**Exhibit10.4**

** **

DEED OF LEASE

 

byand between

 

PETULA ASSOCIATES, LTD.

 

(“Landlord”)

 

and

 

GOVERNMENTTECHNOLOGY SERVICES, INC.

 

(“Tenant”)

 

dated

 

December 10, 1997

 

11/13/97

 

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TABLE OF CONTENTS

 
| 1.     | DEMISE                                           |   |
|--------|--------------------------------------------------|--------|
|   |                                             |   |
| 2.     | TERM                                             |   |
|   |                                             |   |
| 3.     | RENT                                             |   |
|   |                                             |   |
| 4.     | PERMITTED USE                                    |   |
|   |                                             |   |
| 5.     | EXPENSES                                         |   |
|   |                                             |   |
| 6.     | ADDITIONAL RENT                                  |   |
|   |                                             |   |
| 7.     | SORTING AND  SEPARATION OF REFUSE AND TRASH      |   |
|   |                                             |   |
| 8.     | HAZARDOUS SUBSTANCES                             |   |
|   |                                             |   |
| 9.     | INSURANCE                                        |   |
|   |                                             |   |
| 10.    | DAMAGE OR DESTRUCTION                            |   |
|   |                                             |   |
| 11.    | INDEMNIFICATION                                  |   |
|   |                                             |   |
| 12.    | ASSIGNMENT AND SUBLETTING                        |   |
|   |                                             |   |
| 13.    | CARE OF PREMISES                                 |   |
|   |                                             |   |
| 14.    | ALTERATION BY TENANT                             |   |
|   |                                             |   |
| 15.    | CONDEMNATION                                     |   |
|   |                                             |   |
| 16.    | SUBORDINATION                                    |   |
|   |                                             |   |
| 17.    | ACCESS TO PREMISES                               |   |
|   |                                             |   |
| 18.    | RULES AND REGULATIONS                            |   |
|   |                                             |   |
| 19.    | COVENANTS OF RIGHT TO  LEASE                     |   |
|   |                                             |   |
| 20.    | MECHANICS LIENS                                  |   |
|   |                                             |   |
| 21.    | EXPIRATION  OF LEASE AND SURRENDER OF POSSESSION |   |
|   |                                             |   |
| 22.    | DEFAULT-REMEDIES                                 |   |
|   |                                             |   |
| 23.    | RE-ENTRY BY LANDLORD                             |   |
|   |                                             |   |
| 24.    | ADDITIONAL RIGHTS TO  LANDLORD                   |   |
|   |                                             |   |
| 25.    | SUCCESSORS, ASSIGNS  AND LIABILITY               |   |
|   |                                             |   |
| 26.    | NOTICES                                          |   |
|   |                                             |   |
| 21.    | MORTGAGEE’S APPROVAL                        |   |
|   |                                             |   |
| 28.    | ESTOPPEL CERTIFICATES                            |   |

 

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| 29.    | DEFAULT RATE OF INTEREST                               |   |   |
|--------|--------------------------------------------------------|--------|--------|
|   |                                                   |   |   |
| 30.    | EXCULPATORY PROVISIONS                                 |   |   |
|   |                                                   |   |   |
| 31.    | MORTGAGEE PROTECTION                                   |   |   |
|   |                                                   |   |   |
| 32.    | RECIPROCAL  COVENANT ON NOTIFICATION OF ADA VIOLATIONS |   |   |
|   |                                                   |   |   |
| 33.    | LAWS THAT GOVERN                                       |   |   |
|   |                                                   |   |   |
| 34.    | FINANCIAL STATEMENTS                                   |   |   |
|   |                                                   |   |   |
| 35.    | PARKING                                                |   |   |
|   |                                                   |   |   |
| 36.    | SIGNAGE                                                |   |   |
|   |                                                   |   |   |
| 37.    | RECORDATION                                            |   |   |
|   |                                                   |   |   |
| 38.    | FORCE MAJEURE                                          |   |   |
|   |                                                   |   |   |
| 39.    | LANDLORD’S LIEN                                   |   |   |
|   |                                                   |   |   |
| 40.    | BROKERS                                                |   |   |
|   |                                                   |   |   |
| 41.    | CONFIDENTIALITY                                        |   |   |
|   |                                                   |   |   |
| 42     | LEASE/DEED OP LEASE                                    |   |   |
|   |                                                   |   |   |
| 43     | RIGHT OF FIRST OFFER                                   |   |   |
|   |                                                   |   |   |
| 44.    | MISCELLANEOUS                                          |   |   |
|   |                                                   |   |   |
| 45.    | ROOF-TOP EQUIPMENT                                     |   |   |

 
| EXHIBIT | A      | -      | Land                                |   |
|---------|--------|--------|-------------------------------------|--------|
|    |   |   |
| EXHIBIT | B      | -      | Work Agreement                      |   |
|    |   |   |
| EXHIBIT | B-1    | -      | Current Site Plan                   |   |
|    |   |   |
| EXHIBIT | B-2    | -      | Form of Environmental Certification |   |
|    |   |   |
| EXHIBIT | B-3    | -      | Current Specification               |   |
|    |   |   |
| EXHIBIT | C      | -      | Declaration of Lease Commencement   |   |
|    |   |   |
| EXHIBIT | D      | -      | Rules and Regulations               |   |
|    |   |   |
| EXHIBIT | E      | -      | Avion® Signage Program         |   |
|    |   |   |
| EXHIBIT | F      | -      | License Agreement                   |   |
|    |   |   |
| EXHIBIT | F-1    | -      | Location of License Area            |   |
|    |   |   |
| EXHIBIT | F-2    | -      | Intentionally Deleted               |   |
|    |   |   |
| EXHIBIT | F-3    | -      | Minimum Equipment Requirements      |   |
|    |   |   |
| EXHIBIT | F-4    | -      | Contractor Insurance Requirements   |   |
|    |   |   |
| EXHIBIT | G      | -      | Non-Disturbance Agreement           |   |

 

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DEED OF LEASE

 

THIS DEED OF LEASE (“Lease”) is made this 10th day of December, 1997,by and between PETULA ASSOCIATES, LTD., whose address for the purpose of thisLease shall be 711 High Street, Des Moines, Iowa 50392-1370, Attn: CREEquities/Mid-Atlantic Team, hereinafter referred to as “Landlord”, andGOVERNMENT TECHNOLOGY SERVICES, INC., hereinafter referred to as “Tenant”.

 

IT IS AGREED AS FOLLOWS:

 

1.             DEMISE.

 

Landlord does hereby lease to Tenant and Tenant doeshereby lease from Landlord the premises consisting of the Improvements to beconstructed upon the land (“Land”) described on Exhibit A attached hereto andmade a part hereof and any selected parking located on the Land which Tenant isentitled to utilize pursuant to Section 35 hereof (the Improvements, togetherwith the portion of the Land on which the Improvements and any related parkingare located, is herein referred to as the “Premises” or the “Property”).

 

Improvements.  The Improvements (also referred to in ExhibitB as the “Base Building Work”) shall mean the building to be constructed on theLand in accordance with the Work Agreement attached hereto as Exhibit B, tocontain approximately one hundred thousand five hundred (100,500) rentablesquare feet as defined by the Building Owners and Managers AssociationInternational’s Standard Method for Measuring Floor Area in Office Buildings datedJune 7, 1996, as approved by the American National Standards Institute, Inc.(ANSI/BOMA Z65.1-1996) (the “BOMA method”). Upon substantial completion of the Improvements, the rentable area ofthe Improvements shall be determined in accordance with the BOMA method by theArchitect (as herein defined).  Therentable area of the Improvements as so determined shall be controlling forpurposes of establishing the Rent hereunder.

 

2.             TERM.

 

(A)          InitialTerm

 

(1)                                  Theterm of this Lease (“Lease Term”) shall, subject to Section 2(C) hereof andSection 10(c) of Exhibit B hereto, be for a period of 120 months, commencing onthe date of Substantial Completion of the Improvements and the Tenant Work (allas more fully set forth in Exhibit B) (“Commencement Date”) and ending at 11:59p.m. on the day (“Expiration Date”) immediately preceding the tenth (10th)anniversary of the Commencement Date; provided that, if the Commencement Dateis a day other than the first (1st) day of a calendar month, the ExpirationDate shall be the last day of the month in which the tenth (10th) anniversaryof the Commencement Date shall occur. Except as provided below, Tenant shall not be obligated to pay Rentuntil possession of the Premises is tendered to Tenant with the Improvementsand the Tenant Work therein Substantially Complete.  If the Commencement Date is a date other thanthe first day of the month,

 

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Rent for the month in which the Commencement Dateoccurs shall be prorated on a daily basis.

 

(2)                                  IfTenant occupies the Premises prior to the Commencement Date, other than forpurposes of installation of telephones, cabling, special equipment, tradefixtures and furniture in accordance with Section 12(a) of Exhibit B, suchoccupancy shall be subject to all provisions hereof and shall not advance thelast day of the Lease Term, and Tenant shall pay Rent for such period at theinitial monthly rate set forth below.

 

(3)                                  IfLandlord is delayed in Substantially Completing the Landlord’s Work (as definedin Exhibit B) or in tendering possession of the Premises with the Landlord’sWork therein Substantially Complete, in whole or part, by a Tenant Delay, Rentand Additional Rent shall, nonetheless, commence on that date on which theImprovements and the Tenant Work would have been Substantially Completed butfor the Tenant Delay (e.g., if there are two (2) days of Tenant Delayand the Premises are tendered to Tenant with the Improvements and the TenantWork Substantially Complete on December 15, Rent and Additional Rent shallaccrue from December 13th).

 

(4)                                  Subjectto the terms of the last sentence of this Section 2(a)(4), notwithstandinganything herein contained to the contrary, if construction of the Improvementshas not commenced on or before the Commencement Deadline, Tenant shall have theright to terminate this Lease by written notice (“Tenant’s CommencementTermination Notice”) delivered to Landlord not earlier than the CommencementDeadline and not later than ten (10) calendar days after the CommencementDeadline (but in all events not later than commencement of construction of the Improvements),in which event (i) this Lease shall cease and terminate without payment toTenant of any penalty, compensation or any portion of the Allowance (as hereindefined), and without reimbursement of any costs, damages, expenses or feessuffered or incurred by or on behalf of Tenant, as if the date on which.  Tenant’s Commencement Termination Notice isdelivered to Landlord was the Expiration Date, and (ii) Landlord shall returnto Tenant any Security Deposit and any prepaid Rent.  As used herein, the term “Commencement Deadline”shall mean August 1, 1998 [subject to a day-for-day extension for each day ofdelay attributable to Tenant Delays, which Commencement Deadline shall not besubject to delay for “Force Majeure” (as defined in Section 36 below)];provided that, if Tenant fails to timely terminate this Lease pursuant to thisSection 2(A)(4), then for purposes of Section 2(A)(5), the term “CommencementDeadline” shall mean the date on which the Permit (as defined in Exhibit B) isissued by Fairfax County.  Despite theforegoing, in the event that the “Construction Lender” (as defined in Section16(B)(3) below) has foreclosed upon

 

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the Property or has accepted a deed in lieu offoreclosure, and, subject to the provisions of Section 38 below, is diligentlypursuing completion of the work to be performed by Landlord under Exhibit Bhereto, Tenant shall not have the right to terminate the Lease pursuant to theprovisions of this Section 2(A)(4).

 

(5)                                  Notwithstandinganything herein contained to the contrary, if the Landlord’s Work (exclusive of“long-lead” items and Punch List Work items, as defined herein) is notSubstantially Complete within eleven (11) months after the CommencementDeadline (subject to a day-for-day extension for each day of delay which occursafter the Commencement Deadline and is attributable to Tenant Delays, the “CompletionDeadline”) and, as a**result,Tenant is unable to lawfully (and, in fact, does not) occupy the Premises anduse the Premises for the uses permitted hereby, Tenant shall have the right todeliver a sixty (60) day written notice of**termination(“Tenant’s Completion Termination Notice”) delivered to Landlord not earlierthan the Completion Deadline nor later than ten (10) calendar days after theCompletion Deadline (but in all events not later than commencement of theTenant’s Work).  If Tenant timelydelivers the Tenant’s Completion Termination Notice and the Landlord’s Work(exclusive of “long-lead” items and Punch List Work items, as defined herein)is not Substantially Complete within sixty (60) days after delivery of Tenant’sCompletion Termination Notice (subject to a day-for-day extension for each dayof delay which occurs after such delivery of Tenant’s Completion TerminationNotice and which is attributable to Tenant Delays), and, as a result, Tenant isunable to lawfully (and, in fact, does not) occupy the Premises and use thePremises for the uses permitted hereby , this Lease shall automatically ceaseand terminate without payment of penalty or compensation as if the date onwhich such 60-day period (as the same may be extended as aforesaid) expires wasthe Expiration Date, and Landlord shall return to Tenant any Security Depositand any prepaid Rent.

 

(B)           CommencementCertificate.

 

At the request of Landlord at any time after theCommencement Date has occurred, Tenant hereby agrees to execute a declarationin the form attached hereto as Exhibit C (“Declaration”) as incorporatedherein by reference.  Tenant’s failure toexecute the Declaration shall not affect the Commencement Date or the LeaseTerm, as same are determined by the terms of this Lease.

 

(C)           ExtensionPeriod.

 

(1)                                  Providedno Event of Default is in existence under this Lease at the time of theexercise of the

 

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Extension Option or thereafter (through and includingthe commencement date of the Extension Period), and provided that this Leaseshall not theretofore have been terminated, Tenant shall have one (1) non-recurringoption (the “Extension Option”) to extend the Expiration Date of the Lease Termfor a period of five (5) consecutive years (the “Extension Period”).  The Extension Period shall commence on the dayfollowing the Expiration Date determined under Section 2(A) [as the same may beextended pursuant to Section 10(c) of Exhibit B hereto] and end on the fifth(5th) anniversary of the scheduled Expiration Date determined under Section2(A) [as the same may be extended pursuant to Section 10(c) of Exhibit B hereto]. The Extension Period shall be upon thesame terms and conditions contained herein except that (A) the Rent payable inthe Extension Period shall be adjusted on the first (1st) day of the ExtensionPeriod to equal one hundred percent (100%) of the then-prevailing fair marketrental rate for the premises (the “New Rental Rate”), and shall thereafter besubject to adjustment in accordance with the provisions of Section 3(B) hereofand (B) Tenant shall have no option to extend the Expiration Date of the LeaseTerm beyond the last day of the Extension Period.

 

(2)                                  Tenantmay exercise the Extension Option only by delivering binding written notice(the “Extension Option Notice”) to Landlord of Tenant’s election to exercisethe Extension Option not later than twelve (12) months prior to thecommencement of the Extension Period; provided that (i) Tenant’s ExtensionOption Notice shall be ineffective unless the same designates Tenant’s brokerfor purposes of arbitration if the parties are unable to agree on the NewRental Rate, and (ii) if Tenant delivers its Extension Option Notice toLandlord more than twelve (12) months in advance, Tenant may elect to rescindits Extension Option Notice at any time which is at least three hundred fifteen(315) days prior to the commencement of the Extension Period (and in all eventsprior to the execution of a binding agreement to extend this Lease for theExtension Period), on the condition that Tenant reimburses Landlord upon demandfor any out-of-pocket costs incurred by or on behalf of Landlord in connectionwith the determination of the New Rental Rate and/or preparation of a leaseamendment extending this Lease for the Extension Period.  Landlord and Tenant agree to negotiate ingood faith for a period of thirty (30) days to attempt to reach agreement onthe New Rental Rate applicable to the Extension Period, promptly followingdelivery of Tenant’s Extension Option Notice. If the parties fail to agree on such New Rental Rate within said thirty(30) day period, the determination of fair market rental rate for the Premisesshall be arbitrated by brokers as set forth below (each party hereby agreeingto submit the determination of the fair market rental rate for the Premises toarbitration in the manner provided herein,

 

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if the parties are unable to agree on the New RentalRate within said thirty (30) day period).  Landlord shall designate the broker appointedby it within ten (10) business days after the expiration of the aforesaidthirty (30) day period, and each party shall by written notice (a copy of whichshall be provided to the other party hereto) instruct their respective brokersto commence such arbitration within ten (10) business days after the expirationof the aforesaid thirty (30) day period.

 

(3)                                  Inthe event the Tenant designates a broker and the Landlord fails to so designatea broker within the aforesaid ten (10) business day period, the broker appointedby the Tenant shall proceed to make his valuation, in which case the fairmarket rental rate of the Premises shall be as determined by such broker (suchdetermination to be binding on Landlord and Tenant).  In the event each party designates a broker asaforesaid, each broker shall proceed to make an independent determination ofthe then-prevailing fair market rental rate of the Premises within thirty (30)days after appointment of Landlord’s broker.

 

(4)                                  Eachbroker shall render a separate written report, within thirty (30) days afterappointment of Landlord’s broker, of such broker’s estimate of the then-prevailingfair market rental rate for the Premises as of the commencement of theExtension Period.  If the valuescontained in the written reports differ by five percent (5%) or less of the greaterof such values, the New Rental Rate shall be one hundred percent (100%) of thearithmetic average of such values (such determination to be binding on Landlordand Tenant).  If the values contained inthe written reports differ to a greater extent than set forth above, thebrokers shall, within five (5) days, promptly jointly appoint a thirdbroker.  If the two brokers so appointedshall fail to agree upon the selection of a third broker within ten (10) daysafter the expiration of such 30-day period, then either party, upon writtennotice to the other, may request such appointment by the American Arbitration Association(or any organization successor thereto).  The parties shall cooperate to expedite such appointment.  Within twenty (20) days of his appointment,the third broker shall render a written report of his opinion of the value ofthe then-prevailing fair market rental rate for the Premises as of thecommencement of the Extension Period. One hundred percent (100%) of the arithmetic average of the values inthe three (3) evaluation reports shall then be the New Rental Rate for theExtension Period (which determination shall be binding on Landlord and Tenant);provided, however, that if the lowest or highest of the three (3) evaluations,or both, varies by more than ten (10%) from the middle evaluation, suchevaluation or evaluations so varying shall be disregarded in computing saidaverage.

 

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(5)                                  Inthe event the New Rental Rate has not been determined on or before thecommencement of the Extension Period, the Rent payable by Tenant until suchdetermination shall be deemed equal to the Rent payable by Tenant pursuant toSection 3(A) immediately prior to the commencement of the Extension Period (as thesame may be adjusted hereunder); provided, however, within fifteen (15) days ofsuch determination, Tenant shall pay Landlord the excess of (i) the monthlyinstallments of monthly Rent as calculated for the first (1st) year of theExtension Period, above (ii) the monthly installments of Rent actually paid bythe Tenant, in respect of each month commencing on or after the commencement ofthe Extension Period but prior to such determination, or Landlord shall creditTenant for any excess rent paid by Tenant if the rental rate has declined, andTenant shall thereafter pay Rent for such Extension Period as determined andadjusted hereunder.

 

(6)                                  Allvaluations of the fair market rental rate of the Premises shall be in writingand shall be expressed in terms of an annual rent.  Each broker’s determination shall be based onall relevant factors affecting fair market rental rate, including, but notlimited to (and without limiting the scope of such relevant factors), otherterms of this Lease which are applicable to the Extension Period (including,but not limited to, the services provided by Landlord and those which are providedby Tenant, and the absence of any concessions such as free rent or constructionallowance), the duration of the Extension Period, the age and quality of theBuilding (as defined in Exhibit B) and the Premises, current “market”concessions, the fact that the determination is for a renewal, the fact thatthe determination is for a renewal as of a future date, and (if true) that nobrokerage commission will be payable with respect to the Extension Period.  To the extent a reasonable sample isavailable, each broker shall use as a basis for comparison the rent for leasesentered into for comparable space in comparable buildings in the submarket ofChantilly, Virginia in which the Premises is located, within the period which commencestwelve (12) months prior to the date of such determination, which leases shallcommence at approximately the same time as the Extension Period.

