EXHIBIT 10.6
OFFICE LEASE AGREEMENT
between
FAIR LAKES NORTH AND SOUTH L.P.
("Landlord")
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and
SRA INTERNATIONAL, INC.
("Tenant")
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for
FAIR LAKES SOUTH
OFFICE LEASE AGREEMENT
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THIS OFFICE LEASE AGREEMENT (this "Lease") is made and entered into
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this 11th day of May, 1999, by and between FAIR LAKES NORTH AND SOUTH L.P., a
Virginia limited partnership ("Landlord") and SRA INTERNATIONAL, INC., a
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Delaware corporation ("Tenant"), upon all terms set forth in this Lease and in
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all Exhibits hereto, to each and all of which terms Landlord and Tenant hereby
mutually agrees, and in consideration of One Dollar and other valuable
considerations, the receipt and sufficiency of which are, hereby acknowledged,
and of the rents, agreements and benefits flowing between the parties hereto, as
follows:
ARTICLE 1
BASIC LEASE INFORMATION AND CERTAIN DEFINITIONS
Section 1.01. Each reference to this Lease to information and
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definitions contained in Article 1 and each use of the terms capitalized and
defined in this Section 1.01 shall be deemed to refer to, and shall have the
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following meanings:
A. Building: Fair Lakes Court South
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
B. Fair Lakes North: Fair Lakes Court North.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
C. Land: The real property on which the Building is located as
further shown on Exhibit "L" hereto.
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D. Premises: All of the Rentable Area in the Building, as more fully
described and shown on the floor plan(s) attached as Exhibit "A".
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E. Term: Seventeen (17) years commencing on the Commencement Date
and ending on the Expiration Date.
F. Commencement Date: January 1, 1999.
G. Expiration Date: December 31, 2015.
H. Rentable Area of the Building: 132,217 square feet.
I. Rentable Area of the Premises as of the Commencement Date:
132,217 square feet.
J. Tenant's Proportionate Share: Tenant's Proportionate Share is a
fraction, the numerator of which is the Rentable Area of the
Premises and the denominator of which is the Rentable Area of the
Building. As of the Commencement Date, Tenant's Proportionate
Share is 100%.
K. Landlord's Address for Notices:
c/o The ▇▇▇▇▇▇▇▇ Companies
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Asset Manager of Fair Lakes Court North
L. Tenant's Address for Notices:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
M. Lease: Collectively refers to this Lease together with the
following Exhibits which are attached hereto and incorporated
herein by this reference.
Exhibits
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"A" -- Floor Plans
"B" -- Leasehold Improvements
"C" -- General Lease Provisions
"D" -- Rules and Regulations
"E" -- Commencement Date Notice
"F" -- Rent Schedule
"F1" -- Commission Schedule
"G" -- Subordination, Non-Disturbance and Attornment
Agreement
"H" -- List of Typical Additional Building Costs
"I" -- Roof Agreement
"J" -- Computerized Energy Management System
Specifications
"K" -- Janitorial Specifications
"L" -- Plat of Land
N. Brokers: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Inc. and ▇▇▇▇▇ & ▇▇▇▇▇ of
Metropolitan D.C., Inc.
ARTICLE 2
DEMISE AND TERM
Landlord leases to Tenant, and Tenant leases from Landlord, the
Premises located in the Building for the Term and subject to the provisions
hereof. The Term of this Lease shall be for the period specified in Section 1.01
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and shall begin at midnight on the Commencement Date (as defined in the General
Lease Provisions) mid shall, unless this Lease is sooner terminated in
accordance with the provisions of this Lease, end at midnight on the Expiration
Date as such date may be extended pursuant to the terms of Article 3 or 4 of
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this Lease; provided, however, that if for any reason the Expiration Date shall
be a day other than the final day of a calendar month then, the Term of this
Lease shall be extended so that it will expire on the last day of the calendar
month in which the Expiration. Date takes place.
ARTICLE 3
RENEWAL OPTION
Tenant shall have the right to renew and extend the Term of this Lease
with respect to all or a portion (in full floor increments only) of the Premises
then subject to this Lease (and any portion of the Premises that has been
terminated by Landlord pursuant to Section 15.01 of Exhibit "C" as more
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specifically set forth in Section 15.01) for the Renewal Term upon and subject
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to the terms and conditions of this Article 3 provided that if Tenant elects to
renew this Lease with respect to at least three (3) full floors it shall also be
required to renew this Lease with respect to all of the basement space in the
Building. Notwithstanding anything to the contrary herein, if Tenant is leasing
less than all of a particular floor at the time of the Renewal Term, Tenant may
renew the term for such partially leased floor provided that Tenant shall renew
the Term for all of the space on such floor that Tenant is then leasing.
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1. Tenant shall have the right, in its sole discretion, to extend this
Lease for up to two (2) renewal terms of five (5) years (each a "Renewal Term")
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by Tenant's giving written notice thereof to Landlord (the "Renewal Notice") (i)
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no earlier than December 1, 2013 and no later than, March. 1, 2014 with respect
to the first Renewal Term and (ii) no earlier than December 1, 2018 and no later
than March 1, 2019 with respect to the second Renewal Term (if Tenant has
previously exercised its right with respect to the first Renewal Term). The
first Renewal Term shall commence immediately upon the expiration of the
original Term and the second Renewal Term shall commence immediately upon the
expiration of the first Renewal Term. Upon exercise by Tenant of its right to a
Renewal Term, the Expiration Date of the Term shall automatically become the
last day of the Renewal Term. If Tenant does not exercise its rights to a
Renewal Term in a timely manner in accordance with this Lease, Tenant's failure
shall conclusively be deemed a waiver of its rights to such Renewal Term and all
future Renewal Terms.
2. Within thirty (30) days after receipt of the Renewal Notice,
Landlord shall provide to Tenant Landlord's proposed rental rate and proposed
escalations for such rent for the Renewal Term (collectively, "Landlord's
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Proposed Rent"), which shall reflect Landlord's estimation of the then-current
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fair market rate on a triple net basis, including relevant market conditions,
for similar space in a comparable building in Fairfax, Virginia. If Landlord's
proposed rental rate is not acceptable to Tenant, then Landlord and Tenant shall
negotiate in good faith to determine the fair market rental rate including any
escalations. for the Renewal Term. If Landlord and Tenant reach agreement then
such agreed upon rate shall become the Base Rent during such Renewal Term. If
Landlord and Tenant do not reach an agreement within thirty (30) days after
Landlord's delivery of the proposed rental rate (the "Outside Agreement Date"),
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then the determination of the Base Rent and escalations for the Renewal Term
shall be determined in accordance with subsection 3 below.
3. If Landlord and Tenant cannot agree upon the Base Rent and
escalations for the Renewal Term, such Base Rent shall be determined as follows:
(A) Landlord and `Tenant shall each appoint one broker who shall by
profession be a real estate broker who shall have at least ten (10) years
experience in the commercial real estate industry in Fairfax County,
Virginia. Each such broker shall be appointed within ten (10) days after
the Outside Agreement Date. The two brokers, within ten (10) days after the
date of the appointment of the last appointed broker, shall agree upon and
appoint a third, fair and. unbiased broker who shall be qualified under the
same criteria as the first two brokers.
(B) Within thirty (30) days after the appointment of the. last
broker, each broker shall make an independent determination as to the fair
market triple net rent for the Renewal Term (including escalations) and
shall so notify Landlord and Tenant. in writing of its respective
determination. The brokers shall consider all relevant factors in making
their determinations of fair market rent including, but not limited to the
size of the Premises, length of renewal term, base rent and escalations,
provisions, rent abatements (if applicable) and other concessions,
construction allowances, operating expenses, tax pass through provisions,
availability of and charges for parking, avoidance (or inclusion) of
brokerage commissions, services provided and the age, quality and condition
of the Building. Base Rent for the Renewal Period shall be the average of
the determinations of the fair market rent for the Premises determined by
each of the three brokers ("Brokers' Rent"). The Brokers' Rent shall be
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final and binding upon the parties subject to paragraph 4 hereof.
(C) If either Landlord or Tenant fails to appoint a broker within
the time period specified in subsection (A) above, the broker appointed by
one of them shall reach a decision as to the rental rate for the Renewal
Term, notify Landlord and Tenant of such broker's decision, and such
broker's decision shall be binding upon Landlord and Tenant subject to
paragraph 4 hereof.
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4. In the event that the Brokers' Rent is within $1.15 per square foot
of Rentable Area of Landlord's Proposed Rent, then the Brokers' Rent shall be
final and binding upon both parties and Landlord shall be required to lease the
Premises to Tenant for such Renewal Term at the Brokers' Rent and Tenant shall
be obligated to lease. the Premises from Landlord for such Renewal Term at the
Brokers' Rent. In the event that the Brokers' Rent is more than $1.15 per square
foot of Rentable Area greater than or less than Landlord's Proposed Rent, then
Tenant shall have the right to notify Landlord in writing of its decision to
revoke its election for a Renewal Term within ten (10) Business Days after its
receipt of notice of the Brokers' Rent. The failure of Tenant to timely deliver
such notice to Landlord shall be deemed a reaffirmation of Tenant's desire to
renew at the Brokers' Rent.
5. Tenant shall not have the right to exercise a Renewal Term if Tenant
is in material monetary or non-monetary Default under this Lease at the time
Tenant gives notice of its election and, if Tenant is in material monetary or
non-monetary Default at the commencement of the Renewal Term, Tenant's exercise
of its election to extend the Lease, in Landlord's sole discretion, shall be
null and void and of no effect.
6. Tenant shall take the Premises "as is" for the Renewal Term and
Landlord shall have no obligation to make any improvements or alterations to the
Premises except as other wise provided in this Article 3.
7. Subject to subparagraphs 2 and 3 above, the leasing of the
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Premises for the Renewal Term shall be upon the same terms and conditions as
are applicable for the original Term, and shall be upon and subject to all of
the provisions of this Lease, including, without limitation, the obligation of
Tenant to pay Tenant's Additional Rent under the Lease.
8. Throughout this Lease, "material monetary Default" shall mean a
Default in the amount of $5,000.00 or more; provided, however, that in the event
that Tenant in good faith shall have notified Landlord that Tenant disputes a
particular amount which Landlord has, charged to Tenant (other than an amount
owed as Base Rent. and amounts in excess of $125,000.00), then, notwithstanding
anything to the contrary in this Lease, Tenant's failure to pay such amount
after applicable notice and cure periods shall not constitute a "material
monetary Default."
ARTICLE 4
[INTENTIONALLY OMITTED]
ARTICLE 5
[INTENTIONALLY OMITTED]
ARTICLE 6
[INTENTIONALLY OMITTED]
ARTICLE 7
RIGHT OF FIRST OFFER TO PURCHASE
Provided that Tenant is not in material monetary or non-monetary
Default under this Lease at the applicable time, Tenant, shall have a non
assignable and non transferable right of first offer to purchase the Building.
(a) If at any time during the Term, Landlord shall receive a
bona-fide offer, other than at public auction, from an. unrelated third party,
that is not exercising the power of eminent domain, ("Third Party") for the
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purchase of the Building which Landlord desires to accept, Landlord shall send a
written notice (the "Third Party Purchase Notice") to Tenant of such proposal
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including all of the business terms of such proposal. Tenant. may elect to
purchase the Building upon the terms set forth in the Third Party Purchase
Notice, by giving written notice to Landlord of its election not more than
thirty (30) days after receipt by Tenant of the Third Party Purchase Notice. In
the event that Tenant elects in writing, or is deemed to have elected by failing
to respond within said thirty (30) day period, not to purchase the Building,
Landlord may
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proceed to sell the Building to a third party in accordance with the Third Party
Purchase Notice. In the event that Landlord and the third party make, any
material changes to the terms of the sale from the Third Party Purchase Notice
including reducing the purchase price by five percent (5%) or more than that set
forth in the Third Party Purchase Notice or extending the closing date scheduled
for the sale by more than thirty (30) days after the date for such closing,
pursuant to the Third Party Purchase Notice, Landlord shall again offer the
Building to Tenant in accordance with this Section 7(a) on the terms on which
the third party had agreed to purchase the Building; provided, however, Tenant
may elect to purchase the Building only by providing notice to Landlord in
writing within fifteen (15) days after Landlord's notice of the availability of
the Building on the revised terms and conditions agreed to between Landlord and
the Third Party.
(b) If at any time during the Term, Landlord shall prepare a
sale proposal pertaining to the Building that Landlord is prepared to offer as a
sale proposal ("Sale Proposal") to an unrelated third party, Landlord shall send
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to Tenant a written notice (the "Purchase Option Notice") which shall include
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the Sale Proposal. In the event that Tenant does not elect by written notice to
purchase the Building in accordance with the terms set forth in the Purchase
Option Notice within sixty (60) days after receipt of said notice, Landlord may
offer the Building, as applicable, to third parties in accordance with the Sale
Proposal. In the event that prior to the execution of a bona fide purchase
contract Landlord and the Third Party make any material changes to. the terms of
the sale from the Purchase Option Notice including reducing the purchase price
by five percent (5%) or more than that set forth in the Purchase Option Notice
or extending the closing date scheduled for the sale by more than thirty (30)
days after the date for such closing pursuant to the Purchase Option Notice,
then Landlord shall notify Tenant in writing ("Second Notice") of the terms of
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said agreement with the Third Party, and Tenant shall have five (5) Business
Days from receipt of said Second Notice to notify Landlord that Tenant elects to
purchase the Building on the terms on which the Third Party had agreed to
purchase the Building. In the event that Tenant does not respond to the Purchase
Option Notice within the sixty (60) day period or to the Second Notice within
the five (5) Business Day period set forth. above, Tenant shall be deemed to
have elected not to purchase the Building. Notwithstanding anything to the
contrary herein, in the event that Tenant elects to purchase the Building in
accordance with this subsection (b), Tenant shall have thirty (30) days less
than the time .provided for in the Sale Proposal (as may have been modified if
Tenant makes such election after the Second Notice) for any due diligence period
but, in all events, Tenant shall be provided at least a thirty (30) day study
period after Tenant's election to purchase.
(c) The right of first offer described in Section 7(a) shall
be inapplicable to a transfer, by way of sale, gift, or devise, including a
trust, to or for a party affiliated to Landlord, or to any transfer from one
such related party, to another, but shall apply to any such transfer to an
unrelated third person. For purposes of this Article 7, "affiliated" shall mean
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in control of, controlled by or under common control with Landlord or one of the
general or limited partners of Landlord.
ARTICLE 8
CENTRAL SERVICES FACILITY
(a) On or before January 1, 2001, Tenant shall have the right
to request that Landlord design, to Tenant's specifications and with Tenant's
architect, and construct a central services facility (the "Services Facility")
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to be located between the Building and Fair Lakes North ("Initial Services
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Facility Notice"). Landlord shall construct only the base building improvements
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for the Services Facility. Any improvements over base building improvements to
the Services Facility shall be designed and constructed by Tenant at Tenant's
cost. It is anticipated that the Services Facility will be approximately 15,000
square feet, but will in no event be larger than 25,000 square feet of FAR as
that term is defined by Fairfax County zoning regulations, and may contain,
among other facilities, a conference/meeting space, athletic facility and a food
services facility. The design of the Services Facility shall be subject to
Landlord's reasonable approval and Fair Lakes League approval, if required, and
shall in no event have a detrimental affect on the architectural integrity,
function or operation of the Building or the other building identified on the
plat attached hereto as Exhibit "L" and known as Fair Lakes North ("Fair Lakes
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North").
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(b) Within sixty (60) days after Landlord's receipt of the
Initial Services Facility Notice, Landlord shall prepare at Landlord's sole cost
and expense, and deliver to Tenant reasonably detailed initial specifications
and plans, a schedule and an estimated budget for the design and construction of
the base building component of the Services Facility as well as market financing
terms available to Landlord to finance the development, design and construction
of the Services Facility, and an estimate of the initial Services Facility Base
Rent (defined below) based on the calculations set forth in subparagraph (c)
below (collectively, the "Services Facility Initial Terms"). The Services
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Facility Initial Terms shall be determined on the basis of at least three (3)
financing quotes and three (3) construction bids all of which shall be provided
to Tenant with the Services Facility Initial Terms. Within thirty (30) days
after Tenant's receipt of the Service Facility Initial Terms, Tenant shall
provide Landlord written comments on the Services Facility Initial Terms. Within
fifteen (15) days after Tenant's response to the Services Facility Initial
Terms, Landlord shall notify Tenant in writing of what further work will be
necessary for Landlord to determine the Services Facility Base Rent (defined in
Section (c) below), a final development and construction schedule (the "Services
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Facility Schedule") and detailed specifications and plans (the "Services
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Facility Specifications") for the development, design and construction of the
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Services Facility, all of which shall be subject to Tenant's reasonable
approval. At Tenant's request ("Tenant's Services Facility Request") provided to
Landlord within fifteen (15) days after landlord's notification regarding
additional work, Landlord in good faith and with due diligence shall conduct
such further analysis and notify Tenant of the Services Facility Base Rent, the
Services Facility Schedule and the Services Facility Specifications as soon as
is reasonably practicable thereafter. If, within fifteen (15) days after receipt
of the Services Facility Base Rent, the Services Facility Schedule and the
Services Facility Specifications, Tenant shall deliver to Landlord a written
notice of its desire to have Landlord construct the Services Facility (the
"Final Services Facility Notice") and to lease the space for the Services
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Facility Base Rent, then Landlord shall construct the Services Facility
substantially in accordance with the Services Facility Schedule and the Services
Facility Specifications. In the event that Tenant does not elect to proceed to
construction of the Services Facility, notwithstanding anything to the contrary
herein, Landlord and Tenant shall share equally the third party costs reasonably
incurred by Landlord in determining the Services Facility Base Rent between the
time of Tenant's Services Facility Request and the date Landlord provides Tenant
the Services Facility Base Rent, Services Facility Specifications and Services
Facility Schedule. If Tenant elects to have Landlord continue the Services
Facility, then such costs shall be part of the Services Facility Costs.
