2800 EISENHOWER AVENUE ALEXANDRIA, VIRGINIA LEASE

ARTICLE 1.......... Reference Data........................................................................................ 1

1.1...... Introduction and Subjects Referred To...................................................................... 1

1.2...... Exhibits.................................................................................................................... 2

ARTICLE 2.......... Premises and Term.................................................................................. 3

2.1...... Premises.................................................................................................................. 3

2.2...... Term........................................................................................................................ 3

2.3...... Extension Option...................................................................................................... 3

2.4...... Measurement of the Premises................................................................................... 5

2.5...... Right of First Offer................................................................................................... 6

ARTICLE 3.......... Commencement and Condition....................................................... 6

3.1...... Commencement Date............................................................................................... 6

3.2...... Condition/Delivery of the Premises............................................................................ 7

3.3...... Preparation of the Premises...................................................................................... 7

ARTICLE 4.......... Rent, Additional Rent, Insurance and Other Charges........ 8

4.1...... The Annual Fixed Rent............................................................................................. 8

4.2...... Additional Rent........................................................................................................ 8

4.2.1... Real Estate Taxes......................................................................................... 8

4.2.2... Operating Costs......................................................................................... 10

4.2.3... Audit Right................................................................................................. 12

4.3...... Personal Property and Sales Taxes......................................................................... 13

4.4...... Insurance............................................................................................................... 13

4.5...... Utilities................................................................................................................... 15

4.6...... Late Payment of Rent............................................................................................. 15

ARTICLE 5.......... Landlord’s Covenants...................................................................... 15

5.1...... Affirmative Covenants............................................................................................ 15

5.1.1... Heat and Air-Conditioning.......................................................................... 15

5.1.2... Cleaning; Water......................................................................................... 16

5.1.3... Elevator, Lighting and Electricity................................................................. 16

5.1.4... Repairs...................................................................................................... 17

5.2...... Interruption............................................................................................................ 18

5.3...... Outside Services.................................................................................................... 18

5.4...... Access to Building.................................................................................................. 19

5.5...... Parking.................................................................................................................. 19

5.6...... Indemnification....................................................................................................... 20

ARTICLE 6.......... Tenant’s Additional Covenants................................................... 20

6.1...... Affirmative Covenants............................................................................................ 20

6.1.1... Perform Obligations.................................................................................... 20

6.1.2... Use............................................................................................................ 20

6.1.3... Repair and Maintenance............................................................................. 20

6.1.4... Compliance with Law................................................................................. 21

6.1.5... Indemnification........................................................................................... 21

6.1.6... Landlord’s Right to Enter............................................................................ 21

6.1.7... Personal Property at Tenant’s Risk............................................................. 22

6.1.8... Payment of Landlord’s Cost of Enforcement............................................... 22

6.1.9... Yield Up.................................................................................................... 22

6.1.10. Rules and Regulations................................................................................. 23

6.1.11. Estoppel Certificate.................................................................................... 23

6.1.12. Landlord’s Expenses For Consents............................................................. 23

6.1.13. Financial Information.................................................................................. 23

6.2...... Negative Covenants............................................................................................... 23

6.2.1... Assignment and Subletting.......................................................................... 23

6.2.2... Nuisance.................................................................................................... 27

6.2.3... Floor Load; Heavy Equipment.................................................................... 27

6.2.4... Electricity................................................................................................... 27

6.2.5... Installation, Alterations or Additions............................................................ 28

6.2.6... Abandonment............................................................................................. 29

6.2.7... Signs.......................................................................................................... 29

6.2.8... Oil and Hazardous Materials....................................................................... 29

ARTICLE 7.......... Casualty or Taking............................................................................. 31

7.1...... Termination............................................................................................................ 31

7.2...... Restoration............................................................................................................. 31

7.3...... Award................................................................................................................... 32

7.4...... Effect of Casualty or Taking on the Tax Excess and the Operating Cost Excess....... 32

ARTICLE 8.......... Defaults.................................................................................................... 32

8.1...... Default of Tenant.................................................................................................... 32

8.2...... Remedies............................................................................................................... 33

8.3...... Remedies Cumulative............................................................................................. 34

8.4...... Landlord’s Right to Cure Defaults........................................................................... 34

8.5...... Holding Over......................................................................................................... 35

8.6...... Effect of Waivers of Default.................................................................................... 35

8.7...... No Waiver, etc...................................................................................................... 35

8.8...... No Accord and Satisfaction.................................................................................... 35

ARTICLE 9.......... Rights of Holders................................................................................. 36

9.1...... Rights of Mortgagees or Ground Lessor.................................................................. 36

