EXHIBIT 10.18
-------------
DEED OF LEASE FOR OFFICE SPACE
BETWEEN
▇▇ ▇▇▇▇▇▇▇▇ PARK II, LLC,
A VIRGINIA LIMITED LIABILITY COMPANY
AS LANDLORD
AND
SUTRON CORPORATION,
A VIRGINIA CORPORATION
AS TENANT
TABLE OF CONTENTS
SECTION 1. DEFINED TERMS AND DEFINITIONS
1.01 "Additional Rent"
1.02 "Base Rent"
1.03 "Building"
1.04 "Common Areas"
1.05 "Exhibits"
1.06 "Initial Improvements"
1.07 "Landlord's Address for Notice"
1.08 "Landlord's Agents"
1.09 "Lease Year"
1.10 "Operating Expenses"
1.11 "Permitted Use"
1.12 "Premises"
1.13 "Project"
1.14 "Property"
1.15 "Real Estate Taxes"
1.16 "Rent"
1.17 "Rent Commencement Date"
1.18 Intentionally Omitted
1.19 Intentionally Omitted
1.20 "Tenant's Address for Notice"
1.21 "Tenant's Agents"
1.22 "Tenant's Share"
1.23 "Tenant's Trade Name"
1.24 "Term"
SECTION 2. GRANT OF PREMISES
2.01 Tenant's Possession and Use of Premises
2.02 Surrender of Premises and Holdover
2.03 Landlord to have access to the Premises
2.04 Delivery of Premises
2.05 Intentionally Omitted
2.06 Tenant Access
2.07 Renewal Options
2.08 Expansion Rights
SECTION 3. RENT
3.01 Payment of Base Rent
3.02 Payment of Janitorial Services
3.03 Payment of Operating Expenses
3.04 Utilities
3.05 Payment of Real Estate Taxes
3.06 Intentionally Omitted
3.07 Partial Occupancy
3.08 Payments Generally
3.09 Audit Rights
ii
SECTION 4. MAINTENANCE AND REPAIRS
4.01 Tenant Repairs
4.02 Landlord Repairs
4.03 Initial Improvements
4.04 Tenant Alterations
4.05 Restoration after Damage by Casualty
4.06 Termination after Damage by Casualty
4.07 Condemnation
4.08 ADA Compliance
4.09 Mold
4.10 Signs
SECTION 5. INSURANCE
5.01 Tenant's Insurance
5.02 Waiver of Subrogation
5.03 Indemnification by Tenant/Landlord
5.04 Landlord's Liability Excluded
5.05 Landlord Exculpation
5.06 Landlord's Insurance
SECTION 6. HAZARDOUS MATERIALS
6.01 Hazardous Materials Defined
6.02 Environmental Compliance
6.03 Hazardous Materials Indemnification
6.04 Landlord Representation
SECTION 7. SUBLETTING AND ASSIGNING
7.01 Transfer of Premises
7.02 Transfer Defined
7.03 Subordination/Estoppel Certificates
SECTION 8. DEFAULT
8.01 Default
8.02 Consequences of Default
8.03 Self-Help
8.04 No Implied Waivers
8.05 Waiver of Jury Trial
8.06 Landlord Default; Tenant Remedies
SECTION 9. MISCELLANEOUS
9.01 Notices
9.02 Successors and Assigns and Landlord's Liability
9.03 No Offer
9.04 Attorney's Fees
9.05 Interpretation
9.06 Amendments
9.07 Brokerage
9.08 Entire Agreement
9.09 Force Majeure
9.10 Authority
9.11 Mortgagees' Approval
9.12 Parking
9.13 No Liens
iii
9.14 Financial Statements
9.15 Net Lease
9.16 Reservations by Landlord
9.17 Roof Rights
9.18 Monitoring Pond
9.19 Satellite Farm
9.20 Emergency Generator
EXHIBIT "A" PREMISES
EXHIBIT "B" IMPROVEMENTS
EXHIBIT "B-1" TRUCK COURT AND CURB ISLANDS SPACE PLAN
EXHIBIT "C" DECLARATION OF LEASE COMMENCEMENT
EXHIBIT "D" RULES AND REGULATIONS
EXHIBIT "E" MONITORING POND
EXHIBIT "F" SATELLITE FARM
iv
DEED OF LEASE
DATED as of the _____ day of ______________, 2008
LANDLORD: ▇▇ ▇▇▇▇▇▇▇▇ Park II, LLC,
a Virginia limited liability company
TENANT: Sutron Corporation,
a Virginia corporation
In consideration of the mutual covenants hereinafter set forth, and of
other good and valuable consideration, Landlord and Tenant do hereby enter into
this Deed of Lease and do agree as follows:
1.00 DEFINED TERMS AND DEFINITIONS
1.01 "ADDITIONAL RENT" means any and all amounts required to be paid by
Tenant hereunder, other than Base Rent, and any and all reasonable charges or
expenses incurred by Landlord on behalf of Tenant under the terms of this Lease.
Additional Rent shall be payable (except as otherwise expressly set forth
herein) in the same manner and upon the same terms and conditions as the Base
Rent reserved hereunder. Any failure on the part of Tenant to pay such
Additional Rent when and as the same shall become due shall entitle Landlord to
the remedies available to it for nonpayment of Base Rent.
1.02 "BASE RENT" means an annual (Triple Net) amount (exclusive of
Tenant's Share of Operating Expenses and Real Estate Taxes) payable by Tenant
for the Premises in equal monthly installments in accordance with the following
schedule:
--------------------------------------------------------------------------
Rentable Square Annual Base Monthly Base
Time Period Foot Rate Rent Rent
--------------------------------------------------------------------------
CD - 5/31/09* $0 $0 $0
--------------------------------------------------------------------------
6/1/09 - 5/31/10 $13.00 $361,621.00 $30,135.08
--------------------------------------------------------------------------
6/1/10 - 5/31/11 $13.33 $370,800.61 $30,900.05
--------------------------------------------------------------------------
6/1/11 - 5/31/12 $13.66 $379,980.22 $31,665.02
--------------------------------------------------------------------------
6/1/12 - 5/31/13 $14.00 $389,438.00 $32,453.17
--------------------------------------------------------------------------
6/1/13 - 5/31/14 $14.35 $399,173.95 $33,264.50
--------------------------------------------------------------------------
6/1/14 - 5/31/15 $14.71 $409,188.07 $34,099.01
--------------------------------------------------------------------------
6/1/15 - 5/31/16 $15.08 $419,480.36 $34,956.70
--------------------------------------------------------------------------
6/1/16 - 5/31/17 $15.46 $430,050.82 $35,837.57
--------------------------------------------------------------------------
6/1/17 - 5/31/18 $15.85 $440,899.45 $36,741.62
--------------------------------------------------------------------------
6/1/18 - 5/31/19 $16.25 $452,026.25 $37,668.85
--------------------------------------------------------------------------
* Notwithstanding any provision of the Lease to the contrary, Tenant's
obligation to pay Base Rent for the Premises shall not commence until June 1,
2009, the "Rent Commencement Date."
1.03 "BUILDING" means the building known as ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Building contains a total of 57,521 rentable
square feet of space.
1
1.04 "COMMON AREAS" means those areas within the Property not reserved
to individual occupants of premises, but from time to time available and
designated by Landlord to benefit or serve the Building. Without limitation,
Common Areas may include roofs, foundations, exterior walls, sign canopies,
parking and landscaped areas, sidewalks, access roads, general signs, machinery,
equipment, and the mechanical, electrical and other systems and installations
serving the Property as a whole (whether or not located within the Building), as
same may be expanded, reduced or otherwise altered from time to time in
Landlord's sole but reasonable discretion. Landlord may, in its sole but
reasonable discretion, from time to time change the location, layout and
arrangement of the Common Areas and/or reduce the size of the Common Areas by
erecting thereon store buildings or other structures or improvements of any
kind, provided that if Landlord erects another tenant-occupied building on the
Property Landlord will not increase Tenant's Share of Operating Expenses or Real
Estate Taxes as a result of the addition of such new building to the Project.
1.05 "EXHIBITS" means the following exhibits which are attached to this
Lease and made a part hereof, and any other exhibit which may in the future be
attached hereto by the written consent of the parties:
Exhibit "A" - Premises
Exhibit "B" - Improvements
Exhibit "B-1" - Truck Court and Curb Islands Space Plan
Exhibit "C" - Declaration of Lease Commencement
Exhibit "D" - Rules and Regulations
Exhibit "E" - Monitoring Pond
Exhibit "F" - Satellite Farm
1.06 "INITIAL IMPROVEMENTS" means the improvements to be made to the
Premises pursuant to Section 4.03, Exhibit "B" and "Exhibit B-1" hereto.
1.07 "LANDLORD'S ADDRESS FOR NOTICE" means ▇▇ ▇▇▇▇▇▇▇▇ Park I, LLC, c/o
First Potomac Management LLC, Attn.: ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.08 "LANDLORD'S AGENTS" includes any asset manager, agent, managing
agent, affiliate, contractor, employee, director, partner, officer or servant of
Landlord, or any corporate entity affiliated with Landlord or third party
operator and owner of the Building or the Property.
1.09 The first "LEASE YEAR" will begin on the Commencement Date and end
on the last day of the twelfth (12th) full calendar month following the Rent
Commencement Date (hereinafter defined). The second Lease Year will begin on the
first day of the thirteenth (13th) full calendar month following the Rent
Commencement Date and extend for a period of twelve (12) full calendar months.
Each subsequent Lease Year will begin on the annual anniversary of the first day
of the second (2nd) Lease Year and extend for twelve (12) full calendar months.
1.10 "OPERATING EXPENSES" means, without limitation, the sum of all
expenses, costs and disbursements of every kind and nature that Landlord pays or
becomes obligated to pay in connection with owning, operating, managing,
maintaining, insuring, repairing, policing, and securing the Building, the
Property, the parking facilities, and the land upon which the Building and
parking facilities are situated (the "Land"), including but not limited to: all
management fees (in an amount not to exceed five percent (5%) of the Project's
Gross Receipts) and office expenses related to the Building; all costs and
expenses of operating, maintaining, managing,
2
repairing, lighting, signing, cleaning, painting, striping, policing and
securing the Common Areas (including the cost of uniforms, equipment and
employment taxes); alarm and life safety systems; all applicable sales and use
taxes; expenses incurred for heat, cooling and other utilities; the cost of
insuring the Building and the Property (including, but not limited to, liability
insurance for personal injury, death and property damage, insurance against
fire, all-risk coverage including earthquake and flood, theft or other
casualties, worker's compensation insurance or similar insurance covering
personnel, fidelity bonds for personnel, insurance against liability for
defamation and claims of false arrest occurring on or about the Property,
structural insurance, plate glass insurance and rent-loss insurance); the cost
of cleaning all exterior glass; removal of water, snow, ice, trash and debris;
regulation of traffic; the cost of landscaping; the cost of janitorial and
cleaning service, trash collection and recycling services, pest control;
concierge, lobby, or security service (if any); the pro-rata salaries, wages and
other personnel costs of engineers, superintendents, watchpersons, and all other
employees for services provided directly to the Building, including any sales
tax imposed upon their service; charges under maintenance and service contracts
for elevators, chillers, boilers and controls; window cleaning; building and
grounds maintenance; parking lot maintenance; management fees; permits and
licenses; all maintenance, replacement and repair expenses (unless excluded
below) and supplies including replacement, maintenance and repair of the roof,
awnings, paving, curbs, walkways, drainage, landscaping, pipes, ducts, conduits
and similar items, signage for the Building or the Property, and lighting
facilities; costs and expenses of planting, replanting and replacing flowers,
shrubbery and planters; the cost of water services, if any, furnished by
Landlord for the non-exclusive use of all tenants; costs (including finance
charges) of improvements to the Building, equipment or capital items that are
designed to increase safety, improve energy efficiency or expand
telecommunications service; the cost of replacing existing equipment or systems
or other costs incurred for the purpose of complying with the directives of a
public or quasi public entity or authority; costs of complying with all
governmental regulations, including, without limitation, the disposal of
chlorofluorocarbons and compliance with Title III of the Americans With
Disabilities Act of 1990 ("ADA") or any other Virginia statute regarding
barriers; costs of independent contractors; owner's association assessments;
Landlord's share of expenses under any declaration, covenant, or other agreement
recorded among the land records of the county in which the Building is located
and applicable to the Building or the Property; and all other costs and expenses
properly incurred in the operation and maintenance of the Building or the
Property, and the amortized portion of any capital expenditures or improvements
and interest thereon. Landlord agrees that it will not build an additional
tenant-occupied building that will be part of the same Project as the Building.
Notwithstanding the foregoing, "Operating Expenses" shall not include: (i)
payment of principal and interest on mortgages; (ii) ground rent or other rental
payments made under any ground lease or underlying lease; (iii) lease
commissions; (iv) any expenses for which Landlord actually receives
reimbursement from insurance, condemnation awards, other tenants, any warranty
or otherwise; (v) legal and other professional fees incurred in connection with
disputes with tenants, other occupants, or prospective tenants, (vi) costs
incurred in connection with the sale, financing, refinancing, mortgaging,
selling or change of ownership of the Building, the Project, the parking
facilities or the Property; (vii) depreciation of the Building or equipment;
(viii) improvements or replacements to the Building, equipment or other capital
items having a useful life (as determined in accordance with commercially
reasonable industry standards) in excess of three (3) years from the date of
installation (collectively "Capital Costs"), except those that are intended to
reduce Operating Expenses, increase safety, improve energy efficiency, expand
telecommunications services or comply with governmental regulations or other
directives of a public or quasi-public entity or authority; (ix) costs, fines,
interest, penalties, legal fees or costs of litigation incurred due to the late
payments of taxes, utility bills and other costs incurred by Landlord's failure
to make such payments when due; (x) salaries, wages, or other compensation paid
to officers of Landlord; or (xi) any federal, state, or local income tax, and
any
3
franchise, gift, transfer, excise, or inheritance tax. The term "Gross
Receipts," as used in this Section, shall mean and include the gross rents and
all other payments from tenants under leases at the Project or from licensees,
concessionaires, and other third parties with respect to the occupancy or use of
the Project, including without limitation base rents, operating expense
reimbursements, common area charges, percentage rental payments (if applicable),
forfeited deposits, income from the sale of utility services, business
interruption insurance proceeds, and all similar and dissimilar amounts. The
term "Gross Receipts" shall specifically exclude, implied rent during free rent
periods, security deposits (unless and until applied in accordance with the
Leases), rents not collected, and insurance and condemnation proceeds (other
than business interruption insurance proceeds).
1.11 "PERMITTED USE" means general office, production, assembly,
research and development, testing, sales, marketing, warehouse and distribution
use in connection with Tenant's business and to the extent such use is permitted
by the laws and other governmental regulations applicable to the Building and
the Premises, and no other use whatsoever. Landlord acknowledges and agrees
that, to the best of its knowledge, all of the activities currently conducted by
Tenant at its present location are Permitted Uses.
