Document:

Exhibit 10.15

CONFIDENTIAL
TREATMENT REQUESTED

WITH
RESPECT TO CERTAIN PORTIONS

HEREOF
DENOTED WITH "[***]"

 

STANDARD INDUSTRIAL LEASE

 

1.             BASIC LEASE PROVISIONS

 

1.1           DATE: 
December 22, 2003

 

1.2           LANDLORD: 
The Realty Associates Fund V, L.P.,

a Delaware limited partnership

 

1.3           TENANT: 
K.P.  Sports, Inc.,

a Maryland corporation, trading as Under Armour Performance Apparel

 

1.4           PREMISES ADDRESSES:  1010 Swan Creek Drive

Glen Burnle, Maryland

 

1.5           APPROXIMATE LEASABLE AREA

OF PREMISES:  264,676 rentable square
feet

 

1.6           USE: 
General office warehouse, light manufacturing and distribution and
retail product sales, subject to the requirements and limitations contained in Section 4.1.

 

1.7           TERM: 
Five (5) years

 

1.8           COMMENCEMENT DATE:  April 1, 2004

 

1.9           MONTHLY BASE RENT:  $[***]

 

1.10         ESTIMATED MONTHLY OPERATING

EXPENSE PAYMENT:  $[***]

 

1.11         BASE RENT AND ESTIMATED MONTHLY OPERATING EXPENSE
PAYMENT PAID UPON EXECUTION: 
$[***] (for the first full month of the Term of this Lease)

 

1.12         TENANT’S PERCENTAGE SHARE:  [***]% (See Addendum Paragraph 4) (See also Section 6.4)

 

1.13         SECURITY DEPOSIT:  $[***]

 

1.14         NUMBER OF PARKING SPACES:  Tenant shall be entitled to use Tenant’s
Percentage Share of the parking spaces in the parking areas of the Project on
an unreserved basis in common with other tenants of the Project

 

1.15         REAL ESTATE BROKER:

 

 

LANDLORD:  Coldwell Banker Commercial NRT

 

TENANT:  Coldwell Banker Commercial NRT

 

1.16         EXHIBITS ATTACHED TO LEASE:  Addendum; Exhibit A — “Premises”; Exhibit A-1
— “Tenant’s Additional Parking”; Exhibit B — “Verification Letter”; Exhibit C
— “Rules and Regulations”; Exhibit D — intentionally omitted; Exhibit E
— “Letter Regarding Retail Sales Use”; Exhibit F — “Form of License
Agreement for Satellite Dish”; Schedule 1 — Intentionally Omitted; Schedule 2
— “Office Work”; Schedule 3 — “Code Compliance Work”; Schedule 4 — “Demising
Work”

 

1.17         ADDRESSES FOR NOTICES:

 

	
  LANDLORD:

  	
  The
  Realty Associates Fund V, L.P.

  
	
   

  	
  c/o
  NAI KLNB, Inc.

  
	
   

  	
  1430
  Joh Avenue

  
	
   

  	
  Suite A

  
	
   

  	
  Baltimore,
  Maryland 21227

  
	
   

  	
  Attention:
  Mr. Jonathan Clapp

  
	
   

  	
   

  
	
  WITH
  COPY TO:

  	
  TA
  Associates Realty

  
	
   

  	
  28
  State Street

  
	
   

  	
  Boston,
  Massachusetts 02109

  
	
   

  	
  Attention:
  Ms. Kimberly Hourihan

  
	
   

  	
   

  
	
  TENANT:

  	
  K.P.
  Sports, Inc. trading as

  
	
   

  	
  Under
  Armour Performance Apparel

  
	
   

  	
  1020
  Hull Street, Third Floor

  
	
   

  	
  Baltimore,
  Maryland 21230

  
	
   

  	
  Attention:
  J. Scott Plank, Vice President of Finance

  

 

2.             PREMISES.

 

2.1           ACCEPTANCE.  Landlord Leases to Tenant, and Tenant Leases
from Landlord, the Premises, to have and to hold for the Term of this Lease, subject
to the terms, covenants and conditions of this Lease.  The Premises is depicted on Exhibit ”A”
attached hereto.  The Premises depicted
on Exhibit ”A” is all or a part of a building (the “Building”) and may
contain areas outside of the Building to the extent such areas are specifically
identified on Exhibit ”A” as being a part of the Premises.  Tenant accepts the Premises in its condition
as of the Commencement Date, subject to all applicable laws, ordinances,
regulations, covenants, conditions, restrictions and easements, and except as
may be otherwise expressly provided herein, Landlord shall not be obligated to
make any repairs or alterations to the Premises.  Tenant acknowledges that Landlord has made no
representation 

 

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or warranty as to
the suitability of the Premises for the conduct of Tenant’s business, and
Tenant waives any implied warranty that the Premises are suitable for Tenant’s
intended purposes.  The number of square
feet set forth in Section 1.5 is an approximation, and the Base Rent shall
not be changed if the actual number of square feet in the Premises is different
than the number of square feet set forth in Section 1.5.

 

See Addendum Paragraph I

 

2.2           COMMON AREAS.  Landlord hereby grants to Tenant for the
benefit of Tenant and its employees, suppliers, shippers, customers and
invitees during the Term of this Lease, the nonexclusive right to use, in
common with others entitled to such use (including Landlord), the Common Areas
(as hereinafter defined) as they exist from time to time, subject to all rights
reserved by Landlord hereunder and under the terms of all rules and
regulations promulgated by Landlord from time to time with respect
thereto.  Landlord reserves the right
from time to time to (a) make changes in the Common Areas, including,
without limitation, changes in location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas and walkways; (b) close
temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available; (c) construct parking
areas, loading dock facilities and other improvements within the Common Areas;
and (d) do and perform such other acts and make such other changes in, to
or with respect to the Common Areas as Landlord may deem appropriate, so long
as Landlord’s actions in connection with such rights set forth in clauses (a) through
(d) above do not have a materially adverse effect on Tenant’s use or
occupancy of the Premises.  Landlord
shall use reasonable efforts to minimize unreasonable interference with Tenant’s
use and occupancy of the Premises during Landlord’s actions in connection with
such changes.  As used herein, the term “Common
Areas” means all areas and facilities outside the Premises and within the
exterior boundary lines of that land owned by Landlord that are provided and
designated by Landlord as such from time to time for general nonexclusive use
of Tenant and others, including, if designated by Landlord as Common Areas,
parking areas, loading and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways and landscaped areas. 
The Premises, the Building, the Common Areas, the land upon which the
same are located, along with all other buildings and improvements thereon, are
herein collectively referred to as the “Project.”  Under no circumstances shall the right herein
granted to use the Common Areas be deemed to include the right to store any
property, temporarily or permanently, in the Common Areas, including, without
limitation, the storage of trucks or other vehicles, except as expressly
provided hereinafter.  Any such storage
shall be permitted only by the prior written consent of Landlord, which consent
may be revoked at any time.  In the event
that any unauthorized storage shall occur then Landlord shall have the right, 

 

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without notice, in
addition to such other rights and remedies that it may have, to remove the
property and charge the cost to Tenant, which cost shall be immediately payable
upon demand by Landlord.  Notwithstanding
the foregoing, Landlord acknowledges that Tenant will place storage containers
in the parking areas of the Project and receive shipments from tractor trailers
and other vehicles as part of Tenant’s operations at the Premises, and
occasional overnight parking of such tractor trailers and/or other vehicles as
well as the temporary placement of storage containers shall be permitted
provided such tractor trailers are parked or such storage containers are placed
in the parking spaces directly behind the Premises and do not interfere with
the loading areas of other Tenants of the Building and are otherwise not
unsightly on the Project.  Any such
parking spaces used by Tenant pursuant to the immediately preceding sentence
shall otherwise be a parking space Tenant is permitted to use pursuant to Section 1.14
above and this provision shall not be construed to increase the number of
parking spaces Tenant is permitted to use pursuant to Section 1.14 above.

 

3.             TERM.

 

3.1           TERM AND COMMENCEMENT DATE.  The term and Commencement Date of this Lease
are as specified in Sections 1.7 and 1.8. 
Tenant shall, within five (5) days after Landlord’s request,
complete and execute the letter attached hereto as Exhibit ”B” and deliver
it to Landlord.  Tenant’s failure to
execute the letter attached hereto as Exhibit ”B” within said five (5) day
period shall be a material default hereunder and shall constitute Tenant’s
acknowledgment of the truth of the facts contained in the letter delivered by
Landlord to Tenant.

 

3.2           DELAY IN POSSESSION.  Notwithstanding the Commencement Date
specified in Section 1.8, if for any reason Landlord cannot deliver
possession of the Premises to Tenant on said date, except as expressly provided
in Paragraph 2 of the Addendum, Landlord shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease or the
obligations of Tenant hereunder; provided, however, in such a case, Tenant
shall not be obligated to pay rent or perform any other obligation of Tenant
under this Lease, except as may be otherwise provided in this Lease, until
possession of the Premises is tendered to Tenant.

 

See Addendum Paragraph 2

 

3.3           DELAYS CAUSED BY TENANT.  [Intentionally omitted].

 

3.4           TENDER OP POSSESSION.  [Intentionally omitted].

 

3.5           EARLY POSSESSION.  If Tenant occupies the Premises prior to the
Commencement Date, such occupancy shall be subject to all provisions of this 

 

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Lease, such
occupancy shall not change the termination date, and Tenant shall pay Base Rent
and all other charges provided for in this Lease during the period of such
occupancy.  Provided that Tenant does not
interfere with or delay the completion by Landlord or its agents or contractors
of the construction of any Tenant improvements, and provided Landlord has
possession of the Premises, Tenant shall have the right to enter the Premises
prior to the anticipated Commencement Date for the purpose of installing
furniture, trade fixtures, equipment, racking and similar items.  Tenant shall be liable for any damages or
delays caused by Tenant’s activities at the Premises.  [Provided that Tenant has not begun operating
its business from the Premises, and subject to all of the terms and conditions
of the Lease, the foregoing activity shall not constitute the delivery of
possession of the Premises to Tenant and the Lease Term shall not commence as a
result of said activities.]  Prior to
entering the Premises, Tenant shall obtain all insurance it is required to
obtain by the Lease and shall provide certificates of said insurance to
Landlord.  Tenant shall coordinate such
entry with Landlord’s manager, and such entry shall be made in compliance with
all terms and conditions of this Lease and the Rules and Regulations
attached hereto.

 

4.             USE.

 

4.1           PERMITTED USE.  The Premises shall be used only for the
purpose described in Section 1.6 and for no other purpose.  Landlord makes no representation or warranty
that Tenant’s use is permitted by applicable zoning laws or other laws and
regulations, including without limitation, Tenant’s intended use of that
portion of the Premises designated as “Retail Space” on Exhibit A for
retail sales use.  A letter from Anne
Arundel County, Maryland obtained by Tenant permitting such use is attached
hereto as Exhibit E.  Tenant shall
not initiate, submit an application for, or otherwise request, any land use
approvals or entitlements with respect to the Premises or any other portion of
the Project, including, without limitation, any variance, conditional use
permit or rezoning, without first obtaining Landlord’s prior written consent,
which may be given or withheld in Landlord’s sole discretion.  Tenant shall not (a) permit any animals
or pets to be brought to or kept in the Premises, (b) except as expressly
provided in Paragraph 11 of the Addendum attached hereto, install any antenna,
dish or other device on the roof of the Building or outside of the Premises, (c) make
any penetrations into the roof of the Building, (d) place loads upon
floors, walls or ceilings in excess of the load such items were designed to
carry, (e) except as expressly permitted in Section 2.2, place or
store, nor permit any other person or entity to place or store, any property,
equipment, materials, supplies or other items outside of the Building in which
the Premises is located or (f) change the exterior of the Premises or the
Building in which the Premises is located. 
In addition to Tenant’s parking spaces granted under Section 1.14,
Tenant shall have the right to use fifteen (15) parking spaces, more
particularly shown on Exhibit A-1 attached hereto, for parking for its
retail store.  In addition, if, as a
result of Tenant’s use of 

 

5

 

the Premises for
retail sales, Landlord is obligated to comply with the Americans With
Disabilities Act or any other law or regulation and such compliance requires
Landlord to make any improvement or alterations to any portion of the Project,
Landlord shall have the right to require Tenant to pay to Landlord the entire
cost of any improvement or alteration Landlord is obligated to complete by such
law or regulation pursuant to Section 4.2 below.

 

4.2           COMPLIANCE WITH LAWS.  Tenant shall, at Tenant’s sole expense,
promptly comply with all applicable laws, ordinances, rules, regulations,
orders, certificates of occupancy, conditional use or other permits, variances,
covenants, conditions, restrictions, easements, and requirements of any fire
insurance underwriters, rating bureaus or government agencies, now in effect or
which may hereafter come into effect, whether or not they reflect a change in
policy from that now existing (collectively, “Legal Requirements”), during the
Term or any part of the Term hereof, relating to the Premises and arising from
the occupation and use by Tenant of the Premises.  Tenant shall, at Tenant’s sole expense, comply
with all requirements of the Americans With Disabilities Act that relate to the
Premises, and all federal, state and local laws and regulations governing
occupational safety and health.  Tenant
shall not permit any objectionable or unpleasant odors, smoke, dust, gas, noise
or vibrations to emanate from the Premises, or take any other action that would
constitute a nuisance or would disturb, unreasonably interfere with or endanger
Landlord or any other Tenants of the Project. 
Tenant shall obtain, at its sole expense, any permit or other
governmental authorization required to operate its business from the
Premises.  Landlord shall not be liable
for the failure of any other Tenant or person to abide by the requirements of
this Section or to otherwise comply with applicable laws and regulations,
and Tenant shall not be excused from the performance of its obligations under
this Lease due to such a failure. 
Landlord warrants to Tenant that, to the best of Landlord’s knowledge,
the Project, in the state existing on the date this Lease is executed by
Landlord and Tenant, but without regard to alterations or improvements to be
made by Tenant or the use for which Tenant will occupy the Premises, does not
violate any Legal Requirements in effect on such date.  To the extent that Landlord receives any
notice from a governmental entity that the Project is in violation of any Legal
Requirement and Landlord is obligated pursuant to a final determination to
undertake action in order to comply with any such Legal Requirement, then in
such event Landlord agrees to undertake such remedial action.  If such Legal Requirement was in effect as of
the date hereof and such violation existed as of the date hereof, Landlord
shall be responsible for the cost of curing such violation and such costs shall
not be included in Operating Expenses. 
If such Legal Requirement was not in effect as of the date hereof or
such violation did not exist as of the date hereof, then the cost of curing
such violation shall be included in Operating Expenses, except to the extent
such costs would otherwise be excluded from Operating Expenses pursuant to the
terms of Section 6 hereof.  To the
extent that such notice requires action with regard to 

 

6

 

Tenant’s particular
use of the Premises, Tenant shall be obligated to undertake such action at
Tenant’s sole cost and expense.

 

5.             BASE
RENT.  Tenant shall pay base rent in the amount set
forth on the first page of this Lease. The first month’s Base Rent, the
Security Deposit, and the first monthly installment of estimated Operating
Expenses (as hereafter defined) shall be due and payable on the date this Lease
is executed by Tenant, and Tenant promises to pay to Landlord in advance,
without demand, deduction or set-off, monthly installments of Base Rent on or
before the first day of each calendar month succeeding the Commencement Date. Payments
of Base Rent for any fractional calendar month shall be prorated. All payments
required to be made by Tenant to Landlord hereunder shall be payable at such
address as Landlord may specify from time to time by written notice delivered
in accordance herewith. Tenant shall have no right at any time to abate,
reduce, or set off any rent due hereunder except where expressly provided in
this Lease.

 

See Addendum Paragraph 3

 

6.             OPERATING EXPENSE PAYMENTS.

 

6.1           OPERATING EXPENSES.  Tenant shall pay Tenant’s Percentage Share
(as defined below) of the Operating Expenses for the Project.  For the purposes of this Lease, the term “Operating
Expenses” shall mean all expenses and disbursements of every kind (subject to
the limitations set forth below) which Landlord incurs, pays or becomes
obligated to pay in connection with the ownership, operation, and maintenance
of the Project (including the associated Common Areas), including, but not
limited to, the following:

 

(a)           wages
and salaries (including reasonable management fees) of all employees, agents,
consultants and other individuals or entities engaged in the operation, repair,
replacement, maintenance, and security of the Project, including taxes,
insurance and benefits relating thereto;

 

(b)           all
supplies and materials used in the operation, maintenance, repair, replacement,
and security of the Project;

 

(c)           annual
cost of all Capital Improvements (as defined below) made to the Project which
although capital in nature can at the time undertaken reasonably be expected to
reduce the normal operating costs of the Project, as well as all Capital
Improvements made in order to comply with any law now or hereafter promulgated
by any governmental authority, as amortized over the useful economic life of
such improvements as determined by Landlord in its reasonable discretion
(without regard to the 

 

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period over which
such improvements may be depreciated or amortized for federal income tax
purposes);

 

(d)           cost
of all utilities paid by Landlord;

 

(e)           cost
of any insurance or insurance related expense applicable to the Project and
Landlord’s personal property used in connection therewith, including, but not
limited to, the insurance costs described in Section 10.2;

 

(f)            cost
of repairs, replacements and general maintenance of the Project (including all
truck court areas, paving and parking areas, Common Area lighting facilities,
fences, gates, water lines, sewer lines, rail spur areas and any other item
Landlord is obligated to repair or maintain), other than costs necessary to
assure the structural soundness of the roof, foundation and exterior walls of the
Project which are payable solely by Landlord under Section 11;

 

(g)           cost
of service or maintenance contracts with independent contractors for the
operation, maintenance, repair, replacement or security of the Project
(including, without limitation, alarm service, exterior painting, trash
collection, snow, ice, debris and waste removal and landscape maintenance);

 

(h)           the
cost of all reasonable accounting fees, management fees, legal fees and
consulting fees attributable to the operation, management, maintenance or
repair of the Project;

 

(i)            payments
made by Landlord under any easement, license, operating agreement, declaration,
restrictive covenant or other agreement relating to the sharing of costs among
property owners;

 

(j)            reserves
created by Landlord, in Landlord’s sole but reasonable discretion, for future
Operating Expenses or the future replacement of Capital Improvements;

 

(k)           the
cost of all business licenses, permits or similar fees relating to the
operation, ownership, repair or maintenance of the Project; and

 

(l)            the
cost of any other Item the cost of which is stated in this Lease to be an
Operating Expense.

 

For purposes of this Lease, a “Capital Improvement”
shall be an improvement to the Project that Landlord is obligated to make
pursuant to this Lease (other than the Office Work, Code Compliance Work and
Demising Work more particularly defined in Paragraph 10 of the Addendum), the
cost of which is not fully deductible in the year 

 

8

 

incurred in accordance with generally accepted
accounting principles.  Real Property
Taxes (as defined below) shall be reimbursed to Landlord as provided below and
shall not be treated as an Operating Expense. 
References to facilities, services, utilities or other items in this Section shall
not impose an obligation on Landlord to have said facilities or to provide said
services unless such facilities and services already exist at the Project.

 

6.2           OPERATING EXPENSE EXCLUSIONS.  Notwithstanding anything to the contrary
contained herein, for purposes of this Lease, the term “Operating Expenses”
shall not include the following:  (i) costs
(including permit, license and inspection fees) incurred for Tenant
improvements for other Tenants within the Project; (ii) legal and auditing
fees (other than those fees reasonably incurred in connection with the
maintenance and operation of all or any portion of the Project), leasing
commissions, advertising expenses and similar costs incurred in connection with
the leasing of the Project; (iii) depreciation of the Building or any
other improvements situated within the Project; (iv) any items for which
Landlord is actually reimbursed by insurance or by direct reimbursement by any
other Tenant of the Project; (v) costs of repairs or other work
necessitated by fire, windstorm or other casualty (excluding any deductibles)
and/or costs of repair or other work necessitated by the exercise of the right
of eminent domain to the extent insurance proceeds or a condemnation award, as
applicable, is actually received by Landlord for such purposes; provided, such
costs of repairs or other work shall be paid by the parties in accordance with
the provisions of Sections 11 and 12, below; (vi) other than any interest
charges for Capital Improvements referred to in Section 6.1(c) hereinabove,
any interest or payments on any financing for the Building or the Project and
interest and penalties incurred as a result of Landlord’s late payment of any
invoice; (vii) costs associated with the investigation and/or remediation
of Hazardous Materials (hereafter defined) present in, on or about any portion
of the Project, unless such costs and expenses are the responsibility of Tenant
as provided In Section 27 hereof, in which event such costs and expenses
shall be paid solely by Tenant in accordance with the provisions of Section 27
hereof; (viii) overhead and profit increment paid to Landlord or to
subsidiaries or affiliates of Landlord for goods and/or services in the Project
to the extent the same exceeds the costs of such by unaffiliated third parties
on a competitive basis; (ix) any payments under a ground Lease or master
Lease; and (x) except as provided in Section 6.1(c) and (j) above,
the cost of Capital Improvements.

 

6.3           PAYMENT. 
Tenant’s Percentage Share of Operating Expenses shall be payable by
Tenant within ten (10) days after a reasonably detailed statement of
actual expenses is presented to Tenant by Landlord.  At Landlord’s option, however, Landlord may,
from time to time, estimate what Tenant’s Percentage Share of Operating
Expenses will be, and the same shall be payable by Tenant monthly during each
calendar year of the Lease Term, on the same day as the Base Rent is 

 

9

 

due
hereunder.  In the event that Tenant pays
Landlord’s estimate of Tenant’s Percentage Share of Operating Expenses,
Landlord shall use its best efforts to deliver to Tenant within one hundred
twenty (120) days after the expiration of each calendar year a reasonably
detailed statement (the “Statement”) showing Tenant’s Percentage Share of the
actual Operating Expenses incurred during such year.  Landlord’s failure to deliver the Statement
to Tenant within said period shall not constitute Landlord’s waiver of its
right to collect said amounts or otherwise prejudice Landlord’s rights
hereunder.  If Tenant’s payments under
this Section during said calendar year exceed Tenant’s Percentage Share as
indicated on the Statement, Tenant shall be entitled to credit the amount of
such overpayment against Tenant’s Percentage Share of Operating Expenses next
falling due.  If Tenant’s payments under
this Section during said calendar year were less than Tenant’s Percentage
Share as indicated on the Statement, Tenant shall pay to Landlord the amount of
the deficiency within thirty (30) days after delivery by Landlord to Tenant of
the Statement.  Landlord and Tenant shall
forthwith adjust between them by cash payment any balance determined to exist
with respect to that portion of the last calendar year for which Tenant is
responsible for Operating Expenses, notwithstanding that the Lease Term may
have terminated before the end of such calendar year; and this provision shall
survive the expiration or earlier termination of the Lease.

 

6.4           TENANT’S PERCENTAGE SHARE.  “Tenant’s Percentage Share” as used in this
Lease shall mean the percentage of the cost of Operating Expenses and Real
Property Taxes (as defined below) for which Tenant is obligated to reimburse
Landlord pursuant to this Lease.

 

See Addendum Paragraph 4

 

6.5           AUDITS. 
If Tenant disputes the amount set forth in the Statement, Tenant shall
have the right, at Tenant’s sole expense except as expressly provided to the
contrary hereinbelow, not later than sixty (60) days following receipt of such
Statement, to cause Landlord’s books and records with respect to the calendar
year which is the subject of the Statement to be audited by a certified public
accountant mutually acceptable to Landlord and Tenant.  The audit shall take place at the offices of
Landlord where its books and records are located at a mutually convenient time
during Landlord’s regular business hours. 
Tenant’s Percentage Share of Operating Expenses shall be appropriately
adjusted based upon the results of such audit, and the results of such audit
shall be final and binding upon Landlord and Tenant.  Tenant shall have no right to conduct an
audit or to give Landlord notice that it desires to conduct an audit at any
time Tenant is in default under the Lease. 
The accountant conducting the audit shall be compensated on an hourly
basis and shall not be compensated based upon a percentage of overcharges it
discovers.  No subtenant shall have any
right to conduct an audit, and no assignee shall conjunct an audit for any
period during 

 

10

 

which such
assignee was not in possession of the Premises. 
Tenant’s right to undertake an audit with respect to any calendar year
shall expire sixty (60) days after Tenant’s receipt of the Statement for such calendar
year and such Statement shall be final and binding upon Tenant and shall, as
between the parties, be conclusively deemed correct, at the end of such sixty
(60) day period, unless prior thereto Tenant shall have given Landlord written
notice of its intention to audit Operating Expanses for the calendar year which
is the subject of the Statement.  If
Tenant gives Landlord notice of its intention to audit Operating Expenses, it
must commence such audit within sixty (60) days after such notice is delivered
to Landlord, and the audit must be completed within one hundred twenty (120)
days altar such notice is delivered to Landlord.  If Tenant does not commence and complete the
audit within such periods, the Statement which Tenant elected to audit shall be
deemed final and binding upon Tenant and shall, as between the parties, be
conclusively deemed correct.  Tenant
agrees that the results of any Operating Expense audit shall be kept strictly
confidential by Tenant and shall not be disclosed to any other person or
entity, Notwithstanding anything to the contrary contained herein, if such
audit determines that an error has been made in Landlord’s determination and
calculation of Operating Expenses which results in an adjustment to the amounts
determined and calculated by Landlord of five percent (5%) or more, Landlord
shall pay for the fees and expenses of the accounting firm conducting the audit
on Tenant’s behalf (provided such fees shall not exceed the total amount of
Landlord’s refund to Tenant in connection with any adjustment made pursuant to
this Section 8.5), but if such adjustment is less than five percent (5%),
Tenant shall pay for such fees and expenses for such accounting firm.

 

7.             SECURITY DEPOSIT.
 Tenant shall deliver to Landlord at the
time it executes this Lease the security deposit set forth in Section 1.13
as security for Tenant’s faithful performance of Tenant’s obligations
hereunder. If Tenant fails to pay Base Rent or other charges due hereunder, or
otherwise defaults with respect to any provision of this Lease after expiration
of any applicable cure periods, Landlord may use all or any portion of said
deposit for the payment of any Base Rent or other charge due hereunder, to pay
any other sum to which Landlord may become obligated by reason of Tenant’s
default, or to compensate Landlord for any loss or damage which Landlord may
suffer thereby. If Landlord so uses or applies all or any portion of said
deposit, Tenant shall within ten (10) days after written demand therefor
deposit cash with Landlord in an amount sufficient to restore said deposit to
its full amount. Landlord shall not be required to keep said security deposit
separate from its general accounts. If Tenant performs all of Tenant’s
obligations hereunder, said deposit, or so much thereof as has not heretofore
been applied by Landlord, shall be returned, without payment of interest or
other amount for its use, to Tenant (or, at Landlord’s option, to the last
assignee, if any, of Tenant’s interest hereunder) at the expiration of the Term
hereof, and after Tenant has vacated the Premises. No trust relationship is
created

 

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herein between
Landlord and Tenant with respect to said security deposit. Tenant acknowledges
that the security deposit is not an advance payment of any kind or a measure of
Landlord’s damages in the event of Tenant’s default. Tenant hereby waives the
provisions of any law which is inconsistent with this Section. The foregoing
notwithstanding, Landlord agrees, at Tenant’s request, to review Tenant’s
financial condition following the expiration of the twenty-fourth calendar
month of the Term and if Tenant’s financial condition is at least as strong as
it was as of the Commencement Date of this Lease (i.e., Tenant’s net worth is
no less than it was on the Commencement Date), then Landlord shall return the
Security Deposit to Tenant.

 

8.             UTILITIES.

 

8.1           PAYMENT. 
Tenant shall pay for all water, gas, electricity, telephone, sewer,
refuse and trash collection and other utilities and services used on the
Premises, together with any taxes, penalties, surcharges or the like pertaining
thereto.  If the Premises are separately
metered, Tenant shall contract directly with the applicable public utility for
such services.  In the event Tenant is
unable to obtain separate utility service, the utility service may be obtained
in Landlord’s name and Tenant shall pay Landlord as additional rent all costs
for Tenant’s usage of such utilities.  In
addition, Tenant shall pay Tenant’s Percentage Share of electricity supplied to
the Common Areas of the Project in accordance with the provisions of Section 6
of the Lease.  Tenant agrees to limit use
of water and sewer for normal restroom use, and nothing herein contained shall
impose upon Landlord any duty to provide sewer or water usage for other than
normal restroom usage.  Notwithstanding
anything to the contrary in the Lease, in the event any such utilities and
services are not separately metered, Tenant shall pay Tenant’s Percentage Share
(based on [***]%) of all of the costs incurred for the utilities and services
referenced in this Section 8.1 with respect to the Premises and such
expenses shall not be subject to the phased in Percentage Shares referenced in
Paragraph 4 of the Addendum.

 

8.2           INTERRUPTIONS.  Unless caused by the gross negligence or
willful misconduct of Landlord, its employees, agents or contractors, Tenant
agrees that Landlord shall not be liable to Tenant for its failure to furnish
water, gas, electricity, telephone, sewer, refuse and trash collection or any
other utility services or building services when such failure is occasioned, in
whole or in part, by repairs, replacements or improvements, by any strike,
lookout or other labor trouble, by inability to secure electricity, gas, water,
telephone service or other utility at the Project, by any accident, casualty or
event arising from any cause whatsoever, including the negligence of Landlord,
its employees, agents and contractors, by act, negligence or default of Tenant
or any other person or entity, or by any other cause, and such failures shall
never be deemed to constitute an eviction or disturbance of Tenant’s use and
possession of the Premises or relieve Tenant from the obligation of paying rent
or performing any of its obligations under this Lease.  

 

12

 

Furthermore,
Landlord shall not be liable under any circumstances for loss of property or
for injury to, or interference with, Tenant’s business, including, without
limitation, loss of profits, however occurring, through or in connection with
or incidental to a failure to furnish any such services or utilities.  Landlord may comply with voluntary controls
or guidelines promulgated by any governmental entity relating to the use or
conservation of energy, water, gas, light or electricity or the reduction of
automobile or other emissions without creating any liability of Landlord to
Tenant under this Lease.  Notwithstanding
anything contained herein to the contrary, if any interruption of utilities or
services shall continue for more than ten (10) consecutive business days
and shall render all or any portion of the Premises unusable for the normal
conduct of Tenant’s business, and if Tenant does not in fact use such portion
of the Premises, then all Bass Rent and additional rent payable hereunder with
respect to such portion of the Premises which Tenant does not use shall be
abated from and after the eleventh (11th) consecutive business day until full
use of such portion of the Premises is restored to Tenant.

 

8.3           RAILROAD SPURS.  If the Premises is served by a railroad spur,
Tenant shall execute any agreement required by the railroad company serving the
railroad spur, and such agreement shall be satisfactory to Landlord, in Landlord’s
sole discretion.  Tenant shall pay the
cost of maintaining the railroad spur, at Tenant’s sole cost and expense.

 

8.4           (Intentionally
Omitted).

 

9.             REAL AND PERSONAL PROPERTY TAXES.

 

9.1           PAYMENT OF TAXES.  Tenant shall pay to Landlord during the Term
of this Lease, in addition to Base Rent and Tenant’s Percentage Share of
Operating Expenses, Tenant’s Percentage Share of all Real Property Taxes.  Tenant’s Percentage Share of Real Property
Taxes shall be payable by Tenant at the same time, in the same manner and under
the same terms and conditions as Tenant pays Tenant’s Percentage Share of
Operating Expenses.

 

9.2           DEFINITION OF REAL PROPERTY TAX.  As used herein, the term “Real Property Taxes”
shall include any form of real estate tax or assessment, general, special,
ordinary or extraordinary, improvement bond or bonds imposed on the Project or
any portion thereof by any authority having the direct or indirect power to
tax, including any city, county, state or federal government, or any school,
agricultural, sanitary, lire, street, drainage or other improvement district
thereof, as against any legal or equitable interest of Landlord in the Project
or in any portion thereof.  Real Property
Taxes shall not include income, inheritance and gift taxes.

 

13

 

9.3           PERSONAL PROPERTY TAXES.  Tenant shall pay prior to delinquency all
taxes assessed against and levied upon trade fixtures, furnishings, equipment
and all other personal property of Tenant contained in the Premises or related
to Tenant’s use of the Premises.  If any
of Tenant’s personal property shall be assessed with Landlord’s real or
personal property, Tenant shall pay to Landlord the taxes attributable to
Tenant within ten (10) days after receipt of a written statement from
Landlord setting forth the taxes applicable to Tenant’s property.

 

9.4           REASSESSMENTS.  From time to time Landlord may challenge the
assessed value of the Project as determined by applicable taxing authorities
and/or Landlord may attempt to cause the Real Property Taxes to be reduced on
other grounds.  If Landlord is successful
in causing the Real Property Taxes to be reduced or in obtaining a refund,
rebate, credit or similar benefit (hereinafter collectively referred to as a “reduction”),
Landlord shall, credit the reduction(s) to Real Property Taxes for the calendar
year to which a reduction applies and to recalculate the Real Property Taxes
owed by Tenant for years in which the reduction applies based on the reduced
Real Property Taxes.  All costs incurred
by Landlord in obtaining the Real Property Tax reductions shall be considered
an Operating Expense, and Landlord shall determine, in its sole discretion, to
which years any reductions will be applied. 
In addition, all accounting and related costs incurred by Landlord in
making the adjustments shall be an Operating Expense.  Landlord shall have the right to compensate a
person or entity it employs to obtain a reduction in Real Property Taxes by
giving such person or entity a market-rate percentage of any reduction or
credit obtained, and in this event the reduction or credit obtained by Landlord
shall be deemed to be the reduction or credit given by the taxing authority
less the compensation paid to such person or entity.

 

10.           INSURANCE.

 

10.1         INSURANCE-TENANT.

 

(a)           Tenant
shall obtain and keep in force during the Term of this Lease a commercial
general liability policy of insurance with coverages acceptable to Landlord, in
Landlord’s sole discretion, which, by way of example and not limitation,
protects Tenant and Landlord (as an additional insured) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto.  Such
insurance shall be on an occurrence basis providing single-limit coverage in an
amount not less than $2,000,000 per occurrence with an “Additional
Insured-Managers and Landlords of Premises Endorsement” and contain the “Amendment
of the Pollution Exclusion” for damage caused by heat, smoke or fumes from a
hostile fire.  The policy shall not
contain any intra-insured exclusions as between insured persons or
organizations, but shall 

 

14

 

include coverage
for liability assumed under this Lease as an “insured contract” for the
performance of Tenant’s indemnity obligations under this Lease.

 

(b)           Tenant
shall obtain and keep in force during the Term of this Lease “all-risk”
extended coverage property insurance with coverages acceptable to Landlord, in
Landlord’s sole discretion.  Said
insurance shall be written on a one hundred percent (100%) replacement cost
basis on Tenant’s personal property, all Tenant improvements installed at the
Premises by Landlord or Tenant, Tenant’s trade fixtures and other
property.  By way of example, and not
limitation, such policies shall provide protection against any peril included
within the classification “fire and extended coverage,” against vandalism and
malicious mischief, theft, sprinkler leakage, earthquake damage and flood
damage.

 

(c)           Tenant
shall, at all times during the Term hereof, maintain in effect workers’
compensation insurance as required by applicable law and business interruption
and extra expense insurance satisfactory to Landlord.

 

10.2         INSURANCE-LANDLORD.

 

(a)           Landlord
shall obtain and keep in force a policy of general liability insurance with
coverage against such risks and in such amounts as Landlord deems advisable
insuring Landlord against liability arising out of the ownership, operation and
management of the Project.

 

(b)           Landlord
shall also obtain and keep in force during the Term of this Lease a policy or
policies of insurance covering loss or damage to the Project in the amount of
not less than the full replacement cost thereof (less foundations and
footings), as reasonably determined by Landlord from time to time.  The terms and conditions of said policies and
the perils and risks covered thereby shall be determined by Landlord, from time
to time, in Landlord’s reasonable discretion, provided Landlord shall carry
insurance which is comparable to insurance carried by similar Landlords of
similar properties in the same geographic area. 
In addition, at Landlord’s option, Landlord shall obtain and keep in
force, during the Term of this Lease, a policy of rental interruption
insurance, with loss payable to Landlord, which insurance shall, at Landlord’s
option, also cover all Operating Expenses and Real Property Taxes.  Tenant will not be named as an additional
insured in any insurance policies carried by Landlord and shall have no right
to any proceeds therefrom.  The policies
purchased by Landlord shall contain such deductibles as Landlord may determine.  Tenant shall pay at Tenant’s sole expense any
increase in the property insurance premiums for the Project over what was
payable 

 

15

 

immediately prior
to the increase to the extent the increase is specified by Landlord’s insurance
carrier as being caused by the nature of Tenant’s occupancy or any act or
omission of Tenant.

 

10.3         INSURANCE POLICIES.  Tenant shall deliver to Landlord copies of
the insurance policies required under Section 10.1 within fifteen (15)
days prior to the Commencement Date of this Lease, and Landlord shall have the
right to approve the terms and conditions of said policies.  Tenant’s insurance policies shall not be
cancelable or subject to reduction of coverage or other modification except
after thirty (30) days prior written notice to Landlord.  Tenant shall, at least thirty (30) days prior
to the expiration of such policies, furnish Landlord with renewals
thereof.  Tenant’s insurance policies
shall be issued by insurance companies authorized to do business in the state
in which the Project is located, and said companies shall maintain during the
policy term a “General Policyholder’s Rating” of at least A and a financial
rating of at least “Class X” (or such other rating as may be required by
any lender having a lien on the Project) as set forth in the most recent
edition of “Best Insurance Reports.”  All
insurance obtained by Tenant shall be primary to and not contributory with any
similar insurance carried by Landlord, whose insurance shall be considered
excess insurance only.  Landlord and, at
Landlord’s option, the holder of any mortgage or deed of trust encumbering the
Project and any parson or entity managing the Project on behalf of Landlord,
shall be named as an additional insured on all insurance policies Tenant is
obligated to obtain by Section 10.1 above. 
Tenant’s insurance policies shall not include deductibles in excess of
Five Thousand Dollars ($5,000).

 

10.4         WAIVER OF SUBROGATION.  Landlord waives any and all rights of
recovery against Tenant for or arising out of damage to, or destruction of, the
Project to the extent that Landlord’s insurance policies then in force insure
against such damage or destruction and permit such waiver, and only to the
extent of the insurance proceeds actually received by Landlord for such damage
or destruction.  Landlord’s waiver shall
not relieve Tenant from liability under Section 19 below except to the
extent Landlord’s insurance company actually satisfies Tenant’s obligations
under Section 19 in accordance with the requirements of Section 19.  Tenant waives any and all rights of recovery
against Landlord, Landlord’s employees, agents and contractors for liability or
damages if such liability or damage is covered by Tenant’s insurance policies
then in force or the insurance policies Tenant is required to obtain by Section 10.1
(whether or not the insurance Tenant is required to obtain by Section 10.1
is then in force and effect), whichever is broader.  Tenant’s waiver shall not be limited by the
amount of insurance then carried by Tenant or the deductibles applicable
thereto.  Tenant shall cause the
insurance policies it obtains In accordance with this Section 10 to
provide that the insurance company waives all right of recovery by subrogation
against Landlord in connection with any liability or damage covered by Tenant’s
insurance policies.

 

16

 

10.5         COVERAGE. 
Landlord makes no representation to Tenant that the limits or forms of
coverage specified above or approved by Landlord are adequate to insure Tenant’s
property or Tenant’s obligations under this Lease, and the limits of any
insurance carried by Tenant shall not limit Tenant’s obligations or liability
under any indemnity provision included in this Lease or under any other
provision of this Lease.

