Document:

Exhibit 10.17

 

EXECUTION VERSION

 

TAX RECEIVABLE AGREEMENT

 

This TAX RECEIVABLE AGREEMENT (this “Agreement”), dated as of June 5, 2015, is hereby entered into by and among Reit Management & Research Inc., a Maryland corporation (“INC”), Reit Management & Research LLC, a Maryland limited liability company (“LLC”), and Reit Management & Research Trust, a Massachusetts business trust (“TRUST”).

 

RECITALS

 

WHEREAS, TRUST holds Class A Units (as defined below) in LLC, which, upon the admission of INC as the managing member, will be treated as a partnership for United States federal income tax purposes;

 

WHEREAS, INC will become the managing member of, and will hold Class B Units (as defined below) in, LLC;

 

WHEREAS, the Class A Units held by a non-managing member of LLC are redeemable in certain circumstances for shares of Class A common stock, par value $0.001 per share, of INC (the “Class A Common Shares”) and/or cash pursuant to the Operating Agreement;

 

WHEREAS, LLC and each of its direct and indirect Subsidiaries treated as partnerships for United States federal income tax purposes will have in effect an election under section 754 of the Internal Revenue Code of 1986, as amended (the “Code”), for the Taxable Year of the Closing Date and for each other Taxable Year in which a redemption by a Member of Class A Units for Class A Common Shares and/or cash or other consideration occurs, which election is intended to result in an adjustment to the tax basis of the assets owned by LLC and such Subsidiaries, solely with respect to INC, at the time of a redemption of Class A Units for Class A Common Shares and/or cash or any other acquisition of Class A Units by INC for cash or other consideration, (collectively, a “Redemption”) (such time, the “Redemption Date”) (such assets and any asset whose tax basis is determined, in whole or in part, by reference to the adjusted basis of any such asset, the “Adjusted Assets”) by reason of such Redemption and the receipt of payments under this Agreement;

 

WHEREAS, the income, gain, loss, expense, and other Tax items of (i) LLC and such Subsidiaries solely with respect to INC may be affected by the Basis Adjustment (defined below) with respect to the Adjusted Assets and (ii) INC may be affected by the Imputed Interest (as defined below); and

 

WHEREAS, the parties to this Agreement desire to make certain arrangements with respect to the effect of the Basis Adjustment and Imputed Interest on the actual liability for Taxes of INC;

 

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the undersigned parties agree as follows:

 

 

ARTICLE I

 

DEFINITIONS

 

As used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).

 

“AAA” is defined in Section 7.09(a)(i) of this Agreement.

 

“Adjusted Asset” is defined in the recitals of this Agreement.

 

“Advisory Firm” means any accounting firm registered with the Public Company Accounting Oversight Board and authorized to provide auditing services to public companies or any law firm that is generally recognized as being expert in Tax matters as determined by the Board.

 

“Advisory Firm Letter” means a letter from the Advisory Firm stating that the relevant schedule, notice, or other information to be provided by INC to the Applicable Member and all supporting schedules and work papers were prepared in a manner consistent with the terms of this Agreement and, to the extent not expressly provided in this Agreement, on a reasonable basis in light of the facts and law in existence on the date such schedule, notice, or other information is delivered to the Applicable Member.

 

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

 

“Agreed Rate” means the short term applicable federal rate for interest accrued annually, as published by the Internal Revenue Service.

 

“Agreement” is defined in the preamble of this Agreement.

 

“Amended Schedule” is defined in Section 2.04(b) of this Agreement.

 

“Amount Realized” means, in respect of a Redemption by an Applicable Member, the amount that is deemed for purposes of this Agreement to be the amount realized by the Applicable Member as a result of the Redemption, which shall be the sum of (i) the Market Price of the Class A Common Shares, the amount of cash, and the amount or fair market value of other consideration transferred to the Redeeming Member in the Redemption and (ii) the Share of Liabilities attributable to the Class A Units Redeemed.

 

“Appellate Rules” is defined in Section 7.09(a)(vi) of this Agreement.

 

“Applicable Member” means any Member to whom any portion of a Realized Tax Benefit is Attributable hereunder.

 

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“Attributable” means that portion of any Realized Tax Benefit of INC that is Attributable to any Member as determined by reference to the assets from which arise the depreciation, amortization, or other similar deductions or recovery of cost or basis (“Depreciation”) and with respect to Imputed Interest that produce the Realized Tax Benefit, under the following principles:

 

(i)                                     Any Realized Tax Benefit arising from a deduction to INC with respect to a Taxable Year for Depreciation arising in respect of a Basis Adjustment to an Adjusted Asset is Attributable to the Applicable Member to the extent that the ratio of all Depreciation for the Taxable Year in respect of Basis Adjustments resulting from all Redemptions by the Applicable Member bears to the aggregate of all Depreciation for the Taxable Year in respect of Basis Adjustments resulting from all Redemptions by all Members.

 

(ii)                                 Any Realized Tax Benefit arising from a deduction to INC with respect to a Taxable Year in respect of Imputed Interest is Attributable to the Applicable Member that is required to include the Imputed Interest in income (without regard to whether such Member is actually subject to tax thereon).

 

“Award” is defined in Section 7.09(a)(iv).

 

“Basis Adjustment” means the adjustment to the Tax basis of an Adjusted Asset under section 732 of the Code (in situations where, as a result of one or more Redemptions, LLC becomes an entity that is disregarded as separate from its owner for tax purposes) or sections 743(b) and 754 of the Code (including in situations where, following a Redemption, LLC remains in existence as an entity for Tax purposes) and, in each case, comparable sections of state, local and foreign Tax laws (as calculated under Section 2.01 of this Agreement) as a result of a Redemption and the payments made pursuant to this Agreement. Notwithstanding any other provision of this Agreement, the amount of any Basis Adjustment resulting from (i) a Redemption of one or more Class A Units shall be determined without regard to any Pre-Redemption Transfer of such Class A Units and as if any such Pre-Redemption Transfer had not occurred.

 

“Board” means the board of directors of INC.

 

“Business Day” means a day, other than Saturday, Sunday or other day on which banks located in Boston, Massachusetts or Baltimore, Maryland are authorized or required by Law to close.

 

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“Change of Control” means the occurrence of any of the following events:

 

(i)                                     any “person” or “group” (as such terms are used in Sections 13(d) of the Securities Exchange Act of 1934, as amended), other than a Permitted Transferee, becomes the “beneficial owner” (as defined in Rule 13d-3 and Rule 13d-5 promulgated under the Securities Exchange Act of 1934, as amended, except that any person shall be deemed to beneficially own securities such person has a right to acquire whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of fifty percent (50%) or more of the then outstanding voting power of the voting securities of INC;

 

(ii)                                 the consummation of any direct or indirect sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of INC (including securities of INC’s Subsidiaries) on a consolidated basis, except the transfer of outstanding voting power of the voting securities of INC to a Permitted Transferee; or

 

(iii)                             at any time, the Continuing Directors cease for any reason to constitute the majority of either the Board or the independent directors of INC;

 

provided, however, that if LLC is no longer a Subsidiary of INC as a result of a transaction not constituting a Change of Control, then a Change of Control shall be deemed to have occurred upon any of the foregoing events that affect LLC only (and no Change of Control shall be deemed to have occurred if such event affects INC).

 

“Change of Control Date” means the day on which the Change of Control becomes effective.

 

“Change of Control Payment” is defined in Section 4.03(b) of this Agreement.

 

“Change of Control Rate” means the lesser of (i) 6.5% and (ii) LIBOR plus 100 basis points.

 

“Change of Control Notice” is defined in Section 4.02 of this Agreement.

 

“Change of Control Schedule” is defined in Section 4.02 of this Agreement.

 

“Charitable Organization” shall mean an organization that is described in section 501(c)(3) of the Code which is exempt from income taxation under section 501(a) thereof.

 

“Chosen Courts” is defined in Section 7.09(c) of this Agreement.

 

“Class A Common Shares” is defined in the recitals of this Agreement.

 

“Class A Units” has the definition set forth in the Operating Agreement.

 

“Class B Units” has the definition set forth in the Operating Agreement.

 

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“Closing Date” means the date on which Class A Common Shares are distributed to public shareholders.

 

“Code” is defined in the recitals of this Agreement.

 

“Continuing Directors” means, as of any date of determination, any member of the Board who was (i) a member of the Board as of the date of this Agreement or (ii) nominated for election or elected to the Board by, or whose election to the Board was made or approved by (x) the affirmative vote of, a majority of Continuing Directors who were members of the Board at the time of such nomination or election (and not including a director whose initial assumption of office is in connection with an actual or threatened contested solicitation, including, without limitation, a consent or proxy solicitation, relating to the election of directors of the Board or an unsolicited tender offer or exchange offer for INC’s voting securities) or (y) so long as INC is Controlled by one or both Founders, one or both Founders.

 

“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.

 

“Corporate Entity” means any direct Subsidiary of INC which is classified as a corporation for U.S. federal income tax purposes.

 

“Cumulative Net Realized Tax Benefit” means, with respect to a Taxable Year, the cumulative amount of Realized Tax Benefits for all Taxable Years of INC, up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same period. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of such determination.

 

“Default Rate” means the short term applicable federal rate for interest accrued annually, as published by the Internal Revenue Service, plus 300 basis points.

 

“Determination” has the meaning ascribed to such term in section 1313(a) of the Code or similar provision of state, local and foreign tax law, as applicable, or any other event (including the execution of a Form 870-AD) that finally and conclusively establishes the amount of any liability for Tax.

 

“Dispute” is defined in Section 7.09(a)(i) of this Agreement.

 

“Excluded Assets” is defined in Section 7.11(b) of this Agreement.

 

“Expert” is defined in Section 7.08 of this Agreement.

 

“Founder” means each of Barry M. Portnoy and Adam D. Portnoy.

 

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“Governmental Entity” means (a) the United States of America, (b) any other sovereign nation, (c) any state, province, district, territory or other political subdivision of (a) or (b) of this definition, including any county, municipal or other local subdivision of the foregoing, or (d) any entity exercising executive, legislative, judicial, regulatory or administrative functions of government on behalf of (a), (b) or (c) of this definition.

 

“Hypothetical Tax Liability” means, with respect to any Taxable Year, the liability for Taxes of INC (or LLC, but only with respect to Taxes imposed on LLC and allocable to INC) using the same methods, elections, conventions and similar practices used on the relevant INC Return but using the Non-Stepped Up Tax Basis instead of the tax basis reflecting the Basis Adjustments of the Adjusted Assets and excluding any deduction attributable to Imputed Interest.

 

“Immediate Family Member” means, with respect to any individual, (x) any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and any other individual (other than a tenant or employee) which individual is sharing the household of such individual or (y) a trust, the beneficiaries of which are the individual and/or any Immediate Family Member of such individual.

 

“Imputed Interest” means any interest imputed under section 1272, 1274 or 483 or other provision of the Code and any similar provision of state, local and foreign tax law with respect to INC’s payment obligations under this Agreement.

 

“INC” is defined in the preamble of this Agreement.

 

“INC Return” means the U.S. federal Tax Return and/or state and/or local and/or foreign Tax Return, as applicable, of INC filed with respect to Taxes of any Taxable Year.

 

“IRS” means the United States Internal Revenue Service.

 

“Law” means any law, statute, ordinance, rule, regulation, directive, code or order enacted, issued, promulgated, enforced or entered by any Governmental Entity.

 

“LIBOR” means, for each month (or portion thereof) during any period, an interest rate per annum equal to the one-year rate per annum reported, on the date two Business Days prior to the first Business Day of such month, as published on the applicable Bloomberg screen page (or other commercially available source providing quotations of LIBOR ) for London interbank offered rates for U.S. dollar deposits for such month (or portion thereof).

 

“LLC” is defined in the preamble of this Agreement.

 

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“Market Price” means, with respect to a Class A Common Share as of the applicable Redemption Date, the last sale price per Class A Common Share, regular way, or if no such sale took place on such day, the average of the closing bid and asked prices per Class A Common Share, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the Stock Exchange or, if Class A Common Shares are not listed or admitted to trading on the Stock Exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if Class A Common Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in Class A Common Shares selected by the Board or, in the event that no trading price is available for the Class A Common Shares, the fair market value of a Class A Common Share, as determined in good faith by the Board.

 

“Material Objection Notice” is defined in Section 4.02 of this Agreement.

 

“Member” means TRUST and each other Person who from time to time executes a joinder to this Agreement in form and substance reasonably satisfactory to INC.

 

“Net Tax Benefit” is defined in Section 3.01(b) of this Agreement.

 

“Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the tax basis that such asset would have had at such time if no Basis Adjustment had been made.

 

“Objection Notice” is defined in Section 2.04(a) of this Agreement.

 

“Operating Agreement” means the Operating Agreement of LLC, as such is from time to time amended or restated.

 

“Payment Date” means any date on which a payment is required to be made pursuant to this Agreement.

 

“Permitted Transferee” means: (A) any of INC’s Controlled Subsidiaries; (B) any employee benefit plan of INC or any of its Controlled Subsidiaries; (C) any Founder or any of the Founder’s lineal descendants; (D) any Immediate Family Member of a Founder or any of the Immediate Family Member’s lineal descendants; (E) any Qualifying Employee, any Immediate Family Member of a Qualifying Employee or any of the Qualifying Employee’s or Immediate Family Member’s lineal descendants; (F) a Person described in clauses (C), (D) or (E) to whom securities are transferred by will or pursuant to the laws of descent and distribution by a Person described in clauses (C), (D) or (E) of this definition; (G) any entity Controlled by any Person or Persons described in (B), (C), (D), (E) or (F) of this definition; (H) a Charitable Organization Controlled by any Person or Persons described in (C), (D), (E) or (F) of this definition; (I) an entity owned, directly or indirectly, by shareholders (or equivalent) of INC in substantially the same proportions as their ownership of INC immediately prior to the acquisition of beneficial ownership; or (J) an underwriter temporarily holding securities of INC pursuant to an offering of such securities; provided, however, that “lineal descendants” shall not include Persons adopted after attaining the age of eighteen (18) years and any such adopted person’s descendants; and further provided that any 

 

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Subsidiary described in clause (A) or (B), any entity described in clause (G) and any Charitable Organization described in clause (H), shall only be a Permitted Transferee so long as it remains Controlled as provided in clause (A), (B), (G) or (H).

 

“Person” means an individual, a corporation, a general or limited partnership, an association, a limited liability company, a Governmental Entity, a trust, a joint venture, a joint stock company or another entity or organization.

 

“Pre-Redemption Transfer” means any transfer (including upon the death of a Member) of one or more Class A Units (i) that occurs prior to a Redemption of such Class A Units, and (ii) to which section 743(b) of the Code applies.

 

“Proceeding” means any suit, action, proceeding, arbitration, mediation, audit, hearing, inquiry or, to the knowledge of the Person in question, investigation (in each case, whether civil, criminal, administrative, investigative, formal or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity.

 

“Qualifying Employee” means any employee of INC or any of its subsidiaries who is and has been an employee of INC or any of its subsidiaries for at least thirty-six (36) months.

 

“Realized Tax Benefit” means, for a Taxable Year and for all Taxes collectively, relating to such Taxable Year, the net excess, if any, of the Hypothetical Tax Liability over the actual liability for Taxes of INC (or LLC, but only with respect to Taxes imposed on LLC and allocable to INC for such Taxable Year), such actual Tax liability to be computed with the adjustments described in this Agreement. If all or a portion of the actual liability for Taxes of INC, or LLC (but only with respect to Taxes imposed on LLC and allocable to INC for such Taxable Year), for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit unless and until there has been a Determination.

 

“Realized Tax Detriment” means, for a Taxable Year and for all Taxes collectively, relating to such Taxable Year, the net excess, if any, of the actual liability for Taxes of INC (or LLC, but only with respect to Taxes imposed on LLC and allocable to INC for such Taxable Year) over the Hypothetical Tax Liability for such Taxable Year, such actual Tax liability to be computed with the adjustments described in this Agreement. If all or a portion of the actual liability for Taxes of INC, or LLC (but only with respect to Taxes imposed on LLC and allocable to INC for such Taxable Year), for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

 

“Reconciliation Dispute” is defined in Section 7.08 of this Agreement.

 

“Reconciliation Procedures” means those procedures set forth in Section 7.08 of this Agreement.

 

“Redemption” is defined in the recitals of this Agreement, and “Redeem”, “Redeemed”, and “Redeeming” shall have correlative meanings.

 

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“Redemption Basis Schedule” is defined in Section 2.02 of this Agreement.

 

“Redemption Date” is defined in the recitals of this Agreement.

 

“Redemption Payment” is defined in Section 5.01 of this Agreement.

 

“Rules” is defined in Section 7.09(a)(i) of this Agreement.

 

“Schedule” means any Redemption Basis Schedule, Tax Benefit Schedule, or Change of Control Schedule.

 

“Share of Liabilities” means, as to any Class A Unit at the time of a Redemption, the portion of the relevant Company’s “liabilities” (as such term is defined in section 752 and section 1001 of the Code) allocated to that Class A Unit pursuant to section 752 of the Code and the applicable Treasury Regulations.

 

“Stock Exchange” means the national securities exchange, as defined under the Securities Exchange Act of 1934, as amended, on which the Class A Common Shares are principally traded.

 

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (b) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of the voting power of the voting interests thereof are at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, references to a “Subsidiary” of LLC shall be given effect only at such times that LLC has one or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of LLC.

 

“Tax Benefit Payment” is defined in Section 3.01(b) of this Agreement.

 

“Tax Benefit Schedule” is defined in Section 2.03 of this Agreement.

 

“Tax Return” means any return, declaration, report, or similar statement required to be filed with respect to Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return, and declaration of estimated Tax.

 

“Taxable Year” means a taxable year as defined in section 441(b) of the Code or comparable section of state, local or foreign tax law, as applicable, (and, therefore, for the avoidance of doubt, may include a period of less than twelve (12) months for which a Tax Return is made) ending on or after a Redemption Date in which there is a Basis Adjustment due to a Redemption.

 

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“Taxes” means any and all U.S. federal, state, local, and foreign taxes, assessments, or similar charges that are based on or measured with respect to net income or profits, whether on an exclusive or on an alternative basis, and any interest related to such Tax.

 

“Taxing Authority” means any domestic, foreign, federal, national, state, county, or municipal or other local government, any subdivision, agency, commission, or authority thereof, or any quasi-governmental body exercising any taxing authority or any other authority exercising Tax regulatory authority.

 

“Treasury Regulations” means the final, temporary, and proposed regulations under the Code promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.

 

“TRUST” is defined in the preamble of this Agreement.

 

“Valuation Assumptions” means, as of a Change of Control Date, the assumptions that (1) in each Taxable Year ending on or after such Change of Control Date, INC will have taxable income sufficient to fully utilize the deductions arising from the Basis Adjustment and the Imputed Interest during such Taxable Year, (2) the federal income tax rates and state, local, and foreign income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Change of Control Date, (3) any loss carryovers generated by the Basis Adjustment or the Imputed Interest and available as of the Change of Control Date will be utilized by INC on a pro rata basis from the Change of Control Date through the scheduled expiration date of such loss carryovers, (4) any non-amortizable assets are deemed to be disposed of at the fifteenth (15th) anniversary of the earlier of the Basis Adjustment and the Change of Control Date, and (5) if, at the Change of Control Date, there are Units that have not been Redeemed, then each such Unit shall be deemed to be Redeemed for the Market Price of the Class A Common Shares and the amount of cash that would be transferred if the Redemption occurred on the Change of Control Date.

 

ARTICLE II

 

DETERMINATION OF REALIZED TAX BENEFIT

 

Section 2.01                             Basis Adjustment. For purposes of this Agreement, as a result of a Redemption, LLC shall be deemed to be entitled to a Basis Adjustment for each of its Adjusted Assets with respect to INC, the amount of which Basis Adjustment shall be the excess, if any, of (i) the sum of (x) the Amount Realized by the Applicable Member in the Redemption, to the extent attributable to such Adjusted Asset, plus (y) the amount of payments made pursuant to this Agreement with respect to such Redemption, to the extent attributable to such Adjusted Asset, over (ii) INC’s share of LLC’s Tax basis for such Adjusted Asset immediately after the Redemption, attributable to the Class A Units Redeemed, determined as if (x) LLC remains in existence as an entity for tax purposes, and (y) LLC had not made the election provided by section 754 of the Code. For the avoidance of doubt, payments made under this Agreement shall not be treated as resulting in a Basis Adjustment to the extent such payments are treated as Imputed Interest.

