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EXHIBIT
10.10
DEED OF
LEASE
By and
between
PLAZA AMERICA OFFICE
DEVELOPMENT II, LLC
(“Landlord”)
and
NCI INFORMATION SYSTEMS,
INC.
(“Tenant”)
at
Plaza America Building
IV
Reston,
Virginia
TABLE OF
CONTENTS
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TERMS
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PAYMENT OF BASE RENT & ADDITIONAL
RENT
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| 3. |
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SECURITY DEPOSIT
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USES; TENANT COVENANTS
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ENVIRONMENTAL PROVISIONS;
RECYCLING
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LATE CHARGES; INTEREST
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11 |
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REPAIRS AND MAINTENANCE
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UTILITIES AND SERVICES
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OPERATING COSTS
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REAL ESTATE TAXES
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ADDITIONAL PROVISIONS;
OPERATING COSTS AND REAL ESTATE
TAXES
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| 12. |
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TENANT’S INSURANCE
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LANDLORD’S INSURANCE
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DAMAGE OR DESTRUCTION
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MACHINERY AND EQUIPMENT;
ALTERATIONS AND ADDITIONS;
REMOVAL OF
FIXTURES
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29 |
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ACCEPTANCE OF PREMISES
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31 |
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TENANT IMPROVEMENTS
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| 18. |
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ACCESS
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MUTUAL WAIVER OF SUBROGATION
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32 |
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INDEMNIFICATION
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ASSIGNMENT AND SUBLETTING
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34 |
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| 22. |
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ADVERTISING
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36 |
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LIENS
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DEFAULT
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SUBORDINATION
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SURRENDER OF POSSESSION
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NON-WAIVER
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HOLDOVER
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CONDEMNATION
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NOTICES
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MORTGAGEE PROTECTION
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COSTS AND ATTORNEY’S
FEES
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BROKERS
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LANDLORD’S LIABILITY
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ESTOPPEL CERTIFICATES
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PARTIAL TERMINATION OPTION
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TRANSFER OF LANDLORD’S
INTEREST
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RIGHT TO PERFORM
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COMMON AREAS
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SALES AND AUCTIONS; SIGNAGE
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ROOF USE
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ACCESS; SECURITY
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AUTHORITY OF LANDLORD AND
TENANT
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NO ACCORD OR SATISFACTION
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LEGAL REQUIREMENTS
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PARKING
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GENERAL PROVISIONS
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RULES AND REGULATIONS
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ARBITRATION
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WAIVER OF JURY TRIAL
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RENEWAL TERM
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EXPANSION OPTION
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56 |
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EXISTING LEASE OBLIGATIONS
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58 |
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EXHIBIT A
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Location of Premises
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EXHIBIT B
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Description of Land
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EXHIBIT C
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Construction Provisions
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EXHIBIT D
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Rules and Regulations
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EXHIBIT E
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Declaration of Lease
Commencement
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EXHIBIT F
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Form of Estoppel Certificate
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EXHIBIT G
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Form of SNDA
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EXHIBIT H
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Contraction Premises
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EXHIBIT I
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Tenant’s Signage
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EXHIBIT J
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Reserved Parking
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EXHIBIT K
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Cleaning Standards and
Specifications
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EXHIBIT L
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BOMA Standard of Measurement
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DEED OF
LEASE
THIS DEED OF LEASE
(“Lease”) is made as of the 13 th
day of
January, 2003, by and between PLAZA AMERICA OFFICE DEVELOPMENT
II, LLC , a Delaware limited liability company
(“Landlord”), and NCI INFORMATION SYSTEMS, INC
., a Virginia corporation (“Tenant”).
RECITALS:
Landlord, for and in
consideration of the rents and all other charges and payments
hereunder and of the covenants, agreements, terms, provisions and
conditions to be kept and performed hereunder by Tenant, grants and
conveys to Tenant, and Tenant hereby hires and takes from Landlord,
a leasehold interest in the premises described below
(“Premises”), subject to all matters hereinafter set
forth and upon and subject to the covenants, agreements, terms,
provisions and conditions of this Lease for the term hereinafter
stated.
NOW THEREFORE Landlord and
Tenant hereby agree to the following:
1. TERMS.
1.1 Premises, Storage
Space and Lower Level Space . (a) Subject to the terms and
conditions of Section 36 hereof (with respect to the Contraction
Premises as is defined therein), the premises demised by this Lease
will consist of (i) up to approximately 76,716 rentable square feet
of space (the “Premises”) to be measured and certified
in accordance with the ANSI/BOMA Z65.1-1996 Method of Measurement
(the BOMA Standard”), a true and correct copy of which is
attached hereto as Exhibit L , located on the fourth
(4 th ), fifth (5 th ) and seventh (7
th ) floors, and (ii) approximately 2,000 useable
square feet of space located on the lower level (such lower level
space herein, the “Lower Level Space”) and (iii)
approximately 1,000 useable square feet of space located on the
lower level, if taken by Tenant pursuant to Section 8.5 hereof
(such lower level space being referred to herein as the
“Storage Space”) of that building located at 11730
Plaza America Drive, Reston, Fairfax County, Virginia 20190
containing approximately 189,647 rentable square feet (the
“Building”), together with three and one-half (3.5)
parking permits for each one thousand (1,000) square feet of the
Premises (exclusive of the Storage Space and Lower Level Space)
throughout the initial Lease Term and any Renewal Terms, located in
the adjacent parking structure, and the non-exclusive use of
various Common Areas (as defined in Section 39 hereof), as more
particularly set forth herein. The Storage Space and the Lower
Level Space is not considered a portion of the Premises for
purposes of computing Tenant’s Share pursuant to Section 1.2
of this Lease. The land upon which the Building is situated, which
is generally depicted on the diagram attached hereto as
Exhibit B (the “Site Plan”) and
incorporated herein by reference, shall be referred to hereinafter
as the “Land”. The Land and the Building are
collectively referred to herein as the “Project”. The
location of the Premises, the Storage Space and the Lower Level
Space are shown on the conceptual floor plans attached hereto as
Exhibit A and incorporated herein by reference. No
easement for light or air is incorporated in or intended to be
conveyed with the Premises, the Storage Space or the Lower Level
Space.
(b) Within thirty (30) days
after the date hereof, Landlord shall cause Landlord’s
architect to certify to Landlord and Tenant the final measurement
of the Premises and the Building based upon the BOMA Standard.
Landlord shall provide Tenant’s architect with
Landlord’s actual measurements of the Premises and Building
for Tenant’s architect to review, verify and approve.
Tenant’s architect shall then have a period often (10)
business days in which to remeasure the Premises and/or the
Building using the BOMA Standard, and shall provide to each of
Landlord and Tenant, Tenant’s architect’s resulting
measurements. In the event Tenant’s architect, using the BOMA
Standard, arrives at a measurement for the Premises and/or the
Building which differs from the Landlord’s architect’s
measurement by a factor of less than 1.5%, then the measurement of
Landlord’s architect shall be final. If within ten (10)
business days Tenant’s architect arrives at a rentable square
footage measurement for the Premises and/or the Building, utilizing
the BOMA Standard, which differs from the Landlord’s
architect’s measurement by a factor of 1.5% or more,
Tenant’s architect and Landlord’s architect shall be
instructed by Tenant and Landlord to diligently cooperate and reach
agreement on the final measurement of the Premises and the
Building. If such mutual agreement is not reached between
Landlord’s architect and Tenant’s architect within ten
(10) business days of the date of Landlord’s receipt of the
measurement prepared by Tenant’s architect, then
Landlord’s architect and Tenant’s architect shall
jointly select a third architect, with Tenant and Landlord sharing
equally the cost of such third architect. The third architect will
make an independent determination of the rentable square footage of
the Premises and the Building applying the BOMA Standard. This
determination by the third architect and the determination of the
two (2) closest square footage measurements out of all three (3)
architects’ measurements will be averaged, and that average
measurement shall be binding on both parties for purposes of
determining the measurement of the Premises and the Building;
provided, however, that if the middle architect’s
measurements is equally distant from the highest and lowest, that
architect’s measurement shall constitute the measurement of
the Premises and/or the Building.
1.2 Tenant’s
Share . “Tenant’s Share” shall mean a
fraction, the numerator of which is the total rentable square
footage of the Premises (exclusive of Lower Level Space and Storage
Space) as determined in accordance with Section 1.1 hereof, and the
denominator of which is the total rentable square footage of the
Building. No adjustment shall be made for rentable space within the
Building occupied only by building engineers, it being further
provided that any such rentable space will be located only within a
core area location to be determined within the reasonable judgment
of Landlord, which core area shall not be greater than 1,500
rentable square feet for the Building. Further, no reduction in the
rentable square footage of the Building shall be made for any
on-site property management office, provided the same does not
exceed 1,500 rentable square feet of space.
1.3 Lease Term . The
term of this Lease (the “Term” or “Lease
Term”) shall commence on the “Rent Commencement
Date” as defined in Section 1.4.2 below, and shall expire on
the last day of the one hundred twentieth (120 th
) full
calendar month following the Rent Commencement Date (the
“Lease Expiration Date”). Between the Commencement Date
(as defined below) and the Rent Commencement Date (as defined
below), Tenant shall be entitled to occupy the Premises and other
areas leased hereunder, and Landlord grants and conveys to Tenant
the Premises and other areas leased hereunder in accordance with
and subject to all of the terms and conditions of this Lease,
exclusive of the payment of Base Rent and Additional
Rent.
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1.4 Commencement and Rent
Commencement Dates.
1.4.1 The “Commencement
Date”, shall be the earlier of (i) June 1, 2003, or (ii) that
date on which Tenant takes occupancy of the Premises for the
conduct of its business therefrom, provided in either case that (i)
such date shall be extended on a day for day basis for any actual
delay suffered by Tenant in obtaining any permit or approval
necessary for the completion of Tenant’s Work (as defined in
Exhibit C ) resulting from any defect in
Landlord’s Work (as defined in Exhibit C-1 )
discovered after the date hereof, or any governmental notice
received after the date hereof advising of any defect or deficiency
in Landlord’s Work (ii) as of the date hereof Landlord shall
provide Tenant with access to the Premises and the Building so as
not to delay Tenant’s development of the Tenant’s Work.
Notwithstanding the foregoing, for purposes of this Lease, the
term “ Commencement Date” shall also mean
any adjusted Commencement Date which may be established pursuant to
the provisions of this Lease. Landlord and Tenant hereby agree to
execute a Declaration, in the form attached hereto as Exhibit
E , to confirm the Commencement Date. Tenant’s
failure to execute said Declaration shall not affect the
Commencement Date, or the Lease Expiration Date, as the same may be
determined by the terms of this Lease. As of the date hereof, all
Base Building Shell and Common Area construction has been completed
by Landlord and, upon the execution hereof by Tenant, Tenant shall
be granted unencumbered access to the Premises (subject to all of
the terms and conditions hereof other than the payment of Base Rent
and Additional Rent) to permit Tenant to complete Tenant’s
Work in a sequential, orderly and efficient fashion.
1.4.2 Subject to Section
1.5.3, the “Rent Commencement Date” shall be thirty
(30) days after the Commencement Date (but not earlier than July 1,
2003); provided that if the Rent Commencement Date is a date other
than the first day of a calendar month, the Base Rent for such
partial month shall be pro rated based upon the number of calendar
days remaining in such month.
1.5 Base Rent. The
base rent payable by Tenant hereunder (“Base Rent”) is
set forth in this Section 1.5.1 below. The Base Rent is in addition
to (and not to be reduced by) any payment of Additional Rent (as
hereinafter defined) hereunder. Base Rent shall be payable monthly,
in equal monthly installments, in advance, on the first day of each
calendar month of the Term, without prior notice, demand, deduction
or offset.
1.5.1 Subject to the
provisions of Section 1.5.3 below, the annual Base Rent (monthly
installments of which maybe referred to herein as “Monthly
Base Rent”) for the initial Lease Year of the Term shall be
the sum of (i) Twenty Seven Dollars ($27.00) per rentable square
foot of the Premises, plus (ii) Fifteen Dollars and 75/100 ($15.75)
per useable square foot of the Lower Level Space plus (iii) Fifteen
Dollars ($15.00) per useable square foot for the Storage Space.
