**Exhibit 10.7**

 

**DEED OF LEASE**

 

**between**

 

**ARLINGTON OFFICE, L.L.C.,**

 

**as Landlord,**

 

**and**

 

**WATSON WYATT & COMPANY,**

 

**as Tenant,**

 

**for space in “Arlington Gateway”**

**located at**

**901 North Glebe Road**

**Arlington, Virginia**

 

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# *TABLE OF CONTENTS*

# * *

| **Article** |                                     |   |
|-------------|------------------------------------------|--------|
|        |                                     |   |
| **1.**      | **DEFINITIONS**                          |   |
| **2.**      | **TERM**                                 |   |
| **3.**      | **WORK AGREEMENT;  SHELL CONDITION**     |   |
| **4.**      | **RENT**                                 |   |
| **5.**      | **ADDITIONAL  RENT**                     |   |
| **6.**      | **USE**                                  |   |
| **7.**      | **CARE OF PREMISES**                     |   |
| **8.**      | **ALTERATIONS BY TENANT**                |   |
| **9.**      | **EQUIPMENT**                            |   |
| **10.**     | **OWNERSHIP  AND REMOVAL OF PROPERTY**   |   |
| **11.**     | **ACCESS TO PREMISES**                   |   |
| **12.**     | **SERVICES AND UTILITIES**               |   |
| **13.**     | **RULES AND REGULATIONS**                |   |
| **14.**     | **INDEMNIFICATION**                      |   |
| **15.**     | **LIMITATION ON LANDLORD  LIABILITY**    |   |
| **16.**     | **FIRE AND OTHER CASUALTY**              |   |
| **17.**     | **INSURANCE**                            |   |
| **18.**     | **CONDEMNATION**                         |   |
| **19.**     | **DEFAULT OF TENANT**                    |   |
| **20.**     | **DEFAULT OF LANDLORD**                  |   |
| **21.**     | **HOLDING  OVER**                        |   |
| **22.**     | **SUBORDINATION**                        |   |
| **23.**     | **ASSIGNMENT AND SUBLETTING**            |   |
| **24.**     | **TRANSFER BY LANDLORD**                 |   |
| **25.**     | **INABILITY TO PERFORM**                 |   |
| **26.**     | **ESTOPPEL CERTIFICATES**                |   |
| **27.**     | **COVENANT OF QUIET ENJOYMENT**          |   |
| **28.**     | **WAIVER OF JURY TRIAL**                 |   |
| **29.**     | **BROKERS**                              |   |
| **30.**     | **CERTAIN RIGHTS  RESERVED BY LANDLORD** |   |
| **31.**     | **NOTICES**                              |   |
| **32.**     | **MISCELLANEOUS PROVISIONS**             |   |
| **33.**     | **[Intentionally  omitted.]**            |   |
| **34.**     | **PARKING.**                             |   |
| **35.**     | **STORAGE  SPACE**                       |   |
| **36.**     | **HAZARDOUS  MATERIALS**                 |   |
| **37.**     | **STANDARD  FOR CONDUCT AND CONSENT**    |   |
| **38.**     | **NO  RECORDATION**                      |   |
| **39.**     | **SIGNS**                                |   |
| **40.**     | **EXERCISE  FACILITY**                   |   |

 

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| **41.**        | **EXPANSION  SPACE OPTIONS**                                                     |   |
|----------------|----------------------------------------------------------------------------------|--------|
| **42.**        | **[Intentionally  omitted.]**                                                    |   |
| **43.**        | **ACCESS  KEYS**                                                                 |   |
| **44.**        | **LANDLORD  REPRESENTATIONS**                                                    |   |
| **45.**        | **OPTIONS TO  EXTEND**                                                           |   |
| **46.**        | **ROOF RIGHTS**                                                                  |   |
| **47.**        | **RIGHT OF  FIRST REFUSAL AND FIRST RIGHT OF AVAILABILITY**                      |   |
| **48.**        | **RESTRICTION  OF USE BY CERTAIN HUMAN RESOURCES CONSULTING FIRMS**              |   |
| **49.**        | **TERMINATION  OPTION.**                                                         |   |
| **50.**        | **CONTRACTION  OPTION**                                                          |   |
| **51.**        | **RESTRICTION  OF USE BY GSA**                                                   |   |
| **52.**        | **PAYMENT OF  TENANT’S TERMINATION FEE UNDER TENANT’S CURRENT LEASES** |   |
| **SIGNATURES** |                                                                             |

 

 
| Exhibit  A – Premises Plan                                                                                                         |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|
| Exhibit  B – Declaration of Delivery                                                                                               |   |
| Exhibit  C – Work Agreement                                                                                                        |   |
| Exhibit  D – Rules and Regulations                                                                                                 |   |
| Exhibit  E – Shell Condition                                                                                                       |   |
| Exhibit  F – Form of Subordination, Nondisturbance and Attornment Agreement                                                        |   |
| Exhibit  G – Form of Tenant Estoppel Certificate                                                                                   |   |
| Exhibit  H – [Intentionally omitted.]                                                                                              |   |
| Exhibit  I – Cleaning and Char Specifications                                                                                      |   |
| Exhibit  J-1 – Approved Exterior Signage Location for West Side of Building                                                        |   |
| Exhibit J-2 – Approved  Exterior Signage Location for North Side of Building                                                       |   |
| Exhibit J-3 – Approved Lobby Sign Location                                                                                         |   |
| Exhibit K – Minimum Exercise  Equipment                                                                                            |   |
| Exhibit L – Legal description of Land                                                                                              |   |
| Exhibit  M – Site Plan                                                                                                             |   |
| Exhibit  N – Specialized Human Resources Consulting Firms or Human Capital Consulting  Firms Which are Competitors of Watson Wyatt |   |

 

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#### **DEED OF LEASE**

####  

THIS DEED OF LEASE (the “Lease”) is made and entered into as of April 27, 2004,by and between **ARLINGTON****OFFICE, L.L.C.**, a Delaware limitedliability company (“Landlord”),and **WATSON WYATT & COMPANY**,a Delaware corporation(“Tenant”).

 

Inconsideration of the Rent hereinafter reserved and the agreements hereinafterset forth, Landlord and Tenant mutually agree as follows:

 

**1.****                                     ****DEFINITIONS.**

 

Lease Specific

 

A.                                   Building:  a twelve (12) story building to containapproximately three hundred six thousand nine hundred twenty-one (306,921)square feet of office rentable area and three hundred twenty-five thousand fourhundred seventy-nine (325,479) square feet of total rentable area (both officeand retail) as of the date hereof and located at 901 North Glebe Road,Arlington, Virginia.  Except asotherwise expressly provided in this Lease, the term “Building” shall includeall portions of said building, including, but not limited to, the Premises, theCommon Areas and the garage.

 

B.                                     Premises: approximately onehundred nineteen thousand one hundred eleven (119,111) squarefeet of rentable area comprising (i) the entire fourth (4th) floorof the Building containing approximately 28,591 square feet of rentable area,(ii) the entire fifth (5th) floor of the Building containingapproximately 28,591 square feet of rentable area, (iii) the entire sixth (6th)floor of the Building containing approximately 28, 591 square feet of rentablearea, (iv) the entire seventh (7th) floor of the Building containingapproximately 28,591 square feet of rentable area, and (v) approximately four thousand seven hundred forty-seven(4,747) square feet of rentable area located on the eighth (8th)floor of the Building (the “Initial Eighth Floor Space”), all as moreparticularly designated on Exhibit A; provided, however, that withrespect to the Initial Eighth Floor Space, the location of said Initial EighthFloor Space shall be mutually agreed upon by Landlord and Tenant but shallinclude a portion of the front window line of the Building, shall have elevatorlobby exposure and shall be of a configuration which (a) is in full compliancewith the requirements of all applicable Laws (as hereinafter defined) and (b)results in both the Initial Eighth Floor Space and the remainder of the eighth(8th) floor of the Building being in marketable configurations.  Tenant may elect to increase or decrease thetotal rentable area of the Premises by up to ten percent (10%) of the aggregaterentable area identified above, by delivering notice to Landlord on or prior toJuly 31, 2004, which notice shall specify the portion of the subject floors ofthe Building upon which Tenant elects to add rentable area to, or removerentable area from, the Premises.  Anyexpansion in the rentable area of the Premises which Tenant elects to makeshall be on the eighth (8th) floor of the Building.  Any reduction in the rentable area of thePremises which Tenant elects to make shall first include the Initial EighthFloor Space, and if such reduction is larger than the Initial Eighth FloorSpace, shall include, at Tenant’s election, a portion of the space located onthe fourth (4th) floor of the Building or a portion of the spacelocated on the seventh (7th) floor of the Building.  Any such expansion or reduction in the sizeof the Premises elected by Tenant in accordance with the foregoing shall permitthe balance of space outside the Premises on the subject floor of the Buildingon which Tenant elects the subject

 

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expansion or contraction, to be in amarketable configuration.  In the eventTenant elects to increase or decrease the total rentable area of the Premisesin accordance with the foregoing, then Landlord shall deliver notice to Tenant,within thirty (30) days after its receipt of Tenant’s corresponding notice, ofthe number of rentable square feet contained in the subject space which Tenantelects to add to or remove from the Premises. Following Landlord’s delivery of such notice to Tenant, Landlord andTenant shall diligently cooperate to agree upon the number of rentable squarefeet in the subject space which Tenant elects to add to, or remove from, thePremises.  Landlord and Tenant agreethat; (i) any remeasurement of the Building and/or any portion thereof shall bemade only with respect to the useable area of the same in accordance with theBuilding Owners and Managers Association International Standard Method forMeasuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-1996 (the “BOMA Standard”);and (ii) the load factors to be used to convert usable area to rentable areafor the Building and any space therein are agreed to be 10 and 24/100 percent(10.24%) for full floors inthe Building and fourteen and 53/100 percent (14.53%) for multi-tenanted floorsin the Building. Except in connection with an arbitration inaccordance with the following terms of this Section, Landlord waives the rightto remeasure the Building and any space therein.  Tenant shall have the right to remeasure the Building and/or thePremises through that date which occurs sixty (60) days after the date uponwhich Tenant commences business operations in the Premises.  Following Tenant’s remeasurement of theBuilding and/or the Premises, if Tenant disputes the amount of the rentablearea in the Building and/or the Premises described above, and Landlord andTenant fail to reach agreement regarding the total rentable area within theBuilding and/or Premises within sixty (60) days after the date Tenant deliversto Landlord notice of Tenant’s objection to the amount of the rentable area inthe Building and/or the Premises described above, then such dispute, at theelection of either party, shall be resolved by arbitration in accordance withthe method described below.  Within ten(10) days after the expiration of the above-referenced sixty (60) day period,each party shall give notice to the other setting forth the name and address ofa licensed (or registered, as applicable) architect selected by such party whohas agreed to act in such capacity, to determine the subject measurement inaccordance with the foregoing terms.  Ifeither party shall fail to select an architect as aforesaid, the subjectmeasurement shall be determined by the architect selected by the other, subjectto the foregoing terms of this Section. Each architect shall thereupon independently make his/her determinationof the subject measurement within thirty (30) days after the appointment of thesecond architect.  If the twoarchitects’ determinations are not the same, but the higher of such twodeterminations is not more than one hundred two percent (102%) of the lower ofthem with respect to the Building and/or the Premises, as the case may be, thenthe subject measurement shall be deemed to be the average of the twodeterminations with respect to the Building and/or the Premises, as the casemay be.  If the higher of such twodeterminations is more than one hundred two percent (102%) of the lower ofthem, then the two architects shall jointly appoint a third licensed (orregistered, as applicable) architect within ten (10) days after the second ofthe two determinations described above has been rendered.  The third architect shall independently makehis/her determination of the subject measurement within thirty (30) days afterhis/her appointment.  The highest andthe lowest determinations of the subject measurements among the threearchitects shall be disregarded and the remaining determination shall be deemedto be the subject measurement.  Eachparty shall pay for the cost of its architect and one-half of the cost of thethird architect.  Notwithstanding anything in thecontrary set forth in this Lease, in the event it is determined that theamounts of rentable area in the Building and/or the Premises set forth above are different fromthose which would have resulted had the BOMA Standard and the above-referencedload factors been correctly calculated, then (i) Rent theretoforepaid by Tenant to Landlord during the Term shall be retroactively adjusted to reflect the number of rentablesquare area of the Building and the Premises, as remeasured under the BOMAStandard and the above-referenced load factors, and (a) any

 

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deficiency due to the retroactively adjustedsquare footage calculations shall be paid by Tenant to Landlord within thirty(30) days after Landlord’s notice to Tenant setting forth the rentable floorarea of the Premises, or (b) any excess Rent theretofore paid by Tenant due tothe retroactively adjusted square footage calculations shall be creditedtowards the payments of Rent next coming due hereunder; (ii) Tenant’s Share ofIncreased Operating Expenses and Tenant’s Share of Increased Real Estate TaxExpenses shall be appropriately adjusted based upon the revised square footagecalculations; (iii) the Tenant Allowance shall be appropriately adjusted basedon the revised square footage calculations and Landlord shall pay to Tenant anyunderpayment thereof and Tenant shall pay to Landlord any excess paymentthereof, as applicable; and (iv) Landlord and Tenant shall promptly execute anamendment to this Lease implementing the appropriate revisions to this documentbased upon themeasurement and certification of the square footage calculations with respectto the Premises and the Building.

 

C.                                     Complex: that certain complex of three (3) buildings (of which the Building andthe Land are a part) known as Arlington Gateway, and including all easements,rights, and appurtenances thereto (including private streets, storm detentionfacilities, and any other service facilities).

 

D.                                    Term: Approximately twelve (12) years, as more particularly defined in Section2.G. hereof, as may be extended pursuant to Section 45 hereof.

 

E.                                      Anticipated Turnover Date:  January 15, 2005.  The Lease Commencement Date shall be the date defined as such inSection 2.G. hereof.

 

F.                                      Base Rent: As setforth in Section 4.Abelow, andsubject to adjustment as set forth in Section 1.B. above.

 

G.                                     Base Rent Annual Escalation Percentage:  Two and one-half percent (2.50%), as setforth in Section 4.A. hereof.

 

H.                                    Operating Expenses Base Year:  The one (1) year period beginning on the first day of the calendarmonth following the date upon which Tenant commences its business operations inthe Premises, provided that in no event shall such one (1) year period beginlater than that date which occurs two hundred seventy (270) days after theLease Commencement Date.

 

I.                                         Real Estate Tax Expenses Base Year:  The one (1) year period beginning on the first day of the calendarmonth following the date upon which Tenant commences its business operations inthe Premises, provided that in no event shall such one (1) year period beginlater than that date which occurs two hundred seventy (270) days after theLease Commencement Date.

 

J.                                        [Intentionally omitted]

 

K.                                    Brokers: Jones Lang LaSalle, as agent of Landlord, and Equis Corporation, asagent of Tenant.

 

L.                                      Tenant Notice Address: Prior to the date upon which Tenantcommences business operations in the Premises, Watson Wyatt & Company, 1717 H Street, N.W., Suite 800,Washington, D.C. 20008, Attention:  Michael Brendes, Directorof Real Estate, with a copy to Watson Wyatt & Company,

 

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1717 H Street, N.W., Suite 800, Washington, D.C. 20008, Attention: General Counsel, and with a copy to Watt, Tieder, Hoffar and Fitzgerald, 7929 WestparkDrive, Suite 400, McLean, Virginia 22102, Attention: Thomas Galli; and following Tenant’scommencement of business operations in the Premises, Watson Wyatt & Company,at the Premises, Attention: Directorof Real Estate, with a copy to Watson Wyatt & Company, at the Premises,Attention:  General Counsel, and with acopy to Watt, Tieder, Hoffar & Fitzgerald, 7929 Westpark Drive, Suite 400,McLean, Virginia 22102, Attention: Thomas Galli.

 

M.                                 Landlord Notice Address: JBG/CommercialManagement, L.L.C., 4445 Willard Avenue, Suite 400, Chevy Chase, Maryland20815, Attention:  Mr. Thomas A. O’Neil,with a copy to: Greenstein DeLorme & Luchs, P.C., 1620 L Street, N.W.,Suite 900, Washington, D.C. 20036, Attention: Abraham J. Greenstein, Esq.

 

N.                                    Landlord Payment Address:  Arlington Office, L.L.C. and delivered toArlington Office, L.L.C. at JBG/Commercial Management, L.L.C., Attention:  Accounts Receivable Department, at thefollowing address: 4445 Willard Avenue, Suite 400, Chevy Chase, Maryland, orsuch other address as Landlord specifies in a notice to Tenant.

 

O.                                    Building Hours:  8:00 a.m. to  6:00 p.m. onMonday through Friday (excluding Holidays) and 9:00 a.m. to 1:00 p.m. onSaturday (excluding Holidays).

 

P.                                      [Intentionally Omitted]

 

Q.                                    Parking Permits:  Parking permitsfor the use of 2.1 parking spaces in theGaragefor each 1,000 square feet ofrentable area comprising the Premises.

 

General

 

R.                                     Alterations:  Any improvements, alterations, fixed decorations ormodifications, structural or otherwise, to the Premises, the Building or the Land,as defined below, including but not limited to the installation or modificationof carpeting, partitions, counters, doors, air conditioning ducts, plumbing,piping, lighting fixtures, wiring (other than equipment wiring), hardware,locks, ceilings and window wall coverings.

 

S.                                      Common Areas:  Those areas of the Building, Land and, to the extent available for use by easement or otherwise,the Complex,made available by Landlord for use by Tenant in common with Landlord, othertenants of the Building and the employees, agents, subtenants, assignees,contractors, clients, licensees, customers, invited guests, and invitees ofLandlord, Tenantand of such other tenants.

 

T.                                     Default Rate:  That rate of interest which is three (3) percentage points abovethe annual rate of interest which is publicly announced by Bank of America orits successor entity, if applicable (“Bank of America”), from time to time asits “prime” rate of interest, irrespective of whether such rate is the lowestrate of interest charged by Bank of America to commercial borrowers.  In the event that Bank of America ceases toannounce such a prime rate of interest, Landlord, in Landlord’s reasonablediscretion, shall designate the prime rate of interest by another bank locatedin the Washington, D.C. metropolitan area, which shall be the prime rate ofinterest used to calculate the Default Rate.

 

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U.                                    Ground Leases:  All ground and other underlying leases from which Landlord’stitle to the Land and/or the Building is or may in the future be derived.  “Ground Lessors” shall denote the landlord undersuch ground or underlying leases.  Landlord hereby warrantsand represents to Tenant that no Ground Lease exists as of the date of thisLease.

 

V.                                     Holidays: New Year’s Day, Memorial Day, Independence Day, Labor Day, ThanksgivingDay andChristmas Day and such other Federal government holidays as Tenant generallyprovides to its employees.

 

W.                                Land:  The real estate thatsupports the Building, which real estate is more particularly described in ExhibitL attached hereto, and made a part hereof.

 

X.                                    Tenant’s Work:  All work to be performed by Tenant under the Work Agreement (asdefined in Exhibit C).

 

Y.                                     Lease Commencement Date:  The date the Term commences, as determined pursuant to Section2.G. below.

 

Z.                                     Lease Year: That period of twelve (12) consecutive calendar months that commences onthe Lease Commencement Date, and each consecutive twelve (12) month periodthereafter; provided, however, that if the Lease Commencement Date is not thefirst day of a month, then the second Lease Year shall commence on the firstday of the month following the month in which the first anniversary of theLease Commencement Date occurs.  Theearliest such twelve (12) month period shall be referred to as the “first LeaseYear,” and each of the following Lease Years shall similarly be numbered foridentification purposes.

 

AA.                         Mortgages:  All mortgages, deedsof trust and similar security instruments which may now or in the futureencumber Landlord’s interestin the Building andthe Land, including mortgages related to both construction and permanentfinancing.  “Mortgagees” shall denotethose persons and entities holding such mortgages, deeds of trust and similarsecurity instruments. Landlordhereby represents to Tenant that no Mortgage encumbers Landlord’s interests inthe Building or the Land other than that Credit Line Deed of Trust and SecurityAgreement dated January 31, 2003 executed by Landlord in favor of John H. Gardner,as trustee, for the benefit of BFV Interim Finance b.v., and recorded at DeedBook 3539, Page 48 among the land records of Arlington County, Virginia, a copyof which Landlord delivered to Tenant prior to the date of this Lease.

 

BB.                             Operating Expenses:  All costsand expenses actually incurred by Landlord during any (“calendar”) year in managing,operating and maintaining the Building, the Land and certain expenses withrespect to shared areas within the Complex (as detailed below) which shall beallocated to the Building and included in Operating Expenses to the extentprovided under that Amended and Restated Declaration of Easements, Covenants,Restrictions and Agreements dated October 21, 2003, among Arlington Office,L.L.C., Arlington Residential, L.L.C., and Arlington Hotel, L.L.C., recordedamong the land records of Arlington County, Virginia, in Book 3612 at page 950,as document number 2003294456, as the same may be amended from time to time(provided that the Building’s liability for any items which would constituteOperating Expenses shall not be increased as a result of any such amendment),all as

 

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determined in accordance with generallyaccepted accounting principles consistently applied by Landlord.  Such costs and expenses shall include, butnot be limited to, the cost of water, gas, sanitary sewer, storm sewer,electricity and other utilities, trash removal, telephone services, insuranceof types and in amounts customarily carried for Comparable Buildings (provided that Landlord may include inOperating Expenses the premiums for insurance policies in amounts which do notexceed 115% of the amounts customarily carried for Comparable Buildings, withTenant having the burden of proof for the amount of any such policy customarilycarried for Comparable Buildings), janitorial and char servicesand supplies, on-site security services, labor costs (including social securitytaxes and contributions and fringe benefits), charges under maintenance andservice contracts (including, but not limited to, chillers, boilers, elevators,window and security services), central heating and air conditioning, managementfees not to exceed the marketrate (forComparable Buildings, not to exceed 3%) of the gross receiptsfrom the operation of the Building in any calendar year, business taxes,license fees, and charges, costs, charges and other assessments made by or forany entity operating a business improvement district in which the Building islocated.  Operating Expenses shallinclude all actual costs and expenses for operating, maintaining and repairingthe external common areas of the Complex (net of income from such operations of the same) andany shared garage (net of income from operation of the same).  Notwithstandinganything to the contrary set forth in this Lease, OperatingExpenses shall not include: (i) Real Estate Tax Expenses; (ii) payments of principal,interest, fees or other charges or amounts onany Mortgages, or any otherloan or financing; (iii) leasing commissions;(iv) costs of preparing, improving or altering any space in preparationfor occupancy of any new or renewal tenants; (v) amounts of a capital nature or which would be capitalizedundergenerally accepted accounting principles including, without limitation,capital repairs, capital improvement, capital equipment and capital tools,except for those (A) installedor acquired to reduce Operating Expenses (amortized at an annual ratereasonably calculated to equal the amount of Operating Expenses to be saved ineach calendar year throughout the term of this Lease, as reasonably determinedat the time Landlord elected to proceed with the capital improvement oracquisition of the capital equipment to reduce Operating Expenses), together withinterest at the actual but reasonable interest rate incurred by Landlord, tothe extent of the savings realized, or (B) incurred after the LeaseCommencement Date in order to comply with any Law that was not in effect priorto the Lease Commencement Date, provided that such capital costs shall beamortized over their useful life as reasonably determined, together withinterest at the actual but reasonable interest rate incurred by Landlord; allother capital expenditures and improvements shall be excluded from OperatingExpenses; (vi) the costs of services and utilitiesseparately paid by particular tenants; (vii) costs which are payable toLandlord by insurers or by governmental authorities or any other source;(viii) marketing costs;(ix) costs of any equipment, services or utilities which are provided solely toone or more retail tenants; (x) amounts reimbursable to Landlord (either by aninsurer, tenant, warrantor or otherwise); (xi) expenses incurred in leasing orprocuring tenants; (xii) net basic rents under ground leases; (xiii) all costsspecially billed to and paid by specific tenants; (xiv) depreciation or capitalcosts of any equipment, machinery, fixtures or improvements therein, as well asrental of equipment which, if purchased, would constitute a capital item, other than thosepermitted in item (v)above; (xv) compensation paid to officers of Landlord or officers of the managementagent who do not perform property management related activities; (xvi) the cost of tools, equipmentand material usedin the construction of anyimprovements; (xvii) amounts resulting from negligence or willful misconduct on the part ofLandlord or any of its employees, agents or invitees or on the part of anytenant or occupant of space in the Building or any of their respectiveemployees, agents or invitees; (xviii) amounts resulting fromnegligence or willful misconduct on the part of any person or entity which isnot identified in the preceding item to the extent Landlord fails to recoverthe same notwithstanding its commercially reasonable and diligent efforts;(xix) costs for any structural

 

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maintenance, replacement or redesign otherthan those for which Tenant is expressly liable pursuant to the terms of thisLease; (xx) legalfees and other expensesincurred in connection with negotiations or disputes; (xxi) costs or expenses associatedwith the enforcement of provisions of any leases or other agreements; (xxii) amounts relating to thedefense of title or interest in property; (xxiii) amounts incurred by Landlord in connectionwith the  construction of the Building, the Complexand related facilities; (xxiv) amounts incurred for the correction of defects in design and/orconstruction and/or in designand/or construction of Landlord’s Work (but not the costs of wearand tear); (xxv) amountsincurred in connection with casualty or the exercise of eminentdomain; (xxvi) anycompensation paid to clerks, attendants or other persons in commercialconcessions; (xxvii) increasedinsurance premiums caused byacts of others; (xxviii) moving expenses of tenants; (xxvix)costs arising from the presence of hazardous materials or substances,including, without limitation, hazardous substances in the groundwater or soil,not caused by the acts or omissions of Tenant, its agents, employees,contractors, licensees or invitees; (xxx) costs incurred for any items to the extent recovered under amanufacturer’s, materialmen’s, vendor’s or contractor’s warranty or other agreement; (xxxi) costs ofacquisition of sculpture, paintings or other objects of art; (xxxii) income, excessprofits, franchisetaxes or other such taxesimposed on or measured byincome; (xxxiii) costs relating to maintaining any entity’sexistence, either as a corporation, partnership, trust or other entity, such astrustee’s fees, annual fees, partnership organization or administrationexpenses, deed recordation expenses, and legal and accounting fees for suchpurposes; (xxxiv) costs incurred to achieve compliance withany governmental laws, ordinances, rules, regulations or orders with respect toconditions existing in violation thereof on the Rent Commencement Date; (xxxv) any penalties,fees, interest and other amountsincurred because of Landlord’s failure to timely comply with laws or payany Operating Expenses or Real Estate Tax Expenses, provided that Tenant was not then in default beyondthe expiration of the applicable cure period with respect to Tenant’sobligation to pay Tenant’s Share of Increased Operating Expenses under Section5 of this Lease; (xxxvi) accounting fees, other than thoseattributable to reviewing and preparing operating statements for the Buildingor the Complex (but with respect to the Complex, only to the extent necessaryto determine the proportionate amount of any expenses which are allocable tothe Building) or other purposes relating to the operation (but not the sale orthe financing) of the Building or the Complex and not income tax returns; (xxxvii) imputed rent for a managementoffice in the Complex,unless imputed rent for a management office in the Building is included inOperating Expenses for the Operating Expenses Base Year, the size of whichoffice shall not exceed 1,000 rentable square feet, and the rent for whichoffice shall not exceed market rate of rent for comparable space in ComparableBuildings, provided that any increase in such imputed rent shall not exceed twoand one half percent (2.5%) per annum; (xxxviii) Landlord’s general overhead expenses; (xxxix)electricity which is separately sub-metered in premises leased by other tenantsand amounts collected byLandlord from other tenants for excess electrical usage; (xl)amounts incurred in connectionwith selling, syndicating, financing, mortgaging or hypothecating any interestin property, including, but not limited to, closing costs, title insurancepremiums, transfer, recordation taxes, brokers’ commissions and advertisingexpenses; (xli) rentals for items (except when needed in connectionwith normal repairs andmaintenance of permanent systems) which if purchased, rather than rented, wouldbe of a capital nature which is specifically excluded in item (v) above; (xlii)depreciation, amortization and interest payments, except as permitted in item(v) above or except on equipment, materials, tools, supplies and vendor-typeequipment purchased by Landlord to enable Landlord to supply services Landlord mightotherwise contract for with a third party where such depreciation, amortizationand interest payments would otherwise have been included in the charge for suchthird party’s services, all as determined in accordance with generally acceptedaccounting principles, consistently applied, and when depreciation oramortization is permitted or required, the item shall be amortized over itsreasonably anticipated useful

 

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life; (xliii) non-cash items, such as bad debt losses and rent losses;(xliv) reserves, except when and to the extent actually used for the payment ofOperating Expenses; (xlv) amounts incurred in connection with repairs orreplacements to improvements or equipment to the extent such amounts resultfrom deficiency in design, construction, workmanship or materials; (xlvi) costsof signs identifying any entity or person, except directional signs and signscontaining information as to where to obtain services, whether emergency orotherwise, and signs required by any Law; (xlvii) amounts incurred inconnection with lease, sublease and/or assignment negotiations and transactionswith present or prospective tenants or otheroccupants; (xlviii) amounts incurred in connection with events, including, butnot limited to, shows, promotions, kiosks, displays, filming, photography,private events or ceremonies; (xlix) amounts incurred in connection with acasualty or the exercise by governmental authorities of the right of eminentdomain; (l) amounts incurred in connection with the provision of services,utilities or other benefits which are not offered to Tenant, or are greater inquantity, when measured on a per rentable square foot basis, or higher inquality than those delivered to Tenant, or for which Tenant is chargeddirectly, but which are provided to another tenant or occupant regardless ofwhether or not such amounts are recovered by Landlord; (li) amounts incurreddue to the violation by any tenant of the terms and conditions of any lease ofspace; (lii) amount of the management fee paid or computed on a basis differentthan the basis used for calculation of the same for the Operating Expenses BaseYear and in all events to the extent such management fee is in excess of threepercent (3%) of gross revenue from the Building, assuming that the Building was100% occupied with all tenants paying rent on their respective premises for theentire Operating Expenses Base Year; (liii) salaries, wages, fees, benefits andother compensation paid to the extent customarily included in or covered by amanagement fee paid or charged by landlords of Comparable Buildings inconnection with the management of such properties, provided that in no eventshall Operating Expenses include salaries and/or benefits attributable topersonnel above the level of Building manager, and in the event any employee ofthe Building also provides labor or services with respect to other buildings,the salary and other benefits of such employee shall be equitably allocatedamong the buildings for which such employee provides labor or services; (liv)rent and other amounts incurred in connection with any space for leasingpersonnel, or, except as provided in (xxxvi), any other space occupied byLandlord or any affiliate or subsidiary of Landlord; (lv) amounts paid toLandlord or to subsidiaries or affiliates of Landlord for goods and/or servicesto the extent the same exceed the costs of goods and/or services rendered byunaffiliated third parties of similar experience on a competitive basis; (lvi)amounts incurred in connection with a violation of any agreement or inconnection with any violation of applicable laws; (lvii) with respect to allassessments and premiums which can be paid in installments, any amount inexcess of the maximum number of installments permitted by Law and not includedas Operating Expenses except in the year in which the assessment or premiuminstallment is actually paid; (lviii) amounts which are customarily included inor covered by the management fee paid or charged by landlords of ComparableBuildings, including without limitation, all expenses of a centralized office,compensation (including benefits) of management personnel above the level ofproperty manager, and costs of preparation of accounts receivable and accountspayable records; (lix) amounts arising from charitable or politicalcontributions; (lx) amounts arising from earthquake insurance; (lxi) amounts(includingin connection therewith all attorneys’ fees and costs of settlement judgments and paymentsin lieu thereof) incurred in connection with negotiations, claims, potentialclaims, disputes, potential disputes, litigation or arbitrations, includingthose involving tenants and other occupants of the Building, any employee,agent, contractor or subcontractor of Landlord or any of its affiliates orsubsidiaries, or actual or prospective tenants, purchasers or mortgagees of theBuilding; (lxii) amounts incurred in connection with any bankruptcy proceeding;(lxiii) amounts payable in connection with any indemnity obligation or fordamages; (lxiv) amounts paid for entertainment, dining and travel; (lxv)amounts incurred

 

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in connection with any audits performed for a particular tenant; (lxvi)amounts paid in connection with the use or lease of properties and/orfacilities owned by governmental authorities, including, without limitation,vault rent or vault charges; (lxvii) amounts incurred by Landlord for the useof common areas in the Building or elsewhere in the Complex to the extentLandlord receives income for such use; (lxviii) amounts incurred in installing, operating, maintaining and owning any specialty items or services not normally installed,operated and maintained in Comparable Buildings and not necessary forLandlord’s operation, repair and maintenance of, and the providing of required services for,the Building, including, but not limited to, any observatory, beacon(s),broadcasting facilities, cafeteria or other dining facilities, conferencefacilities, athletic or recreational club facilities (except that OperatingExpenses may include the reasonable cost of maintaining the exercise facilitymaintained by Landlord in the Building in accordance with the terms of thisLease, only to the extent the use of such facility is provided at no cost toall tenants in the Building and use of the same is limited to tenants of theBuilding), child care center, kiosks, promotions, displays, or any otherfacilities similar to any of the foregoing; (lxix) amounts expressly excludedfrom Operating Expenses elsewhere in this Lease; (lxx) amounts or taxesexpressly excluded from “Real Estate Tax Expenses” in this Lease; and (lxxi)amounts associated with or relating to separate items or categories orsubcategories of Operating Expenses to the extent such items, categories orsubcategories were not part of Operating Expenses during the entire OperatingExpenses Base Year, unless retroactively included in Operating Expenses for theOperating Expenses Base Year.

 

CC.                             Premises’ Standard Electrical Capacity: The electrical capacity sufficient to support Tenant’s balancedconsumption of six (6) watts of low voltage per square foot of rentable areaand two and one-half (2.5) watts of high voltage per square foot of rentablearea.

 

DD.                           Real Estate Tax Expenses:  (1)All real estate taxes, arena taxes, solid waste taxes and related charges,front foot benefit charges, special user fees, rates, and assessments(including general and special assessments, if any), ordinary andextraordinary, foreseen and unforeseen, which are imposed upon Landlord orassessed against the Building or the Land or Landlord’s personal property usedin connection therewith; (2) any other present or future taxes or governmentalcharges that are imposed upon Landlord or assessed against the Building or theLand which are in the nature of or in substitution for real estate taxes, includingany tax levied on or measured by the rents payable by tenants of the Building,all taxes and assessments for public improvements or any other purpose and anygross receipts or similar taxes; and (3) reasonable expenses (including, without limitation,attorneys’ and consultants’ fees and court costs) incurred in protesting orseeking a reduction of real estate taxes, whether or not such reduction isultimately successful; provided, however, that Tenant shall be credited forTenant’s proportionate share of any refund received, including any interestthereon which is actually received by Landlord, and Tenant’s right to receiveits portion of such refund shall survive the termination or expiration of thisLease.  Notwithstanding anything to the contrary set forth in this Lease,Real Estate Tax Expensesshall not include: (i)any profits or excess profitstaxes or excess profits taxes, franchise taxes, gift taxes, capital stocktaxes, inheritance and succession taxes, estate taxes, transfer taxes, recordation taxes, capitalgains taxes, franchise taxes, corporate or unincorporated business taxes, or other taxes to the extentapplicable to general or net income (as opposed to rents orreceipts), (ii) businesslicense fees or businessentity fees; (iii) any items included in Operating Expenses; (iv) any item expressly excludedfrom Operating Expenses pursuant to this Lease (other than “Real Estate TaxExpenses”); (v) any taxes imposed in connection with personal property owned,leased or used by any tenant or other occupant in the Building or the Complex;(vi) penalties incurredas a result of negligence, inability (except to the extent that Tenant was thenin default beyond the expiration of the applicable cure

 

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period with respect to its payment of Tenant’s Share of Increased RealEstate Tax Expenses) or unwillingness to make payments of , and/or to file any tax or informational returns with respect to,any amounts, when due; (vii) any amounts incurred for real or personalproperty taxes, leaseholdtaxes in lieu thereof and any assessments upon or allocable to parkingfacilities, or taxes or assessments levied in lieu thereof, or in additionthereto; (viii) taxes or assessments imposed or levied in connection withentitlements relative to real property which are granted after the date ofexecution of this Lease; provided, however, that in no event shall Landlordinclude in Real Estate Tax Expenses (A) any taxes or assessments based uponincreases in the FAR which was available to the Building but which was notincorporated into the Building until after the Lease Commencement Date or (B)any amounts payable to any governmental agencies in connection with obtaininggovernmental approval to develop and construct the Building; (ix) taxes,assessments or charges imposed or levied in connection with development orrenovation of ordamage to real property, including improvements, or any new construction, otherthan in connection with restoration work to repair damage after a casualty; (x)any other taxesor assessments charged or levied which are not directly incurred as a result of the operationor operation of the Building or the Land; or (xi) costs, expenses, taxes or assessments associated withor relating to separate items or categories or subcategories of Real Estate TaxExpenses to the extent such items, categories or subcategories were not part ofReal Estate Tax Expenses for the entire Base Year, unless retroactivelyincluded in Real Estate Tax Expenses for the Real Estate Tax Expenses Base Year. Landlord shall contest and diligently pursue a reduction and/orelimination of any such Real Estate Tax Expenses if Landlord reasonablydetermines to initiate efforts to obtain any such reduction or elimination.

 

EE.                               Rent:  All Base Rent andAdditional Rent.

 

(1)                                  Base Rent: The amount payable by Tenant pursuant to Section 4.A below.

 

(2)                                  Additional Rent:  All sums of money payable by Tenant pursuant to this Lease otherthan Base Rent.

 

(3)                                  Monthly Rent:  A monthly installment of Base Rent and Additional Rent, if any,which shall equal one-twelfth (1/12th) of Base Rent and Additional Rent then ineffect.

 

FF.                               Tenant’s Personal Property:  All trade equipment,furnishings and/or other personalproperty now or hereafter installed or placed in or on thePremises by Tenant or with Tenant’s permission (other than any property ofLandlord), excluding, among other things, built-in mill work in offices andconference rooms, built-in reception desks, and built-in kitchen cabinets and appliances.

