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Sample Business ContractsHome: Sample Business Contracts:
DEED OF LEASE
between
TST WATERVIEW I, L.L.C.,
a Delaware limited liability company
Landlord
and
VERISIGN, INC.,
a Delaware corporation
Tenant
Waterview I at Woodland Park
Dulles Toll Road at Centreville Road
Herndon, Virginia 20171
Dated as of July 19, 2001
<PAGE>
TABLE OF CONTENTS
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Page
ARTICLE 1 BASIC LEASE PROVISIONS........................................................... 1
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ARTICLE 2 PREMISES, TERM, RENT............................................................. 4
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ARTICLE 3 USE AND OCCUPANCY................................................................ 7
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ARTICLE 4 CONDITION OF THE PREMISES........................................................ 10
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ARTICLE 5 ALTERATIONS...................................................................... 13
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ARTICLE 6 FLOOR LOAD....................................................................... 15
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ARTICLE 7 REPAIRS.......................................................................... 16
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ARTICLE 8 OPERATING EXPENSES AND TAXES..................................................... 18
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ARTICLE 9 REQUIREMENTS OF LAW.............................................................. 28
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ARTICLE 10 SUBORDINATION................................................................... 30
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ARTICLE 11 SERVICES AND UTILITIES.......................................................... 34
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ARTICLE 12 INSURANCE....................................................................... 39
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ARTICLE 13 DESTRUCTION - FIRE OR OTHER CAUSE............................................... 43
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ARTICLE 14 EMINENT DOMAIN.................................................................. 43
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ARTICLE 15 ASSIGNMENT AND SUBLETTING....................................................... 47
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ARTICLE 16 ACCESS.......................................................................... 55
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ARTICLE 17 DEFAULT......................................................................... 55
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ARTICLE 18 REMEDIES AND DAMAGES............................................................ 57
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ARTICLE 19 RIGHT TO CURE; FEES AND EXPENSES................................................ 60
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ARTICLE 20 LANDLORD REPRESENTATIONS AND COVENANTS; APPROVALS............................... 62
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ARTICLE 21 END OF TERM..................................................................... 64
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ARTICLE 22 QUIET ENJOYMENT................................................................. 66
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ARTICLE 23 NO SURRENDER; NO WAIVER......................................................... 66
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ARTICLE 24 WAIVER OF TRIAL BY JURY......................................................... 67
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ARTICLE 25 INABILITY TO PERFORM............................................................ 67
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ARTICLE 26 NOTICES......................................................................... 67
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ARTICLE 27 RULES AND REGULATIONS........................................................... 68
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ARTICLE 28 BROKER.......................................................................... 69
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ARTICLE 29 INDEMNITY....................................................................... 69
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ARTICLE 30 TAX STATUS OF BENEFICIAL OWNERS................................................. 71
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ARTICLE 31 EXTENSION PERIOD................................................................ 71
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ARTICLE 32 PURCHASE OPTIONS ON THE BUILDING................................................ 75
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ARTICLE 33 SIGNAGE......................................................................... 80
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ARTICLE 34 ARBITRATION..................................................................... 71
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ARTICLE 35 SECURITY DEPOSIT................................................................ 81
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ARTICLE 36 MISCELLANEOUS................................................................... 85
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ARTICLE 37 CONDITIONS PRECEDENT............................................................ 89
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ARTICLE 38 ASSOCIATION DECLARATION......................................................... 91
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ARTICLE 39 EXPANSION OPTIONS............................................................... 92
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i
<PAGE>
EXHIBITS
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A Description of the Land
B Definitions
C Design and Construction Agreement
D Fixed Rent Schedule
E Subordination, Non-Disturbance and Attornment Agreement
F Cleaning Specifications
G Letter of Credit
H [Reserved]
I Rules and Regulations
J Description of Woodland Park
K Construction Procedures
L Specifications for HVAC, Electrical Capacity and Floor Load
M Description of Waterview at Woodland Park
N Agreed Area of Floors/Premises
O Form of Memorandum of Lease
P Form of Purchase and Sale Agreement
Q Form of Option Agreement
R Declarant Letter
S [Reserved]
T Form of ROFO PSA
U Sample Amortization Schedule
V Location of Generator
W Location of Entrance Monument Sign
X Schedule for Completion of Proffers/Development Conditions
Y Sign Specifications for Woodland Park
Z Conditions Landlord Must Satisfy for Issuance of Tenant's Title Policy
<PAGE>
DEED OF LEASE
(Waterview I)
THIS DEED OF LEASE (the "Lease") is made as of the 19th day of
July, 2001 ("Effective Date", which shall be the date (i) that this Lease is
fully executed by both Landlord and Tenant and (ii) that the Condition Precedent
is satisfied pursuant to Section 37 below), between TST WATERVIEW I, L.L.C.
("Landlord"), a Delaware limited liability company, having an office c/o Tishman
Speyer Properties, L.P., 8270 Greensboro Drive, Suite 810, McLean, Virginia
22102, and VERISIGN, INC. ("Tenant"), a Delaware corporation, having an office
at 21355 Ridgetop Circle, Dulles, Virginia 20166.
Landlord and Tenant hereby covenant and agree as follows:
ARTICLE 1
BASIC LEASE PROVISIONS
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PREMISES The entirety of the Building, Parking Garage
and Land.
BUILDING The new thirteen (13) story Class A office
building known as Waterview I, located at the
intersection of the Dulles Toll Road and
Centreville Road, within Woodland Park,
Herndon, Fairfax County, Virginia 20171, along
with related fixtures, equipment and other
improvements and appurtenances, erected (or to
be erected) upon the Land.
LAND The land (consisting of approximately 11.53
acres) on which the Building and Parking Garage
and certain additional exterior areas in the
vicinity thereof (e.g., the plaza and seating
areas) are situated, as more particularly shown
on Exhibit A. Landlord represents
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that the Land (also known as Fairfax County Tax
Map Parcel 16-3((1)) 29C1) is lawfully divided
from a larger parcel, such larger parcel
consisting of approximately 23 acres, known as
Waterview at Woodland Park as shown on the
attached Exhibit M ("Waterview"). The balance
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of Waterview (the "Adjacent Property") consists
of approximately 11.92 acres and is known as
Fairfax County Tax Map Parcel 16-3((1)) 29D and
is legally divided from the Land. Landlord
will, prior to its development, legally divide
the Adjacent Property into two (2) separate
parcels upon which the Waterview II office
<PAGE>
building and related parking garage (or rights
to the parking garage to be constructed on the
Adjacent Property sufficient to satisfy
applicable Requirements and the Waterview II
Lease) ("Waterview II") and the Waterview III
office building and related parking garage (or
rights to the parking garage to be constructed
on the Adjacent Property sufficient to satisfy
applicable Requirements and the Waterview III
Lease) ("Waterview III") (each, an "Option
Property" comprised of "Option Land" and an
"Option Building") will be situated, also as
depicted on Exhibit M.
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COMMENCEMENT DATE The date set forth in Section 2.3 below.
RENT COMMENCEMENT DATE(S) The date(s) set forth in Section 2.3 below.
EXPIRATION The last day of the one hundred thirty-second
(132/nd/) full calendar month after the Rent
Commencement Date with respect to the last
Floor delivered to Tenant (the "Last Rent
Commencement Date"), subject to Sections 21 and
31 (concerning Extension Periods and a
Surrender Term).
TERM The period specified in Section 2.3 below.
PERMITTED USES Office and accessory purposes, and such other
uses incidental or ancillary to general office
use consistent with the operation of Comparable
Buildings (which may include some
telecommunications and call center functions,
data center functions and in-house food service
functions, as well as an exercise facility, a
childcare facility, and a conference and/or
training facility). Landlord represents that
the Land is currently zoned PDC under the
Fairfax County Zoning Ordinance. Tenant shall
be responsible for obtaining and maintaining
required permits, if any, for childcare,
exercise, conference, training and food service
operations. conference, training and food
service operations.
TENANT'S PROPORTIONATE A fraction, the numerator of which is the
SHARE Agreed Area of the Premises, and the
denominator of which is the Agreed Area of the
Building. Tenant's Proportionate Share as of
the date of execution of this Lease is one
hundred percent (100%), based on both the
Building and the
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<PAGE>
Premises having a total rentable area of
404,665 square feet. References in this Lease
to Tenant being the "100% tenant" or "leasing
100%" or "sole tenant" or "100% of the Agreed
Area of the Building" words of similar
construction or import shall be deemed to mean
that Tenant is leasing (as opposed to
occupying) 100% of the rentable area of the
Building that is devoted to office use.
AGREED AREA OF THE BUILDING Four Hundred Four Thousand Six Hundred Sixty
Five (404,665) rentable square feet, as
measured in accordance with the BOMA Standard
(assuming the dimensions of the Building are
consistent with the Plans and Specifications).
The "Agreed Area of the Premises" also is Four
Hundred Four Thousand, Six Hundred Sixty-Five
(404,665) rentable square feet, as measured in
accordance with the BOMA Standard (assuming the
dimensions of the Building are consistent with
the Plans and Specifications). The "Agreed Area
of each Floor", as measured in accordance with
the BOMA Standard, is set forth on Exhibit N.
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FIXED RENT (i) For the period commencing on the first Rent
Commencement Date and ending on the last day of
the first Lease Year, both dates inclusive,
twenty-one and 00/100 Dollars ($21.00) per
annum per rentable square foot of (A) prior to
delivery of all Floors pursuant to Section 2.3
hereof, the Agreed Area of the Floor(s)
delivered to Tenant pursuant to Section 2.3
hereof and for which the applicable Rent
Commencement Date has occurred, and (B)
following the delivery of all Floors pursuant
to Section 2.3 hereof, the entire Agreed Area
of the Premises; and (ii) Commencing on the
first day of the second Lease Year, and on the
first day of each Lease Year thereafter through
the Initial Term and any Surrender Term (with
Fixed Rent for any Extension Period being
determined in accordance with Section 31.1
hereof) the Fixed Rent (monthly, annual and per
rentable square foot) shall be increased as set
forth in Exhibit D.
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ADDITIONAL RENT All amounts payable by Tenant to Landlord
under this Lease other than Fixed Rent.
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<PAGE>
RENT Fixed Rent and Additional Rent, collectively.
INTEREST RATE The lesser of (i) four percent (4%) per annum
above the then-current Base Rate, or (ii) the
maximum rate permitted by applicable law.
SECURITY DEPOSIT Initially, fourteen million ($14,000,000.00),
subject to reduction under certain
circumstances as specified in Section 35.
BROKER FOR TENANT Jones Lang LaSalle Americas, Inc.
LANDLORD'S AGENT Tishman Speyer Properties, L.P., or any other
person designated at any time and from
time to time by Landlord as Landlord's Agent.
LANDLORD'S CONTRIBUTION The product of (a) forty dollars ($40.00) and
(b) the Agreed Area of the Premises. In
addition, at Tenant's request, Landlord will
advance additional sums to Tenant, (i.e., the
Supplemental Allowance) to be amortized and
added into Fixed Rent, as and to the extent
provided in Section 2.2 and Exhibit C.
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All capitalized terms used in the Lease without definition are defined in
Exhibit B.
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ARTICLE 2
PREMISES, TERM, RENT
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Section 2.1 Lease of Premises. Subject to the terms of this Lease,
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Landlord leases to Tenant and Tenant leases from Landlord the Premises for the
Term. Landlord and Tenant shall complete the Building and the Premises for
Tenant's occupancy in accordance with their respective obligations under the
provisions of this Lease and the Design and Construction Agreement attached as
Exhibit C.