9.2...... Modifications......................................................................................................... 37

9.3...... Subordination, Non-Disturbance and Attornment.................................................... 37

ARTICLE 10........ Miscellaneous Provisions............................................................... 37

10.1.... Notices.................................................................................................................. 37

10.2.... Quiet Enjoyment; Landlord’s Right to Make Alterations, Etc................................... 37

10.3.... Lease not to be Recorded; Confidentiality of Lease Terms...................................... 38

10.4.... Assignment of Rents and Transfer of Title; Limitation of Landlord’s Liability............. 39

10.5.... Landlord’s Default.................................................................................................. 39

10.6.... Notice to Mortgagee and Ground Lessor................................................................ 40

10.7.... Brokerage.............................................................................................................. 40

10.8.... Applicable Law and Construction........................................................................... 40

10.9.... Rooftop Dish.......................................................................................................... 41

LEASE

2800 Eisenhower Avenue
Alexandria, Virginia

ARTICLE 1

Reference Data

1.1               Introduction and Subjects Referred To .

This is a lease (this “Lease” ) entered into by and between Hub Properties Trust , a Maryland real estate investment trust ( “Landlord” ), and Dimensions International, Inc. , a Virginia corporation ( “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:	March  3, 2004.
Building and Property:	That building in the City of Alexandria, Virginia known as 2800 Eisenhower Avenue (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:	The entire third (3 rd ) floor of the Building, substantially as shown on Exhibit A hereto.
Premises Rentable Area:	29,973 square feet.
Original Term:	The period commencing on the Commencement Date and expiring June 30, 2014.
Annual Fixed Rent:	The sum of the following amounts, as the same may be adjusted pursuant to the terms of the Lease.

 

	Dates		Annual Fixed Rent	monthly payment
	7/1/04 — 6/30/07*		$599,460.00	$49,955.00
	7/1/07 — 6/30/08		$809,271.00	$67,439.25
	7/1/08 — 6/30/09		$833,549.13	$69,462.43
	7/1/09 — 6/30/10		$858,555.60	$71,546.30
	7/1/10 — 6/30/11		$884,312.26	$73,692.69
	7/1/11 — 6/30/12		$910,841.62	$75,903.47
	7/1/12 — 6/30/13		$938,166.86	$78,180.57
	7/1/13 — 6/30/14		$966,311.86	$80,525.99
		*Tenant shall only be required to pay Annual Fixed Rent during this period if the Commencement Date occurs prior to July 1, 2007 as set forth in Section 3.1 hereof.
Base Taxes:		The Taxes (as defined in Subsection 4.2.1) for the 2007 calendar year, 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 2007 calendar year.
Tenant’s Percentage:		Twenty-six and 12/100 percent (26.12%).
Permitted Uses:		General office use, 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:		c/o REIT Management and Research LLC 400 Centre Street Newton, MA 02458
Landlord’s Agent:		REIT Management and Research LLC or such other entity as shall be designated by Landlord from time to time.
Original Address of Tenant:		2800 Eisenhower Avenue, Suite 300 Alexandria, VA 22314-5209 Attention: Chief Financial Officer

 

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.

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 escalators, 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 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 (as defined in Section 3.1) and continuing for the Original Term and any extension of the term hereof in accordance with the provision of this Lease, unless sooner terminated as hereinafter provided. When the dates of the beginning and end of the Original Term have been determined such dates shall be evidenced by a document executed by Landlord and Tenant and delivered each to the other, but the failure of Landlord and Tenant to execute or deliver such document shall have no effect upon such dates. The Original Term and any extension of the term hereof in accordance with the provisions of this Lease is hereinafter referred to as the “term” of this Lease.

2.3               Extension Option .  So long as this Lease is still in full force and effect, and the named Tenant as set forth in Section 1.1 (or any successor by merger, or any Affiliate) shall actually occupy at least 50% of the Premises, Tenant shall have the right to extend the term of this Lease for one (1) additional period (the “Extended Term” ) of five (5) years.  The Extended Term shall commence on July 1, 2014 and shall end on June 30, 2019.  All of the terms, covenants and provisions of this Lease applicable immediately prior to the expiration of the Original Term shall apply to the such Extended Term except that (i) the Annual Fixed Rent for the Extended Term shall be the Market Rate (as hereinafter defined) for the Premises determined as of the commencement of the Extended Term, as designated by Landlord by notice to Tenant ( “Landlord’s Notice” ), but subject to Tenant’s right to dispute as hereinafter provided; and (ii) Tenant shall have no further right to extend the term of this Lease beyond the Extended Term hereinabove provided.  If Tenant shall elect to exercise the aforesaid option, it shall do so by giving Landlord notice of its election not later than January 1, 2014.  If Tenant fails to give such notice to Landlord, the term of this Lease shall automatically terminate no later than June 30, 2014, and Tenant shall have no further option to extend the term of this Lease unless otherwise agreed to by Landlord and Tenant, it being agreed that time is of the essence with respect to the giving of such notice.  If Tenant shall extend the term hereof pursuant to the provisions of this Section 2.3, such extension shall be automatically effected without the execution of any additional documents, but the parties shall, at either’s request, execute an agreement confirming the Annual Fixed Rent for the Extended Term.