 

11.           LANDLORD’S
REPAIRS.  Landlord shall keep and maintain the Project
(excluding the interior of the Premises and space leased to other occupants of
the Project) in good condition and repair, ordinary wear and tear and damage by
casualty excepted. The structural elements of the roof of the Building
(excluding the roof membrane), the structural soundness of the foundation of
the Building, and the structural elements of the exterior walls of the Building
and external utility lines (collectively, “Structural Elements”) shall be
maintained and repaired at Landlord’s expense, and as more fully set forth in Section 12.2
below, the cost of all of the other maintenance and repair obligations of the
Landlord (“Landlord Maintenance Items”) shall be passed through to Tenant as an
Operating Expense. Tenant shall reimburse Landlord for the cost of any
maintenance, repair or replacement of the foregoing necessitated by Tenant’s
misuse, negligence, alterations to the Premises or any breach of its
obligations under this Lease. By way of example, and not limitation, the term “exterior
walls” as used in this Section shall not include windows, glass or plate
glass, doors or overhead doors, special store fronts, dock bumpers, dock plates
or levelers, or office entries. Upon obtaining knowledge thereof, Tenant shall
immediately give Landlord written notice of any Structural Element repair
required to be performed by Landlord pursuant to this Section, after which
Landlord shall have a reasonable time (under the circumstances) in which to
complete the repair. Nothing contained in this Section shall be construed
to obligate Landlord to seal or otherwise maintain the surface of any
foundation, floor or slab. Except as expressly provided hereinafter, Tenant
expressly waives the benefits or any statute now or hereafter in effect which
would otherwise afford Tenant the right to make repairs at Landlord’s expense
or to terminate this Lease because of Landlord’s failure to keep the Premises
in good order, condition and repair. Notwithstanding anything to the contrary
contained in the Lease, in the event Landlord fails to undertake and diligently
pursue any repair to the Premises required to be made by Landlord pursuant to
this Section 11 or Section 12.2 below within thirty (30) days
following Landlord’s receipt of Tenant’s written notice, then Tenant shall have
the right to make any such repair in accordance with Section 13 of the
Lease, provided Landlord has failed to commence to make such repair during such
thirty (30) day period. Landlord shall reimburse Tenant for the reasonable cost
of making any such repair in accordance with the provisions hereof within
thirty (30) days following Landlord’s receipt of an invoice therefor. Tenant
shall have no right to set-off any sums incurred by Tenant pursuant to this
provision nor shall

 

17

 

Tenant be entitled
to any abatement of rent except as specifically provided otherwise in this
Lease.

 

12.           TENANT’S REPAIRS.

 

12.1         OBLIGATIONS OF TENANT.  Tenant shall, at its sole cost and expense,
keep and maintain all interior parts of the Premises in good and sanitary
condition, promptly making all necessary repairs and replacements, including
but not limited to, windows, glass and plate glass, doors, any special store
front or office entry, walls and finish work, floors and floor coverings, dock
boards, bumpers, plates, seals, levelers and lights, plumbing work and
fixtures, lighting facilities and bulbs, termite and pest extermination, Tenant
signage and regular removal of trash and debris.  Tenant shall notify Landlord in writing prior
to making any repair or performing any maintenance pursuant to this Section,
and Landlord shall have the right to designate the contractor Tenant shall use
to make any repair or to perform any maintenance on the plumbing systems,
located at the Premises.  Tenant shall
not paint or otherwise change the exterior appearance of the Premises without
Landlord’s prior written consent, which may be given or withheld in Landlord’s
sole discretion.  The cost of maintenance
and repair of any common party wall (any wall, divider, partition or any other
structure separating the Premises from any adjacent Premises occupied by other
tenants) shall be shared equally by Tenant and the tenant occupying the
adjacent Premises; provided, however, if Tenant damages a party wall the entire
cost of the repair shall be paid by Tenant, at Tenant’s sole expense.  Tenant shall not damage any party wall or
disturb the integrity and support provided by any party wall.  If Tenant fails to keep the Premises in good
condition and repair, Landlord may following ten (10) days prior written
notice to Tenant (unless the nature of the repair requires Landlord to act
sooner), but shall not be obligated to, make any necessary repairs.  If Landlord makes such repairs, Landlord may
bill Tenant for the cost of the repairs as additional rent, and said additional
rent shall be payable by Tenant within ten (10) days after demand by
Landlord.

 

See
Addendum Paragraph 5

 

12.2         PERFORMANCE OF WORK BY LANDLORD. 
Landlord Maintenance Items shall include, without limitation,
the roof membranes, HVAC units, sprinkler systems, fire alarm systems, fire
detection systems and exterior walls of the Premises, and shall include
entering into preventative maintenance/service contracts for some or all of the
foregoing items.  Except in cases of
emergency, Landlord shall determine in its sole discretion the scope and timing
of the performance of such Landlord Maintenance Items, and subject to the last
three sentences of Section 11 above Tenant shall not perform such Landlord
Maintenance Items.  Landlord’s
maintenance of the exterior wails of the Premises shall include the right, but
not the obligation, of Landlord to paint from time to 

 

18

 

time all or some
of the exterior wails, canopies, doors, windows, gutters, handrails and other
exterior parts of the Premises with colors selected by Landlord.  If the Premises contains landscaped areas,
maintenance and repair of the same shall be Landlord Maintenance Items.  Upon obtaining knowledge thereof, Tenant
shall immediately give Landlord written notice of any repair or maintenance
required by Landlord pursuant to this Section, after which Landlord shall have
a reasonable time (under the circumstances) in which to complete such repair or
maintenance.  Landlord shall include the
cost of Landlord Maintenance Items in Operating Expenses, and Tenant shall then
pay Tenant’s Percentage Share of such costs as determined by Landlord in
accordance with Section 6.3 above. 
Except as expressly provided to the contrary elsewhere in the Lease,
there shall be no abatement of rent or liability to Tenant on account of any
injury or interference with Tenant’s business with respect to any improvements,
alterations or repairs made by Landlord to the Project or any part thereof in
connection with this Section 12.2.

 

12.3         Intentionally
Omitted.

 

13.           ALTERATIONS AND SURRENDER.

 

13.1         CONSENT OF LANDLORD.  Tenant shall not, without Landlord’s prior
written consent, which may be given or withheld in Landlord’s sole discretion,
make any alterations, improvements, additions, utility installations or repairs
(hereinafter collectively referred to as “Alterations”) in, on or about the
Premises or the Project.  Alterations
shall include, but shall not be limited to, the installation or alteration of
security or fire protection systems, communication systems, millwork, shelving,
retrieval or storage systems, carpeting or other floor covering, painting,
window and wall coverings, electrical distribution systems, lighting fixtures,
telephone or computer system wiring, HVAC and plumbing.  At the expiration of the term, Landlord may
require the removal of any Alterations installed by Tenant and the restoration
of the Premises and the Project to their prior condition, at Tenant’s
expense.  To the extent Landlord’s
consent is required pursuant to this Section, at the written request of Tenant,
Landlord agrees to notify Tenant concurrently with Landlord’s consent to such
Alteration whether Landlord will require Tenant to remove such Alteration at
the end of the Term.  If, as a result of
any Alteration made by Tenant, Landlord is obligated to comply with the
Americans With Disabilities Act or any other law or regulation, and such
compliance requires Landlord to make any improvement or Alteration to any
portion of the Project, as a condition to Landlord’s consent, Landlord shall
have the right to require Tenant to pay to Landlord prior to the construction
of any Alteration by Tenant the entire cost of any improvement or alteration
Landlord is obligated to complete by such law or regulation.  Should Landlord permit Tenant to make its own
Alterations, Tenant shall use only such architect and contractor as has been
expressly approved by Landlord (exercising reasonable discretion), and, 

 

19

 

with respect to
any Alterations costing more than Fifty Thousand Dollars ($50,000.00) in any
one instance, Landlord may require Tenant to provide to Landlord, at Tenant’s
sole cost and expense, a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such Alterations, to insure Landlord
against any liability for mechanic’s and materialmen’s liens and to insure
completion of the work.  In addition,
except with respect to (i) Alterations not requiring Landlord’s consent
pursuant to this provision and other non-structural Alterations not requiring
plans or permits, or (ii) Alteration made in connection with Tenant’s
initial buildout of the retail space, or (iii) the installation of Tenant’s
trade fixtures and equipment, Tenant shall pay to Landlord a fee equal to three
percent (3%) of the cost of the Alterations to compensate Landlord for the
overhead and other costs it incurs in reviewing the plans for the Alterations
and in monitoring the construction of the Alterations.  Should Tenant make any Alterations without
the prior approval of Landlord, or use a contractor not expressly approved by
Landlord, Landlord may, at any time during the Term of this Lease, require that
Tenant remove all or part of the Alterations and return the Premises to the
condition it was in prior to the making of the Alternations.  In the event Tenant makes any Alterations,
Tenant agrees to obtain or cause its contractor to obtain, prior to the
commencement of any work, “builders all risk” insurance in an amount approved
by Landlord, workers compensation insurance and any other insurance requested
by Landlord, in Landlord’s sole discretion. 
Notwithstanding anything to the contrary in the Lease, Tenant shall have
the right to make non-structural Alterations to the Premises without obtaining
Landlord’s prior written consent, provided that (i) such Alterations do
not exceed One Hundred Thousand Dollars ($100,000,00) in cost in any twelve
(12) month period; (ii) Tenant provides Landlord with prior written notice
of its intention to make such Alterations together with the plans and
specifications for the same; (iii) Tenant provides Landlord a reasonable
period of time to review Tenant’s plan of such Alteration; (iv) any such
Alteration to the Premises does not affect any of the base Building systems; (v) any
such Alterations are not visible from the exterior of the Building; (vi) any
such Alterations do not affect the structural integrity of the Building; (vii) Tenant
adheres to all applicable government regulations, including the Americans with
Disabilities Act, and obtains any necessary permits in making such Alterations;
and (viii) all work is otherwise performed in compliance with this Section 13.  For purposes of the Lease, it shall be deemed
reasonable for Landlord to require Tenant to perform Alterations during
non-business hours if such Alterations will create unreasonable noise, noxious
fumes or otherwise interfere with the quiet enjoyment of the other tenants in
the Building.

 

13.2         PERMITS. 
Any Alterations in or about the Premises that Tenant shall desire to
make shall be presented to Landlord in written form, with plans and
specifications which are sufficiently detailed to obtain a building
permit.  If Landlord consents to an
Alteration, the consent shall be deemed conditioned upon Tenant acquiring a 

 

20

 

building permit
from the applicable governmental agencies, furnishing a copy thereof to
Landlord prior to the commencement of the work, and compliance by Tenant with
all conditions of said permit in a prompt and expeditious manner.  Tenant shall provide Landlord with as-built
plans and specifications for any Alterations made to the Premises.

 

13.3         MECHANICS LIENS.  Tenant shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Tenant
at or for use in the Premises, which claims are or may be secured by any
mechanic’s or materialmen’s lien against the Premises or the Project, or any
interest therein.  If Tenant shall, in
good faith, contest the validity of any such lien, Tenant shall furnish to
Landlord a surety bond or other financial arrangements satisfactory to Landlord
in an amount equal to not less than one and one-half times the amount of such
contested lien claim indemnifying Landlord against liability arising out of
such lien or claim.  Such bond shall be
sufficient in form and amount to free the Project from the effect of such
lien.  In addition, Landlord may require
Tenant to pay Landlord’s reasonable attorneys’ fees and costs in participating
in such action.

 

13.4         NOTICE. 
Tenant shall give Landlord not less than ten (10) days’ advance
written notice prior to the commencement of any work in the Premises by Tenant,
and Landlord shall have the right to post notices or non-responsibility in or
on the Premises or the Project.

 

13.5         SURRENDER. 
Subject to Landlord’s right to require removal or to elect ownership as
hereinafter provided, all Alterations made by Tenant to the Premises shall be
the property of Tenant, but shall be considered to be a part of the
Premises.  Unless Landlord gives Tenant
written notice of its election not to become the owner of the Alterations at
the end of the Term of this Lease, the Alterations shall become the property of
Landlord at the end of the Term of this Lease. 
Landlord may require, on notice to Tenant (at the end of the Term unless
required to do so at the time of Landlord’s consent to such Alteration in
accordance with Section 13.1 above), that some or all Alterations be
removed prior to the end of the Term of this Lease and that any damages caused
by such removal be repaired at Tenant’s sole expense.  On the last day of the Term hereof, or on any
sooner termination, Tenant shall surrender the Premises (including, but not
limited to, all doors, windows, floors and floor coverings, skylights, heating
and air conditioning systems, dock boards, truck doors, dock bumpers, plumbing
work and fixtures, electrical systems, lighting facilities, sprinkler systems,
fire detection systems and nonstructural elements of the exterior walls,
foundation and roof (collectively the “Elements of the Premises”)) to Landlord
in the same condition as received, ordinary wear and tear and casualty damage
excepted, clean and free of debris and Tenant’s personal property, trade
fixtures and equipment.  Tenant’s
personal property shall include all computer wiring and 

 

21

 

cabling installed
by Tenant.  Provided, however, if
Landlord has not elected to have Tenant remove the Alterations, Tenant shall
leave the Alterations at the Premises in good condition and repair, ordinary
wear and tear excepted.  Tenant shall
repair any damage to the Premises occasioned by the installation or removal of
Tenant’s trade fixtures, furnishings and equipment.  Damage to or deterioration of any Element of
the Premises or any other item Tenant is required to repair or maintain at the
Premises shall not be deemed ordinary wear and tear if the same could have been
prevented by good maintenance practices. 
If the Premises are not surrendered at the expiration of the term or
earlier termination of this Lease in accordance with the provisions of this
Section, at Landlord’s option, Tenant shall continue to be responsible for the
payment of Base Rent and all other amounts due under this Lease until the
Premises are so surrendered in accordance with said provisions.  Except as otherwise modified in Section 33
herein, Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all damages, expenses, costs, losses or liabilities arising
from any delay by Tenant in so surrendering the Premises, including, without
limitation, any damages, expenses, costs, losses or liabilities arising from
any claim against Landlord made by any succeeding tenant or prospective tenant
founded on or resulting from such delay and losses and damages suffered by
Landlord due to lost opportunities to Lease any portion of the Premises to any
such succeeding Tenant or prospective Tenant, together with, in each case,
actual attorneys’ fees and costs.

 

13.6         FAILURE OF TENANT TO REMOVE PROPERTY.  If this Lease is terminated due to the
expiration of its term or otherwise, and Tenant fails to timely remove its
property, in addition to any other remedies available to Landlord under this
Lease, and subject to any other right or remedy Landlord may have under applicable
law, Landlord may remove any property of Tenant from the Premises and store the
same elsewhere at the expense and risk of Tenant.

 

14.           DAMAGE AND DESTRUCTION.

 

14.1         EFFECT OF DAMAGE OR DESTRUCTION.  If all or part of the Project is damaged by
fire, earthquake, flood, explosion, the elements, riot, the release or
existence of Hazardous Materials (as defined below) or by any other cause
whatsoever (hereinafter collectively referred to as “damages”), but the damages
are not material (as defined in Section 14.2 below), Landlord shall repair
the damages to the Project as soon as is reasonably possible, and this Lease
shall remain in full force and effect. 
If all or part of the Project is destroyed or materially damaged (as
defined in Section 14.2 below), Landlord shall have the right, in its sole
and complete discretion, to repair or to rebuild the Project or to terminate
this Lease.  Landlord shall use
commercially reasonable efforts to, within sixty (60) days but in no event
later than ninety (90) days after the discovery of such material damage or
destruction notify Tenant in writing of Landlord’s intention to repair or to
rebuild or to terminate this Lease. 
Tenant 

 

22

 

shall in no event
be entitled to compensation or damages on account of annoyance or inconvenience
in making any repairs, or on account of construction, or on account of Landlord’s
election to terminate this Lease. 
Notwithstanding the foregoing, if Landlord shall elect to rebuild or
repair the Project after material damage or destruction, but in good faith
determines that the Premises cannot be substantially repaired within two
hundred seventy (270) days after the data of the discovery of the material
damage or destruction, without payment of overtime or other premiums, and the
damage to the Project will render the entire Premises unusable during said two
hundred seventy (270) day period, Landlord shall notify Tenant thereof in
writing at the time of Landlord’s election to rebuild or repair, and Tenant
shall thereafter have a period of thirty (30) days within which Tenant may
elect to terminate this Lease, upon thirty (30) days’ advance written notice to
Landlord.  Tenant’s termination right
described in the preceding sentence shall not apply if the damage was caused by
the negligent or intentional acts of Tenant or its employees, agents,
contractors or invitees.  Failure of
Tenant to exercise said election within said thirty (30) day period shall
constitute Tenant’s agreement to accept delivery of the Premises under this
Lease whenever tendered by Landlord, provided Landlord thereafter pursues
reconstruction or restoration diligently to completion, subject to delays
caused by Force Majeure Events.  Subject to
Section 14.3 below, if Landlord or Tenant terminates this Lease in
accordance with this Section 14.1, Tenant shall continue to pay all Base
Rent, Operating Expenses and other amounts due hereunder which arise prior to
the date of termination.

 

14.2         DEFINITION OF MATERIAL DAMAGE.  Damage to the Project shall be deemed
material if more than thirty-five percent (35%) of the Premises is damaged or
destroyed.  Damage to the Project shall
also be deemed material if (a) the Project cannot be rebuilt or repaired
to substantially the same condition it was in prior to the damage due to laws
or regulations in effect at the time the repairs will be made, (b) the
holder of any mortgage or deed of trust encumbering the Project requires that
insurance proceeds available to repair the damage in excess of One Hundred
Thousand Dollars ($100,000) be applied to the repayment of the indebtedness
secured by the mortgage or the deed of trust, or (c) the damage occurs
during the last twelve (12) months of the Lease Term.  Notwithstanding the foregoing, in accordance
with Section 28.1 of this Lease, Landlord agrees to use commercially
reasonable efforts to require any future holder of any mortgage or deed of
trust to release such insurance proceeds to Landlord for repair of the damage
to the Project.

 

14.3         ABATEMENT OF RENT.  If Landlord elects to repair damage to the
Project and all or part of the Premises will be unusable or inaccessible to
Tenant in the ordinary conduct of its business until the damage is repaired,
and the damage was not caused by the negligence or intentional acts of Tenant
or its employees, agents, contractors or invitees, Tenant’s Base Rent and
Tenant’s Share of 

 

23

 

Operating Expenses
shall be abated until the repairs are completed in proportion to the amount of
the Premises which is unusable or inaccessible to Tenant in the ordinary
conduct of its business.  Notwithstanding
the foregoing, there shall be no abatement of Base Rent or Tenant’s Share of
Operating Expenses by reason of any portion of the Premises being unusable or
inaccessible for a period equal to five (5) consecutive business days or
less.

 

14.4         TENANT’S ACTS.  If such damage or destruction occurs as a
result of the negligence or the intentional acts of Tenant or Tenant’s
employees, agents, contractors or invitees, and the proceeds of insurance which
are actually received by Landlord are not sufficient to pay for the repair of
all of the damage, Tenant shall pay, at Tenant’s sole cost and expense, to
Landlord upon demand, the difference between the cost of repairing the damage
and the insurance proceeds received by Landlord.

 

14.5         TENANT’S PROPERTY.  Landlord shall not be liable to Tenant or its
employees, agents, contractors, invitees or customers for loss or damage to
merchandise, Tenant improvements, fixtures, automobiles, furniture, equipment,
computers, files or other property (hereinafter collectively “Tenant’s property”)
located at the Project.  Tenant shall
repair or replace all of Tenant’s property at Tenant’s sole cost and expense.  Tenant acknowledges that it is Tenant’s sole
responsibility to obtain adequate insurance coverage to compensate Tenant for
damage to Tenant’s property.

 

14.6         WAIVER. 
Landlord and Tenant hereby waive the provisions of any present or future
statutes which relate to the termination of leases when leased property is
damaged or destroyed and agree that such event shall be governed by the terms
of this Lease.

 

15.           CONDEMNATION.
 If any portion of the Premises or the Project
are taken under the power of eminent domain, or sold under the threat of the
exercise of said power (all of which are herein called “condemnation”), this
Lease shall terminate as to the part so taken as of the date the condemning
authority takes title or possession, whichever first occurs; provided that if
so much of the Premises or Project are taken by such condemnation as would
substantially and adversely affect the operation and profitability of Tenant’s
business conducted from the Premises, and said taking is reasonably expected to
lasts for ninety (90) days or more, Tenant shall have the option, to be
exercised only in writing within forty-five (45) days after Landlord shall have
given Tenant written notice of such taking (or in the absence of such notice,
within forty-five (45) days after the condemning authority shall have taken
possession), to terminate this Lease as of the date the condemning authority
takes such possession. If a taking is reasonably expected to last for less than
ninety (90) days, Tenant’s rent shall be abated during said period but Tenant
shall not have the right to terminate this Lease. If Tenant

 

24

 

does not terminate
this Lease in accordance with the foregoing, this Lease shall remain in full
force and effect as to the portion of the Premises remaining, except that the
Base Rent and Operating Expenses shall be reduced in the proportion that the
usable floor area of the Premises taken bears to the total usable floor area of
the Premises. Common Areas taken shall be excluded from the Common Areas usable
by Tenant and no reduction of rent shall occur with respect thereto or by
reason thereof. Landlord shall have the option in its sole discretion to
terminate this Lease as of the taking of possession by the condemning authority,
by giving written notice to Tenant of such election within thirty (30) days
after receipt of notice of a taking by condemnation of any part of the Premises
or the Project provided that all leases for spaces similarly affected are also
terminated. Any award for the taking of all or any part of the Premises or the
Project under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Landlord, whether such
award shall be made as compensation for diminution in value of the leasehold,
for good will, for the taking of the fee, as severance damages, or as damages
for tenant improvements; provided, however, that Tenant shall be entitled to
any separate award for loss of or damage to Tenant’s removable personal
property and for moving expenses. In the event that this Lease is not
terminated by reason of such condemnation, and subject to the requirements of
any lender that has made a loan to Landlord encumbering the Project, Landlord
shall to the extent of severance damages received by Landlord in connection
with such condemnation, repair any damage to the Project caused by such
condemnation except to the extent that Tenant has been reimbursed therefor by
the condemning authority. This Section, not general principles of law, shall
govern the rights and obligations of Landlord and Tenant with respect to the
condemnation of all or any portion of the Project.

 

16.           ASSIGNMENT AND SUBLETTING.

 

16.1         LANDLORD’S CONSENT REQUIRED.  Tenant shall not voluntarily or by operation
of law assign, transfer, hypothecate, mortgage, sublet, or otherwise transfer
or encumber all or any part of Tenant’s interest in this Lease or in the
Premises (hereinafter collectively a “Transfer”, without Landlord’s prior
written consent, which shall not be unreasonably withheld.  Landlord shall respond to Tenant’s written
request for consent hereunder within thirty (30) days after Landlord’s receipt
of the written request from Tenant.  Any
attempted Transfer without such consent shall be void and shall constitute a
material default and breach of this Lease. 
Tenant’s written request for Landlord’s consent shall include, and
Landlord’s thirty (30) day response period referred to above shall not
commence, unless and until Landlord has received from Tenant, all of the
following information:  (a) financial
statements for the proposed assignee for the past three (3) years prepared
in accordance with generally accepted accounting principles (to the extent
available), (b) federal tax returns for the proposed assignee for the past
three (3) years (to the extent available), (c) a TRW credit 

 

25

 

report or similar
report on the proposed assignee or subtenant, (d) a detailed description
of the business the assignee or subtenant intends to operate at the Premises, (e) the
proposed effective date of the assignment or sublease, (f) a copy of the
proposed sublease or assignment agreement which includes all of the terms and
conditions of the proposed assignment or sublease, (g) a detailed
description of any ownership or commercial relationship between Tenant and the
proposed assignee or subtenant, (h) a detailed description of any
Alterations the proposed assignee or subtenant desires to make to the Premises,
and (i) [omitted].  If the
obligations of the proposed assignee or subtenant will be guaranteed by any
person or entity, Tenant’s written request shall not be considered complete
until the Information described in (a), (b) and (c) of the previous
sentence has been provided with respect to each proposed guarantor.  “Transfer” shall also include the transfer (a) if
Tenant is a corporation, and Tenant’s stock is not publicly traded over a
recognized securities exchange, by shareholders of record as of the Commencement
Date, of more than fifty-one percent (51%) of the shares held by them at the
Commencement Date, which transfer results in a reduction of the Net Worth of
Tenant (as defined in Section 16.2), by an amount equal to or greater than
twenty-five percent (25%) of such Net Worth of Tenant as it is represented to
Landlord at the time of the execution by Landlord of this Lease, or as it
exists immediately prior to said transaction or transactions constituting such
a reduction, at whichever time said Net Worth of Tenant was or is greater or
the dissolution, merger or liquidation of the corporation, or (b) if
Tenant is a partnership, limited liability company, limited liability
partnership or other entity, of more than forty-nine percent (49%) of the
profit and loss participation in such partnership or entity during the Term of
this Lease (whether or not in one or more transfers) or the dissolution, merger
or liquidation of the partnership, limited liability company, limited liability
partnership or other entity.  If Tenant
is a limited or general partnership (or is comprised of two or more parsons,
individually or as co-partners), Tenant shall not be entitled to change or
convert to (i) a limited liability company, (ii) a limited liability
partnership or (iii) any other entity which possesses the characteristics
of limited liability without the prior written consent of Landlord, which
consent may be given or withheld in Landlord’s sole discretion.  Tenant’s sole remedy in the event that
Landlord shall wrongfully withhold consent to or disapprove any assignment or
sublease shall be to obtain an order by a court of competent jurisdiction that
Landlord grant such consent; in no event shall Landlord be liable for damages
with respect to its granting or withholding consent to any proposed assignment
or sublease.  If Landlord shall exercise
any option to recapture the Premises, or shall deny a request for consent to a
proposed assignment or sublease, Tenant shall indemnify, defend and hold
Landlord harmless from and against any and all losses, liabilities, damages,
costs and claims that may be made against Landlord by the proposed assignee or
subtenant, or by any brokers or other persons claiming a commission or similar
compensation in connection with the proposed assignment or sublease unless a
court of competent jurisdiction determines that such denial was made in bad
faith.

 

26

 

See Addendum Paragraph 6

 

16.2         [Intentionally
Omitted].

 

16.3         STANDARD FOR APPROVAL.  Landlord shall not unreasonably withhold its
consent to a Transfer provided that Tenant has compiled with each and every
requirement, term and condition of this Section 16.  It shall be deemed reasonable for Landlord to
withhold its consent to a Transfer if any requirement, term or condition of
this Section 16 is not complied with or: 
(a) [intentionally omitted]; (b) in Landlord’s reasonable
judgment, a proposed assignee or subtenant has a smaller net worth than Tenant
had on the date this Lease was entered into with Tenant or is less able
financially to pay the rents due under this Lease as and when they are due and
payable; (c) a proposed assignee’s or subtenant’s business will impose a
burden on the Project’s parking facilities, Common Areas or utilities that is
greater than the burden imposed by Tenant, in Landlord’s reasonable judgment; (d) the
terms of a proposed assignment or subletting will allow the proposed assignee
or subtenant to exercise a right of renewal, right of expansion, right of first
offer, right of first refusal or similar right held by Tenant; (e) a
proposed assignee or subtenant refuses to enter into a written assignment
agreement or sublease, reasonably satisfactory to Landlord, which provides that
it will abide by and assume all of the terms and conditions of this Lease for
the term of any assignment or sublease and containing such other terms and
conditions as Landlord reasonably deems necessary; (f) the use of the
Premises by the proposed assignee or subtenant will not be a use permitted by
this Lease; (g) any guarantor of this Lease refuses to consent to the
Transfer or to execute a written agreement reaffirming the guaranty; (h) Tenant
is in default as defined in Section 17 at the time of the request; (i) if
requested by Landlord, the assignee or subtenant refuses to sign a
non-disturbance and attornment agreement in favor of Landlord’s lender; (j)
Landlord has sued or been sued by the proposed assignee or subtenant or has
otherwise been involved in a legal dispute with the proposed assignee or
subtenant; (k) the assignee or subtenant is involved in a business which is not
in keeping with the then-current standards of the Project; (l) the proposed
assignee or subtenant is an existing Tenant of the Project or is a person or
entity then negotiating with Landlord for the lease of space in the Project;
(m) [intentionally omitted]; (n) the assignee or subtenant is a governmental or
quasi-governmental entity or an agency, department or instrumentality of a
governmental or quasi-governmental agency; (o) the assignee or subtenant will
use, store or handle Hazardous Materials in or about the Premises of a type,
nature, quantity not acceptable to Landlord, in Landlord’s sole discretion; or
(p) the assignee or subtenant will use, store or handle Hazardous Materials in
or about the Premises of a type, nature, quantity not permitted by this Lease.

 

16.4         ADDITIONAL TERMS AND CONDITIONS.  The following terms and conditions shall be
applicable to any Transfer:

 

27

 

(a)           Regardless
of Landlord’s consent, no Transfer shall release Tenant from Tenant’s
obligations hereunder or after the primary liability of Tenant to pay the rent
and other sums due Landlord hereunder and to perform all other obligations to
be performed by Tenant hereunder or release any guarantor from its obligations
under its guaranty.

 

(b)           Landlord
may accept rent from any person other than Tenant pending approval or
disapproval of an assignment or subletting.

 

(c)           Neither
a delay in the approval or disapproval of a Transfer, nor the acceptance of
rent, shall constitute a waiver or estoppel of Landlord’s right to exercise its
rights and remedies for the breach of any of the terms or conditions of this Section 16.

 

(d)           The
consent by Landlord to any Transfer shall not constitute a consent to any
subsequent Transfer by Tenant or to any subsequent or successive Transfer by an
assignee or subtenant.  However, Landlord
may consent to subsequent Transfers or any amendments or modifications thereto
which do not increase Tenant’s obligations hereunder without notifying Tenant
or anyone else liable on the Lease and without obtaining their consent, and
such action shall not relieve such persons from liability under this Lease,
although Landlord agrees to use commercially reasonable efforts to provide
notice to Tenant of Landlord’s consent to any subsequent Transfer at the
address last provided in writing to Landlord for Tenant’s notice address.

 

(e)           In
the event of any default under this Lease, Landlord may proceed directly
against Tenant, any guarantors or anyone else responsible for the performance
of this Lease, Including any subtenant or assignee, without first exhausting
Landlord’s remedies against any other person or entity responsible therefor to
Landlord, or any security held by Landlord.

 

(f)            Landlord’s
written consent to any Transfer by Tenant shall not constitute an
acknowledgment that no default then exists under this Lease nor shall such
consent be deemed a waiver of any then-existing default.

 

(g)           The
discovery of the fact that any financial statement relied upon by Landlord in
giving its consent to an assignment or subletting was materially false shall,
at Landlord’s election, render Landlord’s consent null and void.

 

(h)           Landlord
shall not be liable under this Lease or under any sublease to any subtenant.

 

28

 

(i)            No
assignment or sublease may be modified or amended without Landlord’s prior
written consent.

 

(j)            [Intentionally
Omitted]

 

(k)           Any
assignee of, or subtenant under, this Lease shall, by reason of accepting such
assignment or entering into such sublease, be deemed, for the benefit of
Landlord, to have assumed and agreed to conform and comply with each and every
term, covenant, condition and obligation herein to be observed or performed by
Tenant during the term of said assignment or sublease, other than such
obligations as are contrary or inconsistent with provisions of an assignment or
sublease to which Landlord has specifically consented in writing.

 

(l)            At
Landlord’s request, Tenant shall deliver to Landlord, Landlord’s standard
consent to assignment or consent to sublease agreement, as applicable, executed
by Tenant, the assignee and the subtenant, as applicable.

 

16.5         ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO
SUBLETTING.  The following
terms and conditions shall apply to any subletting by Tenant of all or any part
of the Premises and shall be deemed included in all subleases under this Lease
whether or not expressly incorporated therein:

 

(a)           Tenant
hereby absolutely and unconditionally assigns and transfers to Landlord all of
Tenant’s Interest in all rentals and income arising from any sublease entered
into by Tenant, and Landlord may collect such rent and income and apply same
toward Tenant’s obligations under this Lease; provided, however, that until a
default shall occur in the performance of Tenant’s obligations under this
Lease, Tenant may receive, collect and enjoy the rents accruing under such
sublease.  Landlord shall not, by reason
of this or any other assignment of such rents to Landlord nor by reason of the
collection of the rents from a subtenant, be deemed to have assumed or
recognized any sublease or to be liable to the subtenant for any failure of
Tenant to perform and comply with any of Tenant’s obligations to such subtenant
under such sublease, including, but not limited to, Tenant’s obligation to
return any security deposit.  Tenant
hereby irrevocably authorizes and directs any such subtenant, upon receipt of a
written notice from Landlord stating that a default exists in the performance
of Tenant’s obligations under this Lease, to pay to Landlord the rents due as
they become due under the sublease, Tenant agrees that such subtenant shall
have the right to rely upon any such statement and request from Landlord, and
that such subtenant shall pay such rents to Landlord without any obligation or
right to inquire as to whether such 

 

29

 

default exists and
notwithstanding any notice or claim from Tenant to the contrary.

 

(b)           In
the event Tenant shall default in the performance of its obligations under this
Lease, Landlord, at its option and without any obligation to do so, may require
any subtenant to attorn to Landlord, in which event Landlord shall undertake
the obligations of Tenant under such sublease from the time of the exercise of
said option to the termination of such sublease; provided, however, Landlord
shall not be liable for any prepaid rents or security deposit paid by such subtenant
to Tenant or for any other prior defaults of Tenant under such sublease.

 

16.6         TRANSFER PREMIUM FROM ASSIGNMENT OR SUBLETTING.  Landlord shall be entitled to receive from
Tenant (as and when received by Tenant) as an item of additional rent one-half
of all amounts received by Tenant from the subtenant or assignee in excess of
the amounts payable by Tenant to Landlord hereunder (hereinafter the Transfer
Premium).  The Transfer Premium shall be
reduced by the reasonable brokerage commissions and legal fees actually paid by
Tenant in order to assign the Lease or to sublet a portion of the
Premises.  “Transfer Premium” shall mean
all Base Rent, additional rent or other consideration of any type whatsoever
payable by the assignee or subtenant in excess of the Base Rent and additional
rent payable by Tenant under this Lease. 
If less than all of the Premises is transferred, the Base Rent and the
additional rent shall be determined on a per-leasable-square-foot basis.  The provisions of this Section 16.6 shall
not apply with respect to any Permitted Transfer (as that term is defined in
Paragraph 6 of the Addendum).

 

16.7         LANDLORD’S OPTION TO RECAPTURE SPACE.  Notwithstanding anything to the contrary
contained in this Section 16, Landlord shall have the option, by giving
written notice to Tenant within thirty (30) days after receipt of any request
by Tenant (i) to assign this Lease, or (ii) to sublease space in the
Premises if the term of such sublease is scheduled to expire during the last
twelve (12) months of the Term of the Lease, to terminate this Lease with
respect to said space as of the date thirty (30) days after Landlord’s
election.  In the event of a recapture by
Landlord, if this Lease shall be canceled with respect to less than the entire
Premises, the Base Rent, Operating Expenses and the number of parking spaces
Tenant may use shall be adjusted on the basis of the number of rentable square
feet retained by Tenant in proportion to the number of rentable square feet
contained in the original Premises, and this Lease as so amended shall continue
thereafter in full force and effect, and upon request of either party, the
parties shall execute written confirmation of same.  If Landlord recaptures only a portion of the
Premises, it shall construct and erect at its sole cost such partitions as may
be required to sever the space to be retained by Tenant from the space
recaptured by Landlord.  Landlord may, at
its option, Lease any recaptured portion of the 

 

30

 

Premises to the
proposed subtenant or assignee or to any other person or entity without
liability to Tenant.  Tenant shall not be
entitled to any portion of the profit, if any, Landlord may realize on account
of such termination and reletting. 
Tenant acknowledges that the purpose of this Section is to enable
Landlord to receive profit in the form of higher rent or other consideration to
be received from an assignee or subtenant, to give Landlord the ability to meet
additional space requirements of other Tenants of the Project and to permit
Landlord to control the leasing of space in the Project.  Tenant acknowledges and agrees that the
requirements of this Section are commercially reasonable and are
consistent with the intentions of Landlord and Tenant.  The provisions of this Section 16.7
shall not apply with respect to any Permitted Transfer (as that term Is defined
in Paragraph 6 of the Addendum).

 

16.8         LANDLORD’S EXPENSES.  In the event Tenant shall assign this Lease
or sublet the Premises or request the consent of Landlord to any Transfer, then
Tenant shall pay Landlord’s reasonable costs and expenses incurred in
connection therewith, including, but not limited to, attorneys’, architects’,
accountants’, engineers’ or other consultants’ fees.

 

17.           DEFAULT; REMEDIES.

 

17.1         DEPAULT BY TENANT.  Landlord and Tenant hereby agree that the
occurrence of any one or more of the following events is a material default by
Tenant under this Lease and that said default shall give Landlord the rights
described in Section 17.2.  Landlord
or Landlord’s authorized agent shall have the right to execute and to deliver
any notice of default, notice to pay rent or quit or any other notice Landlord
gives Tenant.

 

(a)           Tenant’s
failure to make any payment of Base Rent, Tenant’s Percentage Share of
Operating Expenses, Tenant’s Percentage Share of Real Property Taxes or any
other payment required to be made by Tenant hereunder, as and when due, where
such failure shall continue for a period of three (3) days after written
notice thereof from Landlord to Tenant. 
In the event that Landlord serves Tenant with a notice to pay rent or
quit pursuant to applicable unlawful detainer statutes, such notice shall also
constitute the notice required by this Section 17.1(a).

 

(b)           The
abandonment of the Premises by Tenant, in which event Landlord shall not be
obligated to give any notice of default to Tenant.  For purposes of this Lease, the Premises
shall not be deemed abandoned so long as Tenant (i) has provided Landlord
with prior written notice, (ii) pays rent and all other charges due under
this Lease as and when due, and (iii) maintains the physical appearance of
the Premises.

 

31

 

(c)           The
failure of Tenant to comply with any of its obligations under Sections 4, 10,
12, 13, 16, 19, 23, 25, 26, 27 and 28 where Tenant fails to comply with its
obligations or fails to cure any earlier breach of such obligation within ten (10) days
following written notice from Landlord to Tenant.  In the event Landlord serves Tenant with a
notice to quit or any other notice pursuant to applicable unlawful detainer
statutes, said notice shall also constitute the notice required by this Section 17.1(c).

 

(d)           The
failure by Tenant to observe or perform any of the covenants, conditions or
provisions of this Lease to be observed or performed by Tenant (other than
those referenced in Sections 17.1(a), (b) and (c), above), where such
failure shall continue for a period of thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, that if the nature of
Tenant’s nonperformance is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be deemed to be in default if
Tenant commences such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion. 
In the event that Landlord serves Tenant with a notice to quit or any
other notice pursuant to applicable unlawful detainer statutes, said notice
shall also constitute the notice required by this Section 17.1(d).

 

(e)           (i) The
making by Tenant or any guarantor of Tenant’s obligations hereunder of any
general arrangement or general assignment for the benefit of creditors; (ii) Tenant
or any guarantor becoming a “debtor” as defined in 11 U.S.C. 101 or any
successor statute thereto (unless, in the case of a petition filed against
Tenant or guarantor, the same is dismissed within sixty (60) days); (iii) the
appointment of a trustee or receiver to take possession of substantially alt of
Tenant’s assets located at the Premises or of Tenant’s interest in this Lease,
where possession is not restored to Tenant within thirty (30) days; (iv) the
attachment, execution or other judicial seizure of substantially all of Tenant’s
assets located at the Premises or of Tenant’s interest in this Lease, where
such seizure is not discharged within thirty (30) days; or (v) the
insolvency of Tenant.  In the event that
any provision of this Section 17.1(e) is unenforceable under
applicable law, such provision shall be of no force or effect.

 

(f)            The
discovery by Landlord that any financial statement, representation or warranty
given to Landlord by Tenant, or by any guarantor of Tenant’s obligations
hereunder, was materially false at the time given.  Tenant acknowledges that Landlord has entered
into this Lease in material reliance on such information.

 

(g)           If
Tenant is a corporation, partnership, limited liability company or similar
entity, the dissolution or liquidation of Tenant.

