Cra International, Inc 10-Q for FY2025 Q2
Cra International, Inc. (CRAI)
10-Q
2025-07-31
For: 2025-06-28
View Original
Added on
April 08, 2026
About this 10-Q
Cra International, Inc filed this 10-Q on July 31, 2025, covering the quarter ended June 28, 2025 (FY2025 Q2).
Headline figures
Quarter ended June 28, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $186.88M
- up 9.0% from $171.44M a year earlier
- Net income
- $12.12M
- up 85.4% from net income of $6.54M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________________________________
FORM 10-Q
________________________________________________________________________________________
For the quarterly period ended June 28, 2025
OR
For the transition period from to
Commission file number: 000-24049
________________________________________________________________________________________
(Exact name of registrant as specified in its charter)
________________________________________________________________________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(617 ) 425-3000
(Registrant’s telephone number, including area code)
_____________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| x | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company | |||||||||||||||||||||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at July 25, 2025 | |||||||||||||
| Common Stock, no par value per share | ||||||||||||||
CRA International, Inc.
INDEX
2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
| Fiscal Quarter Ended | Fiscal Year-to-Date Period Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Revenues | $ | $ | $ | $ | |||||||||||||||||||
| Costs of services (exclusive of depreciation and amortization) | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Foreign currency gains (losses), net | ( | ( | ( | ( | |||||||||||||||||||
| Income before provision for income taxes | |||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Net income per share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average number of shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
3
CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
(in thousands)
| Fiscal Quarter Ended | Fiscal Year-to-Date Period Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss) | |||||||||||||||||||||||
| Foreign currency translation adjustments, net of tax | ( | ( | |||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
4
CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share data)
| June 28, 2025 | December 28, 2024 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowances of $ | |||||||||||
Unbilled services, net of allowances of $ | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Forgivable loans | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Goodwill, net | |||||||||||
| Intangible assets, net | |||||||||||
| Right-of-use assets | |||||||||||
| Deferred income taxes | |||||||||||
| Forgivable loans, net of current portion | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses | |||||||||||
| Deferred revenue and other liabilities | |||||||||||
| Current portion of lease liabilities | |||||||||||
| Current portion of deferred compensation | |||||||||||
| Revolving line of credit | |||||||||||
| Total current liabilities | |||||||||||
| Non-current liabilities: | |||||||||||
| Deferred compensation and other non-current liabilities | |||||||||||
| Non-current portion of lease liabilities | |||||||||||
| Deferred income taxes | |||||||||||
| Total non-current liabilities | |||||||||||
| Commitments and contingencies (Note 10) | |||||||||||
| Shareholders’ equity: | |||||||||||
Preferred stock, | |||||||||||
Common stock, | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total shareholders’ equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
See accompanying notes to the condensed consolidated financial statements.
5
CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands)
| Fiscal Year-to-Date Period Ended | |||||||||||
| June 28, 2025 | June 29, 2024 | ||||||||||
| OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Right-of-use asset amortization | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Share-based compensation expense | |||||||||||
| Bad debt expense (recovery) | |||||||||||
| Unrealized foreign currency remeasurement (gains) losses, net | ( | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | |||||||||||
| Unbilled services | ( | ( | |||||||||
| Prepaid expenses and other current assets, and other assets | ( | ( | |||||||||
| Forgivable loans | ( | ( | |||||||||
| Incentive cash awards payable | |||||||||||
| Accounts payable, accrued expenses, and other liabilities | ( | ( | |||||||||
| Lease liabilities | ( | ( | |||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| INVESTING ACTIVITIES: | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Consideration paid for acquisition | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| FINANCING ACTIVITIES: | |||||||||||
| Borrowings under revolving line of credit | |||||||||||
| Repayments under revolving line of credit | ( | ( | |||||||||
| Tax withholding payments reimbursed by shares | ( | ( | |||||||||
| Cash dividends paid | ( | ( | |||||||||
| Repurchase of common stock | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Effect of foreign exchange rates on cash and cash equivalents | ( | ||||||||||
| Net decrease in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Noncash investing and financing activities: | |||||||||||
| Increase (decrease) in accounts payable and accrued expenses for property and equipment | $ | ( | $ | ||||||||
| Excise tax on share repurchases | $ | ( | $ | ( | |||||||
| Right-of-use assets obtained in exchange for lease obligations | $ | $ | |||||||||
| Supplemental cash flow information: | |||||||||||
| Cash paid for taxes | $ | $ | |||||||||
| Cash paid for interest | $ | $ | |||||||||
| Cash paid for amounts included in operating lease liabilities | $ | $ | |||||||||
See accompanying notes to the condensed consolidated financial statements.
6
CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED June 28, 2025 (unaudited)
(in thousands, except share data)
| Common Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | ||||||||||||||||||||||||||
| Shares Issued | Amount | ||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 28, 2024 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | ||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | ||||||||||||||||||||||||||
| Restricted shares vesting | — | — | — | — | |||||||||||||||||||||||||
| Redemption of vested employee restricted shares for tax withholding | ( | ( | — | — | ( | ||||||||||||||||||||||||
| Shares repurchased | — | ||||||||||||||||||||||||||||
| Accrued excise tax on shares repurchased | — | — | — | ||||||||||||||||||||||||||
| Accrued dividends on unvested shares | — | — | — | ||||||||||||||||||||||||||
Cash dividends paid ($ | — | — | ( | — | ( | ||||||||||||||||||||||||
| BALANCE AT MARCH 29, 2025 | $ | $ | ( | $ | |||||||||||||||||||||||||
| Net income | — | $ | — | $ | $ | — | $ | ||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | ||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | ||||||||||||||||||||||||||
| Restricted shares vesting | — | — | — | — | |||||||||||||||||||||||||
| Redemption of vested employee restricted shares for tax withholding | ( | ( | — | — | ( | ||||||||||||||||||||||||
| Shares repurchased | ( | ( | ( | — | ( | ||||||||||||||||||||||||
| Accrued excise tax on shares repurchased | — | — | ( | — | ( | ||||||||||||||||||||||||
| Accrued dividends on unvested shares | — | — | — | ||||||||||||||||||||||||||
Cash dividends paid ($ | — | — | ( | — | ( | ||||||||||||||||||||||||
| BALANCE AT JUNE 28, 2025 | $ | $ | ( | $ | |||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
7
CRA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
FOR THE FISCAL YEAR-TO-DATE PERIOD ENDED June 29, 2024 (unaudited)
(in thousands, except share data)
| Common Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | ||||||||||||||||||||||||||
| Shares Issued | Amount | ||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 30, 2023 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | ( | ( | ||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | ||||||||||||||||||||||||||
| Restricted shares vesting | — | — | — | — | |||||||||||||||||||||||||
| Redemption of vested employee restricted shares for tax withholding | ( | ( | — | — | ( | ||||||||||||||||||||||||
| Shares repurchased | ( | ( | — | ( | |||||||||||||||||||||||||
| Accrued excise tax on shares repurchased | — | — | ( | — | ( | ||||||||||||||||||||||||
| Accrued dividends on unvested shares | — | — | — | ||||||||||||||||||||||||||
Cash dividends paid ($ | — | — | ( | — | ( | ||||||||||||||||||||||||
| BALANCE AT MARCH 30, 2024 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| Net income | — | — | — | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | — | — | ( | ( | ||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | ||||||||||||||||||||||||||
| Restricted shares vesting | — | — | — | — | |||||||||||||||||||||||||
| Redemption of vested employee restricted shares for tax withholding | ( | ( | — | — | ( | ||||||||||||||||||||||||
| Shares repurchased | ( | ( | ( | — | ( | ||||||||||||||||||||||||
| Accrued excise tax on shares repurchased | — | — | ( | — | ( | ||||||||||||||||||||||||
| Accrued dividends on unvested shares | — | — | ( | — | ( | ||||||||||||||||||||||||
Cash dividends paid ($ | — | — | ( | — | ( | ||||||||||||||||||||||||
| BALANCE AT JUNE 29, 2024 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
See accompanying notes to the condensed consolidated financial statements.
8
CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies
Description of Business
CRA International, Inc. and its wholly-owned subsidiaries (collectively, "CRA" or the "Company") is a worldwide leading consulting services firm that applies advanced analytic techniques and in-depth industry knowledge to complex engagements for a broad range of clients. CRA offers services in two broad areas: litigation, regulatory, and financial consulting and management consulting. CRA operates in one business segment. CRA operates its business under its registered trade name, Charles River Associates.
Basis of Presentation
Note 1 to the Consolidated Financial Statements included in Part II, Item 8, on Form 10-K for the fiscal year ended December 28, 2024 describes the significant accounting policies and methods used in preparation of the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
Recent Accounting Standards Not Yet Adopted
Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). The ASU expands annual disclosures in an entity’s income tax rate reconciliation table and requires annual disclosures regarding cash taxes paid both in the U.S. (federal, state and local) and foreign jurisdictions. ASU 2023-09 also requires income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.
ASU 2023-09 is effective for CRA for annual periods beginning after December 15, 2024. CRA plans to adopt the amendment during the annual reporting for fiscal year 2025. CRA has begun to assess the impact of the amendment and has modeled out the changes to its income tax disclosures. As the amendment relates solely to disclosures, the adoption is not expected to have an effect on CRA's financial results.
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). The
9
CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
ASU requires disclosure, in the notes to the financial statements, specified information about certain costs and expenses including employee compensation, depreciation, and intangible asset amortization.
ASU 2024-03, further clarified in ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense
Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date is effective for CRA for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. CRA expects the adoption of this ASU will have no impact on its financial position or its results of operations, but will result in additional disclosures.
2. Revenues and Allowances
The contracts CRA enters into and operates under specify whether the projects are billed on a time-and-materials or a fixed-price basis. Time-and-materials contracts are typically used for litigation, regulatory, and financial consulting projects while fixed-price contracts are principally used for management consulting projects. In general, project costs are classified in costs of services and are based on the direct salary of CRA’s employee consultants on the engagement, plus all direct expenses incurred to complete the project, including any amounts billed to CRA by its non-employee experts.
Disaggregation of Revenue
The following tables disaggregate CRA’s revenue by type of contract and geographic location (in thousands):
| Fiscal Quarter Ended | Fiscal Year-to-Date Period Ended | |||||||||||||||||||||||||
| Type of Contract | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||||
| Consulting services revenues: | ||||||||||||||||||||||||||
| Fixed-price | $ | $ | $ | $ | ||||||||||||||||||||||
| Time-and-materials | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
Revenues have been attributed to locations based on the location of the legal entity generating the revenues.
| Fiscal Quarter Ended | Fiscal Year-to-Date Period Ended | |||||||||||||||||||||||||
| Geographic Breakdown | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||||
| Consulting services revenues: | ||||||||||||||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
Reserves for Variable Consideration and Credit Risk
Revenues from CRA's consulting services are recorded at the net transaction price, which includes estimates of variable consideration for which reserves are established. Variable consideration reserves are based on specific price concessions and those expected to be extended to CRA customers estimated by CRA's historical realization rates. Reserves for variable consideration are recorded as a component of the allowances for accounts receivable and unbilled services on the condensed consolidated balance sheets. Adjustments to the reserves for variable consideration are included in revenues on the condensed consolidated statements of operations.
10
CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
CRA also maintains allowances for accounts receivable and unbilled services for estimated losses resulting from clients’ failure to make required payments. Under ASC Topic 326, Financial Instruments—Credit Losses, CRA estimates allowances based on historical charge-off rates, adjusted for days sales outstanding and expected changes to clients’ financial conditions during the anticipated collection period. Bad debt expense, net of recoveries of previously written off allowances, is recorded as a component of selling, general and administrative expenses on the condensed consolidated statements of operations.
The following table presents CRA's bad debt expense, net of recoveries of previously written off allowances (in thousands):
| Fiscal Quarter Ended | Fiscal Year-to-Date Period Ended | |||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||||||
| Bad debt expense (recovery), net | $ | $ | $ | $ | ||||||||||||||||||||||
Reimbursable Expenses
Revenues also include reimbursements for costs incurred by CRA in fulfilling its performance obligations, including travel and other out-of-pocket expenses, fees for outside consultants, and other reimbursable expenses. CRA recovers substantially all of these costs. The following expenses are subject to reimbursement (in thousands):
| Fiscal Quarter Ended | Fiscal Year-to-Date Period Ended | |||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||||||
| Reimbursable expenses | $ | $ | $ | $ | ||||||||||||||||||||||
Contract Balances from Contracts with Customers
The timing of revenue recognition, billings, and cash collections results in accounts receivables, unbilled services, and contract liabilities on the condensed consolidated balance sheets. Revenues recognized for services performed, but not yet billed to clients, are recorded as unbilled services. The following table presents the open and closing balances of CRA's accounts receivable, net and unbilled services, net (in thousands):
| June 28, 2025 | December 28, 2024 | December 30, 2023 | ||||||||||||||||||
| Accounts receivable, net | $ | $ | $ | |||||||||||||||||
| Unbilled services, net | $ | $ | $ | |||||||||||||||||
CRA defines contract assets as assets for which it has recorded revenue because it determines that it is probable that it will earn a performance-based or contingent fee, but is not yet entitled to receive a fee because certain events, such as completion of the measurement period or client approval, must occur. The contract assets balance was immaterial as of June 28, 2025, December 28, 2024, and December 30, 2023.
When consideration is received, or such consideration is unconditionally due from a customer prior to transferring consulting services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after performance obligations have been satisfied and all revenue recognition criteria have been met. Contract liabilities are included in deferred revenue and other liabilities in the condensed consolidated balance sheets. The following table presents the closing balances of CRA's contract liabilities (in thousands):
| June 28, 2025 | December 28, 2024 | December 30, 2023 | ||||||||||||||||||
| Contract liabilities | $ | $ | $ | |||||||||||||||||
11
CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
CRA recognized the following revenue that was included in the contract liabilities balance as of the opening of the respective period or for performance obligations satisfied in previous periods (in thousands):
| Fiscal Quarter Ended | Fiscal Year-to-Date Period Ended | |||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||||||
| Amounts included in contract liabilities at the beginning of the period | $ | $ | $ | $ | ||||||||||||||||||||||
| Performance obligations satisfied in previous periods | $ | $ | $ | $ | ||||||||||||||||||||||
3. Forgivable Loans
In order to attract and retain highly skilled professionals, CRA may issue forgivable loans to employees and non-employee experts, certain of which may be denominated in local currencies. A portion of these loans is collateralized. The forgivable loans have terms that are generally between and years with interest rates currently between 0.43 % and 5.12 %. The principal amount of forgivable loans and accrued interest is forgiven by CRA over the term of the loans, so long as the employee or non-employee expert continues employment or affiliation with CRA and complies with certain contractual requirements. During the fiscal year-to-date period ended June 28, 2025 and fiscal year 2024 there were no balances due under these loans for which the full principal and interest were not forgiven or not collected upon termination of employment or affiliation with CRA. The forgiveness of the principal amount of the loans is recorded as compensation over the service period, which is consistent with the term of the loans.
The following table presents forgivable loan activity for the respective periods (in thousands):
| June 28, 2025 | December 28, 2024 | |||||||||||||
| Beginning balance | $ | $ | ||||||||||||
| Advances | ||||||||||||||
| Repayments | ( | ( | ||||||||||||
Reclassifications from accrued expenses or to other assets (1) | ( | |||||||||||||
Amortization (2) | ( | ( | ||||||||||||
| Effects of foreign currency translation | ( | |||||||||||||
| Ending balance | $ | $ | ||||||||||||
| Current portion of forgivable loans | $ | $ | ||||||||||||
| Non-current portion of forgivable loans | $ | $ | ||||||||||||
_______________________________
(1)Relates to the reclassification of performance awards previously recorded as accrued expenses or forgivable loans that have been reclassified to other receivables.
4. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the fiscal year-to-date period ended June 28, 2025 are summarized as follows (in thousands):
12
CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
| Goodwill, at December 28, 2024 | $ | |||||||
| Accumulated goodwill impairment | ( | |||||||
| Goodwill, net at December 28, 2024 | ||||||||
| Foreign currency translation adjustment | ||||||||
| Goodwill, net at June 28, 2025 | $ | |||||||
Goodwill, net at June 28, 2025 is comprised of goodwill of $166.8 million and accumulated impairment of $71.9 million. There were no
Intangible assets that are separable from goodwill and have determinable useful lives are valued separately and amortized using the straight-line method over their expected useful lives. There were no
The components of acquired identifiable intangible assets are as follows (in thousands):
| June 28, 2025 | December 28, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Useful Life (in years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
5. Accrued Expenses
Accrued expenses consist of the following (in thousands):
| June 28, 2025 | December 28, 2024 | ||||||||||
| Compensation and related expenses | $ | $ | |||||||||
| Performance awards | |||||||||||
| Direct project accruals | |||||||||||
| Other | |||||||||||
| Total accrued expenses | $ | $ | |||||||||
As of June 28, 2025 and December 28, 2024, approximately $82.6 million and $144.2 million, respectively, of accrued bonuses were included above in “Compensation and related expenses.”
6. Income Taxes
For the fiscal quarters ended June 28, 2025 and June 29, 2024, CRA’s effective income tax rate (“ETR”) was 29.2 % and 32.0 %, respectively. The ETR for the second quarter of fiscal 2025 was lower than the second quarter of fiscal 2024 primarily due to the impact of state tax law changes effective for the 2025 tax year as well as an ETR true-up adjustment during the second quarter of fiscal 2024 that was substantially less in the current period. The impact of these items were partially offset by a tax reserve recognized in the estimated annual effective tax rate of fiscal 2025.
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CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
For the fiscal year-to-date periods ended June 28, 2025 and June 29, 2024, CRA's ETR was 27.9 % and 29.3 %, respectively. The ETR for the current fiscal year-to-date period was lower than the prior year-to-date period primarily due to the impact of state tax law changes effective for the 2025 tax year and an increased benefit related to share-based compensation and the foreign-derived intangible income (“FDII”) deduction. The impact of these items were partially offset by a tax reserve recognized in the estimated annual effective tax rate of fiscal 2025.
7. Net Income Per Share
CRA calculates basic earnings per share using the two-class method. CRA calculates diluted earnings per share using the more dilutive of either the two-class method or treasury stock method. The two-class method was more dilutive for the fiscal quarters and fiscal year-to-date periods ended June 28, 2025 and June 29, 2024.
Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all the net earnings for the period had been distributed. CRA's participating securities consist of unvested share-based payment awards that contain a nonforfeitable right to receive dividends and therefore are considered to participate in undistributed earnings with common shareholders. Net earnings allocable to these participating securities were not material for the fiscal quarters and fiscal year-to-date periods ended June 28, 2025 and June 29, 2024.
The following table presents the calculation of basic and diluted net income per share (in thousands, except per share data):
| Fiscal Quarter Ended | Fiscal Year-to-Date Period Ended | |||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | |||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||
| Net income — basic | $ | $ | $ | $ | ||||||||||||||||||||||
| Less: net income attributable to participating shares | ||||||||||||||||||||||||||
| Net income — diluted | $ | $ | $ | $ | ||||||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||
| Weighted average shares outstanding — basic | $ | $ | ||||||||||||||||||||||||
| Effect of dilutive stock options and restricted stock units | ||||||||||||||||||||||||||
| Weighted average shares outstanding — diluted | ||||||||||||||||||||||||||
| Net income per share: | ||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||||||||||||
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CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
8. Fair Value of Financial Instruments
As of June 28, 2025 and December 28, 2024, CRA did not have any financial instruments measured at fair value on a recurring basis.
CRA had no contingent consideration obligations during the fiscal quarter and fiscal year-to-date period ended June 28, 2025.