 

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Section 2.02                             Redemption Basis Schedule. Within forty-five (45) calendar days after the filing of the U.S. federal income tax return of INC for each Taxable Year in which any Redemption has been effected, INC shall deliver to the Applicable Member a schedule (the “Redemption Basis Schedule”) that shows, in reasonable detail, for purposes of Taxes, (i) the actual unadjusted tax basis of the Adjusted Assets as of each applicable Redemption Date, (ii) the Basis Adjustment with respect to the Adjusted Assets as a result of the Redemptions effected in such Taxable Year and all prior Taxable Years, calculated (a) in the aggregate and (b) solely with respect to Redemptions by the Applicable Member, (iii) the period or periods, if any, over which the Adjusted Assets are amortizable and/or depreciable, and (iv) the period or periods, if any, over which each Basis Adjustment is amortizable and/or depreciable (which, for non-amortizable assets shall be based on the Valuation Assumptions).

 

Section 2.03                             Tax Benefit Schedule. Within 45 calendar days after the filing of the U.S. federal income tax return of INC for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment, INC shall provide to the Applicable Member a schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year (a “Tax Benefit Schedule”). The Schedule will become final as provided in Section 2.04(a) of this Agreement and may be amended as provided in Section 2.04(b) of this Agreement (subject to the procedures set forth in Section 2.04(a)).

 

Section 2.04                             Procedures, Amendments

 

(a)                       Procedure. Every time INC delivers to the Applicable Member an applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.04(b), but excluding any Change of Control Schedule or amended Change of Control Schedule, INC shall also (x) deliver to the Applicable Member schedules and work papers providing reasonable detail regarding the preparation of the Schedule and an Advisory Firm Letter supporting such Schedule and (y) allow the Applicable Member reasonable access at no cost to the appropriate representatives at INC and the Advisory Firm in connection with a review of such Schedule. The applicable Schedule shall become final and binding on all parties unless the Applicable Member, within thirty (30) calendar days after receiving a Redemption Basis Schedule or amendment thereto or within thirty (30) calendar days after receiving a Tax Benefit Schedule or amendment thereto, provides INC with notice of a material objection to such Schedule (“Objection Notice”) made in good faith. If the parties, for any reason, are unable to successfully resolve the issues raised in such notice within thirty (30) calendar days of receipt by INC of an Objection Notice, if with respect to a Redemption Basis Schedule, or within thirty (30) calendar days of receipt by INC of an Objection Notice, if with respect to a Tax Benefit Schedule, after such Schedule was delivered to the Applicable Member, INC and the Applicable Member shall employ the reconciliation procedures as described in Section 7.08 of this Agreement (the “Reconciliation Procedures”).

 

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(b)                       Amended Schedule. The applicable Schedule for any Taxable Year shall be amended from time to time by INC (i) in connection with a Determination affecting such Schedule, (ii) to correct material inaccuracies in the Schedule identified as a result of the receipt of additional factual information relating to a Taxable Year after the date the Schedule was provided to the Applicable Member, (iii) to comply with the Expert’s determination under the Reconciliation Procedures, (iv) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other tax item to such Taxable Year, (v) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year, or (vi) to adjust the Redemption Basis Schedule to take into account payments made pursuant to this Agreement (such Schedule, an “Amended Schedule”).

 

ARTICLE III

 

TAX BENEFIT PAYMENTS

 

Section 3.01                             Payments

 

(a)                       Within five (5) calendar days of a Tax Benefit Schedule delivered to an Applicable Member becoming final in accordance with Section 2.04(a), or earlier in INC’s discretion, INC shall pay to the Applicable Member for such Taxable Year the Tax Benefit Payment determined pursuant to Section 3.01(b) in the amount Attributable to the Applicable Member. Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to a bank account of the Applicable Member or as otherwise designated by such Member to INC. For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated tax payments, including, without limitation, federal income tax payments.

 

(b)                       A “Tax Benefit Payment” means an amount, not less than zero, equal to the sum of the Net Tax Benefit and the Interest Amount. The “Net Tax Benefit” for each Taxable Year shall be an amount equal to the excess, if any, of 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over the total amount of payments previously made under this Section 3.01, excluding payments attributable to Interest Amounts; provided, however, that for the avoidance of doubt, no Member shall be required to return any portion of any previously made Tax Benefit Payment. The “Interest Amount” for a given Taxable Year shall equal the interest on the Net Tax Benefit for such Taxable Year calculated at the Agreed Rate from the due date (without extensions) for filing the INC Return with respect to Taxes for the most recently ended Taxable Year until the Payment Date. In the case of a Tax Benefit Payment made in respect of an Amended Schedule, the “Interest Amount” shall equal the interest on the Net Tax Benefit for such Taxable Year calculated at the Agreed Rate from the date of such Amended Schedule becoming final in accordance with Section 2.04(a) until the Payment Date. The Net Tax Benefit and the Interest Amount shall be determined separately with respect to each separate Redemption, on a Class A Unit-by-Class A Unit basis by reference to the Amount Realized by the Applicable Member on the Redemption of a Common Unit and the resulting Basis Adjustment to INC.

 

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Section 3.02                             No Duplicative Payments. It is intended that the provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. It is also intended that the provisions of this Agreement will result in 85% of INC’s Cumulative Net Realized Tax Benefit, and the Interest Amount thereon (if any), being paid to the Members pursuant to this Agreement. The provisions of this Agreement shall be construed in the appropriate manner so that these fundamental results are achieved.

 

Section 3.03                             Pro Rata Payments. For the avoidance of doubt, to the extent (i) INC’s deductions with respect to any Basis Adjustment or Imputed Interest are limited in a particular Taxable Year or (ii) INC lacks sufficient funds to satisfy its obligations to make all Tax Benefit Payments due in a particular Taxable Year, the limitation on the deductions, or the Tax Benefit Payments that may be made, as the case may be, shall be taken into account or made for the Applicable Member in the same proportion as Tax Benefit Payments would have been made absent the limitations set forth in clauses (i) and (ii) of this paragraph, as applicable.

 

Section 3.04                             Opt-Out.

 

(a)                       Notwithstanding Section 3.01, prior to a Redemption, an Applicable Member may elect not to receive any payments under this Agreement with respect to such Redemption, by delivering written notice evidencing such election, reasonably satisfactory in form and substance to INC, to INC at least ten (10) Business Days prior to the Redemption Date of the relevant Redemption. Such notice of election, when delivered, shall be irrevocable; provided, however, that a revocation of a Redemption under the Operating Agreement shall constitute a revocation of any notice of election with respect to the Class A Units the Redemption of which has been so revoked, and such notice of election shall be without further force and effect to the extent so treated as revoked.

 

(b)                       This Agreement shall not apply to any Redemption to the extent such Redemption is covered by a notice of election delivered pursuant to Section 3.04(a) (to the extent such notice of election continues in effect), and all computations hereunder, including the computation of any Tax Benefit Payments and determination of any amounts Attributable to any Member, shall be made without taking into account Redemptions covered by any such notice of election. For the avoidance of doubt, an Applicable Member that makes an election pursuant to Section 3.04(a) shall remain entitled to payments under this Agreement with respect to any Redemptions with respect to which no election has been made (and continues in effect) pursuant to Section 3.04(a).

 

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ARTICLE IV

 

TERMINATION

 

Section 4.01                             Change of Control and Breach of Agreement.

 

(a)                       This Agreement shall terminate with respect to all of the Class A Units held (or previously held and redeemed) by all Members in the event of a Change of Control, and INC shall pay to all of the Members the Change of Control Payment; provided, however, that this Agreement shall only terminate upon the receipt of the Change of Control Payment by all Members. Upon payment of the Change of Control Payments by INC, neither the Applicable Members nor INC shall have any further payment obligations under this Agreement in respect of such Members, other than for any (a) Tax Benefit Payment agreed to by INC and an Applicable Member as due and payable but unpaid as of the Change of Control Date and (b) Tax Benefit Payment due for the Taxable Year ending with or including the Change of Control Date (except to the extent that the amount described in clause (b) is included in the Change of Control Payment). For the avoidance of doubt, if a Redemption occurs after INC makes the Change of Control Payments with respect to all Members, INC shall have no obligations under this Agreement with respect to such Redemption, and its only obligations under this Agreement in such case shall be its obligations to all Members under Section 4.03(a).

 

(b)                       In the event that INC breaches any of its material obligations under this Agreement, INC must cure such breach within ten (10) days (if such breach is a result of failure to make any payment when due) or twenty (20) days (if such breach is not a result of failure to make any payment when due) from the date INC receives notice of such breach from a Member. If such breach is not so cured within the time period specified in the prior sentence, then all obligations hereunder shall be accelerated and such obligations shall be calculated as if a Change of Control had occurred on the date of such breach and shall include, but not be limited to, (1) the Change of Control Payment, (2) any Tax Benefit Payment agreed to by INC and any Members as due and payable but unpaid as of the date of a breach, and (3) any Tax Benefit Payment due for the Taxable Year ending with or including the date of a breach. Notwithstanding the foregoing, in the event that INC breaches this Agreement, the Members shall be entitled to elect to receive the amounts set forth in clauses (1), (2), and (3), above or to seek specific performance of the terms hereof. The parties agree that the failure to make any payment due pursuant to this Agreement within three (3) months of the date such payment is due shall be deemed to be a breach of a material obligation under this Agreement for all purposes of this Agreement, and that it will not be considered to be a breach of a material obligation under this Agreement to make a payment due pursuant to this Agreement within three (3) months of the date such payment is due.

 

(c)                        The undersigned parties hereby acknowledge and agree that the timing, amounts and aggregate value of Tax Benefit Payments pursuant to this Agreement are not reasonably ascertainable.

 

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Section 4.02                             Change of Control Notice. If a Change of Control occurs, INC shall deliver to each Member notice of such Change of Control (“Change of Control Notice”) and a schedule (the “Change of Control Schedule”) showing in reasonable detail the calculation of the Change of Control Payment. The applicable Change of Control Schedule shall become final and binding on all parties unless the Applicable Member, within thirty (30) calendar days after receiving the Change of Control Schedule thereto provides INC with notice of a material objection to such Change of Control Schedule made in good faith (“Material Objection Notice”). If the parties, for any reason, are unable to successfully resolve the issues raised in such notice within thirty (30) calendar days after receipt by INC of the Material Objection Notice, INC and the Applicable Member shall employ the Reconciliation Procedures as described in Section 7.08 of this Agreement.

 

Section 4.03                             Payment upon Change of Control.

 

(a)                       Within three (3) calendar days after agreement between the Applicable Member and INC of the Change of Control Schedule, INC shall pay to the Applicable Member an amount equal to the Change of Control Payment. Such payment shall be made by wire transfer of immediately available funds to a bank account of the Applicable Member or as otherwise designated by such Member to INC.

 

(b)                       The “Change of Control Payment” as of the Change of Control Date shall equal, with respect to the Applicable Member, the present value of all Tax Benefit Payments that would be required to be paid by INC to the Applicable Member beginning from the Change of Control Date and assuming that the Valuation Assumptions are applied, discounted at the Change of Control Rate from the date such Tax Benefit Payments would be required to be paid back to the Change of Control Date.

 

ARTICLE V

 

LATE PAYMENTS

 

Section 5.01                             Late Payments by INC. The amount of all or any portion of any Tax Benefit Payment or Change of Control Payment required to be made by INC to a Member or to the Members under this Agreement (a “Redemption Payment”) not made to any Member when due under the terms of this Agreement shall be payable together with interest thereon, computed at the Default Rate from the date on which such Redemption Payment was due and payable until actually paid.

 

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ARTICLE VI

 

NO DISPUTES; CONSISTENCY; COOPERATION

 

Section 6.01                             Member Participation in INC’s and Company’s Tax Matters. Except as otherwise provided herein, INC shall have full responsibility for, and sole discretion over, all Tax matters concerning INC and LLC, including without limitation the preparation, filing, or amending of any Tax Return and defending, contesting, or settling any issue pertaining to Taxes. Notwithstanding the foregoing, INC shall notify the Members of, and keep the Members reasonably informed with respect to the portion of any audit of INC and LLC by a Taxing Authority the outcome of which is reasonably expected to affect the Members’ rights and obligations under this Agreement, and shall provide to the Members reasonable opportunity to provide information and other input to INC, LLC, and their respective advisors concerning the conduct of any such portion of such audit; provided, however, that INC and LLC shall not be required to take any action that is inconsistent with any provision of the Operating Agreement.

 

Section 6.02                             Consistency. Except upon the written advice of an Advisory Firm, INC and the Members agree to report and cause to be reported for all purposes, including federal, state, local and foreign Tax purposes and financial reporting purposes, all Tax-related items (including without limitation the Basis Adjustment and each Tax Benefit Payment) in a manner consistent with that specified by INC in any Schedule required to be provided by or on behalf of INC under this Agreement. Any dispute concerning such advice shall be subject to the terms of Section 7.08.

 

Section 6.03                             Cooperation. The Members shall each (a) furnish to INC in a timely manner such information, documents and other materials as INC may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make itself available to INC and its representatives to provide explanations of documents and materials and such other information as INC or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter, and INC shall reimburse each Member for any reasonable third-party costs and expenses incurred pursuant to this Section.

 

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ARTICLE VII

 

MISCELLANEOUS

 

Section 7.01                             Notices. All notices and other communications in connection with this Agreement shall be in writing and shall be considered given if given in the manner, and be deemed given at times, as follows: (i) on the date delivered, if personally delivered; (ii) on the day of transmission if sent via facsimile transmission to the facsimile number given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission; or (iii) on the next Business Day after being sent by recognized overnight mail service specifying next Business Day delivery, in each case with delivery charges pre-paid and addressed to the following addresses:

 

if to INC or LLC, to:

 

c/o Reit Management & Research LLC
 Two Newton Place
 255 Washington Street
 Suite 300
 Newton, MA 02458
 Attn: President
 Facsimile: (617) 928-1305

 

with a copy (which shall not constitute notice) to:

 

c/o Reit Management & Research LLC
 Two Newton Place
 255 Washington Street
 Suite 300
 Newton, MA 02458
 Attn: General Counsel
 Facsimile: (617) 928-1305

 

if to the Members or any Member, to:

 

the address and facsimile number set forth for such Member in the records of LLC.

 

Section 7.02                             Counterparts. This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties (including via facsimile or other electronic transmission), it being understood that each party need not sign the same counterpart.

 

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Section 7.03                             Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes the entire agreement of the parties and supersedes all prior agreements, arrangements or understandings, whether written or oral, among the parties with respect to the subject matter of this Agreement. This Agreement shall bind and inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns. This Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any Person other than the parties hereto any rights or remedies under this Agreement.

 

Section 7.04                             Governing Law. This Agreement and any Dispute, whether in contract, tort or otherwise, shall be governed by and construed in accordance with the laws of the State of Maryland without regard to principles of conflicts of law.

 

Section 7.05                             Severability. This Agreement shall be interpreted in such manner as to be effective and valid under applicable Law. If at any time subsequent to the date hereof, any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of Law or public policy in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties.

 

Section 7.06                             Successors; Assignment; Amendments; Waivers. No Member may assign this Agreement to any person without the prior written consent of INC; provided, however, (i) that, to the extent Class A Units are effectively transferred in accordance with the terms of the Operating Agreement, and any other agreements the Members may have entered into with each other, or a Member may have entered into with INC and/or LLC, the transferring Member shall assign to the transferee of such Class A Units the transferring Member’s rights under this Agreement with respect to such transferred Class A Units, as long as such transferee has executed and delivered, or, in connection with such transfer, executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory to INC, agreeing to become a “Member” for all purposes of this Agreement, except as otherwise provided in such joinder, and (ii) that, once a Redemption has occurred, any and all payments that may become payable to a Member pursuant to this Agreement with respect to such Redemption may be assigned to any Person or Persons, as long as any such Person has executed and delivered, or, in connection with such assignment, executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory to INC, agreeing to be bound by Section 7.12 and acknowledging specifically the last sentence of the next paragraph. For the avoidance of doubt, to the extent a Member or other Person transfers Class A Units to a Member as may be permitted by any agreement to which LLC is a party, the Member receiving such Class A Units shall have all rights under this Agreement with respect to such transferred Class A Units as such Member has, under this Agreement, with respect to the other Class A Units held by him.

 

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No provision of this Agreement may be amended unless such amendment is approved in writing by each of INC and LLC, and by Members who would be entitled to receive at least two-thirds of the Change of Control Payments payable to all Members hereunder if a Change of Control had occurred on the date of the most recent Redemption prior to such amendment (excluding, for purposes of this sentence, all payments made to any Member pursuant to this Agreement since the date of such most recent Redemption); provided that no such amendment shall be effective against Members who do not approve the amendment in writing. No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective.

 

This Agreement shall bind and inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns. INC shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of INC, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that INC would be required to perform if no such succession had taken place.

 

Section 7.07                             Headings. The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

Section 7.08                             Reconciliation. In the event that INC and an Applicable Member are unable to resolve a disagreement with respect to the matters governed by Sections 2.04, 4.02, and 6.02 within the relevant period designated in this Agreement (a “Reconciliation Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to both parties. The Expert shall be a partner in a nationally recognized accounting firm or a law firm (other than the Advisory Firm), and the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with either INC or the Applicable Member or other actual or potential conflict of interest. If the parties are unable to agree on an Expert within fifteen (15) calendar days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for Expertise. The Expert shall resolve any matter relating to the Redemption Basis Schedule or an amendment thereto or the Change of Control Schedule or an amendment thereto within thirty (30) calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment thereto within fifteen (15) calendar days or as soon thereafter as is reasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before the date any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, such payment shall be paid on the date such payment would be due and such Tax Return may be filed as prepared by INC, subject to adjustment or amendment upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by INC, except as provided in the next sentence. INC and each Applicable Member shall bear their own costs and expenses of such proceeding, unless the Applicable Member has a prevailing position that is more than ten percent (10%) of the payment at issue, in which case INC shall reimburse such Applicable Member for any reasonable out-of-pocket costs and expenses in such proceeding. Any dispute as to whether a dispute is a Reconciliation Dispute within the meaning of this Section 7.08 shall be decided by the Expert. The Expert shall finally determine any Reconciliation Dispute and the determinations of the

 

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Expert pursuant to this Section 7.08 shall be binding on INC and the Applicable Member and may be entered and enforced in any court having jurisdiction.

 

Section 7.09                             Submission to Jurisdiction; Dispute Resolution.

 

(a)

 

(i)             any disputes, claims or controversies arising out of or relating to this Agreement or the transactions contemplated hereby that are not Reconciliation Disputes governed by Section 7.08, including any disputes, claims or controversies brought by or on behalf of LLC, INC or a Member or any holder of equity interests (which, for purposes of this Section 7.09, shall mean any holder of record or any beneficial owner of equity interests, or any former holder of record or beneficial owner of equity interests) of LLC, INC or a Member, either on his, her or its own behalf, on behalf of LLC, INC or a Member or on behalf of any series or class of equity interests of LLC, INC or a Member or holders of equity interests of LLC, INC or a Member against LLC, INC or any Member or any of their respective trustees, directors, members, officers, managers, agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration agreement or the governing documents of LLC, INC or a Member (all of which are referred to as “Disputes”) or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 7.09. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of LLC, INC or any Member and class actions by a holder of equity interests against those individuals or entities and LLC, INC or any Member. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 7.09, the term “equity interest” shall mean, (i) in respect of LLC, “membership interest” in LLC as defined in the Maryland Limited Liability Companies Act, (ii) in respect of INC, shares of capital stock of INC and (iii) in respect of any Member, any equity interest in that Member.  References to a “Member” in this Section shall be deemed to include any former Member.