 

32

 

(h)           If
Tenant’s obligations under this Lease are guaranteed:  (i) the death of a guarantor, (ii) the
termination of a guarantor’s liability with respect to this Lease other than in
accordance with the terms of such guaranty, (iii) a guarantor’s becoming
insolvent or the subject of a bankruptcy filing, (iv) a guarantor’s
refusal to honor the guaranty, or (v) a guarantor’s breach of its guaranty
obligation on an anticipatory breach basis.

 

17.2         REMEDIES.

 

(a)           In
the event of any material default or breach of this Lease by Tenant, Landlord
may, at any time thereafter, with or without notice or demand, and without
limiting Landlord in the exercise of any right or remedy which Landlord may
have by reason of such default:

 

(i)            terminate
Tenant’s right to possession of the Premises. 
Upon any such termination, Tenant shall immediately surrender possession
of the Premises to Landlord.  Landlord
reserves all rights and remedies available to it pursuant to the terms and
conditions of this Lease as well as under applicable law.  Tenant hereby grants Landlord the full and
free right to enter the Premises with or without process of law.  Tenant releases Landlord of any liability for
any damage resulting therefrom and waives any right to claim damage for such
re-entry.  Tenant also agrees that
Landlord’s right to re-Lease or any other right given to Landlord as a
consequence of Tenant’s default hereunder or by operation of law is not
relinquished.  On termination of Tenant’s
right of possession, Landlord shall be entitled to recover from Tenant:  (i) the unpaid rent which had been
earned at the time of the termination; (ii) the amount by which the unpaid
rent which would have been earned after termination until the time of the award
exceeds the amount of any rental, if any, received for the Premises during such
time period; (iii) the amount by which the unpaid rent for the balance of
the Term of the Lease after the time of award exceeds the amount of any rent to
be received (net of re-letting expenses as described below) from any
replacement Tenant occupying the Premises at the time of the award, or, if the
Premises are not occupied at the time of the award by a rent-paying replacement
Tenant, the full amount of the rent to be earned hereunder for the balance of
the Term of the Lease discounted to net present value assuming a discount rate
of one percent (1%) above the discount rate of the Federal Reserve Bank of
Richmond in effect at the time of the award; and provided further, however,
that Landlord shall repay to Tenant the excess of the foregoing amount over any
rent received for the Premises during the balance of the Term of the Lease (net

 

33

 

of reletting
expenses as described below) similarly discounted; and (iv) at the time of
the award any other amount necessary to compensate Landlord for all the damage
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of events would likely result therefrom,
including but not limited to, all costs and expenses attributable to recovering
possession of the Premises, re-letting expenses (including the costs and
expenses of any necessary repairs, renovations and alterations to the
Premises), costs of carrying the Premises (including but not limited to,
Landlord’s payment of real property taxes and insurance premiums), actual legal
fees and associated costs and expenses, the unamortized portion of all
brokerage commissions paid in connection with this Lease and all costs of
Tenant improvements (amortized without interest on a straight line basis over
the initial Term of the Lease), and reimbursement of any deferred rent or other
Lease execution inducement.

 

(ii)           maintain
Tenant’s right of possession in which event Landlord shall have the remedy
which permits Landlord to continue this Lease in effect after Tenant’s breach
and abandonment and recover rent as it becomes due.  Acts of maintenance or preservation, efforts
to relet the Premises, or removal or storage of Tenant’s personal property,
shall not constitute a termination of Tenant’s right to possession or act as an
acceptance of any surrender of the Premises. 
Landlord shall not be required to relet any or all of the Premises prior
to leasing other vacant space at the Project, nor shall Landlord be required to
accept a Tenant: (i) that does not otherwise meet Landlord’s financial and
other criteria, nor (ii) a Tenant who intends to make a use other than the
use permitted by the Lease.  Landlord
shall use commercially reasonable efforts to relet the Premises.  The phrase “reasonable efforts” as it relates
to Landlord’s duty to attempt to relet the Premises, shall require Landlord to
do only the following: (i) notify Landlord’s leasing agent in writing of
the availability or the Premises for reletting, (ii) post Landlord’s
leasing contact telephone number in the Project management office, (iii) show
the Premises to any prospective tenant who requests to see the Premises and to
any prospective Tenant specifically referred to Landlord by Tenant, and (iv) show
the “vacant” status of the Premises in posters and information brochures used
at leasing trade meetings and conventions. 
Landlord shall not be required to relet the Premises before reletting
any space in the Project not producing any income to Landlord and Landlord
shall be entitled to consider tenant quality, tenant-mix, 

 

34

 

and the nature of
the Project and office center in making any leasing decision.  If Landlord shall substantially perform the
foregoing then, anything in this Lease, or any statute or common law rule to
the contrary notwithstanding, Landlord shall be deemed to have met its duty to
mitigate its damages hereunder.

 

(iii)          collect
sublease rents (or appoint a receiver to collect such rent) and otherwise
perform Tenant’s obligations at the Premises, it being agreed, however, that
the appointment of a receiver for Tenant shall not constitute an election by
Landlord to terminate this Lease.

 

(iv)          pursue
any other remedy now or hereafter available to Landlord under the laws or
judicial decisions of the state in which the Premises are located.

 

(b)           No
remedy or election hereunder shall be deemed exclusive, but shall, wherever
possible, be cumulative with all other remedies at law or in equity.  The expiration or termination of this Lease
and/or the termination of Tenant’s right to possession of the Promises shall
not relieve Tenant of liability under any indemnity provisions of this Lease as
to matters occurring or accruing during the Term hereof or by reason of Tenant’s
occupancy of the Premises.

 

(c)           If
Tenant abandons or vacates the Premises, Landlord may re-enter the Premises and
such re-entry shall not be deemed to constitute Landlord’s election to accept a
surrender of the Premises or to otherwise relieve Tenant from liability for its
breach of this Lease.  No surrender of
the Premises shall be effective against Landlord unless Landlord has entered
into a written agreement with Tenant in which Landlord expressly agrees to (i) accept
a surrender of the Premises and (ii) relieve Tenant of liability under the
Lease.  The delivery by Tenant to
Landlord of possession of the Premises shall not constitute the termination of
the Lease or the surrender of the Premises.

 

17.3         DEFAULT BY LANDLORD.  Landlord shall not be in default under this
Lease unless Landlord fails to perform obligations required of Landlord within
thirty (30) days after written notice by Tenant to Landlord and to the holder
of any mortgage or deed of trust encumbering the Project whose name and address
shall have theretofore been furnished to Tenant in writing, specifying wherein
Landlord has failed to perform such obligation; provided, however, that if the
nature of Landlord’s obligation is such that more than thirty (30) days are
required for its cure, then Landlord shall not be in default if Landlord
commences performance within such thirty (30) day period and thereafter
diligently pursues the same to 

 

35

 

completion and
provided further that, if the nature of the default is such that it presents a
danger to the health or safety of Tenant or any of Tenant’s employees, agents
or invitees, or adversely affects the operation and profitability of Tenant’s
business conducted from the Premises, then in such events, Landlord shall
commence and complete cure as soon as reasonably practicable.  In no event shall Tenant have the right to
terminate this Lease as a result of Landlord’s default, and Tenant’s remedies
shall be limited to damages and/or an injunction.

 

17.4         LATE CHARGES.  Tenant hereby acknowledges that late payment
by Tenant to Landlord of Bass Rent, Tenant’s Percentage Share of Operating
Expenses, Tenant’s Percentage Share of Real Property Taxes or other sums due
hereunder will cause Landlord to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain.  Such costs include, but are not limited to,
processing and accounting charges and late charges which may be imposed on
Landlord by the terms of any mortgage or trust deed encumbering the
Project.  Accordingly, if any installment
of Base Rent, Tenant’s Percentage Share of Operating Expenses, Tenant’s
Percentage Share of Real Property Taxes or any other sum due from Tenant shall
not be received by Landlord when such amount shall be due, then, without any
requirement for notice or demand to Tenant, Tenant shall immediately pay to
Landlord a late charge equal to five percent (5%) of such overdue amount.  The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payment by Tenant. 
Acceptance of such late charge by Landlord shall in no event constitute
a waiver of Tenant’s default with respect to such overdue amount, nor prevent
Landlord from exercising any of the other rights and remedies granted
hereunder, including the assessment of interest under Section 17.5.

 

17.5         INTEREST ON PAST-DUE OBLIGATIONS.  Except as expressly herein provided, any
amount due to Landlord that is not paid within ten (10) days after the
date when due shall bear interest at the lesser of ten percent (10%) per annum
or the maximum rats permitted by applicable law.  Payment of such interest shall not excuse or
cure any default by Tenant under this Lease; provided, however, that interest
shall not be payable on late charges Incurred by Tenant nor on any amounts upon
which late charges are paid by Tenant.

 

17.6         PAYMENT OF RENT AND SECURITY DEPOSIT AFTER DEFAULT.  If Tenant fails to pay Base Rent, Tenant’s
Percentage Share of Operating Expenses, Tenant’s Percentage Share of Real
Property Taxes, parking charges or any other monetary obligation due hereunder
on the date it is due, after Tenant’s third failure to pay any monetary
obligation on the date it is due, at Landlord’s option, all monetary
obligations of Tenant hereunder shall thereafter be paid by cashier’s check,
and Tenant shall, upon demand, provide Landlord with an additional security
deposit equal to three (3) months’ Base Rent.  If Landlord has required 

 

36

 

Tenant to make
said payments by cashier’s check or to provide an additional security deposit,
Tenant’s failure to make a payment by cashier’s check or to provide the
additional security deposit shall be a material default hereunder.

 

18.           LANDLORD’S
RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT.  All covenants and agreements to
be kept or performed by Tenant under this Lease shall be performed by Tenant at
Tenant’s sole cost and expense and without any reduction of rent. If Tenant
shall fail to perform any of its obligations under this Lease after the
expiration of any applicable notice and cure period, Landlord may, but shall
not be obligated to, after three (3) days’ prior written notice to Tenant,
make any such payment or perform any such act on Tenant’s behalf without
waiving its rights based upon any default of Tenant and without releasing
Tenant from any obligations hereunder. Tenant shall pay to Landlord, within ten
(10) days after delivery by Landlord to Tenant of statements therefore, an
amount equal to the expenditures reasonably made by Landlord in connection with
the remedying by Landlord of Tenant’s defaults pursuant to the provisions of
this Section.

 

19.           INDEMNITY.  Except as set forth in Section 10.4 of the Lease, Tenant hereby
agrees to indemnify, defend and hold harmless Landlord and its employees,
partners, agents, lenders and ground lessors (said persons and entities are
hereinafter collectively referred to as the “Landlord Indemnified Parties”)
from and against any and all liability, loss, cost, damage, claims, less of
rents, liens, judgments, penalties, fines, settlement costs, investigation
costs, the cost of consultants and experts, attorneys’ fees, court costs and
other legal expenses, the effect of environmental contamination, the removal,
remediation and/or abatement of Hazardous Substances (as said term is defined
in Section 27 of the Lease) and other expenses (hereinafter collectively
referred to as “Damages”) arising out of or related to a “Landlord Indemnified
Matter,” as defined below. For purposes of this Section 19, a “Landlord
Indemnified Matter” shall mean any matter for which one or more of the Landlord
Indemnified Parties incurs liability or Damages if the liability or Damages
arise out of or involve, (i) Tenant or its employees, agents, contractors,
invitees, subtenants, assignees or licensees, (all of said persons or entities
are hereinafter collectively referred to as “Tenant Parties”) negligent use of
the Premises or the Project; (ii) any negligent act or omission of a
Tenant Party; (iii) Tenant’s failure to perform any of its obligations
under the Lease; (iv) the existence, use or disposal of any Hazardous Substance
brought on to the Project by a Tenant Party; or (v) any other matter for
which Tenant has agreed to indemnify Landlord pursuant to any other provision
of this Lease. Except as set forth in Section 10.4 of the Lease, Landlord
hereby agrees to indemnify, defend and hold harmless Tenant and its
shareholders, affiliated entities, employees, partners, agents, and lenders
(said persons and entities are hereinafter collectively referred to as the “Tenant
Indemnified Parties”) from and against any and all Damages arising out of or
related to “Tenant Indemnified

 

37

 

Matters,” as
defined below. For purposes of this Section 19, a “Tenant Indemnified
Matter” shall mean any matter for which one or more of the Tenant Indemnified
Parties incurs liability or Damages if the liability or Damages arise out of or
involve, (i) Landlord or its employees, partners agents, lenders and
ground lessors (said persons are hereinafter collectively referred to as “Landlord
Parties”) negligent use, occupancy or operation of the Project; (ii) any
negligent act or omission of a Landlord Party; (iii) Landlord’s failure to
perform any of its obligations under the Lease; (iv) the existence, use or
disposal of any Hazardous Substances brought on to the Project by a Landlord
Party; or (v) any other matters for which Landlord has agreed to indemnify
Tenant pursuant to any other provisions of this Lease. Landlord’s and Tenant’s
obligations hereunder shall include, but shall not be limited to (a) compensating
the Landlord Indemnified Parties or the Tenant Indemnified Parties, as the case
may be, for damages arising out of Landlord Indemnified Matters or Tenant
Indemnified Matters, as applicable, and (ii) providing defense, with
counsel reasonably satisfactory to such indemnified party, at the other party’s
sole expense, of any claims, actions or proceedings arising out of or relating
to a Landlord Indemnified Matter or a Tenant Indemnified Matter, as the case
may be, whether or not litigated or reduced to judgment and whether or not well
founded. The indemnified parties need not first pay any damages to be
indemnified hereunder. This indemnity is intended to apply to the fullest
extent permitted by applicable law, the parties’ obligations under this Section shall
survive the expiration or termination of the Lease.

 

20.           EXEMPTION OF LANDLORD FROM
LIABILITY.  Tenant hereby
agrees that Landlord shall not be liable for injury to Tenant’s business or any
loss of income therefrom or for loss of or damage to the merchandise, tenant
improvements, fixtures, furniture, equipment, computers, files, automobiles, or
other property of Tenant, Tenant’s employees, agents, contractors or invitees,
or any other person in or about the Project, nor shall Landlord be liable for
injury to the person of Tenant, Tenant’s employees, agents, contractors or
invitees, whether such damage or injury is caused by or results from any cause
whatsoever including, but not limited to, theft, criminal activity at the
Project, negligent security measures, bombings or bomb scares, Hazardous
Materials, fire, steam, electricity, gas, water or rain, flooding, breakage of
pipes, sprinklers, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether said damage or injury results from conditions arising upon
the Premises or upon other portions of the Project, or from other sources or
places, or from new construction or the repair, alteration or improvement of
any part of the Project, unless the cause of the damage or injury arises out of
Landlord’s or its employees’, agents’ or contractors’ grossly negligent or
intentional acts. Landlord shall not be liable for any damages arising from any
act or neglect of any employees, agents, contractors or invitees of any other
Tenant, occupant or user of the Project, nor from the failure of Landlord to
enforce the provisions of the Lease of any other Tenant of the Project. Tenant,
as

 

38

 

a material part of
the consideration to Landlord hereunder, hereby assumes all risk of damage to
Tenant’s property or business or injury to persons, in, upon or about the
Project arising from any cause, excluding Landlord’s gross negligence or
willful misconduct or the gross negligence or willful misconduct of its
employees, agents or contractors, and Tenant hereby waives all claims in
respect thereof against Landlord, its employees, agents and contractors.

 

21.           LANDLORD’S LIABILITY. Tenant acknowledges that Landlord shall
have the right to transfer all or any portion of its interest in the Project
and to assign this Lease to the transferee. Tenant agrees that in the event of
such a transfer Landlord shall automatically be released from all liability
under this Lease accruing after the date of such transfer; and Tenant hereby
agrees to look solely to Landlord’s transferee for the performance of Landlord’s
obligations hereunder after the date of the transfer. Upon such a transfer,
Landlord shall, at its opinion, return Tenant’s security deposit to Tenant or
transfer Tenant’s security deposit to Landlord’s transferee and, in either
event, Landlord shall have no further liability to Tenant for the return of its
security deposit. Subject to the rights of any lender holding a mortgage or
deed of trust encumbering all or part of the Project, Tenant agrees to took
solely to Landlord’s equity interest in the Project for the collection of any
judgment requiring the payment of money by Landlord arising out of (a) Landlord’s
failure to perform its obligations under this Lease or (b) the negligence
or willful misconduct to Landlord, its partners, employees and agents. No other
property or assets of Landlord shall be subject to levy, execution or other
enforcement procedure for the satisfaction of any judgment or writ obtained by
Tenant against Landlord. No partner, employee or agent of Landlord shall be
personally liable for the performance of Landlord’s obligations hereunder or be
named as a party in any lawsuit arising out of or related to, directly or
indirectly, this Lease and the obligations of Landlord hereunder. The
obligations under this Lease do not constitute personal obligations of the
individual partners of Landlord, if any, and Tenant shall not seek recourse
against the individual partners of Landlord or their assets.

 

22.           SIGNS.  Tenant shall not make any changes to the
exterior of the Premises, install any exterior lights, decorations, balloons,
flags, pennants, banners or painting, or erect or install any signs, windows or
door lettering, placards, decorations or advertising media of any type which
can be viewed from the exterior of the Premises, without Landlord’s prior
written consent, which may be given or withheld in Landlord’s sole discretion. Upon
vacation of the Premises, Tenant shall remove all signs and repair, paint
and/or replace the building facia surface to which its signs are attached. Tenant
shall obtain all applicable governmental permits and approvals for signs and
exterior treatments. All signs, decorations, advertising media, blinds,
draperies and other window treatment or bars or other security installations
visible from outside the Premises shall be subject to Landlord’s approval and
conform in all respects to Landlord’s requirements.

 

39

 

See Addendum
Paragraph 7

 

23.           PARKING.  During the term and subject to the rules and
regulations attached hereto as Exhibit “C,” as modified by Landlord from
time to time (the “Rules”), Tenant shall be entitled to use the number of
parking spaces set forth in Section 1.14 in the Common Area parking lot of
the Project. Tenant’s parking rights are in common with the parking rights of
any other Tenants of the Project, and all of Tenant’s parking spaces are
unreserved parking spaces. Landlord reserves the right at any time to
reasonably designate areas in the Common Areas where Tenant may or may not
park. If Tenant commits or allows in the parking lot any of the activities
prohibited by the Lease or the Rules, then Landlord shall have the right,
without notice, in addition to such other rights and remedies that it may have,
to remove or tow away the vehicle involved and charge the cost to Tenant, which
cost shall be immediately payable by Tenant upon demand by Landlord. Tenant’s
parking rights are the personal rights of Tenant, and Tenant shall not
transfer, assign or otherwise convey its parking rights separate and apart from
this Lease. Landlord, in addition to its other remedies, shall have the right
to remove or tow away any other vehicles. Landlord shall not be responsible for
enforcing Tenant’s parking rights against any third parties. Tenant shall not
permit or allow any vehicles that belong to or are controlled by Tenant or
Tenant’s employees, suppliers, shippers, customers or invitees to be loaded,
unloaded or parked in areas other than those designated by Landlord for such
activities.

 

24.           BROKER’S FEE.  Tenant and Landlord each represent and warrant
to the other that neither has had any dealings or entered into any agreements
with any person, entity, broker or finder other than the persons, if any,
listed in Section 1.15 (collectively, the “Brokers”), in connection with
the negotiation of this Lease, and no other broker, person, or entity is
entitled to any commission or finder’s fee in connection with the negotiation
of this Lease, and Tenant and Landlord each agree to indemnify, defend and hold
the other harmless from and against any claims, damages, costs, expenses,
attorneys’ fees or liability for compensation or charges which may be claimed
by any such unnamed broker, finder or other similar party by reason of any
dealings, actions or agreements of the indemnifying party. The commission
payable to the Brokers with respect to this Lease shall be pursuant to the
terms of the separate commission agreement in effect between Landlord and the
Brokers. Nothing in this Lease shall impose any obligation on Landlord to pay a
commission or fee to any party other than Brokers. Tenant shall have no
obligation to pay any commission or fees to the Brokers in connection with this
Lease unless Tenant has entered into a separate commission agreement with any
of the Brokers.

 

40

 

25.           ESTOPPEL CERTIFICATE.

 

25.1         DELIVERY OF CERTIFICATE.  Tenant shall from time to time, upon not less
than twenty (20) days’ prior written notice from Landlord, execute, acknowledge
and deliver to Landlord a statement in writing certifying such information as
Landlord may reasonably request relating to the Lease including, but not
limited to, the following:  (a) that
this Lease is unmodified and in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease, as so modified,
is in full force and effect), (b) the date to which the Base Rent and
other charges are paid in advance and the amounts so payable, (c) that
there are not, to Tenant’s knowledge, any uncured defaults or unfulfilled
obligations on the part of Landlord, or specifying such defaults or unfulfilled
obligations, if any are claimed, (d) that whether or not all Tenant
improvements to be constructed by Landlord, if any, have bean completed in
accordance with Landlord’s obligations, and (e) that Tenant has taken
possession of the Premises.  Any such
statement may be conclusively relied upon by any prospective purchaser or
encumbrances of the Project.

 

25.2         FAILURE TO DELIVER CERTIFICATE.  At Landlord’s option, the failure of Tenant
to deliver such statement within such time shall constitute a material default
of Tenant hereunder, or it shall be conclusive upon Tenant that (a) this
Lease is in full force and effect, without modification except as may be
represented by Landlord, (b) there are no uncured defaults in Landlord’s
performance, (c) not more than one month’s Base Rent has been paid in
advance, (d) all Tenant improvements to be constructed by Landlord, if
any, have been completed in accordance with Landlord’s obligations, and (e) Tenant
has taken possession of the Premises.

 

26.           FINANCIAL INFORMAITON. From time to time, at Landlord’s
request, but only if Landlord is selling or refinancing the Building or if
Tenant is in default under the Lease, Tenant shall cause the following
financial information to be delivered to Landlord, at Tenant’s sole cost and
expense, upon not less than twenty (20) days’ advance written notice from
Landlord: (a) Tenant’s most recent audited financial statement for Tenant (b) such
other financial information pertaining to Tenant as Landlord or any Lender or
purchaser of Landlord may reasonably request. All financial statements shall be
prepared in accordance with generally accepted accounting principals
consistently applied (or any other recognized accounting method if such is the
normal practice of Tenant) and, if such is the normal practice of Tenant, shall
be audited by an independent certified public accountant. Tenant hereby
authorizes Landlord, from time to time, without notice to Tenant, to obtain a
credit report or credit history on Tenant from any credit reporting company. Landlord
agrees that it shall keep such financial information confidential and it and
its partners, officers, directors, employees, brokers, and attorneys, if any,
shall not disclose the information contained in such financial

 

41

 

statements to any
other person or entity, other than Landlord’s mortgagees, brokers, agents,
accountants, prospective purchasers and attorneys on an as needed basis or as
required by law, without the prior written consent of Tenant, which such
consent shall not be unreasonably withheld.

 

27.           ENVIRONMENTAL MATTERS/HAZARDOUS MATERIALS.

 

27.1         HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE.  [Intentionally omitted]

 

27.2         DEFINITION OF HAZARDOUS MATERIALS.  As used in this Lease, the term Hazardous
Materials shall mean and include (a) any hazardous or toxic wastes,
materials or substances, and other pollutants or contaminants, which are or
become regulated by any Environmental Laws (defined below); (b) petroleum,
petroleum by-products, gasoline, diesel fuel, crude oil or any fraction thereof;
(c) asbestos and asbestos-containing material, in any form, whether
friable or non-friable; (d) polychlorinatad biphenyls; (e) radioactive
materials; (f) lead and lead-containing materials; (g) any other
material, waste or substance displaying toxic, reactive, ignitable or corrosive
characteristics, as all such terms are used in their broadest sense, and are
defined or become defined by any Environmental Law; or (h) any materials
which cause or threatens to cause a nuisance upon or waste to any portion of
the Premises or any surrounding property; or poses or threatens to pose a
hazard to the health and safety of persons on the Premises, any other
surrounding property.  For purposes of
this Lease, the term “Hazardous Materials” shall not include nominal amounts of
ordinary household cleaners, office supplies and janitorial supplies and any
other items obtained lawfully by Tenant and used by Tenant in the conduct of
its business which are not actionable under any Environmental Laws.

 

27.3         PROHIBITION; ENVIRONMENTAL LAWS.  Tenant shall not be entitled to use or store
any Hazardous Materials on, in, or about any portion of the Premises without,
in each instance, obtaining Landlord’s prior written consent thereto.  If Landlord, in its sole discretion, consents
to any such usage or storage, then Tenant shall be permitted to use and/or
store only those Hazardous Materials in such amounts that are necessary for
Tenant’s business and to the extent disclosed to Landlord.  In all events such usage and storage must at
all times be in full compliance with any and all local, state and federal
environmental, health and/or safety-related laws, statutes, orders, standards,
courts’ decisions, ordinances, rules and regulations (as interpreted by
judicial and administrative decisions), decrees, directives, guidelines,
permits or permit conditions, currently existing and as amended, enacted,
issued or adopted in the future which are or become applicable to Tenant or all
or any portion of the Premises (collectively, the “Environmental Laws”) and in
compliance with the recommendations of Landlord’s consultants.  Tenant agrees that any changes to the type
and/or quantities of Hazardous 

 

42

 

Materials may be
implemented only with the prior written consent of Landlord, which consent may
be given or withheld in Landlord’s sole discretion.  Tenant shall not be entitled nor permitted to
install any tanks under, on or about the Premises for the storage of Hazardous
Materials without the express written consent of Landlord, which may be given
or withheld in Landlord’s sole discretion. 
Landlord shall have the right, in Landlord’s sole discretion, at all
times during the Term of this Lease to (i) inspect the Premises, (ii) conduct
tests and investigations to determine whether Tenant is in compliance with the
provisions of this Section 27 or to determine if Hazardous Materials are
present in, on or about the Premises, (iii) request lists of all Hazardous
Materials used, stored or otherwise located on, under or about any portion of
the Premises, and (iv) to require Tenant to complete a survey of its use,
storage and handling of Hazardous Materials in the Premises, using a form and
following procedures designated by Landlord, in Landlord’s sole discretion (the
“Survey”).  The costs and expenses of any
such Survey, tests, investigations or inspections shall be paid by the party
requesting same, unless a contamination, caused or materially contributed to by
Tenant, is found to exist or be imminent, or unless the inspection is requested
or ordered by governmental authority as the result of any such existing or
imminent violation or contamination, in which case Tenant shall reimburse
Landlord for the cost of all such inspections, tests and investigations, and
all costs associated with any Survey.  If
as a result of an inspection, test or Survey Landlord determines, in Landlord’s
sole discretion, that Tenant should implement or perform safety, security or
compliance measures, Tenant shall within thirty (30) days after written request
by Landlord perform such measures, at Tenant’s sole cost and expense; provided,
however, that if the nature of Tenant’s non-performance is such that more than
thirty (30) days are required for such measures to be completed, then Tenant
shall not be in default if Tenant commences performance within such thirty (30)
day period and thereafter diligently pursues the same to completion (such
period not to exceed sixty (60) days following Landlord’s original written
request).  The aforementioned rights
granted herein to Landlord and its representatives shall not create (a) a
duty on Landlord’s part to inspect, test, investigate, monitor or otherwise
observe the Premises or the activities of Tenant and Tenant Parties with
respect to Hazardous Materials, including without limitation, Tenant’s
operation, use and any remediation relating thereto, or (b) liability on
the part of Landlord and its representatives for Tenant’s use, storage,
disposal or remediation of Hazardous Materials, it being understood that Tenant
shall be solely responsible for all liability in connection therewith.

 

27.4         TENANT’S ENVIRONMENTAL OBLIGATIONS.  Tenant shall give to Landlord immediate
verbal and follow-up written notice of any spills, releases, discharges, disposals,
emissions, migrations, removals or transportation of Hazardous Materials on,
under or about any portion of the Premises; provided that Tenant has actual,
implied or constructive knowledge of such event(s), Tenant, at its sole 

 

43

 

cost and expense,
covenants and warrants to promptly investigate, clean up, remove, restore and
otherwise remediate (including, without limitation, preparation of any
feasibility studies or reports and the performance of any and all closures) any
spill, release, discharge, disposal, emission, migration or transportation of
Hazardous Materials arising from or related to the intentional or negligent
acts or omissions of Tenant or Tenant Parties such that the affected portions
of the Premises and any adjacent property are returned to the condition
existing prior to the appearance of such Hazardous Materials.  Any such investigation, clean up, removal,
restoration and other remediation shall only be performed after Tenant has obtained
Landlord’s prior written consent, which consent shall not be unreasonably
withheld so long as such actions would not potentially have a material adverse
long-term or short-term effect on any portion of the Premises.  Notwithstanding the foregoing, Tenant shall
be entitled to respond immediately to an emergency without first obtaining
Landlord’s prior written consent. 
Tenant, at its sole cost and expense, shall conduct and perform, or
cause to be conducted and performed, all closures as required by any
Environmental Laws or any agencies or other governmental authorities having
jurisdiction thereof.  If Tenant fails to
so promptly investigate, clean up, remove, restore, provide closure or
otherwise so remediate, Landlord may, but without obligation to do so, take any
and all steps necessary to rectify the same, and Tenant shall promptly
reimburse Landlord, upon demand, for all costs and expenses to Landlord of
performing investigation, cleanup, removal, restoration, closure and
remediation work.  All such work
undertaken by Tenant, as required herein, shall be performed in such a manner
so as to enable Landlord to make full economic use of the Premises after the
satisfactory completion of such work.

 

27.5         ENVIRONMENTAL INDEMNITY.  In addition to Tenant’s other indemnity
obligations under this Lease, Tenant agrees to, and shall, protect, indemnify,
defend (with counsel acceptable to Landlord) and hold Landlord and the other
indemnities harmless from and against any and all loss, cost, damage, liability
or expense (including, without limitation, diminution in value of any portion
of the Premises, damages for the loss of or restriction on the use of rentable
or usable space, and from any adverse impact of Landlord’s marketing of any
space within the Premises) arising at any time during or after the term of this
Lease in connection with or related to, directly or indirectly, the use,
presence, transportation, storage, disposal, migration, removal, spill, release
or discharge of Hazardous Materials on, in or about any portion of the Premises
as a result (directly or indirectly) of the intentional or negligent acts or
omissions of Tenant or Tenant Parties. 
Neither the written consent of Landlord to the presence, use or storage
of Hazardous Materials in, on, under or about any portion of the Premises nor
the strict compliance by Tenant with all Environmental Laws shall excuse Tenant
from its obligations of indemnification pursuant hereto.  Tenant shall not be relieved of its indemnification
obligations under the provisions of this Section 27.5 due to Landlord’s
status as either an “owner or “operator” under any 

 

44

 

Environmental
Laws.  Landlord represents and warrants
that, as of the date of this Lease, to the best of its knowledge and belief
there are no Hazardous Materials on, in or under the Premises or the Building
in violation of any Environmental Laws.

 

27.6         SURVIVAL. 
Tenant’s obligations and liabilities pursuant to the provisions of this Section 27
shall survive the expiration or earlier termination of this Lease.

 

28.           SUBORDINATION.

 

28.1         EFFECT OF SUBORDINATION.  This Lease, and any Option (as defined below)
granted hereby, upon Landlord’s written election, shall be subject and
subordinate to any ground Lease, mortgage, deed of trust or any other
hypothecation or security now or hereafter placed upon the Project and to any
and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.  Notwithstanding such subordination, Tenant’s
right to quiet possession of the Premises shall not be disturbed if Tenant is
not in default and so long as Tenant shall pay the rent and observe and perform
all of the provisions of this Lease, unless this Lease is otherwise terminated
pursuant to its terms.  At the request of
any mortgagee, trustee or ground lessor, Tenant shall attorn to such person or
entity.  If any mortgagee, trustee or
ground lessor shall elect to have this Lease and any Options granted hereby
prior to the lien of its mortgage, deed of trust or ground Lease, and shall
give written notice thereof to Tenant, this Lease and such Options shall be
deemed prior to such mortgage, dead of trust or ground lease, whether this
Lease or such Options are dated prior or subsequent to the date of said
mortgage, deed of trust or ground lease or the date of recording thereof.  In the event of the foreclosure of a security
device, the new owner shall not (a) be liable for any act or emission of
any prior landlord or with respect to events occurring prior to its acquisition
of title, (b) be liable for the breach of this Lease by any prior
Landlord, (c) be subject to any offsets or defenses which Tenant may have
against the prior Landlord or (d) be liable to Tenant for the return of
its security deposit.  In the event that
the Project shall become subject to any lien of any ground lease, mortgage,
deed of trust or any other hypothecation or security after the Commencement
Date, Landlord shall, at Tenant’s request, obtain a subordination,
non-disturbance and attornment agreement on such mortgagee’s, trustee’s or
ground lessor’s standard form on behalf of Tenant.  Landlord agrees to endeavor to have such
lender agree to add language to such subordination, non-disturbance and
attornment agreement requiring the lender to release the insurance proceeds for
restoration of any damage.

 

28.2         EXECUTION OF DOCUMENTS.  Tenant agrees to execute and acknowledge any
documents Landlord reasonably requests Tenant execute to effectuate an
attornment, a subordination, or to make this Lease or any Option granted herein

 

45

 

prior to the lien
of any mortgage, deed of trust or ground Lease, as the case may be.  Tenant’s failure to execute such documents
within ten (10) days after written demand shall constitute a material
default by Tenant hereunder or, at Landlord’s option, Landlord shall have the
right to execute such documents on behalf of Tenant as Tenant’s
attorney-in-fact.  Tenant does hereby
make, constitute and irrevocably appoint Landlord as Tenant’s attorney-in-fact
and in Tenant’s name, place and stead to execute such documents in accordance
with this Section.

 

29.           OPTIONS.

 

29.1         DEFINITION.  As used in this Lease, the word “Option” has
the following meaning:  (1) the
right or option to extend the Term of this Lease or to renew this Lease, (2) the
option or right of first refusal to Lease the Premises or the right of first
offer to Lease the Premises or the right of first refusal to Lease other space
within the Project or the right of first offer to Lease other space within the
Project, and (3) the right or option to terminate this Lease prior to its
expiration date or to reduce the size of the Premises.  Any Option granted to Tenant by Landlord must
be evidenced by a written option agreement attached to this Lease as a rider or
addendum or said option shall be of no force or effect.

 

29.2         OPTIONS PERSONAL.  Each Option granted to Tenant in this Lease,
if any, is personal to the original Tenant and may be exercised only by the
original Tenant while occupying the entire Premises and may not be exercised or
be assigned, voluntarily or involuntarily, by or to any person or entity other
than Tenant, including, without limitation, any permitted transferee as defined
in Section 16.  The Options, if any,
herein granted to Tenant are not assignable separate and apart from this Lease,
nor may any Option be separated from this Lease in any manner, either by
reservation or otherwise.  If at any time
an Option is exercisable by Tenant, the Lease has been assigned or a sublease
exists as to any portion of the Premises, the Option shall be deemed null and
void and neither Tenant nor any assignee or subtenant shall have the right to
exercise the Option.

 

29.3         MULTIPLE OPTIONS.  In the event that Tenant has multiple Options
to extend or renew this Lease, a later Option cannot be exercised unless the
prior Option to extend or renew this Lease has been so exercised,

 

29.4         EFFECT OF DEFAUILT ON OPTIONS.  Tenant shall have no right to exercise an
Option (i) during the time commencing from the date Landlord gives to
Tenant a notice of default pursuant to Section 17.1 and continuing until
the noncompliance alleged in said notice of default is cured, or (ii) if Tenant
is in default of any of the terms, covenants or conditions of this Lease.  The period of time within which an Option may
be exercised shall not be extended or enlarged by reason of Tenant’s inability
to exercise an Option because of the provisions of this Section.

 

46

 

29.5         LIMITATIONS ON OPTIONS.  [Intentionally omitted]

 

29.6         GUARANTEES.  [Intentionally omitted]

 

30.           LANDLORD RESERVATIONS.  Landlord shall have the
right:  (a) to change the name and
address of the Project or building upon not less than one hundred eighty (180)
days prior written notice; (b) to permit any Tenant the exclusive right to
conduct any business as long as such exclusive right does not conflict with any
rights expressly given herein; and (c) subject to the rights granted to
Tenant in this Lease (but only to the extent contrary to this provision), to
place signs, notices or displays upon the roof, interior or exterior of the
Building or Common Areas of the Project. 
Landlord reserves the right to use the exterior walls of the Premises,
and the area beneath, adjacent to and above the Premises together with the
right to install, use, maintain and replace equipment, machinery, pipes,
conduits and wiring through the Premises, which serve other parts of the
Project provided that Landlord’s use does not unreasonably interfere with
Tenant’s use of the Premises.

 

31.           CHANGES TO PROJECT. 
Landlord shall have the right, in Landlord’s sole discretion, from time
to time, to make changes to the size, shape, location, number and extent of the
improvements comprising the Project (hereinafter referred to as “Changes”)
including, but not limited to, the interior and exterior of buildings, the
Common Areas, HVAC, electrical systems, communication systems, fire protection
and detection systems, plumbing systems, security systems, parking control
systems, driveways, entrances, parking spaces, parking areas and landscaped
areas so long as such Changes do not have a material adverse effect on Tenant’s
access to or use and enjoyment of the Premises. 
In connection with the Changes, Landlord may, among other things, erect
scaffolding or other necessary structures at the Project, limit or eliminate
access to portions of the Project, including portions of the Common Areas, or
perform work in the building, which work may create noise, dust or leave debris
in the Building.  Tenant hereby agrees
that such Changes and Landlord’s actions in connection with such Changes shall
in no way constitute a constructive eviction of Tenant or entitle Tenant to any
abatement of rent.  Landlord shall have
no responsibility or for any reason be liable to Tenant for any direct or
indirect injury to or interference with Tenant’s business arising from the
Changes, nor shall Tenant be entitled to any compensation or damages from
Landlord for any inconvenience or annoyance occasioned by such changes or
Landlord’s actions in connection with such Changes.  Landlord shall use commercially reasonable
efforts to minimize unreasonable interference with Tenant’s use and occupancy
of the Premises during Landlord’s actions in connection with such changes.

 

32.           SUBSTITUTION OF OTHER PREMISES.  [Intentionally
omitted]

 

47

 

33.           HOLDING OVER. 
If Tenant remains in possession of the Premises or any part thereof
after the expiration or earlier termination of the Term hereof with Landlord’s
consent, such occupancy shall be a tenancy from month to month upon all the
Terms and conditions of this Lease pertaining to the obligations of Tenant,
except that the Base Rent payable shall be one hundred fifty percent (150%) of
the Base Rent payable immediately preceding the termination date of this Lease,
and all Options, if any, shall be deemed terminated and be of no further
effect.  If Tenant remains in possession
of the Premises or any part thereof, after the expiration of the Term hereof
without Landlord’s consent, Tenant shall, at Landlord’s option, be treated as a
Tenant at sufferance or a trespasser. 
Nothing contained herein shall be construed to constitute Landlord’s
consent to Tenant holding over at the expiration or earlier termination of the
Lease Term or to give Tenant the right to hold over after the expiration or
earlier termination of the Lease Term. 
In the event Tenant holds over at the Premises for longer than sixty
(60) days following the date of the expiration or earlier termination of the
Lease, then, in addition to the other provisions of this Section, including the
requirement to pay Base Rent at a higher rate following the expiration of the
Term of the Lease, commencing on the sixty-first (61st) day
following the date of the expiration or earlier termination of the Lease,
Tenant hereby agrees to indemnify, hold harmless and defend Landlord from any
cost, loss, claim or liability (including attorneys’ fees) Landlord may incur
as a result of Tenant’s failure to surrender possession of the Premises to
Landlord upon the termination of this Lease.

