Exhibit 10.3


 


[Net Lease]


 


LEASE AGREEMENT


 


THIS LEASE AGREEMENT is
made this 11th day of August, 1995, between Security Capital Industrial Trust (“Landlord”),
and the Tenant named below.


 


	
  Tenant:

  	
  Government Technology Services, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tenant’s representative, address, and phone no.:

  	
   

  	
  Tom Smudz, Chief Financial Officer

  4100 Lafayette Center Drive, Chantilly, Virginia 22021-0808

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Premises:

  	
   

  	
  Approximately 204,649 square feet, as shown on
  Exhibit A.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project:

  	
   

  	
  Chantilly Distribution Center

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Building:

  	
   

  	
  Building 1 of Chantilly Distribution Center

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tenant’s Proportionate Share of Project:

  	
   

  	
  58.29%

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tenant’s Proportionate Share of Building:

  	
   

  	
  58.29%

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Term:

  	
   

  	
  Beginning on the Commencement Date and ending on the
  last day of the 120th full calendar month thereafter.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commencement Date:

  	
   

  	
  See Addendum 2

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial Monthly Base Rent:

  	
   

  	
  See Addendum 1

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial Estimated Monthly Operating Expense
  Payments: (estimates only and subject to adjustment to actual
  costs and expenses according to the provisions of this Lease)

  	
   

  	
  1. Utilities:

  	
  $Paid directly by Tenant

  	
   

  
	
   

  	
   

  	
   

  
	
  2. Common Area Charges:

  	
  $5,627.85

  	
   

  
	
   

  	
   

  	
   

  
	
  3. Taxes:

  	
  $8,527.04

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4. Insurance:

  	
  $852.70

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5. Others (Management Fee):

  	
  $2,046.49

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial
  Estimated Monthly Operating Expense Payments:

  	
   

  	
   

  	
   

  	
  $17,054.08

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial
  Monthly Base Rent and Operating Expense Payments:

  	
   

  	
   

  	
   

  	
  $75,720.13

  



 


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  Security
  Deposit:

  	
   

  	
  $117,332.10 (See Paragraph 5)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Broker:

  	
   

  	
  Barnes, Morris, Pardoc & Foster Inc. Landlord
  shall pay Broker pursuant to a separate agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Addenda:

  	
   

  	
  1-8, Exhibit A, B and C

  



 


1.              Granting Clause.
In consideration of the obligation of Tenant to pay rent as herein provided and
in consideration of the other terms, covenants, and conditions hereof, Landlord
leases to Tenant, and Tenant leases from Landlord, the Premises, to have and to
hold for the Lease Term and any renewal term, as the case may be, subject to
the terms, covenants and conditions of this Lease.


 


2.              Acceptance of Premises.   Tenant shall accept the Premises, subject to
all applicable laws, ordinances, regulations, covenants and restrictions as
provided in Addendum 2.  Landlord has
made no representation or warranty as to the suitability of the Premises for
the conduct of Tenant’s business, and Tenant waives any implied warranty that
the Premises are suitable for Tenant’s intended purposes.  Except as provided in Paragraph 10, in no
event shall Landlord have any obligation for any defects in the Premises or any
limitation on its use.  The taking of
possession of the Premises shall be conclusive evidence that Tenant accepts the
Premises and that the Premises were in good condition at the time possession
was taken except for items that are Landlord’s responsibility under Paragraph
10 and any punchlist items agreed to in writing by Landlord and Tenant pursuant
to the provisions of Addendum 2.


 


3.              Use.  The Premises shall be used only for the
purpose of receiving, storing, shipping and selling (but limited to non-retail
sales) products, materials and merchandise made and/or distributed by Tenant
and for such other lawful purposes as may be incidental thereto including
general office use, assembly and light manufacturing.  Tenant shall not conduct or give notice of any
auction, liquidation sale open to the general public, or going out of business
sale on the Premises.  Tenant will use
the Premises in a careful, safe and proper manner and will not commit waste
thereon.  Tenant shall not permit any
objectionable or unpleasant odors, smoke, dust, gas, noise, or vibrations to
emanate from the Premises, or take any other action that would constitute a
nuisance or would disturb, unreasonably interfere with, or endanger Landlord or
any tenants of the Project.  Outside
storage, including without limitation, storage of trucks and other vehicles,
except for overnight parking of operational vehicles, is prohibited without
Landlord’s prior written consent. 
Tenant, at its sole expense, shall use and occupy the Premises in compliance
with all laws, including, without limitation, the Americans With Disabilities
Act, orders, judgments, ordinances, regulations, codes, directives, permits,
licenses, covenants and restrictions now or hereafter applicable to the
Premises (collectively, “Legal Requirements”).  The Premises shall not be used as a place of
public accommodation under the Americans With Disabilities Act or similar state
statutes or local ordinances or any regulations promulgated thereunder, all as
may be amended from time to time unless Tenant shall have fully complied with
its obligations under the preceding and succeeding sentences of this Paragraph
3.  Tenant shall, at its expense, make
any alterations or modifications, within or without the Premises, that are
required by Legal Requirements related to Tenant’s use or occupation of the
Premises.  Tenant will not use or permit
the Premises to be used for any purpose or in any manner that would void Tenant’s
or Landlord’s insurance, increase the insurance risk, or cause the disallowance
of any sprinkler credits.  If any
increase in the cost of any insurance on the Premises or the Project is caused
by Tenant’s use or occupation of the Premises, then Tenant shall pay the amount
of such increase to Landlord.


 


4.              Base Rent.  Tenant shall pay Base Rent in the amount set
forth on Addendum I attached hereto.  One-half
of the first month’s Base Rent and one-half of the first monthly installment of
estimated Operating Expenses (as hereafter defined) shall be due and payable on
the date Landlord acquires the Project and one-half shall be payable on the
Commencement Date, and Tenant promises to pay to Landlord in advance, without
demand, deduction or set-off, monthly installments of Base Rent on or before
the first day of each calendar month succeeding


 


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the Commencement Date.  Payments
of Base Rent for any fractional calendar month shall be prorated.  All payments required to be made by Tenant to
Landlord hereunder shall be payable at such address as Landlord may specify
from time to time by written notice delivered in accordance herewith.  The obligation of Tenant to pay Base Rent and
other sums to Landlord and the obligations of Landlord under this Lease are
independent obligations.  Tenant shall
have no right at any time to abate, reduce, or set-off any rent due hereunder
except as may be expressly provided in this Lease.  Tenant waives and releases all statutory liens
and offset rights as to rent.  If Tenant
is delinquent in any monthly installment of Base Rent or of estimated Operating
Expenses for more than 5 business days, Tenant shall pay to Landlord on demand
a late charge equal to 5 percent of such delinquent sum.  The provision for such late charge shall be in
addition to all of Landlord’s other rights and remedies hereunder or at law and
shall not be construed as a penalty.


 


5.             Security
Deposit.  The Security Deposit
shall be due and payable on the date hereof.  The Security Deposit shall be held by Landlord
as security for the performance of Tenant’s obligations under this Lease.  The Security Deposit is not an advance rental
deposit or a measure of Landlord’s damages in case of Tenant’s default.  Upon each occurrence of an Event of Default
(hereinafter defined), Landlord may use all or part of the Security Deposit to
pay delinquent payments due under this Lease, and the cost of any damage,
injury, expense or liability caused by such Event of Default, without prejudice
to any other remedy provided herein or provided by law.  Tenant shall pay Landlord on demand the amount
that will restore the Security Deposit to its original amount.  Landlord’s obligation respecting the Security
Deposit is that of a debtor, not a trustee; no interest shall accrue thereon.  The Security Deposit shall be the property of
Landlord, but shall be paid to Tenant when Tenant’s obligations under this
Lease have been completely fulfilled, to the extent that any portion of the
Security Deposit has not been previously returned to Tenant, as provided below.
 Landlord shall be released from any
obligation with respect to the Security Deposit upon transfer of this Lease and
the Premises to a person or entity assuming Landlord’s obligations under this
Paragraph 5.  If, after Lease Year Three,
Tenant is able to demonstrate two consecutive prior years of: (i) net income in
excess of $6,000,000.00, (ii) total stockholder’s equity in excess of $70,000,000
and (iii) a positive net cash flow, and Tenant is not in default of this Lease,
then Landlord shall return to Tenant 50% of the Security Deposit (the “Deposit
Return”), Landlord agrees that, at the end of the Lease Term, any Security
Deposit returned to Tenant shall be returned with interest as follows: (i) for
the period from the day after Landlord’s receipt of the Security Deposit until
the date of Substantial Completion, an amount equal to 5% per annum compounded
annually based on the original Security Deposit, and (ii) for the period from
the date of the Deposit Return until termination of the Lease, an amount equal
to 5% per annum compounded annually based on the remaining Security Deposit.


 


6.             Operating
Expense Payments.  During each
month of the Lease Term, on the same date that Base Rent is due, Tenant shall
pay Landlord an amount equal to 1/12 of the annual cost, as estimated by
Landlord from time to time, of Tenant’s Proportionate Share (hereinafter
defined) of Operating Expenses for the Project.  Payments thereof for any fractional calendar
month shall be prorated.  The term “Operating
Expenses” means all costs and expenses incurred by Landlord with respect to the
ownership, maintenance, and operation of the Project including, but not limited
to costs of: Taxes (hereinafter defined) and fees payable to tax consultants
and attorneys for consultation and contesting taxes; insurance; utilities;
maintenance, repair and replacement of all portions of the Project, including
without limitation, paving and parking areas, roads, roofs, alleys, and
driveways, mowing, landscaping, exterior painting, utility lines, heating,
ventilation and air conditioning systems, lighting, electrical systems and
other mechanical and building systems; amounts paid to contractors and
subcontractors for work or services performed in connection with any of the
foregoing; charges or assessments of any association to which the Project is
subject and which may be used as an alternative method for Landlord to receive
Operating Expenses; property management fees payable to a property manager,
including any affiliate of Landlord, (which shall not exceed 3 % of total rent
per year) or an administration fee of 15 percent of Operating Expenses payable
to Landlord; security services, if any; trash collection, sweeping and removal;
and additions or alterations made by Landlord to the Project or the Building in
order to comply with Legal Requirements (other than those expressly required
herein to be made by Tenant) or that are appropriate to the continued operation
of the Project or the Building as a bulk warehouse facility in the market area,
provided that the cost of additions or alterations that are required to be


 


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capitalized for federal
income tax purposes shall be amortized on a straight line basis over a period
equal to the lesser of the useful life thereof for federal income tax purposes
or 10 years.  Operating Expenses do not
include costs, or expenses, depreciation or amortization for capital repairs
and capital replacements required to be made by Landlord under Paragraph 10 of
this Lease, debt service under mortgages or ground rent under ground leases,
costs of restoration to the extent of net insurance proceeds received by
Landlord with respect thereto, leasing commissions, or the costs of renovating
space for tenants.


 


If Tenant’s total
payments of Operating Expenses for any year are less than Tenant’s
Proportionate Share of actual Operating Expenses for such year, then Tenant
shall pay the difference to Landlord within 30 days after Landlord provides
Tenant with written evidence thereof, and if more, then Landlord shall retain
such excess, notify Tenant in writing of same and credit it against Tenant’s
next payments.  For purposes of
calculating Tenant’s Proportionate Share of Operating Expenses, a year shall
mean a calendar year except the first year, which shall begin on the
Commencement Date, and the last year, which shall end on the expiration of this
Lease.  With respect to Operating
Expenses which Landlord allocates to the entire Project, Tenant’s “Proportionate
Share” shall be the percentage set forth on the first page of this Lease as
Tenant’s Proportionate Share of the Project as reasonably adjusted by Landlord
in the future for changes in the physical size of the Premises or the Project;
and, with respect to Operating Expenses which Landlord allocates only to the
Building, Tenant’s “Proportionate Share” shall be the percentage set forth on
the first page of this Lease as Tenant’s Proportionate Share of the Building as
reasonably adjusted by Landlord in the future for changes in the physical size
of the Premises or the Building.  Landlord
may equitably increase Tenant’s Proportionate Share for any item of expense or
cost reimbursable by Tenant that relates to a repair, replacement, or service
that benefits only the Premises or only a portion of the Project or Building
that includes the Premises or that varies with occupancy or use.  Upon written request from Tenant, Landlord
shall provide back-up documentation setting forth the calculation of any equitable
increase of Tenant’s Proportionate Share.  The estimated Operating Expenses for the
Premises set forth on the first page of this Lease are only estimates, and
Landlord makes no guaranty or warranty that such estimates will be accurate.


 


7.             Utilities.  Landlord shall be responsible for all water
and sewer tap fees associated with the hookup of basic services to the
Premises.  Tenant shall pay for all
water, gas, electricity, heat, light, power, telephone, sewer, sprinkler
services, refuse and trash collection, and other utilities and services used on
the Premises, all maintenance charges for utilities, and any storm sewer
charges or other similar charges for utilities imposed by any governmental
entity or utility provider, together with any taxes, penalties, surcharges or
the like pertaining to Tenant’s use of the Premises.  To the extent possible, all utilities shall be
separately metered and billed directly to Tenant.  Landlord shall not be liable for any
interruption or failure of utilities or any other service to the Premises and
no such interruption or failure shall result in the abatement of rent
hereunder.  Tenant agrees to limit use of
water and sewer for normal restroom use.


 


8.             Taxes.
 Landlord shall pay all ad valorem
real estate taxes, assessments and governmental charges (collectively referred
to as “Taxes”) that accrue against the Project during the Lease Term, which
shall be included as part of the Operating Expenses charged to Tenant.  Landlord may contest by appropriate legal
proceedings the amount, validity, or application of any Taxes or liens thereof.
 All capital levies or other taxes
assessed or imposed on Landlord upon the rents payable to Landlord under this
Lease and any franchise tax, any excise, transaction, sales or privilege tax,
assessment, levy or charge measured by or based, in whole or in part, upon such
rents from the Premises and/or the Project or any portion thereof shall be paid
by Tenant to Landlord monthly in estimated installments or upon demand, at the
option of Landlord, as additional rent; provided, however, in no event shall Tenant
be liable for any net income taxes imposed on Landlord unless such net income
taxes are directly and identifiably in substitution for any Taxes payable
hereunder.  If any such tax or excise is
levied or assessed directly against Tenant, then Tenant shall be responsible
for and shall pay the same at such times and in such manner as the taxing
authority shall require.  Tenant shall be
liable for all taxes levied or assessed against any personal property or
fixtures placed in the Premises, whether levied or assessed against Landlord or
Tenant.