 

GG.                             Unavoidable Delay:  Any delaysdue to strikes, labor disputes, shortages of material, labor or energy, acts ofGod, governmental restrictions, delays in obtaining building permits beyond thecustomary time for receipt of the particular type of permit and despite thepermit applicant’s timely application for, and diligent pursuit of, same, enemyaction, civil commotion, fire, unavoidable casualty or any other causes, with respect to Landlord’sobligations, beyond the reasonable control of Landlord or, withrespect to Tenant’s obligations, beyond the reasonable control of Tenant.

 

HH.                           Work Agreement:  Exhibit Cattached to this Lease, the terms of which are hereby expressly incorporated inthis Lease.

 

II.                                     Landlord’s Work:  All work to be performed by Landlord under the Work Agreement,and Section 3 below.

 

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**2.****                                     ****TERM.**

 

A.                                   Certain Definitions.

 

A.1                             The term “Substantially Complete” or “SubstantialCompletion” of the Tenant’s Work shall mean: (i) Tenant has been tendered continuous and uninterrupted access to thePremises commencing on the date the same is delivered to Tenant and thereafter;(ii) all systems in the Building are operational to the extent necessary toservice the Premises; (iii) Landlord has completed all the work required to beperformed by Landlord in accordance with the Work Agreement in accordance withthe Work Agreement, with the exception of “punchlist” items which will notunreasonably interfere with Tenant’s use or occupancy of the Premises orTenant’s use of the Garage or Common Areas as permitted under this Lease; (iv)Landlord has obtained a certificate of occupancy for the Building, or atemporary certificate of occupancy for that portion of the Building thatincludes all of the Premises, the Garage and all Common Areas in the Building;(v) Tenant has been provided with the number of parking privileges to which itis entitled under this Lease; (vi) Tenant has completed the Tenant’s Work,excluding “punch-list” items; and (vii) Tenant has installed its furniture,fixtures, telephones, communications systems and free-standing workstations inthe Premises.

 

A.2                             The term “Force Majeure Delay” shall mean any delay in the SubstantialCompletion of the Tenant’s Work which is attributable to any: (i) delay orfailure to perform attributable to any strike, lockout or other labor orindustrial disturbance (whether or not on the part of the employees of eitherparty hereto), civil disturbance, act of the public enemy, war, riot, sabotage,blocking, embargo, inability to secure customary materials, supplies or laborthrough ordinary sources by reason of regulation or order of any government orregulatory body; (ii) delay attributable to the failure of Tenant to securebuilding permits and approvals (including any failure to obtain a temporarycertificate of occupancy) within the same time period that normally prevailedfor obtaining such permits and approvals at the time this Lease was negotiated (excluding Tenant’s unreasonable applicationsor unreasonable requests or requirements in connection with Tenant’s submissionof applications for permits or other approvals in connection with Tenant’sWork), provided that if Tenant fails to apply for the same by the TurnoverDate, then the Force**MajeureDelays described in this item (ii) shall not exceed thirty (30) days, andprovided, further, that if Tenant fails to apply for the same by that datewhich occurs forty-seven (47) days after the Turnover Date, then no ForceMajeure Delay shall be deemed to have occurred with respect to the mattersdescribed in this item (ii);(iii) delay in completing the plans for the Tenant’s Work and/or theconstruction of the Tenant’s Work because of changes in Laws; or (iv) delayattributable to lightning, earthquake, fire, storm, hurricane, tornado, flood,washout, explosion, or any other similar cause beyond the reasonable control ofthe party from whom performance is required, or any of its contractors or otherrepresentatives.  Except as otherwiseexpressly set forth in this Lease, any prevention, delay or stoppage due to anyForce Majeure Delay shall excuse the performance of the party affected for aperiod of time equal to any such prevention, delay or stoppage, except theobligations of either party to pay money pursuant to this Lease.

 

A.3                             The term “Landlord Delay” shall mean any delay inthe Substantial Completion of the Tenant’s Work which is due to any act oromission of Landlord, its agents, employees, contractors, subcontractors orlicensees (including acts or omissions while acting as agent, employee,contractor or subcontractor for Tenant). The term Landlord Delay shall include, but shall not be limited to, any:(i) delay in the giving of authorizations, approvals or disapprovals requiredof Landlord by the respective dates

 

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thereforeas set forth in the Work Agreement or this Lease; (ii) delay due to the failureof Landlord to grant authorizations or approvals for unreasonable reasons;(iii) delay attributable to the acts or failures to act of Landlord, itsagents, employees, contractors, subcontractor or licensees where such acts orfailures to act delay the Substantial Completion of the Tenant’s Work; (iv)delay by Landlord in completing the Landlord’s Work to the extent necessary toallow Tenant to commence the construction of the Tenant’s Work upon theTurnover Date, and thereafter continue construction of the same withoutinterruption for failure of any portion of the Landlord’s Work to be completed;(v) delay attributable to the failure or refusal of Landlord or any of itsagents, employees, contractors, subcontractors or licensees to permit Tenant,its agents, employees, contractors, subcontractors or licensees reasonableaccess to and use of the Building or any Building facilities or services (whichaccess shall be coordinated with Landlord), including elevators, and loadingdocks, which access and use are required for the orderly and continuousperformance of the work necessary to complete the Tenant’s Work or to installTenant’s furniture, fixtures, equipment and personal property; (vi) delayattributable to Landlord providing Tenant incorrect or incomplete Base BuildingPlans (as defined in the Work Agreement), in which case, in addition to suchdelay being deemed a Landlord Delay, Landlord shall increase the TenantAllowance by an amount sufficient to reimburse Tenant for the reasonable actualincreased costs incurred by Tenant as a direct result thereof; and (vii)failure of Landlord to deliver the Base Building Plans to Tenant within thirty(30) days after the date of this Lease.

 

B.                                     *General*.  In the event that the use ofthe freight elevator is not sufficient to meet Tenant’s requirements, Landlordshall cause to be made operational, and shall allow Tenant to have priorityusage of, two passenger elevators in the elevator bank that services thePremises, which usage shall be coordinated with Landlord), in order to assistTenant in the expeditious construction of the Tenant’s Work and the installationof Tenant’s fixtures, furniture, equipment and personal property.  In no event shall Tenant’s remedies orentitlements for the occurrence of a Landlord Delay be abated, deferred, ordiminished or rendered inoperative because of a prior, concurrent, orsubsequent delay resulting from any action or inaction of Tenant.

 

C.                                     *Force Majeure Delays andLandlord Delays Occurring After Lease Commencement Date.*  Ifan event occurs after the Lease Commencement Date, which would otherwise haveconstituted a Landlord Delay had it occurred prior to the Lease CommencementDate, then Rent payable by Tenant under this Lease shall be abated beginning onthe Rent Commencement Date by one (1) day for each such day of LandlordDelay.  In addition, the RentCommencement Date shall be extended by one (1) day for each day of ForceMajeure Delay that begins to occur prior to the occurrence of the RentCommencement Date.  Notwithstanding theforegoing provisions of this Section 2.C., in the event that both of thecircumstances described in the two immediately preceding sentences occur withrespect to the same day or period of time, and one of such circumstancesconstitutes a Landlord Delay and one or more other such circumstancesconstitutes a Force Majeure Delay, both with respect to the same day or periodof time, then the Rent payable by Tenant under this Lease shall be abatedbeginning on the Rent Commencement Date by one (1) day for each such day ofLandlord Delay, but the Rent Commencement Date shall not also be extended byone (1) day for each day of Force Majeure Delay which occurred during the sameday or period of time.

 

D.                                    *Landlord’s Work*.  In the event that (a) Landlordfails to meet theKey Milestone Date (as defined in Section 1.d of the Work Agreement attached tothis Lease as Exhibit C) set forth in Section 1.d.(i),(b) at any time onand after September 1, 2004, it is determined by the Consultants Procedure (as

 

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hereinafter defined) that the Turnover Date(as defined in Section 1.d.(ii) of the Work Agreement attached to this Lease asExhibit C) will not occur on or before May 15, 2005, (c) following theoccurrence of a casualty which destroys or substantially destroys the Building,whether such casualty occurs before or after September 1, 2004, it isdetermined by the Consultants Procedure (as hereinafter defined) that theTurnover Date will not occur on or before May 15, 2005, or (d) the TurnoverDate does not in fact occur on or before May 15, 2005; then in any of theevents described in the immediately preceding clauses (a), (b), (c) and (d), Tenant shall have the right toterminate this Lease by delivering notice to Landlord within twenty (20) daysfollowing the applicable event described in the foregoing clauses (a), (b), (c)or (d).  It is hereby agreed that forpurposes of the foregoing, neither the date of November 1, 2004 nor the date ofMay 15, 2005 shall be extended by Force Majeure Delays or Unavoidable Delays.

 

As used inthis Lease, the term “Consultants Procedure” shall mean a procedure pursuant towhich Tenant advises Landlord in writing that Tenant wishes to have a QualifiedConsultant (as hereinafter defined) selected by Tenant and a QualifiedConsultant selected by Landlord (the “Consultants Procedure Initiation Notice”)determine (i) whether the Turnover Date will not occur on or before May 15,2005, in the case of a Consultants Procedure pursuant to this Section 2.D., or(ii) whether restoration of the Premises will be completed by a particular datecontemplated by Section 16 of this Lease, as applicable.  Within twenty (20) days following Landlord’sreceipt of a Consultants Procedure Initiation Notice, Landlord shall designatea Qualified Consultant (as hereinafter defined) to take part in the applicableConsultants Procedure and if Landlord fails to designate its QualifiedConsultant by the delivery of notice to Tenant within the above-referenced20-day period, then Tenant’s Qualified Consultant shall make the applicabledetermination provided for in the immediately preceding sentence by himself orherself.  In the event that Landlorddesignates a Qualified Consultant by the delivery of notice to Tenant withinthe above-referenced 20-day period and Tenant’s Qualified Consultant andLandlord’s Qualified Consultant do not agree on whether the Turnover Date willoccur on or before May 15, 2004 (with respect to a Consultants Procedurepursuant to this Section 2.D.) or whether Landlord will complete therestoration of the Building by the applicable date set forth in Section 16hereof (with respect to a casualty governed by said Section 16), then Tenant’sQualified Consultant or Landlord’s Qualified Consultant will notify a thirdQualified Consultant, as hereinafter provided, and such third Qualified Consultantshall be required to make the determination as to whether the Turnover Datewill occur on or before May 15, 2005 or whether the restoration of the Buildingby Landlord will occur by the applicable date provided for in Section 16hereof, as applicable, and the determination of such third Qualified Consultantshall be binding upon Landlord and Tenant. The third Qualified Consultant who shall be notified of the necessity ofmaking a determination pursuant to this paragraph shall be Jim Davis, or ifsaid Jim Davis is unable or unwilling to serve as the third QualifiedConsultant or has been requested to bid on the performance of Tenant’s Work,then the third Qualified Consultant shall be David Orr, and if said David Orris unable or unwilling to serve as the third Qualified Consultant, then thethird Qualified Consultant shall be Jeb Turner, or if said Jeb Turner is unableor unwilling to serve as the third Qualified Consultant, then the thirdQualified Consultant shall be A.S. McGoughan, Jr.  All Qualified Consultants shall make their determinationsutilizing their commercially reasonable judgment and taking into account allrelevant facts, including, but not limited to, in connection with a ConsultantsProcedure with respect to whether the Turnover Date will occur on or before May15, 2004, all information provided by Landlord’s general contractor concerningthe status of Landlord’s Work, Landlord’s general contractor’s plan to make uptime in the event of any delay in its schedule in the performance of Landlord’sWork and the reasons for Landlord’s failure to date to perform the Landlord’sWork in accordance with the schedule initially proposed by Landlord to Tenant.

 

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The term“Qualified Consultant” shall mean a person who is unaffiliated with Landlord orTenant, who has not less than ten (10) years experience regarding theconstruction of multi-story commercial office buildings in the Washington, D.C.metropolitan area and who is, in the case of Landlord, a person who is neither(and never has been) employed by, nor an independent contractor for, Landlord’sgeneral contractor, and in the case of Tenant, a person who is neither (andnever has been) an employee of, nor an independent contractor with, Tenant’sconstruction manager, project manager or general contractor in connection withTenant’s Work.  If the ConsultantsProcedure involves two (2) Qualified Consultants [or one (1) QualifiedConsultant if Landlord does not designate its Qualified Consultant within the20-day period within which it is required to do so, as the case may be], thenthe Consultants Procedure shall be completed and a determination made withinten (10) business days following the appointment of the second QualifiedConsultant [or if Landlord fails to designate its Qualified Consultant withinthe aforesaid 20-day period, then within ten (10) business days following theexpiration of such 20-day period].  Ifthe Consultants Procedure involves a third Qualified Consultant, then such thirdQualified Consultant shall make his or her required determination pursuant tothis Section 2.D. within ten (10) business days after being designated to doso.

 

**E.**                                      *Outside Lease Commencement Date.*  In the event the Lease Commencement Datedoes not occur by the three hundred fiftieth (350th) day followingthe Turnover Date as a result of Landlord Delays, Tenant shall have the rightto terminate this Lease by delivering notice of such termination to Landlord,which notice shall be delivered by Tenant, if at all, not later than the threehundred eightieth (380th) day following the Turnover Date.

** **

F.                                      *Reimbursement Obligations*.

 

(1)                                  In the event Tenant terminates this Lease pursuant to Sections D or Eabove, Landlord shall, within ten (10) days following Landlord’s receipt ofTenant’s request from time-to-time, (i) reimburse Tenant for all costs andexpenses incurred by Tenant in connection with the design and construction ofthe Tenant’s Work and all other costs and expenses incurred by Tenant inconnection with its negotiation and execution of this Lease and all relateddocumentation and the transactions contemplated thereby, (ii) indemnify,protect, defend (with counsel reasonably satisfactory to Tenant) and holdTenant harmless from and against any and all costs, expenses, losses, damages,penalties and liabilities suffered or incurred by or rendered against Tenant asa result of or in connection with Tenant’s failure to vacate “Tenant’s CurrentSpace” (as defined below) by the “Holdover Date” (as defined below), and (iii)reimburse Tenant for all rental obligations accruing from the Holdover Dateunder “Tenant’s Current Leases” (as defined below) and any other lease pursuantto which Tenant occupies space in substitution of all or a portion of Tenant’sCurrent Space (the “Substitution Lease”) which are in excess of the amount ofBase Rent which would have been payable by Tenant under this Lease had theLease Commencement Date occurred on July 15, 2005 and had there been no FreeRent Period in effect thereafter (the “Existing Lease Excess RentalObligations”); provided, however, that in the event Tenant terminates thisLease pursuant to Section 2.D.(a) hereof, then (y) Landlord’s liability underSubsection F(1)(i) above shall be limited to costs and expenses incurred byTenant in connection with the design of the Tenant’s Work, in amount not toexceed One Hundred Seventy-Five Thousand Dollars ($175,000.00), and attorneys’fees incurred by Tenant in connection with the negotiation and documentation ofthis Lease, and matters pertaining thereto, in an amount not to exceed OneHundred Thousand Dollars ($100,000.00); and (z) Landlord’s liability withrespect to the matters addressed in Subsection F(1)(iii) above for ExistingLease Excess Rental Obligations shall not exceed such Existing Lease ExcessRental Obligations for three (3) months, that is, from August 1, 2005 throughSeptember 30, 2005.

 

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Tenantcurrently anticipates that its move to the Premises will occur over someweekends prior to completion of the Tenant’s Work and over at least fourweekends following completion of the Tenant’s Work, but prior to the occurrenceof the Rent Commencement Date. Accordingly, Landlord agrees that in the eventLandlord is liable for matters identified in Subsections F(1)(ii) and (iii)above, Landlord’s liability shall extend to the last day of the calendar monthduring which the 196th day after the Turnover Date occurs.

 

(2)                                  In the event that the Turnover Date does not occur on or before January15, 2005, then Landlord shall, within ten (10) days following Landlord’sreceipt of Tenant’s request from time to time, fulfill the obligations setforth in clauses (ii) and (iii) of Section 2.F(1) and Landlord shall alsoreimburse Tenant for all increased costs incurred by Tenant resulting from adelay in the occurrence of the Turnover Date from January 15, 2005 to the dateon which the Turnover Date actually occurred, including without limitationincreased costs of Tenant’s Work resulting from such delay.

 

(3)                                  With respect to Landlord’s payment obligations in the event that Tenantterminates this Lease pursuant to Sections D. or E. above or the Turnover Datedoes not occur on or before January 15, 2005, (A) Landlord may offset againstits foregoing obligations, all amounts, if any, then payable by Tenant toLandlord; (B) Tenant shall deliver to Landlord reasonable evidence of amountsowing or payment of amounts pursuant to Tenant’s Current Lease and/or anySubstitution Lease with respect to corresponding amounts owing by Landlordpursuant to the foregoing; (C) Landlord shall not be obligated pursuant to theforegoing with respect to any net increased obligation of Tenant under Tenant’sCurrent Leases which results from any amendment to an Existing Tenant Leaseexecuted by Tenant after the date of this Lease; (D) Landlord shall not beliable for any consequential damages incurred by Tenant, but Landlord shall beliable for such consequential damages, if any, as are payable by Tenant to itslandlord under Tenant’s Current Leases (as defined below) and/or SubstitutionLeases, subject to clauses (B) and (C) of this Section 2.F.(3), if (i) theTurnover Date does not occur on or before April 15, 2005, or (ii) LandlordDelays occur after the Turnover Date; and (E) Tenant shall furnish to Landlord,not later than ten (10) business days following any payment made by Landlord toTenant pursuant to this Section 2.F., reasonable evidence of payment of thecorresponding amount paid by Landlord to Tenant having been made by Tenant tothe landlord under Tenant’s Current Leases and/or any Substitution Lease, asapplicable.  In the event that Tenantreceives from the landlord under the Tenant’s Current Leases or any SubstitutionLease or any other source, any refund, credit or other reimbursement of anyamount paid by Landlord pursuant to this Section 2.F as a holdover premium,holdover penalty, any other form of compensation with respect to Tenant’stenancy in such space following the Holdover Date (other than base rent andadditional rent in the nature of pass-throughs) or any combination of theforegoing pursuant to such Tenant’s Current Leases or any Substitution Lease,then, in any such event, the amount payable by Landlord under this Section2.F(3) shall be reduced by an amount equal to the amount of such refund, creditor other reimbursement which was received by Tenant, or Tenant shall reimburseLandlord (if theretofore paid by Landlord under this Section 2.F(3)) in anamount equal to the amount of such refund, credit or other reimbursement.

 

(4)                                  Notwithstanding the foregoing, (i) in the event of the termination ofthis Lease by Tenant pursuant to Sections 2.D.(b), (c) or (d) hereof, Landlordshall not be responsible to indemnify, protect, defend and hold Tenant harmlessfrom and against any such costs, expenses, losses, damages, penalties orliabilities, including rental obligations, suffered or incurred by or renderedagainst Tenant which accrue as a result of Tenant’s failure to vacate Tenant’sCurrent Space or any other space occupied by Tenant in substitution of all or aportion of Tenant’s Current Space by that date which occurs twelve (12) monthsafter Tenant’s termination of this Lease pursuant to any of Sections D or Eabove, and (ii) in the event that the Turnover Date occurs, then, irrespectiveof when the Turnover Date occurs,

 

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Landlord shall not be responsible to indemnify, protect, defend or holdTenant harmless from and against any such costs, expenses, losses, damages,penalties or liabilities, including rental obligations, suffered or incurred byor rendered against Tenant which accrue as a result of Tenant’s failure tovacate Tenant’s Current Space or any space occupied by Tenant in substitutionof all or any portion of Tenant’s Current Space after the last day ofthe calendar month during which the 196th day after the Turnover Date occurs.  The term “Tenant’s CurrentSpace” shall mean that space which Tenant currently leases at 1717 H Street,N.W., Washington, D.C. pursuant to those certain leases (collectively, the“Tenant’s Current Leases”) dated (A) January 9, 1998, as amended by thatcertain letter dated February 24, 1999 and by that First Amendment to Leasedated July 13, 2000 pursuant to which Tenant exercised its option to expand itsleased premises thereunder to include the fifth (5th) and sixth (6th)floors in the building in which the leased premises is located, and (B) June16, 2000, as amended by that certain First Amendment to Lease dated June 9,2003, between Tenant, as lessee, and Marvin N. Robertson and Katheryn M.Robertson, Trustees under Trust Indenture made by Mathilda M. Kirchner datedNovember 28, 1953, Marvin M. Robertson and Katheryn M. Robertson, Trusteesunder Trust Indenture made by Cecelia E. Goodman dated November 28, 1953,Marvin M. Robertson, Katheryn M. Robertson and George W. Lemm, Trustees underthe Will of Katheryn Lemm (Trust Estates 2 through 4), Marvin M. Robertson,Katheryn M. Robertson and George W. Lemm, Trustees under Trust Indenture madeby John C. Goodman dated August 14, 1959 (Trust Estates 1 through 4), Marvin M.Robertson, Katheryn M. Robertson and George W. Lemm, Trustees under TrustIndenture made by Mathilda M. Kirchner dated August 14, 1959 (Trust Estates 4,5 and 6), Marvin M. Robertson, Katheryn M. Robertson and George W. Lemm,Trustees under Trust Indenture made by Cecelia E. Goodman dated August 14, 1959(Trust Estates 1 through 6), Marvin M. Robertson and Katheryn M. Robertson, asTrustees under the Trust Indenture made by Henry J. Kirchner (Trust Estates 1and 2), dated December 5, 1956, Marvin M. Robertson, Michael A. Maiatico andAnn T. Maiatico, Trustees under Trust Indenture No. I made by Walter M.Macnichol dated September 21, 1959 (Trust Estates 1 through 8), Marvin M.Robertson, Katheryn M. Robertson and George W. Lemm, Trustees under TrustIndenture No. II made by Walter M. Macnichol dated September 21, 1959, andMarvin M. Robertson and George W. Lemm, Trustees under Trust Indenture made byWilliam F. Glockner dated May 7, 1965 (Trust Estates 3 through 9 and 11), asLessor.  The term “Holdover Date” shallmean July 31, 2005.  Landlordacknowledges that in material consideration for Landlord’s execution of thisLease, and in reliance thereon, Tenant will exercise its right to advance theexpiration date of the term of Tenant’s Current Leases in order that they shallterminate on the Holdover Date. Landlord’s obligations under this Subsection F shall not be subject toany Unavoidable Delay or any Force Majeure Delay.

 

Tenanthereby represents and warrants to Landlord that the copies of Tenant’s CurrentLeases which Tenant has delivered to Landlord prior to the execution of thisLease are true and complete copies of such Tenant’s Current Leases.

 

G.                                     *Term of Lease:*  Theterm of this Lease (the “Term”) shall commence on the Lease CommencementDate (as definedbelow), andshall terminate at Midnight on the last day of the twelfth (12th) Lease Year (the “Lease Expiration Date”),or such earlier date on which this Lease is terminated pursuant to theprovisions hereof.  The “Lease CommencementDate” shall be that date whichoccurs one hundred sixty-six (166) days following the Turnover Date (as such termis defined in the Work Agreement); provided, however, the Lease Commencement Date shall be delayedby one (1) day for each day of delay in the Substantial Completion of theTenant’s Work when such delay is caused by any “Force Majeure Delay” or“Landlord Delay.  Landlord hereby agreesto indemnify, protect, defend (with counsel reasonably satisfactory to Tenant)and hold Tenant harmless from and against any and all

 

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losses, damages, liabilities, claims, costs and expenses suffered orincurred by Tenant in connection with Landlord Delays, excluding consequentialdamages (except to the extent specifically provided for in Section 2.F.(3)hereof).

 

H.                                    *Declarations:*  Ifrequested by Landlord orTenant at any time during the Term, Landlord and Tenantpromptly will execute a declaration in the form attached hereto as Exhibit B.

 

I.                                         *Effective Date:*  Therights and obligations set forth in this Lease, except for the obligation topay Rent and as otherwise specifically provided herein to the contrary, shallbecome effective upon the date of final execution of this Lease.

 

J.                                        Landlord’s liability pursuant to thisSection 2 shall survive the termination of this Lease.

 

**3.****                                     ****WORKAGREEMENT; SHELL CONDITION.**

 

A.                                   *Landlord’s Work*: Landlord agrees to construct the Building and all Common Areas and toperform all Landlord’s Work as defined in, and in accordance with theprovisions of, the Work Agreement.

 

Following delivery of possession of the Premises to Tenant by Landlord,Tenant shall perform Tenant’s Work (as defined in, and in accordance with theprovisions of, the Work Agreement).

 

B.                                     *Sprinkler Work*: Landlord shall coordinate with Tenant regarding the placement of themain sprinkler loop and sprinkler heads in order to accommodate Tenant’s plansfor the ceiling in the Premises.

 

**4.****                                     ****RENT.**

 

From and after the Rent Commencement Date (as defined below), Tenantshall pay to Landlord Base Rent and Additional Rent as are set forth in thisSection 4 and in Section 5 below, subject only to such rights of abatement andoffset as are specifically set forth in this Lease.

 

A.                                   *Base Rent:* Base Rent shall equal the following amounts, as the same may be adjustedpursuant to Section 1.B. above:

 

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| **Lease Year** |   | **Base Rent****Per Square Foot****Per Annum** |   | **Base Rent  Per Annum** |   | **Monthly  Base Rent** |   |
|----------------|--------|-----------------------------------------------|--------|--------------------------|--------|------------------------|--------|
| 1              |   | $                                             | 32.50  |                     | $      | 3,871,107.50           |   | $ | 322,592.29 |   |
| 2              |   | $                                             | 33.31  |                     | $      | 3,967,587.41           |   | $ | 330,632.28 |   |
| 3              |   | $                                             | 34.14  |                     | $      | 4,066,449.54           |   | $ | 338,870.80 |   |
| 4              |   | $                                             | 34.99  |                     | $      | 4,167,693.89           |   | $ | 347,307.82 |   |
| 5              |   | $                                             | 35.86  |                     | $      | 4,271,320.46           |   | $ | 355,943.37 |   |
| 6              |   | $                                             | 36.76  |                     | $      | 4,378,520.36           |   | $ | 364,876.70 |   |
| 7              |   | $                                             | 37.68  |                     | $      | 4,488,102.48           |   | $ | 374,008.54 |   |
| 8              |   | $                                             | 38.62  |                     | $      | 4,600,066.82           |   | $ | 383,338.40 |   |
| 9              |   | $                                             | 39.59  |                     | $      | 4,715,604.49           |   | $ | 392,967.04 |   |
| 10             |   | $                                             | 40.58  |                     | $      | 4,833.524.38           |   | $ | 402,793.70 |   |
| 11             |   | $                                             | 43.08  |                     | $      | 5,131,301.80           |   | $ | 427,608.49 |   |
| 12             |   | $                                             | 44.16  |                     | $      | 5,259.941.76           |   | $ | 438,328.48 |   |

 

The foregoing amounts werecalculated based on the assumption that the Premises shall contain one hundrednineteen thousand one hundred eleven (119,111) rentable square feet measured inaccordance with the BOMA Standard and the load factors identified above. Tenant shall payBase Rent to Landlord in equal monthly installments (“Monthly Base Rent”) inadvance on the first day of each calendar month during the Term, withoutnotice.  Tenant shall have no obligation for the payment ofthe installments of Monthly Base Rent and monthly installments of Additional Rent pursuant to Section 5hereof for the first six (6) months following the LeaseCommencement Date (the “Free Rent Period”), as may be extended in accordance with the terms set forth belowin this Lease.  The dayfollowing the last day of the Free Rent Period is referred to in this Lease asthe “Rent Commencement Date”.  Duringsuch Free Rent Period, the Monthly Base Rent and monthly installments of Additional Rent****shall be abated; provided, however, that(i) the Free Rent Period shall not affect the Lease Commencement Date pursuantto Section 2 hereof,  and (ii) Tenant shall remainobligated during the Free Rent Period to perform all of Tenant’s obligationsunder this Lease except as expressly aforesaid.  The FreeRent Period shall be extended inthe event Landlord fails todeliver to Tenant by the thirtieth (30th) day following the date ofexecution and delivery of this Lease by Tenant a subordination, non-disturbanceand attornment agreement in the form of Exhibit E attached hereto, with respectto each Mortgage and Ground Lease in effect as of the date of this Lease, dulyexecuted on behalf of Landlord and the holder of each such Mortgage and GroundLease, notarized and in form recordable among the land records of Arlington,County, Virginia, by one (1) day for each day in the period beginning on thethirty-first (31st) day following the date of execution and deliveryof this Lease by Tenant and ending on the date Tenant receives all of theabove-referenced subordination, non-disturbance and attornment agreements.  If the first day following the last day ofthe Free Rent Period is a date other than the first day of a month, thenMonthly Base Rent and monthlyinstallments of Additional Rent pursuant to Section 5 hereof forthe period commencing with and including such date and ending on and includingthe day prior to the first day of the following month shall be prorated, based on the actual number of daysin such period relative to the actual

 

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number of days in the subjectcalendar month, and shall be due and payable on the first dayfollowing the last day of the Free Rent Period.

 

B.                                     *Payment:*  AllBase Rent and Additional Rent due and payable to Landlord under this Leaseshall be paid to Landlord at the Landlord Payment Address.  Payments of Rent (other than in cash), ifinitially dishonored, shall not be considered rendered until ultimately honoredas cash by Landlord’s depository.  Payments of amounts owing byLandlord to Tenant (other than in cash), if initially dishonored, shall not beconsidered rendered until ultimately honored as cash by Tenant’s depository orcredited against Rent payable by Tenant under this Lease.  Except as expressly set forthotherwise in this Lease, Tenant will pay all Rent to Landlord without demand,deduction, set-off or counter-claim, except as expressly set forth otherwise in this Lease, Landlordwill pay all amounts owing by Landlord to Tenant without demand, deduction,set-off or counter-claim. If any sum payable by Tenant under this Lease is paid by check which isreturned due to insufficient funds, stop payment order, or otherwise,then:  (a) such event shall be treatedas a failure to pay such sum when due; and (b) if such circumstance occurs morethan once during the Term, in addition to all other rights and remedies ofLandlord hereunder, Landlord shall be entitled to impose, as Additional Rent, areturned check charge of Fifty Dollars ($50.00) to cover Landlord’sadministrative expenses and overhead for processing. If any sumpayable by Landlord under this Lease is paid by check which is returned due toinsufficient funds, stop payment order, or otherwise, then such event shall betreated as a failure to pay such sum when due.

 

C.                                     *Late Fee:*  IfTenant fails to make any payment of Rent on or before the date when payment isdue, which failure continuesfor more than ten (10) days after Landlord’s delivery to Tenant of notices, thenTenant also shall pay to Landlord a late fee equal to three percent (3%) of theamount that is past due.  Said late feeshall be deemed reimbursement to Landlord for its costs of carrying and processingTenant’s delinquent account.  If Landlord fails to make anypayment to Tenant owing by Landlord to Tenant under this Lease on or beforethe date when payment is due, and such failure continues for a period of ten(10) days after Tenant’s delivery to Landlord of notice of the same, thenLandlord shall pay to Tenant a late fee equal to three percent (3%)of the amount that is past due. Said late fee shall be deemed reimbursement to Tenant for its costs ofcarrying and processing Landlord’s delinquent account.

** **

**5.****                                     ****ADDITIONALRENT.**

 

A.                                   *To Cover IncreasedOperating and Real Estate Tax Expenses:*

 

(1)                                  *Definitions:*  Asused herein, “Increased Operating Expenses” shall equal the amount by whichOperating Expenses incurred fora calendar year during the Term exceed the Operating Expenses for the OperatingExpenses Base Year, and “Tenant’s Share of Increased Operating Expenses” shallbe that percentage of Increased Operating Expenses which is the equivalent ofthe number of square feet of rentable area in the Premises divided by thenumber of square feet of rentable area in the Building.  As used herein, “Increased Real Estate TaxExpenses” shall equal the amount by which Real Estate Tax Expenses for a calendar yearduring the Term exceed the Real Estate Tax Expenses for the Real EstateTax Expenses Base Year, and “Tenant’s Share of Increased Real Estate TaxExpenses” shall be that percentage of Increased Real Estate Tax Expenses whichis equivalent to the number of square feet of rentable area in the Premises dividedby the number of square feet of rentable area in the Building.  If Real Estate Tax Expenses for the Real EstateTax Expenses Base Year are increased subsequent to the initial determinationthereof for any reason, suchincreased amount of

 

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additional Real Estate Tax Expenses shall bedeemed to constitute part of Real Estate Tax Expenses for the Real EstateTax Expenses Base Year for all purposes of this Lease.

 

(2)                                  *Calculation Requirements:*  Operating Expenses and RealEstate Tax Expenses shall be calculated based on an accrual method ofaccounting.  When depreciation oramortization is permitted to be included in Operating Expenses, the subject item shall be amortized on a straight line basis over itsreasonably anticipated useful life in accordance with generally acceptedaccounting principles, to the extent applicable.  Operating Expenses for the Operating Expenses Base Year and eachcalendar year and Real Estate Tax Expenses for the Real Estate Taxes Base Yearand each calendar year shall be appropriately grossed-up employing soundaccounting and management principles to reflect the amount of OperatingExpenses and Real Estate Tax Expenses that would have been incurred for theOperating Expenses Base Year, the Real Estate Tax Expenses Base Year, and thesubject calendar year, respectively, had: (a) the Building been one hundredpercent (100%) leased and occupied during the entire subject year, in the caseof Operating Expenses; and (b) the Building having been one hundred percent(100%) leased and one hundred percent (100%) of the Building and all tenantimprovements in all rentable space in the Building been completed and fullyassessed during the entire subject year, in the case of Real Estate Tax Expenses;provided, however, that following the gross-up of Operating Expenses for theOperating Expenses Base Year, such Operating Expenses will be adjusted andagain grossed up after all Operating Expenses for such Operating Expenses BaseYear are known to Landlord.  Landlordagrees that since one of the purposes of Operating Expenses, Real Estate TaxExpenses and the gross up provisions set forth herein is to allow Landlord torequire Tenant to pay for increases in costs and taxes attributable to thePremises, Landlord agrees that: (i) Landlord shall not collect any OperatingExpenses or Real Estate Tax Expenses in excess of the amounts actually incurredfor each of same; and (ii) Landlord shall promptly pay to Tenant, Tenant’sShare of any refund Landlord receives in connection with any amounts previouslyincluded in Operating Expenses or Real Estate Tax Expenses.  In the event Landlord incurs costs orexpenses associated with or relating to separate items or categories orsubcategories of Operating Expenses which were not part of Operating Expensesduring the entire Operating Expense Base Year, Operating Expenses for theOperating Expenses Base Year shall be deemed increased by the amounts Landlordwould have incurred during the Operating Expenses Base Year with respect tosuch amounts had such separate items or categories or subcategories ofOperating Expenses been included in Operating Expenses during the entireOperating Expenses Base Year.  As anillustration of the foregoing, in the event any portion of the Building iscovered by a warranty at any time during the Operating Expenses Base Year,Operating Expenses for the Base Year shall be deemed increased by such amountas Landlord would reasonably have incurred during the Operating Expenses BaseYear with respect to the items or matters covered by the subject warranty, hadsuch warranty not been in effect at any time during the Operating Expense BaseYear.  To the extent that an expense orother amount is not specifically included or excluded as a component ofOperating Expenses or Real Estate Tax Expenses in the definition of “OperatingExpenses” or “Real Estate Tax Expenses”, whether such expense or other amountshall be treated as an Operating Expense or component of Real Estate TaxExpenses shall be determined in accordance with generally accepted accountingprinciples, consistently applied.  Inall instances, the calculation of Operating Expenses and Real Estate TaxExpenses of each calendar year shall be consistent with the calculation ofOperating Expenses for the Operating Expenses Base Year and Real Estate TaxExpenses for the Real Estate Tax Expenses Base Year, including, but not limitedto, the type of expenditures to be included in Operating Expenses and RealEstate Tax Expenses and the allocation of any Operating Expenses and RealEstate Tax Expenses to the Building.  Inthe event Operating Expenses for any calendar year during the Term aredetermined

 

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to be less than Operating Expenses for the Base Year, Tenant shallreceive a credit in the amount of Tenant’s Share of such difference againstinstallments of Tenant’s Share of Increased Real Estate Taxes for thecorresponding period, if any. Similarly, in the event Real Estate Tax Expenses for any calendar yearduring the Term are determined to be less than Real Estate Tax Expenses for theBase Year, Tenant shall receive a credit in the amount of Tenant’s Share ofsuch difference against installments of Tenant’s Share of Increased OperatingExpenses for the corresponding period, if any.

 

(3)                                  *Payment of Tenant’s Share:* Commencing on the first anniversary of the Rent Commencement Date, inaddition to all other Rent set forth herein, for each calendar year during theTerm, Tenant shall pay to Landlord as Additional Rent an amount equal toTenant’s Share of Increased Operating Expenses and an amount equal to Tenant’sShare of Increased Real Estate Tax Expenses; provided, however, that (a) if Operating Expenses for anycalendar year are less than Operating Expenses for the Operating Expenses BaseYear, then Tenant shall receive a credit in the amount of Tenant’s Share ofsuch difference against Tenant’s Share of Increased Real Estate Tax Expensesfor the corresponding period, (b) if Real Estate Tax Expenses for any calendaryear are less than the Real Estate Tax Expenses for the Real Estate Tax ExpenseBase Year, then Tenant shall receive a credit in the amount of Tenant’s Shareof such difference against Tenant’s Share of Increased Operating Expenses forthe corresponding period, and (c) for the calendar years duringwhich Tenant’s obligations under this Section 5.A.(3) begins and the Term ends,Tenant’s Share of Increased Operating Expenses and Tenant’s Share of IncreasedReal Estate Tax Expenses shall be prorated based upon:  (i) the number of days during suchcalendar year during the period commencing on the first anniversary of the RentCommencement Date and ending on December 31 of said calendar year (in the caseof the calendar year during which Tenant’s obligations under this Section5.A.(3) begins) or (ii) in the case of the calendar year during which the Termends, the greater of the number of days during such calendar year during the period commencing on the first day ofsuch calendar year that this Lease is in effect and ending on the date upon whichthe Term expires or is earlier terminated or the number of daysduring such calendar year that Tenant actually occupies the Premises or anyportion thereof.