 

(7)                                  Eachbroker appointed hereunder shall be an independent, licensed real estate brokerin the Commonwealth of Virginia, not affiliated with either party, specializingin commercial real estate in chantilly, Virginia, having not less than ten (10)years relevant experience, and shall be qualified by experience and ability toappraise the fair market rental for the Premises.  The party appointing each broker shall beobligated, promptly after receipt of the valuation report prepared by thebroker appointed by such party, to deliver a copy of such valuation report tothe other party in the manner provided elsewhere in this Lease for the deliveryof notices.

 

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If a third broker is appointed, the third broker shallbe directed, at the time of his appointment, to deliver copies of his valuationreport, promptly upon its completion, to Landlord and Tenant in the mannerprovided elsewhere in this Lease for the delivery of notices.  The fees and other costs of each of the firsttwo brokers shall be borne by the party appointing each such broker, with thefees and other costs of the third broker being shared equally by Landlord andTenant.

 

(8)                                  Unlessotherwise agreed in writing by Landlord and Tenant at the time the New RentalRate is determined, it is understood that the New Rental Rate shall be the initialRent for the first (1st) Lease Year of the Extension Period, and that such Rentshall be subject thereafter to annual escalations, on each successive anniversaryof the commencement of the Extension Period, based on the provisions of Section3(B).

 

(9)                                  Tenant’sfailure to timely deliver the Tenant’s Extension Option Notice shall render theExtension Option null and void.

 

3.             RENT.

 

(A)                              Rent.  Tenant shall pay for the use and occupancy ofthe Premises an annual base rental (“Rent”) equal to Ten and Fifteen OneHundred Dollars ($10.15) per rentable square foot of the Improvements payablein equal monthly installments.  Rentshall be paid on the first day of each month in advance without demand ornotice (except as otherwise expressly provided herein), deduction, offset, orcounterclaim during the Lease Term.  Rentfor any period during the Lease Term which is less than one month shall be apro rata portion of the monthly installment, provided that if the CommencementDate is not the first (1st) day of a calendar month, such pro rata portionshall be added to the Rent for the first (1st) Lease Year.  Rent shall be payable in lawful money of theUnited States to Landlord at the address stated herein or to such other personsor at such other places as Landlord may designate in writing.

 

(B)                                Escalationof Rent.  Commencing on the first dayof the second Lease Year (as hereinafter defined) and on the first day of eachLease Year thereafter during the Lease Term (each an “Adjustment Date”), Tenantshall pay to Landlord on the first day of each month as Rent an amount (the “AdjustmentAmount”) equal to the sum of (i) the Rent in effect immediately preceding thecurrent Adjustment Date plus (ii) three percent (38) of the Rent in effectimmediately preceding such Adjustment Date. The Adjustment Amount shall then be deemed to be the Rent in effect andshall be deemed to be the Rent in effect for purposes of calculating the nextAdjustment Amount.

 

“Lease Year” shall mean the twelve (12) month periodswithin the Lease Term, the first Lease Year commencing on the Commencement Dateand terminating on the last day of the twelfth full calendar month after theCommencement Date,

 

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with each subsequent Lease Year commencing on the dateimmediately following the last day of the preceding Lease Year and continuingfor a period of twelve (12) full calendar months, except that the last LeaseYear of the Lease Term shall terminate on the date this Lease expires or isotherwise terminated.

 

(C)                                Placeof Payment.  Rent, Additional Rentand other sums owed by Tenant shall be paid to Landlord at the offices ofLandlord’s property manager at 1115 30th Street, N.W., Washington, D.C. 20007or at such place as Landlord may designate from time to time in writing.

 

(D)                               LateCharge.  Tenant hereby acknowledgesthat late payment by Tenant of Rent, Additional Rent or other sums duehereunder will cause Landlord to incur collection costs not contemplated bythis Lease.  Therefore, if anyinstallment of Rent, Additional Rent or any other sum due from Tenant shall notbe received by Landlord when such amount is due, Tenant shall pay to Landlord alate charge of five percent (5%) of such overdue amount; provided that,Landlord agrees to waive the imposition of such late charge on the first (1st)occasion in any twelve (12) month period on the conditions that no such latecharge waiver has been granted or exercised in the preceding twelve (12)months, and the overdue payment is paid within five (5) business days afternotice from Landlord that the payment was not paid when due.  Additionally, Tenant shall pay to Landlord theDefault Rate (as set forth in Section 29) on all sums in default.  Acceptance of such late charge and/or theDefault Rate by Landlord shall in no event constitute a waiver of Tenant’sdefault with respect to such overdue amount, or prevent Landlord fromexercising any other right or remedy available to Landlord.

 

(E)                                 SecurityDeposit.

 

(1)*                                 *Purposeof Security Deposit.  The SecurityDeposit shall be held by Landlord as security for Tenant’s faithful performanceof Tenant’s obligations hereunder, with such Security Deposit securing Tenant’sobligations hereunder subject to the terms and conditions set forth in thisSection 3(E).

 

(2)                                  RequiredAmount.  Tenant shall, at all times,ensure that the aggregate amount of all Permitted Security (as herein defined)held by Landlord from time to time (the “Security Deposit”) is equal to thethen-current Required Amount.  If, as aresult of the application of all or any part of the Security Deposit inaccordance with the terms hereof, the Security Deposit shall be less than thethen-current Required Amount, Tenant shall, within fifteen (15) days ofLandlord’s written demand, provide Landlord with additional Permitted Securityequal to the amount of the deficiency. Tenant’s failure to restore the Security Deposit to the then-current RequiredAmount when and as required hereby shall constitute a material breach of thisLease.  As used herein, the term “RequiredAmount” shall initially mean the sum of Two Million

 

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Dollars ($2,000,000.00).  The “Required Amount” shall be reduced on eachReduction Date by Two Hundred Thousand Dollars ($200,000).  “Reduction Date” shall mean the first (1st)day of each Lease Year commencing on or after the first (1st) day of the second(2nd) Lease Year, on which no Event of Default is in existence hereunder.

 

(3)                                  InitialDeposits.  Tenant shall deposit withLandlord upon execution hereof Permitted Security in the amount of Six HundredThousand Dollars ($600,000.00).  Landlordagrees to provide Tenant with written notice (the “LC Notice”) of the date thatconstruction of the Improvements either (x) is estimated to commence, or (y)has already commenced.  Upon the later tooccur of the date that is two (2) days prior to the date construction isscheduled to commence on the Improvements pursuant to the Work Agreement (ExhibitB), or the date which is ten (10) days after the date that Tenant receives theLC Notice, Tenant shall deposit with Landlord additional Permitted Security inthe amount of One Million Four Hundred Thousand Dollars ($1,400,000.00), toincrease the total amount of Permitted Security to Two Million Dollars($2,000,000.00).

 

(4)                                  PermittedSecurity.  Tenant shall provide theSecurity Deposit to Landlord in the form of one or more letters of credit (“LC”)meeting the criteria set forth in Section 3(E)(7) (“Permitted Security”);provided that, the aggregate number of LCs forming a part of the securityDeposit shall at no time exceed four (4).  Tenant shall immediately notify Landlord inwriting if Tenant acquires actual knowledge (from a source other than Landlord)that any LC provided to Landlord no longer constitutes Permitted Security.

 

(5)                                  QualifiedIssuer.  As used herein, the term “QualifiedIssuer” shall mean a federally-insured commercial bank or otherfederally-insured financial institution which has an office (whether of its ownor a correspondent bank) located in the greater Washington, D.C. metropolitanarea at which Permitted Security (or a sight draft drawn thereon) may bepresented for payment (a “DC Payment Office”), and which has a Qualified CreditRating.  whether an institution is a QualifiedIssuer shall be subject to continuous review (i.e., an institution shallno longer be considered a Qualified Issuer at any time after the loss offederal insurance, the closure of all DC Payment Offices, or loss of aQualified Credit Rating).  As usedherein, the term “Qualified Credit Rating” shall mean at least Prime-2 (orthen-current equivalent) by Moody’s Investor Services, Inc., at least A-2 (orthen-current equivalent) by Standard & Poor’s Corporation, or B- by LaceFinancial Corporation.  Landlord herebyacknowledges that, as of the date of this Lease, Landlord considers DeutscheBank to be a Qualified Issuer.

 

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(6)                                  SubstituteSecurity.  If the Security Depositis, at any time, less than the Required Amount (whether due to application ofthe Security Deposit pursuant to the terms hereof, the loss of a QualifiedCredit Rating by the issuer of some or all of assets delivered to Landlord forpurposes of forming a part of the Security Deposit, or otherwise), Tenant shalldeliver to Landlord additional Permitted Security sufficient to restore theSecurity Deposit to the Required Amount, not later than fifteen (15) businessdays after Landlord’s written demand.

 

(7)                                  SpecialLC Requirements.   Each LC forming allor a part of the Security Deposit shall meet each of the following criteria:

 

(A)                              theLC shall be transferable, fully-funded, and run in favor of Landlord;

 

(B)                                theLC shall be issued by a Qualified Issuer (as herein defined);

 

(C)                                theLC shall be irrevocable for a period of one (1)**year, andprovide that it is automatically renewable for successive one (1) year periods unlessthe issuer notifies Landlord by certified mail, return receipt request, atleast thirty (30) days in advance of the expiration date thereof, that theissuer will not renew the LC;

 

(D)                               theLC shall be in such form, and shall contain such terms, as are reasonablyacceptable to Landlord, providing, among other things, in substance that:

 

(1)                                  Landlordand its successors and assigns shall have the right to draw down an amount upto the then-current face amount of the letter of credit upon presentation tothe issuing bank of Landlord’s own declaration signed or purportedly signed byor on its behalf, reading as follows:

 

(i)                                     thatthe declarant has authority to make the declaration on behalf of the Landlord;

 

(ii)                                  thatthe declaration is made pursuant to the terms of the letter of credit number;and

 

(iii)                               thatLandlord is entitled to draw down the letter of credit under the terms ofSection 3(E)(9)(A) or 3(E)(9)(B) of the lease made between Landlord and Tenant.

 

(2)                                  TheLC will be honored by the issuer without inquiry as to the accuracy of theaccompanying declaration, and regardless

 

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ofwhether Tenant disputes the content of such declaration; and

 

(3)                                  Inthe event of a transfer of Landlord’s interest in the Premises, Landlord shall havethe right to transfer the LC to the transferee.

 

(4)                                  Notwithstandingthe foregoing, Landlord agrees that the terms of the LC may limit draws uponthe LC pursuant to Section 3(E)(9)(A) to not more than Two Hundred ThousandDollars ($200,000.00) in any period of ten (10) consecutive days.

 

(8)                                  Treatmentof Cash Security Deposit.  Any cashsums forming all or a part of the Security Deposit as a result of a draw upon aletter of credit shall be kept in a separately designated security depositaccount in a federally-insured bank (which may include other securitydeposits), with interest thereon accruing forming a part of the SecurityDeposit.

 

(9)                                  Rightto Draw Upon security Deposit.

 

(A)          Upon the occurrence of any monetaryEvent of Default, Landlord and its successors and assigns shall have the rightto negotiate, present for payment, draw upon, use, apply or retain all or aportion of the Security Deposit for the payment of the Rent, Additional Rent orother charge, payment or sum due to Landlord from Tenant, provided in no eventshall the amount of any such draw exceed the amount required to cure suchmonetary Event of Default.

 

(B)                                Upon(i) Tenant’s failure, within fifteen (15) business days after delivery ofwritten notice to Landlord from the issuer of an LC forming all or a part ofthe Security Deposit that the issuer will not renew the LC, to deliver to Landlordadditional Permitted Security in an amount equal to the LC which will not be renewed,or (ii) Tenant’s failure, within fifteen (15) business days after writtennotice from Landlord that the some or all of the assets delivered to Landlordto form a part of the Security Deposit no longer meet the criteria to beconsidered Permitted Security (whether due to a reduction in an LC issuer’scredit rating or otherwise), to deliver to Landlord additional PermittedSecurity sufficient to restore the Security Deposit to the Required Amount, Landlordand its successors and assigns shall have the right to negotiate, present for payment,and/or draw upon any portion of the Security Deposit (or any LC then held by Landlordand formerly constituting a part of the Security Deposit) not in the form ofcash, and to hold the proceeds of such negotiation,

 

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presentment or draw (together with all cash alreadyforming a part of the Security Deposit) as a cash Security Deposit; providedthat, Tenant shall substitute additional Permitted Security for the cash soheld upon Landlord’s demand (in which event Landlord shall return to Tenant theportion of the cash held equal to the amount of such additional PermittedSecurity).

 

(10)                            Transferof Security Deposit.

 

(A)                                              Tenant acknowledges and agreesthat Landlord shall have the right to transfer the Security Deposit to any assigneeor other transferee of Landlord’s interest in the Property, subject to theterms hereof, and that the provisions hereof shall apply to every suchassignment or transfer to a new Landlord.  Upon delivery of the Security Deposit to anyassignee or other transferee of Landlord’s interest in the Premises, Landlord shallthereupon be discharged from any further liability with respect to the SecurityDeposit.

 

(B)                                EachPermitted Security forming a part of the Security Deposit shall expresslypermit transfer of such Permitted Security (whether by endorsement withoutrecourse, delivery, assignment, or re-issuance in the name of the newLandlord), and shall require the issuer to acknowledge and accept the transferupon execution and delivery of a form of transfer agreement which complies withthe issuer’s reasonable requirements and payment of a reasonable and customarytransfer fee (which fee, if such fee exceeds One Hundred Dollars ($100.00) andis paid by Landlord, shall be repaid by Tenant to Landlord upon demand).  If anyissuer fails, within ten (10) days after being notified of such transfer anddelivery of the transfer agreement and payment of the transfer fee, toacknowledge and accept the transfer of the Permitted Security which it has issued,Tenant shall deliver to Landlord additional Permitted Security equal to the amountof Permitted Security for which such Issuer has failed to acknowledge andaccept the transfer (Tenant hereby acknowledging and agreeing that Tenant shallbe solely responsible for any and all fees in excess of One Hundred Dollars($100.00) charged by the issuer of such additional Permitted Security.

 

(11)                            Returnof Security Deposit.  If Tenantperforms all of Tenant’s obligations hereunder, the Security Deposit, or somuch thereof as has not theretofore been applied by Landlord, shall be returnedwith any unpaid interest accrued thereon (if any) to Tenant  (or at Landlord’s option, to the lastassignee, if any, of Tenant’s interest hereunder) within thirty (30) days ofthe later of (i) the last day of the Lease Term,

 

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(ii) the date Tenant vacated the Premises, or (iii)the date Tenant has fulfilled all its obligations hereunder.

 

(12)                            CovenantAgainst Assignment or Encumbrance.  Tenantfurther covenants that it will not assign, encumber or otherwise transfer anyor all of Tenant’s interest in any portion of the Security Deposit, andacknowledges that neither Landlord nor its successors or assigns will be boundby any attempted assignment, encumbrance or other transfer.

 

(13)                            NoTrust Relationship.  No trustrelationship is created herein between Landlord and Tenant regarding theSecurity Deposit.

 

(14)                            RightsAgainst Mortgagee.  Tenant herebyagrees not to look to any mortgagee as mortgagee, mortgagee-in-possession orsuccessor in title to the Premises for accountability for the Security Depositunless (but only to the extent) the Security Deposit has actually been receivedby said mortgagee as security for Tenant’s performance of this Lease.  Notwithstanding the foregoing, this Section3(E)(14) shall not apply to Principal Mutual Life Insurance Company or any of itswholly-owned subsidiaries, it being understood and agreed that, if PrincipalMutual Life Insurance Company or its wholly-owned subsidiaries are the mortgagee-in-possessionor successor in title to the Premises, such party shall be responsible toaccount for and apply the Security Deposit in accordance with the terms of thisLease (regardless of whether such party has actually received the SecurityDeposit).

 

4.             PERMITTED USE.

 

Tenant covenants that the Premises will be used solely(if at all) for the following uses (collectively, the “Permitted Use”):  (1) general office purposes;  (2) warehouse use; (3) cafeteria use; (4)sales presentations; (5) equipment demonstrations; (6) seminars; (7) consultingpurposes; and (8) catalogue, mail and telephone sales.  Tenant further covenants that the Premiseswill not be used or occupied for any unlawful purposes.  Tenant agrees to and shall use the Premisessolely for the purpose of conducting the Permitted Use and for no otherbusiness or purpose.  Tenant acknowledgesthat the Permitted Use is not a use granted exclusively to Tenant and thatLandlord reserves the right to lease premises in the Property to others for thesame or a similar permitted use.  Tenantfurther acknowledges that it has received no written or oral inducements fromLandlord or any of Landlord’s representatives concerning this Lease (other thanas specifically set forth herein) or that Tenant will be granted any suchexclusive rights.  Tenant shall notcommit or allow to be committed any waste upon the Premises, or any public orprivate nuisance.

 

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5.            EXPENSES.

 

(A)         Taxes

 

(1)                                  Landlordshall pay all taxes applicable to the Property which are payable during theLease Term.

 

(2)                                  Asused herein, the term “taxes” shall mean real estate taxes, assessments(whether general or special), sewer rents, rates and charges, transit and transitdistrict taxes, taxes based upon the receipt of Rent or other paymentshereunder, and any other federal, state or local governmental charge, general, special,ordinary or extraordinary (but not including income or franchise taxes,inheritance, estate or gift taxes, net profit taxes or any other taxes imposed uponor measured by Landlord’s net income or profits, except as provided herein),which may now or hereafter be levied, assessed or imposed against the Propertyor Premises (“Taxes”).  If the Propertyis assessed as part of a larger parcel of land, Taxes shall only include theportion thereof which is allocable to the Property.  The allocation referenced in the preceding sentenceshall be based on the ratio of the rentable area of the Improvements to therentable area of all improvements upon such larger parcel of land, in the followingmanner: (i) until the construction commences for improvements other than theImprovements on such parcel of land, (A) the assessment for improvements shallbe entirely allocated to the Property, and (B) the assessment for the landshall be allocated based on the sum of (1) the rentable area of the Improvements,plus (2) the rentable areas of the other proposed improvements on such land asset forth on that certain site plan which is entitled “Site/Grading Plan, GTSIHeadquarters @ Avion, Parcel “D-l”,” prepared by Rinker-Detwiler &Associates, P.C.  as Job Number 97-065-H,dated October     , 1997, (the “current Site Plan”)attached hereto as Exhibit B-1 (as such rentable areas may be modified fromtime to time)]; and (ii) once the construction of improvements other than theImprovements on such parcel of land has commenced, the assessment forimprovements and land shall be allocated as stated on the relevant tax bill(s)or assessor’s worksheet(s) (or, if not separately allocated, based on the sumof (1) the rentable area of the Improvements, plus (2) the rentable areas ofthe proposed improvements on such land for which construction hascommenced).  To the extent any Tax may bepaid without penalty or interest in installments over a number of years, suchTax shall be included in Taxes for any year only to the extent of theinstallments allocable to such year (as if Landlord had elected to pay such Taxover the longest possible period, whether or not Landlord has so elected).  Provided Tenant shall timely pay its Pro RataShare of Taxes, “Taxes” shall exclude any penalties or interest thereon.  As of the date hereof, Landlord estimatesthat the Taxes for calendar year 1999 will be $80,400.00.  Landlord agrees to deliver

 

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a copy of each assessmentnotice on the Property promptly following the receipt thereof.  Additionally, Landlord shall have noobligation to protest Taxes, but if Landlord does protest Taxes, the actualout-of-pocket cost of such protest shall also be deemed Taxes.  Landlord shall advise Tenant upon request (tobe made not more than fourteen (14) days in advance of the filing deadline forprotest of the current tax assessment) whether Landlord intends to protest the currenttax assessment.  If Landlord advisesTenant that Landlord does not intend to protest such current tax assessment,Tenant shall have the right to challenge or appeal such assessment in Landlord’sname but at Tenant’s sole expense, and Landlord shall cooperate in suchchallenge or appeal (including executing such forms as may be reasonablynecessary to institute and prosecute such action); provided that, Tenant shallhave no right to challenge or appeal any Tax assessment during the last two (2)years of the Lease Term.

