EX-10.1 3 dex101.txt DEED OF LEASE, DATED JULY 19, 2001 Exhibit 10.01 DEED OF LEASE between TST WATERVIEW I, L.L.C., a Delaware limited liability company Landlord and VERISIGN, INC., a Delaware corporation Tenant Waterview I at Woodland Park Dulles Toll Road at Centreville Road Herndon, Virginia 20171 Dated as of July 19, 2001 TABLE OF CONTENTS -----------------

Page ARTICLE 1 BASIC LEASE PROVISIONS........................................................... 1 ---------------------- ARTICLE 2 PREMISES, TERM, RENT............................................................. 4 -------------------- ARTICLE 3 USE AND OCCUPANCY................................................................ 7 ----------------- ARTICLE 4 CONDITION OF THE PREMISES........................................................ 10 ------------------------- ARTICLE 5 ALTERATIONS...................................................................... 13 ----------- ARTICLE 6 FLOOR LOAD....................................................................... 15 ---------- ARTICLE 7 REPAIRS.......................................................................... 16 ------- ARTICLE 8 OPERATING EXPENSES AND TAXES..................................................... 18 ---------------------------- ARTICLE 9 REQUIREMENTS OF LAW.............................................................. 28 ------------------- ARTICLE 10 SUBORDINATION................................................................... 30 ------------- ARTICLE 11 SERVICES AND UTILITIES.......................................................... 34 ---------------------- ARTICLE 12 INSURANCE....................................................................... 39 --------- ARTICLE 13 DESTRUCTION - FIRE OR OTHER CAUSE............................................... 43 --------------------------------- ARTICLE 14 EMINENT DOMAIN.................................................................. 43 -------------- ARTICLE 15 ASSIGNMENT AND SUBLETTING....................................................... 47 ------------------------- ARTICLE 16 ACCESS.......................................................................... 55 ------ ARTICLE 17 DEFAULT......................................................................... 55 ------- ARTICLE 18 REMEDIES AND DAMAGES............................................................ 57 -------------------- ARTICLE 19 RIGHT TO CURE; FEES AND EXPENSES................................................ 60 -------------------------------- ARTICLE 20 LANDLORD REPRESENTATIONS AND COVENANTS; APPROVALS............................... 62 ------------------------------------------------- ARTICLE 21 END OF TERM..................................................................... 64 ----------- ARTICLE 22 QUIET ENJOYMENT................................................................. 66 --------------- ARTICLE 23 NO SURRENDER; NO WAIVER......................................................... 66 ----------------------- ARTICLE 24 WAIVER OF TRIAL BY JURY......................................................... 67 ----------------------- ARTICLE 25 INABILITY TO PERFORM............................................................ 67 -------------------- ARTICLE 26 NOTICES......................................................................... 67 ------- ARTICLE 27 RULES AND REGULATIONS........................................................... 68 --------------------- ARTICLE 28 BROKER.......................................................................... 69 ------ ARTICLE 29 INDEMNITY....................................................................... 69 --------- ARTICLE 30 TAX STATUS OF BENEFICIAL OWNERS................................................. 71 ------------------------------- ARTICLE 31 EXTENSION PERIOD................................................................ 71 ---------------- ARTICLE 32 PURCHASE OPTIONS ON THE BUILDING................................................ 75 -------------------------------- ARTICLE 33 SIGNAGE......................................................................... 80 ------- ARTICLE 34 ARBITRATION..................................................................... 71 ----------- ARTICLE 35 SECURITY DEPOSIT................................................................ 81 ---------------- ARTICLE 36 MISCELLANEOUS................................................................... 85 ------------- ARTICLE 37 CONDITIONS PRECEDENT............................................................ 89 -------------------- ARTICLE 38 ASSOCIATION DECLARATION......................................................... 91 ----------------------- ARTICLE 39 EXPANSION OPTIONS............................................................... 92 -----------------

i EXHIBITS -------- A Description of the Land B Definitions C Design and Construction Agreement D Fixed Rent Schedule E Subordination, Non-Disturbance and Attornment Agreement F Cleaning Specifications G Letter of Credit H [Reserved] I Rules and Regulations J Description of Woodland Park K Construction Procedures L Specifications for HVAC, Electrical Capacity and Floor Load M Description of Waterview at Woodland Park N Agreed Area of Floors/Premises O Form of Memorandum of Lease P Form of Purchase and Sale Agreement Q Form of Option Agreement R Declarant Letter S [Reserved] T Form of ROFO PSA U Sample Amortization Schedule V Location of Generator W Location of Entrance Monument Sign X Schedule for Completion of Proffers/Development Conditions Y Sign Specifications for Woodland Park Z Conditions Landlord Must Satisfy for Issuance of Tenant's Title Policy DEED OF LEASE (Waterview I) THIS DEED OF LEASE (the "Lease") is made as of the 19th day of July, 2001 ("Effective Date", which shall be the date (i) that this Lease is fully executed by both Landlord and Tenant and (ii) that the Condition Precedent is satisfied pursuant to Section 37 below), between TST WATERVIEW I, L.L.C. ("Landlord"), a Delaware limited liability company, having an office c/o Tishman Speyer Properties, L.P., 8270 Greensboro Drive, Suite 810, McLean, Virginia 22102, and VERISIGN, INC. ("Tenant"), a Delaware corporation, having an office at 21355 Ridgetop Circle, Dulles, Virginia 20166. Landlord and Tenant hereby covenant and agree as follows: ARTICLE 1 BASIC LEASE PROVISIONS ---------------------- PREMISES The entirety of the Building, Parking Garage and Land. BUILDING The new thirteen (13) story Class A office building known as Waterview I, located at the intersection of the Dulles Toll Road and Centreville Road, within Woodland Park, Herndon, Fairfax County, Virginia 20171, along with related fixtures, equipment and other improvements and appurtenances, erected (or to be erected) upon the Land. LAND The land (consisting of approximately 11.53 acres) on which the Building and Parking Garage and certain additional exterior areas in the vicinity thereof (e.g., the plaza and seating areas) are situated, as more particularly shown on Exhibit A. Landlord represents --------- that the Land (also known as Fairfax County Tax Map Parcel 16-3((1)) 29C1) is lawfully divided from a larger parcel, such larger parcel consisting of approximately 23 acres, known as Waterview at Woodland Park as shown on the attached Exhibit M ("Waterview"). The balance --------- of Waterview (the "Adjacent Property") consists of approximately 11.92 acres and is known as Fairfax County Tax Map Parcel 16-3((1)) 29D and is legally divided from the Land. Landlord will, prior to its development, legally divide the Adjacent Property into two (2) separate parcels upon which the Waterview II office building and related parking garage (or rights to the parking garage to be constructed on the Adjacent Property sufficient to satisfy applicable Requirements and the Waterview II Lease) ("Waterview II") and the Waterview III office building and related parking garage (or rights to the parking garage to be constructed on the Adjacent Property sufficient to satisfy applicable Requirements and the Waterview III Lease) ("Waterview III") (each, an "Option Property" comprised of "Option Land" and an "Option Building") will be situated, also as depicted on Exhibit M. --------- COMMENCEMENT DATE The date set forth in Section 2.3 below. RENT COMMENCEMENT DATE(S) The date(s) set forth in Section 2.3 below. EXPIRATION The last day of the one hundred thirty-second (132/nd/) full calendar month after the Rent Commencement Date with respect to the last Floor delivered to Tenant (the "Last Rent Commencement Date"), subject to Sections 21 and 31 (concerning Extension Periods and a Surrender Term). TERM The period specified in Section 2.3 below. PERMITTED USES Office and accessory purposes, and such other uses incidental or ancillary to general office use consistent with the operation of Comparable Buildings (which may include some telecommunications and call center functions, data center functions and in-house food service functions, as well as an exercise facility, a childcare facility, and a conference and/or training facility). Landlord represents that the Land is currently zoned PDC under the Fairfax County Zoning Ordinance. Tenant shall be responsible for obtaining and maintaining required permits, if any, for childcare, exercise, conference, training and food service operations. conference, training and food service operations. TENANT'S PROPORTIONATE A fraction, the numerator of which is the SHARE Agreed Area of the Premises, and the denominator of which is the Agreed Area of the Building. Tenant's Proportionate Share as of the date of execution of this Lease is one hundred percent (100%), based on both the Building and the -2- Premises having a total rentable area of 404,665 square feet. References in this Lease to Tenant being the "100% tenant" or "leasing 100%" or "sole tenant" or "100% of the Agreed Area of the Building" words of similar construction or import shall be deemed to mean that Tenant is leasing (as opposed to occupying) 100% of the rentable area of the Building that is devoted to office use. AGREED AREA OF THE BUILDING Four Hundred Four Thousand Six Hundred Sixty Five (404,665) rentable square feet, as measured in accordance with the BOMA Standard (assuming the dimensions of the Building are consistent with the Plans and Specifications). The "Agreed Area of the Premises" also is Four Hundred Four Thousand, Six Hundred Sixty-Five (404,665) rentable square feet, as measured in accordance with the BOMA Standard (assuming the dimensions of the Building are consistent with the Plans and Specifications). The "Agreed Area of each Floor", as measured in accordance with the BOMA Standard, is set forth on Exhibit N. --------- FIXED RENT (i) For the period commencing on the first Rent Commencement Date and ending on the last day of the first Lease Year, both dates inclusive, twenty-one and 00/100 Dollars ($21.00) per annum per rentable square foot of (A) prior to delivery of all Floors pursuant to Section 2.3 hereof, the Agreed Area of the Floor(s) delivered to Tenant pursuant to Section 2.3 hereof and for which the applicable Rent Commencement Date has occurred, and (B) following the delivery of all Floors pursuant to Section 2.3 hereof, the entire Agreed Area of the Premises; and (ii) Commencing on the first day of the second Lease Year, and on the first day of each Lease Year thereafter through the Initial Term and any Surrender Term (with Fixed Rent for any Extension Period being determined in accordance with Section 31.1 hereof) the Fixed Rent (monthly, annual and per rentable square foot) shall be increased as set forth in Exhibit D. --------- ADDITIONAL RENT All amounts payable by Tenant to Landlord under this Lease other than Fixed Rent. -3- RENT Fixed Rent and Additional Rent, collectively. INTEREST RATE The lesser of (i) four percent (4%) per annum above the then-current Base Rate, or (ii) the maximum rate permitted by applicable law. SECURITY DEPOSIT Initially, fourteen million ($14,000,000.00), subject to reduction under certain circumstances as specified in Section 35. BROKER FOR TENANT Jones Lang LaSalle Americas, Inc. LANDLORD'S AGENT Tishman Speyer Properties, L.P., or any other person designated at any time and from time to time by Landlord as Landlord's Agent. LANDLORD'S CONTRIBUTION The product of (a) forty dollars ($40.00) and (b) the Agreed Area of the Premises. In addition, at Tenant's request, Landlord will advance additional sums to Tenant, (i.e., the Supplemental Allowance) to be amortized and added into Fixed Rent, as and to the extent provided in Section 2.2 and Exhibit C. --------- All capitalized terms used in the Lease without definition are defined in Exhibit B. --------- ARTICLE 2 PREMISES, TERM, RENT -------------------- Section 2.1 Lease of Premises. Subject to the terms of this Lease, ----------------- Landlord leases to Tenant and Tenant leases from Landlord the Premises for the Term. Landlord and Tenant shall complete the Building and the Premises for Tenant's occupancy in accordance with their respective obligations under the provisions of this Lease and the Design and Construction Agreement attached as Exhibit C. --------- Section 2.2 Payment of Rent. --------------- (a) Tenant shall pay to Landlord, without notice or demand, and without any set-off, counterclaim, abatement or deduction whatsoever, except as otherwise expressly set forth in this Lease, in lawful money of the United States by wire transfer of funds to Landlord's account, as designated by Landlord, or by check drawn upon a bank reasonably approved by Landlord, (i) Fixed Rent in equal monthly installments, in advance, on the first (1/st/) day of each calendar month during the Term, commencing on the initial Rent Commencement Date, and (ii) Additional Rent, at the times and in the manner set forth in this Lease. (b) Provided no uncured Material Default shall then exist under this Lease, Tenant shall have the right to require Landlord to advance to Tenant up to a maximum aggregate amount of $10.00 multiplied by the Agreed Area of the Premises (the "Supplemental Allowance"). Such sum shall be elected and used by Tenant in its -4- sole discretion in accordance with Paragraph C.2 of the Design and Construction Agreement attached as Exhibit C. The amount of the Supplemental Allowance Tenant --------- elects to draw shall be treated as an assumed loan, which shall be fully amortized over the Initial