Thereafter, as of the first twelve (12) month anniversary of the
Rent Commencement Date and each annual anniversary thereafter, the
Base Rent applicable to the Premises (but not that applicable to
the Storage Space or Lower Level Space) shall be increased to an
amount equal to one hundred two
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and one-half percent (102.5%) of the
Base Rent for the immediately preceding Lease Year (provided that
any Additional Leasehold Improvement Allowance made available to
Tenant in accordance with Section 2(D) of Exhibit C
attached hereto shall not be subject to the annual increase imposed
on Base Rent notwithstanding that such amount(s) shall be repaid to
Landlord simultaneously with payments of Base Rent
hereunder).
1.5.2 In the event Tenant
exercises its Renewal Option in accordance with Section 51 of this
Lease, Base Rent and escalations for any Renewal Term(s) under this
Lease shall be as set forth in Section 51 below.
1.5.3 The foregoing
notwithstanding, the Monthly Base Rent payable with respect to the
Premises for the initial six (6) months following the Rent
Commencement Date shall be abated. Thereafter, commencing as of the
first day of the seventh calendar month following the Rent
Commencement Date (and continuing thereafter), the Monthly Base
Rent shall be the Base Rent for the initial Lease Year as is set
forth in Section 1.5.1 above.
1.6 Additional Rent .
Tenant’s Share (as defined in Section 1.2) of Increases in
Real Estate Taxes (as defined in Section 10), Operating Costs (as
defined in Section 9) and any other sum owed or reimbursable by
Tenant to Landlord under this Lease (excluding Base Rent) shall be
considered additional rent hereunder (collectively
“Additional Rent”), and, except for items of Additional
Rent for which demand is required pursuant to the express terms of
this Lease, shall be payable without demand, set-off or deduction.
Estimates of those items of Additional Rent described in Section 9
and Section 10 of this Lease shall be payable monthly, in advance,
on the first day of each calendar month of the Term, together with
Tenant’s monthly payment of Base Rent, without demand,
set-off or deduction.
1.7 Notice and Payment
Addresses . Any notices under this Lease shall be governed by
the terms of Section 30, below. The notice addresses of the parties
are as follows:
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| If to
Landlord: |
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See
attached letter dated Dec. 16, 03 from ARC |
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| With copies
to: |
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c/o Intertech Corporation
1500 Broadway, Suite 2003
New York, NY 10036
See attached letter dated Dec. 16, 03
from ARC
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Atlantic Realty Companies
8150 Leesburg Pike
Suite 1100
Vienna, Virginia 22182
See attached letter dated Dec. 16, 03
from ARC
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J.
Richard Saas, Esq. |
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Tenenbaum
& Saas, P.C. |
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4330 East
West Highway |
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Suite
1150 |
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Bethesda,
Maryland 20814 |
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| If to
Tenant: |
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Michelle R. Capello, Esq., General
Counsel
NCI Information Systems, Inc.
8260 Greensboro Drive, Suite
400
McLean, VA 22102
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and |
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W. Norman Pierce, Vice
President
NCI Information Systems, Inc.
8260 Greensboro Drive, Suite
400
McLean, VA 22102
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Until Tenant takes occupancy
of the Premises for the conduct of its business, and thereafter to
each of the foregoing at the Premises.
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With courtesy copies to:
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Allan B. Goldstein, Esq.
Dickstein Shapiro Morin & Oshinsky,
LLP
2101 L Street, N. W.
Washington, D.C. 20037
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Either party may, by ten (10)
days’ prior written notice to the other, designate a new
address to which all notices hereunder shall be
directed.
1.8 Rent Payment
Address . Tenant shall send payments of Base Rent and
Additional Rent hereunder to Landlord at the following address, or
to such other address of which Landlord may advise Tenant in
writing:
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c/o ARC
Management, LLC |
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8150
Leesburg Pike |
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Suite
1100 |
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Vienna,
Virginia 22182 |
1.9 Lease Year . Each
twelve (12) month period within the Lease Term (including any
Renewal Terms) shall be referred to herein as a “Lease
Year.” The first Lease Year shall commence on the Rent
Commencement Date and terminate on the last day of the twelfth full
calendar month after the Rent Commencement Date. Each subsequent
Lease Year shall commence on the date immediately following the
last day of the preceding Lease Year and shall continue for a
period of twelve (12) full calendar months, except that the last
Lease Year of the Lease Term shall terminate on the date this Lease
expires or is otherwise terminated.
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1.10 Deed of Lease .
To the extent required under applicable law to make this Lease
legally effective, this Lease shall constitute a deed of
lease.
2. PAYMENT OF BASE RENT &
ADDITIONAL RENT.
Tenant shall pay to Landlord
the Base Rent due under this Lease, both without prior notice,
demand, deduction or offset, in lawful money of the United States.
Base Rent and Additional Rent shall be paid at the address noted in
Section 1.8, or to such other party or at such other place as
Landlord may hereafter from time to time designate in writing. Base
Rent and Additional Rent under this Lease for any partial month at
the beginning or end of the Lease Term shall be prorated. Except
for monthly installments of estimated Additional Rent as set forth
in Sections 9 and 10 of this Lease, or as otherwise provided in
this Lease, all payments of Additional Rent shall be paid no later
than thirty (30) days after the date Landlord notifies Tenant in
writing of the amount thereof. In the event of any dispute
concerning the computation of the amount of any Additional Rent
due, Tenant shall pay the amount specified by Landlord pending the
resolution of the dispute, and, subject to Section 9.4 hereof, such
payment shall be without prejudice to Tenant’s right to
continue to challenge the disputed computation.
3. SECURITY
DEPOSIT.
3.1 Security Deposit .
Simultaneously with the execution of this Lease by Tenant, Tenant
shall provide Landlord with a security deposit in an amount equal
to $172,611.00 in the form of cash or a letter of credit in such
form as is reasonably acceptable to Landlord and drawn on an FDIC
member bank located in the Washington metropolitan area (the
“Security Deposit”). If Tenant initially provides the
Security Deposit in the form of cash, it may thereafter replace
such cash at any time with a letter of credit satisfying the
provisions hereof. Landlord and Tenant agree that the Security
Deposit shall not be increased to reflect any amounts provided by
Landlord to Tenant in connection with the Leasehold Improvement
Allowance or the Additional Leasehold Improvement Allowance. The
Security Deposit shall constitute security for payment of Base Rent
and Additional Rent and for any and all other obligations of Tenant
under this Lease. If Tenant defaults, beyond any applicable cure
period, with respect to any covenant or condition of this Lease,
including but not limited to the payment of Base Rent, Additional
Rent or any other payment due under this Lease, and the obligation
of Tenant to maintain the Premises and deliver possession thereof
back to Landlord at the expiration or earlier termination of the
Lease Term in the condition required herein, then Landlord may
(without any waiver of Tenant’s default being deemed to have
occurred) apply all or any part of the Security Deposit to the
payment of any sum in default beyond any applicable cure period, or
any other reasonable sum which Landlord may be required or
reasonably deem necessary to spend or incur by reason of
Tenant’s default, or to satisfy in part or in whole any
damages suffered by Landlord as a result of Tenant’s default
which continues to exist beyond any applicable cure period. In the
event of such application, Tenant shall promptly deposit with
Landlord the amount necessary to restore the Security Deposit to
the full amount set forth above. The parties expressly acknowledge
and agree that the Security Deposit is not an advance payment of
Base Rent or Additional Rent, nor a measure of Landlord’s
damages in the event of any default by Tenant. If Tenant shall have
fully complied with all of the covenants and conditions of this
Lease, but not
6
otherwise, the amount of the Security
Deposit then held by Landlord shall be repaid to Tenant within
thirty (30) days after the expiration or sooner termination of this
Lease. In the event of a sale or transfer of Landlord’s
estate or interest in the Building, Landlord shall transfer the
Security Deposit to the purchaser or transferee, and upon such
transfer Landlord shall be considered released by Tenant from all
liability for the return of the Security Deposit, provided
Landlord’s purchaser or transferee acknowledges said transfer
of the Security Deposit in writing.
3.2 Advance Deposit .
Simultaneously with the execution of this Lease by Tenant, Tenant
shall deposit with Landlord the sum of $172,611.00, which sum shall
be subject to adjustment upon final measurement of the Premises
pursuant to Section 1.1, as a deposit of the first month’s
Base Rent following the rental abatement period set forth in
Section 1.5.3 hereof (the “Advance Deposit”), which
shall be applied by Landlord on behalf of the Tenant to the payment
of the first month’s Rent following such rental abatement
period when due and payable. The Advance Deposit, prior to its
being applied to the payment of monthly Base Rent, shall constitute
security for the payment and performance by Tenant of all of
Tenant’s obligations, covenants, conditions and agreements
under this Lease, but shall not be deemed liquidated damages, but
shall be applied in reduction of Tenant’s total obligation(s)
to Landlord.
3.3 No Separate
Account . Landlord shall not be obligated to hold the Security
Deposit or the Advance Deposit in a separate account from other
Building or Project funds, or to pay any interest
thereon.
4. USES; TENANT
COVENANTS.
4.1 Permitted Uses .
The Premises are to be used for a general office uses, and for no
other purpose whatsoever.
4.2 Other General Use
Covenants. Tenant shall not commit or allow to be committed any
waste upon the Premises, or any public or private nuisance. Tenant,
at its expense, shall comply with all laws relating to its use and
occupancy of the Premises and shall observe the Rules and
Regulations, as applied, and attached hereto as Exhibit
D . provided however, in the event of any inconsistency
between the Rules and Regulations and the express provisions of
this Lease, the provisions of this Lease shall control. No act
shall be done in or about the Premises that is unlawful, or which
will increase the existing rate of insurance on the Building. In
the event of a breach of the covenant set forth in the immediately
preceding sentence regarding insurance rates, Tenant shall cease
the activity giving rise to such increase, and provided that the
Landlord has delivered timely notice to Tenant and Tenant has
failed to cease any such conduct or activity, and further provided
that the increased insurance premiums were in fact paid by Landlord
solely as a result of such activity, Tenant shall pay to Landlord
any and all such increases in insurance premiums resulting solely
from such breach. So long as Tenant continues to pay such increases
in premiums, and provided that the activity giving rise to such
increased premiums is an activity permitted under Section 4.1,
above, the continuation of such activity by Tenant shall not be
prohibited or constitute a breach of this Lease.
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5. ENVIRONMENTAL PROVISIONS;
RECYCLING.
5.1 General . Tenant
agrees to comply (and to cause its agents, employees, contractors
and, while within the Premises, invitees to comply) with any and
all applicable Environmental Laws (as defined below) in connection
with (1) Tenant’s use and occupancy of the Premises, (2) any
use and occupancy of the Premises arising in connection with any
assignment of this Lease, or sublease or license of the Premises or
any part thereof, and (3) any other fact or circumstance the
existence of which legally imposes on Tenant the obligation to so
comply therewith. Tenant shall provide all information within
Tenant’s control requested by Landlord and/or governmental
authorities in connection with Environmental Laws or Hazardous
Materials (defined below) relating to the matters contemplated in
the preceding sentence.
5.2 Tenant’s
Warranties and Covenants
During the Term and any
Renewal Term (as hereafter defined) of the Lease, Tenant warrants,
represents and covenants to and with Landlord as
follows:
5.2.1 Tenant will not
introduce within the Premises or the Project (A) asbestos in any
form, (B) urea formaldehyde foam insulation, (C) transformers or
other equipment which contain dielectric fluid containing
polychlorinated biphenyls, or (D) except as permitted below, any
flammable explosives, radioactive materials or other substance
constituting “hazardous materials” or “hazardous
wastes” 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.) and the regulations adopted and promulgated pursuant
thereto, 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 successor legislation thereto, or any other
Federal, state or local environmental law, ordinance, rule,
regulation and/or other statute of a governmental or
quasi-governmental authority relating to pollution or protection of
the environment (collectively, “Environmental Laws”).
The substances described in (A), (B), (C) or (D) above are
hereinafter collectively referred to herein as “Hazardous
Materials”.
