10-K405

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

x    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2001

¨    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-26933

LIONBRIDGE TECHNOLOGIES, INC.

(Exact Name of registrant as specified in its charter)

DELAWARE	04-3398462
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
950 Winter Street, Waltham, MA	02451
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (781) 434-6000

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 Par Value

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days.    Yes x    No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

The aggregate market value of the voting stock held by non-affiliates of the registrant, as of March 14, 2002, was approximately $41 million (based on the closing price of the registrant’s Common Stock on March 14, 2002, of $2.38 per share).

The number of shares outstanding of the registrant’s $.01 par value Common Stock as of March 14, 2002 was 31,590,679.

DOCUMENTS INCORPORATED BY REFERENCE

Lionbridge intends to file a proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2001. Portions of such proxy statement are incorporated by reference into Part III of this Report.

LIONBRIDGE TECHNOLOGIES, INC.

ANNUAL REPORT ON FORM 10-K

YEAR ENDED DECEMBER 31, 2001

TABLE OF CONTENTS

		Page No.
Part I
Item 1.	Business	3
Item 2.	Properties	7
Item 3.	Legal Proceedings	8
Item 4.	Submission of Matters to a Vote of Security Holders	8
Part II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	8
Item 6.	Selected Consolidated Financial Data	9
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 8.	Financial Statements and Supplementary Data	26
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	26
Part III
Item 10.	Directors and Executive Officers of the Registrant	27
Item 11.	Executive Compensation	27
Item 12.	Security Ownership of Certain Beneficial Owners and Management of Lionbridge	27
Item 13.	Certain Relationships and Related Transactions	27
Part IV
Item 14.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	27
SIGNATURES		S-1

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PART I

Except for the historical information contained herein, the matters discussed in this Annual Report on Form 10-K are forward-looking statements that involve risks and uncertainties. Lionbridge makes such forward-looking statements under the provision of the “Safe Harbor” section of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements should be considered in light of the factors described below in Item 7 under “Factors That May Affect Future Results.” Actual results may vary materially from those projected, anticipated or indicated in any forward-looking statements. In this Annual Report on Form 10-K, the words “anticipates,” “believes,” “expects,” “intends,” “future,” “could,” and similar words or expressions (as well as other words or expressions referencing future events, conditions or circumstances) identify forward-looking statements.

Item  1.     Business

General

Lionbridge is a leading provider of solutions for worldwide deployment of technology and content, serving global businesses in the technology, financial services, manufacturing and life sciences industries. Lionbridge’s suite of services includes: globalization and localization solutions, testing services and application development. Lionbridge serves as an outsourced partner throughout a client’s product development and support lifecycle and offers the following key benefits to its clients:

Integrated Full-Service Offering.    Lionbridge offers a full suite of services including product localization and content globalization, comprehensive and product certification testing, and application development and maintenance. Lionbridge’s enterprise-wide globalization services address the full range of needs of its clients’ customers, suppliers, and employees. Lionbridge’s comprehensive solutions enable its clients to reduce time to market and achieve superior product quality, while its product certification testing confirms that independent software vendors’ applications properly interact with those of the hardware and equipment vendor. Lionbridge’s application development and maintenance services provide new software development, maintenance, and user support. Thus, Lionbridge’s end-to-end service offering allows its clients to work with a single outsource provider, which results in time and cost savings benefits to its clients.

Established Global Presence.    Lionbridge operates over 20 localization and testing centers in eleven countries throughout the world. Lionbridge believes this strong geographic coverage provides a network to meet all the globalization needs of its clients. In addition to over 750 consulting and service professionals, Lionbridge maintains a global network of approximately 2,500 third-party translators. This global network of employees and third-party translators provides Lionbridge with local-country linguistic and cultural expertise in many languages and cultures and enables it to handle larger, more complex engagements.

Proven Methodologies.    The cornerstone of Lionbridge’s approach to globalization is its Rapid Globalization Methodology (“RGM”) which provides a systematic approach to globalization projects, ensuring consistency across all global production sites. RGM not only increases productivity, but also provides a baseline for continuous process improvement and the transfer of knowledge and expertise within the Lionbridge organization.

Flexible and Enterprise-scale Globalization Technologies.    Lionbridge’s globalization solutions are built on the Lionbridge Globalization Platform^™ (“LGP”). The LGP is an array of configurable technologies that augments the methodology and expertise employed by Lionbridge’s content globalization teams. The LGP enables Lionbridge to reduce globalization costs, speed time to market and enhance the quality of multilingual content.

Industry Expertise.    Lionbridge has developed significant globalization expertise in targeted industries by offering services that accommodate the various needs of organizations in these industries. Lionbridge currently

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organizes its delivery of services into four primary industry groups: technology, life sciences, financial services and  manufacturing. Lionbridge leverages its expertise in these industries across the entire company to provide clients the full value of its expertise.

Lionbridge, through its predecessor and current wholly owned subsidiary, Lionbridge America, Inc., was incorporated in Delaware in September 1996. Its principal executive offices are located at 950 Winter Street, Waltham, Massachusetts 02451, its telephone number is (781) 434-6000, and its Web site is www.lionbridge.com.

Lionbridge Services

Lionbridge provides a full suite of services for worldwide deployment of technology and content, serving global businesses in the technology, financial services, manufacturing, and life sciences industries. Lionbridge’s services offering includes the following:

Globalization and Localization Solutions.    Lionbridge provides the following globalization and localization solutions:

· Product Localization.    Lionbridge creates foreign language versions of its clients’ products, content, and software applications, including the user interface, on-line help systems, documentation, technical support databases, training materials, and sales and marketing information. Lionbridge provides its clients with re-engineered, fully tested, and culturally adapted multilingual versions of their products and applications. Lionbridge uses a combination of internal and external translators, as well as translation software, for its localization services. Lionbridge has approximately 125 translators and editors who are employees and established relationships with a global network of approximately 2,500 third-party, local-country translators, including independent agencies and freelance professionals. Lionbridge’s Rapid Globalization Methodology standardizes processes, defines key activities, and specifies goals for each localization project enabling it to deliver high quality, localized versions of products and related materials across multiple languages and cultures in a timely fashion.

· Content Globalization.    Lionbridge provides multilingual content globalization services which consist of the continuous updating and other ongoing management of its clients’ localized software products and multilingual Web content. By utilizing its proprietary technology and integrating its processes and infrastructure with its clients’ content management processes and technology, Lionbridge is able to manage the localization process in a semi-automated manner for large volumes of content. Examples of client content requiring these types of globalization services include: a continuously updating on-line support site maintained in multiple languages; a learning program which is constantly updated to reflect the latest products and terminology; and a marketing product database which is constantly evolving.

The cornerstone of Lionbridge’s delivery of its globalization and localization solutions is its Rapid Globalization Methodology. RGM is a proven, repeatable process designed to ensure consistency around the world. A roadmap for effective globalization, RGM offers a systematic approach to adapting products and content to a target locale’s technical, linguistic and cultural expectations.

Lionbridge globalization and localization services are built on the Localization Globalization Platform, an array of technologies that augments the methodology and expertise employed by Lionbridge’s content globalization teams. LGP consists of four configurable elements: LionView^™, a collaboration portal for all project participants; Lion Access^™, a repository connector which selects, extracts and routes content for localization; LionPath^™, a workflow automation tool; and LionLinguist^™, language management tools which leverage previously translated segments across multiple file formats. LGP seamlessly integrates with Lionbridge’s clients’ production environments.

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Testing Services.    Testing services provided by Lionbridge under its VeriTest brand include the following:

· Comprehensive Testing.    Lionbridge provides a variety of testing services to its clients, ensuring the quality of its clients’ software applications, hardware products and Web sites. These services include:

· functionality and compatibility testing—to determine the extent to which the product functions as intended as well as whether it works as expected on the range of components and systems available to its end users,

· globalization testing—to determine whether the product is ready for global release by ensuring that locale-dependent functions work as intended within the local hardware and software environment of the end user,

· Web application testing—to identify any performance and user interface defects in a clients’ Web application, and

· accessibility testing—to determine whether the product is accessible to users who have disabilities.

· Product Certification.    Lionbridge provides product certification programs for many leading software, hardware and telecommunications companies, including Microsoft, AT&T, BMC Software, IBM, Novell, and Alcatel. These sponsoring companies retain Lionbridge to develop and administer test criteria that independent software vendors must satisfy before they may display the sponsor’s logo (such as Microsoft’s Certified for Windows^® 2000) on their products. These certification tests confirm that independent software vendors’ applications properly interact with those of the platform vendor. The logo is an indication to consumers of software quality and compatibility. Other Lionbridge logo programs include BMC Software Certified, AT&T Wireless Logo Certification Program, Novell “YES, Tested and Approved” Certification Program, IBM Server Proven^™ Program, and Alcatel OmniPCX Office Certification.

Application Development.    Lionbridge provides application outsourcing services for enterprise customers including new software development, maintenance, and user support. Through its ChinaConnect^™ brand, Lionbridge provides Web integration and software application development for wireless devices targeted to Chinese-speaking markets.

See Note 12 of Notes to Consolidated Financial Statements included as part of Item 14 of this Form 10-K for financial information relating to Lionbridge’s operating segments and geographic areas of operation.

Sales and Marketing

Substantially all of Lionbridge’s revenue has been generated through its dedicated direct sales force. Lionbridge currently has more than 50 direct sales professionals based in the United States, Europe and Asia who sell the full range of Lionbridge services. The Lionbridge sales approach is highly consultative and often involves planning for an organization’s ongoing requirements, including future versions of products, and ongoing support, maintenance, and training, related to both traditional and Web deployment. There are often several different functional areas within the same organization that require one or more of Lionbridge’s services. Many of its clients do not coordinate these purchases but buy these services at the department head level. As a result, Lionbridge’s sales professionals may call on several functional departments and at various management levels within the same client organization.

Lionbridge’s marketing efforts are designed to create brand recognition and demand for Lionbridge services throughout the world. Marketing programs include targeted industry and solution-specific advertising campaigns, trade show participation, speaking engagements, and promotion of customer success stories. Lionbridge plans to continue to expand its sales and marketing activities.

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Clients

Lionbridge clients are generally Global 2000 and emerging companies in the technology, life sciences, financial services and manufacturing industries. During the year ended December 31, 2001, Lionbridge provided services to more than 625 clients worldwide. The following companies are representative Lionbridge clients, each of whom purchased more than $1,000,000 in services from Lionbridge in the year ended December 31, 2001:

Adobe Systems	Lexmark	Parametric Technology
Cisco Systems	Microsoft	Rational Software
Compaq	Nortel Networks	SAP
Hewlett-Packard	Novell	Schneider Automation
Hyperion	Oracle	Sun Microsystems
IBM	Page Factory	Unicare Life & Health Insurance

In 2001, Lionbridge’s largest client, Hewlett-Packard, accounted for approximately 13% of total revenue. No other clients individually accounted for more than 10% of revenue in 2001, 2000 or 1999. In 2001, 2000 and 1999, Lionbridge’s five largest clients accounted for approximately 32%, 33%, and 29%, respectively, of revenue.

Competition

Lionbridge provides a broad range of solutions for worldwide deployment of technology and content to its clients. The market for its services is highly fragmented, and Lionbridge has many competitors. Lionbridge’s current competitors include the following:

· Localization or translation services providers such as Berlitz International, Bowne Global Solutions (a unit of Bowne & Co.), SDL plc and regional vendors of translation services specializing in specific languages in particular geographic areas. Additionally, companies which provide tool subsets or specific services have entered the market, including Convey Software (formerly eTranslate), GlobalSight, Idiom Technologies, Uniscape, and others;

· Independent testing labs providing testing and logo certification services such as National Software Testing Laboratories (a subsidiary of CMP Media) and Keylabs, and

· Internal localization departments of Global 2000 and large emerging companies.

Lionbridge may also face competition from a number of other companies in the future, including some companies that currently seek localization services from it. As businesses shift from telephonic support centers to Web-based support, technical support call centers and others that currently provide traditional outsourcing services may decide to provide comparable globalization services over the Internet. Other potential entrants into Lionbridge’s market include Web consulting companies who are being asked by their customers to assist them with international Web deployments. Currently, these companies are often requesting localization assistance from Lionbridge. Over time, however, they may determine to expand into localization to directly serve their customers’ requirements. Additionally, as hosting companies expand internationally and require localization of the content they host, these companies may expand to provide localization services themselves. As content management providers are brought international by their customers, they will be required to assist their customers with maintaining a multilingual database. While today they are often working with Lionbridge to assist in meeting their customers’ needs, it is possible that over time they will expand into offering competitive services.

There are relatively few barriers preventing companies from competing with Lionbridge. Lionbridge’s technology does not preclude or inhibit others from entering its market. As a result, new market entrants potentially pose a threat to Lionbridge’s business. While Lionbridge presently uses translation memory software licensed from third parties in its localization process, and to a lesser extent machine translation software also licensed from third parties, these technologies may improve and become sophisticated enough to compete with Lionbridge’s localization service offering.

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Lionbridge believes the principal competitive factors in providing its services include project management expertise, quality and speed of service delivery, vertical industry expertise, the ability to provide clients end-to-end globalization solutions, expertise and presence in certain geographic areas, corporate reputation, and expertise in Internet-related services. Lionbridge believes it has competed favorably with respect to these factors and has a strong reputation in its industry. However, Lionbridge cannot assure you that it will be able to do so in the future.

Intellectual Property Rights

Lionbridge’s success is dependent, in part, upon its proprietary Rapid Globalization Methodology, its Lionbridge Globalization Platform technologies, and other intellectual property rights. Lionbridge has patents or patent applications pending relating to its language automation translation memory engine. Lionbridge relies on a combination of trade secret, license, nondisclosure and other contractual agreements, and copyright and trademark laws to protect its intellectual property rights. Existing trade secret and copyright laws afford Lionbridge only limited protection. Lionbridge enters into confidentiality agreements with its employees, requires that its outside consultants and generally its clients enter into these agreements, and limit access to and distribution of Lionbridge’s proprietary information. Lionbridge cannot assure you that these arrangements will be adequate to deter misappropriation of its proprietary information or that it will be able to detect unauthorized use and take appropriate steps to enforce its intellectual property rights.

Human Resources

As of December 31, 2001, Lionbridge had 1,036 employees. Of these, 760 were consulting and service delivery professionals and 276 were management and administrative personnel performing marketing, sales, operations, process and technology, research and development, finance, accounting, and administrative functions.

Lionbridge has been successful in hiring individuals with leading-edge technical skills and project management experience. In addition, Lionbridge is committed to employee training and retention. Lionbridge has a dedicated knowledge management team that initiates and oversees the training and development of its service delivery professionals. Key organizational development initiatives include ongoing technical and project management classes as well as career path management and guidance.

Most employees are eligible to participate in Lionbridge’s stock option program. Additionally, a large number of Lionbridge’s employees are eligible to participate in its employee stock purchase program.

Lionbridge’s employees in France are represented by a labor union, and there are works councils in The Netherlands and Germany. Lionbridge has never experienced a work stoppage and believes that its employee relations are good.

Item 2.     Properties

Lionbridge maintains offices in the United States, Brazil, England, Ireland, France, Germany, The Netherlands, China, Japan, Taiwan and South Korea. Lionbridge maintains sales offices throughout the United States as well as in Dublin, Ireland; Paris, France; Rendsburg and Hamburg, Germany; Reading, England; Beijing, China; and Tokyo, Japan.

Lionbridge’s headquarters and principal administrative, finance, legal, and marketing operations are located in leased office space in Waltham, Massachusetts. Lionbridge’s lease is for a term of 3 years and expires on August 1, 2002. Lionbridge maintains a facility in metropolitan Dublin, Ireland and leases three floors under three separate leases expiring between September 14, 2025 and March 1, 2026. Lionbridge also maintains an operations center in Framingham, Massachusetts under a lease with a 5-year term that expires in February 2007. Lionbridge expects that it may need additional space as its business expands and believes that it will be able to obtain additional space as needed on commercially reasonable terms.

