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OFFICE BUILDING LEASE

Lease Agreement

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QUADRAMED CORPORATION

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Title: OFFICE BUILDING LEASE
Date: 1/21/2004
Industry: Software and Programming     Sector: Technology

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                                                                   Exhibit 10.19

 

                              OFFICE BUILDING LEASE

 

 

                                        FOR

 

 

                              QUADRAMED CORPORATION

 

 

                               RESTON EXECUTIVE II

                               Suites 500 and 600

                             Reston, Virginia 22090

 

 

                                 CHARLES E. SMITH

                            REAL ESTATE SERVICES L.P.

                               2345 Crystal Drive

                                  Crystal City

                            Arlington, Virginia 22202

 

 

                            [LOGO OF SMITH COMPANY]

 

================================================================================

 

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                                TABLE OF CONTENTS

--------------------------------------------------------------------------------

 

                          SPECIFIC AND GENERAL PROVISIONS

 

                                                                            PAGE

 

1.   SPECIFIC PROVISIONS........................................................1

 

2.   RENT.......................................................................4

    2.1    Base Annual Rent.....................................................4

          (a) Payment of Base Annual Rent......................................4

          (b) Escalation of Base Annual Rent...................................4

    2.2    Additional Rent......................................................4

          (a) Real Estate Taxes................................................4

          (b) Operating Expenses...............................................5

    2.3    Additional Rent Estimates and Adjustments............................5

          (a) Initial Additional Rent Adjustments..............................5

          (b) Annual Budget....................................................5

           (c) Additional Rent Reconciliations..................................5

          (d) Verification of Additional Rent..................................6

          (e) Fiscal Year......................................................6

    2.4    Rent Adjustment Limit................................................6

    2.5    Survival of Rent Obligation..........................................6

    2.6    Pro Rata Share.......................................................6

    2.7    Prorated Rent........................................................6

    2.8    Application of Rent..................................................6

    2.9    Late Payment Fee and Interest Charge.................................6

    2.10   Other Tenant Costs and Expenses......................................6

 

3.   CONSTRUCTION OF PREMISES AND OCCUPANCY ....................................6

    3.1    Tenant Plans, Construction and Rent Liability........................6

          (a) Preparation of Tenant Plans......................................6

          (b) Extension of Construction Timetable..............................7

    3.2    Possession...........................................................7

    3.3    Permits..............................................................7

    3.4    Demised Premises.....................................................7

 

4.   SUBLETTING AND ASSIGNMENT..................................................7

    4.1    Consent..............................................................7

    4.2    Recapture of Premises................................................8

    4.3    Subletting...........................................................8

    4.4    Tenant Liability.....................................................8

    4.5    Reasonable Standards of Consent......................................8

    4.6    Other Transfers........:.............................................8

    4.7    Rights on Default....................................................8

 

5.   SERVICES AND UTILITIES.....................................................9

    5.1    Building Standard Services and Utilities.............................9

    5.2    Overtime Services....................................................9

    5.3    Excessive Usage......................................................9

          (a) Equipment Restrictions...........................................9

          (b) Excess Electrical Usage..........................................9

          (c) Additional Utility Costs.........................................9

    5.4    Excessive Heat Generation............................................9

    5.5    Building Security...................................................10

    5.6    Roof and Auxiliary Spaces...........................................10

    5.7    Trash Removal.......................................................10

 

6.   USE AND UPKEEP OF PREMISES................................................10

    6.1    Use.................................................................10

    6.2    Illegal and Prohibited Uses.........................................10

    6.3    Insurance Rating....................................................10

    6.4    Alterations.........................................................10

           (a) Approval Required...............................................10

          (b) Alteration Requirements.........................................11

          (c) Removal of Leasehold Improvements and Tenant's Property.........11

          (d) Compliance with Laws............................................11

    6.5    Maintenance by Landlord.............................................12

          (a) Landlord Repairs and Maintenance................................12

          (b) Use of Demised Premises by Landlord.............................12

    6.6    Signs and Publications..............................................12

    6.7    Excessive Floor Load................................................12

    6.8    Moving and Deliveries...............................................12

          (a) Prohibitions/Notices............................................12

          (b) Coordination with Landlord......................................12

          (c) Moving Damages..................................................12

 

                                       (i)

 

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                                TABLE OF CONTENTS

                                   (continued)

 

    6.9    Rules and Regulations...............................................13

     6.10   Tenant Maintenance and Condition of Demised Premises Upon

          Surrender...........................................................13

    6.11   Tenant Property and Leasehold Improvements..........................13

    6.12   Landlord's Right to Perform Tenant's Duties.........................13

    6.13   Medical Waste.......................................................13

 

7.   ACCESS....................................................................13

    7.1    Landlord's Access...................................................13

    7.2    Restricted Access...................................................13

    7.3    Tenant's Access.....................................................13

 

8.   LIABILITY.................................................................14

    8.1    Tenant's Property...................................................14

    8.2    Criminal Acts of Third Parties......................................14

    8.3    Public Liability....................................................14

    8.4    Construction on Contiguous Property.................................14

    8.5    Tenant Insurance....................................................14

          (a) Liability Insurance.............................................14

          (b) Fire and Casualty Insurance.....................................14

          (c) Increases in Coverage...........................................14

          (d) Policy Requirements.............................................14

           (e) No Limitation of Liability......................................14

          (f) Waiver of Subrogation...........................................15

          (g) Business Interruption...........................................15

    8.6    Incident Reports....................................................15

    8.7    Landlord's Insurance................................................15

 

9.   DAMAGE....................................................................15

    9.1    Damages Caused by Tenant............................................15

    9.2    Fire or Casualty Damage.............................................15

    9.3    Untenantability.....................................................15

          (a) Restoration Requirements........................................15

          (b) Casualty Near Expiration of Lease Term..........................16

 

10. CONDEMNATION..............................................................16

    10.1   Landlord's Right to Award...........................................16

    10.2   Tenant's Right to File Claim........................................16

 

11. BANKRUPTCY................................................................16

    11.1   Events of Bankruptcy................................................16

    11.2   Landlord's Remedies.................................................17

          (a) Termination of Lease............................................17

          (b) Suit for Possession.............................................17

           (c) Non-Exclusive Remedies..........................................17

          (d) Assumption or Assignment by Trustee.............................17

          (e) Adequate Assurance of Future Performance........................17

          (f) Failure to Provide Adequate Assurance...........................17

    11.3   Guarantors..........................................................17

    11.4   Damages.............................................................17

 

12. DEFAULTS AND REMEDIES.....................................................17

    12.1   Default.............................................................18

    12.2   Remedies............................................................17

    12.3   Landlord's Right to Relet...........................................18

    12.4   Recovery of Damages.................................................18

          (a) Quantification of Damages.......................................18

          (b) Non-Exclusive Rights............................................19

    12.5   Waiver..............................................................19

    12.6   Intentionally Deleted...............................................19

          (a) Repudiation Prior to Commencement Date..........................19

          (b) Repudiation of Any Obligation of Tenant During Lease Term.......19

    12.7   Tenant Abandonment of Demised Premises..............................19

          (a) Abandonment.....................................................19

          (b) Landlord Right to Enter and to Relet............................19

    12.8   Tenant's Property...................................................19

    12.9   Intentionally Deleted...............................................20

    12.10 Injunctive Relief...................................................20

    12.11 Independent Covenants...............................................20

 

                                      (ii)

 

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                                TABLE OF CONTENTS

                                    (continued)

 

    12.12 Waiver of Redemption................................................20

    12.13 Attorneys'Fees......................................................20

 

13. SUBORDINATION.............................................................20

    13.1   Subordination.......................................................20

    13.2   Estoppel Certificates...............................................20

    13.3   Attornment..........................................................21

    13.4   Mortgagee Rjghts....................................................21

          (a) Mortgagee Requirements..........................................21

          (b) Notices to Mortgagee............................................21

 

14. TENANT'S HOLDOVER.........................................................21

    14.1   With Landlord Consent...............................................21

    14.2   Without Landlord Consent............................................21

 

15. SECURITY DEPOSIT..........................................................22

 

16. QUIET ENJOYMENT...........................................................22

 

17. SUCCESSORS................................................................22

 

18. WAIVER OF JURY TRIAL AND STATUTE OF LIMITATIONS...........................22

 

19. LIMITATION OF LANDLORD'S LIABILITY; NOTICE................................22

    19.1   Intentionally Deleted...............................................22

    19.2   Individual Liability................................................22

    19.3   Notice in Event of Landlord's Default...............................22

 

20. AUTHORITY.................................................................22

 

21. TENANT'S RESPONSIBILITY REGARDING HAZARDOUS SUBSTANCES....................23

    21.1   Hazardous Substances................................................23

    21.2   Tenant's Restrictions...............................................23

          (a) Violations......................................................23

          (b) Use.............................................................23

    21.3   Affirmative Obligations.............................................23

          (a) Compliance with Laws............................................23

          (b) Clean-Up Plans..................................................23

          (c) Information Requests............................................23

    21.4   Intentionally Deleted...............................................23

    21.5   Survival of Obligations.............................................23

 

22. INTENTIONALLY DELETED.....................................................23

 

