Document:

exv10w47

 

EXHIBIT 10.47

DEED OF LEASE

by and between

ANNAPOLIS PARTNERS LLC

a Maryland limited liability company

(“Landlord”)

and

TELECOMMUNICATION SYSTEMS, INC.

a Maryland corporation

(“Tenant”)

at

ONE ANNAPOLIS POINT

ANNAPOLIS, MARYLAND

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	1.	 	
TERMS
	 	 	1	 
	2.	 	
PAYMENT OF RENT & ADDITIONAL RENT
	 	 	18	 
	3.	 	
SECURITY DEPOSIT
	 	 	18	 
	4.	 	
USES; TENANT COVENANTS
	 	 	26	 
	5.	 	
ENVIRONMENTAL PROVISIONS; RECYCLING
	 	 	27	 
	6.	 	
LATE CHARGES; INTEREST
	 	 	33	 
	7.	 	
REPAIRS AND MAINTENANCE
	 	 	34	 
	8.	 	
UTILITIES AND SERVICES
	 	 	35	 
	9.	 	
OPERATING COSTS
	 	 	41	 
	10.	 	
REAL ESTATE TAXES
	 	 	50	 
	11.	 	
ADDITIONAL PROVISIONS; OPERATING COSTS AND REAL ESTATE TAXES
	 	 	52	 
	12.	 	
TENANT’S INSURANCE
	 	 	54	 
	13.	 	
LANDLORD’S INSURANCE
	 	 	55	 
	14.	 	
DAMAGE OR DESTRUCTION
	 	 	56	 
	15.	 	
MACHINERY AND EQUIPMENT; ALTERATIONS AND ADDITIONS; REMOVAL OF FIXTURES
	 	 	59	 
	16.	 	
ACCEPTANCE OF PREMISES
	 	 	61	 
	17.	 	
TENANT IMPROVEMENTS
	 	 	61	 
	18.	 	
ACCESS
	 	 	61	 
	19.	 	
MUTUAL WAIVER OF SUBROGATION
	 	 	62	 

ii

 

	 	 	 	 	 	 	 
	20.	 	
INDEMNIFICATION
	 	 	63	 
	21.	 	
ASSIGNMENT AND SUBLETTING
	 	 	63	 
	22.	 	
SIGNS
	 	 	69	 
	23.	 	
LIENS
	 	 	70	 
	24.	 	
DEFAULT
	 	 	70	 
	25.	 	
SUBORDINATION
	 	 	76	 
	26.	 	
SURRENDER OF POSSESSION
	 	 	77	 
	27.	 	
NON-WAIVER
	 	 	77	 
	28.	 	
HOLDOVER
	 	 	77	 
	29.	 	
CONDEMNATION
	 	 	78	 
	30.	 	
NOTICES
	 	 	80	 
	31.	 	
MORTGAGEE PROTECTION
	 	 	80	 
	32.	 	
COSTS AND ATTORNEYS’ FEES
	 	 	81	 
	33.	 	
BROKERS
	 	 	81	 
	34.	 	
LANDLORD’S LIABILITY; LANDLORD’S DEFAULT
	 	 	81	 
	35.	 	
ESTOPPEL CERTIFICATES
	 	 	84	 
	36.	 	
FINANCIAL STATEMENTS
	 	 	85	 
	37.	 	
TRANSFER OF LANDLORD’S INTEREST
	 	 	86	 
	38.	 	
RIGHT TO PERFORM
	 	 	86	 
	39.	 	
REDEVELOPMENT AGREEMENT/TRANSPORTATION DEMAND MEASURES
	 	 	87	 
	40.	 	
SALES AND AUCTIONS
	 	 	88	 

iii

 

	 	 	 	 	 	 	 
	41.	 	
ACCESS TO ROOF
	 	 	88	 
	42.	 	
SECURITY
	 	 	89	 
	43.	 	
AUTHORITY OF LANDLORD
	 	 	91	 
	44.	 	
NO ACCORD OR SATISFACTION
	 	 	91	 
	45.	 	
LEGAL REQUIREMENTS
	 	 	91	 
	46.	 	
PARKING
	 	 	92	 
	47.	 	
GENERAL PROVISIONS
	 	 	93	 
	48.	 	
RULES AND REGULATIONS
	 	 	95	 
	49.	 	
ARBITRATION
	 	 	95	 
	50.	 	
WAIVER OF JURY TRIAL
	 	 	96	 
	51.	 	
RENEWAL OPTION
	 	 	97	 
	52.	 	
GENERATORS
	 	 	100	 
	53.	 	
ADDITIONAL COVENANTS OF LANDLORD
	 	 	102	 
	54.	 	
CONDITIONS PRECEDENT
	 	 	102	 
	55.	 	
EXHIBITS
	 	 	103	 

iv

 

	 	 	 
	EXHIBITS:	 	 
	
	 	 
	EXHIBIT A	 	
Location and Dimensions of Premises
	EXHIBIT B	 	
Site Plan
	EXHIBIT C	 	
Work Agreement
	EXHIBIT D	 	
Rules and Regulations
	EXHIBIT E	 	
Commencement Date Agreement
	EXHIBIT F	 	
Cleaning Specifications
	EXHIBIT G	 	
Form of Estoppel Certificate
	EXHIBIT H	 	
Form of SNDA
	EXHIBIT I	 	
Property Management Specifications
	EXHIBIT J	 	
List of Environmental Reports
	EXHIBIT K	 	
Specifications for Building Services

v

 

DEED OF LEASE

     THIS DEED OF LEASE (“Lease”) is made this 29th day of October, 2002, by
and between ANNAPOLIS PARTNERS LLC, a Maryland limited liability company
(“Landlord”), and TELECOMMUNICATION SYSTEMS, INC. a Maryland corporation
(“Tenant”).

W I T N E S S E T H :

     THAT IN CONSIDERATION OF the rents and all other charges and payments
hereunder and of the covenants, agreements, terms, provisions and conditions to
be kept and performed hereunder by Tenant, Landlord hereby grants and conveys
to Tenant, and Tenant hereby hires and takes from Landlord, a leasehold
interest in the premises described below (“Premises”), subject to the
covenants, agreements, terms, provisions and conditions of this Lease for the
term hereinafter stated:

1.  TERMS.

     1.1 Premises.

               (a) The Premises demised by this Lease (the “Premises”) will consist of a
“Rentable Area” of approximately 150,000 gross square feet in above-ground
office space, which constitutes the entire rentable area of two interconnected
buildings (collectively referred to herein as the “Building”) to be constructed
by Landlord as part of the Annapolis Point Corporate Center mixed use
development in Anne Arundel County, Maryland (the “Project”), which building is
to be known as One Annapolis Point, together with the right throughout the Term
of this Lease to use parking facilities and other Common Areas (as defined
herein) all as more particularly set forth herein. The parties agree that the
name of the Project may be changed by Landlord at any time prior to Substantial
Completion of construction of the Building. The land upon which the Building
is situated (the “Land”) is depicted on the site plan attached hereto as
Exhibit B (the “Site Plan”) and incorporated herein by reference, and labeled
thereon as the “Land”. The Land and the Building, together with the rights of
the owner of the Land and Building in and to the surface parking facilities
serving, inter alia, the Building are collectively referred to herein as the
“Property”. The Premises is depicted in the drawing
attached hereto as Exhibit A and incorporated herein by reference. Upon completion of design development
drawings for the Building, the Premises will be measured in accordance with the
most recent BOMA standard method of measurement.

               (b) The “Rentable Area” of each of the Premises and Building shall be
subject to readjustment or re-measurement in the event of casualty or
condemnation that requires a reconstruction or restoration of the Building or a
part thereof, or by any contraction of the Premises (such as due to the
exercise by Landlord of a right of recapture provided for hereunder), in each
case with such re-adjustment or re-measurement to be limited solely to the
portion of the Premises or Building, as the case may be, directly affected
thereby.

     1.2 Tenant’s Share. “Tenant’s Share” of the Building, as of the date of
execution of this Lease, is 100%, based on the office portion of the Building
and Premises having the same total

1

 

Rentable Area. In addition, Landlord agrees that references in this Lease to Tenant being the “tenant” or “occupant” of a
specified percentage of the Premises (or words of similar import) shall be
deemed to mean that Tenant is leasing such percentage of the Rentable Area of
the Premises.

     1.3 Lease Term.

               (a) This Lease shall become legally effective and binding upon the parties
immediately upon the date of full and final execution and delivery hereof,
subject to terms, covenants and conditions set forth herein (including the
conditions precedent and termination rights of the parties set forth in Section
54, below). For purposes of this Lease, (1) the “Term” or “Lease Term” shall
mean the Initial Term and, if applicable, any exercised Renewal Terms (as
defined herein), (2) the initial fixed term of this Lease (exclusive of any
exercised Renewal Terms) is sometimes referred to herein as the “Initial Term”,
and (3) the Renewal Terms (exclusive of the Initial Term) are sometimes each
referred to herein as a “Renewal Term” and collectively as the “Renewal Terms”.
The Initial Term of this Lease shall commence for each phase of the Premises
delivered to Tenant on the date upon which Substantial Completion of such phase
has been achieved and tender of possession of such phase has been made to
Tenant pursuant to the Phasing Plan (as defined in the Work Agreement) in
accordance with the provisions of Sections 1.3(b) and (c), below (such date
with respect to each such phase, the “Commencement Date”), and shall expire on
the “Lease Expiration Date” which shall be the last day of the one hundred
eightieth (180th) full calendar month after the Rent Commencement Date for the
last phase of the Premises delivered to Tenant hereunder; provided that for all
purposes of this Lease, the duration of any Renewal Terms or extension terms
exercised by Tenant shall be added onto the initial Lease Term stated to be in
effect under the preceding clause. In no event will possession of (or early
access to) any applicable phase of the Premises be delivered to Tenant prior to
the Commencement Date for such phase except (i) for early access (“Early
Access”) granted pursuant to an Access Agreement reasonably satisfactory to
Landlord and Tenant (which may, inter alia, obligate Tenant to be insured, and
otherwise comply with certain covenants and indemnities set forth in this Lease
with respect to its use, occupancy and activities within portions of the
Premises during any period of occupancy of the Premises prior to the
Commencement Date), and/or (ii) for purposes of Early Work, as such term is
defined in Exhibit C, and subject to all terms, covenants, indemnities and
limitations applicable to Early Work under Exhibit C. Prior to the Rent
Commencement Date for each phase hereunder, Tenant shall be bound by all of the
terms and conditions of this Lease applicable to such phase, other than those
requiring the payment of Base Rent and Additional Rent by Tenant, provided
Tenant shall be responsible during the period between the Commencement Date and
the Rent Commencement Date only for the utility expense applicable to that
phase of the Premises which has been delivered to Tenant, but not for utility
expenses associated with the undelivered balance of the Premises (if any).

               (b) Landlord and Tenant acknowledge and agree that the mutual intent of
Landlord and Tenant is that Landlord deliver, and Tenant take possession of,
the Premises, on a phased basis in accordance with, and subject to the terms
and conditions of, the Phasing Plan. Tenant shall be obligated to accept
possession of each applicable phase of the Premises upon (i) Landlord’s
certification that it has achieved Substantial Completion thereof and (ii)
tender of possession of such phase by Landlord to Tenant, provided that (1)
Landlord will not be entitled to

2

 

tender possession of any phase of the Premises (nor may Tenant take possession of any phase of the Premises except for
purposes of Early Access, if applicable, or Early Work pursuant to Exhibit C)
prior to the date indicated for delivery of such phase under the Phasing Plan,
(2) Landlord shall be obligated to provide Tenant with written notice of its
intent to tender possession of each applicable phase of the Premises not less
than five (5) calendar days prior to the date of such tender of possession
(such notice, a “5-Day Notice”), so that the parties can schedule a
walk-through of such phase on or before the date of tender of possession
thereof (and Landlord and Tenant each agree to make themselves available for
the walk-through on such fifth (5th) day after the 5-Day Notice), and (3) in no
event will any phase of delivery of possession of the Premises involve less
than full floors of the Premises, in each instance under the preceding clauses
(1) - (3) unless otherwise approved by Tenant, which approval may be withheld
in Tenant’s sole and absolute discretion. Subject to Tenant’s right to dispute
and/or require arbitration of Landlord’s certification that it has achieved
Substantial Completion of a phase of the Premises, as more fully set forth in
Section 1.3(c), below, “tender of possession” by Landlord to Tenant shall be
deemed to have occurred on the later to occur of (A) the fifth
(5th) day after
the 5-Day Notice, or (B) the first (1st) business day after Landlord’s delivery
of a written certificate to Tenant (or to Tenant’s Representative, as defined
in Exhibit C) certifying that it has achieved Substantial Completion of such
applicable phase of the Premises (a “Certification of Substantial Completion),
provided Landlord delivers keys or electronic key cards enabling Tenant to
enter such phase of the Premises, and has provided free access to such phase of
the Premises, by such 5th day or following business day, as the case may be.

               (c) In the event Tenant, in good faith, disputes that Landlord’s
Certification of Substantial Completion for any phase of the Premises is
accurate, Tenant shall, within five (5) business days after receipt of
Landlord’s Certification of Substantial Completion for such phase, provide a
written notice to Landlord specifying in reasonable detail the basis for such
dispute (a “SC Dispute Notice”). Tenant’s SC Dispute Notice shall be limited
to identifying those incomplete items or deviations from the Construction
Documents or this Lease which Tenant believes in good faith causes such phase
of the Premises not to be Substantially Complete. If Landlord is in agreement
with Tenant’s SC Dispute Notice, Landlord shall, within two (2) business days
after its receipt of Tenant’s SC Dispute Notice, so notify Tenant in writing.
If Landlord is not in agreement with Tenant’s SC Dispute Notice, Landlord
shall, within two (2) business days after its receipt of Tenant’s SC Dispute
Notice, so notify Tenant, which notice will identify all items identified
within Tenant’s SC Dispute Notice with which Landlord agrees, and all items
identified within Tenant’s SC Dispute Notice with which Landlord, in good
faith, disagrees, and the basis for such disagreement. If Landlord agrees that
Tenant’s SC Dispute Notice is accurate, then Landlord shall promptly satisfy
all items identified therein, and the Certification of Substantial Completion
shall, in such event, be deemed effective no earlier than the first
(1st) business day following the date upon which Landlord
completes its remedy of all applicable items identified in Tenant’s SC Dispute
Notice and provides Tenant with a revised Certification of Substantial
Completion for such phase (which revised certification shall itself be subject
to dispute resolution in accordance with this subsection). If Landlord, in
good faith, agrees with only a portion of Tenant’s SC Dispute Notice, or
disagrees entirely therewith, then the parties shall meet promptly thereafter
to attempt to resolve, in good faith, all matters in dispute (and Landlord
agrees that it will concurrently address all items identified in Tenant’s SC
Dispute Notice as to which there is no disagreement, if any). If the parties
are unable, despite their good faith

3

 

efforts, to resolve their disagreement as to any or all of the items in Tenant’s SC Dispute Notice within a five (5)
business day period after the date Landlord’s written response to Tenant’s SC
Dispute Notice is received by Tenant, then the parties shall promptly submit
the matter in dispute to expedited arbitration pursuant to Section 49 of this
Lease. In any such arbitration, the panel of arbitrators shall have the right,
inter alia, (A) to determine that the date of Substantial Completion of the
applicable phase was (i) the date stated in Landlord’s Certification of
Substantial Completion, (ii) an alternative date advocated by Tenant, (iii)
such other date as may be proposed by the parties, or (iv) such other date as
the arbitrators may decide that Substantial Completion of such phase actually
occurred, (B) to determine that Substantial Completion of the applicable phase
has not yet occurred, and/or (C) to enter findings as to which items must be
addressed in order for Substantial Completion to occur, if any. Nothing set
forth in this subsection shall be construed to restrict Landlord and Tenant
from mutually agreeing to resolve any dispute as to the correctness or accuracy
of Landlord’s Certification of Substantial Completion on a basis different from
that set forth herein. In the event the date of Substantial Completion of a
phase of the Premises is found to have been different from that set forth in
Landlord’s Certification of Substantial Completion, and Tenant made a payment
of Rent to Landlord prior to the date such payment would otherwise have been
due because of such inaccurate Certification of Substantial Completion, then
Landlord shall credit Tenant (against the next payment of Rent due from Tenant
to Landlord) with interest on such prepaid amount, calculated at the Prime
Rate, from the date such prepaid amount was actually paid by Tenant to the date
such amount would have been due and payable had the actual date of Substantial
Completion been accurately stated in the Certification of Substantial
Completion.

     1.4     Rent Commencement Date. The “Rent Commencement Date” shall be
determined on a phased basis, in accordance with the provisions of this Section
1.4 and Exhibit C. For each phase of the Premises, and subject to the effect
upon the Rent Commencement Date of the applicable provisions of Exhibit C, the
Rent Commencement Date shall be the earlier of (i) the date upon which Tenant
commences the beneficial use and occupancy of such phase (or any portion
thereof) for purposes of conducting normal business operations, or (ii) three
(3) business days after the date upon which Landlord’s Work for such phase is
“Substantially Completed” (as such term is defined in Section 1.11, below, and,
if applicable, as calculated pursuant to the dispute resolution procedure
described in Section 1.3, above) and possession thereof has been tendered to
Tenant in accordance with Section 1.3, above. Within a reasonable time period
(not to exceed thirty (30) days) after the Rent Commencement Date for the last
phase of the Premises to be delivered to Tenant hereunder, Landlord and Tenant
agree to execute a Commencement Date Agreement and Estoppel Certificate, in the
forms attached hereto as Exhibit E and Exhibit G, respectively, to confirm the
Rent Commencement Date for each phase of the Premises and Lease Expiration Date. The failure to execute said Commencement Date
Agreement and/or Estoppel Certificate shall not affect the Rent Commencement
Date nor the Lease Expiration Date for any phase of the Premises as the same
may be determined by the terms of this Lease.

     1.5     Rent.

4

 

               (a) The term “Rent” shall mean all Base Rent and Additional Rent payable
by Tenant hereunder. The base rent payable by Tenant hereunder (“Base Rent”)
is set forth in this Section 1.5, below, and shall be payable with regard to
each phase of the Premises delivered to Tenant commencing on the Rent
Commencement Date for such phase based on the rentable area of each such
portion multiplied by the per square foot rental rate set forth below. In
addition to the Base Rent, Tenant shall pay as additional rent Tenant’s Share
of Operating Costs as described in Section 9, and Tenant’s Share of Real Estate
Taxes as described in Section 10, all of which shall be deemed Additional Rent
due under this Lease. Base Rent, together with the estimated monthly payments
of Operating Costs and Real Estate Taxes described in Section 9.2 and 10.2,
respectively, of this Lease, shall be payable monthly, in advance, on the
first day of each calendar month of the Term, without prior notice, demand,
deduction or offset, except as and solely to the extent specifically provided
for herein.

               (b) The monthly payments of Base Rent for each phase of the Premises
(which is also referred to herein as “Monthly Base Rent”) for the Initial Term
(and, as set forth below, the Renewal Terms, as defined herein) shall be
calculated as follows:

	 	 	 	 	 	 	 
	Lease Year	 	Annual Base Rental Rate	 	Annual Base Rent	 	Monthly Base Rent
	
	 	
	 	
	 	

	1	 	      TBD*	 	     TBD*	 	     TBD*
	2	 	
103% of the amounts stated for Lease Year One
	3	 	
103% of the amounts stated for Lease Year Two
	4	 	
103% of the amounts stated for Lease Year Three
	5	 	
103% of the amounts stated for Lease Year Four
	6	 	
103% of the amounts stated for Lease Year Five
	7	 	
103% of the amounts stated for Lease Year Six
	8	 	
103% of the amounts stated for Lease Year Seven
	9	 	
103% of the amounts stated for Lease Year Eight
	10	 	
103% of the amounts stated for Lease Year Nine
	11	 	
103% of the amounts stated for Lease Year Ten
	12	 	
103% of the amounts stated for Lease Year Eleven
	13	 	
103% of the amounts stated for Lease Year Twelve
	14	 	
103% of the amounts stated for Lease Year Thirteen
	15	 	
103% of the amounts stated for Lease Year Fourteen
	Post Lease Year 15**	 	
See **
	
Renewal Term #1***
	 	
See Section 50
	
Renewal Term #2****
	 	
See Section 50

	 	•	 	Annual Base Rent for each phase for the first Lease Year of
such Phase shall be determined as an amount equal to eleven percent
(11%) of the Total Cost to Complete allocable to such phase, as
determined pursuant to the terms of the Work Agreement attached as
Exhibit C to this Lease. Monthly Base rent shall equal 1/12 of
Annual Base Rent as so calculated
	 
	 	•	 	Base Rent for the first phase, for the first Lease Year after
Lease Year #15 (to the extent applicable because, due to the phased
delivery, the Initial Term has not yet

5

 

	 	 	 	expired) shall equal 103% of the Base Rent for the first phase as determined for Lease Year 15,
and, to the extent applicable, shall increase annually thereafter at
a 3% escalation rate.

	     ***	 First Renewal Term, if applicable
	 
	     ****	 Second Renewal Term, if applicable

For purposes of any provision of this Lease that may require a calculation or
adjustment in the Base Rent payable by Tenant under this Lease, whether due to
a change in the Rentable Area of the Premises (for example, due to a partial
recapture or other contraction of the Premises, or due to a re-measurement as
provided for in Section 1.1, above) or otherwise, the parties acknowledge and
agree (i) that all Base Rent hereunder is intended to escalate at a compounded
annual rate of three percent (3%), and (ii) that the parties shall utilize a
natural three percent (3%) annual escalation in making such calculation or
recalculation of Base Rent payable hereunder. The parties expressly
acknowledge (1) that the Base Rent payable for each phase may be calculated at
different rates (depending upon the Total Cost to Complete applicable to each
such phase), (2) that Base Rent for each phase may escalate at different times,
depending on the Rent Commencement Date for each phase, and (3) that phased
delivery may cause the Initial Term for the first phase to exceed 180 months.

     1.6 Additional Rent. Any sum owed or reimbursable by Tenant to Landlord
under this Lease (excluding Monthly Base Rent, and including Tenant’s Share of
Real Estate Taxes and Tenant’s Share of Operating Costs,) shall be considered
“Additional Rent” hereunder. Estimated payments of Tenant’s Share of Operating
Costs, as described in Section 9 of this Lease, and of Tenant’s Share of Real
Estate Taxes, as described in Section 10 of this Lease, shall be payable
monthly, in advance, on the first day of each calendar month of the Term,
together with Tenant’s payment of Monthly Base Rent, without demand, set-off or
deduction, except as and solely to the extent specifically provided for herein.
All other items of Additional Rent shall be payable as and when provided for
herein, but without set-off or deduction, except as and solely to the extent
specifically provided for herein.

     1.7 Notice and Payment Addresses. Any notices under this Lease shall be
governed by the terms of Section 30, below. The notice addresses of the
parties are as follows:

	 	 	 
	If to Landlord:Annapolis Partners LLC 	 
	 	
c/o Tod E. Hirt, Manager

1705 Rollins Avenue

Alexandria, VA 22307

Facsimile: (703) 768-7750
	 
	 	 	 
	And to:	Mark S. Tenenbaum	 
	 	
Tenenbaum & Saas, P.C.

4330 East West Highway, Suite 1150

Bethesda, Maryland 20814

Facsimile: (301) 961-5305
	 

6

 

	 	 	 
	If to Tenant:	 	
TeleCommunication Systems, Inc.

275 West Street

	 	 	
Annapolis, MD 21401
	 	 	
Attn: General Counsel
	 	 	
Facsimile: (410) 280-1048
	 	 	
(Prior to the Commencement Date for the First Phase Only)
	 	 	 
	If to Tenant:	 	
At the Premises

Facsimile: (410) 280-1048

(After the Commencement Date for the First Phase)

Either party may, by written notice to the other complying with Section 30,
hereof, designate a new address to which all notices hereunder shall be
directed.

     1.8 Rent
Payment Address. Tenant shall send payments of Base Rent and
Additional Rent hereunder to Landlord at the following address, or to such
other address of which Landlord may advise Tenant in writing pursuant to
Section 30:

	 
	Annapolis Partners LLC
	c/o Tod E. Hirt, Manager
	1705 Rollins Avenue
	Alexandria, VA 22307

Landlord agrees that, within thirty (30) days after Tenant’s written request,
Tenant may commence payment of Base Rent and Additional Rent by electronic wire
transfer of immediately available funds of the United States, provided (i) such
payments shall be made strictly in accordance with wire transfer instructions
provided by Landlord to Tenant, and (ii) Tenant shall, upon Landlord’s request,
provide Landlord with wire confirmation information, including any applicable
federal reference number for any electronic transfer of funds made pursuant
hereto.

     1.9 Lease Year. Each twelve (12) month period within the Lease Term shall
be referred to herein as a “Lease Year.” The first Lease Year shall commence
on the Rent Commencement Date for the final phase of the Premises delivered to
Tenant hereunder and shall terminate on the last day of the twelfth full
calendar month after such Rent Commencement Date. Each subsequent Lease Year
shall commence on the date immediately following the last day of the preceding
Lease Year and shall continue for a period of twelve (12) full calendar months,
except that the last Lease Year of the Lease Term shall terminate on the date
this Lease expires or is sooner terminated. Monthly Base Rent shall be payable
for the period prior to the first Lease Year, as provided under Section 1.5,
above.

     1.10 Deed of Lease. To the extent required under applicable law to make
this Lease legally effective, this Lease shall constitute a deed of lease.

7

 

     1.11 Additional Defined Terms. As used in this Lease, unless otherwise
herein expressly provided, the following terms shall have the following
meanings:

     “Abatement Event” shall have the meaning set forth in Section 8.3(b),
below.

     “Acceptance of Possession” shall mean Tenant’s acceptance of possession of
each phase of the Premises hereunder as evidenced by (A) Tenant’s delivery of a
duly executed “Commencement Date Agreement” and “Estoppel Certificate” in the
forms attached as Exhibit E and Exhibit G hereto, inter alia, acknowledging
such acceptance of possession, and (B) its payment of the first full monthly
installment of Rent due under this Lease with respect to such phase; provided
this definition shall not be construed to imply an obligation by Tenant to
accept possession of any portion of the Premises prior to Substantial
Completion thereof.

     “Building Services” shall mean the following services, to be installed by
Landlord (if applicable) and to be provided on an ongoing basis substantially
in accordance with the specifications set forth in Exhibit F and Exhibit K
attached hereto and made a part hereof (to the extent applicable): (i) the
number of passenger elevators shown in the Construction Documents, at least one
(1) of which is a freight elevator and shall be subject to call at all times,
including Non-Business Hours; (ii) electricity to the Property for lighting,
for the operation of office machines customary for a user with the electrical
load requirements reflected within the Construction Documents, and for heating,
ventilation and air-conditioning (“HVAC”) service; (iii) HVAC service at all
times during Business Hours, in accordance with the “HVAC Specifications”
attached as a part of Exhibit K; (iv) hot and cold running water sufficient
for the plumbing fixtures and plumbing requirements established under the
Construction Documents, (v) public lavatory facilities and supplies and
janitorial and char services, including trash removal and recycling, Monday
through Friday, excepting holidays, in accordance with the cleaning
specifications attached hereto as Exhibit F; (vi) provision of lighting, and
replacement of light bulbs (in fixed lighting fixtures only) and lighting
fixtures throughout the Property and the Parking Facilities, in accordance with
the Construction Documents; (vii) perimeter security for the Building via a
Data Watch or similar key-card system; (viii) telecommunications and data
service conduits in accordance with the Construction Documents and suitable for
installation by Tenant of Tenant’s telecommunications and data service lines
and facilities (provided that the provision of telecommunications and data
services shall not constitute a Building Service); (ix) operational fire alarm
and life safety systems (which, to the extent applicable, shall include
telecommunications systems which are a part of such systems) in accordance with
applicable Legal Requirements; and (x) subject to Section 42, access to the
Building twenty-four (24) hours a day, three-hundred sixty-five (365) days a
year, including Holidays.

     “Building Systems” shall mean and refer to all mechanical, electrical,
plumbing, HVAC, sprinkler, life safety, fire safety, and security systems
within the Building, but excluding any Specialty Systems and excluding Tenant’s
data and telecommunications systems, all of which shall be Tenant’s sole and
exclusive responsibility.

     “Business Hours” shall be 7:00 a.m. to 7:00 p.m. Monday through Friday,
excluding Holidays, and 9:00 a.m. to 1:00 p.m. on Saturdays, excluding
Holidays. Landlord acknowledges that

8

 

Tenant shall be permitted under this Lease to conduct business operations from the Premises twenty-four (24) hours per day, seven (7) days per week (sometimes
referred to herein as “24/7 usage”), and agrees that the definition of Business
Hours is not intended to restrict such 24/7 usage, but rather to establish
Landlord’s responsibilities with respect to certain Building Services, and to
establish Tenant’s responsibility for certain costs associated with 24/7 usage.

     “Common Areas” shall mean (i) all portions of the Land other than portions
upon which the Building is physically located, including all exterior parking
areas, drive ways, landscaped areas and the like, as the same may be modified
from time to time by Landlord in accordance with the terms of this Lease; and
(ii) during any period in which the Building is multi-tenanted, all loading
docks, corridors, lobbies, elevator cabs, stairs, telephone closets, electrical
closets, janitorial closets, plenums, risers, core area restrooms and other
portions of the Building that would customarily be made available in common to
tenants of the Building if the Building were a multi-tenanted building, as the
same may be modified from time to time by Landlord in accordance with the terms
of this Lease (but the foregoing shall not be construed to render any
electrical or telecommunications closets, corridors, restrooms or elevator
lobbies on any floor leased exclusively to Tenant, to constitute a Common
Area). The foregoing notwithstanding, during any period in which Tenant is
leasing (A) 100% of the Rentable Area of the Building, all interior areas shall
constitute a part of the Premises subject to Tenant’s exclusive use and
occupancy (and shall not constitute Common Areas), and Tenant shall also have
priority usage of the exterior Common Areas, subject to the terms and
conditions of this Lease, and (B) 100% of the Rentable Area of any floor of the
Building, all interior areas on such floor shall constitute a part of the
Premises subject to Tenant’s exclusive use and occupancy (and shall not
constitute Common Areas).

     “Comprehensive Sign Plan” shall mean a comprehensive sign plan for the
Project which is to be submitted to the County for approval by Landlord prior
to commencement of development of any portion of the Project, which (i) shall
not be inconsistent with the signage rights granted by Landlord to Tenant under
the Leases, (ii) shall, among other things, seek approval from the County for
the installation of all exterior and or monument signs provided for in this
Lease, and (iii) shall contain such other provisions regarding signage for the
Project as Landlord may determine in its sole discretion, as long as the same
are not inconsistent with the signage rights granted pursuant to this Lease.
After its approval, references to the Comprehensive Sign Plan herein shall mean
and refer to the Comprehensive Sign Plan, as approved.

     “Construction Documents” shall mean, as applicable, the Approved Base
Building Plans and Approved TI Plans, as such terms are defined in
Exhibit C.

     “County” shall mean Anne Arundel County, Maryland, and any governmental
agency or authority thereof, as the context requires.

     “Declaration” shall mean the Declaration of Covenants, Restrictions,
Rights, Affirmative Obligations and Conditions for Annapolis Point Corporate
Center, to be executed, delivered and recorded among the land records of the
County after Landlord’s acquisition of title to the Project in accordance with the terms of the Redevelopment Agreement and the
Acquisition Agreement

9

 

pursuant to which Landlord acquired the Project, as the
same may be amended from time to time in accordance therewith.

     “Default Rate” shall mean an annual interest rate equal to the Prime Rate
plus four percent (4%).

     “Emergency” shall mean and refer to any situation or circumstance where
there is an immediate or imminent risk of injury or death to persons or
material damage to property unless immediate action is taken to address such
situation or circumstance, as determined by the party invoking such term in
good faith.

     “Environmental Laws” shall mean (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C.
Sections 9601 et seq.), (ii) the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Sections 1801 et seq.), (iii) the Resource Conservation and
Recovery Act, as amended (42 U.S.C. Sections 6901 et seq.) and the regulations
adopted and promulgated pursuant thereto, (iv) the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), (v) the Clean Air Act (42 U.S.C.
Section 7401 et seq.), and the regulations adopted and promulgated pursuant
thereto, (vi) Subtitles 1 and 2 of Title 7 of the Environment
Article, Maryland
Code Annotated (1996), as amended (pertaining generally to Hazardous Materials
and Hazardous Substances), (vii) Subtitles 4, 5, 6 and 7 of Title 4 of the
Environment Article, Maryland Code Annotated (1996), as amended (pertaining
generally to Water Pollution Control, Oil Pollution, and Underground Storage
Tanks), (viii) Subtitles 3, 4, and 5 of Title 6 of the Environment Article,
Maryland Code Annotated (1996), as amended (pertaining generally to lead-based
paint and asbestos), (ix) any other Federal, state or local environmental law,
ordinance, rule, regulation and/or other statute or order of a governmental
authority relating to pollution or protection of the environment, and (x) any
Federal, state or local law, ordinance, rule, regulation and/or other statute
or order of a governmental authority relating to the protection, use or
development for commercial purposes of any “wetlands”.

     “Environmental Liabilities” shall mean and include any and all reasonable
and necessary costs, liabilities, damages and expenses (including reasonable
attorneys fees and court costs) incurred, suffered or sustained with respect to
the presence, removal, utilization, generation, storage, transportation,
disposal or treatment of any Hazardous Materials or any Hazardous Materials
Release, including cleanups, remedial and response actions, remedial
investigations and feasibility studies, and permits and licenses required by,
or required to be undertaken in order to comply with any Environmental Laws, as
well as any damages for injury to person, property or natural resources
resulting from Hazardous Materials or any Hazardous Materials Release, and
claims of governmental agencies or third parties for cleanup costs and costs of
removal, discharge, and satisfaction of all liens, encumbrances and
restrictions on the Premises relating to the foregoing.

     “Essential Services” shall mean (i) the operation of at least one (1)
passenger elevator at all times; (ii) electricity to the Property for lighting,
for the operation of office machines customary for a user with the electrical load requirements reflected
within the Construction Documents, and for heating, ventilation and
air-conditioning (“HVAC”) service; (iii) HVAC service during Business

10

 

Hours, substantially in accordance with the HVAC Specifications; (iv) hot and cold
running water sufficient for the plumbing fixtures and plumbing requirements
established under the Construction Documents; (v) operational fire alarm and
life safety systems in accordance with applicable Legal Requirements; and (vi)
subject to Section 42, access to the Building twenty-four (24) hours a day,
three-hundred sixty-five (365) days a year, including Holidays.

     “Hazardous Materials” shall mean (A) asbestos in any form, (B) urea
formaldehyde foam insulation, (C) polychlorinated biphenyls, or (D) except as
permitted under Section 5.3 of this Lease, below, any flammable explosives,
radioactive materials or other substance constituting “hazardous materials” or
“hazardous wastes” pursuant to, or which are regulated pursuant to, any
Environmental Laws.

     “Hazardous Materials Release” shall mean any release, spill, leak,
pumping, pouring, emitting, emptying, discharge, injection, escaping, leaching,
dumping or disposing into the environment (air, land or water) of any Hazardous
Materials.

     “Herein”, “hereunder”, “hereinbelow”, “above” and/or “below”, and any
terms of like import, shall be interpreted to mean this Lease as a whole, and
not merely the Section, paragraph or subparagraph within which such term is set
forth.

     “Holidays” shall be: New Year’s Day, Martin Luther King’s Birthday,
Memorial Day, Independence Day, Labor Day, Veteran’s Day, Thanksgiving Day, and
Christmas Day, as each such Holiday is recognized under applicable Federal law.

     “Including,” “includes” and terms of like import shall be interpreted to
mean “including, but not limited to” and/or “includes, without limitation.”

     “Independently Leasable Space” shall mean space (i) consisting of less
than an entire floor of a building, (ii) which is configured so as to include a
reasonable proportion of windowed offices relative to the rentable area thereof
(i.e., a proportion which is substantially comparable to the proportion of
windowed space on the floor as a whole), (iii) which has reasonable means of
ingress, egress or access to the Common Areas of the Building located on such
floor of the Building, including elevators, bathrooms, telephone and electrical
closets, access to emergency egress as required by local fire codes, etc., and
such other portions of the Building as are necessary for the reasonable use and
enjoyment of such space (such as risers and conduit necessary for access to
roof equipment and the like), and (iv) which is otherwise reasonably leasable
to third parties in a bona fide arm’s length transaction without requirement of
a discount below market rental rates at the time.

     “Landlord Affiliate” shall mean any entity controlled by, controlling or
under common control with Landlord, and which owns a property which is part of
the Project. For purposes of this definition, “control” shall be deemed to mean and refer to any
development entity the general partner, manager or party holding operational
control of which is Annapolis Partners LLC (as presently constituted) or a
successor entity thereto in which Maurice B. Tose¢ (“Tose¢”) and/or Mesirow
Stein Real Estate, Inc. or its affiliated entities (collectively “Mesirow”)
owns (either

11

 

individually or collectively) any material interest (and
specifically excluding any interest retained for purposes of deferral of tax
recapture) or which is formed by (and in which any material ownership interest,
other than for purposes of deferral of tax recapture only, is held by) Tose¢
and/or Mesirow.

     “Landlord’s Agents” shall mean Landlord’s agents, employees, contractors
and subcontractors and, solely while in the control and presence of Landlord
(such as a representative of Landlord’s mortgagee touring the Building with an
agent of Landlord), an invitee of Landlord (but expressly excluding Tenant or
Tenant’s Agents).

     “Legal Requirements” shall mean all laws, ordinances, codes, regulations
and orders of federal, state, county, municipal and local authorities, as
applicable, including (i) all applicable building, health, fire and safety
codes, (ii) the accessibility requirements of the Americans with Disabilities
Act (“ADA”), (iii) all zoning and other land use laws, (iv) all applicable sign
ordinances, (v) all covenants, easements, special exceptions, restrictions and
other title matters affecting the Project as of the date this Lease is
delivered by all parties hereto plus any additional title matters permitted to
be entered into pursuant to the terms of Section 57 of this Lease (except as
specifically prohibited hereby), and (vii) all Environmental Laws.

     “Material Breach” shall mean and refer to the breach by Tenant of, or
Tenant’s failure to comply with, any term, provision or covenant under this
Lease which would constitute a Material Default hereunder upon the expiration
of applicable cure periods provided for herein, where such cure period has not
yet expired, but only during the period after Landlord has provided Tenant with
a written notice of such breach or failure (to the extent such written notice
is required hereunder) but prior to the date the applicable cure period has
expired and prior to completion of a cure of such breach or failure.

     “Material Default” shall mean (i) any Default in the payment of money,
including Base Rent, Additional Rent or any other sums payable by Tenant
hereunder, irrespective of the amount due and owing, and including (A) a
non-monetary Default that has given rise to an obligation on the part of Tenant
to pay a sum of money to Landlord (or a party designated by Landlord pursuant
hereto) under the terms of this Lease, which sum remains unpaid after the date
payment is required hereunder, and (B) failure to pay any damages, costs,
expenses or other monetary amounts owed by Tenant to Landlord by operation of
any provisions this Lease, and/or (ii) any non-monetary Default arising in
relation to a substantial and material obligation of Tenant under this Lease
(as opposed to a minor non-compliance with a non-monetary covenant, even where
such non-compliance extends past applicable cure periods hereunder). Without
limitation, a failure to comply with, or violation of, the following
non-monetary covenants shall be deemed to be material, and shall constitute
Material Defaults hereunder if the same continue after expiration of the
applicable cure period hereunder: (A) any failure of the Tenant to deliver the
Security Deposit when provided for herein, or to replace or refresh the Security
Deposit in accordance with the provisions of Article 3 of this Lease; (B) any
failure of the Tenant to accept delivery of possession of the Premises (or any
phase thereof) when Substantial Completion thereof has occurred and tender of
possession thereof is made in accordance herewith; (C) any substantial
violation of the Permitted Use provisions of this Lease; (D) any assignment or
sublease made in violation of the requirements of this Lease; (E) any failure
of Tenant

12

 

to meet any substantial maintenance and/or repair obligation under
this Lease; (F) any violation by Tenant of its environmental covenants under
this Lease; (G) any failure by Tenant to obtain insurance coverage required by
this Lease; (H) any failure by Tenant to deliver an estoppel certificate or
SNDA as required by this Lease; (I) any holdover by Tenant in violation of this
Lease; (J) any breach of Tenant’s obligation to deliver possession of the
Premises to Landlord at the expiration or earlier termination of the Lease Term
in the condition required herein; (K) any failure by Tenant to cause a lien
upon the Property created due to the acts or omissions of Tenant or Tenant’s
Agents to be released and discharged or bonded and/or insured over as permitted
under the terms of Section 23 of this Lease; (L) any failure by Tenant to
provide indemnification as and to the extent required by this Lease; (M) any
failure by Tenant to make insurance proceeds (or self-insurance) required to be
made available for reconstruction of the Premises, or any portion thereof,
available for such purposes; and (N) any material violation of a Legal
Requirement required to be complied with by Tenant under this Lease.

     “Non-Business Hours” shall mean all hours other than Business Hours, as
defined herein.

     “Parking Allocation” shall mean 463 parking spaces within the Parking
Facilities for the entire Rentable Area of the Premises as of the date of this
Lease (which Parking Allocation shall be phased in the same proportion as the
phasing of the Premises). The Parking Allocation (i) shall be subject to pro
rata reduction in the future in the event the re-measurement of the Premises
which occurs by operation of Section 1.1 of this Lease causes a modification to
the square footages described in such Leases as of the date hereof, in which
event the Parking Allocation hereunder, in the immediate aftermath of such
re-measurement, shall equal the result obtained by multiplying 463 by a
fraction, the numerator of which is the Rentable Area of the Premises and the
denominator of which is the original stipulated Rentable Area of the Building
prior to giving effect to such re-measurement, and (ii) shall also be subject
to pro rata reduction in the future in the event of any contraction of the
Rentable Area of the Premises due to Landlord’s exercise of recapture rights or
Tenant’s election to exercise a Renewal Option as to only a portion of the
Premises (such reduction to be effectuated by multiplying Tenant’s initial
Parking Allocation as modified by the preceding clause (i), by a fraction, the
numerator of which is the total Rentable Area of the Premises as contracted,
and the denominator of which is the total Rentable Area of the Building). Any
parking spaces used by Tenant for purposes of accommodating Tenant’s Generator
Use, or other exterior improvements requested by Tenant within the Parking
Facilities and agreed to by Landlord pursuant to this Lease, shall be counted
against Tenant’s Parking Allocation.

     “Parking Facilities” shall mean the surface parking spaces provided for
the benefit of the Building and located within the boundaries of the Land. The
Parking Facilities provided shall be sufficient to provide parking necessary to
satisfy the Parking Allocation provided for herein.

     “Phasing Plan” shall mean that certain schedule to be developed in
accordance with the Work Agreement, pursuant to which portions of the Premises
will be delivered to Tenant in phases rather than in a single delivery of the
entire Premises. Each portion of the Premises which is delivered to Tenant
pursuant to the Phasing Plan is sometimes referred to herein as a “phase”.

13

 

     “Prime Rate” shall mean the “prime rate” of interest as published from
time to time in the Wall Street Journal (or, if such publication ceases to be
published, then the “prime rate” as established from time to time by the then
largest national banking association in the United States of America).

     “Redevelopment Agreement” shall mean that certain Redevelopment Agreement,
between Landlord and the County, to be executed, delivered and recorded among
the land records of the County as a requirement of Landlord’s acquisition of
title to the Project, which runs with the land of the Project and shall be
binding upon all owners and tenants of the Project (including Tenant). Tenant
acknowledges having received an electronic copy of the Redevelopment Agreement
prior to the date of execution of this Lease.

     “Renewal Parameters” shall mean all appropriate factors for determining
fair market economics of a renewal transaction for similar class office space
in buildings of similar class and age in the Applicable Submarket (as defined
in Section 51) during the six (6) month period after Tenant exercises its
renewal option, such appropriate factors to include the quality, location and
visibility of the Building and the desirability of the Annapolis Point
Corporate Center project, the value of any non-standard signage rights (if
applicable), the size and type of space being renewed, the tenant’s
creditworthiness, any concessions being granted (including rental abatements,
moving allowances, refurbishment allowances, tenant improvement allowances, and
the like) or costs being saved, downtime for vacancy, leasing commissions (or
the lack thereof), the method of calculating Additional Rent (i.e., operating
costs and tax pass-throughs), base rental escalations, other pass-throughs,
costs associated with relocation (or the lack thereof), fees then being charged
(or not) in the Applicable Submarket for parking, other special rights included
within the Lease, the costs associated with multi-tenanting any full floors of
the space being partially renewed by Tenant, the criteria concerning a security
deposit required to be considered under Section 51.6 of this Lease (if any),
and any other criteria or factor that would fairly be taken into consideration
in determining the economics of a market lease transaction in the Applicable
Submarket. The inclusion of specific identified factors within this definition
of “Renewal Parameters” shall not be construed to limit or restrict either
Landlord or Tenant from asserting at the time of any application of this
definition that other or different factors not specifically identified herein
should also be appropriately considered.

     “SEC” shall mean the United States Securities and Exchange Commission, or
any successor governmental agency thereto.

     “SNDA” shall mean a subordination, non-disturbance and attornment
agreement from any mortgagee or deed of trust beneficiary under a mortgage or
deed of trust affecting the Building and/or Land (a “Mortgage”), or from the
ground lessor of any ground lease affecting the Building and/or Land (a “Ground
Lease”) in a form to be negotiated between (and reasonably satisfactory to)
Landlord, Tenant and the applicable mortgagee, deed of trust beneficiary or
ground lessor, which is executed by Landlord, Tenant and either (i) the
mortgagee or deed of trust beneficiary, which subordinates this Lease to such
Mortgage, or (ii) the ground lessor, which subjects this Lease to such Ground
Lease. All SNDA shall include substantially the following provisions: (a)
that, as long as

14

 

Tenant is not in Default (or Material Default, as the case may
be) hereunder, the mortgagee, any successful foreclosure bidder’s assignee or
designee, and other third party purchaser entity or any holder of the
reversionary interest under a Ground Lease succeeding to Landlord’s interest
(collectively, “Senior Lienors”) shall not: (i) disturb Tenant’s rights,
privileges, interests and unexercised options under this Lease or any
instrument executed pursuant hereto, nor name Tenant as a party defendant in
any foreclosure or any action or proceeding instituted under or in connection
with the Mortgage or Ground Lease unless such joinder is necessary to foreclose
the Mortgage or terminate the Ground Lease, and then only for such purpose and
not for the purpose of terminating this Lease; (ii) terminate this Lease if
there is a foreclosure, deed-in-lieu, or other proceedings involving Landlord’s
interest in the Building; and/or (iii) require any Lease modification in
connection therewith; (b) that notwithstanding anything contained herein to be
contrary, Senior Lienor shall have absolutely no obligation to perform any of
Landlord’s construction covenants under the Lease, provided that unless Senior
Lienor agrees within a reasonable time (not to exceed sixty (60) days after a
Construction Default occurs under Exhibit C) that Senior Lienor will, upon
conclusion of a foreclosure of the Property (which, if it so elects, Senior
Lienor agrees to commence promptly and pursue diligently to completion, but
without assurance that Senior Lienor will be the successful bidder at such
foreclosure) either (A) continue to fund (either to Senior Lienor’s own
construction management consultant, or to Tenant) the initial construction of
the Base Building Improvements and Tenant Improvements upon a default by
Landlord of such construction obligations and (if Senior Lienor agrees to fund
the performance of such work by Tenant) Tenant’s exercise of its right to
perform such obligations in accordance with the applicable terms, covenants and
conditions of Exhibit C (in both cases conditioned upon Tenant expressly
reaffirming this Lease and waiving all rights to seek any termination of this
Lease or other damages against Senior Lienor in relation to Landlord’s
construction default, and also (1) if Tenant is performing such work, Tenant
satisfying all customary covenants thereafter arising associated with
performing such construction on Landlord’s behalf as set forth in the
Construction Loan Agreement as originally executed with Senior Lienor, (2) if
Tenant is performing such work, Tenant making proper requisition for such funds
in accordance with customary draw provisions substantially comparable to those
provided for under the Construction Loan Agreement for Landlord’s draw
requests, including provision of all required submissions, inspection reports,
lien waivers and the like, and (3) in either case, Tenant committing
contractually to make available all additional funds necessary to fund the
total cost to complete the improvements required by this Lease (with a right of
set-off for any funds beyond those otherwise required to be paid by Tenant
under the terms of this Lease, such as Excess TI Costs) or (B) recognize Tenant’s right of self-help and
set-off with regard to Tenant’s performance of Landlord’s construction
obligations under Exhibit C of this Lease, for the full amount Tenant is
entitled to recover in connection with such exercise (and provided Tenant
exercised its right to perform Landlord’s obligations in accordance with the
terms, covenants and conditions set forth in Exhibit C), then Tenant shall have
the right to terminate this Lease and pursue any and all legal and equitable
remedies it may have against Landlord and any third parties other than Senior
Lienor; (c) Tenant shall be required to attorn to such Senior Lienor as long as
such Senior Lienor recognizes Tenant and assumes (either expressly or by
operation of law) the obligations of “Landlord” under this Lease for the period
after the date title to the Property is transferred to such Senior Lienor by
Landlord (the “Foreclosure Date”); (d) no Senior Lienor of Landlord shall be:
(i) liable for any act or omission of any prior landlord, except for acts,
omissions or defaults of a continuing nature requiring cure under

15

 

the Lease, which continue after the Foreclosure Date, and which are not thereafter cured
by Senior Lienor after notice and an opportunity to cure as provided herein;
(ii) subject to any offsets or defenses which Tenant may have had against any
prior Landlord, except (A) the foregoing shall not operate to cut off defenses
or offsets Tenant may have in relation to any breach, act or omission of the
Landlord which continues after the Foreclosure Date (but such defenses and/or
offsets shall apply only to the extent such breach, act or omission continues
after such Senior Lienor assumes title to the Project); provided that such
Senior Lienor shall not be relieved of the obligation to comply with all of the
Landlord’s obligations under the Lease accruing from and after the Foreclosure
Date, irrespective of whether the original non-compliance with any such
obligation arose prior to and is continuing as of the Foreclosure Date, or
arose on or after the Foreclosure Date (provided however that if such
obligation arose prior to the Foreclosure Date, such Senior Lienor shall not be
deemed in default until after the provision of any notice of default required
by this Lease to such Senior Lienor, and its failure to cure same within the
cure period provided for herein), and (B) as set forth in clause (b), above;
(iii) bound by any payment of Rent by Tenant for a period greater than one (1)
month made without Senior Lienor’s prior written consent (unless actually
received by such Senior Lienor, or available to such Senior Lienor pursuant to
an escrow account or similar arrangement); (iv) bound by any amendment or
modification of the Lease made after the Mortgage or Ground Lease was recorded
without Senior Lienor’s prior written consent, if and to the extent required by
the Senior Lienor’s loan documents; or (v) personally liable for any default
under the Lease or any covenant or obligation on its part to be performed
thereunder as “Landlord”, it being acknowledged that Tenant’s sole remedy in
the event of such default shall be to proceed against Senior Lienor’s interest
in the Property substantially as such limitation is described in Section 34.1
of this Lease; and (e) Tenant shall have no right to terminate this Lease
except as expressly set forth herein, and, in the event Tenant elects to
terminate this Lease pursuant to an express right of termination provided for
herein, no Senior Lienor shall have any obligation or liability in connection
therewith, or in connection with the circumstances giving rise to such right of
termination. In addition, Tenant shall not be required to name Landlord or
Senior Lienor as Tenant’s attorney-in-fact for any reason, nor pay any
attorneys fees or servicing charges or expenses related to the SNDA or any
estoppel certificate. Landlord and Tenant agree that, notwithstanding any of
the foregoing provisions to the contrary, Exhibit H constitutes a commercially
reasonable form of SNDA that is acceptable to each of them and that may be used
and/or delivered in connection with any future Mortgage or Ground Lease.

     “Specialty Systems” shall mean any specialty systems installed for the
benefit of Tenant within the Project (whether by Tenant or by Landlord for
Tenant as part of the Tenant Improvements) such as, but not limited to, (i)
supplemental HVAC units or systems including those utilized to provide heating
and/or cooling to Tenant’s data center (if any), computer rooms, or other
specialty areas involving special heating or cooling requirements such as 24
hours per day, 7 days per week, operations, (ii) special fire protection
systems including pre-action systems, non-water fire-suppression systems, (iii)
generators and generator fuel tanks, (iv) UPS (i.e., uninterrupted power
supply) systems, (v) roof equipment, and (vi) other similar specialty equipment
serving only Tenant, Tenant’s sublessees and Tenant’s Agents and involving
special maintenance and/or operational requirements.

16

 

     “Substantial Completion” shall mean, with respect to each applicable phase
of the Premises, that (1) Landlord’s TI Work (as defined in Exhibit C) for such
phase has been completed in accordance with the Construction Documents (as
defined in Exhibit C), other than (A) special, non-standard items requested by
Tenant that require an unacceptably long lead time for procurement and/or
installation, provided the same were appropriately identified pursuant to the
process described in Section IV.B.2 of Exhibit C, and (B) Punch List Items (as
defined in Exhibit C); (2) all exterior/site improvements, including but not
limited to the Parking Facilities and exterior utilities, required for the
reasonable use and occupancy of such phase have been substantially completed
and are operational (subject to Punch List Items), other than those items
(including final landscaping installations) which are reasonably deferred due
to seasonal considerations or which are long-lead items the delayed
installation of which will not unreasonably and adversely affect the ability of
Tenant to make beneficial use of such improvements or the Premises (or the
applicable portion thereof); (3) all Base Building Improvements, Building
Systems and Landlord-installed equipment required for the reasonable use of
such phase of the Premises (including at least two of the elevators, the
electrical and plumbing systems, including telephone trunk lines to the
Building, mechanical rooms, electrical closets, and janitor closets for the
applicable phase of the Premises, the Building lobby, the elevator lobbies for
the applicable phase, all public restrooms which are part of such phase, and
all other common and public areas of floors to be occupied in such phase by
Tenant) are substantially completed in accordance with the Construction
Documents (except for Punch List Items and long lead items therein, as
aforesaid), and (if applicable) have been tested, are operating and have been,
to the extent governmental approval is required for the operation thereof,
approved for operation by all applicable governmental authorities; (4) the
applicable phase of the Premises is free from debris and in move-in condition
(except to the extent of any Tenant Work being conducted by Tenant or Tenant’s
Agents therein); (5) the permanent roof system for such phase shall have been
installed and sealed, and all windows in the applicable phase of the Premises
shall have been installed and sealed; (6) Landlord has obtained all
governmental inspection and other approvals in connection with such
construction (including without limitation a certificate of use and occupancy,
or its equivalent, permitting Tenant to move into and lawfully occupy such
phase of the Premises, but excluding those approvals, if any, which can only be
obtained after Tenant’s move-in and installation of movable furniture and
equipment, or completion of Tenant Work, if any) provided (i) Tenant
acknowledges that a certificate of use and occupancy, or its equivalent, for the Premises (or
any applicable phase thereof) may be subject to a post move-in inspection after
Tenant has completed all Tenant Work and/or Tenant’s installation of its trade
fixtures, furniture and equipment in which a certificate of use and occupancy,
or its equivalent, is subject to revocation if Tenant has failed to properly
install its trade fixtures, furniture and equipment, and (ii) Tenant will be
responsible for any failure by Landlord to obtain a non-residential use permit
to the extent the same is deferred or denied (or revoked after a post move-in
inspection) because of any incomplete Tenant Work, because Tenant’s
installation of its trade fixtures, furniture and equipment was performed in
violation of any applicable Legal Requirements, or because of any Tenant Delay,
and in such event, the non-issuance of such certificate of use and occupancy,
or its equivalent, shall not affect the status of the Premises (or any
applicable phase thereof) as “Substantially Completed”. Tenant agrees that
the issuance of a certificate of use and occupancy, or its equivalent, shall
create a rebuttable presumption that Substantial Completion of such phase has
been achieved.

17

 

     “Tenant’s Agents” shall mean Tenant’s agents, employees, contractors,
subcontractors, sublessees, licensees and, solely while on the roof of the
Building, within the Premises or within the Parking Facilities, invitees and
business visitors (but expressly excluding Landlord and Landlord’s Agents).

     1.12 Certain Rights Exclusive When Tenant Leases 100% of Rentable Area.
Landlord and Tenant acknowledge and agree that during any period in which
Tenant is leasing 100% of the Rentable Area of the Building, (i) those
provisions of this Lease which grant rights to Tenant with respect to the
Building (and the use of the interior and exterior Common Areas) on a
non-exclusive basis will be construed to grant such rights on an exclusive
basis (subject to Landlord’s rights of entry and use as set forth herein and
limited hereby), and (ii) those provisions of this Lease which grant rights to
Tenant with respect to the Building (and the use of the interior and exterior
Common Areas of the office portion of the Building) on a non-exclusive basis
will be construed to grant such rights on an exclusive basis (subject to
Landlord’s rights of entry and use as set forth herein and limited hereby).

2. PAYMENT OF RENT & ADDITIONAL RENT.

     Tenant shall pay Rent due under this Lease in lawful money of the United
States without demand, deduction or offset, except as expressly provided for
herein. Rent shall be paid at the address noted in Section 1.8. Monthly Base
Rent and Additional Rent under this Lease for any partial month at the
beginning or end of the Lease Term shall be prorated based on the number of
days in such month to account for such partial month. Except as otherwise
provided in this Lease (for example, with respect to estimated payments of
Tenant’s Share of Operating Costs and of Tenant’s Share of Real Estate Taxes),
all payments of Additional Rent shall be paid no later than thirty (30) days
after the date Landlord notifies Tenant in writing of the amount thereof.
Except as expressly provided in this Lease, in the event of any dispute
concerning the computation of the amount of any Additional Rent due, Tenant
shall pay the amount specified by Landlord pending the resolution of the
dispute, and such payment shall be without prejudice to Tenant’s right to
continue to challenge the disputed computation.

3. SECURITY DEPOSIT.

     3.1 Security Deposit.

               (a) Upon the earlier to occur of (i) the date Landlord and Tenant reach
agreement on Construction Documents for the first phase of the Premises, or
(ii) the date Landlord closes on its construction loan for the Building, Tenant
shall deliver to Landlord a security deposit (the “Security Deposit”) in a
total amount equal to the Base Rent and estimated Additional Rent which would
be payable by Tenant for such phase during the first full Lease Year applicable
thereto, calculated on the basis of the Construction Budget and initial
Operating Expense and Real Estate Tax budget for each such phase (and subject
to upward or downward adjustment once the actual amount of Base Rent and
estimated Additional Rent payable for such phase during the first Lease Year
applicable thereto has been finally determined). As more fully set forth
below, such Security Deposit (when delivered) is

18

 

intended to secure each and every obligation of Tenant under this Lease. The Security Deposit shall be
delivered in the form of an irrevocable and unconditional letter of credit
which shall be in strict compliance with the requirements and provisions of
this Section 3.1.

               (b) The Security Deposit shall constitute security for the payment of Rent
and for the performance of any and all other covenants, agreements and
obligations of Tenant under this Lease. In the event of any Default under this
Lease, Landlord may (without any waiver of such Default being deemed to have
occurred unless such Default has been fully cured to Landlord’s satisfaction
and Tenant has restored the Security Deposit to the full amount then required
hereunder as and when provided for below) draw upon such letter of credit (with
multiple draws being permitted) and apply the proceeds thereof to the payment
of any sum due from Tenant to Landlord that is then due and payable under this
Lease, or any other sum which Landlord is entitled to recover from Tenant on
account of such Default in accordance with this Lease, or to satisfy in part or
in whole any damages recoverable by Landlord from Tenant on account of such Default by Tenant, or as may otherwise then be recoverable
by Landlord under Section 24 of this Lease. In the event of such application,
Tenant shall promptly deposit with Landlord (in the form of an additional
letter of credit for such amount) the amount necessary to restore the Security
Deposit to the full amount then required to be maintained as a Security Deposit
under this Article III. Any failure by Tenant to restore any portion of the
Security Deposit which is applied by Landlord within thirty (30) days after
Landlord’s notification to Tenant that it has applied all or a portion of the
Security Deposit pursuant to this Section 3.1 shall constitute an independent
Default (and Material Default) under this Lease without requirement of any
further notice or right to cure. The parties expressly acknowledge and agree
that the Security Deposit is not an advance payment of Rent, nor a measure of
Landlord’s damages in the event of any Default by Tenant. If no Material
Default then exists under this Lease, but not otherwise, the Security Deposit
then being held by Landlord shall be returned to Tenant within sixty (60) days
after the expiration or sooner termination of this Lease. Such sixty (60) day
period shall be extended if Tenant is in Material Breach of this Lease as of
the Lease Expiration Date (or the date of termination, if sooner) and such
Material Breach has not been cured as of the end of such sixty (60) day period.
In the event of a sale or transfer of Landlord’s estate or interest in the
Building, then, subject to Section 3.3, below, Landlord shall transfer the
Security Deposit to the purchaser or transferee, and Landlord shall be
considered released by Tenant from all liability for the return of the Security
Deposit upon the effective date of such transfer, provided the purchaser or
transferee assumes in writing for the benefit, inter alia, of Tenant,
Landlord’s obligations with respect to the Security Deposit from and after the
date of such transfer.

               (c) Each letter of credit to be delivered by Tenant to Landlord under
Section 3.1(a) and/or (b), above (each, a “Letter of Credit”), shall (i) be in
form and substance consistent with the terms of this Section 3.1 and otherwise
satisfactory to Landlord in its reasonable discretion; (ii) be in the amounts
required pursuant to Section 3.1(a) and/or (b), above, subject to reduction
pursuant to Section 3.2, below, (iii) permit multiple draws; (iv) be issued by
a commercial bank reasonably acceptable to Landlord; (v) be made payable to
Landlord; (vi) subject to Section 3.3, below, be expressly transferable and
assignable to the owner from time to time of the Building, conditioned only
upon the execution by Landlord and/or such owner of the issuer’s standard
transfer documentation and payment by Landlord of the issuer’s standard
transfer fee, which shall be subject

19

 

to Landlord’s reasonable approval and specified at the time of original issuance of the Letter of Credit; (vii) be
payable at sight upon presentment to the issuer of a simple sight draft signed
by an authorized representative of Landlord accompanied by a certificate
stating that Landlord is permitted to draw upon such Letter of Credit under the
express terms of this Lease, and setting forth the amount that Landlord is
drawing; (viii) be for a term of not less than one (1) year, and automatically
renewable and renewed for successive one (1) year periods through the ninetieth
(90th) day after expiration of the Lease Term, unless the issuer notifies
Tenant, Landlord and Landlord’s Mortgagee of its intent not to renew such
Letter of Credit not less than sixty (60) days prior to the stated expiration
thereof; and (ix) shall not prohibit Landlord from pledging or assigning as
collateral such Letter of Credit to the first mortgagee of the Property, as
more fully set forth in Section 3.3, below (provided that the Letter of Credit
shall name only Landlord as the beneficiary thereof).

               (d) Notwithstanding any provision of this Lease to the contrary, upon a
failure by Tenant to extend or renew the Letter of Credit as and when specified
in Section 3.1(c)(viii), above, which failure is not cured (through provision
of a substitute Letter of Credit meeting the requirements of this Section 3.1)
within ten (10) business days after issuer has notified Tenant, Landlord and
Landlord’s Mortgagee of its non-renewal or non-extension of the Letter of
Credit, or to provide a replacement letter of credit meeting the requirements
of this Section 3.1 as and when specified in Section 3.1(e), below, or to
restore the Security Deposit to the full amount then required to be maintained
as a Security Deposit under this Article III after a draw due to Tenant’s
Default as and when provided in Section 3.1(b), above, Landlord shall have the
right, but not the obligation, immediately to draw upon the Letter of Credit in
full and hold the proceeds thereof in accordance with applicable law and/or
apply the same in accordance with the applicable provisions of this Lease (and,
in exercising such right, Landlord shall be expressly permitted to certify to
the issuing bank that Landlord is permitted to draw upon the full amount of
each Letter of Credit); provided:

	 	(1)	 	in the case of Tenant failing to extend or renew the Letter
of Credit as contemplated in Section 3.1(c)(viii), above, or to
provide a replacement letter of credit meeting the requirements of
this Section 3.1 as and when contemplated in Section 3.1(e), below,
if Tenant shall tender to Landlord, within thirty (30) days after
the Letter of Credit is drawn by Landlord, one or more substitute
letter(s) of credit meeting the requirements of this Section 3.1,
such that the full amount of the Security Deposit then required to
be provided by Tenant under this Lease is then, in fact, posted in
the form of a letter of credit as required by this Section 3.1, then
(A) Landlord shall return to Tenant any amounts drawn by Landlord
which were not actually applied by Landlord on account of a Default
by Tenant in accordance with the terms of this Lease as of the date
Tenant tenders the substitute Letters of Credit (together with a
written statement reconciling any amounts so applied by Landlord
against the amounts so drawn by Landlord), and (B) Tenant’s original
failure to renew or extend the Letter of Credit, or to provide a
substitute Letter of Credit, shall not constitute a Default or
Material Default hereunder; and

20

 

	 	(2)	 	in the case of Tenant failing to restore the Security Deposit
after the same has been drawn on by Landlord due to Tenant’s Default
to the full amount then required to be maintained as a Security
Deposit under this Article III (as contemplated in Section 3.1(b),
above), if Tenant shall thereafter restore the Security Deposit by
tendering to Landlord one or more substitute or supplemental
letter(s) of credit meeting the requirements of this Section 3.1,
such that the full amount of the Security Deposit then required to
be provided by Tenant under this Lease is then, in fact, posted in
the form of a letter of credit as required by this Section 3.1, then
Landlord shall return to Tenant any amounts drawn by Landlord which
were not actually applied by Landlord on account of such Default in
accordance with the terms of this Lease as of the date Tenant
tenders the substitute Letters of Credit (together with a written
statement reconciling any amounts so applied by Landlord against
the amounts so drawn by Landlord).

If Tenant shall fail to tender the substitute or supplemental letters of credit
within the time frames referenced within Section 3.1(b) (in the case of
restoration of the Security Deposit) or in Section 3.1(d)(1) (in the case of
replacement of a letter of credit pursuant to Section 3.1(c)(viii) and/or
3.1(e)), the same shall independently constitute both a Default and a Material
Default by Tenant under this Lease. In each instance in which Landlord draws
upon the Letter of Credit, whether for purposes of applying the proceeds
thereof to amounts owed by Tenant on account of a Material Default, or to hold
pending Tenant’s provision of a renewal, extension or substitute letter of
credit as contemplated under Sections 3.1(c)(viii) or 3.1(e), as the case may
be, the proceeds of the Letter of Credit being held by Landlord shall, to the
fullest extent permitted by law, be considered proceeds of a letter of credit
posted by a third party financial institution on a irrevocable standby basis to
secure certain obligations of Tenant under this Lease, and not as assets of the
Tenant’s estate being held as security by Landlord; but in all instances, such
proceeds shall be applied by Landlord (and appropriately credited to the
account of Tenant) subject to and in accordance with the provisions of this
Article III.

               (e) Each Letter of Credit delivered by Tenant as a Security Deposit
hereunder shall be issued by a commercial bank that has a credit rating with
respect to certificates of deposit, short term deposits or commercial paper of
at least P-1 (or equivalent) by Moody’s Investor Service, Inc. (“Moody’s”), or
at least A/A-1 (or equivalent) by Standard & Poor’s Corporation (“Standard &
Poor’s”) . If the issuer’s credit rating is reduced below P-1 (or equivalent)
by Moody’s or below A/A-1 (or equivalent) by Standard & Poor’s, or if the
issuer is placed into (or is under imminent threat, as reasonably substantiated
by Landlord, of being placed into) receivership or conservatorship by the
Federal Deposit Insurance Corporation, or any successor or similar entity,
then, without requirement of any written notice, or any grace or cure periods
which might otherwise be applicable under Section 24, hereof (provided that,
the foregoing notwithstanding, in the case of the issuer’s credit rating being
changed to a classification that does not qualify under this Section 3.1(e),
Landlord will provide Tenant with prior written notice, and a thirty (30) day
opportunity to cure by providing a substitute Letter of Credit meeting the
requirements of this Section 3.1 from a different issuer meeting the requisite
credit rating criteria, before Landlord is permitted to draw such Letter of

21

 

Credit as hereafter provided), Landlord shall have the immediate right to draw
upon the Letter of Credit in full and hold the proceeds thereof in accordance
with applicable law and/or apply the same in accordance with the applicable
provisions of this Lease (and, in exercising such right, Landlord shall be
permitted to certify to the issuing bank that Tenant has committed a Default
within the meaning of this Lease and that Landlord is permitted to draw upon
the full amount of each Letter of Credit); provided that in such event, (i)
Landlord will promptly notify Tenant that it has drawn such Letter of Credit
pursuant to this Section 3.1(e), and (ii) the provisions of Section 3.1(d),
including Section 3.1(d)(1), above shall apply if Tenant tenders one or more
substitute letters of credit satisfying the provisions of this Article III within the time frame
set forth in Section 3.1(d)(1) (or fails to do so).

     3.2 Reduction Provisions.

               (a) Subject to Section 3.2(b)(2), below (which limits the catch-up
provision otherwise provided for in this Section 3.2(a) under certain
circumstances), and provided (i) Tenant is not in Default of this Lease at the
time of any reduction provided for by this Section 3.2(a) (and no Material
Breach is then outstanding), and (ii) Tenant satisfies all of the financial
criteria provided for in Section 3.2(b), below, then on the first day of each
Lease Year, commencing with the first day of the 2nd Lease Year, and continuing
annually thereafter on the first day of each subsequent Lease Year in which
Tenant qualifies for reduction under Section 3.2(b)(1), below (each such
anniversary date, a “Reduction Date”), Tenant shall have the right to reduce
the Security Deposit under this Section 3.2(a) (such reduction, a “Reduction”)
to the amounts set forth in the following schedule (the “Reduction Schedule”):

	 	 	 
	Reduction Date	 	Amount
	
	 	

	First Day of Lease Year #2	 	
90% of Original Security Deposit
	First Day of Lease Year #3	 	
85% of Original Security Deposit
	First Day of Lease Year #4	 	
80% of Original Security Deposit
	First Day of Lease Year #5	 	
75% of Original Security Deposit
	First Day of Lease Year #6	 	
70% of Original Security Deposit
	First Day of Lease Year #7	 	
65% of Original Security Deposit
	First Day of Lease Year #8	 	
60% of Original Security Deposit
	First Day of Lease Year #9	 	
55% of Original Security Deposit
	First Day of Lease Year #10	 	
50% of Original Security Deposit
	First Day of Lease Year #11	 	
45% of Original Security Deposit
	First Day of Lease Year #12	 	
40% of Original Security Deposit
	First Day of Lease Year #13	 	
35% of Original Security Deposit
	First Day of Lease Year #14	 	
30% of Original Security Deposit
	First Day of Lease Year #15	 	
25% of Original Security Deposit

For purposes of the foregoing provision, the term “Original Security Deposit”
means the face amount of the Security Deposit initially required to be posted
by Tenant hereunder. Provided Tenant qualifies for such Reduction as of any
such Reduction Date, such Reduction shall be effectuated by Tenant

22

 

delivery of (A) a replacement letter of credit for the applicable lesser amount at the time
of Tenant’s annual renewal thereof, which replacement letter of credit may (i)
include an endorsement that provides that such replacement letter of credit
shall be effective only upon Landlord’s return of the letter of credit being
replaced or Landlord’s written consent to cancellation of the letter of credit
being replaced, or (ii) be delivered pursuant to a escrow arrangement otherwise
reasonably approved by Landlord, and (B) a letter prepared by the same
certified public accounting firm which prepares Tenant’s financial statements
filed with the SEC as of such date, or a comparable “Big 5” certified public
accounting firm or regional certified public accounting firm reasonably satisfactory to Landlord, which letter shall
(i) be addressed to Landlord and Landlord’s mortgagee, (ii) certify to the
addressees that such accounting firm has performed an audit of Tenant’s
financial records in accordance with generally accepted accounting principles,
consistently applied, and has determined on the basis of such audit that Tenant
has satisfied each of the financial criteria set forth in Section 3.2(b),
below, with respect to the applicable periods, including in such certification
the specific financial information regarding Tenant’s gross revenues, EBIT,
current ratio, tangible net worth and cash reserves during the applicable
reporting period prior to the Reduction Date which evidences Tenant’s
satisfaction of each of the applicable criteria, and (iii) expressly state that
the addressees may rely upon such letter in effectuating a Reduction in
accordance with Section 3.2 of this Lease.