5.2.2 Except as expressly
permitted hereby, 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 Materials
5.2.3 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, in so far as such laws pertain to
Tenant’s use and occupancy of the Premises or the need for
such compliance arises due to the acts or omissions of Tenant, its
agents, employees, contractors, invitees (while within the
Premises), subtenants or assignees, (B) shall not, except as
specifically permitted hereby, and shall not permit any
8
Tenant Parties (as hereafter defined) to
store, utilize, generate, treat, transport or dispose of any
Hazardous Materials on or from the Premises, (C) shall cause its
agents, employees, licensees, contractors, invitees (while within
the Premises), subtenants and assignees to comply with the
representations, warranties and covenants herein contained and be
responsible for any non-compliance by any such party(ies), (D)
agrees that no portion of the Premises will be used by Tenant or
any assignee or subtenant of Tenant as a landfill or a dump, and
(E) will not install any underground tanks of any type.
5.2.4 In the event of any
future 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) which in either case is attributable, in whole
or in part, to the presence of Hazardous Materials existing in, on
or about on the Project subsequent to the Commencement Date and is
caused, directly or indirectly, by Tenant or Tenant’s agents,
employees, contractors, licensees, invitees (while within the
Premises), sub-tenants or assignees (collectively, the
“Tenant Parties”), or is otherwise Tenant’s
responsibility under the terms of this Lease, 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 and
completion of all investigations, studies, sampling and testing and
all remedial, removal and other actions necessary to clean up and
remove all such Hazardous Materials, on, from or affecting the
Premises caused by Tenant or the Tenant Parties. If, under such
circumstances, 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 this Lease
(without any notice to Tenant required), and Landlord may, but
shall not be obligated to, take such action as may be reasonably
necessary under the circumstance 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 reasonable and
actual cost thereof shall be borne by Tenant and thereupon become
due and payable as Additional Rent hereunder; provided, however,
that Landlord shall not exercise its self-help rights hereunder,
nor exercise any right otherwise provided herein to terminate this
Lease or Tenant’s right of possession due to Tenant’s
failure or inability to correct such problem within a time certain
as long as Tenant is at all times using commercially reasonable
good faith efforts to correct the problem (provided however, that
if Landlord determines, in its reasonable discretion, that there
exists a substantial risk of governmental enforcement action
against Landlord, or governmental or third party civil liability to
Landlord, if Landlord fails to take independent action immediately
to remediate an environmental problem which is otherwise
Tenant’s responsibility under this Section 5, then Landlord
shall, notwithstanding Tenant’s continuing efforts to correct
the problem, be entitled to take such independent action, and to
recover the reasonable and actual costs associated therewith from
Tenant). Tenant shall give to Landlord and its authorized 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.
9
5.2.5 Landlord represents,
warrants and covenants that to the best of its current actual
knowledge, as of the date of execution hereof, the Land, the
Building and the Project is free from any Hazardous Materials and
is not in violation of any Environmental Laws.
5.2.6 Each of Tenant and
Landlord hereby indemnifies and holds the other and their
respective shareholders, constituents, subsidiaries, affiliates,
officers, directors, partners, employees, agents and trustees
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 of attorneys, engineers,
laboratories, contractors and consultants) because of, or arising
out of or relating to a violation of any of the indemnifying
party’s representations, warranties and covenants under this
Section, including any Environmental Liabilities (as herein below
defined) arising therefrom. For purposes of this indemnification
clause, “Environmental Liabilities” shall include all
costs and liabilities with respect to the 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 notwithstanding, the foregoing
indemnifications shall not encompass consequential damages or
damages related to loss of business or business interruption which
may arise on account of the presence of any Hazardous Materials on
or about the Project. The foregoing indemnification and the
responsibilities of Tenant and Landlord under this Section shall
survive the termination or expiration of this Lease.
5.2.7 Tenant and Landlord
shall promptly notify each other 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 the Building,
the Land and/or the Project, and shall promptly furnish each other
with copies of any correspondence or legal pleadings or documents
in connection therewith. Each of Tenant and 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, the Building, the Land and/or the
Project following consultation with the other.
10
5.2.8 Tenant agrees that, in
the event Landlord has a good faith basis to believe a breach by
Tenant of its covenants contained in Section 5.2.3 has occurred,
Landlord shall have the right (but not the obligation) to conduct,
or to have conducted by its agents or contractors, such periodic
environmental inspections of the Project as Landlord shall
reasonably deem necessary or advisable from time to time. Landlord
shall provide Tenant with no less than seventy-two (72) hours prior
notice of any such inspection within the interior of the Premises,
except in case of an emergency, in which case only such notice as
may be practicable under the circumstance shall be required. The
cost of any such inspection shall be borne by Tenant in the event
such inspection determines that Tenant has breached the covenants
set forth in Section 5.2.3 above, otherwise the cost shall be at
Landlord’s sole cost and expense.
5.3 Permitted
Materials . Notwithstanding the foregoing, Tenant and its
assignees, subtenants and licensees shall be permitted to store
reasonable amounts of Hazardous Materials that are typically used
in an ordinary office use (the “Permitted Materials”)
provided such Permitted Materials are properly used, stored and
disposed of in a manner and location meeting all Environmental
Laws, and further provided that Tenant shall not, without
Landlord’s consent, have any on-site laboratory facility
within the Premises. Any such use, storage and disposal shall be
subject to all of the terms of this Section (except for the terms
prohibiting same), and Tenant shall be responsible for obtaining
any required permits and paying any fees and providing any testing
required by any governmental agency with respect to the Permitted
Materials. If Landlord in its reasonable opinion determines that
said Permitted Materials are being improperly stored, used or
disposed of, then Tenant shall immediately take such corrective
action as requested by Landlord. Should Tenant fail to take such
corrective action within twenty-four (24) hours, Landlord shall
have the right to perform such work on Tenant’s behalf and at
Tenant’s sole expense, and Tenant shall promptly reimburse
Landlord for any and all costs associated with said
work.
5.4 Recycling
Regulations . Tenant shall be solely responsible for compliance
with all orders, requirements and conditions now or hereafter
imposed by any ordinances, laws, orders and/or regulations
(hereinafter collectively called “regulations”) of any
governmental body having jurisdiction over the Premises or the
Building regarding the collection, sorting, separation and
recycling of waste products, garbage, refuse and trash (hereinafter
collectively called “waste products”).
6. LATE CHARGES; INTEREST LATE
CHARGES; INTEREST.
6.1 Tenant hereby
acknowledges that late payment to Landlord of Base Rent or
Additional Rent will cause Landlord to incur administrative costs
and loss of investment income not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. If
any Base Rent or Additional Rent due from Tenant is not received by
Landlord or Landlord’s designated agent within five (5) days
after the date due, then Tenant shall pay to Landlord a late charge
equal to five percent (5%) of such overdue amount. The parties
hereby agree that such late charges represent a fair and reasonable
estimate of the administrative cost that Landlord will incur by
reason of Tenant’s late payment. Landlord’s acceptance
of such late charges shall not constitute a waiver of
11
Tenant’s Default with respect to
such overdue amount or otherwise stop Landlord from exercising any
of the other rights and remedies granted hereunder. Notwithstanding
the foregoing, Landlord agrees to waive the imposition of such
charge one (1) time during each Lease Year of the Term.
6.2 In addition to the
administrative late charge provided for under Section 6.1, above,
if any Base Rent or Additional Rent or any other sum due hereunder
from Tenant to Landlord is not paid as and when due under this
Lease, and such amount remains unpaid five (5) days after such due
date, then the unpaid amount shall bear interest from the date
originally due until the date paid at an annual rate of interest
equal to the “prime rate” of interest as published in
the Wall Street Journal (or, if not published, as established by
the then largest national banking association in the United States
of America) from time to time (the “Prime Rate”)
plus five percent (5%) (the “Default Rate”).
Notwithstanding the foregoing, Landlord agrees to waive the
imposition of such charge one (1) time during each Lease Year of
the Term.
7. REPAIRS AND
MAINTENANCE.
7.1 Landlord’s
Obligations . Landlord shall maintain, repair, replace and keep
in good operating condition, comparable to similar properties in
the Reston, Virginia area, the Common Areas (as defined in Section
39 below), the roof, foundation, load-bearing elements, conduits
and structural walls and other structural elements of the Building,
the underground utility and sewer pipes of the Building, all base
building mechanical, electrical, plumbing, HVAC system and the
sprinkler system and other fire and life-safety systems (including,
without limitation, all base building systems serving, connected to
or within the Premises, exclusive however of any such system
installed by or on behalf of Tenant as a part of Tenant’s
Work), and the adjacent parking structure and connector, the cost
of which shall be included within Operating Costs except to the
extent set forth in Section 9.5, hereof, provided that, to the
extent the need for any such repairs or replacements arise as a the
result of the gross negligence or willful misconduct of Tenant (or
Tenant’s agents, employees, contractors, invitees (while
within the Premises), assignees or sub-tenants) and the same is not
covered under the policies of casualty insurance which are required
to be carried by the parties pursuant to this Lease (in which case
the proceeds of such insurance will be utilized to satisfy the cost
thereof), the cost of such repairs or replacements shall be
reimbursable by Tenant to Landlord as Additional Rent under this
Lease, and such reimbursement shall be due not later than thirty
(30) days after Landlord’s written demand
therefore.
7.2 Repair Standards .
All repairs and maintenance required of Landlord pursuant to this
Section or elsewhere in this Lease shall be performed in accordance
with standards applicable to comparable buildings in Reston,
Virginia, the applicable building and governmental codes, and
performed in a timely and diligent fashion. Landlord agrees to
diligently attend to any routine repairs or maintenance needs
brought to its attention by Tenant as soon as reasonably
practicable and in a manner calculated to minimize to the extent
possible disruption of Tenant’s business
activities.
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7.3 Tenant’s
Obligations . Subject to Landlord’s obligations as set
forth in Section 7.1 above and its right of access pursuant to
Section 18, Tenant shall be exclusively responsible for the
maintenance and repairs to the interior non-structural portions of
the Premises. Tenant shall report in writing to Landlord any
defective condition in the Premises becoming known to Tenant which
Landlord is required to repair, and failure to so report such
defects shall excuse any delay by Landlord in commencing and
completing such repair, provided that (i) Landlord shall not be so
excused if Landlord had actual knowledge of the need for such
repair independent of Tenant’s notification, and (ii) once
Landlord is notified or has actual knowledge of the need for such
repair, Landlord’s repair obligation under Section 7.1,
above, shall be fully effective as to such item (and, to the extent
that any Tenant failure in reporting such defects that constitutes
gross negligence or willful misconduct and results in the otherwise
avoidable need to perform a capital repair or replacement which
under Section 9.5 is excluded from Operating Costs, in lieu of an
ordinary repair which under Section 9.4 would be included within
Operating Costs, Tenant shall be responsible for the reasonable and
actual cost of such capital repair or replacement (less the
anticipated ordinary repair costs) unless Tenant can demonstrate
that a capital repair or replacement to such item would in any
event have been necessary within twelve (12) months thereafter,
even if the defective condition had been promptly reported to
Landlord or known by Landlord in a timely fashion).
Landlord’s obligation to make repairs shall be limited to the
express obligations stated herein.
8. UTILITIES AND
SERVICES.
8.1 Services .
Landlord shall furnish Tenant with the following services and
facilities: (i) hot and cold running water in public lavatory
facilities located within the Common Areas; (ii) public lavatory
facilities and supplies within the Common Areas; (iii) day porter
services to the Building; (iv) janitorial service within the
Premises (including any executive lavatory or other lavatories
within the Premises) and Common Areas, Monday through Friday
(excluding holidays) in accordance with the cleaning standards and
specifications established from time to time by Landlord for the
entirety of the Building, the current version of which cleaning
standards and specifications being attached hereto as Exhibit
K ; (v) heating ventilation and air conditioning
(“HVAC”) service to the Premises and the Common Areas
Monday through Saturday during the business hours set forth below,
excluding holidays, and shall operate to the standards defined in
Section VII of Exhibit C-1 ; (vi) at least one (1)
on-site building engineer Monday through Friday, excluding
holidays, from 7:00 a.m. to 5:30 p.m.; (vii) at least one (1)
elevator available for service after business hours; and (viii)
access to the Building and adjacent parking structure and parking
areas 24 hours a day, 365 days a year, including holidays; the cost
of all of which shall be deemed an Operating Cost hereunder (unless
excluded pursuant to Section 9.5). For purposes hereof,
“holidays” shall be limited to: New Year’s Day,
Memorial Day, July 4th, Labor Day, Thanksgiving, and Christmas, and
business hours shall be 7:00 a.m. to 6:00 p.m. Monday through
Friday, excluding designated holidays, and 9:00 a.m. to 2:00 p.m.
on Saturdays, excluding designated holidays (provided that Tenant
shall have access to the Premises 24 hours per day, 7 days per
week).
