Document:

Exhibit

EXHIBIT 10.1
AMENDMENT NUMBER SEVEN TO CREDIT AGREEMENT
This Amendment Number Seven to Credit Agreement (this “Amendment”) is entered into as of May 18, 2017, by and among, on the one hand, the lenders identified on the signature pages hereof (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “Lender” and collectively as the “Lenders”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “Agent”) and CALLIDUS SOFTWARE, INC., a Delaware corporation (“Borrower”), on the other hand, in light of the following:
A.Borrower, Agent and Lenders are parties to that certain Credit Agreement, dated as of May 13, 2014 (as amended and modified, from time to time, the “Credit Agreement”).
B.Borrower intends to acquire Learning Heroes Ltd, a company organized under the laws of the United Kingdom (“Learning Heroes”, and such acquisition the “Learning Heroes Acquisition”), and RevSym Inc., a California corporation (“RevSym”, and such acquisition the “RevSym Acquisition”).
C.Borrower, Agent and Lenders desire to amend the Credit Agreement as provided for and on the conditions herein.
NOW, THEREFORE, the parties hereby amend and supplement the Credit Agreement as follows:
1.DEFINITIONS.  All initially capitalized terms used in this Amendment shall have the meanings given to them in the Credit Agreement unless specifically defined herein.
2.    AMENDMENTS.
2.1    The definition of “Immaterial Subsidiary” set forth in Schedule 1.1 to the Credit Agreement is hereby amended to read as follows: 
“Immaterial Subsidiary” means (I) (a) Clicktools, (b) Datahug, (c) Learning Heroes, (d) RevSym, and (II) at any time, each Subsidiary of Borrower which is designated in a written notice by Borrower to Agent as an “Immaterial Subsidiary,” (a) for which revenue for the most recently ended fiscal quarter is less than 3% of the aggregate revenue for Borrower and its Subsidiaries for such fiscal quarter, (b) for which revenue for the most recently ended fiscal quarter (when aggregated with revenue for all other Immaterial Subsidiaries for such fiscal quarter) is less than 5% of the aggregate revenue for Borrower and its Subsidiaries for such fiscal quarter, (c) for which the fair market value or net book value of the consolidated assets as of the last day of the most recently ended fiscal quarter is less than 3% of the fair market value or net book value of the consolidated assets of Borrower and its Subsidiaries as of such date, (d) for which the fair market value or net book value of the consolidated assets as of the last day of the most recently ended fiscal quarter (when aggregated with the fair market value or net book value of the consolidated assets for all other Immaterial Subsidiaries) is less than 5% of the fair market value or net book value of the consolidated assets of Borrower and its Subsidiaries as of such date, and (e) that does not conduct operations material to the business of the Loan Parties, and (f) that does not own any intellectual property used in the business of the Loan Parties.  As of the Closing Date, the Immaterial Subsidiaries are as set forth on Schedule I-1.
2.2    The definition of “Permitted Acquisition” set forth in Schedule 1.1 to the Credit Agreement is hereby amended by revising paragraph (j) thereof to read as follows:
“(j)  the purchase consideration payable in respect of all Permitted Acquisitions (including the proposed Acquisition and including deferred payment obligations) consummated after the Seventh Amendment Effective Date shall not exceed, in the aggregate, $50,000,000 plus the amount of Equity/Sub-Debt Contributions; provided, that the purchase consideration payable in respect of any single Acquisition or series of related Acquisitions shall not exceed, in the aggregate, $15,000,000 plus the amount of Equity/Sub-Debt Contributions.”
2.3     The following definitions are hereby added to Schedule 1.1 to the Credit Agreement in the appropriate alphabetical order:
“Learning Heroes” means Learning Heroes Ltd., a company organized under the laws of the United Kingdom.
“RevSym” means RevSym Inc., a California corporation.
“Seventh Amendment Effective Date” means May 18, 2017.
3.    CONSENT TO ACQUISITION.  The consummation of the Learning Heroes Acquisition and the RevSym Acquisition would violate certain of the terms and provisions of the Loan Documents, including, without limitation, Sections 6.3(a) and 6.9 of the Credit Agreement.  Borrower has requested that the Lender Group consent to the Learning Heroes Acquisition and the RevSym Acquisition, and the Lender Group as of the effective date of this Amendment consents to the Learning Heroes Acquisition and the RevSym Acquisition, so long as at the time of the consummation of the Learning Heroes Acquisition and the RevSym Acquisition, and after giving effect thereto: (i) no Default or Event of Default exists and (ii) Borrower has Availability plus Qualified Cash in an amount equal to or greater than $15,000,000.  The foregoing consent shall be effective only in this specific instance and for the specific purpose for which it is given, and this consent shall not entitle Borrower to any other consent or waiver in any similar or other circumstances.  The foregoing consent shall be limited precisely as written and shall not be deemed to (a) be a waiver or modification of any other term or condition of the Credit Agreement or any documents related thereto, or (b) prejudice any right or remedy which the Lender Group may now have or may have in the future under or in connection with the Credit Agreement or any documents related thereto.
4.    REPRESENTATIONS AND WARRANTIES.  Borrower hereby affirms to Agent, for the benefit of the Lender Group, that, giving effect to this Amendment, all of its representations and warranties set forth in the Agreement are true, complete and accurate in all material respects as of the date hereof (except those which specifically relate to an earlier date).