          (b) (1) In order to qualify for any Reduction of the Security Deposit
pursuant to Section 3.2(a), above, Tenant must satisfy each of the following
criteria as of the applicable Reduction Date (such criteria, collectively, the
“Reduction Metrics”):

               (i) For the four (4) consecutive quarters immediately preceding the
Reduction Date, Tenant’s results from operations, exclusive of any
extraordinary items such as sales of assets, etc., shall include (A)
gross revenues of not less than Seventy-Five Million Dollars
($75,000,000) for such four-quarter period, and (B) operating margin
(EBIT), excluding goodwill and amortization, equal to fifteen percent
(15%) of gross revenues;

               (ii) For the four (4) consecutive quarters immediately preceding the
Reduction Date, Tenant shall have maintained a current ratio of not less
than 1.4 (provided that the parties agree that any long-term bonds or
other similar long-term, e.g., in excess of one year, investments shall
be disregarded for purposes of calculating Tenant’s current ratio);

               (iii) For the four (4) consecutive quarters immediately preceding
the Reduction Date, Tenant shall have maintained a tangible net worth
(i.e., exclusive of goodwill and other intangible assets) of not less
than Ten Million Dollars ($10,000,000); and

               (iv) For the four (4) consecutive quarters immediately preceding the
Reduction Date, Tenant shall have had on account cash or cash equivalents
in an amount not less than Five Million Dollars ($5,000,000.00).

               (2) If Tenant does not qualify for a Reduction as of any applicable
Reduction Date (whether due to the pendency of a Default or Material Breach or
because of its

23

 

failure to satisfy any one or more of the Reduction Metrics as of such Reduction Date, or both), but Tenant subsequently does qualify for such
Reduction (whether (A) due to its cure of the applicable Default or Material
Breach while still meeting the applicable Reduction Metrics as of such later
date, or (B) due to its satisfaction of all of the Reduction Metrics as of such
later date), then Tenant shall be permitted to submit for (and shall thereupon be
deemed to qualify for) such Reduction after the applicable Reduction Date,
provided (a) in those instances where Tenant’s failure to qualify for a
Reduction occurred solely because Tenant was in Default or Material Breach as
of the applicable Reduction Date, then upon curing such Default or Material
Breach, Tenant shall be allowed the benefit of the Reduction it would have
otherwise qualified for had it not been in Material Default or Material Breach
as of the date it otherwise qualified for such Reduction, and (b) in the case
of Tenant’s failure to qualify for a Reduction because Tenant failed to satisfy
one or more of the Reduction Metrics as of an applicable Reduction Date, but
then qualifies thereafter (whether on applicable Reduction Date, or during the
period between applicable Reduction Dates) (a “Requalification”), if such
failure to satisfy Reduction Metrics applied to more than one (1) consecutive
Lease Year before the date of Tenant’s Requalification, then (i)
notwithstanding Section 3.2(a) to the contrary, the amount of the Reduction
Tenant will be entitled to receive after the first four consecutive quarterly
periods with respect to which Tenant satisfies all of the Reduction Metrics
(and therefore requalifies for Reduction) shall equal one half (1/2) of the
Reduction it would otherwise then qualify for under the Reduction Schedule
(herein referred as a “50% Catch-Up”), and (ii) if clause (b)(i) causes Tenant
to derive the benefit of only a 50% Catch-Up as of a Requalification, and over
the next four consecutive quarterly periods after Tenant’s initial
Requalification, Tenant again satisfies all of the applicable Reduction
Metrics, Tenant shall be entitled to the full Reduction contemplated herein as
of the end of such second four consecutive quarterly period (i.e., to the
amount then applicable under the Reduction Schedule). Except as provided in
clause (b)(i) and (b)(2) of the preceding sentence, any Reduction by Tenant
shall be determined and calculated by reference to the Reduction Schedule as of
the date with respect to which each such submission for a Reduction is made
(and each such submission must independently qualify under the applicable
criteria for such Reduction, and include all required information and third
party certifications as of such later date reflecting that the applicable
Reduction Metrics have been satisfied as of such later date). By way of
example only, and not of limitation, if Tenant has never previously qualified
for a Reduction under Section 3.2(a), but qualifies for a Reduction (by
satisfying the Reduction Metrics) effective as of the Reduction Date coinciding
with the first day of Lease Year #5, then upon proper submission for such
Reduction, the Security Deposit shall be reduced to 87.5% of the original
amount (accomplishing a 50% Catch-Up); and if Tenant also satisfies all of the
Reduction Metrics for the next four consecutive quarterly periods after such
initial Reduction (i.e., as of the Reduction Date coinciding with the first day
of Lease Year #6), then upon proper submission for such Reduction, the Security
Deposit shall be reduced from to 70% of the original amount, accomplishing a
full catch-up of the Reduction (i.e., the remaining 50% plus that year’s
Reduction). However, if Tenant fails to satisfy the Reduction Metrics with
respect to the next four consecutive quarterly periods after such initial
Reduction (i.e., as of the Reduction Date coinciding with the first day of
Lease Year #6), then the Security Deposit shall remain at 87.5% of the original
amount, and the next Reduction for which Tenant qualifies shall be for a 50%
Catch-Up measured from such 87.5% amount to amount calculated on the applicable
Reduction Date when Tenant next Requalifies.

24

 

               (c) Notwithstanding any portion of Section 3.1, or 3.2(a) or (b) to the
contrary, and provided Tenant is not then in Material Default of this Lease
(and no Material Breach is then outstanding), should Tenant receive a debt
rating of “A” or better from Standard & Poors or an equivalent debt rating from
Moody’s, then Tenant’s obligation to provide a Security Deposit hereunder (and
under the Two Dulles Station Lease) shall terminate and be of no further force
and effect. The foregoing notwithstanding, in no event shall Tenant’s
obligation to provide the Security Deposit under this Lease terminate under
this Section 3.2(c) prior to Acceptance of Possession. In such event, such
termination shall be effectuated by Tenant’s delivery to Landlord of a written
notice confirming Tenant’s satisfaction of the applicable criteria and
substantiating that the foregoing requirement has been satisfied, and
requesting the return of the Letters of Credit then being held by Landlord
pursuant to this Article 3. Within ten (10) business days after Landlord’s
receipt of such written notice with all required documentation attached, the
Security Deposit then being held by Landlord hereunder shall be returned to
Tenant for cancellation.

               (d) Notwithstanding any portion of Section 3.1, or 3.2(a) or (b) to the
contrary, and provided Tenant is not then in Material Default of this Lease
(and no Material Breach has then occurred and is then uncured with respect to
which Landlord has, prior to such date, provided Tenant with a written notice
of default), should Tenant receive a debt rating of “BBB” or better from
Standard & Poors or an equivalent debt rating from Moody’s, then the Security
Deposit required hereunder shall be reduced to an amount equal to one-half
(-1/2) of the amount otherwise required to be maintained by operation of
Sections 3.1 and 3.2, above; and if Tenant shall maintain such “BBB” or better
debt rating from Standard & Poors (or equivalent rating from Moody’s) for a
period of twenty-four (24) consecutive months after the applicable credit
agency has formally issued the requisite rating, then Tenant’s obligation to
provide a Security Deposit hereunder shall terminate and be of no further force
and effect. The foregoing notwithstanding, in no event shall Tenant’s
obligation to provide the Security Deposit under this Lease terminate under
this Section 3.2(d) prior to Acceptance of Possession. In each instance in
which a reduction or termination of the Security Deposit is provided for under
this Section 3.2(d), such reduction or termination shall be effectuated by
Tenant’s delivery to Landlord of a written notice confirming Tenant’s
satisfaction of the applicable criteria and substantiating that the foregoing
requirement (as applicable) has been satisfied. In the case of a reduction of
the Security Deposit pursuant to this Section 3.2(d), Tenant shall attach to
such written notice replacement Letters of Credit in the appropriate reduced
amount (which replacement letter of credit may include an endorsement that
provides that such replacement letter of credit shall be effective only upon
Landlord’s return of the letter of credit being replaced or Landlord’s written
consent to cancellation of the letter of credit being replaced, or may be
provided pursuant to an alternative escrow arrangement reasonably approved by
Landlord). In the case of a termination of the requirement that Tenant
maintain a Security Deposit, such written notice shall include a request that
Landlord return the Security Deposit then being held by Landlord pursuant to
this Article 3 to Tenant for cancellation. Within ten (10) business days after
Landlord’s receipt of such written notice, with all required documentation
attached, the Security Deposit then being held by Landlord hereunder shall be
returned to Tenant for cancellation.

25

 

     3.3  Pledge or Assignment as Collateral. Landlord shall have the right at
all times during the Term to pledge or assign the Security Deposit posted
hereunder to any first mortgagee in respect of the Property which has delivered
an SNDA in accordance herewith as collateral for the first mortgage or first
deed of trust secured by the Property in favor of such mortgagee, under such
form of pledge agreement, collateral assignment and/or other financing
instruments and documentary requirements as Landlord and such mortgagee may
execute, and including the delivery of the Letter(s) of Credit posted as
Tenant’s Security Deposit hereunder to such mortgagee in order to perfect such
mortgagee’s security interest therein, provided that (i) Landlord’s mortgagee
shall be obligated to comply with all provisions of this Lease regarding the
Security Deposit, including when and under what circumstances the Letter(s) of
Credit constituting the Security Deposit may be drawn upon and applied, and any
requirements concerning reduction of the Security Deposit pursuant to the terms
of this Lease, (ii) Landlord’s mortgagee shall be deemed an authorized
representative of Landlord for purposes of executing a sight draft and
certification required hereunder in order to draw upon the Letter(s) of Credit
when Landlord is entitled to do so hereunder, (iii) in the event of any default
under the aforesaid mortgage, Landlord’s mortgagee shall have the right to have
the Letter of Credit transferred to such mortgagee upon its presenting to the
issuer thereof the issuer’s customary transfer form signed by Landlord (which
Tenant agrees may be signed in advance as part of the collateral assignment)
and upon such transfer, to be the beneficiary of the Letter of Credit subject
to the terms of clause (i), above, (iv) upon any termination of such pledge or
assignment as collateral due to repayment of the underlying mortgage loan, such
mortgagee shall reassign the Security Deposit back to Landlord (or to or for
the benefit of any subsequent mortgagee under a subsequent collateral
assignment, as Landlord may direct), (v) upon any termination of such pledge or
assignment as collateral due to the foreclosure (or transfer in lieu of
foreclosure) in respect of the underlying mortgage loan, such mortgagee shall
reassign the Security Deposit to the transferee of the Property in such
foreclosure or transfer in lieu thereof, provided the transferee acknowledges
in writing for the benefit of Tenant its receipt of such Security Deposit from
such mortgagee, (vi) upon any transfer of the mortgagee’s interest in the
underlying mortgage loan to a new mortgagee, the original mortgagee shall
assign its interest in the Security Deposit pursuant to the pledge agreement or
collateral assignment to the transferee of such mortgage loan, and (vii) Tenant
agrees to cooperate with any reasonable requirements of Landlord necessary to
give effect to this Section 3.3, at no material out-of-pocket expense to
Tenant.

4. USES; TENANT COVENANTS.

     4.1  Permitted Uses. The Premises shall be used solely for general office
and administration purposes, and such other uses incidental or ancillary to
general office and administrative use and consistent with the operation of a
first class office facility for a corporate headquarters as may be permitted by
applicable law (which Landlord agrees may include telecommunications functions,
call center functions, data center functions and food service functions,
provided (i) such functions do not constitute the primary use of the Premises,
and (ii) the Premises shall not be used as a restaurant for the general
public), provided (A) the Premises (or any portion thereof) shall not be used
for any retail, industrial or manufacturing use except as specifically permitted by this Section 4.1, and (B) the Premises (or any
portion thereof) shall not be used for clinical medical uses (i.e., doctor’s
offices, HMO clinical offices or similar offices in which clinical

26

 

medical services are performed). The foregoing notwithstanding, and provided that the
same are operated in accordance with all applicable legal requirements, Tenant
shall be permitted to operate the following uses from the Premises for the
benefit of Tenant’s Agents, incidental to the above-described office uses: an
exercise facility, a childcare facility, a conference and/or training facility
and a cafeteria or food service operation.

     4.2  Other General Use Covenants. Tenant shall not commit or allow to be
committed any waste upon the Premises, or any public or private nuisance.
Tenant, at its expense, shall comply with all laws relating to its use and
occupancy of the Premises and shall observe the Rules and Regulations attached
hereto as Exhibit D. Except as hereafter provided, no activity shall be done
in or about the Premises that is unlawful, or which will increase the rate of
insurance on the Buildings beyond that normally applicable to a typical
commercial office building in the Annapolis submarket, provided that unless
Tenant knowingly violates this Section, such violation shall not constitute a
Default of this Lease as long as Tenant promptly ceases the applicable unlawful
activity and pays all fines and/or penalties associated therewith, or, as
applicable, pays 100% of the increased insurance premiums associated with such
activity. In the event of a breach of the covenant set forth in the
immediately preceding sentence regarding insurance rates, if the Building is at
the time of such violation multi-tenanted, Tenant shall cease the activity
giving rise to such increase and, to the extent any increased insurance
premiums were in fact paid by Landlord as a result of such activity, Tenant
shall pay to Landlord any and all such increases in insurance premiums
resulting from such breach, provided that so long as Tenant continues to pay
such increases in premiums, and provided that the activity giving rise to such
increased premiums is an activity permitted under Section 4.1, above, the
continuation of such activity by Tenant shall not be prohibited or constitute a
breach of this Lease. In a multi-tenanted situation, Landlord (i) shall have
the burden of demonstrating that Tenant’s acts or particular use of the
Premises was the cause of the increase in premiums in order to invoke those
provisions of this Section 4.2 which impose the obligation to pay the increased
insurance premiums upon Tenant, and (ii) agrees that general office use will
not result in an increase in insurance premiums. Landlord agrees that general
office use would not constitute a per se violation of any applicable Legal
Requirements nor cause any increase in insurance premiums for the Building, and
that the specific ancillary uses described in the last sentence of Section 4.1,
above, are not per se unlawful. Landlord makes no representation or agreement
regarding any additional insurance requirements or premiums that would be
associated with the operation of the ancillary uses described in the last
sentence of Section 4.1.

5.  ENVIRONMENTAL PROVISIONS; RECYCLING.

     5.1  General.

     5.1.1      Tenant agrees to comply (and to cause Tenant’s Agents to comply)
with any and all applicable Environmental Laws (as defined below) in connection
with Tenant’s use and occupancy of the Premises, and any other fact or circumstance relating
to Tenant’s use, occupancy or activities in, on or about the Premises or
Property. Tenant shall provide all information within Tenant’s possession,
custody or control reasonably requested by Landlord and/or governmental
authorities in connection with Environmental Laws or Hazardous Materials
(defined below) relating

27

 

to the matters contemplated in the preceding sentence.

               5.1.2  Landlord agrees to comply (and to cause Landlord’s Agents to comply)
with any and all applicable Environmental Laws (as defined below) in connection
with Landlord’s operations relating to the Property, and any other fact or
circumstance relating to Landlord’s activities in, on or about the Premises or
Property. Landlord shall provide all information within Landlord’s possession,
custody or control reasonably requested by Tenant and/or governmental
authorities in connection with Environmental Laws or Hazardous Materials
(defined below) relating to the matters contemplated in the preceding sentence.

     5.2      Tenant’s Warranties and Covenants

     During the Term and any Renewal Term (as herein defined) of the Lease,
Tenant warrants, represents and covenants to and with Landlord as follows:

               5.2.1  Except as expressly permitted hereby, Tenant will not (nor will
Tenant permit or suffer any of Tenant’s Agents to) introduce, or permit or
suffer the introduction, within the Premises or the Project of any Hazardous
Materials.

               5.2.2  Except as expressly permitted hereby, the Premises will never be
used by Tenant or any of Tenant’s Agents for any activities involving, directly
or indirectly, the use, generation, treatment, transportation, storage or
disposal of any Hazardous Materials, or to refine, produce, store, handle,
transfer, process or transport Hazardous Materials.

               5.2.3  Tenant (A) shall comply with the Environmental Laws and all other
applicable laws, rules and regulations or orders pertaining to health, the
environment or Hazardous Materials, in so far as such laws pertain to Tenant’s
use and occupancy of the Premises or the need for such compliance arises due to
the acts or omissions of Tenant or Tenant’s Agents, (B) shall not, except as
otherwise specifically permitted in this Lease, store, utilize, generate,
treat, transport or dispose of (or permit or acquiesce in the storage,
utilization, generation, transportation, treatment or disposal by Tenant’s
Agents of) any Hazardous Materials on or from the Premises, provided the
foregoing shall not be construed to make Tenant liable or responsible for any
storage, utilization, generation, transportation, treatment or disposal of
Hazardous Materials which occurred prior to the Commencement Date of this
Lease, or which was caused by Landlord or Landlord’s Agents, except to the
extent the same was the result of the affirmative acts or omissions of Tenant
or Tenant’s Agents, (C) shall cause Tenant’s Agents to comply with the
representations, warranties and covenants herein contained and be responsible
for any non-compliance by any such party(ies), (D) agrees that no portion of
the Premises will be used by Tenant or any of Tenant’s Agents as a landfill or
a dump, and (E) will not install any underground tanks of any type.

               5.2.4  In the event of any storage, presence, utilization, generation,
transportation, treatment or disposal of Hazardous Materials in or on the
Premises subsequent to the Commencement Date, or in the event of any Hazardous
Materials Release in or on the Premises subsequent to the Commencement Date,
but in either case solely to the extent caused by the actions

28

 

or negligence of Tenant or Tenant’s Agents, or otherwise Tenant’s responsibility under the terms
of this Lease (either of the foregoing may hereinafter be referred to as a
matter for which Tenant is “Responsible”), Tenant shall, at and in accordance
with the direction of any federal, state, or local authority or other
governmental authority and under the supervision and reasonable direction of
Landlord, promptly remediate any such Hazardous Materials and rectify any such
Hazardous Materials Release, and otherwise comply with or cause compliance with
the laws, rules, regulations or orders of such authority, all at the expense of
Tenant. When used in this Lease, the term “remediation” shall include the
undertaking and completion of all investigations, studies, sampling and testing
and all remedial, removal and other actions necessary to clean up and remove
all Hazardous Materials, on, from or affecting the Premises, as determined by
such governmental authority or, if the requirements of such governmental
authority do not provide for remediation to an extent consistent with
commercially reasonable standards applicable to mortgage financed commercial
real estate projects, then as determined by Landlord in the exercise of
Landlord’s commercially reasonable judgment. If, under such circumstances,
Tenant shall fail to proceed with such remediation or otherwise comply with
such laws, rules, regulations or orders within the cure period permitted under
the applicable regulation or order, the same shall constitute a Default under
this Lease without requirements of further notice or opportunity to cure, and
Landlord may, but shall not be obligated to, take such action as may be
reasonably necessary under the circumstance to conduct such remediation in
accordance with the aforesaid standards and the cost thereof shall be borne by
Tenant and thereupon become due and payable as Additional Rent hereunder;
provided, however, that Tenant shall not be in “Default” under this Lease due
to Tenant’s failure or inability to correct such problem within a time certain
as long as Tenant is using all diligent efforts to correct the problem in
accordance with applicable Legal Requirements. Notwithstanding the immediately
preceding sentence, Landlord shall be entitled to take such independent action
and to recover from Tenant the reasonable and actual costs associated therewith
if Landlord determines, upon the advice of its counsel or environmental
consultants, that Tenant’s failure to take independent action immediately to
remediate an environmental problem for which Tenant is otherwise Responsible
under this Section 5 gives rise to a substantial risk of imminent governmental
enforcement action against Landlord, or governmental or third party civil
liability to Landlord, or irreparable damage to the Property, and Tenant fails
to take and diligently pursue to a prompt conclusion such corrective action
within twenty-four (24) hours after Landlord notifies Tenant thereof. Tenant
shall give to Landlord and its authorized agents and employees access to the
Premises for such purposes and hereby specifically grants to Landlord a license
to remove the Hazardous Materials and otherwise comply with such applicable
laws, rules, regulations or orders under such circumstances.

               5.2.5 Notwithstanding this Section 5.2  or any other provision of this
Lease to the contrary, Tenant shall not be required to conduct any remediation
or take any other action to comply with the requirements of governmental authorities with regard to
compliance with the requirements of any Environmental Laws during the pendency
of any good faith administrative or judicial review or appeal of such
requirements, as long as (i) to the extent an administrative or judicial stay
of the requirement of such remediation is required in order to suspend
Landlord’s obligation to remediate, Tenant obtains an administrative or
judicial stay of the requirement of such remediation or other action as part of
such review or appeal and remains at all time in compliance with all terms and

29

 

conditions applicable to such stay, (ii) the failure to conduct such
remediation or take such other action will not expose Landlord or Landlord’s
Agents to any civil or criminal liability, (iii) Landlord determines, in its
good faith judgment, that deferral of such remediation or other action will not
result in any substantial risk of injury or death to persons, or increase the
risk of damage to contamination of the Property or any adjacent properties, nor
otherwise diminish the value of the Property in any material respect, and (iv)
the actions being taken by Tenant, and the other facts and circumstances giving
rise to the claimed need for remediation, do not constitute or give rise to any
default under the terms of any mortgage applicable to the Property.

     5.3  Landlord’s Representations and Covenants

     During the Term and any Renewal Term (as hereafter defined) of the Lease,
Landlord warrants, represents and covenants to and with Tenant as follows:

               5.3.1  Landlord represents, warrants and covenants that, to the best of its
knowledge as of the date of execution and delivery of this Lease, based on the
environmental reports and other documents listed in Exhibit J (collectively,
the “Environmental Reports”), and except as disclosed in said Environmental
Reports, the Land is free of Hazardous Materials in concentrations that would
violate Environmental Laws, and is otherwise not in violation of any
Environmental Law. Tenant acknowledges (i) that the Project was, prior to
Landlord’s acquisition, a naval research center and training facility which
included a tank farm and other uses which involved the use or storage of
Hazardous Materials, and (ii) that it has had an opportunity to review the
Environmental Reports and other materials supplied to Landlord by the United
States government (“U.S. Government”) and the County in connection with the
conveyance of the Property from the U.S. Government to the County, and
thereafter from the County to Landlord.

               5.3.2  Landlord (A) shall comply with the Environmental Laws and all other
applicable laws, rules and regulations or orders pertaining to health, the
environment or Hazardous Materials, in so far as such laws pertain to the
ownership and operation of the Project and is not a matter for which Tenant is
Responsible hereunder, or the need for such compliance arises due to the acts
or omissions of Landlord and Landlord’s Agents, (B) shall not, except as
specifically permitted hereby, store, utilize, generate, treat, transport or
dispose of (or permit or acquiesce in the storage, utilization, generation,
transportation, treatment or disposal of) any Hazardous Materials on or from
the Premises, provided the foregoing shall not be construed to make Landlord
liable or responsible for any storage, utilization, generation, transportation,
treatment or disposal of Hazardous Materials which was caused by Tenant or
Tenant’s Agents, except to the extent the same was the result of the
affirmative acts or omissions of Landlord or Landlord’s Agents, (C) shall cause
Landlord’s Agents to comply with the representations, warranties and covenants
herein contained and be responsible for any non-compliance by any such
party(ies), (D) agrees that no portion of the Premises will be used by Landlord
or Landlord’s Agents as a landfill or a dump, and (E) will not install any
underground tanks of any type.

               5.3.3  If any Hazardous Materials Release occurs or is discovered for which

30

 

Landlord is Responsible, and for which Tenant is not Responsible, Landlord
shall, at and in accordance with the direction of any federal, state, or local
authority or other governmental authority, promptly remediate and rectify any
such Hazardous Materials Release, and otherwise comply or cause compliance with
the laws, rules, regulations or orders of such authority, all at the expense of
Landlord and not at any expense to Tenant (and not as an Operating Cost).
Landlord’s agreement to pay such expense shall in no event be construed as a
waiver by Landlord of any claim Landlord may have against any third party who
or which bears legal responsibility for such remediation and/or compliance. If
Landlord shall fail to promptly and diligently proceed with such remediation or
otherwise comply with such laws, rules, regulations or orders within the cure
period permitted under the applicable regulation or order, the same shall
constitute a default by Landlord under this Lease, Tenant may avail itself of
the rights and remedies set forth elsewhere herein, provided, however that
Tenant shall have no such right and no default by Landlord shall be deemed to
exist provided that Landlord is using all diligent efforts to pursue such
remediation or compliance. Notwithstanding the immediately preceding sentence,
Tenant shall be entitled to take such independent action and to recover from
Landlord the reasonable and actual costs associated therewith if Tenant
determines, upon the advice of its counsel or environmental consultants, that
Landlord’s failure to take independent action immediately to remediate an
environmental problem for which Landlord is otherwise Responsible under this
Section 5 gives rise to a substantial risk of imminent governmental enforcement
action against Tenant, or governmental or third party civil or criminal
liability to Tenant, or irreparable damage to the Tenant’s property, and
Landlord fails to take and diligently pursue to a prompt conclusion such
corrective action within twenty-four (24) hours after Tenant notifies Landlord
thereof.

     5.4  Indemnities and Additional Covenants.

               5.4.1  Each of Tenant and Landlord hereby indemnifies and holds the other
and their respective shareholders, subsidiaries, affiliates, officers,
directors, partners, employees harmless from, against, for and in respect of,
any and all damages, losses, settlement payments, obligations, liabilities,
claims, actions or causes of actions, encumbrances, fines, penalties, and costs
and expenses suffered, sustained, incurred or required to be paid by any such
indemnified party (including, without limitation, reasonable fees and
disbursements of attorneys, engineers, laboratories, contractors and
consultants) because of, or arising out of or relating to a violation of any of
the indemnifying party’s representations, warranties and covenants under this
Section, including any Environmental Liabilities arising therefrom. The
foregoing notwithstanding, (i) the foregoing indemnifications shall not
encompass consequential damages, damages related to loss of business, rent loss, business interruption or any diminution of
the market value of the Project or the property of either party which may arise
on account of the presence of any Hazardous Materials on or about the Project,
and (ii) each party’s indemnities relating to Environmental Liabilities arising
out of the “presence” of Hazardous Materials at the Project shall only apply to
the extent such party is Responsible for such presence within the meaning of
this Section, and shall serve to protect and indemnify solely against third
party liability. Neither party shall be entitled to settle a claim as to which
it is indemnifying the other party hereunder unless (i) the other party
consents to such settlement after written notice of the terms thereof, which
consent shall not be unreasonably

31

 

withheld, conditioned, or delayed (and which
consent shall be deemed given if a proposed settlement is not disapproved or
otherwise responded to within ten (10) days after the date the party whose
consent is required is notified of the proposed settlement in writing), or (ii)
the settlement (A) constitutes a complete release of all present and future
claims that might arise out of the matter indemnified against, (B) includes a
written agreement of all governmental authorities having jurisdiction over such
matter that such matter has been fully and finally resolved to the satisfaction
of such governmental authority and that no future claims or governmental
actions or proceedings arising out of such matter will be asserted by such
authority, (C) such settlement involves no admission of liability or
responsibility by the party indemnified against, (D) such settlement is made at
the sole expense of the party giving such indemnity, and (E) to the extent the
settlement involves definition of the scope of remediation required to be
conducted by Tenant, such scope shall not materially affect Landlord’s ability
to finance the Property on a commercially reasonable basis. The foregoing
indemnification and the responsibilities of Tenant and Landlord under this
Section shall survive the termination or expiration of this Lease.

               5.4.2  Each party hereto shall promptly notify the other in writing of the
occurrence of any Hazardous Materials Release or any pending or threatened
regulatory actions, or any claims made by any governmental authority or third
party, relating to any Hazardous Materials or Hazardous Materials Release on or
from the Premises, to the extent known to such party, and such party shall
promptly furnish the other party with copies of any correspondence or legal
pleadings or documents in connection therewith. Each party shall have the
right, but shall not be obligated, to notify any governmental authority of any
state of facts which may come to its attention with respect to any Hazardous
Materials or Hazardous Materials Release on or from the Premises following
consultation with the other party.

               5.4.3  Tenant agrees that Landlord shall have the right (but not the
obligation) to conduct, or to have conducted by its agents or contractors, such
periodic environmental inspections of the Project as Landlord shall reasonably
deem necessary or advisable from time to time. Landlord shall provide Tenant
with no less than five (5) business days prior notice of any such inspection
within the interior of the Premises, except in case of an Emergency, in which
case only such notice as may be practicable under the circumstance shall be
required, and, except in case of Emergency, such inspections shall be conducted
in the presence of a representative of Tenant so long as Tenant makes a
representative available for such purpose at the time scheduled by Landlord.
The cost of any such inspection shall be borne by Tenant in the event such
inspection determines that Tenant has breached the covenants set forth in
Section 5.2.3 above.

               5.5  Permitted
Materials. Notwithstanding anything in this Lease to the
contrary, Tenant and Tenant’s Agents shall be permitted to store reasonable
amounts of Hazardous Materials that are typically used in an ordinary general
office use environment such as ordinary cleaners, printer and duplication
supplies and similar materials (the “Permitted Materials”) provided such
Permitted Materials are properly used, stored, handled and disposed of in a
manner and location meeting all applicable Environmental Laws. Any such use,
storage and disposal shall be subject to all of the terms of this Section
(except for the terms prohibiting same), and Tenant shall be responsible for

32

 

obtaining any required permits and paying any fees and providing any testing
required by any governmental agency with respect to the Permitted Materials.
If Landlord in its reasonable opinion determines that said Permitted Materials
are being improperly stored, used, handled or disposed of in violation of
Environmental Laws, or in such a manner that materially increases the risk of a
violation of Environmental Laws, then the provisions of Section 5.2, above,
shall apply with respect thereto as if the same were no longer deemed Permitted
Materials.

     5.6  Recycling
Regulations. As a part of the services provided by Landlord
hereunder Landlord shall provide receptacles and containers as reasonably
necessary for Tenant to comply with all orders, requirements and conditions now
or hereafter imposed by any ordinances, laws, orders and/or regulations
(hereinafter collectively called “regulations”) of any governmental body having
jurisdiction over the Premises or the Building regarding the collection,
sorting, separation and recycling of waste products, garbage, refuse and trash
(hereinafter collectively called “waste products”) and Landlord shall cooperate
generally with Tenant in such efforts including but not limited to Tenant’s
separation of such waste products into receptacles provided by Landlord and the
removal of such receptacles in accordance with any collection schedules
prescribed by such regulations. Landlord shall provide Tenant with waste
dumpsters and recycling bins in locations on the Land to be designated as part
of the initial design of the Building and Property so as to enable Tenant to
comply with the foregoing. All costs associated with the provision of any
items by Landlord under this Section 5.4 shall constitute an Operating Cost
hereunder.

6.  LATE CHARGES;
INTEREST.

     6.1  Tenant hereby acknowledges that late payment to Landlord of Base Rent
and/or Additional Rent will cause Landlord to incur administrative costs, loss
of investment income and risk of mortgage default not contemplated by this
Lease, the exact amount and/or cost of which will be extremely difficult to
ascertain.

     6.2  If any Base Rent or Additional Rent due from Tenant is not received by
Landlord or Landlord’s designated agent within five (5) days after the date
due, then, unless Landlord agrees to waive such charge in its sole and absolute
discretion, Tenant shall pay to Landlord a late charge equal to three percent
(3%) of such unpaid amount. The foregoing notwithstanding, no late payment
charge shall be due and payable on the first occasion in any Lease Year in
which Tenant fails to make any Rent payments within the above-referenced time
frame provided Tenant cures the applicable non-payment prior to expiration of
the five (5) business day cure period referenced in Section 24.1. The parties
hereby agree that such late charge represents a fair and reasonable estimate of
the administrative cost that Landlord will incur by reason of Tenant’s late
payment. Landlord’s acceptance of such late charges shall not constitute a
waiver of Tenant’s Default with respect to such overdue amount or otherwise
estop Landlord from exercising any of the other rights and remedies granted
hereunder, to the extent set forth in this Lease.

33

 

     6.3  In addition to the administrative late charge provided for under
Section 6.2, above, if any Base Rent or Additional Rent or any other sum due
hereunder from Tenant to Landlord is not paid as and when due under this Lease,
and such amount remains unpaid five (5) days after notice that such payment was
not received on the due date, then, unless Landlord agrees to waive such
interest in its sole and absolute discretion, the unpaid amount shall bear
interest from the date originally due until the date paid at an annual rate of
interest equal to the Default Rate; provided that if such unpaid amount is one
as to which the administrative late charge described in Section 6.2, above, was
assessed, the interest payable with respect thereto under this Section 6.3
shall not begin to accrue until thirty (30) days after the original due date
therefor.

7.  REPAIRS AND MAINTENANCE.

     7.1  Landlord’s Obligations. Landlord shall maintain, repair, replace and
keep in good operating condition comparable to similar first class office
properties in the Applicable Submarket, the Common Areas (including, without
limitation, the lobbies, elevators, stairs, parking areas, grounds,
landscaping, loading areas and corridors), the roofs, foundations, load-bearing
elements, conduits and structural walls and other structural elements of the
Building, the underground utility and sewer pipes of the Buildings (except to
the extent required to be maintained or repaired by a governmental or
quasi-governmental authority, in which case such authority shall have sole
responsibility for such maintenance and/or repair provided Landlord is diligent
in causing such governmental or quasi-governmental authority to perform its
maintenance and/or repair responsibilities), all Building Systems (including
base building restrooms but excluding any Specialty Systems and excluding
Tenant’s data and telecommunications systems, all of which shall be Tenant’s
sole responsibility), and all other portions of the Land, Building and Premises
which are not Tenant’s responsibility under Section 7.3, below, the cost of
which shall be included within Operating Costs except to the extent set forth
in Section 9.6 hereof. The foregoing notwithstanding, to the extent the need
for any such repairs or replacements arises as the result of the negligence or
willful misconduct of Tenant or Tenant’s Agents, and the same is not covered
under the policies of casualty insurance which are required to be carried by
the parties pursuant to this Lease (in which case the proceeds of such
insurance will be utilized to satisfy the cost thereof), the entire cost of
such repairs or replacements shall be reimbursable by Tenant to Landlord as
Additional Rent under this Lease, and such reimbursement shall be due not later
than thirty (30) days after Landlord’s written demand therefor.
Notwithstanding the foregoing, any defects in construction of the Building or
Premises discovered by Tenant or Landlord within the applicable warranty period
(which in the case of latent defects, shall be limited to one year after the applicable
date Substantial Completion of the item in question is achieved unless a
manufacturer’s or contractor’s warranty for such items has a greater length
than one year) shall be timely repaired at no expense to Tenant.

     7.2.  Repair Standards. All repairs, replacements and maintenance required
of Landlord pursuant to this Section or elsewhere in this Lease shall be
performed in accordance with standards applicable to similar first class office
buildings in the Annapolis, Maryland area, and performed in a timely and
diligent fashion (which, in an Emergency, may be immediate depending upon the
circumstances). Landlord agrees to diligently attend to any routine repairs or
maintenance needs

34

 

brought to its attention by Tenant as soon as reasonably
practicable (but in no event shall Landlord commence such repairs or
maintenance later than five (5) business days thereafter, or thereafter cease
to pursue the completion of such repair with all due diligence) and in a manner
calculated to minimize to the extent possible disruption of Tenant’s business
activities. Tenant shall have the right to object to and cancel the making of
any repairs which it reasonably believes are unnecessary or excessive in
connection with the annual budget determination procedures set forth in Section
9.4 below; provided, however that such objection shall not prohibit or limit
Landlord’s making of any repairs which are necessary or appropriate to the life
safety of any occupants of the Project or to comply with any Legal
Requirements, or which are otherwise necessary or appropriate to properly
maintain the Building and Project in a condition comparable to similar
first-class office buildings in the Applicable Submarket, as determined by
Landlord in good faith. Any dispute regarding the scope of Landlord’s and
Tenant’s responsibilities under this Article 7 shall be subject to arbitration
pursuant to Section 49 of this Lease.

     7.3  Tenant’s Obligations. Subject to Landlord’s obligations as set forth
in this Lease (including Landlord’s responsibility for the acts and omissions
of Landlord and Landlord’s Agents, if any), including Landlord’s warranty
obligations with respect to the Base Building Improvements and Tenant
Improvements set forth in Exhibit C and its obligation to correct Punch List
Items, Tenant shall be exclusively responsible (i) for all repairs,
maintenance and replacements to the interior non-structural portions of the
Premises, and (ii) for all repairs, maintenance and replacements to the
Specialty Systems and to Tenant’s data and telecommunications systems. Tenant
shall promptly report in writing to Landlord any defective condition in the
Premises actually known to Tenant which Landlord is required to repair under
this Lease, and failure to so report such defects shall excuse any delay by
Landlord in commencing and completing such repair to the extent the same would
otherwise be Landlord’s responsibility under this Lease, provided that once
Landlord is notified of the need for such repair, Landlord’s repair obligation
under Section 7.1, above, shall be fully effective as to such item.

8.  UTILITIES AND SERVICES.

     8.1  Services.

               8.1.1  For so long as Tenant is the sole tenant of the Building, all
utilities serving the Premises shall be separately metered.

               8.1.2  Landlord shall furnish the Premises (and, to the extent applicable
to areas outside of the Premises, Landlord shall cause the Common Areas and
Parking Facilities to be furnished) with the Building Services. Landlord
acknowledges that Tenant must maintain reasonable control over the cost and
quality of all property management and services to the Building, and,
therefore, Tenant shall have the rights to confer with Landlord regarding the
scope of Building Services as and to the extent described in Section 8.4,
below, to participate actively in the formation and approval of annual budgets
for the Building in accordance with Section 9.4 of this Lease; and to require
replacement of the property manager of the Building in accordance with Section
8.6 of this Lease.

35

 

               8.1.3  Landlord and Tenant agree that the Building shall be operated in a
manner consistent with other similar first class office buildings in the
Annapolis, Maryland submarket.

     8.2  Additional Services. If Tenant requires Building Services other than
during Business Hours, Landlord shall provide such additional Building
Service(s) after reasonable request therefor from Tenant, which in the case of
after-hours HVAC service shall be effected by use of an automatic dial-in
feature which is part of such HVAC system, during Business Hours, but which
cannot be guarantied (due to the temporary unavailability of engineering
personnel to input the data required into the computers which control the HVAC
system) unless requested at least six (6) hours prior to the time when such
after-hours HVAC service is required, and Tenant shall reimburse Landlord for
such additional Building Service(s), as Additional Rent, at the actual direct
cost of such additional Building Service(s) to Landlord. To the extent such
additional Building Services are in the nature of HVAC services from the
Building’s HVAC system after Business Hours, Tenant shall pay one hundred
percent (100%) of the actual cost of utilities for providing such service plus
Landlord’s reasonable estimate of the accelerated depreciation (i.e.,
diminution of the useful life) of such Building HVAC system, as a result of any
excessive use. Tenant agrees that the foregoing provisions shall not apply to
any supplemental HVAC systems which are Specialty Systems operated by Tenant,
the repair, maintenance and operational cost of which shall be Tenant’s sole
responsibility under Section 7.3, above.

     8.3  Additional Provisions.

               (a) Except as specifically and expressly set forth below, in no event
shall Landlord be liable to Tenant for (a) any damage to the Premises, or (b)
any loss, damage or injury to any property therein or thereon, or (c) any
claims for the interruption of or loss to Tenant’s business, for any property
damages or for any consequential damages resulting from property damage, or for
any other property or business loss, occasioned by bursting, rupture, leakage
or overflow of any plumbing or other pipes or other similar cause in, above,
upon or about the Premises or the Buildings, unless such loss, damage or injury
is the result of the negligence or willful misconduct of Landlord, its agents,
employees and contractors, and is not covered by the extended coverage fire and
casualty insurance required to be carried (or self-insured) by Tenant hereunder provided Landlord shall in no event be liable to Tenant under
this Section (or any other provision of this Lease) for claims of business
loss, business interruption or other consequential damages. If any public
utility or governmental body shall require Landlord or Tenant to restrict the
consumption of any utility or reduce any service to the Premises or the
Buildings, Landlord and Tenant shall comply with such requirements, without any
abatement or reduction of the Rent, additional rent or other sums payable by
Tenant hereunder except to the extent specifically provided for under Section
8.3(b), below.

               (b) Notwithstanding any provision of Section 8.3(a), above, to the
contrary, in the event of an “Abatement Event” as such term is hereafter
defined, Tenant shall be entitled to abate its Base Rent and Additional Rent
obligations hereunder as to the Premises or portion thereof which is not usable
substantially as intended (and is in fact not used substantially as intended)
by Tenant (subject to the limitation applicable to the Abatement Event
described in clause (iii), below), until

36

 

such time as the applicable Abatement Event ceases. The term “Abatement Event” shall mean and refer solely to any
one or more of the following:

	 	 	(i) if (A) an Essential Service to the Premises is interrupted as a
result of the negligence or willful misconduct of Landlord, or its
agents, employees or contractors (and not as a result of any cause beyond
Landlord’s reasonable control, such as a general electrical outage or
blackout, except such as are covered under the terms of Landlord’s rent
loss insurance), and (B) such interruption continues for a period
exceeding three (3) consecutive business days after Tenant first notifies
Landlord of the nature and scope of such interruption (and its effect on
Tenant’s business operations) in writing, and (C) as a result thereof
Tenant is unable to and does not in fact conduct business from the
Premises or any material portion thereof; or
	 
	 	 	(ii) if (A) Landlord fails to commence and diligently pursue the
performance of an obligation of Landlord under this Lease with regard to
the repair of a Building System necessary for the provision of Essential
Services within two (2) business days after the date Landlord is first
notified (or has actual knowledge of) the need for such performance, and
(B) as a result of the failure to commence or, thereafter, to diligently
perform such obligation, Tenant is deprived of the use of all or any
material portion of the Premises for a period in excess of three (3)
business days, and in fact ceases the use of such portion during the
continuation of such failure to commence and diligently pursue such
repair; or
	 
	 	 	(iii) if Landlord, in the exercise of a right of entry into the Premises
provided for in this Lease, shall through negligence or willful
misconduct (A) cause interference with Tenant’s use and enjoyment of all
or any material portion of the Premises for substantially the purpose
such material portion is intended to be used, and (B) such interruption
continues for a period exceeding three (3) consecutive business days
after such interference begins, and (C) as a result thereof, Tenant is
unable to and does not in fact conduct business from the Premises or such
material portion thereof during the continuation of such interference.
	 
	 	 	For purposes of clauses (i) - (iii), above, a “material” portion of the
Premises shall be deemed to mean any portion of the Premises constituting 35%
or more of a full floor of the Premises, or, in the case of spaces smaller than
35% or more of a full floor of the Premises whose use involves a specific
specialized function, such smaller space, but only where the particular
specialized function cannot reasonably be performed elsewhere in the Premises
because of the nature of the function and the interference therewith occasioned
by such Abatement Event (or due to an excessive cost to relocate such
function). In addition, for all purposes of this Section 8.3, Tenant shall be
deemed to have been deprived of the use of a portion of the Premises only if
Tenant is, in fact, substantially impaired in its ability to conduct the uses
and functions normally intended to be conducted within such portion of the
Premises as a result of the cause giving rise to the Abatement Event, and
restoration of the use of such portion of the Premises “substantially as
intended” shall be deemed to have occurred when Tenant ceases to be
substantially impaired in its ability to conduct the uses and functions
normally intended to be conducted within such portion of the Premises by the
cause giving rise to the Abatement Event.

37

 

               (c) In the case of clause (i), above, an Abatement Event shall be deemed
to commence when the referenced three (3) consecutive business day period
described above has expired, the applicable interruption of Essential
Service(s) is still continuing and Tenant is in fact unable to use (and is not
using) the affected portion of the Premises and such Abatement Event shall be
deemed to have ended when the applicable Essential Service(s) has (have) been
restored or Tenant’s use of the affected portion of the Premises shall have
recommenced, whichever first occurs. In the case of clause (ii), above, an
Abatement Event shall be deemed to commence three (3) business days after the
date Tenant first notified Landlord of the need to perform the obligation in
question and that such non-performance is affecting Tenant’s ability to use the
Premises (or any part thereof) if, but only if: (1) Landlord failed to use
diligent efforts to perform the applicable obligation after first receiving
Tenant’s written notice of the need for the repair, (2) the obligation was not
performed within three (3) business days, and (3) the applicable deprivation of
use was continuing with respect to the affected portion of the Premises during
the period that the Abatement Event is asserted to be continuing; and such
Abatement Event shall be deemed to have ended when the applicable performance
has been completed, or Tenant’s use of the affected portion of the Premises
substantially as intended shall have recommenced, whichever first occurs. In
the case of clause (iii), above, an Abatement Event shall be deemed to commence
three (3) business days after the later of (A) the date Landlord’s interference
with Tenant’s use and enjoyment during a Landlord entry into the Premises
commences or (B) the date Tenant notifies Landlord in writing that such entry
is depriving Tenant of the use of a material portion of the Premises, but only
if the applicable deprivation of use was continuing with respect to the
affected portion of the Premises during the period that the Abatement Event is
asserted to be continuing; and such Abatement Event shall be deemed to have
ended when the applicable interference has ceased, or Tenant’s use of the
affected portion of the Premises substantially as intended shall have
recommenced, whichever first occurs. Except as provided in the next sentence,
and in subsection 8.3(d), below, the foregoing shall constitute Tenant’s sole
and exclusive remedy in the event of an interruption of services to, or other
Abatement Event affecting, the Premises. In addition to the foregoing limited right of
abatement, if Landlord fails promptly to commence, and to use diligent efforts
thereafter, to cure (or to cause the applicable utility provider to cure) any
applicable interruption or failure of Essential Services or utilities (even if
not caused by Landlord’s negligence or misconduct), then Tenant shall have the
right to exercise its right of self-help as more fully set forth in Section
34.4, below (subject to any provisions therein requiring notice and the
opportunity to cure), and all reasonable expenses incurred by Tenant in the
exercise of such right shall be recoverable by Tenant from Landlord as and to
the extent provided for in Section 34.4.

               (d) Notwithstanding any provision of this Section 8.3 to the contrary, in
no event will Tenant be entitled to claim the existence of an Abatement Event
in relation to any circumstances where the interruption, disruption or
unusability of the Premises was caused in whole or in part by the negligence,
misconduct or other fault of Tenant or Tenant’s Agents; provided that if the
interruption, disruption or unusability of the Premises was caused partly by
the negligence, misconduct or other fault of Tenant or Tenant’s Agents, and
partly due to other causes, the rent abatement provided for herein will be
equitably adjusted. Any dispute regarding such equitable

38

 

adjustment, or regarding who is at fault for an Abatement Event, shall be subject to
arbitration under Section 49.

     8.4  Modifications to the Scope of Building Services.

               8.4.1  Landlord agrees, on an ongoing basis throughout the term of this
Lease, to consult with Tenant, and to afford Tenant the opportunity to provide
meaningful input, regarding the scope of services and amenities supplied to the
Building, Property and, to the extent possible, the Project, including
providing Tenant, as appropriate, with status reports regarding such services
and amenities, and considering in good faith, and accommodating where
reasonably possible, Tenant’s reasonable suggestions. Section 54 of this Lease
governs Tenant’s rights under this Lease with respect to the Declaration.

               8.4.2  Subject to the limitations set forth below, Tenant shall have the
right and option, exercisable upon not less than sixty (60) days’ advance
written notice to Landlord at any time during the Term in which Tenant is
leasing 100% of the Rentable Area of the Building, to temporarily or
permanently increase, reduce, curtail and/or eliminate the scope of the
janitorial services, security services, or other Building Services to be
provided and/or performed by Landlord for Tenant’s benefit pursuant to this
Lease, for such period as Tenant may desire, and with Tenant to pay the
additional cost, or receive any economic benefit, that results therefrom (in
the form of an increase or reduction in Operating Costs, as the case may be).
Any such service which Tenant may elect to reduce, curtail or eliminate during
the Term hereof is hereinafter referred to as a “Reduced Service”.
Notwithstanding the foregoing or anything to the contrary contained herein, (i)
Tenant shall not have the right to require Landlord to temporarily or
permanently reduce, curtail or eliminate any services deemed by Landlord in its
good faith judgment to be necessary for the proper maintenance and repair of
the Premises in a condition comparable to similar first class office properties
in the Applicable Submarket, and (ii) if Tenant’s implementation of a Reduced Service causes Landlord to incur a
penalty, termination fee or other “breakage” cost with the contracting vendor,
which cost has been communicated by Landlord to Tenant at the time of Tenant’s
request to implement a Reduced Service (and prior to the actual implementation
thereof), such cost will be included within the Operating Costs for the Lease
Year in which such costs are incurred.

               8.5  Termination of Service Contractors. Subject to the limitations set
forth below, provided Tenant is leasing 100% of the Rentable Area of the
Building, in the event Tenant determines that a Building Service is
unsatisfactory, Tenant shall have the right and option, exercisable upon not
less than forty-five (45) calendar days advance written notice to Landlord, to
cause Landlord to terminate the contract of, and replace, such provider of
Building Services (other than the property manager, which is governed by
Section 8.6 of this Lease); the foregoing notwithstanding, if a service
contract with an applicable provider of Building Services, which contract was
approved by Tenant, has a fixed term, Tenant must either (i) identify a basis
for terminating such service contract for “cause” as part of its notification
requesting such termination by Landlord, (ii) agree that such termination will
be put into effect as of the end of the fixed term of such service contract, or
(iii) pay all liquidated damages or breakage costs associated with

39

 

terminating such contract prior to the expiration of its fixed term if Tenant requires
Landlord to terminate same prior to the expiration of its fixed term without
cause. Before any such termination, Tenant shall submit to Landlord a list of
desired service providers and, provided such service providers meet the
Landlord’s reasonable requirements for quality and such service provider is
prepared to perform the services at a cost and within a scope of service
acceptable to Landlord in its reasonable discretion, Landlord shall retain one
of such service providers to provide the applicable Building Services.
Notwithstanding the foregoing, Tenant shall have the right to determine the
identity of and the scope of services of the janitorial and security service
provider for the Building in its sole discretion and to expand, curtail or
eliminate janitorial and security services in accordance with the provisions of
(and subject to the limitations set forth in) Section 8.4, above, as long as
janitorial services and security services continue to be provided in a manner
comparable to similar first-class office properties in the Applicable
Submarket.

     8.6  Property Management Company.

               (a) Landlord will, subject to Tenant’s approval, which shall not be
unreasonably withheld, conditioned or delayed, select an initial property
management firm for the Building (a “Manager”) which is a Qualified Manager (as
defined below), to be retained by Landlord for an initial term commencing on
the date of Substantial Completion and tender of possession of the first phase
of the Premises and ending one (1) year after the Rent Commencement Date for
the final phase of the Premises (the “PM Term”). The property management
agreement pursuant to which Manager is retained (the “Management Agreement”)
shall, at a minimum, incorporate the property management specifications
attached as (or, if Exhibit I is a form of property management agreement, the
property management specifications incorporated within the form agreement
attached as) Exhibit I to this Agreement (the “Property Management
Specifications”), and shall otherwise be subject to Tenant’s approval, which
shall not be unreasonably withheld, conditioned or delayed. Provided Tenant is
leasing 100% of the Rentable Area of the Building, in the event Tenant has
notified Landlord in writing, with reasonable specificity, during the PM Term,
of the failure of Manager (or any successor property management company) to
meet any material requirement set forth within the Management Agreement, which
failure has not been remedied by Manager (or such successor property management company) within the applicable cure period provided
for in the Management Agreement, Tenant shall have the right, upon not less
than thirty (30) day’s prior written notice, to require the Landlord to
terminate the Management Agreement for cause and replace Manager (or such
successor property management company) with another third party management
company mutually and reasonably acceptable to both Landlord and Tenant and
which is a Qualified Manager. Landlord shall have the right from time to time,
upon thirty (30) days prior notice to Tenant, to change the identity of the
property management company for the Project to any property management company
which is a Qualified Manager, provided that if Tenant is leasing one hundred
percent (100%) of the Building, such replacement shall be permitted solely for
cause, and the replacement property manager shall be subject to Tenant’s
reasonable consent, but must be a Qualified Manager. The term “Qualified
Manager” shall mean any reputable property management firm which is mutually
approved by Landlord and Tenant in the exercise of their reasonable discretion
(provided that if Landlord and Tenant cannot reach agreement on the identity of
any Qualified Manager,

40

 

Landlord’s good faith determination shall be determinative.

                      (b)     In the event either party exercises its right to cause a termination
of the property management firm which has been retained to provide property
management services for the Project (be it Manager or a successor property
management firm) and to replace such firm with a Qualified Manager, such
Qualified Manager shall be required to perform all property management
functions affecting the Property substantially in accordance with the Property
Management Specifications (or form agreement) attached as Exhibit I to this
Lease, using a property management agreement consistent with the form of
agreement attached to (or forming a part of) such Property Management
Specifications and which agreement Landlord shall negotiate in good faith with
such Qualified Manager.

                      (c)     If Landlord and Tenant are unable to resolve any dispute regarding the
interpretation and application of this Section 8.6 within thirty (30) days
after the date either party notifies the other of the existence of the matter
in dispute, the parties agree to submit the matter in dispute to arbitration in
accordance with Section 49 of this Lease.

	9.	 	OPERATING COSTS.

            9.1 Defined. During each Calendar Year or portion thereof during the
Term, Tenant shall pay as Additional Rent to Landlord, without diminution,
set-off or deduction, except as and solely to the extent provided for herein,
Tenant’s Share of “Operating Costs” (as defined in Section 9.5, below) for such
Calendar Year.

            9.2 Estimated Payments. Tenant shall make monthly installment payments
toward Tenant’s Share of Operating Costs on an estimated basis, based on the
estimated budget arrived at pursuant to the provisions of Section 9.4, below.
Tenant shall pay Landlord, as Additional Rent, commencing on the first day of
the month immediately following the Rent Commencement Date for each phase of
the Premises, and on the first day of each month thereafter during the Term,
one-twelfth (1/12th) of Landlord’s estimate of Tenant’s Share of Operating
Costs for the then-current Calendar Year, as determined pursuant to the
budgeting process described in Section 9.4, below. If at any time or times
during such Calendar Year, either Landlord or Tenant reasonably demonstrates to
the other that Tenant’s Share of Operating Costs for such Calendar Year will
vary from (either greater than or less than) the estimate upon which Tenant’s
estimated payments for such year were being made by more than five percent (5%)
on an annualized basis, either party shall have the right to cause the estimate
for such Calendar Year to be revised, subject to the other party’s reasonable
consent, and Tenant’s estimated payments hereunder for such Calendar Year shall
thereupon be based on such revised estimate. The intent of this provision is
to ensure that Tenant’s estimated monthly payments closely approximate the
actual Operating Costs for which Tenant is responsible for such year under this
Article 9.

            9.3 Annual Reconciliation. Approximately one hundred twenty (120) days
after the end of each Calendar Year (including the first Calendar Year or
partial Calendar Year), Landlord shall provide to Tenant a detailed, itemized
statement (the “Expense Statement”), calculated in accordance

41

 

with this Article 9, setting forth the total Operating Costs for such
Calendar Year and Tenant’s Share thereof, and shall accompany such statement
with copies of reasonable back-up information to verify the costs reflected
thereupon and with a brief explanation of any variances from the Annual Budget
covering such period. Within thirty (30) days after the delivery of such
Expense Statement, (i) if the Expense Statement reflects that Tenant’s Share of
Operating Costs for such Calendar Year exceeded the amount of estimated
payments theretofore paid by Tenant for such Calendar Year in accordance with
Section 9.2, above, Tenant shall pay the difference to Landlord (but such
payment shall not prejudice Tenant’s right of review pursuant to the provisions
of Section 9.7, below), and (ii) if the Expense Statement reflects that the
amount of estimated payments theretofore paid by Tenant for such Calendar Year
in accordance with Section 9.2, above exceeded Tenant’s Share of Operating
Costs for such Calendar Year, Landlord shall pay the difference to Tenant. In
addition to the aforesaid annual Expense Statement, and in order to assist
Tenant in making accurate forecasts of amounts that are likely to be due in any
year-end Operating Expense reconciliation, Landlord agrees to provide Tenant
with an unaudited, preliminary calculation of actual Operating Expenses (and
Tenant’s Share thereof) for each calendar quarter, within thirty (30) days
after the end of each such quarterly period, which quarterly statement will
reflect Landlord’s good faith calculation of the actual Operating Expenses for
such quarterly period, but which shall not be binding on the parties.

          9.4 Annual Budget. Not less than sixty (60) days prior to each full
Calendar Year during the Term (excluding, however, the partial year in which
the delivery of possession of the Premises occurs), Landlord, Tenant and the
Building’s property manager shall in good faith agree upon a pro-forma budget
setting forth any anticipated repair or maintenance requirements, the cost and
scope of services, and other Operating Costs, anticipated to be incurred during
the coming Calendar Year. Upon approval of the same by Landlord and Tenant,
such budget shall constitute the “Approved Budget” for the following Calendar
Year for all purposes hereof. Until an Approved Budget for such Calendar Year
has been agreed upon (a) the actual Operating Costs incurred by Landlord for
the previous Calendar Year shall be used as the basis for calculating the
amount of Tenant’s estimated payments of Tenant’s Share of Operating Costs for
the then current Calendar Year pursuant to Section 9.2, above, and (b) Landlord
shall continue to provide services and other items within the definition of
Operating Costs utilizing the same scope of services as was utilized in the
previous Calendar Year, subject (i) to variations in the frequency with which
services to be provided are in fact provided, for example (and not by way of
limitation) additional services or costs which may result from adverse weather
conditions (e.g., increased snow removal) or increased repair needs due to
aging equipment, wear and tear, uninsured damage, equipment malfunction or
failure, and the like, (ii) to increases or decreases in market rate unit
prices applicable to the services or items required to be provided by Landlord
under this Lease, despite Landlord’s commercially reasonable efforts to
negotiate favorable unit pricing for such services or items; and nothing in
this Section 9.4 shall be construed to require Landlord, pending the agreement
of the parties on an Approved Budget in any Calendar Year, to reduce, curtail
or eliminate any services deemed by Landlord in its good faith judgment to be
necessary for the proper maintenance and repair of the Premises in a condition
comparable to similar first class office properties in the Applicable
Submarket, or to constitute a waiver of or bar to Landlord’s right to recover
Tenant’s Share of Operating Costs with respect thereto. However, pending
agreement on the Approved Budget for any Calendar Year, Landlord will

42

 

not expand the general scope of services provided pursuant to this Lease
as reflected in such budget unless requested by Tenant or as necessary to
address an Emergency. Landlord and Tenant acknowledge that the purpose of the
Approved Budget is to establish the basis for Tenant’s estimated monthly
payments of Operating Costs, and to provide a mechanism for jointly reviewing
Operating Costs on an annual basis (and on an interim basis, as provided in the
last sentence of this Section) and making adjustments to the scope of services
provided with respect to the management and operation of the Building in order
to minimize Operating Costs consistent with the operation of similar first
class office properties in the Applicable Submarket area or to enhance the
services required by Tenant. Accordingly, although Landlord will endeavor to
keep Operating Costs within the scope of the Approved Budget (subject in all
instances to costs which are not controllable by Landlord), in the absence of
deliberate and willful misconduct, Landlord shall not be responsible for
incurring Operating Costs in any year which are in excess of those set forth in
the Approved Budget.

            
9.5 Operating Costs. The term “Operating Costs” shall mean all actual and
reasonable, arms-length or arms-length equivalent third-party expenses incurred
by Landlord in connection with the operation, management, maintenance and
repair of the Building, Common Areas and the Land in accordance with the
standards applicable to this Lease, and to comparable first-class office
properties in the Applicable Submarket, subject to the qualifications and
limitations set forth below. In determining whether an “Operating Cost” is
“reasonable”, Landlord and Tenant agree that, although cost is a factor, cost
alone shall not be the sole determinative factor, and such factors as the
quality of service provided, the level of service required to be provided
pursuant to the provisions of this Lease, the availability of such services on
a competitive basis in the marketplace, and all other factors which bear upon
the reasonableness of costs under the specific circumstances presented, shall
be considered. In addition, in no event may Tenant assert that the fees
charged for services by any service provider Tenant has required or requested
Landlord to retain pursuant to Article 8 are unreasonable. All Operating Costs
shall, to the extent applicable, be determined according to reasonable
standards applicable to first-class commercial office properties in the
Applicable Submarket (“Local Standards”). Operating Costs include, but are not
limited to, the following items:

	 	(a)	 	the cost of the building supplies and materials used in
conjunction with the operation of the Building, including janitorial
supplies, light bulbs, non-capital items used in providing services,
etc.;
	 
	 	(b)	 	costs to repair and maintain the Building and the Common
Areas, but excluding (i) capital repairs and replacements, except to
the extent included under Section 9.5(l), below, and (ii) any
repairs or replacements which are within the scope of any
construction or equipment warranty provided for under the provisions
of Exhibit C of this Lease;
	 
	 	(c)	 	all expenses paid or incurred by Landlord for electricity,
water, gas, sewer, oil and other utility services for the Building
and exterior Common Areas, whether from public or private utility
providers, but specifically excluding any such utilities which are
separately metered and paid for directly by Tenant;

43

 

	 	(d)	 	the costs and expenses incurred in connection with the
provision of the services set forth in Section 8, above;
	 
	 	(e)	 	building supplies and materials used in connection with
repairs to, and maintenance of the Project;
	 
	 	(f)	 	cleaning and janitorial services in or about the Premises,
the Buildings (including without limitation Common Areas) and the
Land, as set forth in Article 8, provided that interior janitorial
service will be excluded from Operating Costs to the extent provided
directly by Tenant (at Tenant’s direct expense) under Article 8 of
this Lease;
	 
	 	(g)	 	window glass replacement, repair and cleaning (except that
window replacement for substantially the entire Building shall be
governed by Section 9.5(l), below, to the extent the same
constitutes a capital replacement under Local Standards);
	 
	 	(h)	 	repair and maintenance of the grounds, including costs of
landscaping, gardening and planting, and exterior security services;
	 
	 	(i)	 	operational costs to achieve compliance with any Legal
Requirements, excluding (i) capital expenses associated therewith
except to the extent permitted to be recovered under Section 9.5(l),
below, (ii) expenses of compliance with violation notices issued due
to any violation of any such legal requirements by Landlord, its
agents, employees and contractors, except to the extent Landlord
demonstrates that such expenses of compliance would nevertheless
have been incurred by Landlord in order to meet its general legal
compliance obligation even in the absence of such violation, and do
not exceed the amount which otherwise would have been incurred to
meet such general compliance obligation, and (iii) the cost of
bringing the Project into initial compliance with Legal Requirements
as of the Commencement Date of this Lease;
	 
	 	(j)	 	utility taxes, other than those attributable to services and
utilities which are billed directly to, and paid for directly by,
Tenant;
	 
	 	(k)	 	compensation (including employment taxes, fringe benefits,
salaries, wages, medical, dental, and general welfare benefits
(including health, accident and group life insurance), pension
payments, payroll taxes for all personnel who perform duties in
connection with the operation, management, maintenance and repair of
the Building (allocated among all properties served by such
employees on a reasonable basis, if such employees are utilized by
more than one property) including, if charged under the property
management agreement for the Property and subject to any
modification in the scope of service pursuant to Section 8.6, the
compensation of the property manager assigned to the Property, and
irrespective of whether such employees are employed by Landlord or
by the management company performing property

44

 

	 	 	 	management services for the Project as long as such compensation is
accounted for only once in calculating Operating Costs;
	 
	 	(l)	 	any (i) capital expenditures which are intended in good faith
to reduce Operating Costs, (ii) expenditures for capital
replacements made in lieu of needed repairs, and (iii) capital
expenditures incurred to comply with Legal Requirements enacted
after the Commencement Date, but excluding such expenses to the
extent compliance is necessary as a result of the fault of Landlord
or Landlord’s Agents, provided that in each of the foregoing
instances, such expenditure shall be recoverable over the useful
life of the item in question by amortizing such expenditure over
such useful life at an annual interest rate equal to the Prime Rate
at the time of such expenditure, in which case the sum of all
principal and interest payments payable during the year in question
under such amortization shall be includable in Operating Costs in
each year during such recovery period (with no recovery permitted
with respect to any period falling outside of the initial Term or,
if applicable, any renewal Term of this Lease, and with any amount
remaining unrecovered by virtue of limiting the recovery of such
capital expenditure as aforesaid to carry forward to subsequent
Lease Years, subject to such limitation on recovery in each such
subsequent Lease Year);
	 
	 	(m)	 	cost of premiums for casualty and liability insurance
policies maintained by Landlord under the provisions set forth in
Section 13.1, hereof;
	 
	 	(n)	 	license, permit and inspection fees, except to the extent
such inspections or permits are necessary due solely to the
negligence or willful misconduct of Landlord or Landlord’s Agents;
	 
	 	(o)	 	market-rate management fees, based on a market rate
percentage of the sum of gross rental receipts (i.e., Base Rent and
Additional Rent), which shall be the same management fee to be paid
to Manager or a successor Qualified Manager pursuant to Section 8.6,
above;
	 
	 	(p)	 	third party consulting fees incurred at arm’s length in
connection with the provision of common area maintenance services;
	 
	 	(q)	 	personal property taxes;
	 
	 	(r)	 	trash removal, including all costs incurred in connection
with waste product recycling pursuant to Section 5.5 (except to the
extent any such costs are charged directly to and paid directly by
Tenant);
	 
	 	(s)	 	snow removal, ice removal and ice prevention;
	 
	 	(t)	 	maintenance, repair and periodic resealing and restriping of
all exterior parking areas serving the Property, and any other cost
or assessment payable in connection with the maintaining of such
exterior parking areas;

45

 

	 	(u)	 	uniforms and laundry charges related thereto;
	 
	 	(v)	 	telephone, telegraph, postage, stationery, supplies and other
materials and expenses required for the routine operation of the
Building;
	 
	 	(w)	 	association assessments for maintaining, repairing, insuring,
and paying taxes with respect to, any stormwater management systems,
private roads and easements, and other offsite improvements serving
or benefitting the Building, but excluding the initial costs of
developing such systems, roads and improvements;
	 
	 	(x)	 	other association assessments for common area services
provided to owners of properties within the Project, to the extent
either provided at market rates in direct substitution for services
otherwise included within Operating Costs herein, or otherwise
approved by Tenant;
	 
	 	(y)	 	to the extent Tenant exercises its self-help rights pursuant
to any section of this Lease, including Sections 13.3 or 34.4, any
amount reimbursed by Landlord to Tenant, or offset by Tenant,
pursuant to this Lease in respect thereof shall be included in
Operating Costs for the year in which such item was performed by
Tenant, but solely to the extent the item for which Tenant is
seeking reimbursement from Landlord (or as to which Tenant has
exercised such right of offset) would otherwise have been included
in Operating Costs had such item been performed by Landlord and paid
for by Landlord.

            9.6 Exclusions. Notwithstanding the foregoing, Operating Costs shall not
include any of the following: (1) capital expenditures, except those
specifically set forth in Section 9.5(l), above, if any; (2) costs of any
special cleaning or other services not offered to all tenants of the Building;
(3) painting, redecorating or other work which Landlord performs for specific
tenants, the expenses of which are paid by such tenants; (4) Real Estate Taxes
(as defined in Section 10); (5) depreciation or amortization of costs required
to be capitalized in accordance with generally accepted accounting practices,
except those specifically set forth in Section 9.5(l), above, if any; (6)
interest and amortization of funds borrowed by Landlord; (7) leasing
commissions, and advertising, legal, space planning and construction expenses
incurred in procuring tenants for the Building; (8) salaries, wages, or other
compensation paid to officers or executives of Landlord or its property
management company (i.e., employees of Landlord or its property management
firm’s executives above the level of property manager); (9) 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 Operating Costs pursuant to this Section 9 by
Tenant and other tenants of the Building; (10) rents under ground leases; (11)
all costs incurred in the initial construction of the Project; (12) costs
directly resulting from the negligence or willful misconduct of Landlord or
Landlord’s Agents; (13) legal fees and other expenses incurred by Landlord
(except that, if legal fees and expenses are incurred by Landlord in
administering and disputing Operating Costs,

46

 

 any amount recovered from a service provider shall be credited against
Operating Costs solely to the extent such recovery is net of the total legal
expense associated with such recovery); (14) costs or fees relating to the
defense of Landlord’s title or interest in the Land; (15) costs incurred due to
any violation by Landlord of the terms and conditions of this (or any other)
Lease or other agreement to which Landlord is a party; (16) renovation of the
Project or repairs or other work needed because of fire, windstorm or other
casualty or the exercise of eminent domain; (17) costs arising from the
remediation of Hazardous Materials in, about or below the Project; (18) costs
incurred for any items to the extent of Landlord’s net recovery for such items
under a manufacturer’s, materialmen’s, vendor’s or contractor’s warranty; (19)
income, profits, franchise, inheritance, estate, revenue or other such taxes
imposed with respect to the income of Landlord from the operation of the
Building; (20) reserves for repairs, maintenance and replacements; (21)
Landlord’s general overhead expenses; (22) costs incurred to achieve compliance
with any Legal Requirements except to the extent recoverable under Section
9.5(i) and 9.5(l), above; (23) any penalties or interest expenses incurred
because of Landlord’s failure timely to pay any Operating Costs or Real Estate
Taxes, or amounts due under the Declaration and/or Reciprocal Easement
Agreement, except to the extent due to Tenant’s failure to pay amounts due
under this Lease in respect of such items on a timely basis; (24) accounting
fees other than those attributable to reviewing and preparing operating
statements for the Building; (25) rental or similar payments made in connection
with the leasing of any equipment deemed to be capital in nature except to the
extent the acquisition of such item would have been recoverable under Section
9.5(l), above; (26) costs incurred to the extent due to violations by Landlord;
(27) items and services for which Tenant (or others) reimburse Landlord
(whether or not Landlord actually receives such reimbursement) or pay third
parties directly or that Landlord provides selectively to one or more tenants
in the Building other than Tenant without reimbursement therefor (but excluding
“reimbursement” provided for under leases with such other tenants under
pass-through provisions substantially comparable to this Article 9); (28)
advertising and promotional expenditures; (29) any fines or penalties incurred
by Landlord other than as a result of the negligence or willful misconduct of
Tenant or Tenant’s Agents; (30) other expenses which under generally accepted
accounting principles, applied, would not be considered normal maintenance,
repair, management or operating expenses (except as otherwise specifically
permitted by Section 9.5, above); (31) costs of electrical energy or other
utilities furnished and metered directly to (and paid for directly by) tenants
of the Building; (32) cost of tenant installations and decorating expenses
incurred in connection with preparing space for a tenant; (33) costs incurred
by the Landlord, including legal and other professional fees, as a result of a
breach by any tenant or the Landlord of its lease obligations; (34) increased
insurance premiums caused by acts of other tenants, if any; (35) costs and
expenses attributable to initial construction (including correcting initial
construction defects), development, or leasing expenses; (36) financing and
debt service fees; (37) any item of cost which Tenant is required to pay
separately pursuant to any other provision of the Lease; (38) costs of
purchasing or leasing sculpture, paintings or other art objects, except as
specifically approved by Tenant; (39) collection costs and bad debt losses or
reserves; (40) costs of defending any lawsuits with any Mortgagees or Ground
Lessors; (41) costs related to administering the organizational affairs of
Landlord including costs of maintaining Landlord’s existence as a limited
liability company or other entity) and general entity administrative expenses
(including accounting and legal matters, but excluding expenses directly
associated with the management and operation of the Property, which shall
constitute Operating Costs); (42) any amounts payable by Landlord to another
Tenant or Landlord’s lender by

47

 

 way of indemnity or damages (except direct reimbursement of amounts
incurred for costs which would be includable in Operating Costs); and (43) any
otherwise permissible fees or costs paid to Landlord or Landlord’s affiliates
to the extent materially in excess of the arms-length, third party, competitive
market rates for similar Class buildings similar to the Building in the
Applicable Submarket. Operating Costs shall be reduced by reimbursements,
credits, discounts, reductions or other allowances received from other tenants
by Landlord for items of cost included in Operating Costs (but contributions
made by other tenants of the Building under corresponding provisions of such
other tenants’ leases which provide for the reimbursement of such tenants’
proportionate share of Operating Costs or increases therein shall be deemed not
to be “reimbursements” within the meaning of this sentence). Operating Costs
shall be also reduced by the amount of any discounts or rebates received by
Landlord in respect of any constituent components thereof. In no event may
Landlord receive payment more than once for a single item included within
Operating Costs, nor may Landlord receive reimbursement of an amount in excess
of 100% of the Operating Costs for any applicable period (accounting
appropriately, however, for any carryover of prior years’ amortization of
capital expenses pursuant to the provisions of Section 9.5(l), above).

