DEED OF LEASE

Exhibit 10.1

 

DEED OF LEASE

 

by and between

 

PLAZA AMERICA OFFICE DEVELOPMENT, LLC

 

(“Landlord”)

 

and

 

EMBARCADERO TECHNOLOGIES, INC.

 

(“Tenant”)

 

at

 

Plaza America Tower II

11710 Plaza America Drive

Reston, Virginia 20190

TABLE OF CONTENTS

 

 

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E XHIBITS

 

 

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DEED OF LEASE

 

THIS DEED OF LEASE (“Lease”) is made as of the _____ day of ____________________, 2005, by and between PLAZA AMERICA OFFICE DEVELOPMENT, LLC, a Delaware limited liability company (“Landlord”), and EMBARCADERO TECHNOLOGIES, INC., a _______________________ corporation (“Tenant”).

 

R E C I T A L S :

 

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, 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 . The premises demised by this Lease will consist of approximately 1,946 rentable square feet of space (the “Premises”) measured in accordance with the ANSI/BOMA Z65.1-1996 Method of Measurement, located on the first (1 ^st ) floor of that building located at 11710 Plaza America Drive, Reston, Fairfax County, Virginia (the “Building”). Throughout the Lease Term, Landlord grants Tenant a license, at no charge, to use 3.5 parking permits in the adjacent parking garage for each 1,000 square feet of rentable area of the Premises. 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, the Building, the “Common Areas” (as defined below), and the adjacent parking garage are collectively referred to herein as the “Project”. The location and dimensions of the Premises are shown on the conceptual floor plan attached hereto as Exhibit “A” and incorporated herein by reference. No easements, including an easement for light or air, is incorporated in or intended to be conveyed with the Premises.

 

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 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 space within the Project occupied by any building engineers or similar on-site property management or operational personnel, provided any such space will be located within a core area location to be determined within the reasonable judgment of Landlord. Based upon the estimated square footage of the Building and the Premises as set forth in Section 1.1 above (subject in both instances to Landlord’s remeasurement thereof in accordance with the measurement standard set forth in Section 1.1 above) Tenant’s share shall be .71%.

 

1.3 Lease Term . The term of this Lease (the “Term” or “Lease Term”) shall commence on the “Commencement Date” (as defined in Section 1.4 below), and shall expire five (5) “Lease Years” (as defined below) thereafter (the “Lease Expiration Date”).

 

1.4 Commencement and Rent Commencement Dates . The “Commencement Date”, shall be the the date upon which “Landlord’s Work” (as defined in Exhibit “C” ) is “substantially completed”, as such term is defined below. 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” (the “Declaration”) 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. For purposes hereof, the term “Substantial Completion” shall mean that Landlord’s Work has been completed, other than “punch list” items and other minor defects which will not unreasonably interfere with Tenant’s ability to lawfully take occupancy of the Premises or to conduct its business therein.

 

The “Rent Commencement Date” shall be the Commencement Date.

 

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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 The annual Base Rent for the Premises (monthly installments of which may be referred to herein as “Monthly Base Rent”) for the initial Lease Year of the Term shall be Twenty-Seven and 00/100 Dollars ($27.00) per square foot of the Premises. Thereafter, as of the first twelve (12) month anniversary of the Commencement Date and each annual anniversary thereafter, the Base Rent shall be increased to an amount equal to 103% of the Base Rent for the immediately preceding Lease Year.

 

1.6 Additional Rent . Tenant’s Share (as hereinafter defined) of Increases in Real Estate Taxes (as defined in Section 10), Increases in 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 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:

 

 

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:

 

c/o ARC Management, LLC

8150 Leesburg Pike

Suite 1100

Vienna, Virginia 22182

 

1.9 Lease Year . Each twelve (12) month period within the Lease Term shall be referred to herein as a “Lease Year.” The first Lease Year shall commence on the Commencement Date and terminate on the last day of the twelfth full calendar month after the 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 .

