LEASE AGREEMENT

Exhibit 10.10

 

LEASE AGREEMENT

 

RESTON TOWN CENTER

RESTON, VIRGINIA

 

LANDLORD:

RESTON TOWN CENTER PHASE I ASSOCIATES

 

TENANT:

LEARNING TREE INTERNATIONAL, INC.

 

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TABLE OF CONTENTS

 

 

LIST OF ATTACHMENTS :

 

INDEX OF CERTAIN DEFINITIONS

 

 

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LEASE AGREEMENT

 

LEASE AGREEMENT (this “Lease”) is dated as of December 28th, 1990, by and between RESTON TOWN CENTER PHASE I ASSOCIATES, a Virginia general partnership an and lord”), and LEARNING TREE INTERNATIONAL, INC., a California corporation (“Tenant”).

 

ARTICLE I

DEFINITIONS OF CERTAIN TERMS

 

This Article defines certain terms used in this Lease. Certain other terms are defined in the places shown in the Index of Certain Definitions attached to this Lease. For convenience, this Article shows [in brackets] a reference to where each term defined in this Article first is used in the later Sections of this Lease. When used in this Lease, except where the context otherwise requires, the following terms shall have the meanings indicated:

 

1.1 Base Rent: the monthly rental payments set forth on Exhibit H attached hereto.

 

1.2 Broker(s): Grubb & Ellis and Coldwell Banker. [§ 23.3]

 

1.3 Building: a building containing approximately 44,488 square feet of rentable office area, with an address of 1805 Library Street, Reston, Virginia, and located on approximately 20 acres of land (the “Land”). [§ 2.11]

 

1.4 Lease Term Length: one hundred twenty (120) months. [§ 3.11]

 

1.5 Operating Charges Base Year: calendar year 1990. [§ 5.11]

 

1.6 Premises: approximately 30,656 square feet of rentable area comprising (i) all of the rentable area on the second (2nd) floor of the Building and (ii) approximately 5,548 square feet of rentable area located on the third (3rd) floor of the Building, substantially as shown on Exhibit A. The rentable area of the Premises shall be field verified by Tenant’s architect upon the Lease Commencement Date. [§ 2.11]

 

ARTICLE II

PREMISES

 

2.1 Tenant leases the Premises from Landlord for the Lease Term (as hereinafter defined) and upon the conditions and covenants stated in this Lease. Tenant shall have the non-exclusive right to use the common and public areas of the Building for purposes of ingress to and egress from the Building. The common and public areas of the Reston Town Center, Urban Core, Phase I, are shown on Exhibit A-2 attached hereto.

 

2.2 Landlord agrees to provide, for use by Tenant, a number of parking spaces equal to the product of thirty-five ten-thousandths (.0035) and the number of square feet of the rentable area of the Premises. Said product shall be rounded to the nearest integer number. Tenant shall be entitled to park one vehicle within a marked parking space in the parking areas (including the parking structure or structures) serving the Building for each parking space available to Tenant. Except as provided in the next to last sentence of this Section 2.2, Tenant shall not use, or permit its Invitees to use, any number of parking spaces in excess of the number allocated as provided above. The parking rights granted to Tenant hereunder shall not be assignable,

 

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except in conjunction with a permitted assignment of this Lease or a permitted subleasing of the Premises. Tenant and its Invitees shall comply with the reasonable regulations promulgated by Landlord from time to time relating to parking. Landlord shall not be required to reserve or police the use of the parking areas; provided that Landlord may, at its option, limit access to the parking areas, by mechanical gates or otherwise, to ensure that only authorized users are admitted to the parking areas. Tenant and its employees shall not park in any spaces designated for use by the handicapped or by visitors only. The parking rights granted to Tenant hereunder shall be free of charge during the initial ten-year Lease Term. During the first Renewal Term, Tenant shall pay ninety percent (90%) of the prevailing market rate for Tenant’s parking spaces. During the second Renewal Term, Tenant shall pay ninety-five percent (95%) of the prevailing market rate for Tenant’s parking spaces. Tenant shall be informed of the then-prevailing rate for reserved and unreserved parking spaces at the time Base Rent for each Renewal Term is determined pursuant to Section 3.5 below. In addition to the parking spaces allocated to Tenant hereunder, Tenant and its invitees shall have the right to use up to one hundred (100) additional spaces on an intermittent but routine basis. If Tenant reasonably notifies Landlord that such additional spaces are not available for Tenant and its invitees, then between the hours of 8:00 A.M. and 9:30 A.M. on the days that Tenant conducts classes in the premises, Landlord shall provide a parking attendant to direct Tenant and its invitees to available parking, which shall be located no more than five hundred (500) feet from any entrance to the office portion of the Building. In the event future construction within the Reston Town Center development results in the displacement or dislocation of any of the parking areas available for Tenant’s use, Landlord shall furnish Tenant with reasonable prior notice of the exact location of any parking areas thus affected and the location of substitute parking areas to be furnished by Landlord for use by tenants of the building.

 

2.3 Landlord hereby grants Tenant the following expansion option:

 

(1) At a time between the sixtieth (60th) and seventy-second (72nd) months of the initial Lease Term, Tenant shall have the option (the “Expansion Option”) to lease approximately 5,081 rentable square feet on the third (3rd) floor of the Building contiguous to the Premises (the “Expansion Space”). The Expansion Space is outlined on Exhibit A attached hereto. Landlord agrees to notify Tenant, within fifteen (15) days following Tenant’s written request, of the date upon which Landlord in good faith anticipates that the Expansion Space will be available for Delivery to Tenant. Prior to exercising the Expansion Option, Tenant shall have the right, upon at least three (3) days prior written notice to Landlord, to inspect the Expansion Space, in the company of a representative of Landlord and in a manner that does not materially interfere with the operations of the then-current tenant or occupant of the Expansion Space. Tenant shall exercise the Expansion Option by delivering written notice thereof to Landlord no later than the last day of the fifty-first (51st) month within the Lease Term. If Tenant fails to timely exercise its option, Tenant’s right to lease the Expansion Space shall irrevocably lapse. Within sixty (60) days following its receipt of Tenant’s exercise notice, Landlord shall notify Tenant of the date (within the period set forth above) on which Landlord will deliver possession of the Expansion Space to Tenant. Upon delivery of the Expansion Space to Tenant, the Expansion Space

 

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shall become part of the Premises, subject to all the terms and conditions of this Lease (including the renewal rights set forth in Section 3.5 below). Base Rent for the Expansion Space shall be $2.20 per rentable square foot per month from the date of delivery through the seventy-second (72nd) month in the Lease Term and shall thereafter be the same rate per rentable square foot as is in effect for the original Premises. The Expansion Space shall be accepted by Tenant in its “as is” condition; provided, however, that Landlord shall repair any damage to the Expansion Space caused by the prior tenant in the course of vacating the Expansion Space to the extent that such damage exceeds the damage ordinarily associated with an office move.

 

(2) In the event there exists an Event of Default under this Lease on the date of Tenant’s election notice or at any time thereafter, up to and including the date on which possession of the Expansion Space is to be delivered to Tenant, then, at Landlord’s option, possession of the Expansion Space shall not be delivered to Tenant, and Tenant’s right to lease the Expansion Space shall lapse and be of no further force or effect.

