FOR DEVELOPER REVIEW
DRAFT 10/11/06
[VENABLE 10/27 COMMENTS]
MASTER LEASE
By and Between
ARMED FORCES RETIREMENT HOME,
Lessor
and
________________________________,
Lessee
Dated as of ________________, 2006
__________________________________________________________________

TABLE OF CONTENTS

ARTICLE I DEFINITIONS	3
ARTICLE II TERM AND DELIVERY OF POSSESSION	9
ARTICLE III EASEMENTS AND RIGHTS OF WAY	9
ARTICLE IV CONDITION OF LEASED PREMISES	10
ARTICLE V RENT	11
ARTICLE VI DEVELOPMENT AGREEMENT	12
ARTICLE VII USE OF LEASED PREMISES	13
ARTICLE VIII DEFAULT, REMEDIES, AND TERMINATION	13
ARTICLE IX TAXES	17
ARTICLE X RESTORATION AND SURRENDER	18
ARTICLE XI ENVIRONMENTAL PROTECTION	19
ARTICLE XII MAINTENANCE OF LEASED PREMISES	22
ARTICLE XIII COMPLIANCE WITH APPLICABLE LAWS	22
ARTICLE XIV ACCESS AND INSPECTION	23
ARTICLE XV GENERAL INDEMNIFICATION BY LESSEE	24
ARTICLE XVI INSURANCE	24
ARTICLE XVII CONFLICTS	28
ARTICLE XVIII CONSTRUCTION OF INFRASTRUCTURE IMPROVEMENTS	28
ARTICLE XIX UTILITIES AND SERVICES	28
ARTICLE XX OPERATION AND MANAGEMENT OF THE PROPERTY	29
ARTICLE XXI NOTICES	29
ARTICLE XXII ASSIGNMENT, SUBLEASES, AND LICENSES	31
ARTICLE XXIII LIENS AND MORTGAGES	32
ARTICLE XXIV DISPUTES	35
ARTICLE XXV GUARANTY	35
ARTICLE XXVI GENERAL PROVISIONS	36
ARTICLE XXVII REPORTING PROVISIONS	40
ARTICLE XXVIII REPRESENTATIONS AND WARRANTIES	42
ARTICLE XXIX AMENDMENTS	42
ARTICLE XXX EXHIBITS	42

EXHIBIT A	Description and Plat of AFRH-W
EXHIBIT B	Redevelopment Area
EXHIBIT C	Leased Premises
EXHIBIT C-1 Existing Buildings and Existing Infrastructure
EXHIBIT C-2 LaGarde Building and Parking Area
EXHIBIT D	Lessee’s Acknowledgement of Conditions
EXHIBIT E	Permitted Encumbrances
EXHIBIT F	Parcel Lease
EXHIBIT G	Guaranty
EXHIBIT H	Development Agreement
EXHIBIT I	Historic Structures

MASTER LEASE
THIS MASTER LEASE (“Lease”) is entered into and made effective this ___ day of ______, 2006 (the “Effective Date”), by and between THE ARMED FORCES RETIREMENT HOME, acting by and through THE SECRETARY OF DEFENSE (“AFRH” or “Lessor”), ________________ (“Lessee”) and _____________________(“Guarantor”).  AFRH, Lessee and Guarantor may sometimes be referred to jointly as the “Parties,” and each separately may be referred to as a “Party.”  
Recitals
A.	AFRH is an independent establishment of the Federal executive branch.  AFRH owns and operates veterans’ retirement homes and related properties in Washington, DC (AFRH-W) and Gulfport, MS.
B.	AFRH is the owner of AFRH-W.  AFRH-W in its entirety is eligible for listing on the National Register of Historic Places.
C.	Pursuant to the National Defense Authorization Act for Fiscal Year 2002 (107 P.L. 107, 24 U.S.C. § 401, et seq.), the Secretary of Defense is authorized to sell or lease AFRH real property to supplement the AFRH trust fund. 
D.	On or about October 12, 2005, AFRH issued its RFQ for the Redevelopment Area, consisting of Zones 3 and 4, (including the possible adaptive re-use of ten (10) buildings located in Zone 3).  Nine (9) of the ten (10) buildings are the Historic Structures.
E.	Lessee submitted its response to the RFQ in a timely fashion on or about December 21, 2005, in which Lessee represented that it has substantial experience in real estate projects similar to the Project and that it has the current financial and operational ability to perform the work necessary to successfully complete the Project.  After review of Lessee’s response by AFRH and its consultants, Lessee was among the respondents selected to submit a response to AFRH’s RFP.
F.	Lessee timely submitted the Selected Proposal.  In accordance with the RFP, the Selected Proposal contained proposals for two options for development:  Option (1) - Zones 3 and 4, including the ten (10) buildings in Zone 3 identified on the Building Location Map in Section I of the RFP as available for potential adaptive re-use (approximately 77 acres), and Option (2) - Separate developments on (a) Zone 3 (approximately 55 acres) and (b) Zone 4 (approximately 22 acres), which has no buildings located on it as of the date of this Lease.
G.	Pursuant to 24 U.S.C. § 411(e)(3) and the selection process set forth in the RFQ and RFP, Lessee has been selected to undertake the Project.
H.	Concurrent with the execution of this Lease, AFRH and Lessee have entered into the Development Agreement.  The Project will be developed and built in phases pursuant to the Project Schedule attached to the Project Plan of the Development Agreement.  Prior to AFRH authorizing the construction of New Improvements on individual Parcels within the Leased Premises, Lessee shall construct the Infrastructure Improvements, as set forth more fully in this Lease.
I.	Pursuant to the Development Agreement, it is the intent of the parties that Lessor and Lessee enter into this Lease under which Lessee will construct the Infrastructure Improvements on the Leased Premises in accordance with the Project Plan, and Lessee will assume responsibility for the maintenance and security of the entire Leased Premises, all as set forth more fully below.  
J.	Once: (i) the Infrastructure Improvements have been completed for the applicable Parcel; (ii) Lessee has complied with the requirements set forth in Section 11.3 of the Development Agreement; and (iii) Lessee is prepared to commence on-site development and construction of the New Improvements located on a particular Parcel, Lessee and AFRH will enter into a Parcel Ground Lease for the applicable Parcel in substantially the same form as attached hereto as Exhibit F, whereupon that portion of the Leased Premises subject to the Parcel Ground Lease shall be released from this Lease and this Lease shall, except as otherwise provided for herein, no longer apply to that Parcel. 
K.	Guarantor owns a direct or indirect interest in Lessee and expects to derive substantial financial benefit from the Project.  Guarantor is willing to guarantee the timely completion and full performance by Lessee of all of its obligations under this Lease.
L.	AFRH desires that Lessee lease the Leased Premises and undertake the Project and Lessee agrees to lease the Leased Premises and undertake the Project, and the Parties desire to provide for the terms and conditions of the lease of the Leased Premises as set forth below.
Leased Premises
NOW, THEREFORE, AFRH, for the consideration set forth below, hereby leases to Lessee the Leased Premises, including the Existing Infrastructure [(IF THE LEASED PREMISES INCLUDES ZONE 3) including the Existing Buildings)] [(and initially excepting the LaGarde Building and the parking area for the LaGarde Building, as shown on Exhibit C-2, for as long as the LaGarde Building is occupied by residents of AFRH-W)] for purposes of undertaking and completing the Infrastructure Improvements on the Leased Premises and maintaining the Leased Premises, all in accordance with the approved Project Plan.
RESERVING, HOWEVER, to AFRH general access to the Leased Premises at all times for the purpose of exercising the rights, interests, privileges, and benefits contained in the Development Agreement and this Lease, including the general right of access to and from portions of AFRH-W that are outside of the Leased Premises, to the extent that those rights interests, privileges, and benefits go across, include, or encompass all or part of the Leased Premises.    
THIS LEASE is granted subject to the Permitted Encumbrances and the following conditions: (a) this Lease shall be unsubordinated as of its Effective Date, and shall remain unsubordinated throughout the Term; (b) AFRH will retain ownership of the Leased Premises; and (c) AFRH, in its sole discretion and at Lessee’s sole expense, may elect to require Lessee to remove any or all Infrastructure Improvements at Lessee’s sole cost and expense, upon the expiration or earlier termination of this Lease as to those portions of the Lease not subject to a Parcel Ground Lease at the time of such expiration or earlier termination, in accordance with Article X hereof.
ARTICLE I	 DEFINITIONS

