Document:

Exhibit 10.2

 

CONDITIONAL OPTION AGREEMENT

BETWEEN

AVANTI POLAR LIPIDS, INC.

AND

NEOPHARM, INC.

 

 

THIS CONDITIONAL OPTION AGREEMENT is
hereby made and entered into as of this the 26 day of January, 1999 (the
“Effective Date”) by and between AVANTI POLAR
LIPIDS, INC., an Alabama corporation having its principal place of
business at 700 Industrial Park Drive, Alabaster, Alabama 35007 (“Avanti”), and
NEOPHARM, INC., a Delaware
corporation, having a place of business at 100 Corporate North, Suite 215,
Bannockburn, Illinois 60015 (“Neopharm”).

 

WITNESSETH:

 

WHEREAS, Avanti is
engaged in the production of certain lipids and other biochemical products such
as synthetic cardiolipin for sale primarily to third parties engaged in
research and educational activities; and

 

WHEREAS, Neopharm is
engaged in the development of proprietary liposomal products for use in the
encapsulation of cancer drugs; and

 

WHEREAS, to date,
Neopharm has developed two such products, Liposomal Doxorubiein and Paclitaxel;
and

 

WHEREAS, synthetic
cardiolipin is a key ingredient in both products; and

 

WHEREAS, Neopharm
and Avanti entered into that certain Synthetic Cardiolipin Supply Agreement
(the “Supply Agreement”) dated May 26, 1998, setting forth the terms pursuant
to which Avanti will supply Neopharm with synthetic cardiolipin for use in
Liposomal Doxorubicin and Paclitaxel; and

 

WHEREAS, Section
5(e) of the Supply Agreement provides that in the event Avanti elects to
terminate the manufacture of synthetic cardiolipin, Neopharm has a right to
obtain a non-exclusive license from Avanti to allow Neopharm to continue the
manufacture of synthetic cardiolipin on an uninterrupted basis; and

 

WHEREAS, Avanti and
Neopharm wish to formalize the rights granted to Neopharm pursuant to Section
5(e) of the Supply Agreement by entering into this Conditional Option
Agreement.

 

 

AGREEMENT

 

NOW, THEREFORE, for
good and valuable consideration, including, the mutual covenants and agreements
set forth herein, the receipt and sufficiency of which is hereby acknowledged,
Avanti and Neopharm, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1 “Avanti - GMP Production Process”
means those certain processes and procedures that
Avanti has developed and created for the production and manufacture of lipids
used by Avanti and which are in accordance with the “Good Manufacturing
Practices” conditions as described in the United States Code of Federal
Regulations and “Good Manufacturing Practices” regulations and the European
Community Guide to Good Manufacturing Practices, in all events adhering to the
U. S. GMP Regulations where conflict between the U. S. GMP Regulations and such
European Community regulations arise.

 

Section 1.2 “Avanti Intellectual Property”
means any and all innovations, patents, copyrights, trade secrets, patentable
ideas, copyrightable works, and all confidential technical, scientific or
business information, in whatever form or stage of completion, owned
exclusively by Avanti.

 

Section 1.3 “Field of Use”
means the commercialization of any anthrocyclines and taxanes described in a
Valid Claim of a Neopharm Patent for use as pharmaceuticals.

 

Section 1.4 “Neopharm Patent”
means one of the patents or patent applications listed on Exhibit A to this
Conditional Option Agreement.

 

Section 1.5 “Synthetic Cardiolipin
Intellectual Property” means that portion of the
Avanti Intellectual Property which relates either directly or indirectly to
that portion of the Avanti - GMP Production Process used to supply synthetic
cardiolipin to Neopharm pursuant to the terms of the Supply Agreement.

 

Section 1.6 “Valid Claim” means
a claim of a Neopharm Patent which has not been held invalid by a non-appealed
or unappealable decision by a court or other appropriate body of competent jurisdiction.

 

ARTICLE II

CONDITIONAL GRANT

 

Section 2.1 Conditional Option to
Non-Exclusive License.  In the event that, pursuant to Section 5(e) of the Supply
Agreement, Avanti elects to terminate the manufacture of synthetic cardiolipin,
Avanti hereby grants to Neopharm an option to obtain a non-exclusive license to
the

 

2

 

Synthetic Cardiolipin
Intellectual Property to make, have made, use, and sell synthetic cardiolipin
in the Field of Use.

 

Section 2.2 Option.  This Conditional Option Agreement shall
commence on the Effective Date and shall expire on May 1, 2008, unless earlier
terminated in accordance with the terms and conditions of the Supply Agreement.  In the event that the Supply Agreement is
still in effect on May 1, 2008, this Conditional Option Agreement shall
thereafter automatically renew for additional terms of two (2) years each.
Notwithstanding any other provision of the Supply Agreement or this Conditional
Option Agreement, however, this Conditional Option Agreement shall terminate
automatically upon termination of the Supply Agreement.

 

Section 2.3 Option Exercise.  The option contemplated in this Agreement
shall become effective immediately upon Neopharm’s receipt of written
notification from Avanti of Avanti’s decision to terminate the manufacture of
synthetic cardiolipin for supply to Neopharm pursuant to the terms of the
Supply Agreement (the “Avanti Notice of Termination”).  Neopharm shall have ninety (90) days from
its receipt of the Avanti Notice of Termination to exercise the option
contemplated in this Agreement. 
Neopharm shall notify Avanti of its intent to exercise such option in
writing in accordance with the terms of Section 4.4 of this Conditional Option
Agreement.

 

ARTICLE III

LICENSE TERMS

 

Upon exercise
of the option, Avanti and Neopharm hereby agree to negotiate in good faith to
establish the terms of a non-exclusive license agreement granting Neopharm
non-exclusive rights to the Synthetic Cardiolipin Intellectual Property to
make, have made, use and sell synthetic cardiolipin in the Field of Use under
such terms and conditions as are customary in the trade.  Such non-exclusive license agreement shall
include, without limitation, the following provisions: a license fee, milestone
payments, royalty payments, right to grant sublicenses together with provisions
allocating the proceeds derived from any such sublicenses between Avanti and
Neopharm, a commitment by Neopharm and any sublicensee to exert their best
efforts to utilize synthetic cardiolipin in the Field of Use as rapidly as
practicable, the right of Avanti to terminate the non-exclusive license should
Neopharm or its sublicensee fail to meet specified due-diligence milestones,
and indemnity and insurance provisions.