5.    NO DEFAULTS.  Borrower hereby affirms to the Lender Group that, giving effect to this Amendment, no Event of Default has occurred and is continuing as of the date hereof.
6.    CONDITIONS PRECEDENT.  The effectiveness of this Amendment is expressly conditioned on receipt by Agent of (i) a copy of this Amendment duly executed by Borrower, Lenders and Agent, and (ii) a Pledged Interests Addendum duly executed by Borrower pursuant to Section 7(h)(i) of the Guaranty and Security Agreement.
7.    [Reserved].  
8.    COSTS AND EXPENSES.  Borrower shall pay to Agent all of Agent’s documented out-of-pocket costs and expenses (including, without limitation, the reasonable fees and expenses of their counsel, which counsel may include any local counsel deemed necessary, search fees, filing and recording fees, documentation fees, appraisal fees, travel expenses, and other reasonable fees) arising in connection with the preparation, execution, and delivery of this Amendment and all related documents.
9.    COUNTERPARTS; EFFECTIVENESS.  This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed and delivered shall be deemed to be an original.  All such counterparts, taken together, shall constitute but one and the same Amendment.  This Amendment shall become effective upon the execution of a counterpart of this Amendment by each of the parties hereto and satisfaction of the conditions set forth in Section 6 hereof.  Delivery of an executed counterpart of this Amendment by telefacsimile or electronic mail shall be equally as effective as delivery of an original executed counterpart of this Amendment.  Any party delivering an executed counterpart of this Amendment by telefacsimile or electronic mail also shall deliver an original executed counterpart of this Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.
10.    FURTHER ASSURANCES.  Borrower shall execute and deliver all agreements, documents and instruments, in form and substance reasonably satisfactory to Agent, and take all actions as Agent may reasonably request from time to time to perfect and maintain the perfection and priority of the security interests of Agent in the Collateral and to consummate fully the transactions contemplated under this Amendment and the other Loan Documents.
11.    EFFECT ON LOAN DOCUMENTS.
11.1    The Credit Agreement, as amended hereby, and each of the other Loan Documents, as amended as of the date hereof, shall be and remain in full force and effect in accordance with their respective terms and hereby are ratified and confirmed in all respects.  The execution, delivery, and performance of this Amendment shall not operate, except as expressly set forth herein, as a waiver of, consent to, or a modification or amendment of, any right, power, or remedy of Agent or any Lender under the Credit Agreement or any other Loan Document.  Except for the amendments to the Credit Agreement expressly set forth herein, the Credit Agreement and the other Loan Documents shall remain unchanged and in full force and effect.  The consents, waivers and modifications set forth herein are limited to the specifics hereof, shall not apply with respect to any facts or occurrences other than those on which the same are based, shall neither excuse future non-compliance with the Loan Documents nor operate as a waiver of any Default or Event of Default, shall not operate as a consent to any further or other matter under the Loan Documents and shall not be construed as an indication that any future waiver of covenants or any other provision of the Credit Agreement will be agreed to, it being understood that the granting or denying of any waiver which may hereafter be requested by any Loan Party remains in the sole and absolute discretion of the Agent and the Lenders.
11.2    Upon and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified and amended hereby.
11.3    To the extent that any of the terms and conditions in any of the Loan Documents shall contradict or be in conflict with any of the terms or conditions of the Credit Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Credit Agreement as modified or amended hereby.
11.4    This Amendment is a Loan Document.
11.5    Headings and numbers have been set forth herein for convenience only.  Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Amendment.
11.6    Neither this Amendment nor any uncertainty or ambiguity herein shall be construed against Agent, any member of the Lender Group, the Bank Product Providers or any Loan Party, whether under any rule of construction or otherwise.  This Amendment has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.
11.7    The pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction of sentences shall conform thereto.
11.8    Unless the context of this Amendment clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and  “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”.  The words “hereof”, “herein”, “hereby”, “hereunder”, and similar terms in this Amendment refer to this Amendment as a whole and not to any particular provision of this Amendment.  Section, subsection, clause, schedule, and exhibit references herein are to this Amendment unless otherwise specified.  Any reference in this Amendment to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein).  The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts, and contract rights.  Any reference herein or in any other Loan Document to the satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash or immediately available funds (or, in the case of Letters of Credit or Bank Products, providing Letter of Credit Collateralization or Bank Product Collateralization, as applicable) of all Obligations other than unasserted contingent indemnification Obligations and other than any Bank Product Obligations that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding and that are not required by the provisions of the Credit Agreement to be repaid or cash collateralized.  Any reference herein to any Person shall be construed to include such Person’s successors and assigns.  Any requirement of a writing contained herein shall be satisfied by the transmission of a Record.
