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Lease Agreement

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 | Document Parties: TALK AMERICA INC. | TMT RESTON I & II, INC You are currently viewing:
This Lease Agreement involves

TALK AMERICA INC. | TMT RESTON I & II, INC

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Title: LEASE
Governing Law: Virginia     Date: 3/16/2006
Industry: Communications Services     Law Firm: Covington Burling     Sector: Services

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, Parties: talk america inc. , tmt reston i & ii  inc
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                                                                                                                       Exhibit 10.24

LEASE

between

 

TMT RESTON I & II, INC.,

 

as Landlord,

 

 

and

 

TALK AMERICA INC. ,

 

 

as Tenant

 

 

 

 


 

TABLE OF CONTENTS

 

 

1.   USE AND RESTRICTIONS ON USE.

 

2.   TERM.

 

3.   RENT.

 

4.   RENT ADJUSTMENTS.

 

5.   SECURITY DEPOSIT.

 

6.   ALTERATIONS.

 

7.   REPAIR.

 

8.   LIENS.

 

9.   ASSIGNMENT AND SUBLETTING.

 

10.   INDEMNIFICATION.

 

11.   INSURANCE.

 

12.   WAIVER OF SUBROGATION.

 

13.   SERVICES AND UTILITIES.

 

14.   HOLDING OVER.

 

15.   SUBORDINATION.

 

16.   RULES AND REGULATIONS.

 

17.   REENTRY BY LANDLORD.

 

18.   DEFAULT.

 

19.   REMEDIES.

 


20.   TENANT’S BANKRUPTCY OR INSOLVENCY.

 

21.   QUIET ENJOYMENT.

 

22.   CASUALTY

 

23.   EMINENT DOMAIN.

 

24.   SALE BY LANDLORD.

 

25.   ESTOPPEL CERTIFICATES.

 

26.   SURRENDER OF PREMISES.

 

27.   NOTICES.

 

28.   TAXES PAYABLE BY TENANT.

 

29.   INTENTIONALLY OMITTED.

 

30.   DEFINED TERMS AND HEADINGS.

 

31.   TENANT’S AUTHORITY.

 

32.   FINANCIAL STATEMENTS AND CREDIT REPORTS.

 

33.   COMMISSIONS.

 

34.   TIME AND APPLICABLE LAW.

 

35.   SUCCESSORS AND ASSIGNS.

 

36.   ENTIRE AGREEMENT.

 

37.   EXAMINATION NOT OPTION.

 

38.   RECORDATION.

 

39.   PARKING.

 

40.   LIMITATION OF LANDLORD’S LIABILITY.

 

EXHIBIT A - FLOOR PLAN DEPICTING THE PREMISESA-1

 

EXHIBIT A-1 - SITE PLANA-1-1

 

EXHIBIT A-2 - EXPANSION SPACEA-1-2

 

EXHIBIT B - INITIAL ALTERATIONSB-

 

EXHIBIT B-1 - PROJECT SCHEDULEB-1-1

 

EXHIBIT C - COMMENCEMENT DATE MEMORANDUMC-1

 

EXHIBIT D - RULES AND REGULATIONSD-1

 

EXHIBIT E - FORM OF GUARANTYE-


 

LEASE

 

REFERENCE PAGES

 

BUILDING:

Reston Plaza II

12020 Sunrise Valley Drive

Reston, VA 20191

 

 

LANDLORD:

TMT Reston I & II, Inc., a Delaware corporation

 

 

LANDLORD’S ADDRESS:

c/o RREEF

8280 Greensboro Drive, Suite 550

McLean, Virginia 22102

Attn: Patrick N. Connell, Vice President / Regional Director

 

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

Covington & Burling

1201 Pennsylvania Avenue, N.W.

Washington, D.C. 20004-2401

Attention: Robert J. Gage, Esq.

 

 

ADDRESS FOR RENT PAYMENT:

TMT Reston I & II, Inc.

P.O. Box 13517

Newark, NJ 07188-0517

 

 

LANDLORD’S REGISTERED AGENT FOR SERVICE OF PROCESS:

Commonwealth Legal Services Corporation

4701 Cox Road, Suite 301

Glen Allen, VA 23060-6802

 

 

LEASE REFERENCE DATE:

February 28, 2006

 

 

TENANT:

Talk America Inc., a Pennsylvania corporation

 

 

GUARANTOR

Talk America Holdings, Inc., a Delaware corporation

 

 

TENANT’S NOTICE ADDRESS:

 

 

 

(a) As of beginning of Term:

Premises

 

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

Talk America Inc.

6805 Route 202

New Hope, Pennsylvania 18938

Attn: Legal Department

 

 

(b) Prior to beginning of Term (if different):

Premises

 

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

Talk America Inc.

6805 Route 202

New Hope, Pennsylvania 18938

Attn: Legal Department

 

 

PREMISES IDENTIFICATION:

Suite Number 250 on the second (2nd) floor of the Building (for outline of Premises see Exhibit A)

 

 

PREMISES RENTABLE AREA:

Approximately 10,019 sq. ft. (for outline of Premises see Exhibit A)

 

 

COMMENCEMENT DATE:

December 1, 2005

 

 

TERM OF LEASE:

Approximately four (4) years, zero (0) months and zero (0) days beginning on the Commencement Date and ending on the Termination Date. The period from the Commencement Date to the last day of the same month is the “ Commencement Month .”

 

 

TERMINATION DATE:

November 30, 2009

 

 

EXTENSION OPTION

Subject to the provisions set forth in Section 2.2, Tenant shall receive an option to extend the Term of this Lease for all or a portion of the Premises for one (1) consecutive extension term of five (5) consecutive years

 

 

EXPANSION SPACE OPTION

Subject to the provisions set forth in Section 2.3, Tenant shall receive an option to lease any remaining portion of the second (2nd) floor of the Building that shall become vacant and available or is reasonably expected by Landlord to become vacant and available during the first two (2) years of the initial Term of this Lease

 

 

ANNUAL RENT:

Twenty six and 00/100 Dollars ($26.00) per rentable square foot per annum, subject to an escalation of three percent (3%) per annum on each anniversary of the Commencement Date, commencing with the first (1st) anniversary of the Commencement Date.

 

 

RENT ABATEMENT (Article 3):

Subject to the provisions set forth in Articles 3 and 19 of this Lease, Tenant shall receive an abatement during the first (1st) full calendar month of the Term of this Lease equal to one hundred percent (100.0%) of such Monthly Installment of the initial Annual Rent.

 

 

 


MONTHLY INSTALLMENT OF RENT:

 

Lease Year

Rentable Square Footage

Annual Rent Per Square Foot

Annual Rent

Monthly Installment of Rent

1 ˚

10,019

$26.00

$260,494.00

$21,707.83

2

10,019

$26.78

$268,308.82

$22,359.07

3

10,019

$27.58

$276,324.02

$23,027.00

4

10,019

$28.41

$284,639.79

$23,719.98

 

˚ Subject to an abatement as set forth in Section 3.1.1.

 

BASE YEAR (EXPENSES):

January 1, 2006 to December 31, 2006 

 

 

BASE YEAR (INSURANCE):

January 1, 2006 to December 31, 2006

 

 

BASE YEAR (TAXES):

January 1, 2006 to December 31, 2006

 

 

BUILDING SIZE

approximately 48,886 sq. ft.

 

 

TENANT’S PROPORTIONATE SHARE:

20.49%

 

 

SECURITY DEPOSIT:

$21,707.83, subject to the provisions set forth in Section 5

 

 

ASSIGNMENT/SUBLETTING FEE:

$1,500.00

 

 

AFTER-HOURS HVAC COST:

$40.00 per hour, subject to change at any time, from time to time.