The contingent consideration liability pertained to estimated future contingent consideration payments related to the acquisition of bioStrategies Group, Inc. during fiscal 2022. The following table summarizes the changes in the contingent consideration liability for the fiscal year ended December 28, 2024 (in thousands):
| Fiscal Year Ended | ||||||||||||||
| December 28, 2024 | ||||||||||||||
| Beginning balance | $ | |||||||||||||
| Remeasurement of acquisition-related contingent consideration | ( | |||||||||||||
| Accretion | ||||||||||||||
| Ending balance | $ | |||||||||||||
9. Credit Agreement
CRA is party to a Credit Agreement, dated as of August 19, 2022 (as amended, the "Credit Agreement") with Bank of America, N.A., as swingline lender, a letter of credit issuing bank and administrative agent, and with Citizens Bank, N.A., as a letter of credit issuing bank. The Credit Agreement provides CRA with a $250.0 million revolving credit facility, which may be decreased at CRA's option to $200.0 million during the period from July 16 in a year through January 15 in the next year. Additionally, for the period from January 16 to July 15 of each calendar year, CRA may elect to not increase the revolving credit facility to $250.0 million. The revolving credit facility includes a $25.0 million sublimit for the issuance of letters of credit.
Under the Credit Agreement, CRA must comply with various financial and non-financial covenants. The primary financial covenants consist of a maximum consolidated net leverage ratio of 3.0 to 1 and a minimum consolidated interest coverage ratio of 2.5 to 1. The primary non-financial covenants include, but are not limited to, restrictions on CRA's ability to incur future indebtedness, engage in acquisitions or dispositions, pay dividends or repurchase capital stock, and enter into business combinations. Any indebtedness outstanding under the revolving credit facility may become immediately due upon the occurrence of stated events of default, including CRA's failure to pay principal, interest or fees, or upon the breach of any covenant. As of June 28, 2025, CRA was in compliance with the covenants of the Credit Agreement.
There were $120.0 million in borrowings outstanding under the revolving credit facility as of June 28, 2025 and no borrowings outstanding as of December 28, 2024. As of June 28, 2025, the amount available under the revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $3.5 million.
10. Commitments and Contingencies
As described in Note 9, CRA is party to standby letters of credit with its banks in support of minimum future lease payments under certain operating leases for office space.
CRA is subject to legal actions arising in the ordinary course of business. In management’s opinion, based on current knowledge, CRA believes it has adequate legal defenses or insurance coverage, or both, with respect to the eventuality of such actions. CRA does not believe any settlement or judgment relating to any pending legal action would materially affect its financial position or results of operations. However, the outcome of such legal actions is inherently unpredictable and subject to inherent uncertainties.
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CRA INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
11. Segment Reporting
CRA manages its business globally within one operating segment, professional and consulting services, in accordance with ASC Topic 280, Segment Reporting. The accounting policies of the professional and consulting services segment are the same as those described in Note 1 of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024, filed with the SEC on February 20, 2025.
The chief operating decision maker, which is our Chief Executive Officer, assesses performance for the professional and consulting services segment and decides how to allocate resources based on consolidated net income that is also reported in the condensed consolidated statements of operations as net income. The measure of segment assets is reported in the condensed consolidated balance sheets as total assets.
The following table represents consolidated net income reported by segment revenue, segment profit or loss, and significant segment expenses (in thousands):
| Fiscal Quarter Ended | Fiscal Year-to-Date Period Ended | ||||||||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | |||||||||||||||||||||||||
| Employee compensation and fringe benefit costs | |||||||||||||||||||||||||||||
| Forgivable loan amortization | |||||||||||||||||||||||||||||
| Client reimbursable expenses | |||||||||||||||||||||||||||||
Other segment expense (1) | |||||||||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||||||||
| Segment net income | |||||||||||||||||||||||||||||
| Reconciliation of profit or loss | |||||||||||||||||||||||||||||
| Adjustments and reconciling items | |||||||||||||||||||||||||||||
| Consolidated net income | $ | $ | $ | $ | |||||||||||||||||||||||||
1 Other segment expenses included in segment net income includes, rent, commissions to non-employee experts, legal and professional services, software subscription and data services, travel and entertainment expenses, training and marketing expenses, other operating expenses, depreciation and amortization, interest expense, net, and foreign currency gains (losses), net. | |||||||||||||||||||||||||||||
12. Subsequent Events
On July 31, 2025, CRA announced that its Board of Directors declared a quarterly cash dividend of $0.49 per common share, payable on September 12, 2025 to shareholders of record as of August 26, 2025.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Except for historical facts, the statements in this quarterly report are forward-looking statements. Forward-looking statements are merely our current predictions of future events. These statements are inherently uncertain, and actual events could differ materially from our predictions. Important factors that could cause actual events to vary from our predictions include those discussed below under the heading “Risk Factors.” We assume no obligation to update our forward-looking statements to reflect new information or developments. We urge readers to review carefully the risk factors described in the other documents that we file with the Securities and Exchange Commission ("SEC"). You can read these documents at www.sec.gov.
Additional Available Information
Our principal Internet address is www.crai.com. Our website provides a link to a third-party website through which our annual, quarterly, and current reports, and amendments to those reports, are available free of charge. We do not maintain or provide any information directly to the third-party website, and we do not check its accuracy.
Critical Accounting Policies and Estimates
Our critical accounting policies involving the more significant estimates and judgments used in the preparation of our financial statements as of June 28, 2025 remain unchanged from December 28, 2024. Please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024, filed with the SEC on February 20, 2025 for details on these critical accounting policies.
Recent Accounting Standards
There are no recent accounting standards that impact the unaudited condensed consolidated financial statements.
Results of Operations—For the Fiscal Quarter and Fiscal Year-to-Date Period Ended June 28, 2025, Compared to the Fiscal Quarter and Fiscal Year-to-Date Period Ended June 29, 2024
The following table provides operating information as a percentage of revenues for the periods indicated:
| Fiscal Quarter Ended | Fiscal Year-to-Date Period Ended | ||||||||||||||||||||||
| June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024 | ||||||||||||||||||||
| Revenues | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
| Costs of services (exclusive of depreciation and amortization) | 68.8 | 73.1 | 67.5 | 71.1 | |||||||||||||||||||
| Selling, general and administrative expenses | 18.8 | 18.7 | 18.3 | 18.2 | |||||||||||||||||||
| Depreciation and amortization | 1.9 | 1.6 | 1.9 | 1.6 | |||||||||||||||||||
| Income from operations | 10.6 | 6.6 | 12.3 | 9.0 | |||||||||||||||||||
| Interest expense, net | (1.0) | (0.9) | (0.6) | (0.6) | |||||||||||||||||||
| Foreign currency gains (losses), net | (0.4) | (0.1) | (0.3) | (0.1) | |||||||||||||||||||
| Income before provision for income taxes | 9.2 | 5.6 | 11.3 | 8.3 | |||||||||||||||||||
| Provision for income taxes | 2.7 | 1.8 | 3.2 | 2.4 | |||||||||||||||||||
| Net income | 6.5 | % | 3.8 | % | 8.2 | % | 5.9 | % | |||||||||||||||
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Fiscal Quarter Ended June 28, 2025, Compared to the Fiscal Quarter Ended June 29, 2024
Revenues. Revenues increased by $15.5 million, or 9.0%, to $186.9 million for the second quarter of fiscal 2025 from $171.4 million for the second quarter of fiscal 2024. Utilization increased to 76% for the second quarter of fiscal 2025 from 74% for the second quarter of fiscal 2024, while consultant headcount decreased to 937 at the end of the second quarter of fiscal 2025 from 968 at the end of the second quarter of fiscal 2024.
Overall, revenues outside of the U.S. represented approximately 19% of net revenues for each of the second quarters of fiscal 2025 and fiscal 2024. Revenues derived from fixed-price projects decreased to 16% of net revenues for the second quarter of fiscal 2025 compared to 17% of net revenues for the second quarter of fiscal 2024. The percentage of revenue derived from fixed-price projects depends largely on the proportion of our revenues derived from our management consulting business, which typically has a higher concentration of fixed-price service contracts.
Costs of Services (exclusive of depreciation and amortization). Costs of services (exclusive of depreciation and amortization) increased by $3.2 million, or 2.6%, to $128.5 million for the second quarter of fiscal 2025 from $125.3 million for the second quarter of fiscal 2024. The increase in costs of services was due to an increase in employee and incentive compensation of $3.7 million, an increase in client reimbursable expenses of $3.3 million, and an increase in external consultants indirect project expenses of $0.4 million, partially offset by a decrease in forgivable loan amortization of $4.2 million. As a percentage of revenues, costs of services (exclusive of depreciation and amortization) decreased to 68.8% for the second quarter of fiscal 2025 from 73.1% for the second quarter of fiscal 2024.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $3.1 million, or 9.7%, to $35.1 million for the second quarter of fiscal 2025 from $32.0 million for the second quarter of fiscal 2024. Within this category of expenses, there was a $0.9 million increase in legal and professional service fees, a $0.8 million increase in commissions to non-employee experts, a $0.6 million increase in rent expense, a $0.4 million increase in travel and entertainment, and a $0.6 million increase in miscellaneous and other fees, partially offset by a $0.2 million decrease in employee and incentive compensation for the second quarter of fiscal 2025 as compared to the second quarter of fiscal 2024.
As a percentage of revenues, selling, general and administrative expenses increased to 18.8% for the second quarter of fiscal 2025 from 18.7% for the second quarter of fiscal 2024. Commissions to our non-employee experts increased to 2.4% of revenues for the second quarter of fiscal 2025 compared to 2.2% of revenues for the second quarter of fiscal 2024.
Provision for Income Taxes. The income tax provision was $5.0 million and the effective tax rate ("ETR") was 29.2% for the second quarter of fiscal 2025 compared to $3.1 million and 32.0% for the second quarter of fiscal 2024. The ETR for the second quarter of fiscal 2025 was lower than the second quarter of fiscal 2024 primarily due to the impact of state tax law changes effective for the 2025 tax year as well as a less significant ETR true-up adjustment in the current period compared to the second quarter of fiscal 2024 The impact of these items were partially offset by a tax reserve recognized in the estimated annual effective tax rate of fiscal 2025. The ETR for the first quarter of fiscal 2025 and 2024 were both higher than the combined federal and state statutory tax rate primarily due to nondeductible executive compensation and nondeductible meals and entertainment expenses, partially offset by the tax benefit related to share-based compensation and the FDII deduction.
Net Income. Net income increased to $12.1 million for the second quarter of fiscal 2025 from $6.5 million for the second quarter of fiscal 2024. The net income per diluted share was $1.79 per share for the second quarter of fiscal 2025, compared to $0.94 of net income per diluted share for the second quarter of fiscal 2024. Weighted average diluted shares outstanding decreased by approximately 158,000 shares to approximately 6,753,000 shares for the second quarter of fiscal 2025 from approximately 6,911,000 shares for the second quarter of fiscal 2024. The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since June 29, 2024, offset in part by the vesting of shares of restricted stock and time-vesting restricted stock units since June 29, 2024.
Fiscal Year-to-Date Period Ended June 28, 2025, Compared to the Fiscal Year-to-Date Period Ended June 29, 2024
Revenues. Revenues increased by $25.5 million, or 7.4%, to $368.7 million for the fiscal year-to-date period ended June 28, 2025 from $343.2 million for the fiscal year-to-date period ended June 29, 2024. Utilization increased to 76% for the fiscal year-to-date period ended June 28, 2025 from 74% for the fiscal year-to-date period ended June 29, 2024, while consultant headcount decreased from 968 at the end of the second quarter of fiscal 2024 to 937 at the end of the second quarter of fiscal 2025.
Overall, revenues outside of the U.S. represented approximately 18% of net revenues for the fiscal year-to-date periods ended June 28, 2025 and June 29, 2024. Revenues derived from fixed-price projects decreased to 16% of net revenues for the
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fiscal year-to-date periods ended June 28, 2025 compared to 17% of net revenues for the second quarter of fiscal 2024. The percentage of revenue derived from fixed-price projects depends largely on the proportion of our revenues derived from our management consulting business, which typically has a higher concentration of fixed-price service contracts.
Costs of Services (exclusive of depreciation and amortization). Costs of services (exclusive of depreciation and amortization) increased by $4.7 million, or 1.9%, to $248.9 million for the fiscal year-to-date period ended June 28, 2025 from $244.2 million for the fiscal year-to-date period ended June 29, 2024. The increase in costs of services was due to an increase of $10.5 million in employee compensation and fringe benefit costs, an increase of $2.7 million in client reimbursable expenses, and an increase of $0.7 million in external consultants indirect project expenses, partially offset by a decrease in forgivable loan amortization of $9.2 million. As a percentage of revenues, costs of services (exclusive of depreciation and amortization) decreased to 67.5% for the fiscal year-to-date period ended June 28, 2025 from 71.1% for the fiscal year-to-date period ended June 29, 2024.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $5.1 million, or 8.2%, to $67.6 million for the fiscal year-to-date period ended June 28, 2025 from $62.5 million for the fiscal year-to-date period ended June 29, 2024. Within this category of expenses, there was a $1.8 million increase in legal and professional service fees, $0.9 million increase in rent expense, a $0.8 million increase in commissions to our non-employee experts, $0.6 million increase in employee compensation and fringe benefit costs, a $0.6 million increase in travel and entertainment expense, and a $0.4 million increase in miscellaneous and other fees for the fiscal year-to-date period ended June 28, 2025 as compared to the fiscal year-to-date period ended June 29, 2024.
As a percentage of revenues, selling, general and administrative expenses increased to 18.3% for the fiscal year-to-date period ended June 28, 2025 from 18.2% for the fiscal year-to-date period ended June 29, 2024. Commissions to our non-employee experts increased to 2.3% of revenues for the fiscal year-to-date period ended June 28, 2025 compared to 2.2% of revenues for the fiscal year-to-date period ended June 29, 2024.
Provision for Income Taxes. The income tax provision was $11.6 million and the ETR was 27.9% for the fiscal year-to-date period ended June 28, 2025, compared to $8.4 million and 29.3% for the fiscal year-to-date period ended June 29, 2024. The ETR for the fiscal year-to-date period ended June 28, 2025 was lower than the fiscal year-to-date period ended June 29, 2024 primarily due to the impact of state tax law changes effective for the 2025 tax year and an increased benefit related to share-based compensation and the FDII deduction. The impact of these items were partially offset by a tax reserve recognized in the estimated annual effective tax rate of fiscal 2025. The ETR for the fiscal year-to-date periods ended June 28, 2025 and June 29, 2024 were both higher than the combined federal and state statutory tax rate primarily due to nondeductible executive compensation and nondeductible meals and entertainment expenses, partially offset by the tax benefit related to share-based compensation and the FDII deduction.
Net Income. Net income increased by $9.9 million to $30.1 million for the fiscal year-to-date period ended June 28, 2025 from $20.2 million for the fiscal year-to-date period ended June 29, 2024. The diluted net income per share was $4.42 for the fiscal year-to-date period ended June 28, 2025, compared to diluted net income per share of $2.90 for the fiscal year-to-date period ended June 29, 2024. Weighted average diluted shares outstanding decreased by approximately 154,000 to approximately 6,807,000 shares for the fiscal year-to-date period ended June 28, 2025 from approximately 6,961,000 shares for the fiscal year-to-date period ended June 29, 2024. The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since June 29, 2024, offset in part by the vesting of shares of restricted stock and time-vesting restricted stock units since June 29, 2024.
Liquidity and Capital Resources
Fiscal Year-to-Date Period Ended June 28, 2025
We believe that our current cash, cash equivalents, cash generated from operations, and amounts available under our revolving credit facility will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months. As of June 28, 2025, we had $19.4 million of cash and cash equivalents and $126.5 million of borrowing capacity under our revolving credit facility.
General. During the fiscal year-to-date period ended June 28, 2025, cash and cash equivalents decreased by $7.3 million. We completed the period with cash and cash equivalents of $19.4 million. The principal drivers of the decrease of cash and cash equivalents were the payment of a significant portion of our fiscal 2024 performance bonuses in the first quarter of fiscal 2025, forgivable loan advances, repurchase of shares, and the payment of dividends, offset by net borrowings of $120.0 million.
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At June 28, 2025, $5.2 million of our cash and cash equivalents was held within the U.S. We have sufficient sources of liquidity in the U.S., including cash flow from operations and availability on our revolving credit facility to fund U.S. operations for the next 12 months without the need to repatriate funds from our foreign subsidiaries.
Sources and Uses of Cash. During the fiscal year-to-date period ended June 28, 2025, net cash used in operating activities was $74.1 million. Net income was $30.1 million for the fiscal year-to-date period ended June 28, 2025. Uses of cash for operating activities included a decrease in accounts payable, accrued expenses, and other liabilities of $80.2 million, primarily due to the payment of a significant portion of our fiscal 2024 performance bonuses, an increase in forgivable loans for the period of $26.3 million which was primarily driven by $40.3 million of forgivable loan issuances, net of repayments, offset by $14.0 million of forgivable loan amortization, an increase of $16.5 million in unbilled receivables, a $9.4 million decrease in lease liabilities, and a $0.7 million increase in prepaid expenses and other current assets, and other assets. Partially offsetting these uses of cash was an increase of $6.0 million in incentive cash awards payable and a decrease of $5.2 million in accounts receivable.
Non-cash items included right-of-use amortization of $7.7 million, depreciation and amortization expense of $6.9 million, and share-based compensation expenses of $2.4 million.
During the fiscal year-to-date period ended June 28, 2025, net cash used in investing activities was $2.2 million, which consisted of capital expenditures, primarily related to computer equipment.
During the fiscal year-to-date period ended June 28, 2025, net cash provided by financing activities was $67.2 million, primarily as a result of net borrowings under the revolving credit facility of $120.0 million. Offsetting this increase in cash provided by financing activities were repurchases of common stock of $43.2 million, payment of cash dividends and dividend equivalents of $6.8 million, and tax withholding payments reimbursed by restricted shares on vesting of $2.8 million.
Lease Commitments
We are a lessee under certain operating leases for office space and equipment. Certain of our operating leases have terms that impose asset retirement obligations due to office modifications or the periodic redecoration of the premises, which are included in deferred compensation and other non-current liabilities on our condensed consolidated balance sheets and are recorded at a value based on their estimated discounted cash flows. At June 28, 2025, we expect to incur asset retirement obligation or redecoration obligation costs over the next twelve months of $0.2 million. The remainder of our asset retirement obligations and redecoration obligations are approximately $3.1 million and are expected to be paid between fiscal year 2026 and fiscal year 2035 when the underlying leases terminate or when the respective lease agreement requires redecoration. We expect to satisfy these lease and related obligations as they become due from cash generated from operations.
Indebtedness
CRA is party to a Credit Agreement, dated as of August 19, 2022 (as amended, the "Credit Agreement") with Bank of America, N.A., as swingline lender, a letter of credit issuing bank and administrative agent, and with Citizens Bank, N.A., as a letter of credit issuing bank. The Credit Agreement provides CRA with a $250.0 million revolving credit facility, which may be decreased at CRA's option to $200.0 million during the period from July 16 in a year through January 15 in the next year. Additionally, for the period from January 16 to July 15 of each calendar year, CRA may elect to not increase the revolving credit facility to $250.0 million. The revolving credit facility includes a $25.0 million sublimit for the issuance of letters of credit.