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Item 3.     Legal Proceedings

In March 2002, the United States District Court for the Southern District of New York entered an order dismissing without prejudice the claims against Lionbridge and its officers and directors in a certain securities class action lawsuit filed in July 2001. The complaint in this action asserted, among other things, that Lionbridge’s initial public offering prospectus and registration statement contained material misrepresentations and/or omissions regarding the conduct of Lionbridge’s initial public offering underwriters in allocating shares in Lionbridge’s initial public offering to the underwriters’ customers. In connection with this dismissal, Lionbridge and the individual defendants have agreed to extend the duration of applicable limitations periods as to such claims until December 31, 2002.

Item 4.     Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of Lionbridge’s security holders during the fiscal year ended December 31, 2001.

PART II

Item 5.     Market for Registrant’s Common Equity and Related Stockholder Matters

Lionbridge commenced its initial public offering of common stock on August 20, 1999 at a price to the public of $10.00 per share. As of March 14, 2002, there were approximately 350 holders of record of Lionbridge’s common stock. Lionbridge’s common stock is listed and traded on the Nasdaq National Market under the symbol “LIOX.”

The following table sets forth, for the periods indicated, the range of high and low sales prices for the common stock for the past eight quarters, all as reported by the Nasdaq National Market. The quotations represent interdealer quotations, without adjustments for retail mark ups, mark downs, or commissions, and may not necessarily represent actual transactions.

	High		Low
2000
First Quarter	$	28.0000	$	14.3750
Second Quarter	$	15.8125	$	7.2500
Third Quarter	$	11.3750	$	6.7500
Fourth Quarter	$	10.5625	$	2.2500
2001
First Quarter	$	6.5000	$	2.7500
Second Quarter	$	3.0000	$	1.3900
Third Quarter	$	1.8900	$	0.4500
Fourth Quarter	$	2.3400	$	0.8200

Lionbridge has not paid any cash dividends on its common stock and currently intends to retain any future earnings for use in its business. In addition, the terms of Lionbridge’s credit facility with Silicon Valley Bank prohibit the payment of cash dividends to Lionbridge by its European subsidiaries and the terms of the subordinated notes held by Capital Resource Lenders and two Morgan Stanley limited partnerships prohibit Lionbridge from paying any dividends to its stockholders. Accordingly, Lionbridge does not anticipate that any cash dividends will be declared or paid on the common stock in the foreseeable future.

Recent Sales of Unregistered Securities

During the fiscal year ended December 31, 2001, Lionbridge issued the following securities that were not registered under the Securities Act of 1933, as amended:

In August 2001, Lionbridge sold an aggregate of 460,000 shares of its common stock to its Chairman and Chief Executive Officer for aggregate consideration of $253,000, the fair market value of the stock at the time.

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The shares were sold pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. There were no underwriters or placement agents involved in such private placement transaction.

Item 6.     Selected Consolidated Financial Data

The following selected consolidated financial data reflects the combined results of operations and financial position of Lionbridge, INT’L.com, Inc. (“INT’L.com”), which was acquired by Lionbridge on May 22, 2000, and Harvard Translations, Inc. (“Harvard Translations”), which was acquired by Lionbridge on May 18, 2000, restated for all periods presented pursuant to the pooling-of-interests method of accounting. These mergers are more fully described in Note 4 to Lionbridge’s audited consolidated financial statements included as part of  Item 14 of this Form 10-K.

The selected consolidated financial data as of December 31, 2001 and 2000 and for each of the three years in the period ended December 31, 2001 have been derived from the audited consolidated financial statements of Lionbridge which appear as part of Item 14 of this Form 10-K. The selected consolidated financial data as of and for each of the years ended December 31, 1998 and 1997 have been derived from the audited consolidated financial statements included in Lionbridge’s report on Form 8-K/A filed with the Securities and Exchange Commission on July 31, 2000.

The historical results presented are not necessarily indicative of future results. You should read the data set forth below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included in this Form 10-K.

	Year Ended December 31,
	2001			2000			1999			1998			1997
	(In thousands, except per share data)
Consolidated Statement of Operations Data:
Revenue	$	101,204		$	115,149		$	88,764		$	59,754		$	39,443
Cost of revenue		63,123			72,746			62,644			39,885			27,211
Gross profit		38,081			42,403			26,120			19,869			12,232
Operating expenses:
Sales and marketing		11,342			11,384			10,141			5,053			2,334
General and administrative		34,382			33,143			29,222			16,393			12,211
Research and development		2,297			2,518			2,216			265			202
Amortization of acquisition-related intangible assets		6,651			6,503			6,113			2,445			4,400
Merger, restructuring and other charges		2,853			4,266			1,197			501			541
Acquired in-process research and development		—			—			300			—			—
Stock-based compensation		565			799			730			—			—
Total operating expenses		58,090			58,613			49,919			24,657			19,688
Loss from operations		(20,009	)		(16,210	)		(23,799	)		(4,788	)		(7,456	)
Interest expense:
Interest on outstanding debt		2,326			2,523			2,349			816			156
Accretion of discount on debt		839			212			6,009			—			—
Other (income) expense, net		838			714			351			(69	)		475
Loss before income taxes		(24,012	)		(19,659	)		(32,508	)		(5,535	)		(8,087	)
Provision for (benefit from) income taxes		439			616			699			(306	)		(39	)
Net loss		(24,451	)		(20,275	)		(33,207	)		(5,229	)		(8,048	)
Accrued dividends on preferred stock		—			3,574			2,397			1,248			1,062
Net loss attributable to common stockholders	$	(24,451	)	$	(23,849	)	$	(35,604	)	$	(6,477	)	$	(9,110	)
Basic and diluted net loss per share attributable to common stockholders(1)	$	(0.83	)	$	(0.96	)	$	(3.08	)	$	(1.64	)	$	(3.29	)
Shares used in computing basic and diluted net loss per share attributable to common stockholders		29,528			24,871			11,560			3,938			2,770

(1) See Note 2 to Lionbridge’s consolidated financial statements for an explanation of the basis used to calculate net loss per share attributable to common stockholders.

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	December 31,
	2001		2000		1999			1998			1997
	(In thousands)
Balance Sheet Data:
Cash and cash equivalents	$	11,711	$	16,741	$	12,350		$	1,199		$	1,476
Working capital (deficit)		1,709		4,235		(1,660	)		(4,403	)		(350	)
Total assets		54,747		62,046		60,695			34,591			23,295
Long-term debt, less current portion		17,318		13,265		15,472			3,703			209
Capital lease obligations, less current portion		77		114		307			240			—
Redeemable preferred stock		—		—		19,787			23,765			14,356
Stockholders’ equity (deficit)		3,448		11,184		(10,742	)		(18,279	)		(6,541	)

Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains forward-looking statements which involve risks and uncertainties. Lionbridge makes such forward-looking statements under the provision of the “Safe Harbor” section of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements should be considered in light of the factors described below in this Item 7 under “Factors That May Affect Future Results.” Actual results may vary materially from those projected, anticipated or indicated in any forward-looking statements. In this Item 7, the words “anticipates,” “believes,” “expects,” “intends,” “future,” “could,” and similar words or expressions (as well as other words or expressions referencing future events, conditions, or circumstances) identify forward-looking statements. The following discussion and analysis should be read in conjunction with “Selected Consolidated Financial Data” and the accompanying consolidated financial statements and related notes included elsewhere in this Form 10-K.

Overview

Lionbridge is a leading provider of solutions for worldwide deployment of technology and content, serving global businesses in the technology, financial services, manufacturing and life sciences industries. Lionbridge’s full suite of services include: globalization and localization solutions, comprehensive and product certification testing services and application development. Founded in 1996, Lionbridge manages some of its services under the VeriTest brand for comprehensive and product certification testing, the Harvard Translations brand for specialty translation and print/Web publishing services for the financial services and life sciences industries, and the ChinaConnect brand for Web integration and wireless application services applicable to the Chinese-speaking market.

Lionbridge has experienced operating losses, as well as net losses, for each year of its operations and, as of December 31, 2001, had an accumulated deficit of $103.8 million.

Critical Accounting Policies and Estimates

Lionbridge’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires Lionbridge to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Lionbridge periodically evaluates its estimates. Lionbridge bases its estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Lionbridge believes the following accounting policies require the greatest amount of judgments or estimates in the preparation of the financial statements: revenue recognition, allowance for doubtful accounts, valuation of goodwill and other intangible assets and the provision for income taxes.

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Revenue Recognition.    Lionbridge’s revenue is derived from project-by-project fees and, to a lesser extent, long-term service agreements. Projects are generally billed on a time and expense basis. Revenue is recognized using the percentage-of-completion method of accounting, based on all costs incurred to date as a percentage of management’s estimate of total costs of individual projects. The agreements entered into in connection with projects are generally terminable by clients upon 30 days’ prior written notice. If a client terminates an agreement, it is required to pay Lionbridge for time and expenses incurred through the termination date.

Allowance for Doubtful Accounts.    Lionbridge establishes an allowance for doubtful accounts to cover accounts receivable that may not be collectible. In establishing the allowance for doubtful accounts, Lionbridge analyzes the collectibility of individual large or past due accounts. Additionally, Lionbridge considers its historical bad debt experience and current economic trends in evaluating the allowance for doubtful accounts. Accounts written off in subsequent periods can differ materially from the allowance provided.

Valuation of Goodwill and Other Intangible Assets.    Lionbridge assesses the impairment of goodwill and other intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that Lionbridge considers important which could trigger an impairment review include: significant underperformance relative to expected historical or projected future operating results; significant changes in the overall business strategy; and significant negative industry or economic trends. When Lionbridge determines that the carrying value of intangibles and goodwill may not be recoverable based upon one or more of these indicators of impairment, Lionbridge measures any impairment based on a projected discounted cash flow method. In 2002, Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets” became effective. As a result, Lionbridge will cease to amortize approximately $13.9 million of goodwill. Lionbridge had recorded approximately $5.6 million of amortization of these amounts during 2001. In lieu of amortization, Lionbridge is required to perform an initial impairment review of its goodwill balances in 2002. The impairment review is based upon estimated future discounted cash flows. Estimating future cash flows requires making projections that can differ materially from actual results.

Provision for Income Taxes.    Lionbridge is required to estimate its income taxes in each of the jurisdictions in which it operates as part of preparing its consolidated financial statements. This involves estimating the actual current tax in addition to assessing temporary differences resulting from differing treatments for tax and financial accounting purposes. These differences together with net operating loss carryforwards and tax credits may be recorded as deferred tax assets or liabilities on the balance sheet. A judgment must then be made of the likelihood that any deferred tax assets will be recovered from future taxable income. To the extent that Lionbridge determines that it is more likely than not that deferred tax assets will not be utilized, a valuation allowance is established. Taxable income in future periods significantly different from that projected may cause adjustments to the valuation allowance that could materially increase or decrease future income tax expense.

Acquisitions

Lionbridge has grown its business through a combination of acquisitions and organic growth since its inception in 1996. Such acquisitions through December 31, 2001 have resulted in the cumulative recognition of approximately $38.5 million of goodwill and other intangible assets on its balance sheet, which generally have been amortized over five years.

In January 1999, Lionbridge acquired all of the stock of VeriTest, Inc. (“VeriTest”), a California-based provider of contract and logo certification testing services. Lionbridge paid $3.3 million in cash and issued notes totaling $750,000 and 66,668 shares of its common stock valued at $344,000. Subsequent to the acquisition date, pursuant to terms of the original agreement, Lionbridge paid a further $900,000 in cash in connection with the purchase. The acquisition was accounted for using the purchase method of accounting. In connection with this acquisition, Lionbridge has recorded $4.1 million of goodwill, which has been amortized using a five-year life.

In April 1999, Lionbridge’s wholly owned subsidiary, INT’L.com, acquired International Language Engineering Corporation (“ILE”), a company based in Colorado with additional operations in The Netherlands,

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for total consideration of $9.2 million, consisting of 1,983,017 shares of common stock valued at $3.4 million and 936,991 shares of Series D redeemable preferred stock valued at $5.8 million. In addition, long-term debt of ILE in the amount of $3.3 million was assumed. Upon the completion of the acquisition, all outstanding options to purchase common stock of ILE were exchanged for options to purchase common stock of INT’L.com under similar terms. The transaction was accounted for using the purchase method of accounting. In connection with this acquisition, $7.3 million of goodwill was recorded, which has been amortized using a five-year life.

At December 31, 1998, Lionbridge’s wholly owned subsidiary, INT’L.com, had a 32.8% equity investment in Motus!, a French-based provider of localization and translation services. This investment was accounted for using the equity method, under which INT’L.com recorded its proportionate share of the (income) loss of Motus! as other (income) expense, net. On September 30, 1999, INT’L.com acquired the remaining shares of common stock of Motus! for $124,000 in cash and options to purchase 4,540 shares of common stock of INT’L.com valued at $20,000. The transaction was accounted for using the purchase method of accounting. Goodwill of $217,000 was recorded in connection with this acquisition, which has been amortized using a five-year life.

In January 2000, Lionbridge acquired certain assets and operations of the language services operation of Nortel Networks Corporation (“Nortel”) in Montreal and Ottawa, Canada; Beijing, China; Sao Paulo, Brazil; Sunrise, Florida; and Bogota, Colombia for total initial consideration of $2.5 million in cash. In connection with the acquisition, Nortel awarded a preferred vendor designation to Lionbridge as part of a three-year services agreement. The purchase agreement provides for certain contingent payments to be made by Lionbridge during the first three years of the services agreement, dependent on the level of revenues generated under the services agreement during those periods. No such contingent payments were due as a result of revenues generated in 2001 or 2000. Lionbridge recorded $323,000 of goodwill related to this acquisition, not including any additional amounts that may be paid in the future, which has been amortized using a five-year life. The transaction was accounted for using the purchase method of accounting.

In May 2000, Lionbridge acquired Harvard Translations by means of a merger. Upon the effective date of the merger, each outstanding share of Harvard Translations common stock was converted into the right to receive 3.8864 shares of Lionbridge common stock. In addition, long-term debt of Harvard Translations payable to its former sole stockholder in the amount of approximately $203,000 and all accrued interest thereon was paid in full by the issuance of 13,820 shares of Lionbridge common stock. As a result of the merger, Lionbridge issued an aggregate of 285,865 shares of Lionbridge common stock. Upon the completion of the acquisition, all outstanding options to purchase common stock of Harvard Translations were assumed by Lionbridge and converted into options to purchase common stock of Lionbridge under similar terms. The transaction was accounted for using the pooling-of-interests method of accounting.

In May 2000, Lionbridge acquired INT’L.com by means of a merger. Upon the effective date of the merger, (i) each outstanding share of INT’L.com Series A common stock, Series B common stock, Series A preferred stock and Series B preferred stock was converted into the right to receive 0.7567 shares of Lionbridge common stock, (ii) each outstanding share of INT’L.com Series C preferred stock was converted into the right to receive 5.4590 shares of Lionbridge common stock, (iii) each outstanding share of INT’L.com Series D preferred stock was converted into the right to receive 0.5472 shares of Lionbridge common stock, (iv) the $2.0 million of INT’L.com convertible debt and all accrued interest thereon was paid in full and cancelled in exchange for 109,158 shares of Lionbridge common stock, and (v) $5.0 million of INT’L.com subordinated debt and all accrued interest thereon was paid in full and cancelled in exchange for 258,360 shares of Lionbridge common stock. As a result of the merger, Lionbridge issued an aggregate of 8,302,960 shares of common stock. Upon the completion of the acquisition, all outstanding options to purchase common stock of INT’L.com were assumed by Lionbridge and converted into options to purchase common stock of Lionbridge under similar terms. The transaction was accounted for using the pooling-of-interests method of accounting.

The financial information presented below reflects the combined financial position, operating results and cash flows of Lionbridge, Harvard Translations and INT’L.com and their subsidiaries as if they had been combined for all periods presented.

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In January 2001, Lionbridge acquired Quality Group Labs, Inc. (“Quality Group Labs”), a provider of testing services based in Massachusetts, for total initial consideration of $483,000, comprised of $250,000 in cash and 74,488 shares of Lionbridge common stock valued at $233,000. The acquisition was accounted for using the purchase method of accounting. In connection with this acquisition, Lionbridge recognized $433,000 of goodwill, which has been amortized using a five-year life. Additional goodwill of approximately $160,000 was subsequently recorded in 2002 in connection with an incremental stock issuance of 60,000 shares of Lionbridge common stock made under the terms of the original agreement. The agreement does not provide for any further consideration.