Term in one hundred thirty-two (132) equal monthly payments. Tenant shall pay to Landlord, as an addition to Fixed Rent (including without limitation for purposes of determining damages, if any under Section 19.2) but not escalated with Fixed Rent, beginning with the first full month of the first Lease Year (if such amount can be calculated by such date) the monthly amortized amount of the Supplemental Allowance together with interest on the outstanding balance of the Supplemental Allowance at a fixed annual rate equal to twelve percent (12%) per annum. If the first full calendar month of the first Lease Year has already occurred, or any other months have already occurred, as of the date such amount is calculated, Tenant shall pay all monthly amortization payments which correspond to months that have already elapsed at the time of its first monthly payment. In the event this Lease shall terminate for any reason prior to the natural expiration of the Term, the entire then unamortized portion of the Supplemental Allowance shall be due and payable to Landlord as a part of Rent. Attached as Exhibit U is a sample, non-binding schedule of payments that --------- would be required assuming Tenant draws the maximum aggregate amount of the Supplemental Allowance in one lump sum on the date specified in Exhibit U. The --------- parties agree that this Lease will be amended within thirty (30) days after the date on which the Supplemental Allowance is fully drawn but only to reflect the actual schedule of repayments by amending said Exhibit U. In the event Tenant --------- exercises Extension Options that contemplate a continuation of the existing terms and conditions, such amortization will be eliminated from Rent payments (but the failure to repay the Supplemental Allowance in full as of the end of the Initial Term will be a default hereunder, subject to applicable notice and cure rights). Tenant may, from time to time throughout the Initial Lease Term, prepay in full and without penalty, the unamortized principal balance of amounts amortized into Fixed Rent as aforesaid, provided (i) Tenant shall give Landlord thirty (30) days prior notice of such prepayment, (ii) Tenant shall include with any such prepayment the amount of accrued but unpaid interest, and (iii) the parties will promptly enter into an amendment to this Lease adjusting the Fixed Rent as may be necessary to reflect the effect of any such prepayment. Upon receipt of the entire unamortized amount of the Supplemental Allowance, Landlord shall confirm the payoff of the Supplemental Allowance in writing to Tenant. Section 2.3 Delivery of Premises; Rent Commencement Date. Landlord -------------------------------------------- shall deliver to Tenant the Building in accordance with the terms of this Lease and the Design and Construction Agreement. (a) (1) The "Commencement Date" shall be the date that Landlord delivers possession of the entire Premises to Tenant with the Standard Base Building Work Substantially Completed and with all Floors in Floor Ready Condition, which Landlord shall cause to occur not later than March 1, 2002 (the "Outside Date"). If Landlord fails to so deliver the Premises by the Outside Date, then, provided no uncured Material Default shall then exist and Tenant has previously given notice to Landlord that Tenant is ready to commence the Initial Installations together with the Plans and Specifications therefor (subject to Landlord Delay)), then, in addition to the -5- Rent Commencement Date postponement pursuant to Section 2.4, Tenant shall receive an abatement of Rent for each day from and after the Outside Date until the Premises is so delivered. In addition, if such delivery does not occur prior to September 1, 2002 (the "Super Outside Date") and no uncured Material Default shall then exist and Tenant has given the notice described in the immediately preceding sentence, then Tenant shall have the right to terminate this Lease by delivering written notice of the exercise of such right to Landlord within five (5) Business Days after the Super Outside Date. If such termination right is not timely exercised by Tenant, such right shall thereafter lapse and be of no further force or effect. If this Lease is terminated pursuant to this Section, then neither party shall have any further obligations or liability hereunder to the other party; provided, however, that within ten (10) Business Days after receipt of such notice of termination from Tenant, Landlord shall (A) refund any and all security deposits, advance rent and other sums previously deposited by Tenant in accordance with the provisions of this Lease and (B) pay to Tenant all actual out-of-pocket costs reasonably incurred by Tenant in connection with the negotiation of this Lease (and related documents) and Tenant's planned move to the Premises. Notwithstanding the foregoing, neither the Outside Date nor the Super Outside Date shall be extended on account of Unavoidable Delay or Landlord Delay, but each such date shall be extended on a day-for-day basis for each day Substantial Completion and delivery is delayed solely as a result of any Tenant Delay. (2) In addition to the Standard Base Building Work, Landlord shall complete the remainder of the Base Building Work as and when required under this Lease and the Design and Construction Agreement. (b) The "Rent Commencement Date(s)" shall be determined on a Floor-by Floor basis as follows: (i) with respect to Floors 8 through 13 ("Phase One"), comprising approximately 191,162 rentable square feet, the "Rent Commencement Date" for each Floor shall be the earlier of (a) December 1, 2002 (as extended, on a day-for-day basis, by each day of Landlord Delay) or (b) the date Tenant commences business operations on such Floor; and (ii) with respect to Floors 1 through 7 ("Phase Two"), comprising approximately 213,503 rentable square feet, the "Rent Commencement Date" for each Floor shall be the earlier of (a) August 1, 2003 (as extended, on a day-for-day basis, by each day of Landlord Delay), or (b) the date Tenant commences business operations on such Floor. Tenant shall have no obligation to pay Rent (or any utilities or other services or charges to the extent provided in the Design and Construction Agreement) as to any Floor prior to the Rent Commencement Date for that Floor. If a Rent Commencement Date shall occur on a date other than the first (1st) day of any calendar month, Tenant shall pay to Landlord on the Rent Commencement Date, with respect to the Floor or Floors delivered on such Rent Commencement Date, a sum equal to Fixed Rent for such month for such Floor or Floors multiplied by a fraction, the numerator of which shall be the number of calendar days in the period from such Rent Commencement Date to the last day of the month in which the Rent Commencement Date occurred, both dates inclusive, and the denominator of which shall be the number of calendar days in such month. Any Additional Rent payable with respect to such partial month shall be payable by Tenant within thirty (30) days following receipt of an invoice from Landlord. -6- (c) The "Term" of this Lease shall commence on the Commencement Date and shall expire on the Expiration Date. For purposes of this Lease: (1) the "Term" or "Lease Term" shall mean the Initial Term and, if applicable, any exercised Extension Periods or Surrender Term; (2) the initial fixed term of this Lease (exclusive of any exercised Extension Periods or Surrender Term) is sometimes referred to herein as the "Initial Term"; and (3) the Extension Periods (exclusive of the Initial Term) are sometimes each referred to herein as an "Extension Period" and collectively as the "Extension Periods". (d) Provided no uncured Material Default shall then exist under this Lease, and Tenant has exercised its right to lease space in Waterview II or Waterview III pursuant to that certain Option Agreement of even date herewith between Landlord and Tenant (the "Option Agreement"), Tenant shall have the option, not later than the date Tenant executes the lease document for such additional space, to extend the then-current Term of this Lease to be coterminous with the expiration of the last delivered phase in such Option Building. In such event, the Fixed Rent for any such extension beyond the initial Expiration Date will be at FMR. The determination of FMR will occur eighteen (18) months prior to the Expiration Date (i.e., as if Tenant had exercised its Extension Option hereunder), in accordance with the provisions of Section 31 hereof. Tenant's election to exercise the Extension Option shall be irrevocable once exercised by Tenant. Section 2.4 Landlord's Delay. If the Floors are not delivered in Floor ---------------- Ready Condition or the Premises is not Substantially Completed by the dates prescribed for in this Lease and the Design and Construction Agreement, then, in either event, to the extent such delay is not caused by a Tenant Delay, the Rent Commencement Date and Tenant's obligation to pay Rent shall be delayed until the Floor Ready Condition and Substantial Completion occurs on a day-for-day basis, by each day of such delay. Section 2.5 Interest. If Tenant shall fail to pay any installment or -------- other payment of Rent when due, or if Landlord shall fail to make any payment of a monetary obligation hereunder to Tenant when due, at the non-defaulting party's option interest shall accrue on such installment or payment as a late charge, from the date such installment or payment became due until the date paid at the Interest Rate. ARTICLE 3 USE AND OCCUPANCY ----------------- Section 3.1 (a) Permitted Uses. The Premises shall be used and occupied -------------- for the Permitted Uses and for no other purpose. Tenant shall not use or occupy or permit the use or occupancy of any part of the Premises in a manner constituting a Prohibited Use. (b) Licenses and Permits. Tenant, at its expense, shall -------------------- procure or cause to be procured and maintain or cause to be maintained and comply or cause to be complied with the terms and conditions of all licenses and permits required for the -7- lawful conduct of its Permitted Uses in the Premises. The foregoing notwithstanding, Landlord shall be responsible for procuring any and all licenses or permits needed in connection with completion of the Base Building Work and, as part of Substantial Completion of the Base Building Work, the issuance of a final non-residential use permit (core and shell only) for the Base Building and all other components of the Premises (other than the Initial Installations). (c) Use of Roof. Notwithstanding anything to the contrary ----------- in this Section 3.1, Tenant shall have the right, at no additional cost, to access and use the roof of the Building for the installation, use, maintenance, repair and replacement of various communication, HVAC and/or other equipment (collectively, "Communications Equipment") subject only to the Association Declaration and the following: (i) in the event such installation requires Tenant to make any penetration in the roof or perform any other roofing work, such penetrations shall be made only in the manner designated in writing by Landlord, acting reasonably; (ii) any installation work (including any roof penetrations or other roofing work) shall be performed by Tenant at Tenant's sole cost and expense and by a roofing contractor reasonably approved by Landlord and shall be accomplished in a manner which will not invalidate or impair any roof warranties; (iii) Tenant shall promptly pay all taxes and license fees imposed by any federal, state or local governmental agency or authority in connection with the installation, operation and maintenance of any Communications Equipment; (iv) Tenant shall secure any necessary permits, and the installation and use of Communications Equipment shall comply with all Requirements (including any zoning restrictions) and Tenant shall be solely liable for the cost of such compliance; (v) At the end of the Term, Tenant shall remove such Communications Equipment and repair the Premises, including repair the roof, in accordance with Section 5.3; (vi) Tenant shall install screening as may be required by the Association Declaration to reasonably obscure the location of Communications Equipment; (vii) Any proposed installation of Communications Equipment shall be completed in accordance with Article 5 hereof; and --------- (viii) Tenant shall not assign or sublet or grant any use rights to the roof of the Building other than incidental to a permitted assignment or subletting pursuant to Article 15 hereof. ---------- Tenant's rights hereunder shall be exclusive (as to size and location) if Tenant is the sole office tenant in the Building. If Tenant is not the sole office tenant, then Tenant's -8- right shall be non-exclusive but (i) with respect to size, shall be pro rata based on applicable proportionate shares of the tenants involved, and (ii) with respect to location, shall be "grand-fathered" (i.e., Tenant shall not be obligated to relocate any such equipment once installed) unless Tenant is leasing less than 50% of the Agreed Area of the Building. Except to the extent set forth in this Lease or the Design and Construction Agreement, Landlord makes no warranty with respect to the weight-bearing capacity of the roof, and the cost of any additional structural support which might be required for the Communications Equipment shall be Tenant's sole responsibility. (d) Cabling. Tenant shall have the right to install ------- below-grade fiber optic and other cabling on the Land, and Landlord shall grant (and cause its Affiliates to grant) Tenant (in recordable form) such rights to such other portions of Waterview (and Landlord shall use reasonable efforts to cause its Affiliates to grant Tenant (in recordable form) such rights to other portions of Woodland Park), as are reasonably required to provide for interconnectivity among all buildings leased by Tenant or its Affiliates at Woodland Park, subject to Landlord's reasonable approval of the location and method of installation thereof. At Tenant's sole cost and expense, Landlord agrees to grant, or cause its Affiliates to grant (in recordable form), such easements as may be necessary in conjunction therewith, which easements shall be in form and substance reasonably acceptable to Landlord and Tenant. (e) Supplemental Generators. If Tenant leases 50% or