12.    RELEASE.
12.1    In consideration of the agreements of Agent and each Lender contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, on behalf of itself and its successors, assigns and other legal representatives (Borrower and all such other persons being hereinafter referred to collectively as “Releasors” and individually as a “Releasor”), hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and each Lender, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent and each Lender and all such other persons being hereinafter referred to collectively as  “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set‐off, demands and liabilities whatsoever (individually, a “Claim” and collectively, “Claims”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which Releasors may now or hereafter own, hold, have or claim to have against Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior to the day and date of this Amendment, for or on account of, or in relation to, or in any way in connection with the Credit Agreement or any of the other Loan Documents or transactions thereunder or related thereto.
12.2    It is the intention of Borrower that this Amendment and the release set forth above shall constitute a full and final accord and satisfaction of all claims that may have or hereafter be deemed to have against Releasees as set forth herein.  In furtherance of this intention, Borrower, on behalf of itself and each other Releasor, expressly waives any statutory or common law provision that would otherwise prevent the release set forth above from extending to claims that are not currently known or suspected to exist in any Releasor’s favor at the time of executing this Amendment and which, if known by Releasors, might have materially affected the agreement as provided for hereunder.  Borrower, on behalf of itself and each other Releasor, acknowledges that it is familiar with Section 1542 of California Civil Code:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
Borrower, on behalf of itself and each other Releasor, waives and releases any rights or benefits that it may have under Section 1542 to the full extent that it may lawfully waive such rights and benefits, and each of Borrower, on behalf of itself and each other Releasor, acknowledges that it understands the significance and consequences of the waiver of the provisions of Section 1542 and that it has been advised by its attorney as to the significance and consequences of this waiver.
12.3    Borrower understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.
12.4    Borrower agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.
13.    COVENANT NOT TO SUE.  Borrower, on behalf of itself, each Releasor and its successors, assigns and other legal representatives, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and in favor of each Releasee that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released, remised and discharged by Borrower, pursuant to Section 12.1 above.  If Borrower, or any of its successors, assigns or other legal representations violates the foregoing covenant, Borrower, for itself and each other Releasor, agrees to pay, in addition to such other damages as any Releasee may sustain as a result of such violation, all attorneys’ fees and costs incurred by any Releasee as a result of such violation.
14.    ENTIRE AGREEMENT.  This Amendment, and the terms and provisions hereof, the Credit Agreement and the other Loan Documents constitute the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede any and all prior or contemporaneous amendments or understandings with respect to the subject matter hereof, whether express or implied, oral or written.
15.    REAFFIRMATION OF OBLIGATIONS.  Borrower hereby (a) acknowledges and reaffirms its obligations owing to Agent, the Bank Product Providers, and each other member of the Lender Group under each Loan Document to which it is a party, and (b) agrees that each of the Loan Documents to which it is a party is and shall remain in full force and effect.  Borrower hereby (i) further ratifies and reaffirms the validity and enforceability of all of the Liens and security interests heretofore granted, pursuant to and in connection with the Guaranty and Security Agreement or any other Loan Document, to Agent, on behalf and for the benefit of the Lender Group and the Bank Product Providers, as collateral security for the obligations under the Loan Documents in accordance with their respective terms, and (ii) acknowledges that all of such Liens and security interests, and all Collateral heretofore pledged as security for such obligations, continue to be and remain collateral for such obligations from and after the date hereof (including, without limitation, from after giving effect to this Amendment).
16.    RATIFICATION.  Borrower hereby restates, ratifies and reaffirms each and every term and condition set forth in the Credit Agreement and the Loan Documents effective as of the date hereof and as amended hereby.  All Obligations owing by Borrower are unconditionally owing by Borrower to Agent and the Lenders, without offset, defense, withholding, counterclaim or deduction of any kind, nature or description whatsoever.
17.    CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE.  THIS AMENDMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION 12 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.
18.    SEVERABILITY.  In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
[The remainder of this page left blank intentionally, signatures to follow]