 

(ii)          There shall be three (3) arbitrators. If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration. The arbitrators may be affiliated or interested persons of the parties. If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of the demand for arbitration. The arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select 

 

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an arbitrator then the party (or parties) who has selected an arbitrator may request AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA. If the party (or parties) fail(s) to select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2nd) arbitrator; and if he/they should fail to select the second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2nd) arbitrator. If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

 

(iii)       The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties. There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

 

(iv)      In rendering an award or decision (the “Award”), the arbitrators shall be required to follow the Laws of the State of Maryland. Any arbitration proceedings or award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. The Award shall be in writing and shall state the findings of fact and conclusions of law on which it is based. Any monetary award shall be made and payable in Dollars and, subject to Section 7.10, free of any tax, deduction or offset. Subject to Section 7.09(a)(vi), each party against which the Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of the Award or such other date as the Award may provide.

 

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(v)         Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3rd) appointed arbitrator.

 

(vi)      Notwithstanding any language to the contrary in this Agreement, the Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”). The Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of the Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 7.09(a)(v) hereof shall apply to any appeal pursuant to this Section and the appeal tribunal shall not render an award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

 

(vii)   Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 7.09(a)(vi), the Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon the Award may be entered in any court having jurisdiction. To the fullest extent permitted by Law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

 

(viii)     This Section 7.09(a) is intended to benefit and be enforceable by LLC, INC, each Member (including any former Member) and their respective holders of equity interests, trustees, directors, officers, managers, members, agents or employees, and their respective successors and assigns, shall be binding upon LLC, INC, each Member (including any former Member) and their respective holders of equity interests and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

 

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(b)                       The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, in addition to any other applicable remedies at Law or equity, the parties shall be entitled to an injunction or injunctions, without proof of damages, to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement.

 

(c)                        To the fullest extent permitted by applicable Law, the parties shall not assert, and hereby waive, any claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor, against any other party and its respective Affiliates, members, members’ affiliates, officers, directors, partners, trustees, employees, attorneys and agents on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, or as a result of, this Agreement.

 

(d)                       Notwithstanding the foregoing, any Dispute as to the interpretation of this Agreement shall be resolved by INC in its sole discretion, provided that such resolution shall reflect a reasonable interpretation of the provisions of this Agreement and that such resolution shall not be inconsistent with the fundamental results described in Section 3.02 of this Agreement.

 

(e)                        Each party hereto agrees that it shall bring any Proceeding ancillary to an arbitration or contemplated arbitration arising out of or relating to or concerning this Agreement exclusively in the courts of the State of Maryland and the federal courts of the United States, in each case, located in the City of Baltimore (the “Chosen Courts”). Solely in connection with such Proceedings, each party hereto irrevocably and unconditionally (i) submits to the exclusive jurisdiction of the Chosen Courts, (ii) agrees not to commence any such Proceeding except in such courts, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such Proceeding in the Chosen Courts, (iv) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such Proceeding and (v) agrees that service of process upon such party in any such Proceeding shall be effective if notice is given in accordance with Section 7.01. Nothing in this Agreement will affect the right of any party to serve process in any other manner permitted by Law. Each of the parties agrees that a final judgment in any such Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT or the transactions contemplated hereby. Notwithstanding anything herein to the contrary, if a demand for arbitration of a Dispute is made pursuant to Section 7.09(a), this Section 7.09(e) shall not pre-empt resolution of Dispute pursuant to Section 7.09(a).

 

Section 7.10                             Withholding. INC shall be entitled to deduct and withhold from any payment payable pursuant to this Agreement such amounts as INC is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax law. To the extent that amounts are so withheld and paid over to the appropriate Taxing Authority by INC, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Applicable Member.

 

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Section 7.11                             Admission of INC into a Consolidated Group; Transfers of Corporate Assets.

 

(a)                       If INC becomes a member of an affiliated or consolidated group of corporations that files a consolidated income tax return pursuant to sections 1501 et seq. of the Code or any corresponding provisions of state, local or foreign law, then: (i) the provisions of this Agreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments, Change of Control Payments, and other applicable items hereunder shall be computed with reference to the consolidated taxable income of the group as a whole.

 

(b)                       Notwithstanding any other provision of this Agreement, if INC acquires one or more assets that, as of a Redemption Date, have not been contributed to LLC (other than INC’s interests in LLC) (such assets, “Excluded Assets”), then all Tax Benefit Payments due hereunder shall be computed as if such assets had been contributed to LLC on the date such assets were first acquired by INC; provided, however, that if an Excluded Asset consists of stock in a corporation, then, for purposes of this Section 7.11(b), such corporation (and any corporation Controlled by such corporation) shall be deemed to have contributed its assets to LLC on the date on which INC acquired stock of such corporation.

 

(c)                        If any entity that is obligated to make a Redemption Payment hereunder transfers one or more assets to a corporation with which such entity does not file a consolidated tax return pursuant to section 1501 of the Code, such entity, for purposes of calculating the amount of any Redemption Payment (e.g., calculating the gross income of the entity and determining the Realized Tax Benefit of such entity) due hereunder, shall be treated as having disposed of such asset in a fully taxable transaction on the date of such contribution. The consideration deemed to be received by such entity shall be equal to the fair market value of the contributed asset (as reasonably determined by the governing body, or the Person responsible for management, of such entity acting in good faith), plus (i) the amount of debt to which such asset is subject, in the case of a contribution of an encumbered asset or (ii) the amount of debt allocated to such asset, in the case of a contribution of a partnership interest.

 

Section 7.12                             Confidentiality. Each Member and assignee acknowledges and agrees that the information of INC is confidential and, except in the course of performing any duties as necessary for INC and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters, acquired pursuant to this Agreement, of INC, its Affiliates and successors and the other Members, confidential information concerning INC, its Affiliates and successors, and the other Members, including marketing, investment, performance data, credit and financial information, and other business affairs of INC, its Affiliates and successors, and the other Members learned of by the Member heretofore or hereafter. This Section 7.12 shall not apply to (i) any information that has been made publicly available by INC or any of its Affiliates, becomes public knowledge (except as a result of an act of such Member in violation of this Agreement) or is generally known to the business community and (ii) the disclosure of information to the extent necessary for a Member to prepare and file his or her tax returns, to respond to any inquiries regarding the same from any taxing authority or to prosecute or defend any action, proceeding or audit by any taxing authority with respect to such returns. Notwithstanding anything to the contrary herein, each Member and assignee (and each employee, representative, or other agent of such

 

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Member or assignee, as applicable) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of (x) INC, LLC, the Members, and their Affiliates and (y) any of their transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to the Members relating to such tax treatment and tax structure.

 

If a Member or assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.12, INC shall have the right and remedy to have the provisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to INC or any of its Affiliates or the other Members and that money damages alone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

 

Section 7.13                             Operating Agreement. To the extent this Agreement imposes obligations upon LLC or a managing member of LLC, this Agreement shall be treated as part of the operating agreement of LLC as described in section 761(c) of the Code and sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations.

 

Section 7.14                             Joinder. INC hereby agrees that, to the extent it acquires a general partnership interest, managing member interest or similar interest in any Person after the date hereof, it shall cause such Person to execute and deliver a joinder to this Agreement promptly upon acquisition of such interest, and such person shall be treated in the same manner as LLC for all purposes of this Agreement. INC hereby agrees to cause any Corporate Entity that acquires an interest in LLC (or any entity described in the foregoing sentence) to execute a joinder to this Agreement (to the extent such Person is not already a party hereto) promptly upon such acquisition, and such Corporate Entity shall be treated in the same manner as INC for all purposes of this Agreement. LLC shall have the power and authority (but not the obligation) to permit any Person who becomes a member of LLC to execute and deliver a joinder to this Agreement promptly upon acquisition of membership interests in LLC by such Person, and such Person shall be treated as a “Member” for all purposes of this Agreement.

 

[Signature page follows]

 

25

 

IN WITNESS WHEREOF, INC, LLC, and each Member have duly executed this Agreement as of the date first written above.

 

	
 
    	
REIT MANAGEMENT & RESEARCH INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Matthew P. Jordan
    
	
 
    	
Name:
    	
Matthew P. Jordan
    
	
 
    	
Title:
    	
Treasurer and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
REIT MANAGEMENT & RESEARCH LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jennifer B. Clark
    
	
 
    	
Name:
    	
Jennifer B. Clark
    
	
 
    	
Title:
    	
Executive Vice President and General Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
REIT MANAGEMENT & RESEARCH TRUST
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jennifer B. Clark
    
	
 
    	
Name:
    	
Jennifer B. Clark
    
	
 
    	
Title:
    	
Vice President
    

 

Signature Page to Tax Receivable AgreementExhibit 10.18

 

LEASE

 

BY AND BETWEEN

 

 

RMR WEST LLC

 

LANDLORD

 

AND

 

REIT MANAGEMENT & RESEARCH LLC

 

TENANT

 

 

TWO NEWTON PLACE

255 WASHINGTON STREET

NEWTON, MA 02458

 

 

	
ARTICLE 1   Reference Data
    	
1
    
	
1.1   Introduction and Subjects Referred To
    	
1
    
	
1.2   Exhibits
    	
3
    
	
 
    	
 
    
	
ARTICLE 2 Premises   and Term
    	
3
    
	
2.1   Premises
    	
3
    
	
2.2   Term
    	
4
    
	
2.3   Measurement of the Premises
    	
4
    
	
 
    	
 
    
	
ARTICLE 3   Commencement and Condition
    	
4
    
	
3.1   Commencement Date
    	
4
    
	
3.2   Condition of the Premises
    	
4
    
	
 
    	
 
    
	
ARTICLE 4 Rent,   Additional Rent, Insurance and Other Charges
    	
5
    
	
4.1   The Annual Fixed Rent
    	
5
    
	
4.2   Additional Rent
    	
5
    
	
4.2.1   Real Estate Taxes
    	
6
    
	
4.2.2   Operating Costs
    	
7
    
	
4.3   Personal Property Taxes
    	
8
    
	
4.4   Insurance
    	
8
    
	
4.4.1   Insurance Policies
    	
8
    
	
4.4.2   Requirements
    	
9
    
	
4.4.3   Waiver of Subrogation
    	
9
    
	
4.5   Utilities
    	
9
    
	
4.6   Late Payment of Rent
    	
10
    
	
 
    	
 
    
	
ARTICLE 5   Landlord’s Covenants
    	
10
    
	
5.1   Affirmative Covenants
    	
10
    
	
5.1.1   Heat and Air-Conditioning
    	
10
    
	
5.1.2   Cleaning; Water
    	
11
    
	
5.1.3   Elevator, Lighting and Electricity
    	
11
    
	
5.1.4   Repairs
    	
11
    
	
5.2   Interruption
    	
12
    
	
5.3   Outside Services
    	
12
    
	
5.4   Access to Building
    	
12
    
	
5.5   Parking
    	
13
    
	
 
    	
 
    
	
ARTICLE 6 Tenant’s   Additional Covenants
    	
13
    
	
6.1   Affirmative Covenants
    	
13
    
	
6.1.1   Perform Obligations
    	
13
    
	
6.1.2   Use
    	
13
    
	
6.1.3   Repair and Maintenance
    	
14
    
	
6.1.4   Compliance with Law
    	
14
    
	
6.1.5   Indemnification
    	
14
    
	
6.1.6   Landlord’s Right to Enter
    	
14
    
	
6.1.7   Personal Property at Tenant’s Risk
    	
15
    

 

i

 

	
6.1.8   Payment of Landlord’s Cost of Enforcement
    	
15
    
	
6.1.9   Yield Up
    	
15
    
	
6.1.10   Rules and Regulations
    	
15
    
	
6.1.11   Estoppel Certificate
    	
16
    
	
6.1.12   Landlord’s Expenses For Consents
    	
16
    
	
6.2   Negative Covenants
    	
16
    
	
6.2.1   Assignment and Subletting
    	
16
    
	
6.2.2   Nuisance
    	
16
    
	
6.2.3   Floor Load; Heavy Equipment
    	
16
    
	
6.2.4   Electricity
    	
17
    
	
6.2.5   Installation, Alterations or Additions
    	
17
    
	
6.2.6   Signs
    	
17
    
	
6.2.7   Oil and Hazardous Materials
    	
17
    
	
 
    	
 
    
	
ARTICLE 7 Casualty   or Taking
    	
19
    
	
7.1   Termination
    	
19
    
	
7.2   Restoration
    	
19
    
	
7.3   Award
    	
19
    
	
7.4   Effect of Casualty or Taking on the Tax Excess and the Operating Cost Excess
    	
20
    
	
 
    	
 
    
	
ARTICLE 8 Defaults
    	
20
    
	
8.1   Default of Tenant
    	
20
    
	
8.2   Remedies
    	
21
    
	
8.3   Remedies Cumulative
    	
23
    
	
8.4   Landlord’s Right to Cure Defaults
    	
23
    
	
8.5   Holding Over
    	
23
    
	
8.6   Effect of Waivers of Default
    	
23
    
	
8.7   No Waiver, etc.
    	
23
    
	
8.8   No Accord and Satisfaction
    	
24
    
	
 
    	
 
    
	
ARTICLE 9 Rights   of Holders
    	
24
    
	
 
    	
 
    
	
ARTICLE 10   Miscellaneous Provisions
    	
25
    
	
10.1   Notices
    	
25
    
	
10.2   Quiet Enjoyment; Landlord’s Right to Make Alterations, Etc.
    	
25
    
	
10.3   Assignment of Rents and Transfer of Title; Limitation of Landlord’s Liability
    	
26
    
	
10.4   Landlord’s Default
    	
27
    
	
10.5   Notice to Mortgagee and Ground Lessor
    	
27
    
	
10.6   Brokerage
    	
27
    
	
10.7   Waiver of Jury Trial
    	
28
    
	
10.8   Applicable Law and Construction
    	
28
    

 

ii

 

LEASE

 

Two Newton Place

255 Washington Street

Newton, MA 02458

 

ARTICLE 1

 

Reference Data

 

1.1          Introduction and Subjects Referred To.

 

This is a lease (this “Lease”) entered into by and between RMR West LLC, a Massachusetts limited liability company (“Landlord”) and Reit Management & Research LLC, a Delaware limited liability company (“Tenant”).

 

Each reference in this Lease to any of the following terms or phrases shall be construed to incorporate the corresponding definition stated in this Section 1.1.

 

	
Date of this Lease:
    	
 
    	
June 1, 2015.
    
	
 
    	
 
    	
 
    
	
Building and Property:
    	
 
    	
That building in the City of Newton, Massachusetts   located at 255 Washington Street, and known as Two Newton Place (the “Building”).   The Building and the land parcels on which it is located and the sidewalks   adjacent thereto are hereinafter collectively referred to as the “Property”.
    
	
 
    	
 
    	
 
    
	
Premises:
    	
 
    	
Portions of the first, second and third floors of the   Building, substantially as shown on Exhibit A hereto.
    
	
 
    	
 
    	
 
    
	
Premises Rentable Area:
    	
 
    	
Until the Expansion Date, 55,488 square feet,   consisting of Suites 100, 150, 190, 200, 270, 300, 351 and 355 (collectively,   the “Initial Premises”), and commencing on the Expansion Date, 70,818   square feet consisting of the Initial Premises plus Suite 350.
    
	
 
    	
 
    	
 
    
	
Original Term:
    	
 
    	
Ten (10) years, commencing on June 1, 2015   and expiring on May 31, 2025.
    

 

 

	
Annual Fixed Rent:
    	
 
    	
The following amounts:
    

 

	
Period
    	
 
    	
Rate
   (Per Square Foot of
   Premises Rentable
   Area Per Annum)
    	
 
    	
Annual
    	
 
    	
Monthly
    	
 
    
	
6/1/15 – 8/31/15
    	
 
    	
$
    	
37.56
    	
 
    	
$
    	
2,084,129.28
    	
 
    	
$
    	
173,677.44
    	
 
    
	
9/1/15 – 5/31/16
    	
 
    	
$
    	
37.56
    	
 
    	
$
    	
2,659,924.08
    	
 
    	
$
    	
221,660.34
    	
 
    
	
6/1/16 – 5/31/17
    	
 
    	
$
    	
38.28
    	
 
    	
$
    	
2,710,913.04
    	
 
    	
$
    	
225,909.42
    	
 
    
	
6/1/17 – 5/31/18
    	
 
    	
$
    	
38.92
    	
 
    	
$
    	
2,756,236.56
    	
 
    	
$
    	
229,686.38
    	
 
    
	
6/1/18 – 5/31/19
    	
 
    	
$
    	
39.56
    	
 
    	
$
    	
2,801,560.08
    	
 
    	
$
    	
233,463.34
    	
 
    
	
6/1/19 – 5/31/20
    	
 
    	
$
    	
40.20
    	
 
    	
$
    	
2,846,883.60
    	
 
    	
$
    	
237,240.30
    	
 
    
	
6/1/20 – 5/31/21
    	
 
    	
$
    	
40.84
    	
 
    	
$
    	
2,892,207.12
    	
 
    	
$
    	
241,017.26
    	
 
    
	
6/1/21 – 5/31/22
    	
 
    	
$
    	
45.97
    	
 
    	
$
    	
3,255,503.46
    	
 
    	
$
    	
271,291.96
    	
 
    
	
6/1/22 – 5/31/23
    	
 
    	
$
    	
46.85
    	
 
    	
$
    	
3,317,823.30
    	
 
    	
$
    	
276,485.28
    	
 
    
	
6/1/23 – 5/31/24
    	
 
    	
$
    	
47.72
    	
 
    	
$
    	
3,379,434.96
    	
 
    	
$
    	
281,619.58
    	
 
    
	
6/1/24 – 5/31/25
    	
 
    	
$
    	
48.60
    	
 
    	
$
    	
3,441,754.80
    	
 
    	
$
    	
286,812.90
    	
 
    

 

	
 
    	
 
    	
all as the same shall be increased pursuant to   Section 3.2.
    
	
 
    	
 
    	
 
    
	
Base Taxes:
    	
 
    	
The Taxes (as defined in Subsection 4.2.1) for the   fiscal year ending June 30, 2016 as the same may be reduced by the   amount of any abatement.
    
	
 
    	
 
    	
 
    
	
Base Operating Costs:
    	
 
    	
The Operating Costs (as defined in Subsection 4.2.2)   for the 2016 calendar year.
    
	
 
    	
 
    	
 
    
	
Tenant’s Percentage:
    	
 
    	
Until the Expansion Date, fifty and seventy-eight   hundredths percent (50.78%) and commencing on the Expansion Date, sixty-four   and eighty-one hundredths percent (64.81%).
    
	
 
    	
 
    	
 
    
	
Permitted Uses:
    	
 
    	
General office uses, subject to the provisions of   Subsection 6.1.2.
    
	
 
    	
 
    	
 
    
	
Security Deposit:
    	
 
    	
None.
    
	
 
    	
 
    	
 
    
	
Commercial General Liability Insurance Limits:
    	
 
    	
$5,000,000 per occurrence (combined single limit)   for property damage, bodily and personal injury and death.
    
	
 
    	
 
    	
 
    
	
Original Address of Landlord:
    	
 
    	
RMR West LLC

Two Newton Place

255 Washington Street, Suite 300

Newton, MA 02458

Attn: Jennifer B. Clark, Vice President
    

 

2

 

	
Landlord’s Agent:
    	
 
    	
Reit Management & Research LLC or such   other entity as shall be designated by Landlord from time to time.
    
	
 
    	
 
    	
 
    
	
Original Address of Tenant:
    	
 
    	
Reit Management & Research LLC

Two Newton Place

255 Washington Street

Suite 300

Newton, MA 02458
    
	
 
    	
 
    	
 
    
	
Address for Payment of Rent:
    	
 
    	
RMR West LLC

P.O. Box 845462

Boston, MA 02284-5642
    
	
 
    	
 
    	
 
    
	
Guarantor:
    	
 
    	
None.
    

 

1.2          Exhibits.

 

The Exhibits listed below in this section are incorporated in this Lease by reference and are to be construed as a part of this Lease.

