Document:

Exhibit 10.2

 

EXECUTION COPY

 

GROSS LEASE

(w/Base Amounts)

 

THIS LEASE (this “Lease”) is made as of December 31 2002, by and
between

 

“Landlord”                                    The Multi-Employer
Property Trust, a trust organized under 12 C.F.R. Section 9.18

 

and

 

“Tenant”                                              Transaction
Network Services, Inc., a Delaware corporation.

 

TABLE OF CONTENTS

 

	
  SECTION 1: DEFINITIONS

  	
   

  
	
  Access Laws

  	
   

  
	
  Additional Rent

  	
   

  
	
  Affiliate

  	
   

  
	
  Base Amount Allocable to the Premises

  	
   

  
	
  Base Rent

  	
   

  
	
  Brokers

  	
   

  
	
  Building

  	
   

  
	
  Business Day

  	
   

  
	
  Claims

  	
   

  
	
  Commencement Date

  	
   

  
	
  Common Area Amenities

  	
   

  
	
  ERISA

  	
   

  
	
  Estimated Operating Costs Allocable to the
  Premises

  	
   

  
	
  Events of Default

  	
   

  
	
  Fair Market Rent

  	
   

  
	
  Furniture

  	
   

  
	
  Governmental Agency

  	
   

  
	
  Governmental Requirements

  	
   

  
	
  Hazardous Substance(s)

  	
   

  
	
  Land

  	
   

  
	
  Landlord

  	
   

  
	
  Landlord’s Agents

  	
   

  
	
  Lease Term

  	
   

  
	
  Lender

  	
   

  
	
  Lower Level Space

  	
   

  
	
  Lower Level Space Rent

  	
   

  
	
  Manager

  	
   

  
	
  Manager’s Address

  	
   

  
	
  Operating Costs

  	
   

  
	
  Operating Costs Allocable to the Premises

  	
   

  
	
  Parking Ratio

  	
   

  
	
  Permitted Use

  	
   

  
	
  Plans and Specifications

  	
   

  
	
  Prepaid Rent

  	
   

  
	
  Premises

  	
   

  
	
  Prime Rate

  	
   

  
	
  Property Taxes

  	
   

  
	
  Punch List Work

  	
   

  
	
  Rent Commencement Date

  	
   

  
	
  Restrictions

  	
   

  
	
  Substantial Completion

  	
   

  
	
  Telecommunication Facilities

  	
   

  
	
  Telecommunication Services

  	
   

  

 

 

	
  Tenant

  	
   

  
	
  Tenant Alterations

  	
   

  
	
  Tenant Expenditures

  	
   

  
	
  Tenant Improvement Allowance

  	
   

  
	
  Tenant Improvements

  	
   

  
	
  Tenant’s Agents

  	
   

  
	
  Tenant’s Pro Rata Share

  	
   

  
	
  Tenant’s Share of Lower Level Space Rent

  	
   

  
	
  Year

  	
   

  
	
  SECTION 2: PREMISES AND TERM

  
	
  2.1

  	
  Lease of Premises

  
	
  2.2

  	
  Lease
  Term

  
	
  2.8

  	
  Compliance with Governmental Requirements
  and Rules and Regulations

  
	
  SECTION 3: BASE RENT, ADDITIONAL RENT AND
  OTHER SUMS PAYABLE UNDER LEASE

  
	
  3.1

  	
  Payment of Rental

  
	
  3.2

  	
  Base
  Rent

  
	
  3.3

  	
  Lease Security Provisions

  
	
  3.4

  	
  Additional
  Rent

  
	
  3.5

  	
  Utilities

  
	
  3.6

  	
  Holdover

  
	
  3.7

  	
  Late
  Charge

  
	
  3.8

  	
  Default
  Rate

  
	
  SECTION 4: MANAGEMENT AND LEASING
  PROVISIONS

  
	
  4.1

  	
  Maintenance and Repair by Landlord

  
	
  4.2

  	
  Maintenance and Repair by Tenant

  
	
  4.3

  	
  Common Areas/Security

  
	
  4.4

  	
  Tenant Alterations

  
	
  4.5

  	
  Tenant’s Work Performance

  
	
  4.6

  	
  Surrender of Possession

  
	
  4.7

  	
  Removal of Property

  
	
  4.8

  	
  Access

  
	
  4.9

  	
  Damage or Destruction

  
	
  4.10

  	
  Condemnation

  
	
  4.11

  	
  Parking

  
	
  4.12

  	
  Indemnification

  
	
  4.13

  	
  Tenant Insurance

  
	
  4.14

  	
  Landlord’s Insurance

  
	
  4.15

  	
  Waiver of Subrogation

  
	
  4.16

  	
  Assignment and Subletting by Tenant

  
	
  4.17

  	
  Assignment by Landlord

  
	
  4.18

  	
  Estoppel Certificates and Financial
  Statements

  
	
  4.19

  	
  Modification for Lender

  
	
  4.20

  	
  Hazardous Substances

  
	
  4.21

  	
  Access
  Laws

  
	
  4.22

  	
  Quiet
  Enjoyment

  
	
  4.23

  	
  Signs

  
	
  4.24

  	
  Subordination

  
	
  4.25

  	
  Workers Compensation Immunity

  
	
  4.26

  	
  Brokers

  
	
  4.27

  	
  Limitation on Recourse

  
	
  4.28

  	
  Mechanic’s Liens and Tenant’s Personal
  Property Taxes

  
			

 

ii

 

	
  4.29

  	
  Rooftop Telecommunications Equipment

  
	
  4.30

  	
  Indoor Air Quality

  
	
  4.31

  	
  Occupancy

  
	
  Waiver of Certain Statutory Lien Rights

  
	
  SECTION 5: DEFAULT AND REMEDIES

  
	
  5.1

  	
  Events of Default

  
	
  5.2

  	
  Remedies

  
	
  5.3

  	
  Right to Perform

  
	
  5.4

  	
  Landlord’s Default

  
	
  SECTION 6: MISCELLANEOUS PROVISIONS

  
	
  6.1

  	
  Notices

  
	
  6.2

  	
  Attorney’s Fees and Expenses

  
	
  6.3

  	
  No Accord and Satisfaction

  
	
  6.4

  	
  Successors; Joint and Several Liability

  
	
  6.5

  	
  Choice
  of Law

  
	
  6.6

  	
  No Waiver of Remedies

  
	
  6.7

  	
  Offer
  to Lease

  
	
  6.8

  	
  Force
  Majeure

  
	
  6.9

  	
  Landlord’s Consent

  
	
  6.10

  	
  Severability; Captions

  
	
  6.11

  	
  Interpretation

  
	
  6.12

  	
  Incorporation of Prior Agreement;
  Amendments

  
	
  6.13

  	
  Authority

  
	
  6.14

  	
  Time
  of Essence

  
	
  6.15

  	
  Survival of Obligations

  
	
  6.16

  	
  Intentionally Omitted

  
	
  6.17

  	
  Landlord’s Authorized Agents

  
	
  6.18

  	
  Waivers of Jury Trial

  
	
  6.19

  	
  Use of Common Area Amenities in Lower Level
  Space

  
	
  6.20

  	
  Furniture

  

 

iii

 

SECTION
1: DEFINITIONS

 

Access
Laws: 
The Americans With Disabilities Act of 1990 (including the Americans
with Disabilities Act Accessibility Guidelines for Building and Facilities) and
all other Governmental Requirements relating to the foregoing.

 

Additional Rent:  Defined in paragraph captioned “Additional
Rent”.

 

Affiliate:  An entity controlling, controlled by, or
under common control with Tenant (control being defined as direct ownership of
more than 50% of the beneficial ownership of the entity in question).

 

Base
Amount Allocable to the Premises:  Defined in paragraph captioned “Additional
Rent”.

 

Base
Rent: 
The monthly amount of Base Rent and the portion of the Lease Term during
which such monthly amount of Base Rent is payable shall be determined from the
following table.  For convenience and
ease of reference, the annual rental rate for the computation of Base Rent and
the annual Base Rent are also set forth in tabular form with the annual Base
Rent equaling the monthly Base Rent installment multiplied by twelve.  In the case of any conflict or inconsistency
between the Monthly Base Rent installment and the other illustrative figures
set forth in tabular form or in any computations utilizing such figures, the
rate per rentable square foot per annum so specified shall be controlling and
conclusive.

 

	
  Applicable Portion of Lease Term

  	
   

  	
  Rate

  Per/Rentable

  Sq. Ft./Annum

  	
   

  	
  Annual
  Base

  Rent

  	
   

  	
  Monthly
  Base

  Rent

  Installment

  (Annual  ̧ 12)

  	
   

  
	
  April 1, 2003 - February 29, 2004

  	
   

  	
  $

  	
  23.50

  	
   

  	
  $

  	
  963,030.00

  	
   

  	
  $

  	
  80,252.50

  	
   

  
	
  March 1, 2004 - February 28, 2005

  	
   

  	
  $

  	
  24.21

  	
   

  	
  $

  	
  992,125.80

  	
   

  	
  $

  	
  82,677.15

  	
   

  
	
  March 1, 2005 - February 28, 2006

  	
   

  	
  $

  	
  24.94

  	
   

  	
  $

  	
  1,022,041.20

  	
   

  	
  $

  	
  85,170.10

  	
   

  
	
  March 1, 2006 - February 28, 2007

  	
   

  	
  $

  	
  25.69

  	
   

  	
  $

  	
  1,052,776.20

  	
   

  	
  $

  	
  87,731.35

  	
   

  
	
  March 1, 2007 - February 28, 2008

  	
   

  	
  $

  	
  26.46

  	
   

  	
  $

  	
  1,084,330.80

  	
   

  	
  $

  	
  90,360.90

  	
   

  
	
  March 1, 2008 - February 28, 2009

  	
   

  	
  $

  	
  28.25

  	
   

  	
  $

  	
  1,157,685.00

  	
   

  	
  $

  	
  96,473.75

  	
   

  
	
  March 1, 2009 - February 28, 2010

  	
   

  	
  $

  	
  29.10

  	
   

  	
  $

  	
  1,192,518.00

  	
   

  	
  $

  	
  99,376.50

  	
   

  
	
  March 1, 2010 - February 28, 2011

  	
   

  	
  $

  	
  29.97

  	
   

  	
  $

  	
  1,228,170.60

  	
   

  	
  $

  	
  102,347.55

  	
   

  
	
  March 1, 2011 - February 29, 2012

  	
   

  	
  $

  	
  30.87

  	
   

  	
  $

  	
  1,265,052.60

  	
   

  	
  $

  	
  105,421.05

  	
   

  
	
  March 1, 2012 - February 28, 2013

  	
   

  	
  $

  	
  31.80

  	
   

  	
  $

  	
  1,303,164.00

  	
   

  	
  $

  	
  108,597.00

  	
   

  

 

Notwithstanding the foregoing,
Landlord shall abate all Base Rent applicable to the fifth floor portion of the
Premises for a period of three hundred sixty-five (365) days beginning on the
Rent Commencement Date, provided, however, if the Lease is terminated prior to
February 28, 2013 as a result of a default by Tenant, in addition to all other
damages to which Landlord may be entitled under the Lease and applicable law,
Tenant immediately and without notice shall pay Landlord an amount equal to the
Unearned Portion of the Free Rent Credit. 
As used herein, the “Unearned Portion of the Free Rent Credit” shall be
an amount equal to Four Hundred Ninety-One Thousand One Hundred Ninety-Seven
and 00/100 Dollars ($491,197.00) multiplied by a fraction, the numerator of
which shall be the number of months remaining in the Lease Term as of the date
of early termination of the Lease and the denominator of which is the number of
full months in the Lease Term beginning on or after the Rent Commencement Date.

 

Brokers: 
Tenant was represented in this transaction by Julien J. Studley, Inc., a
licensed real estate broker. Landlord was represented in this transaction by
Trammell Crow Real Estate Services, Inc., a licensed real estate broker.

 

Building:  The building located on the Land at 11480
Commerce Park Drive, Reston, Virginia, commonly known as Commerce Executive
Park VI and containing approximately one hundred forty thousand five hundred
ninety (140,590) rentable square feet, inclusive of the Lower Level Space.

 

Business
Day: 
Calendar days, except for Saturdays and Sundays and days observed by the
United States federal government as a legal holiday.

 

Claims:  An individual and collective reference to
any and all claims, demands, damages, injuries, losses, liens, liabilities,
penalties, fines, lawsuits, actions, other proceedings and expenses (including

 

1

 

reasonable attorneys’ fees and expenses incurred in connection with the
proceeding whether at trial or on appeal).

 

Commencement
Date: 
The later of (a) the date that Landlord has obtained a non-residential
use permit for Tenant’s occupancy of the Premises and (b) the date of execution
and delivery of this Lease.

 

Common
Area Amenities:  The exercise room and the training room located in the Lower
Level Space shown on Exhibit L annexed hereto and containing an
aggregate of four thousand nine hundred forty-six (4,946) rentable square feet,
provided, however, Landlord shall have the right to remove all or any portion
of such space from the common area amenities from time to time as the Landlord
in its sole discretion may determine. 
In no event shall the Landlord be permitted to increase the size of the
Common Area Amenities.

 

ERISA:  The Employee Retirement Income Security Act
of 1974, as now or hereafter amended, and the regulations promulgated under it.

 

Estimated Operating Costs Allocable to the
Premises: 
Defined in paragraph captioned “Additional Rent”.

 

Events of Default:  One or more of those events or states of
facts defined in the paragraph captioned “Events of Default”.

 

Fair
Market Rent: 
The prevailing base rent and additional rent (including provisions for
escalations, subsequent increases, market incentives, and other adjustments)
for new leases or lease renewals (as applicable) of a comparable term then
currently being negotiated or executed for comparable space in the Building,
the prevailing base rent and additional rent (including provisions for escalations,
subsequent increases, market incentives, and other adjustments) for new leases
or lease renewals (as applicable) of a comparable term then currently being
negotiated or executed for comparable space located elsewhere in similar
buildings in Reston, Virginia.

 

Furniture:  The furniture located in the Premises and
described in Exhibit H hereto.

 

Governmental
Agency: 
The United States of America, the state in which the Land is located,
any county, city, district, municipality or other governmental subdivision,
court or agency or quasi-governmental agency having jurisdiction over the Land
and any board, agency or authority associated with any such governmental
entity, including the fire department having jurisdiction over the Land.

 

Governmental
Requirements: 
Any and all statutes, ordinances, codes, laws, rules, regulations,
orders and directives of any Governmental Agency as now or later amended.

 

Hazardous
Substance(s): 
Asbestos, PCBs, petroleum or petroleum-based chemicals or substances,
urea formaldehyde or any chemical, material, element, compound, solution,
mixture, sub-stance or other matter of any kind whatsoever which is now or
later defined, classified, listed, designated or regulated as hazardous, toxic
or radioactive by any Governmental Agency.

 

Land:  The land upon which the Building is located
in Fairfax County, Commonwealth of Virginia, as legally described in Exhibit
A attached to this Lease.

 

Landlord:  The trust named on the first page of this
Lease, or its successors and assigns as provided in paragraph captioned “Assignment
by Landlord”.

 

Landlord’s Agents:  The trustee of and consultants and advisors
to the Landlord and employees of the foregoing.

 

Lease Security Deposit:  The letter of credit delivered by Tenant to
Landlord as described in the paragraph entitled “Security Provisions.”

 

Lease Term:  Commencing on the Commencement Date and
ending on February 28, 2013.

 

Lender:  Defined in paragraph entitled “Landlord’s
Default”.

 

Lower
Level Space: 
That portion of the Building consisting of the entire lower level as
depicted on the plan attached as Exhibit B and agreed by Landlord and Tenant
for all purposes under this Lease to consist of an aggregate of approximately
nineteen thousand seven hundred eighty-three (19,783) rentable square feet.  The number of rentable square feet of the
Lower Level Space as recited above shall be final, conclusive and controlling.

 

2

 

Lower
Level Space Rent:  The annual amount of base rent per rentable square foot, for
purposes of this Lease only, allocated to the Lower Level Space and the portion
of the Lease Term during which such amount is applicable shall be determined
from the following table.

 

	
  Applicable Portion of Lease Term

  	
   

  	
  Rate
  Per/Rentable

  Sq. Ft./Annum

  	
   

  
	
  April 1, 2003 - February 29, 2004

  	
   

  	
  $

  	
  16.00

  	
   

  
	
  March 1, 2004 - February 28, 2005

  	
   

  	
  $

  	
  16.48

  	
   

  
	
  March 1, 2005 - February 28, 2006

  	
   

  	
  $

  	
  16.97

  	
   

  
	
  March 1, 2006 - February 28, 2007

  	
   

  	
  $

  	
  17.48

  	
   

  
	
  March 1, 2007 - February 29, 2008

  	
   

  	
  $

  	
  18.00

  	
   

  
	
  March 1, 2008 - February 28, 2009

  	
   

  	
  $

  	
  19.54

  	
   

  
	
  March 1, 2009 - February 28, 2010

  	
   

  	
  $

  	
  20.13

  	
   

  
	
  March 1, 2010 - February 28, 2011

  	
   

  	
  $

  	
  20.73

  	
   

  
	
  March 1, 2011 - February 29, 2012

  	
   

  	
  $

  	
  21.35

  	
   

  
	
  March 1, 2012 - February 28, 2013

  	
   

  	
  $

  	
  21.99

  	
   

  

 

Manager:  Trammell Crow Real Estate Services, Inc., or
its replacement as specified by written notice from Landlord to Tenant.

 

Manager’s
Address: 
14595 Avion Parkway, Suite 100, Chantity, Virginia 20151, which address
may be changed by written notice from Landlord to Tenant.

 

Operating Costs:  Defined in paragraph captioned “Additional
Rent”.

 

Operating Costs Allocable to the Premises:  Defined in paragraph captioned “Additional
Rent”.

 

Parking Ratio:  3.5 stalls per 1,000 rentable square feet of
the Premises.

 

Permitted
Use: 
General business office uses and other uses incidental thereto, so long
as such general business office and other incidental uses are consistent with
Governmental Requirements and with first-class buildings of the same or similar
use as the Building located in the metropolitan area in which the Building is
located.

 

Plans
and Specifications:  (a) Those certain plans and specifications for the Tenant
Improvements, if any, as listed in Exhibit C and any modifications to
them approved in writing by Landlord and Tenant; or (b) if Exhibit C
does not include a listing of such plans and specifications, then such plans
and specifications shall be prepared by Tenant (the “Preparing Party”)
and delivered to Landlord (the “Receiving Party”) and approved by
Landlord and Tenant as set forth in the paragraph entitled “Plans and
Specifications”

 

Prepaid
Rent: 
Forty-One Thousand Three Hundred Eleven and 67/100 ($41,311.67), of
which (a) Thirty-Nine Thousand Three Hundred Nineteen and 42/100 Dollars
($39,319.42) shall be applied toward Base Rent for the sixth floor portion of
the Premises for the first full calendar month of the Lease Term in which full
rent is due on such portion of the Premises, and (b) One Thousand Nine Hundred
Ninety-Two and 25/100 Dollars ($1,992.25) shall be applied to Tenant’s Share of
Lower Level Space Rent for the first full calendar month of the Lease Term in
which Lower Level Space Rent is due.

 

Premises:  The portion of the Building consisting of
the entire fifth (5th) and sixth 
(6th) floors as depicted on the plan attached as Exhibit B
and agreed by Landlord and Tenant for all purposes under this Lease to consist
of an aggregate of approximately forty thousand nine hundred eighty (40,980)
rentable square feet (of which approximately twenty thousand nine hundred two
(20,902) rentable square feet are located on the fifth (5th) floor
and approximately twenty thousand seventy-eight (20,078) rentable square feet
are located on the (6th) floor. 
The number of rentable square feet of the Premises recited above shall
be final, conclusive and controlling, except as the same may be adjusted to
reflect any expansion of the Premises.

 

Prime Rate:  Defined in paragraph captioned “Default
Rate”.

 

Property
Taxes: 
(a) Any form of ad valorem real or personal property tax or assessment
imposed by any Governmental Agency on the Land, Building, any other
improvements on the Land or any personal property owned by Landlord and used in
the operation, repair or maintenance of the

 

3

 

Land, Building
or improvements; (b) any other form of tax or assessment, license fee license
tax, tax or excise on rent or any other levy, charge, expense or imposition
made or required by any Governmental Agency on any interest of Landlord in such
Land, Building, related improvements or personal property; (c) any fee for
services charged by any Governmental Agency for any services such as fire
protection, street, sidewalk and road maintenance, refuse collection, school
systems or other services provided or formerly provided to property owners and
residents within the general area of the Land; (d) any governmental impositions
allocable to or measured by the area of any or all of such Land, Building,
related improvements or personal property or the amount of any base rent,
additional rent or other sums payable under any lease for any or all of such
Land, Building, related improvements or personal property; (e) any gross
receipts or other excise tax allocable to, measured by or a function of any one
or more of the matters referred to in clause (d); (f) any impositions by any
Governmental Agency on any transaction evidenced by a lease of any or all of
such Land, Building, related improvements or personal property or charge with
respect to any document to which Landlord is a party creating or transferring
an interest or an estate in any or all of such Land, Building, related
improvements or personal property; (g) any increase in any of the foregoing
based upon construction of improvements or change of ownership of any or all of
such Land, Building, related improvements or 
personal property, and (h) tax consultant fees and expenses and costs of
appeals of any Property Taxes.  Property
Taxes shall not include federal, state or local taxes on Landlord’s net
income.  Property Taxes also shall not
include excess profit taxes, excise taxes, franchise taxes, gift taxes, capital
stock taxes, estate, succession, inheritance and transfer taxes.  Landlord shall pay all Property Taxes by the
date such Property Taxes are due. 
Further, Landlord shall not include in Property Taxes any interest or
penalties incurred by Landlord by reason of Landlord’s failure to pay any
Property Taxes in a timely manner unless, as of the date such interest or
penalties was assessed, Tenant had not paid all Base Rent and Additional Rent
due hereunder through such date.

 

Punch
List Work: 
Minor items of repair, correction, adjustment or completion as such
phrase is commonly understood in the construction industry in the metropolitan
area in which the Land is located.

 

Rent Commencement Date:  April 1, 2003.

 

Restrictions:  Any covenants, conditions and restrictions
applicable to the Land.

 

Substantial
Completion: 
The date that the Tenant Improvements have been completed substantially
in accordance with the Plans and Specifications, subject to Punch List
Work.  The Tenant Improvements shall be
deemed to be substantially complete upon the earlier of (a) a certification of
same by Kite Architecture or any other architect mutually acceptable to
Landlord and Tenant or (b) the issuance of a temporary or permanent certificate
of occupancy by the proper governmental authority.

 

Telecommunication
Facilities: 
Equipment, facilities, apparatus and other materials utilized for the
purpose of electronic telecommunication, including cable, switches, wires,
conduit and sleeves.

 

Telecommunication
Services: 
Services associated with electronic telecommunications, whether in a
wired or wireless mode.  Basic voice
telephone services are included within the definition.

 

Tenant:  The person or entity(ies) named on the first
page of this Lease.

 

Tenant Alterations:  Defined in paragraph captioned “Tenant
Alterations”.

 

Tennant
Expenditures: 
The costs incurred by Tenant in connection with (i) providing security
devices for the Premises, (ii) the installation/fabrication of any exterior
sign placed on the Building subject to and in accordance with the terms and
conditions of paragraph 4.23 hereof, (iii) the installation of voice and data
wire and cabling in the Premises. (iv) Tenant’s move into the Premises,
including but not limited to the expenses (if applicable) of a moving company
and/or a move coordinator, and/or (v) the purchase of furniture, fixtures or
equipment to be used at the Premises.

 

Tenant
Improvement Allowance:  The maximum amount, if any, to be expended
by Landlord for the cost of Tenant Improvements (including reasonable
architectural, engineering, permitting and space, planning fees, and the
Construction Management Fee) or reimbursed to Tenant for the cost of Tenant
Expenditures (subject to the limitation set forth in paragraph 2.5 hereof),
which maximum shall not exceed an aggregate of Eight Hundred Nineteen Thousand
Six Hundred and 00/100 Dollars ($819,600.00). 
Subject to the terms and conditions of this Lease, Tenant shall have the
right to utilize the Tenant Improvement Allowance through the date which is
three (3) years after the Commencement Date, provided, however, in no event
shall Landlord be required

 

4

 

to fund more
than one-half of the Tenant Improvement Allowance (i.e. Four Hundred Nine
Thousand Eight Hundred and 00/100 Dollars ($409,800.00)) prior to March 1,
2004.

 

Tenant
Improvements: 
Those alterations or improvements to the Premises as appear and are
depicted in the Plans and Specifications, including any modifications thereto
approved in writing by Landlord and Tenant.

 

Tenant’s
Agents: 
Any and all officers, partners, contractors, subcontractors,
consultants, licensees, agents, concessionaires, subtenants, servants,
employees, customers, guests, invitees or visitors of Tenant.

 

Tenant’s
Pro Rata Share:  As of any particular date, a fraction the numerator of which is
the rentable square footage of the Premises, and the denominator of which is
the total rentable square footage of the Building exclusive of the number of
rentable square feet of Lower Level Space then made available by Landlord for
use as Common Area Amenities.  As of the
date of this Lease (x) four thousand nine hundred forty-six (4,946) rentable square
feet are available for use as Common Area Amenities, and (y) Tenant’s Pro Rata
Share is 40,980/(140,590 - 4,946) = thirty and twenty-one hundredths percent
(30.21%).  Such figure shall be final,
conclusive and controlling during the Lease Term for all purposes, except as
the same may be adjusted to reflect (x) any expansion of the Premises and (y)
changes(s) in that portion of the rentable square footage of the Lower Level
Space from time to time made available by Landlord in its sole discretion for use
as Common Area Amenities.

 

Tenant’s Share of Lower Level Space Rent:  Tenant’s Pro Rata Share of the amount
allocated to Lower Level Space Rent for that Portion of the rentable square
footage of the Lower Level Space from time to time made available by Landlord
for use as Common Area Amenities, provided that in no event may Landlord
increase the size of the Common Area Amenities from that existing on the date
of this Lease as set forth in the definition of Common Area Amenities.  Nothing contained herein shall require
Landlord to collect Lower Level Space Rent from any other tenant of the
Building nor shall anything herein prohibit Landlord from charging other
tenants of the Building more or less lower level space rent than the amount
payable by Tenant hereunder, in each case whether or not such other tenant(s)
is/are granted the right to use the Common Area Amenities.  By way of examples and for illustration
purposes only: (a) If four thousand nine hundred forty-six (4,946) rentable
square feet of the Lower Level Space is available for use as Common Area
Amenities during the period from April 1, 2003 through February 29, 2004.  Tenant’s Share of Lower Level Space Rent
during such period shall be Twenty-Three Thousand Nine Hundred Seven and 00/100
Dollars ($23,907.00) per annum, or One Thousand Nine Hundred Ninety-Two and
25/100 Dollars ($1,992.25) per month, calculated as follows: Tenant’s Pro Rata
Share is 40,980/(140,590 - 4,946) = 30.21% 0.3021x $16.00 per rentable square
foot x 4,946 rentable square feet = $23,905.99 per annum, or $1,992.25 per
month; and (b) if two thousand rentable square feet of the Lower Level Space is
available for use as Common Area Amenities during the period from March 1, 2004
through February 28, 2005, Tenant’s Share of Lower Level Space Rent during such
period shall be Nine Thousand Seven Hundred Forty-six and 27/100 Dollars
($9,746.27) per annum, or Eight Hundred Twelve and 19/100 Dollars ($812.19) per
month. calculated as follows: Tenant’s Pro Rata Share is 40,980/(140,590 - 2,000)
= 29.57%; 0.2957 x $16.48 per rentable square foot x 2,000 rentable square feet
= $9,748.27 per annum or $812.19 per month.

 

Year:  A
calendar year commencing January 1 and ending December 31 or that portion of
the calendar year with in the Lease Term.

 

SECTION
2: PREMISES AND TERM

 

2.1                                 Lease of Premises.

 

2.1.1        Initial
Premises.  Landlord leases the
Premises to Tenant, and Tenant leases the Premises from Landlord, upon the
terms and conditions set forth in this Lease.