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Section 2.2 Payment of Rent.
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(a) Tenant shall pay to Landlord, without notice or demand,
and without any set-off, counterclaim, abatement or deduction whatsoever, except
as otherwise expressly set forth in this Lease, in lawful money of the United
States by wire transfer of funds to Landlord's account, as designated by
Landlord, or by check drawn upon a bank reasonably approved by Landlord, (i)
Fixed Rent in equal monthly installments, in advance, on the first (1/st/) day
of each calendar month during the Term, commencing on the initial Rent
Commencement Date, and (ii) Additional Rent, at the times and in the manner set
forth in this Lease.
(b) Provided no uncured Material Default shall then exist
under this Lease, Tenant shall have the right to require Landlord to advance to
Tenant up to a maximum aggregate amount of $10.00 multiplied by the Agreed Area
of the Premises (the "Supplemental Allowance"). Such sum shall be elected and
used by Tenant in its
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<PAGE>
sole discretion in accordance with Paragraph C.2 of the Design and Construction
Agreement attached as Exhibit C. The amount of the Supplemental Allowance Tenant
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elects to draw shall be treated as an assumed loan, which shall be fully
amortized over the Initial Term in one hundred thirty-two (132) equal monthly
payments. Tenant shall pay to Landlord, as an addition to Fixed Rent (including
without limitation for purposes of determining damages, if any under Section
19.2) but not escalated with Fixed Rent, beginning with the first full month of
the first Lease Year (if such amount can be calculated by such date) the monthly
amortized amount of the Supplemental Allowance together with interest on the
outstanding balance of the Supplemental Allowance at a fixed annual rate equal
to twelve percent (12%) per annum. If the first full calendar month of the first
Lease Year has already occurred, or any other months have already occurred, as
of the date such amount is calculated, Tenant shall pay all monthly amortization
payments which correspond to months that have already elapsed at the time of its
first monthly payment. In the event this Lease shall terminate for any reason
prior to the natural expiration of the Term, the entire then unamortized portion
of the Supplemental Allowance shall be due and payable to Landlord as a part of
Rent. Attached as Exhibit U is a sample, non-binding schedule of payments that
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would be required assuming Tenant draws the maximum aggregate amount of the
Supplemental Allowance in one lump sum on the date specified in Exhibit U. The
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parties agree that this Lease will be amended within thirty (30) days after the
date on which the Supplemental Allowance is fully drawn but only to reflect the
actual schedule of repayments by amending said Exhibit U. In the event Tenant
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exercises Extension Options that contemplate a continuation of the existing
terms and conditions, such amortization will be eliminated from Rent payments
(but the failure to repay the Supplemental Allowance in full as of the end of
the Initial Term will be a default hereunder, subject to applicable notice and
cure rights). Tenant may, from time to time throughout the Initial Lease Term,
prepay in full and without penalty, the unamortized principal balance of amounts
amortized into Fixed Rent as aforesaid, provided (i) Tenant shall give Landlord
thirty (30) days prior notice of such prepayment, (ii) Tenant shall include with
any such prepayment the amount of accrued but unpaid interest, and (iii) the
parties will promptly enter into an amendment to this Lease adjusting the Fixed
Rent as may be necessary to reflect the effect of any such prepayment. Upon
receipt of the entire unamortized amount of the Supplemental Allowance, Landlord
shall confirm the payoff of the Supplemental Allowance in writing to Tenant.
Section 2.3 Delivery of Premises; Rent Commencement Date. Landlord
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shall deliver to Tenant the Building in accordance with the terms of this Lease
and the Design and Construction Agreement.
(a) (1) The "Commencement Date" shall be the date that
Landlord delivers possession of the entire Premises to Tenant with the Standard
Base Building Work Substantially Completed and with all Floors in Floor Ready
Condition, which Landlord shall cause to occur not later than March 1, 2002 (the
"Outside Date"). If Landlord fails to so deliver the Premises by the Outside
Date, then, provided no uncured Material Default shall then exist and Tenant has
previously given notice to Landlord that Tenant is ready to commence the Initial
Installations together with the Plans and Specifications therefor (subject to
Landlord Delay)), then, in addition to the
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<PAGE>
Rent Commencement Date postponement pursuant to Section 2.4, Tenant shall
receive an abatement of Rent for each day from and after the Outside Date until
the Premises is so delivered. In addition, if such delivery does not occur prior
to September 1, 2002 (the "Super Outside Date") and no uncured Material Default
shall then exist and Tenant has given the notice described in the immediately
preceding sentence, then Tenant shall have the right to terminate this Lease by
delivering written notice of the exercise of such right to Landlord within five
(5) Business Days after the Super Outside Date. If such termination right is not
timely exercised by Tenant, such right shall thereafter lapse and be of no
further force or effect. If this Lease is terminated pursuant to this Section,
then neither party shall have any further obligations or liability hereunder to
the other party; provided, however, that within ten (10) Business Days after
receipt of such notice of termination from Tenant, Landlord shall (A) refund any
and all security deposits, advance rent and other sums previously deposited by
Tenant in accordance with the provisions of this Lease and (B) pay to Tenant all
actual out-of-pocket costs reasonably incurred by Tenant in connection with the
negotiation of this Lease (and related documents) and Tenant's planned move to
the Premises. Notwithstanding the foregoing, neither the Outside Date nor the
Super Outside Date shall be extended on account of Unavoidable Delay or Landlord
Delay, but each such date shall be extended on a day-for-day basis for each day
Substantial Completion and delivery is delayed solely as a result of any Tenant
Delay.
(2) In addition to the Standard Base Building
Work, Landlord shall complete the remainder of the Base Building Work as and
when required under this Lease and the Design and Construction Agreement.
(b) The "Rent Commencement Date(s)" shall be
determined on a Floor-by Floor basis as follows: (i) with respect to Floors 8
through 13 ("Phase One"), comprising approximately 191,162 rentable square feet,
the "Rent Commencement Date" for each Floor shall be the earlier of (a) December
1, 2002 (as extended, on a day-for-day basis, by each day of Landlord Delay) or
(b) the date Tenant commences business operations on such Floor; and (ii) with
respect to Floors 1 through 7 ("Phase Two"), comprising approximately 213,503
rentable square feet, the "Rent Commencement Date" for each Floor shall be the
earlier of (a) August 1, 2003 (as extended, on a day-for-day basis, by each day
of Landlord Delay), or (b) the date Tenant commences business operations on such
Floor. Tenant shall have no obligation to pay Rent (or any utilities or other
services or charges to the extent provided in the Design and Construction
Agreement) as to any Floor prior to the Rent Commencement Date for that Floor.
If a Rent Commencement Date shall occur on a date other than the first (1st) day
of any calendar month, Tenant shall pay to Landlord on the Rent Commencement
Date, with respect to the Floor or Floors delivered on such Rent Commencement
Date, a sum equal to Fixed Rent for such month for such Floor or Floors
multiplied by a fraction, the numerator of which shall be the number of calendar
days in the period from such Rent Commencement Date to the last day of the month
in which the Rent Commencement Date occurred, both dates inclusive, and the
denominator of which shall be the number of calendar days in such month. Any
Additional Rent payable with respect to such partial month shall be payable by
Tenant within thirty (30) days following receipt of an invoice from Landlord.
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<PAGE>
(c) The "Term" of this Lease shall commence on the
Commencement Date and shall expire on the Expiration Date. For purposes of this
Lease: (1) the "Term" or "Lease Term" shall mean the Initial Term and, if
applicable, any exercised Extension Periods or Surrender Term; (2) the initial
fixed term of this Lease (exclusive of any exercised Extension Periods or
Surrender Term) is sometimes referred to herein as the "Initial Term"; and (3)
the Extension Periods (exclusive of the Initial Term) are sometimes each
referred to herein as an "Extension Period" and collectively as the "Extension
Periods".
(d) Provided no uncured Material Default shall then
exist under this Lease, and Tenant has exercised its right to lease space in
Waterview II or Waterview III pursuant to that certain Option Agreement of even
date herewith between Landlord and Tenant (the "Option Agreement"), Tenant shall
have the option, not later than the date Tenant executes the lease document for
such additional space, to extend the then-current Term of this Lease to be
coterminous with the expiration of the last delivered phase in such Option
Building. In such event, the Fixed Rent for any such extension beyond the
initial Expiration Date will be at FMR. The determination of FMR will occur
eighteen (18) months prior to the Expiration Date (i.e., as if Tenant had
exercised its Extension Option hereunder), in accordance with the provisions of
Section 31 hereof. Tenant's election to exercise the Extension Option shall be
irrevocable once exercised by Tenant.
Section 2.4 Landlord's Delay. If the Floors are not delivered in Floor
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Ready Condition or the Premises is not Substantially Completed by the dates
prescribed for in this Lease and the Design and Construction Agreement, then, in
either event, to the extent such delay is not caused by a Tenant Delay, the Rent
Commencement Date and Tenant's obligation to pay Rent shall be delayed until the
Floor Ready Condition and Substantial Completion occurs on a day-for-day basis,
by each day of such delay.
Section 2.5 Interest. If Tenant shall fail to pay any installment or
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other payment of Rent when due, or if Landlord shall fail to make any payment of
a monetary obligation hereunder to Tenant when due, at the non-defaulting
party's option interest shall accrue on such installment or payment as a late
charge, from the date such installment or payment became due until the date paid
at the Interest Rate.
ARTICLE 3
USE AND OCCUPANCY
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Section 3.1 (a) Permitted Uses. The Premises shall be used and occupied
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for the Permitted Uses and for no other purpose. Tenant shall not use or occupy
or permit the use or occupancy of any part of the Premises in a manner
constituting a Prohibited Use.
(b) Licenses and Permits. Tenant, at its expense, shall
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procure or cause to be procured and maintain or cause to be maintained and
comply or cause to be complied with the terms and conditions of all licenses and
permits required for the
-7-
<PAGE>
lawful conduct of its Permitted Uses in the Premises. The foregoing
notwithstanding, Landlord shall be responsible for procuring any and all
licenses or permits needed in connection with completion of the Base Building
Work and, as part of Substantial Completion of the Base Building Work, the
issuance of a final non-residential use permit (core and shell only) for the
Base Building and all other components of the Premises (other than the Initial
Installations).
(c) Use of Roof. Notwithstanding anything to the contrary
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in this Section 3.1, Tenant shall have the right, at no additional cost, to
access and use the roof of the Building for the installation, use, maintenance,
repair and replacement of various communication, HVAC and/or other equipment
(collectively, "Communications Equipment") subject only to the Association
Declaration and the following:
(i) in the event such installation requires Tenant
to make any penetration in the roof or perform any other roofing work, such
penetrations shall be made only in the manner designated in writing by Landlord,
acting reasonably;
(ii) any installation work (including any roof
penetrations or other roofing work) shall be performed by Tenant at Tenant's
sole cost and expense and by a roofing contractor reasonably approved by
Landlord and shall be accomplished in a manner which will not invalidate or
impair any roof warranties;
(iii) Tenant shall promptly pay all taxes and license
fees imposed by any federal, state or local governmental agency or authority in
connection with the installation, operation and maintenance of any
Communications Equipment;
(iv) Tenant shall secure any necessary permits,
and the installation and use of Communications Equipment shall comply with all
Requirements (including any zoning restrictions) and Tenant shall be solely
liable for the cost of such compliance;
(v) At the end of the Term, Tenant shall remove
such Communications Equipment and repair the Premises, including repair the
roof, in accordance with Section 5.3;
(vi) Tenant shall install screening as may be
required by the Association Declaration to reasonably obscure the location of
Communications Equipment;
(vii) Any proposed installation of Communications
Equipment shall be completed in accordance with Article 5 hereof; and
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(viii) Tenant shall not assign or sublet or grant any
use rights to the roof of the Building other than incidental to a permitted
assignment or subletting pursuant to Article 15 hereof.
