OFFICE LEASE

Exhibit 10.2

OFFICE LEASE

BETWEEN

FUND II AND FUND III ASSOCIATES

(“LANDLORD”)

AND

LOCKHEED MARTIN CORPORATION

(“TENANT”)

TABLE OF CONTENTS

 

EXHIBITS AND RIDERS :

 

 

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OFFICE LEASE

This Office Lease (this “ Lease ”) is entered into by and between FUND II AND FUND III ASSOCIATES, a Georgia joint venture (“ Landlord ”), and LOCKHEED MARTIN CORPORATION, a Maryland corporation (“ Tenant ”), and shall be effective as of the date set forth below Landlord’s signature (the “ Effective Date ”)

1. Basic Lease Information . The key business terms used in this Lease are defined as follows:

A. “ Building ”: The building located at 2100 Space Park Drive, Nassau Bay, Harris County, Texas 77058.

B. “ Rentable Square Footage of the Building ” is agreed and stipulated to be 115,878 square feet.

C. “ Premises ”: The area shown on Exhibit A-1 to this Lease. The Premises are located on floors 3 and 4 of the Building and known as suite number(s) 300 and 400. The “ Rentable Square Footage of the Premises ” is deemed to be 59,797 square feet. Within five (5) Business Days following the Commencement Date, Tenant may by written request to Landlord require that the Rentable Square Footage of the Premises be verified at Tenant’s sole cost by a space planner/designer reasonably acceptable to both Landlord and Tenant, utilizing BOMA Standard ANSI Z65.1-1996. If the Premises include, now or hereafter, one or more floors in their entirety, all corridors and restroom facilities located on such full floor(s) shall be considered part of the Premises. Landlord and Tenant stipulate and agree that the Rentable Square Footage of the Building hereinabove specified is correct and shall not be re-measured, and, unless the Rentable Square Footage of the Premises is re-measured as hereinabove provided, the Rentable Square Footage of the Premises set forth herein shall be deemed correct and shall not be remeasured. The single tenant full floor conversion factor used to calculate the Rentable Square Footage of the Premises is approximately 10.110%, and the multi-floor conversion factor for the Building is approximately 14.146%.

D. “ Base Rent ”:

 

* CD = Commencement Date                                                          ED = Expiration Date

Month = A full calendar month; for example, if the Commencement Date occurs on June 21, Month 1 will be July 1 through July 31, Month 2 will be August 1 through August 31, and so on; provided that if the Commencement Date is other than the first day of a calendar month, the Base Rent abatement hereinabove provided shall extend from the Commencement Date to the date that is the same calendar day three (3) months thereafter, and the Base Rent for the remainder of such month shall be prorated on a daily basis.

E. “ Tenant’s Pro Rata Share ”: The percentage equal to the Rentable Square Footage of the Premises divided by the Rentable Square Footage of the Building.

F. “ Base Year ” for Operating Expenses: 2008.

G. “ Term ”: The period of approximately 63 months starting on the Commencement Date, subject to the provisions of Article 3 .

H. “ Estimated Commencement Date ”: August 1, 2008, subject to adjustment, if any, as provided in Section 3.A and the Work Letter, if any.

I. “ Security Deposit ”: $0.00.

J. “ Guarantor(s) ”: None.

 

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K. “ Business Day(s) ”: Monday through Friday of each week, exclusive of New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, the day after Thanksgiving and Christmas Day (“ Holidays ”). Landlord may designate additional Holidays, provided that the additional Holidays are commonly recognized by other office buildings in the area where the Building is located.

L. “ Law(s) ”: All applicable statutes, codes, ordinances, orders, rules and regulations of any municipal or governmental entity, now or hereafter adopted, including the Americans with Disabilities Act and any other law pertaining to disabilities and architectural barriers (collectively, “ ADA ”), and all laws pertaining to the environment, including the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. § 9601 et seq. (“ CERCLA ”), and all restrictive covenants existing of record and all rules and requirements of any existing association or improvement district affecting the Property.

M. “ Normal Business Hours ”: 7:00 A.M. to 6:00 P.M. on Business Days and 7:00 A.M. to 12:00 P.M. on Saturdays, exclusive of Holidays.

N. “ Notice Addresses ”:

Tenant : On or after the Commencement Date, notices shall be sent to Tenant at the Premises. Prior to the Commencement Date, notices shall be sent to Tenant at the following address:

 

O. Rent (defined in Section 4.A ) is payable to the order of Fund II And Fund III Associates as follows:

if by check :

Fund II And Fund III Associates

Attn.: Property Accounting

Reference: Lockheed Martin Corporation

6200 The Corners Parkway

Norcross, Georgia 30092-3365

if by wire transfer :

Bank Name: Bank of America

Bank Address: Atlanta, GA

 

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ABA # 026009593 – Wires Only

Account Name: Fund II And Fund III Associates

Account # 108062994

Reference: Lockheed Martin Corporation

ABA for Checks & ACH Only: 061000052

P. “ Comparable Buildings ”: Comparable multi-tenant office buildings in the Clear Lake submarket of Houston, Texas, taking into account in such comparability age, size, location and other relevant operating factors.