 

B.                                     *Statements: *Each time Landlord providesTenant with an actual and/or estimated statement of Operating Expenses or RealEstate Tax Expenses for a calendar year, such statement shall be itemized on aline item by line item basis, showing the applicable expense or tax for thesubject calendar year, for the calendar year prior to the subject calendaryear, and for the applicable “Base Year”. Commencingwith the calendar year which includes the first anniversary of the LeaseCommencement Date, and for each calendar year during the Term thereafter,Landlord shall deliver to Tenant a statement estimating Tenant’s Share ofIncreased Operating Expenses forthe calendar year (or Tenant’s Share of the amount by which Operating Expensesfor such calendar year are less than Operating Expenses for the OperatingExpenses Base Year) and Tenant’s Share of Increased Real EstateTax Expenses for such calendar year (or Tenant’s Share of the amount by which Real Estate Tax Expenses forsuch calendar year are less than Real Estate Tax Expenses for the Real EstateTax Expenses Base Year).  Within thirty (30) daysfollowing Tenant’s delivery to Landlord of Tenant’s request, Landlord shalldeliver to Tenant a statement of Operating Expenses and Real Estate TaxExpenses for the calendar year in which the Lease Commencement Dateoccurs.  Subject to the foregoing,Tenant shall pay in equal monthly installments in advance on the first day ofeach calendar month occurring duringeach calendar year, (i) theamount reflected in

 

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Landlord’s statement of Tenant’s Share of Increased Operating Expenses,less Tenant’s Share of the amount, if any, by which Real Estate Tax Expensesfor the Real Estate Taxes Base Year will exceed Real Estate Tax Expenses forthe subject calendar year, plus (ii) the amount reflected in Landlord’sstatement of Tenant’s Share of Increased Real Estate Tax Expenses for suchcalendar year, less Tenant’s Share of the amount, if any, by which OperatingExpenses for the Operating Expenses Base Year will exceed Operating Expensesfor the subject calendar year.  Tenant shall continue to pay such estimatedTenant’s Share of Increased Operating Expenses and Tenant’s Share of IncreasedReal Estate Tax Expenses, with corresponding credits described in the precedingsentence, until Tenant receives the next such statement from Landlord, at whichtime Tenant shall commence making monthly payments pursuant to Landlord’s newstatement; provided, however,Landlord shall not deliver more than two (2) such statements in any calendaryear.  With the firstpayment of Additional Rent herein which is due at least thirty (30) days afterTenant’s receipt of a statement from Landlord specifying Tenant’s Share ofestimated Increased Operating Expenses and Tenant’s Share of estimated IncreasedReal Estate Tax Expenses payable during the calendar year, taking intoconsideration the credits described above, Tenant shall pay the differencebetween Tenant’s monthly share of such sums for the preceding months of thecalendar year and the monthly installments which Tenant has actually paid forsaid preceding months.  Alternatively, Tenant shall receiveappropriate credits against Rent next payable by it after its receipt of theabove-referenced statement from Landlord in the event the same specifies anovercharge to Tenant.  Notwithstandingthe foregoing provisions of this Section 5.C., in determining Tenant’s Share ofIncreased Operating Expenses for any calendaryear, the portion of Operating Expenses for such calendaryear which constitutesControllable Operating Expenses (as hereinafter defined) shall not exceed onehundred sixpercent (106%)of the amount of Controllable Operating Expenses (as hereinafter defined) forthe immediately preceding calendaryear (the“Controllable Operating Expenses Cap”); provided, however, Landlord may only include theportion of Controllable Operating Expenses from any calendar year which was inexcess of the Controllable Operating Expenses Cap for such calendaryear in OperatingExpenses for any future calendar year(s) which occurs within three calendaryears thereafter until fully charged, so long as such Controllable OperatingExpenses for any such future calendar year(s) do not equal or exceed theControllable Operating Expenses Cap for such future calendar year(s).  As used herein, “Controllable OperatingExpenses” shall mean all Operating Expenses except for the following to the extentpermitted to be included in Operating Expenses:  (i) license and permit fees of any nature; (ii) utility company charges for utilityservices; (iii) insurance premiums; (iv) the cost to remove snow and ice; (v) increasedlabor costs due to the requirement for use of labor subject to collectivebargaining, which requirement was not in effect as of the Rent CommencementDate; and (vi) costs ofcompliance with governmental requirements which were not in effect on the Rent Commencement Date.

 

C.                                     [Intentionally omitted.]

 

D.                                    *Retroactive Adjustments:*  Within one hundred twenty (120) daysafter the end of each calendar year that occurs after the date of this Lease through the calendar yearin which the Term expires, Landlord shall determine the actualOperating Expenses and Real Estate Tax Expenses for such calendar year,Landlord shall calculate the foregoing sums and Landlord shall provide toTenant a statement (inthe form as is described in the first sentence of Section 5.B aboveof Tenant’s Share of Increased Operating Expenses and Tenant’s Share ofIncreased Real Estate Tax Expenses for the calendar year, or the amount by which OperatingExpenses for such calendar year are less than the amount of Operating Expensesfor the Operating Expenses Base Year and the amount by which Real Estate TaxExpenses for the subject calendar year are less than the amount of Real EstateTax Expenses for the Real Estate Tax Expenses Base Year;provided, however, that Landlord’s failure to deliver such statement within theaforesaid 120-day period shall not be deemed a waiver of Landlord’s right toreceive payment of Tenant’s Share of Increased Operating Expenses and Tenant’sShare of 

 

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Increased Real Estate Tax Expenses for thecalendar year at issue unless Tenant provides Landlord with thirty (30) daysnotice of Landlord’s failure to provide such statement within such 120-dayperiod and such failure continues for thirty (30) days following such notice toLandlord; further provided, except as otherwise provided in Section 5.F, below,the requirement to provide such statement within 120 days after the end of eachcalendar year shall not be deemed to preclude Landlord from submitting acorrected statement to Tenant in the event that the amount of any OperatingExpense is not known by Landlord until a later date as a result of finaladjudication of any litigation or administrative proceeding or Landlord’sreceipt of an invoice following the expiration of such 120-day period.  Such statement shall be: (a) accompanied bybills for Real Estate Tax Expenses; and (b) prepared or reviewed by an independent firm ofcertified public accountants, which may be Beers & Cutler or any otherregionally or nationally recognized independent firm of certified publicaccountants..  Landlord shall respond toany request by Tenant for information concerning such statement or any other matters pertaining toOperating Expenses and/or Real Estate Tax Expenses, within ten (10) days followingTenant’s delivery of its request therefor. Within thirty (30) days after delivery of any such statement, Tenantshall pay to Landlord any deficiency between the sum of the amount shown as Tenant’s Share ofIncreased Operating Expenses and Tenant’s Share of Increased Real Estate TaxExpenses for the calendar year and the estimated payments thereof made byTenant, provided that if Real Estate Tax Expenses for the subject calendar yearare less than Real Estate Tax Expenses for the Real Estate Tax Expenses BaseYear and/or Operating Expenses for the subject calendar year are less thanOperating Expenses for the Operating Expenses Base Year, then Tenant shallreceive a credit in the amount of Tenant’s Share of each such differenceagainst Rent next payable, to the extent not already credited to Tenantpursuant to Sections 1.A.(2) or 1.A.(3) hereof, provided that if the Lease Termhas expired or been earlier terminated, then Landlord shall pay the amount ofeach such difference to Tenant promptly following the end of the subjectcalendar year.  Tenant shall receive acredit against Rent next payable in an amount equal to the sum of (i) all excess estimatedpayments, plus (ii) Tenant’sShare of the amount by which Operating Expenses for the subject calendar yearare less than the amount of Operating Expenses for the Operating Expenses BaseYear and Tenant’sShare of the amount by which Real Estate Tax Expenses for the subject calendaryear are less than the amount of Real Estate Tax Expenses for the Real EstateTax Expense Base Year.

 

E.                                      *Change In or Contest ofTaxes:*  In the event of any change by any taxingbody in the period or manner in which any of the Real Estate Tax Expenses arelevied, assessed or imposed, Landlord shall make equitable adjustments withrespect to computing Real Estate Tax Expenses. Real Estate Tax Expenses which are being contested by Landlord shall beincluded in computing Tenant’s Share of Increased Real Estate Tax Expensesunder this Section 5, but if Tenant shall have paid Rent on account ofcontested Real Estate Tax Expenses and Landlord thereafter receives a refund ofsuch Real Estate Tax Expenses Tenant shall receive a credit against Rent nextpayable in an amount equal to Tenant’s Share of such refund (including Tenant’s Share of such interestthereon as has been received by Landlord from the taking authority), unless theTerm has expired or terminated, in which event Landlord shall refund the amountto Tenant within thirty (30) days following Landlord’s receipt thereof.

 

F.*                                     **Audit/**Arbitration: *Landlord shall maintain atall times during the Term within the Washingtonmetropolitan area, complete and accurate records with respect to OperatingExpenses and Real Estate Tax Expenses.  Notwithstandinganything to the contrary set forth in this Lease, in the event of any dispute regarding amounts owing by either party pursuant to this Section 5 Tenantshall have the right, after reasonable notice and at reasonable times, toinspect and photocopy, at Tenant’s sole cost, Landlord’s accounting recordswith respect to the calculation of Operating Expenses and Real Estate Tax 

 

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Expenses at Landlord’s office in the Washington metropolitan area.  Landlord shall reasonably cooperate withTenant in any such examination.  If,after such inspection and photocopying, Tenant continues to dispute amountsowing by the parties under this Section 5, Tenant shall be entitled to auditLandlord’s records to determine the proper amounts owing by the parties underthis Section 5.  Tenant shall not bepermitted to conduct more than one such review and audit described above in anycalendar year.  Landlord shall berequired to maintain records of all Operating Expenses, Real Estate TaxExpenses, and other amounts pertaining to rent adjustments for a period ofeighteen (18) months following the expiration of the three year perioddescribed below within which Tenant may notify Landlord of the respects inwhich a year-end reconciliation statement is claimed to be incorrect.  The payment by Tenant of any amounts withrespect to Tenant’s Share of Increased Operating Expenses or Increased RealEstate Tax Expenses shall not preclude Tenant from questioning the correctnessof any statement for same provided by Landlord.  Any year-end reconciliation statement provided by Landlord to Tenantpursuant to Section 5.D shall be (a) conclusive and binding upon Tenant unless(1) within three (3) years after Tenant’s receipt of the same, Tenant notifiesLandlord of the respects in which the statement is claimed to be incorrect, or(2) Landlord notifies Tenant of any change pursuant to the following terms ofthis Section 5.F, and (b) conclusive and binding upon Landlord unless, (1) within one year after the end of the subject calendar yearthereof, Landlord notifies Tenant of any change in said statement, or (2) with respectto Real Estate Tax Expenses, providedthat Landlord receives a notice of a retroactive adjustment in the amount ofsuch Real Estate Tax Expenses,and Landlord delivers such notice to Tenant and notifies Tenant of thecorresponding change to the amount of Real Estate Tax Expenses for the subjectcalendar year within thirty (30) days after Landlord receives such notice ofretroactive adjustment to Real Estate Tax Expenses for the subject calendaryear, in which event Tenant shall again be permitted to review and auditLandlord’s records with respect to Real Estate Tax Expenses for the subjectcalendar year.  Notwithstanding anythingto the contrary set forth in this Section 5, in the event that,pursuant to this Section 5.F, Tenant reviews and/or audits any statement provided byLandlord for Operating Expenses, Real Estate Tax Expenses or both, then, in connectionwith the first such audit, Tenant shall also have the right to review and/or auditthe Operating Expenses (if Tenant’s review and/or audit is of Operating Expenses) forthe Operating Expenses Base Year and Tenant shall also have the right to review and/or auditthe Real Estate Tax Expenses (if Tenant’s review and/or audit is of Real Estate Tax Expenses)for the Real Estate Tax Expenses Base Year at the time of such review and/or audit byTenant.  Unless otherwise mutuallyagreed, any such dispute shall be determined by arbitration in the jurisdictionin which the Premises are located, in accordance with the then currentcommercial rules of the American Arbitration Association.  The costs of the arbitration shall bedivided equally between Landlord and Tenant, except that each party shall bearthe cost of its own legal fees, unless (i) the arbitration results in adetermination that the amountowing by Tenant set forth in Landlord’s statement contained adiscrepancy of less than five percent (5%) in Landlord’s favor, in which event (1) Tenant shall bearall reasonable costsincurred by both partiesin connection with such arbitration (including, but not limited to, thereasonable costs incurred to perform and respond to Tenant’s review and auditpreceding such arbitration), including, without limitation, reasonable legalfees, or (ii) the arbitration results in a determination that the amount owing by Tenant set forthin Landlord’s statement contained a discrepancy of at least fivepercent (5%) in Landlord’s favor, in which latter event (1) Landlord shall bearall reasonable costsincurred by both partiesin connection with such arbitration (including, but not limited to, thereasonable costs incurred to perform and respond to Tenant’s review and auditpreceding such arbitration), including, without limitation, reasonable legalfees, (2) Landlord shall pay interest to Tenant on the amount of the overchargefrom the date of Tenant’s notice of the respects in which Landlord’s statementwas deemed to be incorrect until reimbursement of such overcharges made byLandlord to

 

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Tenant or until the amount thereof is taken as a credit byTenant against Rent payableby it, asapplicable, said interest to be at the “prime” rate of interest (as defined inSection 1.T hereof),and(3) Tenant shall, notwithstanding the provisions of the first sentence of thisSection 5.F., have the right to review (or again review, as the case may be)the statements issued by Landlord for the two (2) years immediately precedingthe year which was the subject of the Landlord’s statement which had beenchallenged by Tenant in such arbitration. In the event that the result of any arbitration is a determination thatTenant owes any additional amount for Tenant’s Share of Increased OperatingExpenses or additional amount for Tenant’s Share of Increased Real Estate TaxExpenses to Landlord because Landlord’s statement(s) understated either or bothof same, the Tenant shall pay interest on the undercharged amount to Landlordat the “prime” rate of interest from the date of Tenant’s notice of therespects in which Landlord’s statement was believed to be incorrect until thedate of payment by Tenant of such undercharged amount.  Pending determination of any dispute, Tenantshall pay all amounts due pursuant to the disputed statement, but such paymentsshall be without prejudice to Tenant’s position.  Upon at least fifteen (15) days notice to Landlord, Tenant shallhave reasonable access during normal business hours and at Tenant’s expense, toall pertinent books and records of Landlord relating to the amount of expenses and other covered bythe disputed statement, for the purpose of verifying the statement.  Any such review shall be made only byTenant’s employees and/or by an auditor hired by Tenant who is a CertifiedPublic Accountant and who is not paid on a contingency fee basis (with theexception of Equis Corporation, which may be paid on a contingency fee basis).

 

**6.****                                     ****USE.**

 

A.                                   *Permitted Use:* Tenant shall use and occupy the Premises solely for general (non-medicaland non-GSA, as defined in Section 51 below) office purposes and purposes incidental thereto, whichincidental uses shall, at Tenant’s election, include: computer facilities;air-conditioning equipment, telephone switch and other equipment and servicesrelating to Tenant’s business; lunchroom facilities (including vendingmachines); coffee bars; physical fitness training rooms; training facilities;and duplicating and other printing operations.** **Tenant may use, on anon-exclusive basis (other than those installed for Tenant’s exclusive use)with Landlord and other tenants in the Building and at no cost to Tenant, theCommon Areas****and****plenums, risers, electric closets, ductsor pipes within the Building in connection with the use and occupancy of thePremises, subject to Landlord’s reasonable right of approval, but such approvalis subject to the requirement that Tenant shall have use of each such facilityor area at least in proportion to Tenant’s Share of space available fromtime-to-time to all tenants of the Building. Tenant may have non-exclusive use of the stairways and stairwells fortravel between floors on which the Premises is located.  Tenant shall also have the right, with theprior approval of Landlord, which shall not be unreasonably withheld,conditioned or delayed, (i) to install a system providing for Tenant’s accessfrom the fire stairwells to floors of the Building occupied by Tenant, and (ii)to paint or otherwise decorate the fire stairwells in the Building betweenfloors upon which portions of the Premises are located.

 

B.                                     *Legal and OtherRestrictions of Use:*  Tenant shall not use or occupy the Premisesfor any unlawful purpose, or in any manner that will violate the certificate ofoccupancy for the Premises or the Building or that will constitute waste,nuisance or unreasonable annoyance to Landlord or any other tenant or user ofthe Building.  Landlord shall use commercially reasonableefforts to prevent occupants of the Building from using space controlled bythem for any unlawful purpose or in any way that will violate the certificate of occupancy for thespaces occupiedor controlled bythem or in a manner that will

 

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constitute waste, nuisance or unreasonable annoyance to Tenant.  Subject to Landlord’s obligationsset forth in this Lease and except as otherwise provided in Section 16 (Fireand Other Casualty) and Section 18 (Condemnation), Tenant shallcomply with all present and future laws [including, without limitation, theAmericans with Disabilities Act (the “ADA”) and the regulations promulgatedthereunder, as the same may be amended from time to time], ordinances (including,without limitation, zoning ordinances and land use requirements), regulations,orders and recommendations (including, without limitation, those made by anypublic or private agency having authority over insurance rates) (collectively,“Laws”), but Tenant has no obligation to make structural repairs except to theextent the same pertain to Tenant’s particular use (as opposed to office usegenerally) and occupancy of the Premises, all of which shall be complied within a timely manner at Tenant’s sole expense, except to the extent that any such Laws require compliance withthe same prior to occupancy of the Premises or pertain generally to the entireBuilding or the entire floor(s) of the Building upon which the Premises islocated or pertains to any Building system or any structural aspect of theBuilding.  In such latter events, Landlordshall promptly take all actions necessary to comply with the subject Laws, atits sole cost and expense, applicable to the Common Areas, any portion of theBuilding outside the Premises, the Building systems and the Landlord’sWork.  Tenant shall have the right tocontest, by appropriate legal proceedings which shall be conducted diligentlyand in good faith in the name of Landlord or Tenant or both, and without costor expense to Landlord, the validity or applicability of any Law of the naturehereinabove referred to with respect to which Tenant is required to complypursuant to the terms of this Lease, and Tenant shall indemnify Landlordagainst, and hold Landlord harmless from, any liability, costs (including, butnot limited to, court costs and reasonable attorneys’ fees), damages, claims orcauses of action resulting from such delay in compliance with such Laws,excluding consequential damages.  In theevent Tenant shall so contest the same, Tenant shall have the right to delayobservance thereof and compliance therewith until such contest is finallydetermined and is no longer subject to appeal. Subject to the satisfaction by Landlord of its obligations under this Lease,if any such Law requires an occupancy or use permit or licensefor the Premises or the operation of the business conducted therein (includinga certificate of occupancy or nonresidential use permit), then Tenant shallobtain and keep current such permit or license at Tenant’s expense and shallpromptly deliver a copy thereof to Landlord. Similarly, Landlordshall not permit use of any space in the Building above the first floor of the Building for the sale ofgoods to thepublic at large or for the sale at auction of goods or property of any kind.** **Tenantshall not use any space in the Premises for the sale of goods to the public at largeor for the sale at auction of goods or property of any kind.  Tenant shall not conduct any operations,sales, promotions, advertising or special events in, on or about the Buildingoutside of the Premises.

 

C.                                     *Landlord’s Compliance withLaws*:  Landlord shall, at its own expense (and notas an Operating Expense), comply with all Laws respecting all matters ofoccupancy, condition or maintenance of the Common Areas and the Building (otherthan the portions of the Premises for which Tenant is responsible pursuant tothe preceding section),including, without limitation, the provisions of the ADA, all zoning and otherland use laws, all environmental laws and all laws pertaining to indoor airquality.

 

**7.****                                     ****CAREOF PREMISES.**

 

A.                                   *Maintenance and Repairs ByTenant*:  Subject to Landlord’s obligations set forth in this Lease andexcept as otherwise provided in this Lease, including, without limitation, inSection 16 (Fire and Other Casualties) and Section 18 (Condemnation), Tenantshall at its expense (i) keepthe interior and non-structural portions of the Premises (including all ofTenant’s Personal Property located therein) in

 

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a neat and clean condition and in good orderand repair, and (ii)maintain all fixtures and equipment for operation of the Premises, in clean, safe andsanitary condition, take good care thereof and make all required repairs andreplacements thereto; and(iii) surrender the Premises at the end of the Term in as goodorder and condition, ordinary wear and tear and damage by fire and othercasualty and eminent domain excepted. Tenant shall not be responsible for repairs to the Premises to theextent that any damages are caused by the acts or omissions of Landlord or any other occupant of the Building or the Complex, or any oftheir respective employees, agents, contractors or invitees.

 

B.                                     *Maintenance and Repairs byLandlord*:  Landlord shall maintain, operate, repair, replace and keep ingood operating order and in a condition comparable to other ComparableBuildings (as defined below), the Building and all parking andother Common Areas within the Building and on the Land and to the extent withinLandlord’s reasonable control, the Complex, including all structural aspects of theBuilding, all Building systems, the Landlord’s Work, striping,landscaping, replacement of light sources, leveling, repaving and removal ofsnow and ice, all in accordance with standards applicable to first-class officebuildings in Arlington, Virginia, taking into account the age, finishes, methodof construction and system design of the Building and of such comparablebuildings (“Comparable Buildings”).  Landlord’sobligation shall include, without limitation, the lobbies, elevators, stairs,parking areas, grounds, loading areas and corridors, the roofs, foundations,load-bearing elements of the Building, conduits and structural walls and otherstructural elements, the underground utility and sewer pipes of the Building,all base building mechanical, electrical, plumbing, the Building’s HVAC systemand the sprinkler system and other fire and life-safety systems (all costs ofwhich shall be included In Operating Expenses except to the extent limited bySection 1.BB. hereof).  All operations, repairs, maintenance and other matters required of Landlord pursuant tothis Section 7.B. or elsewhere in this Lease shall be performed in accordancewith standards applicable to Comparable Buildings, and performed in a timelyand diligent fashion.  Landlord agreesto diligently attend to any routine repairs or maintenance needs brought to itsattention by Tenant.

 

**8.****                                     ****ALTERATIONSBY TENANT.**

 

A.*                                  **Making of Alterations;Landlord’s Consent:*  Tenant shall not make or authorize to be madeany Alterations without the prior consent of Landlord (which consent shall not beunreasonably withheld, conditioned or delayed) both as to whetherthe Alterations may be made and as to how and when they will be made; provided,however, that Landlord shall retain sole and absolute (but good faith) discretionto withhold its consent to any Alteration: (i) to the exterior of the Building; (ii) to the structure of the Building (providedthat Landlord shall not unreasonably withhold, condition or delay its consentwith respect to any coredrilling by Tenant or any reinforcement of floors or the roof of the Buildingto accommodate systems installed in and/or serving the Premises, including highdensity file systems, supplemental HVAC systems and an emergency generator); or(iii) which will have a material adverse effect on theelectrical, mechanical, heating, ventilating, air conditioning, or plumbingsystems of the Building or on any of the structural components of theBuilding.  Within thirty (30) days afterLandlord’s delivery to Tenant of its request together with reasonable evidenceof payment of same, Tenant shall reimburse Landlord for all reasonable costsincurred by Landlord and payable to independent third parties in connectionwith Landlord’s review of Alterations for which Tenant requested Landlord’sapproval.  Within ten (10) business days after Tenant’sdelivery to Landlord of Tenant’s request for Landlord’s approval of anyAlteration proposed by Tenant, together with plans and specifications for sameto the extentcustomarily prepared for similar Alterations, Landlord shall deliver to Tenantnotice of Landlord’s

 

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approval or disapproval of the same. In the event Landlord previouslydisapproved of the proposed Alterations and Tenant thereafter revises Tenant’sproposal and submits the same to Landlord for approval, then, within three (3)business days after Tenant’s delivery to Landlord of Tenant’s revised requestfor Landlord’s approval of the subject Alterations, together with revised plansand specifications for the same to the extent customarily prepared for similarAlterations, Landlord shall deliver to Tenant notice of Landlord’s approval ordisapproval of the same.  Each notice ofdisapproval delivered by Landlord shall set forth with reasonable particularitythe reasons for disapproval and all modifications requested by Landlord withrespect to the Alterations proposed by Tenant. Landlord’s failure to timely reply to Tenant’s request for Landlord’sapproval within the above-referenced ten (10) business days period or three (3)business day period, as the case may be, shall be deemed Landlord’s approval ofthe subject Alterations.  Except asspecified in any notice of disapproval timely and properly delivered byLandlord, in accordance with the foregoing, all matters set forth in Tenant’srequest for approval of the subject Alterations shall be deemed approved by Landlordafter Landlord’s delivery of its subject notice of approval or disapproval orafter the time set forth above within which Landlord must approve or disapprovesuch Alterations has expired without Landlord having delivered to Tenant noticeof approval or disapproval of the same. Landlord shall diligently cooperate in good faith with Tenant withrespect to the preparation of plans and specifications for Alterations, theprocurement of all approvals and certificates required in connection therewith,and construction of the same.  Notwithstanding the foregoing,Tenant shall have the right, after providing at least ten (10) days priornotice to Landlord, but without the necessity of obtaining Landlord’s consent,to recarpet, repaint, or make “cosmetic” or “decorative” nonstructuralAlterations in and to the Premises that (I) do not require the issuance of abuilding permit, and (II) do not cost, when aggregated with all other“cosmetic” and “decorative” non-structural alterations made during the previoustwelve (12) months, more than One Hundred Thousand Dollars ($100,000.00).

 

Any Alterations shall be made at Tenant’s expense, by its contractorsand subcontractors, in a good and workmanlike manner, and in accordance withcomplete plans and specifications (to the extent the same are customarily prepared for comparableAlterations) approved in advance in writing by Landlord (to the extent such approval isrequired under this Lease), and which approval shall not beunreasonably withheld, conditioned or delayed as provided in the immediatelypreceding paragraph of this Section 8.A., and only after Tenant hasobtained all necessary permits from governmental authorities havingjurisdiction and has furnished copies thereof to Landlord.  Landlord’s consent to any Alterations andapproval of any plans and specifications constitutes approval of no more thanthe concept of these Alterations and not a representation or warranty withrespect to the quality or functioning of such Alterations, plans andspecifications.  Tenant shall be and issolely responsible for the proper integration of Alterations with the Building, the Building’ssystems and existing conditions.  Priorto commencing any Alterations involving structural, electrical, mechanical orplumbing work, the heating, ventilation and air conditioning system of thePremises or the Building, or the roof of the Building, Tenant shall provide toLandlord the name and address of each contractor and subcontractor which Tenantintends to employ to perform such Alteration, the use of which subcontractorsand contractors shall be subject to Landlord’s prior approval, which shall notbe unreasonably withheld, conditioned or delayed if the contractor orsubcontractor is properly licensed; provided, however, that if Landlord reasonably determinesthat the performance of any such Alterations by any particular contractor(s) orsubcontractor(s) would violate any warranty with respect to any portion of theBuilding or the Complex, then Landlord may require Tenant to use Landlord’s contractorfor the performance of such Alteration.   If Landlord so requires Tenant to use Landlord’scontractor for the performance of any Alterations, Landlord shallcause its contractor to limitits charges for the subject work to the amount otherwise payable by

 

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Tenant to contractors that would have been selected by Tenant for performance of the subjectwork, and Landlordshall be responsible for allacts and omissions of the contractor designated by it for the subject work.   Ifany Alterations which require Landlord’s approval are made without the priorconsent of Landlord, or which do not conform to plans and specificationsapproved by Landlord or to other conditions imposed by Landlord pursuant to thisSection 8, Landlord may, in its sole discretion, following the expiration of theapplicable cure period for the subject default by Tenant (or such shorter timeas Landlord reasonably determines in the event of any Alteration which, if notmore expeditiously removed, would create an imminent threat to the health orsafety of the occupants of the Building or an imminent threat to the conditionof the Building or Landlord’s ability to fulfill its obligations under thisLease, other leases of space in the Building or any combination thereof, eachof the foregoing being hereinafter referred to as an “Imminent Threat”), andfollowing at least ten (10) days prior notice delivered to Tenant, except inthe event of an Imminent Threat, correct or remove such Alterationsat Tenant’s expense.  Followingcompletion of any Alterations, except with respect to cosmetic or decorativenonstructural Alterations which do not require Landlord’s approval, atLandlord’s request, Tenant shall deliver to Landlord a complete set of construction plansshowing the Alterations.  Landlord shall receive no fee for supervision, profit, overhead,general conditions or otherwise in connection with Alterations or other work performed by Tenantor on Tenant’s behalf by someone other than Landlord or Landlord’s managementagent, except to the extent otherwise provided in the Work Agreement withrespect to the initial construction of alterations in the Premises, butLandlord shall retain the right to receive a fee for Alterations or other workperformed by Landlord at Tenant’s request.

 

B.                                     *No Liens:* Tenant shall take all necessary steps to ensure that no mechanic’s ormaterialmen’s liens are filed against the Premises, the Building or the Land asa result of any Alterations made by the Tenant.  If any such mechanic’slien is filed, Tenant shall discharge the lien within fifteen (15) days after its receipt of notice of thesame from Landlord, at Tenant’s expense, by paying off or bondingthe lien.  If Landlord gives its consentto the making of any Alteration, such consent shall not be deemed to be anagreement or consent by Landlord to subject its interest in the Premises or theBuilding to any liens which may be filed in connection therewith, nor shallLandlord’s receipt of any fee in connection with any Alterations or Tenant’sWork or Landlord’s payment of any allowance to Tenant with respect to any workperformed in or with respect to the Premises by or on behalf of Tenant bedeemed to constitute a basis for Landlord’s interest in the Premises or theBuilding to be subjected to any lien.

 

**9.****                                     ****EQUIPMENT.**

 

A.                                   *Permitted Equipment:*  Tenant shall not install or operatein the Premises any equipment or other machinery that, in the aggregate, willcause Tenant to use more than the Premises’ Standard Electrical Capacitywithout obtaining the prior written consent of Landlord, which consent shallnot be unreasonably withheld, conditioned or delayed.  If Landlord gives such consent and Tenant uses morethan the Premises’ Standard Electrical Capacity, then Tenant shall pay toLandlord the costfor additional consumption of utilities, additional wiring or other expensesresulting therefrom.  Prior to the LeaseCommencement Date, Tenant shall provide Landlord with a list of all equipmentthat Tenant intends to initially install and operate in the Premises whichoperate on more than one hundred twenty (120) volts.  Tenant shall not install any equipment or machinery which maynecessitate any changes, replacements or additions to the water, heating,plumbing, air conditioning or electrical systems of the Building withoutobtaining the prior consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed;provided, however, that Landlord’s consent shall not be required for theinstallation or relocation

 

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of electrical outlets, switches or fixtures if the same is performed inaccordance with all applicable Laws. Tenant will deliver notice (which may be given orally) to Landlord ofTenant’s installation or relocation of electrical outlets, switches or fixturesat least two (2) business days prior to such installation or relocation.  Landlord hereby represents to Tenant thatcustomary amounts of equipment and machinery customarily used for generaloffice purposes shall not necessitate any material changes, replacements oradditions to or in the use of anysystems in the Building. Landlord agrees and acknowledges that Landlord shall include in allleases of space in the Building provisions which are substantially comparableto those set forth above in this Section 9.A. in substance or effect, andLandlord shall enforce such provisions in such leases in a non-discriminatorymanner.

 

B.                                     *Payment For Excess UtilityUsage:*  If at any time during the Term, Tenant’sconnected electrical load from its use of equipment and fixtures (includingincandescent lighting and power), as reasonably estimated by Landlord, exceeds thePremises’ Standard Electrical Capacity, then Landlord may, at its option:  (i) install separate electricalmeter(s) for the Premises, or (ii) cause a survey to be made by anindependent electrical engineer or consulting firm to determine the amount ofelectricity consumed by Tenant beyond the Premises’ Standard ElectricalCapacity.  If such meter(s) or surveyconfirms that Tenant’s connected electrical load from its use of equipment andfixtures (including incandescent lighting and power) exceeds the Premises’Standard Electrical Capacity, then Tenant shall reimburse Landlord for the reasonable cost of theinstallation of said meter(s) or completion of said meter(s) or survey, andshall pay as Additional Rent the cost of any electricity in excess of thePremises Standard Electrical Capacity, at the rate charged by the utilitycompany providing such electricity, assuming continuous business hours, within thirty (30) days after receiptof any bill thereforefrom Landlord.

 

Landlord agrees and acknowledges that Landlord shall include in allleases of space in the Building provisions which are substantially comparableto those set forth above in this Section 9.B. in substance and effect, andLandlord shall use reasonable efforts to enforce such provisions in such leasesin a non-discriminatory manner.

 

C.                                     *Noise; Vibration; FloorLoad:*  Business machines and equipment belonging toTenant, which cause noise or vibration that may be transmitted to any part ofthe Building to such a degree as to be reasonably objectionable to Landlord or to any tenantof the Building, shall be installed and maintained by Tenant at Tenant’sexpense on devices that eliminate the noise and vibration.  Tenant shall not place any load upon thefloor of the Premises which exceeds the per square foot load the floor wasdesigned to carry (eighty (80) pounds per square foot for live loads and twenty(20) pounds per square foot for dead loads), except as specifically approved byLandlord in writing, which approval Landlord shall have no obligation toprovide.

 

D.                                    *Additional HVAC*: Landlord acknowledges that Tenant shall, at Tenant’s sole cost andexpense, install, operate, repair, replace and maintain a supplemental heatingand air conditioning system (“Additional HVAC Equipment”) on the roof of theBuilding at locations selectedby Tenant and approved by Landlord (which approval shall not beunreasonably withheld, conditioned or delayed); provided,however, that (i) Tenant shall be solely responsible, at its costs, for theinstallation, maintenance and repair of any Additional HVAC Equipment, and (ii)Tenant shall be responsible,at its cost, for the operation of such Additional HVAC Equipment(including, but not limited to, all costs of electrical consumption withrespect to Additional HVAC Equipment), and (iii) Tenant’s installation ofAdditional HVAC Equipment shall be subject to Landlord’s prior approval, which approval shall not be

 

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unreasonably withheld, conditioned or delayed, in accordance with the standards set forth in the firstparagraph of Section 8.A. hereof.

 

E.                                      *Generator Equipment:* Tenant shall have the right to install anemergency generator and an associated fuel tank (collectively, the “GeneratorEquipment”) at a mutually agreeable location in the garage of the Building (the“Generator Space”), and Tenant shall be responsible, at Tenant’s sole cost andexpense, for the installation, operation, maintenance, repair and replacementof the Generator Equipment; provided, however, that in the event that thelocation of the Generator Equipment in the garage of the Building is determinedby Arlington County, Virginia not to be legally permissible, then the GeneratorSpace shall be a mutually agreeable location on the roof of the Building, and,in such case, Landlord shall reimburse Tenant for all costs of such installationwhich are in excess of the costs for such installation which would have beenincurred by Tenant had the Generator Space been in the garage of theBuilding.  The type, timing, method ofinstallation, and all items related to the Generator Space shall be subject tothe prior approval of Landlord, which approval shall not be unreasonably withheld, conditioned ordelayed.  Tenant shall have the right touse its proportionate share (based on Tenant’s Share for purposes ofdetermining Tenant’s Share of Increased Operating Expenses) of the space in therisers in theBuilding for installation of conduits between the Generator Equipmentand the Premises.  Tenant shall comply withLandlord’s reasonable andcustomary requirements regarding Tenant’s use, operation andmaintenance of the Generator Equipment with respect to noise, vibration,screening and testing.  At any timeduring the Term, Landlord shall have the right, in Landlord’s reasonablejudgment, by providing Tenant with prior notice and paying the reasonable costof relocation of the Generator Equipment, to relocate the Generator Equipmentfrom the Generator Space to another area which shall permit the GeneratorEquipment to continue to serve the Premises as it had prior to such relocation.  In addition, Landlord and Tenant acknowledgethat the installation of the Generator Equipment shall include the installationof connecting conduits, all actual costs of installation, operation,maintenance, repair, replacement and removal of which shall be paid solely byTenant.  The use of riser space for theinstallation of conduits between the Generator Equipment and the Premises shallnot adversely affect the operating systems or structural components of theBuilding and shall be subject to Landlord’s prior approval, which approval shall not beunreasonably withheld, conditioned or delayed in accordance with the standardsset forth in the first paragraph of Section 8.A. hereof.  The installation and placement of theGenerator Equipment shall comply with all applicable Laws.  The Generator Equipment shall be consideredTenant’s Personal Property.  Prior to the expiration of the Term,Tenant shall removethe Generator Equipment and restore the Generator Space and anydamage to the Land, the Building, or the Premises caused by Tenant’s connectingconduits at the Lease Expiration Date to their reasonable condition, reasonable wear and tear andinsured casualty excepted.  If theGenerator Space includes more than one (1) parking space in the Garage, thenTenant shall pay to Landlord, on the first day of each month occurring duringthe Term, a monthly charge for the Generator Space equal to the number ofparking spaces included in the Generator Space to the extent in excess of one(1), multiplied by the rate for reserved parking spaces in the Building, whichrate shall not exceed the rate for reserved parking spaces permitted to becharged by Landlord to Tenant pursuant to Section 34 below.

 

F.                                      *Telecommunications:* Tenant and telecommunications companies engaged by Tenant, including butnot limited to local exchange telecommunications companies and alternativeaccess vender services companies shall have a reasonable and necessary right ofaccess to and within the Building and the Land at no additional fee, cost orexpense for the installation and operation of telecommunications lines andsystems including, but not limited to, voice, video, data, and any othertelecommunications

 

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services provided over wire, fiber optic,microwave, wireless and any other transmission systems, for part or all ofTenant’s telecommunications within the Building, with Landlord’s prior consent,which shall not be unreasonably withheld, conditioned or delayed.  If Landlord owns or acquires ownership ofthe telephone cables in the Building at any time, Landlord shall permit Tenantto connect to such cables on such terms and conditions as Landlord mayreasonable prescribe.