 


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9.             Insurance.
 Landlord shall maintain all risk
property insurance covering the full replacement cost of the Building.  Landlord may, but is not obligated to,
maintain such other insurance and additional coverages as it may deem
necessary, including, but not limited to, commercial liability insurance and
rent loss insurance.  All such insurance
shall be included as part of the Operating Expenses charged to Tenant.  The Project or Building may be included in a
blanket policy (in which case the cost of such insurance allocable to the
Project or Building will be determined by Landlord based upon the insurer’s
cost calculations).  Tenant shall also
reimburse Landlord for any increased premiums or additional insurance which
Landlord reasonably deems necessary as a result of Tenant’s use of the
Premises, if Tenant’s actual use of the Premises differs from the permitted
uses set forth in Paragraph 3 hereof.


 


Tenant, at its expense,
shall maintain during the Lease Term: all risk property insurance covering the
full replacement cost of all property and improvements installed or placed in
the Premises by Tenant at Tenant’s expense; worker’s compensation insurance
with no less than the minimum limits required by law; employer’s liability
insurance with such limits as required by law; and commercial liability
insurance, with a minimum limit of $1,000,000 per occurrence and a minimum
umbrella limit of $4,000,000, for a total minimum combined general liability
and umbrella limit of $5,000,000 for property damage, personal injuries, or
deaths of persons occurring in or about the Premises.  Landlord may from time to time require
reasonable increases in any such limits.  The commercial liability policies shall name
Landlord as an additional insured, insure on an occurrence and not a
claims-made basis, be issued by insurance companies which are reasonably
acceptable to Landlord, not be cancelable unless 30 days prior written notice
shall have been given to Landlord, contain a hostile fire endorsement and a
contractual liability endorsement and provide primary coverage to Landlord (any
policy issued to Landlord providing duplicate or similar coverage shall be
deemed excess over Tenant’s policies).  Such
policies or certificates thereof shall be delivered to Landlord by Tenant upon
commencement of the Lease Term and upon each renewal of said insurance.


 


The all risk property
insurance obtained by Landlord and Tenant shall include a waiver of subrogation
by the insurers and all rights based upon an assignment from its insured,
against Landlord or Tenant, their officers, directors, employees, managers,
agents, invitees and contractors, in connection with any loss or damage thereby
insured against.  Neither party nor its
officers, directors, employees, managers, agents, invitees or contractors shall
be liable to the other for loss or damage caused by any risk coverable by all
risk property insurance, and each party waives any claims against the other
party, and its officers, directors, employees, managers, agents, invitees and
contractors for such loss or damage.  The
failure of a party to insure its property shall not void this waiver.  Landlord and its agents, employees and
contractors shall not be liable for, and Tenant hereby waives all claims
against such parties for, business interruption and losses occasioned thereby
sustained by Tenant or any person claiming through Tenant resulting from any
accident or occurrence in or upon the Premises or the Project from any cause
whatsoever, including without limitation, damage caused in whole or in part,
directly or indirectly, by the negligence of Landlord or its agents, employees
or contractors; provided, however, such waiver shall only apply to claims in
excess of $1,000, which is the deductible under Tenant’s property insurance
policy.


 


Tenant and its
subtenants, assignees, invitees, employees, contractors and agents shall not be
liable for, and Landlord hereby waives all claims against such parties for
business interruption and loses occasioned thereby sustained by Landlord or any
person claiming through Landlord resulting from any accident or occurrence in
or upon the Premises or in or about the Project from any cause whatsoever,
including, without limitation, damage caused in whole or in part, directly or
indirectly, by the negligence of Tenant or its subtenants, assignees, invitees,
employees, contractors or agents; provided, however, such waiver shall only
apply to claims in excess of the commercially reasonable deductible under
Landlord’s insurance policy.


 


10.           Landlord’s Repairs.
 Landlord shall maintain, at its expense,
the structural soundness of the roof, foundation, and exterior walls of the
Building in good repair, reasonable wear and tear and damages caused by the gross
negligence or wilful misconduct of Tenant, its agents and contractors excluded.
 The term “walls” as used in this
Paragraph 10 shall not include windows, glass or plate glass, doors or overhead
doors, special store fronts,


 


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dock bumpers, dock plates or levelers, or office
entries.  Tenant shall promptly give
Landlord written notice of any repair required by Landlord pursuant to this
Paragraph 10, after which Landlord shall promptly repair.


 


11.           Tenant’s Repairs.
 Landlord, at Tenant’s expense as
provided in Paragraph 6, shall maintain in good repair and condition the
parking areas and other common areas of the Building, including, but not
limited to driveways, alleys, landscape and grounds surrounding the Premises.  Subject to Landlord’s obligation in Paragraph 10,
Tenant, at its expense, shall maintain in good repair and condition all
portions of the Premises.  If Tenant
fails to perform any repair for which it is responsible, Landlord may perform
the repair and be reimbursed by Tenant within 10 days after demand therefor.  Subject to Paragraphs 9 and 15, Tenant shall
bear the full cost of any repair to any part of the Building or Project that
results from damage caused by the gross negligence or willful misconduct of
Tenant, its agents, contractors, or invitees and any repair that benefits only
the Premises.  Heating, ventilation and
air conditioning systems and other mechanical and building systems serving the
Premises shall be maintained at Tenant’s expense pursuant to maintenance
service contracts entered into by Tenant.  To the extent that a warranty exists and is in
effect for any such improvements and is unassignable to Tenant, Landlord agrees
to undertake all reasonable efforts to enforce such warranty for Tenant’s
benefit.  The scope of services and
contractors under such maintenance contracts shall be reasonably approved by
Landlord.  At Landlord’s request, Tenant
shall enter into a joint maintenance agreement with any railroad that services
the Premises.


 


12.           Tenant-Made Alterations
and Trade Fixtures.  Any alterations, additions,
or improvements made by or on behalf of Tenant to the Premises (“Tenant-Made
Alterations”) shall be subject to Landlord’s prior written consent, which shall
not be unreasonably withheld, delayed or conditioned for Tenant-Made
Alternations which do not affect the structural components of the Building or
pierce the roof membrane.  Tenant shall
cause, at its expense, all Tenant-Made Alterations to comply with insurance
requirements and with Legal Requirements and shall construct at its expense any
alteration or modification required by Legal Requirements as a result of any
Tenant-Made Alterations.  All Tenant-Made
Alterations shall be constructed in a good and workmanlike manner by
contractors reasonably acceptable to Landlord and only good grades of materials
shall be used.  All plans and specifications
for any Tenant-Made Alterations shall be submitted to Landlord for its
approval, and Landlord may monitor construction of the Tenant-Made Alterations;
and Tenant shall reimburse Landlord for its costs in reviewing plans and
documents and in monitoring construction; provided, however, that such
reimbursements shall not exceed $2,000 per occurrence for actual expenses
incurred by Landlord.  Tenant shall
provide Landlord with the identities and mailing addresses of all persons
performing work or supplying materials, prior to beginning such construction, and
Landlord may post on and about the Premises notices of non-responsibility
pursuant to applicable law.  Landlord’s
right to review plans and specifications and monitor construction shall be
solely for its own benefit, and Landlord shall have no duty to see that such
plans and specifications or construction comply with applicable laws, codes,
rules, or regulations.  At Landlord’s
request, Tenant shall obtain payment and performance bonds for any Tenant-Made
Alterations which bonds shall be delivered to Landlord prior to commencement of
work on the Tenant-Made Alterations and shall be in form and substance
satisfactory to Landlord.  Upon
completion of any Tenant-Made Alterations, Tenant shall deliver to Landlord
sworn statements setting forth the names of all contractors and subcontractors
who did work on the Tenant-Made Alterations and final lien waivers from all
such contractors and subcontractors.


 


Landlord hereby grants
Tenant the right to install, maintain and replace from time to time an antennae
device (hereinafter “Antenna”) on the roof of the Premises, subject to
the following: (a) applicable governmental laws; (b) the right of Landlord to
supervise any roof penetrations; (c) compliance with the conditions of any roof
bond maintained by Landlord on the Premises; and (d) the Antenna not being
visible at street level from the front of the Building.  Tenant shall be responsible for the repair of
any damage to any portion of the Premises caused by Tenant’s installation, use
or removal of the Antenna.  The Antenna
shall remain the exclusive property of Tenant, and Tenant shall have the right
to remove same at any time during the term of the Lease so long as Tenant is
not in default under the Lease.  Tenant
shall protect, defend, indemnify and hold harmless Landlord from and against
any and all claims, damages, liabilities, costs or  expenses of every kind and nature (including without


 


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limitation reasonable attorney fees) imposed upon or
incurred by or asserted against Landlord arising out of Tenant’s installation,
maintenance, use or removal of the Antenna.


 


Tenant, at its own cost
and expense, may erect such shelves, bins, machinery and trade fixtures
(collectively “Trade Fixtures”) in the ordinary course of its business provided
that such items do not alter the basic character of the Premises, do not
overload or damage the Premises, and may be removed without injury to the
Premises, and provided that the construction, erection, and installation thereof
complies with all Legal Requirements and with Landlord’s requirements.  Subject to Paragraphs 21 and 38 below, upon
the expiration of the Lease Term, Tenant shall remove its Trade Fixtures and
shall repair any damage caused by such removal, by the last day of the Lease
Term.


 


13.           Signs.  Tenant shall not make any changes to the
exterior of the Premises, install any exterior lights, decorations, balloons,
flags, pennants, banners, or painting, or erect or install any signs, windows
or door lettering, placards, decorations, or advertising media of any type
which can be viewed from the exterior of the Premises, without Landlord’s prior
written consent which shall not be unreasonably withheld, delayed or conditioned,
provided that all applicable sign ordinances are met and provided further that,
in Landlord’s reasonable opinion, any such signage will materially conform with
the Landlord’s signage criteria for the Project, which will be uniformly
applied among tenants in the Project.  Subject
to the conditions set forth above and subject to approval of location, Tenant
shall have the right to install a monument sign at the Building and display
Tenant’s name and logo on the Building.  Landlord
shall provide Tenant up to $20,000 as a signage allowance, and such allowance
shall be payable to Tenant within 20 days after receipt of a “paid” invoice for
signage costs from Tenant.  Upon vacation
of the Premises, Tenant shall remove all signs and repair, paint, and/or
replace the building facia surface to which its signs are attached.  Tenant shall obtain all applicable
governmental permits and approvals for sign and exterior treatments.  All signs, decorations, advertising media,
blinds, draperies and other window treatment or bars or other security
installations visible from outside the Premises shall be subject to Landlord’s
approval and conform in all respects to Landlord’s requirements.


 


14.           Parking.  Tenant and its employees, representatives,
agents and invitees shall be entitled to park in common with other tenants of
the Project in those areas designated for nonreserved parking.  A portion of the parking area shall be fenced
in for Tenant’s sole and exclusive benefit. 
Landlord may allocate additional parking spaces among Tenant and other
tenants in the Project if Landlord determines that such parking facilities are becoming
crowded.  Landlord shall not be
responsible for enforcing Tenant’s parking rights against any third parties.


 


15.           Restoration.  If at any time during the Lease Term the
Premises are damaged by a fire or other casualty, Landlord shall notify Tenant
within 45 days after such damage as to the amount of time Landlord reasonably
estimates it will take to restore the Premises.  If the restoration time is estimated to exceed
4 months, either Landlord or Tenant may elect to terminate this Lease upon
notice to the other party given no later than 45 days after Landlord’s notice.  If neither party elects to terminate this
Lease or if Landlord estimates that restoration will take 4 months or less,
then, subject to receipt of sufficient insurance proceeds, Landlord shall
promptly restore the Premises excluding the improvements installed by Tenant or
by Landlord and paid by Tenant, subject to delays arising from the collection
of insurance proceeds or from Force Majeure events.  Tenant at Tenant’s expense shall promptly
perform, subject to delays arising from the collection of insurance proceeds,
or from Force Majeure events, all repairs or restoration not required to be
done by Landlord and shall promptly re-enter the Premises and commence doing
business in accordance with this Lease.  Notwithstanding
the foregoing, either party may terminate this Lease if the Premises are
damaged during the last year of the Lease Term and Landlord reasonably
estimates that it will take more than one month to repair such damage.  Tenant shall pay to Landlord with respect to
any damage to the Premises the amount of the commercially reasonably deductible
under Landlord’s insurance policy (up to $10,000) within 10 days after
presentment of Landlord’s invoice.  If
the damage involves the premises of other tenants, Tenant shall pay the portion
of the deductible that the cost of the restoration of the Premises bears to the
total cost of restoration, as determined by Landlord.  Base Rent and Operating Expenses shall be
abated for


 


7





















 


the period of repair and restoration in the proportion which the area
of the Premises, if any, which is not usable by Tenant bears to the total area
of the Premises.  Such abatement shall be
the sole remedy of Tenant, and except as provided herein, Tenant waives any
right to terminate the Lease by reason of damage or casualty loss.


 


16.           Condemnation.  If any part of the Premises or the Project
should be taken for any public or quasi-public use under governmental law,
ordinance, or regulation, or by right of eminent domain, or by private purchase
in lieu thereof (a “Taking” or “Taken”), and the Taking would prevent or
materially interfere with Tenant’s use of the Premises or in Landlord’s
judgment would materially interfere with or impair its ownership or operation
of the Project, then upon written notice by Tenant to Landlord, or by Landlord
to Tenant, as the case may be this Lease shall terminate and Base Rent shall be
apportioned as of said date.  If part of
the Premises shall be Taken, and this Lease is not terminated as provided
above, the Base Rent payable hereunder during the unexpired Lease Term shall be
reduced to such extent as may be fair and reasonable under the
circumstances.  In the event of any such
Taking, Landlord shall be entitled to receive the entire price or award from
any such Taking without any payment to Tenant, and Tenant hereby assigns to
Landlord Tenant’s interest, if any, in such award.  Tenant shall have the right, to the extent
that same shall not diminish Landlord’s award, to make a separate claim against
the condemning authority (but not Landlord) for such compensation as may be
separately awarded or recoverable by Tenant for moving expenses and damage to
Tenant’s Trade Fixtures, if a separate award for such items is made to Tenant.


 


17.           Assignment
and Subletting.  Without Landlord’s prior written consent
which shall not be unreasonably withheld, delayed or conditioned provided that
the conditions set forth on Addendum 3 are met, Tenant shall not assign this
Lease or sublease the Premises or any part thereof or mortgage, pledge, or
hypothecate its leasehold interest or grant any concession or license within
the Premises and any attempt to do any of the foregoing shall be void and of no
effect.  For purposes of this paragraph,
a transfer of the ownership interests controlling Tenant shall be deemed an
assignment of this Lease unless such ownership interests are publicly traded.  Notwithstanding the above, Tenant may assign
or sublet the Premises, or any part thereof, to any entity controlling Tenant,
controlled by Tenant or under common control with Tenant (a “Tenant Affiliate”),
without the prior written consent of Landlord.  Tenant shall reimburse Landlord for all of
Landlord’s reasonable out-of-pocket expenses in connection with any assignment
or sublease, not to exceed $1,000 per occurrence.  Upon Landlord’s receipt of Tenant’s written
notice of a desire to assign or sublet the Premises, or any part thereof (other
than to a Tenant Affiliate), Landlord may, by giving written notice to Tenant
within 30 days after receipt of Tenant’s notice, terminate this Lease with
respect to the space described in Tenant’s notice, as of the date specified in
Tenant’s notice for the commencement of the proposed assignment or sublease.