1.12 "PREMISES" means the 27,817 rentable square foot area, known as
Suite #100, shown outlined on Exhibit "A", located within the Building. The
rentable square footage leased by Tenant for all purposes under the Lease shall
be measured and computed in accordance with the American National Standard
Method of Measuring Area in Office Buildings of the Buildings Owners and
Managers Association's International Standard Method of Measuring Floor Area in
Office Buildings, (ANSI/BOMA Z65.1-1996). The parties stipulate that the
rentable square footage of the Premises is that stated in this Section 1.12.
1.13 "PROJECT" means the Building, the Building's parking lot and any
other Common Areas serving the Building, together with all improvements and
appurtenances.
1.14 "PROPERTY" shall mean the land upon which the Project is located
and the Project.
1.15 "REAL ESTATE TAXES" means all general and special real estate
taxes, special assessments, including Business, Professional, and Occupational
License Tax ("BPOL"), any state or local business personal property tax, and
other ad valorem taxes, levies and assessments (net of any refund) paid upon or
in respect of the Building, the Property, or the rents therefrom; real estate
rental, receipt or gross receipt tax or any other tax on Landlord (excluding
Landlord's income taxes), and any metropolitan district water and sewer charges
and other governmental charges which customarily are part of the real estate tax
▇▇▇▇ issued by the governmental authorities charged with such responsibility;
and all taxes or other charges imposed in lieu of any such taxes, including fees
of counsel and experts which are reasonably incurred by, or reimbursable by,
Landlord in contesting any such taxes or in seeking any reduction in the
assessed valuation of the Building or the Land or a judicial review thereof. If
any such application or review results in a refund on account of any prior
assessment, after payment of reasonable expenses incurred in connection
therewith (whether by Landlord, Tenant or other tenants of the Building), then,
if Tenant is not in default hereunder, Landlord will reimburse Tenant Tenant's
proportionate share of the refund applicable to the Term. Notwithstanding the
foregoing, "Real Estate Taxes" does not include: (i) any interest or penalties
paid by or imposed upon Landlord as a result of Landlord's failure to pay Real
Estate Taxes when due and payable, or (ii) any net income, franchise or capital
gains tax, inheritance tax or estate tax imposed or constituting a lien upon
Landlord or all or any part of the Property.
4
1.16 "RENT" means Base Rent and all Additional Rent, as the same may be
adjusted from time to time.
1.17 "RENT COMMENCEMENT DATE" means June 1, 2009.
1.18 INTENTIONALLY OMITTED.
1.19 INTENTIONALLY OMITTED.
1.20 "TENANT'S ADDRESS FOR NOTICE" means Sutron Corporation, ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.21 "TENANT'S AGENTS" includes any agent, officer, employee, servant,
partner, independent contractor, licensee, invitee, or visitor of Tenant.
1.22 "TENANT'S SHARE" means forty-eight and thirty-six hundredths
(48.36%), being based on the ratio of the rentable area of the Premises to the
rentable area of the Building (27,817/57,521).
1.23 "TENANT'S TRADE NAME" means Sutron Corporation.
1.24 "TERM" means the period commencing on the date that this Lease is
fully executed (the "Commencement Date") and expiring at 11:59 p.m. on May 31,
2019 (the "Expiration Date"), unless earlier terminated or unless extended
pursuant to the Lease, in which case the Term shall include all extensions.
Landlord shall deliver possession of the Premises to Tenant in its "as-is"
condition on the Commencement Date. If Landlord does not deliver possession of
the Premises to Tenant on the Commencement Date then, unless such delay is
caused by Tenant or Tenant's Agents, the Rent Commencement Date and the
Expiration Date shall be postponed for a period of time equal to the delay in
the delivery of possession of the Premises. If the Rent Commencement Date is
postponed, as set forth in this Section 1.24, Landlord and Tenant shall execute
a Declaration of Lease Commencement, substantially similar to the form attached
hereto as Exhibit "C," after the Commencement Date, Rent Commencement Date and
Expiration Date have been ascertained. If the Landlord has not delivered the
Premises to Tenant in its "as is" condition by the ninetieth (90th) day
following the Commencement Date, Tenant shall have the right, as its sole
remedy, to terminate this Lease on thirty (30) days notice given prior to the
date that the Premises is delivered to Tenant in its "as is" condition, but if
the Premises are delivered within such thirty (30)-day period the termination
notice will be null and void.
2.00 GRANT OF PREMISES
2.01 TENANT'S POSSESSION AND USE OF PREMISES. Landlord leases the
Premises to Tenant, and Tenant leases the Premises from Landlord, for the Term,
together with a nonexclusive, nontransferable license to use the Common Areas.
Tenant shall have the right to use the agreed-upon portions of the Property for
the construction, installation, use, maintenance, repair and replacement of
Tenant's Rooftop Equipment, Monitoring Pond Equipment, Satellite Farm Equipment
and Tenant's Emergency Generator (collectively "Tenant's Equipment") upon the
terms and conditions set forth in Sections 9.17, 9.18, 9.19 and 9.20 of the
Lease, together with connecting underground power and communication lines and
cables required to provide electrical power to Tenant's Equipment or connect
Tenant's Equipment to the Premises, in the locations approved by Landlord. All
of Tenant's Equipment shall be and remain the property of Tenant. Upon
installation, construction, maintenance and removal of Tenant's Equipment (it
being
5
expressly agreed that Tenant shall be required to remove Tenant's Equipment and
all underground power and communication lines and cables required to provide
electrical power to Tenant's Equipment or connect Tenant's Equipment to the
Premises prior to the expiration or earlier termination of this Lease), Tenant
shall, at Tenant's expense, restore the Property, as nearly as possible, to its
original condition. Tenant shall use the Premises for the Permitted Use, under
Tenant's Trade Name, and for no other purpose and under no other name unless
otherwise agreed to by Landlord. Tenant shall not use the Premises, nor suffer
the Premises to be used, for any unlawful purpose or in any unlawful manner or
in violation of any valid regulation of any governmental body, or in any manner
to (i) create any nuisance or trespass; (ii) vitiate any insurance carried by
Landlord or on Landlord's behalf; (iii) alter the classification or increase the
rate of any insurance on the Building; or (iv) use the Building or Property for
or cause any disruptive, harassing or outrageous conduct. Tenant shall not
commit waste, overload the floors or structure of the Building, or take any
action that would impair or alter parking spaces on the Property unless
otherwise agreed to by Landlord. Tenant shall not keep Hazardous Materials
within or about the Premises, nor shall Tenant use or allow the Premises to be
used for any impermissible purposes pursuant to Section 6.02. In the event of
any such waste, damage or manner of use by Tenant, immediately upon written
notice to Tenant at the Premises, Tenant shall take such steps as are reasonably
necessary to cease and repair the same, failing which Landlord shall be entitled
to take such steps and Tenant shall pay to Landlord, upon demand, Landlord's
actual reasonable cost thereof. In addition, if the use or occupancy of the
Premises, the conduct of business in the Premises or any act or omission of
Tenant in the Premises or the Property, causes or results in any increase in
premiums for the insurance carried from time to time by Landlord with respect to
the Property, Tenant shall pay to Landlord on demand Landlord's cost of any
increase in premiums. Use of the Premises is subject to all covenants,
conditions and restrictions of record. Tenant shall not permit any objectionable
odors or noises to emanate from the Premises. Tenant hereby agrees to defend,
indemnify and hold Landlord and the Property harmless from and against any and
all reasonable costs, damages, expenses, and liabilities (including reasonable
attorneys' fees) arising out of or related to any breach of this Section 2.01.
Tenant shall, at its sole expense, promptly observe and comply with all
statutes, laws, ordinances, rules, regulations, orders and requirements of all
governmental, quasi-governmental or regulatory authorities applicable to the
Premises and the conduct of its business, and with Landlord's rules and
regulations (the "Rules and Regulations") promulgated from time to time and
applicable to the Premises and the Common Areas. The current Rules and
Regulations are attached hereto as Exhibit "D". Subject to this Lease and so
long as Tenant is not in default beyond the applicable notice and cure period
(if any) specified in this Lease, Tenant shall have the quiet enjoyment of the
Premises without hindrance on the part of Landlord or anyone claiming though
Landlord.
2.02 SURRENDER OF PREMISES AND HOLDOVER. On the Expiration Date, Tenant
shall remove from the Premises all of its furniture, trade fixtures, equipment
and other personal property, and such of any alterations installed by or on
behalf of Tenant as Landlord may require Tenant to remove (it being expressly
agreed that, with respect to items requiring Landlord's consent, Landlord will
notify Tenant of such removal obligations at the time consent is granted),
repair any damage caused by their installation or removal, and surrender vacant
possession of the Premises, clean, broom-swept and in substantially the same
condition as will exist after the construction of the Improvements and/or any
alterations approved by Landlord for which removal is not required, subject to
ordinary wear and tear and damage by casualty. Any personal property of Tenant
not removed within ten (10) business days following the expiration or earlier
termination of the Lease shall be deemed to have been abandoned by Tenant and to
have become the property of Landlord, and may be retained or disposed of by
Landlord, as Landlord shall desire, in accordance with applicable law. Tenant
acknowledges that it is extremely important that Landlord have substantial
advance notice of the date on which Tenant will vacate the
6
Premises, both because Landlord will require an extensive period to locate a
replacement tenant and because Landlord will plan its entire leasing and
renovation program for the Building in reliance on the expiration dates of this
Lease and other leases. Tenant also acknowledges that if Tenant fails to
surrender the Premises at the expiration or earlier termination of the Term, it
will be conclusively presumed that the value to Tenant of remaining in
possession of the Premises, and the loss that will be suffered by Landlord as a
result thereof, far exceed the amount of the Base Rent and Additional Rent that
would have been payable had the Term continued during such holdover period.
Therefore, unless the parties have agreed in writing to the contrary prior to
the date of such expiration or termination, if Tenant shall not immediately
surrender the Premises on the date of the expiration or earlier termination of
the Term, the monthly rent payable by Tenant hereunder ("Holdover Rent") shall
be increased in accordance with the following terms: (1) during the thirty (30)
day period immediately following the expiration or termination of the Term
hereof, Tenant shall pay Landlord monthly Holdover Rent in an amount equal to
one hundred twenty-five percent (125%) of the Base Rent and Additional Rent
payable hereunder during the month immediately preceding the expiration or
termination date of this Lease; and (2) at all times after the expiration of
such thirty (30) day period referenced in Section 2.02(1) above, Tenant shall
pay Landlord monthly Holdover Rent in an amount equal to one hundred fifty
percent (150%) of the Base Rent and Additional Rent payable hereunder during the
month immediately preceding the expiration or termination date. Such Holdover
Rent shall be computed by Landlord on a monthly basis and shall be payable by
Tenant on the first day of such holdover period and the first day of each
calendar month thereafter during such holdover period until the Premises have
been vacated by Tenant. Landlord's acceptance of such Holdover Rent from Tenant
shall not in any manner impair or adversely affect Landlord's other rights and
remedies hereunder, including, but not limited to, Landlord's right to evict
Tenant from the Premises, and Tenant shall be liable for all actual losses
suffered by Landlord as a result of Tenant's failure to timely vacate.
2.03 LANDLORD TO HAVE ACCESS TO THE PREMISES. Landlord and Landlord's
Agents shall have the right, but not the obligation, to enter the Premises from
time to time during all reasonable hours (or at any time and by forcible means
in an emergency or when Tenant is unavailable during business hours) to inspect
same, to make improvements or repairs to the Premises or the Building, to show
the Premises to prospective purchasers, tenants, and lenders, or for any other
reason, in Landlord's reasonable judgment. Except in the event of an emergency
when no notice shall be required, Landlord shall give Tenant reasonable prior
notice of any entry by Landlord or Landlord's Agents (which notice may be oral
or written). Landlord shall have the right to place "For Sale" signs, and during
the last twelve (12) months of the Term, "For Rent" signs, on the Premises.
Landlord shall, during entry to the Premises, exercise reasonable efforts to
minimize any interference with Tenant's business operations. No entry by
Landlord pursuant to this Section 2.03 shall constitute a breach of Landlord's
covenant for quiet enjoyment.
2.04 DELIVERY OF PREMISES. Landlord shall deliver the Premises, and
Tenant shall accept same in its "as-is" condition, on the Commencement Date
described in Section 1.24, or so soon thereafter as Landlord is able to deliver
the same. Landlord represents to Tenant that the Premises and Building is in
shell condition and has received the "Shell Building Final," and passed
inspections for its Mechanical, Electric and Plumbing systems, by the County and
by the fire inspector. If Landlord does not deliver possession of the Premises
to Tenant by the Commencement Date, unless such delay is caused by Tenant or
Tenant's Agents, the Rent Commencement Date and Expiration Date shall be
postponed for a period of time equal to the delay in the delivery of possession
of the Premises.
7
2.05 INTENTIONALLY OMITTED.
2.06 TENANT ACCESS. Subject to Section 9.09, Tenant shall have access
to the Premises twenty-four (24) hours per day, seven (7) days per week.
2.07 RENEWAL OPTIONS. (a) Tenant has the conditional right to extend
the Term of the Lease for two (2) additional terms (the "First Option Term" and
the "Second Option Term," respectively) of five (5) years each beyond the
initial Term or the First Option Term (as the case may be) at the Base Rent set
forth in paragraph (b) below and upon the same terms and conditions set forth
herein (except that there will be no further privilege of extension), provided
that the following conditions are met:
(i) Tenant notifies Landlord of its election to exercise the
right of renewal granted hereby at least nine (9) months and no more than twelve
(12) months prior to the expiration of the initial Term (defined in Section 1.24
hereof) or the First Option Term (as the case may be);
(ii) at the time of the exercise of such right and for the
remainder of the Term thereafter, there is no existing default which is not
remedied within the applicable cure periods set forth in this Lease;
(iii) the Lease has not terminated prior to the commencement
of the applicable Option Term; and
(iv) at the time of the exercise of such option and for the
remainder of the Term thereafter, the original named Tenant is in possession of
and occupying the entire Premises [it being the intent of the parties that this
option is personal to the original named Tenant hereunder (i.e., it does not
inure to the benefit of any subsequent Tenant, subtenant or assignee of the
Lease) and if such original named Tenant is no longer in possession of and
occupying the entire Premises, then this option is void].
