LEASE between TMT RESTON I & II, INC., as Landlord, and TALK AMERICA INC., as Tenant TABLE OF CONTENTS

    

        2.1.1    The parties agree that the Prior Lease shall terminate pursuant to a separate agreement by and between Landlord and Tenant (“Prior Lease Termination Agreement”). The Prior Lease, the Prior Lease Termination Agreement and the Reston I Lease shall constitute the “Related Agreements.” Any Event of Default as defined in the Related Agreements existing as of the Commencement Date of this Lease shall constitute an immediate Event of Default (as defined hereinafter), to which no notice by Landlord to Tenant shall be required. Any default under any of the Related Agreements shall constitute a default hereunder, as further set forth in Section 18.1.2.

 

    2.2   Provided that: (i) Tenant is in physical possession and actual occupancy of the Premises and no Event of Default exists at the time of the exercise of such option or arises subsequent thereto, and no event exists which by notice and/or the passage of time would constitute an Event of Default if not cured within the applicable cure period provided under this Lease; and (ii) Tenant has not sublet or assigned any of its rights, title, and interest in and to this Lease, Tenant shall have the option to extend this Lease with respect to all or a portion of the Premises for one (1) consecutive extension term of five (5) consecutive years, provided Tenant notifies Landlord in writing of its exercise of such option not sooner than twelve (12) months nor later than nine (9) months prior to the Termination Date. Annual Rent during such extension term shall be at one hundred percent (100%) of the fair market rate, including market concessions, as determined by the mutual agreement of Landlord and Tenant, and provided that Tenant shall post an increase in its Security Deposit which is commensurate with such new Annual Rent. Such Annual Rent for the extension term shall escalate at the fair market escalation rate as determined by the mutual agreement of Landlord and Tenant, provided that in no event shall such Annual Rent escalate at less than the escalation rate of three (3%) per annum. All other provisions of this Lease shall remain the same during the extension term, except that Tenant shall have no further extension option and the Base Year shall be the first (1st) full calendar year of the extension term. Should Landlord and Tenant be unable for any reason to agree upon a new Annual Rent and/or escalation rate within forty-five (45) days after Tenant’s exercise of this option, then the Annual Rent and/or escalation rate, as applicable, shall, at Tenant’s sole option and discretion, be determined by appraisal by a board of three (3) real estate brokers, one of whom shall be named by Landlord, one by Tenant, and the two so appointed shall select a third. Such brokers shall be members of the Greater Washington Association of Commercial Realtors or any successor thereto, licensed in the Commonwealth of Virginia, and each shall have not less than ten (10) years’ experience in the field of commercial office leasing in the Washington, D.C. metropolitan area. Each shall be recognized as being ethical and reputable within its field. Landlord and Tenant agree to make their appointments promptly within ten (10) business days after the expiration of the forty-five (45) day period, and the two brokers shall promptly select a third broker within fifteen (15) days thereafter. Each broker shall, within thirty (30) days after selection of the third broker, submit its determination of the Annual Rent and/or escalation rate, as applicable, and the Annual Rent and/or escalation rate, as applicable, shall be deemed to be the rent and/or escalation rate, as applicable, determined by the third broker, unless it is higher than the higher of the two values determined by the first two brokers, in which event the higher of the first two appraisals shall be the Annual Rent and/or escalation rate, as applicable, or unless it is lower than the lower of the two values determined by the first two brokers, in which event the lower of the first two appraisals shall be the Annual Rent or escalation rate, as applicable. In arriving at its rental rate determinations, each broker shall consider and analyze all material components of the Lease, and review terms being offered to prospective office tenants for comparable space in comparable office buildings and locations in the northern Virginia metropolitan area for leases commencing on or about the time of commencement of the extension period. In no event shall the escalation rate be less than three percent (3%) per annum. Landlord and Tenant shall each pay the fee of the broker selected by it and they shall share equally the payment of the fee of the third broker.

 

 