Q. “ Other Defined Terms ”: In addition to the terms defined above, an index of the other defined terms used in the text of this Lease is set forth below, with a cross-reference to the paragraph in this Lease in which the definition of such term can be found:

 

2. Lease Grant . Landlord leases the Premises to Tenant and Tenant leases the Premises from Landlord, together with the right in common with others to use any portions of the Property (defined below) that are designated by Landlord for the common use of tenants and others, such as sidewalks, common corridors, vending areas, lobby areas and, with respect to multi-tenant floors, restrooms and elevator foyers (the “ Common Areas ”). “ Property ” means the Building and the parcel(s) of land on which it is located as more fully described on Exhibit A-2 , together with all other buildings and improvements located thereon; and the Building garage(s) and other improvements serving the Building, if any, and the parcel(s) of land on which they are located. Additionally, Landlord shall permit Tenant the non-exclusive use of riser space in the Building (as designated by Landlord) to install, operate, maintain, repair, and remove a portion of Tenant’s equipment (to be approved by Landlord in its sole discretion) consisting of cabling and conduit in vertical risers, above ceiling tiles, and/or in demising walls in the Building at locations designated by Landlord (“ Tenant’s Riser Space ”). Tenant’s Riser Space shall be available for use by Tenant and any third-parties entering the Building to service Tenant’s equipment and any associated cabling and conduit during the Term at no cost payable to Landlord by Tenant or by such third-parties, and Tenant shall be entitled to add or remove cable, conduit or wires to or from Tenant’s Riser Space from time to time as Tenant sees fit at Tenant’s cost for such work but at no cost payable to Landlord; provided, however, that all such third-parties are approved in advance by Landlord and execute in advance of entry Landlord’s standard form of riser access agreement. Further, Tenant shall require such approved third-parties to comply with the Building’s rules and regulations, all Laws, and Landlord’s reasonable policies and practices for the Building. Tenant shall use Tenant’s Riser Space to serve exclusively equipment located within the Premises. The conduit in Tenant’s Riser Space shall all be above grade. In no event will Tenant use Tenant’s Riser Space to connect with any other tenant of the Building outside the

 

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Premises or to resell any use of service provided by such cabling or conduit to any other tenant of the Building outside the Premises. Landlord shall not be obligated to bear or pay any cost or expense to maintain the cabling or conduits in Tenant’s Riser Space or any equipment in connection therewith.

3. Term; Adjustment of Commencement Date; Early Access.

A. Term . This Lease shall govern the relationship between Landlord and Tenant with respect to the Premises from the Effective Date through the last day of the Term specified in Section 1.G (the “ Expiration Date ”), unless terminated early in accordance with this Lease. The Term of this Lease (as specified in Section 1.G ) shall commence on the “ Commencement Date ”, which shall be the earliest of (1) the date on which the Landlord Allowance Work (defined below) is Substantially Complete, as determined pursuant to the Work Letter (defined below), or (2) the date on which the Landlord Allowance Work would have been Substantially Complete but for Tenant Delay, as such term is defined in the Work Letter, or (3) the date Tenant takes possession of any part of the Premises for purposes of conducting business. If Landlord is delayed in delivering possession of the Premises or any other space due to any reason, such delay shall not be a default by Landlord, render this Lease void or voidable, or otherwise render Landlord liable for damages. Promptly after the determination of the Commencement Date, the Expiration Date, the Rent schedule and any other variable matters, Landlord shall prepare and deliver to Tenant a commencement letter agreement substantially in the form attached as Exhibit C . If such commencement letter is not executed by Tenant within 30 days after delivery of same by Landlord, then Tenant shall be deemed to have agreed with the matters set forth therein. Notwithstanding any other provision of this Lease to the contrary, if the Expiration Date would otherwise occur on a date other than the last day of a calendar month, then the Term shall be automatically extended to include the last day of such calendar month, which shall become the Expiration Date. “ Landlord Allowance Work ” means the work that Landlord is obligated to perform in the Premises pursuant to the separate work letter agreement (the “ Work Letter ”) attached as Exhibit D . Notwithstanding the foregoing, if Landlord has not delivered the Premises with the applicable Landlord Initial Work and the Landlord Allowance Work Substantially Complete by November 1, 2008, subject to Tenant Delay and Force Majeure (as defined in Section 31.C ), then Tenant shall have the right, as its sole remedy, to terminate this Lease upon written notice to Landlord given at any time after November 1, 2008 and prior to delivery of the Premises in such Substantially Complete condition.

B. Acceptance of Premises . The Premises are accepted by Tenant in “as is” condition and configuration subject to (1) any Landlord obligation to perform Landlord Initial Work and Landlord Allowance Work pursuant to the Work Letter and/or Landlord’s maintenance and repair obligations as specified elsewhere in this Lease, and (2) any latent defects in the Premises of which Tenant notifies Landlord within one year after the Commencement Date [other than work performed by Tenant Parties (defined below)]. Landlord shall deliver the Premises to Tenant in compliance in all material respects with ADA as then in effect; if a non-compliance of the Premises with ADA exists as of the date of delivery to Tenant, Landlord shall, after receipt of written notice from Tenant setting forth with specificity the nature and extent of such non-compliance, rectify same at Landlord’s expense and not includible in Operating Expenses. T ENANT HEREBY AGREES THAT THE P REMISES ARE IN GOOD ORDER AND SATISFACTORY CONDITION AND THAT , EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS LEASE , THERE ARE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND , EXPRESS OR IMPLIED , BY L ANDLORD REGARDING THE P REMISES , THE B UILDING OR THE P ROPERTY .