“Market Rate” shall mean the then fair market annual rental rate and terms for the Premises for the applicable period (determined as set forth below).  If Tenant disagrees with Landlord’s designation of the Market Rate, and the parties cannot agree upon the Market Rate by the date that is thirty (30) days following Landlord’s Notice, then the Market Rate shall be submitted for determination as follows: Within fifteen (15) days after the expiration of such thirty (30) day period, Landlord and Tenant shall each give notice to the other specifying the name and address of the broker each has chosen.  The two brokers so chosen shall meet within ten (10) days after the second broker is appointed and if, within twenty (20) days after the second broker is appointed, the two brokers shall not agree upon a determination of the Market Rate in accordance with the provisions of this Section 2.3 they shall together appoint a third broker.  If only one broker shall be chosen whose name and address shall have been given to the other party within such fifteen (15) day period and who shall have the qualifications hereinafter set forth, that sole broker shall render the decision which would otherwise have been made as hereinabove provided.

If said two brokers cannot agree upon the appointment of a third broker within ten (10) days after the expiration of such twenty (20) day period, then either party, on behalf of both and on notice to the other, may request such appointment by the nearest office of the American Arbitration Association (or any successor organization) in accordance with its then prevailing rules.  In the event that all three brokers cannot agree upon such Market Rate within ten (10) days after the third broker shall have been selected, then each broker shall submit his or her designation of such Market Rate to the other two brokers in writing; and Market Rate shall be determined by calculating the average of the two numerically closest (or, if the values are equidistant, all three) values so determined.

Each of the brokers selected as herein provided shall have at least ten (10) years experience as a commercial real estate broker in the greater Alexandria, Virginia area (i.e., the Washington Capital Beltway area) dealing with properties of the same type and quality as the Building.  Each party shall pay the fees and expenses of the broker it has selected and the fees of its own counsel.  Each party shall pay one half (1/2) of the fees and expenses of the third broker (or the sole broker, if applicable) and all other expenses of the appraisal.  The decision and award of the broker(s) shall be in writing and shall be final and conclusive on all parties, and counterpart copies thereof shall be delivered to both Landlord and Tenant.  Judgment upon the award of the broker(s) may be entered in any court of competent jurisdiction.

Both brokers or a majority of them (or the sole broker, if applicable) shall determine the Market Rate of the Premises for the Extended Term and render a decision and award as to their determination to both Landlord and Tenant (a) within twenty (20) days after the appointment of the second broker, (b) within twenty (20) days after the appointment of the third broker or (c) within fifteen (15) days after the appointment of the sole broker, as the case may be.  In rendering such decision and award, the broker(s) shall assume (i) that neither Landlord nor the prospective tenant is under a compulsion to rent, (ii) that Landlord and Tenant are typically motivated, well-informed and well-advised, and each is acting in what it considers its own best interest and (iii) that in the event the Premises are destroyed or damaged by fire or other casualty prior to the commencement of the Extended Term, they have been fully restored.  The brokers shall also take into consideration any increases or possible increases in rent then being included in leases for comparable space in the Building or in comparable buildings based on changes in price indices, cost of living or other similar increases, or periodic market rental adjustments.  In rendering such decision and award, the broker(s) shall consider the fair market annual rents (as the same may increase over time) then being charged for comparable available space in comparable buildings in the greater Alexandria, Virginia area, but shall not modify the provisions of this Lease.

If the dispute between the parties as to the Market Rate has not been resolved before the commencement of Tenant’s obligation to pay the Annual Fixed Rent based upon determination of such Market Rate, then Tenant shall pay the Annual Fixed Rent under the Lease based upon the Market Rate designated by Landlord in Landlord’s Notice until either the agreement of the parties as to the Market Rate, or the decision of the broker(s), as the case may be, at which time Tenant shall pay any underpayment of the Annual Fixed Rent to Landlord, or Landlord shall refund any overpayment of the Annual Fixed Rent to Tenant.