more ----------------------- of the Agreed Area of the Building, Tenant shall have the right, as part of the Initial Installations or otherwise, to install at its sole cost and expense not more than three (3) supplemental/emergency generators and supporting equipment in the Parking Garage or on the Land, subject to Landlord's reasonable approval of the location and method of installation thereof, and otherwise in accordance with the applicable requirements of Article 5 and criteria substantially --------- similar to those set forth in Section 3.1(c)(iii) and (iv), above. Such generator shall constitute a Specialty Alteration. Landlord shall provide the area designated on Exhibit V in its "as-is, where-is" condition for the --------- installation of the generator(s) which shall be completed in a manner mutually and reasonably agreed upon by Landlord and Tenant. Tenant shall, at its sole expense, obtain any and all necessary licenses, approvals, permits, etc., necessary for the generator pad(s) and enclosures for the generator(s). (f) Any work described in Section 3.1 may be paid for or reimbursed out of the Construction Allowance or Supplemental Allowance or Lock-Out Allowance (as defined below). Section 3.2 [Intentionally Deleted.] ---------------------- Section 3.3 Parking. ------- (a) Subject to and in accordance with the terms of the Base Building Construction Documents, Landlord shall construct (i) a multi-level parking structure (the "Parking Garage") which shall provide a minimum of 1,574 spaces and (ii) an additional 37 spaces on the Land adjacent to the Building (such 1,611 spaces, in -9- total, subject only to a de minimis change in the number of spaces required by the Requirements, "Tenant's Parking Allocation") for the use of Tenant's agents, employees and visitors at no extra charge throughout the Term. The entire Parking Garage and the surface parking on the Land shall be for Tenant's exclusive use for so long as Tenant is leasing the entire Agreed Area of the Building. If Tenant is not leasing 100% of the Agreed Area of the Building, space in the Parking Garage and the surface parking on the Land shall be shared on a pro rata basis (based upon rentable square footage in the Building) with other tenants of the Building. Tenant shall at all times have the exclusive right to designate up to its entire Parking Allocation as reserved parking for Tenant and to secure same by gating and the use of security key cards or other means, and may utilize stacked or valet parking in the Parking Garage; provided, however, that all parking spaces designated by Tenant for use on an exclusive basis and secured through gating shall be designated from the uppermost levels of the Parking Garage down in order to facilitate access to and from non-gated areas of the Parking Garage by other tenants not being leased by Tenant therein. Throughout the Term, as may be extended, the Parking Garage shall be managed (at no additional charge) by the party managing the Building, or by such other party as Landlord and Tenant, so long as Tenant is leasing not less than 75% of the Agreed Area in the Building, may reasonably agree upon. (b) If Tenant exercises its Primary Purchase Option under this Lease, then Landlord shall convey unencumbered fee simple title to the Parking Garage to Tenant, a Tenant Affiliate or to any designee of Tenant identified in accordance with Section 32.1(e). In addition (i) during any period in which Landlord or a Landlord Affiliate owns title to the Building, Landlord or such Landlord Affiliate will continue to hold title to the Parking Garage (and related land) and (ii) Landlord will not sell the Building or the Parking Garage to a party other than Tenant prior to the expiration of Tenant's Primary Purchase Option. ARTICLE 4 CONDITION OF THE PREMISES ------------------------- Section 4.1 Condition. --------- (a) Landlord shall complete, as and when required under this Lease and the Design and Construction Agreement, the Base Building Work (which includes, without limitation, the Punch List Items, Latent Defects, the Required Improvements, and any other item expressly designated in this Lease and the Design and Construction Agreement as a Landlord construction obligation). While Landlord is doing any work at the Premises, Landlord shall do so in compliance with all Requirements, the terms of this Lease and the Design and Construction Agreement, and, if Tenant is in occupancy of any portion of the Building, in accordance with the construction rules attached as Exhibit K. Any work to be --------- performed by or on behalf of Tenant in connection with Tenant's initial occupancy of the Premises shall be referred to herein as the "Initial Installations" and shall be completed in accordance with the terms of the Design and Construction Agreement. Tenant shall be responsible for -10- completing the Initial Installations. Except for the completion of the Base Building Work and provision of Landlord's Contribution and Supplemental Allowance, Landlord shall have no obligation to perform any work, supply any materials, incur any expense (except as expressly set forth in this Lease or the Design and Construction Agreement) or make any Alterations to the Premises to prepare it for Tenant's initial occupancy. Except with respect to completion of any then unfinished item of Base Building Work (including, without limitation, the Punch List Items, the repair of Latent Defects, and subject to warranty items pursuant to Section 4.1(c) of this Lease), Tenant's occupancy of any part of the Premises shall be conclusive evidence, as against Tenant, that Tenant has accepted possession of that portion of the Premises in its then-current condition and that such portion is in a good and satisfactory condition. (b) During the period from the Commencement Date to the Rent Commencement Date for a particular Floor: (i) Tenant will not be charged for any reasonable and customary amounts (based upon normal usage for buildout purposes) for parking, hoisting (excluding external hoisting), electrical services, services of a reasonably available building manager to oversee and operate Building Systems pursuant to Section 11.1 of this Lease, heating and cooling, water, use of elevators, security and any other utilities or services related to construction activity; and (ii) Landlord will provide reasonably sufficient construction parking for Tenant's construction and related personnel (without charge), the location and number of which will be reasonably coordinated with Landlord. Landlord agrees to allow Tenant access to the Premises prior to Substantial Completion or the delivery of the Floors in Floor Ready Condition, without any obligation to pay Rent or other charges, as is reasonably practicable to allow Tenant to commence construction of the Initial Installations (which shall include, without limitation, the installation of phone and data cabling, supplemental security systems, and audio/visual systems in the Premises to the extent not included within the Base Building Work). Tenant also shall have the right on an ongoing basis throughout the process of constructing the Building, during normal working hours, to have access to the Premises for purposes of observation and inspection during the performance of the Base Building Work. To the extent any entry of Tenant within the Premises prior to Substantial Completion interferes (other than in a de minimis manner) with the orderly progress of construction of Base Building Work, Tenant shall cause such interference to cease immediately; and any delays in the Substantial Completion of the Base Building Work caused by such interference shall constitute a Tenant Delay. Access for the aforesaid purposes shall not be deemed to constitute possession or occupancy. (c) Landlord shall warrant each portion of the Base Building Work for a period of one (1) year after Substantial Completion thereof. Landlord agrees to promptly commence and diligently pursue the correction of all Punch List Items as soon as reasonably possible, and, subject to Unavoidable Delays, to complete the correction of all Punch List Items within forty-five (45) days after the Punch List is finalized. The provisions of Section 19.2 of this Lease shall apply to any default by Landlord with respect to this obligation (subject to the notice and cure periods set forth in Section 19 of this Lease). For a period of one (1) year after Substantial Completion of the Base Building Work, Landlord further agrees to repair or replace (or to cause the -11- repair or replacement of) any Latent Defects in the Base Building Work or in the Building Systems or Base Building (i.e., structure) as soon as reasonably practicable after Tenant provides notice thereof to Landlord. Unless otherwise required of Landlord pursuant to the provisions of this Lease, Landlord shall have no obligation to repair defects in any such work which are detected more than one (1) year after the date of Substantial Completion. The foregoing shall not affect, however, any of the general repair covenants set forth in this Lease, nor shall it apply to limit the warranty period provided for by the manufacturer or supplier with respect to any equipment incorporated into the Building or Premises, nor the warranty period otherwise provided for under the terms of the Base Building construction contract if such warranty period exceeds one (1) year. Within ninety (90) days after Substantial Completion of the Base Building Work, Landlord will provide to Tenant a full set of construction drawings for the Base Building Work, as marked by the applicable contractor(s) to reflect actual as-built improvements incorporated therein to the extent the same differ from those reflected in the original construction documents. Landlord agrees to cooperate with Tenant and to provide Tenant with construction drawings for the Base Building Work, as marked by applicable contractor(s) to reflect actual as-built improvements, as the same are required by Tenant for Tenant's design work. In all events, not later than February 1, 2002, Landlord will provide to Tenant a full set of construction drawings for the Base Building Work, as marked by the applicable contractor(s) to reflect actual as-built improvements incorporated therein to the extent the same differ from those reflected in the original construction documents. Section 4.2 Landlord's Contribution. ----------------------- (a) Landlord agrees to pay to Tenant Landlord's Contribution toward the cost of the Initial Installations, provided that as of the date on which Landlord is required to make payment thereof (i) this Lease is in full force and effect, and (ii) no uncured Material Default shall then exist (except such as can be cured or satisfied by Landlord by offset against obligations owed to Tenant). (b) In accordance with the terms and conditions of Section 2.2 of this Lease and the Design and Construction Agreement, Landlord agrees to provide Tenant with the Supplemental Allowance to be used as specified in accordance with Section C.2 of the Design and Construction Agreement. (c) Landlord's Contribution and the Supplemental Allowance shall be payable by Landlord in accordance with Section C.2 of the Design and Construction Agreement. Section 4.3 No Landlord's Supervision Fee. Except as expressly provided ----------------------------- for elsewhere in this Lease or the Design and Construction Agreement, Tenant shall not be required to pay any construction supervision or other fee to Landlord for any work or change orders in connection with the Initial Installations or the Base Building Work. -12- ARTICLE 5 ALTERATIONS ----------- Section 5.1 Tenant's Alterations. -------------------- (a) Tenant shall be entitled to make alterations, additions or other physical changes in or about the Premises (collectively, "Alterations"), without Landlord's prior consent (but where consent is required, the scope of same shall be defined in the next succeeding sentence), provided that such proposed Alterations: (i) are decorative (such as painting, wall covering and carpeting) ("Decorative Alterations"), (ii) affect only the Building, (iii) do not adversely affect the non-residential use permit issued for the Building, and (iv) do not change or alter any surface parking, except to a de minimis extent. Landlord's prior consent shall be required for any Alterations not meeting the foregoing criteria, which consent shall be within Landlord's sole discretion for Alterations that are structural or affect the Building's facade, and which consent shall not be unreasonably withheld, conditioned or delayed for any other such Alterations (including those that affect the Building Systems, the Parking Garage and landscaping). If Landlord fails to respond to any request to approve any plans or contractors within eleven (11) Business Days, then the request shall be deemed approved. The Initial Installations and each subsequent Alteration, whether temporary or permanent in character, made by Landlord or Tenant in or upon the Premises shall become Landlord's Property (excluding FF&E (which FF&E shall include trade fixtures and systems furniture, but shall exclude true real estate fixtures), any generator, any uninterrupted power source, and any free-standing computer HVAC equipment, and any other item so designated by Landlord at the time of Landlord's approval), and shall remain upon the Premises at the expiration or termination of this Lease without compensation to Tenant, subject to Section 5.3. (b) Plans and Specifications. Where Landlord's approval is ------------------------ required, prior to making any Alterations affecting structure, Building Systems, exterior elements or which require the issuance of a building permit ("Major Alterations"), Tenant, at its expense, shall (i) submit to Landlord for its written approval, reasonably detailed plans and specifications (including, where relevant and appropriate, layout, architectural, mechanical, electrical, plumbing, sprinkler and structural drawings) of each proposed Alteration, and with respect to any Alteration affecting any Building System, Tenant shall submit proof that the Alteration has been designed by, or, provided such party is readily available to perform such review, reviewed and approved by, Landlord's designated engineer for the affected Building System (the reasonable cost of such review and approval to be at Tenant's expense), (ii) obtain