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above.

	
		
	BORROWER:
	CALLIDUS SOFTWARE, INC.,
a Delaware corporation

By:   /s/ Roxanne Oulman         
Name:   Roxanne Oulman         
Title:   CFO               

	
		
	 
	WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Agent and a Lender

By:   /s/ Akiko Farnsworth         
Name:   Akiko Farnsworth         
Title:   Vice President            

1Exhibit

THIRD AMENDMENT TO OFFICE LEASE

THIS THIRD AMENDMENT TO OFFICE LEASE ("Third Amendment") is made this 18th day of April, 2017 (the “Effective Date”), between F. P. ROCKVILLE II LIMITED PARTNERSHIP, a Maryland limited partnership ("Landlord"), and CHOICE HOTELS INTERNATIONAL SERVICES CORP., a Delaware corporation ("Tenant").

RECITALS

A.Landlord and Tenant entered into that certain written Office Lease dated July 11, 2011 (the “Original Lease”), as amended by that certain Certificate of Rent Commencement and First Amendment to Office Lease dated February 25, 2014 (the “First Amendment”) and that certain Second Amendment to Office Lease (the “Second Amendment”) dated March 20, 2014 (the Original Lease, as amended by the First Amendment, the Second Amendment and this Third Amendment being referred to herein collectively as the "Lease") for certain premises containing 137,778 rentable square feet of office space (the “Initial Leased Premises”) and 2,200 square feet of storage space (“Storage Space”), as more specifically described in the Original Lease located in the building known as Rockville Metro Plaza II and located at One Choice Hotels Circle, Rockville, Maryland (the "Building").  

B.Landlord and Tenant wish to amend the Original Lease, as amended, to provide for the demise to Tenant of the Expansion Premises upon the terms and conditions set forth in this Third Amendment.  

Now Therefore, based on the covenants and promises contained herein and other good and valuable consideration, and intending to be legally bound hereby the parties hereto agrees as follows:

1.Incorporation of Recitals; Defined Terms. The foregoing Recitals are hereby incorporated herein. All capitalized terms not otherwise defined herein shall have the same meaning as defined in the Original Lease, as amended.  From and after the Expansion Premises Commencement Date (hereinafter defined), as used in the Lease, the term “Leased Premises” shall mean and refer to the Initial Leased Premises together with the Expansion Premises, which Leased Premises shall contain approximately 145,836 rentable square feet in the aggregate for the office portion of the Leased Premises and the 2,200 square feet of Storage Space.

2.    Expansion Premises; Expansion Premises Commencement Date; Expansion Premises Rent Commencement Date; Satisfaction of Tenant’s Option to Lease Second Expansion Space.    

(a)    From and after the Expansion Premises Commencement Date, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, those premises located on the tenth (10th) floor of the Building containing approximately 8,058 rentable square feet, as such premises are outlined on Exhibit A attached hereto (the “Expansion Premises).  The Expansion Premises have been measured in accordance with the modified BOMA Method of Measurement (ANSI /BOMA Z65.1-1996) (the “BOMA Standard”).   