 

(B)                              Landlordshall provide insurance for the Property as set forth in Subsection 9(A) (“Insurance”).  If Landlord has a net worth in excess ofFifty Million Dollars ($50,000,000.00), Landlord shall have the right toself-insure (in which event, Operating Expenses shall include the reasonablecosts which would have been incurred if Landlord had obtained the insurance setforth in Section 9(A) from a third party); provided that, in all eventsLandlord may self-insure the first Fifty Thousand Dollars ($50,000.00) ofliability risk with regard to the Property (whether through deductibles,co-insurance or otherwise).

 

(C)                                (1)           Landlord shall provide for thefollowing throughout the Lease Term as they relate to the Premises: (a)landscaping; (b) property management; and (c) the maintenance, repair and/orreplacement of the Premises and Improvements as follows: (i) the roof; (ii) allstructural components of the Premises and Improvements; (iii) the parking lot(except as expressly provided in Section 35 hereof), (iv) sidewalks, alleys andany and all access drives, including the removal of snow and ice therefrom(provided that, Tenant shall have the right to perform its own snow removal, atTenant’s sole cost and risk, if Landlord fails to promptly commence snowremoval when and as reasonably required to permit access to the Premises); (v)fire sprinkler and fire control systems (if any); (vi) exterior plate glass;(vii) life safety systems and equipment; and (viii) repairs of items underwarranty.  Landlord agrees to maintainthe foregoing systems and components in a first-class manner throughout theLease Term; provided that, Landlord shall have no liability for failure tomaintain or repair the same unless and until Landlord shall fail to performsuch maintenance or make such repairs within a reasonable time after acquiringactual knowledge of the need for such maintenance or repairs.

 

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(2)                                Tenant(and not Landlord) shall provide throughout the Lease Term, at Tenant’s soleexpense, all other maintenance, repair and/or replacement (as and whenreasonably required) of the Premises and Improvements (including, but notlimited to, (a) heating and air conditioning equipment, lines and fixtures; (b)plumbing equipment, lines and fixtures, excluding fire sprinkler and firecontrol systems (if any); (c) electrical equipment, lines and fixtures; (d) allother utility equipment, lines and fixtures; and (e) all ingress-egress doorsto the Property), all as reasonably required in order to maintain theImprovements and the Tenant Work in good working order and condition.  Notwithstanding the foregoing, Landlord shallperform any of the services listed in this Section 5(c)(2) upon Tenant’swritten request, in which event all reasonable costs, expenses and feesincurred by or on behalf of Landlord to perform the same shall constituteOperating Expenses.

 

(D)                             Tenantshall pay all utility bills incurred, including, but not limited to, water,gas, electricity, fuel, light, heat and power bills, when and as due.  If Tenant shall fail to pay any utility billwhen and as due, Landlord shall have the right to pay such utility bill onTenant’s behalf (in which event the amount so paid shall be deemed AdditionalRent which shall be repaid by Tenant upon demand). Landlord shall not be liablefor any failure to furnish, or for any loss, injury or damage caused by orresulting from any variation, interruption or failure of utility services.  In the event of (i) any interruption ofessential utilities or services due to Landlord’s gross negligence or willfulmisconduct, which interruption or failure continues for more than three (3)consecutive business days, then, provided such interruption or failure shallrender a material portion of the Premises untenantable, all Rent and AdditionalRent payable hereunder with respect to such portion of the Premises shallthereafter be abated until such portion of the Premises is tenantable.

 

(E)                               Tenant,at Tenant’s sole expense, shall comply with all laws, rules, orders, ordinances,directions, regulations and requirements of federal, state, county, andmunicipal authorities now in force or which may hereafter be in force, withrespect to the use, repair, replacement, maintenance, occupancy or alterationof the Premises by Tenant or Tenant’s Agents (as herein defined); provided that,Tenant shall have no obligation to perform structural alterations orimprovements, unless such structural alterations or improvements (i) arerequired by law as a result of Tenant’s or Tenant’s Agents’ specific use ormanner of use of the Premises, or repair of the Premises, or (ii) would nothave been required to be performed but for additions, alteration, improvementsor modifications made by or on behalf of Tenant.  Landlord shall perform all structuralalterations or improvements which are not Tenant’s responsibility pursuant tothe terms hereof.

 

(F)                                 Exceptas otherwise expressly provided herein, the Tenant will keep, maintain andpreserve the Premises in a good

 

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condition, ordinary wearand tear excepted, and shall provide all services, maintenance and repairrequire to keep the Premises in such condition. Without limiting the foregoing, Tenant, at its sole cost and expense,will provide janitorial service for the Premises and interior and exteriorwindow washing for the Premises.  Exceptas provided in Section 5(c)(l) above, Tenant, at the Tenant’s sole cost andexpense, shall also make all interior repairs and replacements to the Premises,including, but not limited to, interior walls, doors and windows, floors, floorcoverings and light bulbs.

 

(G)                                Allcosts, expenses and fees incurred by or on behalf of Landlord in connectionwith providing any of the items in Subsections 5(B) and 5(C), to the extentpaid by or on behalf of Landlord shall be referred to as “Operating Expenses”;provided that, the amount of the property management fee included in OperatingExpenses shall not exceed (i) Two Thousand Five Hundred Fifty-One Dollars($2,551.00) per month during the first (1st) calendar year of the Lease Term(which amount, as of the date of this Lease, is deemed by Landlord and Tenantto be the fair market value of the goods and services provided in exchange forsuch property management fee), and (ii) in any subsequent calendar year, thefair market value of the goods and services provided in exchange therefor.  For purposes of determining the fair marketvalue of the goods and services provided in exchange for the propertymanagement fee, not more often than once every third (3rd) calendar yearLandlord shall, upon Tenant’s written request, conduct a survey of the propertymanagement fees paid to first-class property management companies serving theChantilly, Virginia submarket with respect to single-story, single-tenantbuildings located in a similar office parks in the Chantilly, Virginiasubmarket which are leased with similar tenant responsibilities, and shallprovide to Tenant a copy of such survey. In the event of any dispute between Landlord and Tenant on the fairmarket value of the goods and services provide in exchange for the propertymanagement fee, Landlord and Tenant shall submit such dispute to bindingarbitration pursuant to the Uniform Arbitration Act as adopted by theCommonwealth of Virginia, Va. Code Ann. §§8.01-581.01 etseq. (asthe same may be amended from time to time). Tenant further acknowledges that the portion allocable to the Premisesof the reasonable costs incurred in connection with the operation andmanagement of, and providing and obtaining maintenance, landscaping, utilitiesand repairs for Avion® Business Park shall constitute OperatingExpenses.

 

6.             ADDITIONAL RENT.

 

(A)                            Tenantshall pay its Pro Rata Share of Taxes and Operating Expenses (“Tenant’s Share”).  As soon as practicable each year during theLease Term, Landlord shall furnish to Tenant a detailed estimate of Tenant’sShare for the timeframe in question (broken down on a category by categorybasis). Tenant acknowledges that Landlord has provided Tenant with a non-bindingestimate of the Tenant’s Share for calendar year 1999, prior to the executionhereof.  Tenant shall pay to

 

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Landlord the estimate forTenant’s Share in equal monthly installments at the same time and place as Rentis to be paid.  Landlord will furnish astatement of the actual Tenant’s Share no later than April 1 of each yearduring the Lease Term, including the year following the year in which the Leaseexpires or is otherwise terminated.  In theevent that Landlord is, for any reason, unable to furnish the statement of theactual Tenant’s Share within the time specified above, Landlord will furnishsuch statement as soon thereafter as practicable with the same force and effectas the statement would have had if delivered within the time specifiedabove.  Tenant will pay to Landlord anydeficiency as shown by such statement within thirty (30) days of receipt ofsuch statement.  Provided no Event ofDefault by Tenant is in existence under this Lease, Landlord will refund toTenant any excess as shown by such statement within thirty (30) days of thedate of the statement; provided that, if an Event of Default by Tenant is inexistence, Landlord shall refund to Tenant the amount of such excess at suchtime as all Events of Default have been cured. Landlord will keep books and records showing the Operating Expenses inaccordance with generally accepted accounting principles.

 

(B)                                Anyand all payments (other than Rent) required to be made by Tenant pursuant tothis Lease shall be deemed additional Rent (“Additional Rent”).  Landlord shall have the same rights andremedies for said payments as for Rent.

 

(C)                                ProRata Share.  Tenant’s pro rata shareis 100% (“Pro Rata Share”).

 

(D)                               Tenant’sRight to Audit.  If Tenant disputesany Operating Expenses or Taxes statement, Tenant must provide Landlord withspecific written objections within one hundred eighty (180) days afterreceiving the statement (failing which, the statement will be deemedconclusive).  Within 30 days after receivingthese objections, Landlord will either adjust the disputed statement inresponse to Tenant’s objection(s) and credit any overpayment to Tenant asstated above, or notify Tenant that it believes Tenant’s objection is withoutmerit (it being agreed that, if Landlord fails to respond within such 30-dayperiod, Landlord shall be deemed to have agreed to adjust the disputedstatement in response to Tenant’s objection(s) and credit any overpayment toTenant as stated above).  If Tenanttimely disputes a statement and Landlord notifies Tenant that Tenant’sobjection is without merit, Tenant may — if no Event of Default by Tenant isthen in existence — cause (i) qualified accounting employees of Tenant, or (ii)an independent, certified public accountant (“CPA”) to audit the supportingdata for the disputed statement (in which event, such supporting data shall be madeavailable to the employee or CPA). However, Tenant may not exercise its audit right unless the auditcommences within thirty (30) days after Landlord notifies Tenant that Tenant’sobjection is without merit, nor may Tenant audit any statement more than once(it being understood that the foregoing prohibition against multiple audits ofthe same statement shall not be deemed to prohibit the examination of the samedocuments more than once in the course of the same

 

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audit).  Any CPA selected by Tenant to conduct anaudit must have least 5 years experience performing operating expensepass-through audits for commercial office buildings in the metropolitanWashington, D.C. area, and must be approved by Landlord.  Landlord’s approval will not be unreasonablywithheld or delayed, if such CPA (a) is not compensated on a contingency feebasis, and (b) signs a confidentiality agreement in form reasonably acceptableto Landlord (Landlord hereby agreeing that no such confidentiality agreementshall prohibit the disclosure, in any action or suit instituted by Tenantagainst Landlord with regard to the audited Operating Expenses or Taxes, ofinformation required to institute or prosecute such action or suit, but suchconfidentiality agreement may require Tenant and the CPA to agree to reasonableprotective orders in connection therewith). Each audit under this Section 6(D) must be conducted at Landlord’sproperty manager’s Washington, D.C. area office.  If Landlord does not agree with the auditresults of the CPA Tenant selects, or Tenant’s employee(s), Landlord and Tenantwill endeavor to resolve their differences (failing which, the dispute will beconclusively determined based on an independent audit by a third-party CPAselected by the parties or, failing agreement, appointed by the AmericanArbitration Association or any recognized successor thereto upon application byeither party).  The parties will make anynecessary adjustments in accordance with the third-party CPA audit.  Tenant must pay all costs and expenses ofTenant’s audit (including, but not limited to, reasonable copying charges),unless the amounts paid by Tenant to Landlord for the year in question exceededthe amounts to which Landlord was entitled by more than 6%, in which eventLandlord will reimburse Tenant for the reasonable costs incurred in connectionwith Tenant’s audit.  If the third-partyCPA audit shows Tenant has underpaid Operating Expenses or Taxes (or both), inaddition to paying to Landlord the underpayment amount, Tenant shall reimburseLandlord upon demand for all reasonable costs, expenses and fees incurred byLandlord in connection with such dispute.  If a third-party CPA ultimately resolves thedispute, the losing party shall pay the costs incurred in connection with thethird-party CPA audit (including, but not limited to, reasonable copyingcharges).  Tenant has no right towithhold or reduce any performance by Tenant under the Lease pending or basedupon any audit under this Section 6(D).

 

7.             SORTING ANDSEPARATION OF REFUSE AND TRASH.

 

Tenant shall beresponsible for contracting for all trash removal services.  Tenant covenants and agrees, as its sole costand expense, to comply with all present and future laws, orders and regulationsof all state, federal, municipal and local governments, departments,commissions and boards regarding the collection, sorting, separation andrecycling of waste products, garbage, refuse and trash.  Tenant shall pay all costs, expenses, fines,penalties or damages that may be imposed on Landlord or Tenant by reason ofTenant’s failure to comply with the provisions of this Section 7, and, atTenant’s sole cost and expense, shall indemnify, defend and hold Landlordharmless (including legal fees and expenses) from and against any actions,claims and suits

 

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arising from such noncompliance,utilizing counsel reasonably satisfactory to Landlord.

 

8.            HAZARDOUSSUBSTANCES.

 

(A)                              Theterm “Hazardous Substances” shall mean pollutants, contaminants, toxic orhazardous wastes, or any other substances, the use and/or the removal of which isrequired or the use of which is restricted, prohibited or penalized by any “EnvironmentalLaw”, which term shall mean any federal, state or local law, regulation, order,ordinance or other statute of a governmental or quasi-governmental authorityrelating to pollution or protection of the environment.  Tenant hereby agrees that (A) no activitywill be conducted on the Premises that will produce any Hazardous Substances,except for such activities that are part of the ordinary course of Tenant’sbusiness activities (the “Permitted Activities”) provided said PermittedActivities are conducted in accordance with all Environmental Laws and havebeen acknowledged and consented to in advance in writing by Landlord (suchconsent not to be unreasonably withheld); Tenant shall be responsible forobtaining any required permits and paying any fees and providing any testingrequired by any governmental agency in connection with the PermittedActivities; (B) the Premises will not be used in any manner for the storage ofany Hazardous Substances except for the temporary storage of such materials(the “Permitted Materials”) that are used in the ordinary course of thePermitted Activities, provided such Permitted Materials are properly stored ina manner and location meeting all Environmental Laws and acknowledged andconsented to in advance in writing by Landlord (such consent not to beunreasonably withheld); Tenant shall be responsible for obtaining any requiredpermits and paying any fees and providing any testing required by anygovernmental agency in connection with the Permitted Materials; (C) no portionof the Premises will be used as a landfill or a dump; (D) Tenant will notinstall any underground tanks of any type; (E) Tenant will not cause anysurface or subsurface conditions to exist or come into existence thatconstitute, or with the passage of time may constitute a public or privatenuisance; (F) Tenant will not knowingly or negligently permit any HazardousSubstances to be brought onto the Premises by or on behalf of Tenant, exceptfor the Permitted Materials described above, and if so brought thereon, thesame shall be immediately removed, with proper disposal, and all requiredcleanup procedures shall be diligently undertaken pursuant to all EnvironmentalLaws.  Landlord or Landlord’srepresentative shall have the right but not the obligation to enter thePremises for the purpose of inspecting the storage, use and disposal ofPermitted Materials to ensure compliance with all Environmental Laws.  Should it be determined, in Landlord’s sole(but reasonable) opinion, that said Permitted Materials are being improperlystored, used, or disposed of, then Tenant shall immediately take suchcorrective action as is reasonably requested by Landlord.  Should Tenant fail to take such correctiveaction within ten (10) days (or such shorter period as is reasonable under thecircumstances), Landlord shall have the right to perform such work and

 

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Tenant shall promptlyreimburse Landlord for any and all actual, out-of-pocket costs associated withsaid work.  If at any time during orafter the Lease Term, the Premises are found to be contaminated by HazardousMaterials as a consequence of the acts or omissions of Tenant or any of Tenant’sAgents, or any surface or subsurface conditions exist at the Property as aconsequence of the acts or omissions of Tenant or any of Tenant’s Agents,Tenant shall diligently institute proper and thorough cleanup procedures atTenant’s sole cost, and Tenant agrees to indemnify, defend and hold harmlessLandlord, its lenders, any managing agents and leasing agents of the Property,and their respective agents, partners, officers, directors and employees, fromall claims, demands, actions, liabilities, costs, expenses, penalties (whethercivil or criminal), damages (actual or punitive) and obligations of any naturearising from or as a result of such contamination or conditions.  The foregoing indemnification and theresponsibilities of Tenant shall survive the termination or expiration of thisLease.

 

(B)                                Exceptwith regard to the use, storage and disposal, in accordance with applicablelaw, of Hazardous Substances utilized in the ordinary course of themaintenance, repair and/or operation of the Property (“Landlord’s PermittedSubstances”), Landlord agrees that it will be fully responsible for all costs,expenses, damages or liabilities which may occur from the use, storage,disposal, release, spill or discharge of Hazardous Substances by Landlord or itsagents, representatives, employees or contractors while acting within the scopeof their employment, and it shall indemnify, defend and hold harmless Tenantand its agents, employees, partners, officers, directors, invitees, assignees,sublessees, contractors and others for whose actions Tenant is responsible(collectively, “Tenant’s Agents”) from all claims, demands, actions,liabilities, reasonable costs, reasonable expenses, penalties (whether civil orcriminal), damages (actual or punitive) and obligations of any nature to theextent arising from or as a result of any violation of this Section 8(B).  The foregoing indemnification and theresponsibilities of Landlord shall survive the termination or expiration ofthis Lease.

 

(C)                                Duringand after the Lease Term, Tenant and Landlord shall each promptly provide theother with copies of all summons, citations, directives, information inquiriesor requests, notices of potential responsibility, notices of violation ordeficiency, orders or decrees, claims, complaints, investigations, judgments,letters, notices of environmental liens, and other communications, issued orthreatened in writing, from the United States Environmental Protection Agency,Occupational Safety and Health Administration, the Commonwealth of VirginiaDepartment of Environmental Quality, or other federal, state or local agency orauthority, or any other entity or individual, whether public or private,concerning (i) any Hazardous Substance regarding the Property or the Premises;(ii) the imposition of any environmental lien on the Property or the Premises;or (iii) any alleged violation of or responsibility under any EnvironmentalLaw, with respect to the Property.

 

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9.                                       INSURANCE.

 

(A)          INSURANCE BY LANDLORD.

 

Landlord shall, duringthe Lease Term, procure and keep in force the following insurance (it beingunderstood that the cost of commercially reasonable premiums and deductiblesincurred or paid by or on behalf of Landlord in connection therewith will bedeemed Additional Rent payable by Tenant pursuant to Section 5 and Section 6(Tenant hereby acknowledging that, as of the date hereof, Landlord’s deductiblein connection with its casualty insurance is $10,000 per occurrence, and suchdeductible is commercially reasonable)):

 

(1)                                  Propertyinsurance insuring the Premises and Improvements and rental income insurance (i.e.,loss of rents insurance) for perils covered by the causes of loss - specialform (all risk) and in addition coverage for flood, earthquake and boiler and machinery(if applicable).  Such coverage (exceptfor flood and earthquake) shall be written on a replacement cost basis equal toninety percent (90%) of the full insurable replacement value of the foregoingand shall not cover Tenant’s equipment, trade fixtures, inventory, fixtures orpersonal property located on or in the Premises.

 

(2)                                  Commercialgeneral liability insurance against any and all claims for death, bodily injuryand property damage occurring in or about the Premises or the land.  Such insurance shall have a combined singlelimit of not less than One Million Dollars ($1,000,000) per occurrence perlocation with a Two Million Dollars ($2,000,000) aggregate limit, and shallname Tenant as an additional insured.

 

(3)                                  Suchother insurance as Landlord deems reasonably necessary and prudent, consistentwith the insurance customarily maintained by comparable buildings in the Chantillysubmarket of Fairfax County, Virginia, or as reasonably required by Landlord’sbeneficiaries or mortgagees of any deed of trust or mortgage encumbering thePremises.

 

(B)          INSURANCE BY TENANT.