23. DEFINITIONS...............................................................23

    23.1   Pronouns............................................................24

    23.2   Demised Premises....................................................24

    23.3   Lease Term..........................................................24

    23.4   Tenants Property....................................................24

    23.5   Leasehold Improvements..............................................24

 

24. NOTICE TO PARTIES.........................................................24

    24.1   Addresses for Notices...............................................24

    24.2   Effective Date of Notice............................................24

 

25. NOTICE TO MORTGAGEES.................'....................................24

 

26. SPECIAL PROVISIONS; EXHIBITS..............................................24

    26.1   Incorporation in Lease..............................................24

    26.2   Conflicts...........................................................24

 

27. CAPTIONS..................................................................24

 

28. ENTIRE AGREEMENT; MODIFICATION............................................24

 

29. GOVERNING LAW; SEVERABILITY...............................................25

 

30. BINDING EFFECT OF LEASE...................................................25

 

31. FORCE MAJEURE.............................................................25

 

32. RECORDATION...............................................................25

 

33. TIME OF ESSENCE...........................................................25

 

34. BROKERS AND COMMISSIONS...................................................25

 

35. RELATIONSHIP OF LANDLORD AND TENANT.......................................25

 

                                     (iii)

 

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     This Lease, made this 15/th/ day of June, 2001, between CESC RESTON

EXECUTIVE CENTER LLC, a Delaware limited liabilty company (hereinafter referred

to as "Landlord"), and QUADRAMED CORPORATION, a Delaware corporation

(hereinafter referred to as "Tenant").

 

     Landlord, for and in consideration of the covenants and agreements set

forth hereinafter, leases to Tenant, and Tenant leases from Landlord, the

premises described, for the use set forth and for the term and at the rent

reserved herein.

 

1.    SPECIFIC PROVISIONS

 

     1.1   PREMISES

 

          (a) Demised Premises:   Suites 500 and 600, each consisting of 19,912

                                 square feet.

 

          (b) Rentable Area:      Approximately 39,824 square feet (Modified

                                 Washington D.C. Association of Realtors

                                 standard floor area measure as defined in

                                 Exhibit G).

 

          (c) Complex:            The buildings, improvements and grounds known

                                  as Reston Executive Center, of which the

                                 Building is a part.

 

          (d) Building:           RESTON EXECUTIVE II

 

          (e) Address:            12110 Sunset Hills Road

                                 Reston, Virginia 22090

 

     1.2   LEASE DATES

 

          (a) Lease Term:         The term of this Lease ("Lease Term") shall be

                                 Ten (10) years, commencing on August 1,2001

                                 ("Commencement Date"), and expiring on July 31,

                                 2011, both dates inclusive, unless sooner

                                 terminated in accordance with the provisions of

                                 this Lease. Provided Tenant was not at fault

                                  therefor, in the event Landlord is unable to

                                 tender possession of the Demised Premises to

                                 Tenant on the Commencement Date, the aforesaid

                                  dates, and all dates hereinafter related

                                 thereto shall be postponed to the extent

                                 Landlord is delayed in tendering possession of

                                 the Demised Premises to Tenant.

 

          (b) Base Year:          Base Year shall be defined as the period

                                 commencing on January 1, 2001, and ending on

                                 December 31, 2001.

 

          (c) Fiscal Year:        Fiscal Year shall be defined as each annual

                                 period, or portion thereof, included within the

                                 Lease Term commencing on January 1 and ending

                                 on December 31.

 

           (d) Lease Year:         The first Lease Year shall commence on the

                                 Commencement Date and shall terminate at 11:59

                                 p.m. on the day before the first anniversary of

                                  the Commencement Date. All subsequent Lease

                                 Years shall be for twelve calendar months,

                                 except that the last Lease Year shall terminate

                                 on the date this Lease expires or is terminated

                                 in accordance with the provisions hereof.

 

 

          (e) Calendar Year:      Calendar Year (sometimes appearing as 'calendar

                                 year') shall be defined as each annual period

                                 from January 1 through the immediately

                                 following December 31.

 

     1.3   BASE ANNUAL RENT

 

          (a) Initial Base Annual Rent: One Million Four Hundred Sixty-Three

           Thousand Five Hundred Thirty-Two and 00/100 Dollars ($1,463,532.00),

          ($36.75 per square foot) payable in equal monthly installments of One

          Hundred Twenty-One Thousand Nine Hundred Sixty-One and 00/100 Dollars

          ($121,961.00), hereinafter referred to as "base monthly rent", for the

          first Lease Year.

 

          (b) Percentage Factor: Three Percent (3%).

 

                                        1

 

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     1.4   BASE YEAR COSTS

 

          Not Applicable.

 

     1.5   ADDITIONAL RENT

 

          Additional Rent shall be payable by Tenant in accordance with Section

          2, commencing on the first (l/st/) anniversary of the Commencement

          Date, consisting of each of the following:

 

     (a)   Increases in Real

           Estate Taxes:           Tenant's pro rata share (based on 137,780

                                 square feet of office space in the Building),

                                 equal to Twenty-Eight and Nine Hundredths

                                  Percent (28.9%), of the amount of Real Estate

                                 Taxes in excess of the Base Year Real Estate

                                 Taxes.

 

     (b)   Increases in Operating

          Expenses:               Tenant's pro rata share (based on 137,780

                                 square feet of office space in the Building),

                                 equal to Twenty-Eight and Nine Hundredths

                                 Percent (28.9%), of the amount of Operating

                                  Expenses in excess of the Base Year Operating

                                 Expenses.

 

     1.6   SECURITY DEPOSIT

 

          Four Hundred Forty Thousand and 00/100 Dollars ($440,000.00) in

          accordance with Section 45 hereinafter.

 

     1.7   STANDARD BUILDING OPERATING DAYS AND HOURS

 

          8:00 A.M. to 6:00 P.M. Monday - Friday

          8:00 A.M. to 1:00 P.M. Saturday

 

     1.8   USE OF PREMISES

 

          General office use in keeping with the quality and nature of this

          first class office building.

 

     1.9   (a)   ADDRESS FOR NOTICES TO TENANT

 

               Quadramed Corporation                    QuadraMed

               22 Pelican Way           with a copy to   12110 Sunset Hills Road

               San Rafael,                              Suite 600

               California 949011                        Reston, Virginia 20190

               Attn: Executive Vice                     Attn: Director, Human

                     President                                 Resources

 

          (b)   ADDRESS FOR NOTICES TO LANDLORD

 

               CESC Reston Executive Center LLC

               c/o Charles E. Smith Real Estate Services L.P.

               2345 Crystal Drive

               Arlington, VA 22202

 

                     with a copy to:

 

          (c)   ADDRESS FOR PAYMENT OF RENT

 

               CESC Reston Executive Center LLC

               c/o Charles E. Smith Real Estate Services L.P.

               P. O. Box 642006

               Pittsburgh, PA 15264-2006

 

                                         2

 

<PAGE>

 

     1.10 SPECIAL PROVISIONS

 

     Accrual of Rent Obligation                Section 36

     Remodeling the Demised Premises           Section 37

     Parking                                   Section 38

     Renewal Option                            Section 39

     Fair Market Value Rent                    Section 40

     Building Directory                        Section 41

     Exterior Signage                          Section 42

     Right of First Offering                    Section 43

     Nondisturbance                            Section 44

     Letter of Credit                          Section 45

     Excess Electrical Consumption             Section 46

     Execution of Document                     Section 47

 

      1.11 EXHIBITS TO LEASE

 

          Exhibit A- Not Applicable

          Exhibit B- Not Applicable

          Exhibit C- Building Rules and Regulations

          Exhibit D- Cleaning Specifications

          Exhibit E- Not Applicable

          Exhibit F- Not Applicable

          Exhibit G- Rentable Area Definition

 

     IN WITNESS WHEREOF, Landlord has caused this Lease, composed of Specific

Provisions, General Provisions, Special Provisions and Exhibits, to be signed

and sealed by one or more of its Officers, General Partners, Trustees, or

Agents, and Tenant has caused this Lease, as described above, to be signed in

its corporate name by its duly authorized officer and its corporate seal to be

hereto affixed and duly attested by its Secretary.

 

 

WITNESS:                                  LANDLORD:   CESC RESTON EXECUTIVE CENTER

                                                   LLC

 

 

  /s/                                    By:   /s/ Kenneth L.Mc Vearry       (SEAL)

-------------------------------------       -------------------------------

                                            Kenneth L. Mc Vearry

                                            Executive Vice President

 

 

ATTEST:                                  TENANT:    QUADRAMED CORPORATION

 

 

 

CORPORATE SEAL    /s/                      By   /s/ Mark N.Thomas              (SEAL)

               ----------------------       -------------------------------

                    Secretary                Name: MARK N.THOMAS

                MICHAEL H. LANZA             Title: CFO

 

 

                                         3

 

<PAGE>

 

                               GENERAL PROVISIONS

 

2.    RENT

 

     2.1   Base Annual Rent.

 

          (a) Payment of Base Annual Rent. After the Commencement Date, Tenant

shall pay the monthly installments of Base Annual Rent in advance without

deduction, demand, right of set-off or recoupment, in immediately available

funds, on the first day of each and every calendar month throughout the entire

Lease Term specified in Section 1.2(a), to Charles E. Smith Real Estate Services

L.P. ("Landlord's Agent") at the address specified in Section 1.9(c), or to such

other person or at such other place as Landlord may hereafter designate in

writing.