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Tenant's rights hereunder shall be exclusive (as to size and location) if Tenant
is the sole office tenant in the Building. If Tenant is not the sole office
tenant, then Tenant's
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<PAGE>
right shall be non-exclusive but (i) with respect to size, shall be pro rata
based on applicable proportionate shares of the tenants involved, and (ii) with
respect to location, shall be "grand-fathered" (i.e., Tenant shall not be
obligated to relocate any such equipment once installed) unless Tenant is
leasing less than 50% of the Agreed Area of the Building. Except to the extent
set forth in this Lease or the Design and Construction Agreement, Landlord makes
no warranty with respect to the weight-bearing capacity of the roof, and the
cost of any additional structural support which might be required for the
Communications Equipment shall be Tenant's sole responsibility.
(d) Cabling. Tenant shall have the right to install
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below-grade fiber optic and other cabling on the Land, and Landlord shall grant
(and cause its Affiliates to grant) Tenant (in recordable form) such rights to
such other portions of Waterview (and Landlord shall use reasonable efforts to
cause its Affiliates to grant Tenant (in recordable form) such rights to other
portions of Woodland Park), as are reasonably required to provide for
interconnectivity among all buildings leased by Tenant or its Affiliates at
Woodland Park, subject to Landlord's reasonable approval of the location and
method of installation thereof. At Tenant's sole cost and expense, Landlord
agrees to grant, or cause its Affiliates to grant (in recordable form), such
easements as may be necessary in conjunction therewith, which easements shall be
in form and substance reasonably acceptable to Landlord and Tenant.
(e) Supplemental Generators. If Tenant leases 50% or more
-----------------------
of the Agreed Area of the Building, Tenant shall have the right, as part of the
Initial Installations or otherwise, to install at its sole cost and expense not
more than three (3) supplemental/emergency generators and supporting equipment
in the Parking Garage or on the Land, subject to Landlord's reasonable approval
of the location and method of installation thereof, and otherwise in accordance
with the applicable requirements of Article 5 and criteria substantially
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similar to those set forth in Section 3.1(c)(iii) and (iv), above. Such
generator shall constitute a Specialty Alteration. Landlord shall provide the
area designated on Exhibit V in its "as-is, where-is" condition for the
---------
installation of the generator(s) which shall be completed in a manner mutually
and reasonably agreed upon by Landlord and Tenant. Tenant shall, at its sole
expense, obtain any and all necessary licenses, approvals, permits, etc.,
necessary for the generator pad(s) and enclosures for the generator(s).
(f) Any work described in Section 3.1 may be paid for or
reimbursed out of the Construction Allowance or Supplemental Allowance or
Lock-Out Allowance (as defined below).
Section 3.2 [Intentionally Deleted.]
----------------------
Section 3.3 Parking.
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(a) Subject to and in accordance with the terms of the Base
Building Construction Documents, Landlord shall construct (i) a multi-level
parking structure (the "Parking Garage") which shall provide a minimum of 1,574
spaces and (ii) an additional 37 spaces on the Land adjacent to the Building
(such 1,611 spaces, in
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<PAGE>
total, subject only to a de minimis change in the number of spaces required by
the Requirements, "Tenant's Parking Allocation") for the use of Tenant's agents,
employees and visitors at no extra charge throughout the Term. The entire
Parking Garage and the surface parking on the Land shall be for Tenant's
exclusive use for so long as Tenant is leasing the entire Agreed Area of the
Building. If Tenant is not leasing 100% of the Agreed Area of the Building,
space in the Parking Garage and the surface parking on the Land shall be shared
on a pro rata basis (based upon rentable square footage in the Building) with
other tenants of the Building. Tenant shall at all times have the exclusive
right to designate up to its entire Parking Allocation as reserved parking for
Tenant and to secure same by gating and the use of security key cards or other
means, and may utilize stacked or valet parking in the Parking Garage; provided,
however, that all parking spaces designated by Tenant for use on an exclusive
basis and secured through gating shall be designated from the uppermost levels
of the Parking Garage down in order to facilitate access to and from non-gated
areas of the Parking Garage by other tenants not being leased by Tenant therein.
Throughout the Term, as may be extended, the Parking Garage shall be managed (at
no additional charge) by the party managing the Building, or by such other party
as Landlord and Tenant, so long as Tenant is leasing not less than 75% of the
Agreed Area in the Building, may reasonably agree upon.
(b) If Tenant exercises its Primary Purchase Option under
this Lease, then Landlord shall convey unencumbered fee simple title to the
Parking Garage to Tenant, a Tenant Affiliate or to any designee of Tenant
identified in accordance with Section 32.1(e). In addition (i) during any period
in which Landlord or a Landlord Affiliate owns title to the Building, Landlord
or such Landlord Affiliate will continue to hold title to the Parking Garage
(and related land) and (ii) Landlord will not sell the Building or the Parking
Garage to a party other than Tenant prior to the expiration of Tenant's Primary
Purchase Option.
ARTICLE 4
CONDITION OF THE PREMISES
-------------------------
Section 4.1 Condition.
---------
(a) Landlord shall complete, as and when required under this
Lease and the Design and Construction Agreement, the Base Building Work (which
includes, without limitation, the Punch List Items, Latent Defects, the Required
Improvements, and any other item expressly designated in this Lease and the
Design and Construction Agreement as a Landlord construction obligation). While
Landlord is doing any work at the Premises, Landlord shall do so in compliance
with all Requirements, the terms of this Lease and the Design and Construction
Agreement, and, if Tenant is in occupancy of any portion of the Building, in
accordance with the construction rules attached as Exhibit K. Any work to be
---------
performed by or on behalf of Tenant in connection with Tenant's initial
occupancy of the Premises shall be referred to herein as the "Initial
Installations" and shall be completed in accordance with the terms of the Design
and Construction Agreement. Tenant shall be responsible for
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<PAGE>
completing the Initial Installations. Except for the completion of the Base
Building Work and provision of Landlord's Contribution and Supplemental
Allowance, Landlord shall have no obligation to perform any work, supply any
materials, incur any expense (except as expressly set forth in this Lease or the
Design and Construction Agreement) or make any Alterations to the Premises to
prepare it for Tenant's initial occupancy. Except with respect to completion of
any then unfinished item of Base Building Work (including, without limitation,
the Punch List Items, the repair of Latent Defects, and subject to warranty
items pursuant to Section 4.1(c) of this Lease), Tenant's occupancy of any part
of the Premises shall be conclusive evidence, as against Tenant, that Tenant has
accepted possession of that portion of the Premises in its then-current
condition and that such portion is in a good and satisfactory condition.
(b) During the period from the Commencement Date to the
Rent Commencement Date for a particular Floor: (i) Tenant will not be charged
for any reasonable and customary amounts (based upon normal usage for buildout
purposes) for parking, hoisting (excluding external hoisting), electrical
services, services of a reasonably available building manager to oversee and
operate Building Systems pursuant to Section 11.1 of this Lease, heating and
cooling, water, use of elevators, security and any other utilities or services
related to construction activity; and (ii) Landlord will provide reasonably
sufficient construction parking for Tenant's construction and related personnel
(without charge), the location and number of which will be reasonably
coordinated with Landlord. Landlord agrees to allow Tenant access to the
Premises prior to Substantial Completion or the delivery of the Floors in Floor
Ready Condition, without any obligation to pay Rent or other charges, as is
reasonably practicable to allow Tenant to commence construction of the Initial
Installations (which shall include, without limitation, the installation of
phone and data cabling, supplemental security systems, and audio/visual systems
in the Premises to the extent not included within the Base Building Work).
Tenant also shall have the right on an ongoing basis throughout the process of
constructing the Building, during normal working hours, to have access to the
Premises for purposes of observation and inspection during the performance of
the Base Building Work. To the extent any entry of Tenant within the Premises
prior to Substantial Completion interferes (other than in a de minimis manner)
with the orderly progress of construction of Base Building Work, Tenant shall
cause such interference to cease immediately; and any delays in the Substantial
Completion of the Base Building Work caused by such interference shall
constitute a Tenant Delay. Access for the aforesaid purposes shall not be deemed
to constitute possession or occupancy.
(c) Landlord shall warrant each portion of the Base
Building Work for a period of one (1) year after Substantial Completion thereof.
Landlord agrees to promptly commence and diligently pursue the correction of all
Punch List Items as soon as reasonably possible, and, subject to Unavoidable
Delays, to complete the correction of all Punch List Items within forty-five
(45) days after the Punch List is finalized. The provisions of Section 19.2 of
this Lease shall apply to any default by Landlord with respect to this
obligation (subject to the notice and cure periods set forth in Section 19 of
this Lease). For a period of one (1) year after Substantial Completion of the
Base Building Work, Landlord further agrees to repair or replace (or to cause
the
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<PAGE>
repair or replacement of) any Latent Defects in the Base Building Work or in the
Building Systems or Base Building (i.e., structure) as soon as reasonably
practicable after Tenant provides notice thereof to Landlord. Unless otherwise
required of Landlord pursuant to the provisions of this Lease, Landlord shall
have no obligation to repair defects in any such work which are detected more
than one (1) year after the date of Substantial Completion. The foregoing shall
not affect, however, any of the general repair covenants set forth in this
Lease, nor shall it apply to limit the warranty period provided for by the
manufacturer or supplier with respect to any equipment incorporated into the
Building or Premises, nor the warranty period otherwise provided for under the
terms of the Base Building construction contract if such warranty period exceeds
one (1) year. Within ninety (90) days after Substantial Completion of the Base
Building Work, Landlord will provide to Tenant a full set of construction
drawings for the Base Building Work, as marked by the applicable contractor(s)
to reflect actual as-built improvements incorporated therein to the extent the
same differ from those reflected in the original construction documents.
Landlord agrees to cooperate with Tenant and to provide Tenant with construction
drawings for the Base Building Work, as marked by applicable contractor(s) to
reflect actual as-built improvements, as the same are required by Tenant for
Tenant's design work. In all events, not later than February 1, 2002, Landlord
will provide to Tenant a full set of construction drawings for the Base Building
Work, as marked by the applicable contractor(s) to reflect actual as-built
improvements incorporated therein to the extent the same differ from those
reflected in the original construction documents.
Section 4.2 Landlord's Contribution.
-----------------------
(a) Landlord agrees to pay to Tenant Landlord's
Contribution toward the cost of the Initial Installations, provided that as of
the date on which Landlord is required to make payment thereof (i) this Lease is
in full force and effect, and (ii) no uncured Material Default shall then exist
(except such as can be cured or satisfied by Landlord by offset against
obligations owed to Tenant).
(b) In accordance with the terms and conditions of Section
2.2 of this Lease and the Design and Construction Agreement, Landlord agrees to
provide Tenant with the Supplemental Allowance to be used as specified in
accordance with Section C.2 of the Design and Construction Agreement.
(c) Landlord's Contribution and the Supplemental Allowance
shall be payable by Landlord in accordance with Section C.2 of the Design and
Construction Agreement.
