Fill and Sign the Tenant Improvement Form

TENANT IMPROVEMENT AGREEMENT 1. INITIAL IMPROVEMENTS. Landlord shall cause to be performed the improvements (the "Initial Improvements") in the Premises in accordance with plans and specifications approved by Tenant and Landlord (the "Plans"), which approvals shall not be unreasonably withheld. The Initial Improvements shall be performed at the Tenant's cost, subject to the Landlord's Contribution (hereinafter defined). The Initial Improvements shall include any necessary HVAC ducting. Landlord shall cause the Plans to be prepared, at Tenant's cost, by a registered professional architect and mechanical and electrical engineer(s). Such engineer(s) shall be approved, in advance, by the Landlord. On or before March 20, 1999 Tenant shall provide reasonable comments to such Plans or approve the same. Tenant shall be deemed to have approved such Plans if it does not timely provide reasonable comments on such Plans. If Tenant provides Landlord with reasonable comments to the initial draft of the Plans, Landlord shall provide revised Plans to Tenant incorporating Landlord's comments. Tenant shall within one week after receipt then either provide reasonable comments to such revised Plans or approve such Plans. Tenant shall be deemed to have approved such revised Plans if Tenant does not timely provide reasonable comments on such Plans. Tenant hereby agrees that the Plans for the Initial Improvements shall comply with all applicable Governmental Requirements. The fact that Landlord has caused to be prepared any of the Plans (or any modifications or changes thereto) shall not impose upon Landlord or its agents or representatives any obligation with respect to the design of the Initial Improvements or the compliance of such Initial Improvements or the Plans with applicable Governmental Requirements. Landlord, with consultation of Tenant, shall select a contractor to perform the construction of the Initial Improvements. Landlord shall use commercially reasonable efforts to cause the Initial Improvements to be substantially completed, except for minor "Punch List" items, on or before the Commencement Date specified in the Schedule to the Lease, subject to Tenant Delay (as defined in Section 4 hereof) and Force Majeure. Landlord, or an agent of Landlord, shall provide project management services in connection with the construction of the Initial Improvements and the Change Orders (hereinafter defined). Such project management services shall be performed, at Tenant's cost, for a fee of five percent (5%) of all costs related to the preparation of the Plans and the construction of the Initial Improvements and the Change Orders. 2. CHANGE ORDERS. If, prior to the Commencement Date, Tenant shall require improvements or changes (individually or collectively, "Change Orders") to the Premises in addition to, revision of or substitution for the Initial Improvements, Tenant shall deliver to Landlord for its approval plans and specifications for such Change Orders. If Landlord does not APPENDIX C Page 1 of 3 55 approve of the plans for Change Orders, Landlord shall advise Tenant of the revisions required. Tenant shall revise and redeliver the plans and specifications to Landlord within five (5) business days of Landlord's advice or Tenant shall be deemed to have abandoned its request for such Change Orders. Tenant shall pay for all preparations and revisions of plans and specifications, and the construction of all Change Orders, subject to Landlord's Contribution. 3. LANDLORD'S CONTRIBUTION. Landlord shall contribute an amount up to $172,840 ("Landlord's Contribution") toward the costs incurred for the Initial Improvements and Change Orders; provided that up to a maximum of $1,296 of Landlord's Contribution may be used for the payment of the costs of the space planner used for the preparation of a space plan for the Premises. Except as provided below with respect to the Improvement Allowance (as defined below), Landlord has no obligation to pay for costs of the Initial Improvements or Change Orders in excess of Landlord's Contribution. If the cost of the Initial Improvements and/or Change Orders exceeds the Landlord's Contribution and the Improvement Allowance funded by Landlord Tenant shall pay such overage to Landlord prior to commencement of construction of the Initial Improvements and/or Change Orders. If the costs of the Initial Improvements and Change Orders are in excess of the Landlord's Contribution, and so long as Tenant is not in default under this Lease, Landlord will lend Tenant an amount not to exceed $43,210 (the "Improvement Allowance") solely for the payment of the costs of the Initial Improvements and Change Orders. The Improvement Allowance funded by Landlord, together with interest thereon at the rate set forth herein, shall be paid by Tenant to Landlord as part of the Base Rent. For the purposes of determining the Base Rent for the first Lease Year, the "TI Rent Component" per month for the first Lease Year shall mean an amount equal to the total Improvement Allowance funded by Landlord, together with interest on such amount at a rate of ten percent (10%) per annum from the date of disbursement by Landlord until repaid by Tenant, amortized in equal monthly installments over the initial term of this Lease. Landlord and Tenant agree that all unpaid amounts of the Improvement Allowance constitute Base Rent under this Lease. Without limiting any of the foregoing provisions, at Landlord's request, Tenant shall within five (5) days after such request, duly execute and deliver to Landlord a promissory note, in form and substance satisfactory to Landlord, evidencing Tenant's obligation to repay the Improvement Allowance with interest thereon as provided herein (the "Improvement Note"). Tenant acknowledges and agrees that (a) Tenant's failure to deliver the Improvement Note to Landlord as provided herein, or (b) any breach of any of the terms of the Improvement Note, shall constitute a material breach and