(c) The annual Base Rent per square foot of Rentable Area for
the Services Facility ("Services Facility Base Rent") shall be an amount equal
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to (x) the Rent Factor multiplied by (y) the sum of the costs of the land,
building and improvements (including, without limitation, all design and
construction costs, demolition and alteration costs of the Building and Fair
Lakes North to accommodate the Services Facility and all other non-construction
costs and fees) (collectively, the "Service Facility Costs") and (z) divided by
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the Rentable Area for the Services Facility. A list of the types of costs that
will be included within the Services Facility Costs is set forth in Exhibit "H".
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The land cost component for the Service Facility Costs shall equal $19.00 per
square foot of FAR that is used to construct the Services Facility and that
reduces the developable FAR available to the Fair Lakes project. The Services
Facility Base Rent shall be increased on the first anniversary of the Services
Facility Commencement Date, and on each anniversary thereafter during the Term
by the lesser of (1) two and one-quarter percent (2.25%) of the Services
Facility Base Rent payable immediately preceding the applicable adjustment date
and (ii) the amount equal to the Services Facility Base Rent during the first 12
months after the Services Facility Commencement Date ("Base Services Facility
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Year") plus an amount equal to the product of 1.3 times the percentage increase
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in the Index (as defined in Section 3.01) for the Comparison Month (as defined
in Section 3.01) as compared to the average Index in the calendar year of the
Base Services Facility Year, multiplied by the Base Rent for the Base Services
Facility Year. Except for the rent which shall be as set forth above and for
changes necessary to reflect that the Services Facility is a new building, the
lease of the Services Facility shall be upon the same terms and conditions as
are applicable for the Premises and shall be subject to all of the provisions of
this Lease including, without limitation, passthroughs. The Rentable Area of the
Services Facility shall be measured by Landlord's architect in accordance with
the BOMA Standard within sixty (60) days after substantial completion of the
base building and such measurements shall be subject to Tenant's reasonable
approval.
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(d) Landlord and Tenant shall use good faith, diligent efforts to
agree upon the Services Facility Specifications, Services Facility Schedule and
Services Facility Base Rent. If Landlord and Tenant are unable to agree on such
terms by the date which is sixty (60) days after the date Landlord provides
Tenant the Services Facility Initial Terms, Tenant may submit the disagreement
for arbitration by so notifying Landlord ("Arbitration Notice"). Within ten (10)
------------------ days after the Arbitration Notice, Landlord and Tenant shall
each appoint a real estate professional with at least ten (10) years experience
in the development of office buildings as an arbitrator. Within ten (10) days
after their appointment, the two arbitrators shall appoint an independent real
estate professional who is fair and unbiased as a third arbitrator. Thereafter
the arbitrators shall have thirty (30) days to determine whether Landlord's
proposal, including the Services Facility Specification, Services Facility
Schedule and Services Facility Base Rent, were reasonable and in good faith. The
arbitrators' decisions shall be final and binding upon the parties.
(e) The commencement of the lease for the Services Facility (the
"Services Facility Commencement Date") shall be (a) if Tenant is constructing
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the tenant improvements, the earlier of (1) the date which is sixty (60) days
after the date on which the base building is substantially complete as
reasonably certified by Landlord and Tenant" architects and (2) the date of
Tenant" occupancy of any portion of the Services Facility for Tenant's
beneficial use or (b) if Landlord is constructing the tenant improvements, the
earlier of (x) seven (7) days after Landlord provides Tenant copies of all
required occupancy permits or (y) the date of Tenant's occupancy of any portion
of the Services Facility for Tenant's beneficial use. In the event that after
the parties agree on the Services Facility Schedule, Tenant seeks to make any
changes to the Services Facility Specifications, and, if Landlord is
constructing the tenant improvements, any changes to the plans for the tenant
improvements, Tenant shall so notify Landlord. Landlord shall obtain from the
contractor a determination of the delay which will be caused by such change
("Change Delay") and so inform Tenant. If Tenant elects to proceed with such
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change and substantial completion of the Services Facility is delayed beyond the
substantial completion date set forth in the Services Facility Schedule by the
amount of cumulative Change Delays or less, notwithstanding the first sentence
of this paragraph (e), the Services Facility Commencement Date shall be the
substantial completion date set forth in the Services Facility Schedule unless
any Landlord Delay (as defined in Exhibit B) causes a delay in substantial
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completion beyond the date set forth in the Services Facility Schedule in excess
of the aggregate Change Delays in which event the first sentence of this
paragraph (e) shall prevail.
(f) After delivery of Tenant's Final Services Facility Notice, Landlord
and Tenant shall amend this Lease to incorporate the Services Facility into the
Premises and make such other appropriate modifications in accordance with this
Article 8.
ARTICLE 9
GENERAL LEASE PROVISIONS
As set forth in Section 1.01, this Lease includes and incorporates the
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General Lease Provisions attached hereto as Exhibit "C". As more fully set forth
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in the General Lease Provisions, this Lease sets forth the entire agreement
between Landlord and Tenant relating to the Premises and the Building. The parts
of this Lease which are written, printed, or typewritten shall have no greater
force or effect than and shall not control over other parts of the Lease, but
all parts, shall be given equal effect.
[Signatures follow on next page.]
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WITNESS the following signatures and seals of Landlord and Tenant made
as of the date first above written.
LANDLORD:
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FAIR LAKES NORTH AND SOUTH L.P.
a Virginia limited partnership
By: Fair Lakes North & South, Inc,
a Virginia corporation
its sole general partner
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
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Its: PRESIDENT
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TENANT:
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SRA INTERNATIONAL, INC.
a Delaware corporation
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: Chief Operating Officer
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EXHIBIT A
Floor Plans and Floor Area Calculations
Exhibit A to this Lease is not included with this Registration
Statement on Form S-1. The Registrant will provide Exhibit A upon the request of
the Securities and Exchange Commission.
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EXHIBIT B
Leasehold Improvements
Exhibit B to this Lease is not included with this Registration
Statement on Form S-1. The Registrant will provide Exhibit B upon the request of
the Securities and Exchange Commission.
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EXHIBIT "C" TO LEASE
Between
FAIR LAKES NORTH AND SOUTH L.P.
("Landlord")
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and
SRA INTERNATIONAL, INC.
("Tenant")
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General Lease Provisions
Table of Contents
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PART 1 - DELIVERY OF THE PREMISES TO TENANT; RENTABLE AREA.......................................................12
Section 1.01. Commencement Date........................................................................12
Section 1.02. Delivery of the Premises to Tenant.......................................................12
Section 1.03. Rentable Area............................................................................12
PART 2 - ACCEPTANCE OF THE PREMISES AND BUILDING BY TENANT.......................................................12
PART 3 - BASE RENT...............................................................................................12
Section 3.01. Base Rent................................................................................12
Section 3.02. Intentionally Omitted....................................................................12
Section 3.03. Payment..................................................................................13
Section 3.04 Acceptance of Rent.......................................................................13
Section 3.05. Survival of Rent Obligation..............................................................13
Section 3.06 Late Payment Fee.........................................................................13
Section 3.07 Interest on Past Due Rent................................................................13
PART 4 - ADDITIONAL RENT.........................................................................................13
Section 4.01. Operating Expenses.......................................................................13
Section 4.02 Real Estate Taxes........................................................................18
Section 4.03 Parking..................................................................................19
Section 4.04 Additional Rent Defined..................................................................19
Section 4.05. Rent Defined.............................................................................19
Section 4.06. Tenant's Audit Right.....................................................................19
PART 5 - SERVICES BY LANDLORD....................................................................................20
PART 6 - UTILITIES...............................................................................................20
Section 6.01. Computerized Energy Management System....................................................20
Section 6.02. Water, Heating, Ventilating and Air Conditioning.........................................20
Section 6.03. Electricity..............................................................................21
PART 7 - USE.....................................................................................................22
PART 8 - COMPLIANCE WITH LAWS AND BUILDING REGULATIONS...........................................................22
Section 8.01. Compliance with Laws.....................................................................22
Section 8.02. Observance of Building's Rules and Regulations...........................................22
Section 8.03. Hazardous Materials......................................................................23
PART 9 - ALTERATIONS.............................................................................................24
Section 9.01. Approval of Landlord.....................................................................24
Section 9.02. Ownership of Improvements to Premises....................................................24
PART 10 - LIENS...................................................................................................25
PART 11 - REPAIRS.................................................................................................25
Section 11.01. Tenant's Obligations....................................................................25
Section 11.02. Landlord's Obligations..................................................................25
PART 12 - INSURANCE...............................................................................................25
Section 12.01. Tenant's Insurance......................................................................25
Section 12.02. Insurance Rating........................................................................26
Section 12.03. Waiver of Subrogation...................................................................27
Section 12.04. Landlord Insurance......................................................................27
PART 13 - DAMAGE BY FIRE OR OTHER CASUALTY........................................................................27
Section 13.01. Damage to Premises......................................................................27
Section 13.02. Damage to Building......................................................................27
Section 13.03. Partial Damage..........................................................................28
Section 13.04. Damage During Last Year of Term.........................................................28
Section 13.05. No Landlord Liability...................................................................28
Section 13.06. Apportionment of Rent...................................................................28
PART 14 - CONDEMNATION............................................................................................29
Section 14.01. Entire Building.........................................................................29
Section 14.02. Portion of Building.....................................................................29
Section 14.03. Portion of Premises.....................................................................29
Section 14.04. Termination of Lease....................................................................29
Section 14.05. Landlord's Right to Award...............................................................29
PART 15 - ASSIGNMENT AND SUBLETTING...............................................................................30
Section 15.01. Rights of Tenants.......................................................................30
Section 15.02. Affiliate Transfer......................................................................31
Section 15.03. Required Provision in Sublease..........................................................31
Section 15.04. Rights of Landlord......................................................................32
PART 16 - INDEMNIFICATION.........................................................................................32
PART 17 - SURRENDER OF THE PREMISES...............................................................................33
Section 17.01. Condition of Premises...................................................................33
Section 17.02. Tenant Holdover.........................................................................33
PART 18 - ESTOPPEL CERTIFICATES...................................................................................33
PART 19 - SUBORDINATION AND ATTORNMENT............................................................................34
Section 19.01. Existing Financings.....................................................................34
Section 19.02. Future Financings.......................................................................34
Section 19.03. Attornment..............................................................................34
PART 20 - QUIET ENJOYMENT.........................................................................................34
PART 21 - SIGNS AND FURNISHINGS...................................................................................35
Section 21.01. Signs and Advertisements................................................................35
Section 21.02. Furnishings.............................................................................35
PART 22 - DEFAULTS AND REMEDIES...................................................................................36
Section 22.01. Events of Default.......................................................................36
Section 22.02. Remedies................................................................................36
Section 22.03. Remedies Cumulative.....................................................................37
Section 22.04. No Acceptance or Surrender..............................................................37
Section 22.05. Customs and Practices...................................................................37
Section 22.06. Payment of Tenant's Obligations by Landlord.............................................37
Section 22.07. Default by Landlord.....................................................................37
PART 23 - INTENTIONALLY OMITTED...................................................................................38
PART 24 - INTENTIONALLY OMITTED...................................................................................38
2
PART 25 - ATTORNEYS FEES AND LEGAL EXPENSES.......................................................................38
PART 26 - NOTICES.................................................................................................38
PART 27 - MISCELLANEOUS...........................................................................................38
Section 27.01. No Partnership..........................................................................38
Section 27.02. Brokers.................................................................................38
Section 27.03. Severability............................................................................38
Section 27.04. Trial by Jury...........................................................................39
Section 27.05. Force Majeure...........................................................................39
Section 27.06. Captions................................................................................39
Section 27.07. Benefit and Burden......................................................................39
Section 27.08. No Representations by Landlord..........................................................38
Section 27.09. Entire Agreement........................................................................39
Section 27.10. No Offer................................................................................39
Section 27.11. Authority...............................................................................40
Section 27.12. Changes Requested by Lender.............................................................41
Section 27.13. Governing Law and Construction..........................................................41
Section 27.14. Landlord's Liability....................................................................41
Section 27.15. Use of Name of Building.................................................................41
Section 27.16. Changes by Landlord.....................................................................41
Section 27.17. Time of Essence.........................................................................42
Section 27.18. Year 2000...............................................................................42
Section 27.19. Satellite Dish..........................................................................42
3
PART 1 - DELIVERY OF THE PREMISES TO TENANT; RENTABLE AREA
Section 1.01. Commencement Date.
-----------------
The Commencement Date shall be January 1, 1999.
Section 1.02. Delivery of the Premises to Tenant.
----------------------------------
Landlord and Tenant acknowledge that as of the Effective Date Tenant is
in possession of the Premises. As a result, Landlord has no obligation to
deliver possession of the Promises to Tenant on the Commencement Date. Any
Leasehold Improvements to be made to the Premises shall be constructed after the
Commencement Date and Tenant shall continue to pay Rent during the construction
of any Leasehold Improvements except as otherwise provided. in Exhibit C.
---------
Section 1.03. RENTABLE AREA.
-------------
The term "Rentable Area of the Premises" is as stated in the Basic
-----------------------------
Lease Information. If the Rentable Area of the premises changes pursuant to
Article 6 or otherwise, then Tenant's Proportionate Share shall be adjusted
effective as of the date of any such change.
PART 2 - ACCEPTANCE OF THE PREMISES AND BUILDING BY TENANT
Tenant acknowledges that it currently is in possession of the Premises
and accepts the Premises in its "as is" and "where is" condition.
Taking possession of the Services Facility by Tenant shall be
conclusive evidence that Tenant: (i) accepts the Services Facility as suitable
for the purposes for which it is leased; and (ii) accepts the Services Facility
and every part and appurtenance thereof as being in a good and satisfactory
condition except for latent defects therein of which Tenant shall have one (1)
year from the date of delivery of such space to notify Landlord.
PART 3 - BASE RENT
Section 3.01. Base Rent.
---------
The term "Base Year" shall mean the twelve month period commencing on
January 1, 1999 and ending on December 31, 1999. The term "Subsequent Year"
shall mean each twelve month period following the Base Year. The term "Index"
shall mean the CPI (as defined in Section 6.02) The term "Base Index" shall mean
the average Index for 1998. If the Index is discontinued during the Term, with
no successor or comparable successor Index, Landlord shall have the right, with
Tenants reasonable approval, to reasonably select and substitute another similar
index. The term "Comparison Month." shall mean the calendar month which is two
months prior to the first month of each Subsequent Year in question.
On the first day of each Subsequent Year, the Base Rent per square foot
of Rentable Area of the Premises shall be increased to in amount equal to the
Base Rent per square foot of Rentable Area of the Premises for the Base Year
($13.15), plus an amount equal to the product of 1.3 times the percentage
increase in the Index for the Comparison Month as compared to the Base Index,
multiplied by the Base Rent per square foot of Rentable Area of the Premises for
the Base Year ($13.15); provided, however, in no event shall the Base Rent per
square foot of Rentable Area of the Premises for a Subsequent Year be less than
the Base Rent per square foot of Rentable Area of the Premises applicable to the
prior year and in no event shall the Base Rent per square foot of Rentable Area
of the Premises for the Subsequent Year be greater than the amounts shown in
Exhibit "F".
-----------
In addition, Tenant shall pay, as Additional Rent, in. connection with
the brokerage commission to be paid by Landlord to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the
"▇▇▇▇▇▇▇ Commission") the amounts set forth on Exhibit "F1" attached hereto and
------------------ ------------
made a part hereof by this reference.
Section 3.02. Intentionally Omitted.
---------------------
12
Section 3.03. Payment.
-------
All Base Rent and Additional Rent (as hereinafter defined) shall be
paid to Landlord by Tenant when due, without deduction or offset, except as
provided herein, in lawful money of the United States, at Landlord's address for
Notice or such other place as Landlord may from time to time designate in
writing
Section 3.04. Acceptance of Rent.
------------------
If Landlord shall direct Tenant to pay Base Rent and/or Additional
Rent to a lockbox or other depository whereby checks issued in payment of Base
Rent and/or Additional Rent (or both or all, as the case may be) are initially
cashed or deposited by a person or entity other than Landlord (albeit on
Landlord's authority), then, for any and all purposes under this Lease: (i)
Landlord shall not be deemed to have accepted such payment until ten (10) days
after the date on which Landlord shall have actually received such funds, and
(ii) Landlord shall be deemed to have accepted such payment if (and only if)
within said ten (10) day period, Landlord shall not have refunded (or attempted
to refund) such payment to Tenant. Nothing contained in the immediately
preceding sentence shall be construed to place Tenant in default of Tenant's
obligation to pay Rent if and for so long, as Tenant shall timely pay the Rent
required pursuant to this Lease in the manner designated by Landlord.
Section 3.05. Survival of Rent Obligation.
---------------------------
The obligation of Tenant with respect to the payment of past due Base
Rent and Additional Rent shall survive the termination of this Lease.
Section 3.06. Late Payment Fee.