FOR PURPOSES OF THIS AGREEMENT, THE FOLLOWING TERMS SHALL HAVE THE DEFINITIONS ASSIGNED TO THEM BELOW:
1.1	“AFRH-W” means the two hundred seventy-two (272) acre campus of the Armed Forces Retirement Home in Washington DC, located west of North Capitol Street, NW, and north of Irving Street, NW, as shown on the plat attached hereto as Exhibit A and made a part hereof.
1.2	“Applicable Laws” means, collectively, all Federal, state, and local laws, rules, regulations, orders, ordinances, and other governmental standards and requirements that are applicable to Lessee or the Project.
1.3	“Approved Mortgagee” means an approved Lender that has a security interest in the Leased Premises that is subordinate to this Lease.
1.4	“Approved Punch List Items” means the punch list items approved in writing by AFRH upon Lessee’s Substantial Completion of any of the Infrastructure Improvements, any of the New Improvements on each Parcel, or any renovation of the Existing Buildings in accordance with the Final Plans. 
1.5	“Architect’s Contract” means the contract with the Architect with respect to the Project.
1.6	“Capital Maintenance Reserve” means a segregated bank account established and maintained for the benefit of the Leased Premises and the Overall Improvements solely for the purpose of holding reserves to be used for capital maintenance needs.
1.7	“CERCLA” has the meaning set forth in the definition of Environmental Laws in this Article.
1.8	“Damaged or Destroyed Property” means damage or destruction to any part of the Leased Premises (except de minimis damage) for which the risk is assumed by Lessee under this Lease.
1.9	“Default Termination Notice” means the written notice sent by AFRH to Lessee notifying Lessee that an Event of Default has occurred and providing for termination of the Lease. 
1.10	“Design Criteria” means (a) the Master Plan; (b) the Preservation Plan; and (c) the applicable building codes and standards then in effect in the District of Columbia.
1.11	“Development Agreement” means the agreement between Lessee and Lessor, executed concurrently with this Lease, setting forth the Lessee’s development responsibilities for the Leased Premises, which agreement is attached hereto and made a part hereof as Exhibit H.
1.12	“Effective Date” means the date first written above, which represents the date on which the Parties are bound by the terms and conditions of this Lease.
1.13	“Environmental Condition” means any Hazardous Substance, Pollutant or Contaminant, including Hazardous Waste or Hazardous Constituent, or Petroleum Product or its derivative as those terms are defined by Environmental Laws, disposed of, released or existing on, under or from the Redevelopment Area in environmental media such as soil, subsurface soil, air, groundwater, surface water or subsurface geological formations at levels that pose an unacceptable risk to human health and environment, that are above its naturally arising presence in the environment, and that require a response action in accordance with Applicable Laws.  
1.14	“Environmental Laws” means any and all Federal, state or local laws, statutes, rules, regulations, ordinances, codes, requirements, judicial and administrative orders, consents, decrees, writs, injunctions and judgments that address, are related to, or are otherwise concerned with pollution, protection of the environment, the use, storage or disposal of Hazardous Substances and/or health and safety issues (including occupational safety and health), including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (“CERCLA”); the Solid Waste Disposal Act (sometimes referred to as the Resource Conservation and Recovery Act of 1976), 42 U.S.C. § 6901 et seq. (“RCRA”); the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Clean Water Act, 33 U.S.C. § 1251 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq.; the Endangered Species Act of 1973, 16 U.S.C. § 460 et seq. (“ESA”); and the National Environmental Policy Act of 1969, 42 U.S.C. § 4321 et seq. (“NEPA”); as any of the preceding may be amended from time to time.  
1.15	“Environmental Requirements” means all conditions, mitigation measures, and other requirements with respect to the Redevelopment Area pursuant to CERCLA.
1.16	“Environmental Site Assessment” means the enumeration by AFRH of Hazardous Substance activity that has been identified on the Leased Premises, in accordance with CERCLA requirements.
1.17	“Event of Default” means any of the events of default set forth in Section 8.1. 
1.18	“Excusable Delays” means (i) an act of God, fire, earthquake, flood, explosion, war, invasion, insurrection, riot, mob violence, sabotage, act of terrorism, failure or unavailability of transportation, strike, lockout, action of labor unions, (ii) a taking by eminent domain, requisition, laws, orders of government or of civil, military or naval authorities (but only such orders of a general nature pertaining to the Property and comparable properties in the District of Columbia), (iii) governmental restrictions (including without limitation, access restrictions imposed by AFRH and arising without fault or negligence on the part of Lessee that significantlymaterially hinder Lessee’s ability to access the Leased Premises and perform its construction responsibilities in a timely manner), (iv) the commercial unavailability of labor, materials or commodities within the District of Columbia, (v) required environmental remediation, (vi) the failure of the party hereto other than the party whose performance is being excused hereunder (respectively, the "Non-Excused Party" and the "Excused Party") to timely perform its obligations hereunder, or the Non-Excused Party's negligence, intentional misconduct or that of Non-Excused Party's employee's, contractors, agents or invitees; (vii) or any other cause, whether similar or dissimilar to the foregoing not within the reasonable control and without the fault or negligence of AFRH or Lessee, as the case may be,the Excused Party and/or any of theirits respective officers, agents, servants, employees and/or any others who may be on the Leased Premises at the invitation of Lesseethe Excused Party or the invitation of any of the aforementioned persons, specifically excluding, however, delays for adjustments of insurance and delays due to shortage or unavailability of funds.
1.19	“Existing Buildings” means all existing buildings as of the Effective Date as shown on the Building Location Map in Section I of the RFP and identified on Exhibit C-1 [(and initially excepting the LaGarde Building and the parking area for the LaGarde Building, as shown on Exhibit C-2, for as long as the LaGarde Building is occupied by residents of AFRH-W)].
1.20	“Existing Improvements” means all improvements located on the Leased Premises as of the Effective Date, including the Existing Buildings and the Existing Infrastructure.
1.21	“Existing Infrastructure” means all roads, streets, curbing, sidewalks, parking areas, access drives, and appurtenant drainage thereto within the Leased Premises existing as of the Effective Date.
1.22	“Extensive Damage or Destruction of Improvements” means a determination that the magnitude of Damaged or Destroyed Property is so extensive that the Project cannot be used by Lessee for its operations and the repairs, rebuilding, or replacement of the Damaged or Destroyed Property cannot reasonably be expected to be substantially completed within nine (9) months of the occurrence of the casualty.
1.23	 “Final Plans” means any or all of the Project Design Plans approved by AFRH that are one hundred percent (100%) complete and have been modified as required or as necessary to comply with the Master Plan and the Preservation Plan.  
1.24	“Hazardous Substance” has the meaning set forth in CERCLA, USC § 9601(14).
1.25	“Historic Structures” means the Existing Buildings set forth on Exhibit I that have been determined to be eligible for listing on the National Register, either individually or as part of a historic district.
1.26	“Hotel Tenant” means the operating company for any hotel constructed on the Leased Premises pursuant to the Project Plan that enters into a sublease with Developer for any portion of the Leased Premises.
1.27	“Infrastructure Improvements” means certain infrastructure, open space, and related improvements undertaken by Developer in accordance with this Lease.
1.28	“Lease” means this Master Lease.
1.29	“Lease Commencement Date” means 12:01 a.m. on _______________________.
1.30	“Lease Term” means the period from the Lease Commencement Date through the Lease Termination Date.
1.31	“Lease Termination Date” means the date of execution and delivery of a Parcel Ground Lease for the last Parcel in accordance with the Phasing Plan, unless sooner terminated or extended in accordance with the terms of this Lease.
1.32	“Leased Premises” means the portion of the Redevelopment Area, as shown on Exhibit C, attached hereto and made a part hereof, including the Existing Infrastructure and the Existing Buildings.
1.33	“Leased Premises Improvements” means the improvements either located on or to be constructed on the Leased Premises, not including natural gas, electricity, potable water and sanitary sewer distribution systems located on or under the Leased Premises or any future modifications or expansions thereof.
1.34	“Lessee Parties” means the Lessee, Lessee’s officers, agents, servants, employees, or others (excluding those employees or agents of AFRH who are on the Leased Premises for the purpose of performing official duties, and not as Tenants) who may be on the Leased Premises at their invitation or the invitation of any one of them.
1.35	“Master Plan” means the final Master Plan approved by the National Capital Planning Commission for the development and construction of the improvements on the Redevelopment Area and other improvements to be made or caused to be made by AFRH on other portions of the AFRH-W campus.
1.36	“New Improvements” means the Infrastructure Improvements and the Leased Premises Improvements.
1.37	“New Lease” means a lease of the Leased Premises between AFRH and an Approved Mortgagee, if requested by such Approved Mortgagee, in accordance with the Lease terms, in the event this Lease is terminated by AFRH for any reason or is rejected in bankruptcy.
1.38	“Overall Improvements” means the Existing Infrastructure, the Existing Buildings and the New Improvements, together with all personal property either existing or to be placed on the Leased Premises.
1.39	“Parcel” means a portion of the Redevelopment Area that shall be the subject of a parcel ground lease.   
1.40	“Parcel Ground Lease” means a lease for an individual Parcel within the Leased Premises. 
1.41	“Permitted Encumbrances” means the recorded and unrecorded encumbrances for the Leased Premises shown on Exhibit E, attached hereto and made a part hereof.
1.42	 “Physical Condition Report” means the report prepared by the Developer after the expiration or earlier termination of the Lease used by AFRH to determine whether Lessee has fulfilled its obligations to maintain and restore the Leased Premises under this Lease.
1.43	 “Preservation Plan” means the plan setting forth detailed guidance on preservation of elements that contribute to the historic character of AFRH-W, a draft of which has been prepared by AFRH and which is attached as an exhibit to the Project Plan.
1.44	“Programmatic Agreement” means the agreement entered into by AFRH pursuant to Section 106 of the National Historic Preservation Act governing the future use and development of the Redevelopment Area.
1.45	“Prohibited Person” means, at the time of such determination (a) any Person who is debarred or suspended by any agency or instrumentality of the United States or included on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs or the Excluded Parties List System, each as maintained by the General Services Administration, or successor compilation of similar information pursuant to Executive Orders 12549 and 12689, 41 C.F.R. § 105-68.140, and 48 C.F.R. § 9.404 or any similar or successor Executive Orders or rules; (b) any Person generally held in the real estate industry to lack a reasonably satisfactory record of integrity or business ethics; or (c) any Person that is not in compliance with Executive Order 13224 (September 23, 2001), the rules and regulations of the Office of Foreign Assets Control, Department of Treasury, or any enabling legislation or other Executive Orders in respect thereof or similar or successor rules.
1.46	“Project” means the mixed-use redevelopment of the Leased Premises, in accordance with the Developer’s proposal for Option ___as set forth in the Project Plan.
1.47	“Project Agreements” means this Lease, the Development Agreement, each Parcel Ground Lease, the Project Plan, the Project Budget, the Design Criteria, the Project Budget, the Project Design Plans, the Project Schedule, the Architect’s Contract, the Construction Contract and the Master Plan, each as modified or amended from time to time in accordance with this Agreement, together with the  Preservation Plan, the Construction Management Plan, the Programmatic Agreement, the Property Management Agreement, the Demolition Plan, the Capital Repair and Replacement Plan,  the Project Security Agreement, the Record of Decision and any other agreement entered into by and between the parties governing the development, design, finance, demolition, construction, lease, maintenance and management of the Project and the Leased Premises. 
1.48	“Project Budget” means the detailed budget prepared by Developer and approved by AFRH for the design, development and construction phases of the Project, which detailed Project Budget (a) contains an itemized breakdown of hard and soft costs by phase; and (b) is attached as Exhibit __ to the Project Plan.
1.49	“Project Design Plan” means the design plans for the Project proposed by Developer and approved by AFRH and attached as Exhibit ___ to the Project Plan.
1.50	“Project Plan” means the document attached as Exhibit D to the Development Agreement which details the development, Project Design Plan, finance, demolition, construction, lease, maintenance. management, environmental mitigation and socio-economic benefits of the Project and the Leased Premises to be carried out by Lessee. 
1.51	“Project Schedule” means the detailed schedule proposed by Developer and approved by AFRH  for the design, development and construction phases of the Project, which detailed Project Schedule is attached as Exhibit __ to the Project Plan.
1.52	“Property” means the Leased Premises and the Leased Premises Improvements. 
1.53	“Property Management Agreement” means the written agreement approved by AFRH and entered into between Lessee and a third party acceptable to AFRH for the management of the Leased Premises at all times during the Lease Term.
1.54	“Property Manager” means a third party selected by Lessee and approved by AFRH to provide property management services under the Property Management Agreement.
1.55	“Qualified Surety” means a corporate surety or insurer authorized to do business in the District of Columbia and possessing a long-term unsecured debt rating from a Rating Agency of no lower than two rating categories below the highest rating outstanding on the securities backed by this transaction.
1.56	“Rating Agency” means any nationally recognized credit rating service that at the time the unsecured debt rating of the corporate surety is determined  has one or more outstanding ratings of any securities issued by Developer to fund construction of the Project.
1.57	“Redevelopment Area” means the area shown on the plat attached hereto as Exhibit B and made a part hereof.
1.58	“Remediation” means corrective actions, response actions, remedial actions and/or monitoring plans reasonably necessary to permit the development, financing and use of the Redevelopment Area.
1.59	“RFQ” means the Request for Qualifications issued on October 12, 2005 by AFRH for the mixed-use redevelopment of the Redevelopment Area.
1.60	“RFP” means the Request for Proposals, issued on August 11, 2006 by AFRH.
1.61	“Selected Proposal” means Developer’s response to the RFP consisting of Volumes ____, dated ________, 2006.
1.62	“Substantial Completion” means completion of any of the Infrastructure Improvements, any of the New Improvements on each Parcel, or any renovation of the Existing Buildings in accordance with the Final Plans, except for the Approved Punch List Items, in such a condition as to permit their use for their intended purposes.
1.63	“Tenants” means any commercial tenant and any Hotel Tenant that subleases portions of the Leased Premises or space within any Improvements from Lessee.
1.64	“Tenant Leases” means all commercial, residential or hotel subleases that Developer enters into for portions of the Leased Premises or space within any Overall Improvements pursuant to Article IX.
1.65	“Termination Notice for Extensive Damage or Destruction of Improvements” means the written notice provided by either AFRH or Lessee to terminate this Lease in the event of Extensive Damage or Destruction of Improvements.
ARTICLE II	 TERM AND DELIVERY OF POSSESSION
2.1	Lease Term.  Except as otherwise provided for in this Section 2.1, this Lease shall be for a term beginning on the Lease Commencement Date and shall continue, with respect to the Leased Premises or individual Parcels, until the Lease Termination Date; provided, that if any portion of the Leased Premises shall not be included in any Parcel Ground Lease, then this Lease shall remain in full force and effect with respect to such portion until the latest termination date under the Parcel Ground Leases.  
2.2	Delivery of Possession.  Possession of the Leased Premises will be delivered on the Lease Commencement Date.
2.3	Termination.  Notwithstanding anything in this Lease to the contrary, this Lease shall expire and terminate, as to all or a portion of the Leased Premises, and Lessee shall thereupon be relieved and discharged from liability to AFRH hereunder, upon AFRH entering into a Parcel Ground Lease for that specific portion of the Leased Premises, either with Lessee or another entity designated by Lessee and approved by AFRH in accordance with the Development Agreement.  
ARTICLE III	 EASEMENTS AND RIGHTS OF WAY
3.1	Easements; Other Burdens.  This Lease is subject to all existing easements, rights-of-way, licenses and other property interests either of public record or unrecorded for any purpose with respect to the Leased Premises, including the Permitted Encumbrances.  AFRH shall, at the reasonable consent of Lessee, have the right to reserve unto itself or to grant to third parties additional easements, rights of way, licenses or other property interests with respect to the Leased Premises; provided, that any such additional easements, rights of way, licenses or other property interests shall not materially interfere with Lessee’s intended use of the Leased Premises or the Project (including, without limitation, Lessee's ability to secure the Leased Premises and to commence, continue and complete construction of the New Improvements).  The proposed grant of any new easement, right of way, license or other property interest shall be coordinated with Lessee to minimize its impact on the Project.
In addition, AFRH shall not unreasonably withhold or delay consent and/or joinder to requests for granting of easements and rights-of-way for utilities and other purposes reasonably necessary to the construction and maintenance of utilities on the Leased Premises by Lessee to the extent that (a) AFRH's execution and/or joinder therein is reasonably required to make the applicable document lawfully enforceable; and (b) such easement, license or grant is required or reasonably necessary to permit development and use of the Infrastructure Improvements in accordance with this Lease; provided, however, any such additional easements or rights-of-way shall not interfere with the operations, including any future development, of AFRH on portions of AFRH-W not within the Leased Premises.
3.2	Ingress/Egress Easements.  The holders of easements, rights-of-way, licenses or other property interests reserved or granted pursuant to the first paragraph of Section 3.1, present or future, shall have reasonable rights of ingress and egress over the Leased Premises in order to carry out the purpose of such easements, rights-of-way, licenses or other property interests.  These rights may also be exercised by workers engaged in the construction, installation, maintenance, operation, repair or replacement of facilities located on the encumbered areas of the Leased Premises and by any Federal, state, or local official engaged in the official inspection thereof.  Such additional easements or rights-of-way (a) shall not unreasonably interfere with Lessee’s interest in the Leased Premises or the quiet enjoyment of Tenants of the Project; and (b) shall be on commercially reasonable terms.
ARTICLE IV	 CONDITION OF LEASED PREMISES
4.1	No AFRH Obligation with Respect to Condition.  Lessee has inspected, knows and accepts the condition and state of repair of the Leased Premises.  It is understood and agreed that the Leased Premises are leased in an “AS IS,” “WHERE IS” condition without any representation or warranty by AFRH concerning their condition and without obligation on the part of AFRH to make any alterations, repairs or additions.  Except as set forth in Section 11.4,   AFRH shall not be liable to Lessee for any damages or losses, whether direct or consequential, incurred by Lessee as the result of the discovery of any latent or patent defect in the Leased Premises.  Lessee acknowledges that AFRH has made no representation or warranty concerning the condition and state of repair of the Leased Premises nor any agreement or promise to alter, improve, adapt, or repair them that has not been fully set forth in this Lease.
4.2	Acknowledgement of Conditions.  A Lessee’s Acknowledgement of Conditions of the Leased Premises signed by an authorized representative of Lessee, is attached hereto as Exhibit D.  [Lessee anticipates conducting title, environmental and other commercially reasonable due diligence assessments of the Project Site prior to the Effective Date hereof and reserves the right to further comment pending the results of such assessments.]
