SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED COMMISSION
MARCH 31, 1998 FILE NO. 0-22405
INFORMATION ANALYSIS INCORPORATED
(Exact name of Registrant as specified in its charter)
VIRGINIA 54-1167364
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11240 WAPLES MILL ROAD, SUITE 400, FAIRFAX, VA 22030
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number,
including area code) (703) 383-3000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
---------- ----------
State the number of shares outstanding of each of the issuer's classes of
common stock, as of March 31, 1998:
Common Stock, par value $.01, 6,612,044 shares
Transitional small business disclosure format.
Yes No x .
---------- ----------
<PAGE>
INFORMATION ANALYSIS INCORPORATED
FORM 10-QSB
Index
Page
PART I. FINANCIAL INFORMATION Number
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of
March 31, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Operations
for the three months and nine months ended
March 31, 1998 and March 31 1997 4
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 1998 and
March 31, 1997 5
Notes to Unaudited Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 2. Changes in Securities 10
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 11
2
<PAGE>
INFORMATION ANALYSIS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
As Of
March 31, 1998 As Of
Unaudited December 31, 1997
-------------- -----------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $3,355,913 $ 363,753
Accounts receivable, net 5,088,998 3,128,179
Employee advances 86,216 73,513
Refundable income taxes 33,119 33,119
Prepaid expenses 174,862 53,592
Other receivables 47,227 29,167
---------- ----------
Total current assets 8,786,335 3,681,323
Fixed assets, net 863,451 780,442
Equipment under capital leases, net 43,337 49,845
Capitalized software, net 5,206,725 4,431,372
Goodwill -- 12,450
Other receivables 41,656 41,656
Other assets 19,450 19,450
---------- ----------
Total assets $14,960,954 $9,016,538
=========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,331,047 $1,122,282
Accrued payroll 322,999 660,060
Other accrued liabilities 1,120,229 518,402
Revolving line of credit -- 599,600
Current portion of long-term debt 103,624 103,624
Current maturities of capital lease obligations 18,870 22,960
----------- ---------
Total current liabilities 2,896,769 3,026,928
Long-term debt --
Capital lease obligations, net of current portion 12,421 12,421
----------- ---------
Total liabilities 2,909,190 3,039,349
Common stock, par value $0.01, 15,000,000 shares authorized; 8,116,655 and
7,498,430 shares issued, 6,612,044 and 5,993,819 outstanding at March
31, 1998 and December 31, 1997, respectively 81,167 74,984
Additional paid in capital 12,526,544 6,517,655
Retained earnings 298,366 238,863
Less treasury stock; 1,504,611 shares at cost (854,313) (854,313)
----------- ----------
Total stockholders' equity 12,051,764 5,977,189
----------- ----------
Total liabilities and stockholders' equity $14,960,954 $9,016,538
=========== ==========
</TABLE>
See accompanying notes.
3
<PAGE>
INFORMATION ANALYSIS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months ended
March 31,
--------------------------------
1998
Unaudited 1997
----------- ----------
<S> <C>
Sales
Professional fees $2,037,040 $1,498,270
Software sales 2,131,966 63,773
---------- ----------
Total sales 4,169,006 1,562,043
Cost of sales
Cost of professional fees 1,592,662 1,200,507
Cost of software sales 574,921 50,863
---------- ----------
Total cost of sales 2,167,583 1,251,370
---------- ----------
Gross profit 2,001,423 310,673
Selling, general and administrative expenses 1,686,207 579,388
Research & Development 287,753 23,574
---------- ----------
Income (loss) from operations 27,463 (292,289)
Other income (expense) 32,040 (5,074)
---------- ----------
Gain (loss) before provision for income taxes 59,503 (297,363)
Provision (benefit) for income taxes 0 73,728
Net income (loss) $ 59,503 ($371,091)
========== ==========
Earnings per common share
Basic $0.01 ($0.07)
Diluted $0.01 ($0.07)
Weighted average common shares outstanding
Basic 6,497,215 5,007,349
Diluted 8,205,965 5,007,349
</TABLE>
See accompanying notes.
4
<PAGE>
INFORMATION ANALYSIS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
-------------------------------
1998
Unaudited 1997
----------- ----------
<S> <C>
Net income (loss) $ 59,503 ($371,091)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 69,663 39,413
Amortization 26,877 21,584
Software amortization of capitalized software 201,400 3,805
Changes in operating assets and liabilities
Accounts receivable (1,960,819) (190,354)
Other receivables and prepaid expenses (152,033) 40,718
Refundable income taxes -- 2,086
Deferred income taxes -- 71,642
Accounts payable and accrued expenses 291,643 222,200
----------- ----------
Net cash (used) by operating activities ($1,463,766) ($159,997)
----------- ----------
Cash flows from investing activities
Acquisition of furniture and equipment (160,592) (245,564)
Increase in capitalized software (976,753) (483,422)
----------- ----------
Net cash used in investing activities (1,137,345) (728,986)
----------- ----------
Cash flows from financing activities
Net payments under bank revolving line of credit (599,600) --
Principal payments on capital leases (4,090) (3,920)
Net Proceeds from private placement 5,646,685 4,999,995
Proceeds from exercise of warrants 219,989 --
Proceeds from exercise of incentive stock options 148,399 103,686
----------- ----------
Net cash provided by financing activities 5,411,383 5,099,761
----------- ----------
Net increase in cash and cash equivalents 2,810,272 4,210,778
Cash and cash equivalents at beginning of the period 363,753 323,886
Cash and cash equivalents at end of the period $3,174,025 $4,534,664
=========== ==========
Supplemental cash flow Information Interest paid $ 6,092 $ 5,943
</TABLE>
See accompanying notes.
5
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
INFORMATION ANALYSIS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared
by Information Analysis Incorporated ("IAI" or the "Company") pursuant to the
rules and regulations of the Securities and Exchange Commission. Financial
information included herein is unaudited, however, in the opinion of management,
all adjustments (which include normal recurring adjustments) considered
necessary for a fair presentation have been made. Certain information and
footnote disclosures normally included in annual financial statements prepared
in accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations, but the Company believes that the
disclosures made are adequate to make the information presented not misleading.
For more complete financial information, these financial statements should be
read in conjunction with the audited financial statements and notes thereto for
the year ended December 31, 1997 included in the Company's annual report on Form
10-KSB. Results for interim periods are not necessarily indicative of the
results for any other interim period or for the full fiscal year.
In January, 1998, the Company, pursuant to Rule 506 of Regulation D
under the Securities Act of 1933, as amended, sold 545,155 shares of its Common
Stock at a price of $11 per share ("the Offering"). The sale of shares was
limited to only accredited investors within the meaning of Regulation D.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATION.
OVERVIEW
Prior to 1997, IAI was primarily dedicated to providing a range of
information technology services such as software applications development,
software conversions, information systems reengineering and systems integration.
In 1996, IAI acquired the rights to a software tool which IAI initially intended
to utilize for systems conversion services as companies seek to migrate from
mainframe legacy systems to more modern day platforms and environments. After
acquiring the rights to this tool, which IAI named UNICAST, IAI recognized that
the tool's functionality was capable of being extended to address the Year 2000
problem currently confronting many computer systems. This problem basically
prevents certain software applications from recognizing dates and executing
transactions involving years subsequent to 1999.
In 1997, IAI's efforts were primarily devoted towards transitioning to
a product and services focus centered around UNICAST. As part of this
transition, in 1997 (i) the Company developed, or commenced the development of,
a family of products to achieve Year 2000 compliancy for specific language
environments, (ii) implemented its own "solutions factory" to provide Year 2000
services on an outsourced basis, (iii) entered into strategic relationships
centered around UNICAST, including a marketing alliance with Computer Associates
International, Inc. ("CA") under which UNICAST is included as part of CA's suite
of Year 2000 tools and licensing and other arrangements with other solutions
providers offering to provide, on an outsourced basis, Year 2000 services and
(iv) expanded the Company's infrastructure to
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meet the anticipated growth which the Company was projecting for its Year 2000
products and services.
It was not until the fourth quarter of 1997 that the Company began to
realize escalating revenues associated with its Year 2000 products and services.
In this quarter, approximately $1.9 million of the $2.9 million of total revenue
was Year-2000-related activity. This revenue base continued to grow in the first
quarter of 1998. See, "Three Months Ended March 31, 1998 vs. Three Months Ended
March 31, 1997." The changes in the Company's business and operations, as above
described, substantially account for the differences in results of operations
between the first quarter of 1998 and the first quarter of 1997. Therefore,
these changes in the Company's business and operations should be noted when
comparing the results of operations between any respective period in 1998 with a
comparable period in 1997.
During the first quarter of FY1998, IAI continued its transition to
Year 2000 products and services. Of the Company's $4.2 million of revenue, $2.0
million was UNICAST/2000 software, and $1.0 million was professional services
for Year 2000 clients. Moreover, the Company had bookings of $5.8 million in the
first quarter and, at the end of the first quarter, is providing Year 2000
services for 17 clients. The Company's profit of $60,000, or $0.01 per share,
was the first since the first quarter of fiscal 1996.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-QSB contains forward-looking statements regarding the
Company's business, customer prospects, or other factors that may affect future
earnings or financial results that are subject to the safe harbor created by the
Private Securities Litigation Reform Act of 1995. Such statements involve risks
and uncertainties which could cause actual results to vary materially from those
expressed in the forward-looking statements. Investors should read and
understand the risk factors detailed in the Company's 10-KSB for the fiscal year
ended December 31, 1997 and in other filings with the Securities and Exchange
Commission.
THREE MONTHS ENDED MARCH 31, 1998 VERSUS THREE MONTHS ENDED MARCH 31, 1997
Revenue
The Company has substantially changed its business since the first
quarter of 1997 (see "Overview", above). IAI's revenues in the first quarter of
fiscal 1998 were $4.2 million, compared to $1.6 million in the first quarter of
fiscal 1997, an increase of 167%. Professional services revenue was $2.0 million
versus $1.5 million, an increase of 33%, and product revenue was $2.1 million
versus $64,000. The increase in revenue in each of the Company's reporting
segments is attributable to Year 2000 programs in 1998 that were not materially
present in 1997. Product revenue in 1997 was for sale of software not related to
Year 2000 programs.
Going forward, IAI's revenues may be difficult to predict. Because the
Year 2000 market has little prior history, the sales cycle length is not
presently known. Moreover, IAI offers both products and services. Customers that
choose IAI may elect to license the Company's products, which would generate one
level of revenue recognizable in one time period; or utilize IAI's solutions
factory, which would generate a different level of revenue recognizable over a
longer time period. This revenue stream is largely dependent upon the actions of
third parties. As a small company, IAI cannot call on the numerous organizations
7
<PAGE>
with Year 2000 remediation needs. Instead, IAI has formed alliances, most
notably with CA, to sell IAI's products and services. The Company's internal
sales and marketing organization does make sales calls and does generate
revenue; but devotes the bulk of its resources to leveraging the activities of
third-party sales organizations.
Gross Margins
Gross margins were $2.0 million, or 48% of sales, in the first quarter
of fiscal 1998 versus $0.3 million, or 20% of sales, in the first quarter of
fiscal 1997. Of the $2.0 million in 1998, $1.6 million was attributable to
software and $0.4 million was due to professional services. Gross margins as a
percentage of sales were 73% for software and 22% for professional services. In
the first quarter of 1997, the Company reported gross margins of approximately
20% for both software and professional services. The improvement in overall
gross margin in the first quarter of 1998 was attributable to a higher
percentage of high-margin software product sales, augmented by higher-margin
Year 2000 consulting; businesses which now comprise most of the Company's
revenues. While professional services gross margins as a percentage of sales
were slightly higher than in the comparable period in 1997, the Company believes
its 1998 professional services gross margins were affected by
lower-than-commercial pricing given to customers working with pre-release
("beta") versions of IAI's software.
Going forward, IAI's gross margins for Year 2000 work may not be
consistent from quarter to quarter. IAI is in an extremely competitive market.
The Year 2000 remediation market has attracted a very large number of
participants. Some of these companies are quite large and have substantial
sales, marketing, and R&D resources. Most are small and are seeking to establish
a place in the industry. Certain companies market their solutions very
aggressively and may seek to cut prices as a means of gaining market share,
which could affect the Company's pricing strategy. Conversely, the Company
believes that, as the year 2000 approaches, available resources may be
insufficient to meet demand, which could drive up the cost and profitability of
such services.
Selling, General and Administrative
Selling, general and administrative expenses (SG&A) were $1.7 million,
or 40.4% of revenues, in the first quarter of 1998 versus $0.6 million, or 37.1%
of revenues, in the first quarter of 1997, an increase of 191%. The increase is
attributable to the Company's increase in spending to support expected growth.
The Company believes that SG&A expense will decline as a percentage of revenue
as sales increase.
Research and Development
Research and Development (R&D) expenditures were $0.3 million in the
first quarter of fiscal 1998 versus $24,000 in the first quarter of fiscal 1997.
The increase is due to higher software maintenance expenses in 1998. The Company
had no Year 2000 software in general release in the first quarter of 1997. In
addition to reported R&D expenditures, IAI capitalized $0.7 million of software
development cost in the first quarter of 1998 and $0.5 million in the first
quarter of 1997. The increase was attributable to the Company developing
software for multiple languages in 1998 versus development on one language in
1997.
Profits
The Company generated an operating profit of $28,000 in the first
quarter of 1998 compared to a loss of $0.3 million in the first quarter of 1997.
In general, the profit reflected a substantial improvement in gross margins and
higher sales, which were offset in part by higher
8
<PAGE>
spending for SG&A and R&D. Other income of $32,000 came from interest on
deposited funds, and was in contrast to an expense of $5,000 in the year-earlier
period based on borrowings against the Company's line of credit. Because of a
net operating loss carryforward, the Company did not accrue for income taxes in
the first quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES
In the first quarter of 1998, the Company financed its operations from
current collections and through proceeds obtained in a private placement, which
yielded net proceeds of $5.6 million. As of March 31, 1998 the Company had no
outstanding balance on its line of credit. Cash and cash equivalents at March
31, 1998 were $3,355,913, compared to $4,534,664 at March 31, 1997.
The Company's line of credit of $1,500,000 expires June 19, 1998 at
which time it is subject to renewal. The Company believes its line of credit,
coupled with funds generated from operations and proceeds from the private
placement, should be sufficient to meet IAI's operating cash requirements for
the foreseeable future. However, the Company may from time to time consider
raising additional equity.
The Company has no material commitments for capital expenditures.
PART II - OTHER INFORMATION
ITEM 2. CHANGE IN SECURITIES.
(a) In January, 1998, the Company, pursuant to Rule 506 of Regulation D under
the Securities Act of 1933, as amended, sold 545,155 shares of its Common Stock
at a price of $11 per share ("the Offering"). The sale of shares was limited to
only accredited investors within the meaning of Regulation D. Each purchaser in
the Offering was required to certify to their respective level of assets, net
worth or income to qualify as an accredited investor. Fifteen institutional
investors purchased 388,246 shares and 15 individuals purchased 156,909 shares
in the Offering.
For the Offering, the Company used the services of Newby & Company of
Rockville, Maryland ("Newby") and Cruttenden & Roth, Inc. of Irvine, California
("Cruttenden") to assist in the placement of shares. Commissions were paid to
Newby in the form of 12,886 shares of Common Stock and $350,020 to Cruttenden,
of which Cruttenden invested $100,001 to acquire 9,091 shares of Common Stock in
the Offering.
9
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See the Index to Exhibits attached hereto.
(b) No reports on Form 8-K were filed for the quarter for which this report is
filed.
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Information Analysis Incorporated
(Registrant)
Date: May 11, 1998 By: /s/ Sandor Rosenberg
____________ _________________________________
Sandor Rosenberg, Chairman of the
Board and President
By: /s/ Richard S. DeRose
_________________________________
Richard S. DeRose, Executive Vice
President and Treasurer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
10.1 Amended Royalty Agreement between James C.
Wester and the Company in exchange for
development expense advances.
10.2 Amended Software Purchase Agreement between
Kenneth K. Parsons and the Company for the
purchase of CAST software.
10.3 Office lease for 19,357 square feet at 3877
Fairfax Ridge Road, Fairfax, Virginia
27.1 Financial Data Schedule
11
Exhibit 10.1
ADDENDUM TO SOFTWARE ROYALTY AGREEMENT DATED 9/1/96
Between James Wester and Information Analysis, Inc.
This ADDENDUM replaces paragraph 3 to read:
"Royalty Sharing - In consideration of the funds to be provided by
Wester for expense sharing, Wester shall be entitled to receive
royalties from IAI based upon the following schedule of net license
revenue received for the CAST product, not to exceed in the aggregate,
150% of the funds provided by Wester to IAI under Paragraph 2 above.
Percentage of License Fees
1st Half 1998 1%
2nd Half 1998 2%
1999 & thereafter 10%
IAI will provide a quarterly report to Wester of license revenue
received for the CAST product, accompanied by a check for the royalty
due to Wester with respect to the license revenue included on said
report."
Information Analysis, Inc.
/s/ James Wester /s/ Sandor Rosenberg
___________________________ _______________________________
James Wester By Sandor Rosenberg
Title: Chief Executive Officer
March 31, 1998 March 31, 1998
___________________________ _______________________________
Date Date
Exhibit 10.2
ADDENDUM ONE TO SOFTWARE PURCHASE AGREEMENT DATED 8/15/96
Between Kenneth K. Parsons and Information Analysis Incorporated
This ADDENDUM replaces paragraph 3.2 to read:
"The Seller shall be entitled to a royalty equal to the following
schedule of the net license fees collected by IAI from the licensing of
the Software to third parties.
Percentage of License Fees
1st Half 1998 .5%
2nd Half 1998 2.0%
1999 & thereafter 10.0%
Royalties shall be payable to the Seller based on actual collections
received for the CAST software and shall be payable on a quarterly
basis. The aggregate amount of royalties payable by IAI to the Seller
pursuant to this Agreement shall not exceed $1,000,000."
Information Analysis, Inc.
/s/ Kenneth K. Parsons /s/ Sandor Rosenberg
___________________________ ______________________________
Kenneth K. Parsons By Sandor Rosenberg
Title: Chief Executive Officer
March 31, 1998 March 31, 1998
___________________________ ______________________________
Date Date
Exhibit 10.3
AGREEMENT OF SUBLEASE
THIS AGREEMENT OF SUBLEASE (hereinafter referred to as the "Sublease")
is made and entered into this 20th day of March, 1998, by and between BTG, Inc.,
a Virginia Corporation (hereinafter referred to as the "Sublessor"), and
Information Analysis Incorporated, a Virginia Corporation (hereinafter referred
to as the "Sublessee").
WITNESSETH:
WHEREAS, pursuant to that certain DEED OF LEASE dated August 16, 1996
as amended pursuant to the FIRST AMENDMENT TO DEED OF LEASE dated May 22, 1997
(collectively hereinafter referred to as the "Prime Lease", a copy of which is
attached hereto as Exhibit "A"), Sublessor has leased from Gateway Piedmont,
Inc. (hereinafter referred to as the "Prime Landlord") the entirety of buildings
1, 2, and 3 of the High Ridge Office Park located at 3877 Fairfax Ridge Road,
Fairfax, Virginia 22030 (hereinafter referred to as the "Office Park");
WHEREAS, Sublessee desires to sublease from the Sublessor approximately
19,357 square feet of space consisting of the entire second (2nd) floor of
building 1 in the Office Park (hereinafter referred to as the "Building") leased
by Sublessor under the Prime Lease with Prime Landlord; and
WHEREAS, the parties hereto desire to provide for the rental and
further terms and conditions of this Sublease;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. Sublease Premises. The Sublessor does hereby sublease to the
Sublessee, and the Sublessee does hereby sublease from the Sublessor, for the
term and upon the conditions hereinafter provided, approximately 19,357 square
feet of space in the Building, as shown on Exhibit "B" attached hereto
(hereinafter referred to as the "Sublease Premises").
2. Term. The term of this Sublease shall commence on April 1, 1998 (the
"Sublease Commencement Date") and expire at midnight on March 31, 2000, or any
earlier termination thereof. In the event that Sublessee desires to extend the
term of the Sublease for an additional one-year term, Sublessee shall notify
Sublessor in writing no earlier than July 1, 1999 nor later than October 1, 1999
that it would like to extend the Sublease expiration to March 31, 2001.
Sublessor shall within ten (10) business days of receipt of Sublessee's notice
notify Sublessee whether it accepts or declines Sublessee's request for an
extension of the term of the Sublease, it being understood by both parties that
Sublessor in its sole and absolute discretion may choose to accept or decline
Sublessee's request. Should Sublessee fail to receive a response from Sublessor
within said ten (10) business day period, Sublessee shall submit a second
written notice which shall clearly state that a prior written notice was sent,
and that the notice is a second written notice that must be responded to within
five (5) business days. Failure of Sublessor to respond to
<PAGE>
Sublessee's second written notice within five (5) business days shall be deemed
to be an acceptance of Sublessee's request for an extension of the term of the
Sublease.
3. Condition of Premises; Alterations. As of the commencement of the
Sublease, the Sublessor shall deliver to the Sublessee the Sublease Premises in
"AS IS" condition, free of any third party encumbrances, broom swept and clean,
and with all Building systems in good working order. Any alterations performed
to the Sublease Premises by Sublessee are subject to Sublessor's reasonable
prior written consent and to the provisions of Article 15 of the Prime Lease. In
the event that either Sublessor or the Prime Landlord requires any of
Sublessee's approved alterations made to the Sublease Premises to be removed at
the expiration of the Sublease or Prime Lease, Sublessee shall, prior to the
expiration of the Sublease and at Sublessee's sole cost, cause the removal of
said alterations and return the Sublease Premises to its condition as of the
Sublease Commencement Date, ordinary wear and tear excepted.
4. Use. The Sublessee shall use and occupy the Sublease Premises solely
for general office purposes in accordance with the terms of the Prime Lease.
Smoking is prohibited in the Sublease Premises or elsewhere in the Building.
5. Rent. The rent reserved under this Sublease for the term hereby
created shall consist of (a) an annual rent (hereinafter referred to as "Base
Rent") in an amount as set forth below in Section 6 hereof ; and (b) such
additional sums of money as may be payable by the Sublessee from time to time
pursuant to the provisions of this Sublease (hereinafter referred to as
"Additional Rent"). The Sublessee covenants and agrees to pay the Base Rent and
Additional Rent (hereinafter sometimes collectively referred to as "Rent") to
the Sublessor at its notice address as set forth in Section 16 below, or at such
other address as the Sublessor may hereafter designate in writing, in lawful
money of the United States, without notice, demand, set off or deduction
whatsoever, at the times and in the manner hereinafter specified. Sublessee
shall pay a late charge of five percent (5%) of the amount of any installment of
Rent not paid within five (5) business days of the due date. In addition to the
foregoing late charge, all past due payments of Rent shall bear interest
beginning on the first day of the month following the due date until paid, at
the rate ("Interest Rate") of two percent (2%) above the prime rate of interest
from time to time publicly announced by NationsBank, N.A., or any successor
thereof; provided, however, that the interest sought to be imposed shall not
exceed the maximum rate permitted under Federal law or under the laws of the
Commonwealth of Virginia.
6. Base Rent. The Base Rent payable by Sublessee during the Sublease
Term shall be as follows:
<TABLE>
<S><C>
From 4/1/98 - 3/31/99: $20.00 psf $387,140.00/Year $32,261.67/Month
From 4/1/99 - 3/31/00: $20.00 psf $387,140.00/Year $32,261.67/Month
</TABLE>
Base Rent shall be payable in equal monthly installments on the first day of
each and every calendar month during the term of this Sublease, except that the
first such monthly installment in the amount of $32,261.67 shall be due and
payable upon the date of execution and delivery hereof.
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7. Additional Rent. Sublessee shall assume and pay as Additional Rent
during the term of this Sublease any amount which Sublessor becomes obligated to
pay the Prime Landlord under the Prime Lease as a result of Sublessee's
occupancy of the Sublease Premises, which amounts shall be due and payable to
Sublessor by Sublessee within ten (10) days of Sublessee's receipt of a
statement from Sublessor of amounts due.
8. Security Deposit. Sublessee shall deposit Forty Thousand and
00/100's Dollars ($40,000.00) with Sublessor to secure the performance of the
Sublease by Sublessee. The Security Deposit is due and payable upon the date of
execution and delivery hereof. The Security Deposit shall be returned to
Sublessee, without interest, after the fulfillment of the provisions of the
Sublease. Upon the occurrence of a default by Sublessee, Sublessor, without
prejudice to any other remedy, may apply any portion of the Security Deposit to
cure such default, and Sublessee shall pay to Sublessor, on demand, the amount
so applied to cure such default in order to restore the Security Deposit to its
original amount.
9. Obligations Under the Prime Lease. This Sublease and the Sublessee's
rights under this Sublease shall at all times be subject to and is made upon all
of the terms, covenants, rights and conditions of the Prime Lease, with the same
force and effect as if fully set forth herein at length, and except as otherwise
provided for herein, the Sublessee shall keep, observe and perform or cause to
be kept, observed and performed, faithfully all of the applicable terms,
covenants, and conditions of the Sublessor under the Prime Lease.
10. Insurance.
a. The Sublessee shall obtain and at all times during the
Sublease Term keep in force such insurance coverage, in type, form, amount, and
by such insurer, as is required under Article 12 of the Prime Lease.
b. The Sublessee shall deliver to the Sublessor certificates
of such insurance prior to the Sublease Commencement Date, and thereafter
certificates of renewal thereof not less than thirty (30) business days prior to
the expiration of any such policy. In the event that the Sublessee shall fail
promptly to furnish any insurance herein required, the Sublessor may effect the
same and pay the premium thereof for a period not exceeding one (1) year, and
the premium so paid by the Sublessor shall be immediately payable by the
Sublessee as Additional Rent.
c. All policies of insurance as aforesaid shall name the
Sublessor, the Prime Landlord, and such other entity as Prime Landlord may
require under the Prime Lease, as additional insureds, as their interests may
appear.
11. Default. If the Sublessee shall default with respect to this
Sublease and the Sublease Premises beyond any applicable cure period, the
Sublessor shall have all of the rights and remedies afforded to the Prime
Landlord under the Prime Lease. In the event of default by Sublessee, Sublessor
shall provide written notice (in accordance with paragraph 16 hereof) to
Sublessee identifying the default. Sublessor agrees to grant to Sublessee a
seven (7) day cure period from the notice date, and such additional reasonable
period necessary to cure non-monetary defaults so long as Sublessee is in good
faith diligently proceeding to remedy.
-3-
<PAGE>
12. Subordination. This Sublease is subject and subordinate to the
Prime Lease, to all ground and underlying leases, and to all mortgages and deeds
of trust which may now or hereafter affect such leases, the leasehold estate or
estates thereby created or the real property of which the Sublease Premises form
a part, and to any and all renewals, modifications, consolidations, replacements
and extensions thereof, provided that the Sublessor agrees not to effect any
modification or amendment of the Prime Lease which might adversely and
materially affect the rights of the Sublessee hereunder without the written
consent of the Sublessee in each case.
13. Assignments and Further Subleases. Sublessee may not assign or
further sublease the Sublease Premises.
14. Quiet Enjoyment. The Sublessor covenants and agrees with the
Sublessee that, upon the Sublessee paying the rent reserved in this Sublease and
observing and performing all the terms, covenants and conditions of this
Sublease, the Sublessee may peaceably and quietly enjoy the Sublease Premises
during the term of this Sublease, in accordance with the terms, covenants and
conditions of this Sublease.
15. Intentionally Deleted.
16. Notices. Any notice, demand or other communication which must or
may be given or made by either party hereto shall be in writing and shall be
given or made by hand delivery, or by mailing the same by registered or
certified mail, postage prepaid: (i) In the case of Sublessee, to 11240 Waples
Mill Road, Suite 400, Fairfax, Virginia 22030, Attention: Richard S. DeRose; and
(ii) In the case of Sublessor, to 3877 Fairfax Ridge Road, Fairfax, Virginia
22030, Attention: Deborah Fox, with a copy to The Irving Group, 1950 Old Gallows
Road, Suite 555, Vienna, Virginia 22182, Attention: Mr. Dale Powell. Payment of
Rent pursuant hereto shall be made to the following: BTG, Inc., Attn: Treasurer,
3877 Fairfax Ridge Road, Fairfax, Virginia 22030-8045.
Either party may, by notice to the other given as aforesaid, designate a new or
additional address to which any such notice, demand or other communication
thereafter shall be given, made or mailed. Any notice, demand or communication
given hereunder by mail shall be deemed delivered when deposited with the United
States Postal Service.
17. Surrender. Upon the Expiration Date of this Sublease, the Sublessee
shall quit and surrender to the Sublessor the Sublease Premises, broom clean and
in as good order and condition as they were on the commencement of the Sublease,
ordinary wear excepted, and the Sublessee shall remove from the Sublease
Premises all of its property. Sublessee's obligation to perform and observe this
covenant shall survive the expiration or other termination of this Sublease.
18. Brokers. Sublessor and Sublessee warrant and represent to each
other that, other than The Rome Group (Sublessee's representative) and The
Irving Group (Sublessor's representative), no broker brought about this
transaction or dealt with either party in connection herewith, and each party
agrees to indemnify the other from and against any other outside broker claims.
-4-
<PAGE>
19. Parking. Sublessee shall have the right to utilize the parking
areas within the Office Park in common with Sublessor and other sublessees in
the Building. Sublessor shall designate visitor parking spaces in front of the
Building for Sublessee's and other sublessee's visitor's use.
20. Building Hours; Services. Heating, ventilating, and air
conditioning will be provided for normal business occupancy from 8:00 a.m. to
6:00 p.m. Monday through Friday and from 9:00 a.m. to 1:00 p.m. on Saturdays
except for the following holidays: New Years Day, Memorial Day, 4th of July,
Labor Day, Thanksgiving Day, and Christmas Day. Should Sublessee desire service
outside of the times described above, service will be provided upon Sublessee
providing at least 24 hours advance notice. The cost for the additional service
shall be $40 per hour of additional service provided, which shall be payable as
Additional Rent hereunder.
21. Signage. Sublessee may install a suite entry signage within the
Sublease Premises provided that such sign is removed prior to the expiration of
the Sublease, and all damage from removal is repaired. Sublessor shall, at
Sublessor's cost, list Sublessee's name on the directory in the lobby of the
Building. Additionally, Sublessor shall provide monument directional signage
directing Sublessee's visitors to the Building.
22. Keys; Security. Sublessor shall, at Sublessor's cost, provide
Sublessee with keys or cards for entry into the building and, if applicable, the
elevators (which will provide for after-hour lock-off) at a ratio of 3.6 per
1,000 square feet leased.
23. General Provisions.
a. Benefit and Burden. The covenants, conditions, agreements,
terms and provisions herein contained shall be binding upon, and shall inure to
the benefit of, the parties hereto and each of their respective personal
representatives, successors, heirs, executors, administrators and assigns.
b. Governing Law. It is the intention of the parties hereto
that this Sublease shall be construed and enforced in accordance with the laws
of the Commonwealth of Virginia, without regard to its conflict of law rules.
c. Entire Agreement. This Sublease contains the final and
entire agreement between the parties hereto regarding the subject hereof, and
they shall not be bound by any terms, statements, conditions or representations,
oral or written, express or implied, not herein contained.
d. Conflicts Between this Sublease and the Prime Lease. With
respect to the relationship between the Sublessor and the Sublessee, the terms
and conditions of this Sublease shall take precedence with respect to any
conflict between the terms and conditions contained herein and the terms and
conditions of the Prime Lease. Nothing herein shall be construed in any way to
affect the rights and obligations of the Sublessor and the Prime Landlord under
the Prime Lease.
-5-
<PAGE>
e. Captions. The captions throughout this Sublease are for
convenience or reference only and the words contained therein shall in no way be
held or deemed to define, limit, describe, explain, modify, amplify or add to
the interpretation, construction or meaning of any provision of or the scope or
intent of this Sublease, nor in any way affect this Sublease.
f. Singular and Plural. Wherever appropriate herein, the
singular includes the plural and the plural includes the singular.
g. Counterpart. This Sublease may be executed in several
counterparts, but all counterparts shall constitute but one and the same
instrument.
h. United States Citizenship. Sublessee warrants that
Sublessee is owned by persons possessing citizenship of the United States of
America.
IN WITNESS WHEREOF, the Sublessor and the Sublessee have each executed
this Sublease on the day and year first hereinabove written.
SUBLESSOR:
BTG, INC.
By: /s/ Marilynn D. Bersoff
_______________________
Its: SR VP
_______________________
Date: 3-20-98
_______________________
SUBLESSEE:
INFORMATION ANALYSIS INCORPORATED
By: /s/ Richard S. DeRose
________________________
Its: Executive Vice President
________________________
Date: 3-19-98
________________________
-6-
<PAGE>
EXHIBIT A
DEED OF LEASE
BY AND BETWEEN
TC HIGH RIDGE, L.L.C.
("LANDLORD")
AND
BTG, INC.
("TENANT")
AT
HIGH RIDGE, FAIRFAX COUNTY, VIRGINIA
<PAGE>
TABLE OF CONTENTS
1. TERMS............................................................ 1
-----
2. PAYMENT OF RENT & ADDITIONAL RENT................................ 5
---------------------------------
3. ADVANCE DEPOSIT.................................................. 5
---------------
4. USES; TENANT COVENANTS........................................... 6
----------------------
5. ENVIRONMENTAL PROVISIONS; RECYCLING.............................. 6
-----------------------------------
6. LATE CHARGES; INTEREST........................................... 11
----------------------
7. REPAIRS AND MAINTENANCE.......................................... 11
-----------------------
8. UTILITIES AND SERVICES........................................... 14
----------------------
9. INCREASES IN OPERATING COSTS..................................... 16
----------------------------
10. INCREASES IN REAL ESTATE TAXES................................... 21
------------------------------
11. ADDITIONAL PROVISIONS; OPERATING COSTS AND REAL ESTATE
------------------------------------------------------
TAXES............................................................ 22
-----
12. TENANT'S INSURANCE............................................... 23
------------------
13. LANDLORD'S INSURANCE............................................. 24
--------------------
14. DAMAGE OR DESTRUCTION............................................ 25
---------------------
15. MACHINERY AND EQUIPMENT; ALTERATIONS AND ADDITIONS;
---------------------------------------------------
REMOVAL OF FIXTURES.............................................. 27
-------------------
16. ACCEPTANCE OF PREMISES........................................... 28
----------------------
17. TENANT IMPROVEMENTS.............................................. 29
-------------------
18. ACCESS........................................................... 29
------
19. MUTUAL WAIVER OF SUBROGATION..................................... 29
----------------------------
ii
<PAGE>
20. INDEMNIFICATION.................................................. 30
---------------
21. ASSIGNMENT AND SUBLETTING........................................ 31
-------------------------
22. ADVERTISING...................................................... 33
-----------
23. LIENS............................................................ 33
-----
24. DEFAULT.......................................................... 34
-------
25. SUBORDINATION.................................................... 39
-------------
26. SURRENDER OF POSSESSION.......................................... 40
-----------------------
27. NON-WAIVER....................................................... 40
----------
28. HOLDOVER......................................................... 40
--------
29. CONDEMNATION..................................................... 42
------------
30. NOTICES.......................................................... 43
-------
31. MORTGAGEE PROTECTION............................................. 43
--------------------
32. COSTS AND ATTORNEYS' FEES........................................ 43
-------------------------
33. BROKERS.......................................................... 44
-------
34. LANDLORD'S LIABILITY............................................. 44
--------------------
35. ESTOPPEL CERTIFICATES............................................ 44
---------------------
36. ANNUAL REPORTS................................................... 45
--------------
37. TRANSFER OF LANDLORD'S INTEREST.................................. 45
-------------------------------
38. RIGHT TO PERFORM................................................. 45
----------------
39. COMMON AREAS..................................................... 46
------------
40. SALES AND AUCTIONS............................................... 46
------------------
iii
<PAGE>
41. ACCESS TO ROOF................................................... 46
--------------
42. SECURITY......................................................... 47
--------
43. AUTHORITY OF TENANT.............................................. 48
-------------------
44. NO ACCORD OR SATISFACTION........................................ 48
-------------------------
45. LEGAL REQUIREMENTS; INDOOR AIR QUALITY........................... 48
--------------------------------------
46. PARKING.......................................................... 49
-------
47. GENERAL PROVISIONS............................................... 49
------------------
48. RULES AND REGULATIONS............................................ 52
---------------------
49. ARBITRATION...................................................... 52
-----------
50. WAIVER OF JURY TRIAL............................................. 53
--------------------
51. RENEWAL TERM..................................................... 54
------------
52. LANDLORD'S REPRESENTATIONS....................................... 56
--------------------------
53. RIGHT OF FIRST OFFER............................................. 57
--------------------
EXHIBIT A Location and Dimensions of Premises
EXHIBIT B Description of Land
EXHIBIT C Construction & Buildout Provisions; Landlord's Work and Tenant's Work
EXHIBIT D Rules and Regulations
EXHIBIT E Declaration of Lease Commencement
EXHIBIT F Cleaning Specifications
EXHIBIT G Intentionally Deleted
EXHIBIT H Intentionally Deleted
EXHIBIT I Form of Estoppel Certificate
EXHIBIT J Title Report
EXHIBIT K Environmental Report
EXHIBIT L Property Management Specifications
iv
<PAGE>
DEED OF LEASE
-------------
THIS DEED OF LEASE ("Lease") is made this day of August, 1996, by
and between TC HIGH RIDGE, L.L.C., a Delaware limited liability company
("Landlord"), and BTG, INC., a Virginia corporation ("Tenant").
R E C I T A L S:
- - - - - - - -
Landlord, for and in consideration of the rents and all other charges
and payments hereunder and of the covenants, agreements, terms, provisions and
conditions to be kept and performed hereunder by Tenant, grants and conveys to
Tenant, and Tenant hereby hires and takes from Landlord, a leasehold interest in
the premises described below ("Premises"), subject to all matters hereinafter
set forth and upon and subject to the covenants, agreements, terms, provisions
and conditions of this Lease for the term hereinafter stated.
NOW THEREFORE Landlord and Tenant hereby agree to the following:
1. TERMS.
-----
1.1 Premises. The Premises demised by this Lease consists of 209,217
rentable square feet of space (the "Premises") comprised of the entirety of
buildings 1, 2 and 3 of the High Ridge Office Park located at 11225 Waples Mill
Road, Fairfax, Virginia (each a "Building" and collectively, the "Buildings"),
together with the exclusive (as to other tenants, but subject to the rights of
Landlord and to other matters of public record) right to use parking and other
Common Areas (as defined in Section 39 hereof), as more particularly set forth
herein. The land upon which the Buildings and Common Areas are situated, which
is depicted on the site plan attached hereto as Exhibit B (the "Site Plan") and
incorporated herein by reference, shall be referred to hereinafter as the
"Land". The Land includes Landlord's easement rights in and to the Parking
Easement, as defined in Section 46 hereof. The Land and the Buildings are
collectively referred to herein as the "Project". Landlord and Tenant, each
having had the opportunity prior to the execution and delivery hereof to make
such investigation related thereto (including space measurement) as either has
deemed reasonable or necessary, agree that for the purposes of this Lease: (i)
building 1 of the Project ("Building 1") contains 54,597 rentable square feet;
(ii) building 2 of the Project ("Building 2") contains 58,120 rentable square
feet; and building 3 of the Project ("Building 3") contains 96,500 rentable
square feet, including certain below-grade space, all calculated in accordance
with the modified BOMA method of measurement. The location and dimensions of the
Premises are shown on the floor plans attached hereto as Exhibit A and
incorporated herein by reference. No easement for light or air is incorporated
in or intended to be conveyed with the Premises.
1
<PAGE>
1.2 Tenant's Share. "Tenant's Share" shall mean a fraction, the
numerator of which is the total rentable square footage of the Premises, and the
denominator of which is the total rentable square footage of the Buildings.
Tenant's Share as of the date of execution of this Lease is one hundred percent
(100%). In the event Landlord determines to locate a property management
facility for the Project within a rentable portion of the Premises, the Tenant's
Share (and the Base Rent payable by Tenant hereunder) shall be proportionately
adjusted. No such adjustment shall be made however, for space within the Project
occupied by any building engineer(s) or similar on-site personnel, provided any
such space will be located within a core area location to be determined by
reasonable agreement of Landlord and Tenant. Similarly, the foregoing shall not
be construed to obligate Landlord to locate a property management office within
the Premises.
1.3 Lease Term. The term of this Lease (the "Term" or "Lease Term")
shall commence on the "Commencement Date", as defined in Section 1.4 below (and
as more fully set forth in Exhibit C hereto), and shall expire one hundred
fifty-two (152) months thereafter (the "Lease Expiration Date"); provided that
if the Commencement Date is a date other than the first day of a calendar month,
the Lease Term shall run for the number of months set forth above from the first
day of the calendar month following the Commencement Date. Notwithstanding the
foregoing Commencement Date: (i) pursuant to the provisions of Exhibit C, Tenant
and its agents and contractors shall have access to the Premises and Land at all
times following the date hereof for the purpose of constructing the improvements
to be made by it pursuant to the terms of Exhibit C, or as otherwise
contemplated or permitted by this Lease; and (ii) Tenant shall be entitled to
occupy and conduct business from the Premises at any time on or after March 1,
1997. In the event Tenant occupies all or any part of the Premises at any time
prior to the Commencement Date, such occupancy shall be subject to all of the
terms and conditions of this Lease, excluding, however the payment of Rent and
increases in Operating Costs and Real Estate Taxes (as such terms are
hereinafter defined), and provided that Tenant shall not be obligated to pay
utility costs until the earlier to occur of (a) the date Tenant commences
business operations in the Premises, or (b) the Commencement Date.
1.4 Commencement Date. The "Commencement Date" shall be April 1, 1997.
Notwithstanding the foregoing, for purposes of this Lease, the term
"Commencement Date" shall also mean any adjusted Commencement Date which may be
established pursuant to the provisions of this Lease. Landlord and Tenant hereby
agree to execute a Declaration, in the form attached hereto as Exhibit E, to
confirm the Commencement Date. Tenant's failure to execute said Declaration
shall not affect the Commencement Date or the Lease Expiration Date, as the same
are determined by the terms of this Lease.
1.5 Rent. The base rent payable by Tenant hereunder ("Rent" or "Base
Rent") is set forth in this Section 1.5, below. The Rent is net of all costs of
electricity for the Project. In addition to the Rent, Tenant shall pay as
additional rent Tenant's Share of increases in Operating Costs as described in
Section 9, and Tenant's Share of increases in Real Estate Taxes as described in
Section 10, all of which shall be deemed additional rent due under this Lease.
Rent shall be payable
2
<PAGE>
monthly, in advance, on the first day of each calendar month of the Term,
without prior notice, demand, deduction or offset, except as and solely to the
extent specifically provided for herein.
1.5.1 Subject to the provisions of Section 1.5.2 below, the
monthly payments of Rent for the Premises (which may be referred to herein as
"Monthly Rent") shall be as follows:
1.5.2 In the event Tenant exercises its Renewal Option in
accordance with Section 51 of this Lease, Base Rent and escalations for any
Renewal Term(s) under this Lease shall be as set forth in Section 51 below.
1.6 Additional Rent. Any sum owed or reimbursable by Tenant to Landlord
under this Lease (excluding monthly Rent) shall be considered "additional rent"
hereunder, and, except for items of additional rent for which demand is required
pursuant to the express terms of this Lease, shall be payable without demand,
set-off or deduction, except as and solely to the extent specifically provided
for herein. Those items of additional rent described in Section 9 of this Lease
shall be payable monthly, in advance, on the first day of each calendar month of
the Term, together with Tenant's monthly payment of rent without demand, set-off
or deduction, except as and solely to the extent specifically provided for
herein. If Tenant fails to make any payment of additional rent hereunder, and
Landlord provides Tenant with a demand for payment therefor, then such payment
shall be deemed additional rent regardless of whether or not Landlord's demand
identifies such payment as additional rent.
1.7 Notice and Payment Addresses. Any notices under this Lease shall
be governed by the terms of Section 30, below. The notice addresses of the
parties are as follows:
3
<PAGE>
If to Landlord: TC High Ridge, L.L.C.
c/o Trammell Crow Company
1115 30th Street, N.W.
Washington, D.C. 20007
Attn: T. Christopher Roth
Robert J. Murphy
And a copy to: J. Richard Saas, Esq.
Tenenbaum & Saas, P.C.
4330 East West Highway
Suite 1150
Bethesda, Maryland 20814
If to Tenant: Prior to the Commencement Date at:
BTG, Inc.
1945 Old Gallows Road
Vienna, Virginia 22182
Attn: Marilynn Bersoff, Vice President
Following the Commencement Date at:
BTG, Inc.
11225 Waples Mill Road
Building __, Suite ___
Fairfax, Virginia 22030
Attn: Marilynn Bersoff, Vice President
With copies to: Tucker, Flyer & Lewis, a
professional corporation
1615 L Street, N.W. 4th Floor
Washington, D.C. 20036
Attn: Mark D. Jackson, Esq.
and: The Irving Group
1950 Old Gallows Road
Suite 555
Vienna, Virginia 22182
Attn: Dale Powell, President
Either party may, by ten (10) days' prior written notice to the other, designate
a new address to which all notices hereunder shall be directed.
4
<PAGE>
1.8 Rent Payment Address. Tenant shall send payments of Rent and
additional rent hereunder to Landlord at the following address, or to such other
address of which Landlord may advise Tenant in writing:
TC High Ridge, L.L.C.
c/o Trammell Crow Company
1115 30th Street, N.W.
Washington, D.C. 20007
1.9 Lease Year. Each twelve (12) month period within the Lease Term
shall be referred to herein as a "Lease Year." The first Lease Year shall
commence on the Commencement Date and terminate on the last day of the twelfth
full calendar month after the Commencement Date. Each subsequent Lease Year
shall commence on the date immediately following the last day of the preceding
Lease Year and shall continue for a period of twelve (12) full calendar months,
except that the last Lease Year of the Lease Term shall terminate on the date
this Lease expires or is otherwise terminated.
1.10 Deed of Lease. To the extent required under applicable law to
make this Lease legally effective, this Lease shall constitute a deed of lease.
2. PAYMENT OF RENT & ADDITIONAL RENT.
---------------------------------
Tenant shall pay Landlord the Rent and additional rent due under this
Lease (including Tenant's Share of increases in Operating Costs and Real Estate
Taxes) without prior notice, demand, deduction or offset, except as and solely
to the extent specifically provided for herein, in lawful money of the United
States. Rent and additional rent (including any payments for Tenant's Share of
increases in Operating Costs and Real Estate Taxes payable in accordance with
this Lease, which in respect of increases of Operating Costs, shall include
monthly estimated payments thereof) shall be paid at the address noted in
Section 1.8, or to such other party or at such other place as Landlord may
hereafter from time to time designate in writing. Rent and additional rent under
this Lease for any partial month at the beginning or end of the Lease Term shall
be prorated. Except for monthly installments of estimated additional rent as set
forth in Section 9 of this Lease, or as otherwise provided in this Lease, all
payments of additional rent shall be paid no later than ten (10) business days
after the date Landlord notifies Tenant in writing of the amount thereof. In the
event of any dispute concerning the computation of the amount of any additional
rent due, Tenant shall pay the amount specified by Landlord pending the
resolution of the dispute, and such payment shall be without prejudice to
Tenant's right to continue to challenge the disputed computation.
3. ADVANCE DEPOSIT.
---------------
5
<PAGE>
3.1 Advance Deposit. On or before September 1, 1996, Tenant shall
deposit with Landlord the sum of as a deposit of the first month's
Rent (the "Advance Deposit"), which shall be applied by Landlord on behalf of
the Tenant in full satisfaction of the Rent due and payable by Tenant under this
Lease for the first full calendar month of the Term. The Advance Deposit, prior
to its being applied to the payment of monthly Rent, shall constitute security
for the payment and performance by Tenant of all of Tenant's obligations,
covenants, conditions and agreements under this Lease, but shall not be deemed
liquidated damages, but shall be applied in reduction of Tenant's total
obligations to Landlord.
3.2 No Separate Account. Landlord shall not be obligated to hold the
Advance Deposit in a separate account from other Building or Project funds.
4. USES; TENANT COVENANTS.
----------------------
4.1 Permitted Uses. The Premises are to be used for general office
purposes and such other uses as may be permitted by applicable law.
4.2 Other General Use Covenants. Tenant shall not commit or allow to be
committed any waste upon the Premises, or any public or private nuisance.
Tenant, at its expense, shall comply with all laws relating to its use and
occupancy of the Premises and shall observe the Rules and Regulations attached
hereto as Exhibit D. No act shall be done in or about the Premises that is
unlawful. No act shall be done in or about the Premises that will increase the
existing rate of insurance on the Buildings. In the event of a breach of the
covenant set forth in the immediately preceding sentence, Tenant shall cease the
activity giving rise to such increase and, to the extent any increased insurance
premiums were in fact paid by Landlord as a result of such activity, Tenant
shall pay to Landlord any and all such increases in insurance premiums resulting
from such breach, as the sole remedy arising from such breach; provided that so
long as Tenant continues to pay such increases in premiums, and provided that
the activity giving rise to such increased premiums is an activity permitted
under Section 4.1, above, the continuation of such activity by Tenant shall not
be prohibited or constitute a breach of this Lease.
5. ENVIRONMENTAL PROVISIONS; RECYCLING.
-----------------------------------
5.1 General. Tenant agrees to comply with any and all applicable
Environmental Laws (as defined below) in connection with (1) Tenant's use of the
Premises, (2) any use of the Premises arising in connection with any assignment
of this Lease, or sublet or license of the Premises or any part thereof, and (3)
any other fact or circumstance the existence of which legally imposes on Tenant
the obligation to so comply therewith. Tenant shall provide all information
within Tenant's control requested by Landlord and/or governmental authorities in
connection with Environmental Laws or Hazardous Materials (defined below)
relating to the matters contemplated in the preceding sentence.
6
<PAGE>
5.2 Tenant's Warranties and Covenants
During the Term and any Renewal Term (as hereafter defined) of the
Lease, Tenant warrants, represents and covenants to and with Landlord as
follows:
5.2.1 Tenant will not introduce, or permit or suffer the
introduction, within the Premises or the Project of (A) asbestos in any form,
(B) urea formaldehyde foam insulation, (C) transformers or other equipment which
contain dielectric fluid containing polychlorinated biphenyls, or (D) except as
permitted below, any flammable explosives, radioactive materials or other
substance constituting "hazardous materials" or "hazardous wastes" pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S.C. Sections 9601 et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801 et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 9601 et seq.) and
the regulations adopted and promulgated pursuant thereto, the Federal Water
Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42
U.S.C. Section 7401 et seq.), and in the regulations adopted and publications
promulgated pursuant thereto, or successor legislation thereto, or any other
Federal, state or local environmental law, ordinance, rule, regulation and/or
other statute of a governmental or quasi-governmental authority relating to
pollution or protection of the environment (collectively, "Environmental Laws").
The substances described in (A), (B), (C) or (D) above are hereinafter
collectively referred to herein as "Hazardous Materials".
5.2.2 Except as expressly permitted hereby, the Premises will
never be used by Tenant for any activities involving, directly or indirectly,
the use, generation, treatment, transportation, storage or disposal of any
Hazardous Materials, or to refine, produce, store, handle, transfer, process or
transport Hazardous Materials.
5.2.3 Tenant (A) shall comply with the Environmental Laws and
all other applicable laws, rules and regulations or orders pertaining to health,
the environment or Hazardous Materials, in so far as such laws pertain to
Tenant's use and occupancy of the Premises or the need for such compliance
arises due to the acts or omissions of Tenant, its agents, employees,
contractors, invitees (but only while within the Premises), subtenants or
assignees, (B) except as specifically permitted hereby, shall not store,
utilize, generate, treat, transport or dispose of (or permit or acquiesce in the
storage, utilization, generation, transportation, treatment or disposal of) any
Hazardous Materials on or from the Premises, (C) shall cause its agents,
employees, licensees, contractors, invitees (while within the Premises),
subtenants and assignees to comply with the representations, warranties and
covenants herein contained and be responsible for any non-compliance by any such
party(ies), (D) agrees that no portion of the Premises will be used by Tenant or
any assignee or subtenant of Tenant as a landfill or a dump, and (E) will not
install any underground tanks of any type.