 

**10.**                               **OWNERSHIPAND REMOVAL OF PROPERTY.**

 

A.                                   *Landlord’s Property:*  AnyAlterations installed by or on behalf of Tenant shall remain the Property of Tenant, and Tenant shallhave the right to remove thesame and shall repair all damage to the Premises, the Building or both causedby such removal or, at Tenant’s election surrender the same to Landlord withthe Premises, in which event the same shall become the propertyof Landlord; provided, however, that if Landlord reasonably requires in accordancewith the terms of this Section 10 below and consistent with the custom andpractice of landlords in Comparable Buildings, as a condition to Landlord’sapproval of the installation of the same, that Tenant remove anyAlterations installed by or on behalf of Tenant, then Tenant shall, at Tenant’selection, either (i) cause the same to be removed at Tenant’sexpense on or before the Lease Expiration Date, or (ii) reimburseLandlord for the reasonablecosts incurred by Landlord for removal of the subject Alteration which Landlordrequired that Tenant remove;which reimbursement shall be made by Tenant to Landlord within thirty (30) days after Tenant’s receipt of Landlord’srequest together with invoices evidencing the subject of costs incurred byLandlord.  Notwithstandingthe foregoing, (a) Tenant shall not be required to remove any Alterations whichconstitute improvements which are typically found in office space in ComparableBuildings, or any reinforcement of floor slabs or other structural aspects of the Building, flooringand track for high density file systems, supplemental/auxiliary HVAC units, UPSsystems, cables, mill work or plumbing (collectively, the “TypicalImprovements”).  Alterations which Landlord may require beremoved by Tenant as a condition to Landlord’s approval of the same arehereinafter referred to as “Items Subject to Removal”.  Landlord shall, together with its consent to the subject Alterations, specifythe extent to which it will require Tenant to remove the ItemsSubject to Removal in question at the end of the Term, and if Landlord fails soto specify, Tenant shall have no further obligation to remove the same.

 

B.                                     *Removal of Property At Endof Term:*  All personal property and all business andtrade fixtures, machinery and equipment, furniture, partitions and Alterationsowned by Tenant or installed by Tenant in the Premises or elsewhere in theBuilding are and shall remain the property of Tenant, and may be removed byTenant at any time during the Term. Tenant shall remove all of Tenant’s Personal Property, from the Premises on or beforethe Lease Expiration Date.  Notwithstanding anything to thecontrary set forth in this Lease, Tenant shall have no obligation to removewiring or cabling from within the Premises or the Building.  If any personal property belonging to Tenant or toany other person or entity is left in the Building or on the Land after thedate this Lease is terminated for any reason and Tenant vacates the same,Landlord shall have the right,following at least thirty (30) days prior notice to Tenant, tostore such property at Tenant’s reasonable cost and/or to dispose of it in whatevermanner Landlord considers appropriate, without waiving its right to claim fromTenant all expenses and damages caused by Tenant’s failure to remove suchproperty, and Tenant and any other person or entity shall have no right tocompensation from or any other claim against Landlord as result.

 

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**11.****                              ****ACCESSTO PREMISES.**

 

A.                                   *Landlord Access*:  Upon such notice to Tenant as is reasonableunder the circumstances, which shall be at least two (2) business days,which notice may be given orally and, which notice shall not be required in theevent of an emergency), Landlord may enter the Premises to examine them and to makealterations or repairs describedbelow; provided,however, in the case of any emergency, Landlord and its agents may enter thePremises at any time and in any manner. Upon at least two (2)business days following notice delivered to Tenant, unless (x) otherarrangements are made with Tenant, which other arrangements Tenant agrees toreasonably consider at the time of any request for same by Landlord, Tenantshall allow the Premises to be exhibited by Landlord, or (y) Tenant elects todefer such access to avoid interference with special events or circumstancesthen occurring in the Premises (which shall include, but not be limited to,conferences and meetings, work in connection with upcoming pubic filings or inconnection with transactions, and work necessary in order for Tenant to meetkey client delivery dates):  (i) torepresentatives of lending institutions or to prospective purchasers of theBuilding provided arepresentative of Landlord shall accompany its visitors to the Premises andLandlord shall be responsible for the conduct of such representatives andvisitors, and (ii) during the last twelve (12) months of the Term, to persons who maybe interested in leasing the Premises. Subject to the foregoing provisions of this Section 11, Landlordreserves the right and shall be permitted reasonable access to the Premises (1) to installfacilities above the ceilings, behind the walls, and below the floor slabs (or anycombination thereof) of the Premises, (2) to make repairs, alterations, additions and improvements, whether structural orotherwise, in or about the Building or any part thereof, outside the Premises;provided, however, the same shall not (a) unreasonably interfere with Tenant’suse of or operations in the Premises, or (b) result in an obstruction of accessto or visibility of the Premises, or (c) reduce the usable area of thePremises.  Notwithstanding theforegoing, Tenant shall have priority use of all areas within the Premiseswhich Landlord desires to use for the performance and/or installation of thework and improvements described in this Section.  For example, in the event Tenant has installed cables or conduitsbetween the ceiling in the Premises and the floor slab above such ceiling,Landlord may not make any installation which may interfere with such cables orconduits.  Upon completion of work describedin this Section, Landlord shall diligently proceed to restore the areas of thePremises affected by such work as nearly as possible to the condition thatexisted immediately prior to the commencement of the subject work. Landlordagrees that in the exercise of its rights pursuant of this Section 11, Landlordshall use reasonable efforts to minimize disruption of business operations in the Premises.  Landlord hereby agrees to reimburse Tenantfrom time to time promptly following Tenant’s delivery to Landlord of Tenant’srequest together with invoices evidencing the same, for all reasonable costsincurred by Tenant in connection with any action taken by Landlord pursuant tothis Section 11.A., including without limitation, additional costs incurred by Tenantin connection with the performance of any Alterations in the Premisesincluding, but not limited to, the reasonable fees paid by Tenant to any thirdparty architect or engineer engaged by Tenant to review of plans for workLandlord desires to perform in the Premises.  Notwithstanding the foregoing, Tenant maymaintain a locked facility in which classified work is being conducted or inwhich such work is stored.Tenant shall provideprior notice to Landlord of the location of same prior to locking off sucharea, in which case Landlord shall not enter such area without beingaccompanied by a representative of Tenant.  Tenanthereby authorizes Landlord and any of its employees, agents and contractors tobreak any such locks and the doors and walls to which they are attached in theevent of an emergency.

 

B.                                     *Tenant’s Access*.  Tenantshall be granted access to the Premises, the Building, and the parkingfacilities in which Tenant is granted parking rights under this Lease,twenty-four (24) hours per day, seven (7) days per week, every day ofthe year.  Landlord shall maintain acard key access system

 

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or a comparable accesssystem at the main entry for the Building, and shall maintain a similar systemof access to the parking facilities in which Tenant is granted parking rightsunder this Lease.  Such access systemfor the Building shall lock-off elevator access to the floors on which any portion of the Premises is located after the normal hours ofoperation of the Building, and shall permit access to such floors by Tenant andits personnel, as well as any other persons, who hold access key cards.

 

**12.****                              ****SERVICESAND UTILITIES.**

 

A.                                   *Services Provided:* Landlord shall operate,maintain and repair, the Building and the Common Area in a first class mannerand condition comparable to the operation, maintenance and repair of ComparableBuildings.  The obligations of Landlordto operate, maintain and repair the Building and the Common Areas shall includethe provision of the following to Tenant, without additionalcharge, except as otherwise provided herein (including, but not limited to, asprovided in Sections 5 and 1.BB. hereof):

 

(1)                                  Elevator service for common use, with atleast two (2) passenger elevatorssubject to call atall times, including Sundays and Holidays, and at least five (5) passenger elevators subject to call duringBuilding Hours, provided that no more than one elevator may be taken out ofservice at any time for maintenance (which maintenance shall be diligentlypursued to completion by Landlord), it being understood andagreed by Landlord that it shall not render the remaining elevators (that is,elevators which are in addition to the two aforementioned elevators) out ofservice for purposes other than testing, maintenance, repair, or replacement orpursuant to the order of any governmental agency having jurisdiction withrespect to the elevators.  Tenant shallhave the ability to periodically “lock off” elevators to its floors.

 

(2)                                  Central heating and air conditioning duringBuilding Hours, exclusive of Holidays, during the seasons of the year andwithin the temperature ranges usually furnished in Comparable Buildingssufficient to ensure comfortable occupancy within the Premises during all seasonsof the year, and in accordance with the specifications set forth on ExhibitE attached hereto.  Landlord shallprovide heat and air conditioning at other times requested by Tenant.  Landlord shall charge Tenant for such after Business Hoursservice (provided that suchrates shall not exceed the lower of (i) Twenty-Five Dollars ($25.00) perhour, per full floor, to which the subject service is provided, and (ii) theactual costs incurred by Landlord to provide such service, including, adepreciation mark-up as reasonably determined by Landlord.  The above-referenced depreciation shall bebased on the useful life of equipment in the Building used to provide thesubject service and shall be prorated on an hourly basis using the totalreasonably anticipated lifetime hours of usage for the subject equipment.  In any event, Tenant shall only beresponsible for an equitable share of the charge imposed by Landlord to supplyheating or air conditioning after Business Hours to the extent other occupantsof the Building have also requested the provision of the same during the timeprovided to Tenant.

 

(3)                                  Ventilation to the Premises.

 

(4)                                  Water and indoor air quality testing on an annual basis by anindependent contractor, which testing shall be consistent with then-currentOSHA, EPA and ASHRAE standards, with each resulting report delivered to Tenantpromptly following Landlord’s receipt of the same, and which testing shall beperformed at Landlord’s sole cost.

 

(5)                                  Cleaning and char services in accordancewith the cleaning and char specifications set forth on Exhibit Iattached hereto and made a part hereof, which services Landlord shall providein a manner commensurate with the provision of such services in ComparableBuildings.  If Tenant requires any janitorial or cleaningservices in excessof the amounts provided by Landlord in accordance with the

 

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foregoing (such as cleaning services beyond normal office janitorialservices for areas such as kitchens, computer rooms, or other special use areas), Landlord will providesuch excess services to Tenant within a reasonable period after Tenant’srequest and Tenant shall reimburse Landlord for all additional reasonable costsincurred by Landlord to provide the same.

 

(6)                                  Landlord shall provide electricity tothe Premises andthe Common Areas at all times, with the amount of electricity supplied to thePremises to be in the amount at least equal to the Premises Standard ElectricalCapacity and with the amount of such electricity supplied to the Common Areasufficient to service the same in accordance with standards for common areas inComparable Buildings.  Tenant shall notbe charged for excess electrical consumption until total consumption exceedseight (8.0) watts connected load per rentable square foot in the Premises.

 

(7)                                  Replacement of Building standard light bulbs in Building standard light fixtures, itbeing agreed that if Landlord replaces any other light bulbs in the Premises, Tenant shall pay Landlord the reasonable cost ofsuch bulbs.

 

(8)                                  Rest room facilities and necessary lavatorysupplies, including hot and cold running water at the points of supply,provided for general use, oneach floor of the Building on which any portion of the Premises is located.

 

(9)                                  Hot and cold water for kitchens and water for drinking fountains.

 

(10)                            Repair, maintenance and, as necessary, replacement of (1) all of theexterior and structural elements of the Building and the Common Areas,including exterior windows and mechanical, plumbing and electrical systems installed in the Building, but excluding those portions of any mechanical,plumbing or electrical systems that exclusively serve the Premises, such as (bymeans of illustration only) supplemental heating, ventilation and air-conditioningsystems, kitchen plumbing and equipment, plumbing for non-Building standardrestrooms exclusively used by Tenant (but including those restrooms provided aspart of the Landlord’s Work, and wall plugs and switches within thePremises).Landlord shall not be responsible for Tenant’s obligations withrespect to the Premises and equipment exclusively serving the Premises as setforth in this Lease.

 

(11)                            Reasonable access to the Premises, Garage and Common Areasat all times, subject to such access control procedures, restrictions and otherregulations as Landlord may promulgate and which are generally applicable toall office tenants of the Building.  The Building systems shallbe capable of being utilized by Tenant twenty-four (24) hours per day, 365 daysper year without prior notice to Landlord.

 

(12)                            A concierge in the main lobby of the Building during Business Hours, andduring such additional hours as Landlord may reasonably elect, consistent withpractices in Comparable Buildings.

 

(13)                            Access control service and equipment consistent with that provided atComparable Buildings, which shall include the engagement of a professional firmto provide a guard which continuously monitors the Common Areas in andimmediately adjacent to the Building from 6:00 P.M. through midnight each day,and shall include a camera system to monitor Common Areas in the Buildingand that portion of the Garage which is designated for use bytenants of the Building.

 

B.                                     *Failure to ProvideServices:**                                   *If any of the services described in this Section 28, or Tenant’s access to the Premises, the Garage or other Common Areasare interrupted, Landlord will use its best efforts to resume the service oraccess to the extent the same is within the reasonable control of Landlord, andLandlord will use all due diligence to cause others to resume the service oraccess to the extent the same is beyond the reasonable control ofLandlord.  Except as otherwise providedin this Lease, Landlordshall have no liability to Tenant or others based on any failure by Landlord tofurnish the foregoing due to Unavoidable Delays and such failure shall neitherrender Landlord liable for damages to

 

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either person or property, nor be construedas an eviction of Tenant, nor cause a diminution or abatement of Rent norrelieve Tenant of any of Tenant’s obligations hereunder.  In the event Tenant is prevented from using, and does not use, thePremises or any portion thereof, for five (5) consecutivebusiness days or five (5)business days in any twelve (12) month period (the “Eligibility Period”)as a result of any matter which substantially interferes with Tenant’s use ofthe same, if the reason for the suspension or the continuation of thesuspension is anything other than an Unavoidable Delay, provided that anymatter caused by the acts or omissions of tenants or other occupants of theBuilding shall not be deemed to result in an Unavoidable Delay for purposes ofthis Section, then the Rent (including parking charges) shall be abated or reduced, as the case may be,after the expiration of the Eligibility Period for such time that Tenantcontinues to be so prevented from using, and does not use, the Premises, or aportion thereof, in the proportion that the rentable area of the portion of thePremises that Tenant is prevented from using, and does not use, bears to thetotal rentable area of the Premises. However, in the event that Tenant is prevented from conducting, and doesnot conduct, its business in any portion of the Premises for a period of time in excess of theEligibility Period, and the remaining portion of the Premises is not sufficientto allow Tenant to effectively conduct its business therein, and if Tenant does notconduct its business from such remaining portion, then for such time after expiration ofthe Eligibility Period during which Tenant is so prevented from effectivelyconducting its business therein, the Rent for the entire Premises (including all ofTenant’s parking charges) shall be abated; provided, however, if Tenant reoccupies and conducts itsbusiness from any portion of the Premises during such period, theRent (including parkingcharges) allocable to such reoccupied portion, based on the proportion that therentable area of such reoccupied portion of the Premises bears to the totalrentable area of the Premises, shall be payable by Tenant from the datesuch business operations commence. Notwithstanding the foregoing, the Eligibility Period shall not beapplicable to the extent that the abatement of Tenant’s Rent (including parkingcharges) during the Eligibility Period is covered by insurance obtained byLandlord as part of Operating Expenses. If Tenant’s right to abatement occurs during the Free Rent Period, thenthe Free Rent Period shall be extended for the number of days that the abatementperiod overlapped the Free Rent Period.

 

C.                                     *Recycling:* Without limiting the foregoing but subject to the terms of this Lease, Tenantcovenants and agrees, at its sole cost and expense, to comply with all presentand future applicable Lawsof the jurisdiction in which the Building is located and of the federal,municipal, and local governments, departments, commissions, agencies and boardshaving jurisdiction over the Building to the extent that any of them impose onTenant duties and responsibilities regarding the collection, sorting,separation, and recycling of trash.

 

**13.****                              ****RULESAND REGULATIONS.**

 

Tenant shall abide by and observe the rules and regulations attachedhereto as Exhibit D and such other customary rules and regulations asmay be made by Landlord from time to time and which are generally applicable toall office tenants of the Building and comparable to those generally adoptedfor Comparable Buildings, provided that such rules and regulations (including those attached hereto asExhibit D) are not inconsistent with the provisions of thisLease.  Landlord agrees that the rules and regulations shall not be changed, revised or enforced in amanner which may interfere with Tenant’s permitted use of the Premises or in amanner that may decrease the level of services or utilities to be provided by Landlord under thisLease.  In the event of a conflictbetween the provisions of this Lease and the provisions of the rulesand regulations, the provisionsof this Lease shall control.  Landlordshall

 

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not be liable to Tenant or any other entityfor any violation of said rules, regulations or lease provisions, providedLandlord uses its commercially reasonable efforts to cause compliance by theentity which violates the same after Landlord obtains knowledge of suchviolation. ** **Landlordshall not enforce any rule or regulation in a manner whichunreasonably discriminates against Tenant. Landlord shall not discriminate against Tenant in the application of therules and regulations.

 

**14.****                              ****INDEMNIFICATION.**

 

A.*                                  **Liability Standard.*  In no event shall Tenant beliable for consequential damages, except those resulting from a breach byTenant of any of its obligations under Sections 21 or 36 hereof.

 

B.                                     *Indemnification By Tenant:*  Subject to the waiver of subrogation provisions setforth in this Lease, and thewaivers by Landlord of other liabilities ofTenant set forth in thisLease, including, without limitation, Landlord’s waiver ofliability by Tenantfor damage to the Building,the Land and/or any other portion of the Complex and/or all other propertyof Landlord; Tenanthereby agrees toindemnify and hold Landlordharmless from andagainst all costs, damages, claims, liabilities and expenses, includingreasonable attorneys’ fees, suffered by or claimed against Landlord, directlyor indirectly, based on,arising out of orresulting from:  (i) any breach ordefault by Tenant in the observance or performance of its covenants and obligations under thisLease, provided, however, that in no event shall Tenant be liable for consequential damages, except thoseresulting from a breach by Tenant of any of its obligations under Sections 21or 36 hereof; and (ii) the negligence or willful misconduct ofTenant.** **Notwithstanding the foregoing, in no event shall Tenant beliable for consequential damages or for any injury to person or damage to property caused by any act,omission or neglect of Landlord, its agents, servants, employees,customers, invitees or licensees or arising out of the operation or managementor control of the Building and the Common Areas or arising out of a default by Landlordin the performance of any of its obligations under this Lease.

 

C.*                                    **Indemnification by Landlord: *Subject tothe waiver of subrogation provisions set forth in this Lease and other waivers by Tenant ofLandlord’s liability set forth in this Lease (including, without limitation, Tenant’s waiverof liability by Landlord for damage for Tenant’s personal property) Landlordhereby agrees to indemnify and hold Tenant harmless from and against all costs, damages,claims, liabilities and expenses, including reasonable attorneys’ fees, suffered by orclaimed against Tenant,directly or indirectly, based on, arising out of or resulting from: (1) any breach ordefault by Landlordin the observance or performance of its covenants and obligations under thisLease, and (2)the negligence or willful misconduct of Landlord; provided, however, that in noevent shall Landlord be liable for consequential damages (except to the extentspecifically provided in Section 2.F.(3) hereof) or for any injury to person ordamage to property caused by any act, omission or neglect of Tenant, itsagents, servants, employees, customers, invitees or licensees or out of anydefault by Tenant in the performance of any of its obligations under thisLease.

 

**15.****                              ****LIMITATIONON LANDLORD LIABILITY.**

 

A.                                   *LiabilityStandard:*  In no event shall Landlord be liable forconsequential damages, except to the extent specifically provided in Section2.F.(3) hereof.

 

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B.                                     *Limitation on Total Liability: *Notwithstandingany other provision of this Lease, it is expressly understood and agreed thatthe total liability of Landlord arising out of or in connection with thisLease, the relationship of Landlord and Tenant hereunder and/or Tenant’s use ofthe Premises, shall be limited to the interest of Landlord in the Building, the Land and the Complex, and allproceeds from same, no other property or assets of Landlord orany partner or owner of Landlord shall be subject to levy, execution, or otherenforcement proceedings or other judicial process for the satisfaction of anyjudgment or any other right or remedy of Tenant arising out of or in connectionwith this Lease, the relationship of Landlord and Tenant hereunder and/orTenant’s use of the Premises.  Notwithstanding the foregoing, Tenant shall have no right to seekrecourse against any proceeds received by the entity comprising the “Landlord”from the sale of its interest in the Building, the Land or the Complexfollowing the sale of such Landlord’s interest therein, except as the samerelate to claims against the entity comprising the “Landlord” which has soldits subject interest, which claims accrued prior to such sale and which claimsare (A) set forth in a complaint filed by Tenant in any litigation againstLandlord which is pending at the time of such sale or (B) with respect toclaims not in excess of One Million Dollars ($1,000,000.00), are (i) made inwriting to said selling entity, setting forth a general description of thenature of such claims, together with (ii) the filing of a lawsuit against saidentity in the court of appropriate jurisdiction, all within one (1) yearfollowing such sale or transfer.

 

**16.****                              ****FIREAND OTHER CASUALTY.**

 

A.                                   If the Building or the Complexshall be damaged, this Lease shall not terminate except as otherwise provided in thisLease and Landlord shall promptly commence and diligently proceed to repairthe damage, provided that Landlord shall have no obligation to repair damage toor replace Tenant’s Personal Property.  Landlord’s restorationobligations hereunder shall be effective regardless of any delays in obtaininginsurance proceeds.  All Alterationsshall be restored by Landlord in accordance with the as-built plans for thesame.  Except as otherwiseprovided herein, if any part of the Premises are rendered untenantable byreason of any such damage, Rent shall abate from the date of the damage to thedate the damage is repaired, in the proportion that the rentable area of theportion of the Premises that Tenant is prevented from using, and does not use,bears to the total rentable area of the Premises.  However, in the event the remaining portion of the Premises isnot sufficient to allow Tenant to effectively conduct its business therein, andif Tenant does not conduct its business from such remaining portion, then theRent for the entire Premises (including all of Tenant’s parking charges) shallbe abated; provided, however, if Tenant reoccupies and conducts its businessfrom any portion of the Premises, then Rent (including parking charges)applicable to such reoccupied portion, based on the proportion that therentable area of suchreoccupied portion of the Premises bears to the total rentable area of thePremises, shall be payable by Tenant from the date such business operationscommence.  If Tenant’s right toabatement occurs during the Free Rent Period, then the Free Rent Period shallbe extended for the number of days that the abatement period overlaps the FreeRent Period.  Tenant’s right toabatement shall commence upon the occurrence of damage and shall continue untilTenant has been given sufficient time, and sufficient access to the Premises,to rebuild the portion of the Premises it is required to rebuild, to installits property, furniture, fixtures and equipment and to move in over one (1)weekend, provided that such time for Tenant to rebuild the portion of thePremises which it is required to rebuild shall not exceed one hundred eighty(180) days from the date upon which Tenant is given sufficient access to thePremises for such rebuilding.

 

B.                                     Notwithstandinganything herein to the contrary, (i) if the Building is damaged (whether or notthe Premises has been damaged) to such an extent that Landlord decides, in its reasonable

 

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discretion,not to rebuild or reconstruct the Building, then Landlord, at its option,may give Tenant, within ninety (90) days after the casualty, notice oftermination of this Lease, provided that Landlord simultaneously terminates allother leases at the Building, and this Lease and the Term shall terminate(whether or not the Term has commenced) upon the date reasonably selected by Tenant inaccordance with the terms of Section 16.E below, with the sameeffect as if the new expiration date had been the Lease Expiration Date, andall Base Rent and Additional Rent shall be apportioned as of such date; or (ii)if Landlord reasonably estimatesto Tenant in writing (providedthat if Tenant disagrees with such estimate, then Tenant shall have the rightto elect that such estimate be determined pursuant to the Consultants Procedure)that the restoration of the Premises and, to the extent requiredfor lawful occupancy of the Premises, the Building, cannot be completed by thetwo hundred seventieth (270th) day following the date of the damage, then eitherLandlord or Tenant may terminate this Lease by notice to the other of them, which noticeshall be given by Landlord, ifat all, within ninety (90) days following the date of the damage, and whichnotice shall be given by Tenant, if at all, within ninety (90) days following thedate of such estimate.  Such estimateshall be provided by Landlord within ninety (90) days following the date of thecasualty.  If neither Landlord norTenant has terminated this Lease in accordance with the terms of the precedingsentence, and if the restoration of the Premises and the Building has not beencompleted by the ninetieth (90th) day following the date whichLandlord estimated (or such estimate as was determined by the ConsultantsProcedure if Tenant disagreed with Landlord’s estimate and Tenant elected tohave such estimate determined, and such estimate was determined, by theConsultants Procedure) for completion of restoration of the Premises and theBuilding (the “ Estimated Date of Completion”) (which Estimated Date ofCompletion may be later than the two hundred seventieth (270th) day followingthe date of the casualty) (orif it is determined pursuant to the Consultants Procedure that the restorationof the Premises and Building will not be completed by the ninetieth (90th)day following the Estimated Date of Completion), then Tenant mayterminate this Lease by deliveringnotice to Landlord, which notice shall be given by Tenant, if at all, no later than thirty(30) days following such Estimated Date for Completion.   Tenantshall thereafter have the same right to terminate this Lease within twenty (20)days following the expiration of the ninety (90) day period after the EstimatedDate for Completion and within twenty (20) days following the expiration ofevery 90-day period thereafter, if all damage required to be restored byLandlord is not then restored at the end of each such 90-day period.  In the event of anytermination of this Lease, allprepaid amounts shall be promptly refunded to Tenant in full.

 

C*.**                                    **Destruction Near End ofTerm*.  Notwithstanding anything to the contrarycontained in this Section 16 above, if: (i) the Premises is damaged or destroyed or any other portionof  the Building or the Garage or theComplex is damaged or destroyed, such that Tenant’s access to or use of the Premises oruse of the Building’s systemsor the use of Tenant’s parking rights is substantially impaired; and (ii) inthe reasonable judgment of Landlord or a certified contractorengaged by Tenant, theremaining term of this Lease following the restoration of the same shall be less than two (2) years, Landlord or Tenant may, at its option, elect to terminatethis Lease by delivering notice to the other within sixty (60) daysfollowing Tenant’s receipt of Landlord’s determination (or within sixty(60)  days following the thirtieth (30th) day after the date of thecasualty, in the event that Landlord’s determination is not timelydelivered).  Termination by Landlord inconnection with a casualty near the end of the term of this Lease as set forthabove shall not be effective in the event that (1) Tenant then has, orwould with the passage of time have, the right to extend the term of thisLease, and (2) Tenant delivers notice to Landlord, within sixty (60) days after Tenant’s receipt of Landlord’s termination notice, that Tenant isexercising such extension right, in which case Landlord shall be obligated torepair and restore theBuilding and Complex to the extent provided in Section 16.A. hereof.

 

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D*.**                                   **Effective Termination Date*.  Theeffective date of any termination by Landlord or Tenant under thisSection 16 shall be the date on which Tenant reasonably ceased, or ceases,to use the Premises for its ordinary business operations as a result of thecasualty.  In the event that Tenant isstill so using the Premises at the time of the notice of termination, sucheffective date shall be the date reasonably selected by Tenant to find,negotiate for, build-out and relocate to, substitute space, but in no eventlater than twelve (12) months following the date of the casualty.

 

E.                                      In no event shall Tenant have any liability to Landlord or otherwise fordamage to the Premises, the Building, the Complex or any other property ofLandlord, by any cause covered by insurance obtained by Landlord or required tobe obtained by Landlord under the terms of this Lease, including any suchdamage caused by Tenant or anyone claiming by or through Tenant or any of theirrespective employees, agents, contractors or invitees.

 

**17.****                              ****INSURANCE.**

 

A.                                   *Tenant’s Insurance*:

 

(a)Throughout the Term, Tenant shall obtain and maintain (1) commercial generalliability insurance (written on an occurrence basis) including contractualliability coverage insuring the obligations assumed by Tenant under this Lease(including those set forth in Sections 14. and 36.B.), premises and operationscoverage, broad form property damage coverage and independent contractorscoverage, and containing an endorsement for personal injury, and (2) worker’s compensation insurance.  Such commercial general liability insuranceshall be in minimum amounts typically carried by prudent tenants engaged insimilar operations, but in no event shall be in an amount less than One MillionDollars ($1,000,000.00) combined single limit per occurrence with a Two MillionDollars ($2,000,000.00) annual aggregate**,**andTenant shall also obtain and maintain umbrella excess liability insurance witha policy limit of not less than Two Million Dollars ($2,000,000.00).  Such worker’s compensation insurance shallcarry minimum limits as defined by the law of the jurisdiction in which theBuilding is located (as the samemay be amended from time to time).

 

(b)                                 The insurance carried by Tenant pursuant to Subsection 17.A.(a)(1) hereof shall: (1) be issued by a company that is licensed to do business in thejurisdiction in which the Building is located, that has a rating equal to orexceeding A-/IX from Best’s Insurance Guide; (2) with respect to the insurancedescribed in Subsection 17.A.(a)(1) above, name Landlord, themanaging agent of the Building (which Landlord requests by delivery of notice to Tenant)  and the holder of any Mortgage(which Landlord requests by delivery of notice to Tenant) as additional insureds,but not loss payees; (3) with respect to the insurance described in Section 17.A.(a)(1)above, contain an endorsement that such policy shall remain infull force and effect notwithstanding that the insured may have waived itsright of action against any party prior to the occurrence of a loss (Tenanthereby waiving its right of action and recovery against and releasing Landlordand its employees and agents (including, but not limited to, Landlord’smanaging agent) from any and all liabilities, claims and losses for which theymay otherwise be liable to the extent Tenant is covered by insurance carried orwould have been covered by insurance it is required to carry under this Lease);(4) with respect to theinsurance described in Subsection 17.A.(a)(1) above, providedthat the insurer thereunder waives all right of recovery by way of subrogationagainst Landlord, its partners, agents (including, but not limited to,Landlord’s managing agent), employees, and representatives, in connection withany loss or damage covered by such policy; (5) withrespect to the insurance described in Section 17.A.(a)(1) above,be primary and non-contributory; (6) withrespect to the

 

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insurancedescribed in Section 17.A.(a)(1) above, containsan endorsement for cross liability and severability of interests; and (7) with respect to the insurancedescribed in Section 17.A.(a)(1) above, contain an endorsementprohibiting cancellation, failure to renew, reduction of amount (below the amount of same requiredto be carried by Tenant under this Lease) of insurance or material change incoverage without the insurer first giving Landlord thirty (30) days’ priorwritten notice of such proposed action. Tenant’s policy shall contain a commercially reasonable deductible provision.  Landlord reserves the right from time totime to require Tenant to obtain higher minimum amounts or different types ofinsurance, if it becomes customary for other landlords of Comparable Buildingsto require similar sized tenants in similar industries to carry insurance ofsuch higher minimum amounts or of such different types of insurance.  Notwithstanding anything to the contrary set forth in this Lease,any insurance coverage required to be carried by Tenant under this Lease may bemaintained under a “blanket policy” maintained by Tenant or by any affiliate ofTenant, so long as such “blanket policy” shall provide the subject coveragedescribed herein on a per location basis. In the event Landlord (or any other entity, as required under this Lease)shall have been named as an additional insured in any of Tenant’s insurancepolicies, Landlord shall promptly endorse (and cause each such other entitynamed as an additional insured to promptly endorse) to the order of Tenant,without recourse, any check, draft or order for the payment of moneyrepresenting the proceeds or any such policy or any other payment growing outof or connected with said policy and Landlord hereby irrevocably waives (andshall cause each such other entity named as an additional insured toirrevocably waive in writing delivered to Tenant, promptly following Tenant’srequest) any and all rights in and to such proceeds and payments.  Tenant shall deliver acertificate (on an Acord Form) of all such insurance evidencing payment thereforto Landlord concurrently with Tenant’s execution of this Lease and at leastannually thereafter followingLandlord’s request. Tenant shall give Landlord prompt notice in case of fire in the Premises.  Neither the issuance of any insurance policyrequired under this Lease nor the minimum limits specified herein shall bedeemed to limit or restrict in any way Tenant’s liability arising under or outof this Lease.

 

(c)                                  Notwithstanding anything to the contrary set forth above in this Section17.A, provided the net worth of Tenant shall equal or exceed One Hundred FiftyMillion Dollars ($150,000,000.00), Tenant may elect to self-insure with respectto the risks it would otherwise have been insured under the policies requiredby the foregoing terms of this Section 17.A, and in such event, Tenant shallhave no obligation to comply with the foregoing terms of this Section 17.A.

 

B.                                     Landlord’s Insurance:

 

(a)                                  Throughout the Term,Landlord shall obtain and maintain: (1) commercial general liability insurance(written on an occurrence basis) including contractual liability coverageinsuring the obligations assumed by Landlord under this Lease (including thoseset forth in Section 14, premises and operations coverage, broad form propertydamage coverage and independent contractor coverage, and containing anendorsement for personal injury; (2) rental interruption insurance for theBuilding with coverage for interruption of rent for a period of one year;(3)  all-risk, physical damage insurancewith extended coverage, covering the Building, the Garage, and all Landlord’sfixtures and other personal property located thereon, for one hundred percent(100%) of the replacement cost thereof; (4) worker’s compensation insurance; and (5) other types of insurance,and with such policy limits, protecting the Building, the Complex and Landlordas are normally and customarily carried by sophisticated landlords ofComparable Buildings.  Such commercialgeneral liability insurance shall be in minimum amounts typically carriedby prudent landlords of Comparable Buildings, but in no event shall be in an amountless than Ten Million Dollars ($10,000,000.00) combined single limit peroccurrence, with a Ten Million Dollar

 

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($10,000,000.00),annual aggregate, and Landlord shall also obtain and maintain umbrella excessliability insurance with a policy limit of not less than Ten Million Dollars($10,000,000.00).  Such rentinterruption insurance shall insure loss of rent for space in the Buildingfor  the period of one (1) year.  Such property insurance for the Building,the Garage and Landlord’s other property therein shall be written on areplacement cost basis, with a commercially reasonable deductible.  Such worker’s compensation insurance shallcarry minimal limits as defined by the law of the jurisdiction in which theBuilding is located (as the same may be amended from time to time).

 

(b)                                 The insurance carriedby Landlord pursuant to Section 17.B.(a) hereof shall: (1) be issued by a companythat is licensed to do business in the jurisdiction in which the Building islocated, and that has a rating equal to or exceeding A-/VI from Best’s Insurance Guide; (2)with respect to the insurance policies identified in Subsections 17.B.(a) (1), (2), (3) and (5)above, name Tenant as an additional insured; (3) with respect to theinsurance policies identifiedin Subsections 17.B.(a) (1), (2), (3) and (5) above, contain an endorsementthat such policy shall remain in full force and effect notwithstanding that the insuredmay have waived its right of action against any party prior to the occurrence of a loss (Landlord herebywaiving its right of action and recovery against and releasingTenant and its employees andagents from any and all liabilities, claims and losses for which they may otherwise beliable to the extent Landlord is covered by insurance carried or which would have been covered byinsurance required to becarried by Landlord under this Lease); (4) with respect to the insurancepolicies identified inSubsections 17.B.(a)(1), (2), (3) and (5) above,****provides that the insurer thereunder waives all right ofrecovery by way of subrogation against Tenant, its partners, agents, employeesand representatives, in connection with any loss or damage covered by suchpolicy, or; (5) with respect to the insurance policies as identified inSubsections 17.B.(a) (1), (2), (3) and (5) above, be primary andnon-contributory; (6) with respect to the insurance policies identified inSubsections 17.B.(a)(1), (2), (3) and (5) above, contains an endorsement forcross liability and severability of interests; (7) with respect to theinsurance policies identified in Subsections 17.B.(a)(1), (2), (3) and (5)above, contain an endorsement prohibiting cancellation, reduction of amount(below the amount of same required to be carried by Landlord under this Lease)of insurance or material change in coverage without the insurer first givingTenant thirty (30) days prior notice of such proposed action.  Landlord’s policies shall contain acommercially reasonable deductible provision. Tenant reserves the right from time to time to require Landlord toobtain higher minimum amounts of insurance if it becomes customary for otherlandlords of Comparable Buildings to carry insurance of such minimumamounts.  Landlord shall deliver acertificate (on Acord Form 27) of all such insurance and receipts evidencingpayment therefor to Tenant concurrently with Landlord’s execution of this Leaseand at least annually thereafter promptly following Tenant’s request.  Landlord shall give Tenant prompt notice incase of fire in the Building outside the Premises.  Neither the issuance of any insurance policy required under thisLease nor the minimum limit specified therein shall be deemed to limit orrestrict in any way Landlord’s liability arising under or out of this Lease.

 

C.                                     *Effect of Activities onInsurance:*  In the event any increases in the rates ofinsurance incurred by Landlordare due to any activity conducted or property installed or placed by Tenant onor about the Land, the Building or the Premises in violation of the terms of this Lease, then Tenantshall reimburse Landlord for the amount of such increases within thirty (30) days afterTenant’s receipt of Landlord’s request together with invoices and reasonableproof of the basis for such increases; provided, however, thatLandlord shall not have the right to require Tenant to reimburse Landlord forthe amount of such increases pursuant to this Section 17.C. if Tenant isconducting only the Permitted Use pursuant to

 

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Section 6.A. of this Lease at the Premises,and such use is being conducted in accordance with all applicable laws andgovernmental regulations and in accordance with the provisions of thisLease.  In the event any increases inthe rates of insurance incurred by Tenant are due to any activity conducted orproperty installed or placed by Landlord or permitted to be placed by Landlord,on or about the Land or the Building in violation of the terms of this Lease,then Landlord shall reimburse Tenant for the amount of such increase withinthirty (30) days after Landlord’s receipt of Tenant’s request together withinvoices and reasonable proof for the basis of such increases.

 

D.                                    *Mutual Waiver ofSubrogation*:  Notwithstanding anything to the contrary set forth in thisLease, each party shall be relieved from all obligations and liabilities withrespect to any matters arising to the extent the same are covered by insurancecarried by the other party or requiredto be carried by the otherparty pursuant to this Lease, even if the same result from the acts or omissions of a party or anyone claiming by or through suchparty or any of theirrespective agents, contractors, employees or invitees.  Landlord and Tenant further agree that eachwill not make any claim against or seek to recover from the other for any loss,cost, damage, liability, expense or peril covered by insurance. The terms of this Section shall survive the expiration of the Term orearlier termination of this Lease.