 

ARTICLE IV

GENERAL TERMS AND CONDITIONS

 

Section 4.1 Assignability; Assumption.  This Conditional Option Agreement shall be
binding upon and shall inure to the benefit of the parties, their legal
representatives, successors and assigns. 
This Conditional Option Agreement and any rights granted hereunder may
not be assigned, transferred or conveyed by either party without the prior
written consent of the other; provided, however, that Neopharm may assign this
Conditional Option Agreement to Pharmacia and Upjohn, Inc. without Avanti’s
consent.  In the event that Avanti shall
sell all or substantially all of its assets

 

3

 

relating to the manufacture of Synthetic Cardiolipin to another entity,
or in the event that Avanti shall merge (or otherwise combine) with or into
another entity and shall not be the surviving entity, Avanti agrees that it
shall impose as a condition to any such sale or combination that this
Conditional Option Agreement shall be a part of the assets which are
transferred and taken up by the purchaser of the assets or the obligations
imposed by this Conditional Option Agreement shall be specifically assumed by
any such surviving entity purchaser.

 

Section 4.2 Choice of Law; Amendment.  This Agreement
shall be governed by and construed in accordance with the laws of the State of
Alabama.  Any modifications, changes or
amendments to this Agreement shall be effective only if in writing and signed
by a duly authorized representative of each party.

 

Section 4.3 Entire Agreement.  This Agreement
constitutes the entire understanding of the parties relating to the grant by
Avanti to Neopharm of a conditional option to acquire a non-exclusive license
to the Synthetic Cardiolipin Intellectual Property to make, have made, use and
sell synthetic cardiolipin in the Field of Use.  Neither Avanti nor Neopharm have relied on and do not rely on any
representations or statements by the other party or such party’s agents,
whether verbal or written, with respect to the subject matter of this
Conditional Option Agreement.

 

Section 4.4 Notices.  Any notice,
communication or other information permitted or required to be given under this
Agreement shall be effective and deemed properly given upon sending with
confirmed written answer back, if sent by facsimile; upon delivery, return as
undeliverable, or refusal of delivery, if delivered by hand; or on the seventh
(7th) day after being placed in the United States Mail, addressed to a party at
the address set forth below or as hereinafter identified by a party, postage
prepaid, return receipt requested; in all events any such notice, communication
or information shall be sent to the parties addressed as follows:

 

	
  If to Avanti:

  	
   

  	
  Avanti Polar Lipids, Inc.

  
	
   

  	
   

  	
  700 Industrial Park Drive

  
	
   

  	
   

  	
  Alabaster, Alabama 35007

  
	
   

  	
   

  	
  Attention: Dr. Walter A. Shaw

  
	
   

  	
   

  	
  Facsimile: 205/663-0756

  
	
   

  	
   

  	
   

  
	
  If to Neopharm:

  	
   

  	
  Neopharm, Inc.

  
	
   

  	
   

  	
  100 Corporate North, Suite 215

  
	
   

  	
   

  	
  Bannockburn, Illinois 60015

  
	
   

  	
   

  	
  Attention: Mr. James M. Hussey

  
	
   

  	
   

  	
  Facsimile: (847) 295-8678

  

 

Any party may give notice of a change of address, facsimile number,
telephone number or other pertinent mailing or delivery information from time
to time, so long as such notice is given in accordance with this Section.

 

4

 

Section 4.5 Captions.  The captions
contained in this Agreement are inserted only as a matter of convenience and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof.

 

Section 4.6 Severability.  The invalidity, in
whole or in part, of any covenant, promise, undertaking or any paragraph,
subsection, sentence, clause, phrase or word or any provision of this
Conditional Option Agreement shall not affect validity of the remaining portions
thereof.  Each party acknowledges and
agrees that the restrictions contained in this Conditional Option Agreement are
reasonable and valid in scope and in all other respects.  If any provision of this Conditional Option
Agreement or the application thereof by or to any party or circumstance shall
be determined to be invalid or unenforceable to any extent, the remainder of
this Conditional Option Agreement and the application of such provision to
other parties or circumstances shall not be affected thereby and shall be
enforced to the maximum permitted under applicable law.  Without limiting the generality of the
foregoing, if any court of competent jurisdiction determines that any part of
this Conditional Option Agreement is unenforceable because of the duration or
scope of any provision, or both, the parties agree that such duration or scope
shall be reduced to the extent determined to be reasonable by such court of
competent jurisdiction and, in its reduced form, such provisions shall then be
valid and enforceable.

 

IN WITNESS WHEREOF,
each Party has caused the due execution of this Agreement as of the Effective
Date.

 

	
  ATTEST:

  	
   

  	
   

  	
  Avanti Polar
  Lipids, Inc.,
an Alabama corporation,

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Stephen W. Burgess

  	
   

  	
   

  	
  By:

  	
    /s/ Walter A. Shaw

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Walter A. Shaw, Ph.D.

  
	
  Its:

  	
  Director, Research & Development

  	
   

  	
   

  	
  Its:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  	
  Neopharm, Inc.,
a Delaware corporation,

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Lewis Strauss

  	
   

  	
   

  	
  By:

  	
    /s/ James M. Hussey

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  James M. Hussey, R. Ph., M.B.A.

  
	
  Its:

  	
  CHIEF MEDICAL OFFICER

  	
   

  	
   

  	
  Its:

  	
  President

  
										

 

5

 

EXHIBIT A

 

Neopharm Patents

 

United States Patent No.
5,560,923, Method of encapsulating
anthracycline in liposomes, issued October 1, 1996.

 

United States Patent No.
5,424,073, Liposome encapsulated taxol and a
method of using the same, issued June 13, 1995.

 

6Exhibit 10.18

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT (the “lease”) is entered into and dated this 2nd
day of June, 2003 by and between Canton Crossing LLC (the “landlord”) and 1st
Mariner Bank  (the “Tenant”).

 

RECITALS

 

Landlord agrees to Lease to Tenant and Tenant
agrees to lease from Landlord 2,500 sq. ft of office space, herein after
referred to as “the Premises”, upon the terms and conditions herein stated.

 

NOW, therefore, in consideration of the
rents, covenants, and agreements herein contained, the Landlord and Tenant
agree as follows:

 

 

Section 1.              Premises, term, and Collection Date

 

a.             Lease.  Landlord hereby leases to the
Tenant, and the Tenant rents form the Landlord, the space comprising of
approximately Two Thousand Five Hundred (2,500) square feet of office space,
outlined on the plans attached hereto as exhibit A (the “Premises”), on the
property located at 3301 Boston Street, Baltimore, Maryland 21224 (the
“Building”), subject to such rights, easements, covenants, conditions,
restrictions and other interests of record of Landlord and persons other than
Landlord, and to all zoning rules, restrictions and governmental regulations
now in effect by any governmental authority having jurisdiction over the
Premises and Building.

 

b.             Initial Term.  The
term of this lease shall commence on July 1, 2003  (the “Commencement Date”) and shall extend for ten years and
three months (the “Initial Term”) thereafter and end on October 31, 2013.

 

c.             Rental Year - Defined. 
The term “Rental Year” shall mean the period of twelve (12) consecutive
months following the Commencement Date, and each subsequent twelve-month period
thereafter.

