Exhibit 10.11


 


Execution Copy


 


******************************** 


 


SUBLEASE AGREEMENT 


 


BETWEEN


 


THE CORPORATE EXECUTIVE BOARD COMPANY,


 


a Delaware corporation


 


(Sublessor)


 


AND


ROSETTA STONE LTD.,


 


a Virginia corporation


 


(Subtenant)


 


 


Waterview Building


1919 North
Lynn Street, Arlington, Virginia


 


 


Dated: October 6, 2008


 


********************************


 

















 


SUBLEASE AGREEMENT


 


THIS SUBLEASE AGREEMENT (this “Sublease”)  is  made and entered into as of
the 6th day of October 2008, by and between (i) THE CORPORATE EXECUTIVE BOARD COMPANY, a Delaware corporation (“Sublessor”), and
(ii) ROSETTA STONE LTD., a
Virginia corporation (“Subtenant”).


 


RECITALS:


 


A.            Sublessor and Paramount Group, Inc. (as
successor in interest to Waterview, L.P.) (“Landlord”)  are parties
to that certain Deed of Lease dated as of August 16, 2004 (“Prime Lease”), pursuant to
which Sublessor (as Tenant thereunder) leases floors 4 – 24 in the building
located at 1919 North Lynn Street, Arlington, Virginia, (the “Building”), at the rent and subject to the terms and
conditions set forth in the Prime Lease; and


 


B.            Subtenant desires to sublease from Sublessor
the space located on the seventh (7th) floor of the Building that is depicted
on Exhibit A attached hereto
(the “Sublet Premises”)  containing
approximately 31,281 rentable square feet, which constitutes all the rentable
area on the 7th floor of the Building, upon the terms and conditions set forth
herein.


 


NOW THEREFORE, in consideration of the mutual covenants set forth herein, the parties
hereto agree as follows:


 


1.             Recitals: Incorporation of
Terms. The foregoing
recitals, and, subject to the provisions of Section 6 hereof, the terms
and provisions of the Prime Lease, are incorporated herein by reference and are
made a substantive part of this Sublease. Capitalized terms not defined herein
shall have the meanings ascribed to such terms in the Prime Lease. This
Sublease is subject and subordinate to the Prime Lease in all respects. For all
purposes under this Sublease, the rentable area of the Sublet Premises is
hereby stipulated and agreed to be 31,281 rentable square feet and the rentable
area of the Building is hereby stipulated and agreed to be 625,062 rentable
square feet, which rentable areas shall not be subject to further calculation, except
in the event of a change in the physical size of any such space.


 


2.             Sublet Premises.


 


(a)           Sublease; Condition of
Sublet Premises. As of the
Sublease Commencement Date (defined in Section 3 below), Sublessor shall
sublease to Subtenant and Subtenant shall sublease from Sublessor, the Sublet
Premises upon the terms and conditions set forth herein. Sublessor shall tender
possession of the Sublet Premises to Subtenant on the Sublease Commencement
Date, vacant of occupants, with all mechanical, electrical and plumbing systems
servicing the Sublet Premises in good working order and condition as of the
Sublease Commencement Date, and otherwise in broom-clean condition. Subtenant
has fully inspected the Sublet Premises and Subtenant shall accept the Sublet Premises
in its “as is,”
“where-is” condition as of the date hereof. Subtenant
acknowledges that, except as specifically set forth in this Sublease, no
representations, statements or warranties, express or implied, have been made
by or on behalf of Sublessor with respect to the condition of the Sublet
Premises or the Building, and that Sublessor has made no representation,
statement or warranty as to the leasing of any personal property, fixtures, or
equipment in the Sublet Premises other than the 


 


1

















 


Walls/Partitions,
Systems Furniture, and Personal Property (as each such term is defined below).
Upon written request from Subtenant, Sublessor shall use commercially
reasonable efforts, at no cost to Sublessor, to enforce any construction or
materials warranties pertaining to the Sublet Premises (i) that Sublessor
has obtained from Landlord’s initial construction as part of Landlord’s Work
(defined in Paragraph 1.A. of Exhibit C of the Prime Lease), if any and
(ii) that Sublessor has obtained from Tenant’s General Contractor (as
defined in Paragraph 4.E.(2) of Exhibit C of the Prime Lease) in
connection with the Tenant’s General Contractor’s performance of Tenant’s Work
(as defined in Paragraph 4.D. of Exhibit C of the Prime Lease), if any.


 


(b)           Systems Furniture and
Modular Walls/Partitions. The
configuration of the Sublet Premises includes modular walls and partitions,
approximately as shown on Exhibit B-1, attached
hereto, (“Walls/Partitions”)  and office systems furniture also shown on Exhibit B-1, attached hereto (“Systems
Furniture”).
Subtenant shall
have the right to use the Walls/Partitions and Systems Furniture as part of the
Sublet Premises at no additional charge, subject to the conditions hereof.
Notwithstanding the foregoing, the Walls/Partitions and Systems Furniture shall
remain the property of Sublessor at all times during the Sublease Term. Prior
to beneficially occupying the Sublet Premises, Subtenant shall, at its sole
cost and expense, modify the configuration of the Walls/Partitions to construct
a reception area in the Sublet Premises, which modification may include removal
of some Walls/Partitions and installation of additional Walls/Partitions. Such
modifications shall be performed in accordance with the provisions of this
Sublease, including, without limitation, Section 7 hereof. Subtenant shall
be responsible to keep and maintain the Walls/Partitions and Systems Furniture
in good order and condition, reasonable wear and tear excepted, and shall insure
the Walls/Partitions and Systems Furniture under the special cause of loss
business property insurance required by Section 17.A.(1) of the Prime
Lease, naming Sublessor as loss payee under such policy for the
Walls/Partitions and Systems Furniture. Subtenant shall have the right to
perform minor modifications to the Systems Furniture in order to accommodate
additional employees in the Sublet Premises, so long as (i) Subtenant has
obtained the prior written consent of Sublessor with respect to the plans and
specifications for such modifications (which consent may be granted or withheld
in Sublessor’s sole discretion, acting in good faith), (ii) Subtenant
employs vendors and contractors designated by Sublessor in connection with the
performance of such Systems Furniture modification, and (iii) Subtenant
performs such modifications in accordance with the provisions of this Sublease,
including Section 7 hereof and removes any such modifications as set forth
in Section 15 hereof.


 


(c)           Office Furniture. In consideration for the rents and other
promises contained in this Sublease, Sublessor shall lease to Subtenant (and
Subtenant shall lease from Sublessor) the furniture and equipment listed on Exhibit B-2 attached hereto (the “Personal Property”)  at no extra cost or expense to Subtenant. At
all times during the Sublease Term, Subtenant shall maintain and keep in good
order and condition the Personal Property. The Personal Property shall remain
in the Sublet Premises upon Sublease termination, and Subtenant shall surrender
the Personal Property to Sublessor in the same condition as on the Sublease
Commencement Date, reasonable wear and tear excepted. Subtenant shall be
responsible to insure the Personal Property under the special cause of loss
business property insurance required by Section 17.A.(1) of the Prime Lease,
naming, Sublessor as loss payee under such policy for the Personal Property.


 


2

















 


3.             Term.


 


(a)           Sublease Term. The term of this Sublease (the “Sublease Term”)  shall begin on the date the Sublessor
tenders possession of the Sublet Premises to Subtenant in the condition
required by Section 2(a) hereof, which date shall be not later than
November 3, 2008 (the “Sublease Commencement Date”). Subtenant’s
obligation to pay Rent shall commence on January 1, 2009 (the “Sublease Rent Commencement Date”). The Sublease
Term shall terminate at midnight on December 31, 2013 (the “Sublease Expiration Date”), subject to earlier termination
pursuant to the terms hereof. Notwithstanding anything contained in this
Sublease to the contrary, if Sublessor has not tendered possession of the
Sublet Premises to Subtenant on or before the expiration of three
(3) calendar months after the anticipated delivery date (i.e., by February 2,
2009), then Subtenant shall have the right to terminate this Sublease by
delivering written notice of such termination to Sublessor, which notice must
be delivered within ten (10) days after the expiration of the three
(3) calendar month period (i.e., by February 12, 2009), provided,
however, if Sublessor tenders possession of the Sublet Premises prior to
delivery of such notice from Subtenant, then the termination right shall be
null and void and of no force or effect.


 


(b)           Early Entry. Provided no Default then exists, from and
after October 1, 2008 through and including November 2, 2008 (such period,
the “Early Access Period”), Sublessor
shall permit Subtenant reasonable access to the Sublet Premises (subject to the
provisions of this subsection (b)) for purposes of surveying telecommunications
requirements and for installing, at Subtenant’s sole cost and expense, voice
and data systems, telecommunications cabling and wiring (subject to the
provisions of this Sublease, including, without limitation, Section 15 of
this Sublease) in the Sublet Premises. Such access to the Sublet Premises shall
be at no charge to Subtenant, but in no event shall Subtenant be permitted to
commence business operations in the Sublet Premises prior to the Sublease
Commencement Date. Notwithstanding the foregoing, neither Subtenant nor any
agent, contractor, representative, employee or invitee of Subtenant
(collectively, “Invitee”)  shall enter the Sublet Premises
during the Early Access Period during those times that Sublessor determines, in
its reasonable discretion, that such entry will interfere with activities of
Sublessor or Sublessor’s agents or employees in the Sublet Premises. In such
event, Sublessor shall notify Subtenant of specific times during which
Subtenant may make such entry. During the Early Access Period, neither
Subtenant nor any of its Invitees shall delay or otherwise inhibit the work
being performed in the Sublet Premises by Sublessor or Sublessor’s agents or
employees. Sublessor shall have no responsibility with respect to any items
placed in the Sublet Premises by Subtenant or any Invitee prior to the Sublease
Commencement Date. Subtenant must schedule with Sublessor, in advance, any
access to the Sublet Premises during the Early Access Period. Subtenant shall
reimburse Sublessor, within thirty (30) days after invoice, all costs
associated with access during the Early Access Period, including, without
limitation, engineering charges or overtime/extra hours service charges
associated with non-business hour access to the Building. Subtenant shall
remove all debris and materials promptly (and in any case no later than the end
of each day), and shall use diligent efforts to minimize disruption to the
Sublet Premises during times of such early access. Subtenant’s access to
telecommunications closets in the Building Common Area must be scheduled with
Landlord and performed in accordance with Building rules regarding such
access; Sublessor shall use commercially reasonable efforts (at no cost to
Sublessor) to assist in scheduling such entry, but Sublessor shall not be
liable for any delays or


 


3

















 


denials
of Landlord in granting such access. Notwithstanding anything in this Sublease
to the contrary, all of the provisions of this Sublease (including, without
limitation, all insurance, indemnity and utility provisions) shall apply during
the Early Access Period, except that during such period Subtenant shall not be
obligated to pay Annual Base Subrent or Additional Subrent.