 

2.1.2        Expansion
Space - Right of First
Opportunity.  During the Lease Term (including any extension of this Lease
pursuant to paragraph 2.2.2 hereof), provided that no Event of Default exists
and further provided that Transaction Network Services, Inc. or an Affiliate is
itself occupying at least seventy percent (70%) of all of the Premises then
demised to Tenant (provided that such occupancy requirement

 

5

 

shall be waived during the
first twelve (12) months of the Lease Term), in the event that any other space
in the Building (exclusive of Lower Level Space) shall become available for
lease in the Building as a result of the expiration or termination of any lease
(in each case referred to herein as “Expansion Space”), Landlord shall first
offer such Expansion Space to Tenant on an “AS
IS” basis for the balance of the Lease Term, subject to the renewal
rights of existing tenants. 
Notwithstanding the foregoing, if less than three (3) years were to
remain on the Lease Term as of the effective commencement date for such
Expansion Space, Tenant may not exercise such right of first offer unless (i)
Tenant exercises the Extension Option (if the initial Lease Term has not
expired) or (ii) Tenant agrees to lease the Expansion Space for a term of five
(5) years (or such longer period as Landlord may in its sole discretion
approve), with a corresponding extension (a “Corresponding Premises Extension”)
of the Lease Term as it relates to the Premises.  The Base Rent and Additional Rent payable for the affected
Expension Space (and for the Premises during the Corresponding Premises
Extension) shall be the then Fair Market Rent for new leases of such space as
determined in accordance with paragraph 2.1.3 hereof.  Notwithstanding the foregoing or anything to the contrary
contained in paragraph 2.1.3 hereof. (a) in no event shall the Base Rent plus
escalations for any Expansion Space be less than the annual Base Rent per
rentable square foot plus escalations payable for the Premises from time to
time, and (b) Landlord shall have no obligation to prepare, refurbish or
construct the Expansion Space or any part thereof or to otherwise provide any
amount of improvement allowance in respect of the Expansion Space (except as
taken into account in the determination of Fair Market Rent as provided in the
definition thereof).  Tenant shall have
ten (10) Business Days from notification of Landlord (the “ROFO Notice”) within
which to accept Landlord’s offer in writing to lease all of such Expansion
Space or any full floor portion of such Expansion Space.  Although the Fair Market Rent shall be
determined in accordance with paragraph 2.1.3 hereof, the ROFO Notice shall
state Landlord’s proposed Fair Market Rent for such Expansion Space.  If Tenant has not accepted Landlord’s offer
in writing within said ten (10) Business Day time period and/or has not
executed an amendment to this Lease in form and substance satisfactory to
Landlord within five (5) Business Days after Landlord’s delivery of same to the
Tenant, provided that such amendment will only be delivered to Tenant after
Tenant accepts Landlord’s offer in writing, (in each case time being of the
essence), this right of first opportunity shall expire as to such Expansion
Space, and the Landlord shall be free to lease all or any portion of such
Expansion Space to any third party at any time thereafter on the same terms and
conditions as offered to Tenant or on such other terms and conditions as
Landlord shall determine in its sole discretion.  Any exercise of such right of first offer by Tenant as provided
herein shall be irrevocable, whether or not Fair Market Rent has been
determined as of such date.  If the Fair
Market Rent has not been determined as of the effective date of any such
expansion.  Tenant initially shall pay
Base Rent plus escalations for the Expansion Space at the same rate payable for
the Premises, with a retroactive adjustment to be made within ten (10) Business
Days after the determination of Fair Market Rent.  In the event that Tenant does not elect to exercise its right of
first offer with respect to any Expansion Space and such Expansion Space shall
become available again during the Lease Term as a result of the termination or
expiration of any lease subsequently entered into by Landlord with respect to
such space, Landlord shall again offer such Expansion Space to Tenant pursuant
to the procedures set forth above. 
Since the first (1st) through the fourth (4th) floors of the Building
are available as of the Commencement Date. 
Tenant shall be deemed not to have exercised its right of first offer
with respect to such space and Landlord shall have no obligation to offer such
space to Tenant again until after the expiration or termination of any lease of
such space hereafter entered into by Landlord.

 

2.1.3        Determination
of Fair Market Rent for Expansion Space.  If Tenant notifies Landlord of its intent to
lease the Expansion Space as provided above, Landlord and Tenant shall have a
period of twenty (20) days after Tenant’s receipt of the ROFO Notice to agree
upon the Fair Market Rent for the Expansion Space.  If Landlord and Tenant fail to reach agreement on the Fair Market
Rent for the Expansion Space, then the Fair Market Rent for the Expansion Space
shall be determined by three (3) licensed commercial real estate brokers, one
of whom shall be named by Landlord, one of whom shall be named by Tenant, and
the third of whom shall be selected by the brokers chosen by Landlord and by
Tenant.  All such brokers shall be independent
and none of the brokers nor their firms shall have been employed by Landlord
(with respect to the Building). Tenant or their affiliates for the immediately
preceding five (5) years.  A broker
shall not be disqualified if he/she or their firm have been employed by
Landlord within the preceding five (5) years with respect to any property other
than the Building.  Furthermore, each
such broker shall be commercial real estate broker licensed in Virginia,
specializing in commercial office leasing in Northern Virginia, with ;not less
than ten (10) years experience in appraising comparable commercial properties
in Northern Virginia and recognized as reputable within the local real estate
industry

 

6

 

(each such broker being defined
herein for purposes of this paragraph as a “Qualified Broker”).  The parties each agree to select their
Qualified Broker within ten (10) days after the expiration of the aforesaid
twenty (20) day period.  The third
Qualified Broker shall be selected within ten (10) days after the first two
Qualified Brokers have been selected. 
If a party fails to timely select a Qualified Broker, the determination
of the Fair Market Rent for the Expansion Space shall be made by the Qualified
Broker selected by the other party. 
Within fifteen (15) days after the third Qualified Broker has been
selected, all of the Qualified Brokers shall meet to attempt to agree upon the
Fair Market Rent for the Expansion Space. 
If the Qualified Brokers are unable to reach agreement, each Qualified
Broker shall, within fifteen (15) days after the expiration of the preceding
fifteen (15) day period, submit to Landlord and Tenant in writing the Fair
Market Rent for the Expansion Space he or she deems appropriate (each such
Qualified Broker’s determination of Fair Market Rent for purposes of this
paragraph being referred to herein as an “Appraisal”).  The Fair Market Rent for the Expansion Space
shall be the amount which is the mean between the closest two appraisals determined
by the Qualified Brokers, provided that the higher of such appraisals does not
exceed the lower of such appraisals by more than ten percent (10%).  If such appraisal exceeds the other by more
than ten percent (10%), the two (2) remaining brokers (as used in this
paragraph, the “Remaining Qualified Brokers”) shall select another Qualified
Broker (as used in this paragraph, the “Fourth Qualified Broker”).  Within fifteen (15) days after the Fourth
Qualified Broker has been selected, the Remaining Qualified Brokers and the
Fourth Qualified Broker shall meet to attempt to agree upon the Fair Market
Rent for the Expansion Space.  If the
Remaining Qualified Brokers and the Fourth Qualified Broker are unable to reach
agreement, each such Qualified Broker shall, within fifteen (15) days after the
expiration of the preceding fifteen (15) day period, submit to Landlord and
Tenant in writing the Fair Market Rent for the Expansion Space he or she deems
appropriate.  The Fair Market Rent for
the Expansion Space shall be the amount which is the mean between the three (3)
appraisals determined by the Remaining Qualified Brokers and the Fourth
Qualified Broker.  The Fair Market Rent
for any Expansion Space determined in accordance with this paragraph 2.1.3
shall be final and binding on Landlord and Tenant.  Each of the parties to this Lease shall pay the costs of the
services of the Qualified Broker selected by that party, and the cost of the
services of the third Qualified Broker and the Fourth Qualified Broker shall be
divided equally between Landlord and Tenant. 
After the Fair Market Rent for the Expansion Space has been determined
as herein provided, the parties shall execute an amendment to this Lease
setting forth the terms upon which Tenant is Leasing the Expansion Space.

 

2.2                                 Lease Term.

 

2.2.1        Initial
Lease Term.  The initial
Lease Term shall be for the period stated in the definition of that term,
unless earlier terminated as provided in this Lease.

 

2.2.2        Option
to Extend.  While the
Lease is in full force and effect, provided that no Event of Default exists and
further provided that Transaction Network Services, Inc. or an Affiliate is
itself occupying at least seventy (70%) of all of the Premises then demised to
Tenant, in each case both as of the time of option exercise and as of the
commencement of the herein additional term, Tenant shall have the right or
option (the “Extension Option”) to extend the original term of this Lease for
one (1) period of five (5) years.  Such
extension of the original Lease Term shall be on the same terms, covenants and
conditions as provided for in the original Lease Term except that Tenant shall
have no further option to extend the Lease Term, and except that the base
rental for the Premises and Tenant’s Share of Lower Level Space Rent during the
extended term shall each be an amount equal to ninety-five percent (95%) of the
then Fair Market Rent for such space for lease renewals as determined in
accordance with paragraph 2.2.3 hereof. Any exercise of such Extension Option
by Tenant as provided herein shall be irrevocable, whether or not Fair Market
Rent has been determined as of such date. 
If the Fair Market Rent has not been determined as of the commencement
date of such additional term, Tenant initially shall pay Base Rent plus
escalations and Tenant’s Share of Lower Level Space Rent for the extended term
at the same rates payable for the Premises and Tenant’s Share of Lower Level
Space Rent as of the date immediately preceding the commencement of such
additional term, with a retroactive adjustment to be made within ten (10)
Business Days after the determination of Fair Market Rent.  Notwithstanding the foregoing or anything to
the contrary contained in paragraph 2.2.3 hereof, (a) in no event shall the
Base Rent or Tenant’s Share of Lower Level Space Rent on account of any
additional term be less than the annual Base Rent or Tenant’s Share of Lower
Level Space Rent (in each case on a per rentable square foot basis) payable for
the Premises or use of the Common Area Amenities, respectively, as of the date
immediately preceding the commencement of such additional term, and (b)
Landlord shall have no obligation to prepare, refurbish or construct the
Premises, the Lower Level Space, any Common Area Amenities, or any part of any
of the foregoing prior to

 

7

 

the commencement of the herein
additional term or otherwise provide any amount of improvement allowance in
respect of the Premises (except as taken into account in the determination of
Fair Market Rent as provided in paragraph 2.2.3 below).  Notice (the “Option Notice”) of Tenant’s
intention to exercise the Extension Option must be given to Landlord, in
writing, at least nine (9) months prior to the expiration of the original Lease
Term.

 

2.2.3        Determination
of Fair Market Rent for Extension Option.  If Tenant exercises the Extension Option as
provided above, Landlord and Tenant shall have a period of twenty (20) days
after Landlord’s receipt of the Option Notice to agree upon the Fair Market
Rent for the Premises and Tenant’s Share of Lower Level Space Rent.  If Landlord and Tenant fail to reach
agreement on the Fair Market Rent for the for the Premises and Tenant’s Share
of Lower Level Space Rent, then the Fair Market Rent for the Premises and
Tenant’s Share of Lower Level Space Rent shall be determined by three (3)
licensed commercial real estate brokers, one of whom shall be named by
Landlord, one of whom shall be named by Tenant, and the third of whom shall be
selected by the brokers chosen by Landlord and by Tenant.  All such brokers shall be independent and
none of the brokers nor their firms shall have been employed by Landlord (with
respect to the Building).  Tenant or
their affiliates for the immediately preceding five (5) years.  A broker shall not be disqualified if he/she
or their firm have been employed by Landlord within the preceding five (5)
years with respect to any property other than the Building.  Furthermore, each such broker shall be a
commercial real estate broker licensed in Virginia, specializing in commercial
office leasing in Northern Virginia, with not less than ten (10) years
experience in appraising comparable commercial properties in Northern Virginia
and recognized as reputable within the local real estate industry (each such
broker being defined herein for purposes of this paragraph as a “Qualified
Broker”).  The parties each agree to
select their Qualified Broker within ten (10) days after the expiration of the
aforesaid twenty (20) day period.  The
third Qualified Broker shall be selected within ten (10) days after the first
two Qualified Brokers have been selected. 
If a party fails to timely select a Qualified Broker, the determination
of the Fair Market Rent for the Premises and Tenant’s Share of Lower Level
Space Rent shall be made by the Qualified Broker selected by the other
party.  Within fifteen (15) days after
the third Qualified Broker has been selected, all of the Qualified Brokers
shall meet to attempt to agree upon the Fair Market Rent for the Premises and
Tenant’s Share of Lower Level Space Rent. 
If the Qualified Brokers are unable to reach agreement, each Qualified
Broker shall, within fifteen (15) days after the expiration of the preceding
fifteen (15) day period, submit to Landlord and Tenant in writing the Fair
Market Rent for the Premises and Tenant’s Share of Lower Level Space Rent he or
she deems appropriate.  The Fair Market
Rent for the Premises and Tenant’s Share of Lower Level Space Rent shall be the
respective amounts which are the mean between the closest two appraisals for
each such space determined by the Qualified Brokers, provided that the higher
of such appraisals does not exceed the lower of such appraisals by more than
ten percent (10%).  If such appraisal
exceeds the other by more than ten percent (10%), the two (2) remaining brokers
(as used in this paragraph, the “Remaining Qualified Brokers”) shall select
another Qualified Broker (as used in this paragraph, the “Fourth Qualified
Broker”).  Within fifteen (15) days
after the Fourth Qualified Broker has been selected, the Remaining Qualified
Brokers and the Fourth Qualified Broker shall meet to attempt to agree upon the
Fair Market Rent for the Premises and Tenant’s Share of Lower Level Space
Rent.  If the Remaining Qualified
Brokers and the Fourth Qualified Broker are unable to reach agreement, each
such Qualified Broker shall, within fifteen (15) days after the expiration of
the preceding fifteen (15) day period, submit to Landlord and Tenant in writing
the Fair Market Rent for the Premises and Tenant’s Share of Lower Level Space
Rent he or she deems appropriate (each such Qualified Broker’s determination of
Fair Market Rent for purposes of this paragraph being referred to herein as an
“Appraisal”).  The Fair Market Rent for
the Premises and Tenant’s Share of Lower Level Space Rent shall be the
respective amounts which are the mean between the three (3) appraisals for each
such space determined by the Remaining Qualified Brokers and the Fourth
Qualified Broker.  The Fair Market Rent
for the Premises and Tenant’s Share of Lower Level Space Rent determined in
accordance with this paragraph 2.2.3 shall be final and binding on Landlord and
Tenant.  Each of the parties to this
Lease shall pay the costs of the services of the Qualified Broker selected by
that party, and the cost of the services of the third Qualified Broker and the
Fourth Qualified Broker shall be divided equally between Landlord and
Tenant.  After the Fair Market Rent for
the Premises and Tenant’s Share of Lower Level Space Rent have been determined
as herein provided, the parties shall execute an amendment to this Lease
setting forth the terms resulting from the exercise of the Extension Option.

 

2.3           Plans and
Specifications.

 

2.3.1        If there are no Plans and Specifications
attached as Exhibit C, then Tenant shall retain a licensed architect of
its choice, subject to Landlord’s prior written approval, to prepare the Plans
and

 

8

 

Specifications for the Tenant
Improvements.  The plans and
specifications shall be subject to Landlord’s approval, which approval shall
not be unreasonably delayed, provided that such Plans and Specifications comply
with the requirements of this paragraph 2.3.

 

2.3.2        Tenant shall cause its architect to
furnish to Landlord for Landlord’s approval space plans sufficient to convey
the architectural design of any initial alterations which Tenant desires to
make to the Premises, including, without limitation, the location of doors,
partitions, electrical and telephone outlets, plumbing fixtures, heavy floor
loads and other special requirements (collectively, the “Space Plan”).  If required by Landlord, Tenant’s architect
shall consult with Landlord’s engineer in preparing the Space Plan, and
incorporate such engineer’s requirements into the Space Plan.  The fees of such engineer shall be a Tenant
Improvement Cost (as hereafter defined). 
Landlord shall approve or disapprove the Space Plan within three (3)
Business Days after Landlord’s receipt thereof.  If Landlord shall disapprove of any portion of the Space Plan
within such three (3) Business Day period, Landlord shall advise Tenant of the
reason thereof and shall notify Tenant of the revisions to the Space Plan that
are reasonably required by Landlord for the purpose of obtaining approval.  Tenant shall within seven (7) days submit to
Landlord, for Landlord’s approval, a redesign of the Space Plan, incorporating
the revisions required by Landlord.

 

2.2.3        Tenant shall cause its architect to
prepare from Tenant’s approved Space Plan, complete Plans and Specifications
within ten (10) days after Landlord approves the Space Plan.  The Plans and Specifications shall (a) be
compatible with the Building shall and with the design, construction and
equipment of the Building; (b) comply with all Governmental Requirements; (c)
comply with all applicable insurance regulations; and (d) be consistent with
the approved Space Plan.  Tenant shall
submit the Plans and Specifications for Landlord’s approval in the same manner
as provided in Subparagraph 2.3.2 above for approval by Landlord of Tenant’s
Space Plan.

 

2.3.4        Notwithstanding anything to the contrary
herein, so long as the Plans and Specifications for the Tenant Improvements are
substantially consistent with the General Description of Tenant Improvements
contained in Exhibit J attached hereto. 
Landlord shall diligently facilitate and expedite its approval of the
Plans and Specifications within the time period provided above in this Section
2.3 and shall not unreasonably withhold, condition or delay such approval.

 

2.4           Commencement
Date.

 

2.4.1        Prior to delivering possession of the
Premises to Tenant, Landlord shall obtain a non-residential use permit for
Tenant’s occupancy of the Premises, and the Commencement Date shall be the date
set forth in the definition of that term in Section 1 hereof.  With the exception of the Tenant
Improvements which, subject to the terms and conditions hereof, are to be
completed by Landlord after the Commencement Date, Tenant acknowledges that the
Premises shall be delivered AS IS and
that no representations as to the condition of the Premises have been made by
Landlord.  The taking of possession by
Tenant, together with the issuance of a non-residential use permit for Tenant’s
occupancy, shall establish that the Premises are in good and satisfactory
condition (except for latent defects) when possession was so taken, and the
Commencement Date and Rent Commencement Date shall occur as provided in the
definition of such terms.  Tenant shall
notify the Landlord in writing within three (3) months after the Commencement
Date of the existence of any latent defects pertaining to the Premises, or
Tenant shall be deemed to have waived any rights on account thereof.  In no event shall Tenant’s refusal or
failure to take possession of the Premises delay or postpone the occurrence of
the Commencement Date or Rent Commencement Date.

 

2.5           Tenant
Improvements and Tenant’s Contribution to Tenant Improvement Costs.

 

2.5.1        Following the Commencement Date and
Landlord’s approval of the Plans and Specifications, Landlord shall commence
construction of the Tenant Improvements in accordance with such Plans and
Specifications and thereafter diligently pursue the completion of same.  Tenant agrees that Landlord shall be
permitted to enter the Premises after the Commencement Date so that Landlord
may perform  the Tenant
Improvements.  Tenant shall cooperate
with Landlord and grant Landlord free and complete access to all areas of the
Premises necessary for Landlord to complete the Tenant Improvements.  Tenant further agrees not to interfere with
Landlord’s performance of the Tenant Improvements.  Landlord’s construction of the Tenant Improvements shall be
performed by Landlord’s contractors at Tenant’s sole cost and expense, and the
Tenant Improvement Allowance shall be applied against the cost thereof as
provided in this paragraph 2.5. 
Landlord’s contractors and subcontractors in all events shall (a) be
parties to, and bound by, a collective bargaining agreement with a labor
organization affiliated with the Building and Construction Trades Council of
the AFL-CIO applicable to the geographic area in which the Building is located
and to the trade or trades in which the Tenant Improvements are to

 

9

 

be performed and (b) employ
only members of such labor organizations to perform work within their
respective jurisdictions.  Landlord
shall notify Tenant in writing when Substantial Completion has been achieved.  If Tenant believes that Substantial
Completion has not occurred, Tenant shall notify Landlord in writing of its
objections (“Tenant’s Notice Objections”) within ten (10) Business Days after
its receipt of the Landlord’s notice described in the preceding sentence, and
Tenant shall be deemed to have waived any defects or deficiencies in the
construction of the Tenant Improvements (other than latent defects) which are
not expressly set forth on Tenant’s Notice of Objections.  Landlord shall have a reasonable time after
its receipt of Tenant’s notice in which to take such action as may be necessary
to achieve Substantial Completion, and shall notify Tenant in writing when such
has been achieved.  In the event of any
dispute as to whether Substantial Completion has occurred, the receipt of a
certificate of Kite Architecture or any other architect mutually acceptable to
Landlord and Tenant shall be conclusive. 
If, following Landlord’s notice of Substantial Completion, Punch List
Work remains to be completed, Landlord and Tenant shall agree on such Punch
List Work in writing and Landlord will promptly complete such Punch List.  Within thirty (30) days of Landlord’s
request, Tenant shall certify to the Landlord that the Punch List Work has been
satisfactorily completed, or if such is not the case Tenant shall notify Landlord
in writing in reasonable detail of any alleged deficiencies.  Tenant shall notify the Landlord in writing
within three (3) months after Landlord’s notice of Substantial Completion of
the existence of any latent defects pertaining to the Premises, or Tenant shall
be deemed to have waived any rights on account thereof.  Tenant acknowledges and agrees that
completion of the Tenant Improvements is not a condition to the occurrence of
the Rent Commencement date, and the Rent Commencement Date shall occur regardless
of whether Substantial Completion has occurred.  Tenant shall make no changes to the Plans and Specifications or
the work reflected in the Plans and Specifications without the consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed provided that such changes are non-structural and do not affect any of
the Building’s mechanical, HVAC, electrical, plumbing or other systems.

 

2.5.2        Tenant shall be responsible for all
costs for Landlord to complete the Tenant Improvements and to otherwise prepare
the Premises for Tenant’s occupancy, including all hard and soft costs, such as
and without limitation, labor and materials, architectural, engineering,
permitting and space planning fees (collectively, the “Tenant Improvement
Costs”).  Tenant further agrees to pay
the Landlord a construction management fee (the “Construction Management Fee”)
equal to three percent (3%) of that portion of the Tenant Improvement Costs
constituting so called “hard costs” (i.e. all labor, materials, fixtures and
other items incorporated into the Tenant Improvements).  The Tenant Improvement Allowance shall be
applied against the Tenant Improvement Costs and the Construction Management
Fee.  Except as provided in the last two
(2) sentences of this subparagraph 2.5.2, Tenant shall not be entitled to
receive any credit or payment on account of any unexpended portion of the
Tenant Improvement Allowance.  If the
cost of the Tenant Improvements and Construction Management Fee exceeds Four
Hundred Nine Thousand Eight Hundred and 00/100 Dollars ($409,800.00) (the
“First Year Amount”), Tenant shall pay such excess to Landlord on demand and
prior to Landlord’s commencement of work on the Tenant Improvements (the amount
so paid to Landlord by Tenant is referred to herein as the “Tenant Construction
Advance”), if the cost of the Tenant Improvements and Construction Management
Fee subsequently increases (or further increases) above the Tenant Improvement
Allowance as a result of change orders requested by Tenant and approved by
Landlord, Tenant shall pay to Landlord such excess within five (5) calendar
days after demand made from time to time by Landlord.  If Tenant fails to pay to Landlord the cost of any such excess Tenant
Improvements and Construction Management Fee as and when due, Landlord may
elect to suspend work on the Tenant Improvements pending such timely
payment.  Upon completion of the Tenant
Improvements and application of the Tenant Improvement Allowance against the
Tenant Improvement Costs and the Construction Management Fee, if the aggregate
cost of the Tenant Improvements and the Construction Management Fee is less
than the Tenant Improvement Allowance, the unexpended and unapplied balance
thereof shall be available to Tenant until the date which is three (3) years
after the Commencement Date to reimburse Tenant for Tenant Expenditures (up to
a maximum aggregate amount of Six Hundred Fifty-Five Thousand Six Hundred
Eighty and 00/100 Dollars ($655,680.00), less any amount of the Tenant Improvement
Allowance applied against monthly installments of Base Rent for the fifth floor
portion of the Premises as hereinafter provided) upon receipt of paid invoices
and any other documentation reasonably requested by Landlord, provided that in
no event shall Landlord be required to expend and/or advance more than the
First Year Amount of the Tenant Improvement Allowance (including the cost of
Tenant Improvements, the Construction

 

10

 

Management Fee, and Tenant Expenditures)
prior to March 1, 2004.  At Tenant’s
option, upon Landlord’s receipt of Tenant’s written payment directions and
copies of invoices and any other documentation reasonably requested by
Landlord, subject to the foregoing Landlord shall pay Tenant’s vendors directly
for Tenant Expenditures to the extent that Landlord would otherwise have been
required to reimburse Tenant for such amounts as provided above.  Provided that the Tenant Improvements have
been completed, if the aggregate cost of the Tenant Improvements and
Construction Management Fee was greater than the First Year Amount and Tenant
paid Landlord the Tenant Construction Advance, on or before March 1, 2004,
Landlord shall pay Tenant from the remaining undisbursed balance of the Tenant
Improvement Allowance the lesser of (x) the undisbursed balance of the Tenant
Improvement Allowance (after payment of all Tenant Improvement Costs, the
Construction Management Fee, and any Tenant Expenditures) and (y) the Tenant
Construction Advance.  In the event that
the Tenant Construction Advance is less than the undisbursed and unapplied
amount of the Tenant Improvement Allowance, nothing in the immediately
preceding sentence shall limit Tenant’s ability to ultimately use or apply the
full remaining undisbursed and unapplied balance of the Tenant Improvement
Allowance for Tenant Improvement Costs subject to and in accordance with the
terms and conditions of this subparagraph 2.5.2.  Beginning with the thirteenth (13th) month after the Rent
Commencement Date, subject to the terms of the next following sentence, Tenant
may elect to apply any unexpended balance of the Tenant Improvement Allowance
up to a maximum aggregate amount of Four Hundred Nine Thousand Eight Hundred
and 00/100 Dollars ($409,800.00) against that portion of the monthly
installments of Base Rent next becoming due hereunder with respect to that
portion of the Premises constituting the fifth (5th) floor of the
Building calculated on a per rentable square foot basis, and if any portion of
the Tenant Improvement Allowance has not been expended and/or advanced on or
before the date that is three (3) years after the Commencement Date, subject to
the terms of the next following sentence Landlord shall credit the unexpended
and unapplied balance of the Tenant Improvement Allowance against that portion
of the monthly installments of Base Rent next becoming due hereunder with
respect to that portion of the Premises constituting the fifth (5th)
floor of the Building calculated on a per rentable square foot basis until such
amount has been fully applied. Notwithstanding anything to the contrary herein,
in no event shall more than an aggregate of Four Hundred Nine Thousand Eight
Hundred and 00/100 Dollars ($409,800.00) of the Tenant Improvement Allowance be
applied as a credit against Base Rent.

 

2.5.3        All Tenant Improvements, regardless of
which party constructed or paid for them, shall become the property of Landlord
and shall remain upon and be surrendered with the Premises upon the expiration
or earlier termination of this Lease; provided that, at Landlord’s
election and upon notice to Tenant, Tenant shall be required to remove all or
any portion of the Tenant Improvements (including Telecommunication Facilities)
upon the expiration or earlier termination of this Lease.  Notwithstanding the foregoing, if Tenant’s
Plans and Specifications are substantially consistent with the general
description of the Tenant Improvements which is annexed hereto as Exhibit J
and such Plans and Specifications do not include any additional improvements or
alterations which are not generally described on Exhibit J, Tenant shall
not be required to remove any of the Tenant Improvements at the expiration or
earlier termination of the Lease.

 

2.5.4        Tenant shall be solely responsible for
the design of the Tenant Improvements. 
Notwithstanding Landlord’s review and approval of the Plans and
Specifications, Landlord shall have no liability to Tenant or to any other
person for errors or omissions in the Plans and Specifications or in the
construction of the Tenant Improvements ( Landlord’s review and approval of the
Plans and Specifications being for Landlord’s own purposes).  Tenant shall indemnify, defend, protect and
hold Landlord’s Agents harmless from all Claims which arise in any way,
directly or indirectly from or in connection with the design of the Tenant
Improvements, including without limitation, claims arising from the work of
Tenant’s architect, engineer, employees or agents.