 

 

HOLIDAYS

New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day, subject to change at any time, from time to time.

 

 

REAL ESTATE BROKER DUE COMMISSION:

Studley (Virginia), Inc.

 

 

TENANT’S SIC CODE:

4812

 

 

BUILDING BUSINESS HOURS:

Monday - Friday, 8:00 a.m. - 6:00 p.m.

Saturday, 8:00 a.m. - 1:00 p.m.

 

 

AMORTIZATION RATE:

10%

 

The Reference Pages information is incorporated into and made a part of the Lease. In the event of any conflict between any Reference Pages information and the Lease, the Lease shall control. This Lease includes the Exhibits, all of which are made a part of this Lease.

 

[SIGNATURES CONTAINED ON NEXT PAGE]

 

 


 

 

WITNESS :

 

 

 

 

 

 

 

 

 

By: /s/ Patricia M. Webel

Name: Patricia M. Webel      

Title: Property Manager      

LANDLORD:

 

TMT RESTON I & II, INC.,

a Delaware corporation

 

 

By:   RREEF Management Company,

a Delaware corporation

 

 

By: /s/ Patrick N. Connell

Name: Patrick N. Connell   

Title: Vice President / Regional Director

Dated: 9-26-05

 

 

ATTEST:

 

 

 

 

 

By: /s/ Craig H. Pizer

Name: Craig H. Pizer

Title: Associate General Counsel - Assistant Secretary

 

[Corporate Seal]

TENANT:

 

TALK AMERICA INC.

a Pennsylvania corporation

 

 

By: /s/ Aloysius T. Lawn, IV

Name: Aloysius T. Lawn IV

Title: EVP- General Counsel

Dated: 9-19-05

 

 


 



 


LEASE

         By this Lease Landlord leases to Tenant and Tenant leases from Landlord the Premises in the Building as set forth and described on the Reference Pages. The Premises are depicted on the floor plan attached hereto as Exhibit A , and the Building is depicted on the site plan attached hereto as Exhibit A-1 . The Reference Pages, including all terms defined thereon, are incorporated as part of this Lease.

 

1.  

       USE AND RESTRICTIONS ON USE.

 

     1.1     The Premises are to be used solely for general office purposes. Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the lease rights of other tenants or occupants of the Building, including, but not limited to, any exclusive lease rights of another tenant or occupant of the Building, or injure, annoy, or disturb them, or allow the Premises to be used for any improper, immoral, unlawful, or objectionable purpose, or commit any waste. Tenant shall not do, permit or suffer in, on, or about the Premises the sale of any alcoholic liquor without the written consent of Landlord first obtained. Tenant shall comply with all governmental laws, ordinances and regulations applicable to the use of the Premises and its occupancy and shall promptly comply with all governmental orders and directions for the correction, prevention and abatement of any violations in the Building or appurtenant land, caused or permitted by, or resulting from the specific use by, Tenant, or in or upon, or in connection with, the Premises, all at Tenant’s sole expense. Tenant shall not do or permit anything to be done on or about the Premises or bring or keep anything into the Premises which will in any way increase the rate of, invalidate or prevent the procuring of any insurance protecting against loss or damage to the Building or any of its contents by fire or other casualty or against liability for damage to property or injury to persons in or about the Building or any part thereof. Landlord represents that, to the best of Landlord’s actual knowledge (defined as the personal knowledge of Patrick N. Connell, Vice President and Regional Director of RREEF Management Company), as of the Commencement Date, the common areas of the Building and appurtenant land are in compliance with all applicable laws.

 

     1.2    Tenant shall not, and shall not direct, suffer or permit any of its agents, contractors, employees, licensees or invitees (collectively, the “ Tenant Entities ”) to at any time handle, use, manufacture, store or dispose of in or about the Premises or the Building any (collectively “ Hazardous Materials ”) flammables, explosives, radioactive materials, hazardous wastes or materials, toxic wastes or materials, or other similar substances, petroleum products or derivatives or any substance subject to regulation by or under any federal, state and local laws and ordinances relating to the protection of the environment or the keeping, use or disposition of environmentally hazardous materials, substances, or wastes, presently in effect or hereafter adopted, all amendments to any of them, and all rules and regulations issued pursuant to any of such laws or ordinances (collectively “ Environmental Laws ”), nor shall Tenant suffer or permit any Hazardous Materials to be used in any manner not fully in compliance with all Environmental Laws, in the Premises or the Building and appurtenant land or allow the environment to become contaminated with any Hazardous Materials. Notwithstanding the foregoing, Tenant may handle, store, use or dispose of products containing small quantities of Hazardous Materials (such as aerosol cans containing insecticides, toner for copiers, paints, paint remover and the like) to the extent customary and necessary for the use of the Premises for general office purposes; provided that Tenant shall always handle, store, use, and dispose of any such Hazardous Materials in a safe and lawful manner and never allow such Hazardous Materials to contaminate the Premises, Building and appurtenant land or the environment. Tenant shall protect, defend, indemnify and hold each and all of the Landlord Entities (as defined in Article 30) harmless from and against any and all loss, claims, liability or costs (including court costs and attorney’s fees) incurred by reason of any actual or asserted failure of Tenant to fully comply with all applicable Environmental Laws, or the presence, handling, use or disposition in or from the Premises of any Hazardous Materials by Tenant or any Tenant Entity (even though permissible under all applicable Environmental Laws or the provisions of this Lease), or by reason of any actual or asserted failure of Tenant to keep, observe, or perform any provision of this Section 1.2.

 

2.  

       TERM.

 

     2.1     The Term of this Lease shall begin on the Commencement Date. The parties hereby acknowledge that Talk America Holdings, Inc. (“ Parent ”), a Delaware corporation, is currently in possession of the Premises pursuant to that certain lease agreement dated April 28, 2000 by and between Landlord, as successor-in-interest to Reston Plaza I & II, LLC, and Parent, as successor-in-interest to Talk.com, as amended by that certain First Amendment to Lease dated May 6, 2004 and that certain Second Amendment to Lease dated , 2004 (as amended, the “ Prior Lease ”) and that Tenant is the wholly-owned subsidiary of Parent. The parties also acknowledge that Tenant is currently in possession of approximately 1,136 rentable square feet on the first (1st) floor of that certain building located at 12030 Sunrise Valley Drive in Reston, Virginia pursuant to the terms of that certain lease agreement dated October 28, 2004, by and between Landlord and Tenant (the “Reston I Lease” ). Tenant acknowledges that it enters into this Lease without any representations or warranties by the Landlord, or anyone acting or purporting to act on behalf of Landlord, as to the present or future condition of the Premises or the appurtenances thereto or any improvements therein or of the Building, except as specifically set forth in this Lease. It is further agreed that Tenant does and will accept the Premises “AS IS” in their present condition as of the date hereof and the Landlord has no obligation to perform any work therein. Notwithstanding any provision in this Lease to the contrary, if the Term has not commenced within one (1) year after the date of this Lease, this Lease shall automatically terminate on the first (1st) anniversary of the date hereof. The sole purpose of the preceding sentence is to avoid any possible interpretation that this Lease violates the Rule Against Perpetuities or other rule of law against restraints on alienation.

 


     

           2.1.1      The parties agree that the Prior Lease shall terminate pursuant to a separate agreement by and between Landlord and Tenant ( “Prior Lease Termination Agreement” ). The Prior Lease, the Prior Lease Termination Agreement and the Reston I Lease shall constitute the “ Related Agreements .” Any Event of Default as defined in the Related Agreements existing as of the Commencement Date of this Lease shall constitute an immediate Event of Default (as defined hereinafter), to which no notice by Landlord to Tenant shall be required. Any default under any of the Related Agreements shall constitute a default hereunder, as further set forth in Section 18.1.2.

