Exhibit 10.3

SERVICE AGREEMENT

This Service Agreement (“Service Agreement”) is entered into as of September 26,
2008, (the “Effective Date”), by and between Parkway Properties LP, a Delaware
limited partnership (“Service Provider”), and Xenith Bank [in Organization], a
Virginia corporation (“Customer”). In consideration of the mutual covenants set
forth herein, Service Provider and Customer agree as follows:

1. Terms and Definitions. The following definitions and terms apply to this
Service Agreement (other words are defined elsewhere in the text of this Service
Agreement):

(a) “Customer’s Current Address”: 300 Arboretum Place, Suite 550, Richmond,
Virginia 23236.

(b) “Premises”: Suite 410 on the fourth floor in the Boulders Center building
(the “Building”) located on land with an address of 1011 Boulder Springs Drive,
Richmond, Virginia 23225 (the “Land”)

(c) “Rentable Area of Premises”: 7,026 rentable square feet (“RSF”)

(d) “Rentable Area of Building”: 145,887 RSF

(e) “Pro-rata Share”: Customer’s pro-rata share is 4.816 percent (4.816%), which
is determined by dividing the Rentable Area of Premises by the Rentable Area of
Building.

(f) “Term”: The period of time beginning at 7 o’clock AM on the Commencement
Date and expiring at 6 o’clock PM local time on the Expiration Date.

(g) “Commencement Date”: Subject to and upon the terms and conditions set forth
herein, the Commencement Date of this Service Agreement shall be the earlier of
(i) December 1, 2008; or (ii) the date Customer begins conducting its business
in the Premises.

(h) “Expiration Date”: 6 o’clock PM local time on the last day of the
sixty-fifth (65th) full month of the Term.

(i) “Base Rent”: amount of monthly installments payable by Customer according to
the provisions hereof:

 

Period

                        

From

   To    RSF    # of Months    $/PRSF    Monthly Amount    Periodic Amount

12/01/08

   04/30/09    7,026    5.000    $ 17.00    $ 9,953.50    $ 49,767.50

05/01/09

   04/30/10    7,026    12.000    $ 17.00    $ 9,953.50    $ 119,442.00

05/01/10

   04/30/11    7,026    12.000    $ 17.20    $ 10,070.60    $ 120,847.20

05/01/11

   04/30/12    7,026    12.000    $ 17.40    $ 10,187.70    $ 122,252.40

05/01/12

   04/30/13    7,026    12.000    $ 17.61    $ 10,310.66    $ 123,727.92

05/01/13

   04/30/14    7,026    12.000    $ 17.82    $ 10,433.61    $ 125,203.32

 

* Subject to the Abated Rent provision provided below.

Provided that no Default, defined below, under any term, condition or obligation
of this Service Agreement exists at the time of the abatement provided below,
Customer’s monthly installment of Base Rent shall be abated for the first five
(5) full months of the Term of this Service Agreement (the “Abatement Period”),
in the amount of Nine Thousand, Nine Hundred Fifty-three and 50/100 Dollars
($9,953.50) per month, for a total abatement of Base Rent in the amount of
Forty-nine Thousand, Seven Hundred Sixty-seven and 50/100 Dollars ($49,767.50)
(the “Abated Rent”). The principal amount of the Abated Rent, together with
interest thereon calculated at the rate of ten percent (10%) per annum,
compounded monthly, shall be amortized evenly over the Term. So long as no
uncured Default, defined below, occurs under this Service Agreement, then upon
Service Provider’s receipt of the final monthly installment of Rent, defined
below, Customer shall have no liability to Service Provider for the repayment of
any portion of the Abated Rent. In the event of an uncured Default, then in
addition to all of Service Provider’s other remedies available under the Service
Agreement, Customer shall also become immediately liable to Service Provider for
the unamortized portion of the Abated Rent existing as of the date of such
uncured Default, and interest shall accrue thereon at the Default Rate, defined
below.

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(j) “Base Year”: Calendar year 2009.

(k) “Initial Improvements”: the improvements to be made to the Premises by
Service Provider in accordance with the work letter attached hereto as Exhibit
D-l (the “Work Letter”).

(l) “Security Deposit”: None.

(m) “Guarantor”: None.

(n) “Parking Spaces”: Available, unreserved parking in the Building’s Parking
Facility.

(o) “Customer’s Broker” is: Grubb & Ellis/Harrison & Bates, Inc. (Attention:
Stevens N. Gentil), 6606 W. Broad Street, Suite 400, Richmond, Virginia 23230;
804.788.1000.

(p) “Service Provider’s Broker” is: Commonwealth Commercial Partners, Inc. and
Parkway Realty Services, LLC, which is an affiliate of Service Provider.

(q) “Laws” shall mean any and all laws, ordinances, rules, regulations and
building and other codes of any governmental or quasi-governmental entity or
authority (“Governmental Authority”) applicable to the subject matter hereof,
including, without limitation, all Laws relating to disabilities, health, safety
or the environment.

(r) “Project”: shall mean the Building, Land, any areas designated by Service
Provider from time to time for the common use of all tenants and occupants of
the Building (“Common Areas”), including, but not limited to, the parking
facility for the Building designated by Service Provider from time to time (the
“Parking Facility”), walkways, greenspace, plaza and common areas, and related
equipment, fixtures and improvements.

 

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(s) “Building Standard”: The quantity and quality of materials, finishes and
workmanship from time to time specified by Service Provider for use throughout
the Building. Attached as Exhibit I is a specification listing the individual
components of the Building Standard as of the date hereof. “Above Standard”
means all improvements, fixtures, materials, finishes and workmanship which
exceed Building Standard in terms of quantity or quality (or both), including
but not limited to Supplemental HVAC Equipment, defined below; water heaters,
instant hot faucets, garbage disposals, dishwashers, stoves, microwaves,
refrigerators, ice machines, coffee machines, washing machines, dryers or other
appliances; and sinks, sink fixtures, sink drain lines, appliance drain lines,
water source plumbing, ground fault interrupters, dedicated outlets or other
similar plumbing and/or electrical fixtures or items.

(t) “Building Systems”: The mechanical, electrical, plumbing, sanitary,
sprinkler, heating, ventilation and air conditioning (“HVAC”), security,
life-safety, elevator and other service systems or facilities of the Building up
to the point of connection of localized distribution to the Premises.

2. Premises. Subject to and in accordance with the provisions hereof, Service
Provider leases to Customer and Customer leases from Service Provider the
Premises as designated on Exhibit A. The Rentable Area of the Premises and
Building for all purposes shall be as set forth in Section 1(c) and 1(d),
respectively. The Rentable Area of the Premises includes a pro-rata portion of
all Common Areas. Customer agrees that, except as expressly stated herein and in
the Work Letter, if any, attached to this Service Agreement, no representations
or warranties relating to the condition of the Project or the Premises and no
promises to alter, repair or improve the Premises have been made by Service
Provider. Except as otherwise expressly provided in this Service Agreement or
any Work Letter attached hereto, Customer agrees to accept the Premises in their
current “AS IS, WHERE IS” condition and acknowledges that SERVICE PROVIDER MAKES
NO WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF MERCHANTABILITY, HABITABILITY AND/OR FITNESS FOR A PARTICULAR
PURPOSE, IN CONNECTION WITH THE PREMISES OR THE INITIAL IMPROVEMENTS. Upon
Customer’s taking possession for the purposes of conducting business, the
Premises, including all Initial Improvements shall be deemed accepted by
Customer. Customer shall also have the non-exclusive right, subject to the terms
hereof, to use the Common Areas of the Project. Customer acknowledges that the
Project is or may become an integrated commercial real estate project including
the Building, the Land and other buildings, Common Areas and land. Service
Provider reserves the right, in its sole discretion, at any time and from time
to time, to include the Building within a project and/or to expand and/or reduce
the amount of Land and/or improvements of which the Building, the Common Areas,
or Project consists; to alter, relocate, reconfigure and/or reduce the Common
Areas, as long as the Premises remain reasonably accessible by means of
pedestrian and vehicular access, and so long as the Parking Spaces provided to
Customer are not significantly diminished as a result thereof; and to
temporarily suspend access to portions of the Common Areas, if Service Provider
determines, in its sole discretion, that such suspension is necessary to perform
its repair or maintenance obligations under this or any other agreement or to
comply with any applicable Laws, as long as the Premises remain reasonably
accessible.

 

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3. Authorized Use. Customer shall use the Premises solely for general business
office purposes, and as a branch bank and for no other purpose. The parties
acknowledge that, as of the Effective Date, Customer is operating under the name
“Xenith Bank [in Organization]” as Customer is in the process of organizing a
commercial bank under the laws of the Commonwealth of Virginia. Provided
Customer receives all required approvals for the organization and operation of
such bank, Customer intends to use the Premises as the Operations Center for
such bank. Upon receiving such required approvals, Customer shall so inform
Service Provider in writing. Provided, however, that if, for whatever reason,
Customer is unable to obtain such approvals, this Service Agreement shall remain
in full force and effect, and Customer shall be and remain obligated for the
fulfillment of all of its obligations under this Service Agreement throughout
the Term hereof, unless Customer exercises the Termination Option set forth in
Section 56 of this Service Agreement.

4. Term. This Service Agreement shall constitute a legally binding and
enforceable agreement between Service Provider and Customer as of the Effective
Date. The Term of this Service Agreement is stated in Section 1(f), and the
Commencement Date shall be determined as provided in Section 1(g). Service
Provider and Customer shall confirm the Commencement Date and Expiration Date in
writing within thirty (30) days after the actual Commencement Date pursuant to
the form acknowledgement attached as Exhibit E (the “Commencement Date
Agreement”). During the period of time commencing the earlier of
(i) September 5, 2008 or (ii) the date on which the mechanical, electrical and
plumbing stub-out and framing is complete, gypsum board is installed on one side
of the walls of the Premises, and the Premises are secure, and expiring
immediately preceding the Commencement Date (the “Early Access Period”), Service
Provider shall permit Customer to have access to the Premises for the limited
purpose of taking measurements, making plans for occupancy of the Premises,
installing trade fixtures, cabling and wiring network infrastructure, storing
furniture and equipment and doing such other work as may be appropriate or
desirable to enable Customer to eventually assume possession of and operate its
business in the Premises; provided, however, that Customer shall coordinate its
access to the Premises with Service Provider in order to ensure that such access
does not interfere with or delay the completion of the construction of the
Initial Improvements. Customer’s access to the Premises during the Early Access
Period, as permitted in this paragraph, shall not constitute taking possession
of the Premises for purposes of determining the Commencement Date of the Term.

5. Rental Payment. Subject to the Abated Rent provision and Section 1(g) set
forth above, commencing on May 1, 2009, Customer agrees to pay Rent (defined
below) in monthly installments on or before the first day of each calendar month
during the Term, in lawful money of the United States of America to the
following address or to such other address as Service Provider may designate
from time to time in writing: Parkway Properties LP, Post Office Box 532331,
Atlanta, GA 30353-2551. Customer agrees to timely pay all Base Rent and
additional rent and all other sums of money which become due and payable by
Customer to Service Provider hereunder (collectively “Rent”), without abatement,
demand, offset, deduction or counterclaim. If Customer fails to pay part or all
of the Rent within ten (10) days after it is due, Customer shall also pay
(i) interest at the Default Rate, defined below, on the unpaid Rent, plus

 

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(ii) a late charge equal to five percent (5%) of the unpaid Rent or the maximum
then allowed by law, whichever is less. If the Term does not begin on the first
day or end on the last day of a calendar month, the installment of Rent for that
partial month shall be prorated.

6. Rent. Customer shall pay to Service Provider as the base rent for the
Premises (the “Base Rent”) the amount set forth in Section 1, subject to
adjustment as hereinafter provided. Nothing contained herein shall be construed
at any time so as to reduce the Base Rent payable hereunder below the amount set
forth above. Base Rent shall be adjusted in accordance with the following
provisions (any such adjustment is a “Base Rent Adjustment”). Base Rent includes
Customer’s Pro-rata Share of Operating Expenses (defined below) for the Base
Year as specified in Section 1 (“Base Operating Expenses”). Prior to January 1,
2010 and January 1 of each subsequent year in the Term, Service Provider shall
provide Customer with an estimate of Operating Expenses for the calendar year in
the Term commencing on such January 1 (each, an “Operating Period”). If
Operating Expenses during any Operating Period, as estimated by Service
Provider, exceed Base Operating Expenses, Customer shall pay Base Rent for such
Operating Period equal to the Base Rent set forth above adjusted upward by an
amount equal to the product of (i) the difference between the Operating Expenses
for such Operating Period and the Base Operating Expenses, multiplied by
(ii) the Pro-rata Share.

7. Operating Expenses.

(a) Definition of Operating Expenses. “Operating Expenses,” as used herein,
shall mean all expenses, costs and disbursements of every kind and nature
relating to or incurred or paid during any Operating Period in connection with
the ownership, operation, repair and maintenance of the Project, including, but
not limited to, wages and salaries of all employees directly engaged in the
operation, maintenance or security of the Project, including taxes, insurance
and benefits relating thereto; the cost of all labor, supplies, equipment,
materials and tools used in the operation and maintenance of the Project;
management fees not exceeding five percent (5%) of the gross tenant rental
income of the Building; the cost of all legal and accounting expenses incurred
in connection with the management and operation of the Project (but not
including legal costs incurred in collecting delinquent rent from any tenants of
the Building); the cost of all utilities for the Project, including, but not
limited to, the cost of HVAC, water, sewer, waste disposal, gas, and
electricity, but excluding those utility charges actually paid separately by
Customer or any occupant of the Building; the cost of all maintenance and
service agreements for the Project, including but not limited to, security
service, window cleaning, elevator maintenance and janitorial service; the cost
of all insurance relating to the Project and Service Provider’s personal
property used in connection therewith, plus the cost of all deductible payments
made by Service Provider in connection therewith; Taxes (defined below); the
cost of all license and permit fees but excluding those relating to a specific
occupant of the Building; the cost of repairs, refurbishing, restoration and
general maintenance; a reasonable amortization charge on account of any capital
expenditure (i) incurred in an effort to comply with any Laws, or (ii) that
reduces the Operating Expenses of the Project; and, all other items constituting
operating and maintenance costs in connection with the Project according to
generally accepted accounting principles. Except as specifically provided in the
immediately preceding sentence, Operating Expenses shall not include the
following: (i) depreciation, (ii) interest and principal payments on mortgages
and other debt costs, if any, secured by the Building, (iii) leasing commissions
and advertising and other marketing expenses, (iv) repairs

 