 

2.6           Intentionally Omitted.

 

2.7           Use and Conduct of
Business.

 

2.7.1        The Premises are to be used only for the
Permitted Uses, and for no other business or purpose without the prior consent
of Landlord.  Landlord makes no
representation or warranty as to the suitability of the Premises or the
Furniture for Tenant’s intended use. 
Notwithstanding the foregoing, to the best of Landlord’s actual
knowledge, the Permitted Uses are permitted by current zoning ordinances and
any other comprehensive land use requirements. 
Tenant shall, at its own cost and expense, obtain and maintain any and
all licenses, permits, and approvals necessary or appropriate for its use,
occupation and operation of the Premises for the Permitted Uses.  Tenant’s inability to obtain or maintain any
such

 

11

 

license, permit or approval
necessary or appropriate for its use, occupation or operation of the Premises
shall not relieve it of its obligations under this Lease, including the
obligation to pay Base Rent and Additional Rent.

 

2.7.2        No act shall be done in or about the
Premises that is unlawful or that will increase the existing rate of insurance
on any or all of the Land or Building. 
Tenant shall not commit or allow to be committed or exist: (a) any waste
upon the Premises, (b) any public or private nuisance, or (c) any act or
condition which disturbs the quiet enjoyment of any other tenant in the
Building, violates any of Landlord’s contracts affecting any or all of the Land
or Building (provided tenant has knowledge of such contracts), creates or
contributes to any work stoppage, strike, picketing, labor disruption or
dispute, interferes in any way with the business of Landlord or any other
tenant in the Building or with the rights or privileges of any contractors,
subcontractors, licensees, agents, concessionaires, subtenants, servants,
employees, customers, guests, invitees or visitors or any other persons
lawfully in and upon the Land or Building, or causes any impairment or
reduction of the good will or reputation of the Land or Building.

 

2.7.3        Tenant shall not, without the prior
consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed, use any apparatus, machinery, device or equipment in or
about the Premises which will cause any substantial noise or vibration or any
increase in the normal consumption level of electric power.  If any of Tenant’s apparatus, machinery,
devices or equipment should disturb the quiet enjoyment of any other tenant in
the Building, then Tenant shall provide, at its sole cost and expense, adequate
insulation or take other such action, including removing such apparatus,
machinery, devices or equipment, as may be necessary to eliminate the
disturbance.  No food or beverage
dispensing machines shall be installed by Tenant in the Premises without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld, conditioned or delayed.

 

2.8           Compliance
with Governmental Requirements and Rules and Regulations.  Tenant shall comply with all Governmental
Requirements and Restrictions relating to its use, occupancy and operation of
the Premises and shall observe such reasonable rules and regulations as may be
adopted and published by Landlord from time to time for the safety, care and
cleanliness of the Premises and the Building, and for the preservation of good
order in the Building and for the administration and management of the
Building, provided that such rules and regulations shall not be binding on
Tenant unless Tenant receives at least thirty (30) days prior notice of
same.  Current Rules and Regulations are
attached to this Lease as Exhibit E. 
If any rule or regulation conflicts with or is inconsistent with any
provision of this Lease, the Lease provision shall govern and control.  Landlord will enforce the Rules and
Regulations against all tenants in the building in a non-discriminatory manner.

 

SECTION 3: BASE RENT, ADDITIONAL RENT AND
OTHER SUMS PAYABLE UNDER LEASE

 

3.1           Payment of Rental.
 Tenant agrees to pay Base Rent,
Additional Rent and any other sum due under this Lease to Landlord without
demand, deduction, credit, adjustment or offset of any kind or nature, in
lawful money of the United States when due under this Lease, at the offices of
Manager at Manager’s Address, or to such other party or at such other place as
Landlord may from time to time designate in writing.

 

3.2           Base Rent.  On execution of this Lease, Tenant shall pay
to Landlord the amount specified in the definition of Prepaid Rent for the
month specified in the definition of that term.  Beginning on the Rent Commencement Date, Tenant agrees to pay the
monthly installments of Base Rent to Landlord, without demand and in advance,
on or before the first day of each calendar month of the Lease Term.  The monthly Base Rent installment for any
partial month at the beginning or end of the Lease Term shall be prorated.  Base Rent for any partial month at the
beginning of the Lease Term in which the Rent Commencement Date occurs shall be
paid by Tenant on the Rent Commencement Date.

 

3.3           Lease Security
Provisions.

 

3.3.1  On execution of this Lease, as security for
the full and faithful payment of all sums due under this Lease and the full and
faithful performance of every covenant and condition of this Lease to be
performed by Tenant, Tenant shall deliver a letter of credit in the amount of
Seven Hundred Thousand and 00/100 Dollars ($700,000.00) in favor of
Landlord.  The letter of credit
initially delivered pursuant to this paragraph and all substitutions,
replacements and renewals of it, must be consistent with and shall satisfy all
the requirements in the letter of credit criteria set forth on Exhibit F
hereto.  The term “Letter of Credit”
shall mean and refer to a letter of credit conforming to this
subparagraph.  If a Letter of Credit has
not been delivered to and accepted by Landlord on or before the full execution
of this Lease, at 

 

12

 

Landlord’s election, the
failure to deliver such Letter of Credit may be treated by Landlord (a) as a
condition subsequent to the effectiveness of this Lease such that this Lease
shall be voidable by Landlord by notice to Tenant at any time prior to
Landlord’s receipt of the Letter of Credit or (b) as an Event of Default.  If Landlord elects to treat the failure to
deliver the Letter of Credit on execution of this Lease as an Event of Default,
Landlord may pursue all available rights and remedies, including the right to
specific performance and the right to attach assets of Tenant.  Pending delivery of the Letter of Credit,
Landlord also may defer contracting for Tenant Improvements and/or suspend work
on same.

 

3.3.2        Tenant shall have the right to reduce
the amount of the Letter of Credit (a) to Five Hundred Thousand Dollars
($500,000.00) on the date which is two (2) years after the Rent Commencement
Date, (b) to Three Hundred Thousand Dollars ($300,000.00) on the date which is
three (3) years after the Rent Commencement Date, and (c) to One Hundred
Seventy-Five Thousand Dollars ($175,000.00) on the date which is four (4) years
after the Rent Commencement Date (each such date on which the amount of the
Letter of Credit may be reduced is referred to herein as a “Reduction Date”),
provided that on each Reduction Date and on the date any such reduction is
implemented (x) the Lease is in full force and effect, (y) no Event of Default
then exists and no Event of Default has theretofore occurred within the twelve
(12) months prior to such Reduction Date (unless Landlord in its sole
discretion has waived such Event of Default in writing ), and (z) Landlord is
not, as of such Reduction Date enforcing, attempting to enforce, or stayed from
enforcing any right or remedy on account of any Event of Default, whether or
not such Event of Default occurred within or prior to the twelve (12) months
preceding the Reduction Date).  Except
as set forth in the next sentence, if the conditions for reduction of the
Letter of Credit are satisfied with respect to any Reduction Date, upon the
written request of the Tenant, Landlord shall permit Tenant to replace or amend
the Letter of Credit accordingly.  If on
any Reduction Date the Letter of Credit shall not be reduced because one or
more of the conditions set forth in clauses (x) and (y) above were not
satisfied, the Letter of Credit shall not be reduced on any subsequent
Reduction Date.

 

3.3.3        Landlord may draw on the Letter of
Credit, in whole or in part at Landlord’s election, without advance notice to
Tenant at any time or from time to time on or after (a) the occurrence of any
Event of Default, (b) if Tenant, or anyone in possession of the Leased Premises
through Tenant, holds over after the expiration or earlier termination of this
Lease, (c) Landlord is given notice by the issuer of the Letter of Credit that
it is terminating the Letter of Credit, (d) a confirming bank gives notice to
Landlord that it will cease to act in that capacity, (e) the Letter of Credit
expires on a specified date by its terms and is not renewed or replaced at
least sixty (60) days in advance of its expiration date or (f) to the extent
permitted by law, in the event any bankruptcy, insolvency, reorganization or
any other debtor creditor proceeding is instituted by or against Tenant.

 

3.3.4        Landlord may apply any sum drawn on the
Letter of Credit to amounts owing to Landlord under this Lease in such order
and priority as Landlord elects in its absolute discretion.  If any of the proceeds drawn on the Letter
of Credit are not applied immediately to sums owing to Landlord under this
Lease, Landlord may retain any such excess proceeds as a cash Lease Security
Deposit for application, at Lender’s election, to future sums owing to Landlord
under this Lease, in such order and priority as Landlord elects in its absolute
discretion.  Tenant shall, within
fifteen (15) days after Landlord’s demand, restore the amount of the Letter of
Credit drawn so that the Letter of Credit is restored to the original amount of
the Letter of Credit.  If Tenant does
not restore the Letter of Credit to its original amount within the required time
period, such non-restoration shall be considered an Event of Default.

 

3.3.5        Additionally, Landlord’s draw and
application of all or any portion of the proceeds of the Letter of Credit shall
not impair any other rights or remedies provided under this Lease or under
applicable law and shall not be construed as a payment of liquidated
damages.  If Tenant shall have fully
complied with all of the covenants and conditions of this Lease, the Letter of
Credit shall be returned to Tenant or, if Landlord has drawn on the Letter of
Credit, the remaining proceeds of the Letter of Credit which are in excess of
sums due the Landlord shall be repaid to Tenant, without interest, within
thirty (30) days after the expiration or termination of the Lease Term and
delivery of possession of the Leased Premises to Landlord in accordance with
this Lease.

 

3.3.6        On any request by Landlord made during
the Lease Term, Tenant shall cooperate in accomplishing any reasonable
modification of the Letter of Credit requested by Landlord.  If the Letter of Credit should be lost,
mutilated, stolen or destroyed, Tenant shall cooperate in obtaining the
issuance of a replacement.

 

13

 

3.3.7        Tenant shall not assign or grant any
security interest in the Letter of Credit and any attempt to do so shall be
void and of no effect.

 

3.3.8        In the event of a sale or transfer of
Landlord’s estate or interest in the Land and Building, Landlord shall have the
right to transfer the Letter of Credit to the vendee or the transferee.  Tenant shall pay any transfer fees charged
by the issuing bank and Landlord shall thereafter be considered released by
Tenant from all liability for the return of the Letter of Credit.  Tenant shall cooperate in effecting such
transfer.  Notwithstanding the
foregoing, although Landlord shall have the right to transfer the letter of
Credit in connection with each sale or transfer of Landlord’s estate or
interest in the Land and Building, Tenant shall only be required to pay the
transfer fees charged by the issuing bank for the first sale or transfer of
Landlord’s estate or interest in the Land and Building.

 

3.3.9        No mortgagee or purchaser of any or all
of the Building at any foreclosure proceeding brought under the provisions of
any mortgage shall (regardless of whether the Lease is at the time in question
subordinated to the lien of any mortgage) be liable to Tenant or any other
person for any or all amounts drawn against the Letter of Credit or any other
or additional lease security deposit or other payment made by Tenant under the
provisions of this Lease), unless Landlord has actually delivered it in cash to
such mortgagee or purchaser, as the case may be.

 

3.4           Additional Rent. Definitions of certain terms used in
this paragraph are set forth in the last subparagraph of this paragraph
entitled “Additional Rent”.  Tenant
agrees to pay to Landlord additional rent as computed in this paragraph
(individually and collectively the “Additional Rent”):

 

3.4.1        Estimated
Operating Costs.  Tenant
shall pay to Landlord as Additional Rent one-twelfth (1/12) of the amount, if
any, by which the Estimated Operating Costs Allocable to the Premises exceeds
the Operating Cost Base Amount Allocable to the Premises.  This sum shall be paid in advance on or before
the first day of each calendar month of the Lease Term.  Landlord shall furnish Tenant a written
statement of Estimated Operating Costs Allocable to the Premises in advance of
the commencement of each Year.  If such
written statement is furnished after the commencement of the Year (or as to the
first Year during the Lease Term, after the Commencement Date), Tenant shall
also make a retroactive lump-sum payment to Landlord equal to the monthly
payment amount multiplied by the number of months during the Year (or as to the
first Year during the Lease Term, after the Commencement Date) for which no
payment was paid.  Notwithstanding the
foregoing, Landlord reserves the right, from time to time during each Year, to
revise the Estimated Operating Costs Allocable to the Premises and upon notice
to Tenant of such revision, Tenant shall adjust its payment to Landlord under
this subparagraph 3.4.1 accordingly. 
Notwithstanding the foregoing, absent extraordinary circumstances
Landlord shall not revise the Estimated Operating Costs Allocable to the
Premises more than twice in any Year.

 

3.4.2        Actual
Costs. Within one hundred twenty (120) days after the close of
each Year, Landlord shall deliver to Tenant a written statement setting forth
the Operating Costs Allocable to the Premises during the preceding Year, the
amount therefor paid by Tenant and the balance due or amount of
overpayment.  If such Operating Costs
Allocable to the Premises for any Year exceed the Estimated Operating Costs
Allocable to the Premises paid by Tenant to Landlord pursuant to subparagraph
3.4.1 for such Year, Tenant shall pay the amount of such excess to Landlord
within twenty (20) Business Days after receipt of such statement by
Tenant.  If such statement shows the
Operating Costs Allocable to the Premises to be less than the Estimated
Operating Costs Allocable to the Premises paid by Tenant to Landlord pursuant
to subparagraph 3.4.1, then the amount of such overpayment shall be paid by
Landlord to Tenant within twenty (20) Business Days following the date of such
statement.  Landlord’s and Tenant’s
obligations under this paragraph shall survive the expiration or other
termination of this Lease.

 

3.4.3        Determination.
The determination of Operating Costs Allocable to the Premises shall be made by
Landlord in accordance with the terms of this Lease.

 

3.4.4        Operating
Cost Audit. Landlord shall maintain records concerning estimated
and actual Operating Costs Allocable to the Premises for no less than
twenty-four (24) months following the period covered by the statement or
statements furnished Tenant, after which time Landlord may dispose of such
records.  Provided that Tenant is not
then in default of its obligation to pay Base Rent, Additional Rent or other
payments required to be made by it under this Lease and provided that Tenant is
not otherwise in default under this Lease, Tenant may, at Tenant’s sole cost
and expense, cause a Qualified Person (defined below) to inspect Landlord’s
records at the location where such records are maintained by or on behalf of
Landlord.  Such inspection, if any,
shall be conducted no more than once each Year, during Landlord’s normal
business hours within one hundred twenty (120) calendar days after receipt of

 

14

 

Landlord’s written statement of
Operating Costs Allocable to the Premises for the previous year, upon first
furnishing Landlord at least twenty (20) calendar days prior written
notice.  If the actual Operating Costs
Allocable to the Premises for any given Year as certified to Landlord by the
Qualified Person that conducted such review were improperly computed and if the
actual Operating Costs Allocable to the Premises are overstated by more than
three percent (3%), Tenant shall have the right to cause such Qualified Person
to also inspect the Landlord’s records for the Year immediately preceding the
Year which was the subject of the initial review.  Any errors disclosed by the review(s) and certified to Landlord
by the Qualified Person which conducted such review(s) shall be promptly
corrected by Landlord: provided, however, that if Landlord disagrees with any
such claimed errors, Landlord shall have the right to cause another review or
reviews to be made by an auditor of Landlord’s choice.  In the event the results of the review(s) of
records (taking into account, if applicable, the results of any additional
review(s) caused by Landlord) reveal that Tenant has overpaid obligations for a
preceding period, the amount of such overpayment shall be credited against
Tenant’s subsequent installment of Base Rent; 
Additional Rent or other payments due to Landlord under the Lease.  In the event that such results show that
Tenant has underpaid its obligations for a preceding period, the amount of such
underpayment shall be paid by Tenant to Landlord with the next succeeding
installment obligation of Estimated Operating Costs (net of Insurance and
Property Taxes) Allocable to the Premises. 
If the actual Operating Costs Allocable to the Premises for any given
Year were improperly computed and if the actual Operating Costs Allocable to
the Premises are overstated by more than four percent (4%), Landlord shall
reimburse Tenant for the cost of its audit.

 

3.4.5        End
of Term. If this Lease shall terminate on a day other than the
last day of a Year, (a) subject to a final reconciliation pursuant to
subparagraph 3.4.2 hereof, Landlord shall estimate the Operating Costs
Allocable to the Premises and Property Taxes Allocable to the Premises for such
Year predicated on the most recent reliable information available to Landlord;
(b) the amount determined under clause (a) of this sentence shall be prorated
by multiplying such amount by a fraction, the numerator of which is the number
of days within the Lease Term in such Year and the denominator of which is 360;
(c) the Operating Costs Base Amount Allocable to the Premises shall be prorated
in the manner described in clause (b); (d) the clause (c) amount (i.e., the
prorated Operating Costs Base Amount Allocable to the Premises) shall be
deducted from the clause (b) amount (i.e., the prorated Operating Costs
Allocable to the Premises); (e) if the clause (d) amount exceeds the Estimated
Operating Costs Allocable to the Premises paid by Tenant for the last Year in
the Lease Term, then Tenant shall pay the excess to Landlord within twenty (20)
Business Days after Landlord’s delivery to Tenant of a statement for such
excess; and (f) if the Estimated Operating Costs Allocable to the Premises paid
by Tenant for the last Year in the Lease Term exceeds the clause (d) amount,
then Landlord shall refund to Tenant the excess within the twenty (20) Business
Day period described in clause (e) if Tenant is not then in default of any of
its obligations under this Lease beyond any applicable notice and cure
periods.  Landlord’s and Tenant’s
obligations under this paragraph shall survive the expiration or other
termination of this Lease.

 

3.4.6        Definitions.
Each underlined term in this subparagraph shall have the meaning set forth next
to that underlined term:

 

Operating Costs Base Amount Allocable to the
Premises: The Operating Costs Allocable to the
Premises for the year beginning January 1, 2003 and ending December 31, 2003
(the “Base Year”).

 

Estimated Operating Costs Allocable to the
Premises: Landlord’s written estimate of Operating
Costs Allocable to the Premises for a Year to be given by Landlord to Tenant
pursuant to subparagraph 3.4.1.

 

Operating Costs or Operating Costs (net of
Property Taxes): All expenses paid or incurred by
Landlord in good faith and consistent with the standards applicable to first
class office properties in the Reston, Virginia area for maintaining,
operating, owning and repairing any or all of the Land, Building, Premises,
related improvements, and the personal property used in conjunction with such
Land, Building, Premises and related improvements, except for Property
Taxes.  Included are all expenses paid
or incurred by Landlord for: (a) utilities, including electricity, water, gas,
sewers, fire sprinkler charges, refuse collection, Telecommunication Services,
cable television, steam, heat, cooling or any other similar service and which
are not payable directly by tenants in the Building; (b) supplies; (c)
cleaning, painting and janitorial services (including window washing), landscaping
and landscaping maintenance (including irrigating, trimming,

 

15

 

mowing,
fertilizing, seeding and replacing plants), snow removal and other services;
(d) security services, if any; (e) concierge services, if any: (f) the
operation of any subsidized cafeteria in the Building; (g) insurance premiums
and applicable insurance deductible payments by Landlord; (h) management fees
up to a maximum of three percent (3%) of annual gross base rents for the Building;
(i) compensation (including employment taxes and fringe benefits) of all
persons and business organizations who perform duties in connection with any
service, repair, maintenance, replacement or improvement or other work included
in this subparagraph; (j) license, permit and inspection fees; (k) costs,
assessments and special assessments due to deed restrictions, easement
agreements, reciprocal easement agreements, declarations or owners associations
or other means of allocating costs of a larger tract with which the Land is
operated and/or with which the Land is a part; (l) rental of any machinery or
equipment; (m) audit fees and accounting services related to the Building, and
charges for the computation of the rents and charges payable by tenants in the
Building (but only to the extent the cost of such fees and services are in
addition to the cost of the management fee); (n) the cost of repairs or
replacements; (o) charges under maintenance and service contracts; (p) legal
fees and other expenses of legal or other dispute resolution proceedings, other
than legal fees incurred by Landlord in connection with the leasing of the
Building or the enforcement of tenant leases; (q) maintenance and repair of the
roof and roof membranes, (r) costs incurred by Landlord for compliance with any
change(s) which are effective after the date of this Lease in any Governmental
Requirements, including Access Laws, (s) costs incurred by Landlord for
compliance with any new Governmental Requirements which become effective after
the date of this Lease, including Access Laws; (t) elevator service and repair,
if any; (u) business taxes and license fees; (v) any other expense or charge
which in accordance with generally accepted accounting and management
principles would be considered an expense of maintaining, operating, owning or
repairing the Building, and (w) the amortization of costs of capital
improvements to increase the efficiency of any electrical, mechanical or other
system servicing the Building or the Land or to otherwise reduce operating
costs of the Building.  Any capital
expenses which may be included in Operating Costs (net of Property Taxes)
pursuant to items (r), (s), and (w) above shall be amortized with interest return
at the Prime Rate plus two (2) percentage points over the estimated useful life
of the capital improvement as determined by Landlord and the annual
amortization of principal and interest attributable to the Lease Term shall be
an Operating Cost.

 

Exclusions from Operating Costs:  Notwithstanding the foregoing, Operating
Costs (net of Property Taxes) shall not include any of the following: (1)
capital expenditures, except for those Operating Costs set forth above in the
definition of Operating Costs (net of Property Taxes) to the extent such operating
Costs (net of Property Taxes) constitute capital expenditures; (2) costs of any
special services rendered to individual tenants (including Tenant) (3) painting
redecorating or other work which Landlord performs for specific tenants; (4)
depreciation or amortization of costs required to be capitalized in accordance
with generally accepting accounting practices (except for those Operating Costs
(net of Property Taxes) set forth above in the definition of Operating Costs
(net of Property Taxes) to the extent any of such Operating Costs (net of
Property Taxes) are required to be capitalized in accordance with generally
accepting accounting practices); (5) interest, principal, points and fees on
debt or amortization of funds borrowed by Landlord, except for items which are
otherwise included in Operating Costs (net of Property Taxes) as provided
above; (6) leasing commissions, advertising, legal, space planning and
construction expenses incurred in procuring tenants for the Building; (7)
salaries, wages, or other compensation paid to officers or executives of
Landlord or its property management company in their capacities as officers and
executives; (8) any other expenses for which Landlord actually receives direct
reimbursement from insurance, condemnation awards, warranties, other tenants or
any other source but excluding general payments of Additional Rent pursuant to
this Article 3 by Tenant and other tenants of the Building; (9) net basic rents
under ground leases; (10) all costs incurred in the initial construction of the
Building; (11) costs directly resulting from the willful misconduct of
Landlord, its employees, agents, contractors or employees; (12) costs or fees
relating to the defense of Landlord’s title or interest in the Land; (13) costs
incurred due to violation by Landlord of applicable law or the terms and
conditions of this Lease, unless such violation is caused in whole or in part
by any breach or default by Tenant hereunder or by any

 

16

 

 

other act or omission of Tenant; (14) renovation of the Building or
Land made necessary by casualty or the exercise of eminent domain, except for
any deductible under Landlord’s insurance; (15) costs incurred for any items to
the extent of Landlord’s actual recovery under a manufacturer’s, materialmen’s,
vendor’s or contractor’s warranty (except to the extent of costs incurred in
connection with such recovery); (16) Property Taxes; (17) Landlord’s general
overhead expenses; (18) any penalties or interest expenses incurred because of
Landlord’s failure timely to pay any Operating Costs or Property Taxes (unless
the same is the result of Tenant’s failure to timely make any payment in
respect thereof required hereunder); (19) costs associated with maintaining the
entity constituting the Landlord; (20) costs of sale or financing of the
Building; (21) costs of repair caused by any casualty or condemnation of the
Building (except for any deductible under Landlord’s insurance), irrespective
of the amount of insurance proceeds received; (22) above market fees for
services provided by any affiliate of Landlord, but only to the extent of the
portion thereof which is above market (and, for purposes hereof.  Tenant shall have the burden of proving that
any such fee is above market based upon comparable first class properties in
the Reston, Virginia area); (23) costs incurred to comply with laws relating to
the removal of Hazardous Substances which were in existence in the Building or
on the Land prior to the Commencement Date (and, for purposes hereof, Tenant
shall have the burden of proving that such Hazardous Substances were in
existence in the Building or on the Land prior to the Commencement Date), and
was of such a nature that a federal, state or municipal governmental authority.  If it had then had knowledge of the presence
of such hazardous material, in the state, and under the conditions that it then
existed in the Building or on the Land, would have then required the removal of
such Hazardous Substances or other remedial or containment action with respect
thereto; and costs incurred to remove, remedy, contain, or treat Hazardous
Substances, which Hazardous Substances are brought into the Building or onto
the Land after the date hereof by Landlord and is of such a nature, at that
time, that a federal, state or municipal governmental authority, if it had then
had knowledge of the presence of such Hazardous Substances, in the state, and
under the conditions, that it then exists in the Building or on the Land, would
have then required the removal of such Hazardous Substances or other remedial
or containment action with respect thereto; (24) costs as billed by the utility
company for any electric current furnished to any rentable area of the Building
for purposes other than the operation of the Building equipment and machinery
and the lighting of public toilets, stairways, shaftways, fan rooms and other
comparable areas, except that ordinary utilities necessary to heat, cool, and
light any vacant rentable area of the Building to the extent necessary to
maintain such space shall be included in Operating Costs; (25) allowances,
concession, permits, licensees, inspections, and other costs and expenses
incurred in completing, fixturing, renovating or otherwise improving, space for
tenants (including Tenant), prospective tenants or other occupants or
prospective occupants of the Building, or vacant leasable space in the Building
or constructing or finishing demising walls and public corridors with respect
to any such space whether such work or alteration is performed for the initial
occupancy by such tenant or occupant or thereafter; (26) electric power costs
for which any tenant directly contracts with the local public service company;
(27) insurance premiums to the extent the rates of any insurance carried by
Landlord has been increased over the regular rate which would otherwise be
applicable from time to time to the Building and/or the Land due solely to
Landlord’s or any tenant’s hazardous acts beyond those generally associated with
the operation of an office building and related facilities; and (28) the
amortization of costs of capital improvements to increase the efficiency of any
electrical, mechanical or other system servicing the Building or the Land or to
otherwise reduce operating costs of the Building over the amount actually saved
as a result of such capital improvement, as estimated by Landlord in good
faith.  Except where Landlord determines
in its commercially reasonable judgment that it is prudent and beneficial not
to do so, Landlord shall competitively bid (from time to time at Landlord’s
discretion) all services for the Building other than (i) utility services, and
(ii) property management services. 
Landlord shall enter into contracts for the provision of services to the
Building which are for periods in excess of one (1) year only where Landlord
determines it its commercially reasonable judgment that it is prudent and
beneficial to do so.

 

Gross-Up Provision:  If less than ninety-five percent (95%) of
the net rentable area of the Building is occupied by tenants at all times
during any Year, then Operating Costs for such Year shall include all
additional costs and expenses that Landlord reasonably determines would have

 

17

 

been incurred had ninety-five percent (95%) of the Building been
occupied at all times during such Year by tenants.

 

Operating Costs Allocable to the Premises:  The product of Tenant’s Pro Rata Share times
Operating Costs (net of Property Taxes).

 

Property Tax Base Amount:  Tenant’s Pro Rata Share of the Property
Taxes payable for the calendar year beginning January 1, 2003 and ending
December 31, 2003.

 

Property Taxes Allocable to the Premises:  Tenant’s Pro Rata Share of Property Taxes.

 

Qualified Person:  An accountant or other person experienced in
accounting for income and expenses of office properties, who is engaged solely
by Tenant on terms which do not entail any compensation based or measured in
any way upon any savings in Additional Rent or reduction in Operating Costs
Allocable to the Premises achieved through the inspection process described in
this subparagraph.