all permits, approvals and certificates required by any Governmental Authorities, and (iii) furnish to Landlord duplicate original certificates of worker's compensation (covering all persons to be employed by Tenant, and Tenant's contractors and subcontractors in connection with such Alteration) and comprehensive public liability (including property damage coverage) insurance and Builder's Risk coverage (issued on a completed value basis), as required by Article 12 hereof. Upon Tenant's request, Landlord shall reasonably cooperate ---------- with Tenant in obtaining any permits, approvals or certificates required to be obtained by Tenant in connection with any permitted Alteration (if the provisions of the -13- applicable Requirement require that Landlord join in such application), provided Landlord shall incur no cost or expense in connection therewith. (c) Governmental Approvals. Upon completion of any ---------------------- Alterations requiring permits, Tenant, at its expense, shall promptly obtain certificates of final approval of such Alterations required by any Governmental Authority and shall furnish Landlord with copies thereof, together with "as-built" plans and specifications for such Alterations. Section 5.2 Manner and Quality of Alterations. All Alterations shall be --------------------------------- performed (a) in a good and workmanlike manner, (b) substantially in accordance with the plans and specifications (if any) and by contractors reasonably approved by Landlord, (c) excepting Decorative Alterations, under the supervision of a licensed architect reasonably satisfactory to Landlord, and (d) in compliance with all Requirements, the terms of this Lease, the construction rules attached as Exhibit C, Schedule C-5 ("Construction Procedures") and the ----------------------- Rules and Regulations. All materials and equipment to be used in the Premises shall be of new or like new quality. Section 5.3 Removal of Tenant's Property. Tenant's Property shall be ---------------------------- and remain the property of Tenant and Tenant may remove the same at any time on or before the Expiration Date. On or prior to the Expiration Date, Tenant shall, as may be directed by Landlord pursuant to this Section 5.3, at Tenant's expense, remove Specialty Alterations. Tenant shall repair and restore, in a good and workmanlike manner, any damage to the Premises caused by Tenant's removal of any Specialty Alterations or Tenant's Property or by the closing of any slab penetrations, and upon default thereof after ten (10) days' prior written notice, Tenant shall reimburse Landlord, on demand, for Landlord's reasonable cost of repairing and restoring such damage. Any Specialty Alterations required to be removed pursuant to this Section 5.3 or Tenant's Property not so removed shall be deemed abandoned and Landlord may remove and dispose of same, and repair and restore any damage caused thereby, at Tenant's reasonable cost and without accountability to Tenant unless the same are removed within five (5) Business Days after a written notice from Landlord to Tenant notifying Tenant that Tenant has failed to remove such items of personal property from the Premises and that the same will be deemed abandoned if not removed within five (5) Business Days thereafter. This Section 5.3 shall survive the expiration or earlier termination of this Lease. At least sixty (60) days prior to the expiration of the Term, Tenant shall deliver to Landlord a written notice setting forth which Specialty Alterations it intends to remove and Landlord shall, within thirty (30) days of receipt of such notice, identify any additional Specialty Alterations which must be removed and which must stay. No Specialty Alteration shall be required to be removed by Tenant unless, at the time of Tenant's request for Landlord's consent, Landlord designated such proposed Alteration as a Specialty Alteration to be removed (with Landlord being required to so designate any Specialty Alterations completed as part of the Initial Installations at the time it approves the Plans and Specifications or changes thereto). Section 5.4 Mechanic's Liens. Tenant, at its expense, shall discharge ---------------- any lien or charge filed against the Premises in connection with any work claimed or determined -14- in good faith by Landlord to have been done by or on behalf of, or materials claimed or determined in good faith by Landlord to have been furnished to, Tenant, within twenty (20) days after Tenant's receipt of notice thereof by payment, filing the bond required by law, or otherwise in accordance with law. Section 5.5 Tenant's Costs. Tenant shall pay to Landlord or its -------------- designee, within thirty (30) days after demand, all reasonable out-of-pocket costs actually incurred by Landlord in connection with Tenant Alterations, including costs reasonably incurred in connection with (a) Landlord's review of the Alterations (including review of requests for approval thereof) and (b) the provision of Building personnel during the performance of any Alteration required by trade union policy, to operate elevators or otherwise to facilitate Tenant's Alterations. The foregoing shall not apply with respect to the Initial Installations. Landlord shall not charge any oversight or other construction supervision fee for any Alterations. Section 5.6 Tenant's Equipment. Tenant shall provide notice to Landlord ------------------ prior to moving any heavy machinery, heavy equipment, heavy freight, bulky matter or bulky fixtures (collectively, "Equipment") into or out of the Building. The term "Equipment" shall not include normal and customary deliveries made to the Building in connection with the conduct of Tenant's business in accordance with the Permitted Uses. If such Equipment requires special handling, Tenant agrees (a) to employ only persons holding all necessary licenses to perform such work and (b) all work performed in connection therewith shall comply with all applicable Requirements. The agreements set forth in this Section 5.6 shall survive the expiration or earlier termination of this Lease. Section 5.7 Legal Compliance. The approval of plans or specifications ---------------- for, or consent by Landlord to the making of, any Alterations does not constitute Landlord's agreement or representation that such plans, specifications or Alterations comply with any Requirements or the non-residential use permit issued for the Building. Landlord shall have no liability to Tenant or any other party in connection with Landlord's approval of any plans and specifications for any Alterations, or Landlord's consent to Tenant's performing any Alterations. If as the result of any Alterations made by or on behalf of Tenant, Landlord is required to make any alterations or improvements to any part of the Building in order to comply with any Requirements, Tenant shall pay all actual costs and expenses incurred by Landlord in connection with such alterations or improvements. ARTICLE 6 FLOOR LOAD ---------- Tenant shall not place a load upon any Floor that exceeds the per square foot "live load" limitations set forth in Exhibit L. In the event that --------- Tenant intends to install Equipment weighing in excess of seventy-five percent (75%) of the Building's "live load" limitations as so specified, Tenant shall consult with Landlord regarding the proposed location of such Equipment. -15- ARTICLE 7 REPAIRS ------- Section 7.1 Landlord's Repair and Maintenance. --------------------------------- (a) Landlord shall operate, maintain and, except as provided in Section 7.2 hereof, make all necessary repairs and replacements and perform any maintenance to the Premises (excluding items of the Initial Installations such as wall coverings, carpeting and the like, but including extensions of the Building Systems such as additional sprinkler heads, VAV boxes, supplemental HVAC units, plumbing systems and the like) in conformance with standards applicable to first-class office buildings of comparable age and quality in the Reston/Herndon submarket of Fairfax County, Virginia ("Comparable Buildings"). Without limiting the foregoing, Landlord's obligations hereunder shall include: (i) the exterior of the Building and Parking Garage, together with all landscaping and parking areas adjacent to said Building; (ii) all structural repairs to the Building and Parking Garage, including all repairs to the foundation, roof (except as provided for in Section 3.1(c) above), structure, exterior walls, and common area doors and windows; (iii) electric wiring, risers, plumbing, heating, air-conditioning and any other Building System (including base building restrooms) serving the Premises; (iv) all Common Areas, including the underground utility and sewer pipes of the Building (except to the extent required to be maintained or repaired by a governmental authority); (v) all Punch List Items, Latent Defects and Landlord's obligation for warranty items pursuant to Section 4.1(c) of this Lease; and (vi) all other repairs, maintenance and replacements deemed reasonably necessary for the prudent management of the Premises or as requested by Tenant. All costs of repair and maintenance to the Premises shall be included as Operating Expenses, unless specifically excluded pursuant to Article 8. --------- (b) During the Term, at either party's request, Landlord and Tenant shall meet at least twice per year to discuss matters relating to the operation and maintenance of the Premises including the condition and operation of the Premises. In accordance with Section 8.1, Tenant shall have the right to review and discuss with Landlord the budgets for capital expenditures, warranties and maintenance programs for the Premises. For so long as Tenant leases seventy-five (75%) of the Agreed Area of the Building, in the event that Tenant in good faith objects to any operational and maintenance procedures implemented or proposed by Landlord as not being in compliance with the terms of this Lease, and Landlord disagrees with Tenant's determination, the parties agree to submit such dispute to expedited arbitration in accordance with Section 34.2 of this Lease. Upon Tenant's reasonable request, Landlord shall provide Tenant such evidence as Tenant may reasonably request to demonstrate Landlord's compliance with such procedures as Landlord and Tenant may mutually approve. (c) Landlord agrees to diligently attend to any repairs or maintenance needs brought to its attention by written notice from Tenant as soon as reasonably practicable (but in no event shall Landlord commence such repairs or maintenance later than five (5) Business Days (or shorter period as may be reasonably -16- required in an emergency) thereafter or cease to pursue the completion of such repair with diligence) and in a commercially reasonable manner calculated to minimize to the extent possible disruption of Tenant's business activities. Section 7.2 Tenant's Repair and Maintenance. Tenant shall promptly, at its ------------------------------- expense and in compliance with Article 5 of this Lease, make all repairs of --------- Tenant's Property and the Initial Installations not the responsibility of Landlord pursuant to Section 7.1. All Tenant repairs shall be of a quality at least equal to the original work or construction utilizing new or like new construction materials and shall be made in accordance with this Lease. Tenant shall give Landlord prompt notice of any defective condition of which Tenant is aware in any Building System. Section 7.3 Failure to Repair or Maintain. If either party fails within ----------------------------- the time periods required by this Lease (or such shorter period as may be required in an emergency) to proceed with diligence to make any required repairs or perform any maintenance, the other party may do so and (i) if Tenant has failed to do so, all reasonable, out-of-pocket costs and expenses incurred by Landlord on account thereof shall be charged to Tenant as Additional Rent and (ii) if Landlord has failed to do so, upon a final, non-appealable judicial or arbitration determination that Landlord has defaulted in such repair obligation, all reasonable, out-of-pocket costs and expenses incurred by Tenant on account thereof which are in excess of the amounts otherwise includable in Operating Expenses (with consideration given to any extra costs incurred due to Tenant, and not Landlord, not incurring same, with attendant economies of scale, in the normal and ordinary course) shall be paid by Landlord, and, if not so paid, may be offset against future obligations to pay Rent hereunder (as specified below). Section 7.4 Interruptions Due to Repairs. ---------------------------- (a) Landlord reserves the right to make, at Landlord's cost except as otherwise provided in this Lease, all changes, alterations, additions, improvements, repairs or replacements to the Building, including the Building Systems which provide services to Tenant, as Landlord deems reasonably necessary, provided that in no event shall the level of any Building Service decrease in any respect (other than de minimis) from the level required of Landlord in this Lease as a result thereof (other than minor, infrequent, temporary fluctuations in the level of such services during the performance of any such work by Landlord, the timing of which fluctuations shall, where commercially reasonable, be coordinated with Tenant). Landlord shall minimize interference with Tenant's use and occupancy of the Premises during the making of such repairs, alterations, additions, improvements, repairs or replacements provided that Landlord shall have no obligation to employ contractors or labor at overtime or other premium pay rates or to incur any other overtime costs or additional expenses whatsoever except at Tenant's sole cost and expense upon Tenant's request. Landlord shall provide Tenant with reasonable notice of the scope and schedule of any such work and, in the event that the completion thereof is reasonably likely to disrupt (other than in a de minimis manner) the operation of Tenant's business at the Premises, Landlord shall perform such work during non-business hours. Except as expressly provided in this Lease to the contrary, there shall be no Rent abatement or allowance to -17- Tenant for a diminution of rental value, no actual or constructive eviction of Tenant, in whole or in part, no relief from any of Tenant's other