 

(3) Landlord shall incur no liability if Landlord is unable to deliver possession of the Expansion Space to Tenant due to any holdover tenant’s refusal to vacate. Landlord agrees at its expense to take all reasonable legal action to recover such Expansion Space from any holdover tenant. In the event of such a holdover, if Landlord then has other space in the Building that is freely available for leasing and that is not then the subject of bona fide negotiation with any prospective tenant (“Freely Available”), Tenant shall be afforded the opportunity to occupy such space on a temporary basis, at a reasonable market rental rate, until the Expansion Space is available for Tenant’s occupancy or until Landlord desires to make such temporary space available for occupancy by another tenant.

 

2.4 Landlord hereby grants to Tenant a right of first notice during the first five (5) years within the Lease Term, of the availability for leasing of any space located on the third (3rd) floor of the Building that has been previously leased and that, in the aggregate with all space previously leased by Tenant pursuant to this Section 2.4, does not comprise more than 3,000 square feet of rentable area. Each such space, as it becomes available for re-lease, is referred to as the “Previously Leased Option Space.” Tenant’s right of first notice of the availability to lease each Previously Leased Option Space shall be subject to, and shall be exercised in accordance with, the following terms and conditions:

 

(a) The lease for the Previously Leased Option Space shall be coterminous with this Lease (including any extensions or renewals thereof).

 

(b) Landlord shall give Tenant written notice of the availability of any Previously Leased Option Space promptly after Landlord becomes aware that any Previously Leased Option Space will be becoming available for re-leasing (but no earlier than one (1) year before such space is expected to be vacated by the prior tenant). Such notice shall set forth the effective Base Rent and other economic terms and conditions upon which Landlord in good faith anticipates leasing the Previously Leased Option Space to a new tenant following the marketing thereof. Tenant shall have a period of twenty-one (21) days following receipt of such notice to notify Landlord in writing that Tenant elects to lease the Previously Leased Option Space upon such terms. If Tenant so elects, then, within twenty-one (21) days thereafter, Landlord and

 

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Tenant shall promptly execute an amendment to this Lease, or, at Landlord’s option, a new lease upon substantially the same terms and conditions as this Lease, leasing to Tenant the Previously Leased Option Space upon all the terms and conditions described in this Section. Such document shall be prepared by Landlord’s attorney. If Tenant does not elect within the required period to lease the Previously Leased Option Space, then Landlord shall be free to lease the Previously Leased Option Space to any other person or entity on such terms and conditions as Landlord in its sole discretion may determine; provided, however, that Landlord shall not thus lease the Previously Leased Option Space to a third party without first offering Tenant another opportunity to lease such space, in accordance with the terms of this Section 2.4, if (i) Landlord wishes to lease such space to a third party at an effective Base Rent that is more than twenty percent (20%) lower than the effective Base Rent at which Landlord had offered to lease such Previously Leased Option Space to Tenant, or (ii) if more than six (6) months has elapsed since the date on which such Previously Leased option Space was last offered to Tenant hereunder, In no event may Tenant elect to lease less than all of any particular Previously Leased Option Space.

 

(c) In the event there exists an Event of Default under this Lease on the date of Tenant’s election notice or at any time thereafter, up to and including the date on which possession of the Previously Leased Option Space is to be delivered to Tenant, then, at Landlord’s option, possession of the Previously Leased Option Space shall not be delivered to Tenant, and Tenant’s right to lease the Previously Leased Option Space shall lapse and be of no further force or effect.

 

(d) Landlord shall incur no liability if Landlord is unable to deliver possession of the Previously Leased Option Space to Tenant due to any holdover tenant’s refusal to vacate. Landlord agrees at its expense to take all reasonable legal action to recover such Previously Leased Option Space from any holdover tenant. In the event of such a holdover, if Landlord then has other space in the Building that is Freely Available, Tenant shall be afforded the opportunity to occupy such space on a temporary basis, at a reasonable market rental rate, until the Previously Leased Option Space is available for Tenant’s occupancy or until Landlord desires to make such temporary space available for occupancy by another tenant.

 

(e) Tenant’s rights under this Section are subject to Landlord’s rights to continue to lease space to any then-current tenant of such space beyond the expiration date of the lease term of such tenant’s lease.

 

(f) Tenant shall have no rights pursuant to this Section 2.4 with respect to any space all or part of which Landlord intends to offer to Tenant pursuant to Section 2.3 above as all or part of the Expansion Space. If, notwithstanding the immediately-preceding sentence, Landlord does lease to Tenant as Previously Leased Option Space any space that Landlord had intended to offer to Tenant as part of the Expansion Space, then Landlord and Tenant shall appropriately amend Section 2.3 of this Lease to reflect the fact that the space in question has already been leased by Tenant and that the Expansion Option will accordingly be reduced in scope. Notwithstanding anything in clause (b) above to the contrary, the terms of any such lease of Previously Leased Option Space which Landlord had intended to offer as Expansion Space shall be determined pursuant to Section 2.3 above.

 

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ARTICLE III

TERM

 

3.1 This Lease is effective between the parties when fully executed by them. The period referred to in this Lease as the “Lease Term” shall commence on the Lease Commencement Date determined as provided in Section 3.2. The Lease Term shall continue for the Lease Term Length shown in Article I; provided that, if the Lease Commencement Date is not the first day of a month, then the Lease Term shall continue for the Lease Term Length plus that number of days necessary to make the Lease Term expire on the last day of the month in which the Lease Term Length expires. The Lease Term shall also include any renewal or extension of the term of this Lease when exercised.

 

3.2 The “Lease Commencement Date” shall be the earlier of (a) the later of (i) the Anticipated Occupancy Date (as defined in Exhibit B hereto) or (ii) the date the Tenant Work is deemed Substantially Completed as determined pursuant to Exhibit B, or (b) the date Tenant commences doing business within the Premises. Promptly after the Lease Commencement Date is ascertained, Landlord and Tenant shall execute a certificate (substantially in the form of Exhibit C) confirming the Lease Commencement Date and any other matters reasonably requested by Landlord.

 

3.3 It is presently anticipated that the Premises will be delivered to Tenant on May 1, 1991. If Landlord does not complete construction and deliver possession of the Premises by such date, then, except as provided in this Section 3.3, Landlord shall not have any liability whatsoever, and this Lease shall not be rendered voidable, on account thereof. In the event the Tenant Work is not Substantially Completed by the Anticipated Occupancy Date, then, except to the extent such delay is attributable to any of the factors set forth in Section 23.21 hereof, two (2) days’ Base Rent payable hereunder shall be abated for each day of delay of Substantial Completion. As described in I Paragraph 4 of Exhibit B, the date of Substantial Completion of the Tenant Work takes into account the effect of Tenant Delays.

 

3.4 “Lease Year” shall mean a period of twelve (12) consecutive months commencing on the Lease Commencement Date and each successive twelve (12) month period thereafter; provided, however, that if the Lease Commencement Date is not the first day of a month, then the second Lease Year shall commence on the first day of the month in which the first anniversary of the Lease Commencement Date occurs, and each successive Lease Year shall commence on the anniversary of the second Lease Year. The period in which the Lease Term expires or terminates shall be a Lease Year even if it is shorter than twelve (12) months.

 

3.5 (a) Landlord hereby grants to Tenant the conditional right, exercisable at Tenant’s option, to renew the term of this Lease for two (2) terms (each a “Renewal Term”). The length of each Renewal Term shall be five (5) years (the “Renewal Term Length”). If exercised, and if the conditions applicable thereto have been satisfied, each Renewal Term shall commence immediately following the end of the Lease Term provided in this Lease as it may have been renewed. The right of renewal herein granted to Tenant with respect to each Renewal Term shall be subject to, and shall be exercised in accordance with, the following terms and conditions:

 

(1) Tenant shall exercise its right of renewal with respect to the Renewal Term by giving Landlord written notice thereof not later than three hundred sixty five (365) days prior to the expiration date of the Lease Term, as the Lease Term may theretofore have been renewed.