 


Notwithstanding any
assignment or subletting, Tenant and any guarantor or surety of Tenant’s
obligations under this Lease shall at all times remain fully responsible and
liable for the payment of the rent and for compliance with all of Tenant’s
other obligations under this Lease (regardless of whether Landlord’s approval
has been obtained for any such assignments or sublettings).  In the event that the rent due and payable by
a sublessee or assignee (or a combination of the rental payable under such
sublease or assignment plus any bonus or other consideration therefor or
incident thereto) exceeds the rental payable under this Lease, then Tenant
shall be bound and obligated to pay Landlord as additional rent hereunder all
such excess rental and other excess consideration (after deducting Tenant’s
brokerage commissions, reasonable attorney’s fees and reasonable costs of
improvements made by Tenant in connection therewith) within 10 days following
receipt thereof by Tenant.


 


If this Lease be assigned
or if the Premises be subleased (whether in whole or in part) or in the event
of the mortgage, pledge, or hypothecation of Tenant’s leasehold interest or
grant of any concession or license within the Premises or if the Premises be
occupied in whole or in part by anyone other than Tenant, then upon a default
by Tenant hereunder Landlord may collect rent from the assignee, sublessee,
mortgagee, pledgee, party to whom the leasehold interest was hypothecated,
concessionee or licensee or other occupant and, except to the extent set forth
in the preceding paragraph, apply the amount collected to the next rent payable
hereunder; and all such rentals collected by Tenant shall be held in trust for
Landlord and immediately forwarded to Landlord.  No such


 


8





















 


transaction or collection of rent or application
thereof by Landlord, however, shall be deemed a waiver of these provisions or a
release of Tenant from the further performance by Tenant of its covenants,
duties, or obligations hereunder.


 


18.          Indemnification.
 Except for the negligence of Landlord,
its agents, employees or contractors, and to the extent permitted by law,
Tenant agrees to indemnify, defend and hold harmless Landlord, and Landlord’s
agents, employees and contractors, from and against any and all losses,
liabilities, damages, costs and expenses (including attorneys’ fees) resulting
from claims by third parties for injuries to any person and damage to or theft
or misappropriation or loss of property occurring in or about the Project and
arising from the use and occupancy of the Premises or from any activity, work,
or thing done, permitted or suffered by Tenant in or about the Premises or due
to any other act or omission of Tenant, its subtenants, assignees, invitees,
employees, contractors and agents.  The
furnishing of insurance required hereunder shall not be deemed to limit Tenant’s
obligations under this Paragraph 18.


 


19.           Inspection and Access.  After providing reasonable notice to Tenant,
except in the case of an emergency, Landlord and its agents, representatives,
and contractors may enter the Premises at any reasonable time to inspect the
Premises and to make such repairs as may be required or permitted pursuant to
this Lease and for any other business purpose.  Landlord and Landlord’s representatives may
enter the Premises during business hours for the purpose of showing the
Premises to prospective purchasers and, during the last year of the Lease Term,
to prospective tenants.  Except in an
emergency situation, Landlord shall provide Tenant with reasonable opportunity to
accompany Landlord on any such entry into the Premises.  Landlord may erect a suitable sign on the
Premises stating the Premises are available to let or that the Project is
available for sale.


 


20.           Quiet Enjoyment.
 If Tenant shall perform all of the
covenants and agreements herein required to be performed by Tenant, or if
Tenant is not in default hereunder after any applicable cure periods, Tenant
shall, subject to the terms of this Lease, at all times during the Lease Term,
have peaceful and quiet enjoyment of the Premises against any person claiming
by, through or under Landlord.


 


21.           Surrender.  Upon termination of the Lease Term or earlier
termination of Tenant’s right of possession, all Tenant-Made Alterations except
for the Initial Tenant Improvements as defined in Addendum 2, shall be removed
by Tenant at Tenant’s expense and Tenant shall repair any damage caused by such
removal.  Notwithstanding the above, at
Tenant’s request, Landlord will inform Tenant at the time of Landlord’s
approval of Tenant-Made Alterations whether Landlord will require removal of
such Tenant-Made Alterations at the end of the Lease Term.  Any Trade Fixtures or Tenant-Made Alterations
not so removed by Tenant as permitted or required herein shall be deemed
abandoned and may be stored, removed, and disposed of by Landlord at Tenant’s
expense, and Tenant waives all claims against Landlord for any damages
resulting from Landlord’s retention and disposition of such property.  All obligations of Tenant hereunder not fully
performed as of the termination of the Lease Term shall survive the termination
of the Lease Term, including without limitation, indemnity obligations, payment
obligations with respect to Operating Expenses and obligations concerning the
condition and repair of the Premises.


 


22.           Holding Over.  If Tenant retains possession of the Premises
after the termination of the Lease Term, unless otherwise agreed in writing,
such possession shall be subject to immediate termination by Landlord at any
time, and all of the other terms and provisions of this Lease (excluding any
expansion or renewal option or other similar right or option) shall be
applicable during such holdover period, except that Tenant shall pay Landlord from
time to time, upon demand, as Base Rent for the holdover period, an amount
equal to 150% of the Base Rent in effect on the termination date, computed on a
monthly basis for each month or part thereof during such holding over.  All other payments shall continue under the
terms of this Lease.  In addition, Tenant
shall be liable for all damages incurred by Landlord as a result of such
holding over.  No holding over by Tenant,
whether with or without consent of Landlord, shall operate to extend this Lease
except as otherwise expressly provided, and this Paragraph 22 shall not be
construed as consent for Tenant to retain possession of the Premises.


 


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23.           Events
of Default.  Each
of the following events shall be an event of default (“Event of Default”) by
Tenant under this Lease:


 


(i)           Tenant shall fail to pay any
installment of Base Rent or any other payment required herein when due, and
such failure shall continue for a period of 5 business days from the date of
Landlord’s written notice to Tenant of such failure to pay; provided, however,
that Landlord shall not be obligated to provide written notice more than 2
times in any 12-month period or more than 7 times over the Lease Term, and the
failure of Tenant to pay in a timely fashion any additional installment of Base
Rent or other payment when due shall constitute an Event of Default without
requirement of notice or an opportunity to cure.


 


(ii)          Tenant or any guarantor or surety of
Tenant’s obligations hereunder shall (A) make a general assignment for the
benefit of creditors; (B) commence any case, proceeding or other action seeking
to have an order for relief entered on its behalf as a debtor or to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or of any substantial part of its property (collectively a “proceeding
for relief”); (C) become the subject of any proceeding for relief which is not
dismissed within 60 days of its filing or entry; or (D) die or suffer a legal
disability (if Tenant, guarantor, or surety is an individual) or be dissolved
or otherwise fail to maintain its legal existence (if Tenant, guarantor or
surety is a corporation, partnership or other entity).


 


(iii)          Any insurance required to be
maintained by Tenant pursuant to this Lease shall be cancelled or terminated or
shall expire or shall be reduced or materially changed, except, in each case,
as permitted in this Lease.


 


(iv)         Tenant shall not occupy or shall vacate
the Premises or shall fail to operate its business at the Premises for the
permitted use set forth herein, whether or not Tenant is in monetary or other
default under this Lease.


 


(v)          Tenant shall attempt or there shall
occur any assignment, subleasing or other transfer of Tenant’s interest in or
with respect to this Lease except as otherwise permitted in this Lease.


 


(vi)         Tenant shall fail to discharge any lien
placed upon the Premises in violation of this Lease within 30 days after Tenant
receives notice that any such lien or encumbrance is filed against the
Premises.


 


(vii)        Tenant shall fail to comply with any
provision of this Lease other than those specifically referred to in this
Paragraph 23, and except as otherwise expressly provided herein, such default
shall continue for more than 30 days after Landlord shall have given Tenant
written notice of such default.


 


24.           Landlord’s Remedies.  Upon each occurrence of an Event of Default
and so long as such Event of Default shall be continuing, Landlord may at any
time thereafter at its election: terminate this Lease or Tenant’s right of
possession, (but Tenant shall remain liable as hereinafter provided) and/or
pursue any other remedies at law or in equity. 
Upon the termination of this Lease or termination of Tenant’s right of
possession, it shall be lawful for Landlord, without formal demand or notice of
any kind, to re-enter the Premises by summary dispossession proceedings or any
other action or proceeding authorized by law and to remove Tenant and all
persons and property therefrom.  If
Landlord re-enters the Premises, Landlord shall have the right to keep in place
and use, or remove and store, all of the furniture, fixtures and equipment at
the Premises.


 


If Landlord terminates
this Lease pursuant to this Paragraph 24, Landlord may recover from Tenant the
sum of: all Base Rent and all other amounts accrued hereunder to the date of
such termination; the cost of reletting the whole or any part of the Premises,
including without limitation brokerage fees and/or leasing


 


10





















commissions incurred by Landlord, and costs of
removing and storing Tenant’s or any other occupant’s property, repairing,
altering, remodeling, or otherwise putting the Premises into rentable
condition, and all reasonable expenses incurred by Landlord in pursuing its
remedies, including reasonable attorneys’ fees and court costs; and the excess
of the then present value of the Base Rent and other amounts payable by Tenant
under this Lease as would otherwise have been required to be paid by Tenant to
Landlord during the period following the termination of this Lease measured
from the date of such termination to the expiration date stated in this Lease,
over the present value of any net amounts which Tenant establishes Landlord can
reasonably expect to recover by reletting the Premises for such period, taking
into consideration the availability of acceptable tenants and other market
conditions affecting leasing.  Such
present values shall be calculated at a discount rate equal to the 90-day U.S.
Treasury bill rate at the date of such termination.


 


If Landlord terminates
Tenant’s right of possession (but not this Lease), Landlord may, but shall be
under no obligation to, relet the Premises for the account of Tenant for such
rent and upon such terms as shall be satisfactory to Landlord without thereby
releasing Tenant from any liability hereunder and without demand or notice of
any kind to Tenant.  For the purpose of
such reletting Landlord is authorized to make any repairs, changes,
alterations, or additions in or to the Premises as Landlord deems reasonably
necessary or desirable.  If the Premises
are not relet, then Tenant shall pay to Landlord as damages a sum equal to the
amount of the rental reserved in this Lease for such period or periods, plus
the cost of recovering possession of the Premises (including reasonable
attorneys’ fees and costs of suit), the unpaid accrued Base Rent and other
amounts accrued hereunder at the time of repossession, and the costs incurred
in any attempt by Landlord to relet the Premises.  If the Premises are relet and a sufficient sum
shall not be realized from such reletting [after first deducting therefrom, for
retention by Landlord, the unpaid Base Rent and other amounts accrued hereunder
at the time of reletting, the cost of recovering possession (including
reasonable attorneys’ fees and costs of suit), all of the costs and expense of
repairs, changes, alterations, and additions, the expense of such reletting
(including without limitation brokerage fees and leasing commissions) and the
cost of collection of the rent accruing therefrom] to satisfy the rent provided
for in this Lease to be paid, then Tenant shall immediately satisfy and pay any
such deficiency.  Any such payments due
Landlord shall be made upon demand therefor from time to time and Tenant agrees
that Landlord may file suit to recover any sums falling due from time to time.  Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect in writing to terminate
this Lease for such previous breach.


 


Exercise by Landlord of
any one or more remedies hereunder granted or otherwise available shall not be
deemed to be an acceptance of surrender of the Premises and/or a termination of
this Lease by Landlord, whether by agreement or by operation of law, it being
understood that such surrender and/or termination can be effected only by the
written agreement of Landlord and Tenant.  Any law, usage, or custom to the contrary
notwithstanding, Landlord shall have the right at all times to enforce the
provisions of this Lease in strict accordance with the terms hereof; and the
failure of Landlord at any time to enforce its rights under this Lease strictly
in accordance with same shall not be construed as having created a custom in
any way or manner contrary to the specific terms, provisions, and covenants of
this Lease or as having modified the same.  Tenant and Landlord further agree that
forbearance or waiver by Landlord to enforce its rights pursuant to this Lease
or at law or in equity, shall not be a waiver of Landlord’s right to enforce
one or more of its rights in connection with any subsequent default.  A receipt by Landlord of rent or other payment
with knowledge of the breach of any covenant hereof shall not be deemed a
waiver of such breach, and no waiver by Landlord of any provision of this Lease
shall be deemed to have been made unless expressed in writing and signed by
Landlord.  The terms “enter,” “re-enter,”
“entry” or “re-entry,” as used in this Lease, are not restricted to their
technical legal meanings.  Any reletting
of the Premises shall be on such terms and conditions as Landlord in its sole
discretion may determine (including without limitation a term different than
the remaining Lease Term, rental concessions, alterations and repair of the
Premises, lease of less than the entire Premises to any tenant and leasing any
or all other portions of the Project before reletting the Premises).  Landlord shall not be liable, nor shall Tenant’s
obligations hereunder be diminished because of, Landlord’s failure to relet the
Premises or collect rent due in respect of such reletting.


 


11





















 


25.            Tenant’s
Remedies/Limitation of Liability. 
Landlord shall not be in default hereunder and Tenant shall not have any
remedy or cause of action unless Landlord fails to perform any of its
obligations hereunder within 30 days after written notice from Tenant
specifying such failure (unless such performance will, due to the nature of the
obligation, require a period of time in excess of 30 days, then after such
period of time as is reasonably necessary).  All obligations of Landlord hereunder shall be
construed as covenants, not conditions; and, except as may be otherwise
expressly provided in this Lease, Tenant may not terminate this Lease for
breach of Landlord’s obligations hereunder.  All obligations of Landlord under this Lease
will be binding upon Landlord only during the period of its ownership of the
Premises and not thereafter.  The term “Landlord”
in this Lease shall mean only the owner, for the time being of the Premises,
and in the event of the transfer by such owner of its interest in the Premises,
such owner shall thereupon be released and discharged from all obligations of
Landlord thereafter accruing, but such obligations shall be binding during the
Lease Term upon each new owner for the duration of such owner’s ownership.  Any liability of Landlord under this Lease
shall be limited solely to its interest in the Project, and in no event shall
any personal liability be asserted against Landlord in connection with this
Lease nor shall any recourse be had to any other property or assets of
Landlord.


 


26.            Waiver of Jury Trial.  TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL
BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING
OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.