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8.2 Additional
Services. If Tenant requires HVAC services on weekends or
holidays, Landlord shall provide such additional service after
reasonable prior written request therefor from Tenant, and Tenant
shall reimburse Landlord for such additional service within thirty
(30) days of request therefor, at the actual and direct cost to
Landlord in providing such service. Any additional building
engineer hours beyond that set forth in Section 8.1(vi) above
required by the Tenant shall be at Tenant’s sole cost and
expense, and the charge therefore shall be equal to Thirty Five
Dollars ($35.00) per hour. Any after hours HVAC service requested
by Tenant shall be at Tenant’s sole cost and expense and the
charge therefor shall be equal to Thirty Five Dollars ($35.00) per
hour/per floor during the first Lease Year. Two (2) zones are
located on each floor and after hours HVAC, per zone, for the first
Lease Year shall be Twenty and 00/100 Dollars ($20.00) for the
initial hour and each hour thereafter. By request, Tenant shall
have the capability to activate overtime HVAC per zone, per floor.
After the first Lease Year, Landlord shall notify Tenant in writing
of its actual and direct cost of providing after hours
HVAC.
8.3 Additional
Provisions . Except when due to the gross negligence and/or
misconduct of Landlord or its agents, employees or contractors or
except as expressly set forth below, in no event shall Landlord be
liable to Tenant for (a) any damage to the Premises, or (b) any
loss, damage or injury to any property therein or thereon, or (c)
any claims for the interruption of or loss to Tenant’s
business or for any damages or consequential losses occasioned by
bursting, rupture, leakage or overflow of any plumbing or other
pipes or other similar cause in, above, upon or about the Premises
or the Building, or (d) any interruption in any utility or other
services to the Premises. If any public utility or governmental
body shall require Landlord or Tenant to restrict the consumption
of any utility or reduce any service to the Premises or the
Building, Landlord and Tenant shall comply with such requirements,
without any abatement or reduction of the Base Rent, Additional
Rent or other sums payable by Tenant hereunder.
In the event Landlord shall
fail to comply with its obligations hereunder to provide or
undertake any maintenance or repair of life safety systems,
elevators, required lighting, HVAC systems or electricity in the
Building as required by the terms of the Lease within two (2)
business days of written notice to Landlord from Tenant of the
necessity thereof, then, Tenant shall provide a second written
notice to Landlord requesting that Landlord comply with its
obligation hereunder in connection therewith, and in the event
Landlord has not commenced (and thereafter diligently pursues to
completion) the remediation thereof within two (2) business days
after receipt of such second notice, Tenant shall be entitled to
take such action as may be commercially reasonable under the
circumstance to correct such uncured default and Landlord shall
reimburse Tenant for all costs reasonably incurred in the exercise
of such rights, together with interest thereon at the Prime Rate
from the date paid until the date reimbursed, within ten (10) days
after written demand; provided that Tenant hereby waives any and
all rights or claims of offset as a result thereof.
8.4 Lower Level Space
. Tenant shall pay, commencing (i) on the Rent Commencement Date
and on the first day of each month thereafter, the cost of all
electricity actually utilized for or in connection with the Lower
Level Space, as evidenced by a submeter or check meter (if so
installed at Landlord’s sole cost and expense) or
as
14
otherwise reasonably estimated by
Landlord and agreed to by Tenant, and (ii) on the first day of the
Second Lease Year, and on the first day of each month thereafter, a
pro rata share of increases in janitorial expenses attributable to
the Lower Level Space which are over and above that amount of
janitorial expenses attributable to the Lower Level Space during
the Base Year (adjusted, as necessary, to reflect an entire year of
Landlord’s providing janitorial service to the Lower Level
Space), as reasonably estimated by Landlord and agreed to by
Tenant. The Landlord and Tenant expressly agree that there shall be
no Base Rent increase, Operating Expenses (except for electricity
and janitorial expenses attributable to the Lower Level Space as
set forth herein) or real estate taxes applied to the Lower Level
Space. The rental rate for the Lower Level Space, consisting of
approximately 2,000 square feet of space shall be Fifteen &
75/100 Dollars per useable square foot thereof, with no increases
thereto during the Term of this Lease.
8.5 Storage Space . If
exercised by Tenant from time to time on or prior to the
Commencement Date and to be effective as of the Commencement Date
(and thereafter on an as-available basis) for the Lease Term
(including renewal options), Tenant shall have the right to occupy
up to One Thousand (1,000) usable square feet of contiguous, dry
space in a lower level of the Building (the “Storage
Space”), with elevator access to the upper floors, which may
be used for storage and/or ancillary office purposes. The rental
rate for such space shall be Fifteen & 00/100 Dollars ($15.00)
per useable square foot thereof, with no increases thereto during
the Term of this Lease. Except as set forth herein, there shall be
no Additional Rent applicable to the Storage Space, if taken by
Tenant, whether for operating expenses, real estate taxes, or other
such expenses. In the event Tenant at any time requires HVAC or
janitorial for such Storage Space taken by it, the agreed upon cost
thereof shall be reimbursed by Tenant as Additional Rent under this
Lease. Landlord agrees to paint such Storage Space, provide
demising partitioning with a Building standard door and lockset,
and hang basic lighting fixtures from the ceiling, all at
Landlord’s sole expense. If Tenant has taken the Storage
Space then, commencing on the Rent Commencement Date (or, if later,
the date Tenant takes the Storage Space) and on the first day of
each month thereafter, Tenant shall pay, on a monthly basis, the
cost of all electricity utilized for or in connection with the
Storage Space, as evidenced by a check meter or submeter (if so
installed at Landlord’s sole cost and expense) or as
otherwise reasonably estimated by Landlord and agreed to by
Tenant.
9. OPERATING
COSTS.
9.1 Defined .
Commencing with the first annual anniversary of the Rent
Commencement Date and continuing thereafter during each calendar
year or portion thereof during the Term, Tenant shall pay as
Additional Rent to Landlord, without diminution, set-off or
deduction, Tenant’s Share of “Increases in Operating
Costs” (as defined in Section 9.4 below) for each calendar
year. For purposes hereof, Tenant’s Share of Increases in
Operating Costs shall mean Tenant’s Share of the amount by
which all Operating Costs for the calendar year in question exceed
Operating Costs incurred in calendar year 2003 (calendar year 2003
being herein referred to as the “Base
Year”).
9.2 Estimated Payments
. Commencing as of the first day of the second Lease Year and
continuing on a monthly basis thereafter, Tenant shall make
monthly
15
installment payments toward
Tenant’s Share of Increases in Operating Costs on an
estimated basis, based on Landlord’s reasonable good faith
estimate of Operating Costs for such calendar year. Tenant shall
pay Landlord, as Additional Rent, commencing on the first day of
the second Lease Year and on the first day of each month thereafter
throughout the Term (and any extension thereof), one-twelfth
(1/12th) of Landlord’s reasonable good faith estimate of
Tenant’s Share of Increases in Operating Costs for the
then-current calendar year. If at any time or times during such
calendar year, but not more after than once per calendar year, it
appears to Landlord that Tenant’s Share of Increases in
Operating Costs for such calendar year will materially vary from
Landlord’s estimate, Landlord may, by written notice to
Tenant, reasonably revise its estimate for such calendar year and
Tenant’s estimated payments hereunder for such calendar year
shall thereupon be based on such revised estimate.
9.3 Annual
Reconciliation . Landlord shall provide to Tenant within a
reasonable time after the end of each calendar year (Landlord
agreeing to endeavor so to do within 120 days after the end of the
applicable year, provided that such shall not be a condition of
Tenant’s obligations arising as a result thereof or based
thereon), a detailed, itemized statement (the “Expense
Statement”), calculated in accordance with Section 9. 1,
above, setting forth the total actual Operating Costs for such
calendar year and Tenant’s Share of Increases in Operating
Costs. Landlord shall respond to any inquiries and requests for
invoices or other information with respect to Operating Costs
within thirty (30) days of any written request therefore by Tenant.
Within thirty (30) days after the delivery of such Expense
Statement, Tenant shall pay to Landlord the amount of any shortfall
in the amount of estimated payments made to Landlord pursuant to
Section 9.2 on account of Tenant’s Share of Increases in
Operating Costs for such calendar year, and the actual amount shown
as Tenant’s Share of Increases in Operating Costs for such
calendar year. In the event the Expense Statement reflects an
overpayment of Tenant’s Share of Increases Operating Costs
for such year, such overpayment shall be credited against the next
due Base Rent hereunder, except if Tenant’s Lease is no
longer in effect then Landlord shall refund such amount to Tenant
within thirty (30) days.
9.4 Operating Costs .
The term “Operating Costs” shall mean all reasonable
and necessary expenses incurred by Landlord in connection with the
operation, management, maintenance and repair of the Building,
Common Areas and the Land in accordance with the standards
applicable to similar first class properties in the Reston,
Virginia area, subject to the qualifications set forth below. All
Operating Costs shall be determined according to generally accepted
accounting principles which shall be consistently applied.
Operating Costs include the following items: (a) the cost of the
personal property used in conjunction with the operation,
management, maintenance and repair of the Building and the Project;
(b) costs to repair and maintain the Building, the Building roof
and the Common Areas; (c) all expenses paid or incurred by Landlord
for water, gas, electric, sewer and oil services for the Building
(including Common Areas); (e) building supplies and materials used
in connection with repairs to the Project; (f) cleaning and
janitorial services in or about the Premises, the Building
(including, without limitation, Common Areas, but not including the
below grade levels of the Building other than any Common Areas
within such lower levels) and the Land; (g) window glass
replacement, repair and cleaning; (h) repair, replacement and
maintenance of the grounds, including
16
costs of landscaping, lighting, Project
and Building signage, gardening and planting, including service or
management contracts with independent contractors, including but
not limited to security and energy management services and costs;
(i) operational costs to achieve compliance with any governmental
laws, rules, orders or regulations which are enacted or become
effective after the Commencement Date, and excluding capital
expenses associated therewith except to the extent specifically set
forth below; 0) utility taxes; (k) compensation (including
employment taxes, fringe benefits, salaries, wages, medical,
surgical, and general welfare benefits (including health, accident
and group life insurance), pension payments, payroll taxes for all
personnel employed by Landlord or its management company who
perform duties in connection with the operation, management,
maintenance and repair of the Building (allocated among all
properties served by such employees as determined by Landlord in
its reasonable discretion, if such employees are utilized by more
than one property) plus the salary and benefits of the property
manager specifically assigned to the Project; (l) any (i) capital
expenditures incurred to reduce Operating Costs, to the extent of
such reduction (and with any amount remaining unrecovered by virtue
of such limitation to carry forward to subsequent calendar years,
to the extent of any such continuing reduction achieved in each
such subsequent calendar year, until recovered in full), (ii) the
annual amortized portion of capital expenditures incurred to comply
with any governmental law, order, regulation or other requirement
which is enacted or becomes effective after the Commencement Date,
and (iii) capital expenditures made for the replacement of items
(the repair of which would be includable within Operating Costs) in
lieu of repairs thereto, provided (A) replacement of the item in
lieu of repair is either less costly on an annual basis than repair
of the item in question, or is necessary given the non-functioning
condition of the item in question, as determined by Landlord in
good faith, (B) this provision shall not apply to general
renovations, as opposed to needed repairs, of the Building or any
elements therein, and (C) such expenditure shall be recoverable
only over the useful life of the item in question by amortizing
such expenditure over such useful life (in accordance with
applicable federal income tax guidelines) at an annual interest
rate equal to the Prime Rate at the time of such expenditure, and
only the sum of all amortization payments payable or deemed payable
during the year in question shall be includable in Operating Costs
in each year during such recovery period; (m) cost of premiums for
casualty and liability insurance policies required to be maintained
by Landlord hereunder and any other insurance carried by Landlord
with respect to the Project; (n) license, permit and inspection
fees; (o) reasonable management fees based upon a percentage of
gross rental receipts, Increases in Operating Costs, Increases in
Real Estate Taxes and utility costs not to exceed four percent (4%)
of the aggregate amount thereof; (p) consulting fees in connection
with the provision of common area maintenance services; (q)
personal property and BPOL taxes; (r) trash removal, including all
costs incurred in connection with waste product recycling; (s) snow
and ice removal or prevention; (t) maintenance, repair and striping
of all parking areas used by tenants of the Building, and any other
cost or assessment payable in connection with the maintaining of
such parking areas; (u) uniforms and dry cleaning; (v) telephone,
cellular phone, paging, telegraph, postage, stationery supplies and
other materials and expenses required for the routine operation of
the Building; (w) association and other assessments for maintenance
of offsite improvements serving or benefiting the Building or the
Land; (x) costs and expenses relating to compliance with any
ongoing
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existing proffer obligations applicable
to the Project; (y) the cost of acquisition, repair, maintenance
and replacement of seasonal Building decoration; (z) the cost of
operating, maintaining, repairing and replacing conduits and other
electrical fixtures, fire protection, alarm and sprinkler systems,
Building and Project plumbing and storm and sanitary sewer systems,
and (aa) other association assessments for common area services
provided to owners in the Plaza America complex.