 

(2) In the event the renewal option notice is not given timely, Tenant’s right of renewal with respect to the Renewal Term and any subsequent Renewal Terms shall lapse and be of no further force or effect. Landlord agrees to furnish Tenant with written notice no

 

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more than ninety (90) days and no fewer than ten (10) days before the last day on which Tenant is permitted to exercise a renewal option hereunder, if Tenant has neither exercised such renewal option nor disclaimed an intention to exercise such renewal option. If Landlord is required to furnish a notice pursuant to the immediately-preceding sentence and fails to furnish such notice by the date that is ten (10) days before Tenant’s right to exercise its renewal option is to Lapse, then, notwithstanding the first sentence of this Clause (2), Tenant’s right shall not lapse until the date that is ten (10) days after Landlord furnishes such a notice to Tenant.

 

(3) The renewal option may be exercised only with respect to the entire Premises, not with respect to only a part of the Premises.

 

(4) In the event there exists an Event of Default under this Lease on the date the renewal option notice is sent or any time thereafter up to and including the date the Renewal Term is to commence, then, at Landlord’s option, the Renewal Term shall not commence and the Lease Term shall expire at the date the Lease Term would have expired without such renewal.

 

(b) During any Renewal Term, all the terms, conditions, covenants and agreements set forth in this Lease, including but not limited to the full pass-through of increases in Operating Charges, shall continue to apply and be binding upon Landlord and Tenant, except that:

 

(1) the Base Rent shall be calculated at the beginning of the first Renewal Term so that the Base Rent per rentable square foot payable during each Lease Year of such Renewal Term shall be equal to the greater of (A) ninety percent (90%) of Market Rent or (B) the Base Rent per rentable square foot payable by Tenant under this Lease immediately prior to the first Renewal Term, and the Base Rent shall be calculated at the beginning of the second Renewal Term so that the Base Rent per rentable square foot payable during each Lease year of such Renewal Term shall be equal to the greater of (A) ninety-five percent (95%) of Market Rent or (B) the Base Rent per rentable square foot payable by Tenant under this Lease immediately prior to the second Renewal Term;

 

(2) upon commencement of the First Renewal Term, Landlord shall grant Tenant an allowance toward the cost of refurbishing the Premises, in an amount equal to the product of (i) the number of square feet of rentable area in the Premises, (ii) five dollars ($5.00), and (iii) a fraction, the numerator of which is the CPI-W figure for DC-MD-VA published most recently prior to the commencement of the First Renewal Term, and the denominator of which is such CPI-W figure published most recently prior to the Lease Commencement Date;

 

(3) if Base Rent for the Renewal Term is determined with reference to Market Rent pursuant to clause (1)(~) above, then the Operating Charges Base Amount during such Renewal Term shall be the Operating Charges actually incurred during the calendar year in which the Renewal Term commences; and

 

(4) In no event shall Tenant have the right to renew the Lease Term beyond the expiration of the last Renewal Term provided for in Section 3.5(a) or in the event this Lease is terminated as provided in the other provisions of this Lease.

 

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(c) “ Market Rent” shall be the fair market amount of Base Rent as of the commencement of the Renewal Term in question, determined as follows:

 

(1) At any time within eighteen (18) months prior to the expiration of the then-current Lease Term, Tenant may by written notice to Landlord (a “Rental Rate Request”) request that Landlord furnish Tenant with Landlord’s estimate of Market Rent. Tenant’s delivery of a Rental Rate Request shall not constitute or be deemed an exercise by Tenant of its renewal option, and such option shall be deemed exercised only when and if Tenant timely delivers the option notice described in clause (a)(l) of this Section 3.5. However, if Tenant has not theretofore delivered a Rental Rate Request, Tenant’s option notice shall also be deemed a Rental Rate Request. Within fifteen (15) days following Tenant’s delivery of a Rental Rate Request, or the occurrence of any other event requiring the determination of Market Rent hereunder, Landlord shall give Tenant a written notice setting forth Landlord’s estimate of Market Rent. Landlord’s estimate shall be conclusive and binding on the parties hereunder unless, within twenty-five (25) days after the giving of such estimate, Tenant shall give Landlord a written notice stating that Tenant disputes Landlord’s estimate. Upon the giving of Tenant’s notice, Landlord and Tenant shall commence negotiations concerning the amount of base rent that shall constitute Market Rent. The parties shall have thirty (30) days after the date such negotiations are required to commence in which to agree on such Market Rent.

 

(2) If Tenant exercises its right to renew this Lease for a Renewal Term, but the parties do not reach agreement concerning Market Rent pursuant to clause (1) above, then the parties shall each appoint a licensed real estate broker with at least five (5) years of active experience in office space leasing in the Tysons/Dulles corridor and who has not previously been employed by the party designating such broker (except in the capacity of cooperating broker, or as an appraiser of Market Rent) (a “Qualified Broker”). The two (2) brokers shall each, within ten (10) days following their appointment, determine the Market Rent. If the lower of the two Market Rent determinations is not less than ninety-five percent (95%) of the higher of the two determinations, then the Market Rent shall be the mean of the two determinations. If the lower of the two Market Rent determinations is less than ninety-five percent (95%) of the higher of the two determinations, then the two brokers shall render separate written reports of their determinations and shall within ten (10) days thereafter together appoint a third broker. Such third broker shall be furnished with the written reports of the first two brokers and any appropriate supporting documentation. The third broker shall then, within ten (10) days, deliver its determination of Market Rent. The Market Rent shall equal the mean of the two closest determinations; provided, however, that (i) if any determination is agreed upon by any two of the Qualified Brokers, then Market Rent shall equal such agreed-upon determination, and (ii) if any determination is equidistant from the other two determinations, then Market Rent shall equal such middle determination. Landlord and Tenant shall each bear the cost of its Qualified Broker and shall share equally the cost of any additional Qualified Broker. In the event Market Rent is determined to be an amount such that the Base Rent during the Renewal Term will be greater than the Base Rent in effect immediately prior to the Renewal Term, then Tenant shall

 

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have the option, exercisable by written notice delivered to Landlord within ten (10) days after the final determination of Market Rent hereunder, to rescind its election to extend the term of this Lease for the Renewal Term in question; provided, however, that if for any reason the determination of Market Rent has not been finalized by the date that is twelve (12) months before the expiration of the then-current Lease Term, then Tenant may rescind its election to extend the term of this Lease by notice furnished to Landlord on or before such date, and Tenant shall not have any right after such date to rescind its election, If Tenant exercises any rescission right, then, notwithstanding anything in this subsection (2) to the contrary, Tenant shall pay the cost of all brokers employed to determine Market Rent.

 

(3) Among the factors to be considered in determining Market Rent shall be (i) the rental rates then being quoted by (A) Landlord for space in the Building, and (B) other landlords for first-class office space in multi-tenanted, multi-story, first-class office buildings in comparable mixed-use complexes in the Tysons-Dulles corridor, (ii) the age, condition and use of the Building and the Premises, and (iii) prevailing market conditions expected to exist as of the date Base Rent based on Market Rent is to commence (including base rents, escalations, rental abatement periods, other tenant concessions, and other terms expected to be agreed to in market leases entered into at such time).