 


4.             Rent.


 


(a)           Base Subrent. Beginning on the Sublease Rent Commencement
Date, and throughout the Sublease Term, Subtenant shall pay to Sublessor, as
base subrent hereunder, an annual rental (“Annual Base Subrent”)  for each Sublease Year in an amount set forth
below, which Annual Base Subrent shall increase as set forth below. For all
purposes of this Sublease, the term “Sublease Year”  shall mean, with respect to
the first Sublease Year, the period commencing on the Sublease Rent
Commencement Date and ending at midnight on the date immediately prior to the
first anniversary of the Sublease Rent Commencement Date, and, with respect to
future Sublease Years, the one year periods ending on the anniversary of such
date thereafter. Annual Base Subrent through the Sublease Term shall be as
follows:


 


	
  Sublease Year

  	
   

  	
  Annual Base

  Subrent per

  Rentable Square

  Foot

  	
   

  	
  Annual Base

  Subrent

  	
   

  	
  Monthly Installment

  of Annual Base

  Subrent

  	
   

  
	
  1

  	
   

  	
  $

  	
  45.00

  	
   

  	
  $

  	
  1,407,645.00

  	
   

  	
  $

  	
  117,303.75

  	
   

  
	
  2

  	
   

  	
  $

  	
  46.35

  	
   

  	
  $

  	
  1,449,874.30

  	
   

  	
  $

  	
  120,822.85

  	
   

  
	
  3

  	
   

  	
  $

  	
  47.74

  	
   

  	
  $

  	
  1,493,354.90

  	
   

  	
  $

  	
  124,446.24

  	
   

  
	
  4

  	
   

  	
  $

  	
  49.17

  	
   

  	
  $

  	
  1,538,086.70

  	
   

  	
  $

  	
  128,173.89

  	
   

  
	
  5

  	
   

  	
  $

  	
  50.65

  	
   

  	
  $

  	
  1,584,382.60

  	
   

  	
  $

  	
  132,031.88

  	
   

  



 


(b)           Subrent Payments. The Annual Base Subrent for each Sublease
Year shall be payable by
Subtenant to Sublessor in equal monthly installments in advance. All payments
to be made by Subtenant hereunder shall be payable to Sublessor at the address
set forth in Section 17, or at such other address as Sublessor shall
designate in writing, by wire transfer of funds. All payments of Annual Base
Subrent and Additional Subrent (hereafter defined) hereunder shall be made by
Subtenant without demand, abatement, set-off, offset or reduction of any kind.
Contemporaneously with its execution of this Sublease, Subtenant shall pay to Sublessor
the first monthly installment of Annual Base Subrent due hereunder. All
payments of Annual Base Subrent shall be due and payable on the first day of
each and every calendar month during the Sublease Term. Subtenant’s obligation
to pay Annual Base Subrent and Additional Subrent hereunder which accrued
during the Sublease Term shall survive the expiration or earlier termination of
this Sublease. In the event that the Sublease Term commences on a date other
than the first day of a calendar month or expires on a day other than the last
day of a calendar month, Annual Base Subrent and/or Additional Subrent owed for
less 


 


4

















 


than
a full month shall be prorated on the basis of a 30-day month. In the event
that any Annual Base Subrent or Additional Subrent is not paid when due,
Subtenant shall pay to Sublessor interest thereon from the date due until paid
at the Default Rate (as defined in the Prime Lease), compounded monthly, and if
any such amount is not paid within five (5) business days after such
payment is due, Subtenant shall pay to Sublessor, in addition to the accrued
interest specified above, a late charge in an amount equal to five percent (5%)
of such overdue amount; provided, however, that no late charge shall be
assessed for the first occasion (only) in any consecutive twelve (12) month
period that the Annual Base Subrent or Additional Subrent is not paid when due
so long as such overdue amount is paid by Subtenant within five
(5) business days after written notice of such overdue amount from
Sublessor (if not so paid within such five (5)-business day period, then the
late charge shall apply to the overdue amounts).


 


(c)           Additional Subrent. For purposes hereof, “Additional Subrent”  means
Pass-Through Expense Rental (hereafter defined) and all other amounts (other
than Annual Base Subrent) payable by Subtenant to Sublessor pursuant to this
Sublease. Commencing on the Sublease Rent Commencement Date, and for each
calendar year thereafter that commences during the Sublease Term, Subtenant
shall pay to Sublessor, as additional rent (“Pass-Through Expense Rental”), Subtenant’s
Proportionate Share (hereafter defined) of the amounts payable by Sublessor
pursuant to Section 5.C. of the Prime Lease as Sublessor’s proportionate
share of (i) Operating Expenses incurred during each calendar year during
the Term, to the extent such Operating Expenses exceed the Operating Expenses
incurred during the Operating Expenses Base Year, and (ii) Real Estate Tax
Expenses incurred during each calendar year during the Term, to the extent such
Real Estate Tax Expenses exceed the Real Estate Tax Expenses incurred during
the Real Estate Tax Expenses Base Year. For purposes hereof, “Subtenant’s Proportionate Share”  shall be five
percent (5.0%) (being the percentage which the rentable area of the Sublet
Premises bears to the 625,062 square feet of rentable area leased by Sublessor
pursuant to the Prime Lease). Subtenant shall pay such amounts to Sublessor, as
Additional Subrent, at the same time and in the same manner (including
estimated monthly installments) as provided in Section 4  and
5.D. of the Prime Lease and with the same adjustments as provided in
Section 5 of the Prime Lease. Sublessor shall, within a reasonable period
of time following Sublessor’s receipt of the statements described in Sections
5.D.(2) and 5.E. of the Prime Lease (Sublessor shall use reasonable
efforts to deliver such statements to Subtenant within thirty (30) days after
receipt thereof from Landlord), deliver written notice to Subtenant of the
amount of Subtenant’s Pass-Through Expense Rental (estimated amounts and actual
amounts, as the case may be). Sublessor’s failure to timely deliver the
aforesaid statements shall in no way reduce Subtenant’s obligations to pay
Additional Subrent hereunder; the parties hereto acknowledge that Subtenant’s
accounting system requires written invoicing for bill payment.


 


(d)           Inspection Rights. Sublessor shall have the exclusive right (and
Subtenant shall not have the right) to review or audit the Landlord’s books and
records with respect to Annual Statements pursuant to Section 5.G. of the
Prime Lease, provided that if Sublessor conducts any such audit, Sublessor
shall make the results of such audit available to Subtenant. Sublessor shall
make available to Subtenant, as reasonably requested by Subtenant from time to
time, all information relating to Operating Expenses and Real Estate Tax
Expenses that is in the possession of Sublessor and which Sublessor is not
prohibited from disclosing pursuant to any written agreement. If Landlord
reimburses Sublessor for any overcharges pursuant to Section 5.G. of the
Prime Lease, which overcharges were also paid by Subtenant


 


5

















 


hereunder,
then Sublessor shall reimburse Subtenant for the amount of the overcharge
applicable to Subtenant’s overpayment. If Sublessor is responsible to pay
Landlord for any undercharges pursuant to Section 5.G. of the Prime Lease,
which undercharges were applicable to Additional Subrent paid by Subtenant
hereunder, then Subtenant shall pay Sublessor the amount of the undercharge
applicable to Subtenant’s underpayment, within thirty (30) days after invoice
therefor.


 


5.             Permitted Use; Access;
Occupancy Restrictions. The  Sublet Premises shall be used only for
general office use in accordance with all applicable Laws and for no other
purpose. Subject to the provisions of the Prime Lease and this Sublease,
Sublessor shall not interfere with Subtenant’s accessing the Sublet Premises in
accordance with Section 12.A.(7) of the Prime Lease. Subtenant shall maintain a
ratio of not more than one Occupant (as defined below) for each one thirty-six
(136) square feet of rentable area in the Sublet Premises. The term “Occupant”  shall mean employees, visitors, contractors
and other people that are stationed at and/or occupy the Sublet Premises
(including any of the foregoing with respect to a sub-subtenant), but shall not
include people not employed by Subtenant that deliver or pick up mail or other
packages at the Sublet Premises, employees of Landlord or Sublessor or
employees of Landlord’s (or Sublessor’s) agents or contractors. Sublessor shall
have the right to periodically visit the Sublet Premises in order to track the
number of Occupants arriving at the Sublet Premises. Subtenant acknowledges
that increased numbers of Occupants causes additional wear and tear on the
Sublet Premises and the Common Areas, additional use of electricity, water and
other utilities, and additional demand for other Building services.


 


6.             Compliance with Prime Lease.


 


(a)           Obligations under the Prime
Lease. Subtenant hereby
acknowledges that it has read
the Prime Lease, a true, correct and complete copy of which (redacted to delete
certain business or confidential terms) is attached hereto as Exhibit C and, except as set forth
below, is incorporated herein by reference as fully as if the terms and
provisions thereof were set forth herein. Subtenant agrees to assume the same
responsibilities and duties that the Sublessor has as “Tenant” to the Landlord
with respect to the Sublet Premises, excepting matters relating to the
identification of the Sublet Premises, and the amount and due dates of the
rentals payable therefor, and other excluded terms set forth hereinbelow;
provided, however, in no event shall Sublessor be deemed to have assumed the
responsibilities of the Landlord under the Prime Lease, including, without
limitation, any repair or maintenance obligations, any obligation of Landlord
to comply with Laws, any breach of representations or warranties of Landlord,
any Landlord indemnity, any obligation to provide services or any obligation to
restore the Building and/or Sublet Premises following any damage, destruction
or condemnation, nor shall Sublessor be responsible for the compliance of the
Landlord with the provisions of the Prime Lease. The foregoing notwithstanding,
upon the written request of Subtenant, Sublessor agrees to use commercially
reasonable efforts to enforce its rights under the Prime Lease against Landlord
with respect to the Sublet Premises, provided that: (A) to the extent such
enforcement of rights pertains to all or a substantial portion of the premises
leased by Sublessor pursuant to the Prime Lease, including the Sublet Premises,
Subtenant shall reimburse Sublessor within thirty (30) days following written
demand for Subtenant’s Proportionate Share of all out-of-pocket costs and
expenses (including, without limitation, reasonable attorneys’ fees) incurred
by Sublessor in attempting to enforce the Prime Lease; and (B) to the
extent the enforcement of rights pertains


 


6

















 


solely
to the Sublet Premises, Subtenant shall reimburse Sublessor within thirty (30)
days following written demand for the full amount of all such out-of-pocket
costs and expenses (including, without limitation, reasonable attorneys’ fees)
incurred by Sublessor in attempting to enforce the Prime Lease.


 


(b)           Incorporation of Prime Lease
Provisions. In furtherance
of the provisions of Section 6(a), except as otherwise specifically
provided for herein, or unless the context may otherwise require (such as,
without limiting the foregoing, the Landlord Provisions (as defined below)),
the subletting effected hereby shall be upon all of the terms and conditions of
the letting effected by the Prime Lease, except the provisions of the Prime
Lease relating to “Landlord” shall be deemed to refer to Sublessor, the
provisions thereof relating to “Tenant” shall be deemed to refer to Subtenant,
the provisions of the Prime Lease relating to the Premises (as defined in the
Prime Lease) shall be deemed to refer to the Sublet Premises, the provisions of
the Prime Lease referring to the Lease shall be deemed to refer to this
Sublease, and the provisions of the Prime Lease relating to “Rent” shall be
deemed to refer to Annual Base Subrent and Additional Subrent. The foregoing
notwithstanding, the following provisions of the Prime Lease shall not be
applicable to this Sublease: Section 2.A., B.,  C., D., and F.,
Section 5.A. and D.(1), Section 9.A.(i), (ii), D., and E.,
Section 10.A. and the second sentence of 10.B., the third and fourth
sentences of Section 12.B. (i.e., remedies for failure to provide
services), the right to discuss access controls and procedures set forth in
Section 12.A.(7), A.(8), and A.(10), Section 12.C.,
Section 14.C., Section 17.A.(2), any reference to Tenant Allowances,
including those set forth in Section 25, the last sentence of
Section 25, Section 26.B., the last two sentences of
Section 26.A., Sections 35, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46,
Exhibits B-1, B-2, C., F., G., I., J., K., L., M., N. and Schedules C-3 and
C-4. For clarity, the following are examples of provisions in which the term
“Landlord” means and refers to the Landlord and the term “Tenant” means and
refers to the Sublessor (“Landlord
Provisions”),
without limiting the reference above regarding context:
Section 4.D., Section 5.D.(2), E., G., the right to require Landlord
to contest taxes in F, Section 6.A., Section 8.A., all references to
Landlord in Section 12.E. shall refer only to the Landlord,
Section 16, Section 17.B. and D., Section 21, Section 23,
Section 33, 34, and Section 36.D. Subtenant shall adhere to (i) all
rules and regulations for the Building reasonably promulgated from time to
time by Sublessor and (ii) all Rules and Regulations set forth on
Exhibit D  of the Prime Lease (as may be
modified in accordance with the Prime Lease), without regard to the asterisks
contained therein. Notwithstanding anything contained in this Sublease or the
Prime Lease to the contrary, Subtenant is not, and hereby waives any claim it
may have to be, a third party beneficiary of any of Sublessor’s rights as
Tenant under the Prime Lease. With respect to the relationship between the
Sublessor and the Subtenant, the express terms and conditions of the Sublease
shall govern (and where the Sublease is silent, the Prime Lease shall govern);
provided, however, if there is a conflict between the rights and obligations of
Subtenant under this Sublease and the obligations of Sublessor as Tenant under
the Prime Lease that could reasonably cause Sublessor to be in default under
the Prime Lease, then the terms of the Prime Lease shall govern.