default under this Lease. Tenant's failure to execute and deliver the Improvement Note to Landlord as provided herein shall not affect Tenant's obligation to repay the Improvement Allowance together with interest thereon as provided herein. The Improvement Note may be prepaid by Tenant at any time. Any unpaid Improvement Allowance, together with interest thereon as provided herein, shall be immediately due and payable upon any default by Tenant under this Lease. Tenant agrees to pay any and all of Landlord's attorneys' fees and costs relating to the enforcement of Landlord's rights under the Improvement Note or with respect to the repayment of the Improvement Allowance. APPENDIX C Page 2 of 3 56 4. COMMENCEMENT DATE DELAY. Commencement Date shall be delayed until the Initial Improvements have been substantially completed (the "Completion Date"), except to the extent that the delay shall be caused by any one or more of the following (a "Tenant Delay"): (a) Tenant's request for Change Orders whether or not any such Change Orders are actually performed; or (b) Contractor's performance of any Change Orders; or (c) Tenant's request for materials, finishes or installations requiring unusually long lead times; or (d) Tenant's delay in reviewing, revising or approving plans and specifications beyond the periods set forth herein; or (e) Tenant's delay in providing information critical to the normal progression of the project. Tenant shall provide such information as soon as reasonably possible, but in no event longer than one week after receipt of such request for information from the Landlord; or (f) Tenant's delay in making payments to Landlord for costs of the Initial Improvements and/or Change Orders in excess of the Landlord's Contribution; or (g) Any other act or omission by Tenant, its agents, contractors or persons employed by any of such persons. If the Commencement Date is delayed for any reason, then Landlord shall cause Landlord's Architect to certify the date on which the Initial Improvements would have been completed but for such Tenant Delay, or were in fact completed without any Tenant Delay. Prior to Tenant's occupancy of the Premises, Landlord and Tenant shall agree up a punch list of items to be corrected. 5. ACCESS BY TENANT PRIOR TO COMMENCEMENT OF TERM. Landlord at its discretion may permit Tenant and its agents to enter the Premises prior to the Commencement Date to prepare the Premises for Tenant's use and occupancy. Any such permission shall constitute a license only, conditioned upon Tenant's: (a) working in harmony with Landlord and Landlord's agents, contractors, workmen, mechanics and suppliers and with other tenants and occupants of the Building; (b) obtaining in advance Landlord's approval of the contractors proposed to be used by Tenant and depositing with Landlord in advance of any work (i) security satisfactory to APPENDIX C Page 3 of 3 57 Landlord for the completion thereof, and (ii) the contractor's affidavit for the proposed work and the waivers of lien from the contractor and all subcontractors and suppliers of material; and (c) furnishing Landlord with such insurance as Landlord may require against liabilities which may arise out of such entry. Landlord shall have the right to withdraw such license for any reason upon twenty-four (24) hours' written notice to Tenant. Landlord shall not be liable in any way for any injury, loss or damage which may occur to any of Tenant's property or installations in the Premises prior to the Commencement Date. Tenant shall protect, defend, indemnify and save harmless Landlord from all liabilities, costs, damages, fees and expenses arising out of the activities of Tenant or its agents, contractors, suppliers or workmen in the Premises or the Building. Any entry and occupation permitted under this Section shall be governed by Section 5 and all other terms of the Lease. 6. MISCELLANEOUS. Terms used in this Appendix C shall have the meanings assigned to them in the Lease. The terms of this Appendix C are subject to the terms of the Lease. APPENDIX C Page 4 of 4 58 APPENDIX D MORTGAGES CURRENTLY AFFECTING THE PROJECT None. APPENDIX D Page 1 of 1 59 APPENDIX E COMMENCEMENT DATE CONFIRMATION Landlord: CarrAmerica Realty Corporation, a Maryland corporation Tenant: PhoneXchange, a Delaware corporation This Commencement Date Confirmation is made by Landlord and Tenant pursuant to that certain Lease dated as of April 23, 1999 (the "Lease") for certain premises known as Suite ___ in the building commonly known as Building One of Pacific Corporate Plaza (the "Premises"). This Confirmation is made pursuant to Item 9 of the Schedule to the Lease. 1. Lease Commencement Date. Termination Date. Landlord and Tenant hereby agree that the Commencement Date of the Lease is ______ 199_, and the Termination Date of the Lease is ____________, _____. 2. The monthly Base Rent for the initial Term is as follows: Monthly Monthly TI Monthly Base Component Rent Component Base Rent Lease Year 1 $_____________ $_____________ $____________ Lease Year 2 $_____________ $_____________ $____________ Lease Year 3 $_____________ $_____________ $____________ Lease Year 4 $_____________ $_____________ $____________ Lease Year 5 $_____________ $_____________ $____________ 3. Acceptance of Premises. Tenant has inspected the Premises and affirms that the Premises is acceptable in all respects in its current "as is" condition. 4. Incorporation. This Confirmation is incorporated into the Lease, and forms an integral part thereof. This Confirmation shall be construed and interpreted in accordance with the terms of the Lease for all purposes. APPENDIX E Page 1 of 1 60 TENANT: PhoneXchange, a Delaware corporation By:______________________________________ Name:____________________________________ Title:___________________________________ LANDLORD: CarrAmerica Realty Corporation, a Maryland corporation By:______________________________________ Name:____________________________________ Title:___________________________________