 

          (b) Escalation of Base Annual Rent. Commencing on the first

anniversary date of the Commencement Date and continuing on each subsequent

anniversary thereof, the Base Annual Rent shall be increased by the Percentage

Factor stipulated in Section 1.3(b) times the Base Annual Rent payable for the

preceding Lease Year (all of which shall be calculated without giving effect to

any waiver of rent or rent credit otherwise provided to Tenant). The escalated

Base Annual Rent so determined shall be the "Base Annual Rent" for all purposes

of this Lease, including the calculation of the increase in Base Annual Rent for

the subsequent Lease Year.

 

     2.2   Additional Rent. Commencing on the date set forth in Section 1.5 and

continuing throughout the Lease Term, Tenant shall pay as Additional Rent

Tenant's pro rata share of any (i) Real Estate Taxes and (ii) Operating

Expenses, in excess of the (i) Real Estate Taxes and (ii) Operating Expenses,

respectively, accruing during the Base Year. Additional Rent shall be determined

as follows:

 

          (a) Real Estate Taxes. Tenant shall pay Tenant's pro rata share, as

defined in Section 1.5(a), of any Real Estate Taxes accruing during each Fiscal

Year falling entirely or partly within the Lease Term, in excess of the amount

of Real Estate Taxes accruing during the Base Year.

 

               (i)    The term "Real Estate Taxes" shall mean (1) all taxes,

assessments (including all assessments for public improvements or benefits,

whether or not commenced or completed prior to the date hereof and whether or

not to be completed within the Lease Term), water, sewer, transportation or

other excises, levies, license fees, permit fees, impact fees, inspection fees,

and other authorization fees and other similar charges, in each case whether

general or special, levied or assessed, ordinary or extraordinary, foreseen or

unforeseen, of every character (including all interest and penalties thereon),

which at any time during or in respect of the Lease Term, may, by any

governmental or taxing authority, be assessed, levied, confirmed, or imposed on

or in respect of, or be a lien upon, the land and the building improvements of

which the Demised Premises are a part, and on any land and/or improvements now

or hereafter owned by Landlord and/or others that provide the Complex or

locality or the Demised Premises with other services, programs, amenities or

common facilities, together with (2) any other tax imposed on real estate or on

owners of real estate generally, including taxes imposed on leasehold

improvements which are assessed against the Landlord and taxes upon or with

respect to any activity conducted on the land and improvements of which the

Demised Premises are a part, upon this Lease or any rent reserved or payable

hereunder. Real Estate Taxes shall not include any income, franchise or other

taxes measured by Landlord's income. Wherever Real Estate Taxes are incurred

with respect to one or more buildings in the Complex or with respect to common

areas within the Complex, then the Landlord shall reasonably allocate those Real

Estate Taxes consistently and equally among all buildings and tenants in the

Complex.

 

              (ii)   If Real Estate Taxes accruing during the Base Year are

subsequently reduced by any application or proceeding brought by or on behalf of

Landlord for reduction in the amount of Real Estate Taxes payable by Landlord,

the Real Estate Taxes deemed to have accrued during the Base Year shall be

decreased and Landlord may promptly bill Tenant for the Additional Rent not

previously paid by Tenant for any Fiscal Year during the Lease Term, based upon

the reduced amount of Real Estate Taxes accruing during the Base Year.

 

              (iii) Grossed Up Real Estate Taxes. Notwithstanding anything in

this Lease to the contrary, Real Estate Taxes for all fiscal years shall be

"grossed-up" on the basis that the Building is Ninety-Five Percent (95%)

occupied and fully assessed.

 

              (iv)   In addition to the pro rata share of any increase in Real

Estate Taxes to be paid by Tenant pursuant to Sections 2.2(a)(i), (ii) and (iii)

above, Tenant shall reimburse Landlord upon demand for any and all taxes

required to be paid by Landlord upon, measured by, or reasonably attributable to

the cost or value of Tenant's Property or by the cost or value of any Leasehold

Improvements made in or to the Demised Premises by or for Tenant, regardless of

whether title to such Leasehold Improvements shall be in Tenant or Landlord, and

for all taxes required to be paid by Landlord upon, measured by, or reasonably

attributable to or with respect to the possession, leasing, operation,

management, maintenance, alteration, repair, use or occupancy by Tenant of the

Demised Premises or any portion thereof to the extent such taxes are not

included in Real Estate Taxes.

 

          (b) Operating Expenses. Tenant shall pay Tenant's pro rata share, as

indicated in Section 1.5(b), of any Operating Expenses accruing during each

Fiscal Year falling entirely or partly within the Lease Term, in excess of the

Operating Expenses accruing during the Base Year.

 

              (i)    The term "Operating Expenses" shall mean any and all

expenses of Landlord in connection with the servicing, insuring, operation,

maintenance, replacement and repair of the Building and related interior and

exterior appurtenances of which the Demised Premises are a part, or for health,

welfare or safety; expenses, if any, of Landlord either alone or in conjunction

with others to maintain common facilities, amenities, programs and services

required or approved by jurisdictional authorities for the Building, the

building site, the Complex or the locality in which the Complex is situated; the

cost of any services to achieve a reduction of, or to minimize the increase in,

Operating Expenses or Real Estate Taxes; management fees (not to exceed five

percent [5%] of the gross rental income of the Building); vault rentals;

business license, personal property and other taxes; capital expenditures and

other costs of Landlord for equipment or systems installed to reduce or minimize

increases in Operating Expenses or to comply with any governmental or

quasi-governmental ordinance changed, enacted or newly interpreted, after the

Commencement Date (at the option of Landlord, such costs, with interest at

twelve percent (12%) annually, may be recovered from Tenant in installments

simultaneous with the payment of monthly installments of Base Annual Rent in

accordance with a cost repayment schedule based on the useful life of such

equipment or systems). At the reasonable discretion of Landlord, certain of

these expenses may be equitably apportioned among two or more buildings in the

Complex.

 

                                        4

 

<PAGE>

 

              (ii)   The term "Operating Expenses" shall not include any of the

following, except to the extent that such costs and expenses are specifically

included in Operating Expenses as described in Section 2.2(b)(i)above: capital

expenditures and depreciation of the Building; painting and decorating of tenant

space; interest and amortization of mortgages; ground rent; compensation paid to

officers or executives of Landlord; taxes as measured by the net income of

Landlord from the operation of the Building; insurance reimbursements of

Operating Expenses to Landlord; Real Estate Taxes; brokerage commissions; costs

of repairs, restoration, replacements or other work occasioned by fire,

windstorm or other insured casualty (whether such destruction be total or

partial) to the extent of insurance proceeds therefor; the cost of repairs,

etc., occasioned by the exercise by governmental authorities of the right of

eminent domain, whether such taking be total or partial, to the extent of any

condemnation awards; costs occasioned by intentional tort of Landlord, or any

subsidiary or affiliate of Landlord, or any employee or agent of same or the act

of any other tenant in the Building, or any other tenant's agents, employees,

licensees or invitees, to the extent Landlord recovers the applicable cost from

such person; leasing commissions, attorneys' fees (except for those reasonable

attorneys'fees directly related to Operating Expenses or Real Estate Taxes);

expenses incurred in connection with negotiations for leases with tenants, other

occupants, or prospective tenants or other occupants of the Building, or similar

costs incurred in connection with disputes with tenants, other occupants, or

prospective tenants, or similar costs and expenses incurred in connection with

negotiations or disputes with management agents, purchasers or mortgagees of the

Building; allowances, concessions and other costs and expenses incurred in

completing, fixturing, furnishing, renovating or otherwise improving, decorating

or redecorating space for tenants (including Tenant), prospective tenants or

other occupants and prospective occupants of the Building, or vacant, leasable

space in the Building; costs or expenses relating to another tenant's or

occupant's space which were incurred in rendering any service or benefit to

such tenant that was not available to Tenant; payments of principal and interest

or other finance charges made on any debt and rental payments made under any

ground or underlying lease or leases; costs incurred in connection with the

sale, financing, refinancing, mortgaging, selling or change of ownership of the

Building, including attorneys' and accountants' fees, closing costs, title

insurance premiums, transfer taxes and interest charges; costs, fines, interest,

penalties, legal fees or costs of litigation incurred due to the late payments

of taxes, utility bills and other costs incurred by Landlord's failure to make

such payments when due; costs incurred by Landlord for trustees fees,

partnership organizational expenses and accounting fees (except accounting fees

relating solely to the ownership and operation of the Building); Landlord's

general corporate overhead and general and administrative expenses; any

compensation paid to clerks, attendants or other persons in commercial

concessions operated by Landlord or in the parking garage of the Building;

rentals and other related expenses incurred in leasing air conditioning systems,

elevators or other equipment ordinarily considered to be of a capital nature

(except for equipment not affixed to the Building which is used in providing

janitorial or similar services); the rent for Landlord's on-site management or

leasing office, or any other offices or spaces of Landlord or any related

entity; Landlord's income and franchise taxes; special assessments and other

business taxes except those business taxes which relate solely to the operation

of the Building; all amounts which would otherwise be included in Operating

Expenses which are paid to any affiliate or subsidiaries of Landlord, or any

representative, employee or agent of same, to the extent the costs of such

services exceed fair market value; except the management fee paid to Landlord's

Agent, all other fees for management of the Building; costs or expenses of

utilities directly metered to tenants of the Building and payable separately by

such tenants; costs incurred (less costs of recovery) for any items to the

extent covered by a manufacturer's materialman's, vendor's or contractor's

warranty (a 'Warranty') which are paid by such manufacturer, materialman, vendor

or contractor; electric power costs for which any tenant directly contracts with

the local public service company; services provided and costs incurred in

connection with the operation of the parking garage or retail or the ancillary

operations owned, operated or subsidized by Landlord; rental for any space in

the Building set aside for conference facilities, storage facilities or exercise

facilities; hazardous material remediation costs exceeding $10,000 annually;

wages and salaries for off-site employees and employees at the Building above

the level of building manager; reserves for repairs, maintenance or

replacements; and marketing expenses.