obligations under this Lease, and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from Landlord, Tenant or others making, or failing to make, any repairs, alterations, additions or improvements in or to any portion of the Building or the Premises, or in or to fixtures, appurtenances or equipment therein. (b) Notwithstanding anything to the contrary contained in this Lease, if Tenant is unable to use the Building (or any portion, other than de minimis, thereof) for the ordinary conduct of Tenant's business due to (a) an interruption of an Essential Service (as hereinafter defined) resulting from Landlord's performance of an alteration, addition, impairment, repair or replacement to the Premises, or due to Landlord's entry into the Premises, or for any other reason within Landlord's or its agent's reasonable control, or (b) Unavoidable Delays, other than casualty or condemnation (which are governed by Article 13 and Article 14, respectively), and such condition continues for a ---------- ---------- period in excess of six (6) consecutive days after (i) Tenant furnishes a notice to Landlord (the "Abatement Notice") stating that Tenant's inability to so use the Premises (or portion thereof) is due to such condition, and (ii) Tenant does not actually use or occupy the Premises (or portion thereof) during such period for the ordinary conduct of its business, then Fixed Rent, Taxes and Operating Expenses for such portion of the Building that is both untenantable and unoccupied (determined based upon the ratio which the square footage of such portion of the Building), determined using the BOMA Standard bears to the Agreed Area of the Building shall be abated on a per diem basis for the period commencing on the date the Essential Service is interrupted and ending on the earlier of (x) the date Tenant reoccupies such portion of the Premises for the ordinary conduct of its business, and (y) the date on which such condition is remedied in all material respects. "Essential Service" shall mean any Building Service. ARTICLE 8 OPERATING EXPENSES AND TAXES ---------------------------- Section 8.1 Definitions. For the purposes of this Article 8, the following ----------- ----------- --------- terms shall have the meanings set forth below: (a) "Assessed Valuation" shall mean the amount the Premises ------------------ is assessed for the purpose of imposition of Taxes. (b) "Operating Expenses" shall mean the aggregate of all ------------------ actual costs and expenses (and sales or use taxes or other similar taxes in the nature of sales or use taxes, if any, thereon) paid by or on behalf of Landlord (whether directly or through independent contractors) in connection with the management, operation, safety, repair, and maintenance of the Premises: including (i) casualty, liability and other insurance premiums for insurance required or permitted under this Lease; (ii) the cost of electricity, gas, oil, steam, water, air conditioning and other fuel and utilities (to the extent Tenant does not pay for same directly); (iii) reasonable attorneys' fees and disbursements (but only to the extent they are incurred in connection with an expense which is includable in -18- Operating Expenses) and auditing, management, consulting and other professional fees and expenses reasonably necessary for Landlord to render the required services pursuant to this Lease; and (iv) any capital expenditures (as defined under GAAP) incurred by Landlord to meet applicable Requirements (which are not in effect on the date the Premises are Substantially Completed) but excluding those due to Landlord's negligence or willful misconduct, or with the consent of Tenant, which shall not be unreasonably withheld, conditioned or delayed (except in the last eighteen (18) months of the Term), incurred by Landlord in good faith for the purpose of reducing Operating Expenses, subject to the conditions described below in this Section 8.1(b). Such capital expenditures shall be amortized on a straight-line basis over the useful life of the improvement being amortized (with interest accruing per annum on the unamortized portion thereof at the Base Rate in effect at the time such improvements are Substantially Completed). A capital improvement shall be included in Operating Expenses only if it (1) actually results in savings in such year (as for example, expenditures for a labor-saving improvement) in which case the amount included in Operating Expenses shall not exceed the amount of actual savings from such improvement in the same year and/or (2) is made in order to comply with Requirements. (c) Operating Expenses Exclusions. Notwithstanding and without ----------------------------- limitation of the foregoing, the following costs and expenses shall be excluded from Operating Expenses: (1) Costs incurred in connection with the construction of the Base Building Work; (2) Costs of correcting defects in the Base Building Work, or the initial design, construction, reconstruction or renovation of the Premises, or equipment therein, to the extent covered by warranties or guaranties of contractors or subcontractors or any tenant improvements; (3) Non-cash items such as depreciation, amortization, reserves, bad debt losses and reserves therefor, or other non-cash expenses, except for amortization of personal property used in the ordinary course of operating and maintaining the Premises and the cost of which would be properly included as an Operating Expense if expensed rather than amortized, except as permitted in Section 8.1(b); (4) Interest, points, fees and principal payments on mortgages and other debt costs, if any, or amortization on any mortgage or mortgages or any other debt instrument encumbering the Premises; (5) Rental payments pursuant to any ground lease or master space lease (except to the extent otherwise properly includable in Operating Expenses provided that such payments shall not be counted more than once); (6) Expenses directly resulting from the breach of this Lease or any other lease or agreement by Landlord, or the negligence of Landlord, its -19- agents, contractors or employees, or other acts or omissions of tenants other than Tenant, and any fines or penalties incurred by Landlord other than as a result of Tenant's negligence or willful misconduct; (7) Costs for which Landlord is reimbursed by its insurance carrier, any tenant's carrier, any tenant, any warrantor or any other third party, and any condemnation proceeds; (8) Costs associated with the operation of the business of the Landlord, as distinguished from the costs of operation of the Premises, including accounting and legal matters, costs of defending any lawsuits with any prospective or actual purchaser, ground lessor or mortgagee, costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord's interest in the Premises, costs of any disputes between Landlord and its employees, disputes of Landlord with Building management, and outside fees paid in connection with disputes with other tenants; (9) The wages of any employee of Landlord who does not devote substantially all of his or her time to the Premises, except to the extent such wages and benefits are reasonably, properly and equitably allocable to time spent by such employee in directly servicing the Premises; (10) Fees for services rendered by an affiliate of Landlord to the extent such fees exceed the market rate payable for comparable services if rendered by unrelated third parties of comparable quality, except as pre-approved by Tenant and except that management fees shall be included in Operating Expenses to the extent provided in Section 11.5; (11) Any expenditures (whether repairs, improvements or otherwise) that under GAAP should be treated as capital expenditures, except as expressly permitted by Section 8.1(b); (12) Fines, penalties, late payment charges and interest arising from the negligent acts or inaction of Landlord or failure timely to make tax and/or other payments except for such fines, penalties, late payment charges and interest incurred after Tenant has failed to pay its Proportionate Share of Taxes pursuant to Section 8.2, except that interest on assessments described in clause (19) shall be included and deemed incurred as if Landlord has elected to pay such assessments in the maximum number of permitted installments; (13) Costs of replacements or repairs for the restoration of all or any portion of the Premises after the occurrence of a casualty; (14) Legal fees, court costs and litigation related fees (including costs or fees relative to the defense of Landlord's interest in the Land, except for those incurred in connection with recovery under service contracts, which shall be netted out from such recovery; -20- (15) Costs of repairs or replacements caused by the exercise of any right of condemnation or eminent domain by any public or quasi-public authority; (16) Taxes other than Taxes described in Section 8.2 and other than sales and use taxes on items the cost of which is properly included in Operating Expenses; (17) Salaries and other compensation paid to executive employees above the grade of regional manager (including profit sharing, bonuses and other employee benefit plans), provided, that the manager of the Building may have responsibility for more than one building in Woodland Park, in which case the reasonably and properly directly allocable cost of such salary and other compensation shall be included in Operating Expenses in accordance with clause (9) above; (18) General overhead and administrative expenses (other than accounting expenses, to the extent reasonably and properly directly allocable to the operation of the Premises); (19) Assessments to the extent paid in fewer than the maximum permitted number of installments; (20) Costs associated with any property other than the Premises, except for those costs incurred by Landlord pursuant to the Association Declaration, but only to the extent such costs relate, or are attributable, to Landlord's ownership of the Premises and not to other property owned by Landlord in Woodland Park; (21) Costs to comply with Requirements to the extent such Requirements are not being complied with as of the Commencement Date; (22) Charitable and political contributions, advertising and promotional expenditures, including costs of staging special events; (23) The cost of the acquisition or installation of any artwork, including, without limitation, any statues or paintings or electronic artwork or advertising; (24) Painting, redecorating or other work which Landlord performs for specific tenants; (25) The expenses of which are paid by such tenants; leasing commissions, and advertising, legal, space planning and construction expenses incurred in procuring tenants for the Building; -21- (26) Reserves for repairs, maintenance and replacements; (27) Costs and expenses incurred by Landlord pursuant to any provisions of this Lease which require Landlord to perform certain obligations or services at Landlord's sole cost and expense and without recovery as an Operating Expense; (28) Any portion of any Operating Expense which is in excess of Tenant's properly allocable or proportionate share; (29) Any item of cost which Tenant is required to pay separately pursuant to any other provision of the Lease; (30) Costs of any amenity, business or activity that generates or from which Landlord obtains income; costs of purchasing or leasing sculpture, paintings or other art objects, except as specifically approved by Tenant; (31) More than an arms length, market rate rent, and any other expense, for Landlord's Woodland Park management office (which shall be of a reasonable size); and any rent or other expense for any leasing office, if any; (32) Costs of defending any lawsuits with any Mortgagees or Lessors; (33) Any amounts payable by Landlord to another tenant or Landlord's lender by way of indemnity or damages (except direct reimbursement of amounts incurred for costs which would be includable in Operating Expenses); and (34) Any expenses associated with the Parking Garage paid for by Tenant or any garage operator directly. In addition to the foregoing, all Operating Expenses shall be reduced by all cash discounts, trade discounts or quantity discounts received by Landlord or Landlord's Agent in the purchase of any goods, utilities or services in connection with the prudent operation of the Premises. Landlord shall not collect from the tenants of the Premises more than one hundred percent (100%) of the actual costs of operating the Premises. In the calculation of any Operating Expenses, it is understood that no expense shall be charged more than once (whether directly or in Operating Expenses). Landlord shall equitably prorate bills for services rendered to the Premises and to any other property owned by Landlord or an Affiliate. Landlord shall diligently and in good faith pursue all insurance, breach of warranty or other claims or actions that might result in a reduction in Operating Expenses payable by Tenant. Landlord covenants to pay all Operating Expenses and Taxes before the same become delinquent (subject to the right to contest by law), but Landlord shall not be in default of the obligation to pay Taxes to the extent such payment is not made due to Tenant's failure to comply with its obligation to make the payments contemplated hereby in a timely fashion. Any Operating Expenses relating to the Parking Garage shall be reasonably allocated among all tenants using -22- the Parking Garage. In exercising any self help rights hereunder, if Tenant incurs out-of-pocket costs and expenses in excess of amounts otherwise includable in Operating Expenses, Operating Expenses shall be reduced by an amount sufficient to give consideration to any extra costs incurred due to Landlord not incurring such costs, with attendant economies of scale, in the normal and ordinary course. (d) [Intentionally Deleted.] (e) "Taxes" shall mean (i) all real estate taxes, ----- assessments, sewer and water rents, rates and charges and other governmental levies, impositions or charges, whether general, special, ordinary, extraordinary, foreseen or unforeseen, which may be assessed, levied or imposed upon all or any part of the Premises, and (ii) all expenses (including reasonable attorneys' fees and disbursements and experts' and other witnesses' fees) reasonably incurred in contesting any of the foregoing or the Assessed Valuation of all or any part