----------------
In the event any installment of Rent due hereunder is not paid within
five (5) calendar days after notice from Landlord to Tenant that it has not been
paid when due, then Tenant shall also pay, to Landlord as Additional Rent a late
payment fee equal to (i) two and a half percent (2.5%) of such delinquent
installment. of Rent for the first delinquency in any twelve (12) month period
or (ii) five percent (5%) of such delinquent installment of Rent or any
component thereof for each delinquency thereafter in any twelve (12) month
period.
Section 3.07. Interest on Past Due Rent.
-------------------------
All installments of Rent unpaid five (5) days after notice from
Landlord to Tenant of such delinquency shall bear interest until paid fit. a
rate per annum equal to two percent (2%) above the prime rate of interest from
time to time publicly announced by NationsBank, N.A., or any successor thereof
(the "Default Rate"); provided, however, that if at the time such interest is
------------
sought to be imposed the rate of interest exceeds the maximum rate permitted
under federal law or under the laws of the Commonwealth of Virginia, the rate of
interest shall be the maximum rate of interest then permitted by applicable law.
PART 4 - ADDITIONAL RENT
Section 4.01. Operating Expenses.
------------------
(a) Throughout the Term, Tenant shall pay on a monthly basis, without
demand, as Additional Rent for the Premises, Tenant's Proportionate Share of the
Operating Expenses (as defined in Section 4.01 (b) hereof) of the Building. Such
----------------
payments shall be made as follows:
(1) Prior to the Commencement Date and on the first day of
January of each year during the Tenn. or as soon thereafter as is practicable,
Landlord Shall furnish Tenant with Landlord's estimate of the Operating Expenses
for the forthcoming year, On the first day of each month during such year,
Tenant shall pay one-twelfth (1/12th) of Tenants Proportionate Share of the
estimated Operating Expenses for such year. If for any reason Landlord has not
provided Tenant with Landlord's Operating Expenses estimate on or before the
first day of January of any year during the Term (or by the Commencement Date,
as the case may be), then., until the first day of the calendar month following
the month in which Tenant is given Landlords estimate of Operating Expenses,
Tenant shall continue to pay to Landlord on the first day of each calendar month
the monthly sum payable by Tenant under this Section 4.01 for the month of
------------
December of the preceding year.
13
(2) On the first day of March of each year during the Term, or as
soon thereafter as reasonably practical but in no event later than the first day
of June of each year, Landlord shall furnish to Tenant a statement of the actual
Operating Expenses for the preceding year (the "Operating Expense Statement")
---------------------------
audited by Beers & ▇▇▇▇▇▇ or another reputable firm that has at least 10 years
experience with audits for office buildings and is reasonably approved by Tenant
within ten (10) days after Landlord notifies Tenant which auditor Landlord
intends to employ for such audit ("Auditor"). Within thirty (30) days after the
-------
delivery of the Operating Expense Statement, a lump sum payment will be made by
Tenant equal to the amount, if any, by which Tenant's Proportionate Share of the
actual Operating Expenses exceeds the amount, if arty, which Tenant has paid
toward the estimated Operating Expenses pursuant to Section 4.01(a)(1) above. If
------------------
Tenant's Proportionate Share of the actual Operating Expenses is less than the
amount Tenant has paid toward the estimated Operating Expenses pursuant to
Section 4.01(a)(1) above, Landlord shall apply such amount to the next accruing
------------------
installments of Rent due hereunder or, in the event that the Term has expired or
been earlier terminated Landlord shall reimburse Tenant for the overpayment
within 30 days after delivery of the statement. The foregoing notwithstanding,
Landlord shall have the right from time to time during any year, but not more
frequently than twice in any calendar year, to notify Tenant in writing of any
change in Landlord's estimate. of Operating Expenses for the then current year,
in which event Tenant's Proportionate Share of Operating Expenses, as previously
estimated, shall be adjusted to reflect the amount shown in such notice and
shall be effective, and due from Tenant, on the first day of each month
following Landlord's giving of such notice. The effect of this Section 4.01(a)
---------------
is that Tenant will pay during each year during the Term Tenant's Proportionate
Share of actual Operating Expenses. Tenant's and Landlord's obligations
hereunder shall survive expiration or earlier termination of this Lease.
(3) If the Commencement Date occurs on a date other than the
first day of January, or if the Term ends on a date other than the last day of
December, the actual Operating Expenses for the year in which the Commencement
Date or the Expiration Date occurs, as the case may be, shall be prorated so
that Tenant shall pay that portion of Tenant's Proportionate Share of Operating
Expenses for such year represented by a fraction, the numerator of which shall
be the number of days during such fractional year filling within the Term, and
the denominator of which is 365 (or 366, in the case of a leap year ). The
provisions of this Section 4.01 shall survive the Expiration Date or any sooner
------------
termination provided for in this Lease.
(b) As used in this Lease, "Operating Expenses" means all expenses,
------------------
costs, and disbursements of every kind which Landlord incurs, pays or becomes
obligated to pay in connection with the operation, repair, and maintenance of
the Building and the Land (provided that Landlord shall allocate between the
Building and Fair Lakes North expenses associated with the maintenance of the
Land based on the square footage of each building), which costs shall include
all expenditures by Landlord to maintain all facilities in operation at the
beginning of the Term and such additional facilities installed in subsequent
years as Landlord reasonably may consider necessary or beneficial for the
operation. of the Building. All Operating Expenses shall be determined according
to generally accepted accounting principles (which shall be consistently
applied) and shall include. but are not limited to, the following:
(1) Wages, salaries. and fees of all personnel at or below the
level of Director of Property Management (and exclusive of Landlord's executive
personnel) engaged in the operation, repair, maintenance, or security of the
Building, including taxes, insurance, and benefits relating thereto including
any employees whose services are provided to the Building and other buildings
owned by Landlord provided that the costs of such employees' services are
allocated to the Building by Landlord on a fair and equitable basis;
(2) All supplies and materials and administrative costs required
for the operation, repair, security, and maintenance of the Building and the
Land;
(3) Cost of all maintenance and service agreements for the
Building and the Land mid the equipment therein, including, without limitation,
alarm service, water treatment services, janitorial services, security systems
service, window cleaning, service on electrical
14
and mechanical components, trash removal, elevator maintenance, extermination
service, plumbing service, grounds keeping, and landscaping;
(4) Cost of all insurance (including deductible payments)
relating to the Building for which Landlord is responsible hereunder, or which
Landlord considers reasonably necessary for the operation of the Building,
including, without limitation, the cost of property, casualty and liability
insurance applicable to the Building and Landlord's personal property used in
connection therewith, and the cost of business interruption or rental insurance
in such amounts as will reimburse Landlord for all losses of earnings and other
income attributable to such perils as are, commonly insured against by prudent
landlords or required by Landlord's lender;
(5) Cost of repairs and maintenance (excluding repairs and
maintenance paid by proceeds of insurance or by Tenant or other third parties,
but including the deductible payments actually made under policies maintained by
Landlord) of the Building and. the Land;
(6) All utility costs of the Building (exclusive, however, of
such special utility services as described in Part 6 of the General Lease
------
Provision, the costs of which special utility services shall be payable as
therein provided), including, without limitation, (i) water, power, fuel,
heating, lighting, air conditioning, ventilating, and (ii) telecommunications,
cable television and fiber optics (if Landlord is required to provide such
services) except such utilities or services paid directly by any tenant;
(7) The annual amortization of the cost of installation of items
of a capital nature. (a) which are installed to reduce operating costs for the
general benefit of the Building's tenants (provided that the amount included in
Operating Expenses shall not exceed the amount of actual savings from such
improvement in the same year) or (b) which are required to be installed by any
governmental authority or for replacement of any existing equipment, machinery
or essential component of the Building that has become necessary to replace
because it cannot be repaired without incurring excessive repair costs (provided
the amount included in Operating Expenses, pursuant to this clause (b) shall not
exceed. $30,000 in any year). Notwithstanding anything to the contrary herein,
the cost of replacing the roof on the Building shall never be included in
Operating Expenses. All such costs, including interest costs, shall be amortized
over the reasonable life of the capital investment items, with tile reasonable
life mid amortization schedule being determined by Landlord according to
generally accepted accounting principles, but in no event to extend beyond the
reasonable life of the Building; provided, however, (a) that if the useful life
of the improvement is five years or less the amortization shall include in
imputed interest rate of ten percent (10%) and if it is greater than five years,
the amortization shall include an imputed interest rate of nine percent (9%) and
(b) capital improvement items that cost less than $5,000 shall be amortized
fully in the year in which such cost is incurred. Notwithstanding anything to
the contrary herein, Landlord shall use its reasonable judgment as to items in
our around the Building that need to be replaced rather than repaired and shall
not decide to repair rather than replace an item based on whether the
replacement costs will be included in Operating Expenses.
(8) Landlord's central accounting costs and the reasonable cost
of an annual audit relating to the operation of the Building;
(9) A management fee to the manager of the Building which shall
be no greater than 3% of gross rents;
(10) Reasonable building office rent or rental value and
administrative costs relative to the operation of any central Building
management office whether in the Building or in another building within the
planned mixed use development known as Fair Lakes (and hereinafter called the
same), and
(11) The Fair Lakes League Assessment.
15
(c) Notwithstanding any other provision of this Lease, Operating
Expenses (as defined in Section 4.01(b) above), shall not include, and Landlord
---------------
shall be solely liable for, the following expenses:
(1) Costs of capital improvements (other than those permitted by
Section 4.01(b)(7) above) determined in accordance with generally accepted
accounting principles;
(2) Repairs or other work occasioned by insured casualty or by
the exercise of eminent domain, to the extent Landlord is reimbursed by
warranties, service contracts or insurance maintained by Landlord or Tenant
hereof or by the condemning authority (excluding deductibles);
(3) Leasing commissions, attorneys' fees, cost and disbursements
and other expenses incurred in connection with negotiations or disputes with
present or prospective tenants or other occupants of the Building;
(4) Costs incurred in improving, decorating, building-out,
painting or redecorating space for other tenants of the Building;
(5) Expenses in connection with services or other benefits of a
type which are not provided Tenant but which are provided to another tenant of
the Building;
(6) Costs incurred due to violation by Landlord or any other
tenant of the Building of the terms and conditions of any lease of space in the
Building or the negligence of Landlord, its agents, contractors and employees;
(7) Interest, points, fees principal or debt or amortization
payments on any mortgage or mortgages;
(8) Payments of rent by Landlord to any ground lessor;
(9) Landlord's general overhead, and administrative and
accounting expenses that are not reasonably and properly directly allocable to
the operation of the Building.
(10) Advertising expenditures with respect to the Building;
(11) Any costs, fines or penalties incurred due to violations of
any intentional nature by Landlord of any governmental rule or authority;
(12) Wages, salaries or other compensation paid to (i) any
executive employees above the grade of Director of Property Management and (ii)
employees whose services are provided to the Building and other buildings owned
by Landlord except for a proportionate share of the costs of such employees
services allocated to the Building by Landlord on a fair and equitable basis.
(13) Any cost or expense whatsoever arising from or related to
any clean-up of any hazardous or toxic materials, or, any governmental penalty
of fines associated therewith, excepting, however, any such cost or expense
resulting from the negligent or intentional acts of Tenant. The term "hazardous
or toxic materials" as used in this Lease shall mean those materials identified
in The Comprehensive Environmental Response. Compensation and Liability Act of
1980 of the United States Code and by the laws of the Commonwealth of Virginia,
as such sections may be amended from time to time;
(14) The cost of excessive use of Building utilities (such as
HVAC) by other tenants of the Building, and/or utility service by other tenants
outside normal Building hours or utilities paid directly by Tenant or other
tenants;
16
(15) Costs incurred in connection with the sale, financing,
refinancing, mortgaging or change of ownership of the Building or the Project,
including without limitation, brokerage commissions, attorneys and accountants
fees, closing costs, title insurance premiums, transfer taxes and interest
charges;
(16) Any and all loss, claim, damage, award, deductibles paid
under any insurance policies or other amount paid or payable by Landlord
(including all attorneys' fees, court costs and other costs incurred in
connection therewith) as a result or arising out of any act of negligence,
breach of contract or willful misconduct by the Landlord or its agents,
employees or contractors to the. extent not covered by insurance;
(17) Bad debt losses, rent losses or reserves for such losses;
(18) Non-cash items, such as deductions for depreciation and
amortization of the Building and the Building equipment;
(19) Costs incurred in operating concessions such as (but not
limited to) newspaper or cigarette stands;
(20) Costs for which Landlord is reimbursed, or would be but for
Landlord's actions, by its insurance carrier, any tenant's carrier, any tenant.
any warrantor or any, other third party;
(21) Costs associated with the operation of the business of the
person or entity that constitutes Landlord, as distinguished from the costs of
operation of the Building, including, without limitation, accounting and legal
matters, costs of defending any lawsuits with any prospective or actual
purchaser, ground lessor or mortgagee, costs, of selling, syndicating,
financing, mortgaging or hypothecating any of Landlord's interest in the
Building, costs of any disputes between Landlord and its employees, disputes of
Landlord with Building management, and outside fees paid in connection with
disputes with other tenants;
(22) Fees for services rendered by an affiliate of Landlord to
the extent such .flees exceed the market rate payable for comparable services if
rendered by unrelated third parties of comparable quality, except as
pre-approved by Tenant in its sole discretion;
(23) Taxes other than Real Estate Taxes described in Section.
4.02 and other than sales and use taxes on items the cost of which is properly
included in Operating Expenses;
(24) Costs of small tools and equipment in excess of $3,000 in
the aggregate per annum used in the operation, repair and maintenance of the
Building;
(25) Rental for items (except when needed in connection with
normal repairs and maintenance of permanent systems typically rented for such
purposes), which, if purchased rather than rented, should be treated as a
capital improvement under normal accounting rules and would not be included in
Operating Expenses pursuant to Section 4.01(b)(7);
(26) Marketing costs including leasing commissions, space
planners' fees, attorneys' fees, advertising expenses, expenses incurred in
connection with the negotiation and preparation of proposals, deal memos,
letters of intent, leases, subleases and/or assignments, space planning costs
and other costs and expenses incurred in connection with lease, sublease and/or
assignment negotiations and transactions with present or prospective tenants or
other occupants of the Building;
(27) Costs of acquiring any sculpture paintings or other artwork
unless approved by Tenant;
17
(28) Charitable and political contributions, and promotional
expenditures, including costs of staging special events unless approved by
Tenant; and
(29) Any other cost or expense which would not be considered an
operating expense under generally accepted accounting principles consistently
applied except as specifically provided for herein.
In addition to the foregoing, Operating, Expenses shall be reduced by
the Building's pro rata share of all cash discounts, trade discounts or quantity
discounts received by Landlord or Landlord's managing agent in the purchase of
any goods, utilities or services in connection with the prudent operation of the
Building and the Land on which it is located. In the event there is a conflict
between the Operating Expenses identified in Section 4.01(b) and the exclusions
set forth in this Section 4.01(c), the exclusions shall prevail.
Section 4.02. Real Estate Taxes.
-----------------
(a) Throughout the Term, Tenant shall pay on a monthly basis, without
demand, as Additional Rent for the Premises, Tenant's Proportionate Share of the
actual Real Estate Taxes (as defined in Section. 4.02(c) hereof). Such payments
----------------
shall be made as follows:
(1) Prior to the Commencement Date and on the first day of
January of each year during the Term, or as soon thereafter as practicable,
Landlord shall furnish Tenant with Landlord's estimate of the Real Estate Taxes
for the forthcoming year. On the first day of each month during such year,
Tenant shall pay one-twelfth (1/12th) of Tenant's Proportionate Share of the
estimated Real Estate Taxes for such year. If for any reason Landlord has not
provided Tenant with Landlord's estimate of Real. Estate Taxes on or before the
first day of January of any year during the Term (or by the Commencement Date,
as the case may be), then until the first day of the calendar month following
the month in which Tenant is given Landlord's estimate of Real Estate Taxes,
Tenant shall continue to pay to Landlord on the first day of each calendar month
the monthly sum payable by Tenant under this Section 4.02 for the month of
------------
December of the preceding year.
(2) On the first day of March of each year during the Term or
as soon thereafter as reasonably practical, Landlord shall furnish to Tenant a
statement of the actual Real Estate Taxes for the preceding year. Within thirty
(30) days after the delivery of that statement, a lump sum payment will be made
by Tenant equal to the amount, if any, by which Tenant's Proportionate Share of
the actual Real Estate Taxes exceeds the amount, if any, which Tenant has paid
toward the estimated Real Estate Taxes pursuant. to Section 4.02(a)(1) above. If
------------------
Tenant's Proportionate Share of the actual Real Estate Taxes is less than the
amount Tenant has paid toward the estimated Real Estate Taxes pursuant to
Section 4.02(a)(1) above, Landlord shall apply such amount to the next accruing
------------------
installment(s) of Rent due hereunder. The foregoing notwithstanding, Landlord
shall have the right from time to time during any year, but not more frequently
than twice in any calendar year, to notify Tenant in writing of any change in
Landlord's estimate of Real Estate Taxes for the then current year, in which
event Tenant's Proportionate Share of Real Estate Taxes, as previously
estimated, shall be adjusted to reflect the amount shown. in such notice and
shall be effective, and due from Tenant, on the first day of each month
following Landlord's giving of such notice. The effect of this Section 4.02(a)
---------------
is that Tenant will pay during each year during the Term Tenant's Proportionate
Share of actual Real Estate Taxes.