 

Commencing as of the Rent Commencement Date, and continuing on the first (1 ^st ) day of each month thereafter, Tenant shall pay Landlord the Additional Rent and 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 fifteen (15) 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 . Tenant has deposited with Landlord simultaneously with the execution of this Lease, the amount of Four Thousand Three Hundred Seventy-Eight and 50/100 Dollars ($4,378.50) as a deposit (the “Security Deposit”) to secure the prompt performance of Tenant’s obligations hereunder. The Security Deposit may be commingled with Landlord’s general funds, if permitted by law. Landlord shall have the right, but shall not be obligated, to apply all or any portion of the Security Deposit to cure any default, in which event Tenant shall be obligated to deposit with Landlord the amount necessary to restore the Security Deposit to its original amount within ten (10) days after written notice from Landlord. To the extent not forfeited or otherwise used as provided herein, and provided the Premises are vacated in good condition, reasonable wear and tear excepted, as described in Section 26 of this Lease, the Security Deposit shall be returned, without interest, to Tenant within thirty (30) days after the termination of this Lease. Landlord may deliver the Security Deposit to the purchaser or any assignee of Landlord’s interest in the Premises or the Building, whereupon Landlord shall be discharged from any further liability with respect to the Security Deposit. This provision shall apply also to any and all subsequent transferors of the Landlord’s interest in this Lease. If the Tenant fails to take possession of the Premises as required by this Lease, the Security Deposit shall not be deemed liquidated damages and Landlord’s use of the Security Deposit pursuant to this Section 3 shall not preclude Landlord from recovering from Tenant all additional damages incurred by Landlord.

 

3.2 Alternative to Cash Security Deposit .

 

3.2.1 In lieu of the Security Deposit in the amount stipulated in Section 3.1, Tenant, at any time simultaneously with, or following the execution of this Lease, after obtaining Landlord’s prior written consent, may deliver to Landlord an irrevocable letter of credit payable in the Washington, D.C. metropolitan area, running in favor of Landlord issued by a federally insured bank, in the amount stipulated in Section 3.1. The letter of credit shall be irrevocable for the term thereof and shall provide that it is automatically renewable for a period ending not earlier than sixty (60) days after the expiration of the Lease Term without any action whatsoever on the part of Landlord; provided that the issuing bank shall have the right not to renew said letter of credit on written notice to Landlord not less than sixty (60) days prior to the expiration of the then current term thereof (it being understood, however, that the privilege of the issuing bank not to renew said letter of credit shall not, in any event, diminish the obligation of Tenant to maintain such irrevocable letter of credit with Landlord through the date which is sixty (60) days after the expiration of the term thereby demised).

 

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3.2.2 The form and terms of the letter of credit shall be substantially in the form attached to this Lease as Exhibit “G” , and made a part hereof, and the bank issuing the same shall be acceptable to Landlord in its sole discretion and shall provide, among other things, that:

 

(1) Landlord, or its then managing agent, shall have the right to draw down an amount up to the face amount of the letter of credit upon the presentation to the issuing bank of Landlord’s (or Landlord’s then managing agent’s) statement that such amount is due to Landlord under the terms and conditions of this Lease, it being understood that if Landlord or its managing agent be a corporation, partnership or other entity, then such statement shall be signed by an officer (if a corporation), a general partner (if a partnership), or any authorized party (if another entity);

 

(2) The letter of credit will be honored by the issuing bank without inquiry as to the accuracy thereof and regardless of whether Tenant disputes the content of such statement;

 

(3) In the event of a transfer of Landlord’s interest in the Building of which the Premises are a part, Landlord shall have the right to transfer the letter of credit to the transferee and thereupon the Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor, and it is agreed that the provisions hereof shall apply to every transfer or assignment of said letter of credit to a new Landlord.

 

3.2.3 If, as a result of any such application of all or any part of such security, the amount secured by the letter of credit shall be less than the amount stipulated in Section 3.1, Tenant shall forthwith provide Landlord with cash or additional letter(s) of credit in an amount equal to the deficiency. Tenant further covenants that it will not assign or encumber said letter of credit or any part thereof and that neither Landlord nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance.