5.2.4 In the event of any future storage, presence,
utilization, generation, transportation, treatment or disposal of Hazardous
Materials in, on or about the Premises, or in the event of any Hazardous
Materials Release (as hereinafter defined) which in either case (i) is
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attributable, in whole or in part, to the presence of Hazardous Materials
existing in, on or about on the Project subsequent to the Commencement Date and
(ii) is caused, directly or indirectly, by Tenant or Tenant's agents, employees,
contractors, licensees, invitees (while within the Premises), sub-tenants or
assignees, Tenant shall, at the direction of Landlord or any federal, state, or
local authority or other governmental authority, remove or cause the removal of
any such Hazardous Materials and rectify any such Hazardous Materials Release,
and otherwise comply or cause compliance with the laws, rules, regulations or
orders of such authority, all at the expense of Tenant, including without
limitation, the undertaking and completion of all investigations, studies,
sampling and testing and all remedial, removal and other actions necessary to
clean up and remove all Hazardous Materials, on, from or affecting the Premises.
If Tenant shall fail to proceed with such removal or otherwise comply with such
laws, rules, regulations or orders within the cure period permitted under the
applicable regulation or order, the same shall constitute a Default under this
Lease (without any notice to Tenant required), and Landlord may, but shall not
be obligated to, take such action as may be reasonably necessary under the
circumstance to eliminate such Hazardous Materials from the Premises or
otherwise comply with the applicable law, rule, regulation or order, acting
either in its own name or in the name of Tenant pursuant to this Section, and
the cost thereof shall be borne by Tenant and thereupon become due and payable
as additional rent hereunder; provided, however, that Landlord shall not
exercise its self-help rights hereunder, nor exercise any right otherwise
provided herein to terminate this Lease or Tenant's right of possession due to
Tenant's failure or inability to correct such problem within a time certain as
long as Tenant is at all times diligently continuing its efforts to correct the
problem (provided however, that if Landlord determines, in its reasonable
discretion, that there exists a substantial risk of governmental enforcement
action against Landlord, or governmental or third party civil liability to
Landlord, if Landlord fails to take independent action immediately to remediate
an environmental problem which is otherwise Tenant's responsibility under this
Section 5, then Landlord shall, notwithstanding Tenant's continuing diligent
efforts to correct the problem, be entitled to take such independent action, and
to recover the reasonable and actual costs associated therewith from Tenant).
Tenant shall give to Landlord and its authorized agents and employees access to
the Premises for such purposes and hereby specifically grants to Landlord a
license to remove the Hazardous Materials and otherwise comply with such
applicable laws, rules, regulations or orders, acting either in its own name or
in the name of the Tenant pursuant to this Section.
5.2.5 Landlord represents, warrants and covenants that to the
best of its knowledge, except as set forth in that environmental report
identified on Exhibit K attached hereto (a copy of which has previously been
delivered to Tenant) (i) as of the date of execution hereof, the Project is free
from any Hazardous Materials other than (a) certain limited quantities of
asbestos-containing materials ("ACMs") which will be removed as a part of
Landlord's Base Building Work hereunder prior to the Commencement Date, and (b)
certain limited quantities of ACMs in roof flashing and certain amounts of lead
based paint on mechanical rooms equipment, and floors and handrails on the roof
and throughout the Buildings, and which are not intended to be removed as part
of Landlord's Base Building Work, but the removal of which is not required under
applicable Environmental Laws, and (ii) the Project complies with all
Environmental Laws. In the event of any Hazardous Materials
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Release caused by any party other than Tenant or Tenant's agents, employees,
contractors, licensees, invitees (while within the Premise), sub-tenants or
assignees, Landlord shall promptly remediate any such Hazardous Materials and
rectify any such Hazardous Materials Release, and otherwise comply or cause
compliance with the laws, rules, regulations or orders of such authority, all at
the expense of Landlord (and not as an Operating Cost), including without
limitation, the undertaking and completion of all investigations, studies,
sampling and testing and all remedial, removal and other actions necessary to
clean up and remove all Hazardous Materials, on, from or affecting the Project.
If Landlord shall fail to proceed with such removal or otherwise comply with
such laws, rules, regulations or orders within the cure period permitted under
the applicable regulation or order, the same shall constitute a default by
Landlord under this Lease, and, following written notice from Tenant to Landlord
and Landlord's failure to cure such default within thirty (30) days, Tenant may
avail itself of the rights and remedies set forth elsewhere herein, provided,
however that Tenant shall have no such right and no default by Landlord shall be
deemed to exist provided that Landlord is diligently pursuing such remediation
or compliance (provided however, that if Tenant determines, in its reasonable
discretion, that there exists a substantial risk of governmental enforcement
action against Tenant, or governmental or third party civil liability to Tenant,
if Tenant fails to take independent action immediately to remediate an
environmental problem which is otherwise Landlord's responsibility under this
Section 5, Tenant shall, notwithstanding Landlord's continuing diligent efforts
to correct the problem, be entitled to take such immediate action, and to
recover the reasonable and actual costs associated therewith from Landlord).
5.2.6 Each of Tenant and Landlord hereby indemnifies and holds
the other and their respective shareholders, subsidiaries, affiliates, officers,
directors, partners, employees, agents and trustees harmless from, against, for
and in respect of, any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of actions, encumbrances,
fines, penalties, and costs and expenses suffered, sustained, incurred or
required to be paid by any such indemnified party (including, without
limitation, reasonable fees and disbursements or attorneys, engineers,
laboratories, contractors and consultants) because of, or arising out of or
relating to a violation of any of the indemnifying party's representations,
warranties and covenants under this Section, including any Environmental
Liabilities (as hereinbelow defined) arising therefrom. For purposes of this
indemnification clause, "Environmental Liabilities" shall include all costs and
liabilities with respect to the presence, removal, utilization, generation,
storage, transportation, disposal or treatment of any Hazardous Materials or any
release, spill, leak, pumping, pouring, emitting, emptying, discharge,
injection, escaping, leaching, dumping or disposing into the environment (air,
land or water) of any Hazardous Materials (each a "Hazardous Materials
Release"), including without limitation, cleanups, remedial and response
actions, remedial investigations and feasibility studies, permits and licenses
required by, or undertaken in order to comply with the requirements of, any
federal, state or local law, regulation, or agency or court, any damages for
injury to person, property or natural resources, claims of governmental agencies
or third parties for cleanup costs and costs of removal, discharge, and
satisfaction of all liens, encumbrances and restrictions on the Premises
relating to the foregoing. The foregoing notwithstanding, the foregoing
indemnifications shall not
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encompass consequential damages, damages related to loss of business or business
interruption or any diminution of the market value of the Project which may
arise on account of the presence of any Hazardous Materials on or about the
Project. The foregoing indemnification and the responsibilities of Tenant and
Landlord under this Section shall survive the termination or expiration of this
Lease.
5.2.7 Tenant shall promptly notify Landlord in writing of the
occurrence of any Hazardous Materials Release or any pending or threatened
regulatory actions, or any claims made by any governmental authority or third
party, relating to any Hazardous Materials or Hazardous Materials Release on or
from the Premises, and shall promptly furnish Landlord with copies of any
correspondence or legal pleadings or documents in connection therewith. Landlord
shall have the right, but shall not be obligated, to notify any governmental
authority of any state of facts which may come to its attention with respect to
any Hazardous Materials or Hazardous Materials Release on or from the Premises
following consultation with Tenant.
5.2.8 Tenant agrees that Landlord shall have the right (but
not the obligation), at its sole cost and expense and not as an Operating Cost
(except as set forth below), to conduct, or to have conducted by its agents or
contractors, such environmental inspections of the Premises as Landlord shall
reasonably deem necessary or advisable from time to time. Landlord shall provide
Tenant with no less than seventy-two (72) hours prior notice of any such
inspection, except in case of an emergency, in which case only such notice as
may be practicable under the circumstance shall be required. The cost of any
such inspection shall be borne by Tenant in the event such inspection determines
that Tenant has breached the covenants set forth in Section 5.2.3 above.
5.3 Permitted Materials. Notwithstanding the foregoing, Tenant and its
assignees, subtenants and licensees shall be permitted to store reasonable
amounts of Hazardous Materials that are typically used in an ordinary general
office use environment such as ordinary cleaners, printer and duplication
supplies and similar materials (the "Permitted Materials") provided such
Permitted Materials are properly used, stored and disposed of in a manner and
location meeting all Environmental Laws. Any such use, storage and disposal
shall be subject to all of the terms of this Section (except for the terms
prohibiting same), and Tenant shall be responsible for obtaining any required
permits and paying any fees and providing any testing required by any
governmental agency with respect to the Permitted Materials. If Landlord in its
reasonable opinion determines that said Permitted Materials are being improperly
stored, used or disposed of, then Tenant shall immediately take such corrective
action as requested by Landlord. Should Tenant fail to take such corrective
action within twenty-four (24) hours, Landlord shall have the right to perform
such work on Tenant's behalf and at Tenant's sole expense, and Tenant shall
promptly reimburse Landlord for any and all costs associated with said work.
5.4 Recycling Regulations. As a part of the services provided by
Landlord hereunder Landlord shall provide receptacles and containers as
necessary for Tenant to comply with all orders, requirements and conditions now
or hereafter imposed by any ordinances, laws, orders and/or regulations
(hereinafter collectively called "regulations") of any governmental body having
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jurisdiction over the Premises or the Buildings regarding the collection,
sorting, separation and recycling of waste products, garbage, refuse and trash
(hereinafter collectively called "waste products") and Landlord shall cooperate
generally with Tenant in such efforts including but not limited to Tenant's
separation of such waste products into receptacles provided by Landlord and the
removal of such receptacles in accordance with any collection schedules
prescribed by such regulations. Landlord shall provide Tenant with waste
dumpsters, recycling bins and a box crusher in locations on the Land to be
designated by Tenant and reasonably acceptable to Landlord, so as to enable
Tenant to comply with the foregoing.
6. LATE CHARGES; INTEREST.
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6.1 Tenant hereby acknowledges that late payment to Landlord of Rent or
additional rent will cause Landlord to incur administrative costs and loss of
investment income not contemplated by this Lease, the exact amount of which will
be extremely difficult to ascertain. If any Rent or additional rent due from
Tenant is not received by Landlord or Landlord's designated agent within five
(5) days after the date due, then Tenant shall pay to Landlord a late charge
equal to one percent (1%) of such overdue amount. The parties hereby agree that
such late charges represent a fair and reasonable estimate of the administrative
cost that Landlord will incur by reason of Tenant's late payment. Landlord's
acceptance of such late charges shall not constitute a waiver of Tenant's
Default with respect to such overdue amount or estop Landlord from exercising
any of the other rights and remedies granted hereunder.
6.2 In addition to the administrative late charge provided for under
Section 6.1, above, if any Rent or additional rent due from Tenant to Landlord
is not paid as and when due under this Lease, such unpaid amount shall bear
interest from the date due until the date paid at an annual rate of interest
equal to the Prime Rate of interest as published in the Wall Street Journal (or,
if not published, as established by the then largest national banking
association in the United States of America) from time to time plus three
percent (3%) (the "Default Rate").
6.3 The provisions of Sections 6.1 and 6.2 above to the contrary
notwithstanding, (i) no default interest payments shall be due and payable
unless and until Tenant has failed timely to make any Rent or additional rental
payments hereunder on two (2) occasions in any Lease Year, and (ii) no late
payment charge shall be due and payable unless and until Tenant has failed
timely to make any Rent or additional rental payments hereunder on one (1)
occasion in any Lease Year.
7. REPAIRS AND MAINTENANCE.
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7.1 Landlord's Obligations. Landlord shall maintain, repair, replace
and keep in good operating and in a condition comparable to similar properties
in the Fairfax, Virginia area, the Common Areas (as defined in Section 39 below)
(including, without limitation, the lobbies, elevators, stairs, parking areas,
grounds, loading areas and corridors), the roofs, foundations, load-bearing
elements, conduits and structural walls and other structural elements of the
Building, the
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underground utility and sewer pipes of the Buildings, all base building
mechanical, electrical, plumbing, HVAC system and the sprinkler system and other
fire and life-safety systems, the cost of which shall be included within
Operating Costs except to the extent set forth in Section 9.6, hereof, provided
that, (i) any capital repairs or replacements to the Building shall be conducted
at Landlord's sole expense, except to the extent provided in clause (ii) below,
and in Section 9.6 of this Lease, and (ii) to the extent the need for any
capital repairs or capital replacements arises as a the result of the negligence
or willful misconduct of Tenant (or Tenant's agents, employees, contractors,
invitees (while within the Premises), assignees or sub-tenants) and the same is
not covered under the policies of casualty insurance which are required to be
carried by the parties pursuant to this Lease (in which case the proceeds of
such insurance will be utilized to satisfy the cost thereof), the cost of such
capital repairs or replacements shall be reimbursable by Tenant to Landlord as
additional rent under this Lease, and such reimbursement shall be due not later
than ten (10) business days after Landlord's written demand therefore. Any
latent defects in the Buildings discovered by Tenant or Landlord within eighteen
(18) months of the Commencement Date shall be timely repaired by Landlord as its
sole cost and expense (and not as an Operating Cost).
7.2. Repair Standards. All repairs and maintenance required of Landlord
pursuant to this Section or elsewhere in this Lease shall be performed in
accordance with standards applicable to comparable office buildings in the
Fairfax, Virginia area, and performed in a timely and diligent fashion. Landlord
agrees to diligently attend to any routine repairs or maintenance needs brought
to its attention by Tenant as soon as reasonably practicable.
7.3 Replacement of Property Management Company. In the event (i) Tenant
has notified Landlord, with specificity, of the failure of Landlord's property
management company to meet any material requirement set forth within the
Property Management Specifications attached as Exhibit L hereto (the "Management
Specifications"), which failure has not been remedied by such property
management company within thirty (30) days after such notification by Tenant, or
(ii) the property management fee charged by the property management company is
more than 105% of the then prevailing market rates charged for comparable
services as the Management Specifications for comparable properties in the
Fairfax, Virginia area, and the property management company is unwilling to
reduce such fee to such market rates, Tenant shall have the right, upon thirty
(30) day's prior written notice, to require the Landlord to replace its property
management company with another third party management company mutually and
reasonably acceptable to both Landlord and Tenant. The foregoing
notwithstanding, Tenant's right to assess whether the cost of property
management services being charged by Landlord's property management company
exceeds market rates, and to require said property management company to reduce
its fees in lieu of replacement, shall be exercisable only one (1) time during
each Lease Year, and shall in no event be exercisable during the first two (2)
Lease Years. Any change by Landlord in the identity of the company providing
property management services to the Project shall be subject to Tenant's
approval, which shall not be unreasonably withheld, conditioned or delayed;
provided that, as long as (y) the replacement management company is then
currently engaged in the commercial property management business, and (z) the
replacement management company agrees to manage the Project
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in accordance with the Management Specifications and at not more than the
management fee then currently being charged by the existing property management
company, no approval from Tenant shall be required for any change in the
property management company arising as a result of a transfer of ownership of
the Project. In the event of a change in property management company as a result
of a change in ownership of the Project, such change shall not thereafter
terminate Tenant's right to approve subsequent changes in the property
management company, or Tenant's right to require change in the property
management company in the event of circumstances consistent with either
subsection (i) or (ii) above. There shall be no mark-up or additional fee
charged by Landlord or its management company with respect to any goods, labor
or services provided to the Project by third parties.
7.4 No Deferred Maintenance, etc.. Landlord shall not defer any needed
maintenance or repairs during the first Lease Year. Landlord shall coordinate
all maintenance and repair work with Tenant and shall perform the same in a
manner to minimize to the extent possible any disruption of Tenant's business
activities. Tenant shall have the right to object to the making of any repairs
which it reasonably believes are unnecessary or excessive in connection with the
annual budget determination procedures set forth in Section 9.4 below; provided,
however that such objection shall not prohibit or limit Landlord's making of any
repairs which Landlord believes in good faith to be necessary or appropriate to
the life safety of any occupants of the Project or are otherwise necessary or
appropriate to properly maintain the Project in a condition comparable to
similar properties in the Fairfax, Virginia area.
7.5 Tenant's Obligations. Subject to Landlord's obligations as set
forth in Section 7.1 above and its right of access pursuant to Section 18, and
except for janitorial and cleaning services (to the extent provided for under
Section 8.2, below), Tenant shall be exclusively responsible for all repairs and
maintenance to the interior non-structural portions of the Premises. Tenant
shall promptly report in writing to Landlord any defective condition in the
Premises known to Tenant which Landlord is required to repair, and failure to so
report such defects shall excuse any delay by Landlord in commencing and
completing such repair to the extent the same would otherwise be Landlord's
responsibility under this Lease, provided that (i) Landlord shall not be so
excused if Landlord had actual knowledge of the need for such repair independent
of Tenant's notification, and (ii) once Landlord is notified or has actual
knowledge of the need for such repair, Landlord's repair obligation under
Section 7.1, above, shall be fully effective as to such item (and, to the extent
any delay in reporting such defects results in the avoidable need to perform a
capital repair or replacement which under Section 9.5 is excluded from Operating
Costs, in lieu of an ordinary repair which under Section 9.5 would be included
within Operating Costs, Tenant shall be responsible for the reasonable and
actual cost of such capital repair or replacement unless Tenant can demonstrate
that a capital repair or replacement to such item would in any event have been
necessary within twelve (12) months thereafter, even if the defective condition
had been reported to Landlord or known by Landlord in a timely fashion).
Landlord's obligation to make repairs shall be limited to the express
obligations stated herein.
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8. UTILITIES AND SERVICES.
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8.1 Services. Landlord shall furnish Tenant with the following services
and facilities: (i) at least one elevator in each Building subject to call at
all times, including Sundays and holidays; (ii) zoned heating, ventilation and
air conditioning at all times and within the temperature and humidity ranges
usually furnished in comparable office buildings in the Fairfax, Virginia area
(which, in those areas of the Premises utilized for general office purposes,
shall be between 68 and 78 degrees Fahrenheit with a relative humidity range of
40% to 60%), and shall comply with ASHRAE Noise Criteria Level NC-35; (iii)
balancing of the HVAC system when necessary in an effort to provide reasonably
uniform air temperatures throughout the zones within the Premises; (iv) hot and
cold running water sufficient for needs attributable to a general office use;
(v) public lavatory facilities and supplies and janitorial and char services,
including trash removal and recycling, Monday through Friday, excepting
holidays, in accordance with the cleaning specification attached hereto as
Exhibit F; (v) replacement of light bulbs and lighting fixtures throughout the
Premises; (vi) access to the Project 24 hours a day, 365 days a year, including
holidays; and (vii) regular maintenance of all parking and other Common Areas,
including striping, landscaping, replacement of light sources, leveling,
repaving and removal of snow and ice, all in accordance with standards
applicable to comparable office buildings in the Fairfax, Virginia area, and the
cost of which shall be deemed an Operating Cost hereunder unless otherwise
provided above. For purposes hereof, "holidays" shall be: New Year's Day,
Memorial Day, July 4th, Labor Day, Thanksgiving, and Christmas. Landlord shall
provide perimeter security for the Premises via a Kastle Key or similar key-card
system. Landlord shall provide Tenant, without any direct or indirect charge,
with 800 key-cards in order to provide access to the Premises to all of its
employees. Any additional key-cards shall be at Tenant's sole cost and expense,
based upon Landlord's actual cost therefor. No concierge shall be provided in
the Building unless requested by Tenant in the future (and, in any event, not
during the initial Lease Year). Landlord shall be responsible for ensuring that
its property manager complies the Management Specifications, failing which
Tenant shall have the right to make the election specified in Section 7.3.
Without limiting the foregoing, (i) Landlord shall be responsible for assuring
the responsiveness of the Buildings' management to Tenant's written complaints
in a timely manner, and (ii) senior or supervisory representatives of the
management company shall tour the Buildings on not less than a quarterly basis.
Upon notice from Tenant, a representative of Tenant shall have the right to
accompany such representative of the management company on all quarterly tours,
and may indicate areas in need of maintenance. Notwithstanding anything to the
contrary contained herein, Tenant shall be responsible for directly contracting
with and paying to the appropriate utility company for all electrical service
provided to the Project.
8.2 Additional Services. If Tenant requires cleaning services, light
bulb or fixture replacement or other services on weekends or holidays, Landlord
shall make reasonable efforts to provide such additional service after
reasonable prior written request therefor from Tenant, and Tenant shall
reimburse Landlord for such additional service within ten (10) days of request
therefore, at the actual direct cost to Landlord.
8.3 Additional Provisions. Except as specifically and expressly set
forth hereinbelow, in no event shall Landlord be liable to Tenant for (a) any
damage to the Premises, or (b) any loss,
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damage or injury to any property therein or thereon, or (c) any claims for the
interruption of or loss to Tenant's business or for any damages or consequential
losses occasioned by bursting, rupture, leakage or overflow of any plumbing or
other pipes or other similar cause in, above, upon or about the Premises or the
Buildings, unless such loss, damage or injury is the result of the negligence or
willful misconduct of Landlord, and is not covered by the insurance required to
be carried by Tenant hereunder. If any public utility or governmental body shall
require Landlord or Tenant to restrict the consumption of any utility or reduce
any service to the Premises or the Buildings, Landlord and Tenant shall comply
with such requirements, without any abatement or reduction of the Rent,
additional rent or other sums payable by Tenant hereunder. The foregoing
notwithstanding, in the event Tenant, through no act or omission of its own
part, is deprived of water, electricity or HVAC service (including HVAC service
comporting to the temperature and humidity ranges set forth above) for a period
exceeding ten (10) consecutive days, and as a result thereof Tenant is unable to
and does not in fact conduct business from the Premises or any portion thereof,
then from and after such tenth (10th) day until the twentieth (20th) consecutive
day such interruption (and Tenant's non-use of the Premises or applicable
portion) continues, Tenant shall be entitled to abate its Rent obligations
hereunder as to the Premises or portion thereof which is not usable (and not
used) until such time as the water, electrical or HVAC service (as applicable)
is restored. For the next ten (10) consecutive days thereafter (i.e., the
21st-30th consecutive days of such interruption) , Tenant's Rent obligations
hereunder shall be reinstated in full notwithstanding the continuation of such
interruption during such period; and during each consecutive ten (10) day period
thereafter during which such interruption continues, Tenant's Rent obligation
shall alternately be abated and then reinstated until such service (or Tenant's
use of the affected area of the Premises) recommences, at which time Tenant's
Rent obligations hereunder will be reinstated in full. By way of example, only,
if there is a seventy (70) consecutive day utility interruption caused by
Virginia Power which causes Tenant to cease the use of the Premises for sixty
(60) consecutive days of such 70-day interruption period, Tenant shall not be
entitled to abatement of its Rent obligations hereunder during the first ten
(10) days of Tenant's non-use (days 1-10), the third ten (10) days of Tenant's
non-use (days 21-30), and the fifth ten (10) days of Tenant's non-use (days
41-50), but shall be entitled to abatement of its Rent obligations during the
second ten (10) days of Tenant's non-use (days 11-20), the fourth ten (10) days
of Tenant's non-use (days 31-40), and the sixth ten (10) days of Tenant's
non-use (days 51-60) The provisions of Section 47.8 hereof shall not apply with
respect to Tenant's rights under this Section 8.3.
<PAGE>
8.4 Option to Reduce or Eliminate Services. Subject to the limitations
set forth below, Tenant shall have the right and option, exercisable upon thirty
(30) days' advance written notice to Landlord at any time during the Term, to
temporarily or permanently reduce, curtail and/or eliminate the scope of the
janitorial services, Common Area services, or other services to be provided
and/or performed by Landlord for Tenant's benefit pursuant to this Lease, for
such period as Tenant may desire. Any such service which Tenant may elect to
reduce, curtail or eliminate during the Term hereof is hereinafter referred to
as a "Reduced Service". In the event Tenant elects to reduce, curtail and/or
eliminate any services, the annual Rent hereunder shall be reduced by the amount
paid or incurred by Landlord on account of such service during the Base Year (in
respect of any elimination
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of service), or (in respect of any reduction or curtailment of service) the
equitable pro-rata portion of such amount paid or incurred by Landlord on
account of such service during the Base Year, which, if the same cannot be
determined with precision by comparison of the Base Year line item for such
Reduced Service(s) to the amounts expended therefor in subsequent Lease Years,
will be determined by Landlord and Tenant in good faith (and any dispute with
respect to such determination shall be subject to Section 49, below). By way of
example, in the event Tenant elects in the third (3rd) Lease Year to relieve
Landlord of its obligation to provide cleaning services and that portion of Base
Operating Costs attributable to cleaning services was $209,217.00 or $1.00 per
square foot, during the Base Year, then the Base Rent hereunder shall be reduced
by the full $209,217.00 on an annual basis until Tenant elects to require
Landlord to resume furnishing the cleaning services specified herein.
Notwithstanding the foregoing or anything to the contrary contained herein, (i)
Tenant shall not have the right to require Landlord to temporarily or
permanently reduce, curtail or eliminate any services deemed by Landlord in its
good faith judgment to be necessary for the proper maintenance and repair of the
Premises in a condition comparable to similar properties in the Fairfax,
Virginia area, (ii) in no event shall the amount of any costs attributable to
meeting such minimum standard, the cost of insurance required to be carried by
Landlord hereunder, or the cost of real estate taxes attributable to the
Premises, be reduced from Rent hereunder, and (iii) if Tenant's insistence upon
implementing a Reduced Service causes Landlord to incur a penalty, termination
fee or other "breakage" cost with the contracting vendor, such cost will be
included within the Operating Costs for the Lease Year in which such costs are
incurred. Further, Tenant acknowledges that there are certain services which
cannot be partially eliminated on a strict pro rata basis as a result of each
Building being a part of the overall project, and therefore a determination of
an equitable reduction may not be made strictly on a per square footage basis.
9. INCREASES IN OPERATING COSTS.
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9.1 Defined. After the first Lease Year, for each Lease Year or portion
thereof during the Term, Tenant shall pay as additional rent to Landlord,
without diminution, set-off or deduction, except as and solely to the extent
provided for herein, Tenant's Share of an amount (hereinafter referred to as
"Expense Increases") equal to the positive difference between:
9.1.1 Tenant's Share of "Operating Costs" (as defined in
Section 9.5, below) for such Lease Year; and
9.1.2 The "Base Year Operating Costs" (defined below).
9.2 Base Year Operating Costs. For all purposes hereof, the Base Year
Operating Costs shall be all Operating Costs incurred by Landlord during the
first Lease Year of the Term; provided, however that to the extent any
landscaping, maintenance and/or repair work is covered by any guarantees or
warranties provided in connection with the construction of the improvements to
be made by Landlord or otherwise purchased by Landlord, or is otherwise
available to Landlord without cost or at a reduced cost, the Base Year Operating
Costs for each of such items shall be the costs
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incurred on account thereof during the first full Lease Year after such
guarantees or warranties have expired.
9.3 Estimated Payments. Tenant shall make monthly installment payments
toward Tenant's Share of Expense Increases on an estimated basis, based on
Landlord's reasonable estimate of Expense Increases for such Lease Year. Tenant
shall pay Landlord, as additional rent, commencing on the first day of the month
immediately following the last day of the Operating Costs Base Year, and on the
first day of each month thereafter during the Term, one-twelfth (1/12th) of
Landlord's estimate of Tenant's Share of Expense Increases for the then-current
Lease Year. If at any time or times during such Lease Year it appears to
Landlord that Tenant's Share of Expense Increases for such Lease Year will vary
from Landlord's estimate by more than five percent (5%) on an annualized basis,
Landlord may, by written notice to Tenant, revise its estimate for such Lease
Year and Tenant's estimated payments hereunder for such Lease Year shall
thereupon be based on such revised estimate.
9.4 Annual Reconciliation. Within one hundred twenty (120) days after
the end of each Lease Year (including the first Lease Year), Landlord shall
provide to Tenant a detailed, itemized statement (the "Expense Statement"),
calculated in accordance with Section 9.1, above, setting forth the total
Operating Costs for such Lease Year and, if applicable, Tenant's Share of
Expense Increases for such Lease Year. The Expense Statement shall be certified
by Landlord as being true and correct in all material respects. Landlord shall
respond to any inquiries and requests for invoices or other information with
respect to Operating Costs within ten (10) days of any written request therefore
by Tenant. Within thirty (30) days after the delivery of such Expense Statement
and any additional information reasonably requested by Tenant, Tenant shall pay
to Landlord the amount shown as Tenant's Share of Operating Costs for such Lease
Year, but such payment shall not prejudice Tenant's right to object to the same
pursuant to the provisions of Section 9.8, below. In the event Landlord fails to
deliver an Expense Statement to Tenant within eight (8) months after the last
day of any Lease Year, Landlord shall be deemed to have waived the right to
recover any sums on account of Tenant's Share of Expense Increases for such
Lease Year in excess of the estimated payments theretofore paid by Tenant.
9.5 Annual Budget. Within sixty (60) days prior to each Lease Year
following the first Lease Year, Landlord, Tenant and Landlord's management
company shall in good faith agree upon a pro-forma budget setting forth the
estimated repairs, maintenance, cost and scope of services and other Operating
Costs anticipated to be incurred by Landlord during the coming Lease Year. Upon
approval of the same by Landlord and Tenant, such budget shall constitute the
"Approved Budget" for the following Lease Year for all purposes hereof. Until an
Approved Budget for such Lease Year has been agreed upon (a) the actual
Operating Costs incurred by Landlord for the previous Lease Year shall be used
as the basis for calculating the amount of Tenant's estimated payments of
Tenant's Share of Expense Increases for the then current Lease Year, and (b)
Landlord shall continue to provide services and other items within the
definition of Operating Costs utilizing the same scope of services as was
utilized in the previous Lease Year. Further, until an Approved Budget has been
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agreed upon, Tenant shall remain responsible for the entirety of Tenant's Share
of Expense Increases with respect to all Operating Costs incurred in the
provision of such scope of services as set forth above for such period, even if
the Operating Costs applicable to the same scope of services in the current
Lease Year exceeds that applicable to the previous Lease Year, as a result of
(among other things) increases in market rate unit prices applicable to such
services or items, or differences in the frequency of utilization of such
services or items (i.e., increased frequency of repairs or snow removal)
(subject, however, to Tenant's option in accordance with Section 8.4, above, to
reduce services for such Lease Year). Nothing in this Section 9.5 shall be
construed to require Landlord, pending the agreement of the parties on an
Approved Budget in any Lease Year, to reduce, curtail or eliminate any services
deemed by Landlord in its good faith judgment to be necessary for the proper
maintenance and repair of the Premises in a condition comparable to similar
properties in the Fairfax, Virginia area, or to constitute a waiver of or bar to
Landlord's right to recover Tenant's Share of Expense Increases with respect
thereto.
9.6 Operating Costs. The term "Operating Costs" shall mean all arms
length or arms length equivalent third-party expenses incurred by Landlord in
connection with the operation, management, maintenance and repair of the
Buildings, Common Areas and the Land in accordance with the standards applicable
to comparable office properties in the Fairfax County, Virginia, subject to the
qualifications set forth below. All Operating Costs shall be determined
according to generally accepted accounting principles which shall be
consistently applied. Operating Costs include, but are not limited to, the
following items: (a) the cost of the personal property used in conjunction
therewith; (b) costs to repair and maintain the Buildings (including the roofs
thereof) and the Common Areas, irrespective of whether set forth in the Approved
Budget, and except as set forth below with respect to certain capital repairs
and replacements; (c) all expenses paid or incurred by Landlord for water, gas,
sewer and oil services for the Building (specially excluding electric, which
shall be billed directly to Tenant); (d) the costs and expenses incurred in
connection with the provision of the services set forth in Section 8, above; (e)
building supplies and materials used in connection with non-capital (other than
as set forth below) repairs to the Project; (f) cleaning and janitorial services
in or about the Premises, the Buildings (including without limitation Common
Areas) and the Land, as set forth in Section 8; (g) window glass replacement,
repair and cleaning; (h) repair and maintenance of the grounds, including costs
of landscaping, gardening and planting, including service or management
contracts with independent contractors, including but not limited to security
and energy management services and costs, to the extent not more than one
hundred ten percent (110%) of the amount set forth therefore in the Approved
Budget; (i) operational costs to achieve compliance with any governmental laws,
rules, orders or regulations, and excluding capital expenses associated
therewith except to the extent specifically set forth below; (j) utility taxes
(other than those attributable to electrical services which shall be billed
directly to and paid directly by Tenant); (k) compensation (including employment
taxes, fringe benefits, salaries, wages, medical, surgical, and general welfare
benefits (including health, accident and group life insurance), pension
payments, payroll taxes for all personnel employed by Landlord or its management
company on-site at the Project who perform duties in connection with the
operation, management, maintenance and repair of the Buildings, to the extent
set forth in the Approved Budget; (l) any (i) capital expenditures
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incurred to reduce Operating Costs, to the extent of such reduction (and with
any amount remaining unrecovered by virtue of such limitation to carry forward
to subsequent Lease Years, to the extent of any such continuing reduction
achieved in each such subsequent Lease Year, until recovered in full), and (ii)
capital expenditures incurred to comply with any governmental law, order,
regulation or other requirement, whether applicable to Landlord or the Project,
which is or becomes applicable by virtue of the Tenant's particular use of or
activities within the Premises (as opposed to general office usage), or any
alterations performed by Tenant or at Tenant's request (exclusive of Tenant's
Work); (m) cost of premiums for casualty and liability insurance policies
required to be maintained by Landlord hereunder and any other insurance carried
by Landlord with respect to the Project which is consistent with the limitations
set forth in Section 13.1, hereof; (n) license, permit and inspection fees; (o)
market-rate management fees (in an amount not to exceed three percent [3%] of
gross rental receipts and utility costs), provided that a 3% management fee will
be charged in the Base Year; (p) consulting fees in connection with the
provision of common area maintenance services, to the extent not more than one
hundred ten percent (110%) of the amount set forth therefore in the Approved
Budget; (q) personal property taxes; (r) trash removal, including all costs
incurred in connection with waste product recycling pursuant to Section 5.5
(except to the extent any such costs are charged directly to and paid directly
by Tenant); (s) snow and ice removal or prevention; (t) maintenance, repair and
striping of all parking areas used by tenants of the Buildings, and any other
cost or assessment payable in connection with the maintaining of such parking
areas, to the extent not more than one hundred ten percent (110%) of the amount
set forth therefore in the Approved Budget; (u) uniforms and dry cleaning; (w)
telephone, telegraph, postage, stationery supplies and other materials and
expenses required for the routine operation of the Buildings; and (v)
association assessments or other assessments for project-wide common area
services to the extent either provided at market rates in direct substitution
for services otherwise included within Operating Expenses herein, or approved by
Tenant, in its reasonable discretion.
9.7 Exclusions. Notwithstanding the foregoing, Operating Costs shall
not include any of the following: (1) capital expenditures, except those
specifically set forth above; (2) costs of any special services rendered to
individual tenants (including Tenant), for which a special, separate charge
shall be made directly to such Tenant (and which charge shall be payable within
ten (10) days of written demand); (3) painting, redecorating or other work which
Landlord performs for specific tenants, the expenses of which are paid by such
tenants; (4) Real Estate Taxes (as defined in Section 10); (5) depreciation or
amortization of costs required to be capitalized in accordance with generally
accepted accounting practices (except as set forth in Section 9.5, above); (6)
interest and amortization of funds borrowed by Landlord; (7) leasing
commissions, and advertising, legal, space planning and construction expenses
incurred in procuring tenants for the Building; (8) salaries, wages, or other
compensation paid to officers or executives of Landlord in their capacities as
officers and executives; (9) any other expenses for which Landlord actually
receives direct reimbursement from insurance, condemnation awards, warranties,
other tenants or any other source but excluding general payments of Expense
Increases pursuant to this Section 9 by Tenant and other tenants of the
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Building; (10) net basic rents under ground leases; (11) all costs incurred in
the initial construction of the Project or the performance of any Landlord's
Base Building Work hereunder; (12) costs directly resulting from the willful
misconduct of Landlord, its employees, agents, contractors or employees; (13)
costs for any structural maintenance, replacement or redesign other than those
for which Tenant is expressly liable pursuant to the terms of this Lease; (14)
legal fees and other expenses incurred by Landlord; (15) costs or fees relating
to the defense of Landlord's title or interest in the Land; (16) expenses for
the correction of defects in the construction of any of Landlord's Base Building
Work; (17) costs incurred due to violation by Landlord of the terms and
conditions of this Lease; (18) renovation of the Project made necessary by
casualty or the exercise of eminent domain; (19) costs arising from the presence
of Hazardous Materials in, about or below the Project; (20) costs incurred for
any items to the extent of Landlord's recovery under a manufacturer's,
materialmen's, vendor's or contractor's warranty (except to the extent of costs
incurred in such recovery); (21) income, excess profits, franchise taxes or
other such taxes imposed on or measured by the income of Landlord from the
operation of the Building; (22) reserves for repairs, maintenance and
replacements; (23) Landlord's general overhead expenses; (24) costs incurred to
achieve compliance with any governmental laws, ordinances, rules, regulations or
orders, except to the extent recoverable under Section 9.6(i) and 9.6(l), above;
(25) any penalties or interest expenses incurred because of Landlord's failure
timely to pay any Operating Costs or Real Estate Taxes; (26) accounting fees
other than those attributable to reviewing and preparing operating statements
for the Building; and (27) rental or similar payments made in connection with
the leasing of any equipment deemed to be capital in nature. Landlord shall use
reasonable efforts to minimize Operating Costs for the Project.
9.8 Operating Costs Audit
9.8.1 Landlord's books and records with respect to Operating
Costs and Real Estate Taxes shall be kept on a cash basis. Tenant shall have the
right, during business hours and upon reasonable prior notice, to inspect
Landlord's books and records relating to the Operating Costs and Real Estate
Taxes, and/or to have such books and records audited at Tenant's expense. Each
Expense Statement which Landlord provides to Tenant pursuant to Section 9.4
above shall be conclusive and binding upon Tenant unless, within two (2) years
after Tenant's receipt of the Expense Statement (time being of the essence),
Tenant provides Landlord with written notice (the "Audit Notice") stating that
Tenant elects to audit same. If Tenant fails to provide the Audit Notice as
required, or fails to promptly commence such audit within thirty (30) days after
Landlord receives the Audit Notice, then unless Landlord agrees otherwise in
writing, Tenant shall be deemed to have waived its audit right for such calendar
year.
9.8.2 Tenant shall notify Landlord in writing of the results
of Tenant's audit within ten (10) business days after such audit is completed.
9.8.3 If Landlord's determination of the aggregate (i.e.
total) amount of Tenant's Share of Expense Increases exceeds the aggregate
amount of Tenant's Share of Expense Increases for any Lease Year as determined
by Tenant's audit (subject to Section 9.8.6 below) by less than
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three percent (3%), then Landlord shall credit such amount, together with
interest thereon at the "prime rate" published by the Wall Street Journal from
the time of the overpayment until the date repaid against Tenant's next due
payment of Base Rent and additional rent, and Tenant shall bear the full cost of
Tenant's audit.
9.8.4 If Landlord's determination of the aggregate amount of
Tenant's Share of Expense Increases exceeds the aggregate amount of Tenant's
Share of Expense Increases as for any Lease Year as determined by Tenant's audit
(subject to Section 9.8.6 below) by three percent (3%) or more, then Landlord
shall credit such amount, together with interest thereon at the "prime rate"
published by the Wall Street Journal from the time of the overpayment until the
date repaid, against Tenant's next due payment of Base Rent and additional rent,
and Landlord shall reimburse Tenant the reasonable and actual costs of Tenant's
audit, not to exceed $2,500 if the same has been undertaken on a contingency or
similar basis. The foregoing notwithstanding, if the amount to be credited
exceeds one (1) months rent, or if such adjustment occurs after the last Lease
Year, in lieu of such credit Landlord shall promptly refund such difference to
Tenant.
9.8.5 If Landlord's determination of the aggregate amount of
Tenant's Share of Expense Increases is less than or equal to the aggregate
amount of Tenant's Share of Expense Increases as determined by Tenant's audit,
then (i) Landlord shall have the right to charge Tenant for any amounts which
are due from Tenant but are unpaid as determined by Tenant's audit, (ii) Tenant
shall bear the full cost of Tenant's audit, and (iii) Tenant shall reimburse
Landlord for any reasonable and actual costs which Landlord incurs in connection
with such audit.
9.8.6 If, following receipt of a copy of Tenant's audit,
Landlord, in good faith, believes Tenant's audit to be in error, Landlord shall
so notify Tenant within fifteen (15) days after receipt thereof, upon which
Landlord and Tenant shall attempt to agree upon the correct amount of Tenant's
Share of Expense Increases, considering both the Expense Statement and Tenant's
audit. In the event Landlord and Tenant are unable to agree within fifteen (15)
days on the correct amount of Tenant's Share of Expense Increases, the matter
shall be submitted to arbitration in accordance to the terms of Section 49
hereof, and no interest shall accrue during the duration of such arbitration.
10. INCREASES IN REAL ESTATE TAXES
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10.1 Defined. After the first Lease Year, for each Lease Year or
portion thereof during the Term, Tenant shall pay as additional rent to
Landlord, without diminution, set-off or deduction, except as and solely to the
extent provided for herein, Tenant's share of an amount (hereinafter referred to
as "Tax Increases") equal to the positive difference between Tenant's Share of
"Real Estate Taxes" (as defined in Section 10.3, below) paid in such Lease Year
and $240,599.55 (the "Tax Stop").
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10.2 Annual Payment. Landlord shall furnish to Tenant copies of all
bills and assessment notices it receives during the Term with respect to Real
Estate Taxes within fifteen (15) days following its receipt thereof. After the
expiration of the first Lease Year, Tenant shall pay to Landlord Tenant's Share
of all subsequent Tax Increases within thirty (30) days of its receipt of a copy
of each applicable tax bill and a statement (the "Tax Statement") from Landlord
calculating the same.
10.3 Real Estate Taxes. For purposes of this Lease, "Real Estate Taxes"
shall mean all taxes and assessments, general or special, ordinary or
extraordinary, foreseen or unforeseen, assessed, levied or imposed upon the
Buildings or the Land, or assessed, levied or imposed upon the fixtures,
machinery, equipment or systems in, upon or used in connection with the
operation of the Buildings or the Land under the current or any future taxation
or assessment system or modification of, supplement to, or substitute for such
system. Real Estate Taxes shall include all reasonable expenses (including, but
not limited to, attorneys' fees, disbursements and actual costs) incurred by
Landlord in obtaining or attempting to obtain a reduction of such taxes, rates
or assessments, including any legal fees and costs incurred in connection with
contesting or appealing the amounts or the imposition of any Real Estate Taxes.
In the event Real Estate Taxes (including special assessments) may be paid in
installments, they shall be paid in such manner (and in such event Real Estate
Taxes shall include such installments and interest paid on the unpaid balance of
the assessment). The foregoing notwithstanding, Real Estate Taxes shall not
include: (i) any franchise, corporation, income or net profits tax which may be
assessed against Landlord or the Project or both, (ii) transfer taxes assessed
against Landlord or the Project or both, (iii) penalties or interest on any late
payments of Landlord, or (iv) personal property taxes of Tenant.
11. ADDITIONAL PROVISIONS; OPERATING COSTS AND REAL ESTATE TAXES.
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11.1 Partial Year; End of Term. Tenant's Share of increases in both
Operating Costs and Real Estate Taxes for any partial Lease Year shall be
determined by multiplying the amount of Tenant's Share thereof for the full
Lease Year by a fraction, the numerator of which is the number of days during
such partial Lease Year falling within the Term and the denominator of which is
365. If this Lease terminates on a day other than the last day of a Lease Year,
the amount of any adjustment to Tenant's Share of increases in both Operating
Costs and Real Estate Taxes with respect to the Lease Year in which such
termination occurs shall be prorated on the basis which the number of days from
the commencement of such Lease Year to and including such termination date bears
to 365; and any amount payable by Landlord to Tenant or Tenant to Landlord with
respect to such adjustment shall be payable within thirty (30) days after
delivery by Landlord to Tenant of the applicable Expense Statement with respect
to such Lease Year.
11.2 Other Taxes. In addition to Tenant's Share of both Operating Costs
and Real Estate Taxes, Tenant shall pay, prior to delinquency, all personal
property taxes payable with respect to all property of Tenant located in the
Premises or the Buildings and shall provide promptly, upon request of Landlord,
written proof of such payment.
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11.3 Covenants regarding Operating Costs and Taxes. Landlord covenants
to pay all Operating Costs and Real Estate Taxes before the same become
delinquent. At Tenant's request, Landlord shall contest (the cost of which shall
be deemed a part of Real Estate Taxes hereunder) any assessed valuation of the
Project or the amount of any Real Estate Taxes with counsel reasonably
acceptable to Tenant. Alternatively, at its election, provided Landlord has not
already done so for the applicable tax year, Tenant shall have the right, at its
sole cost, to contest such assessed valuation or the amount or validity of any
Real Estate Taxes, or to otherwise seek an exemption or abatement of any such
Real Estate Taxes, by appropriate proceedings conducted in good faith. In such
event Landlord shall cooperate with Tenant and shall execute any and all
documents reasonably required in connection therewith and, if required by any
law, ordinance, rule or regulation, shall join with Tenant in the prosecution of
any such proceedings. Landlord's obligation to refund amounts to Tenant on
account of any refund of Real Estate Taxes received after the Term has expired,
but attributable to periods within the Term, shall survive the expiration or
earlier termination of this Lease.
11.4 Arbitration. Disputes regarding Operating Costs, Real Estate
Taxes, and any audit thereof, shall be subject to arbitration in accordance with
the provisions of Section 49 hereof.
12. TENANT'S INSURANCE.
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12.1 Coverage Requirements. Tenant shall during the Term of this
Lease, procure at its expense and keep in force the following insurance:
12.1.1 Commercial general liability insurance naming the
Landlord and Landlord's managing agent as additional insureds against
any and all claims for bodily injury and property damage occurring in
or about the Premises. Such insurance shall have a combined single
limit of not less than One Million Dollars ($1,000,000) per occurrence
with a Two Million Dollar ($2,000,000) aggregate limit and excess
umbrella liability insurance in the amount of Two Million Dollars
($2,000,000). If Tenant has other locations that it owns or leases,
the policy shall include an aggregate limit per location endorsement.
Such liability insurance shall be primary and not contributing to any
insurance available to Landlord and Landlord's insurance shall be in
excess thereto. In no event shall the limits of such insurance be
considered as limiting the liability of Tenant under this Lease;
12.1.2 Personal property insurance insuring all equipment,
trade fixtures, inventory, fixtures and personal property located
within the Premises (excluding leasehold improvements and other
property purchased by Tenant utilizing the Tenant Improvement Allowance
[as evidenced by the content of Tenant's disbursement requests with
respect to the Tenant Improvement Allowance] which shall be insured by
and remain the property of Landlord). Such insurance shall be written
on a replacement cost basis in an amount equal to one hundred percent
(100%) of the full replacement value of the aggregate of the foregoing;
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12.1.3 Workers' compensation insurance in accordance with
statutory laws and employers' liability insurance with a limit of not
less than One Hundred Thousand Dollars ($100,000) per employee and Five
Hundred Thousand Dollars ($500,000) per occurrence; and
12.1.4 Business interruption and/or loss of rental insurance
in an amount equal to at least to six (6) months Rent.
12.2 Rating; Certificates; Cancellation. The policies required to be
maintained by Tenant shall be with companies rated A- or better in the most
current issue of Best's Insurance Reports. Insurers shall be licensed to do
business in the state in which the Premises are located and domiciled in the
USA. Any deductible amounts under any insurance policies required hereunder
shall be commercially reasonable. Certificates of insurance (certified copies of
the policies may be required) shall be delivered to Landlord prior to the
Commencement Date and annually thereafter at least thirty (30) days prior to the
expiration date of the old policy. Tenant shall have the right to provide
insurance coverage which it is obligated to carry pursuant to the terms hereof
in a blanket policy, provided such blanket policy expressly affords coverage to
the Premises and to Landlord as required by this Lease. Each policy of insurance
shall provide notification to Landlord and any mortgagee(s) of Landlord at least
thirty (30) days prior to any cancellation or modification to reduce the
insurance coverage.
12.3 Other. In the event Tenant does not purchase the insurance
required by this Lease or keep the same in full force and effect, and the same
is not corrected within one (1) business day following written notice thereof
from Landlord to Tenant, then Landlord may, but shall not be obligated to,
purchase the necessary insurance and pay the premium. Tenant shall repay to
Landlord, as additional rent, any and all reasonable expenses (including
attorneys' fees) and damages which Landlord may sustain by reason of the failure
of Tenant to obtain and maintain insurance.
13. LANDLORD'S INSURANCE.
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13.1 Coverage. At all times during the Lease Term, Landlord will
maintain, as an Operating Expense hereunder, (a) fire and extended coverage
insurance covering the Project, including all Landlord's Base Building Work and
all Tenant Work and any furniture purchased by Tenant with portions of the
Tenant Improvement Allowance, in an amount equal to one hundred percent (100%)
of the replacement value thereof, and (b) public liability and property damage
insurance of the types and amounts specified in Section 12. 1 above. Landlord
shall also have the right to obtain such other types and amounts of insurance
coverage on the Building and Landlord's liability in connection with the
Building as are customary or advisable for a comparable office project in the
Fairfax County, Virginia area, as determined by Landlord in Landlord's
reasonable judgment. Any dispute regarding the appropriateness of such
additional insurance coverage shall be subject to arbitration pursuant to
Section 49 of this Lease.
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13.2 Rating; Certificates; Cancellation. The policies required to be
maintained by Landlord shall be with companies rated A- or better in the most
current issue of Best's Insurance Reports. Insurers shall be licensed to do
business in the state in which the Premises are located and domiciled in the
USA. Any deductible amounts under any insurance policies required hereunder
shall be commercially reasonable, in Landlord's reasonable judgement.
Certificates of insurance (certified copies of the policies may be required)
shall be delivered to Landlord prior to the Commencement Date and annually
thereafter at least thirty (30) days prior to the expiration date of the old
policy. Landlord shall have the right to provide insurance coverage which it is
obligated to carry pursuant to the terms hereof in a blanket policy, provided
such blanket policy expressly affords coverage to the Project and to Tenant as
required by this Lease. Each policy of insurance shall provide notification to
Tenant at least thirty (30) days prior to any cancellation or modification to
reduce the insurance coverage.
14. DAMAGE OR DESTRUCTION.
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14.1 Damage Repair.
14.1.1 If the Premises shall be destroyed or rendered
untenantable, either wholly or in part, by fire or other casualty, then Landlord
shall, within thirty (30) days after the date of such casualty, provide Tenant
with Landlord's good faith written estimate (the "Estimate") of how long it will
take to repair or restore the Premises.
14.1.2 If neither party elects to terminate this Lease in
accordance with the terms hereof following any casualty, then Landlord shall
commence promptly and diligently prosecute to completion the restoration of the
Premises to their previous condition, subject to Force Majeure as defined herein
(not to exceed 120 days) and delays caused by Tenant; and pending substantial
completion of such restoration, the Rent shall be abated in the same proportion
as the untenantable portion of the Premises bears to the whole thereof, and this
Lease shall continue in full force and effect.
14.1.3 If Landlord estimates within the Estimate that it will
require in excess of two hundred forty (240) days after the date of such
casualty to fully repair or restore the Premises in accordance herewith, then,
within thirty (30) days after Landlord delivers Tenant the Estimate, Tenant
shall have the right to terminate this Lease by written notice to Landlord,
which termination shall be effective as of the date of such notice of
termination, and all liabilities and obligations of Landlord and Tenant
thereafter accruing shall terminate and be of no legal force and effect except
as otherwise specifically set forth herein. The foregoing notwithstanding, in
the event the damage is confined to less than all of the Buildings, Tenant shall
have the additional right to terminate this Lease only as to the affected
Building or Buildings. Notwithstanding the foregoing, Tenant shall have no right
to terminate this Lease if the fire or other casualty was the result of Tenant's
willful misconduct.