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and restorations paid for by the proceeds of any insurance policy,
(v) construction of improvements of a capital nature, (vi) income and franchise
taxes other than that portion, if any, of income and franchise taxes which may
hereafter be assessed and paid in lieu of or as a substitute in whole or in part
for Taxes, (vii) costs of utilities directly charged to and reimbursed by
Customer or other tenants, (viii) payments to affiliates of Service Provider for
goods and/or services in excess of what would be paid to non-affiliated parties
for such goods and/or services in an arm’s length transaction, (ix) costs of
other services or work performed for the singular benefit of another tenant or
occupant that are not made available to Customer (other than for Common Areas of
the Building), (x) legal, space planning, construction, and other expenses
incurred in procuring tenants for the Building or renewing or amending leases
with existing tenants of the Building, (xi) costs of advertising and public
relations and promotional costs and attorneys’ fees associated with the leasing
of the Building, (xii) any expense for which Service Provider receives
reimbursement from insurance, condemnation awards, other tenants or any other
source, (xiii) costs and expenses (including attorney’s fees and related legal
expenses) incurred in connection with an actual or proposed sale, financing,
refinancing, mortgaging, or other change of ownership of the Building, any
portion thereof or any interest therein, (xiv) all expenses in connection with
the installation, operation and maintenance of any observatory, broadcasting
facilities, luncheon club, athletic or recreation club, cafeteria, dining
facility, or other facility not generally available to all office tenants of the
Building, including Customer, (xv) rental under any ground or underlying lease
or leases, (xvi) all costs relating to the removal, remediation, containment or
treatment of hazardous material, as defined under applicable Laws, which was
present in the Building or on the Project, in violation of such then applicable
Laws, prior to the Effective Date, (xvii) any costs or expenses necessitated by
the gross negligence, intentional act or willful misconduct of Service Provider
or any of its employees, agents or contractors, (xviii) costs incurred by
Service Provider in enforcing the monetary obligations of any tenant of the
Building, (xix) amount of any political campaign or charitable contribution
(xx) fines or other penalties incurred due to the actual or alleged violation or
failure of Service Provider to comply with Laws, (xxi) costs incurred to correct
or cure any title defects relating to the Project; and (xxii) salaries of
officers and executives of Service Provider above the level of Senior Regional
Property Manager and Senior Regional Project Engineer; provided, however, that
the compensation paid to Service Provider’s Senior Regional Property Manager,
Senior Regional Project Engineer, Senior Regional Chief Engineer and Technical
Services Manager may be included in Operating Expenses, provided that such
compensation shall be limited to the percentage of such compensation that is
equal to the percentage of such person’s time allocated to the operation and
management of the Project, exclusive of any other office building on the Land
other than the Building, on a reasonably equitable basis. “Taxes” means all ad
valorem taxes, personal property taxes, and all other taxes, assessments, and
all other similar charges, if any, which are levied, assessed, or imposed upon
or become due and payable in connection with, or a lien upon, the Project or any
portion thereof or facilities used in connection therewith, and all taxes of
whatsoever nature that are imposed in substitution for or in lieu of any of the
taxes, assessments, or other charges included in this definition of Taxes; but
excluding, however, taxes and assessments attributable to the personal property
of tenants and paid by such tenants as a separate charge. If a rental tax, gross
receipts tax or sales tax on Rent is imposed on Service Provider by any
Governmental Authority, Customer shall, as additional rent, reimburse Service
Provider, at the same time as each monthly payment of Rent is due, an amount
equal to all such taxes Service Provider is required to pay by reason of the
Rent paid hereunder. If less than

 

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ninety-five percent (95%) of the Rentable Area o f the Building is actually
occupied during any Operating Period, Operating Expenses shall be the amount
that such Operating Expenses would have been for such Operating Period had
ninety-five percent (95%) of the Rentable Area of the Building been occupied
during all such Operating Period, as determined by Service Provider. Provided,
however, that the aggregate of Operating Expenses collected by Service Provider
during any Operating Period shall not exceed the actual Operating Expenses paid
or incurred by Service Provider during such Operating Period.

(b) Base Rent Adjustment. Service Provider shall, within one hundred twenty
(120) days after the end of each Operating Period, furnish Customer with a
statement of the Operating Expenses during such year and a computation of the
Base Rent Adjustment (“Expense Statement”). Failure of Service Provider to
provide such statement within such time period shall not be a waiver of Service
Provider’s right to collect any Base Rent Adjustment; provided, however, that
notwithstanding any provision contained herein to the contrary, Customer shall
have no obligation to pay any amount shown on an Expense Statement unless
Customer receives such Expense Statement within one hundred eighty (180) days
after the end of the Operating Period to which such Expense Statement applies.
If such statement shows that the actual amount Customer owes is more than the
estimated Base Rent Adjustment paid by Customer, Customer shall pay the
difference to Service Provider within fifteen (15) days after Customer’s receipt
of the Expense Statement. If the Expense Statement shows that Customer paid more
than the actual amount owed, then, unless otherwise requested by Customer, as
provided below, Customer shall receive a credit therefor which shall be applied
to the monthly installments of Rent next becoming due under this Service
Agreement. Provided, however, that if this Service Agreement has expired, such
amount shall be refunded to Customer, and if a credit is due to Customer and
this Service Agreement has not expired, then upon Service Provider’s receipt of
Customer’s written request, in lieu of providing such credit Service Provider
shall refund the amount of such credit to Customer within fifteen (15) days
after Service Provider’s receipt of such request. Unless adjusted as a result of
an audit by Customer conducted pursuant to the express terms of this Service
Agreement, the Operating Expenses and Base Rent Adjustment set forth in the
Expense Statement shall be binding upon Customer. Provided, however, that in the
event that the Term of this Service Agreement expires, or is terminated pursuant
to the terms of this Service Agreement, on a date other than December 31, then,
at the option of Service Provider, Service Provider may, either prior to the
date on which the Term expires or this Service Agreement is terminated pursuant
to the terms of this Service Agreement, or within thirty (30) days thereafter,
elect to provide Customer with a revised estimate of the Operating Expenses for
the Operating Period in which such expiration or termination date occurs and the
Base Rent Adjustment that will be due from Customer for such Operating Period,
which estimated Base Rent Adjustment shall be prorated to reflect the portion of
such Operating Period that is contained within the Term of the Service Agreement
(the “Final Estimated Base Rent Adjustment”). In the event that Service Provider
elects to deliver such Final Estimated Base Rent Adjustment to Customer, then
(i) Customer shall pay the prorated Base Rent Adjustment reflected in the Final
Estimated Base Rent Adjustment within fifteen (15) days after Customer’s receipt
of such estimate; (ii) the estimated amount of the Base Rent Adjustment for the
final Operating Period shall be binding upon Service Provider and Customer
unless adjusted as a result of an audit by Customer conduced pursuant to the
express terms of this Service Agreement; and (iii) Service Provider shall not
thereafter seek from Customer any additional Base Rent Adjustment if the actual
Operating Expenses for such Operating Period are greater than those reflected in
the Final

 

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Estimated Base Rent Adjustment, nor, unless adjusted as a result of an audit by
Customer conducted pursuant to the express terms of this Service Agreement,
shall Service Provider have any obligation to refund to Customer any excess
funds paid by Customer to Service Provider should the actual Operating Expenses
for such Operating Period be less than those reflected in the Final Estimated
Base Rent Adjustment. In the event that Service Provider elects not to provide
Customer with a Final Estimated Base Rent Adjustment, then it shall be presumed
that Service Provider will provide Customer with an Expense Statement within one
hundred twenty (120) days after the end of the final Operating Period contained
in the Term, as provided above, and the Base Rent Adjustment shown in such
Expense Statement shall be due from Customer to Service Provider within fifteen
(15) days after Customer’s receipt of such statement.

(c) Customer’s Audit. Customer shall have the right to have Service Provider’s
books and records pertaining to Operating Expenses for each Operating Period
reviewed, copied (provided Service Provider is reimbursed for the cost of such
copies) and audited (“Customer’s Audit”), provided that: (a) such right shall
not be exercised more than once during any calendar year; (b) if Customer elects
to conduct Customer’s Audit, Customer shall provide Service Provider with
written notice thereof (“Customer’s Audit Notice”) no later than sixty (60) days
following Customer’s receipt of the Expense Statement for the year to which
Customer’s Audit will apply; (c) Customer shall have no right to conduct
Customer’s Audit if an uncured monetary Default by Customer exists either at the
time of Service Provider’s receipt of Customer’s Audit Notice or at any time
during Customer’s Audit; (d) no subtenant shall have any right to conduct an
audit and no assignee shall conduct an audit for any period during which such
assignee was not in possession of the Premises; (e) conducting Customer’s Audit
shall not relieve Customer from the obligation to timely pay Base Rent or the
Base Rent Adjustment, pending the outcome of such audit; (f) Customer’s right to
conduct such audit for any calendar year shall expire sixty (60) days following
Customer’s receipt of the Expense Statement for such year, and if Service
Provider has not received Customer’s Audit Notice within such sixty (60) day
period, Customer shall have waived its right to conduct Customer’s Audit for
such calendar year; provided, however, that with respect to any audit of
Operating Expenses for the Base Year, Customer’s right to conduct an audit for
such year shall expire the earlier of sixty (60) days following Customer’s
receipt of the Expense Statement for the Base Year or sixty (60) days following
Customer’s receipt of the first Expense Statement forwarded by Service Provider
to Customer for any Operating Period during the Term; (g) Customer’s Audit shall
be conducted by a Certified Public Accountant whose compensation is not
contingent upon the results of Customer’s Audit or the amount of any refund
received by Customer, and who is not employed by or otherwise affiliated with
Customer, except to the extent that such accountant has been engaged by Customer
to conduct Customer’s Audit; (h) Customer’s Audit shall be conducted at Service
Provider’s office where the records of the year in question are maintained by
Service Provider, during Service Provider’s normal business hours;
(i) Customer’s Audit shall be completed within thirty (30) days after the date
of Customer’s Audit Notice, and a complete copy of the results thereof shall be
delivered to Service Provider within fifteen (15) days after Customer receives
the results of Customer’s Audit; and (j) Customer’s Audit shall be conducted at
Customer’s sole cost and expense. If Customer’s Audit is completed and submitted
to Service Provider in accordance with the requirements of this Section and such
audit demonstrates to Service Provider’s reasonable satisfaction that Service
Provider has overstated the Operating Expenses for the year audited by more than
five percent (5%), Service Provider shall reimburse Customer for any overpayment
of Customer’s Pro-Rata Share of such increase in Operating

 

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Expenses, as well as Customer’s actual, reasonable cost incurred in conducting
Customer’s Audit (not to exceed $5,000.00), within thirty (30) days after
Service Provider’s receipt of documentation reasonably acceptable to Service
Provider reflecting the amount of such overpayment and the cost of Customer’s
Audit.

(d) Confidentiality. Customer hereby agrees to keep the results of Customer’s
Audit confidential and to use commercially reasonable efforts to secure the
agreement of the auditor conducting Customer’s Audit, including its employees
and each of their respective attorneys and advisors, to keep the results of
Customer’s Audit confidential. In particular, but without limitation, Customer
agrees that: (a) Customer shall not disclose the results of Customer’s Audit to
any past, current or prospective tenant of the Building; and (b) Customer shall
require that its auditors, attorneys and anyone associated with such parties
shall not disclose the results of Customer’s Audit to any past, current or
prospective tenant of the Building; provided, however, that Service Provider
hereby agrees that nothing in items (a) or (b) of this subparagraph shall
preclude Customer from disclosing the results of Customer’s Audit in any
judicial or quasi-judicial proceeding, or pursuant to court order or discovery
request, or to any current or prospective assignee or subtenant of Customer, or
to any agent, representative or employee of Service Provider who or which
request the same. If required by Service Provider, Customer shall execute
Service Provider’s then-current confidentiality agreement reflecting the terms
of this Section as a condition precedent to Customer’s right to conduct
Customer’s Audit.

8. Security Deposit. [Text intentionally deleted]

9. Initial Improvements. The construction of any Initial Improvements to the
Premises shall be undertaken in accordance with the terms and conditions of this
Service Agreement and if applicable, the terms set forth in the Work Letter
attached hereto and incorporated herein as Exhibit D-l. Other than the
Improvement Allowance, if any, specified in the Work Letter applicable to this
transaction, Customer shall be responsible for the entire cost of the Initial
Improvements. In no event shall Service Provider be obligated to expend more
than the Improvement Allowance.

10. Maintenance and Repair. Service Provider shall make such improvements,
repairs or replacements as may be necessary for normal maintenance of the
Building Systems serving the Premises, the exterior and the structural portions
of the Building and Common Areas. Subject to the terms of Section 7, the
maintenance and repairs to be performed by Service Provider hereunder shall be
at Service Provider’s expense, unless the need for such maintenance or repairs
was caused by the gross negligence or willful misconduct of Customer, its
employees, agents, contractors or invitees, in which event Customer shall
reimburse Service Provider for the cost of such maintenance or repairs, plus a
construction oversight fee for Service Provider in an amount equal to five
percent (5%) of the cost and expense of such maintenance or repairs; such fee
shall not apply to the Initial Improvements. Except to the extent that Service
Provider is obligated to restore and repair the Premises pursuant to Section 23,
Customer, at its sole cost, shall maintain and repair the Premises and otherwise
keep the Premises in good order and repair. Any repair or maintenance by
Customer shall be undertaken in accordance with the provisions and requirements
of Section 16. Service Provider is not responsible for replacing and/or
repairing Customer’s fixtures or Above Standard improvements, or fixtures.
Except as expressly provided in this Service Agreement, Customer shall accept
the Premises including any existing

 

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appliances and Above Standard fixtures in their “AS IS, WHERE IS” condition as
of the Effective Date. Service Provider shall inspect, maintain and repair the
life/safety systems of the Building in accordance with schedules required by any
applicable Laws or regulations promulgated by any governmental agency pursuant
to such laws, and in accordance with schedules adopted by other prudent owners
of commercial office buildings comparable to the Building in the same commercial
submarket as the Building (“Comparable Buildings”). In addition, Service
Provider shall not allow any portion of the life/safety systems of the Building
that is critical to the operation of such systems to remain out of repair
without a fire watch.