 

3.2.4 Without limiting the generality of the foregoing, if the letter of credit expires earlier than sixty (60) days after the expiration of the Lease Term, or the issuing bank notifies Landlord that it shall not renew the letter of credit, Landlord will accept a renewal thereof or substitute letter of credit (such renewal or substitute letter of credit to be in effect not later than sixty (60) days prior to the expiration of the expiring letter of credit), which is irrevocable and automatically renewable as above provided until sixty (60) days after the end of the Lease Term, upon the same terms as the expiring letter of credit or such other terms as may be acceptable to Landlord in its sole discretion. However, (i) if the letter of credit is not timely renewed or a substitute letter of credit is not timely received, (ii) or if Tenant fails to maintain the letter of credit in the amount and upon the terms set forth in this Section 3.3, Tenant, at least sixty (60) days prior to the expiration of the letter of credit, or immediately upon its failure to comply with each and every term of this Section, must deposit with Landlord cash security in the amounts stipulated in Section 3.1, failing which Landlord may present such letter of credit to the bank, in accordance with the terms of this Section, and the entire sum secured thereby shall be paid to Landlord, to be held and applied by Landlord as provided in this Section.

 

3.3 Advance Deposit . Simultaneously with the execution of this Lease by Tenant, Tenant shall deposit with Landlord the sum of Four Thousand Three Hundred Seventy-Eight and 50/100 Dollars ($4,378.50), as a deposit of the first month’s Rent (the “Advance Deposit”), which shall be applied by Landlord on behalf of Tenant to the payment of the first month’s Rent 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.

 

3.4 No Separate Account . Landlord shall not be obligated to hold the Security Deposit or Advance Deposit in a separate account from other Building or Project funds or to pay or accrue any interest thereon for the benefit of Tenant.

 

4.	USES; TENANT COVENANTS .

 

4.1 Permitted Uses . The Premises are to be used for general office use, and for no other use or purpose whatsoever. Tenant shall not use or permit the Premises to be used for any other purpose or purposes without the prior written consent of Landlord, which consent may be granted or withheld in Landlord’s sole discretion. Notwithstanding anything in this Lease to the contrary, in no event shall Tenant use or permit any party to use any portion of the Premises for

 

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any of the following purposes: (i) training facility; (ii) classroom; (iii) data center; (iv) call center; (v) sales order center; or (vi) conference facility.

 

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 attached hereto as Exhibit “D” . 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 Tenant shall pay to Landlord any and all such increases in premiums resulting from such breach.

 

5.	ENVIRONMENTAL PROVISIONS; RECYCLING .

 

5.1 Environmental Protection . Except for reasonable amounts of customary office supplies that are used, stored, and disposed of by Tenant in accordance with the “Act” (as defined below), Tenant and Tenant’s employees, contractors and agents shall not dispose of or generate, manufacture, store, treat or use any oil, petroleum or chemical liquids or solids, liquid or gaseous products or any hazardous waste or hazardous substance including, without limitation, asbestos (hereinafter collectively referred to as “hazardous waste”), as those terms are used in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or in any other federal, state or local law governing hazardous substances (hereinafter collectively referred to as the “Act”), as such laws may be amended from time to time at, upon, under or within the Premises or the Project, or into the plumbing or sewer or water system servicing the Premises or the Project, nor shall Tenant, its employees, contractors or agents cause or permit the discharge, spillage, uncontrolled loss, seepage or filtration of any hazardous waste at, upon, under or within the Premises or the Project or into the plumbing or sewer or water system servicing the same. Tenant shall comply in all respects with the requirements of the Act and related regulations, and shall notify Landlord immediately in the event of its discovery of any hazardous waste at, upon, under or within the Premises or the Project, or of any notice by a governmental authority or private party alleging that a disposal of hazardous waste on or near the Premises may have occurred. Tenant further agrees to provide Landlord full and complete access to any documents or information in Tenant’s possession or control relevant to the question of the generation, treatment, storage or disposal of hazardous waste on or near the Premises or the Project. Tenant shall indemnify Landlord against all costs, expenses, liabilities, losses, damages, injunctions, suits, fines, penalties, claims, and demands, including, without limitation, remediation and clean-up costs, reasonable attorneys’ fees, arising out of any violation of or default in the covenants of this Section 5.1. The provisions of Section 5.1 shall survive the expiration of the Lease Term.

 

5.2 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 .

 

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 income not contemplated by this Lease, the exact amount of which will be 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 Tenant’s Default with respect to such overdue amount or otherwise estop Landlord from exercising any of the other rights and remedies granted hereunder.

 

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, then the unpaid amount shall bear interest

 

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from the date originally due until the date paid at an annual rate of interest equal to the sum of (a) 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 (b) five percent (5%) (the “Default Rate”).