 

	
EXHIBIT A.
    	
Plan showing the Premises.
    
	
EXHIBIT B.
    	
Rules and Regulations.
    
	
EXHIBIT C.
    	
Alterations Requirements.
    
	
EXHIBIT D.
    	
Contractor’s Insurance Requirements.
    
	
EXHIBIT E.
    	
Intentionally omitted.
    
	
EXHIBIT F.
    	
Intentionally omitted.
    
	
EXHIBIT G.
    	
Janitorial Specifications.
    

 

ARTICLE 2

 

Premises and Term

 

2.1          Premises.  Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, subject to and with the benefit of the terms, covenants, conditions and provisions of this Lease, the Premises, excluding exterior faces of exterior walls, the common lobbies, hallways, stairways, stairwells, elevator shafts and other common areas, and the escalators, elevators, pipes, ducts, conduits, wires and appurtenant fixtures and other common facilities serving the common areas, the Premises and the premises of other tenants in the Building.

 

Tenant shall have, as appurtenant to the Premises, rights to use, in common with others, subject to reasonable rules of general applicability to tenants of the Building from time to time made by Landlord of which Tenant is given notice: (a) the common lobbies, hallways and stairways of the Building, (b) the common elevators, pipes, ducts, conduits, wires and appurtenant fixtures and other common facilities serving the Premises, (c) common walkways and driveways (if any) necessary for access to the Building, and (d) if the Premises include less

 

3

 

than all of the rentable area of any floor of the Building, the common toilets and other common facilities located on such floor.

 

2.2          Term.  The term of this Lease shall be for a period beginning on the Commencement Date and expiring on May 31, 2025.

 

2.3          Measurement of the Premises.  Landlord and Tenant agree that the Premises Rentable Area identified in Section 1.1 is recited for Landlord’s administrative purposes only and that the actual measurement of the Premises may be more or less than the number identified, irrespective of measurement method used.

 

ARTICLE 3

 

Commencement and Condition

 

3.1          Commencement Date.  The Commencement Date shall be as specified in Section 1.1 above.

 

3.2          Condition of the Premises.  Tenant acknowledges that it occupies the Initial Premises and agrees to accept the same in “as is” condition on the Commencement Date and acknowledges that Landlord has completed all improvements it has required Landlord to perform and that Landlord shall have no obligation to make any alterations or improvements to the Premises or to provide Tenant with any funds for such purpose, except as hereinafter provided.  Landlord shall substantially complete the improvements to Suite 350, which Landlord and Tenant have agreed upon, on or before August 31, 2015, and the date of such substantial completion shall be the “Expansion Date”.

 

Provided this Lease is in full force and effect and Tenant is not in default hereunder, Landlord shall provide Tenant with an improvement allowance (“Landlord’s Contribution”) in an amount not to exceed the lesser of (i) one million dollars ($1,000,000), or (ii) the third-party costs actually incurred or paid by Tenant to design and construction any alterations to the Premises performed in accordance with this Lease following the Date of this Lease (“Initial Work”).  Tenant may requisition Landlord for payment of Landlord’s Contribution in monthly installments, as the Initial Work progresses.  Each requisition for payment of Landlord’s Contribution (or for a portion thereof) shall include (i) a detailed breakdown of the costs of the Initial Work paid or incurred to the date of the requisition, (ii) copies of invoices from Tenant’s contractor for all such costs, (iii) a certification to Landlord from Tenant that all of the work for which requisition is being made has been performed in accordance with plans and specifications approved by Landlord, and (iv) waivers and releases of liens from all parties providing labor or materials in connection with the Initial Work through the date of the requisition; and the final requisition must include a copy of any new or amended certificate of occupancy necessary for use of the Premises following performance of the Initial Work.  Landlord shall pay each requisition to Tenant, or, at Landlord’s election, directly to Tenant’s contractor, within thirty (30) days after Landlord’s receipt of the requisition together with all required supporting documentation; provided, however, that Landlord shall have no obligation to make payment of any of Landlord’s Contribution with respect to any request for payment received later than May 31, 2017, time being of the essence, or at any time that Tenant is in breach of its obligations

 

4

 

under the Lease, and any amounts not so requisitioned by such date shall be forfeited.  As of the date of each payment of any installment of Landlord’s Contribution, Annual Fixed Rent shall increase by an amount equal to the level monthly payment of principle and interest, in advance, necessary to repay such installment with interest at eight percent (8%) per annum over the then remainder of the term of this Lease.

 

Provided this Lease is in full force and effect and Tenant is not in default hereunder, Landlord shall also provide Tenant with a refurbishment allowance (the “Refurbishment Allowance”) in an amount equal to the lesser of (i) seven hundred and eight thousand one hundred and eighty dollars ($708,180), or (ii) the third party costs actually incurred or paid by Tenant to design and construct any alterations to the Premises performed in accordance with this Lease after completion of the Initial Work (“Refurbishment Work”).  Tenant may requisition Landlord for payment of the Refurbishment Allowance in monthly installments, as the Refurbishment Work progresses.  Each requisition for payment of the Refurbishment Allowance (or for a portion thereof) shall include (i) a detailed breakdown of the costs of Refurbishment Work paid or incurred to the date of the requisition, (ii) copies of invoices from Tenant’s contractor for all such costs, (iii) a certification to Landlord from Tenant that all of the work for which requisition is being made to the date of the requisition has been performed in accordance with plans and specifications therefor approved by Landlord, and (iv) waivers and releases of liens from all parties providing labor or materials in connection with the Refurbishment Work through the date of the requisition; and the final requisition must include a copy of any new or amended certificate of occupancy necessary for use of the Premises following performance of the Refurbishment Work.  Landlord shall pay each acquisition to Tenant, or, at Landlord’s election, directly to Tenant’s contractor, within thirty (30) days after Landlord’s receipt of the requisition with all required supporting documentation.  As of the date of each payment of any installment of Refurbishment Allowance, Annual Fixed Rent shall increase by an amount equal to the level monthly payment of principle and interest, in advance, necessary to repay such installment with interest at eight percent (8%) per annum over the then remaining term of this Lease.

 

ARTICLE 4

 

Rent, Additional Rent, Insurance and Other Charges

 

4.1          The Annual Fixed Rent.  Tenant shall pay Annual Fixed Rent to Landlord, or as otherwise directed by Landlord, without offset, abatement (except as provided in Article 7), deduction or demand.  Annual Fixed Rent shall be payable in equal monthly installments, in advance, on the first day of each and every calendar month during the term of this Lease, at the Address for Payment of Rent, or at such other place as Landlord shall from time to time designate by notice, by check drawn on a domestic bank.

 

4.2          Additional Rent.  Tenant shall pay to Landlord, as Additional Rent, Tenant’s Percentage of Taxes and Operating Costs as provided in Sections 4.2.1 and 4.2.2, and all other charges and amounts payable by or due from Tenant to Landlord (all such amounts referred to in this sentence being “Additional Rent”).

 

5

 

4.2.1       Real Estate Taxes.  If Taxes (as hereinafter defined) assessed against the Property (or estimated to be due by governmental authority) for any fiscal tax period (a “Tax Year”) during the term of this Lease shall exceed Base Taxes, whether due to increase in rate or reassessment of the Property, or both, Tenant shall reimburse Landlord, as Additional Rent, for Tenant’s Percentage of any such excess (such amount being hereinafter referred to as the “Tax Excess”). Tenant shall pay to Landlord, as Additional Rent on the first day of each calendar month during the term but otherwise in the manner provided for the payment of Annual Fixed Rent, estimated payments on account of the Tax Excess, such monthly amounts to be sufficient to provide Landlord by the time Tax payments are due or are to be made by Landlord a sum equal to the Tax Excess for the then current Tax Year, as reasonably estimated by Landlord from time to time. Within a reasonable period of time after the end of each Tax Year during the term, Landlord shall give Tenant a notice setting forth the amount of Taxes for the preceding Tax Year and a computation of any Tax Excess. If the total of Tenant’s monthly remittances on account of the Tax Excess for any Tax Year is greater than the Tax Excess for such Tax Year, Landlord shall credit such overpayment against Tenant’s subsequent obligations on account of Taxes (or promptly refund such overpayment if the term of this Lease has ended and Tenant has no further obligations to Landlord); if the total of such remittances is less than the Tax Excess for such Tax Year, Tenant shall pay the difference to Landlord within ten (10) days after being so notified by Landlord.

 

If the Commencement Date shall occur or the term of this Lease shall expire or be terminated during any Tax Year, or the Tax Year or if the period of assessment of real estate taxes is changed or be more or less than one (1) year, or if Tenant’s Percentage is modified during any Tax Year due to a change in the rentable area of the Building and/or the Premises or otherwise,  then the amount of Tax Excess which may be otherwise payable by Tenant as provided in this subsection 4.2.1 shall be pro-rated on a daily basis based.

 

“Taxes” shall mean all taxes, assessments, excises and other charges and impositions which are general or special, ordinary or extraordinary, foreseen or unforeseen, of any kind or nature which are levied, assessed or imposed by any governmental authority upon or against or with respect to the Property, Landlord or the owner or lessee of personal property used by or on behalf of Landlord in connection with the Property, or taxes in lieu thereof, and additional types of taxes to supplement real estate taxes due to legal limits imposed thereon.  If, at any time, any tax or excise on rents or other taxes, however described, are levied or assessed against Landlord, either wholly or partially in substitution for, or in addition to, real estate taxes assessed or levied on the Property, such tax or excise on rents or other taxes shall be included in Taxes; however, Taxes shall not include franchise, estate, inheritance, succession, capital levy, income (except to the extent that a tax on income or revenue is levied solely on rental revenues and not on other types of income and then only from rental revenue generated by the Property) or excess profits taxes assessed on Landlord.  Taxes also shall include all court costs, attorneys’, consultants’ and accountants’ fees, and other expenses incurred by Landlord in analyzing and contesting Taxes through and including all appeals.  Taxes shall include any estimated payment made by Landlord on account of a fiscal tax period for which the actual and final amount of taxes for such period has not been determined by the governmental authority as of the date of any such estimated payment.

 

6

 

4.2.2                     Operating Costs.  If, during the term hereof, Operating Costs (as hereinafter defined) paid or incurred by Landlord in any twelve-month period established by Landlord (an “Operating Year”) shall exceed Base Operating Costs, Tenant shall reimburse Landlord, as Additional Rent, for Tenant’s Percentage of any such excess (such amount being hereinafter referred to as the “Operating Cost Excess”). Tenant shall pay to Landlord, as Additional Rent, on the first day of each calendar month during the term but otherwise in the manner provided for the payment of Annual Fixed Rent, estimated payments on account of the Operating Cost Excess, such monthly amounts to be sufficient to provide to Landlord, by the end of each Operating Year, a sum equal to the Operating Cost Excess for such Operating Year, as estimated by Landlord from time to time. Within a reasonable period of time after the end of each Operating Year during the term, Landlord shall furnish to Tenant an itemized statement setting forth the amount of Operating Costs for the preceding Operating Year and a computation of any Operating Cost Excess, prepared and computed in accordance with Landlord’s prevailing customs and practices, consistently applied. Any such year-end statement by Landlord relating to Operating Costs shall be final and binding upon Tenant unless it shall within thirty (30) days after receipt thereof, contest any items therein by giving notice to Landlord specifying each item contested and the reasons therefor. If, at the expiration of each Operating Year in respect of which monthly installments on account of the Operating Cost Excess shall have been made as aforesaid, the total of such monthly remittances is greater than the Operating Cost Excess for such Operating Year, Landlord shall credit such overpayment against Tenant’s subsequent obligations on account of Operating Costs (or promptly refund such overpayment if the term of this Lease has ended and Tenant has no further obligation to Landlord); if the total of such remittances is less than the Operating Cost Excess for such Operating Year, Tenant shall pay the difference to Landlord within ten (10) days after being so notified by Landlord.  In no event shall Tenant be entitled to receive any reimbursement or credit if Operating Costs for any Operating Year are less than Base Operating Costs.

 

If the Commencement Date shall occur or the term of this Lease shall expire or be terminated during any Operating Year or Tenant’s Percentage be modified during any Operating Year due to a change in the rentable area of the Building and/or the Premises or otherwise, the amount of the Operating Cost Excess which may be payable by Tenant as provided in this subsection 4.2.2 shall be pro-rated on a daily basis.

 

“Operating Costs” shall be all costs and expenses paid or incurred for the operation, cleaning, management, maintenance, insurance, repair, replacement, decoration, upkeep, protection and security of the Property or any part or component thereof.

 

If any item of Operating Costs is a capital expenditure, Landlord may include in Operating Costs for such Operating Year in which such expenditure was made and in Operating Costs for each succeeding Operating Year an annual charge-off of such capital expenditure.  Annual charge-offs shall be determined by dividing the original capital expenditure plus an interest factor, reasonably determined by Landlord as being the interest rate then being charged for long-term mortgages by institutional lenders on like properties within the locality in which the Building is located, by the number of years of useful life of the improvement, repair, alteration or replacement made with the capital expenditure; as determined reasonably by Landlord.

 

7

 

In addition, if during any portion of any Operating Year for which Operating Costs are being computed, less than ninety five percent (95%) of the rentable area of the Building was leased to tenants or if Landlord is supplying less than ninety five percent (95%) of the rentable area of the Building with the services and utilities being supplied hereunder, actual Operating Costs incurred shall be reasonably projected by Landlord on an item-by-item basis to the estimated Operating Costs that would have been incurred if ninety five percent (95%) of the Building were occupied for such Operating Year and such services and utilities were being supplied to ninety five percent (95%) of the rentable area of the Building, and such projected amount shall, for the purposes hereof, be deemed to be the Operating Costs for such Operating Year.

 

4.3                               Personal Property Taxes.  Tenant shall pay all taxes charged, assessed or imposed upon the personal property of Tenant in or upon the Premises.

 

4.4                               Insurance.

 

4.4.1                     Insurance Policies.  Tenant shall, at its expense, take out and maintain, throughout the term of this Lease, the following insurance:

 

4.4.1.1                                   Commercial general liability insurance (on an occurrence basis, including without limitation, broad form contractual liability, bodily injury, property damage, fire legal liability, and products and completed operations coverage) under which Tenant is named as an insured and Landlord and Landlord’s Agent (and the holder of any mortgage on the Premises or Property, as set out in a notice from time to time) are named as additional insureds as their interests may appear, in an amount which shall, at the beginning of the term, be at least equal to the Commercial General Liability Insurance Limits, and, which, from time to time during the term, shall be for such higher limits, if any, as Landlord shall determine to be customarily carried in the area in which the Property is located for premises similar to the Premises which are used for similar purposes and which are located in properties comparable to the Building;

 

4.4.1.2                                   Worker’s compensation insurance with statutory limits covering all of Tenant’s employees working on the Premises;

 

4.4.1.3                                   So-called “special form” property insurance on a “replacement cost” basis with an agreed value endorsement covering all furniture, furnishings, fixtures and equipment and other personal property brought to the Premises by Tenant and anyone acting under Tenant and all improvements and betterments to the Premises performed at Tenant’s expense;

 

4.4.1.4                                   So-called “business income and extra expense” insurance covering twelve months loss of income; and

 

4.4.1.5                                   Such other insurance, in such amounts, as Landlord shall determine are customarily carried in the area in which the Property is located for premises similar to the Premises which are used for similar purposes and which are located in properties comparable to the Building.

 

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4.4.2                     Requirements.  All such policies shall contain deductibles not in excess of that reasonably approved by Landlord, shall contain a clause confirming that such policy and the coverage evidenced thereby shall be primary with respect to any insurance policies carried by Landlord and shall be obtained from responsible companies qualified to do business and in good standing in the state or district in which the Property is located, which companies shall have a general policy holder’s rating by A.M. Best of at least A+ X or otherwise be acceptable to Landlord.  A certificate of the insurer, certifying that such policy has been issued and paid in full, providing the coverage required by this Section and containing provisions specified herein, shall be delivered to Landlord prior to the commencement of the term of this Lease and, upon renewals, not less than thirty (30) days prior to the expiration of such coverage.  Each such policy shall be non-cancelable and not materially changed with respect to the interest of Landlord and such mortgagees of the Property (and others that are in privity of estate with Landlord of which Landlord provides notice to Tenant from time to time) without at least thirty (30) days’ prior written notice thereto.  Any insurance required of Tenant under this Lease may be furnished by Tenant under a blanket policy carried by it provided that such blanket policy shall reference the Premises, and shall guarantee a minimum limit available for the Premises equal to the insurance amounts required in this Lease.

 

4.4.3                     Waiver of Subrogation.  Landlord and Tenant shall each endeavor to secure an appropriate clause in, or an endorsement upon, each property damage insurance policy obtained by it and covering the Building, the Premises or the personal property, fixtures and equipment located therein or thereon, pursuant to which the respective insurance companies waive subrogation and permit the insured, prior to any loss, to agree with a third party to waive any claim it might have against said third party.  The waiver of subrogation or permission for waiver of any claim hereinbefore referred to shall extend to the agents of each party and its employees and, in the case of Tenant, shall also extend to all other persons and entities occupying or using the Premises by, through or under Tenant.  If and to the extent that such waiver or permission can be obtained only upon payment of an additional charge then the party benefiting from the waiver or permission shall pay such charge upon demand, or shall be deemed to have agreed that the party obtaining the insurance coverage in question shall be free of any further obligations under the provisions hereof relating to such waiver or permission from such insurance companies.

 

Subject to the foregoing provisions of this Subsection 4.4.3, and insofar as may be permitted by the terms of the property insurance policies carried by it, each party hereby releases the other with respect to any claim which it might otherwise have against the other party for any loss or damage to its property to the extent such damage is actually covered or would have been covered by policies of property insurance required by this Lease to be carried by the respective parties hereunder.  In addition, Tenant agrees to exhaust any and all claims against its insurer(s) prior to commencing an action against Landlord for any loss covered by insurance required to be carried by Tenant hereunder.

 

4.5                               Utilities.  Tenant shall during the term pay all electricity charges allocable to the Premises and all charges for telephone and other utilities or services not supplied by Landlord pursuant to Subsections 5.1.1 and 5.1.2, whether designated as a charge, tax, assessment, fee or otherwise, all such charges to be paid as the same from time to time become due.  Except as otherwise provided in this Subsection 4.5 or in Article 5, it is understood and agreed that Tenant

 

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shall make its own arrangements for the installation or provision of all utilities and services and that Landlord shall be under no obligation to furnish any utilities to the Premises.

 

Tenant acknowledges that Annual Fixed Rent does not include the cost of supplying electricity to the Premises. Electricity supplied to a portion of the Premises located on the second floor is submetered and the electricity supplied to the remainder of the Premises is separately metered. Tenant shall pay to Landlord, as Additional Rent, the cost to Landlord of the submetered electricity supplied to the Premises, as reasonably determined by Landlord on the basis of such submetering and the cost of maintaining and repairing the submeter. Tenant shall contract directly with the public utility for all other electricity supplied to the Premises and shall pay all bills therefor when due. Tenant shall also be responsible, at its expense, for any necessary maintenance, repair or replacement of the separate electric meter(s) serving the Premises.

 

4.6                               Late Payment of Rent.  If any installment of Annual Fixed Rent or any Additional Rent is not paid on or before the date the same is due, it shall bear interest (as Additional Rent) from the date due until the date paid at the Default Rate (as defined in Section 8.4).  Absent specific provision to the contrary, all Additional Rent shall be due and payable in full thirty (30) days after written demand by Landlord.