            9.7 Tenant’s Right of Review of Operating Costs.

                      9.7.1 Landlord’s books and records with respect to Operating Costs and
Real Estate Taxes shall be kept on a cash basis and in accordance with Local
Standards (subject to the proration provisions set forth in Section 11.1,
below). Tenant shall have the right, during business hours and upon reasonable
prior notice, to inspect Landlord’s books and records relating to the Operating
Costs and Real Estate Taxes, and/or to have such books and records audited at
Tenant’s expense, at a location determined by Landlord within the Washington,
D.C./Baltimore/Annapolis metropolitan area (it being acknowledged that Manager
may maintain such records, in the ordinary course, at Manager’s accounting
department pending any such review or audit, and that Landlord will make such
records available to Tenant within the Washington, D.C./Baltimore/Annapolis
metropolitan area at the time of any inspection of such records by Tenant
pursuant to this Section 9.7). Each Expense Statement and Tax Statement which
Landlord provides to Tenant pursuant to this Lease shall be conclusive and
binding upon Tenant unless, within one hundred eighty (180) days after Tenant’s
receipt thereof (time being of the essence), Tenant provides Landlord with
written notice (the “Audit Notice”) stating that Tenant elects to audit same.
If Tenant fails to provide the Audit Notice as required, or fails to promptly
commence such audit within ninety (90) days after Landlord receives the Audit
Notice, then unless Landlord agrees otherwise in writing, Tenant shall be
deemed to have waived its audit right for such calendar year.

                      9.7.2 Tenant shall notify Landlord of the results of Tenant’s audit within
thirty (30) days after completion thereof.

                      9.7.3 If the aggregate (i.e. total) amount of Tenant’s Share of Operating
Costs and Real Estate Taxes reflected in the Expense Statement and Tax
Statement exceeds the aggregate amount of Tenant’s Share of Operating Costs and
Real Estate Taxes for any Calendar Year as determined by Tenant’s audit
(subject to Section 9.7.6 below) by less than two percent (2%), then Landlord
shall credit such amount, together with interest thereon at the Prime Rate from
the time of

48

 

the annual reconciliation until the date repaid, against Tenant’s next due
payment of Base Rent and Additional Rent, and Tenant shall bear the full cost
of Tenant’s audit.

                      9.7.4 If the aggregate amount of Tenant’s Share of Operating Costs and
Real Estate Taxes reflected in the Expense Statement and Tax Statement exceeds
the aggregate amount of Tenant’s Share of Operating Costs and Real Estate Taxes
for any Calendar Year as determined by Tenant’s audit (subject to Section 9.7.6
below) by two percent (2%) or more, then Landlord shall credit such amount,
together with interest thereon at the Prime Rate from the time of the annual
reconciliation until the date repaid, against Tenant’s next due payment of Base
Rent and Additional Rent, and Landlord shall reimburse Tenant the reasonable
and actual out-of-pocket costs of Tenant’s audit. The foregoing
notwithstanding, if the amount to be credited exceeds one (1) months Rent, or
if such adjustment occurs after the last Lease Year, in lieu of such credit
Landlord shall refund such difference to Tenant within thirty (30) days after
such determination is made.

                      9.7.5 If the aggregate amount of Tenant’s Share of Operating Costs and
Real Estate Taxes reflected in the Expense Statement and Tax Statement is less
than or equal to the aggregate amount of Tenant’s Share of Operating Costs and
Real Estate Taxes as determined by Tenant’s audit (subject to Section 9.7.6
below), then (i) Tenant shall bear the full cost of Tenant’s audit, (ii) Tenant
shall promptly reimburse Landlord for the deficiency as so determined, and
(iii) Tenant shall promptly reimburse Landlord for the reasonable and actual
out-of-pocket costs which Landlord incurred in connection with such audit.

                      9.7.6 If, following receipt of a copy of Tenant’s audit, Landlord, in good
faith, believes Tenant’s audit to be in error, Landlord shall so notify Tenant
within thirty (30) days after receipt thereof, upon which Landlord and Tenant
shall attempt to agree upon the correct amount of Tenant’s Share of Operating
Costs and Real Estate Taxes considering both the Expense Statement, Tax
Statement and Tenant’s audit. In the event Landlord and Tenant are unable to
agree within thirty (30) days after Landlord’s notice disputing the findings of
Tenant’s audit on the correct amount of Tenant’s Share of Operating Costs and
Real Estate Taxes, the matter shall be submitted to arbitration in accordance
to the terms of Section 49 hereof, and no interest shall accrue during the
duration of such arbitration. In the absence of manifest error, the numerical
computations reflected within any audit conducted by Tenant shall be
determinative, but Landlord shall not be restricted from disputing any
non-numerical conclusions made by Tenant’s auditor (such as, but not limited
to, with respect to the classification of an item as being included or excluded
from Operating Costs and Real Estate Taxes, or the actual useful life utilized
to amortize an otherwise recoverable capital expense).

                      9.7.7 In no event will any audit to be conducted by Tenant under this
Section 9.7 be performed by a person, firm or other entity which is compensated
on a contingency fee basis (that is, on the basis of a percentage of amounts
recovered pursuant to such audit).

            9.8     Further Adjustments; Multi-Building Project.

                      9.8.1 If in any Calendar Year the Building is multi-tenanted, and Landlord
shall

49

 

furnish, in such Calendar Year, any utilities or services which are
included in the definition of Operating Costs and provided by Landlord under
this Lease and the cost of which varies based upon the level of occupancy of
the Building or participation by tenants and occupants in the utility or
service in question (collectively “Occupancy Sensitive Services”), to less than
one hundred percent (100%) of the Rentable Area of the Building because (i) the
average occupancy level of the Building for such Calendar Year was not one
hundred percent (100%) of full occupancy, or (ii) any such utility or service
is not provided to one or more of the tenants or occupants of the Building, for
example, because such tenant or occupant is itself obtaining or providing any
such utility or services directly, then the Operating Costs for such Calendar
Year shall be adjusted to include all additional costs, expenses and
disbursements that Landlord reasonably determines would have been incurred had
the Building been one hundred percent (100%) occupied during the year in
question and Occupancy Sensitive Services had been provided to all tenants.
The intent of this Section 9.8 is to ensure that the reimbursement of all
Operating Costs associated with Occupancy Sensitive Services is fairly and
equitably allocated among the tenants receiving such Occupancy Sensitive
Services. For illustrative purposes only, and without limitation, Landlord
and Tenant agree that interior janitorial service is an Occupancy Sensitive
Service, and the snow removal is not an Occupancy Sensitive Service.

                       9.8.2 The parties acknowledge that the Building constitutes a portion of
the Project, which consists (or will, upon completion of its redevelopment,
consist) of multiple buildings, and that certain services and other items
within the scope of Operating Expenses (such as snow removal, common area
liability insurance, etc.) are likely to be provided under a single contract
for the benefit of multiple buildings in the Project. To the extent any
services or other expense items which are included within the definition of
Operating Expenses are in fact provided for the benefit of multiple buildings
in the Project in such a manner (i.e., pursuant to a single contract under
which services or cost items are provided in a consolidated fashion to multiple
buildings), Landlord shall allocate to the Building for each calendar year or
portion thereof during the Term only the Building’s equitable portion of such
Operating Expenses. In addition, to the extent Real Estate Taxes are not
separately assessed by the taxing authority against the Building and Land, but
rather are assessed against the entirety of the Project (or portions of the
Project that involve more than the Building and Land alone), Landlord shall
allocate to the Building for each calendar year or portion thereof during the
Term only the Building’s equitable portion of such Real Estate Taxes.

	10.	 	REAL ESTATE TAXES

            10.1 Defined. During each Calendar Year or portion thereof during the
Term, Tenant shall pay as Additional Rent to Landlord, without diminution,
set-off or deduction, except as and solely to the extent provided for herein,
Tenant’s share of “Real Estate Taxes” (as defined in Section 10.4, below) paid
in such Calendar Year.

            10.2 Estimated Payments. Tenant shall make monthly installment payments
toward Tenant’s Share of Real Estate Taxes on an estimated basis, based on a
reasonable estimate of Real Estate Taxes for such Calendar Year (which shall be
based on the prior year’s tax bill, any phase-in

50

 

information, and any subsequent re-assessment information). Tenant shall
pay Landlord, as Additional Rent, commencing on the first day of the month
immediately following the Commencement Date, and on the first day of each month
thereafter during the Term, one-twelfth (1/12th) of the aforesaid estimate of
Tenant’s Share of Real Estate Taxes for the then-current Calendar Year. If at
any time or times during such Calendar Year, either Landlord or Tenant
reasonably demonstrates to the other that Tenant’s Share of Real Estate Taxes
for such Calendar Year will vary from (either greater than or less than) the
estimate upon which Tenant’s estimated payments for such year were being made
by more than five percent (5%) on an annualized basis, either party may, by
written notice to the other party, cause the estimate for such Calendar Year to
be revised and Tenant’s estimated payments hereunder for such Calendar Year
shall thereupon be based on such revised estimate.

            10.3 Annual Reconciliation. Approximately one hundred twenty (120) days
after the end of each Calendar Year (including the first Calendar Year or
partial Calendar Year), Landlord shall provide to Tenant a detailed, itemized
statement (the “Tax Statement”), calculated in accordance with this Article 9,
setting forth the total Real Estate Taxes for such Calendar Year and Tenant’s
Share thereof, and shall accompany such statement with copies of reasonable
back-up information to verify the costs reflected thereupon (including tax
bills and supplemental information). The Tax Statement shall be certified by
Landlord as being true and correct in all material respects. Within thirty
(30) days after the delivery of such Tax Statement, (i) if the Tax Statement
reflects that Tenant’s Share of Real Estate Taxes for such Calendar Year
exceeded the amount of estimated payments theretofore paid by Tenant for such
Calendar Year in accordance with Section 10.2, above, Tenant shall pay the
difference to Landlord (but such payment shall not prejudice Tenant’s right of
review pursuant to the provisions of Section 9.7, above), and (ii) if the Tax
Statement reflects that the amount of estimated payments theretofore paid by
Tenant for such Calendar Year in accordance with Section 10.2, above exceeded
Tenant’s Share of Operating Costs for such Calendar Year, Landlord shall pay
the difference to Tenant.

            10.4 Real Estate Taxes. For purposes of this Lease, “Real Estate Taxes”
shall mean (i) all taxes and assessments, general or special, ordinary or
extraordinary, foreseen or unforeseen, assessed, levied or imposed upon the
Building or the Land, or assessed, levied or imposed upon the fixtures,
machinery, equipment or systems in, upon or used in connection with the
operation of the Building or the Land under the current or any future taxation
or assessment system or modification of, supplement to, or substitute for such
system, including special district taxes such as transportation district taxes
and similar special district taxes which may now or hereafter be imposed upon
the Property, and (ii) all so-called business fees and taxes, gross receipts
taxes, sales taxes on rent, or similar taxes levied or imposed by any federal,
state or local government in connection with the operation of a commercial real
estate project, except to the extent the statutory provisions enacting such
levies and/or taxes expressly prohibit passing through the cost thereof to
tenants under leases with respect to which such taxes are imposed. Real Estate
Taxes shall include all reasonable expenses (including, but not limited to,
reasonable attorneys’ fees, disbursements and actual costs) paid by Landlord in
good faith pursuant to the provisions of Section 11.4 of this Lease in
obtaining or attempting to obtain a reduction of such taxes, rates or
assessments, including any legal fees and costs incurred in connection with
contesting or appealing the amounts or the imposition of any
Real

51

 

Estate Taxes (except to the extent previously reimbursed under Section
11.4 out of any tax refund received by Landlord). In the event Real Estate
Taxes (including special assessments) may be paid in installments, they shall
be paid in such manner (and in such event Real Estate Taxes shall include such
installments and interest paid on the unpaid balance of the assessment). The
foregoing notwithstanding, Real Estate Taxes shall not include: (i) any
franchise, corporation, income, receipts, inheritance, estate, revenue or net
profits tax which may be assessed against Landlord or the Project or both, (ii)
transfer taxes assessed against Landlord or the Project or both, (iii)
penalties or interest on any late payments of Landlord except to the extent
caused by Tenant’s non-payment, or (iv) personal property taxes of Tenant.

	11.	 	ADDITIONAL PROVISIONS;
OPERATING COSTS AND REAL ESTATE TAXES.

            11.1 Partial Year; End of Term. To the extent that a more accurate method
of allocating same cannot be implemented, Tenant’s Share of Operating Costs and
Real Estate Taxes for any partial Calendar Year shall be determined by
multiplying the amount of Tenant’s Share thereof for the full Calendar Year by
a fraction, the numerator of which is the number of days during such partial
Calendar Year falling within the Term and the denominator of which is 365. If
a more equitable method of allocation is available, such method of allocation
shall be utilized to appropriately allocate Tenant’s Share of Operating Costs
and Real Estate Taxes for any partial Calendar Year (and in connection
therewith, Landlord agrees that the application of accrual principles may, in
certain circumstances, constitute the most equitable method of allocation).
Any amount payable by Landlord to Tenant or by Tenant to Landlord with respect
to the adjustments provided for in this subsection shall be payable within
thirty (30) days after delivery by Landlord to Tenant of the applicable Expense
Statement or Tax Statement with respect to such Calendar Year.

            11.2 Other Taxes. In addition to Tenant’s Share of both Operating Costs
and Real Estate Taxes, Tenant shall pay, prior to delinquency, all personal
property taxes payable with respect to all property of Tenant located in the
Premises or the Buildings and shall provide promptly, upon request of Landlord,
written proof of such payment.

            11.3 Covenant Regarding Timely Payment of Operating Costs and Real Estate
Taxes. Landlord covenants to pay all Operating Costs and Real Estate Taxes
before the same become delinquent, but Landlord shall not be in default of the
obligation to pay Real Estate Taxes to the extent such payment is not made due
to Tenant’s failure to comply with its obligation to make the payments
contemplated by Article 10, above, in a timely fashion.

            11.4 Contesting Real Estate Taxes.

                      11.4.1 Except as hereafter provided, and unless Landlord has previously
initiated such a contest pursuant to Section 11.4.2, below, if in any year in
which Tenant is either the sole tenant of the Building, or is leasing more than
fifty percent (50%) of the Rentable Area thereof, Tenant wishes to contest any
tax assessment, valuation or levy against the Project, Tenant will have, at its
expense (including any reasonable out-of-pocket third party costs incurred by
Landlord in connection with such action), the right by written notice
to
Landlord to cause Landlord to commence

52

 

and diligently and vigorously pursue such contest, and to retain legal
counsel and expert witnesses to assist therein. In the event such contest
results in a refund of Real Estate Taxes in any year, Tenant shall be entitled
to receive Tenant’s Share of such refund, pro-rated for the period with respect
to which Tenant paid its share of Real Estate Taxes for such year, after
deducting from the refund all reasonable fees, expenses and costs incurred by
Landlord and/or Tenant in such contest (which shall be paid to Landlord or
Tenant, as the case may be, in order to reimburse the applicable party for the
cost incurred by such party in such contest); and in the event such contest
results in an increase or surcharge in Real Estate Taxes in any year, Tenant
shall be responsible therefor. The foregoing notwithstanding, Tenant shall not
be permitted to require Landlord to contest such Real Estate Taxes if such
contest will result in any civil or criminal fines, penalties or liability
against Landlord.

                      11.4.2 During the Term, Landlord will have the right to employ a tax
consulting firm to attempt to assure a fair tax burden on the Property,
provided Landlord will use reasonable efforts to minimize the cost of such
service. It is generally agreed that Landlord will engage annually in a good
faith review of Real Estate Taxes and any reassessments of the Project for
purposes of determining whether to contest or appeal any such assessment or
impositions. The reasonable cost of such service shall constitute a component
of Real Estate Taxes within the meaning of Section 10, above. Additionally,
during any such period, Landlord shall have the right, in its reasonable
judgment, to contest any tax assessment, valuation or levy against the Project,
and to retain legal counsel and expert witnesses to assist in such contest and
otherwise to incur reasonable expenses in such contest, and the reasonable
fees, expenses and costs of any such contest shall constitute a component of
Real Estate Taxes within the meaning of Section 10, above, whether or not such
contest is successful (so long as such contest is conducted in good faith). In
the event any such contest results in a refund of Real Estate Taxes in any
year, Tenant shall be entitled to receive Tenant’s Share of such refund,
pro-rated for the period with respect to which Tenant paid its share of Real
Estate Taxes for such year, after deducting from the refund all fees, expenses
and costs incurred by Landlord in such contest (which will be paid to Landlord
to reimburse Landlord for the cost of such contest).

                      11.4.3 Notwithstanding Section 11.4.1 to the contrary, Tenant shall not
have the right to contest or to require Landlord to contest any tax assessment,
valuation or levy against the Project without Landlord’s prior written consent
with respect to any Calendar Year which is a part of a tax cycle in which the
duration of such tax cycle exceeds the remaining Term of this Lease (i.e.,
where the consequences of such contest may affect periods after the expiration
of the Term), and in such event, the provisions of Section 11.4.2, above, shall
apply.

            11.5 Arbitration. Disputes regarding Operating Costs, Real Estate Taxes,
any audit thereof, whether it is reasonable for either Landlord or Tenant to
contest Real Estate Taxes, or whether the fees and expenses incurred in such
contest were reasonable, shall be subject to arbitration in accordance with the
provisions of Section 49 hereof.

	12.	 	TENANT’S INSURANCE.

            12.1 Coverage Requirements. Tenant shall during the Term of this Lease,
procure at its

53

 

 expense and keep in force the following insurance:

		
	 	            12.1.1 Commercial general liability insurance naming the Landlord
and Landlord’s managing agent as additional insureds against any and all
claims for bodily injury and property damage occurring in or about the
Premises. Such insurance shall have coverage limits of not less than
Three Million Dollars ($3,000,000) per occurrence with a Ten Million
Dollar ($10,000,000) aggregate limit, and may include a combination of
base policy and excess umbrella liability insurance as long as the other
requirements of this Section are met. If Tenant has other locations that
it owns or leases which are insured under the same insurance policy, such
policy shall include an aggregate limit per location endorsement. Such
liability insurance shall be primary and not contributing to any
insurance available to Landlord and Landlord’s insurance shall be in
excess thereto. In no event shall the limits of such insurance be
considered as limiting the liability of Tenant under this Lease;
	 
	 	            12.1.2 Personal property insurance insuring all equipment, trade
fixtures, inventory, fixtures and personal property located within the
Premises. Such insurance shall be written on a replacement cost basis in
an amount equal to one hundred percent (100%) of the full replacement
value of the aggregate of the foregoing; and
	 
	 	            12.1.3 Workers’ compensation insurance and employer’s liability
insurance in accordance with statutory laws;

The foregoing notwithstanding, provided Tenant has a minimum net worth (i.e.,
tangible assets in excess of liabilities) of Two Hundred Fifty Million Dollars
($250,000,000.00) or more, and for so long as such minimum net worth continues
to be maintained by Tenant, Tenant shall have the right to self-insure its
coverages under Section 12.1.1 and 12.1.2, above, provided (i) such
self-insurance shall be deemed to be the functional equivalent of third party
insurance, including without limitation, for purposes of Sections 14 and 19
hereof, and (ii) Tenant shall provide to Landlord with reasonable evidence, at
a minimum consistent with the evidence of Tenant’s net worth provided as of the
inception date of this Lease, of its satisfaction of the foregoing minimum net
worth requirement as a precondition to such self-insurance. In any event, the
minimum limits of liability required under the insurance policies set forth in
this Lease shall not be deemed or construed to limit the liability of any party
to this Lease in connection with any matter insured thereunder.

            12.2 Rating; Certificates; Cancellation. The policies required to be
maintained by Tenant shall be with companies rated A- or better in the most
current issue of Best’s Insurance Reports. Insurers shall be licensed to do
business in the state in which the Premises are located and domiciled in the
USA. Any deductible amounts under any fire and casualty insurance policies
required of either Landlord or Tenant hereunder shall be deemed to have been
self-insured by such party to the extent such deductible exceeds $10,000 (and,
if in excess of $50,000, any such deductible Tenant shall be subject to the
minimum net worth requirements applicable to self-insurance as set forth in
Section 12.1, above). Certificates of insurance adequately evidencing Tenant’s
satisfaction of the minimum insurance coverage(s) required of Tenant under this
Lease shall be delivered to Landlord prior to the Commencement Date and
annually thereafter at least thirty (30) days prior to the

54

 

 expiration date of the old policy. Tenant shall have the right to provide
insurance coverage which it is obligated to carry pursuant to the terms hereof
in a blanket policy, provided such blanket policy expressly affords coverage to
the Premises and to Landlord as required by this Lease. Each policy of
insurance shall provide notification to Landlord and any mortgagee(s) of
Landlord at least thirty (30) days prior to any cancellation or modification to
reduce the insurance coverage.

            12.3 Other. In the event Tenant does not procure the insurance required
to be procured by Tenant under this Lease, or keep the same in full force and
effect, and the same is not corrected within two (2) business days following
actual receipt of written notice thereof from Landlord to Tenant, then Landlord
may, but shall not be obligated to, purchase the necessary insurance and pay
the premium. Tenant shall repay to Landlord, as Additional Rent, any and all
reasonable expenses (including reasonable attorneys’ fees) and actual damages
which Landlord may sustain by reason of the failure of Tenant to obtain and
maintain such insurance.

	13.	 	LANDLORD’S INSURANCE.

            13.1 Coverage. At all times during the Lease Term, Landlord will procure
and maintain, as an Operating Cost hereunder, (a) fire and extended coverage
insurance covering the Property, including all of Landlord’s Work, in an amount
equal to one hundred percent (100%) of the replacement value thereof, (b)
public liability and property damage insurance of the types and amounts
specified in Section 12.1 above, and (c) rent loss and/or loss of income
insurance (including dependent property coverage in respect of the Parking
Facilities) in an amount not less than eighteen (18) months rent for the
Building. Landlord shall also have the right to obtain such other types and
amounts of insurance coverage (or additional policy limits to those described
in Section 12.1, above) on the Building and Landlord’s liability in connection
with the Building as are required under any Mortgage customary or as are
advisable for comparable office projects of similar class in the Applicable
Submarket, as determined by Landlord in Landlord’s good faith judgment based on
then current insurance industry products and practices (provided that, unless
required under a Mortgage, Landlord shall not modify the scope of insurance
coverages more than once every three (3) years nor during the first three (3)
Lease Years, and in any event will be required to obtain Tenant’s consent
thereto, which shall not be unreasonably withheld). Any dispute regarding the
appropriateness of such additional insurance coverage shall be subject to
arbitration pursuant to Section 49 of this Lease.

            13.2 Rating; Certificates; Cancellation. The policies required to be
maintained by Landlord shall be with companies rated A- or better in the most
current issue of Best’s Insurance Reports. Insurers shall be licensed to do
business in the state in which the Premises are located and domiciled in the
USA. Certificates of insurance shall be delivered to Tenant prior to the
Commencement Date and annually thereafter at least thirty (30) days prior to
the expiration date of the old policy. Landlord shall have the right to
provide insurance coverage which it is obligated to carry pursuant to the terms
hereof in a blanket policy, provided such blanket policy expressly affords
coverage to the Project and to Tenant as required by this Lease. Each policy
of insurance shall provide notification to Tenant at least thirty (30) days
prior to any cancellation or modification to reduce the insurance coverage.

55

 

            13.3 Other. In the event Landlord does not procure the insurance required
to be procured by Landlord under by this Lease, or keep the same in full force
and effect, and the same is not corrected within two (2) business days
following actual receipt of written notice thereof from Tenant to Landlord,
then Tenant may, but shall not be obligated to, purchase the necessary
insurance and pay the premium. Landlord shall repay to Tenant any and all
reasonable expenses (including attorneys’ fees) and damages which Tenant may
sustain by reason of the failure of Landlord to obtain and maintain such
insurance.

	14.	 	DAMAGE OR DESTRUCTION.

            14.1 Damage
Repair.

                      14.1.1     If the Premises, Building or Parking Facilities shall be destroyed
or rendered untenantable (or, in the case of the Parking Facilities, unusable),
either wholly or in part, or if all means of access to the Premises, Building
and/or Parking Facilities, shall be destroyed by fire or other casualty, then
Landlord shall, within thirty (30) days after the date of such casualty,
provide Tenant with Landlord’s good faith written estimate, derived from the
review of the damage by an architect and/or contractor reasonably acceptable to
both Landlord and Tenant (the “Estimate”) of how long it will take to repair or
restore the damaged portions of the Premises, Building and/or Parking
Facilities (as the case may be). In the case of casualty damage to the Parking
Facilities, the provisions of Section 14.6, below, shall apply.

                      14.1.2 If neither party elects to terminate this Lease in accordance with
the terms hereof following any casualty, then Landlord shall commence promptly
and diligently to prosecute to completion the restoration of the Premises to
their previous condition, subject to Force Majeure as defined herein and delays
caused by Tenant; and pending substantial completion of such restoration, the
Rent shall be abated (effective as of the date of the casualty) in the same
proportion as the unusable portion of the Premises bears to the whole thereof,
and this Lease shall continue in full force and effect.

                      14.1.3 If the portion of the Premises which is rendered unusable by such
casualty exceeds fifty percent (50%) of the total Rentable Area, and the
Estimate provides that it will require in excess of three hundred sixty five
(365) days (exclusive of any delay due to Force Majeure) after the date
Tenant’s right of termination hereunder expires to fully repair or restore the
Premises in accordance herewith, then, within forty-five (45) days after
Landlord delivers Tenant the Estimate, Tenant and Landlord shall each have the
right to terminate this Lease by written notice to the other, which termination
shall be effective as of the date of such notice of termination, and all
liabilities and obligations of Landlord and Tenant thereafter accruing shall
terminate and be of no legal force and effect except as otherwise specifically
set forth herein. Notwithstanding the foregoing, neither party shall have the
right to terminate this Lease if (i) the portion of the Premises which is
rendered unusable by such casualty is fifty percent (50%) or less of the total
Rentable Area, or (ii) the fire or other casualty was the result of the
negligence or willful misconduct of such party, or such party’s “Agents” within
the meaning of this Lease.

56

 

                      14.1.4 If neither party elects (or has the right) to terminate the Lease
pursuant to this Section 14, Landlord will use all reasonable and diligent
efforts to commence and complete its restoration of the Premises promptly, and
in the event Landlord does not complete such restoration within three hundred
sixty five (365) days after the date Tenant’s right of termination hereunder
expires (or such longer period as was referenced in the Estimate, if
applicable), as such period may be extended due to Force Majeure (not to exceed
60 days in the aggregate) or due to any Tenant Delays (as such term is defined
in Exhibit C hereof, and not limited as to the number of days) then within
thirty (30) days after the expiration of such period (but in all events prior
to the date Landlord completes its restoration of the Premises), Tenant shall
again have the right to terminate this Lease upon thirty (30) days prior
written notice to Landlord; provided, however, that if Landlord substantially
completes such restoration prior to the end of the thirty (30) day notice
period, Tenant’s notice of termination shall be deemed rescinded and
ineffective for all purposes, and this Lease shall continue in full force and
effect. The provisions of this Section are in lieu of any statutory
termination provisions allowable in the event of casualty damage.

                      14.1.5 If at any time in the course of its restoration of the Premises,
Landlord believes in good faith that its original Estimate is no longer
accurate for reasons other than Force Majeure (not to exceed 120 days) or
Tenant Delay (in which event the provisions of Section 14.1.4 shall control),
Landlord shall have the right to deliver a revised Estimate based on Landlord’s
reasonable judgment to Tenant of the additional time period which Landlord
believes will be required to fully repair or restore the Premises in accordance
herewith. If the revised Estimate provided by Landlord discloses that the
restoration will take more than three hundred sixty five (365) days after the
date Tenant’s right of termination hereunder expired to be completed (plus any
days of delay due to Force Majeure, not to exceed 60 days in the aggregate, or
Tenant Delay that have theretofore elapsed), and the portion of the Premises
which was rendered unusable by such casualty exceeded thirty percent (30%) of
the total Rentable Area, then Tenant shall once again have the right to
terminate this Lease by written notice to Landlord delivered within fifteen
(15) business days after its receipt of such revised Estimate from Landlord.
If, under such circumstances, Tenant does not exercise such right of
termination, Tenant shall be deemed to have agreed that, for all purposes of
this Section 14.1, the three hundred sixty five (365) day time limit otherwise
imposed upon completion of Landlord’s restoration of the damaged portions of
the Premises shall be extended by the number of additional days needed to
complete such restoration as reasonably estimated by Landlord within such
revised Estimate (plus any tolling of such period due to the time taken by
Tenant in its decision whether or not to exercise its right of termination
under this subsection). If Tenant elects to terminate this Lease as to the
damaged Building(s) after receiving such a revised Estimate from Landlord, as
aforesaid, such termination shall be effective as of the date of such notice of
termination, and all liabilities and obligations of Landlord and Tenant
thereafter accruing hereunder with respect to such Building(s) shall terminate
and be of no legal force and effect except as otherwise specifically set forth
herein.

                      14.1.6 If more than fifty percent (50%) of the Premises is destroyed or
rendered untenantable by fire or other casualty and Landlord restores the
Premises pursuant to this Section 14, the Lease Term shall be tolled for the
period commencing on the date of such fire or casualty and ending on the date
upon which such restoration is completed.

57

 

            14.2 Reconstruction. If all or any portion of the Premises is damaged by
fire or other casualty and this Lease is not terminated in accordance with the
provisions hereof, then all insurance proceeds under the policy referred to in
Section 13.1 hereof that are recovered by Landlord on account of any such
damage by fire or casualty shall be made available for the payment of the cost
of repair, replacing and rebuilding, subject to customary requirements of
Landlord’s mortgagee regarding delivering waivers of all rights of termination
of this Lease, the placement of such insurance proceeds into a trust account,
the submission of requisitions for disbursement of proceeds, and the
satisfaction of various requirements associated with the performance of such
reconstruction.

            14.3 Business
Interruption. Other than rental abatement as and to the
extent provided in Section 14.1, no damages, compensation or claim shall be
payable by Landlord for inconvenience or loss of business arising from
interruption of business, repair or restoration of the Buildings or Premises in
connection with any fire or other casualty.

            14.4 Repairs. Landlord’s repair obligations, should restoration of the
Building and/or Premises proceed in accordance with this Article 14, shall be
limited to the Base Building Improvements, common areas and all interior
improvements to and property within the Premises which are covered or required
to be covered hereunder by Landlord’s insurance or which were installed or paid
for by Landlord (i.e., all interior leasehold improvements other than Specialty
Systems, systems furniture, and other furniture, fixtures and equipment of
Tenant). Landlord shall use reasonable and diligent efforts to commence such
repairs and restorations promptly after all rights to terminate this Lease (if
any) are waived or expire, and to complete such repairs within the time frames
referenced in Section 14.1, above. Tenant acknowledges that any such repairs
or restorations shall be subject to applicable laws and governmental
requirements, any disbursement requirements imposed by Landlord’s mortgagee (if
any), and to delay in the process of adjusting any insurance claim associated
therewith; and delays resulting from any of the foregoing shall constitute a
“Force Majeure” hereunder, shall not in any event constitute a breach of this
Lease by Landlord, and shall extend the time for completing such restoration as
long as Landlord uses reasonable efforts to commence and complete such repairs
and restorations in a timely fashion.

            14.5 End
of Term Casualty. Anything herein to the contrary
notwithstanding, if more than forty percent (40%) of the Premises is destroyed
or damaged during the last eighteen (18) months of the Lease Term, then either
Landlord or Tenant shall have the right to terminate this Lease (in whole if
the damage extends to all or substantially all of the Building or otherwise as
to the affected portion of the Premises within the Building) upon thirty (30)
days prior written notice to the other, which termination shall be effective on
the thirtieth (30th) day after the other party’s receipt of such notice. Such
notice must be delivered within thirty (30) days after the date of such
casualty, or shall be deemed waived; provided, however, that Tenant may revoke
such termination notice, and require Landlord to restore the Premises (subject
to the provisions of Section 14.1, above), by exercising any renewal option
provided herein, if any, within ten (10) days after the receipt of a notice of
termination from Landlord under this Section 14.5.

            14.6 Damage
to Parking Facilities. If neither party elects to terminate
this Lease in accordance with the terms hereof following any fire or other
casualty which causes damage to the

58

 

Parking Facilities, then Landlord (i) shall commence promptly and
diligently prosecute to completion the restoration of the Parking Facilities to
its previous condition, subject to Force Majeure as defined herein and delays
caused by Tenant; and (ii) shall, pending substantial completion of such
restoration, locate and provide to Tenant (for the benefit of Tenant and
Tenant’s Agents), at Landlord’s expense, reasonable substitute parking for
Tenant and Tenant’s Agents during the reconstruction period (solely with
respect to those parking spaces within Tenant’s total Parking Allocation that
are rendered unusable by such fire or other casualty) at alternative parking
facilities within Annapolis within reasonable proximity to the Building under
the circumstances, including instituting a temporary shuttle service to and
from a remote commuter parking area if necessary because substitute parking is
located farther than a reasonable walking distance from the Building; and if
Landlord fails to provide reasonable substitute parking to Tenant as aforesaid,
Tenant may avail itself of its rights under Section 34 of this Lease in respect
thereof.

15.     MACHINERY
AND EQUIPMENT; ALTERATIONS AND ADDITIONS; REMOVAL OF FIXTURES.

            15.1 Tenant shall not place a load upon the floor of the Premises which
exceeds the maximum live load per square foot which are set forth in the
Outline Specifications (as defined in Exhibit C to the Lease) except (i) as
provided for in the Construction Documents, or (ii) as approved by Landlord in
writing, which approval shall not be unreasonably withheld, conditioned or
delayed. Tenant will not install or operate in the Premises any electrical or
other equipment requiring any changes, replacements or additions to any base
building system, except (i) as provided for in the Construction Documents, or
(ii) as approved by Landlord in writing, which approval shall not be
unreasonably withheld, conditioned or delayed as long as such changes,
replacements or additions are generally compatible with other systems in the
Building and do not materially diminish the value or utility of the current
base building systems taking into consideration their age and state of repair
(and, if such approval is granted, Tenant shall be responsible for the costs of
such changes, replacements or additions).

            15.2 Subsequent to construction of the initial improvements reflected in
the Construction Documents, Tenant shall not make or allow to be made any
alterations, additions or improvements to or on the Premises which materially
affect any structural components or Building Systems within the Building or
Premises or which, under applicable codes, rules and/or regulations require any
building, electrical, plumbing or other permit, or which would change the
exterior appearance of the Buildings, without Landlord’s prior written consent,
which consent shall not be unreasonably withheld, conditioned or delayed
(provided that, in the case of alterations affecting the exterior appearance of
the Building or involving a structural modification to the Building, Landlord’s
consent may be withheld in its sole and absolute discretion). Tenant shall
have the right to make any other alterations, repairs, additions or
improvements in or to the Premises without Landlord’s prior written consent,
provided (i) the same do not materially diminish the value of the Premises,
(ii) Tenant provides Landlord with prior written notice thereof, including any
plans actually prepared for such improvements (or a reasonable description of
the alteration Tenant proposes to perform) and (iii) such alterations do not
require the issuance of a building permit to be performed. Any alterations,
additions or improvements, including, but not limited to, wall covering,
paneling and built-in cabinet

59

 

 work, but excepting movable furniture and trade fixtures, shall be made
(A) at Tenant’s sole expense, (B) with respect to alterations affecting
structural components, Building Systems, exterior elements or which require the
issuance of a permit to be performed, according to plans and specifications
approved in writing by Landlord, which approval shall not be unreasonably
withheld, conditioned or delayed (and which plans may be submitted in the same
form as that required for permitting purposes), provided that, as above, in the
case of alterations affecting the exterior appearance of the Building, or
involving a structural modification to the Building, Landlord’s consent may be
withheld in its sole and absolute discretion, (C) in compliance with all
applicable laws, (D) by a contractor that is duly licensed, financially sound
and of good reputation, bonded or bondable, and otherwise reasonably approved
by Landlord, and (E) in a good and workmanlike manner and consistent with the
standard leasehold improvements typical for comparable office buildings of
similar class in the Applicable Submarket, and (E) shall be surrendered with
the Premises (except as provided in Section 15.3, below). Tenant shall have
the right to use its own vendors to perform alterations to the Premises.
Landlord shall not charge any fee for oversight of any Tenant alterations
unless Landlord and Tenant enter into a contractual arrangement at the time
pursuant to which Landlord agrees to manage any such alterations by Tenant for
a construction management fee.

            15.3 Upon the expiration or sooner termination of the Lease Term, Tenant
shall, at Tenant’s sole expense, and with due diligence (i) remove any
alterations, additions, or improvements made by Tenant which are designated by
Landlord to be removed at the time its consent to the installation thereof is
granted, and repair any damage to the Premises caused by such removal (but
excluding any such alterations in the nature of normal office improvements,
such as the installation of temporary or permanent partitioning walls, cosmetic
alterations, and the like), and (ii) shall remove all Specialty Systems unless
Landlord elects at the time of surrender of possession that such Specialty
Systems are not required to be removed (in which event such Specialty Systems
will be surrendered with the Premises, in their then existing condition).
Tenant shall remove any of its movable property, trade fixtures and roof
devices. Upon removal of Tenant’s property, alterations or Specialty Systems
(if any), Tenant shall repair any damage to affected portions of the Premises
and surrender same in good condition (unless, as a condition to Landlord’s
approval of an alteration or installation, a higher level of restoration was
reasonably required as a condition of such approval). All items of Tenant’s
personal property that are not removed from the Premises or the Building by
Tenant at the termination of this Lease shall be deemed abandoned and become
the exclusive property of Landlord, unless the same are removed within five (5)
business days after a written notice from Landlord to Tenant notifying Tenant
that it has failed to remove such items of personal property from the Premises
and that the same will be deemed abandoned if not removed within five (5)
business days thereafter (provided acceptance by Landlord of any such
abandonment shall not be construed to relieve Tenant of its underlying removal
obligation, if applicable, nor deemed or construed to waive any claim by
Landlord for damages arising from Tenant’s breach thereof, including recovery
of removal or storage expenses). The parties’ obligations under these Sections
15.2 and 15.3 shall survive the expiration or termination of this Lease.

	16.	 	ACCEPTANCE OF PREMISES.

            Landlord shall tender, and Tenant shall accept possession of, the Premises
(and each

60

 

 applicable phase thereof) in accordance with the terms of Section 1.3 and
Exhibit C hereto. All provisions regarding delivery of possession of the
Premises, construction of leasehold improvements to the Premises and any
adjustments which may be made with respect to the Rent Commencement Date (as
defined in Section 1.4) are set forth in Section 1.4 and
Exhibit C, and
elsewhere in this Lease.

	17.	 	TENANT IMPROVEMENTS.

            The provisions governing the initial improvements to be performed by
Landlord and Tenant to the Premises are set forth in
Exhibit C hereto.

	18.	 	ACCESS.

            18.1     Subject to the restrictions set forth below, Tenant shall permit
Landlord and Landlord’s Agents to enter the Premises at all reasonable times
for any reasonable business purpose, including to inspect the same if Landlord
has a good faith belief that Tenant is violating a provision of this Lease or
that such inspection is required to fulfill an obligation of Landlord under
this Lease; to show the Premises to prospective tenants (but only during the
last eighteen (18) months of the Lease Term), or to interested parties such as
prospective lenders and purchasers; to clean, repair, alter, improve, maintain,
operate or provide Building Services to the Premises or the Building (as
permitted by or required by this Lease); to discharge Tenant’s obligations when
Tenant has failed to do so within a reasonable time after written notice from
Landlord as permitted by this Lease; and at any time and for any reason if an
Event of Default is then continuing under this Lease Tenant shall permit
Landlord and Landlord’s Agents to enter the Premises at any time in the event
of an Emergency, but only to the extent reasonably necessary to address such
Emergency. When reasonably necessary, Landlord may (to the minimum extent
reasonably necessary) temporarily close entrances, doors, corridors, elevators
or other facilities without liability to Tenant by reason of such closure, as
long as all diligent efforts are used to provide adequate alternative access to
the Building. In exercising the foregoing rights, (i) Landlord shall use all
reasonable and diligent efforts to minimize any disruption to Tenant’s
business, and (ii) Landlord shall coordinate any entry into the Premises with
Tenant’s facilities supervisor at least 24 hours in advance (except in cases of
Emergency or as necessary to respond to an Abatement Event), and shall be
accompanied by a representative of Tenant for security purposes upon Landlord’s
entry to the Premises (other than in cases of Emergency) unless Tenant fails or
declines to make available a representative for such purposes. Tenant shall
supply Landlord with telephone numbers for Tenant’s facilities supervisor so
that Landlord will be able to comply with established security procedures to
the extent feasible under the circumstances in the event Landlord requires
immediate access to the Premises to cure any emergency situation or to address
any Abatement Event.

            18.2 Tenant shall have the right under this Lease to install security
systems within the Premises, and to have locked rooms and secured areas,
provided Landlord shall be excused from such of its obligations under this
Lease as are directly and materially impacted by the inability of Landlord to
access the Premises or any applicable part thereof due to Tenant’s security
restrictions, if and to the extent the performance of such obligations was in
fact prevented or rendered impossible or impracticable due to the effect of
such restrictions on access, provided that, except in cases of

61

 

 Emergency, Landlord shall provide written or verbal notice to Tenant of
the need to gain access to a specified secured portion of the Premises, and
must be denied permission to access or enter such area, before Landlord shall
be entitled to invoke the exculpation provided for under this Section 18.2.

	19.	 	MUTUAL WAIVER OF
SUBROGATION.

            19.1 Tenant. Notwithstanding anything to the contrary in this Lease,
whether the loss or damage is due to the negligence of Landlord or Landlord’s
Agents, or any other cause, Tenant hereby releases Landlord and Landlord’s
Agents from responsibility for and waives its entire claim of recovery for (i)
any and all loss or damage to the personal property of Tenant located in the
Project (excluding any personal property required to be insured by Landlord
pursuant to the provisions hereof), arising out of any of the perils which are
covered by Tenant’s property insurance policy, with extended coverage
endorsements which Tenant is required to obtain under the applicable provisions
of this Lease, whether or not actually obtained, or (ii) loss resulting from
business interruption at the Premises, arising out of any of the perils which
may be covered by business interruption insurance, whether or not carried by
Tenant under this Lease.

            19.2 Landlord. Notwithstanding anything to the contrary in this Lease,
whether the loss or damage is due to the negligence of Tenant or Tenant’s
Agents, or any other cause, Landlord hereby releases Tenant and Tenant’s Agents
from responsibility for and waives its entire claim of recovery for (i) any and
all loss or damage to the Building or any personal property of Landlord located
about the Project and the Building generally and all property attached thereto
(excluding any such property required to be insured by Tenant hereunder),
arising out of any of the perils which are covered by Landlord’s property
insurance policy which Landlord is required to obtain under the applicable
provisions of this Lease, whether or not actually obtained, or (ii) loss
resulting from loss of rental income at the Building, arising out of any of the
perils which may be covered by rental interruption insurance, whether or not
carried by Landlord under this Lease.

            19.3 Carriers. Landlord and Tenant shall each cause its respective
insurance carrier(s) to consent to such waiver of all rights of subrogation
against the other, and to issue an endorsement to all policies of property,
casualty and rent loss/loss of income/business interruption insurance obtained
by such party confirming that the foregoing release and waiver will not
invalidate such policies. If either party fails to obtain insurance which
appropriately consents to these releases, then in addition to any other
applicable rights and/or remedies the other party may have, the breaching party
shall be estopped from invoking the other party’s release under Section 19.1 or
19.2, above, as applicable.

	20.	 	INDEMNIFICATION.

            20.1 Subject to the provisions of Section 19 hereof, Tenant shall
indemnify and hold harmless Landlord, its agents, employees, officers,
directors, partners and shareholders from and against any and all third party
claims, liabilities, judgments, demands, causes of action, claims, losses,
damages, costs and expenses, including reasonable attorneys’ fees and costs,
arising out of such third

62

 

 party claims, to the extent arising out of (i) the use and occupancy of
the Premises by Tenant or Tenant’s Agents; (ii) the negligence or willful
misconduct of Tenant or Tenant’s Agents in or about the Project; and/or (iii)
any Default, breach, or violation by Tenant of, or any failure by Tenant to
comply with or perform its obligations under, any and every provision of this
Lease; provided (i) that this indemnity shall not apply to any loss, damage,
liability or expense resulting from injuries or death to third parties to the
extent caused by the negligence or willful misconduct of Landlord or Landlord’s
Agents, and (ii) this indemnity shall not be construed to indemnify Landlord
against consequential damages of any kind.

            20.2 Subject to the provisions of Section 19 hereof, Landlord shall
indemnify and hold harmless Tenant and its assignees and subtenants and its and
their agents, employees, officers, directors, partners and shareholders from
and against any and all third party claims, liabilities, judgments, demands,
causes of action, claims, losses, damages, costs and expenses, including
reasonable attorneys’ fees and costs, arising out of such third party claims,
to the extent arising out of (i) the operation and management of the Project by
Landlord or Landlord’s Agents; (ii) the negligence or willful misconduct of
Landlord or Landlord’s Agents in or about the Project; (iii) any Default,
breach, or violation by Landlord of, or any failure by Landlord to comply with
or perform its obligations under, any and every provision of this Lease;
provided (i) that this indemnity shall not apply to any loss, damage, liability
or expense resulting from injuries or death to third parties to the extent
caused by the negligence or willful misconduct of Tenant or Tenant’s Agents,
and (ii) this indemnity shall not be construed to indemnify Tenant against
consequential damages of any kind.

            20.3 The indemnifications set forth in this Section 20 shall survive
termination of this Lease.

	21.	 	ASSIGNMENT AND SUBLETTING.

            21.1 Generally. Tenant shall have the right to assign this Lease and to
sublease the Premises (or any portion thereof) as and to the extent set forth
in this Article 21. The foregoing notwithstanding, except as set forth in
Section 21.4, below, Tenant shall not assign, encumber, mortgage, pledge,
license, hypothecate or otherwise transfer the Premises or this Lease, or
sublease all or any part of the Premises, or permit the use or occupancy of the
Premises by any party other than Tenant, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed, as determined in accordance (and subject to) with the terms and
provisions of this Section 21.

            21.2 Procedure. Except for an assignment or sublease permitted as a matter
of right under Section 21.4 of this Lease, and subject to Section 21.5, below
(regarding a different procedure concerning Landlord’s right of recapture under
certain circumstances), Tenant must request Landlord’s consent to each and
every proposed assignment or sublease in writing at least twenty-one (21) days
prior to the commencement date of the proposed sublease or assignment, which
written request (a “Proposal Notice”) must include (a) the name and address of
the proposed assignee or

63

 

 subtenant, (b) the nature and character of the business of the proposed
assignee or subtenant,(c) a description of the material business terms of the
proposed sublease or assignment (including a copy of the written proposal or
term sheet, if any), and (d) complete financial information regarding the
proposed assignee or subtenant, including financial statements for the three
(3) prior fiscal years and the most recent fiscal quarter, of such proposed
assignee or subtenant. Tenant shall also provide any additional information
which may be reasonably available to Tenant that Landlord reasonably requests
regarding such proposed assignment or subletting within the twenty-one (21) day
period following Tenant’s delivery of a Proposal Notice to Landlord. Within
twenty-one (21) days after Landlord receives Tenant’s Proposal Notice (with all
information required by clauses (a) - (c), above, included), Landlord shall
notify Tenant in writing whether Landlord approves or disapproves the sublease
or assignment described in Tenant’s Proposal Notice (subject to Landlord’s
review and approval of the sublease or assignment instrument in accordance with
the provisions set forth below in this Section 21.1); and if disapproved,
Landlord shall also state in its response the basis for such disapproval in
reasonable detail. If Landlord does not respond to a Proposal Notice within
twenty-one (21) days after Landlord receives same, then Landlord shall be
deemed to have approved the proposed assignment or sublease, and Tenant may
assign or sublease the Premises upon the terms stated in such Proposal Notice;
provided (i) Tenant will provide Landlord with a copy of the sublease or
assignment instrument actually utilized for the transaction in order that
Landlord (A) may verify its conformity to the Proposal Notice, and (B) review
and approve the form of assignment or sublease instrument (which shall remain
subject to Landlord’s reasonable consent unless it was included with the
Proposal Notice) and determine whether there is any net profit in which
Landlord is entitled to share pursuant to Subsection 21.3.1, below, and (ii)
the other terms and conditions set forth in Section 21.3 below shall apply,
without modification, to such transaction irrespective of whether Landlord’s
consent is obtained or deemed obtained. Any approval (or deemed approval) of
the sublease or assignment described in Tenant’s Proposal Notice shall be
without prejudice to Landlord’s right to disapprove the proposed sublease or
assignment, if, after receiving a copy of the signed sublease or assignment
instrument, either (1) the items described in clauses (a) - (c), above, with
respect to the applicable Proposal Notice have changed in any material respect,
and such material change would justify Landlord’s denial of approval under the
standards of review set forth herein had such material changes been included in
the Proposal Notice upon which Landlord’s initial approval was based, or (2)
Landlord has a reasonable objection to any legal terms affecting Landlord’s
rights with respect to such transaction within the form of assignment or
sublease instrument that Tenant is unwilling or unable to modify. If Landlord
does not disapprove the assignment or sublease instrument by written notice to
Tenant given within ten (10) business days after Landlord receives a copy of
the sublease or assignment instrument actually utilized for the transaction (on
the limited basis set forth in the preceding sentence), and, if disapproved,
specifying the basis for such disapproval, Landlord shall be deemed to have
approved such assignment or sublease instrument (but not to any deviation from
Section 21.3 not expressly approved by Landlord).

            21.3  Conditions. All subleases and/or assignments hereunder are also
subject to all of the following terms and conditions:

64

 

                      21.3.1  In the case of any assignment or sublease which is subject to
Landlord’s approval hereunder, Tenant shall pay to Landlord, as Additional Rent
due under this Lease, (i) in the case of an assignment, fifty percent (50%) of
all Net Profit associated with such assignment, (ii) in the case of any
sublease other than a Short Term sublease, fifty percent (50%) of the Net
Profit derived from such sublease, and (iii) in the case of a short term
sublease, Tenant shall be entitled to retain the Net Profit, if any, derived
from such sublease. For purposes hereof, the term “Net Profit” shall (i) in
the case of an assignment, equal the total sum received by Tenant in

consideration of such assignment less the amount of “Transaction Expenses” (as
hereafter defined) associated therewith, and (ii) in the case of a sublease,
equal the amount, if any, by which the rent, any additional rent and any other
sums payable by the subtenant to Tenant under such sublease (subject, however,
to the penultimate sentence of this Section 21.3.1), exceeds that portion of
the Base Rent plus Additional Rent payable by Tenant hereunder with respect to
the portion of the Premises which is the subject of such sublease, calculated
after Tenant has recovered in full its Transaction Expenses from such net
amount. The term “Transaction Expenses” shall mean all reasonable and actual
expenses incurred by Tenant in procuring such assignment or sublease, including
broker fees and legal fees (if any) paid by Tenant, any improvements which
Tenant makes to the applicable portion of the Premises at Tenant’s expense in
connection with such assignment or sublease, any leasing concessions paid by
Tenant as part of such transaction, any buy-out of the assignee’s or
sublessee’s existing lease paid for by Tenant as a part of such transaction and
the cost of any downtime reasonably allocable to the portion of the Premises
being subleased. In calculating Net Profit in an assignment or sublease
transaction where a portion of the consideration being paid to Tenant is being
paid other than in respect of the leasehold interest being conveyed as part of
such assignment or sublease (for example, being paid for furniture or equipment
being obtained as part of such transaction, or for services being provided by
Tenant on an ongoing basis to a subtenant, such as telephone services,
photocopying services, secretarial services and the like), the parties shall
disregard such other consideration to the extent such other consideration bears
a reasonable relationship to the cost incurred by Tenant to provide such other
items and is not intended to be disguised subrents or assignment fees. The
foregoing payments shall be made within ten (10) business days after Tenant
receives the applicable consideration from the assignee or subtenant.

                      21.3.2  No consent to any assignment or sublease shall constitute a further
waiver of the provisions of this Section 21, and all subsequent assignments or
subleases may be made only in accordance herewith, including any provisions of
this Section 21 which subject such subsequent assignments or subleases to the
prior written consent of Landlord, under the standards set forth herein. In no
event shall any consent by Landlord be construed to permit reassignment or
resubletting by a permitted assignee or sublessee without compliance with all
of the terms and conditions set forth in this Section 21.

                      21.3.3  Notwithstanding any assignment or sublease consented to by Landlord
or permitted without Landlord’s consent under Section 21.4, below, Tenant shall
remain liable for all Lease obligations, all of which shall be unaffected by
any such sublease or assignment, and which Lease obligations shall remain in
full force and effect for all purposes. An assignee of Tenant shall be
directly liable to Landlord for all obligations of Tenant hereunder, but no
sublease or assignment by Tenant, despite any such direct liability, shall
relieve Tenant of any liability hereunder.

65

 

                      21.3.4  Any assignment or sublease which is consummated without complying
with the provisions of this Section 21 shall constitute a Default (and a
Material Default) under this Lease, and, if such assignment or sublease is one
as to which Landlord would have had a right of recapture, or would have had a
right to disapprove on a reasonable basis, but for Tenant’s non-compliance with
this Section 21.3.4, shall be voidable by Landlord for a period of thirty (30)
days after Landlord has actual knowledge of such assignment or sublease.

                      21.3.5  The term of any such assignment or sublease shall not extend beyond
the Lease Term.

                      21.3.6  Every assignee and sublessee of Tenant shall be bound by and
subject to each and every term, covenant and condition of this Lease (provided
that sublessees shall not be bound by the covenants requiring payment of Rent,
which shall remain the direct and primary obligation of Tenant), and no
assignment or sublease shall be construed to modify in any way the terms of
this Lease unless such modification is expressly agreed to by Landlord in a
written instrument signed by Landlord which clearly and conspicuously evidences
Landlord’s agreement to such modification.

            21.4  Permissive Assignments and Subleases.

                      21.4.1  Provided (i) Tenant is not then in Material Default under this
Lease, (ii) such transfer is not effectuated as part of a transaction or series
of transfers orchestrated with the intent to effect a transfer of this Lease
(or Tenant’s interest herein) in isolation to Tenant’s other leasehold
interests and assets (in order to avoid Landlord’s rights of consent, recapture
and/or to share in Net Profits under this Article 21), and (iii) Tenant and
such assignee both continue to be liable for all obligations of “Tenant” under
this Lease after the effective date of such sublease or assignment as provided
in Section 21.3.3, above, Tenant shall have the right, without Landlord’s prior
written consent and without invoking Landlord’s right to recapture or Net
Profits, to assign this Lease or sublet the Premises, in whole or in part, to
(i) any wholly owned subsidiary or to any parent corporation of Tenant, or (ii)
any affiliate or entity under common control with Tenant or any affiliate or
entity under common control with a parent or subsidiary of Tenant, or (iii) any
entity of which Tenant, a Tenant affiliate, Tenant partner, Tenant subsidiary,
Tenant parent, or entity under common control with Tenant owns a controlling
interest, or (iv) any entity which acquires all or substantially all of the
assets or stock of Tenant, by merger, consolidation, acquisition or other
business reorganization. An “Affiliate” shall mean any corporations or other
business entities which control, are controlled by, or are under common control
with the entity in question. Tenant shall give Landlord written notice of any
such sublease or assignment at the time the same is effectuated.

                      21.4.2  Provided (i) Tenant is not then in Material Default under this
Lease, and (ii) Tenant continues to be liable for all obligations of Tenant
under this Lease after the effective date of any such sublease as provided in
Section 21.3.3, above, Tenant shall have the right, subject to Landlord’s
reasonable consent, but without invoking Landlord’s right of recapture or to
Net Profits, to sublease (in the aggregate for the Premises) up to twenty
percent (20%) of the Rentable Area and having a fixed term of not more than two
(2) years, and a total term of not more than four (4) years

66

 

with options (any such lease, a “Short Term Sublease”).

            21.5  Termination or Partial Termination.

                      21.5.1  Notwithstanding any other provision of this Section 21 to the
contrary, in each instance where Tenant intends in a bona fide, good faith
manner (i) to pursue an assignment of this Lease which is not permitted as a
matter of right under Section 21.4, above, or (ii) to pursue a sublease which
is not a Short Term Sublease, and which sublease encompasses (without
aggregation with any prior subleases) more than twenty (20%) of the Rentable
Area of the Premises for substantially the remainder of the Term of this Lease
(which the parties stipulate shall mean sixty percent (60%) more of the balance
of the Term of this Lease excluding unexercised renewal options), Tenant shall
notify Landlord of such intent in writing (such notice, an “Intent Notice”),
which Intent Notice shall include (A) a specific reference that such Intent
Notice is being sent pursuant to this Section 21.5, and (B) if such Intent
Notice relates to a sublease of the Premises, a reasonably specific description
of the portion of the Premises proposed to be subleased by Tenant pursuant
thereto, which shall be Independently Leasable Space under this Lease. If such
Intent Notice does not also constitute a Proposal Notice (i.e., does not
include all information required for a Proposal Notice), then for a period of
thirty (30) days after receipt of such Intent Notice, Landlord shall have the
right, in the case of a proposed assignment, to terminate this Lease in its
entirety, or, in the case of a proposed sublease, to terminate this Lease in
part (as to all, but not less than all, of the portion of the Premises which
Tenant identified for proposed sublease in the Intent Notice), provided that,
if prior to the expiration of such thirty (30) day period, Tenant provides
Landlord with a Proposal Notice, then the time period within which Landlord
must exercise its recapture right shall be reduced to the lesser of (i) the
remaining period of such original thirty (30) day period at the time such
Proposal Notice is delivered to Landlord, or (ii) ten (10) business days. Such
right shall be exercised by Landlord’s delivery of a written notice of
termination or partial termination (as applicable) to Tenant prior to the
expiration of such thirty (30) day (or lesser, if applicable) period. If
Landlord fails to respond to such Intent Notice prior to the expiration of such
thirty (30) day (or lesser, if applicable) period, Landlord shall be deemed to
have elected not to terminate the Lease, either in whole or in part, as the
case may be, and Tenant shall thereupon be permitted to pursue such assignment
or the sublease described in the Intent Notice, free from any right of
termination or recapture on Landlord’s part with respect to the transactions
described in the Intent Notice, but otherwise subject to the terms and
provisions of Sections 21.2 - 21.4, above, including the requirement of
obtaining Landlord’s approval if and to the extent described in such terms and
provisions. If Tenant does not consummate an assignment or sublease
transaction otherwise described within an Intent Notice within one (1) year
after providing Landlord with such Intent Notice, Tenant shall be required to
provide a new Intent Notice to Landlord, and afford Landlord an additional
opportunity to exercise such right of termination or partial termination, as if
the original Intent Notice had never been issued or responded to previously;
provided that if Tenant has executed a letter of intent or term sheet providing
for an assignment or sublease within the scope of an Intent Notice that has not
been consummated as of the end of such one (1) year period, but Tenant is
diligently working with the sublessee or assignee to consummate same, then the
one (1) year period shall be extended until the transaction is either completed
in the exercise of diligent efforts, or negotiations therefor have terminated.
If Landlord

67

 

elects to exercise its right of recapture under this Section 21.5.1 as to
a proposed assignment or sublease within the scope hereof, Tenant shall have
the right, for period of five (5) business days thereafter, to retract its
Intent Notice by written notice of such retraction delivered to Landlord within
such five (5) business day period (provided that, in such event, Tenant will be
required to provide a new Intent Notice if it thereafter elects to proceed with
an assignment or sublease within the scope of this Section 21.5).

                      21.5.2     In the event of a termination or partial termination of this Lease
by Landlord as described in Section 21.5.1, above, as the case may be: (a)
this Lease and the term hereof shall terminate (either as to the Premises as a
whole, or only as to the portion thereof which Tenant is proposing to sublease,
as the case may be) as of the thirtieth (30th) day after Landlord’s notice of
termination to Tenant; (b) Tenant shall be released from all liability under
the Lease (as to the terminated portion of the Premises only, in the case of a
partial termination, or as to the Premises as a whole, in the case of an
assignment) with respect to the period after the date of termination (other
than the obligations and indemnities of Tenant which accrued with respect to
the applicable portion of the Premises prior to the effective date of such
termination, which obligations and indemnities shall expressly survive such
termination or partial termination of this Lease); (c) all Base Rent,
Additional Rent and other charges shall be prorated to the date of such
termination, and appropriately adjusted if there is only a partial termination;
(d) upon such termination date, Tenant shall surrender the Premises (or the
applicable portion thereof) to Landlord in accordance with Section 26 of this
Lease; and (e) in the case of a partial termination of this Lease, (i) Landlord
shall have the obligation, at Landlord’s expense, to separate the portion of
the Premises being terminated from the balance of the Premises, including the
erection of a demising wall, the creation of a floor lobby area or other access
to the Building core areas consistent with a multi-tenanted building, and, to
the extent necessary under the circumstances, the separation of any applicable
Building Systems (and upon the completion of such separation, the Premises and
Building will be re-measured in accordance with the method of measurement
described in Section 1.1, above, to account for the multi-tenanting of such
floor), and (ii) Tenant shall be entitled as of the date of such recapture to a
pro rata reduction of the Security Deposit posted hereunder based on a fraction
of the amount then required to be posted by Tenant, the numerator of which is
the Rentable Area of the Premises after such recapture, and the denominator of
which is the total Rentable Area of the Building (and in such event, the
Reduction Schedule set forth in Section 3.2(b), above, shall be appropriately
adjusted, on a pro rata basis, to reflect such pro rata reduction). Such
reduction shall be administratively effectuated in substantially the same
manner as effectuating other reductions of the Security Deposit permitted from
time to time under Section 3.2 of this Lease. Landlord will use all
reasonable efforts to minimize any disruption or interference with Tenant’s use
of the remaining portions of the Premises during its performance of any such
separation.

            21.6     Criteria for Reasonableness. Without limitation, in determining
whether it is reasonable or unreasonable for Landlord to deny its consent to
any proposed assignment or sublease requiring Landlord’s consent, the parties
agree (1) that Landlord shall not be required under any circumstances to accept
any non de minimis modification to the terms of this Lease which may be
included as part of such proposal, such as provision for a use which is not a
permitted use hereunder; and (2) it shall be reasonable for Landlord to
consider as factors, with such weight as Landlord

68

 

deems appropriate, the creditworthiness, operating experience, and prior
history of the proposed assignee or subtenant with respect to landlord/tenant
or debtor/creditor relationships (such as, but not limited to, any history of
defaults, evictions, or other disputes) with Landlord, other landlords or other
creditors, as reasonably substantiated by Landlord. In addition, it shall not
be unreasonable for Landlord to deny its consent (i) to any proposed assignment
of this Lease (but not a sublease of less than all of the Premises) prior to
Acceptance of Possession, or (ii) if, at the time Landlord’s consent to any
assignment or sublease is solicited, Tenant is in Material Default or Material
Breach of this Lease.

	22.	 	SIGNS.

            22.1  During the Term of this Lease, for so long as Tenant continues to
lease at least fifty percent (50%) or more of the office portion of the
Building, Tenant shall have the exclusive right to erect such exterior signs on
the Building as it reasonably deems desirable as well as the non-exclusive
right to have one or more monument signs within the Project, for itself and its
affiliates, subtenants and assignees, provided that (i) Tenant notifies
Landlord in advance of erecting such signs, provides signage plans therefore,
and obtains the prior approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed, (ii) all lobby, monument and/or
exterior signage (and any changes thereto, shall be subject to the applicable
provisions of the Declaration, including any design review and approval
required thereunder, and (iii) Tenant’s rights shall in all events be subject
to all rules, regulations, sign ordinances and requirements of governmental
authorities having jurisdiction thereover. Any signage permitted hereunder
shall be installed at Tenant’s sole cost and expense (but may be paid for out
of the TI Allowance under Exhibit C). Tenant shall be responsible to maintain
any permitted signs and remove the same at Lease termination (and to repair, at
its expense, any areas of the Building or Premises which are damaged by such
removal). If Tenant shall fail to do so within five (5) days after the date of
Lease termination, Landlord may do so at Tenant’s cost. Tenant shall be
responsible to Landlord for any damage to the Building caused by the
installation, use, maintenance and/or removal of any such signs.

            22.2  Notwithstanding Section 22.1 to the contrary: (i) Tenant shall be
entitled to exclusive usage of the lobby directory in the Building for so long
as it is the sole office tenant of the Building (and if Tenant ceases to be the
sole tenant of the Building, space within the lobby directory shall be
allocated to Building tenants in proportion to the relative square footage of
their premises), and (ii) Tenant may display its name and logo on the lobby of
each floor of the Building occupied by Tenant (or a sublessee of Tenant) and at
each suite entry, subject to Landlord’s prior written consent, which shall not
be unreasonably withheld. All signage installed by Tenant under this
subsection shall be at Tenant’s sole expense, with the exception of the basic
lobby directory (excluding any special graphics installed by Tenant at Tenant’s
expense), which directory shall be provided by Landlord at Landlord’s expense.

            22.3  In connection with the rights granted to Tenant under this Lease,
Landlord agrees (i)

69

 

 that no tenant of the Project shall have any naming rights with respect to
the Project, and (ii) that it will cause the Declaration to include a provision
which establishes the name of the Project for the properties governed thereby,
and provides that no tenant or owner of any building within the Project will
have naming rights in connection therewith.

            22.4  Landlord agrees that, to the extent it installs directional signage
on any common areas within the Project on any “common areas” within the meaning
of the Declaration in the vicinity of a transportation shuttle stop which
allows office tenants or occupants to be listed, Tenant shall have the first
right to have its identification sign placed thereon, and, if more than one
office tenant or occupant is permitted to be listed on such sign, Tenant shall
have the first right to have its identification sign placed in the most
prominent position (to the extent possible) as any other tenant or occupant of
the Project.

	23.	 	LIENS.

            Tenant shall keep the Premises and the Buildings free from any liens
arising out of any work performed, materials ordered or obligations incurred by
or on behalf of Tenant, and Tenant hereby agrees to indemnify and hold Landlord
and its agents, employees, independent contractors, officers, directors,
partners, and shareholders harmless from any liability, cost or expense for
such liens. Tenant shall cause any such lien imposed to be released of record
by payment or posting of the proper bond reasonably acceptable to Landlord
within thirty (30) days after written request by Landlord. If Tenant fails to
remove any lien within the prescribed thirty (30) day period, then Landlord may
do so at Tenant’s expense and Tenant’s reimbursement to Landlord for such
amount, including reasonable attorneys’ fees and costs, shall be deemed
Additional Rent.

	24.	 	DEFAULT.

            24.1  Tenant’s Default. A “Default” under this Lease by Tenant shall exist
if any of the following occurs (taking into account the expiration of the
notice and cure periods provided for below):

                      24.1.1  If Tenant fails to pay Base Rent, Additional Rent or any other sum
required to be paid hereunder within five (5) business days after receipt (or
deemed receipt pursuant to Section 30) by Tenant of written notice from
Landlord that such payment was due, but was not paid as of the due date; or

                      24.1.2  If Tenant fails to perform any term, covenant or condition of this
Lease except those requiring the payment of money to Landlord as set forth in
Section 24.1.1 above (including Tenant’s obligation to accept delivery of
possession of phases of the Premises in accordance with Section 1.3, above),
and Tenant fails to cure such breach within fifteen (15) calendar days after
receipt (or deemed receipt pursuant to Section 30) by Tenant of written notice
from Landlord where such breach could reasonably be cured within such fifteen
(15) calendar day period; provided,

70

 

however, that where such failure could not reasonably be cured within the
fifteen (15) calendar day period, Tenant shall not be in Default if it
commences such performance promptly after its receipt of Landlord’s written
notice and diligently thereafter prosecutes the same to completion; provided
that the foregoing cure period shall not be invoked to prevent Landlord from
exercising its rights under Section 38 below to perform an obligation which
Tenant has failed to perform under this Lease on Tenant’s behalf (and at
Tenant’s expense), and with notice to the extent reasonable, in cases of
Emergency; or

                      24.1.3 If Tenant shall (i) make an assignment for the benefit of
creditors, (ii) acquiesce in a petition in any court in any bankruptcy,
reorganization, composition, extension or insolvency proceedings, (iii) seek,
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of Tenant and of all or substantially all of Tenant’s property, (iv)
file a petition seeking an order for relief under the Bankruptcy Code, as now
or hereafter amended or supplemented, or by filing any petition under any other
present or future federal, state or other statute or law for the same or
similar relief, or (v) fail to win the dismissal, discontinuation or vacating
of any involuntary bankruptcy proceeding within ninety (90) days after such
proceeding is initiated.

            24.2 Remedies.

                    (A)     Upon a Default, Landlord shall have the following remedies, in
addition to all other rights and remedies provided by law or available in
equity or otherwise provided in this Lease, any one or more of which Landlord
may resort to cumulatively, consecutively, or in the alternative:

                             (i)     Landlord may continue this Lease in full force and effect, and this
Lease shall continue in full force and effect as long as Landlord does not
terminate this Lease, and Landlord shall have the right to collect Base Rent,
Additional Rent and other charges when due.