 

3.4.7                        Property Tax Escalation.  In addition to the payments required by the
previous subparagraphs of this paragraph. Tenant shall pay as Additional Rent
to Landlord one-twelfth (1/12) of the amount, if any, by which (a) Landlord’s
estimate of the Property Taxes Allocable to the Premises for the current tax
year exceeds the Property Tax Base Amount, which estimate shall be provided by
Landlord to Tenant in writing. This sum shall be paid in advance on or before
the first day of each calendar month of the Lease Term. After the close of each
tax year during the Lease Term, Landlord shall deliver to Tenant a written
statement setting forth (1) the actual Property Taxes Allocable to the Premises
for the preceding tax year, (2) the difference between the amount referred to
in clause (1) and the Property Tax Base Amount and (3) the differential between
the amount referred to in clause (2) and the sum of the tentative monthly
payments toward such amount made by Tenant. 
If the differential referred to in clause (3) of the previous sentence
represents an underpayment by Tenant, such differential shall be paid to
Landlord within twenty (20) Business Days after delivery of Landlord’s written
statement to Tenant; if such differential represents an overpayment by Tenant,
Landlord shall refund such overpayment to Tenant within twenty (20) Business
Days after Tenant’s concurrence in the amount due as a refund. If the Lease
Term begins or ends on a day other than the beginning or end of a tax year, the
amount due as described in clause (2) of this subparagraph shall be prorated on
a per diem basis with reference to the tax year. If not separately assessed.  Landlord shall use its best efforts in good
faith to effect an equitable proration of Property Taxes on the Building and
any other property owned by Landlord or an affiliate of Landlord. Landlord
shall not recover more than 100% of the Property Taxes. The provisions of this
subparagraph shall survive the expiration or other termination of this Lease.

 

3.4.8                        Tenant’s Costs.  Tenant agrees to reimburse or pay Landlord
within twenty (20) Business Days after Tenant’s receipt of an invoice from
Landlord for (a) any actual and documented cleaning expenses incurred by
Landlord, including carpet cleaning, garbage and trash removal expenses, over
and above the normal cleaning provided by Landlord, if any, or due to the
presence of a lunchroom or kitchen or food or beverage dispensing machines
within the Premises; (b) any actual and documented expense incurred by Landlord
for usage in the Premises of heating, ventilating and air conditioning
services, elevator services, electricity, water, janitorial services, or any
other services or utilities over and above the normal usage per rentable square
foot during Normal Business Hours (as defined in paragraph 3.5.3) for first
class office buildings in the Reston Virginia area, including other buildings
in the office park in which the Building is located, (c) any actual and
documented expense incurred by Landlord relating to or arising out of the usage
by Tenant or Tenant’s Agents of the public or common areas of the Building or
Land, or any of the equipment contained therein, which usage is over and above
the normal usage for such public or common areas or equipment, and (d) any
other actual and documented direct expense incurred by Landlord on Tenant’s
behalf. Landlord reserves the right to install and activate separate metering
of water or other utilities to the Premises, and Tenant agrees to reimburse or
pay Landlord within twenty (20) Business Days after invoice from Landlord for
all costs of such separate metering, in which case the Operating Costs Base
Amount Allocable to the Premises and Operating Costs shall be adjusted
accordingly.

 

3.4.9                        Payments Deemed Additional Rent. Any
sums payable under this Lease pursuant to this paragraph or otherwise shall be
Additional Rent and, in the event of nonpayment of such sums beyond any
applicable notice and cure periods, Landlord shall have the same rights and
remedies with respect to such nonpayment as it has with respect to nonpayment
of the Base Rent due under this Lease.

 

18

 

3.5                                 Utilities.

 

3.5.1                        Except
as provided in paragraph 3.5.3 hereof and subject to the terms of paragraph
3.5.2 hereof and the provision of such services to the Building by local
utility companies, Landlord shall provide all utilities to the Premises twenty-four
(24) hours a day, seven (7) days a week throughout the Lease Term.  Landlord shall have the right from time to
time to select the company or companies providing electricity, gas, fuel, one
or more categories of Telecommunication Services and any other utility services
to the Building.  Except as provided in
paragraphs 3.4.8 and 3.5.3 hereof with respect to usage over and above that
which is normal for general office use of the Premises or for after hours HVAC
service, the cost of all electricity used on or from the Premises for lighting
and general office equipment with standard building electrical capacities,
including electricity required to operate the HVAC system, is included in Base
Rent (the cost of such electricity included in Base Rent is referred to herein
as “Base Electricity Costs”).  Without
in any way limiting the scope or application of paragraphs 3.4.8 and 3.5.3,
Landlord may require that any electrical usage over and above that which is
normal for general office use of the Premises, including but not limited to
supplemental HVAC and/or high capacity copying machines, be submetered for
actual use and charged to Tenant as Additional Rent.  The cost of the submeter and the installation of same shall be
paid by Tenant.  With the exception of
water, sewer, electricity and HVAC, Tenant shall contract directly and pay for
all utilities used on or from the Premises, including any Telecommunication
Services.  Notwithstanding anything to
the contrary contained herein, the costs of all utility services (other than
Base Electricity Costs) used on or from the Premises which are not separately
metered to the Premises and paid directly by the Tenant shall be included in
Operating Costs.

 

3.5.2                        Landlord
shall in no case be liable or in any way be responsible for damages or loss to
Tenant arising from the failure of, diminution of or interruption in electrical
power, natural gas, fuel, Telecommunication Services, sewer, water, or garbage
collection services, other utility service or building service of any kind to
the Premises, unless such interruption in, deprivation of or reduction of any
such service was caused by the gross negligence or willful misconduct of
Landlord, its agents or contractors or by a failure in facilities, equipment or
systems in the Landlord’s ownership.  To
the extent that Landlord bears any responsibility for any such interruption,
deprivation or reduction in utility or building services to the Premises and
such interruption, deprivation or reduction continues for more than (a) five
(5) consecutive Business Days after the date on which Tenant delivers notice
thereof to Landlord and such interruption, deprivation or reduction renders any
portion of the Premises unusable for the normal conduct of Tenant’s business,
and if Tenant does not in fact use or occupy such portion of the Premises, then
all Base Rent and Additional Rent payable hereunder with respect to such
portion of the Premises which Tenant does not occupy shall be abated
retroactively to the first Business Day of such interruption, deprivation or
reduction and such abatement shall continue until the date such interruption,
deprivation or reduction which is Landlord’s responsibility is not causing
Tenant to be deprived of all reasonable use of the Premises or the applicable portion
thereof, and (b) ninety (90) consecutive calendar days after the date on which
Tenant delivers notice thereof to Landlord and such interruption, deprivation
or reduction renders the entire Premises unusable for the normal conduct of
Tenant’s business, and if Tenant does not in fact use or occupy the Premises,
then Tenant shall have the right to terminate this Lease upon not less than
thirty (30) days advance notice to Landlord (provided that if such utility or
building service is restored within such thirty (30) day period, such
termination shall be null and void). 
The foregoing abatement and right of termination shall be Tenant’s sole
remedies against Landlord for any such interruption.  Except in the case of an emergency, the Landlord will give Tenant
at least five (5) Business Days prior notice if Landlord intends to interrupt
any services required to be furnished by Landlord hereunder.

 

3.5.3                        HVAC
service shall be provided to the Premises by Landlord Monday through Friday
(excluding holidays) from 8:00 a.m. to 6:00 p.m. and Saturdays (excluding
holidays) from 9:00 a.m. to 1:00 p.m. (all of the foregoing hereinafter
collectively “Normal Business Hours”), at such temperatures and in such amounts
as customarily and seasonally provided to tenants occupying comparable space in
first-class office buildings in the Reston, Virginia area.  If Tenant shall require after-hours HVAC,
Tenant may request such service by notifying Landlord’s Manager not later than
12:00 noon on the day on which such after-hours service shall be needed, and
not later than 12:00 noon on the Friday preceding any weekend for which such
after-hours service shall be needed reasonably estimating the number of hours
required for such after-hours service. 
Subject to all other terms and conditions hereof, if Tenant timely
requests after hours HVAC service, Landlord shall provide such services.  Tenant shall pay for such additional HVAC
service at Landlord’s hourly rate in effect from time to time and shall pay all
charges therefor within twenty (20) days of

 

19

 

the date of any invoice received from Landlord.  Such charges shall be deemed Additional Rent
under the Lease.

 

3.6                                 Holdover. 
Tenant is not authorized to hold over beyond the expiration or earlier
termination of the Lease Term.  If
Landlord consents to a holdover and no other agreement is reached between
Tenant and Landlord concerning the duration and terms of the holdover, Tenant’s
holdover shall be a month-to-month tenancy. 
During such tenancy, Tenant shall pay to Landlord one hundred fifty
percent (150%) of the rate of Base Rent in effect on the expiration or
termination of the Lease Term plus all Additional Rent and other sums payable
under this Lease, and shall be bound by all of the other covenants and
conditions specified in this Lease, so far as applicable.  If the Landlord does not consent to the
Tenant’s remaining in possession, Landlord shall have all the rights and
remedies provided for by law and this Lease, including the right to recover
consequential damages suffered by Landlord in the event of Tenant’s wrongful
refusal to relinquish possession of the Premises.  The Base Rent applicable for the period that Tenant wrongfully
remains in possession shall be increased to one hundred fifty percent (150%) of
the rate of Base Rent in effect on the expiration or termination of the Lease
Term for the first sixty (60) days of such holdover and thereafter to twice the
rate of Base Rent in effect on the expiration or termination of the Lease
Term.  Notwithstanding the foregoing,
Landlord waives the right to recover consequential damages suffered by Landlord
in the event of Tenant’s wrongful refusal to relinquish possession of the
Premises at the expiration or earlier termination of the Lease Term unless such
holdover exceeds sixty (60) days.  If
any holdover does exceed sixty (60) days, Landlord shall have the right to
recover consequential damages, whether such damages arose before or after the
sixtieth (60th) day of such holdover. 
The preceding provisions shall not be construed as consent for Tenant to
hold over after the expiration or earlier termination of the Lease Term.

 

3.7                                 Late Charge: 
If Tenant fails to make any payment of Base Rent, Additional Rent or
other amount within three (3) days of the date when due under this Lease, a
late charge is immediately due and payable by Tenant equal to five percent (5%)
of the amount of any such payment. 
Landlord and Tenant agree that this charge compensates Landlord for the
administrative costs caused by the delinquency.  The parties agree that Landlord’s damage would be difficult to
compute and the amount stated in this paragraph represents a reasonable
estimate of such damage.  Assessment or
payment of the late charge contemplated in this paragraph shall not excuse or
cure any Event of Default or breach by Tenant under this Lease or impair any
other right or remedy provided under this Lease or under law.  Notwithstanding anything to the contrary
contained in this Section 3.7. Landlord shall waive the late charge which
would otherwise be imposed for Tenant’s failure to timely pay any Base Rent or
Additional Rent for the first such failure in each Year as long as such failure
does not continue for more than ten (10) days.

 

3.8                                 Default Rate. 
Any Base Rent, Additional Rent or other sum payable under this Lease
which is not paid within three (3) days of the date when due shall bear
interest retroactively to the date such payment was due at a rate equal to the
lesser of: (a) the published prime or reference rate of Riggs Bank NA or such
other national banking institution designated by Landlord if such bank ceases
to publish such rate (the “Prime Rate”), then in effect, plus two (2)
percentage points, or (b) the maximum rate of interest per annum permitted by
applicable law (the “Default Rate”), but the payment of such interest
shall not excuse or cure any Event of Default or breach by Tenant under this
Lease or impair any other right or remedy provided under this Lease or under
law.

 

SECTION 4: MANAGEMENT AND LEASING
PROVISIONS

 

4.1                                 Maintenance and Repair by Landlord.

 

4.1.1                        Subject
to the paragraphs captioned “Damage or Destruction” and “Condemnation”,
Landlord shall at all times maintain the public and common areas and facilities
of the Building in reasonably good order and condition, subject to reasonable
wear and tear, and in compliance with Governmental Requirements.  Landlord also shall at all times maintain
the roof, foundations, structural walls and other structural elements of the
Building, and all base building mechanical, plumbing, electrical and life
safety systems in reasonably good order and condition and in compliance with
Governmental Requirements.  Landlord
shall make such repairs thereto as become necessary after obtaining actual
knowledge of the need for such repairs. 
Except as otherwise expressly provided in Section 3 or
Section 4.21 of this Lease, all maintenance and repair costs shall be
included in Operating Costs, except for damage occasioned by the act or
omission of Tenant or Tenant’s Agents which shall be paid for entirely by
Tenant upon demand by Landlord.  In the
event any or all of the Building becomes in need of

 

20

 

maintenance or repair which Landlord is required to make under this
Lease, upon its discovery thereof Tenant shall promptly give written notice to
Landlord, and any failure to report such condition to Landlord shall excuse any
delay by Landlord in commencing and completing such maintenance or repairs.

 

4.1.2                        Landlord
shall not be liable by reason of any injury to or interference with Tenant’s
business arising from the making of any repairs, alterations, additions or
improvements in or to the Premises or the Building or to any appurtenances or
equipment therein unless due to the gross negligence or willful misconduct of
Landlord or Landlord’s Agents.  There
shall be no abatement of rent because of such repairs, alterations, additions
or improvements.

 

4.2                                 Maintenance
and Repair by Tenant.

 

4.2.1                        Except
as is expressly set forth as Landlord’s responsibility pursuant to the
paragraph captioned “Maintenance and Repair by Landlord.”  Tenant shall at Tenant’s sole cost and
expense keep, clean and maintain the Premises and the Furniture in good
condition and repair, including interior painting, cleaning of the interior
side of all exterior glass, plumbing and utility fixtures and installations,
carpets and floor coverings, all interior wall surfaces and coverings
(including tile and paneling), window replacement, exterior and interior doors,
roof penetrations and membranes in connection with any Tenant installations on
the roof, light bulb replacement and reasonable interior preventative
maintenance.  If, after no less than ten
(10) days written notice from Landlord setting forth in detail any alleged
deficiencies in Tenant’s performance under this paragraph (or immediately and
without notice in the case of an emergency), Tenant continues in its failure to
maintain or repair the Premises and the Furniture in accordance with this
paragraph, then Landlord may, but shall not be required to, enter the Premises
upon two (2) Business Days prior written notice to Tenant (or immediately
without any notice in the case of an emergency) to perform such maintenance or
repair at Tenant’s sole cost and expense. 
Tenant shall pay to Landlord the actual and documented cost of such
maintenance or repair plus a ten percent (10%) administration fee within ten
(10) Business Days of written demand from Landlord.

 

4.2.2                        Without
limiting the generality of paragraph 4.2.1 hereof, Tenant shall be responsible
at Tenant’s sole cost and expense for the maintenance, repair and/or
replacement of any special heating, ventilating, air conditioning, plumbing,
electrical or other systems and fixtures installed solely to service the
Premises, whether installed or paid for by Landlord or Tenant.

 

4.3                                 Common
Areas/Security.

 

4.3.1                        The
common areas of the Building shall be subject to Landlord’s sole management and
control.  Without limiting the
generality of the immediately preceding sentence, Landlord reserves the
exclusive right as it deems necessary or desirable to install, construct,
remove, maintain and operate lighting systems, facilities, improvements,
equipment, Telecommunication Facilities and signs on, in or to all parts of the
common areas; change the number, size, height, layout, or locations of walks,
driveways and truckways or parking areas now or later forming a part of the
Land or Building; make alterations or additions to the Building or common area;
close temporarily all or any portion of the common areas to make repairs,
changes or to avoid public dedication, provided Tenant is given at least seven
(7) days prior written notice, except in the case of an emergency; grant
easements to which the Land will be subject; replat, subdivide, or make other
changes to the Land; place or relocate or cause to be placed or located utility
lines and Telecommunication Facilities through, over or under the Land and
Building; and use or permit the use of all or any portion of the roof of the
Building.  Landlord reserves the right
to relocate parking areas and driveways (if any) and to build additional
improvements in the common areas.  In
exercising its rights under this paragraph 4.3.1, Landlord shall not
materially, adversely affect Tenant’s access to and use and of the Premises.

 

4.3.2                        Landlord
has no duty or obligation to provide any security services in, on or around the
Premises, Land or Building, and Tenant recognizes that security services, if
any, provided by Landlord will be for the sole benefit of Landlord and the
protection of Landlord’s property and under no circumstances shall Landlord be
responsible for, and Tenant waives any rights with respect to, Landlord
providing security or other protection for Tenant or Tenant’s Agents or
property in, on or about the Premises, Land or Building.  Subject to Landlord’s prior approval, Tenant
may, at its sole cost and expense, install, establish and maintain security
services within the Premises; provided that, such security services
(including any apparatus, facilities, equipment or people utilized in
connection with the provision of such security services) comply with the
Governmental Requirements and shall not cause the Building to be out of
compliance with the Governmental Requirements. 
Notwithstanding the foregoing, any such security services installed,
established or maintained by Tenant must not affect or impact any portion of
the Building or the Land other than the Premises and shall not in any way
materially limit or interfere with

 

21

 

Landlord’s ability to exercise its rights as provided in the paragraph
captioned “Access”.  Tenant’s
rights under this subparagraph are subject to all the obligations, limitations
and requirements as set forth in the paragraphs captioned “Tenant
Alterations” and “Tenant’s Work Performance”.

 

4.4                                 Tenant
Alterations.  Tenant shall not make any alterations,
additions or improvements in or to the Premises, or make changes to locks on
doors, or add, disturb or in any way change any floor covering, wall covering,
fixtures, plumbing, wiring or Telecommunication Facilities (individually and
collectively “Tenant Alterations”), without first obtaining the consent
of Landlord, which consent shall not be unreasonably withheld or delayed
provided such alterations, additions or improvements are entirely within the
Premises and do not impact any structural components of the Building or any
building systems.  Notwithstanding the
foregoing, Tenant may make interior non-structural Alterations which do not
affect any of the Building’s mechanical, HVAC, electrical, plumbing or other
systems without the consent of the Landlord provided that the aggregate cost of
such Alterations does not exceed Twenty Thousand Dollars ($20,000.00)
(“Permitted Alterations”) in any period of twelve (12) consecutive calendar
months.  Tenant shall deliver to
Landlord full and complete plans and specifications for any proposed Tenant
Alterations (including Permitted Alterations). 
If Tenant’s plans and specifications are submitted to Landlord with a
notice expressly stating that Landlord’s failure to disapprove such plans and
specifications within ten (10) Business Days after Landlord’s receipt thereof
and Landlord fails to disapprove the same within such ten (10) Business Day
period, such plans and specifications shall be deemed approved.  If consent by Landlord is given or deemed
given, all such work shall be performed at Tenant’s expense by Landlord or by
Tenant at Landlord’s election.  Tenant
shall pay to Landlord, within ten (10) Business Days of receipt of an invoice
from Landlord all reasonable costs incurred by Landlord for any architecture,
engineering, supervisory and/or legal services in connection with any Tenant
Alterations, including, without limitation, Landlord’s review of the plans and
specifications.  Without limiting the
generality of the foregoing, Landlord may require Tenant (if Landlord has
elected to require Tenant to perform the Tenant Alterations), at Tenant’s sole
cost and expense, to obtain and provide Landlord with proof of insurance
coverage and a payment and performance bond, in forms, amounts and by companies
reasonably acceptable to Landlord. 
Should Tenant make any alterations without Landlord’s prior written
consent, or without satisfaction of any conditions established by Landlord,
Landlord shall have the right, in addition to and without limitation of any
right or remedy Landlord may have under this Lease, at law or in equity, to
require Tenant to remove some or all of Tenant Alterations, or at Landlord’s
election, Landlord may remove such Tenant Alterations and restore the Premises
at Tenant’s expense.  Nothing contained
in this paragraph or the paragraph captioned “Tenant’s Work Performance”
shall be deemed a waiver of the provisions of the paragraph captioned “Mechanic’s
Liens”.  Notwithstanding anything to
the contrary contained herein, the terms of this paragraph 4.4 shall not apply
to the Tenant improvements.

 

4.5                                 Tenant’s Work
Performance.  If Landlord elects to require Tenant to
perform the Tenant Alterations; Landlord may, in its absolute discretion,
require that Tenant provide a payment and performance bond to cover the entire
work to be performed, which bond must be in form, amount and by a company
reasonably acceptable to Landlord.  Any
Tenant Alterations to be performed under this paragraph shall be performed by
contractors employed by Tenant under one or more construction contracts, in
form and content approved in advance in writing by Landlord.  Approval shall be subject to Landlord’s
discretion and shall include a requirement that the prime contractor and the
respective subcontractors of any tier performing the Tenant Alterations: (a) be
parties to, and bound by, a collective bargaining agreement with a labor
organization affiliated with the Building and Construction Trades Council of
the AFL-CIO applicable to the geographic area in which the Building is located
and to the trade or trades in which the work under the contract is to be
performed and (b) employ only members of such labor organizations to perform
work within their respective jurisdictions (the foregoing clauses (a) and (b)
are collectively, the “Union Requirements”). 
Notwithstanding anything to the contrary contained herein, in the event
that Tenant is unable to locate union contractors and/or subcontractors in
compliance with the foregoing, despite diligent efforts to do so, Tenant shall
notify Landlord (which notification shall be accompanied with a disclosure by
Tenant of the contractor or subcontractor, as applicable, which Tenant intends
to use in lieu of a union contractor or subcontractor) and Landlord shall
thereafter have a period of ten (10) Business Days in which to identify a union
contractor or subcontractor to perform such work.  In the event Landlord is able to identify a union contactor or
subcontractor for such work, the union requirement set forth above shall remain
intact and Tenant shall be obligated to utilize a union contractor or
subcontractor, as applicable (although Tenant shall not be obligated to utilize
that contractor or subcontractor identified by Landlord).  In the event Landlord is not able, within
such ten (10) Business

 

22

 

Day period, to identify a union contractor or subcontractor (or fails
to respond to Tenant within such ten (10) Business Day period), the Union
Requirements shall be waived in respect of that particular work for which a
union contractor or subcontractor is unavailable (but shall remain as to all
other work hereunder).  Tenant’s
contractors, workers and suppliers performing Alterations (including Permitted
Alterations) shall work in harmony with and not interfere with workers or
contractors of Landlord or other tenants of Landlord.  If Tenant’s contractors, workers or suppliers do, in the
reasonable opinion of Landlord, cause such disharmony or interference,
Landlord’s consent to the continuation of such work may be withdrawn upon
written notice to Tenant.  All Tenant
Alterations shall be (1) completed in accordance with the plans and
specifications approved by Landlord; (2) completed in accordance with all
Governmental Requirements; (3) carried out promptly in a good and workmanlike
manner; (4) of all new materials; and (5) free of defect in materials and
workmanship.  In the event that Tenant
performs any Permitted Alterations, the same also shall be performed solely by
contractors which satisfy the Union Requirements.  Tenant shall pay for all damage to the Premises, Building and
Land caused by Tenant or Tenant’s Agents. 
Tenant shall indemnify, defend and hold harmless Landlord and Landlord’s
Agents from any Claims arising as a result of any Tenant Alterations (including
Permitted Alterations) or any defect in design; material or workmanship of any
such Tenant Alterations (including Permitted Alterations).

 

4.6                                 Surrender of
Possession.  Tenant shall, at the expiration
or earlier termination of this Lease, surrender and deliver the Premises to
Landlord in as good condition as when received by Tenant from Landlord or as
later improved, reasonable use and wear excepted, and free from all tenancies
or occupancies by any person claiming directly or indirectly through Tenant.

 

4.7                                 Removal of Property. 
Unless otherwise agreed to in writing by Landlord, Tenant agrees that
there are and shall be no trade fixtures in the Premises owned by Tenant.  Upon expiration or earlier termination of
this Lease, Tenant may remove its personal property, Telecommunication Facilities
(excluding wiring and cabling unless otherwise approved by Landlord in
writing), office supplies and office furniture and equipment if (a) such items
are readily moveable and are not attached to the Premises; (b) such removal is
completed prior to the expiration or earlier termination of this Lease; (c) no
Event of Default exists at the time of such removal; and (d) Tenant immediately
repairs all damage caused by or resulting from such removal.  All other property in the Premises and any
Tenant Alterations (including, wall-to-wall carpeting, paneling, wall covering,
lighting fixtures and apparatus or Telecommunication Facilities or any other
article affixed to the floor, walls, ceiling or any other part of the
Premises or Building) shall become the property of Landlord and shall remain upon
and be surrendered with the Premises; provided, however, at Landlord’s sole
election, Tenant shall be obligated, at its sole cost and expense, to remove
all (or such portion as Landlord shall designate) of the Tenant Alterations
(including Telecommunication Facilities, including without limitation wiring
and cabling), repair any damages resulting from such removal and return the
Premises to the same condition as existed prior to such Tenant
Alterations.  Notwithstanding the
foregoing, if Tenant’s submission of its plans and specifications to Landlord
for approval of any Tenant Alterations requiring Landlord’s approval is
accompanied by a written request that Landlord identify any Tenant Alterations
that Landlord may require Tenant to remove upon the expiration or earlier
termination of this Lease, Landlord shall identify such Tenant Alterations (if
any) by notice to Tenant given at the time of Landlord’s approval of such
Tenant Alterations.  Tenant waives all
rights to any payment or compensation for such Tenant Alterations (including
Telecommunication Facilities).  If
Tenant shall fail to remove any of its property from the Premises.  Building or Land at the expiration or earlier
termination of this Lease or when Landlord has the right of re-entry, Landlord
may, at its option, remove and store such property at Tenant’s expense without
liability for loss of or damage to such property, such storage to be for the
account and at the expense of Tenant. 
Tenant shall pay all actual and documented costs incurred by Landlord
within five (5) Business Days after demand for such payment.  If Tenant fails to pay the cost of storing
any such property, Landlord may, at its option, after it has been stored for a
period of twenty (20) Business Days or more, sell or permit to be sold, any or
all such property at public or private sale (and Landlord may become a
purchaser at such sale).  In such manner
and at such times and places as Landlord in its sole discretion may deem
proper, without notice to Tenant, and Landlord shall apply the proceeds of such
sale: first, to the cost
and expense of such sale, including reasonable attorney’s fees actually
incurred; second, to the
payment of the actual and documented costs or charges for storing any such
property; third, to the
payment of any other sums of money which may then be or later become due
Landlord from Tenant under this Lease; and, fourth,
the balance, if any, to Tenant.

 

23

 

4.8                                 Access.  Tenant shall permit
Landlord and Landlord’s Agents, subject to Tenant’s reasonable security
procedures, to enter into the Premises at any time on at least two (2) Business
Days’ notice (except in case of emergency in which case no notice shall be
required), for the purpose of inspecting the same or for the purpose of
repairing, altering or improving the Premises or the Building.  Nothing contained in this paragraph shall be
deemed to impose any obligation upon Landlord not expressly stated elsewhere in
this Lease.  When reasonably necessary,
Landlord may, upon two (2) Business Days’ prior notice, temporarily close
Building or Land entrances,  Building
doors or other facilities, without liability to Tenant by reason of such
closure and without such action by Landlord being construed as an eviction of
Tenant or as relieving Tenant from the duty of observing or performing any of
the provisions of this Lease, provided that Tenant and its employees, agents,
invitees, and guests are provided with reasonable alternative access to the
Land and/or Building. In the event that such reasonable alternative access is
not so provided, Tenant shall receive an abatement of all Base Rent, Additional
Rent and any other sums due under this Lease until such reasonable alternative
access is provided by Landlord.  Landlord
shall have the right to enter the Premises at any time during the last nine
(9)  months of the Lease Term for the
purpose of showing the Premises to prospective tenants, subject to Tenant’s
reasonable security procedures.  Tenant
shall give written notice to Landlord at least twenty (20)  Business Days prior to vacating the Premises
and shall arrange to meet with Landlord for a joint inspection of the Premises
prior to vacating.  In the event of
Tenant’s failure to give such notice or arrange such joint inspection,
Landlord’s inspection at or after Tenant’s vacating the Premises shall be
conclusively deemed correct for purposes of determining Tenant’s responsibility
for repairs and restoration.  Landlord
shall not be liable for the consequences of admitting by passkey, or refusing
to admit to the Premises.  Tenant or any
of Tenant’s Agents, or other persons claiming the right of admittance.