 

ARTICLE 5

 

Landlord’s Covenants

 

5.1                               Affirmative Covenants.  Landlord shall provide the following:

 

5.1.1                     Heat and Air-Conditioning.  Landlord shall provide and maintain heat, ventilation and air-conditioning (“HVAC”) equipment sufficient to maintain the Premises at comfortable temperatures for general office use, subject to all federal, state and municipal regulations, during Normal Building Operating Hours (as defined in the Rules and Regulations) and subject to compliance by Tenant with the following and the provisions of Section 6.2.4.  If Tenant shall require HVAC at times other than Normal Building Operating Hours, Landlord may furnish such service and Tenant shall pay therefor such charges as may from time to time be in effect.  If the temperature otherwise maintained in any portion of the Premises by the HVAC system is affected as a result of (i) the type or quantity of any lights, machines or equipment used by Tenant in the Premises, (ii) the occupancy of any portion of the Premises by more than one person per two hundred (200) square feet of rentable area, (iii) an electrical load for lighting or power in excess of the limits specified in Section 6.2.4, or (iv) any partitioning or other improvements installed by Tenant, then at Tenant’s sole cost, Landlord may install any equipment, or modify any existing equipment Landlord deems necessary to restore the temperature balance.  Tenant agrees to keep closed, when necessary, blinds or other window treatments which, because of the sun’s position, must be closed to provide for the efficient operation of the air conditioning system, and Tenant agrees to cooperate with Landlord and to abide by the reasonable regulations and requirements which Landlord may prescribe for the proper functioning and protection of the HVAC system.  Landlord shall have no responsibility for providing any service from Separate HVAC Equipment, as defined in Section 6.1.3.

 

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5.1.2                     Cleaning; Water.  Landlord shall provide cleaning, maintenance and landscaping to the common areas of the Building and Property (including snow removal to the extent necessary to maintain reasonable access to the Building) in accordance with standards generally prevailing throughout the term hereof in comparable office buildings in the Newton, Massachusetts area; and furnish water for ordinary drinking, lavatory and toilet facilities (as opposed to special laboratory or other uses in excess of general office uses) and shall cause the Premises to be cleaned in accordance with the standards set forth in Exhibit G.  Tenant shall pay to Landlord upon invoice the actual costs incurred by Landlord for (x) extra cleaning work in the Premises required because of carelessness, indifference, misuse or neglect on the part of Tenant or its subtenants or its or their employees or visitors, and (y) removal from the Premises and the Building of any refuse and rubbish of Tenant in excess of that ordinarily accumulated in business office occupancy, including, without limitation, kitchen refuse, or at times other than Landlord’s standard cleaning times.  Notwithstanding the foregoing, Landlord shall not be required to clean any portions of the Premises used for preparation, serving or consumption of food or beverages or other special purposes if same require greater or more difficult cleaning work than office areas, and Tenant agrees, at Tenant’s expense, to retain Landlord’s cleaning contractor to perform such extra cleaning, provided that the charges of such cleaning contractor shall be commercially reasonable.

 

Landlord, its cleaning contractor and their respective employees shall have access to the Premises after 6:00 p.m. and before 8:00 a.m. and shall have the right to use, without charge therefor, all light, power and water in the Premises reasonably required to clean the Premises as required hereunder.

 

If Tenant uses water for any purpose other than ordinary drinking, lavatory and toilet purposes, Landlord may assess a reasonable charge for the additional water so used, or install a water meter and thereby measure Tenant’s water consumption for all purposes.  In the latter event, Tenant shall pay the cost of the meter and the cost of installation thereof and shall keep such meter and installation equipment in good working order and repair.  Tenant agrees to pay for water consumed, as shown on such meter, together with the sewer charge based on such meter charges, as and when bills are rendered, and if Tenant shall fail to make such payment, Landlord may pay such charges and collect the same from Tenant as Additional Rent.

 

5.1.3                     Elevator, Lighting and Electricity.  Landlord shall furnish non-exclusive passenger elevator service from the lobby to the Premises; purchase and install, at Tenant’s expense, all building standard lamps, tubes, bulbs, starters and ballasts for lighting fixtures in the Premises; provide lighting to public and common areas of the Property; and arrange for the supply of electrical power to the Premises to accommodate a load not exceeding the limitations contained in Section 6.2.4.

 

5.1.4                     Repairs.  Except as otherwise expressly provided herein, Landlord shall make such repairs and replacements to the roof, exterior walls, floor slabs and other structural components of the Building, and to the common areas and facilities of the Building (including any common plumbing, electrical and HVAC equipment, elevators and any other common equipment or systems in the Building) as may be necessary to keep them in good repair and condition (exclusive of equipment installed by Tenant and except for those repairs required to be made by Tenant pursuant to Subsection 6.1.3 hereof and repairs or replacements occasioned by

 

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any act or negligence of Tenant, its servants, agents, customers, contractors, employees, invitees, or licensees).

 

5.2                               Interruption.  Landlord shall have no responsibility or liability to Tenant for failure, interruption, inadequacy, defect or unavailability of any services, facilities, utilities, repairs or replacements or for any failure or inability to provide access or to perform any other obligation under this Lease caused by breakage, accident, fire, flood or other casualty, strikes or other labor trouble, order or regulation of or by any governmental authority, inclement weather, repairs, inability to obtain or shortages of utilities, supplies, labor or materials, war, civil commotion or other emergency, transportation difficulties or due to any act or neglect of Tenant or Tenant’s servants, agents, employees or licensees or for any other cause beyond the reasonable control of Landlord, and in no event shall Landlord be liable to Tenant for any indirect or consequential damages suffered by Tenant due to any such failure, interruption, inadequacy, defect or unavailability; and failure or omission on the part of Landlord to furnish any of same for any of the reasons set forth in this paragraph shall not be construed as an eviction of Tenant, actual or constructive, nor entitle Tenant to an abatement of rent, nor render the Landlord liable in damages, nor release Tenant from prompt fulfillment of any of its covenants under this Lease.

 

Landlord reserves the right to deny access to the Building and to interrupt the services of the HVAC, plumbing, electrical or other mechanical systems or facilities in the Building when necessary from time to time by reason of accident or emergency, or for repairs, alterations, replacements or improvements which in the reasonable judgment of Landlord are desirable or necessary, until such repairs, alterations, replacements or improvements shall have been completed.  Landlord shall use reasonable efforts to minimize the duration of any such interruption and to give to Tenant at least three (3) days’ notice if service is to be interrupted, except in cases of emergency.

 

5.3                               Outside Services.  In the event Tenant wishes to obtain services or to hire vendors relating to the Premises, Tenant shall first obtain the prior approval of Landlord for the installation and/or utilization of such services or vendors.  Such services shall include, but shall not be limited to, utility providers, security services, moving services, equipment installers, catering services and the like.  Notwithstanding any Landlord approval of the installation and/or utilization of such services or vendors, such installation and utilization shall be at Tenant’s sole cost, risk and expense.

 

5.4                               Access to Building.  During Normal Building Operating Hours, the Building shall, subject to the provisions of Section 5.2, be open and access to the Premises shall be freely available, subject to the Rules and Regulations.  During periods other than Normal Building Operating Hours, Tenant shall have access to the Premises, but such access shall also be subject to the Rules and Regulations.  As of the Date of this Lease, access to the Building outside of Normal Building Operating Hours is regulated by an electronic perimeter access control system. Landlord shall issue Tenant a reasonable number of access cards for such system at no additional charge. Tenant shall be responsible for requesting cancellation of any access cards issued to Tenant, and that Landlord may charge a reasonable fee for any new or replacement access cards requested by Tenant. Tenant acknowledges that Tenant is responsible for providing security to the Premises following Tenant’s entry onto the Premises for any reason and for its own

 

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personnel whenever located therein.  Subject to the foregoing, Landlord shall, at all times, retain the right to control and prevent such access by all persons whose presence, in the sole discretion of Landlord, may jeopardize the safety, protection, character, reputation and interests of the Building and its tenants or occupants.  Landlord shall in no case be liable for damages resulting from any error with regard to the admission or exclusion of any person from the Building.

 

5.5                               Parking.  During the term, Tenant and its employees and invitees may use without additional charge by Landlord a total of up to 2.1 parking spaces for every 1,000 square feet of Premises Rentable Area rounded down to the nearest whole number (initially one hundred sixteen (116) and increasing to one hundred forty-eight (148) as of the Expansion Date), in the parking garage located in the Building (the “Parking Facility”). All parking spaces made available to Tenant hereunder shall be unreserved and available on a first-come, first-served basis until further notice from Landlord. Tenant may not give any parties, other than its employees and any invitees to the Premises, rights to use any of the parking spaces to which Tenant is entitled hereunder. The Parking Facility shall be used for the parking of passenger vehicles. Landlord reserves the right to (a) implement and modify systems to regulate access to and use of the Parking Facility, (b) designate and redesignate reserved and unreserved parking areas within the Parking Facility (for some or all tenants), (c) change entrances or exits and alter traffic flow within the Parking Facility, and (d) modify the Parking Facility to any extent provided that the aggregate number of unreserved parking spaces in the Parking Facility is not materially reduced so as to deprive Tenant of the parking ratio hereinabove specified. Notwithstanding the foregoing, Landlord further reserves the right to close the Parking Facility or portions thereof temporarily to the extent necessary for maintenance and repairs. Tenant acknowledges that Landlord is not required to provide any security or security services for any of the Parking Facility. Tenant hereby indemnifies and agrees to defend and hold Landlord harmless from and against all claims, loss, cost, or damage arising out of the use by Tenant and its employees and invitees of the Parking Facility, except to the extent caused by gross negligence or willful misconduct of Landlord or Landlord’s agent or employees. Tenant shall, and shall cause its employees to, comply with all reasonable rules and regulations pertaining to the Parking Facility, as the same may be established, amended, revised or supplemented by Landlord.

 

ARTICLE 6

 

Tenant’s Additional Covenants

 

6.1                               Affirmative Covenants.  Tenant shall do the following:

 

6.1.1                     Perform Obligations.  Tenant shall perform promptly all of the obligations of Tenant set forth in this Lease; and pay when due the Annual Fixed Rent and Additional Rent and all other amounts which by the terms of this Lease are to be paid by Tenant.

 

6.1.2                     Use.  Tenant shall, during the term of this Lease, use the Premises only for the Permitted Uses and from time to time, procure and maintain all licenses and permits necessary therefor and for any other use or activity conducted at the Premises, at Tenant’s sole expense.

 

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6.1.3                     Repair and Maintenance.  Tenant shall, during the term of this Lease, maintain the Premises in neat and clean order and condition and perform all repairs to the Premises and all fixtures, systems, and equipment therein (including Tenant’s equipment and other personal property and any HVAC Equipment serving all or any portion of the Premises to the exclusion of any other space in the Building (“Separate HVAC Equipment”)) as are necessary to keep them in good and clean working order, appearance and condition, reasonable use and wear thereof and damage by fire or by unavoidable casualty only excepted and shall replace any damaged or broken glass in windows and doors of the Premises (except glass in the exterior walls of the Building) with glass of the same quality as that damaged or broken.

 

6.1.4                     Compliance with Law.  Tenant shall, during the term of this Lease, make all repairs, alterations, additions or replacements to the Premises required by any law or ordinance or any order or regulation of any public authority; keep the Premises safe and equipped with all safety appliances so required; and comply with, and perform all repairs, alterations, additions or replacements required by, the orders and regulations of all governmental authorities with respect to zoning, building, fire, health and other codes, regulations, ordinances or laws applicable to the Premises or other portions of the Property and arising out of any use being conducted in or on the Premises or arising out of any work performed by Tenant.

 

6.1.5                     Indemnification.  Tenant shall neither hold, nor attempt to hold, Landlord or its employees or Landlord’s agents or their employees liable for, and Tenant shall indemnify and hold harmless Landlord, its employees and Landlord’s agents and their employees from and against, any and all demands, claims, causes of action, fines, penalties, damage, liabilities, judgments and expenses (including, without limitation, attorneys’ fees) incurred in connection with or arising from:  (i) the use or occupancy or manner of use or occupancy of the Premises by Tenant or any person claiming under Tenant; (ii) any matter occurring on the Premises during the term; (iii) any acts, omissions or negligence of Tenant or any person claiming under Tenant, or the contractors, agents, employees, invitees or visitors of Tenant or any such person; (iv) any breach, violation or nonperformance by Tenant or any person claiming under Tenant or the employees, agents, contractors, invitees or visitors of Tenant or any such person of any term, covenant or provision of this Lease or any law, ordinance or governmental requirement of any kind; (v) claims of brokers or other persons for commissions or other compensation arising out of any actual or proposed sublease of any portion of the Premises or assignment of Tenant’s interest under this Lease, or Landlord’s denial of consent thereto or exercise of any of Landlord’s other rights under Section 6.2.1; and (vi ) any injury or damage to the person, property or business of Tenant, its employees, agents, contractors, invitees, visitors or any other person entering upon the Property under the express or implied invitation of Tenant. Notwithstanding the foregoing in no event shall this Section 6.1.5 require Tenant to indemnify or defend Landlord or its employees or Landlord’s agents or their employees against any loss, cost, damage, liability, claim, or expense to the extent arising out of the gross negligence or willful misconduct of Landlord or its employees or Landlord’s agents or their employees.

 

6.1.6                     Landlord’s Right to Enter.  Tenant shall, during the term of this Lease, permit Landlord and its agents and invitees to enter into and examine the Premises at reasonable times and to show the Premises to prospective lessees, lenders, partners and purchasers and others having a bona fide interest in the Premises, and to make such repairs, alterations and improvements and to perform such testing and investigation as Landlord shall reasonably

 

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determine to make or perform, and, during the last six (6) months prior to the expiration of this Lease, to keep affixed in suitable places notices of availability of the Premises.

 

6.1.7                     Personal Property at Tenant’s Risk.  Tenant shall, during the term of this Lease keep, at the sole risk and hazard of Tenant, all of the furnishings, fixtures, equipment, effects and property of every kind, nature and description of Tenant and of all persons claiming by, through or under Tenant which may be on the Property, and if the whole or any part thereof shall be lost, destroyed or damaged by fire, water or otherwise, or by the leakage or bursting of water pipes, steam pipes, or other pipes, by theft or from any other cause, Tenant shall hold harmless and indemnify Landlord from and against any and all injury, loss, damage or liability to Tenant or to any other person or entity arising out of said loss or damage.

 

6.1.8                     Payment of Landlord’s Cost of Enforcement.  Tenant shall pay on demand Landlord’s expenses, including reasonable attorneys’ fees, incurred in enforcing any obligation of Tenant under this Lease or in curing any default by Tenant under this Lease as provided in Section 8.4.

 

6.1.9                     Yield Up.  Tenant shall, at the expiration or earlier termination of the term of this Lease, or upon any earlier reentry or retaking of possession of the Premises by Landlord and/or termination of Tenant’s right of possession and/or occupancy of the Premises, as applicable, surrender all keys to the Premises; remove all of its trade fixtures and personal property in the Premises; remove such installations (including wiring and cabling wherever located), alterations, signs, and improvements made (or if applicable, restore any items removed) by or on behalf of Tenant as Landlord may request wherever located and all of Tenant’s signs; repair all damage caused by such removal; and vacate and yield up the Premises (including all installations, alterations, signs and improvements made by or on behalf of Tenant except as Landlord shall request Tenant to remove), broom clean and in the same good order and repair in which Tenant is obliged to keep and maintain the Premises by the provisions of this Lease.  If Landlord so requests, Tenant, at its sole cost and expense, shall properly cap or seal its wiring and cabling (wherever located) at each end, properly label such wiring and cabling for future use, and surrender such wiring and cabling in a good and safe condition on or before the earlier of (i) the expiration or earlier termination of the term of this Lease, or (ii) the date on which Tenant discontinues the use of such wiring and cabling.  Any property not so removed shall be deemed abandoned and may be removed and disposed of by Landlord in such manner as Landlord shall determine and Tenant shall pay Landlord the entire cost and expense incurred by it in effecting such removal and disposition and in making any incidental repairs and replacements to the Premises and for use and occupancy during the period after the expiration or earlier termination of the term of this Lease and prior to the performance by Tenant of its obligations under this subsection 6.1.9.  Tenant shall further indemnify Landlord against all loss, cost and damage resulting from Tenant’s failure or delay in surrendering the Premises as above provided.

 

6.1.10              Rules and Regulations.  Tenant shall, during the term of this Lease, observe and abide by the Rules and Regulations of the Building set forth as Exhibit B, as the same may from time to time be amended, revised or supplemented (the “Rules and Regulations”) and shall cause its employees agents and visitors to do the same.

 

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6.1.11              Estoppel Certificate.  Tenant shall, within ten (10) days’ following written request by Landlord, execute, acknowledge and deliver to Landlord a statement in form satisfactory to Landlord in writing certifying that this Lease is unmodified and in full force and effect and that Tenant has no defenses, offsets or counterclaims against its obligations to pay the Annual Fixed Rent and Additional Rent and any other charges and to perform its other covenants under this Lease (or, if there have been any modifications, that this Lease is in full force and effect as modified and stating the modifications and, if there are any defenses, offsets or counterclaims, setting them forth in reasonable detail), the dates to which the Annual Fixed Rent and Additional Rent and other charges have been paid, and any other matter pertaining to this Lease.  Any such statement delivered pursuant to this subsection 6.1.11 may be relied upon by any prospective purchaser or mortgagee of the Property, or any prospective assignee of such mortgage.

 

6.1.12              Landlord’s Expenses For Consents.  Tenant shall reimburse Landlord, as Additional Rent, promptly on demand for all reasonable legal, engineering and other professional services expenses incurred by Landlord in connection with all requests by Tenant for consent or approval hereunder.

 

6.2                               Negative Covenants.  Tenant shall not do the following.

 

6.2.1                     Assignment and Subletting.  Tenant shall not directly or indirectly assign, mortgage, pledge, hypothecate, encumber or otherwise transfer this Lease or any interest herein or sublease (which term shall be deemed to include the granting of concessions and licenses and the like) all or any part of the Premises or suffer or permit this Lease or the leasehold estate hereby created or any other rights arising under this Lease to be assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether voluntarily, involuntarily or by operation of law, or permit the use or occupancy of the Premises by anyone other than Tenant, or the Premises to be offered or advertised for assignment or subletting without the prior written consent of Landlord which shall not be unreasonably withheld.

 

6.2.2                     Nuisance.  Tenant shall not injure, deface or otherwise harm the Premises; nor commit any nuisance; nor permit in the Premises any vending machine (except such as is used for the sale of merchandise to employees of Tenant) or inflammable fluids or chemicals (except such as are customarily used in connection with standard office equipment); nor permit any cooking to such extent as requires special exhaust venting; nor permit the emission of any objectionable noise or odor; nor make, allow or suffer any waste; nor make any use of the Premises which is improper, offensive or contrary to any law or ordinance or which will invalidate or increase the premiums for any of Landlord’s insurance or which is liable to render necessary any alteration or addition to the Building; nor conduct any auction, fire, “going out of business” or bankruptcy sales.

 

6.2.3                     Floor Load; Heavy Equipment.  Tenant shall not place a load upon any floor of the Premises exceeding the lesser of the floor load capacity which such floor was designed to carry or which is allowed by law. Tenant shall not move any safe, heavy machinery, heavy equipment, freight, construction materials or fixtures into or out of the Premises without Landlord’s prior consent which shall not be unreasonably withheld.

 

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6.2.4                     Electricity.  Tenant shall not connect to the electrical distribution system serving the Premises any equipment which shall cause Tenant’s electrical load to exceed the lesser of the capacity of such system or the maximum load permitted from time to time under applicable governmental regulations.

 

6.2.5                     Installation, Alterations or Additions.  Tenant shall not make any installations, alterations, additions or improvements (collectively and individually referred to in this paragraph as “work”) in, to or on the Premises nor permit the making of any holes in the walls, partitions, ceilings or floors without on each occasion obtaining the prior consent of Landlord, and then only pursuant to plans and specifications approved by Landlord in advance in each instance.  All work to be performed to the Premises by Tenant shall (i) be performed in a good and workmanlike manner by contractors approved in advance by Landlord and in compliance with the provisions of Exhibit C and all applicable zoning, building, fire, health and other codes, regulations, ordinances and laws, (ii) be made at Tenant’s sole cost and expense and at such times and in such a manner as Landlord may from time to time designate, and (iii) be free of liens and encumbrances and become part of the Premises and the property of Landlord without being deemed additional rent for tax purposes, Landlord and Tenant agreeing that Tenant shall be treated as the owner of the work for tax purposes until the expiration or earlier termination of the term hereof, subject to Landlord’s rights pursuant to Section 6.1.9 to require Tenant to remove the same at or prior to the expiration or earlier termination of the term hereof and, to the extent Landlord shall make such election, title thereto shall remain vested in Tenant at all times.  Tenant shall pay promptly when due the entire cost of any work to the Premises so that the Premises, Building and Property shall at all times be free of liens, and, at Landlord’s request, Tenant shall furnish to Landlord a bond or other security acceptable to Landlord assuring that any such work will be completed in accordance with the plans and specifications theretofore approved by Landlord and assuring that the Premises will remain free of any mechanics’ lien or other encumbrances that may arise out of such work.  Prior to the commencement of any such work, and throughout and until completion thereof, Tenant shall maintain, or cause to be maintained, the insurance required by Exhibit D, all with coverage limits as stated therein or such higher limits as shall be reasonably required by Landlord.