    2.3  Provided that: (i) Tenant is in physical possession and actual occupancy of the Premises and no Event of Default exists at the time of the exercise of such option or arises subsequent thereto, and no event exists or arises subsequent thereto which by notice and/or the passage of time would constitute an Event of Default if not cured within the applicable cure period provided under this Lease; and (ii) Tenant has not sublet or assigned any of its rights, title, and interest in and to this Lease, and subject to any pre-existing rights granted to other tenants, if at any time during the first two (2) years of the initial Term of this Lease any remaining portion of the second (2nd) floor of the Building (each such portion, an “Expansion Space”), as shown on Exhibit A-2, attached hereto, shall become vacant and available or is reasonably expected by Landlord to become vacant and available, Landlord shall notify Tenant of the availability of such Expansion Space in writing and Landlord shall provide Tenant with a copy of the proposed terms and conditions (“Proposed Expansion Space Terms”) under which Landlord shall offer such Expansion Space, including the Annual Rent and the date of anticipated delivery of possession. Tenant shall have ten (10) days from the date of Landlord’s notice to Tenant to advise Landlord in writing that Tenant accepts such Expansion Space (“Expansion Space Election Period”) on the Proposed Expansion Space Terms, in its “AS IS” condition, with all Building systems servicing such Expansion Space in working condition at Landlord’s reasonable expense, and agrees that it shall become a part of the Premises. Tenant shall be solely responsible for all repairs, improvements, alterations, fixtures and furnishings to be made or installed in Expansion Space. Subject to the terms and conditions of Article 6 of this Lease, Tenant shall obtain Landlord’s prior written approval of Tenant’s drawings, plans and specifications before commencing construction of improvements. Tenant’s obligation to commence payment of Annual Rent for such Expansion Space shall occur on the day the Expansion Space is substantially completed by Tenant, but in no case longer than the earlier to occur of (i) sixty (60) days from the initiation of the construction of improvements or (ii) sixty (60) days from the date of delivery of possession by Landlord to Tenant. If Tenant shall not so elect to lease Expansion Space within the Expansion Space Election Period, Landlord may lease such Expansion Space to a third party. In the event Landlord and Tenant agree on lease terms pursuant to this Section 2.3, the parties shall enter into an amendment modifying this Lease to set forth such lease terms within thirty (30) days of the parties’ agreement; provided, however, if either party shall fail to do so after Tenant shall have exercised its option for the Expansion Space, they shall each be bound by their mutual agreement as to the Annual Rent and additional rent. Annual Rent for such Expansion Space shall be at one hundred percent (100%) of the fair market rate, including market concessions provided to Tenant pursuant to this Lease, as determined by the mutual agreement of Landlord and Tenant, provided that Tenant shall post an increase in its Security Deposit which is commensurate with the additional Annual Rent of such Expansion Space. Such Annual Rent for the Expansion Space shall escalate at the fair market escalation rate as determined by the mutual agreement of Landlord and Tenant, provided that in no event shall such Annual Rent escalate at less than the escalation rate of three (3%) per annum. All other provisions of this Lease shall remain the same with respect to the Expansion Space. Should Landlord and Tenant be unable for any reason to agree upon the Annual Rent and/or escalation rate within forty-five (45) days after Tenant’s exercise of this option, then the Annual Rent and/or escalation rate, as applicable, shall be determined by appraisal by a board of three (3) real estate brokers, one of whom shall be named by Landlord, one by Tenant, and the two so appointed shall select a third. Such brokers shall be members of the Greater Washington Association of Commercial Realtors or any successor thereto, licensed in the Commonwealth of Virginia, and each shall have not less than ten (10) years’ experience in the field of commercial office leasing in the Washington, D.C. metropolitan area. Each shall be recognized as being ethical and reputable within its field. Landlord and Tenant agree to make their appointments promptly within ten (10) business days after the expiration of the forty-five (45) day period, and the two brokers shall promptly select a third broker within fifteen (15) days thereafter. Each broker shall, within thirty (30) days after selection of the third broker, submit its determination of the Annual Rent and/or escalation rate for such Expansion Space, as applicable and the Annual Rent and/or escalation rate for such Expansion Space, as applicable, shall be deemed to be the rent and/or escalation rate, as applicable, determined by the third broker, unless it is higher than the higher of the two values determined by the first two brokers, in which event the higher of the first two appraisals shall be the Annual Rent and/or escalation rate, as applicable, or unless it is lower than the lower of the two values determined by the first two brokers, in which event the lower of the first two appraisals shall be the Annual Rent or escalation rate, as applicable. In arriving at its rental rate determinations, each broker shall consider and analyze all material components of the Lease, and review terms being offered to prospective office tenants for comparable space in comparable office buildings and locations in the northern Virginia metropolitan area for leases commencing on or about the time of commencement of the extension period. In no event shall the escalation rate be less than three percent (3%) per annum. Landlord and Tenant shall each pay the fee of the broker selected by it and they shall share equally the payment of the fee of the third broker. Notwithstanding anything contained herein to the contrary, Tenant shall have no right to lease from Landlord and Landlord shall have no obligation to lease to Tenant any such Expansion Space which shall become vacant and available or is reasonably expected by Landlord to become vacant and available after the first two (2) years of the initial Term of this Lease.