We may use the proceeds of the revolving credit loans under the Credit Agreement for general corporate purposes and may repay any borrowings under the revolving credit facility at any time, but any borrowings must be repaid no later than August 19, 2027. Borrowings under the revolving credit facility bear interest at a rate per annum equal to one of the following rates, at our election, plus an applicable margin as described below: (i) in the case of borrowings in U.S. dollars by us, the Base Rate (as defined in the Credit Agreement), (ii) in the case of borrowings in U.S. dollars, a rate based on Term SOFR (as defined in the Credit Agreement) for the applicable interest period, (iii) in the case of borrowings in Euros, EURIBOR (as defined in the Credit Agreement) for the applicable interest period, (iv) in the case of borrowings in Pounds Sterling, a daily rate based on SONIA (as defined in the Credit Agreement), (v) in the case of borrowings in Canadian Dollars, Term CORRA (as defined in the Credit Agreement) for the applicable interest period, (vi) in the case of borrowings in Swiss Francs, a daily rate based on SARON (as defined in the Credit Agreement), or (vii) in the case of borrowings in any other Alternate Currency (as defined in the Credit Agreement), the relevant daily or term rate determined as provided in the Credit Agreement. The applicable margin on borrowings based on the Base Rate varies within a range of 0.25% to 1.00% depending on our consolidated net leverage
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ratio, and the applicable margin on borrowings based on any of the other rates described above varies within a range of 1.25% to 2.00% depending on our consolidated net leverage ratio.
We are required to pay a fee on the amount available to be drawn under any letter of credit issued under the revolving credit facility at a rate per annum that varies between 1.25% and 2.00% depending on our consolidated net leverage ratio. In addition, we are required to pay a fee on the unused portion of the revolving credit facility at a rate per annum that varies between 0.175% and 0.250% depending on our consolidated net leverage ratio.
Under the Credit Agreement, we must comply with various financial and non-financial covenants. The primary financial covenants consist of a maximum consolidated net leverage ratio of 3.0 to 1 and a minimum consolidated interest coverage ratio of 2.5 to 1. The primary non-financial covenants include, but are not limited to, restrictions on our ability to incur future indebtedness, engage in acquisitions or dispositions, pay dividends or repurchase capital stock, and enter into business combinations. Any indebtedness outstanding under the revolving credit facility may become immediately due upon the occurrence of stated events of default, including our failure to pay principal, interest or fees, or upon the breach of any covenant. As of June 28, 2025, we were in compliance with the covenants of the Credit Agreement.
There was $120.0 million in borrowings outstanding under the revolving credit facility as of June 28, 2025 and no borrowings outstanding as of December 28, 2024. As of June 28, 2025, the amount available under the revolving credit facility was reduced by certain letters of credit outstanding, which amounted to $3.5 million.
Forgivable Loans
In order to attract and retain highly skilled professionals, we may issue forgivable loans or term loans to employees and non-employee experts. A portion of these loans is collateralized by key person life insurance. The forgivable loans have terms that are generally between two and eight years. The principal amount of forgivable loans and accrued interest is forgiven by us over the term of the loans, so long as the employee or non-employee expert continues employment or affiliation with us and complies with certain contractual requirements. The forgiveness of the principal amount of the loans is recorded as compensation over the service period, which is consistent with the term of the loans.
Compensation Arrangements
We have entered into compensation arrangements for the payment of performance awards to certain of our employees and non-employee experts that are payable if specific performance targets are met. The financial targets may include a measure of revenue generation, profitability, or both. The amounts of the awards to be paid under these compensation arrangements could fluctuate depending on future performance during the applicable measurement periods. Changes in the estimated awards are expensed prospectively over the remaining service period. We believe that we will have sufficient funds to satisfy any cash obligations related to the performance awards. We expect to fund any cash payments from existing cash resources, cash generated from operations, or borrowings available on our revolving credit facility.
Our Amended and Restated 2006 Equity Incentive Plan, as amended (the "2006 Equity Plan"), authorizes the grant of a variety of incentive and performance equity awards to our directors, employees and non-employee experts, including stock options, shares of restricted stock, restricted stock units, and other equity awards.
Our long-term incentive program, or "LTIP," is used as a framework for equity grants made under our 2006 Equity Plan to our senior corporate leaders, practice leaders, and key revenue generators. The equity awards granted under the LTIP include stock options, time-vesting restricted stock units, and performance-vesting restricted stock units.
Our LTIP allows us to grant service and performance-based cash awards in lieu of, or in addition to, equity awards to our senior corporate leaders, practice leaders, and key revenue generators. The compensation committee of our Board of Directors is responsible for approving all cash and equity awards under the LTIP. We expect to fund any cash payments from existing cash resources, cash generated from operations, or borrowings available under our revolving credit facility.
Business and Talent Acquisitions
As part of our business, we regularly evaluate opportunities to acquire other consulting firms, practices or groups, or other businesses. In recent years, we have typically paid for acquisitions with cash, or a combination of cash and our common stock, and we may continue to do so in the future. To pay for an acquisition, we may use cash on hand, cash generated from our operations, borrowings available under our revolving credit facility, or we may pursue other forms of financing. Our ability to secure short-term and long-term debt or equity financing in the future, including our ability to refinance our credit agreement,
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will depend on several factors, including our future profitability, the levels of our debt and equity, restrictions under our existing revolving credit facility with our bank, and the overall credit and equity market environments.
Share Repurchases
In February 2025, we announced that our Board of Directors authorized an expansion of our existing share repurchase program of an additional $45.0 million of our common stock to the $13.1 million then remaining under the program. The program has no expiration date. We may repurchase shares under this program in open market purchases (including through any Rule 10b5-1 plan adopted by us) or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations.
During the fiscal quarter and the fiscal year-to-date period ended June 28, 2025, we repurchased and retired 230,673 shares under our share repurchase program at an average price per share of $187.06. During the fiscal quarter and fiscal year-to-date period ended June 29, 2024, we repurchased and retired 140,497 and 206,379 shares, respectively, under our share repurchase program at an average price per share of $171.58 and $161.59, respectively. We had approximately $14.9 million available for future repurchases under our share repurchase program as of June 28, 2025. We plan to finance future repurchases with available cash, cash from future operations, and borrowings available under our revolving credit facility. We expect to continue to repurchase shares under our share repurchase program.
Dividends to Shareholders
We anticipate paying regular quarterly dividends each year. These dividends are anticipated to be funded through cash flow from operations, available cash on hand, and/or borrowings available under our revolving credit facility. Although we anticipate paying regular quarterly dividends on our common stock for the foreseeable future, the declaration, timing and amounts of any such dividends remain subject to the discretion of our Board of Directors. During the fiscal quarter and fiscal year-to-date period ended June 28, 2025, we paid dividends and dividend equivalents of $3.4 million and $6.9 million, respectively. During the fiscal quarter and fiscal year-to-date period ended June 29, 2024, we paid dividends and dividend equivalents of $2.9 million and $6.0 million, respectively.
Impact of Inflation
To date, inflation has not had a material impact on our financial results. There can be no assurance, however, that inflation will not adversely affect our financial results in the future.
Future Capital and Liquidity Needs
We anticipate that our future capital and liquidity needs will principally consist of funds required for:
•operating and general corporate expenses relating to the operation of our business, including the compensation of our employees under various annual bonus or long-term incentive compensation programs;
•the hiring of individuals to replenish and expand our employee base;
•capital expenditures, primarily for information technology equipment, office furniture and leasehold improvements;
•debt service and repayments, including interest payments on borrowings from our revolving credit facility;
•share repurchases under programs that we may have in effect from time to time;
•dividends to shareholders;
•potential acquisitions of businesses that would allow us to diversify or expand our service offerings;
•contingent obligations related to our acquisitions; and
•other known future contractual obligations.
The hiring of individuals to replenish and expand our employee base is an essential part of our business operations and has historically been funded principally from operations. Many of the other above activities are discretionary in nature. For example, capital expenditures can be deferred, acquisitions can be forgone, and share repurchase programs and regular dividends can be suspended. As such, our operating model provides flexibility with respect to the deployment of cash flow from
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operations. Given this flexibility, we believe that our cash flows from operations, supplemented by cash on hand and borrowings under our revolving credit facility (as necessary), will provide adequate cash to fund our long-term cash needs from normal operations for at least the next twelve months.
Our conclusion that we will be able to fund our cash requirements by using existing capital resources and cash generated from operations does not take into account the impact of any future acquisition transactions or any unexpected significant changes in the number of employees or other expenditures that are currently not contemplated. The anticipated cash needs of our business could change significantly if we pursue and complete additional business acquisitions, if our business plans change, if economic conditions change from those currently prevailing or from those now anticipated, or if other unexpected circumstances arise that have a material effect on the cash flow or profitability of our business. Any of these events or circumstances, including any new business opportunities, could involve significant additional funding needs in excess of the identified currently available sources and could require us to raise additional debt or equity funding to meet those needs on terms that may be less favorable compared to our current sources of capital. Our ability to raise additional capital, if necessary, is subject to a variety of factors that we cannot predict with certainty, including:
•our future profitability;
•the quality of our accounts receivable;
•our relative levels of debt and equity;
•the volatility and overall condition of the capital markets; and
•the market prices of our securities.
Factors Affecting Future Performance
Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this report, as well as a description of material risks we face, are set forth below under the heading “Risk Factors” and included in Part I, Item 1A, “Risk Factors” of our 2024 Form 10-K. If any of these risks, or any risks not presently known to us or that we currently believe are not significant, develops into an actual event, then our business, financial condition, and results of operations could be adversely affected.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in our exposure to market risk during the fiscal quarter ended June 28, 2025. For information regarding our exposure to certain market risks, see Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk” of our 2024 Form 10-K.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our interim Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. This is done in order to ensure that information we are required to disclose in the reports that are filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Based upon that evaluation, our President and Chief Executive Officer and our interim Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 28, 2025.
Management has concluded that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material aspects, our financial position at the end of, and the results of operations and cash flows for, the periods presented in conformity with accounting principles generally accepted in the United States.
Evaluation of Changes in Internal Control over Financial Reporting
Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our interim Chief Financial Officer, we evaluated whether there were any changes in our internal control over financial reporting during the second quarter of fiscal 2025. There were no changes in our internal control over financial
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reporting identified in connection with the above evaluation that occurred during the second quarter of fiscal 2025 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Important Considerations
The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
None.
ITEM 1A. Risk Factors
There are many risks and uncertainties that can affect our future business, financial performance or results of operations. In addition to the other information set forth in this report, please review and consider the information regarding certain factors that could materially affect our business, financial condition or future results set forth under Part I, Item 1A, “Risk Factors” in our fiscal 2024 Form 10-K. There have been no material changes to these risk factors during the fiscal quarter ended June 28, 2025.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)Not applicable.
(b)Not applicable.
(c)The following provides information about our repurchases of shares of our common stock during the fiscal quarter ended June 28, 2025. During that period, we did not act in concert with any affiliate or any other person to acquire any of our common stock and, accordingly, we do not believe that purchases by any such affiliate or other person (if any) are reportable in the following table. For purposes of this table, we have divided the fiscal quarter into three periods of four weeks, four weeks, and five weeks, respectively, to coincide with our reporting periods during the second quarter of fiscal 2025.
Issuer Purchases of Equity Securities
| Period | (a) Total Number of Shares Purchased(1) | (b) Average Price Paid per Share(1) | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) | ||||||||||||||||||||||
| March 30, 2025 to April 26, 2025 | 1,195 | (2) | $ | 167.90 | — | $ | 58,088,568 | |||||||||||||||||||
| April 27, 2025 to May 24, 2025 | 130,567 | (3) | $ | 185.56 | 129,618 | $ | 34,014,786 | |||||||||||||||||||
| May 25, 2025 to June 28, 2025 | 101,055 | $ | 188.77 | 101,055 | $ | 14,938,272 | ||||||||||||||||||||
| Total | 232,817 | $ | 180.74 | 230,673 | ||||||||||||||||||||||
_______________________________
(1)On February 20, 2025, we announced that our Board of Directors authorized an expansion of our existing share repurchase program of an additional $45.0 million of our common stock to the $13.1 million then remaining under the program. The program has no expiration date. We may repurchase shares under this program in open market purchases (including
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through any Rule 10b5-1 plan adopted by us) or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations.
(2)Consists of shares of common stock we accepted as a tax withholding from certain of our employees in connection with the vesting of shares of restricted stock units that occurred during the indicated period pursuant to the terms of our 2006 Equity Plan.
(3)Includes 949 shares of our common stock we accepted as a tax withholding from certain of our employees in connection with the vesting of shares of restricted stock units that occurred during the indicated period pursuant to the terms of our 2006 Equity Plan.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
None.
ITEM 5. Other Information
The following table describes, for the fiscal quarter ended June 28, 2025, each trading arrangement for the sale or purchase of Company securities adopted terminated by our directors and officers that is a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K).
| Name and Title | Date of Adoption of Rule 10b5-1 Trading Plan | Scheduled Expiration Date of Rule 10b5-1 Trading Plan | Date of Termination | Aggregate Number of Securities Sold | Aggregate Number of Securities Unsold | |||||||||||||||||||||||||||
| August 8, 2024 | September 9, 2025 | 2,000 | ||||||||||||||||||||||||||||||
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ITEM 6. Exhibits
| Item No. | Filed with this Form 10-Q | Description | ||||||||||||
| 3.1 | ||||||||||||||
| 3.2 | ||||||||||||||
| 10.1 | X | |||||||||||||
| 31.1 | X | |||||||||||||
| 31.2 | X | |||||||||||||
| 32.1 | X | |||||||||||||
| 32.2 | X | |||||||||||||
| 101 | X | The following financial statements from CRA International, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2025, formatted in Inline XBRL (eXtensible Business Reporting Language), as follows: (i) Condensed Consolidated Statements of Operations (unaudited) for the fiscal quarters ended June 28, 2025 and June 29, 2024, (ii) Condensed Consolidated Statements of Comprehensive Income (unaudited) for the fiscal quarters ended June 28, 2025 and June 29, 2024, (iii) Condensed Consolidated Balance Sheets (unaudited) at June 28, 2025 and December 28, 2024, (iv) Condensed Consolidated Statements of Cash Flows (unaudited) for the fiscal quarters ended June 28, 2025 and June 29, 2024, (v) Condensed Consolidated Statement of Shareholders’ Equity (unaudited) for the fiscal quarter ended June 28, 2025 and June 29, 2024, and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited). | ||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CRA INTERNATIONAL, INC. | ||||||||
| Date: July 31, 2025 | By: | /s/ PAUL A. MALEH | ||||||
| Paul A. Maleh | ||||||||
| President and Chief Executive Officer | ||||||||
| Date: July 31, 2025 | By: | /s/ CHAD M. HOLMES | ||||||
| Chad M. Holmes | ||||||||
| Executive Vice President, Chief Corporate Development Officer and interim Chief Financial Officer and Treasurer | ||||||||
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Execution Version
ADDENDUM NO. 7 TO LEASE
THIS ADDENDUM NO. 7 TO LEASE (this "Addendum") is made as of April 24, 2025 (the “Effective Date”), and shall be effective as of the Effective Date, as defined in Section 15 herein, by and between 1201 F STREET, L.P., a Delaware limited partnership (“Lessor”), and CRA INTERNATIONAL, INC., a Massachusetts corporation (“Lessee”), formerly known as Charles River Associates Incorporated.
RECITALS
R-1. Lessor and Lessee entered into that certain Lease dated as of November 29, 1999 (the “Original Lease”), as amended by (i) Addendum No. 1 dated as of December 2, 1999, (ii) Addendum No. 2 dated as of September 22, 2000, (iii) Addendum No. 3 dated as of November 18, 2005, (iv) Addendum No. 4 dated as of December 1, 2009, (v) Amended and Restated Addendum No. 5 dated as of June 30, 2015 (the “Fifth Addendum”), and (iv) Addendum No. 6 dated as of July 11, 2016 (the “Sixth Addendum”). The Original Lease, as so amended, is hereinafter referred to as the “Lease”.
R-2. Lessor is the owner of that certain office building located at 1201 F Street, N.W., Washington, D.C. 20004 (the “Building”).
R-3. Pursuant to the Lease, Lessor currently is leasing to Lessee, and Lessee currently is leasing from Lessor, (A) certain office space deemed to contain, in the aggregate, thirty-nine thousand six hundred twenty-four (39,624) square feet of rentable area, consisting of the entire rentable area of the seventh (7th) and eighth (8th) floors of the Building (the “Original Premises”), and (B) certain storage space deemed to contain two hundred five (205) square feet located on Level B-3 of the Building (the “Storage Space”), all as more particularly described in the Lease.
R-4. The term of the Lease (the “Term”) is scheduled to expire on December 31, 2027 (the “Original Expiration Date”).
R-5. Lessor and Lessee desire to amend the Lease to (i) provide for the addition to the Original Premises, as of the First Expansion Space Commencement Date (as defined in Section 3(b) of certain additional space located on a portion of the ninth (9th) floor of the Building, deemed to contain, in the aggregate, six thousand six hundred thirty-four (6,634) square feet of rentable area (the “First Expansion Space”), which space is comprised of: (x) that certain space deemed to contain two thousand nine hundred seventy-three (2,973) square feet of rentable area, identified as Suite A-2 in attached Exhibit A (“Suite A-2”), and (y) that certain space deemed to contain three thousand six hundred sixty-one (3,661) square feet of rentable area, identified as Suite A-3 on attached Exhibit A (“Suite A-3”), (ii) further provide for the addition to the Original Premises, as so expanded, as of the Second Expansion Space Delivery Date (as defined in Section 5(b)) of certain additional space located on a portion of the ninth (9th) floor of the Building, deemed to contain six thousand eight hundred forty-seven (6,847) square feet of rentable area, identified as Suite A-1 on Exhibit A attached hereto (the “Second Expansion Space” and, together with the First Expansion Space, individually and collectively, as applicable, the “Expansion Space(s)”), (iii) extend the Term for a period (the
“Extension Term”) commencing on the date immediately following the Original Expiration Date (i.e., January 1, 2028) (the “Extension Term
Commencement Date”) and continuing for a period of eighty-four (84) months through December 31, 2034 (the “Revised Expiration Date”), and (iv) otherwise amend the Lease, all subject to and in accordance with the terms and conditions set forth in this Addendum.
R-6. Except as otherwise defined in this Addendum, all terms and phrases used in this Addendum that are defined in the Lease shall have the same meaning as set forth in the Lease. In the event of any conflict between the Lease and this Addendum, the terms of this Addendum shall control.
COVENANTS
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) cash in hand paid, the mutual covenants hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1.Recitals. The foregoing Recitals are true and correct and are incorporated herein by this reference:
2.Term. The Term is hereby extended for the Extension Term in accordance with the terms and conditions set forth in this Addendum. Any rights or options of Lessee set forth in the Lease to extend the Term beyond the Revised Expiration Date are hereby deleted and shall be null and void. Accordingly, unless otherwise sooner terminated in accordance with the terms of the Lease (as amended herein), the Term shall now expire on the Revised Expiration Date.
3.The First Expansion Space.
(a)Description. Subject to the terms of this Section 3, Lessor and Lessee hereby agree to add the First Expansion Space to the Original Premises effective as of the First Expansion Space Commencement Date. Accordingly, from and after the First Expansion Space Commencement Date (as defined below), the term “Demised Premises” as used in the Lease shall hereinafter refer to the Original Premises, as expanded by the First Expansion Space. Lessor hereby leases to Lessee and Lessee hereby rents from Lessor the First Expansion Space upon the terms and conditions of this Addendum and subject to all the applicable terms and conditions of the Lease (as amended hereby). The Term with respect to the First Expansion Space shall commence on the First Expansion Space Commencement Date and shall expire (if not otherwise terminated sooner pursuant to the terms of the Lease, as amended hereby) along with the Term with respect to the remainder of the Demised Premises, on the Revised Expiration Date.
(b)First Expansion Space Commencement Date.