Landlord and Tenant hereby waive the right to an evidentiary hearing before the broker(s) and agree that the appraisal shall not be an arbitration nor be subject to state or federal law relating to arbitrations.

2.4               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, although the Annual Fixed Rent has been determined by reference to such square footage (regardless of the possibility that the actual measurement of the Premises may be more or less than the number identified, irrespective of measurement method used), Annual Fixed Rent and Tenant’s Percentage shall not be changed except as expressly provided in this Section 2.4.

Either party hereto may, not later than thirty (30) days after the Date of this Lease, request that an exact measurement of the Premises be made in accordance with the measurement method recommended by Building Owners and Managers Association.  Such measurement shall be made by an architect or engineer designated by Landlord at the cost and expense of the requesting party.  If the rentable area of the Premises, as so measured, is more than one hundred one percent (101%) or less than ninety-nine percent (99%) of the Premises Rentable Area as set forth in Section 1.1: (i) the definition of Premises Rentable Area set forth in Section 1.1 shall be deemed amended in accordance with such measurement; (ii) Annual Fixed Rent shall, be recomputed by multiplying the Annual Fixed Rent as set forth in Section 1.1 by a fraction (the “Fraction” ), the numerator of which shall be the rentable area as so measured and the denominator of which shall be the Premises Rentable Area set forth in Section 1.1; and (iii) Tenant’s Percentage shall be recomputed to be the percentage determined by multiplying Tenant’s Percentage as set forth in Section 1.1 by the Fraction.  Any payment due to Landlord as the result of such adjustment shall be paid within fifteen (15) days after notice to Tenant of such computation.  Any payment due to Tenant as a result of such adjustment shall be credited against installments of Annual Fixed Rent thereafter becoming due.  In the event of any adjustment pursuant to this Section 2.4, Landlord and Tenant shall promptly execute a written statement setting forth the recomputed Premise Rentable Area, Annual Fixed Rent, and Tenant’s Percentage, but the failure by either party to execute such a statement shall have no effect on the validity of such recomputation.

If (i) neither Landlord nor Tenant requests any adjustment as herein provided within the time limit provided, or (ii) such adjustment is requested, but the rentable area is within the two (2%) percent range set forth above, Annual Fixed Rent, Tenant’ s Percentage, and Premises Rentable Area shall remain as set forth in Section 1.1, and neither Landlord nor Tenant shall have any right to any adjustment.

2.5               Right of First Offer .  So long as (i) there then exists no Default of Tenant, (ii) Dimensions International, Inc. (or any successor by Merger or any Affiliate) shall occupy the entire Premises, and (iii) this Lease is still in full force and effect, then if any space located in the Building shall become available for lease by Landlord, Landlord shall so notify Tenant, and shall identify the space available (the “Offered Space” ) together with the rental rate and other terms and conditions (collectively, the “Terms” ) under which in good faith Landlord intends to offer such space to third parties (which may include a term whose expiration date is not co-terminous with the term applicable to the space then constituting the Premises demised hereunder) and the date on which such Offered Space is expected to be available, and Tenant may, by giving notice to Landlord within ten (10) days after receipt of such notice, irrevocably elect to lease the Offered Space on the Terms.  If Tenant shall have so elected to lease the Offered Space, it shall enter into an amendment to this Lease within ten (10) days after it shall have received the same from Landlord, confirming the lease of such Offered Space to Tenant on the Terms.  If Tenant shall not elect to lease the Offered Space within the aforesaid 10-day period, then Landlord shall thereafter be free to lease any or all of such Offered Space to a third party or parties from time to time on such terms and conditions as it may deem appropriate, it being agreed that time is of the essence with respect to the exercise of Tenant’s rights under this paragraph.  The provisions hereof shall not apply, and space shall not be deemed “available for lease” hereunder if Landlord shall intend either (a) to enter into a lease of such space pursuant to the terms of the lease to Statoil Energy, Inc. or (b) to renew or extend the lease with (or grant a new lease to) Statoil Energy, Inc. or any other entity (or any party affiliated with such entity) then occupying such space pursuant to a sublease in effect as of the Date of this Lease.