 

**18.****                              ****CONDEMNATION.**

 

*A.**                                    **Right to Terminate:*  Ifa substantial part of the Premises is taken or condemned by any governmental orquasi-governmental authority for any purpose or is granted to any authority inlieu of condemnation (collectively, a “taking”), Landlord shall have the rightin its reasonable discretion to terminate this Lease by notice to Tenant andBase Rent and Additional Rent payable pursuant to Section 5 hereof shall be prorated through the dateof the taking.  Landlord agrees toexercise its right to terminate set forth in this Section 18.A. in annondiscriminatory fashion among leases affecting the Building.  Notwithstanding the foregoing, in the eventthat (i) more than five percent (5%) of the rentable area of the Premises istaken, or (ii) parking spaces for more than twenty percent (20%) of theParking Permits allocated to Tenant are taken and Landlord is unable to providealternative parking to Tenant within a one (1) block radius of the Building prior to the date of the taking,or (iii) by reason of such taking, Tenant is denied reasonable access tothe Premises on a permanent basis, then Tenant shall have the right toterminate this Lease bydelivering notice to Landlord, which notice must be given by that date which occurs thirty (30) days following thedate of such taking.

 

B.                                     *Adjustment of Rent:*  Ifa portion of the Premises is taken and neither party elects to terminate thisLease pursuant to Section 18.A. hereof, then (i) Base Rent and Additional Rent payable pursuant toSection 5 hereof shall be equitably adjusted as of the date title vests in theauthority, (ii) Landlord shalldiligently proceed to restore the remaining portion of the Premises and theBuilding and, to the extent within Landlord’s reasonable control, the Complex, as nearly as possibleto the same condition that existed prior to the subject taking, and (iii)this Lease shall otherwise continue in full force and effect.

 

C.                                     *Division of Award:*  Any award for the taking of all orany part of the Buildings,Garage or other part of the Complex, or any payment made under threat of the exercise of such power shall be the property ofLandlord, and Tenant hereby assigns to Landlord all of its right, title andinterest in and to any such award, except for any portions of such award whichare specifically allocated by the condemning authority as compensation for; (i)the taking of Tenant’s personal property and/or trade fixtures; and (ii)

 

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moving expenses.  Tenant shall be entitled to any compensationseparately awarded to Tenant for the matters set out in (i) through (ii)above.

 

**19.****                              ****DEFAULT****OF TENANT****.**

 

A.                                   *Default of Tenant:*  Thefollowing events shall be a default by Tenant (a “Default”) under this Lease:

 

(1)                                  Failure of Tenant to pay Rent as and whendue; provided, however, no Default shall be deemed to have occurred unless suchfailure continues for a period of ten (10) days after notice thereof from Landlord toTenant.

 

(2)                                  Failure of Tenant to comply with or performany covenant or obligation of Tenant under this Lease, if the failure continuesfor thirty (30) days after notice from Landlord to Tenant specifying thefailure [except that if the failure on the part of Tenant is not reasonablycapable of beingcured within such 30-day period but Tenant expeditiously commences to cure samefollowing its receipt ofnotice from Landlord and diligently proceeds with such cure,Tenant’s time to cure such failure shall be extended for the time reasonably necessaryto cure same, other than (i) those concerning the payment of Rent and (ii)those set forth in clauses (4), (5), (6) and (7) of this Section 19.A.

 

(3)                                  [Intentionally omitted.]

 

(4)                                  If Tenant is a partnership, any general partnerof Tenant (“Partner”), shall file a voluntary petition in bankruptcy orinsolvency, shall be adjudicated bankrupt or insolvent or shall file a petitionor answer seeking any reorganization, arrangement, composition, readjustment,liquidation, dissolution or similar relief under any present or future federal,state or other Laws, or shall make an assignment for the benefit of creditors,or shall seek or acquiesce in the appointment of any trustee, receiver orliquidator of Tenant or of any Partner or of all or any part of the property ofTenant or of such Partner.

 

(5)                                  If, within one hundred twenty (120) days after the commencementof any proceeding against Tenant or any Partner, whether by the filing of apetition or otherwise, seeking any reorganization, liquidation, dissolution orsimilar relief under any present or future applicable federal, state or otherLaws, such proceeding shall not have been dismissed or if, within one hundred twenty (120)days after the appointment of any trustee, receiver or liquidator of Tenant orany Partner, or of all or any part of the property of Tenant or of any Partner,without the acquiescence of such individual or entity, such appointment shallnot have been vacated or otherwise discharged, or if any execution or attachmentshall have been issued against the property of Tenant or of any Partner,pursuant to which the Premises shall be taken or occupied or attempted to betaken or occupied.

 

(6)                                  The failure ofTenant to promptly commence, following its receipt of notice from Landlord ofTenant’s default under Section 36 hereof, to commence the cure of the subjectdefault and thereafter use commercially reasonable efforts to cure the same assoon as reasonably practicable, provided that no Default shall be deemed tohave occurred under this Subsection unless such failure continues for a periodof five (5) days following Tenant’s receipt of a second notice from Landlord ofthe failure.

 

(7)                                  Failure of Tenantto comply with the terms of Section 17 hereof, which failure continues for aperiod of five (5) business days after Tenant’s receipt of notice from Landlordof the subject failure, provided that no Default shall be deemed to haveoccurred under this Subsection unless such failure continues for a period offive (5) business days following Tenant’s receipt of a second notice fromLandlord of the subject failure following the expiration of theabove-referenced five (5) business day period.

 

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Notwithstanding the foregoing to the contrary, in the event Landlord delivers to Tenant notice alleging a failure byTenant to complywith its obligationsunder this Lease and ifTenant after its receipt of suchnotice commences an action fordeclaratory judgment (or other appropriate relief) seeking a determination thatTenant has not breachedTenant’s obligations hereunder with respect to the matter specified inLandlord’s notice, then the subject notice delivered by Landlordshall be deemed not to havebeen delivered for purposes of this Section 19.A until such action is dismissed ornonappealable or is not in fact appealed from, and Tenant shall thereupon beafforded the cure period described in this Section 19.A above, provided,however, that if at any time during the pendency of such action, (i) Tenantwithdraws or dismisses such action or (ii) the action is dismissed withprejudice as a result of a motion to dismiss filed by Landlord and is notappealed by Tenant, then the subject notice shall be deemed to have beendelivered when it was actually delivered.

 

B.                                     *Remedies Upon Default:* Upon the occurrence of a Material Default (as defined below), Landlordshall have the right, then or at any time thereafter:

 

(1)                                  Without demand ornotice, to reenter and take possession of all or any part of the Premisespursuant to legal process, to expel Tenant and those claiming through Tenantand to remove any property therein, either by summary proceedings or by anyother action at law, in equity or otherwise, with or without terminating thisLease, without being deemed guilty of trespass and without prejudice to anyother remedies of Landlord for breach of this Lease, and/or

 

(2)                                  To terminate thisLease by written notice to Tenant, whereupon this Lease shall terminate on thedate specified in Landlord’s notice, and Tenant’s right to possession of thePremises shall cease as of such date.

 

The term “MaterialDefault”  as used herein shall mean aDefault described in Subsection 19.A(1) above for an amount in excess of OneHundred Thousand Dollars ($100,000.00), a Default described in Subsection19.A.(6) above, or a Default described in Subsection 19.A(7) above.

 

IfLandlord elects to reenter pursuant to Section 19.B.(1) above, which must bedone in accordance with legal process, Landlord may terminate this Lease, or,from time to time without terminating this Lease, may relet all or any part ofthe Premises as the agent of Tenant, for such term, at such rental and uponsuch other provisions as Landlord deems acceptable, with the right to make anyalterations and repairs to the Premises that Landlord reasonably deemsappropriate in order to place the Premises in rentable condition, at Tenant’sreasonable expense.  No such reentry ortaking of possession of the Premises shall be construed as an election to terminatethis Lease, unless notice of such intention is given pursuant to SubsectionB.(2) above, or unless termination be decreed by a court of competentjurisdiction at the instance of Landlord. If Landlord leases the Premises or any portion thereof for a term whichis beyond the then remaining Term of this Lease, then the costs of relettingshall be amortized on a straight-line basis over the full term of such newlease, and Tenant shall only be liable for the amortized portion thereofattributable to the remaining Term of this Lease.

 

Landlord shall use commercially reasonable efforts to mitigate itsdamages resulting from a Defaultby Tenant under this Lease, and the following provisions shall apply toLandlord’s obligation to

 

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mitigate damages in connection with Landlord’s leasing of the Premisesto a prospective tenant (a “Substitute Tenant”):

 

(1)                                  Landlord shall have no obligation to solicit or entertain negotiationswith any other prospective tenants for the Premises until Landlord shall haveissued written notice to Tenant terminating this Lease, and if, following suchnotice of termination of this Lease by Landlord, Landlord solicits orentertains negotiations with any other prospective tenants for the Premises,including, but not limited to, exhibiting the Premises to any such prospectivetenants, Landlord shall have no liability to Tenant in connection with suchsolicitation or entertainment of negotiations or such showing of the Premisesbased upon any claims of interference with business relations, invasion ofprivacy or similar theories with respect to such showing of the Premises andsuch solicitation or entertainment of negotiations.

 

(2)                                  Landlord shall not be obligated to enter into a lease with any proposedSubstitute Tenant (a) whose use would violate any restriction, covenant, orrequirement contained in the lease of another tenant of the Building, or whichwould be incompatible with the operation of the Building as a high qualitybuilding or (b) which does not have, in Landlord’s reasonable opinion,sufficient financial resources or operating experience to operate the Premisesin a high quality manner.

 

(3)                                  Landlord shall have no obligation to leasethe Premises in preference to other space then-available in the Buildingcomparable to the Premises, including size and improvements.

 

(4)                                  Landlord shall not be obligated to lease thePremises to a Substitute Tenant for a rental less than the lower of (i) therent payable under this Lease for the Premises, or (ii) the fair market rentalthen prevailing for comparable space in Comparable Buildings, provided that ifLandlord reasonably determines that Tenant will not likely be able to payamounts owing by it under this Section 19 in light of Tenant’s then-current networth, then Landlord shall not be obligated to lease the Premises to aSubstitute Tenant for rental less than the fair market rental then prevailingfor comparable space in Comparable Buildings, nor shall Landlord be obligatedto enter into a new lease with a Substitute Tenant under any terms andconditions that are unacceptable to Landlord under then commercially reasonablecurrent leasing policies for comparable space in Comparable Buildings.

 

(5)                                  Landlord shall not be obligated to enterinto a new lease with a Substitute Tenant if Landlord would have the right toreasonably withhold Landlord’s consent to an assignment or subletting to suchSubstitute Tenant in accordance with the provisions of clauses (i), (ii) or(iv), or any combination thereof, of Section 23.A. of this Lease.

 

C.*                                    **Liability of Tenant:*  IfLandlord terminates this Lease or reenters the Premises (with or withoutterminating this Lease), Tenant shall remain liable (in addition to all otherliabilities of Tenantaccrued at the time of the Material Default) for the sum of (i) any unpaidRent accrued prior to the time of termination and/or reentry, as the case maybe, plus interest thereon from the due date at the Default Rate, (ii) allBase Rent and Additional Rent provided for in this Lease from the time oftermination and/or reentry, discounted to present value at the rate of eightpercent (8%) per annum (the “Discount Rate”) calculated on a monthly basis, asthe case may be, until the date this Lease would have expired had a MaterialDefault not occurred, plus interest thereon from the due date at the DefaultRate, and (iii) any and all reasonable expenses (including but not limited to reasonable attorneys’and brokerage fees) incurred by Landlord in reentering and repossessing thePremises, in correcting any default, in painting, altering or repairing thePremises in order to place the Premises in rentable condition (whether or notthe Premises are relet), in protecting and preserving the Premises and inreletting or attempting to relet the Premises with such costs prorated as setforth in Section 19.B above,*minus* the proceeds realized by

 

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Landlord from any reletting. If Landlord leases the Premises orany portion thereof for a term which is beyond the then remaining Term, thenthe costs of reletting shall be amortized on a straight-line basis over thefull term of such new lease, and Tenant shall only be liable for the amortizedportion thereof attributable to the remaining Term.  Landlord shall have the option to recoverany damages sustained by Landlord either at the time of reletting, if any, orin separate actions from time to time as said damages shall have been made moreeasily ascertainable by successive relettings or, at Landlord’s option, todefer any such recovery until the date this Lease would have expired in theabsence of a Material Default, in which event Tenant hereby agrees that thecause of action shall be deemed to have accrued on the aforesaid date.  The provisions of this Section 19.C. shallbe in addition to, and shall not prevent the enforcement of, any claim Landlordmay have for anticipatory breach of this Lease.

 

D.                                    *LiquidatedDamages:*  In addition to Landlord’srights pursuant to Section 19.C. above, if Landlord terminates this Lease inaccordance with the terms of Section 19.B above, Landlord shall have the rightat any time, at its sole option, to require Tenant to pay to Landlord ondemand, as liquidated damages, the sum of (i) the total of the Base Rent,Additional Rent and all other sums which would have been payable under thisLease from the date of Landlord’s demand for liquidated damages (“Landlord’sDemand”) until the date this Lease would have terminated in the absence of theMaterial Default, discounted to present value at the Discount Rate,(ii) all unpaid Rent accrued prior to the time of Landlord’s Demand, plusinterest thereon from the due date at the Default Rate, and (iii) any andall reasonable and actual expenses (including, but not limited to, reasonableattorneys’ and brokerage fees) incurred by Landlord in reentering andrepossessing the Premises, in correcting any default, in painting, altering orrepairing the Premises in order to place the Premises in rentable condition(whether or not the Premises are relet), in protecting and preserving thePremises and in reletting or attempting to relet the Premises; *minus* the sum of (a) the net fair marketrental value of the Premises for the period referred to in Section19.D.(i) above, discounted to present value at the Discount Rate, and (b)any sums actually paid by Tenant to Landlord pursuant to Section 19.C. above;provided, however, that if said damages shall be limited by law to a lesseramount, Landlord shall be entitled to recover the maximum amount permitted bylaw.  The “net fair market rental value”referred to in Section 19.D.(a) above shall be the fair market rental value ofthe Premises at the time of Landlord’s Demand, reduced by any rentalabatements, tenant improvement allowances and other concessions and inducementsgenerally provided by landlords seeking to lease comparable commercial propertyin the area of the Premises at the time of Landlord’s Demand.

 

E.                                      [Intentionally Omitted.]

 

F.                                      *Waiver of Lien*. Landlord hereby agrees to waive and does hereby waive any and all rightsgranted by or under any present or future Laws to levy any lien or securityinterest on any goods, merchandise, equipment, fixtures, furniture or otherproperty of Tenant.

 

G.                                     *No Right of Distress.*  Landlordhereby waives all rights of distress for Rent which may be permitted orotherwise provided by applicable Law.

 

H.                                    *Counterclaims*.  If Landlord shall commence anyproceeding for non-performance by Tenant of any of its obligations under thisLease, Tenant will not interpose any counterclaim or setoff of whatever natureor description in any such proceeding unless Tenant’s failure to do so wouldimpair Tenant’s ability to pursue a separate action or process on such claim.  The provisions of the foregoing

 

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sentence shall not be construed as a waiver of Tenant’s right to assertsuch a claim in any separate action brought by Tenant.

 

I.                                         *Right of Landlord to Cure.*  IfTenant defaults in the doing of any act required to be made or done by Tenantunder this Lease, other thanwith respect to the payment of amounts, then Landlord may, at itsoption, following ten (10) days prior notice to Tenant, which notice is delivered afterthe expiration of all applicable cure periods with respect to the subjectmatter, or such shorter period of time in the event of anemergency as Landlord may reasonablydetermine, in Landlord’s reasonable discretion, as appropriate under thecircumstances, do such act, and the expenses thereof, shall constituteAdditional Rent hereunder due and payable by Tenant, within thirty (30) days afterLandlord’s delivery to Tenant of Landlord’s request together withpaid invoices for thesubject amounts for whichLandlord seeks reimbursement. In the event Tenant fails to timely pay such amounts within theabove-referenced thirty (30) day period, then interest shall accrue thereon atthe Default Rate beginning on the first day following the expiration of theabove-referenced thirty (30) day period until fully paid by Tenant to Landlord.

 

J.                                        *Attorneys’ Fees.*  Inthe event of any Default hereunder, Tenant shall pay to Landlord all reasonableattorneys’ fees incurred by Landlord in connection with such Default or theenforcement of Landlord’s rights or remedies arising in connection therewith,whether or not this Lease is terminated and whether or not Landlord institutesany lawsuit against Tenant as a result of such Default.  In addition to the foregoing, whether or notthis Lease is terminated, Tenant shall pay to Landlord all other reasonable costsincurred by Landlord with respect to any lawsuit instituted or action taken byLandlord to enforce the provisions of this Lease.  Notwithstanding the foregoing, if any of the rights and remediesof Landlord granted under this Section 19.I. are specifically prohibited byapplicable law, then all limitations and prohibitions which are imposed uponLandlord under such law shall prevail for the purpose of determining Landlord’srights and remedies under this Lease.

 

# *K.*                                    DisputesRegarding Performance.  If at any time a dispute shall arise as toany amount to be paid by Tenant to Landlord under the provisions of this Lease,Tenant shall have the right to make payment “under protest”, such payment notbeing regarded as a voluntary payment, and there shall survive the right on thepart of Tenant to institute suit for recovery of such sum. If it shall beadjudged or determined that there was no legal obligation on the part of Tenantto pay such sum or any portion thereof, Tenant shall be entitled to recover thesum or so much thereof as it was not required to pay, together with interestthereon at the Default Rate.  If at anytime a dispute arises between the parties hereto as to the performance byTenant of any other matter which Landlord claims is required to be performed byTenant under the provisions of this Lease, then Tenant may perform the subjectmatter and pay the cost thereof “under protest”, the performance of the subjectmatter in no event being regarded as voluntary performance, and there shallsurvive the right on the part of Tenant to institute suit for recovery of thecost of the subject matter.  If it shallbe adjudged that there was no obligation on the part of Tenant to perform thesubject matter or any portion thereof, Tenant shall be entitled to recover fromLandlord all costs incurred in connection with the subject matter or so muchthereof as Tenant was not required to perform under this Lease, together withinterest thereon accrued at the Default Rate.

# * *

L.                                      *Survival.* Tenant’s and Landlord’sliability pursuant to this Section 19 shall survive thetermination of this Lease, the institution of summary proceedings and/or theissuance of a warrant thereunder.

 

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**20.****                              ****DEFAULT OF LANDLORD.**

# * *

A.*                                   LandlordDefault*.  A “Landlord Default” shall occur under this Leasein the event Landlord breachesany representation or warranty made by it under this Lease orLandlord fails to perform orobserve any matter required to be performed or observed by it under this Leasewithin thirty (30) days after Landlord’s receipt of notice from Tenantspecifying Landlord’s failure to perform; provided, however, that if the natureof Landlord’s obligation is such that more than thirty (30) days arerequired for its performance, then a Landlord Default shall not be deemed tohave occurred so long as Landlord shall commence such performance expeditiouslyafter its receipt of notice from Tenant and thereafter diligently pursues the sameto completion.  Notwithstanding theforegoing or any other provision in this Lease, if the subject failure byLandlord to observe or perform any matter required to be performed or observedby it under this Lease would constitute an emergency or would materially impairTenant’s ability to conduct its business operations in all or any portion ofthe Premises, and Tenant notifies Landlord of such circumstance (which noticemay be telephonic in the event of an emergency) and, unless Landlord shall,diligently and promptly following Tenant’s notification of Landlord, undertakeaction to cure the subject failure on a expedited basis (which action mayinclude, but not be limited to, ordering parts, engaging consultants,preparation of the site for necessary work or any combination of theforegoing), Tenant may, in addition to all other rights available to Tenant under thisLease, at law or in equity, give Landlord notice (which notice may also betelephonic in the event of an emergency but shall also be simultaneously givenin writing) of such failure and if Landlord does not cure such circumstancewithin five (5) business days after such notice, then Tenant may cure thesubject matter at Landlord’s cost by taking whatever action is reasonablynecessary to cure the same.  Landlordshall reimburse to Tenant, within thirty (30) days after Tenant’s delivery toLandlord of Tenant’s request together with reasonable evidence of payment ofsuch amounts, all costs incurred by Tenant in curing the subject matter.  If Landlord fails to pay all such amounts toTenant within the above-referenced thirty (30) day period, then interest shallaccrue thereon at the Default Rate from the first day following the expirationof the above-referenced thirty (30) day period until fully paid by Landlord oroffset by Tenant against Rent in accordance with the terms of Section 20.Cbelow.

 

*B.**                                    **Tenant’s Remedies*.  Following the occurrence of aLandlord Default, Tenant shall have the right, in addition to all other rightsand remedies available to Tenant under this Lease and/or at law and/or inequity, to pursue, without notice or demand, any one or more of the rights orremedies set forth below in this Section, each and all of which shall becumulative and non-exclusive.  All costsincurred by Tenant (including, without limitation, reasonable attorneys’ fees)in enforcing any of such rights or remedies shall be paid by Landlord to Tenantupon demand.  Additionally, in the eventa Landlord Default shall (i) occur with respect to a matter in the Premises, or(ii) materially interfere with the use of the Premises and/or any businessoperations conducted therein, then Tenant may cure the subject Landlord Defaultby taking whatever action is reasonably necessary to cure the same.  In such event, Landlord shall reimburse toTenant, within thirty (30) days after Tenant’s delivery to Landlord of Tenant’srequest, together with reasonable evidence of payment of same, all reasonablecosts incurred by Tenant to cure the subject Landlord Default.  In the event Landlord fails to reimbursesuch amount to Tenant within the above-referenced thirty (30) days, theninterest shall accrue on such amount at the Default Rate, beginning on thefirst day following the expiration of the above-referenced thirty (30) dayperiod and ending on the date Landlord fully pays such amount, together withsuch interest to Tenant, or Tenant fully offsets the amount of same togetherwith interest accrued thereon against Rent in accordance with the

 

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terms of Section 20.Cbelow.  In the event Tenant exercises its rights tocure a Landlord Default pursuant to the foregoing, then, Tenant shall beresponsible for all losses, damages and liabilities incurred by Landlord,excluding consequential damages, resulting from claims by other tenants in theBuilding directly related to the action taken by Tenant to cure the subjectLandlord Default, only to the extent the same exceed that which Landlord wouldotherwise have incurred had Landlord taken action to cure the subject LandlordDefault.  In the event any mechanic’slien is filed against the Building for any work performed by Tenant to cure aLandlord Default pursuant to the foregoing, then Tenant shall be responsible toremove such lien from the Building in accordance with the terms of Section 8.B of this Lease.

 

*C.**                                   *Tenant shall have the following offsetrights against Rent payable by it under the Lease:

 

I                                                                                            (1)                                  In the event Landlord fails to pay to Tenantthe amounts, together with interest accrued thereon, described in Section 20.Aabove within the thirty (30) day period referenced therein, then Tenant shallhave the right to offset such amounts which remain unpaid, together withinterest accrued thereon, against Rent payable under this Lease.

 

(2)                                  In the event Landlord fails to pay to Tenantthe amounts, together with interest accrued thereon, described in Section 20.Babove in curing a Landlord Default within the thirty (30) day period referencedtherein, Tenant shall have the right to offset such amounts which remainunpaid, together with interest accrued thereon, against Rent payable under thisLease.

 

(3)                                  Tenant shall have the right to offsetagainst Rent any portion of the Improvement Allowance (as defined in ExhibitC attached to this Lease) which Landlord fails to timely pay to Tenant inaccordance with terms of the Work Agreement attached to this Lease as ExhibitC and which remains unpaid, together with interest accrued at the DefaultRate from the date the subject amount was payable by Landlord to Tenant untilfully offset by Tenant against Rent payable under this Lease.

 

(4)                                  In the event Landlord fails to pay to Tenantthe amount of any award rendered in favor of Tenant against Landlord, withinthirty (30) days after the same is rendered in favor of Tenant by a court ofcompetent jurisdiction, with all applicable appeal periods having expired, thenTenant shall have the right to offset against Rent payable by Tenant under thisLease the amount of such award which remains unpaid, together with interestaccrued thereon at the Default Rate from first day following the expiration ofthe above-referenced thirty (30) day period until fully offset by Tenantagainst Rent payable under this Lease.

 

### D.                                    *Landlord’s Bankruptcy*.  If, pursuant to an order, judgment or decreeentered by any court of competent jurisdiction, a receiver, trustee orliquidator of Landlord, or all or substantially all of the assets of Landlordshall be appointed, or Landlord shall be adjudicated as bankrupt as a result ofvoluntary or involuntary proceedings, or a petition seeking reorganization ofLandlord or an arrangement with its creditors or a petition to take advantageof any insolvency law shall be filed, and (a) this Lease or any covenanttherein shall be rejected by order of any court of competent jurisdiction or byoperation of law, or (b) Tenant’s rights or obligations or Landlord’sobligations under this Lease (including any obligation to perform, provide orpay for any service) shall be modified adversely to Tenant, or (c) Landlord isotherwise in default under this Lease, it shall be deemed a Landlord Defaultand, then, notwithstanding anything to the contrary set forth in this Lease, inaddition to any rights Tenant may have under this Lease, (i) Tenant shallhave the right to set off against all amounts due and owing by Tenant

** **

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### underthis Lease (1) any and all losses, liabilities, damages, costs and expensessuffered or incurred by Tenant and all amounts payable by Landlord to Tenant inconnection with such non-performance of Landlord’s obligations under thisLease, and (2) any and all losses, liabilities, damages, costs and expensessuffered or incurred by Tenant and all amounts payable by Landlord to Tenant inconnection with the non-performance of Landlord’s obligations under this Leasefollowing any rejection of this Lease in any such proceeding, and(ii) Tenant shall have the right to terminate this Lease by deliveringnotice to Landlord or the trustee or receiver (if appointed) stating the dateof termination, and on the date specified in such notice this Lease shallterminate and any rent paid for a period after such date of termination shallbe refunded to Tenant on demand.  Theexercise by Tenant of any right under this Section shall not preclude theassertion by Tenant of any claim it may have in any proceeding referencedabove.

###  

### E.                                      Attorneys’Fees:  In the event of any LandlordDefault, Landlord shall pay to Tenant all reasonable attorneys’ fees incurredby Tenant in connection with such Landlord Default or the enforcement ofTenant’s rights and remedies arising in connection therewith, whether or notthis Lease is terminated and whether or not Tenant institutes any lawsuitagainst Landlord as the result of such Landlord Default.  In addition to the foregoing, whether or notthis Lease is terminated, Landlord shall pay to Tenant all other reasonablecosts incurred by Tenant with respect to any lawsuit instituted or action takenby Tenant to enforce the provisions of this Lease.  Notwithstanding the foregoing, if any of the rights and remediesof Tenant granted under Section 20.D are specifically prohibited by applicablelaw, then all limitations and prohibitions which are imposed upon Tenant undersuch law shall prevail for the purpose of determining Tenant’s rights andremedies under this Lease.

###  

### F.                                      Survival:  Landlord’s and Tenant’s liability pursuantto this Section 20 shall survive the termination of this Lease, the institutionof any summary proceeding and/or the issuance of a warrant thereunder.

###  

**21.****                              ****HOLDINGOVER.**

 

IfTenant shall be in possession of the Premises after the expiration of theTerm or the earlier termination of this Lease pursuant to Section 49 below, asapplicable, of any portion ofthe Premises (such portion ofthe Premises in which Tenant holds over is hereinafter referred to asthe “Holdover Space”) with orwithout the express or implied consent of Landlord, such tenancy shall not constitute arenewal thereof or an extension for any further term, and in such case, Tenantshall pay Base Rent for the Holdover Space equal to the product of (a)the rate of Base Rent ineffect for the month preceding Tenant’s holdover, multiplied by (b) the numberof rentable square feet in the Holdover Space; provided, however, the rate ofBase Rent used for purposes of the foregoing with respect to any portion of theHoldover Space shall increase to one hundred fifty percent (150%)of the rate ofBase Rent applicable duringthe last full month of theterm of this Lease (the “Holdover Rate”), beginning on the earlier to occur of(i) the sixth (6th) month anniversary of thelast day of theterm of this Lease or theearlier termination of this Lease pursuant to Section 49 below, as applicable,and (ii) the date upon which Landlord is required to deliver possession of the Holdover Space to a bona fidethird party pursuant to the terms of a lease executed between Landlord and such third party; provided thatLandlord delivered notice to Tenant of the execution of such lease on or beforeLandlord executed the same, which notice shall have identified the date uponwhich Landlord is required to deliver possession of the subject portion of theHoldover Space to such bona fide third-party tenant.  Tenant’s tenancy under this Section 21 shall be subject to everyother applicable term,covenant and agreement contained in this Lease, including, but not limited to,the obligation of Tenant to pay Additional Rent pursuant to Section 5 hereof. Landlordmay exercise any or all

 

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remediesfor Default and at law and in equity, including but not limited to an actionagainst Tenant for wrongfully holding over. Any such holdover shall be deemed to be a tenancy-at-sufferance and nota tenancy-at-will or tenancy from month-to-month, without an obligation toprovide notice to Tenant under Section 19 above.  In no event shall any holdover be deemed a permitted extension orrenewal of the Term, and nothing contained herein shall be construed to constituteLandlord’s consent to any holdover or to give Tenant any right with respectthereto.

 

**22.****                              ****SUBORDINATION.**

 

*A.**                                    **Lease Subordinate:*  Subject to the terms of this Section22, this Lease shall be subordinate to the lien of any first lien Mortgageand to any first priority GroundLease which encumbers theBuilding and the Land, and any and all renewals, extensions,modifications, recastings and refinancings thereof.  In the event Landlord delivers to Tenant a subordination,attornment and non-disturbance agreement required under the following terms ofthis Section, fully executed by Landlord and the subject Mortgagee or GroundLease, as the case may be, with signatures acknowledged, and Tenant fails toexecute and deliver same to Landlord, then: (i) this Lease shall be subordinate to the lien of the subject Mortgageor Ground Lease, without execution of any further instrument; (ii) if thesubject Mortgage is foreclosed or Ground Lease is terminated, upon request bythe purchaser at the foreclosure sale or Ground Lessor, as the case may be,Tenant shall attorn to and recognize the purchaser or Ground Lessor as thelandlord under this Lease and make all payments required hereunder to such newlandlord; and (iii) Tenant shall be deemed to have waived the provisions of anyLaw now or hereafter in effect, which may give or purport to give Tenant aright to terminate this Lease or the obligations of Tenant hereunder withrespect to any such foreclosure, termination or other proceeding filed,prosecuted or completed. Notwithstanding anything herein to the contrary, any Mortgagee may atany time subordinate the lien of its Mortgage to the operation and effect ofthis Lease without Tenant’s consent, by giving Tenant notice of suchsubordination, in which event this Lease shall be deemed to be senior to suchMortgage, and thereafter such Mortgagee shall have the same rights as it wouldhave had if this Lease had been executed, delivered and recorded before saidMortgage.  The subordination ofthis Lease to any Mortgageor Ground Lease is subject tothe condition that Tenantshall not be named or joined in any action or proceeding to foreclose any suchMortgage to terminate any such Ground Lease.  Notwithstanding the foregoing, in consideration of, and as acondition precedent to, the subordination of this Lease to any first lienMortgage or first priority Ground Lease and Tenant’s agreement to be bound bythe terms of this Section 22.A:  (a)Landlord shall obtain from the holder of the existing Mortgage which encumbersthe Building and the Land, and each Mortgagee that places a lien on theBuilding and the Land prior to the execution and delivery of this Lease, a non-disturbance agreementfor the benefit of Tenant in the form which is attached hereto as Exhibit Fand made part hereof, and (b)with respect to allfuture Mortgages and futureGround Leases on the Building, the Land or both, Landlord shallobtain from the holder of thesame a  non-disturbanceagreement for the benefit of Tenant which shall be in the form which is attached hereto as Exhibit F or in othercommercially reasonable form which includes the substantive terms of Exhibit F attachedhereto or terms which are substantively equivalent, except that, solely withrespect to (i) insurance proceeds in excess of Three Million Dollars($3,000,000.00) and (ii) any condemnation proceeds, a provision which is thesubstantive equivalent of Paragraph FIRST in Exhibit F may alsoprovide that the Lease shall be subject to the terms of the Security Instrument(as defined in said ExhibitF) securing a loan by a first lien priority Mortgagee (a “FirstMortgagee”) with respect to such First Mortgagee’s right set forth in theSecurity Instrument to determine whether any such insurance proceeds orcondemnation proceeds shall be applied to the repayment of the loan which is

 

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secured by the subject Security Instrument, or shall be applied to thecost of restoration of the Building, or both, and, if both, then in whatproportion such amount shall be allocable, but such First Mortgagee’s rightshall not include the right to disburse or authorize the disbursement of anysuch proceeds to Landlord unless Landlord has fulfilled its obligations underSections 16 or 18, as applicable, of this Lease.  All non-disturbance agreements delivered to Tenant shall have anexpress acknowledgement by the parties thereunder of all rights of Tenant underthis Lease to offset and deduct amounts owing by Landlord to Tenant againstRent payable by Tenant under this Lease to the extent provided herein, including, without limitation, the amounts of any portion of the ImprovementAllowance and other inducements, if any, payable to Tenant to the extent Landlord fails to timelypay the subject amounts toTenant, all together with interest accrued thereon at the Default Rate.

 

*B.**                                    **Notices from Holders of Mortgages and Ground Leases*.  Tenant is irrevocablyauthorized to rely upon and comply with any notice received by Tenant from anyunderlying lessor, mortgage holder or lienholder of the Project or any portionthereof requiring payment to it of any rental or other sum which is due andpayable by Tenant under this Lease, or with respect to the performance of anyof Tenant’s other obligations under this Lease.  Tenant shall have no duty to inquire as to whether the subjectunderlying lessor, mortgage holder or lienholder was authorized or entitled todeliver the subject notice.

 

**23.****                              ****ASSIGNMENTAND SUBLETTING.**

 

*A.**                                    **No Transfer WithoutConsent:*  Except as specifically set forth in thisSection 23, Tenant shall not, without the prior consent of Landlord in eachinstance (which shall notbe unreasonably withheld, conditioned or delayed withrespect to a proposed assignment of this Lease which is unrelated to a mortgageor other encumbrance and with respect to a proposed sublease) (i) assign,mortgage or otherwise encumber this Lease or any of its rights hereunder; or(ii) sublet the Premises or any part thereof or permit the occupancy oruse of the Premises or any part thereof by any persons or entities other thanTenant.  Any attempted assignment,mortgaging or encumbering of this Lease or any of Tenant’s rights hereunder andany attempted subletting or grant of a right to use or occupy all or a portionof the Premises in violation of the foregoing sentence shall be void.  Notwithstanding any of the foregoing to thecontrary, Landlord shall not unreasonably withhold, condition or delay itsconsent to any proposed subletting of all or any portion of the Premises or toany proposed assignment of this Lease which is unrelated to a mortgage or otherencumbrance.  Without limiting thegenerality of the immediately preceding sentence and except as otherwise expressly provided in this Section 23below, it is specifically agreed that it shall be reasonable forLandlord to withhold its consent if: (i) the proposed subtenant or assignee is engaged in a business, or thePremises will be used in a manner, that is inconsistent with the first-classimage of the Building; or (ii) the proposed use of the Premises is not foroffice use; or (iii) the initial Tenant does not remain fully liable for thepayment of all rent and other charges payable by Tenant under this Lease andfor the performance of all other obligations of Tenant under this Lease exceptas expressly provided below; or (iv) the proposed subtenant or assignee is aGSA Tenant (as hereinafter defined in Section 51), unless to a GSA Tenant whichthen leases, subleases or occupies space in the Building and for which Tenanthas obtained and delivered to Landlord the written consent of all tenants inthe Building whose leases require the consent of the tenant thereunder; or (v)the proposed subtenant or assignee is a Specialized Human Resources ConsultingFirm (as hereinafter defined in Section 48), except that this clause (v) shallbe inapplicable if Tenant waives in writing the provisions of Section 48 hereofas to such proposed subtenant with respect to such proposed sublease orassignee with respect to such proposed assignment.

 

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If at any time during the Term Tenant desires to assign, sublet ormortgage all or part of this Lease or the Premises to any party other than atransferee permitted under Section 23.F. below, then in connection withTenant’s request to Landlord for Landlord’s consent thereto, Tenant shall givenotice to Landlord in writing (“Tenant’s Request Notice”) containing:  the identity of the proposed assignee,subtenant or other party and a description of its business; the material terms of theproposed assignment, subletting or other transaction; the commencement date ofthe proposed assignment, subletting or other transaction; the area proposed tobe assigned, sublet or otherwise encumbered; the most recent financialstatement or other evidence of financial responsibility of such proposedassignee orsubtenant or other party; and a certification executed by Tenant statingwhether or not any premium or other consideration is being paid for theassignment, sublease or other transaction, after deduction of any TransferCosts (as defined in Section 23.C. below). Within fifteen(15) days after delivery toLandlord of Tenant’s requestfor Landlord’s consent to any sublease or any assignment which is unrelated toa mortgage or other encumbrance, or any sublease proposed by Tenant under thisSection, Landlord shall deliver to Tenant notice of Landlord’s approval ordisapproval of the same.  Any notice ofdisapproval shall set forth with reasonable particularity the reasons forLandlord’s disapproval of the subject action. Except as specified in any notice of disapproval timely and properlydelivered by Landlord in accordance with the foregoing, the subject actionproposed by Tenant shall be deemed approved byLandlord. Landlord’s failure to deliver to Tenant Landlord’s notice of approval ordisapproval of the subject sublease or assignment which is unrelated to amortgage or other encumbrance within the above-referenced fifteen (15) dayperiod shall be deemed Landlord’s approval thereof.  Notwithstanding anything to the contrary set forth in this Lease,Landlord shall not have the right to recapture the Premises or any portion ofthe Premises or to terminate this Lease in the event of any action proposed byTenant pursuant to this Section 23.