On June 21, 2001, Lionbridge acquired Data Dimensions, Inc. (“Data Dimensions”), a company based in Washington with operations in the United States, Ireland and the United Kingdom, by means of a merger. Upon the effective date of the merger, each outstanding share of Data Dimensions common stock was converted into the right to receive 0.190884 shares of Lionbridge common stock. As a result of the merger, Lionbridge issued an aggregate of 2,588,316 shares of Lionbridge common stock valued at $12.7 million. Upon the completion of the merger, all outstanding options and warrants to purchase common stock of Data Dimensions, with a fair value at that time of $1.2 million, were assumed by Lionbridge and converted into options and warrants to purchase 451,860 shares of common stock of Lionbridge under similar terms. The transaction was accounted for using the purchase method of accounting. In connection with this acquisition, Lionbridge recognized $7.2 million of goodwill, which has been amortized using a five-year life.

Lionbridge believes its acquisitions have contributed to its growth by rapidly expanding its employee base, geographic coverage, client base, industry expertise, and technical skills. Lionbridge anticipates that a portion of its future growth will be accomplished by acquiring existing businesses. The success of this plan depends upon, among other things, its ability to integrate acquired personnel, operations, products, and technologies into its organization effectively; to retain and motivate key personnel of acquired businesses; and to retain customers of acquired firms. Lionbridge cannot guarantee that it will be able to identify suitable acquisition opportunities, obtain any necessary financing on acceptable terms to finance any acquisitions, consummate any acquisitions, or successfully integrate acquired personnel and operations.

Merger, Restructuring and Other Charges

The following table summarizes activity with respect to merger, restructuring and other charges:

	Year Ended December 31,
	2001			2000		1999
Merger costs (credits), net	$	(20,000	)	$	2,465,000	$	—
Restructuring charges, net		2,537,000			915,000		1,197,000
Impairment of long-lived assets		336,000			886,000		—
	$	2,853,000		$	4,266,000	$	1,197,000

During the year ended December 31, 2001, Lionbridge recorded a net merger credit of $20,000. This amount consists primarily of fees for professional services incurred in connection with Lionbridge’s attempted acquisition of Mendez S.A., offset by the receipt of a $1.0 million fee from the successful bidder for Mendez S.A.

Restructuring charges of $2.5 million were recorded in the year ended December 31, 2001. These charges relate to: (i) the costs of consolidating Lionbridge facilities in the United States as a result of the acquisition of Data Dimensions, consisting primarily of accruals for lease payments on vacant office space, and (ii) costs associated with workforce reductions in the United States, Canada, Brazil, Japan, China, Korea, Germany, Ireland, The Netherlands, the United Kingdom and France, consisting of 154 technical staff, 26 sales and marketing staff and 50 administrative staff. All employees had been informed of their termination and related benefits in the period that the charge was recorded. The restructuring charge for the year ended December 31, 2001 is presented net of a $66,000 reversal of a charge recorded in the quarter ended March 31, 2001 due to subsequent events which reduced the amount of benefits paid on behalf of a terminated employee.

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Impairment charges for long-lived assets for the year ended December 31, 2001 of $336,000 relate primarily to the write-off of acquired workforce and software licenses as a result of the closure of Lionbridge’s office in Montreal, Canada during the second quarter of 2001.

Merger costs for the year ended December 31, 2000 of $2.5 million consist of fees for investment banking, legal and accounting services and other direct costs incurred in connection with Lionbridge’s mergers with Harvard Translations and INT’L.com.

Restructuring charges for the year ended December 31, 2000 of $915,000 relate to: (i) the costs of closing facilities in the United States, France and The Netherlands as a result of the merger with INT’L.com, consisting primarily of accruals for lease payments on vacant office space, and (ii) costs associated with workforce reductions in Canada, the United States and France, consisting of six technical staff and three administrative staff. All employees had been informed of their termination and related benefits in the period that the charge was recorded. The restructuring charge for the year ended December 31, 2000 is presented net of a $162,000 reversal of a charge recorded in the second quarter of 2000, due to subsequent events which have reduced the potential loss on vacant office space.

Impairment charges for long-lived assets for the year ended December 31, 2000 of $886,000 relate to the write-off of property and equipment, primarily consisting of previously capitalized licenses for software, that was abandoned as a result of Lionbridge’s merger with INT’L.com.

Restructuring charges for the year ended December 31, 1999 of $1.2 million consist of charges related to workforce reductions in INT’L.com’s United States operating sites, consisting of 36 technical staff, 14 administrative staff and four sales staff.

At December 31, 2001, accruals totaling $364,000 related to restructuring charges, in addition to accruals of $2,078,000 related to restructuring charges which were assumed upon the acquisition of Data Dimensions, remained on the consolidated balance sheet. Lionbridge currently anticipates that all merger and restructuring accrual balances will be fully utilized by December 31, 2002, except for certain long-term contractual obligations relating to leases for facilities, $648,000 of which related to long-term obligations on unused facilities and is included in Other long-term liabilities.

During the years ended December 31, 2001 and 2000, Lionbridge utilized $917,000 and $2.5 million, respectively, of accruals related to merger costs and $3.8 million and $712,000, respectively, related to restructuring charges.

Non-Cash Charges

Deferred Compensation

Lionbridge recorded deferred compensation of approximately $3.8 million in 1999, representing the difference between the exercise price of stock options granted to employees and the fair market value for accounting purposes of the underlying common stock at the date of the grant. The deferred compensation is being amortized over the four-year vesting period of the applicable options. Of the total deferred compensation amount, $2.1 million had been amortized and $1.1 million had been reversed due to forfeitures of the underlying options at December 31, 2001. The amortization of deferred compensation is recorded as an operating expense and totaled $565,000, $799,000 and $730,000 for the years ended December 31, 2001, 2000 and 1999, respectively. Lionbridge currently expects to amortize the following remaining amounts of deferred compensation as of December 31, 2001 in the fiscal periods ending:

December 31, 2002	$480,000
December 31, 2003	$161,000

Original Issue Discount on Debt

Interest expense for the year ended December 31, 2001 includes $738,000 for the accretion of the original issue discount on $5.0 million of subordinated debt issued in June 2001 by Lionbridge. This discount represents

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the value attributable to warrants to purchase up to 900,000 shares of common stock at a price of $0.80 per share, granted in connection with the debt financing. The principal under the note was due on October 31, 2001. However, as a result of terms included in the original subordinated debt agreement, on October 31, 2001, the note automatically converted into a new note with essentially identical terms but with a principal amount of $8,000,000 due on September 30, 2006. The $3.0 million discount on the new note is being accreted through interest expense on a straight-line basis over the period from November 1, 2001 to September 30, 2006. Interest expense for the year ended December 31, 2001 includes $101,000 of accretion of this discount.

Interest expense for the years ended December 31, 2000 and 1999 includes approximately $212,000 and $42,000, respectively, for the accretion of the original issue discount on $2.0 million of convertible promissory notes issued in August 1999 by INT’L.com. This discount represents the $254,000 value attributable to warrants to purchase 56,753 shares of common stock, at an exercise price of $1.45 per share, granted in connection with these notes. These warrants were fully exercised in May 2000 in a cashless exercise, resulting in the net issuance of 49,547 shares of Lionbridge common stock.

Interest expense for the year ended December 31, 1999 includes approximately $6.0 million for the accretion of the original issue discount on $12.0 million of subordinated notes issued in the first quarter of 1999. This discount represents the $6.0 million value attributable to detachable warrants to purchase 1,533,260 shares of common stock, at an exercise price of $0.015 per share, granted in connection with this debt financing. As Lionbridge was previously required to repay the subordinated notes in full upon the closing of its initial public offering, Lionbridge recorded the expense of this discount on a straight-line basis over a six-month period from date of debt issuance to the date by which it expected the initial public offering to occur. Pursuant to an amendment of the debt agreements effective August 19, 1999, Lionbridge was required to redeem only $6.0 million of the subordinated notes upon the closing of its initial public offering of securities on August 25, 1999.

Results of Operations

The following table sets forth certain consolidated financial data as a percentage of total revenues.

	Year Ended December 31,
	2001		2000		1999
Revenue	100.0	%	100.0	%	100.0	%
Cost of revenue	62.4		63.2		70.6
Gross profit	37.6		36.8		29.4
Operating expenses:
Sales and marketing	11.2		9.9		11.4
General and administrative	34.0		28.8		33.0
Research and development	2.3		2.2		2.5
Amortization of acquisition-related intangible assets	6.6		5.6		6.9
Merger, restructuring and other charges	2.8		3.7		1.3
Acquired in-process research and development	—		—		0.3
Stock-based compensation	0.6		0.7		0.8
Total operating expenses	57.5		50.9		56.2
Loss from operations	(19.9	)	(14.1	)	(26.8	)
Interest expense:
Interest on outstanding debt	2.3		2.2		2.7
Accretion of discount on debt	0.8		0.2		6.7
Other expense, net	0.8		0.6		0.4
Loss before income taxes	(23.8	)	(17.1	)	(36.6	)
Provision for income taxes	0.4		0.5		0.8
Net loss	(24.2	)%	(17.6	)%	(37.4	)%

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Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Revenue.    In 2001, revenue decreased 12.1% to $101.2 million from $115.1 million in 2000. The decrease was attributable to lower volume of projects received from recurring customers as well as a decrease in the number of customers, reflecting the effect of the global economic slowdown in the technology sector during the year. Specifically, revenue from customers in the telecommunications industry decreased by 47.5% from the revenue recognized from the same customers during the previous year. Partially offsetting the decrease was incremental revenue derived from the operations of Data Dimensions of $9.7 million which was acquired in June 2001. Revenue for 2000 included incremental revenue of approximately $2.0 million derived from work in process acquired as part of Lionbridge’s acquisition of the language services operation of Nortel during the first quarter of that year.

Cost of Revenue.    Cost of revenue consists primarily of expenses incurred for translation services provided by third parties as well as salaries and associated employee benefits for personnel related to client projects. As a percentage of revenue, cost of revenue was 62.4% in 2001 as compared to 63.2% for the prior year. Of the total $9.6 million decrease from 2000 to 2001, $1.5 million was attributable to the cost recorded in the first quarter of 2000 upon the completion of the work in process acquired as part of the acquisition of the language services operation of Nortel in that quarter. The remaining amount of the decrease was largely attributable to reduced headcount and lowered reliance on external consultants and translators, partially offset by $5.2 million of incremental costs relating to the operations of Data Dimensions since its acquisition by Lionbridge in June 2001.

Sales and Marketing.    Sales and marketing expenses consist primarily of salaries, commissions and associated employee benefits, travel expenses of sales and marketing personnel, and promotional expenses. Sales and marketing costs of $11.3 million in 2001 were essentially flat with the previous year. Sales and marketing expenses associated with the operations of Data Dimensions were $871,000 for 2001 which were offset by headcount reductions and curtailed marketing expenditures in other parts of the business. As a percentage of revenue, sales and marketing expenses increased during 2001 to 11.2% from 9.9% in the prior year as a result of the declining revenue levels period to period.

General and Administrative.    General and administrative expenses consist of salaries of the management, purchasing, process and technology, finance and administrative groups, and associated employee benefits; facilities costs, including related depreciation and amortization; information systems costs; professional fees; travel; and all other site and corporate costs. General and administrative costs increased 3.7% to $34.4 million in 2001 from $33.1 million in 2000. The acquisition of Data Dimensions in June 2001 accounted for approximately $4.5 million of the increase, which was partially offset by the positive effects of restructuring activities undertaken throughout 2001. As a percentage of revenue, general and administrative expenses were 34.0% in 2001 compared to 28.8% in 2000 due to the reasons noted above as well as the declining revenue levels period to period.

Research and Development.    Research and development expenses relate to the Lionbridge Globalization Platform, an array of configurable technologies used in the globalization process, and include salaries and associated employee benefits, equipment depreciation and third-party contractor expenses. Research and development expense decreased 8.8% to $2.3 million in 2001 from $2.5 million in 2000. Lower usage of external consultants and lower headcount-related expenses accounted for a decrease of $425,000, which was partially offset by increased equipment-related expenses.

Amortization of Acquisition-related Intangible Assets.    Amortization of acquisition-related intangible assets consists of amortization of goodwill and other intangible assets resulting from acquired businesses. Amortization increased 2.3% to $6.7 million in 2001 from $6.5 million in 2000. This increase was primarily attributable to $847,000 of goodwill amortization associated with the acquisitions of Quality Group Labs in January 2001 and Data Dimensions in June 2001, offset by a reduction in amortization expense related to fully amortized intangible assets in 2001 and a reduction in goodwill resulting from the utilization of net operating loss carryforwards.

Interest Expense.    Interest expense represents interest paid or payable on debt and the accretion of discounts on subordinated notes with detachable warrants. Interest expense increased to $3.2 million in 2001

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from $2.8 million in 2000. This increase was principally due to accretion of the discount on debt issued in June 2001, partially offset by the cessation of accretion of the original issue discount on notes issued in 1999. Interest expense for the years ended December 31, 2001 and 2000 includes $839,000 and $0, respectively, for the accretion of the discount on a note issued in June 2001 and $0 and $212,000, respectively, for the accretion of the original issue discount on notes issued in August 1999.

Other Expense, Net.    Other expense, net consists primarily of foreign currency translation gains or losses arising from exchange rate fluctuations on transactions denominated in currencies other than the local currencies of the countries in which the transactions are recorded. As a percentage of revenue, other expense, net, increased to 0.8% from 0.6% for the years ended December 31, 2001 and 2000, respectively. Other expense, net increased 17.4% to $838,000 in 2001 from $714,000 in 2000.

Provision for Income Taxes.    The provision for income taxes for the years ended December 31, 2001 and 2000 represents taxes resulting from operations in foreign jurisdictions. Of the provision amounts booked for 2001 and 2000, $15,000 and $243,000, respectively, represent noncash expenses resulting from utilizations of net operating loss carryforwards. The benefit from Lionbridge’s utilization of net operating loss carryforwards in certain European countries during these periods was recorded as a reduction of goodwill, rather than a tax provision benefit, since the deferred tax assets associated with these carryforwards had been fully reserved at the time Lionbridge acquired the localization businesses of Stream International Holdings, Inc. (“Stream”). Lionbridge recorded no tax benefit for losses generated in other jurisdictions during these periods due to the uncertainty of realizing any benefit.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Revenue.    In 2000, revenue increased 29.7% to $115.1 million from $88.8 million in 1999. This increase results from both an increase in the number of customers as well as an increase in project size during 2000 as compared to 1999. Additionally, results for 2000 reflected revenue derived from the operations acquired from Nortel in January 2000 which accounted for $6.4 million of the increase as well as the operations of ILE which were only included in 1999 for nine months.

Cost of Revenue.    As a percentage of revenue, cost of revenue was 63.2% in 2000, a decrease of 7.4% from the 70.6% level of 1999. These decreases were primarily attributable to decreased outsourcing costs as INT’L.com adopted the Lionbridge outsourcing pricing structure in the second half of 2000 as well as a reduction in the internal cost of sales due to the consolidation of certain offices in 2000.

Sales and Marketing.    Sales and marketing costs increased 12.3% to $11.4 million in 2000 from $10.1 million in 1999. This increase was primarily due to expenses associated with the hiring of seven additional direct sales personnel in 2000. As a percentage of revenue, sales and marketing expenses decreased to 9.9% from 11.4% during 2000 as a result of the rate of revenue growth during the year exceeding the corresponding rate of increase in sales and marketing expense.

General and Administrative.    General and administrative costs increased 13.4% to $33.1 million in 2000 from $29.2 million in 1999, partially as a result of the acquisition of the Nortel operations in January 2000 and the full-year impact of the acquisition of ILE in the second quarter of 1999. Also contributing to the increase were higher depreciation expense, the full-year impact of expenses related to being a publicly traded company and costs associated with an increased number of employees. As a percentage of revenue, general and administrative expenses were 28.8% in 2000 compared to 33.0% in 1999.