Section 4.3 No Landlord's Supervision Fee. Except as expressly provided
-----------------------------
for elsewhere in this Lease or the Design and Construction Agreement, Tenant
shall not be required to pay any construction supervision or other fee to
Landlord for any work or change orders in connection with the Initial
Installations or the Base Building Work.
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<PAGE>
ARTICLE 5
ALTERATIONS
-----------
Section 5.1 Tenant's Alterations.
--------------------
(a) Tenant shall be entitled to make alterations, additions
or other physical changes in or about the Premises (collectively,
"Alterations"), without Landlord's prior consent (but where consent is required,
the scope of same shall be defined in the next succeeding sentence), provided
that such proposed Alterations: (i) are decorative (such as painting, wall
covering and carpeting) ("Decorative Alterations"), (ii) affect only the
Building, (iii) do not adversely affect the non-residential use permit issued
for the Building, and (iv) do not change or alter any surface parking, except to
a de minimis extent. Landlord's prior consent shall be required for any
Alterations not meeting the foregoing criteria, which consent shall be within
Landlord's sole discretion for Alterations that are structural or affect the
Building's facade, and which consent shall not be unreasonably withheld,
conditioned or delayed for any other such Alterations (including those that
affect the Building Systems, the Parking Garage and landscaping). If Landlord
fails to respond to any request to approve any plans or contractors within
eleven (11) Business Days, then the request shall be deemed approved. The
Initial Installations and each subsequent Alteration, whether temporary or
permanent in character, made by Landlord or Tenant in or upon the Premises shall
become Landlord's Property (excluding FF&E (which FF&E shall include trade
fixtures and systems furniture, but shall exclude true real estate fixtures),
any generator, any uninterrupted power source, and any free-standing computer
HVAC equipment, and any other item so designated by Landlord at the time of
Landlord's approval), and shall remain upon the Premises at the expiration or
termination of this Lease without compensation to Tenant, subject to Section
5.3.
(b) Plans and Specifications. Where Landlord's approval is
------------------------
required, prior to making any Alterations affecting structure, Building Systems,
exterior elements or which require the issuance of a building permit ("Major
Alterations"), Tenant, at its expense, shall (i) submit to Landlord for its
written approval, reasonably detailed plans and specifications (including, where
relevant and appropriate, layout, architectural, mechanical, electrical,
plumbing, sprinkler and structural drawings) of each proposed Alteration, and
with respect to any Alteration affecting any Building System, Tenant shall
submit proof that the Alteration has been designed by, or, provided such party
is readily available to perform such review, reviewed and approved by,
Landlord's designated engineer for the affected Building System (the reasonable
cost of such review and approval to be at Tenant's expense), (ii) obtain all
permits, approvals and certificates required by any Governmental Authorities,
and (iii) furnish to Landlord duplicate original certificates of worker's
compensation (covering all persons to be employed by Tenant, and Tenant's
contractors and subcontractors in connection with such Alteration) and
comprehensive public liability (including property damage coverage) insurance
and Builder's Risk coverage (issued on a completed value basis), as required by
Article 12 hereof. Upon Tenant's request, Landlord shall reasonably cooperate
----------
with Tenant in obtaining any permits, approvals or certificates required to be
obtained by Tenant in connection with any permitted Alteration (if the
provisions of the
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<PAGE>
applicable Requirement require that Landlord join in such application), provided
Landlord shall incur no cost or expense in connection therewith.
(c) Governmental Approvals. Upon completion of any
----------------------
Alterations requiring permits, Tenant, at its expense, shall promptly obtain
certificates of final approval of such Alterations required by any Governmental
Authority and shall furnish Landlord with copies thereof, together with
"as-built" plans and specifications for such Alterations.
Section 5.2 Manner and Quality of Alterations. All Alterations shall be
---------------------------------
performed (a) in a good and workmanlike manner, (b) substantially in accordance
with the plans and specifications (if any) and by contractors reasonably
approved by Landlord, (c) excepting Decorative Alterations, under the
supervision of a licensed architect reasonably satisfactory to Landlord, and (d)
in compliance with all Requirements, the terms of this Lease, the construction
rules attached as Exhibit C, Schedule C-5 ("Construction Procedures") and the
-----------------------
Rules and Regulations. All materials and equipment to be used in the Premises
shall be of new or like new quality.
Section 5.3 Removal of Tenant's Property. Tenant's Property shall be
----------------------------
and remain the property of Tenant and Tenant may remove the same at any time on
or before the Expiration Date. On or prior to the Expiration Date, Tenant shall,
as may be directed by Landlord pursuant to this Section 5.3, at Tenant's
expense, remove Specialty Alterations. Tenant shall repair and restore, in a
good and workmanlike manner, any damage to the Premises caused by Tenant's
removal of any Specialty Alterations or Tenant's Property or by the closing of
any slab penetrations, and upon default thereof after ten (10) days' prior
written notice, Tenant shall reimburse Landlord, on demand, for Landlord's
reasonable cost of repairing and restoring such damage. Any Specialty
Alterations required to be removed pursuant to this Section 5.3 or Tenant's
Property not so removed shall be deemed abandoned and Landlord may remove and
dispose of same, and repair and restore any damage caused thereby, at Tenant's
reasonable cost and without accountability to Tenant unless the same are removed
within five (5) Business Days after a written notice from Landlord to Tenant
notifying Tenant that Tenant has failed to remove such items of personal
property from the Premises and that the same will be deemed abandoned if not
removed within five (5) Business Days thereafter. This Section 5.3 shall survive
the expiration or earlier termination of this Lease. At least sixty (60) days
prior to the expiration of the Term, Tenant shall deliver to Landlord a written
notice setting forth which Specialty Alterations it intends to remove and
Landlord shall, within thirty (30) days of receipt of such notice, identify any
additional Specialty Alterations which must be removed and which must stay. No
Specialty Alteration shall be required to be removed by Tenant unless, at the
time of Tenant's request for Landlord's consent, Landlord designated such
proposed Alteration as a Specialty Alteration to be removed (with Landlord being
required to so designate any Specialty Alterations completed as part of the
Initial Installations at the time it approves the Plans and Specifications or
changes thereto).
Section 5.4 Mechanic's Liens. Tenant, at its expense, shall discharge
----------------
any lien or charge filed against the Premises in connection with any work
claimed or determined
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<PAGE>
in good faith by Landlord to have been done by or on behalf of, or materials
claimed or determined in good faith by Landlord to have been furnished to,
Tenant, within twenty (20) days after Tenant's receipt of notice thereof by
payment, filing the bond required by law, or otherwise in accordance with law.
Section 5.5 Tenant's Costs. Tenant shall pay to Landlord or its
--------------
designee, within thirty (30) days after demand, all reasonable out-of-pocket
costs actually incurred by Landlord in connection with Tenant Alterations,
including costs reasonably incurred in connection with (a) Landlord's review of
the Alterations (including review of requests for approval thereof) and (b) the
provision of Building personnel during the performance of any Alteration
required by trade union policy, to operate elevators or otherwise to facilitate
Tenant's Alterations. The foregoing shall not apply with respect to the Initial
Installations. Landlord shall not charge any oversight or other construction
supervision fee for any Alterations.
Section 5.6 Tenant's Equipment. Tenant shall provide notice to Landlord
------------------
prior to moving any heavy machinery, heavy equipment, heavy freight, bulky
matter or bulky fixtures (collectively, "Equipment") into or out of the
Building. The term "Equipment" shall not include normal and customary deliveries
made to the Building in connection with the conduct of Tenant's business in
accordance with the Permitted Uses. If such Equipment requires special handling,
Tenant agrees (a) to employ only persons holding all necessary licenses to
perform such work and (b) all work performed in connection therewith shall
comply with all applicable Requirements. The agreements set forth in this
Section 5.6 shall survive the expiration or earlier termination of this Lease.
Section 5.7 Legal Compliance. The approval of plans or specifications
----------------
for, or consent by Landlord to the making of, any Alterations does not
constitute Landlord's agreement or representation that such plans,
specifications or Alterations comply with any Requirements or the
non-residential use permit issued for the Building. Landlord shall have no
liability to Tenant or any other party in connection with Landlord's approval of
any plans and specifications for any Alterations, or Landlord's consent to
Tenant's performing any Alterations. If as the result of any Alterations made by
or on behalf of Tenant, Landlord is required to make any alterations or
improvements to any part of the Building in order to comply with any
Requirements, Tenant shall pay all actual costs and expenses incurred by
Landlord in connection with such alterations or improvements.
ARTICLE 6
FLOOR LOAD
----------
Tenant shall not place a load upon any Floor that exceeds the per
square foot "live load" limitations set forth in Exhibit L. In the event that
---------
Tenant intends to install Equipment weighing in excess of seventy-five percent
(75%) of the Building's "live load" limitations as so specified, Tenant shall
consult with Landlord regarding the proposed location of such Equipment.
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<PAGE>
ARTICLE 7
REPAIRS
-------
Section 7.1 Landlord's Repair and Maintenance.
---------------------------------
(a) Landlord shall operate, maintain and, except as provided
in Section 7.2 hereof, make all necessary repairs and replacements and perform
any maintenance to the Premises (excluding items of the Initial Installations
such as wall coverings, carpeting and the like, but including extensions of the
Building Systems such as additional sprinkler heads, VAV boxes, supplemental
HVAC units, plumbing systems and the like) in conformance with standards
applicable to first-class office buildings of comparable age and quality in the
Reston/Herndon submarket of Fairfax County, Virginia ("Comparable Buildings").
Without limiting the foregoing, Landlord's obligations hereunder shall include:
(i) the exterior of the Building and Parking Garage, together with all
landscaping and parking areas adjacent to said Building; (ii) all structural
repairs to the Building and Parking Garage, including all repairs to the
foundation, roof (except as provided for in Section 3.1(c) above), structure,
exterior walls, and common area doors and windows; (iii) electric wiring,
risers, plumbing, heating, air-conditioning and any other Building System
(including base building restrooms) serving the Premises; (iv) all Common Areas,
including the underground utility and sewer pipes of the Building (except to the
extent required to be maintained or repaired by a governmental authority); (v)
all Punch List Items, Latent Defects and Landlord's obligation for warranty
items pursuant to Section 4.1(c) of this Lease; and (vi) all other repairs,
maintenance and replacements deemed reasonably necessary for the prudent
management of the Premises or as requested by Tenant. All costs of repair and
maintenance to the Premises shall be included as Operating Expenses, unless
specifically excluded pursuant to Article 8.
---------
(b) During the Term, at either party's request, Landlord and
Tenant shall meet at least twice per year to discuss matters relating to the
operation and maintenance of the Premises including the condition and operation
of the Premises. In accordance with Section 8.1, Tenant shall have the right to
review and discuss with Landlord the budgets for capital expenditures,
warranties and maintenance programs for the Premises. For so long as Tenant
leases seventy-five (75%) of the Agreed Area of the Building, in the event that
Tenant in good faith objects to any operational and maintenance procedures
implemented or proposed by Landlord as not being in compliance with the terms of
this Lease, and Landlord disagrees with Tenant's determination, the parties
agree to submit such dispute to expedited arbitration in accordance with Section
34.2 of this Lease. Upon Tenant's reasonable request, Landlord shall provide
Tenant such evidence as Tenant may reasonably request to demonstrate Landlord's
compliance with such procedures as Landlord and Tenant may mutually approve.
(c) Landlord agrees to diligently attend to any repairs or
maintenance needs brought to its attention by written notice from Tenant as soon
as reasonably practicable (but in no event shall Landlord commence such repairs
or maintenance later than five (5) Business Days (or shorter period as may be
reasonably
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<PAGE>
required in an emergency) thereafter or cease to pursue the completion of such
repair with diligence) and in a commercially reasonable manner calculated to
minimize to the extent possible disruption of Tenant's business activities.