 

(4) Promptly following the determination of Market Rent, Landlord’s attorney shall prepare and the parties shall execute an amendment to this Lease stating the Market Rent and Base Rent so determined.

 

3.6 Tenant shall have the right to terminate this Lease as of the last day of the sixth (6 ^th ) Lease Year (the “Termination Date”), subject to the following terms and conditions. Tenant may exercise such right only by giving Landlord written notice thereof not later than the last day of the fifth (5 ^th ) Lease Year. If Tenant timely exercises such right, then Tenant shall deliver to Landlord, with such written notice, a termination payment in the amount of $693,809.40 (which amount shall be increased or reduced pro rata if the rentable area of the Premises is increased or reduced prior to Tenant’s exercise of the termination option). Such termination payment shall be in addition to, and not in lieu of, the rental payments due and payable hereunder through the- Termination Date. If Tenant does not timely exercise its right of termination pursuant to this Section, then such right shall immediately lapse and be of no further force or effect.

 

ARTICLE IV

BASE RENT

 

4.1 Tenant shall pay the Base Rent in monthly installments n advance on the first day of each month during a Lease Year. f the day Tenant’s rent obligation commences is not the first day of a month, then the Base Rent from such rent commencement date until the first day of the following month shall be prorated on a per diem basis at the rate of one-thirtieth (1/30th) of the monthly installment of the Base Rent payable during the Lease Year in which the rent commencement date occurs. Concurrently with Tenant’s execution of this Lease, Tenant shall pay’ to Landlord the sum of $35,562.36, which amount shall be credited toward the first monthly installment(s) of the Base Rent payable under this Lease for the Premises.

 

4.2 All Base Rent and other sums payable by Tenant shall be paid to Landlord in legal tender of the United States, at the address to

 

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which notices to Landlord are to be given, or to such other party or such other address as Landlord may designate in writing. Landlord’s acceptance of rent after it shall have become due and payable shall not excuse a delay upon subsequent occasions or constitute a waiver of rights.

 

4.3 In consideration of Tenant’s entering into this Lease, Landlord has agreed to grant to Tenant a series of rent credits in the aggregate amount of $955,302. Such credits are reflected in the rent schedule attached hereto as Exhibit H , and are applied against the Base Rent due for the first thirty-six (36) months within the Lease Term.

 

4.4 As an inducement to Tenant to enter into this Lease, Landlord hereby grants Tenant the amount of $1,360,794 (the “Leasehold Allowance”), to be applied toward Tenant’s obligations under its existing lease of premises from JTL Tycon Towers I Limited Partnership (“JTL Tycon”) at 8000 Towers Crescent Drive, Vienna, Virginia as amended (collectively, the “JTL ease”), subject to the following terms and conditions:

 

(a) Concurrently with its execution of this Lease, (i) Tenant shall exercise the right of early termination granted to it under Section 11 of the Addendum to the JTL Lease (as amended), and (ii) the $537,422 termination payment that is due to JTL Tycon upon exercise of such termination option shall be furnished by Landlord.

 

(b) Concurrently with Tenant’s execution of this Lease, Landlord shall disburse to Tenant the sum of $372,443 from the Leasehold Allowance.

 

(c) The entire balance of the Leasehold Allowance (after payment of the amounts described in Paragraph (a) and Paragraph (b) above), which equals $450,929, shall be disbursed by Landlord to Tenant when Tenant takes occupancy of the Premises.

 

(d) Tenant hereby represents that, to Tenant’s actual knowledge, no default by Tenant (beyond applicable notice and cure periods) currently exists under the JTL Lease, and that Tenant has not received any written notice from JTL Tycon of any condition which with the passage of time would constitute a default under the JTL Lease.

 

(e) From and after the date hereof, Tenant shall make all payments due to JTL Tycon pursuant to the terms of the JTL Lease in accordance with the terms of the JTL Lease.

 

ARTICLE V

INCREASES IN OPERATING CHARGES

 

5.1 Tenant shall pay Tenant’s proportionate share of the amount by which Operating Charges during each calendar year falling entirely or partly within the Lease Term exceed a base amount (the “Operating Charges Base Amount”) equal to the greater of (i) the Operating Charges incurred by Landlord during the Operating Charges Base Year and (ii) $274,713.40 (which amount is equal to $6.50 per occupied rentable square foot of office area in the Building, assuming 95% occupancy. For purposes of this Section, Tenant’s proportionate share shall be that percentage which is equal to a fraction, the numerator of which is the number of square feet of rentable area in the Premises, and the denominator “of which is the number of square feet of rentable office area in the Building. It is agreed that, as of the date of this Lease, Tenant’s proportionate share is equal to 68.9%.

 

5.2 “Operating Charges” shall mean all expenses incurred by Landlord and directly attributable to owning, operating, maintaining

 

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and repairing the Building and/or the Land, including but not limited to:

 

(a) Electricity, water, sewer and other utility charges;

 

(b) insurance premiums;

 

(c) market-rate management fees;

 

(d) costs of service and maintenance contracts;

 

(e) maintenance and repair expenses which are deducted by Landlord in computing its federal income tax liability;

 

(f) amortization, with interest at a rate determined by Landlord to reflect its cost of funds, based on accounting practices generally accepted for office buildings, for capital expenditures made by Landlord intended or expected to reduce operating expenses or required to comply with Laws (and not as a replacement necessitated by wear and tear on I the item being replaced);

 

(g) Real Estate Taxes;

 

(h) charges for janitorial services;

 

(i) assessments or other amounts payable to any association or associations now or hereafter established under a recorded covenant running with the Land and other parcels of land in the vicinity of the Land to administer, oversee or enforce common covenants affecting the complex or area in which the Building is located, or to operate, maintain, or repair common or public areas or facilities of the complex or area in which the Building is located, including assessments imposed

 

(1) to pay for landscaping and other capital improvements in such common areas or facilities (but not capital improvements made as part of the initial development of the Reston Town Center Complex),

 

(2) to pay for the operation, maintenance and repair of the cultural center planned for said complex or area,

 

(3) to pay for any transportation system (excluding transportation improvements made as part of the initial development of the Reston Town Center Complex) contemplated by any covenants or governmental requirements now or hereafter affecting the Building, and

 

(4) to pay for any architectural review board or other administrative expenses;

 

(j) any business, professional or occupational license tax payable by Landlord with respect to the Building;

 

(k) costs of decorating and landscaping the grounds and the common areas of the Building; and (1) any sales tax paid by Landlord with respect to goods and services in connection with the foregoing. Operating Charges shall not include:

 

(1) payment of principal or interest due under any mortgage or deed of trust;

 

(2) depreciation allowance of any type;

 

(3) capital improvements costs (other than those described in clause (f) above), whether principal or interest;

 

(4) compensation paid to officers of Landlord or officers of the management agent or any one else above the level of asset manager;

 

(5) the cost of tools, equipment and material used in the initial construction of the Building;

 

(6) costs directly resulting from the gross negligence or willful misconduct of Landlord, its agents, contractors or employees;

 

(7) costs for which Landlord is reimbursed by any insurance;

 

(8) costs for any structural maintenance, replacement or redesign (except as provided in clause (f) above);

 

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(9) leasing commissions, legal fees and other expenses incurred by Landlord or his agents in connection with negotiations or disputes with tenants or prospective tenants (other than with Tenant’s sublessees or assignees) for the ~building;

 

(10) costs or expenses associated with the enforcement of any leases (other than with Tenant’s sublessees or assignees) by Landlord;

 