11. Services. Service Provider shall furnish Customer during Customer’s
occupancy of the Premises the following services: (i) Cleaning and Janitorial
Services (defined in Exhibit B), (ii) hot and cold domestic water at those
points of supply provided for general office use of tenants in the Building,
(iii) electricity for normal, Building Standard office uses subject to
Section 12, (iv) elevator service at the times and frequency reasonably required
for normal business use of the Premises, (v) lamp and ballast replacement for
Building Standard light fixtures, (vi) HVAC service between 7:00 o’clock a.m.
and 6:00 o’clock p.m. on Monday through Friday and between 8:00 o’clock a.m. and
12:00 o’clock p.m. on Saturday (“Building Standard Hours”), except on New Year’s
Day, Memorial Day, July 4, Labor Day, Thanksgiving Day and Christmas Day
(“Holidays”), and (vi) life/safety systems comparable to those maintained by
other prudent owners of Comparable Buildings. If any Holiday falls on a weekend,
the Building may observe the Holiday on the preceding Friday or the succeeding
Monday. Customer may periodically request, and Service Provider shall furnish
HVAC service on days and at times other than those referred to in clause
(vi) above provided Customer requests such service in accordance with the
Project Rules, defined below, then in effect, and agrees to reimburse Service
Provider for this service at the then existing rate being charged in the
Building. If Customer utilizes services provided by Service Provider hereunder
in either quantity and/or quality exceeding the quantity and/or quantity
customarily utilized by normal office uses of comparable premises in the
Building, then Service Provider may separately meter or otherwise monitor
Customer’s use of such services, and charge Customer a reasonable amount for
such excess usage; such amount shall constitute additional Rent due hereunder
within fifteen (15) days of Customer’s receipt of Service Provider’s statement
for such excess. Service Provider shall not be liable for any damages directly
or indirectly resulting from, nor shall any Rent be abated, except as expressly
provided below, by reason of, the installation, use or interruption of use of
any equipment in connection with furnishing any of the foregoing services, or
failure to furnish or delay in furnishing any such service when such failure or
delay is caused by accident or any occurrence or condition beyond the reasonable
control of Service Provider. The failure to furnish any such services shall not
be construed as an eviction of Customer; nor shall such failure relieve Customer
from any of its obligations under this Service Agreement, except as expressly
set forth below, unless such failure substantially handicaps or impedes the
normal use of the Premises by Customer and unless within a reasonable time after
Service Provider’s receipt of written notice from Customer setting forth a
description of the services not so furnished, Service Provider fails to commence
curing any such failure or thereafter fails to continue the curing thereof with
appropriate diligence under the circumstances until cured.

Provided, however, that if Service Provider shall fail to provide any service to
Customer that Service Provider is required to provide to Customer hereunder,
such failure is not due to a Force Majeure Event, defined below, and as a result
of such failure, the Premises or a portion

 

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thereof shall be substantially unusable by Customer for the purposes for which
they were leased to Customer hereunder (a “Critical Failure”), and such Critical
Failure shall persist for a period of five (5) consecutive business days after
Service Provider’s receipt of written notice from Customer of the existence of
such failure, then, commencing with the expiration of such five (5) consecutive
business day period, Customer’s Rent due under this Service Agreement shall
abate in the proportion that the rentable square footage of the portion of the
Premises rendered substantially unusable by such failure bears to the total
Rentable Area of Premises for the period of time that such portion is
substantially unusable. If such Critical Failure shall persist for a period of
ten (10) consecutive business days after Service Provider’s receipt of written
notice from Customer of the existence of such failure, then in addition to the
rental abatement provided in the preceding sentence and all other rights and
remedies Customer may have, Customer shall have the right to repair or restore
the services that were interrupted using Service

Provider-approved contractors, and otherwise in compliance with the terms of
this Service Agreement applicable to any work done in the Premises by a
contractor of Customer, including but not limited to the insurance requirements
of this Service Agreement, in which event Service Provider shall reimburse
Customer for all reasonable costs and expenses incurred by Customer in
connection with such repair or restoration. If such Critical Failure shall
persist for a period of thirty (30) days after Service Provider’s receipt of
written notice from Customer of the existence of such failure, then, in addition
to the foregoing remedies, and for so long as such Critical Failure shall
persist, Customer shall have the right to terminate this Service Agreement by
providing Service Provider with written notice of such termination specifying
the effective date of such termination in such notice which shall not be sooner
than thirty (30) days, nor longer than sixty (60) days, after Service Provider’s
receipt of such notice.

12. Electrical Usage. Service Provider shall supply sufficient electrical
capacity to a panel box located in the core of each floor for lighting and for
Customer’s office equipment to the extent that the total demand load at 100%
capacity of such lighting and equipment does not exceed six (6) watts per RSF in
the Premises (“Electrical Design Load”). If Customer utilizes any portion of the
Premises on a regular basis beyond Building Standard Hours or in any manner in
excess of the Electrical Design Load, Service Provider shall have the right to
separately meter such space and charge Customer for all excess usage;
additionally, Service Provider shall have the right, at Customer’s expense, to
separately meter any Above Standard fixture(s) in the Premises, such as water
heaters and vending machines, and to charge Customer for the electricity
consumed by such fixture(s). If separate metering is not practical, Service
Provider may reasonably estimate such excess usage and charge Customer a
reasonable hourly rate. Customer shall pay to Service Provider the cost of all
electricity consumed in excess of six (6) watts per RSF in the Premises for the
number of hours in the Building Standard Hours for the relevant period, plus any
actual accounting expenses incurred by Service Provider in connection with the
metering or calculation thereof. Customer shall pay the cost of installing,
maintaining, repairing and replacing all such meters. In the event that the
level of occupancy of the Premises, or any machinery or equipment located in the
Premises, creates unusual demands on the HVAC system serving the Premises, then
Customer may install, and Service Provider may require that Customer install,
its own supplemental HVAC unit(s) (“Supplemental HVAC Equipment”) in the
Premises, and in either event the installation, maintenance and removal of the
Supplemental HVAC Equipment shall be governed by the terms of Exhibit F attached
hereto and incorporated herein by this reference. The parties acknowledge that
Customer intends to install Supplemental

 

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HVAC Equipment in the Premises in conjunction with Service Provider’s
construction of the Initial Improvements, and that such Supplemental HVAC
Equipment shall be part of the Initial Improvements; provided, however, that
Customer shall be solely responsible for maintaining and repairing such
Supplemental HVAC Equipment, as provided in Exhibit F. In the event that the
Improvement Costs are less than the Improvement Costs Allowance, then, to the
extent available from the Improvement Costs Allowance, Customer may elect to be
reimbursed for the cost of installing such Supplemental HVAC Equipment as
provided in the Work Letter.

13. Communication Lines. Subject to Building design limits and its existing, or
then existing, capacity, Customer may install, maintain, replace, remove or use
communications or computer wires and cables which service the Premises
(“Lines”), provided: (a) Customer shall obtain Service Provider’s prior written
consent (with such consent not to be unreasonably withheld), and shall use
contractors approved in writing by Service Provider (with such approval not to
be unreasonably withheld), (b) all such Lines shall be plenum rated and neatly
bundled, labeled and attached to beams and not to suspended ceiling grids,
(c) any such installation, maintenance, replacement, removal or use shall comply
with all Laws applicable thereto, including, but not limited to the National
Electric Code, and shall not interfere with any then existing Lines at the
Building, and (d) Customer shall pay all costs and expenses in connection
therewith. Service Provider reserves the right to require Customer to remove any
Lines located in or serving the Premises which violate this Service Agreement or
represent a dangerous or potentially dangerous condition, within three
(3) business days after written notice. Customer shall remove all Lines
installed by or on behalf of Customer upon the expiration or earlier termination
of this Service Agreement. Any Lines that Service Provider expressly permits to
remain at the expiration or termination of this Service Agreement shall become
the property of Service Provider without payment of any type. Under no
circumstances shall any Line problems be deemed an actual or constructive
eviction of Customer, render Service Provider liable to Customer for abatement
of Rent, or relieve Customer from performance of Customer’s obligations under
this Service Agreement.

14. Prohibited Use. Customer shall not do or permit anything to be done within
the Project nor bring, keep or permit anything to be brought or kept therein,
which is prohibited by any Laws now in force or hereafter enacted or
promulgated, or which is prohibited by any insurance policy (and of which
prohibition Customer has been provided written notice) or which may increase the
existing rate or otherwise affect any insurance which Service Provider carries
on the Project. Customer shall not do or permit anything to be done in or about
the Premises which will in any way obstruct or interfere with the rights of
other tenants, or injure or annoy them or use or allow the Premises to be used
for any unlawful or reasonably objectionable purpose. Customer shall not commit
or suffer to be committed any waste to, in or about the Premises or Project.

15. Legal Requirements; Project Rules. Customer shall comply with, and shall
indemnify, defend (with counsel reasonably acceptable to Service Provider) and
hold Service Provider and its directors, officers, partners, members,
shareholders, employees and agents harmless from any and all obligations,
claims, administrative proceedings, judgments, damages, fines, penalties, costs,
and liabilities, including reasonable attorneys’ fees (collectively, “Costs”)
incurred by Service Provider as a result of the failure by Customer, its
employees, agents or contractors to comply with all Laws relating to the use,
condition or occupancy of the Premises

 

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now or hereafter enacted, and the Project Rules, defined below. Customer shall
cause its employees, agents and contractors to comply with, and shall use
reasonable efforts to cause its invitees to comply with, all Laws applicable to
Project. Customer shall not cause or permit the use, generation, storage,
release or disposal in or about the Premises or the Project of any substances,
materials or wastes subject to regulation under any Laws from time to time in
effect concerning flammable, explosive, hazardous, petroleum, toxic or
radioactive materials, unless Customer shall have received Service Provider’s
prior written consent, which consent Service Provider may withhold or revoke at
any time in its sole discretion. Customer shall comply with, and cause its
employees, agents and contractors to comply with, and shall use its reasonable
efforts to cause its invitees to comply with, the rules and regulations of the
Project adopted by Service Provider from time to time for the safety, care and
cleanliness of the Premises and the Project (“Project Rules”). In the event of
any conflict between this Service Agreement and the Project Rules, the
provisions of this Service Agreement shall control. Service Provider shall not
have any liability to Customer for any failure of any other tenants to comply
with the Project Rules. The Project Rules in effect as of the Effective Date are
attached hereto as Exhibit C. Customer shall be obligated to comply with any
amendments to the Project Rules adopted by Service Provider after the date
hereof so long as the provisions of such amendment do not limit or impair the
rights of Customer provider under this Service Agreement. In the event that any
Governmental Authority, ordinance or other Law applicable to the Project
requires either Service Provider or Customer to establish and implement a
transportation management plan designed to reduce the number of single-occupancy
vehicles being used by employees and other permitted occupants of the Building
for commuting to and from the Building, then Customer shall cooperate with
Service Provider in establishing and implementing such plan. Service Provider
shall comply with all Laws in the operation, maintenance and management of the
Building and the Project.

16. Alterations, Additions and Improvements. Except for the Initial
Improvements, Customer shall not permit, make or allow to be made any
construction, alterations, physical additions or improvements in or to the
Premises or placement of any signs in the Premises which are visible from
outside the Premises (collectively, “Customer Work”), without obtaining the
prior written consent of Service Provider which may be withheld in Service
Provider’s sole discretion. Notwithstanding the foregoing, Service Provider will
not unreasonably withhold its consent to Customer Work that: (i) is
non-structural and does not adversely affect any Building Systems or
improvements, (ii) is not visible from the exterior of the Premises, (iii) does
not affect the exterior of the Building or any Common Areas, (iv) does not
violate any provision of this Service Agreement, (v) does not violate any Laws,
and (vi) will not interfere with the use and occupancy of any other portion of
the Project by any other tenant or occupant of the Project. Customer’s plans and
specifications and all contractors, subcontractors, vendors, architects and
engineers (collectively, “Outside Contractors”) shall be subject to Service
Provider’s prior written approval, which shall not be unreasonably withheld. If
requested by Service Provider, Customer shall execute a work letter for any such
Customer Work reasonably acceptable to Service Provider and Customer. Service
Provider may hire outside consultants to review such documents and information
furnished to Service Provider, and Customer shall reimburse Service Provider for
the actual out-of-pocket cost thereof, including reasonable attorneys’ fees,
upon demand. Neither review nor approval by Service Provider of any plans or
specifications shall constitute a representation or warranty by Service Provider
that such documents either (i) are complete or suitable for their intended
purpose, or (ii) comply with

 

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applicable Laws, it being expressly agreed by Customer that Service Provider
assumes no responsibility or liability whatsoever to Customer or any other
person or entity for such completeness, suitability or compliance. Customer
shall furnish any documents and information reasonably requested by Service
Provider, including “as-built” drawings (both in paper and in electronic format
acceptable to Service Provider) after completion of such Customer Work. Service
Provider may impose such conditions on Customer Work as are reasonably
appropriate, including without limitation, compliance with any construction
rules adopted by Service Provider from time to time, insurance covering Service
Provider against liabilities which may arise out of such work, plans and
specifications, and permits for such Customer Work. Any and all Customer Work
shall become the property of Service Provider upon completion and shall be
surrendered to Service Provider upon the termination or expiration of this
Service Agreement for any reason, unless Service Provider shall, at the time it
grants its consent, require removal or restoration by Customer. Customer shall
not allow any liens to be filed against the Premises or the Project in
connection with any Customer Work. If any liens are filed, Customer shall cause
the same to be released within five (5) days after Customer’s receipt of written
notice of the filing of such lien by bonding or other method acceptable to
Service Provider. All Outside Contractors shall maintain insurance in amounts
and types required by, and in compliance with, Section 20. ACORD 25 (or its
equivalent) certificates of insurance evidencing such coverage shall be provided
to Service Provider prior to commencement of any Customer Work. All Outside
Contractors shall perform all work in a good and workmanlike manner, in
compliance with all Laws and all applicable Project Rules and Building
construction rules. No Customer Work shall be unreasonably disruptive to other
tenants. Prior to final completion of any Customer Work, Service Provider shall
prepare and submit to Customer a punch list of items to be completed, and
Customer shall diligently complete all such punch list items.

17. Customer’s Equipment. Except for personal computers, facsimile machines,
copiers and other similar office equipment, Customer shall not install within
the Premises any fixtures, equipment or other improvements until the plans and
location thereof have been approved by Service Provider, such approval not be
unreasonably withheld. The location, weight and supporting devices for any
libraries, central filing areas, safes and other heavy equipment shall in all
cases be approved by Service Provider prior to initial installation or any
relocation, such approval not to be unreasonably withheld. Service Provider may
prohibit any article, equipment or any other item that may exceed the load
capacity of the Building from being brought into the Building.

18. Taxes on Customer’s Property. Customer shall pay all ad valorem and similar
taxes or assessments levied upon all equipment, fixtures, furniture and other
property placed by Customer in the Premises and all license and other fees or
taxes imposed on Customer’s business. If any improvements installed or placed in
the Project by, or at the expense of, Customer result in Service Provider being
required to pay higher Taxes with respect to the Project than would have been
payable otherwise, Customer shall pay to Service Provider, within fifteen
(15) days after written demand, the amount by which such excess Taxes are
reasonably attributable to Customer.