(b) If the Commencement Date occurs on a date other than the first
day of January, of if the term ends on a date other than the last day of
December, the actual Real Estate Taxes for the year in which the Commencement
Date or the Expiration Date occurs, as the case may be, shall be prorated so
that Tenant shall pay that portion of Tenant's Proportionate Share of Real
Estate Taxes for such year represented by a fraction, the numerator of which
shall be the number of days during such fractional year falling within the Term,
and the denominator of which is 365 (or 366, in the case of a. leap year). The
provisions of this Section 4.02 shall survive the Expiration Date or any sooner
------------
termination provided for in this Lease.
18
(c) As used in this Lease, the term "Real Estate Taxes" shall
-----------------
including the following:
(1) All real estate (axes, including general and special
assessments, if any, which are imposed upon Landlord or assessed against the
Building or the Land provided, however, that Landlord shall allocate the Real
Estate Taxes on. the Land between the Building and Fair Lakes North based on the
square footage of each building; and
(2) Any other present or future taxes or governmental charges
that are imposed upon Landlord, or assessed against the Building or the Land, in
lieu of current real estate taxes including, but not limited to, any tax levied
on or measured by the rents payable by tenants of the Building or Landlord's
gross receipts for the Building which is in the nature of, or in substitution
for, real estate taxes. Any inheritance, estate, gift, franchise, corporation,
income, or net profits tax which may be assessed against Landlord and/or the
Building shall be excluded.
(d) Landlord shall timely pay all Real Estate Taxes and,
notwithstanding anything herein to the contrary, Tenant shall not be responsible
for any penalties, fees or charges, resulting from Landlord's late payment of
Real Estate Taxes unless Landlord's failure to timely pay such taxes results
from Tenant's failure to timely pay its Proportionate Share of such Real Estate
Taxes or other amounts due hereunder.
Section 4.03. Parking.
-------
During the Term, Tenant and its employees, invitees, and guests shall
have the right to use, in common, with the other tenants of the Building, the
parking areas for the Building, at no additional charge. Landlord reserves the
right to promulgate reasonable rules and regulations of general application for
the use of all parking spaces.
Section 4.04. Additional Rent Defined.
-----------------------
The term "Additional Rent" shall include, but not be limited to (i) the
---------------
late payment fee, if any, under Section 3.06; (ii) Tenant's Proportionate Share
------------
of Operating Expenses as calculated under Section 4.01; (iii) Tenant's
------------
Proportionate Share of Real Estate Taxes as calculated under Section 4.02; and
------------
(iv) all other costs and expenses which Tenant assumes, agrees or is required to
pay to Landlord pursuant to this Lease. In the event of nonpayment of Additional
Rent, Landlord shall have all the rights and remedies herein provided for in
case of nonpayment of Rent.
Section 4.05. Rent Defined.
------------
The term "Rent" shall include Base Rent and Additional Rent.
----
Section 4.06. Tenant's Audit Right.
--------------------
In the event that the Auditor finds an error in Landlord's statement of
Operating Expenses, Tenant and/or Landlord shall have the right to require the
Auditor by notice to the Auditor and the other party within sixty (60) days
after receipt of the Auditor's notice of error, to review Landlord's books and
records relating to Operating Expenses for preceding years for the purpose of
determining whether the same error resulted in an overcharge or undercharge to
Tenant with respect to the same or substantially similar line items in such
preceding years, and if so, any undercharge shall be paid by Tenant within
thirty (30) after notice from the Auditor of such undercharge or, any overcharge
to Tenant shall be adjusted by a credit in the amount of such overpayment
against Tenant's next required payment of Rent, or in the event that the Term
has expired or terminated, by payment to Tenant within thirty day after notice
to Landlord of any such overpayment. The provisions of this Section 4.06 shall
survive the expiration or earlier termination of this Lease.
19
PART 5 - SERVICES BY LANDLORD
Throughout the Term, Landlord shall maintain the Building and the Land in a
first-class manner and shall furnish or cause to be furnished, the following
services: (I) passenger elevator service in common with other tenants for access
to and from the Premises, provided that Landlord may reasonably limit the number
of elevators to be operated at night after normal business hours and on
Saturdays, Sundays, and holidays and that Landlord may remove elevators from
service for maintenance so long as at least one elevator is always functioning
and usable by Tenant, (ii) janitorial cleaning services Monday through Friday
(except holidays) in accordance with the Standards attached as Exhibit J; (iii)
---------
replacement, as necessary, of ceiling tiles and all lamps and ballasts in
Building Standard light fixtures within the Premises; (iv) the utility services
provided for in Part 6 below (v) adequate supplies for toilet rooms throughout
------
the Building; (vi) building security system provided that Landlord may use the
building security systems currently installed in the Building and Tenant, at
Tenant's sole cost, shall be permitted to install or use supplemental security
services for the Building and Landlord hereby agrees to cooperate with Tenant in
Tenant's use of any such services; (vii) window washing of all windows in the
Building two times per year and (viii) landscaping, road, sidewalk, driveway and
parking lot repair and maintenance including, without limitation, restriping the
parking lot, and reasonable ice and snow removal in accordance with first class
maintenance of all improvements on the Land. An engineer shall be located at
either the Building or Fair Lakes North all day during every Business Day
throughout the Term and shall be available on-call at all other times. Provided
Tenant gives Landlord notice 45 days in advance, Tenant shall have the right at
its sole option to contract for cleaning and janitorial services for the
Premises, or for the Building if Tenant is leading the entire Building, with a
third party provider in which event the costs of such services shall not be
included in Operating Expenses. If Tenant requires services which are not
specified herein and Landlord elects to provide such services to Tenant, Tenant
shall pay to Landlord, 30 days after demand, as Additional Rent, Landlord's
charges for providing such services.
Failure to furnish, or any stoppage of, the services provided for in
this Part 5 and in Part 6 below resulting from any cause will not make Landlord
------ ------
liable in any respect for damages to any person, property, or business, nor be
construed as an eviction of Tenant, nor entitle Tenant to any abatement of Rent,
or damages because of malfunctions or any interruptions in service except as
otherwise provided in. Section 6.03(c).
PART 6 - UTILITIES
Section 6.01. Computerized Energy Management System.
-------------------------------------
The Building has been designed with a Computerized Energy Management
System (the "CEMS") the specifications for which are attached hereto as Exhibit
---- -------
J which controls the heating, ventilating and air conditioning system. (the
-
"HVAC") for the Premises, Tenant will designate to Landlord authorized
----
representatives of the Tenant who will be given, through the CEMS direct control
of the HVAC system for use after normal Building hours.
Section 6.02. Water Heating, Ventilating and Air Conditioning.
-----------------------------------------------
(a) While Tenant is occupying the Premises and is not in Default under
this Lease, Landlord shall furnish Tenant with the following utilities in the
manner and to the extent customarily provided in first class office buildings in
the Northern Virginia area: (1) potable hot and cold water at those currently
located points of supply provided for normal lavatory and other reasonable uses
by tenants in the Building; (2) heating, ventilating, and air-conditioning in
season on Business Days from 7:30 a.m. to 6 p.m., and on Saturdays from 8 a.m.
to 1 p.m. (except holidays); and (3) electric lighting for public areas and
special service areas of the Building. If Tenant requires HVAC or electrical
service outside the hours and days specified above, the additional service may
be requested by use of the CEMS and Tenant will pay for such services based on
measurement from the CEMS at the rate of $20/hour/floor during the first Lease
Year which amount shall increase each Lease Year thereafter by the increase in
CPI (as hereinafter
20
defined) during such Lease Year. Landlord shall have no
obligation to provide any additional service to Tenant at any time Tenant is in
Default under this Lease.
"CPI" shall mean the revised Consumer Price Index for Urban Wage
---
Earners and Clerical Workers (revised CPI-W), All Items, Baltimore, MD -
Washington, DC, VA, WV CMSA, November, 1996=100, issued by the Bureau of Labor
Statistics of the United States Department of Labor. If the CPI is changed so
that a base year other than November, 1996 is used, the CPI used herein shall be
converted in accordance with the conversion factor published by the Bureau of
Labor Statistics. If the CPI is discontinued during the Term, with no successor
or comparable successor CPI, Landlord and Tenant shall reasonably select and
agree upon another similar index as a substitute.
(b) Landlord shall not be liable for its failure to maintain
comfortable atmospheric conditions in all or any portion of the Premises due to
heat generated by any equipment or machinery installed by Tenant or excessive
peopleload based on the capacity of the Building's systems (with or without
Landlord's consent) that exceeds generally accepted engineering design practices
for normal office purposes. If Tenant desires additional cooling to offset
excessive heat generated by such equipment or machinery or people, Landlord will
have the right to install supplemental air conditioning units in the Premises,
and the full cost thereof, including the cost of installation of unit(s) and
meter(s), operation and use, will be paid by Tenant to Landlord on demand.
Tenant will be required to maintain any supplemental air conditioning units
installed pursuant to this Section.
Section 6.01. Electricity.
-----------
(a) While Tenant is occupying the Premises and is not in Default
under this Lease, Landlord will furnish sufficient power in the Premises for
lighting and for personal desktop computers, typewriters, word processors,
calculating machines, copying machines, and other similar office equipment of
low electrical consumption. Tenant will not install or operate in the Premises
any heavy duty electrical equipment or machinery without first obtaining prior
written consent of Landlord. Landlord may require, as a condition of its
consent, for the installation of such equipment or machinery, payment by Tenant
as Additional Rent for excess consumption of electricity that may be occasioned
by the operation of said equipment or machinery. Upon reasonable prior notice,
Landlord may make periodic inspections of the Premises at reasonable times to
determine that Tenant's electrically operated equipment and machinery complies
with the provisions of Part 6.
(b) If Tenant's use of electricity in the Premises materially exceeds
the electrical usage as of the Commencement Date, the Tenant shall pay Landlord
(or the utility company if direct service is provided by such company) within 30
days after demand therefor for all such excessive electric consumption in
accordance with amperage readings accurately reflecting such excess
consumptions.
(c) Notwithstanding any other provisions of this Lease to the
contrary, in the event that electricity or other utilities or services to be
provided by Landlord pursuant to this Lease are not provided to the Premises as
a result of Landlord's negligence or willful misconduct and shall render any
portion of the Premises inaccessible or unusable for the regular operation of
Tenant's business for three (3) consecutive Business Days or more, then all Rent
and Additional Rent payable hereunder with respect to such portion of the
Premises which Tenant is not able to use and does not actually use for the
regular operation of its business shall be abated retroactively to the first day
of such interruption. In the event of any interruption in services which is not
the result of Landlord's negligence or willful misconduct and renders any
portion of the Premises inaccessible or unusable for the regular operation of
Tenant's business for three (3) consecutive Business Days or more, the Rent and
Additional Rent shall not be abated and Tenant's insurance shall be the primary
insurance for costs to Tenant resulting from such interruption provided,
however, that Landlord shall endeavor to obtain insurance at commercially
reasonable rates to cover any loss or cost to Tenant from such interruption
beyond that covered by Tenant's insurance. Failure by Landlord to obtain such
insurance shall not be a default by Landlord nor permit Tenant to ▇▇▇▇▇ Rent.
Further, Tenant shall not be entitled to any abatement of Rent in
21
connection with any interruption in service caused by Tenant, its agents,
employees or representatives.
PART 7 - USE
The Premises shall be used solely for general office purposes that are
permitted by applicable zoning ordinances and land use requirements and for no
other purpose. Tenant agrees to use and maintain the Premises in a clean,
careful, safe, lawful, and proper manner.
PART 8 - COMPLIANCE WITH LAWS AND BUILDING REGULATIONS
Section 8.01. Compliance with Laws.
--------------------
(a) Tenant shall, at its sole expense, promptly and faithfully (i)
comply with all present and future laws, ordinances, orders, rules, regulations,
and requirements of every governmental authority having jurisdiction over the
Premises; (ii) comply with the provisions of the Americans with Disabilities Act
42 U.S.C. Section 12101 et seq ("ADA") as it applies to the Premises and
------
Tenant's activities therein (provided, however, that Landlord shall be
responsible for the ADA compliance of the bathrooms in the Premises unless
changes are required to comply with the ADA as a result of Tenant's alterations
to the Premises); (iii) comply with any direction made pursuant to law by any
public officers which requires abatement of any nuisance or imposes upon
Landlord or Tenant any duty or obligation arising from Tenant's occupancy or use
of the Premises or from conditions which have been created by or at the
insistence of Tenant; (iv) comply with the requirements of the local board of
fire underwriters, or anybody exercising similar functions with respect to the
construction, care and safety, maintenance and operation of the Premises; and
(v) indemnify Landlord and hold Landlord harmless from any loss, cost, claim, or
expense which Landlord may incur or suffer by reason of Tenant's failure to
comply with its obligations under clauses (i), (ii), (iii) or (iv) above. If
Tenant receives notice of any such direction or of violation of any such law,
order, ordinance, or regulation, Tenant shall promptly notify Landlord thereof.
(b) Except as set forth in paragraph (a) of this Section. 8.01 or
-------------
otherwise in this Lease where such obligation is imposed upon the Tenant,
Landlord shall, at Landlord's cost, (subject to inclusion in the Operating
Expenses, if applicable) promptly and properly comply with and carry out all
requirements and conditions now or hereafter imposed upon Landlord, the Building
or the Land by any ordinance, law, rule, order, or regulation of any local,
state, district, county or federal government. or of any of their various
departments or agencies which pertain to the ownership, operation and
maintenance of the Building and the Land including, without limitation, the ADA.
Landlord represents and warrants that the Building (exclusive of the Premises)
and Land currently comply with all applicable laws, rules and regulations
including, without limitation, each of the laws and regulations identified in
(s) 8.01(a).
Section 8.02. Observance of Building's Rules and Regulations.
----------------------------------------------
Tenant and its servants, employees, agents, visitors, and licensees
shall observe faithfully and comply strictly with the Rules and Regulations
attached to this Lease as Exhibit "D". Landlord shall at all times have the
-----------
right to make reasonable changes in and additions to such Rules and Regulations;
provided such changes in existing or new rules and regulations do not materially
interfere with the lawful conduct of Tenant's business in the Premises. Any
failure by Landlord to enforce any of the Rules and Regulations now or hereafter
in effect, either against Tenant or any other tenant in the Building, shall not
constitute a waiver of any such Rules and Regulations. Landlord shall not be
liable to Tenant for the failure or refusal by any other tenant, guest, invitee,
visitor, or occupant of the Building to comply with any of the Rules and
Regulations. If there is any inconsistency between this Lease and the Rules and
Regulations set forth in Exhibit "D" hereto, this Lease shall govern.
-----------
22
Section 8.03 Hazardous Materials.
-------------------
(a) Except for those materials that are necessary in the normal
course of Tenant's business activities associated with the Permitted Use,
Tenant, its agents, employees, contractors or invitees shall not (i) cause or
permit any Hazardous Materials (hereinafter defined) to be brought upon, stored,
used or disposed on, in or about the Premises and/or the Building, or (ii)
permit the release, discharge, spill or emission of any substance considered to
be a Hazardous Material from the Premises.
(b) Any Hazardous Materials permitted by subparagraph (a), all
----------------
containers therefor, and all materials that have been contaminated by Hazardous
Materials shall be used, kept, stored and disposed of by Tenant in a manner that
shall in all respects comply with all applicable federal, state and local laws,
ordinances, regulations and standards.
(c) Tenant hereby agrees that it is and shall be fully responsible
for all costs, expenses, damages or liabilities (including, but not limited to
those incurred by Landlord and/or its mortgagee) which may occur from the use,
storage, disposal, release, spill, discharge or emissions of Hazardous Materials
by Tenant whether or not the same maybe permitted by this Lease. Tenant shall
defend, indemnify and hold harmless Landlord, its mortgagee and its agents from
and against any claims, demands, administrative orders, judicial orders,
penalties, fines, liabilities, settlements, damages costs or expenses
(including, without limitation. reasonable attorney and consultant fees, court
costs and litigation expenses) of whatever kind or nature, known or unknown,
contingent or otherwise, arising out of or in any way related to the use,
storage, disposal, release, discharge, spill or emission of any Hazardous
Material by Tenant, its agents, employees, contractor or invitees. Landlord
shall defend, indemnify and hold harmless Tenant, its mortgagee and its agents
from and against any claims, demands, administrative orders, judicial orders,
penalties, fines, liabilities, settlements, damages, costs or expenses
(including, without limitation, reasonable attorney and consultant. fees, court
costs and litigation expenses) of whatever kind or nature, known or unknown,
contingent. or otherwise, arising out of or in, any way related to the use,
storage, disposal, release, discharge, spill or emission of any Hazardous
Materials by Landlord, its agents, employees, contractors or invitees other than
Tenant. The provisions of this Section shall be in addition to any other
obligations find liabilities either party may have to the other at law or in
equity and shall survive the transactions contemplated herein or any termination
of this Lease.