(b)    As used herein (i) the term “Expansion Premises Commencement Date” means the date Landlord, at Landlord’s sole cost and expense, delivers possession of the Expansion Premises to Tenant in the Delivery Condition (hereinafter defined), (ii) the term “Delivery Condition” means that the Expansion Premises is in the following condition:  (1) vacant, broom clean and with all personal property of any prior occupant removed, (2) all Base Building Work set forth in Exhibit B-4  and the MEP equipment and installation described in Exhibit B-5 to the Original Lease is complete with respect to the Expansion Premises (3) all base Building systems serving the Expansion Premises are in good working order and (4) the Common Area Compliance Work (defined below) is complete in all material respects, and (iii) the term “Expansion Premises Rent Commencement Date” means September 1, 2017, as such date is subject to extension pursuant to the terms of this Paragraph 2(b) and/or the terms of Paragraph 8(b), below.   By its execution of this Third Amendment Tenant acknowledges and agrees that it has no reason to believe that the statements in (i) (2) - (4) above are incorrect. 

As used herein, the term “Common Area Compliance Work” means any alterations or improvements to the Common Areas of the Building required by Montgomery County, Maryland or the City of Rockville, Maryland (including, but not limited to, fire, life safety systems, ADA requirements or local code requirements for handicap bathrooms, sprinklers, or “path of travel” requirements and corridor modifications) to meet all applicable laws and regulations in effect as of the Effective Date of this Third Amendment.

Notwithstanding anything to the contrary contained in this Third Amendment (A) if the Expansion Premises Commencement Date has not occurred ten (10) Business Days after the Effective Date of this Third Amendment, then the Expansion Premises Rent Commencement Date shall be extended by two (2) days for each day after the Effective Date of this Third Amendment that the Expansion Premises Commencement Date fails to occur and (B) if the Expansion Premises Commencement Date has not occurred on or before the date that is thirty (30) days after the Effective Date of this Third Amendment, then, Tenant shall have the right, but not the obligation, to terminate this Third Amendment by delivering written notice of such termination to Landlord, in which event (1) this Third Amendment shall immediately terminate and (2) Landlord shall reimburse Tenant for all costs and expenses incurred by Tenant relating to this Third Amendment.  

(c)    The Term of the Lease with respect to the Expansion Premises shall commence on the Expansion Premises Commencement Date and shall expire on May 31, 2023 (i.e., the “Expiration Date” of the Lease).

(d)    Notwithstanding anything to the contrary contained in the Original Lease, as amended, Landlord and Tenant acknowledge and agree that the lease of the Expansion Premises by Tenant pursuant to the terms of this Third Amendment satisfies Landlord’s obligation to provide the “Second Expansion Space” pursuant to the terms of Section 39 (d) (ii) (2) of the Original Lease.

3.    Measurement of Expansion Premises.  Tenant shall have the right to verify the measurement of the Expansion Premises set forth in this Third Amendment not later than thirty (30) days after the Expansion Premises Rent Commencement Date.  The failure of Tenant to dispute such measurement of the Expansion Premises within such thirty (30) day period will be deemed an acceptance of the rentable square footage of the Expansion Premises set forth in this Third Amendment.  If, within such thirty (30) day period, Tenant notifies Landlord that Tenant disputes that the rentable square footage of the Expansion Premises set forth in this Third Amendment complies with the BOMA Standard, then, Landlord and Tenant will thereafter endeavor to mutually agree on the rentable square footage of the Expansion Premises.  If the Parties mutually agree that the Expansion Premises contain more, or less, than 8,058 rentable square feet of space, the Parties will execute an amendment to the Lease to make any revisions necessitated thereby. 