 

6.3 Despite the foregoing, Landlord shall waive such interest and late charge on the first (1 ^st ) occasion during any twelve (12) month period in which Tenant does not timely pay Base Rent or Additional Rent, provided that Tenant pays such installment of Base Rent or Additional Rent to Landlord within five (5) days after the date Tenant receives notice that such amount is past due.

 

7.	REPAIRS AND MAINTENANCE .

 

7.1 Landlord’s Obligations . Landlord shall maintain, repair, replace and keep in good operating condition, the Common Areas (as defined in Section 39 below), structural elements of the Building, all base building mechanical, electrical, plumbing and life-safety systems, and the adjacent parking structure, the cost of which shall be included within Operating Costs.

 

7.2 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 repair of the Premises. Tenant shall promptly report in writing to Landlord any defective condition in the Premises 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 to the extent the same would otherwise be Landlord’s responsibility under this Lease (and, to the extent any delay in reporting such defects results in the otherwise avoidable need to perform a capital repair or replacement). Landlord’s obligation to make repairs shall be limited to the express obligations stated herein. The costs of repairs or replacements arising as a result of the negligence or misconduct of Tenant, its agents, employees, contractors, invitees, assigns or subtenants shall be reimbursed by Tenant to Landlord as Additional Rent.

 

8.	UTILITIES AND SERVICES .

 

8.1 Services . Landlord shall furnish Tenant with the following services and facilities: (i) hot and cold running water in any public lavatory facilities located within the Common Areas; (ii) public lavatory facilities and supplies within the Common Areas (but not within the Premises); (iii) cleaning and janitorial services consistent with Landlord’s cleaning specifications for the Building as established from time to time Monday through Friday, excluding holidays; (iv) heating and/or air conditioning during business hours, excluding Sundays and holidays; and (v) 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 otherwise provided above. For purposes hereof, “holidays” shall be defined as all Federal and union holidays, and shall include, without limitation: New Year’s Day, Presidents’ 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 holidays, and 9:00 a.m. to 2:00p.m. on Saturdays, excluding holidays (provided that Tenant shall have access to the Premises 24 hours per day, 7 days per week). Tenant shall be responsible for any and all security required for the Premises and Tenant’s business to be conducted therein. Subject to all applicable governmental laws, codes, orders, rules, and regulations, and subject to Landlord’s prior written approval, Tenant shall be permitted to maintain a security system for the Premises.

 

8.2 Additional Services . If Tenant requires services on weekends or holidays, Landlord shall make reasonable efforts to provide such additional service after reasonable prior written request therefor from Tenant, and Tenant shall reimburse Landlord for such additional service, as Additional Rent, within ten (10) days of request therefore, at the then prevailing rate established by Landlord.

 

8.3 Excess Utility Consumption . No tenant will install or operate in the space demised to such tenant any electrically operated equipment or other machinery, other than a reasonable number of electric typewriters, adding machines, radios, televisions, tape recorders, dictaphones, bookkeeping machines, copying machines, clocks, word processors, personal computers, and securities systems, without first obtaining the prior written consent of Landlord, who may condition such consent upon payment by Tenant of additional rent as compensation for

 

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additional consumption of utilities as determined at the discretion of Landlord and for the cost of separate metering or additional wiring as may be occasioned by the operation of said equipment or machinery. Landlord reserves the right to separately meter any utility consumption in the Premises.

 

8.4 Additional Provisions . 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, 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.

 

9.	OPERATING COSTS .

 

9.1 Defined . Commencing with the first annual anniversary of the 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” 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 year in question exceed Operating Costs incurred in calendar year 2005 (calendar year 2005 being herein referred to as the “Base Year”).

 

9.2 Estimated Payments . Commencing as of the first day of the thirteenth month after the Commencement Date, Tenant shall make monthly installment payments toward Tenant’s Share of Increases in Operating Costs on an estimated basis, based on Landlord’s reasonable estimate of Operating Costs for such calendar year. Tenant shall pay Landlord, as Additional Rent, commencing on the first day of the Term and on the first day of each month thereafter throughout the Term (and any extension thereof), one-twelfth (1/12th) of Landlord’s 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 it appears to Landlord that Tenant’s Share of Increases in Operating Costs for such calendar year will 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 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 in 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 expenses incurred by Landlord in connection with the operation, management, maintenance and repair of the Project. Operating Costs include, but are not limited to, the following items: (a) the cost of the personal property used in conjunction with the operation, management, maintenance and repair of the Project; (b) costs to repair and maintain the Project; (c) all expenses paid or incurred by Landlord for water, gas, electric, sewer and oil services for the Project; (d) the costs and expenses incurred in connection with the provision of the services set forth in Section 8, above and any other services provided by Landlord to the Project from time to time; (e) building supplies and materials used in connection with repairs to the Project; (f) cleaning and janitorial services in or