 

Tenant shall,during the Lease Term, procure and keep in force the following insurance:

 

(1)                                  Commercialgeneral liability insurance naming Landlord and Landlord’s managing agent forthe Premises as additional insureds against any and all claims for death,bodily injury and property damage occurring in, or about the Premises arisingout of Tenant’s use and occupancy of the Premises.  Such insurance shall have a combined singlelimit of not less than One Million Dollars ($1,000,000) per occurrence with TwoMillion Dollars ($2,000,000) aggregate limit and excess

 

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umbrella liabilityinsurance in the amount of Two Million Dollars ($2,000,000).  If Tenant has other locations that it owns orleases, the policy shall include an aggregate limit per location endorsementconforming to the foregoing.  Suchliability insurance shall be primary and not contributing with any insuranceavailable to Landlord and Landlord’s insurance shall be in excess thereto.  In no event shall the limits of suchinsurance be considered as limiting the liability of Tenant under this lease.

 

(2)                                Personalproperty insurance insuring all equipment, trade fixtures, inventory, fixturesand personal property located on or in the Premises for perils covered by thecause of loss - special form (all risk) and in addition, coverage for flood,earthquake and boiler and machinery (if applicable).  Such insurance shall be written on areplacement cost basis in an amount equal to ninety percent (90%) of the full replacementvalue of the aggregate of the foregoing.

 

(3)                                Workers’compensation insurance in accordance with statutory law and employers’ liabilityinsurance with a limit of not less than $100,000 per accident, $500,000 for adisease policy limit, and $100,000 for disease limit for each employee.

 

(4)                                Businessinterruption insurance in such amounts, if any, that Tenant in its prudentbusiness judgment, elects to maintain, from time to time, it being understoodand agreed that if there is any conflict between the provisions of this Section9(B)(4) and the provisions of Section 9(B)(5),the provisions of this Section9(6)(4) shall govern and control.

 

(5)                                Suchother insurance as Landlord deems necessary and prudent, consistent with theinsurance customarily required to be maintained by tenants of comparable buildingsin the Chantilly submarket of Fairfax County, Virginia, or as reasonablyrequired by Landlord’s beneficiaries or mortgagees of any deed of trust ormortgage encumbering the Property.

 

The policies required tobe maintained by Tenant and the policies required to be maintained by Landlordshall each be issued by companies rated AX or better in the most current issueof Beat’s Insurance Reports.  Insurersshall be licensed or authorized to do business in the state in which thePremises is located and domiciled in the United States.  Any deductible amounts under any of Tenant’sinsurance policies required hereunder shall not exceed $10,000. Certificates ofinsurance (certified copies of the policies shall be provided upon Landlord’srequest) shall be delivered to Landlord prior to the Commencement Date andannually thereafter at least thirty (30) days prior to the expiration date of theold policy.  Tenant shall have the rightto provide insurance coverage which it is obligated to

 

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carry pursuant to theterms hereof in a blanket policy, provided such blanket policy expresslyaffords coverage to the Premises, and to Landlord, as required by this Lease.  Each policy of insurance shall providenotification to Landlord at least ten (10) days prior to any cancellation ormodification to reduce the insurance coverage. In the event Tenant does not purchase the insurance required by thisLease or fails to keep the same in full force and effect, Landlord may (butshall not be obligated to), upon forty-eight (48) hours notice (or, in the caseof the lapse of Tenant’s general liability insurance, without notice), purchasethe required insurance and pay the premium. The Tenant shall repay to Landlord, as Additional Rent the amount sopaid promptly upon demand.  In addition,Landlord may recover from Tenant and Tenant agrees to pay, as Additional Rent,any and all reasonable expenses (including reasonable attorneys’ fee) anddamages which Landlord may sustain by reason of the failure of Tenant to obtainand maintain such insurance.

 

(C)          SUBROGATION.

 

Landlord and Tenantmutually waive their respective rights of recovery against each other for anyloss of, or damage to, either parties’ property, to the extent that such lossor damage is insured by an insurance policy required to be in effect at thetime of such loss or damage.  Each partyshall obtain any special endorsements, if required by its insurer, whereby theinsurer waives its rights of subrogation against the other party.  This clause shall not apply in those caseswhere waiver of subrogation would cause either parties’ insurance to be voidedor otherwise made uncollectible.

 

10.          DAMAGE ORDESTRUCTION.

 

If (i) the Premises shallbe materially damaged or destroyed during the last year of the Lease Term (itbeing agreed that, if the Extension Option was exercised prior to such damageor destruction and Tenant’s right of rescission thereof has lapsed or is waivedin writing by Tenant not later than the earlier of (x) 315 days in advance ofthe Expiration Date, or (y) thirty (30) days after the date of such damage ordestruction, the last year of the Lease Term shall be deemed to be the lastyear of the Extension Period), or (ii) the Premises is damaged or destroyed tosuch extent that the damage or destruction cannot be repaired within a periodof three hundred sixty-five (365) days of the date of such damage ordestruction, either Landlord or Tenant may terminate this Lease by writtennotice (the “Damage Notice”) delivered to the other within sixty (60) days ofthe date of such damage or destruction (and in such event this Lease shallterminate as of date of such damage or destruction as if such date were theExpiration Date hereof).  In addition,Landlord, at its sole option, shall have the right to cancel and terminate this

 

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Lease, by written notice(the “Section 10 Notice”) delivered to Tenant not later than sixty (60) daysafter the date of damage or destruction, in the event (i) the Premises ismaterially damaged or destroyed, (ii) the unexpired portion of the Lease Termwhich will remain after completion of rebuilding or restoration of the Premises(based on the estimated time for rebuilding or restoration from a reputable,independent contractor) is less than forty-two (42) months [it being agreedthat, for purposes of the foregoing calculation, if the Extension Option wasexercised prior to such damage or destruction and Tenant’s right of rescissionthereof has lapsed or is waived in writing by Tenant not later than the earlierof (x) 315 days in advance of the Expiration Date, or (y) thirty (30) daysafter the date of such damage or destruction, less than forty-two (42)**months of the Extension Period willremain unexpired after completion of rebuilding or restoration of the Premises,based upon the estimated time for such rebuilding or restorationl, and (iii)Tenant shall fail to execute and deliver to Landlord within thirty (30) daysafter the date that Tenant received the Section 10 Notice an extension of theLease Term equal to the amount of time by which the remaining Lease Term(which, if the Extension option is not exercised prior to such damage ordestruction or if Tenant’s right of rescission thereof has not lapsed or is notwaived in writing by Tenant within thirty (30) days after the date of suchdamage or destruction, shall exclude the Extension Period, and in all eventsshall exclude the estimated time to rebuild or restore the Premises) is lessthan forty-two (42) months, upon the same terms and conditions set forth hereinexcept that the Rent for the period of such extension shall equal thethen-escalated Rent in effect immediately prior to the expiration of the LeaseTerm, subject to escalation in the same manner in effect immediately prior tothe expiration of the Lease Term.  IfLandlord delivers neither the Damage Notice or the Section 10 Notice to Tenantwithin sixty (60) days after the date of the damage or casualty, Landlord shallbe deemed to have waived its right to terminate this Lease in connection withsuch damage or destruction.  If thisLease is not terminated, then Landlord shall repair and restore the Premises(exclusive of Tenant’s equipment, trade fixtures, inventory, fixtures andpersonal property) with all reasonable speed (but in all events not later thantwelve (12) months after the date of the damage) to substantially the samecondition as immediately prior to such damage or destruction, and the Rent andAdditional Rent or a just and proportionate part thereof, according to Tenant’sability to utilize the Premises in its damaged condition, shall be abated untilthe Premises shall have been repaired and restored by Landlord.

 

11.          INDEMNIFICATION.

 

(A)                            Subjectto the terms of Section 9(C), Tenant shall and does hereby indemnify, holdharmless, and defend Landlord (except for Landlord’s gross negligence orwillful misconduct) against all costs, damages, injury, claims, liabilities orexpenses (including, but not limited to, reasonable

 

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attorneys’ fees), lossesand court costs with respect to injury or death to any person or for damage toor loss of use of any property arising out of any occurrence in, on or aboutthe Property or on account of the use, condition, occupational safety oroccupancy of the Property, to the extent caused or contributed to by Tenant orTenant’s Agents, or arising out of any occurrence in, upon or at the Premises,or on account of the use, condition, occupational safety or occupancy of thePremises.  To the fullest extentpermitted by applicable law, it is the intent of the parties hereto that theindemnity contained in this Section shall not be limited or barred by reason ofany ordinary negligence on the part of Landlord or Landlord’s agents, butnothing herein contained shall be deemed to require Tenant to indemnifyLandlord against the negligence of Landlord or Landlord’s agents except to theextent Tenant is insured against liability arising therefrom.  Such indemnification shall include and applyto (but shall not be limited to) reasonable attorneys’ fees, investigationcosts, and other costs actually and reasonably incurred by Landlord.  Subject to the terms of Section 9(C), Tenantshall and does hereby further indemnify, defend and hold harmless Landlord fromand against any and all costs, damages, injury, claims, liabilities or expensesarising from any breach or default in the performance of any obligation onTenant’s part to be performed under the terms of this Lease.  The provisions of this Section shall survivethe expiration or termination of this Lease with respect to any damage, injury,death, breach or default occurring prior to such expiration ortermination.  This Lease is made on theexpress conditions that, except as expressly set forth in this Lease, Landlordshall not be liable for, or suffer loss by reason of, injury to person orproperty, from whatever cause, in any way connected with the condition, use,occupational safety or occupancy of the Premises specifically including,without limitation, any liability for injury to the person or property ofTenant or Tenant’s Agents.

 

(B)                                Subjectto the terms hereof (including, but not limited to, Section 9(C) hereof),Landlord shall and does hereby indemnify and hold harmless Tenant from andagainst all costs, damages, injury, claims, liabilities, expenses (including,but not limited to, reasonable attorneys’ fees), losses and court costs to theextent caused by or contributed to by any gross negligence or willfulmisconduct of Landlord or its agents or employees acting within the scope oftheir employment.  Such indemnificationshall include and apply to (but shall not be limited to) reasonable attorneys’fees, investigation costs, and other costs actually and reasonably incurred byTenant.  Subject to the terms of Section9(C), Landlord shall further and does hereby indemnify, defend and holdharmless Tenant from and against any and all costs, damages, injury, claims,liabilities or expenses arising from any breach or default

 

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in the performance of anyobligation on Landlord’s part to be performed under the terms of thisLease.  To the fullest extent permittedby applicable law, it is the intent of the parties hereto that the indemnitycontained in this paragraph shall not be limited or barred by reason of anyordinary negligence on the part of Tenant or Tenant’s Agents, but nothingherein contained shall be deemed to require Landlord to indemnify Tenantagainst the negligence of Tenant or Tenant Agents except to the extent Landlordis insured against liability arising therefrom.  The provisions of this Section shall survivethe expiration or termination of this Lease with respect to any damage, injury,death, breach or default occurring prior to such expiration or termination.  This Lease is made on the express conditionsthat, except as expressly set forth in this Lease, Tenant shall not be liablefor, or suffer loss by reason of, injury to person or property, from whatevercause, in any way connected with the condition, use, occupational safety oroccupancy of the common areas of Avion® Business Park specifically including,without limitation, any liability for injury to the person or property ofLandlord or Landlord’s agents or employees.

 

12.          ASSIGNMENTAND SUBLETTING.

 

(A)                              Tenantshall not assign, encumber, mortgage, pledge, license, hypothecate or otherwisetransfer the Premises or this Lease, in whole or in part, or sublease all orany part of the Premises, or permit the use or occupancy of any part of thePremises by any person or entity other than Tenant and its employees, withoutthe prior written consent of Landlord, which may be granted or withheld inLandlord’s sole discretion; provided that, subject to Landlord’s terminationright as set forth below, Landlord agrees not to unreasonably withhold, delayor condition its consent to any sublease or assignment (each a“Transfer”).  Notwithstanding anythingherein contained to the contrary, it shall be deemed reasonable for Landlord towithhold its consent to a proposed Transfer if Landlord reasonably determinesthat: (1) the proposed Transferee or its business is not of a type and qualitysuitable for a building of comparable quality and type, (2) the proposed Transferee is a governmental orquasi-governmental authority, a foreign government or international agency orother organization entitled to sovereign or other immunity, (3) the proposedoperations of the proposed assignee or subtenant would materially and adverselyinterfere with the ability of other tenants of the Building to utilize theirpremises for the uses (“Comparable Uses”) that are consistent with the type ofuses found in buildings that are of similar quality and type as the Building,(4) the proposed assignee has not been demonstrated to Landlord’s satisfactionto have sufficient financial capability and stability to perform itsobligations under such proposed assignment, or (5) the

 

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proposed Transferee isproposing to engage in a use which (i)  isnot a Permitted Use, (ii) is not permitted pursuant to applicable law to beconducted by the proposed Transferee or within the Premises (or such lesserportion as is being sublet) or both, (iii) will violate any covenant,condition, restriction or other matter of record affecting title to the Property,or (iv) will violate any “exclusive use” or other restrictive covenant of anyother lease of any portion of the Property (so long as such exclusive use orrestrictive covenant does not restrict the ability of Tenant to engage in thePermitted Use).

 

(B)                                (1)          Tenant must request Landlord’s consentto an assignment or sublease in writing at least thirty (30) days prior to thecommencement date of the proposed sublease or assignment, which request mustinclude (a) the name and address of the proposed assignee or subtenant, (b) thenature and character of the business of the proposed assignee or subtenant, (c)financial information (including financial statements) of the proposed assigneeor subtenant, and (d) a copy of the proposed sublet or assignment agreement,which must be in substance and form reasonably acceptable to Landlord.  Tenant shall also provide any additionalinformation Landlord reasonably requests regarding such proposed assignment orsubletting.

 

(2)                               Withintwenty-one (21) days after Landlord receives Tenant’s request for consent to aproposed assignment or subletting (with all required information included),Landlord shall have the option: (i) to grant its consent to such proposedassignment or subletting, or (ii) to deny or condition its consent to suchproposed assignment or subletting (it being understood that such consent willnot, subject to Landlord’s right of termination, be unreasonably withheld,conditioned or delayed), or (iii) at Landlord’s sole discretion, to terminatethis Lease effective as of the commencement date of such proposed assignment,or, if a sublease, to sublease the portion of the Premises proposed to besubleased, on the same terms and conditions set forth in the proposed subleasefor which Landlord’s consent is sought.  IfLandlord fails to respond to Tenant within such period of time, Tenant maydeliver to Landlord a second (2nd) request for such consent, which notice shallspecifically state that the failure by Landlord to respond within five (5) businessdays shall be deemed Landlord’s election to grant its consent thereto, and inthe absence of a response to such second (2nd) notice, Landlord shall be deemedto have granted its consent thereto. Landlord acknowledges that as of the date of this Lease, Tenant hasdelivered to Landlord a list containing the names of the entities identified

 

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by Tenant as Tenant’scurrent direct competitors.  At leastseven (7) days prior to the date that Landlord enters into a lease or grantsany party (other than Tenant) the right to use any portion of the Premises,Landlord shall deliver a written notice (the “Competitor Request Notice”) toTenant which requests that Tenant provide Landlord with a written list of Tenant’sthen direct competitors.  If within seven(7) days after the date that Tenant receives a Competitor Request Notice,Tenant delivers to Landlord a list of direct competitors, then such list shallbe deemed the then-current “Competitor List”, provided that if Tenant fails todeliver to Landlord such list within seven (7) days after the date Tenantreceives a Competitor Request Notice, then the then current Competitor Listshall be deemed to be the most recent list of direct competitors that has beendelivered to Landlord by Tenant. Landlord acknowledges and agrees that, so long as (x) GTSI is the Tenanthereunder, and (y) GTSI utilizes the Premises for sales, marketing or trainingpurposes or for its executive offices, Landlord may not (i) lease space recapturedpursuant to the foregoing clause 12(B)(2)(iii) or the following Section12(B)(3) to any direct competitor of GTSI on the then current Competitor Listor (ii) permit any direct competitor of GTSI on the then current CompetitorList to use any portion of the Premises.  For purposes of this Section 12(B)(2) andSection 12(E), (i) the term “GTSI” shall include Government TechnologyServices, Inc. and any organization successor thereto by means of merger,consolidation or reorganization, and (ii) the terms “direct competitor” and “directcompetitors” shall mean business operations that have been identified by Tenantin writing on the most recent Competitor List as direct competitors inaccordance with the foregoing provisions, which operations engage in the resaleof computers to the United States government (it being understood that computermanufacturers, and any division of any company which otherwise qualifies as adirect competitor of GTSI but the division of which is to be located within therecaptured space does not engage in the resale of computers to the UnitedStates government, shall not be prohibited by the preceding provisions of thisSection 12(B)(2)).

 

(3)                                  Tenantshall additionally have the right to deliver to Landlord advance written notice(each an “Intent Notice”) of Tenant’s intent to assign or sublease beforeTenant identifies the proposed assignee or sublessee.  Each Intent Notice shall include the termsand conditions upon which Tenant proposes to assign or sublease.  Landlord may exercise its recapture rightpursuant to the foregoing Section 12(B)(2)(iii), with

 

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respect to the spaceTenant intends to sublet or assign as identified in Tenant’s Intent Notice,within twenty-one (21) days after delivery of Tenant’s Intent Notice, but ifLandlord fails to exercise such right within such 21-day period, Landlord shallhave no right to exercise such recapture right, with respect to any proposedassignment or sublet of the space identified in Tenant’s Intent Notice on theterms and conditions described in such Intent Notice, during the sixty (60) dayperiod following the expiration of such 21-day recapture period (or any earlierdate on which Landlord notifies Tenant that it will not exercise its recaptureright at that time).

 

(C)           Each sublease and/or assignment isalso subject to all of the following terms and conditions:

 

(1)                                  Tenantshall pay to Landlord as Additional Rent fifty percent (50%) of the amount (the“sublet profit”), if any, by which the rent (net of any rent abatements), anyadditional rent and any other sums paid by the assignee or subtenant to Tenantunder such assignment or sublease (after deducting therefrom the reasonable out-of-pocketcosts incurred by Tenant in the subject transaction, including, but not limitedto, brokerage commissions, hard and soft construction expenses, tenantconcessions (exclusive of non-cash concessions, such as free rent), andreasonable legal fees) exceeds the total of (i) the Rent plus (ii) any AdditionalRent payable by Tenant hereunder, which is allocable to the portion of thePremises and/or the Lease Term which is the subject of such assignment orsublease.  The foregoing payments shallbe made on a monthly basis by Tenant in each month in which a sublet profit isreceived.  In the event that Tenantreceives any consideration in connection with a merger, consolidation,reorganization of Tenant, or in connection with a sale of all or substantiallyall of Tenant’s assets or stock, then the provisions of this Section 12(c)(1)shall not be applicable to such consideration.

 

(2)                                  Noconsent to any assignment or sublease shall constitute a further waiver of theprovisions of this Section, and all subsequent assignments or subleases may bemade only upon the terms and conditions of this Section 12 and, where required,with the prior written consent of Landlord in accordance herewith.  In no event shall any consent by Landlord beconstrued to permit reassignment or resubletting by a permitted assignee or sublessee.

 

(3)                                  Nosublease or assignment by Tenant shall relieve Tenant of any liabilityhereunder.

 

 

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(4)                                  Anyassignment or sublease made without Landlord’s prior written consent (if suchconsent is required) shall be void, and shall, at the option of the Landlord,constitute an Event of Default under this Lease.

 

(5)                                  Noassignment or sublease shall be granted for any term which extends beyond theLease Term.

 

(6)                                  Tenantshall reimburse Landlord upon demand for all reasonable costs, expenses andfees incurred by or on behalf of Landlord in connection with any proposed assignmentor sublease by Tenant (including, but not limited to, Landlord’s reasonableattorneys fees and out-of-pocket expenses, if any), up to a maximum of OneThousand Five Hundred Dollars ($1,500.00) per proposed Transfer.