 

          Grossed Up Real Estate Taxes and Operating Expenses

          ---------------------------------------------------

 

          Notwithstanding anything in this Lease to the contrary, Operating

Expenses for all fiscal years shall be "grossed-up" on the basis that the

Building is Ninety-Five Percent (95%) occupied and fully assessed.

 

     2.3   Additional Rent Estimates and Adjustments.

 

          (a) Initial Additional Rent Adjustments. Landlord shall submit to

Tenant prior to the date set forth in Section 1.5 a statement of Landlord's

reasonable estimate of the increases described in Sections 2.2(a) and (b) above,

together with the amount of Tenant's Additional Rent which is estimated to

result from such increases, in which event Tenant shall pay such estimated

Additional Rent to Landlord in equal monthly installments beginning on the date

set forth in Section 1.5, on the dates and in the manner required for the

payment of Tenant's monthly installments of Base Annual Rent.

 

          (b) Annual Budget. Subsequent to the Calendar Year in which Tenant's

obligation to pay each component of Additional Rent pursuant to Section 2.2

commences, Tenant shall thereafter pay each such component of Additional Rent in

twelve equal monthly installments based upon Landlord's estimates. In order to

provide for the current monthly payment of each component of Additional Rent

described herein, Landlord shall submit to Tenant, prior to January 1 of the

calendar year for which the estimate is being prepared, a statement of

Landlord's reasonable estimate of the increases described in Section 2.2 above,

together with the amount of Tenant's Additional Rent which is estimated to

result from such increases. Tenant agrees to pay each such estimated component

of Additional Rent to Landlord in twelve equal installments beginning on January

1, on the dates and in the manner required for the payment of Tenant's monthly

installments of Base Annual Rent.

 

          (c) Additional Rent Reconciliations. After the end of each Calendar

Year, and within one hundred eighty (180) days thereof, but without forfeiture

or waiver of Landlord's rights to Additional Rent if such deadline is not met,;

Landlord will submit to Tenant an audited financial statement of the actual

increases in Real Estate Taxes and Operating Expenses accruing during the Fiscal

Year which ended during such Calendar Year over the Real Estate Taxes and

Operating Expenses which accrued during the Base Year, respectively. Such

statement shall also indicate the amount of Tenant's excess payment or

underpayment of Additional Rent based on Landlord's estimate described in

Sections 2.3(a) and 2.3(b). If Additional Rent paid by Tenant during the

preceding Calendar Year shall be in excess of, or less than, the aggregate of

its share of the actual increase in Real Estate Taxes and Operating Expenses,

Landlord and Tenant agree to make the appropriate adjustment following the

submission of Landlord's statement. Tenant shall either pay any Additional Rent

due with the installment of Base Annual Rent due for the month following

submission of Landlord's statement, or pay any Additional Rent due within thirty

(30) days if the Lease Term has expired or has otherwise been terminated. Tenant

shall deduct its excess payment, if any, from the installment of Base Annual

Rent due for the month following submission of Landlord's statement, or

following the expiration or earlier termination of the Lease Term, Tenant shall

be reimbursed by Landlord without the need for notice or request for any excess

payments made, less any amounts then due Landlord under this Lease.

 

                                        5

 

<PAGE>

 

          (d) Verification of Additional Rent. Unless Tenant asserts errors

within one hundred eighty (180) days after Landlord has submitted the audited

financial statement for a Fiscal Year to Tenant, Tenant shall have no right to

contest the amount of Tenant's pro rata share of Real Estate Taxes and/or

Operating Expenses or the statement submitted by Landlord. No such assertion of

error by Tenant shall extend the time for payments as set forth in Sections 2.2

and 2.3 above. If Tenant has given a timely assertion of error and if it shall

be determined that there is an error in Landlord's statement, Tenant shall be

entitled to a credit for any overpayment, which shall be applied to any sums

then due Landlord under this Lease and then to the next installment(s) of

Additional Rent until fully credited for the overpayment, or refunded if Tenant

has vacated the Demised Premises, or Tenant shall be billed for any underpayment

and shall remit any amount owing to Landlord within thirty (30) days of Tenant's

receipt of such statement. In the event Tenant asserts in a timely fashion an

error in the statement of Operating Expenses submitted by Landlord, Tenant shall

have the right to examine, or have its accountant examine, at the office of

Landlord's accountant in the Washington metro area, the books and records

relating to the error asserted from which such statement has been prepared. No

such examination shall extend the time for payments due in accordance with this

Section 2.3, however. Tenant shall pay upon demand a reasonable sum to reimburse

Landlord for the costs of services of Landlord's accountant in cooperating and

assisting in the examination. If the error asserted amounts to more than five

percent (5%) in the Operating Expenses statement and Tenant is found to have

been correct, Landlord shall bear its and Tenant's reasonable accountants'

costs. Notwithstanding the foregoing, if another tenant finds a mistake in

Landlord's records, or if Landlord otherwise learns of a mistake therein, Tenant

shall be credited to the same extent that Landlord credits such tenant.

 

          (e) Fiscal Year. Landlord shall have the right to change its Fiscal

Year from time to time. If Landlord changes its Fiscal Year during the Lease

Term, thereby creating a Fiscal Year with fewer than twelve (12) months

(hereinafter "short year"), the Real Estate Taxes and Operating Expenses for the

short year shall be determined on an annualized basis by taking the monthly

average of the actual Real Estate Taxes and Operating Expenses, respectively,

and multiplying each by twelve. The amounts determined by this method shall be

used in determining the increases described in Sections 2.2(a) and 2.2(b) for

the short year.

 

     2.4   Rent Adjustment Limit. Notwithstanding any deductions from or

adjustments to Base Annual Rent and Additional Rent as provided for above, in no

event shall the total monthly installment of Base Annual Rent and Additional

Rent to be paid by Tenant in any month during the Lease Term or any extension

thereof be less than the monthly installment of Base Annual Rent stipulated in

Section 1.3, except as required as the result of the Landlord's application of a

credit due to Tenant pursuant to Section 2.3(c).

 

     2.5   Survival of Rent Obligation. The obligation of Tenant with respect to

payment of Base Annual Rent, as defined in Section 2.1, and Additional Rent as

defined in Sections 2.2 and 2.10, together with all other sums due hereunder,

accrued and unpaid during the Lease Term, shall survive the expiration or

earlier termination of this Lease.

 

     2.6   Pro Rata Share. Tenant's "pro rata share" stipulated in Sections

1.5(a) and 1.5(b) represent the ratio that the total rentable area of the

Demised Premises bears to the total rentable area of the Building. In the event

of any dispute as to the Tenant's "pro rata share", certification of the "pro

rata share" by Landlord's architect shall be binding on both Landlord and

Tenant. The total of pro rata shares of all tenants of the Building shall not

exceed 100%.

 

     2.7   Prorated Rent. Any Base Annual Rent or Additional Rent payable

pursuant to Sections 2.1 and 2.2 for one or more full calendar months in a

partial Fiscal Year at the beginning or end of the Lease Term shall be prorated

based upon the number of months in the Fiscal Year. Any Base Annual Rent or

Additional Rent payable pursuant to Sections 2.1 and 2.2 for a portion of a

calendar month shall be prorated based upon the number of days in the applicable

calendar month.

 

     2.8   Application of Rent. No payment by Tenant or receipt by Landlord of

lesser amounts of Base Annual Rent or Additional Rent than those required by

this Lease shall be deemed to be other than on account of the earliest unpaid

stipulated Base Annual Rent or Additional Rent. No endorsement or statement on

any check or any letter accompanying any check or payment as Base Annual Rent or

Additional Rent shall be deemed an accord and satisfaction, and Landlord may

accept such check or payment without prejudice to Landlord's right to recover

the balance of such Base Annual Rent and Additional Rent or pursue any other

remedy provided in this Lease. Any credit due to Tenant hereunder by reason of

overpayment of Base Annual Rent or Additional Rent shall first be applied to any

Base Annual Rent, Additional Rent or other sums owed to Landlord by Tenant as

set forth elsewhere in this Lease, if Tenant shall be in default, beyond the

applicable notice and cure periods, when said credit shall be owed.