(d) As used in this Lease, the term "Hazardous Materials" shall
include, without limitation:
(i) Those substances included within. the definitions of
"hazardous substances," "hazardous materials," "toxic substances," or "solid
waste" in the Comprehensive Environmental Response Compensation and Liability
Act of 1980 (42 ▇.▇.▇ (▇)▇▇▇▇ et seq.) ("CERCLA"), as amended by Superfund
------
Amendments mid Reauthorization Act of 1986 ("▇▇▇▇"), the Resource Conservation
mid Recovery Act of 1976 ("RCRA"), and the Hazardous Materials Transportation
Act, and in the regulations promulgated pursuant to said laws, all as amended;
(ii) Those substances listed in the United States Department of
Transportation Table (49 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency (of any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto);
(iii) Any material, waste or substance which is (A) petroleum,
(B) asbestos, (C) polychlorinated biphenyls, (D) designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.(s) 1251 et
--
seq. (33 U.S.C.(s) 1321) or listed pursuant to Section of the Clean Water
---
Act (33 U.S.C.(s) 1317)l (E) flammable explosives; or (F) radioactive materials;
(iv) Those substances regulated pursuant to or identified in the
Virginia Pesticide Law; Air Pollution Control Board; Virginia Waste Management
Act; Environmental
23
Health Service, Transportation of Hazardous Radioactive Materials; Virginia
Hazardous Materials Emergency Response Program; State Water Control Law; Die
Groundwater Act of 1973; and Miscellaneous Offenses; and in the regulations
promulgated pursuant to said laws, all as amended; and
(v) Such other substances, materials and wastes which are or
become regulated as hazardous or toxic under applicable local, state or federal
law, or the United States government, or which are classified as hazardous or
toxic under federal, state, or local laws or regulations.
(e) Landlord shall not knowingly generate, use, release store or
dispose of any Hazardous Materials in or about the Premises, Building and Land.
In the event that, in the future, any Hazardous Materials occurring, released or
introduced on the Premises, Building or Land prior to the commencement of Lease
are discovered, Landlord shall have the. express responsibility immediately to
so advise Tenant
PART 9 - ALTERATIONS
Section 9.01. Approval of Landlord.
--------------------
Tenant shall not, at any time during the Term, without Landlord's prior
written consent which shall not be unreasonably withheld, conditioned or
delayed, make any alterations that impact the structure of the Premises or any
Building systems, including the HVAC system. Should Tenant desire any
alterations, Tenant agrees to submit all plans and specifications for same to
Landlord for Landlord's written approval, before beginning such work. Landlord
shall respond to Tenant's request within five (5) Business Days. Landlord shall
not be considered as unreasonably withholding approval by refusing to consent to
any alterations which would (i) alter the exterior appearance of the Building or
the public lobbies, corridors, or common areas thereof; (ii) cause or be likely
to cause any weakening of any part of the structure of the Promises or Building
or which may cause damage or disruption to any Building, system; or (iii)
violate any underlying ground lease or deed of trust or mortgage. Upon Tenant's
receipt of Landlord's written approval, Tenant may proceed with the construction
of the approved alterations, but only so long as they are in substantial
compliance with the plans and specifications and provisions of this Part 9.
------
Additionally, the construction of any alterations, the alterations themselves,
or any maintenance thereof shall comply with all building, safety, fire,
plumbing, electrical and other codes, governmental requirements (including but
not limited to Title III of the Americans with Disabilities Act of 1990, all
regulations issued thereunder and the Accessibility Guidelines for Buildings and
Facilities issued pursuant thereto, as the same are in effect on the date hereof
and may be hereafter modified, amended or supplemented) and insurance
requirements, and shall not require an amount of water, electricity, gas, heat,
ventilation, or air conditioning which exceeds Building standards set forth in
Exhibit "J" hereto unless prior written arrangements satisfactory to Landlord
-----------
are made with respect thereto. All alterations shall be made at Tenant's
expense, either by Tenant's contractors which have been approved in advance by
Landlord or, at Tenant's option by Landlord's contractors on terms reasonably
satisfactory to Tenant. In the event Landlord's contractors are to complete the
work, Tenant shall pay to Landlord a fee equal to five percent (5%) of the
actual costs of such work., such fee to cover Landlord's overhead related to the
work, including, but not limited to, Landlord's review of the plans and
specifications, coordination of the work, consultation with professionals
regarding the work, and general administration allocable to the work. In the
event Tenant's contractors shall complete the work, Tenant shall pay to
Landlord, within 30 days after demand therefor, reasonable third party costs
incurred by Landlord to have Tenant's plans for such alterations reviewed. All
such construction shall be completed promptly and in a good and workmanlike
manner and shall be performed in compliance with Part 10 hereof.
-------
Section 9.02. Ownership of Improvements to Premises.
-------------------------------------
At Landlord's election, all leasehold improvements mid other principal
alterations to the Premises shall be and remain the Landlord's property, and
shall not be removed from the Premises. If Landlord elects and so notifies
Tenant at the time Landlord approves an alteration
24
that it does not desire to acquire ownership of any such alterations, then
promptly upon the termination of this Lease Tenant shall, at Tenant's sole
expense, cause the same to be removed and shall restore the Premises to the
condition it was in prior to such alteration. Tenant further agrees to remove,
at Tenant's expense, all of its furnishings, personal property and movable trade
fixtures by the Expiration Date and to promptly reimburse Landlord for the
actual third party costs of repairing damage done to the Premises or the
Building by such removal.
PART 10 - LIENS
Tenant shall keep the Premises and the Building free from any liens
arising from any work performed, materials furnished, or obligations incurred by
or at the request of Tenant, its agents, employees or independent contractors.
If any lien is filed against the Premises, the Building or Tenant's leasehold
interest therein, which arises out of any act or agreement of Tenant, Tenant
shall discharge same within thirty (30) days after its filing. If Tenant fails
to discharge such lien within such period, then, in addition to any other right
or remedy Landlord may, at its election, discharge the lien by depositing with a
court or a title company, or by bonding, the amount claimed to be due. Tenant
shall pay on demand, as Additional Rent, any amount paid by Landlord for the
discharge or satisfaction of any such lien, and all attorney's fees and other
costs and expenses of Landlord reasonably incurred in defending any such action
or in obtaining the discharge of such lien, together with all necessary
disbursements in connection therewith.
PART 11 - REPAIRS
Section 11.01. Tenant's Obligations.
--------------------
Tenant shall keep the Premises and every part thereof in good condition
and repair at all times during the Term and at Tenant's sole cost and expense.
At the end of the Term, Tenant shall surrender to Landlord the Premises thereto
in the same condition as when received, subject to the provisions of Parts 9 and
-----------
17, hereof. Throughout the Term, Landlord shall give Tenant five (5) days notice
--
to commence to make repairs, and if Tenant fails to commence to make such
repairs within such time period, Landlord, at its option, may make such repairs,
and Tenant shall pay Landlord, on demand, Landlord's actual costs in making such
repairs plus a fee of seven percent (7%) thereof to cover Landlord's overhead,
all to constitute Additional Rent. Landlord has no obligation and has made no
promise to alter, remodel, improve, repair, decorate, or paint the Premises or
any part thereof, except as specifically set forth in this Lease.
Section 11.02. Landlord's Obligations.
----------------------
Subject to the other provisions of this Lease imposing obligations in
this respect upon Tenant, and subject to the provisions of Parts 5, 13 and 14
------------------
hereof, Landlord shall repair, replace, and maintain and keep in good working
order consistent with a first class office building (a) the external find
structural parts of the Building including the roof and all Building systems and
(b) all common areas of the Building and Land including, without limitation, the
landscaping, driveways and parking facilities.
PART 12 - INSURANCE
Section 12-01. Tenant's Insurance.
------------------
Tenant, at its sole expense, shall obtain and keep in force the
following insurance:
(a) Commercial general liability insurance coverage on an "occurrence
basis" against claims for personal injury, including, without limitation, bodily
injury, death, and broad form property damage, in combined single limits of not
less than $1,000,000 per occurrence and a $2,000,000 aggregate with coverage to
include a per location endorsement, contractual liability, fire legal liability
in the amount of $500,000, and other broad form endorsements that would be
carried by a prudent individual conducting a business similar to Tenant's
business. All such
25
insurance policies shall name Tenant as the named insured thereunder and shall
name Landlord and Landlord's mortgagees as additional insureds thereunder, all
as their respective interests may appear;
(b) Worker's Compensation and Employer's Liability insurance, with a
waiver of subrogation endorsement waiving rights of subrogation against
Landlord, in form and amount satisfactory to Landlord and at minimum is equal to
that required by the law of Virginia;
(c) Special Causes of Loss Insurance insuring the Leasehold
Improvements and Tenant's interest in the Premises and all property located in
the Premises, including furniture, equipment fittings, installations, fixtures,
supplies and any other personal property, Leasehold Improvements and
alterations (`Tenant's Property"), in an amount equal to the full replacement
-----------------
value, it being understood that no lack or inadequacy of insurance by Tenant
shall in any event make Landlord subject to any claim by virtue of any theft or
loss or damage to any uninsured or inadequately insured property;
(d) During the course of construction of any work performed by Tenant
or on Tenant's behalf pursuant to Exhibit "B" or any alterations by Tenant until
completion thereof, Builder's Risk Insurance on a "special causes of loss" basis
(including collapse) on a completed value (non-reporting) form for full
replacement value covering all work incorporated in the Building and all
materials and equipment in or about the Premises;
(e) Auto liability coverage for owned, hired and non-owned vehicles
with a $1,000,000 combined single limit; and
(f) Excess liability coverage in the amount of $10,000,000 which will
follow form and respond to and increase the limits of the coverages described in
Sections 12.01(a), (b), (c) and (d) above.
-----------------------------------
All policies shall be issued by companies having a Best's rating of at
least A-XI and shall be in amounts, and in form satisfactory from time to time
to Landlord and Landlord's lender. All policies shall contain in endorsement or
agreement by the insurer that any loss shall be payable in accordance with the
terms of such policy notwithstanding any act or negligence of Tenant which might
otherwise result in a forfeiture of said insurance, and the further agreement of
the insurer waiving all rights of setoff, counterclaim or deduction against
Tenant. Tenant will deliver certificates of insurance evidencing each policy to
Landlord as soon as practicable after the placing of the required insurance, but
not later than ten (10) days prior to the date Tenant takes possession of all or
any part of the Premises, and on each anniversary date of the Commencement Date.
All policies shall contain an undertaking by their insurers to notify Landlord
and Landlord's lender in writing, by registered or certified U.S. Mail, return
receipt requested, not less than thirty (30) days before any material change,
reduction in the scope or limits of coverage, cancellation, or other termination
thereof. All policies shall name Landlord and Landlord's manager as additional
insureds and shall be evidenced as such on a Certificate of Insurance issued to
Landlord.
Landlord reserves the right to periodically review the insurance
coverages required by this Section 12.01 and to revise such requirements to
-------------
reflect insurance industry practices or require other forms or amounts of
insurance as may be reasonably required to reflect changes in insurance industry
practices.
Section 12.02. Insurance Rating.
----------------
Tenant will not keep, use, sell or offer for sale in, or upon the
Premises any article which may be prohibited by any insurance policy
periodically in force covering the Building and the Leasehold Improvements. If
Tenant's occupancy or business in or on the Premises, whether or not Landlord
has consented to the same, results in any increase in premiums for the insurance
periodically carried by Landlord with respect to the Building or the Leasehold
Improvements,
26
Tenant shall pay any such increase in premiums as Additional Rent
within ten (10) days after being billed therefor by Landlord.
If any of the Landlord's insurance policies shall be canceled or
cancellation shall be threatened or the coverage thereunder reduced or
threatened to be reduced in any way because of the use of the Premises or any
part thereof by Tenant or any assignee or subtenant of Tenant or by anyone
Tenant permits on the Premises and, if Tenant fails to remedy the condition
giving rise to such cancellation, threatened cancellation, reduction of
coverage, or threatened reduction of coverage within forty-eight (48) hours
after notice thereof, Landlord may, at. its option, either terminate this Lease
or enter upon the Premises and attempt to remedy such condition, and Tenant
shall promptly pay the cost thereof to Landlord as Additional Rent. Landlord
shall not be liable for any damage or injury caused to any property of Tenant or
of others located on the Premises resulting from such entry. If Landlord is
unable or elects not to remedy such condition, then Landlord shall have all of
the remedies provided for in this Lease in the event of a Default by Tenant.
Notwithstanding the foregoing provisions of this Section, if Tenant fails to
remedy as aforesaid, Tenant shall be in Default of its obligations hereunder and
Landlord shall have no obligation to remedy such Default.
Section 12.03. Waiver of Subrogation.
---------------------
All policies covering real or personal property which either party
obtains affecting the Premises shall include, if possible, a clause or
endorsement denying the insurer any rights of subrogation against the other
party to the extent rights have been waived by the insured before the occurrence
of injury or loss, if same are obtainable. Each party waives any rights of
recovery against the other for injury or loss due to hazards covered by policies
of insurance containing such a waiver of subrogation clause or endorsement to
the. extent of the injury or loss covered thereby.
Section 12.04. Landlord's Insurance.
--------------------
Landlord, as part of the Operating Expenses, shall obtain and keep in
force the following insurance:
(a) Commercial general liability insurance coverage on an "occurrence
basis" against claims in or about the Building (other than the Premises) for
personal injury, including without limitation, bodily injury, death and broad
form property damage, in limits of $ 1,000,000 per occurrence and $2,000,000
aggregate;
(b) Workmen's Compensation and Employer's Liability insurance;
(c) Special Causes of Loss Insurance insuring the Landlord's interest
in the Building and improvements therein in -form satisfactory to Landlord and
in an amount equal to the full replacement value of the Landlord's insurable
interest in the Building; and
(d) Any other form or forms of insurance as Landlord, or Landlord's
mortgagees may reasonably require from time to time in form, in amounts, and for
insurance risks against which a prudent Landlord of a comparable size and in a
comparable business would protect itself.
PART 13 - DAMAGE BY FIRE OR OTHER CASUALTY
Section 13.01. Damage to Building.
------------------
If all or substantially all (meaning 50% or more) of the
Building is damaged or destroyed by any cause whatsoever, and in Landlord's
reasonable judgment, the damage or destruction to the Building cannot be
repaired or restored within 12 months after such damage or destruction, Landlord
shall so notify Tenant, and Landlord or Tenant. at its option, may terminate
this Lease by giving the other party notice of such termination within sixty
(60) days after notice by Landlord to Tenant of the estimated timing of said
repair (which Landlord shall provide no
27
later than 30 days after said damage or destruction), and thereupon Rent and any
other payments for which Tenant is liable under this Lease shall be apportioned
and paid to the date of such damage, and Tenant shall immediately vacate the
Premises. Notwithstanding anything to the contrary in the previous sentence, in
the event that less than -fifteen percent (15%) of the Premises is damaged,
Tenant shall only be permitted to terminate this Lease in accordance with the
previous sentence with respect to the untenantable portion of the Premises. If
neither party elects to terminate this Lease, Landlord shall repair the Building
provided, however, if such repair is not complete within 15 months of such
damage, Tenant may elect to terminate the Lease by written notice within sixty
(60) days after expiration of such 15-month period; provided that Tenant shall
not be permitted to terminate in the event that Landlord completes the repair
and so notifies Tenant before Tenant notifies Landlord of Tenant's election to
terminate.
Section 13.02. Partial Damage.
--------------
In the event of partial destruction or damage to the Building
or the Premises which is not subject to Section 13.01, but which renders the
Premises partially, but not wholly tenantable and in Landlord's reasonable
opinion, the damage or destruction cannot be restored within nine (9) months of
such damage or destruction, then either party may terminate this Lease by
written notice to the other within thirty (30) days after Landlord's notice,
which termination shall be effective as of the date of such damage or
destruction. Notwithstanding anything to the contrary in the previous sentence,
in the event that less than fifteen percent (15%) of the Premises is damaged,
Tenant shall only be permitted to terminate this Lease in accordance with the
previous sentence with respect. to the untenantable portion of the Premises. If
neither party terminates this Lease, Landlord shall, within a reasonable time
after the date of such destruction or damage, subject to Tenant Delay and to the
extent and availability of insurance proceeds, restore the Premises, or that
portion for which the Lease has not been terminated, to as near the same
condition as existed prior to such partial damage or destruction, provided that
Tenant. pays to Landlord Tenant's insurance proceeds as required in Section
-------
13.04 hereof and thereupon Rent and any other payments for which Tenant is
-----
liable under this Lease shall be abated for that portion of the Premises which
is not usable and riot used by Tenant for the regular operation of Tenant's
business as a result of such damage or destruction until the earlier of (x) the
date on which Tenant again uses such portion of the Premises for the regular
operation of its business and (y) the date on which the Premises is usable for
the regular operation of Tenant's business as reasonably determined by Landlords
and Tenant's architect For purposes of this Part 13 "partial destruction or
----------------------
damage" shall mean destruction of or damage to less than fifty percent (50%) of
------
the Building or Premises.
Section 13.03. Damage During Last Year of Term.
-------------------------------
If the Building or the Premises or any portion thereof is destroyed by
fire or other causes at any time during the last year of the Term, then either
Landlord or Tenant shall have the right, at the option of either party, to
terminate this Lease by giving written notice to the other within sixty (60)
days after the date of such destruction.
Section 13.04. No Landlord Liability.
---------------------
Landlord shall have no liability to Tenant for inconvenience, loss of
business, or annoyance arising from any repair of any portion of the Premises or
the Building. If Landlord is required by this Lease or by any lender or lessor
of Landlord to repair or if Landlord undertakes to repair, Tenant shall pay to
Landlord that amount of Tenant's insurance proceeds which insures such damage as
a contributions towards such repair, and Landlord shall use reasonable efforts
to have such repairs made promptly and in a manner which will not unnecessarily
interfere with Tenant's occupancy.
Section 13.05. Apportionment of Rent.
---------------------
In the event of termination of this Lease pursuant to this Part 13,
then all Rent shall be apportioned and paid to the date on which possession is
relinquished although Tenant's personal
28
property may still be in the Premises or the date of such damage, whichever last
occurs, and Tenant shall immediately vacate the Premises according to such
notice of termination; provided, however, that those provisions of this Lease
which are designated to cover matters of termination and the period thereafter
shall survive the termination hereof.
Section 13.06. Tenant Responsible for Damage.