 

34.           LANDLORD’S ACCESS.

 

34.1         ACCESS. 
Landlord and Landlord’s agents, contractors and employees shall have the
right to enter the Premises at reasonable times upon reasonable notice (except
in the event of an emergency in which case no such notice shall be required)
for the purpose of inspecting the Premises, performing any services required of
Landlord, showing the Premises to prospective purchasers, lenders or, during
the last one hundred eighty (180) days of the Term of the Lease only (such
limit to be applicable only In the event Tenant is not in default hereunder) to
prospective Tenants, undertaking safety measures and making alterations,
repairs, improvements or additions to the Premises or to the Project.  In the event of an emergency, Landlord may
gain access to the Premises by any reasonable means without notice, and
Landlord shall not be liable to Tenant for damage to the Premises or to Tenant’s
property resulting from such access. 
Landlord may at any time place on or about the Building “for sale” or “for
Lease” signs and Landlord may at any time during the last one hundred twenty
(120) days of the Term hereof place on or about the Premises “for Lease” signs.

 

34.2         KEYS. 
Landlord shall have the right to retain keys to the locks on the entry
doors to the Premises and all interior doors at the Premises.

 

48

 

35.           SECURITY MEASURES. 
Tenant hereby acknowledges that Landlord shall have no obligation
whatsoever to provide guard service or other security measures for the benefit of
the Premises or the Project, and Landlord shall have no liability to Tenant due
to its failure to provide such services. 
Tenant assumes all responsibility for the protection of Tenant, its
agents, employees, contractors and invitees and the property of Tenant and of
Tenant’s agents, employees, contractors and invitees from acts of third
parties.  Nothing herein contained shall
prevent Landlord, at Landlord’s sole option, from implementing security
measures for the Project or any part thereof, in which event Tenant shall
participate in such security measures and the cost thereof shall be included
within the definition of Operating Expenses, and Landlord shall have no
liability to Tenant and its agents, employees, contractors and invitees arising
out of Landlord’s negligent provision of security measures.  Landlord shall have the right, but not the
obligation, to require all persons entering or leaving the Project to identify
themselves to a security guard and to reasonably establish that such person
should be permitted access to the Project.

 

36.           EASEMENTS.  Landlord
reserves to itself the right, from time to time, to grant such easements,
rights and dedications that Landlord deems necessary or desirable, and to cause
the recordation of parcel maps and restrictions, so long as such easements,
rights, dedications, maps and restrictions do not unreasonably Interfere with
the use of the Premises by Tenant. 
Tenant shall sign any of the aforementioned documents within twenty (20)
days after Landlord’s written request, and Tenant’s failure to do so shall
constitute a material default by Tenant. 
The obstruction of Tenant’s view, air or light by any structure erected
in the vicinity of the Project, whether by Landlord or third parties, shall in
no way affect this Lease or impose any liability upon Landlord.

 

37.           TRANSPORTATION MANAGEMENT.  Tenant shall fully comply at its
sole expense with all present or future programs implemented or required by any
governmental or quasi-governmental entity or Landlord to manage parking,
transportation, air pollution or traffic in and around the Project or the
metropolitan area in which the Project is located.

 

38.           SEVERABILITY. 
The invalidity of any provision of this Lease as determined by a court
of competent jurisdiction shall in no way affect the validity of any other
provision hereof.

 

39.           TIME OF ESSENCE. 
Time is of the essence with respect to each of the obligations to be
performed by Tenant and Landlord under this Lease.

 

40.           DEFINITION OF ADDITIONAL RENT.  All monetary obligations of
Tenant to Landlord under the terms of this Lease, including, but not limited
to, Base Rent,

 

49

 

Tenant’s Percentage Share of
Operating Expenses, Tenant’s Percentage Share of Real Property Taxes and late
charges shall be deemed to be rent.

 

41.           INCORPORATION OF PRIOR AGREEMENTS.  This Lease and the attachments
listed in Section l.16 contain all agreements of the parties with respect
to the lease of the Premises and any other matter mentioned herein.  No prior or contemporaneous agreement or
understanding pertaining to any such matter shall be effective.  Except as otherwise stated in this Lease,
Tenant hereby acknowledges that no real estate broker nor Landlord nor any
employee or agents of any of said persons has made any oral or written
warranties or representations to Tenant concerning the condition or use by
Tenant of the Premises or the Project or concerning any other matter addressed
by this Lease.

 

42.           AMENDMENTS.  This
Lease may be modified in writing only, signed by the parties in interest at the
time of the modification.

 

43.           NOTICES.  All
notices required or permitted by this Lease shall be in writing and may be
delivered (a) in person (by hand, by messenger or by courier service), (b) by
U.S. Postal Service regular mail, (c) by U.S. Postal Service certified
mail, return receipt requested, (d) by U.S. Postal Service Express Mail,
Federal Express or other overnight courier, or (e) by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Section.  The addresses
set forth in Section 1.17 of this Lease shall be the address of each party
for notice purposes.  Landlord or Tenant
may by written notice to the other specify a different address for notice
purposes.  A copy of all notices required
or permitted to be given to Landlord hereunder shall be concurrently
transmitted to such party or parties at such addresses as Landlord may from
time to time hereinafter designate by written notice to Tenant.  Any notice sent by regular mall or by
certified mail, return receipt requested, shall be deemed given three (3) days
after deposited with the U.S. Postal Service. 
Notices delivered by U.S. Express Mail, Federal Express or other courier
shall be deemed given on the date delivered by the carrier to the appropriate
party’s address for notice purposes.  If
any notice is transmitted by facsimile transmission, the notice shall be deemed
delivered upon telephone confirmation of receipt of the transmission thereof at
the appropriate party’s address for notice purposes.  A copy of all notices delivered to a party by
facsimile transmission shall also be mailed to the party on the date the
facsimile transmission is completed.  If
notice is received on Saturday, Sunday or a legal holiday, it shall be deemed
received on the next business day. 
Nothing contained herein shall be construed to limit Landlord’s right to
serve any notice to pay rent or quit or similar notice by any method permitted
by applicable law, and any such notice shall be effective if served in
accordance with any method permitted by applicable law whether or not the
requirements of this Section have been met.

 

50

 

44.           WAIVERS.  No
waiver by Landlord or Tenant of any provision hereof shall be deemed a waiver
of any other provision hereof or of any subsequent breach by Landlord or Tenant
of the same or any other provision. 
Landlord’s consent to, or approval of, any act shall not be deemed to
render unnecessary the obtaining of Landlord’s consent to or approval of any
subsequent act by Tenant.  The acceptance
of rent hereunder by Landlord shall not be a waiver of any preceding breach by
Tenant of any provision hereof, other than the failure of Tenant to pay the particular
rent so accepted, regardless of Landlord’s knowledge of such preceding breach
at the time of acceptance of such rent. 
No acceptance by Landlord of partial payment of any sum due from Tenant
shall be deemed a waiver by Landlord of its right to receive the full amount
due, nor shall any endorsement or statement on any check or accompanying letter
from Tenant be deemed an accord and satisfaction.

 

45.           COVENANTS.  This
Lease shall be construed as though Landlord’s covenants contained herein are
independent and not dependent and Tenant hereby waives the benefit of any
statute to the contrary.  All provisions
of this Lease to be observed or performed by Tenant are both covenants and
conditions.

 

46.           BINDING EFFECT; CHOICE OF LAW.  Subject to any provision hereof
restricting assignment or subletting by Tenant, this Lease shall bind the
parties, their heirs, personal representatives, successors and assigns.  This Lease shall be governed by the laws of
the state in which the Project is located, and any litigation concerning this
Lease between the parties hereto shall be initiated in the county in which the
Project is located.

 

47.           ATTORNEYS’ FEES. 
If Landlord or Tenant brings an action to enforce the terms hereof or
declare rights hereunder, the prevailing party in any such action, or appeal
thereon, shall be entitled to its reasonable attorneys’ fees and court costs to
be paid by the losing party as fixed by the court in the same or separate suit,
and whether or not such action is pursued to decision or judgment.  The attorneys’ fee award shall net be
computed in accordance with any court fee schedule, but shall be such as to
fully reimburse all attorneys’ fees and court costs reasonably incurred in good
faith.  Landlord shall be entitled to
reasonable attorneys’ fees and all other costs and expenses incurred in the
preparation and service of notices of default and consultations in connection
therewith, whether or not a legal action is subsequently commenced In
connection with such default.  Landlord
and Tenant agree that attorneys’ fees incurred with respect to defaults and
bankruptcy are actual pecuniary losses within the meaning of Section 365(b)(1)(B) of
the Bankruptcy Code or any successor statute.

 

48.           AUCTIONS.  Tenant
shall not conduct, nor permit to be conducted, either voluntarily or
Involuntarily, any auction or going-out-of-business sale upon the Premises or
the Common Areas.

 

51

 

49.           MERGER.  The
voluntary or other surrender of this Lease by Tenant, or a mutual cancellation
thereof, or a termination by Landlord, shall not result in the merger of
Landlord’s and Tenant’s estates and shall, at the option of Landlord, terminate
all or any existing subtenancies or may, at the option of Landlord, operate as
an assignment to Landlord of any or all of such subtenancies.

 

50.           QUIET POSSESSION. 
Subject to the other terms and conditions of this Lease, and the rights
of any lender, and provided Tenant is not in default hereunder, Tenant shall
have quiet possession of the Premises for the entire Term hereof subject to all
of the provisions of this Lease.

 

51.           AUTHORITY.  If
Tenant is a corporation, trust, limited liability company, limited liability
partnership or general or limited partnership, Tenant, and each individual
executing this Lease on behalf of such entity, represents and warrants that
such individual is duly authorized to execute and deliver this Lease on behalf
of said entity, that said entity is duly authorized to enter into this Lease,
and that this Lease is enforceable against said entity in accordance with its
terms.  If Tenant is a corporation,
trust, limited liability company, limited liability partnership or other
partnership, Tenant shall deliver to Landlord upon demand evidence of such
authority satisfactory to Landlord.

 

52.           CONFLICT.  Except
as otherwise provided herein to the contrary, any conflict between the printed
provisions, exhibits, addenda or riders of this Lease and the typewritten or
handwritten provisions, If any, shall be controlled by the typewritten or
handwritten provisions.

 

53.           MULTIPLE PARTIES. 
If more than one person or entity is named as Tenant herein, the
obligations of Tenant shall be the joint and several responsibility of all
persons or entitles named herein as Tenant. 
Service of a notice in accordance with Section 43 on one Tenant
shall be deemed service of notice on all Tenants.

 

54.           INTERPRETATION. 
This Lease shall be interpreted as if it was prepared by both parties,
and ambiguities shall not be resolved in favor of Tenant because all or a
portion of this Lease was prepared by Landlord. 
The captions contained in this Lease are for convenience only and shall
not be deemed to limit or alter the meaning of this Lease. As used in this
Lease, the words tenant and landlord include the plural as well as the
singular.  Words used in the neuter
gender include the masculine and feminine gender.

 

55.           PROHIBITION AGAINST RECORDING.  Neither this Lease, nor any
memorandum, affidavit or other writing with respect thereto, shall be recorded
by Tenant or by anyone acting through, under or on behalf of Tenant.  Landlord shall have the right to record a
memorandum of this Lease, and Tenant shall execute,

 

52

 

acknowledge and deliver to Landlord
for recording any memorandum prepared by Landlord.

 

56.           RELATIONSHIP OF PARTIES.  Nothing contained in this Lease
shall be deemed or construed by the parties hereto or by any third party to
create the relationship of principal and agent, partnership, joint venturer or
any association between Landlord and Tenant.

 

57.           SECURITY INTEREST. 
In consideration of the covenants and agreements contained herein, and
as a material consideration to Landlord for entering into this Lease, Tenant
hereby unconditionally grants to Landlord a continuing security interest in and
to all personal property of Tenant located or left at the Premises and the
Security Deposit, if any, and any advance rent payment or other deposit, now in
or hereafter delivered to or coming into the possession, custody or control of
Landlord, by or for the account of Tenant, together with any increase in
profits or proceeds from such property. 
The security interest granted to Landlord hereunder secures payment and
performance of all obligations of Tenant under this Lease now or hereafter
arising or existing, whether direct or indirect, absolute or contingent, or due
or to become due.  In the event of a
default under this Lease which is not cured within the applicable grace period,
if any, Landlord is and shall be entitled to all the rights, powers and
remedies granted a secured party under the State of Maryland Commercial Code
and otherwise available at law or in equity, including, but not limited to, the
right to retain as damages the personal property, Security Deposit and other
funds held by Landlord, without additional notice or demand regarding this
security interest.  Tenant agrees that it
will execute such other documents or instruments as may be reasonably necessary
to carry out and effectuate the purpose and terms of this Section, or as
otherwise reasonably requested by Landlord, including without limitation,
execution of a UCC-1 financing statement. 
Tenant’s failure to execute such documents within ten (10) days
after written demand shall constitute a material default by Tenant hereunder
and, at Landlord’s option, Landlord shall have the right to execute such
documents on behalf of Tenant as Tenant’s attorney-in-fact.  Tenant does hereby make, constitute and
irrevocably appoint Landlord as Tenant’s attorney-in-fact, and Landlord shall
have the right to execute such documents in Tenant’s name.  Tenant hereby waives any rights it may have
under the State of Maryland Civil Code which are inconsistent with Landlord’s
rights under this Section.  Landlord’s
rights under this Section are in addition to Landlord’s rights under
Sections 7 and 17.  Notwithstanding
anything to the contrary contained in this Section 57, the security
interest granted by Tenant to Landlord shall be automatically subordinated to
the security interest, if any, granted to Tenant’s lenders in the ordinary
course of Tenant’s business.  At Tenant’s
request, Landlord shall execute a lien waiver, the form of which shall be
reasonably satisfactory to Landlord, waiving Landlord’s security interest in
the collateral

 

53

 

described in any such lien
waiver (which collateral shall exclude any Tenant improvements and any fixtures
installed in the Premises).

 

58.           SIGNAGE.  [Intentionally
omitted]

 

59.           RULES AND REGULATIONS.  Tenant agrees to abide by and
conform to the Rules and to cause its employees, suppliers, customers and
invitees to so abide and conform. 
Landlord shall have the right, from time to time, to modify, amend and
enforce the rules in a nondiscriminatory manner.  Landlord shall not be responsible to Tenant
for the failure of other persons, including, but not limited to, other tenants,
their agents, employees and invitees, to comply with the Rules.

 

60.           RIGHT TO LEASE. 
Landlord reserves the absolute right to effect such other tenancies in
the Project as Landlord in its sole discretion shall determine, and Tenant is
not relying on any representation that any specific tenant or number of tenants
will occupy the Project.

 

61.           CONFIDENTIALITY. 
Tenant acknowledges and agrees that the terms of this Lease are
confidential and constitute proprietary information of Landlord.  Disclosure of the terms hereof could
adversely affect the ability of Landlord to negotiate other Leases with respect
to the Project and may impair Landlord’s relationship with other Tenants of the
Project.  Tenant agrees that it and its
partners, officers, directors, employees, brokers, and attorneys, if any, shall
not disclose the terms and conditions of this Lease to any other person or
entity except as required by law or by a court order from a court of competent
jurisdiction without the prior written consent of Landlord, which may be given
or withheld by Landlord, in Landlord’s sole discretion.  It is understood and agreed that damages
alone would be an inadequate remedy for the breach of this provision by Tenant,
and Landlord shall also have the right to seek specific performance of this
provision and to seek injunctive relief to prevent its breach or continued
breach.

 

62.           WAIVER OF JURY TRIAL.  LANDLORD AND TENANT HEREBY WAIVE
THEIR RESPECTIVE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM,
COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION, PROCEEDING AND HEARING BROUGHT
BY EITHER LANDLORD AGAINST TENANT OR TENANT AGAINST LANDLORD ON ANY MATTER
WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES,
OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY
LAW, STATUTE, OR REGULATION, EMERGENCY OR OTHERWISE, NOW OR HEREAFTER IN
EFFECT.

 

54

 

See Addendum
Paragraphs 10, 11, 12 and 13

 

[SIGNATURES APPEAR ON
NEXT PAGE]

 

55

 

LANDLORD AND TENANT ACKNOWLEDGE THAT THEY HAVE
CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED
HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND VOLUNTARY
CONSENT THERETO.  THE PARTIES HEREBY AGREE
THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND
TENANT WITH RESPECT TO THE PREMISES. 
TENANT ACKNOWLEDGES THAT IT HAS BEEN GIVEN THE OPPORTUNITY TO HAVE THIS
LEASE REVIEWED BY ITS LEGAL COUNSEL PRIOR TO ITS EXECUTION.  PREPARATION OF TH1S LEASE BY LANDLORD OR
LANDLORD’S AGENT AND SUBMISSION OF SAME TO TENANT SHALL NOT BE DEEMED AN OFFER
BY LANDLORD TO LEASE THE PREMISES TO TENANT OR THE GRANT OF AN OPTION TO TENANT
TO LEASE THE PREMISES.  THIS LEASE SHALL
BECOME BINDING UPON LANDLORD ONLY WHEN FULLY EXECUTED BY BOTH PARTIES AND WHEN
LANDLORD HAS DELIVERED A FULLY EXECUTED ORIGINAL OF THIS LEASE TO TENANT.

 

 

	
  LANDLORD:

  	
  TENANT*

  
	
   

  	
   

  
	
  THE REALTY ASSOCIATES FUND V, L.P.,

  a Delaware limited partnership

  	
  K.R SPORTS, INC.,

  a Maryland corporation

  
	
   

  	
   

  
	
  By: Realty Associates Fund V LLC, a
  Massachusetts

  	
   

  
	
  limited
  liability company, general partner

  	
  By:

  	
  /s/ J. S. Plank

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Realty Associates Advisors LLC, a Delaware 

  	
   

  	
  J. S. Plank 

  	
   

  
	
   

  	
   

  	
  limited liability company, Manager 

  	
   

  	
  (Print Name)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Realty Associates Advisors Trust, a 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Massachusetts business trust, sole 

  	
  lts:

  	
  VP Finance

  	
   

  
	
   

  	
   

  	
   

  	
  member.

  	
   

  	
  (Print
  Title)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Henry G. Grauer 

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By: Realty Associates Fund V Texas
  Corporation,

  	
   

  	
   

  	
   

  	
   

  
	
  A Texas corporation

  	
   

  	
  (Print Name)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Henry G. Bauer

  	
   

  	
  lts:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Print
  Title)

  	
   

  
														

 

*If Tenant is a corporation, the authorized officers must sign on
behalf of the corporation and indicate the capacity in which they are
signing.  The Lease must be executed by
the president or vice president and the secretary or assistant
secretary, unless the bylaws or a resolution of the board of directors
shall otherwise provide, in which event, the bylaws or a certified copy of the
resolution, as the case may be, must be attached to this Lease.

 

56

 

Addendum

 

Addendum to Standard
Industrial Lease (the “Lease”)

dated December, 2003 Between

The Realty Associates Fund V, L.P.  (“Landlord”)
and

K.P.  SPORTS, INC., trading as Under
Armour Performance Apparel (“Tenant”)

 

It is hereby agreed by Landlord and Tenant that the
provisions of this Addendum are a part of the Lease.  If there is a conflict between the terms and
conditions of this Addendum and the terms and conditions of the Lease, the
terms and conditions of this Addendum shall control.  Capitalized terms in this Addendum shall have
the same meaning as capitalized terms in the Lease, and, if a Work Letter Agreement
is attached to this Lease, as those terms have been defined in the Work Letter
Agreement.

 

1.             Tenant
Improvements.

 

(a)           Tenant
hereby agrees to accept the Premises in its “as-is” condition existing on the
date hereof, subject to (i) Landlord’s completion of the “Office Work”
defined in subparagraph (b) below, and (ii) Landlord’s completion of
the “Code Compliance Work” defined in subparagraph (c) below.  For purposes hereof, “as-is” shall mean that
the Premises shall be delivered broom-clean free of debris and the personal
property and equipment of any previous Tenants of the Premises and that all
systems, including without limitation, the plumbing, electrical, lighting and
mechanical systems, shall be delivered in good working order.  Except as expressly provided in subparagraphs
(b) and (c) and Paragraph 10 below, Landlord shall not be obligated
to make any Tenant improvements to the Premises on behalf of Tenant during the
Term hereof.

 

(b)           Landlord,
at Landlord’s sole cost and expense, shall make the cosmetic improvements (the “Office
Work”) to that portion of the Premises consisting of office space that is on
two stories of the Premises containing approximately Twenty Thousand (20,000)
square feet (the “Office Space”).  The
Office Work is more fully described in Schedule 2 attached hereto.

 

(c)           Landlord,
at Landlord’s sole cost and expanse, shall make the Improvements described in Schedule 3
attached hereto (the “Code Compliance Work”).

 

2.             Delay
In Delivery.  Notwithstanding
anything to the contrary contained in the Lease, in the event Landlord fails to
deliver the Premises to Tenant on or before March 1, 2004 with the Office
Work substantially completed and the Code Compliance Work complete (the “Targeted
Delivery Date”), except as expressly

 

57

 

provided below, Landlord
shall not be subject to any liability therefor, nor shall such failure affect
the validity of this Lease or the obligations of Tenant hereunder; provided,
however, Tenant shall be entitled to occupy the Premises rent free after the
Commencement Date one (1) day for each day from the Targeted Delivery Date
until Landlord delivers the Premises to Tenant. 
If, for any reason except as expressly provided herein, Landlord is
unable to deliver possession of the Premises to Tenant as provided herein on or
before July 1, 2004 (the “Outside Delivery Date”), then Tenant shall have
the right, by notice in writing to Landlord within ten (10) days after the
Outside Delivery Date, to terminate this Lease. 
If Tenant terminates this Lease as provided in the preceding sentence,
the parties shall be discharged from all obligations hereunder, provided, that
if such written notice by Tenant is not received by Landlord within said ten (10) day
period, Tenant shall not have the right to terminate this Lease as provided
above.  If Landlord is unable to deliver
the Premises to Tenant on or before the Targeted Delivery Date or the Outside
Delivery Date due to a Force Majeure Event, the Targeted Delivery Date or the Outside
Delivery Date, as applicable, shall be extended by the period of the delay
caused by the Force Majeure Event.  In
the event Tenant terminates the Lease in according with the foregoing sentence,
Tenant shall have up to ninety (90) days following such notice of termination
to remove all of Tenant’s equipment and fixtures from the Premises and to
repair any damage caused by such removal.

 

3.             Base
Rent Increase.  The Base
Rent set forth in Section 1.9 hereinabove shall be adjusted during the
Term of the Lease as follows:

 

 

	
  Lease Period In Months

  	
   

  	
  Rate Per Square

  Foot/Square Footage

  Used

  	
   

  	
  Annual Base Rent

  	
   

  	
  Monthly Base Rent

  	
   

  
	
  04/01/04 —
  09/30/04

  	
   

  	
  $

  	
  [***]/[***]

  	
   

  	
  $

  	
  [***]

  	
  * 

  	
  $

  	
  [***]

  	
   

  
	
  10/01/04 —
  03/31/05

  	
   

  	
  $

  	
  [***]/[***]

  	
   

  	
  $

  	
  [***]

  	
  * 

  	
  $

  	
  [***]

  	
   

  
	
  04/01/05 —
  09/30/05

  	
   

  	
  $

  	
  [***]/[***]

  	
   

  	
  $

  	
  [***]

  	
  * 

  	
  $

  	
  [***]

  	
   

  
	
  10/01/05 —
  03/31/06

  	
   

  	
  $

  	
  [***]/[***]

  	
   

  	
  $

  	
  [***]

  	
  * 

  	
  $

  	
  [***]

  	
   

  
	
  04/01/06 —
  09/30/06

  	
   

  	
  $

  	
  [***]/[***]

  	
   

  	
  $

  	
  [***]

  	
  * 

  	
  $

  	
  [***]

  	
   

  
	
  10/01/06 —
  03/31/07

  	
   

  	
  $

  	
  [***]/[***]

  	
   

  	
  $

  	
  [***]

  	
  * 

  	
  $

  	
  [***]

  	
   

  
	
  04/01/07 —
  03/31/08

  	
   

  	
  $

  	
  [***]/[***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  04/01/08 —
  03/31/09

  	
   

  	
  $

  	
  [***]/[***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  

 

*annualized amount

 

The amounts set forth herein as Tenant’s Base Rent are
subject to adjustment In the event Tenant exercises Its Expansion Option
pursuant to Paragraph 9 below or in the event Landlord reasonably determines
that (i) during the period from the Commencement Date through September 30,
2004, Tenant is occupying more than 150,000 rentable square feet for the
operation of Tenant’s business, which includes the storage of product, and/or (ii) during
the period from October 1, 2004 through September 30, 2006, Tenant is
occupying more of the Premises than the square footage referenced in the chart

 

58

 

hereinabove during the
applicable period.  In the event any of
the foregoing events shall occur, Base Rent shall be adjusted by multiplying
the amount of square feet being utilized by Tenant in excess of the square
footage referenced in the chart hereinabove during the applicable period by the
Rate per Square Foot referenced for such period.  The foregoing notwithstanding, Tenant shall
not have to pay any additional Base Rent (above the Base Rent stated in the
chart above during such period) if Tenant occupies more than 125,000 rentable
square feet but less than 150,000 rentable square feet during the period
commencing on the Commencement Date through September 30, 2004.

 

4.             Tenant’s
Percentage Share. 
Notwithstanding anything to the contrary contained in Sections 1.12 or 6.4
of the Lease, Tenant’s Percentage Share shall be adjusted during the Term of
the Lease according to the following schedule:

 

	
  Leased Period

  	
   

  	
  Tenant’s Percentage Share*

  	
   

  
	
  04/01/04 —
  09/30/04

  	
   

  	
  [***]%
  (based on 125,000 sq.ft)

  	
   

  
	
  10/01/04 —
  03/31/05

  	
   

  	
  [***]% (based
  on 150,000 sq.ft)

  	
   

  
	
  04/01/05 —
  09/30/05

  	
   

  	
  [***]%
  (based on 175,000 sq.ft)

  	
   

  
	
  10/01/05 —
  03/31/06

  	
   

  	
  [***]%
  (based on 200,000 sq.ft)

  	
   

  
	
  04/01/06 —
  09/30/06

  	
   

  	
  [***]%
  (based on 225,000 sq.ft)

  	
   

  
	
  10/01/06 — end of the Term of the Lease

  	
   

  	
  [***]%
  (based on 264,676 sq.ft)

  	
   

  

 

*The amounts set forth herein as Tenant’s Percentage
Share are subject to adjustment in the event Tenant exercises its Expansion
Option pursuant to Paragraph 9 below or in the event Landlord reasonably
determines that Tenant is occupying more of the Premises than the square
footage referenced in the chart hereinabove during the applicable Lease period
for the operation of Tenant’s business, including the storage of product.

 

5.             Building
Systems.  To the
best of Landlord’s knowledge, the base building systems serving the Premises,
including without limitation, the electrical system, plumbing system, HVAC
system and other mechanical systems and components of the Premises
(collectively, the “Base Building Systems”) are in good working order as of the
date this Lease is executed by Landlord and Tenant.  Notwithstanding anything to the contrary set
forth in Section 12 of the Lease, Landlord hereby agrees that, for the
period commencing on the Commencement Date and continuing for a period of
twelve (12) calendar months thereafter (inclusively, the “Warranty Period”),
Landlord shall be responsible for the cost of any necessary repairs to the Base
Building Systems in or relating to the Premises during the Warranty Period,
except to the extent that any such repairs, replacements or maintenance costs
result from the negligence or willful misconduct of Tenant, its employees,
agents, contractors or invitees.  From
and after the expiration of the Warranty Period, Tenant shall be responsible
for the cost of any such repairs in accordance with Section 12 of the
Lease.

 

59

 

6.             Assignment
And Subletting.  Notwithstanding
anything to the contrary contained in Section 16 of the Lease, provided
Tenant is not in default after expiration of any applicable notice and cure
periods, Tenant shall have the right, without Landlord’s consent, upon thirty
(30) days advance written notice to Landlord, to assign the Lease or sublet the
whole or any part of the Premises (a) to any entity or entities which are
owned or controlled by Tenant, or which owns or controls Tenant (for purposes
of the preceding subparagraph, control shall be deemed to be ownership of more
than fifty percent (50%) of the stock or other voting interest of the controlled
corporation or other business entity), (b) in connection with the sale or
transfer of substantially all of the assets of the Tenant or the sale or
transfer of substantially all of the outstanding ownership interests in Tenant,
or (c) in connection with a merger, consolidation or other corporate
reorganization of Tenant (each of the transactions referenced in the above
subparagraphs (a), (b), and (c) are hereinafter referred to as a “Permitted
Transfer,” and each surviving entity shall hereinafter be referred to as a “Permitted
Transferee”); provided, that such assignment or sublease is subject to the
following conditions:

 

(i)            Tenant
shall remain fully liable under the terms of the Lease;

 

(ii)           such
Permitted Transfer shall be subject to all of the terms, covenants and
conditions of the Lease;

 

(iii)          such
Permitted Transferee has a net worth at least equal to the net worth of Tenant
as of the date of this Lease; and

 

(iv)          such
Permitted Transferee shall expressly assume the obligations of Tenant under the
Lease by a document reasonably satisfactory to Landlord.

 

7.             Signage.  Notwithstanding anything to the contrary
contained in Section 22 of the Lease, Tenant, at Tenant’s sole cost and
expense, shall have the non-exclusive right to place signage on the exterior of
the Building, which such signage shall be subject to all applicable laws, codes
and regulations (including any zoning requirements), as well as any
restrictions or covenants of record, Landlord’s signage and design criteria,
and otherwise subject to Landlord’s prior approval, including but not limited
to, Landlord’s approval of the size, location and Installation of such signage,
provided Tenant is not in default under the Lease beyond the expiration of any
applicable notice and cure period at any time during the Term of the
Lease.  In addition, Tenant shall have
the exclusive right to place signage on the exterior of its Premises and the
exterior façade of the Building façade of the retail space of its Premises
only.  Nothing herein shall prevent
Landlord from allowing another Tenant of the Building to have exterior signage
on the exterior Building façade of such Tenant’s Premises.  Landlord shall have the right, (x) at anytime
during the Term of the Lease if the foregoing condition is

 

60

 

not met, or (y) at the
expiration or earlier termination of the Lease, to require Tenant to remove any
such signage at Tenant’s sole cost and expense and to repair any damage caused
by such removal at Tenant’s sole cost and expense.  Tenant will be required to have an annual
maintenance contract providing for the ongoing maintenance of such sign.  In addition, provided Tenant is not in default
under the Lease beyond the expiration of any applicable notice and cure period
and otherwise subject to the requirements of Section 22 of the Lease,
Tenant shall have the right to place its flag on one of the existing flag poles
located in front of the Building, along with the flags of the United States of
America and the State of Maryland.  If
Tenant is in default under the Lease beyond the expiration of any applicable
notice and cure period, then Landlord shall have the right to require Tenant to
remove its flag.  The signage rights
granted to Tenant in this Paragraph are personal to the original Tenant and any
Permitted Transferee and may not be assigned by or to any person or entity
other than the original Tenant and any Permitted Transferee, including in
connection with any transfer permitted pursuant to Section 16 of the Lease.

 

8.             Options
to Renew.  Subject to
the provisions of Section 29 of the Lease, and provided that Tenant is not
in default beyond any applicable cure period, at the time of Tenant’s exercise
of the Option, or at the commencement of the Option term, Tenant shall have
three (3) two (2) year Options to renew this Lease.  Tenant shall provide to Landlord on a date
which is prior to the date that the applicable Option period would commence (if
exercised) by at least two hundred forty (240) days, a written notice of the
exercise of the applicable Option to extend the Lease for the additional Option
term, time being of the essence.  Such
notice shall be given in accordance with Section 43 of the Lease.  If notification of the exercise of the
applicable Option is not so given and received, all options granted hereunder
shall automatically expire.  Base Rent
applicable to the Premises for the applicable Option term shall be an amount
equal to [***] percent ([***]%) of the then escalated Base Rent applicable to
the Premises immediately prior to the expiration of the applicable Term (which
such amount shall Increase by [***]
percent ([***]%)
annually on each anniversary of the commencement of the applicable Option
term).  All prior terms and conditions of
the Lease shall remain the same, except that Tenant shall not be entitled to
any Tenant improvement allowance nor shall Landlord be obligated to construct
any Tenant improvements for the Premises on behalf of Tenant during the
applicable renewal term.  Upon Tenant’s exercise
of the Option pursuant to this Paragraph, the parties shall promptly execute an
amendment to this Lease reflecting the provisions of this Paragraph.

 

9.             Expansion
Option.  Tenant shall have the Option
(the “Expansion Option”) to Lease the remaining square footage of the Building
containing approximately Ninety-Four Thousand Six Hundred (94,600) rentable
square feet (the “Expansion Space”).  On
or before the earlier to occur of (i) the end of the twenty-fourth

 

61

 

(24th) full calendar month
following the Commencement Date, and (ii) September 30, 2005 (the “Option
Period”), Tenant shall provide to Landlord written notice of Tenant’s exercise
of the Expansion Option, time being of the essence.  Such notice shall be given in accordance with
Section 43 of the Lease.  If
notification of the exercise of this Expansion Option is not so given, the
Expansion Option granted herein shall automatically expire.  Landlord shall notify Tenant within thirty
(30) days following Tenant’s exercise of the Expansion Option when Landlord
shall deliver the Expansion Space to Tenant, which such delivery shall occur
within ninety (90) days following the date of Tenant’s notice exercising the
Expansion Option (“Expansion Delivery Date”). 
During the Option Period, Landlord shall be obligated to keep the
Expansion Space available for Tenant; provided, however, the parties hereto
agree that Landlord may enter into short term Leases or occupancy agreements
for the Expansion Space (or any portion thereof) with third party Tenants or
occupants, provided that any such agreement includes a provision that provides
Landlord the option to terminate any such agreement upon sixty (60) days notice
to such party.  Landlord shall deliver
the Expansion Space to Tenant in its “as-is” condition except that Landlord
shall, at Landlord’s sole cost and expense, remove all refrigerator and freezer
equipment currently located in the Expansion Space.  Landlord shall not be required to make any
improvements to the Expansion Space on behalf of Tenant.  The Base Rent payable for the Expansion Space
shall be at the same Base Rent rate than in effect for the Premises as of the
Expansion Delivery Date and shall escalate at the same time and at the same
rate as the Base Rent for the Promises. 
The Lease term applicable to the Expansion Space shall be coterminous
with the Term of the Lease for the Premises. 
All other terms and conditions of the Lease shall remain the same.  In the event Tenant exercises the Expansion
Option, the parties shall promptly execute an amendment to the Lease
incorporating the provisions of this Paragraph.

 

10.           Demising
Work.  The Premises is not currently
separately demised from the remaining space in the Building (the “Remaining
Space”). Landlord, at Landlord’s sole cost and expense, shall cause the
Premises to be separately demised from the remaining space in the Building in
accordance with the specifications set forth in Schedule 4;
provided, however, Landlord shall have the option to perform such demising
work, which shall include erecting partitions and separating utilities and
services (the “Demising Work”) at anytime during the Term hereof.  Tenant hereby acknowledges that the Demising
Work shall be performed while Tenant is in occupancy of the Premises, and
Landlord’s actions in connection with such Demising Work shall in no way
constitute a constructive eviction of Tenant or entitle Tenant to any abatement
of rent.  Landlord shall have no
responsibility or for any reason be liable to Tenant for any direct or indirect
injury to or interference with Tenant’s business arising from the performance
of the Demising Work, nor shall Tenant be entitled to any compensation or
damages from Landlord for any inconvenience or annoyance occasioned by such

 

62

 

construction or Landlord’s
actions in connection with such construction. 
Landlord shall use commercially reasonable efforts to not unreasonably
interfere with Tenant’s use and enjoyment of the Premises during such
construction.  This provision shall no
longer be applicable in the event Tenant exercises the Expansion Option
pursuant to Paragraph 9 above.

 

11.           Roof-top
Access.  Landlord hereby agrees that
Tenant shall have non-exclusive access to and use of a portion of the Building
roof for Tenant’s communication equipment, the location of which shall be
reasonably agreed upon by Landlord free of charge during the Term of this
Lease.  In the event Tenant wishes to
place communication equipment on the roof, it shall be (i) screened in a
manner and design acceptable to Landlord in its sole but reasonable discretion,
(ii) installed and maintained in compliance in all aspects with all
applicable codes, (iii) subject to Landlord’s approval on use and method
of attachment, and the use of Landlord’s roof license management company, and (v) at
Tenant’s sole cost and expense, including all reasonable consulting and
administrative fees associated with the use of Landlord’s roof license
management company.  In the event Tenant
wishes to place communication equipment on the roof, Tenant shall execute a
license agreement substantially in the form attached to this Lease as Exhibit F.

 

12.           Force
Majeure.  Landlord’s
and Tenant’s time to perform their respective obligations under this Lease
because of, from or through acts of God, strikes, lockouts, labor difficulties,
explosions, sabotage, accidents, riots, civil commotions, acts of war, results
of any warfare or warlike conditions in this or any foreign country, fire and
casualty, Legal Requirements or other similar causes beyond the reasonable
control of Landlord or Tenant, as the case may be (hereinafter a “Force Majeure
Event”), shall be extended by the period of such delay or such prevention which
shall be deemed added to the time herein provided for the performance of any
such obligation.  Notwithstanding the
foregoing, Tenant’s failure to pay Base Rent or any other sums due under the
Lease shall not be excused by any Force Majeure Event.

 

13.           Damages.  Notwithstanding anything to the contrary
contained in the Lease, in no event shall either party be liable under the
Lease for any indirect, incidental, consequential, special, reliance or
punitive damages, including without limitation damages for lost profits, whether
or not said party has been advised of the possibility of such damages, except
that no such limitation shall be applicable to damages caused by Tenant, its
employees, agents, contractors, licensees, subtenants, invitees, affiliates,
successors or assigns in connection with Tenant’s obligations pursuant to
Sections 27 and 33 of the Lease.

 

63

 

EXHIBIT A

 

PREMISES

 

[to be attached]

 

64

 

EXHIBIT A-1

 

TENANT’S ADDITIONAL
PARKING

 

[to be attached]

 

A-1

EXHIBIT B

 

VERIFICATION LETTER

 

K.P. Sports, Inc.,
a Maryland corporation, trading as Under
Armour Performance Apparel (“Tenant”), hereby certifies that it has
entered into a Lease with THE REALTY
ASSOCIATES FUND V, L.P., a Delaware limited partnership (“Landlord”)
and verifies the following information as of the
        day of
                  ,
20   :

 

	
  Address of
  Premises:

  	
   

  	
  1010 Swan Creek Drive

  
	
   

  	
   

  	
  Baltimore, MD 21226

  
	
  Leasable Area of
  Premises:

  	
   

  	
  176,035

  
	
  Commencement
  Date:

  	
   

  	
  June 1, 2004

  
	
  Lease
  Termination Date:

  	
   

  	
  May 31, 2009

  
	
  Initial Base
  Rent:

  	
   

  	
  $57,944.85 (Monthly)

  
	
  Billing Address
  for Tenant:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  	
   

  
	
  Telephone
  Number:

  	
   

  	
   

  	
   

  
	
  Federal Tax ID
  No.:

  	
   

  	
   

  	
   

  

 

Tenant acknowledges and agrees that all tenant
improvements Landlord is obligated to make to the Premises, if any, have been
completed to Tenant’s satisfaction, that Tenant has accepted possession of the
Premises, and that as of the date hereof there exist no offsets or defenses to
the obligations of Tenant under the Lease.

 

	
   

  	
  TENANT

  
	
   

  	
   

  
	
   

  	
  K.P. Sports, Inc.