 


(c)           Avoidance of Prime Lease
Termination. Sublessor and
Subtenant each shall take no action or permit anything to be done which would
constitute a default under, or cause a termination of, the Prime Lease
(provided that Sublessor shall be entitled to terminate the Prime Lease
pursuant to Section 9 of this Sublease in connection with the exercise of
its rights following any condemnation or casualty affecting the Sublet
Premises, pursuant to a


 


7

















 


Landlord
Default under the Prime Lease, and pursuant to Section 12.B. of the Prime
Lease for Landlord’s failure to provide services). Each of Sublessor and
Subtenant shall indemnify, defend and hold the other harmless from and against
any loss, cost, damage or expense (including, without limitation, court costs
and reasonable attorneys’ fees) incurred as a result of a breach by Sublessor
or Subtenant, as the case may be, of the foregoing covenant.


 


(d)           Actions Requiring Landlord
Consent. Whenever Subtenant
desires to take any action that would require the consent of Landlord under the
Prime Lease, Subtenant shall not take such action unless the consent of both
Landlord and Sublessor to such action is obtained.


 


7.             Alterations, Electrical
Usage, Supplemental HVAC.


 


(a)           Alterations.


 


(i)         Subtenant shall not make or permit to be made
any alterations, additions, improvements, or modifications to the Sublet
Premises (including, without limitation, modifications to the configuration of
the Walls/Partitions or Systems Furniture) (any such alteration, addition, improvement
or modification, an “alteration”)  without (i) the prior written consent of Sublessor, acting in its
sole and absolute judgment, both as to whether the alterations may be made and
as to how and when they will be made (provided that Sublessor’s consent shall
not be unreasonably withheld so long as such alterations (a) are not
visible from the exterior of the Sublet Premises, (b) do not affect either
the Building Structure or any Building System), and (c) are not
inconsistent with the standards of a First-Class Building (as determined
by each of Sublessor and Landlord in its sole and absolute discretion) and
(ii), to the extent required by the Prime Lease, the prior written consent of
Landlord. Any alterations shall be made at Subtenant’s expense, in a good and
workmanlike manner by contractors and subcontractors approved by Sublessor
(acting reasonably) and, if required by the Prime Lease, by Landlord, provided,
however, with respect to alterations affecting the Walls/Partitions or Systems
Furniture, Subtenant shall use contractors, subcontractors and vendors
designated by Sublessor in its sole and absolute discretion). If any alteration
involves the removal of all or any portion of any Wall or Systems Furniture,
Subtenant shall store such removed item, utilizing storage vendors designated
by Sublessor in its sole and absolute discretion, which vendors shall agree, in
writing, that they shall not have any lien or security interest in any of
Sublessor’s property, including, without limitation, the Walls/Partitions
and/or Systems Furniture; Subtenant shall provide copies of all agreements with
such vendors to Sublessor. All alterations shall be made in accordance with
complete plans and specifications approved in advance in writing by Sublessor,
and in accordance with all Laws (including, without limitation, the ADA), and
only after Subtenant: (i) has obtained all necessary permits from
governmental authorities having jurisdiction and has furnished copies thereof
to Sublessor, (ii) has submitted to Sublessor an architect’s certificate
that the alterations will conform to all Laws (including the ADA), and
(iii) has complied with all other requirements reasonably imposed by
Sublessor, including without limitation any requirements due to the
underwriting guidelines of Sublessor’s insurance carriers. At Subtenant’s
expense, Sublessor shall join in submitting Subtenant’s plans for any necessary
governmental approval, if required by applicable law. Sublessor’s consent to
any alterations and approval of any plans and specifications constitutes
approval of no more than the concept of these alterations and not a
representation or warranty with respect to the quality or functioning of


 


8

















 


such
alterations, plans and specifications. Subtenant shall pay to Sublessor (and,
if required by the Prime Lease, the Landlord) the charge reasonably prescribed
by Sublessor [and Landlord (if applicable)] in consideration for the work of
Sublessor, Landlord, and its and their employees in reviewing and approving
such plans and specifications (or the actual cost incurred by Sublessor and, if
applicable, Landlord, to have a third party representative review such plans
and specifications), including, without limitation, those reasonable costs incurred
by Sublessor in reviewing and approving the modifications described in
Section 2(b) of this Sublease.


 


(ii)           In the event Sublessor (and, if applicable,
Landlord) approves Subtenant alterations pursuant to the terms of this
Section 7, Subtenant shall be and is solely responsible for such
alterations and for the proper integration thereof with the Building, including
the Building Systems, Building Structure and existing conditions.
Notwithstanding the foregoing, all alterations affecting a component of the
Building Structure or Building Systems shall be performed by contractors
approved by Sublessor and Landlord (in its and their sole discretion). With
respect to any alteration that affects a component of the Building Structure or
Building Systems, which component is covered by a warranty that requires work
performed on such component to be performed by a particular contractor,
Subtenant shall use such contractor in connection with such alteration.
Sublessor and, if required by the Prime Lease, Landlord, shall have the right,
but not the obligation, to supervise the making of any such alterations and to
be compensated for such supervision at a rate reasonably prescribed by
Sublessor and, if applicable, Landlord. All such construction, alterations, and
maintenance work done by or for Subtenant shall (i) be performed in a such
manner as to maintain harmonious labor relations, (ii) not alter the
exterior appearance of the Building or the Common Areas, (iii) not affect
the structure or the safety of the Building, (iv) comply with all
building, safety, fire, plumbing, electrical, and other codes, permitting and
governmental and insurance requirements, (v) not result in any usage in
excess of building standard of water, electricity, gas, heating, ventilating, or
air conditioning (either during or after such work), unless prior written
arrangements reasonably satisfactory to Sublessor and Landlord are made with
respect thereto, (vi) be completed promptly and in a good and workerlike
manner, (vii) be performed in compliance with Section 8.B. of the
Prime Lease, and (viii) not unreasonably interfere with the use and
occupancy of the Building by any other tenant or occupant. Sublessor will
require Subtenant, before permitting Subtenant to commence construction of alterations,
to give Sublessor proof reasonably satisfactory to Sublessor of Subtenant’s
financial ability to complete and fully pay for Subtenant’s work; or, in lieu
thereof, to furnish to Sublessor a completion bond in an amount satisfactory to
Sublessor guaranteeing the completion of Subtenant’s work free of mechanics’
and materialmen’s liens. Each of Landlord and Sublessor shall have the right,
but not the obligation, to periodically inspect the performance of the
construction of any alteration. Subtenant shall, at its sole expense, promptly
repair any defects of which Sublessor or Landlord notifies Subtenant.


 


(iii)         Following completion of any alterations, at
Sublessor’s request, Subtenant (i) shall deliver to Sublessor a
certificate signed by Subtenant stating that such alterations have been
completed in accordance with the plans and specifications previously delivered
to Sublessor and in accordance with Laws, including the ADA, and
(ii) either shall deliver to Sublessor a complete set of “as built” plans showing
the alterations or shall reimburse Sublessor for any expense incurred by
Sublessor in causing the Building plans to be modified to reflect the
alterations. Subtenant hereby agrees to indemnify and hold Sublessor harmless


 


9

















 


against
and from any and all claims, damages, costs, and fines arising out of or
connected with such alterations.


 


(iv)          If any alterations are made without the prior
written consent of Sublessor, or which do not materially conform to plans and
specifications approved by Sublessor or to other conditions imposed by
Sublessor pursuant to this Section 7, or which may have more than a de
minimis adverse effect on the Building or the property, or on the health or
safety of any of the persons employed therein, Sublessor may, in its sole
discretion, correct or remove such alterations at Subtenant’s expense.


 


(v)            All alterations made by Subtenant shall be
removed, and the Sublet Premises restored to its condition on the date of this
Sublease (including restoration and return of any Walls/Partitions or Systems
Furniture removed therefrom), on or prior to the end of the Sublease Term
(including any early termination thereof), all as more particularly set forth
in Section 15 hereof.


 


(b)           Electrical Usage. Subtenant shall not install or operate in the
Sublet Premises any equipment or other machinery that causes or is reasonably
likely to cause Subtenant to use more than 5 watts per rentable square foot
(convenience) and 1.5 watts per rentable square foot (lighting) (together, “Sublet Premises
Standard Electrical Capacity”), without Sublessor’s and Landlord’s prior written approval (which
approval, in the case of Sublessor, may be granted or withheld in Sublessor’s sole
and absolute discretion). If, as approved by Sublessor and Landlord,
Subtenant’s equipment shall result in usage that exceeds the Sublet Premises
Standard Electrical Capacity, Sublessor shall have the right, in its sole
discretion, to require Subtenant to upgrade the electrical capacity in the
Sublet Premises and to install additional transformers, distribution panels,
wiring and other applicable equipment to accommodate Subtenant’s electrical
usage at the sole cost and expense of Subtenant, all in accordance with the
provisions of Section 7(a) of this Sublease. All or any portion of
the installations made by Subtenant shall, at the option of Sublessor
(exercised in its sole and absolute discretion), either (i) on or prior to
the Sublease termination date, be removed, and the Sublet Premises restored to
its condition on the date of this Sublease or (ii) remain in the Sublet
Premises after Sublease termination (Sublessor reserving the right to select
either option for individual equipment components or portions of
installations). Electrical usage in the Sublet Premises shall be based on
actual readings of the submeter (or check meter or separate meter) installed by
Sublessor, and the cost of any electrical usage in excess of the Sublet
Premises Standard Electrical Capacity shall be paid directly by Subtenant to
Sublessor within thirty (30) days after invoice therefor as Additional Subrent
hereunder. Within fifteen (15) business days after full execution and delivery
of this Sublease, Subtenant shall provide Sublessor with a list of all equipment
that Subtenant intends to install or operate in the Sublet Premises which
operates on more than one hundred twenty (120) volts, and Subtenant shall
provide Sublessor an updated list of such equipment prior to the installation
or use of any additional equipment which operates on more than one hundred
twenty (120) volts. Subtenant shall have no right to connect to any of
Sublessor’s equipment, such as generators, UPS, or other backup systems.


