Document:

EXHIBIT 10.23

 

AGREEMENT
OF LEASE

 

BETWEEN

 

PREFERRED
950 DEVELOPERS, L.P

 

AS
LANDLORD

 

AND

 

STRATEGIC
DISTRIBUTION, INC.

 

AS TENANT

 

 

AGREEMENT
OF LEASE

 

THIS AGREEMENT OF LEASE made
this          day of                     200    
by and between Preferred 950 Developers, L.P, L.P.,  a Pennsylvania
limited partnership (hereinafter called “Landlord”), and Strategic Distribution, Inc. a Delaware corporation
(hereinafter called “Tenant”).

 

1.                                      FUNDAMENTAL
LEASE PROVISIONS.

 

(a)                                  “Building”:
shall mean the building located at 1414 Radcliffe Street, Bristol,
Pennsylvania  19007.”

 

(b)                                  “Building
RSF”: shall mean the rentable square footage of the Building, which is
deemed to be 183,000 rentable square feet, as the same may be adjusted from
time to time.

 

(c)                                  “Property”:
shall mean the Building and the parcel(s) of land on which the Building is
located, together with all improvements thereon.

 

(d)                                  “Demised
Premises”:  shall mean the area
identified on the plan attached hereto as Exhibit “A”.  The Demised Premises are located on the 3rd   floor of the Building and are designated as
Suite 301.

 

(e)                                  “Tenant’s RSF”: shall mean the rentable square footage of the
Demised Premises, which is mutually agreed by Landlord and Tenant to be the
stipulated amount of 18,005 rentable square feet. Notwithstanding the
foregoing, within ninety (90) days after the Commencement Date, Landlord may,
at its option, cause its architect to measure the Demised Premises in
accordance with the BOMA measurement standard and to certify the same to Landlord
and Tenant.  In such case, if Landlord’s
architect’s determination of Tenant’s RSF differs from the square footage
listed above, then Tenant’s RSF shall be deemed to be the rentable square
footage of the Demised Premises as certified by Landlord’s architect, and the
Annual Base Rent and Tenant’s Fraction (as well as any related provision of
this Lease which is dependent upon the area of the Demised Premises) shall be
proportionately adjusted retroactive to the Commencement Date.

 

(f)                                    “Annual
Base Rent”:

 

	
  Period (measured from

  the Commencement

  Date)

  	
   

  	
  Annual
  Base

  Rent

  	
   

  	
  Monthly

  Installment

  	
   

  	
  Base Rent/R.S.F.

  
	
  Months 1 through 12

  	
   

  	
  $

  	
  315,087.50

  	
   

  	
  $

  	
  26,257.29

  	
   

  	
  $

  	
  17.50

  
	
  Months 13 through 24

  	
   

  	
  $

  	
  324,090.00

  	
   

  	
  $

  	
  27,007.50

  	
   

  	
  $

  	
  18.00

  
	
  Months 25 through 36

  	
   

  	
  $

  	
  333,092.50

  	
   

  	
  $

  	
  27,757.71

  	
   

  	
  $

  	
  18.50

  
	
  Months 37 through 48

  	
   

  	
  $

  	
  342,095.00

  	
   

  	
  $

  	
  28,507.92

  	
   

  	
  $

  	
  19.00

  
	
  Months 49 through the expiration

  	
   

  	
  $

  	
  351,097.50

  	
   

  	
  $

  	
  29,258.13

  	
   

  	
  $

  	
  19.50

  

 

2

 

(g)                                 Intentionally
deleted.

 

(h)                                 “Tenant’s
Fraction”:  9.84%, which is the
Tenant’s RSF divided by the Building RSF, as the same may be adjusted from time
to time.

 

(i)                                    “Base Year”: 2005 Expenses.

 

(j)                                    “Initial
Term”:  Five (5) years commencing on
the Commencement Date and ending on the date (the “Expiration
Date”) which is (i) the day immediately preceding the fifth
anniversary of the Commencement Date, if the Commencement Date is the first day
of a calendar month, or (ii) the last day of the calendar month in which the
fifth (5th) anniversary of the Commencement Date occurs, if the
Commencement Date is any day other than the first day of a calendar month.  In the event that Tenant validly exercises
any Renewal Option (as hereinafter defined) pursuant to Section 33 of the
Lease, then all references herein to the “Term” shall be deemed to included the
Renewal Term (as hereinafter defined ) and the “Expiration Date” shall mean the
last day of the Renewal Term.

 

(k)                                “Commencement
Date”:  the earlier of (i) the
date Tenant commences occupancy of all or any portion of the Demised Premises
(including, without limitation, occupancy for the purpose of installing Tenant’s
furniture, cabling or equipment), and (ii) the Delivery Date (as hereinafter
defined). Upon the request of either party, following the determination of the
Commencement Date, Landlord and Tenant shall enter into a mutually acceptable
Commencement Date Agreement confirming the Commencement Date.

 

(l)                                    “Delivery Date” shall mean the date on which the work to be
performed by Landlord constituting the Tenant Improvements are “Substantially
Completed” pursuant to the terms of Section 3 below.  Notwithstanding the foregoing, in the event
that the Delivery Date is delayed due to a Tenant Delay (as hereinafter
defined) then the Delivery Date shall be deemed to occur on the Estimated
Delivery Date, subject to extension for delays other than those caused by
Tenant.  Notwithstanding the foregoing,
Landlord shall use commercially reasonable efforts to allow Tenant to have access
during normal business hours to the Demised Premises on or about October 1,
2004 for the sole purpose of installing Tenant’s furniture, cabling, computer
equipment and telecommunications systems.

 

(m)                              “Estimated  Delivery Date:”  November 15, 2004.

 

(n)                                 “Construction
Information Submission Date:” July 23, 2004

 

3

 

(o)                                  “Tenant-Approved Drawings Submission Date:” July 30, 2004

 

(p)                                  “Outside
Approval Date: August 6, 2004

 

(q)                                  “Notice
Addresses”:

 

	
  Landlord:

  	
  Preferred 950 Developers, L.P

  	
   

  
	
   

  	
  c/o Preferred Real Estate Investments, Inc.

  	
   

  
	
   

  	
  1001 E. Hector Street, Suite 100

  	
   

  
	
   

  	
  Conshohocken, PA 19428

  	
   

  
	
   

  	
  Attn: Legal Dept.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Preferred +

  	
   

  
	
   

  	
  1001 E. Hector Street, Suite 100

  	
   

  
	
   

  	
  Conshohocken, PA 19428

  	
   

  

 

	
  Tenant:

  	
  Prior to the Commencement Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Strategic Distribution, Inc.

  	
   

  
	
   

  	
  3220 Tillman Drive, Suite 200

  	
   

  
	
   

  	
  Bensalem, PA 19020

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  After the Commencement Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  At the Demised Premises

  	
   

  

 

(r)                                  “Rent
Payment Address” / “Property Manager”:

 

Preferred 950 Developers, L.P

c/o Preferred Plus

P.O. Box 19021A

Newark, NJ 
07195-0021

 

(s)                                  Intentionally
deleted.

 

(t)                                    “Permitted
Use”:  General Office Use

 

(u)                                 Broker:

 

“Landlord’s Broker”   -  Preferred
Real Estate Advisors, Inc.

 

4

 

“Tenant’s Broker”  -                            Goal
Corporate Real Estate

 

2.                                      DEMISED
PREMISES / COMMON AREAS.  Landlord,
for the Term, and subject to the provisions and conditions hereof, leases to
Tenant and Tenant accepts from Landlord, the Demised Premises.  Tenant shall not use or occupy, or permit or
suffer to be used or occupied, the Demised Premises or any part thereof, other
than for the Permitted Use. Tenant shall further have the non-exclusive right,
in common with the other tenants and occupants of the Building and with others
who have been granted such rights by Landlord, to use the “Common Areas” of the
Building.  As used herein, “Common Areas”
shall mean any areas or facilities designated by Landlord from time to time for
the general use of all tenants in the Building, including any non-reserved
parking areas, driveways, sidewalks, hallways, restrooms, fitness center (which
fitness center shall be open and operating within approximately six (6) months
of the Estimated Delivery Date) and other similar public areas and access ways
of the Building to the extent designated as “Common Areas” by Landlord.

 

3.                                      TENANT
IMPROVEMENTS.

 

(a)                                  Landlord shall
construct, or cause to be constructed, at Tenant’s sole cost and expense
(subject to the Landlord’s Maximum TI Contribution (as hereinafter defined)),
in a good and workmanlike manner, certain improvements to the Demised Premises
as provided for in the Tenant’s Plans (as hereinafter defined).  The work described in the Tenant’s Plans is
hereinafter referred to as the “Tenant Improvements”.  Except for the Tenant Improvements, Landlord
shall have no obligation to perform any improvements to the Demised Premises to
prepare the same for Tenant’s occupancy, and Tenant acknowledges that Tenant
has inspected the Demised Premises and accepts the same in its “AS IS”
condition, without any representation or warranty by Landlord, express or
implied.

 

(b)                                 Landlord and Tenant
have attached hereto the initial plans (the “Initial
Plans”) for the Tenant Improvements, consisting of the space plan
attached hereto as Exhibit “B” (the “Space Plan”)
and the construction standards attached hereto as Exhibit “B-1” (the “Construction Standards”). 
On or before the Construction Information Submission Date, Tenant shall
submit sufficient information, including, without limitation, Tenant’s finish
selections, mechanical loads, electrical loads and locations, furniture plans
and special lighting and use requirements, if any (collectively, the “Construction  Information”),
to, and as required by, Blackney Hayes Architects (the “Architect”)
to enable the Architect to prepare and deliver to Landlord, on or before the
Tenant-Approved Drawings Submission Date, complete construction and permit
drawings for the Tenant Improvements (collectively, the “Construction
Drawings”) which have been approved by
Tenant.  The Construction Drawings shall:
(i) strictly conform to the Initial Plans; (ii) include all information and
specifications necessary for Landlord to complete the Tenant Improvements and
to obtain all required permits and approvals therefor; and (iii) strictly
conform to all applicable laws and requirements of governmental authorities and
insurance underwriters’ requirements.  
Within two (2) business days after Tenant’s approval of the Construction
Drawings, and in any event on or before the Tenant-Approved Drawings

 

5

 

Submission Date, Tenant shall submit the same to Landlord for Landlord’s
review and approval, which approval shall not be unreasonably withheld,
conditioned or delayed provided that the Construction Drawings meet the
foregoing requirements.  If Landlord
disapproves the Construction Drawings, (including, without limitation, for
failure of the Construction Drawings to strictly conform to the Initial Plans)
or if the Construction Drawings are disapproved by any applicable governmental
authority, Tenant shall cause the Architect to promptly make any changes in the
Construction Drawings required by Landlord and/or such governmental authority,
as the case may be.  Tenant acknowledges
that the Estimated Delivery Date (which shall be an estimate and not a
guarantee by Landlord) is conditioned upon Landlord and all applicable
governmental authorities approving the Construction Drawings on or before the
Outside Approval Date.

 

(c)                                  The Initial Plans and
the Construction Drawings, as finally approved by Landlord and all applicable
governmental authorities pursuant to subparagraph (b) above, are hereinafter
collectively referred to as the “Tenant’s Plans”.
All work described in the Tenant’s Plans shall be furnished, installed and
performed by Landlord, utilizing a general contractor selected by Landlord, for
the Total TI Costs (as hereinafter defined), which Total TI Costs shall be paid
by Tenant (subject to the Landlord’s Maximum TI Contribution) as provided
herein.    The “Total TI Costs”
shall mean all costs and expenses incurred by Landlord in connection with the
completion of the Tenant Improvements, including, without limitation: (i)
Landlord’s out-of-pocket contract or purchase price(s) for materials,
components, labor and services, plus, plus (ii) Landlord’s architects’ and
engineers’ fees and costs, plus (iii) fees for all required permits and
approvals, plus (iv) an amount equal to five percent (5%) of the foregoing items
as Landlord’s construction management fee. Notwithstanding anything to the
contrary contained herein, if the final Construction Drawings, as finally
approved by Landlord and all applicable governmental authorities, contain any
work which was not included in, or otherwise exceeds the scope of, the Initial
Plans, then the same shall constitute a change order requested by Tenant (a “Tenant Change Order”) and shall be governed by the
provisions of subparagraph (d) below relating to Tenant Change Orders.

 

(d)                                 In constructing the
Tenant Improvements, Landlord reserves the right to:  (i) make substitutions of material of
equivalent grade and quality when and if any specified material shall not be
readily and reasonably available, and (ii) make changes necessitated by
conditions met during the course of construction; provided, however, that
Tenant’s approval of any substantial change shall first be obtained, which
approval shall not be unreasonably withheld or delayed.  Tenant Change Orders shall not be
permitted without the prior written approval of Landlord, which approval shall
not be unreasonably withheld, conditioned or delayed by Landlord so long as the
Tenant Change Order does not delay Substantial Completion (as hereinafter
defined) or materially increase the cost of the Tenant Improvements.  If Landlord approves any Tenant Change Order then,
notwithstanding anything to the contrary contained herein, Tenant shall pay any
increase in the cost of constructing the Tenant Improvements resulting from
such Tenant Change Order within ten (10) days after receipt of Landlord’s
invoice therefor.  As a condition to
Landlord’s approval of any Tenant Change Order,

 

6

 

Landlord may require that, prior to Landlord’s commencement of any work
related to such Tenant Change Order, Tenant shall pay to Landlord fifty percent
(50%) of the amount estimated by Landlord to become due to Landlord with
respect to such Tenant Change Order and the remainder to be paid upon
Substantial Completion.  The foregoing
prepayment of the cost of any work related to such Tenant Change Order shall
not apply to Tenant Change Orders, which in the aggregate are less than Five
Thousand Dollars ($5,000.00), which payment shall be due upon Substantial
Completion.

 

(e)                                  Upon Substantial
Completion of the Tenant Improvements, Landlord shall notify Tenant, and Tenant
shall inspect the Demised Premises with Landlord within three (3) business days
after Tenant’s receipt of Landlord’s notice. 
Upon completion of the inspection, it shall be presumed that all work
theretofore performed by or on behalf of Landlord was satisfactorily performed
in accordance with, and meeting the requirements of this Lease, excepting,
however:  (i) required work not actually
completed by Landlord and which is identified at the time of the inspection on
a list prepared by the construction representatives of Landlord and Tenant, or
(ii) to latent defects in such work which could not reasonably have been
discovered at the time of the inspection provided that Tenant notifies Landlord
in writing of such defects within one (1) year after the Commencement Date.