-----------------------------
In no event shall Rent ▇▇▇▇▇ or shall any termination occur if damage
to or destruction of the Premises is the result of either (i) a Default by
Tenant or (ii) the negligence or willful act of Tenant, or Tenant's agents,
employees, representatives, contractors, successors or assigns.
PART 14 - CONDEMNATION
Section 14.01. Entire Building.
---------------
In the event that the whole or substantially the whole of the Building
and/or the Premises are taken or condemned for any public purposes, this Lease
and the leasehold estate created hereby shall cease and terminate as of the date
of such taking,
Section 14.02. Portion of Building.
-------------------
In the event that any portion of the Building shall be taken or
condemned for any public purpose (whether or not such taking includes any
portion of the Premises), which taking, shall interfere materially with Tenant's
use and operation of the Premises or is such that Landlord determines that the
Building cannot be restored to usefulness in an economically feasible manner,
then Landlord or Tenant shall have the option by notice to the other party
within 60 days after notice to said party of such condemnation to terminate this
Lease, effective as of the date of such taking.
Section 14.03. Portion of Premises.
-------------------
In the event that a portion, but less than substantially the whole, of
the Premises should be taken or condemned for any public purpose, then this
Lease shall be terminated as of the date of such taking as to the portion of the
Premises so taken, and, unless Landlord or Tenant exercises its option to
terminate this Lease pursuant to Section 14.02 above, this Lease shall remain in
full force and effect as to the remainder of the Premises. In such event, the
Rent will be diminished by an amount representing the part of such amounts
properly applicable to the portion of the Premises so taken. Further, in such
event Tenant's Proportionate Share shall be recomputed based upon the remaining
Rentable Area in the Premises and in the Building.
Section 14.04. Termination of Lease.
--------------------
In the event of the termination or partial termination of this Lease
pursuant. to the provisions of this Part 14, this Lease and the Term and the
estate hereby granted shall expire as of the date of such termination in the
same, manner and with the same, effect as if that were the date set for the
normal expiration of the Term of this Lease, and the Rent, shall be apportioned
as of such date.
Section 14.05. Landlord's Right to Award.
-------------------------
All awards, damages, and other compensation paid by the condemning
authority on account of such taking or condemnation (or sale under threat of
such a taking) shall belong to Landlord, and Tenant hereby assigns to Landlord
all rights to such awards, damages and compensation. Tenant agrees not to make
any claim against Landlord or the condemning authority for any portion of such
award or compensation attributable to damages to the Premises, the value of the
unexpired term of this Lease, the loss of profits or goodwill, leasehold
improvements, or severance damages. Nothing contained herein, however, shall
prevent Tenant
29
from pursuing a separate claim against the condemning authority for the value of
Leasehold Improvements paid entirely by the Tenant, furnishings, equipment, and
trade fixtures installed in the Premises at Tenants expense mid for relocation
expenses, provided that such claim does not in any way diminish the award or
compensation payable to or recoverable by Landlord in connection with such
taking or condemnation.
PART 15 - ASSIGNMENT AND SUBLETTING
Section 15.01. Rights of Tenant.
----------------
(a) Tenant may not sell, assign, transfer, or hypothecate this Lease
or any interest herein (either voluntarily or by operation of law, and
including, if Tenant is a corporation, partnership or limited liability company,
the sale or transfer of a controlling interest in Tenant), or sublet the
Premises or any part thereof without the prior written consent of Landlord. If
Tenant should desire to assign this Lease or sublet the Premises or any portion
thereof and provided that there is not then a material monetary or non-monetary
Default hereunder, Tenant shall give Landlord written notice which notice shall
identify the portion of the Premises Tenant desires to assign or sublet, the
date of the availability of such portion of the Premises and the intended term
of any sublease ("Initial Notice Tenant shall provide Landlord such notice
(x) no more than nine (9) months and no less than six (6) months before Tenant
intends to sublet or assign a portion of the Premises equal to or less than two
floors or (y) no more than fifteen (15) months and no less than twelve (12)
months before. Tenant intends to sublet or assign a portion of the Premises that
is more than two floors. Landlord shall then have a period of thirty 30) days
following receipt of such notice within which to notify Tenant in writing that
Landlord elects:
(1) to recapture the space so affected as of the date specified by
Tenant in its notice, in which event this Lease shall be terminated as to such
space for a period equal to the term identified in the Initial Notice; or
(2) to permit Tenant to assign or sublet such space, subject, however,
to the subsequent written approval by Landlord of the instrument of assignment
or sublease provided to Landlord. Once Landlord has agreed in concept to
Tenant's assignment or subletting of the Premises or a portion thereof, Tenant
shall be required to submit to Landlord, for Landlord's approval, the proposed
assignee or sublessee and sublease or assignment, Landlord shall have five (5)
Business Days to approve or disapprove of the proposed assignee or sublessee and
the form of agreement. In the event that Landlord elects to permit Tenant to
assign or sublet such space within the specified period described in clauses (x)
and (y) above, then Tenant shall so notify Landlord and, Landlord shall have
another opportunity to elect to recapture and terminate this Lease with respect
to the space, provided Landlord so notifies Tenant within ten (10) days from
Tenant's notice of the expiration of said specified period. In the event that
Landlord does not recapture the space in accordance with the previous sentence
and Tenant desires thereafter to sublet or assign the space, then Tenant shall
again commence the process for Landlord approval of such assignment or sublease
set forth in this Section (a).
(b) In the event Landlord elects to terminate this Lease with respect
to subleased space pursuant to Section 15.01(a)(1) for a period equal to the
-------------------
term identified in the Initial Notice, Tenant shall have the right. to renew the
Lease pursuant to Article 3 of this Lease. Tenant may renew such terminated
---------
space for the second Renewal Term only if Tenant renewed such terminated space
for the first Renewal Term.
(c) Except as may be otherwise expressly set forth to the contrary, no
assignment or subletting by Tenant shall relieve Tenant of Tenant's obligations
under this Lease. Any attempted assignment or sublease by Tenant in Violation of
the terms and provisions of this Section 15.01 shall be void.
(d) For the purposes of this Section 15.01, the following shall be
deemed an assignment of this Lease:
30
(1) If Tenant is a corporation, the stock of which is not listed
on a "National securities exchange" (as defined in the Securities Act of 1934),
then the sale, issuance or transfer (whether cumulatively or in a single
transaction), of stock by Tenant or the shareholders of record, as of the date
hereof, the result of which either changes or makes possible the change in the
voting control of Tenant; and
(2) If Tenant is a Joint venture, partnership, limited liability
company or other association (collectively referred to as the "Partnership"),
the sale, issuance or transfer (whether cumulatively or in a single transaction)
of ownership of the entity the result of which changes the management of the
entity or the voting control of the entity.
(e) Landlord's consent under this Section 15.01(a) to a sublease or
----------------
assignment will not be unreasonably withheld, conditioned or delayed provided
all of the following conditions have been satisfied:
(i) the sublease or assignment has provisions that satisfy
Section 15.03 hereof; and
-------------
(ii) the entity, organization, or individual to which such space
is proposed to be sublet or assigned is not of a type that would be an
undesirable tenant in a first-class office complex in Fair Lakes or would
violate a reasonable noncompete clause entered into by Landlord and of which
Landlord has provided Tenant written notice
Section 15.02. Affiliate Transfer.
------------------
Notwithstanding the provisions of Section 15.01 hereof, Tenant shall
-------------
have the right, without the prior consent of Landlord, to assign its entire
interest in this Lease to an Affiliate (hereinafter defined) so long as the
Affiliate delivers to Landlord, concurrently with such assignment, a written
notice of the assignment and an assumption agreement whereby the Affiliate
assumes and agrees to perform, observe and abide by the terms, conditions,
obligations and provisions of this Lease applicable to Tenant. Further, Tenant
shall also have the right, without the prior written consent to Landlord but
with prior written notice to Landlord, to sublet all or any portion of the
Premises to an Affiliate so long as such sublease satisfies the requirements of
Section 15.03. No subletting or assignment by Tenant made pursuant to this Part
------------- ----
15 shall relieve Tenant of Tenant's obligations under this Lease. As used
--
herein, the term "Affiliate" shall mean and collectively refer to (i) a
---------
corporation, individual or other entity which owns and controls as least 80% of
the voting stock of Tenant (if it is a corporation) or controls the day-to-day
decision making of Tenant (the "Parent"), (ii) a corporation in which either the
------
Tenant or its Parent owns and controls at least 80% of the voting stock of the
corporation and is able to elect (by ownership of stock or proxy) the board of
directors and the officers of the corporation, or (iii) an Affiliate of the.
Parent, (iv) a successor or surviving corporation in the event of a merger,
takeover or other form of corporate acquisition of the Tenant, and/or (v) Tenant
after it engages in an "Initial Public Offering" which shall mean the closing of
the sale by Tenant of common stock pursuant to a registration statement filed
with and declared effective by the United States Securities and Exchange
commission under the Securities Act of 1933 that results in the common stock
being registered under the Securities Exchange Act of 1934 and that results in
aggregate gross proceeds to the issuer and its stockholders of One Million
Dollars ($1,000,000) or more.
Section 15.03. Required Provisions in Sublease.
-------------------------------
Except as provided in the next sentence, a sublease of portions of the
Premises must include (or shall be deemed to include) provisions stating that it
is subject and subordinate to this Lease and to the matters to which this Lease
is or shall be subordinate, and that in the event of the termination of this
Lease, or the re-entry or dispossession of Tenant by Landlord wider this Lease,
Landlord, at its option, may either terminate the sublease, in which case the
subtenant shall peacefully vacate the premises sublet, or, require the subtenant
to attorn to Landlord as its sublessor pursuant to the then applicable terms of
such sublease for the remaining term thereof,
31
except that Landlord shall not be (i) liable for any previous act or omission of
Tenant as sublessor under such sublease, (ii) subject to any offset which
theretofore accrued to such subtenant against Tenant, or (iii) bound by any
previous modification of such sublease not consented to in writing by Landlord
or by a previous prepayment of rent more than one month in advance.
Notwithstanding anything to the contrary herein, in the event Tenant
enters into a sublease for 10,000 square feet of Rentable Area or more of the
Premises in accordance herewith at a face rental rate equal to or higher than
the Rent required to be paid by Tenant hereunder, Landlord shall agree that so
long as said subtenant is not in default under the sublease beyond all
applicable notice and cure periods, it shall be entitled to quietly enjoy and
possess the subleased portion of the Premises and Landlord shall provide Tenant
a Nondisturbance Agreement stating the same and shall use commercially
reasonable efforts to obtain the same from any lender or mortgagee; provided,
however, Landlord shall be permitted to relocate said subtenant, at said
subtenant's expense, to a comparable space within Fair Lakes.
Section 15.04. Rights of Landlord.
------------------
Landlord may sell, transfer, assign, and convey, all or any part of the
Building and/or the Land and any and all of its rights under this Lease, and in
the event Landlord assigns its rights under this Lease, Landlord shall be
released from any further obligations hereunder, and Tenant agrees to look
solely to Landlord's successor in interest for performance of such obligations.
PART 16 - INDEMNIFICATION
Tenant waives all claims against Landlord for damage to any property or
injury to, or death of, any person, in, upon, or about the Building or the.
Premises, arising at any time and from any cause other than to the extent
resulting from the negligence or willful misconduct of Landlord, its agents,
employees, representatives, contractors or invitees, including all tenants other
than Tenant, (collectively, "Landlord Parties") or use by any Landlord Party of
any portion of the Building or the Land, and Tenant shall indemnify Landlord and
shall hold Landlord harmless from any damage to any property or injury to, or
death of, any person arising from the use of the Building or the Premises by
Tenant or its agents, employees, representatives, contractors, or invitees.
Tenant's foregoing indemnity obligation shall include reasonable attorney's fees
and all other costs and expenses reasonably incurred by Landlord from the first
notice that any claim or demand has been made or may be made.
Landlord waives all claims against Tenant for damage to any property or
injury to, or death of, any person, in, upon, or about the Building, Land or the
Premises, arising at any time and from any cause other than to the extent
resulting from the use of the Building or Premises by Tenant, its agents,
employees, representatives, or contractors, and Landlord shall indemnify Tenant
and shall hold Tenant harmless from any damage to any property or injury to, or
death of, any person arising from the negligence or willful misconduct of any
Landlord Party or the use by any Landlord Party of the Building or Premises.
Landlord's foregoing indemnity obligation shall include reasonable attorney's
fees and all other costs and expenses reasonably incurred by Tenant from the
first notice that any claim or demand has been, made or may be made.
The Provisions of this Part 16 shall survive the expiration or earlier
-------
termination. of this Lease for any reason with respect to any damage, injury, or
death occurring before such expiration or termination.
If Landlord is made a party to any litigation commenced by or against
Tenant or relating to this Lease or to, the Premises, and provided that in any
such litigation Landlord is not finally adjudicated to be at fault, then Tenant
shall pay all costs and expenses, including reasonable attorneys' fees and court
costs, incurred by or imposed upon Landlord because of any such litigation, and
the amount of such costs mid expenses, including reasonable attorneys' fees and
court costs, shall be a demand obligation owing by Tenant to Landlord and shall
constitute Additional Rent.
32
PART 17 - SURRENDER OF THE PREMISES
Section 17.01. Condition of Premises.
---------------------
Upon expiration of the Term or other termination of this Lease for any
cause whatsoever, Tenant shall peacefully vacate the Premises in as good order
mid condition as the same were at the beginning of the Term or may thereafter
have been improved by Landlord or Tenant, except for reasonable use and wear
thereof and damage to the Premises by fire or other casualty or condemnation.
Section 17.02. Tenant Holdover.
---------------
In the event that Tenant shall not immediately surrender all of the
Premises on the Expiration Date of the Term, Tenant, at the option of Landlord,
shall become a month-to-month Tenant for the entire Premises at 150% of the
total Rent ("Holdover Rent") in effect during the last month of the Term and
subject to all of the terms, conditions, covenants and agreements of this Lease.
Such Holdover Rent shall be Landlord's sole remedy for any damages Landlord
suffers as a result of or arising in connection with Tenant's holding over
unless Landlord and another tenant have executed a lease for all or a portion of
the Premises to commence immediately after the Expiration Date and Landlord has
so notified Tenant within thirty (30) days after execution of said lease by a
third party and, in all events, no later than thirty (30) days before the
Expiration Date in which event Tenant in addition to Holdover Rent described
above, shall be responsible for damages resulting from its holdover in that
portion of the Premises covered by Landlord's notice. In addition, during the
holdover period, if Landlord gives Tenant at least thirty (30) days notice that
a new tenant has entered into a lease for all or a portion of the Premises, then
Tenant shall be responsible for all damages resulting from Tenant's holdover in
that portion of the Premises covered by Landlord's notice from the thirtieth
(30th) day after such notice in addition to Holdover Rent.
PART 18 - ESTOPPEL CERTIFICATES
Tenant shall execute and return within fifteen (15) calendar days any
certificate or agreement that Landlord reasonably may request from time to time,
stating that this Lease is unmodified and in full force and effect, or in full
force and effect as modified, and stating the modification. The certificate also
shall state (i) if true that all work has been completed, and the work and the
Premises are accepted as satisfactory except for items listed on a punchlist, if
any, attached to such certificate; (ii) the amount of Base Rent and Additional
Rent and the dates on which Rent commenced to accrue and to which the Rent has
been paid in advance, and the. amount of any security deposit or prepaid Rent;
(iii) that Tenant is paying Rent on a current basis: (iv) that Tenant is in full
and complete possession of the Premises and doing business; (v) that there is no
present fault on the part of Landlord, or attach a memorandum stating any such
instance of default; (vi) that Tenant has not advanced any amounts to or on
behalf of Landlord which have not been reimbursed; (vii) that Tenant has no
rights to setoff and no defense or counterclaim against enforcement of its
obligations under the Lease, including the payment of Rent, except as provided
in the Lease. (viii) if appropriate, that Tenant understands that this Lease has
been collaterally assigned to Landlords mortgagee as security for a loan to
Landlord and that Rent may not be prepaid other than as may be provided for in
this Lease nor may this Lease be amended, modified, or waived so as to have a
material impact on the financial obligations of either Tenant or Landlord
without such mortgagee's prior written, approval; (ix) if appropriate, that
there are no actions, whether voluntary or otherwise, pending against Tenant
under the bankruptcy laws of the United States or any state thereof, (x) if
appropriate, that Tenant has no other notice of any sale, transfer or assignment
of this Lease or of the Rent, and (xi) any other fact pertaining to Tenant's
interest in this Lease which Landlord, or Landlord's mortgagee, may request.
Failure to deliver the certificate within fifteen (15) calendar days shall be
conclusive upon Tenant for the benefit of Landlord and any successor to Landlord
that this Lease is in full force arid effect and has not been modified except as
may be represented by the party requesting the certificate. If Tenant fails to
deliver the certificate within such fifteen (15) day period, Tenant, by such
failure, irrevocably constitutes and appoints Landlord as its special
attorney-in-fact to execute and deliver the certificate to any third party. Any
such certificate may
33
be relied upon by any prospective purchaser, any ground lessor, or any
beneficiary under the deed of trust on the Building, the underlying land, or any
part thereof.
PART 19 - SUBORDINATION AND ATTORNMENT
Section 19.01. Existing Financings.