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14.1.4 If neither party elects to terminate the Lease and
Landlord fails or declines to exercise any other termination right pursuant to
this Section 14, Landlord will use all reasonable efforts to commence and
complete its restoration of the affected portions of the Premises promptly, and
in the event Landlord is unable to complete such restoration within two hundred
forty (240) days after the casualty (or such longer period as was referenced in
the Estimate, if applicable), as such period may be extended due to Force
Majeure (not to exceed 120 days) or due to any Tenant Delays (as such term is
defined in Exhibit C hereof, and not limited as to the number of days) then
within thirty (30) days after the expiration of such period (but in all events
prior to the date Landlord completes its restoration of the Premises), Tenant
shall again have the right to terminate this Lease upon thirty (30) days prior
written notice to Landlord; provided, however, that if Landlord substantially
completes such restoration prior to the end of the thirty (30) day notice
period, Tenant's notice of termination shall be deemed rescinded and ineffective
for all purposes, and this Lease shall continue in full force and effect. The
provisions of this Section are in lieu of any statutory termination provisions
allowable in the event of casualty damage.
14.1.5 If at any time in the course of its restoration of
damaged portions of the Premises, Landlord believes in good faith that its
original Estimate is no longer accurate for reasons other than Force Majeure (in
which event the provisions of Section 14.1.4 shall control), Landlord shall have
the right to deliver a revised Estimate to Tenant of the additional time period
which Landlord believes will be required to fully repair or restore the Premises
in accordance herewith, and, unless Tenant terminates this Lease by written
notice to Landlord within ten (10) business days after its receipt of such
revised Estimate from Landlord, Tenant shall be deemed to have agreed that, for
all purposes of this Section 14.1, the 240 day time limit otherwise imposed upon
completion of Landlord's restoration of the damaged portions of the Premises
shall be extended by the number of additional days needed to complete estimated
by Landlord within such revised Estimate. If Tenant elects to terminate this
Lease as to the damaged Building(s) after receiving such a revised Estimate from
Landlord, as aforesaid, such termination shall be effective as of the date of
such notice of termination, and all liabilities and obligations of Landlord and
Tenant thereafter accruing hereunder with respect to such Building(s) shall
terminate and be of no legal force and effect except as otherwise specifically
set forth herein.
14.1.6 If more than fifty percent (50%) of the Premises is
destroyed or rendered untenantable by fire or other casualty and Landlord
restores the Premises pursuant to this Section 14, the Lease Term shall be
tolled for the period commencing on the date of such fire or casualty and ending
on the date upon which such restoration is completed.
14.2 Reconstruction. If all or any portion of the Premises is damaged
by fire or other casualty and this Lease is not terminated in accordance with
the provisions hereof, then all insurance proceeds under the policy referred to
in Section 13.1 hereof that are recovered by Landlord on account of any such
damage by fire or casualty shall be made available for the payment of the cost
of repair, replacing and rebuilding.
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14.3 Business Interruption. Other than rental abatement as and to the
extent provided in Section 14.1, no damages, compensation or claim shall be
payable by Landlord for inconvenience or loss of business arising from
interruption of business, repair or restoration of the Buildings or Premises.
14.4 Repairs. Landlord's repair obligations, should it elect to repair,
shall be limited to the base Building(s), common areas and all interior
improvements to and property within the Premises which are covered or required
to be covered hereunder by Landlord's insurance or which were installed or paid
for by Landlord. Landlord shall use reasonable efforts to commence such repairs
and restorations within a reasonable period after Landlord elects to restore the
Premises, and to complete such repairs within the time frames referenced in
Section 14.1, above. Tenant acknowledges that any such repairs or restorations
shall be subject to applicable laws and governmental requirements, any
disbursement requirements imposed by Landlord's mortgagee (if any), and to delay
in the process of adjusting any insurance claim associated therewith; and delays
resulting from any of the foregoing shall constitute a "Force Majeure"
hereunder, shall not in any event constitute a breach of this Lease by Landlord,
and shall extend the time for completing such restoration (not to exceed 120
days) as long as Landlord uses reasonable efforts to commence and complete such
repairs and restorations in a timely fashion.
14.5 End of Term Casualty. Anything herein to the contrary
notwithstanding, if more than thirty (30%) of the Premises (or any Building) is
destroyed or damaged during the last eighteen (18) months of the Lease Term,
then either Landlord or Tenant shall have the right to terminate this Lease (in
whole if the damage extends to all of the Buildings or otherwise as to the
affected portion of the Premises within the Building or Buildings) upon thirty
(30) days prior written notice to the other, which termination shall be
effective on the thirtieth (30th) day after the other party's receipt of such
notice. Such notice must be delivered within thirty (30) days after such
casualty, or shall be deemed waived; provided, however, that Tenant may revoke
such termination notice, and require Landlord to restore the Premises, by
exercising any renewal option provided herein, if any.
15. MACHINERY AND EQUIPMENT; ALTERATIONS AND ADDITIONS; REMOVAL OF
--------------------------------------------------------------
FIXTURES.
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15.1 Tenant shall not place a load upon the floor of the Premises which
exceeds the maximum live load per square foot which Landlord (or Landlord's
architect or engineer) reasonably determines is appropriate for the Building
without Landlord's prior written consent. Tenant will not install or operate in
the Premises any electrical or other equipment requiring any changes,
replacements or additions to any base building system, without Landlord's prior
written consent, which shall not be unreasonably withheld, conditioned or
delayed (and if such consent is granted Tenant shall be responsible for the
costs of such changes, replacements or additions).
15.2 Tenant shall not make or allow to be made any alterations,
additions or improvements to or on the Premises which materially affect any
structural or building system components of the
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Premises or which, under applicable codes, rules and/or regulations require any
building electrical, plumbing or other permit without Landlord's prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed. Tenant shall have the right to make any other alterations, repairs,
additions or improvements in or to the Premises without Landlord's prior written
consent but with prior written notice to Landlord; provided, however that no
exterior modification shall be made in any event without Landlord's prior
written consent in all cases. Any such alterations, additions or improvements,
including, but not limited to, wall covering, paneling and built-in cabinet
work, but excepting movable furniture and trade fixtures, shall be made at
Tenant's sole expense and, with respect to structural alterations, according to
plans and specifications approved in writing by Landlord, in compliance with all
applicable laws, by a licensed contractor, and in a good and workmanlike manner
conforming in quality and design with the Premises existing as of the
Commencement Date, shall not diminish the value of the Building or the Premises
and shall at once become a part of the realty and shall be surrendered with the
Premises. Tenant shall have the right to use its own vendors to perform
alterations to the Premises, subject to Landlord's reasonable prior approval in
cases where the underlying alteration requires Landlord's consent hereunder.
Landlord shall not charge any fee for oversight of any Tenant alterations.
15.3 Upon the expiration or sooner termination of the Lease Term,
Tenant shall, at Tenant's sole expense, with due diligence, remove any
alterations, additions, or improvements made by Tenant which are designated by
Landlord to be removed at the time its consent to the installation thereof is
granted, and repair any damage to the Premises caused by such removal. Tenant
may, at its election, but shall not be required to, remove any of its movable
property and trade fixtures, systems furniture (to the extent the same is not
acquired with proceeds from the Tenant Improvement Allowance) and roof devices.
Tenant shall pay Landlord any damages for injury to the Premises or Buildings
resulting from such removal. All items of Tenant's personal property that are
not removed from the Premises or the Buildings by Tenant at the termination of
this Lease shall be deemed abandoned and become the exclusive property of
Landlord, without further notice to or demand upon Tenant. If the Premises are
not surrendered as and when aforesaid, Tenant shall indemnify Landlord against
all claims, losses, costs, expenses (including reasonable attorneys' fees) and
liabilities resulting from the delay by Tenant in so surrendering the same,
including without limitation any claims made by any succeeding occupant founded
on such delay. Tenant's obligations under these Sections 15.2 and 15.3 shall
survive the expiration or termination of this Lease.
16. ACCEPTANCE OF PREMISES.
----------------------
Landlord shall tender, and Tenant shall accept possession of the
Premises in accordance with the terms of Exhibit C hereto. All provisions
regarding delivery of possession of the Premises, construction of leasehold
improvements to the Premises (if any) and any adjustments which may be made with
respect to the Commencement Date (as defined in Section 1.4) are set forth in
Exhibit C.
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17. TENANT IMPROVEMENTS.
-------------------
The initial improvements to be performed by Tenant to the Premises
shall be governed by the terms of Exhibit C hereto.
18. ACCESS.
------
18.1 Subject to the restrictions set forth below, Tenant shall permit
Landlord and its agents to enter the Premises at all reasonable times to inspect
the same; to show the Premises to prospective tenants, or interested parties
such as prospective lenders and purchasers; to exercise its rights under Section
48; to clean, repair, alter or improve the Premises or the Buildings; to
discharge Tenant's obligations when Tenant has failed to do so within a
reasonable time after written notice from Landlord; to post notices of
non-responsibility and similar notices and "For Sale" signs and to place "For
Lease" signs upon or adjacent to the Building or the Premises at any time within
the twelve (12) month period prior to the expiration of the Lease Term. Tenant
shall permit Landlord and its agents to enter the Premises at any time in the
event of an emergency. When reasonably necessary, Landlord may temporarily close
entrances, doors, corridors, elevators or other facilities without liability to
Tenant by reason of such closure. In exercising the foregoing rights, Landlord
shall use reasonable efforts to minimize any disruption to Tenant's business.
Landlord shall coordinate any entry into the Premises with Tenant's facilities
supervisor at least 48 hours in advance (except in cases of emergency involving
fire or other casualty, or other risk of injury or death to persons), and
Landlord acknowledges that Tenant may require Landlord and its agents to be
accompanied by a representative of Tenant for security purposes upon Landlord's
entry to certain limited portions of the Premises (other than in cases of
emergency involving fire or other casualty, or other risk of injury or death to
persons) for legitimate, documented security purposes. Tenant shall supply
Landlord with telephone numbers for Tenant's facilities supervisor so that
Landlord will be able to comply with established security procedures to the
extent feasible under the circumstances in the event Landlord requires immediate
access to the Premises to cure any emergency situation.
18.2 Landlord shall be excused from such of its obligations under this
Lease as are directly and materially impacted by the inability of Landlord to
access the Premises or any applicable part thereof due to Tenant's security
restrictions, if and to the extent the performance of such obligations was in
fact hindered, frustrated, or rendered impossible or impracticable due to the
effect of such restrictions on access.
19. MUTUAL WAIVER OF SUBROGATION.
----------------------------
19.1 Tenant. Notwithstanding anything to the contrary in this Lease,
whether the loss or damage is due to the negligence of Landlord or Landlord's
agents or employees, or any other cause, Tenant hereby releases Landlord and
Landlord's agents and employees from responsibility for and waives its entire
claim of recovery for (i) any and all loss or damage to the personal
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property of Tenant located in the Project (excluding any personal property
required to be insured by Landlord pursuant to the provisions hereof), arising
out of any of the perils which are covered by Tenant's property insurance
policy, with extended coverage endorsements which Tenant is required to obtain
under the applicable provisions of this Lease, whether or not actually obtained,
or (ii) loss resulting from business interruption at the Premises, arising out
of any of the perils which may be covered by the business interruption insurance
policy required to be carried by Tenant under this Lease. This waiver shall not
be construed to supersede (or constitute a waiver of) any rental abatement to
which Tenant may be entitled due to an interruption of services pursuant to
Section 8.3, hereof, or due to a casualty pursuant to Section 14.1.2, hereof.
19.2 Landlord. Notwithstanding anything to the contrary in this Lease,
whether the loss or damage is due to the negligence of Tenant or Tenant's agents
or employees, or any other cause, Landlord hereby releases Tenant and Tenant's
agents and employees from responsibility for and waives its entire claim of
recovery for any and all loss or damage to personal property of Landlord located
about the Project and the Buildings and Project generally and all property
attached thereto (excluding any such property required to be insured by Tenant
hereunder), arising out of any of the perils which are covered by Landlord's
property insurance policy which Landlord is required to obtain under the
applicable provisions of this Lease, whether or not actually obtained.
19.3 Carriers. Landlord and Tenant 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.
20. INDEMNIFICATION.
---------------
20.1 Subject to the provisions of Section 19 hereof and other
provisions of this Lease, Tenant shall indemnify and hold harmless Landlord, its
agents, employees, officers, directors, partners and shareholders from and
against any and all third party claims, liabilities, judgments, demands, causes
of action, claims, losses, damages, costs and expenses, including reasonable
attorneys' fees and costs, arising out of such third party claims, to the extent
arising out of (i) the use and occupancy of the Premises by Tenant, its
officers, contractors, licensees, agents, servants, employees, guests, invitees,
visitors, assignees or subtenants; (ii) the negligence or willful misconduct of
Tenant, its officers, contractors, licensees, agents, servants, employees,
guests, invitees (only while within the Premises), visitors, assignees or
subtenants, in or about the Project; and/or (iii) any breach or Default by
Tenant under this Lease; provided that this indemnity shall not apply to any
loss, damage, liability or expense resulting from injuries to third parties
caused by the gross negligence or willful misconduct of Landlord, or its
officers, contractors, licensees, agents, employees or invitees (only while
within the Premises).
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20.2 Subject to the provisions of Section 19 hereof and other
provisions of this Lease, Landlord shall indemnify and hold harmless Tenant and
its assignees and subtenants and its and their agents, employees, officers,
directors, partners and shareholders from and against any and all third party
claims, liabilities, judgments, demands, causes of action, claims, losses,
damages, costs and expenses, including reasonable attorneys' fees and costs,
arising out of such third party claims, to the extent arising out of (i) the
operation and management of the Project by Landlord or Landlord's management
agent; (ii) the negligence or willful misconduct of Landlord, its officers,
contractors, agents and employees in or about the Project; and/or (iii) any
breach or default by Landlord under this Lease; provided that this indemnity
shall not apply to any loss, damage, liability or expense resulting from
injuries to third parties caused by the gross negligence or willful misconduct
of Tenant, or its officers, contractors, licensees, agents, employees or (while
within the Premises) invitees.
20.3 The indemnifications set forth in this Section 20 shall survive
termination of this Lease.
21. ASSIGNMENT AND SUBLETTING.
-------------------------
21.1 Consent Required. Tenant shall not assign, encumber, mortgage,
pledge, license, hypothecate or otherwise transfer the Premises or this Lease,
or sublease all or any part of the Premises, or permit the use or occupancy of
the Premises by any party other than Tenant, without the prior written consent
of Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed.
21.2 Procedure. Tenant must request Landlord's consent to such
assignment or sublease in writing at least ten (10) business days prior to the
commencement date of the proposed sublease or assignment, which written request
must include (a) the name and address of the proposed assignee or subtenant, (b)
the nature and character of the business of the proposed assignee or subtenant,
(c) financial information (including financial statements) of the proposed
assignee or subtenant, and (d) a copy of the proposed sublet or assignment
agreement. Tenant shall also provide any additional information Landlord
reasonably requests regarding such proposed assignment or subletting. Within ten
(10) days after Landlord receives Tenant's request (with all required
information included), Landlord shall, by written notice to Tenant, elect
either: (i) to grant its consent to such proposed assignment or subletting, or
(ii) to deny its consent to such proposed assignment or subletting, setting
forth with specificity the reason for such denial, or (iii) if the proposed
sublease or assignment is in respect of the entirety of a Building for the
duration of the Term, to terminate this Lease as to that Building effective as
of the commencement date of such proposed assignment. If Landlord does not
exercise any of the above options within fifteen (15) business days after
Landlord receives Tenant's request, then Tenant may assign or sublease the
Premises upon the terms stated in Tenant's request.
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21.3 Conditions. Any subleases and/or assignments hereunder are also
subject to all of the following terms and conditions:
21.3.1 If Landlord approves an assignment or sublease as
herein provided, Tenant shall pay to Landlord, as additional rent due under this
Lease, one half (1/2) of the "Net Profits" (as defined below) generated from
such transaction during each Lease Year. For purposes hereof, the term "Net
Profits" means: (i) with respect to assignment, the amount paid by the assignee
to acquire Tenant's rights under the Lease, less (1) the portion of such sum
fairly attributable to the acquisition of Tenant's leasehold improvements or
personal property which were funded by Tenant and not by the Tenant Improvement
Allowance set forth in Exhibit C, and (2) all reasonable and actual
out-of-pocket expenses incurred and paid by Tenant in procuring such assignment,
including, without limitation, brokerage fees, advertising costs, legal fees,
allowances, the cost of leasehold improvements and other concessions; and (ii)
with respect to a sublease, the amount, if any, by which the rent, any
additional rent and any other sums payable by the subtenant to Tenant under such
sublease exceeds the sum of (x) that portion of the Rent plus increases in
Operating Costs and Real Estate Taxes and other additional rent payable by
Tenant hereunder which is allocable to the portion of the Premises which is the
subject of such sublease, (y) all reasonable and actual out-of-pocket expenses
incurred by Tenant in procuring such sublease, including, without limitation,
brokerage fees, advertising costs, legal fees, allowances, the cost of leasehold
improvements and other concessions, and (z) the amortized costs of any leasehold
improvements or personal property provided as a part of such transaction and
existing prior to the commencement of the sublease term to the extent funded by
Tenant and not from the Tenant Improvement Allowance as set forth in Exhibit C.
The foregoing payments shall be made on a quarterly basis by Tenant.
21.3.2 No consent to any assignment or sublease shall
constitute a further waiver of the provisions of this section, and all
subsequent assignments or subleases may be made only with the prior written
consent of Landlord. In no event shall any consent by Landlord be construed to
permit reassignment or resubletting by a permitted assignee or sublessee.
21.3.3 Tenant shall remain liable for all Lease obligations,
all of which shall be unaffected by such sublease or assignment, and shall
remain in full force and effect for all purposes. An assignee of Tenant, at the
option of Landlord, shall become directly liable to Landlord for all obligations
of Tenant hereunder, but no sublease or assignment by Tenant shall relieve
Tenant of any liability hereunder.
21.3.4 Any assignment or sublease without Landlord's prior
written consent shall be void, and shall, at the option of the Landlord,
constitute a Default under this Lease.
21.3.5 The term of any such assignment or sublease shall not
extend beyond the Lease Term.
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21.4 Affiliated Entity; Sale of Business. Notwithstanding anything to
the contrary in this Lease, so long as such transfer is not effectuated as part
of a transaction or series of transfers orchestrated in order to effect a
transfer of this Lease (or Tenant's interest herein) in isolation to Tenant's
other leasehold interests and assets, Landlord's written consent shall not be
required for any sublease, assignment or other transfer of this Lease to any
other entity which (i) controls or is controlled by Tenant, or (ii) is
controlled by Tenant's parent company, or (iii) which purchases all or
substantially all of the assets of Tenant, or (iv) which purchases all or
substantially all of the stock of Tenant, or (v) is entering into such sublease
for the purpose of performing work on a government contract for which Tenant or
any affiliate or subsidiary of Tenant is the prime contractor or subcontractor;
PROVIDED, HOWEVER, that in such event Tenant shall continue to remain fully
liable under the Lease, on a joint and several basis with the assignee or
acquiror of such assets or stock. Tenant shall be required to give Landlord at
least thirty (30) days written notice in advance of any such sublease or
assignment, except with respect to transfers by operation of law occasioned
through a sale of publicly traded shares in Tenant.
22. ADVERTISING.
-----------
Tenant shall have the right to erect such signs on or about the Project
as it deems desirable (including, without limitation, monument signs,
directional signs and building signs), provided that (i) Tenant notifies
Landlord in advance of erecting such signs, provides signage plans therefore,
and obtains the prior approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed, and in any event shall not be
delayed by Landlord provided that such signage is generally consistent with the
general aesthetics of the Project and that of comparable projects in the
Fairfax, Virginia area, and (ii) Tenant's rights shall be subject to all
statutes, rules, regulations and requirements of governmental authorities having
jurisdiction thereover. Any such signage shall be installed at Tenant's sole
cost and expense. Tenant shall be responsible to maintain any permitted signs
and remove the same at Lease termination. If Tenant shall fail to do so,
Landlord may do so at Tenant's cost. Tenant shall be responsible to Landlord for
any damage caused by the installation, use, maintenance or removal of any such
signs.
23. LIENS.
-----
Tenant shall keep the Premises and the Buildings free from any liens
arising out of any work performed, materials ordered or obligations incurred by
or on behalf of Tenant, and Tenant hereby agrees to indemnify and hold Landlord,
its agents, employees, independent contractors, officers, directors, partners,
and shareholders harmless from any liability, cost or expense for such liens.
Tenant shall cause any such lien imposed to be released of record by payment or
posting of the proper bond acceptable to Landlord within twenty (20) days after
written request by Landlord. Tenant shall give Landlord written notice of
Tenant's intention to perform work on the Premises which might result in any
claim of lien at least ten (10) days prior to the commencement of such work to
enable Landlord to post and record a Notice of Nonresponsibility
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or other notice deemed proper before commencement of any such work. If Tenant
fails to remove any lien within the prescribed twenty (20) day period, then
Landlord may do so at Tenant's expense and Tenant's reimbursement to Landlord
for such amount, including reasonable attorneys' fees and costs, shall be deemed
additional rent.
24. DEFAULT.
-------
24.1 Tenant's Default. A "Default" under this Lease by Tenant shall
exist if any of the following occurs (taking into account the expiration of the
notice and cure periods provided for below):
24.1.1 If Tenant fails to pay Rent, additional rent or any
other sum required to be paid hereunder within five (5) days after written
notice from Landlord that such payment was due, but was not paid as of the due
date (provided, however, if Landlord has delivered two (2) such notices to
Tenant within the prior twelve (12) month period, any subsequent failure to pay
Rent, additional rent or any other sum required to be paid to Landlord hereunder
on or before the due date for such payment occurring shall constitute a Default
by Tenant without requirement of such five (5) day notice and opportunity to
cure; but in the event a full year elapses between such failures then Tenant
shall again have the right to such cure period); or
24.1.2 If Tenant fails to perform any term, covenant or
condition of this Lease except those requiring the payment of money to Landlord
as set forth in Section 24.1.1 above, and Tenant fails to cure such breach
within thirty (30) days after written notice from Landlord where such breach
could reasonably be cured within such thirty (30) day period; provided, however,
that where such failure could not reasonably be cured within the thirty (30) day
period, that Tenant shall not be in Default if it commences such performance
within the thirty (30) day period and diligently thereafter prosecutes the same
to completion; provided that no such grace period to be permitted in the event
of any one or more of the following: (i) the Default relates to the maintenance
of insurance obligations, (ii) the Default relates to the assignment and
subletting provisions, (iii) the Default relates to a violation of Section 5.2
of this Lease, or (iv) there exists a reasonable possibility of danger to the
health or safety of the Landlord, the Tenant, Tenant's invitees, or any other
occupants of, or visitors to, the Buildings; or
24.1.3 If Tenant shall (i) make an assignment for the benefit
of creditors, (ii) acquiesce in a petition in any court in any bankruptcy,
reorganization, composition, extension or insolvency proceedings, (iii) seek,
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of Tenant and of all or substantially all of Tenant's property, (iv)
file a petition seeking an order for relief under the Bankruptcy Code, as now or
hereafter amended or supplemented, or by filing any petition under any other
present or future federal, state or other statute or law for the same or similar
relief, or (v) fail to win the dismissal, discontinuation or vacating of any
involuntary bankruptcy proceeding within ninety (90) days after such proceeding
is initiated; or
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24.1.4 If Tenant shall have abandoned or vacated the Premises
or any material portion thereof without providing Landlord with not less than
thirty (30) days prior written notice.
24.2 Remedies. Upon a Default, Landlord shall have the following
remedies, in addition to all other rights and remedies provided by law or
otherwise provided in this Lease, any one or more of which Landlord may resort
cumulatively, consecutively, or in the alternative:
24.2.1 Landlord may continue this Lease in full force and
effect, and this Lease shall continue in full force and effect as long as
Landlord does not terminate this Lease, and Landlord shall have the right to
collect Rent, additional rent and other charges when due.
24.2.2 Landlord may terminate this Lease, or may terminate
Tenant's right to possession of the Premises, at any time by giving written
notice to that effect, in which event Landlord covenants to use commercially
reasonable efforts to relet the Premises or any part thereof and mitigate its
damages. Upon the giving of a notice of the termination of this Lease, this
Lease (and all of Tenant's rights hereunder) shall immediately terminate,
provided that, without limitation, Tenant's obligation to pay Rent, increases in
Operating Costs, increases in Real Estate Taxes, and any damages otherwise
payable under this Section 24, shall survive such termination and shall not be
extinguished thereby. Upon the giving of a notice of the termination of Tenant's
right of possession, all of Tenant's rights in and to possession of the Premises
shall terminate but this Lease shall continue subject to the effect of this
Section 24. Upon either such termination, Tenant shall surrender and vacate the
Premises in the condition required by Section 26, and Landlord may re-enter and
take possession of the Premises and all the remaining improvements or property
and eject Tenant or any of the Tenant's subtenants, assignees or other person or
persons claiming any right under or through Tenant or eject some and not others
or eject none. This Lease may also be terminated by a judgment specifically
providing for termination. Any termination under this section shall not release
Tenant from the payment of any sum then due Landlord or from any claim for
damages or Rent, additional rent or other sum previously accrued or thereafter
accruing against Tenant, all of which shall expressly survive such termination.
Reletting may be for a period shorter or longer than the remaining Lease Term.
No act by Landlord other than giving written notice to Tenant shall terminate
this Lease. Acts of maintenance, efforts to relet the Premises or the
appointment of a receiver on Landlord's initiative to protect Landlord's
interest under this Lease shall not constitute a constructive or other
termination of Tenant's right to possession or of this Lease, either of which
may be effected solely by an express written notice from Landlord to Tenant. On
termination, Landlord has the right to remove all Tenant's personal property and
store same at Tenant's cost and to recover from Tenant as damages:
24.2.2.1 The worth at the time of award of unpaid
Rent, additional rent and other sums due and payable which had been earned at
the time of termination; plus
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24.2.2.2 The worth at the time of award of the amount
by which the unpaid Rent, additional rent and other sums due and payable which
would have been payable after termination for the balance of the Lease Term
exceeds the fair rental value of the Premises for the balance of the Term; plus
24.2.2.3 Any other amount necessary to compensate
Landlord for all the out-of-pocket costs incurred on account of Tenant's failure
to perform Tenant's obligations under this Lease, including, without limitation,
any costs or expenses reasonably incurred by Landlord: (i) in retaking
possession of the Premises; (ii) in maintaining, repairing, preserving,
restoring, replacing, cleaning, altering or rehabilitating the Premises or a
portion thereof, including such acts for reletting to a new tenant or tenants;
(iii) for leasing commissions; or (iv) for any other costs necessary or
appropriate to relet the Premises. The foregoing notwithstanding, Tenant's
liability with respect to alterations shall not extend beyond the cost necessary
to place the same in leasable condition comparable to similarly situated space
in the Fairfax, Virginia area. Further, to the extent any of such costs are
incurred in connection with a lease transaction having a term in excess of the
remaining Term hereof, all of the foregoing costs incurred in connection
therewith shall be amortized on a straight-line basis over the term of such new
lease, and Tenant's liability shall be limited to the amortized portion of the
same falling within the Term hereof, discounted to present value using a
discount rate equal to eight percent (8%) per annum (the "Discount Rate").
The "worth at the time of award" of the amounts
referred to in Section 24.2.2.1 is computed by allowing interest at the Default
Rate through the date of payment. The "worth at the time of award" of the
amounts referred to in Section 24.2.2.2 shall be computed by discounting the
same to present value using the Discount Rate. In lieu of the amounts
recoverable by Landlord pursuant to Section 24.2.2.2, above, but in addition to
the amounts specified in Section 24.2.2.1 and 24.2.2.3 (or any other portion of
this Section 24), Landlord may, at its sole election, recover "Indemnity
Payments," as defined hereinbelow, from Tenant. For purposes of this Lease
"Indemnity Payments" means an amount equal to the Rent and other payments
provided for in this Lease which would have become due and owing thereunder from
time to time during the unexpired Lease Term after the effective date of the
termination, but for such termination, less the Rent and other payments, if any,
actually collected by Landlord and allocable to the Premises. If Landlord elects
to pursue Indemnity Payments as set forth above, Tenant shall, on demand, make
Indemnity Payments monthly, and Landlord may sue for all Indemnity Payments at
any time after they accrue, either monthly, or at less frequent intervals.
Tenant further agrees that Landlord may bring suit for Indemnity Payments at or
after the end of the Lease Term as originally contemplated under this Lease, and
Tenant agrees that, in such event, Landlord's cause of action to recover the
Indemnity Payments shall be deemed to have accrued on the last day of the Lease
Term as originally contemplated. In seeking any new tenant for the Premises,
Landlord shall be entitled to grant any concessions it deems reasonably
necessary (but Tenant shall not be liable therefor absent a written agreement
with Landlord). In no event shall Tenant be entitled to any excess of any rental
obtained by reletting over and above the rental herein reserved.
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Tenant waives redemption or relief from forfeiture under any other present or
future law, in the event Tenant is evicted or Landlord takes possession of the
Premises by reason of any Default of Tenant hereunder.
24.2.3 Landlord may, with or without terminating this Lease,
re-enter the Premises pursuant to judicial process (except in the event of
Tenant's abandonment of the Premises in which event no judicial process shall be
required) and remove all persons and property from the Premises; such property
may be removed and stored in a public warehouse or elsewhere at the cost of and
for the account of Tenant. No re-entry or taking possession of the Premises by
Landlord pursuant to this section shall be construed as an election to terminate
this Lease unless a written notice of such intention is given to Tenant.
24.2.4 Tenant, on its own behalf and on behalf of all persons
claiming through or under Tenant, including all creditors, does hereby
specifically waive and surrender any and all rights and privileges, so far as is
permitted by law, which Tenant and all such persons might otherwise have under
any present or future law (1) except as may be otherwise specifically required
herein, to the service of any notice to quit or of Landlord's intention to
re-enter or to institute legal proceedings, which notice may otherwise be
required to be given, (2) to redeem the Premises, (3) to re-enter or repossess
the Premises, (4) to restore the operation of this Lease, with respect to any
dispossession of Tenant by judgment or warrant of any court or judge, or any
re-entry by Landlord, or any expiration or termination of this Lease, whether
such dispossession, re-entry, expiration or termination shall be by operation of
law or pursuant to the provisions of this Lease, (5) to the benefit of any law
which exempts property from liability for debt or for distress for rent or (6)
to a trial by jury in any claim, action proceeding or counter-claim arising out
of or in any way connected with this Lease.
24.2.5 Anything contained herein to the contrary
notwithstanding, (i) Landlord shall not be entitled to terminate this Lease for
any Default other than a material Default (including, but not limited to, a
Default in the payment of rent or additional rent), (ii) except as specifically
set forth in Section 24.2.3, in no event shall Landlord be entitled to take
possession of the Premises except pursuant to legal proceedings, and (iii)
Landlord hereby waives the right of distraint and any statutory or other lien
which Landlord may have upon Tenant's furniture, trade fixtures and equipment or
other personal property in the Premises, other than that which was funded by
Landlord pursuant to or under the Tenant Improvement Allowance set forth in
Exhibit C.
24.2.6 In the event of termination of this Lease or
repossession of the Premises after a Default, Landlord agrees to use
commercially reasonable efforts to mitigate its damages and relet the Premises
after any termination of this Lease or Tenant's right to possession of the
Premises hereunder, provided that (i) (if applicable) Landlord shall not be
obligated to show preference for reletting the Premises over any other vacant
space in the Project, (ii) Landlord shall have the right to divide the Premises,
or to consolidate portions of the Premises with other spaces,
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in order to facilitate such reletting, as Landlord deems appropriate, (iii)
Landlord shall not have any obligation to use efforts other than commercially
reasonable efforts under the circumstances to collect rental after any such
reletting, and (iv) Landlord may relet the whole or any portion of the Premises
for any period, to any tenant, and for any use and purpose, upon such terms as
it deems appropriate, and may grant any rental or other lease concessions as it
deems advisable, including free rent. In no event shall Tenant be entitled to
any excess of any rental obtained under this Section 24.2.6 by reletting over
and above the Rent and additional rent herein reserved.
24.3 Landlord's Default; Emergencies. Tenant agrees to provide written
notice to Landlord and any lender having a lien on the Project (provided that it
requests of Tenant in writing) in the event Landlord breaches any of its
obligations hereunder. In the event Landlord (or Landlord's lender) shall fail
to cure any such breach within thirty (30) days after receipt of written notice
from Tenant (or if such breach is not reasonably capable of being cured within
thirty (30) days, such additional period as may reasonably be necessary to cure
the same with due diligence), then Landlord shall be in default hereunder, and
Tenant shall be entitled to bring an action for damages or injunctive relief
against Landlord. Additionally, (i) in the event any default by Landlord is not
cured within the foregoing cure period or (ii) in the event any emergency
repairs to the Demised Premises are needed and Tenant is unable, despite
diligent efforts, to contact Landlord by telephone, then, in either of such
events, Tenant shall be entitled to take such action as may be commercially
reasonable under the circumstance to correct such uncured default and/or make
such repairs as are needed to correct the emergency situation, and Landlord
shall reimburse Tenant for all costs reasonably incurred in the exercise of such
rights, together with interest thereon at the Default Rate from the date paid
until the date reimbursed, within ten (10) days after written demand. If (a)
Landlord defaults in its obligation to pay Taxes due with respect to the
Project, (b) Tenant, in the exercise of its rights under this Section 24.3, pays
such Taxes on Landlord's behalf in order to correct such default, and (c)
Landlord fails to reimburse Tenant for the amount of Taxes so paid by Tenant,
together with interest thereon at the Default Rate, as aforesaid, within ten
(10) business days after Tenant's written demand for such reimbursement
accompanied by evidence of such payment, then Tenant may deduct the amount due
and owing from Landlord with respect thereto from its Rental obligations next
coming due hereunder until the same has been fully recovered, or commence an
action against Landlord to recover same. In addition, if Tenant shall receive a
final, non-appealable judgment (a "Final Judgment") (i.e., a final judgment with
all appeal rights having been exhausted in favor of affirming such final
judgment) against Landlord for any sums due and owing from Landlord to Tenant in
connection with this Lease, and Landlord fails to pay the amount of such Final
Judgment (including any interest required to be paid pursuant thereto) within
ten (10) days after the date thereof, then in addition to any other right of
execution not otherwise limited by this Lease, Tenant shall have the right to
deduct the amount thereof from its Rental obligations next coming due hereunder,
until the same has been fully recovered. The foregoing (together with any right
of offset specifically and expressly granted to Tenant in connection with
Landlord's obligation to complete the Landlord's Base Building Work and
Landlord's obligation to disburse the Tenant Improvement Allowance, as set forth
in Section C.2.(c) of Exhibit C attached hereto) shall constitute Tenant's
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sole and exclusive rights of offset under this Lease (excluding any rental
abatement period specifically provided in Sections 8.3, 14 or 29 hereof) , and
Tenant hereby waives any and all other rights or claims of offset.
25. SUBORDINATION.
-------------
25.1 Subordination. Subject to the provisions of Section 25.2 below,
this Lease is and shall at all times be and remain subject and subordinate to
the lien of any mortgage, deed of trust, ground lease or underlying lease now or
hereafter in force against the Premises, and to all advances made or hereafter
to be made upon the security thereof. Tenant shall execute and return to
Landlord any customary documentation requested by Landlord in order to confirm
the foregoing subordination within ten (10) days after Landlord's written
request. Subject to the provisions of Section 25.2 below, in the event any
proceedings are brought for foreclosure, or in the event of the exercise of the
power of sale under any mortgage or deed of trust made by the Landlord covering
the Premises, Tenant shall attorn to the purchaser at any such foreclosure, or
to the grantee of a deed in lieu of foreclosure, and recognize such purchaser or
grantee as the Landlord under this Lease. Tenant agrees that with the exception
of the Optionees and Beneficiary as defined in Section 25.2 below, no mortgagee
or successor to such mortgagee shall be (i) bound by any payment of Rent or
additional rent for more than one (1) month in advance, (ii) bound by any
amendment or modification of this Lease made without the consent of Landlord's
mortgagee or such successor in interest, (iii) liable for damages for any
breach, act or omission of any prior landlord, or (iv) subject to any claim of
offset or defenses that Tenant may have against any prior landlord; provided
that such mortgagee or successor shall not be relieved of the obligation to
comply with all of the Landlord's obligations under the Lease accruing from and
after the date such mortgagee or successor takes title to the Project,
irrespective of whether the original non-compliance with any such obligation
arose prior to and is continuing as of such date, or arose on or after such
date.
25.2 Non-Disturbance. Landlord agrees to use commercially reasonable
efforts to obtain a Subordination, Non-Disturbance and Attornment Agreement from
any future groundlessor, mortgagee or deed of trust holder for the Buildings in
a form to be negotiated between Landlord, Tenant and the applicable mortgagee or
deed of trust holder, approval of which by Tenant and Landlord shall not be
unreasonably withheld, conditioned or delayed ("SNDA"), providing, inter alia,
that as long as Tenant is not in Default hereunder, Tenant's right of possession
and other leasehold rights shall not be disturbed in the event of a foreclosure
of such groundlease, mortgage or deed of trust which Tenant agrees to execute
and deliver to such groundlessor, mortgagee or deed of trust holder; and upon
obtaining same, Tenant agrees to promptly execute and deliver such SNDA to
Landlord. In the event any future groundlessor or lienholder does not provide
such an SNDA for Tenant, provided that Tenant has attempted in good faith to
negotiate an acceptable form of SNDA with the applicable mortgagee or deed of
trust holder, Tenant shall have no obligation to subordinate its leasehold
interest to such groundlease or lien instrument. In addition, within thirty (30)
days of the date hereof (i) Landlord shall obtain an SNDA which is consistent
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with the provisions of this Section 25.2 from Landlord's present lenders, and if
Landlord obtains same, Tenant shall promptly execute and deliver such SNDA to
Landlord, and (ii) Landlord shall obtain the agreement of those parties (the
"Optionees") which have been granted an option to purchase the Project pursuant
to that certain Option Agreement, a Memorandum of which is recorded among the
land records of Fairfax County, Virginia in Deed Book 9730, page 947, and from
those parties identified as the beneficiaries (collectively, "Beneficiary")
under that certain Deed of Trust recorded among the Land Records of Fairfax
County, Virginia in Deed Book 9730, page 953, to recognize this Lease and the
rights of Tenant hereunder, and acknowledging that title to the Project, if
conveyed to the Optionees or their designee or Beneficiary pursuant to such
option or deed of trust, shall be conveyed subject to this Lease and the rights
of Tenant hereunder. In addition to the foregoing, (a) the SNDA to be provided
by Optionee and Beneficiary shall require Optionee or Beneficiary, as
applicable, to assume the obligations of Landlord hereunder, including, without
limitation, those arising prior to the date it takes title to the Project, and
(b) the SNDA to be obtained from Optionee and Beneficiary shall recognize the
specific offset rights of Tenant as set forth in Section C.2.(c) of Exhibit C
attached hereto.
26. SURRENDER OF POSSESSION.
-----------------------
Upon expiration of the Lease Term, Tenant shall promptly and peacefully
surrender the Premises to Landlord in as good condition as when received by
Tenant from Landlord or as thereafter improved, reasonable use and wear and tear
and damage by fire, casualty and condemnation excepted. If the Premises are not
surrendered in accordance with the terms of this Lease, Tenant shall indemnify
Landlord and its agent, employees, independent contractors, officers, directors,
partners, and shareholders against any loss or liability including reasonable
attorneys' fees and costs, and including liability to succeeding tenants,
resulting from delay by Tenant in so surrendering the Premises. This
indemnification shall survive termination of this Lease.
27. NON-WAIVER.
----------
Waiver by Landlord of any breach of any term, covenant or condition
herein contained shall not be deemed to be a waiver of such term, covenant, or
condition(s), or any subsequent breach of the same or any other term, covenant
or condition of this Lease, other than the failure of Tenant to pay the
particular rental so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such Rent.
28. HOLDOVER.
--------
28.1 Except as provided in Section 28.2, below, if Tenant shall,
without the written consent of Landlord, hold over after the expiration of the
Lease Term, Tenant shall be deemed a tenant at sufferance, which tenancy may be
terminated as provided by applicable state law. Except as provided in Section
28.2, below, during any holdover tenancy (whether or not
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consented to by Landlord), unless Landlord has otherwise agreed in writing,
Tenant agrees to pay to Landlord, a per diem occupancy charge equal to one
hundred fifty percent (150%) of the per diem Rent (and one hundred ten percent
[110%] of the additional rent) as was in effect under this Lease for the last
month of the Lease Term. Such payments shall be made within five (5) days after
Landlord's demand, and in no event less often than once per month (in arrears).
In the case of a holdover which has been consented to by Landlord, unless
otherwise agreed to in writing by Landlord and Tenant, Tenant shall give to
Landlord thirty (30) days prior written notice of any intention to quit the
Premises, and Tenant shall be entitled to thirty (30) days prior written notice
to quit the Premises, except in the event of non-payment of Rent or additional
rent in advance or the breach of any other covenant or the existence of a
Default. Upon expiration of the Lease Term as provided herein, Tenant shall not
be entitled to any notice to quit, the usual notice to quit being hereby
expressly waived under such circumstances, and Tenant shall surrender the
Premises on the last day of the Lease Term as provided in Section 26, above.
28.2 Provided that (i) at the time Tenant notifies Landlord of its
exercise of its rights pursuant to this Section 28.2, Landlord has not entered
into, or commenced "serious discussions" for purposes of entering into, a Lease
for all or any portion of the Premises, which Landlord determines in its sole
discretion will require it to recover possession of any portion of the Premises
within the first month after expiration of the Lease Term, and (ii) Tenant
notifies Landlord not more than forty-five (45) less than thirty (30) days prior
to expiration of the Lease Term (time being of the essence) that it needs to
remain in possession of the Premises for not more than one (1) month after the
expiration of the Lease Term, Tenant shall have the one time right to extend the
Lease Term for a single holdover term of one (1) month, commencing on the first
day after the scheduled expiration date of the Lease Term and ending on the last
day of such month. Tenant agrees to pay monthly Rent for such one (1) month
holdover term in an amount equal to the monthly Rent which was payable for the
month immediately prior thereto. Such permitted holdover term shall otherwise be
subject to all terms, conditions, and obligations of this Lease, including, but
not limited to, Tenant's obligation to pay Operating Expenses, Taxes and any
other obligations constituting additional rent herein, adjusted as necessary or
appropriate to make the same applicable to a one (1) month tenancy. At the end
of such one (1) month holdover term, or in any instance where Tenant fails to
give the requisite notice, Tenant shall be deemed to be holding over without
Landlord's consent, and the provisions of the first sentence of Section 28.1
shall immediately be applicable. For purposes of this Section 28.2, Landlord
shall be deemed to have entered into "serious discussions" if, in Landlord's
sole good faith judgment, communications, discussions or negotiations with a
prospective tenant or its representatives give rise to any significant
possibility that a lease will be executed for all or any portion of the Premises
which will require access to any portion of the Premises either for occupancy or
for demolition or construction purposes within the first month after expiration
of the Lease Term. Tenant acknowledges that the determination of whether serious
discussions are underway is inherently subjective, and will be made by Landlord
in its sole, good faith, discretion.
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29. CONDEMNATION.
------------
29.1 Definitions. The terms "eminent domain", "condemnation", and
"taken", and the like in this Section 29 include takings for public or
quasi-public use, and sales under threat of condemnation and private purchases
in place of condemnation by any authority authorized to exercise the power of
eminent domain.
29.2 Taking. If the whole of the Premises is taken, either permanently
or temporarily, by eminent domain or condemnation, this Lease shall
automatically terminate as of the date title vests in the condemning authority,
and Tenant shall pay all Rent, additional rent, and other payments up to that
date. If twenty percent (20%) or more of the Premises or any Building is
permanently taken, or if access to the Buildings or Premises by Tenant is, by
virtue of a taking, permanently denied, by eminent domain or condemnation, then
Landlord or Tenant shall have the right (to be exercised by written notice to
the other within sixty (60) days after receipt of notice of said taking) to
terminate this Lease from the date when possession is taken thereunder pursuant
to such proceeding or purchase. If the taking affects only one (1) of the
Buildings, Tenant shall have the right to terminate this Lease as to that
Building only (and if Tenant desires to so continue this Lease as to such
Building Landlord shall not be entitled to invoke its termination right). In
addition, Tenant shall have the right to terminate this Lease by written notice
to Landlord if, as a result of any condemnation or other similar action (i) an
amount of the parking spaces in the Common Area are permanently taken, such that
the remaining parking is less than 3.6 parking spaces per 1,000 square foot of
the Premises, (ii) access to the Premises from Waples Mill Road is permanently
denied, and Landlord fails to provide substitute access reasonably acceptable to
Tenant, or (iii) Tenant is permanently deprived of the ability to use the
loading docks on the Premises. If neither party elects to terminate this Lease,
as aforesaid, then Landlord shall within a reasonable time after title vests in
the condemning authority, repair and restore, at Landlord's expense, the portion
not taken so as to render same into an architectural whole to the fullest extent
reasonably possible, and, if any portion of the Premises is taken, thereafter
the Rent shall be reduced (on a per square foot basis) in proportion to the
portion of the Premises taken. If there is a temporary taking involving the
Premises or Buildings, if a taking of other portions of the Buildings or Common
Areas does not deny Tenant access to the Buildings and Premises, or if less than
twenty percent (20%) of the Premises is permanently taken by eminent domain or
condemnation, then this Lease shall not terminate, and Landlord shall repair and
restore, at its own expense, the portion not taken so as to render same into an
architectural whole to the fullest extent reasonably possible, and, if any
portion of the Premises was taken, thereafter the Rent shall be reduced (on a
per square foot basis) in proportion to the portion of the Premises taken.
29.3 Award. Except as set forth below, Landlord reserves all rights to
damages to the Premises or Buildings, or arising out of the loss of any
leasehold interest in the Buildings or Premises created hereby, arising in
connection with any partial or entire taking by eminent domain or condemnation.
Tenant hereby assigns to Landlord any right Tenant may have to such damages or
award, and Tenant shall make no claim against Landlord or the condemning
authority for
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33. BROKERS.
-------
Tenant represents and warrants to Landlord that neither it nor its
officers or agents nor anyone acting on its behalf has dealt with any real
estate broker other than Trammell Crow Real Estate Services, Inc. (on behalf of
Landlord) and The Irving Group, Inc. (on behalf of Tenant) in the negotiating or
making of this Lease, both of which shall be paid a fee by Landlord pursuant to
separate written agreement upon the consummation of this Lease. Tenant agrees to
indemnify and hold Landlord, its agents, employees, partners, directors,
shareholders and independent contractors harmless from all liabilities, costs,
demands, judgments, settlements, claims and losses, including reasonable
attorneys fees and costs, incurred by Landlord in conjunction with any such
claim or claims of any other broker or brokers claiming to have interested
Tenant in the Building or Premises or claiming to have caused Tenant to enter
into this Lease. Landlord represents that it has not dealt with any brokers
other than the parties listed above in negotiating and entering into this Lease,
and shall indemnify, defend and hold Tenant harmless from any breach of the
foregoing representation and warranty.
34. LANDLORD'S LIABILITY.
--------------------
Anything in this Lease to the contrary notwithstanding, covenants,
undertakings and agreements herein made on the part of the Landlord are made and
intended not for the purpose of binding Landlord personally or the assets of
Landlord but are made and intended to bind only the Landlord's interest in the
Premises and Buildings (including insurance and condemnation proceeds and,
subject to Tenant's use thereof only for the partial payment of the cost of the
improvements and other allowed uses as set forth in Exhibit C attached hereto,
any funds escrowed by Landlord pursuant to Exhibit C attached hereto), as the
same may, from time to time, be encumbered and no personal liability shall at
anytime be asserted or enforceable against Landlord or its stockholders,
officers or partners or their respective heirs, legal representatives,
successors and assigns on account of the Lease or on account of any covenant,
undertaking or agreement of Landlord in this Lease. It is understood and agreed
that the exculpation provisions set forth above shall not be effective unless
and until the improvements to be completed by Landlord pursuant to this Lease
have been completed.
35. ESTOPPEL CERTIFICATES.
---------------------
Tenant shall, from time to time, within ten (10) business days of
Landlord's written request, execute, acknowledge and deliver to Landlord or its
designee a written statement stating: the date the Lease was executed and the
date it expires; the date the Tenant entered occupancy of the Premises; the
amount of Rent, additional rent and other charges due hereunder and the date to
which such amounts have been paid; that this Lease is in full force and effect
and has not been assigned, modified, supplemented or amended in any way (or
specifying the date and terms of any agreement so affecting this Lease); that
this Lease represents the entire agreement between the
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parties as to this leasing; that all conditions under this Lease to be performed
by the Landlord have been satisfied (or specifying any such conditions that have
not been satisfied); that all required contributions by Landlord to Tenant on
account of Tenant's improvements have been received (or specifying any such
contributions that have not been received); that to Tenant's knowledge,
following reasonable investigation and inquiry, there are no existing defenses
or offsets which the Tenant has against the enforcement of this Lease by the
Landlord; that no Rent has been paid more than one (1) month in advance; that no
security has been deposited with Landlord (or, if so, the amount thereof); or
any other customary factual matters evidencing the status of the Lease, as may
be reasonably required either by a lender making a loan to Landlord to be
secured by a deed of trust or mortgage against the Building, or a purchaser of
the Building, which written statement shall, to the extent the certifications
required to be made therein are true and correct as of such time, be in
substantially the same form as Exhibit I attached hereto and made a part hereof
by this reference. It is intended that any such statement delivered pursuant to
this paragraph may be relied upon by a prospective purchaser of Landlord's
interest or a mortgagee of Landlord's interest or assignee of any mortgage upon
Landlord's interest in the Building. If Tenant fails to respond within ten (10)
business days after receipt by Tenant of a written request by Landlord as herein
provided, Tenant shall be deemed to have given such certificate as above
provided without modification and shall be deemed to have admitted the accuracy
of any information supplied by Landlord to a prospective purchaser or mortgagee
consistent with the terms of the estoppel so requested.
36. ANNUAL REPORTS.
--------------
Within ten (10) business days after Landlord's request, Tenant shall
deliver to Landlord a copy of Tenant's current Annual Report and most recently
filed 10-Q.
37. TRANSFER OF LANDLORD'S INTEREST.
-------------------------------
In the event of any transfer(s) of Landlord's interest in the Premises
or the Buildings to a bona-fide third-party purchaser, other than a transfer for
security purposes only, the transferor shall be automatically relieved of any
and all obligations and liabilities on the part of Landlord accruing from and
after the date of such transfer, and Tenant agrees to attorn to the transferee.
38. RIGHT TO PERFORM.
----------------
If Tenant shall fail to pay any sum of money, other than Rent and
additional rent, required to be paid by it hereunder or shall fail to perform
any other act on its part to be performed hereunder, and (except in the event of
emergency in which case no grace or cure period shall be applicable or required)
such failure shall continue for ten (10) days (or such longer cure period as may
be provided for herein), Landlord may, but shall not be obligated so to do, and
without waiving or releasing Tenant from any obligations of Tenant, make any
such payment or perform any such other act on Tenant's part to be made or
performed as provided in this Lease. Landlord
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shall have (in addition to any other right or remedy of Landlord) the same
rights and remedies in the event of the nonpayment of sums due under this
section as in the case of Default by Tenant in the payment of Rent. All sums
paid by Landlord and all penalties, interest and costs in connection therewith,
shall be due and payable by Tenant upon written demand within ten (10) business
days after such payment by Landlord, together with interest thereon at the
Default Rate from such date to the date of payment.
39. COMMON AREAS. For purposes hereof, the term "Common Areas" shall mean (i)
all portions of the Land other than portions upon which the Building is
situated, including all parking areas, drive ways, landscaped areas and the
like; (ii) all loading docks, corridors, lobbies, elevator cabs, stairs and
other portions of the Building that would customarily be made available to
tenants of each Building if such Building was a multi-tenanted building, and
(iii) Landlord's rights to the use of the "Common Areas" as defined in the
Parking Easement (as defined in Section 46 hereof).