 

4.9                                 Damage or
Destruction.

 

4.9.1                        If
the Premises are damaged by fire, earthquake or other casualty, Tenant shall
give immediate written notice (the “Casualty Notice”) thereof to Landlord.  Within sixty (60) days after Landlord’s
receipt of such Casualty Notice, Landlord shall make a determination, in its
sole judgment, whether the damage can be repaired in accordance with the
then-existing Governmental Requirements within one hundred-eighty (180)
Business Days after Landlord’s receipt of the Casualty Notice, and Landlord
shall so notify Tenant of such determination. 
If Landlord’s determination is that the Premises cannot be restored in
such time period, then either party, for a period of ten (10) Business Days
thereafter shall have the right to terminate this Lease by notice to the other,
as of the date specified in such notice, which termination date shall be no
later than thirty (30) days after the date of such notice.  Landlord also shall have the right to
terminate this Lease by notice to Tenant if, in Landlord’s estimation, there
are or will be insufficient insurance proceeds available to repair such
damage.  If this Lease is not terminated
as aforesaid, then Landlord shall proceed with reasonable diligence to restore
the Premises to substantially the condition which existed prior to the damage
and this Lease shall continue.  If
Landlord restores the Premises under this paragraph, then Landlord shall use
commercially reasonable efforts to proceed toward completion of the restoration
and (1) the Lease Term shall be extended for the time required to complete such
restoration, (2) Tenant shall pay to Landlord, upon demand.  Tenant’s Pro Rata Share of any applicable
deductible amount specified under Landlord’s insurance and (3) notwithstanding
anything to the contrary contained herein, Landlord shall not be required to
repair or restore Tenant improvements. 
Tenant Alterations (including Telecommunication Facilities), the
Furniture, or any or all furniture, fixtures, equipment, inventory,
improvements or other property which was in or about the Premises at the time
of the damage and was not owned by Landlord. 
In the case of damage to the Premises not caused by the negligence or
other tortuous acts of the Tenant which is of a nature or extent that (a) such
damage materially interferes Tenant’s use of a portion (but not all) of the
Premises (such portion being referred to herein as the “Materially Affected
Premises”), Base Rent and Additional Rent otherwise payable hereunder shall be
abated by the percentage that the rentable area of the Materially Affected
Premises bears to the total rentable area of the Premises, for the period
beginning on the date of such casualty and ending on the earlier of (i) the
date that Landlord has substantially completed its repairs to the Materially
Affected Premises and (ii) the date that Tenant uses any portion of the
Materially Affected Premises for the conduct of its business, and (b) it is
impracticable for the Tenant to carry on its business in the Premises, all Base
Rent and Additional Rent otherwise payable hereunder shall be abated for the
period beginning on the date of such casualty and ending on the earlier of (i)
the date that Landlord has substantially completed its repairs to the Premises
and (ii) the date that Tenant uses any portion of the Premises for the conduct
of its business.  Except for the
abatement of rent if and to the extent provided

 

24

 

herein, Tenant agrees to look to the provider of Tenant’s insurance for
coverage for the loss of Tenant’s use of the Premises and the Furniture and any
other related losses or damages incurred by Tenant during any reconstruction
period.  The validity and effect of this
Lease shall not be impaired in any way by the failure of Landlord to complete
repairs and restoration of the Premises or the Building within one
hundred-eighty (180) Business Days after Landlord’s receipt of the Casualty
Notice, even if Landlord had in good faith notified Tenant that the repair and
restoration could be completed within such period, provided that Landlord
proceeds diligently with such repair and restoration.

 

4.9.2                        If
the Building is damaged by fire, earthquake or other casualty and more than
fifty percent (50%) of the Building is rendered untenantable, without regard to
whether the Premises are affected by such damage, Landlord may in its absolute
discretion and without limiting any other options available to Landlord under
this Lease or otherwise, elect to terminate this Lease by notice in writing to
Tenant within forty (40) Business Days after the occurrence of such damage if
Landlord is also terminating the leases of other tenants in the Building who
are similarly situated to Tenant. Such notice shall effective twenty (20)
Business Days after receipt by Tenant unless a later date is set forth in
Landlord’s notice.

 

4.9.3                        Notwithstanding
anything contained in this Lease to the contrary, if there is damage to the
Premises or Building and the holder of any indebtedness secured by a mortgage
or deed of trust covering any such property requires that the insurance
proceeds be applied to such indebtedness or if the insurance proceeds are
otherwise inadequate to complete the repair of the damages to the Premises, the
Building or both, then Landlord shall have the right to terminate this Lease by
delivering written notice of termination to Tenant within fifteen (15) Business
Days after Landlord is notified of such requirement.

 

4.9.4                        Notwithstanding
the foregoing, if the Premises or the Building are wholly or partially damaged
or destroyed within the final two (2) years of the Lease Term to such an extent
that the cost of restoration would exceed fifty percent (50%) of the
replacement cost of the Premises and/or the Building in its or their entirely
at the time such damage or destruction occurs. Landlord may, at its option,
elect to terminate this Lease upon written notice to Tenant within thirty (30)
days following such damage or destruction. 
Further, notwithstanding  the
foregoing, if the Premises are wholly or partially damaged or destroyed within
the final two (2) years of the Lease Term to such an extent that the cost of
restoration would exceed fifty percent (50%) of the replacement cost of the
Premises in its entirety at the time such damage or destruction occurs, then
Tenant also may terminate this Lease upon written notice to Landlord within
thirty (30) days following such damage or destruction.

 

4.10                           Condemnation. 
If all of the Premises, or such portions of the Building as may be
required for the Tenant’s reasonable use of the Premises, are taken by eminent
domain or by conveyance in lieu thereof, this Lease shall automatically
terminate as of the date the physical taking occurs, and all Base Rent,
Additional Rent and other sums payable under this Lease shall be paid to that
date.  In case of taking of a part of
the Premises or a portion of the Building not required for the Tenant’s
reasonable use of the Premises, then this Lease shall continue in full force
and effect and the Base Rent shall be equitably reduced based on the proportion
by which the floor area of the Premises is reduced, such reduction in Base Rent
to be effective as of the date the physical taking occurs.  Additional Rent and all other sums payable
under this Lease shall not be abated but Tenant’s Pro Rata Share may be
redetermined as equitable under the circumstances.  Landlord reserves all rights to damages or awards for any taking
by eminent domain relating to the Premises, Building, Land and the unexpired
term of this Lease.  Tenant assigns to
Landlord any right Tenant may have to such damages or award and Tenant shall
make no claim against Landlord for damages for termination of its leasehold
interest or interference with Tenant’s business.  Tenant shall have the right, however, to claim and recover from
the condemning authority compensation for any loss to which Tenant may be
entitled for Tenant’s moving expenses or other relocation costs; provided
that, such expenses or costs may be claimed only if they are awarded
separately in the eminent domain proceedings and not as a part of the damages
recoverable by Landlord.

 

4.11                           Parking.

 

4.11.1                  Landlord
hereby grants to Tenant, free of charge, the right to five (5) designated
parking spaces in the garage (the “Garage”) serving the Building for use by
Tenant’s employees (collectively, the “Designated Parking Spaces”).  The Designated Parking Spaces initially
shall be located as shown on the plan annexed hereto as Exhibit I,
provided, however, Landlord reserves the right in its discretion to relocate
such Designated Parking Spaces from time to time upon not less than ten (10)
Business Days notice to Tenant.  Upon
Tenant’s written request, Landlord shall cause to be made available up to ten
(10) additional designated parking spaces in the Garage for Tenant’s use at a
cost of up to Thirty Dollars

 

25

 

($30.00) per month per parking space during the initial Lease Term
expiring on February 28, 2013, which sum shall be payable monthly in
advance on or before the first day of each month.  Upon such designation, such additional parking spaces shall be
included in the definition of Designated Parking Spaces.  Landlord reserves the right to adjust such
monthly parking fees to a market rate for any period that the Lease Term may be
extended after February 28, 2013.

 

4.11.2                  The
landlord shall designate an area of the surface parking lot on the Land for use
as “visitor parking”, which are may be changed from time to time as Landlord
determines in its reasonable discretion.

 

4.11.3                  Landlord
hereby grants to Tenant the nonexclusive privilege to use, on a
first-come-first-served basis and in common with other tenants, that number of
parking spaces on the Land determined by subtracting the number of Designated
Spaces in effect from time to time from the number of parking space allocated
to Tenant in the definition of the Parking Ratio.  Notwithstanding the foregoing, Tenant’s nonexclusive privilege to
use such parking spaces on the Land in common with other tenants shall be
limited to those areas reasonably designated by Landlord and shall be subject
to the reasonable rules and regulations relating to parking adopted by Landlord
from time to time and promptly provided to Tenant.  Landlord shall have the right to grant designated, reserved
parking stalls to other tenants in the Building.  In no event shall the number of parking stalls used by Tenant and
Tenant’s Agents (including the Designated Parking Spaces and parking spaces in
the area designated as visitor parking) exceed the number of stalls allocated
to Tenant in the definition of the Parking Ratio, provided, however, that nothing
in this sentence shall be deemed to alter the first-come-first-served basis of
parking (other than the Designated Parking Spaces) as provided in this
paragraph 4.11.  Landlord shall have no
obligation whatsoever to monitor or police the use of the parking or other
common areas. Tenant’s parking privileges provided pursuant to this paragraph
4.11.3 shall be free of additional charge during the period beginning on the
Commencement Date and ending on February 28, 2013. Landlord reserves the
right to charge a fee for such parking privileges for any period that the Lease
Term may be extended after February 28, 2013.

 

4.11.4                  With
the exception of the temporary closure all or any portion of the parking areas
for purposes of repairing, maintaining, constructing or replacing any portion
of the parking area, any other common areas, the Garage and/or the Building or
due to emergency circumstances, Landlord shall not voluntarily taken any action
without the consent of Tenant (which consent shall not be unreasonably withheld,
conditioned or delayed) which would cause the number of parking spaces on the
Land to be less than that required by the parking Ratio.  If Landlord does take any voluntarily action
which would cause the number of parking spaces on the land to be less than the
required by the parking Ratio. Landlord shall exercise commercially reasonable
efforts to provide reasonable alternative parking.  In the event of the temporary of permanent loss of any parking
spaces on the Land due to casualty, condemnation or any other cause beyond
Landlord’s control, the Parking Ratio automatically shall be deemed amended to
reflect the actual number of remaining parking spaces on the Land, provided
that if such loss is temporary the Parking Ratio shall be restored to the number
in effect immediately prior to such loss as soon as such parking spaces are
again available.  In the case of a
temporary loss, to the extent within Landlord’s control, Landlord shall
exercise reasonable and diligent efforts to restore such parking spaces as
quickly as reasonably possible.

 

4.12                           Indemnification.

 

4.12.1                  Tenant
shall indemnify, defend and hold harmless Landlord and Landlord’s Agents from
and against any and all Claims, arising out of (a) the possession, use or
occupancy of the Premises or the business conducted in the Premises, unless and
to the extent caused by the gross negligence or wishful misconduct of the
Landlord, (b) any act, admission or negligence of Tenant or Tenant’s Agents, or
(c) any breach or default under this Lease by Tenant.

 

4.12.2                  Except
as specified in the next sentence, neither Landlord nor Landlord’s Agents
shall, to the extent permitted by law, have any liability to Tenant, or to
Tenant’s Agents, for (1) any Claims arising out of any cause whatsoever,
including repair to any portion of the Premises; (2) Interruption in or
interference with the use of the Premises or any equipment therein; (3) any
accident or damage resulting from any use or operation by Landlord, Tenant or
any person or entity of heating, cooling, electrical, sewerage or plumbing
equipment or apparatus or Telecommunication Facilities; (4) termination of this
Lease by reason of damage to the Premises or Building ; (5) fire, robbery,
theft, vandalism, mysterious disappearance or a casualty of any kind or nature;
(6) actions of any other tenant of the Building or of any other person or
entity; (7) Inability of furnish any service required of Landlord as specified
in this Lease; or

 

26

 

(8) leakage in any part of the Premises or the Building form rain, ice
or from drains, pipes or plumbing fixtures in the Premises or the
Building.  Landlord shall be
responsible, and shall indemnify and hold Tenant harmless, only for Claims
arising solely out of the gross negligence or willful misconduct of Landlord in
failing to repair or maintain the Building as required by this Lease after
notice by Tenant as required by the paragraph captioned “Maintenance and
Repair by Landlord”; but in no event shall Landlord’s responsibility extend
to any interruption to Tenant’s business or any indirect or consequential
losses suffered by Tenant to Tenant’s Agents or extend beyond Landlord’s
responsibility as set forth in the paragraph entitled “Utilities” when that
paragraph is applicable.  Landlord also
shall indemnify, defend and hold Tenant harmless from and against any and all
Claims arising out of Landlord’s gross negligence in connection with Landlord’s
management, ownership or control of the Building.  The obligations of this paragraph shall be subject to the
paragraph captioned “Waiver of Subrogation”.

 

4.13                           Tenant Insurance.

 

4.13.1                  Tenant
shall, throughout the Lease Term, at its own expense, keep and maintain in full
force and effect the following policies, each of which shall be endorsed as
needed to provide that the insurance afforded by these policies is primary and
that all insurance carried by Landlord is strictly excess and secondary and
shall not contribute with Tenant’s liability insurance:

 

(a)                                  A
policy of commercial general liability insurance, including a contractual
liability endorsement covering Tenant’s obligations under the paragraph
captioned “Indemnification”, insuring against claims of bodily injury and death
or property damage or loss with a combined single limit at the Commencement
Date of this Lease of not less than Two Million Dollars ($2,000,000.00), which
limit shall be reasonably increased during the Lease Term at Landlord’s request
to reflect both increases in liability exposure arising from inflation as well
as from changing use of the Premises or changing legal liability standards,
which policy shall be payable on an “occurrence” rather than a “claims made”
basis, and which policy names Landlord and Manager and, at Landlord’s request
Landlord’s mortgage Lender(s) or investment advisors, as additional insureds;

 

(b)                                 A
policy of extended property insurance (which is commonly called “all risk”)
covering Tenant Improvements, Tenant Alterations (including Telecommunication
Facilities), the Furniture, and any and all furniture, fixtures, equipment,
inventory, improvements and other property in or about the Premises which in
not owned by Landlord, for one hundred percent (100%) of the then current
replacement cost of such property;

 

(c)                                  Business
interruption insurance in an amount sufficient to cover costs, damages, lost
income, expenses, Base Rent, Additional Rent and all other sums payable under
this Lease, should any or all of the Premises not be usable for a period of up
to twelve (12) months;

 

(d)                                 A
policy of worker’s compensation insurance as required by applicable law and
employer’s liability insurance with limits of no less than One Million Dollars
($1,000,000.00); and

 

(e)                                  A
policy of comprehensive automobile liability insurance, including loading and
unloading and covering owned no owned and hired vehicles, with limits of no
less than One Million Dollars ($1,000,000.00) per occurrence.

 

4.13.2                  All
insurance policies required under this paragraph shall be with companies
reasonably approved by Landlord and each policy shall provide that it is not
subject to cancellation, lapse or reduction in coverage except after thirty
(30) days’ written notice to Landlord. 
Tenant shall deliver to Landlord and, at Landlord’s request Landlord’s
mortgage lender(s), prior to the Commencement Date and from time to time
thereafter upon reasonable notice, certificates evidencing the existence and
amounts of all such polices.

 

4.13.3                  If
Tenant fails to acquire or maintain any insurance or provide any certificate
required by this paragraph, Landlord may, but shall not be required to, obtain
such insurance or certificates and the costs associated with obtaining such
insurance or certificates shall be payable by Tenant to Landlord on demand.

 

4.14                           Landlord’s
Insurance.  Landlord
shall, throughout the Lease Term, Keep and maintain in full force and effect:

 

4.14.1                  A
policy of commercial general liability insurance, insuring against claims of
bodily injury and death or property damage or loss with a combined single limit
at the Commencement Date of not less than Five Million Dollars ($5,000,000.00),
which policy shall be payable on an “occurrence” rather than a “claims made”
basis;

 

27

 

4.14.2                  A
policy of extended property insurance (what is commonly called “all risk”)
covering the Building and Landlord’s personal property, if any, located on the
Land in the amount of one hundred percent (100%) of the then current
replacement value of such property;

 

4.14.3                  A
policy of worker’s compensation insurance as required by applicable law and
employer’s liability insurance with limits of no less than One Million Dollars
($1,000,000.00); and

 

4.14.4                  Landlord
may, but shall not be required to, maintain other types of insurance as
Landlord deems appropriate, including but not limited to, property insurance
coverage for earthquakes and floods in such amounts as Landlord deems
appropriate.  Such policies may be
“blanket” policies which cover other properties owned by Landlord.

 

4.15                           Waiver of Subrogation.  Notwithstanding
anything in this Lease to the contrary, Landlord and Tenant hereby each waive
and release the other from any and all Claims or any loss or damage that may
occur to the Land, Building, Premises, or personal property located therein, by
reason of fire or other casualty regardless of cause or origin, including the
negligence or misconduct of Landlord, Tenant, Landlord’s Agents or Tenant’s
Agents, but only to the extent of the insurance proceeds paid to such releasor
under its policies of insurance or, if it fails to maintain the required
policies, the insurance proceeds that would have been paid to such releasor if
it had maintained such policies.  Each
party to this Lease shall promptly give to its insurance company written notice
of the mutual waivers contained in this subparagraph, and shall cause its
insurance policies to be properly endorsed, if necessary, to prevent the
invalidation of any insurance coverages by reason of the mutual waivers
contained in this subparagraph.

 

4.16                           Assignment and Subletting by Tenant.

 

4.16.1                  Tenant
shall not have the right to assign, transfer, mortgage or encumber this Lease
in whole or in part, nor sublet the whole or any part of the Premises, nor
allow the occupancy of all or any part of the Premises by another, without
first obtaining Landlord’s written consent, which consent (except as provided
in the next sentence) shall not be unreasonably withheld, conditioned or
delayed.  During the period beginning on
the Commencement Date and ending on the earlier of the date which is two (2)
years after the Rent Commencement Date or the date that the Building is
ninety-eight percent (98%) leased, Landlord shall have the right to withhold
its consent to any proposed assignment or subletting for any reason or no
reason, such consent to be in Landlord’s sole and absolute discretion.  Notwithstanding any permitted assignment or
subletting.  Tenant shall at all times
remain directly, primarily and fully responsible and liable for the payment of
all sums payable under this Lease and for compliance with all of its other
obligations as tenant under this Lease. 
Landlord’s acceptance of Base Rent. 
Additional Rent or any other sum from any assignee, sublessee,
transferee, mortgagee or encumbrance holder shall not be deemed to be Landlord’s
approval of any such conveyance.  Upon
the occurrence of an Event of Default, if the Premises or any part of the
Premises are then subject to an assignment or subletting, Landlord may, at its
option, collect directly from such assignee or subtenant all rents becoming due
to Tenant under such assignment or sublease and apply such rents against any
sums due to Landlord from Tenant under this Lease.  No such collection shall be construed to constitute a novation or
release of Tenant from the further performance of Tenant’s obligations under
this Lease.  Landlord’s right of direct
collection shall be in addition to and not in limitation of any other rights
and remedies provided for in this Lease or at law.  Tenant makes an absolute assignment to Landlord of such
assignments and subleases and any rent, lease security deposits and other sums
payable under such assignments and subleases as collateral to secure the
performance of the obligations of Tenant under this Lease.

 

4.16.2                  In
the event Tenant desires to assign this Lease or to sublet all or any portion
of the Premises, Tenant shall give written notice of such desire to Landlord
setting forth the name of the proposed subtenant or assignee, the proposed
term, the nature of the proposed subtenant’s or assignee’s business to be
conducted on the Premises, the rental rate, and any other particulars of the
proposed subletting or assignment that Landlord may reasonably request.  Without limiting the preceding sentence,
Tenant shall also provide Landlord with: (a) such financial information as
Landlord may request concerning the proposed subtenant or assignee, including
recent financial statements certified as accurate and complete by a certified
public accountant and by the president, managing partner or other appropriate
officer of the proposed subtenant or assignee; (b) proof satisfactory to
Landlord that the proposed subtenant or assignee will immediately occupy and
thereafter use the entire Premises (or any sublet portion of the Premises) for
the remainder of the Lease Term (or for the entire term of the sublease, if
shorter) in compliance with the terms of this Lease; and (c) a copy of the
proposed sublease or assignment.  Tenant
shall pay to Landlord, upon Landlord’s demand therefor, Landlord’s reasonable
attorneys’ fees and expenses incurred in the review of such documentation and
in documenting

 

28

 

Landlord’s consent.  Receipt of
such fees and expenses shall not obligate Landlord to approve the proposed
assignment or sublease.

 

4.16.3                  In
determining whether to grant or withhold consent to a proposed assignment or
sublease, Landlord may consider, and weigh, any factor it deems relevant, in
its sole and absolute discretion.

 

4.16.4                  Within
fifteen (15) Business Days after Landlord’s receipt of all required information
to be supplied by Tenant pursuant to this paragraph, Landlord shall notify
Tenant of Landlord’s approval, disapproval or conditional approval of any
proposed assignment or subletting or of Landlord’s election to recapture as
described below.  If Tenant’s request
for approval of any sublease or assignment is submitted to Landlord with a
notice expressly stating that Landlord’s failure to disapprove such sublease or
assignment within fifteen (15) Business Days after Landlord’s receipt thereof
and Landlord fails to disapprove such transaction with such fifteen (15)
Business Days period, such sublease or assignment shall be deemed approved,
provided, however, Landlord shall have no obligation to respond and said
fifteen (15) Business Day period shall not begin to run unless and until all
required information has been submitted. 
In the event Landlord approves of any proposed assignment or subletting,
Tenant and the proposed assignee or sublessee shall execute and deliver to
Landlord an assignment (or subletting) and assumption agreement in form and
content satisfactory to Landlord.

 

4.16.5                  Any
transfer, assignment or hypothecation of any of the stock or interest in
Tenant, or the assets of Tenant, or any other transaction, merger,
reorganization or event, however constituted which (a) results in fifty percent
(50%), or more of such stock, interest or assets going into different
ownership, or (b) is a subterfuge denying Landlord the benefits of this paragraph,
shall be deemed to be an assignment within the meaning and provisions of this
paragraph and shall be subject to the provisions of this paragraph.
Notwithstanding the foregoing, (x) no consent of the Landlord shall be required
in connection with an initial public offering of Tenant’s stock on a “national
securities exchange” (as defined in the Securities and Exchange Act of 1934),
and (y) after such initial public offering, no transfer of greater than fifty
percent (50%) of any stock or interest of Tenant shall not be deemed to be an
assignment within the meaning and provisions of this subparagraph 4.16.5 so
long as Tenant remains a publicly traded corporation listed on a “national
securities exchange”.

 

4.16.6                  If
Landlord consents to any assignment or sublease and Tenant receives rent or any
other consideration, either initially or over the term of the assignment or
sublease, in excess of the Base Rent and Additional Rent (or, in the case of a
sublease of a portion of the Premises, in excess of the Base Rent paid by
Tenant on a square footage basis under this Lease), less all actual and
documented third-party usual and customary brokerage fees, reasonable legal
fees, reasonable architectural fees, advertising costs, concessions and
construction costs paid by Tenant in connection with such assignment or
sublease, Tenant shall pay to Landlord fifty percent (50%) of such excess.

 

4.16.7                  Landlord
shall have the right to recapture the Premises or the applicable portion
thereof (a Recapture) by giving written notice of such Recapture to
Tenant within fifteen (15) Business Days after receipt of Tenant’s written
request for Landlord’s consent to such proposed assignment or subletting.  Tenant shall have no right to retract its
request for Landlord’s consent to assign or sublease once such request has been
made.  If Landlord fails to give Tenant
notice of Recapture within such fifteen (15) Business Day period, such right of
Recapture shall be waived with respect to such proposed assignment or
subletting but shall remain in effect for any subsequent proposed assignment or
subletting.  Such Recapture shall
terminate this Lease as to the applicable space effective on the prospective
effective date of assignment or subletting, which shall be the last day of a
calendar month and shall not be earlier than forty-five (45) Business Days
after receipt of Tenant’s request hereunder. 
If less than the entire Premises are recaptured, this Lease shall remain
in full force and effect with respect to that remaining area not recaptured by
Landlord.  In the event of a Recapture
by Landlord, if this Lease shall be canceled with respect to less than the
entire Premises, the Base Rent and Tenant’s Pro Rata Share shall be adjusted on
the basis of the number of rentable square feet retained by Tenant in
proportion to the number of rentable square feet contained in the original
Premises, and this Lease as so amended shall continue thereafter in full force
and effect, and upon request of either party, the parties shall execute written
confirmation of same.  If Landlord
recaptures only a portion of the Premises, it shall construct and erect at
Landlord’s sole cost such partitions as may be required to sever the space to
be retained by Tenant from the space recaptured by Landlord.  Tenant shall surrender that portion of the
Premises recaptured by Landlord in accordance with the terms and conditions of
this Lease.  Notwithstanding the first
sentence of this subparagraph, Landlord shall have no right to Recapture the
Premises or applicable portion thereof if:

 

29

 

(a) Tenant’s proposed assignment or sublet is to an Affiliate or
wholly-owned subsidiary or is to a reorganized entity under which no change in
ownership has occurred, or (b) Tenant’s proposed assignment or sublet together
with any previous assignments and sublets encompass, in the aggregate, net
rentable area equal to or less than twenty-five percent (25%) of the total net
rentable area of Premises.

 

4.16.8                  Notwithstanding
any contrary provision in the previous subparagraphs of this paragraph,
Landlord’s consent shall not be required for any proposed assignment or
subletting of the Premises where (a) the assignment or subletting is to an
Affiliate or a reorganized entity under which no change of ownership has
occurred, provided that Tenant has delivered to landlord satisfactory evidence
of the foregoing at lease fifteen (15) Business Days prior to the effective
date thereof, (b) the proposed assignee or subtenant has delivered to Landlord at
least fifteen (15) Business Days prior to the effective date thereof
satisfactory evidence of financial worth (less goodwill) equal to or greater
than that of Tenant as of the execution date of this Lease, and (c) Tenant has
satisfied the requirements of Section 4.16.2. hereof other than the
payment of Landlord’s attorneys’ fees (which shall not be applicable to an
assignment or sublease made pursuant to this Section 4.16.8).

 

4.17                           Assignment by
Landlord.  Landlord shall have the right to
transfer and assign, in whole or in part, its rights and obligations under the
Lease and in any and all of the Land or Building.  If Landlord sells or transfers any or all of the Building,
including the Premises, Landlord and Landlord’s Agents shall, upon consummation
of such sale or transfer, be released automatically from any liability relating
to obligations or covenants under this Lease to be performed or observed after
the date of such transfer, and in such event, Tenant agrees to look solely to
Landlord’s successor-in-interest with respect to such liability; provided
that, as to the Lease Security Deposit and Prepaid Rent, Landlord shall not
be released from liability therefor unless Landlord has delivered (by direct
transfer or credit against the purchase price) the Lease Security Deposit or
Prepaid Rent to its successor-in-interest.

 

4.18                           Estoppel
Certificates and Financial Statements.  Tenant shall, from time to time, with in ten
(10 Business Days of any written request by Landlord, execute, acknowledge and
deliver to Landlord or its designee a written statement stating:  (a) the date this Lease was executed and the
date it expires; (b) the date Tenant entered into occupancy of the Premises;
(c) the amount of monthly Base Rent and Additional Rent and the date to which
such Base Rent and Additional Rent have been paid; and (d) certifying that (1)
this Lease is in full force and effect and has not been assigned, modified,
supplemented or amended in any way (or specifying the date of the agreement so
affecting this Lease); (2) Landlord is not in breach of this Lease (or, if so,
a description of each such breach) and that no event omission or condition has
occurred which would result, with the giving of notice or the passage of time,
in a breach of this Lease by Landlord (or, if so, a description thereof); (3)
this Lease represents the entire agreement between the parties with respect to
the Premises; (4) whether all required contributions by Landlord to Tenant on
account of Tenant improvements have been received; (5) on the date of
execution; there exist no defenses or offsets which the Tenant has against the
enforcement of this Lease by the Landlord (or, if so, specifying such defenses
or offsets); (6) no Base Rent, Additional Rent or other sums payable under this
Lease have been paid in advance except for Base Rent and Additional Rent for
the then-current month; Lease have been paid in advance except for Base Rent
and Additional Rent for the then-current month; (7) no security has been
deposited with Landlord (or, if so, the amount of such security); (8) it is
intended that any Tenant’s statement may be relied upon by a prospective
purchaser or mortgagee of Landlord’s interest or an assignee of any such
mortgagee; and (9) such other information as may be reasonably requested by
Landlord.  Landlord shall not request
such statements more than once in any twelve (12) month period, unless an Event
of Default exists or such request is made in connection with a sale, financing
or refinancing contemplated by Landlord. 
If Tenant fails to respond within said ten (10) Business Day period
after its receipt of a written request by Landlord as provided in this
paragraph, such shall be a breach of this Lease and Tenant shall be deemed to
have admitted the accuracy of any information supplied by Landlord to a
prospective purchaser, mortgagee or assignee. 
In addition, Tenant shall, from time to time, upon the written request
of Landlord, deliver to or cause to be delivered to Landlord or its designee than
current financial statements (including a statement of operations and balance
sheet and statement of cash flows) certified as accurate by a certified public
accountant and prepared in conformance with generally accepted accounting
principles for (i) Tenant, (ii) any entity which owns a controlling interest in
Tenant, (iii) any entity the controlling interest of which is owned by Tenant,
(iv) any successor entity to Tenant by merger or operation of law, and (v) any
guarantor of this Lease.  Landlord shall
not request such financial statements more than once in any twelve month
period, unless an Event

 

30

 

of Default exists or such request is made in connection with any sale,
financing or refinancing contemplated by Landlord.