 

(f)                                    Landlord’s work in
constructing the Tenant Improvements shall be deemed to be “Substantially
Completed” when: (i) the work to be performed by Landlord shown on
the Tenant’s Plans has been completed except for minor or insubstantial details
of construction, mechanical adjustments, or finishing touches like plastering
or painting, which items shall not materially and adversely affect Tenant’s
conduct of its ordinary business activities in the Demised Premises, and (ii)
Tenant may lawfully occupy the Demised Premises for its ordinary business
activities (except to the extent that such lawful occupancy is conditioned on
remaining installations, work or improvements to be performed by Tenant).  Notwithstanding the foregoing, in the event
that Substantial Completion of the Tenant Improvements is delayed, in whole or
in part, by Tenant for any reason (a “Tenant Delay”),
including, without limitation, the reasons set forth in subparagraphs (i)
through (iv) below, then Tenant’s obligation to pay Rent hereunder shall not be
affected or deferred on account of such delay and, for purposes of establishing
the Delivery Date hereunder, the “Delivery Date” shall be deemed to occur on
the Estimated Delivery Date (or such later date as may result from delays in
Substantial Completion that are not attributable to Tenant Delay):

 

(i)                                     Tenant’s failure
to:  (1) deliver Tenant’s Construction
Information on or before the Construction Information Submission Date; (2)
submit to Landlord, on or prior to the Tenant Approved Drawings Submission
Date, Construction Drawings approved by Tenant; (3) obtain the approval of
Landlord and all applicable governmental authorities with respect to the
Construction Drawings on or before the Outside Approval Date; or (4) promptly
make changes in the Construction Drawings reasonably required by Landlord or
any applicable governmental authority in connection with the approval thereof; or

 

7

 

(ii)                                  Tenant Change
Order(s); or

 

(iii)                               delays, not caused by
Landlord, in furnishing special items which are not readily available (“Long
Lead Items”) or procuring specialized labor required for installation of Long
Lead Items, provided that Tenant shall be notified of Landlord’s good faith
estimate of the anticipated delay promptly after discovery thereof by Landlord,
and shall be given an opportunity to specify alternative materials or
requirements which are readily available; or

 

(iv)                              the performance of any
work or activity in the Demised Premises or Building by Tenant or any of its
employees, agents or contractors (including, without limitation, the
installation of Tenant’s furniture, cabling or equipment).  Without limiting the foregoing, Tenant
specifically acknowledges that the municipality’s issuance of a certificate of
occupancy (or similar certificate) may be conditioned upon Tenant’s
installation of its furniture, cabling or equipment or the completion of any
other work or activity in the Demised Premises by Tenant or any of its
employees, agents or contractors.  In
such event, if the municipal authority will not issue a certificate of
occupancy (or similar certificate) or schedule an inspection of the
Demised Premises due to Tenant’s failure to install such furniture, cabling or
equipment or failure to complete such other work or activity, then the same
shall constitute a Tenant Delay hereunder.

 

(g)                                 Provided that Tenant
is not in default in the performance of any of its obligations hereunder,
Landlord shall contribute up to a maximum amount of Thirty-One 50/100 Dollars
($31.50) per rentable square foot of the Demised Premises (the “Landlord’s Maximum TI Contribution”) to be applied solely
against the Total TI Costs.  In the event
that the Total TI Costs exceed the amount of the Landlord’s Maximum TI
Contribution, Tenant shall reimburse Landlord for such excess from time to time
during the progress of the work within fifteen (15) days after receipt of
Landlord’s invoice(s) therefor; provided, however, that Landlord may require
that, before Landlord commences any work, Tenant shall pay to Landlord fifty
percent (50%) of the amount estimated by Landlord to become due to Landlord
therefor, which fifty percent (50%) shall be applied against the last of the
Tenant Improvements to be paid for by Tenant to Landlord.  Following payment of the final invoice, the
Total TI Costs shall be subject to examination by Tenant, and Tenant shall have
reasonable access to Landlord’s cost records relative thereto.  In the event that the Total TI Costs are less
than the Landlord’s Maximum TI Contribution, Landlord shall be entitled to the
benefit of the savings and Tenant shall not be entitled to any refund or credit
against the Rent payable hereunder.

 

4.                                       DELAY IN POSSESSION. Landlord currently
anticipates that the Delivery Date will occur on or about the Estimated
Delivery Date.  If the Delivery Date has
not occurred by the Estimated Delivery Date because of the holding over or
retention of possession of any tenant or occupant, or if any repairs or
improvements to the Demised Premises are not completed, or for any other
reason, Landlord shall not be subject to any liability to Tenant.  Under such circumstances (but subject to the
provisions herein

 

8

 

relating to Tenant Delay), the Rent reserved and covenanted to be paid
herein shall not commence until the Commencement Date, and no such failure to
deliver possession shall in any other respect affect the validity of this
Lease.  Notwithstanding the foregoing, in
the event that the Commencement Date does not occur by the date which is thirty
(30) days after the Estimated Delivery Date (other than on account of a Tenant
Delay), then Tenant shall be entitled, as its sole and exclusive remedy, to
payment of Tenant’s actual holdover rent, if any, at Tenant’s current location
that is above the amount of Tenant rent thereunder for each day that the
Commencement Date is delayed beyond such thirtieth (30th) day after
the Estimated Delivery Date.  Provided Tenant and Landlord fully
executes this Lease by July 23, 2004, Landlord shall waive the thirty (30)
–day grace period set forth in the preceding sentence.  In the event that the Commencement Date has
not occurred by the date which is one-hundred eighty (180) days after the
Estimated Delivery Date (other than on account of a Tenant Delay), then Tenant
or Landlord shall thereafter have the right to terminate this Lease by
delivering fifteen (15) days’ written notice thereof to the other party at any
time prior to the Commencement Date; provided, however, that if the
Commencement Date shall occur within fifteen (15) days after Landlord’s receipt
of Tenant’s termination notice, then Tenant’s termination notice shall be null
and void and this Lease shall remain in full force and effect.

 

5.                                      RENT.

 

(a)                                  During the Term,
Tenant shall pay to Landlord the Annual Base Rent in the amounts set forth in Section 1
(Fundamental Lease Provisions) above. 
Such Annual Base Rent shall be payable in equal monthly installments in
advance on the first day of each calendar month.

 

(b)                                 The term “Rent” as used in this Lease shall mean the Annual Base Rent,
Tenant’s Share of Operating Expenses (as hereinafter defined), utilities and
all other additional rent or other sums payable by Tenant to Landlord under
this Lease.  All Rent other than the
Annual Base Rent is referred to herein as “Additional Rent.”

 

(c)                                  The first installment
of Rent shall be payable on the Commencement Date.  If the Term begins on a day other than the
first day of a calendar month, Rent from such day until the first day of the
following calendar month shall be prorated on a per diem basis for each day of
such partial month.

 

(d)                                 All Rent and
other sums due to Landlord hereunder shall be payable to Landlord c/o Landlord’s
Property Manager at the Rent Payment Address specified in Section 1
(Fundamental Lease Provisions), or to such other party or at such
other address as Landlord may designate, from time to time, by written notice
to Tenant, without demand and without deduction, set-off or counterclaim
(except to the extent demand or notice shall be expressly provided for
herein).  Tenant’s covenant to pay Rent
is independent of every other covenant under this Lease.

 

9

 

(e)                                  If Landlord, at any
time or times, shall accept said Rent due to it hereunder after the same shall
become due and payable, such acceptance shall not excuse delay upon subsequent
occasions, or constitute or be construed as, a waiver of any of Landlord’s
rights hereunder.

 

6.                                      Intentionally
deleted.

 

7.                                      PAYMENT
OF OPERATING EXPENSES.

 

(a)                                  For and with respect
to each calendar year of the Term, Tenant shall pay to Landlord, as Additional
Rent, an amount  (“Tenant’s
Share” or “Tenant’s Share of Operating Expenses”) equal to the product
obtained by multiplying Tenant’s Fraction by the amount by which Operating
Expenses (as hereinafter defined) for such calendar year exceed the Base Year
(appropriately prorated for any partial calendar year included within the
beginning and end of the Term).

 

(b)                                 As used herein, the
following terms shall have the meanings set forth below:

 

(i)                                     “Operating Expenses” shall mean, except as expressly limited
by subparagraph (ii) below, the expenses incurred by or on behalf of Landlord
in respect of the operation and management of the Property and shall include,
without limitation: (1) labor costs, including wages, salaries and benefits and
taxes imposed upon employers with respect to persons employed by Landlord or
Landlord’s managing agent for rendering service in the operation, cleaning,
maintenance, repair and replacement of the Property, whether paid directly by
Landlord or reimbursed to contractors or other third parties; (2) costs for the
operation, cleaning, maintenance, repair and replacement of the Property,
including payments to contractors; (3) the cost of steam, electricity, gas,
water and sewer and other utilities chargeable to the operation and maintenance
of the Property; (4) cost of premiums and deductibles for insurance for the
Property including fire and extended coverage, elevator, boiler, sprinkler
leakage, water damage, public liability and property damage, environmental
liability, plate glass, and rent protection; (5) supplies; (6) reasonable legal
and accounting expenses; (7) Taxes (as hereinafter defined) and costs of
obtaining any reductions thereof; (8) reasonable management fees and expenses,
including, without limitation, the fair rental value and costs associated with
maintaining a management office at the Property; and (9) all other costs and
expenses incurred by or on behalf of Landlord in connection with the repair,
replacement, operation, maintenance, securing, insuring and policing of the Building
and Property.

 

(ii)                                  The term “Operating Expenses” shall not include:  (1) the cost of any item which, by standard
accounting practice, should be capitalized, except that in lieu of capital
expenses for repairs, replacements or enhancements to the Building or Property
(including without limitation any upgrades for the purpose of reducing
Operating Costs or for the purpose of complying with applicable laws, codes

 

10

 

and regulations), there shall be included within Operating Expenses for
each calendar year, from and after the expenditure in question, the annual
amortization of such expenditure over the useful life of the item(s) in
question, as reasonably determined by Landlord and including an interest factor
equal to the Prime Rate of interest as published from time to time in The
Wall Street Journal plus two percent (2%) (the “Prime Rate”);  (2) any
charge for depreciation, interest on encumbrances or ground rents paid or
incurred by Landlord; (3) commissions; (4) costs actually reimbursed by
insurance proceeds, and (5) costs of electricity, gas and any other utilities
provided to tenant spaces (as opposed to Common Areas) in the Building to the
extent Tenant is chargeable for the utility service in question pursuant to Section 8
below.

 

(iii)                         “Taxes”
shall mean all real estate taxes and assessments, general and special, ordinary
or extraordinary, foreseen or unforeseen, imposed upon the Property or with
respect to the ownership thereof. If, due to a future change in the method of
taxation, any franchise, income, profit or other tax, however designated, shall
be levied or imposed in substitution in whole or in part for (or in lieu of)
any tax which would otherwise be included within the term “Taxes” as defined
herein, then the same shall be included in the term “Taxes.”  If a special improvement shall hereafter be
made for the sole benefit of Tenant which results in an increase in the taxable
value of the Building (as opposed to general tenant improvements consistent
with normal office use), then any increase in Taxes attributable to such
special improvement shall be the responsibility of Tenant.   For purposes of establishing real estate
taxes for the Base Year, if the assessment of the Building is increased, solely
related to tenant improvements to the Building, the Base Year for real estate
taxes shall thereafter be correspondingly adjusted (on a dollars per square
foot basis) to the extent of such increase.

 

(c)                            In
determining Operating Expenses for any year, the following adjustments shall be
made:

 

(i)                               if
less than ninety-five percent (95%) of the Building rentable area shall have
been occupied by tenants at any time during such year, Operating Expenses shall
be deemed for such year to be an amount equal to the like expenses which
Landlord reasonably determines would normally be incurred had such occupancy
been ninety-five percent (95%) throughout such year;

 

(ii)                            if
any tenant of the Building supplies itself with a service at any time during
such year that Landlord would ordinarily supply without separately
charging  therefor, then Operating
Expenses shall be deemed to include the cost that Landlord would have incurred
had Landlord supplied such service to such tenant;

 

(iii)                         if
Landlord successfully obtains a reduction in Taxes, then the Base Year shall
thereafter be correspondingly reduced (on a dollars per square foot basis) to
the extent of the reduction in Taxes;

 

11

 

(iv)                        if
any Operating Expenses incurred for the Building and/or the Property consist of
shared costs and expenses with one or more other buildings or properties,
whether pursuant to a reciprocal easement agreement, cost sharing agreement,
common area agreement, or otherwise, the shared costs and expenses shall be
equitably allocated by Landlord between the Building and/or the Property (as
applicable) and such other buildings or properties.

 

(d)                                 Commencing
with the second calendar year of the Term and for each calendar year
thereafter, “Controllable Operating Expenses (as hereinafter defined) shall not
increase, in the aggregate and on a cumulative basis, by more than five percent
(5%) per annum.  As used herein, “Controllable
Operating Expenses” shall mean those expenses that are not related to snow
removal, taxes, utilities, insurance and such other extraordinary expenses that
may be incurred by Landlord.

 

(e)                                  Landlord shall
furnish to Tenant at the commencement of the Term, or as soon thereafter as
practicable, a statement of Landlord’s good faith estimate of Operating
Expenses, and the amount of Tenant’s Share thereof (the “Estimated
Share”), for the current calendar year.  Landlord shall also furnish to Tenant as soon
as reasonably practicable after the beginning of each calendar year of the Term
following the first calendar year: (i) a statement (the “Expense
Statement”) setting forth Operating Expenses for the previous
calendar year, including Tenant’s Share thereof; and  (ii) a statement of Landlord’s good faith
estimate of Operating Expenses, and the amount of the Estimated Share for the
current calendar year.  If Landlord from
time to time determines that Landlord’s good faith estimate is incorrect,
Landlord shall have the right to provide Tenant with a revised statement of
Landlord’s good faith estimate of Operating Expenses for the then current year,
in which event Tenant’s Estimated Share shall be adjusted accordingly.

 

(f)                                    Within twenty (20)
days after Tenant receives the Expense Statement, Tenant shall pay to Landlord
the difference, if positive, between the Tenant’s Share of Operating Expenses
for such previous year and the actual payments made by Tenant on account of
Tenant’s Share during such calendar year, or if the actual payments exceed
Tenant’s Share of Operating Expenses for such previous year, Tenant shall
receive a credit against the next payment(s) on account of Operating Expenses
falling due or, if the Lease shall have expired, a refund of such overpayment.