9.5 Exclusions .
Except as otherwise specifically provided in this Lease to be an
Operating Cost, Operating Costs shall not include any of the
following:
(a) costs of repairs,
restoration, replacements or other work occasioned by (1) fire,
windstorm or other casualty of an insurable nature (whether such
destruction be total or partial) and either (aa) payable (whether
paid or not) by insurance required to be carried by Landlord under
this Lease, or (bb) otherwise payable (whether paid or not) by
insurance then in effect obtained by Landlord, (2) the exercise by
governmental authorities of the right of eminent domain, whether
such taking be total or partial, (3) the negligence or intentional
tort of Landlord, or any subsidiary or affiliate of Landlord, or
any representative, employee or agent of same (including the costs
of any deductibles paid by Landlord), or (4) the act of any other
tenant in the Building, or any other tenant’s agents,
employees, licensees or invitees to the extent Landlord has the
right to recover the applicable cost from such person;
(b) Leasing commissions;
attorneys’ fees, except for those reasonable attorney’s
fees in connection with enforcing rules and regulations; costs
disbursements and other expenses incurred in connection with
negotiations for leases with tenants, other occupants, or
prospective tenants or other occupants of the Building, or similar
costs incurred in connection with disputes with tenants, other
occupants, or prospective tenants, or similar costs and expenses
incurred in connection with negotiations or disputes with
purchasers or mortgagees of the Building;
(c) Allowances, concessions
and other costs and expenses incurred in completing, fixturing,
furnishing, renovating or otherwise improving, decorating or
redecorating space for tenants (including Tenant), prospective
tenants or other occupants and prospective occupants of the
Building, or vacant, leasable space in the Building;
(d) Costs of the initial
construction of the Building and repairing, replacing or otherwise
correcting defects (but not the costs of repair for normal wear and
tear) in the construction of the base Building, any tenant’s
improvements, the adjacent parking structure or other improvements
in the Building, or in the Building equipment;
(e) Costs or expenses
relating to another tenant’s or occupant’s space which
(1) were incurred in rendering any service or benefit to such
tenant that Landlord was not required, or were for a service in
excess of the service that Landlord was required, to provide Tenant
without additional charge hereunder (including without limitation
insurance coverage for another tenant’s or occupant’s
leasehold improvements), or (2) were otherwise in excess of the
Building standard services then being provided by Landlord to all
tenants or other occupants in the Building, whether or not such
other tenant or occupant is actually charged therefor by
Landlord;
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(f) Payments of principal and
interest or other finance charges made on any debt and rental
payments made under any ground or underlying lease or
leases;
(g) Costs incurred in
connection with the sales, financing, refinancing, mortgaging,
selling or change of ownership of the Building, including brokerage
commissions, attorneys’ and accountants’ fees, closing
costs, title insurance premiums, transfer taxes and interest
charges;
(h) Costs, fines, interest,
penalties, legal fees or costs of litigation incurred due to the
late payments of taxes, utility bills and other costs incurred by
Landlord’s failure to make such payments when due;
(i) Costs incurred by
Landlord for trustee’s fees, partnership organizational
expenses and accounting fees except accounting fees relating solely
to the ownership and operation of the Building.
(j) Costs of a capital
nature, including without limitation, capital improvements, capital
repairs, capital equipment and capital tools, all as determined in
accordance with generally accepted accounting principles other than
those that actually reduce operating expenses to the extent of such
reduction;
(k) Landlord’s general
corporate overhead and general and administrative
expenses;
(l) Any compensation paid to
clerks, attendants or other persons in commercial concessions
operated by Landlord or in the parking garage of the
Building;
(m) Rentals and other related
expenses incurred in leasing air conditioning systems, elevators or
other equipment ordinarily considered to be of a capital nature,
except equipment not affixed to the Building which is used in
providing janitorial or similar services, but excluding any portion
of such rental or lease payment(s) which include a maintenance or
repair agreement or contract;
(n) The rent for any offices
or spaces of Landlord or any related entity other than any on-site
property management office;
(o) Landlord’s income
and franchise taxes, special assessments and other business taxes
except those business taxes which relate solely to the operation of
the Building (specifically including BPOL Taxes which shall be
considered a part of Operating Costs and/or Real Estate
Taxes);
(p) All amounts which would
otherwise be included in Operating Costs which are paid to any
affiliate or subsidiaries of Landlord, or any representative,
employee or agent of same, to the extent the costs of such services
exceed the competitive rates for similar services of comparable
quality rendered by persons or entities of similar skill,
competence and experience;
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(q) Subject to the management
fee contribution provided for in the Lease, all other fees for
management of the Building;
(r) Costs or expenses of
utilities directly metered to tenants of the Building and payable
separately by such tenants;
(s) Increased insurance
premiums caused by Landlord’s or any other tenant’s
hazardous acts;
(t) Moving expense costs of
tenants of the Building to the extent not provided by Landlord (i)
to Tenant and (ii) generally to other initial tenants of the
Building;
(u) Advertising and
promotional costs associated with the leasing of the Building, and
costs of signs in or on the Building identifying the owners of the
Building or any individual tenant of the Building to the exclusion
of other tenants;
(v) Costs incurred to correct
violations by Landlord of any law, rule, order or regulation which
was in effect as of the Commencement Date;
(w) Costs incurred (less
costs of recovery) for any items to the extent covered by a
manufacturer’s, materialman’s, vendor’s or
contractor’s warranty (a “Warranty”) which are
paid by such manufacturer, materialman, vendor or contractor
(Landlord shall pursue a breach of warranty claim for items covered
by a Warranty unless Landlord determines in good faith that such
action would not be in the best interest of the tenants of the
Building) and the costs of any items that are not covered by a
Warranty but for which a reasonable, prudent landlord would have
obtained a warranty;
(x) Non-cash items, such as
deductions for depreciation and amortization of the Building and
the Building equipment, or interest on capital invested, except on
materials, tools, supplies and vendor-type equipment purchased by
Landlord to enable Landlord to supply services Landlord might
otherwise contract for with a third party where such depreciation
in the charge for such third party’s service, all as
determined in accordance with generally accepted accounting
principles, consistently applied;
(y) Electric power costs for
which any tenant directly contracts with the local public service
company;
(z) Services provided and
costs incurred in connection with the operation of any retail or
other ancillary operations owned, operated or subsidized by
Landlord;
(aa) Expenses and costs not
normally, in accordance with generally accepted accounting
principles, included by landlords of first-class institutional
office buildings or that are not competitive or not prudent in view
of the goods and services obtained for such expense or
costs;
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(bb) Consulting costs and
expenses paid by Landlord, other than those incurred to reduce
Operating Costs and/or Real Estate Taxes;
(cc) The cost of any
“tap fees” or one-time lump sum sewer or water
connection fees for the Building payable in connection with the
initial construction of the Building;
(dd) Rental for any space in
the Building set aside for conference facilities, storage
facilities or exercise facilities;
(ee) Vault rental;
(ff) Wages and salaries for
off-site employees and employees at the Building above the level of
property manager;
(gg) the cost of any parking
garage operator or the cost of operating the parking facilities to
the extent that any such costs of operating are borne by a third
party operator and not Landlord;
(hh) those costs and/or
expenses stated to be at Landlord’s cost and expense (or
words of like import), or subject to Landlord’s
indemnification obligations, pursuant to the provisions of Sections
5.2.6, 5.2.8, 8.4, 8.5, 20.2, 40, 42, 51.6 and 53 hereof and
pursuant to paragraph 1 of Exhibit C and General Note 1 of Exhibit
C-1 hereto, and those costs and expenses for which Landlord
actually receives direct reimbursement from third parties;
and/or
(ii) any costs separately
paid directly by retail tenants in the Building.
9.6 Further Adjustment
. Operating Costs for each calendar year (including the Base Year)
shall be adjusted to include all costs, expenses and disbursements
which vary by occupancy or not otherwise provided to all tenants
that Landlord reasonably determines, based upon normal and
customary market standard for similar projects in the Reston,
Virginia area, would have been incurred if Landlord had provided
all utilities and services within the definition of Operating Costs
to tenants and occupants in the Building had the Building been
ninety five percent (95%) occupied throughout such year. Operating
Costs for the Base Year shall also be increased by any amounts
which would have been deemed Operating Costs but which were not
actually incurred as a result of warranties and maintenance/service
contracts in place and applicable to the Base Year.
9.7 Multi-Project
Operating Costs . The Building is a part of a larger project or
development, and as such, Landlord shall have the right (but not
the obligation) to allocate to the Building an appropriate portion
of those Operating Costs which are incurred with respect to the
project as a whole. By way of example, landscaping costs for a
multi-building project shall be allocated on an appropriate basis
between all tenantable buildings in the project.
9.8 Limitation on
Increases in Operating Costs . Beginning calendar year 2004 and
continuing for the balance of the Term, Operating Expenses shall
not include increases in “controllable” Operating Costs
that exceed six percent (6%) of the amount thereof, on a
21
cumulative basis, utilized in the prior
calendar year’s calculation of Operating Expenses. (for
purposes hereof “on a cumulative basis” shall mean that
in the event increases of controllable Operating Costs in any one
year are less than 6% of the prior years increases in controllable
Operating Costs, the amount by which such increases fell below 6%
may be carried forward to subsequent years and applied to increases
in controllable Operating Costs that exceed 6%. For example, if
increases in controllable Operating Costs in 2005 are 5% and
increases in controllable Operating Costs in 2006 are 8%, then, for
purposes of determining the amount of increases in controllable
Operating Costs that may be passed through to Tenant, up to a 7%
increase for 2006 may be passed through (i.e., the 6% allowable in
2006 plus a 1% carryover from 2005). “Controllable”
Operating Costs shall mean all Operating Costs as are defined in
Section 9.4 above, exclusive only of expenses paid or incurred by
Landlord for water, gas, electric, sewer, oil services and other
utilities for the Building, cost of premiums for casualty and
liability insurance policies required to be maintained by Landlord
hereunder (provided such insurance has been competitively bid on an
annual basis) and any other insurance carried by Landlord with
respect to the Building (provided such insurance has been
competitively bid on an annual basis), and the costs of snow and
ice removal.
10. REAL ESTATE
TAXES.