(11) costs or fees relating to the defense of Landlord’s title or interest in the real estate containing the Building or any part thereof;

 

(12) costs incurred by Landlord in connection with the initial construction of the Building and related facilities;

 

(13) expenses for the correction of defects in Landlord’s initial construction of the Building or project;

 

(14) any costs or expenses relating to Landlord’s obligations under any workletter to construct tenant improvements, including Landlord’s obligations pursuant to Exhibit B;

 

(15) costs (including permit, license and inspection fees) incurred in renovating or otherwise improving or decorating space for tenants in the Building;

 

(16) costs for renovating or improving vacant or unleased space in the Building (other than common areas);

 

(17) Landlord’s costs of any services sold or provided to tenants for which Landlord is entitled to be reimbursed by such tenants under the lease with such tenants;

 

(18) expenses in connection with services or other benefits of a type which are not made available to Tenant but which are provided to another tenant or occupant;

 

(19) costs incurred due to violation by Landlord or any tenant of the terms and conditions of any lease;

 

(20) any expense for Landlord’s advertising and promotional program for the Building;

 

(21) renovation of the Building made necessary by the exercise of eminent domain; and

 

(22) any cost incurred to Landlord or an affiliate of Landlord for the provision of any goods or services. to the extent such cost exceeds the cost than prevailing in transactions between unrelated parties.

 

5.3 “Real Estate Taxes” shall mean: (a) all real estate taxes, including general and special assessments, if any, which are imposed upon Landlord or assessed against the Building and/or the Land; (b) any other present or future taxes or governmental charges that are imposed upon Landlord or assessed against the Building or the Land which are in the nature of or in substitution for real estate taxes, including any tax levied on or measured by the rents payable by tenants of the Building; and (c) reasonable expenses (including reasonable attorneys’ fees) incurred in reviewing or seeking a reduction of real estate taxes. Real Estate Taxes shall not include any tax upon Landlord’s net income or profits. In the event any Real Estate Taxes are payable in installments over time, then Landlord shall elect (or shall be deemed for purposes hereof to have elected) to pay such taxes over the maximum permissible number of installments. Any interest or fee charged by the taxing authority as a condition to Landlord’s right to pay such taxes in installments shall be included in Real Estate Taxes. Landlord shall pay all Real Estate Taxes by the date due, and shall, upon Tenant’s written request, furnish Tenant with evidence of such payment. Real Estate Taxes shall not include any interest or penalties incurred by

 

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Landlord by reason of Landlord’s failure to pay in a timely manner any Real Estate Taxes.

 

5.4 If the average occupancy rate for the Building during any calendar year (including, without limitation, the Operating Charges Base Year) is less than ninety-five percent (95%), or if any tenant is separately paying for electricity, janitorial or other services furnished to its premises which would otherwise be included in Operating Charges, then Operating Charges for such calendar year shall be deemed to include all additional expenses, as reasonably estimated by Landlord, which would have been incurred during such calendar year if such average occupancy rate had been ninety-five percent (95%) and if Landlord paid for such electricity, janitorial and other services furnished to such premises. For example, if the average occupancy rate for the Building during a calendar year is eighty percent (80%), and if the janitorial contractor charges are $1.00 per square foot of occupied rentable area per year, and if the Building contains one hundred thousand (100,000) square feet of rentable area, then it would be reasonable for Landlord to estimate that if the Building had been ninety-five percent (95%) occupied during such year, then janitorial charges for such year would have been ninety-five thousand dollars ($95,000).

 

5.5 If any amounts comprising Operating Charges are incurred not just with respect to the Building, but also with respect to one or more other buildings or areas, then Landlord shall reasonably allocate such amounts between the Building and such other buildings or areas. Any Operating Charges or Real Estate Taxes incurred with respect to the Land shall be reasonably allocated among the Building and other buildings hereafter to be constructed on the Land. Prior to the construction of such other Buildings, only that portion of such Operating Charges and Real Estate Taxes that is allocable to the Building and to the portion of the Land that is associated with the Building shall be included among the expenses comprehended by this Article V. To the extent that any of such expenses are allocated among the buildings situated on the Land under the terms of any declaration of covenants affecting such buildings, the allocation formula used in such declaration shall be reasonably determined and then also be used for purposes of this Section 5.5. Similarly, if any amounts comprising Operating Charges are incurred not just with respect to the office area of the Building, but also with respect to the retail area of the Building, then Landlord shall reasonably allocate such amounts between the office and retail areas of the Building. Such allocation shall be made on a fair and equitable basis, based on the usage of or benefits received from the service, utility or item in question. All utilities furnished to retail tenants shall be separately metered, and retail tenants shall pay for the removal of trash from their premises. The allocation of any amounts reasonably determined by Landlord pursuant to this Section shall be binding on Tenant.

 

5.6 At the beginning of each calendar year that begins during the Lease Term, Landlord may submit a statement setting forth the amount by which Operating Charges that Landlord reasonably expects to be incurred during each calendar year exceed the Operating Charges Base Amount, and Tenant’s proportionate share of such excess. Tenant shall pay to Landlord on the first day of each month after receipt of such statement, until Tenant’s receipt of any succeeding statement, an amount equal to one twelfth (1/12) of such share.

 

5.7 Within approximately one hundred twenty (120) days after the end of each calendar year, Landlord shall submit a statement showing (a) Tenant’s proportionate share of the amount by which Operating Charges incurred during the preceding calendar year exceeded the operating Charges Base Amount, and (b) the aggregate amount of Tenant’s estimated

 

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payments during such year. If such statement indicates that the aggregate amount of such estimated payments exceeds Tenant’s actual liability, then Tenant shall deduct the net overpayment from its next estimated payment(s) pursuant to this Article, or, at Tenant’s option, shall receive a refund of such amount. If such statement indicates that Tenant’s actual liability exceeds the aggregate amount of such estimated payments, then Tenant shall pay the amount of such excess.

 

5.8 Landlord’s failure or delay in rendering any particular statement or statements contemplated by this Article shall not prejudice Landlord’s right thereafter to render such statement or statements.

 

5.9 If the Lease Term expires on a day other than the last day of a calendar year, then Tenant’s liability for Operating Charges incurred during such year shall be proportionately reduced.

 

5.10 Landlord agrees to retain the books and records substantiating the Operating Charges incurred in each calendar year for a period of at least three (3) years. Tenant shall have the right, during business hours and upon reasonable prior notice, from time to time to inspect Landlord’s books and records relating to Operating Charges, and/or to have such books and records audited at Tenant’s expense by a certified public accountant mutually designated by Landlord and Tenant, except that any audit that discloses a discrepancy of more than three percent (3%) in the annual Operating Charges and/or Real Estate Taxes shall be at Landlord’s expense. Any discrepancy shall be promptly corrected by a payment of any shortfall to Landlord by Tenant within thirty (30) days after the applicable audit, or by a credit against the next payment(s1 of rent hereunder or (at Tenant’s election) a refund of the overpaid amount within thirty (30) days, as may be applicable. In the event Tenant does not contest a statement of Operating Charges within one hundred twenty (120) days after it is rendered, such statement shall become binding and conclusive, except that any such statement which is shown to contain deliberate misrepresentations shall not be binding and conclusive until three (3) years after it is rendered.