19. Access. Except as set forth below, Service Provider shall have the right to
enter the Premises before and after Building Standard Hours in order to perform
the Cleaning and Janitorial Services required under Section 11 of this Service
Agreement. The parties

 

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acknowledge that two (2) rooms of the Premises, the file server room and the
wire transfer room (the “Secure Rooms”), will be secured by Customer before and
after Customer’s normal business hours (“Customer’s Hours”) Customer shall
provide Service Provider with keys or access cards to the Secure Rooms
permitting Service Provider to have access to the Secure Rooms outside of
Customer’s Hours in accordance with the provisions for emergency access to the
Premises set forth below. Service Provider shall provide Cleaning and Janitorial
Services to the Secure Rooms only once per month, on a date that is mutually
acceptable to Customer and Service Provider, such services to be provided during
Customer’s Hours, and only when escorted by an employee or other agent of
Customer. To the extent that Service Provider incurs additional expense for
Cleaning and Janitorial Services provided to the Secure Rooms during Customer’s
Hours, Service Provider shall have the right to assess such charge to Customer
as additional Rent due under this Service Agreement. Upon giving prior notice to
Customer (except in the case of an emergency as provided below), Service
Provider shall also have the right to enter the Premises in order to inspect the
condition, show the Premises during the last nine (9) months of the Term,
determine if Customer is performing its obligations hereunder, perform the
services or make the repairs that Service Provider is obligated or elects to
perform hereunder, make repairs to adjoining space, cure any Defaults of
Customer hereunder that Service Provider has the right to cure under the terms
of this Service Agreement, and remove from the Premises any improvements or
property placed therein in violation of this Service Agreement, if Customer
fails to remove such improvements or property within ten (10) days after
Customer’s receipt of notice from Service Provider that such removal is required
pursuant to the terms of this Service Agreement. Service Provider’s notice to
Customer of any entity into the Premises shall include the identity of the
individual(s) that will enter the Premises, the name(s) of the employer(s) of
the individual(s) if other than Service Provider, and the purpose of such entry.
Except in the case of an emergency, as provided below, and except to perform the
Cleaning and Janitorial Services required under this Service Agreement, Service
Provider shall enter the Premises only during Building Standard Hours while
Customer is conducting business in the Premises, unless otherwise agreed to by
Customer at the time notice of such entry is provided from Service Provider to
Customer, and Service Provider shall use commercially reasonable efforts to not
unreasonably interfere with the conduct of Customer’s business in the Premises
during such entry.

Customer shall provide Service Provider with the names and contact telephone
numbers of two (2) employees of Customer to be contacted in the event of an
emergency either in or affecting the Premises (“Customer’s Emergency Contacts”).
The names and contact telephone numbers of Customer’s Emergency Contacts shall
be provided by Customer in the Commencement Date Agreement, and such information
shall remain in effect until Service Provider receives written notice, in
accordance with the Notices provision of this Service Agreement, of any
revisions to such information. In the event of any emergency that requires
immediate access to the Premises, Service Provider shall make reasonable
efforts, if practicable under the circumstances, to place one (1) telephone call
to each of Customer’s Emergency Contacts, and, if Service Provider is unable to
reach either person, Service Provider shall leave a voicemail message specifying
the nature of the emergency for both persons (assuming that such persons
maintain voice mail). The building engineer and any vendor or other emergency
personnel required to address such emergency may then enter the Premises for the
sole purpose of addressing such emergency.

 

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20. Customer’s Insurance. At all times after the execution of this Service
Agreement, Customer will carry and maintain, at its expense with insurance
companies that are rated no less than A-, Class VI, by A.M. Best Company: (i) a
commercial general liability insurance policy, including blanket contractual
liability without any exclusion of this Service Agreement, for liability arising
out of the ownership, use, occupancy or maintenance of the Premises and all
areas appurtenant thereto, including any portion of the Common Areas used by
Customer, to afford protection with respect to bodily injury, death or property
damage (including loss of use) of not less than One Million Dollars ($1,000,000)
each occurrence/Two Million Dollars ($2,000,000) aggregate; (ii) an all-risks
property and casualty insurance (special form building and personal property
coverage) policy, including theft coverage, written at replacement cost value
with replacement cost endorsements, covering all of the Customer’s property;
(iii) a worker’s compensation insurance policy with applicable statutory limits,
(iv) automobile liability insurance with single limit coverage of at least
$1,000,000 for all owned, leased/hired or non-owned vehicles, (v) an
excess/umbrella liability policy “following form” of not less than Four Million
Dollars ($4,000,000), including a “drop down” feature in case the limits of the
primary policy are exhausted, and (vi) if Customer will serve or sell alcohol at
the Project, a liquor liability insurance policy with minimum coverage of One
Million Dollars ($1,000,000). Service Provider may also require all Outside
Contractors to provide in addition to the insurance coverages referenced above
such other insurance in amounts and types and with such companies as may be
reasonably requested by Service Provider, including, without limitation,
construction all risk/builder’s risk (including loss of revenue) insurance
(provider, however, that Customer shall have the option to provide its own all
risk/builder’s risk insurance covering such Outside Contractors in lieu of such
coverage being provided by Outside Contractors), professional errors and
omissions liability insurance (but only if the Outside Contractor engaged by
Customer is providing architectural, engineering or other professional services
for which such professional errors and omissions liability insurance is
available), and insurance covering such contractor’s equipment and tools. Each
insurance policy required to be maintained hereunder by Customer shall include
an “Additional Insured Endorsement” in favor of Parkway Properties, Inc., its
subsidiaries and affiliated companies, as well as the employees, officers,
directors and agents of such companies and any other designees of Service
Provider and shall be primary. An ACORD 25 certificate of such insurance in a
form reasonably satisfactory to Service Provider, or certified copies of the
policies, shall be furnished to Service Provider on or before the earlier of the
Commencement Date or ten (10) days after execution of the Service Agreement,
reflecting the limits and endorsements required herein, and renewal ACORD 25
certificates or certified copies of renewal policies shall be delivered to
Service Provider at least ten (10) days prior to the expiration date of any
policy. Each policy shall require notice to Service Provider upon the
nonrenewal, cancellation or expiration of such policy; such policy shall further
provide that the insurer shall endeavor to provide Service Provider with thirty
(30) days’ prior notice of any nonrenewal or cancellation of such policy.
Service Provider agrees to cooperate with Customer to the extent reasonably
requested by Customer to enable Customer to obtain such insurance. Service
Provider shall have the right to require increased limits if, in Service
Provider’s reasonable judgment, such increase is necessary.

21. Service Provider’s Insurance. Service Provider shall maintain, during the
Term of this Service Agreement, (i) a commercial general liability insurance
policy of not less than One Million Dollars ($1,000,000) each occurrence/Two
Million Dollars ($2,000,000) aggregate, and (ii) an all-risk property and
casualty insurance policy, including theft coverage, written at

 

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full replacement cost value and with replacement cost endorsement, covering the
Project, including the Building and the Initial Improvements, and all personal
property, fixtures and improvements therein belonging to Service Provider, and
(iii) an excess liability policy “following form” of not less than Four Million
Dollars ($4,000,000), including a “drop down” feature in case the limits of the
primary policy are exhausted. Service Provider shall not be obligated to insure
any property of Customer. Service Provider shall increase the foregoing limits
if, in Service Provider’s reasonably judgment, such increase is necessary.

22. Waiver of Subrogation; Mutual Waiver of Liability. All policies of property
insurance required to be carried by either party hereunder shall include a
waiver by the insurer of all right of subrogation against the other party in
connection with any loss or damage thereby insured against. Any additional
premium for such waiver shall be paid by the primary insured. To the full extent
permitted by law, Service Provider and Customer each waive all rights of
recovery against the other (and any officers, directors, partners, employees,
agents and representatives of the other), and agree to release the other from
liability, for loss or damage to the extent such loss or damage is covered by
valid and collectible insurance in effect covering the party seeking recovery at
the time of such loss or damage or would have been covered by insurance if the
insurance required to be maintained under this Service Agreement by the party
seeking recovery had in fact been maintained. If the release of either party, as
set forth above, should contravene any law with respect to exculpatory
agreements, the liability of the party in question shall be deemed not released
but shall be secondary to the liability of the other’s insurer.

23. Casualty. If the Premises or the Project is damaged or destroyed, in whole
or in part, by fire or other casualty at any time during the Term and if, after
such damage or destruction, Customer is not able to use the portion of the
Premises not damaged or destroyed to substantially the same extent and for
substantially the same purpose as Customer used the Premises prior thereto, and
within forty-five (45) days after Service Provider’s receipt of written notice
from Customer describing such damage or destruction Service Provider provides
written notice to Customer that the Premises cannot be repaired or rebuilt to
the condition which existed immediately prior to such destruction or casualty
within one hundred eighty (180) days following the date of such destruction or
casualty, then Service Provider or Customer may by written notice to the other
within thirty (30) days following such notice by Service Provider terminate this
Service Agreement. Unless such damage or destruction is the result of the gross
negligence or willful misconduct of Customer or its employees, agents,
contractors or invitees, the Rent shall be abated for the period and
proportionately to the extent that after such damage or destruction Customer is
not able to use the portion of the Premises damaged or destroyed to
substantially the same extent and for substantially the same purposes as
Customer used the Premises prior thereto. If this Service Agreement is not
terminated pursuant to the foregoing, Service Provider shall restore or replace
the damaged or destroyed portions of the Premises or Project to substantially
the same condition in which such portion existed prior to the damage or
destruction, and this Service Agreement shall continue in full force and effect
in accordance with the terms hereof except for the abatement of Rent referred to
above, if applicable. Service Provider shall restore or replace the damaged or
destroyed portions of the Premises or Project within a reasonable time, subject
to Force Majeure Events and the availability of insurance proceeds. If either
party elects to terminate this Service Agreement as provided in this Section,
this Service Agreement shall terminate on the date which is thirty (30) days
following the date of

 

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the notice of termination. Service Provider shall not be obligated to repair any
damage to Customer’s inventory, trade fixtures or other personal property. If
the Premises or any portion of the Project are damaged or destroyed by fire or
other casualty caused by the willful misconduct of Customer, its employees,
agents, contractors, or invitees, then any repair or restoration of the Premises
by Service Provider pursuant to the terms of this Section shall be at Customer’s
sole cost and expense. Notwithstanding anything in this Section to the contrary,
Service Provider shall have no obligation to repair or restore the Premises or
the Project on account of damage resulting from any casualty which occurs during
the last twelve (12) months of the Term unless Customer has extended the Term in
accordance with the provisions of this Service Agreement.

24. Condemnation. If a portion of the Premises is taken by the exercise of the
power of eminent domain and, as a result, Customer is unable to carry on its
business in a commercially satisfactory manner (as determined by Customer in its
reasonable judgment), or if a substantial portion of the Building is taken by
the exercise of the power of eminent domain, then either Service Provider or
Customer shall have the right to terminate this Service Agreement by written
notice to the other within thirty (30) days after the date of taking. In the
event of any taking, Service Provider shall be entitled to any and all
compensation and awards with respect thereto, except for an award, if any,
specified by the condemning authority for (a) any claim made by Customer for
property that Customer has the right to remove upon termination of this Service
Agreement or (b) Customer’s relocation expenses. Customer shall have no claim
against Service Provider for the value of any unexpired portion of the Term. In
the event of a partial taking of the Premises which does not result in a
termination of this Service Agreement, the Rent shall be equitably reduced as to
the square footage so taken.

25. Waiver of Claims. Except for the willful misconduct or gross negligence of
Service Provider, its employees, agents or contractors, Service Provider shall
not be liable to Customer for damage to person or property caused by defects in
the HVAC, electrical, plumbing, elevator or other apparatus or systems, or by
water discharged from sprinkler systems, if any, in the Building, nor shall
Service Provider be liable to Customer for the theft or loss of any property of
Customer whether from the Premises or any part of the Building or Project,
including the loss of trade secrets or other confidential information. Service
Provider agrees to make commercially reasonable efforts to protect Customer from
interference or disturbance by third persons, including other tenants; however,
Service Provider shall not be liable for any such interference, disturbance or
breach, nor shall Customer be relieved from any obligation under this Service
Agreement because of such interference, disturbance or breach. Service Provider
may comply with voluntary controls or guidelines promulgated by any governmental
entity relating to the use or conservation of energy, water, gas, light or
electricity or the reduction of automobile or other emissions without creating
any liability of Service Provider to Customer under this Service Agreement,
provided that the Premises are not thereby rendered untenantable. In no event
shall Service Provider or its directors; officers, shareholders, partners,
members, employees, or agents be liable in any manner for incidental,
consequential or punitive damages, loss of profits, or business interruption.
The waivers in this Section shall survive the expiration or earlier termination
of this Service Agreement.

26. Indemnity. Except for claims, rights of recovery and causes of action
covered by the waiver of subrogation contained in Section 22 or waived in
Section 25, Service Provider shall indemnify and hold harmless Customer and its
agents, directors, officers, shareholders, partners,

 

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members, employees and invitees, from all claims, losses, costs, damages, or
expenses (including reasonable attorneys’ fees) in connection with any injury
to, including death of, any person or damage to any property arising, wholly or
in part, out of any action, omission, or neglect of Service Provider or its
directors, officers, shareholders, members, partners, employees, agents,
invitees, or guests, or any parties contracting with such party relating to the
Project. If Customer shall without fault on its part, be made a party to any
action commenced by or against Service Provider, Service Provider shall protect
and hold Customer harmless and shall pay all costs, expenses, including
reasonable attorneys’ fees in connection therewith.

Except for claims, rights of recovery and causes of action covered by the waiver
of subrogation, Customer shall indemnify and hold harmless Service Provider and
its agents, directors, officers, shareholders, partners, members, employees and
invitees, from all claims, losses, costs, damages, or expenses (including
reasonable attorneys’ fees) in connection with any injury to, including death
of, any person or damage to any property arising, wholly or in part, out of any
action, omission, or neglect of Customer or its Outside Contractors, directors,
officers, shareholders, members, partners, employees, agents, invitees, or
guests, or any parties contracting with such party relating to the Project. If
Service Provider shall without fault on its part, be made a party to any action
commenced by or against Customer, Customer shall protect and hold Service
Provider harmless and shall pay all costs, expenses, including reasonable
attorneys’ fees in connection therewith.

Service Provider’s and Customer’s obligations under this Section shall not be
limited by the amount or types of insurance maintained or required to be
maintained under this Service Agreement. The obligations under this Section
shall survive the expiration or earlier termination of this Service Agreement.

27. Non-Waiver. No consent or waiver, express or implied, by Service Provider to
any breach by Customer of any of its obligations under this Service Agreement
shall be construed as or constitute a consent or waiver to any other breach by
Customer. Neither the acceptance by Service Provider of any Rent or other
payment, whether or not any Default by Customer is then known to Service
Provider, nor any custom or practice followed in connection with this Service
Agreement shall constitute a waiver of any of Customer’s obligations under this
Service Agreement. Failure by Service Provider to complain of any act or
omission by Customer or to declare that a Default has occurred, irrespective of
how long such failure may continue, shall not be deemed to be a waiver by
Service Provider of any of its rights hereunder. Time is of the essence with
respect to the performance of every obligation of Customer and Service Provider
in which the time of performance is a factor. No payment by Customer or receipt
by Service Provider of an amount less than the Rent due shall be deemed to be
other than a partial payment of the Rent, nor shall any endorsement or statement
of any check or any letter accompanying any check or payment as Rent be deemed
an accord and satisfaction. Service Provider may accept such check or payment
without prejudice to its right to recover the balance of such Rent or pursue any
other right or remedy. Except for the execution and delivery of a written
agreement expressly accepting surrender of the Premises, no act taken or failed
to be taken by Service Provider shall be deemed an acceptance of surrender of
the Premises.