C. Early Access . Prior to the date the Landlord Allowance Work is Substantially Complete, Tenant’s access to the Premises shall be permitted as expressly contemplated by the Work Letter and otherwise only with the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned. Early access to the Premises shall be subject to the terms and conditions of this Lease; however, such early access to the Premises shall be permitted by Landlord for the sole purpose of performing improvements or installing furniture, equipment or other personal property and Tenant shall not be required to pay Base Rent or Tenant’s Pro Rata Share of Excess Operating Expenses for any days of such early access.

 

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4. Rent .

A. Payments . As consideration for this Lease, commencing on the Commencement Date, Tenant shall pay Landlord, without any demand, setoff or deduction except as set forth herein, the total amount of Base Rent, Tenant’s Pro Rata Share of Excess Operating Expenses, and any and all other sums payable by Tenant under this Lease (all of which are sometimes collectively referred to as “ Rent ” ). Tenant shall pay and be liable for Tenant’s allocable portion of all rental, gross receipts, sales and use, or other taxes, if any, imposed upon or measured by rents, receipts or income attributable to ownership, use, occupancy, rental, leasing, operation or possession of the Property. The monthly Base Rent and Tenant’s Pro Rata Share of Excess Operating Expenses shall be due and payable in advance on the first day of each calendar month without notice or demand (except as specifically provided for in the Lease). Further, Tenant’s Pro Rata Share of Excess Operating Expenses shall be abated in the same manner as Base Rent pursuant to Section 1.D for the three-month period therein specified. All other items of Rent shall be due and payable by Tenant on or before 30 days after billing by Landlord. All payments of Rent shall be by good and sufficient check or by other means (such as automatic debit or electronic transfer) acceptable to Landlord. If the Term commences on a day other than the first day of a calendar month, the monthly Base Rent and Tenant’s Pro Rata Share of any Excess Operating Expenses for the month shall be prorated on a daily basis based on a 360 day calendar year, and such prorated amount shall be due and payable on the first day of the month following the Commencement Date. Landlord’s acceptance of less than the correct amount of Rent shall be considered a payment on account of the earliest Rent due, and such acceptance shall not constitute a waiver of the remaining unpaid balance. No endorsement or statement on a check or letter accompanying a check or payment shall be considered an accord and satisfaction, and either party may accept such check or payment without such acceptance being considered a waiver of any rights such party may have under this Lease or applicable Law. Tenant’s covenant to pay Rent is independent of every other covenant in this Lease.

B. Excess Operating Expenses . Tenant shall pay Tenant’s Pro Rata Share of the amount, if any, by which Operating Expenses (defined in Section 4.D ) for each calendar year during the Term exceed Operating Expenses for the Base Year (the “ Excess Operating Expenses ” ). Notwithstanding the foregoing, Tenant’s Pro Rata Share of Controllable Expenses (defined below) shall not increase by more than 5% over Tenant’s Pro Rata Share of Controllable Expenses in the previous calendar year, including the Base Year, on a simple, non-compounded basis. However, any increases in Excess Operating Expenses not recovered by Landlord due to the foregoing limitation shall be carried forward into succeeding calendar years during the Term (subject to the foregoing limitation) until fully recouped by Landlord. The term “ Controllable Expenses ” means all Operating Expenses excluding expenses relating to the cost of utilities, security expenses, insurance, real estate taxes and assessments, and other expenses not considered controllable under customary industry practices. If Operating Expenses in any calendar year decrease below the amount of Operating Expenses for the Base Year, Tenant’s Pro Rata Share of Operating Expenses for that calendar year shall be $0. In no event shall Base Rent be reduced if Operating Expenses for any calendar year are less than Operating Expenses for the Base Year. On or about January 1 of each calendar year, Landlord shall provide Tenant with a good faith estimate of the Excess Operating Expenses for such calendar year during the Term. On or before the first day of each month, Tenant shall pay to Landlord a monthly installment equal to one-twelfth of Tenant’s Pro Rata Share of Landlord’s estimate of the Excess Operating Expenses. If Landlord determines that its good faith estimate of the Excess Operating Expenses was incorrect, Landlord may provide Tenant with a revised estimate, but no more frequent than one additional revision per calendar year after the initial estimate. After its receipt of the revised estimate, Tenant’s monthly payments shall be based upon the revised estimate. If Landlord does not provide Tenant with an estimate of the Excess Operating Expenses by January 1 of a calendar year, Tenant shall continue to pay monthly installments based on the most recent estimate(s) until Landlord provides Tenant with the new estimate. Upon delivery of the new estimate, an adjustment shall be made for any month for which Tenant paid monthly installments based on the same year’s prior incorrect estimate(s). Tenant shall pay Landlord the amount of any underpayment within 30 days after receipt of the new estimate. Any overpayment shall be credited against the next sums due and owing by Tenant or, if no further Rent is due, refunded directly to Tenant within 30 days of determination. The obligation of Tenant to pay for Excess Operating Expenses as provided herein shall survive the expiration or earlier termination of this Lease.