 

1

 

Section 2.              Rental

 

a.             Annual Base Rent. 
Tenant covenants and agrees to pay to Landlord, as rent for the Premises
for the first Rental Year, the sum of Sixty Two Thousand Five Hundred Dollars
($62,500.00) payable in equal monthly installments of Five Thousand Two Hundred
Nine Dollars ($5,209.00).  Thereafter,
the annual base Rent shall be adjusted as provided in paragraph 2.c.

 

b.             Payment of Rent.  
All payments of Rent shall be due and paid in advance on the first day
of each month without any setoff or deduction for any reason whatsoever.  Tenant shall deliver all Rent payable and
all statements required thereunder to Landlord at 3301 Boston Street,
Baltimore, Maryland 21224, or any other address, which Landlord may hereafter
designate in writing to Tenant.  Any
payment by Tenant or acceptance by Landlord of a lesser amount than due shall
be treated as a payment on account, and not to be construed to be an accord and
satisfaction or a waiver by Landlord of any sums due hereunder.  Should Tenant fail to pay such rent by the
tenth (10th) day of the month, Tenant shall pay a late payment charge equal to
five percent (5.0%) of the amount due and unpaid.

 

c.             The
annual lease payment shall be increased each year after the initial year by
CPI.

 

d.             Renewal and Extension. 
Tenant shall have the option upon acceptance by Landlord to renew and
extend the term for a time and at a cost mutually agreeable between Landlord
and Tenant, provided that the Tenant, at least ninety (90) days prior to the
expiration of the initial term, gives Landlord written notice of their
intention to exercise such option. 
Landlord upon written notice will have thirty (30) days to acknowledge
acceptance of renewal.

 

 

e.             Security
Deposit.  Tenant has deposited with
Landlord the Security Deposit, (one months rent) as security for the
performance by Tenant of its obligations under this Lease. If Tenant shall
perform all such obligations, the Security Deposit shall be refunded to Tenant,
with interest at the rate of interest payable by 1st Mariner Bank on its money
market accounts, within ten (10) days after termination of this Lease. If
Tenant shall default in any obligation, Landlord shall be entitled to apply any
or all of the Security Deposit toward Landlord’s damages, and Tenant shall,
within ten (10) days after notice thereof, deposit with Landlord an amount
sufficient to restore the Security Deposit to its original amount, which amount
shall constitute Additional Rent under the Lease.

 

2

 

Section 3.              Utilities and Services

 

Tenant will pay for all water and sewer, gas
and electricity, janitorial services, appropriate repairs and trash removal
services to the Premises together with any taxes thereon, if any such services
are not separately metered to Tenant, Tenant shall pay a reasonable proportion
to be determined by Landlord of all charges jointly metered with other
premises.  Landlord shall under no
circumstances be liable to Tenant in damages or otherwise for any interruption
in service of electricity, water, gas, heat, telephone or air-conditioning
caused by the making of any repairs or improvements in the Building unless
cause by Landlord’s negligence.

 

Section 4. Landlord Insurance

 

Landlord shall be responsible for maintaining
adequate insurance on the building known as 3301 Boston Street, Baltimore, Md.
21224.  The cost of this insurance will
be allocated to each tenant on a pro rata basis.

 

Section 5.              Taxes

 

Tenant shall pay prior to delinquency all
taxes assessed against and levied upon trade fixtures, furnishings, equipment
and all other personal property of Lessee contained in the premises or
elsewhere.  When possible, Tenant shall
cause said trade fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of
Landlord.

 

If any of Tenant’s said personal property
shall be assessed with Lessor’s real property, Tenant shall pay Landlord the
taxes attributable to Landlord within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee’s property.

 

Section 6.              Tenant’s Insurance

 

a.             Coverage.  Tenant shall procure and
maintain the following insurance coverage:

(i) Liability Insurance, covering public liability,
personal and bodily injury and death. 
Such insurance shall provide, in the aggregate, a minimum coverage of
One Million Dollars ($ 1,000,000) combined single limit per occurrence and

 

(ii)
Property damage insurance, written at the cost of replacement, covering the
Premises that Landlord shall have installed, including without limitation, all
contents, fixtures, improvements, floor coverings, wall coverings, furniture,
and other property.

 

Such policies shall  (i) insure against “all risks” and cover losses caused by fire
and all other casualties, specifically including, but not limited to, falling
objects, earthquakes, and flood, and shall contain a replacement cost
endorsement, (ii) be adjusted upward annually for inflation to reflect the
actual replacement cost of such property, and in any case by any amount at
least equal to the increase in the Consumer Price Index, as defined in Section
3.  Such insurance shall not require the
payment of a deductible exceeding One Thousand Dollars ($ 1,000.00)

 

3

 

Section 7.  Default Clause

 

Following any of these events, Landlord may terminate
this lease and enter and take possession of the premises from Tenant, all
without waiving any rights, which it may have at law hereunder, without further
notice or demand (all such notices and demands being hereby waived).  In addition, at the option of Landlord, the
balance of the rents for the remainder of this Lease as well as all other
charges agreed to be paid by Tenant during such period, will become due and
payable immediately by Tenant to Landlord, in addition to any and all rents and
other charges already due and payable and in arrears.

 

a.             That Tenant shall fail to pay rent due
hereunder within ten (10) days of due date.

 

b.             That Tenant shall fail to commence to cure
any other violation of its covenants within fifteen (15) days after written
notice thereof, or, having commenced to cure the same as aforesaid, should fail
to carry the same to conclusion with due diligence.

 

c.             Upon the adjudication of Tenant as a
bankrupt or the appointment of a receiver of its property.

 

 

Section 8.              Exhibits and Addenda

 

a.             Exhibit “A”, the floor plan, is part of this
Lease.

 

b.             Addendum “A”, Inclusions to Lease, is part
of this Lease.

 

c.             Addendum “B”, General Terms of Lease, is
part of this Lease.

 

4

 

IN WITNESS WHEREOF, the parties hereto have executed this Lease under
their respective seals as of the day and year first above written.

 

 

	
  WITNESS:

  	
   

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
             Canton
  Crossing LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
       /s/ Ken Jones

  	
   

  	
  By:

  	
     /s/ Edwin F. Hale

  	
  (SEAL)

  	
   

  
	
   

  	
   

  	
   

  	
                  Edwin
  F. Hale

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
     TENANT:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
                  1st
  Mariner Bank

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
       /s/ Ken Jones

  	
   

  	
  By:

  	
     /s/ Brett Carter

  	
  (SEAL)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
                  Brett
  Carter

  
											

 

5

 

ADDENDUM A

Inclusions To the Lease

 

Section 1.              Utilities and Services

 

During the Term of Lease, Tenant shall have
the non-exclusive use, of the common area restroom facilities, elevators,
stairways, hallways, driveways, footway and parking areas servicing the
Building.  Landlord shall have the right
to establish reasonable rules for the use of common facilities to accommodate
the needs and interests of all persons using such facilities.