 

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28. Quiet Possession. Provided Customer is performing all its obligations under
this Service Agreement, Customer shall peaceably and quietly hold and enjoy the
Premises for the Term, subject to the provisions of this Service Agreement.

29. Notices. Each notice required or permitted to be given hereunder shall be in
writing and may be personally delivered, sent via nationally recognized
overnight courier or placed in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, addressed in each case
at the address provided. A notice shall be deemed to have been received (a) upon
the delivery or refusal thereof, if delivered personally or by overnight
courier, or (b) if sent by registered or certified mail or overnight delivery,
(i) the date of delivery of such notice, as indicated on the duly completed
United States Postal Service return receipt, if such receipt reflects delivery
of such notice, (ii) on the date of refusal of such notice, if the refused
notice reflects the date on which such notice is refused, or (iii) three
(3) days after mailing of such notice, if the date of delivery of such notice
cannot otherwise be established as provided above. Prior to the Commencement
Date, the address for notices to Customer shall be the address set forth in
Section 1; after the Commencement Date, the address for Customer shall be the
address set forth in Section 1(a). Any notices to Service Provider shall be
addressed and given to Service Provider at both of the following addresses:

 

Parkway Realty Services, LLC    Parkway Properties LP Attn: Property Manager,
Richmond    Attn: Asset Manager, Virginia 10800 Midlothian Turnpike, Suite 230
   188 East Capitol Street, Suite 1000 Richmond, VA 23235    Jackson, MS 39201

30. Service Provider’s Failure to Perform. If Service Provider fails to perform
any of its obligations hereunder, Service Provider shall not be in default and
Customer shall not have any rights or remedies growing out of such failure
unless Customer gives Service Provider written notice setting forth in
reasonable detail the nature and extent of such failure and such failure is not
cured within thirty (30) days following Service Provider’s receipt of such
notice; provided however if Service Provider commences and diligently pursues to
cure such default within the aforesaid thirty (30) day period, but such default
is of a nature that it cannot through the exercise of commercially reasonable
efforts be cured within such thirty (30) day period, then Service Provider shall
have such longer period as may be required to complete such cure so long as
Service Provider diligently prosecutes such cure. Customer agrees to use
commercially reasonable efforts to mitigate any damages caused by the failure of
Service Provider to perform its obligations under this Service Agreement. Except
as expressly set forth herein, Customer’s remedies for an alleged or actual
failure of Service Provider to perform its obligations under this Service
Agreement shall not include the termination of this Service Agreement.

31. Customer’s Failure to Perform. If Customer fails to perform any of its
obligations hereunder, in addition to the other rights of Service Provider,
Service Provider, after providing prior written notice of its intention to
perform all or any part of Customer’s obligations as soon as reasonably possible
under the circumstances, shall have the right, but not the obligation, to
perform all or any part of Customer’s obligations; provided further that if
Customer’s failure to perform any of its obligations hereunder creates an
emergency condition requiring immediate attention, then subject to the
provisions of Section 19 of this Service Agreement, Service Provider shall have
the right, but not the obligation, to perform all or any

 

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part of Customer’s obligations without prior notice to Customer. Upon receipt of
a written demand therefor, Customer shall reimburse Service Provider for the
actual cost of performing such obligations, plus interest thereon at the Default
Rate, defined below.

32. Default. “Default” means the occurrence of any one or more of the following:
(i) failure of Customer to pay when due any Rent or other amount required to be
paid hereunder, if such failure continues for more than ten (10) after
Customer’s receipt of written notice thereof from Service Provider; (ii) failure
of Customer, after twenty (20) days written notice, or such other notice period
specified in this Service Agreement, to observe and fully perform all of
Customer’s obligations hereunder, other than payment of Rent which is covered
above; provided however if Customer commences and diligently pursues to cure
such failure within the aforesaid twenty (20) day period, but such failure is of
a nature that it cannot through the exercise of commercially reasonable efforts
be cured within such twenty (20) day period, then Customer shall have such
longer period as may be required to complete such cure so long as Customer
diligently prosecutes such cure; (iii) the adjudication of Customer to be
bankrupt; (iv) the filing by Customer of a voluntary petition in bankruptcy or
other similar proceedings; (v) the making by Customer of a general assignment
for the benefit of its creditors; (vi) the appointment of a receiver of
Customer’s interests in the Premises; (vii) any involuntary proceedings
instituted against Customer under any bankruptcy or similar laws, unless such is
dismissed or stayed within sixty (60) days thereafter; or (viii) if the Customer
is an individual or if the Customer is controlled by a single individual, the
death or incapacity of such individual. Notwithstanding any applicable notice
and cure period provided above, Service Provider shall not, with respect to any
Default hereunder, be required to provide any applicable notice and an
opportunity to cure more than five (5) times during the Term, and upon a
subsequent occurrence of any Default hereunder Customer shall not be entitled to
notice or an opportunity to cure, and Service Provider may, at its option,
immediately declare a Default and exercise its rights and remedies.

If a Default occurs, then or at any time thereafter while such Default
continues, Service Provider, at its option, may, without waiving any other
rights available herein, at law, or in equity, either terminate this Service
Agreement or terminate Customer’s right to possession without terminating this
Service Agreement. In either event, Service Provider may, without additional
notice and without court proceedings, reenter and repossess the Premises, and
remove all persons and property therefrom using such force as may be necessary,
and Customer hereby waives any claim arising by reason thereof or by reason of
issuance of any distress warrant and agrees to hold Service Provider harmless
from any such claims. If Service Provider elects to terminate this Service
Agreement, it may treat the Default as an entire breach of this Service
Agreement and Customer immediately shall become liable to Service Provider for
damages for the entire breach in an amount equal to the total Rent and all other
payments due for the balance of the Term discounted at the rate of six percent
(6%) per annum to the then present value, less the fair rental value of the
Premises for the balance of the Term (taking into account, among other factors,
the probability of reletting the Premises for all or part of the remainder of
the Term, and the anticipated duration of the period the Premises will be
unoccupied prior to reletting) similarly discounted to present value, plus the
cost of repossessing, remodeling and re-renting the Premises and all unpaid Rent
through the date of such termination. If Service Provider elects to terminate
Customer’s right to possession of the Premises without terminating this Service
Agreement, Service Provider may rent the Premises or any part thereof for the
account of Customer to any person for such rent and for such terms and other
conditions as

 

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Service Provider deems commercially reasonable, and Customer shall be liable to
Service Provider for the amount, if any, by which the total Rent and all other
payments herein provided for the unexpired balance of the Term exceed the net
amount, if any, received by Service Provider from such re-renting, being the
gross amount so received less the cost of repossession, re-renting, remodeling
and other expenses relating thereto and actually incurred by Service Provider;
Customer shall be and remain liable for such net amount even after an eviction
of Customer from the Premises, should an eviction of Customer from the Premises
occur. Such sums shall be immediately due and payable by Customer upon fifteen
(15) days after Customer received written demand therefor. In no event shall
Customer be entitled to any rents received by Service Provider. If a Default
occurs or in case of any holding over or possession by Customer of the Premises
after the expiration or termination of this Service Agreement, Customer shall
reimburse Service Provider on demand for all costs incurred by Service Provider
in connection therewith including, but not limited to, reasonable attorneys’
fees, court costs and related costs plus interest thereon at the Default Rate,
defined below. Actions by Service Provider to collect amounts due from Customer
as provided in this Section may be brought at any time, and from time to time,
on one or more occasions, without the necessity of Service Provider’s waiting
until the termination of this Service Agreement. The remedies expressed herein
are cumulative and not exclusive, and the election by Service Provider to
terminate Customer’s right to possession without terminating this Service
Agreement shall not deprive Service Provider of the right, and Service Provider
shall have the continuing right, to terminate this Service Agreement.

Notwithstanding the foregoing, Service Provider agrees to exert commercially
reasonable efforts to relet the Premises if, following a Default by Customer
that results in Service Provider exercising its remedies hereunder for such
Default, Customer surrenders possession of the Premises unto Service Provider in
the condition required by the terms of this Service Agreement for Customer’s
surrender of the Premises upon the expiration of the Service Agreement Term;
provided further, however, that it shall not be unreasonable for Service
Provider to (a) decline to relet the Premises to any party that would be
unacceptable as an assignee of Customer’s obligations hereunder, as provided in
Section 38; (b) present other available space in the Building to prospective
tenants prior to presenting the Premises; or (c) refuse to accept less than the
then applicable market rate rent for the Premises.

33. Surrender. On the last day of the Term, or upon the earlier termination
hereof, Customer shall peaceably and quietly surrender the Premises to Service
Provider, in good order, repair and, excepting only reasonable wear and tear
resulting from normal use. The Premises shall be surrendered free of all items
of Customer’s personal property, and otherwise in the condition required by the
terms of this Service Agreement, and the Premises shall be free and clear of any
and all liens or encumbrances of any type caused by Customer, its agents,
contractors or vendors.

34. Holding Over. If Customer does not surrender possession of the Premises at
the end of the Term or upon earlier termination of this Service Agreement, at
the election of Service Provider, Customer shall be a tenant-at-sufferance from
day to day and the Rent due during the period of such holdover shall be one
hundred fifty percent (150%) of the amount which Customer was obligated to pay
for the immediately preceding month.

 

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35. Removal of Customer’s Property. Not later than the expiration of the Term or
the earlier termination of this Service Agreement, Customer shall, at Customer’s
expense, remove all of Customer’s personal property from the Premises. Customer
shall be responsible for any damage to the Premises or Project resulting from
removal of any personal property, including Lines, of Customer. If Customer does
not remove its property prior to termination, then, in addition to its other
remedies at law or in equity, Service Provider shall have the right to consider
the property abandoned and such property may be removed by Service Provider, at
Customer’s expense, or at Service Provider’s option become its property, and
Customer shall have no further rights relating thereto or for reimbursement
therefor.

36. Service Provider’s Lien. [Text intentionally deleted.]

37. Interest. All amounts payable by Customer to Service Provider under this
Service Agreement, if not paid when due, shall bear interest from the date due
until paid at a rate equal to the lesser of twelve percent (12%) per annum,
compounded monthly, or the then maximum lawful rate (“Default Rate”).

38. Assignment and Subletting. Service Provider shall have the right to transfer
and assign in whole or in part, by operation of law or otherwise, its rights and
obligations hereunder whenever Service Provider, in its sole judgment, deems it
appropriate without any liability to Customer, and Customer shall attorn to any
party to which Service Provider transfers its rights and obligations hereunder
or the Building and that expressly assumes in writing Service Provider’s
obligations hereunder. Any sale, conveyance or transfer of the Building or
Project will operate to release Service Provider from liability from and after
the effective date of such sale, conveyance, transfer or assignment upon all of
the covenants, terms and conditions of this Service Agreement, express or
implied, except for those liabilities that arose prior to the effective date of
such sale, conveyance, transfer or assignment. After such effective date,
Customer will look solely to Service Provider’s successor in interest under this
Service Agreement, except for those liabilities that arose prior to the
effective date of such sale, conveyance, transfer or assignment.

Customer shall not assign, transfer, mortgage, pledge or otherwise encumber this
Service Agreement, or any interest herein, and shall not sublet the Premises or
any part thereof, or any right or privilege appurtenant thereto, or permit any
other party to occupy or use the Premises, or any portion thereof, other than
consultants, vendors, attorneys and other persons providing goods or services to
Customer, without the prior written consent of Service Provider, which consent
shall not be unreasonably withheld. The Service Provider’s consent shall not be
considered unreasonably withheld if: (i) the proposed subtenant’s or assignee’s
financial responsibility does not meet the same criteria Service Provider uses
to select comparable Building tenants; (ii) the proposed subtenant’s or
assignee’s business is different from Customer’s and is not suitable for the
Building considering the business of the other tenants and the Building’s
prestige; or (iii) the proposed use is inconsistent with the use permitted by
Section 3. Whether or not Service Provider consents to any proposed assignment
or subletting of any portion of the Premises, Customer shall timely pay Service
Provider’s reasonable professional fees (including, without limitation, legal,
architectural, engineering, and consulting fees) incurred by Service Provider in
connection with such proposed assignment or subletting, not to exceed $5,000 per
assignment or subletting (“Sublease/Assignment Professional Fees”). The
Sublease/Assignment Professional

 

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Fees shall, at Service Provider’s option, be paid by Customer (a) prior to
Service Provider’s denial or execution of a consent to the proposed assignment
or subletting or (b) within ten (10) days of Customer’s receipt of an invoice
from Service Provider for such fees.

A “Change in Control” of Customer shall be deemed for purposes of this Service
Agreement to constitute an assignment of this Service Agreement by Customer
which shall require the consent of Service Provider and entitle Service Provider
to exercise its options as provided hereunder. As used in this Section, a
“Change in Control” shall be deemed to have occurred when: (x) any person, after
the date hereof, acquires directly or indirectly the Beneficial Ownership (as
defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) of
any voting interests or equity interests of Customer and immediately after such
acquisition such person is, directly or indirectly, the Beneficial Owner of
voting or equity interests representing 50% or more of the total voting interest
or equity interest of all of the then-outstanding equity interests or voting
interests of Customer; (y) the stockholders, partners, members or other equity
holders of Customer shall approve a merger, consolidation, recapitalization, or
reorganization of Customer, or consummation of any such transaction if equity
holder approval is not sought or obtained; or (z) the stockholders, partners,
members or other equity holders of Customer shall approve a plan of complete
liquidation of Customer or an agreement for the sale or disposition by Customer
of all or a substantial portion of Customer’s assets (i.e., 50% or more of the
total assets of Customer).

If Customer desires to assign this Service Agreement or sublease the Premises
other than in connection with a Permitted Assignment, defined below, Customer
shall provide Service Provider notice in writing at least thirty (30) days in
advance of the date on which Customer desires such assignment or sublease to
take effect. Customer’s notice shall include (A) the name and address of the
proposed subtenant or assignee; (B) the nature of the proposed subtenant’s or
assignee’s business it will operate in the Premises; (C) the terms of the
proposed sublease or assignment; and (D) reasonable financial information so
that Service Provider can evaluate the proposed subtenant or assignee. Service
Provider shall, within thirty (30) days after receiving such information, give
written notice to the Customer to (i) permit or deny the proposed sublease or
assignment or (ii) terminate this Service Agreement as to the space so affected
as of the date specified in Customer’s notice (and as to option (ii) only,
Customer will be relieved of all further obligations hereunder as to the
terminated space). If Service Provider does not give notice within the thirty
(30) day period, then Service Provider shall be deemed to have consented to the
sublease or assignment upon the terms provided in Customer’s notice.