 

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C. Reconciliation of Operating Expenses . Within 120 days after the end of each calendar year or as soon thereafter as is practicable, Landlord shall furnish Tenant with a statement of the actual Operating Expenses and Excess Operating Expenses for such calendar year. Such statement shall contain a detailed explanation of the method of calculation of the Margin Tax includible in Operating Expenses pursuant to Section 4.D(5) . If the most recent estimated Excess Operating Expenses paid by Tenant for such calendar year are more than the actual Excess Operating Expenses for such calendar year, Landlord shall apply any overpayment by Tenant against Rent due or next becoming due; provided, if the Term expires before the determination of the overpayment, Landlord shall, within 30 days of determination, refund any overpayment to Tenant after first deducting the amount of Rent due. If the most recent estimated Excess Operating Expenses paid by Tenant for the prior calendar year are less than the actual Excess Operating Expenses for such year, Tenant shall pay Landlord, within 30 days after its receipt of the statement of Operating Expenses, any underpayment for the prior calendar year.

D. Operating Expenses Defined . “ Operating Expenses ” means all costs and expenses incurred or accrued in each calendar year (calculated on the basis of generally accepted accounting principles consistently applied [ “ GAAP ” ], except for minor variances from GAAP as may be utilized from time to time in Comparable Buildings) in connection with the ownership, operation, maintenance, management, repair and protection of the Property which are directly attributable or reasonably allocable to the Building, including Landlord’s personal property used in connection with the Property and including all costs and expenditures relating to the following:

(1) Operation, maintenance, repair and replacements of any part of the Property, including the mechanical, electrical, plumbing, HVAC, vertical transportation, fire prevention and warning and access control systems; materials and supplies (such as building standard light bulbs and ballasts); equipment and tools; floor, wall and window coverings; personal property; required or beneficial easements; and related service agreements and rental expenses.

(2) Administrative costs and management fees, including accounting, information and professional services (except for negotiations and disputes with specific tenants not affecting other parties); management office(s); and wages, salaries, benefits, reimbursable expenses and taxes (or allocations thereof) for full and part time personnel involved in operation, maintenance and management, but not above the position of property manager.

(3) Janitorial service; window cleaning; waste disposal; gas, water and sewer and other utility charges (including add-ons); and landscaping, including all applicable tools and supplies.

(4) Property, liability and other insurance coverages carried by Landlord, including deductibles and risk retention programs and a proportionate allocation of the cost of blanket insurance policies maintained by Landlord and/or its Affiliates (defined below).

(5) Real estate taxes, assessments, excises, association dues, fees, levies, charges and other taxes of every kind and nature whatsoever, general and special, extraordinary and ordinary, foreseen and unforeseen, including interest on installment payments, which may be levied or assessed against or arise in connection with ownership, use, occupancy, rental, leasing, operation or possession of the Property, or paid as rent under any ground lease ( “ Tax Expenses ” ). Tax Expenses shall include, without limitation: (i) any tax on the rent or other revenue from the Property, or any portion thereof, or as against the business of owning or leasing the Property, or any portion thereof, including any business, gross margins, or similar tax payable by Landlord which is attributable to rent or other revenue derived from the Property, (ii) any assessment, tax, fee, levy, or charge allocable to or measured by the area of the Premises or the Rent payable hereunder, (iii) personal property taxes for property that is owned by Landlord and used in connection with the operation, maintenance and repair of the Property, (iv) any assessment, tax, fee, levy or charge, upon this transaction or any document to which Tenant is a party, creating or transferring an interest or an estate in the Premises, and (v) any assessment, tax, fee, levy or charge substituted, in whole or in part, for a tax previously in existence, or assessed in lieu of a tax increase. Tax Expenses shall not include Landlord’s estate, excise, income or franchise taxes (except to the extent provided above). With respect to any taxes due on Landlord’s taxable margin under Chapter 171 of the Texas Tax Code, including any successor statutory provision and any future tax or assessment in lieu or replacement thereof (the “ Margin

 

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Tax ” ), Landlord shall, for purposes of calculating the amount of the Margin Tax includible within Tax Expenses hereunder, take the then applicable Margin Tax rate and multiply the same times the gross revenues from the Building less the then applicable deductions allocable to the Building as reasonably determined by Landlord.

(6) Compliance with Laws, including license, permit and inspection fees (but not in duplication of capital expenditures amortized as provided in Section 4.D(9) ); and all expenses and fees, including attorneys’ fees and court or other venue of dispute resolution costs, incurred in negotiating or contesting real estate taxes or the validity and/or applicability of any governmental enactments which may affect Operating Expenses; provided Landlord shall credit against Operating Expenses any refunds received from such negotiations or contests to the extent originally included in Operating Expenses (less Landlord’s costs).

(7) Building safety services, to the extent provided or contracted for by Landlord.

(8) Goods and services purchased from Landlord’s subsidiaries and Affiliates to the extent the cost of same is generally consistent with rates charged by unaffiliated third parties for similar goods and services.

(9) Amortization of capital expenditures incurred: (a) to conform with Laws enacted, amended or interpreted differently after the Commencement Date; or (b) with the intention of promoting safety or reducing or controlling increases in Operating Expenses, such as lighting retrofit and installation of energy management systems, but only to the extent of verifiable savings arising therefrom. Such expenditures shall be amortized uniformly over the following periods of time (together with interest on the unamortized balance at the Prime Rate (defined in Section 19.B ) as of the date incurred): for building improvements, the shorter of 10 years or the estimated useful life of the improvement; and for all other items, 3 years for expenditures under $50,000 and 5 years for expenditures in excess of $50,000. Notwithstanding the foregoing, Landlord may elect to amortize capital expenditures under this subsection over a longer period of time based upon (i) the purpose and nature of the expenditure, (ii) the relative capital burden on the Property, (iii) for cost savings projects, the anticipated payback period, and (iv) otherwise in accordance with sound real estate accounting principles consistently applied.