 

     2.2     Provided that: (i) Tenant is in physical possession and actual occupancy of the Premises and no Event of Default exists at the time of the exercise of such option or arises subsequent thereto, and no event exists which by notice and/or the passage of time would constitute an Event of Default if not cured within the applicable cure period provided under this Lease; and (ii) Tenant has not sublet or assigned any of its rights, title, and interest in and to this Lease, Tenant shall have the option to extend this Lease with respect to all or a portion of the Premises for one (1) consecutive extension term of five (5) consecutive years, provided Tenant notifies Landlord in writing of its exercise of such option not sooner than twelve (12) months nor later than nine (9) months prior to the Termination Date. Annual Rent during such extension term shall be at one hundred percent (100%) of the fair market rate, including market concessions, as determined by the mutual agreement of Landlord and Tenant, and provided that Tenant shall post an increase in its Security Deposit which is commensurate with such new Annual Rent. Such Annual Rent for the extension term shall escalate at the fair market escalation rate as determined by the mutual agreement of Landlord and Tenant, provided that in no event shall such Annual Rent escalate at less than the escalation rate of three (3%) per annum. All other provisions of this Lease shall remain the same during the extension term, except that Tenant shall have no further extension option and the Base Year shall be the first (1st) full calendar year of the extension term. Should Landlord and Tenant be unable for any reason to agree upon a new Annual Rent and/or escalation rate within forty-five (45) days after Tenant’s exercise of this option, then the Annual Rent and/or escalation rate, as applicable, shall, at Tenant’s sole option and discretion, be determined by appraisal by a board of three (3) real estate brokers, one of whom shall be named by Landlord, one by Tenant, and the two so appointed shall select a third. Such brokers shall be members of the Greater Washington Association of Commercial Realtors or any successor thereto, licensed in the Commonwealth of Virginia, and each shall have not less than ten (10) years’ experience in the field of commercial office leasing in the Washington, D.C. metropolitan area. Each shall be recognized as being ethical and reputable within its field. Landlord and Tenant agree to make their appointments promptly within ten (10) business days after the expiration of the forty-five (45) day period, and the two brokers shall promptly select a third broker within fifteen (15) days thereafter. Each broker shall, within thirty (30) days after selection of the third broker, submit its determination of the Annual Rent and/or escalation rate, as applicable, and the Annual Rent and/or escalation rate, as applicable, shall be deemed to be the rent and/or escalation rate, as applicable, determined by the third broker, unless it is higher than the higher of the two values determined by the first two brokers, in which event the higher of the first two appraisals shall be the Annual Rent and/or escalation rate, as applicable, or unless it is lower than the lower of the two values determined by the first two brokers, in which event the lower of the first two appraisals shall be the Annual Rent or escalation rate, as applicable. In arriving at its rental rate determinations, each broker shall consider and analyze all material components of the Lease, and review terms being offered to prospective office tenants for comparable space in comparable office buildings and locations in the northern Virginia metropolitan area for leases commencing on or about the time of commencement of the extension period. In no event shall the escalation rate be less than three percent (3%) per annum. Landlord and Tenant shall each pay the fee of the broker selected by it and they shall share equally the payment of the fee of the third broker.

 


 

 

     2.3    Provided that: (i) Tenant is in physical possession and actual occupancy of the Premises and no Event of Default exists at the time of the exercise of such option or arises subsequent thereto, and no event exists or arises subsequent thereto which by notice and/or the passage of time would constitute an Event of Default if not cured within the applicable cure period provided under this Lease; and (ii) Tenant has not sublet or assigned any of its rights, title, and interest in and to this Lease, and subject to any pre-existing rights granted to other tenants, if at any time during the first two (2) years of the initial Term of this Lease any remaining portion of the second (2nd) floor of the Building (each such portion, an “ Expansion Space ”), as shown on Exhibit A-2 , attached hereto, shall become vacant and available or is reasonably expected by Landlord to become vacant and available, Landlord shall notify Tenant of the availability of such Expansion Space in writing and Landlord shall provide Tenant with a copy of the proposed terms and conditions (“ Proposed Expansion Space Terms ”) under which Landlord shall offer such Expansion Space, including the Annual Rent and the date of anticipated delivery of possession. Tenant shall have ten (10) days from the date of Landlord’s notice to Tenant to advise Landlord in writing that Tenant accepts such Expansion Space (“ Expansion Space Election Period ”) on the Proposed Expansion Space Terms, in its “AS IS” condition, with all Building systems servicing such Expansion Space in working condition at Landlord’s reasonable expense, and agrees that it shall become a part of the Premises. Tenant shall be solely responsible for all repairs, improvements, alterations, fixtures and furnishings to be made or installed in Expansion Space. Subject to the terms and conditions of Article 6 of this Lease, Tenant shall obtain Landlord’s prior written approval of Tenant’s drawings, plans and specifications before commencing construction of improvements. Tenant’s obligation to commence payment of Annual Rent for such Expansion Space shall occur on the day the Expansion Space is substantially completed by Tenant, but in no case longer than the earlier to occur of (i) sixty (60) days from the initiation of the construction of improvements or (ii) sixty (60) days from the date of delivery of possession by Landlord to Tenant. If Tenant shall not so elect to lease Expansion Space within the Expansion Space Election Period, Landlord may lease such Expansion Space to a third party. In the event Landlord and Tenant agree on lease terms pursuant to this Section 2.3, the parties shall enter into an amendment modifying this Lease to set forth such lease terms within thirty (30) days of the parties’ agreement; provided, however, if either party shall fail to do so after Tenant shall have exercised its option for the Expansion Space, they shall each be bound by their mutual agreement as to the Annual Rent and additional rent. Annual Rent for such Expansion Space shall be at one hundred percent (100%) of the fair market rate, including market concessions provided to Tenant pursuant to this Lease, as determined by the mutual agreement of Landlord and Tenant, provided that Tenant shall post an increase in its Security Deposit which is commensurate with the additional Annual Rent of such Expansion Space. Such Annual Rent for the Expansion Space shall escalate at the fair market escalation rate as determined by the mutual agreement of Landlord and Tenant, provided that in no event shall such Annual Rent escalate at less than the escalation rate of three (3%) per annum. All other provisions of this Lease shall remain the same with respect to the Expansion Space. Should Landlord and Tenant be unable for any reason to agree upon the Annual Rent and/or escalation rate within forty-five (45) days after Tenant’s exercise of this option, then the Annual Rent and/or escalation rate, as applicable, shall be determined by appraisal by a board of three (3) real estate brokers, one of whom shall be named by Landlord, one by Tenant, and the two so appointed shall select a third. Such brokers shall be members of the Greater Washington Association of Commercial Realtors or any successor thereto, licensed in the Commonwealth of Virginia, and each shall have not less than ten (10) years’ experience in the field of commercial office leasing in the Washington, D.C. metropolitan area. Each shall be recognized as being ethical and reputable within its field. Landlord and Tenant agree to make their appointments promptly within ten (10) business days after the expiration of the forty-five (45) day period, and the two brokers shall promptly select a third broker within fifteen (15) days thereafter. Each broker shall, within thirty (30) days after selection of the third broker, submit its determination of the Annual Rent and/or escalation rate for such Expansion Space, as applicable and the Annual Rent and/or escalation rate for such Expansion Space, as applicable, shall be deemed to be the rent and/or escalation rate, as applicable, determined by the third broker, unless it is higher than the higher of the two values determined by the first two brokers, in which event the higher of the first two appraisals shall be the Annual Rent and/or escalation rate, as applicable, or unless it is lower than the lower of the two values determined by the first two brokers, in which event the lower of the first two appraisals shall be the Annual Rent or escalation rate, as applicable. In arriving at its rental rate determinations, each broker shall consider and analyze all material components of the Lease, and review terms being offered to prospective office tenants for comparable space in comparable office buildings and locations in the northern Virginia metropolitan area for leases commencing on or about the time of commencement of the extension period. In no event shall the escalation rate be less than three percent (3%) per annum. Landlord and Tenant shall each pay the fee of the broker selected by it and they shall share equally the payment of the fee of the third broker. Notwithstanding anything contained herein to the contrary, Tenant shall have no right to lease from Landlord and Landlord shall have no obligation to lease to Tenant any such Expansion Space which shall become vacant and available or is reasonably expected by Landlord to become vacant and available after the first two (2) years of the initial Term of this Lease.