of the Premises. Taxes shall not include (i) any franchise, corporation, income, receipts, inheritance, estate, revenue or net profits tax which may be assessed against Landlord or the Premises or both, (ii) transfer taxes assessed against Landlord or the Premises or both, (iii) penalties or interest on any late payments of Landlord, (iv) personal property taxes of Tenant, or (v) any of the items set forth in the next succeeding sentence, except upon the terms and conditions set forth therein, or (vi) any items excluded from Operating Expenses in Section 8.1(c). If at any time the methods of taxation prevailing on the date hereof shall be altered so that in lieu of or, if of a nature customarily paid or reimbursed by tenants of Comparable Buildings, as an addition to the whole or any part of Taxes, there shall be assessed, levied or imposed (1) a tax, assessment, levy, imposition or charge based on the income or rents received from the Premises whether or not wholly or partially as a capital levy or otherwise, (2) a tax, assessment, levy, imposition or charge measured by or based in whole or in part upon all or any part of the Premises and imposed upon Landlord, (3) a license fee measured by the rents, or (4) any other tax, assessment, levy, imposition, charge or license fee however described or imposed, if imposed upon the Premises or Landlord by reason of its ownership of the Premises, then all such taxes, assessments, levies, impositions, charges or license fees or the part thereof so measured or based shall be deemed to be Taxes, provided that any tax, assessment, levy, imposition or charge imposed on income or rents from the Premises shall be calculated as if the Premises were the only asset of Landlord. Section 8.2 Tenant's Tax Payment. Beginning on the Rent Commencement Date -------------------- for each Floor, and continuing thereafter throughout the Term, Tenant shall pay to Landlord Tenant's Proportionate Share of Taxes during the Term, except that, during the Partial Term, Tenant's Proportionate Share shall be adjusted to reflect the portion of the Building delivered to Tenant, and the number of days during the real estate tax fiscal year after delivery of the Floors to Tenant. For example, assuming the tax fiscal year is the calendar year and the tax is One Thousand Dollars ($1,000), if the Rent Commencement Date has occurred for sixty-six percent (66%) of the Agreed Area of the Building on February 1 and the remaining thirty-four percent (34%) in one-half (1/2) -23- increments on March 1 and April 1, respectively, Tenant's share of Taxes would be calculated as follows:

----------------------------------------------------------------------------------------------------------- (Percentage) x (Percentage of Year) x (TOTAL TAX) = (Tenant's Share of Taxes) ----------------------------------------------------------------------------------------------------------- (0%) 31/365 = 8.50% $1,000 0 ----------------------------------------------------------------------------------------------------------- (66%) 28/365 = 7.7% $1,000 $ 50.82 ----------------------------------------------------------------------------------------------------------- (83%) 30/365 = 8.20% $1,000 $ 68.06 ----------------------------------------------------------------------------------------------------------- (100%) 276/365 = 75.6% $1,000 $756.00 ----------------------------------------------------------------------------------------------------------- Aggregate Tenant Share $874.88 -----------------------------------------------------------------------------------------------------------

Taxes assessed for a real estate tax fiscal year which extends beyond the Term shall be apportioned between Landlord and Tenant at the expiration of the Term. Landlord shall promptly forward to Tenant copies of all notices, bills or other statements received by Landlord concerning Taxes. Tenant shall pay all such Taxes to Landlord at least five (5) Business Days before the same become due and payable or, if later, five (5) days after the bill for same is delivered by Landlord to Tenant. Tenant's obligation to pay Taxes shall survive the expiration of the Term or the earlier termination of this Lease. Tenant shall be obligated to escrow amounts for Taxes on a monthly basis in an amount equal to one-twelfth (1/12) of the Tenant's Tax Payment if required by any Mortgagee holding a first-priority mortgage lien on the Premises, provided, that (i) such escrowed amounts shall be deposited in an interest-bearing account and (ii) such Mortgagee shall be obligated to apply such escrowed amounts to the payment of Taxes when due notwithstanding any default of Landlord thereunder, and shall so confirm, in writing, to Tenant. Any such estimate shall be based on a reasonable estimate of Taxes for such year (which shall be based on the prior year's tax bill, any phase-in information, and any subsequent re-assessment information) and the parties shall reconcile tax payments within 120 days after the end of the tax year (i.e., pursuant to Section 8.5 below). Section 8.3 Tax Proceedings. Except during the last two (2) Lease Years of --------------- the Term, but only so long as Tenant is either the sole tenant of the Building or is leasing at least seventy-five percent (75%) of the Agreed Area thereof, Tenant shall have the right to direct Landlord to institute and diligently pursue proceedings to contest Taxes or to reduce the Assessed Valuation of the Premises. Such proceedings shall not be settled without Tenant's consent, not to be unreasonably withheld, conditioned or delayed, and Tenant shall otherwise have the right to participate in such tax contest, at Tenant's sole expense. Thereafter, only Landlord shall determine if and when to institute such proceedings; provided, however, that notwithstanding the foregoing, in the event that (i) the Assessed Valuation during any tax fiscal year exceeds one hundred -24- five percent (105%) of the Assessed Valuation during the immediately preceding tax fiscal year, and (ii) Landlord has not contested Taxes or challenged the Assessed Valuation during such tax fiscal year or the immediately preceding tax fiscal year, Landlord agrees to institute proceedings to contest Taxes or reduce the Assessed Valuation upon Tenant's request. To the extent that the costs incurred by Landlord in connection with proceedings instituted pursuant to the immediately preceding sentence are not recovered by Landlord as part of Tenant's Tax Payment or Operating Expense Payment, Tenant shall reimburse Landlord for such costs within thirty (30) days after demand. If Landlord receives a refund of Taxes to the extent that such refund is based upon a payment made by Tenant, Landlord shall, at its election, either pay to Tenant, or (unless the Lease has terminated) credit against subsequent payments of Rent due hereunder, an amount equal to Tenant's Proportionate Share of the refund, net of any actual, out-of-pocket expenses incurred by Landlord in achieving such refund and not recovered, which amount shall not exceed Tenant's Tax Payment paid for such tax fiscal year. Except as expressly set forth above in this Section 8.3, Landlord shall not be obligated to file any application or institute any proceeding seeking a reduction in Taxes or the Assessed Valuation. Landlord will engage annually in a good faith review of Taxes and any reassessments of the Premises for purposes of determining whether to contest or appeal any such assessment or impositions. Section 8.4 Tenant's Operating Expense Payment. ---------------------------------- (a) Tenant shall pay as Additional Rent, Tenant's Proportionate Share of Operating Expenses for each calendar year ("Tenant's Operating Expense Payment"), commencing with the earliest Rent Commencement Date; provided, that, irrespective of Tenant's Proportionate Share, Tenant shall pay the entire cost of any additional service provided to Tenant pursuant to this Lease at Tenant's request. During the Partial Term, Tenant's Operating Expense Statement shall reflect Tenant's obligation to pay Tenant's Proportionate Share of the Operating Expenses relating to the portion of the Building for which Rent Commencement Dates have occurred, and the number of days during the calendar year after such occurrence. Landlord shall make a reasonable estimate of Tenant's Proportionate Share of the Operating Expenses for each calendar year, and, so long as Tenant leases at least seventy-five percent (75%) of the Agreed Area of the Building, shall submit to Tenant for Tenant's approval, not later than thirty (30) days prior to the earliest Rent Commencement Date, and no later than December 1 of each subsequent calendar year, a reasonably itemized budget (the "Operating Budget") setting forth the monthly projected staffing and Operating Expenses and Taxes for the following calendar year (including a list of proposed on-site management personnel and budgets for the Parking Garage and the Building's allocable share of expenses relating to the Association), or, with respect to the Operating Budget to be submitted thirty (30) days before the earliest Rent Commencement Date, for the initial calendar year (or portion thereof) during the term (the "Initial Calendar Year"). So long as Tenant leases at least seventy-five percent (75%) of the Agreed Area of the Building, Tenant shall have the right to direct Landlord to vote, as owner of the Premises, as Tenant deems appropriate, in Tenant's sole and absolute discretion, as to all matters relating to discretionary costs imposed under the Association Declaration or otherwise charged by the Association. Each Operating -25- Budget shall include allocations for maintenance, safety, management and other Building Services at the level found in Comparable Buildings. Tenant shall pay along with each month's installment of Fixed Rent one-twelfth (1/12) of the approved Operating Budget, except that with respect to the Operating Budget to be submitted for the Initial Calendar Year, Tenant's Proportionate Share of Operating Expenses shall be payable in equal monthly installments over such period. If Landlord's estimate of Operating Expenses for any calendar year is not received by December 1 of the preceding calendar year or is not thereafter approved by Tenant within thirty (30) days, Tenant shall continue to pay the monthly installments of Tenant's Proportionate Share of Operating Expenses at the rate and Landlord shall provide service at the level established for the preceding calendar year increased to reflect any actual increases projected in Operating Expenses (other than Controllable Expenses), until Tenant receives and approves a new Operating Budget for the calendar year. Tenant shall have no such approval rights if Tenant is leasing less than 75% of the Agreed Area of the Building. In addition, Tenant shall only have the right to approve line items on any Operating Budget that are Discretionary Expenses. In all other cases involving approval of repair and maintenance items, Tenant agrees to take into consideration Landlord's obligation to maintain a first class building and to protect the value of its asset. Upon approval of the new Operating Budget, Tenant's monthly share of Operating Expenses shall be calculated to reflect payments made pursuant to the preceding calendar year's Operating Budget. Within forty-five (45) days after the end of each calendar quarter, Landlord agrees to provide Tenant with a quarterly report setting forth disbursements to vendors and indicating what percentage of the Operating Budget has been expended as of the date set forth in the report. To the extent Landlord determines that costs incurred with respect to Discretionary Expenses reflected within the Approved Budget will vary by more than five percent (5%) from the budgeted amount on an annual basis, Landlord will endeavor to notify Tenant promptly thereafter to alert Tenant of such likely budgetary variance and to consult with Tenant regarding potential means of achieving cost savings, or modifications to service in order to minimize Operating Expenses for the applicable period. Landlord further agrees not to enter into any contracts related to the operation and management of the Building which are not terminable on thirty (30) days notice for cause or on ninety (90) days notice without cause without Tenant's prior consent, except relating to elevators, fire alarms and life safety equipment. (b) Annual Operating Expense Statement. Within one hundred and ---------------------------------- twenty (120) days after the Initial Calendar Year and thereafter, within one hundred and twenty (120) days after the end of each calendar year, Landlord shall submit to Tenant a statement prepared by Landlord (the "Expense Statement") setting forth in reasonable detail the Operating Expenses (and Taxes) for such calendar year and the amount of Tenant's Proportionate Share of the Operating Expenses (and Taxes) for such calendar year. If Tenant's Proportionate Share of the Operating Expenses so stated is more than the amount (if any) theretofore paid by Tenant for Operating Expenses for the period covered by the Expense Statement, Tenant shall pay to -26- Landlord the deficiency within thirty (30) days after the submission of the Expense Statement. If Tenant's Proportionate Share of the Operating Expenses (and Taxes) so stated is less than the amount (if any) theretofore paid by Tenant for Operating Expenses for the period covered by the Expense Statement, Landlord shall credit the excess against the next monthly installment of Rent thereafter payable by Tenant under this Lease, except that Landlord shall refund the excess (if any) for the calendar year ending with or within the last Lease Year to Tenant within thirty (30) days after submission of the Expense Statement for such calendar year. If the last day of the Term shall not coincide with the end of a calendar year, Tenant shall pay Tenant's Proportionate Share of the Operating Expenses for the calendar year in which the last day of the Term occurs up to and including the last day of the Term as if the last day of the Term were the end of a calendar year. Tenant's obligation under this subsection to pay Tenant's Proportionate Share of the Operating Expenses and Landlord's obligation to reimburse Tenant for an overpayment of Tenant's Proportionate Share of the Operating Expenses shall survive the expiration of the Term