(10) Electrical services used in the operation, maintenance and use of the Property; sales, use, excise and other taxes assessed by governmental authorities on electrical services supplied to the Property, and other costs of providing electrical services to the Property.

E. Exclusions from Operating Expenses . Operating Expenses exclude the following expenditures:

(1) Leasing commissions, attorneys’ fees and other expenses related to leasing, renovating or improving tenant space and constructing improvements for the sole benefit of an individual tenant.

(2) Goods and services furnished to an individual tenant of the Building which are above building standard and which are separately reimbursable directly to Landlord in addition to Excess Operating Expenses.

(3) Repairs, replacements and general maintenance paid by insurance proceeds (or which would have been paid by insurance proceeds had Landlord maintained the insurance required to be maintained by Landlord under this Lease) or condemnation proceeds.

(4) Except as provided in Section 4.D(9) , depreciation, amortization, interest payments on any encumbrances on the Property and the cost of capital improvements or additions.

(5) Costs of installing, operating or removing any specialty service, such as an observatory, broadcasting facility, luncheon club, or athletic or recreational club.

(6) Expenses for repairs or maintenance related to the Property which have been reimbursed to Landlord pursuant to insurance, warranties, service contracts, or otherwise.

 

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(7) Costs (other than maintenance costs) of any art work (such as sculptures or paintings) used to decorate the Building.

(8) Principal and interest payments on indebtedness secured by liens against the Property, or costs of refinancing such indebtedness.

(9) Rental, gross receipts, sales and use, or other taxes, if any, imposed upon or measured by rents, receipts or income attributable to ownership, use, occupancy, rental, leasing, operation or possession of the Property which have been paid by tenants pursuant to Section 4.A .

(10) Salaries of officers and executives of Landlord, except as included in Section 4.D(2) .

(11) Any management fee other than as specified in Section 4.A .

(12) The cost (including legal fees) of any disputes (other than tax disputes and those which generally benefit the tenants of the Property), between Landlord or any employee or agent of Landlord, and any Mortgagee(s).

(13) Costs, penalties and fines incurred due to the violation by Landlord or any other tenant of the Building of Laws, or the terms and conditions of any lease pertaining to the Building, except such as may be incurred by Landlord in contesting in good faith the alleged violation.

(14) Advertising and marketing expenses.

(15) All costs arising from the release, removal or remediation (including encapsulation) of Hazardous Materials in or about the Premises, the Building or the Property, unless caused by the acts or omissions of any Tenant Party.

(16) Payments made under any ground lease other than for the payment of property taxes and insurance premiums.

(17) Costs incurred as a result of gross negligence or willful misconduct by Landlord or its agents.

(18) Costs of any work performed or services rendered by Landlord or its Affiliate pursuant to its obligations hereunder that are in excess of the cost which such work or services could be contracted for to a third party contractor on an arms’ length transaction through a competitive bidding process in the local area where the Building is located.

(19) Any category of expenses which was not included in Operating Expenses for the Base Year and which expenses were incurred in the Base Year and could have been included in Operating Expenses for the Base Year, unless an adjustment is made to the Operating Expenses for the Base Year to include the actual amount of the expenses incurred in the Base Year for such category of expenses.

F. Proration of Operating Expenses; Adjustments . If Landlord incurs Operating Expenses for the Property together with one or more other buildings or properties, whether pursuant to a reciprocal easement agreement, common area agreement or otherwise, the shared costs and expenses (including those specified in Section 4.D(2) ) shall be equitably prorated and apportioned by Landlord between the Property and the other buildings or properties. If the Building is not 95% occupied during any calendar year or partial calendar year or if Landlord is not supplying services to 95% of the total Rentable Square Footage of the Building at any time during a calendar year or partial calendar year, Operating Expenses (including Tax Expenses) shall be determined as if the Building had been 95% occupied and Landlord had been supplying services to 95% of the Rentable Square Footage of the Building during that calendar year. If Tenant pays for Tenant’s Pro Rata Share of Operating Expenses based on increases over a “ Base Year ” and Operating Expenses for a calendar year are determined as provided in the prior sentence, Operating Expenses for the Base Year shall also be determined as if the Building had been 95% occupied and Landlord had been supplying services to 95% of the Rentable Square Footage of the Building. The extrapolation of Operating Expenses under this Section shall be performed by Landlord by adjusting the cost of those components of Operating Expenses that are

 

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impacted by changes in the occupancy of the Building. Landlord agrees that it will utilize a consistent methodology year to year in making such adjustments.