 

B.                                     [Intentionally Omitted]

 

C.*                                    **Transfer of OwnershipInterests:*  The provisions of this Section 23.C. are inall events subject to the provisions of Section 23.F hereof.  If Tenant is a partnership, then any event(whether voluntary, concurrent or related) resulting in a dissolution or,except as hereinafter provided, a merger, consolidation or otherreorganization, of Tenant, or anywithdrawal or change (whether voluntary, involuntary or by operation of law) ofpartners owning a controlling interest in Tenant shall be deemed a voluntaryassignment of this Lease subject to the provisions of this Section 23.  If Tenant is a corporation  (or a partnership with a corporate generalpartner), then any event (whether voluntary, concurrent or related) resultingin a dissolution of Tenant or the sale or transfer or relinquishment of theinterest of shareholders who, as of the date of this Lease, own a controllinginterest of the capital stock of Tenant shall be deemed a voluntary assignmentof this Lease subject to the provisions of this Section 23; provided, however,that this sentence shall not apply to corporations whose stock is tradedthrough a national or regional exchange or over-the-counter market.  Notwithstanding anything to the contrary set forthin this Lease, Landlord’s consent shall not be required with respect to:  (i) a public offering of the stock ofTenant; (ii) a transfer of stock or other interests in Tenant between current shareholders or otherholders of interestsin Tenant or any guarantor of Tenant’s obligations under this Lease,and (iii) the sale of additional shares or other interestsin Tenant to thosecurrently not shareholders or other holders of interests in Tenant provided thereis no change in control in Tenant. Further, the pledge, hypothecation, encumbrance or conditionalassignment of stock or other interests in Tenant or all or substantially all ofthe assets of Tenant, in connection with a bona fide business purpose, shall bepermitted without Landlord’s consent.  IfTenant is a limited liability company, then any dissolution of Tenant or awithdrawal

 

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or change, whether voluntary, involuntary orby operation of law, of members owning a controlling interest in Tenant shallbe deemed a voluntary assignment of this Lease which is subject to theprovisions of this Section 23.

 

D.                                    *Expenses and Profits;Effect of Consent:*

 

(1)                                  With respect to any assignment or sublease which is subject to theapproval ofLandlord and which is approvedby Landlord, Tenant shall pay to Landlord on a monthly basis asAdditional Rent fifty percent (50%) of all Net Profits (as hereinafter defined)received by Tenantfrom such transaction.  For purposeshereof, the term “Net Profits” means the aggregate amounts of all fixed minimumrent andpass-through charges in the case of a subletting, and the purchase price expressly paid, if any, forTenant’s interest in this Lease in the case of an assignment (provided that no portion of any purchase pricefor acquisition of Tenant’s business or substantially all the assets of Tenantshall be taken into consideration for purposes of this Section 23, and anypurchase price expressly paid for Tenant’s interest in this Lease in connectionwith an assignment of Tenant’s interest in this Lease shall exclude anyreasonable portion thereof attributable to the acquisition of furniture, leasehold improvements and/or other propertyof Tenant) paid by any subtenant or assignee in connection with suchtransaction), lessall “Transaction Costs”, as hereinafter defined.  For purposes hereof, “Transaction Costs” means (a) the amounts paid toLandlord by Tenant with respect to the subject portion of the Premises duringthe period of the assignment or sublease term; (b) improvement allowances or other economicconcessions granted by Tenant to the assignee or sublessee; (c) all amountspaid by Tenant to buy-out or take over the previous lease of the assignee orsublessee; (d) all amounts paid by Tenant to advertise the subject portion ofthe Premises for assignment or sublease; (e) brokerage commissions paid byTenant in connection with the assignment of sublease; (f) legalfees paid by Tenant inconnection with the assignment or sublease; and (g) all other costs and amounts incurredby Tenant in connection with theassignment or sublease.

 

(2)                                  Tenant shall be responsible for all reasonable costs and expenses,including reasonable attorneys’ fees, incurred by Landlord in connection withany proposed assignment or sublease for which Landlord’s consent is requiredunder this Section 23.

 

(3)                                  The consent by Landlord to any assignment or subletting shall neither beconstrued as a waiver or release of Tenant from any covenant or obligation ofTenant under this Lease, nor as relieving Tenant from giving Landlord theaforesaid fifteen (15) days notice of, or from obtaining the consent ofLandlord to, any further assignment or subletting which requires Landlord’sconsent under this Section 23.  The collection or acceptance ofRent from any such assignee or subtenant shall not constitute a waiver orrelease of Tenant from any covenant or obligation of Tenant under this Lease,except as expressly agreed by Landlord in writing.

 

E.                                      *Conditions of Assignmentor Sublease*: Allrestrictions and obligations imposed pursuant to this Lease on Tenant shall, to the extent accruing from andafter the effective date of the subject assignment, be deemed toextend to any assignee and Tenant shall cause such person to comply with suchrestrictions and obligations,except to the extent Tenant is relieved from liability for obligations underthis Lease pursuant to this Section 23.  Any assignee shall be deemed to have assumed all the obligations of Tenant under thisLease to the extent accruingfrom and after the effective date of the subject assignment,****and at Landlord’s request shall executepromptly a document confirming such assumption.  In the event anassignee of Tenant’s interest in this Lease shall have a net worth which isequal to or exceeds the net worth of Tenant existing as of the date of thisLease, as reflected in financial statements of such assignee prepared by anindependent certified public accountant in accordance with

 

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generally accepted accounting principles and delivered to Landlord,then Tenant shall be relieved from all liability under this Lease to the extentthe assignee assumes liability for the same in writing delivered toLandlord.  Each sublease is subject to the conditionthat if the Term is terminated or Landlord succeeds to Tenant’s interest in thePremises by voluntary surrender or otherwise, at Landlord’s sole option exercised by the delivery of noticeby Landlord to the subject subtenant within ten (10) business days after theTerm is terminated, the subtenant shall be bound to Landlord forthe balance of the term of such sublease and shall attorn to and recognizeLandlord as its landlord under the then executory terms of such sublease.

 

F.                                      *Permitted Transfer*: Notwithstanding anything contained in this Section 23 to the contrary,Tenant may, without Landlord’s prior consent, assign or transfer its entireinterest in this Lease or sublease all or any portion of the Premises:  (a) to an entity (herein sometimes referred to as a“successor entity”)into or with which Tenant shall be merged or consolidated, or to whichsubstantially all of the assets of Tenant may be transferred, provided thatsuch successor entityshall have a net worth immediately following the merger or consolidation whichis at least equal to the net worth of Tenant as of the date of this Lease and provided that the successorcorporation shall assume in writing all obligations and liabilities of Tenantunder this Lease or shallassume the same by operation of law, to the extent accruing from and after theeffective date of the subject transaction; or (b) to an entity (hereinsometimes referred to as a “related entity”) which shall control, be controlled by or beunder common control with Tenant.  Inthe event of any such assignment, transfer or subletting described in (b) above,Tenant shall remain fully liable for the payment of all rent and other chargesrequired hereunder and for the performance of all obligations to be performedby Tenant hereunder; provided,however, in the event of an assignment or transfer described in (b) above to anentity which has a net worth equal to or in excess of the net worth of Tenantexisting as of the date of this Lease, as reflected in the financial statementsfor the assignee or transferee prepared by an independent certified publicaccountant in accordance with generally accepted accounting practices anddelivered to Landlord, then Tenant shall be released from all liability underthis Lease to the extent such assignee or transferee assumes in writing allobligations of Tenant under this Lease.  For purposes of clause (b) above, “control” shall be deemed to beownership, director indirect, of the power todirect or cause the direction of the management and policies of a person orentity, whether through the ownership of voting securities, by contract or otherwiseto the extentnot restricted by applicable law. Tenant shall deliver to Landlord notice of its assignment orsublease described in this Section 23.F within two (2) businessdays after the same becomes effective, together with sufficient information regarding thetransaction as is reasonably necessary to confirm that the transaction meetsthe qualifications set forth in this Section 23.F. Notwithstanding anything to the contrary set forth in this Lease, (i)Tenant may permit any personnel of any “related entity” or any business partneror client of Tenant to occupy space in the Premises without the receipt ofLandlord’s consent.

 

**24.****                              ****TRANSFERBY LANDLORD.**

 

Landlord (and any successor or affiliate of Landlord) may freely sell,assign or transfer all its interest in this Lease, the Building and the Land and, inthe event of any such sale, or transfer to a party that expressly and unconditionally assumes inwriting, delivered to Tenant and executed for the benefit of Tenant,****all obligations of Landlord under thisLease accruing from and after the date of the sale, assignment or transfer,Landlord shall be relieved of any and all obligations under this Lease to the extent accruing fromand after the date of the sale, assignment or transfer. As to any claim Tenant may haveagainst Landlord arising from any matter accruing prior to the transfer of itsinterest in the Building and

 

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the Land, subject to the terms of Section 15 above and subject to therights of any First Mortgagee as set forth in Section 22 hereof, Tenant shallhave the right to attach the proceeds to which Landlord is entitled from thetransfer of the same, Landlord’s interest in all other proceeds of the Buildingand the Land, and subject to the rights of any First Mortgagee as set forth inSection 22 hereof, and all proceeds payable to Landlord under insurancepolicies.  Provided the above-referencedassumption agreement between Landlord and the assignee is delivered to Tenantwithin two (2) business days after the date of the subject sale, assignment ortransfer, then from and after thedate of such sale, assignmentor transfer, Tenant shall be bound to such purchaser, assignee orother transferee, as the case may be, as though the latter had been theoriginal Landlord hereunder.

 

**25.****                              ****INABILITYTO PERFORM.**

 

This Lease and theobligation of Landlord andTenant hereunder shall in no way be affected, impaired or excused,nor shall either partyhave any claim against theother party for damages, because the other party, due to Unavoidable Delays, is unableto fulfill any of its obligations under this Lease, including, but not limitedto, any obligations to provide any services, repairs, replacements, alterationsor decorations or to supply any improvements, equipment or fixtures; provided,however, that the foregoing shall not apply to (i) Tenant’s termination right due to Landlord’sfailure to timely restore the Premises following any casualty or (ii) to any termination rightsTenant has underSections 2, 12, 16 or 18above; provided, however, in no event shall financial incapability excuse theperformance of either party.

 

**26.****                              ****ESTOPPELCERTIFICATES.**

 

Each ofLandlord and Tenant shall, without charge, within twenty (20) days after receipt of any request therefor, execute anddeliver to the othera certificate stating, to the extent of the providing party’s actual knowledge:  (i) whether this Lease is unmodifiedand in full force and effect againstit (or if there have been modifications, that this Lease is infull force and effect and setting forth all such modifications);(ii) whether there then exist any defenses against the enforcement of anyright of to the otherhereunder (and, if so, specifying the same in detail); (iii) the dates towhich rent and any other charges hereunder have been paid by Tenant;(iv) that ithas no knowledge of any then uncured defaults under this Lease (or, if it has knowledge ofany such defaults, specifying the same in detail); (v) that it has noknowledge of any event that will or may result in the termination of this Lease(or if it has such knowledge, specifying the same in detail); (vi) the addressto which notices to itare to be sent; and (vii) such other   factual information concerning this Lease as may be reasonablyrequested.  It is understood that anysuch certificate may be relied upon by the requesting party, any actual or prospective lenders(including a Mortgagee), any actual or prospective Ground Lessor, any actual orprospective purchaser of the Land and/or the Building, any actual prospective purchaser of any interest in Landlord orTenant, any actual or prospective assignee of an interest in this Lease, andany actual prospective subtenant or licensee of all or a portion of thePremises.  Attached heretoas Exhibit G is a copy of the estoppel certificate which is acceptableto the current holder of the Mortgage encumbering the Building. No party may request an estoppel certificate from the other more thanone time in any calendar year, except in connection with a sale or financing,in which case no party may request estoppel certificates from the other morethan three (3) times in any calendar year.

 

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**27.****                              ****COVENANTOF QUIET ENJOYMENT.**

 

Landlord covenants,represents and warrants that it has the right to make this Leaseand that Tenant shall have the right, during the Term and subject to theprovisions of this Lease(including Section 19 above), to quietly occupy and enjoy thePremises without hindrance by Landlord or anyone claiming by or through Landlord or any of theirsuccessors and assigns.

 

**28.****                              ****WAIVEROF JURY TRIAL.**

 

Landlord and Tenant hereby waive trial by jury in any action,proceeding or counterclaim brought by either of them against the other withrespect to any matter arising out of or connected with this Lease.

 

**29.****                              ****BROKERS.**

 

Landlordand Tenant each represents and warrants to the other that, except as hereinafterset forth, neither of them has employed any broker in procuring or carrying onany negotiations relating to this Lease. Landlord and Tenant shall indemnify and hold each other harmless fromany loss, claim or damage relating to the breach of the foregoingrepresentation and warranty byit.  Landlord recognizesonly the Broker(s) (as set forth in Section 1.K. hereof) as broker(s) withrespect to this Lease and agrees to be responsible for the payment of anyleasing commissions owed to said broker(s).

 

**30.****                              ****CERTAINRIGHTS RESERVED BY LANDLORD.**

 

Landlord shall have the following rights, exercisable without noticeexcept as otherwise set forth herein:

 

A.                                   To change the street address for theBuilding; provided, however, that unless such change was governmentallymandated, Landlord shall reimburse Tenant for all reasonable costs incurred byTenant for printing, mailing and other reasonable matters directly related tosuch change and Landlord shall provide Tenant with at least one hundred twenty(120) days prior notice of such change in the Building’s street address.

 

B.                                     To approve, prior to installation, allwindow shades, blinds, drapes, and awnings and other similar equipment to beinstalled by Tenant that may be visible from the exterior of the Premises orthe Building.

 

C.                                     To grant to a tenant of the Building the exclusive right to conduct itsbusiness in the Building, so long as the same is consistent with the characterof the Building, provided the Tenant is not thereby excluded from the usesexpressly permitted herein; provided, however, that in no event shall Landlordgrant such exclusive right to conduct business in the Building with respect tooffice space in the Building to more than four (4) tenants.  Landlord hereby represents and warrants toTenant that, as of the date of this Lease, there is no other tenant that hasbeen granted an exclusive right to conduct its business with respect to officespace in the Building, but (a) certain exclusive rights to conduct a particularuse in the retail space of the Building are in the process of being granted,and may in the future

 

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be granted, to retail tenants of the Building, and (b) the leasing ofspace in the Building to GSA tenants has been and will be prohibited in eachlease for space in the Building.

 

D.                                    Subject to the terms of Section 11(a) and upon reasonable prior noticeto Tenant, to alter, relocate, reconfigure and reduce the Common Areas in theBuilding in a non-material manner, so long as access to the Premises is notmodified or inhibited (other than to a non-material extent) and there is nodiminution of type and quality of amenities initially provided, except on atemporary basis and then only to a non-material extent.

 

E.                                      Subject to the terms of Section 11(a) and upon reasonable prior noticeto Tenant, to construct improvements on the Land and in the Common Areasoutside the Building in a non-material manner, so long as access to thePremises is not modified or inhibited (other than to a non-material extent) andthere is no diminution of type and quality of amenities initially provided,except on a temporary basis and then only to a non-material extent.

 

F.                                      To prohibit smoking in the entire Building (including the Premises), solong as such prohibitions are in accordance with applicable Laws.

 

**31.****                              ****NOTICES.**

 

No notice, request, approval, waiver or other communication which maybe or is required or permitted to be given under this Lease shall be effectiveunless the same is in writing and hand-delivered, sent by registered orcertified mail, return receipt requested, first-class postage prepaid, or sentwith charges prepaid by a nationally recognized air courier service for overnight delivery,addressed to Landlord at the Landlord Notice Address or to Tenant at the TenantNotice Address, as applicable,   orat any other address of which either party shall notify the other in accordancewith this Section 31.  Suchcommunications, if sent by registered or certified mail, shall be deemed tohave been given three (3) business days after the date of mailing, or if sentby a nationally recognized air courier service for overnight delivery, shall be deemed to have beengiven one (1) business day after the date of deposit of the notice with suchservice for overnight delivery,and otherwise, notices shall be effective upon receipt.  If a Mortgagee which holds a first priorityMortgage on the Land and/or the Building for which a subordination, attornmentand non-disturbance agreement has been fully executed and delivered to Tenant,shall request that Tenant deliver to it notices delivered by Tenant to Landlordwhich identify (i) a default by Landlord under this Lease for which Tenant mayexercise a right to terminate this Lease if such default is not cured asprovided in this Lease, or (ii) the election of Tenant to exercise its“off-set” rights under Section 20 below, then Tenant shall simultaneouslydeliver a copy of each such notice to such Mortgagee at its address in thecontinental United States identified in such Mortgagee’s request delivered toTenant.

 

**32.****                              ****MISCELLANEOUSPROVISIONS.**

 

A.*                                  **Benefit and Burden*: The provisions of this Lease shall be binding upon, and shall inure tothe benefit of, the parties hereto and each of their respective successors andpermitted assigns.

 

B.                                     *Governing Law*: This Lease shall be construed and enforced in accordance with the Lawsof the jurisdiction in which the Building is located.

 

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C.                                     *No Partnership*: Nothing contained in this Lease shall be deemed to create a partnershipor joint venture between Landlord and Tenant, or to create any otherrelationship between the parties other than that of Landlord and Tenant.

 

D.                                    *Delegation by Landlord*: Wherever Landlord has the authority to take any action under this Lease,Landlord shall have the right to delegate such authority to others by the delivery of notice toTenant. Tenant may rely on such notices until its receipt of notice fromLandlord of its revocation of such delegation of authority to the subjectindividual identified in Landlord’s prior notice to Tenant, andLandlord shall be responsible for the authorized actions of such agents,employees and others, to the same extent as if Landlord had taken such actionitself.

 

E.                                      [Intentionally Omitted.]

 

F.                                      *Invalidity of ParticularProvisions*:  If any provision of this Lease or theapplication thereof to any person, entity or circumstance shall, to any extent,be held invalid or unenforceable, the remaining provisions and the applicationof such invalid or unenforceable provisions to persons, entities andcircumstances other than those as to which it is held invalid or unenforceable,shall not be affected thereby.  Eachprovision of this Lease shall be valid and enforced to the fullest extentpermitted by law.

 

G.                                     *Counterparts*: This Lease may be executed in several counterparts, all of which shallconstitute one and the same document.

 

H.                                    *Entire Agreement*: This Lease, and any exhibits and addenda attached hereto, embody theentire agreement of the parties hereto, and no representations, inducements oragreements, oral or otherwise, between the parties not contained in this Leaseor in the exhibits or addenda shall be of any force or effect.  No rights, privileges, easements or licensesare granted to Tenant hereby, except as expressly set forth herein.

 

I.                                         *Amendments*: This Lease may not be modified in whole or in part in any manner otherthan by an agreement in writing.

 

J.                                        *Mortgagee’s Performance*: Tenant shall accept performance of any of Landlord’s obligationshereunder by any Mortgagee.

 

K.                                    *Limitation on Interest*:  Inany case where this Lease provides for a rate of interest that is higher thanthe maximum rate permitted by law, the rate specified herein shall be deemed toequal, and the party designated as recipient of such interest shall be entitledto receive, the maximum rate of interest permitted by law.

 

L.                                      *Remedies Cumulative*: All rights and remedies of Landlord and Tenant shall be cumulative and shall not beexclusive of any other rights or remedies of Landlord and Tenant hereunderor now or hereafter existing at law or in equity.

 

*M.**                                 **No Waiver. *No failure or delay by Landlord or Tenant in enforcing its rightto strict performance bythe other of every provision of thisLease or in exercising any right or remedy hereunder, and no

 

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acceptance by Landlord offull or partial rent during the continuance of any Default, shall constitute awaiver of the provision or the Default, and no provision shall be waived ormodified except by a written instrument executed by the waiving party.  No payment by Tenant, or receipt by Landlord, of a lesser amount than thefull Rent shall be deemed to be other than a payment on account, notwithstandingany endorsement or statement on any check or letter accompanying any payment ofany Rent.  No waiver of any default under this Leaseor settlement ofany proceeding instituted onaccount of anyclaimed default under this Lease shall affect or alter this Lease or constitutea waiver of anyof Landlord’s or Tenant’srights hereunder.

 

N.*                                   **Construction of Lease:* There shall be no presumption that this Lease be construed more strictlyagainst the party who itself or though its agent prepared it.  Landlord and Tenant hereby agree that allparties hereto have participated in the preparation of this Lease and that eachparty had the opportunity to consult legal counsel before the execution of thisLease.

 

O.                                    *Annual Financial Statements: *At any timethat Tenant is neither (i) a company, the stock or other ownership interests inwhich are publicly traded on a national stock exchange, nor (ii) a company thathas its financial statements consolidated with the financial statements of acompany, the stock or other ownership interests in which are publicly traded ona national stock exchange, Tenant shall, within thirty (30) business daysfollowing Landlord’s request therefor, submit to Landlord Tenant’s financialstatement covering the preceding calendar year, certified by Tenant’s Presidentor Chief Financial Officer (or, at Tenant’s option, an independent certifiedpublic accountant) as being true and correct in all material respects, whichfinancial statement shall be prepared in accordance with generally acceptedaccounting principles by an independent certified public accountant; provided,however, that (a) Landlord shall not request such financial statement fromTenant more than once in any calendar year; and (b) Landlord shall preserve theconfidentiality of the information contained in such financial statement,except that Landlord shall be permitted to provide copies of such financialstatement to (i) employees of Landlord and Landlord’s asset manager, propertymanager, accountants and attorneys who provide services to Landlord and have areasonable need to have access to such information, (ii) prospective purchasersof the Land, the Building or both, and (iii) prospective lenders to Landlord,all of whom shall be advised by Landlord of the provisions of this Section32.O., but Landlord’s indemnification obligations set forth in the followingsentence of this Section O. shall not be diminished by Tenant’s permission forLandlord to make copies of Tenant’s financial statement available to any suchpersons.  Landlord shall indemnify,protect, defend, and hold harmless Tenant from and against any and all damages,losses, claims, liabilities and costs suffered or incurred by Tenant inconnection with the failure to maintain the confidentiality of the informationcontained in such financial statements by any individual or entity to whichLandlord shall have provided such information. If Tenant is a company that has its financial statements consolidatedwith the financial statements of a company, the stock or other ownershipinterests in which are publicly traded on a national stock exchange, thenTenant shall, within thirty (30) days following Landlord’s request therefor,meet with Landlord to reasonably address Tenant’s financials in the context ofthe financial statements of the company with which Tenant’s financials areconsolidated.

 

P.                                      *Effect of Deletion ofLanguage: *The deletion of any printed, typed or otherportion of this Lease shall not evidence the parties’ intention to contradictsuch deleted portion.  Such deletedportion shall be deemed not to have been inserted in this Lease.

 

Q.                                    *Authority: *Tenant represents and warrants to Landlord that as of the date of final execution of this Lease,the person thatexecuted this Lease on its behalf is duly authorized to so act;that

 

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Tenant is duly organized, is qualified to dobusiness in the jurisdiction in which the Building is located, is in goodstanding under the Laws of the state of its organization and the Laws of thejurisdiction in which the Building is located, and has the power and authorityto enter into this Lease; and that all action required to authorize Tenant andsuch person to enter into this Lease has been duly taken.

 

R.                                     *Appointment of ResidentAgent: *For purposes of §55-218.1 of the Code ofVirginia, Landlord appoints as its resident agent Corporate Services Company.

 

S.                                      *Deed of Lease: *This Lease, for purposes of applicable law, shall be deemed a deed oflease executed under seal.

 

T.                                     *Qualified Leases: *Landlord intends that all payments made to Landlord underthis Lease will qualify as rents from real property for purposes of Section512(b)(3) of the Internal Revenue Code of 1986, as amended (“QualifiedRents”).  If Landlord, in its reasonable discretion,advises Tenant that there is any material risk that all or a material part of anypayments made to Landlord underthis Lease will not qualify as Qualified Rents, Tenant agrees (i) to cooperatewith Landlord torestructure this Lease in such manner as may be necessary to enable suchpayments to be treated as Qualified Rents, provided such restructuring orassignment will not have aneconomic impact on Tenant orany of its rights or obligations under this Lease. Landlord agrees to promptly reimburse Tenant for all reasonable costsincurred by Tenant in connection with Tenant’s cooperation pursuant to theforegoing.

 

# *U.***                                   **ProfessionalFees.  In the event that either party brings any arbitration orother legal proceeding against the other: (i) for the recovery of any sum due under this Lease;(ii) because of the breach of any provisions of this Lease; (iii) for any otherrelief against the other party under this Lease; or (iv) with respect toany other matters arising from or related to this Lease, then all reasonable costs and expenses, including, withoutlimitation, reasonable professional fees such as appraisers’, accountants’, andattorneys’ fees, incurred by the prevailing party therein shall be paid by the other party. The provisions of this Section shall survive the expiration of the Termof this Lease or earlier termination of this Lease.

# * *

# *V.*                                     WhenPayment is Due.  Whenever a payment is required to be made by one party tothe other under this Lease, but a specific date for payment or a specificnumber of days within which payment is to be made is not set forth in thisLease, or the words “immediately,” “promptly” and/or “on demand,” or theirequivalent, are used to specify when such payment is due, then such paymentshall be due thirty (30) days after the party which is obligated to makesuch payment receives notice from the other party demanding such payment.

# * *

W.                                *Survival:* Subject to the terms of Section 15, 23 and 24 above, the effectiveexpiration of the Term or earlier termination of this Lease shall not dischargeLandlord or Tenant liability for their respective obligations and liabilitiesthat accrue to the day which expiration or earlier termination.  Further, any obligation of Landlord or Tenantwhich by its nature or under the circumstances, be, or by the provisions ofthis Lease may be performed after the expiration of the term or earliertermination of this Lease, and in liability of for a payment which shall haveaccrued with respect to any period ending at a time prior to such expiration orearlier termination, shall survive the expiration of the Term or earliertermination of this Lease.

 

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**33.**                               [Intentionally Omitted]

 

**34.****                              ****PARKING.**

 

A.                                   *Use of Parking*.

 

(1)                                  During the Term, Tenant shall have the rightto use the Parking Permits (as defined in Section 1.Q hereinabove) for theparking of passenger automobiles in the parking garage (the “Garage”) in the Building to be constructed byLandlord in accordance withthe Base Building Plans (asdefined in Exhibit C attached to this Lease and made a part hereof),which Parking Permits shall be on a non-exclusive, first-come, first-servedbasis for the unreserved parking of passenger automobiles in the Garage. Notwithstanding anything to the contrary set forth in this Lease, in noevent shall Landlord grant rights for, or otherwise permit, the parking of suchnumber of vehicles in the Garage such that all Parking Permits purchased byTenant may not be used to passenger automobiles in the Garage at any timeduring any day, and Landlord shall not “over-sell” parking privileges in theGarage such that the holder of any Parking Permit purchased pursuant to thisSection 34 may not drive his/her vehicle out of the Garage within a reasonabletime after entering such vehicle.  TheGarage shall be operated with personnel comparable in number to that whichstaff parking garages in Comparable Buildings and with sufficient personnel inorder that anyone who parks a vehicle in the Garage may exit the Garage withina reasonable time after entering his/her vehicle.  Except as specifically set forth in Section34.B. hereof, the charge for all such Parking Permits for Tenant’s use pursuantto the provisions of this Lease for bothreserved parking spaces and unreserved parking spaces, as applicable, shall bethe prevailing market rate charged  in Comparable Buildings for the respective type of parking space.  Landlord shall have the right to valet park vehicles in theGarage; provided, however, the vehicles of personnel who work in the Premises,hold monthly parking spaces and are identified by Tenant to Landlord in writingshall not be valet parked if they are identified as such by a means whichLandlord shall establish prior to the Lease Commencement Date.  Landlord shall have no right to valet parkthe vehicles of personnel working in the Premises without the prior consent ofTenant, which consent may be withheld in Tenant’s sole and absolutediscretion.  Tenant and its employeesshall observe reasonable precautions in the use of the Garage and shall at alltimes abide by all reasonable rules and regulations governing the use of the Garagepromulgated by   Landlord or the operator of the Garage (the “Garage Operator”), which rules and regulationsshall be consistent with rules and regulations that are adopted by landlordsand parking garage operators for parking garages in Comparable Buildings.  The Garage will remain open on Mondaythrough Friday (excluding Holidays) and during the Building Hours.  At all times when the Garage is closed,monthly permit holders shall be afforded access to the Garage by means of amagnetic card, which shall not be the same access key card given to such permitholder for access to the Building. Landlord does not assume any responsibility for any damage or loss toany automobile or personal property in or about the Garage, except to theextent otherwise provided under Section 14.C above.  In the event that Tenant purchases less than the number of Parking Permits setforth above, at any time, then Tenant shall thereafter have the right topurchase such Parking Permits or any portion thereof, upon at least sixty (60)days prior notice to Landlord.  At any time during the Term, Tenant maydecrease the number of Parking Permits purchased by it.  Tenant shall have the right to access suchGarage at all times bymeans of an electronic access gate operated by electronic access cards, which Landlord shall activate to permit access tothe Garage for each Parking Permit purchased by Tenant.  Landlord reserves the right to reasonably modify themanner in which the Garage is accessed during the Term.

 

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(2)                                  Landlord shall maintain a specific section within the Garage locatednear elevator banks on the main floor of the Garage for visitor parking toserve tenants of the Building.  Subjectto the terms of this Section, Tenant’s customers and visitors shall have theright to use available spaces in the Garage for the purpose of parking theirvehicles therein while visiting the Premises. Tenant’s customers and visitors shall pay the then current hourlyparking fees established by Landlord and/or the Garage Operator, for theprivilege of using the Garage, which hourly parking fees shall not exceed theprevailing market rate for hourly parking in Comparable Buildings; provided,however, that if Tenant elects to establish a parking validation program and ifTenant’s clients and visitors follow reasonable and customary proceduresestablished therefor by Landlord and/or the Garage Operator, which shallinclude obtaining a validation stamp from Tenant on such customer’s parkingticket, which procedures may be subject to change from time to time, then (i)Tenant’s customers and visitors will receive a discount of the then currenthourly parking fees payable by visitors to the Building in such amount as isagreed to by Tenant and Landlord (or Landlord’s garage operator), whichdiscount shall be no less than such discounts generally provided tosignificant-sized tenants by landlords for visitor parking in ComparableBuildings.

 

(3)                                  Landlord’s granting of parking rightshereunder does not create a bailment between the parties, it being expresslyagreed that the only relationship created between Landlord and Tenant hereby isthat of right grantor and right grantee. All motor vehicles which are the subject of Parking Permits issued by Landlordpursuant to this Lease (including all contents thereof) shall be in the Garageat the sole risk of their owners, except to the extent otherwise provided inSection 14.C above, and Landlord is not responsible for the protection andsecurity of such vehicles.

 

(4)                                  Subject to the terms of Section 13, in its use of the Garage, Tenant will followall reasonable rulesand regulationsenacted by Landlord, providedLandlord delivers to Tenant at least thirty (30) days prior notice,and which aregenerally applicable to all vehicle parkers with respect to the Garage.

 

B.                                     *Rates*.  Subject to the terms of this Section34 and Section 13 above, Landlord reserves the right for itselfor the Garage Operator to establish rates and fees for the use of the Garageand to establish and modify or amend, on a reasonable basis, rules and regulationsgoverning the use of such parking areas. The charge for such Parking Permits shall not exceed thefollowing rates: (i) duringthe first year of the Term,the monthly charge for non-reserved Parking Permits shall be Eighty-FiveDollars ($85.00),(ii) during the second year ofthe Term, the monthly charge for non-reserved Parking Permits shall beEighty-Seven and 55/100 Dollars ($87.55), (iii) during the third year of theTerm, the monthly charge for non-reserved Parking Permits shall be Ninety and18/100 Dollars ($90.18), (iv) in no event shall the monthly charge fornon-reserved Parking Permits during the period beginning on the first day ofthe fourth year of the Term and ending on the last day of the tenth year of theTerm, exceed One Hundred and Fifty Dollars ($150.00), and (v) after the last day of the third year of the Term, themonthly charge for Parking Permits shall not be more than the lower of (A) theprevailing rate charged for parking spaces in Comparable Buildings or (B) themonthly charge imposed on any other tenant in the Building for ParkingPermits.  Landlord shall make availableto Tenant five (5) parking spaces on a reserved basis, and the monthly charge for suchreserved spaces shall not exceed two hundred percent (200%) of the monthly charge payableby Tenant for Parking Permitsduring the correspondingperiod.  Landlord shallhave the right to revoke a user’s parking privileges in the event such user on three (3) occasions failsafter notice of such failure toabide by the reasonablerules and regulations governing the use of such parking areas. Tenant shall beprohibited from using the Garage for purposes other than for parking registeredvehicles.  The storage or repair ofvehicles in the Garage shall be prohibited.

 

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C.                                     *No Transfers*. Tenant shall not assign, sublet or transfer any of its right to useParking Permits without Landlord’s prior consent except in connection with anysubletting or assignment permitted pursuant to the provisions of Section 23hereof.  Any other attempted assignment,sublet, or transfer shall be void.

 

**35.****                              ****STORAGE SPACE**.

 

Landlordagrees to make available to Tenant storage space in the Building containingapproximately one thousand (1,000) usable square feet.  Such storage space shall be made availableby Landlord to Tenant on the Lease Commencement Date and no rent shall bepayable by Tenant to Landlord for the same for the period beginning on the datethe same is delivered by Landlord to Tenant through the Rent CommencementDate.  The annual gross rent for thestorage space leased by Tenant shall be Fifteen Dollars ($15.00) per usablesquare foot in such space for the one-year period beginning on the RentCommencement Date.  Such monthly grossrent for storage space leased by Tenant shall be increased by three percent(3%) on each anniversary of the Rent Commencement Date.  Tenant shall not be required to pay anyportion of Operating Expenses or Real Estate Tax Expenses attributable to thestorage space leased by it.  In no eventshall Tenant’s Share be increased as a result of Tenant’s lease of storagespace in the Building.  Landlord shallnotify Tenant of the availability of storage space in the Building as and whenit becomes available.  All storage spaceleased by Tenant shall be built out by Landlord, at Landlord’s cost, to containonly the following: the storage space shall consist of cinder block walls, iflocated in the Garage, and the storage space shall have a steel, locked doorand shall contain reasonable lighting, a reasonable number of electricaloutlets and an exhaust fan for ventilation. Tenant shall have the right at any time to cancel its lease of all orany portion of storage space leased by it on not less than thirty(30) days prior notice to Landlord.

 

**36.****                               HAZARDOUSMATERIALS**.****

 

A.                                   *Definition.*  Asused in this Lease, the term “Hazardous Material” means any flammable items,explosives, radioactive materials, hazardous or toxic substances, material orwaste or related materials, including any substances defined as or included inthe definition of “hazardous substances”, “hazardous wastes”, “infectiouswastes”, “hazardous materials” or “toxic substances” now or subsequentlyregulated under any Laws, including, without limitation, oil, petroleum-basedproducts, paints, solvents, lead, cyanide, DDT, printing inks, acids,pesticides, ammonia compounds and other chemical products, asbestos, PCBs andsimilar compounds, and including any different products and materials which aresubsequently found to have adverse effects on the environment or the health andsafety of persons.

 

B.                                     *General Prohibition.*  Tenant shall not cause or permit any Hazardous Material to be generated,produced, brought upon, used, stored, treated, discharged, released, spilled ordisposed of on, in under or about the Premises, the Building, or the Land(hereinafter referred to collectively as the “Property”) by Tenant or Tenant’sInvitees other than (i) reasonablequantities of customary office products, and (ii) reasonable quantities of fuel, lubricant and othermaterials customarily used in connection with the maintenance and operation ofthe equipment permitted to be installed by Tenant, which equipment shall include withoutlimitation, the Generator Equipment (as defined in Section 9.E above) andsupplemental HVAC equipment; provided that the same are stored,used and disposed of in accordance with all applicable laws and governmentalregulations.  Notwithstanding anything to thecontrary set forth in this Lease, Tenant shall have the right to contest anyclaims or notices regarding the

 

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introduction of Hazardous Materials by Tenant or Tenant’s Invitees tothe Property in violation of the terms of this Lease.   Tenant shall indemnify, defend and hold Landlord, Landlord’smanaging agent and all Mortgagees harmless from and against any and all actions(including, without limitation, remedial or enforcement actions of any kind,administrative or judicial proceedings, and orders or judgments arising out ofor resulting therefrom), costs, claims, damages (including without limitation,attorneys’, consultants’, and experts’ fees, court costs and amount paid insettlement of any claims or actions), fines, forfeitures or other civil,administrative or criminal penalties, injunctive or other relief (whether ornot based upon personal injury, property damage, or contamination of, oradverse effects upon, the environment, water tables or natural resources), liabilitiesor losses arising from a breach of this prohibition by Tenant or Tenant’sInvitees.

 

C.                                     *Notice.*  Inthe event that Hazardous Materials are discovered upon, in, or under theProperty, and any governmental agency or entity having jurisdiction over theProperty requires the removal of such Hazardous Materials, Tenant shall beresponsible for removing suchHazardous Materials introducedby Tenant or Tenant’s Invitees. Notwithstanding the foregoing, Tenant shall not take any remedial actionin or about the Property or any portion thereof without first notifyingLandlord of Tenant’s intention to do so and affording Landlord the opportunityto protect Landlord’s interest with respect thereto.  Tenant promptlyshall notify Landlord in writing of any of the following after obtaining actualknowledge thereof: (i) any spill, release, discharge or disposal of anyHazardous Material in, on or under the Property or any portion thereof caused by Tenant or Tenant’sInvitees; (ii) any enforcement, cleanup, removal or othergovernmental or regulatory action instituted or threatened (if Tenant hasnotice thereof) pursuant to any laws respecting Hazardous Materials against Tenant with respect toHazardous Materials introduced to the Property in violation of the terms ofthis Lease by Tenant or Tenant’s Invitees; (iii) any claimmade by any person against Tenant or the Property or any portion thereofrelating to damage, contribution, cost recovery, compensation, loss or injuryresulting from or claimed to result from any Hazardous Materials introduced to the Property inviolation of theterms of this Lease by Tenant or Tenant’sInvitees; and (iv) any reports made to anygovernmental agency or entity arising out of or in connection with anyHazardous Materials in, on under or about or removed from the Property or anyportion thereof, including any complaints, notices, warnings, reports orasserted violations in connection therewith, which Hazardous Materials were introduced to the Property in violation ofthe terms of this Lease by Tenant or Tenant’sInvitees.  Tenant also shall supply to Landlord withinfive (5) business days after Tenant first receives the same, copies of allclaims, reports, complaints, notices, warnings or asserted violations relatingin any way to the introductionof Hazardous Materials to the Property in violation of the terms of thisLease by Tenant or Tenant’s Invitees.