Notwithstanding an assignment or subletting (i) subleases and assignments by
Customer shall be subject to the terms of this Service Agreement; (ii) Customer
shall remain liable for all of the obligations of “Customer” under this Service
Agreement; (iii) consent to one sublease or assignment does not waive the
consent requirement for future assignments or subleases; and (iv) fifty percent
(50%) of the consideration received by Customer from an assignment or sublease
that exceeds the amount Customer must pay Service Provider hereunder, excluding
reasonable leasing commissions paid by Customer, payments attributable to the
amortization of the cost of improvements made to the Premises at Customer’s cost
for the assignee or sublessee, and other reasonable, out-of-pocket costs paid by
Customer directly related to Customer’s obtaining an assignee or sublessee,
shall also be paid to Service Provider. Customer shall pay such amount to
Service Provider at the beginning of each calendar month. Service Provider shall
have the right to audit Customer’s books and records to verify the accuracy of
the payments under this Section.

 

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If the proposed sublessee or assignee is approved by Service Provider and
Customer fails to enter into the sublease or assignment with the approved
sublessee or assignee within ninety (90) days after the date Customer submitted
its proposal to Service Provider, then Service Provider’s approval shall expire,
and Customer must comply again with the conditions of this Section.
Notwithstanding the giving by Service Provider of its consent to any sublease or
assignment with respect to the Premises, no sublessee or assignee may exercise
any renewal options, expansion options, rights of first refusal or similar
rights except in accordance with a separate written agreement entered into
directly between the Service Provider and such sublessee or assignee provided
Customer continues to be liable for the performance of all obligations
hereunder, as increased or otherwise affected by the exercise of such rights.
Customer may not exercise any renewal options, expansion options, rights of
first refusal or similar rights under this Service Agreement if Customer has
assigned all of its interest in this Service Agreement.

Notwithstanding the restrictions set forth herein on Customer’s ability to
assign the Service Agreement or sublet the Premises, Customer may assign its
obligations and rights under this Service Agreement or sublet all or a portion
of the Premises, without the requirement of obtaining Service Provider’s prior
written consent (collectively, a “Permitted Assignment”) to (i) any corporation,
partnership or other entity directly or indirectly controlling, controlled by,
or under common control with, Customer; (ii) any entity purchasing all or
substantially all of the stock or assets of Customer; or (iii) any entity
resulting from a merger or consolidations with Customer (each, a “Permitted
Transferee”), provided that (a) in the event of an assignment to a Permitted
Transferee, the net worth of the Permitted Transferee will satisfy Service
Provider’s credit standards in effect at the time of the Permitted Assignment
for new tenants of the Building whose rental obligation is comparable to
Customer’s rental obligation hereunder at the time of the Permitted Assignment;
(b) the use of the Premises to be made by the Permitted Transferee will be
substantially the same as the use then being made of the Premises by Customer,
and will be within the permitted uses of the Premises under the Service
Agreement; and (c) no later than ten (10) days prior to the effective date of
the assignment of the Service Agreement or the subletting of the Premises to a
Permitted Transferee, Customer provides Service Provider with written notice of
such assignment or subletting, including (i) the written acknowledgment of
Customer that Customer remains fully liable for all of Customer’s obligations
under this Service Agreement until the expiration of the Term of the Service
Agreement; (ii) in the case of an assignment of the Service Agreement to a
Permitted Transferee, the express assumption by the Permitted Transferee of all
obligations of Customer under the Service Agreement and the Permitted
Transferee’s express agreement to be bound by all terms and conditions of the
Service Agreement; and (iii) in the case of an assignment of the Service
Agreement to an Affiliate, all documentation reasonably requested by Service
Provider in order to evaluate the Permitted Assignment, including but not
limited to certified financial statements evidencing the net worth of the
Permitted Transferee. As used herein, the term “control” means, with respect to
a corporation, the right to exercise, directly or indirectly, fifty percent
(50%) or more of the voting rights attributable to the shares of the controlled
corporation, and, with respect to any entity that is not a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the controlled entity.

 

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The parties acknowledge that (i) Customer is incorporated under the laws of the
Commonwealth of Virginia under the name “Xenith Bank”; (ii) until Customer
receives all requisite approvals for the organization and operation of the bank
it intends to operate in the Premises, Customer will operate under the name
“Xenith Bank [in Organization]”; (iii) upon receiving such approvals, Customer
shall cease operating under the name “Xenith Bank [in Organization]” and will
commence operating under the name “Xenith Bank”; and (iv) such change in the
name under which Customer operates shall not constitute an assignment of this
Service Agreement by Customer.

39. Merger of Estates. The voluntary or other surrender of this Service
Agreement by Customer or a mutual cancellation hereof, shall not work a merger,
but shall, at the option of Service Provider, terminate all or any existing
subleases or subtenancies, or may, at the option of Service Provider, operate as
an assignment to Service Provider of Customer’s interest in such subleases or
subtenancies.

40. Limitation of Liability. Notwithstanding anything herein to the contrary,
Customer shall look solely to the estate and property of Service Provider in the
Building for the collection of any judgment or other judicial process requiring
the payment of money by Service Provider for any default or breach by Service
Provider under this Service Agreement, subject, however, to the prior rights of
the holder of any Security Documents, defined below. No other assets of Service
Provider, or any partners, shareholders, members or other principals of Service
Provider, shall be subject to levy, execution or other judicial process for the
satisfaction of any claim of Customer against Service Provider, including,
without limitation, any Service Provider indemnity obligations under Section 26.
In no event shall any officer, director, employee, or other agent of Service
Provider or of Service Provider’s partners, shareholders, members or principals,
have any personal liability for the obligations of Service Provider under this
Service Agreement. So long as the tenant under this Service Agreement is a
corporation, limited liability company, or limited liability partnership, or
other form of legal entity with no pass-through liability to an individual, then
in no event shall any officer, director, employee, or other agent of Customer or
of Customer’s partners, shareholders, members or principals, have any personal
liability for the obligations of Customer under this Service Agreement. The
obligations under this Section shall survive the expiration or earlier
termination of this Service Agreement.

41. Subordination. The rights and interests of Customer under this Service
Agreement and in and to the Premises shall be subject and subordinate to all
easements and recorded restrictions, covenants, and agreements pertaining to the
Project, or any part thereof, and to all deeds of trust, mortgages, and other
security instruments and to all renewals, modifications, consolidations,
replacements and extensions thereof (the “Security Documents”) heretofore or
hereafter executed by Service Provider covering the Premises, the Building or
any part of the Project, to the same extent as if the Security Documents had
been executed, delivered and recorded prior to the execution of this Service
Agreement; provided, however, that the subordination of this Service Agreement
to the lien of any Security Documents hereafter placed on the Project or any
portion thereof shall be contingent upon Customer being provided with a
non-disturbance agreement reasonably acceptable to Customer and the holder of
the interest under such Security Documents whereby such holder agrees that
Customer’s right to quiet enjoyment of the Premises and all other rights of
Customer hereunder will not be disturbed in the event of a foreclosure of such
holder’s interest under such instrument, so long as a Default by

 

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Customer does not occur hereunder. After Customer’s receipt of a written notice
from Service Provider that it has entered into one or more Security Documents,
then, during the term of such Security Documents, Customer shall deliver to the
holder or holders of all Security Documents a copy of all notices to Service
Provider and shall grant to such holder or holders the right to cure all
defaults, if any, of Service Provider hereunder within the same time period
provided in this Service Agreement for curing such defaults by Service Provider
and, except with the prior written consent of the holder or holders of the
Security Documents, shall not surrender or terminate this Service Agreement
except pursuant to a right to terminate expressly set forth in this Service
Agreement and shall attorn to any holder of any Security Documents or its
successor in interest by foreclosure or otherwise. The provisions of this
subsection shall be self-operative and shall not require further agreement by
Customer; however, at the request of Service Provider, Customer shall execute
such further documents as may be required by the holder of any Security
Documents. At any time and from time to time upon not less than ten (10) days’
prior notice by Service Provider, Customer shall execute, acknowledge and
deliver to the Service Provider a written estoppel certificate certifying:
(i) the Rentable Area of the Premises, (ii) the Commencement Date and Expiration
Date of this Service Agreement, (iii) the Base Rent, Base Rent Adjustment and
expense stop, (iv) that this Service Agreement is unmodified and in full force
and effect, or if there have been modifications, that the same is in full force
and effect as modified and stating the modifications, (v) to Customer’s
knowledge, whether or not the Service Provider is in default in the keeping,
observance or performance of any covenant, agreement, term, provision or
condition of this Service Agreement and, if so, specifying each such default,
(vi) that Customer has unconditionally accepted and occupied the Premises,
(vii) to Customer’s knowledge, that all requirements of the Service Agreement
have been complied with and no charges, set-offs or other credits exist against
any rentals, (viii) that Customer has not assigned, pledged, sublet, or
otherwise transferred any interest in this Service Agreement; and (ix) such
other matters as Service Provider may reasonably request, it being intended that
any such statement may be relied upon by any prospective purchaser, mortgagee or
assignee of any mortgage of the Building or the Project or of the Service
Provider’s interest therein. Service Provider shall use commercially reasonable
efforts to secure from each holder of a security interest under a Security
Document an agreement reasonably acceptable to Customer and such holder whereby
such holder agrees that Customer’s right to quiet enjoyment of the Premises
hereunder will not be disturbed in the event of a foreclosure of such holder’s
interest under such instrument, so long as a Default by Customer does not occur
hereunder. Service Provider represents that, as of the Effective Date hereof,
there are no Security Documents encumbering the Project or any portion thereof.

42. Legal Interpretation. This Service Agreement shall be interpreted and
enforced in accordance with the laws of the state where the Project is located.
The determination that any provision of this Service Agreement is invalid, void,
illegal, or unenforceable shall not affect or invalidate the remainder.
Notwithstanding the title of this Service Agreement and the references to
Service Provider and Customer, this Service Agreement is intended to constitute
a lease with Service Provider being the landlord and Customer being the tenant.
All obligations of Customer requiring any performance after the expiration of
the Term shall survive the expiration or earlier termination of this Service
Agreement and shall be fully enforceable in accordance with those provisions
pertaining thereto. If Customer consists of two or more parties, then all such
parties shall be jointly and severally liable for all obligations of Customer
hereunder.

 

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43. Use of Names and Signage. Customer shall not have the right to use the name
of the Project or Building except in connection with Customer’s address, and
then such terms cannot be emphasized or displayed with more prominence than the
rest of such address. Service Provider shall have the right to change the name
of the Building or Project whenever Service Provider in its sole judgment deems
appropriate without any consent of or liability to Customer. Any signage of
Customer within its Premises is subject to the prior written approval of Service
Provider which shall not be unreasonably withheld, conditioned or delayed;
provided in all cases, Customer shall be solely responsible for all costs and
expenses relating to any such signage, including, without limitation, design,
installation, any operating costs, maintenance, cleaning, repair and removal.
Customer shall be obligated to pay the cost and expense of repairing any damage
associated with the removal of any such signage. Customer shall have no right to
place any signage outside the Premises, on the exterior of the Building or
elsewhere in the Project. Service Provider will provide Customer, at Service
Provider’s sole cost, with one (1) Building Standard lobby directory strip and
one (1) Building Standard suite sign outside the Customer’s Premises.

44. Relocation. [Text intentionally deleted].

45. Brokerage Fees. Each party warrants and represents that it has had no
dealings with any broker in connection with the negotiation or execution of this
Service Agreement other than Service Provider’s Broker and Customer’s Broker.
Customer’s Broker represents Customer’s interests in connection with this
transaction and shall be paid by Service Provider for its services pursuant to a
separate, written agreement fully executed by Customer’s Broker and Service
Provider prior to full execution of this Service Agreement. Service Provider’s
Broker represents Service Provider’s interests in connection with this
transaction and shall be paid by Service Provider for its services pursuant to a
separate, written agreement fully executed by Service Provider’s Broker and
Service Provider prior to full execution of this Service Agreement. Except as
expressly provided above, Service Provider will not be responsible for, and
Customer will indemnify, defend, and hold Service Provider harmless from and
against, any brokerage or leasing commission or finder’s fee claimed by any
party in connection with this Service Agreement based upon any agreement made or
alleged to have been made by Customer or its agent or representative, or the
conduct or the alleged conduct of Customer or its agent or representative.

46. Successors and Assigns. This Service Agreement shall be binding upon and
inure to the benefit of Service Provider and its successors and assigns, and
Customer and its permitted successors and assigns.

47. Force Majeure. Except for the payment of Rent or any other sum due
hereunder, each party hereto shall be excused for the period of any delay and
shall not be deemed in default with respect to the performance of any of its
obligations when prevented from so doing by a cause beyond such party’s
reasonable control, including labor disputes, government regulations, fire or
casualty, acts of terrorism, inability to obtain any materials or services, or
acts of God (collectively, “Force Majeure Events”).

 

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48. Parking. While Customer is occupying the Premises and is not in Default,
Customer shall have the right in common with other tenants to use the Parking
Spaces in the Building’s Parking Facility indicated in Section 1, without charge
but subject to any rules and regulations promulgated from time to time by
Service Provider. If requested by Service Provider, Customer shall execute a
separate parking license agreement detailing Service Provider’s and Customer’s
rights and obligations with respect to the Parking’ Spaces. Customer shall be
entitled to use only the number of spaces so allocated. Nothing herein contained
shall be construed to grant to Customer any estate in real property nor the
exclusive right to a particular parking space, but rather as a license only.

49. Rooftop Antenna. Except as set forth in Exhibit G, Customer shall have no
right to place any microwave, satellite or other type of antenna on the roof or
exterior of the Building without the prior written consent of Service Provider
which may be withheld or conditioned in Service Provider’s sole and absolute
discretion. Service Provider expressly reserves the right to charge a fee
relating to each such device. Customer acknowledges that Service Provider
currently is under contract with Spectrasite Building Group, Inc. for management
and leasing of the roof of the Building.

50. Attorneys’ Fees. If Customer fails to pay any Rent or other sum due under
this Service Agreement, and such sum is thereafter collected by or through an
attorney at law, then, in addition to such sums, Customer shall also pay Service
Provider’s reasonable attorneys’ fees and other reasonable costs and expenses
incurred in such collection. If Service Provider and Customer litigate any
provision of this Service Agreement or the subject matter hereof, the
unsuccessful party will pay to the successful party all costs and expenses,
including reasonable attorneys’ fees and expenses and court costs, incurred by
the successful party, including any cost incurred by the successful party on
appeal; provided, however that a recovery of attorneys’ fees by Service Provider
under this sentence shall include, but shall not duplicate, the recovery by
Service Provider of its reasonable attorneys’ fees and other reasonable costs
and expenses of collection permitted under the first sentence of this Section.