 


27.            Subordination.  This Lease and Tenant’s interest and rights
hereunder are and shall be subject and subordinate at all times to the lien of
any first mortgage, now existing or hereafter created on or against the Project
or the Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant.  Tenant agrees, at the election of the holder
of any such mortgage, to attorn to any such holder.  Landlord agrees to use commercially reasonable
efforts to obtain for Tenant a non-disturbance and attornment agreement from
any current or future holder of a mortgage on the Project.  Tenant agrees upon demand to execute,
acknowledge and deliver such instruments, confirming such subordination and
such instruments of attornment as shall be requested by any such holder.  Tenant hereby appoints Landlord attorney in
fact for Tenant irrevocably (such power of attorney being coupled with an
interest) to execute, acknowledge and deliver any such instrument and
instruments for and in the name of the Tenant and to cause any such instrument
to be recorded.  Notwithstanding the
foregoing, any such holder may at any time subordinate its mortgage to this
Lease, without Tenant’s consent, by notice in writing to Tenant, and thereupon
this Lease shall be deemed prior to such mortgage without regard to their respective
dates of execution, delivery or recording and in that event such holder shall
have the same rights with respect to this Lease as though this Lease had been
executed prior to the execution, delivery and recording of such mortgage and
had been assigned to such holder.  The
term “mortgage” whenever used in this Lease shall be deemed to include deeds of
trust, security assignments and any other encumbrances, and any reference to
the “holder” of a mortgage shall be deemed to include the beneficiary under a
deed of trust.


 


28.            Mechanic’s Liens. 
Tenant has no express or implied authority to create
or place any lien or encumbrance of any kind upon, or in any manner to bind the
interest of Landlord or Tenant in, the Premises or to charge the rentals
payable hereunder for any claim in favor of any person dealing with Tenant, including
those who may furnish materials or perform labor for any construction or
repairs.  Tenant covenants and agrees
that it will pay or cause to be paid all sums legally due and payable by it on
account of any labor performed or materials furnished in connection with any
work performed on the Premises and that it will save and hold Landlord harmless
from all loss, cost or expense based on or arising out of asserted claims or
liens against the leasehold estate or against the interest of Landlord in the Premises
or under this Lease.  Tenant shall give
Landlord immediate written notice of the placing of any lien or encumbrance
against the Premises and cause such lien or encumbrance to be discharged within
30 days of the filing or recording thereof; provided, however, Tenant may
contest such liens or


 


12





















 


encumbrances as long as
such contest prevents foreclosure of the lien or encumbrance and Tenant causes
such lien or encumbrance to be bonded or insured over in a manner satisfactory
to Landlord within such 30 day period.


 


29.           Estoppel Certificates.  Tenant agrees, from time to time, within 10
business days after request of Landlord, to execute and deliver to Landlord, or
Landlord’s designee, any estoppel certificate requested by Landlord, stating
that this Lease is in full force and effect, the date to which rent has been
paid, that Landlord is not in default hereunder (or specifying in detail the
nature of Landlord’s default), the termination date of this Lease and such
other matters pertaining to this Lease as may be requested by Landlord.  Tenant’s obligation to furnish each estoppel
certificate in a timely fashion is a material inducement for Landlord’s
execution of this Lease.  No cure or
grace period provided in this Lease shall apply to Tenant’s obligations to
timely deliver an estoppel certificate.


 


30.           Environmental Requirements.  Except for Hazardous Material contained in
products used by Tenant in de minimis quantities for ordinary cleaning and
office purposes, Tenant shall not permit or cause any party to bring any
Hazardous Material upon the Premises or store or use any Hazardous Material in
or about the Premises without Landlord’s prior written consent.  Tenant, at its sole cost and expense, shall
operate its business in the Premises in compliance with all Environmental
Requirements and shall immediately remediate any Hazardous Materials released
on or from the Project by Tenant, its agents, employees, contractors,
subtenants or invitees.  The term “Environmental
Requirements” means all applicable present and future statutes, regulations,
ordinances, rules, codes, judgments, orders or other similar enactments of any
governmental authority or agency regulating or relating to health, safety, or
environmental conditions on, under, or about the Premises or the environment,
including without limitation, the following: the Comprehensive Environmental
Response, Compensation and Liability Act (“CERCLA”); the Resource Conservation
and Recovery Act; and all state and local counterparts thereto, and any regulations
or policies promulgated or issued thereunder.  The term “Hazardous Materials” means and
includes petroleum (as defined in CERCLA) and any substance, material, waste,
pollutant, or contaminant listed or defined as hazardous or toxic, under any
Environmental Requirements.


 


Tenant shall indemnify,
defend, and hold Landlord harmless from and against any and all losses
(including, without limitation, diminution in value of the Premises or the
Project and loss of rental income from the Project), claims, demands, actions,
suits, damages (including, without limitation, punitive damages), expenses
(including, without limitation, remediation, corrective action, or cleanup
expenses), and costs (including, without limitation, actual attorneys’ fees,
consultant fees or expert fees) which are brought or recoverable against, or
suffered or incurred by Landlord as a result of any release of Hazardous
Materials for which Tenant is obligated to remediate as provided above or any
other breach of the requirements under this Paragraph 30 by Tenant, its agents,
employees, contractors, subtenants, assignees or invitees, regardless of
whether Tenant had knowledge of such noncompliance.  The obligations of Tenant under this Paragraph
30 shall survive any termination of this Lease.


 


When available, Landlord
will deliver to Tenant a true and complete copy of the final Phase 1
Environmental Site Assessment prepared on behalf of Landlord (the “Report”),
Tenant agrees to keep the Report confidential and not to disclose the contents
thereof to any other party (except Tenant’s advisors with respect to this
leasing transaction) without the prior written consent of Landlord.  Tenant acknowledges that Landlord has made no
representation or warranty with respect to the accuracy or completeness of any
information or conclusions contained in such environmental Report.  Landlord shall also provide to Tenant copies
of all other final and fully executed environmental reports prepared on behalf
of Landlord during Landlord’s inspection period for the Project, provided that
Tenant agrees to keep such reports confidential, except as provided above.


 


Landlord, upon delivery
of the Report, will represent to Tenant that to the best of Landlord’s then
current, actual knowledge, based only upon and except as disclosed in the
Report, there are no Hazardous Materials in reportable quantities on the
Project.  The phrase “the current, actual
knowledge of Landlord” shall mean and refer only to the best of the current, actual
knowledge of the officers of Landlord having direct, operational responsibility
for the Project, with the express limitations and qualifications that the
knowledge of any contractor or consultant


 


13





















 


shall not be imputed to Landlord, and none of such
officers has made any special investigation or inquiry, and none of such
officers has any duty or obligation of diligent investigation or inquiry, or
any other duty or obligation, to acquire or to attempt to acquire information
beyond or in addition to the current, actual knowledge of such persons.


 


Landlord shall have
access to, and a right to perform inspections and tests of, the Premises to
determine Tenant’s compliance with Environmental Requirements, its obligations
under this Paragraph 30, or the environmental condition of the Premises.  Access shall be granted to Landlord upon
Landlord’s prior notice to Tenant and at such times so as to minimize, so far
as may be reasonable under the circumstances, any disturbance to Tenant’s
operations.  Such inspections and tests
shall be conducted at Landlord’s expense, unless such inspections or tests
reveal that Tenant has not complied with any Environmental Requirement, in
which case Tenant shall reimburse Landlord for the reasonable cost of such
inspection and tests.  Landlord’s receipt
of or satisfaction with any environmental assessment in no way waives any
rights that Landlord holds against Tenant.


 


31.           Rules and Regulations.  Tenant shall, at all times during the Lease
Term and any extension thereof, comply with all reasonable rules and
regulations at any time or from time to time established by Landlord covering
use of the Premises and the Project.  The
current rules and regulations are attached hereto.  In the event of any conflict between said
rules and regulations and other provisions of this Lease, the other terms and
provisions of this Lease shall control. 
Landlord shall not have any liability or obligation for the breach of
any rules or regulations by other tenants in the Project, but shall equitably
enforce the rules and regulations among all tenants in the Project.


 


32.           Security Service.  Tenant acknowledges and agrees that, while
Landlord may patrol the Project, Landlord is not providing any security services
with respect to the Premises and that Landlord shall not be liable to Tenant
for, and Tenant waives any claim against Landlord with respect to, any loss by
theft or any other damage suffered or incurred by Tenant in connection with any
unauthorized entry into the Premises or any other breach of security with
respect to the Premises.


 


33.           Force Majeure.  Except for monetary payments required under
this Lease, neither party shall be held responsible for delays in the
performance of its obligations hereunder when caused by strikes, lockouts,
labor disputes, acts of God, inability to obtain labor or materials or
reasonable substitutes therefor, governmental restrictions, governmental
regulations, governmental controls, delay in issuance of permits, enemy or
hostile governmental action, civil commotion, fire or other casualty, and other
causes beyond the reasonable control of such party (“Force Majeure”).


 


34.           Entire Agreement.  This Lease, together with all attachments,
addenda and exhibits hereto, constitutes the complete agreement of Landlord and
Tenant with respect to the subject matter hereof.  No representations, inducements, promises or
agreements, oral or written, have been made by Landlord or Tenant, or anyone
acting on behalf of Landlord or Tenant, which are not contained herein, and any
prior agreements, promises, negotiations, or representations are superseded by
this Lease.  This Lease may not be
amended except by an instrument in writing signed by both parties hereto.


 


35.           Severability.  If any clause or provision of this Lease is
illegal, invalid or unenforceable under present or future laws, then and in
that event, it is the intention of the parties hereto that the remainder of
this Lease shall not be affected thereby. 
It is also the intention of the parties to this Lease that in lieu of
each clause or provision of this Lease that is illegal, invalid or
unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in terms to such illegal, invalid or unenforceable clause or
provision as may be possible and be legal, valid and enforceable.


 


36.           Brokers.  Each party represents and warrants to the
other that it has dealt with no broker, agent or other person in connection
with this transaction and that no broker, agent or other person brought about
this transaction, other than the broker, if any, set forth on the first page of
this Lease, and each party agrees to


 


14





















 


indemnify and hold the other harmless from and against any claims by
any other broker, agent or other person claiming a commission or other form of
compensation by virtue of having dealt with such party with regard to this
leasing transaction.


 


37.           Miscellaneous. (a) Any payments or charges due from Tenant
to Landlord hereunder shall be considered rent for all purposes of this Lease.


 


(b)           If and when included within the term “Tenant,”
as used in this instrument, there is more than one person, firm or corporation,
each shall be jointly and severally liable for the obligations of Tenant.


 


(c)           All notices required or permitted to
be given under this Lease shall be in writing and shall be sent by registered
or certified mail, return receipt requested, or by a reputable national
overnight courier service, postage prepaid, or by band delivery addressed to
the parties at their addresses below, and with a copy sent to Landlord at 14100
East 35th Place, Aurora, Colorado 80011 and a copy to Tenant’s counsel at
Dickstein, Shapiro & Morin, L.L.P., 2101 L Street, N.W., Washington, D.C.
20037-1526, Attention: Timothy C. Hutchens.  Either party may by notice given aforesaid
change its address for all subsequent notices.  Except where otherwise expressly provided to
the contrary, notice shall be deemed given upon delivery.


 


(d)           Except as otherwise expressly
provided in this Lease, Landlord retains the absolute right to withhold any
consent or approval.


 


(e)           At Landlord’s request from time to
time Tenant shall furnish Landlord with true and complete copies of its most
recent annual and quarterly financial statements prepared by Tenant or Tenant’s
accountants and any other financial information or summaries that Tenant
typically provides to its lenders or shareholders.


 


(f)            Neither this Lease nor a memorandum
of lease shall be filed by or on behalf of Tenant in any public record.  Landlord may prepare and file, and upon
request by Landlord Tenant will execute, a memorandum of lease.


 


(g)           The normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Lease or any exhibits or
amendments hereto.


 


(h)           The submission by Landlord to Tenant
of this Lease shall have no binding force or effect, shall not constitute an
option for the leasing of the Premises, nor confer any right or impose any
obligations upon either party until execution of this Lease by both parties.


 


(i)            Words of any gender used in this
Lease shall be held and construed to include any other gender, and words in the
singular number shall be held to include the plural, unless the context
otherwise requires.  The captions
inserted in this Lease are for convenience only and in no way define, limit or
otherwise describe the scope or intent of this Lease, or any provision hereof,
or in any way affect the interpretation of this Lease.


 


(j)            Any amount not paid by Tenant within
10 days after its due date in accordance with the terms of this Lease shall
bear interest from such due date until paid in full at the lesser of the
highest rate permitted by applicable law or the prime rate of interest as
defined by NationsBank N.A. plus 31/4 % per year.  It is expressly the intent of Landlord and
Tenant at all times to comply with applicable law governing the maximum rate or
amount of any interest payable on or in connection with this Lease.  If applicable law is ever judicially
interpreted so as to render usurious any interest called for under this Lease,
or contracted for, charged, taken, reserved, or received with respect to this
Lease, then it is Landlord’s and Tenant’s express intent that all excess
amounts theretofore collected by Landlord be credited on the applicable
obligation (or, if the obligation has been or would thereby be paid in full,
refunded to Tenant), and the provisions of this Lease immediately shall be
deemed reformed and the amounts thereafter collectible hereunder reduced,
without the necessity of the execution of any new document, so


 


15





















 


as to comply with the applicable law, but so as to
permit the recovery of the fullest amount otherwise called for hereunder.


 


(k)         Construction and interpretation of this
Lease shall be governed by the laws of the state in which the Project is
located, excluding any principles of conflicts of laws.


 


(1)          Time is of the essence as to the
performance of both Landlord’s and Tenant’s obligations under this Lease.


 


(m)         All exhibits and addenda attached
hereto are hereby incorporated into this Lease and made a part hereof.  In the event of any conflict between such
exhibits or addenda and the terms of this Lease, such exhibits or addenda shall
control.


 


38.           Intentionally
Omitted.


 


39.           Limitation of Liability of
Trustees, Shareholders, and Officers of Security Capital Industrial Trust.
 Any obligation or liability whatsoever
of Security Capital Industrial Trust, a Maryland real estate investment trust,
which may arise at any time under this Lease or any obligation or liability
which may be incurred by it pursuant to any other instrument, transaction, or
undertaking contemplated hereby shall not be personally binding upon, nor shall
resort for the enforcement thereof be had to the property of, its trustees,
directors, shareholders, officers, employees or agents, regardless of whether
such obligation or liability is in the nature of contract, tort, or otherwise.