 

(g)                                 Unless Tenant, within
ninety (90) days after any Expense Statement is furnished, shall give notice to
Landlord that Tenant disputes the amount due in accordance with the foregoing
provisions, specifying in detail the basis for such dispute, each Expense
Statement furnished to Tenant by Landlord under this Section shall be
conclusively binding upon Tenant as to the Operating Expenses and Tenant’s
Share thereof due from Tenant for the period represented thereby; provided,
however, that additional amounts due may be required to be paid by any
supplemental statement furnished by Landlord. 
Pending resolution of any dispute, Tenant shall pay Tenant’s Share in
accordance with the Expense Statement furnished by Landlord.  Any payment due from Tenant to Landlord on
account of Tenant’s Share of Operating Expenses not

 

12

 

yet determined as of the Expiration Date shall be made within twenty
(20) days after submission to Tenant of the next Expense Statement, which
obligation shall survive the expiration or earlier termination of this
Lease.   In connection with any dispute
or any information from Landlord’s records obtained by Tenant with respect
thereto, Tenant covenants that (x) it will hold the results of any
investigation into Landlord’s records in the strictest confidence (provided,
however, that Tenant may discuss the results of such investigation with its
attorneys, accountants and other consultants and use the information obtained
in the investigation to the extent required in any legal or other proceedings
related thereto or as may be required by applicable law); and (ii) it will
cause any consultants retained by it to adhere to a similar covenant of
confidentiality for the benefit of Landlord.

 

(h)                                 Beginning with the
next installment of Annual Base Rent due after delivery of the statement of
Tenant’s Estimated Share (including the first such delivery on or about the
commencement of the Term), Tenant shall pay to Landlord, on account of Tenant’s
Share of Operating Expenses, one-twelfth (1/12) of the Estimated Share for the
current calendar year multiplied by the number of full or partial calendar
months elapsed during the current calendar year up to and including the month
payment is made (less any amounts previously paid by Tenant on account of
Tenant’s Share of Operating Expenses for such period).  On the first day of each succeeding month up
to the time Tenant shall receive a new statement of Tenant’s Estimated Share,
Tenant shall pay to Landlord, on account of Tenant’s Share of Operating
Expenses, one-twelfth (1/12) of the then current Estimated Share.

 

8.                                      UTILITIES
FURNISHED TO DEMISED PREMISES.

 

(a)                                  In addition to the
Annual Base Rent and Tenant’s Share of Operating Expenses, Tenant shall pay for
all utilities (including, without limitation, gas and electricity and, to the
extent separately billable, HVAC service) that are furnished to or consumed
within the Demised Premises. If a submeter or direct meter is installed for any
particular utility, Tenant shall pay for its use and consumption of such
utility based on its metered usage.  If
no meter or submeter is installed, Tenant shall pay a pro-rata share of the
Aggregate Utility Charge (as hereinafter defined).  The “Aggregate
Utility Charge” means the total of all charges for the utility in
question attributable to the Demised Premises and other areas of the Building
covered by such utility (other than Common Areas) for the relevant billing
period, and Tenant’s pro-rata share shall be based on the percentage that
Tenant’s RSF bears to the total rentable square footage of the areas of the
Building serviced by such utility; provided that if less than all of such areas
have been occupied by tenants during the relevant billing period, then the
Aggregate Utility Charge shall be the amount Landlord reasonably determines
would normally be incurred for such utility service had ninety-five percent
(95%) of such areas been occupied by tenants during such billing period.  To the extent required, Landlord shall also
make any necessary adjustments to equitably allocate the cost of utility services
to the Common Areas, if such services are not separately metered.

 

13

 

(b)                                 Tenant shall pay all
utility bills within twenty (20) days after receipt by Tenant, either from
Landlord or the billing authority. Landlord shall have the right, to be
exercised by written notice to Tenant and to the extent that the same may be
lawfully done, to direct Tenant to contract directly with the utility provider
supplying electricity and/or gas to the Building, in which event Tenant shall
pay all charges therefor directly to the utility provider. Landlord shall at
all times have the exclusive right to select the provider or providers of
utility service to the Demised Premises and the Property, and Landlord shall
have the right of access to the Demised Premises from time to time to install
or remove utility facilities.

 

9.                                      SERVICES.

 

(a)                                  Subject to payment by
Tenant of Operating Expenses and utilities as provided in Sections 7 and 8
above, Landlord shall provide or cause to be provided the following services
throughout the Term:

 

(i)                                     Provide water for
drinking, lavatory and toilet purposes on the floor(s) on which the Demised
Premises are located;

 

(ii)                                  Furnish heat,
ventilation and air-conditioning (“HVAC Service”)
to the Demised Premises for ordinary office purposes between the hours of 8:00
a.m. and 6:00 p.m., Monday through Friday (legal holidays excepted).  Tenant, upon such advance notice as is
reasonably required by Landlord, shall have the right to receive HVAC Service
during non-business hours, provided that Tenant pays to Landlord the standard
rate then being charged by Landlord to tenants of the Building for overtime
HVAC Service, as determined by Landlord from time to time (except that no
overtime surcharge shall be imposed if all utilities required for HVAC Service
to the Demised Premises are separately metered and all consumption charges are
separately paid for by Tenant pursuant to Section 8 above);

 

(iii)                               Furnish electricity to the Demised Premises for
ordinary office purposes.  Tenant’s use
of electrical service shall not exceed, either in voltage, rated capacity or
overall load, that which Landlord determines is standard for office use at the
Building.

 

(iv)                              Provide janitorial
services in accordance with Landlord’s building standard janitorial
specifications as set forth on Exhibit “D” attached hereto. Any and all
additional or specialized janitorial service desired by Tenant shall be
contracted for by Tenant directly with a vendor approved by Landlord (such approval
not to be unreasonably withheld), and the cost and payment thereof shall be the
sole responsibility of Tenant; and

 

(v)                                 Provide access to the
Building and the Demised Premises twenty-four hours per day, seven days per
week, subject to reasonable security measures as may be implemented by
Landlord.

 

(b)                                 If Tenant requests
permission to consume excess or supplemental electrical service, HVAC Service
or other utility services, Landlord may withhold its

 

14

 

consent or condition its consent upon conditions that Landlord
reasonably determines, and in the event such consent is granted, all costs for
such additional service, including, without limitation, required changes,
replacements or additions to the existing facilities servicing the Demised
Premises, shall be paid for by Tenant at Tenant’s sole cost and expense.   Without limiting the foregoing, if Tenant’s
usage of electricity or other utility service is substantially in excess of
that for standard office tenancies and if such utility service to the Demised
Premises is not separately metered to the Demised Premises pursuant to Section 8
above, Landlord reserves the right to adjust Tenant’s pro-rata share of such
charges, as referred to in Section 8(a) above, in order to equitably
reflect a surcharge for such excess use.

 

(c)                                  Tenant shall directly
reimburse Landlord for any supplemental services requested by Tenant and
supplied by Landlord, said reimbursement to be paid within fifteen (15) days
after Tenant’s receipt of Landlord’s invoice therefor.  Notwithstanding the foregoing, Landlord shall
have no obligation to provide any such supplemental services to Tenant.

 

(d)                                 It is understood that
Landlord does not warrant that any of the services referred to in this Section will
be free from interruption from causes beyond the reasonable control of
Landlord. No interruption of service shall ever be deemed an eviction or
disturbance of Tenant’s use and possession of the Demised Premises or any part
thereof or render Landlord liable to Tenant for damages, permit Tenant to abate
Rent or otherwise relieve Tenant from performance of Tenant’s obligations under
this Lease.

 

10.                               CARE
OF DEMISED PREMISES.            Tenant
agrees, on behalf of itself, its employees and agents that it shall:

 

(a)                                  Comply at all times
with any and all federal, state and local statutes, regulations, ordinances,
and other requirements of any of the constituted public authorities and
insurers insuring the Building relating to Tenant’s use, occupancy or alteration
of the Demised Premises;

 

(b)                                 Maintain, repair and replace the
interior, non-structural portions of the Demised Premises so as to keep same in
safe, good order and repair, reasonable wear and tear excepted, as and when
needed, and replace all glass broken by Tenant, its agents, employees or
invitees with glass of the same quality as that broken, except for glass broken
by fire and extended coverage-type risks, and commit no waste in the Demised
Premises;

 

(c)                                  Not overload, damage
or deface the Demised Premises or do any act which might make void or voidable
any insurance on the Demised Premises or the Building or which may render an
increased or extra premium payable for insurance (and without prejudice to any
right or remedy of Landlord regarding this subparagraph, Landlord shall have
the right to collect from Tenant, upon demand, any such increase or extra
premium);

 

15

 

(d)                                 Not make any
alteration of or addition to the Demised Premises without the prior written
approval of Landlord, except for interior, nonstructural alterations of a
decorative nature that do not exceed more than Two Dollars ($2.00) per rentable
square foot of the Demised Premises in the aggregate.  All alterations performed in the Demised
Premises by Tenant, whether or not requiring Landlord’s consent, shall be
performed: (i) at Tenant’s sole cost and expense, (ii) by contractors and
subcontractors approved in advance in writing by Landlord, and (iii) in a good
and workmanlike manner and in accordance with all applicable laws and
ordinances.  All alterations to the
Demised Premises by Tenant shall be the property of Tenant until the expiration
or earlier termination of this Lease. 
Upon the expiration or earlier termination of this Lease, all such
alterations shall remain at the Demised Premises and become the property of
Landlord without payment by Landlord therefor. 
Notwithstanding the foregoing, Landlord, at Landlord’s option, shall
have the right to require that any or all of such alterations be removed upon
the expiration or earlier termination of the Lease by providing written notice
thereof to Tenant, in which event Tenant, at Tenant’s sole cost and expense,
shall remove such alterations and repair any resulting damage;

 

(e)                                  Not install any equipment of any kind
whatsoever which might necessitate any changes, replacements or additions to
any of the heating, ventilating, air-conditioning, electric, sanitary, elevator
or other systems serving the Demised Premises or any other portion of the
Building, or to any of the services required of Landlord under this Lease,
without the prior written approval of Landlord, and in the event such consent
is granted, such replacements, changes or additions shall be paid for by Tenant
at Tenant’s sole cost and expense.  At
the expiration or earlier termination of this Lease, Tenant shall pay Landlord’s
cost of restoring such systems to their condition prior to such replacements,
changes or additions;

 

(f)                                    Not place signs on
the Demised Premises except for (i) signs located entirely within the Demised
Premises and which are not visible from the exterior of the Demised Premises,
and (ii) signs on doors provided that the lettering and text are approved by
Landlord;

 

(g)                                 Not install or
authorize the installation of any coin operated vending machine, except for the
dispensing of snacks, coffee, and similar items to the employees of Tenant for
consumption upon the Demised Premises; and

 

(h)                                 Observe the rules and
regulations annexed hereto as Exhibit “C,”
as Landlord may from time to time amend the same, for the general safety,
comfort and convenience of Landlord, occupants and tenants of the Building.

 

11.                               MECHANICS’
LIENS.  Prior to Tenant performing
any alterations to the Demised Premises for which a lien could be filed against
the Demised Premises or the Building, Tenant shall have its contractor execute
and file in the appropriate public office a Waiver of Mechanics’ Lien, in form
satisfactory to Landlord, and provide Landlord with

 

16

 

an original copy thereof. Tenant shall, within ten (10) days after
notice from Landlord, discharge any mechanics’ lien for materials or labor
claimed to have been furnished to the Demised Premises on Tenant’s behalf
(except for work contracted for by Landlord) and shall indemnify and hold
harmless Landlord from any and all claims, costs, damages, loss, liabilities
and expenses (including, without limitation, reasonable attorney’s fees)
incurred by Landlord in connection therewith.

 

12.                               REPAIRS
AND MAINTENANCE.  Landlord shall keep
and maintain the Common Areas of the Building clean and in good working
order.  Landlord shall further make, or
cause to be made, all necessary repairs to the structure and exterior of the
Building, as well as to the mechanical, HVAC, electrical and plumbing systems
servicing Building, provided that Landlord shall have no obligation to make any
repairs until Landlord shall have received notice of the need for such
repair.  The cost of the foregoing
maintenance and repairs shall be included in Operating Expenses except to the
extent expressly excluded therefrom pursuant to Section 7.  Notwithstanding the foregoing, all repairs
made necessary by Tenant’s specific use, occupancy or alteration of the
Building, or by the negligent acts of Tenant, its agents, employees or invitees
(and, without limiting the foregoing, any repairs or maintenance required to
any specialized or supplemental equipment installed by or for Tenant and not of
a “building standard” nature), shall be made at the sole cost and expense of
Tenant.

 

13.                               SUBLETTING
AND ASSIGNING.

 

(a)                                  Tenant shall not
assign this Lease or sublet all or any portion of the Demised Premises, whether
voluntarily or by operation of law, without first obtaining Landlord’s prior
written consent thereto, which shall not be unreasonably withheld, conditioned
or delayed. Tenant acknowledges that, without in any way limiting the
foregoing, Landlord shall have the right to withhold its consent if, by way of
example and not limitation, the reputation or financial responsibility of a
proposed assignee or subtenant is unsatisfactory to Landlord, if such subtenant’s
or assignee’s business is not for the Permitted Use or is otherwise not
consonant with that of the other tenants of the Building or would significantly
increase the density of personnel use, if the proposed sublease or assignment
is to a tenant of the Building or to a prospect with whom Landlord is then
negotiating or has recently negotiated, if there is other comparable space
available for lease by Landlord in the Building, or if Tenant is in default in
the payment or performance of any of its obligations hereunder.  In addition, Tenant shall not mortgage,
pledge or hypothecate this Lease. Any assignment, sublease, mortgage, pledge or
hypothecation in violation of this Section shall be void at the option of
Landlord and shall constitute a default hereunder without the opportunity for
notice or cure by Tenant.

 

(b)                                 A transfer or sale by
Tenant of a majority of the voting shares, partnership interests or other
controlling interests in Tenant shall be deemed an assignment of this Lease by
Tenant requiring Landlord’s prior written consent pursuant to subparagraph (a)
above.   Notwithstanding the foregoing,
so long as Tenant is not in default under this Lease, upon thirty (30) days
prior written notice to Landlord, Tenant shall have the right, without Landlord’s
consent, to sublet all or a portion of the Demised 

 

17

 

Premises or to assign this Lease to any entity which is an Affiliate
(as hereinafter defined) of Tenant so long as the Affiliate has a net worth
(excluding intangibles) equal to or greater than the net worth (excluding
intangibles) of Tenant as of the date of this Lease or as of the date of the
transfer, whichever is greater.  As used
herein, “Affiliate” shall mean any entity (x) that directly owns more than
fifty percent (50%) of the voting shares, partnership interests or other
controlling interests in Tenant, or (y) in which Tenant owns such controlling
interests, or (z) with which Tenant is in common control by virtue of the
ownership of such controlling interests by another person or entity.