ARTICLE 3

Commencement and Condition

3.1               Commencement Date .  The “Commencement Date” shall be the earlier to occur of (i) July 1, 2007 or (ii) the date that Landlord elects to have the term of this Lease commence pursuant to paragraph 10(b) of that certain Consent to Sublease Agreement (the “Consent” ), dated March ___ 2004, by and among Landlord, Statoil Energy, Inc., Hess Energy, Inc. and Tenant.  Landlord and Tenant acknowledge that Tenant shall have occupied the Premises prior to the Commencement Date pursuant to a Sub-Sublease Agreement, dated ___________, 2004, by and between Hess Energy, Inc. and Tenant (the “Sublease” ).  Landlord and Tenant agree that the Sublease and the Consent shall apply only through the day preceding the Commencement Date and, with respect to periods thereafter, Landlord’s and Tenant’s obligations shall be governed only by this Lease.

3.2               Condition/Delivery of the Premises .  Tenant acknowledges that it has inspected the Premises and the Building and has found the condition of both satisfactory and is not relying on any representations of Landlord or Landlord’s agents or employees as to such condition and is agreeing to accept the Premises in “as is” condition.

3.3               Preparation of the Premises .  Tenant may, at its sole cost and expense, have plans ( “Tenant’s Plans” ) prepared for certain improvements to the Premises that it desires to perform, which shall be in accordance with Landlord’s plan submission standards set forth in Exhibit C attached hereto and made a part hereof, and submit the same to Landlord for Landlord’s reasonable approval.  Promptly after approval of Tenant’s Plans by Landlord, Tenant shall exercise all reasonable efforts to complete the work specified therein (collectively, the “Third Floor Work” ), in a timely manner.  Landlord shall provide Tenant with a single improvement allowance (the “Landlord’s Contribution” ) equal to the lesser of the cost of the Third Floor Work shown by such invoices or $524,527.50.  For purposes of this paragraph, “cost” shall be the actual cost to Tenant of performing the Third Floor Work including, without limitation, all architectural and engineering fees and expenses and all contractor charges for the cost of the work and materials, profit, general conditions and overhead and supervision and all filing fees and other permitting costs.  Notwithstanding the foregoing, Landlord agrees that Tenant may apply up to $149,865.00 of Landlord’s Contribution towards independent third party “soft” costs associated with the Third Floor Work, including, without limitation, consulting fees, costs of cabling, set up of computers, modems, telephones, other office equipment and any applicable moving costs.

Tenant may requisition payment of Landlord’s Contribution monthly, provided that the installments (hereinafter “Progress Payments” ) of Landlord’s Contribution shall not exceed the costs invoiced to Tenant as of the date of requisition toward which Landlord’s Contribution may be applied, less any amounts previously paid by Landlord.  Each requisition for a Progress Payment shall include (i) a detailed breakdown of the costs of the Third Floor Work incurred during the period covered by the requisition and to date, (ii) copies of invoices from Tenant’s architect, contractor and/or supplier(s), as applicable, for all such costs of the Third Floor Work (to the extent not submitted with a prior requisition), (iii) a certification from Tenant’s architect that all of the construction work to be paid for by the Progress Payment has been completed in accordance with Tenant’s Plans, and (iv) waivers and releases of liens from all parties providing labor or materials in connection with such portion of the Third Floor Work to be paid for by the Progress Payment and all prior work.  Landlord shall make each Progress Payment within thirty (30) days after Landlord’s receipt of a Progress Payment requisition with all required supporting documentation.  After the completion of all of the Third Floor Work, Tenant may submit a requisition to Landlord for payment of the balance of Landlord’s Contribution (the “Final Payment” ).  Such requisition shall include (i) a detailed breakdown of all of the costs of the Third Floor Work, (ii) copies of invoices from Tenant’s architect, contractor and/or supplier(s), as applicable, for all costs to be reimbursed by the Final Payment, to the extent not previously provided, (iii) full and final lien waivers from all parties providing labor or materials in connection with the Third Floor Work and (iv) a certificate of occupancy for the Premises.  Landlord shall make the Final Payment to Tenant within thirty (30) days after Landlord’s receipt of a timely requisition for the Final Payment with all required supporting documentation.  Notwithstanding any of the foregoing, Landlord shall have no obligation to make any Progress Payment or the Final Payment at any time during which Tenant shall be in default of any of its obligations under this Lease.

Landlord and Tenant acknowledge that the Third Floor Work or portions thereof may be performed by Tenant prior to the Commencement Date (i.e., during the term of the Sublease) and, to the extent that any portion (or all) of Landlord’s Contribution has been applied towards any work performed prior to the Commencement Date, it shall not be available to Tenant during the term of this Lease.  Any Third Floor Work performed prior to the Commencement Date must be performed in accordance with the requirements of this Lease, including, without limitation, the requirements specified in Section 6.2.5, Exhibit C and Exhibit D.

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 Original Address of Landlord, or at such other place as Landlord shall from time to time designate by notice, by check or wire transfer drawn on a domestic bank.