 


40.           Acquisition of Premises
and Approvals Contingency. 
Tenant acknowledges that Landlord does not currently own the Premises.  Notwithstanding anything in the Lease to the
contrary, Landlord’s obligations under the Lease are conditioned and contingent
upon Landlord or its nominee or assignee acquiring fee simple title to the
Premises no later than November 15, 1995.  Landlord shall promptly notify Tenant of its
acquisition of fee simple title to the Premises.  If Landlord has not acquired fee simple title
to the Premises by November 15, 1995, Tenant shall have the right to terminate
this Lease for the ensuing two business days, by written notice to Landlord, be
relieved of all obligations hereunder and receive a return of the Security
Deposit and all deposited Base Rent and Operating Expenses.  If Tenant fails to terminate the Lease as set
forth above, the Lease shall continue in full force and effect; provided,
however, that Tenant shall have a right to terminate the Lease, subject to the
conditions and time restrictions set forth above, on the 30th day following
November 15, 1995 and every 30th day thereafter, until Landlord obtains fee
simple title to the Property.  Landlord
agrees to keep Tenant generally apprised of its due diligence review, and
agrees to use reasonable efforts to notify Tenant of material issues relating
to Landlord’s acquisition of the Project. 
No expenditure of any sum or incurring of any liability of Tenant for
merchandise, fixtures, equipment, labor, materials or otherwise shall affect
the rights of Landlord hereunder.


 


41.           Assignment Provision.  Landlord shall have the right, at any time,
to assign this Lease to any entity, including Galaxy Investments, Inc.,
provided that such assignee assumes all of Landlord’s obligations under the
Lease.


 


16





















 


IN WITNESS WHEREOF,
Landlord and Tenant have executed this Lease as of the day and year first above
written,


 


 


	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  GOVERNMENT TECHNOLOGY SERVICES, INC.

  	
   

  	
  SECURITY CAPITAL INDUSTRIAL TRUST

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas L. Smudz

  	
   

  	
  By:

  	
  /s/ Robert Steubens

  
	
  Title:

  	
  EVP & CFO

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
  8-11-95

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  4100 Lafayette Center Drive

  Chantilly, Virginia 22021

  	
   

  	
  1800 Diagonal Road

  Sixth Floor

  Alexandria, Virginia 22314

  



 


17





















 


Rules and Regulations


 


1.                                     The
sidewalk, entries, and driveways of the Project shall not be obstructed by
Tenant, or its agents, or used by them for any purpose other than ingress and
egress to and from the Premises.


 


2.                                     Except
as otherwise provided in the Lease, Tenant shall not place any objects, outdoor
furniture, etc., in the parking areas, landscaped areas or other areas outside
of its Premises, or on the roof of the Project.


 


3.                                     Except
for seeing-eye dogs, no animals shall be allowed in the offices, halls, or
corridors in the Project.


 


4.                                     Tenant
shall not disturb the occupants of the Project or adjoining buildings by the
use of any radio or musical instrument or by the making of loud or improper
noises.


 


5.                                     If
Tenant desires telegraphic, telephonic or other electric connections in the
Premises, Landlord or its agent will direct the electrician as to where and how
the wires may be introduced; and, without such direction, no boring or cutting
of wires will be permitted.  Any such
installation or connection shall be made at Tenant’s expense.


 


6.                                     Tenant
shall not install or operate any steam or gas engine or boiler, or other
mechanical apparatus in the Premises, except as specifically approved in the
Lease.  The use of oil, gas or
inflammable liquids for heating, lighting or any other purpose is expressly
prohibited.  Explosives or other articles
deemed extra hazardous shall not be brought into the Project.


 


7.                                     Parking
any type of recreational vehicles is specifically prohibited on or about the
Project.  Except for the overnight
parking of operative vehicles, no vehicle of any type shall be stored in the
parking areas at any time.  In the event that
a vehicle is disabled, it shall be removed within 48 hours.  There shall be no “For Sale” or other
advertising signs on or about any parked vehicle.  All vehicles shall be parked in the designated
parking areas in conformity with all signs and other markings.  All parking will be open parking, and no
reserved parking, numbering or lettering of individual spaces will be permitted
except as specified by Landlord.


 


8.                                     Tenant
shall maintain the Premises free from rodents, insects and other pests.


 


9.                                     Landlord
reserves the right to exclude or expel from the Project any person who, in the
judgment of Landlord, is intoxicated or under the influence of liquor or drugs
or who shall in any manner do any act in violation of the Rules and Regulations
of the Project.


 


10.                               Tenant
shall not cause any unnecessary labor by reason of Tenant’s carelessness or
indifference in the preservation of good order and cleanliness.  Landlord shall not be responsible to Tenant
for any loss of property on the Premises, however occurring, or for any damage
done to the effects of Tenant by the janitors or any other employee or person.


 


11.                               Tenant
shall give Landlord prompt notice of any defects in the water, lawn sprinkler,
sewage, gas pipes, electrical lights and fixtures, heating apparatus, or any
other service equipment affecting the Premises, if known.


 


12.                               Tenant
shall not permit storage outside the Premises, including without limitation,
outside storage of trucks and other vehicles, or dumping of waste or refuse or
permit any harmful materials to be placed in any drainage system or sanitary
system in or about the Premises.


 


13.                               All
moveable trash receptacles provided by the trash disposal firm for the Premises
must be kept in the trash enclosure areas, if any, provided for that purpose.


 


14.                               No
auction, public or private, will be permitted on the Premises or the Project.


 


15.                               No
awnings shall be placed over the windows in the, Premises except with the prior
written consent of Landlord.


 


16.                               The
Premises shall not be used for lodging, sleeping or cooking (other than for
incidental meals) or for any immoral or illegal purposes or for any purpose
other than that specified in the Lease.  No
gaming devices shall be operated in the Premises.


 


18





















 


17.                               Tenant
shall ascertain from Landlord the maximum amount of electrical current which
can safely be used in the Premises, taking into account the capacity of the
electrical wiring in the Project and the Premises and the needs of other
tenants, and shall not use more than such safe capacity.  Landlord’s consent to the installation of
electric equipment shall not relieve Tenant from the obligation not to use more
electricity than such safe capacity.


 


18.          Tenant assumes full responsibility for
protecting the Premises from theft, robbery and pilferage.


 


19





















 


ADDENDUM 1


 


BASE RENT ADJUSTMENTS


 


ATTACHED TO AND A PART OF
THE LEASE AGREEMENT

DATED AUGUST 11, 1995 BETWEEN

GOVERNMENT TECHNOLOGY SERVICES, INC.

AND

SECURITY CAPITAL INDUSTRIAL TRUST


 


Base Rent shall equal the following amounts for the respective periods
set forth below:


 


	
  Period

  	
   

  	
  Per Square Ft Per Year

  	
   

  	
  Monthly Rent */

  	
   

  
	
  Lease Year 1

  	
   

  	
  $

  	
  3.44

  	
   

  	
  $

  	
  58,666.05

  	
   

  
	
  Lease Year 2

  	
   

  	
  $

  	
  3.54

  	
   

  	
  $

  	
  60,371.46

  	
   

  
	
  Lease Year 3

  	
   

  	
  $

  	
  3.65

  	
   

  	
  $

  	
  62,247.40

  	
   

  
	
  Lease Year 4

  	
   

  	
  $

  	
  3.76

  	
   

  	
  $

  	
  64,123.35

  	
   

  
	
  Lease Year 5

  	
   

  	
  $

  	
  3.87

  	
   

  	
  $

  	
  65,999.30

  	
   

  
	
  Lease Year 6

  	
   

  	
  $

  	
  3.90

  	
   

  	
  $

  	
  66,510.93

  	
   

  
	
  Lease Year 7

  	
   

  	
  $

  	
  4.02

  	
   

  	
  $

  	
  68,557.42

  	
   

  
	
  Lease Year 8

  	
   

  	
  $

  	
  4.14

  	
   

  	
  $

  	
  70,603.91

  	
   

  
	
  Lease Year 9

  	
   

  	
  $

  	
  4.26

  	
   

  	
  $

  	
  72,650.40

  	
   

  
	
  Lease Year 10

  	
   

  	
  $

  	
  4.39

  	
   

  	
  $

  	
  74,867.43

  	
   

  



 










*/   Monthly
Base Rent will be adjusted based on a final determination of the square footage
of space contained in the Premises.


 


20





















 


ADDENDUM 2


 


CONSTRUCTION -
SHORT FORM


(ALLOWANCE)


 


ATTACHED TO AND A
PART OF THE LEASE AGREEMENT


DATED AUGUST 11,
1995 BETWEEN


GOVERNMENT
TECHNOLOGY SERVICES, INC.


and


SECURITY CAPITAL
INDUSTRIAL TRUST


 


(a)    Within 15 days following execution of this
Lease, Landlord shall use its best efforts to enter into a contract with Morgan
Gick and Associates (“Gick”) at Landlord’s cost and expense (except for any
costs and expenses related to the mezzanine, which shall be the responsibility
of Tenant), which will provide for Gick to prepare all necessary plans and
specifications for construction of the “Base Building” and the “Initial Tenant Improvements”
as such terms are defined below in a timely manner in order to meet the
anticipated Substantial Completion Date set forth in this Addendum 2.  The Building (including the Base Building and
the Initial Tenant Improvements) shall be designed and constructed
substantially in accordance with the Outline Specifications attached hereto at Exhibit
B.


 


(b)   The “Base Building” shall generally refer to
the site work, the foundation, floors, demising walls, access doors, dock
doors, sprinkler system, roof support and roof, all as more particularly
described and delineated on Exhibit B.  “Initial Tenant Improvements” shall generally
refer to the interior lighting, HVAC system, warehouse heating, interior
plumbing and electrical, any office or other finished areas, wall insulation
and dock equipment and the mezzanine, which shall be specifically subject to
the special provisions regarding the mezzanine provided for in this Addendum 2, all as more particularly delineated and
described in Exhibit B.


 


(c)    The plans and specifications for the Initial
Tenant Improvements shall be prepared by Gick at the reasonable direction of
Tenant, subject to periodic review by Landlord and Tenant.  Landlord shall provide Tenant with final
plans (the “Final Plans”) including plans and specifications for the Base
Building and Initial Tenant Improvements which are consistent with the Outline
Specifications and Tenant’s reasonable direction concerning the Initial Tenant
Improvements.  Tenant shall advise
Landlord within 7 business days of its approval or disapproval of the Final
Plans.  Tenant’s right to disapprove the
proposed Final Plans shall be limited to factors which would materially and
adversely affect the basic nature or appearance of the Premises or Tenant’s
ability to use the Premises, and any such disapproval shall be in writing and
shall specify those elements of the Final Plans objected to by Tenant.  To the extent that the Final Plans are
substantially consistent with the Outline Specifications, Tenant shall not be
entitled to object thereto.  If Tenant
shall not object in writing within the time period set forth above, then such
Final Plans or portion thereof not objected to by Tenant shall be deemed
approved.


 


(d)           If Tenant shall desire any changes to
the approved Final Plans, Tenant shall so advise Landlord in writing and
Landlord shall determine whether such changes can be made in reasonable and
feasible manner.  Any and all
out-of-pocket costs of reviewing any requested changes, and any and all costs
of making any changes to the Initial Tenant Improvements which Tenant may
request and which Landlord may agree to shall be at Tenant’s sole cost and
expense and shall be paid to Landlord upon demand and before execution of the
change order.  Prior to instituting any
change which would extend the date on which the Premises will be Substantially Complete,
as defined below.  Tenant approval of the
change, as well as the anticipated impact of the change on the Commencement
Date, shall be specifically set forth in writing signed by both Landlord and
Tenant.


 


(e)   Landlord, at its cost and expense, shall
obtain all building and other permits necessary for the construction and
delivery of the Base Building and the Initial Tenant Improvements.


 


21





















 


(f)      Landlord shall use reasonable efforts to
obtain a minimum of 3 bids for the Initial Tenant Improvements from general
contractors it reasonably believes are qualified and capable to construct the
Initial Tenant Improvements.  The general
contractor need not be the same for the Base Building and the Initial Tenant Improvements.  Landlord and Tenant shall review all bids;
provided, however, that Landlord retains the ultimate decision as to which bid
to accept so long as Landlord’s selected bid is no greater than 15% above the
lowest hid and Landlord sets forth in writing prudent business reasons why
Landlord has decided to select other than the lowest bidder.  Any bid which Landlord desires to select which
is more than 15% above the lowest bid, shall be subject to Tenant’s consent,
which shall not be unreasonably withheld. 
Landlord shall contract with the selected general contractor to
construct, install and deliver the Initial Tenant Improvements.


 


(g)     Tenant, at its cost, shall have the right
to retain a “Construction Manager” to provide construction management
consulting services.  The Construction
Manager shall monitor the design and construction process on behalf of Tenant.  The Landlord will permit the Construction
Manager to attend all design and construction meetings, review all contractor
bids, inspect the progress or construction and to monitor the construction of
the Initial Tenant Improvements with Landlord.


 


(h)     Landlord shall use all reasonable efforts
to ensure that the Premises are Substantially Completed, as defined below, by
June 1, 1996.  Such date, unless an
earlier date is otherwise agreed to in writing between Landlord and Tenant,
shall be the “Commencement Date” provided the Premises are Substantially
Complete on such date unless the completion of such improvements was delayed
due to Tenant’s fault, including as a result of changes made by Tenant or
delays in the construction of the mezzanine as set forth below, in which case
the Commencement Date shall be the date such improvements would have been
completed but for the delays caused by Tenant. “Substantial Completion” shall
be deemed to have occurred when (i) the construction of the Base Building and
Initial Tenant Improvements are completed in accordance with the Final Plans as
reasonably determined by Gick, subject to minor punch list items which do not
interfere with Tenant’s use and enjoyment of the Premises, (ii) all utilities
are available to the Premises, (iii) the Building’s parking areas and loading
areas are available for use by Tenant, and (iv) temporary (if applicable) or
permanent certificates of occupancy (if applicable) shall have been issued for
the Building and the Premises.  If
Substantial Completion or an earlier Commencement Date does not occur by July
15, 1996, or an extended date as set forth below based on Tenant delays, then
the Commencement Date shall be no earlier than October 15, 1996, unless
requested by Tenant.  If Substantial
Completion or an earlier Commencement Date does not occur by February 1, 1997,
subject to Force Majeure delays, Tenant shall have the right in its sole
discretion to cancel this Lease for a 10 day period following such date, and
receive a return of the Security Deposit and all deposited Base Rent, and be
released from all liability hereunder.


 


(i)      Landlord shall pay for the Initial Tenant
Improvements up to $3.50 per square foot of the Premises (the “Allowance”).  To the extent the costs of the Initial Tenant
Improvements exceed the Allowance, Tenant shall be obligated to pay such amount
in cash prior to occupying the Premises.


 


(j)      As an additional improvement item, and as
part of the Initial Tenant Improvements, the plans and specifications shall
provide for an approximately 15,000 square foot mezzanine space at the rear of
the Premises.  The mezzanine will be bid
as an “add alternate” and the general contractor for the Base Building will
construct the mezzanine.  Tenant shall be
responsible for all design, architectural, engineering and construction costs
with respect to the mezzanine, including any additional Base Building or
Initial Tenant Improvement costs which result from such construction.  Tenant, upon receipt of an invoice from
Landlord or Gick, will promptly pay for all design, architectural and
engineering costs for the mezzanine which will not be included in the mezzanine
construction escrow.  Prior to
commencement of the construction of the mezzanine, Tenant will deposit with
Landlord an amount equal to 110% of the accepted bid for the mezzanine
construction.  Any costs in excess of the
escrowed amount shall be paid by Tenant within 5 business days of demand
therefor.  Upon receipt of final lien
waivers from all contractors, Landlord will return to Tenant any unused portion
of the 110% escrow.  Each day of delay to
Substantial Completion which results from the construction of the mezzanine,
which shall be determined in writing by Gick, shall serve to extend by one day
the July 15, 1996 date set forth in paragraph (h) above.