 

4.19                           Modification for
Lender.  If, in connection with obtaining
construction, interim or permanent financing for the Building or Land,
Landlord’s lender, if any, shall request reasonable modifications to this Lease
as a condition to such financing, Tenant will not unreasonably withhold or
delay its consent to such modifications; provided that, such
modifications do not increase the obligations of Tenant under this Lease or
materially adversely affect Tenant’s rights under this Lease.

 

4.20                           Hazardous
Substances.

 

4.20.1                  Neither
Tenant, any of Tenant’s Agents nor any other person shall store, place,
generate, manufacture, refine, handle, or locate on, in, under or around the
Land or Building any Hazardous Substance, except for storage, handling and use
of reasonable quantities and types of cleaning fluids and office supplies in
the Premises in the ordinary course and the prudent conduct of Tenant’s
business in the Premises.  Tenant agrees
that (a) the storage, handling and use of such permitted Hazardous Substances
must at all times conform to all Governmental Requirements and to applicable
fire, safety and insurance requirements; (b) the types and quantities of
permitted Hazardous Substances which are stored in the Premises must be
reasonable and appropriate to the nature and size of Tenant’s operation in the
Premises and reasonable and appropriate for a first-class building of the same
or similar use and in the same market area as the Building; and (c) no
Hazardous Substance shall be spilled or disposed of on, in, under or around the
Land or Building or otherwise discharged from the Premises or any area adjacent
to the Land or Building.  In no event
will Tenant be permitted to store, handle or use on, in, under or around the
Premises any Hazardous Substance which will increase the rate of fire or
extended coverage insurance on the Land or Building, unless: (1) such Hazardous
Substance and the expected rate increase have been specifically disclosed in
writing to Landlord: (2) Tenant has agreed in writing to pay any rate increase
related to each such Hazardous Substance: and (3) Landlord has approved in
writing each such Hazardous Substance, which approval shall be subject to
Landlord’s discretion.

 

4.20.2                  Tenant
shall indemnify, defend and hold harmless Landlord and Landlord’s Agents from
and against any and all Claims arising out of any breach of any provision of
this paragraph, which expenses shall also include laboratory testing fees,
personal injury claims, clean-up costs and environmental consultants’ fees.  Tenant agrees that Landlord may be
irreparably harmed by Tenant’s breach of this paragraph and that a specific
performance action may appropriately be brought by Landlord; provided that,
Landlord’s election to bring or not bring any such specific performance action
shall in no way limit, waive, impair or hinder Landlord’s other remedies
against Tenant.

 

4.20.3                  As
of the execution date of this Lease. 
Tenant represents and warrants to Landlord that, except as otherwise
disclosed by Tenant to Landlord.  Tenant
has no intent to bring any Hazardous Substances on, in or under the Premises
except for the type and quantities authorized in the first paragraph of the
paragraph captioned “Hazardous Substances”.

 

4.20.4                  Except
as disclosed in a certain site assessment dated December 20, 1996 prepared
by Versar, Inc. for Riggs Bank N.A., as trustee of the Multi-Employer Property
trust, to the best of Landlord’s actual knowledge, there are no Hazardous
Substances in, on or about the Premises, the Land or the Building which are not
in compliance with all applicable laws.

 

4.20.5                  Neither
Landlord nor any of Landlord’s Agents shall store, place, generate,
manufacture, refine, handle, or locate on, in under or around the Land or
Building any Hazardous Substance, except for storage, handling and use of
reasonable quantities and types of building materials, building supplies,
cleaning fluids, and office supplies in the ordinary course and the prudent
conduct of Landlord’s ownership, maintenance, repair, construction, and
operation of the Building, the Land and common areas.  Landlord agrees that (a) Landlord’s storage, handling and use of
such permitted Hazardous Substances must at all times conform to all
Governmental Requirements and to applicable fire, safety and insurance
requirements; (b) the types and quantities of permitted Hazardous Substances
which are stored by Landlord in the Building or on the Land must be reasonable
and appropriate for their intended use in the Building and/or on the Land: and
(c) no Hazardous Substance shall be spilled or disposed of by Landlord or
Landlord’s Agents on, in, under or around the Land or Building or otherwise
discharged by Landlord or Landlord’s Agents from the Land or Building.

 

4.21                           Access Laws.

 

4.21.1                  Tenant
agrees to notify Landlord immediately if Tenant receives notification or
otherwise becomes aware of : (a) any condition or situation on, in, under or
around the Land or Building which may constitute a violation of any Access Laws
or (b) any threatened or actual lien, action or notice that the

 

31

 

Land or Building is not in compliance with any Access Laws.  If Tenant is responsible for such condition,
situation, lien, action or notice under this paragraph, Tenant’s notice to
Landlord shall include a statement as to the actions Tenant proposes to take in
response to such condition, situation, lien, action or notice.

 

4.21.2                  Tenant
shall not alter or permit any assignee or subtenant or any other person to
alter the Premises in any manner which would violate any Access Laws or
increase Landlord’s responsibilities for compliance with Access Laws, without
the prior approval of the Landlord.  In
connection with any such approval, Landlord may require a certificate of compliance
with Access Laws from an architect, engineer or other person acceptable to
Landlord.  Tenant agrees to pay the
reasonable fees incurred by such architect, engineer or other third party in
connection with the issuance of such certificate of compliance.  Landlord’s consent to any proposed Tenant
Alteration shall (a) not relieve Tenant of its obligations or indemnities
contained in this paragraph or this Lease or (b) be construed as a warranty
that such proposed alteration complies with any Access Law.

 

4.21.3                  Tenant
shall be solely responsible for all costs and expenses relating to or incurred
in connection with: (a) failure of the Premises to comply with the Access Laws,
provided however, that at the time Landlord delivers the Premises to Tenant the
restrooms located within the Premises shall comply with all Access Laws in
effect as of such date; and (b) bringing the Building and the common areas of
the Building into compliance with Access Laws, if and to the extent such
noncompliance arises out of or relates to : (1) Tenant’s use of the Premises,
including the hiring of employees; (2) any Tenant Alterations to the Premises;
or (3) any Tenant Improvements constructed in the Premises by or at the request
of Tenant, regardless of whether such improvements are constructed prior to or
after the Commencement Date.

 

4.21.4                  Landlord
shall be responsible for all costs and expenses relating to or incurred in
connection with bringing the common areas of the Building into compliance with
Access Laws, unless such costs and expenses are Tenant’s responsibility as
provided in the preceding subparagraph. 
Except as otherwise provided in the definition of Operating Costs, any
cost or expense paid or incurred by Landlord to bring the Premises or common
areas of the Building into compliance with Access Laws which is not Tenant’s
responsibility under the preceding subparagraphs shall be an Operating Cost for
purposes of this Lease.

 

4.21.5                  Tenant
agrees to indemnify, defend and hold harmless Landlord and Landlord’s Agents
from and against any and all Claims arising out of or relating to any failure
of Tenant or Tenant’s Agents to comply with Tenant’s obligations under this
paragraph.

 

4.21.6                  The
provisions of this paragraph shall supersede any other provisions in this Lease
regarding Access Laws, to the extent inconsistent with the provisions of any
other paragraphs.

 

4.22                           Quiet Enjoyment. 
Landlord covenants that Tenant, upon paying Base Rent, Additional Rent
and all other sums payable under this Lease and performing all covenants and
conditions required of Tenant under this Lease shall and may peacefully have,
hold and enjoy the Premises without hindrance or molestation by Landlord
subject to the provisions of this Lease.

 

4.23                           Signs.

 

4.23.1                  Exterior Signs.  (a) Subject to obtaining any necessary
governmental approvals and subject to the terms of paragraph 4.23.1(b)
below.  Tenant shall have the exclusive
right, during such portion of the Lease Term that Transaction Network Services,
Inc. or an Affiliate is itself using and occupying the entire Premises and
leases more space in the Building than any other tenant, to install and
maintain one sign (identifying Transaction Network Services, Inc.) on the
parapet of the Building facing Dulles Access Road (Route 267) the “Dulles Road
Parapet”) in the location and of the size, colors, design, and specifications
set forth in Exhibit G attached to this Lease (the “Dulles Access Road
Sign”), provided that the installation and maintenance of such Dulles
Access Road Sign complies with all Governmental Requirements and all matters of
record.  If Exhibit G does not
describe the exact size, colors, design, and specifications of such Dulles
Access Road Sign, then the same shall be subject to Landlord’s prior written
approval and shall be consistent with Landlord’s existing sign criteria and/or
standards for the Building.  As used
herein, the Dulles Road Parapet includes the area labeled as “most prominent”
and “less prominent” as shown on Exhibit M attached hereto.

 

(b)  If, at any time during the
Lease Term, Transaction Network Services, Inc. or an Affiliate ceases to lease
more space in the Building than any other tenant.  Tenant’s rights to maintain a sign on the Dulles Road Parapet
shall be terminated and Tenant shall remove the Dulles Access Road Sign unless
applicable Governmental Requirements permit two (2) signs to be maintained
thereon, in which case (i) Tenant’s right to maintain a sign on the Dulles Road
Parapet shall become non-exclusive, (ii) the

 

32

 

larger tenant (the “Larger Tenant”) shall have first choice to the
location of its sign on the Dulles Road Parapet, (iii) Landlord in its sole
discretion may require Tenant to move its Dulles Access Road Sign to another
location on the Dulles Road Parapet as determined by Landlord, and (iv) if the
aggregate size or area of all signs maintained on the Dulles Road Parapet is
limited by Governmental Requirements, the aggregate size or area available
shall be allocated between Tenant and the Larger Tenant in proportion to the
amount of rentable square feet leased by each party in the Building, and if the
size or area allocated to Tenant is less than the size or area of its original
sign Tenant shall be required to modify or replace such sign.  If Tenant is required to remove, modify,
relocate or replace the Dulles Access Road Sign pursuant to the terms of this
paragraph 4.23.1(b), Tenant shall be solely responsible for the cost of such
removal, modification, relocation or replacement and for the repair, painting
and/or replacement of the structure to which the Dulles Access Road Sign was
attached (unless such removal, modification, relocation or replacement is
required during the first twelve (12) months of the Lease Term, in which case
such removal, modification, relocation or replacement and related repair,
painting and/or replacement of the structure shall be at Landlord’s
expense).  If Tenant fails to perform
such work, Landlord may cause the same to be performed, and the cost thereof
shall be Additional Rent immediately due and payable upon rendition of a bill
therefore. In all cases, the exact size, colors, design, and specifications of
any Dulles Access Road Sign shall be subject to Landlord’s prior written
approval, which approval shall not be unreasonably withheld, conditioned or delayed,
and shall be consistent with Landlord’s existing sign criteria and/or standards
for the Building and shall comply with all Governmental Requirements and
matters of recorded.

 

(c)  If Tenant is required to
remove its Dulles Access Road Sign under paragraph 4.23.1(b), for so long as
Transaction Network Services, Inc. or an Affiliate is itself using and
occupying the entire Premises, subject to compliance with all Governmental
Requirements and all matters or record. 
Tenant shall have the non-exclusive right during the remainder of the
Lease Term to install and maintain one sign (identifying Transaction Network
Services, Inc.) on the parapet of the Building facing Sunrise Valley Drive (the
“Sunrise Valley Drive Sign”).  The exact
location and the size, colors, design, and specifications of such Sunrise
Valley Drive Sign shall be subject to Landlord’s prior written approval and
shall be consistent with Landlord’s existing sign criteria and/or standards for
the Building.  If applicable, Tenant
shall obtain and at all times maintain all necessary permits required by the
local sign ordinance or by-law in effect from time to time.  If, at any time during the Lease Term,
Transaction Network Services, Inc. or an Affiliate ceases to itself use and
occupy the entire Premises, Landlord in its sole discretion may require Tenant
to remove the Sunrise Valley Drive Sign. 
In such case, Tenant shall be responsible, at it sole cost, for the
removal of such Sunrise Valley Drive Sign and for the repair, painting and/or
replacement of the structure to which the Sunrise Valley Drive Sign is
attached.  If Tenant fails to perform
such work, Landlord may cause the same to be performed, and the cost thereof
shall be Additional Rent immediately due and payable upon rendition of a bill
therefore.

 

(d)  At Tenant’s sole cost and
expense, Landlord shall endeavor to use commercially reasonable efforts to
obtain any necessary permits required by the local sign ordinance or by-law for
the initial installation of the Dulles Access Road Sign.  Tenant shall cooperate with and assist
Landlord in any was Landlord from time to time may request in connection with
its efforts to obtain such permits, and Tenant shall reimburse Landlord on
demand for any expenses incurred by Landlord in connection therewith.  Thereafter, Tenant shall at all times
maintain all necessary permits required by the local sign ordinance or by-law
in effect from time to time.  Any and
all costs in connection with the permitting, fabrication, installation and
maintenance of the Dulles Access Road Sign and, if applicable, the Sunrise
Valley Drive Sign (collectively, the “Exterior Signs”) shall be borne by
Tenant.  Tenant agrees to maintain the
Exterior Signs in good condition at all times. 
Upon vacation of the Premises on the expiration or earlier termination
of this Lease or at such time as Transaction Network Services, Inc. or an
Affiliate ceases to itself use and occupy the entire Premises.  Tenant shall be responsible, at it sole
cost, for the removal of such Exterior Signs and the repair, painting and/or
replacement of the structure to which the Exterior Signs are attached.  If Tenant fails to perform such work,
Landlord may cause the same to be performed, and the cost thereof shall be Additional
Rent immediately due and payable upon rendition of a bill therefor.

 

4.23.2                  Directory and Interior Sign.  Tenant shall be permitted to have its entity
name listed on the main directory sign for the Building situated in the main
lobby of the Building.  Tenant shall be
permitted to install next to Tenant’s entryway into the Premises, as part of
the preparation of the Premises for Tenant’s occupancy (with the cost thereof
included in the Tenant improvement Costs), one (1)

 

33

 

 

entryway sign bearing Tenant’s name. 
Said sign shall be of a size, design and coloration, and in a location
consistent with Landlord’s standard tenant entryway signage for the Building.

 

4.24                           Subordination.  Tenant subordinates this Lease and all
rights of Tenant under this Lease to any mortgage, deed of trust, ground lease
or vendor’s lien, or similar instrument which may from time to time be placed
upon the Premises (and all renewals, modifications, replacements and extensions
of such encumbrances), and each such mortgage, deed of trust, ground lease or
lien or other instrument shall be superior to and prior to this Lease, provided
that, as long as Tenant is not in default hereunder beyond any applicable cure
period (a) Tenant’s occupancy of the Premises shall not be disturbed by the
termination of any ground lease or the foreclosure of any mortgage, and (b) the
foreclosure of a mortgage, the termination of any ground lease, the institution
of any suit, action, summary or other proceeding against the Landlord, or any successor
to the Landlord, or any foreclosure brought by any mortgagee to recover
possession of the Premises, shall not, by operation of law or otherwise, result
in the cancellation or termination of the Lease and Tenant shall not be
disturbed in its possession of the Premises for any reason other than as
provided in the Lease.  Notwithstanding
the foregoing, the holder or beneficiary of such mortgage, deed of trust,
ground lease, vendor’s lien or similar instrument shall have the right to
subordinate or cause to be subordinated any such mortgage, deed of trust,
ground lease, vendor’s lien or similar instrument to this Lease or to execute a
non-disturbance agreement in favor of Tenant on the standard form utilized by
such lender or ground lessor.  Upon not
less than ten (10) Business Days prior written notice from Landlord, the Holder
of such mortgage or deed of trust or any ground lessor,  Tenant shall execute, acknowledge and
deliver promptly in recordable form any instrument or subordination agreement
that Landlord or such holder may request, provided such instrument or
subordination agreement is consistent with the terms of this paragraph
4.24.  Tenant further covenants and
agrees, subject to the terms of this paragraph 4.24, that if the lender or
ground lessor acquires the Premises as a purchaser at any foreclosure sale or
otherwise.  Tenant shall recognize and
attorn to such party as landlord under this Lease, and shall make all payments
required hereunder to such new landlord without deduction or set-off and, upon
the request of such purchaser or other successor, execute, deliver and
acknowledge documents confirming such attornment.  Notwithstanding anything herein to the contrary, in no event
shall the lender or ground lessor which acquires the Premises as a purchaser at
any foreclosure sale or otherwise be (i) bound by any payment of Base Rent or
Additional Rent for more than one month in advance, (ii) bound by any amendment
or modification of this Lease made without the consent of the lender or ground lessor,
(iii) liable in any way to Tenant for any act or omission, neglect or default
on the part of the Landlord under this Lease, and (iv) obligated to perform any
work or improvements to be done by Landlord in the Premises, or (v) subject to
any counterclaim or setoff which therefore accrued to Tenant against
Landlord.  Tenant waives the provisions
of any law or regulation, now or hereafter in effect, which may give or purport
to give Tenant any right to terminate or otherwise adversely affect this Lease
or the obligations of Tenant hereunder in the event that any such foreclosure
or termination or other proceeding is prosecuted or completed.

 

4.25                           Workers
Compensation Immunity. 
If and to the extent that Tenant is obligated to indemnify, defend or
hold harmless Landlord or Landlord’s Agents form any Claims arising from its
use of the Premises or any act or failure to act by Tenant or Tenant’s Agents
or otherwise.  Tenant expressly waives,
to and in favor of Landlord and Landlord’s Agents, its statutory workers
compensation act employers immunity relative to any injury to an employee or
employees of Tenant.

 

4.26                           Brokers.  Each party to this Lease shall indemnify, defend and hold harmless
the other party from and against any and all Claims asserted against such other
party by any real estate broker, finder or intermediary relating to any act of
the indemnifying party in connection with this Lease.

 

4.27                           Limitation on
Recourse.  Landlord
has executed this Lease by its authorized representative signing solely in a
representative capacity. 
Notwithstanding anything contained in this Lease to the contrary.  Tenant confirms that the covenants of
Landlord are made and intended, not as personal covenants of the Landlord’s
authorized representative or trustee, or for the purpose of binding such
authorized representative or trustee personally, but solely in the exercise of
the representative powers conferred upon such authorized representative and
trustee by their principal.  Liability
with respect to the entry and performance of this Lease by or on behalf of
Landlord, however it may arise, shall be asserted and enforced only against
Landlord’s estate and equity interest in the Building.  Neither Landlord nor any of Landlord’s Agents
shall have any personal liability in the event of any claim against Landlord
arising out of or in connection with this Lease, the relationship of Landlord
and Tenant or Tenant’s use of the Premises. 
Further, in no event whatsoever shall any Landlord’s Agent have any
liability or responsibility

 

34

 

whatsoever arising out of or in connection with this Lease, the
relationship of Landlord and Tenant or Tenant’s use of the Premises.  Any and all personal liability, if any,
beyond that which may be asserted under this paragraph, is expressly waived and
released by Tenant and by all persons claiming by, through or under Tenant.

 

4.28                           Mechanic’s Liens and Tenant’s Personal Property Taxes.

 

4.28.1  Tenant shall have no
authority, express or implied, to create or place any lien or encumbrance of
any kind or nature whatsoever upon, or in any manner to bind, the interest of
Landlord or Tenant in the Premises or to charge the rentals payable under this
Lease for any Claims in favor of any person dealing with Tenant, including
those who may furnish materials or perform labor for any construction or
repairs.  Tenant shall pay or cause to
be paid when due all sums legally due and payable by it on account of any labor
performed or materials furnished in connection with any work performed on the
Premises on which any lien is or can be validly and legally asserted against
its leasehold interest in the Premises and Tenant shall indemnify, defend and
hold harmless Landlord from any and all Claims arising out of any such asserted
Claims.  Tenant agrees to give Landlord
immediate written notice of any such Claim.

 

4.28.2  Tenant shall be liable
for all taxes levied or assessed against the Furniture and all personal
property, furniture or fixtures placed by Tenant in the Premises.  If any such taxes for which Tenant is liable
are levied or assessed against Landlord or Landlord’s property and Landlord
elects to pay them or if the assessed value of Landlord’s property is increased
by inclusion of such Furniture or personal property, furniture or fixtures and
Landlord elects to pay the taxes based on such increase, Tenant shall reimburse
Landlord for the sums so paid by Landlord, upon five (5) Business Days written
notice from Landlord.

 

4.29                           Rooftop
Telecommunications Equipment.

 

4.29.1  Subject to compliance
with all applicable Governmental Requirements and the terms and conditions of
this Lease, and provided that such installation and roof use shall not void any
roof or other warranty applicable to the Building.  Tenant shall have the non-exclusive right to install and maintain
on the roof of the Building, at Tenant’s sole cost and expense,
Telecommunication Facilities consisting of up to an aggregate of two (2)
telecommunication antennas or satellite dishes (collectively, the “Rooftop
Equipment”) and associated wiring and cabling (“Tenant’s Roof Rights”) on the
condition that such Rooftop Equipment is specifically and exclusively for the
use of Transaction Network Services, Inc. or an Affiliate in the ordinary
course of its business.  At Tenant’s
expense, Landlord shall make available Tenant’s Pro Rata Share of any conduit
space in the vertical risers of the Building which the Landlord from time to
tome makes available to tenants of the Building for purposes of running wiring
and cabling in order to connect Tenant’s Rooftop Equipment to the
Premises.  Tenant’s Rooftop Equipment
shall in no event occupy more than a five hundred square foot area on the roof
of the Building.  No additional rental
shall be payable in respect of the installation and use of such Rooftop
Equipment and associated wiring and cabling. 
Landlord has not made any representations or promises pertaining to the
suitability of the Building’s rooftop for Tenant’s use.  Tenant, for the purpose of this paragraph and
its right to rooftop access hereunder, accepts the rooftop in its “AS IS”
condition.

 

4.29.2  Prior to
installation.  Tenant will obtain any
and all necessary licenses, approvals, permits, etc., necessary for the
installation, maintenance and use of the Rooftop Equipment.  No method of installation, maintenance or
removal of the Rooftop Equipment shall be permitted which Landlord reasonably
anticipates shall cause any warranty held by Landlord in respect of the roof of
the Building to be deemed void or otherwise adversely affected thereby, nor
adversely affect the Building structure or operating systems.

 

4.29.3  The installation of such
Rooftop Equipment and associated wiring and cabling shall be considered a
Tenant Alteration for all purposes of this Lease, and without limiting the
generality of the foregoing, such installation shall be subject to the terms
and conditions of paragraphs 4.4 and 4.5 (Tenant Alterations and Tenant Work
Performance, respectively).  Prior to
the installation of such Rooftop Equipment and associated wiring and cabling,
Tenant shall provide Landlord with written plans and specifications showing the
size of the Rooftop Equipment, its location on the roof (including plan
elevations to indicate sightliness of location), operating parameters and radio
frequencies, and means of installation (including whether any penetrations of
the roof shall be required for installation), all of which (collectively, the
“Antenna Specifications”) shall be subject to the Landlord’s approval, which approval
shall not be unreasonably withheld, conditioned or delayed.  Without limiting the foregoing,  Tenant acknowledges and agrees that it shall
not be unreasonable for Landlord to withhold its consent if, based upon the
Antenna

 

35

 

Specifications, Landlord determines that Tenant’s Rooftop Equipment is
likely to make it unreasonably difficult or impracticable for other tenants or
third parties to operate similar facilities and equipment on the roof of the
Building without interference from Tenant’s Rooftop Equipment. Tenant shall
reimburse Landlord, within ten (10) Business Days after receipt of an invoice,
for all out-of-pocket costs and expenses incurred by Landlord related to its
review of Tenant’s plans and specifications (regardless of whether Landlord
approves Tenant’s plans and specifications) and Tenant’s installation. The
installation of the Rooftop Equipment shall be performed at Tenant’s expense by
Landlord or by Tenant at Landlord’s election and by contractors previously
approved by Landlord. In no event shall the Landlord’s approval of Tenant’s
plans and specifications be deemed a representation that Tenant’s Rooftop
equipment or plans and specifications comply with Governmental Requirements
and/or the terms of this Lease. Without limiting the foregoing, Landlord’s
approval of Tenant’s plans and specifications shall not be deemed a
representation that use of Tenant’s Rooftop Equipment will not cause
interference with other systems in the Building. Landlord reserves the right to
require Tenant to relocate its Rooftop Equipment to another location on the
roof of the Building upon thirty (30) days advance written notice, provided
that, in Landlord’s reasonable opinion, such move is necessary in order to preserve,
protect or maintain, or to avoid damage to, the roof or structural elements of
the Building. If Landlord requires Tenant to relocate its Rooftop Equipment to
another location on the roof of the Building in accordance with the preceding
sentence, (a) at Landlord’s election, such relocation shall be performed by
Landlord or by Tenant at Landlord’s expense and by contractors previously
approved by Landlord, and (b) if Landlord elects to have Tenant perform such
relocation, Landlord shall reimburse Tenant for its actual, documented
out-of-pocket expenses incurred in relocating the Rooftop Equipment, provided
that Landlord approved such costs in writing prior to such relocation.

 

4.29.4                  Tenant,
through its designated and approved employees and contractors, shall be solely
responsible for the maintenance and care of the Rooftop Equipment and
associated wiring and cabling and shall maintain the same in a clean, sanitary
and safe condition and in good repair and free of any defects at all times
during this Lease. Tenant, at its sole expense and risk, shall ensure that a
physical inspection of the Rooftop Equipment occurs at intervals of no more
than six (6) months and that this inspection include a survey of structural
integrity and a review and correction of any loose bolts, fittings or other
appurtenances. Tenant shall provide a written certification of such inspections
to Landlord not more than ten (10) days following each such inspection. In the
absence of such a certification, but only after Tenant has been provided with
reasonable notice and cure periods (which in no event shall exceed ten (10)
Business Days), Landlord shall have the right (but not the obligation) to
conduct or arrange for such an inspection and corrective action and to charge
Tenant for such costs.

 

4.29.5                  Tenant
covenants upon installation that the Rooftop Equipment and the signals sent and
received by it will not interfere with signals of other tenants communications
equipment then located in the Building or in the office park in which the
Building is located or with other equipment then associated with the operation
of the Building or any other building located in such office park. If such
interference shall occur, Landlord shall give Tenant written notice thereof and
Tenant shall correct the same within twenty-four (24) hours of receipt of such
notice. Further, in the event that the Rooftop Equipment and the signals sent
and received by it at any time do not conform to the operating parameters,
radio frequencies and/or any of the other the Antenna Specifications approved
by Landlord prior to the installation of the Rooftop Equipment, upon notice
from Landlord Tenant shall correct same within twenty-four (24) hours of
receipt of such notice.

 

4.29.6                  Tenant’s
Roof Rights shall be exercised in such manner as: (1) will not create any
hazardous condition or interfere with or impair the operation of the heating,
ventilation, air conditioning, plumbing, electrical, fire protection, life
safety, public utilities or other systems or facilities of the Building, (2)
will not directly or indirectly interfere with, delay, restrict or impose any
expense, work or obligation upon Landlord in the use or operation of the
Building, and (3) shall not in any way conflict with any Governmental
Requirement now in force or which may hereafter be enacted. The Tenant will, at
its sole cost and expense, promptly comply or ensure that the Building complies
with all Governmental Requirements or requirements of any board of fire
insurance underwriters or other similar bodies now or hereafter constituted
relating to or affecting Tenant’s roof use. If the rate of any insurance
carried by Landlord is increased as a result of Tenant’s roof use, and Landlord
provides Tenant with third-party documentation that such increase is the result
of Tenant’s roof use, then Tenant from time to time will pay to Landlord within
ten (10) Business Days after demand by Landlord a sum equal to such increased
cost.