  
	
   

  	
  A Maryland corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
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  ACKNOWLEDGED AND AGREED TO:

  	
   

  
	
   

  	
   

  
	
  LANDLORD

  	
   

  
	
   

  	
   

  
	
  THE REALTY ASSOCIATES FUND V, L.P.,

  a Delaware limited partnership

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Realty Associates Fund V LLC, a Massachusetts

  limited liability company, general partner

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Realty Associates Advisors LLC, a Delaware

  limited liability company, Manager

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Realty Associates Advisors Trusts, a

  Massachusetts business trust, sole

  member

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Officer

  	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Realty Associates Fund V Texas Corporation, a Texas
  corporation, general partner

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Officer

  	
   

  	
   

  
								

 

B-1

 

EXHIBIT B

 

VERIFICATION LETTER

 

K.P. SPORTS, INC.,
a Maryland corporation, trading as UNDER
ARMOUR PERFORMANCE APPAREL, a                          (“Tenant”),
hereby certifies that it has entered into a Lease with THE REALTY ASSOCIATES FUND V, L.P., a
Delaware limited partnership (“Landlord”) and verifies the following
information as of the         day of
                  ,
20   :

 

	
  Address of
  Premises:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Leasable Area of
  Premises:

  	
   

  	
   

  	
   

  
	
  Commencement
  Date:

  	
   

  	
   

  	
   

  
	
  Lease
  Termination Date:

  	
   

  	
   

  	
   

  
	
  Initial Base
  Rent:

  	
   

  	
   

  	
   

  
	
  Billing Address
  for Tenant:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  	
   

  
	
  Telephone
  Number:

  	
   

  	
   

  	
   

  
	
  Federal Tax ID
  No.:

  	
   

  	
   

  	
   

  

 

Tenant acknowledges and agrees that all tenant
improvements Landlord is obligated to make to the Premises, if any, have been
completed to Tenant’s satisfaction, that Tenant has accepted possession of the
Premises, and that as of the date hereof there exist no offsets or defenses to
the obligations of Tenant under the Lease.

 

	
   

  	
  TENANT

  
	
   

  	
   

  
	
   

  	
  K.P. SPORTS, INC.

  
	
   

  	
  A Maryland corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (PRINT
  NAME)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
  (PRINT
  NAME)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (PRINT
  NAME)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
  (PRINT
  NAME)

  	
   

  

 

[SIGNATURES
CONTINUE ON NEXT PAGE]

 

B-1

 

	
  ACKNOWLEDGED AND AGREED TO:

  	
   

  
	
   

  	
   

  
	
  LANDLORD

  	
   

  
	
   

  	
   

  
	
  THE REALTY ASSOCIATES FUND V, L.P.,

  a Delaware limited partnership

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Realty Associates Fund V LLC,

  a Massachusetts limited liability company,

  general partner

  	
   

  
	
   

  	
  By:

  	
  Realty Associates Advisors LLC,

  a Delaware limited liability company,

  manager

  	
   

  
	
   

  	
  By:

  	
  Realty Associates Advisors Trusts,

  a Massachusetts business trust,

  sole member

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Officer

  	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Realty Associates Fund V Texas Corporation,

  a Texas corporation,

  general partner

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Officer

  	
   

  	
   

  
									

 

B-2

 

RULES AND REGULATIONS

 

GENERAL RULES

 

Tenant shall faithfully observe and comply with the
following Rules and Regulations:

 

1.             Tenant
shall not alter any locks or install any new or additional locks or bolts on
any doors or windows of the Premises without obtaining Landlord’s prior written
consent.  Tenant shall bear the cost of
any lock changes or repairs required by Tenant.

 

2.             Access
to the Project may be refused unless the person seeking access has proper
identification or has a previously received authorization for access to the
Project.  Landlord and its agents shall
in no case be liable for damages for any error with regarding to the admission
to or exclusion from the Project of any person. 
In case of invasion, mob, riot, public excitement or other commotion,
Landlord reserves the right to prevent access to the Project during the
continuance thereof by any means it deems appropriate for the safety and
protection of life and property.

 

3.             No
cooking shall be done or permitted on the Premises, nor shall the Premises be
used for any improper, objectionable or immoral purposes.  Notwithstanding the foregoing, Underwriters’
Laboratory-approved equipment and microwave ovens may be used in the Premises
for heating food and brewing coffee, tea, hot chocolate and similar beverages
for employees and visitors of Tenant, provided that such use is in accordance
with all applicable federal, state and city laws, codes, ordinances, rules and
regulations; and provided further that such cooking does not result in odors
escaping from the Premises.

 

4.             No
boring or cutting for wires shall be allowed without the consent of
Landlord.  Tenant shall not install any
radio or television antenna, satellite dish, loudspeaker or other device on the
roof or exterior walls of the Building. 
Tenant shall not interfere with broadcasting or reception from or in the
Project or elsewhere.

 

5.             Landlord
reserves the right to exclude or expel from the Project any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or drugs,
or who shall in any manner do any act in violation of any of these Rules and
Regulations.

 

6.             Tenant
shall store all its trash and garbage within the interior of the Premises or in
other locations approved by Landlord, in Landlord’s sole discretion.  No material shall be placed in the trash
boxes or receptacles if such material is of such nature that it may not be
disposed of in the ordinary and customary manner of removing and disposing of
trash in the vicinity of the Project without violation of any law or ordinance
governing such disposal.

 

7.             Tenant
shall comply with all safety, fire protection and evacuation procedures and
regulations established by Landlord or any governmental agency.

 

C-1

 

PARKING RULES

 

1.             Tenant
shall not permit or allow any vehicles that belong to or are controlled by
Tenant or Tenant’s employees, suppliers, shippers, customers or invitees to be
loaded, unloaded or parked in areas other than those designated by Landlord for
such activities and at times approved by Landlord.  Users of the parking area will obey all
posted signs and park only in the areas designated for vehicle parking.  Tenant and its customers, employees, shippers
and invitees shall comply with all rules and regulations adopted by
Landlord from time to time relating to truck parking and/or truck loading and
unloading.

 

2.             Landlord
reserves the right to relocate all or a part of parking spaces within the
parking area.

 

3.             Landlord
will not be responsible for any damage to vehicles, injury to persons or loss
of property, all of which risks are assumed by the party using the parking
area.

 

4.             The
maintenance, washing, waxing or cleaning of vehicles in the parking area or
Common Areas is prohibited.

 

5.             Tenant
shall be responsible for seeing that all of its employees, agents, contractors
and invitees comply with the applicable parking rules, regulations, laws and
agreements.

 

6.             At
Landlord’s request, Tenant shall provide Landlord with a list which includes
the name of each person using the parking facilities based on Tenant’s parking
rights under this Lease and the license plate number of the vehicle being used
by that person.  Tenant shall provide
Landlord with an updated list within five (5) days after any part of the
list becomes inaccurate.

 

Landlord reserves the right at any time to change or
rescind any one or more of these Rules and Regulations, or to make such other
and further reasonable Rules and Regulations as in Landlord’s judgment may
from time to time be necessary for the management, safety, care and cleanliness
of the Project, and for the preservation of good order therein, as well as for
the convenience of other occupants and Tenants therein.  Landlord may waive any one or more of these Rules and
Regulations for the benefit of any particular Tenant, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in
favor of any other Tenant, nor prevent Landlord from thereafter enforcing any
such Rules or Regulations against any or all Tenants of the Project.  Tenant shall be deemed to have read these Rules and
Regulations and to have agreed to abide by them as a condition of its occupancy
of the Premises.

 

C-2

 

EXHIBIT D

 

[INTENTIONALLY OMITTED]

 

D-1

 

 

EXHIBIT E

 

LETTER REGARDING RETAIL
SALES USE

 

(TO BE ATTACHED)

 

E-1

 

EXHIBIT F

 

LICENSE AGREEMENT FOR
SATELLITE DISH

 

THIS LICENSE AGREEMENT FOR SATELLITE DISH (the “Agreement”)
is made as of this       day of          
20  , by and between                 
limited partnership (the “Licensor”), and                     
(the “Licensee”), a                        .

 

RECITALS

 

A.            This
Agreement is attached to and made a part of that certain Lease Agreement dated           
(“Lease”) by and between Licensee, as Tenant, and Licensor, as Landlord, for
the Lease by Licensee of approximately             
rentable square feet of space (the “demised Premises”) in the building located
at             (the “Building”),
all as more particularly described in the Lease.

 

B.            Under the
terms of the Lease, Licensor has the exclusive right to use or permit the use
of all or any portion of the roof of the Building for any purpose; Licensee
desires to use a portion of the roof space to maintain and operate thereon a
satellite dish and/or related microwave facilities, antennae and related
equipment, all as more particularly described in Exhibit A and Exhibit B
attached hereto and incorporated herein by this reference (the “Equipment
Location and Specifications”).

 

C.            Licensor
and Licensee desire to provide the terms and conditions for Licensee’s use of
the roof space as a location for an antenna and the equipment required for the
operation thereof.

 

NOW, THEREFORE, in consideration of the foregoing, the
sum of Ten Dollars ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Licensor and
Licensee, intending legally to be bound, hereby agree as follows:

 

1.             The
foregoing recitals are hereby incorporated herein and made a part hereof by
this reference.

 

2.             Satellite
Dish Equipment:  Permitted Uses.  Provided Licensee is not in default under the
terms and conditions of the Lease, Licensee’s agent, as approved by Licensor,
in Licensor’s sole discretion, will install and maintain, at the sole cost of
Licensee and Licensee may, at its own expense, operate on the roof of the
Building, a satellite dish and/or related microwave facilities and antenna as
specified in Exhibit A attached hereto, to be located as designated on Exhibit B
attached hereto (said equipment Is collectively referred to hereinafter as the “Satellite
Dish”).  The Satellite Dish shall be
deemed to be the Licensee’s Personal Property (as defined in the Lease) and to
the extent not inconsistent with this Agreement, the ownership, installation,
use and removal thereof shall be governed by the terms of the Lease applicable
to Licensee’s Personal Property.

 

3.             Licensor’s
Prior Approval.  Licensor may approve or
reject the installation and operation of the Satellite Dish within a reasonable
time after Licensee submits (i) plans and specifications for the Satellite
Dish (including size, location, height, weight and color); 

 

F-1

 

(ii) copies of all
required governmental and quasi-governmental permits, licenses, special zoning
variances, and authorizations, all of which Licensee shall obtain at its own
cost and expense; and (iii) a policy or certificate of insurance
evidencing such insurance coverage as may reasonably be required by Licensor
for the installation, operation and maintenance of the Satellite Dish and
sufficient to cover, among other things, the Indemnities from Licensee to
Licensor as hereinafter provided. 
Licensor may withhold approval if the installation, operation or removal
of the Satellite Dish may (a) damage the structural integrity of the
Building; (b) unreasonably interfere with any service provided by
Licensor; (c) interfere with any zoning ordinances or other governmental
regulation applicable to the Building; or (d) reduce the amount of
leasable space (other than the Premises)
in the Building.  Licensee shall not be
entitled to rely on any such approval as being a representation by Licensor
that such installation and operation is permitted by or in accordance with any
governmental or quasi-governmental entity, authority or regulation.

 

4.             Installation.

 

(a)           Installation
and maintenance of the Satellite Dish shall be performed solely by Licensee’s
agent or its contractors, as approved by Licensor, in Licensor’s reasonable
discretion.  The Satellite Dish shall not
be located on top of any existing structure on the roof of the building.

 

(b)           Licensee
shall bear all costs and expenses incurred In connection with the installation,
operation and maintenance of the Satellite Dish.  If operation of the Satellite Dish shall
require electrical power Licensor may, at its sole option, install a separate
meter, at Licensee’s sole expense. 
Licensee shall pay the actual cost of all electricity used in the
operation of the Satellite Dish, all as determined by Licensor.

 

5.             Intentionally Omitted.

 

6.             Indemnification.  Licensee covenants and agrees that the
installation, operation, maintenance and removal of the Satellite Dish, or the
demised Premises with respect thereto, shall be solely at its own risk.  Licensee covenants and agrees absolutely and
unconditionally to indemnify, defend and hold Licensor harmless against all
claims, actions, damages, judgments, settlements, liability, costs and expenses
(including reasonable attorneys’ fees and expenses) in connection with death,
bodily or personal injury, damage to property or business or any other loss or
injury arising out of or related to the installation, operation, maintenance or
removal of the Satellite Dish.

 

7.             Termination
Rights.  Licensor may require Licensee,
at any time prior to the expiration of the Lease, to terminate the operation of
the Satellite Dish if it is causing physical damage to the structural integrity
of the Building, unreasonably interfering with any other service provided by
the Building, unreasonably interfering with any prior licensee of the roof, or
causing the violation of any condition or provision of the Lease or any law,
regulation or ordinance promulgated by any governmental or quasi-governmental
authority now or hereafter permitted to continue any similar use or
operation.  If, however, Licensee can
correct the damage or prevent said interference caused by the Satellite Dish to
Licensor’s satisfaction within thirty (30) days, Licensee may restore its
operation so long as Licensee promptly commences to cure such damage and
diligently pursues such cure to completion. 
If the Satellite Dish is not completely

 

F-2

 

corrected and restored to
operation within thirty (30) days, Licensor, at its sole option, may require
that the Satellite Dish be removed at Licensee’s expense.  If Licensor or any other tenant in the
Building shall require that the Satellite Dish be moved to another location on
the roof, either to accommodate Licensor or to provide other tenants in the
Building with access to the roof for placement of other antennas, other
electrical equipment or other Licensor-approved uses or installations, Licensor
shall have the right, at its sole expense, to relocate the Satellite Dish to
another place on the roof.

 

8.             Removal
of the Satellite Dish, At the expiration or earlier termination of the Lease or
upon termination of the operation of the Satellite Dish as provided hereinabove
in Section 7, the Satellite Dish and all cabling and other equipment
relating thereto shall be removed from the Building at Licensee’s sole
cost.  Provided
Licensee is not in default under the terms and conditions of the Lease,
Licensee’s agent, as approved by Licensor, in Licensor’s sole discretion, will
remove and dispose of the Satellite Dish otherwise.  Licensee hereby authorizes
Licensor to remove and dispose of the Satellite Dish and charge Licensee for
all costs and expenses incurred. 
Licensee agrees that Licensor shall not be liable for any property
disposed of or removed by Licensor. 
Licensee’s obligation to perform and observe this covenant shall survive
the expiration or earlier termination of the Term of this Agreement,

 

9.             Time of
the Essence.  Time shall be of the
essence of the Licensee’s obligations hereunder.

 

10.           Entire
Agreement.  This Agreement contains the
entire agreement of the parties hereto and neither Licensor nor any agent or
representative of Licensor has made or is making, and Licensee, in executing
and delivering this Agreement, is not relying upon any warranties,
representations, promises or statements whatsoever.  No waiver or modification of any provision of
this Agreement shall be effective unless expressed in writing and signed by all
parties hereto.

 

11.           Successors
and Assigns.  The obligations of this
Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

 

12.           Notices.  All notices hereunder shall be given by hand
delivery or by certified mail, return receipt requested, and shall be deemed
delivered upon receipt or refusal to accept delivery, if addressed as noted in
the Lease.

 

13.           Governing
Law.  This Agreement shall be construed
and enforced in accordance with the laws of the State of Maryland.

 

F-3

 

IN WITNESS WHEREOF, Licensor and Licensee have duly
executed this Agreement under seal as of the day and year first above written.

 

	
   

  	
  LICENSOR:

  
	
  WITNESS/ATTEST:

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LICENSEE:

  
	
  WITNESS/ATTEST:

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
										

 

F-4

 

SCHEDULE 1

 

INTENTIONALLY OMITTED

 

1

 

SCHEDULE 2

 

OFFICE WORK

 

[TO BE ATTACHED]

 

1

 

SCHEDULE 3

 

CODE COMPLIANCE WORK

 

[TO BE ATTACHED]

 

1

 

SCHEDULE 4

 

DEMISING WORK

 

[TO BE ATTACHED]

 

1

 

 

EXHIBIT A

 

PREMISES

 

 

 

SCHEDULE 2

 

OFFICE WORK

 

In accordance with the provisions of the Standard
Industrial Lease between The Realty Associates, Fund V, L.P.  and K.P. 
Sports, A Maryland Corporation, trading as Under Armour Performance
Apparel, specifically set forth in Paragraphs 1(a) and 1(b) of The
Addendum, the Landlord hereby agrees to perform the following Landlord’s “Cosmetic
Repairs and Office Work” at its sole cost and expense, prior to Tenant’s
occupancy of the Premises:

 

1)             Clean
where needed, repair and/or replace stained or damaged carpeting and tile, as
necessary, with equivalent weight/grade material.

2)             Repair
and refinish any damaged GWB wall surfaces.

3)             Repaint
any repaired wall surfaces as determined by Landlord and Tenant.

4)             Replace
any stained, damaged or missing ceiling tiles as necessary.

5)             Replace/repair
any non-functional lighting fixtures and tubes to match existing.

6)             Modify
all exit and emergency lighting to conform to appropriate codes (further
detailed in Schedule 3 “Code Compliance Work”).

7)             Service,
test and certify existing passenger elevator is in working condition in
accordance with appropriate codes.

8)             Deliver
all heating, ventilating and air conditioning systems (HVAC) in good working
order.

 

 

Exhibit E, Schedule 3

CODE COMPLIANCE WORK

 

In accordance with the provisions of the Standard
Industrial Lease between The Realty Associates Fund V, L.P.  and K.P. Sports, a Maryland Corporation,
trading as Under Armour Performance Apparel, specifically set forth in
Paragraphs 1(a) and 10 of the Addendum, the Landlord hereby agrees to
perform the following Landlord’s “Code Compliance Work” as its sole cost and
expense, prior to Tenant’s occupancy of the Premises:

 

I)             Fire
Protection Systems.     Per NFPA and local code –
Installation of supplemental fire protection and modifications to the existing
system as follows:

 

A)           Compliance
with the NFDA/FM Guidelines for suspended conduit racks, to include heat
barriers as needed.

 

B)            Modifications
to the existing ESFR Roof Level System to code.

 

C)            Testing,
as required in compliance with appropriate codes and Anne Arundel County.

 

D)            All work
to be based on current fire pump test (within 6 month period).

 

E)            Upgrade
and modifications to existing fire alarm annunciation systems to incorporate
alterations detailed above.

 

II)            Mechanical/Plumbing
Systems.        Per local code – Modifications and/or additions
to the existing HVAC and plumbing systems as follows:

 

A)           Miscellaneous
heating, venting and air conditioning (HVAC) equipment repairs to gas-fired,
roof and floor mounted equipment serving the proposed warehouse and office
Premises, to maintain heating and ventilation standards detailed in the
Spears/Votta calculations dated November 18, 2003 and confirmed by Smith
Mechanical in correspondence dated 11/21/03. 
All systems to be tested and balanced and include automatic controls.

 

B)            All
existing exhaust fans serving the office and warehouse toilet rooms, electric
rooms and elevator machine room will be serviced or replaced to make 100%
operational.

 

 

C)            Domestic
water systems to be flushed and cleaned per requirements of Anne Arundel County
Health Dept.

 

D)            Testing
as required in compliance with appropriate codes and Anne Arundel County.

 

III)           Electrical
and Lighting Systems.  Modifications
and/or additions to the existing electrical and lighting systems as follows:

 

A)           Warehouse
lighting fixtures must be added or relocated to meet the required intensity and
distribution in areas where walls and ceilings are to be removed.  New fixtures shall be equal to existing
fixtures on site.

 

B)            Lighting
intensities shall conform to the levels currently in the existing warehouse
area.

 

C)            Modifications
to the existing electrical system, as necessary, to accommodate upgrades to the
existing fire alarm annunciation system.

 

D)            Re-wiring
or supplemental battery systems, as necessary, to exit and emergency lighting
as required by code.

 

Note:      Fire
pump is already on a separately metered direct power feed from the transformer.

 

 

SCHEDULE 4

 

DEMISING WORK

 

In accordance with the provisions of the Standard
Industrial Lease between The Realty Associates, Fund V, L.P. and K.P. Sports, A
Maryland Corporation, trading as Under Armour Performance Apparel, specifically
set forth in Paragraph 10 of The Addendum, the Landlord hereby agrees to
perform the following demising and demolition work at its sole cost and
expense, prior to Tenant’s occupancy of the Premises:

 

Demolition.

 

1)             Landlord
shall remove all existing freezer/cooler units, walls and partitions, including
suspended ceilings and any structural supports noted on the attached plan.

 

2)             Landlord
shall remove any concrete curbs associated with the above freezer/cooler
partitions and repair any associated floor damage to a standard consistent with
existing warehouse floors.  In addition,
Landlord will grind down or remove any existing bolts and repair damage to
existing warehouse floor.

 

3)             Any
existing lighting and sprinkler systems shall be replaced and/or relocated to
provide fire protection and lighting consistent with the appropriate codes and
existing warehouse space.

 

4)             Landlord
shall clear walls off mezzanine deck but leave the deck and mechanicals (i.e.,
sprinkler, electric, lights, etc).  If at
some future date Tenant wishes to move or remove structure, Landlord shall
disassemble, make floor repairs, and remove at Tenant’s option with 90 days’
notice.

 

Demising.

 

1)             Landlord
shall create a one hour rated demising wall in compliance with appropriate
local codes in the area noted on the attached plan.  By using the existing freezer/cooler partition,
and additional wall construction, as necessary.

 

2)             All
utilities serving the Premises shall be separately metered or metered so as to
permit accurate billing for such services as set forth in Paragraph 8 of the
Lease Agreement.

 

3)             All
necessary plans and permits shall be the responsibility of the Landlord, in
compliance with all appropriate codes.

 

 

SCHEDULE 4-1Exhibit 10.16

 

CONFIDENTIAL TREATMENT REQUESTED

WITH RESPECT TO CERTAIN PORTIONS

HEREOF DENOTED WITH "[***]"

 

 

OFFICE LEASE

 

by and between

 

HULL POINT, LLC

 

(Landlord)

 

and

 

K.P. SPORTS, INC.

 

d/b/a Under Armour Performance Apparel

 

(Tenant)

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  DEFINITIONS

  	
   

  
	
  2.

  	
  PREMISES; MEASUREMENT

  	
   

  
	
  3.

  	
  TERM

  	
   

  
	
  4.

  	
  RENT; SECURITY DEPOSIT

  	
   

  
	
  5.

  	
  TAXES

  	
   

  
	
  6.

  	
  USE OF PREMISES

  	
   

  
	
  7.

  	
  INSURANCE AND INDEMNIFICATION

  	
   

  
	
  8.

  	
  SERVICES AND UTILITIES

  	
   

  
	
  9.

  	
  REPAIRS AND MAINTENANCE

  	
   

  
	
  10.

  	
  IMPROVEMENTS

  	
   

  
	
  11.

  	
  LANDLORD’S RIGHT OF ENTRY

  	
   

  
	
  12.

  	
  DAMAGE OR DESTRUCTION

  	
   

  
	
  13.

  	
  CONDEMNATION

  	
   

  
	
  14.

  	
  ASSIGNMENT AND SUBLETTING

  	
   

  
	
  15.

  	
  RULES AND REGULATIONS

  	
   

  
	
  16.

  	
  SUBORDINATION AND ATTORNMENT

  	
   

  
	
  17.

  	
  DEFAULTS AND REMEDIES

  	
   

  
	
  18.

  	
  ESTOPPEL CERTIFICATE

  	
   

  
	
  19.

  	
  QUIET ENJOYMENT

  	
   

  
	
  20.

  	
  NOTICES

  	
   

  
	
  21.

  	
  GENERAL

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Exhibits

  	
   

  
	
   

  	
   

  	
   

  
	
  A

  	
  Plan showing
  Project and Building

  	
   

  
	
  B

  	
  Drawing showing
  approximate location of Premises

  	
   

  
	
  C

  	
  Landlord’s Work

  	
   

  
	
  D

  	
  Current Rules and Regulations

  	
   

  
	
  E

  	
  Collateral Assignment of Lease Form

  	
   

  
	
  F

  	
  Forms: First Amendment to Lease and
  Promissory Note

  	
   

  
	
  G

  	
  Schedule of
  Deliveries

  	
   

  
	
  H

  	
  Form of Subordination, Attornment
  and Non-Disturbance Agreement

  	
   

  
	
  I

  	
  Form of
  Estoppel Certificate

  	
   

  

 

i

 

OFFICE LEASE

 

THIS LEASE is made on
this                
day of March, 2002 (the “Effective Date”),
by and between HULL POINT, LLC, a Maryland limited liability company (the “Landlord”), and KP SPORTS, INC., a Maryland
corporation, d/b/a Under Armour Performance Apparel (the “Tenant”).

 

IN CONSIDERATION of the
agreements and covenants hereinafter set forth, Landlord and Tenant mutually
agree as follows:

 

1.                                      DEFINITIONS.

 

1.1.                              As
used herein, the following terms shall have the following meanings:

 

“Base Operating Costs” means Operating Costs
incurred for the 2002 calendar year (the “Base
Year”).  If less than 95% of
the rentable square feet in the Project is occupied by tenants or Landlord is
not supplying services to 95% of the rentable square feet of the Project at any
time during any calendar year (including the Base Year), then Operating Costs
for such calendar year shall be an amount equal to the Operating Costs which
would normally be expected to be incurred using reasonable projections and
reasonable extrapolations from existing cost data had 95% of the Project’s
rentable square feet been occupied and had Landlord been supplying services to
95% of the Project’s rentable square feet throughout such calendar year.  Furthermore, if after the Base Year, the
Landlord provides additional services or incurs cost items in a category not
otherwise covered in Operating Costs as defined herein, the Base Operating
Costs shall be increased in a manner as reasonably determined by Landlord to
include such additional matter.

 

“Base Rent” has the meaning given it in subsection 4.1.

 

“Base Taxes” means Taxes incurred for the
state fiscal tax year beginning July 1, 2002 and ending June 30,
2003.

 

“Building” means collectively the five
buildings and the pad site used for office purposes and related accessory uses
in the development known as Tide Point, and located in Baltimore City,
Maryland.  The Building, which will
contain approximately 405,000 rentable square feet, is more particularly shown
on Exhibit A, subject to adjustment from time to time.  The names of individual buildings are
identified on Exhibit A.

 

“Building Service Equipment” means all
apparatus, machinery, devices, fixtures, appurtenances, equipment and personal
property now or hereafter located on the Premises and owned by the Landlord.

 

“Common Areas” means those areas and
facilities of the Project which may be designated by the Landlord from time to
time as common areas (portions of which may from time to time be relocated
and/or reconfigured by the Landlord in its sole discretion so long as
reasonable access to and from the Premises is maintained), which Common Areas
include footways, sidewalks, Parking Areas, lobbies, elevators, stairwells,
corridors, restrooms, water-

 

 

related features, including water taxis, bulkheads and
docks, and certain exterior areas on the Project, subject, however, to the Rules and
Regulations.

 

“Default Rate” means an annual floating rate
of interest equal to [***] ([***]) percentage points in excess of the
prime rate of interest as announced from time to time by Bank of America, or
its successor.

 

“Insurance Premiums” means the aggregate of
any and all premiums paid by the Landlord for hazard, liability, loss-of-rent,
workmens’ compensation, boiler and machinery or similar insurance upon any or
all of the Project.

 

“Landlord” means the Person hereinabove
named as such and its successors and assigns.

 

“Lease Year” means (a) the period
commencing on the Rent Commencement Date and terminating at 11:59 p.m. on
the first anniversary of the last day of the month in which the Rent
Commencement Date occurs, and (b) each successive period of twelve (12)
calendar months thereafter during the Term.

 

“Operating Costs” means any and all costs
and expenses incurred by the Landlord for services performed by the Landlord or
by others on behalf of the Landlord with respect to the operation and
maintenance of the Premises, Building, the Project, and the Common Areas
located therein and serving or allocable to the Premises (including the Parking
Areas) in a manner deemed reasonable and appropriate by Landlord, including,
without limitation, all costs and expenses of:

 

(a)                                  operating,
maintaining, repairing, lighting, signing, cleaning, removing trash from,
painting, striping, controlling of traffic in, controlling of rodents in,
policing and securing the Common Areas;

 

(b)                                 purchasing
and maintaining in full force insurance for the Project as deemed necessary in
Landlord’s discretion;

 

(c)                                  operating,
maintaining, repairing and replacing machinery, furniture, accessories and
equipment used in the operation and maintenance of the Project, and the
personal property taxes and other charges incurred in connection with such
machinery, furniture, accessories and equipment;

 

(d)                                 maintaining
and repairing roofs, awnings, paving, curbs, walkways, drainage pipes, ducts,
conduits, grease traps and lighting fixtures throughout the Common Areas;

 

(e)                                  interior
and exterior planting, replanting and replacing flowers, shrubbery, trees,
grass and planters;

 

(f)                                    providing
electricity, heating, ventilation and air conditioning to the Common Areas and
HVAC service to the Building (it being understood that Tenant shall pay for all
costs of Tenant Electric (as defined below)), and operating, maintaining and
repairing any equipment used in connection therewith; it is

 

2

 

further understood
that the maintenance of the HVAC in the Premises shall be an Operating Cost;
provided, however, that maintenance of specialized HVAC equipment installed in
the Premises, if any, shall not be an Operating Cost;

 

(g)                                 water
and sanitary sewer services and other services, if any, furnished to the
Premises, Common Areas and all rentable square feet of office space in the
Project for the non-exclusive use of tenants;

 

(h)                                 cleaning,
maintaining and repairing the Project;

 

(i)                                     accounting
and audit fees and expenses, including a five (5) percent property
management fee, payroll, payroll taxes, employee benefits and related expenses
of all personnel engaged in the operation, maintenance, and management of the
Project;

 

(j)                                     the
cost and expense of complying with all federal, state and local laws, orders,
regulations and ordinances applicable to the Project which are now in force, or
which may hereafter be in force;

 

(k)                                  the
cost (including legal, architectural and engineering fees incurred in
connection therewith) of any improvement made to the Project during any
Operating Year either (x) in order to comply with a legal requirement or
insurance requirement, whether or not such legal requirement or insurance
requirement is valid or mandatory, (y) with the reasonable expectation by
Landlord of reducing Operating Costs (as, for example, a labor-saving
improvement) or enhancing services, or (z) in lieu of a repair; provided,
however, (i) to the extent the cost of such improvement is required to be
capitalized under generally accepted accounting principles, such cost shall be
amortized over the useful economic life of such improvement as reasonably
estimated by Landlord, and the annual amortization shall be deemed an Operating
Cost in each of the Operating Years during which the cost of the improvement is
amortized; and (ii) in no event shall the amount included in Operating
Costs in connection with a capital improvement of the nature described in
clause (y) above exceed the annual amount by which Operating Costs were reduced
as a result of such capital;

 

(l)                                     providing
janitorial and trash removal services to the Project and Premises; and

 

(m)                               all
other costs of maintaining, repairing or replacing any or all of the Building
(including expenses of landscaping, snow, ice, water and debris removal,
outdoor lighting, road maintenance and exterior signage relating to the
Project).

 

Notwithstanding the
foregoing, the following items shall be excluded from Operating Costs:

 

(a)                                  franchise,
income taxes, or excess profit imposed upon Landlord;

 

3

 

(b)                                 debt
service on Mortgages and any costs and expenses relating to a refinancing or
debt modification, including legal fees, title insurance premiums, survey
expenses, appraisal, environmental report, or engineering report;

 

(c)                                  leasing
commissions, brokerage fees or legal fees incurred in connection with the
negotiation and preparation of letters, deal memos, letters of intent, leases
and related documents with respect to the leasing, assignment or subletting of
space for any occupant of the Building;

 

(d)                                 the
cost of tenant installations incurred in connection with preparing space for a
new tenant or refurbishing or renovating space for an existing tenant;

 

(e)                                  salaries
and other compensations of personnel above the grade of building manager;

 

(f)                                    costs
of compliance with the Americans with Disabilities Act;

 

(g)                                 capital
costs, depreciation or amortization (except as provided in the list of
inclusions for Operating Costs under item (k) above);

 

(h)                                 all
costs applicable solely to any additional buildings constructed on the Project.

 

“Operating Year” means each respective
calendar year or part thereof during the Term, or, at the Landlord’s option,
any other 12-month period or part thereof designated by the Landlord during the
Term.

 

“Parking Areas” means those portions of the
Common Areas or other areas under Landlord’s control which from time to time are
designated by the Landlord for the parking of automobiles and other automotive
vehicles while engaged in business upon the Premises (other than while being
used to make deliveries to and from the Premises).

 

“Person” means a natural person, a trustee, a
corporation, a limited liability company, a partnership and/or any other form
of legal entity.

 

“Premises” means that certain space having a
rentable area of approximately 20,000 square feet (subject to measurement as
provided herein) and located on the third (3rd) floor in The Ivory Building,
1020 Hull Street, Baltimore, Maryland 21230, as more particularly depicted on Exhibit B
provided, that if at any time hereafter any portion of the Premises becomes no
longer subject to this Lease, “Premises” shall thereafter mean so much thereof
as remains subject to this Lease.

 

“Project” means that certain project located
in Baltimore City known as Tide Point containing approximately ten (10) acres,
more or less, together with the Building thereon.  The Project is more particularly shown on Exhibit A.

 

“Rent” means all Base Rent and all
Additional Rent.

 

4

 

“Rules and Regulations” means the
reasonable rules and regulations having uniform applicability to all
tenants of the Project (subject to their respective leases) and governing their
use and enjoyment of the Project; provided that such rules and regulations
shall not materially interfere with the Tenant’s use and enjoyment of the
Premises in accordance with this Lease for the purposes listed in subsection 6.1.

 

“Tax Year” means the 12-month period
beginning July 1 of each year or such other 12-month period (deemed for
the purposes of this Lease to have 365 days) established as a real estate tax
year by the taxing authority having lawful jurisdiction over the Project.

 

“Taxes” means the aggregate of any and all
real property and other taxes, metropolitan district charges, front-foot
benefit assessments, special assessments and other taxes or public or private
assessments or charges levied against any or all of the tax parcel containing
the Premises.

 

“Tenant” means the Person hereinabove named
as such and its successors and permitted assigns hereunder.

 

“Tenant Electric” means electric current
supplied to or used in The Ivory Building during normal business hours,
including, but not limited to, lights, outlets, VAV boxes, air handling units,
any primary electric service charge and any specialized HVAC equipment serving
the Premises.

 

“Tenant’s Proportionate Share” means a
fraction, the numerator of which is the number of rentable square feet in the
Premises and the denominator of which is the number of square feet in the
Building, subject to adjustment from time to time as such areas may change.

 

“Tenant’s Share of Increased Operating Costs”
shall be the amount of (i) the Operating Costs for the Operating Year in
question less the Base Operating Costs multiplied by (ii) the Tenant’s
Proportionate Share.

 

“Tenant’s Share of Increased Taxes” shall be
the amount of (i) the Taxes for the Tax Year in question less the Base
Taxes multiplied by (ii) the Tenant’s Proportionate Share.

 

“Term” means the Original Term plus any
exercised renewals thereof.

 

2.                                      PREMISES;
MEASUREMENT.

 

2.1.                              Premises.  The Landlord hereby leases to the Tenant, and
the Tenant hereby leases from the Landlord, the Premises, together, with the
right to use, in common with others, the Common Areas.

 

2.2.                              Rentable
Area.  The Stable area of the
Premises shall be reasonably determined by the Landlord’s architect and shall
be equal to the usable square feet of the Premises, determined in accordance
with Baltimore Building Owners and Managers Association, International “Standard
Method for Measuring Floor Area in Office Buildings,” multiplied by a common
area factor to be calculated by Landlord’s architect and approved by
Tenant.  The Tenant shall have the right
to verify the usable square feet of the Premises at the Tenant’s sole
cost.  The area as so determined is
herein called the “Rentable Area.”  The
Rentable Area shall

 

5

 

also include the data and telecommunication
termination point (patch panel room) on the third (3rd) floor of The Ivory
Building.  Once the Rentable Area of the
Premises has been verified and jointly agreed to, the parties shall enter into
a confirmation agreement setting forth (i) the area of the Premises, (ii) the
calculation of the Base Rent and (iii) the Tenants’ Proportionate Share.

 

2.3.                              Right
of First Offer.  Provided that both
on the date of Tenant’s exercise of its option in regard thereto, and on the
date upon which such space is to be occupied by Tenant hereunder, (i) this
Lease is in full force and effect and (ii) Tenant is not then in material
default hereunder, Tenant shall have the right of first offer (the “Right of First Offer”), upon the
conditions, and subject to the terms set forth in this section, to lease
additional office space on the third (3rd) floor of The Ivory Building (the “Expansion Space”):

 

(a)                                  Tenant
shall deliver written notice to the Landlord during the Original Term
indicating that Tenant requires the Expansion Space.  The notice shall include (i) the size
and location of the Expansion Space, (ii) the date on which the Tenant
intends to occupy the Expansion Spate, and (iii) the Base Rent to apply to
the Expansion Space which Landlord and Tenant agree shall be $[***] per
rentable square foot with [***]% annual escalations.  Landlord will include as part of the Base
Rent for the Expansion Space set forth above three (3) parking spaces per
1,000 square feet leased by Tenant. 
Tenant has the option to increase the ratio of parking spaces from three
(3) per 1,000 square feet leased by Tenant to five (5) spaces per
1,000 square feet leased by Tenant by giving Landlord fifteen (15) days written
notice.  Tenant agrees to pay $[***] per
month for each additional parking space. 
The charges for the additional parking spaces shall be deemed Additional
Rent in accordance with Section 4.4.2.

 

(b)                                 Within
ten (10) days of Landlord’s receipt of Tenant’s written notice, Landlord
shall deliver to Tenant written notice confirming receipt of Tenant’s notice
requiring the Expansion Space.

 

(c)                                  Landlord
and Tenant shall proceed in good faith to enter into an amendment to this
Lease, which amendment shall incorporate the Expansion Space into the Premises
and set forth (i) the Base Rent with respect to the Expansion Space as
provided above, (ii) Tenant’s Proportionate Share to reflect the inclusion
of the Expansion Space, (iii) the number of additional parking spaces
allocated for the Expansion Space as provided above, (iv) recalculation of
the common area factor charged on the entire space to reflect the entire floor’s
original common area factor, (v) the lease term on the Expansion Space
shall be coterminous with the term of the primary space, and (vi) any
other important terms relating to the lease of the Expansion Space.

 

2.4.                              Right
of First Refusal.

 

(a)                                  If,
at any time after the Effective Date, Landlord receives from a third party a
bona fide written offer to lease the Expansion Space which the Landlord desires
to accept,, the Landlord, before accepting the offer, shall send the Tenant
written notice of the proposed offer to lease the Expansion Space, which notice
shall embody the terms of the offer and a copy of the offer, together with a
written notification from the Landlord of Landlord’s intention to accept the
offer embodied in the notice if the offer is not accepted by the Tenant.  The Tenant shall have the right, within seven
(7) business days of the receipt of the written notice from Landlord (the “Refusal Period”), to accept the offer to
lease the Expansion Space on the terms and conditions

 

6

 

set forth in the written notice.  In the event the Tenant elects to accept the
offer embodied in the written notice, the Tenant must do so by notifying
Landlord by written notice within the Refusal Period.

 

(b)                                 If
(i) the Tenant does not accept the offer embodied in the written notice
within the Refusal Period provided in paragraph (a) hereof or (ii) on
the date of Tenant’s acceptance of the offer to lease the Expansion Space or on
the date upon which such Expansion Space is to be occupied by Tenant, (x) this
Lease is not in full force and effect or (y) Tenant is in material default
under the Lease beyond all applicable cure periods, then the offer embodied in
the written notice shall be deemed withdrawn and the Landlord shall be free to
lease the Expansion Space to third parties free and clear of this Right of
First Refusal.

 

3.                                      TERM.

 

3.1.                              Original
Term; Rent Commencement Date.  This
Lease shall be for a term (the “Original Term”)
commencing on the Effective Date and ending at 11:59 p.m. on the third
(3rd) anniversary of the last day of the month in which the Rent Commencement
Date shall occur (which date is hereinafter referred to as the “Termination Date”).

 

Monthly payments of Base
Rent, Additional Rent and all other charges under this Lease shall commence on
the Rent Commencement Date which shall be the earliest to occur of:  (i) May 1, 2002; (ii) the date
upon which Tenant secures telecommunication service to the Premises; provided
that Tenant agrees to promptly order such services; or (iii) the date upon
which the Tenant actually moves into occupancy of the Premises and conducts
business therein.  Tenant shall have
access to the Premises after full lease execution for installation of
telecommunication and network wiring.  It
is Tenant’s goal to move into the Premises on or about April 15, 2002.