 

D.                                    *Landlord’sObligations*:  In the event that HazardousMaterials are discovered upon, in, or under the Property, and any governmentalagency or entity having jurisdiction over the Property requires the removal ofsuch Hazardous Materials, then, subject to Tenant’s obligations underSubsection 36.C above, Landlord shall be responsible for removing suchHazardous Materials.  Landlord shallpromptly notify Tenant in writing of any of the following after obtainingactual knowledge thereof:  (i) anyspill, release, discharge or disposal of any Hazardous Materials in, on orunder the Property or Complex or any portion thereof; (ii) any enforcement,cleanup, removal or other governmental or regulatory action instituted pursuantto any laws respecting Hazardous Materials on the Property or Complex; (iii)any claim made by any person against Landlord or the Property or the Complex orany portion thereof relating to damage, contribution, cost recovery,compensation, loss or injury resulting from or claimed to result from anyHazardous Materials; (iv) any reports made to any governmental agency or entityarising out of or in connection with any Hazardous Materials in, on, under orabout, or removed from the Property, the Complex or any portion thereof,including any complaints, notices, warnings, reports or asserted

 

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violations in connection therewith.  Landlord shall also supply to Tenant, withinfive (5) business days after Landlord first receives same, copies of allclaims, reports, complaints, notices, warnings or asserted violations relatingin any way to existence of Hazardous Materials on the Property, the Complex ora portion thereof.

 

E.                                      *Survival.*  Therespective rights and obligations of Landlord and Tenant under this Section 36shall survive the expiration or earlier termination of this Lease.

 

**37.****                              ****STANDARD FOR CONDUCT AND CONSENT.**

 

Regardlessof any reference to the words “sole” or “absolute” in this Lease (except for(i) Alterations to the exterior of the Building, (ii) Alterations to thestructure of the Building, except for Tenant’s reinforcement of floors or theroof of the Building in connection with the systems installed in the Premisesor to serve the Premises), and (iii) Alterations that will have a materialadverse effect on the Building systems, whereupon each such case Landlord’sduty is to act in good faith and in compliance with this Lease), any time theconsent of Landlord or Tenant is required, such consent shall not beunreasonably withheld, conditioned or delayed. Unless another time frame is expressly provided in this Lease, then withinten (10) days after the requesting party’s receipt of the other party’s requestfor consent to any matter relative to this Lease and/or Tenant’s use oroccupancy of the Premises, the non-requesting party shall deliver to therequesting party notice of the non-requesting party’s approval or disapprovalof the same.  Any notice of disapprovalshall set forth with reasonable particularity the reasons for thenon-requesting party’s disapproval of the subject matter.  Except as specified in any notice ofdisapproval timely and properly delivered by the non-requesting party inaccordance with the foregoing, the subject matter shall be deemed approved bythe non-requesting party.  Thenon-requesting party’s failure to reply to the requesting party’s request forapproval of the subject matter within the above-referenced ten (10) day periodshall be deemed the non-requesting party’s approval thereof.  Whenever this Lease grants Landlord orTenant the right to take action, exercise discretion, establish rules andregulations or make allocations or other determinations, Landlord and Tenantshall act reasonably and in good faith.

 

**38.****                              ****RECORDATION.**

 

Tenant reserves theright to record amemorandum of this Leasein any public records without the prior approval of Landlord, except as to thecontent of such memorandum, as to which such approval shall not be unreasonablywithheld, conditioned or delayed.  Inthe event that Tenant recordsa memorandum hereof, Tenant shall pay all recordation fees, taxes and chargesin connection with such recordation.

 

**39.****                              ****SIGNS.**

 

A.                                   *Building Signage*: Landlord will, at Landlord’s cost, (i) install and maintain in the main lobby of the Building,directory signs, consistent with the first class character of the Building andshall provide Tenant with Tenant’s Share of lines on such directory, (ii) listTenant’s name and the names of Tenant’s subtenants and their respective employees designated by Tenant,on the lines specified in the immediately preceding clause (i), and (iii) provideBuilding standard signage on the suite entry doors of the Premises.  All signs permitted to be installed byTenant shall be designed and installed in accordance with all applicable Lawsand shall not be subject to the prior approval of Landlord, except with respectto matters which affect reinforcement of the structure of the Building, andLandlord’s approval of such

 

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structural reinforcement shall not beunreasonably withheld, conditioned or delayed.  Except as otherwise provided in thisSection 39, no other sign, advertisement or notice shall beinscribed, painted, affixed or otherwise displayed on any part of the exteriorof the Premises or the Buildingor on exterior windows and exterior doors (and on any of the doors and windowsof the Premises which abut any of the Common Areas in the case ofmulti-tenanted floors on which Tenant leases any portion of the Premises),without the prior approval of Landlord, which may be granted or withheld inLandlord’s sole and absolute discretion. If any such item that has not been approved by Landlord is so displayed,then Landlord shall have the right to remove such item at Tenant’s expense orto require Tenant to do the same. Landlord reserves the right to install and display signs, advertisementsand notices on any part of the exterior or interior of the Building; provided,however, that (1) nosign shall obstruct or block any windows or doors of the Premises, (2) no sign shall be placed on theexterior of the Building, other than (i) on the parapet above first floorretail space in the Building, (ii) above the window line of the highest floorof the Building, with only one sign permitted on each side of the top floor ofthe Building, (iii) a plaque installed at the main entrance of the Building toidentify Nixon & Vanderhye, P.C., and (iv) directional signage placed onthe exterior of the Building for ESI, Inc., and (3) no sign which is placed inor on the exterior of the Building or any portion of the Complex shall identifyanySpecialized Human Resources Consulting Firm (as defined in Section 48 below).

 

B.                                     *Approved Exterior Signageand Approved Lobby Sign*:  Notwithstanding the foregoing, Tenant shallhave (i) the exclusive rightto place signage on the exterior of the Building above the window line of the topfloor of the Building, (ii) the right to install one sign on the West sideof the Building  above the window line of the top floor ofthe Building, in the location shown on Exhibit J-1 attached hereto and made a part hereof, and to install onesign on the North side of theBuilding above the window line of the top floor of the Building, in thelocation shown on Exhibit J-2 attached hereto and made a part hereof(collectively, the “Approved Exterior Signage”), and (ii) the right to installone sign in the main lobby of the Building in the location and ofa size shown on Exhibit J-3attached hereto and made a part hereof (the “Approved Lobby Sign”). The Approved Exterior Signage shall contain Tenant’s name and/orcorporate logo.  TheApproved Lobby Sign shall containTenant’s name and/or corporatelogo.  Tenant shall submitto Landlord Tenant’s plans and specifications for the Approved Lobby Sign,which plans and specifications (including, but not limited to, the materials,design, color and method of fabrication thereof) shall be subject to Landlord’sprior approval, which approvalwhich shall not beunreasonably withheld,conditioned or delayed. Landlord shall have no right to limit or approve the Approved ExteriorSignage except with respect to local requirements for structural reinforcementof the Building to accommodate such signage and the design of the same, forwhich Landlord’s approval shall not be unreasonably withheld, conditioned ordelayed.  Tenant shall be responsiblefor the installation, maintenance, repair and replacement of such ApprovedExterior Signage and shall bear all costs thereof.  At all times during the Term that the Approved Exterior Signageis displayed on the Building, Tenant shall ensure that the Approved ExteriorSignage complies with all applicable laws and governmental regulations andshall maintain such Approved Exterior Signage in compliance with therequirements of this Lease.

 

C.                 *Landlord’s Removal ofApproved Lobby Signage: *Landlord shall have the right, at its soleexpense, to remove the Approved Lobby Signage at any time during which thePremises contains less than fifty-seven thousand (57,000) rentable square feet,provided that signage of comparable size is placed in the location in which theApproved Lobby Signage is located pursuant to a right granted by Landlord in alease for space in the Building with a bona fide unaffiliated third party forspace greater in size than the then-current size of the Premises.

 

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*D.**                                   **Landlord’s RequiredReduction of Approved Exterior Signage:*

 

(a)                                  Landlord shall have the right, at itsexpense, to remove the Approved Exterior Signage at any time during which thePremises contains less than fifty-seven thousand (57,000) rentable square feet,provided that, within two (2) years after such removal, signage is placed onthe exterior of the Building above the window line of the top floor of theBuilding pursuant to a right granted by Landlord under a lease executed with abona fide unaffiliated third party for space in the Building, which space islarger in size than the then-current Premises. In the event Landlord  removesApproved Exterior Signage and the signage described above for an affiliatedthird party is not placed on the exterior of the Building above the window lineof the top floor of the Building within two (2) years after the date of suchremoval, then Landlord shall, within sixty (60) days after Tenant’s delivery ofnotice to Landlord and at Landlord’s sole expense, reinstall Approved ExteriorSignage.

 

(b)                                 Landlord shall have the right, at itsexpense, to reduce the size of the Approved Exterior Signage to Tenant’sAllocation of Exterior Signage Area (as defined below), at any time duringwhich the Premises shall contain less than eighty seven thousand five hundred(87,500) rentable square feet, provided that, within two (2) years after suchelection by Landlord, signage is placed on the exterior of the Building abovethe window line of the top floor of the Building, pursuant to a lease executedby Landlord with a bona fide unaffiliated third party for space in theBuilding, which space is larger in size than the then-current Premises.  In the event Landlord shall so elect,Landlord shall be responsible, at its sole cost, to remove the ApprovedExterior Signage required to be removed in order that the remaining ApprovedExterior Signage is in conformance with the limitation to Tenant’s Allocationof Exterior Signage Rights. Notwithstanding the foregoing, in the event Landlord elects to reducethe size of the Approved Exterior Signage in accordance with the foregoing, andthe existing Approved Exterior Signage is comprised of more than one sign, thenTenant shall designate those sign(s) comprising the Approved Exterior Signagewhich shall remain on the exterior of the Building in conformance with theforegoing.  Notwithstanding anything tothe contrary set forth in this Section 39; (x) if Landlord elects to reduce thesize of the Approved Exterior Signage in accordance with the foregoing, then,Tenant shall have the right to install the Approved Exterior Signage removed byLandlord with other Approved Exterior Signage in conformance with the terms ofthis Section 39, including the limitations of the same to Tenant’s Allocationof Exterior Signage Rights, and (y) if Landlord elects to reduce the size ofthe Approved Exterior Signage in accordance with the foregoing, and signage ofthe above-referenced unaffiliated third party is not placed on the exterior ofthe Building above the window line of the top floor of the Building within two(2) years after the date upon which the subject Approved Exterior Signage isremoved, then Landlord shall, within sixty (60) days after Tenant’s delivery ofnotice to Landlord and at Landlord’s sole expense, reinstall all ApprovedExterior Signage.  The term “Tenant’sAllocation of Exterior Signage Rights” as used herein shall mean the maximumsize of signs permitted to be installed on the exterior of the Building, multipliedby a fraction, the numerator of which shall be the number of rentable squarefeet in the Premises, and the denominator of which shall be the sum of thenumber of rentable square feet in the Premises and the number of rentablesquare feet in the space leased by the subject bona fide independent thirdparty pursuant to its lease with Landlord. Notwithstanding the foregoing, Tenant shall have the first choice ofthat side of the Building on which it shall place the Approved Exterior Signageit is permitted to place on the exterior of the Building.  In no event shall Landlord place or permitmore than one (1) sign above the window line of the top floor any side of theBuilding.

 

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**40.****                              ****EXERCISE FACILITY.**

 

From and after the Lease Commencement Date, Landlord shall provide anexercise center and a locker room facility, located in the Building (the“Exercise Facility”),which shall (a) contain anaggregate of approximately one thousand three hundred (1,300) rentable squarefeet, (b) be operated and maintained in a high quality condition and otherwisein a manner consistent with the maintenance and operation of exercisefacilities in Comparable Buildings, and (c) shall be operated andmaintained****for the exclusive useof office tenants of the Building, including Tenant and its employees;provided, however, that (i) Landlord shall not be required to provide anattendant for the Exercise Facility, (ii) Landlord assumes no liability for such use, and (iii) theuse of the Exercise Facility shall be limited to those parties who physicallyoccupy space in the Building and shall not be available for use by any personwho occupies so-called “virtual space,” i.e., utilizes a portion of theservices or facilities at the Premises without having a physical office thereinwhich is used on a regular basis (a “Virtual User”).  Admission to the Exercise Facility will be obtained through theuse of the Building security system.  Subject to the terms of Section 13above, use of the Exercise Facility and the hours of operationthereof will be subject to such reasonable rules and regulations that Landlord maypromulgate, and amend, from time to time, which rules and regulations shall be consistent with those forexercise facilities operated in Comparable Buildings.  It is understood that no person shall beentitled to use the Exercise Facility until such person has signed a waiver in reasonable form consistent withterms generally adopted by landlords for exercise facilities operated in Comparable Buildings. ** **Landlordshall not charge any fees for use of the Exercise Facility.  The Exercise Facility shall contain separatemen’s and women’s locker rooms, each containing no less than two (2) showerstalls (as well as sinks and toilets), which will be kept operational, clean andtidy by Landlord throughout each day of the week, and in a manner consistent with the operation of exercisefacilities in Comparable Buildings.  Cleaning will be extended to weekends and Holidays if permitteduse warrants same.  Subject to the terms of Section 1.BBabove, all reasonable out-of-pocket expenses of operating theExercise Facility (including, but not limited to, equipment leases butexcluding any rental payments for the premises occupied by the ExerciseFacility), other than costs of the initial construction and the initialequipment installed therein, shall be includable in Operating Expenses (itbeing agree that all equipment installed in the Exercise Facility shall beleased and not purchased by Landlord). All electronic fitness equipment in theExercise Facility shall be replaced once every five (5) years.  Landlord reserves the right, at its sole cost which shall notbe included in Operating Expenses, to change the location of theExercise Facility within the Building at any time and from time to time,provided (1) the size of theexercise facility shall not be reduced, (2)****Landlordprovides Tenant with at leastthirty (30) days prior notice of such relocation and (3) Landlord promptlycommences and diligently pursues to completion such relocation, such that theExercise Facility shall not be out of operation for more than ten (10) daysas the result of anysuch relocation thereof by Landlord. The Exercise Facility shall contain substantially the same equipment asis described on Exhibit K attached hereto and made a part hereof or suchequipment as Landlord, in its reasonable discretion, determines is as good orbetter than such equipment with respect to function and quality.

 

**41.****                              ****EXPANSION SPACE OPTIONS.**

 

A.                                   *Expansion Space*. Tenant shall have two (2) “Expansion Space Options”, as follows:

 

(i)                                     Tenantshall have a one-time option to lease from Landlord certain space on the eighth(8th) floor of the Building (“Expansion Space #1”), comprising not less than fivethousand (5,000) rentable

 

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square feet and not more than seven thousandfive hundred (7,500) rentable square feet, at a location contiguous to theInitial Eighth Floor Space (except as provided below), as such Expansion Space#1 is reasonably designatedby Landlord, which space (A)shall have a demising wall which connects the corridor wall in the Common Areasof the floor on which Expansion Space #1 is located to a mullion in a straightline, except for a deviation of not to exceed ten feet (10’) and (B) shallresult in the remainder of the space located on the floor on which ExpansionSpace #1 is located and which is not then leased by Tenant being in marketablecondition; provided, however, that in the event that Tenant does not lease allor any portion of the Initial Eighth Floor Space and Tenant does not lease allspace on the Seventh (7th) floor of the Building, then ExpansionSpace #1 shall be all space on the seventh (7th) floor of theBuilding which is not leased by Tenant (even if such Expansion Space #1 is lessthan five thousand (5,000) rentable square feet) or, if at such time norentable square footage is available for Expansion Space #1 on the seventh (7th)floor of the Building, then Landlord shall reasonably designate space on theeighth (8th) floor of the Building as Expansion Space #1 inaccordance with the foregoing criteria.  Expansion Space #1, if and when so leased by Tenant, shallbecome part of the Premises and shall be subject to the terms and conditions ofthis Lease, except as set forth in this Section 41;****and

 

(ii)           Tenant shall have a one-time optionto lease from Landlord certain space on the eighth (8th) floor of the Building(“Expansion Space #2”), comprising not less than five thousand (5,000) rentablesquare feet and not more than seven thousand five hundred (7,500) rentablesquare feet on the eighth (8th) floor of the Building, which Expansion Space #2shall be contiguous (except as provided below) to Tenant’s portion of thePremises then located on the eighth (8th) floor of the Building, whichExpansion Space #2 shall be in a location reasonably designated by Landlord,which space (A) shall have a demising wall which connects the corridor wall inthe Common Areas of the floor on which Expansion Space #2 is located to amullion in a straight line, except for a deviation of not to exceed ten feet(10’), and (B) shall result in the remainder of the space located on the flooron which Expansion Space #2 is located and which is not then leased by Tenantbeing in marketable condition; provided, however, that in the event that Tenantdoes not lease all or any portion of the Initial Eighth Floor Space, thenExpansion Space #2 shall be all space on the seventh (7th) floor of theBuilding which is not leased by Tenant (even if such Expansion Space #2 is lessthan five thousand (5,000) rentable square feet), or, if at such time norentable square footage is available for Expansion Space #2 on the seventh(7th) floor of the Building, then Landlord shall reasonably designate space onthe eighth (8th) floor of the Building as Expansion Space #2 in accordance withthe foregoing criteria.  Notwithstandingthe foregoing, in the event that Tenant exercises its option to lease bothExpansion Space #1 and Expansion Space #2, Tenant acknowledges that theaggregate number of square feet of rentable space in Expansion Space #1 andExpansion Space #2 shall not exceed the number of square feet of rentable spaceon the eighth (8th) floor of the Building which is not then already leased toTenant pursuant to this Lease.

 

B.                                     *Terms and ConditionsApplicable to Expansion Space #1 and Expansion Space #2*.

 

(i)                                     Provided that Tenant provides noticeto Landlord in accordance with the terms of Section 41.C. hereof, Landlordshall deliver possession of the Expansion Space to Tenant, in its then “as-is”condition except that the Expansion Space shall be in good condition, reasonable wearand tear excepted, in compliance with all applicable Laws existing at the timethe subject Expansion Space was improved, improved at least to the extent ofthe Landlord’s Work required to be performed by Landlord with respect to thePremises, broom-clean and free of all removable shelving, personal property andtrash, on a date upon which Landlord shall deliver the subject Expansion Spaceto Tenant (the “Expansion Space Commencement Date”) which, as to ExpansionSpace #1, is identified in anotice

 

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delivered by Landlord to Tenant by the last day of the forty-sixth (46th)full calendar month of the Term, and which designated date is not later than the last day of theseventy-fifth (75th) full calendar month of the Term and not earlierthan the first (1st) day of the sixty-first (61st) full calendarmonth of the Term, and, as to Expansion Space #2, is identified in a notice deliveredby Landlord to Tenant by the last day of the seventieth (70th) fullcalendar month of the Term, and which designated date is notlater than the last day of the ninety-ninth (99th) full calendarmonth of the Term, and not earlier than the first day of the eighty-fifth (85th)full calendar month of the Term.  Suchnotice delivered by Landlord to Tenant shall specify Landlord’s estimate of thePrevailing Market Rent for the subject Expansion Space for the period beginningon the Expansion Space Commencement Date for the subject Expansion Space andending on the last day of the Term.  Inthe event Landlord fails to timely and properly deliver notice with respect tothe Expansion Space in accordance with the foregoing, then the Expansion SpaceRent Abatement Period for the subject Expansion Space shall be extended by theperiod, as to Expansion Space #1, beginning on the first day of theforty-seventh (47th) full calendar month of the Term and ending uponthe date on which Landlord timely and properly delivers such notice to Tenant,and, as to Expansion Space #2, beginning on the first day of the seventy-first(71st) full calendar month of the Term and ending upon the date onwhich Landlord timely and properly delivers such notice to Tenant.

 

(ii)                                  The Term as to the Expansion Space, inquestion, leased by Tenantpursuant to this Section 41 shall commence on the Expansion Space CommencementDate as to the Expansion Space in question. Tenant shall have no obligation to pay Rent for the subject ExpansionSpace with respect to the sixty-one (61) day period (such 61 day period withrespect to an Expansion Space is herein referred to as “Expansion Space RentAbatement Period”) beginning on the Expansion Space Commencement Date for thesame, it being agreed that such Rent shall be abated.  The Term as to each Expansion Space in question leased by Tenant hereunder shallcontinue for the remainder of the Term.

 

(iii)                               The Base Rentfor each such Expansion Space shall be equal to the Prevailing Market Rent (asdefined in Section 45 hereof) for such Expansion Space for the period beginningon the Expansion Space Commencement Date for the same and ending on the lastday of the then-current Term, which Prevailing Market Rent shall be determinedin accordance with subsection 45(5) hereof.

 

(iv)                              Allconstruction and improvements to be performed with respect to the ExpansionSpace in question shall be performed by Tenant, at its expense, in accordance with planswhich shall be subject to the terms of this Lease, including, but not limitedto, Sections 8 and 10 hereof (such work being referred to herein as the“Expansion Space Work”).  Notwithstanding the foregoing, Landlord shall be responsible for theconstruction and installation of work necessary to separately demise thesubject Expansion Space from adjacent rentable area and from Common Areas, andall Common Areas reasonably required. Such work shall be performed by Landlord in first-class condition and inaccordance with all applicable Laws and all terms of this Lease.

 

(v)                                 From and after the applicable ExpansionSpace Commencement Date, such Expansion Space shall be included in the term“Premises” as used in this Lease, and subject to abatement during theapplicable Expansion Space Rent Abatement Period, Tenant’s Share of IncreasedOperating Expenses and Tenant’s Share of Increased Real Estate Tax Expensesshall be increased proportionately. Such adjustments to Tenant’s Share of Increased Operating Expensesand Tenant’s Share of Increased Real Estate Tax Expenses, as they relate to thesubject Expansion Space, and the fact that the “base year” for purposes ofcalculating the amount of the same will not correspond to the “base year” fornew transactions for comparable space in Comparable Buildings, shall be takeninto consideration in establishing the Prevailing Market Rent for the subjectExpansion Space, determined in accordance with the terms of Subsection 45(2)below.

 

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*D.**                                   **Notice; Exercise*.  Tenant shall give toLandlord notice of Tenant’sexercise of its option to so lease the Expansion Space  which (i) as to Expansion Space #1, shall begiven by the later to occur of the date whichoccurs one (1) year prior to the date identified as the Expansion SpaceCommencement Date for Expansion Space #1 in the corresponding notice deliveredby Landlord pursuant to Section 41.B(i) above, and (2) the date which occursten (10) months after the date upon which Tenant receives Landlord’scorresponding notice for Expansion Space #1 delivered in accordance withSubsection 41.B(1) above; and (ii) as to Expansion Space #2,shall be given bythe later to occur of(1) the date which occurs one (1) year prior to the date identified as theExpansion Space Commencement Date for Expansion Space #2 in the correspondingnotice delivered by Landlord to Tenant in accordance with Subsection 41.B (i)above, and (2) the date which occurs ten (10) months after the date upon whichTenant receives Landlord’s corresponding notice for Expansion Space #2delivered in accordance with Subsection 41.B(i) above. If Tenant does not timely give any such notice toLandlord, then Landlord shall be free to offer to lease and to lease suchExpansion Space #1 or Expansion Space #2, as the case may be, to others and Tenant’s Expansion Space Option forExpansion Space #1 or Expansion Space #2, as the case may be, shall be void andof no force or effect for the remainder of the Term of this Lease and Landlordmay lease said Expansion Space #1 or Expansion Space #2, as the case may be, toothers under such terms and for such periods as shall be acceptable to Landlord(it being agreed that time shall be of the essence in Tenant’s delivery ofeach of the aforesaid notices to Landlord and that, if any such notice is notso delivered in the time aforesaid, Landlord will rely to its detriment on Tenant’s failure togive such notice).  Notwithstanding anything to the contrarycontained in this Lease, (x) Tenant’s failure to exercise any Expansion SpaceOption pursuant to this Section 41 shall not affect its right to exercise anysubsequent Expansion Space Option, and (y) Tenant may only exercise theExpansion Space Option for Expansion Space #2 if Tenant has either waived or failedto timely exercise its right to terminate this Lease effective as of the lastday of the seventh (7th) Lease Year pursuant to Section 49 below,and Tenant has either waived or failed to timely exercise its right toterminate this Lease with respect to a portion of the Premises effective as ofthe last day of the seventh (7th) Lease Year pursuant to Section 50below.  If a MaterialDefault exists at the time Tenant delivers to Landlord notice of Tenant’sexercise of an Expansion Space Option, then Landlord may elect to invalidateTenant’s exercise of the subject Expansion Space Option by delivering notice toTenant within five (5) business days after Landlord’s receipt of Tenant’snotice of exercise.  If such invalidationnotice (i) is timely and properly delivered by Landlord to Tenant in accordancewith the terms of this Lease, (ii) describes the subject Material Default inreasonable detail, and (iii) states that Landlord has elected pursuant to thatnotice and the terms of this Section 41, to invalidate Tenant’s exercise of thesubject Expansion Space Option, then Tenant’s notice of exercise of the subjectExpansion Space Option shall be invalid; provided, however, such invalidationshall not prevent Tenant from later exercising an Expansion Space Optionthrough the last day permitted for the same under this Section 41.  If Landlord does not timely and properlydeliver any such notice of invalidation to Tenant during the existence of aMaterial Default, then Tenant’s prior exercise of the subject Expansion SpaceOption shall remain valid and in effect. It is agreed that time shall be of the essence in Landlord’s delivery ofan invalidation notice to Tenant in accordance with this Section 41, and if anysuch notice is not so timely and properly delivered within the period specifiedabove, Tenant will rely to its detriment on Landlord’s failure to give suchnotice.

 

E.                                      *Execution of LeaseAmendment*.  Within thirty (30) days after the date Tenant gives notice toLandlord of the exercise of any of Tenant’s such options hereunder, Landlord and Tenant shall executean amendment to this Lease setting forth the terms set forth in this Section 41as to the Expansion Space

 

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in question. Notwithstanding the failure of either party to execute theabove-referenced amendment within the above-referenced thirty (30) day period,both parties shall be bound by Tenant’s exercise of the subject option.

 

**42.****                              ****[Intentionally omitted.]**

 

**43.****                              ****ACCESS KEYS.**

 

###### **Landlord agrees, at its cost, to provide Tenant with four (4) access control keycards for each 1,000 rentable square feet comprising the Premises.  Such access control keys shall be providedas of the Lease**Commencement Date, orsuch later date as Tenant may request.  Additional accesscontrolled key cards shall be provided by Landlord to Tenant upon Tenant’srequest, and thecost of the sameshall be reimbursed by Tenant to Landlord as Additional Rent hereunder, atLandlord’s reasonablecost therefore.

###### ** **

**44.****                              ****LANDLORD REPRESENTATIONS.**

 

###### **Landlordhereby represents, warrants and covenants to and with Tenant that, as of thedate of Landlord’s execution of this Lease: (i) Landlord has the full right,power and authority to enter into this Lease and to perform each and all of theterms, provisions, covenants, agreements, matters and things herein provided tobe performed by Landlord and to execute and deliver all documents providedherein to be executed and delivered by Landlord; (ii) this Lease does not, norwill the performance by Landlord of its obligations hereunder, contravene anyprovision of any existing law, covenant, indenture or agreement binding uponLandlord or upon the Building,the Land or, to the best of Landlord’s knowledge, the Complex; (iii) thesignatories of this Lease on behalf of Landlord are authorized to sign thisLease on Landlord’s behalf; (iv) there is no litigation pending, or to the bestof Landlord’s actual knowledge, threatened pertaining to Landlord, theBuilding, the Land or the Complex; (v) to the best of Landlord’s knowledge, asof the date of this Lease, there are no suits, judgments or notices relating toany violation of the health, pollution control, building, fire or zoning lawsor regulations relating to the use and maintenance of the Building, the Land, or the Complex;(vi) the Building, the Landand the Complex will, as of the Lease Commencement Date, complywith all applicable laws, orders, rules and regulations (including theprovisions of the ADA); and (vii) to the best of Landlord’s knowledge, exceptas may be set forth in that certain environmental report dated April 4, 2001and prepared by ATC Associates, Inc. (the “Report”) no Hazardous Materialsexist in, on or underthe Building or onthe Land or the Complex, and,to the best of Landlord’s knowledge, no Hazardous Materials, including, withoutlimitation, those identified in the Report, exist in, on or under the Building,the Land or the Complex in violation of any applicable laws; (viii) no documentrecorded against the Property conflicts with any of the terms of thisLease;  (ix) all applicable Laws permitthe use and occupancyof the Premises by Tenant as permitted in this Lease;  (x) Landlord is duly organized, is qualified to do business inthe jurisdiction in which the Building is located, is in good standing underthe Laws of the state of Landlord’s formation and the Laws of the jurisdictionin which the Building is located; and (xi) all action required to authorizeLandlord and the signatory tothis Lease on behalf of the Landlord has been duly taken, including,without limitation, the procurement of all approvals required from the holderof any Mortgageand Ground Lease affecting the Building or the Land.**  Landlord shall indemnify, protect, defend andhold harmless Tenant and its shareholders, subsidiaries,affiliates, officers, directors, partners, employees, agents and trustees from,against, for and in respect of, any and all claims, damages, losses,obligations, liabilities, actions or causes of actions, penalties and costs andexpenses suffered, sustained, incurred or required to be paid (including,without limitation,

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###### ** **

###### **reasonableattorney’s fees) because of, or arising out of, a breach of the foregoingrepresentations and warranties by Landlord.  The obligations ofLandlord under this Section 44 shall survive the expiration or earliertermination of this Lease.**

###### ** **

**45.****                              ****OPTIONS TO EXTEND.**

 

###### **Landlord hereby grants to Tenant, two (2) options (the “Renewal Options”), eachto extend the Term for a five (5) year period (the “Renewal Terms”) after theexpiration of the initial Lease Term, or after the expiration of**the initialRenewal Term, as the case may be.  Ifexercised, and if the conditions applicable thereto have been satisfied, the RenewalTerm shall commence immediately following the end of the initial Term or theinitial Renewal Term, as the case may be. The Renewal Options herein granted to Tenant shall be subject to, and shall be exercised inaccordance with, the following terms and conditions:

###### ** **

(1)  Tenant may exercise aRenewal Option with respect toall or a portion of the then-current Premises so along as the same contains atleast two (2) full contiguous floors in the Building.  EachRenewal Option shall be exercisable only by notice given by Tenant to Landlord notlater than nineteen (19) months prior to the expiration of the initial Term orthe initial Renewal Term, as the case may be.

 

### (2)  All terms and conditions ofthis Lease shall be applicable during each Renewal Term, including, but notlimited to, those set forth in Section 5 hereof except that the amount of Rent charged for each of the Renewal Terms shall be equal to ninety-fivepercent (95%) of the “Prevailing Market Rent”(as hereafter defined) for theportion of the Premisesfor which Tenant has exercised the subjectRenewal Term.

###  

### (3)  If Tenant’s notice is not given timely, then Tenant’s subjectRenewal Option, and any subsequent Renewal Option, shall be of no further force or effect (it beingagreed that time shall be of the essence in Tenant’s delivery of such notice of exercise of itsRenewal Options to Landlord and that, if such notice is not so delivered withinthe time aforesaid, Landlord will rely to its detriment on Tenant’s  failure to give such notice). If a MaterialDefault exists at the time Tenant delivers to Landlord notice of Tenant’sexercise of a Renewal Option, then Landlord may elect to invalidate Tenant’sexercise of the subject Renewal Option by delivering notice to Tenant withinfive (5) business days after receipt of Tenant’s notice of exercise.  If such invalidation notice (i) is timelyand properly delivered by Landlord to Tenant in accordance with the terms ofthis Lease, (ii) describes the subject Material Default in reasonable detail,and (iii) states that Landlord has elected pursuant to that notice and theterms of this Section 45, to invalidate Tenant’s exercise of the subjectRenewal Option, then Tenant’s notice of exercise of the subject Renewal Optionshall be invalid; provided, however, such invalidation shall not prevent Tenantfrom later exercising any Renewal Option through the last day permitted for thesame under this Section 45.  If Landlordfails to timely and properly deliver notice of invalidation with respect to aprior exercise by Tenant of a Renewal Option, then Tenant’s prior exercise ofsuch Renewal Option shall remain valid and in effect.  It is agreed that time shall be of the essence in Landlord’sdelivery of an invalidation notice to Tenant in accordance with the foregoing,and if any such notice is not so timely and properly delivered within theperiod specified above, Tenant will rely to its detriment on Landlord’s failureto give such notice.

###  

### (4)  The term “Prevailing Market Rent” forpurposes of this Lease shall mean what a willing, comparable, new,non-expansion, non-renewal, non-equity tenant would pay, and a willing landlordof a comparable building located within the Ballston, Virginia submarket wouldaccept, at arm’s length, for a

 

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### comparableamount of office space for a comparable period of time, in either case givingappropriate consideration to: (i) the age, condition and location of the Building; (ii) theannual rental rates per rentable square foot; (iii) the standard ofmeasurement by which the rentable square footage is measured; (iv) theratio of rentable square feet to usable square feet; (v) the type ofescalation clauses (including, without limitation, type, base year and stop);(vi) the extent of building services; (vii) the extent of liabilityunder the escalation clauses (*e.g.*whether determined on a “net lease” basis or by increases over a particularbase year or base dollar amount); (viii) abatement provisions reflectingfree rent and/or no rent during the period of construction or any other periodduring the lease term; (ix) brokerage commissions, if any, which would bepayable by Landlord in a comparable transaction; (x) length of the leaseterm; (xi) size and location of space being leased; (xii) buildingstandard work letter and/or tenant improvement allowances, if any;(xiii) other economic concessions, if any; (xiv) Tenant’screditworthiness; and (xv) other general applicable conditions of tenancyfor a comparable new transaction, so that Tenant will obtain the same rent andother economic benefits that Landlord would otherwise give to any comparableprospective tenant and so that Landlord will make the same economic paymentsand concessions that Landlord would otherwise make in a comparable newtransaction.  If, for example, afterapplying the criteria set forth above, comparable leases provide a new tenantwith comparable space at Thirty Dollars ($30.00) per rentable square foot,with a Ten Dollars ($10.00) operating expense allowance, three(3) months at no rent to construct improvements, four (4) months freerent, Fifty Dollars ($50.00) per rentable square foot tenant improvementallowance, a “lease takeover” obligation in the amount of One Hundred ThousandDollars ($100,000.00), a brokerage commission of Fifty Thousand Dollars($50,000.00), and certain other generally applicable economic terms, thePrevailing Market Rent shall not be Thirty Dollars ($30.00) per rentablesquare foot only, but shall be the equivalent of Thirty Dollars ($30.00) perrentable square foot, a Ten Dollar ($10.00) operating expense allowance,three (3) months at no rent to construct improvements or three(3) months additional free rent in lieu of such construction period, anadditional four (4) months free rent, Fifty Dollars ($50.00) perrentable square foot tenant improvement allowance or payment in lieu of suchallowance, One Hundred Thousand Dollars ($100,000.00) cash payment in lieuof a lease takeover, Fifty Thousand Dollars ($50,000.00) cash payment inlieu of a brokerage commission (or, if a broker is retained by Tenant withrespect to the subject space, a cash payment equal to the difference betweenFifty Thousand Dollars ($50,000.00) and the commissions payable to Tenant’sbroker), and the other generally applicable economic terms; provided, however,that in no event shall the foregoing example be deemed to state or imply anyobligation on the part of Landlord to make any cash payment to Tenant or toprovide any of the types of concessions set forth in such example.

###  

### (5)  *Determination*.  Landlord shall estimate the PrevailingMarket Rent by using its good faith judgment. Landlord shall provide Tenant with notice of Landlord’s estimate withinten (10) days after Tenant provides notice to Landlord exercising Tenant’scorresponding option right which requires a calculation of the PrevailingMarket Rent.  Tenant shall have ten(10) days (the “Tenant’s Review Period”) after receipt of Landlord’snotice of the new rental rate within which to accept such rental rate.  In the event Tenant fails to accept, priorto the expiration of the Tenant’s Review Period, in writing such rental rateproposed by Landlord, then such proposal shall be deemed rejected and Landlordand Tenant shall attempt in good-faith to agree upon such Prevailing MarketRent.  If Landlord and Tenant fail toreach agreement by that date which occurs ten (10) days following Tenant’sReview Period (the “Outside Agreement Date”), then such determination shall besubmitted to arbitration in accordance with the terms set forth below.**** Within ten(10) days after the Outside Agreement Date, each party shall give writtennotice to the other setting forth the name and address of a Broker (ashereinafter defined) selected by

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### such party who has agreed toact in such capacity, to determine the Prevailing Market Rent for the subjectspace.  If either party shall fail toselect a Broker as aforesaid, the subject Prevailing Market Rent shall bedetermined by the Broker selected by the other party.  Each Broker shall thereupon independently make his determinationof the subject Prevailing Market Rent within twenty (20) days after theappointment of the second Broker.  Ifthe two Brokers’ determinations are not the same, but the higher of such twovalues is not more than one hundred two percent (102%) of the lower of them,then the subject Prevailing Market Rent shall be deemed to be the average ofthe two values.  If the higher of suchtwo values is more than one hundred two percent (102%) of the lower of them,then the two Brokers shall jointly appoint a third Broker within ten (10) daysafter the second of the two determinations described above has beenrendered.  The third Broker shallindependently make his determination of the subject Prevailing Market Rentwithin twenty (20) days after his appointment. The highest and the lowest determinations of value among the threeBrokers shall be disregarded and the remaining determination shall be deemed tobe the subject Prevailing Market Rent. For the purposes of this Section 45(5), “Broker” means a real estatebroker licensed in the Commonwealth of Virginia, who has been regularly engagedin such capacity in the business of commercial office leasing in Arlington,Virginia for at least ten (10) years immediately preceding his/her appointmenthereunder. Except as otherwise provided below, each party shall pay for the cost ofits Broker and one-half of the cost of the third Broker.  Notwithstanding anything to the contrary setforth in this Lease, Tenant may elect to invalidate its exercise of the subjectoption/right for which arbitration was engaged under this Section 45(5), bydelivering notice to Landlord within thirty (30) days following Tenant’sreceipt of the notice of determination by the arbitrators.  In the event Tenant so elects, then Tenant(i) shall reimburse Landlord for all reasonable fees, costs and expensesincurred by Landlord for its Broker in connection with the subject arbitrationand (ii) reimburse Landlord for all reasonable fees, costs and expensesincurred by Landlord for the third (3rd) broker in connection withthe subject arbitration, within thirty (30) days following Landlord’s demandtherefor and if Landlord has not already paid such costs, Tenant shall pay allcosts of the third (3rd) broker directly.