10.1 Defined .
Commencing with the first annual anniversary of the Rent
Commencement Date and continuing during each calendar year or
portion thereof during the Term, Tenant shall pay as Additional
Rent to Landlord, without diminution, set-off or deduction,
Tenant’s Share of “Increases in Real Estate
Taxes” (as defined in Section 10.3, below) paid in such
calendar year. For purposes hereof, Tenant’s Share of
Increases in Real Estate Taxes shall mean Tenant’s Share of
the amount by which all Real Estate Taxes for the year in question
exceed Real Estate Taxes incurred for the Base Year.
10.2 Estimated Payment
. Tenant shall make monthly installment payments toward
Tenant’s Share of Increases in Real Estate Taxes on an
estimated basis, based on Landlord’s reasonable good faith
estimate of Real Estate Taxes for such calendar year. Tenant shall
pay Landlord, as Additional Rent, commencing on the first day of
the second Lease Year and on the first day of each month thereafter
throughout the Term (and any extension thereof), one-twelfth
(1/12th) of Landlord’s reasonable but good faith estimate of
Tenant’s Share of Increases in Real Estate Taxes for the
then-current calendar year. If at any time or times during such
calendar year it appears to Landlord that Tenant’s Share of
Increases in Real Estate Taxes for such calendar year will
materially vary from Landlord’s estimate, Landlord may, by
written notice to Tenant, once during any calendar year, reasonably
revise its estimate for such calendar year and Tenant’s
estimated payments hereunder for such calendar year shall thereupon
be based on such revised estimate.
10.3 Real Estate
Taxes. For purposes of this Lease, “Real Estate
Taxes” shall mean all taxes and assessments, general or
special, ordinary or extraordinary, foreseen or unforeseen,
assessed, levied or imposed upon the Building or the Land, or
assessed, levied or imposed upon the fixtures, machinery, equipment
or systems in, upon or used in connection with the operation of the
Building or the Land under the current or any future
22
taxation or assessment system or
modification of, supplement to, or substitute for such system. Real
Estate Taxes shall include all reasonable expenses (including, but
not limited to, reasonable attorneys’ fees, disbursements and
actual costs) incurred by Landlord in obtaining or attempting to
obtain a reduction of such taxes, rates or assessments, including
any legal fees and costs incurred in connection with contesting or
appealing the amounts or the imposition of any Real Estate Taxes,
but not in excess of the annual reduction in Real Estate Taxes
achieved. In the event Real Estate Taxes (including special
assessments) may be paid in installments, they maybe paid in
installments or in lump sum, at Landlord’s election (and in
such event Real Estate Taxes shall include such installments and
interest paid on the unpaid balance of the assessment, or the
entirety thereof, as applicable). The foregoing notwithstanding,
Real Estate Taxes shall not include: (i) any franchise,
corporation, income or net profits tax which may be assessed
against Landlord or the Project or both, (ii) transfer taxes
assessed against Landlord or the Project or both, (iii) penalties,
interest, legal fees or costs of litigation incurred due to any
late payments of Landlord, or (iv) personal property taxes of
Tenant.
10.4 Annual
Reconciliation . Landlord shall provide to Tenant within a
reasonable time after the end of each calendar year (Landlord
agreeing to endeavor so to do within 120 days after the end of the
applicable year, provided that such shall not be a condition of
Tenant’s obligations arising as a result thereof or based
thereon), with Landlord’s calculation of Tenant’s Share
thereof (the “Tax Statement”). Within thirty (30) days
after the delivery of the Tax Statement, Tenant shall pay to
Landlord the amount of any shortfall in the amount of estimated
payments made to Landlord pursuant to Section 10.2 on account of
Tenant’s Share of Increases in Real Estate Taxes for such
calendar year, and the actual amount shown as Tenant’s Share
of Increases in Real Estate Taxes for such calendar year. In the
event the Tax Statement reflects an overpayment of Tenant’s
Share of Real Estate Taxes for such year, such overpayment shall be
credited against the next due Base Rent hereunder, except if
Tenant’s Lease is no longer in effect then Landlord shall
refund such amount to Tenant within thirty (30) days.
11. ADDITIONAL PROVISIONS;
OPERATING COSTS AND REAL ESTATE TAXES.
11.1 Partial Year; End of
Term . To the extent that a more accurate method of allocating
same cannot be implemented by Landlord, Tenant’s Share of
Increases in Operating Costs and Real Estate Taxes for any partial
calendar year shall be determined by multiplying the amount of
Tenant’s Share thereof for the full calendar year by a
fraction, the numerator of which is the number of days during such
partial calendar year falling within the Term and the denominator
of which is 365. If this Lease terminates on a day other than the
last day of a calendar year, the amount of any adjustment to
Tenant’s Share of Increases in Operating Costs and Real
Estate Taxes with respect to the year in which such termination
occurs shall be prorated on the basis which the number of days from
January 1 of such year to and including such termination date bears
to 365; and any amount payable by Landlord to Tenant or Tenant to
Landlord with respect to such adjustment shall be payable within
thirty (30) days after delivery by Landlord to Tenant of the
applicable Expense Statement and Tax Statement with respect to such
year.
23
11.2 Other Taxes . In
addition to Tenant’s Share of Increases in Operating Costs
and Increases in Real Estate Taxes, Tenant shall pay, prior to
delinquency, all personal property taxes payable with respect to
all property of Tenant located in the Premises or the Building, and
shall provide promptly, upon reasonable request of Landlord,
written proof of such payment.
11.3 Covenant Regarding
Timely Payment of Operating Costs and Real Estate Taxes .
Landlord covenants to pay all Operating Costs and Real Estate Taxes
before the same become delinquent, subject to Tenant’s
obligation to make the payments contemplated by Article 9 and
Article 10, above, in a timely fashion.
11.4 Contesting Real
Estate Taxes . Landlord will have the right to employ a tax
consulting firm to attempt to assure a fair tax burden on the
Project, provided Landlord will use reasonable efforts to minimize
the cost of such service. The reasonable cost of such service shall
be included in the Real Estate Taxes hereunder in the year same
were incurred or paid, at Landlord’s election, but only to
the extent of the annual reduction in Real Estate Taxes achieved.
Additionally, during any such period, Landlord shall have the
right, in its reasonable judgment, to contest any tax assessment,
valuation or levy against the Project, and to retain legal counsel
and expert witnesses to assist in such contest and otherwise to
incur expenses in such contest, and any reasonable fees, expenses
and costs incurred by Landlord in contesting any assessments,
levies or tax rate applicable to the Project shall be included in
Real Estate Taxes as set forth above.
11.5 Tenant’s Audit
Right . Tenant shall have the right, on an annual basis,
beginning on the first annual anniversary of the Commencement Date,
to have a certified public accounting firm or other representative
audit the Landlord’s books and records pertaining to
Operating Costs and Real Estate Taxes for the immediately preceding
year (including, as appropriate, the Base Year). Tenant shall be
responsible for the entire cost of said audit unless an error
greater than four percent (4%) of aggregate Operating Costs and
Real Estate Taxes is identified for the year in question, and in
this instance, Landlord shall be responsible for all audit costs
incurred by Tenant in addition to any and all legal fees incurred
in recovering any Operating Cost and Real Estate Tax pass through
overpayments Tenant has made to Landlord, provided the same shall
not be in the nature of a contingency or success fee. In the event
an error greater than four percent (4%) is identified, Tenant shall
have the right, at Tenant’s cost, to audit that specific item
for the remaining Initial Lease Term. Landlord, upon thirty (30)
days written notice from Tenant, shall make available at the
offices of Landlord’s property manager all appropriate books
and records including but not limited to paid bill files, operating
expense billing files and contracts relating to the year in
question. In the event of any overpayment, Landlord shall
immediately credit against the next due Base Rent hereunder all
overpayments plus 10% per annum interest from the date paid to the
date credited.
11.6 Arbitration .
Disputes regarding Operating Costs, Real Estate Taxes, and any
audit thereof, shall be subject to arbitration in accordance with
the provisions of Section 49 hereof.
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12. TENANT’S
INSURANCE.
12.1 Coverage
Requirements . Tenant shall during the Term of this Lease,
procure at its expense and keep in force the following
insurance:
(a) Commercial general
liability insurance naming the Landlord and Landlord’s
managing agent as additional insureds against claims for bodily
injury and property damage occurring in or about the Premises or
any appurtenances thereto covering the operation of the Tenant and
any subtenants, licensees and concessionaires of the Tenant. Such
insurance shall be written on an “Occurrence Form” and
shall include, without limitation, blanket contractual liability
recognizing provisions of this Lease, broad form property damage,
coverage for independent contractors, personal injury liability and
coverage for hired auto and non-ownership auto liability. Such
insurance shall be primary. Such insurance shall have a limit of
not less than Two Million Dollars ($2,000,000.00) per occurrence
with a Two Million Dollars ($2,000,000.00) general aggregate with
an excess (umbrella) liability insurance in the amount of Two
Million Dollars ($2,000,000.00) per occurrence and Ten Million
Dollars ($10,000,000.00) annually in the aggregate; provided,
however that no such limits shall be deemed limitation of the
liability of Tenant hereunder. If Tenant has other locations that
it owns or leases and its commercial general liability insurance
coverage hereunder is covered as part of blanket coverage, the
blanket policy shall include an aggregate limit per location
endorsement. Such liability insurance shall be primary. In no event
shall the limits of such insurance be considered as limiting the
liability of Tenant under this Lease;
(b) Personal property
insurance insuring all equipment, trade fixtures, inventory,
fixtures and personal property located within the Premises
(excluding leasehold improvements, which shall be insured by and
remain the property of Landlord, but specifically including plate
glass insurance covering breakage of any glass frontage installed
by or on behalf of Tenant within or as a part of the Premises or
otherwise as a part of the Building but adjoining the Premises).
Such insurance shall be written on a replacement cost basis in an
amount equal to one hundred percent (100%) of the full replacement
value of the aggregate of the foregoing;
(c) Workers’
compensation and occupational disease insurance, employee benefit
insurance and any other insurance in the statutory amounts required
by the laws of the State where the operations are to be performed
with broad-form all-states endorsement.
(d) Employer’s
liability insurance with a limit of One Hundred Thousand Dollars
($100,000.00) for each accident, with any claims in excess of such
amount covered by Tenant’s umbrella liability policy;
and
(e) Business income insurance
and loss of rental insurance in an amount equal to at least to
eighteen (18) months Base Rent.
12.2 Rating; Certificates;
Cancellation . The policies required to be maintained by Tenant
shall be with companies rated A-X or better in the most current
issue of Best’s Insurance Reports. Insurers shall be licensed
to do business in the Commonwealth of Virginia and domiciled in the
USA. Any deductible amounts under any insurance policies required
hereunder shall be commercially reasonable. Certificates of
insurance or
25
certified copies of the policies shall
be delivered to Landlord prior to the Commencement Date and
annually thereafter at least thirty (30) days prior to the
expiration date of the old policy. Tenant shall have the right to
provide insurance coverage which it is obligated to carry pursuant
to the terms hereof in a blanket policy, provided such blanket
policy expressly affords coverage to the Premises and to Landlord
as required by this Lease. Each policy of insurance shall provide
notification to Landlord and any mortgagee(s) of Landlord at least
thirty (30) days prior to any cancellation or modification to
reduce the insurance coverage.
12.3 Other . In the
event Tenant does not purchase the insurance required by this Lease
or keep the same in full force and effect, and the same is not
corrected within five (5) business days following written notice
thereof from Landlord to Tenant, then Landlord may, but shall not
be obligated to, purchase the necessary insurance and pay the
premium therefore. Tenant shall repay to Landlord, as Additional
Rent, any and all reasonable expenses (including attorneys’
fees) and damages which Landlord may sustain by reason of the
failure of Tenant to obtain and maintain insurance.
13. LANDLORD’S
INSURANCE.
13.1 Coverage . At all
times during the Lease Term, Landlord will maintain, the cost of
which shall be reimbursable as an Operating Cost hereunder, (a)
fire and extended coverage insurance covering the Project,
including all of Landlord’s Work, in an amount equal to one
hundred percent (100%) of the replacement value thereof, and (b)
public liability and property damage insurance in such amounts as
Landlord deems reasonable from time to time. Landlord shall also
have the right to obtain such other types and amounts of insurance
coverage on the Building (including loss of rental insurance) and
Landlord’s liability in connection with the Building as are
customary or advisable for a comparable project in the Reston,
Virginia area, as determined by Landlord in Landlord’s
reasonable judgment. Any dispute regarding the appropriateness of
such additional insurance coverage shall be subject to arbitration
pursuant to Section 49 of this Lease.