40. SALES AND AUCTIONS.
------------------
Tenant may not display or sell merchandise outside the exterior walls
and doorways of the Premises and may not use such areas for storage. Tenant
shall not conduct or permit to be conducted any sale by auction in, upon or from
the Premises whether said auction be voluntary, involuntary, pursuant to any
assignment for the payment of creditors or pursuant to any bankruptcy or other
insolvency proceedings.
41. ACCESS TO ROOF.
--------------
41.1 Subject to (i) compliance with all rules, regulations, statutes
and codes of any governmental authority having jurisdiction thereover, and (ii)
subject to Landlord's prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed, Tenant shall have the right of
access to and exclusive use of the roofs of the Buildings for the installation
of various communication equipment (Tenant's "Roof Use"); provided further that
such installation and the Roof Use shall not void any roof or other warranty
applicable to the Buildings and that all such installations shall be located and
screened in a manner mutually acceptable to both Landlord and Tenant.
41.2 If the rate of any insurance carried by Landlord is increased as a
result of Tenant's Roof Use, then Tenant will pay to Landlord within ten
(10)days before the date Landlord is obligated to pay a premium on the insurance
(or within ten (10) days after Landlord delivers to Tenant a certified statement
from Landlord's insurance carrier stating that the rate increase was caused by
Tenant's Roof Use, whichever date is later), a sum equal to the difference
between the original premium and the increased premium resulting from the Roof
Use.
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41.3 Landlord has not made any representations or promises pertaining
to the suitability of the Buildings' rooftops for the Roof Use. Tenant, for the
purpose of this paragraph and its right to rooftop access hereunder, accepts the
rooftop in its "as is" condition.
41.4 Tenant will obtain prior to installation, any and all necessary
licenses, approvals, permits, etc., necessary for the installation, maintenance
and use of any equipment installed pursuant to this Section 41. Tenant's Roof
Use shall not in any way conflict with any applicable law, statute, ordinance or
governmental rules or regulation now in force or which may hereafter be enacted.
The Tenant will, at its sole cost and expense, promptly comply or ensure that
the Building complies with all laws, statutes, ordinances, governmental rules or
regulations, or requirements of any board of fire insurance underwriters or
other similar bodies now or hereafter constituted relating to or affecting
Tenant's Roof Use. Tenant shall indemnify and hold Landlord harmless from and
against any and all loss, cost (including reasonable attorney's fees incurred in
defending Landlord), damage or liability arising out of any violations of said
laws, statutes, ordinances rule or regulations.
41.5 Tenant's Roof Use shall be exercised: (1) in such manner as will
not create any hazardous condition or interfere with or impair the operation of
the heating, ventilation, air conditioning, plumbing, electrical, fire
protection, life safety, public utilities or other systems or facilities in the
Buildings; (2) in compliance with all applicable laws, codes and regulations;
(3) in such a manner as will not directly or indirectly interfere with, delay,
restrict or impose any expense, work or obligation upon Landlord in the use or
operation of the Buildings; and (4) at Tenant's cost, including the cost of
repairing all damage to the Buildings and any personal injury and/or property
damage attributable to the installation, inspection, adjustment, maintenance,
removal or replacement of any equipment or apparatus on the roofs approved
hereunder. Tenant's Roof Use shall be used solely in the ordinary course of
Tenant's business operations, and any use of the roof outside of the ordinary
course of Tenant's business operations (such as, but not limited to, subleasing
portions of the roof for profit to third parties, in order for such third
parties to establish communications transmission facilities unrelated to
Tenant's ordinary business) shall be subject to Landlord's consent, which
consent shall not be unreasonably withheld, but may be conditioned, inter alia,
upon the payment by Tenant to Landlord of one-half of any net revenues paid to
Tenant in respect thereof.
42. SECURITY.
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As part of its Base Building Work hereunder, Landlord shall install
access control systems to the common area entrances of the Buildings reasonably
acceptable to Tenant (from a vendor selected by Tenant and reasonably acceptable
to Landlord), and shall supply Tenant with 800 key cards in connection
therewith. All monitoring costs attributable to such system(s), if any, shall
constitute Operating Expenses for all purposes hereof.
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43. AUTHORITY OF TENANT.
-------------------
Tenant shall furnish Landlord with a corporate resolution confirming
that the individual executing this Lease on behalf of Tenant is duly authorized
to execute and deliver this Lease on behalf of said corporation and that this
Lease is binding upon said corporation.
44. NO ACCORD OR SATISFACTION.
-------------------------
No payment by Tenant or receipt by Landlord of a lesser amount than the
Rent and other sums due hereunder shall be deemed to be other than on account of
the earliest rent or other sums due, nor shall any endorsement or statement on
any check or accompanying any check or payment be deemed an accord and
satisfaction; and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such Rent or other sum and to pursue
any other remedy provided in this Lease.
45. LEGAL REQUIREMENTS; INDOOR AIR QUALITY.
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Landlord shall, at its own expense and not as an Operating Cost, shall
cause the Buildings to comply as of the Commencement Date with all laws, orders,
ordinances and regulations of Federal and local authorities and with directions
of public rules, recommendations, requirements and regulations of the Board of
Fire Underwriters, Landlord's insurance companies and any other organization
establishing insurance rates in the geographical area where the Project is
located and all applicable building codes and industry standards (including,
without limitation, 1993 BOCA, ASHRAE, NFPA 13, NEC, VUSBC, to the extent the
same are applicable to the Buildings), respecting all matters of the Project
other than the use and occupancy of the Premises by Tenant, including, without
limitation, the provisions of the Americans with Disabilities Act, all zoning
and other land use laws, all Environmental Laws and all laws pertaining to
indoor air quality. Following the Commencement Date, Tenant may engage an
environmental consultant to analyze the air quality within and otherwise perform
an indoor air quality survey of all portions of the Premises. In the event such
survey reveals that there are any indoor air quality problems which are the
result of inadequate building systems, or that the HVAC systems serving all
portions of the Premises do not comply with all applicable laws, ordinances,
rules, regulations and industry standards, including, without limitation, ASHRAE
Standard 62-1989, Landlord shall, at its sole cost and expense (and not as an
Operating Cost), promptly take such action as may be reasonably necessary to
correct the problem (and in such event, the reasonable and actual cost paid by
Tenant for such survey shall be reimbursed by Landlord to Tenant within ten (10)
business days after Tenant's written demand). The foregoing is not intended and
shall not be construed to confer on Landlord any obligation to or liability for
assuring that Tenant's Work is in compliance with any applicable law, rule,
regulation or standard as set forth above, all of which are the sole and
absolute responsibility of Tenant, or to rectify or remedy any such violation
caused by the acts, omissions, use or occupancy of Tenant.
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46. PARKING.
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Tenant shall have the exclusive right to use all covered and uncovered
parking areas in the Project. There shall be no charge to Tenant for the use
thereof except as set forth in Section 9 and Section 10 hereof. Tenant
acknowledges that a portion of the parking lot serving the Project is located on
land owned by Fairfax Ridge Limited Partnership (the "Adjacent Owner"), as to
which a perpetual easement has been granted for the benefit of Landlord, its
tenants, successors and assigns, for parking, ingress and egress purposes (the
"Parking Easement"). Tenant acknowledges that under the Parking Easement, the
Adjacent Owner has the right, subject to certain conditions and requirements, to
construct improvements thereon, which may encroach within that portion of the
parking lot serving the Project located within the Parking Easement, and which
may therefore require a reconfiguration of the parking lot and/or of the
existing ingress to and egress from the parking lot area. In the event the
Adjacent Owner ever attempts to exercise its right to construct such building
pursuant to the Parking Easement, Landlord agrees to use best efforts to ensure
that the Adjacent Owner complies with all applicable requirements of the Parking
Easement, including without limitation the requirement that a parking ratio
serving the Project equal to the greater of (a) eight hundred thirty five (835)
spaces for the entirety of the Project, or (b) the minimum parking ratio
required under applicable laws and ordinances, be maintained in connection with
such construction and thereafter. During any period of construction of
improvements within the Parking Easement, Landlord agrees that it shall use best
efforts to ensure that (i) any substitute parking provided during such period of
construction shall be in reasonable proximity to the Project, and, if more than
three hundred (300) yards in distance from the nearest Building entrance,
Landlord shall provide, at no cost to Tenant, a means of transportation for
Tenant's employees to and from such parking, as may be agreed upon by Landlord
and Tenant; and (ii) upon completion of such construction, Tenant shall have the
amount of parking as set forth in subsections (a) or (b), as applicable, above.
47. GENERAL PROVISIONS.
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47.1 Acceptance. This Lease shall only become effective and binding
upon full execution hereof by Landlord and delivery of a signed copy to Tenant.
47.2 Joint Obligation. If there be more than one Tenant, the
obligations hereunder imposed shall be joint and several.
47.3 Marginal Headings, Etc. The marginal headings, Table of Contents,
lease summary sheet and titles to the sections of this Lease are not a part of
the Lease and shall have no effect upon the construction or interpretation of
any part hereof.
47.4 Choice of Law. This Lease shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia (without regard to the
choice of law and/or conflict of law principles applicable in such State).
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47.5 Successors and Assigns. The covenants and conditions herein
contained, subject to the provisions as to assignment, inure to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.
47.6 Recordation. Except to the extent otherwise required by law,
neither Landlord nor Tenant shall record this Lease, provided that a short form
memorandum hereof (in a form to be agreed upon by Landlord and Tenant) may be
recorded at the request of either Landlord or Tenant, provided (i) the party
requesting such recordation shall pay all costs and expenses associated
therewith, and (ii) Landlord shall have the right, to be reflected within the
text of such memorandum, to terminate such memorandum at any time after the
expiration or earlier termination of this Lease, by recordation of an instrument
executed and acknowledged solely by Landlord stating that such memorandum (and
the Lease referenced therein) has terminated.
47.7 Quiet Possession. Upon Tenant's paying the Rent reserved hereunder
and observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession and enjoyment of the Premises for the Lease Term hereof, free from
any disturbance or molestation by Landlord, or anyone claiming by, through or
under Landlord, but in all events subject to all the provisions of this Lease.
47.8 Inability to Perform; Force Majeure. This Lease and the
obligations of the Tenant hereunder shall not be affected or impaired because
either Landlord or Tenant is unable to fulfill any of its obligations hereunder
or is delayed in doing so, to the extent such inability or delay is caused by
reason of war, civil unrest, strike, labor troubles, unusually inclement
weather, governmental delays, inability to procure services or materials despite
reasonable efforts, third party delays, acts of God, or any other cause(s)
beyond the reasonable control of the Landlord (which causes are referred to
collectively herein as "Force Majeure".) Any time specified obligation of
Landlord or Tenant in this Lease shall be extended one day for each day of delay
suffered by Landlord as a result of the occurrence of any Force Majeure. The
foregoing notwithstanding (i) in no event will an event of Force Majeure extend
(a) the time within which Tenant or Landlord must perform any of its monetary
obligations under this Lease, or (b) the time within which either Landlord or
Tenant must complete any of its construction obligations under Exhibit C of this
Lease.
47.9 Partial Invalidity. Any provision of this Lease which shall prove
to be invalid, void, or illegal shall in no way affect, impair or invalidate any
other provision hereof and such other provision(s) shall remain in full force
and effect.
47.10 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, whenever possible, be cumulative with all other
remedies at law or in equity.
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47.11 Entire Agreement. This Lease contains the entire agreement of
the parties hereto and no representations, inducements, promises or agreements,
oral or otherwise, between the parties, not embodied herein, shall be of any
force or effect.
47.12 Survival. All indemnities set forth in this Lease shall survive
the expiration or earlier termination of this Lease.
47.13 Consents. If any provision of this Lease subjects any action,
inaction, activity or other right or obligation of any party to the prior
consent or approval of the other, such consent shall not be unreasonably
withheld, conditioned or delayed unless otherwise specifically provided herein.
47.14 Saving Clause. In the event (but solely to the extent) the
limitations on Landlord's liability set forth in Section 8.3 of this Lease would
be held to be unenforceable or void in the absence of a modification holding the
Landlord liable to Tenant or to another person for injury, loss, damage or
liability arising from Landlord's omission, fault, negligence or other
misconduct on or about the Premises, or other areas of the Building appurtenant
thereto or used in connection therewith and not under Tenant's exclusive
control, then such provision shall be deemed modified as and to the extent (but
solely to the extent) necessary to render such provision enforceable under
applicable law. The foregoing shall not affect the application of Section 34 of
this Lease to limit the assets available for execution of any claim against
Landlord.
47.15 Reservation. Nothing herein set forth shall be deemed or
construed to restrict Landlord from making any reconfiguration of or
modifications to any of the parking and/or common areas serving the Project as
of the date of execution hereof, provided that (i) the overall parking ratio
serving the Project shall not be reduced as a result of such reconfiguration or
modification, excluding any short term, temporary reduction during the period in
which such reconfiguration or modification is being performed, (ii) Tenant's
access to the Premises shall not be impaired by reason thereof, and (iii) any
such reconfiguration shall be performed without expense to Tenant, and shall not
constitute an Operating Expense under this Lease; and Landlord expressly
reserves the right to make any modifications to such areas as Landlord may deem
appropriate, provided the same shall be undertaken only after consultation with
and written notice to Tenant. Landlord agrees to use all reasonable and diligent
efforts to minimize the extent and duration of any interference with or
reduction in Tenant's access and parking during the implementation of any such
reconfiguration or modification. Notwithstanding the foregoing, other than the
final execution, delivery and recordation among the Land Records of Fairfax
County, Virginia of the proposed Second Amendment thereto, a copy of which has
previously been delivered to Tenant, Landlord agrees that it shall not, without
the prior written consent of Tenant, which consent shall not be unreasonably
withheld, conditioned or delayed, grant any waiver or consent under or pursuant
to the Parking Easement which would have the effect of limiting, reducing or
reconfiguring Tenant's parking rights thereunder or altering the ingress and
egress thereto; Tenant acknowledging that, as set forth in Section.46 hereof,
the Adjacent Owner has the right, under certain circumstances, to do so without
Landlord's consent.
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47.16 Transportation Covenant. Landlord and Tenant shall each cooperate
with the other and use reasonable efforts to cause the Virginia Department of
Transportation to address and improve for the benefit of the Project, traffic
problems associated with the intersection of Route 50 and Waples Mill, including
without limitation the signalization at such intersection. The parties agree (i)
that Tenant may take the lead in any such effort, subject to Landlord's approval
of any commitments or expenditures which would be binding upon Landlord or the
Project in connection therewith, and (ii) that Landlord and Tenant shall share
equally the reasonable and actual out-of-pocket expenses associated with
engaging in such effort (including reasonable out-of-pocket expenses incurred by
the other party in connection therewith), with the payment of each party's share
to be made within thirty (30) days after written demand by the other party
supported by reasonable substantiation of such expenses. The foregoing
notwithstanding, neither Landlord nor Tenant shall be required to contribute an
aggregate amount in excess of Ten Thousand Dollars ($10,000.00), each, to defray
such expenses, and any party incurring expenses in excess of such amount shall
not have the right to reimbursement of any share of such expenses from the other
party, unless the other party has agreed in writing, and in its sole discretion,
to share such excess expenses.
47.17 Keys. As previously noted herein, Landlord agrees to provide
Tenant with 800 security key cards. Such keys shall be provided as of the
Commencement Date, or such later date as Tenant may reasonably request (and
within a reasonable time period after such request). The cost of any additional
or replacement suite keys or security keys shall be reimbursed by Tenant to
Landlord, at Landlord's actual cost, upon demand.
47.18 Rule Against Perpetuities. In order to ensure the compliance of
this Lease with any rule against perpetuities that may be in force in the state
in which the Premises are located, and without limiting or otherwise affecting
Tenant's obligations under this Lease, as stated in the other sections hereof,
Landlord and Tenant agree that, irrespective of the reasons therefor (other than
a Default by Tenant), in the event Tenant fails to take possession of the
Premises and commence paying Rent hereunder within five (5) years after the date
of execution of this Lease, then this Lease, and the obligations of the parties
hereunder, shall be deemed to be null and void and of no further force and
effect. Without affecting the specific timing requirements otherwise applicable
thereto under this Lease, any and all options granted to Tenant under this Lease
(including, without limitation, expansion, renewal, right of first refusal,
right of first offer, and like options) must be exercised by Tenant, if at all,
during the term of this Lease.
48. RULES AND REGULATIONS. Tenant agrees to comply with the Rules and
Regulations attached hereto as Exhibit D.
49. ARBITRATION.
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49.1 If arbitration is specifically agreed upon hereunder as a
dispute resolution procedure, the arbitration shall be conducted as provided in
this Section. All proceedings shall
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be conducted according to the Commercial Arbitration Rules of the American
Arbitration Association, except as hereinafter provided. No action at law or in
equity in connection with any such dispute shall be brought until arbitration
hereunder shall have been waived, either expressly or pursuant to this Section.
The judgement upon the award rendered in any arbitration hereunder shall be
final and binding on both parties hereto and may be entered in any court having
jurisdiction thereof. During any arbitration proceeding pursuant to this
Section, the parties shall continue to perform and discharge all of their
respective obligations under this Lease, except as otherwise provided in this
Lease.
49.2 All disputes that are required to be arbitrated in
accordance with this Lease shall be raised by notice to the other party, which
notice shall state with particularity the nature of the dispute and the demand
for relief, making specific reference by article number and title of the
provisions of this Lease alleged to have given rise to the dispute. The notice
shall also refer to this Section and shall state whether or not the party giving
the notice demands arbitration under this Section.
49.3 Within thirty (30) days of any demand for arbitration,
each of Tenant and Landlord shall appoint one (1) arbitrator, and within ten
(10) days of their appointment, the two (2) arbitrators thus selected shall
jointly select a third (3rd) arbitrator. All arbitrators shall have at least ten
(10) years' experience in commercial real estate matters and, in particular, the
subject matter of the dispute, to act as arbitrator hereunder. If either party
fails to select an arbitrator within the initial thirty (30) day period, or if
the two (2) arbitrators are unable to agree upon a third (3rd) arbitrator, then,
upon the request of either party, the remaining arbitrator(s) shall be appointed
by The American Arbitration Association. The arbitration proceedings shall take
place a mutually acceptable location in the Washington, D.C./Northern Virginia
and metropolitan area.
49.4 The right of Landlord and Tenant to submit a dispute to
arbitration is limited to issues specifically agreed in this Lease to be
submitted to arbitration, and specifically does not apply to any remedial action
undertaken by landlord pursuant to the provisions of Section 24 hereof. When
resolving any dispute, the arbitrator shall apply the pertinent provisions of
this Lease without departure therefrom in any respect. The arbitrator shall not
have the power to change any of the provisions of this Lease, but this Section
shall not prevent in any appropriate case the interpretation, construction and
determination by the arbitrator of the applicable provisions of this Lease to
the extent necessary in applying the same to the matters to be determined by
arbitration.
50. WAIVER OF JURY TRIAL.
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LANDLORD AND TENANT HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER ON ALL
MATTERS ARISING OUT OF THIS LEASE, OR THE USE AND OCCUPANCY OF THE PREMISES. IF
LANDLORD COMMENCES ANY SUMMARY
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PROCEEDING FOR NON-PAYMENT OF RENT, TENANT WILL NOT INTERPOSE (AND WAIVES THE
RIGHT TO INTERPOSE) ANY NON-MANDATORY COUNTERCLAIM IN ANY SUCH PROCEEDING.
51. RENEWAL TERM.
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51.1 Provided Tenant is not in monetary or other material Default of
this Lease beyond any applicable cure periods at the time its rights hereunder
are to be exercised, Tenant shall have the option (each, a "Renewal Option") to
extend the Lease Term for two (2) periods of sixty (60) months each (each
referred to as the "Renewal Term") provided Tenant gives written notice to
Landlord of its election to exercise such Renewal Option (the "Renewal Notice")
not more than eighteen (18) nor less than fourteen (14) months prior to the
expiration of the last day of the initial Lease Term or, as applicable, the
initial Renewal Term. Time is of the essence in this Section 51.
51.2 All terms and conditions of this Lease, including without
limitation, all provisions governing the payment of additional rent, shall
remain in full force and effect during the Renewal Term(s), except (i) the Base
Rent shall be as set forth in this Section 51, (ii) the Base Year Operating
Costs shall be the Operating Costs incurred during the first Lease Year of each
Renewal Term, and (iii) the Tax Stop shall be equal to the amount of Real Estate
Taxes applicable during the first Lease Year of each Renewal Term.
51.3 The Base Rent payable upon the commencement of the Renewal Term
shall equal the then prevailing market rental rate (including base rental rate
and annual escalation rate) applicable to renewal terms with respect to
comparable space in comparable buildings in the vicinity of the Project, (the
"Fair Market Rate" or "FMR") at the time of the commencement of the applicable
Renewal Term, determined based upon then existing renewal market conditions
applicable to the leasing of comparable space in comparable buildings in the
vicinity of the Project (taking into consideration use, location, quality, age
and location of the applicable building and the definition of net rentable
area). Further, the Fair Market Rate shall be determined on a full-service, net
of electric basis, and shall further be determined on a "net effective" basis,
netting out the economic effect of leasehold improvements provided, remodeling
credits or allowances granted, rental concession such as abatements or lease
assumptions. In no event shall the value of any fixtures or property acquired
with proceeds of the Tenant Improvement Allowance be taken into account when
determining the Fair Market Rate. Landlord and Tenant shall negotiate in good
faith and in accordance with the procedure set forth in Section 51.4, below, to
determine the Fair Market Rate which will be applicable during the Renewal Term,
with the goal of concluding such negotiation or triggering a determination of
the FMR using a three-broker method (as described in Section 51.5, below) within
not more than sixty (60) days after the date of Landlord's receipt of the
Renewal Notice.
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51.4 Within ten (10) days after Landlord receives Tenant's Renewal
Notice exercising either of the renewal options referenced above, Landlord will
provide Tenant with a written notice (the "FMR Notice") indicating the base
rental rate and annual escalation rate which Landlord in good faith believes
represents the then current FMR for the Premises. If Tenant is in agreement with
the base rental rate and annual escalation rate stated in the FMR Notice, Tenant
shall so notify Landlord within ten (10) days after its receipt thereof, in
which case such base rental rate and annual escalation rate shall constitute the
FMR for such Renewal Term within the meaning of this Section 51. If Tenant
believes in good faith that the base rental rate and annual escalation rate
stated by Landlord in the FMR Notice are in excess of actual FMR for the
Premises, Tenant shall so notify Landlord in writing prior to the end of the ten
(10) day period after Tenant received Landlord's FMR Notice, stating in its
response (hereinafter referred to as "Tenant's Counterproposal") the base rental
rate and annual escalation rate which Tenant in good faith believes represents
the then current FMR for the Premises. If Tenant fails to respond to the
Landlord's FMR Notice within such ten (10) day period, Tenant shall be deemed to
have accepted the base rental rate and annual escalation rate stated in
Landlord's FMR Notice. If Tenant does provide Tenant's Counterproposal to
Landlord in a timely fashion, and Landlord agrees that the base rental rate and
annual escalation rate stated in Tenant's Counterproposal represent the then
current FMR, Landlord shall so notify Tenant within ten (10) days after its
receipt thereof, in which case such base rental rate and annual escalation rate
shall constitute the FMR for such Renewal Term within the meaning of this
Section 51. If Landlord fails to respond to the Tenant's Counterproposal within
ten (10) days after Landlord's receipt of the Tenant's Counterproposal, or
rejects the rental rate and escalation rate stated therein, then the parties
agree to submit the issue of what constitutes the appropriate FMR for the
Premises for the Renewal Term to determination using a "three broker method" as
described in Section 51.5, below.
51.5 If the parties submit the issue of what constitutes the
appropriate FMR for the Premises for the Renewal Term to determination using a
"three broker method", then the basic Rent and annual escalations applicable
during the Renewal Term shall be equal to the FMR and annual escalation rates
determined by a board of three (3) licensed real estate brokers, one of whom
shall be named by Landlord, one by Tenant, and the two so appointed shall select
the third. Each member of the board of brokers shall be licensed in the
Commonwealth of Virginia as a real estate broker, specializing in the field of
commercial office leasing in Fairfax County, having no less than ten (10) years
experience in such field, and recognized as ethical and reputable within the
field. Landlord and Tenant agree to make their appointments within five (5)
business days after the earlier to occur of (i) the expiration of the ten (10)
day period after Landlord's receipt of Tenant's Counterproposal, or (ii) the
date Landlord notifies Tenant of its rejection of Tenant's Counterproposal. The
two (2) brokers selected by Landlord and Tenant shall promptly select a third
broker within ten (10) days after they both have been appointed, and each
broker, within ten (10) days after the third broker is selected, shall submit
his or her determination of the said FMR and escalations (taking into account
the provisions of Section 51.3 hereof). If either of the parties fail to select
a broker within the aforesaid time periods, the broker selected by the other
party shall select the other two (2) brokers to participate in the
determination, each of which shall meet
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the selection criteria set forth above, and be affiliated with a different
company from the first broker and from each other; and if the brokers selected
by Landlord and Tenant are unable to reach agreement on the identity of the
third broker within the applicable ten (10) day period, then the third broker
shall be designated (in compliance with the applicable criteria set forth above)
by the President of the Washington, D.C. Association of Realtors in office at
such time. The FMR shall be the average of amount determined by the two brokers
whose determinations are closest in amount to each other (or if two brokers
reach an identical determination, the determination of such two brokers),
provided that if the two (2) most proximate determinations of FMR differ by more
than five percent (5%), then the determination of FMR by such board of three
brokers shall be null and void, and Landlord and Tenant shall, within five (5)
business days thereafter, appoint a new board of three different real estate
brokers meeting the above-stated criteria, who shall convene in accordance with
the procedures and time frames set forth above in order to render a new
determination, as if the first determination had never taken place. After the
Fair Market Rent has been established, the brokers shall immediately notify the
parties in writing. Tenant shall have ten (10) days following the determination
of the Fair Market Rent within which to rescind irrevocably its Renewal Option
by written notice to Landlord. If Tenant rescinds such Renewal Option, Tenant
shall pay the fee of all brokers participating in the determination of Fair
Market Rent. If Tenant does not rescind its Renewal Option within such ten (10)
day period (time being of the essence), then (i) the FMR determined by the three
broker method shall be binding upon Landlord and Tenant, and (ii) Landlord and
Tenant shall each pay the fee of the broker selected by it, and they shall
equally share the payment of the fee of the third broker.
52. LANDLORD'S REPRESENTATIONS. Landlord hereby represents, warrants and
covenants to and with Tenant that, as of the date hereof, on the Commencement
Date and during the term hereof, including any extensions and renewals hereof:
(i) Landlord is the true and lawful owner of the Project, free and clear of all
liens, claims and encumbrances other than those set forth in the title insurance
policy attached as Exhibit J hereto; (ii) Landlord has the full right, power and
authority to enter into this Lease and to perform each and all of the terms,
provisions, covenants, agreements, matters and things herein provided to be
performed by Landlord and to execute and deliver all documents provided herein
to be executed and delivered by Landlord; (iii) this Lease does not, nor will
the performance by Landlord of its obligations hereunder, contravene any
provision of any existing law, covenant, indenture or agreement binding upon
Landlord or upon the Project; (iv) the signatories of this Lease are authorized
to sign this Lease on behalf of Landlord; (v) there is no litigation pending or,
to the best of Landlord's knowledge, threatened which may adversely affect the
Project; (vi) to the best of Landlord's knowledge there are no suits, judgments
or notices from any governmental agency relating to any violation of the health,
pollution control, building, fire or zoning laws or regulations relating to the
use and maintenance of the Building, the Project; (viii) copies of all
environmental reports with respect to the Project in Landlord's possession or
control are listed on Exhibit K attached hereto and copies thereof have
previously been delivered to Tenant, and (ix) the Project will (as to Landlord's
Base Building Work, without any representation as to Tenant's Work) as of the
Commencement Date comply
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with all applicable laws, orders, rules and regulations (including the
provisions of the American with Disabilities Act).
53. RIGHT OF FIRST OFFER.
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53.1 Provided that Tenant is not in monetary or other material Default
under this Lease beyond any applicable cure period, Tenant shall have a right of
first offer (a "Right of First Offer"), subject to the terms of this Section 53,
to purchase the entirety (but not less than the entirety) of the Project, in
accordance with the terms of this Section 53.
53.2 In the event during the Term of this Lease (or any Renewal Term
hereof) Landlord shall determine, in its sole and absolute subjective
discretion, that Landlord desires to sell the Project, Landlord shall, not less
than thirty (30) days prior to Landlord's general public circulation of offering
materials for the Project, notify Tenant in writing of Landlord's intent to
market the Project the ("Offer Notice"). The Offer Notice shall disclose to
Tenant Landlord's asking price for the Project (the "Offer Price").
53.3 The following provisions shall govern the exercise by Tenant of
its Right of First Offer:
53.3.1 Tenant shall have thirty (30) days after receipt of the
Offer Notice to (i) exercise its Right of First Offer by giving Landlord written
notice of Tenant's election to acquire all (but not less than all) of the
Project at the Offer Price (an "Election Notice"), or (ii) elect not to exercise
its Right of First Offer for the acquisition of the Project. Tenant's failure to
timely respond to the Offer Notice shall constitute Tenant's election not to
exercise its Right of First Offer.
53.3.2 If Tenant elects (whether by failure to respond within
the requisite time period or otherwise) not to exercise its Right of First
Offer, Landlord shall be free to offer the Project for sale to the public at
such price and on such terms as Landlord deems appropriate in its sole and
absolute discretion, provided that if Landlord determines that it wishes to
enter into a contract for sale of the Project, or in fact executes a contract of
sale for the Project, at a price equal to less than 95% of the original Offer
Price (such contract, a "Reduced Price Contract"), Tenant shall have the right,
for a period of six (6) business days after the date Landlord notifies Tenant in
writing of its intention to enter into, or of its having executed, such Reduced
Price Contract, to send to Landlord an Election Notice notifying Landlord of its
election to exercise its Right of First Offer at the reduced price stated in
such Reduced Price Contract (or, as applicable, the reduced price at which
Landlord intends to enter into a Reduced Price Contract), which reduced price
shall thereupon constitute the "Offer Price" for purposes of this Section. For
purposes of this Section 53.3.2, the parties shall disregard any terms of the
Reduced Price Contract other than those relating to the establishment of the
sales price thereunder, including
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without limitation any provisions relating to credit enhancements required as a
condition of sale, and/or any "take-back" or other financing.
53.3.3 In the event Tenant exercises its Right of First Offer
within the thirty (30) day period described in Section 53.3.1, above, or, if
applicable, within the six (6) business day period described in Section 53.3.2,
above, then Tenant and Landlord shall execute an Agreement of Purchase and Sale
for the Project in accordance with Section 53.4, below (and regardless of any
other or different terms or conditions set forth in any Reduced Price Contract,
or under any offer of sale made by Landlord in connection with the sale of the
Property).
53.3.4 If Tenant fails or declines to exercise its Right of
First Offer under this Section 53, whether at the end of the initial 30-day
period or in connection with Landlord's entry into a Reduced Price Contract, or
both, and Landlord enters into a sale contract for the Project with a
prospective purchaser which is no longer subject to Tenant's Right of First
Offer hereunder, Landlord shall be under no obligation thereafter to inform
Tenant of any modifications or amendments to such contract entered into after
its execution, notwithstanding that the effect of such amendment may be to
reduce the purchase price for the Project, and any such price reduction shall be
fully effective, free and clear of any right of Tenant under this Section 53,
even if the reduction exceeds five percent (5%) of the original Offer Price, or
the original sale price stated in such contract, it being agreed that Tenant's
Right of First Offer shall, except as (and solely to the extent) provided in
Section 53.3.2, above and Section 53.8, below, forever terminate and thereafter
be null and void and of no force or effect upon the Landlord's entry into any
contract of sale for the Project.
53.4 Within five (5) days after receipt of Tenant's Election Notice,
Landlord shall prepare and deliver to Tenant an Agreement of Purchase and Sale
(the "Agreement of Sale") which shall: (i) evidence the parties non-contingent
binding obligation to sell (as to Landlord) and to purchase (as to Tenant) the
Project at and for the Offer Price (or, as applicable, the price reflected in
the Reduced Price Contract), (ii) provide for the immediate payment of a deposit
from Tenant to Landlord in an amount equal to five percent (5%) of the Offer
Price, (iii) provide for closing thereunder on an all cash basis not later than
ninety (90) days after the date of the Offer Notice, (iv) provide for the sale
of the Project on an "as-is, where-is" basis without representations or
warranties of any kind, (v) specify that Landlord shall pay the Virginia
grantor's tax and that Tenant shall pay all other transfer and recordation
taxes, fees and charges, title insurance charges and all other costs and
expenses in connection with consummation of closing other than those of
Landlord's professionals and consultants, (vi) provide for the pro ration of
Rent hereunder as of the date of closing, (vii) limit Tenant's damages as a
result of its default under the Agreement of Sale to the amount of the deposit
set forth in subsection (ii) above, provided that such limitation shall not
apply, and Landlord shall be entitled to all remedies available at law or in
equity in the event Tenant contests Landlord's right to receive and retain such
deposit, and (viii) evidence such other terms and conditions as Landlord and
Tenant may mutually agree. Tenant and Landlord shall agree on the content of the
Agreement of Sale within
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five (5) days of delivery to Tenant, and thereafter shall execute the Agreement
of Sale and deliver same, prepared in accordance with the foregoing
requirements, not later than twenty (20) days after the date of the Offer
Notice.
53.5 In the event Tenant fails or declines to exercise its Right of
First Offer within the requisite time periods in accordance with this Section
53, or in the event Tenant fails or declines to execute and deliver the
Agreement of Sale within the requisite time period after Tenant exercises its
Right of First Offer, then (except as provided in Section 53.3.2, above, and
Section 53.8, below) Tenant's Right of First Offer shall be extinguished and
shall thereafter be null and void and of no further force and effect, and
Landlord shall thereafter have the right to sell the Project or any part thereof
to any other party without any further notification to Tenant.
53.6 Time is of the essence in this Section 53.
53.7 Tenant acknowledges and agrees that this Right of First Offer and
any other rights granted under this Section 53 are granted exclusively to Tenant
and not to any assignee or sublessee of Tenant; provided, however that the
rights set forth herein shall, provided the same have not otherwise been
previously terminated, be available to any assignee of the entirety of Tenant's
interest hereunder, provided such assignee is a permitted assignee under and
pursuant to Section 21 hereof.
53.8 In the event (i) Tenant declines to exercise its option under the
Right of First Offer described above, and the Project remains unsold for a
period of eighteen (18) months after Tenant first declined or failed to act upon
such right, and (ii) after expiration of such eighteen (18) month period,
Landlord at any time thereafter and during the Term of this Lease (or any
Renewal Term hereof) determines in its sole and absolute subjective discretion
to offer the Project for sale, then: (A) Landlord agrees to notify Tenant in
accordance with the terms of this Section 53, (B) Tenant's Right of First Offer
shall remain in effect strictly in accordance with the terms and provisions of
this Section 53.
53.9 In the event Tenant exercises its Right of First Offer as granted
herein, pending the exercise thereof and the date of closing thereon, Tenant
agrees that (i) it will remain in possession of the Premises solely under this
Lease and not as a purchaser in possession or under an alleged pre-occupancy
agreement, (ii) possession of fee simple ownership shall be given only upon the
consummation of closing under the Agreement of Sale, (iii) until consummation of
closing under the Agreement of Sale, Tenant will continue to pay the Rent and
all additional rent hereunder as the same become due and payable, with the
understanding that a Default hereunder shall entitle Landlord to exercise its
rights hereunder as if the Agreement of Sale did not exist, and (iv) in the
event of a default under the Agreement of Sale or for any reason closing
thereunder is not consummated, this Lease shall remain in full force and effect
unaffected thereby (provided that in the event the closing is not consummated by
reason of Tenant's default under the Agreement of Sale, the terms and provisions
of this Section 53 shall thereafter be null and void).
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Deed of
Lease, or have caused this Deed of Lease to be executed on their respective
behalves by their duly authorized officers, as of the day and year first above
written.
LANDLORD:
TC HIGH RIDGE, L.L.C.
By: Trammell Crow NE, Inc., Manager
By: _____________________________(Seal)
Name: _____________________________
Title: _____________________________
TENANT:
BTG, INC.
By: _____________________________(Seal)
Name: _____________________________
Title: _____________________________
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Deed of
Lease, or have caused this Deed of Lease to be executed on their respective
behalves by their duly authorized officers, as of the day and year first above
written.
LANDLORD:
TC HIGH RIDGE, L.L.C.
By: Trammell Crow NE, Inc., Manager
By: /s/ Robert J. Murphy
_____________________________(Seal)
Name: Robert J. Murphy
_____________________________
Title: Managing Director
_____________________________
TENANT:
BTG, INC.
By: /s/ Marilynn D. Bersoff
_____________________________(Seal)
Name: Marilynn D. Bersoff
_____________________________
Title: Senior Vice President
_____________________________
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EXHIBIT "A"
<PAGE>
EXHIBIT "A"
LOCATION AND DESCRIPTION OF PREMISES
Description of Premises pursuant to a Lease dated August __, 1996, by
and between TC High Ridge, L.L.C. ("Landlord") and BTG, Inc. ("Tenant"): Two
Hundred Nine Thousand Two Hundred Seventeen (202,217) square feet located at
High Ridge Office Park, 11225 Waples Mill Road, Fairfax, Virigina.
[HIGH RIDGE OFFICE PARK GRAPHIC APPEARS HERE]
58,120 square feet
4 stories above grade
54,597 square feet
3 stories above grade
96,500 square feet
3 stories above grade
1 story below grade
<PAGE>
EXHIBIT "B"
<PAGE>
DESCRIPTION OF PROPERTY
All those pieces or parcels of land situate, lying and being in the Centreville
Magisterial District, County of Fairfax, Commonwealth of Virginia, being more
particularly described as follows:
PARCEL I:
Parcel E-1 Part of The Property of High Ridge Associates
BEGINNING at a point marking the intersection of the Westerly Right of Way line
of Waples Mill Road (Route 665) with the Southerly Right of Way line of Fairfax
Ridge Road; thence with the Westerly Right of Way line of Waples Mill Road the
following courses and distances:
(1) with a curve to the left having a radius of 1,745.00 feet and a chord and
bearing of South 06 degrees 16 minutes 34 seconds East, 158.67 feet, an arc
distance of 158.73 feet; thence
(2) with a curve to the left having a radius of 795.00 feet and a chord and
bearing of South 10 degrees 47 minutes 32 seconds East, 53.00 feet, an arc
distance of 53.01 feet; thence
(3) with a curve to the left having a radius of 1,220.00 feet and a chord and
bearing of South 14 degrees 24 minutes 50 seconds East, 72.85 feet, an arc
distance of 72.57 feet, thence
(4) with a curve to the left having a radius is 585.00 feet and a chord and
bearing of South 19 degrees 09 minutes 38 seconds East, 61.96 feet, an arc
distance of 61.99 feet to a point; thence departing from the road and running
through the property of 50-66 G/Y Partnership the following courses:
(5) North 88 degrees 27 minutes 35 seconds West, 125.55 feet; thence
(6) South 81 degrees 57 minutes 26 seconds West, 62.41 feet; thence
(7) South 52 degrees 54 minutes 20 seconds West, 44.23 feet; thence
(8) South 44 degrees 53 minutes 57 seconds West, 66.00 feet; thence
(9) North 69 degrees 32 minutes 19 seconds West, 175.00 feet; thence
(10) North 10 degrees 00 minute 41 seconds East, 60.00 feet; and thence
(11) North 74 degrees 50 minutes 20 seconds West, 80.00 feet to a point; thence
continuing through the property of 50-66 G/Y Partnership and with the
aforementioned Southerly R/W line of Fairfax Ridge Road the following courses:
(12) with a curve to the right having a radius of 405.00 feet and a chord and
bearing of North 51 degrees 38 minutes 09 seconds East, 481.53 feet, an arc
<PAGE>
distance of 515.65 feet; thence
(13) North 88 degrees 06 minutes 38 seconds East, 30.85 feet; and thence
(14) with a curve to the right having a radius of 25.00 feet and a chord and
bearing of South 47 degrees 46 minutes 47 seconds East, 34.80 feet, an arc
distance of 38.49 feet to the point of beginning, containing 141,534 square feet
of land, more or less.
TOGETHER WITH all of the rights, benefits, burdens, duties and obligations of
the Owner of Building E-1 under that certain Common Area Operation Reciprocal
Eastment and Parking Agreement dated March 7, 1983, recorded in Deed Book 5748
at Page 860, as amended in Deed Book 5836 at Page 730 among the Land Records
in Fairfax County, Virginia.
PARCEL II:
Parcel E-2 Part of The Property of High Ridge Associates
BEGINNING at a point on the Southwesterly Right of Way line of Waples Mill Road
(Route 665) said point being South 39 degrees 40 minutes 44 seconds West, 5.60
feet from a point on the Southwesterly Right of Way line of Waples Mill Road
running the most Northerly corner of Anthony John Georgelas; thence departing
from the road with the Northwesterly line of 50-66 G/Y Partnership the following
courses and distances:
(1) South 39 degrees 40 minutes 44 seconds West, 479.87 feet to a point on the
Southerly Right of Way line of Fairfax Ridge Road; thence with the Easterly
Right of Way line of Fairfax Ridge Road
(2) with a curve to the right having a radius of 405.00 feet and a chord and
bearing of North 24 degrees 08 minutes 41 seconds West, 513.10 feet, an arc
distance of 555.68 feet to a point; thence through the property of 50-66 G/Y
Partnership the following courses and distances:
(3) South 74 degrees 50 minutes 20 seconds East, 80.00 feet; thence
(4) South 10 degrees 00 minute 41 seconds West, 60.00 feet; thence
(5) South 69 degrees 32 minutes 19 seconds East, 175.00 feet; thence
(6) North 44 degrees 53 minutes 57 seconds East, 66.00 feet; thence
(7) North 52 degrees 54 minutes 20 seconds East, 44.23 feet; thence
(8) North 81 degrees 57 minutes 26 seconds East, 62.41 feet; thence
(9) South 88 degrees 27 minutes 35 seconds East, 125.55 feet to a point on the
aforementioned Southwesterly Right of Way line of Waples Mill Road; thence with
the Southwesterly Right of Way line of Waples Mill Road
<PAGE>
(10) with a curve to the left having a radius of 585.00 feet and a chord and
bearing of South 24 degrees 09 minutes 19 seconds East, 39.99 feet, an arc
distance of 40.00 feet to the point of beginning, containing 128,509 square feet
of land, more or less.
LESS AND EXCEPT THEREFROM Parcel E-3, described as follows:
BEGINNING at a point in the property of 50-66 G/Y Partnership, said point being
South 39 degrees 40 minutes 44 seconds West, 5.60 feet and South 62 degrees 33
minutes 06 seconds West, 218.66 feet from a point on the Southwesterly Right of
Way line of Waples Mill Road (Route 665) marking the most Northerly corner of
50-66 G/Y Partnership; thence running through the property of 50-66 G/Y
Partnership the following courses and distances:
(1) South 48 degrees 48 minutes 43 seconds West, 36.08 feet; thence
(2) South 41 degrees 11 minutes 17 seconds East, 21.46 feet; thence
(3) South 48 degrees 48 minutes 43 seconds West, 204.19 feet; thence
(4) North 41 degrees 11 minutes 17 seconds West, 114.00 feet; thence
(5) North 48 degrees 48 minutes 43 seconds East, 210.75 feet; thence
(6) South 86 degrees 11 minutes 17 seconds East, 41.75 feet; and thence
(7) South 41 degrees 11 minutes 17 seconds East, 63.02 feet to the point of
beginning, containing 26,181 square feet of land, more or less, leaving a net
area for Parcel E-2 of 102,328 square feet of land, more or less.
TOGETHER WITH all of the rights, benefits, burdens, duties and obligations of
the Owner of Building E-2 under that certain Common Area Operation Reciprocal
Eastment and Parking Agreement dated March 7, 1983, recorded in Deed Book 5748
at Page 860 as amended in Deed Book 5836 at Page 730 among the Land Records of
Fairfax County, Virginia.
PARCEL III:
Parcel E-3 Part of The Property of High Ridge Associates
BEGINNING at a point in the property of 50-60 G/Y Partnership, said point being
North 43 degrees 24 minutes 56 seconds West, 512.53 feet, South 39 degrees 40
minutes 44 seconds West, 5.60 feet, and South 62 degrees 33 minutes 06 seconds
West, 218.66 feet from a point on the Southwesterly Right of Way line of Waples
Mill Road (Route 665) making the most Northerly corner of Boyuk and Aliyek
Bimen; thence running through the property of 50-66 G/Y Partnership the
following courses and distances:
(1) South 48 degrees 49 minutes 43 seconds West, 36.08 feet; thence
<PAGE>
(2) South 41 degrees 11 minutes 17 seconds East, 21.46 feet; thence
(3) South 48 degrees 48 minutes 43 seconds West, 204.19 feet; thence
(4) North 41 degrees 11 minutes 17 seconds West, 114.00 feet; thence
(5) North 48 degrees 48 minutes 43 seconds East, 210.75 feet; thence
(6) South 86 degrees 11 minutes 17 seconds East, 41.75 feet; and thence
(7) South 41 degrees 11 minutes 17 seconds East, 63.02 feet to the point of
beginning, containing 26,181 square feet of land.
TOGETHER WITH all of the rights, benefits, burdens, duties and obligations of
the Owner of Building E-2 under that certain Common Area Operation Reciprocal
Eastment and Parking Agreement dated March 7, 1983, recorded in Deed Book 5748
at Page 860 as amended in Deed Book 5836 at Page 730 among the Land Records of
Fairfax County, Virginia.
AND BEING the same property conveyed to HR Associates L.C., a Virginia limited
liability company by Deed dated November 10, 1995, and recorded November 16,
1995, in Deed Book 9560 at Page 560 among the Land Records of Fairfax County,
Virginia.
<PAGE>
EXHIBIT "C"
<PAGE>
EXHIBIT C
FOR
BTG, INC.
CONSTRUCTION & BUILDOUT PROVISIONS
LANDLORD'S WORK AND TENANT'S WORK
A. Landlord's Work.
1. Defined Terms. All capitalized terms used herein shall have the same
meaning ascribed to such terms in the Lease, except as specifically set
forth hereafter, provided that the following capitalized terms used in this
Exhibit C shall have the following meanings:
(a) "Allowance Items" shall have the meaning set forth in
Section A.3(a), below, and "Allowance" shall mean and refer to each
allowance established pursuant to Section A.3(a) with respect to the
Allowance Items (and shall be in addition to the Tenant Improvement
Allowance described in part B of this Exhibit C).
(b) "Base Building Improvements" shall mean and refer to all
physical improvements within (i) the shell and core areas of each of the
Buildings, including all mechanical, plumbing, electrical and HVAC systems
within said core areas (up to the point of integration of such systems with
tenant improvements to be constructed as part of Tenant's Work), and
including the existing roof, structural components, elevators, mechanical
rooms, restrooms, building entrances and lobby areas, exterior doors and
windows, exterior wall systems, life safety and fire safety systems,
plumbing systems (to the extent located within core areas of the
Buildings), electrical systems (to the extent located within core areas of
the Buildings), and HVAC equipment, components and distribution systems (to
the extent located within the core areas of the Buildings), and (ii) the
exterior Common Areas of the Project, excluding portions thereof dedicated
exclusively for items to be constructed therein for Tenant's benefit as
part of Tenant's Work.
(c) "Costs" shall mean all hard costs and soft costs
associated with the completion of an item, and shall include architectural
and engineering fees and costs, permit and inspection fees, sums expended
for labor and materials, general conditions and contractor profits, and
other associated out-of-pocket expenses.
(d) "Critical Path" shall mean the schedule for completion of
Tenant's Work, as necessary in order for Tenant to achieve Substantial
Completion thereof (exclusive of punch list items) and to obtain a
non-residential use permit for, and/or to lawfully occupy, the Premises by
March 1, 1997 in light of the required completion dates for Landlord's Base
Building Work, as otherwise set forth herein. The "Critical Path"
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<PAGE>
shall consist of (1) the general construction schedule for Tenant's Work
which is attached as Schedule C-4 hereto and made a part hereof, and (2)
the construction schedule set forth within the general construction
contract awarded by Tenant for Tenant's Work, which Tenant shall provide to
Landlord promptly after the same has been established and which shall, in
all events, (A) be established based upon reasonable and prudent methods of
construction, and (B) appropriately account for and be integrated with the
required completion dates for Landlord's Base Building Work, as otherwise
set forth herein. "Critical Path Item(s)" shall be those items of Tenant's
Work reflected within the Critical Path, the completion of which is
necessary in order for Tenant to complete all items of Tenant's Work
necessary for Tenant to obtain a non-residential use permit for, and to
lawfully occupy, the Premises by March 1, 1997; and Tenant agrees that any
item which, if not completed in accordance with the Critical Path, would
NOT affect Tenant's ability to complete all items of Tenant's Work
necessary for Tenant obtain a non-residential use permit for, or to
lawfully occupy, the Premises by March 1, 1997, shall be deemed NOT to be a
"Critical Path Item".
(e) "Excess Costs" shall mean and refer to the amount by which
the total Costs incurred by Tenant in connection with the completion of the
Allowance Items exceeds the Allowance stated for such items in Section
A.3(a), below.
(f) "Finish Drawings" shall mean the drawings and
specifications for the Finish Items, as more fully described and defined in
Section A.3(b), below.
(g) "Finish Items" shall mean the items described in Section
A.3(a)(i), (ii) and (iii), below.
(h) "General Office Areas" shall mean those portions of the
Premises which are designated by Tenant for ordinary office and
administrative purposes, such as individual offices, work areas,
secretarial areas, conference rooms and the like, and excluding any
"Specialized Areas" as such term is defined below.
(i) "(I)ncluding" shall mean "including but not limited to".
(j) "Landlord's Base Building Work" shall mean and refer to
all demolition, repairs, replacements and improvements which Landlord has
agreed to perform (or to provide Tenant with an allowance to perform) to
the Base Building Improvements and Project pursuant to this Exhibit C,
including all items specifically referenced herein as being part of
Landlord's Base Building Work, and including all items described in
Schedule C-1, Schedule C-2 and Schedule C-3 attached hereto and made a part
hereof, as well as any item which is Landlord's responsibility under
Section A.2(c), below.
(k) "Landlord's Construction Default" shall mean and refer to:
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<PAGE>
(1) any failure by Landlord to commence or diligently
pursue, as a whole, the completion of Landlord's Base Building
Work, which failure continues for a period of ten (10) days after
written notice of such failure from Tenant to Landlord, provided
that Landlord's Construction Default shall NOT include (A) any
inability of Landlord to commence or pursue Landlord's Base
Building Work due to Tenant Delay or Force Majeure (although
Landlord agrees that Force Majeure shall not affect whether
Landlord's inability constitutes a "Landlord's Delay" within the
meaning of this Exhibit C), and (B) any failure of Landlord to
commence or pursue one or more individual items of Landlord's Base
Building Work shall not constitute a Landlord's Construction
Default hereunder as long as Landlord is substantially engaged in
the performance of Landlord's Base Building Work as a whole;
and/or
(2) any failure by Landlord to fund the Tenant
Improvement Allowance within the time frame contemplated under
Section B.5(c) below, which failure continues for three (3)
business days after Tenant provides Landlord with a written notice
of non-payment, provided that it shall not be considered a
"failure" or "non-payment" by Landlord within the scope of this
clause A.1(j)(2) if Landlord declines to disburse all or a portion
of the Tenant Improvement Allowance requested pursuant to a
payment request made by Tenant under Section B.5(c) under
circumstances where Landlord has disputed Tenant's entitlement to
such portion of the disbursement requested, in a written notice
identifying the basis of the dispute with particularity which is
delivered within the applicable time period specified in Section
B.5(c) for making such disbursement, provided that (A) Landlord
pays all undisputed portions of the applicable payment request
within the applicable period, and (B) Landlord shall work in good
faith with Tenant and the Tenant's contractor to resolve the
dispute, including prompt submission of the dispute to expedited
arbitration in accordance with Section 49 of the Lease if the
parties are unable to resolve the dispute voluntarily within five
(5) days after Landlord notifies Tenant of the existence and
nature of the dispute.