 

Additional charges for electric, water,
janitorial in accordance with 3a will be invoiced monthly.  The tenants pro rata share of real estate
taxes will be invoiced annually.

 

6

 

Addendum B

General Terms of Lease

 

Section 1.              Tenant’s Use

 

a.             Use of Premises. 
The Premises shall be used and occupied for general office use and no
other purpose.  Tenant shall have access
to the Premises twenty-four hours per day and seven days per week, provided
that Tenant shall comply with Landlord’s standard security systems and procedures,
as in effect from time-to-time.

 

b.             No Partnership or Joint Venture. 
Nothing contained in this Lease shall be deemed or construed as making
any party the agent, employee, joint venture, partner, or representative of any
other party.

 

c.             Quiet Enjoyment.  So
long as the Tenant complies with this Lease, the Tenant shall be entitled to
the quiet and peaceful use and enjoyment of the Premises, and the Landlord
shall defend such rights of the Tenant against the claims the Landlord, subject
to the terms of this Lease.

 

Section 2.              Assignment and Subletting

 

Tenant shall not assign Lease or sublet the
Premises in whole or in part, permit other persons to occupy said Premise or
any part thereof, or grant a license or concession for all or any part of said
Premises except upon the prior written approval of Landlord’s sole and absolute
discretion which should not be unreasonably withheld.  Any consent by Landlord to an assignment or subletting of this
lease shall not constitute a waiver of the necessity of such consent as to any
subsequent assignment or subletting.

 

Section 3.

 

a.             Landlord Obligations. 
Landlord shall keep and maintain in good repair all of the structural
elements of the Building including all electrical, plumbing, heating,
air-conditioning or other mechanical installations servicing the Building, all
exterior portions of the Premises (inclusive of doors, windows, and glass) and
the routine maintenance of the interior of the Premises to the same extent that
Landlord maintains the other portions of the Building; provided that any damage
thereto shall not have been caused by Tenant, its agents, servants, licensees,
invitees, contractors or employees, in which event Tenant shall be responsible
therefore and shall promptly perform necessary repairs.

 

Tenant shall pay for its pro
rata share (including its pro rata share of common area space) of expense
incurred by the landlord as outlined in section 7(f).  Such payment is due within 30 days after invoiced by the Landlord.

 

b.             Tenant Obligations. 
Landlord shall have no liability or obligation to repair or maintain any
equipment, facilities, fixtures, installations, or other property placed or

 

7

 

incorporated in the Premises by Tenant, all
of which shall be at the expiration of the Term in as good condition as when
received except for ordinary wear and tear.

 

Section 4.              Tenant’s Operations, Alterations, Signs, Etc

 

a.             Tenant’s Operations. 
Tenant shall  (1) use, maintain
and occupy the Premises in a careful, safe, clean, proper and lawful manner,
(2) conduct its business in a respectable, first-class manner as not degrade
the Building or disturb other tenants; (3) comply with all laws and ordinances
and all rules and regulations of governmental authorities and all
recommendations of the Association of Fire Underwriters or other similar bodies
establishing standards for fire insurance ratings with respect to the use or
occupancy of the Premises by Tenant, and (4) comply such other standards of
operation and requirements as the Building Lease requires of Landlord.

 

b.             Tenant’s Alterations.  
Tenant shall not make any alterations whatsoever to the Premises without
Landlord’s prior written consent.  All
alterations made by Tenant, whether or not approved by or subject to the
approval of Landlord, and all air-conditioning, heating, lighting, electrical,
plumbing equipment and fixtures and all wiring and other apparatus related to
air-conditioning, heating, lighting, electrical and plumbing equipment
installed by Tenant at the Premises (whether or not such equipment and fixtures
are affixed to the Premises as to be removable without destroying the chattels
themselves or the property to which they re affixed and whether or not such
equipment and fixtures are real property or personality) unless Landlord gives
notice to Tenant to remove the same, shall remain upon the Premises at the
expiration or earlier termination of the Term of this lease and shall become
the property of Landlord immediately upon installation thereof.  Landlord may give Tenant written notice to
remove any or all of the aforesaid alterations or fixtures, in which event the
Tenant shall remove such if the alterations and fixtures as may be specified in
Landlords notice to Tenant and Promptly restore the Premises to the same good
order and conditions as they were in at the Commencement Date.  Tenant shall not cause or suffer any liens,
including but limited to mechanic’s liens, to attach to the Premise or the building
in which the Premises are located.

 

c.             Signs.  Tenant shall not place, suffer
to be placed or maintain any sign, billboard, marquee, awning, decoration,
placard, lettering, advertising matter, or other thing of any kind (herein
collectively “Sign”), whether permanent or temporary on the exterior of the
Premises or on the glass of any window or door of the Premises without first
obtaining Landlord’s written approval thereof, said approval not to be
reasonably withheld.  Tenant further
agrees to maintain any sign approved by Landlord in good condition and repair
at all times.

 

d.             Increase in Insurance.  If
anything done, omitted to be done or suffered to be done by Tenant, or kept, or
suffered by cost of fire or other insurance on the Premises or other property
of Landlord in the Building, to be increased beyond the minimum from time to
time applicable to the Premises, Tenant will pay the amount of such increase
within thirty (30) days of the date of written demand by Landlord.

 

8

 

Section 5.              Subordination and Estoppel Certificate

 

a.             Subordination. 
Tenant’s rights under this Lease are and shall always be subordinate to
(i) the terms, conditions, provisions and rights stated in the Building Lease,
(ii) the operation and effect of any mortgage or deed of trust now or hereafter
placed upon the Building or any part thereof by Landlord or its landlord, or
(iii) any renewal, modification, consolidation, replacement or extension of any
such lease, mortgage or deed of trust unless the lessor, mortgagee or holder of
the deed of trust elects in such instrument to have Tenant’s interest hereunder
superior to the interest of the lessor, mortgagee or holder of such deed of
trust.  This sub-section shall be
self-operative and no further instrument or subordination shall be necessary,
but Tenant shall execute promptly any instrument of subordination that Landlord
may request.

 

b.             Estoppel Certificate. Tenant shall from time to time, upon not
less than ten (10) days prior written request by Landlord, provide, execute,
acknowledge, and deliver to Landlord written acknowledgments and statement s
may be required of Landlord under the Building Lease.

 

Section 6.              Indemnification

 

a.             Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all claims, actions, damages, liabilities, property damage
arising out of or relating to Tenant’s occupancy or use of the Premises or any
other part of the Building or property or other improvement thereon.  Such Indemnity shall extend to acts and
omissions by Tenant, its employees, agents, contractors, customers, guests, and
any other visitor whomsoever, and include workers compensation claims.