4.    Minimum Annual Rent.  Subject to the terms of this Paragraph 4, from and after the Expansion Premises Rent Commencement Date, Tenant shall pay Landlord Minimum Annual Rent and Basic Monthly Rent for the Expansion Premises for the indicated periods during the Term as follows:

	
				
	 
	 
	 
	 

	Expansion Premises
	8,058
	 
	 

	Period
	Annual Rent Per RSF
	Minimum Annual Rent
	Basic Monthly Rent

	9/1/17 - 8/31/18+
	$40.50
	$326,349.00
	$27,195.75

	9/1/18 - 8/31/19
	$41.55
	$334,809.96
	$27,900.83

	9/1/19 - 8/31/20
	$42.63
	$343,512.60
	$28,626.05

	9/1/20 - 8/31/21
	$43.74
	$352,456.92
	$29,371.41

	9/1/21 - 8/31/22
	$44.88
	$361,643.04
	$30,136.92

	9/1/22 - 5/31/23
	$46.05
	$371,070.96**
	$30,922.58

	 
	 
	 
	 

** Minimum Annual Rent is annualized

+ The Basic Monthly Rent for the Expansion Premises for the months of September, 2017 - February, 2018, inclusive, will be abated by 100%.  If the Expansion Premises Rent Commencement Date occurs after September 1, 2017, then, notwithstanding the foregoing, the Basic Monthly Rent for the Expansion Premises will be abated by 100% for the first six (6) months following the Expansion Premises Rent Commencement Date.
 
5.    Tenant’s Increase Charges.  Tenant shall have no obligation to pay Landlord Tenant’s Increase Charges for the Expansion Space for any period prior to June 1, 2018.  Commencing on June 1, 2018, and continuing thereafter during the Term, Tenant shall pay Landlord Tenant’s Increase Charges with respect to the Expansion Premises in accordance with the terms of the Original Lease, as previously amended and as amended by the terms of this Paragraph 5, provided, however, that in calculating Tenant’s Increase Share payable by Tenant pursuant to the terms of this Paragraph 5 (i) “Tenant’s Proportionate Share” shall mean (a) 4.07% (8,058/197,866) for those Basic Operating Charges that affect both the office space and retail space of the Building and (b) 4.41% (8,058/182,786) for those Basic Operating Charges that affect only the office space of the Building and (ii) “Base Operating Expense Amount” shall mean the Basic Operating Costs incurred by the Landlord during the 2017 calendar year.  The Basic Operating Costs incurred by Landlord during the 2017 calendar year shall be grossed up to reflect a ninety-five percent (95%) occupied Building (or greater based on actual occupancy).  

6.    Parking.      From and after the Effective Date of this Third Amendment (i) in addition to the parking spaces allocated for Tenant’s use pursuant to the terms of the Original Lease, as amended, Tenant shall have the right to lease seventeen (17) additional parking spaces in the garage serving the Building at the current monthly non-reserved rates as set forth in the Original Lease, as escalated through the Effective Date of this Third Amendment, and (ii) notwithstanding anything to the contrary contained in the Original Lease, as amended (a) twenty (20) of the parking spaces leased by Tenant pursuant to the terms of the Lease shall be located on the P-6 level of the garage in the locations set forth on the attached Exhibit B (collectively, the “Third Amendment P-6 Parking Spaces”), (b) Landlord shall, promptly after the Effective Date of this Third Amendment and at Landlord’s sole cost and expense, mark the Third Amendment P-6 Parking Spaces as reserved for Tenant’s use from 8:00 a.m. to 5:00 p.m. Monday-through Friday  and, (c) Tenant shall pay for the Third Amendment P-6 Parking Spaces at the then-current monthly parking rate for unreserved parking spaces in the Building parking garage, as such rate is set forth in the Lease (which rate is subject to change from time to time in accordance with the terms of the Lease) and (d) upon request from Tenant, Landlord shall use commercially reasonable efforts to ensure the no car is improperly parked in any Third Amendment P-6 Parking Space, and, if despite such commercially reasonable efforts, a car is improperly parked in any Third Amendment P-6 Parking Space, then, upon request from Tenant, Landlord shall cause the parking garage operator to tow such car and Tenant shall pay any towing costs, if any, that are not the responsibility of the operator of the improperly parked vehicle.  

7.    Third Expansion Space.    Notwithstanding anything to the contrary contained in the Original Lease, as amended, Landlord and Tenant agree that the definition of “Third Expansion Space Delivery Period” in Section 39 (d) (ii) (3) of the Original Lease is amended to be the period beginning June 1, 2022 and ending May 31, 2023. 