13.2 Rating; Certificates;
Cancellation . The policies required to be maintained by
Landlord shall be with companies rated A-X or better in the most
current issue of Best’s Insurance Reports. Insurers shall be
licensed to do business in the Commonwealth of Virginia and
domiciled in the USA. Any deductible amounts under any insurance
policies required hereunder shall be commercially reasonable, in
Landlord’s reasonable judgment. Landlord shall have the right
to provide insurance coverage which it is obligated to carry
pursuant to the terms hereof in a blanket policy, provided such
blanket policy expressly affords coverage to the Project and to
Tenant as required by this Lease.
26
14. DAMAGE OR
DESTRUCTION.
14.1 Damage
Repair.
14.1.1 If the Premises shall
be destroyed or rendered untenantable, as agreed to by Landlord and
Tenant or determined by the local fire marshal or building
inspector, either wholly or in part, by fire or other casualty,
then, unless this Lease is terminated for reasons permitted
pursuant to Sections 14.2 and/or 14.5, below, Landlord shall,
within thirty (30) days after the date of such casualty, provide
Tenant with Landlord’s good faith written estimate (the
“Estimate”) of how long it will take to repair or
restore the Premises.
14.1.2 If the Estimate
indicates that Landlord will require less than one hundred eighty
(180) days after the date of such casualty to perform such repairs
or restoration, then this Lease shall continue in full force and
effect, and Landlord shall, promptly after adjusting the insurance
claim and obtaining governmental approvals for reconstruction,
commence and diligently prosecute to completion the restoration of
the Premises to their condition immediately prior to such casualty,
subject to Section 14.4 below and subject to Force Majeure (as
defined in Section 47.7, below). Pending termination of this Lease
or substantial completion of such restoration, the Base Rent shall
be abated from the date of the casualty in the same proportion as
the untenantable portion of the Premises bears to the whole
thereof, as agreed to by Landlord and Tenant, or determined by the
governmental official set forth above.
14.1.3 If Landlord indicates
within the Estimate that it will require in excess of one hundred
eighty (180) days after the date of such casualty to fully repair
or restore the Premises in accordance herewith, then within thirty
(30) days after Landlord delivers Tenant the Estimate, either
Landlord or Tenant shall have the right to terminate this Lease by
written notice to the other, which termination shall be effective
as of the date of such notice of termination, and all liabilities
and obligations of Landlord and Tenant thereafter accruing shall
terminate and be of no legal force and effect.
14.1.4 If neither party
elects to terminate the Lease, as aforesaid, and Landlord fails or
declines to exercise any other termination right pursuant to this
Section 14, Landlord shall, promptly after adjusting the insurance
claim and obtaining governmental approvals for reconstruction,
commence and diligently prosecute to completion the restoration of
the Premises to their condition immediately prior to such casualty,
subject to Section 14.4 below and subject to Force Majeure (as
defined herein). If such restoration is not substantially completed
within one hundred eighty (180) days after the date of the casualty
(or such longer period as was referenced in the Estimate and agreed
to by Tenant, if applicable), then for a period of up to thirty
(30) days after the expiration of such period (but in all events no
later than the date Landlord substantially completes its
restoration of the Premises), Tenant shall have the right to
terminate this Lease upon thirty (30) days prior written notice to
Landlord without any cost, fee or penalty of any kind or nature;
provided, however, that if Landlord completes such restoration
prior to the end of the thirty (30) day notice period,
Tenant’s notice of termination shall be deemed rescinded and
ineffective for all purposes, and this Lease
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shall continue in full force and effect.
The provisions of this Section are in lieu of any statutory
termination provisions allowable in the event of casualty damage
and shall not be subject to extension by virtue of the other
provisions hereof including, but not limited to, Force
Majeure.
14.2 Termination for
Material or Uninsured Damages . If (i) the Building shall be
materially destroyed or damaged to the extent that the restoration
of such, in Landlord’s judgment, is not economical or
feasible, or (ii) the Building shall be materially destroyed or
damaged by any casualty other than a casualty covered by the
insurance policies required to be maintained by Landlord hereunder,
notwithstanding that the Premises may be unaffected directly by
such destruction or damage, or (iii) Landlord’s mortgagee (if
any) requires that the proceeds of insurance be applied to reduce
any amounts outstanding under such mortgage, then in any such
event, Landlord may, at its election, terminate this Lease by
notice in writing to Tenant within thirty (30) days after such
destruction or damage. Such notice shall be effective thirty (30)
days after receipt thereof by Tenant.
14.3 Business
Interruption . Other than rental abatement as and to the extent
provided in Section 14. 1, and as provided in Section 8, no
damages, compensation or claim shall be payable by Landlord for
inconvenience or loss of business arising from interruption of
business, repair or restoration of the Building or the
Premises.
14.4 Repairs .
Landlord’s repair obligations, if any, shall be limited to
restoration of improvements which are covered by the insurance
policies required to be maintained by Landlord hereunder. Tenant
acknowledges that any such repairs or restorations shall be subject
to applicable laws and governmental requirements, the requirements
of Landlord’s mortgagee (if any), and to delay in the process
of adjusting any insurance claim associated therewith; and neither
delays resulting from any of the foregoing nor modifications to the
Building or to the interior of the Premises occurring by virtue of
the application of such requirements shall constitute a breach of
this Lease by Landlord (but may result in termination pursuant to
Section 14.1.4) as long as Landlord uses reasonable efforts to
commence and complete such repairs and restorations in a timely
fashion consistent with the pre-existing condition of the
applicable improvements.
14.5 End of Term
Casualty. Anything herein to the contrary notwithstanding, if
the Premises are destroyed or damaged during the last eighteen (18)
months of the Lease Term, then Tenant shall have the right to
terminate this Lease upon thirty (30) days prior written notice to
the Landlord, which termination shall be effective on the thirtieth
(30th) day after the Landlord’s receipt of such notice. In
addition, if the Premises are destroyed or substantially damaged
(which, for purposes of this Section 14.5 shall mean that the
repair thereof can not, in accordance with the terms hereof, be
completed within sixty (60) days after the date of such casualty)
during the last ten (10) months of the Lease Term, and Tenant does
not and has not timely exercised any Renewal Option pursuant to
Section 51.1 hereof, then Landlord shall also have the right to
terminate this Lease upon thirty (30) days prior written notice to
the Tenant, which termination shall be effective on the thirtieth
(30th) day after the Tenant’s receipt of such notice. In
either case, such notice must be delivered within thirty (30) days
after such casualty, or such termination rights shall be deemed
waived.
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15. MACHINERY AND EQUIPMENT;
ALTERATIONS AND ADDITIONS; REMOVAL OF FIXTURES .
15.1 Tenant shall not place a
load upon the floor of the Premises which exceeds the maximum live
load which Landlord (or Landlord’s architect or engineer)
reasonably determines is appropriate for the Building (and advises
Tenant in writing) without Landlord’s prior written consent
which consent shall not be unreasonably withheld. Tenant will not
install or operate in the Premises any electrical or other
equipment requiring any changes, replacements or additions to any
base building system, without Landlord’s prior written
consent (and if such consent is granted Tenant shall be responsible
for the costs of such changes, replacements or
additions).
15.2 Except for the
Tenant’s Work, which will be governed Exhibit C
hereto, Tenant shall not make or allow to be made any alterations,
additions or improvements to or on the Premises which (i) affect
any structural or building system components of the Premises, (ii)
under applicable codes, rules and/or regulations require any
building electrical, plumbing or other permit, or (iii) cost, in
the aggregate in excess of $25,000.00 (other than wall coverings,
floor coverings and similar work which is of a purely cosmetic
nature), without Landlord’s prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed.
Any alterations, additions or improvements to the Premises shall be
made at Tenant’s sole expense, in compliance with all
applicable laws, by a licensed contractor, and in a good and
workmanlike manner conforming in quality with the Premises existing
as of the Rent Commencement Date, shall not diminish the value of
the Building or the Premises and shall at once become a part of the
realty and shall be surrendered with the Premises (except as
provided in Section 15.3 and 15.4, below). In addition, any
alterations, additions or improvements which fall within the
purview of subsection (i) through (iii) above shall also be
undertaken according to plans and specifications, with a contractor
and during hours reasonably approved in writing by Landlord all as
provided herein. Any such approved alterations, additions or
improvements shall be made at Tenant’s sole cost and
expense.
15.3 Upon the expiration or
sooner termination of the Lease Term, Tenant shall, at
Tenant’s sole expense, with due diligence, remove any
alterations, additions, or improvements made by Tenant which are
designated by Landlord to be removed at the time its consent to the
installation thereof is granted, and repair any damage to the
Premises caused by such removal. None of Landlord’s Work or
Tenant’s Work shall be subject to any removal obligation on
Tenant’s part. Tenant shall remove all of its movable
property, trade fixtures and roof devices. Tenant shall retain one
hundred percent (100%) ownership of its movable special Tenant
improvements including but not limited to trade fixtures and their
related mechanical support systems and detachable furniture. Tenant
shall be responsible for the repair of any damage to the Premises
caused by such removal. Tenant shall pay Landlord any reasonable
damages for injury to the Premises or Building resulting from such
removal. All items of Tenant’s personal property that are not
removed from the Premises or the Building by Tenant at the
termination of this Lease may be
29
removed and/or stored by Landlord at
Tenant’s expense, if Tenant does not remove same within five
(5) days of Landlord’s written notice to or demand upon
Tenant. Tenant’s obligations under these Sections 15.2 and
15.3 shall survive the expiration or termination of this
Lease.
15.4 Subject to the approval
of Landlord as set forth in Subsections 15.1 and 15.2 above, Tenant
shall have the right to install, at Tenant’s expense, and
operate, at Tenant’s expense, additional (package)
air-conditioning equipment to provide after-hours heating,
ventilating and air-conditioning for the Premises. Any such
additional air-conditioning equipment shall remain the property of
Tenant and shall be removed at Tenant’s option, upon the
expiration or sooner termination of the Term, in accordance with
the terms of Section 15.3 above. Any base Building modification
required to accommodate such equipment shall be undertaken by
Landlord, at Tenant’s sole expense, and shall in all events
be subject to the approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed.
15.5 Tenant shall, at its
sole cost and expense, maintain, repair and/or replace any special
installations (finishes, equipment or other facilities including,
without limitation, special plumbing, electrical or heating,
ventilating and air-conditioning) required for Tenant’s use
and occupancy of the Premises (whether or not such special items
are located within said Premises). No such special installations
shall be undertaken by Tenant absent Landlord’s written
approval therefore in accordance with the terms of this Section 15,
which approval shall not be unreasonably withheld, conditioned or
delayed.
15.6 Subject to the terms of
this Section 15.6, Tenant shall have the right to install its own
generator (the “Generator”) at an exterior location
approved by Landlord, which approval shall not be unreasonably
withheld, delayed or conditioned. The Generator shall remain the
property of Tenant and shall be removed by and at the expense of
Tenant at the expiration or earlier termination of the Term. Upon
Landlord’s approval as set forth herein, Landlord hereby
grants Tenant a license to install and use the Generator to the
extent not located within the Premises. In addition to and not in
lieu of any other right or rights of Tenant under this Lease
currently or in the future, Landlord grants to Tenant the following
cumulative rights, which may be exercised by Tenant itself or
through its agents, employees, licensees, contractors or
subcontractors at all times during the Term with respect to
Tenant’s Generator: (i) the right to test and exercise the
Generator during the hours between 3:00 a.m. and 6:00 a.m. and such
additional times as may otherwise be approved by Landlord or
Landlord’s property manager, at Tenant’s request, that
accommodate the reasonable needs of the other tenants in the
Project; (ii) the right to run Tenant’s Generator at anytime
when a commercial utility power outage, reduction or
“brownout” occurs with respect to the Project and/or
the Premises; and (iii) the right of access to Tenant’s
Generator for operation, maintenance and replacement purposes at
all times.