4.3	Environmental Site Assessment. A Phase I Environmental Site Assessment, dated January 2005, has been prepared for the Leased Premises by AFRH in accordance with the requirements of CERCLA that sets forth those environmental conditions and matters on and affecting the Leased Premises on the Lease Commencement Date, as determined from the records and analyses reflected therein.  AFRH has initiated a Phase II Environmental Site Assessment, which will be completed shortly after the Commencement Date and forwarded to Lessee upon completion.  The foregoing notwithstanding, AFRH makes no representations, express or implied, and gives no warranties concerning or regarding the environmental condition of the Leased Premises or the Existing Buildings, including but not limited to the compliance or non-compliance of the Leased Premises and the Existing Buildings with any environmental laws.  Lessee expressly acknowledges and agrees that it is relying solely on environmental reports, studies and investigations obtained by Lessee from third parties other than AFRH in entering into this Lease.
4.4	Disclaimer.	LESSEE ACKNOWLEDGES AND AGREES AS FOLLOWS:
That, except as expressly and specifically set forth in this Lease, any Parcel Ground Lease, the Development Agreement, the RFQ or the RFP, AFRH has not made, does not make and specifically negates and disclaims any representations and/or warranties (whether express or implied), promises, covenants, agreements or guaranties of, as to, concerning or with respect to (a) the value, quality or condition of the Property; (b) the income to be derived from the Property; (c) the suitability of the Property for any and all uses and activities currently or subsequently contemplated by Lessee on the Property; (d) the habitability, merchantability, marketability, profitability or fitness for a particular purpose of the Property; (e) the manner or quality of the construction materials incorporated into any of the Existing Buildings; (f) the manner, quality, state of repair or lack of repair of the Property; (g) title; (h) the accuracy of any information or assumptions contained in the RFQ, the RFP or otherwise furnished by AFRH; (i) environmental conditions on the Property; (j) the zoning or regulatory requirements that apply or might be applied to all or any portion of the Property; or (k) any other matter with respect to, and any other conditions on, the Property not defined in (a) through (j) above.  Lessee further acknowledges and agrees that, except as specifically set forth in this Lease, any Parcel Ground Lease, the Development Agreement, the RFQ or the RFP, any information provided or to be provided with respect to the Property was obtained from a variety of sources and that AFRH has informed Lessee that AFRH has not made any independent investigation or verification of such information and makes no representation as to the accuracy or completeness of such information.  Lessee further acknowledges and agrees that, except as specifically set forth in this Lease, any Parcel Ground Lease, the Development Agreement, the RFQ or the RFP, (including AFRH’s obligations with respect to the Property set forth in this Lease) to the maximum extent permitted by law, the lease of the Property as provided for in this Lease is made on an “as-is, where-is” basis subject to all conditions of the Property with all faults except as expressly provided by Applicable Laws.  Except as specifically set forth in this Lease, in the event of any defect or deficiency in any portion of the Property of any nature, whether patent or latent, AFRH shall not have any responsibility or liability with respect thereto.  The provisions of this Section have been negotiated, and, except as specifically set forth in this Lease, any Parcel Ground Lease, the Development Agreement, the RFQ or the RFP, the foregoing provisions are intended to be a complete exclusion and negation of any warranties by AFRH, express or implied, with respect to the Property, arising pursuant to the Uniform Commercial Code as currently in effect in the District of Columbia or as subsequently modified or amended, or any other Applicable Laws now or hereafter in effect or otherwise.
ARTICLE V	 RENT
5.1	Base Rent.  [tbd].   
5.2	Rent Offset.  All necessary Remediation work on the Leased Premises will be undertaken at AFRH’s cost and expense on AFRH’s behalf by Lessee in accordance with the provisions set forth in the Development Agreement.  Lessee shall fund the Remediation work and will receive a credit toward future payment of Rent owed to AFRH pursuant to this Lease in the amount of such advance.
5.3	Late Charges and Default Interest.  If any installment of Rent is not paid within ten (10) business days after its due date, then such arrearage (a) shall bear a late charge equal to five percent (5%) of the amount due and be payable without demand simultaneously with the rent arrearage, and (b) shall bear interest from the due date at the rate equal to the then-current Wall Street Journal prime rate plus two (2) basispercentage points until paid in full.
5.4	Rent Payments.  All Rent shall be paid in lawful money of the United States of America without deduction or offset, prior notice or demand.
5.5	Restoration Expenses.  Lessee shall reimburse AFRH for any expenses AFRH incurs after the expiration or termination of this Lease to restore the Leased Premises to the condition required by Article X below within thirty (30) days after AFRH provides written notice to Lessee of the reimbursement amount together with reasonable documentary support for the reimbursement amount.
5.6	Net Lease.  It is the purpose and intention of AFRH and Lessee that all Rent shall be absolutely net to AFRH without any abatement, deduction, counterclaim, set-off, or offset whatsoever, except as provided for in Section 5.2 hereof, so that this Lease shall yield net, to AFRH when due hereunder, the Rent during the Term and that all costs, expenses and charges of every kind and nature relating to the Leased Premises shall be paid by Lessee.
5.7	Contributions to Reserves.  Within sixty (60) days after the end of each year of the Term, Lessee shall deposit an amount equal to two percent (2%) of the Net Operating Income into the Capital Maintenance Reserve so long as the Capital Maintenance Reserve is less than [INTERNAL – Insert Capital Maintenance Reserve Cap Measurement].  The amounts so deposited in the Capital Maintenance Reserve, including all interest earned thereon, shall be continually maintained in such reserve account until such time as Lessee deems it advisable in its discretion to withdraw such amounts for use in fulfilling its obligation to repair, make replacements to and maintain the Leased Premises in accordance with the terms of this Lease.  Upon the expiration or earlier termination of this Lease, the funds in the Capital Maintenance Reserve shall be the property of AFRH and shall be transferred promptly to AFRH, which funds shall be maintained to repair, replace and maintain the Leased Premises.  Lessee's obligation to make contributions to the Capital Maintenance Reserve pursuant to this Section 5.7 shall be deemed an obligation on the part of Lessee to pay Rent.   
ARTICLE VI	 DEVELOPMENT AGREEMENT
6.1	Incorporation of Development Agreement.  The Development Agreement is hereby incorporated into and made a material part of this Lease.  The Development Agreement sets forth certain detailed procedures and requirements to be followed by Lessee in designing, demolishing, constructing, renovating, leasing, operating and maintaining the Leased Premises, the Infrastructure Improvements and the Leased Premises Improvements.  In the event of any amendment of the Development Agreement, the amended Development Agreement will be deemed to be substituted in lieu of the existing one.
6.2	Compliance with Development Agreement.  Lessee shall develop, construct, operate and maintain the Leased Premises and the Infrastructure Improvements in accordance with the Development Agreement and the other Project Agreements. 
6.3	Controlling Provisions.  In the event of any inconsistency between any provisions of the Development Agreement, as it presently exists or may be amended in the future, and any provisions of this Lease, the provision chosen by AFRH in its sole determination shall control.
ARTICLE VII	 USE OF LEASED PREMISES
7.1	Limited Permitted Uses.  The only purposes for which the Leased Premises may be used under this Lease are the construction and maintenance of the Infrastructure Improvements and the maintenance and security of the Leased Premises in accordance with  the Development Agreement and all other applicable Project Agreements.  Lessee shall not create, nor allow to exist, a public or private nuisance on the Leased Premises at any time during the Term.  [IF THE LEASED PREMISES INCLUDES THE LAGARDE BUILDING: Lessee shall ensure that, during construction of the Infrastructure Improvements, during any or all of the Term during which the LaGarde Building is being utilized for residential occupancy, Lessee shall not unreasonably interfere with or disturb the residents of the LaGarde Building.]    AFRH may, in its sole and absolute discretion, permit Lessee to utilize any or all of the Existing Buildings on the Leased Premises, provided that such use is consistent with the Development Agreement and all applicable Project Agreements, pursuant to an Existing Building use agreement to be entered into by and between AFRH and Lessee prior to the commencement of such use that includes reasonable provisions for the protection and security of the Existing Buildings and any users of the Existing Buildings. 
7.2	Prohibited Uses.  Specifically, but without limitation, in no event shall the Leased Premises be used by Lessee or any of its agents, employees, officers, directors affiliates, contractors or subcontractors for any illegal or immoral activities, or any activities that would materially interfere with, obstruct or inhibit the services provided elsewhere on AFRH-W as determined in AFRH’s sole discretion.
7.3	Permits.  Lessee shall procure and maintain all permits as and when necessary for the Infrastructure Improvements at Lessee's sole cost and expense.  
ARTICLE VIII	 DEFAULT, REMEDIES, AND TERMINATION
8.1	Events of Default.  Any one or more of the following shall constitute an Event of Default under this Lease by Lessee:
8.1.1	Lessee’s failure to comply with any provision of this Lease, other than payment of Rent, where such failure to comply continues for thirty (30) days after delivery of written notice thereof by AFRH to Lessee and all Approved Mortgagees.  If, however, such default is not reasonably susceptible to cure within such thirty (30)-day period, Lessee shall  have such longer period as may be approved in writing in advance by AFRH, which approval shall not be unreasonably withheld, to cure such default so long as Lessee commences curing such default within the initial thirty (30)-day period and diligently prosecutes such cure to completion in accordance with a schedule approved in writing by AFRH, which approval shall not be unreasonably withheld.  
8.1.2	Lessee’s failure to pay Rent when due and such failure remains uncured for a period of ten (10) days after written notice to Lessee by AFRH of Lessee’s failure to pay such amount.
8.1.3	An uncured defaultEvent of Default by Lessee under the Development Agreement or any other Project Agreement.
8.1.4	Lessee’s voluntary petition for bankruptcy protection under the United States Bankruptcy Code or voluntary submission to any reorganization, receivership, insolvency proceeding or other similar proceeding pursuant to any other Federal or state law affecting debtor and creditor rights, or commencement of an involuntary case against Lessee by any creditor of Lessee pursuant to the Bankruptcy Code or other Federal or state law affecting debtor and creditor rights that is not dismissed or discharged within sixty (60) days after filing.
8.1.4.1	If any voluntary or involuntary petition is filed under the Bankruptcy Code by or against Lessee (other than an involuntary petition filed by or joined in by AFRH), Lessee shall not assert, or request any other party to assert, that the automatic stay under the Bankruptcy Code shall operate or be interpreted to stay, interdict, condition, reduce or inhibit the ability of AFRH to enforce any rights it has by virtue of any agreement between the Parties, or any other rights that AFRH has, whether now or hereafter acquired, against any party responsible for the debts or obligations of Lessee under such agreements.  Furthermore, Lessee shall not seek a supplemental stay or any other relief, whether injunctive or otherwise, pursuant to the Bankruptcy Code to stay, interdict, condition, reduce or inhibit the ability of AFRH to enforce any of its rights under such agreements against any party responsible for the debts or obligations of Lessee.  The waivers contained in this Section are a material inducement to AFRH’s willingness to enter into this Lease and Lessee acknowledges and agrees that no grounds exist for equitable relief which will bar, delay, or impede the exercise by AFRH of its rights and remedies under such agreements against Lessee or any party responsible for the debts or obligations of Lessee.
8.1.4.2	If any or all of, or any interest in, the Leased Premises or the Leased Premises Improvements becomes the property of any bankruptcy estate or subject to any state or Federal insolvency proceeding, then AFRH shall immediately become entitled, in addition to all other relief to which AFRH may be entitled under any agreement between the Parties, to obtain (a) an order from the Bankruptcy Court or other appropriate court granting immediate relief from the automatic stay pursuant to the Bankruptcy Code so as to permit AFRH to pursue its rights and remedies at law and in equity under applicable state law, and (b) an order from the Bankruptcy Court prohibiting Lessee’s use of all “cash collateral” as defined under the Bankruptcy Code.  In connection with such Bankruptcy Court orders, Lessee shall not contend or allege in any pleading or petition filed in any court proceeding that AFRH does not have sufficient grounds for relief from the automatic stay.  Lessee acknowledges and agrees that any bankruptcy petition or other action taken by Lessee to stay, condition, or prevent AFRH from exercising its rights or remedies under this Lease or any other agreement between the Parties shall be deemed to be in bad faith.
8.2	Tolling.  No Event of Default shall be deemed to have occurred for any period of time during which an Excusable Delay exists or Lessee and AFRH are attempting to resolve a dispute about an alleged default as provided in Article XXIV.  For an Excusable Delay, Lessee’s period for cure shall be tolled for the period of time that the Excusable Delay exists. For a dispute, if, pursuant to the dispute resolution procedures set forth in Article XXIV, a default is determined to have occurred, Lessee’s period for cure shall not begin until the day after the final decision on the dispute is issued and such default shall not become an Event of Default until any applicable cure period has expired.  In the event of a conflict with any other provision of this Agreement or any other Project Document, the provisions of this Section 8.2 shall control.
8.3	Termination.  Notwithstanding SectionsSubject to Section 2.3 and 23.7,Article XXIII hereof, AFRH may terminate this Lease, upon written notice to Lessee, and without any cost or liability to AFRH, if an Event of Default exists. after all applicable notice and cure periods.  The Default Termination Notice and shall be effective as of the date specified therein, which shall be at least five (5) but not more than thirty (30) days after its receipt by Lessee.
8.4	Waiver of Claims.  Lessee hereby waives any claims, actions, proceedings, suits, damages or liabilities of any kind whatsoever against AFRH arising out of any termination of this Lease pursuant to Section 8.3.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS, LESSEE HEREBY WAIVES ANY AND ALL NOTICES TO CURE OR VACATE OR TO QUIT THE PROPERTY NOW OR HEREAFTER REQUIRED BY APPLICABLE LAWS; provided that, the foregoing waiver shall not be deemed a waiver of any notice to which Lessee or the Approved Mortgagee is entitled pursuant to the express terms of this Lease or any Project Agreement.  
8.5	Additional Rights and Remedies.  If an Event of Default exists and all notices of such Event of Default required by this Lease have been given, then subject to the rights, if any, of an Approved Mortgagee, AFRH shall have the following rights and remedies in addition to all other rights and remedies available to AFRH at law or in equity:
8.5.1	AFRH shall have the right to seek an injunction, a writ of restitution or enforce specific performance by Lessee of its obligations under this Lease in any state or Federal court of competent jurisdiction.
8.5.2	AFRH shall have the right to take possession of the Leased Premises and the Leased Premises Improvements and operate, lease, repair, restore, maintain, manage, and use the Lease Premises and the Leased Premises Improvements in accordance with the provisions of this Lease.
8.5.3	AFRH shall have the right to secure the appointment of a receiver to take possession of the Leased Premises and the Leased Premises Improvements and operate, repair, restore, maintain, manage, and use the Leased Premises and the Leased Premises Improvements in accordance with the provisions of this Lease.
8.5.4	AFRH shall have the right to terminate any management agreement relating to the Project without payment of any termination fee or other similar fee or premium; provided, however, that to the extent there are funds available for payment thereof, any terminated management company shall be paid all fees earned and unreimbursed expenses incurred (as identified in writing to AFRH) in accordance with its management agreement through the date of such termination.
8.5.5	Lessee shall reimburse AFRH for the cost of all repairs and maintenance by AFRH.
8.5.6	AFRH shall have the right to pursue more than one right or remedy at the same time.
8.6	Damages; Measure of Damages.  Upon the occurrence of an Event of Default, Lessee shall be liable for all damages sustained by Lessor in accordance with Applicable Laws.  
8.7	No Obligation to Evict.  Nothing in this Lease shall obligate AFRH to take any action or institute any proceedings to eject, evict, or remove Lessee or any other occupant of the Leased Premises or the Leased Premises Improvements.
8.8	Anti-Assignment Act Limitations.  Nothing in this Lease shall require AFRH to take any action in violation of the Anti-Assignment Act (Pub. L. 97-258; 31 U.S.C.§ 3727) or other Applicable Laws.  To the extent that any instrument is to be executed by Lessor in connection therewith or in connection with any leasehold mortgage violates or is limited by the Anti-Assignment Act or other Applicable Laws (including regulations relating to suspension or debarment of government contractors), AFRH agrees to cooperate with the Approved Mortgagee or its successor in interest (as proposed lessee under the New Lease) to avoid such violation or limitation by waiving the pertinent provisions of the Anti-Assignment Act applicable thereto, but only to the extent legal and proper so to do.
8.9	Grant of Security Interest.  Lessee hereby grants AFRH a security interest in all its property and all property of Lessee shall be subject to a continuing lien for any sums due from Lessee in accordance with the provisions of this Lease.  Such lien shall be subordinate to any lien approved by AFRH pursuant to Article XXIII below and any sums secured by such lien shall be subject to a late charge and default interest, as provided in Section 5.3 above.
8.10	Waiver of Jury Trial.  IN CONSIDERATION OF THE RECIPROCAL WAIVER GRANTED BY THE OTHER PARTY PURSUANT TO THIS SECTION 8.10, EACH OF AFRH AND LESSEE HEREBY (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY; AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST, WITH RESPECT TO EACH AND EVERY ACTION, CLAIM, COUNTERCLAIM, PROCEEDING, OR SUIT IN WHICH AFRH AND LESSEE ARE ADVERSE PARTIES OR TAKE ADVERSE POSITIONS.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, AND THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE, INCLUDING, BUT NOT LIMITED TO, ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER AFRH OR LESSEE ON, OR IN RESPECT OF, ANY MATTER OR CLAIM WHATSOEVER, WHETHER SOUNDING IN TORT OR CONTRACT, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE PROPERTY OR THIS LEASE (INCLUDING, BUT NOT LIMITED TO, ANY CHALLENGE TO THE VALIDITY AND/OR EFFECTIVENESS OF THE LEASE IN WHICH THIS JURY TRIAL WAIVER APPEARS OR TO THE VALIDITY OR EFFECTIVENESS OF THIS JURY TRIAL WAIVER, WHETHER BY CLAIM OF FRAUD IN THE FACTUM OR IN THE INDUCEMENT, INTENTIONAL OR NEGLIGENT MISREPRESENTATION, DECEIT, OR OTHERWISE), THE RELATIONSHIP OF AFRH AND LESSEE HEREUNDER, AND/OR ANY CLAIM OF PERSONAL OR PROPERTY INJURY OR DAMAGE, OR ANY STATUTORY REMEDY.  EACH PARTY HERETO IS HEREBY AUTHORIZED AND REQUESTED TO SUBMIT THIS JURY TRIAL WAIVER TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF THE HEREIN-CONTAINED WAIVER OF THE RIGHT TO JURY TRIAL.  FURTHER, EACH OF AFRH AND LESSEE HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE OTHER PARTY HERETO (NOR THEIR RESPECTIVE COUNSEL) HAS REPRESENTED TO THE OTHER, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.  BY INITIALING WHERE INDICATED BELOW, AFRH AND LESSEE EACH ACKNOWLEDGE THAT (I) THEY ARE FULLY AWARE OF THE EXISTENCE OF THIS JURY TRIAL WAIVER, (II) THEY HAVE READ AND FULLY  REVIEWED THIS JURY TRIAL WAIVER, (III) THEY HAVE HAD A REASONABLE OPPORTUNITY TO REVIEW THIS JURY TRIAL WAIVER WITH COUNSEL OF THEIR RESPECTIVE CHOICE, AND (IV) THIS JURY TRIAL WAIVER CONSTITUTES AN INDEPENDENT AGREEMENT AND COVENANT OF AFRH AND LESSEE THAT SHALL SURVIVE (A) THE INVALIDATION OF ALL OR ANY PORTION OF THE REMAINDER OF THE LEASE IN WHICH THIS JURY TRIAL WAIVER APPEARS, OR (B) THE EXPIRATION OR SOONER TERMINATION OF THE LEASE IN WHICH THIS JURY TRIAL WAIVER APPEARS.
AFRH'S INITIALS ____________
LESSEE’S INITIALS ____________