or the earlier termination of this Lease. Section 8.5 Disputes. Landlord's books and records with respect to -------- Operating Expenses and Taxes shall be kept on an accrual basis in accordance with GAAP consistently applied. Each Expense Statement, in a form sufficiently detailed and complete for Tenant's adequate review, sent to Tenant shall be conclusively binding upon Tenant unless Tenant shall, within one (1) year after such Expense Statement is received, give notice to Landlord objecting to such Expense Statement and specifying the reasons that such Expense Statement is claimed to be incorrect (to the extent then known by Tenant). Notwithstanding the foregoing, Tenant shall, within thirty (30) days after such Expense Statement is received, pay to Landlord the amount set forth in such Expense Statement, without prejudice to Tenant's right to dispute such Expense Statement. No such objection shall prejudice Tenant's right to make further objections with respect to the same Expense Statement within the permitted time period. Tenant shall have the right at its sole cost and expense to review or audit Landlord's books and records relating to Landlord's calculation of Operating Expenses and Taxes (for such year) at any time within one (1) year from Tenant's receipt of the Expense Statement, and may use the auditor or reviewer of its choice, provided, however, that Tenant may not hire an auditor or reviewer paid on a contingency fee basis unless such auditor's area of expertise includes lease expense analysis and such auditor is recognized for such expertise. Tenant shall be obligated to reimburse Landlord for its reasonable costs of responding to any claim by Tenant that it is entitled to a refund, in the proportion that (A) the amount which Tenant initially claimed less the amount actually recovered bears to (B) the amount of the initial claimed adjustment in Operating Expenses or Taxes. Landlord shall have the right to reasonably revise its calculation of Operating Expenses at any time within one (1) year from the date of the Expense Statement which shall be binding on Landlord thereafter, and any such revision shall be deemed a new Expense Statement for purposes hereof. Tenant shall not be required to notify Landlord of the results of Tenant's audit. If the parties are unable to resolve a dispute as to the correctness of an Expense Statement within thirty (30) days following Tenant's notice of objection, either party may refer the issues raised to an accountant -27- reasonably acceptable to the other party, and that has not and does not provide accounting and consulting services to Landlord or Tenant or any of their respective Affiliates and does not otherwise have any affiliation or business relationship with Landlord or Tenant or any of their respective Affiliates, and the decision of such accountants shall be conclusively binding upon Landlord and Tenant. In the event that Landlord and Tenant are unable to agree, such accountant shall be selected by the AAA in the manner provided in Section 34.2 hereof. In connection with any review or audit of Operating Expenses, Landlord, Tenant and its reviewer or auditor shall execute and deliver to Landlord a confidentiality agreement, in form and substance reasonably satisfactory to all, whereby such parties agree not to disclose to any third party any of the information obtained in connection with such review, except as reasonably necessary to attorneys, arbitrators or other similar professionals in connection with such audit or in the event of any dispute or litigation between the parties. The fees and expenses relating to the accountant hired to conclusively resolve the dispute as to the correctness of the Expense Statement and, if the expenses were overstated by more than three and one half percent (3.5%), the fees and expenses of Tenant's auditor or reviewer, shall be borne by the unsuccessful party (and if both parties are partially unsuccessful, the accountant shall apportion the fees and expenses between the parties based on the degree of success of each party). In the event there is an adjustment of the Expense Statement, the amount owed by either party shall be increased by interest on the sum owed calculated at the Base Rate from the date of the original payment until the date the adjustment is paid. ARTICLE 9 REQUIREMENTS OF LAW ------------------- Section 9.1 Tenant's Compliance. Tenant, at its expense, shall comply ------------------- (or cause to be complied) with all Requirements applicable to (x) the Initial Installations and (y) otherwise applicable to the Premises and first enacted or imposed after the initial Rent Commencement Date, regardless of whether imposed by their terms upon Landlord or Tenant, and which do not require any structural changes to the Premises. Notwithstanding the foregoing, all repairs and alterations to the Premises, whether structural or nonstructural, ordinary or extraordinary, required to be made to cause the Premises to comply with any Requirements and which arise as a result of (i) the specific manner and nature of Tenant's use or occupancy of the Premises, as distinct from general office use, (ii) Alterations made by Tenant in the Premises or (iii) a breach by Tenant of any provisions of this Lease, shall be made by Tenant, at Tenant's expense and in compliance with Article 5, if such repairs or alterations are --------- nonstructural and do not affect any Building System, or by Landlord, at Tenant's reasonable expense, if such repairs or alterations are structural or affect any Building System. If Tenant obtains knowledge of any failure to comply with any Requirements applicable to the Premises, Tenant shall give Landlord prompt written notice thereof. Section 9.2 Landlord's Compliance. Landlord shall comply with (or --------------------- cause to be complied with) all Requirements applicable to the Premises which are related to the structural components thereof and do not arise out of the matters described in clauses -28- (i), (ii) or (iii) of Section 9.1; and the cost thereof shall be included in Operating Expenses pursuant to Section 8.1(b) of this Lease if the Requirement shall not apply to the Premises as of the Commencement Date. Landlord shall, as part of the Base Building Work (but not as an Operating Expense), cause the Base Building to comply as of the Commencement Date with all applicable Requirements (including the ADA), and with all requirements of all insurance bodies affecting the Premises which are customarily applicable to Comparable Buildings. From and after the Commencement Date, Landlord shall be responsible, for compliance with Requirements as they relate to the Common Areas and the Building generally and the costs thereof shall, in accordance with the terms of Section 8.1, be charged as Operating Expenses. Section 9.3 Hazardous Materials. ------------------- (a) From and after the Commencement Date, Tenant shall not (i) cause or permit the storage or use of Hazardous Materials in any manner not permitted by any Requirements, or (ii) cause or permit the escape, disposal or release of any Hazardous Materials within or from the Premises, except to the extent that any of the foregoing actions are caused by Landlord or any party claiming by, through or under Landlord. Nothing herein shall be deemed to prevent the use of any Hazardous Materials customarily used in the construction or normal operation of office buildings in Comparable Buildings, provided such use is in accordance with all Requirements. Tenant shall be responsible, at its expense, for all matters directly or indirectly based on, or arising or resulting from, the actual or alleged presence of Hazardous Materials in the Premises, which is caused or permitted by Tenant. Tenant shall provide to Landlord copies of all communications received by Tenant with respect to any Requirements relating to Hazardous Materials, and/or any claims made in connection therewith and applicable to the Premises or Landlord. Upon reasonable prior written notice to Tenant (except in the event of an emergency), so long as Landlord does not unreasonably interfere with Tenant's business operations, Landlord or its agents may perform environmental inspections (at its cost) of the Premises subject to the limitations set forth herein. (b) Landlord hereby represents and warrants that, except as set forth in that certain Phase I Environmental Site Assessment--CFC Tract dated July 7, 1997, prepared by Environmental Consulting Services, Ltd. it has received no notice, and has no actual knowledge, of any Hazardous Materials on, in or under the Premises, including in connection with the initial construction of the Building. For purposes of this Lease, the knowledge of Landlord shall be limited to the actual knowledge of James A. Evans, Rustom Cowasjee, Simon Wasserberger, Steven F. Grant and Andrew J. Nathan. There shall be no personal liability to said individuals arising out of said representations or warranties (all liability therefrom being attributable to Landlord hereunder). (c) From and after the Effective Date, Landlord shall not cause or permit the escape, disposal or release of any Hazardous Materials within or from the Premises, except to the extent that any of the foregoing actions are caused by Tenant or any party claiming by, through or under Tenant. Landlord shall be responsible, at its -29- expense, for all matters directly or indirectly based on, or arising or resulting from, the actual or alleged presence of Hazardous Materials in the Premises, which is caused by Landlord or permitted by Landlord. Landlord shall provide to Tenant copies of all communications received by Landlord with respect to any Requirements relating to Hazardous Materials, and/or any claims made in connection therewith, and applicable to the Premises or Tenant. (d) Nothing herein shall be deemed to prevent the use of any Hazardous Materials customarily used (i) in the ordinary course of Tenant's business operations in accordance with the Permitted Uses, or (ii) in the ordinary course of Landlord's business operations provided that, in either (i) or (ii), such use is in accordance with all Requirements. (e) The covenants contained in this Section 9.3 shall survive the expiration or earlier termination of this Lease. Section 9.4 Landlord's Insurance. Tenant shall not cause or knowingly -------------------- permit any action or condition that would (i) invalidate or conflict with Landlord's insurance policies, provided such policies contain terms which are customarily applicable to Comparable Buildings, (ii) violate applicable Requirements, (iii) cause an increase in the premiums of fire insurance then covering the Building over that payable with respect to Comparable Buildings or (iv) result in insurance companies of good standing refusing to insure the Building or the Land in amounts and against risks as reasonably determined by Landlord and which are customarily applicable to Comparable Buildings. If the fire insurance premiums increase as a result of Tenant's failure to comply with the provisions of this Article 9, Tenant shall promptly cure such failure and --------- shall reimburse Landlord, as Additional Rent, for the increased fire insurance premiums paid by Landlord as a result of such failure by Tenant. In any action or proceeding to which Landlord and Tenant are parties, a schedule or "make up" of rates for the Building issued by the appropriate Fire Insurance Rating Organization, or other body fixing such fire insurance rates, shall be presumptive evidence of the fire insurance rates then applicable to the Building. Landlord represents that, to Landlord's knowledge as of the date hereof, use of the Building for the Permitted Uses will not increase the rate of fire or other insurance on the Building. ARTICLE 10 SUBORDINATION ------------- Section 10.1 Subordination and Attornment. Subject to Section 10.5 ---------------------------- hereof, this Lease is subject and subordinate to all Mortgages and Superior Leases and, at the request of any Mortgagee or Lessor, Tenant shall attorn to such Mortgagee or Lessor, its successors in interest or any purchaser in a foreclosure sale pursuant to the foreclosure of such mortgage. Section 10.2 Mortgage Priority; Modification. Any Mortgagee or Lessor ------------------------------- may elect that this Lease shall have priority over the Mortgage or Superior Lease that it holds and, upon notification to Tenant by such Mortgagee or Lessor, this Lease shall be -30- deemed to have priority over such Mortgage or Superior Lease, regardless of the date of this Lease. In connection with any financing of the Building, Tenant shall consent to any reasonable modifications of this Lease requested by any lending institution, provided such modifications do not increase the obligations, or adversely affect the rights, of Tenant under this Lease. Section 10.3 Tenant's Termination Right. As long as any Mortgage or -------------------------- Superior Lease shall exist and Tenant has been provided notice of same, Tenant shall not seek to exercise any termination or other right it may have under this Lease, at law, in equity or otherwise, if any, by reason of any act or omission of Landlord (a) until Tenant shall have given notice of such act or omission to all such Mortgagees or Lessors, and (b) until thirty (30) days shall have elapsed following the giving of notice of such default and the expiration of any applicable notice or grace periods applicable to Landlord under this Lease (unless such act or omission is not capable of being remedied within such period, such Mortgagee or Lessor has, within such thirty (30) day period, notified Tenant that it intends to remedy such circumstance and has thereafter commenced and is diligently pursuing with continuity a remedy but in no event more than one hundred fifty (150) days after the expiration of the aforesaid thirty (30) day period), during which period such Mortgagees or Lessors shall have the right, but not the obligation, to remedy such act or omission and thereafter diligently proceed to so remedy such act or obligation. If any Mortgagee or Lessor so elects to remedy such act or omission of Landlord, Tenant shall not to exercise any termination or other right it may have under this Lease, at law, in equity or otherwise, if any, by reason of any act or omission of Landlord so long as such Mortgagee or Lessor is proceeding with reasonable