 

(D)                               Thefollowing events also constitute an “Assignment” which is subject to the termsof this Section and for which Landlord’s prior written consent isrequired:  (i) if Tenant is a corporationand any part or all of Tenant’s shares of stock, or the shares of stock orother ownership interests of any corporation or other entity owning shares ofTenant’s stock, shall in any one or more instances be issued, or transferred bysale, assignment, conveyance, operation of law (including, but not limited to,transfer as a result of or in conjunction with any merger, reorganization orrecapitalization) or other disposition, or otherwise changed, so as to resultin less than fifty-one (51%) of such shares, or other ownership interests, orless than fifty-one percent (51%) of any class of such shares or otherownership interests, being owned by the present (i.e., as of the datehereof) owners thereof; (ii) if Tenant is a partnership and any generalpartnership interest(s), or the stock or other ownership interests of anycorporation or other entity owning any such general partnership interests(s),in the partnership shall in any one or more instances be issued, or transferredby sale, assignment, conveyance, operation of law (including, but not limitedto, transfer as a result of or in conjunction with any merger, reorganizationor recapitalization) or other disposition, or otherwise changed, so as toresult in less than fifty-one percent (51%) of such general partnershipinterests(s), stock (or any class of such stock) or other ownership interestsbeing owned by the present (i.e., as of the date hereof) owners thereof;(iii) if Tenant is a limited liability company or any other type of entity, andany interest(s) of any member or other equity owner, or the ownership interestsof any entity owning any membership interest(s) or other equity interest in theTenant, shall in any one or more instances be issued, or transferred by sale,assignment, conveyance, operation of law (including, but not

 

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limited to, transfer as aresult of or in conjunction with any merger, reorganization orrecapitalization) or other disposition, or otherwise changed, so as to resultin less than fifty-one percent (51%) of such membership interests or other suchequity and/or ownership interests being owned by the present (i.e., asof the date hereof) owners thereof; or (iv) if effective control of thecorporation, partnership, limited liability company or other form of Tenantshall be taken from those exercising such control as of the date hereof.  Notwithstanding anything herein contained tothe contrary, this Section 12(D) shall not be deemed to apply to Tenant if Tenantis a corporation the shares of which are traded on a nationally-recognizedexchange and which is required to make public disclosures regarding ownershipand financial condition.

 

(E)                                 Notwithstandingany other provision of this Lease to the contrary, GTSI (as defined in Section12(B)(2)), while it is the Tenant and no Event of Default is in existencehereunder, shall have the right to (1) assign this Lease or to sublet all orany portion of the Premises, in either case without the consent of Landlord, toany successor to GTSI by merger, consolidation or reorganization, and to anyaffiliate that is wholly-owned by or under common ownership with GTSI (as partof a single group of interlocking companies), or to any wholly-owned andcontrolled division or sub-entity of GTSI, or (2) sublet up to twenty percent(20%) of the Premises in the aggregate (collectively, the “PermittedSublettings”) without the consent of Landlord, subject to the satisfaction ofthe following conditions: (a) the proposed assignee or sublessee (the “Transferee”)and its business shall be of a type and quality suitable for a building ofcomparable quality and type, (b) the proposed Transferee shall not be agovernmental or quasi-governmental authority, a foreign government or internationalagency or other organization entitled to sovereign or other immunity, (c) theproposed operations of the proposed assignee or subtenant will not materiallyand adversely interfere with the ability of other tenants of the Building toutilize their premises for the Comparable Uses, (d) GTSI shall notify Landlordnot less than ten (10) days in advance of the effective date of such assignmentor sublease of GTSI’s intent to enter into such assignment or sublease (failingwhich, Landlord shall be entitled, and GTSI shall pay to Landlord as liquidateddamages, the sum of Five Hundred Dollars ($500.00) for each failure to sonotify Landlord), (e) occupancy of the Premises by such Transferee will notviolate existing law, (f) there will be no use of the Premises in violation ofthe terms hereof, (g) with respect to an assignment, such Transferee shallexpressly assume all of the obligations of the Tenant hereunder on a formreasonably acceptable to Landlord, and (h) no such assignment or sublettingshall relieve GTSI of any agreement, covenant, duty, liability or obligation

 

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hereunder.  Landlord acknowledges and agrees thatLandlord’s right to recapture pursuant to this Section 12 shall not apply toany assignment or sublease to any successor to GTSI by merger, consolidation orreorganization, or to affiliate that is wholly-owned by or under commonownership with GTSI (as part of a single group of interlocking companies), orto any wholly-owned and controlled division or sub-entity of GTSI, which may bemade without Landlord’s consent under the terms hereof, nor to the PermittedSublettings.

 

(F)                                 Tenanthereby assigns to the Landlord absolutely the rent due from each assignee andsubtenant and Tenant hereby authorizes each such assignee and subtenant to paysaid rent directly to Landlord for credit, as and when collected by theLandlord (and net of the Landlord’s reasonable collection costs), against theRent and Additional Rent payable hereunder; provided that, for all periods inwhich no Event of Default shall be in existence hereunder, Landlord shallpermit Tenant to continue to collect the rent from such assignees andsubtenants.

 

13.           CARE OFPREMISES.

 

Except to the extent theobligation of Landlord pursuant to the express terms hereof, Tenant covenantsand agrees that during the Lease Term it will keep the Premises and every partthereof in good order, condition and repair (subject to reasonable wear andtear, and damage by fire or other casualty which is not Tenant’s obligation torepair), and that it will in all respects and at all times duly comply with allapplicable laws, and all covenants, conditions and restrictions applicable tothe Property.

 

14.           ALTERATIONBY TENANT.

 

(A)                              Tenantis hereby given the right, at its sole cost and expense, at any time during theLease Term, to make non-structural alterations or improvements to the interiorof the Improvements which Tenant deems necessary or desirable for its purposes;provided, however, that no alterations or improvements shall be made withoutthe prior written approval of Landlord, which written approval shall not beunreasonably withheld, conditioned or delayed so long as the proposedalterations do not affect the structure of the Property or the systems servingthe same, do not require any alterations to be made to portions of the Propertyoutside the Premises, and will not materially and adversely interfere with theability of other tenants of the Building to utilize their premises for theComparable Uses.  Landlord’s approval ofany plans, specifications or work drawings shall create no responsibility orliability on the part of the Landlord for their completeness, designsufficiency or compliance with any laws, rules and regulations of governmentalagencies or authorities.  Notwithstandingthe foregoing, Landlord’s consent shall not

 

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be required for purelycosmetic decorations nor for non-structural alterations costing less thanTwenty-Five Thousand Dollars ($25,000.00) in the aggregate, so long as (1)Tenant notifies Landlord of its intent to carry out such alterations at leastten (10) days in advance, (2) the proposed alterations do not affect thestructure of the Property or the systems serving the same, do not require anyalterations to be made to portions of the Property outside the Premises, do notrequire the issuance of a building permit, and will not adversely affect anyother tenant or occupant of the Property, and (3) Tenant provides Landlord withreasonable assurances against the attachment of any mechanics’ or materialmen’sliens to the Property.  Landlord agreesto respond to any request for consent to any alteration costing less than FiftyThousand Dollars ($50,000) within five (5) business days after delivery toLandlord of Tenant’s request for consent accompanied by detailed plans andspecifications for the proposed alteration.

 

(B)                                Allwork herein permitted shall be done and completed by the Tenant in a good andworkmanlike manner and in compliance with all requirements of law and ofgovernmental rules and regulations. Tenant agrees to and does hereby indemnify the Landlord against allmechanics’ or other liens arising out of any of such work, and also against anyand all costs, damages, injury, claims, liabilities or expenses which arise outof any such work.  The Landlord agrees tojoin with the Tenant in applying for all permits necessary to be secured fromgovernmental authorities and to promptly execute such consents as suchauthorities may reasonably require in connection with any of the foregoingwork.

 

(C)                                Uponwritten notice to Tenant within ninety (90) days after expiration of the LeaseTerm, Landlord may require that Tenant remove, at Tenant’s sole cost andexpense, any or all alterations, improvements or additions to the Improvements,and restore the Improvements to their prior condition.  Notwithstanding the foregoing, Landlord shallhave no right to require removal of the Tenant Work, or any subsequent alteration,addition, improvement or modification in or to the Premises for which Landlord’sconsent is required, unless Landlord expressly reserves (in writing) the rightto require such removal at the time Landlord’s consent to the plans andspecifications therefor is given.  UnlessLandlord requires their removal in accordance with the foregoing, all alterations,additions and improvements which may be made on the Improvements (other thanvideo/surveillance equipment installed by or on behalf of Tenant at Tenant’sexpense, exclusive of the Tenant’s Allowance) shall become the property ofLandlord and remain upon and be surrendered with the Improvements.  Tenant shall also repair any damage to theImprovements or Tenant Work caused by the installation or removal of Tenant’strade fixtures, furnishings and

 

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equipment, or any alterations or other improvementsmade to the Improvements or Tenant Work by or on behalf of Tenant.

 

15.           CONDEMNATION.

 

(A)                               Ifthe Premises shall be wholly taken by exercise of right of eminent domain, thenthis Lease shall terminate from the day the possession of the whole of thePremises shall be required under the exercise of such power of eminent domain.  Any award for the taking of all or part of thePremises under the power of eminent domain or any payment made under threat ofthe exercise of such power shall be the property of the Landlord.  Tenant reserves such separate rights as it mayhave against the condemning authority to claim damages for loss of its tradefixtures and the cost of removal and relocation expense, provided such Tenantrights do not, in any way, diminish the award to which Landlord would otherwisebe entitled or reduce the amounts payable to Landlord pursuant to thissubsection.

 

(B)                                 Ifsuch part of the Improvements shall be condemned so as to substantially and materiallyhamper the operation of Tenant’s business, then the Rent and Additional Rentpayable hereunder shall be reduced in the proportion that the remaining area ofthe Improvements bears to the original area of the Improvements.

 

16.           SUBORDINATION.

 

(A)                              Providedthat (i) Landlord enters into a mortgage which encumbers all or any portion ofthe Property, and (ii) Landlord’s mortgagee shall have executed and deliveredto Tenant a written subordination, attornment and non-disturbance agreementmeeting the criteria set forth in Section 16(B) (the “Approved Agreement”), (x)this Lease shall be subject and subordinate to the lien of such mortgage (andto any and all advances made thereunder) ; however, Landlord’s mortgagee shallhave the right, without Tenant’s consent, to require this Lease be superior toany such mortgage, and (y) Tenant agrees to execute such Approved Agreement.  Notwithstanding anything herein to thecontrary, if Principal Mutual Life Insurance Company (“PMLIC”) or any partythat is related to or affiliated with PMLIC is the mortgagee, the form of thesubordination and non-disturbance agreement that will be entered into shall bethe form that is attached hereto as Exhibit G.

 
|   | (B) | (1) | The subordination of this Lease to any mortgage  shall be conditioned upon Landlord obtaining from the holder of such mortgage  a commercially reasonable form of written non-disturbance agreement which  provides (A) in the event of a foreclosure or other action taken under the  mortgage by the holder thereof, this Lease and the rights of Tenant hereunder  shall not be |
|--------|-----|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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|   |   |   | disturbed but shall continue in full force and  effect so long as Tenant shall not be in default hereunder beyond the  applicable notice and cure period (if any), and (B) such holder will agree  that in the event it shall be in possession of the Premises, that so long as  Tenant shall observe and perform all of the obligations of Tenant to be  performed pursuant to this Lease (subject to applicable notice and cure  rights), such Mortgagee will perform all obligations of Landlord required to  be performed under this Lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   | (2)    | Tenant hereby acknowledges that it has been informed  that Principal Mutual Life Insurance Company currently is the beneficiary of  a deed of trust which encumbers the Land.  Tenant further acknowledges and agrees that  the form of subordination, non-disturbance and attornment agreement attached  hereto as Exhibit G (the “Approved SNDA”) constitutes a commercially  reasonable form of non-disturbance agreement.  Landlord hereby agrees that, if Principal  Mutual Life Insurance Company fails to execute and deliver the Approved SNDA  to Tenant within five (5) days after Landlord and Tenant execute and deliver  this Lease, Tenant may deliver to Landlord a five (5) day written notice of  termination (the “SNDA Termination Notice”) within ten (10) days after the  expiration of the first 5-day period.  Provided  the Tenant’s SNDA Termination Notice is timely delivered, and further  provided that such SNDA Termination Notice shall state, inter  alia,  that the failure by Principal Mutual Life Insurance Company to execute and  deliver the Approved SNDA within five (5) days after delivery of the SNDA  Termination Notice will result in a termination of this Lease, if Principal  Mutual Life Insurance Company fails to execute and deliver the Approved SNDA  to Tenant within five (5) days after delivery of the SNDA Termination Notice  this Lease shall cease and terminate without payment of penalty or compensation  as if the fifth (5th) day after the date on which Tenant’s SNDA Termination  Notice is delivered to Landlord was the Expiration Date, and Landlord shall  return to Tenant any Security Deposit and any prepaid Rent, |
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   | (3)    | Tenant hereby acknowledges that it has been informed  that Landlord intends to obtain a construction loan to finance the  construction of the Improvements and/or the Tenant Work from a third-party  construction lender (the “Construction Lender”).  Landlord hereby agrees that, if the Construction  Lender fails to execute and deliver to Tenant a commercially reasonable form  of non-disturbance agreement (a “Construction SNDA”, which form shall  provide, inter  alia, that if the Construction Lender forecloses  upon the Property or accepts a deed to the Property in lieu of foreclosure,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

 

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|   |   |   | the Construction Lender will, subject to the  provisions of Section 38 below, diligently pursue completion of the  construction of the Improvements and the Tenant Work beginning upon the  Construction Lender’s obtaining possession of the Property, provided that (i)  Tenant attorns to the Construction Lender as substitute landlord, (ii) Tenant  agrees not to terminate this Lease, provided that, subject to the provisions  of Section 38 below, the Construction Lender is diligently pursuing  completion of the work to be performed by Landlord under Exhibit B, and (iii)  Tenant is not in default beyond the expiration of any applicable cure period,  on or before August 1, 1998, Tenant may deliver to Landlord a five (5) day  written notice of termination (the “Construction SNDA Termination Notice”) on  or before August 11, 1998.  Provided  the Tenant’s Construction SNDA Termination Notice is timely delivered, and  further provided that such Construction SNDA Termination Notice shall state, interalia, that the failure by the Construction Lender to execute and  deliver the Construction SNDA within five (5) days after delivery of the  Construction SNDA Termination Notice will result in a termination of this  Lease, if the Construction Lender fails to execute and deliver the  Construction SNDA to Tenant within five (5) days after delivery of the  Construction SNDA Termination Notice this Lease shall cease and terminate  without payment of penalty or compensation as if the fifth (5th) day after  the date on which Tenant’s Construction SNDA Termination Notice is delivered  to Landlord was the Expiration Date, and Landlord shall return to Tenant any  Security Deposit and any prepaid Rent. |
|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

(C)                                Inthe event any proceedings are brought for foreclosure, or in the event of theexercise of the power of sale under any mortgage made by the Landlord coveringthe Premises, Tenant shall attorn to the purchaser at any such foreclosure, orto the grantee of a deed in lieu of foreclosure, and recognize such purchaseror grantee as the Landlord under this Lease.

 

(D)                               Tenanthereby agrees that no mortgagee or its successor shall be (i) bound by anypayment of Rent or Additional Rent for more than one (1) month in advance, (ii)bound by any amendment or modification of this Lease made without the consentof Landlord’s mortgagee or its successor (which consent, if PMLIC is themortgagee, shall not be unreasonably withheld, conditioned or delayed), (iii)liable for damages for any breach, act or omission of any prior landlord, (iv)bound to effect or pay for any construction for Tenant’s occupancy (it beingunderstood and agreed that such mortgagee or its successor shall be obligatedto perform the initial construction of the Improvements in accordance with theprovisions of Exhibit B to the extent

 

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not previously completed), or (v) subject to any claimof offset or defenses that Tenant may have against any prior landlord.  Notwithstanding anything herein contained tothe contrary, (x) the foregoing clause (iv) shall not apply to Principal MutualLife Insurance Company or its wholly-owned subsidiaries or to any ConstructionLender, and (y) with respect to any mortgage, secured in whole or part by theProperty, under which PMLIC or any of its wholly-owned subsidiaries is themortgagee or beneficiary, the disposition of any casualty proceeds andcondemnation awards shall, in the first instance, be controlled by the terms ofthis Lease and not such lender’s loan documents, and such lender will beobligated to return the Security Deposit, whether or not received by suchlender.  Upon Tenant’s written request,Landlord agrees to exercise reasonable efforts (the same not to includerefinancing, payment of money or posting of security by Landlord) to obtain theagreement of any future mortgagee (other than Principal Mutual Life InsuranceCompany or its wholly-owned subsidiaries or any Construction Lender) to includein its non-disturbance agreement such mortgagee’s agreement that (a) clause(iv) of this Section 16(D) will be inapplicable, (b)the disposition of anycasualty proceeds and condemnation awards shall, in the first instance, be controlledby the terms of this Lease and not such lender’s loan documents, and (c) thelender will be obligated to return the Security Deposit, whether or notreceived by such lender, but the refusal of any such future mortgagee to agreeto such provisions shall not entitle Tenant to refuse to execute a commerciallyreasonable form of written non-disturbance agreement which complies withSection 16(B).

 

(E)                                 Theword “mortgage” as used herein includes mortgages, deeds of trust and anysale-leaseback transactions, or other similar instruments, and modifications,extensions, renewals, and replacements thereof, and any and all advancesthereunder.

 

17.                                 ACCESS TO PREMISES.

 

Landlord and its authorized agents shall have accessto the Premises, upon forty-eight (48) hours’ notice (but without notice in theevent of an emergency) at any and all reasonable times to inspect the same, tomake any repair or alteration to the Premises, to exhibit and show the Premisesto prospective tenants during the last three hundred fifteen (315) days of theLease Term, and for other purposes pertaining to the rights of the Landlord.  Tenant may require an authorizedrepresentative of Tenant accompany any entry into the Premises, provided Tenantmakes such representative available upon reasonable prior notice.  Tenant shall also have the right to restrictaccess to secure areas, so long as (i) Tenant accepts all responsibility andliability arising from Landlord’s inability to access such areas, and (ii) asenior employee of Landlord or Landlord’s managing

 

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agent is provided access to such secure area upon 48-hours’notice for purposes of verifying the condition and use thereof.  In exercising Landlord’s rights under thisSection 17, Landlord agrees to exercise commercially reasonable efforts toavoid any unreasonable interference with the operation of Tenant’s business inthe Premises.

 

18.                                 RULES AND REGULATIONS.

 

Tenant agrees to comply with the current rules andregulations set forth in the attached Exhibit D and made a part hereof byreference.  Tenant further agrees tocomply with future rules and regulations promulgated by Landlord concerning thePremises, to the extent (i) such future rules and regulations do not increaseTenant’s obligations or decrease Tenant’s rights hereunder, (ii) such futurerules and regulations are not in conflict with the express terms of this Lease,and (iii) such future rules and regulations are imposed on all comparabletenants in Avion® Business Park.

 

19.                                 COVENANTS OF RIGHT TO LEASE.

 

Landlord covenants that it owns the fee interest inthe Land subject to existing covenants, conditions and restrictions of record,that it has good and sufficient right to enter into this Lease, subject toapproval from Landlord’s mortgagee, and that Landlord alone has the right tolease the Premises for the Lease Term. Tenant acknowledges that Landlord has provided to Tenant a current titlereport for the Land (the “Title Report”) prior to the date hereof, and Landlordrepresents that, to the best of Landlord’s actual knowledge as of the datehereof, Landlord has not entered into any proffers with respect to the Landthat are binding upon the Land or the occupants thereof which either are notdisclosed on the Title Report or have not been disclosed in writing to Tenantprior to the date hereof.  Landlordfurther covenants that upon Tenant performing the terms and obligations ofTenant under this Lease, Tenant shall be entitled to have quiet enjoyment ofthe Premises and the Property throughout the Lease Term and any renewal orextension thereof, without hindrance or molestation by Landlord or anyonelawfully claiming by, through or under Landlord, subject to the terms of thisLease; provided that, nothing herein contained shall be deemed to constitute aguaranty that neighboring tenants will not utilize portions of Tenant’sparking, but, subject to the provisions of Section 36 below, Landlord agrees toconsult with Tenant on measures to assure Tenant of the parking itrequires.  Subject to the terms hereof,Tenant shall be entitled to use, and will have access to, the Premises threehundred sixty-five (365) days per year, twenty-four (24) hours per day.