                             (ii)     Landlord may terminate this Lease, or may terminate Tenant’s right to
possession of the Premises, at any time by giving written notice to that
effect, in which event Landlord covenants to use commercially reasonable
efforts to relet the Premises or any part thereof and mitigate its damages, as
more fully set forth herein. Upon the giving of a notice of the termination of
this Lease, this Lease (and all of Tenant’s rights hereunder) shall immediately
terminate, provided that, without limitation, Tenant’s obligation to pay Base
Rent, Additional Rent and any other damages otherwise payable under this
Section 24, shall survive such termination and shall not be extinguished
thereby (but Landlord’s right to recover damages in respect of the same shall
be subject to the limitations set forth in this Section 24). Upon the giving
of a notice of the termination of Tenant’s right of possession, all of Tenant’s
rights in and to possession of the Premises shall terminate but this Lease
shall continue subject to the effect of this Section 24. Upon such termination,
but only after Landlord obtains an order of a court of competent jurisdiction
ordering Tenant’s eviction or surrender to Landlord of the Premises, Tenant
shall surrender and vacate the Premises in the condition required by Section
26, and Landlord may re-enter and take possession of the Premises and all the
remaining improvements or property and eject Tenant or any of the Tenant’s
subtenants, assignees or other person or persons claiming any right under or
through Tenant or eject

71

 

some and not others or eject none, but again only after Landlord obtains a
final order of a court of competent jurisdiction ordering Tenant’s eviction or
surrender to Landlord of the Premises. This Lease may also be terminated by a
judgment specifically providing for termination. Any termination under this
Section shall not release Tenant from the payment of any sum then due Landlord
or from any claim for damages permitted under this Section, or from the payment
of Rent, Additional Rent or other sum previously accrued or thereafter accruing
against Tenant, all of which shall expressly survive such termination. No act
by Landlord other than giving written notice to Tenant shall terminate this
Lease. Acts of maintenance, efforts to relet the Premises or the appointment
of a receiver on Landlord’s initiative to protect Landlord’s interest under
this Lease shall not constitute a constructive or other termination of Tenant’s
right to possession or of this Lease, either of which may be effected solely by
an express written notice from Landlord to Tenant. Upon termination, and
provided Tenant has not removed such personal property from the Premises within
five (5) days after Landlord has delivered an additional written demand to
Tenant to remove its personal property from the Premises immediately by virtue
of such termination (stating that the same will be removed, stored and/or
discarded by Landlord if not removed by Tenant from the Premises within five
(5) days thereafter, all of Tenant’s remaining personal property at the
Premises shall thereafter be deemed to have been abandoned by Tenant, and
Landlord shall thereupon have the right to remove all such personal property
from the Premises and to either store same at Tenant’s cost or otherwise
dispose of same at Tenant’s expense. In the event of any termination described
in this subsection, Landlord shall have the right to seek to recover from
Tenant as damages:

		
	 	                                (a)     The worth at the time of award of unpaid Base Rent, Additional
Rent and other sums due and payable which had accrued at the time of
termination (and the “worth at the time of award” of the amounts referred
to in this Section 24.2.(A)(ii)(a) shall be computed by allowing interest
at the Default Rate through the date of payment); plus
	 
	 	                                (b)     The worth at the time of award of the amount by which the unpaid
Base Rent, Additional Rent and other sums due and payable, which would
have been payable after termination for the balance of the Lease Term,
exceeds the fair rental value of the Premises for the balance of the
Term, which Tenant shall have the burden of establishing unless such
amount is in fact established on the basis of actual leases entered into
by Landlord after Tenant’s Default, as more fully set forth below (and
the “worth at the time of award” of the amounts referred to in this
Section 24.2.(B)(ii)(b) shall be computed by discounting the same to
present value using a discount rate of equal to the average yield to
maturity of United States Treasury securities having a maturity most
closely approximating the then unexpired Term of this Lease, plus
one-hundred (100) basis points (hereinafter referred to as the
“Applicable Discount Rate”); plus
	 
	 	                                (c)     Any other amount necessary to compensate Landlord for all of the
reasonable out-of-pocket costs incurred on account of Tenant’s failure to
perform Tenant’s obligations under this Lease, including, without
limitation, any costs or expenses reasonably incurred by Landlord: (i)
in retaking possession of the Premises; (ii) in

72

 

		
	 	maintaining, repairing, preserving, restoring, or cleaning the
Premises; (iii) in replacing, altering or rehabilitating the Premises or
a portion thereof, for reletting to a new tenant or tenants; (iii) for
leasing commissions; or (iv) for any other costs reasonably necessary or
appropriate to relet the Premises. To the extent any of such costs
described in clauses (iii), (iv) and/or (v) are incurred in connection
with a lease transaction having a term in excess of the remaining Term
hereof, all aggregate amount of such costs shall be amortized on a
straight-line basis over the term of such new lease, assuming equal
monthly installments of principal and interest, at an interest rate equal
to the greater of (i) the Default Rate, or (ii) twelve percent (12%) per
annum, and Tenant’s liability shall be limited to the amortized portion
of the same (i.e., the monthly payments as so determined) falling within
the Term hereof.

In lieu of the amounts recoverable by Landlord pursuant to Section
24.2.(B)(ii)(b), above, but in addition to the amounts specified in Section
24.2(B)(ii)(a) and Section 24.2(B)(ii)(c) (or any other portion of this Section
24), Landlord may, at its sole election, recover “Indemnity Payments,” as
defined hereinbelow, from Tenant. For purposes of this Lease “Indemnity
Payments” means an amount equal to the Base Rent, Additional Rent and other
payments provided for in this Lease which would have become due and owing
hereunder from time to time during the unexpired Lease Term after the effective
date of the termination, but for such termination, less the Base Rent,
Additional Rent and other payments, if any, actually collected by Landlord and
allocable to the Premises. If Landlord elects to pursue Indemnity Payments as
set forth above, Tenant shall, on demand, make Indemnity Payments monthly, and
Landlord may sue for all Indemnity Payments at any time after they accrue,
either monthly, or at less frequent intervals. Tenant further agrees that
Landlord may bring suit for Indemnity Payments and/or any other damages
recoverable herein at or after the end of the Lease Term as originally
contemplated under this Lease, and Tenant agrees that, in such event,
Landlord’s cause of action to recover the Indemnity Payments shall be deemed to
have accrued on the last day of the Lease Term as originally contemplated. In
seeking any new tenant for the Premises, Landlord shall be entitled to grant
any concessions it deems reasonably necessary, as more fully set forth in
Section 24.2(E), below. In no event shall Tenant be entitled to any excess of
any rental obtained by reletting over and above the rental herein reserved. To
the fullest extent permitted by law, Tenant waives redemption or relief from
forfeiture under any other present or future law, in the event Tenant is
evicted from the Premises.

                      (B)     Landlord may, with or without terminating this Lease, re-enter the
Premises pursuant to judicial process (except in the event of an abandonment by
Tenant, or a failure of Tenant to take possession, in which event Landlord may
re-enter without legal process to the extent allowed by law) and remove all
persons and property from the Premises; such property may be removed and stored
in a public warehouse or elsewhere at the cost of and for the account of
Tenant. No re-entry or taking possession of the Premises by Landlord pursuant
to this subsection shall be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant.

                      (C)     Tenant, on its own behalf and on behalf of all persons claiming
through or under Tenant, including all creditors, does hereby specifically
waive and surrender any and all rights

73

 

and privileges, so far as is permitted by law, which Tenant and all such
persons might otherwise have under any present or future law (1) to the service
of any notice to quit or of Landlord’s intention to re-enter (provided the
foregoing shall not be construed to relieve Landlord of the obligation to
provide Tenant with any written notice and opportunity to cure otherwise
provided for under this Lease), (2) to redeem the Premises, (3) to re-enter or
repossess the Premises, (4) to restore the operation of this Lease, with
respect to any dispossession of Tenant by judgment or warrant of any court or
judge, or any re-entry by Landlord, or any expiration or termination of this
Lease, whether such dispossession, re-entry, expiration or termination shall be
by operation of law or pursuant to the provisions of this Lease, or (5) to the
benefit of any law which exempts property from liability for debt.

                      (D)     Anything contained herein to the contrary notwithstanding, in no event
shall Landlord be entitled to take possession of the Premises except pursuant
to legal proceedings except in the case of an abandonment by Tenant, or a
failure of Tenant to take possession, in which event Landlord may re-enter
without legal process.

                      (E)     Notwithstanding anything in this Section 24 to the contrary, in the
event of termination of this Lease or repossession of the Premises after a
Default, and provided Tenant has cooperated reasonably with Landlord in
surrendering possession of the Premises to Landlord after such Default has been
sustained by a court of competent jurisdiction (in the case of a bona fide
dispute) or where there is no bona fide dispute, after the cure period for such
Default expired, Landlord agrees to use commercially reasonable efforts to
mitigate its damages and relet the Premises after any termination of this Lease
or Tenant’s right to possession of the Premises hereunder, provided that (i)
(if applicable) Landlord shall not be obligated to show preference for
reletting the Premises over any other vacant space in Annapolis Point Corporate
Center then owned by Landlord or a Landlord Affiliate; (ii) Landlord shall have
the right to divide the Premises, or to consolidate portions of the Premises
with other spaces, in order to facilitate such reletting, as Landlord deems
appropriate in its sole, but reasonable, discretion, (iii) Landlord shall not
have any obligation to use efforts other than commercially reasonable efforts
under the circumstances to relet the Premises and/or collect rental after any
such reletting, and Landlord shall be deemed to have satisfied its obligation
to use commercially reasonable efforts to relet the Premises (or any applicable
portion thereof) if Landlord lists the Premises (or the applicable portion
thereof) for lease with a commercial real estate broker licensed in Maryland,
and gives reasonable consideration to incoming offers to lease space from
creditworthy tenants at market terms, and, where it determines in its
reasonable judgment to do so, negotiates with such prospective tenants for such
lease(s), (iv) Landlord may relet the whole or any portion of the Premises for
any period, to any tenant, and for any use and purpose, upon such terms as it
deems appropriate in its sole but reasonable discretion, and may grant any
rental or other lease concessions as it deems advisable in its sole, but
reasonable, discretion, including free rent. In no event shall Tenant be
entitled to any excess of any rental obtained under this Section 24.2.6 by
reletting over and above the Base Rent and Additional Rent herein reserved.
The intent of this Article 24 is to make Landlord whole in the event of a
Default by Tenant, and, accordingly, Landlord may not invoke the provisions of
this Section 24 in order to receive payment more than once for any damages
suffered by Landlord as a result of, or to receive a windfall or extract a
penalty from Tenant by virtue of, such Default by Tenant.

74

 

                      (F)     In the event Landlord relets all or any portion of the Premises after
a Default by Tenant, Landlord shall have the right (but not the obligation) to
seek the lump sum amount described in Section 24.2(A)(ii)(b) (herein referred
to as “lump sum future rent loss damages”) with respect solely to such relet
portion of the Premises, in lieu of Indemnity Payments thereafter accruing with
respect to such relet portion of the Premises, in which event: (i) the
calculation of the Base Rent, Additional Rent and other payments due for the
balance of the Term, and of the “fair rental value of the Premises for the
balance of the Term” (for purposes of calculating the lump sum future rent loss
damages) shall be construed to refer solely to that portion of the Premises
which was relet, and as to which Landlord is exercising its rights under this
Section 24.2(F); (ii) such calculation shall be made on the basis of the actual
rents received under the replacement lease, the actual downtime experienced in
reletting, and all other economic factors which reasonably should be considered
in evaluating the amount of future rent loss suffered by Landlord in connection
with such reletting transaction as compared to the economic terms of this Lease
applicable to such portion of the Premises; and (iii) such lump sum recovery
shall not affect Landlord’s right to continue to seek and receive Indemnity
Payments for the remaining portions of the Premises (whether the same have or
have not been relet) under Section 24.2(B), and to exercise thereafter its
right under this Section 24.2(F) to seek lump sum future rent loss damages as
to any such portion of the Premises which is subsequently relet, which right
shall survive any calculation and payment of lump sum future rent loss damages
for any portion of the Premises as to which Landlord exercises its rights under
this Section 24.2(F).

                      (G)     To the extent that this Lease might be construed as a contract to make
a lease as opposed to the conveyance of a leasehold interest because a Default
occurs under this Lease prior to Tenant’s acceptance of possession of the
Premises, the parties agree that Landlord’s rights and remedies as set forth in
this Lease (including this Section 24 and Section 3) shall apply as contractual
rights and remedies of Landlord against Tenant.

                      (H)     Nothing set forth in this Section 24 shall be construed to limit
Landlord’s rights in and with respect to the Security Deposit upon the
occurrence of a Default by Tenant under this Lease, or under circumstances
where Landlord is entitled under the express terms of Section 3 of this Lease
to draw upon the Letter of Credit due to Tenant’s failure to provide a renewal,
extension or substitute letter of credit when required to do so thereunder, all
as more fully established in and limited by the terms of Article 3 of this
Lease.

                      (I)     Notwithstanding any provision of this lease to the contrary, neither
Landlord or Tenant shall be liable to the other for unforeseeable and/or
consequential damages of any kind, provided that specific measures of damages
provided for in this Lease (for example, under this Section 24 or under Section
3.5, above) shall be deemed not to constitute unforeseeable or consequential
damages.

                      (J)     Notwithstanding
the foregoing provisions of this Section 24.2 to the
contrary, if and for so long as Tenant is disputing in good faith a claim by
Landlord that Tenant is in Non-

75

 

Monetary Default (as such term is hereinafter defined), and provided
Tenant has notified Landlord of the basis for such dispute in writing and with
reasonable particularity within the initial cure period provided for for such
claimed Non-Monetary Default under Section 24, Landlord agrees to forbear on
the exercise of its right to terminate this Lease or to terminate Tenant’s
right of possession unless and until it has been determined by a court or by
arbitration (as applicable) that the claimed Non-Monetary Default does exist
and the same is not thereafter fully cured by Tenant to Landlord’s satisfaction
within ten (10) days after the court’s or arbitrator’s determination. The
foregoing shall not restrict Landlord from exercising any other rights or
remedies provided for hereunder, including the right to seek damages and/or
equitable relief, and the right to perform unperformed obligations of Tenant
pursuant to Section 38, in connection with a claimed Non-Monetary Default by
Tenant, although Landlord acknowledges that its right to recover from Tenant
the costs associated with the exercise or attempted exercise of such other
rights and/or remedies may be limited or inapplicable if the dispute in
question is ultimately resolved in Tenant’s favor. The term “Non-Monetary
Default” shall mean a Default by Tenant of any covenant in this Lease other
than a Default in the payment of Base Rent or Additional Rent.

25. SUBORDINATION.

            25.1 Subordination. Subject to the last sentence of this Section 25.1,
this Lease is and shall at all times be and remain subject and subordinate to
the lien of any Mortgage or Ground Lease now or hereafter in force against the
Property, and to all advances made or hereafter to be made upon the security
thereof, and Tenant shall execute and return to Landlord any customary and
reasonable documentation requested by Landlord in order to confirm the
foregoing subordination (and reasonably acceptable to Tenant) within ten (10)
business days after Landlord’s written request. In the event any proceedings
are brought for foreclosure, or in the event of the exercise of the power of
sale under any mortgage or deed of trust made by the Landlord covering the
Property, Tenant shall attorn to the purchaser at any such foreclosure, or to
the grantee of a deed in lieu of foreclosure, and recognize such purchaser or
grantee as the Landlord under this Lease (subject to the terms and requirements
of this Lease). Notwithstanding the provisions of this Section 25.1 to the
contrary, the subordination of this Lease by Tenant to the lien of any Mortgage
or Ground Lease now or hereafter in force against the Property, and to all
advances made or hereafter to be made upon the security thereof, shall be
expressly subject to Tenant’s receipt of an SNDA from the mortgagee, deed of
trust beneficiary, ground lessor or underlying lessor thereunder, which SNDA
substantially meets the requirements of this Lease, or is otherwise reasonably
accepted by Tenant, all as more fully set forth in Section 25.2, below.

            25.2 Non-Disturbance. Landlord and Tenant agree that the subordination of
this Lease to any future Mortgage or Ground Lease shall be subject to the
delivery of an SNDA in a form to be negotiated in good faith between Landlord,
Tenant and the applicable lienholder or lessor, to which the approval by Tenant
and Landlord shall not be unreasonably withheld, conditioned or delayed (and
which shall be deemed reasonable if such form substantially meets the
definition of SNDA set forth in Section 1.11 of this Lease). Upon obtaining
such SNDA from such lienholder or lessor, Landlord and Tenant each agree to
promptly execute such SNDA and to deliver same to the applicable parties.
Landlord and Tenant further agree that the form of SNDA attached as Exhibit H

76

 

 hereto and made a part hereof is now and shall be a mutually acceptable
form of SNDA.

26. SURRENDER OF POSSESSION.

            Upon expiration of the Lease Term as to each applicable phase of the
Premises, Tenant shall promptly and peacefully surrender such phase of the
Premises to Landlord in as good condition as when received by Tenant from
Landlord, reasonable use and wear and tear and damage by insurable fire and
casualty, and by condemnation, excepted.

27. NON-WAIVER.

            Waiver by either party of any breach of any term, covenant or condition
herein contained shall not be deemed to be a waiver of such term, covenant, or
condition(s), or any subsequent breach of the same or any other term, covenant
or condition of this Lease.

28. HOLDOVER.

77

 

     28.1 Generally. If Tenant shall, without the written consent of Landlord,
hold over with respect to any portion of the Premises after the expiration of
the Lease, the same shall constitute a Default hereunder and Tenant shall be
deemed a tenant at sufferance with respect to the Premises, which tenancy may
be terminated as provided by applicable state law. During any holdover tenancy
(whether or not consented to by Landlord), unless Landlord has otherwise agreed
in writing, Tenant agrees to pay to Landlord an occupancy charge equal to (i)
one hundred twenty five percent (125%) of the Rent (including Additional Rent)
as was in effect under this Lease for the last month of the Lease Term for the
first thirty (30) days of such holdover (determined on a phase-by-phase basis,
even if portions of each such phase are surrendered by Tenant), and (ii) for
each day of such holdover after the end of the initial 30-day period, the
greater of (A) one hundred fifty percent (150%) of the Rent (including
Additional Rent) as was in effect under this Lease for the last month of the
Lease Term, or (B) one hundred fifty percent (150%) of the fair market rental
rate then applicable to comparable spaces in the Applicable Submarket.
Landlord and Tenant agree that the fair market rental rate applicable under
clause (ii)(B), above shall (1) include both base rental and Additional Rent,
and (2) shall be determined under the Renewal Parameters as defined herein, and
using either the Three Broker Method substantially as described in Section 51
of this Lease, or by a court of competent jurisdiction, as Landlord may elect
in its sole discretion. Such payments shall be made in an amount equal to one
(1) full month’s holdover rent at the beginning of each month of such holdover,
without being deemed to create a month-to-month tenancy. In the case of a
holdover which has been consented to by Landlord, unless otherwise agreed to in
writing by Landlord and Tenant, Tenant shall give to Landlord thirty (30) days
prior written notice of any intention to quit the Premises, and Tenant shall be
entitled to thirty (30) days prior written notice to quit the Premises, except
in the event of non-payment of Rent or Additional Rent (in advance) or the
existence of a Default. Except as provided in the previous sentence, upon
expiration of the Lease Term as provided herein, Tenant shall not be entitled
to any notice to quit, the usual notice to quit being hereby expressly waived
under such circumstances, and Tenant shall surrender the Premises on the last
day of the Lease Term as provided in Section 26, above.

     28.2 Short Term Renewal Option.

               28.2.1 In order to accommodate Tenant’s ability to time its surrender of
the Premises consistent with its then-existing circumstances (as of the
expiration of the Term of this Lease), Landlord agrees that Tenant shall have a
one-time right and option (the “Surrender Option”) to extend the Term of this
Lease as to all (but not less than all) of the Premises for a fixed term of six
(6) months, which additional period (the “Surrender Term”) shall constitute a
part of the Term of this Lease. Tenant shall exercise its Surrender Option by
written notice to Landlord delivered not more than eighteen (18) months and not
less than nine (9) months prior to the expiration of the Term then ending. In
the event that Tenant fails or declines to provide the applicable written
notice exercising the Surrender Option (subject, however, to Tenant’s right to
provide a Renewal Notice pursuant to Section 51, if a Renewal Option is then
still available for exercise by Tenant) prior to the expiration of the time
period described in the preceding sentence (time being of the essence with
respect thereto), then the Surrender Option, and all unexercised Renewal
Options, shall, upon the expiration of such time period, become null and void
and be of no further force or effect and Tenant and

78

 

Landlord shall, at the request of Landlord, execute an instrument in form and substance acceptable to
Landlord confirming such facts. If Tenant exercises the Surrender Option, the same shall constitute Tenant’s
irrevocable waiver of all unexercised Renewal Options under this Lease, if any.

               28.2.2 The Surrender Term shall be upon the same terms and conditions of
this Lease except that: (a) the monthly Base Rent during the Surrender Term
shall equal one hundred three percent (103%) of the monthly Base Rent in effect
for the last month of Term then ending; (b) Tenant shall have no further option
to renew or extend the Lease Term beyond the expiration of the Surrender Term;
and (c) the Premises shall be delivered to and retained by Tenant in their then
existing, “as is” condition as of the date the Surrender Term commences.

29. CONDEMNATION.

     29.1 Definitions. The terms “eminent domain”, “condemnation”, and
“taken”, and the like in this Section 29 include takings for public or
quasi-public use, and sales under threat of condemnation and private purchases
in place of condemnation by any authority authorized to exercise the power of
eminent domain.

     29.2 Taking. If the whole of the Premises is taken, either permanently or
temporarily, by eminent domain or condemnation, this Lease shall automatically
terminate as of the date title vests in the condemning authority, and Tenant
shall pay all Base Rent, Additional Rent, and other payments up to that date.
For purposes of this Lease, any temporary taking which exceeds one hundred
eighty (180) consecutive days shall be deemed to be a permanent taking. If
fifteen percent (15%) or more of the Premises is permanently taken by eminent
domain or condemnation, or if all access to the Premises is, by virtue of a
taking by eminent domain or condemnation, denied for a period in excess of one
hundred eighty (180) consecutive days and substitute access reasonably
acceptable to Tenant is not available prior to the end of such period, then
Tenant shall have the right (to be exercised by written notice to Landlord
within sixty (60) days after receipt of notice of said taking or at any time
after the expiration of the 180-day period in which access is denied, as
applicable, but in no event after any temporary taking ends) to terminate this
Lease from the date when possession was taken thereunder pursuant to such
proceeding or purchase. In addition, Tenant shall have the right to terminate
this Lease by written notice to Landlord if, as a result of any condemnation or
other similar action (i) an amount of the parking spaces in the Parking
Facilities are permanently taken, such that the remaining parking available to
Tenant and Tenant’s agents therein (including, in the case of a temporary
taking only, any parking that may be made available through means of stacking,
valet parking and other reasonable substitute parking, which may include
off-site parking with a shuttle bus service operated by Landlord for the
benefit of Tenant) is less than ninety (90%) of the Parking Allocation granted
to Tenant herein, or (ii) access to the Premises from a public right of way to
the internal roads of the Project is denied for a period in excess of one
hundred eighty (180) consecutive days and substitute access reasonably
acceptable to Tenant is not available prior to the end of such period. Tenant
agrees that reasonable substitute access will be deemed to exist if a detour
involving a different route from any public right of way to the Premises is
made available during any period where roadwork of a non-permanent nature is
being performed by any applicable governmental or quasi-governmental authority.
Landlord and Tenant further agree that the widening or

79

 

reconfiguration of Kinkaid Road or any other road providing access to the Premises,
if any, shall not constitute a taking. If Tenant does not elect to terminate this
Lease, as aforesaid, then Landlord shall, within a reasonable time after title
vests in the condemning authority, repair and restore, at Landlord’s expense, the portion not
taken so as to render same into an architectural whole, and, if any portion of
the Premises is taken, thereafter the Rent shall be reduced (on a per square
foot basis) in proportion to the portion of the Premises taken. If there is a
temporary taking involving the Premises or Buildings, if a taking of other
portions of the Buildings or Common Areas does not deny Tenant access to the
Buildings and Premises, or permanently reduce parking in the amount described
above, or if less than fifteen percent (15%) of the Premises is permanently
taken by eminent domain or condemnation, then this Lease shall not terminate,
and Landlord shall repair and restore, at its own expense, the portion not
taken so as to render same into an architectural whole, and, if any portion of
the Premises was taken, albeit even temporarily, the Rent shall thereafter be
reduced (on a per square foot basis) in proportion to the portion of the
Premises taken but solely for the period of the taking if the same is not
permanent.

     29.3 Award. Except as set forth below, Landlord reserves all rights to
damages to the Premises or arising out of the loss of any leasehold interest in
the Premises created hereby, arising in connection with any partial or entire
taking by eminent domain or condemnation. Tenant shall make no claim against
Landlord or the condemning authority for damages for termination of Tenant’s
leasehold interest or for interference with Tenant’s business as a result of
such taking. The foregoing notwithstanding, Tenant shall have the right to
claim and recover from the condemning authority compensation for any loss which
Tenant may incur for Tenant’s moving expenses, business interruption or taking
of Tenant’s personal property (but specifically excluding any leasehold
interest in the Buildings or Premises) under the then applicable law provided
that Tenant shall not make any claim that will detract from or diminish any
award for which Landlord may make a claim.

30. NOTICES.

     All notices and demands which may be required or permitted to be given to
either party hereunder shall be in writing, and shall be delivered personally
or sent by United States certified mail, postage prepaid, return receipt
requested, or by Federal Express or other reputable overnight carrier (with
confirmation of receipt or refusal of delivery), to the addresses set out in
Section 1.7, and to such other person or place as each party may from time to
time designate in a notice to the other. Notices may also be given by
facsimile transmission (with a confirmed receipt) to the facsimile number
indicated in Section 1.7, provided that any notice given by facsimile
transmission shall also be delivered using one of the other permitted methods
of delivering notices under this Section 30, provided that any notice delivered
by facsimile transmission shall be deemed to have been given upon the date of
receipt as reflected in the facsimile receipt confirmation. Any notice from
Tenant to Landlord asserting a default by Landlord under this Lease must also
be provided to Landlord’s mortgagee, at the address provided under Section 1.7
of this Lease, or to such other person or place as such mortgagee may notify
Tenant pursuant to the notice provisions of the SNDA or this Section 30. All
notice delivered other than by facsimile shall be deemed given upon the earlier
to occur of actual receipt or refusal of delivery.

80

 

31. MORTGAGEE PROTECTION.

     So long as Tenant receives an applicable SNDA, or is senior to such
mortgagee (and receives notice from such mortgagee of the mortgagee’s notice
address), Tenant agrees to give any mortgagee(s) and/or trust deed holder(s),
by certified mail, a copy of any notice of default served upon the Landlord,
provided that prior to such notice, if such notice address is different than
that currently stated in Section 1.7 of this Lease, Tenant has been notified
in writing (by way of notice of assignment of rents and leases, delivery of an
SNDA, or otherwise) of the addresses of such mortgagee(s) and/or trust deed
holder(s). Except as may otherwise be provided to the contrary in the SNDA,
and without in any way affecting or extending the 60-day irrevocable election
period described in clause (b) of the definition of “SNDA” in Section 1.11,
above and in the SNDA attached as Exhibit H to this Lease, Tenant further
agrees that if Landlord shall have failed to cure such default within the time
provided for in this Lease, then the mortgagee(s) and/or trust deed holder(s)
shall have an additional thirty (30) days within which to cure such default
during which time Tenant shall not have the right to pursue any claim against
Landlord, such mortgagee and/or such trust deed holder(s), including but not
limited to any claim of actual or constructive eviction.

32. COSTS AND ATTORNEYS’ FEES.

     In any litigation between the parties arising out of this Lease, the
non-prevailing party shall pay to the prevailing party all reasonable expenses
and court costs including reasonable attorneys’ fees incurred by the prevailing
party, in preparation for and (if applicable) at trial, and on appeal.

33. BROKERS.

     33.1 Tenant represents and warrants to Landlord that neither it nor its
officers or agents nor anyone acting on its behalf has dealt with any real
estate broker other than Annapolis Partners LLC, acting as a broker under owner
exemption pursuant to Maryland brokerage law, in the negotiating or making of
this Lease. Annapolis Partners LLC shall be paid a market rate leasing
commission in respect of this Lease, which commission shall constitute a part
of the Total Cost to Complete, as defined in the Work Agreement. Tenant agrees
to indemnify and hold Landlord, its agents, employees, partners, directors,
shareholders and independent contractors harmless from all liabilities, costs,
demands, judgments, settlements, claims and losses, including reasonable
attorneys fees and costs, incurred by Landlord in conjunction with any breach
of the foregoing representation and warranty by Tenant. Landlord represents
and warrants to Tenant that neither it nor its officers or agents nor anyone
acting on its behalf has dealt with any brokers in negotiating or making this
Lease, and shall indemnify, defend and hold Tenant, and its agents, employees,
partners, directors, shareholders and independent contractors harmless from all
liabilities, costs, demands, judgments, settlements, claims and losses,
including reasonable attorneys fees and costs, incurred by Tenant in
conjunction with any breach of the foregoing representation and warranty by
Landlord.

34. LANDLORD’S LIABILITY; LANDLORD’S DEFAULT.

81

 

     34.1 No Personal Liability. Anything in this Lease to the contrary
notwithstanding, Tenant shall look solely to Landlord’s interest in the
Property (including the net proceeds of insurance, condemnation and sale
thereof), but not to any other personal assets, or separate business or
non-business assets, of Landlord, or any partner, shareholder,
member, officer or representative of Landlord, for the satisfaction of any
claim brought by Tenant against Landlord; and if Landlord shall fail to
perform any covenant, term or condition of this Lease upon Landlord’s part to
be performed, and as a consequence of such default Tenant shall recover a money
judgment against Landlord, such judgment shall be satisfied only (i) out of the
proceeds of sale received upon levy against the right, title and interest of
Landlord in the Property, (ii) out of the net proceeds of insurance or
condemnation in respect of the Land and Building, and/or (iii) to the extent
not encumbered by a secured creditor, out of the rents or other incomes
receivable by Landlord from the property of which the Premises are a part. In
no event shall Landlord transfer the Property to any person or entity without
transferring or assigning this Lease to such person or entity. In addition, to
the extent Landlord misappropriates funds paid to Landlord in respect of Real
Estate Taxes (i.e., fails to pay Real Estate Taxes despite having received such
payments from Tenant), Landlord shall have personal liability to Tenant
hereunder to the extent (but solely to the extent) of such misappropriation.

     34.2 Notice and Cure. In no event shall Landlord be in default of this
Lease unless Tenant notifies Landlord of the precise nature of the alleged
breach by Landlord, and such breach is not cured within fifteen (15) calendar
days after the date of Landlord’s receipt of such notice; provided that (i) if
the alleged breach is of such a nature that it cannot reasonably be cured
within such fifteen (15) calendar day period, then Landlord shall not be in
default if a cure of such breach is commenced within such fifteen (15) day
period and diligently thereafter prosecuted to completion, and (ii) in the
event of an Emergency, such grace or cure period may be shortened as reasonably
necessary given the scope and nature of the Emergency, provided that such
shortened grace or cure period shall only apply to permit the exercise of
Tenant’s self help rights under Section 34.4, below.

     34.3
Rights and Remedies — Generally. In the event of a default by
Landlord after expiration of applicable cure periods, Tenant shall be entitled
to pursue all rights and remedies available at law or in equity except as
limited by this Lease, and in all events excluding consequential damages. In
addition, in no event shall Tenant have any right to terminate this Lease by
virtue of any uncured default by Landlord, except (i) under circumstances
affecting a substantial portion of the Premises which would constitute a
constructive eviction under applicable principles of the law of the State of
Maryland (and with respect to which Tenant satisfies the requirements for a
constructive eviction claim under applicable law), and (ii) where otherwise
expressly permitted pursuant to the terms of this Lease, if ever. Tenant shall
have the obligation to use commercially reasonable efforts under the
circumstances to mitigate its damages in the event of any default by Landlord
hereunder.

     34.4 Tenant’s Right to Perform Landlord’s Obligations After a Default by
Landlord and to Pre-Judgment Offset.

          34.4.1 Among other remedies permitted to be exercised by Tenant upon a
default

82

 

by Landlord of its obligations hereunder after expiration of applicable
cure periods established under Section 34.2, above (including any reduced cure
period applicable by virtue of an Emergency or the existence of an Abatement
Event), and without waiving or releasing Landlord from any such obligation of
Landlord, in the event any such default impairs Tenant’s use, occupancy and/or
enjoyment of the Premises, Tenant may, but shall not be obligated to,
perform any such obligation of Landlord (including the right to exercise
Landlord’s self-help rights under the Reciprocal Easement Agreement, if
applicable), and all reasonable sums rightfully paid by Tenant under this
Section, and all reasonable penalties, interest and costs incurred in
connection therewith, plus an administrative charge equal to ten percent (10%)
of the cost of such performance, shall be due and payable by Landlord (together
with interest at the Default Rate from the date such amount was paid by Tenant
to the date such amount was repaid by Landlord) within thirty (30) days after
Tenant’s written demand to Landlord accompanied by reasonable substantiation of
the applicable costs (provided, however, that if Tenant is not then current
with respect to all monies due Landlord, such sums due from Landlord shall
instead be credited against Tenant’s outstanding balance). The foregoing right
to perform Landlord’s obligations shall only apply after the requisite notice
and opportunity to cure has been afforded to Landlord (taking into account any
shortened cure period permitted in cases of Emergency, and in case of an
Abatement Event as provided below) as long as Landlord is not diligently
engaged in curing such default. In the case of an Abatement Event, Tenant may
exercise the self help rights provided under this Section 34.4 to cure the
problem giving rise to the Abatement Event if Landlord does not commence to
take steps to cure a problem which might give rise to an Abatement Event within
one (1) business day after Landlord (and Landlord’s mortgagee) are first
notified thereof by Tenant, or at any time thereafter fails to pursue such cure
in a diligent fashion. The foregoing cure period applicable to Abatement
Events shall not be construed to modify any provision of this Lease provided
for a shortened grace or cure period (for purposes of exercising self-help
rights) in the event of an Emergency. To the extent permitted by Section 9.5,
above, amounts paid by Landlord to Tenant in respect of Tenant’s exercise of
self-help rights under this Section 34.4.1 may constitute Operating Costs
recoverable by Landlord under (and pursuant to the terms and limitations of)
Article 9 of this Lease. Nothing set forth in this Section 34.4.1 shall be
construed to limit any rights of self-help provided for under the applicable
provisions of Section III(C).1 of Exhibit C of this Lease.

            34.4.2    If Landlord fails to make any payment of Real Estate Taxes
required to be made by Landlord under Article 10 of this Lease prior to
delinquency (other than as a result of Tenant’s failure to make the
reimbursement Tenant is required to make under Article 10) and such failure
continues for a period of thirty (30) days after written notice thereof from
Tenant to Landlord (and Landlord’s mortgagee), Tenant shall have the right, but
not the obligation, to pay such Real Estate Taxes on behalf of Landlord, and to
deduct the amount so paid (plus interest from the date paid to the date
recovered at the Default Rate) from the next payments of Rent required to be
paid by Tenant hereunder, until such amount has been recovered in full.

     34.5    Enforcement of Final Judgment for Amounts Due and Owing. If
Landlord, within thirty (30) days after the receipt from Tenant of its written
demand therefor, fails to reimburse Tenant for the reasonable costs and
expenses of Tenant’s exercise of its self help rights hereunder, or any

83

 

other sums due and payable from Landlord to Tenant under this Lease, Tenant may seek
the entry of a judgment against Landlord for the amount thereof, plus interest
at the Default Rate and Tenant’s reasonable costs of collection (including
reasonable attorney’s fees). If Tenant thereafter obtains a final,
non-appealable judgment against Landlord, and Landlord fails to pay the amount
thereof within thirty (30) days after the date of such judgment, Tenant shall
have the right, in addition to the execution upon Landlord as and to the extent
permitted under Section 34.1, above, to offset the amount of such judgment in
full against the next payments of Base Rent and Additional Rent payable by Tenant
hereunder. The foregoing notwithstanding, a final arbitration award made pursuant
to Section 49 of this Lease, in connection with an arbitration proceeding where both
Landlord and Tenant had the opportunity to participate fully, shall be deemed
to constitute a final, non-appealable judgment within the meaning of this
Section 34.6.

     34.6 No Implied Rights of Offset. Except for the rights of offset
specifically and expressly set forth in this Lease, and subject to any
limitations on such rights of offset set forth in this Lease, Tenant shall have
no right of offset against Rent payable hereunder, whether such rights may
exist under statute, common law principles or otherwise.

35. ESTOPPEL CERTIFICATES.

     35.1 Tenant shall, from time to time, within fifteen (15) business days of
Landlord’s written request, execute, acknowledge and deliver to Landlord and
any designee of Landlord having a reasonable business interest in receiving
factual certifications regarding this Lease in connection with a commercial
business transaction involving Landlord and such designee, a written statement
certifying (to the extent true): the date the Lease was executed and the date
it expires; the date the Tenant entered occupancy of the Premises (or
applicable phases thereof); the amount of Base Rent, Additional Rent and other
charges due hereunder and the date to which such amounts have been paid; that
this Lease is in full force and effect and has not been assigned, modified,
supplemented or amended in any way (or specifying the date and terms of any
agreement so affecting this Lease); that this Lease represents the entire
agreement between the parties as to this leasing; that, to Tenant’s knowledge,
all conditions under this Lease to be performed by the Landlord have been
satisfied (or specifying any such conditions that have not been satisfied);
that, to Tenant’s knowledge, all required contributions by Landlord to Tenant
on account of Tenant’s improvements have been received (or specifying any such
contributions that have not been received); that, to Tenant’s knowledge, there
are no existing defenses or offsets which the Tenant has against the
enforcement of this Lease by the Landlord (or specifying any such existing
defenses or offsets if known to Tenant); that no Rent has been paid more than
one (1) month in advance; the amount of the Security Deposit that is then being
held by Landlord, if any; or any other customary factual matters correctly and
truthfully evidencing the status of the Lease, as may be reasonably required
either by a lender making a loan to Landlord to be secured by a deed of trust
or mortgage against the Building, or a purchaser of the Building, which written
statement shall be in substantially the same form as Exhibit G attached hereto
and made a part hereof by this reference. It is intended that any such
statement delivered pursuant to this paragraph may be relied upon by the
parties to whom such certificate is addressed (including Landlord, a
prospective purchaser of Landlord’s interest (and its mortgagee) and/or a
mortgagee of

84

 

Landlord’s interest or assignee of any mortgage upon Landlord’s
interest in the Building, if applicable). If Tenant fails to respond within
fifteen (15) business days after receipt by Tenant of a written request by
Landlord as herein provided, and such failure continues for an additional five
(5) business day period after Landlord notifies Tenant in writing of its
failure to have responded to the first request (a “Reminder Notice”) (which
Reminder Notice must specifically reference this Section 35 and state that, if
Tenant fails to provide the written statement within such five (5) business day
period, Tenant shall be deemed to have executed and delivered the written
estoppel certificate previously provided by Landlord without modification and
to have admitted the accuracy of any information set forth therein), then if
Tenant fails to provide the required statement within five (5) business days
after the date of the Reminder Notice, Tenant shall be deemed to have executed
and delivered the written estoppel certificate previously provided by Landlord
without modification and to have admitted the accuracy of any information set
forth therein.

     35.2 Landlord shall, from time to time, within fifteen (15) business days
after Tenant’s written request in connection with any third party transaction
in which such certificate is required by one of the parties, execute,
acknowledge and deliver to Tenant or its designee a written statement stating
(to the extent true): the date the Lease was executed and the date it expires;
the amount of Base Rent, additional rent and other charges due hereunder and
the date to which such amounts have been paid; that this Lease is in full force
and effect and, to Landlord’s knowledge (without special investigation), has
not been assigned, modified, supplemented or amended in any way (or specifying
the date and terms of any agreement so affecting this Lease); that this Lease
represents the entire agreement between the parties as to this leasing (or
identifying any such other agreements); that on the date of such certificate,
to Landlord’s knowledge, there is no Default on the part of Tenant which is
then continuing; that no Rent has been paid more than one (1) month in advance
(or, if so, the amount thereof); the amount of the Security Deposit that is
then being held by Landlord, if any; and/or any other matters evidencing the
status of the Lease as may reasonably be required either by the third party
requesting such certification in connection with such transaction or in
connection with any required SEC filing. It is intended that any such
statement delivered pursuant to this paragraph may be relied upon by the
parties to whom it is addressed. If Landlord fails to respond within fifteen
(15) business days after receipt by Landlord of a written request by Tenant as
herein provided, and such failure continues for an additional five (5) business
day period after Tenant notifies Landlord in writing of its failure to have
responded to the first request (a “Reminder Notice”) (which Reminder Notice
must specifically reference this Section 35 and state that, if Landlord fails
to provide the written statement within such five (5) business day period,
Landlord shall be deemed to have executed and delivered the written estoppel
certificate previously provided by Tenant without modification and to have
admitted the accuracy of any information set forth therein), then if Landlord
fails to provide the required statement within five (5) business days after the
date of the Reminder Notice, Landlord shall be deemed to have executed and
delivered the written estoppel certificate previously provided by Tenant
without modification and to have admitted the accuracy of any information set
forth therein.

36. FINANCIAL STATEMENTS.

85

 

     36.1 For so long as Tenant is and remains a publicly traded company which
meets its obligation to file financial statements as part of its annual and
quarterly reporting to the United States Securities and Exchange Commission
(the “SEC”), Tenant’s financial reporting obligations under Section 36.2,
below, shall be suspended and Landlord will during such period obtain copies of
the quarterly and annual financial statements filed by Tenant with the SEC
during the Term of this Lease from public sources.

     36.2 Subject to Section 36.1, above, Tenant shall, within ten (10) days
after Landlord’s request, which request may not be made more than once during
any fiscal quarter with regard to quarterly reports or more than once during
any fiscal year with regard to annual reports, deliver to Landlord, Tenant’s
unaudited quarterly financial statement for its most recent fiscal quarter and
(to the extent not previously delivered by Tenant to Landlord) Tenant’s audited
annual financial statement for its two (2) most recent fiscal years. Such quarterly
and annual financial statements shall include, at a minimum, a balance sheet, an income statement,
and a statement of change in financial position or sources and uses of cash,
together with any accompanying notes customary for the type of financial
statement being submitted under applicable FASB standards. Tenant hereby
agrees that Tenant’s annual financial statements shall be completed within
ninety (90) days after Tenant’s fiscal year-end and that Tenant’s quarterly
financial statements shall be completed within thirty (30) days after Tenant’s
fiscal quarter-end. The certified public accountant preparing any such annual
financial statement shall provide an opinion that such financial statement is
complete and materially accurate and that the same has been prepared in
accordance with generally accepted accounting principles consistently applied.

37. TRANSFER OF LANDLORD’S INTEREST.

               In the event of any transfer(s) of Landlord’s interest in the Premises or
the Building, other than a transfer for collateral purposes only, the
transferor shall be automatically relieved of any and all obligations and
liabilities on the part of Landlord accruing from and after the date of such
transfer, but solely to the extent such obligations are assumed by the
transferee either expressly or by operation of law, and, provided such
obligations are assumed (and this Lease, and Tenant’s rights and obligations
hereunder, are recognized by the transferee) either expressly or by operation
of law, Tenant agrees to attorn to the transferee as Landlord hereunder.

38. RIGHT TO PERFORM.

     If Tenant shall fail to pay any sum of money, other than Rent and
Additional Rent, required to be paid by it hereunder or shall fail to perform
any other act on its part to be performed hereunder, and such failure shall
continue for fifteen (15) calendar days or such longer period as is reasonably
necessary provided Tenant commences such performance promptly after its receipt
of Landlord’s written notice of such failure and diligently thereafter
prosecutes the same to completion, Landlord may, but shall not be obligated so
to do, and without waiving or releasing Tenant from any obligations of Tenant,
make any such payment or perform any such other act on Tenant’s part to be made
or performed as provided in this Lease. The foregoing right to perform
Tenant’s obligations shall

86

 

only apply after the requisite notice and
opportunity to cure has been afforded to Tenant (taking into account any
shortened cure period permitted in cases of Emergency) as long as Tenant is not
diligently engaged in curing such default. All reasonable sums rightfully paid
by Landlord under this Section, and all reasonable penalties, interest and
costs incurred in connection therewith, plus an administrative charge equal to
ten percent (10%) of the cost of such performance, shall be due and payable by
Tenant within thirty (30) days after Landlord’s written demand accompanied by
reasonable substantiation of the applicable costs, together with interest
thereon at the Default Rate from the date such sums were paid by Landlord
through the date of payment by Tenant to Landlord. Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and remedies
for nonpayment of sums due under this section as would be the case in any
monetary Default under this Lease (such as a Default by Tenant in the payment
of Rent). The foregoing notwithstanding, in the event of an Emergency arising from or in
connection with Tenant’s failure to perform its obligations under this Lease,
Landlord shall be entitled to make the requisite performance prior to
expiration of the applicable cure period under this Section (or even prior to
giving notice under particularly exigent circumstances) if the magnitude of the
Emergency, and the need to act immediately, is so great that Landlord’s
immediate action is reasonable under the circumstances; and, in such event, the
same shall not be construed to prevent or preclude Landlord from recovering the
costs associated with such exercise from Tenant, in accordance herewith.

39. REDEVELOPMENT AGREEMENT/TRANSPORTATION DEMAND MEASURES.

     Tenant acknowledges that (i) the Redevelopment Agreement contains certain
development standards that apply to the Project, including limits on the
maximum rentable area and floor area ratio (“FAR”), and the number of Employees
(as defined therein), parking spaces and vehicular trips per peak hour, that
are applicable to the Project as a whole and to each and every owner and tenant
within the Project (the “Development Standards”), (ii) in the event of a
violation of the Development Standards, the County has certain remedies against
Landlord, and/or any owner or tenant in the Project that bears responsibility
for such violation, (iii) Section 4.1 of the Redevelopment Agreement provides
that, so long as certain of the Development Standards (identified therein) are
being complied with, there is a conclusive presumption that the Project is not
exceeding the maximum number of permissible “Employees” (which presumption
ceases to apply if any of such Development Standards is being violated), and
(iv) upon any violation of the Development Standards (or any other applicable
provisions of the Redevelopment Agreement), the County is entitled to invoke
certain remedies, including requiring the implementation of certain
“Transportation Demand Measures”, or “TDMs” (which may include a requirement
that tenants, and their agents, employees and visitors use car pools, shuttle
services or other means to reduce traffic entering and exiting the Project
during peak hours, as delineated therein). Tenant hereby acknowledges that,
for purposes of the Redevelopment Agreement, the Premises (i) is hereby
allocated, and shall not have more than, 466 Employees (as defined in the
Redevelopment Agreement), (ii) is hereby allocated 463 parking spaces (which
shall be subject to adjustment based on a parking ratio of 1 parking space for
each 324 gross square feet of the Premises), and (iii) is hereby allocated a
total of 178 vehicle trips (entering and exiting the Project) per peak hour
during the hours of 7:00 a.m and 9:00 a.m., and a total of 180 vehicle trips
(entering and exiting the Project) per peak hour during the hours of 4:00 p.m.
and 6:00

87

 

p.m.. Tenant further agrees (1) that each the foregoing allocations
is based on a fraction, the numerator of which is the total gross square
footage of the Premises, and the denominator of which is the total maximum
developable gross square footage of the Project under the Redevelopment
Agreement (and shall be adjusted from time to time to account for any
modification in the rentable area of the Premises), and (2) that each such
allocation shall apply to all tenants, subtenants, and others in occupancy of
the Premises (or any portion thereof). Tenant agrees to cooperate with
Landlord in complying with, and participating in, any TDMs implemented by
Landlord, by the Association, or by the County pursuant to the provisions of
the Redevelopment Agreement, whether due to a violation of the Development
Standards for which Tenant is solely or partially responsible, or as result of
a violation of the Development Standards (such as the trip limitations) where
Landlord cannot practicably determine which tenant or occupant is the
responsible party. Landlord agrees that, so long as Tenant is not in violation
of any of the Development Standards (including in particular the vehicle trip
limitations allocated to Tenant under this Lease), Tenant shall be conclusively
presumed not to be in violation of the maximum Employee limitation allocated to
Tenant herein. Without limiting the foregoing, Tenant shall be solely
responsible for the cost of any TDMs, or for other damages suffered by
Landlord, as a result of Tenant’s violation of the allocations set forth in
this subsection. If it is not reasonably practicable to identify which tenant
or occupant of the Project bears primary (or joint) responsibility for the
implementation of TDMs, the costs associated with such implementation shall
constitute Operating Costs for purposes of this Lease.

40. SALES AND AUCTIONS.

     Tenant may not display or sell merchandise outside the exterior walls and
doorways of the Premises and may not use such areas for storage without
Landlord’s prior written consent. Tenant shall not conduct or permit to be
conducted any sale by auction in, upon or from the Premises whether said
auction be voluntary, involuntary, pursuant to any assignment for the payment
of creditors or pursuant to any bankruptcy or other insolvency proceedings.

41. ACCESS TO ROOF.

     41.1 Subject to (i) Tenant’s compliance with all applicable Legal
Requirements, (ii) Landlord’s prior written consent, which consent shall be
limited to matters of structural and roof integrity, appropriate location and
physical screening, ensuring compliance with applicable Legal Requirements and
matters of safety and (solely in the case of equipment other than
communications equipment) environmental concerns, and which consent shall not
be unreasonably withheld, conditioned or delayed, and (iii) the further
restrictions (if any) set forth in this Section 41.1, Tenant shall have the
right, at no additional cost, of access to and (except during any period in
which Tenant is the sole tenant of the Building, in which event such right of
use shall be exclusive) the non-exclusive use of the roof of the Buildings for
the installation, use, maintenance, repair and replacement of various equipment
(Tenant’s “Roof Use”). Tenant further covenants to engage in such Roof Use (1)
in a manner which will not void any roof or other warranty applicable to the
Building, (2) in a manner which is in compliance with all (and does not violate
any) applicable Legal Requirements, (3) in a manner so as not to create any
hazardous condition or unreasonably interfere

88

 

with or impair the operation of
any Building Systems; (4) in such a manner as will not directly or indirectly
interfere with, delay, restrict or impose any expense, or unreasonable work or
obligation upon Landlord in the use or operation of the Building (unless, and
solely in the case of additional expenses associated therewith, Tenant pays the
full amount of such additional expenses within thirty (30) days after
Landlord’s written demand); and (5) at Tenant’s sole cost and expense,
including the cost of repairing all damage to the Building and any costs
associated with any personal injury and/or property damage attributable to the
installation, inspection, adjustment, maintenance, removal or replacement of
any equipment or apparatus on the roofs approved hereunder (but excluding any
death or injury to persons or property damage caused by Landlord’s negligence
or willful misconduct). At any time in which Tenant’s Roof Use is
non-exclusive, (A) rights granted to other tenants or occupants of the Building
shall not interfere with or disturb Tenant’s pre-existing Roof Use, and (B)
Tenant shall not be required to relocate any roof equipment theretofore
installed by Tenant without its consent. Notwithstanding the foregoing
provisions to the contrary, to the extent items within Tenant’s Roof Use are shown in the
Construction Drawings for Landlord’s TI Work (and not designated thereon for
performance by Tenant or a party other than Landlord or the TI GC), Landlord
shall be responsible for causing the TI GC to perform such installations,
provided that the costs associated therewith will constitute a part of TI Costs
for all purposes of this Lease.

     41.2 To the extent the rate of any insurance carried by Landlord is
increased as a result of Tenant’s Roof Use, then Tenant will pay to Landlord
within thirty (30) days after Landlord delivers to Tenant a certified statement
from Landlord’s insurance carrier stating that the rate increase was caused by
Tenant’s Roof Use, a sum equal to the difference between the original premium
and the increased premium resulting from the Roof Use. In a multi-tenanted
situation, Landlord shall have the burden of demonstrating that Tenant’s acts
or particular exercise of Tenant’s Roof Use was the sole and direct cause of
the increase in premiums in order to invoke those provisions of this Section
41.2 which impose the obligation to pay the increased insurance premiums upon
Tenant.

     41.3 Landlord has not made any representations or promises pertaining to
the suitability of the Building’s rooftop for the Roof Use, except for the
specifications provided for in the Construction Documents and Outline
Specifications. Tenant, for the purpose of this paragraph and its right to
rooftop access hereunder, accepts the rooftop in its “as is” condition (subject
to the applicable provisions of the Construction Documents and Outline
Specifications referenced in Exhibit C).

     41.4 Tenant’s Roof Use shall be used solely in the ordinary course of the
business operations of Tenant (including for the benefit of any assignee of
Tenant’s interest in this Lease and of any sublessees of the Premises). Tenant
acknowledges and agrees that (i) the Roof is not part of the Premises, (ii)
that except as set forth in the first sentence of this Section 41.5, regarding
Tenant’s right to make Tenant’s Roof Use available for the benefit of any
assignee of Tenant’s interest in this Lease and of any sublessees of the
Premise, Tenant does not have the right to grant rights to the use of the roof
of the Building (whether by sublease, assignment, license agreement, or
otherwise) to any third party for any purpose, including for purposes of
establishing third party communications transmission facilities as part of
Tenant’s Roof Use.

89

 

     41.5 Upon vacating the Premises, Tenant shall remove all equipment,
satellite dishes and other devices installed upon the roof of the Building as
part of Tenant’s Roof Use, and shall repair all damage caused by such removal.
Tenant shall perform its obligations under this Section 41.5 in such a manner
as to not violate the terms of any roof warranty of which Tenant has been
notified during the Term of this Lease (and, with respect thereto, the delivery
to Tenant of a copy of the roof warranty pursuant to Landlord’s
responsibilities under Exhibit C shall be deemed to satisfy this notification
requirement). Tenant’s obligation to observe or perform this covenant (and the
other covenants set forth in this Section 41) shall survive the expiration or
earlier termination of this Lease.

42. SECURITY.

     42.1 As
part of the Base Building Improvements (as defined in Exhibit C),
Landlord shall install (and maintain throughout the Term) access control
systems to Building, Premises and any gated areas of the Parking Facilities to
the extent set forth in the Construction Documents (such system, the “Base
Building Security System”). Landlord shall (as part of the Total Cost to
Complete) provide one (1) key card for each employee of Tenant, up to a maximum
of four hundred sixty-six (466) key cards, provided any key card provided by
Landlord pursuant to Exhibit C will be programmed solely for use with the Base
Building Security System (and any additional programming, including for
Tenant’s supplemental security systems, if any, shall be Tenant’s
responsibility, at Tenant’s sole expense). The security company which
installs such systems, and which performs security monitoring in connection
with the Building and Parking Facilities, shall be selected by Landlord in
Landlord’s reasonable discretion, subject to Tenant’s reasonable approval (and
after consultation between Landlord and Tenant). After the provision of the
initial allocation of security key cards, Tenant may obtain from the applicable
security system vendor as many key cards as Tenant requires, at Tenant’s sole
expense. The security system shall include programming that allows the
elevator and any other means of and access to individual floors to be locked
off (subject to all life safety and other code requirements) using the same
security key card for access, with all special programming and system
modifications to accommodate Tenant’s particular needs to be performed at
Tenant’s sole expense. Access to the Building and Parking Facilities shall,
subject only to temporary Emergency closures, closures for repairs and/or
closures required by applicable Legal Requirements, be available twenty-four
hours per day, seven (7) days per week, and shall include access (without
charge) to the Premises, Common Areas and Building Services (which may be
limited after Normal Business Hours as otherwise provided in this Lease).

     42.2 In addition, Tenant may install such supplemental security systems as
Tenant deems appropriate (i) in the Building, in any areas of the Parking
Facilities devoted to Tenant’s exclusive use, and, so long as such supplemental
security systems do not prevent public access, in areas of ingress and egress
between the Parking Facilities and the Building, and around the exterior areas
of the Property, and (ii) as long as Tenant is the sole tenant of the Building,
in, around, and on the roof of the Building provided (A) all such supplemental
security systems shall be subject to Landlord’s consent, which shall not be
unreasonably withheld, conditioned or delayed, (B) all programming expenses
associated with such supplemental security systems (including with respect to
the key cards

90

 

provided to Tenant for the base building security systems
described in Section 42.1) shall be Tenant’s sole responsibility, (C) such
supplemental security systems shall not violate any Legal Requirements, and (D)
such supplemental security systems shall not materially affect the physical
appearance of the Building (provided that security cameras and card readers
installed in a reasonable and typical fashion shall be deemed not to materially
affect the physical appearance of the Building).

     42.3 Without limiting the provisions of Sections 42.1 and 42.2, above,
Tenant may elect to implement a full time security guard and/or “concierge”
service (twenty four (24) hours per day, seven (7) days per week) so long as
(i) Tenant leases the entire Building, and (ii) such function shall be
implemented at Tenant’s sole expense.

     42.4 All reasonable costs of operating and maintaining the security
system(s) and operations implemented pursuant to this Section 42 shall
constitute Operating Costs for purposes of this Lease (subject to any specific
exclusions under Sections 9.5 and 9.6, above).

43. AUTHORITY OF LANDLORD.

     Landlord represents and warrants to Tenant that all necessary limited
liability company action has been taken to fully authorize the execution,
delivery and performance of this Lease by Landlord.

44. NO ACCORD OR SATISFACTION.

     No payment by Tenant or receipt by Landlord of a lesser amount than the
Rent and other sums due hereunder shall be deemed to be other than on account
of the earliest rent or other sums due, nor shall any endorsement or statement
on any check or accompanying any check or payment be deemed an accord and
satisfaction; and Landlord may accept such check or payment without prejudice
to Landlord’s right to recover the balance of such Rent or other sum and to
pursue any other remedy provided in this Lease.

45. LEGAL REQUIREMENTS.

     45.1
Subject to those provisions of Exhibit C which impose upon Tenant the
obligation to cause Tenant Improvements designed by Tenant and/or Tenant’s
Architect to comply with Legal Requirements, and as more fully set forth in
Exhibit C (as to the scope of Landlord’s initial construction
responsibilities), Landlord shall, as part of Landlord’s Work, cause the
Project to comply as of the Commencement Date with all applicable Legal
Requirements and with all directions of public rules, requirements and
regulations of the Board of Fire Underwriters, Landlord’s insurance companies
and any other organization establishing insurance rates in the geographical
area where the Project is located.

     45.2 Tenant shall comply with all applicable Legal Requirements, and with
all directions of public rules, requirements and regulations of the Board of
Fire Underwriters, Landlord’s insurance companies and any other organization
establishing insurance rates in the geographical area where the

91

 

Project is
located, in connection with (i) its specific use and occupancy of the Premises,
(ii) any specific Tenant Work, (iii) Specialty Systems (except to the extent
non-compliance is due to improper installation by Landlord), (iv) Tenant
alterations and/or (v) installations by Tenant of Tenant’s furniture, fixtures
and equipment whether effected as part of the initial construction of the
Project or subsequent to Commencement Date, except to the extent non-compliance
is caused by the affirmative acts or negligence of Landlord or Landlord’s
Agents.

     45.3 From and after the Commencement Date of this Lease, and except to the
extent non-compliance is caused by the affirmative acts or negligence of Tenant
or Tenant’s Agents: (a) Landlord shall be responsible, at Landlord’s sole
expense (except as provided below), for compliance with Legal Requirements as
they relate to the Building and the Property generally (but excluding such
compliance as it relates to (i) any initial construction designed by Tenant to
the extent improper design is the cause of any non-compliance, (ii) Tenant
Work, (iii) Tenant alterations and/or (iv) installations by Tenant of Tenant’s
furniture, fixtures and equipment, which shall be Tenant’s sole
responsibility), and excluding any unusual requirements attributable to or
derived from Tenant’s specific use of the Premises (as opposed to general ADA
accessibility requirements applicable to general office use in a multi-story
office building, which shall be Landlord’s responsibility unless designed by
Tenant’s architect); and (b) Tenant shall be responsible for compliance with
Legal Requirements as they relate to, are attributable to or are derived from
(i) any Tenant alterations, Roof Use, Specialty Systems, and/or installations
by Tenant of Tenant’s furniture, fixtures and equipment, and/or (ii) Tenant’s
specific use of and operations within the Premises (as opposed to general Legal
Requirements, such as ADA accessibility requirements, applicable generally to
office use in a multi-story office building, which shall be Landlord’s
responsibility). Landlord shall have the right, as and to the extent permitted
under Section 9.5 and 9.6 of this Lease, to charge certain costs incurred by
Landlord pursuant to this Section 45.3, as Operating Costs incurred to comply
with Legal Requirements enacted after the Commencement Date of this Lease.

     45.4 Within ten (10) days after receipt, Landlord and Tenant shall advise
the other party in writing, and provide the other with copies of (as
applicable), any notices alleging violation of any Legal Requirement relating
to any portion of the Premises; any claims made or threatened in writing
regarding noncompliance with any Legal Requirement and relating to any portion
of the Premises; or any governmental or regulatory actions or investigations
instituted or threatened regarding noncompliance with any Legal Requirement and
relating to any portion of the Premises.

46. PARKING.

     46.1 Tenant’s Parking Allocation. Subject to the terms of this Section
46, throughout the Term, Tenant and Tenant’s Agents shall have the right to use
the Parking Facilities to the full extent of (but not in excess of) its Parking
Allocation. No rent or fees shall be charged for the use of Tenant’s Parking
Allocation (or any additional use allowed above) by Tenant or Tenant’s Agents
during the Lease Term, provided that the Building’s allocable share of the cost
of operating, cleaning, maintaining, repairing and providing security
monitoring and other similar services to the Parking Facilities, whether by
Reciprocal Easement Agreement or sole ownership of an applicable

92

 

parking
facility, shall constitute Operating Costs under Article 9, hereof. Except as
provided in the first sentence of this Section 46.1, in the balance of this
Section 46.1, and in Section 46.2, below, such parking rights shall be
non-exclusive and on an unreserved basis, and Tenant shall not exceed its
Parking Allocation at any time during the Term without Landlord’s consent;
provided however that, the foregoing notwithstanding, Tenant shall have the
right to designate up to one-half of its entire Parking Allocation as
exclusive, reserved parking for Tenant and Tenant’s Agents. Tenant’s
designation of its exclusive parking area may not infringe upon access to or
use, by any other parties with rights to the Parking Facilities the
aforementioned beneficiaries thereof, and all parking spaces designated by
Tenant for use on an exclusive basis and secured through gating of any portions
of the Parking Facilities under this Lease shall be designated in such a manner
as to facilitate access to and from non-gated areas of the Parking Facilities
by other tenants of the Project, and their respective employees and visitors.

     46.2 Designation of Gated Areas for Reserved Parking. Landlord and Tenant
contemplate that the protection of Tenant’s reserved parking rights may be
accomplished by the designation, within the Parking Facilities, of an area for
Tenant’s sole use, and Landlord shall install entrance gates (which
installation shall be part of the initial construction hereunder, and not an
Operating Cost), to be controlled by Tenant’s security key cards, in order to
restrict third party access to such designated areas, consistent with Section
46.1, above. Such gated areas may apply to all or some of Tenant’s reserved
spaces, at Tenant’s sole election. Tenant will restrict parking by Tenant’s
Agents to such gated areas, in order to ensure that Tenant does not exceed its
Parking Allocation by making use of the parking spaces allocated to tenants of
the Project. Any other designation of specific reserved parking (for example,
reserving spaces among the block of spaces reserved by Tenant for particular
employees of Tenant, or reservation of spaces not located within gated areas
but constituting part of Tenant’s Parking Allocation) may be added by Tenant,
subject to Landlord’s reasonable approval, at Tenant’s sole expense.

47. GENERAL PROVISIONS.

     47.1 Acceptance. This Lease shall only become effective and binding upon
full execution and delivery hereof by Landlord and Tenant.

     47.2 Certain References to “Landlord” and “Tenant”. The parties agree
that, except as expressly otherwise limited herein, in those provisions of this
Lease which, by their terms, purport to hold Landlord responsible for actions
or omissions of “Landlord”, and/or to hold Tenant responsible for actions or
omissions of “Tenant”, and, in Sections 9.5 and 9.6 of this Lease, in referring
to actions taken by, or omissions of, Landlord and/or Tenant, as the case may
be, the references (i) to “Landlord” shall be deemed to mean and include
actions and omissions by “Landlord and Landlord’s Agents” and (ii) to “Tenant”
shall be deemed to mean and include actions and omissions by “Tenant and
Tenant’s Agents.”

     47.3 Marginal Headings, Etc. The marginal headings, Table of Contents,
and titles to the sections of this Lease are not a part of the Lease and shall
have no effect upon the construction or interpretation of any part hereof.

93

 

     47.4 Choice of Law. This Lease shall be governed by and construed in
accordance with the laws of the State of Maryland (without regard to the choice
of law and/or conflict of law principles applicable in such State).

     47.5 Successors and Assigns. The covenants and conditions herein
contained, subject to the provisions as to assignment, inure to and bind the
heirs, successors, executors, administrators and assigns of the parties hereto.

     47.6 Recordation. Except to the extent otherwise required by law, neither
Landlord nor Tenant shall record this Lease, provided that a short form
memorandum hereof (in a form mutually and reasonably approved by Landlord and
Tenant) may be recorded at the request of either Landlord or Tenant, provided
(i) the party requesting such recordation shall pay all costs, expenses and
recordation taxes associated therewith, and (ii) if recorded, each party
covenants to execute and acknowledge (A) a valid release of such memorandum, in
recordable form, effective upon the expiration, or earlier termination, of this
Lease (and which may thereupon be recorded by either party, as set forth
herein), and (B) an amendment to such memorandum, in recordable form, upon any
amendment to this Lease which renders any information set forth within the
original memorandum incorrect in any material respect (and which may thereupon
be recorded by either party, as set forth herein).

     47.7 Quiet Possession. So long as Tenant is not in Default of this Lease,
Tenant shall have quiet possession and enjoyment of the Premises for the Lease
Term hereof, free from any disturbance or molestation by Landlord, or anyone
claiming by, through or under Landlord, but in all events subject to all the
provisions of this Lease.

     47.8 Inability to Perform; Force Majeure. This Lease and the obligations
of the parties hereunder shall not be affected or impaired because either
Landlord or Tenant is unable to fulfill any of its obligations hereunder or is
delayed in doing so, to the extent such inability or delay is caused by reason
of war, civil unrest, strike, labor troubles, unusually inclement weather,
governmental delays, inability to procure services or materials despite
diligent efforts, acts of God, acts of terrorism or bio-terrorism, increased
military alert status, or any other cause(s) beyond the reasonable control of
the party claiming the benefit of such excuse for delay (which causes are
referred to collectively herein as “Force Majeure”.) Any time specified
obligation of Landlord or Tenant in this Lease shall be extended one day for
each day of delay suffered by such party as a result of the occurrence of any
Force Majeure. The foregoing notwithstanding (i) in no event will an event of
Force Majeure extend the time within which Tenant or Landlord must perform any
of its monetary obligations under this Lease; and (ii) to the extent
inconsistent herewith, the definition of “Force Majeure” set forth within
Exhibit C shall, for purposes of Exhibit C only, supersede the definition of
Force Majeure set forth herein.

     47.9 Partial Invalidity. Any provision of this Lease which shall prove to
be invalid, void,

94

 

or illegal shall in no way affect, impair or invalidate any
other provision hereof and such other provision(s) shall remain in full force
and effect.

     47.10 Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, whenever possible, be cumulative with all other
remedies at law or in equity.

     47.11 Entire Agreement. This Lease contains the entire agreement of the
parties hereto and no representations, inducements, promises or agreements,
oral or otherwise, between the parties, not embodied herein (or therein), shall
be of any force or effect.

     47.12 Survival. All indemnities, obligations and covenants set forth in
this Lease shall survive the expiration or earlier termination of this Lease.

     47.13 Consents. If any provision of this Lease subjects any action,
inaction, activity or other right or obligation of any party to the prior
consent or approval of the other, such consent shall not be unreasonably
withheld, conditioned or delayed unless otherwise specifically provided herein.

     47.14 Rule Against Perpetuities. In order to ensure the compliance of
this Lease with any rule against perpetuities that may be in force in the State
of Maryland, and without limiting or otherwise affecting either Landlord’s or
Tenant’s obligations under this Lease, as stated in the other sections hereof,
or modifying any other termination rights which may be set forth herein,
Landlord and Tenant agree that, irrespective of the reasons therefor (other
than a Default by Tenant), in the event Tenant fails to take possession of at
least one phase of the Premises or to commences paying Rent hereunder within
twenty (20) years after the date of execution of this Lease, then this Lease,
and the obligations of the parties hereunder, shall thereafter be deemed to be
null and void and of no further force and effect.

     47.15 Further Assurances. Landlord and Tenant each agree to execute such
other and further documents and instruments as may from time to time be
requisite to perfect, confirm, establish or continue the rights and obligations
of the parties to, and the purposes and intentions of, this Lease.

     47.16 Amendments. This Lease may be amended solely by a written instrument
signed by Landlord and Tenant and approved in writing by Landlord’s mortgagee,
if and to the extent required by Landlord’s loan documents (and, in such event,
Landlord shall bear responsibility for obtaining such consent).

48. RULES AND REGULATIONS.

     Tenant agrees to comply with the Rules and Regulations attached hereto as
Exhibit D. Landlord agrees that it shall not enforce the Rules and Regulations
against Tenant in a discriminatory fashion.

49. ARBITRATION.

95

 

     49.1 If arbitration is specifically agreed upon hereunder as a dispute
resolution procedure, the arbitration shall be conducted as provided in this
Section. All proceedings shall be conducted according to the Commercial
Arbitration Rules of the American Arbitration Association, except as
hereinafter provided. No action at law or in equity in connection with any
dispute which is expressly made subject to arbitration in this Lease shall be
brought until arbitration hereunder shall have been waived, either expressly or
pursuant to this Section. The judgement upon the award rendered in any
arbitration hereunder shall be final and binding on both parties hereto and may
be entered in any court having jurisdiction thereof. During any arbitration
proceeding pursuant to this Section, the parties shall continue to perform and
discharge all of their respective obligations under this Lease, except as
otherwise provided in this Lease.

     49.2 All disputes that are required to be arbitrated in accordance with
this Lease shall be raised by notice to the other party, which notice shall
state with particularity the nature of the dispute and the demand for relief,
making specific reference by article number and title of the provisions of this
Lease alleged to have given rise to the dispute. The notice shall also refer
to this Section and shall state whether or not the party giving the notice
demands arbitration under this Section.

     49.3 Within thirty (30) days of any demand for arbitration, each of Tenant
and Landlord shall appoint one (1) arbitrator, and within ten (10) days of
their appointment, the two (2) arbitrators thus selected shall jointly select a
third (3rd) arbitrator. All arbitrators shall have at least ten (10) years’
experience in commercial real estate matters to act as arbitrator hereunder.
If either party fails to select an arbitrator within the initial thirty (30)
day period, or if the two (2) arbitrators are unable to agree upon a third
(3rd) arbitrator, then, upon the request of either party, the remaining
arbitrator(s) shall be appointed by The American Arbitration Association. The
arbitration proceedings shall take place at a mutually acceptable location in
the Washington, D.C./Baltimore, Maryland/Annapolis, Maryland metropolitan
areas.

     49.4 The right of Landlord and Tenant to submit a dispute to arbitration
is limited to issues specifically agreed in this Lease to be submitted to
arbitration, and specifically does not apply to any remedial action undertaken
by Landlord pursuant to the provisions of Section 24 hereof. When resolving
any dispute, the arbitrator shall apply the pertinent provisions of this Lease
without departure therefrom in any respect. The arbitrator shall not have the
power to change any of the provisions of this Lease, but this Section shall not
prevent in any appropriate case the interpretation, construction and
determination by the arbitrator of the applicable provisions of this Lease to
the extent necessary in applying the same to the matters to be determined by
arbitration.

     49.5 Without limitation, any dispute between Landlord and Tenant regarding
the application, interpretation or effect of the provisions of Exhibit C to
particular factual circumstances, including without limitation any dispute
regarding approval of plans and specifications for Landlord’s Work, compliance
of construction with the approved plans and specifications therefor (or as
otherwise required by this Lease), achievement of “Substantial Completion” of
all or any part of Landlord’s Work to the extent not resolved by the dispute
resolution mechanism described in Section

96

 

1.3, above, completion of punch list
items and Landlord’s calculation of the Total Cost to Complete, disputes
concerning Operating Costs and Real Estate Taxes, disputes concerning the
reasonableness of any proposed assignment or sublease, disputes concerning the
reasonableness of any proposed Alterations, and disputes regarding Tenant’s
exercise of rights of self-help, offset, and rent abatement pursuant to, and to
the extent provided in, any applicable provision of this Lease, shall be
subject to arbitration pursuant to this Section 49 if Landlord and Tenant
cannot resolve such dispute voluntarily.

50. WAIVER OF JURY TRIAL.

     LANDLORD AND TENANT HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER ON ALL MATTERS
ARISING OUT OF THIS LEASE, OR THE USE AND OCCUPANCY OF THE PREMISES. IF
LANDLORD COMMENCES ANY SUMMARY PROCEEDING FOR NON-PAYMENT OF RENT, TENANT WILL
NOT INTERPOSE ANY NON-MANDATORY COUNTERCLAIM IN ANY SUCH PROCEEDING.

     
INITIALS:      
LANDLORD:                
  TENANT:                

51. RENEWAL OPTION.

     51.1. General. Provided that, at the time of the exercise of the option
hereinafter set forth, Tenant is not then in Material Default of any of its
obligations under this Lease, Tenant is hereby granted the option (each, a
“Renewal Option” and collectively, the “Renewal Options”) to renew the Lease
Term for two (2) additional consecutive period(s) of sixty (60) months each
(the first such renewal term, the “First Renewal Term”, the second such renewal
term, the “Second Renewal Term”, and each or both, as the context requires, a
“Renewal Term”), the First Renewal Term to commence at the expiration of the
initial Lease Term, and the Second Renewal Term to commence at the expiration
of the First Renewal Term. Tenant shall exercise its option to renew by
delivering notice of such election (the “Renewal Notice”) to Landlord not more
than twenty (24) months and not less than eighteen (18) months prior to the
expiration of the initial Lease Term, for the First Renewal Term, and not more
than twenty (24) months and not less than eighteen (18) months prior to the
expiration of the First Renewal Term for the Second Renewal Term. In the event
that Tenant does not provide the applicable Renewal Notice prior to the
expiration of such time period (time being of the essence with respect
thereto), then such option to renew the Lease Term (and any and all subsequent
options to renew the Lease Term) shall, upon the expiration of such time
period, become null and void and be of no further force or effect and Tenant
and Landlord shall, at the request of Landlord, execute an instrument in form
and substance acceptable to Landlord confirming such facts.