 

b.             Landlord shall indemnify, defend and hold Tenant harmless from and
against any and all claims, actions, damages, liabilities, and expenses,
including reasonable attorney’s fees for, or in connection with, personal
injury, bodily injury, loss of life and/or property damage arising out of or
relating to Landlord’s occupancy or use of the Building other than the Premises.  Such indemnity shall extend to acts and
omissions by Landlord, its employees, agents, contractors, customers, guests,
and any other visitor whomsoever, and include workers compensation claims.

 

c.     Neither party shall have any obligation to
indemnify the other for or open account of the illegal acts of any person.

 

Section 7.                              Tenant’s Insurance

 

a.             General.   Tenant shall procure and
maintain the insurance coverage specified in the lease with insurance companies
licensed to do business in Maryland and having a Best rating of at least
“A+”.  Tenant shall also procure and
maintain all insurance required by law, for example, workman’s compensation
insurance, in such amounts and in such form as required by the particular
law.  All liability and property damage
policies shall contain an endorsement naming Landlord as a named insured and a
loss payee.  Tenant shall procure the
required

 

9

 

coverage promptly, and furnish Landlord with
a certificate reflecting the required coverage and endorsement, and proof of
payment of the premiums for such policies. 
Tenant shall provide Landlord promptly with a copy of all policy
renewals and premium notices (within three (3) days of receipt by Tenant
thereof) and with proof of payment of such premiums no later than thirty (30)
days prior to the due date for the payment of such premium.  All such insurance coverage shall be
exclusive of the cost of legal defense and other attorney’s fees.  Tenant shall ensure that the insurance policies
contain an endorsement requiring the insurance company to provide Landlord with
a thirty (30) day written notice of any change in the coverage described herein
that Tenant or insurance company proposes to make.  Tenant hereby assigns the proceeds of such insurance as provided
in this Agreement, and authorizes Landlord to collect such sums and to execute
and endorse in Tenant’s name all proofs of loss, drafts, checks, and other
documents necessary to accomplish such collections.  Any persons or entities making payments to Landlord under the
terms of this paragraph hereby are indemnified against and relieved absolutely
from any obligation regarding the payment or application of any sums so paid.

 

b.             Supplemental Coverage. 
Landlord reserves the right, should one or more claims be made against
such insurance coverage to demand the Tenant promptly procure additional
insurance coverage in such an amount as in Landlord’s reasonable is necessary
and prudent to protect Landlord’s interest in the Building and under this
agreement.  A demand for additional
coverage, in an amount equal to claims that have been filed and either settled,
or are in litigation and with respect to which Landlord’s counsel has furnished
an opinion that the Claimant has a legal cause of action which may result in
the relief sought being granted, shall be deemed to be reasonable demand.

 

c.             Contractor Insurance. 
Tenant shall require any contractor of Tenant performing work on the
Premises to carry and maintain, at no expense to the Landlord:

 

(i)            comprehensive General Liability Insurance, including contractor’s
liability coverage contractual liability coverage completed operations coverage
broad from property damage endorsement and contractor’s protective liability
coverage to afford protection with limits for each occurrence of not less than
Three Million Dollars ($3,000,000.000) with respect to personal injury, bodily
injury or death, and One Million Dollars ($1,000,000.00) with respect to
property damage; and

 

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

 

d.             Waiver of Subrogation. 
Neither party shall be liable to the other party or to any insurance
company (by way of subrogation or otherwise) insuring the other party for any
loss or damage to any building, structure or other tangible property, or losses
under workmen’s compensation laws and benefits, even though such loss or damage
might have been occasioned by negligence of such party, its agents or employees
if any such loss or damage covered by insurance benefiting the party suffering
such damage or loss was required to be covered by insurance pursuant to this
Lease.  However, if, by reason of the
foregoing waiver, either party shall be unable to obtain any such insurance,
such waiver shall be deemed not to have been made 

 

10

 

by such party, and provided further that, if
either party is unable to obtain any such insurance without the payment of an
additional premium therefore, then, unless the party claiming the benefit of
such additional premium within thirty (30) days after notice setting forth such
requirement and the amount of the additional premium, such waiver shall be of
no force and effect between such party and such claiming party.

 

Section 8 Additional
Rent

 

a.             Additional Rent.  In
addition to Base Rent, Tenant shall pay, as “Additional Rent” hereunder, (i)
Tenant’s Proportionate Share of “Common Area Costs,” as set forth in Section
8(g) hereof; (ii) Tenant’s Proportionate Share of premiums for the “Insurance”
to be obtained by Landlord for the Property, as set forth in Section 4 hereof,
(iii) Tenant’s Proportionate Share of “Taxes,” as set forth in Section 9(g)
hereof; and (iv) all other sums or charges due or to become due from Tenant to
Landlord hereunder.  Any payment of
monies called for herein to be made by Tenant to Landlord is deemed Additional
Rent and shall be collectible as Additional Rent.

 

b.             Common Area Costs. 
Tenant agrees to pay as Additional Rent during each lease year during
the Term, Tenant’s Proportionate Share of the “Common Area Costs,” as hereafter
defined.  For purposes of this Lease,
the term “Common Area Costs” shall mean all costs and expenses incurred by
Landlord in operating, maintaining, repairing, lighting, signing, cleaning,
painting, stripping, insuring, equipping, staffing, heating and cooling,
securing, and policing of the Common Area, including, without limitation, all
costs and expenses associated with the following items or services, which may
be incurred by Landlord in its sole discretion:  (i) maintaining and replacing any and all alarm and life safety
systems and any fire alarm monitoring or testing service program or fire
suppression system installed within the Premises or otherwise within the
improvements which form a part of the Property, including without limitation
any patrol services; (ii) maintenance of irrigation systems serving the
Property; (iii) insurance, including, without limitation, liability insurance
for personal injury, death and property damage, to the extent not reimbursed by
Tenant under Section 13.2 below; (iv) surcharges levied upon or assessed
against parking spaces or areas, payments toward mass transit or car pooling
facilities or otherwise as required by federal, state or local governmental
authorities; (v) all landscaping, including, but not limited to, lawn
maintenance, new plantings and replacement of existing landscaping; (vi)
repairing, cleaning, sweeping, painting, striping, replacing and repaving of
paving, curbs, walkways, guardrails, bumpers, fences, screens, flagpoles,
bicycle racks, signs and other markers, landscaping, drainage pipes, ducts,
conduits, lighting facilities and all other Common Area site amenities; (vii)
maintenance, repair and replacement of utility systems serving the Property,
including, but not limited to, water, sanitary sewer and storm water lines and
drainage systems (whether on-site or off-site), electrical, gas, telephone and
lighting systems (including bulbs, poles, and fixtures) and other utility
lines, pipes and conduits, and all payments of utility charges in connection
with any of the foregoing systems; (viii) maintenance and repair of all
portions of the buildings in the Property including, but not limited to, walls,
roofs and roof flashings, canopies, skylights, signs, planters, benches, fire
exits, doors and hardware, windows, glass and glazing; (ix) inspection,
maintenance, repair and acquisition costs (including depreciation) of any and
all machinery and equipment used in the operation and maintenance of the Common
Area, including personal property taxes and other 