ARTICLE IX	 TAXES
9.1	In no event is AFRH responsible for the payment of taxes. Lessee shall pay to the proper authority, when and as the same become due and payable, all taxes, assessments, and similar charges which, at any time during the term of this Lease may be imposed on Lessee or the Leased Premises Improvements.  Lessee shall have the right (a) to contest any such taxes, assessments or similar charges; and (b) to take such actions as may be necessary and appropriate (i) to contest the validity, applicability or amount thereof; (ii) to minimize such taxes, assessments or charges; or (iii) to assert any exemption that may be available with respect to taxes, assessments or charges imposed on the Leased Premises or the Leased Premises Improvements.  AFRH is not obligated to participate in the appeal or challenge of any taxes, assessments, or charges.  AFRH shall not be subject to any liability for the payment of any costs or expenses in connection with any such proceedings, and Lessee shall indemnify and save harmless AFRH from and against any such costs and expenses, including, but not limited to, reasonable attorneys' fees and disbursements, and from any liability resulting from such proceedings.
ARTICLE X	 RESTORATION AND SURRENDER
10.1	Restoration.  No later than one hundred eighty (180) days after the Lease Termination Date,  Lessee shall remove all of its personal property from the Leased Premises and restore, at its own expense, the Leased Premises to the reasonable satisfaction of AFRH to the condition that existed on the Lease Commencement Date to include applicable demolition,(any New Improvements and alterations thereto and reasonable wear and tear excepted).  At AFRH’s sole discretion, AFRH may elect not to have the Leased Premises restored, in whole or in part, but to retake possession with some or all of the Leased Premises Improvements constructed by Lessee remaining on the Leased Premises.  
10.2	Plans and Drawings.  Upon the expiration of the term or sooner termination of this Lease, or the completion of construction of any material Leased Premises Improvements, Lessee shall promptly provide to AFRH full “as-built” drawings, plans and specifications for the Leased Premises in ACADCAAD format on CDs or DVDs, at no additional cost to AFRH, to the extent that Lessee is in good faith able to obtain such “as-builts” from its contractors.  To the extent that it is not able to provide “asbuilt” drawings, plans and specifications, Lessee shall instead provide AFRH with the corresponding construction drawings, plans and specifications in ACAD format on CDs or DVDs.
10.3	  Termination of Operations.  Subject to the provisions in this Lease, Lessee shall terminate its operations on the Leased Premises and vacate and surrender possession of the Leased Premises and the Leased Premises Improvements and any personal property of Lessee located therein.  Such reversion or transfer shall be automatic.  Lessee shall execute any documentation reasonably requested by AFRH to confirm or effect such conveyance, which conveyance shall be free and clear of any and all encumbrances other than those approved by AFRH pursuant to Article XXIII.
10.4	Peaceful Surrender.  After completion of any demolition required pursuant to this Article X, Lessee shall immediately restore, quit, and peacefully surrender possession of the Leased Premises to AFRH in good, usable, and buildable condition.
10.5	AFRH Self-Help.  If Lessee fails, refuses, or neglects to satisfy its removal and restoration obligations pursuant to this Article X, then at the option of AFRH and subject to the liens of any Approved Mortgagee, the Leased Premises Improvements and the personal property of Lessee located therein shall either become the property of AFRH without compensation therefore, or AFRH may cause it to be removed and/or destroyed and the Leased Premises to be so restored at the expense of Lessee, and no claim for damages against AFRH, its officers, employees, agents, or contractors shall be created by or made on account of such removal and/or destruction and restoration work.
10.6	Continuing Obligations.  During the period after the Lease Termination Date or the effective date of a Default Termination Notice, as applicable, until the date on which Lessee satisfies its obligations under Section 10.1, all obligations set forth in Articles XI, XIII, and XV, and Sections 16.2.2, 16.3.3 and 16.4 shall remain in full force and effect.
ARTICLE XI	 ENVIRONMENTAL PROTECTION
11.1	Lessee Compliance with Laws.  Lessee shall comply at all times with all Applicable Laws and shall cause all tenants of the Leased Premises Improvements to comply at all times with such Applicable Laws.
11.2	Environmental Permits.  Subject to the terms of the Development Agreement, Lessee shall obtain at its cost and expense any environmental permits required for its operations under this Lease, independent of any existing permits.
11.3	Lessee Indemnification.  Lessee shall indemnify, defend, save and hold harmless AFRH from any claims for damages, response, remediation or other costs, expenses, liabilities, fines, or penalties resulting in any way from releases, discharges, emissions, spills, storage, handling, disposal, or any other acts or omissions by Lessee, its officers, agents, employees, contractors, subcontractors or any sublessees or licensees, or the invitees of any of them, giving rise to Government liability, civil or criminal, or responsibility under Environmental Laws.  This Section 11.3 shall survive the expiration or termination of the Lease, and Lessee’s obligations hereunder shall apply whenever AFRH incurs costs or liabilities of the type described in this Article XI.
11.4	Limitation.  Notwithstanding any other provision of the Lease to the contrary, Lessee, as between the Parties, does not assume any liability (including liability to third parties) or responsibility for environmental impacts and damage caused by AFRH’s use of toxic or hazardous wastes, substances or materials on the Leased Premises.  Lessee has no responsibility or obligation under this Lease to undertake the defense of any claim or action, whether in existence now or brought in the future, alleging environmental impacts and damage solely arising out of the use of or release of any toxic or hazardous wastes, substances, or materials covered by any Environmental Laws on or from any part of AFRH-W, including the Leased Premises, occurring prior to the Lease Commencement Date.  
11.4.1	  For the purposes of this Article XI, “defense” or “environmental response, remediation, or cleanup” includes liability and responsibility for the costs of damage, penalties, legal, and investigative services relating to such use or release.  “Occupancy” or “use” shall mean any activity or presence (including preparation and construction) in or upon the Leased Premises.
11.4.2	  This Article shall survive the expiration or termination of the Lease.
11.5	Disposal of Hazardous Wastes.  Lessee must comply with all applicable Environmental Laws relating to occupational safety and health, the handling and storage of hazardous materials, and the proper generation, handling, accumulation, treatment, storage, disposal, and transportation of hazardous wastes.
11.6	RCRA Compliance.  Lessee shall strictly comply with the hazardous waste permit requirements under RCRA, as amended or its District of Columbia equivalent and any other applicable Environmental Laws.  Lessee shall be liable for any violation of the requirements set forth in this Section 11.6.  Lessee shall be liable for the cost of proper disposal of any hazardous waste generated by any Tenants in the event of failure by the tenants to dispose properly of such wastes.
11.6.1	  Lessee must provide, at its own expense, such hazardous waste accumulation points, complying with all Environmental Laws, as it may need for the temporary accumulation of hazardous wastes prior to such wastes being disposed of in accordance with Environmental Laws.  Lessee will not use AFRH accumulation points for hazardous and other wastes.  Neither will Lessee permit its hazardous waste to be commingled with hazardous wastes of AFRH.
11.6.2	  Any violation of the requirements of this Section 11.6 shall constitute a material breach of this Lease.
11.7	Recordkeeping.  Lessee must maintain and make available to AFRH all records, inspection logs, and manifests that track the generation, handling, storage, treatment, and disposal of hazardous waste, as well as all other records required by Applicable Laws.  AFRH reserves the right to inspect the Leased Premises and Lessee’s records for compliance with Environmental Laws relating to the generation, handling, storage, treatment, and disposal of hazardous waste, as well as to the discharge or release of hazardous substances.  Violations will be reported by AFRH to Lessee and to appropriate regulatory agencies, as required by Applicable Laws.  Lessee will be liable for the payment of any fines and penalties which may accrue as a result of the actions or omissions of Lessee.
11.8	Hazardous Waste Plan.  Lessee shall have a completed and approved plan prior to commencement of operations on the Leased Premises for responding to hazardous waste, fuel, and other chemical spills.  The plan shall comply with all Applicable Laws and shall be updated as required to comply with changes in site conditions or applicable requirements and shall be approved by all agencies having regulatory jurisdiction over such plan.  The plan shall be independent of AFRH spill prevention and response plans.  Lessee shall file a copy of the approved plan and approved amendments thereto with AFRH within fifteen (15) days of approval.
11.9	Pesticide Management Plan.  Prior to the storage, mixing, or application of any pesticide, as that term is defined under the Federal Insecticide, Fungicide, and Rodenticide Act, Lessee shall prepare a plan for storage, mixing, and application of pesticides.  The plan shall be sufficient to meet all Applicable Laws.  Lessee shall store, mix, and apply all pesticides within the Leased Premises only in strict compliance with the plan.  The pesticides will only be applied by a licensed applicator.
11.10	Wastewater.  Lessee shall comply with all requirements of Environmental Laws, including the Federal Water Pollution Control Act and the National Pollutant Discharge Elimination System.  If Lessee discharges wastewater to a publicly owned treatment works, Lessee must submit an application for its discharge prior to the Lease Commencement Date.  Lessee will be responsible for meeting all applicable wastewater discharge permit standards.
11.11	AFRH Inspections.  AFRH and its officers, agents, employees, contractors, and subcontractors shall have the right, upon reasonable notice to Lessee, to enter upon the Leased Premises to ascertain Lessee’s compliance with Environmental Laws, whether or not AFRH is responsible for enforcing them, including for the purposes enumerated below.  Any investigations, surveys, drilling, testpitting, test soil borings, and other activities undertaken pursuant to Section 11.14.1, on lands utilized for residential purposes, shall be conducted in a manner that is as inconspicuous as practicable.  Such inspections are without prejudice to the right of duly constituted enforcement officials to make such inspections.  
11.11.1	To conduct investigations and surveys, including, where necessary, drilling, soil and water sampling, testpitting, testing soil borings, and other activities; and
11.11.2	To inspect field activities of Lessee and its contractors and subcontractors in implementing the Development Agreement.
11.12	Acknowledgement of Environmental Site Assessment Receipt.  Lessee acknowledges receipt under separate cover of the Phase I Environmental Site Assessment.
11.13	Lessee Liability for Environmental Damages.  Lessee will use all reasonable means available to protect the environment and natural resources, consistent with Applicable Laws. Where damage nevertheless occurs, arising from Lessee’s activities, Lessee shall be fully liable for any such damage to the fullest extent of the Applicable Laws.  Lessee shall promptly abate or remediate any Hazardous Substances in, on, under, or about the Leased Premises or in any Improvements in violation of any Environmental Laws, except to the extent that the release of the Hazardous Substance is solely and directly the result of an act or failure to act of AFRH.  
11.14	Historical Artifacts.  Lessee shall not remove or disturb or cause or permit to be removed or disturbed, any historical, archeological, architectural, or other cultural artifacts, relics, remains or objects of antiquity.  In the event such items are discovered on the Leased Premises, Lessee shall immediately notify AFRH and protect the site and the material from further disturbance until AFRH gives clearance to proceed.   The Programmatic Agreement shall guide the handling of historical artifacts found on the Leased Premises.
ARTICLE XII	 MAINTENANCE OF LEASED PREMISES
12.1	Maintenance.  Except to the extent maintained by the District of Columbia (e.g. roads), Lessee, at no expense to AFRH, shall at all times preserve, maintain, repair, and manage the Leased Premises, including the Existing Buildings and Existing Infrastructure, as applicable, and the Infrastructure Improvements in an acceptable, safe, and sanitary condition in accordance with this Lease and the Development Agreement.  Lessee shall not cause, permit, commit, or suffer any waste to the Leased Premises, and shall maintain such Leased Premises in good, clean and safe condition, in all cases excepting casualty and normal wear and tear.
12.1.1	  Lessee shall be responsible for (in coordination with the applicable providers) the operation and maintenance of the utility systems within the Leased Premises, including but not limited to water, gas, TV, electric, sanitary sewer, and storm systems. AFRH shall have no obligation to furnish any services, utilities or facilities whatsoever to the Leased Premises except as separately agreed to.  Lessee shall assume sole responsibility for the condition, operation, repair, alteration, improvement, replacement, rehabilitation, maintenance, and management of the Leased Premises during the Term.     
12.1.2	  Except to the extent maintained by the District of Columbia, Lessee shall at all times maintain all Existing Infrastructure within the Leased Premises in good condition and keep them free of debris and obstructions of any kind.  Lessee shall keep roads, streets and common paved areas (including common sidewalks) free of ice and snow.
12.1.3	Lessee shall maintain all Historic Structures in accordance with the maintenance provisions provided for in the Programmatic Agreement and any Preservation Plan established in a conjunction with the Programmatic Agreement.
12.2	Repair and Replacement.  If Lessee damages or destroys any real or personal property of AFRH other than as contemplated by the Final Plans, Lessee shall promptly repair or replace such real or personal property to the reasonable satisfaction of AFRH.  In lieu of such repair or replacement, Lessee shall, if so required by AFRH, pay to AFRH money in an amount sufficient to compensate for the loss sustained by AFRH by reason of damage or destruction of AFRH property, including natural resources.
ARTICLE XIII	 COMPLIANCE WITH APPLICABLE LAWS
13.1	Lessee Obligation.  Lessee shall comply, at its sole cost and expense (except for matters for which AFRH remains obligated hereunder pursuant to Section 11.4), with all Applicable Laws.  Lessee shall comply with all Applicable Laws with regard to construction, sanitation, licenses, or permits to do business, protection of the environment, pollution control and abatement, occupational safety and health and all other related matters.  Lessee shall be responsible for determining whether it is subject to local building codes or building permit requirements, and for compliance with them to the extent they are applicable.
13.2	Construction Requirements.  Lessee’s activities on the Leased Premises, including construction, demolition, disposal, use, operation, maintenance, repair, and replacement of the Infrastructure Improvements, shall at a minimum conform to Applicable Laws, including all specifications and standards utilized by the District of Columbia in the construction of roadways and public rights-of-way and the requirements of the Development Agreement.  
13.3	Permits.  Lessee will be responsible for and obtain, at its sole expense, prior to the commencement of construction and demolition, and upon completion of the building of the Infrastructure Improvements, any approvals, permits, or licenses which may be necessary to construct, occupy, and operate the Leased Premises and the Infrastructure Improvements in compliance with Applicable Laws.
13.4	Federal Jurisdiction.  Nothing in this Lease shall be construed to constitute a waiver of Federal Supremacy or Federal Sovereign Immunity.  
13.5	No AFRH Obligations.  Responsibility for compliance as specified in this Article XIII rests exclusively with Lessee.  AFRH assumes no enforcement or supervisory responsibility except with respect to matters committed to its jurisdiction and authority.  Lessee shall be liable for all costs associated with compliance, defense of enforcement actions or suits, payment of fines, penalties, or other sanctions and remedial costs related to Lessee’s use and occupation of the Leased Premises.
13.6	Lessee Right to Contest.  Lessee shall have the right to contest by appropriate proceedings diligently conducted in good faith, without cost or expense to AFRH, the validity or application of any Applicable Laws of the nature referred to in this Article XIII.  AFRH shall not be required to join in or assist Lessee in any such proceedings.
ARTICLE XIV	 ACCESS AND INSPECTION
14.1	AFRH, its officers, agents, employees, and contractors, may enter upon the Leased Premises, at all times for any purposes not inconsistent with Lessee’s quiet use and enjoyment of them under this Lease, including but not limited to confirming compliance by Lessee with the terms of this Lease.  AFRH normally will enter the Leased Premises during regular business hours.  In the event that AFRH intends to enter the Leased Premises to confirm compliance by Lessee with the terms of this Lease, AFRH will use its reasonable best efforts to give Lessee at least twenty-four (24) hours prior notice of its intention to do so, which entry will normally occur during regular business hours, unless AFRH determines the entry is required for safety, environmental, operations, or mission security purposes.  Lessee shall have no claim on account of any entries against the United States or any officer, agent, employee, or contractor thereof.
ARTICLE XV	 GENERAL INDEMNIFICATION BY LESSEE
15.1	Limitation on AFRH Obligations.  Except as otherwise expressly provided in this Lease, AFRH shall not be responsible for damages to property or injuries or death to persons which may arise from or be attributable or incident to the condition of state of repair of the Leased Premises, or the use and occupation of the Leased Premises, or for damages to the property of Lessee, or injuries or death of Lessee’s officers, agents, servants, employees, or Tenants, or others who may be on the Leased Premises at their invitation or the invitation of any one of them.