(b) During the applicable Option Term, Tenant shall pay Landlord Base
Rent equal to the Fair Market Rent (defined below), including escalations, for
the Premises for such Option Term. The "Fair Market Rent," as used in this
Section, shall mean the market annual base rental rate (plus any market
appropriate annual escalations thereof) for comparable space in the Sterling,
Virginia market for the applicable Option Term, taking into account all
appropriate factors. Within thirty (30) days of Landlord's receipt of Tenant's
notice of its exercise of the option, Landlord shall notify Tenant of the Base
Rent applicable to the Option Term in question based upon the foregoing
parameters. If Tenant notifies Landlord in writing within ten (10) business days
of Tenant's receipt of Landlord's notice that Tenant agrees with Landlord's
determination of the Fair Market Rent, then, provided the foregoing conditions
thereto are met, the Term shall be extended for five (5) years beyond the
Expiration Date. If Tenant disagrees with Landlord's determination of the Base
Rent applicable to said Option Term, Tenant shall notify Landlord of such
disagreement within ten (10) business days of Tenant's receipt of Landlord's
notice. If Tenant fails to notify Landlord within such ten (10) business day
period that Tenant agrees or disagrees with Landlord's determination of the Base
Rent, then Tenant shall be deemed to disagree with such determination, and in
the event of such disagreement or deemed disagreement Landlord and Tenant will
negotiate in good faith to determine the appropriate Base Rent applicable to
said Option Term in accordance with the foregoing parameters. In the event that
the parties cannot agree upon the appropriate Base Rent within sixty (60) days
of Tenant's exercise of the option, the Base Rent applicable to the Option Term
in question will be determined in accordance with the following terms, the
results of which shall be binding upon the parties:
8
Within ten (10) business days after the expiration of such sixty (60) day
period, each party shall give written notice to the other setting forth the name
and address of a Broker (as hereinafter defined) selected by such party who has
agreed to act in such capacity, to determine the Base Rent applicable to the
Option Term in question. If either party shall fail to select a Broker as
aforesaid, then the party which has selected a Broker as aforesaid (the
Appointing Party) shall have the right to issue a written notice to the party
which failed to select a Broker as aforesaid (the Non Appointing Party) advising
such Non Appointing Party that it has failed to appoint its Broker, in which
case, if the Non Appointing Party does not then designate its Broker within five
(5) business days following receipt of the Appointing Party's Notice, then the
Base Rental shall be determined by the Broker selected by the other party. Each
Broker shall thereupon independently make his determination of the Base Rental
applicable to the Option Term in question based upon the parameters for
determining Base Rental outlined above within twenty (20) days after the
appointment of the second Broker. If the two Brokers determinations are not the
same, but the higher of such two determinations (based upon the initial annual
Base Rent and average Base Rent over the course of the applicable Option Term)
is not more than one hundred five percent (105%) of the lower of them, then the
Base Rent shall be deemed to be the average of the two determinations. If the
higher of such two determinations is more than one hundred five percent (105%)
of the lower of them, then the two Brokers shall jointly appoint a third Broker
within ten (10) days after the second of the two determinations described above
has been rendered. The third Broker shall independently make his determination
of the Base Rent within twenty (20) days after his appointment by choosing
between the two determinations previously submitted in accordance with the
foregoing by the parties' respective Brokers, and the third Broker's
determination shall be deemed to be the Base Rent payable by Tenant with respect
to the applicable Option Term. For the purposes of this Section, "Broker" shall
mean (i) a real estate broker licensed in the Commonwealth of Virginia, (ii)
with at least ten (10) years of experience in commercial real estate in the
Commonwealth of Virginia, (iii) with particular and current experience in the
Sterling, Virginia market, and (iv) recognized within the field as being
reputable and ethical. Each party shall pay for the cost of its Broker and one
half of the cost of the third Broker, if any.
(c) Prior to the commencement of the applicable Option Term, upon the
request of Landlord, Tenant hereby agrees to execute an amendment to the Lease
memorializing said extension of the Term. If Tenant fails to timely notify
Landlord of its desire to exercise the renewal option granted hereby, then
Tenant shall be deemed to have conclusively waived its renewal option.
2.08 EXPANSION RIGHTS. (a) Subject to the terms of this paragraph and
any renewal, expansion or other leasing rights of other tenants in the Building
existing as of the date of this Lease, Landlord's right to renew or extend the
term of the current tenants lease(s), and any rights of future tenants in the
Offer Space (hereinafter defined), Tenant shall have a right of first offer (the
"Right of First Offer") on other space in the Building (the "Offer Space"), if
the same becomes available for leasing prior to the expiration of the Term.
Landlord shall not have any obligation to take action to regain possession of
the Offer Space or any portion thereof for the purpose of offering the same to
Tenant until the expiration or termination of all other tenants' rights thereto
(including renewal rights), and then only if Landlord elects not to renew or
extend the term of the current tenants lease(s). The parties acknowledge that
the remainder of the Building is vacant and being marketed to third parties as
of the execution of this Lease. The parties agree that Tenant does not want to
lease the remainder of the Building at this time. Accordingly, Landlord may
lease the remainder of the Building to any other person or entity on whatever
terms Landlord and such third party may agree upon without any obligation to
offer such space to Tenant. If all or a portion of the remainder of the Building
shall again become vacant after being leased to a third party during the Term,
then Landlord shall comply with the requirements of this Section 2.08.
9
(b) Landlord will notify Tenant if such Offer Space becomes available
for leasing during the Term and the terms on which said Offer Space may be
leased by Tenant ("Offer Notice"), which terms will be consistent with: (i) the
terms upon which Tenant is leasing the Premises if the Offer Space becomes
available during the first eighteen (18) months of the Term, it being agreed
that the Improvement Allowance and any other concessions shall be prorated to
reflect the shortened length of the term for such Offer Space; or (ii) the terms
upon which similar space is being leased by Landlord in the Project and
consistent with the terms at which similar space in comparable buildings is
being leased by other landlords in the Sterling, Virginia area. Tenant will have
thirty (30) days following delivery of such Offer Notice during which to notify
Landlord in writing of Tenant's intent to lease all and not a portion of the
Offer Space described in Landlord's Offer Notice or to reject leasing the same.
Tenant's failure to timely exercise its Right of First Offer within said thirty
(30) day period shall be deemed an absolute waiver by Tenant of its right to
lease said Offer Space specified in Landlord's Offer Notice and this paragraph
shall thereafter be of no further force and effect. Upon Tenant's rejection (or
deemed rejection) of the Offer Space specified in Landlord's Offer Notice,
Landlord shall be free to lease said Offer Space to any other person or entity
on any terms. If, during the Term, Tenant rejects the Offer Space and such space
or a portion thereof again becomes available during the Term (following the
leasing of such space to a third party), Tenant shall have the same Right of
First Offer describe in this Section 2.08.
(c) Tenant's Right of First Offer shall be subject to the following
conditions:
(i) at the time of the exercise of such right and throughout
the period prior to Landlord's delivery of the Offer Space to Tenant, there is
no existing outstanding default by Tenant which has not been remedied within the
applicable cure period;
(ii) at the time of Landlord's Offer Notice and throughout the
period prior to Landlord's delivery of the Offer Space to Tenant, Tenant is in
possession of and occupying the entire Premises; and
(iii) Tenant must lease the entire Offer Space specified in
Landlord's Offer Notice.
Landlord, in its sole and absolute discretion, may waive any of the foregoing
conditions.
(d) If Tenant timely and properly exercises the Right of First Offer
granted hereby, prior to Landlord's delivery of the Offer Space to Tenant,
Tenant and Landlord shall execute an amendment to the Lease memorializing said
expansion of the Premises and the terms applicable thereto. If Tenant fails to
timely notify Landlord of its desire to exercise the Right of First Offer
granted hereby, then Tenant shall be deemed to have conclusively waived its
Right of First Offer as to the Offer Space and the Offer Notice in question.
3.00 RENT
3.01 PAYMENT OF BASE RENT. Beginning on the Rent Commencement Date,
installments of Base Rent shall be paid monthly, in advance, without demand,
notice, deduction, offset or counterclaim, on the first day of each month. All
such installments for any partial month shall be prorated on a per diem basis.
If the Rent Commencement Date is other than the first (1st) day of a
10
month, Base Rent from that date until the first (1st) of the next succeeding
month will be prorated on the basis of the actual number of days in each such
month and shall be payable in advance on the Rent Commencement Date.
3.02 PAYMENT OF JANITORIAL SERVICES. Tenant shall be solely responsible
for contracting for and bearing the cost of any cleaning or janitorial services
to the Premises throughout the Term.
3.03 PAYMENT OF OPERATING EXPENSES. (a) To the extent not provided by
Landlord and reimbursed pursuant to this Section, Tenant shall be responsible
for all costs and expenses of its trash removal. In addition, beginning on the
Rent Commencement Date and continuing throughout the Term, Tenant shall be
responsible for the payment of Tenant's Share of Operating Expenses. Prior to
the Rent Commencement Date, and then at the beginning of each year (which may be
a calendar year or other twelve-month period selected by Landlord from time to
time) Landlord shall furnish Tenant with Landlord's reasonable estimation of
Tenant's Share of Operating Expenses for the forthcoming year, and Tenant shall
pay same in equal monthly installments, in advance and without prior demand,
together with Base Rent. After the end of each year a reconciliation and
adjustment shall be made based on the actual cost incurred by Landlord for
Operating Expenses in respect of such year. The estimated Operating Expenses for
2008 are $2.08 per rentable square foot. Landlord and Tenant acknowledge that
the foregoing is an estimate only and that the Tenant is obligated to pay
Tenant's Share of the actual Operating Expenses, subject to the Controllable
Operating Expense Cap set forth below.
(b) Beginning on the first day of the second Lease Year and ending on
the last day of the Term, for the purpose of calculating Tenant's Share of
Operating Expenses, the Controllable Operating Expenses (as defined below) shall
be limited to Landlord's Controllable Operating Expense Cap (as hereinafter
defined). The Controllable Operating Expense Cap shall be an amount equal to
Landlord's actual Controllable Operating Expenses for the first Lease Year
increased by five percent (5%) annually, on a cumulative basis. [By way of
illustration only, if the actual per square foot Controllable Operating Expenses
are $2.00 for the first Lease Year, then the Controllable Operating Expense Cap
for the second Lease Year will be $2.10 ($2.00 x 1.05), and the Controllable
Operating Expense Cap for the third Lease Year will be $2.21 ($2.10 x 1.05)].
For the purposes hereof the term "Controllable Operating Expenses" shall mean
all Operating Expenses except: sales, use and any other taxes, cost of
insurance, costs of procuring and providing utility services, snow removal
costs, landscaping costs, union labor costs (to the extent controlled by a
collective bargaining agreement), costs associated with procuring permits and
licenses, and costs of complying with all governmental laws and regulations.
3.04 UTILITIES. "Utilities" means water, gas, electricity, and any
other utilities from time to time supplied by Landlord or the applicable utility
provider to the Premises. For Utilities that are separately metered, Tenant
shall pay all costs of Utilities utilized in or for the Premises directly to the
provider. Tenant expressly acknowledges that, as part of the Improvements, it is
required to install separate meters for gas and electric. For Utilities that are
not separately metered, such as water and sewer, the cost of such Utilities
shall be included in Operating Expenses. Tenant shall use reasonable diligence
in the conservation of Utilities. To the extent that Tenant contracts for any
utility directly with the supplier thereof, Tenant shall promptly pay all bills
for such utilities. Landlord shall not be liable for any failure to furnish, or
for any loss, injury or damage caused by or resulting from any variation,
interruption or failure of utility services. Notwithstanding the foregoing, if
there is a failure by Landlord to furnish the utilities or services specified in
this Lease, which failure: (i) interferes substantially with or prevents
Tenant's use of the Premises or any material part thereof, (ii) is capable of
being remedied by
11
Landlord by the exercise of commercially reasonable efforts (as opposed to being
outside of Landlord's control), and (iii) continues for five (5) consecutive
business days, the Monthly Base Rent shall ▇▇▇▇▇ for the period beginning on the
sixth (6th) consecutive business day of such interruption and continuing until
such interruption is remedied, based upon the portion or portions of the
Premises rendered unusable by such interruption of utilities or services.
3.05 PAYMENT OF REAL ESTATE TAXES. Throughout the Term, Tenant shall be
responsible for the payment of Tenant's Share of Real Estate Taxes. From time to
time Landlord shall furnish Tenant with a copy of Landlord's ▇▇▇▇ for Real
Estate Taxes and an invoice for Tenant's Share of Real Estate Taxes reflected on
such ▇▇▇▇, and, within ten (10) business days of Landlord's invoice, Tenant
shall pay such amount to Landlord. Landlord shall ▇▇▇▇ Tenant for Tenant's Share
of Real Estate Taxes semi-annually. After the end of each year, a reconciliation
and adjustment shall be made based on the actual cost incurred by Landlord for
Real Estate Taxes in respect of such year. The estimated Real Estate Taxes for
2008 are $1.22 per rentable square foot. Landlord and Tenant acknowledge that
the foregoing is an estimate only and that the Tenant is obligated to pay
Tenant's Share of the actual Real Estate Taxes.
3.06 INTENTIONALLY OMITTED.
3.07 PARTIAL OCCUPANCY. If, during the Term, the Building is not fully
occupied during any year, (or if any tenant provides itself with any service or
Utilities which Landlord provides as a part of Operating Expenses, or is
separately assessed for Real Estate Taxes) Operating Expenses, Real Estate Taxes
and Utilities for such year (to the extent that the same vary with occupancy
levels) may be grossed up to reflect one-hundred percent (100%) occupancy, using
sound accounting and management principles consistently applied.
3.08 PAYMENTS GENERALLY. All rentals and other charges hereunder shall
commence to accrue and become payable in accordance with the terms hereof on the
Commencement Date. All payments required to be made by Tenant under this Lease
shall be deemed to be rent and shall be collectible as such, shall be in lawful
money of the United States, and shall be timely delivered to Landlord's Address
for Notice, with no deduction, offset, abatement, credit or the like, except as
expressly be provided herein. Each late payment shall incur a late fee in the
amount of five percent (5%) of such payment to cover extra tracking and handling
expenses. All amounts owed by Tenant to Landlord under this Lease which are
overdue shall bear interest at the rate of 12% per annum from the date due until
paid. The tender by Tenant of a lesser amount than due shall be treated as a
payment on account notwithstanding any endorsement or statement to the contrary
on the payment or in any cover letter, and Landlord's acceptance of such lesser
amount shall not constitute a waiver of any other available right or remedy.
Notwithstanding the foregoing, on the first (1st) occasion during any calendar
year that any installment of Base Rent or Additional Rent is not timely paid
when due hereunder, no late fee or default interest will be assessed until the
fifth (5th) day after the day that such payment was originally due.
3.09 AUDIT RIGHTS. Within one hundred twenty (120) days of the
reconciliation and adjustment as set forth in Section 3.03 regarding Operating
Expenses (but not more than once per year), if Tenant disputes the amount of
Additional Rent set forth in the reconciliation statement, an independent
certified public accountant or other representative of Tenant, designated and
paid for by Tenant, may, upon at least twenty (20) business days prior written
notice to Landlord, and at reasonable times, inspect Landlord's records at
Landlord's offices, provided that Tenant is not then in default under this Lease
and Tenant has paid all amounts required to be paid under the applicable
reconciliation statement, as the case may be. No such audit may be conducted on
a contingency basis by the accountant or other representative (and therefore no
portion of the fee or other
12
compensation payable to the accountant or other representative may in any way be
tied to the results of such audit), and any such audit conducted on such basis
shall be deemed void for the purposes hereof, and Tenant hereby waives and
further rights under this Section 3.09 following the performance of an audit on
such basis. Tenant's failure to dispute the amount of Additional Rent set forth
in any statement within one hundred twenty (120) days of Tenant's receipt of
such statement shall be deemed to be Tenant's approval of such statement and
Tenant, thereafter, waives the right or ability to dispute the amounts set forth
in such statement. If after such inspection, Tenant still disputes such
Additional Rent, a determination as to the proper amount shall be made, at
Tenant's expense, by an independent certified public accountant (the
"Accountant") selected by Landlord, subject to Tenant's reasonable approval. The
results of any audit conducted pursuant to this Section 3.09 shall be kept
confidential by Tenant and its accountant, and at Landlord's request, such
accountant must agree in writing (in a commercially reasonable form) to keep the
results of such audit confidential and not to reveal the same to any parties
other than Landlord and Tenant. In the event of any breach of the foregoing
confidentiality/non disclosure covenant by the accountant, Tenant or Tenant's
agents, then the audit with respect to which such breach occurred shall be
deemed void for the purposes hereof. If Tenant's audit shall conclusively
disclose an overstatement of Operating Expenses (and related overpayment of
Operating Expenses by Tenant) of more than five percent (5%) of the amount
actually incurred by Landlord for such period, Landlord shall promptly reimburse
Tenant for the reasonable cost of such audit, provided that the maximum
reimbursement payable by Landlord with respect to the cost of such audit shall
be $3,000.00.