 

     2.9   Late Payment Fee and Interest Charge. In the event any installment of

Base Annual Rent or Additional Rent due hereunder is not paid within ten (10)

calendar days after written notice from Landlord that it is due, then Tenant

shall also pay to Landlord as Additional Rent (a) a late payment fee equal to

five percent (5%) of the payment as liquidated damages for the additional

administrative costs incurred by Landlord as a result of such late payments,

plus (b) an interest charge calculated at the rate of twelve percent (12%) per

annum on the delinquent payment from the date due until paid.

 

     2.10 Other Tenant Costs and Expenses. All costs and expenses which Tenant

assumes or agrees to pay to Landlord pursuant to this Lease, including without

limitation costs of construction and alterations, shall be deemed Additional

Rent, whether or not the same is specifically designated herein as Additional

Rent, and, in the event of nonpayment thereof, Landlord shall have all the

rights and remedies herein provided for the nonpayment of Base Annual Rent and

Additional Rent payable pursuant to Sections 2.1 and 2.2, including assessment

of late payment fees and interest charges.

 

3.    CONSTRUCTION OF PREMISES AND OCCUPANCY

 

     3.1   Tenant Plans, Construction and Rent Liability. The improvements to be

constructed by Landlord in the Demised Premises are hereinafter referred to as

the "Construction Improvements".

 

              (ii)   Landlord shall have the right to approve any architect

and/or engineer selected by Tenant, which approval shall not be unreasonably

withheld, and each of Tenant's architects and engineers shall be licensed in the

jurisdiction in which the Demised Premises are located and shall maintain (and

provide Landlord with evidence of the existence of) professional liability

insurance adequate in Landlord's reasonable judgment.

 

                                        6

 

<PAGE>

 

              (iii) Tenant's preliminary plan shall be certified by the

architect or engineer preparing same to be in compliance with applicable

building and fire codes, and with The Americans with Disabilities Act and all

amendments, modifications, extensions, replacements, regulations, orders and

directives in connection therewith (the "ADA"). If the Demised Premises as

reflected on Tenant's plans are not in compliance with applicable building and

fire codes, or do not comply with all requirements of the ADA, then Tenant's

plans shall not be, nor shall they be deemed to be, acceptable to Landlord.

Landlord's approval of Tenant's plans or work does not constitute certification

by Landlord that said plans or work meet the applicable requirements of any

building or fire codes, laws or regulations, or the ADA, nor shall it impose any

liability whatsoever upon Landlord.

 

          (b) Extension of Construction Timetable. Nothing contained in this

Section 3.1, nor any delay in completing the Demised Premises, shall in any

manner affect the Commencement Date set forth in Section 1.2 or Tenant's

liability for payment of Base Annual Rent and Additional Rent from such

Commencement Date.

 

     3.2   Possession. If Landlord shall be unable to tender possession of the

Demised Premises on the Commencement Date set forth in Section 1.2 by reason of:

(a) the fact that the Demised Premises are located in a building being

constructed and which has not been sufficiently completed to make the Demised

Premises ready for occupancy; (b) the holding over or retention of possession of

any tenant or occupant; (c) the Construction Improvements have not been

substantially completed due to delays by Landlord; or (d) for any other reason

beyond the control of Landlord, Landlord shall not be subject to any liability

for the failure to tender possession on said date. Under such circumstances the

Base Annual Rent and Additional Rent reserved and covenanted to be paid herein

shall not commence until possession of the Demised Premises is tendered to

Tenant. No such failure to tender possession on the Commencement Date set forth

in Section 1.2 shall in any other respect affect the validity of this Lease or

the obligations of Tenant hereunder, nor shall same be construed to extend the

termination date of this Lease set forth in Section 1.2. In the event the actual

Commencement Date does not occur within one (1) year of the date this Lease is

fully executed and delivered by Landlord and Tenant, then Landlord, without

further liability to Tenant, shall have the right to terminate this Lease upon

thirty (30) days prior written notice to Tenant.

 

     3.3   Permits. Tenant shall be responsible for obtaining at its sole cost

and expense any construction and occupancy permits for the Demised Premises.

Tenant shall be responsible for obtaining any other permits or licenses

necessary for its lawful occupancy of the Demised Premises. Tenant shall provide

Landlord with a copy of all such permits and licenses.

 

4.    SUBLETTING AND ASSIGNMENT

 

     4.1   Consent. Without the prior written consent of Landlord, not to be

unreasonably withheld or delayed in accordance with Section 4.5, Tenant will not

sublet the Demised Premises or any part thereof or transfer possession or

occupancy thereof to any person, firm or entity, or transfer or assign this

Lease, and no subletting or assignment hereof shall be effected by operation of

law or in any other manner, such as the transfer of all or substantially all of

Tenant's assets or voting control of Tenant's stock, partnership interest or

other equity, without such prior written consent of Landlord. If Tenant is a

partnership, then any sale, conveyance, or other transfer of in, any partnership

interest, or any dissolution of Tenant, or any act which will result in a future

change in control, or a withdrawal or change, whether voluntary, involuntary or

by operation of law, of a partner or partners owning a controlling interest in

Tenant, shall be deemed a voluntary assignment of this Lease. All permitted

sublettings and assignments of the Demised Premises and this Lease shall be

subject to the provisions of this Lease, including but not limited to Section

4.3. No assignment shall be made except for the entire Demised Premises. Any

subletting or assignment consented to by Landlord, to be effective, shall be

evidenced in writing in a form acceptable to Landlord. Consent by Landlord to

any assignment or subletting by Tenant shall not operate as a waiver of the

necessity for obtaining Landlord's consent in writing to any subsequent

assignment or subletting. The collection or acceptance of rent from any such

assignee, subtenant or other occupant shall not constitute a waiver of or

release of Tenant from any covenant or obligation contained in this Lease, nor

shall such acceptance of rent be deemed to create any right to the Demised

Premises in such assignee, subtenant or other occupant, nor any legal or other

relationship between the Landlord and any such assignee, subtenant or other

occupant. Landlord's acceptance of any name for listing on the Building

directory shall not be deemed, nor will it substitute for, Landlord's consent as

required by this Lease, to each sublease, assignment and any other occupancy of

the Demised Premises. In the event that Tenant defaults, beyond the applicable

notice and cure periods, under this Lease in the payment of Base Annual Rent or

Additional Rent, Tenant hereby assigns to Landlord the rent and other sums due

from any subtenant, assignee or other occupant and hereby authorizes each such

subtenant, assignee and other occupant to pay said rent and other sums directly

to Landlord upon demand. Any transfer of this Lease or the Demised Premises, or

any transfer of any interest in Tenant restricted pursuant to this Section 4.1,

without the prior written consent of Landlord pursuant to this Section 4.1 shall

be void. By taking a transfer of this Lease by assignment, transfer of interest

in Tenant, or by any other manner described in this Section 4.1, or otherwise

with Landlord's consent to the transfer, the transferee shall be bound by all

provisions of this Lease, which shall be binding upon the transferee as if the

transferee had signed this Lease in lieu of the original Tenant named herein.

Provided Tenant is not then in default, beyond the applicable notice and cure

period, of any of the terms or conditions of this Lease, then notwithstanding

anything to the contrary in the first sentence of Section 4.1. Tenant shall not

be required to obtain Landlord's consent to assign this Lease or sublet all or

any part of the Demised Premises to any parent, successor or acquiring entity,

subsidiary or affiliated company, Tenant's customers, subcontractors or partners

but Tenant immediately shall furnish Landlord with written notice and a

fully-executed copy of any such sublease agreement, together with a floor plan

of the sublet area. Any such subletting or assignment shall be subject to the

remaining provisions of Sections 4.1, 4.4, 4.6 and 4.7.

 

                                        7

 

<PAGE>

 

     4.2   Recapture of Premises. In the event Tenant desires to sublet the

Demised Premises or assign this Lease or effect the transfer of any interest in

this Lease or in Tenant restricted pursuant to Section 4.1, Tenant shall give to

Landlord written notice of Tenant's intended subtenant, assignee or transferee

in order to secure Landlord's written consent in accordance with Section 4.1.

Within thirty (30) days of receipt of said notice, Landlord shall have the

right, at its option: (i) to terminate this Lease as of the proposed

Commencement Date of the sublease or assignment by giving Tenant not less than

sixty (60) days notice if Tenant's notice states the Tenant's desire to sublet

more than eighty percent (80%) of the Demised Premises; or (ii) if Tenant's

notice states the Tenant's desire to sublet less than eighty percent (80%) of

the Demised Premises, to terminate this Lease and simultaneously to enter into a

new lease with Tenant for that portion of the Demised Premises Tenant may desire

to retain upon the same terms, covenants and conditions as then set forth in

this Lease, prorated based upon the space retained by Tenant. Tenant shall

promptly execute such lease amendments and other documents as Landlord may

require to effectuate the terms and intent of this Section 4.2.