 

20.                                 MECHANICS LIENS.

 

Neither Tenant nor anyone claiming by, through, orunder Tenant or this Lease, shall have the right to file or place any mechanics

 

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lien or other lien of any kind or character whatsoeverupon the Premises or upon any improvement thereon, or upon the leaseholdinterest of Tenant therein.  Notice is herebygiven that no contractor, subcontractor, or anyone else who may furnish anymaterial, service or labor for any Property improvements, alteration, repairsor any part thereof, shall at any time be or become entitled to any lienthereon.  For the further security ofLandlord, Tenant covenants and agrees to give actual notice thereof in advanceto any and all contractors and subcontractors who may furnish or agree tofurnish any such material, service or labor. Tenant shall cause any such lien imposed to be released of record bypayment or posting of the proper bond reasonably acceptable to Landlord withinten (10) days after the earlier of imposition of the lien or written request byLandlord.  If Tenant fails to remove anylien within the ten (10) day period, then Landlord, upon ten (10) days priornotice to Tenant, may do so at Tenant’s expense and Tenant’s reimbursement toLandlord for such amount, including, but not limited to, reasonable attorneysfees and costs, shall be deemed Additional Rent.

 

21.           EXPIRATION OF LEASE AND SURRENDER OFPOSSESSION.

 

(A)                              HoldingOver.  Tenant will, at the expiration ortermination of this Lease by lapse of time or otherwise, yield up immediatepossession of the Premises to Landlord in the condition required under this Lease.  If Tenant retains possession of the Premisesor any part thereof after such expiration or termination, then Landlord may, atits option, serve written notice upon Tenant that such holding over constitutes(i) creation of a month-to-month tenancy, upon the terms and conditions setforth in this Lease, or (ii) creation of a tenancy at sufferance, upon theterms and conditions set forth in this Lease; provided, however, that themonthly Rent (or daily Rent under (ii)) shall, in addition to all other sumswhich are to be paid by Tenant hereunder, be equal to one hundred ten percent(110%) of the sum of Rent plus Additional Rent owed monthly to Landlord underthis Lease immediately prior to such expiration or termination (prorated in thecase of (ii) on the basis of a 365 day year for each day Tenant remains inpossession); provided further that, if Landlord shall institute any action,case or suit to recover possession of the Premises (whether styled as anunlawful detainer action or otherwise), the monthly Rent (or daily Rent under(ii)) payable pursuant to the preceding sentence shall increase, effective asof the date on which such action, case or suit is filed with the court, to onehundred fifty percent (150%) of the sum of Rent plus Additional Rent owedmonthly to Landlord under this Lease immediately prior to such expiration ortermination (prorated in the case of (ii) on the basis of a 365 day year foreach day Tenant remains in possession). If no such notice is served, then a tenancy at sufferance shall bedeemed to be created at the Rent in the preceding sentence.  Tenant shall also pay to Landlord as

 

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Additional Rent all damages sustained by Landlordresulting from retention of possession by Tenant, including the loss of anyproposed subsequent tenant for any portion of the Premises,  The provisions of this Section shall notconstitute a waiver by Landlord of any right of re-entry as herein set forth;nor shall receipt of any Rent or any other act in apparent affirmance of thetenancy operate as a waiver of Landlord’s right to terminate this Lease for abreach of any of the terms, covenants, or obligations herein on Tenant’s partto be performed.

 

(B)                                Subjectto Section 14(C) and the following Section 21(C), upon the expiration of thisLease, by lapse of time or otherwise, any and all buildings, improvements oradditions erected on the Premises by Tenant shall, at the option of Landlord,be and become the property of the Landlord without any payment therefor andTenant shall, at the option of Landlord, surrender said Premises, together withall buildings, improvements or additions thereon, whether erected by Tenant orLandlord, ordinary wear and tear excepted.

 

(C)                                Tenantmay install in the Premises adequate furnishings, furniture, equipment(including, but not limited to, security cameras on the exterior of theBuilding), fixtures, machinery and other personal property for the operation ofits business (collectively, “Tenant’s Property”), and upon the expiration ortermination of this Lease by lapse of time or otherwise, Tenant shall removeTenant’s Property at Tenant’s sole cost. Upon removal of Tenant’s Property, Tenant shall repair any damage to thePremises caused by the installation or removal thereof at Tenant’s sole cost.

 

22.*                                *DEFAULT-REMEDIES.

 

(A)                              Theoccurrence of one or more of the following events shall constitute a materialdefault and breach of this Lease by Tenant (“Event of Default”):

 

(1)                                  Failureby Tenant to make payment of any Rent, Additional Rent, or any other paymentrequired to be made by Tenant hereunder, as and when due, and such a failureshall continue for a period of five (5) business days after written notice ofsuch failure from Landlord; provided that, if two (2) such notices have beendelivered within the twelve (12) months immediately preceding any failure tomake any payment when and as due, such failure shall, without notice or demand,be deemed an Event of Default;

 

(2)                                  Themaking by Tenant (or any guarantor) of any assignment or arrangement for thebenefit of creditors;

 

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(3)                                  Thelevying of an attachment, execution of other judicial seizure upon the Tenant’sproperty in or interest under this Lease, which is not satisfied or released orthe enforcement thereof superseded by an appropriate proceeding within sixty(60) days thereafter;

 

(4)                                  Theappointment of a receiver or trustee to take possession of the property ofTenant (or any guarantor) or of Tenant’s (or any guarantor’s) business orassets and the order or decree appointing such receiver or trustee shall haveremained in force undischarged for sixty (60) days after the entry of suchorder or decree;

 

(5)                                  Thevacating or abandonment of the Premises, unless (i) Tenant notifies Landlord ofits intent to vacate or abandon not less than ten (10) days in advance thereof,(ii) Tenant obtains and maintains all necessary endorsements to ensure thatTenant’s insurance shall remain in effect with regard to the Premises, notwithstandingsuch vacating or abandonment of the Premises, and (iii) Tenant takes allnecessary steps to ensure there will be no unauthorized access to the Premisesduring the period of any such vacancy or abandonment;

 

(6)                                  Thefailure by Tenant to maintain any insurance required herein, which failurecontinues for more than two (2) business days after written notice from Landlordadvising Tenant of such failure;

 

(7)                                  Anassignment, subletting, pledge, mortgage, or other transfer of this Lease orthe Premises by Tenant, or any transfer of any interest in the Tenant, in violationof Section 12 of this Lease; and/or

 

(8)                                  Thefailure by Tenant to perform or observe any other term, covenant, agreement orcondition to be performed or kept by the Tenant under the terms, conditions, orprovisions of this Lease, which failure is not cured within ten (10) days afterwritten notice thereof from Landlord (or such longer time as may be reasonably requiredto cure such failure through the exercise of due diligence, unless (i) suchfailure is a willful repudiation of the Lease authorized by Tenant’s Board ofDirectors, (ii) such failure cannot, based on objective evidence, be cured,(iii) such failure relates to the existence of a generally-recognized, imminentdanger to the health or safety of occupants of the Premises due to a hazardouscondition on the Premises, or (iv) such failure subjects Landlord to criminalprosecution).

 

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(B)                                Ifan Event of Default shall have occurred, Landlord shall have (in addition toall other rights and remedies provided by law or otherwise provided by thisLease) the right, at the option of the Landlord, then or at any time thereafterwhile such Event of Default shall continue, to elect any one or more of thefollowing:

 

(1)                                  Tocontinue this Lease in full force and effect (so long as****Landlord does not terminate this Lease),and Landlord shall have the right to collect Rent, Additional Rent and othercharges when due for the remainder of the Lease Term; and/or

 

(2)                                  Tocure such default or defaults at its own expense and without prejudice to anyother remedies which it might otherwise have; and any reasonable payment madeor reasonable expenses incurred by Landlord in curing such default, with interestthereon at the Default Rate (as hereafter defined), to be and become AdditionalRent to be paid by Tenant with the next installment of Rent falling duethereafter (but in no event earlier than fifteen (15) days, nor later thanthirty (30) days, after the date on which Landlord invoices Tenant for thesame); and/or

 

(3)                                  Tore-enter the Premises in accordance with applicable law, and dispossess Tenantand anyone claiming through or under Tenant by summary proceedings orotherwise, and remove their effects, and take complete possession of thePremises and either (a) declare this Lease terminated and the Lease Term ended,or (b) elect to continue this Lease in full force and effect, but with theright at any time thereafter that such Event of Default remains uncured todeclare this Lease terminated and the Lease Term ended.  In such re-entry, Landlord may, as permittedby applicable law, remove all persons from the Premises, and Tenant herebycovenants in such event, for itself and all others occupying the Premises underTenant, to peacefully yield up and surrender the Premises to Landlord.  If Landlord elects to terminate this Leaseand/or elects to terminate Tenant’s right of possession, every obligation ofLandlord contained in this Lease shall, upon entry of a final, non-appealablejudgment terminating this Lease or Landlord’s reentry onto the Premises inaccordance with applicable law, cease without prejudice to Tenant’s liabilityfor all Rent, Additional Rent, and other sums owed by Tenant herein.

 

Should Landlord declare this Lease terminated and theLease Term ended (pursuant to Section 22(B)(3)(a) above), the Landlord shall beentitled to recover from Tenant the Rent, Additional Rent, and all other sumsdue and owing by Tenant

 

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to the date of termination, plus the reasonable costsof curing all Tenant’s defaults existing at or prior to the date oftermination, plus the reasonable costs of recovering possession of thePremises, plus the reasonable costs of reletting the Premises including, butnot limited to repairs to the Premises, costs to prepare and refinish thePremises for reletting, leasing commissions, rental concessions, and legal feesand costs, plus other actual damages suffered or incurred by Landlord due toall Events of Default and any late fees or other charges incurred by Landlordunder any mortgage, plus the deficiency, if any, between Tenant’s Rent andAdditional Rent for the balance of the Lease Term and the rent obtained byLandlord under another lease for the Premises, for the balance of the LeaseTerm remaining under this Lease on the date of termination.

 

Should Landlord elect to continue this Lease (pursuantto Section 22(B)(3)(b) above), Landlord shall be entitled to recover from Tenantthe Rent, Additional Rent and all other sums due and owing by Tenant up to thedate of dispossession, plus the reasonable costs of curing all Events ofDefault existing at or prior to the date of dispossession, plus the Rent,Additional Rent and all other sums owed by Tenant on a continuing basis as saidamounts accrue to the end of the Lease Term, less the rental which Landlordreceives during such period, if any, from others to whom the Premises may berelet, plus the reasonable cost of recovering possession of the Premises, plusthe reasonable costs of reletting including, but not limited to repairs to thePremises, costs to prepare and refinish the Premises for reletting, leasingcommissions, rental concessions, and legal fees and costs.  Any suit brought by Landlord to enforcecollection of such deficiency for any one month shall not prejudice Landlord’sright to enforce the collection of any deficiency for any subsequent month insubsequent separate actions, or Landlord may defer initiating any such suituntil after the expiration of the Lease Term (in which event such deferralshall not be construed as a waiver of Landlord’s rights as set forth herein andLandlord’s cause of action shall be deemed not to have accrued until theexpiration of the Lease Term), and it being further understood that if Landlordelects to bring suits from time to time prior to reletting the Premises,Landlord shall be entitled to its full damages through the date of the award ofdamages without regard to any rent, additional rent or other sums that are ormay be projected to be received by Landlord upon a subsequent reletting of thePremises.  In the event that Landlordrelets the Premises together with other premises or for a term extending beyondthe scheduled expiration of the Lease Term, it is understood that Tenant willnot be entitled to apply against Landlord’s damages any rent, additional rentor other sums generated or projected to be generated by either such otherpremises or the period extending beyond the

 

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scheduled expiration of the Lease Term.  Landlord shall use commercially reasonableefforts to relet and rent the Premises with or without advertising for theremainder of the Lease Term, or for such longer or shorter period as Landlordshall deem advisable.

 

In lieu of the amounts recoverable by Landlordpursuant to the two immediately preceding paragraphs, but in addition to otherremedies and amounts otherwise recoverable by Landlord in this Lease, Landlord may,at its sole election, (i) terminate this Lease, (ii) collect all Rent,Additional Rent, and other sums due and owing by Tenant up to the date oftermination, and (iii) provided Landlord terminates Tenant’s right topossession of the Premises, accelerate and collect the present value of thepositive difference (if any) between (x) the sum of all Rent, Additional Rentand all other sums required to be paid by Tenant through the remainder of theLease Term, and (y) the fair market rental value of the Premises for theremainder of the Lease Term, net of a reasonable vacancy and concessionallowance determined by Landlord in its reasonable discretion (the presentvalue of such difference being herein referred to as the “Accelerated Rent”),which Accelerated Rent shall be discounted to present value using an interestrate equal to six and one-half percent (6.5%) per annum (“Present ValueAccelerated Rent”).  In the eventLandlord is successful in reletting the Premises for any part of the remainderof the Lease Term prior to payment of the Present Value Accelerated Rent, thefair market rental value shall be deemed to equal the rents reserved under suchreletting, and Landlord shall not be obligated to pay over the proceeds of suchreletting in whole or part.  In no eventshall Landlord be liable for, nor shall Tenant’s obligations hereunder bediminished by reason of, any failure by Landlord to relet all or any portion ofthe Premises or to collect any rent due upon such reletting.

 

(C)                                Tenant,on its own behalf and on behalf of all persons claiming through or underTenant, including all creditors, does hereby specifically waive and surrenderany and all rights and privileges, so far as is permitted by law, which Tenantand all such persons might otherwise have under any present or future law (1)to the service of any notice to quit or of Landlord’s intention to re-enter orto institute legal proceedings, which notice may otherwise be required to begiven, (2) to redeem the Premises, (3) to re-enter or repossess the Premises,(4) to restore the operation of this Lease, with respect to any dispossessionof Tenant by judgment or warrant of any court or judge, or any re-entry byLandlord, or any expiration or termination of this Lease, whether suchdispossession, re-entry, expiration or termination shall be by operation of lawor pursuant to the provisions of this Lease, or (5) which exempts property fromliability for debt or for distress for rent. Landlord and

 

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Tenant each hereby consents to the exercise ofpersonal jurisdiction over it by any federal or local court in the jurisdictionin which the Premises is located.

 

(D)                               IfTenant fails to take possession of the Premises upon the commencement of theLease Term, Landlord and Tenant acknowledge that this Lease Agreement may beconstrued as a contract to or for lease, as opposed to a contract of lease.  Accordingly, Landlord and Tenant agree that,if Tenant defaults under this Lease (beyond the applicable notice and cureperiod, if any) prior to the Lease Commencement Date, or if Tenant fails toaccept possession of the Premises when tendered by Landlord (it being acknowledgedand agreed that any such failure by Tenant to accept possession of the Premiseswhen tendered by Landlord shall be an Event of Default hereunder, but thatTenant shall not be required to actually occupy the Premises in order forTenant to accept possession thereof), Landlord shall be entitled to terminateTenant’s right to possession of the Premises pursuant to the Lease Agreementand to recover from Tenant, subject to the conditions and limitations set forthin Section 22(B), contract damages resulting from Tenant’s default and/orfailure to accept possession of the Premises in an amount equal to all of the rentsand other sums required to be paid under the Lease (as if Tenant had takenpossession of the Premises when tendered by Landlord) from the date on whichLandlord tenders possession of the Premises to Tenant until the date on which thePremises are relet (if ever) or any earlier date on which the Lease would haveexpired by its terms, plus (but without duplication) all of the damagesreserved to Landlord in Section 22(B) of this Lease (including, but not limitedto, any rent deficiency upon any reletting, costs of reletting, and court costsand attorneys’ fees incurred to relet the Premises and/or to enforce Landlord’srights under the terms of this Lease).

 

(E)                                 LandlordDefault.

 

(1)                                  Subjectto the terms hereof, if (i) Landlord shall default in the performance of anycovenant or provision of this Lease pertaining to the provision of services byLandlord or performance of repairs or maintenance on Landlord’s part to beperformed (which default shall not be occasioned by (a) the acts or omissionsof Tenant or Tenant’s agents, assignees, contractors, employees, invitees,licensees, sublessees or others for whose actions Tenant is responsible or overwhose actions Tenant can reasonably be expected to exercise control, or (b)circumstances, events or facts beyond Landlord’s reasonable control), (ii)Landlord shall fail to remedy such default within ten (10) days after Tenantshall have given Landlord written notice of such

 

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default specifying the same in detail and specifyingthat the failure to cure the same within ten (10) days shall be deemed a LandlordDefault hereunder, and (iii) such default shall substantially impair Tenant’s useand enjoyment of the Premises, then upon the expiration of such 10-day cureperiod the Tenant shall (as Tenant’s sole and exclusive remedies) be entitledto exercise the remedies set forth in this Section 22(E).  Notwithstanding the foregoing, in the event thatany such default is not reasonably susceptible of cure within such ten (10) daycure period, such cure period shall automatically be deemed to be extended forsuch additional period as shall be reasonably required to cure such default,provided that Landlord commences such cure within such 10-day period and diligentlypursues such cure thereafter.  Any suchdefault on the part of Landlord which is not cured within such 10-day cureperiod (as the same may be extended pursuant to the preceding sentence) shallbe deemed a “Landlord Default”.

 

(2)                                  Subjectto the terms hereof, in the event of a Landlord Default, Tenant shall, providedthat no Event of Default by Tenant is in existence hereunder, have the right(but not the obligation) to remedy such Landlord Default and charge Landlordfor the reasonable cost of such remedy, which charges shall be payable byLandlord within thirty (30) days of Tenant’s demand therefor; provided that,(i) Tenant’s actions to cure any Landlord Default shall conform and comply inall respects with the terms of this Lease (including, but not limited to, theapplicable provisions of Section 14), (ii) the charges payable by Landlordpursuant to this Section 22(E) shall constitute Operating Expenses to theextent the same would constitute Operating Expenses under Section 5 hereof ifincurred directly by Landlord (it being agreed, however, that any additionalincremental increase in such costs which is reasonably attributable solely tothe Landlord Default (i.e., if Landlord had performed directly it wouldhave been able to render performance at a lower cost) shall be excluded fromOperating Expenses), and (iii) Tenant shall have no right to remedy anyLandlord Default if (a) such remedy will or may materially and adverselyinterfere with the ability of other tenants of the Building to utilize theirpremises for the Comparable Uses or invalidate or impair any warrantyapplicable to any portion of the Building, the Building structure or any systemserving any of the same, or (b) such Landlord Default arises from or out of, orin connection with, any fire or other casualty damage to, or condemnation of,the Building.

 

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(3)                                  Inthe event Tenant engages in self-help as provided in subparagraph 22 (E) (2)above and Landlord disagrees with the propriety of Tenant’s actions and/or the levelof expenses incurred by Tenant, and refuses to reimburse Tenant for its costs,the parties agree to submit such dispute to arbitration; provided that, thissubparagraph 22(E)(3) shall not be deemed to require that Tenant refrain fromcuring a Landlord Default in compliance with this Section 22(E) until suchdispute is submitted to arbitration, nor shall this subparagraph 22(E)(3) bedeemed to preclude Landlord from submitting to arbitration, after the exerciseof such remedy by Tenant, any dispute regarding the existence of a LandlordDefault or arising from the exercise of (or the costs of exercising) suchremedy by Tenant.

 

(4)                                  Notwithstandinganything herein contained to the contrary, in the event the Building, or any partthereof, or the land on which the Building is constructed, or the Landlord’sestate in the Building, is at any time subject to a mortgage or deed of trust (eacha “Mortgage”), and/or (ii) this Lease, or the Rent payable under this Lease, isassigned to a mortgagee or the trustee(s) under a deed of trust (each a “Mortgagee”),then Tenant shall have no right to exercise any remedy under this Section 22(E)unless and until Tenant shall first deliver written notice, in the mannerprovided elsewhere in this Lease for the delivery of notices, to suchMortgagee, specifying the Landlord Default in reasonable detail, and affordingsuch Mortgagee the same notice and cure period set forth above for the cure ofa Landlord Default (it being understood and agreed that no such Mortgagee shallbe obligated to cure any Landlord Default). Tenant further agrees to deliver to each such mortgagee or trustee acopy of any notice delivered to Landlord pursuant to the provisions of thisSection 22(E).