 

11

 

charges and taxes incurred in
connection with such equipment; (x) cleaning of any exterior glass; (xi)
removal of snow, ice, trash and debris; (xii) maintenance of and compliance
with federal, state or local governmental ambient air and environmental
standards and other laws and regulations; (xiii) all materials, supplies and
services purchased or hired in connection with the operation of the Common
Area; (xiv) compensation and benefits paid to any and all personnel, including,
without limitation, security and maintenance persons, secretaries, bookkeepers
and any other personnel related to the operation of the Common Area; (xv) management
fees charged for management of the Property; and (xvi) an overhead
administrative cost allowance in the amount of fifteen percent (15%) of the
total Common Area Costs.  Tenant’s
Proportionate Share of Common Area Costs shall be paid by Tenant in monthly
installments in such amounts as are estimated and billed by Landlord to Tenant
as of the Commencement Date and then at the beginning of each calendar year
during the Term, each such installment being due on the first day of each
calendar month.  Any period of less than
a full calendar year occurring due to the timing of the Commencement Date shall
be proportionately adjusted to reflect such partial year.  If at any time during such twelve (12) month
period it shall appear that Landlord has underestimated Tenant’s Proportionate
Share of Common Area Costs (whether attributable to a change in Tenant’s
Proportionate Share, an increase in the projected Common Area Costs for such
period, mathematical error or otherwise), Landlord may re-estimate Tenant’s Proportionate
Share of Common Area Costs and may bill Tenant for any deficiency which may
have accrued during such twelve (12) month period and thereafter the monthly
installment payable by Tenant shall also be adjusted.  Within one hundred twenty (120) days after the end of each such
twelve (12) month (or, if applicable, shorter) period, Landlord shall deliver
to Tenant a statement setting forth the actual Common Area Costs for such
period, Tenant’s Proportionate Share thereof, and the total amount paid by Tenant
to Landlord under this Section 6.3 during such period.  In the event the amounts paid by Tenant
during such period are greater or lesser than Tenant’s Proportionate Share of
the Common Area Costs as set forth on such statement, Tenant shall pay to Landlord
or Landlord shall credit Tenant’s account (or, if such adjustment occurs at the
end of the Term, pay to Tenant), as the case may be, within thirty (30) days of
receipt of such statement, the amount of any excess or deficiency.  Failure of Landlord to provide the statement
called for hereunder shall not relieve Tenant from its obligations under this
Section 6.3 or elsewhere in this Lease.

 

Section 9 
Other

 

a.             Limitations. The Premises may be used only for the
purpose or purposes specified in Section 1.1(j) above and for no other purpose
or purposes without the prior written consent of Landlord.  Tenant shall not at any time leave the
Premises vacant, but shall in good faith continuously throughout the Term conduct
and carry on its business in the entire Premises.  Tenant shall not, without Landlord’s prior written consent, keep
anything within the Premises for any purpose or use the Premises in a manner
which causes an increase in the insurance premium cost or invalidates any
insurance policy carried on the Premises or other part of the Property.  Tenant shall pay as Additional Rent, upon
demand of Landlord; any such increased premium cost due to or associated with
Tenant’s use or occupation of the Premises or its storage of certain
goods.  Anything contained herein to the
contrary notwithstanding, all property kept, stored or maintained within the
Premises by Tenant shall be at Tenant’s sole risk.  Tenant shall not (a) permit any objectionable or unpleasant odors
to emanate from the Premises; (b) place or permit

 

12

 

any radio, television,
loudspeaker or amplifier on the roof or outside the Premises or where the same
can be seen or heard from outside the Building or in the Common Area; (c) place
an antenna, awning or other projection on the exterior of the Premises; (d)
solicit business or distribute leaflets or other advertising material in the
Common Area; nor (e) take any other action which in the exclusive judgment of
Landlord would constitute a nuisance or would disturb or endanger other tenants
of the Property or unreasonably interfere with their use of their respective
premises.

 

b.             Environmental. During the Term and any Renewal Term of
the Lease, Tenant warrants, represents and covenants to and with Landlord as
follows:  The Premises will not contain
(A) asbestos in any form, (B) urea formaldehyde foam insulation, (C)
transformers or other equipment which contain dielectric fluid containing
polychlorinated biphenyls, or (D) any flammable explosives, radioactive
materials, hazardous materials, hazardous wastes, hazardous, controlled or
toxic substances, or any pollutant or contaminant, or related materials defined
in or controlled pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 et
seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801 et seq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Sections 9601 et seq.), the Federal Water Pollution Control Act (33
U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et
seq.), and in the regulations adopted and publications promulgated pursuant
thereto, or any other Federal, state or local environmental law, ordinance,
rule or regulation (collectively, “Environmental Laws”); or which, even if not
so regulated, may or could pose a hazard to the health or safety of the
occupants of the Building (the substances described in (A), (B), (C) or (D)
above being hereinafter collectively referred to as “Hazardous Materials”);
(ii) the Premises will never be used by Tenant for any activities involving,
directly or indirectly, the use, generation, treatment, transportation, storage
or disposal of any Hazardous Materials or to refine, produce, store, handle,
transfer, process or transport “Hazardous Substances”, as such term is defined
in any such Environmental Laws. Tenant (A) shall comply with the Environmental
Laws and all other applicable laws, rules and regulations or orders pertaining
to health, the environment or Hazardous Materials, (B) shall not store,
utilize, generate, treat, transport or dispose of (or permit or acquiesce in
the storage, utilization, generation, transportation, treatment or disposal of)
any Hazardous Materials on or from the Premises, and (C) shall to cause its
employees, licensees and invitees to comply with the representations,
warranties and covenants herein contained. 
In the event of any storage, presence, utilization, generation,
transportation, treatment or disposal of Hazardous Materials in, on or about
the Premises, or in the event of any Hazardous Materials Release (as
hereinafter defined) Tenant shall, at the direction of Landlord or any federal,
state, or local authority or other governmental authority, remove or cause the
removal of any such Hazardous Materials and rectify any such Hazardous
Materials Release, and otherwise comply or cause compliance with the laws,
rules, regulations or orders of such authority, all at the expense of Tenant,
including without limitation, the undertaking an completion of all
investigations, studies, sampling and testing and all remedial, removal and
other actions necessary to clean up and remove all Hazardous Materials, on,
from or affecting the Premises.  If Tenant
shall fail to proceed with such removal or otherwise comply with such laws,
rules, regulations or orders within the cure period permitted under the
applicable regulation or order, the same shall constitute a default under
Section 19.1 hereof, and Landlord may, but shall not be obligated to,