Section 7.2 Tenant's Repair and Maintenance. Tenant shall promptly, at its
-------------------------------
expense and in compliance with Article 5 of this Lease, make all repairs of
---------
Tenant's Property and the Initial Installations not the responsibility of
Landlord pursuant to Section 7.1. All Tenant repairs shall be of a quality at
least equal to the original work or construction utilizing new or like new
construction materials and shall be made in accordance with this Lease. Tenant
shall give Landlord prompt notice of any defective condition of which Tenant is
aware in any Building System.
Section 7.3 Failure to Repair or Maintain. If either party fails within
-----------------------------
the time periods required by this Lease (or such shorter period as may be
required in an emergency) to proceed with diligence to make any required repairs
or perform any maintenance, the other party may do so and (i) if Tenant has
failed to do so, all reasonable, out-of-pocket costs and expenses incurred by
Landlord on account thereof shall be charged to Tenant as Additional Rent and
(ii) if Landlord has failed to do so, upon a final, non-appealable judicial or
arbitration determination that Landlord has defaulted in such repair obligation,
all reasonable, out-of-pocket costs and expenses incurred by Tenant on account
thereof which are in excess of the amounts otherwise includable in Operating
Expenses (with consideration given to any extra costs incurred due to Tenant,
and not Landlord, not incurring same, with attendant economies of scale, in the
normal and ordinary course) shall be paid by Landlord, and, if not so paid, may
be offset against future obligations to pay Rent hereunder (as specified below).
Section 7.4 Interruptions Due to Repairs.
----------------------------
(a) Landlord reserves the right to make, at Landlord's cost
except as otherwise provided in this Lease, all changes, alterations, additions,
improvements, repairs or replacements to the Building, including the Building
Systems which provide services to Tenant, as Landlord deems reasonably
necessary, provided that in no event shall the level of any Building Service
decrease in any respect (other than de minimis) from the level required of
Landlord in this Lease as a result thereof (other than minor, infrequent,
temporary fluctuations in the level of such services during the performance of
any such work by Landlord, the timing of which fluctuations shall, where
commercially reasonable, be coordinated with Tenant). Landlord shall minimize
interference with Tenant's use and occupancy of the Premises during the making
of such repairs, alterations, additions, improvements, repairs or replacements
provided that Landlord shall have no obligation to employ contractors or labor
at overtime or other premium pay rates or to incur any other overtime costs or
additional expenses whatsoever except at Tenant's sole cost and expense upon
Tenant's request. Landlord shall provide Tenant with reasonable notice of the
scope and schedule of any such work and, in the event that the completion
thereof is reasonably likely to disrupt (other than in a de minimis manner) the
operation of Tenant's business at the Premises, Landlord shall perform such work
during non-business hours. Except as expressly provided in this Lease to the
contrary, there shall be no Rent abatement or allowance to
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<PAGE>
Tenant for a diminution of rental value, no actual or constructive eviction of
Tenant, in whole or in part, no relief from any of Tenant's other obligations
under this Lease, and no liability on the part of Landlord by reason of
inconvenience, annoyance or injury to business arising from Landlord, Tenant or
others making, or failing to make, any repairs, alterations, additions or
improvements in or to any portion of the Building or the Premises, or in or to
fixtures, appurtenances or equipment therein.
(b) Notwithstanding anything to the contrary contained in this
Lease, if Tenant is unable to use the Building (or any portion, other than de
minimis, thereof) for the ordinary conduct of Tenant's business due to (a) an
interruption of an Essential Service (as hereinafter defined) resulting from
Landlord's performance of an alteration, addition, impairment, repair or
replacement to the Premises, or due to Landlord's entry into the Premises, or
for any other reason within Landlord's or its agent's reasonable control, or (b)
Unavoidable Delays, other than casualty or condemnation (which are governed by
Article 13 and Article 14, respectively), and such condition continues for a
---------- ----------
period in excess of six (6) consecutive days after (i) Tenant furnishes a notice
to Landlord (the "Abatement Notice") stating that Tenant's inability to so use
the Premises (or portion thereof) is due to such condition, and (ii) Tenant does
not actually use or occupy the Premises (or portion thereof) during such period
for the ordinary conduct of its business, then Fixed Rent, Taxes and Operating
Expenses for such portion of the Building that is both untenantable and
unoccupied (determined based upon the ratio which the square footage of such
portion of the Building), determined using the BOMA Standard bears to the Agreed
Area of the Building shall be abated on a per diem basis for the period
commencing on the date the Essential Service is interrupted and ending on the
earlier of (x) the date Tenant reoccupies such portion of the Premises for the
ordinary conduct of its business, and (y) the date on which such condition is
remedied in all material respects. "Essential Service" shall mean any Building
Service.
ARTICLE 8
OPERATING EXPENSES AND TAXES
----------------------------
Section 8.1 Definitions. For the purposes of this Article 8, the following
----------- ----------- ---------
terms shall have the meanings set forth below:
(a) "Assessed Valuation" shall mean the amount the Premises
------------------
is assessed for the purpose of imposition of Taxes.
(b) "Operating Expenses" shall mean the aggregate of all
------------------
actual costs and expenses (and sales or use taxes or other similar taxes in the
nature of sales or use taxes, if any, thereon) paid by or on behalf of Landlord
(whether directly or through independent contractors) in connection with the
management, operation, safety, repair, and maintenance of the Premises:
including (i) casualty, liability and other insurance premiums for insurance
required or permitted under this Lease; (ii) the cost of electricity, gas, oil,
steam, water, air conditioning and other fuel and utilities (to the extent
Tenant does not pay for same directly); (iii) reasonable attorneys' fees and
disbursements (but only to the extent they are incurred in connection with an
expense which is includable in
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<PAGE>
Operating Expenses) and auditing, management, consulting and other professional
fees and expenses reasonably necessary for Landlord to render the required
services pursuant to this Lease; and (iv) any capital expenditures (as defined
under GAAP) incurred by Landlord to meet applicable Requirements (which are not
in effect on the date the Premises are Substantially Completed) but excluding
those due to Landlord's negligence or willful misconduct, or with the consent of
Tenant, which shall not be unreasonably withheld, conditioned or delayed (except
in the last eighteen (18) months of the Term), incurred by Landlord in good
faith for the purpose of reducing Operating Expenses, subject to the conditions
described below in this Section 8.1(b). Such capital expenditures shall be
amortized on a straight-line basis over the useful life of the improvement being
amortized (with interest accruing per annum on the unamortized portion thereof
at the Base Rate in effect at the time such improvements are Substantially
Completed). A capital improvement shall be included in Operating Expenses only
if it (1) actually results in savings in such year (as for example, expenditures
for a labor-saving improvement) in which case the amount included in Operating
Expenses shall not exceed the amount of actual savings from such improvement in
the same year and/or (2) is made in order to comply with Requirements.
(c) Operating Expenses Exclusions. Notwithstanding and without
-----------------------------
limitation of the foregoing, the following costs and expenses shall be excluded
from Operating Expenses:
(1) Costs incurred in connection with the construction of
the Base Building Work;
(2) Costs of correcting defects in the Base Building Work,
or the initial design, construction, reconstruction or renovation of the
Premises, or equipment therein, to the extent covered by warranties or
guaranties of contractors or subcontractors or any tenant improvements;
(3) Non-cash items such as depreciation, amortization,
reserves, bad debt losses and reserves therefor, or other non-cash expenses,
except for amortization of personal property used in the ordinary course of
operating and maintaining the Premises and the cost of which would be properly
included as an Operating Expense if expensed rather than amortized, except as
permitted in Section 8.1(b);
(4) Interest, points, fees and principal payments on
mortgages and other debt costs, if any, or amortization on any mortgage or
mortgages or any other debt instrument encumbering the Premises;
(5) Rental payments pursuant to any ground lease or master
space lease (except to the extent otherwise properly includable in Operating
Expenses provided that such payments shall not be counted more than once);
(6) Expenses directly resulting from the breach of this
Lease or any other lease or agreement by Landlord, or the negligence of
Landlord, its
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<PAGE>
agents, contractors or employees, or other acts or omissions of tenants other
than Tenant, and any fines or penalties incurred by Landlord other than as a
result of Tenant's negligence or willful misconduct;
(7) Costs for which Landlord is reimbursed by its insurance
carrier, any tenant's carrier, any tenant, any warrantor or any other third
party, and any condemnation proceeds;
(8) Costs associated with the operation of the business of
the Landlord, as distinguished from the costs of operation of the Premises,
including accounting and legal matters, costs of defending any lawsuits with any
prospective or actual purchaser, ground lessor or mortgagee, costs of selling,
syndicating, financing, mortgaging or hypothecating any of Landlord's interest
in the Premises, costs of any disputes between Landlord and its employees,
disputes of Landlord with Building management, and outside fees paid in
connection with disputes with other tenants;
(9) The wages of any employee of Landlord who does not
devote substantially all of his or her time to the Premises, except to the
extent such wages and benefits are reasonably, properly and equitably allocable
to time spent by such employee in directly servicing the Premises;
(10) Fees for services rendered by an affiliate of Landlord
to the extent such fees exceed the market rate payable for comparable services
if rendered by unrelated third parties of comparable quality, except as
pre-approved by Tenant and except that management fees shall be included in
Operating Expenses to the extent provided in Section 11.5;
(11) Any expenditures (whether repairs, improvements or
otherwise) that under GAAP should be treated as capital expenditures, except as
expressly permitted by Section 8.1(b);
(12) Fines, penalties, late payment charges and interest
arising from the negligent acts or inaction of Landlord or failure timely to
make tax and/or other payments except for such fines, penalties, late payment
charges and interest incurred after Tenant has failed to pay its Proportionate
Share of Taxes pursuant to Section 8.2, except that interest on assessments
described in clause (19) shall be included and deemed incurred as if Landlord
has elected to pay such assessments in the maximum number of permitted
installments;
(13) Costs of replacements or repairs for the restoration of
all or any portion of the Premises after the occurrence of a casualty;
(14) Legal fees, court costs and litigation related fees
(including costs or fees relative to the defense of Landlord's interest in the
Land, except for those incurred in connection with recovery under service
contracts, which shall be netted out from such recovery;
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(15) Costs of repairs or replacements caused by the exercise
of any right of condemnation or eminent domain by any public or quasi-public
authority;
(16) Taxes other than Taxes described in Section 8.2 and
other than sales and use taxes on items the cost of which is properly included
in Operating Expenses;
(17) Salaries and other compensation paid to executive
employees above the grade of regional manager (including profit sharing, bonuses
and other employee benefit plans), provided, that the manager of the Building
may have responsibility for more than one building in Woodland Park, in which
case the reasonably and properly directly allocable cost of such salary and
other compensation shall be included in Operating Expenses in accordance with
clause (9) above;
(18) General overhead and administrative expenses (other
than accounting expenses, to the extent reasonably and properly directly
allocable to the operation of the Premises);
(19) Assessments to the extent paid in fewer than the
maximum permitted number of installments;
(20) Costs associated with any property other than the
Premises, except for those costs incurred by Landlord pursuant to the
Association Declaration, but only to the extent such costs relate, or are
attributable, to Landlord's ownership of the Premises and not to other property
owned by Landlord in Woodland Park;
(21) Costs to comply with Requirements to the extent such
Requirements are not being complied with as of the Commencement Date;
(22) Charitable and political contributions, advertising and
promotional expenditures, including costs of staging special events;
(23) The cost of the acquisition or installation of any
artwork, including, without limitation, any statues or paintings or electronic
artwork or advertising;
(24) Painting, redecorating or other work which Landlord
performs for specific tenants;
(25) The expenses of which are paid by such tenants; leasing
commissions, and advertising, legal, space planning and construction expenses
incurred in procuring tenants for the Building;
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(26) Reserves for repairs, maintenance and replacements;
(27) Costs and expenses incurred by Landlord pursuant to any
provisions of this Lease which require Landlord to perform certain obligations
or services at Landlord's sole cost and expense and without recovery as an
Operating Expense;
(28) Any portion of any Operating Expense which is in excess
of Tenant's properly allocable or proportionate share;
(29) Any item of cost which Tenant is required to pay
separately pursuant to any other provision of the Lease;
(30) Costs of any amenity, business or activity that
generates or from which Landlord obtains income; costs of purchasing or leasing
sculpture, paintings or other art objects, except as specifically approved by
Tenant;
(31) More than an arms length, market rate rent, and any
other expense, for Landlord's Woodland Park management office (which shall be of
a reasonable size); and any rent or other expense for any leasing office, if
any;
(32) Costs of defending any lawsuits with any Mortgagees or
Lessors;
(33) Any amounts payable by Landlord to another tenant or
Landlord's lender by way of indemnity or damages (except direct reimbursement of
amounts incurred for costs which would be includable in Operating Expenses); and
(34) Any expenses associated with the Parking Garage paid
for by Tenant or any garage operator directly.