Research and Development.    Research and development expense increased 13.6% to $2.5 million in 2000 from $2.2 million in 1999. This increase reflects the full-year impact of development efforts for the workflow component of LGP which commenced during the first quarter of 1999.

Amortization of Acquisition-related Intangible Assets.    Amortization increased 6.4% to $6.5 million in 2000 from $6.1 million in 1999. This increase was primarily attributable to the amortization of goodwill and

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other intangible assets recognized on the acquisition of the Nortel language services operations in 2000 as well as the full-year impact of ILE which was only acquired in the second quarter of 1999.

Interest Expense.    Interest expense decreased to $2.7 million in 2000 from $8.4 million in 1999. This decrease was principally due to a decrease in the accretion of the original issue discount on notes issued in 1999 to $212,000 from $6.0 million for the year ended December 31, 2000 and 1999, respectively.

Other Expense, Net.    Other expense, net consists primarily of foreign currency translation gains or losses arising from exchange rate fluctuations on transactions denominated in currencies other than the local currencies of the countries in which the transactions are recorded. As a percentage of revenue, other expense, net, increased to 0.6% from 0.4% for the years ended December 31, 2000 and 1999, respectively. Other expense, net increased 103.4% to $714,000 in 2000 from $351,000 in 1999.

Provision for Income Taxes.    The provision for income taxes for the years ended December 31, 2000 and 1999 represents taxes resulting from operations in foreign jurisdictions. Of the provision amounts booked for 2000 and 1999, $243,000 and $519,000, respectively, represent noncash expenses resulting from utilizations of net operating loss carryforwards. The benefit from Lionbridge’s utilization of net operating loss carryforwards in certain European countries during these periods was recorded as a reduction of goodwill, rather than a tax provision benefit, since the deferred tax assets associated with these carryforwards had been fully reserved at the time Lionbridge acquired Stream’s localization businesses. Lionbridge recorded no tax benefit for losses generated in other jurisdictions during these periods due to the uncertainty of realizing any benefit.

Quarterly Results of Operations

The following tables set forth unaudited consolidated quarterly financial data for the periods indicated. Lionbridge derived this data from its unaudited consolidated financial statements, and, in the opinion of management, they have been prepared on the same basis as Lionbridge’s audited consolidated financial statements for the years ended December 31, 2001 and 2000, and include all adjustments, which consist only of normal recurring adjustments, necessary to present fairly the financial results for the periods. Certain quarterly amounts have been reclassified to conform with current year presentation. The operating results for any quarter are not necessarily indicative of results for any future period.

	Quarter Ended
	Dec. 31,			Sept. 30,			June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,			March 31,
	2001			2001			2001			2001			2000			2000			2000			2000
	(Unaudited)
	(Amounts in thousands)
Revenue	$	25,307		$	25,924		$	22,693		$	27,280		$	27,720		$	30,345		$	28,888		$	28,196
Cost of revenue		15,043			16,580			14,435			17,065			17,540			18,091			17,613			19,502
Gross profit		10,264			9,344			8,258			10,215			10,180			12,254			11,275			8,694
Operating expenses:
Sales and marketing		2,568			2,827			2,821			3,126			3,023			2,756			2,731			2,874
General and administrative		7,731			9,800			7,920			8,931			8,886			8,039			8,145			8,073
Research and development		479			580			594			644			615			605			524			774
Amortization of acquisition-related intangible assets		1,835			1,518			1,628			1,670			1,681			1,637			1,580			1,605
Merger, restructuring and other charges		300			340			2,088			125			—			725			3,541			—
Stock-based compensation		124			128			165			148			168			202			212			217
Total operating expenses		13,037			15,193			15,216			14,644			14,373			13,964			16,733			13,543
Loss from operations		(2,773	)		(5,849	)		(6,958	)		(4,429	)		(4,193	)		(1,710	)		(5,458	)		(4,849	)
Interest expense:
Interest on outstanding debt		644			575			565			542			647			704			607			565
Accretion of discount on debt		286			553			—			—			—			—			79			133
Other (income) expense, net		(72	)		390			102			418			170			196			123			225
Loss before income taxes		(3,631	)		(7,367	)		(7,625	)		(5,389	)		(5,010	)		(2,610	)		(6,267	)		(5,772	)
Provision for income taxes		12			195			89			143			136			201			75			204
Net loss	$	(3,643	)	$	(7,562	)	$	(7,714	)	$	(5,532	)	$	(5,146	)	$	(2,811	)	$	(6,342	)	$	(5,976	)

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Lionbridge has experienced quarter-to-quarter variability in its revenue and gross profit. This variability is due to fluctuations in its clients’ release cycles, the length of the its sales cycle, rapid growth, acquisitions, the emerging nature of the markets in which Lionbridge competes, global economic conditions and other factors outside Lionbridge’s control. Lionbridge believes that quarter-to-quarter comparisons of results of operations are not necessarily meaningful. You should not rely on these comparisons as a measure of future performance.

Liquidity and Capital Resources

Since inception, Lionbridge has relied upon sales of equity securities and borrowings to fund operations. On August 25, 1999, Lionbridge completed its initial public offering of 3,500,000 shares of common stock. After deducting expenses, Lionbridge received approximately $31.8 million in cash proceeds from this transaction. In June 2000, Lionbridge issued 1,500,000 shares of common stock at $8.50 per share in a private placement for total consideration before expenses of approximately $12.8 million. In August 2001, Lionbridge issued 460,000 shares of common stock at $0.55 per share to its Chairman and Chief Executive Officer in a private placement for total consideration of $253,000.

Net cash used in operations was $6.7 million in 2001, $8.6 million in 2000, and $10.1 million in 1999. Cash used in these periods was primarily to fund the net losses of $24.5 million, $20.3 million, and $33.2 million incurred during these years, respectively, offset in part by depreciation, amortization and other non-cash expenses, and changes in operating assets and liabilities. Changes in operating assets and liabilities were largely the result of Lionbridge’s business operations during these periods in addition to a receipt in 2001 of a tax refund of $5.0 million related to the pre-acquisition operations of Data Dimensions. Lionbridge has not experienced any significant trends in accounts receivable other than changes relative to increases in sales. Fluctuations in accounts receivable from period to period relative to changes in sales are a result of the timing of customer invoicing and receipt of payments from customers.

Net cash used in investing activities was $684,000 in 2001, $6.0 million in 2000, and $5.6 million in 1999. Investing activities for these periods were primarily purchases of equipment and the acquisitions of Quality Group Labs and Data Dimensions in 2001, certain assets of the language services operation of Nortel in 2000, and VeriTest, ILE, and Motus! in 1999.

Net cash provided by financing activities was $2.5 million in 2001, $19.0 million in 2000, and $27.2 million in 1999. The primary financing activities were the issuance of $5.0 million of notes payable and the private placement of common stock in 2001, the private placement of common stock in 2000, and the completion of Lionbridge’s initial public offering in 1999, with additional resources being provided by borrowings against Lionbridge’s bank lines of credit in each year as well as the issuance of the subordinated debt and convertible promissory notes in 1999 and 2000.

As of December 31, 2001, Lionbridge had $8.6 million outstanding under its commercial credit facility with a bank that allows Lionbridge to borrow up to $13.0 million, expiring June 2002. The bank has indicated in a letter to Lionbridge its intention to extend the credit facility to April 2003. The facility requires Lionbridge to maintain certain financial covenants and restricts the payment of dividends. The facility bears interest at prime plus 2.00% (6.75% at December 31, 2001) and is collateralized by worldwide accounts receivable.

In June 2001, Lionbridge entered into a subordinated debt agreement pursuant to which a 12% promissory note in the amount of $5,000,000 was issued. The principal under the note was due on October 31, 2001, with interest payable quarterly in arrears. However, as a result of terms included in the original subordinated debt agreement, on October 31, 2001, the note automatically converted into a new note with essentially identical terms but with a principal amount of $8,000,000 due on September 30, 2006, with interest payable quarterly in arrears at 12% per year. The note is subject to certain covenant restrictions and the terms of the subordinated debt agreement restrict Lionbridge from paying dividends to its stockholders.

In the second quarter of 1999, Lionbridge’s wholly owned subsidiary, INT’L.com, assumed ILE’s obligation under a promissory note to a former stockholder in the amount of $3.3 million as part of its acquisition

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of ILE. The promissory note accrues interest at 8.5% per year and matures June 27, 2002. The promissory note is subordinate to all indebtedness owed by INT’L.com to any bank, pension fund, insurance fund or other financial institution.

In the first quarter of 1999, Lionbridge entered into subordinated loan agreements with Morgan Stanley Venture Capital Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P., existing stockholders of Lionbridge, and Capital Resource Lenders III, L.P. Under the terms of the agreements, Lionbridge issued $12.0 million of subordinated notes. The agreements require Lionbridge to comply with several operating and financial covenants, including a prohibition on the payment of dividends to its stockholders. In connection with its initial public offering, Lionbridge repaid $6.0 million of the subordinated notes and Capital Resource Lenders and the Morgan Stanley-sponsored limited partnerships agreed to defer the repayment of the remaining $6.0 million of the subordinated notes that would otherwise have been due upon the completion of its initial public offering. A subsequent amendment of the debt agreements in March 2001 extended the maturity date of the notes to the earlier of January 31, 2002 or an underwritten public offering by Lionbridge with aggregate proceeds of at least $10,000,000. In the event of a qualifying underwritten public offering, 50% of the then outstanding notes and accrued interest are payable, with the remaining amount maturing on January 31, 2002. In December 2001, the notes were amended to change the maturity date of the notes to April 15, 2002.

As of December 31, 2001, Lionbridge’s other significant financial commitments consisted of $3.5 million of notes payable to former stockholders of INT’L.com which accrue interest at 6.0% per annum, increasing by 1.0% per annum, and mature in January 2005. Lionbridge also has obligations of $535,000 under an equipment financing facility and obligations under operating and capital leases.

The following table summarizes Lionbridge’s contractual cash obligations at December 31, 2001 and the effect such obligations are expected to have on its liquidity and cash flow in future periods.

	Total		Less than 1 Year		1 – 3 Years		4 – 5 Years		More than 5 Years
	(In thousands)
Debt	$	29,817	$	9,600	$	12,217	$	8,000	$	—
Interest on debt		7,254		2,098		4,436		720		—
Capital leases		144		67		77		—		—
Operating leases		15,564		4,622		4,749		995		5,198
	$	52,779	$	16,387	$	21,479	$	9,715	$	5,198

Lionbridge has agreements with the Irish Industrial Development Agency regarding financial grants to its Irish subsidiaries from this agency. Under the agreements, the Irish subsidiaries may not pay dividends or otherwise distribute cash, including any distributions to Lionbridge. In addition, Lionbridge’s European subsidiaries, including its Irish subsidiaries, are restricted from paying dividends under the terms of its commercial credit facility with Silicon Valley Bank. These restrictions have not had an impact on Lionbridge or any of its subsidiaries and Lionbridge does not expect that these restrictions will have a material impact in the future.

As of December 31, 2001, Lionbridge had cash and cash equivalents of $11.7 million and an additional $1.1 million available for borrowing under the bank line of credit. Lionbridge’s future financing requirements will depend upon a number of factors, including Lionbridge’s operating performance and increases in operating expenses associated with growth in its business. Lionbridge anticipates that its present cash position and available financing should provide adequate cash to fund its currently anticipated cash needs through at least the next 12 months. Lionbridge expects to seek additional financing during 2002, but cannot assure you that additional financing, if needed, will be available to Lionbridge at terms acceptable to it, if at all.

Conversion to the Euro

On January 1, 1999, 11 European countries began using the Euro as their single currency, while still continuing to use their own notes and coins for cash transactions. Local coins and notes ceased to be legal tender

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in January 2002. Lionbridge conducts a significant amount of business in these countries. The introduction of the Euro has not resulted in any material adverse impact upon the results of Lionbridge’s operations, although it continues to monitor the effects of the conversion. Any significant fluctuations in the value of the Euro could adversely impact the results of Lionbridge’s operations.

Recently Issued Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that all business combinations be accounted for under the purchase method only and that certain acquired intangible assets in a business combination be recognized as assets apart from goodwill. SFAS No. 142 requires that ratable amortization of goodwill be replaced with periodic tests of the goodwill’s impairment and that intangible assets other than goodwill generally be amortized over their useful lives. In addition, SFAS No. 142 includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill. SFAS No. 142 also requires Lionbridge to complete a transitional goodwill impairment test within six months from the date of adoption. Application of the non-amortization provisions of SFAS No. 142 for goodwill is expected to result in an increase in operating income of approximately $5.7 million for the year ended December 31, 2002. At December 31, 2001, Lionbridge had goodwill of approximately $13.6 million. Pursuant to SFAS No. 142, Lionbridge will test its goodwill for impairment upon adoption and, if impairment is indicated, record such impairment as a cumulative effect of an accounting change. SFAS No. 141 is effective for all business combinations initiated after June 30, 2001 and for all business combinations accounted for by the purchase method for which the date of acquisition is after June 30, 2001. The provisions of SFAS No. 142 will be effective for fiscal years beginning after December 15, 2001, and were thus adopted by Lionbridge, as required, on January 1, 2002. Lionbridge has not yet determined whether it will be required to record an impairment of its goodwill in 2002.

In August 2001, the FASB issued SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supercedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” SFAS No. 144 applies to all long-lived assets (including discontinued operations) and consequently amends Accounting Principles Board Opinion No. 30, “Reporting Results of Operations—Reporting the Effects of Disposal of a Segment of a Business.” SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001, and were thus adopted by Lionbridge, as required, on January 1, 2002. Lionbridge does not expect the adoption of SFAS No. 144 to have a material impact on its financial position or results of operations.

Factors That May Affect Future Results

This Annual Report on Form 10-K contains forward-looking statements which involve risks and uncertainties. Lionbridge’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, without limitation, those set forth in the following risk factors and elsewhere in this Annual Report on Form 10-K. In addition to the other information included or incorporated by reference in this Annual Report on Form 10-K, the following risk factors should be considered carefully in evaluating Lionbridge and its business.

Lionbridge’s revenue could be negatively affected by the delay of its clients’ product releases and production schedules or the loss of a major client.

A significant portion of Lionbridge’s revenue is linked to the product release cycle and production cycle of its clients. As a result, Lionbridge performs varying amounts of work for specific clients from year to year based on their product development schedule. A major client in one year may not have use for a similar level of Lionbridge’s services in another year. In addition, Lionbridge derives a significant portion of its revenues from large projects and programs for a limited number of clients. In 2001, Lionbridge’s largest customer accounted for

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approximately 13% of its revenue and its five largest clients accounted for approximately 32% of its revenue. As a result, the loss of any major client or a significant reduction in a large project’s scope could materially reduce Lionbridge’s revenue and cash flow, and adversely affect its ability to achieve and maintain profitability.

Lionbridge has an accumulated deficit, is not currently profitable and may incur future losses.

Lionbridge has incurred substantial losses since it was founded, and may continue to incur substantial losses for the foreseeable future. Lionbridge has an accumulated deficit of approximately $103.8 million as of December 31, 2001 and a net loss of $24.5 million for the year ended December 31, 2001. Lionbridge intends to continue to invest in internal expansion, infrastructure, integration of acquired companies into its existing operations, select acquisitions, and its sales and marketing efforts. Lionbridge cannot predict when it will operate profitably, if ever.

If Lionbridge’s losses continue, it will need to raise additional capital. If Lionbridge is unable to do so, or does so on unfavorable terms, the value of your investment in its stock may decline.

If Lionbridge’s cash losses continue, it may be unable to pay its expenses unless it raises additional capital. If Lionbridge needs to raise additional capital but is unable to do so, it may not be able to continue as a going concern. If Lionbridge needs to raise additional capital but is able to do so only on unfavorable terms, the value of your investment in its stock may decline.

Delisting of Lionbridge’s common stock from the Nasdaq National Market could negatively impact the marketability of the stock and reduce the market price of the stock.