 

3.2.                              Confirmation
of Commencement and Termination. 
After (a) the Rent Commencement Date or (b) the expiration of
the Term or any earlier termination of this Lease by action of law or in any
other manner, the Landlord shall confirm in writing by instrument in recordable
form that, respectively, such rent commencement or such termination has
occurred, setting forth therein, respectively, the Rent Commencement Date and
the Termination Date.

 

3.3.                              Renewal.  Tenant shall have the option to renew the
Term of this Lease for two periods of one (1) year each (each, a “Renewal Term”).  Tenant shall exercise the option by providing
written notice to Landlord of its election to exercise such option no later
than six (6) months prior to the expiration of the Term; provided,
however, that Tenant’s option to renew shall be subject to the condition that
no default shall have occurred and be continuing after applicable notice and
cure periods have expired as of the date of Tenant’s exercise of such option or
as of the date of commencement of the Renewal Term; and provided further, that
if Tenant’s estate hereunder shall terminate prior to the commencement of the
Renewal Term, Tenant’s option to renew shall expire upon such termination.  Tenant shall have no other right to renew this
Lease after the Renewal Term.

 

Except as otherwise
expressly provided in this Lease, all terms, covenants, and conditions of this
Lease shall remain in full force and effect during the Renewal Term, except
that the Rent

 

7

 

applicable to the Renewal Tern] shall be as set forth
in Section 4.1(b).  In no event
shall the Rent for the Renewal Term be less than the Rent in effect at the
expiration of the immediately preceding Term of the Lease.  If the Tenant fails to give notice exercising
the foregoing option by the date required herein, or if at the time Tenant
exercises such option or at commencement of the Renewal Term the Tenant is in
default of any term of this Lease, or if this Lease is assigned by Tenant or
the Premises is sublet in whole or part in violation of Section 14, then
Tenant’s rights and options to renew shall be automatically terminated and of
no further force or effect.

 

3.4.                              Surrender.  The Tenant at its expense at the expiration
of the Term or any earlier termination of this Lease, shall (a) promptly
surrender to the Landlord possession of the Premises (including any fixtures or
other improvements which, under Section 10, are owned by the Landlord) in
good order and repair (ordinary wear and tear excepted) and broom clean, (b) remove
therefrom all signs, goods, effects, machinery, fixtures and equipment used in
conducting the Tenant’s trade or business which are neither part of the
Building Service Equipment nor owned by the Landlord, and (c) repair any
damage caused by such removal.

 

3.5.                              Holding
Over.  If the Tenant continues to
occupy the Premises after the expiration of the Term or any earlier termination
of this Lease after obtaining the Landlord’s express, written consent thereto,
then:

 

(a)                                  such
occupancy (unless the parties hereto otherwise agree in writing) shall be
deemed to be under a month-to-month tenancy, which shall continue until either
party hereto notifies the other in writing, at least two months before the end
of any calendar month, that the notifying party elects to terminate such
tenancy at the end of such calendar month, in which event such tenancy shall so
terminate;

 

(b)                                 anything
in this section to the contrary notwithstanding, the Rent payable for each
such monthly period shall equal the sum of (a) one-twelfth (1/12) of that
amount which is equal to 150% of the Base Rent for the Lease Year during which
such expiration of the Term or termination of this Lease occurs, plus (b) the
Additional Rent payable under subsection 4.2; and

 

(c)                                  except
as provided herein, such month-to-month tenancy shall be on the same terms and
subject to the same conditions as those set forth in this Lease; provided,
however, that if the Landlord gives the Tenant, at least one month before the
end of any calendar month during such month-to-month tenancy, written notice
that such tents and conditions (including any thereof relating to the amount
and payment of Rent) shall, after such month, be modified in any manner
specified in such notice, then such tenancy shall, after such month, be upon
the said terms and subject to the said conditions, as so modified.

 

4.                                      RENT;
SECURITY DEPOSIT.

 

As Rent for the Premises,
the Tenant shall pay to the Landlord all of the following:

 

4.1.                              Base
Rent.

 

(a)                                  An
annual rent (the “Base Rent”) for
the Original Tenant shall be determined by multiplying the actual rentable
square footage as determined in accordance with Section 2.2

 

8

 

hereof by the “Per Square Foot” as stated below
applicable to the particular Lease Year. 
The following chart illustrates Base Rent based on a rentable area of
20,000 square feet, but shall be adjusted based on the actual rentable square
footage of the Premises:

 

	
  Lease Year

  	
   

  	
  Per Square Foot

  	
   

  	
  Monthly

  	
   

  	
  Annual

  	
   

  
	
  1

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  2

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  3

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
													

 

(b)                                 The
Base Rent for the Renewal Term shall be determined by multiplying the actual
rentable square footage as determined in accordance with Section 2.2
hereof by the “Per Square Foot” as stated below applicable to the particular
Lease Year.  The following charts
illustrate Base Rent based on a rentable area of 20,000 square feet, but shall
be adjusted based on the actual rentable square footage of the Premises:

 

First Renewal Term

 

	
  Lease Year

  	
   

  	
  Per Square Foot

  	
   

  	
  Monthly

  	
   

  	
  Annual

  	
   

  
	
  1

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
											

 

Second Renewal
Term

 

	
  Lease Year

  	
   

  	
  Per Square Foot

  	
   

  	
  Monthly

  	
   

  	
  Annual

  	
   

  
	
  1

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
											

 

(c)                                  Landlord
has included as part of the Base Rent set forth above three (3) parking
spaces per 1,000 square feet leased by Tenant for a total of sixty (60) parking
spaces (the “Parking Spaces”).  Landlord agrees to reserve two (2) of
the Parking Spaces for Tenant in the parking area outside of The Ivory Building
lobby area and three (3) of the Parking Spaces for Tenant in the parking
area outside of The Tide Building (the “Tide
Parking Lot”).  Tenant has the
option to increase the ratio of Parking Spaces from three (3) spaces per
1,000 square feet leased by Tenant to five (5) spaces per 1,000 square
feet leased by Tenant by giving Landlord fifteen (15) days written notice, but
in no event shall Tenant be entitled to increase its Parking Spaces by more
than a total of forty (40) parking spaces. 
Tenant agrees to pay $[***] per month for each additional Parking
Space.  The charges for the additional
Parking Spaces shall be deemed Additional Rent and payable in accordance with Section 4.4.2.

 

4.2.                              Additional
Rent.  Additional rent (“Additional Rent”) shall include any and all
charges or other amounts which the Tenant is obligated to pay to the Landlord
under this Lease, other than the Base Rent.

 

4.3.                              Operating
Costs.

 

4.3.1.                     Computation.  Within one hundred twenty (120) days after
the end of each calendar year during the Term, the Landlord shall compute the
total of the Operating Costs incurred for the Building during such calendar
year, and the Landlord shall allocate them to each

 

9

 

separate rentable space within the Building in
proportion to the respective operating costs percentages assigned to such
spaces; provided that anything in this subsection 4.3 to the contrary
notwithstanding, wherever the Tenant and/or any other tenant of space within
the Building has agreed in its lease or otherwise to provide any item of such
services partially or entirely at its own expense, or wherever in the Landlord’s
reasonable judgment any such significant item of expense is not incurred with
respect to or for the benefit of all of the net rentable space within the
Building, in allocating the Operating Costs pursuant to this subsection, the
Landlord shall make an appropriate adjustment, using generally accepted
accounting principles, as aforesaid, so as to avoid allocating to the Tenant or
to such other tenant (as the case may be) those Operating Costs covering such
services already being provided by the Tenant or by such other tenant at its
own expense, or to avoid allocating to all of the net rentable space within the
Project those Operating Costs incurred only with respect to a portion thereof,
as aforesaid.  The Tenant shall have the
right to review the books and records of the Landlord with respect to the calculation
of Operating Costs for the prior Lease Year at the Landlord’s office during
normal business hours, at the Tenant’s sole expense; provided (i) the
Tenant provides at least five (5) business days’ advance written notice to
the Landlord of its desire to inspect such books and records, and (ii) such
request is made within one hundred twenty (120) days after the Operating Costs
Statement is delivered by the Landlord to the Tenant.

 

4.3.2.                     Payment as
Additional Rent.  For each Operating
Year, the Tenant shall pay as Additional Rent to the Landlord, in the manner
provided herein, Tenant’s Share of Increased Operating Costs.  The Landlord shall send to the Tenant an
annual statement setting forth the Operating Costs for the applicable calendar
year.  Notwithstanding the actual costs,
Tenant’s Share of Increased Operating Costs shall not increase by more than [***]
percent ([***]%) per year.

 

4.3.3.                     Proration.  If only part of any calendar year falls
within the Term, the amount computed as Tenant’s Share of Increased Operating
Costs for such calendar year under this subsection shall be prorated in
proportion to the portion of such calendar year falling within the Term (but
the expiration of the Term before the end of a calendar year shall not impair
the Tenant’s obligation hereunder to pay such prorated portion of Tenant’s
Share of Increased Operating Costs for that portion of such calendar year
falling within the Term, which amount shall be paid on demand).

 

4.3.4.                     Landlord’s
Right to Estimate.  Anything in this
subsection to the contrary notwithstanding, the Landlord, at its
reasonable discretion, may (a) make from time to time during the Term a
reasonable estimate of the Additional Rent which may become due under this subsection for
any calendar year, (b) require the Tenant to pay to the Landlord for each
calendar month during such year one twelfth (1/12) of such Additional Rent, at
the time and in the manner that the Tenant is required hereunder to pay the
monthly installment of the Base Rent for such month, and (c) increase or
decrease from time to time during such calendar year the amount initially so
estimated for such calendar year, all by giving the Tenant written notice
thereof, accompanied by a schedule setting forth in reasonable detail the
expenses comprising the Operating Costs, as so estimated.  In such event, the Landlord shall cause the
actual amount of such Additional Rent to be computed and certified to the
Tenant within one hundred twenty (120) days after the end of such calendar
year.  Any overpayment or deficiency in
the Tenant’s payment of Tenant’s Share of Increased Operating’ Costs shall be
adjusted between the Landlord and the Tenant; the Tenant shall pay the Landlord
or the Landlord shall credit to the Tenant’s 

 

10

 

account (or, if such adjustment is at the end of the
Term, the Landlord shall pay to the Tenant), as the case may be, within thirty
(30) days after such notice to the Tenant, such amount necessary to effect such
adjustment.  The Landlord’s failure to
provide such notice within the time prescribed above shall not relieve the
Tenant of any of its obligations hereunder.

 

4.4.                              When
Due and Payable.

 

4.4.1.                     Base Rent.  The Base Rent for any Lease Year shall be due
and payable in twelve (12) consecutive, equal monthly installments, in advance,
on the first (1st) day of each calendar month during such Lease Year.  In addition, if the Rent Commencement Date
falls on a day other than the first day of a calendar month, then the Base Rent
for the first month of the Term shall be prorated based on the number of days
remaining in that month and such amount shall be due and payable on the Rent
Commencement Date.

 

4.4.2.                     Additional
Rent.  Any Additional Rent accruing
to the Landlord under this Lease, except as is otherwise set forth herein,
shall be due and payable when the installment of Base Rent next falling due
after such Additional Rent accrues and becomes due and payable, unless the
Landlord makes written demand upon the Tenant for payment thereof at any
earlier time, in which event such Additional Rent shall be due and payable at
such time.

 

4.4.3.                     No
Set-Off; Late Payment.  Each such
payment shall be made promptly when due, without any deduction or setoff
whatsoever, and without demand, failing which the Tenant shall pay to the Landlord
as Additional Rent, after the fifth (5th) day after such payment remains due
but unpaid, a late charge equal to five percent (5%) of such payment which
remains due but unpaid.  In addition, any
payment that is not paid by the tenth (10th) day after such payment is due
shall bear interest at the Default Rate. 
Any payment made by the Tenant to the Landlord on account of Rent may be
credited by the Landlord to the payment of any Rent then past due before being
credited to Rent currently falling due. 
Any such payment which is less than the amount of Rent then due shall
constitute a payment made on account thereof, the parties hereto hereby
agreeing that the Landlord’s acceptance of such payment (whether or not with or
accompanied by an endorsement or statement that such lesser amount or the
Landlord’s acceptance thereof constitutes payment in full of the amount of Rent
then due) shall not alter or impair the Landlord’s rights hereunder to be paid
all of such amount then due, or in any other respect.

 

4.5.                              Where
Payable.  The Tenant shall pay the
Rent, in lawful currency of the United States of America, to the Landlord by
delivering or mailing it to the Landlord’s address which is set forth in section 20,
or to such other address or in such other manner as the Landlord from time to
time specifies by written notice to the Tenant.

 

4.6.                              Tax
on Lease.  If federal, state or local
law now or hereafter imposes any tax, assessment, levy or other charge directly
or indirectly upon (a) the Landlord with respect to this Lease or the
value thereof, (b) the Tenant’s use or occupancy of the Premises, (c) the
Base Rent, Additional Rent or any other sum payable under this Lease, or (d) this
transaction, then the Tenant shall pay the amount thereof as Additional Rent to
the Landlord upon demand, unless the Tenant is prohibited by law from doing so,
in which event the Landlord, at its election may terminate this Lease by giving
written notice thereof to the Tenant.

 

11

 

4.7.                              Cash
Security Deposit or Letter of Credit. 
On the Effective Date, Tenant shall deliver to Landlord a cash security
deposit in the amount of two months of Base Rent or an unconditional
irrevocable letter of credit issued by a commercial bank reasonably acceptable
to Landlord payable to Landlord or Landlord’s assigns as “beneficiary” in the
amount of two months of Base Rent for the first (1st) year of the
Original Term (the “Letter of Credit”)
as security for the performance of the Tenant’s covenants and obligations under
this Lease for the Term.  Provided there
is no Event of Default, the cash security deposit or the Letter of Credit, as
the case may be, shall reduce by one-third (1/3) at the end of each Lease Year.  At the end of the Original Term, the
remaining cash security deposit shall be returned to Tenant or the Letter of
Credit shall expire, as the case may be.

 

If Tenant fails to pay
Base Rent or other charges due hereunder, or otherwise defaults with respect to
any provision of this Lease, Landlord shall have the right to draw against the
Letter of Credit and hold the funds for the payment of any Base Rent or other
charge due hereunder, to pay any other sum to which Landlord may become
obligated by reason of Tenant’s default, or to compensate Landlord for any loss
or damage which Landlord may suffer thereby. 
If Landlord so uses or applies all or any portion of said Letter of
Credit, Tenant shall within ten (10) days after written demand therefor
restore the amount of the Letter of Credit drawn so that the Letter of Credit
is restored to the amount existing prior to any drawing.

 

On termination of this
Lease, the Landlord shall return the Letter of Credit to Tenant.  The Letter of Credit shall be assignable to
any Mortgagee or purchaser of the Project.

 

5.                                      TAXES.

 

5.1.                              Payment.  For each Tax Year, the Tenant shall pay to
the Landlord, in the manner provided herein, Tenant’s Share of Increased Taxes.

 

5.2.                              Proration.  If only part of any Tax Year falls within the
Term, the amount computed as Tenant’s Share of Increased Taxes for such Tax
Year under this subsection shall be prorated in proportion to the portion
of such Tax Year falling within the Term (but the expiration of the Term before
the end of a Tax Year shall not impair the Tenant’s obligations hereunder to
pay such prorated portion of Tenant’s Share of Increased Taxes for that portion
of such Tax Year falling within the Term, which amount shall be paid on
demand).

 

5.3.                              Method
of Payment.  Tenant’s Share of
increased Taxes shall be paid by the Tenant, at the Landlord’s election (i) in
advance, in equal monthly installments in such amounts as are estimated and
billed for each Tax Year by the Landlord at the commencement of the Term and at
the beginning of each successive Tax Year during the Term, each such
installment being due on the first day of each calendar month or (ii) in a
lump sum, following the Landlord’s receipt of the tax bill for the Tax Year in
question, and calculation of Tenant’s Share of Increased Taxes with respect
thereto.  If the Landlord has elected
that the Tenant pay Tenant’s Share of Increased Taxes in installments, in
advance, then, at any time during a Tax Year, the Landlord may re-estimate
Tenant’s Share of Increased Taxes and thereafter adjust the Tenant’s monthly
installments payable during the Tax Year to reflect more accurately Tenant’s
Share of Increased Taxes.  Landlord shall
provide Tenant with reasonable explanation of the Landlord’s calculation of
Tenant’s Share of Increased Taxes including assumptions for the increase.  Within ninety (90)

 

12

 

days after the Landlord’s receipt of tax bills for
each Tax Year, the Landlord will notify the Tenant of the amount of Taxes for
the Tax Year in question and the amount of Tenant’s Share of Increased Taxes
thereof.  Any overpayment or deficiency
in the Tenant’s payment of Tenant’s Share of Increased Taxes for each Tax Year
shall be adjusted between the Landlord and the Tenant; the Tenant shall pay the
Landlord or the Landlord shall credit to the Tenant’s account (or, if such
adjustment is at the end of the Term, the Landlord shall pay the Tenant), as
the case may be, within thirty (30) days after such notice to the Tenant, such
amount necessary to effect such adjustment. 
The Landlord’s failure to provide such notice within the time prescribed
above shall not relieve the Tenant of any of its obligations hereunder.

 

5.4.                              Taxes
on Rent.  In addition to Tenant’s
Share of Increased Taxes, the Tenant shall pay to the appropriate agency any
sales, excise and other tax (not including, however, the Landlord’s income
taxes) levied, imposed or assessed by the State of Maryland or any political
subdivision thereof or other taxing authority upon any Rent payable
hereunder.  The Tenant shall also pay,
prior to the time the same shall become delinquent of payable with penalty, all
taxes imposed on its inventory, furniture, trade fixtures, apparatus,
equipment, leasehold improvements installed by the Tenant or by the Landlord on
behalf of the Tenant and any other property of the Tenant.

 

5.5.                              Tax
Credits.  Landlord hereby discloses
to Tenant that the Property is expected to benefit from certain real property
tax credits for historic restorations and rehabilitations pursuant to Tax
Property Article 9-103 of the Annotated Code of Maryland.  Such credits will inure to Tenant’s benefit
by virtue of lower Taxes.  Such credits
will phase out over a period of ten years resulting in an increase of Taxes
over that period of time.  Within ten (10) business
days of full execution of the Lease, Landlord shall provide Tenant with a tax
credit phase out schedule so that Tenant may reasonably project the
increases in taxes which may be passed through to Tenant.

 

6.                                      USE
OF PREMISES.

 

6.1.                              Nature
of Use.  The Tenant shall use the
Premises only for general office purposes.

 

6.2.                              Compliance
with Law and Covenants.  The Tenant,
throughout the Term and at its sole expense, in its use and possession of the
Premises, shall:

 

(a)                                  comply
promptly and fully with (i) all laws, ordinances, notices, orders, rules,
regulations and requirements of all federal, state and municipal governments
and all departments, commissions, boards and officers thereof;

 

(b)                                 pay
when due all personal property taxes, income taxes, license fees and other
taxes assessed, levied or imposed upon the Tenant or any other person in
connection with the operation of its business upon the Premises or its use
thereof in any other manner; and

 

(c)                                  not
obstruct, annoy or interfere with the rights of other tenants.

 

13

 

6.3.                              Mechanics’
Liens.  Without limiting the
generality of the foregoing provisions of this section, the Tenant shall not
create or permit to be created, and if created shall discharge or have
released, any mechanics’ or materialmens’ lien arising while this Lease is in
effect and affecting any or all of the Premises, the Building and/or the
Project, and the Tenant shall not permit any other matter or thing whereby the
Landlord’s estate, right and interest in any or all of the Premises, the
Building and/or the Project might be impaired. 
The Tenant shall defend, indemnify and hold harmless the Landlord
against and from any and all liability, claim of liability or expense (including
but not limited to that of reasonable attorneys’ fees) incurred by the Landlord
on account of any such lien or claim.

 

6.4.                              Signs.  The Tenant shall have no right, to erect
signs upon the Premises or the remainder of the Building or the Project without
the prior written consent of Landlord. 
Any exterior signage must be approved by the local Baltimore City
government and the National Park Service. 
The Landlord shall provide, at the Landlord’s sole expense for the first
time only, customary identification of the Tenant’s business on the lobby
directory of the Building.  All other
signs, including any sign on the main entry of the Premises, shall be paid for
by Tenant.  Landlord shall work with
Tenant in good faith to secure for Tenant exterior signage on the Building
which, at Tenant’s option, shall face the Tide Building or Baltimore’s Inner
Harbor.  Tenant shall pay all costs,
including Landlord’s costs, associated with the request for approval from local
Baltimore City government and the National Park Service and all costs
associated with the installation of signage. 
If signage is approved by the local Baltimore City government and the
National Park Service, Landlord will approve such signage.  Tenant shall also pay all costs of
deinstallation of such sign after Tenant’s tenancy of the Building and for any
repairs to the Building after deinstallation.

 

6.5.                              License.

 

6.5.1.                     Grant of
License.  The Landlord hereby grants
to the Tenant a non-exclusive license to use (and to permit its officers,
directors, agents, employees and invitees to use), in the course of conducting
business at the Premises, the Common Areas.

 

6.5.2.                     Non-Exclusive
License.  Such license shall be
exercised in common with the exercise thereof by the Landlord, the other
tenants or occupants of the Project, and their respective officers, directors,
agents, employees and invitees

 

6.5.3.                     Parking
Areas; Changes.

 

(a)                                  The
Landlord reserves the right to change the entrances, exits, traffic lanes,
boundaries and locations of the Parking Areas. 
The Landlord reserves the right to designate for the specific account of
the Tenant, and/or of other tenants of the Project, specific parking areas or
spaces constructed around, within or under the Project.  All Parking Areas and facilities which may be
furnished by the Landlord in or near the Project, including any employee
parking areas, truckways, loading docks, pedestrian sidewalks and ramps,
landscaped areas and other areas and improvements which may be provided by the
Landlord for the Tenant’s exclusive use or for general use, in common with
other tenants, their officers, agents, employees and visitors, shall at all
times be subject to the Landlord’s exclusive control and management, and the
Landlord shall have the right from time to time to establish; modify and
enforce reasonable rules and

 

14

 

regulations with respect thereto.  The Landlord shall have the right to (a) police
the Common Areas, (b) establish and from time to time to change the level
of parking surfaces, (c) close all or any portion of the Common Areas to
such extent as, in the opinion of the Landlord’s counsel, may be legally
sufficient to prevent a dedication thereof or the accrual of any rights to any
person or to the public therein, (d) close temporarily all or any portion
of the Parking Areas, (e) discourage non-tenant parking, and (f) do
and perform such other acts in and to the Common Areas as, in the use of good
business judgment, the Landlord determines to be advisable, with a view to the
improvement of the convenience and use thereof by tenants, their officers,
agents, employees and visitors.  The
Tenant shall cause its officers, agents and employees to park their automobiles
only in such areas as the Landlord from time to time may designate by written
notice to the Tenant as employee parking areas, and the Tenant shall not use or
permit the use of any of the Common Areas in any manner which will obstruct the
driveways or throughways serving the Parking Areas or any other portion of the
Common Areas allocated for the use of others.

 

(b)                                 The
Tenant has the nonexclusive right to use sixty (60) on-site parking spaces
(which includes 5 reserved spaces) during the Term of this Lease as provided in
Section 4.1(c) and has the option to increase the number of spaces as
provided for in that Section.  At
Landlord’s request, Tenant shall provide license plate numbers for its
employees and otherwise cooperate with Landlord’s management of the Parking
Areas, which may include attended parking service.  Such parking expenses shall be part of
Operating Costs.

 

6.5.4.                     Alterations.  The Landlord reserves the right at any time
and from time to time (i) to change or alter the location, layout, nature
or arrangement of the Common Areas or any portion thereof, including but not
limited to the arrangement and/or location of entrances, passageways, doors,
corridors, stairs, lavatories, elevators, parking areas, and other public areas
of the Building, and (ii) to construct additional improvements on the
Project and make alterations thereof or additions thereto and build additional
stories on or in any such buildings adjoining the same; provided, however, that
no such change or alteration shall deprive the Tenant of access to the
Premises.  The alterations made in
accordance with this Section shall not be included in Operating Costs.

 

6.5.5.                     Use of
Common Areas.

 

(a)                                  The
Landlord shall at all times have full and exclusive control, management and
direction of the Common Areas

 

(b)                                 The
Tenant shall maintain in a neat and clean condition that area designated by the
Landlord as the refuse collection area, and shall not place or maintain
anywhere within the Project, other than within the area which may be designated
by Landlord from time to time as such refuse collection area, any trash,
garbage or other items, except as may otherwise be expressly permitted by this
Lease.

 

6.6.                              Liability
of Landlord.  The Landlord and its
agents and employees shall not be liable to the Tenant or any other person
whatsoever (a) for any injury to person or damage to Project caused by any
defect in or failure of equipment, pipes, wiring or broken glass, or the
backing up of any drains, or by gas, water, steam, electricity or oil leaking,
escaping or flowing

 

15

 

into the Premises, or (b) for any loss or damage
that may be occasioned by or through the acts or omissions of any other tenant
of the Project or of any other person whatsoever, in each case other than due
to the gross negligence or willful misconduct of the Landlord or its employees
or agents or contractors.

 

6.7.                              Floor
Load.  The Tenant shall not place a
load upon any floor of the Premises exceeding the floor load per square foot
area which such floor was designed to carry which is 100 lbs. per square
foot.  The Landlord reserves the right to
prescribe the weight and position of all safes and other heavy equipment, and
to prescribe the reinforcing necessary, if any, which in the opinion of the
Landlord may be required under the circumstances, such reinforcing to be at the
Tenant’s sole expense.  Business machines
and mechanical equipment shall be placed and maintained by the Tenant in
settings sufficient in the Landlord’s judgment to absorb and prevent vibration
and noise, and the Tenant shall, at its sole expense, take such steps as the
Landlord may direct to remedy any such condition.

 

6.8.                              Hazardous
Materials.  The Tenant warrants and
agrees that the Tenant shall not cause or permit any Hazardous Material to be
brought upon, kept or used in or about the Premises by the Tenant, its agents,
employees, contractors or invitees.  If
the Tenant breaches the obligations stated in the preceding sentence, then the
Tenant shall indemnify, defend and hold the Landlord harmless from and against
any and all claims, judgments, damages, penalties, fines, costs, liabilities or
losses (including, without limitation, diminution in value of the Premises, the
Building and the Project generally, damages for the loss or restriction on use
of rentable or usable space or of any amenity of the Building or the Project
generally, damages from any adverse impact on marketing of space in the
Building, and sums paid in settlement of claims, reasonable attorneys’ fees,
reasonable consultant fees and reasonable expert fees) which arise during or
after the Term as a result of such contamination.

 

7.                                      INSURANCE
AND INDEMNIFICATION.

 

7.1.                              Insurance.  At all times from and after the earlier of (i) the
entry by the Tenant into the Premises, or (ii) the Rent Commencement Date,
the Tenant shall take out and keep in full force and effect, at its expense:

 

(a)                                  commercial
general liability insurance with a combined single limit of not less than One
Million Dollars ($1,000,000) per occurrence and Two Million Dollars
($2,000,000) in the aggregate, which limit may be reasonably increased by
Landlord to reflect changing legal liability standards;

 

(b)                                 special
form property insurance written at full replacement cost value and with
replacement cost endorsement in an amount not less than Two Million Dollars
($2,000,000.00) covering all of Tenant’s property, except for improvements
which are part of the Landlord’s Work;

 

(c)                                  worker’s
compensation or similar insurance in form and amounts required by law; and

 

16

 

(d)                                 such
other insurance in such types and amounts as Landlord may reasonably require,
provided that such other insurance is in accordance with standards generally
accepted for comparable buildings in the downtown Baltimore area.

 

7.2.                              Tenant’s
Contractor’s Insurance.  The Tenant
shall require any contractor of the Tenant performing work in, on or about the
Premises to take out and keep in full force and effect, at no expense to the
Landlord, such insurance as Landlord may reasonably require.

 

7.3.                              Policy
Requirements.

 

7.3.1.                     The company
or companies writing any insurance which the Tenant is required to take out and
maintain or cause to be taken out or maintained pursuant to subsections 7.1
and/or 7.2, as well as the form of such insurance, at all times be subject to
the Landlord’s approval, and any such company or companies shall be licensed to
do business in the State of Maryland and have a rating of at least A or better
and a financial size rating of XII or larger from Best’s Key Rating Guide and
Supplemental Service (or comparable rating from a comparable insurance rating
service).  Public liability and all-risk
casualty insurance policies evidencing such insurance shall name the Landlord
and/or its designees (including, without limitation, any Mortgagee) as
additional insureds, shall be primary and noncontributory, and shall also
contain a provision by which the insurer agrees that such policy shall not be
cancelled, materially changed, terminated or not renewed except after thirty
(30) days’ advance written notice to the Landlord and/or such designees.

 

7.4.                              Indemnities
by Tenant and Landlord.

 

7.4.1.                     Notwithstanding
any policy or policies of insurance required of the Tenant, the Tenant, for
itself and its successors and assigns, to the extent permitted by law, shall
defend, indemnify and hold harmless the Landlord, the Landlord’s agents and any
Mortgagee against and from any and all liability or claims of liability by any
person asserted against or incurred by the Landlord and/or such agent or
Mortgagee in connection with (i) the use, occupancy, conduct, operation or
management of the Premises by the Tenant any of its agents, contractors,
servants, employees, licensees, concessionaires, suppliers, materialmen or
invitees during the Term; (ii) any work or thing whatsoever done or not
done on the Premises during the Term performed by Tenant, its employees, agents
or contractors; (iii) any breach or default in performing any of the
obligations under the provisions of this Lease and/or applicable law by the
Tenant or any of its agents, contractors, servants, employees, licensees,
suppliers, materialmen or invitees during the Term; (iv) any negligent,
intentionally tortuous or other act or omission by the Tenant or any of its
agents, contractors, servants, employees, licensees, concessionaires,
suppliers, materialmen or invitees during the Term; or (v) any injury to
or death of any person or any damage to any property occurring upon the
Premises (whether or not such event results from a condition existing before
the execution of this Lease or resulting in the termination of this Lease), and
from and against all costs, expenses and liabilities incurred in connection
with any claim, action, demand, suit at law, in equity or before any
administrative tribunal, arising in whole or in part by reason of any of the
foregoing (including, by way of example rather than of limitation, the fees of
attorneys, investigators and experts), all regardless of whether such claim,
action or proceeding is asserted before or after the expiration of the Term or
any earlier termination of this Lease.

 

17

 

7.4.2.                     If any such
claim, action or proceeding is brought against the Landlord and/or any agent or
Mortgagee, the Tenant, if requested by the Landlord or such agent or Mortgagee,
and at the Tenant’s expense, promptly shall resist or defend such claim, action
or proceeding or cause it to be resisted or defended by an insurer.  The Landlord, at its option, shall be
entitled to participate in the selection of counsel, settlement and all other
matters pertaining to such claim, action or proceeding, all of which shall be
subject, in any case, to the prior written approval of the Landlord.

 

7.4.3.                     Subject to
the provisions of subsection 7.8, the Landlord hereby agrees for itself
and its successors and assigns to indemnify and save the Tenant harmless from
and against any liability or claims of liability arising solely out of the
gross negligence or intentional acts and omissions of the Landlord, its agents
or employees or contractors.

 

7.5.                              Landlord
Not Responsible for Acts of Others. 
The Landlord shall not be responsible or liable to the Tenant, or to
those claiming by, through or under the Tenant, for any loss or damage which
may be occasioned by or through the acts or omissions of persons occupying or
using space adjoining the Premises or any part of the premises adjacent to or
connecting with the Premises or any other part of the Building or the Project,
or for any loss or damage resulting to the Tenant (or those claiming by,
through or under the Tenant) or its or their property, from (a), the breaking,
bursting, stoppage or leaking of electrical cable and/or wires, or water,
gas, sewer or steam pipes, (b) falling plaster, or (c) dampness,
water, rain or snow in any part of the Building except in the case where Tenant
has duly notified the Landlord of such problem and Landlord has the obligation
under this Lease to correct such problem and has failed to take remedial action
in a timely manner.  To the maximum
extent permitted by law, the Tenant agrees to use and occupy the Premises, and
to use such other portions of the Project as the Tenant is herein given the
right to use, at the Tenant’s own risk.

 

The Landlord is not
obligated to protect from the criminal acts of third parties the Tenant, Tenant’s
agents, customers, invitees or employees, the Premises or the property of
Tenant or any property of any of Tenant’s agents, customers, invitees or
employees.  Tenant hereby acknowledges
that Tenant has the sole responsibility for the protection of the Premises, the
Tenant’s property and the Tenant’s customers, agents, invitees and
employees.  Tenant acknowledges that, if
Landlord shall provide security guards for the Common Areas, Landlord does not
represent, guarantee, or assume responsibility that Tenant will be secure from
any claims or causes of action relating to such security guards.

 

7.6.                              Landlord’s
Insurance.  During the Term, the
Landlord shall maintain, in commercially reasonable amounts, (a) insurance
on the Project against loss or damage by fire and all of the hazards included
in the extended coverage endorsement at full replacement cost value, (b) comprehensive
liability and property damage insurance with respect to the Common Areas,
against claims for personal injury or death, or property damage suffered by
others occurring in, on or about the Project, and (c) any other insurance,
in such form and in such amounts as are deemed reasonable by the Landlord,
including, without limitation, rent continuation and business interruption
insurance, theft insurance and workers’ compensation, flood and earthquake, and
boiler and machinery insurance.  The
costs and expenses of any and all insurance carried by the Landlord pursuant to
the provisions of this subsection 7.6 shall be deemed a part of Operating
Costs.

 

18

 

7.7.                              Increase
in Insurance Premiums.  The Tenant
shall not do or suffer to be done, or keep or suffer to be kept, anything in,
upon or about the Premises, the Building or the Project which will contravene
the Landlord’s policies of hazard or liability insurance or which will prevent
the Landlord from procuring such policies from companies acceptable to the
Landlord.  If anything done, omitted to
be done, or suffered by the Tenant to be kept in, upon or about the Premises,
the Building or the Project shall cause the rate of fire or other insurance on
the Premises, the Building or the Project to be increased beyond the minimum
rate from time to time applicable to the Premises or to any such other property
for the use or uses made thereof, the Tenant shall pay to the Landlord, as
Additional Rent, the amount of any such increase upon the Landlord’s demand
therefor.

 

7.8.                              Waiver
of Right of Recovery.  To the extent
that any loss or damage to the Premises, the Building, the Project, any
building, structure or other tangible property, or resulting loss of income, or
losses under workers’ compensation laws and benefits, are covered by insurance,
neither party shall be liable to the other party or to any insurance company
insuring the other party (by way of subrogation or otherwise), even though such
loss or damage might have been occasioned by the negligence of such party, its
agents or employees.

 

8.                                      SERVICES
AND UTILITIES.

 

(a)                                  Landlord
shall provide the following services and utilities during normal business hours
on all days except Saturdays, Sundays, and federal and state holidays, or
unless otherwise stated below.  Cost of
such services shall be included as an Operating Cost.

 

(i)            when
necessary during normal business hours, central heating and air conditioning in
the Premises and the Common Areas at temperature levels customary for
comparable office buildings in the immediate vicinity (Landlord and Tenant
agree that Tenant shall have the right to operate the HVAC system serving the
Premises on an after-hours basis and shall pay for such expense in accordance
with Section 8(b));

 

(ii)           janitorial
services five business days per week; and

 

(iii)          three
passenger elevators, to be used in common with other tenants, except for the
occasion of a temporary repair or replacement of the elevators.

 

“Normal business hours”
for purposes of clause (a) above shall be deemed to mean the periods from
8:00 a.m. until 6:00 p.m. on business days (Monday through Friday)
and from 8:00 a.m. until 1:00 p.m. on Saturdays. Tenant shall
nonetheless have access to the Premises and elevators seven (7) days a
week, twenty-four (24) hours a day, subject to and in accordance with any
security procedures that Landlord may have in place.

 

(b)                                 Tenant
shall pay Tenant’s pro rata share of Tenant Electric.  In addition, Tenant shall pay for all costs
of after-hours HVAC service used by Tenant at an hourly rate mutually agreed
upon by Landlord and Tenant.  Electric
current supplied to or used in the Premises shall be set at the rate prevailing
for Tenant’s class of use as established by the company or companies chosen by
Landlord or its designee to provide electricity to the Premises.  Upon reasonable prior

 

19

 

notice, Landlord or its designated electric service
provider may have access to the Premises to install equipment necessary to
deliver electric service to the Premises or the Building provided that Landlord
or the utility company shall restore the Premises to its condition prior to the
commencement of such work.  Landlord
reserves the right to switch electricity providers, if legally permissible, at
any time.  Landlord shall not be liable
to Tenant for damages arising as a result of service interruptions caused by
any electric service provider.  Electric
current supplied to or used in the Premise shall be measured by a submeter.

 

(c)                                  Any
failure by the Landlord to furnish any of the foregoing services or utilities,
resulting from circumstances beyond the Landlord’s reasonable control or from
interruption of such services due to repairs or maintenance, shall not render
the Landlord liable in any respect for damages to either person or property,
nor be construed as an eviction of the Tenant, nor cause an abatement of rent
hereunder, nor relieve the Tenant from any of its obligations hereunder, unless
caused by Landlord or its agents, employees and/or contractors.  If any public utility or governmental body
shall require the Landlord or the Tenant to restrict the consumption of any
utility or reduce any service for the Premises or the Building, the Landlord
and the Tenant shall comply with such requirements, whether or not the services
and utilities referred to in this section 8 are thereby reduced or
otherwise affected, without any liability on the part of the Landlord to the
Tenant or any other person or any reduction or adjustment in rent payable
hereunder.  The Landlord and its agents shall
be permitted reasonable access to the Premises for the purpose of installing
and servicing systems within the Premises deemed necessary by the Landlord to
provide the services and utilities referred to in this Section 8 to the
Tenant and other tenants in the Building.

 

(d)                                 Tenant
shall not at any time overburden or exceed the capacity of the mains, feeders,
ducts, conduits, or other facilities by which such utilities are supplied to,
distributed in or serve the Premises beyond normal office uses.  If Tenant desires to install any equipment
which shall require additional utility facilities or utility facilities of a
greater capacity than the facilities existing, such installation shall be
subject to Landlord’s prior written approval of Tenant’s plans and
specifications therefor.  If such installation
is approved by Landlord and if Landlord provides such additional facilities to
accommodate Tenant’s installation, Tenant agrees to pay Landlord, on demand,
the cost for providing such additional utility facilities or utility facilities
of greater capacity.  Landlord shall not
be responsible for providing any meters or other devices for the measurement of
utilities supplied to the Premises.  In
addition, if Tenant requires lighting other than the standard lighting provided
by Landlord for the Building, Tenant shall be required to pay Landlord on
demand for the additional costs of such lighting, including light bulb
replacement.

 

(e)                                  Landlord
shall cause to be operated a trash removal service for the Project, the costs
and expenses of which shall be a part of Operating Costs.  In the event that Tenant’s use of the
Premises requires trash removal services in excess of that required for
standard office tenants, Tenant shall pay to Landlord, as additional rent all
costs and expenses in excess of the trash removal costs which are attributable
to such excess usage.