(i)The date that Lessor tenders delivery of the First Expansion Space in its entirety to Lessee in the condition set forth in Section 6 is hereinafter referred to as the “First Expansion Space Commencement Date” and is currently estimated to occur on June 1, 2025 (the “Anticipated First Expansion Space Commencement Date”). Lessee acknowledges that a portion of the First Expansion Space (i.e., Suite A-2) currently is leased to and occupied by another Lessee of the Building (the “Existing Lessee”) pursuant to an existing lease (the “Existing Lease”) currently scheduled to expire beyond the Anticipated First Expansion Space Commencement Date, and Lessor is currently negotiating with the Existing Lessee to terminate its lease and vacate Suite A-2 prior to the scheduled expiration date of the Existing Lease, on or prior to May 31, 2025 (the “Existing Lease Early Termination Date”). Accordingly, notwithstanding anything in this Addendum to the contrary, (x) Lessor’s delivery of the First Expansion Space to Lessee on or about the Anticipated First Expansion Space Commencement Date is subject on Lessor and Existing Lessee entering into an amendment (the “Existing Lease Termination Amendment”) (upon terms satisfactory to Lessor in its sole and absolute discretion) to the Existing Lease to provide for the early termination of the Existing Lease on the Existing Lease Early Termination Date, and the complete vacancy by the Existing Lessee on or prior to the Anticipated First Expansion Space Commencement Date, and (y) if Lessor does not deliver the First Expansion Space to Lessee on or before the Anticipated First Expansion Space Commencement Date, or any other date, then, except as set forth in Section 3(b)(ii) below, Lessor shall have no liability with respect thereto whatsoever, and neither this Addendum nor the Lease shall be rendered void or voidable, on account thereof. However, if at any time Lessor determines that it will not be able to obtain a termination of the Existing Lease on terms that are satisfactory to Lessor in its sole and absolute discretion, then Lessor shall promptly notify Lessee in writing of that fact and may terminate this Addendum by written notice to Lessee.
(ii)Notwithstanding anything to the contrary herein, if the First Expansion Space Commencement Date does not occur on or before October 1, 2025 (the “Abatement Trigger Date”), then, provided such delay actually delays Lessee’s construction of the Seventh Addendum Improvements (as defined in Exhibit B) in the First Expansion Space (i.e., Lessee has necessary permits, has engaged the Contractor (as defined in Exhibit B) and the Contractor is ready to commence construction) and Lessee notifies Lessor in writing thereof, then, provided no default by Lessee beyond the expiration of any applicable notice and cure periods then exists under the Lease (as amended hereby), as its sole and exclusive remedy therefor, Lessor shall grant to Lessee a rent abatement equal to the per diem Monthly Rent, Lessee’s proportionate share of Operating Expenses, Lessee’s proportionate Share of Operating Costs, and Lessee’s proportionate share of Real Estate Taxes payable with respect to the First Expansion Space immediately following the expiration of the First Expansion Space Abatement Period (as defined in Section 3(e)) for each day during the period commencing on the day following the Abatement Trigger Date and continuing through the day preceding the First Expansion Space Commencement Date. In addition, and notwithstanding anything to the contrary herein, if the First Expansion Space Commencement does not occur on or before March 1, 2026 (the “Outside First Expansion Space Delivery Date”), then, provided no default by Lessee beyond the expiration of any applicable notice and cure periods then exists under the Lease (as amended hereby), as its sole and exclusive remedy therefor, then Lessee shall have the right to terminate this Lease with respect to the First Expansion Space by delivering written notice of the exercise of such right to Lessor. Such right of termination may be exercised by Lessee only during the ten (10) business day
period commencing on the day after the Outside First Expansion Space Delivery Date, and if such right is not exercised by Lessee during such ten (10) business day period, such right shall thereafter lapse and be of no further force or effect. If Lessee exercises such termination right pursuant to this Section, then neither party shall have any further obligations or liability hereunder with respect to the First Expansion Space to the other party (and the Lease, as amended hereby, shall otherwise remain in full force and effect). Notwithstanding any of the foregoing to the contrary, the Abatement Trigger Date and the Outside First Expansion Space Delivery Date (as applicable) shall be delayed on a day for day basis with respect to any delays in the First Expansion Space Commencement Date that are caused by Force Majeure (specifically excluding any holdover by the Existing Lessee, and further provided that any delay with respect to Force Majeure shall be capped at thirty (30) day with respect to the Outside First Expansion Space Delivery Date), or the result of any action by Lessee or any employee, agent or contractor of Lessee, provided that Lessor delivers notice of such action electronically to Lessee’s Representative (as defined in Exhibit B)) and Lessee thereafter fails to cure such action within two (2) business days after Lessor’s delivery of such notice.
(iii)Promptly after the First Expansion Space Commencement Date is ascertained, Lessor and Lessee shall execute the certificate confirming the First Expansion Space Commencement Date attached hereto as Exhibit C-1; provided, however, that failure to execute such certificate shall not affect the First Expansion Space Commencement Date or Lessee’s obligation to pay Rent with respect to the First Expansion Space. As used in this Addendum, the term “Lease Year” shall mean that period commencing on the First Expansion Space Commencement Date and ending on the last day of the calendar month preceding the month in which the first (1st) anniversary of the First Expansion Space Commencement Date occurs, and each succeeding Lease Year shall commence on the day following the end of the preceding Lease Year and shall extend for twelve (12) consecutive months; provided, however, the last Lease Year shall expire on the Revised Expiration Date.
(c)First Expansion Space Monthly Rent. Commencing on the First Expansion Space Commencement Date, and continuing through the remainder of Term (as extended herein), Lessee shall pay to Lessor, Monthly Rent with respect to the First Expansion Space in the amounts stipulated below:
Lease Year | Annual Base Rent Amount Per Square Foot | First Expansion Space Monthly Rent | ||||||
1* | $37.50* | $20,731.25* | ||||||
2 | $38.44 | $21,249.53 | ||||||
3 | $39.40 | $21,780.77 | ||||||
4 | $40.38 | $22,325.29 | ||||||
5 | $41.39 | $22,883.42 | ||||||
6 | $42.43 | $23,455.51 | ||||||
7 | $43.49 | $24,041.89 | ||||||
8 | $44.58 | $24,642.94 | ||||||
9 | $45.69 | $25,259.02 | ||||||
10 | $46.83 | $25,890.49 | ||||||
*Subject to abatement for the First Expansion Space Abatement Period (as set forth in Section 3(e) below.
Lessee shall pay First Expansion Space Monthly Rent in equal monthly installments on or prior to the first day of each applicable calendar month, along with the Monthly Rent with respect to the remainder of the Demised Premises in accordance with the terms of Section 4 of the Original Lease (as amended hereby). Except as otherwise provided herein, the First Expansion Space Monthly Rent shall be added to and be deemed to be part of the Rent for all purposes of the Lease (as amended hereby). If the First Expansion Space Commencement Date is not the first day of a month, then the Monthly Rent with respect to the First Expansion Space for such partial month shall be prorated on a per diem basis, and Lessee shall pay such prorated installment on the dayfollowing the expiration of the First Expansion Space Abatement Period (as provided in Section 3(e)). Except as expressly set forth in the Lease, no rental abatement or rental concession whatsoever shall apply with respect to the First Expansion Space except as specifically set forth in Section 3(e) below.
(d)First Expansion Space Additional Rent. Subject to Section 3(e) below, commencing on the First Expansion Space Commencement Date and continuing through the remainder of the Term (as extended hereby), Lessee shall pay all other amounts required to be paid pursuant to the terms of the Lease (as amended hereby) with respect to the First Expansion Space, including, but not limited to, Lessee’s proportionate share of Operating Expenses, Lessee’s proportionate share of Operating Costs, and Lessee’s proportionate share of Real Estate Taxes. As of the First Expansion Space Commencement Date, (i) Lessee’s proportionate share of Operating Expenses with respect to the First Expansion Space shall be 2.71%; (ii) Lessee’s proportionate share of Operating Costs with respect to the First Expansion Space shall be 2.93%; and (iii) Lessee’s proportionate share of Real Estate Taxes with respect to the First Expansion Space shall be 2.71%.
(e)First Expansion Space Abatement Period. Notwithstanding anything to the contrary herein, provided no default by Lessee beyond the expiration of applicable notice and cure periods then exists, Lessor shall grant to Lessee an abatement of one hundred percent (100%) of the Monthly Rent, and the monthly installments of Lessee’s proportionate share of Operating Expenses, Lessee’s proportionate Share of Operating Costs, and Lessee’s proportionate share of Real Estate Taxes, otherwise payable hereunder with respect to the First Expansion Space for ten (10) full consecutive calendar months commencing on the First Expansion Space Commencement Date (the “First Expansion Space Abatement Period”).
4.Original Premises. Lessee shall continue to lease the Original Premises for the remainder of the Term, as extended for the Extension Term, in accordance with the terms of the Lease (as amended hereby).
(a)Re-measurement. Lessor and Lessee hereby expressly acknowledge and agree that: (i) since the date of execution and delivery of the Lease, the Original Premises [and the Building] have been re-measured in accordance with the Building Owners and Managers Association Standard Method of Measurement (ANSI Z65.1-2017, Method A) (the “BOMA Method”); and (ii) based on such re-measurement, notwithstanding anything to the contrary in the Lease, from and after the Extension Term Commencement Date, (A) the Original Premises shall be deemed to contain forty-one thousand five hundred fourteen (41,514) square feet of rentable area, comprised of twenty thousand seven hundred fifty-seven (20,757) square feet on each of the seventh (7th) and eighth (8th) floors of the Building, (B) Lessee’s proportionate share of Operating Expenses with respect to the Original Premises shall be
16.97%; (C) Lessee’s proportionate share of Operating Costs with respect to the Original Premises shall be 18.36%; and (D) Lessee’s proportionate share of Real Estate Taxes with respect to the Original Premises shall be 16.97%. Notwithstanding the foregoing or anything to the contrary in the Lease, Lessor and Lessee stipulate and agree that, during the Term, (x) the rentable area of the Original Premises shall be as set forth in this Section 4(a), (y) the rentable area of the First Expansion Space and the rentable area of the Second Expansion Space shall be as set forth in Section R-5, and none of said the rentable areas shall be subject to adjustment except in connection with any further expansion by Lessee or a modification of the physical configuration of the Demised Premises agreed to by the parties.
(b)Original Premises Monthly Rent.
(i)For purposes of this Addendum, the term “Interim Period” shall mean the period commencing as of the Effective Date and continuing through the Original Expiration Date. During the Interim Period, Lessee shall continue to pay Monthly Rent for the Original Premises in accordance with the terms and conditions and conditions of the Lease.
(ii)Commencing on the Extension Term Commencement Date and continuing through the Extension Term, Lessee shall pay to Lessor, with respect to the Original Premises, Monthly Rent in the amounts stipulated below. For clarification purposes, the parties currently anticipate that the Extension Term Commencement Date will occur during the third (3rd) Lease Year.
Lease Year | Annual Base Rent Amount Per Square Foot | Original Premises Monthly Rent | ||||||
3* ** | $39.40 | $136,304.30 | ||||||
4* | $40.38 | $139,706.37 | ||||||
5 | $41.39 | $143,199.03 | ||||||
6 | $42.43 | $146,779.00 | ||||||
7 | $43.49 | $150,448.48 | ||||||
8 | $44.58 | $154,209.69 | ||||||
9 | $45.69 | $158,064.93 | ||||||
10 | $46.83 | $162,016.55 | ||||||
*Subject to abatement for the Original Premises Abatement Period (as defined in Section 4(d) below.
**Partial Lease Year commencing on the Extension Term Commencement Date.
Lessee shall continue to pay such Original Premises Monthly Rent in advance, in accordance with the terms of Section 4 of the Original Lease (as amended hereby). No rental abatement or rental concession whatsoever shall apply with respect to the Original Premises in connection with the Extension Term except as specifically set forth in Section 4(d) below.
(c)Original Premises Additional Rent. Except as expressly set forth in this Addendum, Lessee shall continue to pay during the Interim Period and the Extension Term all other amounts required to be paid pursuant to the terms of the Lease (as amended hereby) with respect to the Original Premises (including, but not limited to Lessee’s proportionate share of Operating Expenses, Lessee’s proportionate share of Operating Costs, and Lessee’s proportionate share of Real Estate Taxes); provided, however, that as of the Extension Term
Commencement Date, Lessee’s applicable proportionate shares with respect to the Original Premises shall be as set forth in Section 4(a) above (and prior to the Extension Term Commencement Date, such proportionate shares shall not be adjusted as provided in Section 4(a)).
(d)Original Premises Abatement Period. Notwithstanding anything to the contrary herein, provided no default by Lessee beyond the expiration of applicable notice and cure periods then exists, Lessor shall grant to Lessee an abatement of fifty percent (50%) of the Monthly Rent, and the monthly installments of Lessee’s proportionate share of Operating Expenses, Lessee’s proportionate share of Operating Costs, and Lessee’s proportionate share of Real Estate Taxes, otherwise payable hereunder with respect to the Original Premises for eighteen (18) full consecutive calendar months commencing on the Extension Term Commencement Date (the “Original Premises Abatement Period”).
5.The Second Expansion Space.
(a)Description. Subject to the terms of Section 5, Lessor and Lessee hereby agree to add the Second Expansion Space to the Demised Premises effective as of the Second Expansion Space Delivery Date. As of the Second Expansion Space Delivery Date, the term “Demised Premises” as used in this Lease shall therefore refer to the Original Premises, as expanded by the First Expansion Space (as applicable) and the Second Expansion Space. Lessor hereby leases to Lessee and Lessee hereby rents from Lessor the Second Expansion Space upon the terms and conditions of this Addendum and subject to all the applicable terms and conditions of the Lease (as amended hereby). The Term with respect to the Second Expansion Space shall commence on the Second Expansion Space Delivery Date and shall expire (if not otherwise terminated sooner pursuant to the terms of the Lease, as amended hereby) along with the Term with respect to the remainder of the Demised Premises, on the Revised Expiration Date.
(b)Second Expansion Space Delivery Date. The “Second Expansion Space Delivery Date” shall be the date that Lessor tenders delivery of the Second Expansion Space to Lessee in the condition set forth in Section 6. Lessee acknowledges that (i) the Second Expansion Space is currently leased and occupied by another Lessee of the Building pursuant to an existing lease currently scheduled to expire on October 31, 2026, and (ii) Lessor is extending the term of such existing lease of the Second Expansion Space, and currently anticipates tendering possession of the Second Expansion Space to Lessee on November 1, 2028 (the “Anticipated Second Expansion Space Delivery Date”). Notwithstanding anything to the contrary herein, if Lessor does not deliver the Second Expansion Space to Lessee on or before the Anticipated Second Expansion Space Delivery Date, or any other date, then, except as set forth below, Lessor shall have no liability with respect thereto whatsoever, and neither this Addendum nor the Lease shall be rendered void or voidable, on account thereof. Notwithstanding anything to the contrary herein, if the Second Expansion Space Delivery Date does not occur on or before March 1, 2029 (the “Second Abatement Trigger Date”), then, provided such delay actually delays Lessee’s construction of the Seventh Addendum Improvements in the Second Expansion Space (i.e., Lessee has necessary permits, has engaged the Contractor and the Contractor is ready to commence construction) and Lessee notifies Lessor in writing thereof, then, provided no default by Lessee beyond the expiration of any applicable notice and cure periods then exists under the Lease (as amended hereby), as its sole and exclusive remedy therefor, Lessor shall grant to Lessee a rent abatement equal to
the per diem Monthly Rent, Lessee’s proportionate share of Operating Expenses, Lessee’s proportionate Share of Operating Costs, and Lessee’s proportionate share of Real Estate Taxes payable with respect to the Second Expansion Space immediately following the expiration of the Second Expansion Space Abatement Period (as defined in Section 5(b)) for each day during the period commencing on the day following the Second Abatement Trigger Date and continuing through the day preceding the Second Expansion Space Delivery Date. In addition, and notwithstanding anything to the contrary herein, if the Second Expansion Space Delivery Date does not occur on or before November 1, 2029 (the “Outside Second Expansion Space Delivery Date”), and Lessee notifies Lessor in writing thereof and no default by Lessee beyond the expiration of any applicable notice and cure periods then exists under the Lease (as amended hereby), as its sole and exclusive remedy therefor, then Lessee shall have the right to terminate this Lease with respect to the Second Expansion Space by delivering written notice of the exercise of such right to Lessor. Such right of termination may be exercised by Lessee only during the ten (10) business day period commencing on the day after the Outside Second Expansion Space Delivery Date, and if such right is not exercised by Lessee during such ten (10) business day period, such right shall thereafter lapse and be of no further force or effect. If Lessee exercises such termination right pursuant to this Section, then neither party shall have any further obligations or liability hereunder with respect to the Second Expansion Space to the other party (and the Lease, as amended hereby, shall otherwise remain in full force and effect). Notwithstanding any of the foregoing to the contrary, the Second Abatement Trigger Date and the Outside Second Expansion Space Delivery Date (as applicable) shall be delayed on a day for day basis with respect to any delays in the Second Expansion Space Commencement Date that are caused by Force Majeure (specifically excluding any holdover by the existing tenant of such Second Expansion Space, and further provided that any delay with respect to Force Majeure shall be capped at thirty (30) day with respect to the Outside Second Expansion Space Delivery Date), or the result of any action by Lessee or any employee, agent or contractor of Lessee, provided that Lessor delivers notice of such action electronically to Lessee’s Representative and Lessee thereafter fails to cure such action within two (2) business days after Lessor’s delivery of such notice.
(c)Second Expansion Space Commencement Date. The “Second Expansion Space Commencement Date” shall be the earlier of (i) the date that is ninety (90) days following the Second Expansion Space Delivery Date, or (ii) the date Lessee commences business operations in the Second Expansion Space. Promptly after the Second Expansion Space Commencement Date is ascertained, Lessor and Lessee shall execute the certificate confirming the Second Expansion Space Commencement Date attached hereto as Exhibit C-2; provided, however, that failure to execute such certificate shall not affect the Second Expansion Space Commencement Date or Lessee’s obligation to pay Monthly Rent with respect to the Second Expansion Space.
(d)Second Expansion Space Monthly Rent. Commencing on the Second Expansion Space Commencement Date, and continuing through the remainder of Term (as extended herein), Lessee shall pay to Lessor, Monthly Rent with respect to the Second Expansion Space in the amounts stipulated below. For clarification purposes, the parties currently anticipate that the Second Expansion Space Commencement Date will occur during the fourth (4th) Lease Year.
Lease Year | Annual Base Rent Amount Per Square Foot | Second Expansion Space Monthly Rent | ||||||
4* ** | $40.38 | $23,042.09 | ||||||
5 | $41.39 | $23,618.15 | ||||||
6 | $42.43 | $24,208.60 | ||||||
7 | $43.49 | $24,813.82 | ||||||
8 | $44.58 | $25,434.16 | ||||||
9 | $45.69 | $26,070.01 | ||||||
10 | $46.83 | $26,721.76 | ||||||
*Subject to abatement for the Second Expansion Space Abatement Period (as defined in Section 5(f) below.
**Partial Lease Year commencing on the Second Expansion Space Commencement Date.
Lessee shall pay the Second Expansion Space Monthly Rent in equal monthly installments in advance on or prior to the first day of each applicable calendar month, along with the Monthly Rent with respect to the remainder of the Demised Premises in accordance with the terms of Section 4 of the Original Lease (as amended hereby). Except as otherwise provided herein, the Second Expansion Space Monthly Rent shall be added to and be deemed to be part of the Rent for all purposes of the Lease (as amended hereby). If the Second Expansion Space Commencement Date is not the first day of a month, then the Monthly Rent with respect to the Second Expansion Space for such partial month shall be prorated on a per diem basis, and Lessee shall pay such prorated installment on the day following the expiration of the Second Expansion Space Abatement Period (as provided in Section 5(f)). Except as expressly set forth in the Lease, no rental abatement or rental concession whatsoever shall apply with respect to the Second Expansion Space except as specifically set forth in Section 5(f) below.