 

     4.3   Subletting. Provided Tenant first obtains the written consent of the

Landlord to such sublease or assignment as required by Section 4 and further

provided that Tenant is not in default, beyond the applicable notice and cure

periods, of any of the terms or conditions of this Lease on the date each rent

payment is due pursuant to such sublease or assignment, then only Fifty Percent

(50%) of any rent and other consideration accruing to Tenant as a result of each

such sublease or assignment which is in excess of the pro rated portion of Base

Annual Rent and Additional Rent then being paid by Tenant for the Demised

Premises or portion thereof being sublet pursuant to said sublease or assignment

shall be paid by Tenant to Landlord monthly as Additional Rent; otherwise 100%

thereof shall be due Landlord. Tenant shall be permitted to first deduct the

reasonable advertising costs, reasonable legal fees, reasonable brokerage

commissions and reasonable remodeling costs in calculating Landlord's share of

the net excess rent and other consideration to be paid to Landlord pursuant to

this Section. Tenant shall provide documentation of such expenses to Landlord at

the time Tenant requests Landlord's giving consent to the subletting or

assignment.

 

     4.4   Tenant Liability. In the event of any subletting of the Demised

Premises or assignment of this Lease by Tenant or transfer of an interest in

this Lease or in Tenant, Tenant shall remain liable to Landlord for payment of

the Base Annual Rent and Additional Rent stipulated herein and all other

covenants and conditions contained herein. No subletting of the Demised Premises

or assignment of this Lease or transfer of an interest in this Lease or in

Tenant shall operate to release, discharge or otherwise affect the liability of

any guarantors, co-signers or other parties liable to Landlord pursuant to the

terms of any guaranty or otherwise for the obligations of Tenant under this

Lease.

 

     4.5   Reasonable Standards of Consent. Tenant acknowledges that Landlord, in

considering whether to grant or withhold consent required of Landlord pursuant

to this Section 4, shall be entitled to apply any or all of the following

criteria:

 

          (a) The financial strength of proposed subtenant/assignee/ transferee

must be acceptable to Landlord in Landlord's reasonable discretion based on

adequate current and historical financial information given by Tenant Failure to

provide such financial information, shall be grounds for Landlord to withhold or

deny consent;

 

          (b) The proposed subtenant/assignee/transferee must have a good

reputation in the business community and must be credit-worthy;

 

          (c) Use of the Demised Premises by the proposed subtenant/assignee/

transferee must be permitted by this Lease;

 

          (d) Use of the Demised Premises by the proposed subtenant/assignee/

transferee shall not violate or create any potential violation of any laws and

must be in keeping with the character of the Building and the Complex;

 

          (e) Use of the Demised Premises by the proposed subtenant/assignee/

transferee shall not violate, or cause Landlord to violate, any other leases,

agreements or mortgages affecting (i) the Demised Premises, the Building, the

Complex or the land related to such improvements, or (ii) the Landlord,

Landlord's Agent or other tenants, whether such leases, agreements or mortgages

were entered into prior or subsequent to this Lease;

 

          (f) The proposed use shall be compatible with all other uses within

the Building or Complex and the proposed use or user shall not cause a

diminution in the reputation of the Building, the Complex, Landlord, Landlord's

Agent or other tenants;

 

          (g) The proposed subtenant/assignee/transferee shall have no right to

further sublet the subleased premises, nor to further assign this Lease, nor to

further transfer any interest in such proposed subtenant/assignee/transferee;

except as provided herein.

 

          (h) In the event Tenant is in default, beyond any applicable cure

period consent may be withheld irrespective of whether these other criteria are

met by the proposed subtenant/assignee/transferee.

 

     4.6   Other Transfers. Notwithstanding anything herein to the contrary,

Tenant shall not pledge, assign, transfer, encumber or otherwise convey its

interest in the Demised Premises (excluding Tenant's personal property)

conditionally or as security for any obligations of Tenant to any third party,

or otherwise. Any such transfer in violation of this provision shall be void.

 

     4.7   Rights on Default. In the event Tenant defaults under this Lease

beyond any applicable cure period, in addition to the rights and remedies of

Landlord outlined in Section 12, Landlord, at its option, may elect to recognize

any sublease between Tenant and any subtenant, or any agreement by which Tenant

has granted any leasehold estate or interest in the Demised Premises, as a

direct lease or agreement between Landlord and such subtenant or other grantee,

upon written notice to Tenant and such subtenant or other grantee, without

releasing or affecting the liability of Tenant to Landlord under this Lease, and

Tenant shall be deemed to have assigned its interest in such sublease or other

agreement to Landlord (without the need for executing any further documentation

evidencing same) and such subtenant or other grantee shall attorn to and

recognize the rights of Landlord under such sublease or other agreement, as the

case may be. Notwithstanding Tenant's consent or acquiescence in the termination

of this Lease and/or Tenant's voluntary surrender of the Demised Premises (or

any portion thereof), Landlord may consider any sublease or other agreement

transferring a leasehold estate or interest in the Demised Premises, and/or any

right to use or possess the Demised Premises (or any portion thereof) by any

subtenant or other grantee, terminated as of the date Landlord terminates this

Lease and/or Tenant's right to possession of the Demised Premises, it being the

intention of the parties that any leasehold estate or other interest in the

Demised Premises shall be subject to the terms and conditions of this Lease,

including all rights and remedies of Landlord outlined herein, notwithstanding

anything to the contrary contained in such sublease or other agreement.

 

                                        8

 

<PAGE>

 

5.    SERVICES AND UTILITIES

 

     5.1   Building Standard Services and Utilities. Subject to the limitations

set forth in Section 5.3 below, Landlord shall furnish sufficient electric

current for lighting and office equipment such as typewriters, calculators,

small copiers, desktop personal computers and word processors and similar items.

Landlord shall also furnish water for lavatory and drinking purposes, lavatory

supplies, fluorescent tube replacements, automatically operated elevator service

and nightly cleaning service in accordance with prevailing practices of

first-class office buildings in the Washington, D.C. area (as set forth in

Exhibit D attached hereto), as they may be modified from time to time, except

that Landlord shall not be responsible for cleaning Tenant's kitchens (except

for routine mopping and dusting), private bathrooms, rugs, carpeting (except

vacuuming) and drapes. Landlord shall have no liability for and expressly

disclaims any responsibility for the engineering, design, installation,

provision of or maintenance of Tenant's telecommunications and data transmission

systems and the inside wire associated therewith. Landlord further agrees to

furnish heating and cooling during the appropriate seasons of the year, between

the hours and on the days set forth in Section 1.7 (exclusive of legal public

holidays as defined in section 6103(a) and (c) of Title 5 of the United States

Code, as it may hereafter be amended; for purposes hereof, the following are the

legal public holidays for the Building: New Year's Day, Martin Luther King, Jr.,

Day, Inauguration Day, Presidents' Day, Memorial Day, Independence Day, Labor

Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day). All of

the aforesaid services shall be provided without cost to Tenant except as such

expenses may be included in calculating Additional Rent pursuant to the

provisions of Sections 2.2 and 2.3. Landlord shall not be liable for failure to

furnish, or for suspension or delay in furnishing, any of such services if such

failure, suspension or delay is caused by breakdown, maintenance or repair work,

strike, riot, civil commotion, governmental regulations, emergency periods due

to weather or any other cause or reason whatever beyond the reasonable control

of Landlord. Failure, suspension, delay or interruption of services shall not

result in any abatement of Base Annual Rent or Additional Rent, be deemed an

eviction or breach of this Lease (including any express or implied covenant of

quiet enjoyment), or relieve Tenant of performance of Tenant's obligations under

this Lease unless the Demised Premises are rendered untenantable by such

failure, suspension, delay or interruption of services for five (5) consecutive

business days due to Landlord's negligence or willful misconduct, in which

event Tenant may abate paying Base Annual Rent from said fifth (5th) day until

such service is restored.

 

     5.2   Overtime Services. Should Tenant require heating and cooling services

beyond the hours and/or days stipulated in Section 1.7, upon receipt of at least

24 hours prior written notice from Tenant, Landlord will furnish such additional

service at the then-prevailing hourly rates for both utility services and

personnel as established by Landlord from time to time; provided, further, that

there will be a minimum charge of four (4) hours each time overtime services are

required.

 

          For purposes of Section 5.2. the prevailing hourly cost of overtime

heating and cooling services as of the date of execution of this Lease is as

follows:

 

           $79.60 per hour for one (1) floor/Monday - Saturday

          $96.19 per hour for one (1) floor/Sundays & holidays

 

     5.3   Excessive Usage.

 

          (a) Equipment Restrictions. Tenant will not install or operate in the

Demised Premises any heavy duty electrical equipment or machinery or any other

equipment which consumes excess gas (where applicable), excess water, excess

sewer services or excess electricity as defined in Section 5.3(b) below, without

first obtaining prior written consent of Landlord. Landlord may, among other

things, require as a condition to its consent for the installation of such

equipment or machinery that Tenant pay as Additional Rent the costs for excess

consumption of such utilities that may be occasioned by the operation of said

equipment or machinery. Landlord may make periodic inspections of the Demised

Premises at reasonable times to determine that Tenant's equipment and machinery

comply with the provisions of this Section and Section 5.4.

 

          (b) Excess Electrical Usage. The consumption of electricity,

including lighting, in excess of five (5) watts per square foot for the entire

Demised Premises shall be deemed excessive. Additionally, any individual piece

of electrically operated machinery or equipment having a name plate rating in

excess of two (2) kilowatts shall also be deemed as requiring excess electric

current.