In March 2002, Nasdaq notified Lionbridge that Lionbridge’s common stock may be subject to delisting from the Nasdaq National Market due to Lionbridge’s noncompliance with listing standards that require Lionbridge to maintain either (i) minimum stockholders’ equity of at least $10.0 million or (ii) a minimum bid price of $3.00 per share (regardless of the amount of Lionbridge’s stockholders’ equity). Lionbridge has until June 17, 2002 to regain compliance with either standard. If Lionbridge is not in compliance at June 17, 2002, then Nasdaq will notify Lionbridge that it will be delisted. Lionbridge can regain compliance if, no later than June 17, 2002, Lionbridge increases its stockholders’ equity to at least $10.0 million while maintaining a minimum closing bid price per share of $1.00 or by obtaining a minimum closing bid price per share of $3.00 for 10 consecutive days. Lionbridge intends to take all reasonable measures to regain compliance.

Although Lionbridge hopes to regain compliance by June 17, 2002, Lionbridge cannot assure you it will be successful in meeting the applicable listing standards. If Lionbridge fails to comply with the listing standards by June 17, 2002, Lionbridge will request a hearing with the Nasdaq Listing Qualifications Panel to appeal Nasdaq’s determination and the delisting may be suspended until the outcome of the hearing. Lionbridge cannot assure you that the outcome of the hearing will result in the continued listing of its common stock on the Nasdaq National Market. The delisting of Lionbridge common stock may result in the placement of the stock on the over-the-counter market or the Nasdaq Small Cap Market, the effect of which may limit the continuation of, or the re-establishment of, a public trading market for the Lionbridge common stock which could reduce or destabilize the stock price and impair Lionbridge’s ability to raise capital.

The uncertainty in the technology market could affect Lionbridge’s ability to achieve operating plans.

A substantial portion of Lionbridge’s revenue is derived from technology companies. Many technology companies have experienced severe economic slowdowns in 2001 and may continue to experience these slowdowns in the future. A continued slowdown in the technology market may have a negative impact on Lionbridge’s ability to achieve its operating plans.

Potential fluctuations in Lionbridge’s quarterly results make financial forecasting difficult and could affect its common stock trading price.

As a result of fluctuations in Lionbridge’s revenues tied to foreign currency fluctuations, its clients’ release cycles, the three- to nine-month length of its typical sales cycle, rapid growth, acquisitions, the emerging nature of the markets in which it competes, global economic conditions and other factors outside its control, Lionbridge

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believes that quarter-to-quarter comparisons of results of operations are not necessarily meaningful. You should not rely on the results of any one quarter as an indication of Lionbridge’s future performance. Lionbridge may not experience revenue increases in future years comparable to the revenue increases in some prior years. If in some future quarter Lionbridge’s results of operations were to fall below the expectations of securities analysts and investors, the trading price of its common stock would likely decline.

Lionbridge generally does not have long-term service agreements, which makes revenue forecasting difficult.

A majority of Lionbridge’s revenue is derived from individual projects rather than long-term service agreements. Lionbridge cannot assure you that a client will engage it for further services once a project is completed or that a client will not unilaterally reduce the scope of, or terminate, existing projects. You should not predict or anticipate Lionbridge’s future revenue based on the number of clients Lionbridge has or the size of its existing projects.

Lionbridge may be liable for defects or errors in the services it provides to its clients.

Many of the services Lionbridge provides are critical to its clients’ businesses. Any defects or errors in these services could result in:

· delayed or lost client revenue;

· adverse reaction to its clients from their end users and, ultimately, toward Lionbridge;

· claims against Lionbridge;

· negative publicity; and

· additional expenditures to correct the defect or error.

Liability claims could require Lionbridge to spend significant time and money in litigation or to pay significant damages. Although Lionbridge maintains general liability insurance, including coverage for errors and omissions, Lionbridge cannot assure you that this coverage will be available in amounts sufficient to cover one or more large claims, or that the insurer will not disclaim coverage as to any future claims.

If Lionbridge fails to attract and retain professional staff, its ability to complete its projects and obtain new projects could suffer.

Lionbridge’s potential failure to attract and retain qualified employees could impair its ability to complete existing projects and bid for or obtain new projects and, as a result, could have a material adverse effect on its business and revenue. Lionbridge’s ability to grow and increase its market share largely depends on its ability to hire, train, retain, and manage highly skilled employees, including project managers and technical, translation, and sales and marketing personnel. In addition, Lionbridge must make sure its employees maintain their technical expertise and business skills. Lionbridge cannot assure you that it will be able to attract a sufficient number of qualified employees or that it will successfully train and manage the employees it hires.

Lionbridge may be unable to continue to grow at its historical growth rates or to manage its growth effectively.

Growth is a key component of increasing the value of Lionbridge. Since its inception, Lionbridge’s business has grown significantly and it anticipates additional future growth. This growth places a significant demand on management and operational resources. In order to manage growth effectively, Lionbridge must continue to improve its operational systems and controls. This additional growth may further strain Lionbridge’s management and operational resources. Lionbridge’s growth could also be adversely affected by many other factors, including economic downturns. As a result of these concerns, Lionbridge cannot be sure that it will continue to grow, or, if it does grow, that it will be able to maintain its overall historical growth rate.

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Difficulties presented by international economic, political, legal, accounting, and business factors could negatively affect Lionbridge’s business in international markets.

A large component of Lionbridge’s operations is its ability to conduct business in international markets, as evidenced by the fact that a large part of its current operations are outside of the United States. As a result, Lionbridge’s business is subject to the political and economic fluctuations in various countries. Lionbridge has experienced foreign currency fluctuations and they may have a more significant impact on its revenue, cash flow and ability to achieve and maintain profitability as Lionbridge continues to grow its business. In addition, Lionbridge has experienced long payment cycles and occasional problems in collecting accounts receivable originating outside of the United States. Lionbridge has experienced exchange rate losses as a result of fluctuations in the Euro and slowdowns in revenue growth as its clients reassessed their strategies in various countries based on political and economic conditions. In addition, as Lionbridge continues to employ and retain personnel throughout the world and apply varying employment laws, it may face difficulties in integrating such personnel on a cost-efficient basis. To date, Lionbridge has been able to successfully staff its international operations, but if Lionbridge continues to expand its operations, it may become more difficult to manage its business. If Lionbridge fails to manage these operations successfully, its ability to service its clients and grow its business will be seriously impeded.

Lionbridge’s goodwill and other intangible assets represent a significant portion of its assets; amortization of its intangible assets will adversely impact its net income, and Lionbridge may never realize the full value of its goodwill and other intangible assets.

Lionbridge’s acquisitions have resulted in the creation of significant goodwill and other intangible assets, which have generally been amortized over five-year periods. At December 31, 2001, Lionbridge had goodwill and other acquisition-related intangible assets of approximately $15.0 million, net of accumulated amortization, which represented approximately 27.3% of its total assets. Lionbridge will continue to incur non-cash charges in connection with the amortization of its other intangible assets over their remaining respective useful lives.

In the future, as events or changes in circumstances indicate that the carrying amount of its goodwill and other intangible assets may not be recoverable, Lionbridge will evaluate the carrying value of its intangible assets and may take a charge to its earnings. Any future determination requiring the write-off of a significant portion of unamortized goodwill and other intangible assets could have a material adverse effect on Lionbridge’s results of operations.

Pursuing and completing potential acquisitions could divert management attention and financial resources and may not produce the desired business results.

In May 2000, Lionbridge acquired all of the capital stock of INT’L.com and Harvard Translations and in June 2001, Lionbridge acquired all of the capital stock of Data Dimensions, a publicly-traded provider of quality assurance and testing services. As part of its growth strategy, Lionbridge intends to continue pursuing and making selected acquisitions of other complementary businesses. Lionbridge does not have specific personnel dedicated solely to pursuing and making acquisitions. As a result, if Lionbridge pursues any acquisition, its management, in addition to their operational responsibilities, could spend a significant amount of time and management and financial resources to pursue and integrate the acquired business with its existing business. To pay for an acquisition, Lionbridge might use capital stock, cash or a combination of both. Alternatively, Lionbridge may borrow money from a bank or other lender. If it uses capital stock, Lionbridge’s stockholders will experience dilution. If it uses cash or debt financing, Lionbridge’s financial liquidity may be reduced. In addition, from an accounting perspective, an acquisition may involve nonrecurring charges or involve amortization of significant amounts of other intangible assets that could adversely affect Lionbridge’s ability to achieve and maintain profitability.

Despite the investment of these management and financial resources and completion of due diligence with respect to these efforts, an acquisition may not produce the revenue, earnings or business synergies that

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Lionbridge anticipated, and an acquired service or technology may not perform as expected for a variety of reasons, including:

· difficulties in the assimilation of the operations, technologies, products and personnel of the acquired company,

· risks of entering markets in which Lionbridge has no or limited prior experience,

· expenses of any undisclosed or potential legal liabilities of the acquired company,

· the applicability of rules and regulations that might restrict Lionbridge’s ability to operate, and

· the potential loss of key employees of the acquired company.

Lionbridge may have difficulty in identifying and competing for acquisition opportunities.

Lionbridge’s business strategy includes the pursuit of strategic acquisitions. Lionbridge has engaged in discussions with third parties concerning potential acquisitions of niche expertise, businesses, and operations. Lionbridge currently does not have commitments or agreements with respect to any acquisitions. In executing its acquisition strategy, Lionbridge may be unable to identify suitable acquisition candidates. In addition, Lionbridge can expect to face competition from other companies for acquisition candidates, making it more difficult to acquire suitable companies on favorable terms.

If Lionbridge fails to keep pace with changing technologies, it may lose clients.

Lionbridge’s market is characterized by rapidly changing client requirements, and evolving technologies and industry standards. If Lionbridge cannot keep pace with these changes, its business could suffer. The Internet’s continued growth and strong influence in Lionbridge’s industry magnifies these characteristics. To achieve its goals, Lionbridge’s need to develop strategic business solutions and methodologies that keep pace with continuing changes in industry standards, information technology, and client preferences.

If Lionbridge loses the services of its Chairman and Chief Executive Officer, Rory J. Cowan, or other key personnel, its business and stock price could suffer.

In order to continue to provide quality services in its rapidly changing business, Lionbridge believes it is particularly important to retain personnel with experience and expertise relevant to its business. Lionbridge’s future success, therefore, depends in large part on the continued services of a number of its key personnel, including its Chief Executive Officer, Rory J. Cowan. The loss of the services of Mr. Cowan or any of Lionbridge’s other key personnel could seriously impede its success. Lionbridge might not be able to prevent key personnel, who may leave its employ in the future, from disclosing or using its technical knowledge, practices or procedures. One or more of Lionbridge’s key personnel might resign and join a competitor or form a competing company. As a result, Lionbridge might lose existing or potential clients.

Lionbridge competes in a highly competitive market that has low barriers to entry.

The market for Lionbridge’s services is very competitive and faces many competitors. Lionbridge cannot assure you that it will compete successfully against these competitors in the future. Some of these companies have longer operating histories, significantly greater resources, and greater name recognition than Lionbridge. If Lionbridge fails to be competitive with these companies in the future, it may lose market share and its revenue could decline.

There are relatively few barriers preventing companies from competing with Lionbridge. Although Lionbridge owns proprietary technology, Lionbridge does not own any patented or other technology that precludes or inhibits others from entering its market. As a result, new market entrants also pose a threat to its business. In addition to Lionbridge’s existing competitors, Lionbridge may face further competition in the future from companies that do not currently offer globalization services. Technology companies, Web consulting firms,

25

technical support call centers, hosting companies, and content management providers may choose to broaden their range of services to include globalization as they expand their operations internationally. Lionbridge cannot assure you that it will be able to compete effectively with potential future competitors.

Lionbridge will continue to depend on intellectual property rights to protect its proprietary technologies, although it may not be able to protect these rights.

Lionbridge relies on its proprietary technology to deploy some of its service offerings. Lionbridge’s policy is to enter into confidentiality agreements with its employees, outside consultants, and independent contractors. Lionbridge also uses patent, trademark, trade secret, and copyright law in addition to contractual restrictions to protect its technology. Notwithstanding these precautions, it may be possible for a third party to obtain and use Lionbridge’s proprietary technology without authorization. Although Lionbridge holds registered or pending United States patents and foreign patents covering certain aspects of its technology, it cannot be sure of the level of protection that these patents will provide. Lionbridge may have to resort to litigation to enforce its intellectual property rights, to protect trade secrets or know-how, or to determine their scope, validity or enforceability. Enforcing or defending its proprietary technology is expensive, could cause diversion of Lionbridge’s resources and may not prove successful. The laws of other countries may afford Lionbridge little or no effective protection of its intellectual property rights.

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk

Lionbridge is exposed to market risk related to changes in interest rates and foreign currency exchange rates. Lionbridge does not use derivative financial instruments for speculative or trading purposes.

Interest Rate Risk.    Lionbridge is exposed to market risk from changes in interest rates with respect to its line of credit with a commercial bank. There was $8.6 million outstanding as of December 31, 2001 under this facility. A hypothetical increase of 1% in the variable rate used as the basis for the interest charged on the line of credit in the year ended December 31, 2001 would result in an estimated $86,000 increase in annualized interest expense, assuming a constant outstanding balance of $8.6 million. Lionbridge is exposed to market risk from changes in interest rates through its investing activities. In addition, Lionbridge’s ability to finance future acquisition transactions may be impacted if it is unable to obtain appropriate financing at acceptable rates. Lionbridge’s investment portfolio consists primarily of investments in high-grade commercial bank money market accounts. A hypothetical 10% increase or decrease in interest rates would not have a material impact on the carrying value of Lionbridge’s investments due to their immediate available liquidity or their short maturity.

Foreign Currency Exchange Rate Losses.    The majority of Lionbridge’s contracts with clients are denominated in U.S. dollars. However, 39% and 36% of its costs and expenses in 2001 and 2000, respectively, were denominated in foreign currencies. Thirty-five percent and 41% of its assets were recorded in foreign currencies as of December 31, 2001 and 2000, respectively. Seventeen percent and 22% of its liabilities were recorded in foreign currencies as of December 31, 2001 and 2000, respectively. Therefore, Lionbridge is exposed to foreign currency exchange risks. Lionbridge has not historically tried to reduce its exposure to exchange rate fluctuations by using hedging transactions. However, it may choose to do so in the future. There are no assurances that Lionbridge may be able to do this successfully. Accordingly, Lionbridge may experience economic loss and a negative impact on earnings and equity as a result of foreign currency exchange rate fluctuations.

Item 8.     Financial Statements and Supplementary Data

Lionbridge’s consolidated financial statements together with the related notes and the reports of PricewaterhouseCoopers LLP and Arthur Andersen LLP, independent accountants, are set forth beginning on page F-1 of Item 14.

Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

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PART III

Anything herein to the contrary notwithstanding, in no event whatsoever are the sections entitled “Stock Performance Graph”, “Compensation Committee Report on Executive Compensation” and “Audit Committee Report”, nor the Audit Committee Charter attached as an appendix thereto, to be incorporated by reference herein from Lionbridge’s proxy statement in connection with its annual meeting of stockholders expected to be held in the second quarter of 2002.

Item 10.     Directors and Executive Officers of the Registrant

Certain information relating to directors and executive officers of Lionbridge is incorporated by reference herein from Lionbridge’s proxy statement in connection with its annual meeting of stockholders expected to be held in the second quarter of 2002, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of Lionbridge’s fiscal year ended December 31, 2001.

Item 11.     Executive Compensation

Certain information relating to remuneration of directors and executive officers and other transactions involving management is incorporated by reference herein from Lionbridge’s proxy statement in connection with its annual meeting of stockholders expected to be held in the second quarter of 2002, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of Lionbridge’s fiscal year ended December 31, 2001.

Item 12.     Security Ownership of Certain Beneficial Owners and Management of Lionbridge

Certain information relating to security ownership of certain beneficial owners and management is incorporated by reference herein from Lionbridge’s proxy statement in connection with its annual meeting of stockholders expected to be held in the second quarter of 2002, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of Lionbridge’s fiscal year ended December 31, 2001.

Item 13.     Certain Relationships and Related Transactions

Certain information relating to certain relationships and related transactions is incorporated by reference herein from Lionbridge’s proxy statement in connection with its annual meeting of stockholders expected to be held in the second quarter of 2002, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of Lionbridge’s fiscal year ended December 31, 2001.