 

ARTICLE VI

USE OF PREMISES

 

6.1 Tenant shall use the Premises solely for general office purposes (including but not limited to, technical education classrooms) and for such other ancillary purposes as are permitted by law and consistent with the first-class nature of the Building. Tenant shall not use the Premises for any unlawful purpose or in any manner that will or is likely to (a) constitute waste, nuisance or unreasonable annoyance to Landlord or any tenant of the Building, (b) violate the terms of the occupancy or use permit covering the Premises, (c) impair or interfere with any base building systems or facilities, (d) adversely affect the character, appearance or reputation of the Building, or (e) increase the number of parking spaces required for the Building. Tenant shall comply with all present and future laws, ordinances, regulations and orders (collectively, “Laws”) concerning the use, occupancy and condition of the Premises and all machinery, equipment and furnishings therein. Notwithstanding the foregoing, Tenant shall not be responsible for compliance with any Laws that apply to office premises in Fairfax County, Virginia generally if the requirement for compliance with the same does not arise from Tenant’s particular use or design of the Premises, as distinguished from general office use. Landlord shall obtain the original use or occupancy permit for the Premises. Use of the Premises is subject to all covenants, conditions and restrictions now or hereafter of record. Landlord represents that the zoning regulations applicable to the Building and

 

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any covenants, conditions or restrictions appertaining to the Building permit the use of the Premises for the uses contemplated hereunder.

 

6.2 Tenant shall pay before delinquency any business, rent or other tax or fee that is now or hereafter assessed or imposed upon Tenant’s use or occupancy of the Premises, the conduct of Tenant’s business in the Premises or Tenant’s equipment, fixtures, furnishings, inventory or personal property. If any such tax or fee is enacted or altered so that such tax or fee is imposed upon Landlord or so that Landlord is responsible for collection or payment thereof, then Tenant shall pay the amount of such tax or fee promptly to Landlord upon demand.

 

6.3 Tenant shall not generate, use, store or dispose of any Hazardous Materials in or about the Building. “Hazardous Materials” shall mean: (a) “hazardous wastes,” as defined by the Resource Conservation and Recovery Act of 1976, as amended from time to time; (b) “hazardous substances,” as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time; (c) “toxic substances,” as defined by the Toxic Substances Control Act, as amended from time to time; (dl “hazardous materials,” as defined by the Hazardous Materials Transportation Act, as amended from time to time; (e) oil or other petroleum products; and (f) any substance which under any Federal or state law or regulation now or hereafter in effect is identified as being hazardous to health or the environment. Notwithstanding the foregoing, Tenant may use and store within the Premises reasonable quantities of customary office and cleaning supplies.

 

ARTICLE VII

ASSIGNMENT AND SUBLETTING

 

7.1 Tenant shall not assign this Lease or any of Tenant’s rights or obligations hereunder, or sublet or permit anyone to occupy the Premises or any part thereof, without Landlord’s prior written consent, which consent shall not be unreasonably withheld or delayed, provided Landlord reasonably determines that the proposed assignee or subtenant (i) is of a type and quality consistent with a first-class office building, and (ii) has the financial capacity to undertake and perform the obligations of the sublease or of this Lease. No assignment or transfer of this Lease may be effected by operation of law or otherwise without Landlord’s prior written consent as provided above. Any assignment, subletting or occupancy, Landlord’s consent thereto or Landlord’s collection or acceptance of rent from any assignee, subtenant or occupant shall not be construed as a waiver or release of Tenant from liability hereunder.

 

Any assignment, subletting or occupancy, Landlord’s consent thereto or Landlord’s collection or acceptance of rent from any assignee, subtenant or occupant shall not be construed as relieving Tenant or any 1 assignee, subtenant or occupant from the obligation of obtaining Landlord’s prior written consent to any subsequent assignment, subletting or occupancy. Tenant assigns to Landlord any sum due from any assignee, subtenant or occupant of Tenant as security for Tenant’s performance of its obligations pursuant to this Lease. Following an Event of Default, Tenant authorizes each such assignee, subtenant or occupant to pay such sum directly to Landlord if such

 

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assignee, subtenant or occupant receives written notice from Landlord specifying that such rent shall be paid directly to Landlord. Landlord’s collection of such rent shall not be construed as an acceptance of such assignee, subtenant or occupant as a tenant.

 

All restrictions and obligations imposed pursuant to this Lease on Tenant shall be deemed to extend to any subtenant, assignee or occupant of Tenant, and Tenant shall cause such persons to comply with all such restrictions and obligations. If the Lease Term or Tenant’s right of possession shall terminate prior to the stated expiration of the Lease Term, then, at Landlord’s option in its sole and absolute discretion, Landlord may (but shall not be required to) succeed to the rights of Tenant under any or all subleases or assignments entered into by Tenant. Tenant shall not mortgage, pledge or encumber this Lease without Landlord’s prior written consent, which consent shall not be unreasonably withheld or delayed. For all purposes of this Lease, the term “sublet” or “subletting” shall include any assignment of Tenant’s rights with respect to the relevant portion of the Premises.

 

7.2 If Tenant is a partnership, then any dissolution of Tenant or a withdrawal or change, whether voluntary, involuntary or by operation of law, of partners owning a controlling interest in Tenant shall be deemed an assignment of this Lease subject to this Article. Subject to Section 7.5 below, if Tenant is a corporation, then any dissolution, merger, consolidation or other reorganization of Tenant, or any sale or transfer of a controlling interest of its capital stock, other than a sale or transfer undertaken in the context of tenant becoming a publicly-held corporation listed on a national stock exchange or trading in the over-the-counter market, shall be deemed an assignment of this Lease subject to this Article. If any assignment is deemed to have occurred pursuant to this Section, the assignee shall be deemed to be paying fair market rent for purposes of determining the excess rent referred to in Section 7.4 below.

 

7.3 In order to request the consent of Landlord to an assignment, sublease or other transfer (other than to a Permitted Transferee) of all or part of the Premises or this Lease pursuant to this Article, Tenant shall give Landlord written notice (“Tenant’s Request Notice”) of the identity of the proposed assignee or subtenant and its business, all terms of the proposed assignment or subletting, the commencement date of the proposed assignment or subletting (the “Proposed Sublease Commencement Date”) and the area proposed to be assigned or sublet (the “Proposed Sublet Space”). Tenant shall also transmit therewith the most recent financial statement or other evidence of financial responsibility of such assignee or subtenant, a certification executed by Tenant and such proposed assignee or subtenant stating whether (and to what extent) any premium or other consideration is being paid for the proposed assignment or sublease, and all other information requested by Landlord concerning such proposed assignee or subtenant.

 

7.4 If, pursuant to the agreements or understandings effecting or relating to any sublease, assignment or other transfer (whether by operation of law or otherwise), the subtenant, assignee or other transferee is to pay any amount in excess of the sum of (i) the rent and other charges due under this Lease, and (ii) the reasonable costs incurred by Tenant in obtaining the assignment or sublease (including legal fees, brokerage commissions, advertising costs and tenant concessions), then, whether such excess be in the form of an increased rental, lump sum payment, payment for the sale or lease of fixtures or other leasehold improvements or any other form (and if the applicable space does not constitute the entire Premises, the existence of such excess shall be determined on a pro rata basis), Tenant shall pay to

 

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Landlord any such excess upon such terms as shall be specified I by Landlord and in no event later than ten (10) days after Tenant receives (or is deemed to have received) such excess. Landlord shall have the right to inspect Tenant’s books and records relating to any sublease, assignment or other transfer. Any sublease, assignment or other transfer shall be effected on forms reasonably approved by Landlord.