 

23.                                 RE-ENTRY BY LANDLORD.

 

No re-entry by Landlord or any action brought byLandlord to remove Tenant from the Premises shall operate to terminate thisLease unless Landlord shall have given written notice of termination to Tenant,in which event Tenant’s liability shall be as above provided.  Subject to the express limitations andconditions set forth herein, no right or remedy herein granted to Landlord orTenant is intended to be exclusive of any other right or remedy, and each andevery right and remedy herein provided shall be cumulative and in addition toany other right or remedy hereunder or now or hereafter existing in law orequity or by statute.  In the event oftermination of this Lease, Tenant waives

 

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any and all rights to redeem the Premises either givenby any statute now or herein enacted.

 

24.                                 ADDITIONAL RIGHTS TO LANDLORD.

 

(A)                              Inaddition to any and all other remedies, Landlord or Tenant may restrain anythreatened breach of any covenant, condition or agreement herein contained, butexcept as otherwise expressly set forth herein the mention herein of anyparticular remedy or right shall not preclude the Landlord or Tenant from anyother remedy or right it may have either at law or equity, or by virtue of someother provision of this Lease; nor shall the consent to one act, which wouldotherwise be a violation or waiver of or redress for one violation either ofcovenant, promise, agreement, undertaking or condition, prevent a subsequentact which would originally have constituted a violation from having all theforce and effect of any original violation.

 

(B)                                Receiptby Landlord of Rent or other payments from the Tenant shall not be deemed tooperate as a waiver of any rights of the Landlord to enforce payment of any Rent,Additional Rent, or other payments previously due or which may thereafterbecome due, or of any rights of the Landlord to terminate this Lease or toexercise any remedy or right which otherwise might be available to theLandlord, the right of Landlord to declare a forfeiture for each and every breachof this Lease is a continuing one for the life of this Lease.

 

(C)                                IntentionallyDeleted.

 

(D)                               IntentionallyDeleted.

 

25.                                 SUCCESSORS, ASSIGNS AND LIABILITY.

 

The terms, covenants, conditions and agreements hereincontained and as the same may from time to time hereafter be supplemented,modified or amended, shall apply to, bind, and inure to the benefit of theparties hereto and their legal representatives, successors and assigns,respectively, subject to Section 12 hereof. In the event either party now or hereafter shall consist of more thanone person, firm or corporation, then and in such event all such person, firmsand/or corporations shall be jointly and severally liable as parties hereunder.

 

26.                                 NOTICES.

 

All notices and demands required to be given to eitherparty hereunder shall be in writing and shall be deemed to have been given uponthe earlier to occur of delivery or refusal of delivery (or inability todeliver at the last address provided by the recipient to the sender), providedthat such notice or demand is sent by certified United States mail, postageprepaid, return

 

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receipt requested, or by personal delivery, or by anationally recognized overnight delivery service which provides evidence ofdelivery, delivery prepaid, addressed to the party to whom directed at theaddress set forth below or at such other address as may be from time to timedesignated in writing by the party changing such address.

 
| Landlord                                                   | Tenant                         |
|------------------------------------------------------------|--------------------------------|
|                                                       |                           |
| Petula Associates, Ltd.                                    | If Prior to the Commencement   |
| 711 High Street                                            | Date:                          |
| Des Moines, Iowa 50392-1370                                | Government Technology          |
| Attn: CRE Equities/Mid-Atlantic Team                       | 4100 Lafayette Center Drive    |
|                                                       | Chantilly, VA 20151-1200       |
|                                                       |                           |
| With a copy  to:                                           | With a copy to:                |
|                                                       |                           |
| Trammell Crow Real Estate                                  | Government Technology          |
| Services, Inc.                                             | Services, Inc.                 |
| 1115 30th Street, N.W.                                     | 4100 Lafayette Center Drive    |
| Washington, D.C. 20007                                     | Chantilly, Virginia 20151-1200 |
| Attn:     Property  Manager/Avion | Attn: General Counsel          |
|                                                       |                           |
|                                                       | If after the Commencement      |
|                                                       | Date:                          |
|                                                       |                           |
|                                                       | Tenant at the Premises         |
|                                                       | Attn: Director of Facilities   |
|                                                       |                           |
|                                                       | With a copy to:                |
|                                                       |                           |
|                                                       | Tenant at the Premises         |
|                                                       | Attn: General Counsel          |

 

27.           MORTGAGEE’S APPROVAL.

 

Tenant hereby agrees that, if Landlord’s mortgageeshall require modifications of the terms and provisions of this Lease, Tenantshall not unreasonably withhold, condition or delay its execution and deliveryof the agreements required to effect such Lease modification (it beingunderstood that any such reasonable modification(s) shall be executed anddelivered within thirty (30) days after Landlord’s request therefor).  In no event, however, shall Tenant berequired to agree to modify any provision of this Lease relating to the amountof Rent, Additional Rent or other charges reserved herein, the size and/orlocation of the Premises, the Improvements or the Lease Term, or to anymodification which would conflict with the express terms hereof, nor shall anysuch modification diminish Landlord’s obligations or Tenant’s rights hereunderor increase Tenant’s obligations hereunder.

 

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28.                                 ESTOPPEL CERTIFICATES.

 

Within fifteen (15) days after delivery of a**written request from the other partyhereto (the “Requesting Party”), the party receiving such request (the “ReceivingParty”) agrees to execute, acknowledge and deliver to the Requesting Party (or,if Landlord is the Requesting Party, any proposed mortgagee or purchaser) astatement in writing, in form reasonably satisfactory to the Requesting Party,certifying whether this Lease is in full force and effect and, if it is in fullforce and effect, what modifications (if any) have been made to this Lease tothe date of the certification, whether or not any defaults or offsets existwith respect to this Lease and, if there are, what they are claimed to be, andsetting forth the date(s) to which Rent or other charges have been paid inadvance, if any.  The failure of Tenantto execute, acknowledge, and deliver to Landlord a statement requested pursuantto this Section 28, which failure shall continue for more than five (5) daysafter a second (2nd) writtennotice from Landlord (delivered not earlier than the expiration of the initial15-day period) demanding such statement, shall constitute an acknowledgment byTenant that this Lease is unmodified and in full force and effect and that theRent and other charges have been duly and fully paid to and including therespective due dates immediately preceding the date of Landlord’s notice toTenant and shall constitute as to any person, a waiver of any defaults whichmay exist prior to such notice.

 

29.                                 DEFAULT RATE OF INTEREST.

 

All amounts owed by one party to the other pursuant toany provision of this Lease shall bear interest from the date due until paid atfive percent (5%) per annum above the generally prevailing “prime rate” aspublished in the “Money Rates” section of the *WallStreet Journal* (Eastern Edition) on the due date of such sum (or, ifnot a business day, the next business day), unless a lesser rate shall then bethe maximum rate permissible by law, in which event said lesser rate shall becharged (“Default Rate”); provided that, interest shall not accrue on anypayment which is paid within five (5) business days after written notice thatsuch payment is due and payable, unless two (2) or more such notices have beendelivered to the party from whom payment is due within the twelve (12) monthsimmediately preceding the due date of the current payment.

 

30.                                 EXCULPATORY PROVISIONS.

 

It is expressly understood and agreed by and betweenthe parties hereto, anything herein to the contrary notwithstanding, that eachand all of the representations, warranties, covenants, undertakings,indemnities and agreements herein made on the part of Landlord while in formpurporting to be the representations, warranties, covenants, undertakings,indemnities and agreements of Landlord are nevertheless each and every one ofthem made and intended, not as personal representations, warranties, covenants,

 

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undertakings, indemnities and agreements by Landlordor for the purpose or with the intention of binding Landlord personally, butare made and intended for the purpose only of subjecting Landlord’s interest inthe Premises to the terms of this Lease and for no other purpose whatsoever,and in case of default hereunder by Landlord, Tenant shall look solely to theinterests of Landlord in the Property. Landlord shall not have any personal liability to pay any indebtednessaccruing hereunder or to perform any covenant, either express or implied,herein contained.  All such personalliability of Landlord, if any, is expressly waived and released by Tenant andby all persons claiming by, through orunder Tenant.  Notwithstanding theforegoing, this Section 30 shall be inapplicable to any judgment for monetarydamages entered against Landlord and in favor of Tenant, to the extent Tenant’sdamages were found to have been proximately caused by Landlord’s fraud orLandlord’s misapplication of insurance proceeds or a condemnation award.

 

31.                                 MORTGAGEE PROTECTION.

 

Tenant agrees to give any holder of any first mortgageor first trust deed in the nature of a mortgage (both hereinafter referred toas a “First Mortgage”) against the Premises, or any interest therein, byregistered or certified mail, a copy of any notice or claim of default servedupon Landlord by Tenant, provided that prior to such notice, Tenant has beennotified in writing of the address of such First Mortgage holder.  Tenant further agrees that if Landlord shallhave failed to cure any such default within twenty (20) days after such noticeto Landlord (or if such default cannot be cured or corrected within that time,then such additional time as may be necessary if Landlord has commenced withinsuch twenty (20) days and is diligently pursuing the remedies or stepsnecessary to cure or correct such default), then the holder of the FirstMortgage shall have an additional thirty (30) days within which to cure orcorrect such default (or if such default cannot be cured or corrected withinthat time, then such additional time as may be necessary if such holder of theFirst Mortgage has commenced with such thirty (30) days and is diligentlypursuing the remedies or steps necessary to cure or correct such default,including the time necessary to obtain possession if possession is necessary tocure or correct such default).

 

32.                                 RECIPROCAL COVENANT ON NOTIFICATION OFADA VIOLATIONS.

 

Within ten (10) days after receipt, Landlord andTenant shall advise the other party in writing, and provide the other withcopies of (as applicable), any notices alleging violation of the Americans withDisabilities Act of 1990 (“ADA”) relating to any portion of the Premises or theImprovements; any claims made or threatened in writing regarding noncompliancewith the ADA and relating to any portion of the Premises or the Improvements;or any governmental or regulatory actions or investigations

 

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instituted or threatened regarding noncompliance withthe ADA and relating to any portion of the Premises or the Improvements.

 

33.                                 LAWS THAT GOVERN.

 

The terms and conditions of this Lease shall begoverned by the laws of the jurisdiction in which the Premises is located.

 

34.                                 FINANCIAL STATEMENTS.

 

Within ten (10) business days of Landlord’s request,Tenant shall deliver to Landlord the current financial statements of Tenant,and financial statements for the two (2) years prior to the current year.  The financial statements shall include abalance sheet, profit and loss statement, and statement of cash flows for eachyear, accompanied by an opinion from a certified public accountant certifyingthat the financial statements are prepared in accordance with generallyaccepted accounting principles consistently applied.  If Tenant fails to deliver such financialstatements within two (2) business days after Landlord’s second (2nd) requestfor such financial statements, an amount equal to $250 per day shall be chargedas Additional Rent for each day thereafter on which Tenant fails to deliver toLandlord the financial statements required herein.  Notwithstanding the foregoing, this Section34 shall not be deemed to apply to GTSI or to any other publicly tradedcorporation so long as GTSI or such publicly traded corporation, as applicable,publicly discloses its financial condition.

 

35.                                 PARKING.

 

In connection with construction of the Improvements,Landlord shall construct on the Premises in accordance with the Work Agreementattached hereto as Exhibit B, surface parking at a ratio equal to not less than4 spaces per 1,000 square feet of net rentable area in the Improvements.  Tenant shall have the right to park in the parkingfacilities free of charge (other than payment of Tenant’s Pro Rata Share ofOperating Expenses).  If, after Landlordcompletes construction of the second building (the “Second Building”)contemplated by the Current Site Plan (as defined herein) and executes a leasetherefor, Tenant determines that use of parking on the Property by thirdparties is leaving Tenant with insufficient parking spaces for its employeesand visitors, Tenant shall have the right to install professional signs andstencils on Tenant’s parking spaces, identifying such spaces as reserved forthe exclusive use of Tenant and its employees and invitees.  Tenant shall have the right, at any time, toinstall professional signs and stencils identifying Tenant’s executive andvisitor parking spaces.  Tenant shallhave the right to tow any vehicle parked in Tenant’s parking spaces inviolation of Tenant’s posted signs, provided that such signs warn thatviolators will be towed and provide such other information as is required bylaw to allow such towing.  Landlord andTenant acknowledge that Tenant’s parking area**will be as shown

 

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cross-hatched on the Current Site Plan (subject tomodification in accordance with Exhibit B). Tenant shall, at all times and at Tenant’s sole expense, maintain itsparking signs and stencils in a first-class condition.

 

36.           SIGNAGE.

 

(A)                              Landlordshall permit Tenant to place two (2) signs containing Tenant’s logo upon theImprovements subject to Landlord’s approval as to design, method of attachment,placement, size, color and style (such approval not to be unreasonablywithheld, conditioned or delayed), it being further agreed that Landlord shallnot withhold its approval as to the design, color, size, or style of such signsto the extent that such signs comply with the signage requirements of Exhibit Ehereto.  So long as Tenant shall occupyat least fifty percent (50%) of the Building, no other tenant shall bepermitted to place signage on the Building.

 

(B)                                Solong as Tenant occupies at least seventy-five percent (75%) of the Building,Tenant shall also have the exclusive right, subject to approval by FairfaxCounty and receipt of all necessary approvals, easements, licenses and permits (whichthe parties agree to cooperate to obtain), to install and maintain one (1)monument sign containing Tenant’s name and/or logo on the Land adjacent toStonecroft Boulevard (in a location mutually-agreed by Landlord and Tenant [andto be tentatively agreed by the parties not later than when Landlord’s proposedsite plan is submitted for Fairfax County approval], each hereby agreeing tonegotiate the same in good faith and further agreeing not to unreasonably withhold,condition or delay their agreement to the same).  If Tenant occupies less than seventy-fivepercent (75%) of the Building, Landlord shall have the right to install and maintainits own monument sign on the Land adjacent to Stonecroft Boulevard (in alocation mutually-agreed by Landlord and Tenant, each hereby agreeing tonegotiate the same in good faith and further agreeing not to unreasonably withhold,condition or delay their agreement to the same).  If Tenant occupies less than seventy-fivepercent (75%) of the Building, and Fairfax County does not permit installationof a second monument sign on the Land adjacent to Stonecroft Boulevard, Tenantagrees to provide Landlord with fifty percent (50%) of the signage space on itsmonument sign and Landlord agrees to reimburse Tenant for (i) any modificationsto such monument sign reasonably required in connection therewith and (ii)fifty percent (50%) of the original cost of constructing and installing themonument sign.

 

(C)                                Inthe event Landlord, in Landlord’s sole discretion, installs a monument ordirectional signage at the entrance to the parking areas from Avion Parkway,Tenant shall be entitled to have sign space on such directional sign equal

 

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to that of the other tenants occupying improvements onParcel D-l, Avion Development, as shown on plat attached to Deed of Divisionrecorded in Deed Book 7375 at page 562, among the land records of FairfaxCounty, Virginia (“Parcel D-l”); provided that, Tenant’s signage thereon shallbe uppermost in location on such directional sign.  Tenant shall reimburse Landlord for itsproportionate share (based on the proportion of signage space allowed thereon)of all costs, expenses and fees attributable to such directional sign.

 

(D)                               Tenantshall obtain and pay for all governmental approvals, permits and/or licensesrequired in connection with any signage installed by or on behalf ofTenant.  In addition, all such signageshall be subject to Landlord’s prior approval (not to be unreasonably withheld,conditioned or delayed), and must comply with the established signage programat Avion Business Park  (a copy of whichis attached hereto as Exhibit E) and with all covenants, conditions and restrictionsof record.  The cost of Tenant’s signageshall be borne by Tenant (it being understood, however, that Tenant may electto be reimbursed from the Allowance (as defined in Exhibit B) for the cost ofTenant’s permitted signage.

 

(E)                                 Ifany signage (other than signage on the interior of the Premises which is notvisible from outside the Premises) is exhibited without Tenant first obtainingthe Landlord’s written consent thereto, Landlord shall have the right, upon ten(10) days written notice to Tenant, to remove the same and Tenant shall beliable for any and all expenses incurred by Landlord in connection with suchremoval.  Tenant shall maintain all ofits signage in a good state of repair and save the Landlord harmless from anyloss, cost or damage as a result of the construction, installation,maintenance, existence or removal of the same, and Tenant shall repair anydamage which may have been caused by the construction, installation, operation,existence, maintenance or removal of such signage.  Upon vacating the Premises, Tenant shallremove all of its signage and repair all damage caused by the installation,operation and/or removal thereof, at the Tenant’s sole expense.

 

37.           RECORDATION.

 

Except to the extent required by law, Tenant shall notrecord this Lease among or in any public records.

 

38.           FORCE MAJEURE.

 

This Lease and the obligations of the partieshereunder shall not be affected or impaired because the Landlord or Tenant (asapplicable) is unable to fulfill any of its obligations hereunder or is delayedin doing so, to the extent such inability or delay

 

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is caused by reason of war, civil unrest, strike,labor troubles, unusually inclement weather, governmental delays, inability toprocure services or materials despite reasonable efforts, third party delays,acts of God, or any other cause (s) beyond the reasonable control of theLandlord or Tenant (as applicable) (which causes are referred to collectivelyherein as “Force Majeure”).  The timespecified for the performance of an obligation of Landlord or Tenant (asapplicable) in this Lease shall be extended one day for each day of delaysuffered by Landlord or Tenant (as applicable) in the performance of suchobligation as a result of any Force Majeure cause, provided that the party fromwhom performance is due exercises commercially reasonable efforts to mitigatethe effects of such Force Majeure cause. Notwithstanding the foregoing, but subject to the terms of the sentencewhich immediately follows this sentence, (i) this Section 38 shall have noapplication to, nor shall the time for the performance of Landlord’s or Tenant’sobligations hereunder be extended with respect to, any obligation for thepayment of money or the surrender of the Premises upon the expiration of theLease Term, and (ii) this Section 38 shall be disregarded for purposes ofdetermining Tenant’s termination rights pursuant to Section 2(A)(4) and fordetermining the liquidated damages, if any, to which Tenant may be entitledpursuant to Section 10(c) of Exhibit B (it being understood that Force Majeureshall have no application to Section 2(A)(4), and is independently treated inSection 10(c) of Exhibit B).  Notwithstandinganything herein to the contrary, (x) if the Construction Lender has foreclosedupon the Property or has accepted a deed in lieu of foreclosure, and (y) suchConstruction Lender is diligently pursuing completion of the work to beperformed by Landlord under Exhibit B hereto, this Section shall apply toTenant’s right to terminate pursuant to Section 2(A)(4).

 

39.           LANDLORD’S LIEN.

 

As security for the performance of Tenant’sobligations, Tenant grants to Landlord a lien upon and a security interest inTenant’s existing or hereafter acquired personal property, inventory,furniture, furnishings, fixtures, equipment, licenses, permits, and all othertangible and intangible property, assets and accounts, and all additions,modifications, products and proceeds thereof, including, without limitation,such tangible property which has been used at the Premises, purchased for useat the Premises, located at any time in the Premises or used or to be used inconnection with the business conducted or to be conducted in the Premises,whether or not the same may thereafter be removed from the Premises.  Such lien shall be in addition to all rightsof distraint available under applicable law. Within five (5) days after request from time to time, Tenant shallexecute, acknowledge and deliver to Landlord a financing statement and anyother document evidencing or establishing such lien and security interest whichmay be requested by Landlord.  During theLease Term, Tenant shall not sell, transfer or remove from the Premises any ofthe aforementioned tangible property without Landlord’s

 

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prior written consent, unless the same shall bepromptly replaced with similar items of comparable value.  In order to further assure Tenant’sperformance of its obligations under this Lease, Tenant covenants that duringthe Lease Term, it will not convey or otherwise transfer its assets or permitits assets to be encumbered to the extent that any such conveyance, transfer orencumbrance is not done in the ordinary course of Tenant’s business or wouldmaterially and adversely affect the net worth of Tenant.  Notwithstanding anything herein to thecontrary, said lien shall be subordinated to the rights of any lessor of anyequipment or personal property under any equipment lease, the rights of theseller under any conditional sales contract, and to the properly perfected lienof any bonafide third party lender providing financing to Tenantin the ordinary course of Tenant’s business. Landlord also shall, to the extent permitted by law, have (in additionto all other rights) a right of distress for rent as security for all Rent,Additional Rent and any other sums payable under this Lease.