     51.2.
Terms. Each Renewal Term shall be upon the same terms and
conditions of this Lease except that: (a) the Base Rent during each such
Renewal Term shall be set at an annual rate (with annual escalations) equal to
the greater of (i) one hundred percent (100%) of the fully escalated

97

 

Rent payable for the last Lease Year of the Term then ending (and the Base Rent
component thereof shall escalate annually at a rate of 3% per annum), or (ii)
the annual fair market rental and annual escalation rate (collectively “FMR”)
for the applicable Renewal Term, as determined by the agreement of Landlord and
Tenant in accordance with the Renewal Parameters, and under the process
described in Section 51.3, below, or, if applicable, pursuant to the method
described in Section 51.4, below; (b) except as specifically set forth in
Section 28.3 of this Lease with respect to the Surrender Term, Tenant shall
have no option to renew the Lease Term beyond the expiration of the Second
Renewal Term; and (c) except as otherwise agreed to by Landlord and Tenant
pursuant to the process described in Section 51.3, below, the Premises shall be
delivered in their existing condition (on an “as is” basis) at the time the
applicable Renewal Term commences (provided that the determination of FMR
pursuant to the Renewal Parameters will take into account any improvement or
refurbishment allowances actually agreed to be paid by Landlord in connection
with Tenant’s renewal, if any, and/or the lack thereof). Except as
specifically provided in Section 51.5, below, any renewal of the Term of this
Lease shall be for all, but not less than all, of the Premises.

     51.3 Negotiation Process. Within thirty (30) days after Landlord’s
receipt of a Renewal Notice from Tenant, Landlord will provide to Tenant in
writing its good faith determination of the applicable FMR for the Renewal Term
taking into account the Renewal Parameters (“Landlord’s FMR Proposal”). If
Tenant is unwilling to accept the FMR set forth in Landlord’s FMR Proposal,
Tenant shall so notify Landlord in writing within ten (10) business days after
its receipt of Landlord’s FMR Proposal and shall include in such notification
Tenant’s counterproposal of Tenant’s good faith determination of the applicable
FMR. The parties thereafter shall continue to negotiate in good faith, in each instance
exchanging written proposals and counterproposals reflecting their respective
positions where appropriate. If Landlord and Tenant are unable to reach
agreement on the FMR for the applicable Renewal Term, then Tenant may elect, by
written notice to Landlord, (i) to withdraw its Renewal Notice (in which event
the Renewal Option shall thereupon be null and void, and of no further force
and effect), (ii) to accept the last written offer presented by Landlord to
Tenant pursuant to this Section 51.4, or (iii) to submit the question of what
the appropriate FMR should be for the applicable Renewal Term for determination
using the Three Broker Method set forth in, and the other standards described
in, Section 51.4 of this Lease. If Tenant fails to notify Landlord of its
election pursuant to the preceding sentence, Tenant shall be deemed to have
withdrawn its Renewal Notice pursuant to clause (i) above.

     51.4 Three Broker Method. If the question of what the appropriate FMR
should be for the applicable Renewal Term is submitted for determination under
this Section 51.4, then the FMR for the applicable Renewal Term shall be
determined in the following manner:

                (i)  Landlord and Tenant shall each appoint one broker who is licensed as a
real estate broker in the State of Maryland and who shall have been active over
the seven (7) year period ending on the date of the Renewal Notice in the
leasing of comparable office properties within the Anne Arundel County office
submarket (the “Applicable Submarket”). Each such broker shall be appointed
within ten (10) business days after it is determined that the three (3) broker
method is to be used.

98

 

               (ii) The two brokers so appointed shall, within ten (10) business days of
the date of the appointment of the last appointed broker, agree upon and
appoint a third broker who shall be qualified based upon the same criteria set
forth hereinabove for the qualification of the initial two brokers.

               (iii) Each of two (2) brokers initially selected by Landlord and Tenant
shall, within ten (10) business days after the appointment of the third broker,
prepare his or her written determination of the terms which each such broker
believes in good faith constitutes the prevailing FMR taking into account the
Renewal Parameters, and deliver a written copy of such determination to each of
Landlord, Tenant and the third broker, provided that in no event shall the
determination of either broker be more favorable to Landlord than the terms set
forth in Landlord’s final written proposal to Tenant under Section 51.3, nor
more favorable to Tenant than the terms set forth in Tenant’s final written
counterproposal to Landlord under Section 51.3 unless there has been an
intervening change in market conditions. Within ten (10) business days after
the third broker receives the written submissions from each of Landlord’s
broker and Tenant’s broker of their respective good faith determination of the
appropriate FMR, the third broker shall determine which submission the third
broker believes in good faith most closely approximates the prevailing FMR, and
the FMR set forth in such submission shall thereupon constitute the FMR.

               (iv) If either Landlord or Tenant fails to appoint a broker within the
time period specified in subparagraph (i) hereinabove, the broker appointed by
one of them shall reach a decision (within the limitations set forth in clause
(iii), above, and notify Landlord and Tenant thereof, and such broker’s
decision shall be binding upon Landlord and Tenant.

               (v) Landlord and Tenant shall each pay any fees and costs charged by the
broker selected by it under this section 51.4. All fees and costs charged by
the third broker under this Section 51.4 shall be divided equally by Landlord
and Tenant.

     51.5. Partial Renewal. Notwithstanding Section 51.2, above, to the
contrary, Tenant may renew this Lease for less than the entirety of the
Premises in accordance with the terms of this Section 51.5. Any such renewal
for less than all of the Premises (hereinafter, a “Partial Renewal”) shall meet
all of the following standards: (i) such Partial Renewal shall be for minimum
of 50% of the then total Rentable Area of the Building; (ii) with respect to
each floor included within any such Partial Renewal, the space renewed shall be
either the entirety of, or one-half (1/2) of, such floor unless Tenant is
then occupying a different fractional portion of the space on the floor in
question at the time, and is renewing as to the entirety of its space on such
floor; (iii) if Tenant exercises a Partial Renewal as to any one-half (1/2)
floor, the point of demarcation shall be such that the remaining half of the
floor as to which Tenant does not renew constitutes Independently Leasable
Space; (iv) Tenant shall not exercise a Partial Renewal for all but one-half
(1/2) floor of the Premises, unless such one-half (1/2) floor is located on
the first floor of the Premises; and (v) no Partial Renewal will be permitted
which will result in the surrender to Landlord of any non-contiguous floors.
The costs associated with separating a partial floor renewed by Tenant from the
balance of the floor (including costs associated with the separation of any
Building Systems, the construction of a demising wall, and the preparation of
any common area lobbies, elevator lobbies and other

99

 

improvements necessary to
make such floor appropriate for multi-tenanting) shall be taken into account
within the determination of FMR pursuant to the Renewal Parameters. If Tenant
wishes to exercise its Renewal Option for a Partial Renewal, Tenant’s Renewal
Notice shall specify exactly which portion of the Premises is subject to such
Renewal Notice (and upon the end of the Initial Term or Renewal Term then
ending, this Lease shall terminate as to all portions of the Premises which are
not within the scope of such Renewal Notice).

     51.6. Security Deposit During Renewal Term. If Tenant is in compliance
with the Reduction Metrics under Section 3.2 of this Lease as of the date
Tenant notifies Landlord of its election to renew the Lease under this Section
51 (as to all or part of the Premises), then Tenant shall not be required to
post any security deposit for such Renewal Term. Conversely, if Tenant is not
in compliance with the Reduction Metrics under Section 3.2 of this Lease as of
the date Tenant notifies Landlord of its election to renew the Lease under this
Section 51 (as to all or part of the Premises), then the Renewal Parameters
shall include consideration of what would constitute an appropriate security
deposit securing the performance of Tenant’s obligations with respect to the
applicable Renewal Term, given Tenant’s creditworthiness at the time, any
out-of-pocket expenditures by Landlord in connection with such renewal, and
prevailing market conditions at the time.

52. GENERATORS.

     52.1 Subject to (i) Tenant’s compliance with all applicable Legal
Requirements, (ii) the further restrictions (if any) set forth in this Section
55.1, and (iii) Landlord’s prior written consent as to the location, type of
fuel tank and/or generator, and method of installation, which consent shall not
be unreasonably withheld, conditioned or delayed, Tenant shall have the
exclusive right of access to and use of a space for the placement, use,
operation, maintenance, repair and replacement of one or more emergency
generators (collectively, whether one or more, the “Generator”) and related
above-ground fuel tank (the “Generator Fuel Tank”) on the Land immediately
adjacent to the Building, in a location approved by Landlord or shown on the
Construction Documents (such area, the “Generator Area”) pursuant to plans and
specifications reasonably approved by Landlord. The foregoing right is
collectively referred to herein as Tenant’s “Generator Use”. Tenant further
covenants to engage in such Generator Use (1) in a manner which is in
compliance with all (and does not violate any) applicable Legal Requirements,
including all applicable Environmental Laws, (2) in a manner so as not to
create any hazardous condition or interfere with or impair the operation of any
Building Systems; (3) in such a manner as 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 Buildings (unless, and solely in the
case of additional expenses associated therewith, Tenant pays the full amount
of such additional expenses within thirty (30) days after Landlord’s written
demand); and (4) at Tenant’s sole cost and expense, including the cost of
repairing all damage to the Building and any costs associated with any personal
injury and/or property damage attributable to the installation, inspection,
adjustment, maintenance, removal or replacement of any equipment or apparatus
on the roofs approved hereunder (but excluding any death or injury to persons
or property damage caused by Landlord’s negligence or willful misconduct).
Tenant’s Generator Use shall be deemed a Specialty System under this Lease
irrespective of whether the same is installed prior to or after the

100

 

Commencement Date for the first phase of the Premises, and irrespective of
whether the same is installed by Landlord or by Tenant.

     52.2 If the rate of any insurance carried by Landlord is increased as a
result of Tenant’s installation of the Generator and/or Generator Fuel Tank,
then Tenant will pay to Landlord within thirty (30) days after Landlord
delivers to Tenant a certified statement from Landlord’s insurance carrier
stating that the rate increase was caused thereby, a sum equal to the
difference between the original premium and the increased premium resulting
therefrom.

     52.3 The determination of a suitable area for the installation of Tenant’s
Generator and Generator Fuel Tank shall be made within the process of reaching
final agreement on Construction Drawings pursuant to Exhibit C. Tenant shall
be responsible for any and all costs associated with the purchase, installation
and connection to the Premises of such Generator and Generator Fuel Tank,
including any rough-in, conduit installation, equipment costs, installation
costs, permitting fees, and the like, provided that the same will be performed
by the TI GC as part of Landlord’s TI Work to the extent shown on the
Construction Documents. The foregoing notwithstanding, to the extent screening
or other similar aesthetic features are required to be installed as a result of
the application of the Declaration (or actions of the architectural review
board thereunder) or due to any such requirement imposed by Landlord, within
the area within which the Generator and Generator Fuel Tank are installed, the
costs associated with such installation shall be borne by Tenant.

     52.4 Landlord will, at Landlord’s sole expense, obtain any and all
necessary licenses, approvals, permits, etc., necessary for the construction of
the generator pad and enclosures associated with Tenant’s Generator Use.
Except to the extent shown on the ConstructionDrawings in connection with the
initial installation thereof (in which event the administrative responsibility
for obtaining the same shall be borne
by Landlord and/or the TI GC, with the costs associated therewith, if any, to
be paid as part of the TI Costs), Tenant will obtain, prior to installation,
any and all other necessary licenses, approvals, permits, etc., necessary for
the installation, maintenance and use of the Generator, and Generator Fuel
Tank, and any other equipment or facilities installed pursuant to this Section
52. Tenant’s violation of any of its covenants in this Section 52 shall be
subject to the indemnification provisions of Section 20 and Section 5.2.3 of
this Lease. Without limiting the foregoing, the use by Tenant of the Generator
and Generator Fuel Tank shall be deemed to constitute the authorized use,
storage and (as applicable) disposal of Permitted Materials by Tenant, and
Tenant shall be responsible for its acts in connection therewith pursuant to
the various covenants governing Hazardous Materials and Permitted Materials
under Article 5 of this Lease, as if such covenants are fully restated in this
Section 52.

     52.5 Tenant shall maintain any Generator and/or Generator Fuel Tank
installed pursuant to this Section 52 in good condition and repair, and will
remove same and restore the Property and generator pad areas to their
pre-existing condition upon the earlier to occur of (A) the removal or
cessation of operation of the devices which the Generator and Generator Fuel
Tank are intended to support, or (B) the expiration or earlier termination of
this Lease. Such use shall be confined solely

101

 

to the ordinary course of Tenant’s business operations.

     52.6 In connection with Tenant’s use of the Generator and Generator Fuel
Tank, and subject to the above-stated responsibilities of Tenant, Tenant shall
have the right to operate the Generator at such intervals and for such periods
of time as may be recommended by or required by the manufacturer of such
generator, or at such other intervals as Tenant deems necessary in its
reasonable judgment provided (i) Tenant will provide notice to Landlord of the
scheduled times for regular testing and operation, (ii) Tenant will use all
reasonable and diligent efforts to perform any such testing or periodic
operation outside of Business Hours (it being acknowledged by Landlord that
certain testing and operation will necessarily take place during peak
operational periods, which may include during Business Hours), and (iii) such
testing will be performed in a manner reasonably calculated to minimize any
inconvenience to tenants and occupants of the Project.

53. ADDITIONAL COVENANTS OF LANDLORD.

     53.1 With regard to the development of the Project, Landlord shall provide
Tenant with periodic status reports and meaningful opportunities for input and
consultation regarding the initial and ongoing development and operation of
amenities. Landlord covenants to consider, in good faith, Tenant’s suggestions
regarding the initial and ongoing development and operation of amenities in the
remainder of the Project.

     53.2 Prior to submission of any site plan amendments or amendment to
Approved Base Building Plans previously submitted to Anne Arundel County,
Landlord agrees to deliver (or cause the proper Landlord Affiliate to deliver)
copies of the same to Tenant for Tenant’s prior review and input. Any such
amendment which materially impacts Tenant’s rights, obligations, use or
enjoyment of the Premises shall be subject to Tenant’s approval, which shall
not be unreasonably withheld, conditioned or delayed, and which shall be deemed
given if Tenant fails to respond to any such submission within five (5)
business days after the same is received (or deemed received pursuant to
Section 30 of this Lease) by Tenant.

     53.3 Landlord agrees that it will not enter into covenants, restrictions
or cross-easements with respect to the Property after the date hereof that
would materially and adversely affect Tenant’s use and enjoyment of the
Premises, or its other rights and obligations under this Lease, without
obtaining Tenant’s consent, which shall not be unreasonably withheld,
conditioned or delayed; provided, however, that Landlord shall have the right
after Lease execution to enter into easement agreements with the County, and
utility companies providing utility service to the Project, in most instances
using the standard form of easement agreement required by such parties with
little or no negotiated changes, as necessary to meet its development
obligations under the Approved Site Plan, the Approved Zoning and/or its
construction and operational covenants under this Lease (including its
obligation to provide Building Services), and that Landlord’s entry into any
such customary easement agreements shall not require Tenant’s consent.

54. CONDITIONS PRECEDENT.

102

 

     In addition to the other terms, covenants and conditions set forth in this
Lease and Exhibits attached hereto, the obligations of Landlord and Tenant
under this Lease shall be subject to the satisfaction of each and all of the
following conditions precedent:

     (1)  Landlord’s closing, within sixty (60) days after final execution and
delivery hereof, on its acquisition of title to the Project from the County.

     (2)  Tenant’s obtaining, within one hundred twenty (120) days after final
execution and delivery hereof, (i) receipt of such due diligence as the
Tenant’s Board of Directors in its sole discretion determines to be necessary,
including a written determination satisfactory to Tenant’s Board of Directors
from an independent certified public accounting firm or qualified MAI appraiser
designated by Tenant, to the effect that the financial and non-financial terms
of this Lease are fair to Tenant, and substantially equivalent to the
financial and non-financial terms that would be available for a lease on a
build-to-suit basis of a building of comparable age, size, quality and location
to that being leased hereunder from a completely unrelated third party
negotiating at arm’s length, (ii) approval of this Lease, including its
Exhibits, by Tenant’s Board of Directors, in its sole discretion, and (iii) a
written determination from Tenant’s outside counsel satisfactory to Tenant’s
Board of Directors that entering into the Lease does not violate any Legal
Requirements applicable to Tenant and/or its officers and directors, including
any applicable laws or regulations of the United States Securities and Exchange
Commission, the Sarbanes-Oxley Act (and regulations promulgated pursuant
thereto) or other corporate governance laws and regulations.

Landlord and Tenant each agree to use diligent, good faith efforts to cause the
satisfaction of each of the foregoing conditions precedent in a timely fashion.
The foregoing sentence shall not be construed, however, to limit to any extent
the discretion of the Tenant’s Board of Directors in (i) exercising the
approval rights described in clause (2)(ii) of this Section 54, or (ii) making
a determination regarding its satisfaction with (or the process of obtaining) the
written determinations described in clauses (i) and (iii) of clause (2) of this
Section 54, and Tenant’s sole obligation under the preceeding sentence shall be
to use diligent, good faith efforts to bring this Lease before the Board of
Directors for approval in a timely manner, and to take other steps deemed
appropriate in its discretion to make the necessary determinations in a timely
manner. In the event any one or more of the conditions described above are not
satisfied by the date indicated above, then either party may terminate this
Lease upon thirty (30) days written notice of termination delivered to the
other party at any time thereafter until the date such condition(s) is (are)
satisfied, provided that if all unsatisfied conditions upon which any such
termination notice is based are satisfied prior to the expiration of such
thirty (30) day notice period, then such notice of termination shall be deemed
rescinded and null and void for all purposes and effects, and this Lease shall
be deemed fully reinstated for all purposes. Neither Landlord nor Tenant shall
have liability to one another as a result of any termination of this Lease
pursuant to this Section 54 (and upon any such termination, the parties shall
be released from any and all liabilities and obligations hereunder).

55. EXHIBITS.

103

 

     The following Exhibits are attached to this Lease and are incorporated
herein by this reference:

	 	 	 
	EXHIBIT A	 	
Location and Dimensions of Premises
	EXHIBIT B	 	
Site Plan
	EXHIBIT C	 	
Work Agreement
	EXHIBIT D	 	
Rules and Regulations
	EXHIBIT E	 	
Commencement Date Agreement
	EXHIBIT F	 	
Cleaning Specifications
	EXHIBIT G	 	
Form of Estoppel Certificate
	EXHIBIT H	 	
Form of SNDA
	EXHIBIT I	 	
Property Management Specifications
	EXHIBIT J	 	
List of Environmental Reports
	EXHIBIT K	 	
Specifications for Building Services

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Deed of Lease,
or have caused this Deed of Lease to be executed on their respective behalves
by their duly authorized officers, as of the day and year first above written.

	 	 	 
	 	
LANDLORD:
	 	 	 
	 	
ANNAPOLIS PARTNERS LLC, a Maryland limited

liability company
	 	 	 
	 	
By: /s/ Tod E. Hirt (Seal)

	 	 	

	 	
Name: Tod E. Hirt, Manager

	 	 	 
	 	
TENANT:
	 	 	 
	 	
TELECOMMUNICATION SYSTEMS, INC. a Maryland

corporation
	 	 	 
	 	
By: /s/ Richard A. Young (Seal)

	 	 	

	 	
Name: Richard A. Young

Title: Executive Vice President and Chief Operating Officer

104

 

ACKNOWLEDGMENTS

STATE OF MARYLAND:

	 	:to wit:

CITY/COUNTY OF ANNE ARUNDEL:

     On this
29th day of October, 2002, Tod E. Hirt, Manager of Annapolis
Partners LLC, a Maryland limited liability company, appeared before me, a
Notary Public for the aforesaid jurisdiction, and, being by me first duly
sworn, did acknowledge that he, in his capacity as Manager of the Landlord
named herein, and being authorized so to do, executed the foregoing instrument
for the uses and purposes therein contained.

	 	 	 	 	 
	 	 	 	 	/s/ James A. Scali

          
     Notary Public
	My commission expires:  December 14, 2005	 	
	 	 

STATE OF MARYLAND:

	 	:to wit:

CITY/COUNTY OF ANNE ARUNDEL:

     On this
29th day of October, 2002, Richard A. Young, Senior Vice
President and Chief Operating Officer of TeleCommunication Systems, Inc., a
Maryland corporation, appeared before me, a Notary Public for the aforesaid
jurisdiction, and, being by me first duly sworn, did acknowledge that he, in
his capacity as Officer of the Tenant named herein, and being authorized so to
do, executed the foregoing instrument for the uses and purposes therein
contained.

	 	 	 
	 	 	
/s/ Elizabeth LaGrange Smith

         
      Notary Public
	My commission expires: September 1, 2005	 

55137-06

10/25/02

105

 

EXHIBIT A

Location and Dimensions of Premises

A-1

 

EXHIBIT B

Site Plan

B-1

 

EXHIBIT C

Work Agreement

Construction & Site Acquisition Provisions

	I.	 	GENERAL PROVISIONS

     A.     Land Acquisition and Timing. As of the date of execution of the Lease
to which this Exhibit C is attached (the “Lease”), Landlord is the contract
purchaser of the Project (which includes the Land), pursuant to an Acquisition
Agreement (defined below), which includes as an exhibit a schedule of
activities associated with the redevelopment of the Project, including in
connection with the development of the Building and Land for purposes of this
Lease. Pursuant to Section 9.4 of the Acquisition Agreement, Landlord
covenanted to (i) initiate and complete all design and engineering of a site
plan for the first phase of the Project (which encompasses Landlord’s Work
under this Lease) in accordance with the Approved Concept Plan and the
Development Performance Standards (a “Site Plan”), and (ii) apply for the
approval of such Site Plan and thereafter use good faith and diligent efforts
to obtain such approval. In addition, subject to various conditions described
therein (including the availability of financing and force majeure), Landlord
agreed to undertake development of this first phase of the Project pursuant to
this Lease, as well as the redevelopment of the Project as a whole pursuant to
the terms of the Redevelopment Agreement. The planned redevelopment of the
project includes the ultimate demolition of almost all existing buildings and
improvements at the Project, the installation of infrastructure, and the
development of buildings and site improvements in phases. Subject to (and
upon) the satisfaction of the conditions precedent set forth in Section 55 of
the Lease, including Landlord’s closing on the acquisition of the Project,
Landlord and Tenant agree to proceed with the civil engineering and design
associated with preparation and submission of the Site Plan, and, subject to
the terms and conditions of this Work Agreement, to undertake the design and
construction of the Improvements, consistent with the requirements of the
Acquisition Agreement.

     B.     Architects and Design. The parties shall use Ehrenkrantz, Eckstut &
Kuhn Architects, P.C. (“Landlord’s Architect”), a locally licensed civil
engineering firm designated by Landlord, and such other engineers and design
professionals as may be designated by Landlord (collectively, the “Design
Professionals”) to design the Building, site improvements and interior tenant
finishes, and to supervise the process of obtaining necessary development
approvals for the Project. The parties agree that the design of the Building
shall be two connected three story office buildings consistent with elevations
that are part of the Approved Concept Plan

     C.     General Contractor. To ensure cost efficiency and adherence to
schedule, it is currently contemplated that Landlord shall retain a general
contractor selected by Landlord and reasonably acceptable to Tenant to serve as
general contractor for Landlord’s Work (as defined herein),and to solicit at
competitive bids from subcontractors and materialmen in order to ensure
competitive pricing, as more fully set forth in Section III, below.
Alternatively, Landlord reserves the right to competitively bid the general
construction contract for Landlord’s work among three (3) or more general
contractors, again as more fully set forth in Section III, below.

C-1

 

     D.     General Responsibility. Landlord shall generally be responsible for
all matters that must be accomplished to complete Landlord’s Work, including
filing plans and other required documentation with the proper governmental
authorities and securing all necessary permits for the performance thereof and,
upon completion of Landlord’s Work, to obtain all approvals and permits
necessary for Tenant to occupy the Premises including all final inspections for
issuance of Tenant’s final certificate of use and occupancy (but solely to the
extent the same is capable of being obtained by Landlord prior to (i) Tenant’s
move-in and installation of its furniture, fixtures and equipment, and (ii)
completion of any Tenant Work to be performed by Tenant within the Premises).
Promptly after issuance of the requisite permits for each portion of Landlord’s
Work, Landlord agrees to cause the GC (as defined herein) to commence and
thereafter to perform such portion of Landlord’s Work in a diligent, first
class and good and workmanlike manner, and in accordance with applicable codes
and legal requirements, including without limitation the accessibility
requirements of the Americans with Disabilities Act (“ADA”) . Landlord shall
use all reasonable and diligent efforts to cause its GC to substantially
complete Landlord’s Work within the time frames contemplated by this Lease.

     E.     Defined Terms. The terminology herein shall have the same meaning
ascribed to such terminology within the Lease. In addition, the following terms
shall have the following meanings:

     “Acquisition Agreement” shall mean that certain Acquisition Agreement
dated June 17, 2002 between Landlord and Anne Arundel County, Maryland for the
acquisition of the property commonly known as the David Taylor Research Center,
of which the Land is a portion.

     “Approved Base Building Plans” shall mean Base Building Plans prepared by
Landlord, after the same have been finally approved by the parties as provided
below.

     “Approved Concept Plan” shall mean the Concept Plan for the David Taylor
Research Center, as approved by Anne Arundel County, Maryland, as the same may
be amended from time to time in accordance with the terms of the Redevelopment
Agreement.

     “Approved Design Plan” shall mean the Approved Concept Plan as it relates
to the first phase of the Project, together with the Floor Plan and Outline
Specifications, as defined below.

     “Approved Project Budget” shall mean the preliminary Budget after it has
been modified to reflect the actual pricing determined under the competitive
bidding process described in Section II of this Work Agreement.

     “Approved Schedule” shall mean the schedule for performance of Landlord’s
work, as developed by the parties pursuant to Section II of this Work
Agreement, consistent with the scheduling requirements of the Acquisition
Agreement.

     “Approved Space Plan” shall mean a preliminary space plan for the
construction of leasehold improvements to the Premises, including a floor
layout for each floor of the Building, a reflective

C-2

 

ceiling plan, a preliminary electrical and HVAC distribution plan, and a description of
standard tenant finishes and materials, after the same has been finally
approved by the parties as provided below.

     “Approved TI Plans” shall mean the TI Plans prepared by Landlord, after
the same have been finally approved by the parties as provided below.

     “Base Building Plans” shall mean the initial construction drawings and
specifications prepared by Landlord’s Architect and other Design Professionals
and submitted to Tenant for approval, based on the Approved Design Plan.

     “Construction Contracts” shall mean all contracts entered into by Landlord
for the construction of the Improvements, including without limitation the
Shell Construction Contract and the TI Construction Contract.

     “Construction Documents” shall mean the Approved Base Building Plans and
the Approved TI Plans, as the same may be modified (i) by any approved change
orders, (ii) in order to comply with any architectural restrictions applicable
to the Project under the Redevelopment Agreement and Approved Concept Plan, and
(iii) to comply with applicable legal requirements asserted by governmental
authorities in the process of obtaining the issuance of permits or other
approvals required for Landlord’s Work. The Construction Documents shall
comply with all governmental rules, codes and requirements, and shall
designate, among other things, the locations of and specifications for all
mechanical, electrical and plumbing equipment to be installed in all spaces,
all partitions, doors, lighting fixtures, electric receptacles and switches,
telephone outlets (location only), and special air conditioning and other
improvements to be installed.

     “Costs” shall mean and refer to (i) an agreed land value amount
attributable to that portion of the Land acquired pursuant to the Acquisition
Agreement, including any contribution required of Landlord for the construction
of any off-site improvements, to the extent reasonably allocable to the Land
(which the parties agree shall be based on a land value of $_______per gross
square foot of the Building), (ii) hard construction costs incurred by Landlord
in connection with developing, constructing, and equipping the Improvements in
accordance with the Construction Documents, (iii) soft costs incurred by
Landlord for legal fees, architectural fees, engineering fees, survey expenses,
lender fees, mortgage broker fees, real estate taxes, personal property taxes,
front foot benefit charges and other special assessments, recording and
transfer taxes with respect to the conveyance of the Land to Landlord and the
recording of any deed of trust against the Land, building permit fees,
pre-Commencement Date interest and fixed return costs under any Project
Financing (defined below), leasing commissions and other brokerage expenses,
Net Operating Deficit, and fees to local utilities for connections, (iv) other
costs incurred in the initial development and construction of the Project and
within the categories and narrative reflected within the Preliminary Budget,
and (v) the Development Fee. In all events, Costs shall not be increased by
any cost overruns resulting from (a) any failure to construct the Improvements
in accordance with the Construction Documents, (b) any failure of Landlord to
comply with any provision of this Agreement, (c) any failure of Landlord to

C-3

 

complete construction of the Improvements by the Target Date other than as a
result of Tenant Delays and/or Force Majeure,
(d) the negligence or other wrongful actions of Landlord, (e) any
penalties or other charges imposed on Landlord for late performance or
Landlord’s default under the Construction Contracts, any contracts with the
Design Professionals, or the Project Financing, and (f) any overtime or other
additional expenses required to meet the Target Schedule not set forth in the
base construction contract with the GC, except to the extent occasioned by
Tenant Delays and/or Force Majeure or as otherwise provided for herein. Costs
shall be decreased by any and all discounts or rebates received by Landlord in
connection with any work performed or expenses incurred in connection with this
Agreement.

     “Development Fee” shall mean all amounts payable as development fees by
Landlord to its development manager pursuant to the DSA.

     “Development Performance Standards” have the meaning given to such term in
the Redevelopment Agreement.

     “DSA”
means that certain Development Services Agreement dated October
___,
2002 between Landlord and Mesirow Stein Development Services, Inc., the
development manager for the first phase of the Project.

     “Excess Base Building Costs” shall mean all incremental additional Costs
of performing Landlord’s Base Building Work in excess of the Target Costs, but
solely to the extent due to increases in Variable Costs, increases in
Guarantied Costs due to Permitted Overruns, or the performance of any Change
Orders affecting Landlord’s Base Building Work which are requested by Tenant
and approved by the parties pursuant to Section II, below. All Excess Base
Building Costs shall be payable by Tenant to Landlord, at Landlord’s election,
either (1) through a cash payment as to all or any part of the amount of such
Excess Base Building Costs, within thirty (30) days after Landlord’s written
demand, or (2) by including all or a portion (as Landlord may elect) of such
Excess Base Building Costs in the Total Cost to Complete.

     “Excess Costs” means both Excess Base Building Costs and Excess TI Costs.

     “Excess TI Costs” shall mean the sum of (i) all Costs for Landlord’s TI
Work, to the extent in excess of the TI Allowance, plus (ii) the incremental
additional cost associated with any Change Orders to Landlord’s TI Work
requested by Tenant, plus (iii) any additional costs of construction which are
incurred by Landlord due to Tenant Delays or Tenant’s default under the Lease
or this Exhibit C or which are otherwise contemplated to be paid by Tenant
under this Exhibit C. All Excess TI Costs shall be payable by Tenant to
Landlord, at Landlord’s election, either (1) through a cash payment as to all
or any part of the amount of such Excess TI Costs, within thirty (30) days
after Landlord’s written demand, or (2) by including all or a portion (as
Landlord may elect) of such Excess TI Costs in the Total Cost to Complete.

     “Final Payment Date” shall mean sixty (60) days after the Commencement
Date.

C-4

 

     “Final Reconciliation” shall mean a reasonably detailed written
reconciliation prepared by Landlord within sixty (60) days after final
completion of the Improvements, of the Total Cost to Complete.

     “Force Majeure” shall mean any act of God, war, civil riot, insurrection,
strike or other labor dispute, unusual delays in transportation, unusually
inclement weather, permitting delays, other governmental delays, condemnation,
fire or other unavoidable casualty, acts of terrorism or bio-terrorism,
increased military alert status, or other cause, event or circumstance which is
beyond the reasonable control of Landlord, provided (i) financial inability
shall not constitute a cause, event or circumstance which is beyond the
reasonable control of the parties hereto, and (ii) if Landlord claims the
benefit of a delay due to Force Majeure, it shall have the obligation to use
all reasonable and diligent efforts to minimize the duration of such delay.

     “GC” shall mean the general contractor selected by Landlord to perform
Landlord’s Work hereunder.

     “Guaranteed Costs” shall mean those hard and soft costs associated with
Landlord’s Work which Landlord is guarantying will not exceed the amounts set
forth in the Approved Project Budget, and which are reflected by the marking of
such costs with an asterisk within the Approved Project Budget; provided that
the total Guaranteed Costs set forth in the Approved Project Budget may
nevertheless be subject to adjustment if the increase in cost is due to a
“Permitted Overrun”, as such term is defined herein.

     “Improvements” shall mean the Building, all interior improvements thereto,
and all exterior site improvement to be constructed by Landlord on the Land in
accordance with the Approved Concept Plan and, ultimately, the Construction
Documents.

     “Invoices” shall mean any invoices which Landlord has received for payment
in respect of Landlord’s Work, along with requisitions therefor (on standard
AIA forms G702 and G703, or a substantially similar form).

     “Landlord’s Base Building Work” shall mean the construction of the shell
of the Building, all major mechanical, electrical, plumbing, fire safety and
HVAC systems therein (exclusive of the portions of such systems which form a
part of the Tenant’s leasehold improvements, but including core area
improvements such as electrical and telephone rooms, restrooms and the like),
and all appurtenant exterior site improvements, including but not limited to
surface parking areas, sidewalks, curbs and gutter, and exterior utilities,
lighting, landscaping, storm and sanitary sewer facilities, all completed in
substantial accordance with the Approved Base Building Plans.

     “Landlord’s TI Work” shall mean the construction of interior leasehold
improvements to the Premises, including interior lighting, electrical and HVAC
distribution systems, interior partitioning, flooring, and other leasehold
improvements which are not part of the core areas of the Building, in
accordance with the Approved TI Plans.

C-5

 

     “Landlord’s Work” shall mean, collectively, Landlord’s Base Building Work
and Landlord’s TI Work.

     “Net Operating Deficit” shall mean and refer to the amount by which the
ordinary and necessary expenses, including debt service, incurred in connection
with the operation of the Improvements during the period prior to the
Commencement Date exceeds the gross revenues actually received from the
operation of the Improvements during such period (if any). Landlord shall be
responsible for, and Costs shall not include, any increase in Net Operating
Deficit due to a failure of Tenant to occupy the Premises as a result of
Landlord’s failure to achieve Substantial Completion by the Target Date other
than as a result of Tenant Delays and Force Majeure.

     “Outline Specifications” shall mean the outline specifications developed
and approved by the parties pursuant to Section II of this Work Agreement. The
Outline Specifications will set forth defined parameters for Landlord’s Base
Building Work and general specifications for leasehold improvements, including
specifications for demolition, earthwork, clearing and grubbing, excavation and
backfill, site drainage and utilities, paving, curbing, landscaping, site fire
protection and water service, base building materials, foundations, masonry,
structural elements, carpentry and millwork, moisture protection, roofing,
doors and windows, interior partitioning, lighting, utility and HVAC
distribution systems, common area finishes, other finishes and known specialty
items (including UPS systems, generator requirements, SCIF rooms and the like).

     “Permitted Overruns” shall mean any increase in Total Cost to Complete
(defined below), including both Variable Cost and Guarantied Cost items,
caused by (i) any change orders to the Construction Documents or Construction
Contract which result in increased Costs, to the extent requested by Tenant,
caused by Tenant Delay or Tenant acts or omissions, or agreed at the time of
Tenant’s approval thereof to constitute a Permitted Overrun; (ii) overruns in
any Variable Cost category reflected in the Approved Project Budget, except to
the extent such increase in cost was caused by Landlord’s non-performance,
negligence or willful misconduct; (iii) costs resulting from the need to
address unforseen site or geotechnical conditions or site or geotechnical
requirements which arise after execution of this Lease, such as issues
discovered during the course of construction of Landlord’s Work; (iv) costs
resulting from increased demolition expenses arising due to unknown
environmental conditions encountered in the course of demolition activity, (v)
additional costs due to increases in interest rates and financing costs; (vi)
tenant improvement costs in excess of the TI Allowance amount reflected within
the Approved Project Budget; (vii) any additional costs of any kind whatsoever
arising from any failure by Tenant to comply with any provision of this Work
Agreement or due to Tenant Delay or Force Majeure, and (ix) any overtime or
other additional expenses required to meet any special scheduling requirements
of Tenant or otherwise incurred at Tenant’s request.

     “Phasing Plan” shall mean and refer to a plan for the phased delivery of
different identified portions of the Premises to Tenant, in order to allow for
the orderly completion and delivery of possession of the Premises by Landlord,
and an orderly process for move-in activities by Tenant. The Phasing Plan
shall be agreed to by mutual agreement of Landlord and Tenant no later than the

C-6

 

time of the parties’ agreement on the final Construction Documents for
Landlord’s TI Work, so that bidding of the TI Construction Contract can
encompass any phasing requirements associated therewith.

     “Preliminary Budget” shall mean the Preliminary Budget which is developed
by the parties for each phase of Landlord’s Work pursuant to Section II of this
Work Agreement (including all schedules and narrative attached thereto).

     “Preliminary Schedule” shall mean the Preliminary Schedule which is
developed by the parties for each phase of Landlord’s Work pursuant to Section
II of this Work Agreement.

     “Project Budget” shall mean the budgets prepared pursuant to this Work
Agreement on an ongoing basis in order to update the Preliminary Budget based
on more current or accurate information as to cost.

     “Project Financing” shall mean and refer to any acquisition, development
and construction loan, and any other “mezzanine” loan or third-party equity
investment financing or funding necessary to fund the Total Cost to Complete,
and encompasses all debt service, fixed interest or fixed return required to be
paid in connection therewith, as well as any and all costs associated with
originating, procuring and making full settlement upon the same.

     “Remaining Costs” shall mean those estimated Costs which have not been
paid as of the Final Payment Date, as reasonably estimated by Landlord, but
which will have to be incurred and paid after the Final Payment Date in order
to complete construction of the Improvements and complete performance of all of
Landlord’s obligations with regard to the acquisition of the Land and the
development and construction of the Improvements.

     “Shell Construction Contract” shall mean the construction contract entered
into with the GC for construction of Landlord’s Base Building Work (including
without limitation all exterior site improvements). The Shell Construction
Contract and the TI Construction Contract may, at Landlord’s option, be
consolidated into a single construction contract covering all of Landlord’s
Work.

     “Site Plan” means a site plan for redevelopment of the Land to accommodate
the construction of the Building and other aspects of Landlord’s Base Building
Work, which shall be developed in accordance with the Approved Concept Plan and
Development Performance Standards, approved by the parties and submitted for
approval to the County, all in accordance with Section II of this Work
Agreement.

     “Substantial Completion”, “substantially complete” and phrases of a
similar nature shall mean, with regard to particular work, completion of the
applicable work in accordance with the approved plans therefor (as modified by
any approved change orders thereto), other than minor modifications due to the
unavailability of specified equipment or materials or due to unforseen field

C-7

 

conditions, and exclusive of incomplete or defective items of the type normally
included within a punch list. Substantial Completion of Landlord’s Work as a
whole shall mean (1) that all interior leasehold improvements have been
completed in accordance with the approved Construction Documents (as defined
below), other than (A) special, non-standard items requested by Tenant that
require a lead time for procurement and/or installation which is inconsistent
with the Approved Schedule, and (B) “punch list” items and other minor defects
which will not unreasonably interfere with Tenant’s ability to lawfully
take occupancy of the Premises or to conduct its business therein; (2) the
Building shell and all base building systems serving the Premises have been
substantially completed and/or are operational; (3) all exterior/site
improvements, including but not limited to surface parking areas and exterior
utilities, have been substantially completed and/or are operational, other than
final landscaping and paving installations which must be deferred due to
seasonal considerations and do not unreasonably interfere with Tenant’s
occupancy and enjoyment of the Premises (and subject to punch list items); and
(4) Landlord has obtained all governmental inspection and other approvals
capable of being obtained by Landlord in connection with such construction
prior to Tenant’s installation of its trade fixtures, furniture and equipment
(including without limitation a permanent or temporary certificate of occupancy
or its equivalent permitting Tenant to lawfully occupy the Premises, or any
applicable portion thereof, unless the same cannot be obtained by Landlord
prior to such installations by Tenant). Substantial Completion shall not be
dependent upon the issuance of an occupancy permit (or its equivalent) except
and solely to the extent the non-issuance thereof is caused by Landlord’s
failure to properly complete particular items of Landlord’s Work.

     “Target Cost” shall mean the projected total Cost to Complete determined
by the parties during the design phase of this Work Agreement, as set forth in
Section II, below, which shall consist of an amount designated as Guaranteed
Costs and an amount designated as Variable Costs, as each such term is defined
herein, and shall be reflected in the Preliminary Budget approved by the
parties.

     “Target Date” shall mean the date for completion of each applicable phase
of the Premises as set forth in the Approved Schedule for such phase.

     “Tenant Delay(s)” shall mean any delay in the performance of Landlord’s
Work occasioned by (i) the actions, omissions or interference of Tenant, its
agents, employees, agents, contractors and subcontractors, with respect to any
aspect of the design, permitting and/or performance of Landlord’s Work, and
(ii) any other item which, under the terms of this Exhibit C constitutes a
Tenant Delay, including without limitation any delay by Tenant in the review
and approval of the Base Building Plans and the TI Plans, and/or any delay
occasioned by a change order requested or approved by Tenant.

     “Tenant’s Load Letter” shall mean a complete list in tabular form of
Tenant’s special equipment, including the quantities and locations of the
following: personal computers, special computer rooms and other equipment
therein, electrical generators and uninterrupted power supply (UPS) equipment,
continuously operating electric motors, copiers, cooking hood exhausts or other
exhaust requirements indicating circuits and/or “clean” power, grounding
requirements, other special

C-8

 

requirements for other heat-generating equipment,
and any future load that Tenant requires or anticipates requiring. In addition
to quantities and locations, Tenant shall provide the name, manufacturer, model
number, voltage, phase, full load amperage, watts or horsepower, heat output in
BTU, plumbing connection requirements, and any special operating temperature
and humidity requirements and any other special requirements for any other
special equipment.
Tenant shall also designate any areas of high density occupancy,
twenty-four hour cooling requirements, and any special light switching
requirements.

     “Tenant’s Representative” shall be a single individual designated by
Tenant in a written notice to Landlord (and who may be changed by Tenant at any
time upon giving Landlord prior written notice thereof), who Tenant agrees
shall be available to meet and consult with Landlord at the Building as
Tenant’s representative respecting the matters which are the subject of this
Exhibit C and who, as between Landlord and Tenant, shall have the power to
legally bind Tenant with respect to notices from Tenant making requests for and
approving changes, giving approval of plans or work, or otherwise giving
directions to Landlord under this Exhibit C.

     “Tenant Work” shall mean any construction work, systems furniture
installations and other installations (including telephone systems, upgraded
security systems, computer LAN wiring or other similar installations), to the
extent the same are not provided for under the Construction Documents and are
intended by Tenant to be performed by Tenant or under Tenant’s supervision.

     “TI Allowance” shall mean the allowance to be given for tenant
improvements, as established in the Preliminary Budget developed pursuant to
Section II of this Work Agreement.

     “TI Construction Contract” shall mean the construction contract entered
into with the GC for construction of Landlord’s TI Work.

     “TI Plans” shall mean architectural plans, construction drawings and
mechanical, electrical and plumbing (MEP) drawings for the Premises, in form
sufficient for the permitting and construction of the Premises.

     “Total Cost to Complete” shall mean the sum of the all final Costs as
determined after final completion of all of the Improvements, but in no event
more than the Target Cost except to the extent the Target Cost is increased or
decreased (i) due to increases or decreases in the Variable Costs, and/or (ii)
due to increases in the Guarantied Costs occurring by virtue of any Permitted
Overruns (as defined below).

     “Variable Costs” shall mean those hard and soft costs associated with
Landlord’s Work which Landlord is not guarantying will exceed the amounts set
forth in the Approved Budget, and are reflected by the marking of such costs
with two asterisks within the Approved Budget.

C-9

 

	II.	 	LANDLORD’S WORK

     A.  Landlord’s Base Building Work/Design and General Performance Covenant.

          (1) Landlord’s
Base Building Work - Generally. Upon acquisition of the
Land, agreement on the Site Plan and Approved Base Building Plans, entry into
the Shell Construction Contract, and issuance of Site Plan approval and a building
permit allowing such construction, Landlord shall construct (or cause to be
constructed) Landlord’s Base Building Work, all in accordance with the
provisions of this Exhibit C. Such construction shall be completed in
substantial accordance with the Approved Base Building Plans.

          (2) Site Plan. Within the time frames provided for in the Acquisition
Agreement, Landlord shall cause its civil engineer and other Design
Professionals to prepare a proposed Site Plan for submission to the County.
Landlord shall prepare such Site Plan in collaboration with Tenant regarding
major site design features, and consistent with the Concept Plan and
Development Performance Standards, and, prior to submission, Landlord shall
provide a copy of the proposed Site Plan to Tenant for comment and approval.
Within a reasonable time period after Landlord’s receipt of Tenant’s approval
of the Site Plan, Landlord shall submit the Site Plan to the County for review
and approval, and diligently pursue the granting of such approval.

          (3) Development of General Design and Schedules. Upon reaching final
approval of the Site Plan, and concurrent with its submission to the County for
approval (if not earlier), Landlord and Tenant shall meet to develop (i)
Outline Specifications for all base building improvements, site improvements
and tenant improvements consistent with the Approved Site Plan and Concept
Plan, and taking into account the particular requirements of Tenant’s proposed
use of the Premises, (ii) a Preliminary Schedule for the design and
construction for Landlord’s Work, and (iii) a Phasing Plan for the phasing of
any construction, as and to the extent desired by the parties. The Outline
Specifications, Preliminary Schedule and Phasing Plan shall each be subject to
the mutual review and approval of Landlord and Tenant, to be achieved within
ninety (90) days after Landlord’s submission of the Site Plan to the County for
approval. After reaching final agreement upon the Outline Specifications.
Preliminary Schedule and Phasing Plan, Landlord shall prepare (and submit to
Tenant for review and approval) a Preliminary Budget for Landlord’s Work
consistent with Site Plan and Outline Specifications (which will provide as
much preliminary budgetary information as is then reasonably available, broken
down (1) into Guarantied Cost and Variable Cost line items, and (2) to reflect
those items which apply to all phases of construction, and those items which
apply only to each separate phase of construction). The Tenant Improvements
line item in the Preliminary Budget will reflect a market rate, per square foot
tenant improvement allowance. Once agreement is reached upon the Outline
Specifications, Preliminary Schedule, Phasing Plan and Preliminary Budget, and
subject only to the availability of (and closing upon) required financing (as
more fully provided for hereinbelow), Landlord and Tenant shall each be
required to proceed with final base building and tenant improvement design, and
construction, as set forth in the balance of this Work Agreement, without
further right of termination. Either prior to, or within ninety (90) days
after, agreement is reached upon the Outline Specifications, Preliminary
Schedule, Phasing Plan and

C-10

 

Preliminary Budget, Landlord will use diligent
efforts to determine if equity and/or debt financing is available for the
development of the Building and Premises (and each phase thereof) in accordance
with this Lease. If Landlord has not accepted a commitment for such financing
prior to the expiration of such 90-day period, or it is reasonably apparent
prior to such date that a commitment for such financing on commercially
reasonable and feasible terms (as determined by Landlord in good faith) is not
going to be available despite Landlord’s diligent, good faith efforts, then either Landlord or Tenant
shall have the right to terminate this Lease upon written notice to the other
at any time prior to the date a commitment for such financing is accepted by
Landlord and a commercial lender and/or equity source. In addition, if
Landlord and Tenant do not reach agreement on the Site Plan, Outline
Specifications, Preliminary Schedule, Phasing Plan and/or Preliminary Budget
for any phase of construction of the Building and premises within the time
frames set forth above, despite their good faith efforts, either Landlord or
Tenant shall have the right to terminate this Lease upon written notice to the
other at any time prior to the date all such items are approved by Landlord and
Tenant. The parties understand that changes in market conditions and the
availability of financing could affect their willingness or ability to reach
final agreement on any or all of the foregoing items, and that, beyond the
obligation to act in good faith in furtherance of the mutual objectives of the
parties as reflected in this Lease, neither shall be bound to proceed if they
cannot reach agreement on such items despite their good faith efforts. This
Lease shall be further contingent upon Landlord’s closing a construction loan
and/or equity financing providing for all anticipated Costs of Landlord’s Work
hereunder (and if such a loan or other financing is not closed within ninety
(90) after the date indicated for such closing in the Preliminary Schedule or
Approved Schedule, whichever is then applicable, then either Landlord or Tenant
shall have the right to terminate this Lease upon written notice to the other
at any time thereafter until the date such financing is consummated). Promptly
after determining that financing will be available for the development of the
Building and Premises in accordance with this Lease, and final agreement on the
Site Plan, Outline Specifications, Preliminary Schedule, Phasing Plan and
Preliminary Budget for each applicable phase of construction, Landlord will
proceed with the preparation of Base Building Plans, and will submit an updated
version of the Preliminary Schedule to Tenant for approval (upon which approval
the same shall constitute the “Approved Schedule” hereunder).

          (4) Base Building Plans. Subject to the terms of Subsection II.A.(3),
above, and within the time frames set forth in the Approved Schedule, Landlord
shall cause Landlord’s Architect and other Design Professionals to prepare the
Base Building Plans, and Tenant shall provide to Landlord, for Landlord’s
review and approval (which shall not be unreasonably withheld, conditioned or
delayed), Tenant’s Load Letter. As the Base Building Plans are completed,
Landlord shall provide copies thereof to Tenant for its review and approval.
Tenant may disapprove any Base Building Plans submitted to it for its approval
only if Tenant reasonably determines that such Base Building Plans are
materially inconsistent with the Site Plan, Preliminary Budget and/or the
Outline Specifications. Tenant shall use all due diligence and reasonable
efforts to review the Base Building Plans and to provide Landlord with written
notice of its approval or disapproval thereof, in accordance with the time
frames set forth in the Approved Schedule, and if disapproved by Tenant, Tenant
shall return such Base Building Plans to Landlord with its explicit objections
and suggested modifications. If Tenant’s modifications are acceptable to
Landlord, the Base Building Plans shall

C-11

 

thereafter be revised by Landlord’s
architect to reflect the applicable changes, and the same shall be resubmitted
to Tenant for approval within the time frames set forth in the Approved
Schedule. If, upon receipt of Tenant’s proposed modifications, Landlord wishes
to take exception thereto, Landlord may do so within five (5) business days
after the date upon which Landlord first received Tenant’s proposed
modifications. In such event, Landlord shall deliver revised Base Building
Plans to Tenant prior to the expiration of such five (5) business day period, and Tenant shall
grant its approval or disapproval thereto, and/or state any further objections
or proposed modifications, within five (5) business days after receipt thereof.
After the first submission and resubmission, Landlord and Tenant agree to
restrict further objections or disputes to matters which have not previously
been agreed upon or accepted by the other party, and to deliver revised
submissions or objections within a five (5) business day period. The parties
shall, in all events, attempt to reach agreement as soon as possible, and
within the time frames set forth in the Approved Schedule. The process of
submissions and resubmissions shall continue thereafter until final agreement
is reached. Each party agrees that its failure to respond to a submission or
resubmission within the above-referenced time frames shall constitute such
party’s acceptance of the submission or resubmission in question.

          (5) Performance of Landlord’s Base Building Work. Following final
approval of the Approved Base Building Plans, and subject to the satisfaction
of any financing contingency set forth herein, Landlord agrees to apply for and
diligently pursue the issuance of a building permit for the performance of
Landlord’s Base Building Work. Tenant acknowledges that Landlord may apply for
a building permit which encompasses only Landlord’s Base Building Work, or
which encompasses all of Landlord’s Work, and which takes into account any
phasing of construction pursuant to the Phasing Plan. Promptly after the
latest to occur of (i) Landlord’s closing on debt and/or equity financing for
such construction, (ii) the issuance of such building permit, or (iii)
Landlord’s entry into the Base Building Construction Contract, Landlord will
cause Landlord’s Base Building Work to be commenced, completed, installed or
performed, as the case may be, in accordance with the Approved Base Building
Plans and Phasing Plan, subject only to variations as described below, and any
modifications required by applicable governmental authorities in review of the
Approved Base Building Plans as part of the process of obtaining a building
permit. During construction of the Building, Landlord shall have the right to
make substitutions of material(s) of equivalent grade and quality, and to make
changes necessitated by conditions met in the course of construction, provided
Landlord shall seek Tenant’s approval of any material change to the Approved
Base Building Plans within the scope of the aforesaid circumstances, which
shall not be unreasonably withheld, conditioned or delayed, provided that it
shall be deemed unreasonable for Tenant to withhold its consent to any such
changes if there is general conformity of such changes to the Approved Concept
Plans, and shall be deemed given if Tenant fails to respond within three (3)
days of a request for approval.

C-12

 

	 	B.	 	Landlord’s TI Work/Design and General Performance Covenants.

          (1) Preparation of Plans and Specifications.

               (a) Within thirty (30) days after the date upon which the Approved Base
Building Plans have been agreed upon, and consistent therewith (and with the
Phasing Plan) Landlord and Tenant shall reach agreement on the Approved Space Plan
(an initial draft of which shall be prepared by Landlord’s architect in
consultation with Tenant).

               (b) Promptly after approval of the Approved Space Plan and Tenant’s Load
Letter, Landlord shall cause its Design Professionals to commence to prepare
the TI Plans.

          (2) Approval of and Revisions to Plans and Specifications. As soon as
practicable after receipt of such TI Plans, but in no event more than ten (10)
business days after receipt thereof, Tenant shall return such TI Plans to
Landlord with its objections, suggested modifications and/or approval. If
Tenant’s modifications are acceptable to Landlord, said TI Plans shall
thereafter be revised by Landlord’s architect to reflect the applicable
changes, and the same shall be resubmitted to Tenant for approval within ten
(10) business days after their receipt by Landlord. If, upon receipt of
Tenant’s modified Drawings and Specifications, Landlord wishes to take
exception thereto, Landlord may do so within ten (10) business days after the
date upon which Landlord first received Tenant’s proposed modifications to the
TI Plans. In such event, Landlord shall deliver revised TI Plans to Tenant
prior to the expiration of such ten (10) business day period, and Tenant shall
grant its approval or disapproval thereto, and/or state any further objections
or proposed modifications, within five (5) business days after receipt thereof.
After the first submission and resubmission, Landlord and Tenant agree to
restrict further objections or disputes to matters which have not previously
been agreed upon or accepted by the other party, and to deliver revised
submissions or objections within a five (5) business day period. The parties
shall, in all events, attempt to reach agreement as soon as possible, and
within thirty (30) days after the date upon which Landlord first received
Tenant’s response to the first submission of TI Plans from Landlord to Tenant.
The process of submissions and resubmissions shall continue thereafter until
final agreement is reached. Each party agrees that its failure to respond to a
submission or resubmission within the above-referenced time frames shall
constitute such party’s acceptance of the submission or resubmission in
question.

          (3) Landlord’s TI Work. Following final approval of the Approved TI
Plans, Landlord agrees to apply for a building permit for the performance of
Landlord’s TI Work. Tenant acknowledges that Landlord may apply for a building
permit which encompasses only Landlord’s TI Work, or which encompasses all of
Landlord’s Work, and may reflect any phasing contemplated under the Phasing
Plan. Promptly after the latest to occur of (i) the issuance of such building
permit, (ii) Landlord’s entry into the TI Construction Contract, and (iii) the
completion of such portion of Landlord’s Base Building Work as is necessary in
order to commence Landlord’s TI Work in a manner consistent with prudent
construction practices, Landlord will cause Landlord’s TI Work to be commenced,
completed, installed or performed, as the case may be, in accordance with the
Approved TI Plans, subject only to minor variations and/or variations
necessitated by the unavailability of specified materials and equipment, and
any modifications required by applicable governmental authorities in review of
the Approved TI Plans as part of the process of obtaining a building permit.

C-13

 

          (4) Change Orders. Tenant shall be allowed to make change orders to the
Construction Documents provided that (i) any such proposed change order shall
be submitted to Landlord for Landlord’s consent, and Landlord shall have three
(3) business days after receipt of all documentation necessary for Landlord to
properly review such change order within which to review and either approve or
disapprove same within the same standard of review as would be applicable to
any alteration of the Premises proposed by Tenant after the
Rent Commencement Date pursuant to Section 1.5 of the Lease (and provided
further that, in the event Landlord does not approve all items set forth in
said proposed change order, Landlord will notify Tenant of the basis for its
disapproval, and Landlord and Tenant will work together expeditiously and in a
commercially reasonable manner to reach agreement on any such proposed change
order), (ii) any and all incremental additional costs associated with such
change order(s) shall constitute Excess Base Building Costs or Excess TI Costs,
as the case may be, and (iii) any delay in the Substantial Completion of
Landlord’s Work occasioned by any such change order shall be deemed a “Tenant
Delay” within the meaning of this Exhibit C.

          (5) Tenant’s Inspection Right. Subject to the insurance requirements and
the rules and regulations of the GC, Tenant’s Representative shall have the
right during normal working hours, and accompanied by a representative of
either Landlord or the GC, to have access to the Premises for purposes of
observation and inspection only during the performance of Landlord’s Work,
provided that Tenant or Tenant’s Representative shall have the obligation to
provide prior notice of any such entry to the GC and to Landlord’s Project
Manager. The right of Tenant and Tenant’s Representative to enter the Building
prior to the Target Date shall in no way interfere with or delay the completion
of Landlord’s Work, and any delays in the Substantial Completion of Landlord’s
Work caused by such entry shall constitute a Tenant Delay hereunder. Access
for such purposes shall not be deemed to constitute possession or occupancy,
provided, however, that any such entry and/or occupancy shall be subject to all
of the terms and conditions of the Lease, except for the payment of Rent.

          (6) Interim Correction of Defects. Landlord shall promptly undertake and
diligently prosecute (or cause the GC to undertake and prosecute) the
correction of any defects in Landlord’s Work of which Landlord is notified in
writing as a result of any of the aforesaid inspections by Tenant. In addition,
on the date of Substantial Completion of Landlord’s Work, it shall be
conclusively deemed that all work theretofore performed by or on behalf of
Landlord and not objected to by Tenant as aforesaid was satisfactorily
performed in accordance with, and meeting the requirements of, this Lease, and,
except as provided in the following sentence, Landlord shall be relieved of
further obligation hereunder with respect to such work. The foregoing
presumption shall not apply, however: (i) to required work not actually
completed by Landlord, which Landlord agrees it shall complete with reasonable
speed and diligence, or (ii) to latent defects in such work which could not
reasonably have been discovered theretofore, provided that Tenant notifies
Landlord thereof within one (1) year after occupancy, or (iii) to work covered
by warranties provided to Landlord by Landlord’s Contractor, or any
subcontractors, with respect to Landlord’s Work but only during the period such
warranties remain in force.

          (7) Substantial Completion; Delivery of Possession; Punch List.

               (a) The process and requirements associated with notifying Tenant that
Landlord’s Work with respect to any phases of the Premises has been
Substantially Completed, with

C-14

 

arranging for a joint inspection thereof, with
the timing of Landlord’s tender of possession thereof to Tenant, and with
regard to the resolution of any disputes relating to Landlord’s SC Notice (as
defined in the Lease), shall be governed by the provisions of Section 1.3(b)
and (c) of the Lease, as if fully restated herein.

               (b) If, in the course of any joint inspection of phases of the Premises
conducted pursuant to Section 1.3 of the Lease, Tenant discovers minor
deviations or variations from the Construction Documents of a nature commonly
found on a “punch list” (as that term is used in the construction industry),
Tenant shall promptly notify Landlord of such deviations; provided, however,
that in the event of a dispute, Landlord (or Landlord’s Architect) and Tenant
shall negotiate in good faith, using their reasonable discretion, to determine
which items constitute punch list items. The existence of such punch list
items shall not postpone the Rent Commencement Date of this Lease nor the
obligation of Tenant to pay Rent, additional rent or any other charges due
under this Lease.

               (c) Landlord covenants and agrees to complete all items on Tenant’s punch
list as soon as reasonably practicable under the circumstances; provided,
however, Tenant’s acceptance of the Premises, subject to completion of all
punch list items, shall not be deemed a waiver by Tenant of any warranty or
other claims, if any, that Tenant may have, directly or indirectly, against
Landlord, the GC or subcontractors to the extent any of them are involved in
the construction of the Premises. Landlord covenants and agrees to repair or
replace any latent defects in its work or in the Building systems and
structures as soon as reasonably practicable after Tenant provides notice
thereof to Landlord; provided, however, that Landlord shall have no obligation
to repair or correct, nor any liability for, defects in any such work for the
initial buildout to the extent Landlord is notified thereof more than one (1)
year after the date of Substantial Completion of Landlord’s Work; or in the
case of any such defect previously repaired, first detected more than one (1)
year from the date of the last repair of such defect. The foregoing shall not
affect, however, any of the general repair covenants set forth in the Lease.

          (8) Early Work and Furniture Installation.

               (a) Landlord acknowledges that Tenant wishes to commence operations in
each applicable phase of the Premises as soon as possible after Landlord’s Work
is Substantially Complete, and that there may be some aspects of Tenant Work
that may need to be completed before Tenant can commence operations within any
phase of the Premises. Therefore, Landlord and Tenant acknowledge and agree
that Tenant shall be given access to each applicable phase of the Premises
prior to the Substantial Completion of Landlord’s Work, as and to the extent
set forth below, so that Tenant may perform certain items of Tenant Work, and
thereby expedite Tenant’s use and occupancy of such phase of the Premises. Any
such items of Tenant Work shall be agreed upon in writing by Landlord and
Tenant in their reasonable discretion prior to the commencement of any such
work, and shall be referred to herein as the “Early Work”, which shall include,
without limitation, any installations of modular furniture in the Premises, and
the installation of phone and data cabling in the Premises, in each instance to
the extent not included within Landlord’s Work. Landlord and Tenant
acknowledge and agree that the installation of modular furniture in the
Premises is likely to constitute the most time-consuming component of the Early
Work, and shall be referred to separately

C-15

 

herein as the “Furniture Installation”. Landlord and Tenant agree that the
performance of any Early Work shall be in accordance with this paragraph II.B(8).

               (b) Any entry and/or occupancy of the Premises prior to Substantial
Completion of Landlord’s Work and/or the Commencement Date, including without
limitation any early entry for the purposes of performing any Early Work, shall
be subject to all of the terms and conditions of the Lease, except for the obligation to pay Rent
(which will not be applicable until the Rent Commencement Date, as provided in
the Lease). In addition, any entry by the Tenant, its agents, employees or
contractors (any and all of which to be referred to hereinafter as “Tenant’s
Personnel”): (i) shall be subject to the insurance requirements of Landlord and
the GC (which shall provide such requirements to Tenant within five (5)
business days after Tenant requests the same in writing); (ii) shall comply
with any reasonable scheduling requirements of the GC, and Tenant shall request
permission to enter the Premises in writing, specifying the requested date,
time of entry, and which Early Work Tenant intends to perform, at least five
(5) business days prior to any such entry, and Landlord shall cause the GC to
respond promptly to such request and to use reasonable efforts to accommodate
the request, in accordance with the scheduling restrictions and requirements
set forth hereinbelow; and (iii) shall in no way delay the Substantial
Completion of Landlord’s Work, and if Tenant’s Personnel cause any such delay,
the same shall constitute a Tenant Delay hereunder. In addition, Tenant shall
bear the full risk of loss for any materials, equipment or other property which
Tenant’s Personnel bring into the Building or the Premises in connection with
any Early Work, which shall be at Tenant’s sole risk, and Landlord shall not
have any liability therefor.

               (c) Notwithstanding the foregoing to the contrary: (i) Tenant acknowledges
that Tenant’s Personnel shall not be permitted to enter the Premises prior to
the Substantial Completion of Landlord’s Work to perform any Early Work unless
and until Tenant receives permission from Landlord or the GC for such entry,
subject to the terms of Section II.B(8)(d), below, and (ii) Tenant’s Personnel
shall have full access to each of the Premises no later than the “Furniture
Date” for such reflected in the Target Schedule, subject to Tenant Delays
and/or Force Majeure, for the purpose of performing the Furniture Installation,
which access for the Furniture Installation shall include access to the
elevator, delivery dock and trash facilities which is comparable to the access
thereto of the GC and its subcontractors for Landlord’s Work. Landlord shall
ensure that the GC’s schedule for performance of Landlord’s Work shall include
a reasonable block of time which is allocated to Furniture Installation, and,
to a lesser extent, Early Work.

               (d) Tenant shall notify Landlord and the GC at least five (5) business
days prior to the date upon which Tenant requests entry to the Premises for the
purpose of performing any Early Work. Landlord agrees to cause the GC to
cooperate in good faith with Tenant to accommodate Tenant’s requested entry
dates, subject to the terms of this paragraph II.B.(8)(d), provided that if,
prior to the Furniture Date for any Phase of the Premises, the GC determines
that it is not feasible for Early Work to be performed on a particular floor or
floors of the Premises, or determines that allowing such entry would delay the
Substantial Completion of Landlord’s Work, then Tenant’s Personnel shall not
have the right to enter such floor(s). Subject to the foregoing sentence,
Landlord and the GC shall make all reasonable efforts to enable the Tenant to
have access to certain floors of the Premises as they become available (i.e.,
as the commencement of Early Work becomes feasible), prior to the Furniture
Date.

C-16

 

               (e) Without limitation, Tenant shall be responsible for any damage to
Landlord’s Work caused by Tenant, or its agents, employees and contractors, in
the course of performing any early work and/or furniture installation.

	III.	 	Timing of Construction.

     A.     Target Date. Subject to Force Majeure and Tenant Delays, Landlord
agrees to use all reasonable and diligent efforts to cause Landlord’s Work to
be substantially completed on or before the Target Date, for each applicable
phase of the Premises. Landlord shall give prompt written notice to Tenant of
any delays in the progress of construction that might prevent substantial
completion of Landlord’s Work on an applicable phase by the Target Date,
together with an estimate of the duration of such delay. If such delay is due
to Force Majeure or Tenant Delays, Landlord will, at Tenant’s option,
investigate with the GC if it is possible to accelerate the completion of
Landlord’s Work (through the authorization of overtime work and the like) in
order to reduce or eliminate any anticipated delay, and, if so, Landlord and
the GC will identify the cost which will be associated with accelerating the
completion of Landlord’s Work to the extent delayed thereby (or the portion
thereof which is affected by such delay). If such acceleration is possible,
Landlord will, in consultation with Tenant, reasonably approve change orders
allowing for such acceleration provided, at Landlord’s sole option, the cost
associated therewith will either be payable directly by Tenant to Landlord
within thirty (30) days after written invoice, or shall constitute a Permitted
Overrun.

     B.     Effect of Delay. To the extent that any item of Landlord’s Work which
is required to be substantially completed as of the applicable Target Date is,
in fact, not completed as of such date, the provisions of this Section III.B
and of Section III.C, below, shall apply as Tenant’s sole and exclusive remedy:

          (i) If and to the extent the non-completion of such item(s) does not
materially affect Tenant’s use and occupancy of an applicable of the
Premises, then provided Landlord continues to pursue the completion of
such items with all due diligence, such non-completion shall not affect
the Rent Commencement Date of this Lease or otherwise result in or give
rise to any damages or penalties payable by Landlord to Tenant, or
otherwise constitute a default by Landlord under this Lease.

          (ii) If and to the extent the non-completion of such item(s) does
materially affect Tenant’s use and occupancy of an applicable of the
Premises, then:

               (A) If and to the extent such non-completion occurs as a result of
any event of “Force Majeure”, the Rent Commencement Date of this Lease
for the applicable shall be extended one (1) day for each day which
elapses between the Target Date and the date such items are substantially
completed by Landlord (provided that in no event shall the Rent
Commencement Date of this Lease for an Applicable be extended to a date
later than the date upon which Landlord achieves “Substantial Completion”
of Landlord’s Work unless the non-completion of an item of Landlord’s
Work legally prevents Tenant from commencing occupancy of the
Premises).

C-17

 

               (B) If and to the extent such non-completion occurs as a result of
Landlord’s failure to perform, and not as a result of any Tenant Delays
or Force Majeure, then (1) the Rent Commencement Date of this Lease for
such shall be extended one (1) day for each day which elapses between
the Target Date for such and the date such items are substantially
completed by Landlord (provided that in no event shall the Rent
Commencement Date of this Lease for a be extended to a date
later than the date upon which Landlord achieves “Substantial Completion”
of Landlord’s Work upon such unless the non-completion of an item of
Landlord’s Work legally prevents Tenant from commencing occupancy of the
Premises), and (2) Tenant shall also be entitled to receive a credit
against Base Rent (commencing on the Rent Commencement Date, as adjusted
pursuant to this subparagraph) of one-half (1/2) day of Base Rent for
the applicable for each of the first thirty (30) days which elapse
between the Target Date for such (as otherwise adjusted due to any Force
Majeure or Tenant Delays) and the date such items are substantially
completed by Landlord , three-quarters (3/4) of a day of Base Rent for
each of the second thirty (30) days which elapse between the Target Date
for such (as otherwise adjusted due to any Force Majeure or Tenant
Delays) and the date such items are substantially completed by Landlord,
and one (1) full day’s Base Rent for each day which thereafter elapses
until the earlier of (i) date upon which Landlord achieves “Substantial
Completion” of Landlord’s Work, and (ii) the date upon which Tenant is
lawfully permitted to commence occupancy of the Premises.

               (C) If and to the extent such non-completion occurs as a result of
any Tenant Delay(s), the Rent Commencement Date of this Lease for such
shall be deemed to be the date upon which Landlord’s Work upon such phase
would have been Substantially Completed (and Tenant permitted to lawfully
occupy the Premises) but for such Tenant Delay(s), and Landlord shall not
be liable to Tenant for any Base Rent abatement, damages or other rights
and remedies as a result thereof.

               (D) The provisions of clauses (A), (B) and (C) shall be construed in
conjunction with each other in those cases where delay in completion of
items of Landlord’s Work are caused in part by Force Majeure, in part by
Tenant Delays and/or in part by Landlord’s non-performance.

     C.     Additional Remedies. In addition to the remedies provided in Section
III.B, above, but in lieu of any other rights and remedies at law or in equity,
if (i) Landlord is at any time failing to pursue the performance of Landlord’s
Work diligently, and Landlord fails to recommence such diligent efforts within
a period of more than thirty (30) days after Tenant notifies Landlord in
writing of such failure, or (ii) if Landlord ceases to perform any portion of
Landlord’s Work without good cause for a period in excess of thirty (30)
consecutive days, then the same shall constitute a “Construction Default” by
Landlord hereunder. Upon the occurrence of any Construction Default by
Landlord with regard to the completion of Landlord’s Work, Tenant shall have
the right to exercise self-help, that is, to perform the obligations of
Landlord with respect to Landlord’s Work which

C-18

 

Landlord has failed to perform in accordance with the applicable specifications
for such work, and, upon such performance by Tenant, Tenant shall have the right
to be reimbursed for its reasonable expenses associated with the exercise of such
self-help right, plus interest at the Default Rate from the date such expenses
were paid by Tenant until the date the same are reimbursed by Landlord. If Landlord
fails to make a reimbursement which is due and owing to Tenant under this subparagraph to
Tenant within thirty (30) days after Tenant’s written demand, and unless there
is a bona fide dispute regarding Tenant’s right to such reimbursement that is
then being actively pursued by Landlord, Tenant shall have the right to
deduct the reimbursement amount owed to Tenant from the next payments of
Base Rent and Additional Rent becoming due under the Lease. In order to obtain
any reimbursement from Landlord pursuant to this subparagraph, Tenant shall be
required to submit a written reimbursement request (i) setting forth (in an AIA
Form G701) the amount of the reimbursement requested, (ii) certifying (A) that
a Construction Default by Landlord has occurred pursuant to this Lease and that
all applicable cure periods and cure rights have expired without such failure
having been cured by Landlord, (B) that Tenant has expended the amount
requested to be reimbursed in accordance with the provisions of this
subparagraph for the items reflected within the Form G701 accompanying such
reimbursement request, and (C) that the work for which Tenant is seeking
reimbursement has been performed properly by Tenant or its contractor in
accordance with the Construction Documents applicable to such work, and (iii)
attaching a duly executed release of liens executed by the contractor and any
and all subcontractors and/or materialmen supplying labor and/or materials in
connection with such work, in form satisfactory to Landlord’s title insurance
company to issue a bring-to-date mechanics lien endorsement, or otherwise
insure over such liens, under the mortgagee’s title insurance policy issued in
favor of Landlord’s mortgagee, acknowledging payment of the applicable amounts
for such labor and/or materials, and fully and forever waiving any and all
statutory and/or common law liens which might otherwise be asserted by them
against the Premises (or any portion thereof), the Building or the Land, which
in the case of any interim payment may be limited to all work for which payment
has previously been made, and which, in the case of final payment, shall be an
unconditional and unlimited waiver of any and all statutory and/or common law
liens which might otherwise be asserted by them against the Premises (or any
portion thereof), the Building or the Land.