4.00 MAINTENANCE AND REPAIRS
4.01 TENANT REPAIRS. Except for those items for which Landlord is
responsible by virtue of Section 4.02 below, Tenant shall, at its own cost and
expense, clean, repair, maintain and replace the interior of the Premises and
any improvements, equipment and fixtures therein, including without limitation
all plate glass, lighting and other fixtures and equipment inside the Premises
whether or not they were initially installed at Landlord's expense, and any
HVAC, electrical and mechanical systems that service the Premises, so as to keep
them in good operating condition and in compliance with the requirements from
time to time of all governmental authorities having jurisdiction. All repairs,
maintenance and/or replacements made by Tenant shall be subject to Landlord's
prior written approval, which will not be unreasonably withheld provided that
the same are at least equal in quality and class to the original work and/or
fixtures and equipment. In the event that Tenant fails to make any necessary
repairs, Landlord shall have the right, at its option, after providing written
notice to Tenant, to perform on behalf of Tenant any repair or replacement
approved by Landlord and one hundred five percent (105%) of the reasonable cost
and expense incurred shall be due within thirty (30) days of demand. Landlord
and Tenant agree that the Landlord will obtain a reasonable and customary
maintenance, repair and service contract on the HVAC system serving the
Premises, the cost of which shall be billed to Tenant and shall be deemed to be
Additional Rent. The parties agree that, notwithstanding any provision of this
Lease to the contrary, Tenant's obligation to pay for the maintenance, repair
and replacement of the Building-standard systems (which includes the HVAC,
sprinkler, electrical and plumbing systems) serving the Premises shall be
limited to: (i) the cost of maintaining and making minor repairs to the
Building-standard systems serving the Premises; (ii) the cost of the
afore-mentioned service contract on the HVAC system; (iii) Tenant's Share of any
such costs that are included in Operating Expenses; and (iv) the first $4,000.00
per year of the cost of major repairs or the cost of replacing such
Building-standard systems serving the Premises. Tenant shall promptly place all
of its refuse in the trash receptacles provided for this purpose and shall not
allow same to accumulate within the Premises or anywhere on the Common Areas. It
is understood and agreed that all property of Tenant kept, stored or maintained
in the Premises or
13
the Project shall be at the sole risk of Tenant. Tenant agrees at its sole cost
and expense to comply with all present and future laws regarding the collection,
sorting, separation and recycling of waste products, garbage, refuse and trash.
4.02 LANDLORD REPAIRS. Except in the case of damage by casualty as
described in Section 4.05 below, and except as required to be repaired and
maintained by Tenant under Section 4.01 above, Landlord shall, as a part of
Operating Expenses, (i) repair, maintain and replace the roof, structure,
foundation, gutters, downspouts, and the mechanical, electrical and HVAC systems
serving the Common Areas of the Building, and (ii) clean, landscape, repair,
maintain, and replace the Common Areas, and keep same reasonably free of snow,
ice and other obstructions. If applicable, Landlord shall supply Utilities to
the Premises and ▇▇▇▇ Tenant as provided in Section 3.04 above. Landlord shall
at all times operate and maintain the Building in accordance with a standard at
least as high as that customarily followed in the operation and maintenance of
first class Flex buildings similar to the Building and with similar tenants in
the vicinity of the Building ("Comparable Buildings").
4.03 INITIAL IMPROVEMENTS. On the Commencement Date Tenant shall accept
possession of the Premises in their "as-is" condition, and Landlord shall not be
required to perform any improvements whatsoever to the Premises except as
provided for in this Section 4.03 or Exhibit "B." Landlord shall deliver the
Premises on the Commencement Date free of any leaks in the roof of the Building.
Any leaks in the roof caused by the construction of Tenant's Improvements shall
be the responsibility of Tenant, at its sole cost and expense. All other work
necessary to improve, furnish, fixture, equip, stock, and decorate the Premises
for Tenant's Permitted Use shall be performed by Tenant, at its sole cost and
expense, in accordance with Section 4.04 below. Tenant represents that it has
thoroughly examined the Building and the Property (including without limitation
the Premises and the Building) and is aware of, and accepts, the existing shell
condition thereof. Landlord and Tenant will cooperate with each other to ensure
that neither interferes with the other's ability to complete the work set forth
on Exhibit "B" in a timely manner. Tenant acknowledges that it must use
Landlord's civil engineer, VIKA, when amendments to the site plan are needed in
connection with Tenant's work outside the Building.
4.04 TENANT ALTERATIONS. Tenant shall not make any installations,
alterations, improvements, or the like to the Premises without, in each case,
first obtaining Landlord's written consent. Landlord may grant or withhold its
consent in its sole and absolute discretion in the case of any proposed
installation, alteration, improvements, or the like which (i) may affect the
structure of the Premises, or (ii) are on the exterior of the Premises, or (iii)
require cutting or drilling into the Premises, or securing of any item to any
part of the Premises, or penetrating the roof. Notwithstanding the foregoing,
Tenant may make purely cosmetic alterations, and other minor alterations which
are: (i) non structural in nature, (ii) do not affect the Building systems in
any way, (iii) do not in any way affect the exterior appearance of the Building,
and (iv) cost a total during any twelve (12) month period of $50,000.00 or less
("Alterations Threshold"), without Landlord's prior written consent provided
that Tenant notifies Landlord in writing of Tenant's intent to undertake the
same prior to commencing any work related thereto, and further provided that the
same are performed in accordance with the requirements of this Lease. Landlord
will not unreasonably withhold, condition or delay its consent to any purely
cosmetic alterations and other minor alterations which are non structural in
nature, do not affect the Building's structures or systems in any way, and cost
in excess of the Alterations Threshold to perform. All other approvals shall be
in Landlord's sole and absolute discretion. For the purposes hereof, any
erection, removal or relocation of walls shall be deemed to be structural in
nature. Requests must be in writing and detailed to Landlord's reasonable
satisfaction. Tenant shall immediately discharge any lien which is filed against
the Premises, the Building or the Property as a result of work performed by or
on behalf of Tenant. Tenant
14
shall not, without Landlord's prior written consent, display any sign, logo,
lettering, or the like on the outside of the Premises, or on the inside of the
Premises in such a manner as to be visible from the outside. Except as expressly
provided in this Section 4.04, Tenant may not make any alterations,
improvements, door lock changes or other modifications to the Premises without
the prior written consent of Landlord.
4.05 RESTORATION AFTER DAMAGE BY CASUALTY. If this Lease is not
terminated in accordance with Section 4.06 below, and subject to Landlord's
ability to obtain the necessary permits, if the Premises are damaged or
destroyed by fire or other casualty insured against by Landlord ("Casualty") and
not caused by the negligence of Tenant or those over whom it exercises control,
Landlord shall diligently commence to settle its insurance claims and restore
the Premises, but shall not be obligated to expend an amount in excess of the
insurance proceeds recovered. However, Landlord shall not be obligated to
restore any improvements, furniture, fixture, equipment or other property that
is not Landlord's property. Upon notification that Landlord's restoration work
is substantially complete Tenant shall forthwith complete the restoration of its
improvements (but shall not be entitled to any allowance, abatement, or other
inducement or concession that may have been available in connection with the
original construction of the Premises) and shall reopen in the whole of the
Premises fully fixtured, stocked, and staffed as soon as reasonably practical
following delivery of the space by Landlord. If the Premises are damaged by a
Casualty to the extent of complete or partial untenantability, all rents (except
for Utilities) shall ▇▇▇▇▇ proportionately from the date of the Casualty until
the Premises are substantially restored to the extent required of Landlord.
4.06 TERMINATION AFTER DAMAGE BY CASUALTY. Landlord shall have the
right to terminate this Lease on notice to Tenant given within ninety (90) days
of a Casualty if (i) insurance proceeds are unavailable or insufficient to
restore the Premises as required of Landlord, or if Landlord's mortgagee does
not make them available for such restoration, (ii) the Premises have been
materially damaged and there is less than one (1) year of the Term remaining on
the date of the casualty, (iii) Landlord is not permitted by law to rebuild the
Building or the Property in substantially the same form as existed before the
fire or casualty, or (iv) more than fifty (50%) of the Premises are damaged, or
the Premises and/or the Building are damaged to such an extent as to make
restoration uneconomical, and in such event the parties shall be relieved of any
further obligation hereunder accruing after the termination date.
4.07 CONDEMNATION. If any of the Premises is taken or condemned to an
extent that Tenant is unable to continue to use the Premises in the manner and
for the purpose for which they were leased, either party shall have the option
to terminate the Lease as to the entire Premises, on notice given to the other
within thirty (30) of notification of such taking, and such termination shall be
effective on the date on which Tenant is obligated to yield possession. All
compensation awarded for such taking of the fee and the leasehold shall belong
to the Landlord, but Landlord shall not be entitled to any portion of any award
made separately to Tenant for the cost of removing its fixtures and inventory.
4.08 ADA COMPLIANCE. Nothing contained in this Lease is intended to
prevent or prohibit compliance by either party with Title III of the Americans
With Disabilities Act of 1990 ("ADA") nor is any provision of this Lease
intended to violate ADA, and any provision that does so is hereby modified to
allow compliance or deleted as necessary. Tenant shall be responsible for
ensuring that the Premises complies with ADA throughout the Term. Landlord shall
be responsible for ensuring that the Common Areas comply with ADA throughout the
Term, subject
15
to partial reimbursement as part of Operating Expenses. Notwithstanding the
foregoing or any other provision of this Lease to the contrary, if ADA
modifications to the Premises or the Common Areas are made necessary as a result
of work that Tenant does in the Premises or as a result of a permit application
filed by Tenant, then the cost of such modifications shall be borne by Tenant.
Tenant acknowledges Landlord's representation that the Building has received the
"Shell Building Final" prior to the Commencement Date. Tenant indemnifies
Landlord and Landlord's Agents for all costs, liabilities and causes of action
occurring or arising as a result of Tenant's failure to comply with ADA or as a
result of any violation of ADA by Tenant or Tenant's Agents in the Premises,
and, at Landlord's option, Tenant will defend Landlord and Landlord's Agents
against all such costs, liabilities and causes of action. Breach of this Section
4.08 is a default under this Lease.
4.09 MOLD. It is generally understood that mold spores are present
essentially everywhere and that mold can grow in most any moist location.
Emphasis is properly placed on prevention of moisture and on good housekeeping
and ventilation practices. Tenant acknowledges the necessity of housekeeping,
ventilation, and moisture control, especially in kitchens, janitor's closets,
bathrooms, break rooms and around outside walls, for mold prevention. Landlord
and Tenant have inspected the Premises and both certify that there is no
observable mold, mildew or moisture within the Premises. Tenant agrees use
reasonable efforts to maintain the Premises in a way that does not promote mold
growth. Tenant agrees to promptly notify Landlord if mold, mildew or moisture
conditions are observed in the Premises and take prompt and reasonable action to
correct conditions which led to the mold growth. Landlord agrees to promptly
notify Tenant if mold, mildew or moisture conditions are observed on the Common
Area and take reasonable action to correct conditions which led to the mold
growth.
4.10 SIGNS. Tenant shall have the right to place non-illuminated
exterior signage in one location on the top front of the Building at Tenant's
sole cost and expense. In addition, Building standard suite entry signage
according to Landlord's standard signage campaign shall be provided by Landlord
at its sole cost and expense. The location, quality, design, style, lighting and
size of Tenant's exterior sign and any other signage shall be consistent with
the Landlord's Building standard signage program (if any), shall be at Tenant's
sole cost and expense, shall be compliant with all local government ordinances
and shall be subject to Landlord's prior written approval, which shall not be
unreasonably withheld, conditioned or delayed. Any signs, notices, logos,
pictures, names or advertisements which are installed and that have not been
individually approved by Landlord may be removed by Landlord, without notice to
Tenant, such removal to be at the sole expense of Tenant. Except as specifically
set forth above, Tenant may not install any signs on the exterior of the
Premises, the roof of the Building or in the Common Areas. Tenant acknowledges
that other tenants in the Building may be granted the right to display exterior
signage. Landlord shall include Tenant's name in the Building monument sign (if
any).
5.00 INSURANCE
5.01 TENANT'S INSURANCE. Tenant shall, at its own cost and expense,
secure and maintain the following insurance with insurers reasonably acceptable
to Landlord: (i) commercial property insurance written on a "special causes of
loss" form providing fire and extended coverage insurance, including without
limitation sprinkler damage, for the full replacement value of the contents of
the Premises, including without limitation Tenant's improvements, plate glass,
furniture, fixtures, equipment and inventory; (ii) commercial general liability
insurance including without limitation coverage for contractual liability
covering Tenant's obligations hereunder in which the limits of liability shall
not be less than three million dollars ($3,000,000) per occurrence, for bodily
injury and property damage; and (iii) such other insurance coverage, limits
16
and/or endorsements as Landlord or any mortgagee of the Project may reasonably
require from time to time. All such policies shall be primary and
non-contributing with any coverage that Landlord may carry, shall name Landlord
(and/or Landlord's mortgagees and/or managing agent, if requested) as additional
insured, and shall provide for Landlord to receive written notice at least
thirty (30) days prior to any material alteration or cancellation. Such
insurance may be carried under a blanket policy or policies provided that the
proceeds from such policies shall not be less than would have been available if
the insurance had been obtained under separate or non-blanket policies. Tenant
shall furnish to Landlord from time to time upon ten (10) business days request
a current Certificate of Insurance, evidencing the coverage and endorsements
above required, failing which Landlord shall have the right, but not the
obligation, to purchase the required insurance on Tenant's behalf and one
hundred ten percent (110%) of the amount incurred shall be due from Tenant as
Additional Rent.
5.02 WAIVER OF SUBROGATION. Each party hereby waives every right or
cause of action for the events which occur or accrue during the Term for any and
all loss of, or damage to, any of its property (whether or not such loss or
damage is caused by the fault or negligence of the other party or anyone for
whom said other party may be responsible), which loss or damage is covered (or
would have been covered if such party had maintained the coverage required under
this Lease) by valid and collectible commercial property insurance or similar
policies covering real property, personal property or business interruption
insurance policies, to the extent that such loss or damage is recovered (or
would have been recovered if such coverage were in effect as required hereunder)
under said insurance policies. Said waivers are in addition to, and not in
limitation or derogation of, any other waiver or release contained in this Lease
with respect to any loss or damage to property of the parties hereto. Each party
will give its insurance carrier written notice of the terms of such mutual
waiver, and the insurance policies will be properly endorsed, if necessary, to
prevent the invalidation of coverage by reason of said waiver.