 

(c)                                  Notwithstanding the
foregoing, any such subletting or assignment (whether or not requiring Landlord’s
consent) shall not in any way relieve or release Tenant from liability for the
payment and performance of all obligations under this Lease (including, if
applicable, obligations relating to any extension of the Term), and Tenant
shall remain primarily liable to Landlord for all such obligations without
release or limitation by reason of any action or inaction by Landlord
(including without limitation any failure to take any action in the enforcement
of this Lease against the assignee or subtenant, any release or inaction with
respect to any security or collateral (including without limitation any failure
to perfect any interest therein), any forbearance, any failure to provide any
notice to Tenant, or any modification or amendment to this Lease).  Furthermore, no assignment will be valid
unless the assignee shall execute and deliver to Landlord an assumption of
liability agreement in form satisfactory to Landlord, including an assumption
by the assignee of all of the obligations of Tenant and the assignee’s
ratification of and agreement to be bound by all the provisions of this Lease;
and no subletting will be valid unless Tenant and the subtenant have executed
and delivered to Landlord a sublease agreement pursuant to which such subtenant
agrees that the sublease shall be subject to all of the terms and conditions of
this Lease.

 

(d)                                 In the case of a
sublease, Tenant shall pay to Landlord, as Additional Rent hereunder, one
hundred percent (100%) of all subrents or other sums or economic consideration
received by Tenant (after deducting Tenant’s reasonable costs of reletting),
whether denominated as rentals or otherwise, in excess of the monthly sums
which Tenant is required to pay under this Lease.    In the case of an assignment, Tenant shall
pay to Landlord, as Additional Rent hereunder, one hundred percent (100%) of
all sums or economic consideration received by Tenant for the assignment (after
deducting Tenant’s reasonable costs in connection with the assignment), whether
denominated as rentals or otherwise.

 

(e)                                  When Tenant requests
Landlord’s consent to an assignment or sublease, it shall notify Landlord in
writing of (i) the name and address of the proposed assignee or subtenant; (ii)
the nature and character of the business of the proposed assignee or subtenant;
(iii) financial information including financial statements of the proposed
assignee or subtenant; (iv) the rental rate and material monetary terms, such
as rent concessions, work, or work allowance, at which Tenant intends to sublet
any of the Demised Premises or assign this Lease, the proposed commencement
date of the sublet or assignment and, in the case of a sublet, the portion of
the Demised  Premises sought to be sublet
and the length of the sublet, and (v) a copy of the proposed sublet

 

18

 

or assignment documentation. Tenant shall thereafter promptly provide
to Landlord any and all other information and documents reasonably requested by
Landlord in order to assist Landlord with its consideration of Tenant’s request
hereunder.

 

(f)                                    Notwithstanding the
provisions set forth above, Landlord shall have fifteen (15) days after receipt
of the written notice furnished pursuant to subsection (e) above to elect
to terminate this Lease in its entirety if the proposed transaction was an
assignment or a sublease of substantially all of the Demised Premises, or to
terminate this Lease only with respect to the space proposed to be sublet, if
the proposed transaction was a sublease of less than substantially all of the
Demised Premises, in each case by written notice to Tenant, in which event this
Lease shall automatically terminate with respect to all or such portion of the
Demised Premises as the case may be, on the ninetieth (90th) day following
Tenant’s receipt of the such notice with the same force and effect as if the
termination date had been designated as the expiration date of this Lease. In
the event that Landlord elects not to terminate the Lease wholly or in part as
set forth above, then the remaining provisions of this Section 13 shall be
applicable.

 

(g)                                 No subletting,
occupancy or collection of rent with respect to a subtenant or assignee shall
be deemed the acceptance of the subtenant or occupant as tenant under this Lease
unless otherwise consented to by Landlord. The consent by Landlord to an
assignment or subletting where such Landlord consent is required shall not in
any respect be construed to relieve Tenant from obtaining the express consent
in writing of Landlord to any further assignment or subletting.

 

(h)                                 Tenant shall pay to
Landlord, promptly upon demand therefor, all reasonable out-of-pocket costs and
expenses to a limit of One Thousand Dollars ($1,000.00) (including, without
limitation, reasonable attorneys’ fees and disbursements) incurred by Landlord
in connection with any assignment of this Lease or sublease of all or any part
of the Demised Premises.

 

14.                               FIRE
OR CASUALTY.                      In
the event that the whole or a substantial part of the Building or the Demised
Premises is damaged or destroyed by fire or other casualty, then, within
forty-five (45) days after the date that Landlord receives notice of such fire
or other casualty, Landlord shall provide written notice to Tenant as to
whether Landlord intends to repair or rebuild and the estimated time period for
the completion thereof.  In the event
that Landlord’s notice provides that the repairs to the Demised Premises are
estimated to require more than two hundred seventy (270) days to complete, then
Tenant shall have the right to terminate this Lease by providing written notice
thereof to Landlord within thirty days (30) after receipt of Landlord’s
notice.  In the event that Landlord
elects to repair or rebuild (and Tenant does not have the right to, or has
elected not to, terminate this Lease in accordance with the foregoing
sentence), Landlord shall thereupon cause the damage (excepting, however,
Tenant’s furniture, fixtures, equipment and other personal property in, and all
alterations and improvements performed by Tenant to, the Demised Premises,
which shall be Tenant’s responsibility to restore) to be repaired with
reasonable speed, subject to delays which may arise by

 

19

 

reason of adjustment of loss under insurance policies and for delays
beyond the reasonable control of Landlord, it being further understood that in
such case this Lease shall remain in effect regardless of whether the actual
time for completion of restoration shall differ from the initial estimate. In
the event the damage shall be so extensive that Landlord shall decide not to
repair or rebuild, or if any mortgagee, having the right to do so, shall direct
that the insurance proceeds are to be applied to reduce the mortgage debt
rather than to the repair of such damage, this Lease shall, at the option of
Landlord, be terminated effective as of the date of casualty. To the extent and
for the time that the Demised Premises are rendered untenantable on account of
fire or other casualty, the Rent shall proportionately abate.

 

15.                               EMINENT
DOMAIN.                               If
the whole or a substantial part of the Building is taken or condemned for a
public or quasi-public use under any statute or by right of eminent domain by
any competent authority or sold in lieu of such taking or condemnation, such
that in the opinion of Landlord the Building is not economically operable as
before without substantial alteration or reconstruction, this Lease shall
automatically terminate on the date that the right to possession shall vest in
the condemning authority (the “Taking Date”), with Rent being adjusted to said
Taking Date, and Tenant shall have no claim against Landlord for the value of
any unexpired term of this Lease.  Tenant
shall have no claim against Landlord and no claim or right to any portion of
any amount that may be awarded as damages or paid as a result of any taking,
condemnation or purchase in lieu thereof; all rights of Tenant thereto are
hereby assigned by Tenant to Landlord. If any part of the Demised Premises is
so taken or condemned and this Lease is not terminated in accordance with the
foregoing provisions of this Section, this Lease shall automatically terminate
as to the portion of the Demised Premises so taken or condemned, as of the
Taking Date, and this Lease shall continue in full force as to the remainder of
the Demised Premises, with Rent abating only to the extent of the Demised
Premises so taken or condemned; provided, however, that if the remaining
portion of the Demised Premises is no longer suitable for the Permitted Use,
then Tenant shall have the right to terminate this Lease by providing written
notice thereof to Landlord within thirty (30) days after the Taking Date.

 

16.                               INSOLVENCY.  (a)  The
appointment of a receiver or trustee to take possession of all or a portion of
the assets of Tenant or any guarantor of Tenant’s obligations hereunder (a “Guarantor”), or (b) an assignment by Tenant or any
Guarantor for the benefit of creditors, or (c) the institution by or against
Tenant or any Guarantor of any proceedings for bankruptcy or reorganization
under any state or federal law (unless in the case of involuntary proceedings,
the same shall be dismissed within forty-five (45) days after institution), or
(d) any execution issued against Tenant or any Guarantor which is not stayed or
discharged within fifteen (15) days after issuance of any execution sale of the
assets of Tenant, shall constitute a breach of this Lease by Tenant.  Landlord in the event of such a breach, shall
have, without need of further notice, the rights enumerated in Section 17
herein.

 

20

 

17.                               DEFAULT.

 

(a)                                  If (i) Tenant shall
fail to pay Rent or any other sum payable to Landlord hereunder when due and
such failure continues for more than five (5) business days after written
notice thereof from Landlord to Tenant (provided, however, that Landlord shall
not be required to provide written notice to Tenant more than two times during
any twelve month period), or (ii) any of the events specified in Section 16
occur; or (iii) Tenant fails to occupy the Demised Premises within ninety (90)
days after the Commencement Date or vacates or abandons the Demised Premises
during the term hereof or removes or manifests an intention to remove any of
Tenant’s goods or property therefrom other than in the ordinary and usual
course of Tenant’s business; or (iv) 
Tenant sublets the Demised Premises or assigns this Lease in violation
of the provisions of Section 13 hereof; or (v)  Tenant fails to maintain the insurance required
pursuant to Section 19 hereof; or (vi) intentionally deleted; or (vii)
Tenant fails to perform or observe any of the other covenants, terms or
conditions contained in this Lease and such failure continues for more than
thirty (30) days after written notice thereof from Landlord (or such longer
period as is reasonably required to correct any such default, provided Tenant
promptly commences and diligently continues to effectuate a cure, but in any
event within sixty (60) days after written notice thereof by Landlord); then
and in any of said cases (notwithstanding any former breach of covenant or
waiver thereof in a former instance), Landlord, in addition to all other rights
and remedies available to it by law or equity or by any other provisions
hereof, may at any time thereafter:

 

(i)                                     declare to be
immediately due and payable, a sum equal to the Accelerated Rent Component (as
hereinafter defined), and Tenant shall remain liable to Landlord as hereinafter
provided;

 

(ii)                                  terminate this Lease
upon written notice to Tenant and, on the date specified in said notice, this
Lease and the term hereby demised and all rights of Tenant hereunder shall
expire and terminate and Tenant shall thereupon quit and surrender possession
of the Demised Premises to Landlord in the condition elsewhere herein required,
and Tenant shall remain liable to Landlord as hereinafter provided; and/or

 

(iii)                               enter upon and repossess
the Demised Premises, by force, summary proceedings, ejectment or otherwise,
and dispossess Tenant and remove Tenant and all other persons and property from
the Demised Premises, without being liable to Tenant for prosecution or damages
therefor, and Tenant shall remain liable to Landlord as hereinafter provided.

 

(b)                                 For purposes herein,
the Accelerated Rent Component shall mean the aggregate of:

 

(i)                                     all Rent and other
charges, payments, costs and expenses due from Tenant to Landlord and in
arrears at the time of the election of Landlord to recover the Accelerated Rent
Component;

 

21

 

(ii)                                  the Annual Base Rent
reserved for the then entire unexpired balance of the Term (taken without
regard to any early termination of the Term by virtue of any default or any
early termination rights set forth herein), plus all other charges, payments,
costs and expenses herein agreed to be paid by Tenant up to the end of the Term
which shall be capable of precise determination at the time of Landlord’s
election to recover the Accelerated Rent Component, discounted to then present
value at the Prime Rate (as defined in Section 7(b)(2)); and

 

(iii)                               Landlord’s good faith estimate of all charges,
payments, costs and expenses herein agreed to be paid by Tenant up to the end
of the Term which shall not be capable of precise determination as aforesaid,
discounted to then present value at the Prime Rate (and for such purposes no
estimate of any component of the Additional Rent to accrue pursuant to the
provisions of Sections 7 and Section 8 hereof shall be less than the
amount which would be due if each such component continued at the highest
monthly rate or amount in effect during the twelve (12) months immediately
preceding the default).

 

(c)                                  In the event that Landlord shall, after
default or breach by Tenant, recover the Accelerated Rent Component and/or
retake possession of the Demised Premises, then Landlord agrees to use
reasonable efforts to relet the Demised Premises; provided, however, in no
event shall Landlord be required to (i) lease the Demised Premises over other
available space in the Building, (ii) intentionally deleted, (iii) accept any
tenant whose creditworthiness is unsatisfactory to Landlord, in its sole
discretion, or (iv) accept any tenant whose business is not compatible with the
other tenants of the Building, as determined by Landlord in its sole
discretion.  For the purpose of such
reletting, Landlord may decorate or make reasonable repairs, changes,
alterations or additions to the Demised Premises to the extent deemed desirable
or convenient by Landlord.  All costs of
reletting, including, without limitation, the cost of such repairs, changes,
alterations and additions, brokerage commissions and legal fees, shall be
charged to and be payable by Tenant as Additional Rent hereunder.  Any sums collected by Landlord from any new
tenant shall be credited against the balance of the Annual Base Rent and
Additional Rent due hereunder as aforesaid.

 

(d)                                 Tenant shall, with
respect to all periods of time up to and including the expiration of the term
of this Lease (or what would have been the expiration date in the absence of
default or breach) remain liable to Landlord as follows:

 

(i)                                     In the event of
termination of this Lease on account of Tenant’s default or breach, Tenant
shall remain liable to Landlord for damages equal to the rent and other charges
payable under this Lease by Tenant as if this Lease were still in effect, less
the net proceeds of any reletting after deducting all costs incident thereto
(including without limitation all repossession costs, brokerage and management commissions,
operating and legal expenses and fees, alteration costs and expenses of
preparation for reletting) and to the extent such damages shall not have been
recovered by Landlord by virtue of payment by Tenant of the Accelerated Rent
Component (but without prejudice to the right of Landlord to demand and receive
the Accelerated Rent

 

22

 

Component), such damages shall be payable to Landlord, at Landlord’s
option, monthly upon presentation to Tenant of a bill for the amount due or at
such other intervals or times as Landlord shall determine.

 

(e)                                  If Landlord shall,
after default or breach by Tenant, recover the Accelerated Rent Component from
Tenant and it shall be determined at the expiration of the term of this Lease
(taken without regard to early termination for default) that a credit is due
Tenant because the net proceeds of reletting, as aforesaid, plus the amounts
paid to Landlord by Tenant exceed the aggregate of rent and other charges
accrued in favor of Landlord to the end of the term, Landlord shall refund such
excess to Tenant (but not an amount more than the rent and additional rent paid
by Tenant for any particular period of time), without interest, promptly after
such determination.

 

(f)                                    Nothing contained
in this Lease shall limit or prejudice the right of Landlord to prove for and
obtain as damages incident to a termination of or default under this Lease, in
any bankruptcy, reorganization or other court proceedings, the maximum amount
allowed by any statute or rule of law in effect when such damages are to be
proved.