     D.     Tenant Delay(s). Tenant acknowledges that Tenant Delay(s) may cause
delay in Landlord’s ability to complete items which are part of Landlord’s Work
within the time frames contemplated by this Lease. Accordingly, Landlord’s
completion obligations with respect to Landlord’s Work shall be extended one
(1) day for each day of delay in the completion thereof caused by “Tenant
Delays”; and in such event, the Rent Commencement Date under this Lease for
each applicable shall be deemed to be the date upon which Landlord’s Work upon
such would have been substantially completed (and Tenant lawfully permitted to
occupy the Premises) but for such Tenant Delay(s), and Landlord shall not be
liable to Tenant for any Base Rent abatement, damages or other rights and
remedies as a result thereof.

     E.     Early Substantial Completion. If Substantial Completion of Landlord’s
Work on a phase of the Premises shall occur prior to the Target Date for such
phase, the same shall not affect the timing of the Rent Commencement Date for
such phase (which shall coincide with the date of

C-19

 

Substantial Completion) irrespective of whether Tenant commences to occupy the
Premises on such earlier date, or is unable to do so; provided that (i) in no
event shall the Tenant be
required to take occupancy of any phase of the Premises more than thirty (30)
days prior to the Target Date for such phase, (ii) if the date of Substantial
Completion for such phase is more than thirty (30) days prior to the Target
Date, then unless Tenant actually accepts delivery of possession of such phase
prior to such date (in which case the Rent Commencement Date shall be the date
upon which Tenant takes occupancy of such phase), the Rent Commencement Date
for such phase shall, under such circumstances, be that date which is
thirty (30) days prior to the Target Date.

	IV.	 	COST TO COMPLETE

     A.     Payment of Costs. Except as otherwise set forth herein, Landlord shall
be responsible for and shall pay when due all Costs associated with the
acquisition and redevelopment of the Land, and performance of Landlord’s Work,
in accordance with this Exhibit C. All such Costs shall constitute part of the
Total Cost to Complete, except as specifically set forth herein to the
contrary.

     B.     Bidding.

          (1) Any reference in this Section IV.B(1) to Tenant shall be deemed to
refer to Tenant acting through Tenant’s Representative after the completion of
Construction Documents. After agreement upon the relevant portions of the
Construction Documents, Landlord shall, with the assistance and cooperation of
the GC, Tenant and Landlord’s Design Professionals, prepare a bidding package
for Landlord’s Work based upon the Construction Documents, to be provided to
the GC’s proposed subcontractors (or, if Landlord so elects, in the bidding of
general contractors).

          (2) Landlord shall promptly issue the aforesaid bidding package to the GC.
The bid solicitation will require that the GC obtain bids from a minimum of
three (3) subcontractors in each applicable trade, all of whom shall be
mutually and reasonably acceptable to Landlord and Tenant, and reasonably
determined by Landlord, Tenant and the GC to have demonstrated ability to
perform the work in a first class, good and workmanlike and timely manner, for
each type of work required. The GC may bid directly for any items of
Landlord’s Work. Tenant may require that specific items be unit priced during
the course of the bid process. Landlord agrees to cause the GC to identify
“long lead” items or materials which will delay Substantial Completion of any
portion of Landlord’s Work by the Target Date, and shall notify Tenant of the
same promptly after such identification can be made. Landlord and Tenant shall
cooperate in good faith to avoid such “long lead” items or materials.

          (3) All subcontractors shall submit their bids directly to the GC and
Landlord, who will review and analyze all bids submitted, and either Landlord
or the GC shall format all the bids for review by Tenant including copies of
all submitted bids (such format, the “Bid Format”). The Bid Format, listing
all bids received, shall be delivered to Tenant and Tenant’s Representative
within seven (7) days after receipt of the last subcontractor bid. Upon
receiving the Bid Format, Tenant shall have seven (7) days to review the Bid
Format and request any clarifications thereof from

C-20

 

Landlord (a “Request for Clarification”). If Tenant makes a Request for
Clarification, Landlord shall promptly commence diligent efforts to cause the
information requested to be furnished, if possible. Within five (5) days after
Tenant’s receipt of the Bid Format, or, if Tenant makes a Request for
Clarification, within five (5) days after Tenant’s receipt of the clarification
requested, Landlord shall deliver the final Bid Format for the Landlord’s Work
(“Final Bid Format”). Landlord, Tenant and the GC shall, within seven (7)
days following Tenant’s receipt of the Final Bid Format, select the
subcontractors mutually determined by them to be the acceptable bid (“Final
Bid”), and the costs associated with such subcontracts shall be incorporated
within a revised budget and shall form a part of the Total Cost to Complete.
Although pricing shall be a consideration, the parties agree that the lowest
price bid shall not necessarily be the Final Bid awarded by the GC if there is
a reasonable basis to award the subcontract to a higher priced bidder (such as
considerations relating to scheduling, coordination of trades, and other
factors). The parties agree to use reasonable, diligent and good faith efforts
to make Final Bid selections as soon as is reasonably practicable after the
Final Bid Format is submitted to Tenant. Once contracts have been awarded, the
Preliminary Budget shall be updated to reflect the pricing of such contracts,
and the Preliminary Budget, as so adjusted, shall constitute the “Approved
Project Budget” hereunder.

          (4) The parties generally intend that the Improvements be designed and
constructed within the overall cost limitations of the Preliminary Budget. The
Preliminary Budget, and each subsequent budget, shall contain a line item
contingency for miscellaneous items and unanticipated issues, in an amount
equal to three percent (3%) of the sum of (i) the Final Bid amount for
Landlord’s Work in the aggregate, plus (ii) all Land acquisition costs. If,
upon determination of the Final Bid, any Costs exceed the amount budgeted
therefor pursuant to the Preliminary Budget and/or the Cost of Landlord’s TI
Work exceeds the TI Allowance, Landlord shall, upon Tenant’s written request,
engage in a process of redesigning and value engineering the scope of
Landlord’s Work to reduce the overage or otherwise meet the Preliminary Budget
or TI Allowance , provided any delay in the completion of Landlord’s Work
resulting from such redesign or value engineering shall either (i) constitute a
Tenant Delay, if the redesign relates to Landlord’s TI Work, or (ii) constitute
an event of Force Majeure, if the redesign relates to Landlord’s Base Building
Work. Unless Tenant requests such value engineering, the pricing reflected in
the awarded Final Bids shall be deemed to have been agreed upon by Landlord and
Tenant, and will be reflected within the Approved Project Budget; and if such
value engineering is in fact requested and implemented, the pricing reflected
in the revised Final Bids (reflecting any savings achieved by such value
engineering) shall be deemed to have been agreed upon by Landlord and Tenant,
and will be reflected within the Approved Project Budget.

          (5) Landlord shall provide, or cause the GC to provide, updated Project
Budgets to Tenant on a reasonably frequent basis, but no less than once
monthly. Landlord shall commence review of such Project Budgets on the date of
their submission to Tenant and shall respond in writing to the GC, specifying
in detail any aspects of the updated Project Budgets of which Landlord or
Tenant does not approve. Tenant and Landlord shall attempt, in good faith, to
resolve any differences between the Construction Documents and Project Budget,
as prepared, and the GC’s responses. Landlord and the Project Employees shall
consult and work closely with Tenant, Tenant’s

C-21

 

Representative, and Tenant’s
consultants throughout the design and construction process, and coordinate with
Tenant as to all scheduled meetings with the design and construction
professionals, and shall work with Tenant to provide any requested material
information concerning the design and construction of the Building and Premises
to Tenant. Tenant shall not have the right to object to any items within a
Project Budget other than the Variable Cost items.

          (6) In addition, Landlord and Tenant shall endeavor to meet with each
other and with the GC and Design Professionals at least once weekly to review
design and construction issues for Landlord’s Work at all times prior to the
Commencement Date. Landlord or the GC shall, upon Tenant’s written request,
provide a written summary of the weekly progress meetings (which may consist of
meeting minutes) to Tenant’s Representative.

          (7) On
a monthly basis, Landlord shall provide Tenant (or Tenant’s
Representative) with copies of any Invoices which Landlord has received for
Landlord’s Work, along with requisitions therefor (on standard AIA forms G702
and G703, or a substantially similar form), plus any additional documentation
of such costs as Landlord or Tenant may reasonably request. Within five (5)
business days after Tenant receives such Invoices, Tenant shall either: (i)
notify Landlord that Tenant in good faith disputes the charges indicated on any
such Invoices (which dispute may be due to Tenant‘s good faith belief that such
portion of Landlord’s Work has not been performed in accordance with the
Construction Documents, or that such Invoices are inconsistent with the Final
Bid); or (ii) sign off on and approve payments of such Invoices. If Tenant
grants its approval pursuant to clause (ii) as aforesaid, then unless Tenant
notifies Landlord otherwise in writing at the time Tenant grants its approval,
Tenant shall be deemed to have agreed that (1) the portion of
Landlord’s Work
shown on such Invoices has been Substantially Completed in accordance with the
Construction Documents (except for latent defects and punch list items), and
(2) the value of the work set forth on such Invoices has been incorporated into
Landlord’s Work. Tenant’s failure to respond to a submission under this
Section within such five (5) business day period shall be deemed to constitute
its approval of the applicable submission.

     C. Final
Reconciliation.

            (1) Within
sixty (60) days after final completion of Landlord’s Work,
Landlord shall provide Tenant with the Final Reconciliation. To the extent
Landlord requires information in Tenant’s possession in order to prepare the
Final Reconciliation, Tenant will provide such information to Landlord promptly
after Landlord’s written request, and Landlord’s delivery of the Final
Reconciliation shall be excused for so long as Tenant delays in providing such
information to Landlord.

            (2) If the Final Reconciliation indicates that there are Excess Costs of
any kind which have not been theretofore paid by Tenant, then either (i) the
Total Cost to Complete shall be increased by an amount equal to all such Excess
Costs (or such portion thereof as Landlord may, in its sole discretion, elect
to include in the Total Cost to Complete), and the Base Rent payable under the
Lease shall be adjusted retroactive to Commencement Date, in accordance with
the Base Rent formula set forth in the Lease, or (ii) Tenant shall pay all such
Excess Costs (or such portion thereof

C-22

 

as Landlord elects not to include in the Total Cost to Complete) to Landlord
within thirty (30) days after delivery of the Final Reconciliation.

	V.	 	TENANT WORK

          A.     Generally.

             (1) In the event Tenant wishes to perform any Tenant Work in the Premises,
whether as part of the initial construction of the Improvements or as an
alteration thereto after the Commencement Date, the provisions of this Section
V shall apply. Any such Tenant Work shall be performed by a contractor
reasonably approved by Landlord in accordance with plans and specifications
approved by Landlord, which approvals shall not be unreasonably withheld. The
procedure for submission of any plans and specifications for Tenant Work shall
be substantially identical to (i.e., a reverse mirror image of) the procedure
for obtaining Tenant’s consent to the TI Plans. Tenant agrees that Landlord
will have the right to inspect the performance of Tenant’s Work by Tenant’s
contractor(s) and subcontractor(s), through a construction manager appointed by
Landlord, and Tenant agrees to cooperate with Landlord to facilitate such
inspection, including without limitation: (A) notifying Landlord and such
construction manager prior to any and all government inspections of Tenant’s
Work so that Landlord’s construction manager can be present therefor; (B)
permitting Landlord’s construction manager free and clear access to the
Premises during the construction period, as necessary to perform such
inspections, and (C) complying (or causing its contractor to comply) with the
reasonable directions of such construction manager in connection with Tenant’s
Work, as long as such directions are not inconsistent with the Construction
Documents. Landlord shall use reasonable efforts not to interfere unreasonably
with the performance of any Tenant Work during the course of any inspections by
Landlord or Landlord’s construction manager pursuant to this Paragraph.

             (2) In the performance of any Tenant Work in accordance with this Lease,
Tenant shall cause its contractor(s) to use reasonable and diligent efforts
not to interfere with ongoing operations in the Buildings, including, but not
limited to Landlord’s Work, and any delay in the completion of Landlord’s Work
which is occasioned by the performance of any Tenant Work shall constitute a
Tenant Delay hereunder. Without limiting the foregoing, Tenant agrees to cause
its contractor to use reasonable and diligent efforts to minimize excess noise,
and to limit its construction activities to the portion of the Premises being
constructed and those portions of the common area (if any) in which Tenant is
permitted to perform Tenant Work in accordance with the approved plans
therefor.

             (3) Tenant’s contractor(s) shall be responsible for all utility costs
associated with the performance of any Tenant Work and shall either supply its
own electricity and other utilities, or shall reimburse Landlord for all
utility consumption associated with such work. Tenant’s contractor(s) shall
keep all construction areas reasonably clean and free of trash and debris, and
Tenant shall police the activities of its contractors, subcontractors and their
respective employees with regard to keeping the Building and Project clean, and
not disturbing any other tenant (if any) in

C-23

 

the course of such construction
activities. Tenant’s construction contract shall indemnify Tenant and Landlord
from damages, losses and expenses associated with the acts and omissions of
Tenant’s contractor, its agents, employees and subcontractors, and shall
otherwise be subject to Landlord’s prior reasonable approval.

          (4) In connection with any Tenant Work, Tenant shall provide to Landlord
copies of all applications for permits, copies of all governmental inspection
reports and/or certificates, and any and all notices or violations communicated
to Tenant or its contractors by applicable governmental authorities, promptly upon receipt and/or
submission thereof, as the case may be. Tenant agrees to comply (or to cause
its contractors to comply) with all applicable federal, state and local laws,
regulations and ordinances in the performance of any Tenant Work, and to
promptly rectify any violations of such laws caused by the acts or omission of
Tenant, its employees, agents and/or contractors, and Tenant shall be
responsible for any non-compliance by Tenant or its agents, employees and
contractors.

          (5) Without limiting the generality or applicability of the foregoing
provisions, or of any other applicable provision of this Exhibit C or the
Lease, Tenant agrees that the following provisions shall apply to the
performance of any Tenant Work:

		
	 	     (i)    In performing any plumbing work which may require removal of
floor slab in corridors which are otherwise within the common areas of
the Building, Tenant agrees: (A) to conduct such work expeditiously and
in a manner which is calculated to minimize, to the fullest extent
possible, any inconvenience to Landlord’s building personnel, and other
Building occupants and invitees (if any) who use such common corridors;
(B) upon completion of the plumbing work, to restore the finishes within
such common corridors to their original condition; and (C) if materials
necessary to match such finishes, upon restoration, to the finish of the
portions of the corridor which were not removed or affected by Tenant
Work, are not available, Tenant shall be responsible to restore the
entire corridor to a uniform finish acceptable to Landlord in Landlord’s
reasonable discretion, consistent with the quality of the existing
finish.
	 
	 	     (ii)    In performing portions of any Tenant Work which involve
construction work upon the exterior of the Building, Tenant agrees that
it shall, at Tenant’s sole expense, restore all areas of the Building’s
exterior, including without limitation all adjacent planting areas,
sidewalks and parking areas, affected by the execution of such Tenant
Work, to their original condition upon the completion of such portions of
such Tenant Work.
	 
	 	     (iii)    Tenant shall protect and restore all work areas of the
Building (including without limitation any portions of the common areas
of the Buildings) required for access to the Premises as part of any
Tenant Work, or otherwise utilized or affected in performing any Tenant
Work, including, but not limited to, the Building roofs, common corridor
floors, walls, and ceilings, floor penetrations and chase wall
penetrations. Tenant

C-24

 

		
	 	shall use only roofing contractors who are permitted
to perform such work upon the roof without nullifying any then applicable
roof warranty for penetrations and reflashing of affected roof areas (if
any), which roofing contractors shall be subject to Landlord’s reasonable
approval, and Tenant and such contractor shall warrant to Landlord the
integrity of any such roof or exterior penetrations and that the same are
free from leakage and are otherwise properly waterproof. Tenant shall
further ensure (and warrant to Landlord) that all floor penetrations are
properly fire-stopped, in accordance with applicable building and fire
codes and prudent construction practices. Landlord’s construction
manager and/or representatives shall be advised at the time Tenant
commences any portion of any Tenant Work involving the exterior of the
Building, the Building roof, the common corridors, and all floor-to-floor
penetrations, and all such work shall be subject to the inspection and
approval of Landlord (and in the case of work involving the exterior of
the Building, shall be supervised by Landlord’s construction manager
and/or other representatives). In regard to the foregoing right of
inspection and approval, Tenant and its contractor shall permit such
construction manager and/or representatives free access to all affected
areas of the Premises and Building necessary for Landlord to conduct
such inspections and/or supervision.

		
	 	     (iv)    Tenant and its contractor performing any Tenant Work shall
provide copies of warranties for such Tenant Work and the materials and
equipment which are incorporated into the Building and Premises in
connection therewith, as well as provide to Landlord all operating and
maintenance manuals for all equipment and materials incorporated into the
Building and/or Premises as part of any Tenant Work. Tenant shall either
assign to Landlord, or enforce on Landlord’s behalf, all such warranties
to the extent repairs and/or maintenance on warranted items would be
covered by such warranties. Without limitation, all aspects of any
Tenant Work shall be warranted to be free from defects in design and
workmanship for a period of not less than one (1) year from substantial
completion of construction.

The inclusion of provisions in this Section V.A(5) which impose obligations
upon Tenant and/or Tenant’s contractor with regard to the performance of any
Tenant Work outside of the Premises are intended only to apply to those
portions of Tenant Work (if any) which are approved by Landlord; and the
inclusion of such provisions shall not be construed to impose upon Landlord any
obligation to approve work proposed by Tenant within (or affecting) areas
outside of the Premises.

          (6) Landlord shall be notified not less than three (3) business days in
advance of, and shall have the right to participate in, any inspection of
Tenant Work by Tenant and its contractor in which a punch list for such work is
intended to be prepared, and shall further have the right to require the
inclusion of any bona fide punch list items on such punch list.

          (7) Except as provided herein, Tenant shall obtain all necessary permits
in connection with any Tenant Work, including all final inspection approvals
which are required for the proper completion of such Tenant Work.

C-25

 

     B. First-Class Lien-Free Completion. Except as otherwise approved by
Landlord, Tenant shall use only new or first-class materials in connection with
any Tenant Work. All Tenant Work shall be paid for in full and in a timely
fashion by Tenant, and shall be performed in a lien-free, first-class, and good
and workmanlike manner, and in accordance with all applicable codes and
requirements. Tenant’s indemnity and covenants regarding liens as set forth in
the Lease shall apply to any liens created by virtue of any Tenant Work.
Tenant’s architect shall be responsible for ensuring that all Tenant Work
complies with the ADA and all other applicable federal, state and local laws,
ordinances, codes and regulations.

     C. Bonding. All contractors and subcontractors performing Tenant Work
shall be subject to Landlord’s approval, and shall be bonded or bondable and
licensed to do business in the State of Maryland.

     D. Insurance Requirements Applicable to Tenant During Tenant’s Work.

            (1) Tenant shall secure, pay for, and maintain, or cause its contractors
and subcontractors to secure, pay for, and maintain, during the continuance of
any construction work within the Premises, all of the insurance policies
required in the amounts as set forth herein, together with such insurance as
may from time to time be required by city, county, state or federal laws,
codes, regulations or authorities. Tenant Work (if any) may not commence until
all required insurance has been obtained, and, if Landlord requests, until
Tenant’s certificates of such insurance have been delivered to Landlord.
Tenant’s insurance policies shall name the Landlord and Landlord’s mortgagee(s)
as additional insureds. Tenant’s certificates of insurance shall provide that
no change or cancellation of such insurance coverage shall be undertaken
without thirty (30) days’ prior written notice to Landlord. Landlord shall
have the right to require Tenant, and Tenant shall have the duty, to stop work
in the Premises immediately if any of the coverage Tenant is required to carry
herein lapses during the course of the work, in which event such Tenant Work
may not be resumed until the required insurance is obtained and satisfactory
evidence of same is provided to Landlord.

            (2) In the event Tenant employs a contractor or subcontractor to perform
all or part of Tenant’s Work, Tenant shall purchase, or cause its contractor to
carry, General Contractor’s and Subcontractor’s Required Minimum Coverages and
Limits of Liability as follows:

		
	 	     (i)   Worker’s Compensation and Employer’s Liability Insurance, as
required by state law, and any insurance required by any Employee Benefit
Act or similar statute applicable where the work is to be performed, as
will protect the contractor and subcontractors from any and all liability
under the aforementioned act(s) or similar statute.

		
	 	     (ii)   Comprehensive General Liability Insurance (including
Contractor’s Protective Liability) in an amount not less than $3,000,000
per occurrence whether involving personal injury liability (or death
resulting therefrom) or property damage liability or a combination
thereof (combined single limit coverage) with a minimum aggregate limit of

C-26

 

		
	 	$3,000,000. Such insurance shall insure Tenant’s general contractor
against any and all claims for personal injury, death, and damage to the
property of others arising from its operations under its contract,
whether such operations are performed by Tenant’s contractors,
subcontractors, or sub-subcontractors, or by anyone directly or
indirectly employed by any of them.

		
	 	     (iii)      Comprehensive Automotive Liability Insurance, for the
ownership, maintenance, or operation of any automotive equipment, whether
owned, leased, or otherwise held, including employer’s non-ownership and hired car
liability endorsements, in an amount not less than $2,000,000 per
occurrence and $2,000,000 aggregate, combined single limit bodily injury
and property damage liability.

		
	 	     (iv)      Builder’s risk insurance, in an amount commensurate with the
scope of work, and otherwise in form and substance reasonably
satisfactory to Landlord.

          (3) Such
insurance policies set forth in (i) - (iii), above, shall insure
Tenant’s general contractor and all subcontractors against any and all claims
for bodily injury, including death resulting therefrom, and damage to the
property of others arising from its operations under its contract in connection
with construction of the Premises, whether performed by Tenant’s general
contractor, subcontractors, or sub-subcontractors, or by anyone directly or
indirectly employed by any of them.

          (4) The insurance required under this Exhibit C shall be in addition to
any and all insurance required to be procured by Tenant pursuant to the terms
of the Lease.

C-27

 

EXHIBIT D

Rules and Regulations

     To the Lease Agreement between ANNAPOLIS PARTNERS LLC and
TELECOMMUNICATION SYSTEMS, INC. (“Tenant”).

Rules and Regulations - Annapolis Point Corporate Center

     The following rules and regulations have been formulated for the safety
and well-being of all the tenants of the Building and become effective upon
occupancy. Strict adherence to these rules and regulations is necessary to
guarantee that each and every tenant will enjoy a safe and unannoyed occupancy
in the Building. Any repeated or continuing violation of these rules and
regulations by Tenant after the applicable notice and cure period provided for
in the Lease for non-monetary defaults, shall be sufficient cause for
termination of this Lease at the option of Landlord.

     Landlord may, upon request by any tenant, waive the compliance by such
tenant of any of the following rules and regulations provided that (i) no
waiver shall be effective unless signed by Landlord or Landlord’s authorized
agent; (ii) any such waiver shall not relieve such tenant from the obligation
to comply with such rule or regulation in the future unless expressly consented
to by Landlord, and (iii) no waiver granted to any tenant shall relieve any
other tenant from the obligation of complying with the foregoing rules and
regulations unless such other tenant has received a similar waiver in writing
from Landlord.

     The rules and regulations set forth herein may be modified by Landlord
from time to time, subject to Tenant’s consent, which shall not be unreasonably
withheld, conditioned or delayed.

     1.     The sidewalks, entrances, passages, courts, vestibules, or stairways,
or other parts of the Building not occupied by any tenant shall not be
obstructed or encumbered by any tenant or used for any purpose other than
ingress and egress to and from any tenant’s Premises, provided, subject to
compliance with applicable Legal Requirements and to Landlord’s reasonable
consent as to the configuration, design and materials used to construct such
area (unless included in the Construction Documents, in which event such
consent shall be deemed given to any such area depicted therein), Landlord
hereby consents to Tenant’s installation and use of a reasonable outdoor
seating area in the vicinity of the Cafeteria . Landlord shall have the right
to control and operate the public portions of the Building, and the facilities
furnished for the common use of the tenants, in such manner as Landlord deems
best for the benefit of the tenants generally. No tenant shall knowingly
permit the visit to its Premises of persons in such numbers or under such
conditions as to unreasonably interfere with the use and enjoyment by other
tenants of the entrances, and other public portions or facilities of the
Building.

     2.     Except as otherwise provided for in the Lease, no signs, awnings or
other projections shall be attached to the outside walls of any building
without the prior written consent of Landlord. No drapes, blinds, shades or
screens shall be attached to or hung in, or used in connection with, any

D-1

 

window or door of the Premises, without the prior
consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed. Such signs, awnings, projections, curtains, blinds,
screens or other fixtures must be of a quality, type, design and color, and
attached in the manner reasonably approved by Landlord.

     3.     No show cases or other articles shall be put in front of or affixed to
any part of the exterior of the Building, nor placed in any interior Common
Area without the prior written consent of Landlord.

     4.     The water and wash closets and other plumbing fixtures shall not be
used for any purpose other than those for which they were constructed, and no
sweepings, rubbish, rags, or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be born by the tenant
who, or whose servants, employees, agents, visitors, or licensees, shall have
caused the same.

     5.     There shall be no marking, painting, drilling into or in anyway
defacing any part of the Premises or the Building. Except in connection with a
permitted security system, no tenant shall construct, maintain, use or operate
on the outside of the Building, any electrical devices, wiring or apparatus in
connection with a loud speaker system or other sound system.

     6.     No animals, birds, pets of any kind shall be brought into or kept in or
about the Premises, and, other than in any permitted Cafeteria or any other
restaurant space within the Building, if any, no cooking shall be done or
permitted by any tenant on its Premises except for a tenant’s employee’s own
use. Microwave cooking devices, toasters, coffee machines, refrigerators, and
other similar kitchen or pantry devices typical of a general office use shall
be permissible. No tenant shall cause or permit any unusual or objectionable
odors to be produced or permeate from its Premises.

     7.     No tenant shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of this or any neighboring
building or Premises or with any person having business with such occupants.
No tenant shall throw anything out of the doors or windows or down the
corridors or stairs.

     8.     No inflammable, combustible, or explosive fluid, chemical or
radioactive substance shall be brought or kept upon the Premises except for
Permitted Materials (as defined within the Lease) as and to the extent
permitted by the Lease.

     9.     No additional locks or bolts of any kind shall be placed upon any of
the doors, or windows, by any tenant, nor shall any changes be made in existing
locks or the mechanism thereof without prior approval from Landlord, which
approval shall not be unreasonably withheld, conditioned or delayed. Each
tenant shall, upon termination of its tenancy, restore to Landlord all keys of
stores, offices, storage, and toilet rooms either furnished to, or otherwise
procured by, such tenant, and in the event of the loss of any keys so furnished
such tenant shall pay to Landlord the cost

D-2

 

of replacement thereof.

     10.     All removals, or the carrying in or out, of any safes, freight,
furniture or bulky matter of any description must take place at times and in
such manner as will not unreasonably interfere with the use and quiet enjoyment
of other tenants of the Building. Landlord reserves the right to inspect all
freight to be brought into the Premises and to exclude from the Premises all
freight which violates any of these Rules and Regulations or the Lease of which
these Rules and Regulations are a part.

     11.     Any person employed by any tenant to do janitorial work within its
premises must obtain Landlord’s consent and such person shall, while in the
Building and outside of the Premises, comply with all instructions issued by
the superintendent of the Building. No tenant shall engage or pay any
employees on its Premises, except those actually working for such tenant on its
Premises.

     12.     No tenant shall purchase spring water, ice, coffee, tea, soft drinks,
towels, or other like service, from any company or persons whose repeated
violations of these Regulations have caused, in Landlord’s opinion, a hazard or
nuisance to the Building and/or its occupants.

     13.     Landlord reserves the right to exclude from the Building at all times
any person who is not known or does not properly identify himself to the
Building management. Each tenant shall be responsible for all persons for
whom he authorizes entry into or exit out of the Building and shall be liable
to Landlord for all acts of such persons.

     14.     The Premises shall not be used for lodging or sleeping or for any
immoral or illegal purpose.

     15.     No tenant shall occupy or permit any portion of its Premises to be
used or occupied for the possession, storage, manufacture, or sale of liquor,
narcotics, tobacco in any form. No tenant shall engage or pay any employees on
its Premises, except those actually working for such Tenant on said Premises,
nor advertise for laborers giving an address at said Premises.

     16.     Landlord’s employees shall not perform any work for Tenant or do
anything outside of their regular duties, unless under special instruction from
the management of the Building.

     17.     Canvassing, soliciting, and peddling on the Premises is prohibited and
each Tenant shall cooperate to prevent the same.

     18.     There shall not be used in any space, or in the public halls of the
Building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber
tires and side guards.

     19.     Tenant shall not overload the floors or exceed the maximum floor
weight limits of the Premises.

D-3

 

EXHIBIT E

DECLARATION BY LANDLORD AND TENANT

AS TO DATE OF DELIVERY AND ACCEPTANCE OF

POSSESSION, LEASE COMMENCEMENT DATE, ETC.

     THIS DECLARATION is hereby attached to and made a part of the Deed of
Lease dated ____________, 2002, (the “Lease”), between ANNAPOLIS PARTNERS LLC
(“Landlord”) and TELECOMMUNICATION SYSTEMS, INC. (“Tenant”). All terms used in
this Declaration have the same meaning as they have in the Lease.

     (1)  Landlord and Tenant do hereby declare that possession of the Premises
was accepted by Tenant on ______________;

     (2) 
The Lease Commencement Date is hereby established to be ___________;

     (3) 
The Rent Commencement Date is hereby established to be ___________;
and

     (4)  The Lease Expiration Date is hereby established to be
_________________ unless the Lease is sooner terminated pursuant to any
provision thereof.

	 	 	 	 	 
	 	 	
LANDLORD:	 
	 	 	 	 	 
	 	 	ANNAPOLIS PARTNERS LLC, a Maryland limited
liability company	 
	 	 	 	 	 
	 	 	
By:
	 	(Seal)
	 	 	
 
	
	 
	 	 	Name: Tod E. Hirt
	 	 	Title: Manager	 
	 	 	 	 	 
	 	 	
TENANT:	 
	 	 	 	 	 
	 	 	TELECOMMUNICATION
SYSTEMS, INC.,a

Maryland corporation	 
	 	 	 	 	 
	 	 	
By:
	 
	 
	 	 	
 
	

	 
	 	 	
Title:
	 
	 
	 	 	
 
	

	 

E-1

 

EXHIBIT F

Cleaning Specifications

PREMISES:

Daily:

	 	 	 	 
	 	(a)	 	
Dust furniture, business machines, telephones, partition
tops, sills, ledges and other horizontal surfaces
	 	 	 	 
	 	(b)	 	
Spot clean all desk tops and furnishings to remove
fingerprints and smudges, (desks and tables not cleared of paper
work material will only be dusted where desk is exposed)
	 	 	 	 
	 	(c)	 	
Spot clean and polish all executive type desks and conference
tables
	 	 	 	 
	 	(d)	 	
Empty and damp wipe clean all ashtrays
	 	 	 	 
	 	(e)	 	
Where sand urns are used, remove all debris and smooth or
replace sand
	 	 	 	 
	 	(f)	 	
Empty all trash receptacles, wipe out with damp cloth if
necessary, replace plastic liners and remove trash to designated
areas
	 	 	 	 
	 	(g)	 	
All loose trash (marked by tenants as “TRASH”) to be removed
to designated areas, (“LOOSE TRASH”) means cardboard boxes, computer
paper, etc.
	 	 	 	 
	 	(h)	 	
Spot clean all washable wall, partition and door surfaces
	 	 	 	 
	 	(i)	 	
Clean and sanitize all drinking fountains, polish stainless
steel and chrome
	 	 	 	 
	 	(j)	 	
Vacuum all carpeted floors with a heavy duty commercial vacuum cleaner
	 	 	 	 
	 	(k)	 	
Dust mop all resilient tile, parquet, quarry, ceramic, raised
computer floors and other special floor coverings and treat with the
appropriate methods and material
	 	 	 	 
	 	(l)	 	
Dust mop all resilient tile and other non-carpeted floor
surfaces
	 	 	 	 
	 	(m)	 	
Turn off all lights
	 	 	 	 
	 	(n)	 	
Lock all suites

Weekly:

	 	 	 	 
	 	(a)	 	
Dust all vertical surfaces
	 	 	 	 
	 	(b)	 	
Spot clean all partitions and office window glass (removing
fingerprints, smudges, etc.)
	 	 	 	 
	 	(c)	 	
Spray buff all resilient tile floors
	 	 	 	 
	 	(d)	 	
Broom sweep or vacuum all stairs and landings

Annually:

	 	 	 	 
	 	 	 	Strip and refinish all resilient tile floors, applying two (2) coats of
metal interlock floor finish (regardless of whose approval or direction,
no materials will be applied that would cause a hazardous situation or
slippage)

F-1

 

LAVATORIES:

Daily:

	 	 	 	 
	 	(a)

(b)	 	
Clean, sanitize and polish all vitreous fixtures including
toilet bowls, urinals and sinks, using a germicidal detergent
solution

Mop all lavatory floors

WINDOWS:

           Clean interior and exterior surfaces of all windows semi-annually

F-2

 

EXHIBIT G

Form of Estoppel Certificate

NOTE: THIS EXHIBIT WILL BE SUBSTITUTED UPON NEGOTIATION OF THE
FORM ESTOPPEL
CERTIFICATE BETWEEN TENANT AND LANDLORD’S
CONSTRUCTION LENDER

	 	 	 
	TO:	 	
[OWNER]

[PURCHASER]/[LENDER]

The undersigned (“Tenant”) has executed and entered into that certain lease
agreement (“Lease”), a copy of which is attached hereto as Exhibit A and made a
part hereof for all purposes, with respect to certain space known
as ______________________ 
(“Premises”), in the building located
at _________________________ 
(the “Property”). Tenant acknowledges that [OWNER]
(“Owner”) is the owner of the Property and “Landlord” under the Lease. Tenant
further acknowledges that Owner intends to [As applicable: sell, transfer,
assign and convey the Property, and lessors’ interest in and under all tenant
leases with respect to the Property, to [PURCHASER] (together with its
successors and assigns, “Purchaser”)/enter into a deed of trust or mortgage
with respect to the Property with [LENDER] (together with its successors and
assigns, “Lender”), and in connection therewith, to collaterally assign Owner’s
interest in the Lease to Lender]. Tenant acknowledges and agrees that
[Purchaser/Lender], in its determination whether to proceed with such
transaction, shall be relying upon, among other things, the statements made in
this certification, and Tenant agrees that Owner and [Purchaser/Lender] may
rely upon the statements made in this certification.

With respect to the Lease and such transaction, Tenant does hereby agree and
certify that the following is true and correct as of the date hereof:

	1.	 	A true, complete and correct executed copy of the Lease (together with
any and all amendments, modifications, renewals, extensions, subleases and
assignments thereof or thereto, as listed in and attached to Exhibit A) is
attached hereto as Exhibit A. The Lease constitutes the entire agreement
between the parties thereto (and their successors and assigns) as to the
leasehold interest created thereby. The Lease is in full force and effect
according to its terms as of the date of this certification and is binding
upon the parties thereto (and their respective successors and assigns).
Except as described on Exhibit A hereto, (a) the Lease has not been
amended, supplemented or modified in any way, and (b) the Lease has not
been assigned in whole or in part, nor has all or any portion of the
Leased Premises been sublet, in any way except as reflected in Exhibit B
attached hereto. The Leased Premises
contains ___________ rentable square
feet.
	 
	2.	 	a.      Term
of Lease:

	 	 	 	Date of Commencement:

G-1

 

	 	 	 	Date of Expiration:
	 
	 	b.	 	Renewal Options:
	 
	 	 	 	Exercised:

Not Exercised:
	 
	 	c.	 	Current Monthly Rent: $
	 
	 	d.	 	Current Share of Operating Costs and Real Estate Taxes (as
applicable):
	 
	 	e.	 	Security Deposit:

	3.	 	Tenant has accepted possession, and, except as described on Exhibit C, is
in actual occupancy, of the entire Premises and is currently operating
within the Premises. All improvements, alterations and other work and
parking facilities required to be performed or constructed by the lessor
under the Lease have been completed as of the date hereof and accepted by
Tenant.
	 
	4.	 	All rent (whether base rent, percentage rent or otherwise), charges and
other payments currently due and payable by Tenant under the Lease have
been paid through the date hereof, and there have been no prepayments of
such rent, charges or other payments.
	 
	5.	 	To Tenant’s actual knowledge as of the date hereof, neither Tenant nor
Owner is in default under any term or provision of the Lease. To Tenant’s
actual knowledge as of the date hereof, no event or condition has occurred
which, with the passage of time, the giving of notice or both, (a) would
constitute a default or event of default under the Lease or (b) would give
rise to any right or option in favor of Tenant to terminate the Lease.
	 
	6.	 	Tenant is not entitled to any concession, rebate, allowance, free rent,
bonus or other matter affecting the Base Rent payable by Tenant for any
period after the date of this certification. As of the date of this
certification, Tenant is not entitled to any partial or total abatement of
rent or other amounts due under the Lease.
	 
	7.	 	Except as set forth in the Lease, Tenant has no options to expand the
Leased Premises, to extend the term of the Lease, to terminate the Lease
prior to the stated date for expiration thereof, to acquire all or any
part of the Property or to negotiate for the acquisition of all or any
part of the Property.
	 
	8.	 	As of the date hereof, there are no actions, whether voluntary or
otherwise, which are pending or have been threatened against Tenant under
any bankruptcy or insolvency laws of any state or the United States.

G-2

 

	9.	 	Except as described on Exhibit A hereto, Tenant has not assigned,
encumbered, transferred, mortgaged, pledged or hypothecated all or any
portion of its interest in and to the Lease.
	 
	10.	 	This certification shall be binding upon, and shall inure to the benefit
of [Purchaser/Lender], Owner, their respective successors and assigns and
all parties claiming by, through or under such entities.

If Applicable:

	11.	 	Tenant acknowledges that Owner will assign its interest in the Lease to
Purchaser, and agrees to attorn to Purchaser and to perform all of
Tenant’s obligations as lessee under the Lease (including, without
limitation, the payment of rent) directly to Purchaser, as the lessor
under the Lease from and after the date of such assignment.

            IN WITNESS WHEREOF, Tenant has caused this certificate to be executed
under seal as of the ____ day of _____________, 2002.

	 	 	 
	 	 	

	 	 	 
	 	 	TENANT

[SIGNATURE BLOCK]

G-3

 

EXHIBIT H

Form of SNDA

[To Be Attached By Mutual Agreement of Landlord and Tenant At Time of Loan,

Consistent with the terms of the Lease]

H-1

 

EXHIBIT I

Property Management Specifications

I.    GENERAL SCOPE

Manager shall coordinate with Owner and Tenant and assist in establishing
realistic short and long term fiscal and physical goals for the property.
Manager shall regularly inspect the operating system to insure that the
building and property are operated in the most efficient manner.

Long term goals are established through the joint efforts of the Owner’s agent,
the manager and the Tenant to reflect the Tenant’s needs and the Owner’s
objectives. The following is a statement of Owner’s objectives for services as
the Owner of this property.

	A.	 	Owner’s Objectives
	 
	 	 	To operate the property economically.
	 
	 	 	To provide accurate information which will facilitate the evaluation of
all operations.
	 
	 	 	To maintain current and complete records for review of all building
functions, systems and contracted services. Owner will review and
approve all vendor/supplier selections. Copies of paid invoices for
insurance (with insurance certificate), electricity & gas, water & sewer,
and Real Estate Taxes will be provided to Owner’s agent on a quarterly
basis along with a statement of operations in Tenant’s chart of accounts.
Tenant’s insurance certificate shall name Owner, its mortgagee(s) and its
management agent as additional named insureds. Owner’s agents will
perform periodic Building inspections, not more than once per quarter, on
prior notice to Tenant, and as needed due to specific circumstances.
	 
	 	 	Owner’s agents, including Property Managers, Engineers and Construction
Managers, will be available to consult on building plans and to advise on
decisions of an operating nature. Whether Owner or Tenant is
responsible, they will employ reliable contractors for all building
services (general maintenance, landscaping and grounds care, snow
removal, refuse disposal, etc.) and closely monitor the performance of
each contractor in accordance with the negotiated provisions of the
contracts. Landlord must be provided with a copy of the relevant
contract and contractor’s insurance certificate. Named additional
insureds will include: Owner, its mortgagee(s) and its management agent.
	 
	B.	 	Pre and Post Lease Inspections
	 
	 	 	Representatives of Tenant and Owner’s agents will inspect the Building
and Land (“Property”) in order to identify any “punch list” items which
survive the lease commencement and to provide all the initial reports and
summaries required by Owner’s

I-1

 

	 	 	standard practices and procedures. This
inspection will be provided in Owner’s standard format (attached). In
addition to this initial inspection of the Building, Owner’s Agents will
conduct an annual inspection of the Property using the same (or similar)
format - on reasonable prior notice to Tenant. Manager will provide
Owner copies of any operating budgets or other documents they develop in
any detail or which provide a summary of the condition of the property
and a plan for the future.
	 
	C.	 	Owner will allow Manager to perform, and Manager will perform, the
following functions:

	 	1.	 	Meet with prospective and existing occupants to determined
their concerns and opinions of the property and their leasehold.
	 
	 	2.	 	Copy and abstract all contracts.
	 
	 	3.	 	Annually review current operating expenses and offer specific
recommendations.
	 
	 	4.	 	Annually review the requirements and services provided under
all vendor contracts at the facility.
	 
	 	5.	 	Annually review and make any required additions to the
existing budget and 3-year capital plan.
	 
	 	6.	 	Meet with Tenant’s facilities personnel on a quarterly basis
to help coordinate their usage of the Property.

	D.	 	Start-up Reports
	 
	 	 	In addition to the annual operating budget and 3 year capital budget,
Manager will provide the following items to Owner:

	 	1.	 	Imminent Problems. An immediate report of any conditions at
the property which create a liability for the Owner or Tenant, are
detrimental to the integrity of the facility, or are in violation of
local or state codes and ordinances, upon actual notice thereof,
whether derived from Tenant or on-site inspections.
	 
	 	2.	 	Summary of Conditions and Actions. A start-up report
summarizing the conditions and actions taken as a result of the
inspections, meetings with Tenants and local authorities, and a
review of ADA requirements.
	 
	 	3.	 	Vendor List. A complete list of contracted vendors
alphabetically. The list will show vendor name, service provided,
term of contract and cost. Updates of this list will be provided,
as changes occur.

	E.	 	Building Manual

I-2

 

	 	 	A booklet/directory which summaries for the Owner and Tenant all
information needed regarding the operation of the physical plant, the
services the Tenant should expect from the vendors, emergency phone
lists, emergency procedures and use of service requested, work orders,
etc.

II.    OPERATIONAL SERVICES

	A.	 	Service Requests and Work Orders
	 
	 	 	Manager will implement a service request/work order system at the
property to monitor specific requests by the occupants. This system need
not require much sophistication from an accounting and billing
perspective, but should allow for tracking of efforts and preventive
program enhancement. Specific areas with respect to which such controls
should be maintained include the following: Security, Access Control,
Fire and Life Safety, Janitorial, Window Cleaning, Repairs and
Maintenance for, Plumbing, HVAC, Elevator, Parking Lot, Parking Lot
Lights, Exterior Signs, Doors & Glass, and Services for Pest Control,
Trash Removal, Recycling, Snow Removal, Interior and Exterior
Landscaping, Trees and Flowers, Irrigation System. In all cases annual
certifications from local, state or governmental authority will be the
responsibility of the Manager.
	 
	B.	 	Emergency Response
	 
	 	 	Manager will document its system for routine and emergency response to
the Property. If Manager’s personnel are not available in the building or
at their other offices, calls from occupants, vendors, and clients should
be forwarded to a call monitoring agency who is able to contact the
Manager’s personnel and vendors to respond to the situation. Manager
will be provided with a list of contacts from Owner and will report all
situations requiring emergency response to them. This will include all
Life-Safety Issues, Bomb, Police, Fire and Medical emergencies, and any
other issues for which a member of Manager’s staff, vendor or outside
agency is contacted.
	 
	C.	 	Contract Supervision
	 
	 	 	Manager will supervise the contractors it retains to provide service to
the property. Manager will allow Owner to review and obtain copies of any
records it uses such as a combination of Purchase Orders and formal
contracts to obtain services from contractors and vendors. Contracts are
to be used for annual or continuing services and in cases where the
dollar volume warrants a more formal agreement. The terms of Manager’s
contracts with vendors shall contain a termination clause which permits
termination upon 30 days notice with or without cause. Landlord shall
not be bound by any such contracts after Manager ceases to manage the
Property.
	 
	D.	 	Inventory

I-3

 

	 	 	Manager will maintain an inventory of all capital equipment and major
supply items and annually account for them to Owner.

III.    ADMINISTRATIVE SERVICES

	A.	 	Property Management Office
	 
	 	 	Manager will establish an office presence within, or within the
reasonable vicinity of, the Property which will be staffed by property
management and engineering support personnel.
	 
	B.	 	Annual and Monthly Operating Expenditures
	 
	 	 	By the tenth (10th) day of each month, Manager will provide a report of
the previous month’s expenditures, in a chart of accounts acceptable to
Owner. By the end of the calendar quarter of each year, Manager will
provide a report of the previous year’s expenditures, in a chart of
accounts acceptable to Owner. The budget will be compared annually
actual expenditures and a written variance report prepared.
	 
	C.	 	Annual Operating Budget
	 
	 	 	On or before November 1st each year, Manager shall prepare an annual
operating budget for the Property.
	 
	D.	 	Maintenance File
	 
	 	 	Manager will maintain a file of preventive, demand and routine
maintenance performed at the property. All work orders will remain on
file.
	 
	E.	 	Capital and Major Maintenance Budget
	 
	 	 	Manager will develop a capital budget which will include new projects and
major repair items. The capital budget is a natural outgrowth of the
annual building inspection conducted by Owner’s agent in the
summer/spring of each year. The capital listing should contain all the
items recommended by the inspection team, which will then be refined in
discussions with the Owner, Manager and Tenant.
	 
	F.	 	Expense File
	 
	 	 	Copies of all invoices will be retained by Manager and filed in
alphabetical order by vendor. Copies of all invoices will be available
for audit by Owner.

IV.    STAFFING

I-4

 

Manager has the responsibility, in conjunction with Owner and Tenant to
determine the staffing level necessary to provide first class service to the
Property. As part of such process, a full disclosure of the Manager’s local
senior personnel and contact person(s), with names, titles, brief description
of duties, phone numbers, and emergency contacts, will be provided to Owner
along with the annual budget and updated as major changes occur.

V.    AMENDMENT

The foregoing Property Management Specifications may be modified by Landlord
from time to time, subject to Tenant’s consent, which shall not be unreasonably
withheld, conditioned or delayed.

VI.    FORM OF AGREEMENT

If this Exhibit attaches a form of Property Management Agreement, the parties
agree that such form may be used in contracting property management services
with any Manager, subject to negotiation with the Manager in accordance with
then current market conditions.

I-5

 

EXHIBIT J

List of Environmental Reports

LIST OF ENVIRONMENTAL REPORTS

1.        Final
Ecological Screening Risk Assessment – Open Storage Area – Naval
Surface Warfare Center – Carderock Division – Annapolis Detachment dated August
2000 by EA Engineering, Science, and Technology

2.        Environmental Assessment For Disposal and Reuse of Naval Surface Warfare
Center – Annapolis, Maryland Properties dated April 1998 prepared by Naval
Facilities Engineering Command

3.        Preliminary
Assessment Report – Naval Station (NACSTA) Annapolis, Maryland
dated April 1988 prepared for Naval Energy and Environmental Support Activity
by US Navy Ordnance Environmental Support Office

4.        Final
Environmental Baseline Survey – Naval Surface Warfare Center –
Carderock Division – Annapolis Detachment dated December 1996 prepared by EA
Engineering, Science and Technology, Inc.

5.        Final
Environmental Baseline Survey – Area of Concern Evaluation
Report –
Naval Surface Warfare Center – Carderock Division – Annapolis Detachment and
Bay Head Road Annex dated February 1997 prepared by EA Engineering, Science and
Technology, Inc.

6.        Final
Environmental Baseline Survey (EBS) Phase II Work Plan – Naval Surface
Warfare Center – Carderock Division – Annapolis Detachment dated March 1998
prepared by EA Engineering, Science and Technology, Inc.

7.        Naval
Surface Warfare Center – Carderock Division Detachment – Annapolis,
Maryland (Formerly David Taylor Research Center) – Environmental Restoration
Advisor Board (RAB) binder containing:

	 	 	 	 	 
	 	 	
X
	 	Membership Roster
	 	 	 	 	 
	 	 	
X
	 	Proposed Plans
	 	 	 	 	 
	 	 	
X
	 	Meeting Minutes
	 	 	 	 	 
	 	 	
X
	 	Meeting Handouts
	 	 	 	 	 
	 	 	
X
	 	NEPA Documents
	 	 	 	 	 
	 	 	
X
	 	1985 Preliminary Assessment of Nike Missile Site

J-1

 

8.        Basewide Environmental Baseline Survey, Task I Deliverables for Naval
Surface Warfare Center, Carderock Division, Annapolis Detachment dated March
1996 prepared by EA Engineering, Science and Technology, Inc.

9.        Final
Environmental Baseline Survey (EBS) Phase II Report of Results – Naval
Surface Warfare Center, Carderock Division, Annapolis Detachment dated June
2000 prepared by EA Engineering, Science and Technology, Inc.

10.        Intensive Level Architectural Survey at Naval Surface Warfare Center,
Carderock Division, Annapolis Detachment dated February 3, 1998 prepared by R.
Christopher Goodwin & Associates, Inc.

11.        Final
Work Plan Site Investigation – Naval Surface Warfare Center,
Carderock Division, Annapolis Detachment dated August 1999 prepared by EA
Engineering, Science and Technology, Inc. (Includes Addendum No.1
– Further
Evaluation and Risk Assessment – Worthington Basin, Dungin Basin, and Open
Storage Area dated August 1999 and Addendum No. 2 – Further Evaluation -
Building 34 (Draft) dated October 1999

12.        Radiological Decommissioning Survey of the Naval Surface Warfare Center,
Carderock Division, Annapolis Facility dated May 2000

13.        Draft
Addendum No. 1 to the Work Plan Site Investigation - Naval Surface
Warfare Center – Carderock Division – Annapolis Detachment – Further Evaluation
and Risk Assessment – Worthington Basin, Dungin Basin, and Open Storage Area
dated June 1999 prepared by EA Engineering, Science, and Technology Inc.

14.        Tank Farm Soil Boring Investigation Results dated June 4, 1992 prepared by
EA Engineering, Science, and Technology Inc.

15.        Final Site Investigation Naval Surface Warfare Center Carderock Division -
Annapolis Detachment Annapolis, Maryland dated June 2000 (Final) prepared by EA
Engineering, Science, and Technology Inc.

16.        Final Environmental Baseline Survey, Naval Surface Warfare Center,
Carderock Division – Annapolis Detachment, Bay Head Road Annex, January 1997

17.        Finding of No Significant Impact for Disposal of Naval Surface Warfare
Center Carderock Division – Annapolis Detachment Properties in Annapolis,
Maryland, July 10, 1998

18.        Apex Asbestos Identification and Assessment Survey Reports set forth on the
attached list entitled “Apex Asbestos Identification and Assessment Survey
Reports NSWC Annapolis – Main Site” prepared by the Navy.

19.        Final Remedial Investigation Work Plan, Naval Surface Warfare Center,
Carderock Division – Annapolis Detachment, Bay Head Road Annex IR Program Site
1, May 1999

J-2

 

20.        Final Report, Site Inspection Study, David Taylor Research Center, Bay Head
Road Annex, Annapolis, Maryland, October 1991

21.        Preliminary Assessment Report, David Taylor Research Center, Bay Head Road
Annex, Annapolis, Maryland, May 1990

22.        Record of Decision, David Taylor Research Center, Former Naval Surface
Warfare Center - Carderock Division, Annapolis Detachment, Annapolis, Maryland,
March 6, 2001

23.        Findings of Suitability to Transfer (FOST), David Taylor Research Center,
Former Naval Surface Warfare Center - Carderock Division, Annapolis Detachment,
Annapolis, Maryland, May 24, 2001

24.        An Archeological Survey of the David W. Taylor Naval Ship Research and
Development Center, Carderock and Annapolis, Maryland
dated                       

25.        Ecological Screening Risk Assessment, Worthington and Dungan Basins, Naval
Surface Warfare Center, Carderock Division – Annapolis Detachment, Annapolis,
Maryland, April 2001

26.        Human Health Risk Assessment for Groundwater, Naval Surface Warfare Center
- Carderock Division, Annapolis Detachment, Bay Head Road Annex, IR Program
Site 1, April 2001

J-3

 

EXHIBIT K

Specifications Applicable to Building Services

HVAC Service:

Unless provided to the contrary in the Outline Specifications developed
pursuant to the Work Agreement, the HVAC System serving the Premises shall have
the capability, at a minimum, to provide a thermal environment to satisfy the
following conditions:

Cooling Season:   Maintain room conditions not in excess of 75EF. dry bulb and
55% relative humidity when the coincident outside conditions do not exceed
94EF. dry bulb at 80% relative humidity and 74EF. wet bulb (per ASHRAE design
criteria).

Heating Season:   Maintain room conditions of not less than 70EF. dry bulb when
the outside air temperature is not less than 5EF. dry bulb at 20 mph wind
conditions. Average relative humidity shall be maintained at 45% or at a lower
level, as required, to prevent condensation on exterior walls and windows.

The above conditions shall be maintained, based on the following:

	(A)	 	Low — E glass with 50% shading coefficient.
	 
	(B)	 	Lighting and equipment heat load of 6.8 watts/square foot of occupied
space.
	 
	(C)	 	People load of 150 people per typical floor
	 
	(D)	 	20 CFM fresh air per person.

All other specifications for the base building HVAC Systems, electrical systems
and other Building Systems are as set forth in the Approved Base Building
Plans.

K-1

 

AMENDMENT TO LEASE

     THIS AMENDMENT TO LEASE (this “Amendment”) is made this 10th day of
February, 2003, by and between Annapolis Partners LLC, a Maryland limited
liability company (“Landlord”) and Telecommunication Systems, Inc., a Maryland
corporation (“Tenant”).

WITNESSETH:

     R-1.    Pursuant to that certain Lease, dated October 29, 2002, by and
between Landlord and tenant (the “Original Lease”), Landlord leased to Tenant,
and Tenant leased from Landlord, certain above-ground office space to be
designed and constructed in the future, consisting of approximately 150,000
gross square feet, and located in Annapolis Point Corporate Center, Anne
Arundel County, Maryland.

     R-2.    Tenant has requested, in the interest of preserving and maintaining
the independent of Tenant’s board of directors, that Tenant’s board of
directors not be subject to the legal standard of “good faith” in making any of
the determinations otherwise reserved to Tenant’s board of directors within
Section 54 of the Original Lease.

     R-3.    Landlord and Tenant wish to amend the Lease to address Tenant’s
aforementioned concern, as more fully set forth herein (the Original Lease, as
amended by this Amendment, being hereinafter referred to as the “Lease”).

     NOW, THEREFORE, in consideration of the mutual promises herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, landlord and Tenant hereby agree as follows:

     1.        Capitalized Terms. Except as and to the extent expressly set forth
herein, all capitalized terms contained herein shall have the meanings ascribed
to such terms in the Original Lease. In the event that the meaning ascribed to
any capitalized term in this Amendment differs from the meaning ascribed
thereto in the Original Lease, the meaning of such capitalized term shall be
that ascribed thereto in this Amendment.

     2.        Amendment to Section 54.

          (a)        Landlord and Tenant hereby acknowledge that the contingency described
in clause (1) of Section 54 has been satisfied.

          (b)        The final paragraph of Section 54 of the Original Lease is hereby
deleted, and replaced with the following:

 

		
	 	     “Landlord and Tenant each agree to use diligent efforts to cause the
satisfaction of each of the foregoing conditions precedent in a timely fashion,
but without the obligation to proceed in good faith or in accordance with any
other legal standard in pursuing such satisfaction. Nothing in this Section 54
shall limit to any extent the discretion of the Tenant’s Board of Directors in (i) exercising the approval
rights described in clause (2)(ii) of this Section 54, or (ii) making a
determination regarding its satisfaction with (or the process of obtaining) the
written determinations described in clauses (i) and (iii) of clause (2) of this
Section 54; and Tenant’s sole obligation under the preceding sentence shall be
to bring this Lease before the Board of Directors for approval in a timely
manner, and to take other steps deemed appropriate in its sole discretion to
make the necessary determinations in a timely manner. In the event any one or
more of the conditions described above are not satisfied by the date indicated
above, then either party may terminate this Lease upon thirty (30) days written
notice of termination delivered to the other party at any time thereafter
until the date such condition(s) is (are) satisfied, provided that if all
unsatisfied conditions upon which any such termination notice is based are
satisfied prior to the expiration of such thirty (30) day notice period, then
such notice of termination shall be deemed rescinded and null and void for all
purposes and effects, and this Lease shall be deemed fully reinstated for all
purposes. Neither Landlord nor Tenant shall have liability to one another as a
result of any termination of this Lease pursuant to this Section 54 (and upon
any such termination, the parties shall be released from any and all
liabilities and obligations hereunder).”

     3.        Governing Law; Construction. This Amendment shall be construed
according to the laws of the State of Maryland (without regard to any choice of
law and/or conflict of law principles that might otherwise apply).
Notwithstanding the drafting of the Original Lease and this Amendment by
Landlord, neither the Original Lease, as amended hereby or otherwise, nor this
Amendment shall be construed against Landlord.

     4.        Full Force and Effect; No Other Modification. Except as, and solely to
the extent, expressly modified by this Amendment, the Original Lease shall
continue in full force and effect unmodified. The Lease shall not be amended or
otherwise modified further except in a writing executed by both Landlord and
Tenant.

     5.        Headings. The headings contained in this Amendment are included for the
convenience of the parties only and shall not be deemed or otherwise construed
to limit, expand, or otherwise affect the meaning or scope of any provision
hereof.

     6.        Counterpart Originals; Telecopied Delivery. This Amendment may be
executed in counterparts, each of which shall constitute an original, and both
of which, when assembled, shall constitute a single original hereof. In
addition, Landlord and Tenant each may deliver an executed counterpart of this
Amendment to the other by telecopier transmission, and such delivery shall
constitute good and valid delivery by Landlord and/or Tenant, as the case may
be, for all purposes hereof. This Amendment shall be effective only upon its
execution and delivery by both Landlord and Tenant.

 

[Signatures are on the following page]

3

 

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

	 	 	 
	 	 	
LANDLORD:
	 	 	 
	 	 	
Annapolis Partners LLC, a Maryland limited

liability company
	 	 	 
	 	 	 
	 	 	
By: /s/ Tod E. Hirt

          Name: Tod E. Hirt

          Title: Manager
	 	 	 
	 	 	 
	  	 	
TENANT:
	 	 	 
	    	 	
Telecommunication Systems, Inc., a Maryland

corporation
	 	 	 
	 	 	 
	 	 	
By: /s/ Richard A. Young
	 	 	

	 	 	
          Name: Richard A. Young

          Title:
Executive Vice President and Chief

                    
Operating Officer

4<PAGE>

                                                                     Exhibit 4.2

================================================================================

                              CDF FINANCING, L.L.C.
                                     Seller

                 GE COMMERCIAL DISTRIBUTION FINANCE CORPORATION
                                    Servicer
                                       and

                                       [ ]
                                     Trustee

                               ------------------

                              SERIES [ ] SUPPLEMENT

                                 Dated as of [ ]

                                       to

              AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT

                            Dated as of April 1, 2000

                               ------------------

             DISTRIBUTION FINANCIAL SERVICES FLOORPLAN MASTER TRUST
                                   SERIES [ ]

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
<S>           <C>                                                           <C>

                                    ARTICLE I
                     CREATION OF THE SERIES [] CERTIFICATES

SECTION 1.1   Designation......................................................3

                                   ARTICLE II

SECTION 2.1   Definitions......................................................4

                                   ARTICLE III
                                  SERVICING FEE

SECTION 3.1   Servicing Compensation..........................................16
SECTION 3.2   Servicer Advances...............................................17

                                   ARTICLE IV
            RIGHTS OF SERIES [] CERTIFICATEHOLDERS AND ALLOCATION AND
                           APPLICATION OF COLLECTIONS

SECTION 4.1   Allocations; Payments to Seller.................................18
SECTION 4.2   Monthly Interest; Determination of Certificate Rate.............18
SECTION 4.3   Determination of Monthly Principal..............................19
SECTION 4.4   Establishment of Reserve Fund and Funding Accounts..............20
SECTION 4.5   Deficiency Amount...............................................23
SECTION 4.6   Application of Investor Non-Principal Collections, Investment
              Proceeds, Servicer Advances and Available Investor
              Principal Collections...........................................24
SECTION 4.7   Distributions to Series [] Certificateholders...................27
SECTION 4.8   Application of Reserve Fund.....................................28
SECTION 4.9   Investor Charge-Offs............................................29
SECTION 4.10  Excess Servicing................................................29
SECTION 4.11  Excess Principal Collections....................................30
SECTION 4.12  Excess Funding Account..........................................30
SECTION 4.13  Yield Supplement Account........................................31

                                    ARTICLE V
            DISTRIBUTION AND REPORTS TO SERIES [] CERTIFICATEHOLDERS

SECTION 5.1   Distributions...................................................32
SECTION 5.2   Reports and Statements to Series [] Certificateholders..........32

                                   ARTICLE VI
                            EARLY AMORTIZATION EVENTS

SECTION 6.1   Additional Early Amortization Events............................33

                                   ARTICLE VII
                               OPTIONAL REPURCHASE

SECTION 7.1   Optional Repurchase.............................................34
</TABLE>

                                       i

<PAGE>

                                TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                            PAGE
<S>           <C>                                                           <C>
                                  ARTICLE VIII
                               FINAL DISTRIBUTIONS

SECTION 8.1   Sale of Certificateholders' Interest Pursuant to Section 2.3
              of the Agreement; Distributions Pursuant to Section 7.1 of
              this Series Supplement or Section 2.3 or 12.2(c) of the
              Agreement.......................................................35
SECTION 8.2   Distribution of Proceeds of Sale, Disposition or Liquidation
              of the Receivables Pursuant to Section 9.2 of the Agreement.....37

                                   ARTICLE IX
                            MISCELLANEOUS PROVISIONS

SECTION 9.1   Securities Law Filings..........................................37
SECTION 9.2   Ratification of Agreement.......................................37
SECTION 9.3   Counterparts....................................................37
SECTION 9.4   Governing Law...................................................38
SECTION 9.5   Limitation of Class C Certificates..............................38
SECTION 9.6   The Trustee; Paying Agent; Transfer Agent and Registrar.........42
SECTION 9.7   Instructions in Writing.........................................42
SECTION 9.8   Initial Funding of Reserve Fund.................................42
SECTION 9.9   Severability; Certificate Rate Limitation.......................43
SECTION 9.10  Headings........................................................43
SECTION 9.11  Certain Matters Relating to Luxembourg Stock Exchange Listing...43

EXHIBITS

Exhibit A     Form of Certificate
Exhibit B     Distribution Date Statement
Exhibit C     Form of Representation Letter

SCHEDULES

Schedule 1    Accounts
Schedule 2    Initial Principal Amounts of Certificates
</TABLE>

                                       ii
<PAGE>

     SERIES [ ] SUPPLEMENT dated as of [ ] (this "Series Supplement"), among CDF
FINANCING, L.L.C., a Delaware limited liability company ("LLC"), as Seller, GE
COMMERCIAL DISTRIBUTION FINANCE CORPORATION, a Nevada corporation, as Servicer,
and [ ], a [ ], as Trustee.

     Pursuant to Section 6.3 of the Amended and Restated Pooling and Servicing
Agreement, dated as of April 1, 2000 (as amended, the "Agreement"), among the
Seller, the Servicer and the Trustee, the Seller may from time to time direct
the Trustee to issue, on behalf of the Trust, one or more new Series of Investor
Certificates.

     Pursuant to this Series Supplement, the Seller and the Trustee shall create
a new Series of Investor Certificates and specify the Principal Terms thereof.

                                    ARTICLE I

                     Creation of the Series [ ] Certificates

     SECTION 1.1 Designation. (a) There is hereby created a Series of Investor
Certificates to be issued pursuant to the Agreement and this Series Supplement
to be known as the "Floating Rate Asset Backed Certificates, Series [ ]" or the
"Series [ ] Certificates", which shall consist of three Classes to be known,
respectively, as the "Floating Rate Asset Backed Certificates, Series [ ], Class
A," "Floating Rate Asset Backed Certificates, Series [ ], Class B" and "Floating
Rate Asset Backed Certificates, Series [ ], Class C."

     (b) In the event that any term or provision contained herein shall conflict
with or be inconsistent with any term or provision contained in the Agreement,
the terms and provisions of this Series Supplement shall govern.

                                   ARTICLE II

                                   Definitions

     SECTION 2.1 Definitions. (a) Whenever used in this Series Supplement the
following words and phrases shall have the following meanings:

     "Accumulation Period" shall mean, unless an Early Amortization Event shall
have occurred prior thereto (other than an Early Amortization Event which has
resulted in an Early Amortization Period which has ended as described in clause
(c) of the definition of Early Amortization Period in the Agreement), the period
commencing on the Accumulation Period Commencement Date and ending upon the
earlier of (a) the commencement of an Early Amortization Period and (b) the
Expected Final Payment Date.

     "Accumulation Period Commencement Date" shall mean the first day of the
calendar month which is the fourth calendar month prior to the calendar month in
which the Expected Final Payment Date occurs; provided, however, that upon
written notice to the Trustee, the Servicer may elect to postpone the
Accumulation Period Commencement Date so that the number of months included in
the Accumulation Period shall equal or exceed the Accumulation Period Length;
provided further, however, that such election shall only be permitted if the

<PAGE>

Accumulation Period Length is less than four months; provided further, however,
that the Accumulation Period Commencement Date shall not be postponed beyond the
first day of the calendar month which is the second calendar month prior to the
calendar month in which the Expected Final Payment Date occurs.

     "Accumulation Period Length" shall mean, as determined by the Servicer on
each Determination Date, beginning with the Determination Date occurring in the
calendar month which is the fifth calendar month prior to the calendar month in
which the Expected Final Payment Date occurs, the number of calendar months that
the Servicer expects to be required so that sufficient funds are on deposit in
the Principal Funding Account no later than the Expected Final Payment Date to
pay the outstanding principal balances of the Certificates, based on (a) the
expected monthly collections of Principal Receivables expected to be
distributable to the Series [ ] Certificateholders assuming a principal payment
rate no greater than the lowest Monthly Payment Rate on the Receivables for the
preceding three months, so that, for example, if the lowest Monthly Payment Rate
for that preceding three month period is 50% or more, the number of calendar
months required would be two; if the lowest Monthly Payment Rate for that
preceding three month period is between 33.33% and 50%, the number of calendar
months required would be three; and if the lowest Monthly Payment Rate for that
preceding three month period is between 25% and 33.33%, the number of calendar
months required would be four; and (b) the amount of principal expected to be
distributable to Investor Certificateholders of other Series which are expected
to be in their accumulation or amortization periods during the Accumulation
Period.

     "Additional Early Amortization Event" shall have the meaning specified in
Section 6.1.

     "Additional Interest" shall mean the sum of the Class A Additional
Interest, the Class B Additional Interest and the Class C Additional Interest.

     "Adjustment Date" shall mean, with respect to any Interest Period, the
second London Business Day preceding such Interest Period; provided that with
respect to the first Interest Period, the Adjustment Date shall be [ ].

     "Allocable Miscellaneous Payments" shall mean, with respect to any
Distribution Date, the product of (a) a fraction, the numerator of which is the
Series [ ] Allocation Percentage for the related Collection Period and the
denominator of which is the sum of the series allocation percentages for all
Series not in their revolving periods, and (b) Miscellaneous Payments with
respect to the related Collection Period.

     "Available Investor Principal Collections" shall mean, with respect to any
Distribution Date, the sum of (a) an amount equal to Investor Principal
Collections for such Distribution Date, (b) Allocable Miscellaneous Payments
with respect to such Distribution Date, (c) any funds remaining in the Yield
Supplement Account at the beginning of the Accumulation Period or upon the
occurrence of an Early Amortization Event and (d) on the Termination Date, any
funds in the Reserve Fund after giving effect to Section 4.8.

     "Carry-over Amount" shall mean the sum of the Class A Carry-over Amount,
the Class B Carry-over Amount and the Class C Carry-over Amount.

                                       2
<PAGE>

     "Certificate Rate" means any of the Class A Certificate Rate, the Class B
Certificate Rate or the Class C Certificate Rate.

     "Certificateholders" shall mean, collectively, the Class A
Certificateholders, the Class B Certificateholders and the Class C
Certificateholders.

     "Certificateholders' Monthly Servicing Fee" shall have the meaning
specified in Section 3.1.

     "Certificates" shall mean, collectively, the Class A Certificates, the
Class B Certificates and the Class C Certificates.

     "Class A Additional Interest" shall have the meaning specified in Section
4.2(a).

     "Class A Carry-over Amount" shall mean, with respect to a Distribution Date
an amount equal to the excess, if any, of (a) the amount equal to the Class A
Monthly Interest for such Distribution Date calculated as if the Class A
Certificate Rate for such Distribution Date were based on LIBOR rather than the
Net Receivables Rate, over (b) the actual Class A Monthly Interest for such
Distribution Date.

     "Class A Carry-over Amount Additional Interest" for a Distribution Date
shall mean an amount equal to the product of:

     (a)  the Class A Certificate Rate for the Interest Period then ended;

     (b)  a fraction, the numerator of which is the actual number of days in
          that Interest Period and the denominator of which is 360; and

     (c)  any unpaid Class A Carry-over Amount, if any, for the previous
          Distribution Date.

     "Class A Certificate Rate" shall mean, for an Interest Period and the
Distribution Date immediately following such Interest Period, a rate per annum
equal to the lesser of (i) LIBOR plus [ ] per annum and (ii) the related Net
Receivables Rate.

     "Class A Certificateholders" shall mean the Holders of Class A
Certificates.

     "Class A Certificates" shall mean any one of the "Floating Rate Asset
Backed Certificates, Series [ ], Class A" executed by the Seller and
authenticated by the Trustee, substantially in the form of Exhibit A.

     "Class A Initial Invested Amount" shall mean, for any date, the initial
principal amount of the Class A Certificates, which is set forth in Schedule 2,
plus (x) the product of (i) the Class A Percentage multiplied by (ii) the amount
of any withdrawals from the Excess Funding Account in connection with an
increase in Pool Balance since the Closing Date, minus (y) the product of (i)
the Class A Percentage multiplied by (ii) the amount of any additions to the
Excess Funding Account in connection with a reduction in the Pool Balance since
the Closing Date.

                                       3
<PAGE>

     "Class A Interest Shortfall" shall have the meaning specified in Section
4.2(a).

     "Class A Invested Amount" shall mean, for any date, an amount equal to the
result of (i) the Class A Initial Invested Amount, minus (ii) the aggregate
amount of principal payments made to Class A Certificateholders prior to such
date, minus (iii) the aggregate amount of all unreimbursed Class A Investor
Charge-Offs; provided that the Class A Invested Amount shall not be less than
zero.

     "Class A Investor Charge-Off" shall have the meaning specified in Section
4.9.