 

4.29.7                  Without
limiting any other indemnification contained herein, Tenant shall indemnify and
hold Landlord harmless from and against any and all Claims arising out of (a)
any violations of

 

36

 

Governmental Requirements relating to Tenant’s Rooftop Equipment and
related facilities, and (b) the installation, maintenance and/or use of such
Rooftop Equipment and related facilities.

 

4.29.8                  Tenant’s
Roof Rights shall not be transferable to any other party other than in
connection with an assignment or subletting to an Affiliate pursuant to
paragraph 4.16.8 and shall be used solely in the ordinary course of Tenant’s
business operations.  Without limiting
the foregoing.  Tenant shall have no
right to sublease, sublicense or permit any other party to use Tenant’s Roof
Rights or any of Tenant’s Rooftop Equipment.

 

4.29.9                  Unless
Landlord agrees in writing to permit Tenant to leave the Rooftop Equipment in
place, upon the expiration or earlier termination of the Lease Term, Tenant
shall remove its Rooftop Equipment and all associated wiring and cabling
connecting the antenna to Tenant’s Premises and repair any and all damage
caused to the roof or any other part of the Building by the installation or
removal of said Rooftop Equipment.  If
Tenant fails to remove any such Rooftop Equipment and all associated wiring and
cabling connecting the Rooftop Equipment to Tenant’s Premises within ten (10)
calendar days after the expiration or earlier termination of the Lease Term,
Landlord may do so and Tenant shall pay the entire cost thereof to Landlord within
ten (10) Business Days after Tenant’s receipt of Landlord’s written demand
therefor, which obligation shall survive expiration or earlier termination of
the Lease.

 

4.29.10            Upon
reasonable notice, the Landlord shall permit Tenant to access the roof of the
Building at reasonable times for purposes of Tenant’s exercise of its rights
under this Section 4.29.

 

4.30                           Indoor Air Quality. 
Landlord represents and warrants that: (i) the HVAC system and other
Building systems servicing the Building currently comply with, and during the
Lease Term will meet, federal, state and applicable local building codes; and
(ii) the indoor air quality in the Premises will meet the 29 CFR 1910.1000 OSHA
standards.

 

4.31                           Occupancy.  Prior to the expiration or earlier
termination of the Lease Term, Tenant shall not vacate the Premises without
providing Landlord with at least five (5) Business Days advance notice.  Tenant’s furnishing of such notice shall not
relieve Tenant of any of its obligations under this Lease.  Without limiting any of such
obligations.  Tenant shall inspect the
Premises no less than once each week during the remainder of the Lease Term to
ensure that the Premises are in good order and condition.

 

4.32                           Waiver
of Certain Statutory Lien Rights.  Landlord hereby
waives any statutory “landlord’s lien” which it may otherwise have with respect
to personal property (other than the Furniture) located in the Premises, which
shall include furniture (other than the Furniture), equipment and supplies
utilized by Tenant in its business operations (“Tenant’s Property”), and Tenant
shall have the right, subject to the terms of this Lease, to remove the same at
any time without Landlord’s consent. 
Landlord expressly reserves any statutory “landlord’s lien” which
Landlord may have with respect to the Furniture.  Landlord further reserves the right to seek and obtain, and
nothing contained herein shall prohibit Landlord from seeking and obtaining,
pre-judgment and/or judgment liens against any or all of tenant’s property,
including without limitation, Tenant’s Property, after the occurrence of an
Event of Default.

 

SECTION 5: DEFAULT AND REMEDIES

 

5.1                                 Events of Default.

 

5.1.1                        The
occurrence of any one or more of the following events shall constitute a
material default and breach of this Lease by Tenant (“Event of Default”):

 

(a)                                  failure
by Tenant to make any payment of Base Rent, Additional Rent or any other sum
payable by Tenant under this Lease within ten (10) days after written notice
from Landlord that such payment was not paid when due, provided, however.
Landlord need not give any such notice, and Tenant shall not be entitled to any
such period of grace, more than twice in any twelve (12) month period;

 

(b)                                 failure
by Tenant to observe or perform any covenant or condition of this Lease, other
than the making of payments, where such failure shall continue for a period of
fifteen (15) Business Days after written notice from Landlord, provided,
however, if cure is not reasonably capable of being completed within such time
period, Tenant shall have such additional reasonable time (not to exceed an
additional thirty (30) Business Days) as is required to cure such default as
long as Tenant promptly commences such cure within said fifteen (15) Business
Day period and thereafter diligently pursues such cure to completion;

 

(c)                                  the
failure of Tenant to surrender possession of the Premises at the expiration or
earlier termination of this Lease in the condition required by this Lease;

 

37

 

(d)                                 (1)
the making by Tenant of any general assignment or general arrangement for the
benefit of creditors; (2) the filing by or against Tenant of a petition in
bankruptcy, including reorganization or arrangement, unless, in the case of a
petition filed against Tenant, unless the same is dismissed within twenty (20)
Business Days; (3) the appointment of a trustee or receiver to take possession
of substantially all of Tenant’s assets located in the Premises or of Tenant’s
interest in this Lease; (4) any execution, levy, attachment or other process of
law against any property of Tenant or Tenant’s interest in this Lease, unless
the same is dismissed within twenty (20) Business Days; (5) adjudication that
Tenant is bankrupt; or (6) the making by Tenant of a transfer in fraud of
creditors; or

 

(e)                                  any
information furnished by or on behalf of Tenant to Landlord in connection with
the entry of this Lease is determined to have been materially false, misleading
or incomplete when made.

 

(f)                                    the
failure of the Tenant to deliver the Letter of Credit within the time period
specified in the paragraph captioned “Lease Security”.

 

5.1.2                        Tenant
shall notify Landlord promptly of any known Event of Default or any known
facts, conditions or events which, with the giving of notice or passage of time
or both, would constitute an Event of Default.

 

5.1.3                        If
a petition in bankruptcy is filed by or against Tenant, and if this Lease is
treated as an “unexpired lease” under applicable bankruptcy law in such
proceeding, then Tenant agrees that Tenant shall not attempt nor cause any
trustee to attempt to extend the applicable time period within which this Lease
must be assumed or rejected.

 

5.2                                 Remedies. If any Event of Default occurs, Landlord may at any time
after such occurrence, with or without notice or demand except as stated in
this paragraph, and without limiting Landlord in the exercise of any right or
remedy at law which Landlord may have by reason of such Event of Default,
exercise the rights and remedies, either singularly or in combination, as are
specified or described in the subparagraphs of this paragraph.

 

5.2.1                        Landlord
may terminate this Lease and all rights of Tenant under this Lease either
immediately or at some later date by giving Tenant written notice that this Lease
is terminated. If Landlord so terminates this Lease, the Landlord may recover
from Tenant the sum of:

 

(a)                                  the
unpaid Base Rent, Additional Rent and all other sums payable under this Lease
which have been earned at the time of termination;

 

(b)                                 interest
at the Default Rate on the unpaid Base Rent, Additional Rent and all other sums
payable under this Lease which have been earned at the time of termination;
plus

 

(c)                                  the
amount by which the unpaid Base Rent, Additional Rent and all other sums
payable under this Lease which would have been earned after termination until
the time of award exceeds the amount of such rental loss, if any, as Tenant
affirmatively proves could have been reasonably avoided and interest on such
excess at the Default Rate; plus

 

(d)                                 the
amount by which the aggregate of the unpaid Base Rent, Additional Rent and all
other sums payable under this Lease for the balance of the Lease Term after the
time of award exceeds the amount of such rental loss, if any, as Tenant
affirmatively proves could be reasonably avoided, with such difference being
discounted to present value at the Prime Rate at the time of award; plus

 

(e)                                  any
other amount necessary to compensate Landlord for the detriment proximately
caused by Tenant’s failure to perform Tenant’s obligations under this Lease or
which, in the ordinary course of things, would be likely to result from such
failure, including, leasing commissions, tenant improvement costs, renovation
costs and advertising costs; plus

 

(f)                                    all
such other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable law.

 

5.2.2                        Landlord
shall also have the right, with or without terminating this Lease, to re-enter
the Premises and remove all persons and property from the Premises. Landlord
may cause property so removed from the Premises to be stored in a public
warehouse or elsewhere at the expense and for the account of Tenant.

 

5.2.3                        Landlord
shall also have the right, without terminating this Lease, to accelerate and
recover from Tenant the amount by which the sum of all unpaid Base Rent,
Additional Rent and all other sums payable under the then remaining term of the
Lease exceeds the amount of such rental loss, if any, as Tenant affirmatively
proves could be reasonably avoided, with such difference being discounted to
present value at the Prime Rate.

 

38

 

5.2.4                        If
Tenant surrenders the Premises prior to the expiration of the Lease Term
without Landlord’s consent, or if Landlord re-enters the Premises as provided
in subparagraph 5.2.2 or takes possession of the Premises pursuant to legal
proceedings or through any notice procedure provided by law, then, if Landlord
does not elect to terminate this Lease, Landlord may, from time to time,
without terminating this Lease, either (a) recover all Base Rent, Additional
Rent and all other sums payable under this Lease as they become due or (b)
relet the Premises or any part of the Premises on behalf of Tenant for such
term or terms, at such rent or rents and pursuant to such other provisions as
Landlord, in its sole but reasonable discretion, may deem advisable, all with
the right, at Tenant’s cost, to make alterations and repairs to the Premises
and recover any deficiency from Tenant as set forth in subparagraph 5.2.6.

 

5.2.5                        None
of the following remedial actions, singly or in combination, shall be construed
as an election by Landlord to terminate this Lease unless Landlord has in fact
given Tenant written notice that this Lease is terminated: (a) an act by
Landlord to maintain or preserve the Premises; (b) any efforts by Landlord to
relet the Premises; (c) any repairs or alterations made by Landlord to the
Premises; (d) re-entry, repossession or reletting of the Premises by Landlord pursuant
to this paragraph; or (e) the appointment of a receiver, upon the initiative of
Landlord, to protect Landlord’s interest under this Lease.  If Landlord takes any of the foregoing
remedial action without terminating this Lease, Landlord may nevertheless at
any time after taking any such remedial action terminate this Lease by written
notice to Tenant.

 

5.2.6                        If
Landlord relets the Premises, Landlord shall apply the revenue from such
reletting as follows: first.
to the payment of any indebtedness of Tenant to Landlord other than Base Rent,
Additional Rent or any other sums payable by Tenant under this Lease; second. to the payment of any cost of
reletting (including finders’ fees and leasing commissions); third. to the payment of the cost of
any alterations, improvements, maintenance and repairs to the Premises; and fourth. to the payment of Base Rent,
Additional Rent and other sums due and payable and unpaid under this
Lease.  Landlord shall hold and apply
the residue, if any, to payment of future Base Rent, Additional Rent and other
sums payable under this Lease as the same become due, and shall deliver the
eventual balance, if any, to Tenant. 
Should revenue from letting during any month, after application pursuant
to the foregoing provisions, be less than the sum of the Base Rent, Additional
Rent and other sums payable under this Lease and Landlord’s expenditures for
the Premises during such month.  Tenant
shall be obligated to pay such deficiency to Landlord as and when such
deficiency arises.

 

5.2.7                        Pursuit
of any of the foregoing remedies shall not preclude pursuit of any of the other
remedies provided in this Lease or by law (all such remedies being cumulative),
nor shall pursuit of any remedy provided in this Lease constitute a forfeiture
or waiver of any Base Rent, Additional Rent or other sum payable under this
Lease or of any damages accruing to Landlord by reason of the violation of any
of the covenants or conditions contained in this Lease.

 

5.3                                 Right to Perform.  If Tenant shall fail to pay any sum of
money, other than Base Rent or Additional Rent, required to be paid by it under
this Lease or shall fail to perform any other act on its part to be performed
under this Lease and such failure shall continue for ten (10) Business Days
after notice of such failure by Landlord, or such shorter time if reasonable
under the circumstances to prevent injury to persons or property, Landlord may,
but shall not be obligated to, and without waiving or releasing Tenant from any
obligations of Tenant, make such payment or perform such other act on Tenant’s
part to be made or performed as provided in this Lease.  Landlord shall have (in addition to any
other right or remedy of Landlord) the same rights and remedies in the event of
the nonpayment of sums due under this paragraph as in the case of default by
Tenant in the payment of Base Rent.

 

5.4                                 Landlord’s Default.  Landlord shall not be in default under this
Lease unless Landlord fails to perform obligations required of Landlord within
twenty (20) Business Days after written
notice is delivered by Tenant to Landlord and to the holder of any mortgages or
deeds of trust (collectively, “Lender”) covering the Premises whose name
and address shall have theretofore been furnished to Tenant in writing,
specifying the obligation which Landlord has failed to perform; provided,
however, that if the nature of Landlord’s obligation is such that more than
twenty (20) Business Days are required for performance, then Landlord shall not
be in default if Landlord or Lender commences performance within such twenty
(20) Business Day period and thereafter diligently prosecutes the same to
completion.  All obligations of Landlord
hereunder shall be construed as covenants, not conditions.  In the event of any default, breach or
violation of Tenant’s rights under this Lease by Landlord,  Tenant’s exclusive remedy shall be either an
action for specific performance or an action for actual damages.  Tenant hereby waives

 

39

 

the benefit of any laws granting it the right
to perform Landlord’s obligation or the right to terminate this Lease or
withhold Rent on account of any Landlord default.

 

SECTION 6:
MISCELLANEOUS PROVISIONS

 

6.1                                 Notices.  Any notice, request, approval, consent or written communication
required or permitted to be delivered under this Lease shall be: (a) in
writing; (b) transmitted by personal delivery, express or courier service,
United States Postal Service in the manner described below, or electronic means
of transmitting written material; ad (c) deemed to be delivered on the earlier
of the date received or four (4) Business Days after having been deposited in
the United States Postal Service, postage prepaid.  Such writings shall be addressed to Landlord or Tenant, as the
case may be, at the respective designated addresses set forth opposite their
signatures, or at such other address(es) as they may, after the execution date
of this Lease, specify by written notice delivered in accordance with this
paragraph, with copies to the persons at the addresses, if any, designated
opposite each party’s signature. Those notices which contain a notice of breach
or default or a demand for performance may be sent by any of the methods
described in clause (b) above, but if transmitted by personal delivery or
electronic means, shall also be sent concurrently by certified or registered
mail, return receipt requested.

 

6.2                                 Attorney’s
Fees and Expenses. 
In the event either party requires the services of an attorney in
connection with enforcing the terms of this Lease, or in the event suit is
brought for the recovery of Base Rent, Additional Rent or any other sums
payable under this Lease or for the breach of any covenant or condition of this
Lease, or for the restitution of the Premises to Landlord or the eviction of
Tenant during the Lease Term or after the expiration or earlier termination of
this Lease, the non-breaching party shall be entitled to a reasonable sum for
attorney’s and paralegal’s fees, actual expenses and court costs, including those
relating to any appeal.

 

6.3                                 No Accord and
Satisfaction.  No
payment by Tenant or receipt by Landlord of any amount less than the Base Rent
or Additional Rent or any other sum due and payable under this Lease shall be
deemed to be other than a payment on account of the Base Rent, Additional Rent
or other such sum, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment be deemed an accord and satisfaction,
no preclude Landlord’s right to recover the balance of any amount payable or
Landlord’s right to pursue any other remedy provided in this Lease or at law.

 

6.4                                 Successors;
Joint and Several Liability.  Except as provided in the paragraph captioned “Limitation on
Recourse” and subject to the paragraph captioned “Assignment and
Subletting by Landlord”, all of the covenants and conditions contained in
this Lease shall apply to and be binding upon Landlord and Tenant and their
respective heirs, executors, administrators, successors and assigns.  In the event that more than one person,
partnership, company, corporation or other entity is included in the term “Tenant”,
then each such person, partnership, company, corporation or other entity shall
be jointly and severally liable for all obligations of Tenant under this Lease.

 

6.5                                 Choice of Law.  This Lease shall be construed and governed
by the laws of the Commonwealth of Virginia. 
Tenant consents to Landlord’s choice of venue for any legal proceeding
brought by Landlord or Tenant to enforce the terms of this Lease.

 

6.6                                 No Waiver of
Remedies.  The waiver
by Landlord of any covenant or condition contained in this Lease shall not be
deemed to be a waiver of any subsequent breach of such covenant or condition
nor shall any custom or practice which may develop between the parties in the
administration of this Lease be construed to waive or lessen the rights of
Landlord to insist on the strict performance by Tenant of all of the covenants
and conditions of this Lease.  No act or
thing done by Landlord or Landlord’s Agents during the Lease Term shall be
deemed an acceptance or a surrender of the Premises, and no agreement to accept
a surrender of the Premises shall be valid unless made in writing and signed by
Landlord.  The mention in this Lease of
any particular remedy shall not preclude Landlord from any other remedy it
might have, either under this Lease or at law, nor shall the waiver of or
redress for any violation of any covenant or condition in this Lease or in any
of the rules or regulations attached to this Lease or later adopted by
Landlord, prevent a subsequent act, which would have originally constituted a
violation, from having all the force and effect of an original violation.  The receipt by Landlord of Base Rent, Additional
Rent or any other sum payable under this Lease with knowledge of a breach of
any covenant or condition in this Lease shall not be deemed a waiver of such
breach.  The failure of Landlord to
enforce any of the rules and regulations attached to this Lease or later
adopted, against Tenant or any other tenant in the

 

40

 

Building shall not be deemed a waiver. 
Any waiver by Landlord must be in writing and signed by Landlord to be
effective.

 

6.7                                 Offer to Lease.  The submission of this Lease in a draft form
to Tenant or its broker or other agent does not constitute an offer to Tenant
to lease the Premises or the Furniture. 
This Lease shall have no force or effect until: (a) it is executed and
delivered by Tenant to Landlord; and (b) it is executed and delivered by
Landlord to Tenant.

 

6.8                                 Force Majeure.  In the event that Landlord shall be delayed,
hindered in or prevented from the performance of any act or obligation required
under this Lease by reason of acts of God, strikes, lockouts, labor troubles or
disputes, inability to procure or shortage of materials or labor, failure of
power or utilities, delay in transportation, fire, vandalism, accident, flood,
severe weather, other casualty, Governmental Requirements (including mandated
changes in the Plans and Specifications or the Tenant improvements resulting
from changes in pertinent Governmental Requirements or interpretations
thereof), riot, insurrection, civil commotion, sabotage, explosion, war,
natural or local emergency, acts or omissions of others, including Tenant, or
other reasons of a similar or dissimilar nature not solely the fault of, or
under  the exclusive control of,
Landlord, then performance of such act or obligation shall be excused for the period
of the delay and the period for the performance of any such act or obligation
shall be extended for the period equivalent to the period of such delay.

 

6.9                                 Landlord’s Consent.  Unless otherwise provided in this Lease,
whenever Landlord’s consent, approval or other action is required under the
terms of this Lease, such consent, approval or action shall be subject to
Landlord’s judgment or discretion exercised in good faith and shall be
delivered in writing.

 

6.10                           Severability;
Captions.  If any
clause or provision of this Lease is determined to be illegal, invalid, or
unenforceable under present or future laws, the remainder of this Lease is
shall not be affected by such determination, and in lieu of each clause or
provision that is determined to be illegal, invalid or unenforceable, there be
added as a part of this Lease a clause or provision as similar in terms to such
illegal, invalid or unenforceable clause or provision as may as possible and be
legal, valid and enforceable.  Headings
or captions in this Lease are added as a matter of convenience only and in no
way define, limit or other wise affect the construction or interpretation of
this Lease.

 

6.11                           Interpretation.  Whenever a provision of this Lease uses the
term (a) “include” or “including”, that term shall not be limiting but shall construed
as illustrative, (b) “covenant”, that term shall include any covenant,
agreement, term or provision, (c) “at law”, that term shall mean as specified
in any applicable statute, ordinance or regulation having the force of law or
as determined at law or in equity, or both, and (d) “day”, that uncapitalized
word shall mean a calendar day.  This
Lease shall be given a fair and reasonable interpretation of the words
contained in it without any weight being given to whether a provision was
drafted by one party or its counsel.

 

6.12                           Incorporation
of Prior Agreement; Amendments.  This Lease contains all of the agreements of the parties to this
Lease with respect to any matter covered or mentioned in this Lease and no
prior agreement or understanding pertaining to any such matter shall be
effective for any purpose.  No provision
of this Lease may be amended or added to except by an agreement in writing
signed by the parties to this Lease or their respective successors in interest.

 

6.13                           Authority.  If Tenant is a partnership, company,
corporation or other entity, each individual executing this Lease on behalf of
Tenant represents and warrants to Landlord that he or she is duly authorized to
so execute and deliver this Lease and that all partnership, company, corporation
or other entity actions and consents required for execution of this Lease have
been given, granted or obtained.  If
Tenant is a partnership, company, corporation or other business organization,
it shall, within ten (10) Business Days after demand by Landlord, deliver to
Landlord satisfactory evidence of the due authorization of this Lease and the
authority of the person executing this Lease on its behalf.

 

6.14                           Time of Essence.  Time is of the essence with respect to the
performance of every covenant and condition of this Lease.

 

6.15                           Survival of
Obligations. 
Notwithstanding anything contained in this Lease to the contrary or the
expiration or earlier termination of this Lease, any and all obligations of
either party accruing prior to the expiration or termination of this Lease
shall survive the expiration or earlier termination of this Lease, and either
party shall promptly perform all such obligations whether or not this Lease has
expired or terminated.  Such obligations
shall include any and all indemnity obligations set forth in this Lease.

 

6.16                           Intentionally
Omitted

 

6.17                           Landlord’s
Authorized Agents. 
Notwithstanding anything contained in the Lease to the contrary,
including without limitation, the definition of Landlord’s Agents, only officers
of Riggs Bank N.A.,

 

41

 

are authorized to amend, renew or terminate this Lease, or to
compromise any of Landlord’s claims under this Lease or to bind Landlord in any
manner.  Without limiting the effect of
the previous sentence, no property manager or broker shall be considered an
authorized agent of Landlord to amend, renew or terminate this Lease, to
compromise any of Landlord’s claims under this Lease or to bind Landlord in any
manner.

 

6.18                           Waiver of Jury Trial.  Landlord and Tenant irrevocably waive the
respective rights to trial by jury in any action, proceeding or counterclaim
brought by either against the other (whether in contract or tort) or any matter
arising out of or relating in any way to this Lease, the relationship of
Landlord and Tenant or Tenant’s use or occupancy of the Premises.

 

6.19                           Use
of Common Area Amenities in Lower Level Space.  For so long as Landlord in its sole
discretion maintains any Common Area Amenities in the Lower Level Space: (a)
Tenant and its employees shall be entitled during the Lease Term to the
non-exclusive use of such Common Area Amenities in common with the other
tenants in the Building, and (b) beginning on the Rent Commencement Date and
continuing for the entire Lease Term, Tenant shall pay, as Additional Rent, a
use fee equal to Tenant’s Share of Lower Level Space Rent.  The monthly installments of Tenant’s Share
of Lower Level Space Rent shall be due and payable, without demand and in
advance, on or before the first day of each calendar month of the Lease
Term.  The monthly installment of
Tenant’s share of Lower Level Space Rent for any partial month at the beginning
or end of the Lease Term or for the month in which the Landlord ceases to
maintain any Common Area Amenities (or reduces the rentable square footage of
the Lower Level Space made available for use as Common Area Amenities) shall be
prorated. Tenant’s Share of Lower Level Space Rent for any partial month at the
beginning of the Lease Term shall be paid by Tenant on the Rent Commencement
Date.  Nothing contained herein shall
require the Landlord to provide, or to continue to provide, all or any of the
Common Area Amenities at any time during the Lease Term.

 

6.20                           Furniture.  Upon the execution hereof and delivery of
the Lease Security Deposit, Landlord shall sell and convey to Tenant all of
Landlord’s right, title and interest in and to the Furniture for the sum of Ten
and 00/100 Dollars ($10.00) pursuant to a quitclaim bill of sale in the form
attached hereto as Exhibit K. 
Such sale shall be made without any representations or warranties,
whether expressed, implied, or imposed by law. 
Without limiting the foregoing total exclusion of representations and
warranties, the Furniture shall be conveyed to Tenant in its then AS IS, WHERE
IS condition WITHOUT ANY WARRANTY OF MERCHANTABILITY, and WITHOUT ANY WARRANTY
OF FITNESS FOR A PARTICULAR PURPOSE. 
Upon the occurrence of any monetary Event of Default, Landlord shall
have the right and option to repurchase the Furniture from Tenant for Ten and
00/100 Dollars ($10.00).  In the event
of such exercise, Tenant shall convey the Furniture to Landlord by a quitclaim
bill of sale substantially in the form attached hereto as Exhibit K.

 

<THE REMAINDER OF THIS PAGE INTENTIONALLY
LEFT BLANK>

 

42

 

IN WITNESS
WHEREOF, this lease has been executed the day and year first above set forth.

 

	
  Designated
  Address for Landlord:

  	
  LANDLORD:

  
	
   

  	
   

  
	
  The
  Multi-Employer Property Trust

  	
  MULTI-EMPLOYER
  PROPERTY TRUST, a trust

  
	
  c/o Kennedy
  Associates Real Estate Counsel, Inc.

  	
  organized
  under 12 C.F.R. Section 9.18

  
	
  Attn: Vice
  President, Asset Management

  	
   

  
	
  7315
  Wisconsin Ave., West Tower, Third Floor

  	
  By:

  	
  Kennedy
  Associates Real Estate

  
	
  Bethesda, MD
  20814

  	
   

  	
  Counsel,
  Inc.,

  
	
  Facsimile:
  (301) 656-9339

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jeanette
  R. Flory

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeanette R.
  Flory

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  
	
  with a copy
  to Manager at:

  	
   

  
	
   

  	
   

  
	
  Trammell
  Crow Real Estate Services, Inc.,

  	
   

  
	
  14595 Avion
  Parkway, Suite 100

  	
   

  
	
  Chantilly,
  VA 20151

  	
   

  
	
  Facsimile:
  703-288-9262

  	
   

  
	
   

  	
   

  
	
  Designated
  Address for Tenant:

  	
  TENANT:

  
	
   

  	
   

  
	
  Transaction
  Network Services, Inc.

  	
  Transaction
  Network Services, Inc., a

  
	
  1939 Roland
  Clarke Place

  	
  Delaware
  corporation

  
	
  Reston,
  Virginia 2019

  	
   

  
	
  Attention:
  General Counsel

  	
  By:

  	
  /s/ Brian
  Bates

  	
   

  
	
  Facsimile:
  703-453-8397

  	
  Name:

  	
  Brian Bates

  	
   

  
	
   

  	
  Its:

  	
  President
  & COO Transaction Network Services

  	
   

  
											

 

1

 

LANDLORD ACKNOWLEDGEMENT

 

	
  State of
  Maryland

  	
  )

  
	
  County of
  Montgomery

  	
  ) ss.

  
	
   

  	
  )

  

 

On this 31 day
of December       , 2002, before me
personally appeared Jeanette R. Flory, to me known to be a Vice President of
Kennedy Associates Real Estate Counsel, Inc., the corporation that executed the
within and foregoing instrument as authorized signatory of the Multi-Employer
Property Trust, and acknowledged said Instrument to be the free and voluntary
act and deed of corporation as such authorized signatory, for the uses and
purposes therein mentioned, and on oath stated that she (he or she) was authorized
to execute said instrument.

 

IN WITNESS
WHEREOF, I have hereunto set my hand affixed my hand and affixed my official
seal the day and year first above written.

 

	
  [SEAL]

  	
  /s/ Norman
  Hawkins

  	
   

  
	
   

  	
  Name:

  	
  Norman
  Hawkins

  	
   

  
	
   

  	
  NOTARY
  PUBLIC in and for the District of Columbia,

  
	
   

  	
  residing at
  Dumfries, VA. My appointment

  
	
   

  	
  expires:

  	
   8/28/06

  
	
   

  	
   

  
					

 

TENANT ACKNOWLEDGEMENT (CORPORATION)

 

	
  Virginia

  	
  )

  
	
  Fairfax
  County

  	
  ) ss.