 

13

 

do whatever is necessary to
eliminate such Hazardous Materials from the Premises or otherwise comply with
the applicable law, rule, regulation or order, acting either in its own name or
in the name of Tenant pursuant to this Section, and the cost thereof shall be
borne by Tenant and thereupon become due and payable as additional rent
hereunder.  Tenant shall give to Landlord
and its agents and employees access to the Premises for such purposes and
hereby specifically grants to Landlord a license to remove the Hazardous
Materials and otherwise comply with such applicable laws, rules, regulations or
orders, acting either in its own name or in the name of the Tenant pursuant to
this Section.  Tenant hereby indemnifies
and holds Landlord and each of its shareholders, subsidiaries, affiliates,
officers, directors, partners, employees, agents and trustees, and any
receiver, trustee or other fiduciary appointed for the Building, harmless from,
against, for and in respect of, any and all damages, losses, settlement
payments, obligations, liabilities, claims, actions or causes of actions,
encumbrances, fines, penalties, and costs and expenses suffered, sustained,
incurred or required to be paid by any such indemnified party (including,
without limitation, reasonable fees and disbursements or attorneys, engineers,
laboratories, contractors and consultants) because of, or arising out of or
relating to (A) Tenant’s violation of any of its representations, warranties
and covenants under this Section 7.5, and (B) any Environmental Liabilities (as
herein below defined) in connection with the Premises    For purposes of this indemnification clause, “Environmental
Liabilities” shall include all costs and liabilities with respect to the future
presence, removal, utilization, generation, storage, transportation, disposal
or treatment of any Hazardous Materials or any release, spill, leak, pumping,
pouring, emitting, emptying, discharge, injection, escaping, leaching, dumping
or disposing into the environment (air, land or water) of any Hazardous
Materials (each a “Hazardous Materials Release”), including without limitation,
cleanups, remedial and response actions, remedial investigations and
feasibility studies, permits and licenses required by, or undertaken in order
to comply with the requirements of, any federal, state or local law,
regulation, or agency or court, any damages for injury to person, property or
natural resources, claims of governmental agencies or third parties for cleanup
costs and costs of removal, discharge, and satisfaction of all liens,
encumbrances and restrictions on the Premises relating to the foregoing.  The foregoing indemnification and the
responsibilities of Tenant under this Section shall survive the termination or
expiration of this Lease.

 

Tenant shall promptly notify
Landlord in writing of the occurrence of any Hazardous Materials Release or any
pending or threatened regulatory actions, or any claims made by any
governmental authority or third party, relating to any Hazardous Materials or
Hazardous Materials Release on or from, the Premises and shall promptly furnish
Landlord with copies of any correspondence or legal pleadings or documents in
connection therewith.  Landlord shall
have the right, but shall not be obligated, to notify any governmental
authority of any state of facts, which may come to its attention with respect
to any Hazardous Materials or Hazardous Materials Release on or from the
Premises.  Upon expiration of the Term
or any Renewal Term, as applicable, Tenant shall deliver the Premises to
Landlord free of any and all Hazardous Materials and any liens, encumbrances
and restrictions relating to Environmental Liabilities to the extent Tenant was responsible therefore under the terms of this
Section.   Tenant agrees that
Landlord shall have the right to conduct, or to have conducted by its agents or
contractors, such environmental inspections of the Premises, as Landlord shall
reasonably deem necessary or advisable from time to time.  Without limitation of the foregoing, in the
event of the failure of Tenant to comply with any of the material requirements
of any Environmental Laws, and/or any

 

14

 

 related regulations, Landlord shall have the right, at the sole
option of Landlord, to comply with such statutory or regulatory requirements,
and/or to cure any such default at Tenant’s sole expense, and all costs and
expenses of such compliance and/or cure shall be due and payable from Tenant to
Landlord upon demand as additional rent hereunder.   Tenant shall procure, at its sole expense, all permits and
licenses required for its operations and the transaction of business in the
Premises (including without limitation, to the extent applicable to Tenant’s
permitted use, special use permits, business licenses, health department
licenses, and other similar licenses, permits and approvals), and shall
otherwise comply with all applicable laws, ordinances and governmental
regulations, as well as all other covenants and restrictions of record,
affecting the Premises, and the conduct of business therein by Tenant,
including without limitation the Americans with Disabilities Act, as the same
may be amended (“ADA”).

 

c.             Repair by Tenant. 
Maintenance of the air conditioning, hot water and heating equipment
shall be solely the responsibility of Tenant throughout the entire Term.  Landlord will invoice tenant monthly for the
maintenance contract that will protect the air conditioning, hot water and
heating equipment for tenant.  The
service contract will include all services suggested by the equipment
manufacturer within the operation/maintenance manual and will become effective
(and a copy thereof delivered to Landlord) within thirty (30) days of the date
Tenant takes possession of the Premises.

 

d.             Non-Liability. 
Landlord and Landlord’s partners, agents, employees, officers and
directors shall not be liable to Tenant or any other person or entity
whomsoever for any damage to property caused by the Premises or other portions
of the Property becoming out of repair or damaged, or by defect in or failure
of equipment, pipes or wiring, or broken glass, or by the backing up of drains
or by gas, water, steam, electricity or oil leaking, escaping or flowing into
the Premises irrespective of the cause. To the extent Landlord would otherwise
be required by Maryland law or common law to correct any latent or patent
defects in the Premises or in the Building of which they form a part, any
obligation on the part of Landlord to correct such latent or patent defects in
the Premises or in the Building shall not extend beyond one (1) year from the
date the Premises are deemed Ready for Occupancy, whether or not such defects
are discovered within such one (1) year period; provided that the other terms
of this Lease shall in all events govern Landlord’s and Tenant’s respective
responsibilities and monetary obligations in connection with the construction
of initial leasehold improvements to the Premises, correction of “punch-list”
items,  and any subsequent repairs and
maintenance to the Premises and the Building. 
Landlord and Landlord’s partners, agents, employees, officers and
directors shall not be liable to Tenant or to Tenant’s employees, agents or
visitors, or to any person or entity whomsoever, for injury to person or damage
to or loss of property (i) occurring in, on or about the Premises, regardless
of the cause, (ii) occurring within the Common Area, if caused by the
negligence or misconduct of Tenant, its officers, partners, employees, agents,
subtenants, licensees or concessionaires, (iii) arising out of the use of the
Premises by Tenant and the conduct of its business therein, (iv) arising out of
any breach or default by Tenant in the performance of its obligations
hereunder, or (v) occasioned by or through the acts or omissions of other
tenants of the Property or of any other persons or entities whomsoever,
excepting only the negligence or willful misconduct of duly authorized employees
and agents of Landlord to the extent the same is not covered under insurance
Tenant is required to carry pursuant to Section 13.1, above; and, in any of
such events, Tenant hereby agrees to indemnify Landlord and Landlord’s
partners, agents, employees, officers and/or directors and hold each of them
harmless from any and all liability, loss, damage, claim, action or expense
(including, without limitation, all court costs and attorneys’ fees) arising
out of such damage or injury due to any of the causes described above (other
than those described in clause (v), above). 
The provisions of this section shall survive the termination of this
Lease with respect to any claims or liability attributable to acts, omissions,
occurrences and/or conditions existing or occurring prior to such
termination.  In no event shall
Landlord, or any of Landlord’s partners, agents, employees, officers and
directors, be liable to Tenant or any of its agents, employees, contractors,
officers or directors for any lost profits or other loss suffered by Tenant,
due to any interruption in Tenant’s business operation from the Premises,
whether caused by the acts or omissions of Landlord, or its agents, employees,
contractors, officers and/or directors, or by any other cause (other than
Landlord’s intentional misconduct), it being acknowledged that Tenant is
capable of obtaining business