 


3.  

       RENT.

 

     3.1    Tenant agrees to pay to Landlord the Annual Rent in effect from time to time by paying the Monthly Installment of Rent then in effect on or before the first day of each full calendar month during the Term, except that the first full month’s rent shall be paid upon the execution of this Lease. The Monthly Installment of Rent in effect at any time shall be one-twelfth (1/12) of the Annual Rent in effect at such time. Rent for any period during the Term which is less than a full month shall be a prorated portion of the Monthly Installment of Rent based upon the number of days in such month. Said rent shall be paid to Landlord, without deduction or offset and without notice or demand, at the Rent Payment Address, as set forth on the Reference Pages, or to such other person or at such other place as Landlord may from time to time designate in writing. If an Event of Default occurs, Landlord may require by notice to Tenant that all subsequent rent payments be made by an automatic payment from Tenant’s bank account to Landlord’s account, without cost to Landlord. Tenant must implement such automatic payment system prior to the next scheduled rent payment or within ten (10) days after Landlord’s notice, whichever is later. Unless specified in this Lease to the contrary, all amounts and sums payable by Tenant to Landlord pursuant to this Lease shall be deemed “ additional rent ”.

 

           3.1.1    Notwithstanding the foregoing, provided that there shall not exist any Event of Default, and subject to the provisions of Section 19.3 below, the Monthly Installment of Annual Rent due for the first (1st) full calendar month following the Commencement Date shall be abated. Nothing in this Section 3.1.1, however, shall be interpreted to except or excuse Tenant from any additional rent or other amounts due under this Lease or the Prior Lease to Landlord.

 

     3.2    Tenant recognizes that late payment of any rent or other sum due under this Lease will result in administrative expense to Landlord, the extent of which additional expense is extremely difficult and economically impractical to ascertain. Tenant therefore agrees that if rent or any other sum is not paid when due and payable pursuant to this Lease, a late charge shall be imposed in an amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b) six percent (6%) of the unpaid rent or other payment. The amount of the late charge to be paid by Tenant shall be reassessed and added to Tenant’s obligation for each successive month until paid. The provisions of this Section 3.2 in no way relieve Tenant of the obligation to pay rent or other payments on or before the date on which they are due, nor do the terms of this Section 3.2 in any way affect Landlord’s remedies pursuant to Article 19 of this Lease in the event said rent or other payment is unpaid after date due.

 

     3.3    Notwithstanding anything to the contrary contained herein, if the Commencement Month is not a full calendar month, such Commencement Month shall be deemed for all purposes of this Lease to be part of the First Lease Year and Tenant shall pay additional Annual Rent for such Commencement Month calculated on a per diem basis at the Annual Rental Rate for the First Lease Year.

 


4.  

     RENT ADJUSTMENTS.

 

     4.1    For the purpose of this Article 4, the following terms are defined as follows:

 

            4.1.1     Lease Year: Each consecutive twelve (12) month period falling partly or wholly within the Term; provided, however, if the Commencement Month is not a full calendar month, then the first Lease Year shall consist of the Commencement Month and the subsequent twelve (12) consecutive month period.

 

           4.1.2     Expenses: All costs of operation, maintenance, repair, replacement and management of the Building (including (A) the amount of any credits which Landlord may grant to particular tenants of the Building in lieu of providing any standard services or paying any standard costs described in this Section 4.1.1 for similar tenants and (B) the portion of shared expenses allocable to the Building as provided for in the final sentence of this Section 4.1.2), as determined in accordance with generally accepted accounting principles, including the following costs by way of illustration, but not limitation: water and sewer charges; utility costs, including, but not limited to, the cost of heat, light, power, steam, gas; waste disposal; the cost of janitorial services; the cost of access control and monitoring services (including any central station signaling system); costs of cleaning, repairing, replacing and maintaining the common areas, including parking and landscaping, window cleaning costs; labor costs; costs and expenses of managing the Building including management and/or administrative fees; air conditioning maintenance costs; elevator maintenance fees and supplies; material costs; equipment costs including the cost of maintenance, repair and service agreements and rental and leasing costs; purchase costs of equipment; current rental and leasing costs of items which would be capital items if purchased; tool costs; licenses, permits and inspection fees; wages and salaries; employee benefits and payroll taxes; accounting and legal fees; any sales, use or service taxes incurred in connection therewith. In addition, Landlord shall be entitled to recover, as additional rent (which, along with any other capital expenditures constituting Expenses, Landlord may either include in Expenses or cause to be billed to Tenant along with Expenses and Taxes but as a separate item), Tenant’s Proportionate Share of: (i) an allocable portion of the cost of capital improvement items which are reasonably calculated to reduce operating expenses; (ii) the cost of fire sprinklers and suppression systems and other life safety systems; and (iii) other capital expenses which are required under any governmental laws, regulations or ordinances which were not applicable to the Building at the time it was constructed; but the costs described in this sentence shall be amortized over the reasonable life of such expenditures in accordance with such reasonable life and amortization schedules as shall be determined by Landlord in accordance with generally accepted accounting principles, with interest on the unamortized amount at one percent (1%) in excess of the Wall Street Journal prime lending rate announced from time to time. Expenses shall not include Taxes, Insurance Costs, depreciation or amortization of the Building or equipment in the Building except as provided herein, loan principal payments, costs of alterations of tenants’ premises, leasing commissions, interest expenses on long-term borrowings or advertising costs. If any Expenses are shared jointly between or among the Building and another building, such as, but not limited to, Reston Plaza I, such costs shall be allocated proportionately between or among such buildings based upon the rentable square footage of each building, or such other equitable manner as Landlord shall deem appropriate.

 


 

           Notwithstanding anything to the contrary, Expenses shall not include Taxes, Insurance Costs, depreciation or amortization of the Building or equipment in the Building except as provided herein, loan principal payments, costs of alterations of tenants’ premises, leasing commissions; interest expenses on long-term borrowings; advertising costs; wages and salaries for off-site employees and employees at the Building above the level of district manager; costs of repairs, restoration, replacements or other work occasioned by (1) fire, windstorm or other casualty of a customarily 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 gross negligence or intentional tort of Landlord, or any subsidiary or affiliate of Landlord, or any representative, employee or agent of same, 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 and actually recovers the applicable cost from such person; attorneys’ fees, 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; 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; costs of the initial construction of the Building; deductions for depreciation of the original Building when initially constructed; costs of expenses relating to another tenant’s or occupant’s space which were 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; payments of rent made on any debt payments made under any ground or underlying lease or leases, except to the extent that a portion of such rental payments is reasonably allocable to ad valorem/real estate taxes and increased property values as a result of such leases; except as real estate taxes may be increased due to a re-assessment of the Building upon any of such events, costs incurred in connection with the sale, financing, refinancing, mortgaging, selling or change of ownership of the Building, including brokerage commissions, attorneys’ and accountants’ fees, closing costs, title insurance premiums, transfer and recordation taxes as a result of such action, 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 trustee’s fees, partnership organizational expenses and accounting fees except accounting fees relating solely to the ownership and operation of the Building (exclusive of the incremental accounting fees to the extent incurred separately in reporting operating results to the Building owners or lenders); any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord or in the parking garage of the Building; Landlord’s income and franchise taxes (other than those business taxes which relate solely to the operation of the Building); all amounts which would otherwise be included in operating expenses which are paid to any affiliate or subsidiaries of Landlord, to the extent the costs of such services exceed the competitive rates for similar services of comparable quality; costs or expenses of utilities directly metered to tenants of the Building and payable separately by such tenants; 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; advertising and promotional costs associated with the leasing of the Building; costs incurred to correct violations by Landlord of any law, rule, order or regulation which was in effect as of the Commencement Date; electric power costs for which any tenant directly contracts with the local public service company; and management fees in excess of fair market management fees.