 

        Notwithstanding anything to the contrary, Expenses shall not include Taxes, Insurance Costs, depreciation or amortization of the Building or equipment in the Building except as provided herein, loan principal payments, costs of alterations of tenants’ premises, leasing commissions; interest expenses on long-term borrowings; advertising costs; wages and salaries for off-site employees and employees at the Building above the level of district manager; costs of repairs, restoration, replacements or other work occasioned by (1) fire, windstorm or other casualty of a customarily insurable nature (whether such destruction be total or partial) and either (aa) payable (whether paid or not) by insurance required to be carried by Landlord under this Lease, or (bb) otherwise payable (whether paid or not) by insurance then in effect obtained by Landlord, (2) the exercise by governmental authorities of the right of eminent domain, whether such taking be total or partial; (3) the gross negligence or intentional tort of Landlord, or any subsidiary or affiliate of Landlord, or any representative, employee or agent of same, or (4) the act of any other tenant in the Building, or any other tenant’s agents, employees, licensees or invitees to the extent Landlord has the right to recover and actually recovers the applicable cost from such person; attorneys’ fees, costs, disbursements and other expenses incurred in connection with negotiations for leases with tenants, other occupants, or prospective tenants or other occupants of the Building, or similar costs incurred in connection with disputes with tenants, other occupants, or prospective tenants; allowances, concessions and other costs and expenses incurred in completing fixturing, furnishing, renovating or otherwise improving, decorating or redecorating space for tenants (including Tenant), prospective tenants or other occupants and prospective occupants of the Building or vacant, leasable space in the Building; costs of the initial construction of the Building; deductions for depreciation of the original Building when initially constructed; costs of expenses relating to another tenant’s or occupant’s space which were in excess of the Building standard services then being provided by Landlord to all tenants or other occupants in the Building, whether or not such other tenant or occupant is actually charged therefor by Landlord; payments of rent made on any debt payments made under any ground or underlying lease or leases, except to the extent that a portion of such rental payments is reasonably allocable to ad valorem/real estate taxes and increased property values as a result of such leases; except as real estate taxes may be increased due to a re-assessment of the Building upon any of such events, costs incurred in connection with the sale, financing, refinancing, mortgaging, selling or change of ownership of the Building, including brokerage commissions, attorneys’ and accountants’ fees, closing costs, title insurance premiums, transfer and recordation taxes as a result of such action, and interest charges; costs, fines, interest, penalties, legal fees or costs of litigation incurred due to the late payments of taxes, utility bills and other costs incurred by Landlord’s failure to make such payments when due; costs incurred by Landlord for trustee’s fees, partnership organizational expenses and accounting fees except accounting fees relating solely to the ownership and operation of the Building (exclusive of the incremental accounting fees to the extent incurred separately in reporting operating results to the Building owners or lenders); any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord or in the parking garage of the Building; Landlord’s income and franchise taxes (other than those business taxes which relate solely to the operation of the Building); all amounts which would otherwise be included in operating expenses which are paid to any affiliate or subsidiaries of Landlord, to the extent the costs of such services exceed the competitive rates for similar services of comparable quality; costs or expenses of utilities directly metered to tenants of the Building and payable separately by such tenants; moving expense costs of tenants of the Building to the extent not provided by Landlord (i) to Tenant and (ii) generally to other initial tenants of the Building; advertising and promotional costs associated with the leasing of the Building; costs incurred to correct violations by Landlord of any law, rule, order or regulation which was in effect as of the Commencement Date; electric power costs for which any tenant directly contracts with the local public service company; and management fees in excess of fair market management fees.

 

        4.1.4  Insurance Costs: Any and all insurance charges of or relating to all insurance policies and endorsements deemed by Landlord to be reasonably necessary or desirable and relating in any manner to the protection, preservation, or operation of the Building or any part thereof. If any Insurance Costs are shared jointly between or among the Building and another building, such as, but not limited to, Reston Plaza I, such costs shall be allocated proportionately between or among such buildings based upon the rentable square footage of each building, or such other equitable manner as Landlord shall deem appropriate.

    4.5  When the above mentioned actual determination of Tenant’s liability for Expenses, Insurance Costs and/or Taxes is made for any calendar year and when Tenant is so notified in writing, then:

    5.2  As additional security for the faithful performance by Tenant of all covenants, conditions and agreements of this Lease, Parent, (“Guarantor”) has executed and delivered to Landlord the Continuing Lease Guaranty (the “Guaranty”), in the form attached hereto as Exhibit E, unconditionally guaranteeing to Landlord the due and punctual payment and performance by Tenant of all of Tenant’s obligations hereunder for the time period and as otherwise more particularly set forth in the Guaranty. No right or remedy available to Landlord under the Guaranty or this Lease shall extinguish any other right to which Landlord may be entitled. In furtherance of the foregoing, it is understood that in the event Tenant fails to perform any of its obligations hereunder, any amounts recovered by Landlord under the Guaranty shall not be deemed liquidated damages. Landlord may apply such sums to reduce Landlord’s damages and such application of funds shall not preclude Landlord from recovering from Tenant or the Guarantor jointly and severally all additional damages incurred by Landlord by reason of Tenant’s failure to perform hereunder.