Annual Fixed Rent for any partial month shall be prorated on a daily basis (based on a 365 day year), and if Annual Fixed Rent commences on a day other than the first day of a calendar month, the first payment which Tenant shall make to Landlord shall be payable on the date Annual Fixed Rent commences and shall be equal to such pro-rated amount plus the installment of Annual Fixed Rent for the succeeding calendar month.

4.2               Additional Rent .  Tenant covenants and agrees to pay 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” ).

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 therefor, as Additional Rent, in an amount equal to Tenant’s Percentage of any such excess (the “Tax Excess” ).  Except as otherwise provided in the immediately following paragraph, Tenant shall pay the Tax Excess to Landlord at least ten (10) days prior to the date or dates within any year during the term hereof that the same, or any fractional share thereof, shall be due and payable to any governmental authority responsible for collection of same (as stated in a notice to Tenant given at least thirty (30) days prior to the date or dates any such payment shall be due, which notice shall set forth the manner of computation of any Tax Excess due from Tenant), except that such payment shall be made to Landlord not later than ten (10) days after such notice to Tenant, if such notice is given subsequent to the date thirty (30) days prior to the date the same is due and payable as aforesaid.

At Landlord’s election, 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, as reasonably estimated by Landlord from time to time on account of Taxes for the then current Tax Year.  If the total of such monthly remittances 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, after Tenant shall have made all payments due to Landlord pursuant to this subsection 4.2.1, Landlord shall receive a refund of any portion of Taxes as a result of an abatement of such Taxes by legal proceedings, settlement or otherwise (without either party having any obligation to undertake any such proceedings), Landlord shall pay or credit to Tenant Tenant’s Percentage of that percentage of the refund (after first deducting actual, reasonable expenses, including attorneys’, consultants’ and appraisers’ fees, incurred in connection with obtaining any such refund) which equals the percentage of the applicable Tax Year included in the term hereof, provided however, in no event shall Tenant be entitled to receive more than the sum of payments actually made by Tenant on account of Taxes with respect to such Tax Year or to receive any payment if Taxes for any Tax Year are less than Base Taxes.

In the event that the Commencement Date shall occur or the term of this Lease shall expire or be terminated during any Tax Year, or should the Tax Year or period of assessment of real estate taxes be changed or be more or less than one (1) year, or should Tenant’s Percentage be modified during any Tax Year due to a change in the rentable area of the Building and/or the Premises or otherwise, as the case may be, 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 on a 365 day Tax Year.

“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 at any time during the term 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 during the term of this Lease, 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 from the Property 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 actual court costs, attorneys’, consultants’ and accountants’ fees, and other expenses reasonably incurred by Landlord 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.

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 for the Tenant’s Percentage of any such excess (such amount being hereinafter referred to as the “Operating Cost Excess” ).  Within one hundred twenty (120) days after the end of each Operating Year, Landlord shall furnish to Tenant an itemized statement of Operating Costs, prepared, allocated and computed in accordance with generally accepted accounting principles, consistently applied (the “Final Statement” ).  Any Final Statement shall be final and binding upon Tenant unless it shall within four (4) months after receipt thereof, contest any items therein by giving notice to Landlord specifying each item contested and the reasons therefor.  Except as otherwise provided in the immediately following paragraph, Tenant shall pay the Operating Cost Excess to Landlord within thirty (30) days from the date Landlord shall furnish to Tenant the Final Statement.

At the election of Landlord, 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 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 during such Operating Year.  If, at the expiration of each Operating Year in respect of which monthly installments of 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.

In the event that the Commencement Date shall occur or the term of this Lease shall expire or be terminated during any Operating Year or Tenant’s Percentage shall be modified during any Operating Year due to a change in the rentable area of the Building and/or the Premises or otherwise, as the case may be, then the amount of 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 based on a 365 day Operating Year.

“Operating Costs” shall include, without limitation, all costs and expenses paid or incurred for the operation, cleaning, management, maintenance, repair, upkeep and security of the Property, including, without limitation:

(a)                all salaries, wages, fringe benefits, payroll taxes and workmen’s compensation insurance premiums related thereto and all other costs paid or incurred with respect to employment of personnel engaged in operation, administration, cleaning, maintenance, repair, upkeep and security of the Property including, without limitation, supervisors, property managers, accountants, bookkeepers, janitors, carpenters, engineers, mechanics, electricians and plumbers;

(b)                all utilities and other costs related to provision of heat (including oil, steam and/or gas), electricity, air conditioning, and water (including sewer charges) and other utilities to the Property (exclusive of reimbursement to Landlord for any of same received as a result of direct billing to any tenant of the Building);