15.2	Lessee Liability.    Except as otherwise expressly provided in this Lease, Lessee agrees to assume all riskrisks of loss or damage to property and injury or death to persons by reason of or incident to the possession of and/or use of the Leased Premises by Lessee Parties, or the activities conducted by or on behalf of Lessee Parties under this Lease.  Lessee expressly waives all claims against AFRH for any such loss, damage, bodily injury or death caused by or occurring as a consequence of such possession and/or use of the Leased Premises by Lessee Parties or the conduct of activities or the performance of responsibilities under this Lease.  Lessee further agrees to the extent permitted by Applicable Laws and not arising from the negligence or intentional misconduct to of AFRM, its officers, employees, contractors, agents or invitees to indemnify, save, and hold harmless AFRH, its officers, agents and employees, from and against all suits, claims, demands or actions, liabilities, judgments, costs, and attorneys’ fees arising out of, claimed on account of, or in any manner predicated upon bodily injury, death, or property damage resulting from, related to, caused by or arising out of the possession and/or use of any portion of the Leased Premises or any activities conducted or services furnished by or on behalf of Lessee Parties in connection with or pursuant to this Lease, and all claims for damages by Lessee’s Tenants against AFRH arising out of or related to their tenancy.  The agreements of Lessee contained herein do not extend to claims caused by the gross negligence or willful misconduct of officers, agents, or employees of the United States, where the Federal Tort Claims Act would apply without contributory fault on the part of any person, firm or corporation.  AFRH will give Lessee notice of any claim against it covered by this indemnity as soon after learning of it as practicable.
ARTICLE XVI	 INSURANCE
16.1	Lessee Obligation.  Lessee shall bear all risk of loss of or damage or destruction to the Leased Premises and any building(s), improvements, fixtures, or other property thereon, arising from any causes whatsoever, with or without fault by AFRH; provided, however, AFRH shall not be relieved of responsibility for loss or damage that is solely the result of acts or omissions of AFRH (a) to the extent such loss or damage is not covered by coverage of insurance required under this Lease and (b) to the extent recovery is authorized under Applicable Laws including the Federal  Tort Claims Act.
16.2	Required Insurance.  During the Lease Term, Lessee, at no expense to AFRH, shall carry and maintain the following insurance, and all of Lessee’s insurance polices shall be endorsed to name AFRH as an additional insured:
16.2.1	  All-risk property insurance, including loss of rents for actual loss sustained with an extended period of indemnity of one hundred eighty (180) days, on a replacement cost basis, with no coinsurance, for full replacement value of the Leased Premises Improvements, including demolition, building ordinance coverage, earthquake, flood, and business income coverage.  At least every two years Lessee shall from time to time, or upon request by Lessor, notify AFRH of the amount that a qualified appraiser selected by Lessee and reasonably acceptable to AFRH, reasonably deems to be the full insurance cost of replacement thereof with like kind and quality.  Such replacement value shall be subject to adjustment at the request of Lessee not more frequently than once in any twenty-four (24) month period unless there have been substantial changes to the Project within such period.  Such insurance shall have: (a) a deductible no greater than $10,000, unless otherwise approved in writing by AFRH; (b) earthquake, flood, sewer backup, boiler, and machinery coverage with commercially available limits and deductibles approved by AFRH; and (c) terrorism insurance if commercially available at reasonable rates.
16.2.2	  Commercial general liability insurance, on an occurrence basis, insuring against claims for bodily injury, death and property damage, occurring upon, in or about the Leased Premises including any building thereon and adjoining sidewalks, streets and passageways.  Such insurance is to be effective at all times throughout the Lease Term, with limits of not less than $20,000,000 per occurrence, general aggregate and products and completed operations aggregate and include coverage for fire, legal liability and medical payments. Any general aggregate shall apply on a per location or per project basis.  Such insurance shall have a deductible no greater than $10,000, unless otherwise approved in writing by AFRH and any Approved Mortgagee.  AFRH and any Approved Mortgagee shall be named as additional insureds. This coverage may be provided under primary liability and umbrella excess liability policies and shall include: (a) business auto liability insurance which insures against claims for bodily injury and property damage arising from the use of “any auto” with a combined single limit of $1,000,000 per accident; (b) environmental liability or pollution legal liability insurance to the extent available which includes coverage for mold; and (c) underground storage tank environmental insurance for any underground storage tanks located on the Leased Premises.  Limits of environmental policies, if available, shall be determined and approved by AFRH.  All liability policies shall be primary and non-contributory to any insurance maintained by AFRH or any Approved Mortgagee.
The insurance carried and maintained by Lessee pursuant to this Section 16.2 shall provide coverage to protect AFRH from any damage and liability for which Lessee is liable or responsible or agrees to hold harmless and indemnify AFRH under this Lease.  Proceeds under all policies of insurance carried and maintained to provide the coverage required by this Section 16.2 shall be available only for that purpose.
16.3	Additional Requirements.  During the Lease Term, Lessee either shall carry and maintain the insurance required below at its expense, or require any contractor performing work on the Leased Premises to carry and maintain such insurance at no expense to AFRH:
16.3.1	  Commercial general liability and business auto liability insurance provided for in Section 16.2.2 shall be maintained for the limits specified thereunder and shall provide coverage for the mutual benefit of Lessee, AFRH and any Approved Mortgagee as additional insureds;
16.3.2	  Fire and any other applicable insurance provided for in Section 16.2 which, if not then covered under the provisions of existing policies, shall be covered by special endorsement thereto with respect to any improvements, structures, alterations, additions to or installations, including all materials and equipment therefore, incorporated in, on or about the Leased Premises (including excavations, foundations, and footings) under a broad form all-risks builder’s risk completed value form or equivalent thereof; and
16.3.3	  Workers’ compensation or similar insurance covering all persons employed in connection with the work and with respect to whom death or bodily injury claims could be asserted against AFRH or Lessee, in form and amounts required by Applicable Laws (statutory limits) and employers’ liability with limits of $1,000,000 each coverage and policy limit.
16.4	Qualified Insurers.  All policies of insurance which this Lease requires Lessee to carry and maintain or cause to be carried or maintained pursuant to this Article XVI shall be effected under valid and enforceable policies, in such forms and amounts as may, from time to time, be required under this Lease, issued by insurers authorized to do business in the District of Columbia.  The Qualified Insurers for a majority of the coverage shall have a long-term unsecured debt rating from Standard & Poors no lower than BBB and a rating of A/VIII or better in A.M. Best’s Insurance Reports.  All policies issued by the respective insurers for commercial general liability insurance and for the all-risk property insurance provided for above in this Article XVI shall be for the mutual benefit of AFRH, any Approved Mortgagee and Lessee and will name AFRH and any Approved Mortgagee as additional insureds or loss payees as to their respective interests.  Each such policy shall provide that any losses shall be payable notwithstanding any act or failure to act or negligence of Lessee, AFRH, any Approved Mortgagee or any other person; provided that no cancellation, reduction in amount, or material change in coverage thereof shall be effective until at least sixty (60) days after receipt by AFRH and any Approved Mortgagee of written notice thereof; provided that the insurer shall have no right of subrogation against AFRH or any Approved Mortgagee; and be reasonably satisfactory to AFRH in all other respects.  All property insurance coverage required by Section 16.2.1 shall be payable solely to AFRH, except as otherwise permitted in Article XXIII.  In no circumstances will Lessee be entitled to assign to any third party rights of action that Lessee may have against AFRH.  Notwithstanding the foregoing, any cancellation of insurance coverage based on nonpayment of the premium shall be effective upon ten (10) days’ written notice to AFRH and any Approved Mortgagee.  Lessee understands and agrees that cancellation of any insurance coverage required to be carried and maintained by Lessee under this Article XVI will constitute a failure to comply with the terms of the Lease, and AFRH shall have the right to terminate the Lease for default and breach pursuant to Article VIII upon receipt of any such cancellation notice, but only if Lessee fails to cure such noncompliance to the extent allowed under Article VIII.  Lessee shall deliver or cause to be delivered upon execution of this Lease (and thereafter not less than fifteen (15) days prior to the expiration date of each policy furnished pursuant to this Article XVI), at AFRH’s option, a certified copy of each policy of insurance required by the Lease as soon as each such policy is made available by the insurer, or a certificate of insurance evidencing the insurance required by the Lease, in a form acceptable to AFRH and including such endorsements necessary to afford additional insured or loss payee status or evidence to satisfy other conditions as required per provisions above, or both.  Should Lessee fail to acquire, maintain or renew any insurance required to be maintained by it under this Article, or to pay the premium therefor, then AFRH, at its option, but without obligation so to do, may procure such insurance, and any sums expended by it to procure any such insurance shall be forthwith repaid upon demand with interest at a rate equal to three (3) percentage points above the prime rate of interest as published from time to time in The Wall Street Journal (or, if the prime rate is no longer so published, a replacement rate reasonably determined by AFRH) or the maximum rate allowed by applicable usury law, if any, whichever is lower.  Lessee shall obtain written agreements from each insurer under policies required to be maintained by them, to notify all additional insureds named thereunder at least ten (10) days prior to cancellation or reduction in coverage under any such policy to a level less than that required to be maintained under this Lease.  
16.5	Notice of Damage or Destruction.  In the event of Damaged or Destroyed Property, Lessee shall promptly give notice thereof to AFRH and all Approved Mortgagees.
16.5.1	Lessee shall as soon as reasonably practicable after the casualty restore the Damaged or Destroyed Property as nearly as possible to the condition which existed immediately prior to such loss or damage.
16.5.2	Any insurance proceeds received as a result of any casualty loss to the Project shall be applied in the following order of priority: (a) first, to restoring the damaged area and removing any related debris to the reasonable satisfaction of AFRH; (b) second, to repairing, rebuilding and/or replacing the Leased Premises Improvements and the damaged area to the reasonable satisfaction of AFRH; (c) third, if required by AFRH or any Approved Mortgagee, to the payment of any outstanding liens held by AFRH or any Approved Mortgagee, in accordance with the order of priority of such liens, until all such liens are fully satisfied and released; and (d) fourth, the excess, if any, shall be paid to Lessee.  
16.6	Notice to Tenants Regarding Insurance.  At the time of the execution of each Tenant Lease, Lessee shall advise such Tenant in writing and the Tenant shall acknowledge in writing that neither AFRH nor Lessee insures the personal property and leasehold improvements of the Tenant and that it is the sole responsibility of the Tenant to apply for and maintain at all times renter’s insurance.
16.7	     Subrogation Waiver.	All risk, property, and boiler and machinery insurance policies shall provide that the insurance company waives all rights of recovery by way of subrogation against AFRH or Lessee.  Commercial General Liability and Commercial Automobile Liability insurance policies shall provide that the insurance company waives all rights of recovery by way of subrogation against AFRH.  In the instance of Commercial General Liability and Commercial Automobile Liability insurance, the provisions of this Section are intended to restrict Lessee (as permitted by Applicable Laws) to recovery against insurance carriers to the extent of such coverage, and waive fully, and for the benefit of AFRH, any rights and/or claims that might give rise to a right of subrogation in any insurance carrier.  
ARTICLE XVII	 CONFLICTS
17.1	Conflicts.  Lessee shall demolish, design, construct, renovate, replace, own, operate and maintain the Leased Premises and the Leased Premises Improvements  in accordance with the terms and conditions of the Development Agreement and this Lease.  In the event of any inconsistency or conflict between any provision of the Development Agreement and any provision of this Lease, the provision chosen by AFRH, in its sole determination, shall control.
ARTICLE XVIII	 CONSTRUCTION OF INFRASTRUCTURE IMPROVEMENTS
18.1	Construction; Title.  This Lease is subject to and conditioned on Lessee’s designing, demolishing, constructing, completing and maintaining (or arranging for the construction, completion and maintenance of) the Infrastructure Improvements on the Leased Premises in accordance with this Lease and the Development Agreement, including the plans included as attachments to the Development Agreement.  It is specifically understood that (a) the construction and operation of the Infrastructure Improvements is a private undertaking; (b) title to the Leased Premises  Improvements during the Lease Term (other than public roads and public utilities) shall be vested in Lessee; and (c) AFRH’s sole and exclusive interest in and liability under this Lease are limited to that of Lessor of the Leased Premises.  Lessee shall not be entitled to receive from AFRH and AFRH shall not be obligated to pay to Lessee any monetary consideration for the construction of the Infrastructure Improvements contemplated by this Article XVIII.  Any alterations to the Infrastructure Improvements shall be conducted in accordance with the terms of the Development Agreement and this Lease.
18.2	Furniture, Fixtures & Equipment.  During the Lease Term, Lessee shall have the right at its sole cost and expense, to install such of its own machinery and equipment, to make improvements and to attach such removable fixtures in or upon the Leased Premises as may be necessary for its use of the Leased Premises pursuant to this Lease; and to remove such machinery, equipment, minor improvements, and removable fixtures at any time prior to the expiration or earlier termination by Lessee of this Lease.
ARTICLE XIX	 UTILITIES AND SERVICES
19.1	Damage to Utilities.  If, during construction, maintenance or repair of the Infrastructure Improvements and the Leased Premises, damage is incurred to any identified and located utilities, Lessee will be responsible for all subsequent repairs.  All utilities located underground on the Effective Date shall remain underground, as shown on the Final Plans.  All new and relocated utilities installed after the Effective Date shall be located underground unless otherwise approved by AFRH and shown on the Master Plans.
19.1.1	  The Parties understand and agree that the construction, maintenance and repair of all utility distribution systems, all connections to the Infrastructure Improvements and the Leased Premises Improvements, conduits, and the connections to existing AFRH utility mains and the purchase, installation, maintenance, and repair of all meters shall be without cost to AFRH.
19.1.2	  Lessee shall be responsible for the expenses of all utilities used for (a) common areas; (b) operations facilities, including rental offices and maintenance shops; (c) maintenance activities, including janitorial services; and (d) vacant rental areas.  Lessee shall ensure that there is no loss of utility service to AFRH.  
19.1.3	  Lessee shall be responsible at its expense for all janitorial services,  curbside refuse collection, building maintenance, and grounds maintenance for the Leased Premises.  
19.1.4	  Lessee will pay or cause to be paid the charges for any utilities and services in connection with its use or operation of the Project.  The charges and the method of payment for each utility or service will be determined by the appropriate supplier of the utility or service in accordance with Applicable Laws and regulations, on such basis as the appropriate supplier of the utility or service may establish.
19.1.5	  Lessee may contract directly with service providers concerning the construction, installation, maintenance and provision of cable television, telephone, internet and other telecommunication services.  Lessee may make its own arrangements for utility systems or services to be provided or distributed by private parties to the Leased Premises (including, without limitation, electricity, natural gas, water and sewer). 
ARTICLE XX	 OPERATION AND MANAGEMENT OF THE PROPERTY
20.1	AFRH Approval of Name.  The name used by Lessee for any portion of the Project is subject to the prior written approval of AFRH.
20.2	Lessee to Operate Property.  Lessee, at its sole cost and expense, shall operate and maintain the Leased Premises and the Leased Premises Improvements in accordance with all Applicable Laws, the Development Agreement, and this Lease.  Lessee shall enter into a Property Management Agreement for the management and maintenance of the Project with a qualified, reputable property management company experienced in successfully managing properties substantially similar to the Project.  Any such agreement is subject to the prior written approval of AFRH, which approval shall not be unreasonably withheld, delayed or conditioned.  Lessee shall not make any material revision to the Property Management Agreement without the prior written consent of AFRH.
ARTICLE XXI	 NOTICES
21.1	Notices.  Whenever AFRH or Lessee shall desire to give or serve upon the other (or in the case of AFRH, also any Approved Mortgagee) any notice, demand, order, direction, determination, requirement, consent or approval, request or other communication with respect to this Lease or with respect to the Leased Premises, the Infrastructure Improvements, and any other improvements located thereon, each such notice, demand, order, direction, determination, requirement, consent, approval, request, or other communication shall be in writing and shall not be effective for any purpose unless same shall be given or served by personal delivery to the Party or Parties to whom such notice, demand, order, direction, determination, requirement, consent or approval, request or other communication is directed or by mailing the same, in duplicate, to such Party or Parties by certified mail, postage prepaid, return receipt requested, addressed as follows, or at such other address or addresses as AFRH, Lessee or any Approved Mortgagee may from time to time designate by notice given by certified mail:
If to Lessee:	c/o Crescent Resources, LLC 2805 S. Crystal Drive Arlington, VA 22202 Fax: (703) 416-4442 Attn: Daniel B. Kohlhepp Attn: Robert H. Zeiller 
With a copy to:	 							Venable LLP 575 7th Street, NW Washington, DC 20004 Fax: (202) 344-8300 Attn: Jerry A. Moore, Esq. Attn: Philip M. Horowitz, Esq. 
If to AFRH:

With a copy to:
and a copy to:				

If to Guarantor:
If to an Approved Mortgagee:

If to Guarantor:
If to an Approved Mortgagee:
21.2	Service.  Every notice, demand, order, direction, determination, requirement, consent, approval, request, or communication hereunder shall be personally served, sent by certified first-class mail, return receipt requested, or by recognized overnight delivery service.  Any such notice, demand, order, direction, determination, requirement, consent, approval, request, or other communication shall be deemed to have been delivered on the date of the receipt of such delivery or transmission at the address set forth above (or such other address designated pursuant hereto), or, if sent by certified first-class mail, return receipt requested, and delivery is refused, upon the date of refusal to accept service.
ARTICLE XXII	 ASSIGNMENT, SUBLEASES, AND LICENSES
22.1	Limitations.  Lessee shall neither transfer nor assign this Lease or any interest therein or any property on the Leased Premises, nor sublet the Leased Premises or any part thereof or any property thereon, nor grant any interest, privilege, or license whatsoever in connection with this Lease without the prior written consent of AFRH except as provided at Article XXIII of this Lease.  Such consent shall not be unreasonably withheld or delayed subject to Sections 22.1.1, 22.1.2, 22.1.3, and 22.1.4 below.  Lessee may also request that AFRH consent to an assignment of the Guaranty to a new guarantor, thereby relieving Guarantor of its obligations under the Guaranty, which consent shall be not be unreasonably conditioned or delayed and shall not be withheld so long as the new guarantor provides AFRH evidence that it has the reputation, experience and financial resources to complete the obligations secured by the Guaranty, as determined in AFRH's reasonable discretion. 
22.1.1	  Any assignment or sublease granted by Lessee shall be consistent with all of the terms and conditions of this Lease and shall terminate immediately upon the expiration or any earlier termination of this Lease, without any liability on the part of AFRH to Lessee or any assignee or sublessee.  Under any assignment made, with or without consent, the assignee shall be deemed to have assumed all of the obligations of Lessee under this Lease.  No assignment or sublease shall relieve Lessee of any of its obligations hereunder. 
22.1.2	  Lessee shall furnish AFRH, for its prior written consent, a copy of each agreement of sublease or assignment it proposes to execute.  Such consent may include the requirement to delete, add, or change provisions in the sublease or assignment instrument as AFRH shall deem necessary to protect its interests.  Consent to any sublease or assignment shall not be taken or construed to diminish or enlarge any of the rights or obligations of either of the Parties under this Lease including, without limitation, the rights and obligations stated in Section 23.2.  Consent or rejection of any required changes shall be provided within ten (10) business days of receipt of the proposed agreement.
22.1.3	  Any agreement of sublease or assignment must include the provisions set forth in this Lease and expressly provide that: (a) the sublease or assignment, as the case may be, is subject to all of the terms and conditions of the Lease; (b) the sublease shall terminate on the expiration or earlier termination of the Lease; (c) the sublessee or assignee, as the case may be, shall assume all of Lessee’s obligations and responsibilities under the Development Agreement; and (d) in case of any conflict between any provisions of the Lease and any provisions of the agreement of sublease or assignment, the Lease will control.  A copy of the Lease and the current Development Agreement must be attached to the agreement of sublease or assignment.
22.1.4	  Failure to comply with this Article XXII shall constitute a breach of this Lease by Lessee.  AFRH shall not be obligated to recognize any right of any person or entity to an interest in this Lease or to own or operate any facilities and/or improvements or conduct any other activity or activities on the Leased Premises authorized under the Lease acquired in violation of this Article XXII.
ARTICLE XXIII	 LIENS AND MORTGAGES
23.1	Limitations on Liens.  Except as provided in Section 23.2 below, Lessee shall not: (a) engage in any financing or other transaction creating any mortgage or security interest upon the Leased Premises or the Infrastructure Improvements; (b) place or suffer to be placed upon the Leased Premises or any Infrastructure Improvements any lien or other encumbrance; (c) suffer any levy or attachment to be made on Lessee’s interests in the Leased Premises or any Infrastructure Improvements; or (d) pledge, mortgage, assign, encumber, or otherwise grant a security interest in the Leased Premises or any Infrastructure Improvements or the rents, issues, profits or other income of the Leased Premises.  Lessee shall not suffer any other matter or thing arising by or through Lessee whereby the estate, rights and interest of AFRH in any portion of AFRH will be impaired; provided that any Imposition shall, after the same becomes a lien, be paid or contested and any mechanic's, laborer's, or materialman's lien shall be discharged (by payment, bonding off or other method permitted by law).
23.2	Permitted Encumbrances.  During the Lease Term, Lessee may encumber by mortgage, deed of trust or security agreement its interest in the Leased Premises or any Leased Premises Improvements to secure one or more loans, subject to Section 23.3 below.  Each such encumbrance, and the interest of any Approved Mortgagee in the Leased Premises created by  such encumbrance, shall at all times be subordinate to the interest of AFRH in the Leased Premises.  The proposed holder of any such mortgage, deed of trust or security agreement must be approved in writing by AFRH prior to the execution of such loan, which approval shall not be unreasonably withheld or delayed.  AFRH agrees to execute a Lease Status Report and any other similar documentation as may reasonably be required by an Approved Mortgagee to evidence AFRH’s consent to the conditional assignment or mortgage of Lessee’s interest in this Lease and to certify the status of this Lease and performance by Lessee of its obligations hereunder as of the date of such certification, and such certification shall not be unreasonably withheld or delayed.  Notwithstanding any foreclosure, Lessee shall remain liable for the performance of all the terms, covenants, and conditions of this Lease, which by the terms hereof are to be carried out and performed by Lessee.
23.3	Limitations.  No mortgage or deed of trust shall extend to or affect the fee or the estate of AFRH in the Leased Premises.  No mortgage, deed of trust or security agreement shall be binding upon the Leased Premises until it is approved by AFRH and a copy thereof has been delivered to AFRH.  This Lease will not under any circumstances be subordinated to the lien of any mortgage, deed of trust or security agreement.  Nothing in this Article XXIII shall require AFRH to take any action in violation of the AntiAssignment Act or other Applicable Laws (including regulations relating to suspension or debarment of Government contractors).  AFRH agrees to take such steps and actions under the Anti-Assignment Act or otherwise as necessary or desirable to give full effect to the provisions of this Article (including waiver of the pertinent provisions of the Anti-Assignment Act applicable thereto that are committed to the discretion of AFRH, but only to the extent AFRH deems such waiver(s) legal and proper.  
23.4	Notice of Liens or Encumbrances.  Lessee shall notify AFRH promptly in writing of any lien or encumbrance on the Leased Premises, or Lessee’s interest in the Leased Premises or any Leased Premises Improvements, whether created by act of Lessee or otherwise, of which Lessee has notice.
23.5	Discharge or Bond.  If, because of any act or omission of Lessee or any person or entity claiming through Lessee, any mechanic's lien or other lien, charge or order for the payment of money is filed against Lessor’s reversionary interest in the Leased Premises, Lessee shall, at its own cost and expense, cause such lien, charge or order to be discharged of record or bonded off within thirty (30) days after the filing thereof.  Further, Lessee shall add Lessor to, and Lessor shall join in, at no cost to Lessor, any surety bond required by any Mortgagee so as to guarantee payment of all liens and judgments against the Leased Premises.  If any mechanic's or other lien is at any time filed against Lessor for work performed by or for Lessee or any person or entity claiming through Lessee, and Lessee fails to have the lien discharged in the same manner as provided above, or if Lessee desires to contest any such lien, Lessee shall furnish to AFRH security in the amount of the claim, together with all interest and penalties related thereto, which security shall be reasonably satisfactory to Lessor, or shall procure a bond of a reputable bonding company in such amount.  The final, nonappealable judgment of any court of competent jurisdiction determining the validity and/or amount of any such lien shall be conclusive of such fact as between AFRH and Lessee.
23.6	Acquisition by Approved Mortgagee.  If an Approved Mortgagee acquires Lessee’s interest in the Leased Premises or the Infrastructure Improvements by deed-in-lieu, at a foreclosure of its mortgage or deed of trust, or otherwise, this Lease shall continue in full force and effect. The acquisition of Lessee’s interest in the Leased Premises or Infrastructure Improvements by anyone other than an Approved Mortgagee shall require the prior written approval of AFRH, which approval may be given or withheld in AFRH’s sole discretion. No agent or nominee shall be appointed to operate and manage any portion of the Leased Premises or the Infrastructure Improvements without obtaining the prior written approval of AFRH, which approval may be given or withheld in AFRH’s sole discretion.  The proposed agent or nominee must demonstrate experience or expertise in the development, management, and operation of projects similar to the Leased Premises and the Infrastructure Improvements.
23.7	Certain Matters Regarding Approved Mortgagees.  With respect to the Approved Mortgagees, the following shall apply:
23.7.1	  If an Approved Mortgagee has given written notice to AFRH of its address, any notice to Lessee given pursuant to this Lease, including, without limitation, notice of a default or a termination of this Lease, shall be delivered simultaneously to such Approved Mortgagee and no notice of default or termination of this Lease given by AFRH to Lessee shall be deemed effective until like notice is given to such Approved Mortgagee.
23.7.2	  An Approved Mortgagee shall have the same rights to cure any default as Lessee has under the Lease with such additional time as may be afforded to an Approved Mortgagee pursuant to this Article XXIII and AFRH shall accept performance by such Approved Mortgagee as if Lessee had performed.
23.7.3	AFRH will not accept any cancellation of this Lease by Lessee or materially modify this Lease without the prior written consent of each Approved Mortgagee.  Lessee shall provide each Approved Mortgagee with notice of any proposed material modification or cancellation.
23.7.4	  No Approved Mortgagee, or purchaser at a foreclosure sale who has been approved by AFRH as required by Section 23.2, shall be required to cure any default of Lessee which cannot be cured by the payment of money or performance of demolition, design, construction, renovation, operation, and maintenance work, including any bankruptcy of Lessee.    Defaults under Article XXVII also shall constitute personal defaults to the extent records are not available to prepare the reports required by that Article.
23.8	Mortgagee’s Right to Postpone.  If AFRH elects to terminate this Lease pursuant to Section 8.3, each Approved Mortgagee shall have the right to postpone  and extend the termination date specified in the notice of termination by AFRH to Lessee, subject to the following conditions:
23.8.1	  Prior to the termination date specified in the notice of termination by AFRH to Lessee, the Approved Mortgagee must give AFRH written notice of its exercise of the Mortgagee’s Right to Postpone and simultaneously cure all monetary defaults and deliver to AFRH as security for the cure of all other defaults other than personal defaults an amount sufficient to effect such cure.
23.8.2	  The Approved Mortgagee’s right to postpone and extend the termination date shall extend the date specified in the  notice of termination by AFRH to Lessee for the termination of this Lease for a period of up to six (6) months or such longer period as may be reasonably requested by the Approved Mortgagee  and approved by AFRH, which approval shall not be unreasonably withheld.  AFRH will grant a reasonable extension of the date for termination of this Lease pursuant to the Approved Mortgagee’s right to postpone and extend the termination date so long as the Approved Mortgagee  (a) promptly commences all steps necessary to cure any default other than personal defaults of Lessee, including such steps as may be required for the Approved Mortgagee to obtain possession or control of the Leased Premises, and diligently prosecutes the same to completion; and (b) provides AFRH with monthly updates in writing that describe in reasonable detail the steps the Approved Mortgagee  has taken and will take in the future to cure any such defaults, and the anticipated timeframe for curing such default.
23.8.3	  Prior to the termination date specified in the AFRH’s termination notice, such Approved Mortgagee shall assume performance and observance of the covenants and other agreements of Lessee in this Lease.
23.8.4	  If prior to the AFRH’s extension of the termination date, all defaults under this Lease other than personal defaults are cured or otherwise resolved as memorialized in a written agreement, then AFRH shall withdraw the Termination Notice.
23.9	No Obligation of AFRH to Deliver Possession.  Nothing herein contained shall be deemed to impose any obligation on the part of AFRH to deliver physical possession of the Leased Premises or any Leased Premises Improvements located thereon to such Approved Mortgagee.
23.10	Priority of Liens.  If more than one Approved Mortgagee shall seek to exercise any of the rights provided for in this Article XXIII, the holder of the mortgage or deed of trust having priority of lien over the other Approved Mortgagees shall be entitled, as against the others, to exercise such rights.  Should a dispute arise among the Approved Mortgagees regarding the priority of their respective liens, all of the Approved Mortgagees must provide written confirmation to AFRH that they have settled that dispute.
23.11	New Lease after Termination.  In the event this Lease is terminated or annulled by AFRH for any reason or is rejected in bankruptcy, the Approved Mortgagee(s) in the order of the priority of their respective mortgages, may request a New Lease from AFRH and AFRH shall execute and deliver such New Lease provided the applicable Approved Mortgagee (a) pays all past due amounts due to AFRH pursuant to the terms of this Lease; and (b) cures or otherwise resolves in a manner and within a time frame acceptable to AFRH any non-monetary defaults, except for personal defaults, of Lessee under the Lease.  Such New Lease shall be for the remaining term of this Lease and shall be on the same terms and conditions as set forth herein.
ARTICLE XXIV	 DISPUTES
24.1	Disputes.  If a dispute arises out of or relates to this Lease, or the breach thereof, and if said dispute cannot be settled through negotiation, the Parties agree first to attempt in good faith to settle the dispute by mediation, before resorting to litigation.  AFRH agrees that AFRH’s contracting officer shall not issue any final determination regarding any claim by or against DeveloperLessee until and unless such mediation has been concluded, or either AFRH or DeveloperLessee advises the other that a resolution of the dispute by mediation does not appear likely within a reasonable time.  AFRH and DeveloperLessee each acknowledge that the other Party may exercise and enforce any and all its rights and remedies under this Lease.  Notwithstanding anything to the contrary herein, in the event that any dispute hereunder relates to matters directly addressed in any Parcel Lease, the matter shall be resolved pursuant to such Parcel Lease.  
ARTICLE XXV	 GUARANTY
25.1	Concurrent with its execution and delivery of this Agreement, Guarantor has executed and delivered the Guaranty attached hereto as Exhibit G, pursuant to which Guarantor has guaranteed the timely and full performance by Lessee of each of the covenants, terms and conditions of this Agreement.  Guarantor shall at all times comply with each of the covenants, terms and conditions of the Guaranty.
ARTICLE XXVI	 GENERAL PROVISIONS
26.1	Facilities Nondiscrimination.  In compliance with Executive Order No. 11246, Lessee agrees to comply with the following in connection with the performance of its obligations under this Lease.
26.1.1	If, during any 12-month period (including the 12 months preceding the  Effective Date), Lessee has been or is awarded nonexempt Federal contracts and/or subcontracts that have an aggregate value in excess of $10,000, Lessee shall comply with subparagraphs 26.1.2.1 through 26.1.2.11 below.  Upon request, Lessee shall provide information necessary to determine the applicability of this clause.
26.1.2	During performing this contract, Lessee agrees as follows:
26.1.2.1	Lessee shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin.  However, it shall not be a violation of this clause for Lessee to extend a publicly announced preference in employment to Indians living on or near an Indian reservation, in connection with employment opportunities on or near an Indian reservation, as permitted by 41 C.F.R. 601.5.