diligence to effect such remedy. The provisions of this Section 10.3 are not intended in any way to affect any of Tenant's self-help rights under this Lease. Section 10.4 Provisions. The provisions of this Article 10 shall (a) ---------- ---------- inure to the benefit of Landlord, Tenant, Mortgagee, or Lessor and their respective successors and assigns, and (b) apply notwithstanding that, as a matter of law, this Lease may terminate upon the termination of any such Mortgage or Superior Lease. Section 10.5 Non-Disturbance Agreements. Notwithstanding anything in -------------------------- this Lease to the contrary, as a condition precedent to Tenant's agreement hereunder to subordinate Tenant's interest in the Lease and attorn to any Mortgage or Superior Lease made between Landlord and such Mortgagee or Lessor, whether now or hereafter existing, Landlord shall obtain from each Mortgagee or Lessor, whether now or hereafter existing, cause to be recorded, and deliver to Tenant an agreement, substantially in the form attached hereto as Exhibit E or --------- otherwise meeting the definition of a Non-Disturbance Agreement hereunder. If Lender does not require the recording of the Non-Disturbance Agreement, and Tenant elects to record such Non-Disturbance Agreement, Tenant shall bear the cost of such recordation. "Non-Disturbance Agreement" shall mean a subordination, non-disturbance and attornment agreement from each Mortgagee or Lessor in a form to be negotiated between (and reasonably satisfactory to) Landlord, Tenant and the applicable Mortgagee or Lessor (sometimes referred to herein as "Lender"), which is executed by Landlord, Tenant and -31- the Lender, which is duly recorded in the land records of Fairfax, County, Virginia, and which includes the following provisions: (a) that, provided no uncured Material Default shall then exist under this Lease, the Mortgagee, any successful foreclosure bidder's assignee or designee, and any other third party purchaser entity or any holder of the reversionary interest under a Superior Lease succeeding to Landlord's and/or Lender's or their respective successors' and assigns' interest (collectively, "Senior Lienors") shall not: (i) disturb Tenant's rights, privileges, interests and unexercised options under this Lease or any instrument executed pursuant hereto, nor name Tenant as a party defendant in any foreclosure or any action or proceeding instituted under or in connection with the Mortgage or Superior Lease unless such joinder is necessary to foreclose the Mortgage or terminate the Superior Lease, and then only for such purpose and not for the purpose of terminating this Lease or reducing any rights under the Lease because of any default under the Mortgage; (ii) terminate this Lease if there is a foreclosure, deed-in-lieu, or other proceedings involving Landlord's interest in the Building; and/or (iii) require any Lease modification in connection therewith (except as provided in Section 10.2); (b) that notwithstanding anything contained herein to the contrary, Senior Lienor shall not be bound by any obligation to perform any work or to make improvements to the Building except for (x) repairs and maintenance required to be made by Landlord under this Lease, subject to subsection (d)(i) below, and (y) repairs to the Building as a result of damage by fire or other casualty or a partial condemnation pursuant to the provisions of this Lease, but only to the extent that such repairs can reasonably be made from the net proceeds of any insurance or condemnation awards, respectively, actually made available to such successor landlord; provided, that if such Senior Lienor elects not to repair such damage by fire, casualty or condemnation, Tenant shall have the right to terminate this Lease pursuant to Article 13 hereof; ---------- (c) Tenant shall be required to attorn to such Senior Lienor as long as such Senior Lienor recognizes Tenant and assumes (either expressly or by operation of law) the obligations of "Landlord" under this Lease for the period after the date title to the Property is transferred to such Senior Lienor by Landlord (the "Foreclosure Date"); (d) no Senior Lienor shall be: (i) liable for any act or omission of Landlord with respect to which Senior Lienor has not received prior written notice, except for acts, omissions or defaults of a continuing nature requiring cure under this Lease, which continue after the Foreclosure Date and which are not thereafter cured by Senior Lienor after notice and an opportunity to cure as provided herein (including, without limitation, any failure by Landlord to fund any allowances or Tenant's inability to fully recognize any offsets or credits under this Lease); -32- (ii) subject to any offsets (other than the Special Offset Amounts, as defined in Section 19.2(b)) or defenses which Tenant may have had against any prior landlord, except (A) the foregoing shall not operate to cut off defenses or offsets Tenant may have in relation to any breach, act or omission of the landlord which continues after the Foreclosure Date (but such defenses and/or offsets shall apply only to the extent such breach, act or omission continues after such Senior Lienor assumes title); Senior Lienor shall not be relieved of the obligation to comply with all of the landlord's obligations under the Lease accruing from and after the Foreclosure Date, irrespective of whether the original non-compliance with any such obligation arose prior to and is continuing as of the Foreclosure Date, or arose on or after the Foreclosure Date (provided however that if such obligation arose prior to the Foreclosure Date, such Senior Lienor shall not be deemed in default until after the provision of any notice of default required by this Lease to such Senior Lienor, and its failure to cure same within the cure period provided for herein), and (B) as set forth in clause (b), above and subclause (vi) below; (iii) bound by any payment of Rent or Additional Rent by Tenant for a period greater than one (1) month in advance made without Senior Lienor's prior written consent (unless actually received by, or otherwise in the control of, such Senior Lienor); (iv) bound by any amendment or modification of the Lease which reduces rent or charges payable under this Lease or shortens or lengthens the term thereof or otherwise materially affects the rights of Landlord (in more than a de minimis manner) and made after the Mortgage or Superior Lease was recorded (or earlier, if Tenant was notified earlier) without Senior Lienor's prior written consent, if and to the extent required by the Senior Lienor's loan documents; (v) liable for the Security Deposit given by Tenant to a prior landlord (including Landlord) unless such Security Deposit is actually delivered to Senior Lienor by the prior landlord or otherwise in the control of Senior Lienor; or (vi) bound by any obligation to make any payment to Tenant which was required to be made prior to the time such successor landlord succeeded to Landlord's interest, other than the Special Offset Amounts (including any unpaid portion of Landlord's Contribution). In addition, Tenant shall not be required to name Landlord or Senior Lienor as Tenant's attorney-in-fact for any reason, nor pay any attorneys fees or servicing charges or expenses related to the Non-Disturbance Agreement or any estoppel certificate. Landlord and Tenant agree that, notwithstanding any of the foregoing provisions to the contrary, Exhibit E shall constitute a commercially --------- reasonable form of Non-Disturbance Agreement that is acceptable to each of them and that may be used and/or delivered in connection with any Mortgage or Superior Lease, so long as such Non-Disturbance Agreement is recorded in the applicable land records. (e) that, if Senior Lienor shall become the owner of the Property, or the Property shall be sold by reason of non-judicial or judicial foreclosure or -33- other proceedings brought to enforce the Mortgage, or the Property shall be conveyed by deed in lieu of foreclosure, Tenant agrees to pay all Rent directly to Senior Lienor in accordance with this Lease promptly upon receipt of written notice from Senior Lienor. Tenant further agrees to pay all Rent directly to Senior Lienor immediately upon notice that Senior Lienor is exercising its rights to such Rent under the Mortgage or any other loan documents (including but not limited to any Assignment of Leases and Rents) following a default by Landlord or other applicable party and Landlord acknowledges the same. Notwithstanding the foregoing, Tenant shall be under no obligation to ascertain whether a default by Landlord has occurred under the Mortgage or any other loan documents or whether such demand by Senior Lienor is permitted under the loan documents, and Landlord waives any right, claim or demand it may now or hereafter have against Tenant by reason of such direct payment to Lender and agrees that such direct payment to Lender shall discharge all obligations of Tenant to make such payment to Landlord and if Tenant makes such payment, Landlord shall indemnify, defend, protect and hold Tenant harmless from and against any and all Losses which Tenant may incur by reason of same. ARTICLE 11 SERVICES AND UTILITIES ---------------------- Section 11.1 Building Services. ----------------- (a) Prior to the Commencement Date, Landlord at Landlord's sole cost and expense shall maintain the interior temperature of the Building above thirty-two degrees Fahrenheit (32(0)F), perform preventative maintenance to the Building Systems, and service the Building with a part-time engineer reasonably sufficient to protect the Building and the Building Systems. (b) Throughout the Term, Landlord shall maintain the Premises in a first-class manner consistent with Comparable Buildings, shall operate all Building Systems consistent with the Plans and Specifications, and, subject to Unavoidable Delays, all Requirements, the provisions of this Article ------- 11 and the approved Operating Budget, and shall furnish, or cause to be -- furnished, the following services ("Building Services"): (i) Subject to the provisions of Section 11.2, normal and usual electricity for interior and exterior lighting purposes for the Building, the Parking Garage, surface parking areas and Common Areas, and the operation of ordinary office equipment and HVAC service and lighting in accordance with the design capabilities of the Building and such other services to the Building (all in accordance with the Base Building Construction Documents), the Parking Garage, surface parking areas and Common Areas as may be required under this Lease; (ii) Public lavatory facilities and adequate supplies for toilet rooms throughout the Premises; -34- (iii) In accordance with the specifications contained within the Base Building Construction Documents, hot and cold running water in toilet rooms, kitchens and pantries throughout the Premises as well as sufficient running water for HVAC and other applicable uses; (iv) Heating, ventilating and air-conditioning to the Building (zoned Floor-by-Floor) during Business Hours, in accordance with the specifications attached as Exhibit L; --------- (v) Automatically operated elevator service (with at least eight (8) passenger elevators and one freight elevator) twenty-four (24) hours a day, seven days a week; (vi) Building Standard lighting fixtures, electric bulbs and fluorescent tubes in light fixtures in the Premises (including the Parking Garage and the Land); (vii) A controlled access security system for the Premises (including the Parking Garage) permitting access thereto twenty-four (24) hours a day, three hundred sixty-five (365) days a year, via a Kastle or similar key-card system, including key-cards for such system and Building concierge/security personnel during Business Hours; (viii) Landscaping maintenance, road and driveway repair, and snow removal; (ix) Janitorial and char services to the Premises (including the cafeteria, kitchen and dining area, however, if the Building is occupied by more than one (1) tenant, such services shall be considered a "tenant extra" to be paid for directly by Tenant and Operating Expenses will be appropriately reduced on account thereof), including trash removal and recycling, Monday through Friday, excepting holidays, in accordance with the cleaning specifications attached hereto as Exhibit F; --------- (xi) Operational fire alarm and life safety systems (which, to the extent applicable, shall include telecommunications systems which are a part of such systems) in accordance with applicable Requirements; and (x) Utility and other service to the Parking Garage for purposes of lighting, ventilation (if any). (c) Landlord agrees to seek at least three competitive bids from a list of qualified service providers reasonably acceptable to Tenant for any service or work provided to the Premises, other than service or work related to fire alarms and other life safety equipment, Building management or any other services not included in Operating Expenses. Landlord shall select in its reasonable discretion the lowest responsive bid from among the qualified bidders. All costs of providing Building Services shall be included as an Operating Expense, unless specifically excluded in Article 8 or separately --------- charged to Tenant. Provided Tenant gives Landlord notice at -35- least thirty (30) days in advance, Tenant shall have the right at its sole option to temporarily or permanently increase, reduce the scope of janitorial services, security services, or other Building Services relating to Discretionary Expenses to be provided and/or performed by Landlord for Tenant's benefit pursuant to this Lease, for such period as Tenant may desire, and with Tenant to pay the additional cost, or receive any economic benefit, that results therefrom (in the form of an increase or reduction in Operating Expenses, as the case may be). Any such service which Tenant may elect to reduce, curtail or eliminate during the Term hereof is hereinafter referred to as a "Reduced Service". Notwithstanding the foregoing: (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 or appropriate for the proper operation, maintenance and repair of the Premises in a condition comparable to Comparable Properties, and (ii) the cleaning and janitorial services provided by such third party provider comply with the standards set forth in Exhibit F. ---------