5.03 INDEMNIFICATION BY TENANT/LANDLORD. (a) Tenant shall indemnify,
save harmless and defend Landlord and Landlord's Agents from and against all
claims, damages, costs, liabilities, losses and the like (including without
limitation reasonable legal fees, court costs and the like) incurred in
connection with loss of life, bodily injury and damage to property (including
without limitation the property and person of Tenant and Tenant's Agents)
arising from or relating to the following: (i) any occurrence in, on or about
the Premises, and any loading platform or other area outside of the Premises
allocated to Tenant's use, except if directly and solely caused by the
negligence or willful misconduct of Landlord or Landlord's Agents, (ii) Tenant's
use or occupancy of the Premises, (iii) any act or omission of Tenant, Tenant's
Agents, Tenant's customers, clients, family members, assignees, subtenants or
guests, or attributable to property of Tenant on the Common Areas, or (iv) the
negligence or willful misconduct of Tenant or Tenant's Agents. Tenant shall have
no liability for consequential, indirect or punitive damages, and Landlord
waives any right it may have to claim same.
(b) Subject to the limitation on Landlord's liability provided in
Section 5.05, and except for any claims arising from the negligence or willful
misconduct of Tenant or Tenant's Agents, Landlord hereby indemnifies and agrees
to hold Tenant and Tenant's Agents harmless from and against any and all costs,
penalties, damages, claims, causes of action, obligations, liabilities and
expenses (including reasonable attorneys' fees) (collectively, "claims")
suffered by or claimed against Tenant, directly and solely resulting from
Landlord's or Landlord's Agents' negligence or willful misconduct. Landlord
shall have no liability for consequential, indirect or punitive damages, and
Tenant waives any right it may have to claim same.
17
5.04 LANDLORD'S LIABILITY EXCLUDED. Notwithstanding anything to the
contrary herein, Landlord shall have no liability whatsoever for any injury or
death to persons or loss or damage to property caused by (i) fire, smoke,
explosion, falling plaster, falling ceiling tiles, falling stucco, falling
fixtures, steam, gas, fumes, vapors, electricity, water, rain, flood, snow,
sleet, ice, dampness, sewer or down spout backups, or leaks, including without
limitation from pipes, sprinklers, appliances, wiring, plumbing, roofs, windows,
subfloors or ceilings, (ii) any third party including without limitation
occupants of adjacent premises or property, or any private, public or
quasi-public work, or (iii) the failure or interruption of any utility, trash
removal or other service, whether provided directly by a third party or through
Landlord, in each case unless directly and solely caused by the negligence or
willful misconduct of Landlord or Landlord's Agents.
5.05 LANDLORD EXCULPATION. It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any
applicable law to the contrary, the liability of Landlord and the Landlord's
Agents hereunder (including any successor landlord) and any recourse by Tenant
against Landlord or the Landlord's Agents shall be limited solely and
exclusively to an amount which is equal to the lesser of (a) the interest of
Landlord in the Building or (b) the equity interest Landlord would have in the
Building if the Building were encumbered by third-party debt in an amount equal
to eighty percent (80%) of the value of the Building (as such value is
reasonably determined by Landlord in accordance with customary commercial
practices), and neither Landlord, nor any of the Landlord's Agents shall have
any personal liability therefor, and Tenant hereby expressly waives and releases
such personal liability on behalf of itself and all persons claiming by, through
or under Tenant.
5.06 LANDLORD'S INSURANCE. Landlord shall maintain throughout the Term
insurance coverage on the Building in such amounts as that reasonably carried by
owners of other comparable office buildings in the Sterling, Virginia submarket,
including, without limitation, commercial general liability insurance and 100%
full-value replacement cost insurance on the Building and the structural
improvements therein.
6.00 HAZARDOUS MATERIALS
6.01 HAZARDOUS MATERIALS DEFINED. "Hazardous Materials" shall mean any
substance, chemical, waste, product or the like which now or in the future is
identified as hazardous, toxic, dangerous or the like, or is regulated or
otherwise subject to any Environmental Laws, including, but not limited to,
asbestos, polychlorinated biphenyls, urea formaldehyde insulation, and any
substance which requires reporting, registration, notification, removal,
abatement or special treatment, storage, handling or disposal under any
Environmental Laws. The term "Environmental Laws" shall mean all existing and
future Federal, state and local laws, regulations, ordinances and the like
relating to the environment, as amended from time to time. Environmental Laws
currently include, but are not limited to, the following: the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. ss.6901 et. seq.) ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. ss.9601 et. seq.) ("CERCLA"), the Emergency Planning and Community
Right-to-Know Act of 1986 (42 U.S.C. ss.ss.11001, et. seq.) ("EPCRA"), the
Occupational Safety and Health Act of 1970 (29 U.S.C. ss.651 et. seq.) ("OSHA")
and the Toxic Substances Control Act (15 U.S.C. ss.ss.2601 et. seq.) ("TSCA").
6.02 ENVIRONMENTAL COMPLIANCE. Tenant will not use or permit the
Premises to be used in violation of any Environmental Regulations (as defined
below). Tenant assumes sole and
18
full responsibility for, and will remedy at its cost, all such violations,
provided that Tenant must first obtain Landlord's written approval of any
remedial actions, which approval Landlord may not unreasonably withhold. Tenant
will not use, generate, release, store, treat, dispose of, or otherwise deposit,
in, on, under or about the Premises, any Hazardous Materials, nor will Tenant
permit or allow any third party to do so, without Landlord's prior written
consent. The foregoing shall not preclude Tenant from using materials commonly
used in a business office setting, provided that Tenant properly uses, handles
and disposes of the same in accordance with applicable law and the manufacturers
instructions with respect thereto. Landlord's election to conduct inspections of
the Premises is not approval of Tenant's use of the Premises or any activities
conducted thereon, and is not an assumption by Landlord of any responsibility
regarding Tenant's use of the Premises or Hazardous Materials. Tenant's
compliance with the terms of this Section 6.02 and with all Environmental
Regulations is at Tenant's sole cost. Tenant will pay or reimburse Landlord for
any costs or expenses incurred by Landlord, including reasonable attorneys',
engineers', consultants' and other experts' fees and disbursements reasonably
incurred or payable to determine, review, approve, consent to or monitor the
requirements for compliance with Environmental Regulations, including, without
limitation, above and below ground testing. Landlord and Landlord's Agents are
hereby authorized to enter upon the Premises for such purposes with reasonable
prior notice (except in an emergency when no notice is required). Tenant will
supply Landlord with historical and operational information regarding the
Premises, including without limitation, all reports required to be filed with
governmental agencies, as may be reasonably requested by Landlord to facilitate
site assessment, and will make available for meetings with Landlord or
Landlord's Agents, appropriate personnel having knowledge of such matters. If
Tenant fails to comply with the provisions of this Section 6.02, or if Landlord
receives notice or information asserting the existence of any Hazardous
Materials, Landlord has the right, but not the obligation, without in any way
limiting Landlord's other rights and remedies, to enter upon the Premises or to
take such other actions Landlord deems reasonably necessary or advisable to
clean up, remove, resolve, or minimize the impact of any Hazardous Materials on
or affecting the Premises. Tenant shall pay to Landlord on demand as Additional
Rent all reasonable costs and expenses paid or incurred by Landlord in the
exercise of any such rights. Tenant will notify Landlord in writing, immediately
upon the discovery, notice (from a governmental authority or other entity) or
reasonable grounds to suspect, by Tenant, Tenant's Agents, its successors or
assigns the presence in the Premises or the Building of any Hazardous Materials
or conditions that result in a violation of or could reasonably be expected to
violate this Section 6.02, together with a full description thereof.
"Environmental Regulations" means any law, statute, regulation, order or rule
now or hereafter promulgated by any Governmental Authority, whether local, state
or federal, relating to air pollution, water pollution, noise control or
transporting, storing, handling, discharge, disposal or recovery of on-site or
off-site hazardous substances or materials, as same may be amended from time to
time. Tenant's obligations pursuant to this Section 6.02 shall survive the
expiration or earlier termination of the Lease.
6.03 HAZARDOUS MATERIALS INDEMNIFICATION. Tenant shall indemnify,
defend, and hold harmless Landlord, Landlord's Agents, the manager of the
Building, and their respective officers, directors, beneficiaries, shareholders,
partners, agents, and employees from all fines, suits, procedures, claims, and
actions of every kind, and all costs associated therewith (including attorneys'
and consultants' fees) arising out of or in any way connected with any deposit,
spill, discharge, or other release of Hazardous Materials that occurs during the
term of this Lease, at or from the Premises, or which arises at any time from
Tenant's use or occupancy of the Premises, or from Tenant's failure to provide
all information, make all submissions, and take all steps required by all
governmental authorities under the CERCLA and all other environmental laws.
Tenant's obligations and liabilities under this Section 6.03 shall survive the
expiration of this Lease.
19
6.04 LANDLORD REPRESENTATION. To the best of Landlord's knowledge as of
the date this Lease is executed by Landlord: (i) the Premises are not
contaminated by any Hazardous Materials; and (ii) the Premises are not in
violation of any Environmental Regulations.
7.00 SUBLETTING AND ASSIGNING
7.01 TRANSFER OF PREMISES. (a) Tenant shall not assign this Lease or
sublease, or grant a license or concession, or otherwise transfer the whole or
any part of any Premises (except to an Affiliate of Tenant (hereinafter defined)
without the prior written consent of Landlord in each case, which consent shall
not be unreasonably withheld, conditioned or delayed. Any request to transfer
this Lease or any portion of the Premises shall be accompanied by a check in the
amount of one thousand dollars ($1,000.00) to help defray the cost of reviewing
same. It shall not be unreasonable for Landlord to withhold consent if (i)
Tenant is in default of the Lease beyond the applicable notice and cure period
(if any), (ii) the proposed transfer would violate a provision of another lease
or agreement, (iii) the proposed use would be incompatible with the other uses
in the Building or would increase parking or utility requirements, (iv) the
proposed transferee is not sufficiently creditworthy or experienced; (v)
Landlord's lender or Tenant's guarantor (if any) refuses to consent, or (vi) any
other factor exists which would make Landlord's refusal reasonable under the
circumstances. Tenant's request for consent shall be accompanied by sufficient
documentation to allow Landlord to make a decision based on the foregoing
factors. Landlord shall have the right to recapture the Premises proposed for
transfer by written notice to Tenant given within thirty (30) days of the
request for consent, but Landlord's failure to exercise this right shall not
constitute a consent to the transfer. In the event Landlord elects to recapture
all or a portion of the Premises in accordance with this Section 7.01, Tenant
may, in a writing delivered to Landlord within five (5) business days of receipt
of Landlord's notice that it intends to exercise its recapture right, elect to
withdraw its request for Landlord to consent to the proposed assignment or
sublease. If Tenant timely withdraws its request for Landlord's consent,
Landlord shall not be entitled to exercise its recapture right and this Lease
shall continue in full force and effect. In the case of each transfer, Tenant
shall cure any outstanding defaults prior to the transfer date, and remain
jointly and severally liable with the transferee for the full and timely
performance of each and every term, covenant and condition of Tenant under the
Lease. All cash or other proceeds whatsoever payable by or on behalf of a
transferee of this Lease or the Premises, whensoever same may be payable, shall
be deemed to be rent, and 50% of any such rent in excess of the rentals payable
by Tenant hereunder (determined net of Tenant's reasonable brokerage, legal and
improvements costs associated with such transaction) shall promptly be paid to
Landlord.
(b) Notwithstanding any provision hereof to the contrary, Tenant may
assign or sublet the Premises ("Permitted Transfer"), or any portion thereof,
without Landlord's consent, to any corporation which controls, is controlled by
or is under common control with Tenant, or to any corporation resulting from the
merger or consolidation with Tenant or to any person or entity which acquires
all the assets of Tenant as a going concern of the business that is being
conducted on the Premises, (each, an "Affiliate of Tenant") provided that said
assignee or subtenant assumes, in full, the obligation of Tenant under the
Lease, further provided however, that: (i) Tenant shall not be in material
default under the Lease beyond the applicable cure period (if any) at the time
of any such Permitted Transfer; (ii) in the case of a Permitted Transfer
following which the Tenant shall remain in existence, then Tenant shall remain
fully liable pursuant to the terms and condition of the Lease (as amended by
this Amendment), jointly and severally with the
20
assignee/subtenant permitted hereby; and (iii) Tenant shall provide Landlord
with written notice of the assignment or sublease and a copy of the assignment
or sublease documenting the Permitted Transfer prior to the effective date
thereof and shall, at all times, be obligated to ensure that proper insurance
coverage is in place.
7.02 TRANSFER DEFINED. The term "transfer" in Section 7.01 above shall
include (i) if Tenant is a partnership, a withdrawal or change (voluntary,
involuntary, or by operation of law, whether accomplished by a single
transaction or a series of transactions) of any partner owning twenty five
percent (25%) or more of the partnership, or a dissolution or liquidation of the
partnership, (ii) if Tenant is a corporation, any dissolution, merger,
consolidation or other reorganization of Tenant, or the transfer of a
controlling interest of the capital stock of Tenant (whether accomplished by a
single transaction or a series of transactions), or (iii) any management
arrangement by which operational control is transferred to a person other than
Tenant.
7.03 SUBORDINATION/ESTOPPEL CERTIFICATES. This Lease is and shall be
subordinate to all ground leases, mortgages, trust deeds or other financing or,
refinancing instruments that may now or in the future be placed on the Building
or the Property, and to all renewals, replacements, and extensions of same and
Tenant shall attorn to any purchaser, to the purchaser at any foreclosure, or to
the grantee of a deed in lieu of foreclosure, and recognize such purchaser or
grantee as Landlord under the Lease. Such subordination is self-operative, and
no further instruments shall be required to effect same. However, if requested
by Landlord, Tenant shall promptly from time to time, within ten (10) business
days of written request, execute a confirmation of such subordination in the
form reasonably required by Landlord. If any ground lessor, mortgagee or trustee
notifies Tenant that it elects to have the Lease be a prior lien, then this
Lease shall be deemed to be prior in lien to such ground lease, mortgage or
trust deed. Tenant shall, within ten (10) business days of written request,
deliver to Landlord, or to any party providing financing to Landlord, or to a
prospective purchaser, information reasonably required by such party, including
without limitation current financial statements and estoppel certificates in a
form reasonably required by such party, failing which Tenant shall be in default
of this Lease without further notice or cure period. If Tenant does not deliver
any subordination or estoppel certificate within the ten (10) business day time
period provided herein, then in addition to any other right or remedy of
Landlord, Tenant hereby appoints Landlord as its attorney-in-fact to execute and
deliver any such subordination or estoppel certificate on Tenant's behalf. Any
such subordination or estoppel certificate, delivered pursuant hereto may be
relied upon by any owner, prospective purchaser, mortgagee or prospective
mortgagee of the Building, the Property, or Landlord's interest therein.
Landlord will use best efforts to obtain a non-disturbance agreement from its
existing lender and any future lender(s) on such lender's commercially
reasonable form.