26.1.2.2	Lessee shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, creed, color, religion, sex, disability, age, or national origin. This shall include, but not be limited to, (a) employment; (b) upgrading; (c) demotion; (d) layoff or termination; (e) rates of pay or other forms of compensation; and (f) selection of training, including apprenticeship.

26.1.2.3	Lessee shall post in conspicuous places available to employees and applicants for employment the notices to be provided by AFRH that explain this clause.

26.1.2.4	Lessee shall, in all solicitations or advertisements for employees placed by or on behalf of Lessee, state that all qualified applicants will receive consideration for employment without regard to race, creed, color, religion, sex, disability, age, or national origin.

26.1.2.5	Lessee shall send, to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, the notice to be provided by AFRH advising the labor union or workers’ representative of Lessee’s commitments under this clause, and post copies of the notice in conspicuous places available to employees and applicants for employment.

26.1.2.6	Lessee shall comply with Executive Order 11246, as amended, and the rules, regulations and orders of the Secretary of Labor.

26.1.2.7	Lessee shall furnish to AFRH all information required by Executive Order 11246, as amended, and by the rules, regulations and orders of the Secretary of Labor.  Lessee shall also file Standard Form 100 (EEO1), or any successor form, as prescribed in 41 C.F.R. Part 601.  Unless Lessee has filed within the twelve (12) months preceding the Effective Date, Lessee shall, within thirty (30) days after the Effective Date, apply to either the regional Office of Federal Contract Compliance Programs or the local office of the Equal Employment Opportunity Commission for the necessary forms.

26.1.2.8	Lessee shall permit access to its books, records and accounts by AFRH or the Office of Federal Contract Compliance Programs for the purpose of conducting onsite compliance evaluations and complaint investigations.  Lessee shall permit AFRH to inspect and copy any books, accounts, records (including computerized records), and other material that may be relevant to the matter under investigation and pertinent to compliance with Executive Order 11246, as amended, and rules and regulations that implement the Executive Order.

26.1.2.9	IfSubject to the notice and cure rights hereof for an pendant Event of Default, if the Office of Federal Contract Compliance Programs determines that Lessee is not in compliance with this clause or any rule, regulation or order of the Secretary of Labor, this Lease may be canceled, terminated or suspended in whole or in part and Lessee may be declared ineligible for further Government contracts, under the procedures authorized in Executive Order 11246, as amended.  In addition, sanctions may be imposed and remedies invoked against Lessee as provided in Executive Order 11246, as amended, the rules, regulations and orders of the Secretary of Labor, or as otherwise provided by Applicable Laws.

26.1.2.10	Lessee shall include the terms and conditions of Section 26.1.2.1 through 26.1.2.11 in every subcontract or purchase order that is not exempted by the rules, regulations or orders of the Secretary of Labor issued under Executive Order 11246, as amended, so that these terms and conditions will be binding upon each subcontractor or vendor.