 


22





















 


(k)     The failure of Tenant to take possession of
or to occupy the Premises at the time of Substantial Completion shall not serve
to relieve Tenant of obligations arising on the Commencement Date or delay the
payment of rent by Tenant.  Subject to
applicable ordinances and building codes governing Tenant’s right to perform
work in the Premises and subject to the provisions of Paragraph 12 of the
Lease, Tenant shall have the right, which may be temporarily revoked for
reasonably limited periods of time by Landlord from time to time for legitimate
construction purposes, to install its racking, machinery, equipment, fixtures,
or other property on the Premises during the 30 days prior to Substantial
Completion with the understanding that, during such period, Landlord shall be
completing the Base Building and Initial Tenant Improvements, and that Tenant
does hereby agree to assume all risk of loss or damage to such improvements,
machinery, equipment, fixtures, and other property and to indemnify, defend,
and hold Landlord harmless from any loss or damage to such property, and all
liability, loss, or damage arising from any injury to the Project or the
property of Landlord, its contractors, subcontractors, or materialmen, whether
or not any such loss, damage or liability was caused by Landlord’s negligence;
provided, however, that any waiver of claims contained herein shall only be
applicable in excess of the $1,000 property deductible.  Delay in putting Tenant in possession of the
Premises shall not serve to extend the term of this Lease or to make Landlord
liable for any damages arising therefrom.


 


23





















 


ADDENDUM 3


 


ASSIGNMENT AND SUBLETTING (CONSENT)


 


ATTACHED TO AND A PART OF THE LEASE AGREEMENT


DATED AUGUST 11, 1995, BETWEEN


GOVERNMENT TECHNOLOGY SERVICES, INC.


and


SECURITY CAPITAL
INDUSTRIAL TRUST


 


Notwithstanding the terms of Paragraph 17 of the Lease:


 


(a)           Excepting Tenant’s
absolute right to assign or sublet the Premises to a Tenant Affiliate, Landlord
shall not unreasonably withhold, delay or condition its consent to Tenant’s
request for permission to assign the Lease or sublease all or part of the
Premises.  It shall be reasonable for the
Landlord to withhold its consent to any assignment or sublease in any of the
following instances:


 


(i)            The assignee or sublessee is not
creditworthy in the sole but reasonable judgment of Landlord;


 


(ii)           The intended use of the Premises by
the assignee or sublessee is not among the uses permitted pursuant to Paragraph
3 of the Lease;


 


(iii)          The intended use of the Premises by
the assignee or sublessee would materially increase the pedestrian or vehicular
traffic to the Premises or the Project;


 


(iv)          Occupancy of the Premises by the
assignee or sublessee would, in Landlord’s opinion, violate any agreement
binding upon Landlord or the Project with regard to the identity of tenants,
usage in the Project, or similar matters;


 


(v)           The identity or business reputation
of the assignee or sublessee will, in the good faith judgment of Landlord, tend
to damage the goodwill or reputation of the Project;


 


(vi)          The assignment or sublet is to another
tenant in the Project and is at rates which are below those charged by Landlord
for comparable space in the Project;


 


(vii)         In the case of a sublease, the
subtenant has not acknowledged that the Lease controls over any inconsistent
provision in the sublease; or


 


(viii)        The proposed assignee or sublessee is a
government entity.


 


The foregoing
criteria shall not exclude any other reasonable basis for Landlord to refuse
its consent to such assignment or sublease.


 


(b)           Any approved
assignment or sublease shall be expressly subject to the terms and conditions
of this Lease.


 


(c)           Tenant shall provide
to Landlord all information concerning the assignee or sublessee other than a
Tenant Affiliate, as Landlord may request.


 


24





















 


(d)             Landlord may revoke its consent
immediately and without notice if, as of the effective date of the assignment
or sublease, there has occurred and is continuing any default under the Lease.


 


(e)             Landlord’s agreement to not
unreasonably withhold its consent shall only apply to the first assignment or
sublease under the Lease and to any subsequent proposed assignment or sublet of
at least 50% of the Premises.


 


25





















 


ADDENDUM 4


 


TWO RENEWAL
OPTIONS AT MARKET


 


ATTACHED TO AND A
PART OF THE LEASE AGREEMENT


DATED AUGUST 11,
1995, BETWEEN


GOVERNMENT
TECHNOLOGY SERVICES, INC.


and


SECURITY CAPITAL
INDUSTRIAL TRUST


 


(a)             Provided that as of the time of the
giving of the First Extension Notice and the Commencement Date of the First
Extension Term, (x) Tenant is the Tenant originally named herein, (y) Tenant
actually occupies 60% of the Premises initially demised under this Lease and
any space added to the Premises, and (z) no Event of Default exists or would
exist but for the passage of time or the giving of notice, or both; then Tenant
shall have the right to extend the Lease Term for an additional term of 5 years (such additional term is
hereinafter called the “First Extension Term”) commencing on the day
following the expiration of the Lease Term (hereinafter referred to as the “Commencement
Date of the First Extension Term”).  Tenant
shall give Landlord notice (hereinafter called the “First Extension Notice”)
of its election to extend the term of the Lease Term at least 12 months, but
not more than 15 months, prior to the scheduled expiration date of the Lease
Term.


 


(b)             Provided that as of the time of the
giving of the Second Extension Notice and the Commencement Date of the Second
Extension Term, (x) Tenant is the Tenant originally named herein, (y) Tenant
actually occupies 60% of the Premises initially demised under this Lease and
any space added to the Premises, and (z) no Event of Default exists or would
exist but for the passage of time or the giving of notice, or both and provided
Tenant has exercised its option for the First Extension Term; then Tenant shall
have the right to extend the Lease Term for an additional term of 5 years (such
additional term is hereinafter called the “Second Extension Term”) commencing
on the day following the expiration of the First Extension Term (hereinafter
referred to as the “Commencement Date of the Second Extension Term”).  Tenant shall give Landlord notice
(hereinafter called the “Second Extension Notice”) of its election to
extend the term of the Lease Term at least 12 months, but not more than 15
months, prior to the scheduled expiration date of the First Extension Term.


 


(c)             The Initial Base Rent payable by
Tenant to Landlord during the First Extension Term shall be equal to $4.70 per
square foot per year, and the Base Rent shall be increased by 3% at the beginning of each year of
the First Extension Term.


 


(d)             The Base Rent payable by Tenant to
Landlord during the Second Extension Term shall be the greater of (i) the Base
Rent applicable to the last year of the First Extension Term and (ii) 90% of the then prevailing market
rate for comparable space in the Project and comparable buildings in the
vicinity of the Project, taking into account the size of the Lease, the length
of the renewal term, the credit of Tenant and market escalations.  In the event Landlord and Tenant fail to
reach an agreement on such rental rate and execute the Amendment (defined
below) at least 4 months prior to the expiration of the Lease, then Tenant’s
exercise of the renewal option shall be deemed withdrawn and the Lease shall
terminate at the end of the First Extension Term unless the arbitration
provisions set forth below are invoked by Tenant or Landlord.


 


(e)             The determination of Base Rent does
not reduce the Tenant’s obligation to pay or reimburse Landlord for operating
expenses and other reimbursable items as set forth in the Lease, and Tenant
shall reimburse any pay Landlord as set forth in the Lease with respect to such
operating expenses and other items with respect to the Premises during the
First Extension Term and Second Extension Term without regard to any cap on
such expenses set forth in the Lease.


 


(f)              Except for the Base Rent as
determined above, Tenant’s occupancy of the Premises during the Extension Term
shall be on the same terms and conditions as are in effect immediately prior to
the expiration of


 


26





















 


the initial Lease Term; provided, however, Tenant
shall have no further right to any allowances, credits or abatements or any
options to expand, contract, renew or extend the Lease.


 


(g)             If Tenant does not give the First
Extension Notice within the period set forth in paragraph (a) above, Tenant’s
right to extend the Lease Term for the First Extension Term and the Second
Extension Term shall automatically terminate.  If Tenant does not give the Second Extension
Notice within the period set forth in paragraph (b) above, Tenant’s right to
extend the Lease Term for the Second Extension Term shall automatically
terminate.  Time is of the essence as to
the giving of the First Extension Notice and Second Extension Notice.


 


(h)             Landlord shall have no obligation
to refurbish or otherwise improve the Premises for the Extension Term.  The Premises shall be tendered on the
Commencement Date of the First Extension Term and Second Extension Term in “as-is”
condition.


 


(i)              If the Lease is extended for
either the First Extension Term or Second Extension Term, then Landlord shall
prepare and Tenant shall execute an amendment to the Lease confirming the
extension of the Lease Term and the other provisions applicable thereto (the “Amendment”).


 


(j)              If Tenant exercises its right to
extend the term of the Lease for the First Extension Term or second Extension
Term pursuant to this Addendum, the term “Lease Term” as used in the Lease,
shall be construed to include, when practicable, the First Extension Term or
Second Extension Term, as applicable, except as provided in (f) above.


 


(k)             Arbitration to determine the Fair
Market Rent shall be in accordance with the Real Estate Valuation Arbitration
Rules of the American Arbitration Association.  Unless otherwise required by state law,
arbitration shall be conducted in the metropolitan area where the Project is
located by a single arbitrator unaffiliated with either party.  If the prevailing market rates has not been
agreed upon, either party may elect to arbitrate by sending written notice to
the other party and the Regional Office of the American Arbitration Association
at any time between 3 and 4 months prior to scheduled termination of the Lease
invoking the binding arbitration provisions of this paragraph.  If timely written notice is not given, the
arbitration provisions shall be of no force or effect.  Landlord and Tenant shall each submit to the
arbitrator their respective proposal of fair market rate.  The arbitrator must choose between the
Landlord’s proposal and the Tenant’s proposal and may not compromise between
the two or select some other amount.  Notwithstanding
any other provision herein, the 90% of the fair market rate determined by the
arbitrator shall not be less than, and the arbitrator shall have no authority
to determine a fair market rate which, when 90% of such rate is calculated
would be less than the Base Rent in effect as of the scheduled expiration of
the Lease Term.  The cost of the
arbitration shall be borne equally by the parties.  If the arbitrator has not determined the Fair
Market Rent as of the end of the Lease Term, Tenant shall pay 105 percent of
the Base Rent in effect under the Lease as of the end of the Lease Term until
the Fair Market Rent is determined as provided herein.  Upon such determination, Landlord and Tenant
shall make the appropriate adjustments to the payments between them.


 


27





















 


ADDENDUM 5


 


RIGHT OF FIRST
OFFER


 


ATTACHED TO AND A
PART OF THE LEASE AGREEMENT


DATED AUGUST 11,
1995, BETWEEN


GOVERNMENT
TECHNOLOGY SERVICES, INC.


and


SECURITY CAPITAL
INDUSTRIAL TRUST


 


(a)             “Offered Space” shall mean
all or any portion of the space in the Building leased to MJD Investments, Inc.


 


(b)             Provided that as of the date of the
giving of Landlord’s Notice, (x) Tenant or Tenant’s Affiliate is the Tenant
originally named herein, (y) Tenant actually occupies all of the Premises
originally demised under this Lease and any premises added to the Premises, and
(z) no Event of Default or event which but for the passage of time in the
giving of notice, or both, would constitute an Event of Default has occurred and
is continuing, if at any time during the Lease Term any lease for any portion
of the Offered Space shall expire, then Landlord, before offering such Offered
Space to anyone, other than the tenant then occupying such space (or its
affiliates), shall offer to Tenant the right to include the Offered Space
within the Premises on the same terms and conditions upon which Landlord
intends to offer the Offered Space for lease.


 


(c)             Such offer shall be made by
Landlord to Tenant in a written notice (hereinafter called the “First Offer
Notice”) which offer shall designate the space being offered and shall
specify the terms which Landlord intends to offer with respect to any such
Offered Space.  Tenant may accept the
offer set forth in the First Offer Notice by delivering to Landlord an
unconditional acceptance (hereinafter called “Tenant’s Notice”) of such
offer within 10 business days after delivery by Landlord of the First Offer
Notice to Tenant.  Time shall be of the
essence with respect to the giving of Tenant’s Notice.  If Tenant does not accept (or fails to timely
accept) an offer made by Landlord pursuant to the provisions of this Addendum
with respect to the Offered Space designated in the First Offer Notice,
Landlord shall be under no further obligation with respect to such space by
reason of this Addendum.


 


(d)             Tenant must accept all Offered
Space offered by Landlord at any one time if it desires to accept any of such
Offered Space and may not exercise its right with respect to only part of such
space.  In addition, if Landlord desires
to lease more than just the Offered Space to one tenant, Landlord may offer to
Tenant pursuant to the terms hereof all such space which Landlord desires to
lease, and Tenant must exercise its rights hereunder with respect to all such
space and may not insist on receiving an offer for just the Offered Space.


 


(e)             If Tenant at any time declines any
Offered Space offered by Landlord, Tenant shall be deemed to have irrevocably
waived all further rights under this Addendum with respect to the specified
Offered Space, and Landlord shall be free to lease the Offered Space to third
parties including on terms which may be less favorable to Landlord than those
offered to Tenant.


 


28





















 


ADDENDUM 6


 


CANCELLATION
OPTION


 


ATTACHED TO AND A
PART OF THE LEASE AGREEMENT


DATED AUGUST 11,
1995, BETWEEN


GOVERNMENT
TECHNOLOGY SERVICES, INC.


and


SECURITY CAPITAL
INDUSTRIAL TRUST


 


Provided no Event of Default shall then exist and no condition shall
then exist which with the passage of time or giving of notice, or both, would
constitute an Event of Default, Tenant shall have the right at any time on or
before the last day of the Sixth Lease Year to send Landlord written notice
(the “Termination Notice”) that Tenant has elected to terminate this
Lease effective on the last day of the Seventh Lease Year (the “Effective Date”).


 


If Tenant elects to terminate this Lease pursuant to the immediately
preceding sentence, the effectiveness of such termination shall be conditioned
upon Tenant paying to Landlord $766,246.00 plus the sum of any unamortized
leasing commissions, calculated on a straight-line basis with no interest, less
an amount equal to 6 months of interest on the Termination Fee, calculated at
10% per annum using simple interest calculations (the “Termination Fee”)
contemporaneously with Tenant’s delivery of the Termination Notice to Landlord.
 Landlord and Tenant shall be relieved of
all obligations accruing under this Lease after the effective date of such
termination but not any obligations accruing under the Lease prior to the
effective date of such termination.