PART IV

Item 14.     Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)    The following documents are filed as part of this Form 10-K:

(1)    Financial Statements:

	Page Number
Reports of Independent Accountants	F-1
Consolidated Balance Sheets as of December 31, 2001 and 2000	F-3
Consolidated Statements of Operations for the years ended December 31, 2001, 2000, and 1999	F-4
Consolidated Statements of Redeemable Preferred Stock and Stockholders’ Equity (Deficit) for the years ended December 31, 2001, 2000 and 1999	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999	F-8
Notes to Consolidated Financial Statements	F-9

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(2)    Financial Statement Schedules:

Financial Statement Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the accompanying Consolidated Financial Statements or notes thereto.

(3)    Exhibits

Exhibit No.	Exhibit
3.1, 4.1	Second Amended and Restated Certificate of Incorporation of Lionbridge (filed as Exhibit 3.2 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
3.2, 4.2	Form of Amended and Restated By-laws of Lionbridge (filed as Exhibit 3.4 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
4.3	Specimen Certificate for shares of Lionbridge’s Common Stock (filed as Exhibit 4.3 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.1**	1998 Stock Plan (filed as Appendix A to the Definitive Proxy Statement on Schedule 14A filed September 14, 2000 (File No. 333-81233) and incorporated herein by reference).
10.2**	1999 Employee Stock Purchase Plan (filed as Exhibit 10.2 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.3	Lease dated as of February 13, 1997 between Shorenstein Management, Inc., as Trustee of SRI Two Realty Trust, and Lionbridge Technologies, Inc. (filed as Exhibit 10.3 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.4**	Employment Agreement dated as of December 23, 1996 between Lionbridge Technologies, Inc. and Rory J. Cowan (filed as Exhibit 10.4 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.5**	Employment Agreement dated as of February 24, 1997 between Lionbridge Technologies, Inc. and Myriam Martin-Kail (filed as Exhibit 10.5 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.6**	Employment Agreement dated as of February 11, 1997 between Lionbridge Technologies, Inc. and Stephen J. Lifshatz (filed as Exhibit 10.6 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.7	Third Restated Registration Rights Agreement dated May 22, 2000 between Lionbridge, the Lionbridge shareholders party to the Second Restated Registration Rights Agreement, the former shareholders of INT’L.com, Inc. and the former shareholder of Harvard Translations, Inc. (filed as Exhibit 99.2 to the Current Report on Form 8-K filed June 1, 2000 (File No. 333-81233) and incorporated herein by reference).
10.8	Lease dated as of January 1, 1998 between Corke Abbey Investments Limited and Lionbridge Technologies Ireland (filed as Exhibit 10.36 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.9	Lease dated as of March 1, 1991 between Corke Abbey Investments and Andrews Travel Consultants Limited; Assignment to European Language Translations Limited as of March 12, 1993 (filed as Exhibit 10.37 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.10	Lease dated as of September 14, 1990 between Corke Abbey Investments Limited and European Language Translations Limited (filed as Exhibit 10.38 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).

28

Exhibit No.	Exhibit
10.11	Agreement dated as of December 4, 1998 between the Industrial Development Agency (Ireland) and Lionbridge (filed as Exhibit 10.39 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.12**	Form of Non-Competition Agreement as entered into between Lionbridge and each of Rory J. Cowan, Stephen J. Lifshatz, and Peter Wright (filed as Exhibit 10.41 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.13	Senior Subordinated Note Purchase Agreement by and among Lionbridge, Morgan Stanley Venture Capital Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P. dated as of March 9, 1999 (filed as Exhibit 10.44 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.14	Senior Subordinated Note Purchase Agreement by and among Lionbridge Technologies Holdings B.V., Morgan Stanley Venture Capital Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P. dated as of March 9, 1999 (filed as Exhibit 10.45 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.15	First Amended and Restated Senior Subordinated Note Purchase Agreement by and between Lionbridge and Capital Resource Lenders III, L.P. dated as of February 26, 1999 (filed as Exhibit 10.46 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.16	Senior Subordinated Note Purchase Agreement by and between Lionbridge Technologies Holdings B.V. and Capital Resource Lenders III, L.P. dated as of February 26, 1999 (filed as Exhibit 10.47 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.17	Form of Senior Subordinated Promissory Notes issued pursuant to Senior Subordinated Note Purchase Agreements (filed as Exhibit 10.48 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.18	Letter Agreements amending each of the Senior Subordinated Note Purchase Agreements (filed as Exhibit 10.49 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.19	First Amendment to lease dated as of June 29, 1999 between Bay Colony Corporate Center LLC and Lionbridge (filed as Exhibit 10.48 to the Annual Report on Form 10-K (File No. 000-26933) for the year ended December 31, 1999 and incorporated herein by reference).
10.20	Second Amendment to lease dated as of December 10, 1999 between Bay Colony Corporate Center LLC and Lionbridge (filed as Exhibit 10.49 to the Annual Report on Form 10-K (File No. 000-26933) for the year ended December 31, 1999 and incorporated herein by reference).
10.21	Harvard Translations, Inc. 1997 Stock Option Plan (filed as Exhibit 4.4 to the Registration Statement on Form S-8 filed on June 9, 2000 (File No. 333-38996) and incorporated herein by reference).
10.22	IC Global Services, Inc. 1998 Stock Plan (Amended and Restated April 6, 1999) (filed as Exhibit 4.5 to the Registration Statement on Form S-8 filed on June 9, 2000 (File No. 333-38996) and incorporated herein by reference).
10.23	International Language Engineering Corporation Amended and Restated 1997 Stock Option Plan (filed as Exhibit 4.6 to the Registration Statement on Form S-8 filed on June 9, 2000 (File No. 333-38996) and incorporated herein by reference).

29

Exhibit No.	Exhibit
10.24	Letter Agreement by and between Capital Resource Lenders III, L.P., Morgan Stanley Venture Capital Fund II Annex, L.P., Morgan Stanley Venture Investors II Annex, L.P. and Lionbridge Technologies, Inc. dated March 27, 2001 (filed as Exhibit 10.70 to the Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 000-26933) and incorporated herein by reference).
10.25	Letter Agreement by and between Capital Resource Lenders III, L.P., Morgan Stanley Venture Capital Fund II Annex, L.P., Morgan Stanley Venture Investors II Annex, L.P. and Lionbridge Technologies Holdings, B.V. dated March 27, 2001 (filed as Exhibit 10.71 to the Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 000-26933) and incorporated herein by reference).
10.26	Agreement and Plan of Reorganization by and among Lionbridge Technologies, Inc., Diamond Acquisition Corp. and Data Dimensions, Inc. dated March 8, 2001 (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on March 19, 2001 (File No. 000-26933) and incorporated herein by reference).
10.27	Amendment No. 1 to Agreement and Plan of Reorganization by and among Lionbridge Technologies, Inc., Diamond Acquisition Corp. and Data Dimensions, Inc. dated March 16, 2001 (filed as Exhibit 2.2 to the Current Report on Form 8-K filed on March 19, 2001 (File No. 000-26933) and incorporated herein by reference).
10.28**	Agreement between Lionbridge Technologies, Inc. and Roger Jeanty dated as of June 20, 2001 (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.29**	Agreement between Lionbridge Technologies, Inc. and Peter Wright dated as of June 21, 2001 (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.30	Loan and Security Agreement between INT’L.com, Inc., International Language Engineering Corporation, Harvard Translations, Inc., Lionbridge Technologies California, Inc. and Silicon Valley Bank dated as of June 28, 2001 (filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.31	Promissory Note between INT’L.com, Inc., International Language Engineering Corporation, Harvard Translations, Inc., Lionbridge Technologies California, Inc. and Silicon Valley Bank dated as of June 28, 2001 (filed as Exhibit 10.4 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.32	Guarantee between Lionbridge Technologies, Inc. and Silicon Valley Bank dated as of June 28, 2001 (filed as Exhibit 10.5 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.33	Loan Agreement between Lionbridge Technologies Holdings B.V., Lionbridge Technologies B.V., Lionbridge Technologies Ireland and Silicon Valley Bank dated as of June 28, 2001 (filed as Exhibit 10.6 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.34	Promissory note between Lionbridge Technologies Holdings B.V., Lionbridge Technologies B.V., Lionbridge Technologies Ireland, and Silicon Valley Bank dated as of June 28, 2001 (filed as Exhibit 10.7 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30 , 2001 and incorporated herein by reference).

30

Exhibit No.	Exhibit
10.35	Guarantee between Lionbridge Technologies, Inc. and Silicon Valley bank dated as of June 28, 2001 (filed as Exhibit 10.8 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.36	Warrant to Purchase Stock of Lionbridge dated as of June 28, 2001 issued to Silicon Valley Bank (filed as Exhibit 10.9 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.37	Note and Warrant Purchase Agreement between Lionbridge Technologies, Inc. and Capital Resource Partners IV, L.P. dated as of June 29, 2001 (filed as Exhibit 10.10 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.38	Promissory note between Lionbridge Technologies, Inc. and Capital Resource Partners IV, L.P. dated as of June 29, 2001 (filed as Exhibit 10.11 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.39	Warrant to Purchase Stock of Lionbridge dated as of June 29, 2001 issued to Capital Resource Partners IV, L.P. (filed as Exhibit 10.12 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.40	Guarantee between each of the direct or indirect subsidiaries of Lionbridge Technologies, Inc. in favor of Capital Resource Partners IV, L.P. dated as of June 29, 2001 (filed as Exhibit 10.13 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.41	Amended and Restated Promissory Note between INT’L.com, Inc., International Language Engineering Corporation, Harvard Translations, Inc., Lionbridge Technologies California, Inc., Data Dimensions, Inc., and Silicon Valley Bank dated as of September 24, 2001 (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended September 30, 2001 and incorporated herein by reference).
10.42	Loan Document Modification Agreement between INT’L.com, Inc., International Language Engineering Corporation, Harvard Translations, Inc., Lionbridge Technologies California, Inc., Data Dimensions, Inc., and Silicon Valley Bank dated as of September 24, 2001 (field as Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended September 30, 2001 and incorporated herein by reference).
10.43	Data Dimensions, Inc. 1988 Incentive Stock Option Plan (filed as Exhibit 4.4 to the Registration Statement on Form S-8 filed on the Registration Statement on Form S-8 filed on August 3, 2001 (File No. 333-66720) and incorporated herein by reference).
10.44	Data Dimensions, Inc. 1997 Stock Option Plan (filed as Exhibit 4.5 to the Registration Statement on Form S-8 filed on the Registration Statement on Form S-8 filed on August 3, 2001 (File No. 333-66720) and incorporated herein by reference).
10.45	ST Labs Stock Option Plan (filed as Exhibit 4.6 to the Registration Statement on Form S-8 filed on the Registration Statement on Form S-8 filed on August 3, 2001 (File No. 333-66720) and incorporated herein by reference).
10.46	Non-Qualified Stock Option Agreement between Peter Allen and Data Dimensions, Inc. (filed as Exhibit 4.7 to the Registration Statement on Form S-8 filed on the Registration Statement on Form S-8 filed on August 3, 2001 (File No. 333-66720) and incorporated herein by reference).

31

Exhibit No.	Exhibit
10.47*	Office Lease between Flatirons Cottonwood, Inc. and International Language Engineering Corporation dated as of December 28, 2001.
10.48*	Amendment to First Amended and Restated Senior Subordinated Note Purchase Agreement by and among Lionbridge Technologies Holdings, Inc., Capital Resource Lenders III, L.P. and Capital Resource Investment Partners III, L.L.C. dated as of December 31, 2001.
10.49*	Amendment to First Amended and Restated Senior Subordinated Note Purchase Agreement by and among Lionbridge Technologies Holdings B.V., Capital Resource Lenders III, L.P. and Capital Resource Investment Partners III, L.L.C. dated as of December 31, 2001.
10.50*	Amendment to Senior Subordinated Promissory Note between Lionbridge Technologies Holdings B.V., Morgan Stanley Venture Capital Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P. dated as of December 31, 2001.
10.51*	Amendment to Senior Subordinated Promissory Note among Lionbridge Technologies Holdings, Inc., Morgan Stanley Venture Capital Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P. dated as of December 31, 2001.
10.52*	First Amendment to Lease by and between Mission Street Development LLC and INT’L.com, Inc. dated as of February 28, 2002.
10.53*	Second Amendment to Lease by and between Cornerstone Suburban Office, L.P. and Lionbridge Technologies, Inc. dated as of February 28, 2002.
10.54*	Amendment No. 1 to Third Restated Registration Rights Agreement dated as of June 29, 2001 among Lionbridge Technologies, Inc., each of the other parties listed in Schedule A to the Third Restated Registration Rights Agreement dated as of May 22, 2000, Capital Resource Lenders III, L.P., CRP Investment Partners III, LLC, Morgan Stanley Venture Capital Fund II Annex, L.P., Morgan Stanley Venture Investors Annex, L.P., and each of the affiliates of both INT’L.com, Inc. and Harvard Translations, Inc. listed on Schedule B thereto.
21.1*	Subsidiaries of Lionbridge.
23.1*	Consent of PricewaterhouseCoopers LLP.
23.2*	Consent of Arthur Andersen LLP.
24.1*	Power of Attorney (included in signature page).

* Filed herewith.

** Indicates a management contract or any compensatory plan, contract or arrangement required to be filed as an exhibit pursuant to Item 14(c).

(b) Reports on Form 8-K:

None.

(c) Exhibits:

Lionbridge hereby files as part of this Form 10-K the exhibits listed in Item 14(a)(3) above. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference rooms maintained by the Securities and Exchange Commission in Washington, D.C., New York, New York, and Chicago, Illinois. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms. Securities and Exchange Commission filings are also available to the public from commercial document retrieval services and at the Web site maintained by the Securities and Exchange Commission at http://www.sec.gov.

(d) Financial Statement Schedules:

Lionbridge hereby files as part of this Form 10-K in Item 14(b) attached hereto the consolidated financial statement schedules listed in Item 14(a)(2) above, if any.

32

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of

Lionbridge Technologies, Inc.:

In our opinion, based on our audits and the report of other auditors, the accompanying consolidated balance sheets and the related consolidated statements of operations, redeemable preferred stock and stockholders’ equity (deficit) and cash flows present fairly, in all material respects, the financial position of Lionbridge Technologies, Inc. and its subsidiaries at December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of INT’L.com, Inc., a wholly owned subsidiary, for the year ended December 31, 1999, which statements reflect total revenues of $34,902,000. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for INT’L.com, Inc., is based solely on the report of the other auditors. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

/s/    PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts

January 28, 2002, except as to Note 16 which

is as of March 29, 2002

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of

INT’L.com, Inc. and Subsidiaries:

We have audited the consolidated balance sheet, as restated, of INT’L.com, Inc. and Subsidiaries (a Delaware corporation formerly know as IC Global Services, Inc.) as of December 31, 1999, and the related consolidated statements of operations, redeemable preferred stock, stockholders’ equity (deficit) and comprehensive loss and cash flows for the year ended December 31, 1999. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of INT’L.com, Inc. and Subsidiaries as of December 31, 1999, and the results of their operations and their cash flows for the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States.

/s/ Arthur Andersen LLP

Boston, Massachusetts

March 3, 2000

F-2

LIONBRIDGE TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

	December 31,
	2001			2000
ASSETS
Current assets:
Cash and cash equivalents	$	11,711		$	16,741
Accounts receivable, net of allowances of $932 and $699 at December 31, 2001 and 2000, respectively		16,791			16,355
Work in process		4,286			6,710
Other current assets		1,336			1,795
Total current assets		34,124			41,601
Property and equipment, net		4,463			4,932
Goodwill and other intangible assets, net		14,969			14,865
Other assets		1,191			648
Total assets	$	54,747		$	62,046
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	9,600		$	11,337
Accounts payable		7,121			6,669
Accrued compensation and benefits		4,592			6,784
Accrued outsourcing		2,373			4,148
Accrued merger and restructuring		1,794			394
Other accrued expenses		3,815			3,977
Deferred revenue		3,053			3,578
Other current liabilities		67			479
Total current liabilities		32,415			37,366
Long-term debt, less current portion and net of discount of $2,898 at December 31, 2001		17,318			13,265
Other long-term liabilities		1,566			231
Commitments (Note 7)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.01 par value; 100,000,000 shares authorized; 31,165,470 and 27,561,640 shares issued and 31,165,470 and 27,520,443 shares outstanding at December 31, 2001 and 2000, respectively		312			276
Additional paid-in capital		105,845			91,087
Accumulated deficit		(103,776	)		(79,325	)
Deferred compensation		(641	)		(1,690	)
Subscriptions receivable		(102	)		(102	)
Treasury stock, at cost		—			(167	)
Accumulated other comprehensive income		1,810			1,105
Total stockholders’ equity		3,448			11,184
Total liabilities and stockholders’ equity	$	54,747		$	62,046

The accompanying notes are an integral part of the consolidated financial statements.