 

(f)                                    In
the event Tenant wishes, at any time, to utilize the services of a
telecommunications provider who is not then authorized by the Landlord to
provide telecommunications services to tenants in the Building, such provider
shall be permitted to install

 

20

 

its lines or other equipment within the Building after
it secures the prior written approval of the Landlord.  Landlord hereby authorizes Verizon, Worldcom,
and Telephonet to provide telecommunication services to the Building.  Tenant shall use its best efforts to get such
vendors to execute license and access agreements reasonably acceptable to
Landlord provided that such agreements do not materially alter the
telecommunication service to Tenant or increase the costs to Tenant of such
telecommunication services.  Landlord’s
approval shall not be deemed any kind of warranty or representation by
Landlord, including, without limitation, any warranty or representation as to
the suitability, competence, or financial strength of the provider.  Without limitation of the foregoing standard,
unless all of the following conditions are satisfied to Landlord’s
satisfaction, it shall be reasonable for Landlord to refuse to give its
approval:  (i) Landlord shall incur
no expense whatsoever with respect to any aspect of the provider’s provision of
its services, including, without limitation, the costs of installation,
materials and services; (ii) the provider shall agree to use the Building’s
central communications distribution system (“CDS”) to deliver
telecommunications services to Tenant (unless the CDS is not physically capable
of delivering such services); (iii) prior to commencement of any work in
or about the Building by the provider, the provider shall supply Landlord with
such written indemnities, insurance, financial statements, and such other items
as Landlord reasonably determines to be necessary to protect its financial
interests and the interests of the Building relating to the proposed activities
of the provider; (iv) the provider agrees in writing to abide by such rules and
regulations, Building and other codes, job site rules and such other
requirements as are reasonably determined by Landlord to be necessary to
protect the interests of the Building, the tenants in the Building, and
Landlord, in the same or similar manner as Landlord has the right to protect
itself and the Building with respect to proposed alterations as described in
this Lease; (v) Landlord reasonably determines that there is sufficient
space in the Building for the placement of all of the provider’s equipment and
materials; (vi) Landlord receives from the provider such compensation as
is reasonably determined by Landlord to compensate it for the fair market value
of a provider’s occupancy of the Building, and the costs which may reasonably
be expected to be incurred by Landlord in conjunction with the provider’s
occupancy of and activities within the Building; and (vii) all of the
foregoing matters are documented in a written agreement between Landlord and
the provider, the form and content of which is reasonably satisfactory to
Landlord.

 

Except as otherwise
authorized in writing by Landlord, all communications services provided to
Tenant shall be delivered via the Building’s CDS.  Landlord may charge Tenant’s service
providers fees for use of the CDS (“CDS Fees”), which includes monthly
recurring fees (“Recurring CDS Fees”) for use of each circuit of the CDS used
in the delivery of communications services to Tenant, and non-recurring fees (“Non-Recurring
CDS Fees”) relating to activities such as moves, adds and changes of circuits
which Landlord or Landlord’s agents are making. 
In the event that a service provider refuses for any reason to pay the
CDS Fees directly to Landlord, or if Tenant is directly using the CDS to
connect to a provider or otherwise, Tenant shall be responsible to pay Landlord
Non-Recurring CDS Fees, but in no event shall Tenant be responsible to pay to
Landlord Recurring CDS Fees,

 

Landlord shall repair or
replace the CDS as necessary to eliminate any interruption or other adverse
effects to Tenant caused by malfunction, damage or destruction of the CDS, the

 

21

 

cost of which shall be borne by Tenant if the problem
was caused directly or indirectly by the act or omission of Tenant, its agents,
representatives, employees or invitees.

 

In no event shall
Landlord or its agents be liable for any direct or indirect claims or damages
of any kind arising out of any interruption or failure of communications or
related services (including without limitation, local or long distance phone
service, internet, cable TV, CDS, and data services) received by Tenant, it
being understood that Tenant shall look solely to its communications services
providers for recovery of any such claims or damages.  To the extent that Landlord or its agents
provides any communications services directly to Tenant, Tenant’s sole remedy
in the event that such services provided by Landlord or its agents are
interrupted or otherwise fail shall be an equitable abatement of the fees paid
by Tenant to Landlord or its agents for such services, pro-rated from the date
of the interruption or failure of service until the date upon which service is
restored.

 

Landlord shall have the
right to designate a third party as its agent to manage and/or own the
telecommunications infrastructure in the Building, whose responsibilities
include without limitation management of circuit activity on the CDS (“Manager”).  Manager or Landlord may provide to Tenant
operating procedures for the CDS, including the phone number(s) for the, person
or persons responsible for the operation and maintenance of the CDS, and Tenant
agrees to comply with any such procedures. 
Notwithstanding the foregoing, Landlord may, in its sole discretion and
upon notice to Tenant, also designate other entities as Manager of the CDS.

 

As used in this Lease
Agreement, “Communications Distribution System” (“CDS”) means the cables,
conduits, inner ducts, connecting hardware, entrance conduit, and distributed
antenna systems installed by Landlord or its agent in the Building, for the use
of Tenants and their invitees, telecommunications service providers, and Owner
for distributing wired and/or wireless telecommunications signals within the
Building.  The CDS includes the main,
intermediate, and horizontal cross-connects and demarcation frames.

 

9.                                      REPAIRS
AND MAINTENANCE.

 

9.1.                              Landlord’s
Duty to Maintain Structure.  The
Landlord shall maintain or cause to be maintained in good operating condition
the structure of the Building and shall be responsible for structural repairs
to the exterior walls, load bearing elements, foundations, roofs, structural
columns and structural floors with respect thereto, and the Landlord shall make
all required repairs thereto, provided, however, that if the necessity for such
repairs shall have arisen, in whole or in part, from the negligence or willful
acts or omissions of the Tenant, its agents, concessionaires, officers,
employees, licensees, invitees or contractors, or by any unusual use of the
Premises by the Tenant, then the Landlord may collect the cost of such repairs,
as Additional Rent, upon demand.

 

9.2.                              Tenant’s
Duty to Maintain Premises.

 

9.2.1.                     Except as
provided in subsection 9.1, the Tenant shall keep and maintain the
Premises and all fixtures and equipment located therein in a good, safe, clean
and sanitary condition consistent with the operation of a first-class office
building, and in compliance with all legal requirements with respect
thereto.  Except as provided in subsection 9.1,
all injury,

 

22

 

breakage and damage to the Premises (and to any other
part of the Building and/or the Project, if caused by any act or omission of
the Tenant, its agents, concessionaires, officers, employees, licensees,
invitees or contractors) shall be repaired or replaced by the Tenant at its
expense.  The Tenant shall keep all pipes
and conduits and all mechanical, electrical, HVAC and plumbing systems
contained within the Premises in good, safe, clean and sanitary conditions.

 

9.2.2.                     The Tenant
shall keep the Premises in a neat, clean and orderly appearance to a standard
of cleanliness and hygiene reasonably satisfactory to the Landlord.  The Tenant shall surrender the Premises at
the expiration of the Term or at such other time as the Tenant may vacate the
Premises in accordance with Section 3.4 of the Lease,

 

10.                               IMPROVEMENTS.

 

10.1.                        Base
Building and Initial Tenant Improvements.

 

(a)                                  Initial
Tenant Improvements.  The Landlord
shall make the initial improvements to the Premises as set forth in Exhibit C
attached hereto and made a part hereof (the “Landlord’s
Work”).  Other than the Landlord’s
Work, Tenant shall lease the Premises in its “as-is” condition, including the
use of the modular workstations and accompanying furniture contained within the
Premises.  A modular work station
includes one chair, one workstation, one stationary pedestal file, one pedestal
file on wheels and one task table per two workstations.  Accompanying furniture includes conference
room furniture and office furniture including chairs and task tables.  Landlord and Tenant shall inventory the
modular workstations and accompanying furniture prior to Tenant’s occupancy of
the Premises.  All modular workstations
and accompanying furniture shall be the property of the Landlord and shall be
returned to Landlord at the expiration or early termination of this Lease.

 

(b)                                 Additional
Improvements.  Landlord shall be
obligated to spend excess money to make additional tenant improvements (“Additional Work”) only upon the
satisfaction of the following two conditions: 
(i) the Landlord obtains an acceptable equity or financing source
for the Additional Work, which equity or financing source shall be satisfactory
to Landlord in its sole discretion and (ii) the Tenant agrees to pay an
increased Base Rent in an amount necessary to amortize the cost to the Landlord
of the equity or financing source for the Additional Work.  If Tenant provides such additional funding,
the promissory note and lease amendment in connection therewith shall be in
substantially the form attached hereto as Exhibit F.

 

(c)                                  Construction.  As of the date of this Lease, Tenant
acknowledges that the Building and the Project are under construction by the
Landlord and that, during such construction, disruptions and inconveniences to
the Tenant may occur.  During the
construction and renovation of the Building and the Project, Tenant agrees to
provide Landlord with any and all access to the Premises as is necessary for
Landlord to complete the construction and renovation of the Building and the
Project, provided however, Landlord agrees to use its best efforts to minimize
any and all disruption and inconveniences to the Tenant.  In addition, Tenant agrees to follow the rules and
regulations with respect to a site under construction, including, but not
limited to, following all safety guidelines posted around or in construction
areas.

 

23

 

10.2.                        Tenant
Alterations.  The Tenant shall not
make any alteration, improvement or addition in the aggregate costing more than
[***] Dollars ($[***]) (collectively “Alterations”) to the Premises without
first:

 

(i)                                     presenting
to the Landlord plans and specifications therefor and obtaining the Landlord’s
written consent thereto (which shall not, in the case of (1) non-structural
interior Alterations, or (2) Alterations which would not affect any
electrical, mechanical, plumbing or other Building systems, be unreasonably
withheld so long as such Alterations will not violate applicable law or the
provisions of this Lease, or impair the value of the Premises, the Building or
the rest of the Project or be visible from the exterior of the Building) and

 

(ii)                                  obtaining
any and all governmental permits or approvals for such Alterations, which are
required by applicable law; provided, that (1) any and all contractors or
workmen performing such Alterations must first be approved by the Landlord, (2) all
work is performed in a good and workmanlike manner in compliance with all
applicable codes, rules, regulations and ordinances, and (3) the Tenant
shall restore the Premises to its condition immediately before such Alterations
were made, by not later than the date on which the Tenant vacates the Premises
or the Termination Date, whichever is earlier.

 

The Tenant shall be
responsible for the cost of repairing any damage to the Building caused by
bringing therein any property for its use, or by the installation or removal of
such property, regardless of fault or by whom such damage is caused.  As a condition for approving any Alterations
on the Premises by the Tenant, the Landlord shall have the right to require the
Tenant, or the Tenant’s contractor, to furnish a bond in an amount equal to the
estimated cost of construction with a corporate surety approved by the Landlord
for (i) completion of the construction and (ii) indemnification of
the Landlord and the Tenant, as their interests may appear, against liens for
labor and materials, which bond shall be furnished before any work has begun or
any materials are delivered.

 

10.3.                        Acceptance
of Possession.  The Tenant shall for
all purposes of this Lease be deemed to have accepted the Premises and the
Building and to have acknowledged them to be in the condition called for
hereunder except with respect to those defects of which the Tenant notifies the
Landlord within thirty (30) days after the Rent Commencement Date.

 

10.4.                        Fixtures.  Any and all improvements, repairs,
alterations and all other property attached to, used in connection with or
otherwise installed within the Premises by the Landlord, or the Tenant shall
become the Landlord’s property, without payment therefor by the Landlord,
immediately on the completion of their installation; provided that any
machinery, equipment or fixtures installed by the Tenant and used in the
conduct of the Tenant’s trade or business (rather than to service the Premises,
the Building or the Project generally) and not part of the Building Service
Equipment shall remain the Tenant’s property; but further provided that if any
leasehold improvements made by the Tenant replaced any part of the Premises,
such leasehold improvements that replaced any part of the Premises shall be and
remain the Landlord’s property.

 

24

 

11.                               LANDLORD’S
RIGHT OF ENTRY.

 

The Landlord and its
authorized representatives shall be entitled to enter the Premises at any
reasonable time during the Tenant’s usual business hours, after giving the
Tenant at least twenty-four (24) hours’ oral or written notice thereof, (a) to
inspect the Premises, (b) to exhibit the Premises (i) to any existing
or prospective purchaser or Mortgage thereof, or (ii) to any prospective
tenant thereof during the last six (6) months of the Term or upon notice
to vacate the Premises by Tenant, provided that in doing so the Landlord and
each such invitee observes all reasonable safety standards and procedures which
the Tenant may require, and (c) to make any repair thereto and/or to take
any other action therein which the Landlord is permitted to take by this Lease
or applicable law (provided, that in any situation in which, due to an
emergency or otherwise, the Landlord reasonably believes the physical condition
of the Premises, the Building or any part of the Project would be unreasonably
jeopardized unless the Landlord were to take such action immediately, the
Landlord shall not be required to give such notice to the Tenant and may enter
the same at any time).  Notwithstanding
clause (b) above, Tenant hereby agrees that Landlord shall have access to
the Premises upon at least twenty-four (24) hours’ oral or written notice to
obtain entry to the remainder of the third (3rd) floor space in The Ivory
Building for the purposes of exhibiting such space to prospective tenants.  Nothing in this section shall be deemed
to impose any duty on the Landlord to make any such repair or take any such
action, and the Landlord’s performance thereof shall not constitute a waiver of
the Landlord’s right hereunder to have the Tenant perform such work.  The Landlord shall not in any event be liable
to the Tenant for any inconvenience, annoyance, disturbance, loss of business
or other damage sustained by the Tenant by reason of the making of such
repairs, the taking of such action or the bringing of materials, supplies and
equipment upon the Premises during the course thereof, and the Tenant’s
obligations under this Lease shall not be affected thereby.

 

12.                               DAMAGE
OR DESTRUCTION.

 

12.1.                        Option
to Terminate.  If during the Term
either the Premises or any portion of the Building or the Project are
substantially damaged or destroyed by fire or other casualty, the Landlord shall
have the option (which it may exercise by giving written notice thereof to the
Tenant within sixty (60) days after the date on which such damage or
destruction occurs) to terminate this Lease as of the date specified in such
notice (which date shall not be earlier than the thirtieth (30th) day after
such notice is given).  On such
termination, the Tenant shall pay to the Landlord all Base Rent, Additional
Rent and other sums and charges payable by the Tenant hereunder and accrued
through such date (as justly apportioned to the date of such termination).  If the Landlord does not terminate this Lease
pursuant to this section, the Landlord shall restore the Premises as soon
thereafter as is reasonably possible to their condition on the date of
completion of Landlord’s Work, taking into account any delay experienced by the
Landlord in recovering the proceeds of any insurance policy payable on account
of such damage or destruction and in obtaining any necessary permits.  Until the Premises are so repaired, the Base
Rent (and each installment thereof) and the Additional Rent shall abate in
proportion to the floor area of so much, if any, of the Premises as is rendered
substantially unusable by the Tenant by such damage or destruction.  If during the Term either fifty percent
(50%), of the Premises rendering the Premises untenantable, any portion of the
Building or the Project are substantially damaged or destroyed by fire or other
casualty, or the repairs are estimated by the Landlord to require more than six
(6) months from the date of the casualty to complete, the Tenant shall
have

 

25

 

the option (which it may exercise by giving written
notice thereof to Landlord within sixty (60) days after the date on which such
damage or destruction occurs) to terminate this Lease as of the date specified
in such notice (which date shall not be earlier than the thirtieth (30th) day
after such notice is given).  On such
termination, the Tenant shall pay to the Landlord all Base Rent, Additional
Rent and other sums and charges payab1e by the Tenant hereunder and accrued
through such date (as justly apportioned to the date of such termination).

 

12.2.                        No
Termination of Lease.  Except as is
otherwise expressly permitted by subsection 12.1, no total or partial
damage to or destruction of any or all of the Premises shall entitle either
party hereto to surrender or terminate this Lease, or shall relieve the Tenant
from its liability hereunder to pay in full the Base Rent, any Additional Rent
and all other sums and charges which are otherwise payable by the Tenant
hereunder, or from any of its other obligations hereunder, and the Tenant
hereby waives any right now or hereafter conferred upon it by statute or
otherwise, on account of any such damage or destruction, to surrender this
Lease, to quit or surrender any or all of the Premises, or to have any
suspension, diminution, abatement or reduction of the Base Rent or any
Additional Rent or other sum payable by the Tenant hereunder.

 

13.                               CONDEMNATION.

 

13.1.                        Termination
of Lease.  If any or all of the
Premises and/or of that portion of the Project underlying the Premises is taken
by the exercise of any power of eminent domain or is conveyed to or at the
direction of any governmental entity under a threat of any such taking (each of
which is herein referred to as a “Condemnation”),
this Lease shall terminate on the date on which the title to so much of the
Premises as is the subject of such Condemnation vests in the condemning
authority, unless the parties hereto otherwise agree in writing.  If all or any substantial portion of the
Building or the Project other than that portion thereof underlying the Premises
is taken or conveyed in a Condemnation, the Landlord shall be entitled, by
giving written notice thereof to the Tenant, to terminate this Lease on the
date on which the title to so much thereof as is the subject of such
Condemnation vests in the condemning authority. 
If this Lease is not terminated pursuant to this subsection, the Landlord
shall restore any of the Premises damaged by such Condemnation substantially to
its condition immediately before such Condemnation, as soon after the Landlord’s
receipt of the proceeds of such Condemnation as is reasonably possible under
the circumstances.

 

13.2.                        Condemnation
Proceeds.  Regardless of whether this
Lease is terminated under this section, the Tenant shall have no right in any
such Condemnation to make any claim on account thereof against the condemning
authority, except that the Tenant may make a separate claim for the Tenant’s
moving expenses and the value of the Tenant’s trade fixtures, provided that
such claim does not reduce the sums otherwise payable by the condemning
authority to the Landlord.  Except as
aforesaid, the Tenant hereby (a) waives all claims which it may have
against the Landlord or such condemning authority by virtue of such
Condemnation, and (b) assigns to the Landlord all such claims (including
but not limited to all claims for leasehold damages or diminution in value of
the Tenant’s leasehold interest hereunder).

 

13.3.                        Effect
on Rent.  If this Lease is terminated
under this section, any Base Rent, any Additional Rent and all other sums and
charges required to paid by the Tenant hereunder shall be

 

26

 

apportioned and paid to the date of such
termination.  If this Lease is not so
terminated in the event of a Condemnation, the Base Rent (and each installment
thereof) and the Additional Rent shall be abated from the date on which the
title to so much, if any, of the Premises as is the subject of such
Condemnation vests in the condemning authority, through the Termination Date,
in proportion to the floor area of such portion of the Premises as is the
subject of such Condemnation.

 

13.4.                        No
Termination of Lease.  Except as
otherwise expressly provided in this section, no total or partial Condemnation
shall entitle either party hereto to surrender or terminate this Lease, or
shall relieve the Tenant from its liability hereunder to pay in full the Base
Rent, any Additional Rent and all other sums and charges which are otherwise
payable by the Tenant hereunder, or from any of its other obligations
hereunder, and the Tenant hereby waives any right now or hereafter conferred
upon it by statute or otherwise, on account of any such Condemnation, to
surrender this Lease, to quit or surrender any or all of the Premises, or to
receive any suspension, diminution, abatement or reduction of the Base Rent or
any Additional Rent or other sum payable by the Tenant hereunder.

 

14.                               ASSIGNMENT
AND SUBLETTING.

 

14.1.                        Landlord’s
Consent Required.  The Tenant shall
not assign this Lease, in whole or in part, nor sublet all or any part of the
Premises, nor license concessions or lease departments therein, nor otherwise
permit any other person to occupy or use any portion of the Premises
(collectively, a “Transfer”), without in each instance first obtaining the
written consent of the Landlord, which consent may not be unreasonably
withheld.  Notwithstanding the foregoing,
Tenant shall have the right without Landlord’s prior written consent to assign
this Lease or sublet all or any part of the Premises to any parent, subsidiary,
affiliate corporation of the survivor of any merger or to the purchaser of all
or substantially all of the assets of Tenant. 
Consent by the Landlord to any assignment, subletting, licensing or
other transfer shall not (i) constitute a waiver of the requirement for
such consent to any subsequent assignment, subletting, licensing or other
Transfer, (ii) relieve the Tenant from its duties, responsibilities and
obligations under this Lease, or (iii) relieve any guarantor of this Lease
from such guarantor’s obligations under its guaranty agreement.

 

14.2.                        Acceptance
of Rent from Transferee.  The
acceptance by the Landlord of the payment of Rent from any person following any
act, assignment or other Transfer prohibited by this section shall not
constitute a consent to such act, assignment or other Transfer, nor shall the
same be deemed to be a waiver of any right or remedy of the Landlord’s
hereunder.

 

14.3.                        Conditions
of Consent.  All reasonable costs
incurred by the Landlord in connection with any request for consent to a
Transfer, including reasonable costs of investigation and the reasonable fees
of the Landlord’s counsel, shall be paid by the Tenant on demand as a further
condition of any consent which may be given.

 

14.4.                        Profits
from Use or Transfer.  The Tenant
agrees that in the event of a Transfer, the Tenant shall pay the Landlord, within
ten (10) days after receipt thereof, fifty percent (50%) of the excess of (i) any
and all consideration, money or thing of value, however characterized, received
by the Tenant or payable to the Tenant in connection with or arising out of
such

 

27

 

Transfer, over (ii) all amounts otherwise payable
by the Tenant to the Landlord pursuant to this Lease, less any and all
reasonable costs incurred by Tenant in effecting the Transfer.

 

14.5.                        Landlord’s
Right of Recapture.  If Tenant
intends to sublease any portion of the Premises or assign this Lease, then
Tenant shall give written notice of such intent to Landlord, which notice shall
constitute an offer to Landlord to recapture the Premises, or the portion of the
Premises covered by such sublease, as the case may be.  Tenant’s notice to Landlord shall identify
the specific “Rental Area” of the Premises subleased or indicate that the Lease
is to be assigned, and the date of commencement and termination of the sublease
or the effective date for the assignment, and shall include a copy of all of
the documents relating to such sublease or assignment.  Within thirty (30) days after Landlord’s
receipt of Tenant’s notice, Landlord may at its sole option elect to recapture
the Premises or such portion thereof, as the case may be, by giving Tenant
written notice thereof.  If Landlord
exercises its option, Tenant shall notify the prospective subtenant or assignee
of Landlord’s election, shall terminate the agreement with such prospective
subtenant or assignee if so directed by Landlord, and shall surrender the space
to Landlord pursuant to a written partial or total surrender of lease, as
applicable, reasonably satisfactory to both parties, providing for the
termination of this Lease with respect to the Premises or such portion thereof
and the parties’ obligations to each other with respect to such space.  Upon any partial termination under this Section 14.5,
(x) the Rental Area of the Premises shall be adjusted, and the base rent and
additional rent shall be pro-rated as of the date of termination and shall be
abated following the termination as to the surrendered Rental area, and
(y) Landlord, at Landlord’s sole cost and expense, shall construct
Building standard demising walls to separate the space covered by such partial
termination from the remaining part of the Premises.

 

14.6.                        Relocation
of Premises.  With respect to each
Renewal Term, within fifteen (15) days of Landlord’s receipt of written notice
by Tenant exercising its option to renew, Landlord shall have the one time
right, at its sole cost and expense to request Tenant to move from the Premises
to another suite of equal or greater size, amenities and decor, including
build-out of such relocation space, in the Building or the Project (the “Relocation Premises”) in accordance with
the plans and specifications originally prepared for the Premises, using
materials of like quality as those used in the build-out of the original
Premises provided, however, that in the event of receipt of any such notice,
Tenant by written notice to Landlord delivered not more than fifteen (15) days
after receipt of Landlord’s request for relocation may elect not to move to the
Relocation Premises and in lieu thereof to terminate this Lease, in which case
the termination shall be effective at the end of the Original Term or the first
Renewal Term, as the case may be.  If
Tenant fails to exercise such termination right within fifteen (15) days after
receipt of Landlord’s request for relocation, Tenant shall be deemed to have
agreed to such relocation.  If Tenant
exercises such termination right in a timely manner, Landlord may, by notice
delivered, to Tenant not more than fifteen (15) days after such termination
notice, rescind its relocation request, in which case Tenant’s termination
notice shall become void and this Lease shall continue as if no relocation
request were ever made.

 

In the event of any such
relocation, Landlord shall, within thirty (30) days of such relocation, pay all
expenses associated with preparing and decorating the Relocation Premises so
that they shall be substantially similar to the Premises, as well as the
expense of moving Tenant’s property, including, but not limited to, Tenant’s
furniture, equipment, supplies, telephones, and

 

28

 

telephone equipment to the Relocation Premises.  Any such move shall be completed over a
weekend or during off hours as to minimize any interruption of Tenant’s’
business.  Occupancy of the Relocation
Premises shall be under and pursuant to the terms of this Lease.  Effective on the date of such relocation,
this Lease will be amended by deleting the description of the original premises
and substituting a description of such Relocation Premises and making any other
changes as may be reasonably necessary or desirable in light of such
relocation.

 

15.                               RULES
AND REGULATIONS.

 

The Landlord shall have
the right to prescribe, at its sole discretion, the Rules and
Regulations.  The Rules and
Regulations may govern, without limitation, the use of sound apparatus, noise
or vibrations emanating from machinery or equipment, obnoxious fumes and/or
odors, the parking of vehicles, lighting and storage and disposal of trash and
garbage.  The Landlord will not enforce
the Rules and Regulations in a discriminatory manner and will make
reasonable’ efforts to enforce the Rules, and Regulations uniformly against all
tenants.  The Tenant shall adhere to the Rules and
Regulations and shall cause its agents, employees, invitees, visitors and
guests to do so.  A copy of the Rules and
Regulations in effect on the date hereof is attached hereto as Exhibit D.  The Landlord shall have the right to amend
the Rules and Regulations from time to time.

 

16.                               SUBORDINATION
AND ATTORNMENT.

 

16.1.                        Subordination.

 

16.1.1.               Unless a Mortgagee
otherwise shall elect as provided in subsection 16.2, the Tenant’s rights
under this Lease are and shall remain subject and subordinate to the operation
and effect of any mortgage, deed of trust or other security instrument
constituting a lien upon the Premises, and/or the Project, whether the same
shall be in existence on the date hereof or created hereafter (any such lease,
mortgage, deed of trust or other security instrument being referred to herein
as a “Mortgage,” and the party or parties having the benefit of the same,
whether as beneficiary, trustee or noteholders being referred to hereinafter
collectively as “Mortgagee”).  The Tenant’s
acknowledgment and agreement of subordination as provided for in this section is
self-operative and no other instrument of subordination shall be required;
however, the Tenant shall execute, within ten (10) days after request
therefor, a document providing for such further assurance thereof and for such
other matters as shall be requisite or as may be requested from time to time by
the Landlord or any Mortgagee.  Within
fifteen (15) days of full execution of this Lease, Landlord and Tenant agree to
execute a Subordination, Attornment and Non-Disturbance Agreement in
substantially the form attached hereto as Exhibit H, being the form
of such agreed as approved by Riggs Bank, the current first Mortgagee of the
Project.

 

Landlord and Tenant
hereby agree to execute a Collateral Assignment of Lease in substantially the
form attached hereto as Exhibit E being the form of such agreed
upon by Landlord and Tenant and approved by Prudent Capital I, LP, a lender to
K.P. Sports, Inc.  Landlord and
Tenant further agree to execute such other Collateral Assignment of Lease is
substantially the same form as Exhibit E as may be requested by a
lender of K.P. Sports, Inc.  Upon
request of a lender of Tenant, Landlord will provide Tenant’s lender with
essentially the

 

29

 

same information requested by Landlord of Tenant in
the form of estoppel certificate attached hereto as Exhibit I.

 

16.1.2.               The Landlord hereby
directs the Tenant, upon (i) the occurrence of any event of default by the
Landlord, as mortgagor under any Mortgage, (ii) the receipt by the Tenant
of a notice of the occurrence of such event of default under such Mortgage from
the Landlord or such Mortgagee, or (iii) a direction by the Mortgagee
under such Mortgage to the Tenant to pay all Rent thereafter to such Mortgagee,
to make such payment to such Mortgagee, and the Landlord agrees that in the
event that the Tenant makes such payments to such Mortgagee, as aforesaid, the
Tenant shall not be liable to the Landlord for the same.  In addition, the Mortgagee (and any person
who acquires the property from Mortgagee) shall not be responsible for security
deposits not actually received by the Mortgagee, or its affiliate, after the
Mortgagee, or its affiliate, becomes the owner of the property.

 

16.2.                        Mortgagee’s
Unilateral Subordination.  If a
Mortgagee shall so elect by notice to the Tenant or by the recording of a
unilateral declaration of subordination, this Lease and the Tenant’s rights
hereunder shall be superior and prior in right to the Mortgage of which such
Mortgagee has the benefit, with the same force and effect as if this Lease had
been executed, delivered and recorded prior to the execution, delivery and
recording of such Mortgage, subject, nevertheless, to such conditions as may be
set forth in any such notice or declaration.

 

16.3.                        Attornment.  If any Person shall succeed to all or any
part of the Landlord’s interest in the Premises, whether by purchase,
foreclosure, deed in lieu of foreclosure, power of sale, termination of lease
or otherwise, and if such successor-in-interest requests or requires, the
Tenant shall attorn to such successor-in-interest and shall execute within ten (10) after
receipt thereof an agreement in confirmation of such attorment in a form as may
be reasonably requested by such successor-in-interest.  Failure to respond within such ten (10) day
period shall be deemed to be a confirmation by the Tenant of the facts and
matters set forth therein.

 

16.4.                        Superior
Leases.  Tenant acknowledges that
Landlord may restructure the ownership of the Project involving one or more
ground leases or master leases (the “Superior Leases”).  In such event, Tenant agrees that it will
subordinate this Lease to such Superior Leases or, at Landlord’s option, enter
into a new sublease with the applicable master lessee upon substantially the
same terms and conditions as are set forth herein, provided that in connection
with such subordination or such new sublease, Tenant shall have the benefit of
a non-disturbance agreement which shall provide in substance, along with other
matters deemed reasonable or desirable by Landlord, that so long as Tenant is
not in default, Tenant’s rights of use and occupancy shall not be disturbed in
the event of a termination of any Superior Lease.

 

17.                               DEFAULTS
AND REMEDIES.

 

17.1.                        “Event
of Default” Defined.  Any one or more
of the following events shall constitute a default under the terms of this
Lease (“Event of Default”):

 

(a)                                  the
failure of the Tenant to pay any Rent or other sum of money due hereunder to
the Landlord or any other person within five (5) days after receipt of
written notification from the Landlord that the same is due;

 

30

 

(b)                                 the
filing of a petition proposing the adjudication of the Tenant as a bankrupt or
insolvent, or the reorganization of the Tenant, or an arrangement by the Tenant
with its creditors, whether pursuant to the Federal Bankruptcy Act or any
similar federal or state proceeding, unless such petition is filed by a party
other than the Tenant and is withdrawn or dismissed within sixty (60) days
after the date of its filing;

 

(c)                                  the
appointment of a receiver or trustee for the business or property of the
Tenant, unless such appointment is vacated within sixty (60) days of its entry;

 

(d)                                 the
making by the Tenant of an assignment for the benefit of its creditors if
Tenant is insolvent;

 

(e)                                  a
default by the Tenant in the performance or observance of any covenant or
agreement of this Leases to be performed or observed by the Tenant (other than
as set forth in clauses (a) through (d) above), which default is not
cured within thirty (30) days after the giving of written notice thereof by the
Landlord, unless such default is of such nature that it cannot be cured within
such 30-day period, in which event an Event of Default shall not be deemed to
have occurred if the Tenant institutes a cure within the 30-day period and
thereafter diligently and continuously prosecutes the curing of the same until
completion, but in no event shall such cure period exceed ninety (90) days;
provided, however, that if the Tenant defaults in the performance of any such
covenant or agreement more than two (2) times during the Term, then
notwithstanding that such defaults have each been cured by the Tenant, any
further defaults shall be deemed an Event of Default without the ability to
cure; or

 

(f)                                    the
vacating or abandonment of the Premises by the Tenant at any time during the
Term.

 

17.2.                        Landlord’s
Remedies.  Upon the occurrence of an
Event of Default, the Landlord, without notice to the Tenant in any instance
(except where expressly provided for below), may do any one or more of the
following:

 

(a)                                  perform,
on behalf and at the expense of the Tenant, any obligation of the Tenant under
this Lease which the Tenant has failed to perform beyond any applicable grace
or cure periods and of which the Landlord shall have given the Tenant notice
(except in an emergency situation in which no notice is required), the cost of
which performance by the Landlord, together with interest thereon at the
Default Rate from the date of such expenditure, shall be deemed Additional Rent
and shall be payable by the Tenant to the Landlord as otherwise set forth
herein;

 

(b)                                 elect
to terminate this Lease and the tenancy created hereby by giving notice of such
election to the Tenant without any right on the part of the Tenant to save the
forfeiture by payment of any sum due or by other performance of condition,
term, agreement or covenant broken, or elect to terminate the Tenant’s
possessory rights and all other rights of the Tenant without terminating this
Lease, and in either event, at any time thereafter without notice or demand and
without any liability whatsoever, reenter the Premises by force, summary
proceedings or otherwise, and remove the Tenant and all other persons and
property from the Premises, and store such Project in a public warehouse or
elsewhere at the cost and for the

 

31

 

account of the Tenant without resort to legal process
and without the Landlord being deemed guilty of trespass or becoming liable for
any loss or damage occasioned thereby; and

 

(c)                                  exercise
any other legal and/or equitable might or remedy which it may have at law or in
equity, including rights of specific performance and/or injunctive relief, where
appropriate.

 

17.3.                        Damages.

 

(a)                                  If
this Lease is terminated by the Landlord pursuant to subsection 17.2, the
Tenant nevertheless shall remain liable for any Rent and damages which may be
due or sustained prior to such termination, as well as all reasonable costs,
fees and expenses incurred by the Landlord in pursuit of its remedies
hereunder, and/or in connection with any bankruptcy proceedings of the Tenant,
and/or in connection with renting the Premises to others from time to time (all
such Rent, damages, costs, fees and expenses being referred to herein as “Termination
Damages”), plus additional damages for all Rent treated as in arrears (“Liquidated
Damages”).  At the election of the
Landlord, Termination Damages shall be an amount equal to either:

 

(i)                                     the
Rent which, but for the termination of this Lease, would have become due during
the remainder of the Term, less the amount or amounts of rent, if any, which
the Landlord receives during such period from others to whom the Premises may
be rented (other than any additional rent received by the Landlord as a result
of any failure of such other person to perform any of its obligations to the
Landlord), in which case Termination Damages shall be computed and payable in
monthly installments, in advance, on the first business day of each calendar
month following the termination of this Lease and shall continue until the date
on which the Term would have expired but for such termination, and any action
or suit brought to collect any such Termination Damages for any month shall not
in any manner prejudice the right of the Landlord to collect any Termination
Damages for any subsequent months by similar proceeding; or

 

(ii)                                  the
present worth (as of the date of such termination) of the Rent which, but for
the termination of this Lease, would have become due during the remainder of
the Term, less the fair rental value of the Premises, as determined by an
independent real estate appraiser or broker selected by the Landlord, in which
case such Termination Damages shall be payable to the Landlord in one lump sum
on demand, and shall bear interest at the Default Rate.  “Present worth” shall be computed by
discounting such amount to present worth at a rate equal to one percentage
point above the discount rate then in effect at the Federal Reserve Bank.

 

(b)                                 Notwithstanding
anything to the contrary set forth in this subsection 17.3, if either
party commences an action against the other party arising out of or in
connection with this Lease, the prevailing party shall be entitled to have and
recover from the losing party attorneys’ fees, costs of suit, investigation
expenses and discovery costs, including costs of appeal.

 

17.4.                        Waiver
of Jury Trial.  Each party hereto
hereby waives any right which it may otherwise have at law or in equity to a
trial by jury in connection with any suit or proceeding at law or in equity
brought by the other against the waiving party or which otherwise relates to
this

 

32

 

lease, as a result of an event of default or
otherwise.  The Tenant agrees that in the
event the Landlord commences any summary proceeding for nonpayment of rent or
possession of the Premises, the Tenant will not, and hereby waives, all right
to interpose any counterclaim of whatever nature in any such proceeding.

 

18.                               ESTOPPEL
CERTIFICATE.

 

(a)                                  Within
fifteen (15) days of the full execution of this Lease, Tenant agrees to execute
an Estoppel Certificate in substantially the form attached hereto as Exhibit I,
being the form of such agreed as approved by Riggs Bank, the current first
mortgagee of the Project.

 

(b)                                 Landlord
also agrees to provide to Tenant a similar estoppel certificate from time when
reasonably requested.

 

19.                               QUIET
ENJOYMENT.

 

The Landlord hereby
warrants that, so long as all of the Tenant’s obligations hereunder are timely
performed, the Tenant will have during the Term quiet and peaceful possession
of the Premises and enjoyment of such rights as the Tenant may hold hereunder
to use the Common Areas, except if and to the extent that such possession and
use are terminated pursuant to this Lease.

 

20.                               NOTICES.

 

Except as may be
otherwise provided in this Lease, any notice, demand, consent, approval,
request or other communication or document to be provided hereunder to the
Landlord or the Tenant (a) shall be in writing, and (b) shall be
deemed to have been provided (i) two (2) days following the date sent
as certified mail in the United States mails, postage prepaid, return receipt
requested, (ii) on the day following the date it is deposited prior to the
close of business with Federal Express or another national courier service or (iii) on
the date of hand delivery (if such party’s receipt thereof is acknowledged in
writing), in each case to the address of such party set forth hereinbelow or to
such other address as such party may designate from time to time by notice to
each other party hereto.

 

If to the Landlord, notice shall be sent to:

Hull Point, LLC

Tide Point

1040 Hull Street

Baltimore, Maryland 21230

Attention:                                         Property
Management

 

33

 

with a copy to:

John P. Machen, Esquire

Piper Marbury Rudnick & Wolfe LLP

6225 Smith Avenue

Baltimore, Maryland 21209

 

If to the Tenant, notice shall be sent to:

J. Scott Plank

Vice President – Finance

Under Armour Performance Apparel

1600 Bush Street

Baltimore, Maryland 21230

 

with a copy to:

Tom Sippel, Esquire

Gill & Sippel

The B&O Railroad Station

98 Church Street

Rockville, Maryland 20850

301-251-9200 (phone)

301-762-6176 (fax)

 

21.                               GENERAL

 

21.1.                        Effectiveness.  This Lease shall become effective on and only
on its execution and delivery by each party hereto.

 

21.2.                        Complete
Understanding.  This Lease represents
the complete understanding between the parties hereto as to the subject matter
hereof, and supersedes all prior negotiations, representations, guaranties,
warranties, promises, statements and agreements, either written or oral,
between the parties hereto as to the same.

 

21.3.                        Amendment.  This Lease may be amended by and only by an
instrument executed and delivered by each party hereto.

 

21.4.                        Waiver.  No party hereto shall be deemed to have
waived the exercise of any right which it holds hereunder unless such waiver is
made expressly and in writing (and, without limiting the generality of the
foregoing, no delay or omission by any party hereto in exercising any such
right shall be deemed a waiver of its future exercise).  No such waiver made in any instance involving
the exercise of any such right shall be deemed a waiver as to any other such
instance or any other such right. 
Without limiting the generality of the foregoing provisions of this
subsection, the Landlord’s receipt or acceptance of any Base Rent, Additional
Rent or other sum from the Tenant or any other person shall not be deemed a
waiver of the Landlord’s right, to

 

34

 

enforce any of its rights hereunder on account of any
default by the Tenant in performing its obligation’s hereunder.

 

21.5.                        Applicable
Law.  This Lease shall be given
effect and construed by application of the laws of Maryland, and any action or
proceeding arising hereunder shall be brought in the courts of Maryland;
provided, however, that if any such action or proceeding arises under the Constitution,
laws or treaties of the United States of America, or if there is a diversity of
citizenship between the parties thereto, so that it is to be brought in a
United States District Court, it may be brought only in the United States
District Court for Maryland or any successor federal court having original
jurisdiction.

 

21.6.                        Commissions.  The parties hereto hereby acknowledge and
agree that, in connection with the leasing of the Premises hereunder, they have
used the services of Colliers Pinkard. 
Any and all commissions due such brokers shall be paid in accordance
with the terms and conditions set forth in a separate written agreement or
agreements between the Landlord and Colliers Pinkard.  Subject to the foregoing, each party hereto
hereby represents and warrants to the other that, in connection with such
leasing, the party so representing and warranting has not dealt with any real
estate broker, agent or finder, and there is no commission, charge or other
compensation due on account thereof. 
Each party hereto shall indemnify and hold harmless the other against
and from any inaccuracy in such party’s representation.