 

(g)                                 Tenant shall pay upon
demand all of Landlord’s costs, charges and expenses, including the reasonable
fees and out-of-pocket expenses of counsel, agents and others retained by Landlord,
incurred in enforcing Tenant’s obligations hereunder or incurred by Landlord in
any litigation, negotiation or transaction in which Tenant causes Landlord,
without Landlord’s fault, to become involved or concerned.

 

(i)                                     Intentionally
Deleted.

 

(j)                                     Intentionally
Deleted.

 

(k)                                  Tenant further waives
the right to any notices to quit as may be specified by applicable law, and
agrees that five (5) days notice shall be sufficient in any case where a longer
period may be statutorily specified.

 

(l)                                     If Rent or any
other sum due from Tenant to Landlord shall be overdue for more than five (5)
business days after notice from Landlord, it shall thereafter bear interest at
the rate of three percent (3%) in excess of the Prime Rate (as defined in Section 7(b)(2)
above) in effect on the date of default (or, if lower, the highest legal rate)
until paid.

 

(m)                               All remedies available
to Landlord hereunder and at law and in equity shall be cumulative and
concurrent.  No termination of this Lease
nor taking or recovering possession of the Demised Premises shall deprive
Landlord of any remedies or actions against Tenant for Rent, for charges or for
damages for the breach of any covenant, agreement or condition herein
contained, nor shall the bringing of any such action for Rent, charges or
breach of covenant, agreement or condition, nor the resort to any other remedy
or right for the recovery of Rent, charges or damages for such breach be

 

23

 

construed as a waiver or release of the right to insist upon the
forfeiture and to obtain possession.  No
reentering or taking possession of the Demised Premises, or making of repairs,
alterations or improvements thereto, or reletting thereof, shall be construed
as an election on the part of Landlord to terminate this Lease unless written
notice of such election to terminate is given by Landlord to Tenant.

 

(n)                                 NONWAIVER.  No waiver of any provision of this Lease
shall be implied by any failure of Landlord to enforce any remedy allowed for the
violation of such provision, even if such violation is continued or repeated,
and no express waiver shall affect any provision other than the one(s)
specified in such waiver and only for the time and in the manner specifically
stated.  No receipt of monies by Landlord
from Tenant after the termination of this Lease shall in any way alter the
length of the Term or of Tenant’s right of possession hereunder or after the
giving of any notice shall reinstate, continue or extend the Term or affect any
notice given to Tenant prior to the receipt of such moneys, it being agreed
that after the service of notice or the commencement of a suit or after final
judgment for possession of the Demised Premises, Landlord may receive and
collect any Rent due, and the payment of said Rent shall not waive or affect
said notice, suit or judgment.  The
receipt by Landlord of a lesser amount than the Annual Base Rent or any
Additional Rent due shall not be construed to be other than a payment on
account of the Annual Base Rent or Additional Rent then due, and any statement
on Tenant’s check or any letter accompanying Tenant’s check to the contrary
shall not be deemed an accord and satisfaction, and Landlord may accept such
payment without prejudice to Landlord’s right to recover the balance of the
Annual Base Rent or Additional Rent due or to pursue any other remedies
provided in this Lease or otherwise.

 

18.                               LANDLORD’S
RIGHT TO CURE.       Landlord may
(but shall not be obligated), on five (5) days notice to Tenant  (except that no notice need be given in case
of emergency) cure on behalf of Tenant any default hereunder by Tenant, and the
cost of such cure (including any reasonable attorney’s fees incurred) shall be
deemed Additional Rent payable upon demand.

 

19.                               INSURANCE.
Tenant shall at all times during the Term, including any renewal or extension
thereof, at Tenant’s sole cost and expense, maintain in full force and effect
with respect to the Demised Premises and Tenant’s use thereof from insurance
companies reasonably acceptable to Landlord: (i) comprehensive general
liability insurance, covering injury to person and property in amounts at least
equal to Two Million Dollars ($2,000,000) per occurrence and annual aggregate
limit for bodily injury and One Million Dollars ($1,000,000) per occurrence and
annual aggregate limit for property damage, with increases in such limits as
Landlord may from time to time reasonably request, and (ii) all-risk or fire
and extended coverage insurance upon  all
furniture, trade fixtures, equipment and other personal property in, and all
alterations and improvements performed by Tenant to, the Demised Premises for
the full replacement value of the same. 
All liability insurance policies shall name Landlord, the Property
Manager and at Landlord’s request any mortgagee of all or any portion of the
Property as additional insureds.  Tenant
shall deliver to Landlord certificates of such insurance at or prior to the
Commencement Date, together with evidence of paid-up

 

24

 

premiums, and shall deliver to Landlord renewals thereof at least
thirty (30) days prior to expiration. 
All such policies and certificates shall provide that such insurance
coverage may not be cancelled or materially amended unless Landlord, the
Property Manager and any mortgagee designated by Landlord as aforesaid are
given at least thirty (30) days prior written notice of the same.

 

20.                               LIABILITY.

 

(a)                                  Each of the parties
hereto hereby releases the other, to the extent of the releasing party’s insurance
coverage, from any and all liability for any loss or damage covered by such
insurance which may be inflicted upon the property of such party even if such
loss or damage shall be brought about by the fault or negligence of the other
party, its agents or employees; provided, however, that this release shall be
effective only with respect to loss or damage occurring during such time as the
appropriate policy of insurance shall contain a clause to the effect that this
release shall not affect the policy or the right of the insured to recover
thereunder.  If any policy does not
permit such a waiver, and if the party to benefit therefrom requests that such
a waiver be obtained, the other party agrees to obtain an endorsement to its
insurance policies permitting such waiver of subrogation if it is available;
provided that if an additional premium is charged for such waiver, the party
benefiting therefrom agrees to pay the amount of such additional premium
promptly upon being billed therefor.

 

(b)                                 Without limiting the
foregoing, Landlord, its agents and employees shall not be liable to Tenant,
and Tenant hereby releases Landlord, its agents and employees, for any loss of
life, personal injury or damage to property in the Demised Premises from any
cause whatsoever except to the extent such loss, injury or damage is the result
of the negligence or willful misconduct of Landlord, its agents or employees.
Notwithstanding anything to the contrary set forth in this Lease, Landlord, its
agents and employees shall in no event be liable to Tenant, and Tenant hereby
releases Landlord, its agents and employees, for any loss or damage to
property, whether or not the result of the negligence or willful misconduct of
Landlord, its agents or employees, to the extent that Tenant would be covered
by insurance that Tenant is required to carry hereunder or is covered by
insurance regardless of the insurance requirements set forth herein, or to the
extent of insurance customarily maintained by similarly situated tenants for
the risk in question (even if Tenant failed to maintain such insurance).  Tenant shall and does hereby indemnify and
hold Landlord, its agents and employees harmless from and against any and all
claims, actions, damages, liability and expenses (including reasonable
attorneys fees) in connection with any loss of life, personal injury or damage
to property in or about the Demised Premises or arising out of the use or
occupancy of the Demised Premises by Tenant, its agents, employees, invitees or
contractors, or occasioned in whole or in part by Tenant, its agents,
employees, invitees or contractors, except to the extent such loss, injury or
damage was caused by the negligence or willful misconduct of Landlord, its
agents or employees.  Tenant’s covenants,
obligations and liabilities under this Section shall survive the
expiration or earlier termination of this Lease.

 

25

 

(c)                            Notwithstanding
anything to the contrary contained in this Lease, it is expressly understood and
agreed by Tenant that none of Landlord’s covenants, undertakings or agreements
are made or intended as personal covenants, undertakings or agreements by
Landlord or its partners, shareholders or trustees, or any of their respective
partners, shareholders or trustees, and any liability for damage or breach or
nonperformance by Landlord, its agents or employees or for the negligence of
Landlord, its agents or employees, shall be collectible only out of Landlord’s
interest in the Building and no personal liability is assumed by, nor at any
time may be asserted against, Landlord or its partners, shareholders or
trustees or any of its or their partners, shareholders, trustees, officers,
agents, employees, legal representatives, successors or assigns, if any; all
such liability, if any, being expressly waived and released by Tenant.  Notwithstanding anything to the contrary
contained in this Lease, in no event shall Landlord be liable to Tenant for any
consequential damages, lost profits, loss of business or other similar damages,
regardless of whether the same arises out of the negligence of Landlord, its
agents or employees.

 

21.                               ENVIRONMENTAL
MATTERS.

 

(a)                                  Tenant shall conduct,
and cause to be conducted, all operations and activity at the Demised Premises
in compliance with, and shall in all other respects applicable to the Demised
Premises comply with, all applicable present and future federal, state,
municipal and other governmental statutes, ordinances, regulations, orders,
directives and other requirements, and all present and future requirements of
common law, concerning the environment (hereinafter collectively called “Environmental Statutes”) including, without limitation,
(i) those relating to the generation, use, handling, treatment, storage,
transportation, release, emission, disposal, remediation or presence of any
material, substance, liquid, effluent or product, including, without
limitation, hazardous substances, hazardous waste or hazardous materials,
(ii) those concerning conditions at, below or above the surface of the
ground and (iii) those concerning conditions in, at or outside the
Building.

 

(b)                                 Tenant, its agents,
employees, contractors and invitees shall not cause or suffer or permit to
occur in, on or under the Demised Premises any generation, use, manufacturing,
refining, transportation, emission, release, treatment, storage, disposal,
presence or handling of hazardous substances (including without limitation
asbestos and petroleum products), hazardous wastes or hazardous materials (as
such terms are now or hereafter defined under any Environmental Statute) or any
other material, substance, liquid, effluent or product now or hereafter
regulated by any Environmental Statute (all of the foregoing herein
collectively called “Hazardous Substances”),
except that construction materials (other than asbestos or polychlorinated
biphenyls), office equipment and cleaning solutions, and other maintenance
materials that are or contain Hazardous Substances may be used, generated,
handled or stored on the Demised Premises, provided such is incident to and
reasonably necessary for the operation and maintenance of the Demised Premises
for the Permitted Use and is in compliance with all Environmental Statutes and
all other applicable governmental requirements. 
Should Tenant, its agents, employees,

 

26

 

 

contractors or invitees cause
any release of Hazardous Substances at the Demised Premises, Tenant shall
immediately notify Landlord in writing and immediately contain, remove and
dispose of, such Hazardous Substances and any material that was contaminated by
the release and to remedy and mitigate all threats to human health or the
environment relating to such release. 
When conducting any such measures the Tenant shall comply with all
Environmental Statutes.

 

(c)                                  
Tenant hereby agrees to indemnify and to hold harmless Landlord, its agents and
employees, of, from and against any and all expense, loss or liability suffered
by Landlord by reason of Tenant’s breach of any of the provisions of this
Section, including, but not limited to, (i) any and all expenses that Landlord,
its agents and employees may incur in complying with any Environmental
Statutes, (ii) any and all costs that Landlord, its agents and employees may
incur in studying, assessing, containing, removing, remedying, mitigating, or
otherwise responding to, the release of any Hazardous Substance or waste at or
from the Demised Premises, (iii) any and all costs for which Landlord, its
agents and employees may be liable to any governmental agency for studying,
assessing, containing, removing, remedying, mitigating, or otherwise responding
to, the release of a Hazardous Substance or waste at or from the Demised
Premises, (iv) any and all fines or penalties assessed, upon Landlord, its
agents and employees by reason of a failure of Tenant to comply with any
obligations, covenants or conditions set forth in this Section, and (v) any and
all legal fees and costs incurred by Landlord, its agents and employees in
connection with any of the foregoing.

 

(d)                                 Tenant’s
covenants, obligations and liabilities under this Section shall survive the
expiration or earlier termination of this Lease.

 

22.                               SUBORDINATION.   This
Lease is and shall be subject and subordinate to all the terms and conditions
of all underlying mortgages and to all ground or underlying leases of the
Property which may now or hereafter encumber the Building and/or the Property,
and to all renewals, modifications, consolidations, replacements and extensions
thereof.  This clause shall be
self-operative and no further instrument of subordination shall be necessary.
Notwithstanding the automatic subordination of this Lease, Tenant shall
execute, within five (5) business days after request, any certificate that
Landlord may reasonably require acknowledging such subordination.  If Landlord has attached to this Lease, or
subsequently delivers to Tenant, a form of subordination agreement required by
a mortgagee of the Property, Tenant shall execute and return the same to
Landlord within five (5) business days after receipt thereof by Tenant.
Notwithstanding the foregoing, the party holding the instrument to which this
Lease is subordinate shall have the right to recognize and preserve this Lease
in the event of any foreclosure sale or possessory action, and in such case
this Lease shall continue in full force and effect at the option of the party
holding the superior lien (subject to the limitations in Sections 20(c) and
31(c)), and Tenant shall attorn to such party and shall execute, acknowledge
and deliver any instrument that has for its purpose and effect the confirmation
of such attornment.  This Lease is and
shall be subject and subordinate to all of the terms and conditions of all
underlying mortgages and to all underlying ground leases of the entire building
which may now or hereafter encumber the Building and/or

 

27

 

the Property, and to all
renewals, modifications, consolidations, replacements and extensions thereof,
provided, however, that with respect to: (i) the Master Lease (hereinafter
defined) as set forth in Section 39, upon the execution hereof, the landlord of
the Master Lease and Tenant shall enter into a subordination and
non-disturbance agreement in the form attached hereto as Exhibit “H” (which
agreement may be recorded at Tenant’s option and at Tenant’s sole cost and
expense); and (ii) the existing mortgage and any future mortgages, this Lease
shall be subject and subordinate so long as the holder of any such mortgage
shall have provided to Tenant a nondisturbance agreement in a form reasonably
satisfactory to Tenant which shall provide, inter alia, that (a) Tenant’s
rights under this Lease shall not be extinguished by any foreclosure or other
enforcement proceedings so long as Tenant is not in default under this Lease,
(b) subject to the foregoing, the Tenant’s rights under this Lease are
subordinate.

 

23.                               ESTOPPEL
STATEMENT.                                               Tenant
shall from time to time, within five (5) business days after request by
Landlord, execute, acknowledge and deliver to Landlord a statement certifying
that this Lease is unmodified and in full force and effect (or that the same is
in full force and effect as modified, listing any instruments or
modifications), the dates to which Rent and other charges have been paid, and
whether or not, to the best of Tenant’s knowledge, Landlord is in default or
whether Tenant has any claims or demands against Landlord (and, if so, the
default, claim and/or demand shall be specified), and such other information
reasonably requested by Landlord.