-------------------
(a) This Lease is subject and subordinate to any deeds of trust or
other security instruments which, as of the date of this Lease, cover the
Building, the underlying land, or any interest of Landlord therein, and to any
advances made on the security thereof, and to any increases, renewals,
modifications, consolidations, and extensions of any of such deeds of trust or
security instruments (the "Existing Indebtedness"). This provision is declared
by Landlord and Tenant to be self-operative and no further instrument shall be
required to effect such subordination of this Lease. Upon demand, however,
Tenant shall execute, acknowledge, and deliver to Landlord any further
instruments and certificates evidencing such subordination as Landlord, or the
holder of the Existing Indebtedness may reasonably require.
(b) Landlord agrees to obtain from the holder of the Existing
Indebtedness ("Mortgagee") a Subordination, Non-Disturbance and Attornment
Agreement ("SNDA'), in generally the form attached hereto as Exhibit "G" (and by
this reference incorporated herein) but with such changes requested by Tenant as
Landlord, using commercially reasonable efforts, is able to obtain from the
Mortgagee. Notwithstanding anything to the contrary in Exhibit "G" such SNDA
-----------
shall provide that, in the event of a foreclosure or a transfer in lieu thereof,
Tenant will not be disturbed in its possession, this Lease shall,
notwithstanding the foreclosure or transfer in lieu thereof, continue in full
force and effect upon and subject to all terms, covenants, conditions, and
obligations of this Lease so long as (i) no Default has occurred on the part of
Tenant under this Lease and (ii) Tenant attorns to the purchaser or transferee
as landlord under this Lease and (iii) that such transferee or purchaser shall
be responsible for the ongoing liabilities, obligations and defaults of any
prior Landlord that remain ongoing at the time of the transfer or purchase and
of which the Mortgagee was given notice, and, if permitted by Landlord, an
opportunity to cure any such default.
Section 19.02. Future Financings.
-----------------
During the Term of this Lease, Landlord reserves the right to encumber
its interest in this Lease, the Building and/or the underlying land. by new or
additional deeds of trust or other security instruments and to refinance the
Existing Indebtedness (the "Now Financing"). Tenant agrees to subordinate this
Lease to any New Financing so long as the holder of the New Financing executes
and delivers to Tenant a Subordination, Non-Disturbance and Attornment Agreement
which contains provisions substantially similar to those set forth in Section
-------
19.01(b) hereof.
--------
Section 19.03. Attornment.
----------
Provided the holder of the Existing Indebtedness and New Financing has
delivered to Tenant a Subordination, Non-Disturbance and Attornment Agreement
which satisfies the provisions of Section 19.01(b) hereof, Tenant shall attorn
----------------
to the purchaser upon a sale or to the grantee under any deed in lieu of
foreclosure and shall recognize such purchaser or grantee as Landlord under this
Lease without any change in the terms or other provisions of this Lease. In such
agreement, Tenant will waive the right, if any, to elect to terminate this Lease
or to surrender possession of the Premises in the event of foreclosure of any
deed of trust or security instrument (or any transfer in lieu thereof).
PART 20 - QUIET ENJOYMENT
Provided Tenant performs all of Tenant's obligations under this Lease,
including the payment of Rent, Tenant shall, during the Term, peaceably and
quietly enjoy the Premises without disturbance from Landlord or any other
persons, acting by, through, or under Landlord;
34
subject, however, to (a) the terms of this Lease; (ii) the right of Landlord to
enter upon the Premises for (a) purposes of general inspection upon at least
twenty-four (24) hours notice or (b) during the last eighteen (18) months of the
Term or Renewal Term, as applicable, for future leasing of the Premises upon
reasonable notice and in all cases, without unreasonably interrupting the
operation of Tenant's business and in accordance with Tenant's security
regulations; and (iii) noise and other disruption reasonably caused in
connection with the construction of the Services Facility pursuant to Article 8
hereof including, without limitation, the right of Landlord to move the parking
provided hereunder. This covenant and all other covenants of Landlord in this
Lease shall be binding upon Landlord and its successors only with respect to
breaches occurring during its and their respective ownership of Landlord's
interest hereunder.
PART 21 - SIGNS AND FURNISHINGS
Section 21.01. Signs and Advertisements.
------------------------
No sign, advertisement, or notice referring to Tenant shall be
inscribed, painted, affixed, or otherwise displayed on any part of the exterior
or the interior of the Building, except those installed by Landlord on the
directories and the entrance door to the Premises and such other areas, if any,
as Landlord may determine. Notwithstanding the foregoing, Tenant, at its
expense, shall be permitted to display Tenant's name on a sign on the Building
(the "Building Sign") and on a monument at the entry to the Building (the
-------------
"Monument") provided the size, design and location of the Building Sign and
--------
Monument sign are reasonably agreed upon by Landlord and comply with. all
applicable governmental and then current Fair Lakes League regulations,.
Landlord agrees that its consent to such signs shall not be unreasonably
withheld. Tenant shall have exclusive Building Sign rights on the Building until
such time as (1) Tenant is leasing less than 50% of the Rental Area of the
Building and (2) a minimum of 40,000 square feet of Rentable Area is leased by
any one tenant other than Tenant in the Building ("Signage Threshold"). At such
time, Tenant, at its sole cost and expense, shall be required to reduce the size
of its Building Sign to its proportionate share (based upon Rentable Area leased
by Tenant) of the signage allotment for the Building permitted by the applicable
governmental authorities and Landlord shall have the right to install a sign for
the tenant occupying at least 40,000 square feet in proportion to its share of
the Rentable Area of the Building. In addition, Tenant shall have the right to
the largest sign on the Monument, which Monument shall be shared by the Building
and Fair Lakes North and on which Landlord shall be permitted to erect a sign,
at least 25% smaller than Tenant's sign, with the name of the second largest
tenant in each of Fair Lakes North and the Building which leases at least 40,000
square feet of Rentable Area in either building. If Tenant exhibits or installs
any sign, advertisement or notice in violation of this Section 21.01, Landlord
-------------
shall have the right to remove the same at Tenant's expense. Landlord reserves
the right to affix, install, and display signs, advertisements, and notices on
any part of the exterior or interior of the Building.
Section 21.02. Furnishings.
-----------
Landlord shall have the right to prescribe the weight and position of
safes and other heavy equipment end fixtures, which, if considered necessary by
Landlord, shall be installed in such manner as Landlord directs in order to
distribute their weight adequately. In no event shall Tenant place on any part
of the floor of the Premises a load exceeding the floor load per square foot
which such floor was designed to carry and which is allowed by law. Any and all
damage or injury to the Premises or the Building caused by moving such heavy
equipment or fixtures or the same being in or upon the Premises, shall be
repaired by and at the sole cost of Tenant. All furniture, equipment, and other
bulky matter of any description shall be delivered to the Premises only through
the designated service entrance of the Building and the designated service
elevator during normal business hours or as otherwise directed or scheduled by
Landlord. All moving of furniture, equipment, and other materials shall be under
the supervision of Landlord, who shall not however, be responsible for any
damage to or charges for moving the. same. Tenant agrees to remove promptly from
the sidewalks adjacent to the Building any of Tenant's furniture, equipment, or
other material there delivered or deposited.
35
PART 22 - DEFAULTS AND REMEDIES
Section 22.01. Events of Default.
-----------------
The occurrence of any one or more of the following events shall
constitute a Default or an Event of Default under this Lease: (a) if Tenant
fails to pay any Rent hereunder as and when such Rent becomes due and such
failure shall continue for more than five (5) days after Landlord gives Tenant
notice of past due Rent; (b) if Tenant fails to pay Rent on time more than three
times in any period of twelve (12) months, notwithstanding that such payments
have been made within the applicable cure period, (c) if Tenant permits to be
done anything which creates a lien upon the Premises and fails to discharge, or
bond such lien or post such security with Landlord as is required by Part 10;
(d) if Tenant fails to maintain in force all policies of insurance required by
this Lease and any such failure shall continue for more than ten (10) days after
Landlord gives Tenant notice of such failure, (e) if any petition is filed by or
against Tenant under any present or future section or chapter of the Bankruptcy
Code, or under any similar law or statute of the United States or any state
thereof (which, in the case of an involuntary proceeding, is not permanently
discharged, dismissed, stayed, or vacated, as the case may be, within sixty (60)
days after commencement), or if any order for relief shall be entered against
Tenant in any such proceedings; (f) if Tenant becomes insolvent or makes a
transfer in fraud of creditors or makes an assignment for the benefit of
creditors; (g) if a receiver, custodian, or trustee is appointed for the
Premises or for all or substantially all of the assets of Tenant, which
appointment is not vacated within sixty (60) days following the date of such
appointment; (h) if Tenant fails to perform or observe any other term of this
Lease and such failure shall continue for more than twenty (20) days after
Landlord gives Tenant notice of such failure or, if such failure cannot be
corrected within such twenty (20) day period if Tenant does not commence to
correct such default within said twenty (20) day period and thereafter
diligently prosecute the correction of same to completion within a reasonable
time and in any event prior to the time failure to complete such correction
could cause Landlord to be subject to prosecution for violation of any law,
rule, ordinance or regulation or causes, or could cause a default under any deed
of trust, mortgage, underlying lease, tenant lease or other agreement applicable
to the Building or the land upon which it is situated; or (i) Tenant is in
Default under the Fair Lakes North Lease or, if applicable, the lease for the
additional building provided for in Article 4 of the Fair Lakes North Lease.
Section 22.02. Remedies.
--------
Upon the occurrence of any Event of Default, Landlord shall have the
right, at Landlord's option, to terminate this Lease. With or without
terminating this Lease, Landlord may re-enter and take possession of the
Premises and the provisions of this Section 22.02 shall operate as a notice to
-------------
quit, any other notice to quit or of Landlord's intention to re-enter the
Premises being hereby expressly waived. If necessary, Landlord may proceed to
recover possession of the Premises under and by virtue of the laws of the
Commonwealth of Virginia or by such other proceedings, including re-entry and
possession, as may be applicable. If Landlord elects to terminate this Lease,
everything contained in this Lease on the part of Landlord to be done and
performed shall cease without prejudice; subject, however, to the right of
Landlord to recover from Tenant all Rent and other sums accrued up to the time
of termination or recovery of possession by Landlord, whichever is later.
Whether or not this Lease is terminated by reason of Tenants Default, Landlord
may relet the Premises for such Rent and upon such terms as are not unreasonable
under the circumstances and, if the entire Rent provided in this Lease plus the
costs, expenses, and damages hereafter described shall not be realized by
Landlord, Tenant shall be liable for all damages sustained by Landlord,
including, without limitation, deficiencies in Base Rent and Additional Rent,
the value of any rent abatement, tenant allowance or other payments made to
Tenant, attorney's fees and expenses reasonably incurred, brokerage fees, and
the expense of placing the Premises in first-class rentable condition. Landlord
shall not be responsible or liable for any failure to collect any rent due
and/or accrued from such reletting, to the end and intent that Landlord may
elect to hold Tenant liable for the Rent and any and all other items of costs
mid expense which Tenant shall have been obligated to pay throughout the
remainder of the Term. Any damages or loss of rent sustained by Landlord may be
recovered by Landlord, at Landlord's option, at the time of the reletting, or in
separate actions, from time to time, as said damage shall have been made more
easily ascertainable by successive relettings, or,
36
at Landlord's option, may be deferred until the expiration of the Term, in which
event Tenant hereby agrees that the cause of action shall not he deemed to have
accrued until the. date of Expiration of the Term. The provisions contained in
this Section 22.02 shall be in addition to, and shall not prevent the
-------------
enforcement of, any claim Landlord may have against Tenant for anticipatory
breach of this Lease. Landlord shall use all reasonable efforts to mitigate its
damages hereunder.
Section 22.03. Remedies Cumulative.
-------------------
All rights and remedies of Landlord set forth herein are in addition to
all other rights, and remedies available to Landlord at law or in equity. All
rights and remedies available to Landlord hereunder or at law or in equity are
expressly declared to be cumulative. The exercise by Landlord of any such right
or remedy shall not prevent the concurrent or subsequent exercise of any such
right or remedy. No delay in the enforcement or exercise of any such right or
remedy shall constitute a waiver of any Default by Tenant hereunder or of any of
Landlord's rights or remedies in connection therewith. Landlord shall not be
deemed to have waived any Default by Tenant hereunder unless such waiver is set
forth in a written instrument signed by Landlord. If Landlord waives in writing
any Default by Tenant, such waiver shall not be construed as a waiver o any
covenant, condition, or agreement set forth in this Lease except as to the
specific circumstances described in such written waiver.
Section 22.04. No Acceptance or Surrender.
--------------------------
No act or thing done by Landlord or its agents during the Term shall
constitute an acceptance of an attempted surrender of the Premises, and no
agreement to accept a surrender of the Premises shall be valid unless made in
writing and signed by Landlord. No re-entry or taking possession of the Premises
by Landlord shall constitute an election by Landlord to terminate this Lease,
unless a written notice of such intention is given to Tenant. Notwithstanding
any such reletting or re-entry or taking possession, Landlord may at any time
thereafter terminate, this Lease for a previous Default. Landlord's acceptance
of Rent following aft Event of Default hereunder shall not be construed as a
waiver of such Event of Default. No waiver by Landlord of any breach of this
Lease shall constitute a waiver of any other violation or breach of any of the
terms hereof. Forebearance by Landlord to enforce one or more of the remedies
herein provided upon a breach hereof shall not constitute a waiver of any other
breach of this Lease.
Section 22.05. Customs and Practices.
---------------------
No custom or practice which may develop between the parties in the
administration of the terms of this Lease shall be construed to waive or lessen
Landlord's right to insist upon strict performance of the terms of this Lease.
Section 22.06. Payment of Tenant's Obligation by Landlord by Landlord.
------------------------------------------------------
In the Event of Default, Landlord may, but shall not be required to,
make such payment or do such act required to be performed by Tenant. If Tenant
fails to act and Landlord makes such payment or does such. act, all costs and
expenses incurred by Landlord, plus interest thereon at the Default Rate from
the date paid by Landlord to the date of payment thereof by Tenant shall be
immediately paid by Tenant to Landlord. The taking of such action by Landlord
shall not be considered as a cure of such Default by Tenant or to prevent
Landlord from pursuing any remedy it is otherwise entitled to in connection with
such Default.
Section 22.07. Default by Landlord.
-------------------
Tenant agrees to give written notice of any default by Landlord under
this Lease to any lender of Landlord secured by the Premises upon request
thereof by such lender and a reasonable time within which to cure such default
prior to Tenant taking any action to remedy such default or cancel the Lease.
37
PART 23 - INTENTIONALLY OMITTED
PART 24 - INTENTIONALLY OMITTED
PART 25 - ATTORNEYS FEES AND LEGAL EXPENSES
In. any action or proceeding brought by either party against the other
under this Lease, the prevailing party shall be entitled to recover from the
other party its actual out-of-pocket reasonable attorneys fees, and other
reasonable legal expenses and court costs incurred by such party in such action
or proceeding.
PART 26 - NOTICES
Any notice, demand, request, consent, approval or other communication
which either party hereto is required or desires to give or make or communicate
to the other shall be in writing and shall be given or made or communicated by
United States registered or certified mail or by any overnight or express mail
service which provide receipts to indicate delivery, addressed to the parties
hereto at the respective addresses specified in the Basic Lease Information, or
at such other address as they have subsequently specified by written notice.
All notices shall be effective upon receipt or refusal of delivery by
the addressee thereof as shown on the return receipt of the notice. Rejection or
other refusal to accept or the inability to deliver because of changed address
of which no notice was given, shall be deemed to be receipt of the notice as of
the date of such rejection, refusal or inability to deliver.
PART 27 - MISCELLANEOUS
Section 27.01. No Partnership.
--------------
Nothing contained in this Lease shall be construed as creating a
partnership or joint venture of or between Landlord and Tenant, or to create any
other relationship between the parties hereto other than that of Landlord and
Tenant.
Section 27.02. Brokers.
-------
Landlord recognizes the Brokers as the brokers under this Lease and
shall pay the Brokers a commission pursuant to separate agreements between the
Brokers and Landlord, Landlord and Tenant each represent and warrant to the
other that, except as provided above, neither of them has employed or dealt with
any broker, agent or finder in carrying on the negotiations relating to this
Lease. In the event of a breach by a party of their foregoing representation and
warranty (the "Defaulting Party"), the Defaulting Party shall indemnify and hold
the other party harmless from and against any claim or claims, damages or
expenses (including any claims for brokerage or other commissions asserted by
any broker, agent, or finder fees) which may arise as a result of such breach.
The Brokers' fees shall. be paid in accordance with the rent schedule attached
hereto as Exhibit F.
Section 27.03. Severability.
------------
Every agreement contained in this Lease is, and shall be construed as,
a separate and independent agreement. If any term of this Lease or the
application thereof to any person or circumstances shall be invalid and
unenforceable, the remainder of this Lease, or the application of such term to
persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected.
38
Section 27.04. Trial by Jury.
-------------
Landlord and Tenant each hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other in
connection with any matter arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant hereunder, Tenant's use or
occupancy of the Premises, or any claim of injury or damage.
Section 27.05. Force Majeure.
-------------
Whenever a period of time is herein prescribed for action to be taken
by a party hereunder, such party shall not be liable or responsible for, and
there shall be excluded from the computation for any such period of time, any
delays due to strikes, riots, acts of God, shortages of labor or materials, war,
governmental laws, regulations, or restrictions, or any other cause of any kind
whatsoever which is beyond the reasonable control of such party; provided,
however, this section shall not be deemed to relieve (i) Tenant of its
obligation timely to pay Rent or (ii) either party of any other amounts required
to be paid hereunder.
Section 27.06. Captions.