8.00 DEFAULT
8.01 DEFAULT. Tenant shall be in "default" of this Lease whenever: (i)
Tenant fails to pay any Rent when due and such failure continues for five (5)
days after receipt of written notice from Landlord; or (ii)Tenant fails to
comply with any other term, covenant or conditions of the Lease and such failure
continues for thirty (30) days after receipt of written notice from Landlord; or
(iii) Tenant fails to timely deliver any required subordination, estoppel
certificate, or financial statements within the time limited by this Lease; or
(iv) Tenant abandons the Premises; or (v) a petition is filed by or against
Tenant in bankruptcy, insolvency, for the appointment of a receiver or
custodian, or an attachment or other judicial seizure is instituted against
Tenant, or other act of bankruptcy or insolvency occurs involving the Tenant, or
any steps are taken for the dissolution, winding up or liquidation of Tenant. To
the extent notice is required by this Section 8.01, then provided such notice is
given, Tenant hereby waives any present or future law requiring any notice to
quit or of Landlord's intention to re-enter.
21
8.02 CONSEQUENCES OF DEFAULT. If a default occurs, Landlord may, at its
option, reenter the Premises without terminating the Lease, relet the Premises
on Tenant's behalf, and Tenant shall be responsible for the payment of any
deficiency in the rent received by Landlord in accordance with the Lease, as
well as all reasonable costs relating to recovery and reletting the Premises,
including all leasing commissions, legal fees and costs plus all actual costs,
but if Landlord does not relet the Premises Tenant shall continue to be
responsible for the full payment of rentals in accordance with the Lease. If a
default occurs, Landlord shall not be required to serve further notice (beyond
that required by Section 8.01) or resort to legal process prior to exercising
its right of re-entry, and Tenant waives any available rights of redemption.
Landlord shall also have the right to terminate this Lease and recover damages,
even if Landlord has previously exercised its right of re-entry. If Landlord
elects to terminate, Landlord shall be entitled to liquidated damages in an
amount equal to (i) all sums owing hereunder up to the date of termination, and
(ii) accelerated rent discounted to present value using an interest rate of six
percent (6%), provided that Landlord will forward to Tenant any net rentals
received on reletting the Premises as they are received, provided that Landlord
shall incur no liability, and Tenant's obligations hereunder shall not be
diminished, by virtue of Landlord's failure to relet. The foregoing remedies are
in addition to any other remedies available hereunder or at law.
8.03 SELF-HELP. Landlord shall also have the right, but not the
obligation and without prejudice to any other right or remedy, to cure any
default of Tenant on Tenant's behalf, and one hundred five percent (105%) of the
cost incurred shall be payable by Tenant on demand as Additional Rent. The
failure to pay such amount when due shall constitute a monetary default.
8.04 NO IMPLIED WAIVERS. No waiver of any breach of a term, covenant or
condition by either party shall be construed as a waiver of a subsequent breach
of the same term, covenant or condition, or as a waiver of the term, covenant or
condition itself. The consent or approval by either party to, or of, any act
requiring such party's consent or approval shall not be deemed to waive or
render unnecessary the consent or approval of such party to, or of, any
subsequent similar act. All rights and remedies set forth in this Lease are
cumulative and in addition to any other available rights and remedies.
8.05 WAIVER OF JURY TRIAL. The parties hereby waive all rights to trial
by jury in any action, proceeding or counterclaim brought by either of them
against the other on any matters arising out of or in any way relating to this
Lease, the relationship of landlord and tenant, and/or Tenant's use or occupancy
of the Premises.
8.06 LANDLORD DEFAULT; TENANT REMEDIES. Landlord shall be deemed in
default of this Lease (a "Landlord Default") if Landlord fails to perform any
term, covenant or condition of Landlord under this Lease and fails to cure such
default within a period of thirty (30) days after Landlord's receipt of written
notice from Tenant specifying such default (or if the default specified by
Tenant is not capable of cure within such thirty (30)-day period, if Landlord
fails, after notice from Tenant, to commence to cure such default and diligently
to pursue completion of such cure during and within a reasonable time after such
thirty (30)-day period). Upon a Landlord Default, Tenant shall have the right to
pursue all remedies available at law or in equity. In addition, if Landlord
fails to respond in any way to Tenant's notice of a Landlord Default within
thirty (30) days, Tenant shall be entitled to send Landlord a second notice of
such Landlord Default requesting that Landlord apprise Tenant of the status of
Landlord's actions to cure the Landlord Default, which second notice must
include the following language in all caps:
22
"FAILURE TO RESPOND TO THIS NOTICE WITHIN TWENTY (20) BUSINESS DAYS FROM THE
DATE OF THIS NOTICE SHALL ENTITLE TENANT TO EXERCISE ITS SELF-HELP REMEDIES AS
SET FORTH IN SECTION 8.06 OF THE LEASE." If Landlord does not respond to Tenant
within the twenty (20) business days set forth above, Tenant may commence to
cure the Landlord Default and may ▇▇▇▇ Landlord for the Tenant's reasonable,
actual, out-of pocket costs of curing the same, which amount shall be due and
payable by Landlord to Tenant within thirty (30) days following Landlord's
receipt of Tenant's invoice therefor.
9.00 MISCELLANEOUS
9.01 NOTICES. No notice, and no request, consent, approval, waiver or
other communication which may be or is required or permitted to be given under
this Lease shall be effective unless the same is given in the manner set forth
in this Section 9.01. Each notice given pursuant to this Lease shall be given in
writing and shall be (i) delivered in person, (ii) sent by nationally recognized
overnight courier service, (iii) sent by certified mail, return receipt
requested, first class postage prepaid, to Landlord or Tenant, as the case may
be, at their respective notice addresses as set forth in Sections 1.07 and 1.20,
or at any such other address that may be given by one party to the other by
notice pursuant to this Section 9.01. Such notices, if given as prescribed in
this Section 9.01, shall be deemed to have been given (a) at the time of
delivery if delivery is made in person, (b) on the next business day if
deposited with a nationally recognized overnight courier service in time for
next day delivery, (c) on the third business day following the date of mailing
if mailed, or (d) at the time of attempted delivery if delivery is refused or
cannot be effected at the addressee's address (as evidenced in writing). During
any interruption or threatened interruption of substantial delay in postal
services, all notices shall be delivered personally or by nationally recognized
overnight courier service.
9.02 SUCCESSORS AND ASSIGNS AND LANDLORD'S LIABILITY. This Lease shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the original Landlord named
herein and each successive owner of the Premises shall be liable only for
obligations accruing during the period of its ownership; provided that nothing
in this Section 9.02 shall be deemed to permit any Transfer in violation of
Section 7.01 hereof. Whenever Landlord conveys its interest in the Building,
Landlord shall be automatically released from the further performance of
covenants on the part of Landlord herein contained, and from any and all further
liability, obligations, costs and expenses, demands, causes of action, claims or
judgments arising from or growing out of, or connected with this Lease after the
effective date of said release. The effective date of said release shall be the
date the assignee of Landlord executes an assumption of this Lease pursuant to
such an assignment whereby the assignee expressly agrees to assume all of
Landlord's obligations, duties, responsibilities and liabilities with respect to
this Lease. If requested, Tenant shall execute a form release and such other
documentation as may be reasonably required to further effect the foregoing
provision. The liability of Landlord for Landlord's obligations under this Lease
shall not exceed and shall be limited to Landlord's interest in the Building and
Tenant shall not look to any other property or asset of Landlord, Landlord's
Agents or representatives in seeking either to enforce Landlord's obligations
under this Lease or to satisfy a judgment for Landlord's failure to perform such
obligations. No other properties or assets of Landlord, and no properties or
assets of Landlord's Agents or representatives shall be subject to levy,
execution or other enforcement procedures for the satisfaction of any judgment
(or other judicial process) or for the satisfaction of any other remedy of
Tenant arising out of or in connection with this Lease, the relationship of
Landlord and Tenant or Tenant's use of the Premises, and if Tenant shall acquire
a lien on or interest in any other properties or assets by judgment or
otherwise, Tenant shall promptly release such lien on or interest in such other
properties and assets by executing, acknowledging and delivering to Landlord an
instrument to that effect prepared by Landlord's attorneys.
23
9.03 NO OFFER. The submission of this Lease for examination does not
constitute a reservation of, or option for, the Premises, and this Lease shall
become effective only upon execution and delivery by and to all parties hereto.
9.04 ATTORNEY'S FEES. In the event of the employment of an attorney by
the Landlord because of the violation by the Tenant of any term or provision of
this Lease, including non-payment of rent as due, the Tenant shall pay and
hereby agrees to pay reasonable attorney's fees and all other costs incurred
therein by the Landlord. In addition, if either party commences litigation
against the other for the specific performance of this Lease, for damages for
the breach hereof or otherwise for enforcement of any remedy hereunder, or for
declaratory relief hereunder, the prevailing party shall be entitled to recover
from the other party such costs and reasonable attorneys' fees as may have been
incurred, including any and all costs incurred in enforcing, perfecting and
executing such judgment.
9.05 INTERPRETATION. This Lease shall be construed in accordance with
the laws of the state or commonwealth in which the Building is located, without
reference to its conflict of laws provisions. To the extent required under
applicable law to make this Lease legally effective, this Lease shall constitute
a Deed of Lease executed under seal. The section headings contained in this
Lease are for convenience only and shall not enlarge or limit the scope or
meaning of the various and several sections hereof. Words of any gender used in
this Lease shall include any other gender, and words in the singular number
shall be held to include the plural, unless the context otherwise requires.
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. The parties acknowledge and agree that neither this Lease nor
any of its provisions shall be interpreted against a party by virtue of such
party having drafted the Lease or the provision. Time shall be of the essence in
this Lease. Whenever any consent or approval by Landlord or Tenant is required
or requested pursuant to the terms of this Lease, such consent or approval shall
not be unreasonably withheld, conditioned or delayed unless this Lease expressly
states otherwise.
9.06 AMENDMENTS. This Lease and its exhibits may be amended or modified
only by a written instrument duly executed by each of the parties hereto prior
to or as of the effective date of any such amendment or modification.
9.07 BROKERAGE. Each of the parties hereto represents and warrants that
there are no brokerage commissions or finder's fees of any kind due to anyone
other than First Potomac Management LLC and ▇▇▇▇▇ ▇▇▇▇ LaSalle Americas, Inc.,
which brokers shall be paid by Landlord pursuant to a separate agreement. Each
party agrees to defend and indemnify the other against, and hold it harmless
from, all liabilities arising from any claim for brokerage compensation from any
other party including, without limitation, the cost of counsel fees in
connection therewith.
9.08 ENTIRE AGREEMENT. This Lease and its exhibits contains the entire
and final agreement of and between the parties, and the parties shall not be
bound by any statements, conditions, representations, inducements or warranties,
oral or written, not herein contained.
24
9.09 FORCE MAJEURE. If either party is unable to fulfill any obligation
hereunder (other than Tenant's obligation to pay all items of Base Rent and
Additional Rent which shall not be covered by this Section 9.09), or is delayed
in so doing, by reason of war, civil unrest, strike, labor troubles, inability
to procure services, materials, permits or licenses, unusually inclement
weather, governmental delays, acts of God, or any other cause beyond the
reasonable control of such party, the time within which such party would
otherwise have been obligated to fulfill such obligation shall be extended for a
period equal to the period of such delay.
9.10 AUTHORITY. The parties hereby each represent that each is duly
organized and legally existing in the state or commonwealth of its organization
and is qualified to do business in the state or commonwealth in which the
Premises are located. If there is more than one Tenant, or if Tenant is
comprised of more than one party or entity, the obligations imposed upon Tenant
shall be joint and several obligations of all the parties and entities. Each of
the undersigned represents and warrants that he/she has the power, authority and
legal right to bind the corporation he/she purports to represent to the terms of
this Lease by his/her signature hereto.
9.11 MORTGAGEES' APPROVAL. If Landlord's current or future mortgagee
shall require modifications of the terms and provisions of this Lease, Tenant
agrees to execute and deliver to Landlord such reasonable amendments to this
Lease as may be required to effect such modifications within thirty (30) days
after Landlord's request therefor. In no event, however, shall Tenant be
required to take on additional liability or risk or agree to materially modify
any provision of this Lease relating to the amount of Rent, Additional Rent or
other charges reserved herein, the size and/or general location of the Premises,
or the Lease Term.
9.12 PARKING. Tenant shall have the right to use up to seventy-three
(73) unreserved spaces in the parking facilities serving the Building upon such
reasonable terms and conditions as are established by Landlord from time to time
and ten (10) reserved spaces in the parking facilities serving the Building upon
such terms and conditions as are reasonably established by Landlord from time to
time [for a total of 3 spaces per 1,000 square feet of space leased]. Tenant
agrees to cooperate with Landlord and other tenants in use of the parking
facilities. Landlord reserves the right in its sole, but reasonable discretion
to determine whether the parking facilities are properly used or are becoming
overburdened and to allocate and assign parking spaces among Tenant and other
tenants, and to reconfigure the parking area and modify the existing ingress and
egress from the parking areas as Landlord shall deem reasonably appropriate.
9.13 NO LIENS. Landlord's title is and always will be paramount to the
title of Tenant, and Tenant will not do or be empowered to do any act which
encumbers or may encumber Landlord's title or subjects the Premises or the
Building or any part of either to any lien. Tenant must immediately remove any
and all liens or encumbrances which are filed against the Premises or the
Building as a result of any act or omission of Tenant or Tenant's Agents. If
Tenant fails to remove any such lien within ten (10) business days of receipt of
written notice thereof, then Landlord may, but is not obligated to, remove such
lien, and Tenant shall pay all costs of removal or bonding the lien, plus
interest at the rate of 12% per annum from the date expenses shall be incurred
by Landlord until paid to Landlord upon demand.
9.14 FINANCIAL STATEMENTS. Tenant, upon written request by Landlord
(but, provided Tenant is not in monetary or material default hereunder, not more
than once per calendar year), will provide Landlord with a copy of its current
financial statements consisting of a balance sheet, an earnings statement,
statement of changes in financial position, statement of changes in Tenant's
equity, and related footnotes, prepared in accordance with generally accepted
accounting principles. Such financial statements must be either certified by a
certified public
25
accountant or sworn to as to their accuracy by Tenant's most senior official and
its chief financial officer. The financial statements provided must be as of a
date not more than twelve (12) months prior to the date of request. All of
Tenant's financial statements given to Landlord shall be held in confidence, but
may be shared with Landlord's officers, directors, shareholders, employees,
attorneys, accountants, business consultants or lenders on a need to know basis
only, and may be disclosed pursuant to a judicial or governmental decree or
order requiring disclosure.
9.15 NET LEASE. Tenant acknowledges and agrees that it is intended that
this is a net lease that is completely carefree to Landlord, and that, except as
expressly set out in this Lease, Landlord is not responsible during the Term for
any costs, charges, expenses, and outlays of any nature whatsoever arising from
or relating to the Premises, or the use and occupancy thereof, or the contents
thereof, or the business carried on therein; and Tenant shall pay all charges,
expenses, costs, and outlays of every nature and kind relating to the Premises
except as expressly set out in this Lease. Landlord is not and shall not be
required to render any services of any kind to Tenant except as specifically set
forth in this Lease.