F-3

LIONBRIDGE TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

	For the Years Ended December 31,
	2001			2000			1999
Revenue	$	101,204		$	115,149		$	88,764
Cost of revenue		63,123			72,746			62,644
Gross profit		38,081			42,403			26,120
Operating expenses:
Sales and marketing		11,342			11,384			10,141
General and administrative		34,382			33,143			29,222
Research and development		2,297			2,518			2,216
Amortization of acquisition-related intangible assets		6,651			6,503			6,113
Merger, restructuring and other charges		2,853			4,266			1,197
Acquired in-process research and development		—			—			300
Stock-based compensation		565			799			730
Total operating expenses		58,090			58,613			49,919
Loss from operations		(20,009	)		(16,210	)		(23,799	)
Interest expense:
Interest on outstanding debt		2,326			2,523			2,349
Accretion of discount on debt		839			212			6,009
Other expense, net		838			714			351
Loss before income taxes		(24,012	)		(19,659	)		(32,508	)
Provision for income taxes		439			616			699
Net loss		(24,451	)		(20,275	)		(33,207	)
Accrued dividends on preferred stock		—			3,574			2,397
Net loss attributable to common stockholders	$	(24,451	)	$	(23,849	)	$	(35,604	)
Basic and diluted net loss per share attributable to common stockholders	$	(0.83	)	$	(0.96	)	$	(3.08	)
Shares used in computing basic and diluted net loss per share attributable to common stockholders		29,528			24,871			11,560

The accompanying notes are an integral part of the consolidated financial statements.

F-4

LIONBRIDGE TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK

AND STOCKHOLDERS’ EQUITY (DEFICIT)

(Amounts in thousands, except number of shares)

	Redeemable Preferred Stock					Common Stock			Additional Paid-in Capital			Accumulated Deficit			Deferred Compensation			Subscriptions Receivable			Treasury Stock				Accumulated Other Comprehensive Income		Total Stockholders’ Equity (Deficit)			Comprehensive Loss
	Shares		Amount			Shares	Par Value														Share	Amount
Balance at December 31, 1998	15,716,226		$	23,765		4,603,397	$	46	$	1,614		$	(19,872	)				$	(446	)					$	379	$	(18,279	)
Issuance of common stock and preferred stock in connection with business combinations	936,991			5,830		2,073,953		21		3,785																		3,806
Issuance of warrants in connection with debt financing										6,221																		6,221
Deferred compensation										3,803					$	(3,803	)											—
Amortization of deferred compensation																730												730
Reversal of deferred compensation due to option forfeitures										(236	)					236												—
Stock options exercised						765,741		8		290																		298
Accrual of dividends on preferred stock				2,397									(2,397	)														(2,397	)
Accretion of common stock to redemption value										120																		120
Warrants exercised						1,533,050		15		5																		20
Issuance of common stock in connection with initial public offering						3,500,000		35		31,725																		31,760
Issuance of Series B redeemable preferred stock	1,048,752			3,900
Redemption and conversion of preferred stock	(13,271,454	)		(16,105	)	8,847,649		88		(88	)																	—
Collection of subscriptions receivable																			147									147
Purchase of treasury stock																			147		41,197	$	(167	)				(20	)
Comprehensive loss:
Net loss													(33,207	)														(33,207	)	$	(33,207	)
Other comprehensive income:
Translation adjustment																										59		59			59
Comprehensive loss																														$	(33,148	)
Balance at December 31, 1999	4,430,515			19,787		21,323,790		213		47,239			(55,476	)		(2,837	)		(152	)	41,197		(167	)		438		(10,742	)
Accrual of dividends on preferred stock				3,574									(3,574	)														(3,574	)
Issuance of common stock in connection with business combinations						381,338		4		7,473																		7,477

F-5

LIONBRIDGE TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK

AND STOCKHOLDERS’ EQUITY (DEFICIT)—(Continued)

(Amounts in thousands, except number of shares)

	Redeemable Preferred Stock				Common Stock		Additional Paid-in Capital		Accumulated Deficit		Deferred Compensation		Subscriptions Receivable		Treasury Stock			Accumulated Other Comprehensive Income	Total Stockholders’ Equity (Deficit)		Comprehensive Loss
	Shares		Amount		Shares	Par Value									Shares	Amount
Redemption and conversion of preferred stock in connection with business combinations	(4,430,515	)	(23,361	)	3,179,748	32	23,329												23,361
Amortization of deferred compensation											799								799
Reversal of deferred compensation due to option forfeitures							(348	)			348								—
Stock options exercised					853,608	9	438												447
Issuance of common stock under employee stock purchase plans					31,228		284												284
Accretion of common stock to redemption value							60												60
Warrants exercised					291,928	3	(3	)											—
Collection of subscriptions receivable													50						50
Issuance of common stock in connection with private placement					1,500,000	15	12,615												12,630
Comprehensive loss:
Net loss									(20,275	)									(20,275	)	$	(20,275	)
Other comprehensive income:
Translation adjustment																		667	667			667
Comprehensive loss																					$	(19,608	)
Balance at December 31, 2000	—		—		27,561,640	276	91,087		(79,325	)	(1,690	)	(102	)	41,197	(167	)	1,105	11,184
Issuance of common stock in connection with business combinations					2,662,804	27	12,858												12,885
Assumption of options and warrants in connection with business combinations							1,179												1,179
Amortization of deferred compensation											565								565
Reversal of deferred compensation due to option forfeitures							(484	)			484								—
Stock options exercised					448,460	4	142												146
Issuance of common stock under employee stock purchase plans					73,763	1	113												114
Issuance of warrants in connection with debt financing							853												853

F-6

LIONBRIDGE TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK

AND STOCKHOLDERS’ EQUITY (DEFICIT)—(Continued)

(Amounts in thousands, except number of shares)

	Redeemable Preferred Stock			Common Stock					Additional Paid-in Capital			Accumulated Deficit			Deferred Compensation			Subscriptions Receivable			Treasury Stock				Accumulated Other Comprehensive Income		Total Stockholders’ Equity (Deficit)			Comprehensive Loss
	Shares	Amount		Shares		Par Value															Shares		Amount
Issuance of common stock in connection with private placement				460,000			5			248																		253
Retirement of treasury stock				(41,197	)		(1	)		(166	)										(41,197	)		167				—
Compensation expense from stock option modifications										15																		15
Comprehensive loss:
Net loss													(24,451	)														(24,451	)	$	(24,451	)
Other comprehensive income:
Translation adjustment																										705		705			705
Comprehensive loss																														$	(23,746	)
Balance at December 31, 2001	—	$	—	31,165,470		$	312		$	105,845		$	(103,776	)	$	(641	)	$	(102	)	—		$	—	$	1,810	$	3,448

The accompanying notes are an integral part of the consolidated financial statements.

F-7

LIONBRIDGE TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	For the Years Ended December 31,
	2001			2000			1999
Cash flows from operating activities:
Net loss	$	(24,451	)	$	(20,275	)	$	(33,207	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of acquisition-related intangible assets		6,651			6,503			6,113
Stock-based compensation		565			799			730
Accretion of discount on debt		839			212			6,009
Impairment of long-lived assets		336			886			—
Acquired in-process research and development		—			—			300
Depreciation and amortization of property and equipment		3,861			3,725			3,277
Provision for doubtful accounts		520			(404	)		552
Other		51			269			504
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		2,409			(1,641	)		(2,304	)
Work in process		3,463			318			(901	)
Income taxes receivable		4,950			—			—
Other current assets		1,254			(481	)		404
Other assets		166			(213	)		52
Accounts payable		981			(2,369	)		3,009
Accrued compensation and benefits		(3,548	)		1,838			1,459
Accrued outsourcing		(2,045	)		1,484			1,441
Accrued merger and restructuring		1,975			37			357
Other accrued expenses		(4,176	)		725			(872	)
Deferred revenue		(520	)		5			2,929
Net cash used in operating activities		(6,719	)		(8,582	)		(10,148	)
Cash flows from investing activities:
Purchases of property and equipment		(1,402	)		(3,147	)		(3,617	)
Payments for businesses acquired, net of cash acquired		718			(2,876	)		(4,150	)
Maturities of marketable securities, net		—			—			2,194
Net cash used in investing activities		(684	)		(6,023	)		(5,573	)
Cash flows from financing activities:
Proceeds from issuance of short-term debt		5,000			—			—
Net increase (decrease) in other short-term debt		(1,722	)		5,688			(366	)
Proceeds from issuance of long-term debt		—			1,109			14,000
Payments of long-term debt		(1,063	)		(261	)		(6,000	)
Proceeds from issuance of common stock under option and employee stock purchase plans		260			731			298
Proceeds from other issuances of common stock		253			12,630			31,760
Proceeds from issuance of preferred stock		—			—			3,900
Redemption of preferred stock		—			—			(16,105	)
Payments of capital lease obligations		(223	)		(929	)		(98	)
Purchase of treasury stock		—			—			(20	)
Collection of subscriptions receivable		—			50			147
Dividends paid		—			—			(400	)
Other		—			—			118
Net cash provided by financing activities		2,505			19,018			27,234
Net increase (decrease) in cash and cash equivalents		(4,898	)		4,413			11,513
Effects of exchange rate changes on cash and cash equivalents		(132	)		(22	)		(362	)
Cash and cash equivalents at beginning of year		16,741			12,350			1,199
Cash and cash equivalents at end of year	$	11,711		$	16,741		$	12,350

The accompanying notes are an integral part of the consolidated financial statements.

F-8

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Basis of Presentation:

Nature of the Business

Lionbridge Technologies, Inc. and its subsidiaries (collectively, “Lionbridge” or the “Company”) is a provider of solutions for worldwide deployment of technology and content, serving global businesses in the technology, financial services, manufacturing and life sciences industries. Lionbridge’s suite of services includes: globalization solutions, testing services and application development. Globalization services, including localization, internationalization and testing, enable simultaneous worldwide release and ongoing maintenance of products and product-related technical support, training materials, and sales and marketing information in multiple languages. Lionbridge has its head office in the United States, with operations in France, Germany, Ireland, The Netherlands, Brazil, China, Taiwan, Japan, South Korea and the United States.

On May 18, 2000, as more fully described in Note 4, Lionbridge completed its acquisition of all of the capital stock of Harvard Translations, Inc. (“Harvard Translations”) by means of a merger. As a result of the merger, Harvard Translations became a wholly owned subsidiary of Lionbridge. In addition, as more fully described in Note 4, on May 22, 2000, Lionbridge completed its acquisition of all of the capital stock of INT’L.com, Inc. (“INT’L.com”) by means of a merger. As a result of the merger, INT’L.com became a wholly owned subsidiary of Lionbridge. These transactions are referred herein as the “mergers”. These consolidated financial statements have been prepared following the pooling-of-interests method of accounting for the mergers and therefore reflect the combined financial position, operating results and cash flows of Lionbridge, Harvard Translations and INT’L.com as if they had been combined for all periods.

The Company anticipates that its exisiting capital resources, including the expected extension of its line of credit, and cash flows from operations will be adequate to satisfy its capital requirements for at least one year from the balance sheet date. To the extent that capital resources are less than expected or operating objectives are not achieved, management is committed to pursuing alternative financing arrangements or reducing expenditures as necessary to meet its cash requirements throughout 2002. However, there is no assurance that, if required, the Company will be able to raise additional capital or reduce certain discretionary spending to provide adequate liquidity.

2.    Significant Accounting Policies:

The accompanying consolidated financial statements of Lionbridge reflect the application of certain significant accounting policies as described below:

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Lionbridge and its wholly owned subsidiaries from the effective date of their acquisition or formation. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Revenue Recognition

Lionbridge recognizes revenue from the provision of services to its customers primarily on the percentage-of-completion method of accounting, based on all costs incurred to date as a percentage of management’s estimate of total costs of individual projects. Anticipated losses by project, if any, are recognized in the period in which determined.

Advertising Costs

Advertising costs are included in sales and marketing expenses and are expensed as incurred. Advertising costs were approximately $282,000, $230,000 and $281,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

Foreign Currency Translation

The functional currency for each of Lionbridge’s foreign operations is the local currency of the country in which those operations are based. Revenues and expenses of foreign operations are translated into U.S. dollars at the average rates of exchange during the year. Assets and liabilities of foreign operations are translated into U.S.

F-9

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

dollars at year-end rates of exchange. Resulting cumulative translation adjustments are reflected as a separate component of accumulated other comprehensive income in stockholders’ equity (deficit). Foreign currency transaction gains or losses, arising from exchange rate fluctuations on transactions denominated in currencies other than the functional currencies, are included in other (income) expense, net in the consolidated statements of operations and were $838,000, $714,000 and $356,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

For the purpose of the disclosure of comprehensive loss, Lionbridge does not record tax provisions or benefits for the net changes in foreign currency translation adjustments, as Lionbridge intends to permanently reinvest undistributed earnings in its foreign subsidiaries.

Cash Equivalents

The Company considers all investments with an original maturity of three months or less to be cash equivalents. Included in cash equivalents at December 31, 2001 and 2000 are funds held in money market accounts.

Work in Process

Work in process represents the value of work performed but not yet billed. Work in process is calculated using the percentage-of-completion method based on total anticipated costs and is stated at cost plus estimated profit, but not in excess of net realizable value. Billing of amounts in work in process occurs according to customer-agreed payment schedules or upon completion of specified project milestones. All of Lionbridge’s projects in work in process are expected to be billed and collected within one year.

Property and Equipment

Property and equipment is stated at cost and depreciated over the estimated useful lives of the assets using the straight-line method, based upon the following asset lives:

Computer software and equipment	1 to 5 years
Furniture and office equipment	3 to 7 years
Leasehold improvements	Shorter of lease term or useful life of asset

Upon retirement or other disposition, the cost and related accumulated depreciation of the assets are removed from the accounts and the resulting gain or loss is reflected in the determination of net income or loss. Expenditures for maintenance and repairs are expensed as incurred.

F-10

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Goodwill and Other Intangible Assets

Goodwill represents the excess of cost over the fair value of the net assets of businesses acquired. Goodwill is amortized using the straight-line method over five years. Other intangible assets arose from the acquisitions of VeriTest, Inc. (“VeriTest”) and International Language Engineering Corporation (“ILE”), and consist of the following, which have been or are being amortized on a straight-line basis over the following estimated useful lives:

	Estimated Useful Life
VeriTest:
Acquired workforce	5 years
Trade name	5 years
ILE:
Installed customer base	5 years
Acquired workforce	2 years
Completed technology	3 years

Long-Lived Assets

Lionbridge periodically evaluates the net realizable value of its long-lived assets, including goodwill and other intangible assets and property and equipment, relying on a number of factors including operating results, business plans, economic projections and anticipated future cash flows. An impairment in the carrying value of an asset is assessed when the undiscounted, expected future operating cash flows derived from the asset are less than its carrying value.

Income Taxes

Deferred income taxes are recognized based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. Valuation allowances are provided if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Net Loss per Share Attributable to Common Stockholders

Basic and diluted earnings per share are computed in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings per Share.” Basic net loss per share attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding. There is no difference between basic and diluted earnings per share since potential common shares from the conversion of preferred stock and exercises of stock options and warrants are anti-dilutive for all periods presented.