In addition to the foregoing, all Operating Expenses shall be reduced
by all cash discounts, trade discounts or quantity discounts received by
Landlord or Landlord's Agent in the purchase of any goods, utilities or services
in connection with the prudent operation of the Premises. Landlord shall not
collect from the tenants of the Premises more than one hundred percent (100%) of
the actual costs of operating the Premises. In the calculation of any Operating
Expenses, it is understood that no expense shall be charged more than once
(whether directly or in Operating Expenses). Landlord shall equitably prorate
bills for services rendered to the Premises and to any other property owned by
Landlord or an Affiliate. Landlord shall diligently and in good faith pursue all
insurance, breach of warranty or other claims or actions that might result in a
reduction in Operating Expenses payable by Tenant. Landlord covenants to pay all
Operating Expenses and Taxes before the same become delinquent (subject to the
right to contest by law), but Landlord shall not be in default of the obligation
to pay Taxes to the extent such payment is not made due to Tenant's failure to
comply with its obligation to make the payments contemplated hereby in a timely
fashion. Any Operating Expenses relating to the Parking Garage shall be
reasonably allocated among all tenants using
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the Parking Garage. In exercising any self help rights hereunder, if Tenant
incurs out-of-pocket costs and expenses in excess of amounts otherwise
includable in Operating Expenses, Operating Expenses shall be reduced by an
amount sufficient to give consideration to any extra costs incurred due to
Landlord not incurring such costs, with attendant economies of scale, in the
normal and ordinary course.
(d) [Intentionally Deleted.]
(e) "Taxes" shall mean (i) all real estate taxes,
-----
assessments, sewer and water rents, rates and charges and other governmental
levies, impositions or charges, whether general, special, ordinary,
extraordinary, foreseen or unforeseen, which may be assessed, levied or imposed
upon all or any part of the Premises, and (ii) all expenses (including
reasonable attorneys' fees and disbursements and experts' and other witnesses'
fees) reasonably incurred in contesting any of the foregoing or the Assessed
Valuation of all or any part of the Premises. Taxes shall not include (i) any
franchise, corporation, income, receipts, inheritance, estate, revenue or net
profits tax which may be assessed against Landlord or the Premises or both, (ii)
transfer taxes assessed against Landlord or the Premises or both, (iii)
penalties or interest on any late payments of Landlord, (iv) personal property
taxes of Tenant, or (v) any of the items set forth in the next succeeding
sentence, except upon the terms and conditions set forth therein, or (vi) any
items excluded from Operating Expenses in Section 8.1(c). If at any time the
methods of taxation prevailing on the date hereof shall be altered so that in
lieu of or, if of a nature customarily paid or reimbursed by tenants of
Comparable Buildings, as an addition to the whole or any part of Taxes, there
shall be assessed, levied or imposed (1) a tax, assessment, levy, imposition or
charge based on the income or rents received from the Premises whether or not
wholly or partially as a capital levy or otherwise, (2) a tax, assessment, levy,
imposition or charge measured by or based in whole or in part upon all or any
part of the Premises and imposed upon Landlord, (3) a license fee measured by
the rents, or (4) any other tax, assessment, levy, imposition, charge or license
fee however described or imposed, if imposed upon the Premises or Landlord by
reason of its ownership of the Premises, then all such taxes, assessments,
levies, impositions, charges or license fees or the part thereof so measured or
based shall be deemed to be Taxes, provided that any tax, assessment, levy,
imposition or charge imposed on income or rents from the Premises shall be
calculated as if the Premises were the only asset of Landlord.
Section 8.2 Tenant's Tax Payment. Beginning on the Rent Commencement Date
--------------------
for each Floor, and continuing thereafter throughout the Term, Tenant shall pay
to Landlord Tenant's Proportionate Share of Taxes during the Term, except that,
during the Partial Term, Tenant's Proportionate Share shall be adjusted to
reflect the portion of the Building delivered to Tenant, and the number of days
during the real estate tax fiscal year after delivery of the Floors to Tenant.
For example, assuming the tax fiscal year is the calendar year and the tax is
One Thousand Dollars ($1,000), if the Rent Commencement Date has occurred for
sixty-six percent (66%) of the Agreed Area of the Building on February 1 and the
remaining thirty-four percent (34%) in one-half (1/2)
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increments on March 1 and April 1, respectively, Tenant's share of Taxes would
be calculated as follows:
-----------------------------------------------------------------------------------------------------------
(Percentage) x (Percentage of Year) x (TOTAL TAX) = (Tenant's Share of
Taxes)
-----------------------------------------------------------------------------------------------------------
(0%) 31/365 = 8.50% $1,000 0
-----------------------------------------------------------------------------------------------------------
(66%) 28/365 = 7.7% $1,000 $ 50.82
-----------------------------------------------------------------------------------------------------------
(83%) 30/365 = 8.20% $1,000 $ 68.06
-----------------------------------------------------------------------------------------------------------
(100%) 276/365 = 75.6% $1,000 $756.00
-----------------------------------------------------------------------------------------------------------
Aggregate Tenant Share $874.88
-----------------------------------------------------------------------------------------------------------
Taxes assessed for a real estate tax fiscal year which extends beyond the Term
shall be apportioned between Landlord and Tenant at the expiration of the Term.
Landlord shall promptly forward to Tenant copies of all notices, bills or other
statements received by Landlord concerning Taxes. Tenant shall pay all such
Taxes to Landlord at least five (5) Business Days before the same become due and
payable or, if later, five (5) days after the bill for same is delivered by
Landlord to Tenant. Tenant's obligation to pay Taxes shall survive the
expiration of the Term or the earlier termination of this Lease. Tenant shall be
obligated to escrow amounts for Taxes on a monthly basis in an amount equal to
one-twelfth (1/12) of the Tenant's Tax Payment if required by any Mortgagee
holding a first-priority mortgage lien on the Premises, provided, that (i) such
escrowed amounts shall be deposited in an interest-bearing account and (ii) such
Mortgagee shall be obligated to apply such escrowed amounts to the payment of
Taxes when due notwithstanding any default of Landlord thereunder, and shall so
confirm, in writing, to Tenant. Any such estimate shall be based on a reasonable
estimate of Taxes for such year (which shall be based on the prior year's tax
bill, any phase-in information, and any subsequent re-assessment information)
and the parties shall reconcile tax payments within 120 days after the end of
the tax year (i.e., pursuant to Section 8.5 below).
Section 8.3 Tax Proceedings. Except during the last two (2) Lease Years of
---------------
the Term, but only so long as Tenant is either the sole tenant of the Building
or is leasing at least seventy-five percent (75%) of the Agreed Area thereof,
Tenant shall have the right to direct Landlord to institute and diligently
pursue proceedings to contest Taxes or to reduce the Assessed Valuation of the
Premises. Such proceedings shall not be settled without Tenant's consent, not to
be unreasonably withheld, conditioned or delayed, and Tenant shall otherwise
have the right to participate in such tax contest, at Tenant's sole expense.
Thereafter, only Landlord shall determine if and when to institute such
proceedings; provided, however, that notwithstanding the foregoing, in the event
that (i) the Assessed Valuation during any tax fiscal year exceeds one hundred
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five percent (105%) of the Assessed Valuation during the immediately preceding
tax fiscal year, and (ii) Landlord has not contested Taxes or challenged the
Assessed Valuation during such tax fiscal year or the immediately preceding tax
fiscal year, Landlord agrees to institute proceedings to contest Taxes or reduce
the Assessed Valuation upon Tenant's request. To the extent that the costs
incurred by Landlord in connection with proceedings instituted pursuant to the
immediately preceding sentence are not recovered by Landlord as part of Tenant's
Tax Payment or Operating Expense Payment, Tenant shall reimburse Landlord for
such costs within thirty (30) days after demand. If Landlord receives a refund
of Taxes to the extent that such refund is based upon a payment made by Tenant,
Landlord shall, at its election, either pay to Tenant, or (unless the Lease has
terminated) credit against subsequent payments of Rent due hereunder, an amount
equal to Tenant's Proportionate Share of the refund, net of any actual,
out-of-pocket expenses incurred by Landlord in achieving such refund and not
recovered, which amount shall not exceed Tenant's Tax Payment paid for such tax
fiscal year. Except as expressly set forth above in this Section 8.3, Landlord
shall not be obligated to file any application or institute any proceeding
seeking a reduction in Taxes or the Assessed Valuation. Landlord will engage
annually in a good faith review of Taxes and any reassessments of the Premises
for purposes of determining whether to contest or appeal any such assessment or
impositions.
Section 8.4 Tenant's Operating Expense Payment.
----------------------------------
(a) Tenant shall pay as Additional Rent, Tenant's
Proportionate Share of Operating Expenses for each calendar year ("Tenant's
Operating Expense Payment"), commencing with the earliest Rent Commencement
Date; provided, that, irrespective of Tenant's Proportionate Share, Tenant shall
pay the entire cost of any additional service provided to Tenant pursuant to
this Lease at Tenant's request. During the Partial Term, Tenant's Operating
Expense Statement shall reflect Tenant's obligation to pay Tenant's
Proportionate Share of the Operating Expenses relating to the portion of the
Building for which Rent Commencement Dates have occurred, and the number of days
during the calendar year after such occurrence. Landlord shall make a reasonable
estimate of Tenant's Proportionate Share of the Operating Expenses for each
calendar year, and, so long as Tenant leases at least seventy-five percent (75%)
of the Agreed Area of the Building, shall submit to Tenant for Tenant's
approval, not later than thirty (30) days prior to the earliest Rent
Commencement Date, and no later than December 1 of each subsequent calendar
year, a reasonably itemized budget (the "Operating Budget") setting forth the
monthly projected staffing and Operating Expenses and Taxes for the following
calendar year (including a list of proposed on-site management personnel and
budgets for the Parking Garage and the Building's allocable share of expenses
relating to the Association), or, with respect to the Operating Budget to be
submitted thirty (30) days before the earliest Rent Commencement Date, for the
initial calendar year (or portion thereof) during the term (the "Initial
Calendar Year"). So long as Tenant leases at least seventy-five percent (75%) of
the Agreed Area of the Building, Tenant shall have the right to direct Landlord
to vote, as owner of the Premises, as Tenant deems appropriate, in Tenant's sole
and absolute discretion, as to all matters relating to discretionary costs
imposed under the Association Declaration or otherwise charged by the
Association. Each Operating
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Budget shall include allocations for maintenance, safety, management and other
Building Services at the level found in Comparable Buildings. Tenant shall pay
along with each month's installment of Fixed Rent one-twelfth (1/12) of the
approved Operating Budget, except that with respect to the Operating Budget to
be submitted for the Initial Calendar Year, Tenant's Proportionate Share of
Operating Expenses shall be payable in equal monthly installments over such
period.