26.1.2.11	Lessee shall take such action with respect to any subcontract or purchase order as AFRH may direct as a means of enforcing these terms and conditions, including sanctions for noncompliance; provided, that if Lessee becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of any direction, Lessee may request the United States to enter into the litigation to protect the interest of the United States.
26.1.3	Notwithstanding any other clause in this Lease, disputes relative to this Section will be governed by the procedures in 41 C.F.R. § 60-1.1.
26.2	No Joint Venture.  Nothing contained in this Lease will make, nor will be construed to make, the Parties hereto partners or joint venturers with each other, it being understood and agreed that the only relationship between AFRH and Lessee under this Lease is that of landlord and tenant.  Neither will anything in this Lease render, nor be construed to render, either of the Parties hereto liable to any third party for the debts or obligations of the other Party hereto.
26.3	Records and Books of Account.  Lessee agrees that AFRH or any of its duly authorized representatives shall, until the expiration of three (3) years after the expiration or earlier termination of this Lease, have access to and the right to examine any directly pertinent books, documents, papers, and records of Lessee involving transactions related to this Lease.
26.4	Remedies Cumulative; Failure of Government to Insist on Compliance.  The specified remedies to which AFRH may resort under the terms of the Lease are distinct, separate, and cumulative, and are not intended to be exclusive of any other remedies or means of redress to which AFRH may be lawfully entitled in case of any breach or threatened breach by Lessee of any provisions of this Lease.  The failure of AFRH to insist in any one or more instances, upon strict performance of any of the terms, covenants, or conditions of this Lease shall not be construed as a waiver or a relinquishment of AFRH’s right to the future performance of any such terms, covenants, or conditions, but the obligations of Lessee with respect to such future performance shall continue in full force and effect.  No waiver by AFRH of any provisions of this Lease shall be deemed to have been made unless expressed in writing and signed by an authorized representative of AFRH.
26.5	Headings or Titles.  The brief headings or titles preceding each Article are merely for purposes of identification, convenience, and ease of reference, and will be completely disregarded in the construction of this Lease.
26.6	Counterparts.  This Lease may be executed in multiple counterparts, each of which is deemed an original of equal dignity with the other and which is deemed one and the same instrument as the other.
26.7	Personal Pronouns.  All personal pronouns used in this Lease, whether used in the masculine, feminine, or neuter gender, will include all other genders.
26.8	Entire Agreement.  It is expressly agreed that this written instrument, together with the provisions of other documents that are expressly incorporated by reference by the terms of this Lease, embodies the entire agreement between the Parties regarding the use of the Leased Premises by Lessee.  In the event of any inconsistency between the terms of this Lease and of any provision that has been incorporated by reference, the terms of this Lease shall govern. There are no understandings or agreements, verbal or otherwise, between the Parties except as expressly set forth herein.  This instrument may only be modified or amended by mutual agreement of the Parties in writing and signed by each of the Parties hereto.
26.9	Partial Invalidity.  If any term or provision of this Lease, or the application of the term or provision to any person or circumstance is, to any extent, invalid or unenforceable, the remainder of this Lease, or the application of the term or provision to persons or circumstances other than those as to which the term or provision is held invalid or unenforceable, will not be affected by the application, and each remaining term or provision of this Lease will be valid and will be enforced to the fullest extent permitted by Applicable Laws.
26.10	Recording.  A Memorandum of this Lease dated of even date herewith shall be filed for record in the appropriate real estate records on or after the Lease Commencement Date.
26.11	Approvals.  Any approval or consent of the Parties required for any matter under this Lease shall be in writing and shall not be unreasonably withheld or delayed unless otherwise indicated in this Lease.
26.12	Third Party Beneficiaries.  Except as otherwise expressly provided with respect to Approved Mortgagees, (a) there shall be no third party beneficiaries of this Lease; and (b) none of the provisions of this Lease shall be for the benefit of, or enforceable by, any creditors of Lessee.
26.13	No Individual Liability of AFRH Personnel.  No covenant or agreement contained in this Lease shall be deemed to be the covenant or agreement of any individual officer, agent, employee, or representative of AFRH in his or her individual capacity, and none of such persons shall be subject to any personal liability or accountability by reason of the execution of this Lease, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty, or otherwise.
26.14	Non-Merger.  Notwithstanding anything contained herein to the contrary, it is the intention of the Parties that the interest created hereunder shall remain separate and distinct interests and the leasehold interest of Lessee shall not merge with the fee title in the event that Lessee becomes the owner of the Leased Premises.
26.15	Excusable Delays.  AFRH and Lessee shall be excused from performing an obligation or undertaking provided for in this Lease, and the period for the performance of any such obligation or undertaking shall be extended for a period equivalent to the period of such delay, so long as such performance is prevented or unavoidably delayed, retarded or hindered by any Excusable Delays.  Nothing contained in this Section 26.16 shall excuse Lessee from the performance or satisfaction of an obligation under this Lease that is not prevented or delayed by the act or occurrence giving rise to an Excusable Delay.
26.16	Successors and Assigns.  Subject to any provisions of this Lease restricting assignment, this Lease shall be binding upon and inure to the benefit of AFRH, Lessee and their respective successors and assigns.
26.17	Officials Not to Benefit.  No member or delegate to Congress or staff member of any Member of or delegate to Congress, the Mayor of the District of Columbia, no member of the City Council of the District of Columbia and no officer or employee of the United States Government or the Government of the District of Columbia shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom; provided, however, that this provision shall not be construed as extending to any person who may be a shareholder or other beneficial owner of any publicly-held corporation or other entity, if this Lease is for the general benefit of such corporation or other entity.
26.18	Contra Preferentum. The language of this Lease shall not be construed for or against either party by reason of the authorship or alleged authorship of any provision hereof or by reason of the status of the respective parties as AFRH and Lessee.
26.19	Prohibition on Transfers to Prohibited Persons.  Notwithstanding anything else in this Lease to the contrary, under no circumstances shall there be a transfer of all or any portion of the rights of Lessee in and to this Lease, the Project or any direct or indirect controlling interest in Lessee to a Prohibited Person or a person controlled by a Prohibited Person.
26.20	Lessee Statement Regarding Debarment and Suspension.  Pursuant to 41 C.F.R. § 105-68.225, Lessee and this Lease are currently subject to Executive Orders 12549 and 12689, 41 C.F.R. Part 105-68, and 48 C.F.R. Subpart 509.4.  To Lessee’s knowledge as of the Effective Date, Lessee: (a) is not presently excluded or disqualified; (b) has not been convicted within the preceding three years of any of the offenses listed in 41 C.F.R. § 105.68.800(a) or had a civil judgment rendered against it for one of those offenses within that time period; (c) is not presently indicted for or otherwise criminally or civilly charged by a governmental entity (Federal, state, or local) with commission of any of the offenses listed in 41 C.F.R. § 105.68.800(a); or (d) has not had one or more public transactions (Federal, state, or local) terminated within the preceding three years for cause or default.
26.21	Governing Law.  Any disputes under this Lease shall be resolved in accordance with applicable Federal law, and, in case such law does not exist, in accordance with the applicable District of Columbia law.  Each Party consents to the jurisdiction of the Federal courts of the District of Columbia and hereby waives any right or basis it may have to object to such jurisdiction.
26.22	Time Limits.  If the final date of any period provided for in this Lease falls on a Saturday, Sunday or legal holiday under the laws of the District of Columbia, then in such event such period shall be deemed extended to the next day that is not Saturday, Sunday or legal holiday under such laws.
	26.23	Counterparts; Facsimile Copies.  This Lease may be executed in several counterparts, each of which shall constitute the same instrument.  Signed copies of this Lease may be exchanged by facsimile and all signatures exchanged by facsimile may be relied upon and shall have the same force and effect as if original signatures were exchanged. [From Parcel Lease.]
	
	26.24	Consent Standards and Timing.  Unless otherwise indicated, where AFRH is required to give its consent pursuant to the terms of this Agreement, such consent shall not be unreasonably withheld, conditioned or delayed.  Unless otherwise indicated, if no specific response period is given, then if within ten (10) business days of receipt of a consent request from Lessee, AFRH does not approve or reject in writing a consent request, the consent so requested shall be irrevocably deemed given.

	26.25	Financing Related Revisions.  In connection with Lessee's financing of all or any portion of the Leased Premises with an Approved Lender, the parties hereto agree to revise this Agreement to accommodate the Approved Lenders commercially reasonable requests for revisions made in connection with such financing so long as such requests to not materially increase either party's obligations hereunder.
[INTERNAL – Lacks Time Is of the Essence Provision – to our benefit?]
ARTICLE XXVII	 REPORTING PROVISIONS
27.1	Complete Records.  At all times during the Lease Term, Lessee shall maintain at its principal place of business or such other place as agreed to by the Parties, a complete and accurate set of files, books and records of all business activities and operations conducted in connection with performance under this Lease.  Lessee’s records and accounts shall reflect, with respect to each asset subject to this Lease, all items of revenue and expense allocable to the management and disposition of such asset, as well as information regarding the status of each such asset including appraisal, title to improvements, marketing and other information as required.  At all times during the Lease Term, AFRH may, at such reasonable times, inspect and request copies of any of Lessee’s records, files, reports, and related material pertaining to the assets and to the performance under this Lease.
27.2	Additional Record Keeping and Delivery.  Lessee agrees that AFRH, or any of its duly authorized representatives, shall, until the expiration of three (3) years after the expiration or earlier termination of this Lease, have access to and the right to examine any directly pertinent books, documents, papers, and records of Lessee involving transactions related to the Leased Premises.  Lessee shall keep and maintain accurate, true, and complete books and records, which shall fully reflect the financial condition, occupancy, physical condition, maintenance, and operational status of the Project, together with all business licenses and permits required to be kept and maintained pursuant to the provisions of any Applicable Laws now or hereafter in effect.  All books and records shall be kept at Lessee’s principal office, or at the Project, or at such other place as AFRH and Lessee both agree upon in writing.  AUpon AFRH's written request, a complete duplicate set of the books and records shall be kept at a separate location mutually agreeable to the Parties at AFRH's sole expense.  AFRH is herewith granted the right to photocopies of same, at the sole expense of Lessee.  Lessee shall deliver to AFRH, upon such schedule as AFRH may establish from time to time, and in such media, including electronic media as AFRH shall select, all information and supporting documentation which Lessee has maintained or which, if reasonably available, which AFRH needs to assess the financial condition, performance, occupancy, physical condition, maintenance and operational status of the Project.  Such items shall: (a) be in a form satisfactory to AFRH; (b) be certified to AFRH as true, complete, and accurate in all material respects by Lessee; and (c) be taken from the books and records maintained by Lessee as aforesaid.  Lessee shall furnish to AFRH all of the following documents, statements, reports, and other information in the manner provided below:
A.	27.2.1   At any time upon the, within thirty (30) days of a written request of AFRH:
27.2.1.1	a rent roll for the Leased Premises showing the name of each Tenant, the space occupied, the lease expiration date, the rent payable for the current month, the date through which rent has been paid, and any requested related information;
27.2.1.2	a monthly property management report for the Leased Premises, showing deposits received from Tenants, materials relating to marketing and leasing efforts for the Leased Premises, and any other information requested by AFRH;
27.2.1.3	a monthly maintenance report for the Leased Premises;
27.2.1.4	within27.2.2	Within fifteen (15) days after the end of each month in which Lessee has received notice that a default under this Lease has occurred and/or is continuing, monthly income statements for the Leased Premises, including calculations of net cash flow;
27.2.1.5	within27.2.3	Within thirty (30) days of its filing with the required Federal, state or local agencies, all income, real and personal property and any other tax returns and any other tax filings relating to Lessee and/or the Leased Premises;
27.2.1.6	within27.2.4	Within fifteen (15) days following Lessee’s receipt of same, copies of any and all default or deficiency notices provided to Lessee by any mortgagee on an approved loan, any government agency, or any insurance company or other party; and
27.2.1.7	within ten (1027.2.5	Within thirty (30) days after receipt of a written request by AFRH, such additional information as may reasonably be requested by AFRH and which is reasonably available to Lessee.
ARTICLE XXVIII	 REPRESENTATIONS AND WARRANTIES
28.1	Lessee hereby makes the following representations and warranties, solely for the benefit of AFRH and any Approved Mortgagee, as of the date of execution of this Lease:
28.1.1	The persons executing this Lease on behalf of Lessee have the full right, power and authority to execute and deliver this Lease as Lessee's act and deed and to bind Lessee hereto. Lessee has the full right, power and authority, and has obtained all necessary authorizations and consents, to enter into and perform its obligations under this Lease. 
28.1.2	This Lease is a legal, valid and binding obligation of Lessee, enforceable against Lessee in accordance with its terms.
28.1.3	The execution and delivery of this Lease by Lessee will not result in a breach of the terms or provisions of, or constitute a default (or a condition that, upon notice or lapse of time, or both, could constitute a default) under its organizational documents or any indenture, agreement or obligation by which Lessee is bound, and will not constitute a violation of any Applicable Laws.
28.1.4	No litigation is being threatened or prosecuted against Lessee that might impair Lessee's ability to execute and deliver this Lease or perform any of its obligations hereunder.
ARTICLE XXIX	 AMENDMENTS
29.1	This Lease may be amended at any time by mutual agreement of the Parties in writing and signed by a duly authorized representative of each of AFRH and Lessee.  Such amendments may include, but are not limited to, extensions of the Lease Termination Date.  Guarantor acknowledges and agrees that (a) its consent and approval are not required for any such amendment; and (b) the Guaranty shall at all times and for all purposes be deemed to extend to and cover Lessee’s obligations and liabilities under any such amendment, regardless of whether the Guarantor had prior notice of such amendment.
ARTICLE XXX	 EXHIBITS
30.1	The following exhibits are attached to and made a part of this Lease:
30.1.1	Exhibit A	Description and Plat of Leased Premises
30.1.2	Exhibit B	Redevelopment Area
30.1.3	Exhibit C	Leased Premises
30.1.4	Exhibit C-1	Existing Buildings and Existing Infrastructure
30.1.5	Exhibit C-2	LaGarde Building and Parking Area
30.1.6	Exhibit D	Lessee’s Acknowledgement of Conditions
30.1.7	Exhibit E	Permitted Exceptions  
30.1.8	Exhibit F	Form of Parcel Ground Lease 
30.1.9	Exhibit G	Form of Guaranty
30.1.10Exhibit H	Development Agreement
30.1.11Exhibit I	Historic Structures

[SIGNATURES ON THE FOLLOWING PAGE]
  
IN WITNESS WHEREOF, each of the Parties has caused its duly authorized representative to execute and deliver this Lease on its behalf as of the Effective Date.
ARMED FORCES RETIREMENT HOME

Signed, sealed and delivered			UNITED STATES OF AMERICA, acting by
in the presence of:				and through the DEPARTMENT OF DEFENSE,
						Secretary of Defense

_______________________________	By: __________________________
Witness
						Name: _______________________

_______________________________	Title:_________________________
Witness

LESSEE

_______________________________	By: __________________________
Witness
						Name: _______________________

_______________________________	Title:_________________________

GUARANTOR

_______________________________	By: __________________________
Witness
						Name: _______________________

_______________________________	Title:_________________________
Witness

EXHIBIT A
DESCRIPTION AND PLAT OF AFRH-W

EXHIBIT B
REDEVELOPMENT AREA

EXHIBIT C
LEASED PREMISES

EXHIBIT C-1
EXISTING BUILDINGS AND EXISTING INFRASTRUCTURE

EXHIBIT C-2
LAGARDE BUILDING AND PARKING AREA

EXHIBIT D
LESSEE’S ACKNOWLEDGEMENT OF CONDITIONS
_________________, 2006

Re:	Armed Forces Retirement Home Redevelopment

This is to confirm that the undersigned, as the Selected Offeror under the RFP for the above referenced matter, of the Leased Premises pursuant to that certain Master Lease by and between the THE ARMED FORCES RETIREMENT HOME, acting by and through The Secretary of Defense (“AFRH”), and the Selected Offeror (the “Master Lease”), which Leased Premises consists of a portion of the approximately seventy-seven (77) acres located in Zones 3 and 4 of the redevelopment area (the “Project Area”) of the Armed Forces Retirement Home, located in Washington, D.C. located west of North Capitol Street, N.W., and north of Irving Street, N.W., as shown on the plat attached as Exhibit C to the Master Lease, has inspected the Leased Premises and all environmental reports concerning the Leased Premises provided to Lessee by AFRH, is generally familiar with the condition and characteristics of the Leased Premises and agrees to accept the Leased Premises “as-is, where-is”, without any representation or warranty by AFRH concerning its condition and without any obligation on the part of AFRH to make any alterations, repairs or additions, in accordance with the terms of the Project Plan and the aforementioned Master Lease.  

LESSEE

___________________________________
By: ________________________________
Name: _____________________________
Title: ______________________________

EXHIBIT E
PERMITTED ENCUMBRANCES

EXHIBIT F
PARCEL LEASE

EXHIBIT G
GUARANTY

EXHIBIT H
DEVELOPMENT AGREEMENT 

EXHIBIT I
HISTORIC STRUCTURES

 Document comparison done by DeltaView on Friday, October 27, 2006 9:27:17 AM
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Document 1	file://C:/WINDOWS/Profiles/lrk01/Desktop/10.11.06_AFRH Master Lease - Developer Review Draft.DOC 	
Document 2	file://C:/WINDOWS/Profiles/lrk01/Desktop/10-27 Master Lease.DOC 	
Rendering set	Venable	

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