--------
The article, part, and section headings contained in this Lease are for
convenience only and limit the scope or meaning of the provisions hereof. Words
of any gender used in this Lease shall include any other genders, and words in
the singular number shall be held to include the plural, unless the context
otherwise requires.
Section 27.07. Benefit and Burden.
------------------
If there be more than one Tenant, the obligations hereunder imposed
upon Tenant shall be joint and several, and all agreements and covenants herein
contained shall be binding upon the respective heirs, personal representatives,
successors, and, to the extent permitted under this Lease, assigns of the
parties hereto.
Section 27.08. No Representations by Landlord.
------------------------------
Neither Landlord nor Landlord's agents or brokers have made any
representations or promises with respect to the Premises or the Building except
as herein expressly set forth and all reliance with respect to any
representations or promises is based solely on those contained herein. No
rights, easements, or licenses are acquired by Tenant under this Lease by
implication or otherwise except as expressly set forth in this Lease.
Section 27.09. Entire Agreement.
----------------
This Lease sets forth the entire agreement between the parties
(including without limitation any existing leases by Tenant of the Premises) and
cancels all prior negotiations, arrangements, brochures, agreements, and
understandings, if any, between Landlord and Tenant regarding the subject matter
of this Lease. No amendment or modification of this Lease shall be binding or
valid unless expressed in a writing executed by both parties hereto.
Section 27.10. No Offer.
--------
The submission of this Lease to Tenant shall not be construed as an
offer, nor shall Tenant have any rights with respect thereto unless said lease
is consented to by any lender mid any lessor to Landlord, to the extent such
consent is required, and Landlord executes a copy of this Lease a and delivers
the same to Tenant.
39
Section 27.11. Authority.
---------
(a) If Tenant signs as a corporation, each of the persons executing
this Lease on behalf of Tenant represents and warrants that Tenant is a duly
organized and existing corporation, that Tenant been and is qualified to do
business in the Commonwealth of Virginia, that the corporation has full right
and authority to enter into this Lease, and that all persons signing on behalf
of the corporation were authorized to do so by appropriate corporate actions. If
Tenant signs as a partnership, trust, or other legal entity, each of the persons
executing this Lease on behalf of Tenant represents and warrants that Tenant has
complied with all applicable laws, rules, and governmental regulations relative
to its right to do business in the Commonwealth of Virginia, that such entity
has the full right and authority to enter into this Lease, and that all persons
signing on behalf of the Tenant were authorized to do so by any and all
necessary or appropriate partnership, trust, or other actions.
(b) Landlord represents and warrants to Tenant that:
(1) Landlord is a limited partnership duly organized and validly
existing under the laws of the Commonwealth of Virginia. Landlord has all
requisite power to own lease and operate its assets, and to carry on its
business as now conducted. Landlord has full power to execute, deliver and carry
out the terms and provisions of this Lease and all documents required on its
part to be executed and has taken all necessary limited partnership action to
authorize the execution, delivery and performance of this Lease and all other
agreements and instruments executed in connection herewith and (lie performance
of those provision,-; of this Lease required on its part to be carried out. The
persons executing this Lease (and all other agreements and instruments entered
into by Landlord in furtherance hereof), on behalf of Landlord, have the
authority to bind. Landlord to the terms and conditions of this Lease (and all
said agreements and instruments). Neither the execution and delivery of this
Lease and said agreements and instruments to be executed by Landlord in
connection herewith, nor the incurrence by Landlord of the obligations herein
set forth, nor the consummation by Landlord of the transactions herein
contemplated, nor compliance by Landlord with the terms of this Lease and said
agreements and instruments will conflict with or result in a breach of any of
the terms, conditions or provisions of, or constitute a default under, the
limited partnership agreement of Landlord, or to the knowledge of Landlord, any
bond, note or other evidence of indebtedness, contract, indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument, to which
Landlord is a party or by which any of its properties may be bound. This Lease
constitutes, and all agreements and documents required to be executed by
Landlord hereunder when so executed and delivered shall constitute, the legal,
valid and binding obligations of Landlord enforceable against Landlord in
accordance with their respective terms. Any order, permission, consent,
approval, license, authorization, registration or filing with, or exemption by,
any governmental agency which is required for the execution or delivery of this
Lease, or said agreements and instruments by Landlord has been obtained or made.
(2) There is (i) no pending or threatened condemnation to all or any
part of the Premises, (ii) no pending relocation of any roadways abutting the
Premises, and (iii) no denial of access to the Premises from any point of access
to the Land, and neither Landlord nor any of its agents or affiliates has
received any notice of any of the same.
(3) Landlord owns fee simple title to the Land and the Building.
(4) Landlord (i) is not in receivership or dissolution, (ii) has not
made an assignment for the benefit of creditors or admitted in writing its
inability to pay its debts as they mature, (iii) has not been adjudicated a
bankrupt or filed a petition in voluntary bankruptcy or a petition or answer
seeking reorganization or an arrangement with creditors under the Federal
bankruptcy law or any other similar law or statute of the United States or any
jurisdiction and no such petition has been filed against Landlord, and (iv) to
the best of its knowledge, none of the foregoing are pending or threatened.
40
Section 27.12. Changes Requested by Lender.
---------------------------
If, in connection with obtaining financing for the. Building, any
lender shall request reasonable modifications in this Lease as a condition for
such financing, Tenant will not unreasonably withhold, delay, or defer its
consent thereto, provided such modifications do not increase the obligations of
Tenant, decrease Tenant's rights or in any way affect Tenant's monetary
obligations hereunder or materially adversely affect either the leasehold
interest hereby created or Tenant's use and enjoyment of the Premises.
Section 27.13. Governing Law and Construction.
------------------------------
This Lease shall be governed by and construed under the laws of the
Commonwealth of Virginia, without regard to choice of laws principles thereof.
This Lease consists of three (3) parts, the Basic Lease, General Lease
Provisions and Exhibits which are to be read together as a complete integrated
document. Printed parts of this Lease shall be as binding on the parties hereto
as other parts hereof. Parts of this Lease which are written or typewritten
shall have no greater force or effect than and shall not control parts which are
printed, but all parts shall be given equal effect. Tenant declares that Tenant
has read and understands all parts of this Lease, including all printed parts
thereof. Should any provision of this Lease require judicial interpretation, it
is agreed that the court interpreting or considering same shall not apply the
presumption that the terms hereof shall be more strictly construed against a
party by reason of the rule or conclusion that a document should be construed
more strictly against the party who itself or through its agents prepared the
same, it being agreed that all parties hereto have participated in the
preparation of this Lease and that each party had full opportunity to consult
with legal counsel of its choice before the execution of this Lease.
Section 27.14. Landlord's Liability.
--------------------
Anything contained in this Lease to the contrary notwithstanding,
Tenant agrees that Tenant shall look solely to the estate and property of
Landlord in the Building and the Land including, without limitation, all
insurance and condemnation proceeds relating thereto, for the collection of any
judgment or other judicial process requiring the payment of money by Landlord
for any default or breach by Landlord under this Lease, subject, however, to the
prior rights of any mortgagee or lessor of the Building and land upon which the
Building is situated. No other assets of Landlord or any partners, shareholders,
or other principals of Landlord shall be subject to levy, execution or other
judicial process for the satisfaction of Tenant's claim.
Section 27.15. Use of Name of Building.
-----------------------
Tenant shall not, without prior written consent of Landlord, use the
name of the Building for any purpose other than as the address of the business
to be conducted by Tenant on the Premises, and Tenant shall not do or permit the
doing of anything in connection with Tenant's business or advertising which in
the reasonable judgment of Landlord may reflect unfavorably on Landlord or the
Building or confuse or mislead the public as to any apparent connection or
..relationship between Tenant and Landlord, the Building or the Land.
Section 27.16. Changes by Landlord.
-------------------
Landlord shall have the unrestricted right to make changes to all
portions of Fair Lakes (of which the Building and land upon which it is situated
are a part) in Landlord's reasonable discretion for the purpose of improving
access of or security to Fair Lakes or the flow of pedestrian vehicular traffic
therein; provided that such changes or the making of them shall not unreasonably
interfere with the operation of Tenant's business or Tenant's use of the
Premises. Landlord shall have the right to close, from time to time, the common
areas of the Land upon which the Building is situated, Fair Lakes and other
portions of Fair Lakes for such temporary periods as Landlord deems legally
sufficient to evidence Landlord's ownership and control thereof and to prevent
any claim of adverse possession by, or any implied or actual dedication to the
public or any party other than Landlord.
41
Section 27.17. Time of Essence.
---------------
Time is of the essence in this Lease.
Section 27.18. Year 2000.
---------
Landlord and Tenant acknowledge that the arrival of Year 2000 presents
potential problems with equipment and systems controlled by computer systems.
Landlord hereby represents that it is using commercially reasonable efforts to
insure that all Building systems will be Year 2000 compliant so that they will
not be adversely affected by computer hardware and software that may
misinterpret the digits "00" which denote Year 2000. Tenant represents that it
has implemented a Year 2000 compliance program for its business and plans that
its business will be Year 2000 compliant by December 1, 1999. Neither Landlord
nor Tenant shall be relieved of their obligations under the Lease as a result of
any of their operations not being Year 2000 compliant and the provisions of
Section 6.03(c) shall apply in the event of interruptions in services in
connection with Year 2000 problems.
Section 27.19. Satellite Dish.
--------------
(a) Tenant shall have the right, subject to the provisions of this
Section and the Roof Agreement attached to this Lease as Exhibit "I" and made a
-----------
part hereof by this reference, to install, at its sole cost and expense, upon
the roof of the Building communications equipment (the "Roof Equipment"). The
location of the Roof Equipment shall be mutually agreed upon by Landlord and
Tenant prior to the installation on the roof. The size, design, and appearance
of the Roof Equipment shall be subject to the approval of all applicable
governmental authorities, the Architectural Review Board of Fair Lakes and
Landlord.
(b) In the event that Tenant installs the Roof Equipment then, such
construction shall be subject to all of the provisions of this Lease. Tenant
further agrees that the provisions of Part 9 hereof shall apply to Tenant's use
of the roof for the installation and operation of the Roof Equipment. Tenant
shall maintain the Roof Equipment and the portion of the roof upon which is
situated in a good, clean and proper condition and will, at the end of the Term,
remove the Roof Equipment and will return the building to its original
appearance where the Roof Equipment was located subject to Landlord's approval
not to be unreasonably withheld, delayed or conditioned.
Section 27.20. - Business Day.
------------
For all purposes herein, "Business Day" shall mean Monday through
Friday except New Year's Day, President's Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, the Friday after Thanksgiving Day, and Christmas
Day.
42
EXHIBIT D
Rules and Regulations
Exhibit D to this Lease is not included with this Registration
Statement on Form S-1. The Registrant will provide Exhibit D upon the request of
the Securities and Exchange Commission.
43
EXHIBIT E
Commencement Date Notice
Exhibit E to this Lease is not included with this Registration
Statement on Form S-1. The Registrant will provide Exhibit E upon the request of
the Securities and Exchange Commission.
44
EXHIBIT `F'
FAIR LAKES COURT SOUTH
Updated 5/25/99
-----------------------------------------------------------------------------------------------------------
Base Rent Before
Expenses and Before
Commission Amortization
----------------------------------------------------
Effective Total Premises
Lease Yr. Date Sq. Ft. Total Annual Per SF Monthly
-----------------------------------------------------------------------------------------------------------
1 1/1/99 132,217 $1,485,585.00 $11.24 $123,798.75
-----------------------------------------------------------------------------------------------------------
2 1/1/00 132,217 $1,508,565.00 $11.41 $125,714.00
-----------------------------------------------------------------------------------------------------------
3 1/1/01 132,217 $1,678,361.00 $12.69 $139,863.42
-----------------------------------------------------------------------------------------------------------
4 1/1/02 132,217 $1,777,773.25 $13.45 $148,147.77
-----------------------------------------------------------------------------------------------------------
5 1/1/03 132,217 $1,817,773.15 $13.75 $151,481.10
-----------------------------------------------------------------------------------------------------------
6 1/1/04 132,217 $1,858,673.05 $14.06 $154,889.42
-----------------------------------------------------------------------------------------------------------
7 1/1/05 132,217 $1,900,493.19 $14.37 $158,374.43
-----------------------------------------------------------------------------------------------------------
8 1/1/06 132,217 $1,943,254.29 $14.70 $161,937.86
-----------------------------------------------------------------------------------------------------------
9 1/1/07 132,217 $1,986,977.51 $15.03 $165,581.46
-----------------------------------------------------------------------------------------------------------
10 1/1/08 132,217 $2,031,684.51 $15.37 $169,307.04
-----------------------------------------------------------------------------------------------------------
11 1/1/09 132,217 $2,077,397.41 $15.71 $173,116.45
-----------------------------------------------------------------------------------------------------------
12 1/1/10 132,217 $2,124,138.85 $16.07 $177,011.57
-----------------------------------------------------------------------------------------------------------
13 1/1/11 132,217 $2,171,931.97 $16.43 $180,994.33
-----------------------------------------------------------------------------------------------------------
14 1/1/12 132,217 $2,220,800.44 $16.80 $185,066.70
-----------------------------------------------------------------------------------------------------------
15 1/1/13 132,217 $2,270,768.45 $17.17 $189,230.70
-----------------------------------------------------------------------------------------------------------
16 1/1/14 132,217 $2,321,860.74 $17.56 $193,488.40
-----------------------------------------------------------------------------------------------------------
17 1/1/15 132,217 $2,374,102.61 $17.96 $197,841.88
-----------------------------------------------------------------------------------------------------------
NOTES
1. Above rents do not include operating expenses, real estate taxes, or Tenant
Improvement/Commission amortization, all due and payable as additional rent in
accordance with the Lease.
2. The above schedule is subject to the provisions of Section 3.01 of the
Lease.
Exhibit "F1"
Fair Lakes Court South
Commission Payment and Rent Increase
Landlord and Tenant agree that Landlord shall pay the ▇▇▇▇▇▇▇ Commission as
defined in the Lease to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Inc. in the amount of $500,000.00 as
follows:
▇▇▇▇▇▇▇
Commission Commission Rent Increase Additional Additional
Payment Date Amount Factor Annual Rent Monthly Rent
------------ ----------- ------------- ----------- ------------
July 1, 1999 $500,000.00 0.12023 $60,114.21 $5,009.52
- As of July 1, 1999, and continuing thereafter until December 31, 2015,
Tenant shall pay Landlord pursuant to the Lease the additional monthly
Commission Rent of .................................................. $5,009.52
EXHIBIT G
Form of Subordination, Non-Disturbance and Attornment Agreement
Exhibit G to this Lease is not included with this Registration Statement on
Form S-1. The Registrant will provide Exhibit G upon the request of the
Securities and Exchange Commission.
2
EXHIBIT H
List of Typical Additional Building Costs
Exhibit H to this Lease is not included with this Registration
Statement on Form S-1. The Registrant will provide Exhibit H upon the request of
the Securities and Exchange Commission.
3
EXHIBIT I
Roof Agreement
Exhibit I to this Lease is not included with this Registration
Statement on Form S-1. The Registrant will provide Exhibit I upon the request of
the Securities and Exchange Commission.
4
EXHIBIT J
Computerized Energy Management System
Exhibit J to this Lease is not included with this Registration
Statement on Form S-1. The Registrant will provide Exhibit J upon the request of
the Securities and Exchange Commission.
5
EXHIBIT K
Janitorial Cleaning Specifications
Exhibit K to this Lease is not included with this Registration
Statement on Form S-1. The Registrant will provide Exhibit K upon the request of
the Securities and Exchange Commission.
6
EXHIBIT L
Plat of Land
Exhibit L to this lease is not included with this Registration Statement on Form
S-1. The Registrant will provide Exhibit L upon the request of the Securities
and Exchange Commission.
4
FIRST AMENDMENT TO OFFICE LEASE AGREEMENT
-----------------------------------------
THIS FIRST AMENDMENT TO OFFICE LEASE AGREEMENT (this "First Amendment")
---------------
is made and entered into this 30th day of August, 1999 by and between FAIR LAKES
NORTH AND SOUTH L.P., a Virginia limited partnership ("Landlord") and SRA
--------
INTERNATIONAL, INC., a Delaware corporation ("Tenant"), with reference to the
------
following:
R E C I T A L S :
-----------------
A. Pursuant to that Office Lease Agreement dated May 11, 1999, by and
between Landlord and Tenant (the "Lease"), Landlord leased to Tenant certain
-----
premises more particularly described therein in the building commonly known as
Fair Lakes Court South, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Building").
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B. Landlord and Tenant desire to amend the Lease as more particularly
described herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Landlord and Tenant agree as
follows:
1. All capitalized terms used herein unless specifically defined shall
have the same meaning and definition as used in the Lease.
2. The Lease is hereby modified and amended by inserting the following
sentence in Article 8, Central Services Facility, Paragraph (c) after the first
sentence:
"The Rent Factor shall be the percentage rate equal to 250 basis
points over Landlord's permanent financing debt service constant
for the Services Facility."
3. Except as modified by this First Amendment, the Lease remains
unmodified and in full force and effect.
[Signatures follow on next page.]
8
IN WITNESS WHEREOF, Landlord and Tenant have executed this First
Amendment as of the day and year first above written.
LANDLORD:
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FAIR LAKES NORTH AND SOUTH L.P.
a Virginia limited partnership
By: Fair Lakes North and South, Inc.
a Virginia corporation
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Its: President
-----------------------------------
TENANT:
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SRA INTERNATIONAL, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Its: Vice President, Asset Management
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9