 

           4.1.3    Taxes: Real estate taxes and any other taxes, charges and assessments which are levied with respect to the Building or the land appurtenant to the Building, or with respect to any improvements, fixtures and equipment or other property of Landlord, real or personal, located in the Building and used in connection with the operation of the Building and said land, any payments to any ground lessor in reimbursement of tax payments made by such lessor; and all fees, expenses and costs incurred by Landlord in investigating, protesting, contesting or in any way seeking to reduce or avoid increase in any assessments, levies or the tax rate pertaining to any Taxes to be paid by Landlord in any calendar year. Taxes shall not include any corporate franchise, or estate, inheritance or net income tax, or tax imposed upon any transfer by Landlord of its interest in this Lease or the Building or any taxes to be paid by Tenant pursuant to Article 28. If any Taxes are shared jointly between or among the Building and another building, such as, but not limited to, Reston Plaza I, such costs shall be allocated proportionately between or among such buildings based upon the rentable square footage of each building, or such other equitable manner as Landlord shall deem appropriate.

 


 

           4.1.4    Insurance Costs: Any and all insurance charges of or relating to all insurance policies and endorsements deemed by Landlord to be reasonably necessary or desirable and relating in any manner to the protection, preservation, or operation of the Building or any part thereof. If any Insurance Costs are shared jointly between or among the Building and another building, such as, but not limited to, Reston Plaza I, such costs shall be allocated proportionately between or among such buildings based upon the rentable square footage of each building, or such other equitable manner as Landlord shall deem appropriate.

 

     4.2    If in any calendar year, (i) Expenses paid or incurred shall exceed Expenses paid or incurred in the Base Year (Expenses) and/or (ii) Taxes paid or incurred by Landlord shall exceed the amount of such Taxes which became due and payable in the Base Year (Taxes), and/or (iii) Insurance Costs paid or incurred by Landlord shall exceed the amount of such Insurance Costs which became due and payable in the Base Year (Insurance Costs), Tenant shall pay as additional rent for such calendar year Tenant’s Proportionate Share of each such excess amount.

 

     4.3    The annual determination of Expenses and Insurance Costs shall be made by Landlord and shall be binding upon Landlord and Tenant, subject to the provisions of this Section 4.3. During the Term, Tenant may review, at Tenant’s sole cost and expense, the books and records supporting such determination in an office of Landlord, or Landlord’s agent, during normal business hours, upon giving Landlord five (5) days advance written notice within sixty (60) days after receipt of such determination, but in no event more often than once in any one (1) year period, subject to execution of a confidentiality agreement acceptable to Landlord, and provided that if Tenant utilizes an independent accountant to perform such review it shall be one of national standing which is reasonably acceptable to Landlord, is not compensated on a contingency basis and is also subject to such confidentiality agreement. If Tenant fails to object to Landlord’s determination of Expenses and Insurance Costs within ninety (90) days after receipt, or if any such objection fails to state with specificity the reason for the objection, Tenant shall be deemed to have approved such determination and shall have no further right to object to or contest such determination. In the event that during all or any portion of any calendar year or Base Year, the Building is not fully rented and occupied Landlord shall make an appropriate adjustment in occupancy-related Expenses for such year for the purpose of avoiding distortion of the amount of such Expenses to be attributed to Tenant by reason of variation in total occupancy of the Building, by employing consistent and sound accounting and management principles to determine Expenses that would have been paid or incurred by Landlord had the Building been at least ninety-five percent (95%) rented and occupied, and the amount so determined shall be deemed to have been Expenses for such calendar year.

 

     4.4    Prior to the actual determination thereof for a calendar year, Landlord may from time to time reasonably estimate Tenant’s liability for Expenses, Insurance Costs and/or Taxes under Sections 4.1, Section 6.3 and Article 28 for the calendar year or portion thereof. Landlord will give Tenant written notification of the amount of such estimate and Tenant agrees that it will pay, by increase of its Monthly Installments of Rent due in such calendar year, additional rent in the amount of such estimate. Any such increased rate of Monthly Installments of Rent pursuant to this Section 4.4 shall remain in effect until further written notification to Tenant pursuant hereto.

 


     4.5    When the above mentioned actual determination of Tenant’s liability for Expenses, Insurance Costs and/or Taxes is made for any calendar year and when Tenant is so notified in writing, then:

 

           4.5.1    If the total additional rent Tenant actually paid pursuant to Section 4.3 on account of Expenses, Insurance Costs and/or Taxes for the calendar year is less than Tenant’s liability for Expenses, Insurance Costs and/or Taxes, then Tenant shall pay such deficiency to Landlord as additional rent in one lump sum within thirty (30) days of receipt of Landlord’s bill therefor; and

 

           4.5.2    If the total additional rent Tenant actually paid pursuant to Section 4.3 on account of Expenses, Insurance Costs and/or Taxes for the calendar year is more than Tenant’s liability for Expenses, Insurance Costs and/or Taxes, then Landlord shall credit the difference against the then next due payments to be made by Tenant under this Article 4, or, if the Lease has terminated, refund the difference in cash. Tenant shall not be entitled to a credit by reason of actual Expenses and/or Taxes and/or Insurance Costs in any calendar year being less than Expenses and/or Taxes and/or Insurance Costs in the Base Year (Expenses and/or Taxes and/or Insurance).

 

     4.6    If the Commencement Date is other than January 1 or if the Termination Date is other than December 31, Tenant’s liability for Expenses, Insurance Costs and Taxes for the calendar year in which said Date occurs shall be prorated based upon a three hundred sixty-five (365) day year. Tenant’s obligation to pay Tenant’s Proportionate Share of any unpaid Expenses, Insurance Costs, and Taxes which are otherwise due and payable under this Lease shall survive the expiration or earlier termination of the Term.

 

5  

     SECURITY DEPOSIT. 