 

24.                             RESERVATION OF LANDLORD’S RIGHTS.   Notwithstanding anything to the contrary
contained herein, Landlord explicitly reserves, without limitation, the
following rights, each of which Landlord may exercise without liability to
Tenant, and the exercise of any such rights shall not be deemed to constitute
an eviction or disturbance of Tenant’s use or possession of the Demised
Premises and shall not give rise to any claim for setoff or abatement of Rent
or any other claim or otherwise affect any of Tenant’s obligations hereunder:

 

(a)                                  to decorate or make repairs, alterations,
additions or improvements, whether structural or otherwise, in and about the
Property, including the Building and the Common Areas, and/or to discontinue
the availability of any Common Areas or to substitute different Common Areas
(provided that Landlord shall maintain such Common Areas as are necessary to
provide reasonable access and use of the Demised Premises, and provided further
that, during the continuance of any work by Landlord, Landlord may temporarily
close doors, entrance ways, corridors or any other public areas of the
Building, or temporarily suspend services or the use of facilities, so long as
Landlord endeavors to minimize any undue disruption to Tenant’s access);

 

(b)                                 to regulate delivery of supplies and the
usage of common loading docks, receiving areas and freight elevators, if any;

 

(c)                                  to enter the Demised Premises at
reasonable times and upon reasonable notice to inspect the Demised Premises and
to make repairs, alterations or

 

28

 

improvements to the
Demised Premises or other portions of the Building, including other tenants’
premises, provided that Landlord shall use reasonable efforts to avoid material
interference to the conduct of Tenant’s business operations therein;

 

(d)                                 to erect, use and maintain pipes, ducts,
wiring and conduits, and appurtenances thereto, in and through the Demised
Premises in reasonable locations, provided that Landlord shall use reasonable
efforts to avoid material interference to the conduct of Tenant’s business
operations therein;

 

(e)                                  to exclusively utilize the roofs,
telephone, electrical and janitorial closets, equipment rooms, building risers
and similar areas that are used by Landlord for the provision of Building
services; and

 

(f)                                    to show the Demised Premises to
prospective mortgagees and purchasers and, during the six (6) months prior to
expiration of the Term, to prospective tenants.

 

25.                               EXPIRATION
OF TERM; HOLDING-OVER.                                              
Upon or prior to the expiration or earlier termination of this Lease, Tenant
shall remove Tenant’s goods and effects and those of any other person claiming
under Tenant, and quit and deliver up the Demised Premises to Landlord
peaceably and quietly in as good order and condition as existed at the inception
of the Term, reasonable use and wear thereof, damage from fire and extended
coverage type risks, and repairs which are Landlord’s obligation excepted.  Goods and effects not removed by Tenant at
the termination of this Lease, however terminated, shall be considered
abandoned and Landlord may dispose of and/or store the same as it deems
expedient, the cost thereof to be charged to Tenant. Should Tenant continue to
occupy the Demised Premises after the expiration of the Term, including any
renewal or renewals thereof, or after a forfeiture incurred, such tenancy shall
(without limitation of any of Landlord’s rights or remedies therefor) be one at
sufferance at a minimum monthly rental equal to one hundred fifty percent
(150%) of the greater of: (i) the Rent payable for the last full month of the
Term, or (ii) the fair market gross rental for the Demised Premises as
reasonably determined by Landlord. No holdover by Tenant or payment by Tenant
after the expiration or earlier termination of this Lease shall be construed to
extend the Term or prevent Landlord from immediate recovery of the Demised
Premises by summary proceedings or otherwise. 
In the event that Landlord is unable to deliver possession of the
Demised Premises to a new tenant or to perform improvements for a new tenant as
a result of any holdover by Tenant after receipt of Landlord’s notice to
vacate, Tenant shall be liable to Landlord for all damages, including, without
limitation, consequential damages, that Landlord suffers as a result of Tenant’s
holdover.

 

27.                               FINANCIAL
STATEMENTS.   Upon the request of any mortgagee, prospective
mortgagee or prospective purchaser of the Property, Tenant shall provide to
Landlord complete copies of Tenant’s latest annual financial statements and
such other information as may be reasonably requested by such mortgagee and/or
purchaser.

 

29

 

28.                               RENT,
USE AND OCCUPANCY TAX.    If, during the Term, including any
renewal or extension thereof, any tax is imposed upon the privilege of renting
or occupying the Demised Premises, Tenant’s use of the Demised Premises, or
upon the amount of rentals collected therefor, Tenant will pay each month, as
Additional Rent, a sum equal to such tax or charge that is imposed for such month,
but nothing herein shall be taken to require Tenant to pay any income, estate,
inheritance or franchise tax imposed upon Landlord.

 

29.                               QUIET
ENJOYMENT.  Tenant, upon paying the
Rent, and observing and keeping all covenants, agreements and conditions of
this Lease on its part to be kept, shall quietly have and enjoy the Demised
Premises during the term of this Lease without hindrance or molestation by
anyone claiming by or through Landlord, subject, however, to the exceptions,
reservations and conditions of this Lease and of record.

 

30.                               NOTICES.   All
notices required to be given hereunder shall be sent by registered or certified
mail, return receipt requested, by Federal Express or other overnight express
delivery service or by hand delivery against written receipt or signed proof of
delivery, to the respective Notice Addresses set forth in Section 1
(Fundamental Lease Provisions), and to such other person and address as each
party may from time to time designate in writing to the other.  Notices shall be deemed to have been received
on the date delivered when sent by hand delivery, the next day when sent by
Federal Express or other overnight express delivery service, and within two (2)
business days when sent by registered or certified mail.

 

31.                               INTENTIONALLY
DELETED.

 

32.                               MISCELLANEOUS.

 

(a)                                  Tenant represents and warrants to
Landlord that Tenant has dealt with no broker, agent or other intermediary in
connection with this Lease other than Landlord’s Broker and Tenant’s Broker, if
any, specified in Section 1 (Fundamental Lease Provisions), and that insofar as
Tenant knows, no other broker, agent or other intermediary negotiated this
Lease or introduced Tenant to Landlord or brought the Building to Tenant’s
attention for the lease of space therein. 
Tenant agrees to indemnify, defend and hold Landlord and its partners,
employees, agents, their officers and partners, harmless from and against any
claims made by any broker, agent or other intermediary other than Landlord’s
Broker or, if applicable, Tenant’s Broker, with respect to a claim for broker’s
commission or fee or similar compensation brought by any person in connection
with this Lease, provided that Landlord has not in fact retained such broker,
agent or other intermediary.  Landlord
agrees to pay all commissions payable to Landlord’s Broker pursuant to a
separate, written agreement between Landlord and Landlord’s Broker.  If any Tenant’s Broker is specified in
Section 1 (Fundamental Lease Provisions), Landlord’s Broker shall pay Tenant’s
Broker a co-brokerage commission pursuant to a separate, written agreement
between Landlord’s Broker and Tenant’s Broker.

 

30

 

(b)                                 The term “Tenant” as used in this Lease
shall be construed to mean tenants in all cases where there is more than one
tenant, and the necessary grammatical changes required to make the provisions
hereof apply to corporations, limited liability companies, partnerships or
individuals, men or women, shall in all cases be assumed as though in each case
fully expressed.  This Lease shall not
inure to the benefit of any assignee, transferee or successor of Tenant except
in accordance with the provisions of Section 13 of this Lease.  Subject to the foregoing limitation, each
provision hereof shall extend to and shall, as the case may require, bind and
inure to the benefit of Tenant, its successors and assigns.

 

(c)                                  The
term “Landlord” as used in this Lease means the fee owner of the Building or,
if different, the party holding and exercising the right, as against all others
(except space tenants of the Building) to possession of the entire
Building.  In the event of the voluntary
or involuntary transfer of such ownership or right to a successor-in-interest
of Landlord, Landlord shall be freed and relieved of all liability and
obligation hereunder which shall thereafter accrue (and, as to any unapplied
portion of Tenant’s security deposit, Landlord shall be relieved of all
liability therefor upon transfer of such portion to its successor in interest)
and Tenant shall look solely to such successor in interest for the performance
of the covenants and obligations of the Landlord hereunder (either in terms of
ownership or possessory rights).  The
successor in interest (including without limitation any holder of a mortgage
who shall succeed to Landlord’s possessory or ownership interest) shall not (i)
be liable for any previous act or omission of a prior landlord; (ii) be subject
to any rental offsets or defenses against a prior landlord; (iii) be bound by
any payment by Tenant of Rent in advance in excess of one (1) month’s Rent; or
(iv) be liable for any security not actually received by it.  Subject to the foregoing, and to the
provisions of Section 20(c), the provisions hereof shall be binding upon and
inure to the benefit of the successors and assigns of Landlord.

 

(d)                                 If
either Landlord or Tenant institutes a suit against the other for violation of
or to enforce any covenant or condition of this Lease, the prevailing party
shall be entitled to all reasonable costs and expenses incurred by the
prevailing party in connection with such litigation, including, without
limitation, reasonable attorneys’ fees.

 

(e)                                  Time
is of the essence of this Lease and all of its provisions.

 

(f)                                    If
Landlord or Tenant is delayed or prevented from performing any of their
respective obligations under this Lease due to strikes, acts of God, shortages
of labor or materials, war, civil disturbances or other causes beyond the
reasonable control of the performing party (“Force
Majeure”), the period of such delay or prevention shall be deemed
added to the time herein provided for the performance of any such obligation by
the performing party.  Notwithstanding
the foregoing, events of Force Majeure shall not extend any period of time for
the payment of Rent or other sums payable by either party or any period of time
for the written exercise of an option or right by either party.

 

31

 

(g)                                 Tenant
shall not record this Lease or a short form memorandum of this Lease without
the prior written consent of Landlord which consent shall not be unreasonably
withheld or delayed, and any such attempted recordation shall be void and of no
force or effect and shall constitute a default hereunder; and Tenant hereby
appoints Landlord its attorney-in-fact to file any instrument to remove or
discharge from record any such recordation of the Lease or memorandum.

 

(h)                                 Any
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not apply to the interpretation of this Lease
or any amendments or exhibits hereto.

 

(i)                                     This
Lease, the exhibits, and any riders attached hereto and forming a part hereof
set forth all of the promises, agreements, conditions, warranties, representations,
understandings and promises between Landlord and Tenant relative to the
Property, the Building, the Demised Premises and this leasehold and Tenant
expressly acknowledges that Landlord and Landlord’s agents have made no
representation, agreements, conditions, warranties, representations,
understandings or promises, either oral or written, other than as herein set
forth, with respect to the Property, the Building, the Demised Premises, this
leasehold or otherwise. No alteration, amendment, modification, waiver,
understanding or addition to this Lease shall be binding upon Landlord unless
reduced to writing and signed by Landlord or by a duly authorized agent of
Landlord empowered by a written authority signed by Landlord.  Tenant agrees to execute any amendment to
this Lease required by a mortgagee of the Building, which amendment does not
materially adversely affect Tenant’s rights or obligation hereunder.

 

(j)                                     The
captions of the paragraphs in this Lease are inserted and included solely for
convenience and shall not be considered or given any effect in construing the
provisions hereof.

 

(k)                                  If
any provision contained in this Lease shall, to any extent, be invalid or
unenforceable, the remainder of this Lease (and the application of such
provision to the persons or circumstances, if any, other than those as to which
it is invalid or unenforceable) shall not be affected thereby, and each and
every provision of this Lease shall be valid and enforceable to the fullest
extent permitted by law.

 

(l)                                     This
Lease shall be governed by and construed in accordance with the laws of the
State in which the Property is located, without giving effect to the principles
of conflict of laws.

 

(m)                               This
Lease may be executed in two or more counterparts, each of which shall be
deemed to be an original hereof, but all of which, taken together, shall
constitute one and the same instrument.

 

33.                               RENEWAL OPTION.   Tenant
shall have the option to extend the Term for one (1) additional period of five
(5) years (the “Renewal Option”), under and
subject to the following terms and conditions:

 

32

 

(a)                                The
renewal term (the “Renewal Term”) shall be for a five (5) year period
commencing on the day immediately following the expiration date of the Initial
Term and expiring at midnight on the day immediately preceding the fifth (5th)
anniversary thereof.

 

(b)                                 Tenant
must exercise the Renewal Option, if at all, by written notice to Landlord
delivered at least one hundred eighty (180) days prior to the expiration of the
Initial Term of this Lease, time being of the essence.

 

(c)                                  As
a condition to Tenant’s exercise of the Renewal Option, at the time Tenant
delivers its notice of election to exercise the Renewal Option to Landlord,
this Lease shall be in full force and effect, Tenant shall not have assigned
this Lease or sublet the Demised Premises unless Landlord shall have consented
to such assignee or sublessee exercising such renewal option, and Tenant shall
not be in default in the performance of any of its obligations hereunder.

 

(d)                                 The
Renewal Term shall be on the same terms and conditions contained in this Lease,
except that (i) the Annual Base Rent shall be ninety-five percent (95%) of the “Fair
Market Rental Rate” (as hereinafter defined) for the Demised Premises, but in
no event less than One Dollar ($1.00) more than the Annual Base Rent per square
foot payable during the final year of the Initial Term with continuing annual
escalations of three percent (3%) per annum for each lease year of the Renewal
Term, and (ii) Tenant shall be entitled to a market-rate refurbishment
allowance, which, if Tenant elects to refurbish the Demised Premises, shall be
taken into account when determining the Fair Market Rental Rate.

 

(e)                                  Except
for the specific Renewal Term set forth above, there shall be no further
privilege of renewal.