 

7.5 Notwithstanding the foregoing provisions of this Article VII, Tenant shall have the right, upon prior written notice to Landlord, but without Landlord’s consent, to assign this Lease, or to sublet all or any part of the Premises, to (a) any entity resulting from a merger or consolidation with Learning Tree International, Inc. or (b) any corporation succeeding to all the business and assets of Learning Tree International, Inc., provided that the net worth of the surviving or successor entity is at least equal to the net worth of Tenant as of the date of execution of this Lease, and provided that the net worth of such surviving or successor entity is at least equal to the net worth of Tenant immediately prior to such merger, consolidation or transfer. Notwithstanding the foregoing provisions of this Article VII, Tenant shall have the right, upon prior written notice to Landlord, but without Landlord’s consent, to assign this Lease, or to sublet all or any part of the Premises, to any affiliates of Tenant. An Affiliate of Tenant is any entity that controls, is controlled by, or is under common control with Tenant. Any entity to which this Lease is assigned or to which the Premises are sublet pursuant to the terms of this Section 7.5 shall be referred to in this Lease as a “Permitted Transferee.” Sections 7.2, 7.3, and 7.4 shall not apply to any assignment or subletting undertaken pursuant to this Section 7.5.

 

ARTICLE VIII

MAINTENANCE AND REPAIRS

 

8.1 Tenant shall keep and maintain the Premises and all fixtures and equipment located therein in clean, safe and sanitary condition, shall take good care thereof and make all repairs thereto, shall suffer no waste or injury thereto, and at the expiration or earlier termination of the Lease Term, shall surrender the Premises in the same order and condition in which they were on the Lease Commencement Date, ordinary wear and tear and insured casualty excepted. Except as otherwise provided in Article XVII, all injury, breakage and damage to the Premises and to any other part of the Building or the Land caused by any act or omission of any invitee, agent, employee, subtenant, assignee, contractor, client, family member, licensee, customer or guest of Tenant (collectively “Invitees”) or Tenant, shall be repaired by and at Tenant’s expense, except that, if Tenant fails to make such repair within a reasonable time following Landlord’s demand therefor, Landlord shall have the right at Landlord’s option to make any such repair and to charge Tenant for all costs and expenses incurred in connection therewith. In an emergency, Landlord may make such repair without any prior demand upon Tenant. Landlord shall, at Landlord’s expense, repair any damage caused by the negligence or misconduct of Landlord, its agents or employees. Landlord shall provide and install replacement tubes for building standard fluorescent light fixtures and all other conventional light bulbs and tubes for the Premises at Tenant’s expense (which expense shall not be included in Operating Charges pursuant to Article V).

 

8.2 Landlord shall keep and maintain in good order and repair appropriate for a first-class office building the base-building structure and systems, including the roof, exterior walls, elevators, electrical, plumbing and HVAC systems, and the parking areas, landscaping, ground floor lobby and other common areas and facilities of

 

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the Building. In addition, Landlord shall maintain and repair Tenant’s private bathrooms within the Premises and the uninterrupted power source described in Paragraph 3(b) of Exhibit B.

 

ARTICLE IX

ALTERATIONS

 

9.1 The original improvement of the Premises shall be accomplished by Landlord in accordance with Exhibit B. Landlord is under no obligation to make any alterations, decorations, additions, improvements or other changes (collectively “Alterations”) in or to the Premises except as set forth in Exhibit B or otherwise expressly provided in this Lease.

 

9.2 Tenant shall not make or permit anyone to make any Alteration in or to the Premises or the Building without Landlord’s prior written consent, which consent shall not be unreasonably withheld or delayed with respect to proposed Alterations that are not visible from the exterior of the Premises, do not affect the Building’s structure, and do not impair the Building’s mechanical, electrical, plumbing or HVAC systems. Any Alteration made by Tenant shall be subject to the preceding sentence and shall be made: (a) in a good, workmanlike, first-class and prompt manner; (b) using new materials only; (c) by a contractor and in accordance with plans and specifications and procedures reasonably approved in writing by Landlord; (d) in accordance with legal requirements and requirements of any insurance company insuring the Building; (el after obtaining any required consent of any Mortgagee; and (f) after obtaining a workmen’s compensation insurance policy reasonably approved in writing by Landlord and any other insurance reasonably required by Landlord (provided, however, that this requirement shall be satisfied if such insurance is carried by the contractor performing the work). Upon completion of the Alteration, Tenant shall deliver to Landlord written, unconditional waivers of mechanics’ and materialmen’s liens against the Premises and the Building from all contractors, subcontractors, laborers and material suppliers for all work and materials in connection with such Alteration. If any lien (or a petition to establish a lien) is filed in connection with any Alteration, then such lien (or petition) shall be discharged by Tenant at Tenant’s expense within twenty (20) days thereafter by the payment thereof or filing of a bond acceptable to Landlord. Landlord’s consent to the making of an Alteration shall be deemed not to constitute Landlord’s consent to subject its interest in the Premises or the Building to liens which may be filed in connection therewith. Tenant shall hire Landlord (or its designee) to perform any structural Alteration, provided that the charge to Tenant therefor is reasonable. Notwithstanding anything to the contrary contained in this Article IX, Tenant shall have the right from time to time and at any time, without Landlord’s consent, to perform the following work within the Premises: (i) paint and install wall coverings, (ii) install and remove office furniture, (iii) relocate existing electrical outlets, (iv) install and remove workstations, (v) install and remove Tenant’s equipment and perform cable pulls in connection therewith (provided no work within the walls or above the ceiling tiles is performed in connection with such installation and removal), and (vi) install and remove carpeting and other floor coverings. If appropriate in view of the nature and scope of the Alterations, Tenant shall furnish Landlord

 

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with an updated set of “as-built” drawings reflecting any alterations made by Tenant.

 

9.3 If any Alteration for which Landlord’s consent is required is made without Landlord’s prior written consent, then Landlord shall have the right at Tenant’s expense to remove and correct such Alteration and restore the Premises and the Building to their condition immediately prior thereto or to require Tenant to do the same. All Alterations to the Premises or the Building made by either party shall immediately become Landlord’s property and shall remain upon and be surrendered with the Premises at the expiration or earlier termination of the Lease Term; provided, however, that Tenant shall have the right to remove, prior to the expiration or earlier termination of the Lease Term, all of Tenant’s trade fixtures, movable furniture, furnishings and equipment (collectively, “Tenant’s Removables”); and except that Tenant shall be required to remove all Alterations to the Premises or the Building which Landlord designates in writing for removal at the time Landlord approves installation of such Alteration. Movable furniture, furnishings and equipment shall be deemed to exclude any item which would normally be removed from the Premises with the assistance of any tool or machinery other than a dolly. Landlord shall have the right to repair at Tenant’s expense all damage to the Premises or the Building caused by such removal or to require Tenant to do the same. If any such furniture, furnishing or equipment is not removed by Tenant prior to the expiration or earlier termination of the Lease Term, then the same shall become Landlord’s property and shall be surrendered with the Premises as a part thereof; provided, however, that Landlord shall have the right to remove from the Premises at Tenant’s expense such furniture, furnishing or equipment and any Alteration which Landlord designated in writing for removal as set forth above.

 

ARTICLE X

SIGNS

 

10.1 Landlord will list Tenant’s name in the Building directory, if any, and provide building standard signage on or near the primary suite entry door. Tenant shall have the right to affix a sign displaying Tenant’s trade name to the exterior of the Building, on the east and west elevations facing Discovery Street and Library Street, upon the following terms and conditions:

 

(a) Landlord shall obtain, at Tenant’s expense, the initial permit required with respect to such sign, provided that Tenant’s specifications for the sign conform to all government and quasi-governmental requirements;

 

(b) the location of such sign shall be mutually agreed upon by Landlord and Tenant;

 

(c) the size, materials, color, design and other aspects of such sign shall be acceptable to Landlord in its reasonable judgment; and

 

(d) Landlord shall have the right to remove such sign at the expiration or earlier termination of the Lease Term at Tenant’s expense.