8.    Tenant Improvements in Expansion Premises; Construction Allowance; Landlord Delay.  

(a)    Landlord will provide Tenant with an allowance (the “Third Amendment Construction Allowance”) of Four Hundred Ninety Thousand Nine Hundred Eighty and No/100 Dollars ($490,980.00) (or Sixty and No/100 Dollars [$60.93] per rentable square foot of the Expansion Premises) to pay for costs and expenses incurred by Tenant in connection with (i) the design and construction of improvements which Tenant desires to undertake in and to the Premises (the “Third Amendment Tenant Improvements”), (ii) the purchase and installation in the Expansion Premises of Tenant’s furniture, fixtures, equipment and cabling and wiring and (iii) Tenant’s move to the Expansion Premises (collectively, “Expansion Premises Improvement Costs”).  Tenant shall be responsible for all Expansion Premises Improvement Costs in excess of the Third Amendment Construction Allowance.  All leasehold improvements constructed by Tenant pursuant to the terms of this Paragraph 8 shall be undertaken in accordance with the provisions of Article 13 and Exhibit G of the Original Lease.  In the event of any conflict between the terms of Article 13 and Exhibit G of the Original Lease and the terms of this Paragraph 8, the terms of this Paragraph 8 shall control.

(b)    Provided the Third Amendment Draw Conditions (hereinafter defined) are satisfied, Landlord shall, within thirty (30) days after Landlord’s receipt of Tenant’s written draw request therefor (but in no event more than once in any calendar month), reimburse (or pay) Tenant (or, at Tenant's direction, which shall be stated in such request, pay directly to the applicable contractors, subcontractors or other vendors) for Expansion Premises Improvement Costs in the amount requested by Tenant.  With respect to each draw request by Tenant, the term “Third Amendment Draw Conditions” shall mean each of the following:  the applicable request is accompanied by (i) a copy of all invoices for Expansion Premises Improvement Costs covered by such draw request (and reasonable back-up information relating thereto), (ii) an application for payment and sworn statement of Tenant’s general contractor substantially in the form of AIA Document G-702 or G-703 covering all hard costs for which reimbursement is to be made to a date specified therein; (iii) a certification from Tenant, or, if applicable, Tenant’s architect, substantially in the form of the Architect’s Certificate for Payment which is located on AIA Document G702, Application and Certificate of Payment; and (iv) contractor’s and subcontractor’s partial waivers of liens and claims (for contractors and subcontractors providing in excess of $10,000 in materials and/or services) conditioned upon payment for the current request and waiving all claims for amounts previously paid.  Any portion of the Third Amendment Construction Allowance remaining unused shall be applied by Landlord against the Minimum Annual Rent and/or Additional Rent next due and payable by Tenant under the Lease.  

(c)    Notwithstanding anything to the contrary contained herein, the Expansion Premises Rent Commencement Date shall be extended one (1) day for each day of Third Amendment Landlord Delay (hereinafter defined).  As used herein, the term "Third Amendment Landlord Delay" means any actual delay in the substantial completion of the Third Amendment Tenant Improvements caused by:  (i) Landlord's failure to provide reasonable access to the Building or the Expansion Premises, the loading docks, the service elevators and other areas in connection with Tenant’s performance of the Third Amendment Tenant Improvements or Landlord's failure to provide the services Landlord is obligated to provide to the Expansion Premises during the construction of the Third Amendment Tenant Improvements, (ii) Landlord’s failure to timely and/or properly disburse the Third Amendment Construction Allowance pursuant to the terms of this Third Amendment and (iii) any other delay to the extent caused by or resulting from the wrongful acts or omissions of Landlord or its agents, employees or contractors and Landlord fails to cure such delay set forth in this subparagraph (iii) within three (3) Business Days after receipt of written notice of such delay.