 

40.           BROKERS.

 

Tenant represents and warrants to Landlord, andLandlord represents and warrants to Tenant, that neither it nor its officers oragents nor anyone acting on its behalf has dealt with any real estate brokerother than Trammell Crow Real Estate Services, Inc. and Cambridge PropertyGroup Limited Partnership in the negotiating or making of this Lease, and eachagrees to indemnify and hold the other party, and its respective agents,employees, partners, directors, shareholders and independent contractorsharmless from all liabilities, costs, demands, judgments, settlements, claimsand losses, including reasonable attorneys fees and costs, incurred inconjunction with any such claim or claims of any other broker or brokersclaiming to have interested Tenant in the Property or Premises or claiming tohave caused Landlord or Tenant to enter into this Lease.  Landlord acknowledges that it has agreed topay Trammell Crow Real Estate Services, Inc. and Cambridge Property GroupLimited Partnership a commission with respect to this Lease, pursuant to aseparate agreement.

 

41.           CONFIDENTIALITY.

 

Tenant agrees that this Lease is confidential and,agrees to exercise reasonable, good faith efforts not to disclose the contentsof this Lease to any third party, except Tenant’s brokers, lawyers, architects,engineers, and other consultants engaged in connection with this Leasetransaction; provided that, this Section 41 shall not prohibit the disclosureof the terms of this Lease to the U.S. Government or Tenant’s lenders, to theextent required by law or contract between Tenant and such party.

 

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42.**                                **LEASE/DEED OF LEASE.

 

To the extent required under applicable law to makethis Lease legally effective, this Lease shall constitute a deed of leaseexecuted under seal.

 

43.                                 RIGHT OF FIRST OFFER.

 

(A)                              Subjectto the terms hereof and provided no Event of Default then remains uncured underthe Lease, Landlord agrees that it will not sell the Premises (or, if thePremises is Landlord’s sole asset, transfer all of Landlord’s capital stock)during the Lease Term unless it first extends a bonafideoffer to sell the Premises to Tenant at aprice and on such terms and conditions as Landlord may describe in a written “offerto sell” given to Tenant in the same fashion as notices given pursuant to theprovisions of Section 26 of this Lease. Landlord shall, not less than fifteen (15) days prior to Landlord’sgeneral circulation of offering materials for the Premises, deliver to Tenantthe offer to sell (“Sale Offer Notice”). Tenant shall have fifteen days after receipt of the Sale Offer Notice to(i) exercise its right of first offer by agreeing to the economic terms of thepurchase and sale and giving Landlord written notice of Tenant’s election toacquire the Premises (“Sale Election Notice”) or (ii) not to exercise its rightof first offer for the acquisition of the premises, it being understood and agreedthat if no notice is received from Tenant during said fifteen day period,Tenant shall be deemed not to have elected to purchase the Premises.  Within 30 days after receipt of Tenant’s SaleElection Notice, Landlord will provide Tenant with an agreement of purchase andsale, which Landlord and Tenant will negotiate and execute within thirty (30)days of Tenant’s delivery of the Sale Election Notice.  In the event Tenant fails to execute theagreement of purchase and sale within said thirty (30) day period after givingits Sale Election Notice or in the event Tenant does not deliver the SaleElection Notice, then Landlord shall have the right thereafter to sell thePremises to any third party purchaser free and clear of any rights by Tenantunder this Section 43; provided that, before entering into a contract to sellthe Premises at a price which is less than ninety-five percent (95%) of theprice at which the Premises was offered to Tenant in Landlord’s Sale OfferNotice, Landlord shall again offer to sell the Premises to Tenant in accordancewith this Section 43 (in which event Tenant shall exercise its rights underthis Section 43 by delivery of the Sale Election Notice within three (3)business days after delivery of the Sale Offer Notice).

 

(B)                                Subjectto the terms hereof and provided no Event of Default has occurred under theLease, Landlord agrees that, during the first (1st) six and one-half (6-1/2)years of the Lease Term, before executing any lease for space in any other

 

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building constructed on Parcel D-l (an “AdjacentBuilding”), Landlord will provide Tenant with a bonafide offerto lease such Adjacent Building at a rental rate and on such other terms andconditions as Landlord describes in a written “offer to lease” (the “LeaseOffer Notice”) delivered to Tenant in the same fashion as notices givenpursuant to the provisions of Section 26 of this Lease.  Tenant shall have fifteen days after receiptof the Lease Offer Notice to (i) exercise its right of first offer by agreeingto the economic terms of the lease and giving Landlord written notice of Tenant’selection to lease such Adjacent Building (“Lease Election Notice”) or (ii) notto exercise its right of first offer for the lease of the Adjacent Building, itbeing understood and agreed that if no notice is received from Tenant duringsaid fifteen day period, Tenant shall be deemed not to have elected to leasethe Adjacent Building.  Within 30 daysafter receipt of Tenant’s Lease Election Notice, Landlord will provide Tenantwith a lease agreement, which Landlord and Tenant will negotiate and executewithin thirty (30) days of Tenant’s delivery of the Lease Election Notice.  In the event Tenant fails to execute thelease agreement within said thirty (30) day period after giving its LeaseElection Notice or in the event Tenant does not deliver the Lease ElectionNotice, then Landlord shall have the right thereafter to lease all or any partof the Adjacent Building to any third party free and clear of any rights by Tenantunder this Section 43.  Notwithstandinganything herein contained to the contrary, Tenant acknowledges that (i) itsrights under this Section 43(B) are subject and subordinate to any now-existingexpansion rights in or to such Adjacent Building, and to any expansion orrenewal rights granted to future tenants of such Adjacent Building, and (ii)this Section 43(B) shall be inapplicable to the initial “lease-up” of any “pre-leased”or “build-to-suit” Adjacent Building.

 

44.                                 MISCELLANEOUS.

 

(A)                              Inthe event that Tenant desires to store or maintain the type or character ofgoods or materials in the Premises which cause an increase in insurancepremiums, Tenant shall first obtain the written consent of Landlord and Tenant shallreimburse Landlord for any increase in premiums caused thereby.

 

(B)                                Unlessthe context clearly denotes the contrary, the words “Rent” and “Additional Rent”as used in this Lease not only includes cash rental for the Premises, but alsoall other payments and obligations to pay assumed by the Tenant, whether suchobligations to pay run to the Landlord or to other parties.

 

(C)                                Inany litigation between the parties arising out of this Lease, or in connection with any consultations with counsel

 

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and other actions taken or notices delivered inrelation to a default by any party to this Lease, the non-prevailing partyshall pay to the prevailing party all reasonable expenses and costs includingreasonable attorneys’ fees incurred by the prevailing party in connection withthe default and/or litigation, as the case may be (including fees and costs inpreparation for and at trial, and on appeal, if applicable) (“Legal Costs”).  The Legal Costs shall be payable on demand,and, if the prevailing party is Landlord, the Legal Costs shall be deemedAdditional Rent, subject to all of Landlord’s rights and remedies providedherein.

 

(D)                               Itis mutually agreed by and between Landlord and Tenant that the respectiveparties hereto shall, and they hereby do, waive trial by jury in any action,proceeding or counterclaim brought by either of the parties hereto against theother on any matter whatsoever arising out of or in any way connected with thisLease, the relationship of Landlord and Tenant, Tenant’s use of or occupancy ofthe Premises or any claim of injury or damage and any emergency statutory or anyother statutory remedy.  If Landlordcommences any summary proceeding for nonpayment of Rent or Additional Rent,  Tenant will not interpose any counterclaim ofwhatever nature or description in any such proceeding, unless such counterclaimis a mandatory counterclaim which would be waived if not interposed in suchproceeding.

 

(E)                                 Ifany term or provision of this Lease is declared invalid or unenforceable, the remainderof this Lease shall not be affected by such determination and shall continue tobe valid and enforceable.

 

(F)                                 Landlordand Tenant warrant that this agreement is being executed with full corporateauthority and that the officers whose signatures appear hereon are dulyauthorized and empowered to make and execute this Lease in the name of the corporationby appropriate and legal resolution of its Board of Directors.

 

(G)                                ThisLease contains the entire agreement between the parties hereto.  No representations, inducements, promises or agreements,oral or otherwise, between the parties not embodied herein shall be of anyforce or effect, and all reliance by Tenant with respect to anyrepresentations, inducements, promises or agreements is based solely on those containedin this Lease.  Any modification to thisLease must be in writing and duly executed by the parties hereto.

 

45.                                 ROOF-TOP EQUIPMENT.

 

Tenant shall have the right to utilize a**portion of the roof of the Building forpurposes of installing and operating one or more satellite dishes or antennas,subject to the terms of the attached

 

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Exhibit F. Landlord and Tenant shall each complete, execute and deliver to otherthe attached Exhibit F prior to Tenant making any installation upon theBuilding roof.  Nothing herein containedshall be deemed to grant Tenant the exclusive right to utilize the roof of theBuilding.

 

IN WITNESS WHEREOF,Landlord and Tenant have executed this Lease under seal on this 10thday of December, 1997.

 
| WITNESS/ATTEST:   | LANDLORD:                                     |
|-------------------|-----------------------------------------------|
|              |                                          |
|              | PETULA ASSOCIATES, LTD., an Iowa  corporation |
| /s/ Susie Wieland |                                          |   |
|              | By:                                           | /s/ Michael D. Ripson | (Seal) |
|              |                                          | MICHAEL D. RIPSON |   |
|              | Title:                                        | VICE PRESIDENT |   |
|              |                                          |
|              | By:                                           | /s/ H. L. Minear | (Seal) |
|              |                                          | H. L. Minear |   |
|              | Title:                                        | Vice President |   |
|              |                                          |   |   |
| WITNESS/ATTEST:   | TENANT:                                       |
|              |                                          |   |
|              | GOVERNMENT TECHNOLOGY SERVICES,  INC.,        |
|              |                                          | a Delaware corporation |
|              | By:                                           | /s/ M. Dendy Young | (Seal) |
|              | Title:                                        | CEO |   |
|                   |                                               |  |  |  |  |  |

 

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FIRST AMENDMENT TO LEASEAGREEMENT

 

THIS FIRST AMENDMENT TOLEASE AGREEMENT (this “Amendment”) is made entered into as of April 30,**2003 by and between AG/ARG Avion, LLC andGTSI Corp (“Tenant”).

 

WITNESSETH:

 

WHEREAS, Landlord and Tenant entered into that certainLease Agreement dated as of December 10, 1997 (the “Lease”) for 102,022 feet ofspace (the “Premise”) in a facility at 3901 Stonecroft Boulevard, Chantilly,Virginia 20151 (the “Building”);

 

WHEREAS, Tenant desires to install a satellite dish onthe roof of the Building and Landlord agrees to allow such installation, uponthe terms and conditions and as more particularly set forth herein below.

 

NOW, THEREFORE, in consideration of the mutualcovenants and agreements set forth herein below and of other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged bythe parties hereto, Landlord and Tenant, intending legally to be bound, herebyagrees as follows:

 

1.             CommunicationsEquipment. Tenant shall have the right to install and maintain one (1) satellitedish (the “Communications Equipment”) on the roof of the Building throughoutthe Lease Term, subject to the following terms and conditions:

 

(a)           Thelocation, size, weight, height and all other features and specifications of theCommunications Equipment and the manner of initial installation of the sameshall be subject to Landlord’s prior written approval, which approval may begranted or withheld in Landlord’s sole and absolute discretion; provided,however, that in no event shall (i) the diameter of any satellite dish exceedtwenty-four (24”), and (ii) any portion of the Communications Equipment extendover the top of the roof of the Building.  Tenant shall reimburse Landlord for Landlord’sexpenses incurred in such review.  Allrepair and installation required after the initial installation of theCommunications Equipment also shall be subject to Landlord’s prior writtenapproval (to be granted or withheld in Landlord’s sole and absolutediscretion), which approval shall be at Tenant’s sole cost and expense.

 

(b)           Tenant, atits sole cost and expense, shall procure all necessary governmental permits andlicenses for the construction and maintenance of the Communications Equipment,and shall at all times comply with all requirements of laws, ordinances,orders, rules and regulations of all public authorities and insurance companieswhich shall impose any order or duty upon Landlord or Tenant with respect to oraffecting the Communications Equipment or arising out of Tenant’s use or mannerof use thereof.  The failure by Tenant toprocure any such permits shall not in any way affect Tenant’s obligations underthis Lease.

 

(c)           Tenantshall pay and discharge all costs and expenses incurred by Landlord inconnection with the furnishing, installation, maintenance, operation andremoval of the Communications Equipment within fifteen (15) business days afterwritten demand therefore.

 

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(d)           Installationof the Communications Equipment shall be at Tenant’s sole expense and risk.  The Communications Equipment shall be approvedby Landlord and shall be screened from view from the grounds adjacent to theBuilding in a manner and with materials acceptable to Landlord in its solediscretion.  Tenant shall not disturb theroof membrane or make any other penetration on the roof or the exterior facadeof the Building except as otherwise approved in writing by Landlord in its solediscretion.  Tenant shall be permittedaccess to the roof only upon prior notice to Landlord, provided that, atLandlord’s option, Tenant is accompanied by Landlord’s agent or representative. Any change or attachment to the roofsystem to which Landlord may consent in its sole and absolute discretion shallbe performed at Tenant’s cost by a contractor selected and/or approved by Landlord.

 

(e)           Tenantshall maintain the Communications Equipment in a clean and safe manner throughoutthe entire Lease Term, and shall comply with all applicable laws, ordinancesand regulations, as well as such rules and regulations as Landlord had adopted orshall adopt from time to time.  Inaddition, all repairs to the Building made necessary by reason of thefurnishing, installation, maintenance, operation or removal of theCommunications Equipment or any replacements thereof (including, withoutlimitation, any invalidation of the roof warranty due to Tenant’s actions)shall be at Tenant’s sole cost.  Notlater than the expiration or termination of this Lease, Tenant agrees that it willremove promptly the Communications Equipment and any wiring or accessoriesassociated with the Communications Equipment and shall repair any damage to theBuilding or Land caused by the installation or removal of the CommunicationsEquipment and related equipment and restore the Building to its preexistingcondition.  In the event Tenant fails toremove the Communications Equipment and associated equipment, Landlord mayremove and dispose of the Communications Equipment and associated equipment andcharge Tenant the entire cost thereof.

 

(f)            Landlordmay notify Tenant when in Landlord’s reasonable judgment it is necessary tomove any Communications Equipment to another part of the roof or to anotherlocation on the Land, provided that such relocation will not materiallyadversely affect Tenant’s ability to use such Communications Equipment, inwhich event Tenant shall promptly move such Communications Equipment to suchlocation as designated by Landlord or, if applicable, remove such CommunicationsEquipment altogether.  If it becomesunlawful for Tenant’s Communications Equipment to remain on the roof for anyreason, then Tenant shall promptly remove same after receipt of notice fromLandlord demanding such removal thereof.  Tenant hereby acknowledges and agrees that therequirement that Tenant relocate or remove altogether any Communications Equipmentshall not result in any credit or abatement in the rent payable under thisLease.

 

(g)           Landlordmay, at Tenant’s expense, install checkmeters or submeters to the electrical circuitsserving the Communications Equipment.  Tenantshall reimburse Landlord, as additional rent, for all amounts incurred inconnection with the electricity consumed by the Communications Equipment,including not only the cost of the electricity consumed, but also the cost ofthe measurement of such consumption.

 

(h)           Tenant’sCommunications Equipment shall not interfere with the operation of theproperty, the structure of the Building, any of the Building systems, or theequipment (including airwaves reception and other equipment) of any othertenant in the Building.

 

(i)            Tenantshall maintain such insurance as is appropriate with respect to theinstallation, operation and maintenance of the Communications Equipment.  Landlord shall have no liability on account ofany damage to or interference with the operation of the CommunicationsEquipment except for physical damage caused by Landlord’s gross negligence orwillful misconduct and Landlord expressly makes no representations orwarranties with respect to the capacity for Communications Equipment placed onthe roof of the Building to receive or transmit signals.  The

 

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operation of the Communications Equipment shall be at Tenant’s sole andabsolute risk.  Tenant shall in no eventinterfere with the use of any other communications equipment located on theroof of the Building.

 

(j)            TheCommunications Equipment may be used by Tenant only in the conduct of Tenant’sbusiness at the Premises.

 

(k)           Inthe event that a default occurs under the Lease (as amended hereby) beyond anyapplicable notice and/or cure period, then, in addition to all other rights andremedies of Landlord, Landlord, in its sole and absolute discretion, mayterminate Tenant’s rights pursuant to this Paragraph by written notice toTenant.  Within five (5) business daysafter such notice, Tenant shall remove the Communications Equipment and anywiring or accessories associated with the Communications Equipment and shallrepair any damage to the Building or Land caused by the installation or removalof the Communications Equipment and related equipment and restore the Buildingto its preexisting condition.  In theevent Tenant fails to remove the Communications Equipment and associatedequipment, Landlord may remove and dispose of the Communications Equipment andassociated equipment and charge Tenant the entire cost thereof.

 

(1)                                  Tenant’srights under this Section may be exercised only by Tenant and may not beexercised by any other person or entity.

 

2*.**             *Ratification. Except as otherwiseexpressly modified by the terms of this Amendment, the Lease shall remainunchanged and continue in full force and effect.  All Terms, covenants and conditions of theLease not expressly modified herein are hereby confirmed and ratified andremain in full force and effect, and as further amended hereby, constitute validand binding obligations of Tenant enforceable according to the terms thereof.

 

3.              Authority.Tenant and each of the persons executing this Amendment on behalf of Tenant covenantsand warrants that Tenant has full right and authority to enter into this Amendment,and that the person signing on behalf of Tenant is authorized to do so behalfof Tenant.

 

4.              BindingEffect. All of the covenants contained in this Amendment, including but notlimited to, all covenants of the Lease as modified hereby, shall be bindingupon and shall inure to the benefit of the parties hereto and their respectiveheirs, legal representatives and permitted successors and assigns.

 

5.              Effectiveness.The submission of this Amendment shall not constitute an offer, and this Amendmentshall not be effective and binding unless and until fully executed anddelivered by each of the parties hereto.

 

6.              Counterparts.This Amendment may be executed in multiple counterparts, each of which shall bean original, but all of which shall constitute on and the same Amendment.

 

7.              Recital.The forgoing recital are intended to be a material part of this Amendment andare incorporated herein by this reference.

 

8.              DefinedTerms. Unless otherwise provided herein, all terms used in this Amendment thatare defined in the Lease shall have the meanings provided in the Lease.

 

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IN WITNESS WHEREOF,Landlord and Tenant executed this Amendments as of the date first abovewritten.

 
|            | **LANDLORD:**                                  |
|-----------------|------------------------------------------------|
|            |                                           |
|            | AG/ARG AVION, L.L.C                            |
|            |                                           |
| WITNESS:        | By:                                            | /s/ David Fisher |   |
|            | Name:                                          | David Fisher |   |
| /s/ Nancy Feene |                                           | Title: | Senior VP |   |
|            |                                           |
| ** **      | **TENANT:**                                    |
|            |                                           |
| ATTEST:         | GTS1 Corp.                                     |
|            | 3901 Stonecroft Boulevard  Chantilly, VA 20151 |
|            |                                           |
|            | By:                                            | /s/ Scott Decker |   |
|            | Name:                                          | Scott Decker |   |
|            |                                           | Title: | Sr. Director, Operations |   |
|                 |                                                |  |  |  |  |  |

 

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