 

          (c) Additional Utility Costs. Landlord shall have the right to either

require that one or more separate meters be installed to record the consumption

or use of electricity or other utilities, or cause a reputable independent

engineer to survey and determine the quantity of such utilities consumed by such

excessive use. The cost of any such survey and meters and of installation,

maintenance and repair thereof shall be paid for by Tenant. Tenant agrees to pay

Landlord (or the utility company, if direct service is provided by the utility

company), promptly upon demand therefor, for all such consumption and demand as

shown by said meters, or a flat monthly charge determined by the survey, as

applicable, at the rates charged for such service by the local public utility

company. If Tenant's cost of such utilities based on meter readings is to be

paid to Landlord, Tenant shall pay a service charge related thereto in an amount

Landlord shall reasonably determine.

 

     5.4   Excessive Heat Generation. Landlord shall not be liable for its

failure to maintain comfortable atmospheric conditions in all or any portion of

the Demised Premises due to heat generated by over-occupancy of the Demised

Premises or by any equipment, machinery or additional lighting installed by

Tenant (with or without Landlord's consent) that exceeds design capability for

the Building. If Tenant does not desire such auxiliary cooling equipment,

Tenant shall pay for excess electrical consumption by the existing cooling

system.

 

                                        9

 

<PAGE>

 

     5.5   Building Security. Any security system or other security measures

(collectively, the "Security System") that Landlord may undertake for

protection of the Demised Premises, the Building and/or Complex (including any

parking garages or areas) are for the protection of the physical structures

only and shall not be relied upon by Tenant, its agents, employees or invitees

to protect Tenant, Tenant's Property and Leasehold Improvements or Tenant's

employees, invitees or their property. Tenant shall not do anything to

circumvent or allow others to circumvent any Security System. Landlord shall not

be liable for any failure of any Security System to operate or for any breach or

circumvention of the Security System by others, and Landlord makes no

representations or warranties concerning the installation, performance and

monitoring of any Security System, or that it will detect or avert the

occurrences which any such Security System is intended or expected to detect or

avert. Landlord shall provide a key or access card security system for the

Building.

 

     5.6   Roof and Auxiliary Spaces. Tenant shall not use the roof, roof utility

closets or other auxiliary spaces in the Building for antennas, condenser

coolers, telecommunications and/or data transmission equipment or any other type

of equipment or for any other purpose without the prior written consent of

Landlord, which consent may be conditioned upon the terms of a separate written

agreement and the payment by Tenant of separate consideration for the use of

such space.

 

     5.7   Trash Removal. Tenant covenants and agrees, at its sole cost and

expense, to comply with all present and future laws, orders and regulations of

the federal, state, county, municipal and local governments, departments,

commissions, agencies and boards regarding the collection, sorting, separation

and recycling of trash. Upon request by Landlord, Tenant shall sort and separate

its trash into such categories as are provided by law. Each separately sorted

category of trash shall be placed in separate receptacles as directed by

Landlord. Landlord reserves the right to refuse to collect or accept from Tenant

any trash that is not separated and sorted as required by law and directed by

Landlord, and to require Tenant to arrange for such collection at Tenant's sole

cost and expense, utilizing a contractor satisfactory to Landlord. Tenant shall

pay all costs, expenses, fines, penalties and damages that may be imposed on

Landlord or Tenant by reason of Tenant's failure to comply with the provisions

of this Section, and Tenant, at Tenant's sole cost and expense, shall indemnify,

defend and hold Landlord harmless from and against any actions, claims and suits

(including legal fees and expenses) arising from such non compliance, utilizing

counsel reasonably satisfactory to Landlord.

 

6.    USE AND UPKEEP OF PREMISES

 

     6.1   Use. Tenant shall use and occupy the Demised Premises only for the

purposes specified in Section 1.8 and for no other purpose whatsoever, and shall

comply, and cause its employees, agents, contractors, invitees and other users

of the Demised Premises to comply, with all applicable federal, state and local

laws, statutes, ordinances and regulations, including, but not limited to, the

ADA, zoning regulations, and smoking regulations. Any variation or deviation

from the specific use expressly set forth in Section 1.8 shall be deemed a

default of this Lease. Tenant shall pay before delinquency any business, rent

and other tax and fee that is now or hereafter assessed or imposed upon Tenant's

use or occupancy of the Demised Premises, the conduct of Tenant's business in

the Demised Premises or Tenant's Property. If any such tax or fee is enacted or

altered so that such tax or fee is imposed upon Landlord so that Landlord is

responsible for collection or payment thereof, then Tenant shall promptly pay

the amount of such tax or fee directly to the taxing authority, or if previously

paid by Landlord, to Landlord upon demand.

 

     6.2   Illegal and Prohibited Uses. Tenant will not use or permit the Demised

Premises or any part thereof to be used for any disorderly, unlawful or extra

hazardous purpose and will not manufacture anything therein. Tenant will not use

or permit the Demised Premises to be used for any purposes that unreasonably

interfere with the use and enjoyment by other tenants of the Building or Complex

or, in Landlord's opinion, impair the reputation or character of the Building,

Complex, Landlord or Landlord's Agent. Tenant shall immediately refrain from and

discontinue such use after receipt of written notice from Landlord.

 

     6.3   Insurance Rating. Tenant will not do or permit anything to be done in

the Demised Premises, the Building or the Complex or bring or keep anything

therein which shall in any way increase the rate of fire or other insurance on

said Building or the Complex, or on the property kept therein, or conflict (or

permit any condition to exist which would conflict) with applicable fire laws or

regulations, or with any insurance policy upon said Building or Complex or any

part thereof, or with any statute, rules or regulations enacted or established

by any appropriate governmental authority. Tenant shall be responsible for any

increase in insurance costs with respect to the Building or Complex if the

increases were caused by its actions or failure to act.

 

     6.4   Alterations.

 

          (a) Approval Required. Except for cosmetic changes and decorations,

Tenant shall not make any alterations, installations, changes, replacements,

repairs, additions or improvements in or to (or which interfere with) the

structural elements of the Building or the Demised Premises, or the Systems

(hereinafter defined), without the prior written consent of Landlord, which

consent may be granted or withheld in Landlord's sole and absolute discretion.

Tenant shall not make any non-structural, non-System alterations, changes,

replacements, repairs, additions or improvements in or to the Demised Premises

or any part thereof, without the prior written consent of Landlord, which

consent shall not be unreasonably withheld. All Tenant plans and specifications

shall be submitted to Landlord for prior approval. All Tenant engineering plans

and specifications shall be prepared at Tenant's expense by an engineer

reasonably approved by Landlord. Landlord may, among other things, condition its

consent upon Tenant's agreement that any construction up-gradings required by

any governmental authority as a result of Tenant's work, either in the Demised

Premises or in any other part of the Building or Complex will be paid for by

Tenant in advance. Tenant shall not install any equipment of any kind or nature

whatsoever which will or may necessitate any changes, replacements or

additions to the water system, plumbing system, heating system, ventilating

system, air-conditioning system, supply, return or control systems, Landlord's

data system(s), or the electrical system of the Demised Premises or the

Building (collectively, the "Systems"), nor install or use any air-conditioning

unit, engine, boiler, generator, machinery, heating unit, stove,

 

                                       10

 

<PAGE>

 

water cooler, ventilator, radiator or any other similar apparatus, nor modify or

interfere with any of the Systems, without the prior written consent of the

Landlord, which consent may be granted or withheld in the Landlord's sole and

absolute discretion. Any auxiliary air-conditioning equipment which Tenant may

desire to install in the Demised Premises shall be connected to the Building's

commercial condenser water system, if available, and Tenant shall pay to

Landlord such reasonable charges as established by Landlord from time to time

for the use of the Building's commercial condenser water system. Tenant shall

not modify or interfere with the Systems without the prior written consent of

Landlord, and then only as Landlord may direct. Landlord may condition its

consent upon Tenant's payment of all costs to make such changes, replacements or

modifications. Tenant shall not design, configure, install, use or arrange for

the design, configuration, installation or use of its telecommunications and

data transmission systems or inside wire associated therewith in any manner that

interferes with the existing telecommunications and/or data transmission systems

or inside wire associated therewith of Landlord or other tenants in the

Building. Landlord's consent to any work by Tenant or approval of Tenant's plans

or specifications shall not be deemed a certification that such work complies

with applicable building codes, laws or regulations, nor shall it impose any

liability whatsoever upon Landlord.

 

          (b) Alteration Requirements. All of Tenant's approved work shall be

done in accordance with Landlord's Supplemental Rules and Regulations for

Contractors (as promulgated and amended by Landlord from time to time) and shall

be done by duly qualified, licensed and bonded contractors in accordance with

all applicable laws, codes, ordinances, rules and regulations, and Tenant shall

obtain (or give) at its cost any required permits, licenses, registrations,

notices, or inspections for performance of its work. Notwithstanding the

aforesaid, if any mechanic's or materialman's lien shall at any time, whether

before, during or after the Lease Term, be filed against any part of the

Building or other property of Landlord by reason of work, labor, services or

materials performed for or furnished to or on behalf of Tenant, Tenant shall

forthwith cause the lien to be released of record by being discharged or bonded

off to Landlord's satisfaction within ten (70) days after being notified of the

filing thereof. If Tenant shall fail to cause such lien to be released of record

within said ten (10) day period, then, in addition to any other right or remedy

of Landlord, Landlord may bond off or discharge the lien by paying the amount

claimed to be due. Any amount paid by Landlord, whether as bond premium or

payment of the lien amount, and all costs and expenses, including reasonable

attorneys' fees incurred by Landlord in procuring the same and its release from

the appropriate land records, shall be due from Tenant to Landlord as Additional

Rent, and shall be payable on the first day of the next following month, or if

the Lease Term has expired, upon demand.