9.16 RESERVATIONS BY LANDLORD. In addition to other rights conferred by
this Lease or by law, so long as such actions do not block Tenant's or Tenant's
Agents access, ingress to, or egress from the Premises or prevent the operation
of Tenant's business operations from the Premises, Landlord reserves the right,
to be exercised in Landlord's reasonable judgment, to: (a) change the name of
the Building; (b) change entrances and exits to the Building and to the parking
lot adjacent to the Building; (c) install and maintain a sign or signs on the
exterior or interior of the Building; (d) change the street address of the
Building; (e) designate all sources furnishing signs, sign painting and
lettering for use in the Building; (f) take all measures as may be necessary or
desirable for the safety and protection of the Premises or of the Building; (g)
sell or mortgage the Building and assign this Lease in connection therewith; (h)
issue pass keys to the Building or the Premises; (i) repair, alter, add to,
improve, build additional stories on, or build adjacent to the Building; (j) run
necessary pipes, conduits and ducts through the Premises; (k) carry on any work,
repairs, alterations or improvements in, on or about the Building or in the
vicinity thereof and, during the continuance of any such work, to temporarily
close doors, entryways, public space and corridors in the Building; (l)
interrupt or temporarily suspend Building services and facilities; (m) change
the arrangement and location of entrances or passageways, doors and doorways,
corridors, elevators, stairs, toilets, or other public parts of the Building;
and (n) grant to anyone the exclusive right to conduct any business or render
any service in or to the Building, provided such exclusive right shall not
operate to exclude Tenant from the use expressly permitted herein. This
paragraph is not to be construed to diminish the obligations of Tenant provided
herein, nor to create or increase any obligation on the part of Landlord with
respect to repairs or improvements. Landlord will use reasonable efforts to
minimize any interference with Tenant's business caused by the exercise by
Landlord of its rights set forth in this Section 9.16. However, the same shall
in no way obligate the Landlord to exercise any such rights during non-business
hours, and except as expressly provided herein, neither Landlord nor Landlord's
Agents will be liable to Tenant or Tenant's Agents for any inconvenience,
interference, annoyance, loss or damage resulting from Landlord's exercise of
its rights hereunder, including any work done in or upon the Premises or any
portion of the Building or adjacent grounds.
9.17 ROOF RIGHTS. (a) Tenant shall have the conditional right, without
paying any additional rent, to install and maintain up to three (3)
communication devices (such as a dish or antenna) and related equipment for its
own use (collectively, the "Rooftop Equipment") on the roof of the Building in
accordance with the terms of this Section. Additional communication devices must
be approved by the Landlord, which approval shall be in the sole discretion of
Landlord.
26
(b) Prior to installing any such Rooftop Equipment, Tenant shall submit
detailed plans and specifications therefore to Landlord for its review. Said
plans and specifications shall describe in detail the size, weight, color and
configuration of the Rooftop Equipment and any associated equipment (including
cabling or other conduits between the Rooftop Equipment itself and the
Premises), the proposed location of the same on the roof of the Building, the
manner in which the same shall be installed and removed, and the name and
license number of the competent licensed contractor who will perform such
installation. All such plans shall be subject to Landlord's prior written
approval, the size and location of such Equipment may be limited by Landlord in
its reasonable judgment, and Landlord may request any reasonable additional
changes to the plans and specifications, as Landlord, in its reasonable
judgment, deems necessary to protect the structure and aesthetic appearance of
the Building and/or Landlord's ability to properly maintain and operate the
Building. As a result, the design and installation of said Rooftop Equipment
shall be subject to the consistently applied design limitations of the Building
and its structural, electrical and mechanical systems. No work may commence with
respect to the installation of said Rooftop Equipment until: (i) Landlord has
provided Tenant with Landlord's prior written approval of final plans therefor,
and (ii) Tenant has provided Landlord with written proof that Tenant has
obtained all required licenses, permits and approvals, if any, from applicable
government authorities necessary for the installation and operation of said
Rooftop Equipment.
(c) The installation, operation and maintenance of the Rooftop
Equipment shall, at all times, comply with all applicable present and future
laws, ordinances (including zoning ordinances and land use requirements),
regulations, orders or other legal requirements of the United States of America,
the Commonwealth of Virginia, and any other public or quasi public authority
having jurisdiction over the Building and insurance requirements relating to or
affecting the Premises, the Building, the condition thereof, all machinery,
equipment and furnishings therein incident to Tenant's occupancy of the Building
and its use thereof. The Rooftop Equipment shall be modified, removed or
relocated (subject to Landlord's prior written approval) from time to time by
Tenant in order to ensure continued compliance with the foregoing requirements.
Landlord's approval of any plans and specifications shall in no way constitute a
representation or warranty by Landlord that the same are in compliance with any
of the foregoing requirements. The installation and subsequent maintenance of
the Rooftop Equipment shall be subject to such reasonable regulations and
restrictions as are imposed thereon by Landlord. In the event that the
installation or maintenance of the Rooftop Equipment results in damage to the
Building or the Project, or Landlord incurs any liability relating to or arising
from the same, Tenant agrees: (i) to pay Landlord on demand the costs incurred
by Landlord in repairing any such damage, and (ii) to indemnify Landlord against
any such liability.
(d) Tenant shall pay all costs associated with the design,
installation, maintenance, operation, relocation and removal of the Rooftop
Equipment. Tenant shall reimburse Landlord, as additional rent, for any
reasonable costs incurred by Landlord with respect to the Rooftop Equipment,
including but not limited to: (i) any increased insurance premiums, (ii) any
engineering or architectural fees related to reviewing the aforesaid plans and
specifications, it being agreed that Landlord will provide Tenant with an
estimate of such fees prior to incurring the same and will allow Tenant to
withdraw its request if Tenant desires in lieu of incurring such fees, and (iii)
any reasonable legal fees related to the review of the aforesaid requirements
and Tenant's compliance therewith. Tenant hereby indemnifies and holds Landlord
harmless from and against any claims, liabilities, causes of action, losses,
damages and costs incurred by Landlord as
27
a result of the installation, operation, maintenance, relocation or removal of
the Rooftop Equipment. Tenant covenants not to damage the roof or any other part
of the Building or the Project in the course of installing, maintaining and
removing the Rooftop Equipment. Except as expressly set forth in the approved
plans therefor, no such installation, maintenance or removal of the Rooftop
Equipment shall involve any penetration of the Building's roof or exterior
walls.
(e) Tenant covenants that the installation, maintenance, operation,
relocation and removal of the Rooftop Equipment shall in no way interfere with
Landlord's operation of the Building's systems or with other tenant's use of
their premises or operation of their equipment within the Project. In the event
of any such interference, the Rooftop Equipment shall be modified, removed or
relocated (subject to Landlord's prior written approval) from time to time by
Tenant. Landlord shall have the right to require Tenant to temporarily relocate
the Rooftop Equipment in order to allow Landlord to complete repairs,
maintenance or modification of the Building. In exercising its rights set forth
in the immediately preceding sentence, Landlord will use reasonable efforts to
minimize any interference with Tenant's use of the Rooftop Equipment.
(f) Tenant shall use the Rooftop Equipment for internal corporate
purposes only. No Rooftop Equipment which Tenant is permitted to install on the
roof of the Building in accordance with the terms of this Section shall be
utilized by anyone other than Tenant or in any manner as a source of revenue to
Tenant.
(g) The maintenance and operation of the Rooftop Equipment shall be at
Tenant's sole risk, and any damage to the Rooftop Equipment will in no way
operate to affect Tenant's obligations under this Lease. Similarly, any
condemnation or other governmental action which affects Tenant's ability to
maintain and operate the Rooftop Equipment shall in no way affect Tenant's
obligations under this Lease, except as set forth below. In the event that any
applicable government authority or other legal requirement prevents Tenant from
operating or maintaining the Rooftop Equipment, Tenant shall promptly remove the
same. The rights of Tenant set forth in this Section are personal to the named
Tenant herein and may not be assigned, sublet or otherwise transferred to any
third person or entity (notwithstanding a permitted assignment, sublease or
other transfer of Tenant's other rights hereunder). Prior to the expiration or
termination of the Term, Tenant shall remove the Rooftop Equipment from the
Building and reasonably restore the same to its condition prior to the
installation thereof. Tenant's failure to so remove the same shall constitute a
default subject to Article 8 of this Lease.
9.18 MONITORING POND. Tenant, at its sole cost and expense (without
paying additional rent), shall have the right to install a Monitoring Pond (the
"Monitoring Pond") and monitoring devices, with the associated underground
connecting lines to the Premises (collectively, the "Monitoring Pond Equipment")
for testing and demonstration to clients on approximately 100 square feet of
space outside the Building in a location near the Building and the Premises,
which location is to be determined by Landlord, in its sole, but reasonable
discretion. Alternatively, the Tenant may, upon receiving the prior written
consent of Landlord which shall not be unreasonably withheld, conditioned or
delayed, and upon receiving written permission from the County, elect to utilize
the existing storm water management pond (the "SWM Pond") for the installation
of the Monitoring Pond Equipment. Tenant, at its sole cost and expense, must
comply with all laws, including all Environmental Laws, in its use of the
Monitoring Pond or the SWM Pond, as the case may be. The initial proposed and
Landlord approved location of the Monitoring Pond is shown on Exhibit E,
attached hereto and incorporated herein by this reference. Upon the expiration
or earlier termination of the Lease, Tenant, at its sole cost and expense, shall
remove the Monitoring Pond and the Monitoring Pond Equipment and shall restore
the Property to substantially the same condition it was in prior to the
installation of the Monitoring Pond and/or Monitoring Pond Equipment.
28
9.19 SATELLITE FARM. Tenant, at its sole cost and expense (without
paying additional rent), shall have the right to install a Southern Exposure
Satellite Farm, with its associated underground connecting lines to the Premises
(collectively, the "Satellite Farm Equipment") for its dish and pole antennae
requirements on approximately 1,500 square feet of space outside the Building in
a location to be determined by Landlord, in its sole, but reasonable discretion.
The specifications of the Satellite Farm Equipment and the location thereof are
subject to the prior, written approval of Landlord. The initial proposed and
Landlord approved location of the Satellite Farm Equipment is shown on Exhibit
F, attached hereto and incorporated herein by this reference. Upon the
expiration or earlier termination of the Lease Tenant, at its sole cost and
expense, shall remove the Satellite Farm Equipment and shall restore the
Property to substantially the same condition it was in prior to the installation
of the Satellite Farm Equipment.
9.20 EMERGENCY GENERATOR. If Tenant, at its sole cost and expense
(without paying additional rent), desires to install an emergency generator,
with its associated underground connecting lines ("the "Emergency Generator") on
the exterior of the Building adjacent to the Premises, Tenant shall submit
detailed plans and specifications to Landlord along with a request for
Landlord's consent to the installation of the same, which consent shall not be
unreasonably withheld, it being expressly agreed that the size, location, design
and type of emergency generator shall require the Landlord's approval. If
consent is granted, Tenant shall maintain and repair (as needed) the Emergency
Generator during the Term. Upon the expiration or earlier termination of the
Lease, Tenant, at its sole cost and expense, shall remove the Emergency
Generator and shall restore the Property to substantially the same condition it
was in prior to the installation of the Emergency Generator.
[SIGNATURE PAGE FOLLOWS]
29
IN WITNESS WHEREOF the said parties have hereunto signed their names
and affixed their seals on the day and year hereinbefore written.
ATTEST/WITNESS: LANDLORD:
▇▇ ▇▇▇▇▇▇▇▇ PARK II, LLC,
a Virginia Limited Liability Company
By: First Potomac Realty Investment
Limited Partnership
Its Sole Member
By: First Potomac Realty Trust
Its General Partner
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ VP Leasing -------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: EVP/COO
----------------------------
Date: November 17, 2008
-----------------------------
ATTEST/WITNESS: TENANT:
SUTRON CORPORATION,
a Virginia Corporation
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO -------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: President & CEO
----------------------------
Date: 13 November 2008
-----------------------------
30
EXHIBIT "A"
PREMISES
31
[MAP OF PREMISES]
EXHIBIT "B"
IMPROVEMENTS
A. Landlord shall deliver the Premises to Tenant on the Commencement Date in its
"as is" condition, structurally sound and with the roof and all existing
mechanical, electrical and plumbing systems servicing the Building and the
Premises in good working order and condition. Between the period beginning on
the Commencement Date and ending at least thirty (30) days prior to the Rent
Commencement Date, Landlord shall: (i) make improvements to the truck court and
curb islands regarding truck access to the rear of the Building to ensure that
the agreed-upon turning radius is accommodated, all at Landlord's sole cost and
expense and in accordance with the Truck Court and Curb Islands Space Plan
attached hereto as Exhibit B-1 (hereinafter, the "Truck Court and Curb Islands
Improvements"); (ii) pay 1/2 of the cost of constructing the necessary demising
walls and corridor walls, the construction of which will be completed by Tenant
prior to the Rent Commencement Date; and (iii) purchase and install mini-blinds
on all exterior windows within the Premises (at such time as Tenant is ready to
proceed with the installation of the same), it being agreed that the cost of the
purchase and installation of the mini-blinds will be deducted from the
Improvement Allowance (hereinafter defined). If Tenant or Tenant's Agents delay,
hinder or otherwise prevent Landlord from completing the foregoing, the same
shall be deemed to have been completed on the day that completion would have
occurred but for the delay caused by Tenant or Tenant's Agents and Landlord
shall complete the same as soon as reasonably possible thereafter.
B. Following the Commencement Date, Tenant shall complete construction of the
Premises in accordance with the following:
1. Tenant will submit to Landlord for approval final working
drawings and specifications of materials for all Improvements
(the "Improvements") of the Premises that Tenant desires
beyond the current "as is" condition of the Premises, (which
final working drawings will comply with the ADA, and will
incorporate and be consistent with the Building standards
established by Landlord). Landlord shall provide its approval
or reasons for its non-approval to the final working drawings
within ten (10) business days following receipt thereof. Said
drawings and specifications, which will be ready to submit for
necessary permits and ready for bidding to general
contractors, must be approved by Landlord prior to the
commencement of any work related to the Improvements. As
modified by any Landlord-required changes, the final working
drawings will be the "Final Plans". Tenant is solely
responsible for determining whether or not it is a public
accommodation and for compliance with ADA within the Premises.
Tenant's approval of the Final Plans constitutes an
acknowledgement by Tenant that they comply with ADA.
Landlord's approval of the plans, specifications and working
drawings for Tenant's alterations shall create no
responsibility or liability on the part of Landlord for their
completeness, design sufficiency, or compliance with all laws,
rules and regulations of governmental agencies or authorities.
2. It is acknowledged by Landlord that Tenant has retained the
services of a construction manager to assist Tenant in
managing and overseeing the design, permitting and
construction of Tenants Improvements. Following approval and
B-1
completion of the Final Plans, Tenant shall retain a general
contractor, subject to Landlord's reasonable approval of the
same, to construct the Improvements.