(l) "Landlord Delay(s)" shall mean any delay suffered by
Tenant in the performance of an item of Tenant's Work which results from
(i) the failure of Landlord to perform its obligations under this Exhibit C
in accordance with the time requirements set forth herein, (ii) the
negligence or misconduct of Landlord, its agents, employees, architects,
engineers and/or contractors, or (iii) any wrongful interference in the
scheduled progress of Tenant's Work caused by Landlord, its agents,
employees, architects, engineers and/or contractors, including Landlord's
failure to respond to requests for information, specifications or other
items needed to complete a Critical Path Item in a diligent fashion. In
connection with claiming the benefit of (or invoking any remedies with
respect to) any Landlord Delays, Tenant agrees that, if Tenant fails to
notify Landlord of the precise nature of a particular Landlord Delay within
two (2) business days after Tenant, or its agents, representatives or
contractors, first had actual
3
<PAGE>
knowledge of the existence thereof, such Landlord Delay shall be deemed to
have commenced on the date Tenant actually notified Landlord of the
existence thereof.
(m) "Legal Requirements" shall mean and refer to all federal,
state and local legal requirements, building codes, fire and life safety
codes, and other laws, codes, regulations and ordinances applicable to the
design and construction of office buildings, and all interior and exterior
improvements and systems appurtenant thereto.
(n) "Qualifying Loan" shall mean any loan made by a third
party financial institution or other third party capital source which
provides for advances of principal in an amount not less than Five Million
Dollars ($5,000,000) and which, inter alia, provides funding for at least
sixty-five percent (65%) or more of the unfunded portion of Landlord's Base
Building Work and the Tenant Improvement Allowance. Tenant agrees, at no
out-of-pocket expense to Tenant, to cooperate with Landlord in Landlord's
obtaining a Qualifying Loan, including the execution of such commercially
reasonable documentation as may be requested by the lender thereunder,
provided the same does not materially modify Tenant's rights and
obligations under this Lease, or increase the cost of Tenant's Work.
(o) "Specialized Areas" shall mean and refer to areas of the
Premises which are designated for use other than as a General Office Area,
including cafeteria areas, computer rooms, rooms involving special code
requirements normally not applicable to General Office Areas due to the
nature or high density of machinery, lighting or other equipment stored or
utilized therein, interior stairwells not existing as of the date of this
Lease, and SCIF rooms.
(p) "Substantially Completed" shall mean that, subject to the
principles set forth in Sections A.2(b) and A.5, below, the items in
question have been constructed in accordance with the applicable plans and
specifications therefor and all Legal Requirements applicable thereto,
exclusive of variations due to the unavailability (despite due diligence)
of specified materials or equipment (provided reasonably equivalent
substitute materials or equipment reasonably approved by the other party
are utilized), non-material variations due to unforseen field conditions,
other minor, non-material variations, and, subject to Landlord's covenant
to remedy same within a reasonable period after the joint inspections
provided for hereinbelow, items of incomplete or defective work of a type
normally noted on a "punch list", provided that such variations and punch
list items would not prevent Tenant from lawfully taking possession of the
Premises (or, as Substantial Completion is defined in relation to the
completion of less than all of the Premises, such portion thereof) upon
delivery of possession thereof to Tenant, and would not materially and
adversely affect (i.e, materially delay or render materially more
expensive) Tenant's ability to proceed to construct Tenant's Work as
provided herein.
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<PAGE>
(q) "Tenant Delays" shall mean any delay suffered by Landlord
in the performance of an item of Landlord's Base Building Work which
results from (i) the failure of Tenant to perform its obligations under
this Exhibit C in accordance with the time requirements set forth herein,
(ii) the negligence or misconduct of Tenant, its agents, employees,
architects, engineers and/or contractors, or (iii) any wrongful
interference in the scheduled progress of Landlord's Base Building Work
caused by Tenant, its agents, employees, architects, engineers and/or
contractors, including Tenant's failure to respond to requests for
information, specifications or other items needed to complete a Critical
Path item in a diligent fashion. In connection with claiming the benefit of
(or invoking any remedies with respect to) any Tenant Delays, Landlord
agrees that, if Landlord fails to notify Tenant of the precise nature of a
particular Tenant Delay within two (2) business days after Landlord, or its
agents, representatives or contractors, first had actual knowledge of the
existence thereof, such Tenant Delay shall be deemed to have commenced on
the date Landlord actually notified Tenant of the existence thereof.
2. Landlord's Base Building Work - Generally.
(a) Landlord agrees to perform (or to provide Tenant with the
Allowances specified in Section A.3, below, for Tenant to perform)
Landlord's Base Building Work, in accordance with the procedures set forth
herein. Except as provided in Section A.3, Landlord agrees to perform
Landlord's Base Building Work at Landlord's sole cost, and irrespective of
whether the cost associated with such work exceeds Landlord's current
budget therefor.
(b) Except as specifically provided herein to the contrary,
Landlord shall be responsible, as part of Landlord's Base Building Work and
at Landlord's sole expense, for ensuring that the Base Building
Improvements as delivered to Tenant are designed and constructed in
compliance with all Legal Requirements applicable thereto, assuming their
ultimate integration with General Office Areas. Tenant shall (i) be solely
responsible, as part of Tenant's Work and at Tenant's sole expense, for
ensuring that all items and improvements which are within the scope of
Tenant's Work hereunder are designed and constructed in compliance with all
Legal Requirements applicable thereto, and (ii) perform, as part of
Tenant's Work hereunder and at its sole expense, any modifications or
enhancements required to be made to the Base Building Improvements in order
to ensure that Specialized Areas are constructed in compliance with Legal
Requirements, but solely to the extent the Legal Requirements applicable to
such Base Building Improvements which require such enhancements or
modifications exceed or are different from the Legal Requirements which
would be otherwise be applicable if the areas to which such Base Building
Improvements were being integrated were General Office Areas.
Notwithstanding clause (ii) above to the contrary, to the extent (1)
Landlord's Base Building Work on any portion of the Base Building
Improvements which Tenant intends to integrate with a Specialized Area is
not yet completed, or it becomes apparent that a portion of the Base
Building Improvements which Tenant
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<PAGE>
intends to integrate with a Specialized Area is required under this Section
A.2(b) to be further improved or modified by Landlord in order to render
the same in compliance with applicable Legal Requirements (assuming the
such Base Building Improvements were being integrated with General Office
Areas), and (2) additional improvements to such Base Building Improvements
would be necessary above and beyond those otherwise required to be
performed by Landlord under this Section A.2(b) in order for the same to be
in compliance with Legal Requirements in light of Tenant's planned
integration thereof with a Specialized Area, then (A) Tenant shall promptly
notify Landlord thereof, (B) if Tenant so notifies Landlord prior to
completion of the particular item of Landlord's Base Building Work,
Landlord agrees to attempt in good faith to effectuate any needed
enhancement to the Base Building Work in order to meet Legal Requirements
applicable to the planned integration of such Base Building Improvements
with a Specialized Area through a change order to Landlord's Base Building
Work, (C) if Landlord is able to accomplish such enhancement through a
change order to Landlord's Base Building Work, Tenant shall be responsible
only for the incremental additional cost associated with such change order;
and (D) if Landlord is unable despite its good faith efforts to effectuate
such needed enhancement through a change order to the Base Building Work,
or if Tenant fails to so notify Landlord of the need for such enhancement
prior to Landlord's completion of the applicable portion of Landlord's Base
Building Work, then Tenant shall be responsible for all modifications or
enhancements required to be made to the Base Building Improvements in order
to ensure that the Specialized Areas (including the Base Building
Improvements integrated therewith) are constructed in compliance with Legal
Requirements, as aforesaid. Schedule C-1 sets forth certain specific items
of Landlord's Base Building Work which involve bringing portions of the
Base Building Improvements into compliance with applicable Legal
Requirements. In addition, to the extent an item of Landlord's Base
Building Work described in Schedule C-2 (which establishes certain items of
Landlord's Base Building Work to be performed in accordance with a
particular set of drawings or technical specification) or Schedule C-3
(which addresses certain repairs to be made by Landlord to certain existing
Base Building Improvements) is governed by a particular Legal Requirement,
Landlord agrees, as part of Landlord's Base Building Work, to comply with
the applicable Legal Requirement in performing such work or in effectuating
such repair. This Exhibit C also contains certain special provisions which
allocate responsibility for compliance with certain particular Legal
Requirements to a specific party, notwithstanding the general standards set
forth above, and any such special allocation of responsibility shall
supersede the general principles otherwise set forth in this Section A.2(b)
(c) Landlord's Base Building Work shall encompass a level of
repair and renovation to the Base Building Improvements which renders the
same fully functional for integration with General Office Areas, and
generally upgrades and renovates the Project to a condition substantially
consistent with (though not necessarily identical to) the Base Building
Improvements of a Class B+ office project such as Oakwood Plaza or
Greenwood Plaza. The foregoing standard is not intended to
6
<PAGE>
encompass the particular aesthetic aspects of, or finishes within, the Base
Building Improvements, but rather to identify an overall standard of
completion, renovation, repair and (if necessary) replacement which will
govern any portions of the Base Building Improvements which reasonably
require repair in order to bring the Project to a Class B+ standard, but
which may not have been identified in Schedule C-1, Schedule C-2 and
Schedule C-3. In addition, and notwithstanding the foregoing general
standard, Tenant acknowledges and agrees that Schedule C-1, Schedule C-2
and Schedule C-3 identify all major items which are presently expected to
be included within Landlord's Base Building Work other than items not known
to Tenant as of the date hereof which may need to be improved, repaired or
replaced in order to bring them into compliance with Legal Requirements, to
the extent such Legal Requirements are within the scope of Landlord's
responsibility under Section A.2(b), above. Landlord further acknowledges
that Landlord's Base Building Work may encompass repairs or replacements to
components of the Base Building Improvements which are not identified in
Schedule C-3 because the same are not known to Tenant as of the date hereof
in light of the degree of inspection of the Project which Tenant has been
capable of conducting to date.
(d) Landlord agrees promptly after Lease execution to commence
the design of, and after completion of the design thereof and the issuance
of all required permits therefor, to diligently pursue the performance of
Landlord's Base Building Work. Subject to Tenant Delays (as hereinafter
defined) and Section A.5, below (which addresses Landlord's obligation to
complete certain Critical Path Items of Landlord's Base Building Work by
November 1, 1996), Landlord's Base Building Work shall be Substantially
Completed on or before December 31, 1996, and if Landlord's Base Building
Work is not Substantially Completed by such dates, the provisions of
Section A.5(b) and (c), below shall be applicable.
3. Items Subject to an Allowance.
(a) The following items of Landlord's Base Building Work
(hereinafter, the "Allowance Items") shall be performed by Tenant, subject
to payment of an allowance by Landlord as hereafter provided:
<TABLE>
<CAPTION>
Item Allowance
---- ---------
<S><C>
i. Refinishing of all restrooms (including tilework, countertop
replacement, faucets, handles, and other "finish" items)
ii. Upgrade of elevator cab finishes
iii. Upgrading lobby finishes/E1, E-2 and E-3
iv. Furnishing and installation of access control system
v. Replacement of all Common Area door hardware
</TABLE>
7
<PAGE>
<TABLE>
<S><C>
with ADA accessible hardware
vi. Furnishing and installation of all necessary "exit" lights and
signage (ADA & Fire Safety)
vii. Furnishing and installation of core area
identification signs
</TABLE>
Landlord's financial responsibility for the Costs associated with the
Allowance Items shall be limited to the Allowance indicated after each item
listed, which Allowance shall be funded by Landlord to Tenant on
substantially the same basis as the funding of the Tenant Improvement
Allowance, as set forth in Section B.5, below, and Tenant shall be
responsible for all excess Costs associated with completion of the
Allowance Items, as more fully set forth in Section A.4, below. Tenant
agrees that, with respect to all items reflected above, Tenant shall be
solely responsible, at Tenant's expense, for ensuring that the Allowance
Items are designed and constructed in accordance with applicable Legal
Requirements, provided that, to the extent that (1) Finish Items are
integrated with systems, features or components which are part of the Base
Building Improvements, (2) the requirement that such systems, features or
components be brought into compliance with Legal Requirements is otherwise
Landlord's responsibility under Section A.2(b) hereof, (3) Tenant's
particular design or construction of the applicable Allowance Item is not
what causes such Legal Requirement(s) to become applicable to the
underlying system, features and components, and (4) Tenant promptly
notifies Landlord of the Landlord's responsibility to bring such systems,
features or components into compliance with such Legal Requirements,
Landlord shall promptly take such steps as are necessary to bring such
underlying systems, features or components into compliance with such
applicable Legal Requirements.
(b) The design and construction of the Allowance Items
(including all Finish Items) shall be subject to Landlord's review and
approval as part of the process of approving Tenant's plans and
specifications for Tenant's Work, provided the Finish Items shall be
subject to certain additional standards set forth herein. Landlord and
Tenant mutually acknowledge and agree that lobby finishes, elevator cab
finishes, and restroom finishes are integral to the overall appearance as a
Class B+ project which both parties wish to implement with respect to the
major public areas of the Buildings, and Tenant agrees that it shall be
required to incorporate finishes and design concepts and suggestions
proposed by Landlord within the ultimate design and construction of each
such Finish Item, provided the same (i) are consistent with that of a Class
B+ project, (ii) would not require Tenant to exceed the Allowance
established above for such Finish Item, and (iii) are not inconsistent with
Tenant's overall design concept for such Finish Item. Landlord will
endeavor to communicate its initial requirements and design suggestions,
consistent with the limitations described in the foregoing clauses (i) and
(ii), within a reasonable time period after Lease execution, and in all
events prior to the date Tenant submits its Drawings and Specifications for
Landlord's Approval, Tenant
8
<PAGE>
specifically agrees that, without limitation, Landlord shall have the right
to disapprove Tenant's proposed Drawings and Specifications, to the extent
related to such Finish Items, if the same are not consistent with that of a
Class B+ office project. Tenant shall be responsible for the timing of
completion of, and for using diligent efforts to complete in an expeditious
fashion consistent with the Critical Path, the Allowance Items.
4. Payment of Costs Associated with Allowance Items. Tenant shall be
responsible to pay all Costs associated with the completion of the
Allowance Items, subject only to the payment of the stated Allowance in
accordance with the disbursement procedures set forth herein. Disbursement
of the Allowances shall be handled in the same manner and using the same
disbursement procedures applicable to Tenant's Work, provided that Tenant
shall be responsible for disbursing the Excess Costs component associated
with the Allowance Items, on a pro rata basis with the Allowance provided
by Landlord with respect to such items. Tenant shall further be responsible
for any incremental additional costs occasioned by change orders affecting
the Allowance Items requested by Tenant and approved by Landlord, in
accordance with a procedure substantially identical to the procedure for
change orders applicable to Tenant's Work, as set forth in Section B.4,
below. Provided Tenant has performed all Allowance Items in accordance with
plans approved by Landlord pursuant hereto, any savings realized by Tenant
in completing such Allowance Items from the Allowances established in
Section A.3(a), above shall be added to the Tenant Improvement Allowance
hereunder.
5. Completion of Landlord's Base Building Work.
(a) The following principles shall be applied to assist the
parties in determining whether a particular item of Landlord's Base
Building Work described in Schedule C-1, Schedule C-2 or Schedule C-3, or
which is otherwise required to be performed by Landlord pursuant to this
Exhibit C, has been Substantially Completed:
(i) The items described in Schedule C-1 are required
to be performed by Landlord in order to bring the affected
component of the Base Building Improvements into compliance with
Legal Requirements applicable to such component, and, subject to
subparagraph 5(a)(iv), below, shall be deemed Substantially
Completed if the applicable government inspector signs off upon or
otherwise approves the compliance of such item with applicable
Legal Requirements.
(ii) The items described in Schedule C-2 consist of
particular improvements, repairs or enhancements to the Base
Building Improvements which Landlord has agreed to perform in
accordance with a particular equipment or other technical
specification, or in accordance with detailed engineering or
construction drawings (or other mutually acceptable form of detail
documentation approved by Landlord and Tenant) to be prepared and
approved in the future. To
9
<PAGE>
the extent feasible as of the date hereof, Schedule C-2 describes
the applicable specification. To the extent there are Legal
Requirements applicable to an item within the scope of Schedule
C-2 (exclusive of Legal Requirements which are Tenant's
responsibility due to the intended integration of such item(s)
with a Specialized Area), the Substantial Completion of such item
shall also encompass completion in compliance with such Legal
Requirement.
(iii) The items described in Schedule C-3 consist of
certain general repairs to existing components of the Base
Building Improvements which Landlord has agreed to perform in
order to restore such components to a functioning condition
consistent with its the intended functioning condition which
existed before such component became non-functioning. In
interpreting the foregoing repair standard, Landlord agrees that
it is intended that each item or component being repaired be
restored to good working condition, with a reasonable useful life,
consistent with a properly functioning item or component of
similar age and type to the item or component being repaired, and
not simply to a working condition which will require additional
repair or replacement within an unusually short period after such
item or component is put back into service (provided Landlord is
not guaranteeing the precise life expectancy of any item Landlord
is agreeing to repair under Schedule C-3). Schedule C-3 sometimes
describes a repair specification which the parties agree will
supersede any general repair standard set forth herein. To the
extent there are Legal Requirements applicable to a repair item
within the scope of Schedule C-3 (exclusive of Legal Requirements
which are Tenant's responsibility due to the intended integration
of such item(s) with a Specialized Area), the Substantial
Completion of such repair item shall also encompass completion in
compliance with such Legal Requirement.
(iv) Landlord agrees that "Substantial Completion",
as applied within the meaning of clauses (i)-(iii) of this Section
A.5, is intended to be exclusive of punch-list items, that is, the
fact that an item is Substantially Completed within the scope of
the foregoing standards shall not mean that Tenant is barred from
including any defect in the completion of such item within a punch
list.
(v) Landlord and Tenant acknowledge that certain
components of the Base Building Improvements may be in compliance
with current Legal Requirements only by virtue of so-called
"grandfathering" provisions which are included within such Legal
Requirements, and that if the Buildings were new construction,
such components would be required to be performed in accordance
with current Legal Requirements applicable to new construction.
Tenant specifically acknowledges that the configuration of the
electrical closets, and the stair risers in the existing
staircases, may be in compliance with Legal
10
<PAGE>
Requirements only because of the application of such
grandfathering provisions, and Tenant agrees that provided such
grandfathering provisions are applicable thereto, such items are
not required to be upgraded to code standards applicable to new
construction. Landlord and Tenant acknowledge and agree that,
except with respect to the foregoing items, Landlord's Base
Building Work will conform with Legal Requirements applicable to
new construction (and without regard to grandfathering provisions)
PROVIDED that as long as a grandfathered code requirement is not
inconsistent with a particular specification identified in
Schedule C-1, C-2 or C-3, Landlord shall have the right to request
that Tenant approve Landlord's completion of the affected item of
Landlord's Base Building Work in accordance with the grandfathered
code requirement, which approval shall not be unreasonably
withheld, conditioned or delayed.
(vi) With respect to any Base Building Work for which Landlord
is responsible under this Exhibit C, but which is not specifically
referenced in Schedule C-1, C-2 or C-3, Landlord agrees that the
applicable standard for Substantial Completion will be determined
on the basis of whether the item in question would reasonably have
been included in Schedule C-1, Schedule C-2 or Schedule C-3 had
the item in question been identified prior to Lease execution.
(b) Landlord agrees that, subject only to Tenant Delays, (i)
the items of Landlord's Base Building Work which are marked on Schedule C-1
and Schedule C-2 with a single asterisk shall be completed by November 1,
1996 (i.e, roof, HVAC and sprinkler mains and branches), and (ii) unless
otherwise agreed by Landlord and Tenant, all other items of Landlord's Base
Building Work shall be completed by December 31, 1996. The parties
acknowledge that numerous items of Landlord's Base Building Work will be
performed by Landlord's contractor(s) contemporaneously with the
performance of Tenant's Work, and the parties agree to cooperate (and to
cause their respective contractors to cooperate) in good faith, in the
coordination of their respective construction schedules, and in the
performance of all such work, so as to provide for the orderly and proper
satisfaction of each party's construction responsibilities with a minimum
of interference, to facilitate the timely completion of critical path
items, to facilitate the completion of all such work in a manner most
economically efficient to both Landlord and Tenant, that is, to minimize
the respective costs involved in completion of such work consistent with
the timely completion thereof. Except as contemplated in Section A.5(c)
below with respect to overtime work, in the event of any Landlord Delay
(including any failure by Landlord to complete any item of Landlord's Base
Building Work within the time requirements set forth herein), the same
shall not give rise to any remedy in favor of Tenant, whether in the nature
of self-help, penalties or grants of free rent due to delay, or otherwise,
unless and solely to the extent such delay by Landlord causes actual delay
in one or more Critical Path Items which in turn delays Substantial
Completion of Tenant's Work beyond March 1, 1996. The provisions governing
Tenant's remedies for breach of
11
<PAGE>
Landlord's obligations under this Exhibit C are more fully established and
qualified in Sections A.5(c), and A.8, below.
(c) To the extent that any item of Landlord's Base Building
Work which is required to be substantially completed as of a date certain
is, in fact, not completed as of such date, the following provisions shall
apply:
(i) If and to the extent the item in question is not
a Critical Path Item, that is, non-completion of such item(s) does
not actually delay Substantial Completion of Tenant's Work beyond
March 1, 1997, or does not increase the aggregate cost of Tenant's
Work by more than $5,000, then provided Landlord continues to
pursue the completion of such items with all due diligence, such
non-completion shall not affect the Commencement Date of this
Lease or otherwise result in or give rise to any damages or
penalties payable by Landlord to Tenant, or otherwise constitute a
default by Landlord under this Lease.
(ii) If and to the extent any delay by Landlord in
the completion of a Critical Path Item of Landlord's Base Building
Work beyond the time specified herein, or other Landlord Delay,
materially delays the Critical Path for completion of Tenant's
Work, that is, causes actual delay in the completion of a Critical
Path Item to the extent that Substantial Completion of Tenant's
Work is delayed, or in Tenant's good faith judgment is likely to
be delayed as a direct result thereof, beyond March 1, 1997, then
Tenant shall have the right, after consultation with Landlord as
provided hereafter, to cause its contractor to perform overtime
work in order to achieve timely completion after such a delay
caused by Landlord. In such event, Landlord agrees to reimburse
Tenant for any overtime charges reasonably incurred by Tenant in
order to achieve timely completion to the extent incurred as a
result of Landlord Delays (and not as a result of Tenant Delays,
Force Majeure or other causes not involving any fault of
Landlord). Tenant's right to hold Landlord responsible for such
overtime charges shall be subject to Tenant's first obtaining
Landlord's approval to incur such overtime (which approval shall
not be unreasonably withheld and which approval shall be based
solely upon Landlord's and Tenant's mutual good faith assessment
that such overtime work is likely to eliminate or minimize the
delay in Substantial Completion to an extent which will reduce the
aggregate damages payable by Landlord by virtue of such delay
(that is, the aggregate of rental abatement, loss of present
income due to Commencement Date deferral and total likely overtime
charges for which Landlord is responsible). Landlord's
responsibility for overtime charges under this clause shall be
limited to overtime charges incurred to address delay caused by
Landlord Delays affecting Critical Path Items, and shall not
include any overtime charges needed to expedite portions of
Tenant's Work which are behind schedule through no fault of
Landlord.
12
<PAGE>
(iii) Subject to clauses A.5(c)(iii)(D)(E) and (F),
below, if and to the extent any delay by Landlord in the
completion of a Critical Path Item of Landlord's Base Building
Work beyond the time specified herein, or other Landlord Delay,
materially delays the Critical Path for completion of Tenant's
Work, that is, causes actual delay in the completion of a Critical
Path Item to the extent that Substantial Completion of Tenant's
Work is delayed, or in Tenant's good faith judgment is likely to
be delayed as a direct result thereof, beyond the scheduled date
of Substantial Completion of Tenant's Work under the Critical Path
or March 1, 1997 (whichever is later), and overtime work incurred
pursuant to Section A.5(c)(ii) does not enable Tenant to achieve
Substantial Completion by such date, the following provisions
shall apply:
(A) If and to the extent delay in completion
of a Critical Path Item occurs as a result of Landlord
Delays (and not due to Tenant Delays, Force Majeure or
other causes not involving any fault of Landlord), AND
Tenant is able to negotiate (on terms reasonably
acceptable to Tenant) with its current landlords a
holdover under its current leases for a period
corresponding to the actual period of delay in Substantial
Completion attributable to Landlord Delays (as opposed to
a month to month holdover), then (i) the Commencement Date
of this Lease shall be extended to the first day of the
first calendar month occurring after the date by which
Tenant actually commences operation for business purposes
in the Premises (or, if earlier, the day Tenant should
have first commenced operation within the entire Premises
for business purposes, assuming that date would have
occurred thirty-one (31) days after Substantial Completion
of Tenant's Work is achieved or would have been achieved
but for delays in Substantial Completion of Tenant's Work
occurring through no fault of Landlord, whichever occurs
first) (the earlier of such date, the "Occupancy Date"),
(ii) Tenant shall pay pre-Commencement Date Base Rent and
electrical charges for the entire Premises at the same per
diem rate as would otherwise be applicable for the first
full month of the first Lease Year, for the period between
the Occupancy Date and the Commencement Date, and (iii)
Tenant shall also be entitled to one (1) day of Base Rent
abatement for each day elapsing between April 1, 1997 and
the Occupancy Date (commencing on the Commencement Date,
as adjusted pursuant to this subparagraph). By way of
example and not of limitation, (1) if (a) the completion
of a Critical Path Item required to be completed by
Landlord on November 1, 1996 is delayed to November 10,
1996 through no fault of Tenant, or Substantial Completion
of Tenant's Work is otherwise delayed for a like period of
time due to any Landlord Delay, (b) Tenant nevertheless
achieves Substantial Completion of Tenant's Work on March
7, 1997, (c) the Occupancy Date is in fact April 7, 1997
(and not some earlier date), and (d) Tenant successfully
negotiates
13
<PAGE>
a one week holdover with its other landlords, THEN (aa)
the Commencement Date shall be extended to May 1, 1997,
(bb) Tenant shall pay pre-Commencement Date Base Rent and
electrical charges for the entire Premises at the
above-stated rate for the period between April 7, 1997 and
May 1, 1997, and (cc) Tenant shall be entitled to receive
seven (7) days of Base Rent abatement; (2) if (a) the
completion of such Critical Path Item by Landlord is
delayed to November 10, 1996 by reason of Landlord's
non-performance, or Substantial Completion of Tenant's
Work is otherwise delayed for a like period of time due to
any Landlord Delay, (b) Tenant achieves Substantial
Completion of Tenant's Work on March 17, 1997 by virtue of
an additional delay in Tenant's Work occasioned by Force
Majeure or Tenant Delays, (c) the Occupancy Date is April
10, 1997 even though Tenant first commenced actual
occupancy on April 17, 1997 (the 7-day additional delay
being attributable to delay in completion of Tenant's Work
caused by Force Majeure or Tenant Delays) and (d) Tenant
successfully negotiated a 17-day holdover with its other
landlords, then (aa) the Commencement Date shall be
extended to May 1, 1997, (bb) Tenant shall pay
pre-Commencement Date Base Rent and electrical charges for
the entire Premises at the above-stated rate for the
period between April 10, 1997 and May 1, 1997, and (cc)
Tenant shall be entitled to receive ten (10) days of Base
Rent Abatement; and (3) if (a) the completion of a
Critical Path Item required to be completed by Landlord on
November 1, 1996 is delayed to November 10, 1996 through
no fault of Tenant, or Substantial Completion of Tenant's
Work is otherwise delayed for a like period of time due to
any Landlord Delay, (b) solely as a result of such delayed
completion of said Critical Path Item, Tenant achieves
Substantial Completion of Tenant's Work on March 17, 1997,
(c) the Occupancy Date is in fact April 17, 1997 (and not
some earlier date), and (d) Tenant successfully negotiates
a 17-day holdover with its other landlords, THEN (aa) the
Commencement Date shall be extended to May 1, 1997, (bb)
Tenant shall pay pre-Commencement Date Base Rent and
electrical charges for the entire Premises at the
above-stated rate for the period between April 17, 1997
and May 1, 1997, and (cc) Tenant shall be entitled to
receive seventeen (17) days of Base Rent abatement.
(B) If and to the extent delay in completion
of a Critical Path Item occurs as a result of Landlord
Delays (and not due to Tenant Delays, Force Majeure or
other causes not involving any fault of Landlord), AND
Tenant is NOT able to negotiate with its current landlords
a holdover under its current leases for a period
corresponding to the actual period of delay in Substantial
Completion attributable to Landlord Delays, but rather, is
required to pay holdover rent under any or all of such
leases for an entire month, then (i) the Commencement Date
of this Lease shall
14
<PAGE>
be extended to the first day of the first calendar month
occurring after the Occupancy Date, (ii) Tenant shall pay
pre-Commencement Day Base Rent and electrical charges for
only that portion of the Premises it is actually occupying
between the actual date it commences such occupancy and
the Commencement Date at the same per diem rate as would
otherwise be applicable for the first full month of the
first Lease Year (but on a pro rata basis if less than all
of the Premises is so occupied by Tenant), together with a
pro rata portion of electrical charges from the Occupancy
Date until the Commencement Date (provided that upon
vacating the premises subject to such holdover rent,
Tenant may occupy that portion of the Premises which is
the replacement therefor and shall not be required to pay
any applicable pre-Commencement Day Base Rent in respect
of such portion of the Premises, but shall pay a pro rata
portion of electrical charges applicable thereto), and
(iii) Tenant shall not be entitled any Base Rent abatement
for days elapsing between April 1, 1997 and the Occupancy
Date.
(C) If and to the extent such non-completion
occurs as a result of delay in the completion of Tenant's
Work due to Force Majeure or Tenant Delays (i.e., not
through any fault of Landlord), the Commencement Date of
this Lease shall not be extended even if Tenant does not
achieve Substantial Completion until after March 1, 1997,
or the Occupancy Date is not occur until after April 1,
1997, and Landlord shall not be liable to Tenant for any
Base Rent abatement, damages or other rights and remedies
as a result thereof.
(D) The provisions of clauses (A), (B) and
(C) of this Section A.5(c) shall be construed in
conjunction with each other in those cases where delay in
completion of items of Landlord's Base Building Work which
materially affect Tenant's Critical Path for completion of
Tenant's Work are caused in part by delays in Tenant's
Work due to Force Majeure or Tenant Delays and in part by
Landlord Delays or other Landlord non-performance, so each
party will ultimately bear responsibility for the economic
consequences of delay which, under the terms of this
Lease, it is responsible for. Each party agrees that it
will bear sole responsibility for any delay in the
performance of its own work which occurs by virtue of any
Force Majeure. In addition, if, notwithstanding Landlord
Delays, Tenant Substantially Completes Tenant's Work by
March 1, 1997, or Substantially Completes Tenant's Work
after March 1, 1997 but is nevertheless able to commence
occupancy of the Premises for business purposes on April
1, 1997, then (i) the Commencement Date shall in all
events remain April 1, 1997, and (ii) if such completion
or commencement of occupancy was achieved without
incurring overtime
15
<PAGE>
charges or additional expense greater than $5,000, then
Landlord shall not have any liability to, or be required
to pay any damages or penalties to, Tenant by virtue of
such Landlord Delays.
(E) Landlord and Tenant acknowledge and
agree that, because Tenant is currently occupying a number
of different spaces in different buildings which are
subject to different leases with different landlords, it
may not be feasible for Tenant to reach agreement with all
of its landlords to permit a holdover after April 1, 1997
on the same basis (i.e., some may permit a holdover
corresponding to the actual period of delay, and others
may require a minimum one month (or month to month)
holdover term. Tenant acknowledges that the damages
Landlord may suffer as a result of the operation of clause
A.5(c)(iii)(B) above may be disproportionate to the actual
number of days of delay directly attributable to
Landlord's non-performance, and that this may be true even
in instances where some portion of the delay is due to
Landlord's fault, and other portions of the delay are due
to Force Majeure or Tenant Delays for which Tenant has
agreed to be responsible. Accordingly, Tenant agrees to
use reasonable efforts to mitigate any damages Landlord
might suffer as a result of the operation of clause
A.5(c)(iii)(B) above, which shall include (i) keeping
Landlord informed on a regular basis regarding any
holdover arrangements which Tenant has made or may make,
so that Landlord can better assess the advisability of
authorizing overtime work or other measures which might
avoid or minimize a delay that Landlord is responsible for
under this Section, (ii) permitting Landlord to
participate with Tenant in the negotiation of any such
holdover arrangements with its existing landlords, (iii)
relocating those portions of Tenant's existing operations
from those premises as to which Tenant is able to arrange
a shorter term holdover arrangement (i.e., for a period
corresponding to the actual period of delay, etc., as
opposed to a full month) to the Premises, unless Tenant is
able to demonstrate a substantial operational reason why
such a partial move is impracticable or inadvisable, and
(iv) exercising its right to cause overtime work to be
performed in circumstances where Tenant reasonably
believes that such overtime work will avoid the type of
delay which gives rise to the remedies set forth in this
Section A.5(c)(iii).
(F) (i) The other provisions of this Section
A.5(c)(iii) to the contrary notwithstanding, if Landlord
Delays, including delays in Landlord's Base Building Work,
cause Tenant not to achieve Substantial Completion of all
or any part of Tenant's Work on or before March 1, 1997,
under circumstances where Tenant achieves Substantial
Completion (including issuance of a Non-Residential Use
Permit) of Tenant's Work with respect to less than all of
the Premises by March 1, and takes
16
<PAGE>
occupancy of such portion of the Premises for business
operation purposes on or before April 1, 1997 (which
Tenant agrees to do in the absence of a substantial
operational reason why such partial occupancy would be
impracticable or inadvisable), then:
(a) the accrual of
Base Rent abatement provided for above by virtue
of Landlord's Delay, if any, shall be prorated so
as to be applicable solely to that portion of the
Premises as to which Landlord's Delay resulted in
Tenant's inability to achieve substantial
completion by March 1, 1997 and to take occupancy
for business operation purposes by April 1, 1997;
and
(b) with respect to
any portion of the Premises as to which Tenant
achieved Substantial Completion on or before
March 1, 1997 and as to which Tenant took
occupancy for business operation purposes prior
to April 1, 1997 (which, again, Tenant agrees to
do in the absence of a substantial operational
reason why such partial occupancy would be
impracticable or inadvisable), Tenant shall be
obligated to pay Base Rent and electrical charges
for such portion for the period BEGINNING (1) on
the later to occur of (A) April 1, 1997, or (B)
the date Tenant actually commenced occupancy of
such portion for business operation purposes, AND
ENDING (2) on the Commencement Date of the Lease
as determined pursuant to this Section
A.5(c)(iii), which pre-Commencement Date Base
Rent shall be based upon the applicable pro rata
share of the Base Rent which would otherwise
payable for the first full month of the first
Lease Year, based upon the rentable area in the
portion of the Premises which Tenant is actually
occupying and conducting business from, and which
electrical charges shall be based on an agreed
annual estimate of electrical charges equal to
$1.75 p.s.f. per annum, for the space so occupied
by Tenant.
(ii) To the extent Tenant is in
actual occupancy of any portion of the Premises for
business operation purposes after April 1, 1997, but prior
to the Commencement Date of this Lease, by virtue of the
operation of clauses A.5(c)(iii)(A) or (B), above, Tenant
agrees to pay Base Rent and electrical charges (and
further agrees that it shall not be entitled to any
further accrual of Base Rent abatement under this Section
A.5(c)(ii)) with respect to such portion of the Premises
for the period BEGINNING (1) on the date Tenant actually
commenced occupancy of such portion for business operation
purposes, AND ENDING (2) on the
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Commencement Date of the Lease as determined pursuant to
this Section A.5(c)(iii), which pre-Commencement Date Base
Rent shall be based upon the applicable pro rata share of
the Base Rent which would otherwise payable for the first
full month of the first Lease Year, based upon the
rentable area in the portion of the Premises which Tenant
is actually occupying and conducting business from, and
the applicable occupancy period, and which electrical
charges shall be based on an agreed annual estimate of
electrical charges equal to $1.75 p.s.f. per annum, for
the space so occupied by Tenant.
(iii) To the extent Tenant
is required by virtue of clause A.5(c)(iii)(A), above, to
pay pre-Commencement Date Base Rent and electrical charges
on the entire Premises for any period, such
pre-Commencement Date Base Rent shall be based upon the
applicable pro rata share of the Base Rent which would
otherwise payable for the first full month of the first
Lease Year, pro-rated for the applicable period, and which
electrical charges shall be based on an agreed annual
estimate of electrical charges equal to $1.75 p.s.f. per
annum, for the space so occupied by Tenant.
(G) The remedies set forth in this Section
A.5(c) are in addition to, and not in lieu of, any
remedies otherwise set forth in Section C of this Exhibit
C in the event of Landlord's Construction Default.
(d) Landlord agrees that, promptly after any plans and
specifications for Landlord's Base Building Work which are required under
applicable laws in order to obtain issuance of any permits required for of
such work have been finalized, it shall apply for all permits necessary to
perform Landlord's Base Building Work and diligently pursue the issuance of
such permits. Promptly after issuance of the requisite permits for
Landlord's Base Building Work, Landlord agrees to cause its General
Contractor to commence and thereafter to perform Landlord's Base Building
Work in a diligent, first class and good and workmanlike manner. Landlord
shall use all reasonable and diligent efforts to cause its General
Contractor to substantially complete Landlord's Base Building Work within
the time frames contemplated by this Lease.
(e) Tenant agrees that, in addition to any other remedy
provided for herein, Landlord's obligation to complete Landlord's Base
Building Work by a date certain shall be extended one (1) day for every day
of delay suffered by Landlord in the completion of Landlord's Base Building
Work due to Tenant Delays.
B. Tenant's Work.
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1. Preparation of Plans and Specifications. On or before August 31,
1996, Tenant shall submit a preliminary space plan for the construction of
tenant improvements to the Premises (to be prepared at Tenant's expense) to
Landlord for Landlord's approval, which shall not be unreasonably withheld,
conditioned or delayed (and which Landlord will, in all events, either
approve or comment upon within three (3) days after receipt). Immediately
thereafter, Tenant shall cause its architect and engineer to prepare
architectural plans, construction drawings and mechanical, electrical and
plumbing ("MEP") drawings for the Premises, at Tenant's sole expense.
Landlord shall coordinate with Tenant's architect during such period to
provide any building engineering information necessary for Tenant's
Architect to prepare mechanical, electrical and plumbing ("MEP") drawings.
Said plans, drawings and MEPs shall be submitted to Landlord in form
sufficient for the permitting and construction of the Premises, and are
hereinafter referred to as the "Drawings and Specifications". Tenant shall
deliver the completed Drawings and Specifications to Landlord promptly
after completion, and in all events prior to November 1, 1996. In the event
Landlord fails to provide Tenant's architect with any information necessary
for Tenant's architect to complete the Drawings and Specifications, Tenant
or Tenant's Architect shall notify Landlord of any such missing
information, and Landlord shall be obligated to provide any such
information which is reasonably requested by Tenant at Landlord's expense,
as expeditiously as possible. In connection with such requirement, (i)
Tenant's architect shall be obligated to inform Landlord promptly of any
information which it reasonably requires which has not already been made
available to it by Landlord, and (ii) Landlord shall have the right to
provide such information with the caveat that the same must be verified in
the field prior to the preparation of Drawings and Specifications
integrating the items reflected by such information within Tenant's Work,
in which event Landlord will promptly cause its architect to conduct such
field verification, and Tenant's architect may rely on the information
supplied with such caveat prior to such field verification at its sole
risk. Further, to the extent Tenant suffers any delays to the Critical Path
due to its inability to obtain such information despite its due diligence,
or due to inaccuracies within such information, and provided the foregoing
notification provision has been complied with, such delay shall constitute
a Landlord Delay for all purposes hereof.
2. Approval of and Revisions to Plans and Specifications. As soon as
practicable after receipt of such Drawings and Specifications, but in no
event more than three (3) business days after receipt thereof, Landlord
shall return to Tenant such Drawings and Specifications with its written
objections, suggested modifications and/or approval. Landlord's review
shall be limited to items or matters (i) which affect or impact the
exterior areas and/or exterior appearance of the Project, (ii) which affect
or impact in more than a de minimis fashion the structural components of
the Buildings, or would otherwise affect or impact the structural integrity
of any of the Buildings, (iii) which affect or impact in more than a de
minimis fashion any mechanical, electrical, plumbing or HVAC systems within
the Buildings, (iv) which are intended to be integrated with Base Building
Improvements, including main Building lobbies, Building common areas,
elevator lobbies and floor core areas, or (v) which involve issues of
compliance with applicable Legal Requirements, and
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except with respect to matters affecting the exterior appearance of the
Project, Landlord's consent shall not be unreasonably withheld, conditioned
or delayed. If Landlord's modifications are acceptable to Tenant, said
Drawings and Specifications shall thereafter be revised by Tenant's
architect to reflect the applicable changes, and the same shall be
resubmitted to Landlord for written approval within three (3) business days
after their receipt by Tenant. If, upon receipt of Landlord's modified
Drawings and Specifications, Tenant wishes to take exception thereto,
Tenant may do so within three (3) business days after the date upon which
Tenant first received Landlord's modified Drawings and Specifications. In
such event, Tenant shall deliver revised Drawings and Specifications to
Landlord prior to the expiration of such three (3) business day period, and
Landlord shall grant its written approval or disapproval thereto, and/or
state any further objections or proposed modifications, within three (3)
business days after receipt thereof. After the first submission and
resubmission, Landlord and Tenant agree to restrict further objections or
disputes to matters which have not previously been agreed upon or accepted
by the other party. The parties shall, in all events, attempt to reach
agreement as soon as possible, and within nine (9) business days after the
date upon which Tenant first received Landlord's modified Drawings and
Specifications. The process of submissions and resubmissions shall continue
thereafter until final agreement is reached. Each party agrees that its
failure to respond to a submission or resubmission within the
above-referenced time frames shall constitute such party's acceptance of
the submission or resubmission in question.
3. Tenant's Work. Upon Landlord and Tenant's final approval of the
Drawings and Specifications, the same shall constitute the "Approved
Plans", and the work shown on such final Drawings and Specifications shall
be deemed "Tenant's Work" unless otherwise noted thereon. Following final
approval of the Approved Plans, Tenant agrees to apply for a building
permit and upon issuance thereof, to cause Tenant's Work to be completed,
installed or performed, as the case may be, in accordance therewith,
subject only to minor variations and/or variations necessitated by the
unavailability of specified materials and equipment. Tenant shall enter
into a construction contract with a pre-approved general contractor, or
with a general contractor approved by Landlord in Landlord's reasonable
discretion to construct the initial improvements within the Premises in
accordance with the Approved Plans and otherwise in accordance with the
terms of this Lease. Landlord hereby approves each of the following general
contractors: (i) Hitt Contracting; (ii) James G. Davis Construction Corp.;
(iii) J.R. Austin, Inc.; (iv) Sigal Construction; and (v) McDevitt Street
Bovis. Except as specifically provided in this Exhibit C, Tenant shall be
responsible for all matters that must be accomplished to complete Tenant's
Work, including filing plans and other required documentation with the
proper governmental authorities and securing all necessary permits for the
performance of any and all work required to be performed under the Approved
Plans, all of which will be deemed part of Tenant's Work and, upon
completion of Tenant's Work, all approvals and permits necessary for Tenant
to occupy the Premises including all final inspections for issuance of
Tenant's final certificate of use and occupancy (provided that, (a) in the
event Tenant fails an inspection, or is denied a permit or approval, in
whole or in part because of a problem or defect in Landlord's Base Building
20
<PAGE>
Work, or a problem or defect regarding the Building that is Landlord's
responsibility under the terms of this Exhibit C, Landlord shall be
responsible for curing the problem(s) or defect(s) in question, to the
extent of Landlord's responsibility therefor; and (b) to the extent Tenant
encounters any such problem with Landlord's Base Building Work in the
course of performing Tenant's Work, or detects a defect or problem with the
Building as to which Landlord is responsible hereunder, or which Tenant has
the right to cause Landlord to remedy, Tenant agrees to give Landlord
prompt written notice thereof and an opportunity to remedy same, and if
Landlord fails to commence to remedy any such problem within three (3)
business days after Tenant's notice, and at all times thereafter to
prosecute such remedy with all due diligence, Tenant shall have thereafter
have the right to remedy such problem at Landlord's expense, and to the
extent the denial of such approval or passing inspection is in part due to
Landlord's fault and in part due to Tenants's fault, Tenant shall be
responsible only for the incremental additional cost of such remedy which
corresponds to, or is appropriately allocable to, that portion of the
problem as to which Tenant is rightfully responsible under this Exhibit C.
. Neither Landlord's review of the proposed plans and specifications nor
any oversight of Tenant's Work by Landlord's construction manager shall
constitute a warranty by Landlord regarding the fitness of the Approved
Plans for the intended uses of the Premises by Tenant, nor of the
compliance of the Approved Plans or any other aspect of Tenant's Work with
applicable Legal Requirements.
4. Change Orders. Tenant shall be allowed to make change orders to the
Approved Plans provided that (i) any such proposed change order shall be
submitted to Landlord for Landlord's consent, and Landlord shall have three
(3) business days after receipt of all documentation necessary for Landlord
to properly review such change order within which to review and either
approve or disapprove same (provided that, in the event Landlord does not
approve all items set forth in said proposed change order Landlord will
notify Tenant of the basis for its disapproval, and Landlord and Tenant
will work together expeditiously and in a commercially reasonable manner to
reach agreement on any such proposed change order), and (ii) Tenant shall
be obligated to pay any and all costs associated with such change order(s).
5. Payment of Costs.
(a) Except as set forth in subparagraph B.5(b), below, Tenant
shall be responsible for and shall pay when due all Costs associated with
the preparation of plans and the performance of Tenant's Work (including
any change orders thereto) incurred in accordance with this Exhibit C.
Provided Landlord advances the Tenant Improvement Allowance in accordance
with section B.5, any failure by Tenant to pay the Costs associated with
Tenant's Work on a timely basis so as to avoid the assertion of any
statutory and/or common law lien against the Premises, Buildings or Project
shall constitute a default by Tenant for all purposes of the Lease. Tenant
shall cause its contractor to commence construction of Tenant's Work
promptly and to perform such work diligently and in a good and workmanlike
manner. Except for any different notice or cure provisions specifically set
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forth herein. any violation of this Exhibit C by Tenant shall be subject to
Landlord's rights and remedies (and subject to any notice and cure rights
provided for) under the applicable default provisions of this Lease.
(b) In consideration of Tenant's fulfillment of all of its
obligations under this Exhibit C and the performance of all of its
financial and other obligations under the Lease, Landlord agrees to pay to
Tenant an allowance (the "Tenant Improvement Allowance") equal to Four
Million, Seventy Nine Thousand, Seven Hundred Thirty One and 50/100 Dollars
($4,079,731.50) to be applied toward actual Costs due and owing by Tenant
for design services associated with the preparation of the Approved Plans,
for the purchase, construction and installation of Tenant's Work, for the
cost of any signage approved by Landlord pursuant to the terms of the
Lease, for the costs of any telephone switches, security systems and
telephonic and data cabling within the Premises, and for costs of moving
and relocation; and, if and to the extent not used for the foregoing items,
the Tenant Improvement Allowance may be used by Tenant for the purchase of
systems furniture (which will be surrendered to Landlord as a part of the
Premises at the expiration of the term) and/or to the payment of (or as a
credit against) any Base Rent becoming due under the Lease. Landlord's
total financial obligation with respect to such design services, and the
purchase, construction, and installation of Tenant's Work or any other
improvements to the Premises (other than Landlord's Base Building Work and
any other items for which Landlord is responsible as expressly set forth
herein) shall be limited solely to the Tenant Improvement Allowance, and
Tenant shall be solely responsible for any and all such costs in excess of
the Tenant Improvement Allowance.
(c) Landlord and Tenant agree that portion of the Tenant
Improvement Allowance used to pay for work performed under the general
contract for Tenant's Work shall be payable on a percentage of completion
basis, as follows: Not more than once during each calendar month, between
the first (1st) day and the tenth (10th) day of such calendar month, Tenant
shall submit to Landlord a payment request, using AIA Form G701, seeking
payment of the Tenant Improvement Allowance (less the applicable holdback
amount specified below) in an amount which corresponds to those items of
Tenant's Work which have been completed, on a line-item basis in accordance
with AIA Form G701. Each such payment request shall be accompanied by all
(in the case of the final payment) or some of the following items (in the
case of an interim payment), as indicated:
(i) a certificate of Tenant's architect to Landlord and any
other party reasonably designated by Landlord (such as Landlord's
mortgagee, if any) specifying that the items for which Tenant is
seeking disbursement pursuant to AIA Form G701 have been performed
in accordance with the Approved Plans (and in any payment request
seeking final payment, such certificate shall include a
certification by the Tenant's architect that Tenant's Work as a
whole has been Substantially Completed in accordance with the
Approved Plans, and that all punch list items noted by the parties
have also been fully corrected);
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(ii) a copy of the final non-residential use permit or
certificate of use and occupancy (or its equivalent) issued to
Tenant by the applicable governmental authority with respect to
the entire Premises (final payment only);
(iii) a copy of complete as-built plans and specifications for
Tenant's Work (final payment only); and
(iv) a duly executed interim release of liens (each interim
payment) and a final release of liens (final payment), in the form
attached as Schedule C-5 hereto, executed by Tenant's general
contractor and any and all subcontractors and/or materialmen
supplying labor and/or materials in connection with Tenant's Work,
in form and substance satisfactory to Landlord, acknowledging
payment of the applicable amounts consistent with the AIA Form
G701 submitted (as to each interim payment) and in full (final
payment) for such labor and/or materials, and fully and forever
waiving any and all statutory and/or common law liens which might
otherwise be asserted by them against the Premises (or any portion
thereof), the Buildings or the Project in connection with Tenant's
Work , which in the case of any interim payment may be limited to
all work for which payment has previously been made, and which, in
the case of final payment, shall be an unconditional and unlimited
waiver of any and all statutory and/or common law liens which
might otherwise be asserted by them against the Premises (or any
portion thereof), the Buildings or the Project.
Landlord shall have no obligation to pay any interim installment or the
final installment of the Tenant Improvement Allowance to Tenant unless (and
not until twenty-one (21) days (interim payment) or thirty (30) days (final
payment) after) Landlord has received a payment request with all required
attachments properly supplied. Notwithstanding the foregoing to the
contrary, Landlord shall be obligated to disburse only ninety percent (90%)
of the amount requested by Tenant pursuant to any payment request for
Tenant Work up to the first fifty (50%) percent of the Tenant Improvement
Allowance, so as to establish a 10% holdback on the first half of Tenant's
Work; and such hold back shall be retained by Landlord until such time as
the following conditions have been satisfied: (A) such holdback amount
(less the punch-list holdback amount specified below) shall be released and
disbursed to Tenant or Tenant's contractor within twenty-one (21) days
after Landlord's receipt of (1) a certificate from Tenant's architect that
Tenant's Work has been substantially completed in accordance with the
Approved Plans, (2) the items described in clauses (i) - (iv) above as to
final payment, and (3) a valuation by Tenant's architect, certified to
Landlord, of the cost to correct all punch list items noted by Tenant and
Landlord in their joint inspection of Tenant's Work at the time of
Substantial Completion PROVIDED that a portion of the holdback amount which
otherwise would be so disbursed shall nevertheless continue to be retained
by Landlord, so that Landlord continues to hold back an amount equal to
200% of the cost to correct the punch list as certified by Tenant's
architect, and (B) the final portion of such holdback amount shall be
released within thirty (30) days after Landlord's receipt of a
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certification from Tenant's architect that all punch list items have been
satisfactorily corrected, accompanied by all of the items listed in clauses
(i)-(iv) above (to the extent not previously supplied to Landlord).