 


(c)           Supplemental HVAC. As of the date of this Sublease, the Sublet
Premises contains and/or is served by supplemental HVAC equipment as set forth
on Exhibit B-3 (“Sublessor’s
HVAC’). Subtenant shall have the right to use the
Sublessor’s HVAC under the


 


10

















 


terms
and conditions hereinafter set forth. Sublessor reserves the right to
reasonably prescribe the amount and level of use for Sublessor’s HVAC, and
Subtenant’s use shall not exceed such levels and amounts at any time. Sublessor
makes no representation or warranty as to the capacity or output of the
Sublessor’s HVAC or to its sufficiency to service Subtenant’s particular
requirements in the Sublet Premises, and Subtenant acknowledges that the
Sublessor’s HVAC equipment is in its “as is, where is”  condition. Sublessor shall maintain
the Sublessor’s HVAC under the same contracts as the other supplemental HVAC
units in the Building, and Subtenant shall reimburse Sublessor the costs of
such maintenance (without markup for profit by Sublessor) from time to time,
within thirty (30) days after invoice therefor. Subtenant shall reimburse
Sublessor from time to time, within thirty (30) days after invoice therefor,
all costs for use of Sublessor’s HVAC, including, without limitation, costs for
electricity and chilled water or condenser water (including any costs for
depreciation charged by Landlord as set forth below) serving Sublessor’s HVAC.
Sublessor shall not be required, under any circumstance, to replace the
Sublessor’s HVAC or to perform repairs or maintenance that are not covered by
the service contracts. Subtenant shall not have the right to install additional
supplemental HVAC units in the Sublet Premises or in the Building without the
prior written consent of Sublessor, which consent may be granted or withheld in
Sublessor’s sole discretion. For approved additional supplemental HVAC units (“Subtenant’s HVAC”), (i) Subtenant
shall be solely responsible for all costs to install, maintain, and repair any
Subtenant’s HVAC, (ii) Subtenant shall be responsible for all costs to
operate such Subtenant’s HVAC (including, but not limited to, all costs of
electrical consumption with respect to Subtenant’s HVAC), and
(iii) Subtenant’s installation of Subtenant’s HVAC shall be part of
alterations, performed in accordance with Section 7(a) of this
Sublease (including reimbursement of all costs in reviewing plans), and shall
be subject to Sublessor’s and Landlord’s prior written approval in accordance
with the terms and conditions of Section 7(a) of this Sublease. In no
event may Subtenant move or remove any convector units or any plumbing or other
system equipment of the Building without Sublessor’s and Landlord’s prior
written consent, which may be granted or denied in its or their sole and
absolute discretion. If Subtenant installs and operates Subtenant’s HVAC as set
forth herein, Subtenant shall reimburse Sublessor from time to time, within
thirty (30) days after invoice therefor, for the actual costs of such chilled
water or condenser water and of providing same, including, but not limited to,
an amount for depreciation which is reasonable based upon the charge assessed
for depreciation in First-Class Buildings. All or any of Subtenant’s HVAC
installation, shall, at the option of Sublessor (exercised in its sole and
absolute discretion), either (i) on or prior to the Sublease termination
date, be removed, and the Sublet Premises restored to its condition on the date
of this Sublease or (ii) remain in the Sublet Premises after Sublease
termination (Sublessor reserving the right to select either option for
individual equipment components or portions of Subtenant’s HVAC installations).
Subtenant shall be responsible to insure Subtenant’s HVAC under the special
cause of loss business property insurance required by Section 17.A.(1) of
the Prime Lease, naming Sublessor as loss payee under such policy for
Subtenant’s HVAC.


 


8.             Liability for Damage or
Injury and Indemnification.


 


(a)           Subtenant Indemnification. Sublessor shall not be liable for any damage
to the Sublet Premises or any injury to persons sustained by Subtenant or its
employees, agents, invitees, guests, or other persons caused by conditions or
activities on the Sublet


 


11

















 


Premises
or the Building (including, without limitation, the Cafeteria, Fitness Center,
Bike Room or Shower Facilities), or activities of Subtenant in or upon the
Building (including, without limitation, use of the Cafeteria, Fitness Center,
Bike Room or Shower Facilities), except to the extent any loss, cost,
damage or expense is attributable to the gross negligence or intentional
misconduct of Sublessor or its agents or employees, and subject to the waiver
of subrogation provisions hereof and in the Prime Lease. Subject to the waiver
of subrogation provisions set forth in subsection (b), below, except to the
extent caused by (respectively) the negligence or willful misconduct of
Sublessor, Landlord or its agents or employees, (each of the foregoing, an “Indemnified Party”), Subtenant
hereby indemnifies and saves harmless the non-negligent Indemnified Parties
from any liability, loss, cost or expense (including, without limitation,
reasonable attorneys’ fees) arising out of (i) Subtenant’s use or
occupancy of the Sublet Premises, the Cafeteria, Fitness Center, Bike Room or
Shower Facilities and (ii) Subtenant’s failure to keep, observe or perform
any of the terms, provisions, covenants, conditions and obligations on
Subtenant’s part to be kept, observed or performed under this Sublease. Subject
to the waiver of subrogation provisions set forth in subsection (b), below,
except to the extent caused by the negligence or willful misconduct of
Subtenant, Sublessor hereby indemnifies and saves harmless Subtenant from any
liability, loss, cost or expense (including, without limitation, reasonable
attorneys’ fees) arising out of Sublessor’s failure to keep, observe or perform
any of the terms, provisions, covenants, conditions and obligations on
Sublessor’s part to be kept, observed or performed under this Sublease.
Subtenant’s obligation hereunder shall survive the termination of this
Sublease. Subtenant shall carry all insurance, in form and substance as
required of Sublessor under the Prime Lease, including (without limitation)
business interruption insurance (regardless of Subtenant’s net worth);
Subtenant’s commercial general liability insurance shall name, as additional
insureds, Sublessor, Landlord, the managing agent of the Building and the
holder of any Mortgage, and Subtenant’s business property insurance shall name
Sublessor as loss payee with respect to the Walls/Partitions, Systems
Furniture, Personal Property, and Subtenant’s HVAC as well as any alterations
in the Sublet Premises. On or before the commencement of the Early Access
Period, Subtenant shall provide Landlord and Sublessor with all certificates of
insurance required under the Prime Lease, and shall comply with all insurance
requirements imposed upon Sublessor as “Tenant” under the Prime Lease.


 


(b)           Waiver of Subrogation. Notwithstanding anything to the contrary in this Sublease, whether the loss or
damage is due to the negligence of Sublessor or its agents or employees,
Subtenant hereby releases Sublessor and its agents and employees from
responsibility for and waives its entire claim of recovery for (i) any and
all loss or damage to the personal property of Subtenant located in the Sublet
Premises arising out of any of the perils which are covered by Subtenant’s
property insurance policy or which would be covered by an all-risk property
insurance policy if such policy was obtained by Subtenant, or (ii) loss
resulting from business interruption at the Sublet Premises, arising out of any
of the perils which may be covered by the business interruption insurance
policy carried by Subtenant or which would be covered by a business
interruption insurance policy with twenty-four (24) months coverage if such
policy was obtained by Subtenant. Similarly, notwithstanding anything to the
contrary in this Sublease, whether the loss or damage is due to the negligence
of Subtenant or its agents or employees, Sublessor hereby releases Subtenant
and its agents and employees from responsibility for and waives its entire
claim of recovery for any and all loss or damage to personal property of
Sublessor located in the Sublet Premises (excluding the Walls/Partitions,
Systems Furniture, Personal Property, and Subtenant’s HVAC, and alterations in
the Sublet


 


12

















 


Premises,
which shall not be the subject of Sublessor’s waiver or release), arising out
of any of the perils which are covered by any such property insurance or
business interruption insurance which Sublessor obtains or would be covered if
any such policy was obtained by Sublessor. Sublessor and Subtenant shall each
cause its respective insurance carrier(s) to consent to such waiver of all
rights of subrogation against the other, and to issue an endorsement to all
policies of insurance obtained by such party confirming that the foregoing
release and waiver will not invalidate such policies.


 


9.             Casualty and Condemnation.


 


(a)           In the event of damage or destruction of the
Sublet Premises or other portion of the Building by fire or other casualty,
this Sublease shall not terminate, unless the Prime Lease shall terminate,
absolutely or with regard to the Sublet Premises, in accordance with the
provisions of the Prime Lease, or except as expressly set forth in this
Section 9. The rental obligation of Subtenant shall abate or be prorated
only if Sublessor’s rental and/or additional rental obligations with respect to
the Sublet Premises is abated pursuant to the terms of the Prime Lease. It is
understood and agreed that any repair or restoration required under the terms
of the Prime Lease, in connection with either a casualty or condemnation, shall
be performed by Landlord to the extent Landlord is required to do so under the
Prime Lease, and that Sublessor shall have no obligations with respect thereto.


 


(b)           Notwithstanding anything contained in this
Sublease or the Prime Lease to the contrary, following any material fire or
other casualty to the Sublet Premises, Sublessor shall, within a reasonable
period of time following receipt of Landlord’s Restoration Certificate as
described in Section 16.B. of the Prime Lease, deliver a notice (the “Sublessor Restoration Notice”)  to Subtenant
setting forth the estimated number of days from the date of the casualty
necessary for the Landlord to complete Landlord’s Casualty Restoration Work and
for Sublessor to complete the Sublessor Casualty Restoration Work (defined
below). If the estimated aggregate time to restore the Sublet Premises as set
forth in the Sublessor Restoration Notice is in excess of nine (9) months
from the date of casualty, then either party shall have the right to terminate
this Sublease by written notice to the other party, which notice shall be
delivered within ten (10) business days after the Sublessor Restoration
Notice (and, in the case of the Sublessor electing to terminate, may be
included in the Sublessor Restoration Notice); failure to deliver such
termination notice within such 10-business day period shall render such right
null and void. In such event, termination shall be effective as of the later to
occur of either (a) the date of the material fire or other casualty or (b) the
date Subtenant ceased operations in the Sublet Premises as a result of such
material fire or other casualty.


 


(c)           If the Sublease is not terminated in accordance
with Section 9(b) hereof, then, upon Landlord’s completion of the
Landlord Casualty Restoration Work, Sublessor shall complete the restoration of
the Sublet Premises to the condition immediately prior to the material fire or
other casualty (the “Sublessor
Casualty Restoration Work”). Regardless of whether this Sublease
is terminated, Subtenant shall cause its insurance carrier to pay proceeds for
the Walls/Partitions, Systems Furniture, Personal Property, and Subtenant’s
HVAC as well as any alterations in the Sublet Premises directly to Sublessor;
provided, however, if such proceeds are in fact paid directly to Subtenant,
Subtenant shall promptly remit same to Sublessor.


 


13














 


(d)           In the event the Prime Lease is terminated
due to a taking of all or any portion
of the premises leased by Sublessor pursuant to the Prime Lease, Subtenant
shall have no claim against Sublessor or the Landlord for the value of any
unexpired term of this Sublease or any other claim, nor any claim or right to
any portion of any award or payment resulting from such condemnation, except
that Subtenant may maintain a separate claim for its relocation expenses, as
long as the same does not diminish the award payable to the Landlord or to
Sublessor.


 


10.          Assignments
and Subleases.


 


(a)           Subtenant shall not assign, mortgage, pledge
or otherwise encumber this Sublease
or any interest herein (including any assignment by operation of law), or
sub-sublet all or any part of the Sublet Premises (any of the foregoing, a “transfer”)  without the prior written consent in each
instance of Sublessor and, if required by the Prime Lease, Landlord, which
consent, in the case of Sublessor, shall not be unreasonably withheld, conditioned
or delayed. Sublessor shall not be deemed to have unreasonably withheld its
consent to a proposed transfer if such consent is withheld because, inter alia: (i) Subtenant
is then in default of this Sublease, following applicable notice and the expiration
of applicable cure periods, or an event has occurred which, with the giving of
notice or passage of time, or both, would constitute a default hereunder
(unless such occurrence shall be cured prior to the commencement date of the
proposed transfer); or (ii) any notice of termination of this Sublease or
termination of Subtenant’s rights under this Sublease shall have been validly
given; or (iii) either the portion of the Sublet Premises which Subtenant
proposed to sublease, or the remaining portion of the Sublet Premises, or the
means of ingress and egress to either the portion of the Sublet Premises which
Subtenant proposed to sublease or the remaining portion of the Sublet Premises,
or the proposed use of the Sublet Premises or any portion thereof by the
proposed assignee or subtenant will violate any Laws or would not conform with
the use provisions set forth in the Prime Lease or Section 5 of this
Sublease; or (iv) in the reasonable judgment of Sublessor, the proposed
transferee is of a character or reputation or is engaged in a business which
would be harmful to the image and reputation of the Building, Sublessor, or
Landlord, or the proposed transferee is not financially capable of performing
its obligations under the terms of this Sublease; or (v) the proposed
transferee is a governmental entity (or subdivision or agency thereof) or is an
occupant of the Building for whom Sublessor or Landlord has available for lease
space similar in size and otherwise reasonably comparable to that which
Subtenant is proposing to transfer to such occupant of the Building and such
occupant of the Building would accept the space being offered by Sublessor or
Landlord if the space which Subtenant is offering were not available; or (vi) notwithstanding
Subtenant’s continuing primary liability under this Sublease, as set forth in
this Section 10, any assignee fails to assume all of the obligations of
Subtenant under this Sublease, or the sublessee or occupant fails to agree to
be subject to all the terms and conditions of this Sublease; or (vii) the
proposed transferee is a competitor of Sublessor or any affiliate of the
Corporate Executive Board Company; or (viii) the proposed transfer
constitutes a Prohibited Assignment or Sublease. Any attempted assignment,
mortgage, pledge, encumbrance or sub- sublet that is made in violation of this Section 10
shall be void and shall be a default by Subtenant. Consent by Sublessor and
Landlord to one or more assignments or sub-sublettings shall not operate as a
waiver of Sublessor’s and Landlord’s rights with respect to any subsequent
assignment or sub-subletting. No assignment or sub-subletting shall relieve
Subtenant from primary liability for all obligations of Subtenant under this
Sublease, whether accruing before or


 


14

















 


after
the date of such assignment or sub-subletting. For purposes of this Sublease,
the term “sublet” or “sub-sublet” shall be deemed
to include the granting of any rights of occupancy of any portion of the Sublet
Premises.