    6.3  All alterations, additions or improvements proposed by Tenant shall be constructed in accordance with all government laws, ordinances, rules and regulations, using Building standard materials where applicable, and Tenant shall, prior to construction, provide the additional insurance required under Article 11 in such case, and also all such assurances to Landlord as Landlord shall reasonably require to assure payment of the costs thereof, including but not limited to, notices of non-responsibility, waivers of lien, surety company performance bonds and funded construction escrows and to protect Landlord and the Building and appurtenant land against any loss from any mechanic’s, materialmen’s or other liens. Tenant shall pay in addition to any sums due pursuant to Article 4, any increase in real estate taxes attributable to any such alteration, addition or improvement for so long, during the Term, as such increase is ascertainable; at Landlord’s election said sums shall be paid in the same way as sums due under Article 4. Landlord may, as a condition to its consent to any particular alterations or improvements, require Tenant to deposit with Landlord the amount reasonably estimated by Landlord as sufficient to cover the cost of removing such alterations or improvements and restoring the Premises, to the extent required under Section 26.2.

    9.8  Notwithstanding the foregoing provisions of this Article to the contrary, Tenant shall be permitted to assign this Lease, or sublet all or a portion of the Premises, to a Qualified Tenant Affiliate (as hereinafter defined) of Tenant without the prior consent of Landlord, if all of the following conditions are first satisfied:

    13.5   Tenant will not, without the written consent of Landlord, use any apparatus or device in the Premises, including but not limited to, electronic data processing machines and machines using current in excess of 2000 watts and/or 20 amps or 120 volts, which will in any way increase the amount of electricity or water usually furnished or supplied for use of the Premises for normal office use, nor connect with electric current, except through existing electrical outlets in the Premises, or water pipes, any apparatus or device for the purposes of using electrical current or water. If Tenant shall require water or electric current in excess of that usually furnished or supplied for use of the Premises as normal office use, Tenant shall procure the prior written consent of Landlord for the use thereof, which Landlord may refuse, and if Landlord does consent, Landlord may cause a water meter or electric current meter to be installed so as to measure the amount of such excess water and electric current. The cost of any such meters shall be paid for by Tenant. Tenant agrees to pay to Landlord within ten (10) days of Landlord’s demand , the cost of all such excess water and electric current consumed (as shown by said meters, if any, or, if none, as reasonably estimated by Landlord) at the rates charged for such services by the local public utility or agency, as the case may be, furnishing the same, plus any additional expense incurred in keeping account of the water and electric current so consumed. 

        18.1.5  A court of competent jurisdiction shall enter an order, judgment or decree adjudicating Tenant bankrupt, or appointing a receiver of Tenant, or of the whole or any substantial part of its property, without the consent of Tenant, or approving a petition filed against Tenant seeking reorganization or arrangement of Tenant under the bankruptcy laws of the United States, as now in effect or hereafter amended, or any state thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within sixty (60) days from the date of entry thereof.

        19.1.4  Upon any termination of Tenant’s right to possession only without termination of the Lease:

    19.2  Upon the occurrence of an Event of Default, Landlord may (but shall not be obligated to) cure such default at Tenant’s sole expense. Without limiting the generality of the foregoing, Landlord may, at Landlord’s option, enter into and upon the Premises if Landlord determines in its sole discretion that Tenant is not acting within a commercially reasonable time to maintain, repair or replace anything for which Tenant is responsible under this Lease or to otherwise effect compliance with its obligations under this Lease and correct the same, without being deemed in any manner guilty of trespass, eviction or forcible entry and detainer and without incurring any liability for any damage or interruption of Tenant’s business resulting therefrom and Tenant agrees to reimburse Landlord within five (5) days of Landlord’s demand as additional rent, for any expenses which Landlord may incur in thus effecting compliance with Tenant’s obligations under this Lease, plus interest from the date of expenditure by Landlord at the Wall Street Journal prime rate.

    19.6  No act or thing done by Landlord or its agents during the Term shall be deemed a termination of this Lease or an acceptance of the surrender of the Premises, and no agreement to terminate this Lease or accept a surrender of said Premises shall be valid, unless in writing signed by Landlord. No waiver by Landlord of any violation or breach of any of the terms, provisions and covenants contained in this Lease shall be deemed or construed to constitute a waiver of any other violation or breach of any of the terms, provisions and covenants contained in this Lease. Landlord’s acceptance of the payment of rental or other payments after the occurrence of an Event of Default shall not be construed as a waiver of such Default, unless Landlord so notifies Tenant in writing. Forbearance by Landlord in enforcing one or more of the remedies provided in this Lease upon an Event of Default shall not be deemed or construed to constitute a waiver of such Default or of Landlord’s right to enforce any such remedies with respect to such Default or any subsequent Default.