If Landlord's estimate of Operating Expenses for any calendar
year is not received by December 1 of the preceding calendar year or is not
thereafter approved by Tenant within thirty (30) days, Tenant shall continue to
pay the monthly installments of Tenant's Proportionate Share of Operating
Expenses at the rate and Landlord shall provide service at the level established
for the preceding calendar year increased to reflect any actual increases
projected in Operating Expenses (other than Controllable Expenses), until Tenant
receives and approves a new Operating Budget for the calendar year.
Tenant shall have no such approval rights if Tenant is leasing
less than 75% of the Agreed Area of the Building. In addition, Tenant shall only
have the right to approve line items on any Operating Budget that are
Discretionary Expenses. In all other cases involving approval of repair and
maintenance items, Tenant agrees to take into consideration Landlord's
obligation to maintain a first class building and to protect the value of its
asset. Upon approval of the new Operating Budget, Tenant's monthly share of
Operating Expenses shall be calculated to reflect payments made pursuant to the
preceding calendar year's Operating Budget. Within forty-five (45) days after
the end of each calendar quarter, Landlord agrees to provide Tenant with a
quarterly report setting forth disbursements to vendors and indicating what
percentage of the Operating Budget has been expended as of the date set forth in
the report. To the extent Landlord determines that costs incurred with respect
to Discretionary Expenses reflected within the Approved Budget will vary by more
than five percent (5%) from the budgeted amount on an annual basis, Landlord
will endeavor to notify Tenant promptly thereafter to alert Tenant of such
likely budgetary variance and to consult with Tenant regarding potential means
of achieving cost savings, or modifications to service in order to minimize
Operating Expenses for the applicable period. Landlord further agrees not to
enter into any contracts related to the operation and management of the Building
which are not terminable on thirty (30) days notice for cause or on ninety (90)
days notice without cause without Tenant's prior consent, except relating to
elevators, fire alarms and life safety equipment.
(b) Annual Operating Expense Statement. Within one hundred and
----------------------------------
twenty (120) days after the Initial Calendar Year and thereafter, within one
hundred and twenty (120) days after the end of each calendar year, Landlord
shall submit to Tenant a statement prepared by Landlord (the "Expense
Statement") setting forth in reasonable detail the Operating Expenses (and
Taxes) for such calendar year and the amount of Tenant's Proportionate Share of
the Operating Expenses (and Taxes) for such calendar year. If Tenant's
Proportionate Share of the Operating Expenses so stated is more than the amount
(if any) theretofore paid by Tenant for Operating Expenses for the period
covered by the Expense Statement, Tenant shall pay to
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Landlord the deficiency within thirty (30) days after the submission of the
Expense Statement. If Tenant's Proportionate Share of the Operating Expenses
(and Taxes) so stated is less than the amount (if any) theretofore paid by
Tenant for Operating Expenses for the period covered by the Expense Statement,
Landlord shall credit the excess against the next monthly installment of Rent
thereafter payable by Tenant under this Lease, except that Landlord shall refund
the excess (if any) for the calendar year ending with or within the last Lease
Year to Tenant within thirty (30) days after submission of the Expense Statement
for such calendar year. If the last day of the Term shall not coincide with the
end of a calendar year, Tenant shall pay Tenant's Proportionate Share of the
Operating Expenses for the calendar year in which the last day of the Term
occurs up to and including the last day of the Term as if the last day of the
Term were the end of a calendar year. Tenant's obligation under this subsection
to pay Tenant's Proportionate Share of the Operating Expenses and Landlord's
obligation to reimburse Tenant for an overpayment of Tenant's Proportionate
Share of the Operating Expenses shall survive the expiration of the Term or the
earlier termination of this Lease.
Section 8.5 Disputes. Landlord's books and records with respect to
--------
Operating Expenses and Taxes shall be kept on an accrual basis in accordance
with GAAP consistently applied. Each Expense Statement, in a form sufficiently
detailed and complete for Tenant's adequate review, sent to Tenant shall be
conclusively binding upon Tenant unless Tenant shall, within one (1) year after
such Expense Statement is received, give notice to Landlord objecting to such
Expense Statement and specifying the reasons that such Expense Statement is
claimed to be incorrect (to the extent then known by Tenant). Notwithstanding
the foregoing, Tenant shall, within thirty (30) days after such Expense
Statement is received, pay to Landlord the amount set forth in such Expense
Statement, without prejudice to Tenant's right to dispute such Expense
Statement. No such objection shall prejudice Tenant's right to make further
objections with respect to the same Expense Statement within the permitted time
period. Tenant shall have the right at its sole cost and expense to review or
audit Landlord's books and records relating to Landlord's calculation of
Operating Expenses and Taxes (for such year) at any time within one (1) year
from Tenant's receipt of the Expense Statement, and may use the auditor or
reviewer of its choice, provided, however, that Tenant may not hire an auditor
or reviewer paid on a contingency fee basis unless such auditor's area of
expertise includes lease expense analysis and such auditor is recognized for
such expertise. Tenant shall be obligated to reimburse Landlord for its
reasonable costs of responding to any claim by Tenant that it is entitled to a
refund, in the proportion that (A) the amount which Tenant initially claimed
less the amount actually recovered bears to (B) the amount of the initial
claimed adjustment in Operating Expenses or Taxes. Landlord shall have the right
to reasonably revise its calculation of Operating Expenses at any time within
one (1) year from the date of the Expense Statement which shall be binding on
Landlord thereafter, and any such revision shall be deemed a new Expense
Statement for purposes hereof. Tenant shall not be required to notify Landlord
of the results of Tenant's audit. If the parties are unable to resolve a dispute
as to the correctness of an Expense Statement within thirty (30) days following
Tenant's notice of objection, either party may refer the issues raised to an
accountant
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reasonably acceptable to the other party, and that has not and does not provide
accounting and consulting services to Landlord or Tenant or any of their
respective Affiliates and does not otherwise have any affiliation or business
relationship with Landlord or Tenant or any of their respective Affiliates, and
the decision of such accountants shall be conclusively binding upon Landlord and
Tenant. In the event that Landlord and Tenant are unable to agree, such
accountant shall be selected by the AAA in the manner provided in Section 34.2
hereof. In connection with any review or audit of Operating Expenses, Landlord,
Tenant and its reviewer or auditor shall execute and deliver to Landlord a
confidentiality agreement, in form and substance reasonably satisfactory to all,
whereby such parties agree not to disclose to any third party any of the
information obtained in connection with such review, except as reasonably
necessary to attorneys, arbitrators or other similar professionals in connection
with such audit or in the event of any dispute or litigation between the
parties. The fees and expenses relating to the accountant hired to conclusively
resolve the dispute as to the correctness of the Expense Statement and, if the
expenses were overstated by more than three and one half percent (3.5%), the
fees and expenses of Tenant's auditor or reviewer, shall be borne by the
unsuccessful party (and if both parties are partially unsuccessful, the
accountant shall apportion the fees and expenses between the parties based on
the degree of success of each party). In the event there is an adjustment of the
Expense Statement, the amount owed by either party shall be increased by
interest on the sum owed calculated at the Base Rate from the date of the
original payment until the date the adjustment is paid.
ARTICLE 9
REQUIREMENTS OF LAW
-------------------
Section 9.1 Tenant's Compliance. Tenant, at its expense, shall comply
-------------------
(or cause to be complied) with all Requirements applicable to (x) the Initial
Installations and (y) otherwise applicable to the Premises and first enacted or
imposed after the initial Rent Commencement Date, regardless of whether imposed
by their terms upon Landlord or Tenant, and which do not require any structural
changes to the Premises. Notwithstanding the foregoing, all repairs and
alterations to the Premises, whether structural or nonstructural, ordinary or
extraordinary, required to be made to cause the Premises to comply with any
Requirements and which arise as a result of (i) the specific manner and nature
of Tenant's use or occupancy of the Premises, as distinct from general office
use, (ii) Alterations made by Tenant in the Premises or (iii) a breach by Tenant
of any provisions of this Lease, shall be made by Tenant, at Tenant's expense
and in compliance with Article 5, if such repairs or alterations are
---------
nonstructural and do not affect any Building System, or by Landlord, at Tenant's
reasonable expense, if such repairs or alterations are structural or affect any
Building System. If Tenant obtains knowledge of any failure to comply with any
Requirements applicable to the Premises, Tenant shall give Landlord prompt
written notice thereof.
Section 9.2 Landlord's Compliance. Landlord shall comply with (or
---------------------
cause to be complied with) all Requirements applicable to the Premises which are
related to the structural components thereof and do not arise out of the matters
described in clauses
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(i), (ii) or (iii) of Section 9.1; and the cost thereof shall be included in
Operating Expenses pursuant to Section 8.1(b) of this Lease if the Requirement
shall not apply to the Premises as of the Commencement Date. Landlord shall, as
part of the Base Building Work (but not as an Operating Expense), cause the Base
Building to comply as of the Commencement Date with all applicable Requirements
(including the ADA), and with all requirements of all insurance bodies affecting
the Premises which are customarily applicable to Comparable Buildings. From and
after the Commencement Date, Landlord shall be responsible, for compliance with
Requirements as they relate to the Common Areas and the Building generally and
the costs thereof shall, in accordance with the terms of Section 8.1, be charged
as Operating Expenses.
Section 9.3 Hazardous Materials.
-------------------
(a) From and after the Commencement Date, Tenant shall
not (i) cause or permit the storage or use of Hazardous Materials in any manner
not permitted by any Requirements, or (ii) cause or permit the escape, disposal
or release of any Hazardous Materials within or from the Premises, except to the
extent that any of the foregoing actions are caused by Landlord or any party
claiming by, through or under Landlord. Nothing herein shall be deemed to
prevent the use of any Hazardous Materials customarily used in the construction
or normal operation of office buildings in Comparable Buildings, provided such
use is in accordance with all Requirements. Tenant shall be responsible, at its
expense, for all matters directly or indirectly based on, or arising or
resulting from, the actual or alleged presence of Hazardous Materials in the
Premises, which is caused or permitted by Tenant. Tenant shall provide to
Landlord copies of all communications received by Tenant with respect to any
Requirements relating to Hazardous Materials, and/or any claims made in
connection therewith and applicable to the Premises or Landlord. Upon reasonable
prior written notice to Tenant (except in the event of an emergency), so long as
Landlord does not unreasonably interfere with Tenant's business operations,
Landlord or its agents may perform environmental inspections (at its cost) of
the Premises subject to the limitations set forth herein.