(d) In the case of disbursements sought for items which are
not part of Tenant's Work being performed by Tenant's general contractor
(such as amounts in remittance of invoices for systems furniture and
equipment incorporated within the Premises, moving expenses or other
similar items, etc.), any such items may be included by Tenant in each
monthly payment request, together with evidence of delivery of the property
in question to the Premises, or the performance of the service for which
such payment is sought, and Landlord agrees to pay the invoices for such
items within twenty-one (21) days after provision of such invoices with the
accompanying substantiation; and subject to Landlord's approval, which
shall not be unreasonably withheld, such disbursements may include deposits
made or required to be made by Tenant for such items, not to exceed
$150,000.00 in the aggregate.
6. Building Standard Finish. Landlord acknowledges that Tenant intends
to use and incorporate certain existing improvements within the Premises
(though it shall not be obligated to do so) in the performance of Tenant's
Work, and Landlord hereby consents to such use (provided that Landlord
makes no warranty to Tenant regarding the condition of any such
improvements, other than Landlord's agreement pursuant to the provisions of
this Exhibit C to complete Landlord's Base Building Work in a good and
workmanlike manner). Except as aforesaid, and unless the Approved Plans
specifically state otherwise, Tenant's Work shall utilize new materials of
substantially equivalent quality to those presently used within the
Premises. Without limitation, Tenant shall have the right to use or dispose
of all equipment currently within the cafeteria area in Building E-2.
7. Miscellaneous Provisions Applicable to Tenant's Work.
(a) Tenant agrees that Landlord will have the right to inspect
the performance of Tenant's Work by Tenant's contractor(s) and
subcontractor(s), through Landlord's construction manager, and Tenant
agrees to cooperate with Landlord to facilitate such inspection, including
without limitation: (A) notifying Landlord and such construction manager of
all scheduled construction meetings between Tenant and its general
contractor, which Tenant agrees to conduct on not less than a weekly basis;
(B) providing to Landlord copies of all governmental inspection reports,
promptly after the same have been received by Tenant; (C) responding
promptly to all Landlord requests for information, or other inquiries
regarding the progress of Tenant's Work; (D) notifying Landlord promptly of
any item or matter which Tenant asserts involves any incomplete item of
Landlord's Base Building Work, or any claimed design or construction defect
with respect thereto; (E) notifying Landlord promptly of any changes made
in the Critical Path, or any other schedules prepared in connection with,
or reflecting the timing of, the completion of Tenant's Work; and (F)
permitting Landlord's construction manager free and clear access to the
Premises
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during the construction period, and during any governmental inspections of
Tenant's Work, as necessary for Landlord's construction manager to perform
its inspections of Tenant's Work and to participate in government
inspection. Landlord shall use reasonable efforts not to interfere
unreasonably with the performance of Tenant's Work during the course of any
inspections by Landlord or Landlord's construction manager pursuant to this
Paragraph B.7(a)
(b) In the performance of Tenant's Work in accordance with
this Lease, Tenant shall cause its contractor to use reasonable and
diligent efforts not to interfere unreasonably with Landlord's Base
Building Work.
(c) Tenant's contractor shall keep all construction areas
reasonably clean and free of trash and debris, and shall police the
activities of its contractors, subcontractors and their respective
employees with regard to keeping the Buildings and Project clean. Tenant's
construction contract shall indemnify Tenant and Landlord from damages,
losses and expenses associated with the acts and omissions of Tenant's
contractor, its agents, employees and subcontractors, and shall otherwise
be subject to Landlord's prior reasonable approval.
(d) Tenant shall provide to Landlord copies of all
applications for permits, copies of all governmental inspection reports
and/or certificates, and any and all notices or violations communicated to
Tenant or its contractors by applicable governmental authorities, promptly
upon receipt and/or submission thereof, as the case may be. Tenant agrees
to comply (or to cause its contractors to comply) with all applicable
federal, state and local laws, regulations and ordinances in the
performance of Tenant's Work, and to promptly rectify any violations of
such laws caused by the acts or omission of Tenant, its employees, agents
and/or contractors, and Tenant shall be responsible for any non-compliance
by Tenant or its agents, employees and contractors. In the event of any
violation of this Exhibit C, which continues for a period of ten (10) days
after written notice from Landlord to Tenant identifying the violation with
reasonable specificity (it being agreed that non-material variations from
the Approved Plans shall not constitute a violation of this Exhibit C),
Landlord shall have the right, in addition to any other remedies provided
for in this Lease due to such default by Tenant, to cause Tenant and
Tenant's contractor to stop Tenant's Work, and Landlord may, in such event,
seek any and all appropriate legal and equitable relief in order to enforce
the provisions of this Exhibit C.
(e) Without limiting the generality or applicability of
Paragraph B.7(a), above, or of any other applicable provision of this
Exhibit C or the Lease, Tenant agrees that the following provisions shall
apply to the performance of Tenant's Work:
(i) In performing any portions of
Tenant's Work which involve construction work upon the exterior
portions of the Buildings, Tenant agrees that it shall, at
Tenant's sole expense, restore all areas of the Building's
exterior,
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including without limitation all adjacent planting areas,
sidewalks and parking areas, affected by the execution of Tenant's
Work, to their original condition upon the completion of such
portions of Tenant's Work.
(ii) Tenant shall protect and restore
all work areas of the Buildings (including without limitation any
portions of the common areas of the Buildings) required for access
to the Premises as part of Tenant's Work, or otherwise utilized,
affected or disrupted in the performance of Tenant's Work,
including, but not limited to, the Buildings roofs, common
corridor floors, walls, and ceilings, floor penetrations and chase
wall penetrations. Tenant shall use only qualified roofing
contractors for penetrations and reflashing of affected roof areas
(if any), which roofing contractors shall be subject to Landlord's
approval, and Tenant and such contractor shall warrant to Landlord
the integrity of any such roof or exterior penetrations and that
the same are free from leakage and are otherwise properly
waterproof. Tenant shall further ensure (and warrant to Landlord)
that all floor penetrations performed by Tenant are properly
fire-stopped, in accordance with applicable Legal Requirements and
prudent construction practices.
(iv) Tenant and its contractor
performing Tenant's Work shall provide copies of warranties for
Tenant's Work and the materials and equipment which are
incorporated into the Buildings and Premises in connection
therewith, as well as provide to Landlord copies of all operating
and maintenance manuals for all equipment and materials
incorporated into the Buildings and/or Premises as part of
Tenant's Work. Tenant shall either assign to Landlord, or enforce
on Landlord's behalf, all such warranties to the extent repairs
and/or maintenance on warranted items would be covered by such
warranties. Without limitation, all aspects of Tenant's Work shall
be warranted to be free from defects in design and workmanship for
a period of not less than one (1) year from substantial completion
of construction.
The inclusion of provisions in this Paragraph 7(e) which impose obligations
upon Tenant and/or Tenant's contractor with regard to the performance of
Tenant's Work outside of the Premises are intended only to apply to those
portions of Tenant's Work (if any) which are approved by Landlord in the
Approved Plans; and the inclusion of such provisions shall not be construed
to impose upon Landlord any obligation to approve work proposed by Tenant
within (or affecting) areas outside of the Premises, but rather shall apply
solely to the extent any such work is expressly approved by Landlord as
part of the Approved Plans.
(f) Landlord and Tenant shall be each notified by the other
not less than three (3) business days in advance of, and shall have the
right to participate in, any inspection of the work being performed by the
other party and its contractor in which a punch list for such work is
intended to be prepared, and shall further have the right to require the
inclusion of any bona fide punch list items on such punch list.
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8. First-Class Lien-Free Completion. Except as specified above or in
the Approved Plans, Tenant shall use only new materials (as specified in
the Approved Plans, subject to minor deviations due to unavailability of
any specified materials) in connection with Tenant's Work. To the extent
feasible, the Approved Plans will identify those areas where Tenant
contemplates the incorporation of existing improvements within the
Premises. Tenant's Work shall be paid for in full and in a timely fashion
by Tenant, and shall be performed in a lien-free, first-class, and good and
workmanlike manner, and in accordance with applicable codes and
requirements. Tenant's architect shall be responsible for ensuring that the
Approved Plans comply with the requirements of the Americans with
Disabilities Act ("ADA") and all other applicable Legal Requirements
(provided this sentence shall not be construed to shift to Tenant any
obligation to comply with Legal Requirements which, under the terms of this
Exhibit C, is Landlord's responsibility.
9. Bonding. All contractors and subcontractors performing work on
behalf of either party within the Premises shall be licensed to do business
in the Commonwealth of Virginia. In addition, Tenant's general contractor
shall either be pre-approved, or subject to Landlord's reasonable approval,
and shall be bondable.
10. Insurance Requirements.
(a) Each party shall secure, pay for, and maintain, or cause
its contractors and subcontractors to secure, pay for, and maintain, during
the continuance of construction and fixturing work within the Premises, all
of the insurance policies required in the amounts as set forth herein,
together with such insurance as may from time to time be required by city,
county, state or federal laws, codes, regulations or authorities. Such work
(including Landlord's Base Building Work and Tenant's Work) may not
commence until all required insurance has been obtained, and, if the other
party requests, until certificates of such insurance have been delivered to
the other party. Tenant's insurance policies shall name the Landlord and
Landlord's mortgagee(s) as additional insureds, and shall provide that no
change or cancellation of such insurance coverage shall be undertaken
without thirty (30) days' prior written notice to Landlord. Landlord shall
have the right to require Tenant, and Tenant shall have the duty, to stop
work in the Premises immediately if any of the coverage Tenant is required
to carry herein lapses during the course of the work, in which event
Tenant's Work may not be resumed until the required insurance is obtained
and satisfactory evidence of same is provided to Landlord.
(b) In the event a party employs a contractor or subcontractor
to perform all or part of the work to be performed by such party pursuant
hereto, such party shall purchase, or cause its general contractor to
carry, General Contractor's Required Minimum Coverages and Limits of
Liability as follows:
(i) With respect to Tenant's Work, Builder's Risk
Insurance, naming Landlord as an additional insured and loss
payee, in an amount consistent
27
<PAGE>
with the scope of Tenant's Work and otherwise reasonably
satisfactory to Landlord.
(ii) Worker's Compensation, as required by state law,
and Employer's Liability Insurance with a limit of not less than
$2,000,000 (or more if required by the law of the State) and any
insurance required by any Employee Benefit Act or similar statute
applicable where the work is to be performed, as will protect the
contractor and subcontractors from any and all liability under the
aforementioned act(s) or similar statute.
(iii) Comprehensive General Liability Insurance
(including Contractor's Protective Liability) in an amount not
less than $2,000,000 per occurrence whether involving personal
injury liability (or death resulting therefrom) or property damage
liability or a combination thereof (combined single limit
coverage) with a minimum aggregate limit of $2,000,000. Such
insurance shall insure such general contractor against any and all
claims for personal injury, death, and damage to the property of
others arising from its operations under its contract, whether
such operations are performed by Tenant's contractors,
subcontractors, or sub-subcontractors, or by anyone directly or
indirectly employed by any of them.
(iv) Comprehensive Automotive Liability Insurance,
for the ownership, maintenance, or operation of any automotive
equipment, whether owned, leased, or otherwise held, including
employer's non-ownership and hired car liability endorsements, in
an amount not less than $2,000,000 per occurrence and $2,000,000
aggregate, combined single limit bodily injury and property damage
liability.
(c) Such insurance policies set forth in (i) - (iv), above,
shall insure such general contractor against any and all claims for bodily
injury, including death resulting therefrom, and damage to the property of
others arising from its operations under its contract in connection with
construction of the Premises, whether performed by such general contractor,
or its subcontractors, or sub-subcontractors, or by anyone directly or
indirectly employed by any of them.
(d) The insurance required under this Exhibit C shall be in
addition to any and all insurance required to be procured by the parties
pursuant to the terms of the Lease.
C. Assurances Regarding Landlord's Performance and Additional Remedies for
Non- Performance.
1. The parties acknowledge that the Project is currently
encumbered by two deeds of trust, the first securing a purchase money
promissory note in favor of the party which sold the Property to Landlord,
H/P Companies, LC (the "H/P Trust"), and the second securing a convertible
shared appreciation purchase money mortgage in favor of South
28
<PAGE>
Charles Investment Corporation, AB Ashley Creek Limited Partnership and TC
Midatlantic, LLC, as Co-Lenders (the "Co-Lender Trust"). The parties
further acknowledge that, upon execution of this Lease, Landlord intends to
obtain a Qualifying Loan for the Project from an as yet undetermined third
party financial institution or third party capital source.
2. Landlord acknowledges that Tenant's willingness to enter
into this Lease is based, inter alia, on the Tenant's need to take
possession of all or a substantial portion of the Premises for business
operation purposes on or before April 1, 1997, as well as Landlord's
agreement to provide certain assurances to Tenant regarding its ability to
the fund the construction and allowance requirements of this Lease, and to
otherwise perform its construction obligations hereunder. Accordingly,
Landlord and Tenant agree:
(a) In the event Landlord has not obtained a
Qualifying Loan on or before December 1, 1996, Tenant shall have
the right (but not the obligation) at any time thereafter until
Landlord obtains a Qualifying Loan, to request in writing that
Landlord place into escrow (the "Escrow"), in accordance with
Section C.2(b), below, a sum equal to the LESSER of (i) Two
Million Dollars ($2,000,000), or (ii) the balance of the Tenant
Improvement Allowance which Landlord has not, as of the date of
Tenant's written request, funded pursuant to Section A.5, above
(hereinafter, the "Escrow Amount"), which Escrow is intended as
security for Landlord's obligation to fund the Tenant Improvement
Allowance, PROVIDED that if Tenant makes such request, Tenant
shall be required to pay (1) a fee to Landlord equal to Two
Hundred Seventy Seven and 78/100 Dollars ($277.78) for each day
that all or a portion of the Escrow Amount remains in Escrow, up
to a maximum fee of Twenty Five Thousand Dollars ($25,000), and
(2) to the extent charged by the Escrow Agent, all escrow fees
charged by the Escrow Agent, as and when invoiced by the Escrow
Agent. If Tenant makes such request in accordance with this
Section C.2(a), Landlord agrees to place the Escrow Amount in
Escrow pursuant to Section C.2(b), below, within five (5) business
days after Landlord's receipt of Tenant's written request, upon
which the Tenant Improvement Allowance shall be deemed reduced by
the amount of $25,000, representing the prepayment of the maximum
fee permissible under this Section C.2(a). The Escrow Amount (less
any portion thereof which is disbursed pursuant to Section C.2(b)
or C.2(c), below) shall be retained in Escrow until the earliest
to occur of (i) the date upon which Landlord obtains a Qualifying
Loan (as evidenced by the recordation of a deed of trust or
mortgage for such Qualifying Loan), (ii) the date upon which the
Tenant Improvement Allowance has been funded in full by Landlord
(which, as set forth in Sections C.2(b) and C.2(c), below, may
include funding made through disbursements of the Escrow Amount),
or (iii) any earlier date upon which Tenant approves the release
by the Escrow Agent of any remaining balance in Escrow to
Landlord; and upon Landlord's delivery of a certification to the
Escrow Agent and Tenant, under penalties of perjury, that any of
the foregoing three occurrences has taken place, Landlord shall
have the right to cause the Escrow Agent to disburse the remaining
balance of the Escrow
29
<PAGE>
Amount to Landlord. If the Escrow Amount is released from escrow
less than ninety (90) days after the date it is first put into
escrow, Landlord agrees to restore to the Tenant Improvement
Allowance the unearned portion of the fee described above, based
on the fee rate of Two Hundred Seventy Seven and 78/100 Dollars
($277.78), calculated by multiplying such per diem rate by the
difference between ninety (90) and the total number of days that
all or a portion of the Escrow Amount remained in Escrow, which
refund shall be made within thirty (30) days after the Escrow
Amount was released from Escrow.
(b) The Escrow Amount shall be placed into an interest-bearing
escrow account with Commercial Settlements, Inc. of 1413 K Street,
N.W., 12th Floor, Washington, D.C. 20005 (Attention: Stuart Levin,
Vice President) (the "Escrow Agent"), to be held and disbursed in
accordance with this Section C.2. The Escrow Amount may be
invested (for the sole benefit of Landlord) in overnight
repurchase instruments, or such other short term overnight
investments as Landlord may designate in its discretion. Tenant
agrees that Landlord shall have the absolute right to require the
Escrow Agent to disburse any portion of the Escrow Amount
necessary to fund a payment request made by Tenant pursuant to
Section A.5, above, provided that Landlord certifies to Tenant and
the Escrow Agent, under penalty of perjury, that the entire
portion of the Tenant Improvement Allowance exclusive of the
Escrow Amount has been funded by Landlord prior to the date of
such disbursement (i.e., the Escrow Amount shall represent the
last portion of the Tenant Improvement Allowance to be disbursed).
(c) Upon the occurrence of any Landlord's Construction Default
with regard to Landlord's completion of Landlord's Base Building
Work, Tenant shall have the right to exercise self-help, that is,
to perform the obligations of Landlord with respect to Landlord's
Base Building Work which Landlord has failed to perform in
accordance with the applicable specifications for such work, and,
upon such performance by Tenant, Tenant shall have the right to be
reimbursed for its reasonable expenses associated with the
exercise of such self-help right, plus interest at the Default
Rate from the date such expenses were paid by Tenant until the
date the same are reimbursed by Landlord or by disbursement of the
applicable portion of the Escrow Amount. If Landlord fails to make
such reimbursement to Tenant within ten (10) days after Tenant's
written demand, Tenant shall have the right (i) to draw upon the
Escrow Amount in satisfaction of such reimbursement, until
reimbursed in full, and/or (ii) to deduct any remaining
reimbursement amount owed to Tenant from the next payments of Base
Rent and additional rent becoming due under the Lease. In order to
obtain any reimbursement out of the Escrow Amount pursuant to this
Section C.2(c), Tenant shall be required to submit a written
escrow disbursement request (i) setting forth (in an AIA Form
G701) the amount of the disbursement requested, (ii) certifying
under penalty of perjury to Landlord and the Escrow Agent (A) that
a Landlord's Construction Default has occurred pursuant to
30
<PAGE>
this Lease and that all applicable cure periods and cure rights
have expired without such failure having been cured by Landlord,
(B) that Tenant has expended the amount requested to be reimbursed
in accordance with the provisions of this Section C.2 for the
items reflected within the Form G701 accompanying such
disbursement request, and (C) that the work for which Tenant is
seeking reimbursement has been performed properly by Tenant or its
contractor in accordance with all specifications applicable to
such work, and (iii) attaching a duly executed release of liens
executed by the contractor and any and all subcontractors and/or
materialmen supplying labor and/or materials in connection with
such work, in form satisfactory to the Escrow Agent to issue a
bring-to-date mechanics lien endorsement, or otherwise insure over
such liens, under the mortgagee's title insurance policy issued in
favor of the Co-Lenders under the Co-Lender's Trust, acknowledging
payment of the applicable amounts for such labor and/or materials,
and fully and forever waiving any and all statutory and/or common
law liens which might otherwise be asserted by them against the
Premises (or any portion thereof), the Buildings or the Project,
which in the case of any interim payment may be limited to all
work for which payment has previously been made, and which, in the
case of final payment, shall be an unconditional and unlimited
waiver of any and all statutory and/or common law liens which
might otherwise be asserted by them against the Premises (or any
portion thereof), the Buildings or the Project.
(d) Upon the occurrence of any Landlord's Construction Default
with regard to Landlord failure to make a disbursement of the
Tenant Improvement Allowance after submission of a proper payment
request and in the absence of a bona fide dispute, Tenant shall
have the right to disbursement from the Escrow Amount in an amount
equal to the amount requested to be paid by Tenant pursuant to its
undisputed payment request, plus interest at the Default Rate
accruing from the date Tenant paid its contractor or supplier(s)
any sum properly included within such payment request (but not
earlier than the date Landlord would have been required to
disburse such amount pursuant to such payment request under
Section B.5, above), until the date such amount is in fact
reimbursed, and/or to deduct any portion of the Tenant Improvement
Allowance which was wrongfully not disbursed to Tenant (plus
accrued but unpaid interest at the Default Rate, as aforesaid)
from the next payments of Base Rent and additional rent becoming
due under the Lease (but solely to the extent not previously
disbursed out of the Escrow Amount) until repaid in full. In order
to obtain any reimbursement out of the Escrow Amount pursuant to
this Section C.2(d), Tenant shall be required to submit a written
escrow disbursement request (i) setting forth the amount of the
disbursement requested, (ii) certifying under penalty of perjury
to Landlord and the Escrow Agent (A) that a Landlord's
Construction Default has occurred pursuant to this Lease, and that
all applicable cure periods and cure rights have expired without
such failure having been cured by Landlord, and (B) that Tenant is
entitled to a disbursement of the Tenant Improvement Allowance
pursuant to Section B.5, above by virtue of having made
31
<PAGE>
a payment request in accordance therewith which has not been
disputed in writing by Landlord, and (iii) attaching a true copy
of the payment request submitted pursuant to Section B.5,
including the original lien waivers which were required to be
attached thereto.
(e) Within five (5) business days after the submission of a
proper disbursement request made either by Landlord or by Tenant,
accompanied by all appropriate certifications and attachments, the
Escrow Agent shall be fully authorized to disburse the amount
requested in accordance therewith.
(f) In the event of any dispute between Landlord and Tenant
regarding the disbursement of the Escrow Amount, or in the event
Escrow Agent shall receive conflicting demands or instructions
with respect thereto, Escrow Agent shall withhold such
disbursement until such dispute is resolved, in which case Escrow
Agent shall promptly notify the parties that it is unwilling to
make any disbursement until Landlord and Tenant have arbitrated
all matters in dispute on an expedited basis in accordance with
Section 49 of the Lease, and the arbitrator has ordered Escrow
Agent to make a distribution in connection therewith. Landlord and
Tenant hereby consent to the jurisdiction of such arbitrator in
connection with any such dispute, and to the retention of such
sums by the Escrow Agent until the final resolution of any such
dispute. Escrow Agent shall be entitled to reasonable compensation
for its services rendered pursuant hereto, which shall be paid by
Tenant. Escrow Agent shall not be liable for any damage, liability
or loss arising out of or in connection with the services rendered
by Escrow Agent pursuant hereto, except for any damage, liability
or loss resulting from the willful or negligent conduct of the
Escrow Agent or any of its officers or employees. The instructions
contained herein may not be modified, amended or altered in any
way except by a writing (which may be in counterpart copies)
signed by both Landlord and Tenant, and acknowledged by Escrow
Agent. Landlord and Tenant reserve the right, at any time and from
time to time, to substitute a new escrow agent in place of Escrow
Agent.
Nothing set forth in this Section C.2 shall be construed to limit Tenant's
other rights and remedies under this Lease, or existing at law or in equity
(except as the same may otherwise be limited by this Lease) in the event of
any Landlord's Construction Default.
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<PAGE>
SCHEDULE C-1
------------
LANDLORD'S BASE BUILDING WORK
ITEMS TO BE COMPLETED PER LEGAL REQUIREMENTS
The following items of Landlord's Base Building Work are required to be
performed by Landlord solely in order to bring the affected component of
the Base Building Improvements into compliance with Legal Requirements
applicable thereto, and substantial completion shall be measured by final
sign-off of applicable governmental authorities:
1. Upgrading of Elevator Controls and Control Panels:
-------------------------------------------------
o Solely to comply with applicable ADA requirements/Legal Requirements.
2. *HVAC System:
------------
o Bringing all components and overall systems into compliance with
current outside air requirements.
3. Electrical Systems:
------------------
o Relocate rooftop electrical
o Install new fire pump feeder
o Resize emergency tap @ E-2 switchboard
o Bring Buildings to full code compliance (except all items which are
Tenant's responsibility under Exhibit C, including exit lights and
signs)
4. Fire Sensing and Alarms:
-----------------------
o Install new, fully integrated fire alarm systems with battery backup,
per code
o Test and replace smoke detectors, as required
5. Accessibility Compliance (Per ADA):
----------------------------------
o Restripe for eight (8) additional HCP spaces with signs
o Replace water coolers
o Replace one urinal at each men's restroom
o Relocate fire pull stations and pull boxes
o Tenant to be responsible for all Allowance Items, including common area
hardware and signs
6. Underground Storage Tank:
------------------------
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<PAGE>
o Remove and replace existing tank to meet federal, state and local
Environmental Laws. The replacement tank will be above-ground, with
capacity sufficient to service the Landlord's generator per Section 4,
above. Any upgrade of the above-ground tank to satisfy any additional
requirements of Tenant's generator shall be subject to Landlord's
reasonable approval, and the incremental cost thereof shall be paid by
Tenant.
7. Asbestos Removal
----------------
o Removal of all asbestos containing materials (ACMs) other than ACMs as
existing in the roof flashing
8. Parking Areas
-------------
o Fire lane designation (painting curbs and installation of signs per
County requirements)
9. Additional Provisions
---------------------
o Tenant specifically agrees that, except as provided in Schedule C-3,
Landlord will not be required to remove lead paint within the
mechanical room equipment, floors and hand rails (both on roof and
within the Buildings).
o Tenant specifically agrees that the cafeteria area is being delivered
in "as-is" condition, and that Tenant will be solely responsible for
bringing the cafeteria area, equipment, venting, fire safety systems
and other components into compliance with Legal Requirements (except
for the portion thereof, if any, which constitutes Base Building
Improvements, as to which Landlord will be required to bring same into
compliance with Legal Requirements to the extent they would be
applicable if the same were integrated with General Office Areas, and
the items in question are not Allowance Items for which Tenant
independently has responsibility).
o Tenant acknowledges that demolition of fire exit corridors in Buildings
E-1, E-2 and E-3 has been performed by Landlord prior to the date
hereof, and that, notwithstanding Landlord's obligation to meet Legal
Requirements applicable to the Base Building Improvements as set forth
herein (and limited hereby), Tenant will pay for the design and
construction of rated exit corridors as part of Tenant's Work.
* To be completed by November 1, 1996
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<PAGE>
SCHEDULE C-2
------------
LANDLORD'S BASE BUILDING WORK
ITEMS TO BE COMPLETED PER SPECIFICATIONS
The following items of Landlord's Base Building Work are required to be
performed by Landlord in accordance with the specification identified below, or
in accordance with drawings or specifications to be agreed upon in the future by
Landlord and Tenant in accordance with the standard identified below. To the
extent the item in question is required to meet one or more specific Legal
Requirements, Landlord shall be responsible for causing the item to be completed
in accordance with such Legal Requirements, except where the compliance issue
concerns items which are Allowance Items for which Tenant independently has
responsibility for compliance with Legal Requirements:
1. Landscaping Upgrading:
---------------------
o Landlord will submit a landscaping plan for Tenant's reasonable
approval. Landlord estimates that the expense it will incur to upgrade
existing landscaping will be approximately $20,000.00.
o Landlord will be responsible for ensuring that the exterior irrigation
system is functional.
2. Parking Lot Expansion Joint Replacement:
---------------------------------------
o Landlord will provide Tenant with a technical specification for the
replacement joints. The replacement expansion joints will be
substantially comparable to the originally designed expansion joints.
3. Seal Coating and Restriping the Parking Lot:
-------------------------------------------
o An exact coating ratio specification will be supplied, consistent with
industry standards.
o Landlord will repair and repatch the parking lot as needed prior to
resealing, and will restripe the parking lot after resealing is
completed.
4. *Roofing and roof components:
----------------------------
o Landlord will replace all roofs with a minimum ten (10) year warranty
watertight roof. An exact specification consistent with the foregoing
will be provided within a reasonable time after Lease execution.
o Repair issues are addressed in Schedule C-3.
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<PAGE>
o Landlord will install roof with five (5) roof penetrations sized and
located to Tenant's reasonable specification (to be designated by
Tenant prior to September 1, 1996) -- two (2) in Building E-1, two (2)
in Building E-3, and one (1) in Building E-2.
5. Caulking:
--------
o Landlord and Tenant will agree on a specification for the type of caulk
to be used, consistent with the overall quality of the Buildings.
Otherwise covered by Schedule C-3.
6. Glass Replacement:
-----------------
o Landlord to replace broken and spandrel windows to match existing
windows. This replacement will encompass replacement of affected
mullions, if necessary.
7. Patch and Paint all Base Building Doors:
---------------------------------------
o Landlord will patch and paint (as opposed to replace) all doors which
are part of the Base Building Improvements (i.e., mechanical rooms,
electrical and telephone closets, etc.) to "like new" condition.
8. Vertical Circulation:
--------------------
o Landlord will replace elevator controls and control panels to meet ADA
standards and applicable Legal Requirements.
o Landlord will repair and service elevators -- replacing all components
which are not functioning, consistent with the existing design and
configuration (as opposed to upgrading). Replacement or upgrading of
elevator cab finishes will be Tenant's sole responsibility.
o Landlord shall make no upgrades or modifications to the Building
stairwells, other than life safety and fire safety improvements solely
within the stairwells themselves in order to meet applicable Legal
Requirements.
9. Energy Management System:
------------------------
o Landlord will provide a precise equipment specification within a
reasonable time period after Lease execution -- to handle all Base
Building mechanical systems, pumps, chillers, air handling units and
compressors (exclusive of VAV system, which will be Tenant's option).
o Energy Management System will NOT include monitoring of electrical
systems, hot water systems.
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<PAGE>
10. Generator:
---------
o A precise equipment specification will be agreed upon within a
reasonable time after Lease execution -- adequate to meet Legal
Requirements for backup power supply to three (3) fully sprinklered and
occupied general office use buildings. If the existing generator
satisfies this specification, Landlord will have the right to utilize
the existing generator. In such case, Landlord shall provide Tenant
with a credit in an amount equal to $33,000.00 less the amount expended
by Landlord to satisfy the Legal Requirements as set forth above. Such
credit may be used by Tenant only for (a) the upgrade of the existing
generator such that the existing generator shall satisfy any capacity
requirements over and above the Legal Requirements for backup power
supply for three (3) fully sprinklered and occupied general office use
buildings, or (b) the acquisition of any other backup power system for
the Project, which will remain the property of Landlord after the
termination of this Lease. In the event the existing generator is not
suitable to satisfy the Legal Requirements as set forth above, Landlord
shall obtain a new generator adequate to meet Legal Requirements for
backup power supply to three (3) fully sprinklered and occupied general
office use buildings. In such event, Tenant shall have the right to
fund any incremental increase in the cost of such new generator above
the cost to be incurred by Landlord to obtain sufficient backup power
supply for three (3) fully sprinklered and occupied general office use
buildings, such that Tenant shall bear the cost of any additional
capacity requirements of Tenant in addition thereto. In such event,
Tenant shall also be entitled to the use of the existing generator,
provided that the repair, operation and/or future replacement thereof
shall at all times be at the sole cost and expense of Tenant (but
Tenant shall be under no obligation to so maintain, repair, operate or
replace the existing generator, and in all events the ownership thereof
shall remain with Landlord at the termination of the Lease).
11. Sprinkler:
---------
o Installation of full sprinkler system into all three Buildings,
including mains and branches to all tenant areas. Mains and branches
will be installed (but not "final") prior to November 1, 1996.
o Landlord will furnish and install 1,046 concealed sprinkler heads, and
will include a price from its sprinkler subcontractor for turning down
1,046 heads (and provide Tenant with the same unit cost for furnishing
and installing sprinkler heads in excess of the 1,046 to be furnished
and installed by Landlord). Landlord's sprinkler subcontractor will
perform such work in accordance with Tenant's Approved Plans, and
Tenant shall be responsible for the cost of furnishing and installing
all sprinkler heads in excess of the 1,046 to be provided by Landlord.
Mains and branches will be installed (but not "final") prior to
November 1, 1996.
37
<PAGE>
12. Window Penetrations and Installation:
------------------------------------
o Landlord to install sixty (60) linear feet of 3'0" tall window
penetrations, located on the south elevation of Building E-3 (lower
level). Windows to be furnished and installed, and mini-blind window
treatments therefore to be furnished and installed by Landlord at
Landlord's expense, substantially consistent with existing windows in
Building.
13. HVAC System.
-----------
o Replace E-2 and E-3 cooling towers with cooling towers with capacity to
meet code requirements or with substantially identical capacity to the
existing cooling towers, whichever is greater.
* To be completed by November 1, 1996
38
<PAGE>
SCHEDULE C-3
------------
LANDLORD'S BASE BUILDING WORK
REPAIR ITEMS TO BE COMPLETED
The following items of Landlord's Base Building Work are required to be
performed by Landlord in order (i) to restore the items or components noted, or
as needed in generally described areas, to functioning condition, consistent
with the intended functioning condition which existed before such component
became non-functioning (and in interpreting the foregoing repair standard,
Landlord agrees that it is intended that each item or component being repaired
be restored to good working condition, with a reasonable useful life, consistent
with a properly functioning item or component of similar age and type to the
item or component being repaired, and not simply to a working condition which
will require additional repair or replacement within an unusually short period
after such item or component is put back into service, provided Landlord is not
guaranteeing the precise life expectancy of any item Landlord is agreeing to
repair under this Schedule C-3), or (ii) to bring the affected area of the Base
Building Improvements, as needed, into a condition consistent with that of a
Class B+ quality building, such as Oakwood Plaza and Greenwood Plaza. To the
extent the repair items identified are required to be repaired in compliance
with certain Legal Requirements, Landlord will be responsible for such
compliance (except as to Allowance Items, or as necessary to be integrated with
Specialized Areas). Substantial completion shall be measured by final sign-off
of applicable governmental authorities, if applicable, and meeting the
functionality and comparability to Class B+ standards set forth above:
1. SITEWORK:
--------
o Seal cracks at bituminous paving
o Top coat bituminous, concrete surfaces @ differential settlement
o Grout cracked concrete slabs, parking deck
o Patch concrete curbing
o Recast broken walks at trip hazards
o Reset brick edging at walkways
o Reset brick pavers at entry
o Repair curb inlet
o Repair downspout at parking deck
o Point-up and repair brick @ ramps
o Replace steel nosings at parking deck stair
o Repair light pole base
2. STRUCTURAL ELEMENTS:
-------------------
Prep and repaint steel & Parking deck
39
<PAGE>
3. ROOFING AND ROOF COMPONENTS:
---------------------------
o BUILDING E-1
Repair/reset and repaint steel access ladder
o BUILDING E-2
Prep and recoat structural steel at penthouse
o BUILDING E-3
Prep and recoat structural steel at penthouse
4. EXTERIOR DOORS AND WINDOWS:
--------------------------
o Subject to caulk specification per Schedule C-2, Landlord to caulk
windows, doors and expansion joints in bricks, as needed
o Window cleaning
5. EXTERIOR WALL SYSTEMS:
---------------------
o Repair and point-up brick
o Clean brick
o Clean and repaint exterior soffits
6. INTERIOR FINISHES:
-----------------
o Replace gypsum board at water damaged janitors closets
o Refinish damaged doors
7. VERTICAL CIRCULATION:
--------------------
o Repair and service elevators
o Paint underside of steel pan egress stairs
8. PLUMBING:
--------
o Repair flush valves
o Repair water heater
o Hot water tanks repaired or replaced
9. *HVAC SYSTEMS:
-------------
o Start up all systems
o Existing deficiencies corrected
40
<PAGE>
o Chemically clean all systems
o Repair roof top units, E-1
o Repair all VAV boxes
o Repair chiller, E-1
o Remove abandoned piping at loading dock
o Replace cooling tower spring isolators
o Rebuild compressor motors, new belts, oil etc.
o Repair fusible link skylights
o Install corrosion protection system @ all hydronics
10. ELECTRICAL SYSTEMS:
------------------
o Repair or replace all missing or damaged florescent light fixtures at
Common Areas.
11. DEMOLITION:
-----------
o All ceilings, interior partitions (other than perimeter partitions), and
floor coverings will be removed.
o Interior perimeter partitions will not be removed.
o Exterior perimeter diffusers will be saved and stocked.
o Interior Diffusers will be removed.
o Air handling flex ducts will not be removed.
o Lights will be stocked for Tenant re-use (stored in a single location on
each floor).
o The pre-action sprinkler system will not be removed.
o Subject to Landlord's obligation to cause Base Building Improvements
within this area to meet Legal Requirements applicable to integration with
General Office use, the cafeteria area will not be modified or demolished.
o All exposed voice/data cabling will be removed.
o All branch circuits to be removed and terminated to the LESSER point of
(i) the originating panel board, or (ii) the applicable junction box.
o All rated enclosures will be patched.
o Drywall on Building E-3 lower level to be removed.
12. ADDITIONAL ITEMS/MISCELLANEOUS:
------------------------------
o Landlord to ensure that the exterior irrigation system is functional.
o Landlord to replace damaged or missing blinds throughout, to match
existing.
o Landlord to remove graffiti from parking deck walls.
o Landlord to unclog parking deck drains.
o Landlord to repair or replace perimeter insulation where the same is
missing or in disrepair, limited to areas where the insulation is exposed
(i.e., not covered over by existing wall) and is in need of repair or
replacement.
o Landlord to patch/repair all fire rated assemblies.
41
<PAGE>
o Landlord to flash brick floor at the entrance to Building E-1.
o Landlord to ensure that the Base Building Improvements are watertight.
o Applicable components of Landlord's Base Building Work (i.e, new
construction) shall have a minimum one (1) year construction warranty.
* To be completed by November 1, 1996
42
<PAGE>
SCHEDULE C-4
VIRGINIA
--------
WAIVER OF LIENS
The undersigned, being a party to the construction of certain
improvements being made upon real estate owned by _________________________,
situated in the state of Virginia and generally described as follows:
PROJECT: ______________________________ TOTAL COMPLETED TO DATE ___________
______________________________ LESS RETENTION ___________
LABOR OR MATERIALS FURNISHED: ___________
_______________________________________ LESS PREVIOUS PAYMENTS ___________
THIS PAYMENT ___________
for and in consideration of the sum of $__________ and other good and valuable
consideration, the receipt of which is hereby acknowledged, acknowledges receipt
of the above payment for work performed on or materials supplied to the
above-described project and does hereby waive, release and quitclaim all right
to a lien upon the land and improvements above-described, as a result of work
done and/or materials furnished by the undersigned, any employees, materialmen
and subcontractors under the statutes of the state of Virginia relating to
mechanic's liens on the aforementioned property and improvements thereon through
billing period for which this payment is made.
Undersigned warrants that all laborers and subscontractors employed in
the performance of the work and all materialmen who have furnished materials and
services have been fully paid, that none of such laborers, such subcontractors
or such materialmen have asserted a claim against or a lien upon the premises
herein above-described, that no chattel mortgage, conditional bill of sale, or
retention of title agreement has been executed or given with respect to any item
of property used in conjunction with or incorporated into the improvements on
the premises herein above-described, that no claim has been assigned or will be
assigned for payment or right to perfect a lien against said land and
improvements and that the undersigned is fully authorized and empowered to
execute this Waiver of Liens.
Undersigned understands and agrees that the owner and any lender and any
title insurance company is entitled to reply upon this Waiver.
ATTEST: FIRM: ________________________
____________________________________ By: ________________________
(Title)
<PAGE>
STATE OF ________________)
) ss. To-wit:
COUNTY OF________________)
Taken, sworn and subscribed before me, the undersigned Notary Public,
this ________ day of ______________, 19__.
______________________
Notary Public
My Commission Expires:
IMPORTANT NOTE: AS A CONDITION FOR RENDERING THE ATTACHED CHECK PAYABLE TO YOUR
ORDER, THE LENDER AND TITLE INSURANCE COMPANY REQUIRE YOUR EXECUTION OF THIS
WAIVER OF LIENS WITHOUT MODIFICATION THERETO.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
BTG HEADQUARTERS RELOCATION
- ------------------------------------------------------------------------------------------------------------------------------
August September October November
---------------------------------------------------------------------------------
ID Task Name Duration 28 4 11 18 25 1 8 15 22 29 6 13 20 27 3 10 17 24
- ------------------------------------------------------------------------------------------------------------------------------
<S><C>
1 Space Plan Approval 0d 8/21
2 Construction Documents 40d
3 CD Approval & Revisions 10ed
4 Building Permit Approval 30ed
5 Issue Gen. Contractor RFP 15d
6 Award Constr. Contract 3d
7 Construct Facility 100ed
8 Substantial Completion 0d
9 Issue Vendor RFP's 45d
10 Award Vendor RFP's 15ed
11 Cabling Installation 90ed
12 Security Installation 30d
13 Systems Furniture Installation 25ed
14 Final Occupancy 0d
15 Post Move Adjustments 10d
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
December January February March
---------------------------------------------------------------------------------------
ID Task Name Duration 1 8 15 22 29 5 12 19 26 2 9 16 23 2 9 16 23 30 6
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C>
1 Space Plan Approval 0d
2 Construction Documents 40d
3 CD Approval & Revisions 10ed
4 Building Permit Approval 30ed
5 Issue Gen. Contractor RFP 15d
6 Award Constr. Contract 3d
7 Construct Facility 100ed
8 Substantial Completion 0d 3/1
9 Issue Vendor RFP's 45d
10 Award Vendor RFP's 15ed
11 Cabling Installation 90ed
12 Security Installation 30d
13 Systems Furniture Installation 25ed
14 Final Occupancy 0d 3/28
15 Post Move Adjustments 10d
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Task Summary Rolled Up Progress
Project: BTG Progress Rolled Up Task
Date: 8/15/96
Milestone Rolled Up Milestone
- --------------------------------------------------------------------------------
Page 1
<PAGE>
EXHIBIT "D"
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
1. Tenant shall not allow the Premises to be used for lodging.
2. Tenant shall not employ any person or persons other than the janitor
of Landlord for the purpose of cleaning the Premises, unless otherwise agreed to
by Landlord in writing or as specifically provided in the Lease. Except with the
written consent of Landlord, no person or persons other than those approved by
Landlord shall be permitted to enter the Building for the purpose of cleaning
the same.
3. Except with respect to secure areas to be designated by Tenant
pursuant to Section 18 of the Lease, Tenant shall not alter any lock or install
a new or additional lock or any bolt on any door of the Premises without the
prior written consent of Landlord. Tenant shall in each case furnish Landlord
with a key for any such lock. Tenant, upon the termination of its tenancy, shall
deliver to Landlord all keys to doors in the Building which shall have been
furnished to the Tenant.
4. In the case of invasion, mob, riot, public excitement or other
circumstances rendering such action advisable in Landlord's opinion, Landlord
reserves the right to prevent access to the Building during the continuance of
the same by such action as Landlord may deem appropriate, including closing
doors.
5. Tenant shall ensure the doors of the Premises are closed and locked
and that all water faucets, water apparatus and utilities are shut off before
Tenant or Tenant's employees leave the Premises, so as to prevent waste or
damage.
6. The toilet rooms, toilets, urinals, wash basins and other apparatus
shall not be used for any purpose other than that for which they were
constructed, no foreign substance of any kind whatsoever shall be thrown therein
and the expense of any breakage, stoppage or damage resulting from the violation
of this rule shall be borne by Tenant.
7. Hand trucks shall not be used in any space or public halls of the
Building, either by Tenant or any other occupant of the Building, except those
equipped with rubber tires and side guards or similar material-handling
equipment.
8. Tenant agrees to use the services of an insured professional moving
company in connection with any movement in or out of the Premises.
9. Tenant agrees not to allow or keep any animals or pets of any kind
on the Premises, except those seeing-eye dogs which are for the direct purpose
of aiding and assisting the visually impaired.
D-1
<PAGE>
10. These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of premises in the Building.
D-2
<PAGE>
EXHIBIT "E"
<PAGE>
EXHIBIT E
---------
DECLARATION OF LEASE COMMENCEMENT
THIS DECLARATION is attached to and made a part of that certain Deed of
Lease dated the day of , 1996, (the "Lease") entered
into by and between TC HIGH RIDGE, L.L.C., a Delaware limited liability company
("Landlord"), and BTG, INC., a Virginia corporation ("Tenant").
Landlord and Tenant are parties to the Lease. All capitalized terms
used herein shall have the same meaning as was ascribed to such terms in the
Lease, unless otherwise indicated.
Landlord and Tenant do hereby declare that (a) the Commencement Date is
hereby established to be , and (b) the term of the Lease
shall expire on (the "Lease Expiration Date"). The Lease is in
full force and effect as of the date hereof, Landlord has fulfilled all of its
obligations under the Lease required to be fulfilled by Landlord on or prior to
the Commencement Date with the exception of punch list items.
IN WITNESS WHEREOF Landlord and Tenant have executed this Declaration
as of the day of , 1997.
WITNESS/ATTEST: LANDLORD:
--------
TC HIGH RIDGE, L.L.C.
__________________________ By: ________________________________
Printed Name: _______________________
Its: ________________________________
WITNESS/ATTEST: TENANT:
------
BTG, INC.
__________________________ By: ________________________________
Printed Name: _______________________
Its: ________________________________
<PAGE>
EXHIBIT "F"
<PAGE>
EXHIBIT F
CLEANING SPECIFICATIONS
------------------------
Landlord shall provide the following Building standard janitorial and
cleaning services throughout the Lease Term, outside normal business hours,
exclusive of all holidays, in accordance with this Exhibit F.
1. Waste paper - Daily
-------------------
Wastebaskets shall be emptied daily. Trash generated by normal, daily office
routine shall be emptied into trash containers with plastic liners replaced as
necessary. Non-recyclable trash shall be carried to the loading dock area and
deposited in the Building's dumpster daily.
2- Recyclable Trash - Daily - Weekly
---------------------------------
White paper wastebaskets shall be emptied daily and deposited in recyclable
trays in the loading dock area. Aluminum and glass recycling boxes shall be
emptied on a weekly or as needed basis.
3. Dusting - Daily - Weekly - Monthly
----------------------------------
Unobstructed furniture and file cabinets which can be reached while standing on
the floor shall be dusted with a chemically treated cloth daily. Horizontal
surfaces shall be dusted weekly. Picture frames, charts, graphs, etc. shall be
dusted on no less than a monthly basis.
4. Spot Cleaning - Daily
---------------------
Walls, doors, door frames, kickplates, light switches and all painted surfaces
shall be cleaned with a cloth and neutral cleaner. Metal trim work shall be
spot-cleaned daily with a cleaner appropriate for wall material. Carpet shall be
spot cleaned daily as necessary.
5. Vacuuming - Daily - Weekly - As Necessary
-----------------------------------------
Public areas, private offices, and cubicle work stations shall be vacuumed daily
with hard-to-get areas cleaned weekly areas shall with accessory tools. Spot
cleaning shall be done on an as-needed basis.
6. Dust Mopping Floors - Daily
---------------------------
Non-carpeted floors (including any such areas under desks and furniture) shall
be swept or dust mopped with a treated yarn dust mop daily. Dust mopping shall
be done after furniture has been dusted.
F-1
<PAGE>
7. Damp Mopping - Daily - As Necessary
-----------------------------------
All Building standard non-carpeted flooring shall be spot mopped daily and damp
mopped as necessary.
8. Floor Finishing and Buffing - Daily - As Necessary
--------------------------------------------------
Building standard non-carpeted flooring shall be finished with Underwriters
Laboratory approved materials. Hard surfaces (except wood) shall be damp mopped
and buffed on no less than a weekly basis. Wood floors will be buffed weekly.
Lobby floors will be cared for on a daily basis by damp mopping and buffing.
9. Stripping and Machine Scrubbing - Quarterly/As Necessary
--------------------------------------------------------
Non-carpeted floors (except wood) shall be stripped and machine scrubbed as
necessary, but no less than on a quarterly basis.
10. Restrooms - Daily - Monthly
---------------------------
a. All mirrors shall be spot cleaned daily and thoroughly cleaned
weekly.
b. Hand basins urinals, toilet seats, bowls, and hardware shall be
cleaned daily.
c. Walls shall be spot cleaned daily.
d. Partitions shall be dusted and spot cleaned daily and thoroughly
cleaned monthly.
e. Floors shall be swept and damp mopped daily and machine scrubbed
monthly.
f. Hand soap, paper towels, toilet tissue, toilet seat covers, and
feminine hygiene supplies shall be furnished, with dispensers to be
refilled daily.
g. Toilet bowl and bowl cleaner shall be used on toilet bowls and
urinals daily, including flush holes, under rims, and traps.
h. Damp wipe and clean and use disinfectant on all tile surfaces daily.
i. Wash toilet seats using disinfectant in water daily.
F-2
<PAGE>
j. Wash urinals, using disinfectant in water daily.
k. Empty and damp wipe all waste containers daily.
11. Stairwells and Landings - Daily - Weekly - As Necessary
-------------------------------------------------------
All stairwells and landings shall be polished and swept twice weekly. Railings,
ledges, and equipment shall be dusted weekly. Applicable refinishing and
stripping shall be done on an as-needed basis.
12. Elevators - Daily
-----------------
Interior surfaces, (including door tracks), interiors and exteriors of doors,
and fixtures of elevators shall be dusted, damp wiped, and polished as
necessary. Clean and polish threshold plates, including grooves, edges and
corners, as necessary. Carpet shall be vacuumed and spot cleaned daily.
13. Glass Partitions and Doors -Daily - As Necessary
------------------------------------------------
Any public glass partitions and doors shall be spot cleaned daily and washed
bi-weekly or as needed.
14. Carpet Spotting - As Necessary
------------------------------
Carpet spotting shall be cleaned as necessary, using accepted commercial
methods.
15. Air Grilles - Monthly
---------------------
All air grilles shall be cleaned once each month.
16. Venetian Blinds - Quarterly
---------------------------
Any venetian blinds shall be dusted on no less than a quarterly basis.
17. High Dusting - Quarterly
------------------------
Pipes, ledges and moldings shall be dusted every three months.
18. Lighting Fixtures - Semi-Annually
---------------------------------
The exterior of any non-parabolic type lighting fixtures/diffusers shall be damp
wiped semi-annually.
19. Office Partitions - As Needed
-----------------------------
Any office partitions shall be cleaned on an as needed basis.
F-3
<PAGE>
20. Planter Areas - Daily
---------------------
Debris, trash and cigarette butts from interior planters in any common and
public areas shall be removed daily.
The cost of the foregoing cleaning services shall be a component
of "Operating Costs", as set forth in the Lease. Subject to Tenant's consent,
which shall not be unreasonably withheld, conditioned or delayed, Landlord may
change these specifications from time to time during the Lease Term, and shall
notify Tenant in writing as to the nature of such changes.
F-4
<PAGE>
EXHIBIT "G"
INTENTIONALLY DELETED
<PAGE>
EXHIBIT "H"
INTENTIONALLY DELETED
<PAGE>
EXHIBIT "I"
<PAGE>
EXHIBIT I
---------
FORM OF ESTOPPEL CERTIFICATE
Date: _____________________
___________________________
___________________________
___________________________
___________________________
Re: Lease of approximately 209,217 rentable square feet of space
(the "Premises") comprised of the entirety of the High Ridge
Office Park located at 11225 Waples Mill Road, Fairfax,
Virginia
Dear Sirs:
This estoppel certificate is given to you such that you, your lenders
and partners may rely on the contents hereof in connection with your
acquisition/financing of the project described herein. The undersigned BTG,
INC., a Virginia corporation ("Tenant"), having an address of 11225 Waples Mill
Road, Suite ______, Fairfax, Virginia, is the tenant under that certain Deed of
Lease for the above Premises dated __________________, the term of which expires
on ______________, 20__, which Premises is owned by TC HIGH RIDGE, L.L.C., a
Delaware limited liability company ("Landlord/Assignor"). A copy of the Deed of
Lease and any amendments, exhibits and addenda thereto is attached hereto as
Exhibit A (the "Lease"). Tenant hereby represents to
____________________________ ("Assignee") as follows:
(a) Tenant has accepted and is occupying the Premises;
(b) the Lease has not been modified or amended except as stated in
the documents attached hereto as Exhibit A, and constitutes
the entire agreement between Landlord and Tenant;
(c) the Lease is in full force and effect;
(d) all construction, build-out, improvements, alterations, or
additions to the Premises required to be made by Landlord
under the Lease have been fully completed in accordance with
the terms of the Lease, and have been accepted by Tenant;
(e) to the best of Tenant's knowledge, having undertaken
reasonable investigation and inquiry, and as of the date of
execution hereof, Tenant is not in default under the Lease and
no circumstance exists which, with the
<PAGE>
giving of notice or the passage of time would create such a
default. To the best of Tenant's knowledge, having undertaken
reasonable investigation and inquiry, and as of the date of
execution hereof, Landlord is not in default under the Lease
and no circumstances exist under which with the giving of
notice or the passage of time would create such a default.