 

Landlord hereby agrees to grant Tenant an allowance in the amount of $10,000 to be applied toward the cost of Tenant’s exterior sign. If the cost of Tenant’s exterior sign is less than $10,000, the unused portion of such allowance shall be paid to Tenant within thirty (30) days after the Lease Commencement Date. Tenant shall not paint, affix or otherwise display on any part of the exterior or interior of the Building any other sign, advertisement or notice, other than signs in the interior of the Premises that are not visible from the exterior of the Premises. If any such item that has not been approved by Landlord is so displayed, then Landlord shall have the right to remove such item at

 

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Tenant’s expense or to require Tenant to do the same. Landlord hereby agrees not to grant exterior signage rights to any other office tenant in the Building, except for the right given to A-Point, Inc:, in its lease dated August 20, 1990, to post a Western Union sign on the Building. The rights granted to Tenant under this Section 10.1 shall also inure to the benefit of any Permitted Transferee (as defined in Section 7.5 above).

 

ARTICLE XI

SECURITY DEPOSIT

[Intentionally Omitted]

 

ARTICLE XII

HOLDING OVER

 

12.1 Tenant acknowledges that it is extremely important that Landlord have substantial advance notice of the date on which Tenant will vacate the Premises, because Landlord will (a) require an extensive period to locate a replacement tenant, and (b) plan its entire leasing and renovation program for the Building in reliance on its lease expiration dates. Tenant also acknowledges that if Tenant fails to surrender the Premises at the expiration or earlier termination of the Lease Term, then it will be conclusively presumed that the value to Tenant of remaining in possession, and the loss that will be suffered by Landlord as a result thereof, far exceed the Base Rent and additional rent that would have been payable had the Lease Term continued during such holdover period.

 

Therefore, unless Landlord (in its discretion) consents to Tenant’s continued occupancy of the Premises, in which event such tenancy shall be on such terms and conditions as may be mutually agreed to by Landlord and Tenant, if Tenant does not immediately surrender the Premises upon the expiration or earlier termination of the Lease Term, then the rent shall be increased to equal the greater of (1) fair market rent for the Premises, or (2) double the Base Rent, additional rent and other sums that would have been payable pursuant to the provisions of this Lease if the Lease Term had continued during such holdover period. Such rent shall be computed on a monthly basis and shall be payable on the first day of such holdover period and the first day of each calendar month thereafter during such holdover period until the Premises have been vacated.

 

Landlord’s acceptance of such rent shall not in any manner adversely affect Landlord’s other rights and remedies, including Landlord’s right to evict Tenant and to recover damages.

 

ARTICLE XIII

INSURANCE

 

13.1 Tenant shall not conduct any activity or place any item in or about the Building which may increase the cost of any insurance on the Building. If any increase in the cost of such insurance is due to any such activity or item, then (whether or not Landlord has consented to such activity or item) Tenant shall pay the amount of such increase. The

 

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statement of any insurance company or insurance rating organization (or other organization exercising similar functions in connection with the prevention of fires or the correction of hazardous conditions) that such an increase is due to any such activity or item shall be conclusive evidence thereof.

 

13.2 Tenant shall maintain throughout the Lease Term, with a company licensed to do business in the Commonwealth of Virginia, approved by Landlord and having a rating equal to or exceeding A:XI in Best’s Insurance Guide: (a) broad form comprehensive general liability insurance (written on an occurrence basis and including contractual liability coverage insuring the obligations assumed by Tenant pursuant to Section 15.2 and an endorsement for personal injury); and (b) all-risk property insurance. Such liability insurance shall be in minimum amounts typically carried by prudent tenants engaged in similar operations, but in no event shall be in an amount less than two million dollars ($2,000,000) combined single limit for bodily injury or death to any one person or number of persons, and two million dollars ($2,000,000) general aggregate for property damage. Such property insurance shall be in an amount not less than that required to replace all Above-Standard Work, all Alterations and all other contents of the Premises, excluding the Building Standard Tenant Work. All liability insurance shall name Landlord, any Mortgagee and any invitee of Landlord or Landlord’s managing agent as additional insureds. All property insurance shall contain an endorsement that such insurance shall remain in full force and effect notwithstanding that the insured may have waived its claims against any person prior to the occurrence of a loss, and provide that the insurer waives all right of recovery by way of subrogation against Landlord, its partners, agents and employees.

 

Notwithstanding any other provision of this Lease, Tenant hereby waives any claims it may hereafter have against Landlord on account of any damage for which Tenant is covered by insurance required hereunder or under any other insurance actually carried by Tenant. All of Tenant’s insurance shall contain an endorsement prohibiting cancellation, failure to renew, reduction in amount of insurance or change of coverage (1) as to the interests of Landlord, any Mortgagee or any Invitee of Landlord or Landlord’s managing agent by reason of any act or omission of Tenant, and (2) without the insurer’s giving Landlord thirty (30) days’ prior written notice of such action. Landlord reserves the right from time to time to require Tenant to obtain higher minimum amounts of insurance. Tenant shall deliver a certificate of insurance and receipts evidencing payment of the premium for all required insurance policies to Landlord on or before the Lease Commencement Date and at least annually thereafter, no less than thirty (30) days prior to the earliest expiration date set forth on such certificate.

 

13.3 Throughout the Lease Term, (i) Landlord shall carry comprehensive general liability insurance in at least such amounts as may be required from time to time by the holder of any Mortgage encumbering the Building, and (ii) Landlord shall insure the Building against loss due to fire and other casualties included in standard extended coverage insurance policies, with an agreed amount endorsement and replacement cost coverage, exclusive of architectural and engineering fees, excavations, footings and foundations. Landlord’s property insurance shall contain an endorsement that such insurance shall remain in full force and effect notwithstanding that the insured may have waived its claims against any person prior to the occurrence of a loss. Notwithstanding any other provision of this Lease, Landlord

 

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hereby waives any claims it may hereafter have against Tenant on account of any damage for which Landlord is covered by insurance required hereunder or under any other insurance actually carried by Landlord.

 

ARTICLE XIV

SERVICES AND UTILITIES

 

14.1 Landlord shall furnish to the Premises air-conditioning and heating during the seasons they are required in accordance with the specifications attached hereto as Exhibit F. Landlord shall provide: janitorial service on Monday through Friday only (excluding legal public holidays celebrated-’by the Executive Departments of the Federal Government) in accordance with the specifications attached hereto as Exhibit G; electricity; water; elevator service; and exterior window-cleaning service.

 

The normal hours of operation of the Building will be 8:00 a.m. to 6:00 p.m. on Monday through Friday (except such holidays) and 9:00 a.m. to 12:00 p.m. on Saturday (except such holidays) and such additional hours, if any, as Landlord determines, If Tenant requires air-conditioning or heat beyond the normal hours of operation, then Landlord will furnish the same, provided Tenant gives Landlord sufficient advance notice of such requirement. Tenant shall pay for such extra service in accordance with Landlord’s then-current schedule. Notwithstanding the preceding sentence, the parties agree that the cost of such extra service during the first Lease Year shall not exceed $35.68 per hour per floor