     "Class A Monthly Interest" on any Distribution Date shall be an amount
equal to the product of (i) the Class A Certificate Rate, (ii) a fraction the
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360, and (iii) (A) the outstanding principal
balance of the Class A Certificates as of the close of business on the preceding
Distribution Date (after giving effect to all repayments of principal made to
Class A Certificateholders on such preceding Distribution Date, if any) or (B)
in the case of the first Distribution Date with respect to Series [ ], the
initial principal amount of the Class A Certificates as set forth in Schedule 2.

     "Class A Percentage" shall mean the percentage equivalent of a fraction,
the numerator of which is the outstanding principal balance of the Class A
Certificates and the denominator of which is the outstanding principal balance
of all Certificates.

     "Class A Pool Factor" shall mean, with respect to any Determination Date, a
number carried out to eleven decimals representing the ratio of the outstanding
principal balance of the Class A Certificates as of such Determination Date
(determined after taking into account any reduction in the outstanding principal
balance of the Class A Certificates which shall occur on the following
Distribution Date) to the initial principal balance of the Class A Certificates.

     "Class B Additional Interest" shall have the meaning specified in Section
4.2(a).

     "Class B Carry-over Amount" shall mean, with respect to a Distribution
Date, an amount equal to the excess, if any, of (a) the amount equal to the
Class B Monthly Interest for such Distribution Date calculated as if the Class B
Certificate Rate for such Distribution Date were based on LIBOR rather than the
Net Receivables Rate, over (b) the actual Class B Monthly Interest for such
Distribution Date.

     "Class B Carry-over Amount Additional Interest" for a Distribution Date
shall mean an amount equal to the product of:

     (a)  the Class B Certificate Rate for the Interest Period then ended;

     (b)  a fraction, the numerator of which is the actual number of days in
          that Interest Period and the denominator of which is 360; and

     (c)  any unpaid Class B Carry-over Amount, if any, for the previous
          Distribution Date.

                                       4
<PAGE>

     "Class B Certificate Rate" shall mean, for an Interest Period and the
Distribution Date immediately following such Interest Period, a rate per annum
equal to the lesser of (i) LIBOR plus [ ] per annum and (ii) the related Net
Receivables Rate.

     "Class B Certificateholders" shall mean the Holders of Class B
Certificates.

     "Class B Certificates" shall mean any one of the "Floating Rate Asset
Backed Certificates, Series [ ], Class B" executed by the Seller and
authenticated by the Trustee, substantially in the form of Exhibit A.

     "Class B Initial Invested Amount" shall mean, for any date, the initial
principal amount of the Class B Certificates, which is set forth in Schedule 2,
plus (x) the product of (i) the Class B Percentage multiplied by (ii) the amount
of any withdrawals from the Excess Funding Account in connection with an
increase in Pool Balance since the Closing Date, minus (y) the product of (i)
the Class B Percentage multiplied by (ii) the amount of any additions to the
Excess Funding Account in connection with a reduction in the Pool Balance since
the Closing Date.

     "Class B Interest Shortfall" shall have the meaning specified in Section
4.2(a).

     "Class B Invested Amount" shall mean, for any date, an amount equal to the
result of (i) the Class B Initial Invested Amount, minus (ii) the aggregate
amount of principal payments made to Class B Certificateholders prior to such
date, minus (iii) the aggregate amount of all unreimbursed Class B Investor
Charge-Offs; provided that the Class B Invested Amount shall not be less than
zero.

     "Class B Investor Charge-Off" shall have the meaning specified in Section
4.9.

     "Class B Monthly Interest" on any Distribution Date shall be an amount
equal to the product of (i) the Class B Certificate Rate, (ii) a fraction the
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360, and (iii) (A) the outstanding principal
balance of the Class B Certificates as of the close of business on the preceding
Distribution Date (after giving effect to all repayments of principal made to
Class B Certificateholders on such preceding Distribution Date, if any) or (B)
in the case of the first Distribution Date with respect to Series [ ], the
initial principal amount of the Class B Certificates as set forth in Schedule 2.

     "Class B Percentage" shall mean the percentage equivalent of a fraction,
the numerator of which is the outstanding principal balance of the Class B
Certificates and the denominator of which is the outstanding principal balance
of all Certificates.

     "Class B Pool Factor" shall mean, with respect to any Determination Date, a
number carried out to eleven decimals representing the ratio of the outstanding
principal balance of the Class B Certificates as of such Determination Date
(determined after taking into account any reduction in the outstanding principal
balance of the Class B Certificates which shall occur on the following
Distribution Date) to the initial principal balance of the Class B Certificates.

     "Class C Additional Interest" shall have the meaning specified in Section
4.2(a).

                                       5
<PAGE>

     "Class C Carry-over Amount" shall mean, with respect to a Distribution
Date, an amount equal to the excess, if any, of (a) the amount equal to the
Class C Monthly Interest for such Distribution Date calculated as if the Class C
Certificate Rate for such Distribution Date were based on LIBOR rather than the
Net Receivables Rate, over (b) the actual Class C Monthly Interest for such
Distribution Date.

     "Class C Carry-over Amount Additional Interest" for a Distribution Date
shall mean an amount equal to the product of:

     (a)  the Class C Certificate Rate for the Interest Period then ended;

     (b)  a fraction, the numerator of which is the actual number of days in
          that Interest Period and the denominator of which is 360; and

     (c)  any unpaid Class C Carry-over Amount, if any, for the previous
          Distribution Date.

     "Class C Certificate Rate" shall mean, for an Interest Period and the
Distribution Date immediately following such Interest Period, a rate per annum
equal to the lesser of (i) LIBOR plus [ ] per annum and (ii) the related Net
Receivables Rate.

     "Class C Certificateholders" shall mean the Holders of Class C
Certificates.

     "Class C Certificates" shall mean any one of the "Floating Rate Asset
Backed Certificates, Series [ ], Class C" executed by the Seller and
authenticated by the Trustee, substantially in the form of Exhibit A.

     "Class C Initial Invested Amount" shall mean, for any date, the initial
principal amount of the Class C Certificates, which is set forth in Schedule 2,
plus (x) the product of (i) the Class C Percentage multiplied by (ii) the amount
of any withdrawals from the Excess Funding Account in connection with an
increase in Pool Balance since the Closing Date, minus (y) the product of (i)
the Class C Percentage multiplied by (ii) the amount of any additions to the
Excess Funding Account in connection with a reduction in the Pool Balance since
the Closing Date.

     "Class C Interest Shortfall" shall have the meaning specified in Section
4.2(a).

     "Class C Invested Amount" shall mean, for any date, an amount equal to the
result of (i) the Class C Initial Invested Amount, minus (ii) the aggregate
amount of principal payments made to Class C Certificateholders prior to such
date, minus (iii) the aggregate amount of all unreimbursed Class C Investor
Charge-Offs; provided that the Class C Invested Amount shall not be less than
zero.

     "Class C Investor Charge-Off" shall have the meaning specified in Section
4.9.

     "Class C Monthly Interest" on any Distribution Date shall be an amount
equal to the product of (i) the Class C Certificate Rate, (ii) a fraction the
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360, and (iii) (A) the outstanding principal
balance of the Class C Certificates as of the close of business on the

                                       6
<PAGE>

preceding Distribution Date (after giving effect to all repayments of principal
made to Class C Certificateholders on such preceding Distribution Date, if any)
or (B) in the case of the first Distribution Date with respect to Series [ ],
the initial principal amount of the Class C Certificates as set forth in
Schedule 2.

     "Class C Percentage" shall mean the percentage equivalent of a fraction,
the numerator of which is the outstanding principal balance of the Class C
Certificates and the denominator of which is the outstanding principal balance
of all Certificates.

     "Class C Pool Factor" shall mean, with respect to any Determination Date, a
number carried out to eleven decimals representing the ratio of the outstanding
principal balance of the Class C Certificates as of such Determination Date
(determined after taking into account any reduction in the outstanding principal
balance of the Class C Certificates which shall occur on the following
Distribution Date) to the initial principal balance of the Class C Certificates.

     "Closing Date" shall mean [ ].

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

     "Controlled Accumulation Amount" shall mean the quotient obtained by
dividing the Invested Amount as of the Determination Date on which the
Accumulation Period Length is determined (after giving effect to any changes
therein on such date) by the number of months comprising the Accumulation Period
Length.

     "Controlled Deposit Amount" shall mean, for any Distribution Date with
respect to the Accumulation Period, the excess, if any, of (i) the product of
the Controlled Accumulation Amount and the number of Distribution Dates from and
including the first Distribution Date during the Accumulation Period through and
including such Distribution Date over (ii) the sum of amounts on deposit in the
Excess Funding Account and the Principal Funding Account, in each case before
giving effect to any withdrawals from or deposits to such accounts on such
Distribution Date.

     "Deficiency Amount" shall have the meaning specified in Section 4.5.

     "Distribution Date Statement" shall have the meaning specified in Section
5.2(a).

     "Early Amortization Event" shall mean any Early Amortization Event
specified in Section 9.1 of the Agreement, together with any Additional Early
Amortization Event specified in Section 6.1 of this Series Supplement.

     "Early Amortization Period" shall mean an Early Amortization Period (as
defined in the Agreement) with respect to Series [ ].

     "Excess Funding Account" shall have the meaning specified in Section
4.4(d).

     "Excess Principal Collections" shall mean the amounts equal to the balances
referred to as such in Sections 4.6(b)(ii) and 4.6(c)(ii).

                                       7
<PAGE>

     "Excess Servicing" shall mean, with respect to any Distribution Date, the
amount, if any, specified pursuant to Section 4.6(a)(xi) with respect to such
Distribution Date.

     "Expected Final Payment Date" shall mean the [ ] Distribution Date.

     "Floating Allocation Percentage" shall mean, with respect to any Collection
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Invested Amount as of the last day of
the immediately preceding Collection Period and the denominator of which is the
Unconcentrated Pool Balance as of such last day; provided, however, for the
Collection Period in which the Closing Date occurs, the Floating Allocation
Percentage shall mean the percentage equivalent of a fraction, the numerator of
which is the sum of the initial principal balances of the Series [ ]
Certificates and the denominator of which is the Unconcentrated Pool Balance on
the last day of the Collection Period immediately preceding the Closing Date.

     "Initial Invested Amount" shall equal the sum of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the Class C Initial
Invested Amount.

     "Interest Funding Account" shall have the meaning specified in Section
4.4(b).

     "Interest Period" shall mean, with respect to any Distribution Date, the
period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribution Date.

     "Invested Amount" shall mean, for any date, the sum of the Class A Invested
Amount, the Class B Invested Amount and the Class C Invested Amount.

     "Investment Proceeds" shall mean, with respect to any Distribution Date,
all interest and other investment earnings (net of losses and investment
expenses) on the related Determination Date on funds on deposit in the
Series [ ] Accounts, together with an amount equal to the Series [ ] Allocation
Percentage of the interest and other investment earnings (net of losses and
investment expenses) on funds held in the Collection Account credited as of the
related Determination Date to the Collection Account pursuant to Section 4.2 of
the Agreement.

     "Investor Default Amount" shall mean, with respect to any Distribution
Date, an amount equal to the product of (a) the Defaulted Amount for the related
Collection Period, after giving effect to any allocation of any portion of that
Defaulted Amount to the Dealer Overconcentration Series, and (b) the Floating
Allocation Percentage for the related Collection Period.

     "Investor Non-Principal Collections" shall mean, with respect to any
Distribution Date, an amount equal to the product of (i) the Floating Allocation
Percentage for the related Collection Period and (ii) Non-Principal Collections
deposited in the Collection Account for the related Collection Period after
giving effect to any allocations to the Dealer Overconcentration Series for such
Collection Period.

     "Investor Principal Collections" shall mean, with respect to any
Distribution Date, the sum of (a) the product of (i) the Floating Allocation
Percentage, with respect to the Revolving

                                       8
<PAGE>

Period, or the Principal Allocation Percentage, with respect to the Accumulation
Period or an Early Amortization Period, for the related Collection Period (or
the portion of the Collection Period which occurs as part of the first
Collection Period during an Early Amortization Period), and (ii) Principal
Collections for the related Collection Period after giving effect to any
allocations to the Dealer Overconcentration Series for such Collection Period
and (b) the amount, if any, of Non-Principal Collections to be allocated with
respect to the Investor Default Amount or unreimbursed Class A, Class B or Class
C Investor Charge-Offs pursuant to Section 4.6(a)(vi) or 4.6(a)(vii); provided
that in the case of clause (a), if for any Distribution Date the sum of the
Floating Allocation Percentage (if the Revolving Period is in effect), the
Principal Allocation Percentage (if the Early Amortization Period or the
Accumulation Period is in effect), the floating allocation percentages for all
other outstanding Series of Investor Certificates in their revolving periods and
the principal allocation percentages for all other outstanding Series of
Investor Certificates in their early amortization or accumulation periods
exceeds 100%, then, after giving effect to any allocations to the Dealer
Overconcentration Series, Principal Collections shall be allocated among all
Series (including Series [ ]) pari passu and pro rata on the basis of such
floating allocation percentages and principal allocation percentages.

     "LIBOR" shall mean, with respect to any Interest Period, the offered rates
for deposits in United States dollars having a maturity of one month (the "Index
Maturity") commencing on the related Adjustment Date which appears on the
Telerate Page 3750 as of approximately 11:00 A.M., London time, on the date of
calculation as determined by the Trustee. If at least two such offered rates
appear on the Telerate Page 3750, LIBOR shall be the arithmetic mean (rounded
upwards, if necessary, to the nearest one-sixteenth of a percent) of such
offered rates. If fewer than two such offered rates appear, LIBOR with respect
to such Interest Period shall be determined at approximately 11:00 A.M., London
time, on such Adjustment Date on the basis of the rate at which deposits in
United States dollars having the Index Maturity are offered to prime banks in
the London interbank market by four major banks in the London interbank market
selected by the Trustee and in a principal amount equal to an amount of not less
than U.S. $1,000,000 and that is representative for a single transaction in such
market at such time. The Trustee shall request the principal London office of
each of such banks to provide a quotation of its rate. If at least two such
banks quote rates to the Trustee, LIBOR shall be the arithmetic mean (rounded
upwards, if necessary, as aforesaid) of such quotations. If fewer than two of
such banks quote rates to the Trustee, LIBOR with respect to such Interest
Period shall be the arithmetic mean (rounded upwards as aforesaid) of the rates
quoted at approximately 11:00 A.M., New York City time, on such Adjustment Date
by three major banks in New York, New York selected by the Trustee for loans in
United States dollars to leading European banks having the Index Maturity and in
a principal amount equal to an amount of not less than U.S. $1,000,000 and that
is representative for a single transaction in such market at such time;
provided, however, that if the banks selected as aforesaid are not providing
quotations as mentioned in this sentence, LIBOR in effect for the applicable
period shall be LIBOR in effect for the previous period. If any Certificates are
listed on the Luxembourg Stock Exchange, then, on or prior to each Distribution
Date, the Trustee shall cause the Listing Agent (pursuant to a listing agency
agreement between the Trustee and the Listing Agent which is mutually
satisfactory to the Servicer, the Trustee and the Listing Agent) to notify the
Luxembourg Stock Exchange of the interest rates applicable to such Certificates
for the Interest Period commencing on such Distribution Date.

                                       9
<PAGE>

     "Listing Agent" shall mean, if the Class A Certificates or Class B
Certificates are listed on the Luxembourg Stock Exchange, Kredietbank S.A.
Luxembourgeoise, as additional Paying Agent and additional Transfer Agent and
Registrar in Luxembourg for the Class A Certificates and the Class B
Certificates, or any successor thereto.

     "London Business Day" shall mean any business day on which dealings in
deposits in United States dollars are transacted in the London interbank market.

     "Monthly Interest" shall have the meaning specified in Section 4.2.

     "Monthly Principal" shall have the meaning specified in Section 4.3.

     "Monthly Servicing Fee" shall have the meaning specified in Section 3.1.

     "Net Receivables Rate" shall mean, with respect to each Distribution Date
immediately following an Interest Period, (i) the weighted average of the
interest rates borne by the Receivables during the second Collection Period
preceding such Distribution Date (interest payments on the Receivables at such
rates being due and payable in the Collection Period preceding such Distribution
Date) plus (ii) the product of (x) the Monthly Payment Rate for the Collection
Period preceding such Distribution Date, (y) the Discount Factor for such
Distribution Date and (z) twelve less (iii) 2% per annum, unless the Monthly
Servicing Fee has been waived in whole or in part for such Distribution Date, in
which case, solely for that Distribution Date, "2% per annum" will be deemed to
be replaced by "0% per annum".

     "Principal Allocation Percentage" shall mean, with respect to any
Collection Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Invested Amount as of
the last day of the Revolving Period and the denominator of which is the
Unconcentrated Pool Balance as of the last day of the immediately preceding
Collection Period.

     "Principal Funding Account" shall have the meaning specified in Section
4.4(c).

     "Private Holder" shall mean each holder of a right to receive interest or
principal in respect of any direct or indirect interest in the Trust, including
any financial instrument or contract the value of which is determined in whole
or part by reference to the Trust (including the Trust's assets, income of the
Trust or distributions made by the Trust), excluding any interest in the Trust
represented by any Series or Class of Certificates or any other interests as to
which the Trustee has received an Opinion of Counsel to the effect that such
Series, Class or other interest shall be treated as debt or otherwise not as an
equity interest in either the Trust or the Receivables for federal income tax
purposes (unless such interest is convertible or exchangeable into an interest
in the Trust or the Trust's income or such interest provides for payment of
equivalent value). Notwithstanding the immediately preceding sentence, "Private
Holder" shall also include any other Person that the Seller determines is a
"partner" within the meaning of Section 1.7704-1(h)(1)(ii) of the U.S. Treasury
Regulations (including by reason of Section 1.7704-1(h)(3)) or any successor
provision of law. Any Person holding more than one interest in the Trust, each
of which separately would cause such Person to be a Private Holder, shall be
treated as a single Private Holder. Each holder of an interest in a Private
Holder which is a partnership, S corporation or a grantor trust under the
Internal Revenue Code shall be treated as a

                                       10
<PAGE>

Private Holder unless excepted with the consent of the Seller (which consent
shall be based on an Opinion of Counsel generally to the effect that the action
taken pursuant to the consent shall not cause the Trust to become a publicly
traded partnership treated as a corporation). Notwithstanding anything to the
contrary herein, each Class C Certificateholder shall be considered to be a
Private Holder.

     "Reassignment Amount" shall mean, with respect to any Distribution Date,
after giving effect to any deposits and distributions otherwise to be made on
such Distribution Date, the sum of (i) the Invested Amount on such Distribution
Date and (ii) the amounts distributable pursuant to Section 4.7(a)(i).

     "Required Participation Percentage" shall mean, with respect to Series [ ],
105%; provided, however, that the Seller may, upon 10 days' prior notice to the
Trustee, each Rating Agency and any Enhancement Provider, reduce the Required
Participation Percentage to a percentage which shall not be less than 100%;
provided, however, that the Rating Agency Condition is satisfied.

     "Reserve Fund" shall have the meaning specified in Section 4.4(a).

     "Reserve Fund Deposit Amount" shall mean, with respect to any Distribution
Date, the amount, if any, by which (i) the Reserve Fund Required Amount for such
Distribution Date exceeds (ii) the amount of funds in the Reserve Fund after
giving effect to any withdrawals therefrom on such Distribution Date.

     "Reserve Fund Required Amount" shall mean, with respect to any Distribution
Date, an amount equal to the product of (a) three and one-half percent (3.5%)
and (b) the aggregate outstanding principal balance of the Series [ ]
Certificates as of such Distribution Date (after giving effect to any changes
therein on such Distribution Date).

     "Revolving Period" shall mean the period beginning at the opening of
business on the Closing Date and ending on the earlier of (a) the close of
business on the day immediately preceding the Accumulation Period Commencement
Date, and (b) the close of business on the day an Early Amortization Period
commences; provided, however, that, if any Early Amortization Period ends as
described in clause (c) of the definition of Early Amortization Period in the
Agreement, the Revolving Period shall recommence as of the close of business on
the day such Early Amortization Period ends.

     "Securities Act" shall mean the Securities Act of 1933, as amended.

     "Series [ ]" or the "Series [ ] Certificates" shall mean the Series of
Investor Certificates, the terms of which are specified in this Series
Supplement.

     "Series [ ] Accounts" shall have the meaning specified in Section 4.4(f).

     "Series [ ] Allocation Percentage" for a Collection Period shall mean the
percentage equivalent of a fraction, the numerator of which is the Invested
Amount on the last Business Day of the Collection Period immediately preceding
such Collection Period and the denominator of which is the Trust Invested Amount
on such last Business Day.

                                       11
<PAGE>

     "Series [ ] Certificateholders" shall mean, collectively, the Class A
Certificateholders, the Class B Certificateholders and the Class C
Certificateholders.

     "Series [ ] Certificateholders' Interest" shall mean that portion of the
Certificateholders' Interest evidenced by the Series [ ] Certificates.

     "Series [ ] Certificates" shall mean, collectively, the Class A
Certificates, the Class B Certificates and the Class C Certificates.

     "Series [ ] Excess Principal Collection" shall mean that portion of Excess
Principal Collections allocated to Series [ ] pursuant to Section 4.11.

     "Series [ ] Principal Shortfall" with respect to any Distribution Date,
shall equal the excess of (i) (x) for any Distribution Date with respect to the
Accumulation Period, the Controlled Deposit Amount or (y) for any Distribution
Date with respect to an Early Amortization Period, the Invested Amount, over
(ii) Available Investor Principal Collections for such Distribution Date
(excluding any portion thereof attributable to Excess Principal Collections).

     "Servicer Advance" shall have the meaning specified in Section 3.2.

     "Servicing Fee Rate" shall mean, with respect to Series [ ], two percent
(2%).

     "Special Payment Date" shall mean each Distribution Date with respect to an
Early Amortization Period (other than an Early Amortization Period that has
ended as described in clause (c) of the definition of Early Amortization Period
in the Agreement).

     "Telerate Page 3750" shall mean the display designated as page 3750 on
Telerate (or such other page as may replace such page on that service for the
purpose of displaying London interbank offered rates of major banks).

     "Termination Date" for Series [ ] shall mean the [ ] Distribution Date.

     "Termination Proceeds" shall mean any proceeds arising out of a sale of
Receivables (or interests therein) pursuant to Section 12.2(c) of the Agreement
with respect to Series [ ].

     "Yield Supplement Account" shall have the meaning specified in Section
4.4(e).

     "Yield Supplement Account Deposit Amount" shall mean, with respect to any
Distribution Date, the amount, if any, by which the Yield Supplement Account
Required Amount exceeds the amount on deposit in the Yield Supplement Account
after giving effect to any withdrawals from the Yield Supplement Account on that
Distribution Date.

     "Yield Supplement Account Required Amount" shall mean an amount equal to
one-half of one percent (0.5%) of the aggregate initial principal balance of the
Series [ ] Certificates.

     (b) Notwithstanding anything to the contrary in this Series Supplement or
the Agreement, the term "Rating Agency" shall mean, whenever used in this Series
Supplement or

                                       12
<PAGE>

the Agreement with respect to Series [ ], Standard & Poor's, Moody's and Fitch.
As used in this Series Supplement and in the Agreement with respect to Series
[ ], "highest investment category" shall mean (i) in the case of Standard &
Poor's, AAA and A-1+, as applicable, (ii) in the case of Moody's, Aaa and P-1,
as applicable, and (iii) in the case of Fitch, AAA and F-1+, as applicable.

     (c) All capitalized terms used herein and not otherwise defined herein have
the meanings ascribed to them in the Agreement. The definitions in Section 2.1
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such terms.

     (d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Series Supplement shall refer to this Series Supplement
as a whole and not to any particular provision of this Series Supplement;
references to any Article, Section or Exhibit are references to Articles,
Sections and Exhibits in or to this Series Supplement unless otherwise
specified; and the term "including" means "including without limitation".

     (e) All references to any agreement (including the Agreement) shall be
understood to be references to such agreement as it may be amended, amended and
restated or otherwise modified from time to time.

                                   ARTICLE III

                                  Servicing Fee

     SECTION 3.1 Servicing Compensation. A monthly servicing fee for your series
(the "Monthly Servicing Fee") shall be payable to the Servicer, in arrears, on
each Distribution Date in respect of any Collection Period (or portion thereof)
occurring prior to the first Distribution Date on which the Invested Amount is
zero, in an amount equal to one-twelfth of the product of (a) the Servicing Fee
Rate and (b) the product of (i) the Series [ ] Allocation Percentage and (ii)
the Pool Balance as of the last day of the second Collection Period preceding
such Distribution Date. The share of the Monthly Servicing Fee allocable to the
Series [ ] Certificateholders with respect to any Distribution Date (the
"Certificateholders' Monthly Servicing Fee") shall be equal to one-twelfth of
the product of (a) the Servicing Fee Rate and (b) the Invested Amount as of the
last day of the second Collection Period second preceding such Distribution Date
and shall be payable in the manner set forth in Section 4.6 and Section 4.10;
provided, however, that with respect to the first Distribution Date for Series
[ ], clause (b) of this sentence shall be deemed to refer to the Invested Amount
on the Closing Date. Notwithstanding the foregoing, with respect to the first
Distribution Date for Series [ ], each reference in the preceding sentences of
this Section to one-twelfth shall be deemed to be replaced by a fraction, the
numerator of which is the number of days from but excluding the Closing Date to
and including the last day of the month in which the Closing Date occurs and the
denominator of which is 360.

     The remainder of the Monthly Servicing Fee shall be paid by the Seller and
in no event shall the Trust, the Trustee or the Series [ ] Certificateholders be
liable for the share of the Monthly Servicing Fee to be paid by the Seller; and
the remainder of the Servicing Fee shall be paid by the Seller and the Investor
Certificateholders of other Series, the Trustee and the Series [ ]

                                       13
<PAGE>

Certificateholders shall in no event be liable for the share of the Servicing
Fee to be paid by the Seller or the Investor Certificateholders of other Series.
The Certificateholders' Monthly Servicing Fee shall be payable to the Servicer
solely to the extent amounts are available for distribution in accordance with
the terms of this Series Supplement or to the extent that amounts may be netted
with respect thereto in accordance with the terms of this Series Supplement or
the Agreement.

     The Servicer shall be permitted, in its sole discretion, to waive the
Monthly Servicing Fee for any Distribution Date, in whole or in part, by notice
to the Trustee on or before the related Determination Date; provided that the
Servicer reasonably believes that sufficient Non-Principal Collections shall be
available on any future Distribution Date to pay the waived portion of Monthly
Servicing Fee. The waived portion of such Monthly Servicing Fee shall be paid on
a future Distribution Date to the extent amounts are available therefor pursuant
to Section 4.10(a) or to the extent that amounts may be netted with respect
thereto in accordance with the terms of this Series Supplement or the Agreement;
provided, however, that, to the extent any such waived Monthly Servicing Fee is
so paid, the related portion of the Monthly Servicing Fee to be paid by the
Seller shall be paid by the Seller to the Servicer.

     If the Servicer is CDF, and payment of any portion of the Monthly Servicing
Fee to CDF on a Distribution Date would require a withdrawal from the Reserve
Fund, then absent affirmative notice to the Trustee by CDF to the contrary, CDF
shall be deemed to have waived payment of that portion on that Distribution
Date; provided that a deemed waiver described in this sentence shall not occur
on more than two Distribution Dates in any twelve month period and shall not
occur on any two consecutive Distribution Dates.

     SECTION 3.2 Servicer Advances. On or before each Distribution Date, the
Servicer will deposit into the Collection Account as an advance (a "Servicer
Advance") an amount equal to the amount of interest due but unpaid on any
Receivable for the related Collection Period (but only to the extent that the
Servicer reasonably expects to recover that Servicer Advance from subsequent
payments on that delinquent Receivable). No Servicer Advance shall be made by
the Servicer for the principal portion of the Receivables or for Defaulted
Receivables. The Servicer shall reimburse itself for a Servicer Advance on the
subsequent Determination Date or Distribution Date (and, if necessary, on other
Determination Dates or Distribution Dates) out of funds collected on all
Receivables prior to the deposit of funds in the Collection Account.

                                   ARTICLE IV

                   Rights of Series [ ] Certificateholders and
                    Allocation and Application of Collections

     SECTION 4.1 Allocations; Payments to Seller. (a) Subject to Section 4.3(c)
of the Agreement, and after giving effect to any allocations to the Dealer
Overconcentration Series, Collections of Non-Principal Receivables and Principal
Receivables, Miscellaneous Payments and Defaulted Amounts, as they relate to
Series [ ], shall be allocated and distributed as set forth in this Article IV.

                                       14
<PAGE>

     (b) The Servicer shall instruct the Trustee to withdraw from the Collection
Account and pay (and the Trustee shall so withdraw and pay) to the Seller on
each Deposit Date any funds not required to be held therein (or not required to
be transferred from the Collection Account to a deposit account for the benefit
of Investor Certificateholders of any Series).

     The withdrawals to be made from the Collection Account pursuant to this
Section 4.1(b) do not apply to deposits into the Collection Account that do not
represent Collections, including Miscellaneous Payments, payment of the purchase
price for the Certificateholders' Interest pursuant to Section 2.3 of the
Agreement, payment of the purchase price for the Series [ ] Certificateholders'
Interest pursuant to Section 7.1 of this Series Supplement and proceeds from the
sale, disposition or liquidation of Receivables pursuant to Section 9.2 or 12.2
of the Agreement.

     SECTION 4.2 Monthly Interest; Determination of Certificate Rate. (a)
"Monthly Interest" with respect to the Series [ ] Certificates on any
Distribution Date shall be an amount equal to the sum of the Class A Monthly
Interest, the Class B Monthly Interest and the Class C Monthly Interest.
Interest on the respective outstanding principal balance of each Class of
Certificates shall accrue at the Class A Certificate Rate, Class B Certificate
Rate or Class C Certificate Rate, as applicable, and shall be payable to
Certificateholders on each Distribution Date.

     On the Determination Date preceding each Distribution Date, the Servicer
shall determine the excess, if any (the "Class A Interest Shortfall"), of (x)
the Class A Monthly Interest for the Interest Period applicable to such
Distribution Date over (y) the amount which shall be available to be paid to the
Class A Certificateholders as Class A Monthly Interest from the Interest Funding
Account on such Distribution Date pursuant to this Series Supplement. "Class A
Additional Interest" shall mean, as of any Distribution Date, an amount equal to
the product of (i) the Class A Certificate Rate for the Interest Period then
ended, (ii) a fraction the numerator of which is the actual number of days in
that Interest Period and the denominator of which is 360, and (iii) the Class A
Interest Shortfall, if any, for the previous Distribution Date. Notwithstanding
anything to the contrary herein, Class A Additional Interest shall be payable to
the Interest Funding Account or distributed to Class A Certificateholders only
to the extent permitted by applicable law.

     On the Determination Date preceding each Distribution Date, the Servicer
shall determine the excess, if any (the "Class B Interest Shortfall"), of (x)
the Class B Monthly Interest for the Interest Period applicable to such
Distribution Date over (y) the amount which shall be available to be paid to the
Class B Certificateholders as Class B Monthly Interest from the Interest Funding
Account on such Distribution Date pursuant to this Series Supplement. "Class B
Additional Interest" shall mean, as of any Distribution Date, an amount equal to
the product of (i) the Class B Certificate Rate for the Interest Period then
ended, (ii) a fraction the numerator of which is the actual number of days in
that Interest Period and the denominator of which is 360, and (iii) the Class B
Interest Shortfall, if any, for the previous Distribution Date. Notwithstanding
anything to the contrary herein, Class B Additional Interest shall be payable to
the Interest Funding Account or distributed to Class B Certificateholders only
to the extent permitted by applicable law.

                                       15
<PAGE>

         On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class C Interest Shortfall"),
of (x) the Class C Monthly Interest for the Interest Period applicable to such
Distribution Date over (y) the amount which shall be available to be paid to the
Class C Certificateholders as Class C Monthly Interest from the Interest Funding
Account on such Distribution Date pursuant to this Series Supplement. "Class C
Additional Interest" shall mean, as of any Distribution Date, an amount equal to
the product of (i) the Class C Certificate Rate for the Interest Period then
ended, (ii) a fraction the numerator of which is the actual number of days that
Interest Period and the denominator of which is 360, and (iii) such Class C
Interest Shortfall, if any, for the previous Distribution Date. Notwithstanding
anything to the contrary herein, Class C Additional Interest shall be payable to
the Interest Funding Account or distributed to Class C Certificateholders only
to the extent permitted by applicable law.

     (b) The Distribution Date Statement shall specify the applicable Net
Receivables Rate for the next Interest Period. Based on such Distribution Date
Statement (and on the Trustee's calculation of LIBOR) the Trustee shall
determine the Class A, Class B and Class C Certificate Rates for each Interest
Period on the Determination Date immediately preceding each Interest Period. The
Trustee shall notify the Servicer and the Listing Agent on each Adjustment Date
of the Trustee's determination of LIBOR. The establishment of LIBOR on each
Adjustment Date (or in the case of the date specified in the proviso to the
definition of Adjustment Date, promptly following such date) by the Trustee and
the Trustee's calculation of the Class A, Class B and Class C Certificate Rates
shall (in the absence of manifest error) be final and binding.

     SECTION 4.3 Determination of Monthly Principal. The amount of monthly
principal ("Monthly Principal") distributable with respect to the Series [ ]
Certificates on each Distribution Date with respect to an Early Amortization
Period and the Accumulation Period shall be equal to the Available Investor
Principal Collections with respect to such Distribution Date; provided, however,
that for each Distribution Date with respect to the Accumulation Period, Monthly
Principal, at the option of the Seller, may be increased to include amounts
otherwise payable or distributable to the Seller (including without limitation
(i) amounts allocable to other Series but not required to be paid to such other
Series on such Distribution Date and not required to be kept in a deposit
account for such other Series after such Distribution Date and (ii) Collections
otherwise allocable to the Seller's Interest)) or may be limited to the
Controlled Deposit Amount for such Distribution Date; and provided further,
however, that Monthly Principal shall not exceed the outstanding principal
balance of the Series [ ] Certificates.

     SECTION 4.4 Establishment of Reserve Fund and Funding Accounts. (a)(i) The
Trustee, for the benefit of the Series [ ] Certificateholders, shall cause to be
established and maintained in the name of the Trustee, on behalf of the Trust,
an Eligible Deposit Account (the "Reserve Fund") which shall be identified as
the "Reserve Fund for the Distribution Financial Services Floorplan Master
Trust, Series [ ]" and shall bear a designation clearly indicating that the
funds deposited therein are held for the benefit of the Series [ ]
Certificateholders.

          (ii) At the direction of the Servicer, funds on deposit in the Reserve
     Fund shall be invested by the Trustee in Eligible Investments selected by
     the Servicer that shall mature so that such funds shall be available at the
     close of business on or before the

                                       16
<PAGE>

     Business Day next preceding the following Distribution Date. All Eligible
     Investments shall be held by the Trustee for the benefit of the Series [ ]
     Certificateholders. On each Distribution Date, all interest and other
     investment earnings (net of losses and investment expenses) on funds on
     deposit in the Reserve Fund and received prior to such Distribution Date
     shall be applied as set forth in Section 4.6(a) of this Series Supplement.
     Funds deposited in the Reserve Fund on the Business Day preceding a
     Distribution Date are not required to be invested overnight.

     (b) (i) The Trustee, for the benefit of the Series [ ] Certificateholders,
shall establish and maintain in the name of the Trustee, on behalf of the Trust,
an Eligible Deposit Account (the "Interest Funding Account"), which shall be
identified as the "Interest Funding Account for the Distribution Financial
Services Floorplan Master Trust, Series [ ]" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Series [ ] Certificateholders.

          (ii) At the direction of the Servicer, funds on deposit in the
     Interest Funding Account shall be invested by the Trustee in Eligible
     Investments selected by the Servicer that shall mature so that such funds
     shall be available at the close of business on or before the Business Day
     next preceding the following Distribution Date. All such Eligible
     Investments shall be held by the Trustee for the benefit of the Series [ ]
     Certificateholders. On each Distribution Date, all interest and other
     investment earnings (net of losses and investment expenses) on funds on
     deposit in the Interest Funding Account and received prior to such
     Distribution Date shall be applied as set forth in Section 4.6(a) of this
     Series Supplement. Funds deposited in the Interest Funding Account on the
     Business Day preceding a Distribution Date are not required to be invested
     overnight.

     (c) (i) The Trustee, for the benefit of the Series [ ] Certificateholders,
shall establish and maintain in the name of the Trustee, on behalf of the Trust,
an Eligible Deposit Account (the "Principal Funding Account"), which shall be
identified as the "Principal Funding Account for Distribution Financial Services
Floorplan Master Trust, Series [ ]" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series [ ] Certificateholders.

          (ii) At the direction of the Servicer, funds on deposit in the
     Principal Funding Account shall be invested by the Trustee in Eligible
     Investments selected by the Servicer that shall mature so that such funds
     shall be available at the close of business on or before the Business Day
     next preceding the following Distribution Date. All such Eligible
     Investments shall be held by the Trustee for the benefit of the Series [ ]
     Certificateholders. On each Distribution Date all interest and other
     investment earnings (net of losses and investment expenses) on funds on
     deposit in the Principal Funding Account and received prior to such
     Distribution Date shall be applied as set forth in Section 4.6(a) of this
     Series Supplement. Funds deposited in the Principal Funding Account on the
     Business Day preceding the Expected Final Payment Date are not required to
     be invested overnight.

                                       17
<PAGE>

     (d) (i) The Trustee, for the benefit of the Series [ ] Certificateholders,
shall establish and maintain in the name of the Trustee, on behalf of the Trust,
an Eligible Deposit Account (the "Excess Funding Account"), which shall be
identified as the "Excess Funding Account for Distribution Financial Services
Floorplan Master Trust, Series [ ]" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series [ ] Certificateholders.

          (ii) At the direction of the Servicer, funds on deposit in the Excess
     Funding Account shall be invested by the Trustee in Eligible Investments
     selected by the Servicer. All such Eligible Investments shall be held by
     the Trustee for the benefit of the Series [ ] Certificateholders. On each
     Distribution Date, all interest and other investment earnings (net of
     losses and investment expenses) on funds on deposit in the Excess Funding
     Account and received prior to such Distribution Date shall be applied as
     set forth in Section 4.6(a) of this Series Supplement. Funds deposited in
     the Excess Funding Account on any Distribution Date shall be invested in
     Eligible Investments that shall mature so that such funds shall be
     available on or before the close of business on the Business Day next
     preceding the following Distribution Date; provided that if, pursuant to
     Section 4.12, deposits to and withdrawals from the Excess Funding Account
     are being made on a weekly or daily basis, then such Eligible Investments
     shall mature on each Business Day on a weekly or daily basis, as the case
     may be; provided further that such Eligible Investments shall still mature
     so that funds shall be available on or before the close of business on the
     Business Day next preceding the following Distribution Date. Funds
     deposited in the Excess Funding Account on the Business Day preceding a
     Distribution Date are not required to be invested overnight.

     (e) (i) The Trustee, for the benefit of the Series [ ] Certificateholders,
shall establish and maintain in the name of the Trustee, on behalf of the Trust,
an Eligible Deposit Account (the "Yield Supplement Account"), which shall be
identified as the "Yield Supplement Account for the Distribution Financial
Services Floorplan Master Trust, Series [ ]" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Series [ ] Certificateholders.

          (ii) At the direction of the Servicer, funds on deposit in the Yield
     Supplement Account shall be invested by the Trustee in Eligible Investments
     selected by the Servicer that shall mature so that such funds shall be
     available at the close of business on or before the Business Day next
     preceding the following Distribution Date. All such Eligible Investments
     shall be held by the Trustee for the benefit of the Series [ ]
     Certificateholders. On each Distribution Date, all interest and other
     investment earnings (net of losses and investment expenses) on funds on
     deposit in the Yield Supplement Account and received prior to such
     Distribution Date shall be applied as set forth in Section 4.6(a) of this
     Series Supplement. Funds deposited in the Yield Supplement Account on the
     Business Day preceding a Distribution Date are not required to be invested
     overnight.

     (f) (i) The Trustee shall possess all right, title and interest in and to
all funds on deposit from time to time in, and all Eligible Investments credited
to, the Reserve Fund, the Interest Funding Account, the Principal Funding
Account, the Yield Supplement Account and

                                       18
<PAGE>

the Excess Funding Account (collectively, the "Series [ ] Accounts") and in all
proceeds thereof. The Series [ ] Accounts shall be under the sole dominion and
control of the Trustee for the benefit of the Certificateholders. If, at any
time, any of the Series [ ] Accounts ceases to be an Eligible Deposit Account,
the Trustee (or the Servicer on its behalf) shall within 10 Business Days (or
such longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Series [ ] Account meeting the conditions
specified in paragraph (a)(i), (b)(i), (c)(i), (d)(i) or (e)(i) above, as
applicable, as an Eligible Deposit Account and shall transfer any cash and/or
investments to such new Series [ ] Account. Neither the Seller, the Servicer nor
any other Person or entity claiming by, through or under the Seller, the
Servicer or any such other Person or entity shall have any right, title or
interest in, or any right to withdraw any amount from, any Series [ ] Account,
except as expressly provided herein. Schedule 1, which is hereby incorporated
into and made part of this Series Supplement, identifies each Series [ ] Account
by setting forth the account number of each such account, the account
designation of each such account and the name of the institution with which such
account has been established. If a substitute Series [ ] Account is established
pursuant to this Section, the Servicer shall provide to the Trustee an amended
Schedule 1, setting forth the relevant information for such substitute Series
[ ] Account.

          (ii) Pursuant to the authority granted to the Servicer in Section
     3.1(a) of the Agreement, the Servicer shall have the power, revocable by
     the Trustee, to make withdrawals and payments or to instruct the Trustee to
     make withdrawals and payments from the Series [ ] Accounts for the purposes
     of carrying out the Servicer's or the Trustee's duties hereunder.

     (g) Unless otherwise agreed to by the Rating Agencies, at no time may funds
on deposit in any Series [ ] Account in an amount greater than 10% of the
outstanding principal balance of the Certificates be invested in Eligible
Investments (other than obligations of the United States government or
investments in a mutual fund that does not have credit concentrations greater
than 10%) of any single entity or its Affiliates.

     (h) Upon payment in full of all amounts payable on the Series [ ]
Certificates pursuant to this Series Supplement, or any earlier date
contemplated by this Series Supplement, any funds remaining on deposit in any
Series [ ] Account shall be paid to the Seller.

     SECTION 4.5 Deficiency Amount. On each Determination Date, with respect to
the related Distribution Date (the "current Distribution Date"), the Servicer
shall determine the amount (the "Deficiency Amount"), if any, by which

          (a)  the sum of

               (i) the Monthly Interest for the current Distribution Date,

               (ii) any Monthly Interest for any prior Distribution Dates not
          distributed to the Certificateholders on a prior Distribution Date,

               (iii) Additional Interest, if any, for the current Distribution
          Date and any Additional Interest for any prior Distribution Date not
          distributed

                                       19
<PAGE>

          to the Certificateholders on such prior Distribution Date (but only to
          the extent permitted by applicable law),

               (iv) the Certificateholders' Monthly Servicing Fee for the
          current Distribution Date,

               (v) the Investor Default Amount for the current Distribution
          Date, and

               (vi) the Series [ ] Allocation Percentage of the amount of any
          Adjustment Payment required to be deposited in the Collection Account
          pursuant to Section 3.9(a) of the Agreement with respect to the
          related Collection Period that has not been so deposited as of such
          Determination Date

     exceeds

          (b) the sum of Investor Non-Principal Collections for the current
     Distribution Date plus any Investment Proceeds, if any, with respect to
     such Distribution Date.

     SECTION 4.6 Application of Investor Non-Principal Collections, Investment
Proceeds, Servicer Advances and Available Investor Principal Collections. The
Servicer shall direct the Trustee (by setting forth the following amounts in the
related Distribution Date Statement) to make the following distributions on each
Distribution Date (and the Trustee shall distribute):

     (a) On each Distribution Date, an amount equal to the sum of Investor
Non-Principal Collections on deposit in the Collection Account (after giving
effect to repayment to the Servicer of any Servicer Advances from any previous
Distribution Dates) and any Investment Proceeds and the Servicer Advance, if
any, for such Distribution Date, with respect to such Distribution Date in the
following priority:

          (i) first, an amount equal to the Class A Monthly Interest for such
     Distribution Date, plus the amount of any Class A Monthly Interest for any
     prior Distribution Dates not distributed to the Class A Certificateholders
     on such prior Distribution Dates plus (but only to the extent permitted
     under applicable law) the amount of any Class A Additional Interest for the
     current Distribution Date and, without duplication, any Class A Additional
     Interest previously due but not distributed to the Class A
     Certificateholders on prior Distribution Dates, shall be deposited to the
     Interest Funding Account;

          (ii) second, an amount equal to the Class B Monthly Interest for such
     Distribution Date, plus the amount of any Class B Monthly Interest for any
     prior Distribution Dates not distributed to the Class B Certificateholders
     on such prior Distribution Dates plus (but only to the extent permitted
     under applicable law) the amount of any Class B Additional Interest for the
     current Distribution Date and, without duplication, any Class B Additional
     Interest previously due but not distributed to the

                                       20
<PAGE>

     Class B Certificateholders on prior Distribution Dates, shall be deposited
     to the Interest Funding Account;

          (iii) third, an amount equal to the Class C Monthly Interest for such
     Distribution Date, plus the amount of any Class C Monthly Interest for any
     prior Distribution Dates not distributed to the Class C Certificateholders
     on such prior Distribution Dates plus (but only to the extent permitted
     under applicable law) the amount of any Class C Additional Interest for the
     current Distribution Date and, without duplication any Class C Additional
     Interest previously due but not distributed to the Class C
     Certificateholders on prior Distribution Dates, shall be deposited to the
     Interest Funding Account;

          (iv) fourth, so long as CDF is not the Servicer, an amount equal to
     the Certificateholders' Monthly Servicing Fee for such Distribution Date
     shall be distributed to the Servicer (unless such amount has been netted
     against deposits to the Collection Account);

          (v) fifth, an amount equal to the Reserve Fund Deposit Amount, if any,
     for such Distribution Date shall be deposited in the Reserve Fund;

          (vi) sixth, an amount equal to the Investor Default Amount, if any,
     for such Distribution Date shall be treated as a portion of Investor
     Principal Collections for such Distribution Date;

          (vii) seventh, an amount required to reimburse unreimbursed Class A
     Investor Charge-Offs, Class B Investor Charge-Offs and Class C Investor
     Charge-Offs pursuant to Section 4.9 shall be treated as a portion of
     Investor Principal Collections for such Distribution Date;

          (viii) eighth, so long as CDF is the Servicer, an amount equal to the
     Certificateholders' Monthly Servicing Fee for that Distribution Date shall
     be distributed to the Servicer, unless that amount has been netted against
     deposits to the Collection Account by CDF or waived;

          (ix) ninth, any unpaid Class A Carry-over Amount, Class B Carry-over
     Amount or Class C Carry-over Amount for any previous Distribution Date,
     plus to the extent permitted under applicable law, the amount of any Class
     A Carry-over Amount Additional Interest, Class B Carry-over Amount
     Additional Interest and Class C Carry-over Amount Additional Interest for
     the current Distribution Date and, without duplication, any Class A
     Carry-over Amount Additional Interest, Class B Carry-over Amount Additional
     Interest and Class C Carry-over Amount Additional Interest previously due
     but not distributed to the Class A Certificateholders, Class B
     Certificateholders and Class C Certificateholders, respectively, shall be
     deposited in the Interest Funding Account;

          (x) tenth, if that Distribution Date occurs prior to the beginning of
     the Accumulation Period and prior to the occurrence of an Early
     Amortization Event, an

                                       21
<PAGE>

     amount equal to the Yield Supplement Account Deposit Amount, if any, for
     that Distribution Date will be deposited in the Yield Supplement Account;
     and

          (xi) eleventh, the balance, if any, shall constitute "Excess
     Servicing" and shall be allocated and distributed as set forth in Section
     4.10.

     (b) On each Distribution Date with respect to the Revolving Period, the
Servicer shall direct the Trustee in writing by setting forth the following
amounts on the Distribution Date Statement to apply an amount equal to the
Available Investor Principal Collections deposited in the Collection Account for
the related Collection Period shall be applied in the following priority:

          (i) first, if (A) the Unconcentrated Pool Balance at the end of the
     preceding Collection Period is less than the Unconcentrated Pool Balance at
     the end of the second preceding Collection Period and (B) the
     Unconcentrated Pool Balance at the end of the preceding Collection Period
     is less than the Required Participation Amount for such Distribution Date
     (calculated before giving effect to any deposits to be made on such
     Distribution Date to the Excess Funding Account and any excess funding
     account for any other Series in their revolving periods to be made on such
     Distribution Date), then the Servicer shall direct the Trustee to deposit
     (and the Trustee shall deposit) Available Investor Principal Collections
     into the Excess Funding Account in an amount which shall reduce the
     Invested Amount such that, together with the deposits to the excess funding
     accounts, if any, (and any resulting reductions in the invested amounts)
     for other outstanding Series in their revolving periods for such
     Distribution Date, the Unconcentrated Pool Balance is equal to the Required
     Participation Amount, and

          (ii) second, an amount equal to the balance (such balance being part
     of "Excess Principal Collections"), if any, of such Available Investor
     Principal Collections shall be applied in accordance with Section 4.4 of
     the Agreement.

For purposes of determining the amount to be applied pursuant to subparagraph
(i) above, allocations of the amounts to be deposited in the Excess Funding
Account and the excess funding account for other outstanding Series shall be
made pro rata on the basis of the invested amounts (including the Invested
Amount for Series [ ]).

     If the Servicer has elected in respect of a Collection Period to make
withdrawals from the Excess Funding Account on a daily or weekly basis pursuant
to Section 4.12(b), then deposits into the Excess Funding Account required by
this Section 4.6(b) shall be made on each Business Day in such Collection Period
(if daily withdrawals and deposits have been elected) or on each Wednesday (or
the next succeeding Business Day if such Wednesday is not a Business Day) in
such Collection Period (if weekly withdrawals and deposits have been elected).
In the case of such election, the Unconcentrated Pool Balance referred to in
clause (B) above shall be the Unconcentrated Pool Balance on the preceding
Business Day, in the case of an election to make daily deposits and withdrawals,
and on the Monday next preceding the related Wednesday, in the case of an
election to make weekly deposits and withdrawals.

                                       22
<PAGE>

     (c) On each Distribution Date (x) with respect to the Accumulation Period
or (y) an Early Amortization Period (if a Responsible Officer of the Trustee has
actual knowledge of such Early Amortization Period), an amount equal to the
Available Investor Principal Collections on deposit in the Collection Account
shall be distributed in the following priority:

          (i) first, an amount equal to Monthly Principal for such Distribution
     Date shall be deposited by the Servicer or the Trustee into the Principal
     Funding Account; and

          (ii) second, for each Distribution Date with respect to the
     Accumulation Period (unless an Early Amortization Event has occurred), an
     amount equal to the balance (such balance being part of "Excess Principal
     Collections"), if any, of such Available Investor Principal Collections
     shall be applied in accordance with the written instructions of the
     Servicer in accordance with Section 4.4 of the Agreement.

     SECTION 4.7 Distributions to Series [ ] Certificateholders. (a) The
Servicer shall direct the Trustee (by setting forth the amounts in Section
4.7(a)(i) in the related Distribution Date Statement) to make (and the Trustee
shall make) the following distributions at the following times from the Interest
Funding Account, the Principal Funding Account and the Excess Funding Account:

          (i) on each Distribution Date, available amounts on deposit in the
     Interest Funding Account shall be distributed to the Series [ ]
     Certificateholders in the following order of priority:

               (A) first, to the Class A Certificateholders, an amount equal to
          the sum of (i) the Class A Monthly Interest for the current
          Distribution Date, plus (ii) any Class A Monthly Interest that was not
          distributed on any prior Distribution Date to the Class A
          Certificateholders, plus (iii) to the extent permitted under
          applicable law, the amount of any Class A Additional Interest for the
          current Distribution Date and, without duplication, any Class A
          Additional Interest previously due but not distributed to the Class A
          Certificateholders;

               (B) second, to the Class B Certificateholders, an amount equal to
          the sum of (i) the Class B Monthly Interest for the current
          Distribution Date, plus (ii) any Class B Monthly Interest that was not
          distributed on any Distribution Date prior to the current Distribution
          Date to the Class B Certificateholders, plus (iii) to the extent
          permitted under applicable law, the amount of any Class B Additional
          Interest for the current Distribution Date and, without duplication,
          any Class B Additional Interest previously due but not distributed to
          the Class B Certificateholders;

               (C) third, to the Class C Certificateholders, an amount equal to
          the sum of (i) the Class C Monthly Interest for the current
          Distribution Date, plus (ii) any Class C Monthly Interest that was not
          distributed on any Distribution Date prior to the current Distribution
          Date to the Class C Certificateholders, plus (iii) to the extent
          permitted under applicable law, the amount of any Class C Additional
          Interest for the current Distribution Date and, without duplication,
          any Class C

                                       23
<PAGE>

          Additional Interest previously due but not distributed to the Class C
          Certificateholders;

               (D) fourth, to the Class A Certificateholders, the sum of any
          Class A Carry-over Amount for the current Distribution Date plus any
          unpaid Class A Carry-over Amount for any previous Distribution Date
          plus to the extent permitted under applicable law, the amount of any
          Class A Carry-over Amount Additional Interest for the current
          Distribution Date and, without duplication, any Class A Carry-over
          Amount Additional Interest previously due but not distributed to the
          Class A certificateholders;

               (E) fifth, to the Class B Certificateholders, the sum of any
          Class B Carry-over Amount for the current Distribution Date plus any
          unpaid Class B Carry-over Amount for any previous Distribution Date
          plus to the extent permitted under applicable law, the amount of any
          Class B Carry-over Amount Additional Interest for the current
          Distribution Date and, without duplication, any Class B Carry-over
          Amount Additional Interest previously due but not distributed to the
          Class B certificateholders; and

               (F) sixth, to the Class C Certificateholders, the sum of any
          Class C Carry-over Amount for the current Distribution Date plus any
          unpaid Class C Carry-over Amount for any previous Distribution Date
          plus to the extent permitted under applicable law, the amount of any
          Class C Carry-over Amount Additional Interest for the current
          Distribution Date and, without duplication, any Class C Carry-over
          Amount Additional Interest previously due but not distributed to the
          Class C certificateholders.

          (ii) on each Special Payment Date (if a Responsible Officer of the
     Trustee has actual knowledge of the Early Amortization Period) and on the
     Expected Final Payment Date, all amounts on deposit in the Principal
     Funding Account shall be distributed to the Series [ ] Certificateholders
     in the following order of priority: (A) first, to the Class A
     Certificateholders until the outstanding principal balance of the Class A
     Certificates has been reduced to zero; (B) second, to the Class B
     Certificateholders until the outstanding principal balance of the Class B
     Certificates has been reduced to zero; and (C) to the Class C
     Certificateholders until the outstanding principal balance of the Class C
     Certificates has been reduced to zero; provided, however, that the maximum
     amount distributed pursuant to this clause (ii) on any Distribution Date
     shall not exceed the excess, if any, of (x) the sum of the outstanding
     principal balance of the Class A, Class B and Class C Certificates, over
     (y) the sum of the unreimbursed Class A Investor Charge-Offs, Class B
     Investor Charge-Offs and Class C Investor Charge-Offs, each on such
     Distribution Date.

     (b) The distributions to be made pursuant to this Section are subject to
the provisions of Sections 2.3, 9.2, 10.1 and 12.2 of the Agreement and Section
8.1 and 8.2 of this Series Supplement.

                                       24
<PAGE>

     SECTION 4.8 Application of Reserve Fund. (a) If Investor Non-Principal
Collections and Investment Proceeds on any Distribution Date (plus the amount of
any Servicer Advance for such Distribution Date) are not sufficient to make the
entire distributions required on such Distribution Date by Sections 4.6(a)(i),
(ii), (iii), (iv), (vi) and (viii), the Servicer shall direct the Trustee to
withdraw (and the Trustee shall withdraw) funds from the Reserve Fund to the
extent available therein, and apply such funds to complete the distributions
pursuant to Section 4.6(a)(i), (ii), (iii), (iv), (vi) and (viii) in the
numerical order thereof.

     (b) On the Termination Date, any funds in the Reserve Fund shall be treated
as Available Investor Principal Collections. Upon payment in full of the
outstanding principal balance of the Series [ ] Certificates, any funds
remaining on deposit in the Reserve Fund shall be paid to the Seller.

     SECTION 4.9 Investor Charge-Offs. If on any Distribution Date (after giving
effect to the allocations, distributions, withdrawals and deposits to be made on
such Distribution Date) the balance of the Reserve Fund is zero, then the Class
C Invested Amount shall be reduced by the lesser of the Deficiency Amount for
that Distribution Date and the Investor Default Amount for that Distribution
Date (the lesser of such Deficiency Amount and such Investor Default Amount
being a "Class C Investor Charge-Off"). In the event that any such reduction of
the Class C Invested Amount would cause the Class C Invested Amount to be a
negative number, the Class C Invested Amount shall be maintained at or reduced
to zero, and the Class B Invested Amount shall be reduced by the amount of such
excess (the amount of such reduction being a "Class B Investor Charge-Off"). In
the event that any such reduction of the Class B Invested Amount would cause the
Class B Invested Amount to be a negative number, the Class B Invested Amount
shall be maintained at or reduced to zero, and the Class A Invested Amount shall
be reduced by the amount of such excess but not by more than the Class A
Invested Amount on such Distribution Date (the amount of such reduction being a
"Class A Investor Charge-Off"). Class A Investor Charge-Offs, Class B Investor
Charge-Offs and Class C Investor Charge-Offs shall thereafter be reimbursed (in
that order) and the Class A Invested Amount, Class B Invested Amount and Class C
Invested Amount increased (in that order) (but not by an amount in excess of the
aggregate unreimbursed Class A Investor Charge-Offs, Class B Investor
Charge-Offs and Class C Investor Charge-Offs, as the case may be) on any
Distribution Date by the sum of (a) Allocable Miscellaneous Payments with
respect to such Distribution Date and (b) the amount allocated and available for
that purpose pursuant to Section 4.6(a)(vii). The Servicer shall be responsible
for calculating Class A, Class B and Class C Investor Charge-Offs and shall give
the Trustee notice thereof by setting forth such amounts in the Distribution
Date Statement.

     SECTION 4.10 Excess Servicing. The Servicer shall direct the Trustee to
apply (and the Trustee shall so apply), on each Distribution Date, Excess
Servicing for such Distribution Date to make the following distributions in the
following priority:

          (a) an amount equal to the aggregate outstanding amounts of the
     Monthly Servicing Fee which have been previously waived pursuant to Section
     3.1 shall be distributed to the Servicer; and

          (b) the balance, if any, shall be distributed to the Seller.

                                       25
<PAGE>

     SECTION 4.11 Excess Principal Collections.

     "Series [ ] Excess Principal Collections", with respect to any Distribution
Date, shall mean an amount equal to the lesser of (a) the Series [ ] Principal
Shortfall, if any, for such Distribution Date and (b) an amount equal to the
product of (x) excess principal collections for all Series for such Distribution
Date and (y) a fraction, the numerator of which is the Series [ ] Principal
Shortfall for such Distribution Date and the denominator of which is the
aggregate amount of principal shortfalls for all Series for such Distribution
Date.

     SECTION 4.12 Excess Funding Account. (a) Any funds on deposit in the Excess
Funding Account at the beginning of the Accumulation Period or upon the
occurrence of an Early Amortization Event shall be deposited in the Principal
Funding Account. In addition, no funds shall be deposited in the Excess Funding
Account during the Accumulation Period or any Early Amortization Period.

     (b) If (i) on any Determination Date during the Revolving Period there are
any funds in the Excess Funding Account and (ii) the Unconcentrated Pool Balance
at the end of the preceding Collection Period is greater than the Unconcentrated
Pool Balance at the end of the second preceding Collection Period, then, subject
to the other provisions of this Section 4.12(b) and to Sections 4.12(c) and (d),
the Invested Amount and the invested amounts (but, in each case, not in excess
of the initial principal amount of such Series) for all other outstanding Series
that provide for an excess funding account or similar arrangement and are in
their revolving periods shall be increased such that, after giving effect to
such increases, the Required Participation Amount is at least equal to the
Unconcentrated Pool Balance. On such Determination Date, the Servicer shall
notify the Trustee of the amount, if any, of such increase in the Invested
Amount and the Trustee shall withdraw from the Excess Funding Account and pay to
the Seller or allocate to one or more other Series, on the immediately
succeeding Distribution Date, an amount equal to the amount of such increase in
the Invested Amount. To the extent that the Invested Amount is increased by any
payment to the Seller or any allocation to one or more other Series, the
Seller's Interest or such other Series' invested amount, as applicable, shall be
reduced by the amount of such payment. In addition, any increase in the Invested
Amount is subject to the condition that after giving effect to such increase the
Unconcentrated Pool Balance equals or exceeds the Required Participation Amount.
In connection with the foregoing, the Seller shall endeavor (taking into account
any seasonality experienced in the Accounts in the Trust) to minimize the
amounts on deposit, from time to time, in the Excess Funding Account.

     The Seller may elect to make withdrawals from the Excess Funding Account
and the excess funding accounts or similar arrangements for other Series on a
daily or weekly basis during a Collection Period by giving the Trustee notice of
such election at least two Business Days and no more than five Business Days
prior to the commencement of such daily or weekly withdrawals. If such election
is made, then deposits into the Excess Funding Account and excess funding
accounts or similar arrangements for other Series shall be made on a similar
basis for the related Collection Period. If such election is for withdrawals on
a daily basis, then such withdrawals shall be made on each Business Day and the
Unconcentrated Pool Balance to be referenced shall be the Unconcentrated Pool
Balance on the next preceding Business Day. If such election is for withdrawals
on a weekly basis, then such withdrawals shall be made on each

                                       26
<PAGE>

Wednesday (or if such Wednesday is not a Business Day, then on the Business Day
next succeeding such Wednesday) and the Unconcentrated Pool Balance to be
referenced shall be the Unconcentrated Pool Balance on the preceding Monday.

     (c) In the event that other Series issued by the Trust provide for excess
funding accounts or other arrangements similar to the Excess Funding Account
involving fluctuating levels of investments in Principal Receivables, (i) the
allocation of additional Principal Receivables to increase the Invested Amount
and the invested amounts of such other Series (and the related withdrawals from
the Excess Funding Account and the other excess funding or similar accounts)
shall be based on the proportion that the amount on deposit in the Excess
Funding Account bears to amounts on deposit in the excess funding accounts
(including the Excess Funding Account) of all Series providing for excess
funding accounts or such similar arrangements or to amounts otherwise similarly
available and (ii) the deposit of amounts into the Excess Funding Account and
the excess funding accounts of such other Series shall be pro rata based on the
proportion that the Invested Amount bears to the invested amounts (including the
Invested Amount) of all Series providing for excess funding accounts or such
similar arrangements.

     (d) In the event that any other Series is in an amortization period, early
amortization period or accumulation period, the amounts of any withdrawals from
the Excess Funding Account shall be applied first to satisfy in full any then
applicable funding or payment requirements of such Series and second to make a
payment to the Seller. In the event that more than one other Series is in an
amortization period, early amortization period or accumulation period, the
amounts of any withdrawals from the Excess Funding Account shall be allocated
(and, if necessary, reallocated) among such Series as specified in the related
Supplements for such Series, to meet the funding or payment requirements of each
such Series first to satisfy in full all then applicable funding or payment
requirements of each such Series and second to make a payment to the Seller.

     SECTION 4.13 Yield Supplement Account. On each Distribution Date prior to
the beginning of the Accumulation Period and prior to the occurrence of an Early
Amortization Event, the Trustee shall deposit Non-Principal Collections and
Investment Proceeds, if any--to the extent available pursuant to Section
4.6(a)(x)--into the Yield Supplement Account in an amount equal to the Yield
Supplement Account Deposit Amount, if any, for that Distribution Date.

     If the Class A Monthly Interest, Class B Monthly Interest or Class C
Monthly Interest for any Distribution Date, determined as if the interest rate
were based on LIBOR plus the applicable margin, exceeds the applicable monthly
interest determined on the basis of the related Net Receivables Rate, the
Servicer shall direct the Trustee to withdraw (and the Trustee shall withdraw)
funds from the Yield Supplement Account, to the extent available, and apply
those funds to deposit the amount of such excess into the Interest Funding
Account first, for the benefit of the Class A Certificates, second, for the
benefit of the Class B Certificates, and third, for the benefit of the Class C
Certificates.

                                       27
<PAGE>

     Any funds on deposit in the Yield Supplement Account at the beginning of
the Accumulation Period or upon the occurrence of an Early Amortization Event
shall be deposited in the Principal Funding Account.

                                   ARTICLE V

                           Distribution and Reports to
                          Series [ ] Certificateholders

     SECTION 5.1 Distributions. (a) On each Distribution Date, the Trustee as
paying agent shall distribute to each Series [ ] Certificateholder of record on
the preceding Record Date (other than as provided in Section 12.2 of the
Agreement respecting a final distribution) such Series [ ] Certificateholder's
pro rata share (based on the outstanding principal balances of the Series [ ]
Certificates held by such Certificateholder) of the amounts on deposit in the
Series [ ] Accounts as is payable to Series [ ] Certificateholders on such
Distribution Date pursuant to and subject to the applicable priorities set forth
in Section 4.7.

     (b) Except as provided in Section 12.2 of the Agreement with respect to a
final distribution, distributions to Series [ ] Certificateholders hereunder
shall be made by check mailed to each Series [ ] Certificateholder at such
Certificateholder's address appearing in the Certificate Register without
presentation or surrender of any Series [ ] Certificate or the making of any
notation thereon; provided, however, that with respect to Series [ ]
Certificates registered in the name of a Depository, such distributions shall be
made to such Depository in immediately available funds.

     (c) For so long as any of the Series [ ] Certificates are listed on the
Luxembourg Stock Exchange, the Trustee shall notify the Luxembourg Stock
Exchange in the event that any of such Series [ ] Certificates listed on the
Luxembourg Stock Exchange do not receive scheduled distributions of interest or
principal on any Distribution Date in accordance with instructions from the
Servicer (which may be standing instructions).

     SECTION 5.2 Reports and Statements to Series [ ] Certificateholders. (a) At
least two Business Days prior to each Distribution Date, the Servicer shall
provide to the Trustee, the Rating Agencies and, for so long as any Series [ ]
Certificates are listed on the Luxembourg Stock Exchange, such exchange, a
statement substantially in the form of Exhibit B (a "Distribution Date
Statement"), and on each Distribution Date the Trustee shall forward to each
Series [ ] Certificateholder such statement prepared by the Servicer setting
forth certain information relating to the Trust and the Series [ ] Certificates.

     (b) A copy of each statement provided pursuant to paragraph (a) and a copy
of the Pooling and Servicing Agreement (without exhibits) and this Series
Supplement shall be made available to Series [ ] Certificateholders of record
for inspection at the Corporate Trust Office during the Trustee's normal
business hours.

     (c) On or before January 31 of each calendar year, beginning with calendar
year [ ], the Trustee shall furnish or cause to be furnished to each Person who
at any time during the preceding calendar year was a Series [ ]
Certificateholder, a statement prepared by the Servicer

                                       28
<PAGE>

containing the information which is required to be contained in the statement to
Series [ ] Certificateholders as set forth in paragraph (a) above, aggregated
for such calendar year or the applicable portion thereof during which such
Person was a Series [ ] Certificateholder, together with other information as is
required to be provided by an issuer of indebtedness under the Internal Revenue
Code for the preceding calendar year and such other customary information as is
necessary to enable the Series [ ] Certificateholders (or Certificate Owners) to
prepare their tax returns. Such obligation of the Trustee shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Trustee pursuant to any requirements of the Internal
Revenue Code as from time to time in effect.

     (d) For so long as the Class A Certificates or the Class B Certificates are
listed on the Luxembourg Stock Exchange and so long as the rules of such
exchange so require, notices to the holders of the Class A Certificates and the
Class B Certificates shall also be given by publication in an Authorized
European Newspaper. The Trustee shall have the right to cause the Listing Agent,
pursuant to a listing agency agreement between the Trustee and the Listing Agent
which is mutually satisfactory to the Servicer, the Trustee and the Listing
Agent, to give such notices by such publication.

                                   ARTICLE VI

                            Early Amortization Events

     SECTION 6.1 Additional Early Amortization Events. The occurrence of any of
the following events shall, immediately upon the occurrence thereof without
notice or other action on the part of the Trustee or the Series [ ]
Certificateholders, be deemed to be an Early Amortization Event solely with
respect to Series [ ] (each, an "Additional Early Amortization Event"):

          (a) on any Distribution Date, the balance of the Reserve Fund is less
     than [ ] percent of the aggregate outstanding principal balance of the
     Series [ ] Certificates, in each case after giving effect to all deposits,
     withdrawals and distributions on such Distribution Date; or

          (b) any Servicer Default occurs; or

          (c) a Class A Carry-over Amount, Class B Carry-over Amount or Class C
     Carry-over Amount is outstanding on six consecutive Distribution Dates
     (after giving effect to the distributions on each of those Distribution
     Dates); or

          (d) on any Determination Date, the average of the Monthly Payment
     Rates for the three preceding Collection Periods is less than [ ] percent
     (or a lower percentage if the Rating Agency Condition has been satisfied
     with respect to that lower percentage); or

          (e) the outstanding principal amount of the Series [ ] Certificates is
     not fully repaid on the Expected Final Payment Date; or

                                       29
<PAGE>

          (f) the ratio (expressed as a percentage) of (i) the average for each
     month of the net losses on the Receivables (exclusive of the Ineligible
     Receivables) owned by the Trust (i.e., gross losses less recoveries on any
     Receivables) (including recoveries from collateral security in addition to
     recoveries from the products, recoveries from Manufacturers and insurance
     proceeds) during any three consecutive calendar months, to (ii) the average
     of the month-end aggregate balances of those Receivables (without deducting
     therefrom the Discount Portion) for such three-month period, exceeds [ ]
     percent ([ ]%) on an annualized basis; provided, that the percentage in
     this clause (f) may be changed, or any Early Amortization Event relating to
     this clause (f) may be waived, at the direction of the Seller and without
     the consent of any Series [ ] Certificateholder upon the satisfaction of
     the Rating Agency Condition; or

          (g) the sum of all Eligible Investments and amounts on deposit in the
     Excess Funding Account and any excess funding accounts for any other Series
     represents more than [ ] percent of the total assets of the Trust on each
     of six or more consecutive Determination Dates, after giving effect to all
     payments made or to be made on the Distribution Date next succeeding each
     such respective Determination Date; or

          (h) the Overconcentration Amount exceeds [ ] for a period of five
     Business Days after any Distribution Date, unless the Rating Agency
     Condition shall have been satisfied with respect to the existence of the
     Overconcentration Amount.

                                  ARTICLE VII

                               Optional Repurchase

     SECTION 7.1 Optional Repurchase. (a) On any Distribution Date occurring
after the date on which the Invested Amount is reduced to less than ten percent
(10%) of the initial principal amount of the Series [ ] Certificates on the
Closing Date or less, the Seller shall have the option, subject to the condition
set forth in paragraph (c), to purchase the entire, but not less than the
entire, Series [ ] Certificateholders' Interest, at a purchase price equal to
the Reassignment Amount for such Distribution Date.

     (b) The Seller shall give the Servicer and the Trustee at least 10 Business
Days' prior written notice of the Distribution Date on which the Seller intends
to exercise such purchase option. Not later than 12:00 noon, New York City time,
on such Distribution Date the Seller shall deposit the Reassignment Amount into
the Collection Account in immediately available funds. Such purchase option is
subject to payment in full of the Reassignment Amount and if for any reason the
Seller fails to deposit the Reassignment Amount, payments shall continue to be
made to Certificateholders as provided herein. The Reassignment Amount shall be
distributed as set forth in Section 8.1(b).