 

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about the Premises and the Project; (g) window glass replacement, repair and cleaning; (h) repair, replacement and maintenance of the grounds, including 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, and excluding capital expenses associated therewith except to the extent specifically set forth below; (j) 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 Project (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, (ii) 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 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) management fees; (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 Project; (x) costs and expenses relating to compliance with any ongoing 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, (aa) other association assessments for common area services provided to owners in the Plaza America complex, (bb) costs and fees charged and/or assessed in connection with any business improvement district that is applicable to the Project; and (cc) costs and fees charged and/or assessed in connection with any transportation district fee or assessment that is applicable to the Project. Notwithstanding anything in this Lease to the contrary, the preceding list is for definitional purposes only and shall not impose any obligation upon Landlord to incur such expenses or provide such services.

 

9.5 Further Adjustment . Operating Costs for each calendar 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 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. Such costs shall include costs which would have been incurred as ordinary maintenance and repair but which were covered as a part of any warranty in place for the benefit of Landlord or the Building.

 

9.6 Complex Operating Costs . The Building is a part of a larger project or development which contains other office buildings, a retail development and land (collectively, the “Development”), and as such, Landlord shall have the right (but not the obligation) to

 

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allocate to the Building an appropriate portion of those Operating Costs which are incurred with respect to two or more buildings (or the land upon which such buildings are located) of the Complex.

 

9.7 Exclusions . “Operating Costs” shall not include any of the following, except to the extent that such costs or expenses are specifically included in “Operating Costs” as described in Section 9.4 above: capital expenditures and depreciation of the Building; painting and decorating of tenant space; interest and amortization of mortgages; ground rent; compensation paid to officers or executives of Landlord; taxes as measured by the net income of Landlord from the operation of the Building; insurance reimbursements of Operating Costs to Landlord; Real Estate Taxes; brokerage commissions, costs of repairs, restoration, replacements or other work occasioned by fire or other insured casualty (whether such destruction be total or partial), provided the amount of any insurance deductible shall be included in Operating Costs; the cost of repairs, etc., occasioned by the exercise by governmental authorities of the right of eminent domain, whether such taking be total or partial, to the extent of any condemnation awards; costs occasioned by intentional tort of Landlord, or any subsidiary or affiliate of Landlord, or any employee or agent of same; leasing commissions, attorneys’ fees (except for those reasonable attorneys’ fees directly related to Operating Costs or Real Estate Taxes); expenses incurred in connection with negotiations for leases with tenants, other occupants, or prospective tenants or other occupants of the Building, or similar costs directly 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 management agents, purchasers or mortgagees of the Building; allowances, concessions and other costs and expenses incurred in completing, fixturing, furnishing, renovating or otherwise improving, decorating or redecorating tenant space (including Tenant), or vacant, leasable space in the Building; costs or expenses relating to another tenant’s or occupant’s space which were incurred in rendering any service or benefit to such tenant that was not available to Tenant; 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; costs directly incurred in connection with the sale, financing, refinancing, mortgaging, selling or change of ownership of the Building, including attorneys’ and accountants’ fees, closing costs, title insurance premiums, transfer taxes and interest charges; 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; costs incurred by Landlord for trustees fees, partnership organizational expenses and accounting fees (except accounting fees relating solely to the ownership and operation of the Building); Landlord’s general corporate overhead and general and administrative expenses; any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord; rentals and other related expenses incurred in leasing air conditioning systems, elevators or other equipment ordinarily considered to be of a capital nature (except for equipment not affixed to the Building which is used in providing janitorial, Building management, or similar services); 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; 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 fair market value; costs or expenses of utilities directly metered to tenants of the Building and payable separately by such tenants; 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 which are paid by such manufacturer, materialman, vendor or contractor; electric power costs for which any tenant directly contracts with the local public service company; services provided and costs incurred in connection with the operation of retail or the ancillary operations owned, operated or subsidized by Landlord; rental for any space in the Building set aside for conference facilities, storage facilities or exercise facilities; wages and salaries for employees at the Building above the level of building manager; and marketing expenses. Despite the foregoing, in the event that any employee is assigned part-time to the Building, such employee’s salaries and wages shall be reasonably allocated based upon time spent in connection with the Building (it being understood and agreed that in no event shall Landlord allocate more than one hundred percent (100%) of the compensation and benefits for any single employee among the properties serviced by such employee).