 

15

 

interruption insurance covering
such loss(es) including a waiver of subrogation endorsement. .  In the event (but solely to the extent) the
limitations on Landlord’s liability set forth in this Lease would be held to be
unenforceable or void under Maryland law in the absence of a modification
holding the Landlord liable to Tenant or to another person for injury, loss,
damage or liability arising from Landlord’s omission, fault, negligence or
other misconduct on or about the Premises, or other areas of the Building
appurtenant thereto or used in connection therewith and not under Tenant’s
exclusive control, then such provision shall be deemed modified as and to the
extent (but solely to the extent) necessary to render such provision
enforceable under applicable Maryland law. 
The foregoing shall not affect the application this Lease to limit the
assets available for execution of any claim against Landlord, or otherwise.

 

e.             Substantial Taking.  If
more than twenty percent (20%) of the floor area of the Premises should be
taken for any public or quasi-public use under any governmental law, ordinance
or regulation or by right of eminent domain or by private purchase in lieu
thereof, this Lease shall terminate and the Rent (excluding Rent accruing with
respect to the period prior to the date of such termination) shall be abated
during the un-expired portion of this Lease, effective on the date physical
possession is taken by the condemning authority.    If less than twenty percent (20%) of the floor area of the
Premises should be taken as aforesaid, this Lease shall not terminate; however,
the Base Rent payable hereunder during the un-expired portion of this Lease
shall be reduced in proportion to the area taken, effective on the date
physical possession is taken by the condemning authority.  Following such partial taking, Landlord
shall make all necessary repairs or alterations within the scope of Landlord’s
Work as described in Exhibit C necessary to make the Premises an
architectural whole.  If any part of the Common Area shall be taken
as aforesaid, this Lease shall not terminate, nor shall the Rent payable
hereunder be reduced; provided, however, either Landlord or Tenant may
terminate this Lease if the area of the Common Area remaining following such
taking plus any additional parking area provided by Landlord in reasonable
proximity to the Property shall be less than fifty percent (50%) of the area of
the Common Area immediately prior to the taking. Any election to terminate this Lease in accordance with this provision
shall be evidenced by written notice of termination delivered to the other
party within thirty (30) days
after the date physical possession is taken by the condemning authority.  All compensation awarded for any taking for
public purposes, whether permanent
or temporary (or the proceeds of private sale in lieu thereof), of the Premises or Common Area shall be the
property of Landlord, and Tenant hereby assigns its interest in any such award
to Landlord; provided, however, Landlord shall have no interest in any award
made to Tenant for loss of business, relocation expenses and/or for the taking
of Tenant’s fixtures and other personal property of Tenant if a separate award
for such items is made to Tenant and does not diminish the award payable to
Landlord.  Tenant shall in no event be
entitled to any award made for the value of the unexpired Term of this Lease.

 

f.              Personal Property and Fixtures. Tenant shall be liable for all taxes
levied against personal property and trade fixtures placed by Tenant in the
Premises.  If any such taxes are levied
against Landlord or Landlord’s property and if Landlord elects to pay the same
or if the assessed value of Landlord’s property is increased by inclusion of
personal and trade fixtures placed by Tenant in the Premises and Landlord
elects to pay the taxes based on such increase, Tenant shall pay to Landlord
upon demand that part of such taxes for which Tenant is primarily liable
hereunder.

 

g.             Tax Payment. 
Tenant agrees to pay its Proportionate Share of all taxes, assessments
and governmental charges of any kind and nature whatsoever levied or assessed
against the Property, any other charges, taxes and/or impositions now in
existence or hereafter imposed by any governmental authority based upon the
privilege of renting the Premises or upon the amount of rent collected
therefore, and any tax, fee, levy, assessment or charge which is imposed as the
result of the transfer of the leasehold interest in the Premises created by
this Lease (all of the foregoing being hereinafter referred to collectively as
“Taxes”).  Taxes shall also be deemed to
include any special taxing district assessment, which is imposed in order to
fund public facilities for the area in which the Property is located.  During each month of the Term, Tenant shall
make a

 

16

 

monthly payment to Landlord
equal to one-twelfth (1/12) of its Proportionate Share of the Taxes on the
Property which Landlord reasonably estimates will be due and payable for the
tax year as to which such payments are being made (the “Tax Payments”).  Tenant acknowledges that, under current
practice, Taxes in Baltimore County, Maryland are assessed (and required to be
paid) in advance, so that it will be required to fund its Proportionate Share
of Taxes for the first Lease Year in advance, and to make estimated monthly Tax
Payments pursuant to this Section during the same Lease Year (such estimated
payments being made in respect of the next tax year’s bill for Taxes).  Tenant authorizes Landlord to use the funds
deposited with Landlord under this Section to pay the Taxes levied or assessed
against the Property.  Each Tax Payment
shall be due and payable at the same time and in the same manner as the time
and manner of the payment of Base Rent as provided herein.  The initial monthly Tax Payment is based
upon Tenant’s Proportionate Share of the Taxes on the Property for the fiscal
tax year in which the Commencement Date is to occur, as estimated by Landlord
in good faith, and the monthly Tax Payment is subject to increase or decrease
as determined by Landlord to reflect accurately Tenant’s Proportionate Share of
the Taxes.  If following Landlord’s
receipt of all Tax bills for any fiscal tax year Landlord determines that
Tenant’s total Tax Payments for such period are less than Tenant’s actual
Proportionate Share of the Taxes on the Property, Tenant shall pay to Landlord
the difference upon demand; if the total Tax Payments of Tenant exceed Tenant’s
actual Proportionate Share of the Taxes on the Property, Landlord shall retain
such excess and credit it to Tenant’s future Tax Payments, except that, upon
expiration of the Lease Term, Landlord will refund such excess to Tenant within
thirty (30) days after the exact amount of such refund can be calculated.

 

17

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