###  

**46.****                              ****ROOF RIGHTS.**

 

A.                                   Subject to the terms of this Section46, Tenant shall have the right to install, without the payment of anyadditional rent or licensing fees, and maintain at a location on the roof ofthe Building chosen by Tenantand approved by Landlord (the “Satellite Area”) certaintelecommunications and related equipment, together with the cables extendingfrom such telecommunications and related equipment to the Premises(collectively, the “Telecommunications and Related Equipment”).  The location, size, weight, height and allother features and specifications of such Telecommunications and RelatedEquipment and the manner of the initial installment of the same shall besubject to Landlord’s prior approval, which approval shall not be unreasonably withheld conditioned or delayed.  Notwithstanding the foregoing, Tenant shallnot be entitled to install any such Telecommunications and Related Equipment(i) which occupies an area of more than approximately one hundred (100) squarefeet on the roof of theBuilding, (ii) if such installation would materially adverselyaffect (or in a manner that wouldadversely affect) any warranty with respect to theroof of the Building, (iii) if such installation would adversely affect (or ina manner that would materially adversely affect) the structure or any of thebuilding systems of the Building, or if such installation would require (or ina manner that would require) any structural alteration to the Building, or (iv)if such installation would violate (or in a manner that would violate) anyapplicable federal, state or local law, rule or regulation. Tenant shallobtain and maintain at Tenant’sexpense, and submitto Landlord copies of, all permits and approvals relating to suchTelecommunications and Related Equipment and such installation and maintenance(including, without limitation, any permit required if a

 

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crane is necessary to place such Telecommunicationsand Related Equipment on the roof), and shall pay all taxes and fees related thereto. Such Telecommunications and Related Equipment shall be installed, atTenant’s sole cost and expense, by a qualified contractor chosen by Tenant andapproved in advance by Landlord, which approval shall not be unreasonablywithheld, conditionedor delayed.  In the event Tenant shallrequire penetration of the roof membrane of the Building in connection with theinstallation of any Telecommunication and Related Equipment, then Tenant shalluse Landlord’s roof contractor for work with respect to such penetration of theroof membrane, and Landlord shall cause such contractor to charge an amount toTenant for the performance of such work which is equal to the amount whichwould be payable for such work on an arm’s-length, competitive basis for theperformance of such work in the Washington, D.C. metropolitan area, failingwhich Landlord shall be responsible for the payment of all amounts charged toTenant by such contractor for the subject work to the extent in excess of sucharm’s-length, competitive amount for performance of the subject work.  Tenant shall obtain Landlord’s prior consent, which shall not be unreasonablywithheld, conditioned or delayed, to the manner and time in whichsuch installation work is to be done.  Tenant shall screen the Telecommunications andRelated Equipment from view from the grounds adjacent to theBuilding in a manner and with materials acceptable to Landlord in its reasonable discretion. The Telecommunications and Related Equipment shall not be for any purpose otherthan communication related to the operation of Tenant’s business and the business of other permitted occupants of thePremises (and not for commercial resale purposes). All plans and specifications concerning such installation shall besubject to Landlord’s prior approval, which approval shall not be unreasonablywithheld, conditioned ordelayed and Tenant shall reimburse Landlord’s reasonable expensesincurred to third parties in such review. All repairs and installations required after the initial installation ofthe Telecommunications and Related Equipment also shall be subject toLandlord’s prior approval,which shall not be withheld,conditioned or delayed.

 

B.                                     Except in the circumstance of an emergency, Tenant shall deliver to Landlord notice prior to Tenant’s access to theTelecommunications and Related Equipment. Any such access by Tenant shall be subject to reasonable rules andregulations established from time to time by Landlord in accordance with the terms ofSection 13 above

 

C.                                     At all timesduring the Term, Tenant shall (i) maintain the Telecommunications and Related Equipment inclean, good and safe condition,and (ii) comply with all requirements of laws, ordinances, rules andregulations of all public authorities with respect to the Telecommunicationsand Related Equipment.  Tenant shall not install or operate theTelecommunications and Related Equipment in a manner that will interfere withthe operation of any other antenna installed on the roof of the Building priorto the installation of the Telecommunications and Related Equipment, and Tenantshall use commercially reasonable efforts to avoid interference with otherantennae installed on the roof of the Building [after the initial installationof the Telecommunications and Related Equipment], provided that suchcommercially reasonable efforts shall not require that Tenant be prevented fromusing the Telecommunications and Related Equipment for their intendedpurpose.  Tenant shall be responsible,at its sole cost, for repairs to the Building made necessary by reason of therefurbishing, installation, maintenance, operation or removal of theTelecommunications and Related Equipment or any replacements thereof.  At the expiration or earlier termination of theTerm, Tenant shall remove theTelecommunications and Related Equipment from the Building.

 

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D.                                    It is expressly understood that by grantingTenant rights under this Section 46, Landlord makes no representation as to thelegality of such Telecommunications and Related Equipment or itsinstallation.  In the event that anyfederal, state, county, regulatory or other authority requires the removal orrelocation of such Telecommunications and Related Equipment, Tenant shallremove or relocate such Telecommunications and Related Equipment at Tenant’ssole cost and expense, and Landlord shall under no circumstances be liable toTenant therefor.

 

E.                                      Subject to the terms of this Lease, Tenant shall indemnify and hold Landlordharmless from and against all costs, damages, claims, liabilities and expenses(including attorneys’ fees) suffered by or claimed against Landlord, directlyor indirectly, based on, arising out of or resulting from any act or omissionby Tenant or Tenant’s employees, agents, assignees, subtenants, contractors,clients, guests, licensees, customers or invitees with respect to theinstallation, use, operation, maintenance, repair or disassembly of such Telecommunications andRelated Equipment and related equipment.

 

F.                                      TheTelecommunications and Related Equipment may be used by Tenant and other permitted occupants of thePremises only in the conduct of their customary business.

 

G.                                     Tenant shall maintain such insurance as isappropriate with respect to the installation, operation and maintenance of theTelecommunications and Related Equipment. Landlord shall have no liability on account of any damage to or interferencewith the operation of the Telecommunications and Related Equipment except forphysical damage caused by Landlord or any of its employees, agents or contractors, andLandlord expressly makes no representations or warranties with respect to thecapacity for such Telecommunications and Related Equipment placed on the roofof the Building to receive or transmit signals.  The operation of the Telecommunications and Related Equipmentshall be at Tenant’s sole and absolute risk.

 

**47.****                              ****RIGHT OF FIRST REFUSAL AND FIRST RIGHT OF AVAILABILITY.**

 

A.                                   Right of First Refusal.  Subjectto the terms ofthis Section 47A, Tenantshall have a right of firstrefusal to lease any space located on the eighth (8th) floor ofthe Building which is orbecomes available for lease

 

A.1                             **Procedure for Offer**.  Landlord shall deliver noticeto Tenant (the “First Refusal Notice”) fromtime to time of each bona-fide offer Landlord is willing to accept from anindependent third party for all or any of the portion of the space on theeighth (8th) floor of the Building which is not then included in thePremises (the portion of the space on the eighth (8th) floor of theBuilding which is the subject of any such bona-fide offer is hereinafterreferred to as the “First Refusal Space”). The First Refusal Notice shalldescribe the First Refusal Space (including, without limitation, Landlord’sdetermination of the rentable and usable square footage thereof) and shall setforth the terms of the subject bona fide offer which Landlord is willing toaccept, which terms shall include the material terms for the subjecttransaction, including economic terms based on full service rental rates,operating expenses, allocations, free rent and no rent periods, costsreimbursable by Landlord, discounts, improvement allowances, other allowancesand other inducements proposed for the subject First Refusal Space.  Tenant shall have the right to lease the spacedescribed in the First Refusal Notice upon the terms set forth in suchnotice; provided, however, at Tenant’s option, if at least two (2) years remainin the Term (as the same then exists, including any Renewal Period with respectto which Tenant has exercised its Renewal Option, even if said Renewal Periodhas not yet commenced), then the term for the subject First Refusal Space shallbe coterminous with the Term. In the event Tenant elects to have the term forthe subject First Refusal Space be coterminous with the Term, then the freerent and no rent periods, improvement allowances, other allowances and otherinducements reflected in the subject First Refusal Notice shall be pro-rated

 

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based on the length of the term of the leaseproposed for the First Refusal Space in the subject First Refusal Noticerelative to the period beginning on the date upon which Landlord proposes todeliver the subject First Refusal Space as set out in the subject First RefusalNotice and the last day of the Term.

 

A.2                             **Procedure for Acceptance**.  IfTenant desires to exercise its right of first refusal to lease the space describedin a First Refusal Notice, Tenant shall deliver to Landlord its notice of exercise withinfifteen (15) days of Tenant’s receipt of the First Refusal Notice.  If Tenant timely exercises its right offirst refusal as set forth herein, Landlord and Tenant shall, within ten(10) days after Landlord’s receipt of Tenant’s notice of exercise, execute anamendment to this Lease covering the space described in thesubject First RefusalNotice.  If Tenant does not notifyLandlord within the above-referenced fifteen (15) day period of Tenant’s election to lease thespace described in the subjectFirst Refusal Notice, then Landlord shall be free to lease the subject spaceto any independent third party which will deliver to Landlord a correspondingbona fide offer for the subject First Refusal Space at a net effective rentwhich is no more favorable than by a margin of five percent (5%) of the neteffective rent which is contained in the applicable First Refusal Notice.  If Landlord wishes to offer the subject spaceon terms morefavorable to the prospective tenant, than those contained in the applicableFirst Refusal Notice, by a margin of five percent (5%) or greater, then Landlord must first make such offer toTenant by delivering another First Refusal Notice to Tenant setting forth suchmore favorable net effective rent, and Tenant shall have ten (10) businessdays from Tenant’s receipt of such First Refusal Notice to electto lease the First RefusalSpace upon the terms set forth in such First Refusal Notice.  If Tenant does not so timely electto lease the space describedin such First Refusal Notice, Landlord shall again be free to lease the subject spaceto any independent third partyupon the terms set forth in the last First Refusal Notice delivered to Tenant.

 

Notwithstanding anythingto the contrary set forth in this Section 47. A .2, if Landlord does notlease the space described in a First Refusal Notice within one hundred eighty(180) days after Tenant’s receipt of such First Refusal Notice, Landlord mustagain offer the subject space to Tenant in accordance with the right of firstrefusal granted to Tenant in this Section  47.A.2.  If a Material Default exists at the timeTenant delivers to Landlord notice of Tenant’s exercise of a right of firstrefusal set forth in this Section 47.A, then Landlord may elect to invalidateTenant’s exercise of the subject right of first refusal by delivering notice (a“Invalidation Notice”) to Tenant within five (5) business days after receipt ofTenant’s notice of exercise.  If suchInvalidation Notice (i) is timely and properly delivered by Landlord to Tenantin accordance to the terms of this Lease, (ii) describes the subject MaterialDefault in reasonable detail, and (iii) states that Landlord has electedpursuant to that Invalidation Notice and the terms of this Section 47.A, toinvalidate Tenant’s exercise of the subject right of first refusal under thisSection 47.A, then Tenant’s notice of exercise of the subject right of firstrefusal shall be invalid; provided, however, such invalidation shall notprevent Tenant from later exercising any right of first refusal under thisSection 47.A through the last day permitted for the same under this Section47.A.  If Landlord fails to timely andproperly deliver an Invalidation Notice in accordance with the foregoing withrespect to the prior exercise by Tenant of a right of first refusal under thisSection 47.A, then the earlier exercise by Tenant of its subject right of firstrefusal shall remain valid and in effect. It is agreed that time shall be of the essence in Landlord’s delivery ofan Invalidation Notice to Tenant in accordance with the foregoing, and if anysuch notice is not so timely and properly delivered within the period specifiedabove, Tenant will rely to its detriment on Landlord’s failure to give suchnotice.

 

# *B.*                                     First Right of Availability.  Tenant shall be entitled to request from Landlord from time totime a report (an “Availability Report”) with respect to the availability ofspace on the third (3rd), fourth (4th),

# * *

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# *seventh (7th), eighth (8th) andninth (9th) floors of the Building, and the date as of which eachsuch space will be available.  Spaceshall be “available” only to the extent it is not subject to expansion,extension, first offer, first refusal or any other rights of other tenants inthe Building which do not contradict Tenant’s expansion options/rights underthis Lease.  Landlord shall provideTenant such report within ten (10) business days after Tenant delivers itsrequest to Landlord.  Tenant shall havethe option, exercisable by notice delivered to Landlord within thirty(30) days after Tenant’s receipt of Landlord’s notice of available spacein the Building, to add any such available space to the Premises as it firstbecomes available.  Any such availablespace shall be leased to Tenant at the Prevailing Market Rent for the same fora term coterminous with the balance of the then-current term of this Leaseprovided that two (2) years remain in the Term (as the same then exists,including any Renewal Period with respect to which Tenant has exercised itsRenewal Option, even if said Renewal Period is not commenced) (or such shortertime period as may be necessary to prevent any conflict with another tenant’srights to such space or to prevent a conflict with Tenant’s expansion optionsunder Lease, if they have not expired). Notwithstanding anything to thecontrary set forth in this Section 47.B.2, Tenant may not exercise during thefifth (5th) Lease Year or the sixth (6th) Lease Year itsoption to add available space to the Premises pursuant to this Section 47.B.unless Tenant has either waived or failed to timely exercise its right toterminate this Lease effective as of the last day of the seventh (7th)day Lease Year pursuant to Section 49 below, unless Tenant has either waived orfailed to timely exercise its right to terminate this Lease with respect to aportion of the Premises effective as of the last day of the seventh (7th)Lease Year pursuant to Section 50 below. Nothing contained herein shall reduce the amount of space subject to theexpansion options granted to Tenant under this Lease. *If a Material Default existsat the time Tenant delivers to Landlord notice of Tenant’s exercise of anoption/right set forth in this Section 47.B, then Landlord may elect toinvalidate Tenant’s exercise of the subject option/right by delivering noticeto Tenant within five (5) business days after receipt of Tenant’s notice ofexercise.  If such Invalidation Notice(i) is timely and properly delivered by Landlord to Tenant in accordance withthe terms of this Lease, (ii) describes the subject Material Default inreasonable detail, and (iii) states that Landlord has elected pursuant to thatnoticeand the terms of this Section 47.B,to invalidate Tenant’s exercise of the subject option/right under this Section47.B, then Tenant’s notice of exercise of the subject option/right shall beinvalid; provided, however, such invalidation shall not prevent Tenant fromlater exercising any option/right under this Section 47.B through the last daypermitted for the same under this Section 47.B.  It is agreed that time shall be of the essence in Landlord’sdelivery of an invalidation notice to Tenant in accordance with the foregoing,and if any such notice is not so timely and properly delivered within theperiod specified above, Tenant will rely to its detriment on Landlord’s failureto give such notice.

# * *

C.                                     Nothing set forth in this Section shall beconstrued to give Tenanta superior right to lease any FirstRefusal Space or Available Space or any other space in theBuilding that is leased to another tenant and that is subject to any writtenoption on the part of such other tenant to renew or extend the term thereof, so long as the subject space was previously offeredto Tenant in accordance with the terms of this Section 47.  Landlord may proceed withnegotiations with prospective tenants other than Tenant with respect to all of theFirst Refusal Space or Available Space in question, provided that Landlordmay only enter into leaseswith respect to any such First Refusal Space or Available Spaceupon complying with all of the terms and conditions as set forth in this Section 47.

 

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D.                                    Within thirty (30) days after Tenant gives notice to Landlord of theexercise of an option hereunder, Landlord and Tenant shall execute an amendment to this Lease setting forth the terms for as to the subject First Refusal Space orAvailable Space, as the case may be. Notwithstanding the failure of either party to execute theabove-referenced amendment within the above-referenced thirty (30) day period,both parties shall be bound by Tenant’s exercise of its right to lease theFirst Refusal Space or Available Space, as the case may be.

 

**48.****                              ****RESTRICTION OF USE BYCERTAIN SPECIALIZED HUMAN RESOURCES CONSULTING FIRMS OR HUMAN CAPITALCONSULTING FIRMS.**

 

Landlord hereby agrees that, so long as the Premises shall contain atleast fifty-seven thousand (57,000) rentable square feet, it will not lease to, or knowingly permit occupancyof, any space in the Building to, or consent to any sublease or other agreement for use of space inthe Building or assignment of a lease for space in the Building toany companies/firms listed on Exhibit N attached hereto and made a parthereof, as said Exhibit N may be modified by Tenant, from time to time,to add human resources consulting firms or human capital consulting firmsspecializing in benefits, healthcare, and human resource technology (a“Specialized Human Resources Consulting Firm or Human Capital Consulting Firm”)and in the case of any such modification, the restrictions set forth in thisSection 48 shall apply to any such additional Specialized Human ResourcesConsulting Firm or Human Capital Consulting Firm beginning on the day after thedate of Landlord’s receipt of such modified list; provided, however, that withrespect to a proposed assignment of, or any sublease under, those certainleases for space in the Building between Landlord and (i) Nixon &Vanderhye, P.C. (the “Nixon Lease”) and (ii) ESI, Inc. (the “ESI Lease”) to anySpecialized Human Resources Consulting Firm or Human Capital Consulting Firm,Landlord, subject to the following terms of this Section 48, shall be deemed tohave fulfilled its obligations under this Section 48 if Landlord initiallyrefuses to consent to any such assignment or sublease by written notice to thetenant under the Nixon Lease or the tenant under the ESI Lease, as applicable(the “Refusal Notice”), but later consents to same if the tenant under theNixon Lease or the tenant under the ESI Lease, as applicable, contends thatLandlord’s denial or withholding of its consent is unreasonable ordiscriminatory and Landlord concludes, in good faith and on the advice ofcounsel, that such contention of the tenant under the Nixon Lease or the tenantunder the ESI Lease, as applicable, is not without any merit whatsoever;further provided, that in lieu of Landlord’s exercise of its right to approve aproposed sublease or proposed assignment pursuant to the Nixon Lease or the ESILease pursuant to this Section 48, if Landlord has the right, under the NixonLease or under the ESI Lease, as applicable, (A) in the case of a proposedsublease, to sublease the space which is the subject of the proposed subleaseor terminate the Nixon Lease or ESI Lease, as applicable, with respect to suchproposed sublet space, or (B) in the case of a proposed assignment, to take anassignment of, or terminate, the Nixon Lease or the ESI Lease, as applicable(any such right of Landlord with respect to the sublease by Landlord of anysuch space or the termination by Landlord of the Nixon Lease or the ESI Leasewith respect to any such space being hereinafter referred to as the “Landlord’sRecapture Right”), then Tenant shall have the right to, in the case of aproposed sublease, sublease (or Lease the subject space from Landlord, as thecase may be) the proposed sublet space upon the same terms and conditions aswere set forth in the proposed sublease, and in the case of a proposedassignment of the Nixon Lease or the ESI Lease, Tenant shall have the right toaccept such assignment of the Nixon Lease or the ESI Lease, as applicable (orlease the same from Landlord, as the case may be) upon the same terms andconditions as were proposed with respect to a third party.

 

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Simultaneously with Landlord’s issuance of the Refusal Notice to thetenant under the Nixon Lease or the tenant under the ESI Lease, as applicable,Landlord shall notify Tenant of the proposed assignment or sublease to whichthe Refusal Notice pertains and shall advise Tenant in such notice whether ornot Landlord has a Landlord’s Recapture Right with respect to such proposedassignment or sublease, and, if Landlord does have such a Landlord’s RecaptureRight with respect to same, Landlord shall include in such notice to Tenant theterms and conditions set forth in the proposed sublease and the terms andconditions upon which the assignment of the Nixon Lease or the ESI Lease wasproposed with respect to a third party, as applicable (such notice fromLandlord to Tenant being hereinafter referred to as a “Landlord’s Section 48Notice”).  Within five (5) business daysfollowing Tenant’s receipt of a Landlord’s Section 48 Notice, Tenant shalladvise Landlord in writing (a “Tenant’s Section 48 Response”) as to which ofthe following options Tenant selects in the event that the tenant under the NixonLease or the tenant under the ESI Lease, as applicable, contends thatLandlord’s denial or withholding of its consent, as set forth in the RefusalNotice, is unreasonable or discriminatory and that Landlord has concluded, ingood faith and on the advice of counsel, that such contention of the tenantunder the Nixon Lease or the tenant under the ESI Lease, as applicable, is notwithout any merit whatsoever:

 

(a)                                  if Landlord has advised Tenant in theLandlord’s Section 48 Notice that Landlord does not have a Landlord’s RecaptureRight with respect to the proposed assignment of, or sublease under, the NixonLease or the ESI Lease, as applicable, then Tenant shall, at its sole option,in Tenant’s Section 48 Response, either (i) waive the provisions of this Section48 which would prohibit such proposed assignment or sublease solely withrespect to such proposed assignment or sublease, in which case Landlord shallnot be obligated to disapprove or withhold its consent to such proposedassignment or sublease and shall not be entitled to the indemnification fromTenant provided for in this Section 48 with respect to such assignment orsublease, or (ii) advise Landlord that Tenant does not waive the provisions ofthis Section 48 with respect to such proposed assignment or sublease inTenant’s Section 48 Response, solely with respect to such proposed assignmentor sublease, in which case the indemnification provided for in this Section 48shall apply if Landlord disapproves or withholds its consent to such proposedassignment or sublease; and

 

(b)                                 in the event that Landlord advises Tenant inLandlord’s Section 48 Notice that Landlord does have a Landlord’s RecaptureRight with respect to the proposed assignment or sublease, Tenant shall, at itssole option, in Tenant’s Section 48 Response either (i) elect to accept asublease upon the same terms and conditions as were set forth in the proposedsublease, as identified in the Landlord’s Section 48 Notice, or accept anassignment of the Nixon Lease or the ESI Lease, as applicable (or lease thesame from Landlord, as the case may be) upon the same terms and conditions aswere proposed with respect to a third party, and (ii) decline to enter intosuch sublease or accept such assignment, and if Tenant elects the optionprovided for in the immediately preceding clause (ii) of this clause (b), thenTenant shall simultaneously advise Landlord in Tenant’s Section 48 Responsewhether Tenant does or does not waive the provisions of this Section 48 withrespect to such proposed assignment or sublease, solely with respect thereto,and if Tenant does not so waive the provisions of this Section 48 with respectto such proposed assignment or sublease, then the indemnification provided forin this Section 48 shall apply if Landlord disapproves or withholds its consentto such proposed assignment or sublease.

 

Inthe event that clause (a) above is applicable and Tenant does not make eitherof the elections required therein, then Tenant shall be deemed to have electedto not waive the provisions of this Section 48 with

 

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respectto the proposed sublease or assignment, in which case the indemnificationprovisions of this Section 48 shall apply. In the event that clause (b) of this paragraph is applicable and Tenantdoes not make any of the elections set forth therein, then Tenant shall bedeemed to have (x) elected not to exercise the right to sublease the proposedsublet space, or to accept an assignment of the Nixon Lease or the ESI Lease orto lease the subject space directly from Landlord (as the case may be) upon theterms and conditions set forth in an offer from a third party and (y) electednot to waive the provisions of this Section 48 with respect to the proposedsublease or assignment, in which case the indemnification provisions of thisSection 48 shall apply.

 

In the event that (1)(x) Landlord does not have a Landlord’s RecaptureRight with respect to a proposed assignment of, or sublease under, the NixonLease or the ESI Lease, as applicable, or (y)(i) Landlord does have aLandlord’s Recapture Right with respect to such proposed assignment of, orsublease under, the Nixon Lease or the ESI Lease, as applicable, and (ii)Tenant does not exercise its right as set forth in this Section 48 to subleaseor lease the proposed sublease space upon the same terms and conditions as wereset forth in the proposed sublease, or, in the case of a proposed assignment ofthe Nixon Lease or the ESI Lease, as applicable, does not accept suchassignment of the Nixon Lease of the ESI Lease, as applicable, or lease thesubject space from Landlord, as the case may be, upon the same terms andconditions as were proposed with respect to a third party, and, (2) in the caseof any of the circumstances described in clause (x) or clause (y) of thissentence, Landlord disapproves or withholds its consent to the proposedassignment of, or sublease under, the Nixon Lease or the ESI Lease, asapplicable; then, in such event, Tenant shall indemnify, defend and hold Landlordharmless in the event of any claim, action, suit or demand against Landlord, orany claims, liability, damages, costs or expenses (including, but not limitedto, court costs and reasonable attorneys’ fees, but excluding any consequentialdamages) incurred by Landlord, as a result of any claim by the tenant under theNixon Lease or the tenant under the ESI Lease to the extent based in whole orin part upon the restrictions on leasing set forth in this Section 48;provided, however, that in the event that Tenant notifies Landlord in aTenant’s Section 48 Response, within the five (5) business day period followingTenant’s receipt of a Landlord’s Section 48 Notice, as set forth in the secondparagraph of this Section 48, that Tenant has waived the provisions of thisSection 48 which prohibit such proposed assignment or sublease solely withrespect to such proposed assignment or sublease, then Landlord shall not beobligated to disapprove or withhold its consent to such proposed assignment orsublease and shall not be entitled to the indemnification from Tenant providedfor in this Section 48 with respect to such assignment or sublease.  Landlord’s covenant as set forth in thisSection 48 shall cease and terminate and be of no further force or effect ifTenant assigns this Lease except pursuant to Section 23.F. hereof. Landlordhereby represents and warrants to Tenant that as of the date of its executionof this Lease, it has not entered into any lease with a tenant which wouldviolate the terms and provisions of this Section 48.

 

Landlord covenants and agrees, that, within fifteen (15) days followingthe date of this Lease, Landlord shall issue to the tenant under the NixonLease and the tenant under the ESI Lease letters advising each of said tenantsthat pursuant to a provision in each such tenant’s lease which is comparable toSection 30.C. of this Lease, Landlord has granted an exclusive right to Tenantto conduct in the Building the business of a human resources consulting firm orhuman capital consulting firm specializing in benefits, healthcare, and humanresource technology.  Within five (5)business days following Landlord’s receipt of documentary evidence that both ofsuch letters have been delivered, Landlord shall deliver to Tenant a writtencertification that such delivery has occurred, which certification

 

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shall be accompanied by a copy of the form ofletter that was issued to the tenant under the Nixon Lease and the tenant underthe ESI Lease.

 

**49.****                              ****TERMINATION OPTION.**

 

Notwithstanding anything in this Lease to the contrary, Tenant shall have theright, exercisable at Tenant’ssole option, to terminate this Lease, said right of Tenant to beexercisable by giving notice thereof (the “Termination Notice”) to Landlord,which Termination Notice shall set forth a date of termination (the“Termination Date”) which is specified to be the last day of the seventh (7th)Lease Year or the last day ofthe ninth (9th) Lease Year, and which notice shall begiven, if at all, not later than eighteen (18) months prior to the TerminationDate specified in the Termination Notice. In the event that Tenantexercises its termination option hereunder, this Lease shall continue in fullforce and effect until the Termination Date, whereupon Tenant shall surrenderpossession of the Premises (including, but not limited to, any space leased byTenant pursuant to Sections 41 and 47 hereof) in accordance with the provisionsof this Lease, this Lease shall terminate with respect to the Premises(including, but not limited to, any space leased by Tenant pursuant to Sections41 and 47 hereof) as if the Termination Date were the Lease Expiration Date setforth herein, and all Rent shall be prorated as of the Termination Date, andneither party shall have any obligations hereunder accruing after theTermination Date.  In the event Tenant exercises its termination optionhereunder, then,on the date which occurs sixty(60) days prior tothe Termination Date,Tenant shall pay to Landlordan amount equal to the sum of (a) the then unamortized sum (i.e., amortizedover the initial twelve (12) year Term of this Lease, at the rate of eightpercent (8%) per annum) of (i) the Tenant Allowance (as such term is defined inExhibit C excluding any increasein the amount of same pursuant to the terms of Exhibit C or the terms of thisLease and any tenant allowance with respect to Expansion Space orAvailable Space, if any, paidby Landlord to Tenant, (ii) all reasonable brokerage commissions paid by Landlord withrespect to this Lease and any amendments hereto and (iii) all reasonableattorneys’ fees paidby Landlord in connection with the preparation and negotiation of this Leaseand any amendments hereto (which attorneys’ fees shall not exceed Twenty-FiveThousand Dollars ($25,000.00) with respect to the initial Lease); together with(b) the amount of six (6) times the amount of the Monthly Base Rent for theseventh Lease Year if theTermination Date is the last day of the seventh (7th) Lease Year, or the amount of three(3) times the amount of the Monthly Base Rent for the ninth (9th)Lease Year if the Termination Date is the last day of the ninth (9th)Lease Year (the items set forth in clauses (a) and (b) of thisSection 49 being hereinafter collectively referred to as the “TerminationExpenses”).  The Termination Expensespayable by Tenant to Landlord pursuant to the immediately preceding sentenceshall be in addition to the Rent coming due between the date of the TerminationNotice and the Termination Date.

 

**50.****                              ****CONTRACTION OPTION.**

 

Notwithstanding anything in this Lease to the contrary, Tenant shall have theright, exercisable at Tenant’ssole option, to terminate this Lease,effectiveas of the last day of theseventh (7th) Lease Year or the last day of the ninth (9th)Lease Year, with respect to up to two (2) floors in the Premises (such space with respect to which Tenantelects toterminate this Lease is hereinafter referred to as the “ContractionSpace”).  Tenant may exercise such rightby deliveringnotice thereof (the “Contraction Notice”) to Landlord, which Contraction Noticeshall set forth a date of termination (the “Contraction Date”) which isspecified to be the last day the seventh (7th) Lease Year or the last day of the ninth (9th)Lease Year, and which notice shall be given, if at all, not laterthan sixteen (16) months prior tothe Contraction

 

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Date specified in the ContractionNotice.  The Contraction Space shall (i) be located on the upper-most floorsof the Building on which the Premises is located or on the lower-most floors ofthe Building on which the Premises is located, (ii) be contiguous space and(iii) with respect to any portion of the Contraction Space located on a floor uponwhich Tenant shall retain space as part of the Premises following theContraction Date, the portion of the Premises which is not part of theContraction Space located on such floor shall be in a location that isreasonably marketable following the deduction of the Contraction Space.  In the event that Tenant exercises itscontraction option under thisSection 50, (A) this Lease shall continue in full force andeffect with respect to theContraction Space until the Contraction Date, whereupon Tenantshall surrender possession of the Contraction Space in accordance with theprovisions of this Lease, (B)this Lease shall terminate with respect to only the Contraction Space as if the ContractionDate were, as to the Contraction Space, the Lease Expiration Date set forthherein, and (C)all Rent pursuant to Section 5 hereof with respect to the Contraction Spaceshall be prorated as of the Contraction Date, and neither party shall have anyobligations hereunder accruing after the Contraction Date with respect to the ContractionSpace.  In the event Tenant exercises its contraction optionunder this Section 50, thenTenant shall payto Landlord on the date whichoccurs sixty (60) days prior to the Contraction Date, the followingamounts:

 

(I).                                 with respect to the Premises initiallydemised under this Lease (the “Initial Premises”), but not any Expansion Space,First Refusal Space or Available Space which is leased by Tenant (hereinaftercollectively referred to as “Future Leased Space”), an amount equal to the sumof (a) the then unamortized sum (i.e., amortized over the initial twelve (12)year Term of this Lease, at the rate of eight percent (8%) per annum) of thePro Rata Portion (as hereinafter defined) of (i) the Tenant Allowance (asdefined in Exhibit C) as to the Initial Premises paid by Landlord to Tenant, (ii)all reasonable brokeragecommissions paidby Landlord with respect to this Lease and any amendments hereto which relateto the Initial Premises, excluding amendments which relate to Future LeasedSpace, and (iii) all reasonable attorneys’ fees paid by Landlord in connection with the preparationand negotiation of this Lease (which attorneys’ fees shall not exceedTwenty-Five Thousand Dollars ($25,000.00)) with respect to this Lease); and

 

(II).                             with respect to all Future Leased Space, anamount equal to the sum of (a) the then unamortized sum [i.e., amortized overthe term of this Lease with respect to the particular portion of the FutureLeased Space at issue, at the rate of eight percent (8%) per annum] of the ProRata Portion (as hereinafter defined) of (i) any tenant allowance with respectto such Future Leased Space paid by Landlord to Tenant, (ii) all reasonablebrokerage commissions paid by Landlord with respect to such Future LeasedSpace, and (iii) all reasonable attorneys’ fees paid by Landlord in connectionwith the preparation and negotiation of any amendment to this Lease withrespect to such Future Leased Space;

 

togetherwith (b) (i) the amount of two(2) times theamount of the Monthly Base Rent for the seventh (7th) Lease Year) allocable to the Contraction Spacein the event the Contraction Date is the last day of the seventh (7th)Lease Year, or (ii) the amount of the Monthly Base Rent for one month for theninth (9th) Lease Year allocable to the Contraction Space if theContraction Date is the last day of the ninth (9th) Lease Year and(c) (i) in the event that the Contraction Date is the last day of the seventh(7th) Lease

 

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Year, an amount which is equal to 60/144thsof the Tenant’s Current Leases Termination Amount (as defined in Section 52hereof), or (ii) in the event that the Contraction Date is the last day of theninth (9th) Lease Year, an amount which is equal to 36/144ths of theTenant’s Current Leases Termination Amount (the items set forth in clauses (a), (b) and(c) of this Section 50 being hereinafter collectively referred to as the“Contraction Expenses”).  As used inthis Section 50, the term “Pro Rata Portion” shall mean with respect to theInitial Premises, a fraction, the numerator of which is the rentable squarefootage of the Contraction Space which is included in the Initial Premises andthe denominator of which is the rentable square footage comprising the Premisesas of the Lease Commencement Date or, should a remeasurement of such InitialPremises occur pursuant to Section 1.B. hereof, then as of the date that theremeasured rentable square footage of the Initial Premises is finallydetermined, and, with respect to any Future Leased Space, a fraction, thenumerator of which is the rentable square footage of the Contraction Spacewhich is included in the Future Leased Space and the denominator of which isthe rentable square footage comprising the portion of the Future Leased Spaceas to which such Pro Rata Portion is applicable.  The Contraction Expenses payable by Tenant to Landlord pursuantto the immediately preceding sentence shall be in addition to the Rent comingdue between the date of the Contraction Notice and the Contraction Date. In the event Tenant exercises its option to contract the Premises underthis Section 50 with respect to a portion of the Premises located on a floor ofthe Building upon which Tenant will retain space as part of the Premiseslocated on such floor following the Contraction Date, then Tenant shall beresponsible to construct Common Areas on the subject floor to a reasonablestandard, at Tenant’s sole expense.

 

**51.****                              ****RESTRICTION OF USE BY GSA.**

 

Tenanthereby agrees that it shall not, at any time during the Term, assign this Leaseto, or sublease or license the use of any portion of the Premises to, theUnited States General Services Administration (“GSA”) or any agency or entityon whose behalf GSA negotiates or executes leases or any federal agency whichhas independent leasing authority (each of the foregoing being referred to inthis Lease as a “GSA Tenant”).

 

**52.****                              ****PAYMENT OF TENANT’STERMINATION FEE UNDER TENANT’S CURRENT LEASES.**

 

Landlordacknowledges that Tenant in connection with the exercise by Tenant of itsrights to terminate Tenant’s Current Leases in accordance with their terms, hasan obligation to pay, pursuant to Tenant’s Current Leases, as defined inSection 2.F.(4) hereof, a termination fee of Three Million One Hundred Sixty-ThreeThousand Three Hundred Seventy-Eight and 88/100 Dollars ($3,163,378.88) (the“Tenant’s Current Leases Termination Amount”). Notwithstanding anything to the contrary contained in this Lease,Landlord shall pay to Tenant on or before said January 10, 2005, the Tenant’sCurrent Leases Termination Amount. Tenant covenants and agrees that, following Tenant’s receipt of saidpayment from Landlord, Tenant shall pay the Tenant’s Current Leases TerminationAmount to the landlord under Tenant’s Current Leases not later than the timerequired under Tenant’s Current Leases, and, following such payment by Tenantpursuant to Tenant’s Current Leases, Tenant shall, on or before February 10,2005, deliver to Landlord evidence of such payment, either in the form of a receipt,a copy of Tenant’s check therefor or a copy of the confirmation of the wiretransfer therefor, as the case may be.

 

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Deed ofLease under seal as of the day and year first above written.****

 
| WITNESS:     | LANDLORD:            |
|--------------|----------------------|
|         |                 |   |
|         |                 | **ARLINGTON OFFICE, L.L.C.,** |
|         |                 | a Delaware  limited liability company |
|         |                 |   |
|         |                 | By: | JBG/Company Manager, L.L.C., |   |
|         |                 |   | a Delaware limited liability company |   |
|         |                 |   | Its Managing Member |   |
|         |                 |   |   |   |
| By:          | /s/ Sharon M. Oliver |   |   | By: | /s/ Brian P. Coulter | [SEAL] |
| Name:        | Sharon M. Oliver     |   |   |   | Brian P. Coulter |   |
|         |                 |   |   | Managing Member |   |
|         |                 |   |   |   |
|         |                 |   |   |   |
| WITNESS:     | TENANT:              |   |
|         |                 |   |   |   |
|         |                 | **WATSON WYATT & COMPANY,** |
|         |                 | a Delaware corporation |
|         |                 |   |   |   |
| By:          | /s/ Michael Brendes  |   | By: |   | /s/ Carl  D.. Mautz | [SEAL] |
| Name:        | Michael Brendes      |   |   | Carl D.. Mautz |   |
|         |                 |   | Vice President and Chief Financial Officer |   |
|         |                 |   |   |   |
|         |                 |   |   |   |
| **230638v9** |                 |   |   |
|              |                      |  |  |  |  |  |  |  |  |

 

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