 

6.2.6                     Signs.  Tenant shall not paint or place any signs or place any curtains, blinds, shades, awnings, aerials, or the like, visible from outside the Premises.  Landlord shall not unreasonably withhold consent for signs or lettering on or adjacent to the entry doors to the Premises provided such signs conform to building standards adopted by Landlord and Tenant has submitted to Landlord a plan or sketch of the sign to be placed on such entry doors.  Landlord agrees, however, to maintain a tenant directory in the lobby of the Building in which will be placed Tenant’s name and the location of the Premises in the Building.

 

6.2.7                     Oil and Hazardous Materials.  Tenant shall not introduce on or transfer to the Premises or Property, any Hazardous Materials (as hereinafter defined); nor dump, flush or otherwise dispose of any Hazardous Materials into the drainage, sewage or waste disposal systems serving the Premises or Property; nor generate, store, use, release, spill or dispose of any Hazardous Materials in or on the Premises or the Property, or to transfer any Hazardous Materials from the Premises to any other location; and Tenant shall not commit or suffer to be committed in or on the Premises or Property any act which would require any reporting or filing

 

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of any notice with any governmental agency pursuant to any statutes, laws, codes, ordinances, rules or regulations, present or future, applicable to the Property or to Hazardous Materials.

 

Tenant agrees that if it shall generate, store, release, spill, dispose of or transfer to the Premises or Property any Hazardous Materials, it shall forthwith remove the same, at its sole cost and expense, in the manner provided by all applicable Environmental Laws (as hereinafter defined), regardless of when such Hazardous Materials shall be discovered.  Furthermore, Tenant shall pay any fines, penalties or other assessments imposed by any governmental agency with respect to any such Hazardous Materials and shall forthwith repair and restore any portion of the Premises or Property which it shall disturb in so removing any such Hazardous Materials to the condition which existed prior to Tenant’s disturbance thereof.

 

Tenant agrees to deliver promptly to Landlord any notices, orders or similar documents received from any governmental agency or official concerning any violation of any Environmental Laws or with respect to any Hazardous Materials affecting the Premises or Property.  In addition, Tenant shall, within ten (10) days of receipt, accurately complete any questionnaires from Landlord or other informational requests relating to Tenant’s use of the Premises and, in particular, to Tenant’s use, generation, storage and/or disposal of Hazardous Materials at, to, or from the Premises.

 

Tenant shall indemnify, defend (by counsel satisfactory to Landlord), protect, and hold Landlord free and harmless from and against any and all claims, or threatened claims, including without limitation, claims for death of or injury to any person or damage to any property, actions, administrative proceedings, whether formal or informal, judgments, damages, punitive damages, liabilities, penalties, fines, costs, taxes, assessments, forfeitures, losses, expenses, attorneys’ fees and expenses, consultant fees, and expert fees that arise from or are caused in whole or in part, directly or indirectly, by (i) the presence or suspected presence in, on, under or about the Premises or discharge in or from the Premises of any Hazardous Materials, or Tenant’s use, analysis, storage, transportation, disposal, release, threatened release, discharge or generation of Hazardous Materials to, in, on, under, about or from the Premises, or (ii) Tenant’s failure to comply with any Environmental Laws.  Tenant’s obligations hereunder shall include, without limitation, and whether foreseeable or unforeseeable, all costs (including, without limitation, capital, operating and maintenance costs) incurred in connection with any investigation or monitoring of site conditions, repair, cleanup, containment, remedial, removal or restoration work, or detoxification or decontamination of the Premises, and the preparation and implementation of any closure, remedial action or other required plans in connection therewith.  For purposes of this Section 6.2.7, any acts or omissions of Tenant, or its subtenants or assignees or its or their employees, agents, or contractors (whether or not they are negligent, intentional, willful or unlawful) shall be attributable to Tenant.

 

The term “Hazardous Materials” shall mean and include any oils, petroleum products, asbestos, radioactive, biological, medical or infectious wastes or materials, and any other toxic or hazardous wastes, materials and substances which are defined, determined or identified as such in any Environmental Laws, or in any judicial or administrative interpretation of Environmental Laws.

 

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The term “Environmental Laws” shall mean any and all federal, state and municipal statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, codes, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, petroleum or petroleum products, medical, biological, infectious, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, medical, biological, infectious, toxic or hazardous substances or wastes or the cleanup or other remediation thereof.

 

ARTICLE 7

 

Casualty or Taking

 

7.1                               Termination.  In the event that the Premises or the Property, or any material part thereof shall be destroyed or damaged by fire or casualty, shall be taken by any public authority or for any public use or shall be condemned by the action of any public authority, then the term of this Lease may be terminated at the election of Landlord.  Such election, which may be made notwithstanding the fact that Landlord’s entire interest may have been divested, shall be made by the giving of notice by Landlord to Tenant within one hundred twenty (120) days after the date of the taking or casualty.

 

7.2                               Restoration.  If Landlord does not elect to so terminate, this Lease shall continue in force and (so long as the damage is not caused by the negligence or other wrongful act of Tenant or its employees, agents, contractors or invitees) a just proportion of the Annual Fixed Rent reserved, according to the nature and extent of the damages sustained by the Premises, shall be suspended or abated until the Premises (excluding any improvements to the Premises made at Tenant’s expense), or what may remain thereof, shall be put by Landlord in proper condition for use, which Landlord covenants to do with reasonable diligence to the extent permitted by the net proceeds of insurance recovered or damages awarded for such destruction, taking, or condemnation and subject to zoning and building laws or ordinances then in existence.  “Net proceeds of insurance recovered or damages awarded” refers to the gross amount of such insurance or damages actually made available to Landlord (and not retained by any Superior Lessor or Superior Mortgagee) less the reasonable expenses of Landlord incurred in connection with the collection of the same, including without limitation, fees and expenses for legal and appraisal services.

 

7.3                               Award.  Irrespective of the form in which recovery may be had by law, all rights to seek reimbursement for damages or compensation arising from fire or other casualty or any taking by eminent domain or condemnation shall belong to Landlord in all cases.  Tenant hereby grants to Landlord all of Tenant’s rights to such claims for damages and compensation and covenants to deliver such further assignments thereof as Landlord may from time to time request.  Nothing contained herein shall be construed to prevent Tenant from prosecuting in any condemnation proceedings a claim for relocation expenses, provided that such action shall not affect the amount of compensation otherwise recoverable by Landlord from the taking authority.

 

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7.4                               Effect of Casualty or Taking on the Tax Excess and the Operating Cost Excess.  In the event of any taking, condemnation or damage by fire or casualty affecting the Property whereby the term of this Lease shall not terminate pursuant to the provisions of Section 7.1, then for purposes of determining the Operating Cost Excess or Tax Excess there shall be established new Base Taxes and Base Operating Costs as hereinafter provided.  Base Taxes shall be a product of the initial Base Taxes as recited in Section 1.1 multiplied by a fraction, the numerator of which shall be the Taxes for the first full Tax Year subsequent to the taking, condemnation or damage which reflects the occurrence of such taking, condemnation or damage (the “Revised Tax Year”), and the denominator of which shall be the Taxes for the full Tax Year prior to such taking, condemnation or damage; and Base Operating Costs shall be the product of the initial Base Operating Costs as recited in Section 1.1 multiplied by a fraction, the numerator of which shall be Operating Costs for the first full Operating Year subsequent to such taking, condemnation or damage which reflects the occurrence of such taking, condemnation or damage (the “Revised Operating Year”) and the denominator of which shall be the Operating Costs for the full Operating Year prior to such taking, condemnation or damage.  The foregoing revisions shall be effective as of the first day of the Revised Tax Year or the Revised Operating Year (as applicable).  Effective as of the date of any such taking, condemnation or damage, Tenant’s Percentage shall be adjusted appropriately to reflect the change, if any, in the rentable area of the Premises and/or the rentable area of the Building.

 

ARTICLE 8

 

Defaults

 

8.1                               Default of Tenant.  (a) (I) If Tenant shall default in its obligations to pay the Annual Fixed Rent or Additional Rent or any other charges or amounts under this Lease when due or shall default in complying with its obligations under Subsection 6.1.11 of this Lease and if any such default shall continue for five (5) days after notice from Landlord designating such default, or (II) if as promptly as possible but in any event within thirty (30) days after notice from Landlord to Tenant specifying any default or defaults other than those set forth in clause (I) Tenant has not cured the default or defaults so specified; or (b) if any assignment shall be made by Tenant for the benefit of creditors; or (c) if Tenant’s leasehold interest shall be taken on execution; or (d) if a lien or other involuntary encumbrance shall be filed against Tenant’s leasehold interest or Tenant’s other property, including said leasehold interest, and shall not be discharged within ten (10) days thereafter; or (e) if a petition shall be filed by Tenant for liquidation, or for reorganization or an arrangement under any provision of any bankruptcy law or code as then in force and effect; or (f) if an involuntary petition under any of the provisions of any bankruptcy law or code shall be filed against Tenant and such involuntary petition shall not be dismissed within thirty (30) days thereafter; or (g) if a custodian or similar agent shall be authorized or appointed to take charge of all or substantially all of the assets of Tenant or (h) if Tenant dissolves or shall be dissolved or shall liquidate or shall adopt any plan or commence any proceeding, the result of which is intended to include dissolution or liquidation; or (i) if any order shall be entered in any proceeding by or against Tenant decreeing or permitting the dissolution of Tenant or the winding up of its affairs; or (j) if Tenant shall fail to pay any installment of Annual Fixed Rent or Additional Rent when due, Tenant shall cure such default within the grace period provided in clause (a) (I) above (or with Landlord’s approval after the expiration of such grace period) and Tenant shall, within the next year following the date such

 

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initial defaulted payment was first due, fail more than once to pay any installment of Annual Fixed Rent or Additional Rent when due, then, and in any of such cases indicated in clauses (a) through (j) hereof (collectively and individually, a “Default of Tenant”), Landlord may, in addition to and not in derogation of any remedies for any preceding breach of covenant, immediately or at any time thereafter (x) give notice to Tenant terminating this Lease and/or the term hereof, which notice shall specify the date of such termination, whereupon on the date so specified, the term of this Lease and all of Tenant’s rights and privileges under this Lease shall expire and terminate or (y) without terminating this Lease terminate Tenant’s right of possession and/or occupancy and reenter and take possession of the Premises or any part thereof, without notice and expel Tenant and any party claiming under Tenant and remove any of their effects, without being liable on account thereof, whether in trespass or breach or covenant or otherwise, (and no such reentry or taking possession shall be construed as an election by Landlord to terminate this Lease unless Landlord shall affirm such election by notice expressly to such effect), but in either case Tenant shall remain liable as hereinafter provided.

 

8.2                               Remedies.  In the event of any termination of this Lease or the term hereof pursuant to Section 8.1, Tenant shall pay the Annual Fixed Rent, Additional Rent and other charges payable hereunder up to the time of such termination.  Thereafter, whether or not the Premises shall have been re let, Tenant shall be liable to Landlord for, and shall pay to Landlord the Annual Fixed Rent, Additional Rent and other charges which would be payable hereunder for the remainder of the term of this Lease had such termination not occurred, less the net proceeds, if any, of any reletting of the Premises, after deducting all expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage commissions, attorneys’ fees and expenses, advertising costs, administration expenses, alteration costs, the value of any tenant inducements (including but without limitation free rent, moving costs, and contributions toward leasehold improvements) and any other expenses incurred in preparation for such reletting.  Tenant shall pay such damages to Landlord monthly on the days on which the Annual Fixed Rent, Additional Rent or other charges would have been payable hereunder if the term of this Lease had not been so terminated.

 

In the event of any reentry or retaking of possession of the Premises and/or termination of Tenant’s right of possession and/or occupancy of the Premises, as applicable, without termination of this Lease, pursuant to Section 8.1, Tenant shall pay the Annual Fixed Rent, Additional Rent and other charges payable hereunder up to the time of such reentry or retaking of possession and/or termination.  Thereafter, whether or not the Premises shall have been re-let, Tenant shall be liable to Landlord for, and shall pay to Landlord the Annual Fixed Rent, Additional Rent and other charges which would be payable hereunder for the remainder of the term of this Lease notwithstanding any such reentry, retaking of possession or termination, less the net proceeds, if any, of any reletting of the Premises, after deducting all expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage commissions, attorneys’ fees and expenses, advertising costs, administration expenses, alteration costs, the value of any tenant inducements (including but without limitation free rent, moving costs, and contributions toward leasehold improvements) and any other expenses incurred in preparation for such reletting.  Tenant shall pay such damages to Landlord monthly on the days on which the Annual Fixed Rent, Additional Rent or other charges are payable hereunder.

 

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At any time after any such termination, reentry or retaking of possession, in lieu of recovering damages pursuant to the provisions of the immediately preceding paragraphs with respect to any period after the date of demand therefor, at Landlord’s election, Tenant shall pay to Landlord immediately and in full the greater of (i) the amount, if any, by which (A) the Annual Fixed Rent, Additional Rent and other charges which would be payable hereunder from the date of such demand to the end of what would be the then unexpired term of this Lease had such termination not occurred (or in the case of reentry or retaking of possession of the Premises by Landlord or a termination of Tenant’s right of possession and/or occupancy of the Premises, to the end of the term of this Lease), shall exceed (B) the then fair rental value of the Premises for the same period, reduced to amortize over such period all costs or expenses which Landlord would incur to obtain such fair market rent, or (ii) an amount equal to the lesser of (x) the Annual Fixed Rent, Additional Rent and other charges that would have been payable for the remainder of the term of this Lease had such termination not occurred (or in the case of reentry or retaking of possession of the Premises by Landlord or a termination of Tenant’s right of possession and/or occupancy of the Premises, to the end of the term of this Lease) or (y) the aggregate of the Annual Fixed Rent, Additional Rent and other charges accrued in the twelve (12) months ended next prior to such termination, reentry or retaking of possession of the Premises by Landlord or termination of Tenant’s right of possession and/or occupancy (without reduction for any free rent or other concession or abatement) except that in the event the term of this Lease or Tenant’s right of possession and/or occupancy of the Premises is so terminated or Landlord shall reenter and/or retake possession of the Premises prior to the expiration of the first full year of the term of this Lease, the damages which Landlord may elect to recover pursuant to clause (ii) (y) of this paragraph shall be calculated as if any such termination, reentry or retaking of possession had occurred on the first anniversary of the Commencement Date.

 

Nothing contained in this Lease shall, however, limit or prejudice the right of Landlord to prove for and obtain in proceedings for bankruptcy or insolvency by reason of the termination of this Lease, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

 

In case of any Default of Tenant, re-entry, expiration and repossession by summary proceedings or otherwise, Landlord may (i) relet the Premises or any part or parts thereof, either in the name of Landlord, Tenant (Tenant hereby irrevocably appointing Landlord its attorney in fact to execute any instrument of reletting on behalf of Tenant) or otherwise (as Landlord may elect), for a term or terms which may at Landlord’s option be equal to or less than or exceed the period the balance of the term of this Lease (or the balance of the term of this Lease if it shall not have been terminated) and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to relet the same and (ii) may make such alterations, repairs and decorations in the Premises as Landlord in its sole judgment considers advisable and necessary for the purpose of reletting the Premises; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid.  Landlord shall in no event be required to relet the Premises or otherwise mitigate damages or be liable in any way whatsoever for failure to relet the Premises, or, in the event that the Premises are relet, for failure to collect the rent under such reletting.

 

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To the fullest extent permitted by law, Tenant hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Tenant being evicted or dispossessed, or in the event of Landlord obtaining possession of the Premises, by reason of the violation by Tenant of any of the covenants and conditions of this Lease.

 

8.3                               Remedies Cumulative.  Except as expressly provided otherwise in Section 8.2, any and all rights and remedies which Landlord may have under this Lease, and at law and equity (including without limitation actions at law for direct, indirect, special and consequential (foreseeable and unforeseeable) damages), for Tenant’s failure to comply with its obligations under this Lease shall be cumulative and shall not be deemed inconsistent with each other, and any two or more of all such rights and remedies may be exercised at the same time insofar as permitted by law.

 

8.4                               Landlord’s Right to Cure Defaults.  At any time with or without notice, Landlord shall have the right, but shall not be required, to pay such sums or do any act which requires the expenditure of monies which may be necessary or appropriate by reason of the failure or neglect of Tenant to comply with any of its obligations under this Lease (irrespective of whether the same shall have ripened into a Default of Tenant), and in the event of the exercise of such right by Landlord, Tenant agrees to pay to Landlord forthwith upon demand, as Additional Rent, all such sums including reasonable attorneys fees, together with interest thereon at a rate (the “Default Rate”) equal to ten percent (10%) per annum.

 

8.5                               Holding Over.  Any holding over by Tenant of all or any portion of the Premises after the expiration or early termination of the term of this Lease shall be treated as a daily tenancy at sufferance at a rental rate equal to 150% of the sum of Annual Fixed Rent plus Additional Rent on account of Operating Costs and Taxes in effect immediately prior to the expiration or earlier termination of the term (prorated on a daily basis).  Tenant shall also pay to Landlord all damages, direct and/or consequential (foreseeable and unforeseeable), sustained by reason of any such holding over.  Otherwise, all of the covenants, agreements and obligations of Tenant applicable during the term of this Lease shall apply and be performed by Tenant during such period of holding over as if such period were part of the term of this Lease.

 

8.6                               Effect of Waivers of Default.  Any consent or permission by Landlord to any act or omission by Tenant shall not be deemed to be consent or permission by Landlord to any other similar or dissimilar act or omission and any such consent or permission in one instance shall not be deemed to be consent or permission in any other instance.

 

8.7                               No Waiver, etc.  The failure of Landlord or Tenant to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this Lease shall not be deemed a waiver of such violation nor prevent a subsequent act, which would have originally constituted a violation, from having all the force and effect of an original violation.  The receipt by Landlord of rent with knowledge of the breach of any covenant of this Lease shall not be deemed to have been a waiver of such breach by Landlord, or by Tenant, unless such waiver be in writing signed by the party to be charged.  No consent or waiver, express or implied, by Landlord or Tenant to or of any breach of any agreement or duty shall be construed as a waiver or consent to or of any other breach of the same or any other agreement or duty.

 

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8.8                               No Accord and Satisfaction.  No acceptance by Landlord of a lesser sum than the Annual Fixed Rent, Additional Rent or any other charge then due shall be deemed to be other than on account of the earliest installment of such rent or charge due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent or other charge be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such installment or pursue any other remedy in this Lease provided.

 

ARTICLE 9

 

Rights of Holders

 

This Lease, and all rights of Tenant hereunder, are and shall be subject and subordinate to any ground or master lease, and all renewals, extensions, modifications and replacements thereof, and to all mortgages, which may now or hereafter affect the Building or the Property and/or any such lease, whether or not such mortgages shall also cover other lands and/or buildings and/or leases, to each and every advance made or hereafter to be made under such mortgages, and to all renewals, modifications, replacements and extensions of such leases and such mortgages and all consolidations of such mortgages.  This Section shall be self-operative and no further instrument of subordination shall be required.  In confirmation of such subordination, Tenant shall promptly execute, acknowledge and deliver any instrument that Landlord, the lessor under any such lease or the holder of any such mortgage or any of their respective successors in interest may reasonably request to evidence such subordination.  Any lease to which this Lease is subject and subordinate is herein called “Superior Lease” and the lessor of a Superior Lease or its successor in interest, at the time referred to, is herein called “Superior Lessor”; and any mortgage to which this Lease is subject and subordinate, is herein called “Superior Mortgage” and the holder of a Superior Mortgage is herein called “Superior Mortgagee”.