 


29





















 


ADDENDUM 7


 


PREMISES
RELOCATION


 


ATTACHED TO AND A
PART OF THE LEASE AGREEMENT


DATED AUGUST 11,
1995, BETWEEN


GOVERNMENT
TECHNOLOGY SERVICES, INC.


and


SECURITY CAPITAL
INDUSTRIAL TRUST


 


1.             Premises Relocation.  If Tenant
determines that its business requirements necessitate a relocation of the operations
conducted at the Premises, Landlord shall work with Tenant in good faith to
locate a new facility for Tenant within Landlord’s portfolio.  Provided that a lease is entered into for new
space within Landlord’s portfolio, Landlord agrees to terminate the balance of
the existing term of this Lease effective at the commencement of the new Lease
with Landlord.  Any lease on such new
space shall be subject to the agreement of the parties, each acting in their
sole discretion.


 


30





















 


ADDENDUM 8


 


RIGHT OF FIRST
OFFER TO PURCHASE


 


ATTACHED TO AND A
PART OF THE LEASE AGREEMENT


DATED AUGUST 11,
1995, BETWEEN


GOVERNMENT
TECHNOLOGY SERVICES, INC.


and


SECURITY CAPITAL
INDUSTRIAL TRUST


 


1.             Provided that Landlord is the owner of the approximately
7 acre tract of land located along Lee Jackson Memorial Highway as illustrated
on Exhibit C (the “Option Parcel”), Tenant shall have the right to purchase the
Option Parcel prior to Landlord listing the Option Parcel for sale to the
market.  The Option Parcel shall be
offered to Tenant by Landlord (“Landlord’s Offer”) at the price which Landlord
intends to offer such Option Parcel to the market.


 


2.             Tenant shall have 20 business days from the date of
receipt of Landlord’s Offer to unconditionally accept or decline Landlord’s
Offer.  Landlord’s Offer will be deemed
accepted by Tenant unless Landlord receives timely written notice to the
contrary.  If Tenant declines Landlord’s
Offer, Landlord shall be under no further obligation to Tenant with respect to
the Option Parcel.


 


3.             If Landlord’s Offer is accepted, closing shall take
place no later than 45 days following the acceptance of Landlord’s Offer.  The closing shall be conducted through an
escrow established at a title company acceptable to both Landlord and Tenant.  All deliveries shall be deposited in escrow
and all closing deliveries and disbursements shall be made through the escrow.


 


4.             Landlord shall convey to Tenant fee simple title to the
Option Parcel by Bargain and Sale Deed (warranting title by, through, or under
Landlord, but not otherwise) subject only to all matters of record and those
matters which a correct survey would show but free and clear of any liens or
any other exceptions created by, under, or through Landlord except only
exceptions that do not impair the use or value of the Option Parcel and to
which like properties are commonly subject.  Landlord
shall assign to Tenant all its right, title and interest in and to all contracts,
warranties, permits, approvals, and other intangible property related to the
Option Parcel except for any tradename or other similar rights related to the
Option Parcel, which Landlord shall retain.


 


5.             Real estate taxes and assessments shall be pro rated to
the date of closing.  Tenant shall pay
the transfer taxes, the cost of the title policy and one-half of any other
closing or escrow costs or fees.  Landlord
shall pay one- half of any closing or escrow costs or fees.  Each party shall be responsible for the fees
of its attorneys and consultants.


 


6.             Landlord makes no, and at closing Tenant shall waive in
writing reasonably satisfactory to Landlord any, warranty or representation
with respect to the Premises (other than title to the Premises as provided
above), including without limitation, any representation or warranty as to the
environmental or physical condition of the Premises.  Except for such warranty, Tenant is relying on
its own inspection and review of the Premises.


 


7.             Landlord may conduct the sale as a tax-free exchange
pursuant to Section 1031 of the Internal Revenue Code.  Such exchange shall be conducted through a
qualified intermediary, at no cost to Tenant, and without affecting Landlord’s
obligations to Tenant.  Tenant shall not
be required to take title to any other property in connection with a Section
1031 exchange.


 


8.             Tenant may conduct the purchase as a tax-free exchange
pursuant to Section 1031 of the Internal Revenue Code.  Such exchange shall be conducted through or
qualified intermediary at no cost to Landlord, and without


 


31





















 


affecting Tenant’s obligations to Landlord.  Landlord shall not be required to take title
to any other property in connection with a Section 1031 exchange.


 


9.             Tenant’s exercise of the Purchase Option is irrevocable
except as provided herein.  Time is of
the essence.


 


10.           Only the Tenant originally named
herein may exercise this option.  The
option is not assignable and shall terminate automatically upon any termination
of the Lease other than as a result of default by Landlord.


 


32





















 


FIRST AMENDMENT TO
LEASE


 


FIRST AMENDMENT TO LEASE is entered into as of the 24th day of JANUARY, 1997, by and between SCI Development Services
Incorporated, (the “Lessor”) and Government Technology Services, Inc. (the “Lessee”).


 


W I T N E S S E T
H:


 


WHEREAS, Lessor or its predecessors in interest, and Lessee have
entered into a Lease, dated as of the 11th day of August, 1995, pursuant to
which Lessor leased to Lessee certain premises (the “Premises” or “Leased Premises”)
located at 3900 A Stonecroft Boulevard, Chantilly, Virginia (such lease, as
heretofore and hereafter modified, being herein referred to as the “Lease”).


 


WHEREAS, Lessor and Lessee desire to modify its terms and conditions as
set forth below.


 


1.      Commencement
Date.  The commencement
date shall be hereby amended to be December 10, 1996.


 


2.       Except as modified
herein, the Lease, and all of the terms and conditions thereof, shall remain in
full force and effect and the same are hereby ratified and confirmed.


 


IN WITNESS WHEREOF, the parties hereto have signed this First Amendment
to Lease as of the day and year first above written.


 




	
   

  	
  SCI DEVELOPMENT SERVICES INCORPORATED

  
	
   

  	
   

  
	
   

  	
  LESSOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Watson

  	
   

  
	
   

  	
  Name:

  	
  ROBERT J. WATSON

  	
   

  
	
   

  	
  Title:

  	
  MANAGING DIRECTOR

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GOVERNMENT TECHNOLOGY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  LESSEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter E. JAnke

  	
   

  
	
   

  	
  Name:

  	
  Peter E. JAnke

  	
   

  
	
   

  	
  Title:

  	
  EVP & CFO

  	
   

  
						






 





















 


FIRST AMENDMENT TO LEASE AGREEMENT


 


THIS FIRST AMENDMENT TO LEASE AGREEMENT (the “First Amendment”) is
made and entered into effective as of the 18th
day of October, 1995, by and between SECURITY CAPITAL INDUSTRIAL
TRUST (the “Landlord”), and GOVERNMENT TECHNOLOGY SERVICES, INC. (the “Tenant”).


 


W I T N E S S E T H:


 


WHEREAS, Landlord and Tenant have heretofore made and entered into that
certain Lease Agreement, dated as of the 11th day of August, 1995 (the “Lease”),
pursuant to which Landlord leased to Tenant approximately 204,649 square feet
of space (the “Premises”) located at Building 1 of Chantilly Distribution
Center (the “Project”), situated in Chantilly, Virginia, said Premises
being depicted on Exhibit A attached to the Lease;


 


WHEREAS, Landlord and Tenant desire to amend the Lease on the terms and
conditions set forth below;


 


NOW THEREFORE, for and in
consideration of the sum of Ten and No/100 Dollars ($10.00) each to the other
in hand paid, the mutual covenants and agreements of the Lease and this First
Amendment, and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:


 


1.            In the second, fourth and fifth sentences of Paragraph
40 of the Lease, the words “December 31, 1995” shall be substituted for the
words “November 15, 1995”.


 


2.            In Addendum 2 to the Lease, entitled “Construction -
Short Form”, existing Paragraph (h) shall be deleted in its entirety,
and replaced with the following provision:


 


(h)           The “Commencement Date” shall
be the later of October 15, 1996 or the date of Substantial Completion (as defined
herein); provided, however, that if Substantial Completion occurs later than
October 15, 1996 due to Tenant’s fault, including as a result of changes made
by Tenant or delays in the construction of the mezzanine as set forth below,
the Commencement Date shall be the later of October 15, 1996 or the date
Substantial Completion would have occurred but for the delays caused by Tenant.
“Substantial Completion” shall be deemed to have occurred when (i) the
construction of the Base Building and Initial Tenant Improvements are completed
in accordance with the Final Plans as reasonably determined by Gick, subject to
minor punch list items which do not interfere with Tenant’s use and enjoyment
of the Premises, (ii) all utilities are available to the Premises, (iii) the
Building’s parking areas and loading areas are available for use by Tenant, and
(iv) temporary (if applicable) or permanent certificates of occupancy (if
applicable) shall have been issued for the Building and the Premises.  If Substantial Completion or an earlier
Commencement Date does not occur by February 1, 1997, subject to Force Majeure
delays, Tenant shall have the right in its sole discretion to cancel this Lease
for a 10-day period following such date, and receive a return of the Security Deposit
and all deposited Base Rent, and be released from all liability hereunder.


 


3.            Except as otherwise specifically provided for herein, all
defined terms used in this First Amendment shall have the same respective
meanings as are provided for such defined terms in the Lease.  Except as modified herein, the Lease and all
of the terms and conditions thereof, shall remain in full force and effect.  In the event of any conflict between the terms
and provisions of the Lease and the terms and provisions of this First Amendment,
the terms and provisions of this First Amendment shall supersede and control.  This First Amendment shall be construed under
and enforceable in accordance with the laws of the State of Virginia; and shall
be binding upon and inure to the benefit of Landlord and Tenant and their
respective successors and permitted assigns under the Lease.  This First Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original, and
all of such counterparts shall constitute one agreement.  To facilitate execution of this Amendment,
the parties may execute and exchange by telephone facsimile counterparts of the
signature pages.


 


4.            Any obligation or liability whatsoever of Security
Capital Industrial Trust, a Maryland real estate investment trust, which may
arise at any time under the Lease or this First Amendment, or any obligation or
liability which may be incurred by it pursuant to any other instrument,
transaction or undertaking contemplated hereby, shall not be personally binding
upon, nor shall resort for the enforcement thereof be had to the property of,
its trustees, directors, shareholders, officers, employees, or agents
regardless of whether such obligation or liability is in the nature of
contract, tort or otherwise.


 


IN WITNESS WHEREOF, the
parties hereto have executed this First Amendment to be effective as of the day
and year first above written.


 


	
  GOVERNMENT TECHNOLOGY SERVICES, INC.

  	
  SECURITY CAPITAL INDUSTRIAL TRUST

  
	
   

  	
   

  
	
  By:

  	
  /s/ Thomas L. Smudz

  	
   

  	
  By:

  	
  /s/ Robert A Kritt

  	
   

  
	
  Name:

  	
  Thomas L. Smudz

  	
   

  	
  Name:

  	
  Robert A. Kritt

  	
   

  
	
  Title:

  	
  EVP & CFO

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
  10/17/95

  	
   

  
	
   

  	
  “Tenant”

  	
   

  	
   

  	
  “Landlord”

  	
   

  
										



 





















 


SECOND AMENDMENT TO LEASE


 


THIS SECOND AMENDMENT TO LEASE is entered into as of
the          day of May, 1997,
by and between SCI Development Services Incorporated (“Lessor”) and Government Technology
Services, Inc. (“Lessee”).


 


W I T N E S S E T H:


 


WHEREAS, Lessor’s  predecessor in interest and Lessee
have entered into a Lease Agreement dated August 11, 1995 and amended by First
Amendment to Lease dated January 22, 1997, pursuant to which Lessor leased to
Lessee certain premises located at 3900 A Stonecroft Boulevard, Chantilly,
Virginia (such Lease Agreement, as so amended, being herein referred to as the “Lease”).


 


WHEREAS, Lessor and Lessee desire to amend the terms and conditions of
the Lease as set forth below.


 


1.              AMENDMENT.  Addendum 8 to the
Lease is hereby deleted and is of no force or effect.


 


2.              RATIFICATION.
 Except as expressly amended herein, the
Lease, and all of the terms and conditions thereof, shall remain in full force
and effect and the same are hereby ratified and confirmed.


 


IN WITNESS WHEREOF, the
parties hereto have signed this Second Amendment to Lease as of the day and
year first above written.


 




	
   

  	
  LESSOR:

  
	
   

  	
   

  
	
   

  	
  SCI DEVELOPMENT SERVICES

  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ M. Marc Jason

  	
   

  
	
   

  	
  Name:

  	
  M. Marc Jason

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  LESSEE:

  
	
   

  	
   

  
	
   

  	
  GOVERNMENT TECHNOLOGY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ H. Robert Boehm

  	
   

  
	
   

  	
  Name:

  	
  H. Robert Boehm

  	
   

  
	
   

  	
  Title:

  	
  V.P. Human Resources

  	
   

  
						






 





















 


THIRD
AMENDMENT TO LEASE AGREEMENT


 


This
THIRD AMENDMENT TO LEASE AGREEMENT
(the “Third Amendment”) is made
and entered into as of June 1, 2004, by and between CHANTILLY DISTRIBUTION, INC., a Delaware corporation (“Landlord”), and GTSI CORP., a Delaware corporation (“Tenant”).


 


Recitals


 


1.     Security Capital Industrial Trust (“SCI Trust”) and Government Technology Services, Inc. (“GTS, Inc.”) entered into that certain August 11, 1995 Lease
Agreement, as amended by that certain First Amendment to Lease dated as of
January 22, 1997, and as further amended by that certain Second Amendment to
Lease dated as of May 29, 1997 (collectively, the “Lease”),
pursuant to which GTS, Inc. leased approximately 204,649 square feet (“Premises”) of that certain building known as Building 1 of
the Chantilly Distribution Center, located in Chantilly, Virginia (the “Building”).  Landlord
and GTS, Inc. further are parties to that certain June 11, 2003 License to Use
Rooftop Space, with respect to the Building rooftop.


 


2.     Landlord is successor-in-interest to SCI
Trust and Tenant is successor-in-interest to GTS, Inc.


 


3.     Landlord recaptured as of June 1, 2004
61,788 square feet of the Premises (the “Recapture Space”)
as permitted by the Lease (the “Recapture”) and
Landlord and Tenant have agreed upon a certain allocation of costs relating to
such Recapture.  The Recapture Space and
the remaining Premises (the “Revised Premises”)
are as set forth in the attached Exhibit A.


 


4.     Landlord and Tenant desire to amend the
terms of the Lease on the terms and conditions hereinafter set forth.


 


NOW
THEREFORE, in consideration of the above recitals which by
this reference are incorporated herein and made a substantive part hereof, the
mutual covenants and conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant, intending to be legally bound hereby, agree as follows:


 


1.     Capitalized Terms;
Recitals; Exhibits.  All
capitalized terms not defined in this Third Amendment shall have the same
meaning as in the Lease.  The preceding
recitals and attached Exhibits are deemed to be a material part hereof
and are hereby incorporated herein by this reference.