(c)                 all costs, including supplies, material and equipment costs, for cleaning and janitorial services to the Property, the Building and, if applicable, adjacent walks and ways (including, without limitation, trash removal and interior and exterior window cleaning), and interior and exterior landscaping and pest control;

(d)                the cost of replacements for tools and other similar equipment used in the repair, maintenance, cleaning and protection of the Property, provided that, in the case of any such equipment used jointly on other property of Landlord, such costs shall be suitably prorated among the Property and such other properties;

(e)                all costs and premiums for fire, casualty, rental income, liability and such other insurance as may be maintained from time to time by Landlord relating to the Property and premiums for fidelity bonds covering persons having custody or control over funds or other property of Landlord relating to the Property;

(f)                  all costs of maintaining, repairing, decorating, operating, administering, inspecting and protecting the Property (including, without limitation, lighting, installation, maintenance, repair and alteration of signs, snow removal on the Property and adjacent walks and ways, paving, patching and restriping of parking areas and operation, maintenance, replacement and repair of heating, ventilating and air conditioning equipment, fire protection and security systems, elevators, roofs, parking areas and any other common Building equipment, systems or facilities), all costs of structural and other repairs and replacements (other than repairs for which Landlord has received full reimbursement from contractors, other tenants of the Building or from others) necessary to keep the Property in good working order, repair, appearance and condition;

(g)                costs of compliance with any laws, rules, regulations, ordinances, agreements or standards applicable to the Building or the Property, which conformance is not the responsibility of any tenant of the Building, and which Landlord elects or is required to perform, and costs of removal or remediation of any Hazardous Materials in the Building or Property, which is not the responsibility of any tenant of the Building, and which Landlord elects to perform;

(h)                all costs incurred in connection with the administration and supervision of all matters referred to in items (a) through (g) hereof and in performing Landlord’s obligations under Article 5, including Landlord’s office overhead costs provided that, if any such administrative or supervisory personnel are also employed on other property of Landlord, such cost of compensation shall be suitably prorated among the Property and such other properties;

(i)                  payments under all service contracts relating to matters referred to in Items (a) through (h) hereof;

(j)                  a management fee of up to four (4%) percent of gross rents payable by tenants of the Property; and

(k)                attorney’s fees and disbursements (exclusive of any such fees and disbursements incurred in tax abatement proceedings or in the preparation of leases) and auditing and other professional fees and expenses.

If, during the term of this Lease, Landlord shall make any capital expenditure, the total cost of which is not included in Operating Costs for the Operating Year in which it was made, Landlord may include in Operating Costs for the 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 equal to the level payments of principal and interest necessary to amortize the original capital expenditure over the useful life of the improvement, repair, alteration or replacement made with the capital expenditure using an interest rate reasonably determined by Landlord as being the interest rate being charged at the time of the original capital expenditure for long-term mortgages by institutional lenders on like properties within the greater Alexandria, Virginia area; and the useful life shall be determined reasonably by Landlord in accordance with generally accepted accounting principles, consistently applied.

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, Landlord shall reasonably project, on an item-by-item basis, the 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.

4.2.3         Audit Right .  Provided Tenant shall have timely paid all amounts invoiced by Landlord on account of Operating Costs for the applicable Operating Year, Landlord shall permit Tenant and its accountants, at Tenant’s expense except as otherwise hereinafter provided, to review, at Landlord’s home office or other location containing such records, any of Landlord’s invoices and statements relating to Operating Costs for such Operating Year, provided that such review is commenced within four (4) months of Tenant’s receipt of the Final Statement and thereafter undertaken by Tenant and its accountants (but not any party compensated by Tenant on a contingency fee arrangement) with due diligence.  If Tenant objects to Landlord’s accounting of any Operating Costs and elects to review Landlord’s documentation as provided above, Tenant shall complete its review of Landlord’s invoices and statements within two (2) months of the commencement of such review.  On or before the date six (6) months following receipt of the Final Statement, Tenant shall notify Landlord that Tenant disputes the correctness of such accounting, specifying the particular line items in which the accounting is claimed to be incorrect.  If such dispute has not been settled by agreement within two (2) months thereafter, either party may submit the dispute to arbitration in accordance with the commercial arbitration rules of the American Arbitration Association.  The decision of the arbitrators shall be final and binding on Landlord and Tenant and judgment thereon may be entered in any court of competent jurisdiction.