G. Audit Rights . Within 60 days after Landlord furnishes its statement of actual Operating Expenses for any calendar year (including the Base Year) (the “ Audit Election Period ” ), Tenant may, at its expense, elect to audit Landlord’s Operating Expenses for such calendar year only, subject to the following conditions: (1) there is no uncured event of default under this Lease; (2) the audit shall be prepared by an independent certified public accounting firm of recognized national standing; (3) in no event shall any audit be performed by a firm retained on a “contingency fee” basis; (4) the audit shall commence within 30 days after Landlord makes Landlord’s books and records available to Tenant’s auditor and shall conclude within 60 days after commencement; (5) the audit shall be conducted during Landlord’s normal business hours at the location where Landlord maintains its books and records and shall not unreasonably interfere with the conduct of Landlord’s business; (6) Tenant and its accounting firm shall treat any audit in a confidential manner and shall each execute Landlord’s confidentiality agreement for Landlord’s benefit prior to commencing the audit; and (7) the accounting firm’s audit report shall, at no charge to Landlord, be submitted in draft form for Landlord’s review and comment before the final approved audit report is delivered to Landlord, and any reasonable comments by Landlord shall be incorporated into the final audit report. This paragraph shall not be construed to limit, suspend, or abate Tenant’s obligation to pay Rent when due, including estimated Excess Operating Expenses. Landlord shall credit any overpayment determined by the final approved audit report against the next Rent due and owing by Tenant or, if no further Rent is due, refund such overpayment directly to Tenant within 30 days of determination. Likewise, Tenant shall pay Landlord any underpayment determined by the final approved audit report within 30 days of determination. If the audit proves that Landlord’s calculation of Operating Expenses for the calendar year under inspection was overstated by more than five percent (5%), then, after verification, Landlord shall pay Tenant’s actual reasonable out-of-pocket audit and inspection fees (but specifically excluding any travel and lodging expenses) applicable to the review of said calendar year statement within thirty (30) days after receipt of Tenant’s invoice therefor. The foregoing obligations shall survive the expiration or termination of this Lease. If Tenant does not give written notice of its election to audit Landlord’s Operating Expenses during the Audit Election Period, Landlord’s Operating Expenses for the applicable calendar year shall be deemed approved for all purposes, and Tenant shall have no further right to review or contest the same. The right to audit granted hereunder is personal to the initial Tenant named in this Lease and to any assignee under a Permitted Transfer (defined below) and shall not be available to any subtenant under a sublease of the Premises.

5. Tenant’s Use of Premises .

A. Permitted Uses . The Premises shall be used only for general office and engineering use and any uses ancillary thereto (collectively, the “ Permitted Use ” ) and for no other use whatsoever. Tenant shall not use or permit the use of the Premises for any purpose which is illegal, creates obnoxious odors (including tobacco smoke), noises or vibrations, is dangerous to persons or property, could increase Landlord’s insurance costs, or which, in Landlord’s reasonable opinion, unreasonably disturbs any other tenants of the Building or interferes with the operation or maintenance of the Property or any work by Landlord or its contractors in the Premises. Except as provided below, the following uses are expressly prohibited in the Premises: schools, government offices or agencies (provided that governmental and agency personnel may occupy portions of the Premises as permitted under Section 11.E ); personnel agencies; collection agencies; credit unions; data processing, telemarketing or reservation centers; medical treatment and health care; radio, television or other telecommunications broadcasting; restaurants and other retail; customer service offices of a public utility company; or any other purpose which would, in Landlord’s reasonable opinion, impair the reputation or quality of the Building, overburden any of the Building systems, Common Areas or parking facilities (including any use which would create a population density in the Premises which exceeds 5 persons per 1,000 square feet of Rentable Square Footage), impair Landlord’s efforts to lease space or otherwise interfere with the operation of the Property.

B. Compliance with Laws . Tenant shall comply with all Laws regarding the operation of Tenant’s business and the use, condition, configuration and occupancy of the Premises and the use of the Common Areas. Tenant, within 10 days after receipt, shall provide Landlord with copies of any notices Tenant receives regarding a violation or alleged or potential violation of

 

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any Laws. Tenant shall comply with the rules and regulations of the Building attached as Exhibit B and such other reasonable rules and regulations (or modifications thereto) adopted by Landlord from time to time. Such rules and regulations will be applied in an equitable manner as reasonably determined by Landlord. Tenant shall also cause its agents, contractors, subcontractors, employees, customers, and subtenants to comply with all rules and regulations.

C. Tenant’s Security Responsibilities . Tenant shall (1) lock the doors to the Premises and take other reasonable steps to secure the Premises and the personal property of all Tenant Parties (defined in Article 13 ) and any of Tenant’s transferees, contractors or licensees in the Common Areas and parking facilities of the Building and Property, from unlawful intrusion, theft, fire and other hazards; (2) keep and maintain in good working order all security and safety devices installed in the Premises by or for the benefit of Tenant (such as locks, smoke detectors and burglar alarms); and (3) cooperate with Landlord and other tenants in the Building on Building safety matters. Tenant acknowledges that any security or safety measures employed by Landlord are for the protection of Landlord’s own interests; that Landlord is not a guarantor of the security or safety of the Tenant Parties or their property; and that such security and safety matters are the responsibility of Tenant and the local law enforcement authorities. Tenant shall have the right to designate certain areas of the Premises as “ Secured Areas ” should Tenant require such areas for the purpose of securing certain valuable property or confidential information. Landlord shall not have access to such Secured Areas except (i) in the event of an emergency, in which case, Landlord may use whatever means necessary to access such Secured Areas, at no expense to Landlord, and (ii) in the event of a Landlord or Mortgagee inspection, in which case Landlord shall provide 48 hours prior written notice to Tenant of the date and time of such inspection, and during such inspection Landlord’s or Mortgagee’s representatives shall be accompanied at all times by a Tenant representative or escort. Landlord shall not be required to provide janitorial or other services to the Secured Areas which services require Landlord’s employees or agents to have access to such Secured Areas.