 

     5.1    Tenant shall deposit the Security Deposit with Landlord upon the execution of this Lease. Notwithstanding the foregoing, Landlord and Tenant acknowledge and agree that Parent previously has deposited a security deposit with respect to the Premises under the Prior Lease in the amount of Forty Thousand Nine Hundred Fifty and 50/100 Dollars ($40,950.50) (the “ Prior Lease Security Deposit ”). Landlord and Tenant acknowledge and agree that, in accordance with the terms and conditions of the Prior Lease Termination Agreement, Landlord shall continue to hold a portion of such Prior Lease Security Deposit equal to the Security Deposit hereunder and that, subject to Landlord’s right to apply any or all of such Prior Lease Security Deposit pursuant to the terms of the Prior Lease, Landlord shall refund the remaining balance, if any, of the Prior Lease Security Deposit to Parent on or before December 31, 2005. The Security Deposit shall be held by Landlord as security for the faithful performance by Tenant of all the terms, covenants and conditions of this Lease to be kept and performed by Tenant and not as an advance rental deposit or as a measure of Landlord’s damage in case of Tenant’s default. If Tenant defaults with respect to any provision of this Lease, Landlord may, after the applicable cure period, use any part of the Security Deposit for the payment of any rent or any other sum in default, or for the payment of any amount which Landlord may spend or become obligated to spend by reason of Tenant’s default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s default. If any portion is so used, Tenant shall within ten (10) days after written demand therefor, deposit with Landlord an amount sufficient to restore the Security Deposit to its original amount and Tenant’s failure to do so shall be a material breach of this Lease. Except to such extent, if any, as shall be required by law, Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on such deposit. Provided that Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the Security Deposit or any balance thereof shall be returned to Tenant at such time after termination of this Lease when Landlord shall have determined that all of Tenant’s obligations under this Lease have been fulfilled, but in any event no later than sixty (60) days after the expiration of this Lease.

 


     5.2    As additional security for the faithful performance by Tenant of all covenants, conditions and agreements of this Lease, Parent, (“ Guarantor ”) has executed and delivered to Landlord the Continuing Lease Guaranty (the “ Guaranty ”), in the form attached hereto as Exhibit E , unconditionally guaranteeing to Landlord the due and punctual payment and performance by Tenant of all of Tenant’s obligations hereunder for the time period and as otherwise more particularly set forth in the Guaranty. No right or remedy available to Landlord under the Guaranty or this Lease shall extinguish any other right to which Landlord may be entitled. In furtherance of the foregoing, it is understood that in the event Tenant fails to perform any of its obligations hereunder, any amounts recovered by Landlord under the Guaranty shall not be deemed liquidated damages. Landlord may apply such sums to reduce Landlord’s damages and such application of funds shall not preclude Landlord from recovering from Tenant or the Guarantor jointly and severally all additional damages incurred by Landlord by reason of Tenant’s failure to perform hereunder.

 

6  

     ALTERATIONS.

 

     6.1    Except for those, if any, specifically provided for in Exhibit B to this Lease, Tenant shall not make or suffer to be made any alterations, additions, or improvements, including, but not limited to, the attachment of any fixtures or equipment in, on, or to the Premises or any part thereof or the making of any improvements as required by Article 7, without the prior written consent of Landlord. When applying for such consent, Tenant shall, if requested by Landlord, furnish complete plans and specifications for such alterations, additions and improvements. Landlord’s consent shall not be unreasonably withheld, conditioned or delayed with respect to alterations which (i) are not structural in nature, (ii) are not visible from the exterior of the Building, (iii) do not materially affect or require modification of the Building’s electrical, mechanical, plumbing, HVAC or other systems, (iv) will not interfere with the use and occupancy of any other portion of the Building by any other tenant or their invitees; (v) do not and will not, whether alone or taken together with other improvements, require the construction of any other improvements or alterations in other tenant’s space or the Common Areas; and (vi) in aggregate do not cost more than $2.50 per rentable square foot of that portion of the Premises affected by the alterations in question.

 

     6.2    In the event Landlord consents to the making of any such alteration, addition or improvement by Tenant, the same shall be made by using a contractor reasonably approved by Landlord, at Tenant’s sole cost and expense. If Tenant shall employ any contractor and such contractor or any subcontractor of such contractor shall employ any non-union labor or supplier, Tenant shall be responsible for and hold Landlord harmless from any and all delays, damages and extra costs suffered by Landlord as a result of any dispute with any labor unions concerning the wage, hours, terms or conditions of the employment of any such labor. In the event that Tenant requests and Landlord provides supervisory services to Tenant in connection with such work, Landlord may charge Tenant an administrative fee not to exceed five percent (5%) of the cost of such work to cover its overhead as it relates to such proposed work. Furthermore, Tenant shall reimburse to Landlord any third-party costs actually incurred by Landlord in connection with the proposed work and the design thereof (including review of such proposed work and design), with all such amounts being due ten (10) days after Landlord’s demand, which will be submitted with reasonable supporting information.

 


     6.3    All alterations, additions or improvements proposed by Tenant shall be constructed in accordance with all government laws, ordinances, rules and regulations, using Building standard materials where applicable, and Tenant shall, prior to construction, provide the additional insurance required under Article 11 in such case, and also all such assurances to Landlord as Landlord shall reasonably require to assure payment of the costs thereof, including but not limited to, notices of non-responsibility, waivers of lien, surety company performance bonds and funded construction escrows and to protect Landlord and the Building and appurtenant land against any loss from any mechanic’s, materialmen’s or other liens. Tenant shall pay in addition to any sums due pursuant to Article 4, any increase in real estate taxes attributable to any such alteration, addition or improvement for so long, during the Term, as such increase is ascertainable; at Landlord’s election said sums shall be paid in the same way as sums due under Article 4. Landlord may, as a condition to its consent to any particular alterations or improvements, require Tenant to deposit with Landlord the amount reasonably estimated by Landlord as sufficient to cover the cost of removing such alterations or improvements and restoring the Premises, to the extent required under Section 26.2.

 

7  

     REPAIR.

 

     7.1    Landlord shall have no obligation to alter, remodel, improve, repair, decorate or paint the Premises, except as specified in Exhibit B if attached to this Lease and except that Landlord shall repair and maintain the structural portions of the Building, including the basic plumbing, air conditioning, heating and electrical systems installed or furnished by Landlord. By taking possession of the Premises, Tenant accepts them as being in good order, condition and repair and in the condition in which Landlord is obligated to deliver them. It is hereby understood and agreed that no representations respecting the condition of the Premises or the Building have been made by Landlord to Tenant, except as specifically set forth in this Lease.

 

     7.2    Tenant shall, at all times during the Term, keep the Premises in good condition and repair excepting damage by fire, or other casualty, and in compliance with all applicable governmental laws, ordinances and regulations, promptly complying with all governmental orders and directives for the correction, prevention and abatement of any violations or nuisances in or upon, or connected with, the Premises, all at Tenant’s sole expense.

 

     7.3    Landlord shall not be liable for any failure to make any repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after written notice of the need of such repairs or maintenance is given to Landlord by Tenant.

 

     7.4    Except as provided in Article 22, there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of any repairs, alterations or improvements in or to any portion of the Building or the Premises or to fixtures, appurtenances and equipment in the Building. Except to the extent, if any, prohibited by law, Tenant waives the right to make repairs at Landlord’s expense under any law, statute or ordinance now or hereafter in effect.

 


8  

     LIENS. 

 

     8.1    Tenant shall keep the Premises, the Building and appurtenant land and Tenant’s leasehold interest in the Premises free from any liens arising out of any services, work or materials performed, furnished, or contracted for by Tenant, or obligations incurred by Tenant. In the event that Tenant fails, within ten (10) days following the imposition of any such lien, to either cause the same to be released of record or provide Landlord with insurance against the same issued by a major title insurance company or such other protection against the same as Landlord shall accept (such failure to constitute an Event of Default), Landlord shall have the right to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith shall be payable to it by Tenant within five (5) days Landlord’s demand .

 

     ASSIGNMENT AND SUBLETTING.

 

     9.1    Tenant shall not have the right to assign or pledge this Lease or to sublet the whole or any part of the Premises whether voluntarily or by operation of law, or permit the use or occupancy of the Premises by anyone other than Tenant, and shall not make, suffer or permit such assignment, subleasing or occupancy without the prior written consent of Landlord, such consent not to be unreasonably withheld, conditioned or delayed, and said restrictions shall be binding upon any and all assignees of the Lease and subtenants of the Premises. In the event Tenant desires to sublet, or permit such occupancy of, the Premises, or any portion thereof, or assign this Lease, Tenant shall give written notice thereof to Landlord at least sixty (60) days but no more than one hundred twenty (120) days prior to the proposed commencement date of such subletting or assignment, which notice shall set forth the name of the proposed subtenant or assignee, the relevant terms of any sublease or assignment and copies of financial reports and other relevant financial information of the proposed subtenant or assignee.