 

10.	REAL ESTATE TAXES .

 

10.1 Defined . Commencing with the first day of the second Lease Year and continuing during each calendar year or portion thereof during the Term, Tenant shall pay as Additional

 

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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 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 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 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 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 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. In the event Real Estate Taxes (including special assessments) may be paid in installments, they may be 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).

 

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 Increases in 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 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 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.

 

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11.2 Other Taxes . In addition to Tenant’s Share of Increases in Operating Costs and 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 request of Landlord, written proof of such payment.

 

11.3 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. The 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. Additionally, during any such period, Landlord shall have the option, 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, whether or not such contest is successful, shall be included in Real Estate Taxes as set forth above.

 

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:

 

Commercial general liability insurance naming Landlord and Landlord’s managing agent as additional insureds against any and all claims for bodily injury and property damage occurring in or about the Premises or any appurtenances thereto covering the operation of Tenant and any subtenants, licensees and concessionaires of 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 and not contributing to any insurance available to Landlord and Landlord’s insurance shall be in excess thereto. Such insurance shall have a limit of not less than One Million Dollars ($1,000,000.00) 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 Two Million Dollars ($2,000,000.00) 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, the policy shall include an aggregate limit per location endorsement. Such liability insurance shall be primary and not contributing to any insurance available to Landlord and Landlord’s insurance shall be in excess thereto. In no event shall the limits of such insurance be considered as limiting the liability of Tenant under this Lease;

 

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;

 

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;

 

Employer’s liability insurance with a limit of One Million Dollars ($1,000,000.00) for each accident;

 

Such additional insurance as any mortgagee of the Building may require.

 

12.2 Rating; Certificates; Cancellation . The policies required to be maintained by Tenant shall be with companies rated “A” “XII” 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

 

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hereunder shall be commercially reasonable. Certificates of insurance and 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) 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. All insurance required of Tenant under this Lease shall: (i) be written as primary policy coverage and non-contributing with respect to any coverage which Landlord may carry (it being understood and agreed that any insurance that Landlord may carry shall be excess insurance); (ii) name Landlord, Landlord’s managing agent, and any mortgagee of the Building as additional insureds, as their respective interests may appear (except with respect to workers’ compensation insurance), and (iii) contain an endorsement for cross liability and severability of interests.

 

13.	WAIVER OF SUBROGATION .

 

Landlord and Tenant mutually covenant and agree that each party, in connection with any all-risk property insurance policies required to be furnished in accordance with the terms and conditions of this Lease, or in connection with any all-risk property insurance policies which they obtain insuring such insurable interest as Landlord or Tenant may have in its own properties, whether personal or real, shall expressly waive any right of subrogation on the part of the insurer against Landlord (and any mortgagee requested by Landlord) or Tenant as the same may be applicable, which right to the extent not prohibited or violative of any such policy is hereby expressly waived, and Landlord and Tenant each mutually waive all right of recovery against each other, their agents, or employees for any loss, damage or injury of any nature whatsoever to property for which either party is required by this Lease to carry insurance.

 

14.	DAMAGE OR DESTRUCTION .

 

14.1 Damage Repair . If the Premises shall be destroyed or rendered untenantable, either wholly or in part, by fire or other casualty and Landlord fails or declines to exercise any termination right pursuant to this Section 14, Landlord shall, after adjusting the insurance claim and obtaining governmental approvals for reconstruction, commence and 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 below), and delay caused by Tenant. Pending substantial completion of such restoration, the Base Rent and all Additional Rent otherwise to come due hereunder during such period shall be abated in the same proportion as the untenantable portion of the Premises bears to the whole thereof.

 

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, (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, (iii) Landlord’s mor