(f) Tenant has not received any free rent, partial rent, rebates,
rent abatements, rent concessions, or any other economic
concession (rental or otherwise) or similar compensation not
expressed in the Lease;
(g) there are no offsets or credits against rentals nor have
rentals been prepaid, except as expressly provided by the
terms of the Lease, and there are no known defenses or
counterclaims to Tenant's future obligation to pay the
specified rentals at the times required in accordance with the
terms of the Lease.
(h) the Commencement Date of the Term is __________, 1997, and
the Lease Expiration Date is ______________________;
(i) Tenant has not exercised any options or rights to renew,
extend, amend, modify or change the term of the Lease. Tenant
has no right to extend the Term of the Lease except as set
forth in Section 51 of the Lease.
(j) Tenant acknowledges that the Lease and the rents payable
thereunder are to be assigned to Assignee, and upon notice of
the assignment Tenant shall thereafter make all rental
payments required under the Lease to the Assignee.
(k) the current Monthly Base Rent is $___________. Monthly Base
Rent has been paid through ______________. No rent has been
prepaid for more than one month. Tenant is obligated to pay
increases in Operating Costs and Real Estate Taxes in the
amounts as set forth in the Lease. Tenant's estimated share of
increases in Operating Costs and Real Estate Taxes have been
paid through __________________. Tenant has not provided an
Audit Notice for any claim of overpayment of additional rent
which is currently pending;
(l) there is no security deposit held by Landlord pursuant to the
terms of the Lease.
(m) all insurance required by Tenant under the Lease has been
obtained and maintained by Tenant and all premiums therefor
have been paid;
(n) the address for notices to Tenant under the Lease is correctly
set forth above;
(o) the person signing this letter on behalf of Tenant is a duly
authorized agent of the Tenant;
<PAGE>
(p) having undertaken no independent investigation or inquiry,
Tenant has no actual knowledge of the presence of any
"hazardous materials", "toxic substances" or "hazardous
substances" as defined and regulated by any federal or state
governmental agency or instrumentality on or about the
Premises;
(q) Tenant has not:
(i) made a general assignment for the benefit of
creditors;
(ii) commenced any case, proceeding or other action
seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors;
(iii) had any involuntary case, proceeding or other action
commenced against it which seeks to have an order for
relief entered against it, as debtor, or seeks
reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under
any law relating to bankruptcy, insolvency,
reorganization or relief of debtors;
(iv) subleased all or any part of the Premises or assigned
the Lease, or otherwise transferred its interest in
the Lease or the Premises except as follows
___________________________________;
(vi) had a trustee, receiver, custodian or other similar
official appointed for or take possession of all or
any material part of its property or had any court
take jurisdiction of any other material part of its
property; or
(vii) filed and is not subject of any filing for bankruptcy
or reorganization under the federal bankruptcy code
or any state statutes of similar import.
(r) [In the event of sale] Tenant has no option, right of first
refusal or right of first offer to purchase the Premises or
the Project (as defined in the Lease) except as set forth in
Section 53 thereof. Tenant has been given all notices required
pursuant to such Section 53 and has chosen not to purchase the
Project. Provided that the sale contemplated hereby is
consummated by (18 months from the original notice to Tenant),
Section 53 of the Lease shall hereafter forever be null and
void and of no force or effect.
<PAGE>
TENANT:
------
BTG, INC.
By:_________________________
Name:_______________________
Title:______________________
<PAGE>
EXHIBIT "A" TO ESTOPPEL CERTIFICATE
-----------------------------------
[ATTACH COPY OF LEASE AND ANY AMENDMENTS]
<PAGE>
EXHIBIT "J"
<PAGE>
ISSUED BY
[LOGO] Commonwealth(R) POLICY NUMBER
Land Title Insurance Company 207-516329
OWNER'S POLICY OF TITLE INSURANCE
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE
CONTAINED IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, COMMONWEALTH LAND
TITLE INSURANCE COMPANY, a Pennsylvania corporation, herein called the Company,
insures, as of Date of Policy shown in Schedule A, against loss or damage, not
exceeding the Amount of Insurance stated in Schedule A, sustained or incurred by
the insured by reason of:
1. Title to the estate or interest described in Schedule A being vested other
than as stated therein;
2. Any defect in or lien or encumbrance on the title;
3. Unmarketability of the title;
4. Lack of a right of access to and from the land.
The Company will also pay the costs, attorneys' fees and expenses incurred
in defense of the title, as insured, but only to the extent provided in the
Conditions and Stipulations.
IN WITNESS WHEREOF, COMMONWEALTH LAND TITLE INSURANCE COMPANY has caused its
corporate name and seal to be hereunto affixed by its duly authorized officers,
the Policy to become valid when countersigned by an authorized officer or agent
of the Company.
COMMONWEALTH LAND TITLE INSURANCE COMPANY
Attest: /s/ James J.D. Lynch Jr. [SEAL] By: /s/ Gerald R. Perras
________________________ ____________________
Secretary President
EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this
policy and the Company will not pay loss or damage, costs, attorneys' fees or
expenses which arise by reason of:
1. (a) Any law, ordinance or governmental regulation (including but not limited
to building and zoning laws, ordinances, or regulations) restricting,
regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment
of the land; (ii) the character, dimensions or location of any improvement
now or hereafter erected on the land; (iii) a separation in ownership or a
change in the dimensions or area of the land or any parcel of which the land
is or was a part; or (iv) environmental protection, or the effect of any
violation of these laws, ordinances or governmental regulations, except to
the extent that a notice of the enforcement thereof or a notice of a defect,
lien or encumbrance resulting from a violation or alleged violation affecting
the land has been recorded in the public records at Date of Policy.
(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect, lien or
encumbrance resulting from a violation or alleged violation affecting the
land has been recorded in the public records at Date of Policy.
2. Rights of eminent domain unless notice of the exercise thereof has been
recorded in the public records at Date of Policy, but not excluding from
coverage any taking which has occurred prior to Date of Policy which would be
binding on the rights of a purchaser for value without knowledge.
3. Defects, liens, encumbrances, adverse claims or other matters:
(a) created, suffered, assumed or agreed to by the insured claimant;
(b) not known to the Company, not recorded in the public records at Date of
Policy, but known to the insured claimant and not disclosed in writing to the
Company by the insured claimant prior to the date the insured claimant became
an insured under this policy;
(c) resulting in no loss or damage to the insured claimant;
(d) attaching or created subsequent to Date of Policy; or
(e) resulting in loss or damage which would not have been sustained if the
insured claimant had paid value for the estate or interest insured by this
policy.
4. Any claim, which arises out of the transaction vesting in the Insured the
estate or interest insured by this policy, by reason of the operation of
federal bankruptcy, state insolvency, or similar creditors' rights laws, that
is based on:
(a) the transaction creating the estate or interest insured by this policy
being deemed a fraudulent conveyance or fraudulent transfer; or
(b) the transaction creating the estate or interest insured by this policy
being deemed a preferential transfer except where the preferential transfer
results from the failure:
(i) to timely record the instrument of transfer; or
(ii) of such recordation to impart notice to a purchaser for value or a
judgment or lien creditor.
NM 1 PA10
ALTA Owner's Policy (10-17-92)
Valid Only If Schedules A and B and Cover Are Attached
<PAGE>
Simultaneous Policy No. 554-783500
COMMONWEALTH LAND TITLE INSURANCE COMPANY
OWNER'S POLICY
Schedule A
CASE NUMBER: DATE OF POLICY: AMOUNT OF INSURANCE: POLICY NUMBER:
96-1147 June 18, 1996 $7,600,000.00 207-516329
THE POLICY NUMBER SHOWN ON THIS SCHEDULE MUST AGREE WITH THE PREPRINTED NUMBER
ON THE COVER SHEET.
1. Name of Insured:
TC High Ridge, L.L.C., a Delaware limited liability company by virtue of a
Special Warranty Deed recorded June 18, 1996 in Deed Book 9730 at folio 928
among the Land Records of Fairfax County, Virginia.
2. The estate or interest in the land which is covered by this policy is: FEE
SIMPLE
3. Title to the estate or interest in the land is vested in:
TC High Ridge, L.L.C., a Delaware limited liability company by virtue of a
Special Warranty Deed recorded June 18, 1996 in Deed Book 9730 at folio 928
among the Land Records of Fairfax County, Virginia.
4. The land referred to in this policy is described as follows:
SCHEDULE A PAGE 2 ATTACHED HERETO
COMMERCIAL SETTLEMENTS, INC.
By:
_____________________________
Authorized Officer or Agent ALTA Owner's Policy FORM B 1992
This Policy is invalid unless the cover sheet and Schedule B are attached.
<PAGE>
COMMONWEALTH LAND TITLE INSURANCE COMPANY
OWNER'S POLICY
Schedule A - Page 2
CASE NUMBER: DATE OF POLICY: POLICY NUMBER:
96-1147 June 18, 1996 207-516329
THE POLICY NUMBER SHOWN ON THIS SCHEDULE MUST AGREE WITH THE PREPRINTED NUMBER
ON THE COVER SHEET.
All those pieces or parcels of land situate, lying and being in the
Centreville Magisterial District, County of Fairfax, Commonwealth of
Virginia, being more particularly described as follows:
PARCEL I:
Parcel E-1 Part of The Property of High Ridge Associates
BEGINNING at a point marking the intersection of the Westerly Right of Way
line of Waples Mill Road (Route 665) with the Southerly Right of Way line of
Fairfax Ridge Road; thence with the Westerly Right of Way line of Waples
Mill Road the following courses and distances:
(1) with a curve to the left having a radius of 1,745.00 feet and a chord
and bearing of South 06 degrees 16 minutes 34 seconds East, 158.67 feet, an
arc distance of 158.73 feet; thence
(2) with a curve to the left having a radius of 795.00 feet and a chord and
bearing of South 10 degrees 47 minutes 32 seconds East, 53.00 feet, an arc
distance of 53.01 feet; thence
(3) with a curve to the left having a radius is 1,220.00 feet and a chord
and bearing of South 14 degrees 24 minutes 50 seconds East, 72.85 feet, an
arc distance of 72.57 feet; thence
(4) with a curve to the left having a radius is 585.00 feet and a chord and
bearing of South 19 degrees 09 minutes 38 seconds East, 61.96 feet, an arc
distance of 61.99 feet to a point; thence departing from the road and
running through the property of 50-66 G/Y Partnership the following courses:
(5) North 88 degrees 27 minutes 35 seconds West, 125.55 feet; thence
(6) South 81 degrees 57 minutes 26 seconds West, 62.41 feet; thence
(7) South 52 degrees 54 minutes 20 seconds West, 44.23 feet; thence
(8) South 44 degrees 53 minutes 57 seconds West, 66.00 feet; thence
-Continued-
ALTA Owner's Policy FORM B 1992
<PAGE>
Schedule A - Page 2 continued
(9) North 69 degrees 32 minutes 19 seconds West, 175.00 feet; thence
(10) North 10 degrees 00 minute 41 seconds East 60.00 feet; and thence
(11) North 74 degrees 50 minutes 20 seconds West, 80.00 feet to a point;
thence continuing through the property of 50-66 G/Y Partnership and with the
aforementioned Southerly R/W line of Fairfax Ridge Road the following
courses:
(12) with a curve to the right having a radius of 405.00 feet and a chord
and bearing of North 51 degrees 38 minutes 09 seconds East, 481.53 feet, an
arc distance of 515.65 feet; thence
(13) North 88 degrees 06 minutes 38 seconds East, 30.85 feet; and thence
(14) with a curve to the right having a radius of 25.00 feet and a chord and
bearing of South 47 degrees 46 minutes 47 seconds East, 34.80 feet, an arc
distance of 38.49 feet to the point of beginning, containing 141,534 square
feet of land, more or less.
TOGETHER WITH all of the rights, benefits, burdens, duties and obligations
of the Owner of Building E-1 under that certain Common Area Operation
Reciprocal Easement and Parking Agreement dated March 7, 1983, recorded in
Deed Book 5748 at page 860, as amended in Deed Book 5836 at Page 730 among
the Land Records of Fairfax, County, Virginia.
PARCEL II:
Parcel E-2 Part of The Property of High Ridge Associates
BEGINNING at a point on the Southwesterly Right of Way line of Waples Mill
Road (Route 665) said point being South 39 degrees 40 minutes 44 seconds
West, 5.60 feet from a point on the Southwesterly Right of Way line of
Waples Mill Road marking the most Northerly corner of Anthony John
Georgelas; thence departing from the road with the Northwesterly line of
50-66 G/Y Partnership the following courses and distances:
(1) South 39 degrees 40 minutes 44 seconds West, 479.87 feet to a point on
the Easterly Right of Way line of Fairfax Ridge Road; thence with the
Easterly Right of Way line of Fairfax Ridge Road
(2) with a curve to the right having a radius of 405.00 feet and a chord and
bearing of North 24 degrees 08 minutes 41 seconds West, 513.10 feet, an arc
distance of 555.68 feet to a point; thence through the property of 50-66 G/Y
Partnership the following courses and distances:
(3) South 74 degrees 50 minutes 20 seconds East, 80.00 feet; thence
(4) South 10 degrees 00 minute 41 seconds West, 60.00 feet; thence
(5) South 69 degrees 32 minutes 19 seconds East, 175.00 feet; thence
(6) North 44 degrees 53 minutes 57 seconds East 66.00 feet; thence
(7) North 52 degrees 54 minutes 20 seconds East, 44.23 feet; thence
Page 1 POLICY NUMBER: 207-516329
<PAGE>
Schedule A - Page 2 continued
(8) North 81 degrees 57 minutes 26 seconds East, 62.41 feet; thence
(9) South 88 degrees 27 minutes 35 seconds East, 125.55 feet to a point on
the aforementioned Southwesterly Right of Way line of Waples Mill Road;
thence with the Southwesterly Right of Way line of Waples Mill Road
(10) with a curve to the left having a radius of 585.00 feet and a chord and
bearing of South 24 degrees 09 minutes 19 seconds East, 39.99 feet, an arc
distance of 40.00 feet to the point of beginning, containing 128,509 square
feet of land, more or less.
LESS AND EXCEPT THEREFROM Parcel E-3, described as follows:
BEGINNING at a point in the property of 50-66 G/Y Partnership, said point
being South 39 degrees 40 minutes 44 seconds West, 5.60 feet and South 62
degrees 33 minutes 06 seconds West, 218.66 feet from a point on the
Southwesterly Right of Way line of Waples Mill Road (Route 665) marking the
most Northerly corner of 50-66 G/Y Partnership; thence running through the
property of 50-66 G/Y Partnership the following courses and distances:
(1) South 48 degrees 48 minutes 43 seconds West 36.08 feet; thence
(2) South 41 degrees 11 minutes 17 seconds East, 21.46 feet; thence
(3) South 48 degrees 48 minutes 43 seconds West, 204.19 feet; thence
(4) North 41 degrees 11 minutes 17 seconds West, 114.00 feet; thence
(5) North 48 degrees 48 minutes 43 seconds East 210.75 feet; thence
(6) South 86 degrees 11 minutes 17 seconds East, 41.75 feet; and thence
(7) South 41 degrees 11 minutes 17 seconds East, 63.02 feet to the point of
beginning, containing 26,181 square feet of land, more or less, leaving a
net area for Parcel E-2 of 102,328 square feet of land, more or less.
TOGETHER WITH all of the rights, benefits, burdens, duties and obligations
of the Owner of Building E-2 under that certain Common Area Operation
Reciprocal Easement and Parking Agreement dated March 7, 1983, recorded in
Deed Book 5748 at page 860 as amended in Deed Book 5836 at Page 730 among
the Land Records of Fairfax County, Virginia.
PARCEL III:
Parcel E-3 Part of The Property of High Ridge Associates
BEGINNING at a point in the property of 50-60 G/Y Partnership, said point
being North 43 degrees 24 minutes 56 seconds West, 512.53 feet, South 39
degrees 40 minutes 44 seconds West, 5.60 feet, and South 62 degrees 33
minutes 06 seconds West, 218.66 feet from a point on the Southwesterly Right
of Way line of Waples Mill Road (Route 665) making the most Northerly corner
of Boyuk and Aliyek Eimen; thence running through the property of 50-66 G/Y
Partnership the following courses and distances:
Page 2 POLICY NUMBER: 207-516329
<PAGE>
Schedule A - Page 2 continued
(1) South 48 degrees 49 minutes 43 seconds West, 36.08 feet; thence
(2) South 41 degrees 11 minutes 17 seconds East, 21.46 feet; thence
(3) South 48 degrees 48 minutes 43 seconds West, 204.19 feet; thence
(4) North 41 degrees 11 minutes 17 seconds West, 114.00 feet; thence
(5) North 48 degrees 48 minutes 43 seconds East, 210.75 feet; thence
(6) South 86 degrees 11 minutes 17 seconds East, 41.75 feet; and thence
(7) South 41 degrees 11 minutes 17 seconds East, 63.02 feet to the point of
beginning, containing 26,181 square feet of land.
TOGETHER WITH all of the rights, benefits, burdens, duties and obligations
of the Owner of Building E-2 under that certain Common Area Operation
Reciprocal Eastment and Parking Agreement dated March 7, 1983, recorded in
Deed Book 5748 at page 860 as amended in Deed Book 5836 at Page 730 among
the Land Records of Fairfax County, Virginia.
AND BEING the same property conveyed to HR Associates L.C., a Virginia
limited liability company by Deed dated November 10, 1995, and recorded
November 16, 1995, in Deed Book 9560 at page 560 among the Land Records of
Fairfax County, Virginia.
Page 3 POLICY NUMBER: 207-516329
<PAGE>
COMMONWEALTH LAND TITLE INSURANCE COMPANY
OWNER'S POLICY
Schedule B
EXCEPTIONS FROM COVERAGE
CASE NUMBER: DATE OF POLICY: POLICY NUMBER:
96-1147 June 18, 1996 207-516329
THE POLICY NUMBER SHOWN ON THIS SCHEDULE MUST AGREE WITH THE PREPRINTED NUMBER
ON THE COVER SHEET.
This policy does not insure against loss or damage (and the Company will not pay
costs, attorneys' fees or expenses) which arise by reason of:
1. Real estate taxes subsequent to December 31, 1995, a lien not yet due and
payable.
2. Terms, provisions, conditions, easements and obligations contained in Common
Area Operation, Reciprocal Easement and Parking Agreement recorded in Deed
Book 5748 at page 860 as amended in Deed Book 5836 at page 730. (Noted on
Plat of Survey made by VIKA Incorporated dated February 1994, last revised
April 9, 1996, "The Survey")
3. Rights of way to Virginia Public Service Company in Deed Book O-15 at page
509, Deed Book J-12 at page 266, and Deed Book W-15 at page 502. (Noted on
The Survey)
4. Storm Water Detention-Agreements with Fairfax County Board of Supervisors in
Deed Book 5486 at page 1132 and Deed Book 5669 at page 657. (Noted on The
Survey)
5. Rights of way to Fairfax County Water Authority in Deed Book 5533 at page
1692, Deed Book 5681 at page 494, and Deed Book 5689 at page 1109. (Shown on
The Survey)
6. Terms, provisions, conditions and easements contained in Deed of Dedication,
Re-Subdivision, Easement and Re-Plat in Deed Book 5638 at page 1990. (Shown
on the Survey)
7. Easements in Deed of Dedication and Easements recorded in Deed Book 5769 at
page 1347. (Shown on The Survey)
8. Deed of Trust from TC HIGH RIDGE, L.L.C., a Delaware limited liability
company, to DONALD N. GOLDROSEN and ROBERT M. DILLING, Trustee(s), dated June
17, 1996 and recorded on June 18, 1996 in Deed Book 9730 at page 935 among
the Land Records of Fairfax County, Virginia; securing H/P COMPANIES L.C., a
Virginia limited liability company in the sum of $1,200,000.00.
9. Memorandum of Option between TC HIGH RIDGE, L.L.C., a Delaware limited
liability company and SOUTH CHARLES INVESTMENT CORPORATION, a Georgia
-Continued-
ALTA Owner's Policy FORM B 1992
<PAGE>
Schedule B continued
corporation, AB ASHLEY CREEK LIMITED PARTNERSHIP, a Maryland limited
partnership and TC MIDATLANTIC, L.L.C., a Virginia limited liability
company, dated as of June 17, 1996 and recorded June 18, 1996 in Deed Book
9730 at page 947 among the Land Records of Fairfax County, Virginia.
10. Credit Line Deed of Trust, Assignment and Security Agreement from TC HIGH
RIDGE L.L.C., a Delaware limited liability company, to NANCY L. WALSH,
Trustee(s), dated as of June 17, 1996 and recorded on June 18, 1996 in Deed
Book 9730 at page 953 among the Land Records of Fairfax County, Virginia;
securing SOUTH CHARLES INVESTMENT CORPORATION, a Georgia Corporation, AB
ASHLEY CREEK LIMITED PARTNERSHIP, a Maryland limited partnership and TC
MIDATLANTIC, L.L.C., a Virginia limited liability company in the sum of
$11,000,000.00.
11. Financing Statements from TC HlGH RIDGE, L.L.C., debtor, to to SOUTH CHARLES
INVESTMENT CORPORATION, AB ASHLEY CREEK LIMITED PARTNERSHIP, and TC
MIDATLANTIC, L.L.C., secured party, recorded:
a. June 18, 1996 as Instrument No. 96-6412 among the Financing Records of
Fairfax County, Virginia; and,
b. June 20, 1996 as Instrument No. 9606207819 among the UCC Records of the
Virginia State Corporation Commission.
Page 1 POLICY NUMBER: 207-516329
<PAGE>
[LOGO] Commonwealth(R)
Land Title Insurance Company ENDORSEMENT
File No. 96-1147
To be annexed to and form a part of Commitment/Policy No. 207-516329 insuring
TC HIGH RIDGE, L.L.C., a Delaware limited liability company
as set forth in said Commitment/Policy.
The said Commitment/Policy is hereby amended in the following manner:
The Company hereby insures the insured against loss or damage which the insured
shall sustain by reason of:
1) Any incorrectness in the assurance that, at date of policy:
a) There are no covenants, conditions or restrictions under which
the insured can be divested.
b) Unless otherwise expressly excepted in Schedule B:
(1) There are no present violations on the land or any
enforceable covenants, conditions or restrictions nor do
any existing buildings on the land violate building
setback lines shown on a plat of subdivision recorded or
filed in the public records.
(2) Any instrument referred to in Schedule B as containing
covenants, conditions or restrictions on the land does
not, in addition, (i) establish an easement on the land;
(ii) provide for a lien for liquidated
continued on attached sheet
---------------------------
The total liability of the Company under said commitment/policy and any
endorsements attached thereto shall not exceed, in the aggregate, the face
amount of said policy and costs which the Company is obligated under the
provisions of said commitment/policy to pay.
This endorsement is made a part of said commitment/policy and is subject to the
exclusions, schedules, endorsements, conditions, stipulations and terms thereof,
except as modified by the provisions hereof.
Nothing herein contained shall be construed as extending or changing the
effective date of said Commitment/Policy, unless otherwise expressly stated.
IN WITNESS WHEREOF COMMONWEALTH LAND TITLE INSURANCE COMPANY has caused its
corporate name and seal to be hereunto affixed by its duly authorized officers
on the 18th day of June 1996.
Countersigned COMMONWEALTH LAND TITLE INSURANCE COMPANY
Commercial Settlements, Inc. By /s/ Gerald R. Perras
____________________
President
[SEAL]
By: Attest: /s/ James J.D. Lynch Jr.
_____________________________ ________________________
Authorized Officer or Agent Secretary
Gerald R. Perras, President
Form 1013
<PAGE>
Attachment to endorsement attached to policy no. 207-516329
-----------------------------------------------------------
damages; (iii) provide for a private charge
or assessment; (iv) provide for an option to
purchase, a right of first refusal or the
prior approval of a future purchaser or
occupant;
(3) There are no encroachments of existing
buildings located on the land onto adjoining
land, nor any encroachments onto the land of
existing buildings located on adjoining
land.
(4) There are no encroachments of existing
buildings located on the land onto that
portion of the land subject to any easement
excepted in Schedule B.
2) Any future violations on the land of an existing covenant,
condition or restriction provided the violation results in
loss of title to the estate or interest in the land of the
Insured.
3) Unless expressly excepted in Schedule B, damage to existing
buildings:
(a) Which are located on or encroach upon that portion of the
land subject to any easement excepted in Schedule B, which
damage results from the exercise of the right to maintain
the easement for the purpose for which it was granted or
reserved.
(b) Which results exercise of any right to use the surface of
the land for the extraction or development of minerals
excepted from the description of the land excepted in
Schedule B.
4) Any final court order or judgment requiring the removal from
any land adjoining the land of any encroachment excepted in
Schedule B.
5) Any final court order or judgment denying the right to
maintain any existing buildings on the land because of any
violation of covenants, conditions or restrictions or building
setback lines shown on a plat or subdivision recorded or filed
in the public records.
Wherever in this endorsement the words "covenants, conditions or restrictions"
appear, they shall not be deemed to refer to or include the terms, covenants,
conditions or limitations contained in an instrument creating a lease.
CAVEAT: Notwithstanding any of the coverages afforded by this endorsement,
nothing contained herein shall in any way limit or modify the policy Exclusion
From Coverage relating to "any law, ordinance or governmental regulation
(including, but not limited to, building zoning laws, ordinances or
regulation)...".
<PAGE>
[LOGO] Commonwealth(R)
Land Title Insurance Company ENDORSEMENT
File No. 96-1147
To be annexed to and form a part of Commitment/Policy No. 207-516329 insuring
TC HIGH RIDGE, L.L.C., a Delaware limited liability company
as set forth in said Commitment/Policy.
The said Commitment/Policy is hereby amended in the following manner:
This policy insures that the parcels comprising the insured property are
contiguous along their common boundaries containing no intervening strips,
gaps or gores.
The total liability of the Company under said commitment/policy and any
endorsements attached thereto shall not exceed, in the aggregate, the face
amount of said policy and costs which the Company is obligated under the
provisions of said commitment/policy to pay.
This endorsement is made a part of said commitment/policy and is subject to the
exclusions, schedules, endorsements, conditions, stipulations and terms thereof,
except as modified by the provisions hereof.
Nothing herein contained shall be construed as extending or changing the
effective date of said Commitment/Policy, unless otherwise expressly stated.
IN WITNESS WHEREOF COMMONWEALTH LAND TITLE INSURANCE COMPANY has caused its
corporate name and seal to be hereunto affixed by its duly authorized officers
on the 18th day of June 1996.
Countersigned COMMONWEALTH LAND TITLE INSURANCE COMPANY
Commercial Settlements, Inc. By /s/ Gerald R. Perras
____________________
President
[SEAL]
By: Attest: /s/ James J.D. Lynch Jr.
_____________________________ ________________________
Authorized Officer or Agent Secretary
Gerald R. Perras, President
Form 1013
ORIGINAL
<PAGE>
[LOGO] Commonwealth(R)
Land Title Insurance Company ENDORSEMENT
File No. 96-1147
To be annexed to and form a part of Commitment/Policy No. 207-516329 insuring
TC HIGH RIDGE, L.L.C., a Delaware limited liability company
as set forth in said Commitment/Policy.
The said Commitment/Policy is hereby amended in the following manner:
The Company hereby affirmatively insures that the land described in
Schedule A is the same as that delineated on the Survey prepared by VIKA
Incorporated dated February, 1994 and last revised April 9, 1996.
The total liability of the Company under said commitment/policy and any
endorsements attached thereto shall not exceed, in the aggregate, the face
amount of said policy and costs which the Company is obligated under the
provisions of said commitment/policy to pay.
This endorsement is made a part of said commitment/policy and is subject to the
exclusions, schedules, endorsements, conditions, stipulations and terms thereof,
except as modified by the provisions hereof.
Nothing herein contained shall be construed as extending or changing the
effective date of said Commitment/Policy, unless otherwise expressly stated.
IN WITNESS WHEREOF COMMONWEALTH LAND TITLE INSURANCE COMPANY has caused its
corporate name and seal to be hereunto affixed by its duly authorized officers
on the 18th day of June 1996.
Countersigned COMMONWEALTH LAND TITLE INSURANCE COMPANY
Commercial Settlements, Inc. By /s/ Gerald R. Perras
____________________
President
[SEAL]
By: Attest: /s/ James J.D. Lynch Jr.
_____________________________ ________________________
Authorized Officer or Agent Secretary
Gerald R. Perras, President
Form 1013
ORIGINAL
<PAGE>
CONDITIONS AND STIPULATIONS
1. DEFINITION OF TERMS.
The following terms when used in this policy mean
(a) "insured" the insured named in Schedule A, and, subject to any rights or
defenses the Company would have had against the named insured, those who succeed
to the interest of the named insured by operation of law as distinguished from
purchase including, but not limited to, heirs, distributees, devisees,
survivors, personal representatives, next of kin, or corporate or fiduciary
successors.
(b) "insured claimant": an insured claiming loss or damage.
(c) "knowledge" or "known": actual knowledge, not constructive knowledge or
notice which may be imputed to an insured by reason of the public records as
defined in this policy or any other records which impart constructive notice of
matters affecting the land.
(d) "land": the land described or referred to in Schedule A, and improvements
affixed thereto which by law constitute real property. The term "land" does not
include any property beyond the lines of the area described or referred to in
Schedule A, nor any right, title, interest, estate or easement in abutting
streets, roads, avenues, alleys, lanes, ways or waterways, but nothing herein
shall modify or limit the extent to which a right of access to and from the land
is insured by this policy.
(e) "mortgage": mortgage, deed of trust, trust deed, or other security
instrument.
(f) "public records": records established under state statutes at Date of
Policy for the purpose of imparting constructive notice of matters relating to
real property to purchasers for value and without knowledge. With respect to
Section 1(a) (iv) of the Exclusions From Coverage, "public records" shall also
include environmental protection liens filed in the records of the clerk of the
United States district court for the district in which the land is located.
(g) "unmarketability of the title": an alleged or apparent matter affecting
the title to the land, not excluded or excepted from coverage, which would
entitle a purchaser of the estate or interest described in Schedule A to be
released from the obligation to purchase by virtue of a contractual condition
requiring the delivery of marketable title.
2. CONTINUATION OF INSURANCE AFTER CONVEYANCE OF TITLE.
The coverage of this policy shall continue in force as of Date of Policy in
favor of an insured only so long as the insured retains an estate or interest in
the land, or holds an indebtedness secured by a purchase money mortgage given by
a purchaser from the insured, or only so long as the insured shall have
liability by reason of covenants of warranty made by the insured in any transfer
or conveyance of the estate or interest. This policy shall not continue in force
in favor of any purchaser from the insured of either (i) an estate or interest
in the land, or (ii) an indebtedness secured by a purchase money mortgage given
to the insured.
3. NOTICE OF CLAIM TO BE GIVEN BY INSURED CLAIMANT.
The insured shall notify the Company promptly in writing (i) in case of any
litigation as set forth in Section 4(a) below, (ii) in case knowledge shall come
to an insured hereunder of any claim of title or interest which is adverse to
the title to the estate or interest as insured, and which might cause loss or
damage for which the Company may be liable by virtue of this policy, or (iii) if
title to the estate or interest, as insured, is rejected as unmarketable. If
prompt notice shall not be given to the Company, then as to the insured all
liability of the Company shall terminate with regard to the matter or matters
for which prompt notice is required; provided, however, that failure to notify
the Company shall in no case prejudice the rights of any insured under this
policy unless the Company shall be prejudiced by the failure and then only to
the extent of the prejudice.
4. DEFENSE AND PROSECUTION OF ACTIONS; DUTY OF INSURED CLAIMANT TO COOPERATE.
(a) Upon written request by the insured and subject to the options contained
in Section 6 of these Conditions and Stipulations, the Company, at its own cost
and without unreasonable delay, shall provide for the defense of an insured in
litigation in which any third party asserts a claim adverse to the title or
interest as insured, but only as to those stated causes of action alleging a
defect, lien or encumbrance or other matter insured against by this policy. The
Company shall have the right to select counsel of its choice (subject to the
right of the insured to object for reasonable cause) to represent the insured as
to those stated causes of action and shall not be liable for and will not pay
the fees of any other counsel. The Company will not pay any fees, costs or
expenses incurred by the insured in the defense of those causes of action which
allege matters not insured against by this policy.
(b) The Company shall have the right, at its own cost, to institute and
prosecute any action or proceeding or to do any other act which in its opinion
may be necessary or desirable to establish the title to the estate or interest,
as insured, or to prevent or reduce loss or damage to the insured. The Company
may take any appropriate action under the terms of this policy, whether or not
it shall be liable hereunder, and shall not thereby concede liability or waive
any provision of this policy. If the Company shall exercise its rights under
this paragraph, it shall do so diligently.
(c) Whenever the Company shall have brought an action or interposed a defense
as required permitted by the provisions of this policy, the Company may pursue
any litigation to final determination by a court of competent jurisdiction and
expressly reserves the right, in its sole discretion, to appeal from any adverse
judgment or order.
(d) In all cases where this policy permits or requires the Company to
prosecute or provide for the defense of any action or proceeding, the insured
shall secure to the Company the right to so prosecute or provide defense in the
action or proceeding, and all appeals therein, and permit the Company to use, at
its option, the name of the insured for this purpose. Whenever requested by the
Company, the insured, at the Company's expense, shall give the Company all
reasonable aid (i) in any action or proceeding, securing evidence, obtaining
witnesses, prosecuting or defending the action or proceeding, or effecting
settlement, and (ii) in any other lawful act which in the opinion of the Company
may be necessary or desirable to establish the title to the estate or interest
as insured. If the Company is prejudiced by the failure of the insured to
furnish the required cooperation, the Company's obligations to the insured under
the policy shall terminate, including any liability or obligation to defend,
prosecute, or continue any litigation, with regard to the matter or matters
requiring such cooperation.
5. PROOF OF LOSS OR DAMAGE.
In addition to and after the notices required under Section 3 of these
Conditions and Stipulations have been provided the Company, a proof of loss or
damage signed and sworn to by the insured claimant shall be furnished to the
Company within 90 days after the insured claimant shall ascertain the facts
giving rise to the loss or damage. The proof of loss or damage shall describe
the defect in, or lien or encumbrance on the title, or other matter insured
against by this policy which constitutes the basis of loss or damage and shall
state, to the extent possible, the basis of calculating the amount of the loss
or damage. If the Company is prejudiced by the failure of the insured claimant
to provide the required proof of loss or damage, the Company's obligations to
the insured under the policy shall terminate, including any liability or
obligation to defend, prosecute, or continue any litigation, with regard to the
matter or matters requiring such proof of loss or damage.
In addition, the insured claimant may reasonably be required to submit to
examination under oath by any authorized representative of the Company and shall
produce for examination, inspection and copying, at such reasonable times and
places as may be designated by any authorized representative of the Company, all
records, books ledgers, checks, correspondence and memoranda, whether bearing a
date before or after Date of Policy, which reasonably pertaining to the loss or
damage. Further, if requested by any authorized representative of the Company,
the insured claimant shall grant its permission, in writing, for any authorized
representative or the Company to examine, inspect and copy all records, books
ledgers, checks, correspondence and memoranda in the custody or control of a
third party, which reasonably pertain to the loss or damage. All information
designated as confidential by the insured claimant provided to the Company
pursuant to this Section shall not be disclosed to others unless, in the
reasonable judgement of the Company, it is necessary in the administration of
the claim. Failure of the insured claimant to submit for examination under oath,
produce other reasonably requested information or grant permission to secure
reasonably necessary information from third parties as required in this
paragraph shall terminate any liability of the Company under this policy as to
that claim.
6. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS; TERMINATION OF LIABILITY.
In case of a claim under this policy, the Company shall have the following
options:
(a) To Pay or Tender Payment of the Amount of Insurance.
To pay or tender payment of the amount of insurance under this
policy together with any costs, attorneys' fees and expenses incurred by the
insured claimant, which were authorized by the Company, up to the time of
payment or tender of payment and which the Company is obligated to pay.
Upon the exercise by the Company of this option, all liability and
obligations to the insured under this policy, other than to make the payment
required, shall terminate, including any liability or obligation to defend,
prosecute, or continue any litigation, and the policy shall be surrendered to
the Company for cancellation.
(b) To Pay or Otherwise Settle With Parties Other than the Insured or With
the Insured Claimant.
(i) to pay or otherwise settle with other parties for or in the name of
an insured claimant any claim insured against under this policy, together with
any costs, attorneys' fees and expenses incurred by the insured claimant which
were authorized by the Company up to time of payment and which the Company is
obligated to pay; or
(ii) to pay or otherwise settle with the insured claimant the loss or
damage provided for under this policy, together with any costs, attorneys' fees
and expenses incurred by the insured claimant which were authorized by the
Company up to the time of payment and which the Company is obligated to pay.
Upon the exercise by the Company of either of the options provided for in
paragraphs (b)(i) or (ii), the Company's obligations to the insured under this
policy for the claimed loss or damage, other than the payments required to be
made, shall terminate, including any liability or obligation to defend,
prosecute or continue any litigation.
B 1190-2 Conditions and Stipulations Continued Inside Cover
<PAGE>
CONDITIONS AND STIPULATIONS
7. DETERMINATION, EXTENT OF LIABILITY AND COINSURANCE.
This policy is a contract of indemnity against actual monetary loss or damage
sustained or incurred by the insured claimant who has suffered loss or damage by
reason of matters insured against by this policy and only to the extent herein
described.
(a) The liability of the Company under this policy shall not exceed the least
of:
(i) the Amount of Insurance stated in Schedule A; or,
(ii) the difference between the value of the insured estate or interest
as insured and the value of the insured estate or interest subject to the
defect, lien or encumbrance insured against by this policy.
(b) In the event the Amount of Insurance stated in Schedule A at the Date of
Policy is less than 80 percent of the value of the insured estate or interest or
the full consideration paid for the land, whichever is less, or if subsequent to
the Date of Policy an improvement is erected on the land which increases the
value of the insured estate or interest by at least 20 percent over the Amount
of Insurance stated in Schedule A, then this Policy is subject to the following:
(i) where no subsequent improvement has been made, as to any partial
loss, the Company shall only pay the loss pro rata in the proportion that the
amount of insurance at Date of Policy bears to the total value of the insured
estate or interest at Date of Policy; or
(ii) where a subsequent improvement has been made, as to any partial
loss, the Company shall only pay the loss pro rata in the proportion that 120
percent of the Amount of Insurance stated in Schedule A bears to the sum of the
Amount of Insurance stated in Schedule A and the amount expended for the
improvement.
The provisions of this paragraph shall not apply to costs, attorneys' fees
and expenses for which the Company is liable under this policy, and shall only
apply to that portion of any loss which exceeds, in the aggregate, 10 percent of
the Amount of Insurance stated in Schedule A.
(c) The Company will pay only those costs, attorneys' fees and expenses
incurred in accordance with Section 4 of these Conditions and Stipulations.
8. APPORTIONMENT.
If the land described in Schedule A consists of two or more parcels which are
not used as a single site, and a loss is established affecting one or more of
the parcels but not all, the loss shall be computed and settled on a pro rata
basis as if the amount of insurance under this policy was divided pro rata as to
the value on Date of Policy of each separate parcel to the whole, exclusive of
any improvements made subsequent to Date of Policy, unless a liability or value
has otherwise been agreed upon as to each parcel by the Company and the insured
at the time of the issuance of this policy and shown by an express statement or
by an endorsement attached to this policy.
9. LIMITATION OF LIABILITY.
(a) If the Company establishes the title, or removes the alleged defect, lien
or encumbrance, or cures the lack of a right of access to or from the land, or
cures the claim of unmarketability of title, all as insured, in a reasonably
diligent manner by any method, including litigation and the completion of any
appeals therefrom, it shall have fully performed its obligations with respect to
that matter and shall not be liable for any loss or damage caused thereby.
(b) In the event of any litigation, including litigation by the Company or
with the Company's consent, the Company shall have no liability for loss or
damage until there has been a final determination by a court of competent
jurisdiction, and disposition of all appeals therefrom, adverse to the title as
insured.
(c) The Company shall not be liable for loss or damage to any insured for
liability voluntarily assumed by the insured in settling any claim or suit
without the prior written consent of the Company.
10. REDUCTION OF INSURANCE; REDUCTION OR TERMINATION OF LIABILITY.
All payments under this policy, except payments made for costs, attorneys'
fees and expenses, shall reduce the amount of the insurance pro tanto.
11. LIABILITY NONCUMULATIVE.
It is expressly understood that the amount of insurance under this policy
shall be reduced by any amount the Company may pay under any policy insuring a
mortgage to which exception is taken in Schedule B or to which the insured has
agreed, assumed, or taken subject, or which is hereafter executed by an insured
and which is a charge or lien on the estate or interest described or referred to
in Schedule A, and the amount so paid shall be deemed a payment under this
policy to the insured owner.
12. PAYMENT OF LOSS.
(a) No payment shall be made without producing this policy for endorsement
of the payment unless the policy has been lost or destroyed, in which case proof
of loss or destruction shall be furnished to the satisfaction of the Company.
(Continued)
(b) When liability and the extent of loss or damage has been definitely
fixed in accordance with these Conditions and Stipulations, the loss or damage
shall be payable within 30 days thereafter.
13. SUBROGATION UPON PAYMENT OR SETTLEMENT.
(a) The Company's Right of Subrogation.
Whenever the Company shall have settled and paid a claim under this policy,
all right of subrogation shall vest in the Company unaffected by any act of the
insured claimant.
The Company shall be subrogated to and be entitled to all rights and
remedies which the insured claimant would have had against any person or
property in respect to the claim had this policy not been issued. If requested
by the Company, the insured claimant shall transfer to the Company all rights
and remedies against any person or property necessary in order to perfect this
right of subrogation. The insured claimant shall permit the Company to sue,
compromise or settle in the name of the insured claimant and to use the name of
the insured claimant in any transaction or litigation involving these rights or
remedies.
If a payment on account of a claim does not fully cover the loss of the
insured claimant, the Company shall be subrogated to these rights and remedies
in the proportion which the Company's payment bears to the whole amount of the
loss.
If loss should result from any act of the insured claimant, as stated above,
that act shall not void this policy, but the Company, in that event, shall be
required to pay only that part of any losses insured against by this policy
which shall exceed the amount, if any, lost to the Company by reason of the
impairment by the insured claimant of the Company's right of subrogation.
(b) The Company's Rights Against Non-insured Obligors.
The Company's right of subrogation against non-insured obligors shall exist
and shall include, without limitation, the rights of the insured to indemnities,
guaranties, other policies of insurance or bonds, notwithstanding any terms or
conditions contained in those instruments which provide for subrogation rights
by reason of this policy.
14. ARBITRATION
Unless prohibited by applicable law, either the Company or the insured may
demand arbitration pursuant to the Title Insurance Arbitration Rules of the
American Arbitration Association. Arbitrable matters may include, but are not
limited to, any controversy or claim between the Company and the insured arising
out of or relating to this policy, any service of the Company in connection with
its issuance or the breach of a policy provision or other obligation. All
arbitrable matters when the Amount of Insurance is $1,000,000 or less shall be
arbitrated at the option of either the Company or the insured. All arbitrable
matters when the Amount of Insurance is in excess of $1,000,000 shall be
arbitrated only when agreed to by both the Company and the insured. Arbitration
pursuant to this policy and under the Rules in effect on the date the demand for
arbitration is made or, at the option of the insured, the Rules in effect at
Date of Policy shall be binding upon the parties. The award may include
attorneys' fees only if the laws of the state in which the land is located
permit a court to award attorneys' fees to a prevailing party. Judgment upon the
award rendered by the Arbitrator(s) may be entered in any court having
jurisdiction thereof.
The law of the situs of the land shall apply to an arbitration under the
Title Insurance Arbitration Rules.
A copy of the Rules may be obtained from the Company upon request.
15. LIABILITY LIMITED TO THIS POLICY; POLICY ENTIRE CONTRACT.
(a) This policy together with all endorsements, if any, attached hereto by
the Company is the entire policy and contract between the insured and the
Company. In interpreting any provision of this policy, this policy shall be
construed as a whole.
(b) Any claim of loss or damage, whether or not based on negligence, and
which arises out of the status of the title to the estate or interest covered
hereby or by any action asserting such claim, shall be restricted to this
policy.
(c) No amendment of or endorsement to this policy can be made except by a
writing endorsed hereon or attached hereto signed by either the President, a
Vice President, the Secretary, an Assistant Secretary, or validating officer or
authorized signatory of the Company.
16. SEVERABILITY.
In the event any provision of the policy is held invalid or unenforceable
under applicable law, the policy shall be deemed not to include that provision
and all other provisions shall remain in full force and effect.
17. NOTICES, WHERE SENT.
All notices required to be given the Company and any statement in writing
required to be furnished the Company shall include the number of this policy and
shall be addressed to Commonwealth Land TItle Insurance Company, Eight Penn
Center, Philadelphia, Pennsylvania 19103-2198.
NM 1 PA 10
ALTO Owner's Policy (10-17-92)
Form 1190-3 Cover Page
ORIGINAL
Valid Only If Face Page, Schedules A and B Are Attached
<PAGE>
American Land Title Association
Owner's Policy
(10-17-92)
POLICY
OF
TITLE
INSURANCE
[LOGO](R)
ISSUED BY
Commonwealth(R)
Land Title Insurance Company
TITLE INSURANCE SINCE 1876
HOME OFFICE
EIGHT PENN CENTER
PHILADELPHIA, PA 19103-2198
B 1190-3
<PAGE>
EXHIBIT "K"
<PAGE>
PHASE I ENVIRONMENTAL SITE ASSESSMENT
Conducted on
Fair Ridge Building
11225 Waples Mill Road
Fairfax, Virginia
For:
Trammel Crow Real Estate Services, Inc.
1115 30th Street, NW
Washington, DC 20007
Issue Date: April 16, 1996
Ronald G. Martin, CHMM /s/ RG Martin
______________________________________ __________________________
Site Inspector/Environmental Scientist Signature
Andrew M. Forrest, PG /s/ A. M. Forrest
______________________________________ __________________________
Supervisor/Project Director Signature
Prepared by:
Environmental Science & Engineering, Inc. (ESE)
250-A Exchange Place
Herndon, Virginia 22070
Phone: (703) 318-8900
Fax: (703) 318-0411
ESE Project No. 2196090
<PAGE>
EXHIBIT "L"
<PAGE>
EXHIBIT L
Property Management - Specifications
The following are the specific property management areas that Landlord's
property manager ("Property Manager" or "TCRES") will oversee on behalf of
Landlord and Tenant (or "BTG"):
A. CONTRACT SERVICES:
-----------------
TCRES will operate HIGH RIDGE CORPORATE PARK IN a professional manner.
As managing agent, TCRES will oversee the MANAGEMENT, OPERATION, and
EQUIPMENT MAINTENANCE of the property. This responsibility will include
contracting, monitoring and managing essential services, as
appropriate, such as utilities, janitorial, mechanical, elevator
maintenance, trash removal, recycling, landscaping and the building
security access system. TCRES will administer all contracted services
in a manner that provides a high level of service reasonably acceptable
to the Tenant while exercising maximum control over operating costs. At
a minimum, contracts will be reviewed on an annual basis in conjunction
with budget preparation process and will be re-bid as necessary.
B. MAINTENANCE AND OPERATIONS SERVICES:
-----------------------------------
1. PEST CONTROL: Preventive pest control services will be provided on a
monthly basis to the buildings in order to maintain a pest free
environment. Interim service will be provided if a pest problem becomes
evident. Immediate termite treatment would be performed to terminate
any presence of pests.
2. HEATING, VENTILATION & AIR CONDITIONING (HVAC): The HVAC systems will
be operated and maintained to ensure that an appropriate seasonal
temperature range and air quality is provided in all areas as set forth
in the Lease. Following an evaluation period, the Preventive
Maintenance schedule will be adjusted if necessary to maximize the
operating efficiency and life expectancy of all mechanical systems.
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<PAGE>
3. ELECTRICAL SYSTEMS: Electrical Systems shall be inspected annually to
ensure their safety and reliability. A comprehensive preventive
maintenance program shall be designed for all electrical system
components. Special procedures will be established to ensure the
integrity and reliability of electrical systems that support data
centers. Where Auxiliary Power Systems (APS), Uninterrupted Power
Systems (UPS), power conditioners and other specialized electrical
systems exist, special operations and maintenance programs will be
established to maximize their reliability.
4. ELEVATOR MAINTENANCE: Elevators shall be maintained and adjusted
regularly by qualified technicians to ensure their safety, reliability,
operating efficiency and longevity. An independent elevator consultant,
if contracted for as part of the property's annual operating budget
shall inspect all elevator systems to verify appropriate preventive
maintenance and proper adjustments are being performed on the elevator
systems in accordance with local building codes.
5. PLUMBING SYSTEMS: All water and natural gas piping, sanitary sewers,
rain leaders, water coolers, water heaters, water closets, lavatories
and other plumbing fixtures will be maintained to ensure proper
operation and leak free condition. Fixtures will be inspected quarterly
and seals and washers replaced as necessary to prevent drips and minor
leaks.
6. INTERIOR LIGHTING: Lamps and ballasts for interior lighting fixtures,
including task lighting and exit lights, will be handled as a priority
3. If two or more adjacent lighting fixtures are inoperable, the
request will be handled as a priority 2. Light diffusers and lenses
will be cleaned during re-lamping. Relamping will take place on a
schedule reasonably acceptable to the Tenant.
7. EXTERIOR LIGHTING: Proper exterior lighting is essential to the safety
of all tenants and guests. Replacement of exterior lighting will be
considered a priority l or 2 at the reasonable discretion of the
Tenant. Exterior lighting should be regulated by a photocell to ensure
operating efficiency.
8. PARKING GARAGE FACILITY & MAINTENANCE: The parking garage facility,
deck or lot shall be maintained free of litter. Areas of cracking or
"alligatoring" will be repaired as required. Signage, traffic arrows
and lines, handicap designations and striping of parking spaces will be
maintained so as to be clearly legible at all times.
.,
9. SNOW AND ICE REMOVAL: Service contracts will be maintained to ensure
the timely removal of snow and ice from the building entries,
sidewalks, parking areas and drives in accordance with local codes. A
fresh supply of calcium chloride or other de-icer will be used by the
building's maintenance staff as required. When significant snow or ice
accumulates, management will use its best efforts to remove snow and
ice in order to provide for safe building ingress and egress so as to
minimize any inconvenience to the tenants.
2
<PAGE>
10. EXTERIOR SIGNAGE: Exterior signs at ground level shall be inspected
regularly and maintained. Primary identification and pylon signs will
be cleaned annually and florescent lamps replaced as necessary.
11. INTERIOR SIGNAGE: Common area directional signage, directories, and any
signage required to comply with governmental rules and regulations will
be consistently maintained and updated to the reasonable satisfaction
of Tenant.
12. ROOF INSPECTION/REPAIRS: The roof will be inspected during the annual
building inspection to determine any preventive maintenance
requirements.
13. EXTERIOR/INTERIOR PLANTS: Exterior and Interior plants, both base
plantings and rotating seasonals, will be provided and maintained to
ensure an attractive appearance on the grounds and in the lobbies and
common areas of the buildings throughout the year.
14. AFTER HOURS RECEPTION FUNCTIONS: Management will assist in coordinating
vendor deliveries and will set up logistics for any after hours
reception functions. A Building Engineer will be on-site to assist in
after hours functions as requested. A member of the TCRES management
staff may also be available as determined.