 

If any Superior Lessor or Superior Mortgagee or the nominee or designee of any Superior Lessor or Superior Mortgagee shall succeed to the rights of Landlord under this Lease, whether through possession or foreclosure action or delivery of a new lease or deed, or otherwise, then at the request of such party so succeeding to Landlord’s rights (herein called “Successor Landlord”) and upon such Successor Landlord’s written agreement to accept Tenant’s attornment, Tenant shall attorn to and recognize such Successor Landlord as Tenant’s landlord under this Lease and shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment.  Upon such attornment, this Lease shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Lease, except that the Successor Landlord (unless formerly the landlord under this Lease) shall not be (a) liable in any way to Tenant for any act or omission, neglect or default on the part of Landlord under this Lease, (b) responsible for any monies owing by or on deposit with Landlord to the credit of Tenant, (c) subject to any counterclaim or setoff which theretofore accrued to Tenant against Landlord, (d) bound by any modification of this Lease subsequent to such Superior Lease or Superior Mortgage, or by any previous prepayment of Annual Fixed Rent or Additional Rent for more than one (1) month, which was not approved in writing by the Successor Landlord, (e) liable to the Tenant beyond the Successor Landlord’s interest in the Property, (f) responsible for the performance of any

 

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work to be done by Landlord under this Lease to render the Premises ready for occupancy by the Tenant, or (g) required to remove any person occupying the Premises or any part thereof, except if such person claims by, through or under the Successor Landlord.  Tenant agrees at any time and from time to time to execute a suitable instrument in confirmation of Tenant’s agreement to attorn, as aforesaid.

 

ARTICLE 10

 

Miscellaneous Provisions

 

10.1                        Notices.  Except as may be expressly provided herein otherwise, all notices, requests, demands, consents, approval or other communications to or upon the respective parties hereto shall be in writing, shall be delivered by hand or mailed by certified or registered mail, return receipt requested, or by a nationally recognized courier service that provides a receipt for delivery such as Federal Express, United Parcel Service or U.S. Postal Service Express Mail and shall be addressed as follows:  If intended for Landlord, to the Original Address of Landlord set forth in Section 1.1 of this Lease with a copy to Reit Management & Research LLC, Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458, Attn: Jennifer B. Clark (or to such other address or addresses as may from time to time hereafter be designated by Landlord by notice to Tenant); and if intended for Tenant, addressed to Tenant at the Original Address of Tenant set forth in Section 1.1 of this Lease until the Commencement Date and thereafter to the Property (or to such other address or addresses as may from time to time hereafter be designated by Tenant by notice to Landlord).  Notices shall be effective on the date delivered to (or the first date such delivery is attempted and refused by) the party to which such notice is required or permitted to be given or made under this Lease.  Notices from Landlord may be given by Landlord’s Agent, if any, or Landlord’s attorney; and any bills or invoices for Annual Fixed Rent or Additional Rent may be given by mail(which need not be registered or certified) and, if so given, shall be deemed given on the third Business Day following the date of posting.

 

10.2                        Quiet Enjoyment; Landlord’s Right to Make Alterations, Etc.  Landlord agrees that upon Tenant’s paying the rent and performing and observing the agreements, conditions and other provisions on its part to be performed and observed, Tenant shall and may peaceably and quietly have, hold and enjoy the Premises during the term hereof without any manner of hindrance or molestation from Landlord or anyone claiming under Landlord, subject, however, to the terms of this Lease; provided, however, Landlord reserves the right at any time and from time to time, without the same constituting breach of Landlord’s covenant of quiet enjoyment or an actual or constructive eviction, and without Landlord incurring any liability to Tenant or otherwise affecting Tenant’s obligations under this Lease, to make such changes, alterations, improvements, repairs or replacements in or to the interior and exterior of the Building (including the Premises) and the fixtures and equipment thereof, and in or to the Property, or properties adjacent thereto, as Landlord may deem necessary or desirable, and to change (provided that there be no unreasonable obstruction of the right of access to the Premises by Tenant and that Landlord use commercially reasonable efforts to minimize, to the extent practical, any interference with the conduct of business at the Premises) the arrangement and/or location of entrances or passageways, doors and doorways, corridors, elevators, or other common areas of the Building and Property.

 

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Without incurring any liability to Tenant, Landlord may permit access to the Premises and open the same, whether or not Tenant shall be present, upon any demand of any receiver, trustee, assignee for the benefit of creditors, sheriff, marshal or court officer Landlord reasonably believes is entitled to such access for the purpose of taking possession of, or removing, Tenant’s property or for any other lawful purpose (but this provision and any action by Landlord hereunder shall not be deemed a recognition by Landlord that the person or official making such demand has any right or interest in or to this Lease, or in or to the Premises), or upon demand of any representative of the fire, police, building, sanitation or other department of the city, state or federal governments.

 

10.3                        Assignment of Rents and Transfer of Title; Limitation of Landlord’s Liability.  Tenant agrees that the assignment by Landlord of Landlord’s interest in this Lease, or the rents payable hereunder, whether absolute or conditional in nature or otherwise, which assignment is made to the holder of a mortgage on property which includes the Premises, shall never be treated as an assumption by such holder of any of the obligations of Landlord hereunder unless such holder shall, by notice sent to Tenant, specifically otherwise elect and that, except as aforesaid, such holder shall be treated as having assumed Landlord’s obligations hereunder (subject to the limitations set forth in Section 9.1) only upon foreclosure of such holder’s mortgage and the taking of possession of the Premises.

 

The term “Landlord”, so far as covenants or obligations to be performed by Landlord are concerned, shall be limited to mean and include only the owner or owners at the time in question of Landlord’s interest in the Property, and in the event of any transfer or transfers of such title to said property, Landlord (and in case of any subsequent transfers or conveyances, the then grantor) shall be concurrently freed and relieved from and after the date of such transfer or conveyance, without any further instrument or agreement, of all liability with respect to the performance of any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed, it being intended hereby that the covenants and obligations contained in this Lease on the part of Landlord, shall, subject as aforesaid, be binding on Landlord, its successors and assigns, only during and in respect of their respective period of ownership of such interest in the Property.

 

Notwithstanding the foregoing, in no event shall the acquisition of Landlord’s interest in the Property by a purchaser which, simultaneously therewith, leases Landlord’s entire interest in the Property back to Landlord or the seller thereof be treated as an assumption by operation of law or otherwise, of Landlord’s obligations hereunder.  Tenant shall look solely to such seller-lessee, and its successors from time to time in title, for performance of Landlord’s obligations hereunder.  The seller-lessee, and its successors in title, shall be the Landlord hereunder unless and until such purchaser expressly assumes in writing the Landlord’s obligations hereunder.

 

Tenant shall not assert nor seek to enforce any claim for breach of this Lease against any of Landlord’s assets other than Landlord’s interest in the Property, and Tenant agrees to look solely to such interest for the satisfaction of any liability or claim against Landlord under this Lease, it being specifically agreed that in no event whatsoever shall Landlord ever be personally liable for any such liability. Tenant furthermore agrees that no trustee, officer, director, general or limited partner, member, shareholder, beneficiary, employee or agent of Landlord (including

 

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any person or entity from time to time engaged to supervise and/or manage the operation of Landlord) shall be held to any liability, jointly or severally, for any debt, claim, demand, judgment, decree, liability or obligation of any kind (in tort, contract or otherwise) of, against or with respect to Landlord or arising out of any action taken or omitted for or on behalf of Landlord.

 

10.4                        Landlord’s Default.  Landlord shall not be deemed to be in breach of, or in default in the performance of, any of its obligations under this Lease unless it shall fail to perform such obligation(s) and such failure shall continue for a period of thirty (30) days, or such additional time as is reasonably required to correct any such breach or default, after written notice has been given by Tenant to Landlord specifying the nature of Landlord’s alleged breach or default.  Tenant shall have no right to terminate this Lease for any breach or default by Landlord hereunder and no right, for any such breach or default, to offset or counterclaim against any rent due hereunder.  In no event shall Landlord ever be liable to Tenant for any punitive damages or for any loss of business or any other indirect, special or consequential damages suffered by Tenant from whatever cause.  Tenant further agrees that if Landlord shall have failed to cure any such breach or default within thirty (30) days of such notice to Landlord (or if such breach or default cannot be cured within said time, then within such additional time as may be necessary if within said thirty days Landlord has commenced and is diligently pursuing the remedies necessary to cure such breach or default), then the holder(s) of any mortgage(s) or the lessor under any ground lease entitled to notice pursuant to Section 10.5 shall have an additional thirty (30) days within which to cure such breach or default if such breach or default cannot be cured within that time, then such additional time as may be necessary, if within such thirty (30) days any such holder or lessor has commenced and is diligently pursuing the remedies necessary to cure such breach or default (including but not limited to commencement of foreclosure proceedings, if necessary to effect such cure).

 

Where provision is made in this Lease for Landlord’s consent and Tenant shall request such consent and Landlord shall fail or refuse to give or shall delay in giving such consent, Tenant shall not be entitled to any damages and Tenant hereby waives any claim based on such failure, refusal or delay; provided however in any situation where Landlord is expressly required not to withhold its consent unreasonably Tenant shall (at its sole remedy) be entitled to bring an action for specific performance or injunction.

 

10.5                        Notice to Mortgagee and Ground Lessor.  After receiving notice from any party that it holds a mortgage which includes the Premises as part of the mortgaged premises, or that it is the ground lessor under a lease with Landlord, as ground lessee, which includes the Premises as part of the demised premises, no notice from Tenant to Landlord shall be effective unless and until a copy of the same is given to such holder or ground lessor, and the curing of any of Landlord’s defaults by such holder or ground lessor shall be treated as performance by Landlord.

 

10.6                        Brokerage.  Tenant warrants and represents that it has dealt with no broker in connection with the consummation of this Lease, and in the event of any brokerage claims or liens against Landlord or the Property predicated upon or arising out of prior dealings with Tenant, Tenant agrees to defend the same and indemnify and hold Landlord harmless against any such claim, and to discharge any such lien.

 

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10.7                        Waiver of Jury Trial.  LANDLORD AND TENANT HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER IN CONNECTION WITH THIS LEASE.

 

10.8                        Applicable Law and Construction.  This Lease shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts and if any provisions of this Lease shall to any extent be invalid, the remainder of this Lease shall not be affected thereby.  Tenant expressly acknowledges and agrees that Landlord has not made and is not making, and Tenant, in executing and delivering this Lease, is not relying upon, any warranties, representations, promises or statements, except to the extent that the same are expressly set forth in this Lease or in any other written agreement which may be made between the parties concurrently with the execution and delivery of this Lease and which shall expressly refer to this Lease.  All understandings and agreements heretofore made between the parties are merged in this Lease and any other such written agreement(s) made concurrently herewith, which alone fully and completely express the agreement of the parties and which are entered into after full investigation, neither party relying upon any statement or representation not embodied in this Lease or any other such written agreement(s) made concurrently herewith.  This Lease may be amended, and the provisions hereof may be waived or modified, only by instruments in writing executed by Landlord and Tenant.  The titles of the several Articles and Sections contained herein are for convenience only and shall not be considered in construing this Lease.  The submission of this document for examination and negotiation does not constitute an offer to lease, or a reservation of, or option for, the Premises, and Tenant shall have no right to the Premises hereunder until the execution and delivery hereof by both Landlord and Tenant.  Except as herein otherwise provided, the terms hereof shall be binding upon and shall inure to the benefit of the successors and assigns, respectively, of Landlord and Tenant and, if Tenant shall be an individual, upon and to his heirs, executors, administrators, successors and assigns.  Each term and each provision of this Lease to be performed by Tenant shall be construed to be both an independent covenant and a condition and time is of the essence with respect to the exercise of any of Tenant’s rights, and the performance of any and all of Tenant’s obligations, under this Lease.  The reference contained to successors and assigns of Tenant is not intended to constitute a consent to assignment by Tenant.  Except as otherwise set forth in this Lease, any obligations of Tenant (including, without limitation, rental and other monetary obligations, repair and maintenance obligations and obligations to indemnify Landlord), shall survive the expiration or earlier termination of this Lease, and Tenant shall immediately reimburse Landlord for any expense incurred by Landlord in curing Tenant’s failure to satisfy any such obligation (notwithstanding the fact that such cure might be effected by Landlord following the expiration or earlier termination of this Lease).

 

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WITNESS the execution hereof under seal on the day and year first above written.

 

	
 
    	
Landlord:
    
	
 
    	
 
    
	
 
    	
RMR West LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ethan S. Bornstein
    
	
 
    	
 
    	
Ethan S. Bornstein
    
	
 
    	
 
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Tenant:
    
	
 
    	
 
    
	
 
    	
Reit Management & Research LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jennifer F. Francis
    
	
 
    	
 
    	
Jennifer F. Francis
    
	
 
    	
 
    	
Senior Vice President
    

 

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EXHIBIT B

 

RULES AND REGULATIONS

 

1.                                      The sidewalks, entrances, passages, corridors, vestibules, halls, elevators or stairways in or about the Building shall not be obstructed by Tenant.

 

2.                                      Tenant shall not place objects against glass partitions, doors or windows which would be unsightly from the Building corridor or from the exterior of the Building.  No sign, advertisement, notice or other lettering shall be exhibited, inscribed, painted or fixed by Tenant on any window or part of the outside or inside of the Buildings without prior consent of Landlord.

 

3.                                      Tenant shall not place a load upon any floor of the Building exceeding the lesser of the floor load which such floor was designed to carry or that allowed by law.

 

4.                                      Tenant shall not waste electricity or water in the Building and shall cooperate fully with Landlord to assure the most effective operation of the Building HVAC system.  All regulating and adjusting of HVAC equipment shall be done by the Landlord’s agents or employees.

 

5.                                      No additional or different locks or bolts shall be affixed on doors by Tenant.  Tenant shall return all keys to Landlord upon termination of Tenant’s lease.  Tenant shall not allow peddlers, solicitors or beggars in the Building and shall report such persons to the Landlord’s agent.

 

6.                                      Tenant shall not use the Premises so as to cause any increase above normal insurance premiums on the Building.

 

7.                                      No bicycles, vehicles or animals of any kind shall be brought into or kept in or about the Premises.  No space in the Building shall be used for manufacturing or for the sale of merchandise of any kind at auction or for storage thereof preliminary to such sale.

 

8.                                      Tenant shall not engage or pay any employees of the Building without approval from the Landlord.  Tenant shall not employ any persons other than the janitor or employees of Landlord for the purpose of cleaning Premises without the prior written consent of Landlord.

 

9.                                      All removals from the Building or the carrying in or out of the Building or the Premises of any freight, furniture or bulky matter of any description must take place at such time and in such manner as Landlord may determine from time to time.  Landlord reserves the right to inspect all freight to be brought into the Building and to exclude from the Building all freight which violates any of the rules and regulations or provisions of Tenant’s lease.

 

10.                               Normal Building Operating Hours are 8:00 a.m. to 6:00 p.m. Mondays through Fridays and 8:00 a.m. to 1:00 p.m. on Saturdays excluding New Years Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day (and the applicable weekday when any such day occurs on a weekend day) and all other federal, state, county or municipal holidays and all Sundays, except that Landlord reserves the option (at its sole election) to expand

 

 

or alter Normal Building Operating Hours.  Any day (other than a Saturday) on which Normal Building Operating Hours shall occur shall be a “Business Day”.

 

11.                               Tenant shall cooperate with Landlord in minimizing loss and risk thereof from fire and associated perils.

 

12.                               Tenant shall, at Tenant’s expense, provide artificial light and electric current for the Landlord and/or its contractors, agents and employees during the making of repairs, alterations, additions or improvements in or to the demised premises.

 

13.                               The water and wash closets and other plumbing fixtures shall not be used for any purposes other than those for which they were designed and constructed and no sweepings, rubbish, rags, acid or like substance shall be deposited therein.  All damages resulting from any misuse of the fixtures shall be borne by Tenant.

 

14.                               Tenant may request HVAC service outside of Normal Building Operating Hours by submitting a request in writing to the Building Manager’s office by noon of the preceding workday.

 

15.                               Landlord reserves the right to establish, modify and enforce parking rules and regulations.

 

16.                               All refuse from the Premises shall be disposed of in accordance with the requirements established therefor by Landlord and no dumpster shall be overloaded by Tenant.

 

17.                               Landlord reserves the right at any time to rescind, alter or waive any rule or regulation at any time prescribed for the Building and to impose additional rules and regulations when in its judgment Landlord deems it necessary, desirable or proper for its best interest and for the best interest of tenants and other occupants and invitees thereof.  No alteration or waiver of any rule or regulation in favor of one tenant shall operate as an alteration or waiver in favor of any other tenant.  Landlord shall not be responsible to any tenant for the non-observance or violation by any other tenant however resulting of any rules or regulations at any time prescribed for the Building.

 

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EXHIBIT C

 

ALTERATIONS REQUIREMENTS

 

A.                                    General

 

1.                                 All alterations, installations or improvements (“Alterations”) to be made by Tenant in, to or about the Premises, including any Alterations to be made prior to Tenant’s occupancy of the Premises for the Permitted Use, shall be made in accordance with the requirements of this Exhibit and with any additional requirements stated in the Lease.

 

2.                                 All submissions, inquiries approvals and other matters shall be processed through Landlord’s Building manager or regional property manager.

 

3.                                 Additional and differing provisions in the Lease, if any, will be applicable and will take precedence over the terms of this Exhibit.

 

B.                                    Plans

 

1.  Before commencing construction of any Alterations, Tenant shall submit for Landlord’s written approval either a description of the Alterations or drawings and specifications for the Alterations, as follows:

 

(i)                                     Tenant shall submit drawings and written specifications (collectively, “Plans”) for all of Tenant’s Alterations, including mechanical, electrical and cabling, plumbing and architectural drawings. Drawings are to be complete, with full details and finish schedules, and shall be stamped by an AIA architect licensed in the state or district in which the Property is located certifying compliance with building codes.

 

(ii)                                  Tenant may submit a complete description of Tenant’s Alterations (including sketches or diagrams as necessary) in lieu of submitting Plans if the proposed Alterations meet all of the following criteria: (1) they are cosmetic in nature (e.g. painting, wallpapering, installation of floor coverings, etc.),  (2) they do not require a building permit, (3) they do not require work to be performed inside walls or above the ceiling of the Premises, and (4) they will not affect the structure or the mechanical, plumbing, HVAC, electrical or life safety systems of the Building (collectively, the “Building Systems”). Notwithstanding that Tenant’s proposed Alterations satisfy all of the preceding criteria, upon review of Tenant’s submission, Landlord shall have the right to require Tenant to submit Plans for all or any portion of the proposed Alterations.

 

2.  Landlord shall review the description or Plans submitted by Tenant (“Tenant’s Design Submission”) and notify Tenant of approval or disapproval. If Landlord disapproves Tenant’s Design Submission, Landlord shall specify the reasons for its disapproval and Tenant shall revise Tenant’s Design Submission to meet Landlord’s objections, and shall resubmit the same to Landlord as so revised until Tenant’s Design Submission is approved by Landlord. No approval by Landlord of Tenant’s Design Submission shall constitute a waiver of any of the requirements of this Exhibit or the Lease. Tenant shall not make any changes to Tenant’s Design Submission after

 

 

approval by Landlord, including changes required to obtain governmental permits, without obtaining Landlord’s written approval in each instance.

 

3.  All mechanical, electrical, structural and floor loading requirements shall be subject to approval of Landlord’s engineers. Landlord also reserves the right to require Tenant to submit copies of shop drawings for Landlord’s review and approval.