 

(f)                                    As
used herein, the term “Fair Market Rental Rate” shall mean the  per square foot base rental rate, including
annual escalations, then being charged by Landlord for new leases for
comparable office space in the Building or, if no comparable space exists in
the Building, then being charged by landlords for comparable space in Class “A”
office buildings in the Lower Bucks County, Pennsylvania market for leases
commencing on or about the commencement of the Renewal Term, taking into
consideration the use, location and floor level of the applicable building,
leasehold improvements provided, the term of the lease under consideration, the
extent of services provided thereunder and other adjustments to the base rental
and any other relevant term or condition in making such evaluation, assuming,
however, for purposes of the foregoing analysis, that the Demised Premises is
fit for immediate use and occupancy in its “AS IS” condition and that no work
is required to be done by Landlord with respect thereto (except to the extent
that Tenant elects to refurbish the Demised Premises, then, such rate shall
take into account the costs of such refurbishment). Landlord shall determine
the Fair Market Rental Rate using its good faith judgment and shall provide
written notice of such rate within fifteen

 

33

 

(15) business days after
Tenant’s exercise notice pursuant to this Section.  Tenant shall thereupon have the following
options: (i) to accept such proposed “Fair Market Rental Rate” or (ii) to
decline to exercise its renewal option, or (iii) to notify Landlord in writing
that Tenant objects to the proposed rental rate.  Tenant must provide Landlord with written
notification of its election within fifteen (15) business days after Tenant’s
receipt of Landlord’s notice, otherwise Tenant shall be deemed to have elected
clause (ii) above, in which event Tenant shall be deemed to have rescinded its
exercise notice and this Lease shall expire on the Expiration Date as if Tenant
had not elected to exercise the applicable Renewal Option. If Tenant objects to
Landlord’s proposed Fair Market Rental Rate in accordance with clause (iii)
above, Landlord and Tenant shall attempt to negotiate a mutually acceptable
rental rate within fifteen (15) business days following notification by Tenant,
and if such negotiations have not been concluded within such fifteen (15)
business day period, either party may require an independent determination of
the Fair  Market Rental Rate for the Extension
Period by giving written notice to the other no later than ten (10) days after
the expiration of such fifteen (15) business day period, which notice shall
designate a MAI real estate appraiser or real estate broker with at least five
(5) years experience in office leasing in the Lower Bucks County area.  Within ten (10) days after receipt of such
notice, the other party to this Lease shall select a real estate
appraiser/broker meeting the aforesaid requirements and give written notice of
such selection to the initiating party. 
If the two (2) real estate appraisers/brokers fail to agree upon the
Fair Market Rental Rate within ten (10) days after selection of the second
appraiser/broker, the two (2) appraisers/brokers shall select a third (3rd)
real estate appraiser/broker meeting the foregoing requirements to determine
the Fair Market Rental Rate within ten (10) days after the appointment of the
third  (3rd) appraiser/broker.  The Fair Market Rental Rate applicable to the
applicable Renewal Term shall equal the arithmetic average of such three (3)
determinations; provided, however, that if one (1) appraiser’s/broker’s
determination deviates by more than five percent (5%) from the median of the
three (3) determinations, the Fair Market Rental Rate shall be an amount equal
to the average of the other two (2) determinations.  The determination of the Fair Market Rental
Rate in accordance with the foregoing shall be final, binding and conclusive on
Landlord and Tenant.

 

34.                               EARLY
TERMINATION.  Provided that Tenant is
not in default in the performance of any of its obligations hereunder on the
date that Tenant delivers the Early Termination Notice and on the Early
Termination Date (each, as hereinafter defined), Tenant shall have the option
to terminate this Lease (“Termination Option”) effective as of the last day of
the third (3rd) lease year of the Term, subject to and upon the
following terms and conditions:

 

(a)                                  Tenant
shall give Landlord prior written notice (the “Early Termination Notice”) of
its intention to exercise its Termination Option not more than 540 days and not
less than two-hundred seventy (270) days prior to the last day of the third (3rd)
lease year of the Term.  If such Termination
Option is exercised, this Lease shall terminate as of the last day of the third
(3rd) lease year of the term (the “Early Termination Date”).  In the event that Tenant fails to deliver the
Early Termination Notice to Landlord within the time periods prescribed by this
subparagraph, then Tenant

 

34

 

shall be deemed to have
irrevocably waived the Termination Option and, in such event, Tenant’s
Termination Option shall be null and void and Tenant shall have no further
right to terminate the Lease pursuant to this Section.

 

(b)                                 
Within thirty (30) days after delivery of the Early Termination Notice, Tenant
shall pay Landlord a fee (the “Early Termination Fee”) as consideration for its
exercise of the Tenant’s Termination Option, which early termination fee shall
equal the sum of (A) three (3) months rent of the Annual Base Rent which
otherwise would have been payable for the third (3rd) lease year of
the term (i.e., Eighty-Three Thousand Two Hundred Seventy-Three Dollars and
Thirteen Cents ($83,273.13) based on 18,005 rentable square feet), plus (B) the
unamortized portion of the following costs: (i) the cost of the Tenant’s
Improvements; and (ii) all commissions paid by Landlord to any broker(s) in
connection with this Lease (collectively, the “Amortized Costs”).  For purposes of this Lease, the Amortized
Costs shall be amortized on a straight-line basis over the initial term of the
Lease at an interest rate of ten percent (10%) per annum.  The Early Termination Fee shall be paid by
Tenant to Landlord via certified check or by wire transfer of immediately
available funds to an account designated by Landlord.  In the event that Tenant delivers the Early
Termination Notice but Tenant fails to deliver the Early Termination Fee within
the time periods prescribed hereby, then, at Landlord’s option, the Early
Termination Notice shall be null and void and this Lease shall continue in full
force and effect as if Tenant had not delivered the Early Termination Notice.

 

(c)                                  Notwithstanding
Tenant’s delivery of the Early Termination Notice and payment of the Early
Termination Fee, Tenant shall continue to pay all Annual Base Rent and
Additional Rent through the Early Termination Date.  Tenant acknowledges that the Early Termination
Fee is consideration for Tenant’s exercise of the Termination Option and,
therefore, shall not be credited against the Annual Base Rent and Additional
Rent due through the Early Termination Date.   
The Annual Base Rent and all Additional Rent shall be apportioned as of
the Early Termination Date.

 

(d)                                 Tenant
shall surrender vacant possession of the Demised Premises on or prior to the
Early Termination Date.  In the event
Tenant exercises its Termination Option, this Lease shall terminate as of the Early
Termination Date as if the Early Termination Date were the date originally
stipulated for the expiration of the Term, provided, however, that nothing
herein shall relieve Tenant of any obligations which accrued hereunder prior to
the Early Termination Date.

 

35.                               RIGHT
OF FIRST OFFER.   Provided that Tenant is not in default
under the terms of this Lease beyond any applicable cure period, Tenant shall
have a one-time right of first offer (the “Right of First Offer”) to lease the
space identified on Exhibit “E” attached hereto and located on the third (3rd)
floor of the Building, consisting of approximately 15,000 rentable square feet
in the aggregate (the “First Offer Space”), upon the following terms and
conditions:

 

(a)                                  In
the event that Landlord anticipates that all or any portion of the First Offer
Space may become available during the Term, Landlord shall give Tenant

 

35

 

written notice of the
availability of all or such portion of the First Offer Space, as the case may
be (the “Offered Space”), setting forth the terms and conditions (including,
without limitation, the rental rate and the duration of the proposed term,
etc.) upon which Landlord would be willing to lease the Offered Space (“Landlord’s
Availability Notice”).  Notwithstanding
the foregoing, provided Tenant is not in default of any of its obligations
under this lease, Landlord agrees that, if any of the First Offer Space becomes
available during the first two (2) years of this Lease, Landlord will offer to
Tenant any First Offer Space, if any, (i) at the same Annual Base Rent per
square foot as set forth in Section 1(f) and continuing to escalate in
accordance with Section 1(f) on a per square foot basis and (ii) with Tenant
Improvements to be approved by Landlord and contribution for such improvements
by Landlord capped at Thirty-One Dollars and Fifty Cents ($31.50) per square
foot of Offered Space.  Within five (5)
business days after Tenant’s receipt of Landlord’s Availability Notice, Tenant
must give Landlord written notice pursuant to which Tenant shall elect either
(i) to lease the entire Offered Space on the terms and conditions set forth in
Landlord’s Availability Notice, or (ii) to decline to lease the Offered
Space.  If Tenant fails to elect clause
(i) within such five (5) business day period, then Tenant shall be deemed to
have declined to lease the Offered Space. 
In the event that Tenant declines (or is deemed to have declined) to
lease the Offered Space, then Landlord shall be free to lease the Offered Space
to any other party(ies) without any further obligation to Tenant
hereunder;  however, Tenant shall retain
its first offer rights hereunder with respect to any part of the First Offer
Space (i) that was not covered by Landlord’s Availability Notice and (ii) that
was not covered by any previous Landlord’s Availability Notice.

 

(b)                                 If
Tenant elects to lease the Offered Space in accordance with subparagraph (a)
above (upon such election, the “Additional Space”), then Landlord and Tenant
shall execute an amendment to the Lease to provide for the inclusion of the
Additional Space under the terms and conditions set forth in Landlord’s
Availability Notice.  Except as provided
in Landlord’s Availability Notice, all other terms and conditions of the Lease
shall apply to the Additional Space except that: (i) Tenant’s Fraction with
respect to Operating Expenses shall be increased to take into account the
square footage of the Additional Space and all other terms of the Lease
affected by the addition of such square footage shall be adjusted accordingly,
(ii) Landlord shall not be required to perform any improvements to the
Additional Space unless specifically provided for in Landlord’s Availability
Notice, and (iii) Tenant shall not be entitled to any allowances, credits,
options or other concessions with respect to the Additional Space unless
specifically provided for in Landlord’s Availability Notice.

 

(c)                                  The
effective date of the addition of the Additional Space to the Demised Premises
shall be the date that Landlord delivers possession of the Additional Space to
Tenant in accordance with the terms of Landlord’s Availability Notice.

 

(d)                                 Except
as otherwise provided in Landlord’s Availability Notice, Tenant agrees to
accept the Additional Space in its “AS IS” condition, in the then current
physical state and condition thereof, without any representation or warranty by
Landlord.

 

36

 

(e)                                  Notwithstanding
anything herein to the contrary, Tenant’s Right of First Offer hereunder is
subject to all expansion, extension, renewal, first offer, first refusal and
other rights to lease, as applicable, which Landlord (or any predecessor to
Landlord’s interest in the Property) has granted to other tenants of the Building
(including, without limitation, any existing tenant of the First Offer Space)
prior to the date of this Lease.  Thus,
Landlord’s Availability Notice will be delivered to Tenant only after Landlord
has appropriately notified and received negative responses from all other
tenants with rights in the First Offer Space superior to Tenant’s.

 

(f)                                    Notwithstanding
anything to the contrary contained herein, in the event that Tenant exercises
its Right of First Offer pursuant to this Section, Tenant shall be deemed to
have waived its right to terminate this Lease pursuant to Section 34 hereof and
the Termination Option (as hereinafter defined) shall automatically become null
and void.

 

36.                               PARKING.  Landlord shall provide Tenant, throughout the
Term, with the use of up to five (5) parking spaces per 1,000 rentable square
feet of the Demised Premises, of which seven (7) parking spaces shall be
reserved for Tenant’s exclusive use and the balance of such parking spaces
shall be non-reserved.  The reserved
parking spaces shall be located in the area identified on Exhibit “F” attached
hereto, and the non-reserved parking spaces shall be located in the general
parking area at the Property.

 

38.                               BACK-UP
GENERATOR. Landlord shall install an emergency generator and related
equipment (collectively, the “Back-Up Generator”)
in order to provide emergency electrical service to the Demised Premises in the
event of a power failure, as described on Exhibit “G” attached hereto and made
a part hereof.  Tenant shall, at Tenant’s
sole cost and expense, maintain, repair and replace such Back-Up
generator.  Tenant’s right to the
following terms and conditions: (i) intentionally deleted, (ii) intentionally
deleted; (iii) the Back-up Generator shall not adversely affect the mechanical,
electrical, structural and life-safety systems in the Building, (iii) Tenant
shall operate, maintain, repair and replace the Back-Up Generator, at Tenant’s
sole cost and expense, in accordance with all applicable laws and requirements,
including, without limitation all applicable Environmental Statutes; and (iv)
Tenant shall pay all utility costs (including, without limitation, all
consumption and installation costs) relating to the Back-Up Generator..    Tenant shall indemnify, defend and hold
harmless Landlord, its agents and employees, from and against any and all
claims, demands, liabilities, costs and expenses (including, without
limitation, reasonable attorney’s fees) suffered or incurred by Landlord, its
agents or employees arising out of or in any way related to Tenant’s use and
operation of the Back-Up Generator.

 

39.                               MASTER LEASE.  Notwithstanding anything to the contrary
contained herein, Tenant hereby acknowledges that Landlord is not the fee owner
of the Building, but is the tenant under that certain master lease for the
entire Building (the “Master 

 

37

 

Lease”).  In accordance with Section 22, Tenant further
acknowledges that this Lease is subject and subordinate to all of the terms and
conditions of the Master Lease; provided, however, that, concurrently with the
execution hereof, the landlord of the Master Lease and Tenant shall enter into
a subordination and non-disturbance agreement in the form attached hereto as
Exhibit “H”.

 

40.                               DELIVERY
FOR EXAMINATION.  DELIVERY OF THE LEASE TO TENANT SHALL NOT BIND LANDLORD IN ANY MANNER,
AND NO LEASE OR OBLIGATIONS OF LANDLORD SHALL ARISE UNTIL THIS INSTRUMENT IS
SIGNED BY BOTH LANDLORD AND TENANT.

 

[signatures on next page]

 

38

 

IN WITNESS WHEREOF, the parties hereto have
executed this Lease or caused this Lease to be executed by their duly
authorized representatives the day and year first above written.

 

	
   

  	
  LANDLORD:

  	
   

  
	
   

  	
   

  
	
   

  	
  PREFERRED 950 DEVELOPERS, L.P

  
	
   

  	
  a Pennsylvania
  limited partnership

  
	
   

  	
   

  
	
  Witness:

  	
  By:

  	
  PREFERRED 950 DEVELOPERS,
  INC.

  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  TENANT:

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
  STRATEGIC
  DISTRIBUTION, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
							

 

39

 

EXHIBIT “A”

 

DEMISED PREMISES

 

40

 

EXHIBIT “B”

 

SPACE PLAN

 

41

 

EXHIBIT “B-1”

 

CONSTRUCTION STANDARDS

 

42

 

EXHIBIT “C”

 

BUILDING RULES AND REGULATIONS

 

1.                                       The
sidewalks, entryways, passages, corridors, stairways and elevators shall not be
obstructed by any of the tenants, their employees or agents, or used by them
for purposes other than ingress or egress to and from their respective
suites.  All safes or other heavy
articles shall be carried up or into the leased premises only at such times and
in such manner as shall be prescribed by the Landlord and the Landlord shall in
all cases have the right to specify a maximum weight and proper position or
location of any such safe or other heavy article.  The Tenant shall pay for any damage done to
the Building by taking in or removing any safe or from overloading any floor in
any way.  The Tenant shall pay for the
cost of repairing or restoring any part of the Building, which shall be defaced
or injured by a tenant, its agents or employees.

 

2.                                       Each
Tenant will refer all contractors, contractor’s representatives and
installation technicians rendering any service on or to the leased premises for
the tenant to Landlord for Landlord’s approval and supervision before
performance of any contractual service. 
This provision shall apply to all work performed in the Building,
including installation of telephones, telegraph equipment, electrical devices
and attachments and installations of any nature affecting floors, walls,
woodwork, trim, windows, ceilings, equipment or any other physical portion of
the Building.