(e)Second Expansion Space Additional Rent. Subject to Section 5(f), commencing on the Second Expansion Space Commencement Date, Lessee shall pay, with respect to the Second Expansion Space, during the remainder of the Term (as extended hereby) all other amounts required to be paid pursuant to the terms of the Lease (as amended hereby) with respect to the Second Expansion Space, including, but not limited to, Lessee’s proportionate share of Operating Expenses, Lessee’s proportionate share of Operating Costs, and Lessee’s proportionate share of Real Estate Taxes. As of the Second Expansion Space Commencement Date, (i) Lessee’s proportionate share of Operating Expenses with respect to the Second Expansion Space shall be 2.80%; (ii) Lessee’s proportionate share of Operating Costs with respect to the Second Expansion Space shall be 3.03%; and (iii) Lessee’s proportionate share of Real Estate Taxes with respect to the Second Expansion Space shall be 2.80%.
(f)Second Expansion Space Abatement Period. Notwithstanding anything to the contrary herein, provided no default by Lessee beyond the expiration of applicable notice and
cure periods then exists, Lessor shall grant to Lessee an abatement of one hundred percent (100%) of the Monthly Rent, and the monthly installments of Lessee’s proportionate share of Operating Expenses, Lessee’s proportionate Share of Operating Costs, and Lessee’s proportionate share of Real Estate Taxes, otherwise payable hereunder with respect to the Second Expansion Space for six (6) full consecutive calendar months commencing on the Second Expansion Space Commencement Date (the “Second Expansion Space Abatement Period”).
(g)Second Expansion Space Termination Option. Lessor hereby grants to Lessee a one-time option (the “Second Expansion Space Termination Option”), exercisable as set forth in this Section 5(g), to terminate its obligations pursuant to this Addendum with respect to the leasing of the Second Expansion Space, prior to the Anticipated Second Expansion Space Delivery Date, by delivering to Lessor irrevocable written notice of such exercise (the “Second Expansion Space Termination Notice”), no later than August 23, 2027. If Lessee timely provides to Lessor the Second Expansion Space Termination Notice as provided in this Section 5(g), then neither party shall have any obligation with respect to the Second Expansion Space, and the Lease (as amended hereby) shall continue in full force and effect with respect to the remainder of the Demised Premises (i.e., the Original Premises and the First Expansion Space, as applicable). If Lessee does not provide the Second Expansion Space Termination Notice on or prior to August 23, 2027 (time being of the essence), then Lessee’s Second Expansion Space Termination Option shall lapse and be of no further force and effect, and Lessee’s obligations hereunder with respect to the Second Expansion Space will continue in full force and effect. If a default beyond the expiration of notice and cure periods by Lessee exists at the time Lessee delivers the Second Expansion Space Termination Notice, at Lessor’s election, Lessee’s right under this Section 6(g) will lapse and be of no further force and effect.
6.The Seventh Addendum Improvements. Lessee shall continue to occupy the Original Premises in its “as is” condition as of the Effective Date. Lessee shall accept each applicable Expansion Space in its “as is” condition as of the First Expansion Space Commencement Date and as of the Second Expansion Space Delivery Date, as applicable; provided that (a) the base Building systems serving the applicable Expansion Space shall be in good working order, and (b) Lessor shall perform any necessary demising work and related corridor egress work necessary in order to maintain egress in accordance with the Requirements (as defined in Exhibit B) for the First Expansion Space (the “Demising Work”). Lessor shall use commercially reasonable efforts to Substantially Complete the Demising Work prior to the First Expansion Space Commencement Date. Lessee shall be responsible for paying, within thirty (30) days following Substantial Completion of the Demising Work, an amount (“Lessee’s Demising Work Contribution”) equal to fifty percent (50%) of the actual, reasonable, out-of-pocket third- party costs of the Demising Work, such Lessee’s Demising Work Contribution not to exceed Seventy-Five Thousand Dollars ($75,000.00); provided that Lessee shall have the right to apply all or any portion of the Supplemental Contribution (as defined in Exhibit B) towards Lessee’s Demising Work Contribution upon written notice to Lessor. Notwithstanding the foregoing, if it is determined that any base Building systems serving the First Expansion Space, or the Second Expansion Space, as applicable, are not in good working order on the First Expansion Space Commencement Date, or the Second Expansion Space Delivery Date, as applicable, (and not as a result of any acts or omissions of Lessee, its employees, agents or contractors, or as a result of any improvements performed by Lessee) and Lessee provides written notice thereof to Lessor within sixty (60) days after the
First Expansion Space Commencement Date, or the Second Expansion Space Delivery Date, as applicable, (and the same is confirmed by Lessor’s engineer), Lessor shall promptly correct the same at no cost or expense to Lessee, however, the same shall not extend or otherwise affect the First Expansion Space Commencement Date, or the Second Expansion Space Delivery Date, as applicable. Except as expressly set forth above, Lessor is under no obligation to make any structural or other Alterations whatsoever in or to any part of the Original Premises, the First Expansion Space, the Second Expansion Space or the Building, subject to Section 11 below. Nothing herein shall affect Lessor’s maintenance and repair obligation as expressly provided in the Lease. The initial improvement of the First Expansion Space, the Second Expansion Space, and any all Alterations to the Original Premises (i.e., the Seventh Addendum Improvements, as defined in Exhibit B) shall be accomplished, at Lessee’s sole cost and expense, subject to the application of the Lessor’s Contribution (as defined in Exhibit B), by Lessee or its designated Contractor in accordance with Exhibit B and all other applicable provisions of the Lease (as amended hereby). No improvements or other allowance whatsoever, except for the Lessor’s Contribution, shall be applicable with respect to the First Expansion Space, the Second Expansion Space, or the Original Premises.
7.Expiration of Storage Space. Notwithstanding anything herein to the contrary, the Term with respect to the Storage Space shall expire on the Original Expiration Date and such Term, with respect to the Storage Space, shall not be extended with the Original Premises as provided in this Amendment.
8.Parking. Pursuant to Section 7 of the Original Lease (as amended by Section 7 of the Sixth Addendum, Lessor provided Lessee with a Basic Parking Allocation of twenty-six (26) parking contracts for unreserved parking. The Basic Parking Allocation shall be increased as follows: (i) as of the First Expansion Space Commencement Date, the Basic Parking Allocation shall be increased by four (4) additional parking contracts for unreserved parking, and (ii) as of the Second Expansion Space Commencement Date, the Basic Parking Allocation shall be increased by five (5) additional parking contracts for unreserved parking (provided that Lessee’s rights under Section 5(g) are not exercised). In addition, the last sentence of Section 7(B) of the Original Lease (as amended) is amended and restated as follows: “In the event Lessee fails to execute with the Operator the monthly parking contract for the additional Basic Parking Allocation by the date that is two (2) months after the First Expansion Space Commencement Date and the Second Expansion Space Commencement Date, as applicable, or subsequently relinquishes in any manner its Basic Parking Allocation, Lessor shall be under no obligation to seek restoration of the relinquished contract or waive Lessee's failure to execute said contract prior to the date that is two (2) months after the First Expansion Space Commencement Date and the Second Expansion Space Commencement Date, as applicable; provided, however, that Lessee shall have the right to take (or, as applicable, retake) a parking contract up to Lessee's full number of Basic Parking Allocation upon forty-five (45) days’ written notice to Lessor.”
9.Signage. As of the First Expansion Space Commencement Date, and the Second Expansion Space Commencement Date, as applicable, Lessor shall provide, at Lessor’s expense, additional listings in the Building directory (to the extent that such directory exists) based upon Lessee’s rentable area in the First Expansion Space and the Second Expansion Space, as applicable, and will provide Building standard suite entry signage for the First Expansion Space and the Second Expansion Space. Except as modified above, Lessee’s
signage rights and obligations shall continue to be in accordance with Section 15 of the Original Lease (as theretofore amended).
10.Access Cards. On or prior to the First Expansion Space Commencement Date, Lessor shall provide Lessee with fifty (50) electronic access cards to the Building at no cost to Lessee. On or prior to the Second Expansion Space Commencement Date, Lessor shall provide Lessee with fifteen (15) additional electronic access cards to the Building at no cost to Lessee.
11.Compliance with Laws. During the Term, Lessor shall comply with (or cause to be complied with) all Requirements applicable to the base Building systems, and the Building structure and common areas, provided that if such compliance is the result of Lessee particular use and occupancy of the Demised Premises (as opposed to office use generally), or any Alterations performed by Lessee, or Lessee’s negligence or willful misconduct, then such compliance shall be at Lessee’s cost. Lessor hereby represents that, to its knowledge, it has not received any written notices from any applicable governmental authority of any violation of applicable environmental laws applicable to the First Expansion Space, or the Second Expansion Space, that remains uncured. In the event that any hazardous materials are discovered in the First Expansion Space as of the First Expansion Space Commencement Date, or in the Second Expansion Space as of the Second Expansion Space Delivery Date, that are in violation of then-applicable environmental laws, and the same are not introduced by Lessee, or any employee, agent or contractor of Lessee, then Lessor shall promptly remove or remediate all such hazardous materials existing as of such dates, at Lessor’s sole cost and expense, if and to the extent required by applicable environmental law in effect as of such applicable dates.
12.Right of Opportunity. Any expansion, rights of opportunity, rights of first offer, or rights of first refusal, of Lessee set forth in the Lease are hereby deleted in their entirety and shall hereinafter be null and void to the effect that the only right of Lessee to expand the Demised Premises shall be as set forth in this Section 12. Subject to the provisions of this Section 12, commencing on First Expansion Space Commencement Date and continuing through the Revised Expiration Date any space located on the ninth (9th) floor of the Building (other than the Second Expansion Space) becomes available for lease from Lessor (or Lessor reasonably anticipates that such space will become available for lease from Lessor) after the initial leasing thereof (any such space sometimes being individually referred to as a "ROFO Space" and collectively referred to as the “ROFO Spaces”), then Lessee shall have the one-time first right to lease such ROFO Space for the then-remainder of the Term pursuant to the following terms and conditions:
(a)At such time as Lessor reasonably becomes aware of the availability of the ROFO Space after its initial leasing, Lessor shall notify Lessee in writing (the “Lessor ROFO Availability Notice”) of the availability of such space and the location and anticipated availability date thereof. Lessee shall have ten (10) business days after receiving the Lessor ROFO Availability Notice to provide irrevocable notice to Lessor in writing (“Lessee’s ROFO Election Notice”) that Lessee desires to exercise its right to lease such ROFO Space in accordance with this Section 12 for the then remainder of the Term. If Lessee does not properly and timely deliver Lessee’s ROFO Election Notice to Lessor as set forth above, Lessor shall be free to lease the ROFO Space to any third party on terms and conditions as
determined by Lessor in its sole and absolute discretion, and Lessee’s right of opportunity set forth in this Section 12 shall become null and void.
(b)If Lessee timely and properly exercises its right to lease the ROFO Space pursuant to this Section 12, then (i) such ROFO Space shall be added to the Demised Premises as of the date Lessor delivers same to Lessee (the “ROFO Space Delivery Date”) at an annual base rent, escalation and other concessions determined as provided herein, and pursuant to all of the other then existing terms and conditions of the Lease (as amended hereby); provided, however, that all provisions varying with square footage not specifically described herein (including, without limitation, Lessee’s proportionate share) shall be re-determined to reflect the increased rentable area of the Demised Premises, (ii) Lessee shall accept the ROFO Space in its then “as is” condition, with no improvements obligation on the part of Lessor.
(c)The parties shall have thirty (30) days after Lessor’s timely receipt of Lessee’s ROFO Election Notice (the “ROFO Negotiation Period”) in which to agree on the monthly rent, escalation factor and additional rent which shall be payable for the ROFO Space. The parties shall attempt in good faith to agree upon an annual base rent payable for the first year of the Term for the ROFO Space which would equal one hundred percent (100%) of the applicable market rent, taking into account the Market Items (as defined below). Among the factors to be considered by the parties during such negotiations shall be the general office rental market in the East End submarket of Washington, D.C., the rental rates then being quoted by Lessor to comparable Lessees for comparable space in the Building, and the rents being charged similar Lessees for similar office space in multi-tenanted, multi-story, first class office buildings with comparable views, location and address. The “Market Items” shall be, if then applicable: size, location of premises, lease term, leasing inducements, condition of building, and services provided by a lessor, taking into account all relevant factors. If during the ROFO Negotiation Period the parties agree on such annual base rent, escalation factor and additional rent, then they shall promptly execute an amendment to the Lease stating the terms so agreed upon. If during the ROFO Negotiation Period the parties are unable, for any reason whatsoever, to agree on such annual base rent, escalation factor and additional rent payable, then, at any time during the ROFO Negotiation Period, but not later than the fifth (5th) day after the last day of the ROFO Negotiation Period, the parties shall each appoint an independent real estate broker who shall be licensed in the District of Columbia and who specializes in the field of commercial office space leasing in the District of Columbia, has at least ten (10) years of experience and is recognized within the field as being reputable and ethical (an “Arbitrator”). If Lessee fails to timely appoint its Arbitrator, then Lessor’s determination of the annual base rent, escalation factor and additional rent shall be final and conclusive. The two appointed Arbitrators shall each determine, within ten (10) days after their appointment, such monthly rent, escalation factor and additional rent. If such individuals do not agree on such items, then the two individuals shall, within five (5) days, render separate written reports of their determinations and together appoint a third similarly qualified individual. If Lessee’s Arbitrator fails to timely deliver its determination to such third individual, then Lessor’s determination of the annual base rent, escalation factor and additional rent shall be final and conclusive. The third individual shall, within ten (10) days after his or her appointment, select either Lessor’s Arbitrator’s determination or Lessee’s Arbitrator’s determination (this being the third Arbitrator’s sole function) as being closest to the applicable annual base rent, escalation factor and additional rent and shall notify the
parties of such selection which determination shall be final and conclusive, and binding on Lessor and Lessee. Lessor and Lessee shall each bear the cost of its Arbitrator and shall share equally the cost of the third Arbitrator. Upon determination of the annual base rent, escalation factor and concessions payable pursuant to this Section, the parties shall promptly execute an amendment to the Lease stating the rent and additional terms so determined
(d)Lessee’s rights under this Section 13 are subject and subordinate to (i) any rights of any other Lessee pursuant to its lease at the Building as of the Effective Date, (ii) renewal rights of any existing or future tenant and Lessor’s rights to renew or continue to lease space to any current or future tenant of such space beyond the expiration date of the lease term of such tenant’s lease. Lessor represents that an existing tenant of the ROFO Space currently leasing approximately 5,800 has an existing renewal right, another tenant of the Building has an existing ROFO right on the 9th floor for not less than 4,000 square feet of rentable area, and another tenant of the Building has an existing renewal right for a portion of the ROFO Space.
(e)Notwithstanding anything in the Lease to the contrary, delivery of possession of the ROFO Space to Lessee and commencement of Lessee’s leasing thereof is and shall be subject to Lessor’s obtaining possession from any prior Lessee or occupant who holds over beyond the applicable lease expiration date, and Lessee shall have no claim against Lessor (for damages or otherwise) and Lessor shall have no obligation or liability for, on account of or with respect to any holdover in all or any portion of the ROFO Space. Lessee shall accept possession of such ROFO Space and commence paying rent therefor on the date of delivery of such space by Lessor in the condition required and otherwise as provided pursuant to this Section 12 (the “ROFO Commencement Date”). Notwithstanding anything to the contrary herein, if Lessor does not deliver the ROFO Space within one hundred fifty (150) days after the delivery date with respect to the ROFO Space set forth in the Lessor ROFO Availability Notice (the “Outside ROFO Space Delivery Date”), and Lessee notifies Lessor in writing thereof and no default by Lessee beyond the expiration of any applicable notice and cure periods then exists under the Lease (as amended hereby), as its sole and exclusive remedy therefor, then Lessee shall have the right to revoke its exercise of the Right of Opportunity with respect to the applicable ROFO Space by delivering written notice of the exercise of such right to Lessor. Such right of termination may be exercised by Lessee only during the ten (10) business day period commencing on the day after the Outside ROFO Space Delivery Date, and if such right is not exercised by Lessee during such ten (10) business day period, such right shall thereafter lapse and be of no further force or effect. Notwithstanding the foregoing, the Outside ROFO Space Delivery Date shall be delayed on a day for day basis with respect to any delays in the Outside ROFO Space Delivery Date that are caused by Force Majeure (specifically excluding any holdover by the existing tenant of such ROFO Space, and further provided that such delay as a result of Force Majeure does not exceed thirty (30) days) or the result of any action by Lessee or any employee, agent or contractor of Lessee, provided that Lessor delivers notice of such action electronically to Lessee’s Representative and Lessee thereafter fails to cure such action within two (2) business days after Lessor’s delivery of such notice.
(f)If Lessee is in default under the Lease (as amended hereby) beyond the expiration of any applicable notice or cure period on the date Lessee sends Lessee’s ROFO Election Notice or at any time thereafter until the date such ROFO Space is occupied by
Lessee, then, at Lessor’s election, Lessee’s rights pursuant to this Section 12 shall lapse and be of no further force or effect.
(g)If at any time more than 30% of the rentable area of the Demised Premises has been subleased or assigned in a transaction requiring Lessor’s consent pursuant to Section 11 of the Original Lease (as amended and restated by Section 12 of Addendum No. 4) (Lessor acknowledging that Lessor’s consent is not required for an assignment of the Lease or sublet of the Demised Premises to any subsidiary, affiliate or successor (as those terms are defined in Section 11 of the Original Lease), or if Lessee is not occupying at least seventy percent (70%) of the Demised Premises, then Lessee’s rights pursuant to this Section 12 shall lapse and be of no further force or effect.
(h)Lessee has the right under this Section 12 to lease only the entire ROFO Space identified in Lessor’s ROFO Availability Notice. Lessee has no right to lease less nor more than the entire ROFO Space so identified.
(i)Lessor shall have no obligation to offer the ROFO Space to Lessee if, as of the anticipated availability date of such ROFO Space, there would be less than thirty (30) months then remaining in the Term. Notwithstanding the foregoing, if there are less than thirty (30) months then remaining in the Term, and Lessee has available to it an unexercised renewal option under the Lease (regardless of when such applicable renewal option must be exercised under the Lease), then Lessor shall offer the ROFO Space to Lessee during such period pursuant the terms of this Article 12; provided, however, that (i) Lessor shall have no obligation to lease the ROFO Space to Lessee for a term of less than thirty (30) months, (ii) Lessee’s right to lease the ROFO Space from Lessor shall be conditioned upon Lessee’s irrevocable exercise of such available renewal option along with Lessee’s ROFO Election Notice, and (iii) if Lessee does not properly and timely exercise such renewal option (time being of the essence), then Lessor shall have no further obligation to Lessee with respect to the ROFO Space and Lessor shall be free to lease the ROFO Space to any third party on terms and conditions as determined by Lessor in its sole and absolute discretion.
13.Security Deposit. Pursuant to the Lease (and Section 6 of the Fifth Addendum), Lessor is currently holding a letter of credit (the “Letter of Credit”) in the amount of Two Hundred Thousand Dollars ($200,000.00). Notwithstanding anything to the contrary in the Lease, Lessee shall have no right to replace the Letter of Credit with a cash Security Deposit, and Lessor shall continue to hold the Letter of Credit for the remainder of the Term (as extended hereby) in accordance with the terms and conditions of the Lease. Concurrently with Lessee’s execution of this Addendum, Lessee shall deliver to Lessor an amendment to the Letter of Credit, extending the outside expiration thereof through the date that is sixty (60) days following the Revised Expiration Date.