15. SUPPLIES: The Property Manager is charged with the responsibility
for establishing and monitoring the procedures for purchase, use and
inventory of all supplies, tools and equipment necessary to operate
the property. TCRES will provide the Tenant with a monthly report of
supplies used and current inventory. All supplies will be procured
on a best value basis, established by lowest price with required
availability. The TCRES personnel assigned to the building will
ensure that all expenditures are recorded. To that end, TCRES has
established a purchasing procedure and inventory control program which
provides that: (i) numbered purchase orders are required for any
purchase or service not under contract; (ii) all purchase orders must
be authorized by personnel with approval authority previously
established by ownership, and (iii) the administration of inventory
control shall be the responsibility of the property manager with the
reasonable approval of the Tenant's Director of Facilities. The
arrangement in no way limits the Tenant's option to purchase supplies
and provide them to the property manager, should the Tenant deem it
advisable to do so; provided such items purchased by Tenant shall not
be included in the determination of the Base Year Operating Costs.
All invoices must carry a complete accounting of the supplies used in a
manner that identifies supplies used to provide service to individual
BTG business units, but only to the extent TCRES is informed at the
time such supplies are ordered as to the identity of the specific BTG
business unit.
16. EXTERIOR CLEANING/PAINTING: The building's exterior facade will be
maintained in a clean and attractive appearance. Painted and/or
duranotic surfaces will be repainted as necessary to maintain a clean,
uniform surface free of peeling, streaking or staining.
3
<PAGE>
17. INTERIOR PAINTING/WALLCOVERING: Routine janitorial service will clean
soiled areas from interior painted surfaces or wallcovering to provide
a stain-free appearance. Entries and heavy traffic areas may require
interim painting to maintain a clean appearance. Such need will be
determined during routine building preventive maintenance inspections
(or at Tenant's reasonable request).
18. BUILDING REPAIRS/LOCKSMITH SERVICES: Handyman services will be provided
to maintain and repair the existing building structure and components,
consisting of minor building repairs and rekeying upon request.
19. BUILDING SECURITY ACCESS SYSTEM MAINTENANCE AND GUARD SERVICES: TCRES's
Director of Security and the Property Manager will meet with Tenant's
Director of Facilities on a regular basis, to assess the building
Security Access System's effectiveness. This contract will be evaluated
and bid annually to receive the best available fee for responsible
system monitoring. TCRES shall provide BTG with full access to the
building database. Should BTG elect to procure uniformed guard service
through TCRES, the contract will be rebid using TCRES's portfolio size
thus assuring the best value for this service (note: this expense will
not be included in the determination of the Base Year Operating Costs).
A thorough project specific security policy & procedures manual will be
provided to the Tenant. TCRES's Director of Security, Property Manager
and Building Engineer will include the fire alarm systems and other
safety equipment in the preventive maintenance schedule.
C. PROPERTY MANAGER RESPONSE TIMES
-------------------------------
Tenant will set priority on all Tenant initiated work requests which
the Landlord will apply as follows:
1. PRIORITY 1: 1 hour response with work-around suitable to Tenant in
place by 2-hours after report - 24 hours per day/7 days per week.
Repair completed in next business day.
2. PRIORITY 2: Same as priority 1, but limited to normal working hours.
3. PRIORITY 3: 4 hour response during normal working hours with
work-around in place within six business hours. Repair completed within
two business days.
4. PRIORITY 4: Work-around in place or contact made with Tenant within one
business day, repair complete within 3 business days.
As used herein, the term "work-around" is defined as an action taken to
partially restore the functionality to the failed component or system
which falls short of a complete repair.
4
<PAGE>
Notwithstanding the foregoing, to the extent the completion response
and/or work-around times set forth above are not met due to lack of
labor and/or parts, to the extent the Property Manager is diligently
pursuing to complete the work required, the response times set forth
above shall be extended to allow for such lack of parts or labor.
D. OTHER:
-----
1. PREVENTIVE MAINTENANCE SCHEDULES: Property Managers will allow Tenant
to review and reasonably approve Property Manager's preventive
maintenance schedules for the buildings' systems.
2. EMERGENCY EVACUATION PLAN: Property Manager and Tenant will jointly
prepare an emergency evacuation plan for the Building.
3. Modifications: To the extend Tenant requests a modification to this
Exhibit L or to Exhibit F, and such modification does not increase
Landlord's Base Year Operating Costs, and does not negatively impact
Landlord's repair and maintenance obligations under the lease. Landlord
will agree to work in good faith with Tenant to effect such requests of
Tenant. However, if requests will increase Landlord's Base Year
Operating Costs, Tenant will be responsible for such additional costs.
5
<PAGE>
FIRST AMENDMENT TO DEED OF LEASE
--------------------------------
THIS FIRST AMENDMENT TO DEED OF LEASE (this "Amendment") is made this
22nd day of May, 1997, by and between GATEWAY PIEDMONT, INC., a California
corporation ("Landlord"), and BTG, INC., a Virginia corporation ("Tenant").
R E C I T A L S :
WHEREAS, Tenant and TC High Ridge, L.L.C. (the "Original Landlord")
have heretofore made and entered into that certain Deed of Lease dated as of
August 16, 1996 (the "Lease"), wherein the Original Landlord leased the
"Premises" (as defined therein) to Tenant.
WHEREAS, contemporaneous with the execution hereof, Landlord named
herein has acquired from the Original Landlord the Premises, the Land (as
defined below) and all of the rights, title, interests and obligations of the
Original Landlord under the Lease.
WHEREAS, as a condition precedent to such acquisition, Landlord and
Tenant have agreed to amend certain provisions of the Lease in the manner set
forth below.
NOW THEREFORE, for and in consideration of the foregoing recitals and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto, intending legally and equitably to be
bound, hereby covenant and agree as follows:
1. RECITALS; INCORPORATION OF TERMS. The foregoing recitals, and the
terms and provisions of the Lease, are incorporated herein by reference and made
a substantive part of this Amendment. Capitalized terms not defined in this
Amendment shall have the meanings ascribed to such terms in the Lease.
2. AMENDMENTS TO LEASE. Effective as of the Effective Date, the Lease
shall be deemed amended, modified and supplemented in the following manner:
a. Section 1.3 of the Lease shall be deleted in its entirety, and the
following shall be substituted in lieu thereof:
1.3 LEASE TERM. The term of this Lease (the "Term" or "Lease Term")
shall commence on April 1, 1997 (which shall be deemed to be the
"Commencement Date", as defined in Section 1.4 below, for all
purposes hereof), and shall expire at 5:00 p.m. Eastern Time on
June 30, 2012, unless (i) renewed pursuant to the provisions of
Section 51 below, (ii) terminated by Landlord pursuant to the
provisions of Section 24 below or (iii) terminated by Tenant
pursuant to the provisions of Section 53 below (in any such case,
the "Lease Expiration Date").
b. Section 1.5.1 of the Lease shall be deleted in its entirety, and
the following shall be substituted in lieu thereof:
<PAGE>
1.5.1 BASE RENT. During the first Lease Year and the "Interim
Period" (as defined in Section 1.9 below), Tenant shall pay to
Landlord an annual "Base Rent" in an amount equal to
payable in equal monthly installments during each Lease Year
("Monthly Rent"). The foregoing notwithstanding, Tenant shall,
under certain circumstances, be entitled to a rebate of portions of
the Tax and Expense Component pursuant to the provisions of
Sections 9.1.3 and 10.4 hereinbelow. Effective upon the
commencement of the second (2nd) Lease Year, and upon the
commencement of each Lease Year thereafter during the initial
fifteen (15) year Term hereof (each such date being referred to
herein as an "Adjustment Date"), the annual Base Rent shall be
adjusted by increasing the Triple-Net Component thereof (but not
the Tax and Expense Component thereof) by the "CPI Adjustment", as
defined below, provided however, that (i) in no event shall the
annual Base Rent increase by more than three and one-half percent
(3.5%) of the then-effective Triple-Net Component in any Lease Year
and (ii) in no event shall the Triple-Net Component be reduced
below the Triple-Net Component paid by Tenant during the prior
Lease Year. For purposes hereof, on each Adjustment Date the "CPI
Adjustment" shall be calculated by multiplying the Triple-Net
Component payable during the then-current Lease Year by one hundred
twenty percent (120%) of a fraction, the numerator of which shall
be the difference between the "Index" (as defined below) most
recently published prior to the Adjustment Date in question and the
Index most recently published as of the date which is one (1) year
prior to said Adjustment Date, and the denominator of which shall
be the Index published one (1) year prior to the Adjustment Date in
question. For purposes hereof, the "Index" shall mean the revised
Consumer Price Index for Urban Wage Earners and Clerical Workers
for the Washington, D.C.-MD-VA-SMSA (All Items, 1982-84=100)
promulgated by the Bureau of Labor Statistics of the United States
Department of Labor. If the Index is changed so that a base year
other than 1982-84 is used, the Index used herein shall be
converted in accordance with the conversion factor published by the
Bureau of Labor Statistics of the Department of Labor. If the Index
is discontinued during the Term, the Index shall be the successor
index adopted by the Bureau of Labor Statistics or, if none, the
parties shall mutually agree upon and substitute another similar
index.
c. Section 1.7 of the Lease shall be deleted in its entirety, and the
following shall be substituted in lieu thereof:
1.7 NOTICE AND PAYMENT ADDRESSES. Any notices under this Lease
shall be governed by the terms of Section 30, below. The notice addresses of the
parties are as follows:
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<PAGE>
If to Landlord: Gateway Piedmont, Inc.
c/o TA Associates Realty
45 Milk Street, 6th Floor
Boston, MA 02109
Attn: Henry Brauer, Director of
Asset Management
With copies to: Cox, Castle & Nicholson, LLP
Suite 2800
2049 Century Park East
Los Angeles, California 90067
ATTN: Amy H. Wells, Esq.
and: Barnes Morris Pardoe & Foster
1015 15th Street, N.W., Suite 1000
Washington, DC 20005
ATTN: Eric Forshee
If to Tenant: BTG, Inc.
3877 Fairfax Ridge Road
Fairfax, Virginia 22030
Attn: Marilynn Bersoff, Senior Vice President
With copies to: Tucker, Flyer & Lewis, a
professional corporation
1615 L Street, N.W.-4th Floor
Washington, D.C. 20036
Attn: Mark D. Jackson, Esq.
and: The Irving Group
1950 Old Gallows Road
Suite 555
Vienna, Virginia 22182
Attn: Dale Powell, President
Either party may, by ten (10) days' prior written notice to the
other, designate a new address to which all notices hereunder shall
be directed.
d. Section 1.8 of the Lease shall be deleted in its entirety, and the
following shall be substituted in lieu thereof:
1.8 RENT PAYMENT ADDRESS. Tenant shall send payments of Rent and
additional rent hereunder to Landlord at the following address, or to such other
address of which Landlord may advise Tenant in writing in accordance with the
provisions of Section 39 below:
-3-
<PAGE>
Gateway Piedmont, Inc.-High Ridge Office Park
File #55229
Los Angeles, California 90074-5229
e. Section 1.9 of the Lease shall be deleted in its entirety, and the
following shall be substituted in lieu thereof:
1.9 LEASE YEAR. Each twelve (12) month period within the Lease Term
shall be referred to herein as a "Lease Year." The first Lease Year
shall commence on July 1, 1997 and terminate on June 30, 1998. Each
subsequent Lease Year shall commence on the first day of July and
shall continue for a period of twelve (12) full calendar months.
The period commencing on June 1, 1997 and ending on July 1, 1997
shall be referred to herein as the "Interim Period", and shall be
treated as a separate partial Lease Year for purposes of
calculating Tenant's obligations under Sections 9 and 10 hereof;
however, the period beginning on the Commencement Date and ending
on May 31, 1997 shall not constitute a partial Lease Year, and
Tenant shall have no obligations to pay any additional rent with
respect to such period.
f. The last sentence of Section 5.4 of the Lease is hereby deleted in
its entirety.
g. Sections 7.1 through 7.5 shall be modified to substitute the phrase
"similar first class properties" wherever the phrases "similar properties" or
"comparable properties" is used, it being the intent hereof that each of
Landlord and Tenant shall perform their respective repair and maintenance
obligations hereunder in accordance with standards applicable to comparable
first-class buildings in Fairfax, Virginia.
h. The period at the end of the last sentence of Section 7.1 of the
Lease shall be deleted, and the following shall be added at the end of such
sentence:
; provided, however, that Landlord's obligation to correct latent
defects shall terminate upon the earlier of (A) the date Landlord
has expended the sum of One Hundred Thousand and No/100 Dollars
($100,000.00) correcting such latent defects, or (B) the expiration
of such eighteen (18) month period, and thereafter, (i) to the
extent any repairs, improvements or replacements needed to correct
any additional latent defects constitute an Operating Cost pursuant
to Section 9.6 below, then Tenant shall be responsible for the
same, and (ii) to the extent any repairs, improvements or
replacements needed to correct any additional latent defects are
excluded from Operating Costs pursuant to the provisions of Section
9.7 below, then Landlord shall be responsible for the same. In
addition, if and to the extent TC High Ridge, LLC, Landlord's
predecessor-in-interest, pays any amount to Tenant in satisfaction
of its obligation to perform or complete any punch-list obligations
regarding the Base Building Work, then, absent Landlord's agreement
to the contrary, Tenant shall complete such part of the punch-list
work
-4-
<PAGE>
at its sole cost and expense within a reasonable time following its
receipt of such payment; and, in the event Tenant fails timely to
perform any punch-list work required to be performed by Landlord,
then Landlord shall have the right to complete the same, and the
costs incurred by Landlord in connection therewith shall constitute
Operating Costs for all purposes hereof.
i. Section 7.3 of the Lease shall be deleted in its entirety.
j. The first sentence of Section 7.4 of the Lease shall be modified to
delete the phrase "during the First Lease Year", and to substitute in lieu
thereof the phrase "or replacements, whether of a capital nature or otherwise,
at any time during the Term hereof, except as agreed upon by the parties
pursuant to the annual Approved Budget".
k. The following shall be added as new Sections 7.6, 7.7, 7.8, 7.9 and
7.10 of the Lease:
7.6 REPLACEMENT OF THIRD PARTS PROPERTY MANAGER. Landlord and
Tenant acknowledge that Landlord shall initially engage Trammel
Crow Real Estate Services, Inc. ("TCRES") to manage the Project
upon terms mutually acceptable to Landlord, Tenant and TCRES. TCRES
or any subsequent third party manager of the Project engaged by
Landlord is hereinafter sometimes referred to as the "Property
Manager". Tenant shall have the right, at any time and from time to
time and for any reason, upon not less than thirty (30) days prior
written notice to Landlord, to require Landlord to terminate its
management agreement with TCRES or any future Property Manager and
to engage another third party management company mutually and
reasonably acceptable to both Landlord and Tenant to manage the
Project. Landlord shall have the right to terminate the Property
Manager at any time, subject to Tenant's prior written consent,
which shall not be unreasonably withheld, conditioned or delayed,
and in such event Landlord shall engage another third party
management company mutually and reasonably acceptable to both
Landlord and Tenant to manage the Project. Any third party
management company engaged as the Property Manager hereunder shall
manage the Project pursuant to a management agreement approved by
Tenant (as to economic and all other terms), which approval shall
not be unreasonably withheld, conditioned or delayed. Any party
engaged as the Property Manager hereunder shall perform the minimum
maintenance specifications set forth in Exhibit L hereto (the
"Management Specifications"). In all events, there shall be no
mark-up or additional fee charged by Landlord or any Property
Manager with respect to any goods, labor or services provided to
the Project by third parties. Tenant's rights under this Section
7.6 shall be subject to modification in certain circumstances
pursuant to the provisions of Section 7.10 below. Tenant
acknowledges that Landlord shall engage an asset manager in
connection with the Project to perform certain accounting,
reporting and oversight functions required
-5-
<PAGE>
by Landlord, which asset manager shall be referred to herein as the
"Oversight Manager," and that Tenant shall not have the right to
select or approve the Oversight Manager or the agreement between
Landlord and the Oversight Manager. The provisions of Sections 7.6
and 7.7 shall not apply with respect to the Oversight Manager.
7.7 TENANT'S SELF-MANAGEMENT OPTION. Tenant shall have the right,
at any time, upon at least thirty (30) days prior written notice to
Landlord, either (i) to directly engage a third party management
company reasonably acceptable to Landlord to manage the Project
(rather than having Landlord engage such company) or (ii) to
engage, as employees of Tenant, an experienced and qualified
facilities manager, building engineer and other individuals to
perform the management functions of the Property Manager hereunder.
Any individuals engaged by Tenant pursuant to clause (ii) above
shall be subject to Landlord's prior written consent, which shall
not be unreasonably withheld, conditioned or delayed. If Tenant
engages a third party management company to perform the functions
of the Property Manager hereunder, Landlord shall have the right to
review and approve of any contract between Tenant and such party to
insure that such party is obligated to perform and comply with the
Management Specifications, which approval shall not be unreasonably
withheld, conditioned or delayed. In the event Tenant exercises its
right to engage a third party manager or perform management
services with its own employees: (a) Tenant shall pay all
management and other fees to any third party management company it
may engage and/or shall be responsible for the salary and fringe
benefits of all employees engaged by Tenant to perform management
functions; and (b) Tenant shall be deemed to have elected to
eliminate Landlord's obligation to engage a property management
company, and such reduction in Operating Costs shall constitute a
"Reduced Service" for purposes of Section 8.4 hereof. Accordingly,
in such event, the Tax and Expense Component of Base Rent shall be
reduced by all management fees and other costs (including, but not
limited to, personnel) passed through to the Landlord pursuant to
the terms of the applicable management agreement which were paid or
incurred by Landlord during the First Lease Year (which for all
purposes of this Lease shall not include the Interim Period);
PROVIDED, that, if such election is made prior to the expiration of
the First Lease Year, the Tax and Expense Component of Base Rent
shall be reduced by the management fees and related costs which
would have been paid or incurred by Landlord during the First Lease
Year absent Tenant's election. In the event Tenant exercises its
rights under this Section 7.7, then Tenant shall be deemed to have
assumed the obligations of Landlord under the last three (3)
sentences of Section 8.1 of the Lease. Tenant's rights under this
Section 7.7 shall be subject to modification in certain
circumstances pursuant to the provisions of Section 7.10 below.
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7.8 MANAGEMENT DEFICIENCIES. In the event Landlord believes that
Tenant's third party management company or in-house employees are
not managing the Project in the manner required herein, it shall
provide Tenant and any third party manager engaged by Tenant with
written notice thereof setting forth the perceived deficiencies. In
the event any deficiencies are not corrected within thirty (30)
days from the date of such notice (or such longer period of time as
may reasonably be needed to cure such deficiencies using due
diligence, not to exceed an additional thirty (30) days), then (i)
Landlord may temporarily terminate Tenant's right to self-manage
the Project or (ii) without terminating Tenant's right to
self-manage the Project, Landlord may take such action as may be
necessary to cure the deficiencies, and any amounts reasonably
expended by Landlord in connection therewith shall be reimbursed by
Tenant to Landlord as additional rent hereunder within thirty (30)
days following submission of an invoice therefor (with appropriate
backup). In the event Landlord terminates Tenant's right to
self-manage the Project, then Landlord and Tenant shall mutually
agree upon a new third party management company to be employed by
Landlord, which shall function as the Property Manager hereunder
pursuant to the provisions of Section 7.6 above. If Landlord
exercises the termination rights specified above, then Tenant shall
have no right to elect to self-manage the Project for at least two
(2) years thereafter. Further, if Tenant thereafter opts to
self-manage the Project and its self-management rights are validly
terminated a second (2nd) time pursuant to this paragraph, then its
right to self-manage the Project shall thereafter cease and be of
no further force and effect. Additionally, in the event Tenant is
not self-managing the Project pursuant to Section 7.7 above during
the thirteenth (13th) Lease Year, then Tenant shall not have the
right to elect to self-manage the Project during the last two (2)
Lease Years. Any disputes between Landlord and Tenant under this
Section 7.8 shall be subject to resolution pursuant to the
provisions of Section 49 of this Lease, and pending resolution of
any such dispute, unless the parties agree otherwise, Landlord
shall have the right (but not the obligation) to engage the
Oversight Manager as the Property Manager for the Project, provided
that the fees payable to the Oversight Manager shall not exceed the
prevailing fair-market fees payable to third parties managing a
project similar to the Project in the Fairfax, Virginia area.
7.9 COORDINATION WITH OVERSIGHT MANAGER. In the event Tenant
exercises its right to self-manage the Project pursuant to Section
7.7, all bills incurred in managing the Project shall be approved
by Tenant's in-house or third-party property manager and shall then
be forwarded to Landlord's Oversight Manager for payment by
Landlord in accordance with the Management Specifications, except
that Tenant shall be responsible for the fees paid to any third
party management company it may engage or the salary of any
employees it may hire to perform management-related functions.
Additionally, in such event Tenant's third party manager or
in-house employees shall (i) promptly respond to all inquiries from
the Oversight Manager, (ii) cooperate with any reasonable request
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<PAGE>
made by Landlord's Oversight Manager, and (iii) provide Landlord's
Oversight Manager with the reports and information specified in
EXHIBIT L hereto within the time frames specified therein. Further,
except as approved by Landlord in advance pursuant to any Approved
Budget, in no event shall any management company engaged directly
by Tenant, or any employees of Tenant, perform any capital repairs
or improvements to the Project. The parties acknowledge that
Landlord's Oversight Manager is currently Barnes Morris Pardoe &
Foster, but that Landlord shall have the right to change its
Oversight Manager upon written notice to Tenant. Landlord's
Oversight Manager and other representatives of Landlord shall be
permitted to inspect the Project on an annual, quarterly and
bi-weekly basis, subject to the conditions set forth in Section 18
below. Further, the parties acknowledge that any party performing
management functions hereunder shall be responsible for assisting
in the preparation of the "Approved Budget" and shall coordinate
the "Annual Facility Review" (as such terms are defined in Section
9.5 below) to determine if all repairs, replacement and
improvements to be performed by Landlord and Tenant hereunder have
been timely performed.
7.10 TENANT'S RIGHTS FOLLOWING CERTAIN ASSIGNMENTS AND SUBLETTINGS.
Tenant's rights under Sections 7.6 and 7.7 above shall, at
Landlord's election, cease and be of no further force and effect in
the event of any assignment of this Lease to any party other than a
permitted assignee under Section 21.4 of this Lease or in the event
Tenant or any such permitted assignee ceases to occupy at least
145,000 rentable square feet of space in the Project (either of
such events being referred to herein as a "Self-Management
Termination Event"), and in such event (and only in such event) the
provisions of this Section 7.10 shall apply. Landlord's election to
terminate Tenant's Self-Management rights may be exercised at any
time following a Self-Management Termination Event. If Tenant had
been self-managing the Project immediately prior to the time a
Self-Management Termination Event occurred, and Landlord thereafter
elects to terminate Tenant's self-management rights, then Tenant
shall have the one-time right to approve of the first Property
Manager to be engaged by Landlord following a Self-Management
Termination Event, which consent shall not be unreasonably
withheld, conditioned or delayed. Further, if at any time
thereafter (i) Tenant has notified Landlord, with specificity, of
the failure of Landlord's Property Manager to meet any material
requirement set forth in the Management Specifications or elsewhere
in this Lease, which failure has not been remedied by the Property
Manager within thirty (30) days after such notification by Tenant,
or (ii) the portion of the property management fee charged by the
Property Manager is more than 105% of the then prevailing market
rates charged for comparable services as contemplated in the
Management Specifications and this Lease (excluding any duties
therein to be performed by the Oversight Manager) for comparable
properties in the Fairfax, Virginia area, and the property
management company is unwilling to reduce such fee to such market
rates (provided that the fee paid to the Oversight Manager shall
not be included in calculating the property management
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<PAGE>
fee charged by the Property Manager), then Tenant shall have the
right, upon thirty (30) day's prior written notice, to require the
Landlord to replace the Property Manager (but not the Oversight
Manager) with another third party management company mutually and
reasonably acceptable to both Landlord and Tenant. The foregoing
notwithstanding, Tenant's right to assess whether the cost of
property management services being charged by Landlord's Property
Manager exceeds market rates, and to require said Property Manager
to reduce its fees in lieu of replacement, shall be exercisable
only one (1) time during each Lease Year, and shall in no event be
exercisable during the first two (2) Lease Years. Further, in such
event, any change by Landlord in the identity of the Property
Manager shall be subject to Tenant's approval, which shall not be
unreasonably withheld, conditioned or delayed; provided that, as
long as (y) the replacement management company is then currently
engaged in the commercial property management business, and (z) the
replacement management company agrees to manage the Project in
accordance with the Management Specifications and the terms hereof
and at not more than the management fees then currently being
charged by the existing Property Manager and Oversight Manager, no
approval from Tenant shall be required for any change in the
property management company arising as a result of a transfer of
ownership of the Project. In the event of a change in the Property
Manager as a result of a change in ownership of the Project, such
change shall not thereafter terminate Tenant's right to approve
subsequent changes in the Property Manager or Tenant's right to
require change in the Property Manager in the event of
circumstances consistent with either subsection (i) or (ii) above.
l. Section 8.4 of the Lease shall be amended by substituting the
phrase "the First Lease Year" for the phrase "the Base Year" in each place where
such phrase appears.
m. The following shall be added as new Section 9.1.3 of the Lease:
9.1.3 REIMBURSEMENTS TO TENANT. The parties acknowledge that the
Tax and Expense Component of Base Rent includes the full amount of
the Base Year Operating Costs as a part of the Rent payable by
Tenant. Accordingly, to the extent Tenant's Share of actual
Operating Costs attributable to any Lease Year is less than the
Base Year Operating Costs, then the difference shall promptly be
refunded by Landlord to Tenant.
n. The first sentence of Section 9.2 of the Lease shall be modified to
delete the phrase "For all purposes hereof, the Base Year Operating Costs shall
be all Operating Costs incurred by Landlord during the First Lease Year of the
Term," and substituting in its place the following: "For purposes hereof, the
`Base Year Operating Costs' shall mean an amount equal to"
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<PAGE>
o. The following shall be added after the fourth (4th) complete
sentence of Section 9.4 of the Lease:
Similarly, if the Expense Statement shows that Tenant's Share of
actual Operating Costs attributable to the applicable Lease Year is
less than the Base Year Operating Costs plus any payments made by
Tenant on account of estimated increases in Operating Expenses,
then Landlord shall refund the difference to Tenant at the time it
submits such Expense Statement to Tenant.
p. The following shall be added at the end of Section 9.5 of the
Lease:
Neither Landlord nor Tenant shall be entitled to defer any
maintenance, repairs, replacements or improvements (whether capital
or otherwise) needed to maintain the Project in accordance with the
standards set forth herein unless such deferral is contemplated
pursuant to each Approved Budget (it being acknowledged that
neither Landlord nor Tenant shall have the right to defer any
maintenance, repairs, replacements or improvements to the Project
if such deferral would have the effect of increasing the economic
burden of the other party hereto or if such deferral would have an
adverse effect upon the Premises or the Project). The parties
acknowledge that the Approved Budget shall specifically address
capital expenses to be borne by Landlord during each Lease Year.
The Approved Budget shall be prepared in accordance with the
requirements set forth in EXHIBIT L hereof. Within thirty (30) days
after the expiration of each Lease Year, representatives of
Landlord and Tenant shall jointly tour the Buildings and Common
Areas and conduct an "Annual Facility Review" to assess whether
the repairs, replacements, capital improvements, maintenance
obligations and other items for which Landlord and Tenant were
responsible pursuant to the then-current Approved Budget have been
timely and properly made by each party. At the conclusion of each
Annual Facility Review, Landlord and Tenant shall each sign a
certificate confirming that, to the best of their knowledge, the
work for which each party was responsible during the prior Lease
Year has been fully and completely performed, or if any items were
not properly performed, such certificate shall specify the same and
the timetable for completion or correction thereof. Additionally,
at any time during the Lease Term, Landlord and Tenant agree to
provide the other party with written notice (a "Repair Notice") in
the event it believes the other party has not performed any of its
maintenance, repair and replacement obligations hereunder. In the
event the party receiving a Repair Notice does not either dispute
the same or commence performing such obligations within thirty (30)
days following its receipt of such notice, or in the event any
party fails to diligently prosecute the noted repairs to
completion, then the party sending such notice shall be entitled to
exercise any remedies set forth herein. Disputes arising under this
Section shall be subject to resolution in accordance with the
provisions of Section 49 hereof.
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<PAGE>
q. The text of clause (o) of Section 9.6 of the Lease shall be deleted
in its entirety, and the following shall be substituted in lieu thereof:
market rate management fees actually incurred, consistent with the
amounts agreed to by Landlord and Tenant pursuant to the annual
Approved Budget, as modified in any Lease Year on account of the
exercise by Tenant of its rights under Section 7.6 hereof, provided
that in no event shall the management fee payable to the Property
Manager exceed two percent (2%) of, and in no event shall any fee
payable to the Oversight Manager exceed one percent (1%) of, the
gross rental receipts plus assumed utility costs of Three Hundred
Twenty-Five Thousand and No/00 Dollars ($325,000.00) payable by
Tenant with respect to the then-current Lease Year (and in the
event Tenant elects to self-manage the Project pursuant to its
rights under Section 7.7 above Operating Costs shall be deemed to
include such one percent (1%) fee to the Oversight Manager);
r. Section 10.1 of the Lease shall be amended by deleting the phrase
"[A]fter the first Lease Year" at the beginning of the first sentence thereof.
s. The following shall be added as new Section 10.4 of the Lease:
10.4 REIMBURSEMENTS TO TENANT. The parties acknowledge that the Tax
and Expense Component of Base Rent includes the full amount of the
Tax Stop as a part of the Rent payable by Tenant. Accordingly, to
the extent Tenant's Share of Real Estate Taxes attributable to any
Lease Year is less than the Real Estate Tax Stop, then the
difference shall be refunded by Landlord to Tenant at the time
Landlord delivers the Tax Statement to Tenant.
t. Clause (iii) of the second complete sentence of Section 21.2 of the
Lease is hereby deleted in its entirety.
u. The fourth (4th) sentence of the second (2nd) full paragraph of
Section 24.2.2.3 of the Lease shall be modified to add the phrase "additional
rent and other amounts payable by Tenant to Landlord hereunder" after the word
"Rent" in both place where the word "Rent" appears.
v. The following shall be added after the second (2nd) complete
sentence of Section 24.3 of the Lease:
In the event Landlord's lender notifies Tenant in writing prior to
the expiration of the foregoing cure period that it intends to cure
the default, Landlord's lender shall be afforded the additional
time to cure the same specified in Section 31 of this Lease.
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<PAGE>
w. The last sentence of Section 41.5 of the Lease is hereby deleted in
its entirety, and the following shall be substituted in lieu thereof:
Tenant shall have the right to remove all roof devices at any time.
In the event Tenant does not wish to remove any roof devises at the
end of the Term, it shall notify Landlord of such desire in
writing; within ten (10) days from Landlord's receipt of such
request, it shall notify Tenant in writing if it requires any then-
existing roof devices to be removed. Tenant shall, prior to the
expiration of the Term, remove all roof devices it desires or is
required to remove pursuant to the terms hereof, and repair any
damage to the roof of the Buildings occasioned thereby.
x. Section 51.1 of the Lease is hereby amended to delete the phrase
"not more than eighteen (18) months nor less than fourteen months," and to
substitute in lieu thereof the phrase "not more than twelve (12) months nor less
than nine (9) months". In addition, at the end of Section 51.1 of the Lease the
following sentence shall be added: "Exercise of the second Renewal Option is
contingent upon Tenant's exercise of the first Renewal Option."
y. The first sentence of Section 51.3 of the Lease shall be deleted in
its entirety, and the following shall be substituted in lieu thereof:
The Base Rent payable upon the commencement of the Renewal Term
shall equal ninety-five percent (95%) of the then-prevailing market
rental rate for a tenant having a financial condition comparable to
the greater of Tenant's net worth as of the date hereof or Tenant's
net worth at the time the applicable Renewal Option is exercised
(including base rental rate and annual escalation rate) applicable
to renewal terms with respect to comparable space in comparable
buildings in the vicinity of the Project (the "Fair Market Rate" or
"FMR") at the time of the commencement of the applicable Renewal
Term, determined based upon then existing renewal market conditions
applicable to the leasing of comparable space in comparable
buildings in the vicinity of the Project (taking into consideration
use, location, quality, age and location of the applicable building
and the definition of net rentable area).
Similarly, wherever the phrase "Fair Market Rate", "Fair Market Rent" or "FMR"
is used in Sections 51.3 or 51.4 of the Lease, the same shall be amended to
refer to ninety-five percent (95%) of the Fair Market Rent or FMR, as
applicable.
z. Section 53 of the Lease is hereby deleted in its entirety, and the
following is substituted in lieu thereof:
53 TERMINATION RIGHT. Tenant shall have the one (1) time right to
terminate this Lease as of the last day of the seventh (7th) Lease
Year (the "Termination Date"), provided that (i) Tenant provides
written notice of its desire
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to so terminate to Landlord (the "Termination Notice") at least
fifteen (15) months prior to the Termination Date and (ii) at least
thirty (30) days prior to the Termination Date, Tenant shall pay to
Landlord, via certified or cashier's check or wire transfer of
Federal funds, an amount equal to (i) the "Cancellation Fee", as
defined below, plus (ii) all Base Rent and estimated payments of
additional rent and other charges payable by Tenant hereunder
through the Termination Date. For purposes hereof, the
"Cancellation Fee" shall be an amount equal to
. In the event
Tenant timely exercises the termination right set forth herein, and
timely pays the Cancellation Fee and other costs enumerated above
to Landlord, this Lease and the Term hereof shall expire upon the
Termination Date; PROVIDED, HOWEVER that (a) Tenant shall remain
liable for all indemnification obligations hereunder and (b) if
after the Termination Date the amount of any estimated payments
made by Tenant pursuant to clause (ii) of the preceding sentence
proves to be inaccurate, Landlord or Tenant, as the case may be,
shall promptly remit to the other any amount which may be due to
rectify any overpayment or underpayment by Tenant.
aa. EXHIBIT L attached to the Lease shall be deleted in its entirety,
and EXHIBIT L attached to this Amendment shall be substituted in lieu thereof.
3. INTEGRATION; CONFLICTS. The parties hereto hereby ratify and
confirm all of the terms and provisions of the Lease (as modified pursuant to
Paragraph 2 hereof). In the event of a conflict between the terms of this
Amendment and the terms of the Lease, the terms of this Amendment shall govern
the rights and obligations of the parties hereto.
4. BINDING EFFECT. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns and
legal and personal representatives.
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<PAGE>
5. GOVERNING LAW. This Amendment shall be governed and construed in
accordance with the internal laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, Landlord and Tenant have executed this First
Amendment to Deed of Lease as of the day and year first above written.
LANDLORD:
GATEWAY PIEDMONT, INC.
By: /s/ Margaret O. Shuler
__________________________
Name: MARGARET O. SHULER
__________________________
Title: VICE PRESIDENT & SECRETARY
__________________________
TENANT:
BTG, INC.
By:
_______________________________
Name: Marilynn D. Bersoff
_______________________________
Title: Senior Vice President/Secretary
_______________________________
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EXHIBIT L
---------
MANAGEMENT SPECIFICATIONS
- -------------------------
The following are the specific property management areas that Landlord's
Oversight Manager, Barnes, Morris, Pardoe, & Foster, ("Oversight Manager"), and
the property manager ("Property Manager"), whether engaged by Landlord or Tenant
will oversee on behalf of Landlord and Tenant (or "BTG"):
A. CONTRACT SERVICES:
-----------------
The Oversight Manager and Property Manager will operate High Ridge Corporate
Park in a, first class, professional manner. The Property Manager will
oversee the management, operation, and equipment maintenance of the property.
This responsibility will include contracting (in the name of the Landlord or
Tenant), monitoring and managing essential services, as appropriate, such as
utilities, janitorial, mechanical, elevator maintenance, trash removal,
recycling, landscaping and the building security access system. The Oversight
Manager and Property Manager will administer all contracted services in a
manner that provides a high level of service reasonably acceptable to BTG and
Landlord while exercising maximum control over operating costs. At a minimum,
contracts will be reviewed on an annual basis in conjunction with budget
preparation process and will be re-bid as necessary or as reasonably
requested by Landlord or BTG. The Property Manager will be responsible for
all the items to be performed as outlined below, subject to consultation with
the Oversight Manager.
B. MAINTENANCE AND OPERATIONS SERVICES:
-----------------------------------
1. PEST CONTROL: Preventive pest control services will be provided on a monthly
basis to the buildings in order to maintain a pest free environment. Interim
service will be provided if a pest problem becomes evident. Immediate termite
treatment would be performed to terminate any presence of pests.
2. HEATING, VENTILATION & AIR CONDITIONING (HVAC): The HVAC systems will be
operated and maintained to ensure that an appropriate seasonal temperature
range and air quality is provided in all areas as set forth in the Lease.
Following an evaluation period, the Preventive Maintenance Schedule will be
adjusted if necessary to maximize the operating efficiency and life
expectancy of all mechanical systems.
3. ELECTRICAL SYSTEMS: Electrical Systems shall be inspected annually to ensure
their safety and reliability. A comprehensive preventive maintenance program
shall be designed for all electrical system components. Special procedures
will be established to ensure the integrity and reliability of electrical
systems that support data centers. Where Auxiliary Power Systems (APS),
Uninterrupted
<PAGE>
Power Systems (UPS), power conditioners and other specialized electrical
systems exist, special operations and maintenance programs will be
established to maximize their reliability.
4. ELEVATOR MAINTENANCE: Elevators shall be maintained and adjusted regularly by
qualified technicians to ensure their safety, reliability, operating
efficiency and longevity. An independent elevator consultant, if contracted
for as part of the property's annual operating budget shall inspect all
elevator systems to verify the appropriate preventive maintenance and proper
adjustments are being performed on the elevator systems in accordance with
local building codes.
5. PLUMBING SYSTEMS: All water and natural gas piping, sanitary sewers, rain
leaders, water coolers, water heaters, water closets, lavatories and other
plumbing fixtures will be maintained to ensure proper operation and leak free
connection. Fixtures will be inspected quarterly and seals and washers
replaced as necessary to prevent drips and minor leaks.
6. INTERIOR LIGHTING: Lamps and ballast's for interior lighting fixtures,
including task lighting and exit lights, will be handled as a priority 3. If
two or more adjacent lighting fixtures are inoperable the request will be
handled as a priority 2. Light diffusers and lenses will be cleaned during
re-lamping. Re-lamping will take place on a schedule reasonably acceptable to
the Tenant.
7. EXTERIOR LIGHTING: Proper exterior lighting is essential to the safety of all
tenants and guests. Replacement of exterior lighting will be considered a
priority 1 or 2 at the reasonable discretion of the Tenant. Exterior lighting
should be regulated by a photocell to ensure operating efficiency.
8. PARKING GARAGE FACILITY & MAINTENANCE: The parking garage facility, deck or
lot shall be maintained free of litter. Areas of cracking or "alligatoring"
will be repaired as required. Signage, traffic arrows and lines, handicap
designations and striping of parking spaces will be maintained so as to be
clearly legible at all times.
9. SNOW AND ICE REMOVAL: Service contracts will be maintained to ensure the
timely removal of snow and ice from the building entries, sidewalks, parking
areas and drives in accordance with local codes. Calcium chloride or other
deicer will be used by the building's maintenance staff as required. When
significant snow or ice accumulates, management will use its best efforts to
remove snow and ice in order to provide for safe building ingress and egress
so as to minimize any inconvenience to the tenants.
10. EXTERIOR SIGNAGE: Exterior signs at ground level shall be inspected
regularly and maintained. Primary identification and pylon signs will be
cleaned annually
<PAGE>
and florescent lamps are replaced as necessary.
11. INTERIOR SIGNAGE: Common area directional signage, directories, and any
signage required to comply with governmental rules and regulations will be
consistently maintained and updated to the reasonable satisfaction of
Tenant.
12. ROOF INSPECTION/REPAIRS: The roof will be inspected during the annual
building inspection to determine any preventive maintenance requirements.
13. EXTERIOR/INTERIOR PLANTS: Exterior and interior plants, both base plantings
and rotating seasonal, will be provided and maintained to ensure an
attractive appearance on the grounds and in the lobbies and common areas of
the buildings throughout the year.
14. AFTER HOURS RECEPTION FUNCTIONS: Management will assist in coordinating
vendor deliveries and will set up logistics for any after hours reception
functions. A Building Engineer will be on-site to assist in after hours
functions as requested. A member of the Property Management staff may also
be available as determined.
15. SUPPLIES: The Property Manager is charged with the responsibility for
establishing and monitoring the procedures for purchasing, use and inventory
of all supplies, tools and equipment necessary to operate the property. The
Property Manager will provide the Tenant and Oversight Manager with a
monthly report of supplies used and current inventory. All supplies will be
procured on a best value basis, established by lowest price with required
availability. The Property Manager personnel assigned to the building will
ensure that all expenditures are recorded. To that end, the Property
Manager, at the direction of the Oversight Manager, will establish a
purchasing procedure and inventory control program which provides that: (i)
numbered purchase orders are required for any purchase or service not under
contract; (ii) all purchase orders must be authorized by personnel with
approval authority previously established by ownership, and (iii) the
administration of inventory control shall be the responsibility of the
Property Manager with the reasonable approval of the Tenant's Director of
Facility. The arrangement in no way limits the Tenant's option to purchase
supplies and provide them to the Property Manager, should the Tenant or
Oversight Manager deem it advisable to do so.
All invoices must carry a complete accounting of the supplies used in a
manner that identifies supplies used to provide service to individual BTG
businesses
<PAGE>
units, but only to the extent the Oversight Manager and Property Manager are
informed at the time such supplies are ordered as to the identity of the
specific BTG business unit.
16. EXTERIOR CLEANING/PAINTING: The building's exterior facade will be
maintained in a clean and attractive appearance. Painted and/or duranotic
surfaces will be repainted as necessary to maintain a clean, uniform surface
free of peeling, streaking or staining.
17. INTERIOR PAINTING/WALLCOVERING: Routine janitorial service will clean soiled
areas from interior painted surfaces or wallcovering to provide a stain-free
appearance. Entries and heavy traffic areas may require interim painting to
maintain a clean appearance. Such need will be determined during routine
building preventive maintenance inspection (or Tenant's or Oversight
Manager's reasonable request).
18. BUILDING REPAIRS/LOCKSMITH SERVICES: Handyman service will be provided to
maintain and repair the existing building structure and components,
consisting of minor building repairs and rekeying upon request.
19. BUILDING SECURITY ACCESS SYSTEM MAINTENANCE AND GUARD SERVICES: The
Oversight Manager and Property Manager will meet with Tenant's Director of
Facilities on a regular basis, to assess the building Security Access
System's effectiveness. This contract will be evaluated and bid annually to
receive the best annual fee for responsible system monitoring. The Property
Manager shall provide BTG and Oversight Manager with full access to the
building database. Should BTG and Oversight Manager elect to procure
uniformed guard service through the Oversight Manager or Property Manager,
the contract will be rebid using that organization's portfolio(s) size thus
assuring the best value of this service. A thorough project specific
security policy & procedures manual will be provided to the Tenant and
Oversight Manager. The Oversight Manager, Property Manager and Building
Engineer will include the fire alarm systems and other safety equipment in
the preventive maintenance schedule.
C. PROPERTY MANAGER RESPONSE TIMES
-------------------------------
Tenant will set priority on all Tenant initiated work requests which the
Property Manager will apply as follows:
Priority 1: 1 hour response with Work-around suitable to Tenant in place by 2
hours after report--24 hours per day/7 days per week. Repair completed in
next business day.
Priority 2: Same as priority 1, but limited to normal working hours.
<PAGE>
Priority 3: 4 hour response during normal working hours with work-around in
place within six business hours. Repair completed within two business days.
Priority 4: Work-around in place or contact made with Tenant within one
business day, repair complete within 3 business days.
As used herein, the term "work-around" is defined as an action taken to
partially restore the functionality to the failed component or system which
falls short of a complete repair.
Notwithstanding the foregoing, to the extent the completion response and/or
work-around times set forth above are not met due to lack of labor and/or
parts, to the extent the Property Manager is diligently pursuing to complete
the work required, the response times set forth above shall be extended to
allow for such lack of parts or labor.
D. FINANCIAL REPORTING
-------------------
1. All financial reports will be prepared by the Oversight Manager in "Skyline"
software and will be submitted to the Landlord and Tenant by the fourth (4th)
day of each month. Books will be closed on the twentieth (20th) day of each
month. Preliminary Financial Reports will be submitted to Property Manager
for review within four (4) business days of financial closing. Property
Manager will provide comments to Oversight Manager with preliminary
financials within three (3) business days.
2. The Property Manager will prepare the monthly funding request for all bills
anticipated for the next thirty (30) days on the eleventh (11th) day of each
month or the next day if the eleventh (11th) day falls on a weekend.
3. The Property Manager will approve and code all invoices and forward them (on
the 1st day & 15th day) to the Oversight Manager. The Oversight Manager will
cut checks and mail them within seven (7) days.
4. The Property Manager and engineering staff will prepare a monthly activities
report and submit it to the Oversight Manager on the first (1st) day of each
month, (reference Schedule L-1). The report will contain the following:
o Meetings, complete with synopsis.
o Staffing issues
o In house engineering activities
o Repairs
o Preventative Maintenance
o Capital Items
<PAGE>
o Service Contract Activities
5. Either the Property Manager or the Oversight Manager, on behalf of Landlord
or on behalf of BTG, will execute all service contracts. All contracts will
have a thirty (30) day cancellation with no penalty. Oversight Manager must
reasonably approve any contracts for a period more than thirty (30) days.
6. The Property Manager will prepare the Monthly Budget Variance Narrative,
(reference Schedule L-2). This report is due on the first (1st) day of every
month.
7. Property Manager will jointly prepare with Oversight Manager, with timely
input of BTG, the Annual Property Asset Plan and Operating Budget.
o Property Overview
o Executive Summary (Oversight Manager & Property Manager)
o Management Company (Oversight Manager & Property Manager)
o Physical Description (Property Manager)
o Performance Analysis
o 1996 Analysis (Oversight Manager & Property Manager)
o Comparative Analysis (Oversight Manager & Property Manager)
o Occupancy History (Property Manager)
o 1997 Operating Budget
o Budget Summary & Detail (Oversight Manager & Property Manager)
o Yield Analysis (Oversight Manager)
o Income Detail (Property Manager)
o Operating Expense Detail (Property Manager)
o Capital Expenditure Detail (Oversight Manager & Property Manager)
o Special Exhibits
o Service Contracts (Property Manager)
o Tax Abatement Policy (Oversight Manager)
o Energy Management/Air Quality (Property Manager)
o ADA Compliance (Property Manager)
o Affirmative Action Policy (Oversight Manager & Property Manager)
o Goals and Objectives 1997
o Goals and Objectives (Oversight Manager & Property Manager)
<PAGE>
o 3 Year Plan (Oversight Manager & Property Manager)
E. OTHER:
-----
1. PREVENTIVE MAINTENANCE SCHEDULES: Property Manager will prepare and allow
Tenant and Oversight Manager to review and reasonably approve Property
Manager's preventive maintenance schedules for the buildings' systems.
2. EMERGENCY EVACUATION PLANS: Oversight Manager, Property Manager, Tenant, and
Landlord will jointly prepare an emergency evacuation plan for the Building.
3. MODIFICATION: To the extent Tenant requests a modification to the Exhibit L
or to Exhibit F, and such modification does not negatively impact the repair
and maintenance obligations under the lease, Landlord will agree to work in
good faith with Tenant to effect such request of Tenant.
4. ANNUAL MANAGEMENT PLAN AND SIGNOFF: Oversight Manager, Property Manager and
Tenant will approve and signoff on the annual Property Asset Plan and
Operating Budget. This process will also include a signoff and approval of
the previous years Property Asset Plan and Operating Budget.
5. REPORTING MODIFICATIONS: Oversight Manager may reasonably request to the
Owner that the Property Manager prepare additional reports from time to time
and may establish new or different reporting procedures not necessarily
contemplated in this agreement. If such request causes an increase in the fee
payable to the Property Manager, such increase shall not be included in
Operating Costs and will be paid by Landlord directly.
<PAGE>
SCHEDULE L-1
Monthly Activities Report
April 1997
MEETINGS
- --------
April 17 Gene Macogay, Macogay Electric--Surveyed electrical panels for the
property.
April 17 Mike Avery, Millar Elevator--Submitted bid for elevator contract.
April 17 Lou Sorrell, ASIS--Reviewed new security system installed on the
twelfth floor.
April 17 Lighting Retrofit Survey performed.
April 18 Henry Brauer, TA Associates--Walkthru of building.
April 22 Walk-thru with Richard Brigstocke and Michael Grainger
April 30 Terry Koussis, Air Control Services--Submitted bid.
MOVE-INS
- --------
None
MOVE-OUTS
- ---------
None
STAFFING
- --------
Richard Brigstocke joined Barnes Morris in early April as the Building Manager
for the property. Previously, Richard spent three years working as the property
manager for the Consulate and residential properties of the Republic of
Singapore. Richard has extensive management and mechanical experience in both
residential and commercial properties.
Bobby Beck, the maintenance engineer for the property, is no longer employed by
Barnes Morris. We are currently seeking a replacement for his position. However,
until a replacement is found, Scott Harvey will be covering the building.
IN-HOUSE ENGINEERING ACTIVITIES
- -------------------------------
1 Exercised the emergency generator.
2 Exercised the fire pump.
<PAGE>
SCHEDULE L-2
Year-to-Date Variance Report
March 1997
Please explain all variances greater than $1,000 and 5%
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Year to Date Year to Date
Category Actual Budget Variance Explanation
- ----------------------------------------------------------------------------------------------------
<S><C>
Revenue
Due to timing of several lease
Base Rental Income 2,170,300.00 2,212,037.00 (41,737.00) deals (4th, 5th, 10th floors)
Due to renewals of several
Escalation income 15,383.00 19,467.00 (4,084.00) existing tenants leases
Recovery Income--CAM 200.00 198.00 2.00 No significant variance
Lower number was used for
Recovery Income--RE Tax 8,032.00 45.00 7,987.00 original estimates
Parking Income 162,000.00 162,000.00 -- No variance
Interest from money market
Interest Income 13,037.00 900.00 12,137.00 higher than anticipated
Due to unbudgeted late fees
Miscellaneous 22,898.00 0 22,896.00 received from tenants
Total Income 2,391,848.00 2,394,647.00 (2,799.00)
Expenses
Due to cancelling building power
washing and to completing
various R&M projects for less
R & M Expense 66,967.00 96,687.00 27,720.00 than budget
Due to vacancy credit for
Janitorial 101,269.00 108,937.00 7,888.00 unoccupied space
Due to engineer's wages being
Common Area Maintenance 147,862.00 129,630.00 (18,232.00) higher than budget
Electric and water lower than
Utilities 52,429.00 64,195.00 11,766.00 anticipated
Property Management Fees 36,063.00 35,921.00 (142.00) No significant variance
Insurance 13,770.00 11,268.00 (2,502.00) Due to the timing of an accrual
Real Estate Taxes 154,547.00 146,556.00 (7,991.00) Due to timing of BPOL tax
Total Expenses 574,907.00 593,194.00 18,287.00
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT B
3877 Fairfax Ridge Road
[FLOOR PLAN GRAPHIC APPEARS HERE]
OCCUPANCY FLOOR PLAN
2nd FLOOR
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S 10-QSB AS FOR THE QUARTER ENDED MARCH 31, 1998 AND IS QUALIFIED BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,355,913
<SECURITIES> 0
<RECEIVABLES> 5,088,998
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,786,335
<PP&E> 2,490,614
<DEPRECIATION> 1,583,826
<TOTAL-ASSETS> 14,960,954
<CURRENT-LIABILITIES> 2,896,769
<BONDS> 0
0
0
<COMMON> 81,167
<OTHER-SE> 11,970,597
<TOTAL-LIABILITY-AND-EQUITY> 14,960,954
<SALES> 4,169,006
<TOTAL-REVENUES> 4,234,259
<CGS> 2,167,583
<TOTAL-COSTS> 4,141,543
<OTHER-EXPENSES> 27,121
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,092
<INCOME-PRETAX> 59,503
<INCOME-TAX> 0
<INCOME-CONTINUING> 59,503
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 59,503
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