 


(b)           If Subtenant wishes to enter into a
transfer, Subtenant must provide not less than thirty (30) days’ prior written
notice thereof to Sublessor, which notice shall include the proposed effective
date of such assignment or sublease, and in the case of a proposed sublease,
shall specify the space to be sublet. For thirty (30) days following receipt of
such notice, Sublessor shall have the right, exercisable by sending written
notice to Subtenant, to recapture from Subtenant for the balance of the
Sublease Term of this Sublease (i) all of the Sublet Premises in the event
Subtenant notified Sublessor of its desire to assign this Sublease, or (ii) so
much of the Sublet Premises as Subtenant intends to sub-sublet in the event
Subtenant notified Sublessor of its desire to sub-sublet the Sublet Premises or
permit another to make use thereof, at the same Annual Base Subrent and
Additional Subrent Subtenant is obligated to pay to Sublessor hereunder. In the
event Sublessor does not exercise the aforesaid right within such thirty (30)
days, and, pursuant to Section 10(a) Sublessor consents to
Subtenant’s entering into a transfer, Subtenant may attempt for a period of one
hundred twenty (120) days from the last day of such thirty (30)-day period to
assign, sub-sublet or permit use of this Sublease or such space on the terms
set forth in the aforementioned notice and in accordance with the terms of this
Section 10. Upon the termination of such one hundred twenty (120)-day
period, Subtenant may not enter into a transfer, except in accordance with the
terms of this Section 10(b), including Subtenant’s notice obligation and
Sublessor’s right of recapture. In the event that Subtenant defaults hereunder,
Subtenant hereby assigns to Sublessor the rent due from any assignee or
subtenant and hereby authorizes each such party to pay such rent to Sublessor.


 


(c)           In addition to the requirements set
forth in subsection (b), and regardless if Sublessor has provided its consent,
no transfer shall be effective unless and until Sublessor shall have received,
at least thirty (30) days prior to the proposed commencement date of such
transfer (i) a written request from Subtenant for the proposed transfer, (ii) full
and complete information concerning the identity and business activities of the
proposed transferee, (iii) such financial information concerning the
proposed transferee as Sublessor shall reasonably request after notification by
Subtenant of the proposed transfer, and (iv) a copy of the proposed
sublease or assignment or occupancy agreement or other transfer document, which
shall be in form and substance acceptable to Sublessor. No consent by Sublessor
to a transfer hereunder shall be effective unless such consent shall be in
writing. Any attempted transfer in violation of the requirements of this Section 10
shall be null and void and of no force or effect.


 


(d)           In the event Sublessor permits
Subtenant to transfer its interest under the Lease or all or a portion of the
Sublet Premises to a third party, then (i) fifty percent (50%) of any sums
that are payable by such third party for the right to occupy the Sublet
Premises (on a per square foot basis) (after deducting therefrom Subtenant’s
reasonable and actual out-of-pocket expenses incurred by Subtenant in procuring
such transferee for leasehold improvement costs, broker fees, marketing costs,
moving costs and legal fees (if any) paid by Subtenant), in excess of the
Annual Base Subrental then in effect (on a per square foot basis), shall be
paid by Subtenant to Sublessor on a monthly basis as additional Rent and (ii) Subtenant
shall be responsible for all costs and expenses, including reasonable
attorneys’ and engineering review fees, incurred by Sublessor in connection
with any proposed or purported transfer, including,


 


15

















 


without
limitation, any fee to be paid to Landlord under Section 23.B. of the
Prime Lease. The failure of Subtenant to remit fifty percent (50%) of any such
excess sums to Sublessor, as the same are realized on a monthly basis by
Subtenant, shall be a default hereunder. For purposes of this paragraph, such
excess sums shall be calculated based upon all payments which are made by the
applicable transferee to Subtenant, or any other entity designated by Subtenant,
in consideration of such party’s occupancy of the Sublet Premises, whether or
nor characterized as payments of Rent.


 


(e)           The consent by Sublessor to any
transfer shall neither be construed as a waiver or release of Subtenant from
any covenant or obligation of Subtenant under this Sublease, nor as relieving
Subtenant from giving Sublessor the aforesaid thirty (30) days notice of, or
from obtaining the consent of Sublessor to, any further transfer. The
collection or acceptance of rent from any such transferee shall not constitute
a waiver or release of Subtenant from any covenant or obligation of Subtenant
under this Sublease, except as expressly agreed by Sublessor in writing.


 


(f)            Notwithstanding anything contained
herein to the contrary (but subject to the last sentence of this Section 10(f)),
the Sublet Premises may be occupied by, or subleased or assigned to, a
Subtenant Affiliate, and such occupancy, assignment or sublease shall be
permitted provided Subtenant delivers notice thereof to Sublessor prior to such
occupancy, assignment or sublease and such Subtenant Affiliate agrees in
writing to assume all obligations of Subtenant under this Sublease. For
purposes of this subparagraph, a “Subtenant Affiliate”  shall mean an entity that, directly
or indirectly Controls, is Controlled by, or is under common Control with,
Subtenant. For purposes of this subparagraph, “Control”  shall mean ownership of sufficient
stock or membership or partnership interests of Subtenant to have voting
control of Subtenant (such as ownership of 50% or more of the outstanding
voting stock of a corporation or of the outstanding membership, partnership or
other similar interest if such entity is not a corporation). Notwithstanding
anything contained herein to the contrary (but subject to the last sentence of
this Section 10(f), Subtenant may assign this Sublease to an entity with
which Subtenant merges, consolidates or which purchases all or substantially
all of Subtenant’s assets (a “Successor”)  without
Sublessor’s prior written approval, conditioned upon satisfaction of the
following (as determined by Sublessor acting in good faith): (1) Successor
has a creditworthiness sufficient to meet the requirements of this Sublease;
and (2) such merger, consolidation or purchase was not entered into as a
subterfuge to evade the requirements of this Section 10 of the Sublease.
Subtenant shall provide documentation acceptable to Sublessor to evidence the
foregoing. The term “Permitted
Transferee”
shall mean a Subtenant Affiliate or Successor, and the
term “Permitted Transfer”  shall mean a
transfer to Permitted Transferee in accordance with this Section 10(f). In
the event of a transfer to a Subtenant Affiliate, Subtenant shall not be
released from any covenant or obligation of Subtenant under this Sublease, but
shall remain jointly and severally liable with Subtenant Affiliate for the
performance of all covenants and obligations hereunder. In the event of a
transfer to a Successor, such Successor shall expressly assume all obligations
of Subtenant under this Sublease in writing. No Permitted Transfer shall
relieve Subtenant from obtaining the consent of Sublessor (as required
by this Section 10) to any further transfer. Notwithstanding anything
contained herein to the contrary, a transfer shall not be deemed a “Permitted
Transfer”
(and shall
therefore be subject to the remaining provisions of this Article 10,
including, without limitation, the requirement that Subtenant obtain Landlord’s
consent to a proposed transfer) if either (i) the transferee (whether a
Subtenant Affiliate or


 


16

















 


Successor)
is a competitor of Sublessor or of any affiliate of the Corporate Executive
Board Company or (ii) the transfer would constitute a Prohibited
Assignment or Sublease under the Prime Lease.


 


11.          Security
Deposit.


 


(a)           Security
Deposit Generally. Concurrently
with its execution and delivery of this Sublease, Subtenant shall deliver to
Sublessor a security deposit (“Security
Deposit”)
in the amount of Three Hundred Fifty-One Thousand Nine
Hundred Eleven and 25/100 Dollars ($351,911.25), which Security Deposit may be
in the form of cash or a letter of credit that conforms to the requirements of
this Section 11, to secure the payment and performance by Subtenant of all
of Subtenant’s obligations, covenants, conditions and agreements under this
Sublease. If in the form of cash, Sublessor shall not be required to keep the
Security Deposit separate from other funds or accounts of Sublessor and the
Security Deposit shall not bear interest. If Subtenant defaults in the
observance or performance of any of such terms and conditions, and such default
continues after applicable notice and cure periods under this Sublease,
Sublessor may use or apply all or any part of the Security Deposit for the
payment of any Rent not paid when due or for the payment of any other amounts
due Sublessor by reason of such default, including any costs of Sublessor’s
observing or performing such terms or conditions on Subtenant’s behalf and any
deficiencies in reletting or damages incurred by Sublessor. If Sublessor shall
use or apply all or any part of the Security Deposit, Subtenant shall,
immediately upon notice from Sublessor (and in any event within three (3) business
days thereafter), deliver to Sublessor additional funds so as to restore the
Security Deposit to the amount specified above. If Subtenant shall faithfully
observe and perform all of the terms and conditions of this Sublease, the
Security Deposit, or so much thereof as shall not have been used or applied in
accordance with this Section 11, shall be returned to Subtenant within
thirty (30) days after the expiration or sooner termination of this Sublease
and the vacation and surrender of the Sublet Premises in accordance with this
Sublease. In the event of any assignment of Sublessor’s interest in this
Sublease, Sublessor shall have the right to transfer the Security Deposit to
such assignee, in which event such assignee shall hold, use and apply the
Security Deposit in accordance with the covenants, terms and conditions of this
Sublease. Subtenant shall look solely to the assignee for the return of the
Security Deposit and Sublessor shall thereupon be released from all liability
to Subtenant for the return of the Security Deposit. Subtenant shall not assign
(other than to a permitted assignee of this Sublease) or encumber its interest
in the Security Deposit and no such assignment or encumbrance shall be valid or
binding upon Sublessor.


 


(b)           Form of
Letter of Credit. If
the Security Deposit is tendered in the form of a letter of credit (“Letter of Credit”), the
following provisions shall also apply. Subtenant shall maintain the Letter of
Credit in full force and effect throughout the entire term of this Sublease and
until sixty (60) days after the termination of this Sublease, and shall cause
the Letter of Credit to be renewed or replaced not less than sixty (60) days
prior to its expiry date. The Letter of Credit shall (i) be unconditional,
irrevocable, transferable, payable to Sublessor on sight at a metropolitan
Washington, D.C. area financial institution, in partial or full draws, (ii) be
substantially in the form attached hereto and incorporated herein as Exhibit D,  and otherwise be in
form and content reasonably acceptable to Sublessor, (iii) shall be issued
by HSBC Bank USA, N.A., or such other financial institution as Sublessor may
approve in its sole and absolute


 


17

















 


discretion,
and (iv) contain an “evergreen” provision which provides that it is
automatically renewed on an annual basis unless the issuer delivers sixty (60)
days’ prior written notice of cancellation to Sublessor and Subtenant. Any and
all fees or costs charged by the issuer in connection with the Letter of Credit
(including, without limitation, charges in connection with any transfers or
assignments thereof) shall be paid by Subtenant.


 


(i)             Right
to Draw.


 


(1)           In the event of any default by
Subtenant hereunder that continues after notice and the expiration of any
applicable cure period under this Sublease, Sublessor shall have the right to
draw upon the Letter of Credit in whole or in part and apply the proceeds
thereof as may be necessary to compensate Sublessor for any such default under
this Sublease on the part of Subtenant, and Subtenant, within three (3) business
days after Sublessor delivers written demand therefor to Subtenant, shall
forthwith restore the Letter of Credit to its original amount; provided,
however, neither the application of the Security Deposit as set forth above nor
the restoration by Subtenant of such Security Deposit shall operate to cure
such default or to estop Sublessor from pursuing any remedy to which Sublessor
would otherwise be entitled.