 

     9.2    Notwithstanding any assignment or subletting, permitted or otherwise, Tenant shall at all times remain directly, primarily and fully responsible and liable for the payment of the rent specified in this Lease and for compliance with all of its other obligations under the terms, provisions and covenants of this Lease. Upon the occurrence of an Event of Default, if the Premises or any part of them are then assigned or sublet, Landlord, in addition to any other remedies provided in this Lease or provided by law, may, at its option, collect directly from such assignee or subtenant all rents due and becoming due to Tenant under such assignment or sublease and apply such rent against any sums due to Landlord from Tenant under this Lease, and no such collection shall be construed to constitute a novation or release of Tenant from the further performance of Tenant’s obligations under this Lease.

 

     9.3    In addition to Landlord’s right to approve of any subtenant or assignee, Landlord shall have the option, in its sole discretion, in the event of any proposed subletting or assignment, to terminate this Lease, or in the case of one or more proposed sublettings (together with any prior sublettings) of twenty percent (20%) or more of the Premises in the aggregate for a period constituting the all or substantially all of the remainder of the Term (exclusive of any extension term), to recapture the portion of the Premises to be sublet, as of the date the subletting or assignment is to be effective. The option shall be exercised, if at all, by Landlord giving Tenant written notice given by Landlord to Tenant within thirty (30) days following Landlord’s receipt of Tenant’s written notice as required above. However, if Tenant notifies Landlord, within five (5) days after receipt of Landlord’s termination notice, that Tenant is rescinding its proposed assignment or sublease, the termination notice shall be void and the Lease shall continue in full force and effect; provided, however, Tenant’s failure to rescind its proposed assignment or sublease shall be deemed a waiver of such rescission right by Tenant. If this Lease shall be terminated with respect to the entire Premises pursuant to this Section, the Term of this Lease shall end on the date stated in Tenant’s notice as the effective date of the sublease or assignment as if that date had been originally fixed in this Lease for the expiration of the Term. If Landlord recaptures under this Section only a portion of the Premises, the rent to be paid from time to time during the unexpired Term shall abate proportionately based on the proportion by which the approximate square footage of the remaining portion of the Premises shall be less than that of the Premises as of the date immediately prior to such recapture. Tenant shall, at Tenant’s own cost and expense, discharge in full any outstanding commission obligation which may be due and owing as a result of any proposed assignment or subletting, whether or not the Premises are recaptured pursuant to this Section 9.3 and rented by Landlord to the proposed tenant or any other tenant.

 


 

     9.4    In the event that Tenant sells, sublets, assigns or transfers this Lease (excluding an assignment, sublease or other transaction as permitted by Section 9.8), Tenant shall pay to Landlord as additional rent an amount equal to seventy five percent (75%) of any Increased Rent (as defined below), less the Costs Component (as defined below), when and as such Increased Rent is received by Tenant. As used in this Section, “ Increased Rent ” shall mean the excess of (i) all rent and other consideration which Tenant is entitled to receive by reason of any sale, sublease, assignment or other transfer of this Lease, over (ii) the rent otherwise payable by Tenant under this Lease at such time. For purposes of the foregoing, any consideration received by Tenant in form other than cash shall be valued at its fair market value as determined by Landlord in good faith. The “ Costs Component ” is that amount which, if paid monthly, would fully amortize on a straight-line basis, over the entire period for which Tenant is to receive Increased Rent, the reasonable costs incurred by Tenant for leasing commissions and tenant improvements in connection with such sublease, assignment or other transfer (excluding therefrom, however, any costs or expenses attributable to any vacancy factor).

 

     9.5    Notwithstanding any other provision hereof, it shall be considered reasonable for Landlord to withhold its consent to any assignment of this Lease or sublease of any portion of the Premises if at the time of either Tenant’s notice of the proposed assignment or sublease or the proposed commencement date thereof, there shall exist any uncured default of Tenant or matter which will become a default of Tenant with passage of time unless cured, or if the proposed assignee or sublessee is an entity: (a) with which Landlord is already in negotiation; (b) is already an occupant of the Building unless Landlord is unable to provide the amount of space required by such occupant; (c) is a governmental agency; (d) is incompatible with the character of occupancy of the Building; (e) with which the payment for the sublease or assignment is determined in whole or in part based upon its net income or profits; or (f) would subject the Premises to a use which would: (i) involve increased personnel or wear upon the Building; (ii) violate any exclusive right granted to another tenant of the Building; (iii) require any addition to or modification of the Premises or the Building in order to comply with building code or other governmental requirements; or, (iv) involve a violation of Section 1.2. Tenant expressly agrees that for the purposes of any statutory or other requirement of reasonableness on the part of Landlord, Landlord’s refusal to consent to any assignment or sublease for any of the reasons described in this Section 9.5, shall be conclusively deemed to be reasonable.

 

     9.6    Upon any request to assign or sublet, Tenant will pay to Landlord the Assignment/Subletting Fee plus, on demand, a sum equal to all of Landlord’s reasonable costs, including reasonable attorney’s fees, incurred in investigating and considering any proposed or purported assignment or pledge of this Lease or sublease of any of the Premises, regardless of whether Landlord shall consent to, refuse consent, or determine that Landlord’s consent is not required for, such assignment, pledge or sublease. Any purported sale, assignment, mortgage, transfer of this Lease or subletting which does not comply with the provisions of this Article 9 shall be void.

 

     9.7    If Tenant is a corporation, limited liability company, partnership or trust, any transfer or transfers of or change or changes within any twelve (12) month period in the number of the outstanding voting shares of the corporation or limited liability company, the general partnership interests in the partnership or the identity of the persons or entities controlling the activities of such partnership or trust resulting in the persons or entities owning or controlling a majority of such shares, partnership interests or activities of such partnership or trust at the beginning of such period no longer having such ownership or control shall be regarded as equivalent to an assignment of this Lease to the persons or entities acquiring such ownership or control and shall be subject to all the provisions of this Article 9 to the same extent and for all intents and purposes as though such an assignment. The foregoing limitation shall not apply to the ordinary purchase and sale of shares of Tenant if Tenant is a corporation, the voting stock of which is listed on a nationally-recognized securities exchange as defined in the Securities Exchange Act of 1934, as amended or superseded.

 


     9.8    Notwithstanding the foregoing provisions of this Article to the contrary, Tenant shall be permitted to assign this Lease, or sublet all or a portion of the Premises, to a Qualified Tenant Affiliate (as hereinafter defined) of Tenant without the prior consent of Landlord, if all of the following conditions are first satisfied:

 

           9.8.1    No Event of Default by Tenant shall have occurred and no event exists which by notice and/or the passage of time would constitute an Event of Default if not cured within the applicable cure period provided under the Lease, if any;

 

           9.8.2    a fully executed copy of such assignment or sublease, the assumption of this Lease by the assignee or acceptance of the sublease by the sublessee, and such other information regarding the assignment or sublease as Landlord may reasonably request, shall have been delivered to Landlord;

 

           9.8.3    the Premises shall continue to be operated solely for general office purposes or other use acceptable to Landlord in its sole discretion;

 

           9.8.4    Tenant shall pay all third party costs reasonably incurred by Landlord in connection with such assignment or subletting, including without limitation attorneys’ fees (such third party costs not to exceed $1,500.00 per such assignment or subletting) and the Assignment/Subletting Fee set forth on the Reference Page of the Lease; and

 

           9.8.5    such Qualified Tenant Affiliate shall possess a creditworthiness and financial net worth acceptable to Landlord in its reasonable discretion (as evidenced by a copy of such entity’s financial statements covering its most recent fiscal year, audited by an independent certified public accounting firm (if available), or if not available, certified by such entity’s chief financial officer).