6. Security Deposit . [Intentionally deleted]

7. Services Furnished by Landlord .

A. Standard Services . Subject to the provisions of this Lease, Landlord agrees to furnish (or cause a third party provider to furnish) the following services (in a manner consistent with the Comparable Buildings) to Tenant during the Term:

(1) Hot and cold (or temperate) water service for use in the lavatories on each floor on which the Premises are located.

(2) Heat and air conditioning in season during Normal Business Hours, at such temperatures and in such amounts as required by governmental authority and generally comparable to the Comparable Buildings. Tenant, upon such notice as is reasonably required by Landlord, and subject to the capacity of the Building systems, may request HVAC service during hours other than Normal Business Hours. Tenant shall pay Landlord for such additional service at a rate equal to $45.00 per operating hour per floor (the “ Hourly HVAC Charge ” ), with a 1-hour minimum per floor. Landlord shall have the right, upon 30 days prior written notice to Tenant, to adjust the Hourly HVAC Charge from time to time, but not more than once per calendar year, based proportionately upon increases in HVAC costs, which costs include utilities, taxes, surcharges, labor, equipment, maintenance and repair.

(3) Maintenance and repair of the Property as described in Section 9.B .

(4) Janitorial service five days per week (excluding Holidays), in accordance with the cleaning specifications attached as Exhibit F . If Tenant’s use of the Premises, floor covering or other improvements require special services in excess of the standard services for the Building, Tenant shall pay the additional cost attributable to the special services.

(5) Elevator service 24 hours per day, 7 days per week, subject to periodic elevator repair and maintenance, events of Force Majeure, casualty and governmental regulation as well as proper authorization after Normal Business Hours and Landlord’s policies and procedures for use of the elevator(s) in the Building.

 

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(6) Exterior window washing at least once per year with one additional washing per year as needed in season.

(7) Electricity to the Premises for general office use, in accordance with and subject to the terms and conditions in Article 8 .

(8) Parking as specified in the Parking Agreement attached as Exhibit E .

(9) Building standard pest control.

Landlord agrees that Landlord’s management personnel and janitorial staff servicing the Premises must be composed of either U.S. citizens or persons legally registered with U.S. immigration officials.

B. Service Interruptions . For purposes of this Lease, a “ Service Failure ” shall mean any interruption, suspension or termination of services being provided to Tenant by Landlord or by third-party providers, whether engaged by Tenant or pursuant to arrangements by such providers with Landlord, which are due to (1) the application of Laws; (2) the failure, interruption or malfunctioning of any electrical or mechanical equipment, utility or other service to the Building or Property; (3) the performance of repairs, maintenance, improvements or alterations; or (4) the occurrence of any other event or cause whether or not within the reasonable control of Landlord. No Service Failure shall render Landlord liable to Tenant, constitute a constructive eviction of Tenant, give rise to an abatement of Rent, or relieve Tenant from the obligation to fulfill any covenant or agreement. Notwithstanding anything in this Section 7.B to the contrary, if an interruption or cessation of an Essential Service (defined below) or Contamination not caused or introduced by a Tenant Party, results in the Premises being untenantable for a continuous period of five (5) consecutive Business Days or more (unless the interruption or cessation of Essential Service is caused by a fire or other casualty, in which event Article 16 shall control), then Base Rent and Excess Operating Expenses shall be abated on a per diem basis commencing on the day following the date Tenant delivers written notice to Landlord of such interruption and continuing until such Essential Service to the Premises is restored. The term “ Essential Service ” shall mean only the following: (i) HVAC service; (ii) Water and sewer service; and (iii) Electrical service. Furthermore if an interruption of Essential Service or Contamination renders more than 50% of the rentable square footage of the Premises untenantable and such interruption or Contamination shall continue after Tenant’s notice to Landlord for more than 120 consecutive Business Days and, provided such interruption or Contamination was not caused by Tenant, its employees, agents or contractors or by reason of a casualty, then Tenant shall have the right to terminate this Lease following 30 Business Days written notice given to Landlord after such 120 Business Day period; provided, however, if the interrupted Essential Service is restored (or Contamination fully remediated) prior to the expiration of the 30 Business Day notice period, Tenant’s right to terminate shall be null and void. In no event shall Landlord be liable to Tenant for any loss or damage, including the theft of Tenant’s Property (defined in Article 14 ), arising out of or in connection with any Service Failure or the failure of any Building safety services, personnel or equipment.