 


(2)           Sublessor shall also have the right
to draw upon the Letter of Credit in any of the following circumstances (which
circumstances described in items (i) and (ii) below shall apply to
all issuers, including without limitation the initial issuer): (i), if the
total assets of the issuer of the Letter of Credit are at any time less than
Three Billion Dollars ($3,000,000,000.00), or such issuer has a Standard &
Poor’s commercial paper rating of less than A-1 (provided if at any time the
current Standard & Poor’s commercial paper rating system is no longer
in existence, a comparable rating of a comparable commercial paper rating
system from a comparable company shall be selected by Sublessor, in its
reasonable discretion, for purposes of this Section 11) and Subtenant
fails to deliver to Sublessor a replacement Letter of Credit complying with the
terms of this Sublease within thirty (30) days of request therefor from
Sublessor, (ii) if the issuer of the Letter of Credit shall enter into any
supervisory agreement with any governmental authority, or the issuer of the Letter
of Credit shall fail to meet any capital requirements imposed by applicable
Laws, and Subtenant fails to deliver to Sublessor a replacement Letter of
Credit complying with the terms of this Sublease within thirty (30) days of
request therefor from Sublessor, or (iii) if Subtenant fails to provide
Sublessor with any renewal or replacement Letter of Credit complying with the
terms of this Sublease at least sixty (60) days prior to expiration of the
then-current Letter of Credit. In the event the Letter of Credit is drawn upon
due solely to the circumstances described in the foregoing clauses (i), (ii) or
(iii), the amount drawn shall be held by Sublessor as a Security Deposit to be
otherwise retained, expended or disbursed by Sublessor for any amounts or sums
due under this Sublease to which the proceeds of the Letter of Credit could
have been applied pursuant to this Sublease, and Subtenant shall be liable to
Sublessor for restoration of the Letter of Credit complying with the terms of
this Sublease, of any amount so expended to the same extent as set forth in
this Section 11.


 


(c)           Right
to Assign. In the
event of any assignment of Sublessor’s interest in this Sublease, Sublessor shall have the right to transfer the
Security Deposit to such assignee, in which event such assignee shall hold, use
and apply the Security Deposit and proceeds thereof in accordance with the
covenants, terms and conditions of this Sublease. Subtenant shall look solely
to the assignee for the return of the Security Deposit and Sublessor shall
thereupon be


 


18

















 


released
from all liability to Subtenant for the return of such Security Deposit. If
Subtenant assigns this Sublease, Subtenant shall be entitled to replace the
Letter of Credit then held by Sublessor (for which Subtenant is the account
party and Sublessor is the beneficiary) with another Letter of Credit (for
which such assignee is the account party and Sublessor is the beneficiary)
complying with the terms hereof.


 


12.          Services. Anything contained in this Sublease to the
contrary notwithstanding, the only services or rights to which Subtenant is
entitled hereunder are those to which Sublessor is entitled under the Prime
Lease from Landlord. In the event Sublessor is entitled to any rental abatement
on account of any interruption of essential services to the Sublet Premises
(and not other portions of the premises leased by Sublessor pursuant to the
Prime Lease) pursuant to the terms of the Prime Lease, Subtenant shall be
entitled to proportionately abate its rental obligations hereunder for the same
period of time. Subtenant shall, within thirty (30) days of demand, pay or
reimburse Sublessor for all costs and expenses (i) payable under the Prime
Lease arising out of Subtenant’s acts or omissions or Subtenant’s requests for
services in excess of those provided by Landlord and included in Operating
Expenses under the Prime Lease in connection with the Sublet Premises and (ii) for
services to the Sublet Premises provided directly by Sublessor, including (a) supplemental
chilled or condenser water, (b) above building standard or overtime HVAC, (c) extra
cleaning, (d) overtime or dedicated freight elevator service, and (e) any
maintenance, repair or other service for which a separate charge is payable to
Landlord under the Prime Lease or which is provided by Sublessor, and (f) any
janitorial service in excess of those described on Exhibit E of the Prime
Lease. Sublessor currently (and shall have the right to continue to do so)
causes the carpeting in the elevator lobby of the Sublet Premises to be cleaned
approximately once per quarter, which frequency exceeds that set forth in the
standard janitorial specifications set forth on Exhibit E of the Prime
Lease and therefore results in a separate charge. Subtenant shall pay its
Proportionate Share of such excess charge to Sublessor as Additional Rent from
time to time within thirty (30) days after invoice therefor. Sublessor
currently (and shall have the right to continue to do so) maintains the
Sublessor’s HVAC, as well as the water heaters, water filters, VAV boxes, and
appurtenances thereto. Subtenant shall pay its share of such maintenance costs
to Sublessor as Additional Rent from time to time within thirty (30) days after
invoice therefor. Notices from Subtenant requesting overtime HVAC services
shall be delivered to the Director of Support Services for the Corporate
Executive Board Company (or to such other contact of which Sublessor notifies
Subtenant from time to time), notwithstanding any provision in the Prime Lease
to the contrary. Subtenant may obtain access card keys for its employees by
written request to Sublessor, at Sublessor’s actual cost therefor (currently
approximately $5.00 per card).


 


13.          Default. In the event that Subtenant shall be in
default beyond any applicable notice and cure period of any covenant or
obligation under this Sublease, or if any other default set forth in Section 19
of the Prime Lease occurs with respect to Subtenant and is not cured within the
applicable notice and cure periods, then Sublessor shall have available to it
all of the remedies available to Landlord under the Prime Lease in the event of
a like default or failure on the
part of the Sublessor thereunder, provided, however, the time periods for curing
defaults under the Prime Lease set
forth in Section 19.A. of the Prime Lease shall be modified with respect
to defaults under this Sublease as follows: (i) the thirty (30) day grace
period for defaults in payment of rent or additional rent shall be reduced to
five (5) days; and (ii) the thirty (30) day grace period for other
defaults shall be reduced to fifteen (15) days. Sublessor shall use


 


19

















 


commercially
reasonable efforts to mitigate its damages resulting from a default under this
Sublease by Subtenant beyond any applicable notice and cure period under the
same terms and conditions by which Landlord has agreed to mitigate damages for
Sublessor pursuant to Section 19.B. of the Prime Lease (including subsections
(a), (b), (c), (d), and (e) thereunder), which provisions are further
limited by the following: Sublessor shall not be obligated to enter into a new
lease with a Substitute Tenant if an assignment or subletting to such
Substitute Tenant would be rejected by Sublessor under the provisions of Section 10(a) of
this Sublease.


 


14.         No Waiver. The failure of Sublessor to insist at any
time upon the strict performance of any covenant or agreement herein, or to
exercise any option, right, power or remedy contained in this Sublease shall
not be construed as a waiver or a relinquishment thereof for the future. No act
or thing done by Sublessor or its agents during the term hereof shall be deemed
an acceptance or surrender of the Sublet Premises, and no agreement to accept a
surrender of the Sublet Premises shall be valid unless in writing and signed by
Sublessor. No payment by Subtenant or receipt by Sublessor of a lesser amount
than the monthly installment of Annual Base Subrent due under this Sublease shall
be deemed to be other than on account of the earliest Rent due hereunder, or
portion thereof, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Sublessor may accept such check or payment without prejudice
to Sublessor’s right to recover the balance of such Rent or pursue any other
remedy in this Sublease or available to Sublessor at law or in equity.


 


15.          Surrender
of Sublet Premises; Holdover. Upon the expiration or other termination of the Sublease Term,
Subtenant shall quit and surrender to Sublessor the Sublet Premises, broom
clean, in good order and condition, ordinary wear and tear excepted, and
Subtenant shall remove all of its property as provided in Section 10.B. of
the Prime Lease. Subtenant shall remove all alterations installed in the Sublet
Premises during the Sublease Term and shall restore the Sublet Premises to the
condition immediately prior to the Sublet Commencement Date, including, without
limitation, removing telecommunications cabling and wiring and voice and data
systems, restoring Walls/Partitions or Systems Furniture removed from the
Sublet Premises, and restoring any alterations to the raised floor, conference
rooms, and any other portion of the Sublet Premises. Notwithstanding the
foregoing, Subtenant shall not be required to restore or remove the alterations
to the Systems Furniture and Walls/Partitions shown on Exhibit B-4 (Approved Space Plan),
attached hereto, so long as such alterations are (i) consistent in make
and model as the Systems Furniture in place on the Sublease Commencement Date;
and (ii) approved in writing by Sublessor. Subtenant’s obligation to
observe or perform this covenant shall survive the expiration or other termination
of the Sublease Term. In the event of holding over by Subtenant or any person
or entity claiming under Subtenant after expiration or other termination of
this Sublease, or in the event Subtenant continues to occupy the Sublet
Premises after the termination of Subtenant’s right of possession due to a
default by Subtenant, such holding over or possession shall constitute a
tenancy at sufferance, subject to all of the terms and provisions of this
Sublease. In the event of any such holding over, in addition to any other
remedies available to Sublessor under this Sublease, at law or in equity,
Sublessor shall have the right, in accordance with applicable law, to enter
upon and take possession of the Sublet Premises. Subtenant shall, throughout
the entire holdover period, pay Rent at the times and in the manner required by
this Sublease but at a rate equal to 150% of the Annual Base Subrent payable
during the last month of the Sublease Term preceding the commencement of the
holdover period


 


20

















 


for
the first month of such holdover period, and 200% thereafter. Subtenant shall
also continue to pay all Additional Subrent during any such holdover period. No
holding over by Subtenant after the expiration of the Sublease Term and no
acceptance of Rent by Sublessor during a holdover period, whether with or
without the consent of Sublessor, shall be construed to extend the Sublease
Term or prevent Sublessor from recovering immediate possession of the Sublet
Premises by summary proceedings or otherwise. In addition, in the event of any
unauthorized holding over that extends more than thirty (30) days after the
expiration of the Sublease Term, Subtenant will protect, defend, indemnify and
hold Sublessor harmless from and against any claims, demands, liability, costs,
expenses or damages (including reasonable attorneys’ fees) for which Sublessor
may become liable to Landlord under the Prime Lease due to such holding over.


 


16.          Brokers.
Each party represents
and warrants to the other that, except for the Staubach Company, Northeast Inc.
and Cushman & Wakefield (collectively, “Brokers”)  (i) no broker brought about this
transaction or dealt with either party in connection herewith, and (ii) they
have had no dealings with any real estate broker, finder or other person, with
respect to this Sublease in any manner. Each party agrees to indemnify, defend
and hold harmless the other against and from any and all losses, costs, claims,
damages and expenses (including, without limitation, reasonable attorneys’
fees) which may be claimed by any broker (other than the Brokers) by reason of
any dealings, actions or agreements with the indemnifying party. Sublessor
agrees to compensate the Brokers pursuant to the terms of a separate agreement
between Sublessor and each of the Brokers.


 


17.          Notices.
All notices given or
required to be given pursuant to the provisions hereof shall be in writing and
shall be hand-delivered or sent by reputable overnight delivery service or
certified mail, postage prepaid, return receipt requested, to the following
addresses, or to such other address as the party to be notified shall specify
in writing by such notice:


 


	
   

  	
  Sublessor:

  	
  The Corporate Executive
  Board Company 

  
	
   

  	
   

  	
  1919 North Lynn Street

  
	
   

  	
   

  	
  Arlington, Virginia 22209

  
	
   

  	
   

  	
  Attention: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Arent Fox LLP

  
	
   

  	
   

  	
  1050 Connecticut Avenue,
  N.W. 

  
	
   

  	
   

  	
  Washington, DC 20036

  
	
   

  	
   

  	
  Attention: Jeremy B.
  Fox, Esq.

  
	
   

  	
   

  	
   

  
	
   

  	
  Subtenant:

  	
  Rosetta Stone Ltd.

  
	
   

  	
   

  	
  135 West Market Street 

  
	
   

  	
   

  	
  Harrisonburg, VA 22801 

  
	
   

  	
   

  	
  Attention: General Counsel

  



 


Notices
shall be deemed given and
effective upon the date of delivery (or refusal to accept delivery) if
delivered by hand or overnight delivery service, and upon the date set forth on
the return receipt therefor if delivered by certified mail.