 


2.     Recapture.  Effective as of June 1, 2004 (the “Recapture Date”):


 


1





















 


a)       Landlord recaptured the Recapture Space
from the Premises and the Premises were accordingly reduced;


 


b)       any references in the Lease to the “Premises” shall be deemed to refer to the Revised Premises;


 


c)       Landlord and Tenant acknowledge and agree
that the Revised Premises shall consist of approximately 142,861 square feet,
as set forth in Exhibit A;


 


d)       “Tenant’s Proportionate
Share of the Project” as set forth in the Lease shall be amended to
state that the Tenant’s Proportionate Share of the Project is 40.71%.


 


e)       “Tenant’s Proportionate
Share of the Building” as set forth in the Lease shall be amended to
state that the Tenant’s Proportionate Share of the Building is 40.71%.


 


f)        Section 2 of the Lease is deleted and
restated as:


 


Tenant
acknowledges possession of the Revised Premises as of the Recapture Date and
Tenant acknowledges and agrees that such possession shall be subject to all
applicable laws, ordinances, regulations, covenants, and restrictions as
provided in Addendum 2 of the Lease.  Landlord
has made no representation or warranty as to the suitability of the Revised
Premises for the conduct of Tenant’s business, and Tenant waives any implied
warranty that the Premises are suitable for Tenant’s intended purposes.  Except as provided in Paragraph 10 of the
Lease, in no event shall Landlord have any obligation for any defects in the
Revised Premises or any limitation on its use.  The continuation of possession of the Revised
Premises shall be conclusive evidence that Tenant accepts the Premises and that
the Premises were in good condition at the time possession was taken and as of
the Recapture Date except for items that are Landlord’s responsibility under
Paragraph 10 of the Lease and any punchlist items agreed to in writing by
Landlord and Tenant pursuant to the provisions of Addendum 2 of the Lease.


 


g)       The Base Rent table set forth in Addendum
I of the Lease is amended to state the following with respect to Base Rent
during the Lease Years stated below:


 


	
  Period

  	
   

  	
  Per
  Square Ft Per Year

  	
   

  	
  Monthly
  Rent

  	
   

  
	
  Lease Year 8

  	
   

  	
  $

  	
  4.14

  	
   

  	
  $

  	
  49,287.05

  	
   

  
								



 


2





















 


	
  Lease Year 9 

  	
   

  	
  $

  	
  4.26 

  	
   

  	
  $

  	
  50,715.66 

  	
   

  
	
  Lease Year 10 

  	
   

  	
  $

  	
  4.39 

  	
   

  	
  $

  	
  52,263.32 

  	
   

  



 


3.     Recapture Space.


 


a)          Subject to the provisions of this
Third Amendment, Tenant releases, quitclaims, and surrenders to Landlord, its
successors and assigns, its leasehold interest with respect to the Recapture
Space and all of the estate and rights of Tenant in and to the such leasehold
interest and the Recapture Space and Tenant forever releases and discharges
Landlord from any and all claims, demands or causes of action whatsoever
against Landlord or its successor and assigns arising out of or in connection
with the Recapture Space or such leasehold interest or any obligations to be
observed or performed by Landlord under the Lease after the Recapture Date with
respect to the Recapture Space.


 


b)         Subject to the provisions of this Third
Amendment, Landlord recaptures the Recapture Space from and after the Recapture
Date, and effective as of the Recapture Date, forever releases and discharges
Tenant from any obligations to be observed and performed by the Tenant under
the Lease with respect to the Recapture Space after the Recapture Date (subject
to Tenant having fulfilled the agreements set forth herein and that Tenant’s
representations and warranties set forth herein are true and correct).  Notwithstanding the foregoing, nothing herein
shall release Tenant from:


 


(1) any of
Tenant’s indemnification obligations under the Lease with respect to the
Recapture Space accruing prior to the Recapture Date including but not limited
to, Tenant’s indemnity pursuant to Section 18 of the Lease (as further
described therein), and Tenant’s obligation with respect to brokers as provided
in Section 36 of the Lease (as further described therein), nor any other
obligation arising from or related to Tenant’s possession and occupancy of the
Recapture Space prior to the Recapture Date; nor


 


(2) any of Tenant’s
obligations pursuant to Sections 6, 7, and 8 of the Lease (as further described
therein) to the extent such obligations accrued prior to the Recapture Date.


 


4.     Recapture Costs and Work.


 


a)       Tenant shall surrender the Recapture
Space as of the Recapture Date in the condition required pursuant to the Lease
upon surrender of the Premises, except as otherwise provided in this Third
Amendment.


 


b)      Landlord and Tenant acknowledge and agree
that with respect to the work and costs related to the Recapture and subject to
the Payment Conditions (as defined


 


3





















 


hereinafter), Landlord shall undertake the following
work at its sole cost and expense: (i) construct a demising wall between the
Revised Premises and the Recapture Space; (ii) separate the electrical service
between the Revised Premises and the Recapture Space; (iii) provide an
electrical feed for the material handling charging station that will be
relocated at Tenant’s sole expense from the Recapture Space to the Revised
Premises; and (iv) remove the existing Tenant chain link fence and gate in the
Building parking lot and relocate such fence and gate to locations reasonably
determined by Landlord to correspond with the Revised Premises.  Tenant acknowledges and agrees that such
relocation of the fence and gate locations shall cause a proportionate
reduction in the parking lot areas reserved for Tenant’s use to reflect the
difference in size between the Premises and the Revised Premises.


 


c)       Landlord and Tenant acknowledge and agree
that with respect to the Recapture, Tenant shall undertake the following work,
for which Landlord shall reimburse Tenant for costs actually and reasonably
incurred, subject to the Payment Conditions (as defined hereinafter) and the
following limitations: (i) disconnecting and reinstalling overhead door contacts,
pedestrian door contacts, motion detectors, and CCTV equipment, not to exceed $4,080.00;
and (ii) relocating Tenant’s T-1 telephone service, not to exceed $4,798.00.  Landlord’s repayment obligations set forth in
the preceding sentence are expressly conditional upon: (v) there not existing
at the time of such payment an Event of Default or a condition that with the
giving of notice and/or the passage of time would constitute an Event of
Default; (w) Landlord’s receipt of paid receipts from Tenant which are
reasonably acceptable to Landlord with respect to any claimed third-party
expense submitted for reimbursement; (x) partial lien waivers covering work
with respect to which any materialman or contractor was previously paid pursuant
to an earlier payment by Landlord (and final unconditional lien waivers with
respect to final contract payments upon final completion of such work) in form
acceptable to Landlord in its sole discretion; (y) as-built plans (upon final
completion) covering all architectural work and mechanical, electrical,
plumbing and structural engineering, and (z) receipt of any licenses or permits
required by any applicable governmental authority for Tenant’s legal occupancy
of the Revised Premises and use of the equipment installed therein (the “Payment
Conditions”).


 


d)      Tenant acknowledges and agrees that Tenant’s
work to the Revised Premises related to or arising from the Recapture shall be
subject to the requirements of the Lease with respect to Tenant-Made
Alterations.


 


5.     Landlord’s Registered Agent for Service of Process.  Landlord hereby designates Commonwealth Legal
Services Corporation, 4701 Cox Road, Suite 301, Glen Allen, VA 23060-6802, as “Landlord’s
Registered Agent for Service of Process.”  Service
of process upon Landlord shall be served upon Landlord’s Registered Agent for
Service of Process, with a copy (which shall not constitute notice) to Landlord
at the address designated for notices from Tenant and a copy to Covington &
Burling, 1201 Pennsylvania Avenue, N.W., Washington, D.C. 20004, Attention:
Robert J. Gage.


 


4





















 


6.     Brokerage.  Tenant represents and warrants to Landlord
that it has not dealt with any real estate broker or agent in connection with
this Third Amendment and Tenant knows of no real estate broker or agent who is
or might be entitled to a commission in connection herewith.  Tenant agrees to indemnify, defend and hold
Landlord harmless from and against any claims made by any broker or finder (not
retained by Landlord) for a commission in connection with this Third Amendment
and/or Tenant’s leasing of any space referred to herein.


 


7.     Default.  Any default by Tenant under the terms of this
Third Amendment shall constitute a default under the Lease, and any default by
Tenant under the terms of the Lease shall constitute a default under this Third
Amendment.  In the event of a default
under this Third Amendment or the Lease, Landlord shall have the right, at its
sole option, to exercise any rights set forth herein or in the Lease in the
event of a default, or as otherwise permitted pursuant to applicable law.  Whether or not it elects to terminate the
Lease, upon such default, Landlord may re-enter and take possession of the
Premises and/or the Revised Premises and the provisions of this Section shall
operate as a notice to quit.


 


8.     Ratification.  Except as expressly modified and amended by
the provisions of this Third Amendment, all terms, covenants and conditions of
the Lease shall remain in full force and effect in accordance with their terms.


 


9.     Counterpart
Execution.  This Third Amendment may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which,
when executed and delivered, together shall constitute one and the same
document.


 


10.   Time and
Applicable Law.  Time is of the essence of this Third Amendment,
the Lease, and all of its provisions.  This
Third Amendment and the Lease shall in all respects be governed by the laws of
the state in which the Building is located.


 


11.   Entire
Agreement.  This Third Amendment, together with its
exhibits, contains all agreements of the parties to this Third Amendment and
supersedes any previous negotiations.  There
have been no representations made by the Landlord or understandings made between
the parties other than those set forth in the Lease (as hereby amended) and its
exhibits.  The Lease may not be modified
except by a written instrument duly executed by the parties hereto.


 


12.   Payments.  All payments to Landlord pursuant to this
Third Amendment other than Base Rent shall constitute additional rent under the
Lease, and in the event of nonpayment of either Base Rent or additional rent by
Tenant, Landlord shall have all of the rights and remedies as set forth in this
Third Amendment and the Lease.  In the
event of nonpayment by Landlord of any amounts required pursuant to Section
4(c) hereof, Tenant shall provide written notice to Landlord of such
non-payment.  If Landlord fails to make
payment within ten (10) business days following such written notice, Tenant
shall thereafter have all of the rights and remedies provided by the Lease, as
amended hereby, and applicable law.


 


5





















 


 


13. Tenant’s
Authority.   Tenant
represents and warrants that (a) Tenant is the rightful owner of all of the
Tenant’s interest in the Lease and that Tenant has full power and authority to
execute and perform this Third Amendment and has taken all action necessary to
authorize the execution and performance of this Third Amendment; (b) Tenant has
not made any disposition, assignment, lease, or conveyance of the Lease or
Tenant’s interest therein or any claim, demand, obligation, liability, action
or cause of action arising from the Lease; (c) no other person or entity has an
interest in the Lease, collateral or otherwise; (d) there are no outstanding
contracts for the supply of labor or material and no work has been done or is
being done in, to or about the Recapture Space which has not been fully paid
for and for which appropriate waivers of mechanic’s liens have not been
obtained; and (e) Tenant is not currently subject to the provisions of the United
Slates Bankruptcy Code or other law of the United States or any state thereof
for the protection of debtors.   If
Tenant signs as a corporation each of the persons executing this Third
Amendment on behalf of Tenant represents and warrants that Tenant has been and
is qualified to do business in the state in which the Building is located, that
the corporation has full right and authority to enter into this Third
Amendment, and that all persons signing on behalf of the corporation were
authorized to do so by appropriate corporate actions.  If Tenant signs as a partnership, trust or
other legal entity, each of the persons executing this Third Amendment on
behalf of Tenant represents and warrants that Tenant has complied with all
applicable laws, rules and governmental regulations relative to its right to do
business in the state and that such entity on behalf of the Tenant was
authorized to do so by any and all appropriate partnership, trust or other
actions.  If requested by Landlord,
Tenant agrees to furnish promptly upon request a corporate resolution
evidencing the due authorization of Tenant to enter into this Third Amendment.


 


14. Miscellaneous.  This Third Amendment(i) shall be binding upon
and inure to the benefit of Landlord and Tenant, and their respective
successors, assigns and related entities (subject to any restrictions set forth
in the Lease) and (ii) shall be governed by and construed in accordance with
the laws of the Commonwealth of Virginia and may be executed in multiple
counterparts or by facsimile transmissions, each of which shall be treated as
an original of this Third Amendment for all purposes, and all of which shall
constitute one (1) agreement binding upon all of the parties hereto,
notwithstanding that all the parties are not signatory to the original or the same
counterpart or facsimile transmission. 
Each such counterpart or facsimile transmission shall be admissible into
evidence as an original hereof against the party who executed it.


 


15. Limitation
of Liability.  Redress for
any claim against Landlord under the Lease and this Third Amendment shall be
limited to and enforceable only against and to the extent of Landlord’s
interest in the Building.  The
obligations of Landlord under the Lease and this Third Amendment are not intended
to and shall not be personally binding upon, nor shall any resort be had to
private properties of, any of Landlord’s trustees or board of directors or
officers, as the case may be, its investment manager, the general partners
thereof, or any beneficiaries, stockholders, employees, or agents of Landlord
or of the investment manager.


 


6





















 


16. Waivers.
 Landlord and Tenant each agree to and
they hereby do waive trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against the other on any matters
whatsoever arising out of or in any way connected with this Third Amendment or
the Lease.


 


[Signatures contained on next
page]


 


7





















 


IN
WITNESS WHEREOF, Landlord
and Tenant have caused this Third Amendment to be executed as of the day and
year as first above written.


 


	
  WITNESS:

  	
  LANDLORD

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CHANTILLY DISTRIBUTION, INC.,

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  RREEF MANAGEMENT COMPANY,

  	
   

  
	
   

  	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/William B. Murray

  	
   

  	
  By:

  	
  /s/Patrick N. Connell

  	
   

  	
   

  
	
  Name:

  	
  William B. Murray

  	
  Name:

  	
  Patrick N. Connell

  	
   

  
	
  Title:

  	
  Property Manager

  	
  Title:

  	
  Vice President - Regional Manager

  	
   

  
	
   

  	
  Dated:

  	
  10/7/04

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
  TENANT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GTSI CORP.,

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/Charles Deleon

  	
   

  	
  By:

  	
  /s/Thomas A. Mutryn

  	
   

  	
   

  
	
  Name:

  	
  CHARLES DELEON

  	
  Name:

  	
  THOMAS A. MUTRYN

  	
   

  	
   

  
	
  Title:

  	
  CORPORATE SECRETARY

  	
  Title:

  	
  SR VP & CFO

  	
   

  	
   

  
	
   

  	
  Dated:

  	
  10/5/04

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [Corporate Seal]

  	
   

  	
   

  
	
  Dated:

  	
  10/5/04

  	
   

  
											



 


8