 

           Tenant acknowledges (and, at Landlord’s request, at the time of such assignment or subletting shall confirm) that in each instance Tenant shall remain liable for performance of the terms and conditions of the Lease despite such assignment or subletting. If such sublease is for less than all of the Premises, tenant and such sublessee agree to construct at their expense a Building standard multi-tenant corridor on the applicable floor, if required by, and in accordance with applicable laws. Such Qualified Tenant Affiliate’s use of the Premises, in whole or in part, shall not violate any exclusive right granted to another tenant in the Building. As used herein, the term “ Qualified Tenant Affiliate ” shall mean an entity which (i) directly or indirectly controls Tenant; or (ii) is under the direct or indirect control of Tenant; or (iii) is under common direct or indirect control with Tenant; or (iv) is the successor-in-interest to Tenant after a merger, sale of substantially all of the assets of Tenant or public offering of Tenant’s stock. As used in this Article 9, the term “control” shall mean ownership of fifty-one percent (51%) or more of the voting securities or rights of the controlled entity.

 


10  

     INDEMNIFICATION. 

 

     10.1    None of the Landlord Entities shall be liable and Tenant hereby waives all claims against them for any damage to any property or any injury to any person in or about the Premises or the Building by or from any cause whatsoever (including without limiting the foregoing, rain or water leakage of any character from the roof, windows, walls, basement, pipes, plumbing works or appliances, the Building not being in good condition or repair, gas, fire, oil, electricity or theft), except to the extent caused by or arising from the gross negligence or willful misconduct of Landlord or its agents, employees or contractors. Tenant shall protect, indemnify and hold the Landlord Entities harmless from and against any and all loss, claims, liability or costs (including court costs and attorney’s fees) incurred by reason of (a) any damage to any property (including but not limited to property of any Landlord Entity) or any injury (including but not limited to death) to any person occurring in, on or about the Premises or the Building to the extent that such injury or damage shall be caused by or arise from any actual or alleged act, neglect, fault, or omission by or of Tenant or any Tenant Entity to meet any standards imposed by any duty with respect to the injury or damage; (b) the conduct or management of any work or thing whatsoever done by the Tenant in or about the Premises or from transactions of the Tenant concerning the Premises; (c) Tenant’s failure to comply with any and all governmental laws, ordinances and regulations applicable to the condition or use of the Premises or its occupancy; or (d) any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of the Tenant to be performed pursuant to this Lease. The provisions of this Article shall survive the termination of this Lease with respect to any claims or liability accruing prior to such termination.

 

11  

     INSURANCE.

 

     11.1    Tenant shall keep in force throughout the Term: (a) a Commercial General Liability insurance policy or policies to protect the Landlord Entities against any liability to the public or to any invitee of Tenant or a Landlord Entity incidental to the use of or resulting from any accident occurring in or upon the Premises with a limit of not less than $1,000,000.00 per occurrence and not less than $2,000,000.00 in the annual aggregate, or such larger amount as Landlord may prudently require from time to time, covering bodily injury and property damage liability and $1,000,000 products/completed operations aggregate; (b) Business Auto Liability covering owned, non-owned and hired vehicles with a limit of not less than $1,000,000 per accident; (c) insurance protecting against liability under Worker’s Compensation Laws with limits at least as required by statute with Employers Liability with limits of $500,000 each accident, $500,000 disease policy limit, $500,000 disease--each employee; (d) All Risk or Special Form coverage protecting Tenant against loss of or damage to Tenant’s alterations, additions, improvements, carpeting, floor coverings, panelings, decorations, fixtures, inventory and other business personal property situated in or about the Premises to the full replacement value of the property so insured; and, (e) Business Interruption Insurance with limit of liability representing loss of at least approximately six (6) months of income.

 

     11.2    The aforesaid policies shall (a) be provided at Tenant’s expense; (b) name the Landlord Entities as additional insureds (General Liability) and loss payee (Property—Special Form); (c) be issued by an insurance company with a minimum Best’s rating of “ A:VII ” during the Term; and (d) provide that said insurance shall be written on an occurrence basis and shall not be canceled unless thirty (30) days prior written notice (ten days for non-payment of premium) shall have been given to Landlord; a certificate of Liability insurance on ACORD Form 25 and a certificate of Property insurance on ACORD Form 27 shall be delivered to Landlord by Tenant upon the Commencement Date and at least thirty (30) days prior to each renewal of said insurance.

 

     11.3    Whenever Tenant shall undertake any alterations, additions or improvements in, to or about the Premises (“ Work ”) the aforesaid insurance protection must extend to and include injuries to persons and damage to property arising in connection with such Work, without limitation including liability under any applicable structural work act, and such other insurance as Landlord shall require; and the policies of or certificates evidencing such insurance must be delivered to Landlord prior to the commencement of any such Work.

 

12  

     WAIVER OF SUBROGATION. 

 

     12.1    So long as their respective insurers so permit, Tenant and Landlord hereby mutually waive their respective rights of recovery against each other for any property loss insured by fire, extended coverage, All Risks or other insurance now or hereafter existing for the benefit of the respective party but only to the extent of the net insurance proceeds payable under such policies. Each party shall obtain any special endorsements required by their insurer to evidence compliance with the aforementioned waiver.

 


13  

     SERVICES AND UTILITIES.

 

     13.1    Provided Tenant shall not be in default under this Lease, and subject to the other provisions of this Lease, Landlord agrees to furnish to the Premises during Building Business Hours (specified on the Reference Pages) on generally recognized business days (but exclusive in any event of Sundays and Holidays), the following services and utilities subject to the rules and regulations of the Building prescribed from time to time, such services to be reasonably commensurate with industry standard for suburban commercial office buildings in the Reston, Virginia submarket, of a similar age, size and quality to the Building: (a) water suitable for normal office use of the Premises; (b) heat and air conditioning required in Landlord’s judgment for the use and occupation of the Premises during Building Business Hours; (c) cleaning and janitorial service; (d) elevator service by nonattended automatic elevators, if applicable; (e) snow removal and pest control; and, (f) equipment to bring to the Premises electricity for lighting, convenience outlets and other normal office use. Landlord shall include electricity costs in Expenses. In the absence of Landlord’s gross negligence or willful misconduct, Landlord shall not be liable for, and Tenant shall not be entitled to, any abatement or reduction of rental by reason of Landlord’s failure to furnish any of the foregoing, unless such failure shall persist for an unreasonable time after written notice of such failure is given to Landlord by Tenant and provided further that Landlord shall not be liable when such failure is caused by accident, breakage, repairs, labor disputes of any character, energy usage restrictions or by any other cause, similar or dissimilar, beyond the reasonable control of Landlord. Landlord shall use reasonable efforts to remedy any interruption in the furnishing of services and utilities.

 

     13.2    Should Tenant require any additional work or service, as described above, including services furnished outside ordinary business hours specified above, Landlord may, on terms to be agreed, upon reasonable advance notice by Tenant, furnish such additional service and Tenant agrees to pay Landlord such charges as may be agreed upon, including any tax imposed thereon, but in no event at a charge less than Landlord’s actual cost plus overhead for such additional service and, where appropriate, a reasonable allowance for depreciation of any systems being used t


 
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