 


21

















 


18.          Parking.
Subtenant shall have
the right, but not the obligation, to obtain non-reserved, first-come,
first-served parking contracts, by contracting directly with the Garage
Operator, for the parking of up to sixty-two (62) automobiles in the Garage
upon the same rental, terms and conditions in the parking contracts that the
Garage makes available to Sublessor. Subtenant shall notify Sublessor of the
number of parking contracts required by Subtenant within thirty (30) days
following the Sublease Commencement Date; any parking contracts not utilized
within such thirty (30)-day period shall be forfeited by Subtenant, provided,
however, if, during the Sublease Term, Subtenant shall require additional
parking contracts (up to the initial 62 allotted), then Sublessor shall make
such contracts available to Subtenant to the extent the same are available.
Subtenant and its employees shall observe reasonable precautions in the use of
the Garage and shall at all times abide by all rules and regulations
governing the use of the Garage promulgated by Landlord or the Garage Operator.
Landlord has reserved (i) the right to close the Garage during periods of
unusually inclement weather or for repairs, (ii) to reasonably modify in
any way Landlord deems appropriate the manner in which the Garage is accessed,
and (iii) to revoke a user’s parking privileges in the event such user
repeatedly fails, after appropriate notice, to abide by the rules and
regulations governing the use of the Garage, all as set forth in Section 34
of the Prime Lease, and Subtenant acknowledges and agrees to abide all of the
foregoing. Subtenant shall be prohibited from using the Garage for purposes
other than for parking registered vehicles. All parking rights granted to
Subtenant shall be at Subtenant’s sole risk, and Sublessor shall have the
right, at its option, to issue permits (or to cause such issuance) or establish
other reasonable parking controls (or cause such controls to be established) to
assure that the use by Subtenant of the parking area does not exceed the
parking rights granted to Sublessor pursuant to Section 34 of the Prime
Lease. In such event, all permits, access cards or other costs associated with
any parking controls shall be at Subtenant’s sole cost and expense. The repair
of vehicles in the Garage is prohibited. Except in connection with a permitted
assignment or sublease pursuant to Section 10 hereof, Subtenant shall not
assign, sublet or transfer any parking permits without Sublessor’s prior
written consent, which may be granted or withheld in Sublessor’s sole
discretion. Any attempted assignment, sublet or transfer in violation of the
foregoing shall be void.


 


19.          Subtenant
Signage. Sublessor
shall provide to Subtenant, at Sublessor’s sole cost, Building standard suite
entry signage at the entrance to the Sublet Premises, in a location and with
dimensions as set forth on Exhibit H and
otherwise as determined by Sublessor in its sole discretion. Subtenant
acknowledges and agrees that the Building does not have a lobby directory.
Sublessor and Subtenant shall cooperate in good faith to design appropriate
Subtenant identifying signage to be placed in the Building lobby (e.g.,
free-standing signage or signage at the lobby desk, the location and dimensions
of which shall be as set forth on Exhibit H
and otherwise as determined by Sublessor in its sole discretion) by
Sublessor at its cost. Sublessor and Subtenant shall cooperate in good faith to
obtain any required Landlord approval to the lobby and suite entry signage,
provided, however, if Landlord shall not approve such signage, then the parties
shall work together in good faith to redesign the signage package, subject to
the provisions hereof, and shall resubmit the signage package to Landlord. If
Landlord shall not approve such revised signage, Sublessor shall have no
liability therefor, and the provisions of this Section 19 granting such
signage shall be deemed null and void.


 


22














 


20.          Waiver of
Jury Trial. THE PARTIES HERETO EACH HEREBY WAIVE ALL RIGHT TO TRIAL BY JURY IN
ANY CLAIM, ACTION, PROCEEDING OR COUNTERCLAIM BY EITHER PARTY AGAINST THE OTHER
ON ANY MATTERS ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS SUBLEASE, THE
RELATIONSHIP OF THE PARTIES HERETO OR SUBTENANT’S USE OR OCCUPANCY OF THE
SUBLET PREMISES.


 


21.          Reciprocal
Litigation Costs. In
the event of any litigation between Sublessor and Subtenant, the unsuccessful
party as determined by a court of competent jurisdiction shall reimburse the
successful party for all reasonable legal fees, court costs and out-of-pocket
expenses incurred by the successful party in prosecuting or defending any such
action.


 


22.          Estoppel
Certificates. Subtenant
shall, from time to time, within ten (10) business days following request
by Sublessor, execute and deliver to such persons as the requesting party may
request, a statement certifying that this Sublease is unmodified and in full
force and effect (or if there have been modifications, that the same is in full
force and effect as so modified), stating the dates to which Annual Base
Subrent and other charges payable under this Sublease have been paid, stating
that, to the certifying party’s knowledge, the requesting party is not in
default hereunder (or if a default is alleged to exist, stating the nature of
such alleged default) and further stating such other matters as the requesting
party shall reasonably request (to the extent accurate).


 


23.          Representations.
Sublessor represents
that, as of the date hereof: (a) it has not received any notice from the
Landlord asserting that Sublessor is in Default under the Prime Lease and, to
its knowledge, it is not aware of any default on its part under the Prime
Lease, (b) the Prime Lease is unmodified and in full force and effect; (c) Sublessor
has the power and authority to enter into this Sublease; and (d) Sublessor
has not delivered a notice to Landlord asserting that Landlord is in a Landlord
Default as defined in the Prime Lease. Subtenant represents that it has the
power and authority to enter into this Sublease.


 


24.          Consent of
Landlord. Sublessor
believes that, under the terms of the Prime Lease, this Sublease is not subject
to Landlord’s consent. Promptly following the execution and delivery of this
Sublease, Sublessor shall deliver the notice to Landlord required by Section 23
of the Prime Lease, identifying the Subtenant, Subtenant’s business, the
anticipated Sublease Commencement Date, a certification that there is no
Monthly Sublet Profit, and, if validly requested by Landlord, providing to
Landlord a copy of this Sublease. If, for any reason, it is determined that
Landlord’s consent is required for this Sublease, and if such consent is not
received within thirty (30) days after Landlord has notified Sublessor of the
requirement of Landlord’s approval, then Sublessor shall have the right, by
notice to Subtenant, given prior the receipt of Landlord’s consent, to cancel
this Sublease, in which case Sublessor shall promptly return to Subtenant all
sums theretofore paid by Subtenant hereunder. Further, if, for any reason, it
is determined that Landlord’s consent is required for this Sublease, any fees
and costs due to Landlord pursuant to Section 23.B. of the Prime Lease
shall be split evenly between Subtenant and Sublessor. Sublessor shall promptly
deliver a copy of any notice from Landlord regarding Landlord’s consent of this
Sublease.


 


23

















 


25.          Miscellaneous.


 


(a)           Time of
the Essence. Time is
of the essence in the performance by Subtenant of its obligations hereunder.


 


(b)           Severability.
In the event any part
of this Sublease is held to be unenforceable or invalid for any reason, the
balance of this Sublease shall not be affected and shall remain in full force
and effect during the term of this Sublease.


 


(c)           Binding
Effect. The
covenants, conditions, agreements, terms and provisions of this Sublease shall
be binding upon and shall inure to the benefit of the parties hereof and each
of their respective successors and assigns, subject to the restrictions and
limitations set forth herein.


 


(d)           Governing
Law. It is the
intention of the parties hereto that this Sublease (and the terms and
provisions hereof) shall be construed and enforced in accordance with the laws
of the Commonwealth of Virginia.


 


(e)           Entirety. It is understood and agreed by and between
the parties hereto that this Sublease contains the final and entire agreement
between the parties relative to the subject matter hereof, and that they shall
not be bound by any terms, statements, conditions or representations relative
to the subject matter hereof, oral or written, express or implied, not herein
contained. This Sublease may not be changed or terminated orally or in any
manner other than by an agreement in writing and signed by all parties hereto.


 


(f)            Submission
Not an Offer. The
submission of this Sublease by Sublessor to Subtenant shall not constitute an
offer by Sublessor and Sublessor shall not be bound in any way unless and until
this Sublease is executed and delivered by both parties.


 


(g)           Counterparts.
This Sublease may be
executed in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.


 


(h)           Exhibits. The exhibits attached hereto are made a
substantive part of this Sublease.


 


(i)            Appointment
of Resident Agent. For
purposes of § 55-218.1 of the Code of Virginia, Sublessor appoints as its
resident agent                               .


 


(j)            No Recordation.
Neither party shall
have the right to record this Sublease or the Prime Lease.


 


(k)           Contracts
of Sublessor. Subtenant
shall not do or permit any activity or condition that might cause Sublessor to
be in default under any contract relating to the Building or the operation
thereof. In furtherance of the foregoing (and not in limitation thereof),
Subtenant shall not hire or employ any caterer or food provider to serve meals
within the Sublet Premises or Common Areas of the Building other than the food
provider for the Cafeteria in the Building or Sublet Premises (currently
Restaurant Associates).


 


24

















 


26.          Expansion
Option.


 


(a)           Subject to the provisions of this Section 26,
Subtenant shall have the continuous and ongoing right of first option to lease
Available Additional Space (defined herein) on the terms and conditions
hereinafter set forth (the “Expansion
Option”).
If at any time or times during the Sublease Term
Sublessor desires to market any space in the Building for sublease to any
entity that is not a Sublessor Affiliate (as hereafter defined) (“Available Additional Space”), and provided
that (i) Subtenant is not in default beyond any applicable notice and cure
period set forth herein for curing such default, (ii) Sublessor does not
elect to allow the then-existing subtenant occupying the Available Additional
Space to extend the term of its sublease (whether or not pursuant to an option
contained in such sublease), (iii) Subtenant has not assigned or sublet
all or any portion of the Sublet Premises and (iv) there remains, as of
the Expansion Space Sublease Commencement Date, at least one (1) year in
the Sublease Term, then, prior to entering into a letter of intent with a
prospective subtenant, Sublessor shall send written notice to Subtenant
informing it that such space will become available for sublease (the “Availability Notice”). The
Availability Notice shall specify (i) the effective date (the “Expansion Space Sublease
Commencement Date”)  that such space will become available
for sublease and occupancy, and (ii) the base rent (including
escalations), and the base year for Operating Expenses and Real Estate Tax
Expenses (which shall be determined in accordance with the provisions of this Section 26,
including (i) and (ii) below) (collectively the “Economic Terms”)  that
Sublessor proposes for the subletting of such Available Additional Space to
Subtenant. Space on the sixth (6th) floor of the Building, which Sublessor is
currently marketing for sublease, shall not be considered “Available Additional
Space” until after the initial subleasing of the sixth (6th) floor. If the
Expansion Space Sublease Commencement Date for any sublease of Available
Additional Space to Subtenant occurs (i) during the first Sublease Year,
then the Annual Base Subrent and Additional Subrent (including the Operating
Expenses Base Year and Real Estate Tax Expenses Base Year) shall be the
then-escalated amounts (on a per rentable square foot basis), and (ii) after
the first Sublease Year, then the Annual Base Subrent and Additional Subrent
shall be the fair market value Annual Base Subrent and Additional Subrent, as
determined by Sublessor in its good faith judgment, which fair market value
shall (x) be calculated as if the term of the sublease for the Available
Additional Space were five (5) years, regardless of the actual time
remaining in the Sublease Term and (y) shall mean the fair market rental
rate per square foot of rentable area of the Sublet Premises that would be
agreed upon between a landlord and a tenant executing a lease in a comparable
building of comparable age located in Arlington, Virginia, assuming the
following: (A) the landlord and tenant are typically motivated; (B) the
landlord and tenant are well informed and well advised and each is acting in
what it considers its own best interest; (C) the leased premises are fit
for immediate occupancy and use “as is” and no work is required to be done by
the landlord (and that the tenant would not require any additional tenant work
or reconfiguration of the existing tenant work); (D) market rents
then being charged for comparable space in other similar office buildings in
comparable locations; and (E) all other relevant factors. For purposes of
this Sublease, (i) a “Sublessor
Affiliate”
shall mean any entity controlling, controlled by or under
common control with Sublessor or with which Sublessor merges, consolidates or
which purchases all or substantially all of the assets of Sublessor.