 

3.                                       No,
sign, advertisement or notice shall be inscribed, painted or affixed on any
part of the inside or outside of the Building unless of such color, size and
style and in such place upon or in the Building as shall first be designated by
Landlord; there shall be no obligation or duty on Landlord to allow any sign,
advertisement or notice to be inscribed, painted or affixed on any part of the
inside or outside of the Building except as specified in a tenant’s lease.  Signs on or adjacent to doors shall be in
color, size and style approved by Landlord, the cost to be paid by the
tenants.  Landlord will provide a
directory in a conspicuous place, with the names of tenants, Landlord will make
any necessary revision in this within a reasonable time after notice from the
tenant of an error or of a change making revision necessary.  No furniture shall be placed in front of the
Building or in any lobby or corridor without written consent of Landlord.

 

4.                                       No
tenant shall do or permit anything to be done in its leased premises, or bring
or keep anything therein, which will in any way increase the rate of fire
insurance on the Building, or on property kept therein, or obstruct or
interfere with the rights of other tenants, or in any way injure or annoy them,
or conflict with the laws relating to fire prevention and safety, or with any
regulations of the fire department, or with any rules or ordinances of any
Board of Health or other governing bodies having jurisdiction over the
Building.

 

43

 

5.                                       The
janitor of the Building may at all times keep a pass-key, and said janitor and
other agents of the Landlord shall at all times, be allowed admittance to the
leased premises for purposes permitted in Tenant’s lease.

 

6.                                       No
additional locks shall be placed upon any doors without the written consent of
the Landlord.  All necessary keys shall
be furnished by the Landlord, and the same shall be surrendered upon the
termination of this Lease, and the Tenant shall then give the Landlord or its
agents explanation of the combination of all locks upon the doors of vaults.

 

7.                                       The
water closets and other water fixtures shall not be used for any purpose other
than those for which they were constructed, and any damage resulting to them
from misuse or abuse by a tenant or its agents, employees or invitees, shall be
borne by the Tenant.

 

8.                                       No
person shall disturb the occupants of the Building by the use of any musical
instruments; the making or transmittal of noises which are audible outside the
leased premises, the making of odors which are apparent outside the leased
premises, or any unreasonable use.  No
dogs or other animals or pets of any kind will be allowed in the Building.

 

9.                                       Nothing
shall be thrown out of the windows of the Building or down the stairways or
other passages.

 

10.                                 Tenants
shall not be permitted to use or to keep in the Building any kerosene,
camphene, burning fluid or other illuminating materials.

 

11.                                 If
any tenant desires telegraphic, telephonic or other electric connections,
Landlord or its agents will direct the electricians as to what and how the
wires may be introduced, and without such directions no boring or cutting for
wires will be permitted.

 

12.                                 If
a tenant desires shades, they must be of such shape, color, materials and make
as shall be prescribed by Landlord.  No
outside awning shall be permitted.

 

13.                                 No
portion of the Building shall be used for the purposes of lodging rooms or for
any immoral or unlawful purposes.

 

14.                                 No
tenant shall store anything outside the Building or in any common areas in the
Building.

 

44

 

EXHIBIT “D”

 

SPECIFICATIONS FOR

JANITORIAL SERVICES

 

A.                                    Daily:  The following services are to be performed on
a daily basis (Monday through Friday, except for legal holidays, unless
otherwise provided herein):

 

1.                                       Empty
all trash containers, wastebaskets and recycling containers, including all
exterior trash containers

 

2.                                       Damp
wipe all areas of desk and credenza tops, file cabinets, counters, sills and
ledges.  Dust under all desk equipment
and telephone and replace same.  Clean
and disinfect telephone equipment.

 

3.                                       Dust
mop all hard surface flooring and remove debris or dust buildup from
corners.  Damp mop cove base and any
areas where spillage may have occurred.

 

4.                                       Vacuum
all carpeted areas and remove spots from carpet and mats.  Remove gum, tar, etc. adhering to floor.

 

5.                                       Vacuum
entrance mats and runners.

 

6.                                       Remove
finger marks and smudges from all doors, frames, walls, partitions, switch
plates and glass.

 

7.                                       Wash
and squeegee clean all side lights to offices and all glass doors.

 

8.                                       Damp
wipe the framework and ledges at all entrance ways.  Dust picture frames, baseboards, and wall
hangings as needed.

 

9.                                       Special
attention is to be paid to all common areas such as lobbies, reception areas
and conference areas to maintain superior quality of appearance.

 

10.                                 Trash
and debris is to be removed to a dumpster area so designated at the site,
secured in heavy-duty plastic bags. 
Trash bags are to be placed in a cart to be taken to dumpster.  Trash bags are not to be put in elevator
unless they are in a cart.  Nothing in
tenant space is to be thrown away unless in a wastebasket or specifically
marked trash.

 

11.                                 Wipe
down all vinyl floor mats as needed.

 

12.                                 Clean
elevator thresholds nightly, certificate holder and panels.

 

13.                                 Clean,
sanitize and polish all drinking fountains.

 

45

 

14.                                 Wipe
down all tenant and building doors to remove fingerprints and soil.

 

15.                                 Cleaning
and disinfecting of lavatories.

 

(a)               Empty
all waste containers and replace bags inside containers (plastic liners
purchased specifically for recessed stainless containers, shall remain in
containers after trash is removed.

 

(b)              Sweep and/or damp
mop floors.

 

(c)               Fill
and maintain all toilet tissue, soap and towel dispensers, personal seat
dispensers and sanitary protection dispensers. 
Sanifresh gentle lotion cleaner or liquid soap, napkin receptacle, trash
can liners, personal seat covers.

 

(d)             Disinfect
all fixtures and disposals.

 

(e)              Thoroughly
clean and disinfect all sinks, bowls and urinals.  Pour water

down floor
drains on each floor.

 

(f)                Clean
all counter tops and cosmetic shelves.

 

(g)             Clean
and polish all mirrors and chrome fixtures.

 

(h)             Damp
mop floor (including the cafeteria) with disinfecting solution including tile
baseboards, pay special attention to corners and under urinals.

 

(i)                 Clean
and polish outside of all waste containers.

 

(j)                 Wipe
down entrance doors and signage.

 

(k)              Wipe
down wall tile as needed.

 

(l)                 High
dust all partitions and low dust baseboards.

 

(m)           Clean
and disinfect all sanitary disposal units.

 

16.                                 As
needed basis:

 

High dust all
horizontal and vertical surfaces not reached daily.

 

17.                                 Turn
off all lights and secure all designated interior doors and all exterior entrances
upon completion of work assignments according to the security procedures

 

46

 

as to each tenants individual
security system.  Supervisor should check
all doors at the end of each evening to ensure they are secure.

 

18.                                 All
dumpster areas are to be kept clean.

 

19.                                 Areas
provided for storage of janitorial supplies and equipment to be kept orderly
and clean at all times.

 

B.                                   Weekly

 

1.                                       Maintain
marble surfaces with Multi-Seal as per manufacturer’s specifications.

 

2.                                       Maintain
all types of flooring as per manufacturer’s specifications.

 

3.                                       Sweep
entrance to building.

 

4.                                       Dust
tops of cubicle furniture.

 

C.                                     Monthly

 

1.                                       All
lights lenses and air diffusers are to be cleaned the first Friday of each
month.

 

2.                                       Damp
wash diffusers, vents, grills and light lenses that are soiled.

 

3.                                       Dust
venetian blinds and window frames (every other month).

 

D.                                    Quarterly

 

1.                                       Strip
and wax all VCT tile in all tenant and common areas.

 

2.                                       Perform
maintenance to all types of flooring as per manufacturer’s specifications.

 

E.                                      Semi-Annually

 

1.                                       Damp
wipe venetian blinds.

 

F.                                      Performance of Extra Janitorial
Services

 

47

 

Performance of
any extra work over and above the scope of the contract will be done only by
written authorization by Landlord. 
Invoicing for same will be separate from regular invoicing.  A purchase order must be obtained prior to
performing work.  If a purchase order is
not obtained prior to work being performed, Landlord will not be responsible
for the cost of same.

 

Extras shall
include cleaning services and trash removal to be provided on Saturdays and
Sundays or related Tenant’s activities on weekends (e.g., cleaning the Premises
prior to commencement of business on Mondays). 
In the event Tenant requires such services, Tenant shall provide a
written request to Landlord therefore and Tenant shall promptly pay Landlord,
upon presentation of a bill or bills therefore, for the cost of such additional
services.

 

G.                                     Tenant’s Right to Hire
Additional Help

 

Provided that
no undue interference is caused to Landlord’s Contractor, Tenant shall have the
right, as its sole cost and expense, with prior written approval by Landlord,
to hire additional service for the cleaning of the premises.  All labor, supervision equipment, and
cleaning supplies required for the proper performance of this work, unless
otherwise specified, is to be furnished by a contractor of Tenant’s
choice.  Contractor must provide Landlord
with adequate insurance coverages.

 

48

 

EXHIBIT “E”

 

RIGHT OF FIRST OFFER

 

49

 

EXHIBIT “F”

 

PARKING

 

50

 

EXHIBIT “G”

 

GENERATOR

 

51

 

EXHIBIT “H”

 

SUBORDINATION AND NON-DISTURBANCE AGREEMENT

 

52Exhibit 10.24

 

INTERACTIVE INTELLIGENCE, INC.

STOCK OPTION AGREEMENT

UNDER OUTSIDE DIRECTORS STOCK
OPTION PLAN

 

THIS STOCK OPTION AGREEMENT is made and entered into as of the «Day» of «Month», «Year» by and
between Interactive Intelligence, Inc., an Indiana corporation (the “Company”),
and «Name» (“Outside Director”) pursuant to the terms, conditions, and
limitations contained in the Interactive Intelligence, Inc. Outside Directors
Stock Option Plan (the “Plan”), a copy of which has been provided to the Outside
Director and is incorporated herein by reference;

 

WITNESSETH:

 

WHEREAS, pursuant
to the terms of the Plan, Outside Director is being granted an option to
purchase «NumberOfShares» shares of the Company’s Common Stock;

 

WHEREAS,
Outside Director desires to have the option to purchase Common Shares of the
Company pursuant to the terms, conditions and limitations of the Plan and this
Agreement;

 

NOW, THEREFORE,
in consideration of the mutual agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Outside Director hereby agree as follows:

 

1.                                       Grant of Option. The Company hereby grants to Outside
Director, effective as of «Month» «Day2», «Year» (“Option Date”), the right,
privilege and option (“Option”) to purchase «NumberOfShares» shares of Common
Stock of the Company (“Shares”) at the purchase price of «Price» per share (the
“Option Price”), in the manner and subject to the terms and conditions provided
in this Agreement and the Plan. The Option shall be a non-qualified stock
option.

 

2.                                       Vesting of Option.  The
Option granted herein shall become exercisable for                  .

 

3.                                       Method of Exercise.  Outside Director may exercise, in whole or in
part, the Option for the Shares with respect to which the Option has vested and
become exercisable at any time by written notice from Outside Director directed
to the Company in substantially the form attached hereto as Exhibit “A”,
accompanied by payment of the Option exercise price in United States dollars by
cash or check or other form accepted by the Board in full payment of the Option
Price for the specified number of Shares purchased.  Outside Director shall pay to the Company, or
make arrangements satisfactory to the Board regarding the payment of, any
federal, state or local taxes of any kind required by law to be withheld with
respect to the Shares as to which the Option is being exercised.  The Company shall make prompt delivery of the
certificates for such Shares, provided that if any law or regulation requires
the Company to take any action with respect to the Shares specified in such
notice before the issuance thereof, then the date of delivery of such Shares
shall be extended for the period necessary to take such action.  Neither Outside Director nor any person
claiming under or through him shall have any rights as a shareholder of the
Company with respect to any of the Shares until full payment of the Option
Price and delivery to him of certificates for such Shares as provided herein.

 

4.                                       Death, Disability, or Certain Retirement of
Outside Director.   In the event Outside Director dies, becomes
permanently disabled or retires with the consent of the Board, holding an
Option that has not expired and has not been fully exercised, he or his
executor, administrators, heirs or distributes, as the case may be, may at any
time within one (1) year after

 

1

 

the
date of such event (but in no event after the Option has expired under Section
2 above), exercise the Option with respect to any Shares as to which Outside
Director could have exercised the Option at the time of his death, disability,
or retirement.

 

5.                                       Termination for Other Reason.  In
the event Outside Director shall cease to serve as a director of the Company
for any reason other than those set forth in Section 4 above, while holding an
Option that has not expired and has not been fully exercised, Outside Director,
at any time within three months of the date he ceased to be such and Eligible
Director (but in no event after the Option has expired under Section 2 above),
may exercise the Option with respect to any Shares as to which he could have
exercised the Option on the date he ceased to be such and Eligible Director.

 

6.                                       Restrictions on Transfer.  The
Option may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by will or by the laws of descent and
distribution may be exercised during Outside Director’s life-time only by the
Outside Director and, following his death, only as provided in Section 4
hereof.

 

7.                                       Adjustments Upon Changes in Capitalization or
Merger.  The number of Shares underlying the Option
and Option Price are subject to adjustments as provided in the Plan.

 

8.                                       Conditions Upon Issuance of Shares.  (a)
Shares shall not be issued pursuant to the exercise of an Option, in whole or
in part, unless the exercise of such Option and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

 

(b)  As a condition to the
exercise of an Option, the Company may require Outside Director to represent
and warrant at the time of any such exercise that the Shares are being
purchased only for his own account and not with a view to the distribution
thereof, if the Board shall deem it advisable.

 

9.                                       Right to Terminate Relationship. 
Neither this Agreement nor the existence of the Option shall be
construed as giving Outside Directory any right to be retained as a director of
the Company or any of its affiliates.

 

10.                                 Binding Effect.  This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, executors, administrators, successors and assigns.

 

11.                                 Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
state of Indiana, without regard to its conflict of laws provisions.

 

12.                                 Terms of Plan Control. All parties acknowledge that the Option is
granted under and pursuant to the Plan, which shall govern all rights,
interests, obligations and undertakings of both the Company and the Outside
Director. All capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Plan.

 

IN WITNESS WHEREOF, the parties hereby have caused this Stock Option Agreement to be
executed as of the day and year first written.

 

	
  INTERACTIVE
  INTELLIGENCE, INC.

  	
  “OUTSIDE
  DIRECTOR”

  
	
  or
  “COMPANY”

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Printed:
  Stephen R. Head

  	
  Printed:
  «Name»

  
	
  Title:
  CFO

  	
   

  
					

 

2

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