In the event that Tenant
installs the Generator, Tenant agrees to undertake, through its
authorized contractors and otherwise at Tenant’s cost, the
following measures with respect thereto: (i) installation of spill
protective measures for the fueling of the Generator in
accordance
30
with applicable laws and codes; (ii)
location of a fuel storage tank above-ground and installation of a
double-walled steel fuel tank in accordance with applicable laws
and codes but only in a location approved by Landlord; (iii)
installation of appropriate and customary noise reduction measures
in accordance with standards acceptable to Landlord and customary
for a first class office building in the Reston, Virginia area; and
(iv) installation of appropriate and customary screening measures
in accordance with standards acceptable to Landlord and customary
for a first class office building in the Reston, Virginia area. In
addition, Tenant shall be solely responsible for the cost of (and
shall contract directly for the performance of) all maintenance,
repair and replacement of the Generator, shall maintain appropriate
insurance in accordance with the terms of this Lease which shall
include coverage of and against all perils related to the
Generator, and shall indemnify and hold Landlord harmless from and
against all cost, loss, and liability whatsoever arising as a
result of Tenant’s installation, use, the malfunction of, or
personal injury or property damage occasioned by the existence of,
the Generator.
At the end of the Term,
Landlord and Tenant agree that Tenant’s Generator system
consisting of an emergency generator, any approved fuel supply
tank, manual transfer switch, roll-up generator termination box and
conduit and cable distribution connecting to the automatic transfer
switches of the distribution system shall be removed by Tenant and
Tenant shall be solely responsible for the full cost of such work
without any obligation on the part of Landlord
whatsoever.
16. ACCEPTANCE OF
PREMISES.
Landlord shall tender, and
Tenant shall accept possession of, the Premises in accordance with
the terms of Exhibit C-1 attached hereto. All
provisions regarding delivery of possession of the Premises,
construction of leasehold improvements to the Premises and any
adjustments which may be made with respect to the Commencement Date
(as defined in Section 1.4) are set forth in Exhibits C
and C-1 .
17. TENANT
IMPROVEMENTS.
The provisions governing
initial improvements to be performed by Tenant to the Premises are
set forth in Exhibit C hereto. Such provisions
include Landlord’s making available to Tenant a Leasehold
Improvement Allowance (at an amount equal to the sum of $50.00 per
rentable square foot of the Premises and $30.00 per useable square
foot of the Lower Level Space) and an Additional Leasehold
Improvement Allowance (at up to $15.00 per rentable square foot of
the Premises) in accordance with and subject to the terms of
Exhibit C attached hereto.
18. ACCESS.
18.1 Subject to the
restrictions set forth below, Tenant shall permit Landlord and its
agents to enter the Premises at all reasonable times, upon
reasonable advance notice except for emergencies, during
Tenant’s normal business hours to inspect the same; to show
the Premises to prospective tenants, or interested parties such as
prospective lenders and purchasers; to exercise its rights under
Section 48; to repair, alter or improve the Premises or the
Building, provided such alterations and repairs do not
31
unreasonably interfere with
Tenant’s ability to conduct its business during normal
business hours; to discharge Tenant’s obligations when Tenant
has failed to do so within a reasonable time after such written
notice from Landlord and the lapse of any opportunity to cure as is
set forth in Section 24 hereof; to post notices of
non-responsibility and similar notices and “For Sale”
signs and to place “For Lease” signs upon (which signs
shall not impair Tenant’s window line in the Premises) or
adjacent to the Building or the Premises. Tenant shall permit
Landlord and its agents to enter the Premises at any time in the
event of an emergency. When reasonably necessary, Landlord may
temporarily close entrances, doors, corridors, elevators or other
facilities without liability to Tenant by reason of such closure.
In exercising the foregoing rights, Landlord shall use reasonable
efforts to minimize any disruption to Tenant’s business.
Landlord shall coordinate any entry into the Premises with
Tenant’s facilities supervisor at least 24 hours in advance
(except in cases of emergency involving fire or other casualty, or
other risk of injury or death to persons), and Landlord
acknowledges that Tenant may require Landlord and its agents to be
accompanied by a representative of Tenant for security purposes
upon Landlord’s entry to the Premises (other than in cases of
emergency involving fire or other casualty, or other risk of injury
or death to persons) for legitimate, documented security purposes.
Tenant shall supply Landlord with telephone numbers for
Tenant’s facilities supervisor so that Landlord will be able
to comply with established security procedures to the extent
feasible under the circumstances in the event Landlord requires
immediate access to the Premises to cure any emergency
situation
18.2 Landlord shall be
excused from such of its obligations under this Lease as are
directly and materially impacted by the inability of Landlord to
access the Premises or any applicable part thereof due to
Tenant’s security measures which may limit or restrict access
to any portion of the Premises, if and to the extent the
performance of such obligations was in fact hindered, frustrated,
or rendered impossible or impracticable due to the effect of such
restrictions on access.
19. MUTUAL WAIVER OF
SUBROGATION.
19.1 Tenant .
Notwithstanding anything to the contrary in this Lease, whether the
loss or damage is due to the negligence, gross negligence and/or
willful misconduct of Landlord or Landlord’s agents or
employees, or any other cause, Tenant hereby releases Landlord and
Landlord’s agents and employees from responsibility for and
waives its entire claim of recovery for (i) any and all loss or
damage to the personal property of Tenant located in the Project,
arising out of any of the perils which are covered by
Tenant’s property insurance policy, with extended coverage
endorsements which Tenant is required to obtain under the
applicable provisions of this Lease, whether or not actually
obtained, or (ii) loss resulting from business interruption at the
Premises, arising out of any of the perils which may be covered by
the business interruption insurance policy required to be carried
by Tenant under this Lease.
19.2 Landlord .
Notwithstanding anything to the contrary in this Lease, whether the
loss or damage is due to the negligence, gross negligence and/or
willful misconduct of Tenant or Tenant’s agents or employees,
or any other cause, Landlord hereby releases Tenant and
Tenant’s agents and employees from responsibility for and
waives its entire
32
claim of recovery for any and all loss
or damage to the Building or any personal property of Landlord
located about the Project and the Building generally and all
property attached thereto (excluding any such property required to
be insured by Tenant hereunder), arising out of any of the perils
which are covered by Landlord’s property insurance policy
which Landlord is required to obtain under the applicable
provisions of this Lease, whether or not actually
obtained.
19.3 Carriers .
Landlord and Tenant shall each cause its respective insurance
carrier(s) to consent to such waiver of all rights of subrogation
against the other, and to issue an endorsement to all policies of
insurance obtained by such party confirming that the foregoing
release and waiver will not invalidate such policies.
20.
INDEMNIFICATION.
20.1 Subject to the
provisions of Section 19 hereof and other provisions of this Lease,
Tenant shall indemnify and hold harmless Landlord, its agents,
employees, officers, directors, partners and shareholders from and
against any and all third party claims, liabilities, judgments,
demands, causes of action, claims, losses, damages, costs and
expenses, including reasonable attorneys’ fees and costs,
arising out of such third party claims, to the extent arising out
of (i) the use and occupancy of the Premises by Tenant, its
officers, contractors, licensees, agents, servants, employees,
guests, invitees, visitors, assignees or subtenants; (ii) the
negligence or willful misconduct of Tenant, its officers,
contractors, licensees, agents, servants, employees, guests,
invitees, visitors, assignees or subtenants, in or about the
Project; and/or (iii) any breach or Default by Tenant under this
Lease; provided that this indemnity shall not apply to any loss,
damage, liability or expense resulting from injuries to third
parties caused by the gross negligence or willful misconduct of
Landlord, or its officers, contractors, licensees, agents,
employees or invitees (while within the Premises).
20.2 Subject to the
provisions of Section 19 hereof and other provisions of this Lease,
Landlord shall indemnify and hold harmless Tenant, its agents,
employees, officers, directors, partners and shareholders from and
against any and all third party claims, liabilities, judgments,
demands, causes of action, claims, losses, damages, costs and
expenses, including reasonable attorneys’ fees and costs,
arising out of such third party claims, to the extent arising out
of (i) the use and occupancy of the Building by the Landlord, its
officers, contractors, licensees within Landlord’s control,
agents, servants, employees, or guests, invitees and/or visitors to
the extent within Landlord’s control; and/or (ii) the
negligence or willful misconduct (including breach of this Lease)
of Landlord, its officers, contractors, agents, servants, or
employees, in or about the Project; provided that this indemnity
shall not apply to any loss, damage, liability or expense resulting
from injuries to third parties caused by the gross negligence or
willful misconduct of Tenant, or its officers, contractors,
licensees, agents, employees or invitees (while within the
Premises).
20.3 The indemnifications set
forth in this Section 20 shall survive termination of this
Lease.
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21. ASSIGNMENT AND
SUBLETTING.
21.1 Consent Required
. Except as specifically set forth herein to the contrary, Tenant
shall not assign, encumber, mortgage, pledge, license, hypothecate
or otherwise transfer the Premises or this Lease, or sublease all
or any part of the Premises, or permit the use or occupancy of the
Premises by any party other than Tenant, without the prior written
consent of Landlord, which consent shall not be unreasonably
withheld.
21.2 Procedure .
Tenant must request Landlord’s consent to such assignment or
sublease in writing at least thirty (30) days prior to the
commencement date of the proposed sublease or assignment, which
written request must include (a) the name and address of the
proposed assignee or subtenant, (b) the nature and character of the
business of the proposed assignee or subtenant, (c) financial
information (including financial statements) of the proposed
assignee or subtenant, (d) all other terns of the proposed sublet
or assignment as well as a copy of the agreement evidencing same,
and (e) any additional information Landlord reasonably requests
regarding such proposed assignment or subletting. Within ten (10)
business days after Landlord receives Tenant’s request (with
all information required pursuant to clauses (a) - (d) hereof
included), Landlord shall, by written notice to Tenant, elect
either: (i) to grant its consent to such proposed assignment or
subletting, or (ii) to deny its consent to such proposed assignment
or subletting, setting forth with specificity the reason for such
denial. If Landlord does not exercise either of the above options
within ten (10) business days after Landlord receives
Tenant’s request, then Tenant shall provide a second notice
to Landlord, specifically referencing this section of the Lease,
and if Landlord does not elect either of the foregoing alternatives
within three (3) business days of receipt of such second notice,
Tenant may assign or sublease the Premises upon the terms stated in
Tenant’s request.
21.3 Conditions . Any
subleases and/or assignments hereunder are also subject to all of
the following terms and conditions:
21.3.1 If Landlord approves
an assignment or sublease as herein provided, Tenant shall pay to
Landlord, as Additional Rent due under this Lease (which amounts
shall be due immediately upon receipt by Tenant), fifty percent
(50%) of the “Net Profits” (as defined below) generated
from such transaction during each Lease Year. For purposes hereof,
the term “Net Profits” means: (i) with respect to
assignment, the amount paid by the assignee to acquire
Tenant’s rights under the Lease, less (1) the portion
of such sum fairly attributable to the acquisition of
Tenant’s leasehold improvements or personal property which
were funded solely by Tenant, and (2) all reasonable and actual
out-of-pocket expenses incurred and paid by Tenant in procuring
such assignment, including, without limitation, brokerage fees,
advertising costs, legal fees, allowances, the cost of leasehold
improvements and other concessions; and (ii) with respect to a
sublease, the amount, if any, by which the rent, any additional
rent and any other sums payable by the subtenant to Tenant under
such sublease exceeds the sum of (x) that portion of the Base Rent
plus Additional Rent payable by Tenant hereunder which is allocable
to the portion of the Premises which is the subject of such
sublease, (y) all reasonable and actual out-of-pocket expenses
incurred by Tenant in procuring such sublease, including, without
limitation, brokerage fees, advertising costs, legal fees,
allowances, the cost of leasehold
34
improvements and other concessions, and
(z) the costs of any leasehold improvements or personal property
provided as a part of such transaction and existing prior to the
commencement of the sublease term to the extent funded by Tenant.
The f
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