If it should be agreed or decided that Operating Costs were overstated by five percent (5%) or more, then Landlord shall promptly reimburse Tenant for the reasonable costs incurred by Tenant in reviewing Landlord’s invoices and statements, Tenant’s reasonable arbitration costs plus any excess amount paid by Tenant on account of overstated Operating Costs and interest at the Default Rate.  If it should be agreed or decided that Operating Costs were not overstated at all, then Tenant shall, as Additional Rent, promptly reimburse Landlord for its costs incurred in the arbitration and in preparing for Tenant’s review of invoices and statements, and if Operating Costs shall have been understated or Tenant shall not have paid the Operating Cost Excess in full, Tenant shall, as Additional Rent, promptly pay any deficiency in the payments thereafter made on account of Operating Cost Excess.  If it should be agreed or decided that Operating Costs were overstated by less than five percent (5%), Landlord shall promptly reimburse Tenant any excess amount paid by Tenant on account of overstated Operating Costs, with interest at the Default Rate, and each party shall be responsible for its own costs incurred in connection with such dispute.

Tenant shall keep confidential (and shall cause any third party assisting Tenant with any such audit to keep confidential) all information obtained during the audit process including any settlements or arbitration awards made.  Landlord may require Tenant to execute and deliver a separate confidentiality agreement further specifying Tenant’s obligations and Landlord’s remedies for breach, as a condition to commencement of the audit.

4.3               Personal Property and Sales Taxes .  Tenant shall pay all taxes charged, assessed or imposed upon the personal property of Tenant and all taxes on the sales of services or inventory, merchandise and any other goods by Tenant in or upon the Premises.

4.4               Insurance .

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

(a)                Commercial general liability insurance (on an occurrence basis and on a 1988 ISO CGL form or its equivalent, 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 (on an ISO Form 20226 or as otherwise acceptable to Landlord) 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 Premises are located at property comparable to the Premises and used for similar purposes;

(b)                Worker’s compensation insurance with statutory limits covering all of Tenant’s employees working on the Premises; and

(c)                 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 or any party claiming under Tenant and all improvements and betterments to the Premises performed at Tenant’s expense.

4.4.2     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 in Best’s of at least A+ X or otherwise be acceptable to Landlord.  A certificate (on ACORD Form 27 or its equivalent) 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 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.  Landlord may, at any time, and from time to time, inspect and/or copy any and all insurance policies required to be procured by Tenant hereunder.

4.4.3    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 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 excluding any deductible amounts, to the extent such damage is actually covered or would have been covered by policies of 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 property loss.

4.5               Utilities .  Tenant shall pay 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 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.

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).  In addition, if any installment of Annual Fixed Rent or Additional Rent is unpaid for more than five (5) days after the date due, Tenant shall pay to Landlord a late charge equal to the greater of One Hundred Dollars ($100) or ten percent (10%) of the delinquent amount.  The parties agree that the amount of such late charge represents a reasonable estimate of the cost and expense that would be incurred by Landlord in processing and administration of each delinquent payment by Tenant, but the payment of such late charges shall not excuse or cure any default by Tenant under this Lease.  Absent specific provision to the contrary, all Additional Rent shall be due and payable in full ten (10) days after demand by Landlord.

ARTICLE 5

Landlord’s Covenants

5.1               Affirmative Covenants .  Landlord shall, during the term of this Lease provide the following:

5.1.1         Heat and Air-Conditioning .  Landlord shall provide and maintain heat, ventilation and air-conditioning equipment ( “HVAC” ) 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 (which charges, as of the Date of this Lease, are $50.00 per hour).  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 use reasonable efforts 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.

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 greater Alexandria, Virginia 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 to cause the Premises to be cleaned in accordance with standards of comparable office buildings in the greater Alexandria, Virginia area.  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 all lamps, tubes, bulbs, starters and ballasts for building standard 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.

Landlord shall have the right to discontinue furnishing electricity to the Premises at any time upon not less than thirty (30) days’ notice to Tenant provided Landlord shall, at Landlord’s expense, separately meter the Premises.  If Landlord exercises such right, from and after the effective date of such discontinuance, Landlord shall not be obligated to furnish electricity to the Premises, and

(i)                  Annual Fixed Rent shall be reduced by an amount equal to the product of the square footage of the Premises multiplied by the cost on a per square footage basis (the “Electricity Cost” ) of supplying electricity for connected lights and power for space leased to tenants of the Building in the period established by Base Operating Costs;

(ii)                Base Operating Costs shall be reduced by the product of the square footage of all areas in the Building leased or intended to be leased to tenants multiplied by the Electricity Cost (on a per square footage basis);

(iii)              in the computation of Operating Costs, only the cost of