 

          (c) Removal of Leasehold Improvements and Tenant's Property. All

Leasehold Improvements within the Demised Premises shall, subject to Landlord's

right to require Tenant to remove all or any portion of the Leasehold

Improvements and restore the Demised Premises to its condition as of the date

this Lease is fully executed and delivered by Landlord and Tenant, remain at the

expiration or earlier termination of the Lease Term without disturbance,

molestation or injury. Should Landlord elect that Leasehold Improvements be

removed upon the expiration or earlier termination of the Lease Term, then

Landlord shall notify Tenant in writing of such election when Landlord approves

Tenant's Improvements. Should Tenant fail to remove all or any portion of

Tenant's Property in accordance with the provisions of this Lease, Tenant hereby

agrees that Landlord shall have the right to cause all or any portion of the

Leasehold Improvements and/or Tenant's Property to be removed at Tenant's sole

cost and expense. Tenant hereby agrees to reimburse Landlord for the cost of

such removal together with the reasonable cost of repairing any damage resulting

therefrom, and the cost of restoring the Demised Premises to its condition as of

the date this Lease is fully executed and delivered by Landlord and Tenant.

Approximately sixty (60) days prior to Tenant's scheduled vacation of the

Demised Premises, Landlord and Tenant shall meet to review any items that shall

be removed and what items shall remain as required here under. Landlord shall

provide its estimate to Tenant of the costs of such removal and the costs of any

repairs to or restoration of the Demised Premises as herein provided. In the

event Tenant fails to remove the Leasehold Improvements designated by Landlord

for removal prior to the expiration of the Lease Term and/or fails to remove

Tenant's Property as aforesaid and/or fails to make such repairs and/or

restoration as aforesaid, Landlord shall cause the removal, repair and/or

restoration to be performed at Tenant's sole expense, which expense shall not be

limited by the amount of the estimate referred to herein. Tenant shall provide

for the transfer or disposal of all items removed, failing which Landlord is

hereby authorized to dispose of same in any manner deemed appropriate,

including, but not limited to, disposal into the trash, without liability to

Tenant, and at Tenant's sole cost and expense, and Tenant shall indemnify,

defend and hold harmless Landlord, Landlord's Agent and their respective

employees and agents from and against all claims, damages, costs and expenses,

including reasonable attorneys' fees, arising from or in connection with the

disposal of all or any items removed by Landlord hereunder.

 

          (d) Compliance with Laws. In the event that during the Lease Term

either Landlord or Tenant shall be required by the order or decree of any court,

or any other governmental authority, or by law, code or ordinance (including but

not limited to the ADA), to repair, alter remove, reconstruct, or improve any

part of the Demised Premises or of the Building, then Tenant agrees, at its sole

cost and expense, to comply with such requirements imposed on Demised Premises

or Tenant and shall perform, at its expense, or Tenant shall permit Landlord to

perform, at Tenant's expense, such repairs, alterations, removals,

reconstructions, or improvements. Notwithstanding the foregoing, any required

work, which is generally applicable to landlords similarly situated shall be

Landlord's responsibility. Within ten (10) days after receipt, Tenant shall

advise Landlord in writing, and provide the Landlord with copies of (as

applicable), (i) any notices alleging violation of any law, code or ordinance

(including the ADA) relating to any portion of the Demised Premises or the

Building, (ii) any claims made or threatened in writing regarding noncompliance

with any law, code or ordinance and relating to any portion of the Building or

of the Demised Premises, or (iii) any governmental or regulatory actions or

investigations instituted or threatened regarding noncompliance with any law,

code or ordinance and relating to any portion of the Building or the Demised

Premises. No such order or decree or the compliance required therewith shall

have any effect whatsoever on the obligations or covenants of Tenant herein

contained. Tenant hereby waives all claims for damages or abatement of Base

Annual Rent and Additional Rent because of such repairing, alteration, removal,

reconstruction, or improvement. Notwithstanding anything in Section 6.4(d) to

the contrary, Landlord will comply with all final orders of any government

agency to conform the common areas of the Building with the requirements of The

Americans with Disabilities Act (ADA). Tenant shall be responsible at its

expense for compliance of the Demised Premises with the ADA.

 

                                       11

 

<PAGE>

 

     6.5   Maintenance by Landlord.

 

          (a) Landlord Repairs and Maintenance. Except to the extent that Tenant

is required to maintain and repair pursuant to Sections 5.4, 6.4, 6.7, 6.8,

6.10, 6.11, 9 and 21, Landlord shall maintain and repair, in a first-class

manner consistent with similar buildings in Northern Virginia, all public or

common areas located within the Building, including external landscaping,

walkways and parking areas, and, except to the above extent, Landlord shall make

repairs to structural roofs, walls, standard heating, air conditioning, plumbing

and electrical systems and equipment. Except as otherwise expressly provided in

this Lease, such maintenance shall be provided without cost to Tenant, except

that (i) such expenses may be included in calculating the Additional Rent

pursuant to the provisions of Sections 2.2 and 2.3; and (ii) if such expenses

are incurred by Landlord in making repairs attributable to acts or omissions of

Tenant or Tenant's employees, agents, contractors or invitees, then Tenant shall

reimburse Landlord for all such expenses within ten (10) days after Landlord

submits a bill for such costs to Tenant. Tenant hereby waives all claims for

damages or abatement of Base Annual Rent and Additional Rent because of such

repairing, alteration, removal, reconstruction, or improvement.

 

          (b) Use of Demised Premises by Landlord. Landlord reserves the right

to erect, use, maintain, repair and replace all pipes, ducts, conduits, wiring,

fluids, gases, components, and similar materials and structures in and through

the Demised Premises, including any changes, additions or replacements as

Landlord may from time to time make thereto. Landlord may install any and all

materials, equipment, pipes, ducts, conduits, wires, and related fluids, gases,

components and mechanical equipment serving other portions, tenants and

occupants of the Building, in, through, under or above the Demised Premises that

Landlord deems desirable and shall have the right to locate, both vertically and

horizontally, utility lines, wiring, air ducts, flues, duct shafts, drains,

sprinkler mains and valves, and such other facilities within the Demised

Premises as may be deemed necessary by engineering design and/or code and/or

other legal requirements and to repair, alter, replace or remove these items.

These shall be located so as to cause minimum interference with Tenant's use of

the Demised Premises and shall, if possible, be located above Tenant's suspended

ceiling, if any, or as close to the concrete slab as possible, below the floor,

along column lines or in storage areas. Landlord shall have the right to remove

or abate any hazardous materials located in the Demised Premises and Tenant

shall fully cooperate with Landlord in this regard. Landlord's right to locate

facilities within the Demised Premises shall include facilities required by

tenants or occupants in levels above or below the Demised Premises as well as on

the same level as the Demised Premises. None of the above conduct by Landlord

shall be deemed to constitute an interference with Tenant's quiet enjoyment or

an actual or constructive eviction of Tenant. Tenant shall be entitled to no

abatement of Base Annual Rent or Additional Rent whatsoever on account of such

installation, location, construction, use, entry, removal, repair, maintenance

or other conduct as aforesaid provided, however, if the Demised Premises are

rendered untenantable thereby for five (5) consecutive business days due to

Landlord's negligence or willful misconduct, then Tenant may abate paying Base

Annual Rent from said fifth (5th) day until the Demised Premises are again

tenantable.

 

     6.6   Signs and Publications. No sign, advertisement or notice shall be

inscribed, painted or affixed on any part of the outside of the Building, except

as otherwise provided hereinafter, or in the common areas of the Building, or

inside the Demised Premises where it may be visible from the public areas of the

Building, except on the directories and doors of offices, and then only in such

size, color, method of attachment and style as Landlord shall reasonably

approve. Landlord shall have the right to prohibit any signage or publication of

Tenant on the Demised Premises which in Landlord's opinion tends to impair the

reputation or character of the Building, Complex, Landlord or Landlord's Agent.

Tenant shall refrain from and discontinue such signage or publication upon

receipt of written notice from Landlord.

 

     6.7   Excessive Floor Load. Landlord shall have the right to prescribe the

weight and method of installation of safes, non-personal and non-network

computer equipment, and other heavy fixtures or equipment. Tenant will not

install in the Demised Premises any item of Tenant's Property or fixtures that

will place a load upon the floor exceeding the designed floor load capacity of

the floor and the Building. Landlord may prescribe the placement and positioning

of all such objects within the Demised Premises and/or Building, and, if

necessary, such objects shall be placed upon platforms, plates or footings of

such size as Landlord shall prescribe. All damage done to the Building or the

Demised Premises by installing or removing a safe or any other article of

Tenant's Property or fixtures, or due to


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