14.Telecommunications. Lessee may use its proportionate share of Riser Space for the sole purpose of installing cabling and telecommunications equipment serving the Demised Premises (“Telecom Cabling and Equipment”). “Riser Space” means the available space in the Building risers and telecommunications closets, including the space above the ceilings and below the floors of the Demised Premises, but excluding such risers or closets being used exclusively by Lessor or other Lessees in the Building or located in mechanical rooms, basement space or other common and/or public areas of the Building. Lessee’s right to use the
Riser Space is non-exclusive and will be subject to the following terms and conditions: (a) Lessee must submit to Lessor, for Lessor’s review and approval (which approval shall not be unreasonably withheld, conditioned, or delayed), reasonably detailed plans and specifications for the Telecom Cabling and Equipment prior to installation; (b) Lessee must reimburse Lessor as additional rent for any reasonable, actual, out of pocket third-party costs and expenses incurred by Lessor in reviewing the plans and specifications; (c) Lessee must use an experienced contractor approved by Lessor for installation of the Telecom Cabling and Equipment in accordance with the plans and specifications approved by Lessor; (d) Lessee and its contractor must adhere to the Building’s standard construction rules; (e) all work and materials furnished by Lessee or its contractor must be of good quality, and must be performed in a good and workmanlike manner and in compliance with all applicable Legal Requirements; (f) all work must be performed in a manner that minimizes disruption and inconvenience to other Lessees and occupants of the Building; (g) Lessee must promptly repair, at its sole cost and expense, any damage done to the Riser Space, the Building, the Demised Premises or to the Demised Premises of any other Lessee in the Building that is caused by or arises out of any work performed by Lessee or its contractor pursuant to this Section; (h) all Telecom Cabling and Equipment must be appropriately bundled and marked or tagged as reasonably required by Lessor to identify the owner/user and pathway; (i) Lessor will have the right to inspect the work; and (j) solely with respect to any Telecom Cabling and Equipment that is not bundled and marked or tagged as required above, Lessee must remove, at Lessee’s sole cost and expense, all Telecom Cabling and Equipment installed by or on behalf of Lessee upon the expiration or earlier termination of the Term, and any damage to the Riser Space, the Demised Premises or the Building caused by such removal must be repaired by Lessee, at Lessee’s sole expense and in a manner approved by Lessor.
15.Lender Approval. The terms and conditions of this Addendum are contingent upon the consent of Lessor's current lender for the Building ("Lender Approval"). The terms and conditions of this Addendum shall not be effective until the Effective Date. The term "Effective Date" shall mean the later to occur of the following dates: (a) the date this Addendum is fully executed, and (b) the date upon which Lessor advises Lessee in writing that Lender Approval has been received (the "Lender Approval Notification Date"). Lessor shall use commercially reasonable, good faith, diligent efforts to obtain Lender Approval as soon as is reasonably possible following the full execution of this Addendum. If the Lender Approval Notification Date does not occur within thirty (30) days following the date on which this Addendum has been fully executed by Lessor and Lessee, then Lessee shall have the right to cancel this Addendum upon five (5) days' prior written notice to Lessor, such notice to be given, if at all, prior to the Lender Approval Notification Date. If the Lender Approval Notification Date does not occur within fifty-five (55) days following the date on which this Addendum has been fully executed by Lessor and Lessee, then, provided Lessor has used its commercially reasonable good faith diligent efforts to obtain Lender Approval as required above, Lessor shall have the right to cancel this Addendum upon five (5) days' prior written notice to Lessee, such notice to be given, if at all, prior to the Lender Approval Notification Date. If this Addendum is cancelled by Lessor or Lessee as aforesaid, (i) this Addendum shall be null and void as if the same had never been executed by Lessor and Lessee, (ii) the Lease as unamended by this Addendum shall remain in full force and effect, and (iii) neither party hereto shall have any rights against or obligations to the other under this Addendum.
16.SNDA. Lessor shall obtain a non-disturbance, subordination and attornment agreement (an “SNDA”) from the holder of the existing mortgage encumbering the Building (the “Lender”) on Lender’s standard form SNDA agreement, with such commercially reasonably changes as agreed to by Lessee, Lender and Lessor. Lessor shall have no liability, and neither this Addendum nor the Lease shall be terminable by Lessee if Lessor does obtain such SNDA; provided, however, that, if such SNDA is not executed and delivered by the Lender and Lessor to Lessee within ninety (90) days following the Effective Date, then, as Lessee’s sole and absolute remedy, Lessee shall have the right to terminate this Amendment by written notice delivered to Lessor (if at all) by providing Lessor with written notice thereof within five (5) business days following the expiration of said ninety (90) day period, in which event the Lease shall remain in full force and effect unmodified by this Addendum.
17.Brokerage. Lessee represents and covenants that it has retained CBRE, Inc. (“Broker”) to act as its broker in connection with this Addendum. Except for the Broker, Lessor and Lessee each represent and warrant to the other that it has not entered into any agreement, or otherwise had any dealings, with any broker or agent (other than with an affiliate of Lessor), in connection with the negotiation or execution of this Addendum which could form the basis of any claim by any such broker or agent for a brokerage fee or commission, finder’s fee, or any other compensation of any kind or nature in connection herewith. Lessee shall indemnify and hold Lessor harmless from all costs (including court costs, investigation costs, and attorneys’ fees), expenses, or liability for commissions or other compensation claimed by Broker, or any other broker or agent with respect to this Addendum which arise out of any agreement or dealings, or alleged agreement or dealings, between Lessee and any such agent or broker. Lessor shall indemnify and hold Lessee harmless from all costs (including court costs, investigation costs, and attorneys’ fees), expenses, or liability for commissions or other compensation claimed by any broker or agent with respect to this Addendum which arise out of any agreement or dealings, or alleged agreement or dealings, between Lessor and any such agent or broker, other than Broker. The terms of this Paragraph shall survive the expiration or earlier termination of the Lease (as amended hereby).
18.Confidentiality. Lessee acknowledges and agrees that the terms of this Addendum are confidential and constitute propriety information of Lessor. Disclosure of the terms hereof could adversely affect the ability of Lessor to negotiate other leases and/or lease amendments with respect to the Building and may impair Lessor's relationship with other tenants of the Building. Lessee agrees that it and its partners, officers, directors, and employees shall not, without the prior written consent of Lessor, make any public disclosure of the terms and conditions of this Addendum other than (a) in Lessee's ordinary course of business to Permitted Recipients, and (b) if required by applicable laws or governmental authorities (including, without limitation, any legal disclosures required with respect to Lessee's status as a publicly traded corporation). Lessee shall use commercially reasonable, good faith efforts to cause the Permitted Recipients to comply with the confidentiality provisions set forth herein.
19.Ratification. Except as otherwise expressly modified by the terms of this Addendum, the Lease shall remain unchanged and continue in full force and effect. All terms, covenants and conditions of the Lease not expressly modified herein are hereby confirmed and ratified and remain in full force and effect, and, as further amended hereby, constitute valid and binding obligations of Lessee enforceable according to the terms thereof.
20.Authority. Lessee and each of the persons executing this Addendum on behalf of Lessee hereby covenants and warrants that Lessee is a duly organized, authorized and existing corporation and is in good standing under the laws of the District of Columbia, that Lessee has full right and authority to enter into this Addendum, and that the person signing on behalf of Lessee is authorized to do so on behalf of Lessee.
21.Counterparts. This Addendum may be executed in multiple counterparts, each of which shall be an original, but all of which shall constitute one and the same Addendum. Electronically transmitted signatures shall have the same binding effect as original signature, and an electronically transmitted Amendment containing the signatures (original or electronically transmitted) of the parties shall be binding. This document may be executed electronically or by an electronic signature stamp and the same shall be deemed an original.
22.Binding Effect. This Addendum shall not be effective and binding unless and until fully executed and delivered by each of the parties hereto. All of the covenants contained in this Second Addendum, including, but not limited to, all covenants of the Lease as modified hereby, shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, legal representatives, and permitted successors and assigns.
23.Exculpation. Notwithstanding anything in the Lease (as hereby amended) to the contrary, Lessee shall not be entitled to enforce the liability and obligation of Lessor to perform and observe any obligations contained in the Lease (as hereby amended) by any action or proceeding against any member, shareholder, partner, manager, director, officer, agent, affiliate, beneficiary, trustee or employee of Lessor, or against any direct or indirect member, shareholder, partner or other owner of any such member, shareholder, partner, manager, director, officer, agent, affiliate or employee of Lessor, or against any director, officer, employee, agent, manager or trustee of any of the foregoing, and no personal judgment shall be sought or obtained against any such member, shareholder, partner, manager, director, officer, agent, affiliate, beneficiary, trustee or employee. Lessee hereby acknowledges and agrees that it shall look solely to the interest of Lessor in the Building for the payment of any liabilities relating to or arising out of a breach of the obligations or covenants of Lessor set forth in the Lease (as hereby amended).
[Signature page follows]
IN WITNESS WHEREOF, Lessor and Lessee have caused this Addendum to be executed under seal as of the Effective Date.
LESSOR:
1201 F STREET, L.P., a Delaware limited partnership
By: /s/ Paul A. Galiano [SEAL]
Name: Paul A. Galiano
Title: Senior Managing Director
LESSEE:
CRA INTERNATIONAL, INC., a Massachusetts
By: /s/Chad M. Holmes [SEAL]
Name: Chad M. Holmes
Title: EVP & Chief Corp Dev Officer
Signature Page to Addendum No. 7 to Lease between 1201 F Street, L.P. and CRA International
EXHIBIT A
PLAN SHOWING SUITE A-1, SUITE A-2, AND SUITE A-3
A-1
EXHIBIT B WORK
AGREEMENT
This Work Agreement is a part of the Addendum No. 7 to Lease (the “Addendum”) to which it is attached. In the event of any conflict between the terms of this Work Agreement and the terms of the Lease, the terms of this Work Agreement shall control. Capitalized terms used but not defined in this Work Agreement shall have the meanings given such terms in the Addendum or the Lease.
Article 1 - Definitions
1.Definitions.
1.1“Base Building Plans” means those certain plans and specifications for the Building.
1.2“Change Order” means any change in any of Lessee’s Plans after Lessor has approved any such plan and/or any change in the work or materials to be included in the Seventh Addendum Improvements.
1.3“Comparable Building” means first-class office buildings of comparable age and size in the central business district of the District of Columbia.
1.4“Contractor” means the general contractor selected by Lessee in accordance with the terms of this Work Agreement to construct and install the Seventh Addendum Improvements.
1.5“Construction Costs” means all costs in the permitting, demolition, construction and installation of the applicable Seventh Addendum Improvements and acquiring the materials for the applicable Seventh Addendum Improvements.
1.6“Engineers” means the mechanical, electrical, plumbing and structural and engineers
and other licensed third-parties selected by Lessee to assist in the preparation of Lessee’s Plans.
1.7“Essential Subs” means those subcontractors to be specifically designated by Lessor acting reasonably for purposes of working on the Building mechanical, electrical, plumbing, energy management, structural, exterior windows (including window removal and reinstallation for hoisting purposes), roof, sprinkler and fire and life safety systems.
1.8“Final Space Plan” means a detailed space plan for the applicable Seventh Addendum Improvements prepared by Lessee’s Architect, which space plan shall be substantially in conformance with the Preliminary Plan approved by Lessor and any updates or changes thereto approved by Lessor and shall contain the information and otherwise comply with the requirements set forth on Annex 2 attached hereto.
1.9“Improvement Costs” means, collectively, (i) the Planning Costs; (ii) the Construction Costs; and (iii) Lessor’s Fee, with respect to the applicable portion of the Seventh Addendum Improvements.
1.10“Lessee’s Architect” means the architect engaged by Lessee to design the applicable Seventh Addendum Improvements and prepare Lessee’s Plans.
1.11“Lessee’s Contractors” means Contractor and all subcontractors and sub- subcontractors (including the Essential Subs) who will work on the applicable Seventh Addendum Improvements.
1.12“Lessee’s Equipment” means any telephone, telephone switching, telephone and data cabling, furniture, computers, servers, Lessee’s trade fixtures and other personal property to be installed by or on behalf of Lessee in the Demised Premises.
1.13“Lessor’s Contribution” shall mean (i) with respect to the First Expansion Space, an amount equal to Four Hundred Sixty-Four Thousand Three Hundred Eighty Dollars ($464,380.00) (i.e., Seventy Dollars ($70.00) per rentable square foot of the First Expansion Space (the “First Expansion Space Lessor’s Contribution”), (ii) with respect to the Original Premises, an amount equal to Two Million Seventy-Five Thousand Seven Hundred Dollars ($2,075,700.00) (i.e., Fifty Dollars ($50.00) per rentable square foot of the Original Premises (as re-measured in accordance with Section 4(a) of the Addendum) (the “Original Premises Lessor’s Contribution”), (iii) with respect to the Second Expansion Space, an amount equal to Four Hundred Forty-Five Thousand Fifty-Five Dollars ($445,055.00) (i.e., Sixty-Five Dollars ($65.00) per rentable square foot of the Second Expansion Space) (the “Second Expansion Space Lessor’s Contribution”); and (iv) an additional amount equal to Thirteen Thousand Five Hundred and No/100 Dollars ($13,500.00) (the “Supplemental Contribution”) which may be used by Lessee with respect to any portion of the Seventh Addendum Improvements or Lessee’s Demising Work Contribution.
1.14“Lessor’s Fee” means a fee payable to Lessor equal to two percent (2%) of the Construction Costs.
1.15“Lessee’s Plans” means the Preliminary Plan, the Final Space Plan and the Plans and
Specifications, as applicable to the First Expansion Space and the Original Premises
1.165 “Lessee’s Representative” means Maxine Jacobs, whose address is 200 Clarendon Street, Boston, Massachusetts, and whose telephone number is (617) 425-3577, and whose email address is: mjacobs@crai.com.
1,17 “Lessor’s Representative” means Rustom Cowasjee, whose address is Tishman Speyer Properties, 1875 Eye Street, NW, Suite 300, Washington, DC 20006 and whose telephone number is (202) 420-2139 and whose email address is: rcowasjee@tishmanspeyer.com, and Haley Kameros, whose address is Tishman Speyer Properties, 1875 Eye Street, NW, Suite 300, Washington, DC 20006 and
whose telephone number is (202) 655-1653 and whose email address is: hkameros@tishmanspeyer.com.
1.18 “Permits” means all necessary permits in connection with the Seventh Addendum Improvements.
1.69 “Planning Costs” means all architectural, space planning, engineering and other costs
related to the design of the Seventh Addendum Improvements including, without limitation, the fees of Lessee’s Architect, the Engineers and the professionals preparing and/or reviewing Lessee’s Plans (or any of them).
1.20 “Plans and Specifications” means all architectural plans, construction drawings and specifications necessary and sufficient (i) for the construction of the Seventh Addendum Improvements in accordance with the Final Space Plan and (ii) to enable the Contractor to obtain all necessary Permits for the construction of the Seventh Addendum Improvements, and which shall contain the information and otherwise comply with the requirements set forth on Annex 3 attached hereto.
1.21 “Preliminary Plan” means a preliminary space plan prepared by Lessee’s Architect showing the general layout of the First Expansion Space and the Original Premises, as applicable, upon completion of the Seventh Addendum Improvements (as applicable with respect to the First Expansion Space and the Original Premises), which space plan shall contain the information and otherwise comply with the requirements set forth on Annex 1 attached hereto.
1,22 “Punch List Work” means minor details of construction, decoration and mechanical adjustment, if any, the noncompletion of which do not materially interfere with the use of the relevant portion of the Building.
1.23 “Requirements” means all present and future laws, rules, orders, ordinances, regulations, statutes, requirements, codes and executive orders, extraordinary and ordinary of (i) all Governmental Authorities, including the Americans With Disabilities Act, 42 U.S.C. §12101 (et seq.), and any law of like import, and all rules, regulations and government orders with respect thereto, and any of the foregoing relating to hazardous materials, environmental matters, public health and safety matters and landmarks protection, (ii) any applicable fire rating bureau or other body exercising similar functions, affecting the Project or the maintenance, use or occupation thereof, or any street, avenue or sidewalk comprising a part of or in front thereof or any vault in or under the same, (iii) all requirements of all insurance bodies affecting the Demised Premises, and (iv) utility service providers.
1.24 Seventh Addendum Improvements” means the improvements set forth in Lessee’s Plans with respect to the First Expansion Space, the Original Premises, and the Second Expansion Space (as applicable), as approved by Lessor in accordance with the terms of this Work Agreement.
1.25 “Substantial Completion” or "Substantially Completed" means that the applicable Seventh Addendum Improvements have been completed, as reasonably determined by Lessor, in accordance with (a) the provisions of this Work Agreement applicable thereto, and (b) the plans and specifications for such work, except for any Punch List work.
Article 2 – Plans
2.1 Lessee’s Architect and Engineers. Lessee has or will retain Lessee’s Architect to design the Seventh Addendum Improvements and prepare Lessee’s Plans. Lessee’s Architect and the Engineers shall be subject to Lessor’s reasonable approval, which approval shall not be unreasonably withheld, conditioned or delayed.
2.2 Preliminary Plan. Prior to commencement of any work, Lessee shall deliver the applicable Preliminary Plan to Lessor for Lessor’s approval. Within ten (10) business days after Lessee delivers the applicable Preliminary Plan to Lessor, Lessor shall advise Lessee of Lessor’s approval or disapproval of the applicable Preliminary Plan (which disapproval shall specify Lessor’s objections in sufficient detail so that Lessee can make the necessary revisions to satisfy such objections). Within ten (10) business days after Lessor notifies Lessee of Lessor’s objections, Lessee shall revise the proposed Preliminary Plan to address Lessor’s objections and deliver the revised Preliminary Plan to Lessor for Lessor’s approval. Within five (5) business days after Lessee delivers the revised Preliminary Plan to Lessor, Lessor shall advise Lessee of Lessor’s approval or disapproval of the revised Preliminary Plan (which disapproval shall specify Lessor’s objections in sufficient detail so that Lessee can make the necessary revisions to satisfy such objections). Lessee and Lessor shall continue to follow the revision, delivery and notice of objections procedure and schedule set forth above until Lessor approves the Preliminary Plan. Lessor’s approval standard with respect to the Preliminary Plans shall be in accordance with Section 12 of the Original Lease.
2.3 Final Space Plan. Within thirty (30) days after Lessor approves the applicable Preliminary Plan, Lessee shall deliver the applicable Final Space Plan to Lessor for Lessor’s approval. Within ten (10) business days after Lessee delivers the Final Space Plan to Lessor, Lessor shall advise Lessee of Lessor’s approval or disapproval of the applicable Final Space Plan (which disapproval shall specify Lessor’s objections in sufficient detail so that Lessee can make the necessary revisions to satisfy such objections). Within ten (10) business days after Lessor notifies Lessee of Lessor’s objections, Lessee shall revise the proposed Final Space Plan to meet Lessor’s objections and deliver the revised Final Space Plan to Lessor for Lessor’s approval. Within ten (10) business days after Lessee delivers the revised Final Space Plan to Lessor, Lessor shall advise Lessee of Lessor’s approval or disapproval of the revised Final Space Plan (which disapproval shall specify Lessor’s objections in sufficient detail so that Lessee can make the necessary revisions to satisfy such objections). Lessee and Lessor shall continue to follow the revision, delivery and notice of objections procedure and schedule set forth above until Lessor approves the Final Space Plan. Lessor’s approval standard with respect to the Final Space Plan shall be in accordance with Section 12 of the Original Lease.