 

21.7.                        Landlord’s
Liability.  No Person holding the
Landlord’s interest hereunder (whether or not such Person is named as the “Landlord”
herein) shall have any liability hereunder after such Person ceases to hold
such interest, except for any such liability accruing while such Person holds
such interest.  No Mortgagee not in
possession of the Premises shall have any liability hereunder.  Neither the Landlord nor any principal of the
Landlord, whether disclosed or undisclosed, shall have any personal liability
under this Lease.  If the Landlord
defaults in performing any of its obligations hereunder or otherwise, the
Tenant shall look solely to the Landlord’s equity, interest and rights in the
Project to satisfy the Tenant’s remedies on account thereof.

 

21.8.                        Remedies
Cumulative.  No reference to any
specific right or remedy shall preclude the Landlord from exercising any other
right or from having any other remedy or from maintaining any action to which
it may otherwise be entitled at law or in equity.  No failure by the Landlord to insist upon the
strict performance of any agreement, term, covenant or condition hereof, or to
exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial Rent during the continuance of any such breach,
shall constitute a waiver of any such breach, agreement, term, covenant or
condition.  No waiver by the Landlord of
any breach by the Tenant under this Lease or of any breach by any other tenant
under any other lease of any portion of the Building shall affect or alter this
Lease in any way whatsoever.

 

21.9.                        Severability.  No determination by any court, governmental
or administrative body or agency or otherwise that any provision of this Lease
or any amendment hereof is invalid or unenforceable in any instance shall
affect the validity or enforceability of (a) any other provision hereof,
or (b) such provision in any circumstance not controlled by such
determination.  Each such provision shall
remain valid and enforceable to the fullest extent allowed by, and shall be
construed wherever possible as being consistent with, applicable law.

 

35

 

21.10.                  Authority.  If the Tenant is a corporation partnership,
limited liability company or similar entity, the person executing this Lease on
behalf of the Tenant represents and warrants that (a) the Tenant is duly
organized and validly existing and (b) this Lease (i) has been
authorized by all necessary parties, (ii) is validly executed by an
authorized officer or agent of the Tenant and (iii) is binding upon and
enforceable against the Tenant in accordance with its terms.

 

21.11.                  Recordation.  Neither this Lease, any amendment to this
Lease, nor any memorandum, affidavit or other item with respect thereto shall
be recorded by the Tenant or by anyone acting through, under or on behalf of
the Tenant, and the recording thereof in violation of this provision shall (i) be
deemed an Event of Default and (ii) at the Landlord’s election, make this
Lease null and void.

 

21.12.                  Headings.  The headings of the sections, subsections,
paragraphs and subparagraphs hereof are provided herein for and only for convenience
of reference and shall not be considered in construing their contents.

 

21.13.                  Construction.  As used herein, all references made (a) in
the neuter, masculine or feminine gender shall be deemed to have been made in
all such genders; (b) in the singular or plural number shall be deemed to
have been made, respectively, in the plural or singular number as well; and (c) to
any section, subsection, paragraph or subparagraph shall be deemed, unless
otherwise expressly indicated, to have been made to such section, subsection,
paragraph or subparagraph of this Lease.

 

21.14.                  Exhibits.  Each writing or drawing referred to herein as
being attached hereto as a schedule, an exhibit or otherwise designated herein
as a schedule or an exhibit hereto is hereby made a part hereof.

 

36

 

IN WITNESS WHEREOF, each party hereto has executed and
ensealed this Lease, or caused it to be executed and ensealed on its behalf by
its duly authorized representatives, on the date first above written.

 

	
  WITNESS or
  ATTEST:

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  HULL POINT, LLC,
  a Maryland liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Locust Tide
  Point LLC, Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  LTP Management
  LLC, its Managing Member

  
	
   

  	
   

  
	
  [illegible]

  	
   

  	
  By:

  	
  /s/

  	
  Carl W. Struever

  	
  (SEAL)

  
	
   

  	
   

  	
   

  	
   

  	
  Carl W. Struever

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Managing Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS or
  ATTEST:

  	
   

  	
  TENANT:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KP SPORTS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [illegible]

  	
   

  	
  By:

  	
  /s/ J. Scott
  Plank

  	
  (SEAL)

  
	
   

  	
   

  	
   

  	
  Scott Plank

  	
   

  
	
   

  	
   

  	
  Vice President -
  Finance

  	
   

  

 

37

 

ACKNOWLEDGEMENT
OF LANDLORD

 

STATE OF MARYLAND

) to wit:

COUNTY OF

 

I HEREBY CERTIFY that on
this           day of                   ,
2002 before me, the subscriber, a Notary Public in and for the State aforesaid,
personally appeared                           
who acknowledged himself to be the                       
of                       ,
and that he, as such officer, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of said
corporation by himself as such officer.

 

IN WITNESS WHEREOF, I
have hereunto set my hand and Notarial Seal.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
   

  	
  My
  Commission Expires:

  

 

 

ACKNOWLEDGEMENT
OF TENANT

 

STATE OF MARYLAND

) to wit:

COUNTY OF

 

I HEREBY CERTIFY that on
this           day of                         ,
2002 before me, the subscriber, a Notary Public in and for the State aforesaid,
personally appeared                                         
who acknowledged himself to be the                                 
of                                 ,
and that he, as such officer, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of said
corporation by himself as such officer.

 

IN WITNESS WHEREOF, I
have hereunto set my hand and Notarial Seal.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
   

  	
  My
  Commission Expires:

  

 

38

 

Exhibit A

 

Site Plan
showing Project and Building

 

 

 

39

 

Exhibit B

 

Location of
Premises

 

 

40

 

Exhibit C

 

Landlord’s Work

 

Landlord agrees to complete the following work prior
to Rent Commencement Date:

 

1.                                       Install
demising wall between Tenant’s Leased premises and remaining space on 3rd
Floor;

 

2.                                       Finish
installation of all existing workstations currently located in Leased premises.

 

3.                                       Facilitate
data/telecom installation with Riser Management.

 

4.                                       Re-key
all Suite entry doors.

 

41

 

EXHIBIT D

 

Current Rules and Regulations

 

1.             The sidewalks, passages, and stairways shall not be
obstructed by the Tenant or Tenant’s agents, employees, or invitees or used by
the Tenant for any purpose other than ingress and egress from and to the Tenant’s
premises.  The Landlord shall in all
cases retain the right to control or prevent access thereto by any person whose
presence, in the Landlord’s judgment, would be prejudicial to the safety,
peace, character or reputation of the property or of any tenant of the Project.

 

2.             The toilet rooms, water closets, sinks, faucets,
plumbing and other service apparatus of any kind shall not be used by the
Tenant for any purpose other than those for which they were installed, and no
sweepings, rubbish, rags, ashes, chemicals or other refuse or injurious
substances shall be placed therein or used in connection therewith by the
Tenant, or left by the Tenant in the lobbies, passages, elevators or stairways
of the Building.  The expense of any
breakage, stoppage or damage to such sinks, toilets and the like shall be
borne by the tenant who, or whose employees, contractors or invitees, caused
it.

 

3.             No skylight, window, door or transom of the Building
shall be covered or obstructed by the Tenant, and no window shade, blind,
curtain, screen, storm window, awning or other material shall be installed or
placed on any window or in any window space, except as approved in writing by
the Landlord.  If the Landlord has
installed or hereafter installs any shade, blind or curtain in the Premises,
the Tenant shall not remove it without first obtaining the Landlord’s written
consent thereto.

 

4.             No sign, lettering, insignia, advertisement, notice or
other thing shall be inscribed, painted, installed, erected or placed in any
portion of the Premises which may be seen from outside the Building, or on any
window, window space or other part of the exterior or interior of the Building,
unless first approved in writing by the Landlord.  Names on suite entrances may be provided by
and only by the Landlord and at the Tenant’s expense, using in each instance
lettering of a design and in a form consistent with the other lettering in the
Building, and first approved in writing by the Landlord.  The Tenant shall not erect any stand, booth or
showcase or other article or matter in or upon the Building and/or the
Project without first obtaining the Landlord’s written consent thereto.

 

5.             The Tenant shall not place any other or additional lock
upon any door within the Premises or elsewhere upon the Project, and the Tenant
shall surrender all keys for all such locks at the end of the Term.  The Landlord shall provide the Tenant with
one set of keys to the Premises when the Tenant assumes possession thereof.

 

6.             The Tenant shall not do or permit to be done anything
which obstructs or interferes with the rights of any other tenant of the
Project.  No bird, fish or animal shall
be brought into or kept in or about the Premises, the Building and/or the
Project.

 

7.             If the Tenant desires to install signaling, telegraphic,
telephonic, protective alarm or other wires, apparatus or devices within the
Premises, the Landlord shall direct where and

 

42

 

how they are to be
installed and, except as so directed, no installation, boring or cutting shall
be permitted.  The Landlord shall have
the right (a) to prevent or interrupt the transmission of excessive,
dangerous or annoying current of electricity or otherwise into or through the
Premises, the Building and/or the Project, (b) to require the changing of
wiring connections or layout at the Tenant’s expense, to the extent that the
Landlord may deem necessary, (c) to require compliance with such
reasonable rules as the Landlord may establish relating thereto, and (d) in
the event of noncompliance with such requirements or rules, immediately to cut
wiring or do whatever else it considers necessary to remove the danger,
annoyance or electrical interference with apparatus in any part of the Building
and/or the Project.  Each wire installed
by the Tenant must be clearly tagged at each distributing board and junction
box and elsewhere where required by the Landlord, with the number of the office
to which such wire leads and the purpose for which it is used, together with the
name of the Tenant or other concern, if any, operating or using it.

 

8.             A directory may be provided by the Landlord on the
ground floor of the Building or elsewhere within the Project, on which the
Tenant’s name may be placed.

 

9.             The Landlord shall in no event be responsible for
admitting or excluding any person from the Premises.  In case of invasion, hostile attack,
insurrection, mob violence, riot, public excitement or other commotion,
explosion, fire or any casualty, the Landlord shall have the right to bar or
limit access to the Project to protect the safety of occupants of the Project,
or any property within the Project.

 

10.           The use of any area within the
Project as sleeping quarters is strictly prohibited at all times.

 

11.           The Tenant shall keep the windows and
doors of the Premises (including those opening on corridors and all doors
between rooms entitled to receive heating or air conditioning service and rooms
not entitled to receive such service) closed while the heating or
air-conditioning system is operating, in order to minimize the energy used by,
and to conserve the effectiveness of, such systems.  The Tenant shall comply with all reasonable rules and
regulations from time to time promulgated by the Landlord with respect to such
systems or their use.

 

12.           The Landlord shall have the right to
prescribe the weight and position of inventory and of other heavy equipment or
fixtures, which shall, if considered necessary by the Landlord, stand on plank
strips to distribute their weight.  Any
and all damage or injury to the Project arising out of the Tenant’s equipment
being on the property shall be repaired by the Tenant at its expense.  The Tenant shall not install or operate any
machinery whose installation or operation may affect the structure of the
Building without first obtaining the Landlord’s written consent thereto, and
the Tenant shall not install any other equipment of any kind or nature
whatsoever which may necessitate any change, replacement or addition to, or in
the use of, the water system, the heating system, the plumbing system, the
air-conditioning system or the electrical system of the Premises, the Building
or the Project without first obtaining the Landlord’s written consent
thereto.  Business machines and
mechanical equipment belonging to the Tenant which cause noise or vibration
that may be transmitted to the structure of the Building, any other buildings
on the Project or any space therein to such a degree as to be objectionable to
the Landlord or to any tenant, shall be installed and maintained by the Tenant,
at

 

43

 

its expense, on
vibration eliminators or other devices sufficient to eliminate such noise and
vibration.  The Tenant shall remove
promptly from any sidewalks and other areas on the Project any of the Tenant’s
furniture, equipment, inventory or other material delivered or deposited there.

 

13.           The Tenant shall not place or permit
its agents, employees or invitees to place any thing or material on the roof or
in the gutters and downspouts of the Building or cut, drive nails into or
otherwise penetrate the roof, without first obtaining the Landlord’s written
consent thereto.  The Tenant shall be
responsible for any damage to the roof caused by its employees or
contractors.  The Tenant shall indemnify
the Landlord and hold the Landlord harmless against expenses incurred to
correct any damage to the roof resulting from the Tenant’s violation of this
rule, as well as any consequential damages to the Landlord or any other tenant
of the Project.  The Landlord shall
repair damage to the roof caused by the Tenant’s acts, omissions or negligence
and the Tenant shall reimburse the Landlord for all expenses incurred in making
such repairs.  The Landlord or its agents
may enter the Premises at all reasonable hours to make such roof repairs.  If the Landlord makes any expenditure or
incurs any obligation for the payment of money in connection therewith,
including but not limited to attorneys’ fees in instituting, prosecuting or
defending any action or proceeding, such sums paid or obligations incurred,
with interest at the rate of twenty percent (20%) per annum, and costs, shall
be deemed to be Additional Rent and shall be paid by the Tenant to the Landlord
within five (5) days after rendition of any bill or statement to the
Tenant therefor.  The Tenant shall not
place mechanical or other equipment on the roof without the Landlord’s prior
written consent, which shall be conditioned in part upon the Landlord’s
approval of the Tenant’s plans and specifications for such installations.  The costs of any roof improvements made
pursuant hereto shall be borne by the Tenant.

 

14.           The Landlord reserves the right to
institute energy management procedures when necessary.

 

15.           The Tenant shall assure that the
doors of the Premises are closed and locked and that all water faucets, water
apparatus and utilities are shut off before the Tenant and its employees leave
the Premises each day.

 

16.           So long as Tenant’s business is not
adversely affected, the Landlord shall have the right to rescind, suspend or
modify these Rules and Regulations and to promulgate such other rules or
regulations as, in the Landlord’s reasonable judgment, are from time to time
needed for the safety, care, maintenance, operation and cleanliness of the
Building or the Project, or for the preservation of good order therein.  Upon the Tenant’s having been given notice of
the taking of any such any action, the Rules and Regulations as so
rescinded, suspended, modified or promulgated shall have the same force and
effect as if in effect at the time at which the Tenant’s lease was entered into
(except that nothing in the Rules and Regulations shall be deemed in any
way to alter or impair any provision of such lease).

 

17.           Nothing in these Rules and
Regulations shall give any tenant any right or claim against the Landlord or
any other person if the Landlord does not enforce any of them against any other
tenant or person (whether or not the Landlord has the right to enforce them
against

 

44

 

such tenant or
person), and no such non-enforcement with respect to any tenant shall
constitute a waiver of the right to enforce them as to the Tenant or any other
tenant or person.

 

18.           In any instance in which the Landlord’s
prior consent or approval is required, the consent or approval shall not be
unreasonably withheld by Landlord.

 

45

 

Exhibit E

 

Collateral Assignment of Lease
Form

 

46

 

COLLATERAL ASSIGNMENT OF LEASE

 

THIS
COLLATERAL ASSIGNMENT OF LEASE (“Assignment”) is made
as of the date of the last signature below, among (1) K.P. SPORTS, INC., a Maryland corporation (“Assignor”), having an address c/o Under
Armour Performance Apparel, 1600 Bush Street, Baltimore, Maryland 21230, (2) PRUDENT CAPITAL I, LP, a Maryland limited
partnership (the “Assignee”)
having an address at
                                                                ,
and (3) HULL POINT, LLC (“Landlord”) having an
address at Tide Point, 1040 Hull Street, Baltimore, Maryland 21230.

 

WHEREAS,
Assignor is the tenant under the certain Lease dated
                            ,2002
and leases from Landlord a rentable area of approximately 20,000 square feet
(subject to measurement as provided in the Lease) located on the third (3rd)
floor in The Ivory Building, 1020 Hull Street, Baltimore, Maryland 21230 ( the “Premises”); and

 

WHEREAS,
Assignor, Assignee and others entered into an Loan Agreement of even date
herewith (the “Loan
Agreement”), pursuant to which Assignee has agreed to make an
investment in Assignor, such investment to be evidenced by, among other things,
issuance to Assignee of a certain Note in the aggregate principal amount of
Three Million Dollars ($3,000,000) (the “Note”);
and

 

WHEREAS,
as a condition of advancing all or a portion of such investment, Assignee
requires that Assignor enter into this Assignment.

 

NOW,
THEREFORE, for and in consideration for the making of the
investment by Assignee, or any portion thereof which may be disbursed, the
parties hereto hereby agree as set forth below.

 

1.             Definitions.  As used herein, the term “Lease” shall refer, collectively, to the
Lease and any modifications, extensions or renewals thereof, or any
substitutions or replacements therefor. 
Additionally, any capitalized term used herein and not otherwise defined
herein shall have the meaning given to it in the Loan Agreement.

 

2.             Collateral Assignment.  To secure the performance
by Assignor of the Obligations, Assignor does hereby collaterally assign,
transfer and set over unto Assignee, with the right to reassign (subject to
Landlord’s consent, to the extent required under the Lease), all of its right,
title and interest in and to the Lease and in and to the Premises, upon the
terms and conditions set forth herein.

 

3.             Retained Rights of Assignor.  Assignor shall retain the
right to possession of the Premises subject to the Lease in accordance with the
terms and conditions in the Lease until the occurrence of an Event of Default
under the Loan Agreement.

 

4.             Assignee’s Rights and
Remedies.  Upon the
occurrence of an Event of Default under the Loan Agreement, Assignee shall have
the following rights and remedies, in addition to those existing at law or in
equity:

 

47

 

(A)          Assignee may, at its
option, upon written notice to Landlord and Assignor, assume the Lease and
occupy the Premises.  Upon exercise of
this option, Assignee shall be deemed to be substituted as the tenant under the
Lease in the place and stead of Assignor and shall be deemed to have assumed
expressly all of the terms, covenants and obligations of the Lease theretofore
applicable to Assignor and shall likewise be entitled to enjoy all of the
rights and privileges granted to Assignor under the terms and conditions of the
Lease.  Notwithstanding the foregoing, in
the event Assignee exercises its rights under this section, Assignor shall
remain obligated under the Lease; it being understood and agreed that any
security deposit by Assignor shall remain the property of Assignor;

 

(B)          Assignee may, at its
option, reassign, by public or private sale, all its rights herein to
possession of the leasehold.  If Assignee
exercises its right to reassign through public sale, such sale shall be
conducted according to the Applicable UCC and shall be made only to a
commercially reasonable tenant.  If
reassignment is made through a private sale, it shall likewise be conducted
according to the Applicable UCC.  All
prospective tenants shall be subject to the prior written approval of Landlord,
which shall not be unreasonably withheld. 
In any reassignment, the new tenant shall be bound by all terms of the
reassigned Lease and shall be required as a condition of sale to provide the
security deposit originally provided for in the Lease.  In the event of a reassignment hereunder,
Assignor shall remain liable to Landlord for all damages (including reasonable
attorneys’ fees) sustained by Landlord; and

 

(C)          So long as Assignee shall not have
exercised its option to take possession of the Premises under the foregoing
provisions, Assignee shall not be liable for rent or any other obligations
under the Lease, and Assignor shall remain liable for such rent and obligations.  Assignor shall be liable to Assignee for all
payments made by Assignee for rent and other Lease obligations.  Such sums shall be secured by all of the
Collateral securing the Loan as provided in the Loan Documents and shall bear
interest at the accrual rate payable on the Loan as provided in the Note.  The parties acknowledge that such payments
may include the reasonable expenses of foreclosure.

 

5.             Landlord’s Covenants.   Landlord joins in this Assignment to indicate
its consent to the collateral assignment herein made by Assignor to Assignee,
with the right to reassign (subject to Landlord’s consent, to the extent
required under the Lease) under the terms and conditions set forth above, and
hereby:

 

(A)          Certifies that, as of the date hereof,
to the best of Landlord’s knowledge, Assignor is not in default under any terms
of the Lease;

 

(B)          Agrees with Assignor
and Assignee that, in the event of any default under the Lease, Landlord will
provide to Assignee the same notice and opportunity to cure with respect to
such default as is currently provided to Assignor under the Lease; and so long
as Assignee has not entered into possession of the Premises subject to the
Lease, it shall not be liable for rent or any other obligations of Assignor
under the Lease, and Assignor shall remain liable for all such rents and
obligations;

 

(C)          Fully subordinates any lien of
Landlord on, any right of distraint, or any right of Landlord to claim against,
any of the property of Assignor securing the Loan as provided

 

48

 

in the Loan
Documents to the liens and security interests securing the Obligations until
full satisfaction thereof;

 

(D)          Certifies that Landlord has full power
and authority to execute and deliver this instrument and to lease the Premises;
and

 

(E)           Certifies that none of Assignor’s
removable property situated in the Premises or any removable improvements made
by Assignor in the Premises constitutes a “fixture” under applicable law or
constitutes any part of the real estate of Landlord, and that all such property
and improvements have been placed in the Premises or on the property thereat
with the agreement and understanding that such property may be removed
therefrom at the expiration or termination of the Lease in accordance with the
terms of the Lease.  Notwithstanding the
foregoing, any and all tenant improvements constructed by Landlord at the
Premises and any all workstations and accompanying furniture designated for use
by Assignor during the Lease term shall remain the property of Landlord and
shall not in any event be removed from the Premises.

 

6.             Controlling Law.  This Assignment shall be
governed by, and interpreted and construed in accordance with, the internal
laws of the State of Maryland (without regard to its conflicts of law
principles).

 

7.             Counterparts.  This Assignment may be executed by
the parties in one or more counterparts, each of which shall be binding against
the signatory and all of which taken together shall constitute one instrument.

 

49

 

IN WITNESS WHEREOF,
the parties hereto have executed this Collateral Assignment of Lease as of the
day and year written below.

 

	
   

  	
  “ASSIGNOR”:

  
	
   

  	
   

  
	
   

  	
  K.P. SPORTS, INC.,

  
	
   

  	
  a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “ASSIGNEE”:

  
	
   

  	
   

  
	
   

  	
  PRUDENT CAPITAL I, LP,

  
	
   

  	
  a Maryland limited partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Prudent Capital Management, L.L.C.,

  a Maryland limited liability company,

  Its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Steven J. Schwartz, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “LANDLORD”:

  
	
   

  	
   

  
	
   

  	
  HULL POINT, LLC,

  
	
   

  	
  a Maryland limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Locust Tide Point LLC, Managing Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
  LTP Management LLC, its Managing Member,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  (SEAL)

  
	
   

  	
   

  	
  Carl W. Struever

  
	
   

  	
   

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
													

 

50

 

Exhibit F

 

FORMS

 

FIRST AMENDMENT TO LEASE

 

THIS FIRST AMENDMENT TO
LEASE is made on this
                 
day of
                         
by and between                                                  ,a
Maryland limited liability company (the “Landlord”), and
         a                                                                                                       (the’
“Tenant”).

 

A.                                   Landlord
and Tenant are parties to a Lease dated
                      ,
with respect to approximately
            square feet
of space (the “Premises”) at the mixed use retail/office project located in
Baltimore Maryland at                                       
Street known as                                                   
(the “Lease”).

 

B.                                     The
parties have agreed to amend the Lease to provide that (i) Landlord will
construct and own certain additional improvements to the Premises and (ii) in
return for Landlord undertaking such additional work the rent under the Lease
shall increase as provided herein.

 

NOW THEREFORE, in
consideration of the foregoing and for other good and valuation consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree to amend the Lease as follows:

 

1.                                       Construction
of Improvements.  Landlord shall, in
addition to the improvements to be constructed by Landlord as currently
provided in the Lease, construct the improvements to the Premises as described
on Exhibit A attached hereto (the “Additional Improvements”).  All such work shall be undertaken in a good
and workmanlike manner in accordance with plans and specifications approved by
both Landlord and Tenant and otherwise as provided in the Lease.

 

2.                                       Ownership
of Improvements.  All Additional
Improvements to be constructed by Landlord as described in Exhibit A shall
be the property of the Landlord.  If any
of such Additional Improvements are damaged by fire and other casualty and the
Landlord is required under the Lease to restore, such restoration obligation
shall extend to the Additional Improvements.

 

51

 

3.                                       Increased
Rent.  Notwithstanding Section
         of the Lease, the Base Rent
under the Lease shall be increased by the amount of the “Increased TI Rent” as
provided below:

 

	
  Period

  	
   

  	
  Base Rent

  	
   

  	
  Increased TI Rent

  	
   

  	
  Total

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

4.                                       Liability
for Increased TI Rent. 
Notwithstanding anything herein or the Lease to the contrary, if Tenant
shall fail to make any payment of the Increased TI Rent to Landlord hereunder,
Landlord’s sole and exclusive remedy as to such default alone shall be to
credit the amount of such delinquent Increased TI Rent payment against the debt
service payment owed under that certain promissory note dated                                    
by Landlord, as maker, to Tenant, as payee.

 

5.                                       No
Other Amendments.  Except as provided
herein, the terms and conditions of the Lease remain unmodified and in full
force and effect.

 

IN WITNESS WHEREOF, the
parties have executed this First Amendment to Lease as of the day and year
first above written.

 

 

	
  WITNESS/ATTEST:

  	
   

  	
  [LANDLORD]

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [TENANT]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
							

 

52

 

PROMISSORY NOTE

 

	
  $

  	
   

  	
   

  	
   

  
	
  Baltimore,
  Maryland

  

 

FOR VALUE RECEIVED, [name
of Landlord] (the “Borrower”) promises to pay to the order of [name of Tenant
(the “Lender”), its successors and assigns, and any subsequent holder of this
Note, the aggregate principal amount of $                                                     
(the “Principal Amount”) together with interest on the unpaid balance of the
Principal Amount.

 

Interest shall not begin
to accrue on this Note until the Interest Commencement Date, which shall be the
date the Lender commences payment of rent under that certain Lease dated                                                                                   
as amended, for space in the improvements located at                                                     
in Baltimore, Maryland (the “Lease”). 
Commencing on first day of the month next following the Interest
Commencement Date and continuing on the first day of each month thereafter,
Borrower shall pay to Lender principal and interest, in equal monthly installments
of $                                                     
until the maturity of this Note, at which time all unpaid interest accrued
through the date of such maturity shall be paid in full by the Borrower to the
Lender.  Such payment represents a level
monthly payment of principal and interest at ten percent
(                    %)
per year over a                                               
month amortization period.  Unless sooner
paid, the unpaid Principal Amount, together with interest accrued and unpaid
thereon, shall be due and payable in full on the first day of the                         
th month after the Interest Commencement Date.

 

Borrower’s failure to pay
any monthly installment of Principal and Interest when due hereunder shall
constitute a default under this Note (“Default”).  Upon the occurrence of a Default, the Lender’s
sole and exclusive remedy (and notwithstanding any restrictions in the Lease
regarding rent offset) shall be to offset against each monthly installment of
rent due under the Lease and any amendments thereto, the amount of any such
unpaid monthly installment due hereunder. 
The Lender shall have no right to accelerate the payment of the
indebtedness hereunder in the event of any Default.

 

All payments and
prepayments of the Principal Amount, interest thereon and any other amounts
payable hereunder shall be paid in lawful money of the United States of America
in immediately available funds during regular business hours of the Lender at                                
or at such other place as the Lender or any other holder of this Note may at
any time or from time to time designate in writing to the Borrower.

 

The Borrower and the
Lender hereby voluntarily and intentionally waive any right they may have to a
trial by jury in any action, proceeding or litigation directly or indirectly
arising out of, under or in connection with this Note.

 

This note shall be
governed and construed under the laws of the State of Maryland, and the
Borrower hereby irrevocably consents and submits to the jurisdiction and venue
of any state or federal court sitting in the State of Maryland over any suit,
action or judicial proceeding brought to enforce or construe this Note or
arising out of or relating to this Note.

 

53

 

IN WITNESS WHEREOF, the
Borrower has caused this Note to be executed in its name, under its seal and on
its behalf by its duly authorized officers the day and year first written
above.

 

	
  WITNESS/ATTEST:

  	
   

  	
  [LANDLORD]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
					

 

54

 

GUARANTY

[Applicable where the space lease is a sublease of a master lease]

 

The undersigned                                                                                                     
[name of sublessor], as landlord under the aforementioned Lease, joins herein
to guaranty the payment by the Borrower of all sums due hereunder.  The remedies against the undersigned
guarantor for failure to pay under this Guaranty shall be limited to the right
of the Lender to offset against each monthly installment of rent due under the
Lease and any amendments thereto, the amount of any such unpaid monthly
installment due under the foregoing Note. 
The Lender shall have no right to, accelerate the payment of the
indebtedness hereunder in the event of any Default.

 

	
  :

  	
   

  	
  [NAME OF SUBLESSOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DATE:

  	
   

  	
   

  
							

 

55

 

Exhibit H

 

Subordination, Attornment and
Non-Disturbance Agreement

 

THIS SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE
AGREEMENT (“Agreement”) is made and entered into as of the          
day of                        ,
2002, by and, between                                         
a national banking association and its successors and assigns (“Mortgagee”),                            
(“Tenant”) and HULL POINT, LLC, a Maryland limited liability company (“Landlord”).

 

R E C I T A L S

 

A.            Mortgagee is the proposed beneficiary under that certain
Indemnity Deed of Trust and Security Agreement (the “Mortgage”), to be
delivered from Landlord, to Mortgagee, encumbering a parcel or parcels of land
and the improvements now existing or hereafter erected thereon (the “Mortgaged
Premises”) in the State of Maryland which Mortgaged Premises is more
particularly described in Exhibit A attached hereto and made a part
hereof by reference.

 

B.            Landlord and Tenant have previously entered into a
certain Lease Agreement (the “Lease”) dated                                                   
whereby Landlord has demised to Tenant certain space (the “Demised Premises”)
in the Mortgaged Premises as further described in the Lease.

 

C.            As a condition precedent to the loan (the “Loan”) from
Mortgagee to The Thirteen Eleven Corporation, a Maryland corporation (the
proceeds of which Loan will be reloaned by Borrower to Landlord), Landlord will
conditionally assign to Mortgagee, on the date of closing of the Loan, by a
certain Assignment of Leases and Rents (the “Lease Assignment”), all of
Landlord’s interest in the Lease and all rents, rentals, fees, profits,
payments and other sums of money now or hereafter arising therefrom.

 

D.            Tenant and Mortgagee desire to confirm certain agreements
and understandings with respect to the Lease.

 

NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth herein and for Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Mortgagee and Tenant hereby covenant and agree as follows:

 

1.             The Lease is and shall be subject and subordinate in all
respects to the Mortgage and to all extensions, renewals and modifications of,
or substitutions for, the same.

 

2.             So long as Tenant complies with this Agreement and is
not in default (beyond any period provided Tenant under the Lease to cure such
default) in the payment of rent or additional rent or other sums as provided in
the Lease, or in the performance or observance of any other term, covenant or
condition of the Lease on Tenant’s part to be performed or observed, then,
except in accordance with the terms of the Lease:  (a) Tenant’s possession of the Demised
Premises and Tenant’s rights, and privileges under the Lease, or any
extensions, renewals or

 

56

 

modifications
thereof, or substitutions therefore, shall not be diminished or interfered with
by Mortgagee, (b) Tenant’s occupancy of the Demised Premises shall not be
disturbed by Mortgagee for any reason whatsoever during the term of the Lease
or any extensions, renewals or modifications thereof, or substitutions
therefore, and (c) Mortgagee will not join Tenant as a party defendant in
any action or proceeding for the purpose of terminating Tenant’s interest and
estate under the Lease because of any default under the Mortgage or the Lease
Assignment.

 

3.             Tenant agrees that, without Mortgagee’s prior written
consent, Tenant will not prepay by more than one (1) month any rent or
additional rent or other sums due or to become due under the Lease, and Tenant
will not hereafter alter, amend or modify the Lease.

 

4.             If the Demised Premises shall be transferred by reason
of foreclosure of the Mortgage or by deed in lieu of foreclosure, or if in any
other manner the Demised Premises shall be owned by Mortgagee, by any other
person or entity owned in whole or in part by Mortgagee, or by such other
person or entity designated by Mortgagee (Mortgagee, the foreclosure purchaser,
owner, mortgagee, or such other person or entity being hereinafter referred to
as “New Owner”), or if in any other way such New Owner succeeds to the interest
of Landlord under the Lease, then:

 

(a)           Tenant shall be bound under all of
the terms, covenants and conditions of the Lease for the balance of the term
thereof remaining, and any extensions or renewals thereof which may be effected
in accordance with any option contained in the Lease, with the same force and
effect as if the New Owner were the original landlord under the Lease, and
Tenant hereby attorns to the New Owner as its landlord, such attornment to be
effective and self-operative without the execution of any further instruments
on the part of any of the parties hereto immediately upon the New Owner’s
succeeding to the interest of Landlord under the Lease; provided, however,
that Tenant shall be under no obligation to pay rent or additional rent (or
other sums payable under the Lease) to the New Owner or any subsequent owner
until Tenant receives written notice from the New Owner that the New Owner has
succeeded to the interest of Landlord under the Lease or that the New Owner has
exercised its right to receive payment of the rent and additional rent (and/or
other sums) pursuant to the provisions of the Mortgage and/or the Lease
Assignment; and

 

(b)           Upon the request of the New Owner,
Tenant will execute a written agreement whereunder Tenant attorns to the New
Owner and affirms Tenant’s obligations under the Lease and agrees to pay all
rentals, additional rentals and other sums due or to become due under the Lease
as they shall become due and payable to the New Owner; and

 

(c)           The New Owner shall be bound to
Tenant under the terms of the Lease; provided, however, that, in no event,
shall the New Owner:  (i) be liable
to Tenant for any act or omission of any prior landlord, (ii) be subject
to any offset or defense which Tenant might have against any prior landlord, (iii) be
bound by any previous amendment or modification of the Lease or by any previous
payment of rent or additional rent (or other sums) for a period a greater than
one (1) month unless such amendment, modification or prepayment shall have
been expressly approved in writing by the Mortgagee, (iv) be liable to
Tenant for any liability or obligation of any prior landlord occurring prior to
the date that the New Owner or any subsequent owner acquires title to the
Demised Premises, (v) be liable to Tenant for any security or other
deposits given to secure

 

57

 

the performance of
Tenant’s obligations under the Lease, except to the extent that the New Owner
shall have acknowledged actual receipt of such security or other deposits in
writing, or (vi) be liable for any obligations of landlord under the Lease
relating to any period after the New Owner shall have transferred title to any
third party.

 

5.             From and after the date hereof, Tenant agrees to send to
Mortgagee a copy of any notice or statement under the Lease at the same time
Tenant sends any such notice or statement to Landlord under the Lease.

 

6.             Tenant hereby agrees that from and after the date hereof
in the event of any act or omission by Landlord under the Lease which would
give Tenant the right, either immediately or after the lapse of a period of
time, to terminate the Lease, or to claim a partial or total eviction, Tenant
will not exercise any such right (a) until it has given written notice of
such act or omission to Mortgagee by delivering such notice of such act or
omission by certified or registered mail, return receipt requested, addressed
to Mortgagee, at Mortgagee’s address as set forth herein, or at the last
address of Mortgagee furnished to Tenant in writing, and (b) until a
reasonable period, of time for remedying such act or omission shall have lapsed
following the giving of such notice and following the time when Mortgagee shall
have become entitled under the Mortgage to remedy the same.

 

7.             Nothing contained in this Agreement shall in any way
impair, diminish or otherwise affect in any manner the lien created by the
Mortgage, except as specifically set forth herein.

 

8.             Tenant shall not change the terms, covenants, conditions
and agreements of the Lease in a manner which reduces the rent or other charges
payable or space demised thereunder or has an adverse effect upon the value of
the Landlord’s interest thereunder without the express consent in writing of
Mortgagee.

 

9.             Anything herein or in the Lease to the contrary
notwithstanding, in the event that a New Owner shall succeed to the interests
of the Landlord under the Lease, the New Owner shall have no obligation, nor
incur any liability, beyond its then interest, if any, in the Mortgaged
Premises and Tenant shall look exclusively to such interest of the successor,
if any, in the Mortgaged Premises for the payment and discharge of any
obligations imposed upon the New Owner hereunder or under the Lease and the New
Owner is hereby released or relieved of any other liability hereunder and under
the Lease.  Tenant agrees that with
respect to any judgment which may be obtained or secured by Tenant against the
New Owner, Tenant shall look solely to the estate or interest owned by the New
Owner in the Mortgaged Premises and Tenant will not collect or attempt to
collect any such judgment out of any other assets of the New Owner.

 

10.           No modification, amendment, waiver or
release of any provision of this Agreement or any right, obligation, claim or
cause of action arising hereunder shall be valid or binding for any purpose
whatsoever unless it is in writing and duly executed by the party against whom
the same is sought to be asserted.

 

11.           Tenant agrees that this Agreement
satisfies any condition or requirement in the Lease relating to the granting of
a non-disturbance agreement.

 

58

 

12.           Tenant certifies that the Lease is
presently in full force and effect and unmodified and no rent payable
thereunder has been paid more than one (1) month in advance of its due
date, and that no default by Tenant exists under the Lease which has continued
beyond the expiration of any applicable grace period.

 

13.           Tenant and Mortgagee each hereby
forever waive the provision of any statute or rule of law now or hereafter
in effect which may give or purport to give Mortgagee or Tenant any right
(other than in accordance with the express terms of the Lease), to terminate or
otherwise adversely affect the Lease and the respective obligations of the
Landlord and Tenant thereunder in the event that any foreclosure proceeding is
prosecuted or completed or any other right is asserted under the Mortgage.

 

14.           This Agreement shall become effective
upon the closing of the Loan and the recording of the Mortgage securing
Mortgagee herein and shall not be recorded by Landlord and/or Tenant prior to
the date of its effectiveness:

 

15.           In the event of a foreclosure, all
rights of first refusal, options to purchase, or similar rights in favor of the
Tenant and relating to the Demised Premises or the Mortgaged Premises provided
for in the Lease shall terminate.

 

16.           This Agreement shall be governed in
all respects by the laws of the State of Maryland and shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and assigns.

 

17            This Agreement may be executed in any number of
counterparts, each of which, when taken together, shall together constitute one
and the same instrument.

 

59

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement or have caused the same to be executed by their representative
thereunto duly authorized.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  HULL POINT, LLC

  
	
   

  	
   

  
	
  WITNESS:

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  Carl W. Struever

  
	
   

  	
   

  	
  Title:  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
  WITNESS:

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MORTGAGEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
  WITNESS:

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
																							

 

60

 

STATE OF

COUNTY OF

 

On this
         day of
                   
2002, before me                                                           ,
the undersigned officer, personally appeared                                                 ,
managing member of Locust Tide Point LLC, a Maryland limited liability company,
and known to me (or satisfactorily proven) to be the person whose name is
subscribed to the within instrument, and on behalf of said company,
acknowledged that he, on behalf of said company, in its capacity as managing
member of Hull Point LLC, a Maryland limited liability company, executed the
foregoing instrument for the purposes therein contained.

 

In witness whereof I
hereunto set my hand and official seal.

 

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

STATE OF

COUNTY OF

 

On this
            day of
                        
2002, before me                                                           ,
the undersigned officer, personally appeared
                                                    ,
                              
of
              ,
a national banking association, and known to me (or satisfactorily proven) to
be the person whose name is subscribed to the within instrument, and on behalf
of said company, acknowledged that he, on behalf of said company, executed the
foregoing instrument for the purposes therein contained.

 

In witness whereof I
hereunto set my hand and official seal.

 

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

61

 

STATE OF

COUNTY OF

 

On this
          day of
                     
2002, before me
                                                     ,
the undersigned officer, personally appeared                                                               ,
                                                
of
                          ,
a national banking association, and known to me (or satisfactorily proven) to
be the person whose name is subscribed to the within instrument, and on behalf
of said bank, acknowledged that he, on behalf of said bank, executed the
foregoing instrument for the purposes therein contained.

 

In witness whereof I
hereunto set my hand and official seal.

 

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

62

 

EXHIBIT A

 

[PLAT OF MORTGAGED PREMISES]

 

63

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