 


(b)           No later than ten (10) business
days after the delivery of the Availability Notice to Subtenant, Subtenant
shall notify Sublessor either (i) that Subtenant is not interested in


 


25

















 


subleasing the Available
Additional Space, or (ii) that Subtenant will sublease the Available
Additional Space from Sublessor commencing on the Expansion Space Sublease
Commencement Date designated in such Availability Notice on the Economic Terms
proposed by Sublessor. If Subtenant fails to respond within such ten (10) business
day period, Subtenant shall be deemed to have elected not to sublease the
Available Additional Space. If Subtenant timely notifies Sublessor pursuant to
clause (ii) above that Subtenant will sublease the Available Additional
Space from Sublessor on the Economic Terms proposed by Sublessor, then the
Available Additional Space (“Expansion Space”)  shall become part of the Sublet Premises
effective as of the Expansion Space Sublease Commencement Date, for a Sublease
Term (the “Expansion Space Sublease Term”)  commencing on the Expansion Space Sublease
Commencement Date and expiring on the last day of the Sublease Term, upon the
Economic Terms proposed by Sublessor and otherwise upon all of the terms and
conditions set forth in this Sublease.


 


(c)           Except as may otherwise be specified
in the Economic Terms, Subtenant shall accept such Expansion Space in its
“as-is”, “where-is” condition, and Sublessor shall not be required to perform
any work of any sort with respect to such Expansion Space.


 


(d)           Notwithstanding anything contained in
this Sublease to the contrary, the amount of parking spaces granted by
Sublessor under any Expansion Space sublease, if any, shall be determined by
Sublessor in its sole and absolute discretion. In no event, however, shall
Subtenant’s ratio of parking spaces to rentable square feet of Sublet Premises
(in the aggregate) be less than 1:1000.


 


(e)           In the event Subtenant does not
timely exercise any Expansion Option with respect to any Available Additional
Space or notifies Sublessor that Subtenant is not interested in subleasing the
Available Additional Space, Sublessor shall be free to sublease all or any part
of such space to any other party upon such terms  and conditions that Sublessor may determine,
provided that if Sublessor does not enter into a sublease, letter of intent or
term sheet for the subleasing of the Available Additional Space within nine (9) months
after Subtenant’s rights to sublease such Available Additional Space expired,
then Sublessor shall again offer such Available Additional Space if and to the
extent required by this Section 26.


 


(f)            If (a) Subtenant does not
exercise the Expansion Option with respect to any Available Additional Space
and Sublessor enters into a sublease with a third party for such space as
provided in subsection (e) above, and (b) Sublessor once again
desires to market such Available Additional Space for sublease, Subtenant shall
once again have the right to sublease such space pursuant to, and subject to
the terms and conditions of, this Section 26.


 


(g)           Subtenant hereby acknowledges and
agrees that (i) the aforesaid time limitations upon the exercise of the
Expansion Option will be strictly enforced, (ii) any attempt to exercise
any such option at any other time shall be void and of no further force or
effect, (iii) if any Expansion Option is not exercised within the required
time period, Sublessor intends immediately thereafter to undertake appropriate
efforts relating to the use, marketing or management of the space that is the
subject of such option, and (iv) the period of time within which any such
option may be exercised shall not be extended or enlarged by reason of


 


26

















 


Subtenant’s failure or inability to exercise
any such option for any reason whatsoever. The exercise by Subtenant of any
Expansion Option shall be irrevocable.


 


27.          Renewal
Option. Subject to
the provisions of subsection (c) below, and subject to Sublessor’s right
to recapture the Sublet Premises as hereinafter set forth, Subtenant shall have
a conditional right (the “Renewal Option”)  to renew or
extend the Sublease Term for one (1) additional
period of three (3) years (the “Renewal Period”). If Subtenant desires to exercise the
Renewal Option, Subtenant shall give written notice thereof to Sublessor at
least twelve (12) months prior to the expiration of the initial Sublease Term.
Sublessor shall have the right, exercisable within thirty (30) days after
receipt of Subtenant’s renewal notice, to elect to recapture the Sublet
Premises, effective at the end of the initial Sublease Term, if Sublessor
requires the Sublet Premises for its own use. If Sublessor so elects, in
writing, within such thirty (30)-day period, then the Renewal Option shall
terminate and be null and void and this Sublease shall terminate and expire on
the last day of the initial Sublease Term as if this Section 27 were not
part of the Sublease.


 


(a)           In the event that Subtenant exercises the
Renewal Option in accordance with the provisions hereof, and Sublessor does not
elect to recapture the Sublet Premises as permitted above, then the Sublease
Term shall be extended for the Renewal Period. Except as otherwise expressly
provided herein, the Renewal Period shall be upon the same terms, covenants and
conditions as set forth herein with respect to the immediately preceding
Sublease Term. All references in this Sublease to the Sublease Term shall be
construed to mean the initial Sublease Term and the Renewal Period, unless the
context clearly indicates that another meaning is intended. For purposes of
this Lease, no distinction is made between the terms “extend” and “renew,” or
any variations thereof.


 


(b)           The Annual Base Subrental for the Sublet
Premises for the Renewal Period shall be as follows:


 


	
  Sublease Year in

  Renewal Period

  	
   

  	
  Annual Base

  Subrent per

  Rentable Square

  Foot

  	
   

  	
  Annual Base

  Subrent

  	
   

  	
  Monthly Installment

  of Annual Base

  Subrent

  	
   

  
	
  1

  	
   

  	
  $

  	
  52.17

  	
   

  	
  $

  	
  1,631,929.70

  	
   

  	
  $

  	
  135,994.14

  	
   

  
	
  2

  	
   

  	
  $

  	
  53.74

  	
   

  	
  $

  	
  1,681,040.90

  	
   

  	
  $

  	
  140,086.74

  	
   

  
	
  3

  	
   

  	
  $

  	
  55.35

  	
   

  	
  $

  	
  1,731,403.30

  	
   

  	
  $

  	
  144,283.60

  	
   

  



 


(c)           The Renewal Option referred to in
this Section 27 may not be exercised by Subtenant if, at the time
specified in Section 27(a) for exercising such option, (i) this
Sublease shall not be in full force and effect, (ii) Subtenant is in
default of any obligation under this Sublease after expiration of any
applicable notice and cure period, (iii) the named Subtenant hereunder
shall have assigned its rights under this Sublease, or (iv) Subtenant
shall have sublet


 


27

















 


all or more than twenty-five percent (25%) of
the Sublet Premises. If Subtenant shall fail to exercise the Renewal Option
during the time or in the manner provided in this Section 27 for the
exercise thereof, or if at the time specified for the exercise of such Renewal
Option, Subtenant shall not be entitled to exercise such option because of the
provisions hereof, then, and in either event, such Renewal Option shall be
absolutely void and of no force and effect.


 


28.          Amenities.


 


(a)           Cafeteria
Use. As of the date
of this Sublease, Sublessor is operating a cafeteria (the “Cafeteria”) on the
fourth (4th) floor of the Building for use by Sublessor’s employees for dining
purposes during the hours of cafeteria operations only. Except as set forth
below, Sublessor will maintain and operate the Cafeteria in a first-class
manner and through a reputable food service operator throughout the Sublease
Term. During the Sublease Term, Subtenant’s employees officing in the Building
will have the use of the Cafeteria at no additional cost to Subtenant; provided
that such employees will pay the cost of food, drinks and other items sold in
the Cafeteria at the prices regularly charged for such food, drinks and other
items from time to time to Sublessor’s employees. Use of the Cafeteria by
Subtenant’s employees shall be subject to Sublessor’s reasonable rules and
regulations, including, without limitation, that the Cafeteria may not be
utilized by Subtenant or its employees for any purposes other than dining, e.g., holding meetings or group functions.
Notwithstanding anything contained in this Sublease to the contrary, Sublessor
shall have the right, at its sole option and in its absolute discretion, to
discontinue operation of the Cafeteria (and Subtenant shall thereafter have no
rights to use the Cafeteria or the space previously occupied by the Cafeteria,
subject to the next sentence). If Sublessor discontinues operation of the
Cafeteria, Sublessor shall have no further duties or obligations to Sublessee
under this Section 28 unless and until Sublessor again elects to operate a
Cafeteria in the Building, in which event Sublessor shall make the Cafeteria
available to Subtenant in the manner, and subject to the terms, provided in
this Section 28. If Sublessor is prohibited from operating the Cafeteria
for any reason (including, without limitation, closures for permitting
reasons), Sublessor shall have no obligation hereunder to continue to operate
the Cafeteria. Subtenant’s use of the Cafeteria shall be subject and
subordinate to the use of Sublessor, and Sublessor reserves the right to close
the Cafeteria or restrict access to all or any part of the Cafeteria from time
to time in connection with meetings, functions, and special occasions serving
the Sublessor employee community.


 


(b)           Fitness
Facility. During the
Sublease Term, (i) to the extent that a health and fitness facility (a “Fitness Facility”) is
being operated by or on behalf of Sublessor in the Building, and (ii) the
named Subtenant in this Sublease is the Subtenant hereunder, Subtenant’s
employees (but not the employees of any other party including, without
limitation, any subtenant of Subtenant) will have the right to use the Fitness
Facility at a monthly rate equal to the rate being charged from time to time to
Sublessor’s employess (currently, no charge). Prior to using the Fitness
Facility, each of Subtenant’s employees using the Fitness Facility will be
required to provide an executed Fitness Center Consent & Waiver of
Liability form (current form attached  hereto as Exhibit E,
but which may be modified from time to time by Sublessor) or other
forms used by Sublessor from time to time with respect to Sublessor’s
employees’ use of the Fitness Facility. Notwithstanding anything contained in
this Sublease to the contrary, Sublessor shall have no obligation to operate
the Fitness Facility or similar facility during the Sublease Term and may
discontinue operation of the Fitness Facility or any similar facility at


 


28

















 


any time and at Sublessor’s
sole option, without notice, in which event Sublessor shall have no further
duties or obligations under this Section 28(b). Use of the Fitness
Facility will be subject to Sublessor’s rules and regulations promulgated
from time to time.


 


(c)           Bike
Room/Shower Facilities. Subtenant
shall, and shall cause its employees to, comply with all rules, regulations,
and requirements of Landlord (or Sublessor, if applicable), in its use of the
bike room and shower facilities provided by Landlord on Level BI of the parking garage. Prior to using
the bike room or shower facilities, each of Subtenant’s employees will be
required to provide an executed Waiver and Release form (current form attached
hereto as Exhibit F, but
which may be modified from time to time). Current rules and regulations
(which may be modified from time to time) are attached hereto as Exhibit G. Sublessor accepts no
responsibility for providing the bike room or shower facilities or for
maintaining either, and either may be discontinued at any time.


 


(d)           Other
Amenities. Other than
use of the Cafeteria and Fitness Facility, Subtenant shall have no right to use
or enjoy any other amenity located within the Sublessor’s Premises.


 


[Signature Page Follows]


 


29

















 


IN
WITNESS WHEREOF, the
parties hereto have made and entered into this Sublease Agreement under seal as
of the date and year first set forth above.


 


	
   

  	
   

  	
  SUBLESSOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WITNESS/ATTEST: 

  	
   

  	
  THE CORPORATE EXECUTIVE BOARD 

  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Barron Anshutz 

  	
   

  	
  By:

  	
  /s/ Pamela Auerbach

  
	
  Barron Anshutz ,
  Controller

  	
   

  	
  Name:

  	
  Pamela Auerbach

  
	
   

  	
   

  	
  Title:

  	
  Corp Counsel/Secretary

  
						



 


 


	
   

  	
   

  	
  SUBTENANT:

  
	
   

  	
   

  	
   

  
	
  WITNESS/ATTEST: 

  	
   

  	
  ROSETTA STONE LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Michael Wu

  	
   

  	
  By:

  	
  /s/ Tom Adams

  
	
  Michael Wu, GC

  	
   

  	
  Name:

  	
  Tom Adams

  
	
   

  	
   

  	
  Title:

  	
  CEO

  
						



 


S-1