2.4 Plans and Specifications. Within thirty (30 days after Lessor approves the applicable Final Space Plan with respect to the applicable Seventh Addendum Improvements, Lessee shall deliver the applicable Plans and Specifications to Lessor for Lessor’s approval. Within ten (10) business days after Lessee delivers the applicable Plans and Specifications to Lessor,
Lessor shall advise Lessee of Lessor’s approval or disapproval of the Plans and Specifications (which disapproval shall specify Lessor’s objections in sufficient detail so that Lessee can make the necessary revisions to satisfy such objections). Within ten (10) business days after Lessor notifies Lessee of Lessor’s objections, Lessee shall revise the proposed Plans and Specifications to meet Lessor’s objections and deliver the revised Plans and Specifications to Lessor for Lessor’s approval. Within ten (10) business days after Lessee delivers the revised Plans and Specifications to Lessor, Lessor shall advise Lessee of Lessor’s approval or disapproval of the revised Plans and Specifications (which disapproval shall specify Lessor’s objections in sufficient detail so that Lessee can make the necessary revisions to satisfy such objections). Lessee and Lessor shall continue to follow the revision, delivery and notice of objections procedure and schedule set forth above until Lessor approves the Plans and Specifications. Lessor’s approval standard with respect to the Plans and Specifications shall be in accordance with Section 12 of the Original Lease.
2.5 Changes to Plans.
a.In the event of any Change Order or in the event that Lessor reasonably determines that any of Lessee’s Plans have not been prepared in accordance with the requirements of this Work Agreement, Lessee shall be solely responsible for all costs and expenses and for all delays in occupancy by Lessee (which shall not delay the First Expansion Space Commencement Date or the Second Expansion Space Commencement Date, as applicable) resulting therefrom including, without limitation, costs or expenses relating to (i) any additional architectural or engineering services and related design expenses; (ii) any architectural or engineering costs incurred by Lessor in connection with its review of such requested change; (iii) any changes to materials in process of fabrication; (iv) cancellation or modification of supply or fabricating contracts; (v) removal or alteration of work or plans completed or in process; or (vi) delay claims made by Contractor.
b.No changes (other than de minimis cosmetic changes that do not affect the Building structure or base Building systems or the common areas, and are not visible from the exterior of the Premises) shall be made to any of Lessee’s Plans and no Change Orders shall be implemented without the prior written approval of Lessor, in accordance with the approval standards set forth above. All Change Orders shall be in writing and shall be on such AIA form as is required by Lessor and/or Contractor. Lessee shall evidence in writing its approval of any Change Order prior to requesting Lessor’s approval of same.
2.6 General Plan Provisions.
a.Lessee shall cause (i) Lessee’s Plans to comply with all applicable Requirements; (ii) Lessee’s Plans to be prepared by Lessee’s Architect and the Engineers in accordance with the terms of this Work Agreement and in conformity with the Base Building Plans and the base Building systems (including, without limitation, the base Building HVAC, mechanical, electrical, plumbing and life safety systems); (iii) the Plans and Specifications to be sufficient to enable Contractor (with respect to the Plans and Specifications) to obtain all necessary Permits; and (iv) the Plans and Specifications to be prepared using the AutoCAD Computer Assisted Drafting and Design System, in
CAD and PDF format. Lessee shall cause Lessee’s Plans not to include any Seventh Addendum Improvements that will or that reasonably might be anticipated to (1) interfere with the normal operation of the Building, Building operations, or the Base Building Systems; (2) materially increase maintenance or utility charges for operating the Building in excess of the standard requirements for Comparable Buildings, or (3) affect the exterior or structure of the Building.
b.Any provision of this Work Agreement or the Lease to the contrary notwithstanding, neither Lessor’s approval of the Plans and Specifications nor its observation or supervision of the construction or installation thereof, shall constitute an assurance by Lessor that Lessee’s design will perform to the desired temperature specifications, or (2) that the Plans and
Specifications satisfy any applicable Requirements or are sufficient to enable the Contractor to obtain a building permit for the undertaking of the applicable Seventh Addendum Improvements, or (4) release Lessee from its obligations under this Work Agreement. If Lessor notifies Lessee at any time that the Plans and Specifications must be revised due to their failure to comply with the terms of this Work Agreement, such revisions shall be made at Lessee’s expense and any delay arising in connection therewith shall constitute a Lessee delay and shall not postpone or delay the First Expansion Space Commencement Date or the Second Expansion Space Commencement Date, as applicable, or otherwise give rise to any claim or cause of action against Lessor.
c.Prior to making or installing any of the applicable Seventh Addendum Improvements, Lessee shall perform a field verification to independently determine the existing conditions, specifications and dimensions of the applicable portion of the Demised Premises (i.e., the First Expansion Space, the Original Premises and the Second Expansion Space) and any variances from the Base Building Plans.
d.Lessee has appointed Lessee’s Representative for purposes of granting any consents or approvals by Lessee under this Work Agreement and for authorizing and executing any and all Change Orders or other documents in connection with this Work Agreement and Lessor shall have the right to rely on Lessee’s Representative’s consent, approval, authorization or execution as aforesaid.
e.Lessor has appointed Lessor’s Representative for purposes of granting any consents or approvals by Lessor under this Work Agreement and for authorizing and executing any and all Change Orders or other documents in connection with this Work Agreement and Lessee shall have the right to rely on Lessor’s Representative’s consent, approval, authorization or execution as aforesaid.
f.Lessee shall reimburse Lessor for all actual, reasonable third-party out-of- pocket costs incurred by Lessor in reviewing any proposed Lessee Plans and Change Orders within thirty (30) days after Lessee’s receipt of an invoice therefor, provided that such amount does not exceed $5,000 for Lessee Plans and Change Orders that might affect the Building’s MEP System, and $5,000 for Lessee Plans and Change Orders that might affect the Building structure.
g.If Lessee proposes any structural Alteration or any Alteration having a material impact on the Building’s mechanical, electrical or plumbing systems, the time periods set forth above for Lessor’s review of such Plans (or any component thereof) shall be reasonably extended by Lessor if Lessor reasonably determines extra time is needed for its review.
Article 3 – Construction
3.1 Lessor Improvements. Except as might be expressly set forth herein or in the Addendum to the contrary, Lessor has no obligation to do any other work or pay any amounts with respect to the First Expansion Space, the Original Premises or the Second Expansion Space.
3.2 Seventh Addendum Improvements. Lessee shall, at Lessee’s expense (subject to the application of the Lessor’s Contribution as expressly set forth in this Exhibit), Substantially Complete the applicable Seventh Addendum Improvements in a good and workmanlike manner and in accordance with the terms of this Work Agreement. Except to the extent that the Plans and Specifications provide otherwise, Lessee will cause the Seventh Addendum Lessee Improvements to be constructed of new or like-new materials commensurate with the level of improvements for a typical first-class tenant in Comparable Buildings and consist with the materials and finishes in Lessee’s existing Premises.
3.3 General Contractor. Promptly after Lessor’s approval of the Plans and Specifications, Lessee shall enter into a contract for construction of the applicable Seventh Addendum Improvements with a general contractor. The general contractor shall be subject to Lessor’s approval, such approval not to be unreasonably withheld, conditioned or delayed, and upon such selection and approval such general contractor shall be the “Contractor” under this Work Agreement. Lessee shall deliver to Lessor a copy of Lessee’s construction contract with the Contractor promptly upon execution of same (with redaction of sensitive terms, except the economic terms, if Lessee elects to do so). Lessee shall cause such contract to comply with all of the relevant terms and conditions of this Work Agreement and the Lease (and in the event of any conflict between this Lease and the construction contract, the terms of this Lease shall govern as between Lessor and Lessee). The Contractor shall be responsible for all required construction, management and supervision of the Seventh Addendum Improvements.
3.4 Subcontractors. All Lessee’s subcontractors shall be reputable, and Lessor shall have the right to disallow any subcontractors with whom Lessor (or its affiliates) have had any disputes.
3.5 Certain Essential Work. All Seventh Addendum Improvement connections or tie-ins to the base Building energy management, sprinkler and fire and life safety systems shall be performed at Lessee’s expense by the applicable Essential Sub. All Seventh Addendum Improvement work relating to the Building exterior walls and windows (including window removal and reinstallation for hoisting purposes), and the roof (excluding HVAC), shall be performed at Lessee’s expense by the applicable Essential Sub.
3.6 Permits. Prior to commencement of the applicable Seventh Addendum Improvements, Lessee shall, at Lessee’s expense, obtain the Permits.
3.7 Pre-Construction Deliveries. Not fewer than ten (10) days prior to commencement of construction of the Seventh Addendum Improvements, Lessee shall deliver the following information and items to Lessor with respect to the applicable portion of the Seventh Addendum Improvements:
a.the names and addresses of Lessee’s Contractors;
b.the schedule for commencement of construction, the estimated date of Substantial Completion, the fixturing work and the date on which Lessee will commence occupancy of the First Expansion Space and the Second Expansion Space, as applicable, for the conduct of Lessee’s business;
c.Lessee’s itemized statement of the estimated Improvement Costs;
d.certificates of insurance evidencing all insurance coverage required under the Lease and this Work Agreement; and
e.a copy of the Permits.
3.8 Lessee’s Equipment. Lessee, at Lessee’s expense, shall be responsible for ordering and for the delivery and installation of Lessee’s Equipment.
3.9 Post Construction Activities. Prior to Lessee’s use or occupancy of the First Expansion Space and the Second Expansion Space, as applicable, or any portion thereof and Lessor’s disbursement of any portion of the Retainage, Lessee shall, at Lessee’s expense, deliver to Lessor a copy of the certificate of occupancy (if the same is required by applicable Requirements in connection with Lessee’s use or occupancy of the applicable Expansion Space), and all certifications and approvals with respect to the applicable portion of the Seventh Addendum Improvements that may be required from any governmental authority and/or any board or fire underwriters or similar body for the use and/or occupancy of the Demised Premises; and certificates of insurance evidencing all insurance coverage required under the Lease and this Work Agreement.
3.10 General Construction Provisions.
a.Any damage caused by Lessee’s Contractors to any portion of the Building or to any property of Lessor or other Lessees shall be repaired forthwith after written notice from Lessor to its condition prior to such damage by Lessee at Lessee’s expense.
b.Lessee and Lessee’s Contractors shall access the applicable portion of the Demised Premises via the Building freight elevator, work in harmony and not interfere with the performance of other work in the Building.
c.If at any time such entry shall cause, or in Lessor’s reasonable judgment threaten to cause, such disharmony or interference, Lessor may terminate such permission upon 24 hours’ notice to Lessee, and thereupon, Lessee or its employees, agents, contractors, and suppliers causing such disharmony or interference shall immediately withdraw from the First Expansion Space and the Second Expansion Space and the Building until Lessor reasonably determines such disturbance no longer exists.
d.Lessee shall comply with and cause Lessee’s Contractors to comply with the rules and regulations attached hereto as Annex 5-Construction Rules and Regulations and such other reasonable rules and regulations as Lessor from time to time establishes concerning construction work in the Building.
Article 4 – Improvement Costs and Lessor’s Contribution
4.1 Improvement Costs. Lessee shall be responsible for the full and timely payment of all Improvement Costs, subject to Lessor’s disbursement of the Lessor’s Contribution as provided in this Work Agreement. Lessor shall make disbursements from the Lessor’s Contribution as invoices are rendered to Lessor, provided that Lessor has received partial or final (as applicable) lien waivers and such other commercially reasonable related documentation as Lessor may reasonably require from the party requesting such payment. Lessor shall have the right to deduct Lessor’s Fee from the applicable portion of the Lessor’s Contribution as and when Lessor makes disbursements from the Lessor’s Contribution. Lessor acknowledges and agrees that Lessee shall have the right to apply Lessor’s Contribution to the Improvement Costs in connection with Original Premises, the First Expansion Space, and/or the Second Expansion Space in Lessee’s sole discretion, including retroactively, provided, however, that (i) the First Expansion Space Lessor’s Contribution shall solely be available as of the First Expansion Space Commencement Date, (ii) the Original Premises Lessor’s Contribution shall solely be available as of the Extension Term Commencement Date, and (iii) the Second Expansion Space Lessor’s Contribution shall solely be available as of the Second Expansion Space Delivery Date.
4.2 Lessor’s Contribution. Lessor shall disburse an amount not to exceed the Lessor’s Contribution toward the Improvement Costs as set forth herein. Up to twenty-five percent (25%) of the Lessor’s Contribution may be applied toward Planning Costs and other soft costs incurred in connection with the Seventh Addendum Improvements and the Demised Premises. Subject to Section 4.1, any portion that is not requested for disbursement in accordance with this Work Agreement by the date that is twelve (12) months after (x) the First Expansion Space Commencement Date, with respect to the First Expansion Space Lessor’s Contribution, (y) the Extension Term Commencement Date, with respect to the Original Premises Lessor’s Contribution, and (z) the Second Expansion Space Delivery Date, with respect to the Second Expansion Space Lessor’s Contribution, shall be deemed waived and forfeited. Notwithstanding anything to the contrary herein, Lessor acknowledges and agrees that, in connection with Lessee’s performance of the Lessee Improvements in the applicable portion of the Premises, Lessee may submit requests for draws from any later- available portion of the Lessor’s Contribution in accordance with the terms hereof, at the time that Lessee incurs Improvement Costs for the applicable portion of the Premises; provided, however, that Lessee shall also resubmit the same request for draw from the applicable
portion of the Lessor’s Contribution at the time such portion of Lessor’s Contribution becomes available to Lessee as provided herein, and shall resubmission shall not constitute a waiver of Lessee’s rights with respect to the applicable portion of the Lessor Contribution (e.g., Lessee may submit a draw request package for the First Expansion Space or the Second Expansion Space, as applicable, in connection with a draw request for a portion of the Original Premises Lessor’s Contribution simultaneously with Lessee’s other draw requests for the First Expansion Space Lessor’s Contribution and/or Second Expansion Space Lessor’s Contribution, as applicable, provided that (i) such First Expansion Space Lessor’s Contribution and/or Second Expansion Space Lessor’s Contribution, as applicable, shall only be disbursed as of the Extension Term Commencement Date, and (ii) Lessee shall resubmit the draw request for the First Expansion Space or the Second Expansion Space, as applicable, upon the availability of the Original Premises Lessor’s Contribution).
4.2 Disbursement of Lessor’s Contribution.
a.Lessor shall make progress payments to Lessee from the Lessor’s Contribution for the work performed during the previous month, less a retainage of ten percent (10%) of each progress payment (“Retainage”), such that if all conditions set forth in this Exhibit to Lessor’s obligation to make a progress payment have been satisfied and (i) the invoice for which Lessee seeks a progress payment states that the Retainage has been deducted from the total amount owed, the progress payment will be for entire amount that is then payable under such invoice, and (ii) the invoice for which Lessee seeks a progress payment does not state that the Retainage has been deducted from the total amount owed, the progress payment will be for ninety percent (90%) of the invoiced amount. Prior to disbursement of the first progress payment, Lessor shall have received a copy of Lessee’s construction contract with the Contractor and Lessee’s budget (showing all Improvement Costs) for the applicable portion of the Seventh Addendum Improvements. Each progress payment shall be limited to that fraction of the total amount of such payment, the numerator of which is the amount of the applicable Lessor’s Contribution and the denominator of which is the total contract price (or, if there is no specified or fixed contract price for the applicable portion of the Seventh Addendum Improvements, then Lessor’s reasonable estimate thereof) for the performance of all of the applicable Seventh Addendum Improvements shown the applicable Lessee’s Plans as approved by Lessor.
b.Prior to disbursement of the first progress payment, Lessor shall have received a copy of Lessee’s construction contract with the Contractor and Lessee’s budget (showing all applicable Improvement Costs) for the applicable Seventh Addendum Improvements.
c.If Lessor receives Lessee’s request (together with the supporting documentation required hereunder) for a disbursement from the applicable portion of the Lessor’s Contribution on or before the twentieth (20th) day of a month, Lessor will make such disbursement not later than on the last day of the first calendar month following the calendar month during which Lessor received such request. If Lessor receives Lessee’s request (together with the
supporting documentation required hereunder) for a disbursement from the applicable portion of the Lessor’s Contribution after the twentieth (20th) day of a month, Lessor will make such disbursement not later than on the last day of the second calendar month following the calendar month during which Lessor received such request. Each disbursement shall be made payable to Lessee, or, pursuant to a Lessee’s written request for disbursement, to Lessee’s general contractor and consultants directly, provided that Lessor shall not be required to pay more than three (3) such entities each calendar month. Each of Lessee’s requisitions for a disbursement from the applicable portion of the Lessor’s Contribution shall be signed by Lessee’s Representative, shall set forth the names of each contractor and subcontractor to whom payment is due or for which Lessee seeks reimbursements for payments made by Lessee and the amount thereof, and shall be accompanied by:
(i) with respect to the first requisition from each applicable portion of the applicable portion of Lessor’s Contribution, copies of conditional waivers and releases of lien upon progress payment in such form as Lessor reasonably requires from all of Lessee’s Contractors and material suppliers covering all work and materials for which the progress payment is being made, and after the first requisition, copies of conditional waivers and releases of lien upon progress payment in such form as Lessor reasonably requires from all of Lessee’s Contractors and material suppliers covering all work and materials for which the progress payment is being made, together with copies of unconditional waivers and releases of lien upon progress payment in such form as Lessor reasonably requires from all of Lessee’s Contractors and material suppliers covering all work and materials which were the subject of previous progress payments by Lessor and Lessee;
(ii) Lessee’s Architect’s written certification that the work for which the requisition is being made has been Substantially Completed in accordance with the Plans and Specifications; and
(iii) such other commercially reasonable documents and information as Lessor may reasonably request.
(d) Lessor shall disburse the Retainage upon submission by Lessee to Lessor of Lessee’s requisition therefor accompanied by all documentation required above, together with:
(i) Lessee’s Architect’s written certification of final completion of the applicable portion of the Seventh Addendum Improvements in accordance with the applicable Plans and Specifications. In addition, Lessor with the opportunity to inspect the applicable portion of the
Demised Premises so that Lessor can be reasonably satisfied of the final completion of the applicable portion of the Seventh Addendum Improvements in accordance with such Plans and Specifications;
(ii) a copy of the certificate of occupancy and all other certifications and approvals with respect to the applicable portion of the Seventh Addendum Improvements that may be required from any governmental authority and/or any board or fire underwriters or similar body for the use and/or occupancy of the applicable portion of the Demised Premises;
(iii) final waivers and releases of lien in such form as Lessor reasonably requires from all of Lessee’s Contractors and material suppliers;
(iv) certificates of insurance evidencing all insurance coverage required under the Lease and this Work Agreement;
(v) a copy (which may be electronic) of each guaranty, warranty and O&M manual applicable to the applicable portion of the Seventh Addendum Improvements; and
(vi) final “as built” plans (five (5) sets) and certified air balance reports for the applicable portion of the Demised Premises. The “as-built” plans shall be prepared on the AutoCAD Computer Assisted Drafting and Design System, in CAD and PDF format.
4.4 Test-Fit. Lessor agrees to reimburse Lessee (or at Lessee’s written elect Lessee’s Architect directly) in amount not to exceed Nine Hundred Twenty-Eight and 76/100 Dollars ($928.76) (i.e., Fourteen Cents ($0.14) per rentable square foot of the First Expansion Space) for costs incurred by Lessee for the preparation of a test-fit of the First Expansion Space.
4.5 Additional Rent. All amounts payable by Lessee pursuant to this Work Agreement shall be deemed to be Additional Rent for purposes of the Lease (as amended by the Addendum).
4.6 Conditions to Advance. Any provision of the Lease (as amended by the Addendum) or this Work Agreement to the contrary notwithstanding, Lessor shall have no obligation to make any payment or disbursement from the Lessor’s Contribution (i) if the Lease (as amended by the Addendum) is not in full force and effect or there exists any default by Lessee beyond the expiration of applicable notice and cure periods; (ii) for any deposit or off-site prefabrication, whether for any portion of the Seventh Addendum Improvements, any Lessee equipment, or otherwise; (iii) for any work that is not in place at the Demised Premises; or (iv) for any Lessee’s equipment not located at the Demised Premises.