51. Anti-Terrorism Laws. Throughout the Term, the parties shall comply with
Presidential Executive Order 13224, the USA PATRIOT Act, the Bank Secrecy Act,
the Money Laundering Control Act, or any regulations promulgated pursuant
thereto (collectively, “Anti-Terrorism Laws”). A party shall be in breach of
this provision if (i) such party or its officers, directors, or controlling
owners is, at any time during the Term hereof, listed as a “Specifically
Designated National or Blocked Person” (“SDN”) on the SDN list maintained and
updated from time to time on the United States Treasury Department’s website
(the “SDN List”), or is otherwise a banned or blocked person, entity, or nation
pursuant to any law, order, rule or regulation that is enforced or administered
by the Office of Foreign Assets Control (“OFAC”), or is otherwise named by any
Executive Order, the United States Department of Justice, or the United States
Treasury Department as a terrorist; (ii) such party or its officers, directors,
or controlling owners, is acting, directly or indirectly, for or on behalf of
any person, group, entity, or nation that is listed on the SDN List or is
otherwise named by any Executive Order, the United States Department of Justice,
or the United States Treasury Department as a terrorist, SDN or other banned or
blocked person, entity, nation, or transaction pursuant to any law, order, rule
or regulation that is enforced or administered by the OFAC; (iii) such party or
its officers, directors, or controlling owners is engaged in this transaction,
directly or indirectly on behalf of, or instigating or facilitating this
transaction, directly or indirectly on behalf of, any such person, group,
entity, or nation; (iv) such party or its officers, directors, or controlling
owners is in

 

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violation of any of the Anti-Terrorism Laws; or (v) such party or its officers,
directors, or controlling owners is an entity with whom the other party is
prohibited from transacting business under any of the Anti-Terrorism Laws. The
parties shall not, during the Term of this Service Agreement (and any extensions
thereof), violate any of the Anti-Terrorism Laws, nor do business with any
entity that violates any of the Anti-Terrorism Laws. Each party shall indemnify,
defend (with counsel reasonably acceptable to the indemnified party), and hold
the other party and its directors, officers, partners, members, shareholders,
employees, and agents harmless from any and all obligations, claims,
administrative proceedings, judgments, damages, fines, penalties, costs, and
liabilities, including reasonable attorneys’ fees and costs, incurred by the
indemnified party or its directors, officers, partners, members, shareholders,
employees, or agents as a result of the breach of the foregoing certification.
Moreover, to the extent any provision of this section of the Service Agreement
is breached by a party during the Term of this Service Agreement (and any
extensions thereof), and the breaching party does not remedy such breach within
two (2) business days after receipt of notice of the existence of such breach
from the other party, then such other party may, at its sole option, immediately
terminate this Service Agreement without payment or obligation to the party in
breach of this provision.

52. Guaranty. [Text intentionally deleted].

53. Extension Options. Customer shall have the following options to extend the
Term of this Service Agreement:

(a) Grant of Extension Options. So long as this Service Agreement is in full
force and effect; no monetary Default has occurred during the twelve (12) month
period prior to Service Provider’s receipt of a Preliminary Notice, defined
below; and no Default exists, either at the time of the exercise of either of
the options set forth herein or at the commencement of the applicable extension
term set forth herein, Customer is hereby granted two successive options (the
“First Extension Option” and the “Second Extension Option”; individually, an
“Extension Option,” and collectively, the “Extension Options”) to extend the
Term of this Service Agreement for successive periods of three (3) additional
years each (the “First Extension Term” and the “Second Extension Term”;
individually, an “Extension Term,” and collectively, the “Extension Terms”),
with the First Extension Term to commence at the expiration of the initial Term
of this Service Agreement, and the Second Extension Term to commence at the
expiration of the First Extension Term. The extension of this Service Agreement
shall be upon the same terms and conditions of this Service Agreement, except:
(i) the Base Rent and Base Rent Adjustment applicable during the Extension Terms
shall be determined as set forth below; (ii) Customer shall have no option to
extend this Service Agreement beyond the expiration of the Second Extension
Term; (iii) Customer shall not have the right to assign its extension rights to
any subtenant of the Premises, or to any assignee of Customer that is not a
Permitted Transferee, nor may any such subtenant or assignee exercise or enjoy
the benefit of the Extension Options; and (iv) the leasehold improvements will
be provided in their then existing condition at the time the Extension Term
commences.

(b) Preliminary Notice. If Customer intends to exercise the First Extension
Option, Customer shall provide Service Provider with written notice, in
accordance with the Notices provision of this Service Agreement (the
“Preliminary Notice”), of such intention at least twelve (12) months, but no
earlier than eighteen (18) months, prior to the expiration of the

 

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initial Term of the Service Agreement. If, for whatever reason, Customer does
not forward Preliminary Notice to Service Provider, in accordance with the terms
of this paragraph, that Customer intends to exercise the First Extension Option,
then the Extension Options set forth herein shall expire, and Customer shall not
thereafter have any right to exercise either of the Extension Options or
otherwise acquire an interest in the Premises after the expiration of the
initial Term of this Service Agreement. In the event that Customer exercises the
First Extension Option, and Customer intends to exercise the Second Extension
Option, Customer shall provide Service Provider with Preliminary Notice of such
intention at least twelve (12) months, but no earlier than eighteen (18) months,
prior to the expiration of the First Extension Term. If, for whatever reason,
after exercising the First Extension Option, Customer does not forward
Preliminary Notice to Service Provider that Customer intends to exercise the
Second Extension Option, then the Second Extension Option shall expire, and
Customer shall not thereafter have any right to exercise the Second Extension
Option or otherwise acquire an interest in the Premises after the expiration of
the First Extension Term.

(c) Rental Applicable During Extension Terms. Within thirty (30) days after
Service Provider’s receipt of a Preliminary Notice from Customer, Service
Provider shall provide Customer with written notice (the “Rent Notice”) of the
Base Rent that will be applicable during the Extension Term to which such
Preliminary Notice applies, and the Base Year that will be used for purposes of
determining Customer’s Base Rent Adjustment during such Extension Term
(collectively, the “Extension Term Rent”). The Extension Term Rent shall be
determined by Service Provider, and shall consist of Service Provider’s good
faith determination of the market rental rate for the Premises as of the
commencement of the applicable Extension Term, and in light of the terms and
conditions under which Customer would be leasing the Premises during the
applicable Extension Term, taking into consideration such factors as rental for
comparable premises in the Building; the applicable base year; rental for
comparable premises in existing buildings in the same geographical area as the
Building (taking into consideration, but not limited to, use, quality, age and
location of the applicable building); the rentable area of the premises being
leased; the length of the pertinent rental term; the quality and
creditworthiness of the tenant; the fact that (i) no brokerage commission will
be payable by Service Provider, (ii) the Premises will be leased by Customer in
their “AS IS” condition without any tenant improvements made or paid for by
Service Provider, and (iii) Customer will be provided with no free rent, rent
abatement or other concessions or inducements by Service Provider, and such
other factors as Service Provider may reasonably determine are relevant to a
determination of the fair market rental rate for the Premises. Service Provider
shall include in the Rent Notice the manner in which it calculated the Extension
Term Rent and the comparable office buildings and office space Service Provider
relied upon in making its calculation of the Extension Term Rent.

(d) Extension Notice. If, after review of Service Provider’s determination of
the Extension Term Rent, Customer elects to exercise the Extension Option to
which such rate applies, then, no later than thirty (30) days after Customer’s
receipt of Service Provider’s Rent Notice, Customer shall forward written notice
of such election (the “Extension Notice”) to Service Provider in accordance with
the Notices provision of this Service Agreement. Customer shall, within
forty-five (45) days after presentation by Service Provider, execute an
amendment to this Service Agreement, which amendment shall be reasonably
acceptable to Customer and shall reflect the extension of the Term of the
Service Agreement through the expiration of such

 

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Extension Term (the “Amendment”), and the Extension Term Rent applicable to such
Extension Term (including the specification of the base rent and the base year
that will be applicable during such Extension Term). If, after providing Service
Provider with a Preliminary Notice, Customer does not, for whatever reason,
provide Service Provider with the Extension Notice required hereunder in order
to exercise the applicable Extension Option, or an Arbitration Notice, as
defined below, then such Extension Option shall expire; Customer’s Preliminary
Notice indicating its intention to exercise such Extension Option shall be of no
further force or effect; and it shall be as if the Preliminary Notice had never
been forwarded by Customer to Service Provider. If, however, after Customer
forwards an Extension Notice to Service Provider, Customer fails to execute the
Amendment to the Service Agreement as required by the terms of this paragraph,
the Term of the Service Agreement shall nonetheless be extended in accordance
with the terms of the applicable Extension Option.

(e) Negotiation Period. If, after review of Service Provider’s determination of
the Extension Term Rent applicable to either of the Extension Terms, Customer
desires to exercise the Extension Option to which such determination is
applicable, but Customer objects to Service Provider’s determination of such
Extension Term Rent, then no later than fifteen (15) days after Customer’s
receipt of Service Provider’s Rent Notice regarding such Extension Term Rent,
Customer may forward written notice to Service Provider in accordance with the
Notices provision of this Service Agreement that Customer elects to proceed with
the arbitration procedure set forth below (the “Arbitration Notice”). Within the
fifteen (15) day period following Service Provider’s receipt of the Arbitration
Notice (the “Negotiation Period”) from Customer, Customer and Service Provider
shall negotiate in good faith to determine and mutually agree upon such
Extension Term Rent. If Service Provider and Customer are unable to agree upon
the Extension Term Rent during the Negotiation Period, which agreement would be
evidenced by an amendment to the Service Agreement executed by both Service
Provider and Customer, then within five (5) days after the last day of the
Negotiation Period, Customer may, by written notice to Service Provider (the
“Notice of Exercise”), irrevocably elect to exercise the applicable Extension
Option, with the Extension Term Rent to be determined in accordance with the
arbitration procedure set forth below, which determination shall be binding on
Service Provider and Customer. In the event that Customer shall fail to deliver
the Notice of Exercise on or before five (5) days after the last day of the
Negotiation Period, then Customer shall have waived any right to exercise the
applicable Extension Option. In the event Customer timely delivers the Notice of
Exercise to Service Provider, Service Provider and Customer shall each
simultaneously present to the other party their final determinations of such
Extension Term Rent (the “Final Offers”) within ten (10) days after the last day
of the Negotiation Period. If the lower of the Final Offers is at least ninety
percent (90%) of the higher of the Final Offers, then the Extension Term Rent
shall be determined by averaging the Final Offers. If the lower of the Final
Offers is less than ninety percent (90%) of the higher of the Final Offers, then
the Extension Term Rent shall be determined by arbitration, in accordance with
the procedure set forth below.

(f) Arbitration. Arbitration shall follow the following procedures:

(i) Within ten (10) days after Service Provider’s receipt of Customer’s Notice
of Exercise, Customer and Service Provider shall each select an arbitrator
(“Customer’s Arbitrator” and “Service Provider’s Arbitrator”, respectively) who
shall be a qualified and

 

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impartial person licensed in the state where the Building is located as an MAI
appraiser with at least five (5) years of experience in appraising the type of
matters for which they are called on to appraise hereunder in the market where
the Building is located.

(ii) Service Provider’s Arbitrator and Customer’s Arbitrator shall name a third
arbitrator, similarly qualified, within ten (10) days after the appointment of
Service Provider’s Arbitrator and Customer’s Arbitrator.

(iii) The third arbitrator shall, after due consideration of the factors to be
taken into account under the definition of Extension Term Rent set forth above,
and hearing whatever evidence the arbitrator deems appropriate from Service
Provider, Customer and others, and obtaining any other information the
arbitrator deems necessary, in good faith, make its own determination of the
Extension Term Rent for the Premises as of the commencement of the applicable
Extension Term (the “Arbitrator’s Initial Determination”) and thereafter select
either Service Provider’s Final Offer or the Customer’s Final Offer, but no
other, whichever is closest to the Arbitrator’s Initial Determination (the
“Final Determination”), such determination to be made within twenty (20) days
after the appointment of the third arbitrator. The Arbitrator’s Initial
Determination, Final Determination and the market information upon which such
determinations are based shall be in writing and counterparts thereof shall be
delivered to Service Provider and Customer within such twenty (20) day period.
The arbitrator shall have no right or ability to determine the Extension Term
Rent in any other manner. The Final Determination shall be binding upon the
parties hereto.

(iv) Service Provider and Customer shall each pay the costs and fees of their
respective arbitrators. The actual reasonable costs and fees of the third
arbitrator shall be paid by Service Provider if the Final Determination shall be
Customer’s Final Offer or by Customer if the Final Determination shall be
Service Provider’s Final Offer.

(v) If Customer fails to appoint Customer’s Arbitrator in the manner and within
the time specified above, then the Extension Term Rent shall be the rent
contained in the Service Provider’s Final Offer. If Service Provider fails to
appoint Service Provider’s Arbitrator in the manner and within the time
specified above, then the Extension Term Rent shall be the rent contained in the
Customer’s Final Offer.

(g) Extension Options Personal to Customer. The parties expressly agree that the
Extension Options granted to Customer herein shall be “personal” to Customer.
The Extension Options may only be exercised by Customer or an assignee of
Customer that is a Permitted Transferee; the Extension Options may not be
exercised by a subtenant of Customer any assignee that is not a Permitted
Transferee; and they may not be exercised by Customer if Customer is, at the
time that an Extension Notice is provided by Customer to Service Provider,
negotiating with Service Provider or a potential assignee or subtenant to either
assign the Customer’s interest under the Service Agreement to an assignee that
is not a Permitted Transferee or to sublet all or a portion of the Premises to
other than a Permitted Transferee.

 

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54. Generator.

(a) Purchase of New Generator. The parties acknowledge that Service Provider
will purchase the new 50KW generator and transfer switch described in Exhibits
H-l and H-2 (the “Generator”) for Customer’s exclusive use to permit Customer to
connect Customer’s computer network system located in the Premises to the
Generator. The Generator shall be installed by Service Provider’s contractor in
accordance with the Scope of Equipment described in Exhibit H-2 on the existing
concrete pad on which Service Provider’s generator for the Building is currently
located, or in such other location as may be mutually acceptable to the parties.
The parties acknowledge that Customer selected the Generator; Customer has
determined that the Generator is appropriate and sufficient for Customer’s
intended use; and the Generator, and installation of the Generator in accordance
with the terms of Exhibit H-2, have been approved by Service Provider. Service
Provider’s installation of the Generator in accordance with Exhibit H-2 shall be
part of the Initial Improvements.

(b) Permitting; compliance with laws. Customer acknowledges that a permit will
be required in order to connect Customer’s computer network system to the
Generator (the “Generator Permit”). Service Provider shall apply and pursue
obtaining the Generator Permit, and shall inform Customer when the Generator
Permit has been obtained. All connections of Customer’s computer network system
to the Generator shall be made by Customer under the direct supervision of
Service Provider. Customer shall comply with all applicable laws, and all
applicable electrical, fire and life/safety codes in its use of the Generator.