C. Tenant will bear the cost of constructing the Improvements and all
architectural and engineering fees, if any, relating to the Improvements,
including: (i) the architectural fees related to the preparation of all
drawings, (including CAD drawings) plans and specifications (collectively,
"plans"), (ii) engineering fees related to the construction of the Improvements,
and (iii) all costs and expenses incurred in the construction of Improvements
over and above the current "as is" condition of the Premises (collectively
"Tenant's Costs") [In the event that Tenant employs its own architect to prepare
the Final Plans, upon completion of the Improvements, Tenant's architect, at
Tenant's cost and expense, shall deliver to Landlord computer disks containing
"as-built" CAD drawings and specifications regarding such Improvements]. Tenant
acknowledges that the Improvements must include the installation of gas and
electric meters to measure the Tenant's gas and electric usage in the Premises.
D. If Tenant requires any changes in the Final Plans (the "Tenant Changes"),
Tenant must present Landlord with revised drawings and specifications (and, if
applicable proposed substitute or replacement materials) for Landlord's review
and approval, which approval will not be unreasonably withheld, conditioned or
delayed provided that the same are in compliance with the requirements and
limitations set forth herein. Upon Landlord's approval of the Tenant Changes,
Tenant will incorporate such changes in the Improvements.
E. In addition to the Tenant's Costs detailed in Paragraph C above, Tenant shall
also pay Landlord a construction supervisory fee, in order to compensate
Landlord for its participation in the planning and its supervision of the
construction process, which construction supervisory fee shall be $15,000.00.
This supervisory fee may be paid from the Improvement Allowance at Tenant's
option.
F. Tenant will complete construction of the Improvements in accordance with the
Final Plans, the terms of the Lease, the terms set forth in paragraphs D and E
above, and the following:
1. Tenant will select and retain a licensed, reputable general
contractor approved by Landlord to oversee plans and schedule
and manage construction of the Improvements. The Improvements
shall be completed in a first class workmanlike manner, using
only new materials, fixtures and equipment, and shall be
performed by reputable contractors and subcontractors who are
licensed to conduct business in the jurisdiction in which the
Premises are located, and such contractors and subcontractors
shall be subject to Landlord's prior written approval. The
construction of the Improvements shall be subject to all
reasonable contractor and construction rules, regulations and
guidelines established by Landlord from time to time.
2. During Tenant's construction of the Improvements, Landlord and
its consultants and architect will have access to the Premises
for the purpose of monitoring the construction of the
Improvements and ensuring their compliance with the Final
Plans and the requirements of this Lease. Landlord and its
consultants and architect will not interfere with Tenant's or
its contractors' construction of the Improvements, except to
the extent reasonably necessary (including halting work, if
necessary) to ensure such compliance.
3. Intentionally omitted.
B-2
4. Prior to commencing any work with respect to such
Improvements, and thereafter until the same are completed,
Tenant shall obtain and maintain and/or cause Tenant's
contractor to obtain and maintain insurance against: claims
under workmen's compensation and other employee benefit acts,
with limits not less than $500,000.00; claims for damages
because of bodily injury, including death, to said
contractor's employees and all others, with a single limit of
at least $3,000,000.00 per person and per occurrence; and
damages to property with limits of $3,000,000.00. All such
coverages shall be maintained with such companies as Landlord
reasonably requires. Such contractors and subcontractors must
provide Landlord with certificates of insurance prior to
commencement of work, and such certificates shall list
Landlord and its managing agent and any other designee of
Landlord as additional insureds.
5. Throughout the period during which any such Improvements are
being performed, Tenant and Tenant's contractors shall: (1)
keep the Premises, the Building and all areas adjacent thereto
reasonably free of debris, refuse, equipment, materials and
personal property, (2) initiate, maintain and supervise all
reasonably necessary safety precautions and programs in
connection with the work.
6. Immediately upon the completion of the Improvements: (i)
Tenant shall remove and cause Tenant's contractors and any
subcontractors to remove any and all debris, refuse,
equipment, materials and personal property left on the
Premises, in the Building, or any area adjacent thereto, and
(ii) Tenant shall deliver to Landlord full and complete lien
releases executed by all of Tenant's contractors,
subcontractors and materialmen which performed work or
provided materials in connection with such Improvements.
7. Tenant, as construction manager, will enter into contracts
with its general contractors and, at Tenant's sole option,
major subcontractors performing the Improvements. All
contractors and major subcontractors, as well as the
scheduling of all construction work in the Premises shall be
subject to Landlord's prior approval. Tenant will be
responsible for all Tenant's Costs, subject to partial
reimbursement in accordance with the terms set forth in
Paragraph G below.
G. Tenant is responsible for the payment of all Tenant's Costs, including design
and engineering fees and the cost of constructing the Improvements; provided,
however, that Landlord will reimburse Tenant for up to $1,390,850.00 of such
Tenant's Costs (the "Improvement Allowance"), which is based on $50.00 per
square foot of rentable area in the Premises, provided, however, that
eighty-five percent (85%) of the Improvement Allowance must be used for the
customary hard and soft costs of constructing physical improvements to the
Premises. The remaining fifteen percent (15%) of the Improvement Allowance may
be used for Tenant's fixtures, equipment, consulting fees, special
installations, telephone, computer wiring, furniture and move-related costs.
Subject to the foregoing limits and conditions, Landlord will reimburse Tenant
for the Tenant's Costs up to the amount of the Improvement Allowance upon
Tenant's submission of invoices to Landlord in accordance with the procedures
set forth below. Tenant will submit to Landlord for reimbursement paid invoices
from Tenant's contractors and subcontractors who have performed work and
provided materials in connection with the Improvements, accompanied by lien
waivers (from the general contractor and all subcontractors
B-3
with work reflected in such invoice), architect, vendor, consultant, project
manager or moving contractor, along with written instructions from Tenant to
reimburse the same to Tenant from the Improvement Allowance (collectively,
"Approved Invoices"). It is understood and agreed that only the following costs
are eligible for reimbursement or payment by Landlord in accordance with the
terms hereof: (i) hard construction costs associated with constructing the
Improvements, and (ii) customary "soft" costs associated with the Improvements
(including, without limitation: architectural, design and engineering fees,
project management fees, and the cost of procuring permits). Said Approved
Invoices shall be paid from the Improvement Allowance within thirty (30) days of
delivery of Approved Invoices for work and materials. Landlord will pay Tenant
the amount of such Invoices to the extent of the Improvement Allowance (subject
to the limitations set forth above). Notwithstanding the foregoing, if the cost
of the Improvements exceeds the amount of the Improvement Allowance
(hereinafter, the "Excess") and if Tenant has not opted to have the Landlord pay
the Additional Improvement Allowance (defined below), or if the cost of the
Improvements exceeds the amount of the Improvement Allowance and the Additional
Improvement Allowance, Tenant agrees to pay all such Excess, prior to commencing
business operations from the Premises. Notwithstanding any provision hereof to
the contrary, Tenant hereby waives any right to any portion of the Improvement
Allowance to the extent that Tenant has not properly requested payment of the
same (and submitted the appropriate documentation in connection therewith as
provided above) within two hundred seventy (270) days following the Commencement
Date.
H. As of the execution of this Lease, the Landlord and Tenant have not
determined the exact cost of constructing the Improvements in accordance with
the Final Plans. Therefore, if the cost of the Improvements exceeds the amount
of the Improvement Allowance, then the first $556,340.00 of such excess of
Tenant's Costs over the Improvement Allowance may, at Tenant's option, be paid
for by Landlord as an additional Improvement Allowance (the "Additional
Improvement Allowance"). If the Landlord pays any Additional Improvement
Allowance, then in addition to the Base Rent payments required to be made by
Tenant as outlined in Section 1.02, the Tenant will pay additional Base Rent to
the Landlord. Tenant's increase in Base Rent shall be paid monthly with the Base
Rent, outlined in Section 1.02, and shall commence on the Rent Commencement Date
and shall continue throughout the balance of the Term. If the Tenant elects to
utilize the entire Additional Improvement Allowance, then the Base Rent shall
increase by $7,047.48 per month. If the Tenant utilizes a lesser amount, then
the Base Rent shall be proportionately increased (e.g. if Tenant utilizes one
half (1/2) of the Additional Improvement Allowance, then the Tenant will pay
additional Base Rent in the amount of $3,523.74 monthly).
B-4
EXHIBIT "B-1"
TRUCK COURT AND CURB ISLANDS SPACE PLAN
B-1
[MAP OF TRUCK COURT AND CURB ISLANDS SPACE PLAN]
EXHIBIT "C"
DECLARATION OF LEASE COMMENCEMENT
THIS DECLARATION is attached to and made a part of that certain Deed of
Lease dated the ___ day of __________, 20___, ("Lease") by and between ▇▇
▇▇▇▇▇▇▇▇ Park II, LLC ("Landlord") and Sutron Corporation ("Tenant").
Landlord and Tenant are parties to the Lease. All capitalized
terms used herein shall have the same meaning as was ascribed to such terms in
the Lease, unless otherwise indicated.
Landlord and Tenant do hereby declare that: (a) the
Commencement Date is hereby established to be __________ __, 20__; (b) the Rent
Commencement Date is hereby established to be _____________ ___, 20___; and (c)
the Term of the Lease shall expire on __________ __, 20__ unless the Lease is
earlier terminated as may be provided therein. The Lease is in full force and
effect as of the date hereof, and Landlord has fulfilled all of its obligations
under the Lease required to be fulfilled by Landlord on or prior to such date.
IN WITNESS WHEREOF Landlord and Tenant have executed this
Declaration under seal this __ day of __________, 20___.
ATTEST/WITNESS: LANDLORD:
▇▇ ▇▇▇▇▇▇▇▇ PARK II, LLC,
a Virginia Limited Liability Company
By: First Potomac Realty Investment
Limited Partnership
Its Sole Member
By: First Potomac Realty Trust
Its General Partner
By:_________________________________
Name:_______________________________
Title:______________________________
Date:_______________________________
ATTEST/WITNESS: TENANT:
SUTRON CORPORATION,
a Virginia Corporation
C-1
By:_________________________________
Name:_______________________________
Title:______________________________
Date:_______________________________
C-2
EXHIBIT "D"
RULES AND REGULATIONS
1. The sidewalks, lobbies, halls and passages shall not be obstructed by any of
the tenants nor used by them for any other purpose than for ingress and egress
to and from their respective offices, nor shall they be used as a waiting or
lounging place for tenants' employees or those having business with tenants. The
halls, passages and roofs are not for the use of the general public, and
Landlord retains in all cases the right to control and prevent access to any
part of the Building of all persons whose presence, in the judgment of Landlord
or Landlord's employees or property manager, may be prejudicial to the safety,
character, reputation or interests of the Building and its tenants. In case of
invasion, mob, riot, public excitement or other commotion, Landlord reserves the
right to prevent access to the Building during the continuance of same by
closing the door or otherwise, for the safety of tenants and the protection of
property in the Building. During other than business hours, access to the
Building may also be refused, unless the person seeking admission is identified,
and the production of a key to the Premises may in addition be required.
Landlord shall in no case be liable in damages for the admission or exclusion of
any person from the Building. No Tenant or its employees or invitees shall go
upon the roof of the Building without the express consent of Landlord.
2. The floors, walls, partitions, skylights, windows, doors, and transoms that
reflect or admit light into passageways or into any place in the Building shall
not be covered or obstructed by any of the tenants except as provided for
herein; provided, however, that tenants may install curtains or draperies on the
windows. The toilet rooms, sinks and other water apparatus shall not be used for
any purpose other than those for which they were constructed, and no sweepings,
rubbish, rags, ashes, chemicals or refuse shall be thrown or placed therein. The
cost of any damage resulting from such misuse or abuse shall be borne and
immediately paid by the tenant by whom or by whose employees it shall have been
caused.
3. Nothing shall be placed by tenants or their employees on the outside of the
Building, without the prior written consent of Landlord, which consent may be
granted or withheld in the Landlord's sole and absolute discretion.
4. No tenant sign and/or building standard sign, advertisement or notice shall
be inscribed, painted or affixed on any part of the outside or inside of the
Building, unless of such character, color, size and material and in such places
as shall be first designated by Landlord in writing. Notwithstanding the
foregoing, Tenant at its own cost and expense, shall have the right to install a
sign on the exterior similar to the existing signs on the Building and subject
to Landlord's approval.
5. Tenants will see that the windows are closed and the doors to the Premises
are securely locked each day before leaving the Building.
6. Tenants, their employees or others shall not make or commit any improper
noises or disturbances of any kind in the Building, nor smoke in the elevators,
▇▇▇▇ or defile the elevators, bathrooms or the walls, windows, doors, or any
other part of the Building, nor interfere in any way with other tenants or those
having business in the Building. Tenants shall be liable for all damage to the
Building done by their employees or agents.
D-1
7. No tenant shall sweep or throw or permit to be swept or thrown from the
Premises any dirt or other substance into any of the corridors or halls,
elevators or stairways of the Building, or into any of the light-shafts or
ventilators thereof.
8. No animals shall be kept in or about the Premises except those used for
laboratory purposes.
9. If the tenants desire to introduce signaling, telegraphic, telephonic or
other wires and instruments, Landlord will direct the electricians as to where
and how the same are to be placed; and without such direction, no placing,
boring or cutting for wires will be permitted. Landlord retains in all cases the
right to require the placing and using of such electrical protecting devices to
prevent the transmission of excessive currents of electricity into or through
the Building, to require the changing of wires and of their placing and
arrangement underground or otherwise as Landlord may direct, and further to
require compliance by tenants or by those furnishing service by or using such
wires or by others with the directions, requirements or rules, Landlord shall
have the right to immediately cut, displace and prevent the use of such wires.
Notice requiring such changing of wires and their replacing and rearrangement
given by Landlord to any company or individual furnishing service by means of
such wires to any tenant shall be regarded as notice to such tenants and shall
take effect immediately. All wires used by tenants must be clearly tagged at the
distributing boards and junction boxes and elsewhere in the Building with the
number of the office to which said wires lead and the purpose for which said
wires respectively are used, together with the name of the company operating
same.
10. No varnish, stain, paint, linoleum, oil-cloth, rubber or other air-tight
covering shall be laid or put upon the floors, nor shall articles be fastened to
or holes drilled or nails or screws driven into walls, doors, or partitions; or
shall the walls, doors, or partitions be painted, papered, or otherwise covered
or in any way marked or broken; nor shall machinery of any kind be operated on
the Premises; nor shall any tenant use any other method of heating than that
provided by Landlord, without the written consent of the Landlord.
11. The use of the Premises as sleeping apartments is prohibited.
12. The above rules and regulations or any further rules and regulations are for
the exclusive benefit of and enforceable only by Landlord herein, and they shall
not inure to the benefit of Tenant herein as against other tenants or in favor
of other tenants as against Tenant herein; nor does Landlord warrant to enforce
them against other tenants; provided, however, that Landlord, in any enforcement
of the said rules and regulations, shall enforce them uniformly as to all
tenants in the Building.
13. Landlord shall not discriminate against Tenant in enforcing the Rules and
Regulations.
D-2
EXHIBIT "E"
MONITORING POND
[MAP OF MONITORING POND]
E-1
EXHIBIT "F"
SATELLITE FARM
[MAP OF SATELLITE FARM]
F-1