C. Parking Interruption . If:

(1) all or a portion of the total of 300 parking spaces ( “ Applicable Spaces ” ) allocated to Tenant in the Building’s parking area for the third and fourth floor portions of the Premises leased by Tenant (the “ Affected Premises ” ) are rendered unusable (by reason other than an act by a Tenant Party or a fire or other casualty, in which latter event Article 16 of the Lease shall control) such that the ratio of Applicable Spaces to the RSF within the Affected Premises is less than 4.0/1,000 ( “ Stipulated Ratio ” ), and

(2) such reduction below the Stipulated Ratio continues for a continuous period of thirty (30) consecutive Business Days (the “ Parking Restoration Period ” ), and

(3) Landlord has not, by the expiration of the Parking Restoration Period, fully replaced the reduced number of parking spaces ( “ Reduced Spaces ” ) with an equivalent number of parking spaces (the “ Replacement Spaces ” ) achieved by either or both of the following means: (i) a reallocation of available parking spaces at the Building’s parking area from other tenants and/or (ii) obtaining the use of one or more paved parking areas located in the vicinity of the Building and (if the Property is more than 400 yards distance from such parking area(s))

 

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providing to Tenant’s employees, at Landlord’s cost, reasonable transport at suitable intervals to and from the Building to such parking area(s),

then Base Rent and Excess Operating Expenses shall be abated on a per diem basis and a prorata basis (that is, by the proportion represented by (I) the number of the parking spaces then unusable less the Replacement Spaces, compared to (II) the total Applicable Spaces [i.e., 300]), with such abatement commencing on the day following the expiration of the Parking Restoration Period, and continuing until the ratio of Applicable Spaces to the RSF within the Affected Premises is equal to 5.0/1,000. Furthermore if such reduction of Applicable Spaces below the Stipulated Ratio shall continue for more than 180 consecutive days, then Tenant shall have the right to terminate this Lease following 30 Business Days’ written notice given to Landlord after such 180 day period; provided, however, if Landlord restores all of the Applicable Spaces (which shall include any Replacement Spaces) prior to the expiration of the 30 Business Day notice period, Tenant’s right to terminate shall be null and void.

D. Tenant’s Qualified Self Help Right . Landlord and Tenant agree that the Essential Services identified in Section 7.B are Building services without which Tenant cannot occupy the Premises for the purpose of which it is leased. If Landlord fails to provide an Essential Service to the Premises or any material portion thereof (a “ Essential Service Failure ” ), and such Essential Service Failure:

(i) results in the Premises or any material portion thereof Premises being untenantable;

(ii) is not cured within ten (10) consecutive Business Days after Landlord’s receipt of Tenant’s written notice of the Essential Service Failure;

(iii) is not then being addressed by Landlord’s efforts to cure the same; and

(iv) was not caused by Tenant, its agents, employees or contractors;

and Tenant is not in default under this Lease beyond any applicable notice or cure period, then (in addition to such rights of abatement and/or termination Tenant may otherwise have under Section 7.B of this Lease by reason of such Essential Service Failure) Tenant, at its option, shall have the right to cure such Essential Service Failure, if curable by Tenant without the need to enter any other tenant’s leased space and without voiding any applicable warranties pertaining to Building systems or components, provided such cure is effectuated in the manner of a prudent commercial landlord, without interference with any ongoing cure or repair efforts of Landlord, and in accordance with the provisions hereof. In the event Tenant proposes to undertake to correct or cure such Essential Service Failure, Tenant shall submit to Landlord a description of the steps Tenant intends to take, in the manner of a prudent commercial landlord, to correct or cure the Essential Service Failure (the “ Self Help Notice ” ). Unless Landlord implements the curative action specified in Tenant’s Self Help Notice within three (3) Business Days after Landlord’s receipt thereof and diligently thereafter prosecutes cure of the Essential Service Failure, Tenant shall, after such 3-Business Day period, proceed with the cure of the Essential Service Failure in the manner specified in the Self Help Notice and diligently complete such cure in a good and workmanlike manner. If Tenant so effectuates a cure of the Essential Service Failure and restores the Premises to tenantable condition thereby, then Landlord shall reimburse Tenant for Tenant’s reasonable out-of-pocket costs incurred in connection with such cure (net of any amounts owing by Tenant to Landlord pursuant to the indemnity set forth hereinbelow). In addition, Tenant’s right to self-help under this Section 7.D is personal to the party named as Tenant herein, and shall terminate upon assignment of this Lease (except to an immediate successor of such named party by Permitted Transfer) or subletting of more than 50 percent of the floor area of the Premises. T ENANT SHALL I NDEMNIFY , HOLD HARMLESS AND D EFEND THE L ANDLORD P ARTIES AND OTHER TENANTS AND OCCUPANTS OF THE B UILDING FROM AND AGAINST ALL C LAIMS IN CONNECTION WITH OR ARISING OUT OF T ENANT ’ S CURE OF OR ATTEMPT TO CURE ANY E SSENTIAL S ERVICE F AILURE .

E. Third Party Services . If Tenant desires any service which Landlord has not specifically agreed to provide in this Lease, such as private security systems or telecommunications services serving the Premises, Tenant shall procure such service directly from a reputable third party service provider ( “ Provider ” ) for Tenant’s own account. Tenant shall require each Provider to comply with the Building’s rules and regulations, all Laws, and Landlord’s reasonable policies and practices for the Building. Tenant acknowledges Landlord’s

 

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current policy that requires all Providers utilizing any area of the Property outside the Premises to be approved by Landlord and to enter into a written agreement acceptable to Landlord prior to gaining access to, or making any installations in or through, such area. Accordingly, Tenant shall give Landlord written notice sufficient for such purposes.

8. Use of Electrical Services by Tenant .

A. Landlord’s Electrical Service . Subject to the terms of this Lease, Landlord shall furnish building standard electrical service to the Premises in accordance with Parag