(c) Generator Costs. The cost of the Generator, which the parties anticipate to
be Twenty-four Thousand, Thirty-three and 88/100 Dollars ($24,033.88) (as set
forth in Exhibit H-2), and all costs incurred by Service Provider in obtaining a
permit for the connection of Customer’s computer network system to the Generator
(the “Generator Costs”), shall be part of the Initial Costs, defined in the Work
Letter. As part of the Improvement Allowance, Service Provider shall provide
Customer with an allowance equal to the lesser of (i) the actual amount of the
Generator Costs incurred by Service Provider, or (ii) Forty Thousand Dollars
($40,000.00) (such lesser amount being referred to herein as the “Generator
Allowance”), which Service Provider shall apply directly toward the Generator
Costs. Customer shall be solely responsible for, and shall pay directly, the
cost of connecting the Generator to Customer’s computer network system in the
Premises, including the cost of all required wiring required to make such
connection (the “Connectivity Costs”). Except for reimbursement of any direct
costs incurred by Service Provider hereunder, or otherwise incurred by Service
Provider as a result of Customer’s use of the Generator, no rent or other charge
shall be assessed to Customer in connection with Customer’s use of the
Generator.

(d) Generator remains property of Service Provider. Although the Generator will
be purchased by Service Provider for Customer’s exclusive use, the Generator
shall be and remain the sole property of Service Provider, and the parties
acknowledge that the Generator will be located in the Common Areas of the
Project, in such location as is mutually acceptable to Service Provider and
Customer. In the event that in the course of maintaining, repairing or improving
the Building or the Common Areas, it shall become necessary for the Generator to
be relocated in order for Service Provider to perform such maintenance, repair
or improvement, then upon reasonable prior notice to Customer, Service Provider
may require Customer to

 

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relocate the Generator, either temporarily or permanently as required by the
circumstances, to other space in the Common Areas of the Project that is
acceptable to both parties, with all reasonable costs of such relocation to be
paid by Service Provider.

(e) Use and Maintenance of Generator. Subject to the terms of this Section 54,
Customer shall have the right to use the Generator throughout the Term of this
Service Agreement, until such right is terminated as provided below. Customer
shall use and operate the Generator in strict compliance with all applicable
Laws, at Customer’s own and sole risk, and Customer shall be solely responsible
for maintaining, servicing and repairing the Generator throughout the Term.
Customer shall have no claim against Service Provider should the Generator fail
or fail to operate correctly, unless such failure is the result of Service
Provider’s gross negligence or willful misconduct.

(f) Indemnity. Customer’s use of the Generator shall be at Customer’s own risk,
and Customer hereby waives any liability of Service Provider, Service Provider’s
management agent for the Building, and their respective officers, directors,
shareholders, employees, agents, successors and assigns, for any loss, injury or
damage sustained by Customer or any of its employees, customers or other third
parties, unless such loss, injury or damage is the result of the gross
negligence or willful misconduct of Service Provider, its employees, agents or
contractors. Customer hereby indemnifies Service Provider from and agrees to
hold Service Provider harmless against, any and all liability, loss, cost,
damage or expense, including, without limitation, court costs and reasonable
attorneys’ fees, imposed on Service Provider by any person whomsoever, as a
result of any loss, injury or damage resulting from Customer’s use of the
Generator, unless such loss, injury or damage is the result of the gross
negligence or willful misconduct of Service Provider, its employees, agents or
contractors.

(g) Insurance. Customer shall insure against any damage resulting to Customer’s
business due to a failure or other malfunction of the Generator as if the
Generator were located in the Premises.

(h) Termination of right to connect to the Generator. Customer’s right to use
the Generator shall terminate upon the earlier of (i) the expiration or earlier
termination of the Term of this Service Agreement; (ii) the termination by
Service Provider of Customer’s right to possession of the Premises as a result
of a Default by Customer hereunder; or (iii) Customer disconnects its computer
network system located in the Premises from the Generator and ceases use of the
Generator for a period of ten (10) or more days.

55. Funding of Improvement Costs Allowance.

(a) Initial Improvement Costs Deposit. No later than ten (10) days after the
Effective Date hereof, Customer shall deposit with Service Provider the sum of
Eighty-four Thousand, Three Hundred Twelve Dollars ($84,312.00), which amount is
equal to one-half of the Improvement Costs Allowance defined in the Work Letter
(the “Initial Improvement Costs Deposit”).

 

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(b) Remainder of Improvement Costs Deposit. At such time as it appears that the
Initial Improvement Costs Deposit will be exhausted, Customer shall deposit with
Service Provider an additional sum equal to the greater of (i) Eighty-four
Thousand, Three Hundred Twelve Dollars ($84,312.00), which amount is also equal
to one-half of the Improvement Costs Allowance; or (ii) Service Provider’s
reasonable estimate of the remainder of the Improvement Costs to be incurred in
constructing the Initial Improvements (the “Remainder of Improvement Costs
Deposit”). Customer shall deposit the Remainder of Improvement Costs Deposit
with Service Provider within ten (10) days after Customer’s receipt of
documentation reflecting the Improvement Costs incurred to date, and Service
Provider’s reasonable estimate of the remainder of the Improvement Costs to be
incurred to complete the Initial Improvements (the Initial Improvement Costs
Deposit and the Remainder of Improvement Costs Deposit are hereinafter
collectively referred to as the “Improvement Costs Deposit”).

(c) Application of the Improvement Costs Deposit. The Improvement Costs Deposit
shall be held by Service Provider and applied to the Improvement Costs in
accordance with the provisions of the Work Letter regarding the payment of the
Improvement Costs from the Improvement Costs Allowance. Within thirty (30) days
after completion of the Initial Improvements, any unused portion of the
Improvement Costs Deposit shall be refunded by Service Provider to Customer.

(d) Reimbursement to Customer. Provided that no monetary Default has occurred
under this Service Agreement through the date on which the reimbursement that is
the subject of this paragraph is to be made, and subject to the occurrence of
each of the following conditions, within thirty (30) days after (i) Customer’s
occupancy of the entire Premises for the purpose of conducting business in the
Premises; (ii) the Commencement Date; and (iii) Service Provider’s receipt of
copies of (A) the charter received by Customer from the State Corporation
Commission of Virginia for the bank to be operated in the Premises; (B) written
confirmation that Customer has been granted membership in the Federal Reserve
System; (C) written confirmation that the Federal Deposit Insurance Corporation
(“FDIC”) has agreed to provide insurance for Customer accounts; and (D) any
other documentation (collectively, “Regulatory Approval Documents”), if any,
that is required by the FDIC, the State Corporation Commission of Virginia, or
any other governmental entity (collectively, “Regulatory Entity”), in order for
Customer to legally operate a bank in the Premises (collectively, “Regulatory
Approval”), whichever occurs later, Service Provider shall reimburse Customer
for the cost of the Initial Improvements in an amount equal to the lesser of
(x) the Improvement Costs Allowance; (y) the Improvement Costs; or (z) any
portion of the Improvement Costs Deposit not previously refunded to Customer as
provided in Section 55(c) above.

56. Termination Option. Prior to the Effective Date, Customer applied for, and
Customer shall continue to use commercially reasonable efforts to obtain as soon
as reasonably possible, Regulatory Approval; such commercially reasonable
efforts shall include using all lawful means reasonably available to Customer to
comply with additional regulatory requirements that may be placed upon Customer
by a Regulatory Entity in order to obtain Regulatory Approval. Upon obtaining
Regulatory Approval, Customer shall provide copies of the Regulatory Approval
Documents to Service Provider evidencing that Regulatory Approval has been
obtained. In the event that, despite such commercially reasonable efforts,
Customer is unable to obtain Regulatory Approval by June 30, 2009, then Customer
shall have the option of terminating this Service Agreement in accordance with
the terms of this Section 56. Customer shall also have the option of terminating
this Service Agreement, in accordance with the terms of

 

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this Section 56, in the event that Service Provider is unable to obtain the
Generator Permit by the date of Substantial Completion, defined in the Work
Letter. Provided, however, that if Service Provider is unable to obtain the
Generator Permit by the date of Substantial Completion, and the delay in
obtaining the Generator Permit is due to (i) Customer’s failure to respond,
within reasonable time periods prescribed by Service Provider, to a written
request for information necessary from Customer in order to obtain the Generator
Permit; (ii) Customer’s failure to respond, within the time periods specified in
the Work Letter, or if no period of time is specified in the Work Letter, within
reasonable time periods prescribed by Service Provider, to a request for
information regarding or timely review of the Customer Plans as the same relate
to the Generator, the installation of the Generator, or connection of the
Generator to Customer’s computer network system; (iii) Customer’s changes to the
Final Plans affecting the Generator, the installation of the Generator, or
connection of the Generator to Customer’s computer network system; or (iv) any
other delay in obtaining the Generator Permit caused by Customer, then, for
purposes of this Section 56 only, there shall be added to the date of
Substantial Completion one day for each day of such delay.

(a) Grant of Termination Option. Subject to the foregoing provisions of this
Section 56, Customer is hereby granted the option of terminating this Service
Agreement (the “Termination Option”) effective at 6:00 P.M. local time on the
Termination Date, defined below. If Customer elects to exercise the Termination
Option, Customer must do so in strict compliance with the terms and conditions
set forth herein.

(b) Exercise of Termination Option. In order to exercise the Termination Option,
Customer must timely deliver the “Termination Notice,” and timely pay the
“Termination Fee,” to Service Provider as provided below:

(i) Termination Notice.

(A) Termination Notice applicable to inability of Customer to obtain Regulatory
Approval. If Customer elects to exercise the Termination Option due to
Customer’s inability to obtain Regulatory Approval, as provided above, then
Customer shall do so by delivering written notice of such election to Service
Provider, in compliance with the Notices provision of this Service Agreement
(the notice exercising the Termination Option under either this Subsection
(A) or Subsection (B) below being referred to herein as a “Termination Notice”),
no later than ten (10) days prior to the date specified in the Termination
Notice as the Termination Date; provided, however, that the effective date of
such termination (the “Termination Date”) shall be the earlier of (i) fifteen
(15) days after the date upon which Regulatory Approval is denied to Customer,
or (ii) July 10, 2009. In the event that Regulatory Approval is or would be
denied to Customer, Customer shall provide documentation to Service Provider
demonstrating to Service Provider’s reasonable satisfaction that Regulatory
Approval has been or would be denied contemporaneously with Customer’s delivery
of the Termination Notice. If Customer does not, for whatever reason, forward
such Termination Notice to Service Provider by July 10, 2009, then Customer’s
right to exercise the Termination Option due to Customer’s inability to obtain
Regulatory Approval shall expire.

 

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(B) Termination Notice applicable to inability of Service Provider to obtain
Generator Permit. If Customer elects to exercise the Termination Option due to
Service Provider’s inability to obtain the Generator Permit, as provided above,
then Customer shall do so by delivering Customer’s Termination Notice to Service
Provider no later than ten (10) days after Substantial Completion, and the
Termination Date shall be the date of the Termination Notice. If Customer does
not, for whatever reason, forward such Termination Notice to Service Provider
within such ten (10) day period, then Customer’s right to exercise the
Termination Option due to Service Provider’s inability to obtain the Generator
Permit shall expire.

(ii) Termination Fee. In the event that Customer elects to exercise the
Termination Option, Customer shall pay to Service Provider a fee (the
“Termination Fee”) to be calculated and paid in accordance with the terms of
this paragraph. The Termination Fee shall be paid by Customer to Service
Provider contemporaneously with Customer’s delivery to Service Provider of the
Termination Notice, and shall consist of the entire amount of the Improvement
Costs Allowance, less any portion of the Improvement Costs Deposit paid by
Customer to Service Provider under Section 55(b) above, for which no
reimbursement to Customer has been made by Service Provider under Section 55(d)
above as of the date on which the Termination Notice is delivered to Service
Provider, plus the Generator Costs incurred by Service Provider as of such date.
The parties acknowledge and agree that the Termination Fee does not constitute a
penalty, but rather is the parties’ reasonable pre-estimate of a portion of
Service Provider’s probable loss in the event that Customer elects to exercise
the Termination Option. Customer shall not be entitled to a refund of any
portion of the Termination Fee, regardless of whether Service Provider leases
all or any portion of the Premises to a third party, at any time after receipt
of the Termination Notice.

If Customer fails to deliver the Termination Notice to Service Provider within
the time permitted hereunder, or fails to deliver the Termination Fee to Service
Provider within the time required hereunder, or if Customer does not effectively
exercise the Termination Option in accordance with the terms hereof, or if all
the terms and conditions set forth above for exercise of the Termination Option
are not entirely satisfied, then (a) this Service Agreement shall continue
beyond the Termination Date, and Customer shall continue to be bound by the
terms of the Service Agreement as if the Termination Option had not been
exercised; and (b) the Termination Fee, or portion thereof, paid by Customer, if
any, shall be returned to Customer (unless an event of Default then exists under
the Service Agreement, in which case Service Provider may apply the Termination
Fee, or portion thereof, paid by Customer toward the amount then due under the
Service Agreement and return the balance, if any, to Customer).

(c) Effect of Exercise of Termination Option. If Customer exercises the
Termination Option in accordance with the terms hereof: (a) Customer shall be
fully liable for the payment to Service Provider of all Rent and other charges
owed under the Service Agreement which shall become due through and including
the Termination Date, and for the prompt and complete performance of all terms
and conditions of the Service Agreement, through and including the Termination
Date; (b) Customer shall surrender the Premises to Service Provider in
accordance with the terms of the Service Agreement no later than the Termination
Date; (c) if Customer shall remain in possession of the Premises beyond the
Termination Date, then Customer shall be a tenant holding over as provided in
the Service Agreement; and (d) all obligations of the parties which would
survive the expiration of the Service Agreement shall also survive the early
termination of the Service Agreement.

 

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(d) Termination Option Personal to Customer. The Termination Option set forth
herein is not transferable. The parties hereto acknowledge and agree that they
intend that the Termination Option shall be “personal” to Customer, and that in
no event shall any assignee or subtenant of Customer have any right to exercise
the Termination Option set forth herein, notwithstanding any prior approval by
Service Provider of the assignment of this Service Agreement or the subletting
of the Premises.

57. Deed of Lease. For purposes of Virginia law, this Service Agreement is a
Deed of Lease (“Deed of Lease”).

58. Entire Agreement. No oral statements or prior written material not
specifically incorporated herein shall be of any force or effect. Customer
agrees that in entering into this Service Agreement and accepting the Premises,
it relies solely upon the representations and agreements contained in this
Service Agreement, the exhibits attached hereto and the written agreements, if
any, executed contemporaneously herewith. This Service Agreement, including the
Exhibits which are attached hereto and a part hereof, constitutes the entire
agreement of the parties and shall in no way be conditioned, modified or
supplemented except by a written agreement executed by both parties.

WITNESS WHEREOF, this Service Agreement is executed and, except as otherwise
expressly provided herein, all provisions shall be effective, as of the
Effective Date.

 

Service Provider:       Customer: Parkway Properties LP       Xenith Bank [in
Organization] By:   Parkway Properties General Partners, Inc.         its
General Partner       By:  

/s/ John V. Barton II

    By:  

/s/ Thomas W. Osgood

  John V. Barton II, its Senior Vice President     Name:   Thomas W. Osgood    
  Its:   CFO/CAO

 

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