     (c) If at the time the Seller exercises its purchase option hereunder the
Seller's unsecured debt is unrated or has a rating lower than the lowest
investment grade rating of any

                                       30
<PAGE>

Rating Agency, the Seller shall deliver to the Trustee on such Distribution Date
an Opinion of Counsel (which must be an independent outside counsel) to the
effect that, in reliance on certain certificates to the effect that the Series
[ ] Certificateholders' Interest purchased by the Seller constitutes fair value
for the consideration paid therefor and as to the Seller is solvent, the
purchase of the Series [ ] Certificateholders' Interest would not be considered
a fraudulent conveyance under applicable law.

     So long as any Series [ ] Certificates are listed on the Luxembourg Stock
Exchange and the rules of such exchange so require, the Trustee shall cause
notice of any such optional repurchase under this Section to be published in an
Authorized European Newspaper at least one Business Day prior to the related
Distribution Date and shall cause notice to be given by first-class mail,
postage prepaid, mailed not less than ten Business Days prior to the applicable
repurchase date, to each Holder of Class A and Class B Certificates at the
Holder's address in the register maintained by the Trustee under the Pooling and
Servicing Agreement, and shall inform the Luxembourg Stock Exchange thereof one
Business Day prior thereto in accordance with instructions from the Servicer
(which may be standing instructions).

                                  ARTICLE VIII

                               Final Distributions

     SECTION 8.1 Sale of Certificateholders' Interest Pursuant to Section 2.3 of
the Agreement; Distributions Pursuant to Section 7.1 of this Series Supplement
or Section 2.3 or 12.2(c) of the Agreement. (a) The amount to be paid by the
Seller to the Collection Account with respect to Series [ ] in connection with a
purchase of the Certificateholders' Interest pursuant to Section 2.3 of the
Agreement shall equal the Reassignment Amount for the Distribution Date on which
such repurchase occurs.

     (b) With respect to the Reassignment Amount deposited into the Collection
Account pursuant to Section 7.1 or 8.1 of this Series Supplement or Section 2.3
of the Agreement or any Termination Proceeds deposited into the Collection
Account pursuant to Section 12.2(c) of the Agreement, the Trustee shall, not
later than 12:00 noon, New York time, on the Distribution Date on which such
amounts are deposited (or, if such date is not a Distribution Date, on the
immediately following Distribution Date) (in the priority set forth below): (i)
first, deposit an amount equal to the Invested Amount on such Distribution Date
into the Principal Funding Account, (ii) second, deposit an amount equal to the
amount distributable on such Distribution Date pursuant to Section 4.7(a)(i)
into the Interest Funding Account and (iii) third, pay the remainder of any
Termination Proceeds to the Seller; provided, however, that the sum of the
amounts allocated pursuant to clauses (i) through (iii) shall not exceed the
Reassignment Amount for Series [ ].

     (c) Notwithstanding anything to the contrary in this Series Supplement or
the Agreement, any Termination Proceeds deposited in the Principal Funding
Account and the Interest Funding Account pursuant to Section 8.1 of this Series
Supplement and all other amounts on deposit therein on the applicable
Distribution Date shall be distributed in full to the Series [ ]
Certificateholders on such date in the following order of priority:

                                       31
<PAGE>

          (i) first to Class A Certificateholders, in an amount equal to the sum
     of (x) the Class A Monthly Interest for the current Distribution Date and,
     without duplication, any unpaid Class A Monthly Interest for any previous
     Distribution Date, (y) to the extent permitted by applicable law, any Class
     A Additional Interest for the current Distribution Date and, without
     duplication, any unpaid Class A Additional Interest for any previous
     Distribution Date, and (z) the Class A Invested Amount;

          (ii) second to Class B Certificateholders, in an amount equal to the
     sum of (x) the Class B Monthly Interest for the current Distribution Date
     and, without duplication, any unpaid Class B Monthly Interest for any
     previous Distribution Date, (y) to the extent permitted by applicable law,
     any Class B Additional Interest for the current Distribution Date and,
     without duplication, any unpaid Class B Additional Interest for any
     previous Distribution Date, and (z) the Class B Invested Amount; and

          (iii) third to Class C Certificateholders, in an amount equal to the
     sum of (x) the Class C Monthly Interest for the current Distribution Date
     and, without duplication, any unpaid Class C Monthly Interest for any
     previous Distribution Date, (y) to the extent permitted by applicable law,
     any Class C Additional Interest for the current Distribution Date and,
     without duplication, any unpaid Class C Additional Interest for any
     previous Distribution Date and (z) the Class C Invested Amount.

     No Class A Carry-over Amount, Class B Carry-over Amount, Class C Carry-over
Amount, Class A Carry-over Amount Additional Interest, Class B Carry-over Amount
Additional Interest or Class C Carry-over Amount Additional Interest will be
paid as part of this distribution.

     Any remaining funds shall be paid to the Seller.

     Any distribution made pursuant to paragraph (b) above and this paragraph
(c) shall be deemed to be a final distribution pursuant to Section 12.2 of the
Agreement with respect to Series [ ].

     SECTION 8.2 Distribution of Proceeds of Sale, Disposition or Liquidation of
the Receivables Pursuant to Section 9.2 of the Agreement. (a) Not later than
12:00 noon, New York City time, on the Distribution Date following the date on
which the Insolvency Proceeds are deposited into the Collection Account pursuant
to Section 9.2(b) of the Agreement, the Trustee shall (after giving effect to
any deposits and distributions otherwise to be made on such Distribution Date)
(x) deduct an amount equal to the amount distributable on such Distribution Date
pursuant to Section 4.7(a)(ii) from the Series [ ] Allocation Percentage of the
Insolvency Proceeds and deposit such amount in the Principal Funding Account,
(y) deduct an amount equal to the amount distributable on such Distribution Date
pursuant to Section 4.7(a)(i) from the Series [ ] Allocation Percentage of the
Insolvency Proceeds, and deposit such amount in the Interest Funding Account,
and (z) allocate the remainder of the Series [ ] Allocation Percentage of the
Insolvency Proceeds to the Seller's Interest and release the same to the Seller
on such Distribution Date.

                                       32
<PAGE>

     (b) Notwithstanding anything to the contrary in this Series Supplement or
the Agreement, the entire amount deposited in the Principal Funding Account and
the Interest Funding Account pursuant to this Section and all other amounts on
deposit therein shall be distributed in full to the Series [ ]
Certificateholders in the order of priority set forth in Section 4.7 on the
Distribution Date on which funds are deposited pursuant to this Section 8.2 (or,
if not so deposited on a Distribution Date, on the immediately following
Distribution Date) and any distribution made pursuant to this Section 8.2 shall
be deemed to be a final distribution pursuant to Section 12.2 of the Agreement
with respect to Series [ ].

                                   ARTICLE IX

                            Miscellaneous Provisions

     SECTION 9.1 Securities Law Filings. The Seller shall cause the Class A and
Class B Certificates to be registered under the Securities Exchange Act of 1934,
as amended, to the extent required to do so under applicable law.

     SECTION 9.2 Ratification of Agreement. As supplemented by this Series
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Series Supplement shall be read, taken and
construed as one and the same instrument.

     SECTION 9.3 Counterparts. This Series Supplement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.

     SECTION 9.4 Governing Law. This Series Supplement shall be governed by and
construed in accordance with the laws of the State of New York without reference
to its conflict of law provisions, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.

     SECTION 9.5 Limitation of Class C Certificates. Each purchaser of a Class C
Certificate (other than the LLC) (each, the "Purchaser") hereby represents and
warrants to the Trustee and the LLC, and hereby agrees with the Trustee and the
LLC, and the Purchaser hereby acknowledges, as follows (except to the extent
that such provisions have been waived or modified by the LLC in accordance with
the Agreement or this Series Supplement):

          (1) The Class C Certificates have not been and will not be registered
     under the Securities Act or the securities laws of any jurisdiction.
     Consequently, the Class C Certificates are not transferable other than
     pursuant to an exemption from the registration requirements of the
     Securities Act and satisfaction of certain provisions of this Series
     Supplement.

          (2) The Purchaser is a "qualified institutional buyer" ("QIB") within
     the meaning of Rule 144A under the Securities Act ("Rule 144A") and is
     purchasing for its own account (and not for the account of others) or as a
     fiduciary or agent for others (which others also are QIBs and have executed
     a letter substantially in the form of Exhibit C to this Series Supplement
     and have delivered a copy of such letter to the LLC

                                       33
<PAGE>

     and the Trustee). The Purchaser is aware that it (or any account for which
     it is purchasing) may be required to bear the economic risk of an
     investment in the Class C Certificates for an indefinite period, and it (or
     such account) is able to bear such risk for an indefinite period.

          (3) No sale, pledge or other transfer of any Class C Certificate may
     be made by any Person unless (a) either (i) such sale, pledge or other
     transfer is made to the LLC, or (ii) so long as the Class C Certificates
     are eligible for resale pursuant to Rule 144A under the Securities Act,
     such sale, pledge or other transfer is made to a Person whom the transferor
     reasonably believes after due inquiry is a QIB acting for its own account
     (and not for the account of others) or as a fiduciary or agent for others
     (which others also are QIBs) to whom notice is given that the sale, pledge
     or transfer is being made in reliance on Rule 144A.

          (4) The Class C Certificates may not be acquired by or for the account
     of (i) an "employee benefit plan" (as defined in section 3(3) of the
     Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
     that is subject to the provisions of Title I of ERISA, (ii) a plan
     described in Section 4975(e)(1) of the Code or (iii) any entity whose
     underlying assets include plan assets by reason of a plan's investment in
     the entity. By accepting and holding a Class C Certificate, the holder
     thereof shall be deemed to have represented and warranted that it is not
     within any of the categories described in the preceding sentence.

          (5) The Purchaser acknowledges that it has been afforded an
     opportunity to request from the LLC, the Servicer and Deutsche Bank
     Securities Inc. (the "Initial Purchaser"), and has received and reviewed,
     all information which it has deemed necessary in connection with its
     decision to purchase the Class C Certificates. The Purchaser acknowledges
     that none of the LLC, the Servicer, the Initial Purchaser nor any of their
     respective affiliates or any Person representing any of them has made any
     representation to it with respect to any information relating to the
     offering or sale of the Class C Certificates, other than the information
     contained in the private placement memorandum for the Class C Certificates,
     a copy of which has been delivered to it.

          (6) The Purchaser understands that all information furnished to it by
     the LLC, the Servicer or the Initial Purchaser or representatives of the
     LLC, the Servicer or the Initial Purchaser in connection with its
     evaluation of an investment in the Class C Certificates was provided to it
     on a confidential basis and it agrees not to disclose such information, in
     whole or in part, to any other Person.

          (7) The Purchaser further represents and warrants to the LLC and the
     Trustee that, except to the extent permitted in paragraphs (8) and (9)
     below, the Purchaser: (i) is properly classified as a "corporation" as
     described in Section 7701(a)(3) of the Code which is created or organized
     under the laws of the United States, any State thereof or the District of
     Columbia, and will not knowingly take any action which will cause it not to
     be so classified; and (ii) is not an S corporation as described in Section
     1361 of the Code (an "S Corporation"), and will not knowingly take any
     action which will cause it to be so classified.

                                       34
<PAGE>

          (8) No Class C Certificates shall be transferred or sold to any
     grantor trust, partnership or S Corporation (each a "Pass-Through Entity")
     unless such entity represents that (i) not 25% or more (or that amount
     which the Internal Revenue Service (or any successor thereto) may
     subsequently indicate is an amount which prevents treating direct and/or
     indirect owners of a Pass-Through Entity as partners in the Trust for
     purposes of determining whether the Trust is a publicly traded partnership)
     of the value of the assets of the Pass-Through Entity is attributable to
     the Pass-Through Entity's ownership interest in certificates issued by the
     Trust other than the Class A and Class B Certificates and (ii) the
     Pass-Through Entity does not specially allocate to any of its beneficiaries
     amounts received in respect of certificates issued by the Trust other than
     Class A and Class B Certificates. Any purported transfer, assignment or
     other conveyance (including any participation) of the Class C Certificates
     in contravention of the immediately preceding sentence shall be null and
     void ab initio and the purported transferor shall continue to be treated as
     the owner of such Class C Certificates and the purported transferee shall
     not be recognized as a Class C Certificateholder by the LLC or the Trustee.

          (9) No Class C Certificates shall be transferred or sold to any
     foreign investor ("Foreign Investor") which does not make the
     representations contained in Annex 1 to the representation letter required
     to be signed by a purchaser in connection with the purchase of Class C
     Certificates. A Foreign Investor for this purpose includes any person who
     is not: (1) a citizen or resident of the United States; (2) a corporation
     or partnership or other entity treated for Federal income tax purposes as a
     corporation or a partnership created or organized in or under the laws of
     the United States, any State thereof or the District of Columbia; (3) an
     estate, the income of which is subject to United States Federal income tax,
     regardless of its source; or (4) a trust if a U.S. court is able to
     exercise primary supervision over the administration of the trust and one
     or more U.S. persons have the authority to control all substantial
     decisions of the trust. Notwithstanding the preceding sentence, to the
     extent provided in Treasury regulations, certain trusts in existence on
     August 20, 1996, and treated as United States persons under the Code and
     applicable Treasury regulations prior to that date, that elect to continue
     to be treated as United States persons under the Code or applicable
     Treasury regulations will not be Foreign Investors.

          (10) The Purchaser confirms that is has neither acquired nor will it
     sell, trade or transfer any interest in any Class C Certificate or cause an
     interest in any Class C Certificate to be marketed on or through (i) an
     "established securities market" within the meaning of Section 7704(b)(1) of
     the Code and any proposed, temporary or final treasury regulation
     thereunder, including, without limitation, an over-the-counter market or an
     interdealer quotation system that regularly disseminates firm buy or sell
     quotations or (ii) "secondary market" or "substantial equivalent thereof"
     within the meaning of Section 7704(b)(2) of the Code and any proposed,
     temporary or final treasury regulation thereunder, including a market
     wherein interests in the Class C Certificates are regularly quoted by any
     person making a market in those interests and a market wherein any person
     regularly makes available bid or offer quotes with respect to interests in
     the Class C Certificates and stands ready to effect buy or sell
     transactions at the quoted prices for itself or on behalf of others. Any
     purported transfer, assignment or other conveyance of any Class C
     Certificate in contravention of the foregoing covenant will be null and
     void

                                       35
<PAGE>

     ab initio and the purported transferor will continue to be treated as the
     holder of such Class C Certificate and the purported transferee will not be
     recognized as a Class C Certificateholder by the LLC, the Servicer or the
     Trustee.

          (11) Notwithstanding the foregoing, at no time shall the aggregate
     number of Private Holders exceed 100. Any purported transfer, assignment or
     other conveyance (including any participation) of the Class C Certificates
     in contravention of the immediately preceding sentence will be null and
     void ab initio and the purported transferor will continue to be treated as
     the holder of those Class C Certificates and the purported transferee will
     not be recognized as a Class C Certificateholder by the LLC, the Servicer
     or the Trustee. "Private Holder" means each holder of a right to receive
     interest or principal in respect of any direct or indirect interest in the
     Trust, including any financial instrument or contract the value of which is
     determined in whole or part by reference to the Trust (including the
     Trust's assets, income of the Trust or distributions made by the Trust),
     excluding any interest in the Trust represented by any series or class of
     certificates or any other interests as to which the Trustee has received an
     opinion of counsel to the effect that that series, class or other interest
     will be treated as debt or otherwise not as an equity interest in either
     the Trust or the Receivables for federal income tax purposes (unless that
     interest is convertible or exchangeable into an interest in the Trust or
     the Trust's income or that interest provides for payment of equivalent
     value). Notwithstanding the immediately preceding sentence, "Private
     Holder" will also include any other person that the LLC determines is a
     "partner" within the meaning of Section 1.7704-1(h)(1)(ii) of the U.S.
     Treasury Regulations (including by reason of Section 1.7704-1(h)(3)) or any
     successor provision of law. Any person holding more than one interest in
     the Trust, each of which separately would cause that person to be a Private
     Holder, will be treated as a single Private Holder. Each holder of an
     interest in a Private Holder which is a partnership, S corporation or a
     grantor trust under the Code will be treated as a Private Holder unless
     excepted with the consent of the LLC (which consent will be based on an
     opinion of counsel generally to the effect that the action taken pursuant
     to the consent will not cause the Trust to become a publicly traded
     partnership treated as a corporation). Notwithstanding anything to the
     contrary herein, each Class C Certificateholder, and each holder of any
     Class of any Series if with respect to such Class no opinion is delivered
     to the effect that the Certificates of such Class will be treated as debt
     for federal income tax purposes, will be considered to be a Private Holder.

          (12) The Class C Certificates will be issued in denominations of
     $1,000,000 and integral multiples of $100,000 in excess thereof. No Class C
     Certificate may be subdivided upon transfer or exchange in a manner so that
     the resulting Class C Certificate if it had been sold in the original
     offering would have had an initial offering price of less than $1,000,000
     and any purported transfer, assignment or conveyance of a Class C
     Certificate in contravention of the immediately preceding sentence will be
     void ab initio and the purported transferor will continue to be treated as
     the owner of that Class C Certificate for all purposes.

          (13) Without limiting the foregoing, no transfer, pledge, assignment
     or conveyance may be made to any one Person for Class C Certificates with a
     face amount of less than $1,000,000 and, in the case of any Person acting
     on behalf of one or more

                                       36
<PAGE>

     third parties (other than a bank (as defined in Section 3(a)(2) of the
     Securities Act) acting in its fiduciary capacity), for Class C Certificates
     with a face amount of less than that amount for each of those third
     parties. Any purported transfer, assignment or conveyance in contravention
     of the immediately preceding sentence will be void ab initio and the
     purported transferor will continue to be treated as the owner of the Class
     C Certificates for all purposes. Neither the LLC nor the Trustee will be
     obligated to register the Class C Certificates under the Securities Act,
     qualify the Class C Certificates under the securities laws of any state or
     provide registration rights to any purchaser or holder thereof.

          (14) No transfer, assignment or conveyance of a Class C Certificate
     will be effective unless the LLC and the Trustee shall have received a
     letter, substantially in the form of Exhibit C to this Series Supplement,
     from the transferee, assignee or recipient of the conveyance.

          (15) The Class C Certificates will bear legends substantially to the
     effect of the matters contemplated by paragraphs (1) through (14) above,
     unless the LLC determines otherwise in accordance with applicable law.

          (16) If the Purchaser of the Class C Certificate is a Foreign
     Investor, the representations and warranties contained in Annex 1 to the
     form of letter in Exhibit C to this Series Supplement required to be signed
     by Foreign Investors purchasing Class C Certificates are incorporated by
     reference.

     SECTION 9.6 The Trustee; Paying Agent; Transfer Agent and Registrar. (a)
The Trustee shall not be responsible in any manner whatsoever for or in respect
of the validity or sufficiency of this Series Supplement, for or in respect of
the calculation or verification of any of the amounts, allocation or
distributions set forth in Article IV and Article VIII or for or in respect of
the recitals contained herein, all of which recitals are made solely by the
Seller; provided, however, that this sentence shall not limit the obligations of
the Trustee contemplated by Section 4.2(b) of this Series Supplement.

     (b) For so long as any Series [ ] Certificates are listed on the Luxembourg
Stock Exchange, an additional Paying Agent and an additional Transfer Agent and
Registrar for the Series [ ] Certificates shall be maintained in Luxembourg. The
Trustee is hereby directed to appoint Kredietbank S.A. Luxembourgeoise in
Luxembourg as an additional Paying Agent and as additional Transfer Agent and
Registrar for the Series [ ] Certificates and to enter into a listing agency
agreement with Kredietbank S.A. Luxembourgeoise which is not inconsistent with
the terms of this Series Supplement and which is mutually satisfactory to the
Servicer, the Trustee and the Listing Agent; provided, that unless Kredietbank
S.A. Luxembourgeoise shall be rated "P-1" by Moody's and "A-1" by S&P, it may
not hold funds pursuant to this Series Supplement overnight.

     If the Listing Agent resigns or is removed and a successor is appointed,
notice of said appointment shall be given by publication in an Authorized
European Newspaper.

                                       37
<PAGE>

     SECTION 9.7 Instructions in Writing. All instructions given by the Servicer
to the Trustee pursuant to this Series Supplement shall be in writing, and may
be included in a Distribution Date Statement.

     SECTION 9.8 Initial Funding of Reserve Fund. On the Closing Date the Seller
shall cause to be deposited with the Trustee, and the Trustee shall deposit in
the Reserve Fund, available funds in an amount equal to [ ] percent of the
aggregate initial principal balance of the Series [ ] Certificates.

     SECTION 9.9 Severability; Certificate Rate Limitation. (a) If any one or
more of the covenants, agreements, provisions or terms of this Series Supplement
or any Series [ ] Certificate shall for any reason whatsoever be held invalid,
then such covenants, agreements, provisions or terms shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this Series
Supplement and shall in no way affect the validity or enforceability of the
other provisions of this Series Supplement or of such Series [ ] Certificate.

     (b) Notwithstanding anything in this Series Supplement, the Agreement, or
any Series [ ] Certificate to the contrary, if at any time any Certificate Rate,
together with all fees, charges and other amounts which are treated as interest
on any Series [ ] Certificate under applicable law (collectively the "Charges"),
shall exceed the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by the Series [ ]
Certificateholders in accordance with the terms of this Series Supplement, the
Agreement or any Series [ ] Certificate, then such Certificate Rate, together
with all Charges payable in respect of the Series [ ] Certificate, shall be
limited to the Maximum Rate and, to the extent lawful, such Certificate Rate and
Charges that would have been payable in respect of the Series [ ] Certificates,
but were not payable as a result of the operation of this Section, shall be
cumulated and the Certificate Rate and Charges payable to the Series [ ]
Certificateholders in respect of other periods shall be increased (but not above
the Maximum Rate therefor) until such cumulated amount shall have been received
by the Series [ ] Certificateholders.

     SECTION 9.10 Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.

     SECTION 9.11 Certain Matters Relating to Luxembourg Stock Exchange Listing.
(a) For as long as any Series [ ] Certificates are listed on the Luxembourg
Stock Exchange, on each Date the Trustee shall notify the Listing Agent and the
Luxembourg Stock Exchange of the outstanding principal balance of each Class of
such Series [ ] Certificates after giving effect to distributions of principal,
if any, thereon on each Distribution Date (as soon as possible after the
determination of such principal balances but not later than the Distribution
Date on which a payment of principal is made) in accordance with instructions
from the Servicer (which may be standing instructions).

     (b) Promptly upon receipt of notice of any qualification, reduction or
withdrawal of the rating assigned to any Class of Certificates listed on the
Luxembourg Stock Exchange, the Trustee shall notify the Listing Agent and the
Luxembourg Stock Exchange thereof in accordance with instructions from the
Servicer (which may be standing instructions).

                                       38
<PAGE>

     (c) Prior to listing on the Luxembourg Stock Exchange, a legal notice
("Notice Legale") relating to the issuance of the Certificates, together with
certain documents relating to the Seller and the Trust, shall be deposited by
the Trustee (at the written direction of the Seller or the Servicer) with the
Chief Registrar of the District of Luxembourg ("Greffier en Chef du Tribunal
d'Arrondissement de et a Luxembourg"), where copies thereof may be obtained,
free of charge, upon request.

     (d) For so long as the Class A or Class B Certificates are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require, the
Servicer and the Trustee shall cause the following documents to be available
without charge for inspection (and copies of the documents listed in (1), (2) ,
(4) and (5) to be provided without charge) during regular business hours at the
office of the Listing Agent in the City of Luxembourg:

          (1) an executed copy of the Agreement;

          (2) an executed copy of this Series Supplement;

          (3) an executed copy of the agreement between the Trustee and the
     Listing Agent;

          (4) a copy of the prospectus supplement relating to the public
     offering of the Class A and the Class B Certificates and the accompanying
     prospectus; and

          (5) copies of each monthly statement prepared by the Servicer for each
     Distribution Date.

     (e) The parties hereto shall cooperate in good faith to take all actions
and execute all documents which are necessary and appropriate to cause the Class
A Certificates and the Class B Certificates to be listed on the Luxembourg Stock
Exchange and to maintain such listing.

                              [SIGNATURES FOLLOW]

                                       39
<PAGE>

     IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have caused
this Series Supplement to be duly executed as of the day and year first above
written.

                                            CDF FINANCING, L.L.C.,
                                            as Seller

                                            By: ________________________________

                                            GE COMMERCIAL DISTRIBUTION FINANCE
                                            CORPORATION,
                                            as Servicer

                                            By: ________________________________

                                      S-1

<PAGE>

                                            [ ],
                                            as Trustee

                                            By: ________________________________
                                                Name:
                                                Title:

                                      S-2
<PAGE>

                                                                       EXHIBIT A

                          FORM OF CLASS [ ] CERTIFICATE

REGISTERED                     Initial
                               Principal Balance:(1)
                               $_____________________

Certificate No. R-             CUSIP NO.

[Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]

[FOR CLASS B CERTIFICATES, INSERT:

THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF (I) AN "EMPLOYEE
BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA")), THAT IS SUBJECT TO THE PROVISIONS
OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(e)(1) OF THE CODE OR
(III) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A
PLAN'S INVESTMENT IN THE ENTITY. BY ACCEPTING AND HOLDING THIS CERTIFICATE, THE
HOLDER THEREOF SHALL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT
WITHIN ANY OF THE CATEGORIES DESCRIBED IN THE PRECEDING SENTENCE.

[FOR CLASS C CERTIFICATES INSERT:

THE PURCHASER OF THIS CERTIFICATE (THE "PURCHASER") HEREBY REPRESENTS AND
WARRANTS TO THE TRUSTEE AND DEUTSCHE FRLP, AND HEREBY AGREES WITH THE TRUSTEE
AND DEUTSCHE FRLP, AND THE PURCHASER HEREBY ACKNOWLEDGES, AS FOLLOWS:

          (1) THE CLASS C CERTIFICATES HAVE NOT BEEN AND WILL NOT BE REGISTERED
     UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY JURISDICTION.
     CONSEQUENTLY, THE CLASS C CERTIFICATES ARE NOT TRANSFERABLE OTHER THAN
     PURSUANT TO AN EXEMPTION FROM

_____________________

(1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.

<PAGE>

     THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SATISFACTION OF
     CERTAIN PROVISIONS OF THE SERIES SUPPLEMENT.

          (2) THE PURCHASER IS A "QUALIFIED INSTITUTIONAL BUYER" ("QIB") WITHIN
     THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") AND IS
     PURCHASING FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A
     FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE QIBS AND HAVE EXECUTED
     A LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT C TO THE SERIES SUPPLEMENT
     AND HAVE DELIVERED A COPY OF SUCH LETTER TO THE LLC AND THE TRUSTEE). THE
     PURCHASER IS AWARE THAT IT (OR ANY ACCOUNT FOR WHICH IT IS PURCHASING) MAY
     BE REQUIRED TO BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE CLASS C
     CERTIFICATES FOR AN INDEFINITE PERIOD, AND IT (OR SUCH ACCOUNT) IS ABLE TO
     BEAR SUCH RISK FOR AN INDEFINITE PERIOD.

          (3) NO SALE, PLEDGE OR OTHER TRANSFER OF ANY CLASS C CERTIFICATE MAY
     BE MADE BY ANY PERSON UNLESS (A) EITHER (I) SUCH SALE, PLEDGE OR OTHER
     TRANSFER IS MADE TO THE LLC, OR (II) SO LONG AS THE CLASS C CERTIFICATES
     ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT,
     SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO A PERSON WHOM THE TRANSFEROR
     REASONABLY BELIEVES AFTER DUE INQUIRY IS A QIB ACTING FOR ITS OWN ACCOUNT
     (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS
     (WHICH OTHERS ALSO ARE QIBS) TO WHOM NOTICE IS GIVEN THAT THE SALE, PLEDGE
     OR TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A.

          (4) THE CLASS C CERTIFICATES MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT
     OF (I) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE
     EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")),
     THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (II) A PLAN
     DESCRIBED IN SECTION 4975(e)(1) OF THE CODE OR (III) ANY ENTITY WHOSE
     UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN
     THE ENTITY. BY ACCEPTING AND HOLDING A CLASS C CERTIFICATE, THE HOLDER
     THEREOF SHALL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT
     WITHIN ANY OF THE CATEGORIES DESCRIBED IN THE PRECEDING SENTENCE.

          (5) THE PURCHASER ACKNOWLEDGES THAT IT HAS BEEN AFFORDED AN
     OPPORTUNITY TO REQUEST FROM THE LLC, THE SERVICER AND [                  ]
     (THE "INITIAL PURCHASER"), AND HAS RECEIVED AND REVIEWED, ALL INFORMATION
     WHICH IT HAS DEEMED NECESSARY IN CONNECTION WITH ITS DECISION TO PURCHASE
     THE CLASS C CERTIFICATES. THE PURCHASER ACKNOWLEDGES THAT NONE OF THE LLC,
     THE SERVICER, THE INITIAL PURCHASER NOR ANY OF THEIR

                                       2
<PAGE>

     RESPECTIVE AFFILIATES OR ANY PERSON REPRESENTING ANY OF THEM HAS MADE ANY
     REPRESENTATION TO IT WITH RESPECT TO ANY INFORMATION RELATING TO THE
     OFFERING OR SALE OF THE CLASS C CERTIFICATES, OTHER THAN THE INFORMATION
     CONTAINED IN THE PRIVATE PLACEMENT MEMORANDUM FOR THE CLASS C CERTIFICATES,
     A COPY OF WHICH HAS BEEN DELIVERED TO IT.

          (6) THE PURCHASER UNDERSTANDS THAT ALL INFORMATION FURNISHED TO IT BY
     THE LLC, THE SERVICER OR THE INITIAL PURCHASER OR REPRESENTATIVES OF
     DEUTSCHE FRLP, THE SERVICER OR THE INITIAL PURCHASER IN CONNECTION WITH ITS
     EVALUATION OF AN INVESTMENT IN THE CLASS C CERTIFICATES WAS PROVIDED TO IT
     ON A CONFIDENTIAL BASIS AND IT AGREES NOT TO DISCLOSE SUCH INFORMATION, IN
     WHOLE OR IN PART, TO ANY OTHER PERSON.

          (7) THE PURCHASER FURTHER REPRESENTS AND WARRANTS TO DEUTSCHE FRLP AND
     THE TRUSTEE THAT, EXCEPT TO THE EXTENT PERMITTED IN PARAGRAPHS (8) AND (9)
     BELOW, THE PURCHASER: (I) IS PROPERLY CLASSIFIED AS A "CORPORATION" AS
     DESCRIBED IN SECTION 7701(a)(3) OF THE CODE WHICH IS CREATED OR ORGANIZED
     UNDER THE LAWS OF THE UNITED STATES, ANY STATE THEREOF OR THE DISTRICT OF
     COLUMBIA, AND WILL NOT KNOWINGLY TAKE ANY ACTION WHICH WILL CAUSE IT NOT TO
     BE SO CLASSIFIED; AND (II) IS NOT AN S CORPORATION AS DESCRIBED IN SECTION
     1361 OF THE CODE, AND WILL NOT KNOWINGLY TAKE ANY ACTION WHICH WILL CAUSE
     IT TO BE SO CLASSIFIED.

          (8) NO CLASS C CERTIFICATES SHALL BE TRANSFERRED OR SOLD TO ANY
     GRANTOR TRUST, PARTNERSHIP OR S CORPORATION (EACH A "PASS-THROUGH ENTITY")
     UNLESS SUCH ENTITY REPRESENTS THAT (I) NOT 25% OR MORE (OR THAT AMOUNT
     WHICH THE INTERNAL REVENUE SERVICE (OR ANY SUCCESSOR THERETO) MAY
     SUBSEQUENTLY INDICATE IS AN AMOUNT WHICH PREVENTS TREATING DIRECT AND/OR
     INDIRECT OWNERS OF A PASS-THROUGH ENTITY AS PARTNERS IN THE TRUST FOR
     PURPOSES OF DETERMINING WHETHER THE TRUST IS A PUBLICLY TRADED PARTNERSHIP)
     OF THE VALUE OF THE ASSETS OF THE PASS-THROUGH ENTITY IS ATTRIBUTABLE TO
     THE PASS-THROUGH ENTITY'S OWNERSHIP INTEREST IN CERTIFICATES ISSUED BY THE
     TRUST OTHER THAN THE CLASS A AND CLASS B CERTIFICATES AND (II) THE
     PASS-THROUGH ENTITY DOES NOT SPECIALLY ALLOCATE TO ANY OF ITS BENEFICIARIES
     AMOUNTS RECEIVED IN RESPECT OF CERTIFICATES ISSUED BY THE TRUST OTHER THAN
     CLASS A AND CLASS B CERTIFICATES. ANY PURPORTED TRANSFER, ASSIGNMENT OR
     OTHER CONVEYANCE (INCLUDING ANY PARTICIPATION) OF THE CLASS C CERTIFICATES
     IN CONTRAVENTION OF THE IMMEDIATELY PRECEDING SENTENCE SHALL BE NULL AND
     VOID AB INITIO AND THE PURPORTED TRANSFEROR SHALL CONTINUE TO BE TREATED AS
     THE OWNER OF SUCH CLASS C CERTIFICATES AND THE

                                       3
<PAGE>

     PURPORTED TRANSFEREE SHALL NOT BE RECOGNIZED AS A CLASS C CERTIFICATEHOLDER
     BY THE LLC OR THE TRUSTEE.

          (9) NO CLASS C CERTIFICATES SHALL BE TRANSFERRED OR SOLD TO ANY
     FOREIGN INVESTOR ("FOREIGN INVESTOR") WHICH DOES NOT MAKE THE
     REPRESENTATIONS CONTAINED IN ANNEX 1 TO THE REPRESENTATION LETTER REQUIRED
     TO BE SIGNED BY A PURCHASER IN CONNECTION WITH THE PURCHASE OF CLASS C
     CERTIFICATES. A FOREIGN INVESTOR FOR THIS PURPOSE INCLUDES ANY PERSON WHO
     IS NOT: (1) A CITIZEN OR RESIDENT OF THE UNITED STATES; (2) A CORPORATION
     OR PARTNERSHIP OR OTHER ENTITY TREATED FOR FEDERAL INCOME TAX PURPOSES AS A
     CORPORATION OR A PARTNERSHIP CREATED OR ORGANIZED IN OR UNDER THE LAWS OF
     THE UNITED STATES, ANY STATE THEREOF OR THE DISTRICT OF COLUMBIA; (3) AN
     ESTATE, THE INCOME OF WHICH IS SUBJECT TO UNITED STATES FEDERAL INCOME TAX,
     REGARDLESS OF ITS SOURCE; OR (4) A TRUST IF A U.S. COURT IS ABLE TO
     EXERCISE PRIMARY SUPERVISION OVER THE ADMINISTRATION OF THE TRUST AND ONE
     OR MORE U.S. PERSONS HAVE THE AUTHORITY TO CONTROL ALL SUBSTANTIAL
     DECISIONS OF THE TRUST. NOTWITHSTANDING THE PRECEDING SENTENCE, TO THE
     EXTENT PROVIDED IN TREASURY REGULATIONS, CERTAIN TRUSTS IN EXISTENCE ON
     AUGUST 20, 1996, AND TREATED AS UNITED STATES PERSONS UNDER THE CODE AND
     APPLICABLE TREASURY REGULATIONS PRIOR TO THAT DATE, THAT ELECT TO CONTINUE
     TO BE TREATED AS UNITED STATES PERSONS UNDER THE CODE OR APPLICABLE
     TREASURY REGULATIONS WILL NOT BE FOREIGN INVESTORS.

          (10) THE PURCHASER CONFIRMS THAT IS HAS NEITHER ACQUIRED NOR WILL IT
     SELL, TRADE OR TRANSFER ANY INTEREST IN ANY CLASS C CERTIFICATE OR CAUSE AN
     INTEREST IN ANY CLASS C CERTIFICATE TO BE MARKETED ON OR THROUGH (I) AN
     "ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7704(b)(1) OF
     THE CODE AND ANY PROPOSED, TEMPORARY OR FINAL TREASURY REGULATION
     THEREUNDER, INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER MARKET OR AN
     INTERDEALER QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR SELL
     QUOTATIONS OR (II) "SECONDARY MARKET" OR "SUBSTANTIAL EQUIVALENT THEREOF"
     WITHIN THE MEANING OF SECTION 7704(b)(2) OF THE CODE AND ANY PROPOSED,
     TEMPORARY OR FINAL TREASURY REGULATION THEREUNDER, INCLUDING A MARKET
     WHEREIN INTERESTS IN THE CLASS C CERTIFICATES ARE REGULARLY QUOTED BY ANY
     PERSON MAKING A MARKET IN THOSE INTERESTS AND A MARKET WHEREIN ANY PERSON
     REGULARLY MAKES AVAILABLE BID OR OFFER QUOTES WITH RESPECT TO INTERESTS IN
     THE CLASS C CERTIFICATES AND STANDS READY TO EFFECT BUY OR SELL
     TRANSACTIONS AT THE QUOTED PRICES FOR ITSELF OR ON BEHALF OF OTHERS. ANY
     PURPORTED TRANSFER, ASSIGNMENT OR OTHER CONVEYANCE OF ANY CLASS C
     CERTIFICATE IN CONTRAVENTION

                                       4
<PAGE>

     OF THE FOREGOING COVENANT WILL BE NULL AND VOID AB INITIO AND THE PURPORTED
     TRANSFEROR WILL CONTINUE TO BE TREATED AS THE HOLDER OF SUCH CLASS C
     CERTIFICATE AND THE PURPORTED TRANSFEREE WILL NOT BE RECOGNIZED AS A
     CLASS C CERTIFICATEHOLDER BY THE LLC, THE SERVICER OR THE TRUSTEE.

          (11) NOTWITHSTANDING THE FOREGOING, AT NO TIME SHALL THE AGGREGATE
     NUMBER OF PRIVATE HOLDERS EXCEED 100. ANY PURPORTED TRANSFER, ASSIGNMENT OR
     OTHER CONVEYANCE (INCLUDING ANY PARTICIPATION) OF THE CLASS C CERTIFICATES
     IN CONTRAVENTION OF THE IMMEDIATELY PRECEDING SENTENCE WILL BE NULL AND
     VOID AB INITIO AND THE PURPORTED TRANSFEROR WILL CONTINUE TO BE TREATED AS
     THE HOLDER OF THOSE CLASS C CERTIFICATES AND THE PURPORTED TRANSFEREE WILL
     NOT BE RECOGNIZED AS A CLASS C CERTIFICATEHOLDER BY DEUTSCHE FRLP, THE
     SERVICER OR THE TRUSTEE. "PRIVATE HOLDER" MEANS EACH HOLDER OF A RIGHT TO
     RECEIVE INTEREST OR PRINCIPAL IN RESPECT OF ANY DIRECT OR INDIRECT INTEREST
     IN THE TRUST, INCLUDING ANY FINANCIAL INSTRUMENT OR CONTRACT THE VALUE OF
     WHICH IS DETERMINED IN WHOLE OR PART BY REFERENCE TO THE TRUST (INCLUDING
     THE TRUST'S ASSETS, INCOME OF THE TRUST OR DISTRIBUTIONS MADE BY THE
     TRUST), EXCLUDING ANY INTEREST IN THE TRUST REPRESENTED BY ANY SERIES OR
     CLASS OF CERTIFICATES OR ANY OTHER INTERESTS AS TO WHICH THE TRUSTEE HAS
     RECEIVED AN OPINION OF COUNSEL TO THE EFFECT THAT THAT SERIES, CLASS OR
     OTHER INTEREST WILL BE TREATED AS DEBT OR OTHERWISE NOT AS AN EQUITY
     INTEREST IN EITHER THE TRUST OR THE RECEIVABLES FOR FEDERAL INCOME TAX
     PURPOSES (UNLESS THAT INTEREST IS CONVERTIBLE OR EXCHANGEABLE INTO AN
     INTEREST IN THE TRUST OR THE TRUST'S INCOME OR THAT INTEREST PROVIDES FOR
     PAYMENT OF EQUIVALENT VALUE). NOTWITHSTANDING THE IMMEDIATELY PRECEDING
     SENTENCE, "PRIVATE HOLDER" WILL ALSO INCLUDE ANY OTHER PERSON THAT THE LLC
     DETERMINES IS A "PARTNER" WITHIN THE MEANING OF SECTION 1.7704-1(h)(1)(ii)
     OF THE U.S. TREASURY REGULATIONS (INCLUDING BY REASON OF SECTION
     1.7704-1(h)(3)) OR ANY SUCCESSOR PROVISION OF LAW. ANY PERSON HOLDING MORE
     THAN ONE INTEREST IN THE TRUST, EACH OF WHICH SEPARATELY WOULD CAUSE THAT
     PERSON TO BE A PRIVATE HOLDER, WILL BE TREATED AS A SINGLE PRIVATE HOLDER.
     EACH HOLDER OF AN INTEREST IN A PRIVATE HOLDER WHICH IS A PARTNERSHIP, S
     CORPORATION OR A GRANTOR TRUST UNDER THE CODE WILL BE TREATED AS A PRIVATE
     HOLDER UNLESS EXCEPTED WITH THE CONSENT OF DEUTSCHE FRLP (WHICH CONSENT
     WILL BE BASED ON AN OPINION OF COUNSEL GENERALLY TO THE EFFECT THAT THE
     ACTION TAKEN PURSUANT TO THE CONSENT WILL NOT CAUSE THE TRUST TO BECOME A
     PUBLICLY TRADED PARTNERSHIP TREATED AS A CORPORATION). NOTWITHSTANDING
     ANYTHING TO THE CONTRARY HEREIN, EACH CLASS C CERTIFICATEHOLDER, AND EACH
     HOLDER OF ANY

                                       5
<PAGE>

     CLASS OF ANY SERIES IF WITH RESPECT TO SUCH CLASS NO OPINION IS DELIVERED
     TO THE EFFECT THAT THE CERTIFICATES OF SUCH CLASS WILL BE TREATED AS DEBT
     FOR FEDERAL INCOME TAX PURPOSES, WILL BE CONSIDERED TO BE A PRIVATE HOLDER.

          (12) THE CLASS C CERTIFICATES WILL BE ISSUED IN DENOMINATIONS OF
     $1,000,000 AND INTEGRAL MULTIPLES OF $100,000 IN EXCESS THEREOF. NO CLASS C
     CERTIFICATE MAY BE SUBDIVIDED UPON TRANSFER OR EXCHANGE IN A MANNER SO THAT
     THE RESULTING CLASS C CERTIFICATE IF IT HAD BEEN SOLD IN THE ORIGINAL
     OFFERING WOULD HAVE HAD AN INITIAL OFFERING PRICE OF LESS THAN $1,000,000
     AND ANY PURPORTED TRANSFER, ASSIGNMENT OR CONVEYANCE OF A CLASS C
     CERTIFICATE IN CONTRAVENTION OF THE IMMEDIATELY PRECEDING SENTENCE WILL BE
     VOID AB INITIO AND THE PURPORTED TRANSFEROR WILL CONTINUE TO BE TREATED AS
     THE OWNER OF THAT CLASS C CERTIFICATE FOR ALL PURPOSES.

          (13) WITHOUT LIMITING THE FOREGOING, NO TRANSFER, PLEDGE, ASSIGNMENT
     OR CONVEYANCE MAY BE MADE TO ANY ONE PERSON FOR CLASS C CERTIFICATES WITH A
     FACE AMOUNT OF LESS THAN $1,000,000 AND, IN THE CASE OF ANY PERSON ACTING
     ON BEHALF OF ONE OR MORE THIRD PARTIES (OTHER THAN A BANK (AS DEFINED IN
     SECTION 3(a)(2) OF THE SECURITIES ACT) ACTING IN ITS FIDUCIARY CAPACITY),
     FOR CLASS C CERTIFICATES WITH A FACE AMOUNT OF LESS THAN THAT AMOUNT FOR
     EACH OF THOSE THIRD PARTIES. ANY PURPORTED TRANSFER, ASSIGNMENT OR
     CONVEYANCE IN CONTRAVENTION OF THE IMMEDIATELY PRECEDING SENTENCE WILL BE
     VOID AB INITIO AND THE PURPORTED TRANSFEROR WILL CONTINUE TO BE TREATED AS
     THE OWNER OF THE CLASS C CERTIFICATES FOR ALL PURPOSES. NEITHER DEUTSCHE
     FRLP NOR THE TRUSTEE WILL BE OBLIGATED TO REGISTER THE CLASS C CERTIFICATES
     UNDER THE SECURITIES ACT, QUALIFY THE CLASS C CERTIFICATES UNDER THE
     SECURITIES LAWS OF ANY STATE OR PROVIDE REGISTRATION RIGHTS TO ANY
     PURCHASER OR HOLDER THEREOF.

          (14) NO TRANSFER, ASSIGNMENT OR CONVEYANCE OF A CLASS C CERTIFICATE
     WILL BE EFFECTIVE UNLESS DEUTSCHE FRLP AND THE TRUSTEE SHALL HAVE RECEIVED
     A LETTER, SUBSTANTIALLY IN THE FORM OF EXHIBIT C TO THE SERIES SUPPLEMENT,
     FROM THE TRANSFEREE, ASSIGNEE OR RECIPIENT OF THE CONVEYANCE.

          (15) IF THE PURCHASER OF THE CLASS C CERTIFICATE IS A FOREIGN
     INVESTOR, THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ANNEX 1 TO THE
     FORM OF LETTER IN EXHIBIT C TO THE SERIES SUPPLEMENT REQUIRED TO BE SIGNED
     BY FOREIGN INVESTORS PURCHASING CLASS C CERTIFICATES ARE INCORPORATED BY
     REFERENCE.]

                                       6
<PAGE>

              $___________ FLOATING RATE ASSET BACKED CERTIFICATES,

                              SERIES [ ], CLASS [ ]

              evidencing a fractional undivided interest in certain
                                  assets of the

             DISTRIBUTION FINANCIAL SERVICES FLOORPLAN MASTER TRUST.

     This certificate ("Certificate") does not represent any interest in, or
obligation of, CDF Financing, L.L.C. ("the LLC" or the "Seller"), GE Commercial
Distribution Finance Corporation ("CDF"), General Electric Capital Corporation
or any affiliate thereof.

     This certifies that [ ] (the "Class [ ] Certificateholder"), is the
registered owner of a fractional undivided interest in assets of the
Distribution Financial Services Floorplan Master Trust (the "Trust") created
pursuant to an Amended and Restated Pooling and Servicing Agreement, dated as of
April 1, 2000 (as amended, the "P&S"), as supplemented by the Series [ ]
Supplement dated as of [ ], 2002 (the "Series [ ] Supplement" or the "Series
Supplement"), among the LLC, as Seller, CDF, as Servicer, and [ ], as trustee
(the "Trustee"). The P&S and the Series [ ] Supplement are collectively referred
to herein as the "Pooling and Servicing Agreement."

     Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose.

     THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

     This Certificate is issued under and is subject to the terms, provisions
and conditions of the Pooling and Servicing Agreement to which, as amended and
supplemented from time to time, the Certificateholder by virtue of the
acceptance hereof assents and is bound. Although a summary of certain provisions
of the Pooling and Servicing Agreement is set forth herein, this Certificate
does not purport to summarize the Pooling and Servicing Agreement and reference
is made to the Pooling and Servicing Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. In the event of
any conflict or inconsistency between this Certificate and the Pooling and
Servicing Agreement, the Pooling and Servicing Agreement shall control in all
respects. To the extent not defined herein, the capitalized terms used herein
have the meanings ascribed to them in the Pooling and Servicing Agreement.

     The Seller has entered into the Pooling and Servicing Agreement and the
Series [ ] Certificates have been (or shall be) issued with the intention that
the Series [ ] Certificates shall qualify as indebtedness of the LLC secured by
the Receivables for Federal income taxes, state and local income, single
business and franchise taxes (imposed on or measured by income) and

                                       7
<PAGE>

any other taxes imposed on or measured by income. The Seller, each Beneficiary
and each Certificateholder and Certificate Owner, by the acceptance of its
Certificate or Book-Entry Certificate, as applicable, agrees to treat such
Series [ ] Certificate as indebtedness of the Seller secured by the Receivables
for Federal income taxes, state and local income, single business and franchise
taxes (imposed on or measured by income) and any other taxes imposed on or
measured by income.

     [FOR CLASS B AND CLASS C CERTIFICATES, INSERT: THIS CERTIFICATE IS
SUBORDINATE TO THE CLASS A [AND CLASS B] CERTIFICATES IN ACCORDANCE WITH THE
SERIES SUPPLEMENT].

                                       8
<PAGE>

     IN WITNESS WHEREOF, the Seller has caused this Certificate to be duly
executed.

                                            CDF FINANCING, L.L.C.

                                            By: ________________________________
                                                Name:
                                                Title:

Dated:

                                      S-1
<PAGE>

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Certificates referred to in the within-mentioned Pooling and
Servicing Agreement.

                                            [ ],
                                            as Trustee

                                            By: ________________________________
                                                     Authorized Officer
Dated:

                                      S-2

<PAGE>

                                   ASSIGNMENT

Social Security or other identifying number of assignee

------------------------------

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto

------------------------------
(name and address of assignee)

the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints _________________________, attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.

Dated: ___________________                              _______________________*
                                                          Signature Guaranteed:

-----------------------
(*) NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the within Certificate in every particular,
without alteration, enlargement or any change whatsoever.

<PAGE>

                                                                       EXHIBIT B

                           DISTRIBUTION DATE STATEMENT

         (a) The aggregate amount of Collections, the aggregate amount of
Non-Principal Collections and the aggregate amount of Principal Collections
processed during the immediately preceding Collection Period, and the Pool
Balance as of the end of such Collection Period;

         (b) The Floating Allocation Percentage, the Principal Allocation
Percentage and the Series [ ] Allocation Percentage relating to such Collection
Period;

         (c) The total amount, if any, distributed on the Series [ ]
Certificates;

         (d) The amount of such distribution allocable to principal on the Class
A Certificates, the Class B Certificates and the Class C Certificates;

         (e) The amount of such distribution allocable to interest on the Class
A Certificates, the Class B Certificates and the Class C Certificates;

         (f) The Investor Default Amount for the applicable Distribution Date;

         (g) The Deficiency Amount, if any, for the preceding Collection Period;

         (h) The amount of the Class A, Class B and Class C Investor Charge-Offs
and the amounts of reimbursements thereof for the preceding Collection Period;

         (i) The amount of the Monthly Servicing Fee for the preceding
Collection Period;

         (j) The Class A Invested Amount, the Class B Invested Amount, the Class
C Invested Amount, the Excess Funding Account balance and the outstanding
principal balance of the Class A, Class B and Class C Certificates for such
Distribution Date (after giving effect to all distributions which shall occur on
such Distribution Date);

         (k) The Controlled Deposit Amount, if any;

         (l) The Class A Pool Factor, Class B Pool Factor and Class C Pool
Factor;

         (m) LIBOR and the applicable Net Receivables Rate for the next Interest
Period;

         (n) The Reserve Fund balance with respect to the current Determination
Date;

         (o) The Principal Funding Account balance, the Interest Funding Account
balance, he Yield Supplement Account balance and the Collection Account balance
with respect to the current Distribution Date;

         (p) The Servicer Advance, if any, for the current Distribution Date and
reimbursement of any Servicer Advance;

<PAGE>

         (q) Any elective or "deemed" waiver of the Monthly Servicing Fee for
the current Distribution Date;

         (r) If a Dealer Overconcentration exists, (i) the Unconcentrated Pool
Balance, (ii) the aggregate amount of such Dealer Overconcentration, (iii) the
applicable Unconcentrated Percentage and Overconcentrated Percentage, and (iv)
the portion of Collections, Miscellaneous Payments and the Defaulted Amount
allocated to the Dealer Overconcentration Series and other Series;

         (s) the Class A Monthly Interest;

         (t) the Class B Monthly Interest;

         (u) the Class C Monthly Interest;

         (v) the Class A Additional Interest;

         (w) the Class B Additional Interest;

         (x) the Class C Additional Interest;

         (y) the Certificateholders' Monthly Servicing Fee;

         (z) the Reserve Fund Deposit Amount;

         (aa) the Investor Default Amount;

         (bb) the Class A Carry-over Amount;

         (cc) the Class B Carry-over Amount;

         (dd) the Class C Carry-over Amount;

         (ee) the Yield Supplement Account Deposit Amount;

         (ff) the amount calculated pursuant to Section 4.6(b);

         (gg) the amount calculated pursuant to Section 4.7(a)(i);

         (hh) the amount calculated pursuant to Section 4.8;

         (ii) the amount calculated pursuant to Section 4.10; and

         (jj) Miscellaneous Payments, including Adjustment Payments, Transfer
Deposit Amounts and Unallocated Principal Collections.

<PAGE>

                                                                       EXHIBIT C

                          FORM OF REPRESENTATION LETTER

                                     [Date]

[ ], as Trustee

CDF Financing, L.L.C.
655 Maryville Centre Drive
St. Louis, MO 63141

Re:      Distribution Financial Services Floorplan Master Trust, Series [  ],
         Class C Certificates

Ladies and Gentlemen:

         This letter is being delivered by the undersigned (the "Purchaser")
pursuant to Section 9.5 of the Series [ ] Supplement dated as of [ ] (as
amended, amended and restated or otherwise modified from time to time, the
"Supplement") among CDF Financing, L.L.C., as Seller ("the LLC"), GE Commercial
Distribution Finance Corporation, as Servicer, and [ ], as Trustee, in
connection with the Purchaser's acquisition of a Class C Certificate.
Capitalized terms defined in (or by reference in) the Supplement and used herein
without definition shall have the meanings defined in (or by reference in) the
Supplement. The Purchaser hereby represents and warrants to the Trustee and the
LLC, and hereby agrees with the Trustee and the LLC, and the Purchaser hereby
acknowledges, as follows:

              (1) The Class C Certificates have not been and will not be
         registered under the Securities Act or the securities laws of any
         jurisdiction. Consequently, the Class C Certificates are not
         transferable other than pursuant to an exemption from the registration
         requirements of the Securities Act and satisfaction of certain
         provisions of the Supplement.

              (2) The Purchaser is a "qualified institutional buyer" ("QIB")
         within the meaning of Rule 144A under the Securities Act ("Rule 144A")
         and is purchasing for its own account (and not for the account of
         others) or as a fiduciary or agent for others (which others also are
         QIBs and have executed a letter substantially in the form of this
         letter and have delivered a copy of such letter to the LLC and the
         Trustee). The Purchaser is aware that it (or any account for which it
         is purchasing) may be required to bear the economic risk of an
         investment in the Class C Certificates for an indefinite period, and it
         (or such account) is able to bear such risk for an indefinite period.

              (3) No sale, pledge or other transfer of any Class C Certificate
         may be made by any Person unless (a) either (i) such sale, pledge or
         other transfer is made to the LLC, or (ii) so long as the Class C
         Certificates are eligible for resale pursuant to Rule 144A under the
         Securities Act, such sale, pledge or other transfer is made to a Person
         whom the transferor reasonably believes after due inquiry is a QIB
         acting for its own account (and not for the account of others) or as a
         fiduciary or agent for others (which others also are

                                       1
<PAGE>

         QIBs) to whom notice is given that the sale, pledge or transfer is
         being made in reliance on Rule 144A.

              (4) The Class C Certificates may not be acquired by or for the
         account of (i) an "employee benefit plan" (as defined in section 3(3)
         of the Employee Retirement Income Security Act of 1974, as amended
         ("ERISA")), that is subject to the provisions of Title I of ERISA, (ii)
         a plan described in Section 4975(e)(1) of the Code or (iii) any entity
         whose underlying assets include plan assets by reason of a plan's
         investment in the entity. By accepting and holding a Class C
         Certificate, the holder thereof shall be deemed to have represented and
         warranted that it is not within any of the categories described in the
         preceding sentence.

              (5) The Purchaser acknowledges that it has been afforded an
         opportunity to request from the LLC, the Servicer and [ ] (the "Initial
         Purchaser"), and has received and reviewed, all information which it
         has deemed necessary in connection with its decision to purchase the
         Class C Certificates. The Purchaser acknowledges that none of the LLC,
         the Servicer, the Initial Purchaser nor any of their respective
         affiliates or any Person representing any of them has made any
         representation to it with respect to any information relating to the
         offering or sale of the Class C Certificates, other than the
         information contained in the private placement memorandum for the Class
         C Certificates, a copy of which has been delivered to it.

              (6) The Purchaser understands that all information furnished to it
         by the LLC, the Servicer or the Initial Purchaser or representatives of
         the LLC, the Servicer or the Initial Purchaser in connection with its
         evaluation of an investment in the Class C Certificates was provided to
         it on a confidential basis and it agrees not to disclose such
         information, in whole or in part, to any other Person.

              (7) The Purchaser further represents and warrants to the LLC and
         the Trustee that, except to the extent permitted in paragraphs (8) and
         (9) below, the Purchaser: (i) is properly classified as a "corporation"
         as described in Section 7701(a)(3) of the Code which is created or
         organized under the laws of the United States, any State thereof or the
         District of Columbia, and will not knowingly take any action which will
         cause it not to be so classified; and (ii) is not an S corporation as
         described in Section 1361 of the Code (an "S Corporation"), and will
         not knowingly take any action which will cause it to be so classified.

              (8) No Class C Certificates shall be transferred or sold to any
         grantor trust, partnership or S Corporation (each a "Pass-Through
         Entity") unless such entity represents that (i) not 25% or more (or
         that amount which the Internal Revenue Service (or any successor
         thereto) may subsequently indicate is an amount which prevents treating
         direct and/or indirect owners of a Pass-Through Entity as partners in
         the Trust for purposes of determining whether the Trust is a publicly
         traded partnership) of the value of the assets of the Pass-Through
         Entity is attributable to the Pass-Through Entity's ownership interest
         in certificates issued by the Trust other than the Class A and Class B
         Certificates and (ii) the Pass-Through Entity does not specially
         allocate to any of its beneficiaries amounts received in respect of
         certificates issued by the Trust other than Class A and Class B

                                       2
<PAGE>

         Certificates. Any purported transfer, assignment or other conveyance
         (including any participation) of the Class C Certificates in
         contravention of the immediately preceding sentence shall be null and
         void ab initio and the purported transferor shall continue to be
         treated as the owner of such Class C Certificates and the purported
         transferee shall not be recognized as a Class C Certificateholder by
         the LLC or the Trustee.

              (9) No Class C Certificates shall be transferred or sold to any
         foreign investor ("Foreign Investor") which does not make the
         representations contained in Annex 1 to the representation letter
         required to be signed by a purchaser in connection with the purchase of
         Class C Certificates. A Foreign Investor for this purpose includes any
         person who is not: (1) a citizen or resident of the United States; (2)
         a corporation or partnership or other entity treated for Federal income
         tax purposes as a corporation or a partnership created or organized in
         or under the laws of the United States, any State thereof or the
         District of Columbia; (3) an estate, the income of which is subject to
         United States Federal income tax, regardless of its source; or (4) a
         trust if a U.S. court is able to exercise primary supervision over the
         administration of the trust and one or more U.S. persons have the
         authority to control all substantial decisions of the trust.
         Notwithstanding the preceding sentence, to the extent provided in
         Treasury regulations, certain trusts in existence on August 20, 1996,
         and treated as United States persons under the Code and applicable
         Treasury regulations prior to that date, that elect to continue to be
         treated as United States persons under the Code or applicable Treasury
         regulations will not be Foreign Investors.

              (10) The Purchaser confirms that is has neither acquired nor will
         it sell, trade or transfer any interest in any Class C Certificate or
         cause an interest in any Class C Certificate to be marketed on or
         through (i) an "established securities market" within the meaning of
         Section 7704(b)(1) of the Code and any proposed, temporary or final
         treasury regulation thereunder, including, without limitation, an
         over-the-counter market or an interdealer quotation system that
         regularly disseminates firm buy or sell quotations or (ii) "secondary
         market" or "substantial equivalent thereof" within the meaning of
         Section 7704(b)(2) of the Code and any proposed, temporary or final
         treasury regulation thereunder, including a market wherein interests in
         the Class C Certificates are regularly quoted by any person making a
         market in those interests and a market wherein any person regularly
         makes available bid or offer quotes with respect to interests in the
         Class C Certificates and stands ready to effect buy or sell
         transactions at the quoted prices for itself or on behalf of others.
         Any purported transfer, assignment or other conveyance of any Class C
         Certificate in contravention of the foregoing covenant will be null and
         void ab initio and the purported transferor will continue to be treated
         as the holder of such Class C Certificate and the purported transferee
         will not be recognized as a Class C Certificateholder by the LLC, the
         Servicer or the Trustee.

              (11) Notwithstanding the foregoing, at no time shall the aggregate
         number of Private Holders exceed 100. Any purported transfer,
         assignment or other conveyance (including any participation) of the
         Class C Certificates in contravention of the immediately preceding
         sentence will be null and void ab initio and the purported transferor
         will continue to be treated as the holder of those Class C Certificates
         and the purported transferee will not be recognized as a Class C
         Certificateholder by the LLC,

                                       3
<PAGE>

         the Servicer or the Trustee. "Private Holder" means each holder of a
         right to receive interest or principal in respect of any direct or
         indirect interest in the Trust, including any financial instrument or
         contract the value of which is determined in whole or part by reference
         to the Trust (including the Trust's assets, income of the Trust or
         distributions made by the Trust), excluding any interest in the Trust
         represented by any series or class of certificates or any other
         interests as to which the Trustee has received an opinion of counsel to
         the effect that that series, class or other interest will be treated as
         debt or otherwise not as an equity interest in either the Trust or the
         Receivables for federal income tax purposes (unless that interest is
         convertible or exchangeable into an interest in the Trust or the
         Trust's income or that interest provides for payment of equivalent
         value). Notwithstanding the immediately preceding sentence, "Private
         Holder" will also include any other person that the LLC determines is a
         "partner" within the meaning of Section 1.7704-1(h)(1)(ii) of the U.S.
         Treasury Regulations (including by reason of Section 1.7704-1(h)(3)) or
         any successor provision of law. Any person holding more than one
         interest in the Trust, each of which separately would cause that person
         to be a Private Holder, will be treated as a single Private Holder.
         Each holder of an interest in a Private Holder which is a partnership,
         S corporation or a grantor trust under the Code will be treated as a
         Private Holder unless excepted with the consent of the LLC (which
         consent will be based on an opinion of counsel generally to the effect
         that the action taken pursuant to the consent will not cause the Trust
         to become a publicly traded partnership treated as a corporation).
         Notwithstanding anything to the contrary herein, each Class C
         Certificateholder, and each holder of any Class of any Series if with
         respect to such Class no opinion is delivered to the effect that the
         Certificates of such Class will be treated as debt for federal income
         tax purposes, will be considered to be a Private Holder.

              (12) The Class C Certificates will be issued in denominations of
         $1,000,000 and integral multiples of $100,000 in excess thereof. No
         Class C Certificate may be subdivided upon transfer or exchange in a
         manner so that the resulting Class C Certificate if it had been sold in
         the original offering would have had an initial offering price of less
         than $1,000,000 and any purported transfer, assignment or conveyance of
         a Class C Certificate in contravention of the immediately preceding
         sentence will be void ab initio and the purported transferor will
         continue to be treated as the owner of that Class C Certificate for all
         purposes.

              (13) Without limiting the foregoing, no transfer, pledge,
         assignment or conveyance may be made to any one Person for Class C
         Certificates with a face amount of less than $1,000,000 and, in the
         case of any Person acting on behalf of one or more third parties (other
         than a bank (as defined in Section 3(a)(2) of the Securities Act)
         acting in its fiduciary capacity), for Class C Certificates with a face
         amount of less than that amount for each of those third parties. Any
         purported transfer, assignment or conveyance in contravention of the
         immediately preceding sentence will be void ab initio and the purported
         transferor will continue to be treated as the owner of the Class C
         Certificates for all purposes. Neither the LLC nor the Trustee will be
         obligated to register the Class C Certificates under the Securities
         Act, qualify the Class C Certificates under the securities laws of any
         state or provide registration rights to any purchaser or holder
         thereof.

                                       4
<PAGE>

              (14) No transfer, assignment or conveyance of a Class C
         Certificate will be effective unless the LLC and the Trustee shall have
         received a letter, substantially in the form of this letter, from the
         transferee, assignee or recipient of the conveyance.

              (15) The Class C Certificates will bear legends substantially to
         the effect of the matters contemplated by paragraphs (1) through (14)
         above, unless the LLC determines otherwise in accordance with
         applicable law.

              (16) This letter has been duly executed and delivered by the
         Purchaser and constitutes the legal, valid and binding obligation of
         the Purchaser, enforceable against the Purchaser in accordance with its
         terms, except as such enforceability may be limited by bankruptcy,
         insolvency, reorganization, moratorium or similar laws or equitable
         principles affecting the enforcement of creditors' rights generally and
         general principles of equity.

              (17) If the Purchaser is a Foreign Investor, the representations
         and warranties contained in Annex 1 hereto are incorporated herein by
         reference.

         IN WITNESS WHEREOF, the Purchaser has signed this letter as of the date
first above written.

                                            [NAME OF PURCHASER]

                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                       5
<PAGE>

                                                                         ANNEX 1

              (18) The Purchaser's long term debt is rated investment grade by
         an internationally recognized rating agency.

              (19) The Purchaser agrees that, prior to the date on which the
         first interest payment under the Supplement is due thereto, it shall
         deliver to the LLC, the Servicer and the Trustee (i) two duly completed
         copies of the United States Internal Revenue Service Form W-8ECI or
         successor applicable form and (ii) an Internal Revenue Service Form W-8
         or successor applicable form. The Purchaser also agrees to deliver to
         the LLC, the Servicer and the Trustee two further copies of the said
         Form W-8ECI and Form W-8, or successor applicable forms or other manner
         of certification, as the case may be, on or before the date that any
         such form expires or becomes obsolete or after the occurrence of any
         event requiring a change in the most recent form previously delivered
         by it and such extensions or renewals thereof as may reasonably be
         requested by the Servicer, unless in any such case an event (including,
         without limitation, any change in treaty, law or regulation) has
         occurred prior to the date on which any such delivery would otherwise
         be required which renders all such forms inapplicable or which would
         prevent the Purchaser from duly completing and delivering any such form
         with respect to it and the Purchaser so advises the Servicer, the
         Trustee and the LLC.

              (20) Notwithstanding anything to the contrary in this letter, the
         Purchaser agrees that, upon written notice by the Servicer to the
         Purchaser in accordance with paragraph (22) below that the U.S.
         Internal Revenue Service ("IRS") has determined that amounts payable
         under the Supplement are subject to withholding tax under Section 1446
         of the Code (a "Withholding Tax" and such determination being a
         "Withholding Event"):

                   a. The Purchaser shall, for tax years for which the Purchaser
              has already filed, or was legally required to file, U.S. federal
              income tax returns (each a "Prior Tax Year") prior to notice of
              such Withholding Event in accordance with paragraph (22) below,
              (A) provide to the LLC a signed officer's certificate of the
              Purchaser stating that amounts paid under the Supplement have been
              included in the Purchaser's U.S. federal income tax returns for
              each such Prior Tax Year, and (B) upon the written request of the
              LLC, which request shall provide assurances of confidentiality of
              information reasonably satisfactory to the Purchaser, provide all
              information in the Purchaser's possession or control to the LLC
              or, at the Purchaser's option, to the IRS directly required by the
              IRS in support of the application of Section 1463 of the Code for
              each such Prior Tax Year to such Withholding Tax.

                   b. If Section 1463 of the Code is not applicable for any
              Prior Tax Year of the Purchaser because the Purchaser did not
              include amounts payable under the Supplement in its U.S. federal
              income tax return for such Prior Tax Year and properly pay any
              federal income tax due on such amounts or failed to file a U.S.
              federal income return with respect to such Prior Tax Year, the
              Purchaser shall (at the Purchaser's option) either (x) amend or
              file, as the case may be, its U.S. federal income tax return for
              such Prior Tax Year to properly

                                       6
<PAGE>

              include amounts paid under the Supplement during such Prior Tax
              Year, pay any federal income tax due on such amounts (and interest
              and penalties thereon if required) and comply with the provisions
              of clause (b) of this paragraph (20) with respect to such Prior
              Tax Year or (y) pay to the LLC or the Trust, as applicable, the
              amount of any Withholding Tax (and any interest or penalties
              thereon) paid or payable by the LLC or the Trust to the IRS (which
              payment by the Purchaser, if the applicable Withholding Tax has
              not theretofore been remitted to the IRS, shall be paid over by
              the LLC or the Trust, as applicable, to the IRS for application to
              such Withholding Tax) on payments under the Supplement during such
              Prior Tax Year which were not included on the Purchaser's U.S.
              federal income tax return or with respect to which the Purchaser
              did not so properly pay federal income tax.

                   c. No increased amounts shall be payable to the Purchaser if
              any taxes are required to be withheld or deducted from any amount
              payable to the Purchaser with respect to any Withholding Tax
              unless, due to a change in law, treaty or regulation (or in the
              interpretation or administration thereof by any governmental or
              regulatory agency or body charged with the administration or
              interpretation thereof), the credit for U.S. federal income tax
              purposes available to the Purchaser under the Code (as in effect
              on the Closing Date) resulting from such Withholding Tax is
              discontinued or substantially reduced.

         In connection with remitting to the IRS any required amount of
         Withholding Tax on account of the Purchaser for any tax year subsequent
         to the last Prior Tax Year, the amount thereof may be charged first
         against the amount otherwise payable to the Purchaser pursuant to the
         Supplement (a "Payable Amount") for the distribution date immediately
         preceding such remittance and then against each successive Payable
         Amount for subsequent distribution dates to the extent required to
         aggregate such Withholding Tax amount.

                   (21) The Purchaser agrees that it shall use reasonable
              efforts to take any actions that shall avoid any Withholding Tax
              or the need for, or reduce the amount of, any amounts payable to
              it for all present and future taxes, levies, imposts, duties,
              deductions, withholdings, fees, liabilities and similar charges
              ("Taxes"); provided that the Purchaser shall not be obligated to
              take any such actions that would, in the reasonable opinion of the
              Purchaser, be unlawful or otherwise disadvantageous to the
              Purchaser or would result in any unreimbursed cost or expense to
              the Purchaser, which cost and expense would not have been incurred
              but for such actions. If any amounts payable to the Purchaser for
              Taxes (referred to above) shall not be eliminated or reduced by
              the actions taken by the Purchaser and payment thereof under the
              Supplement shall not be waived by the Purchaser within 15 days
              after the LLC shall have given written notice to the Purchaser of
              its intent to replace the Purchaser, the LLC shall have the right
              to (A) request in writing that the Purchaser use reasonable
              efforts, and the Purchaser hereby agrees upon receipt of such
              request to use its reasonable efforts, to obtain a replacement
              investor for the Class C Certificates owned by the Purchaser,
              which replacement investor is reasonably acceptable to the LLC, or
              (B) itself seek to replace the Purchaser with a new investor which
              is reasonably acceptable to the LLC; provided that the Purchaser
              shall not be replaced with a new investor until the Purchaser has
              been repaid in full all amounts owed to it pursuant to the
              Supplement. Subject to the provisions of this paragraph (21),

                                       7
<PAGE>

              the Purchaser hereby agrees to assign all of its rights and
              obligations with respect to the Class C certificates (and with
              respect to the Supplement) to the replacement investor pursuant to
              an agreement in form and substance reasonably acceptable to the
              Purchaser, the LLC, the Trustee and the replacement investor,
              subject to payment in full of all amounts due to the Purchaser
              under the Supplement.

                   (22) The Purchaser's address for notice is:

                   ------------------------------------------------------

                   ------------------------------------------------------

                   ------------------------------------------------------

                   ------------------------------------------------------

                                       8
<PAGE>

                                                                      SCHEDULE 1

<TABLE>
<CAPTION>
Name of Series
[       ] Account                                            Account No.
-----------------                                            -----------
<S>                                                          <C>
                                                             [ ]

Interest Funding Account                                     [ ]

Principal Funding Account                                    [ ]

Excess Funding Account                                       [ ]

Reserve Fund                                                 [ ]

Yield Supplement Account                                     [ ]

</TABLE>

         All of the foregoing accounts are maintained at the Trustee.

<PAGE>

                                                                      SCHEDULE 2

            Initial Principal Amounts of the Series [ ] Certificates

<TABLE>
<CAPTION>
Class                                                   Initial Principal Amount
-----                                                   ------------------------
<S>                                                               <C>
Class A                                                           $[ ]
Class B                                                           $[ ]
Class C                                                           $[ ]
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00047-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00047-of-00352.parquet"}]]