(d)    If Landlord disputes in writing ("Third Amendment Dispute Notice") Landlord's obligation to disburse any amount of the Third Amendment Construction Allowance that Tenant requests be disbursed by Landlord pursuant to the terms of this Third Amendment prior to the  expiration of the thirty (30) day period set forth in Paragraph 8(b), above, then Landlord shall have no obligation to disburse such disputed amount until five (5) Business Days following the date that a final decision awarding such amounts to Tenant is entered in arbitration conducted in accordance with the terms of Paragraph 5(b)(4) of Exhibit B-3 attached to the Original Lease (it being expressly understood, however, that Landlord shall pay Tenant within such thirty [30] day period all amounts which Landlord is not disputing, and only amounts in dispute shall be subject to such arbitration).  If Landlord fails to pay any amounts requested by Tenant on or before the expiration of such thirty (30) day period or on or before the expiration of such five (5) Business Day period (if any such amounts are disputed and a final decision awarding such amounts to Tenant is entered in arbitration conducted in accordance with the terms of Paragraph 5(b)(4) of Exhibit B-3 attached to the Original Lease), then, without limiting Tenant's rights at law or in equity, Tenant may deduct any such amounts, plus interest thereon accruing at a rate equal to ten percent (10%) per annum from the date such amount was due to Tenant (collectively, "Third Amendment Offset Amounts"), against Minimum Annual Rent next due and payable by Tenant under the Lease.  If the Lease is terminated for any reason other than an Event of Default by Tenant thereunder prior to the date on which all Third Amendment Offset Amounts have been applied against Minimum Annual Rent, then Landlord shall be liable to Tenant for any unapplied amounts.

9.    Miscellaneous Provisions.
(a)    The Lease constitutes the entire agreement between Tenant and Landlord with respect to the Leased Premises.  

(b)    This Third Amendment shall be binding upon and inure to the benefit of Landlord and Tenant and their heirs, personal representatives, successors and assigns.
(c)     Landlord and Tenant each represents and warrants to the other that the person(s) signing this Third Amendment on its behalf have the requisite authority and power to execute this Third Amendment and to thereby bind the party on whose behalf it is being signed.
(d)     If any inconsistency appears with respect to this Third Amendment and Original Lease, First Amendment or Second Amendment, the terms of this Third Amendment shall govern.

(e)    Tenant represents and warrants to Landlord that it has not authorized any broker, agent or finder purporting to act on Tenant’s behalf in respect to this Third Amendment other than Steven A. London of Savills Studley (“Tenant’s Broker”) and Tenant hereby agrees to indemnify and hold harmless Landlord from and against any cost, expense, claims, liability or damage resulting from a breach of this representation and warranty.  Landlord will pay Tenant’s Broker a commission with respect to this Third Amendment in accordance with the terms of a separate agreement between Landlord and Tenant’s Broker.  Landlord represents and warrants to Tenant that it has not authorized any broker, agent or finder purporting to act on Landlord’s behalf in respect to this Third Amendment other than J. Andrew Masters of Jones Lang LaSalle Brokerage, Inc. (“Landlord’s Broker”) and Landlord hereby agrees to indemnify and hold harmless Tenant from and against any cost, expense, claims, liability or damage resulting from a breach of this representation and warranty.  Landlord will pay Landlord’s Broker a commission with respect to this Third Amendment in accordance with the terms of a separate agreement between Landlord and Landlord’s Broker.

(f)    This Third Amendment (i) shall be governed by and construed in accordance with the laws of the State of Maryland and (ii) may be executed in multiple counterparts, each of which shall constitute an original and all of which shall constitute one and the same agreement.
  
10.    Ratification of Lease.     All of the terms and conditions of the Original Lease, as previously amended and as amended by this Third Amendment, are hereby ratified and remain in full force and effect.

11.    Cash Flow Participation Agreement.  Landlord and Tenant hereby expressly acknowledge and agree that the Cash Flow Participation Agreement dated of even date with the Original Lease by and between Landlord and Choice Hotels International, Inc. remains in full force and effect and will apply with respect to the leasing of the Expansion Premises by Tenant.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have duly executed this Third Amendment as of the day and year first above written.

WITNESS/ATTEST:            LANDLORD:

F. P. ROCKVILLE II LIMITED PARTNERSHIP 
_______________________         a Maryland limited partnership

By: FP RMP II GP, Inc., a Maryland corporation,
      its General Partner

By: Foulger Investments, Inc., a Maryland corporation,                                   its Sole Shareholder                      

By: /s/ Cameron Pratt (Seal)

Name: Cameron Pratt
        
Title: Authorized Party

                            
WITNESS/ATTEST:            TENANT:

CHOICE HOTELS INTERNATIONAL 
SERVICES CORP.,
a Delaware corporation
_________________________        

By: /s/ Patrick Cimerola (Seal)
                            
Name: Patrick Cimerola
        
Title: Chief Human Resources Officer

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