4.7 Failure to Pay Contractors. Any provision of the Lease (as amended by the Addendum) or this Work Agreement to the contrary notwithstanding, assuming Lessor funds
disbursement requests in accordance with the terms of this Work Agreement, if Lessee does not pay any of Lessee’s Contractors or material suppliers, Lessor shall have the right, but not the obligation, to promptly pay to such contractor or supplier all sums so due from Lessee if such failure continues for more than ten (10) business days after written notice to Lessee of such failure, and Lessee agrees the same shall be deemed Additional Rent and shall be paid by Lessee within ten (10) business days after Lessor delivers to Lessee an invoice therefor.
4.8 Intentionally omitted.
4.9 Lessor Delay. If and to the extent that Lessee is unable to Substantially Complete an applicable portion of the Seventh Addendum Improvements and commence beneficial occupancy in the First Expansion Space or the Second Expansion Space (as applicable), and such inability is caused by Lessee being actually delayed in completing the applicable portion of the Seventh Addendum Improvements or obtaining any required governmental permit or required occupancy permit therefor as a direct result of a Lessor Delay (as defined below), then, provided no default by Lessee beyond the expiration of any applicable notice and cure period then exists, as Lessee’s sole and exclusive remedy therefor, the First Expansion Space Commencement Date and the Second Expansion Space Commencement Date, as applicable, shall be extended by one (1) day for each day of Lessor Delay. Lessee shall notify Lessor (in writing and with reasonable specificity) of the existence and cause of a potential Lessor Delay (the “Delay Notice”) within three (3) business days after Lessee first becomes aware of the existence thereof. Such Delay Notice shall be delivered to Lessor, with a copy to Lessor’s Representative. If Lessee fails to timely provide such Delay Notice in accordance with the foregoing, then any period of delay occurring prior to Lessor’s receipt of such Delay Notice shall be deemed not to constitute Lessor Delay. Lessee agrees to use good faith reasonable efforts to counter the effect of any Lessor Delay; however, Lessee shall not be obligated to expend any additional amounts in such efforts (e.g., by employing overtime labor) unless Lessor agrees in advance in writing to bear any incremental cost associated with such efforts. “Lessor Delay” means any actual delay in the permitting, construction or completion of any portion of the applicable Seventh Addendum Improvements directly caused by: (a) any failure of Lessor in timely responding to Lessee’s request for approval of the Plans and Specifications, which delay continues for two (2) business days after written notice; (b) a violation of applicable Requirements with respect to the base Building or the common areas, which prevents Lessee from obtaining a building permit or certificate of occupancy for the applicable portion of the Demised and not resulting from Lessee’s performance of the Seventh Addendum Improvements; (c) unreasonable interference by Lessor with Lessee’s performance of the applicable Seventh Addendum Improvements.
4.10 Lessee Set Off Rights. Provided that Lender consents to the provisions set forth in this Section 4.10 without requiring Lessor to escrow any funds on account of Lessor’s Contribution, then Lessee shall have the set off rights as expressly set forth in this Section 4.10: If Lessor fails to make any disbursement of the applicable portion of Lessor’s Contribution as and when required pursuant to this Exhibit B following Lessor’s receipt of written request from Lessor (together with all supporting documentation) as required hereunder (the “Overdue Allowance”), then Lessee shall have the right to provide Lessor and the current lender for the Building with written notice (the “Set Off Notice”) specifying such failure and including the following in bold capital letters: “MUST BE PAID BY LESSOR WITHIN TEN (10) BUSINESS DAYS OR LESSEE SET OFF RIGHTS SHALL BE
EXERCISED.” If (X) Lessor does not reasonably dispute any portion of Lessee’s request for disbursement and fails to disburse the applicable portion of Lessor’s Contribution as required hereunder within ten (10) business days following receipt of the Set Off Notice, or (Y) Lessor does not disburse the applicable portion of Lessor’s Contribution within ten (10) business days after a final and unappealable order with respect to the same has been entered in a court of competent jurisdiction in favor of Lessee (and only in such events), then Lessee shall have the right to exercise its rights and remedies under law (but not the right to terminate the Lease) in connection with such Overdue Allowance, and Lessee shall have the right to set off against the next installment(s) of Monthly Rent payable by Lessee under the Lease (as amended by the Addendum) an amount equal to the Overdue Allowance from the date such amount became overdue until the date applied hereunder; provided, however, that such set-off shall not be applied against more than thirty-five percent (35%) of any installment of Monthly Rent. In the event Lessee exercises its right to set off as set forth herein, Lessee shall be required to apply an amount equal to the amount set off toward the costs to which such applicable portion of Lessor’s Contribution is permitted to be applied. Any set off that occurs or is permitted to occur under this Section in accordance with the foregoing shall be nullified and of no further force and effect if and to the extent that, and at such time as, the applicable amount of the Overdue Allowance is paid to Lessee in full.
Annex 1
Requirements for Preliminary Space Plan
Floor plans showing partition arrangement including the following information:
a.space plan showing the general layout of offices, open plan areas and special Lessee areas;
b.typical individual work station layouts;
c.identify the extent of each department on each floor;
d.show door locations and door swings in partitions;
e.identify general location and size of interconnecting stairs;
f.indicate preliminary furniture layout for typical offices and work stations, conference rooms, employee lounge, reception area, training room and print room;
g.indicate locations for coffee rooms and shower rooms; and
h.preliminary locations for built-in millwork.
Annex 2
Requirements for Final Space Plan
Floor plans, together with related information for mechanical, electrical and plumbing design work, showing partition arrangement (3 sets), including without limitation the following information:
a.identify the location of conference rooms and density of occupancy;
b.indicate the density of occupancy for all rooms, except individual use rooms such as offices;
c.identify the location of any food service areas or vending equipment rooms;
d.identify areas, if any, requiring 24 hour air conditioning;
e.indicate those partitions that are to extend from floor to underside of structural slab above or require special acoustical treatment;
f.identify the location of rooms for telephone equipment other than Building core telephone closet, identify type of equipment for these rooms;
g.identify the locations and types of plumbing required for toilets (other than core facilities), sinks, drinking fountains, etc.;
h.indicate light switches in offices, conference rooms and all other rooms in the Demised Premises;
i.indicate the layouts for specially installed equipment, including computer and duplicating equipment, the size and capacity of mechanical and electrical services required and heat rejection of the equipment;
j.indicate the location of: (A) electrical receptacles one hundred twenty (120) volts, including receptacles for wall clocks, and telephone outlets and their respective locations (wall or floor), (B) electrical receptacles for use in the operation of Lessee’s business equipment which requires 208 volts or separate electrical circuits, (C) electronic calculating and CRT systems, etc., and (D) special audio- visual requirements;
k.indicate proposed layout and location of any of special equipment (e.g., fire suppression equipment for computer room);
l.indicate the swing of each door;
m.indicate any special file systems to be installed which would require special construction; and
n.lighting layouts for each floor.
Annex 3
Requirements for Plans and Specifications
Final architectural detail and working drawings, finish schedules and related plans (3 reproducible sets) including without limitation the following information and/or meeting the following conditions:
a.specifications of all materials, colors and suppliers/manufacturers of wallcoverings, floor coverings, ceiling systems, window coverings and other finishes; all millwork shall be fully detailed to the appropriate level for pricing and construction; all specialty items shall be identified as particular products; and paintings and decorative treatment required to complete all construction;
b.complete, finished, detailed mechanical, electrical, plumbing and structural plans and specifications for the applicable Seventh Addendum Improvements, including but not limited to the fire and life safety systems and all work necessary to connect any special or non-standard facilities to the Building’s base mechanical systems; and
c.all final floor plans must be drawn to a scale of one-eighth (l/8) inch to one (l) foot except for larger scaled detailed drawings. Any architect or designer acting for or on behalf of Lessee shall be deemed to be Lessee’s agent in all respects with respect to the design and construction of the Demised Premises.
Annex 4
[Intentionally omitted]
Annex 5
Construction Rules and Regulations
1.Lessee and/or the general contractor will supply Lessor with a copy of all permits prior to the start of any work.
2.Lessee and/or the general contractor will post the building permit, as required by District regulations, within the Demised Premises while work is being performed.
3.The Lessee shall provide, in writing, prior to commencement of the work, the names and emergency numbers of all subcontractors, the general contractor superintendent, general contractor’s project manager and the Project Manager.
4.No construction is to be started until the drawings required under the Work Agreement have been submitted and approved in writing by Lessor.
5.Lessor is to be contacted by Lessee when work is completed for final inspection. All damage to building will be determined at that time unless determined earlier.
6.Any work that is to be performed in other than Lessee’s Premises must be reviewed and scheduled in advance with the Lessor.
7.Lessor will be notified of all work schedules of all workmen on the job and will be notified, in writing, in advance, of names of those who may be working in the building after “normal” business hours.
8.Construction personnel must carry proper identification at all times.
9.All workers to be appropriately dressed for their work responsibility.
10.Lessor must approve all roof top equipment and placement. All penetrations must be cut and flashed by the roof warranty holder of the existing roof system.
11.Lessor shall designate contractor-parking areas (if any).
12.Contractor must notify Lessor two days prior to an independent air balancing service by a certified air balance company. Lessor’s building engineer will accompany the contractor during their work. Lessor must receive a copy of the final approved balance report.
13.Before Lessor makes final payment, five sets of as-built and all O&M manuals as well as a CADD disc must be submitted to Lessor.
14.The general contractor and Lessee shall be responsible for all loss of their materials and tools and shall hold Lessor harmless for such loss and from any damages or claims resulting from the work.
15.The general contractor shall maintain insurance coverage throughout the job of a type(s), in amounts and issued by an insurance company, reasonably satisfactory to Lessor and licensed to write the type of coverage so required in the District of Columbia. Prior to the commencement of work, a Certificate of Insurance must be submitted with the limits of coverage per the limits noted in the Lease with such parties being named as additional insureds as Lessor requires from time to time.
16.All key access, fire alarm work, or interruption of security hours must be arranged with the Lessor.
17.Proper supervision shall be maintained at the job site at all times and Lessee’s workmen, mechanics and contractors must not unreasonably interfere with the Buildings operations or Lessor. Lessee’s workmen, mechanics and contractors shall use good faith efforts to work in harmony with and shall not unreasonably interfere with any labor employed by the property manager or any other Lessee, or their workmen, mechanics and contractors.
18.Lessor is to be notified in advance of all ties into Base Building Systems, welding, or any work affecting the base building or other Lessee spaces unless agreed to otherwise, all tie- ins to base building fire alarm systems are performed by Lessor, designated contractor and cost borne by Lessee.
19.The following work, of which Lessor is to be notified in advance, must be done on overtime and not during normal business hours once any portion of the building is occupied (by Lessees other than the property management office):
•Demolition which per building manager’s judgment may cause disruption to other tenants.
•Oil base painting (on multi-Lessee floors)
•Gluing of carpeting (on multi-Lessee floors)
•Shooting of studs for mechanical fastenings
•Testing of life safety system, sprinkler tie-ins.
•Work performed in occupied spaces.
•Welding, brazing, soldering and burning with proper fire protection and ventilation.
•Other activities that, in building manager’s judgment, may disturb other tenants.
20. All building shutdowns – electrical, plumbing, HVAC equipment, fire and life-safety must be coordinated with Lessor in advance. Lessor’s and Factory Mutual procedures for hot work, fire alarm and sprinkler shutdowns must be followed. Lessor’s on-site engineer will detail the requirements summarized below:
•Smoke detectors must be bagged or cleaned daily and placed back in service at the end of each day.
•Call outs for fire alarm and sprinkler systems must be made with and only with Lessor’s personnel and with the attached forms. All systems must be put back into service at the end of each work day and working correctly.
•Hot work, i.e., torch burning/cutting and welding must be permitted through Lessor’s personnel and contractor must use Lessor’s form.
•When welding, contractor shall provide a fused disconnect switch for connection to building power supply and a Fire Watch.
•Forms are to be provided at kickoff meeting.
21. Fire extinguishers supplied by the general contractor must be on the job-site at all times during demolition and construction
22. No building materials are to enter the building by way of main lobby, and no materials are to be stored in any lobbies or fire stairs at any time.
23. Contractors or personnel will use loading dock area for all deliveries and will not use loading dock for vehicle parking.
24. Passenger elevators shall not be used for moving building materials and shall not be used for construction personnel except in the event of an emergency. The designated freight elevator and one or more protected passenger elevators are the only elevators to be used for moving materials and construction personnel. These elevators may be used only when they are completely protected as reasonably determined by Lessor’s building engineer.
25. Protection of hallway carpets, wall coverings, and elevators from damage with masonite board, carpet, cardboard, or pads is required. They may be removed from time to time as reasonably requested by the Lessor.
26. Public spaces, corridors, elevators, bathrooms, lobby, etc. must be cleaned after use. Construction debris or materials found in public areas will be removed at Lessee’s cost.
27. Contractors will remove their trash and debris daily or as often as necessary to maintain cleanliness in the building. Building trash containers are not to be used for construction debris. Lessor reserves the right to bill Lessee for any cost incurred to clean up debris left by the general contractor or any subcontractor (other than Contractor).
28. All construction materials or debris must be stored within the project confines or in an approved lock-up.
29. Contractors will be responsible for daily removal of waste foods, milk and soft drink containers, etc. to trash room and will not use any building trash receptacles but trash receptacles supplied by them.
30. Construction personnel are not to eat in the lobby or in front of building nor are they to congregate in the lobby or in front of building.
31. There will be no smoking, eating, or open food containers in the elevators, carpeted areas or public lobbies.
32. There will be no alcohol or controlled substances allowed or tolerated.
33. There will be no yelling or boisterous activities.
34. Radios shall not be played on job site, except that radios shall be permitted until the first Lessee occupies any portion of the Building. In any event, radio volume shall be kept to a reasonable level as reasonably determined by Lessor.
35. Lessor shall grant access to the base building electrical, telephone and mechanical rooms.
36. No utilities (electricity, water, gas, plumbing) or services to the Lessees are to be cut off or interrupted without first having requested, in writing, and secured, in writing, the permission of Lessor (which shall not be unreasonably withheld, conditioned or delayed).
37. No electrical services are to be put on the emergency circuit, without specific written approval from Lessor (which shall not be unreasonably withheld, conditioned or delayed).
38. When utility meters are installed, the general contractor must provide the property manager with a copy of the operating instructions for that particular meter.
39. All public areas such as elevator lobbies, corridors, toilets and service halls shall be protected with masonite and other such materials to the satisfaction of the building manager/representative or representative.
40. Trash and debris resulting from the work shall be confined to either the interior of the space under construction or an on-site dumpster. If it is a dumpster, then such debris shall be kept within the confines of the dumpster. The general contractor shall coordinate the location of the dumpster with the Lessor and plywood shall be used to protect the surface from damage.
41. Contractor is responsible to keep the construction area safe and in a workmanlike manner. Machinery noise shall not interfere with the peaceful enjoyment of any Lessee or their invitees to the building. No smoking in the building will be allowed at any time.
42. Clear access to be provided at all times to stairwells, mechanical/electrical equipment and rooms, elevators, fire hoses, valves, fire dampers and maintenance sensitive equipment.
43. Adequate lighting is to be provided in construction areas to achieve a safe working environment.
44. A Lessee valve tag chart shall be submitted to the Lessor.
45. All piping and wiring systems shall be adequately supported from building structure.
46. The cleaning of condenser water pipes shall be done in the presence of the Lessor’s representative with the chemical used per the building’s chemical treatment company’s recommendation.
47. All mechanical and electrical equipment shall have permanent identification labels affixed.
48. Kitchen exhaust access doors must be clearly identified and accessible for periodic inspection as required by law.
49. All telecommunication cabling in common areas, mechanical equipment rooms, etc. shall be installed in an enclosed raceway and shall be identified.
50. All air handlers, CAV boxes and VAV boxes need pre-filters (construction filters) installed over filter bank and may require periodic changes during the construction period until each floor is complete at which time a change out of filters is required. All units will be required to be cleaned thoroughly if the system is contaminated and this procedure is not maintained.
51. All mechanical, telephone, electrical and pump room floors within the Demised Premises, must be painted at the end of the job. Damaged, stained or new walls and pipe, etc. must be painted to match existing pipes and new pipes must match Lessor’s standard colors.
52. If Lessee uses any elevator(s) during the performance of the Seventh Addendum Improvements, after all Lessee construction is complete, the elevator systems need to be cleaned by the elevator service provider at Lessee contractor’s expense. This includes rails, pits, tops of cabs, machine rooms.
EXHIBIT C-1
CERTIFICATE AFFIRMING THE FIRST EXPANSION SPACE COMMENCEMENT DATE
This Certificate, dated as of , is being provided pursuant to that certain Addendum No. 7 to Lease dated as of (the “Addendum”), by and between 1201 F STREET, L.P., a Delaware limited partnership (“Lessor”), and CRA INTERNATIONAL, INCL, a Massachusetts corporation (“Lessee”).
All terms used herein and not otherwise defined shall have the meaning ascribed to them in the Addendum. The parties to the Addendum desire to confirm the following:
1.The First Expansion Space Commencement Date is .
2.The Revised Expiration Date is December 31, 2034.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Certificate under seal.
LESSOR:
1201 F STREET, L.P., a Delaware limited partnership
By: [SEAL]
Name:
Title:
LESSEE:
CRA INTERNATIONAL, INC., a Massachusetts corporation
By: [SEAL]
Name:
Title:
EXHIBIT C-2
CERTIFICATE AFFIRMING THE SECOND EXPANSION SPACE DELIVERY DATE AND THE SECOND EXPANSION SPACE COMMENCEMENT DATE
This Certificate, dated as of , is being provided pursuant to that certain Addendum No. 7 to Lease dated as of (the “Addendum”), by and between 1201 F STREET, L.P., a Delaware limited partnership (“Lessor”), and CRA INTERNATIONAL, INCL, a Massachusetts corporation (“Lessee”).
All terms used herein and not otherwise defined shall have the meaning ascribed to them in the Addendum. The parties to the Addendum desire to confirm the following:
1.The Second Expansion Space Delivery Date is .
2.The Second Expansion Space Commencement Date is
The Revised Expiration Date is December 31, 2034.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Certificate under seal.
LESSOR:
1201 F STREET, L.P., a Delaware limited partnership
By: [SEAL]
Name:
Title:
LESSEE:
CRA INTERNATIONAL, INC., a Massachusetts corporation
By: [SEAL]
Name:
Title:
Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul A. Maleh, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q (this "report") of CRA International, Inc. (the "registrant");
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 31, 2025 | By: | /s/ PAUL A. MALEH | ||||||
| Paul A. Maleh | ||||||||
| President and Chief Executive Officer | ||||||||
Exhibit 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Chad M. Holmes, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q (this "report") of CRA International, Inc. (the "registrant");
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 31, 2025 | By: | /s/ CHAD M. HOLMES | ||||||
| Chad M. Holmes | ||||||||
| Executive Vice President, Chief Corporate Development Officer and interim Chief Financial Officer and Treasurer | ||||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CRA International, Inc. (the “Company”) on Form 10-Q for the quarter ended June 28, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned President and Chief Executive Officer of the Company, certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| /s/ PAUL A. MALEH | |||||
| Paul A. Maleh | |||||
| President and Chief Executive Officer | |||||
| Date: July 31, 2025 | |||||
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CRA International, Inc. (the “Company”) on Form 10-Q for the quarter ended June 28, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Financial Officer, Executive Vice President and Treasurer of the Company, certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
| /s/ CHAD M. HOLMES | |||||
| Chad M. Holmes | |||||
| Executive Vice President, Chief Corporate Development Officer and interim Chief Financial Officer and Treasurer | |||||
| Date: July 31, 2025 | |||||