(b) Landlord hereby represents and warrants that, except
as set forth in that certain Phase I Environmental Site Assessment--CFC Tract
dated July 7, 1997, prepared by Environmental Consulting Services, Ltd. it has
received no notice, and has no actual knowledge, of any Hazardous Materials on,
in or under the Premises, including in connection with the initial construction
of the Building. For purposes of this Lease, the knowledge of Landlord shall be
limited to the actual knowledge of James A. Evans, Rustom Cowasjee, Simon
Wasserberger, Steven F. Grant and Andrew J. Nathan. There shall be no personal
liability to said individuals arising out of said representations or warranties
(all liability therefrom being attributable to Landlord hereunder).
(c) From and after the Effective Date, Landlord shall
not cause or permit the escape, disposal or release of any Hazardous Materials
within or from the Premises, except to the extent that any of the foregoing
actions are caused by Tenant or any party claiming by, through or under Tenant.
Landlord shall be responsible, at its
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expense, for all matters directly or indirectly based on, or arising or
resulting from, the actual or alleged presence of Hazardous Materials in the
Premises, which is caused by Landlord or permitted by Landlord. Landlord shall
provide to Tenant copies of all communications received by Landlord with respect
to any Requirements relating to Hazardous Materials, and/or any claims made in
connection therewith, and applicable to the Premises or Tenant.
(d) Nothing herein shall be deemed to prevent the use of
any Hazardous Materials customarily used (i) in the ordinary course of Tenant's
business operations in accordance with the Permitted Uses, or (ii) in the
ordinary course of Landlord's business operations provided that, in either (i)
or (ii), such use is in accordance with all Requirements.
(e) The covenants contained in this Section 9.3 shall
survive the expiration or earlier termination of this Lease.
Section 9.4 Landlord's Insurance. Tenant shall not cause or knowingly
--------------------
permit any action or condition that would (i) invalidate or conflict with
Landlord's insurance policies, provided such policies contain terms which are
customarily applicable to Comparable Buildings, (ii) violate applicable
Requirements, (iii) cause an increase in the premiums of fire insurance then
covering the Building over that payable with respect to Comparable Buildings or
(iv) result in insurance companies of good standing refusing to insure the
Building or the Land in amounts and against risks as reasonably determined by
Landlord and which are customarily applicable to Comparable Buildings. If the
fire insurance premiums increase as a result of Tenant's failure to comply with
the provisions of this Article 9, Tenant shall promptly cure such failure and
---------
shall reimburse Landlord, as Additional Rent, for the increased fire insurance
premiums paid by Landlord as a result of such failure by Tenant. In any action
or proceeding to which Landlord and Tenant are parties, a schedule or "make up"
of rates for the Building issued by the appropriate Fire Insurance Rating
Organization, or other body fixing such fire insurance rates, shall be
presumptive evidence of the fire insurance rates then applicable to the
Building. Landlord represents that, to Landlord's knowledge as of the date
hereof, use of the Building for the Permitted Uses will not increase the rate of
fire or other insurance on the Building.
ARTICLE 10
SUBORDINATION
-------------
Section 10.1 Subordination and Attornment. Subject to Section 10.5
----------------------------
hereof, this Lease is subject and subordinate to all Mortgages and Superior
Leases and, at the request of any Mortgagee or Lessor, Tenant shall attorn to
such Mortgagee or Lessor, its successors in interest or any purchaser in a
foreclosure sale pursuant to the foreclosure of such mortgage.
Section 10.2 Mortgage Priority; Modification. Any Mortgagee or Lessor
-------------------------------
may elect that this Lease shall have priority over the Mortgage or Superior
Lease that it holds and, upon notification to Tenant by such Mortgagee or
Lessor, this Lease shall be
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deemed to have priority over such Mortgage or Superior Lease, regardless of the
date of this Lease. In connection with any financing of the Building, Tenant
shall consent to any reasonable modifications of this Lease requested by any
lending institution, provided such modifications do not increase the
obligations, or adversely affect the rights, of Tenant under this Lease.
Section 10.3 Tenant's Termination Right. As long as any Mortgage or
--------------------------
Superior Lease shall exist and Tenant has been provided notice of same, Tenant
shall not seek to exercise any termination or other right it may have under this
Lease, at law, in equity or otherwise, if any, by reason of any act or omission
of Landlord (a) until Tenant shall have given notice of such act or omission to
all such Mortgagees or Lessors, and (b) until thirty (30) days shall have
elapsed following the giving of notice of such default and the expiration of any
applicable notice or grace periods applicable to Landlord under this Lease
(unless such act or omission is not capable of being remedied within such
period, such Mortgagee or Lessor has, within such thirty (30) day period,
notified Tenant that it intends to remedy such circumstance and has thereafter
commenced and is diligently pursuing with continuity a remedy but in no event
more than one hundred fifty (150) days after the expiration of the aforesaid
thirty (30) day period), during which period such Mortgagees or Lessors shall
have the right, but not the obligation, to remedy such act or omission and
thereafter diligently proceed to so remedy such act or obligation. If any
Mortgagee or Lessor so elects to remedy such act or omission of Landlord, Tenant
shall not to exercise any termination or other right it may have under this
Lease, at law, in equity or otherwise, if any, by reason of any act or omission
of Landlord so long as such Mortgagee or Lessor is proceeding with reasonable
diligence to effect such remedy. The provisions of this Section 10.3 are not
intended in any way to affect any of Tenant's self-help rights under this Lease.
Section 10.4 Provisions. The provisions of this Article 10 shall (a)
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inure to the benefit of Landlord, Tenant, Mortgagee, or Lessor and their
respective successors and assigns, and (b) apply notwithstanding that, as a
matter of law, this Lease may terminate upon the termination of any such
Mortgage or Superior Lease.
Section 10.5 Non-Disturbance Agreements. Notwithstanding anything in
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this Lease to the contrary, as a condition precedent to Tenant's agreement
hereunder to subordinate Tenant's interest in the Lease and attorn to any
Mortgage or Superior Lease made between Landlord and such Mortgagee or Lessor,
whether now or hereafter existing, Landlord shall obtain from each Mortgagee or
Lessor, whether now or hereafter existing, cause to be recorded, and deliver to
Tenant an agreement, substantially in the form attached hereto as Exhibit E or
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otherwise meeting the definition of a Non-Disturbance Agreement hereunder. If
Lender does not require the recording of the Non-Disturbance Agreement, and
Tenant elects to record such Non-Disturbance Agreement, Tenant shall bear the
cost of such recordation. "Non-Disturbance Agreement" shall mean a
subordination, non-disturbance and attornment agreement from each Mortgagee or
Lessor in a form to be negotiated between (and reasonably satisfactory to)
Landlord, Tenant and the applicable Mortgagee or Lessor (sometimes referred to
herein as "Lender"), which is executed by Landlord, Tenant and
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the Lender, which is duly recorded in the land records of Fairfax, County,
Virginia, and which includes the following provisions:
(a) that, provided no uncured Material Default shall then
exist under this Lease, the Mortgagee, any successful foreclosure bidder's
assignee or designee, and any other third party purchaser entity or any holder
of the reversionary interest under a Superior Lease succeeding to Landlord's
and/or Lender's or their respective successors' and assigns' interest
(collectively, "Senior Lienors") shall not: (i) disturb Tenant's rights,
privileges, interests and unexercised options under this Lease or any instrument
executed pursuant hereto, nor name Tenant as a party defendant in any
foreclosure or any action or proceeding instituted under or in connection with
the Mortgage or Superior Lease unless such joinder is necessary to foreclose the
Mortgage or terminate the Superior Lease, and then only for such purpose and not
for the purpose of terminating this Lease or reducing any rights under the Lease
because of any default under the Mortgage; (ii) terminate this Lease if there is
a foreclosure, deed-in-lieu, or other proceedings involving Landlord's interest
in the Building; and/or (iii) require any Lease modification in connection
therewith (except as provided in Section 10.2);
(b) that notwithstanding anything contained herein to the
contrary, Senior Lienor shall not be bound by any obligation to perform any work
or to make improvements to the Building except for (x) repairs and maintenance
required to be made by Landlord under this Lease, subject to subsection (d)(i)
below, and (y) repairs to the Building as a result of damage by fire or other
casualty or a partial condemnation pursuant to the provisions of this Lease, but
only to the extent that such repairs can reasonably be made from the net
proceeds of any insurance or condemnation awards, respectively, actually made
available to such successor landlord; provided, that if such Senior Lienor
elects not to repair such damage by fire, casualty or condemnation, Tenant shall
have the right to terminate this Lease pursuant to Article 13 hereof;
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(c) Tenant shall be required to attorn to such Senior
Lienor as long as such Senior Lienor recognizes Tenant and assumes (either
expressly or by operation of law) the obligations of "Landlord" under this Lease
for the period after the date title to the Property is transferred to such
Senior Lienor by Landlord (the "Foreclosure Date");
(d) no Senior Lienor shall be:
(i) liable for any act or omission of Landlord with
respect to which Senior Lienor has not received prior written notice, except for
acts, omissions or defaults of a continuing nature requiring cure under this
Lease, which continue after the Foreclosure Date and which are not thereafter
cured by Senior Lienor after notice and an opportunity to cure as provided
herein (including, without limitation, any failure by Landlord to fund any
allowances or Tenant's inability to fully recognize any offsets or credits under
this Lease);
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(ii) subject to any offsets (other than the Special
Offset Amounts, as defined in Section 19.2(b)) or defenses which Tenant may have
had against any prior landlord, except (A) the foregoing shall not operate to
cut off defenses or offsets Tenant may have in relation to any breach, act or
omission of the landlord which continues after the Foreclosure Date (but such
defenses and/or offsets shall apply only to the extent such breach, act or
omission continues after such Senior Lienor assumes title); Senior Lienor shall
not be relieved of the obligation to comply with all of the landlord's
obligations under the Lease accruing from and after the Foreclosure Date,
irrespective of whether the original non-compliance with any such obligation
arose prior to and is continuing as of the Foreclosure Date, or arose on or
after the Foreclosure Date (provided however that if such obligation arose prior
to the Foreclosure Date, such Senior Lienor shall not be deemed in default until
after the provision of any notice of default required by this Lease to such
Senior Lienor, and its failure to cure same within the cure period provided for
herein), and (B) as set forth in clause (b), above and subclause (vi) below;
(iii) bound by any payment of Rent or Additional Rent
by Tenant for a period greater than one (1) month in advance made without Senior
Lienor's prior written consent (unless actually received by, or otherwise in the
control of, such Senior Lienor);
(iv) bound by any amendment or modification of the
Lease which reduces rent or charges payable under this Lease or shortens or
lengthens the term thereof or otherwise materially affects the rights of
Landlord (in more than a de minimis manner) and made after the Mortgage or
Superior Lease was recorded (or earlier, if Tenant was notified earlier) without
Senior Lienor's prior written consent, if and to the extent required by the
Senior Lienor's loan documents;
(v) liable for the Security Deposit given by Tenant
to a prior landlord (including Landlord) unless such Security Deposit is
actually delivered to Senior Lienor by the prior landlord or otherwise in the
control of Senior Lienor; or
(vi) bound by any obligation to make any payment to
Tenant which was required to be made prior to the time such successor landlord
succeeded to Landlord's interest, other than the Special Offset Amounts
(including any unpaid portion of Landlord's Contribution). In addition, Tenant
shall not be required to name Landlord or Senior Lienor as Tenant's
attorney-in-fact for any reason, nor pay any attorneys fees or servicing charges
or expenses related to the Non-Disturbance Agreement or any estoppel
certificate. Landlord and Tenant agree that, notwithstanding any of the
foregoing provisions to the contrary, Exhibit E shall constitute a commercial |