  
	
   

  	
  )

  

 

On this 23RD
day of December     , 2002, before me, a Notary Public
in and for the State of                                          ,
personally appeared Brian Bates, the President & COO of Transaction Network
services, Inc., the Delaware corporation that executed the within and foregoing
instrument, and acknowledged said instrument to be the free and voluntary act
and deed of said corporation for the uses and purposes therein mentioned, and
on oath stated that s/he/they was/were authorized to execute said instrument.

 

WITNESS my
hand and official seal hereto affixed the day and year first as above written.

 

 

	
   

  	
  /s/ Sandra J
  Lashbrook

  	
   

  
	
   

  	
  Name:

  	
  SANDRA J.
  LASHBROOK

  	
   

  
	
   

  	
  NOTARY
  PUBLIC in and for the State of Virginia

  
	
   

  	
  residing at
  1939 Roland Clark Place, Reston, VA. My appointment

  
	
   

  	
  expires:

  	
   7-31-03

  
					

 

[NOTARIAL SEAL]

 

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Exhibit 10.4    
    

 
  TNS HOLDINGS, INC.
  2001 FOUNDERS' STOCK OPTION PLAN    
    

Preamble: 

        The
Board of Directors of TNS Holdings, Inc. (the "Company") hereby adopts this 2001 Founders' Stock Option Plan (the "Plan"). The Board wishes to recognize the contributions of
those employees of the Company employed by Transaction Network Services, Inc. ("TNS") at the time the Company acquired TNS from PSINet, Inc. who, together with senior management and the
Investors, represent the founders of the new TNS. By adopting the Plan, the Board wishes to create, during the 5-year term of the Plan, incentives for and to reward the founding employees
and future employees who contribute to the growth of the new TNS. The options granted pursuant to this Plan will enable those employees and others to share in the resulting increase in the equity
value of the Company. 

        1.    Purpose.    

        This
Plan is intended to provide non-employee directors, officers, employees and certain other individuals with opportunities to purchase shares of the Company's Common Stock
under (a) incentive stock options ("ISOs") within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and (b) non-qualified stock options
(also known as "nonstatutory stock options") ("NQSOs"), as designated at the time of grant. The Plan is a compensatory benefit plan within the meaning of Rule 701 of the Securities Act of 1933,
as amended (the "Securities Act"), and, unless and until the Common Stock (as defined herein) is publicly traded, the issuance of options to purchase shares of Common Stock pursuant to the Plan and
the issuance of Common Stock pursuant to the exercise of such options are intended to qualify for the exemption from registration under the Securities Act provided by Rule 701. 

        2.    Definitions.    

        As
used in the Plan, the following words and phrases shall have the meanings indicated below: 

        (a)   "Affiliate"
shall mean any corporation that, directly or indirectly, controls, is controlled by, or is under common control with, another corporation, where "control"
(including the terms "controlled by" and "under common control with") means the possession, direct or indirect, of the power to cause the direction of the management and policies of the corporation,
whether through the ownership of voting securities, by contract, or otherwise 

        (b)   "Board"
shall mean the Board of Directors of the Company. 

        (c)   "Change
in Control Transaction" shall mean any transaction or series of transactions which occur after the Plan has been adopted by the Board as a consequence of which
any person or group of related persons (other than the Investors and their Affiliates) in the aggregate acquires: (i) capital stock of the Company possessing the voting power to elect a
majority of the Company's board of directors (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company's capital stock, shareholder or voting agreement, proxy,
power of attorney or otherwise) or (ii) all or substantially all of the Company's assets determined on a consolidated basis; provided, that, a Change in Control Transaction shall not include a
public offering and sale of equity securities of the Company. 

        (d)   "Code"
shall mean the Internal Revenue Code of 1986, as amended. 

        (e)   "Committee"
shall mean the committee of the Board which shall be designated by the Board to administer the Plan. The Committee shall be composed of two or more directors
appointed from time to time to serve by the Board, a majority of whom shall be directors designated by the Investors. 

        (f)    "Common
Stock" shall mean the common stock of the Company. 

 

        (g)   "Fair
Market Value" per share of Common Stock as of a particular date shall mean: (i) the closing sales price per share of Common Stock on the principal national
securities exchange, if any, on which the shares of Common Stock shall then be listed for the last preceding date on which there was a sale of such Common Stock on such exchange, (ii) if the
shares of Common Stock are not then listed on a national securities exchange, the last sales price per share of Common Stock entered on a national inter-dealer quotation system for the last preceding
date on which there was a sale of such Common Stock on such national inter-dealer quotation system, (iii) if no closing or last sales price per share of Common Stock is entered on a national
inter-dealer quotation system, the average of the closing bid and asked prices for the shares of Common Stock in the over-the-counter market for the last preceding date on
which there was a quotation for such Common Stock in such market, or (iv) if no price can be determined under the preceding alternatives, then the price per share of Common Stock as most
recently determined by the Committee, which shall make such determination of value at least once annually. 

        (h)   "Immediate
Family" shall mean an individual who is a member of the Optionee's "immediate family" as that term is defined under Rule 16a-1(e) of the
Exchange Act. 

        (i)    "Investors"
shall mean GTCR Fund VII, L.P., a Delaware limited partnership, and any other investment fund managed by GTCR Golder Rauner, L.L.C., a Delaware limited
liability company. 

        (j)    "ISO"
shall mean one or more options to purchase Common Stock which, at the time such options are granted under the Plan or any other such plan of the Company, qualify
as incentive stock options under Section 422 of the Code. 

        (k)   "Parent"
shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of granting an Option, each of
the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 

        (l)    "Plan"
shall mean this 2001 Founders' Stock Option Plan. 

        (m)  "Option"
shall mean any ISO or NQSO issued pursuant to the Plan. 

        (n)   "Optionee"
shall mean any person to whom an Option is granted under the Plan. 

        (o)   "Subsidiary"
shall mean with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if
a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or
other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries
of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any
managing director or general partner of such limited liability company, partnership, association or other business entity. 

        (p)   "Ten
Percent Shareholder" shall mean an "Optionee" who, at the time an Option is granted, owns directly or indirectly (within the meaning of section 425(d) of the
Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, its Parent or a Subsidiary. 

2

 

        3.    General Administration.    

        (a)   The
Plan shall be administered by the Committee. 

        (b)   The
Board shall delegate to the Committee all authority, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan in the
Committee's discretion and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Options; to determine the purchase price of shares of Common Stock covered by each Option (the "Exercise Price"); to determine the persons to whom, and the time or
times at which, Options shall be granted; to determine the number of shares to be covered by each Option; to interpret the Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the Option Agreements (which need not be identical) entered into in connection with Options granted under the Plan (including, without limitation, those
relating to vesting and repurchase rights); and to make all other determinations deemed necessary or advisable for the administration of the Plan. Pursuant to a duly-adopted resolution of
the Committee, the Committee may delegate its authority to administer the Plan to one or more senior officers of the Company (the "Designated Officer"), subject to the limitations imposed by the
Committee. The interpretation by the Committee of any of the provisions of the Plan, any related agreements, or any Option granted under the Plan shall be final and binding upon the Company and all
persons having an interest in any Option or any shares of Common Stock purchased pursuant to an Option. 

        (c)   Subject
to the provisions of Section 1(e) above, the Board (i) shall fill all vacancies, however caused, in the Committee, (ii) may from time to
time appoint additional members to the Committee, and (iii) may at any time remove one or more Committee members and substitute others. 

        (d)   Neither
the Designated Officer nor any member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect to the Plan
or any Option granted hereunder. 

        (e)   The
Plan shall become effective on the date it is adopted by the Board. The Plan shall be approved by the shareholders of the Company, in any manner permitted by
applicable corporate law, within twelve (12) months before or after the date the Plan is adopted by the Board. 

        4.    Term of Plan.    

        Options
may be granted pursuant to the Plan from time to time from the date on which the Plan is adopted by the Board until April 2, 2006, provided that no Options granted under
the Plan shall become exercisable unless and until the Plan shall have been approved by the Company's shareholders. 

        5.    Eligibility.    

        (a)   Options
may be granted to any employee, officer, non-employee director, consultant, independent contractor and advisor (provided such consultant, contractor
and advisor render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction) of the Company or any Parent, Subsidiary or Affiliate of the Company.
The Committee in its sole discretion shall select the Optionees. In determining from time to time the individuals to whom Options shall be granted and the number of shares to be covered by each
Option, the Committee shall take into account the duties of the respective individuals, their present and potential contributions to the success of the Company and such other factors as the Committee
shall deem relevant in connection with accomplishing the purposes of the Plan. An Optionee may be granted more than one Option under the Plan. 

3

 

        (b)   At
the time of the grant of each Option under the Plan, the Committee shall determine whether such Option is to be designated an ISO or a NQSO. ISOs may be granted only
to employees of the Company or a Parent or Subsidiary of the Company. The length of the exercise period of Options shall be governed by Section 7(f) of the Plan. 

        (c)   An
Option designated an ISO can, prior to its exercise, be changed to a NQSO if the Optionee consents. 

        6.    Stock.    

        (a)   The
stock subject to the Options shall be shares of the Common Stock. Such shares may, in whole or in part, be authorized but unissued shares issued directly by the
Company or shares which shall have been or which may be acquired by the Company. The aggregate number of shares of Common Stock as to which Options may be granted from time to time under the Plan
shall be three million (3,000,000) shares. The limitation established by the preceding sentence shall be subject to adjustment as provided in Section 7(j) hereof. 

        (b)   If
any outstanding Option under the Plan for any reason expires or is terminated without having been exercised in full, the shares of Common Stock allocable to the
unexercised portion of such Option shall (unless the Plan shall have been terminated) become available for subsequent grants of Options under the Plan. Shares of Common Stock that actually have been
issued under the Plan shall not be returned to the Plan and shall not become available for future issuance under the Plan, except that if unvested shares of Common Stock are forfeited, or repurchased
by the Company at their original purchase price, such shares shall become available for future grant under the Plan. 

        7.    Terms and Conditions of Options.    

        Each
Option granted pursuant to the Plan shall be evidenced by an Option Agreement in such form as the Committee may from time to time approve. Options shall comply with and be subject
to the following terms and conditions: 

        (a)    Date of Grant.    The date of grant of an Option shall be the date on which the Committee adopts a resolution
expressly granting the Option, unless otherwise specified by the Committee and subject to applicable provisions of the Code. The grant representing the Option (the "Grant") will be delivered to the
Optionee with a copy of the Plan within a reasonable time after the date of grant. No Option shall be exercisable until such Grant is executed by the Company and the Optionee. 

        (b)    Exercise Price.    Each Option shall state the Exercise Price. The Exercise Price of an ISO shall not be less
than one hundred percent (100%) of the Fair Market Value of the shares of Common Stock on the date of grant of the Option. The Exercise Price for an NQSO shall not be less than eighty-five
percent (85%) of the Fair Market Value of the shares of Common Stock on the date of grant of the Option. The Exercise Price of any Option granted to a Ten Percent Shareholder shall not be less than
one hundred ten percent (110%) of the Fair Market Value of the
shares of Common Stock on the date of grant of the Option. The Option price shall be subject to adjustment as provided in Section 7(j) hereof. 

        (c)    Restrictions.    Any Common Stock issued under the Plan may contain such restrictions, including, but not
limited to, limitations on transferability, as the Committee may determine. Common Stock issued under the Plan may not be registered pursuant to the Securities Act, or any applicable state securities
law, and the Committee may require any Optionee upon exercise to make such representations as are reasonably necessary to establish compliance with such laws. 

        (d)    Value of Shares.    Options may be granted to any eligible person for shares of Common Stock of any value,
provided that the aggregate Fair Market Value (determined at the time the 

4

 

Option
is granted) of the stock with respect to which ISOs are exercisable for the first time by the Optionee during any calendar year (under all the plans of the Company, its Parent and its
Subsidiaries) shall not exceed $100,000. To the extent that the Fair Market Value of stock with respect to which ISOs are exercisable for the first time by an Optionee during any calendar year exceeds
$100,000, the Options for the amount in excess of $100,000 shall be treated as not being ISOs and shall be treated as NQSOs. The foregoing shall be applied by taking Options into account in the order
in which they were granted. In the event that the Code or the regulations promulgated thereunder are amended after the effective date of the Plan to provide for a different limit on the Fair Market
Value of shares permitted to be subject to ISOs, such different limit shall be incorporated herein and shall apply to any Options granted after the effective date of such amendment. 

        (e)    Medium and Time of Payment.    The Exercise Price shall be paid in full, at the time of exercise, in cash or,
where approved by law, any of the following methods approved by the Committee, or any combination thereof, provided that the portion of the consideration equal to the par value of the shares of Common
Stock being purchased must be paid in cash or other legal consideration permitted by the General Corporation Law of the State of Delaware: (i) by cancellation of indebtedness of the Company to
the Optionee; (ii) by delivery to the Company of shares of Common Stock that, on the date of exercise, have been owned by Optionee for a minimum of six months and one day, and have a Fair
Market Value equal to the Exercise Price; (iii) provided that a public market for the Company's stock exists, through a "same day sale" commitment from the Optionee and a broker-dealer that is
a member of the National Association of Securities Dealers, Inc. (an "NASD Dealer") whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the shares of Common
Stock so purchased to pay for the exercise price and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the exercise price directly to the Company; and/or
(iv) provided that a public market for the Company's stock exists, through a "margin" commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the
Option and to pledge the shares of Common Stock so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the exercise price, and whereby the
NASD Dealer irrevocably commits upon receipt of such shares to forward the exercise price directly to the Company. 

        (f)    Term and Exercise of Options.    

        (1)   Options
shall be exercisable within the times and upon the events determined by the Committee as set forth in the Grant; provided, that no Option shall be exercisable
after the expiration of ten (10) years from the date the Option is granted; and provided, further, that in the case of an ISO granted to a Ten Percent Shareholder the exercise period shall not
exceed five (5) years from the date of grant of such Option. The exercise period shall be subject to earlier termination as provided in Section 7(g) and 7(h) hereof. 

        (2)   Options
may be exercised only by delivery to the Company of a written exercise agreement in a form approved by the Committee (which need not be the same for each
Optionee), stating the number of Shares being purchased, the restrictions imposed on the Shares, if any, and such representations and agreements regarding the Optionee's investment intent and access
to information, if any, as may be required by the Company to comply with applicable securities laws. 

        (g)    Termination of Employment.    Except as provided in this Section 7(g) and Section 7(h) hereof,
Options granted under the Plan shall terminate and may not be exercised if the Optionee ceases to be employed by, or provide services to, the Company or any Parent or Subsidiary of the Company (or, in
the case of a NQSO, by or to any Affiliate of the Company). An Optionee shall be considered to be employed by the Company for all purposes under this Section 7(g) if the 

5

 

Optionee
is an officer, non-employee director or full-time employee of the Company or any Parent, Subsidiary or Affiliate of the Company or if the Committee determines that the
Optionee is rendering substantial services as a part-time employee, consultant, contractor or advisor to the Company or any Parent, Subsidiary or Affiliate of the Company. The Committee
shall have discretion to determine whether an Optionee has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company and the effective date on which such employment
terminated (the "Termination Date"). If an Optionee ceases to be employed by the Company and all Parents, Subsidiaries or Affiliates of the Company for any reason except death or disability, the
Options which are then exercisable (and only to the extent exercisable) (the "Vested Options") by the Optionee on the Termination Date, may be exercised by the Optionee, but only within three
(3) months after the Termination Date or such shorter period of time as provided in the Grant, but in no event less than thirty (30) days; provided that Options may not be exercised in
any event after the Expiration Date; and provided, further, that if the association of the Optionee with the Company shall terminate for "cause" (as determined by the Committee), all Options
theretofore granted to such Optionee shall, to the extent not theretofore exercised, terminate forthwith. Nothing in the Plan or any Option granted under the Plan shall confer on any Optionee any
right (i) to continue in the employ of, or other relationship with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit in any way the right of the Company or any Parent,
Subsidiary or Affiliate of the Company to terminate the Optionee's employment or other relationship at any time, with or without cause, or (ii) to have any Option(s) granted to such Optionee
under the Plan, or any other plan, or to acquire any other securities of the Company, in the future. 

        (h)    Death or Disability of Optionee.    If an Optionee's employment with the Company and all Parents, Subsidiaries
and Affiliates of the Company is terminated because of the death of the Optionee or the permanent and total disability of the Optionee within the meaning of Section 22(e)(3) of the Code, the
Vested Options, as determined on the Termination Date, may be exercised by the Optionee (or the Optionee's legal representative), but only within twelve (12) months after the Termination Date;
and provided further that Options may not be exercised in any event later than the Expiration Date. If an Optionee's employment with the Company and all Parents, Subsidiaries and Affiliates of the
Company is terminated because of a disability of the Optionee which is not permanent and total within the meaning of Section 22(e)(3) of the Code, the Vested Options, as determined on the
Termination Date, may be exercised by the Optionee or the Optionee's legal representative, but only within six (6) months after the Termination Date; and provided further that Options may not
be exercised in any event later than the Expiration Date. 

        (i)    Non-transferability of Options.    To the extent provided in an individual Grant, NQSOs shall be
transferable by gift to members of the Optionee's Immediate Family, by instrument to an inter vivos or testamentary trust under which the NQSOs are to be passed to beneficiaries upon the death of the
Optionee, by will, and by the laws of descent and distribution. ISOs granted under the Plan, and any interest therein, shall not be transferable or assignable by the Optionee, and may not be made
subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution following the Optionee's death and shall be exercisable during the lifetime of the
Optionee only by the Optionee. 

        (j)    Effect of Certain Changes.    

        (1)   In
the event that the number of outstanding shares of Common Stock is changed by a stock dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration, or if a substantial portion of the assets of the Company are distributed, without consideration in a spin-off
or similar transaction, to the shareholders of the Company, the number of shares of Commons Stock available under the Plan and the number of shares of Common Stock subject to outstanding Options and
the exercise price per share of such Options shall be proportionately adjusted, 

6

 

subject
to any required action by the Board or shareholders of the Company and compliance with applicable securities laws; provided, however, that any fractional shares resulting from such adjustment
shall be eliminated; and provided, further, that the Exercise Price may not be decreased to below the par value of the Common Stock. 

        (2)   In
the event of the proposed dissolution or liquidation of the Company, or in the event of any corporate separation or division, including but not limited to, a
split-up, a split-off or spin-off, the Committee may provide that the holder of each Option then exercisable shall have the right to exercise such Option (at its
then Exercise Price) solely
for the kind and amount of shares of stock and other securities, property, cash or any combination thereof receivable upon such dissolution or liquidation, or corporate separation or division; or the
Committee may provide, in the alternative, that each Option granted under the Plan shall terminate as of a date to be fixed by the Board, provided, however, that no less than thirty (30) days'
written notice of the date so fixed shall be given to each Optionee who shall have the right, during the period of thirty (30) days preceding such termination, to exercise the Options as to all
or any part of the shares of Common Stock covered thereby, including shares as to which such Options would not otherwise be exercisable. 

        (3)   The
Committee may provide in an Option Agreement for the acceleration of the vesting of Options upon the occurrence of specific events designated by the Committee
(including, without limitation, a Change in Control Transaction). Upon the occurrence of a Change in Control Transaction, (a) the Committee shall, in the case of a merger, consolidation or sale
or disposition of assets, promptly make an appropriate adjustment to the number and class of shares of Common Stock available for Vested Options, and to the amount and kind of shares or other
securities or property receivable upon exercise of any outstanding Vested Options after the effective date of such transaction, and the price thereof, and (b) the Committee may, in its
discretion, permit the cancellation of outstanding Vested Options in exchange for the same consideration payable to holders of Common Stock in an amount per share subject to such Option determined by
the Committee in its sole discretion, but not less than the difference between the Exercise Price per share and the Fair Market Value per share of Common Stock on the effective date of the Change in
Control Transaction. 

        (4)   Paragraphs
(2) and (3) of this Section 7(j) shall not apply to a merger or consolidation in which the Company is the surviving corporation and
shares of Common Stock are not converted into or exchanged for stock or securities of any other corporation, cash or any other thing of value. Notwithstanding the preceding sentence, in case of any
consolidation or merger of another corporation into the Company in which the Company is the continuing corporation and in which there is a reclassification or change (including a change to the right
to receive cash or other property) of the shares of Common Stock (other than a change in par value, or from par value to no par value, or as a result of a subdivision or combination, but including any
change in such shares into two or more classes or series of shares), the Committee may provide that the holder of each Option then exercisable shall have the right to exercise such option solely for
the kind and amount of shares of stock and other securities (including those of any new direct or indirect parent of the Company), property, cash or any combination thereof receivable by the holder of
the number of shares of Common Stock for which such Option might have been exercised upon such reclassification, change, consolidation or merger. 

        (5)   In
the event of a Change in Control Transaction and subject to the other provisions contained herein and in any Option Agreement, the Committee may terminate unvested
Options or require that such Options be assumed by the successor corporation (or the parent thereof). 

7

 

        (6)   In
the event of a change in the Common Stock as presently constituted, which is limited to a change of all of its authorized shares with par value into the same number
of shares with a different par value or without par value, the shares resulting from any such change shall be deemed to be the Common Stock within the meaning of the Plan. 

        (7)   To
the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Committee, whose determination in that
respect shall be final, binding and conclusive provided that each Option granted pursuant to the Plan and designated an ISO shall not be adjusted in a manner that causes the Option to fail to continue
to qualify as an ISO within the meaning of Section 422 of the Code. 

        (8)   Except
as herein before expressly provided in this Section 7(j), the Optionee shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class or by reason of any dissolution, liquidation, merger, or
consolidation, and any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number or Exercise Price of shares of Common Stock subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any
part of its business or assets. 

        (k)    Rights as a Shareholder.    An Optionee or a transferee of an Option shall have no rights as a shareholder with
respect to any shares covered by his or her Option until the date of the issuance of a stock certificate to him or her for such shares. No adjustments shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such stock certificate is issued, except as provided in
Section 7(j) hereof. 

        (l)    Other Provisions.    The Option Agreements authorized under the Plan shall contain such other provisions
including, without limitation, (i) the imposition of restrictions upon the exercise of an Option and (ii) the inclusion of any condition not inconsistent with such Option qualifying as
an ISO, as the Committee shall deem advisable, including provisions with respect to compliance with federal and applicable state securities laws. Notwithstanding anything else to the contrary in the
Plan or any Grant, no Option may be exercisable later than the expiration date of the Option. 

        8.    Agreement by Optionee Regarding Withholding Taxes.    The Company may, if necessary or desirable, withhold from
any Optionee, from any amounts due and payable by the Company to such Optionee (or secure payment from such Optionee in lieu of withholding), the minimum amount of any withholding or other tax due
from the Company with respect to any shares issuable under the Options, and the Company may defer the exercise of Options or the issuance of Common Stock thereunder unless indemnified to its
satisfaction. 

        9.    Restrictions.    

        (a)   If
the Committee shall at any time determine that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting
of any Option, the issuance or purchase of Common Stock or other rights thereunder, or the taking of any other action thereunder (each such action being hereinafter referred to as a "Plan Action"),
then such Plan Action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the Committee's full satisfaction. 

        (b)   The
term "Consent" as used herein with respect to any Plan Action means (i) any and all listings, registrations or qualifications in respect thereof upon any
inter-dealer quotation system of 

8

 

a
registered national securities association or any national securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and
representations by the Optionee with respect to the disposition of Common Stock, or with respect to any other matter, which the Committee shall deem necessary or desirable to comply with the terms of
any such listing, registration or qualification, or to obtain an exemption from the requirement that any such listing, qualification or registration be made, and (iii) any and all consents,
clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies. 

        (c)   In
furtherance of the foregoing, at the time of any exercise of an Option, the Committee may, if it shall determine it necessary or desirable for any reason, require the
Optionee as a condition to the exercise thereof, to deliver to the Committee a written representation of the Optionee's present intention to purchase the Common Stock for investment and not for
distribution. If such representation is required to be delivered, an appropriate legend may be placed upon each certificate delivered to the Optionee upon his exercise of part or all of an Option and
a stop transfer order may be placed with the transfer agent. Each such Option shall also be subject to the requirement that, if at any time the Committee determines, in its discretion, that either
(i) the listing, registration or qualification of Common Stock subject to an Option upon any securities exchange or under any state, federal or foreign law, or (ii) the consent or
approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issue or purchase of Common Stock thereunder, the Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. The Committee shall
not have the power to require or oblige the Company to register any Common Stock subject to an Option under the Securities Act or any applicable state securities law and any requirement imposed by the
Committee relating to the registration of Common Stock shall not bind the Company to cause the registration of such Common Stock. 

        10.    Savings Clause.    

        Notwithstanding
any other provision hereof, the Plan is intended to qualify as a plan pursuant to which ISOs may be issued under Section 422 of the Code. If the Plan or any
provision of the Plan shall be held to be invalid or to fail to meet the requirements of Section 422 of the Code or the regulations promulgated thereunder, such invalidity or failure shall not
affect the remaining parts of the Plan, but rather it shall be construed and enforced as if the Plan or the affected provision thereof, as the case may be, complied in all respects with the
requirements of Section 422 of the Code. 

        11.    Nature of Payments.    

        (a)   All
Options granted shall be in consideration of services performed for the Company by the Optionee. 

        (b)   All
Options granted shall constitute a special incentive payment to the Optionee and shall not be taken into account in computing the amount of salary or compensation of
the Optionee for the purpose of determining any benefits under any pension, retirement, profit-sharing, bonus, life insurance or other benefit plan of the Company or under any agreement between the
Company and the Optionee unless such plan or agreement specifically otherwise provides. 

        12.    Non-Uniform Determinations.    The Committee's determinations under the Plan need not be uniform
and may be made by it selectively among persons who receive, or are eligible to receive, Options (whether or not such persons are similarly situated). Without limiting the generality of the foregoing,
the Committee shall be entitled, among other things, to make non-uniform and selective determinations which may, inter alia, reflect the specific terms of individual employment agreements,
and to enter into non-uniform and selective Option Agreements, as to (a) the persons to receive Options and (b) the terms and conditions of Options. 

9

 

        13.    Amendment and Termination of the Plan.    The Board may at any time and from time to time suspend, terminate,
modify or amend the Plan, provided that any amendment that would materially increase the aggregate number of shares of Common Stock as to which Options may be granted under the Plan, materially
increase the benefits accruing to participants under the Plan, or materially modify the requirements as to eligibility for participation in the Plan shall be subject to the approval of the holders of
a majority of the Common Stock voting at a meeting at which a quorum is present, except that any such increase or modification that may result from adjustments authorized by Section 7(j) hereof
shall not require such approval. Except as provided in Section 7 hereof, no suspension, termination, modification or amendment of the Plan may adversely affect any Option previously granted
unless the written consent of the Optionee is obtained. 

        14.    Modification, Extension, Cancellation and Renewal of Options.    The Committee shall have the power to modify,
extend or renew outstanding Options and to authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of the Optionee, impair any
rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered shall be treated in accordance with Section 424(h) of the Code. The
Committee shall have the power to reduce the Exercise Price of outstanding options; provided, however, that the Exercise Price per share may not be reduced below the minimum Exercise Price that would
be permitted under Section 7(b) of the Plan for options granted on the date the action is taken to reduce the Exercise Price. 

        15.    Indemnification.    In addition to such other rights of indemnification as they may have as members of the
Board or the Committee, the members of the Committee shall be indemnified by the Company against any and all costs and expenses reasonably incurred by them in connection with any action, suit, or
proceeding to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Option granted thereunder, and against all amounts
paid by them in settlement thereof (provided such settlement is approved by independent legal counsel approved by the Company) or paid by them in satisfaction of a judgment in any such action, suit,
or proceeding; provided, that, any such Committee member shall be entitled to the indemnification rights set forth in this Section 15 only if such member has acted in good faith and in a manner
that such member reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe that such
conduct was unlawful; and, provided, further, that upon the institution of any such action, suit, or proceeding a Committee member shall give the Company written notice thereof and an opportunity, at
its own expense, to handle and defend the same before such Committee member undertakes to handle and defend it on his own behalf. 

        Adopted
by the Board of Directors on July 19, 2001, approved by the shareholders of the Company on April 24, 2002, and amended by the Board of Directors on
October 24, 2002. 

10

QuickLinks

Exhibit 10.4

TNS HOLDINGS, INC. 2001 FOUNDERS' STOCK OPTION PLAN

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