 

4.  Before commencing construction of any Alterations, Tenant shall provide Landlord with two (2) complete copies of Tenant’s Design Submission in final form as approved by Landlord.

 

C.                                    Selection of Contractors and Subcontractors

 

Before commencing construction of any Alterations, Tenant shall submit to Landlord the names of Tenant’s general contractor (the “General Contractor”) and subcontractors for Landlord’s approval. If Landlord shall reject the General Contractor or any subcontractor, Landlord shall advise Tenant of the reasons(s) in writing and Tenant shall submit another selection to Landlord for Landlord’s approval.

 

D.                              Insurance

 

Before commencing construction of any Alterations, Tenant will deliver to Landlord:

 

(i)                                     Four (4) executed copies of the Insurance Requirements agreement in the form set forth in Exhibit D from the general contractor and, if requested by Landlord, from the subcontractors (Landlord will return two fully executed copies to Tenant), and

 

(ii)                                 insurance certificates for the General Contractor and subcontractors as required by Exhibit D, which shall include evidence of coverage for the indemnity provided by the General Contractor or subcontractor executing such agreement.

 

E.                                 Building Permit and Other Legal Requirements

 

1.  Before commencing construction of any Alterations, Tenant shall furnish Landlord with a valid permit for the construction of the Alterations from the building department or other agency having jurisdiction in the municipality in which the Building is located (unless the Alterations are of a cosmetic nature not requiring a building permit). Tenant shall keep the original building permit posted on the Premises during the construction of the Alterations.

 

2.  Tenant Design Submission, the Alterations, and the construction of the Alterations shall each be in strict compliance with (i) all applicable laws, codes, rules and regulations, including, without limitation, the Americans with Disabilities Act, state and local health department requirements, and occupational health and safety laws and regulations (and no approval of Tenant’s Design Submission shall relieve Tenant of this obligation or invest Landlord with any responsibility for ensuring such compliance), and (ii) all building permits, consents, licenses, variances, and approvals issued in connection with the Alterations. Tenant shall ensure that the General Contractor and all subcontractors have the requisite licenses to

 

2

 

perform their work. Tenant shall procure all permits, governmental approvals, licenses, variances and consents required for the Alterations and shall provide Landlord with a complete copy thereof promptly upon receipt of same by Tenant.

 

F.                            Materials and Workmanship

 

1.  All materials, equipment and installations must meet Landlord’s minimum standards for the Building, as may be designated by Landlord from time to time, and all materials shall be new, commercial grade and of first-class quality. Any deviation from these requirements will be permitted only if clearly indicated or specified on Tenant’s Design Submission and approved by Landlord.

 

2.  Alterations shall be constructed in a professional, first-class and workmanlike manner, in accordance with Tenant’s Design Submission.

 

3.  The General Contractor shall guaranty all materials and workmanship against defects for a period of not less than one (1) year from installation. Notwithstanding any limitations contained in such guaranty or in any contract, purchase order or other agreement, during the entire term of the Lease, Tenant shall promptly repair or replace, at Tenant’s cost, any defective aspect of the Alterations except for insubstantial defects that do not adversely effect the Building or the appearance or rental value of the Premises, as determined by Landlord in its sole discretion.

 

4.  Alterations must be compatible with the existing Building Systems. In the event any Alterations shall interfere with the proper functioning of any Building System, Tenant, at Tenant’s sole cost and expense, shall promptly cause such repairs,  replacements or adjustments to be made to the Alterations as are necessary to eliminate any such interference.

 

G.                                    Prosecution of the Work

 

1.  All construction activities shall be conducted so as to avoid disturbance of other tenants. Landlord may require that all demolition and other categories of work that may inconvenience other tenants or disturb Building operations be scheduled and performed before or after Normal Building Operating Hours (at times determined by Landlord), and Tenant shall provide the Building manager with at least two Business Days’ notice prior to proceeding with any such work.

 

2.  Unless Landlord directs otherwise, Tenant’s contractors shall have access to the Building during the Normal Building Operating Hours only. If Tenant’s contractors desire access to the Building at any other time, Landlord shall use reasonable efforts to provide such access, provided, however, that Tenant shall pay Landlord any additional cost incurred by Landlord to provide such access, including, without limitation, additional costs for utilities, personnel, and security.

 

3.  Prior arrangements for elevator use shall be made with the Building manager by Tenant or the General Contractor. Elevator cabs shall be properly padded and no material or equipment shall be carried under or on top of elevators. If an operating engineer is required by any union rules, such engineer shall be paid for by Tenant.

 

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4.  Under no circumstances will any material related to Tenant’s Alterations be allowed access through the Building’s front entrance without advance written approval of the Building manager.

 

5.  If shutdown of risers and mains for electrical, HVAC, sprinkler or plumbing work is required, such work shall be supervised by Landlord’s representative at Tenant’s expense. No work will be performed in Building mechanical equipment rooms except under Landlord’s supervision.

 

6.  Alterations shall be performed under the supervision of a superintendent or foreman of the General Contractor at all times.

 

7.  All areas adjacent to the construction area shall be sealed with plastic so as to not be affected by dust and debris. All floors shall be protected from the construction process.

 

8.  The General Contractor or HVAC subcontractor shall block off supply and return grilles, diffusers and ducts to keep dust from entering into the Building HVAC system and thoroughly clean all HVAC units in the work area at the completion of the Alterations.

 

9.  Construction debris shall be removed from the construction area daily and the construction area shall be kept neat and reasonably clean at all times. All construction debris is to be discarded in waste containment provided by the General Contractor only. No material or debris shall be stored outside the Premises or Building without the prior written approval of the Landlord’s representative.

 

10.  Landlord shall have the right to instruct the General Contractor to deliver to Landlord, at Tenant’s expense, any items to be removed from the Premises during the construction of the Alterations.

 

11.  Tenant, either directly or through the General Contractor, will immediately notify Landlord, in writing, of any damage to the Building caused by the General Contractor or any subcontractors.  Such damage shall be repaired within 72 hours unless otherwise directed by the Landlord in writing. Any damage that is not repaired may be repaired by Landlord at Tenant’s expense.

 

12.  Construction personnel shall use the restrooms located within the Premises only. If there are no restrooms within the Premises, then construction personnel shall use only those Building restrooms located on the floor where the work is being performed.

 

13.  All wiring and cabling installed by Tenant shall be tagged with Tenant’s name and its specific use and purpose.

 

14.  The General Contractor and all subcontractors shall cause their employees to adhere to all applicable Rules and Regulations of the Building.

 

15.  Landlord shall have the right to supervise and inspect the Alterations as the work progresses and to require Tenant to remove or correct any aspect of the Alterations that does not conform to Tenant’s Design Submission approved by Landlord. Such supervision and inspection

 

4

 

shall be at Tenant’s sole expense and Tenant shall pay Landlord’s reasonable charges for such supervision and inspection.

 

H.                                   Documents to Be Furnished to Landlord Upon Completion of Tenant’s Work

 

1.  Within fifteen (15) days after construction of the Alterations has been completed, except for so-called punch list items, Tenant shall furnish Landlord with the following documents:

 

(i)                                     record “as built” drawings in paper and electronic (CADD) format showing all of the Alterations as actually constructed for all portions of the Alterations for which drawings were submitted;

 

(ii)                                 if Plans for the Alterations were prepared by an architect, a written certification from the architect confirming that the Alterations were completed in accordance with the Plans and all applicable laws, codes, ordinances, and regulations;

 

(iii)                             full and final lien waivers and releases executed by the General Contractor and all subcontractors and suppliers;

 

(iv)                              if the Alterations include any HVAC work, a properly executed air balancing report signed by a professional engineer showing that the HVAC system is properly balanced for the season;

 

(v)                                 copies of all warranties and guarantees received from the General Contractor, subcontractors and materials suppliers or manufacturers;

 

(vi)                             copies of all maintenance manuals, instructions and similar information pertaining to the operation and maintenance of equipment and fixtures installed in the Premises as part of the Alterations; and

 

(vii)                           a copy of the final, permanent certificate of occupancy or amended certificate of occupancy for the Premises.

 

5

 

EXHIBIT D

 

CONTRACTOR’S INSURANCE REQUIREMENTS

 

Building:

 

Tenant:

 

Premises:

 

The undersigned contractor or subcontractor (“Contractor”) has been hired by the tenant or occupant (hereinafter called “Tenant”) of the Building named above or by Tenant’s contractor to perform certain work (“Work”) for Tenant in the Premises identified above.  Contractor and Tenant have requested the undersigned landlord (“Landlord”) to grant Contractor access to the Building and its facilities in connection with the performance of the Work and Landlord agrees to grant such access to Contractor upon and subject to the following terms and conditions:

 

1.                                      Contractor agrees to indemnify and save harmless the Landlord, and if Landlord is a general or limited partnership each of the partners thereof, and if Landlord is a nominee trust the trustee(s) and all beneficiaries thereof, and all of their respective officers, employees and agents, from and against any claims, demands, suits, liabilities, losses and expenses, including reasonable attorneys’ fees, arising out of or in connection with the Work (and/or imposed by law upon any or all of them) because of personal injuries, including death, at any time resulting therefrom and loss of or damage to property, including consequential damages, whether such injuries to person or property are claimed to be due to negligence of the Contractor, Tenant, Landlord or any other party entitled to be indemnified as aforesaid except to the extent specifically prohibited by law (and any such prohibition shall not void this agreement but shall be applied only to the minimum extent required by law).

 

2.                                      Contractor shall provide and maintain at its own expense, until completion of the Work, the following insurance:

 

(a)                                 Workmen’s Compensation and Employers Liability Insurance covering each and every workman employed in, about or upon the Work, as provided for in each and every statute applicable to Workmen’s Compensation and Employers’ Liability Insurance.

 

(b)                                 Commercial General Liability Insurance including coverages for Protective and Contractual Liability (to specifically include coverage for the indemnification clause of this agreement) for not less than the following limits:

 

	
Bodily Injury:
    	
$5,000,000 per person
    
	
 
    	
$5,000,000 per occurrence
    
	
 
    	
 
    
	
Property Damage:
    	
$5,000,000 per occurrence
    
	
 
    	
$5,000,000 aggregate
    

 

 

(c)                                  Commercial Automobile Liability Insurance (covering all owned, non-owned and/or hired motor vehicles to be used in connection with the Work) for not less than the following limits:

 

	
Bodily Injury:
    	
$5,000,000 per person
    
	
 
    	
$5,000,000 per occurrence
    
	
 
    	
 
    
	
Property Damage:
    	
$5,000,000 per occurrence.
    

 

Contractor shall furnish a certificate from its insurance carrier or carriers to the Building office before commencing the Work, showing that it has complied with the above requirements regarding insurance and providing that the insurer will give Landlord ten (10) days’ prior written notice of the cancellation of any of the foregoing policies.

 

The insurance provided in (b) and (c) above shall name Landlord as an additional insured.

 

3.                                      Contractor shall require all of its subcontractors engaged in the Work to provide the following insurance:

 

(a)                                 Commercial General Liability Insurance including Protective and Contractual Liability coverages with limits of liability at least equal to the limits stated in paragraph 2(b).

 

(b)                                 Commercial Automobile Liability Insurance (covering all owned, non-owned and/or hired motor vehicles to be used in connection with the Work) with limits of liability at least equal to the limits stated in paragraph 2(c).

 

Upon the request of Landlord, Contractor shall require all of its subcontractors engaged in the Work to execute an Insurance Requirements agreement in the same form as this Agreement.

 

Agreed to and executed this      day of              , 20  .

 

	
Contractor:
    	
 
    	
Landlord:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    

 

 

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EXHIBIT G

 

JANITORIAL SPECIFICATIONS

 

Area to be Serviced:

 

Hours to be Serviced:

 

Monday — Friday: 6:00 PM — 9:30 PM

Day porter: Monday — Friday:                      7:30 AM — 4:00 PM

 

Special Projects Cleaning on the weekends:       8:00 AM — 3:00 PM

 

Please provide adequate coverage during this time frame to complete the Scope of Work outlined below.

 

Include headcount in proposal.

 

Contractor’s Services:

To provide cleaning services throughout the buildings, both during the day and evening hours.

 

Lobby and Traffic Areas

Daily:

·                  Pull all trash and wash receptacles.

·                  Wipe down entrance doors and clean glass (interior & exterior).

·                  Dust window mullions and millwork.

·                  Wipe down lobby desk, chairs, & coffee tables.

·                  Sweep and damp mop lobby floor.

·                  Vacuum carpets and wipe down doors and dust walls.

·                  Spot clean elevator walls and carpet

·                  Straighten chairs in lobby.

Weekly:

·                  Clean and polish elevator tracks.

·                  Clean and dust lobby high hats/light fixtures.

Bi yearly:

·                  Scrub and seal lobby floor,

 

Bathrooms:

Daily:

·                  Pull all trash and replace with liners.

·                  Restock supplies as needed.

·                  Clean and sanitize all toilets, seats, sinks and urinals, inside & out.

·                  Wipe down and clean all mirrors and bright work.

·                  Clean sink and countertop.

·                  Wash all floors with disinfectant cleaner.

·                  Spot clean walls, doors and partitions.

 

 

·                  Empty and wash (inside & out) all sanitary disposal bins.

Weekly:

·                  Dust down all high spots, vents, light fixtures, etc.

·                  Machine scrub all floor surfaces to remove any build up in grouting or edges.

·                  Pour hot soapy water down rest room drains

 

Showers:

Daily:

·                  Pull trash and replace liners.

·                  Replenish supplies as needed (paper towels, soap, etc.)

·                  Clean inside, outside and on top of all lockers.

·                  Spot wash all walls and doors.

·                  Wipe down and clean benches, mirrors, bright work.

·                  Wash all walls and floors with disinfectant cleaner.

·                  Scrub and sanitized all shower surfaces.

Weekly:

·                  Machine scrub all floor surfaces to remove any build up in grouting or edges,

·                  Scrub and polish shower drains and fixtures.

·                  Pour hot soapy water down rest room drains.

As needed

·                  Replace shower curtain

 

Stairwells and Landings:

Daily:

·                  Sweep and spot wash stairwells.

·                  Spot clean doors & walls.

Weekly:

·                  Wash the stairs.

·                  Spot wash walls and doors.

·                  Wash rails and ledges.

·                  Wipe down fixed equipment such as fire extinguishers, light fixtures, etc.

·                  Clean high areas.

 

All Office Areas:

Daily:

·                  Pull all trash and replace liners.

·                  Remove dust from furniture and window ledges, artificial plants, paintings and other wall decorations using chemically treated dry cloths.

·                  Spot wash all woodwork, doors and walls especially around door frames and light switches.

·                  Wipe down all vinyl and leather upholstered furniture.

·                  Vacuum upholstered chairs.

·                  Clean all glass doors, partitions and any glass walls that exist.

·                  Wipe down all telephone equipment.

·                  Vacuum all carpeting including edges.

 

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·                  Spot clean all carpeting as needed.

·                  Dust ceiling vents.

Weekly:

·                  Wash all glass doors, partitions and any glass walls that exist.

Monthly:

·                  Wipe down all ceiling vents and other ceiling decorations, hi hats/light fixtures, etc.

 

Conference Rooms

·                  Follow above office area cleaning procedures.

·                  Wipe down & wash white boards nightly.

·                  Straighten & Organize table & chairs.

 

Kitchen Areas

Daily:

·                  Pull all trash and replace liners.

·                  Wash sink with an abrasive cleaner.

·                  Wipe down countertop and microwave.

·                  Spot wash doors, walls, especially behind barrels and around light switches.

·                  Dust all window ledges, radiators and other wall decorations.

·                  Spot clean walls.

·                  Dry mop all tile.

·                  Damp mop all tile.

Weekly:

·                  Wash interior of all trash receptacles.

Quarterly:

·                  Machine scrub, seal & wax floors.

 

Kitchen & Serving Area (were applicable)

Daily:

·                  Pull all trash and replace liners.

·                  Spot clean all walls and especially behind barrels.

·                  Wash entire floor using a heavy duty degreaser.

Monthly:

·                  Scrubbing the floor area including under the table and edges.

·                  Cleaning the counter tops and front of the cabinet doors.

·                  All the stainless steel needs to be cleaned, disinfected and polished.

·                  Walls cleaned from top to bottom.

·                  Salad bar dispensers need to be cleaned.

·                  Grill top scrubbed and cleaned

·                  Vents dusted and cleaned.

·                  Trash containers cleaned and disinfected.

Loading Dock Area (where applicable)

Daily:

 

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·                  Pull trash and replace with clear liners.

Monthly:

·                  Sweep and spray wash loading dock floor.

 

Day Porter Schedule — 7:30 AM to 4:00 PM

 

·                  Remove trash and clean ashtrays outside entrances.  Police grounds around perimeter of building.

·                  Clean and restock all bathrooms, showers including air freshener.

·                  Clean lobby, elevators, lobby glass, common areas and all stairwells.

·                  Replace light bulbs as needed.

·                  All cleaning staff are to assist Maintenance Crew in removing snow from sidewalk & outside walkways during winter months.

·                  Wash sidewalks, remove trash /debris and clean ashtrays from outside main entrances.

·                  Clean loading dock area both inside and outside twice a week

·                  Police walkways, garage, removing trash debris and wash specific windows as requested.

·                  Notify maintenance personnel or manager of rest room repairs/maintenance requirements.

 

General Requirements

 

·                  Cleaning will begin at 6:00 PM each evening, Monday through Friday.

 

·                  The Contractor shall follow vendor’s holiday schedule which falls between Monday through Friday at no additional cost except for the following legal holidays:  New Year’s Day, Martin Luther King Day, President’s Day, Patriot’s Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veteran’s Day, Thanksgiving Day, and Christmas Day.

 

·                  The contractor will supply all equipment and materials necessary to perform all cleaning.  Client will supply disposables such as plastic wastebasket liners, paper towels, toilet tissue and hand soap.  The Contractor, however, will be responsible for installing supplies into bathrooms and for restocking inventory.  Sufficient notice must be given to the Client to restock supplies.

 

·                  All cleaners and supervisors shall be provided with proper identification (Uniforms and name tags), and shall be carefully interviewed, screened, references checked, covered by bond and be properly trained prior to being added to the staff.

 

·                  Contractor shall have a full time supervisor on location nightly and identified as a supervisor.  Also, a manager will make one weekly unplanned tour.

 

·                  Cleaners shall be restricted to their assigned areas.

 

·                  Cleaning personnel are to keep the doors to the client’s spaces locked at all times while performing cleaning services.

 

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·                  All employees of the cleaning contractor shall be familiarized with the building, its security, and emergency evacuation plans.

 

·                  Contractor agrees to participate with client to institute, support and maintain a project wide recycling program as directed by client at no additional charge.

 

·                  Cleaners will remove trash to a central compactor/dumpster each evening.

 

·                  Cleaning supervisors shall inspect the building at the end of the shift to insure compliance with job performance and security requirements.

 

·                  All equipment and storage areas shall be kept in clean and safe condition.  These areas shall be inspected monthly by the contractor’s supervisor.

 

·                  The contractor shall make reasonable and prompt restitution by cash replacement or repairs, subject to Client approval for any damage for which Contractor is liable.

 

·                  The contractor’s personnel shall not disturb papers on desks, tables or cabinets.

 

·                  Upon completion of cleaning, lights shall be turned off, doors locked premises secured and left in a neat and orderly condition.

 

·                  Contractor shall provide Client with an updated staffing list at all times.

 

·                  The contractor will remove immediately, at client’s request, any personnel who, in the Client’s opinion, are not qualified to perform the work assigned or who have not conducted themselves properly.

 

·                  Any and all overtime (hours worked over designated normal working hours) must receive prior approval from the Client.

 

·                  Keys shall be provided to personnel required for the performance of their duties.  All keys will remain on site.  The cost of lost keys shall be paid by the contractor.  Such cost shall include all materials and labor for re-keying, if deemed necessary, by the client.

 

·                  All telephone calls made by personnel which are charged to Ownership but which were not authorized by the client, shall be credited against the following month’s invoice.

 

·                  Contractor shall provide MSDA sheets to the agent one week prior to the utilization of any chemicals.

 

5

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