Accounting for Stock-Based Compensation

Lionbridge accounts for stock-based awards to employees using the intrinsic value method as prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Accordingly, no compensation expense is recorded for options issued to employees in fixed amounts and with fixed exercise prices at least equal to the fair market value of Lionbridge’s common stock at the date of grant. When the exercise price of stock options granted to employees is less than the fair market value

F-11

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of common stock at the date of grant, Lionbridge records that difference multiplied by the number of shares under option as deferred compensation, which is then amortized over the vesting period of the options. Lionbridge has adopted the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” through disclosure only (see Note 8). All stock-based awards to non-employees are accounted for at their fair value in accordance with SFAS No. 123 and related guidance.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Estimates are used when accounting for the collectibility of receivables, calculating revenue using the percentage-of-completion method, and valuing intangible assets, deferred tax assets and net assets of businesses acquired.

Concentrations of Credit Risk and Significant Customers

Financial instruments which potentially subject Lionbridge to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivables. The Company places its cash and cash equivalents with financial institutions with high credit standing. Concentrations of credit risk with respect to trade accounts receivable are limited due to the dispersion of customers across different geographic regions. Lionbridge does not require collateral or other security against trade receivable balances; however, it maintains reserves for potential credit losses and such losses have been within management’s expectations.

Fair Value of Financial Instruments

Financial instruments, including cash equivalents, accounts receivable, accounts payable and debt, are carried in the consolidated financial statements at amounts that approximate fair values at December 31, 2001 and 2000. Fair values are based on quoted market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk.

Reclassifications

Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation.

Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that all business combinations be accounted for under the purchase method only and that certain acquired intangible assets in a business combination be recognized as assets apart from goodwill. SFAS No. 142 requires that ratable amortization of goodwill be replaced with periodic tests of the goodwill’s impairment and that intangible assets other than goodwill generally be amortized over their useful lives. In addition, SFAS No. 142 includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill. SFAS No. 142 also requires the Company to complete a transitional goodwill impairment test within six months from the

F-12

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

date of adoption. Application of the non-amortization provisions of SFAS No. 142 for goodwill is expected to result in an increase in operating income of approximately $5.7 million for the year ended December 31, 2002. At December 31, 2001, the Company had goodwill of approximately $13.6 million. Pursuant to SFAS No. 142, the Company will test its goodwill for impairment upon adoption and, if impairment is indicated, record such impairment as a cumulative effect of an accounting change. SFAS No. 141 is effective for all business combinations initiated after June 30, 2001 and for all business combinations accounted for by the purchase method for which the date of acquisition is after June 30, 2001. The provisions of SFAS No. 142 will be effective for fiscal years beginning after December 15, 2001, and thus will be adopted by the Company, as required, on January 1, 2002. Lionbridge has not yet determined whether it will be required to record an impairment of its goodwill in 2002.

In August 2001, the FASB issued SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supercedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” SFAS No. 144 applies to all long-lived assets (including discontinued operations) and consequently amends Accounting Principles Board Opinion No. 30, “Reporting Results of Operations—Reporting the Effects of Disposal of a Segment of a Business.” SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001, and thus will be adopted by the Company, as required, on January 1, 2002. The Company does not expect the adoption of SFAS No. 144 to have a material impact on its financial position or results of operations.

3.    Property and Equipment:

Property and equipment consisted of the following at December 31:

	2001			2000
Computer software and equipment	$	12,913,000		$	10,761,000
Furniture and office equipment		3,103,000			2,980,000
Leasehold improvements		1,815,000			1,439,000
		17,831,000			15,180,000
Less: Accumulated depreciation and amortization		(13,368,000	)		(10,248,000	)
	$	4,463,000		$	4,932,000

4.    Mergers:

Harvard Translations, Inc.

On May 18, 2000, Lionbridge acquired Harvard Translations, a company based in Massachusetts, by means of a merger. Upon the effective date of the merger, each outstanding share of Harvard Translations common stock was converted into the right to receive 3.8864 shares of Lionbridge common stock. In addition, long-term debt of Harvard Translations payable to its former sole stockholder in the amount of $203,000 and all accrued interest thereon was paid in full by issuance of 13,820 shares of Lionbridge common stock. As a result of the merger, Lionbridge issued an aggregate of 285,865 shares of Lionbridge common stock. Upon the completion of the acquisition, all outstanding options to purchase common stock of Harvard Translations were assumed by Lionbridge and converted into options to purchase common stock of Lionbridge under similar terms. The transaction was accounted for using the pooling-of-interests method of accounting, and the results of Harvard Translations have been included in the accompanying consolidated financial statements for all periods presented.

INT’L.com, Inc.

On May 22, 2000, Lionbridge acquired INT’L.com, a company based in Massachusetts, by means of a merger. Upon the effective date of the merger, (i) each outstanding share of INT’L.com Series A common stock,

F-13

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Series B common stock, Series A preferred stock and Series B preferred stock was converted into the right to receive 0.7567 shares of Lionbridge common stock, (ii) each outstanding share of INT’L.com Series C preferred stock was converted into the right to receive 5.4590 shares of Lionbridge common stock, (iii) each outstanding share of INT’L.com Series D preferred stock was converted into the right to receive 0.5472 shares of Lionbridge common stock, (iv) the $2,000,000 of INT’L.com convertible debt and all accrued interest thereon was paid in full and cancelled in exchange for 109,158 shares of Lionbridge common stock, and (v) $5,000,000 of INT’L.com subordinated debt and all accrued interest thereon was paid in full and cancelled in exchange for 258,360 shares of Lionbridge common stock. As a result of the merger, Lionbridge issued an aggregate of 8,302,960 shares of common stock. Upon the completion of the acquisition, all outstanding options to purchase common stock of INT’L.com were assumed by Lionbridge and converted into options to purchase common stock of Lionbridge under similar terms. The transaction was accounted for using the pooling-of-interests method of accounting, and the results of INT’L.com have been included in the accompanying consolidated financial statements for all periods presented.

Combined and separate results of Lionbridge, Harvard Translations and INT’L.com for the periods preceding the mergers were as follows:

	Lionbridge			Harvard Translations			INT’L.com			Combined
Three months ended March 31, 2000 (unaudited)
Revenue	$	17,006,000		$	1,366,000		$	9,824,000		$	28,196,000
Net income (loss)	$	(3,269,000	)	$	62,000		$	(2,769,000	)	$	(5,976,000	)
Year ended December 31, 1999
Revenue	$	49,508,000		$	4,354,000		$	34,902,000		$	88,764,000
Net loss	$	(17,586,000	)	$	(113,000	)	$	(15,508,000	)	$	(33,207,000	)

5.    Business Acquisitions:

VeriTest, Inc.

On January 11, 1999, Lionbridge entered into an agreement to acquire all of the stock of VeriTest, a company based in California, for total initial consideration of $4,354,000, consisting of cash of $3,260,000, 66,668 shares of common stock valued at $344,000, and notes payable for $750,000. The agreement also required certain contingent cash payments, limited to $1,000,000, dependent on future operating performance through December 31, 2000. The acquisition was accounted for using the purchase method of accounting, and results of VeriTest are included in the accompanying financial statements from the date of acquisition. The purchase price, including direct costs of the acquisition, was allocated based on the fair values of the acquired assets and liabilities assumed as follows:

Current assets	$	522,000
Property and equipment		175,000
Current liabilities		(616,000	)
Acquired workforce		676,000
Trade name		505,000
Goodwill		3,157,000
	$	4,419,000

The initial calculation of goodwill did not include any contingent consideration. Additional goodwill of $900,000 was subsequently recorded through December 31, 2000 in connection with incremental payments being due under the terms of the original agreement, with $400,000 paid in 2000 and $500,000 paid in 2001.

F-14

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

International Language Engineering Corporation

On April 9, 1999, Lionbridge’s wholly owned subsidiary, INT’L.com, acquired ILE, a company based in Colorado with additional operations in The Netherlands, for total consideration of $9,237,000, consisting of 1,983,017 shares of common stock valued at $3,407,000 and 936,991 shares of Series D redeemable preferred stock valued at $5,830,000. In addition, long-term debt of ILE in the amount of $3,250,000 was assumed. Upon the acquisition, all outstanding options to purchase common stock of ILE were exchanged for options to purchase common stock of the Company under similar terms. The transaction was accounted for using the purchase method of accounting, and the results of ILE have been included in the accompanying financial statements as of the acquisition date. The purchase price, including direct cost of the acquisition, was allocated based on the fair value of the acquired assets and liabilities assumed as follows:

Current assets	$	3,244,000
Property and equipment		1,922,000
Current liabilities		(3,765,000	)
Installed customer base		1,800,000
Acquired workforce		1,200,000
Completed technology		800,000
Acquired in-process research and development		300,000
Goodwill		7,322,000
	$	12,823,000

The value of acquired in-process research and development was recorded as an operating expense as of the acquisition date.

Motus!

At December 31, 1998, Lionbridge’s wholly owned subsidiary, INT’L.com, had a 32.8% equity investment in Motus!, a French-based provider of localization and translation services. This investment was accounted for using the equity method. On September 30, 1999, INT’L.com acquired the remaining equity interest in Motus! For $124,000 in cash and 4,540 options to purchase common stock of the Company valued at $20,000. The transaction was accounted for using the purchase method of accounting, and the results of Motus! have been included in the accompanying financial statements as of the date of the acquisition. The purchase price, including direct costs of the acquisition, was allocated based on the fair value of the acquired assets and liabilities assumed as follows:

Property, equipment and long-term receivables	$	15,000
Current liabilities		(87,000	)
Goodwill		217,000
	$	145,000

Language Services Operations of Nortel

On January 17, 2000, Lionbridge acquired certain assets of the language services operation of Nortel Networks Corporation (“Nortel”) in Montreal and Ottawa, Canada; Beijing, China; Sao Paulo, Brazil; Sunrise, Florida; and Bogota, Colombia for cash of $2,476,000. In connection with the purchase, Nortel awarded a preferred vendor designation to Lionbridge as part of a three-year services agreement, under which Lionbridge

F-15

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

will provide a full range of translation and localization services for Nortel. The purchase agreement provides for certain contingent payments to be made by Lionbridge, dependent on the level of revenues generated under the services agreement over the three-year period. No such contingent payments were due as a result of revenues generated in 2001 or 2000. The transaction was accounted for using the purchase method of accounting, and results of the operations acquired are included in the accompanying financial statements from the date of the asset purchase. The purchase price was allocated based on the fair values of the acquired assets and liabilities assumed as follows:

Current assets	$	1,693,000
Property and equipment		140,000
Current liabilities		(57,000	)
Acquired workforce		377,000
Goodwill		323,000
	$	2,476,000

The initial calculation of goodwill did not include any contingent consideration. Future payments, if any, under the contingent payment arrangement will increase goodwill. In 2001, the employees acquired as part of the transaction were terminated due to the closure of the Montreal and Florida offices. As a result, the unamortized balance of $264,000 attributable to the acquired workforce was written off. Pro forma statements of operations for the year ended December 31, 1999 would not differ materially from reported results.

Quality Group Labs, Inc.

On January 2, 2001, Lionbridge acquired Quality Group Labs, Inc. (“Quality Group Labs”), a company based in Massachusetts, for total initial consideration of $250,000 in cash and 74,488 shares of Lionbridge common stock valued at $233,000. The acquisition was accounted for using the purchase method of accounting, and the results of Quality Group Labs are included in the accompanying financial statements from the date of acquisition. The purchase price was allocated based on the fair values of the acquired assets and liabilities assumed as follows:

Property and equipment	$	50,000
Goodwill		433,000
	$	483,000

Pro forma statements of operations would not differ materially from reported results. Additional goodwill of $160,000 was subsequently recorded in 2002 in connection with incremental stock issuances of 60,000 shares of Lionbridge common stock made under the terms of the original agreement. The agreement does not provide for any further consideration.

Data Dimensions, Inc.

On June 21, 2001, Lionbridge acquired Data Dimensions, Inc. (“Data Dimensions”), a company based in Washington with operations in the United States, Ireland and the United Kingdom, by means of a merger. Upon the effective date of the merger, each outstanding share of Data Dimensions common stock was converted into the right to receive 0.190884 shares of Lionbridge common stock. As a result of the merger, Lionbridge issued an

F-16

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

aggregate of 2,588,316 shares of Lionbridge common stock valued at $12,652,000. Upon the completion of the merger, all outstanding options and warrants to purchase common stock of Data Dimensions, with a fair value at that time of $1,179,000, were assumed by Lionbridge and converted into options and warrants to purchase 451,860 shares of common stock of Lionbridge under similar terms. The transaction was accounted for using the purchase method of accounting, and the results of Data Dimensions are included in the accompanying financial statements from the date of acquisition. The purchase price, including direct costs of acquisition, has been allocated based on the fair values of the acquired assets and liabilities assumed as follows:

Current assets	$	12,217,000
Property and equipment		2,216,000
Long-term assets		656,000
Current liabilities		(7,964,000	)
Goodwill		7,189,000
	$	14,314,000

Pro Forma Disclosures (Unaudited)

The following unaudited pro forma consolidated results of operations for the years ended December 31, 2001, 2000 and 1999 assume that the acquisitions of VeriTest, ILE, and Motus! occurred as of January 1, 1999 and the acquisition of Data Dimensions occurred as of January 1, 2000:

	2001			2000			1999
Revenue	$	112,879,000		$	147,557,000		$	93,010,000
Net loss		(35,580,000	)		(32,815,000	)		(35,961,000	)
Basic and diluted net loss per share attributable to common stockholders		(1.11	)		(1.33	)		(3.32	)

For each period presented, the pro forma results include estimates of the interest expense on debt used to finance the purchases and the depreciation and amortization of intangible assets based on the purchase price allocations. These pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisitions had occurred at the beginning of the periods presented or that may be obtained in the future.

Amortization of Goodwill

The expense of amortizing goodwill related to all acquisitions was $5,600,000, $4,965,000, and $4,957,000 in 2001, 2000 and 1999, respectively. Additionally, amortization of $1,051,000, $1,538,000 and $1,156,000 was recorded in 2001, 2000 and 1999, respectively, in connection with other intangible assets acquired.

6.    Debt:

Debt consisted of the following at December 31:

	2001		2000
Lines of credit	$	8,551,000	$	10,273,000
Notes payable to stockholders		6,750,000		7,500,000
Subordinated debt, net of discount of $2,898,000 at December 31, 2001		11,082,000		5,981,000
Equipment financing facility		535,000		848,000
Total debt		26,918,000		24,602,000
Less current portion		9,600,000		11,337,000
Long-term debt, less current portion and discount	$	17,318,000	$	13,265,000

F-17

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Lines of Credit

On June 28, 2001, Lionbridge entered into a new line of credit agreement with a commercial bank. Under the terms of the agreement, Lionbridge is able to borrow up to $13,000,000, based on the value of certain current assets worldwide. The interest rate payable on any outstanding borrowings is prime plus 2.0% per year (6.75% at December 31, 2001). The line expires on June 27, 2002. Borrowings outstanding under the line of credit agreement are collateralized by certain assets of Lionbridge. The amount outstanding on the line of credit at December 31, 2001 was $8,551,000. The agreement requires Lionbridge to comply with various covenants, including the maintenance of certain financial ratios and restrictions on the payment of dividends. In conjunction with the new line of credit, Lionbridge issued a warrant to the commercial bank for the purchase of 75,000 shares of common stock at an exercise price of $1.81 per share, valued at $115,000. This amount has been treated as a deferred financing cost and will be amortized through interest expense over the original life of the agreement. The new line of credit replaces Lionbridge’s prior line of credit agreements with the same commercial bank. At December 31, 2000, $10,273,000 was outstanding under the prior lending arrangements at interest rates ranging from 9.5% to 10.5% per year.

Notes Payable to Stockholders

On August 13, 1998, as part of a cash and stock dividend to the INT’L.com stockholders on record as of that date, subordinated promissory notes to stockholders in the aggregate amount of $3,500,000 were issued. The notes bear interest at 6% per year for the first year of the term of the notes, and the interest rate increases by 1% for each successive year of the term of the notes. One half of the interest accruing in each semi-annual period is payable semi-annually on January 1 and June 30 during the term of the notes and the remaining interest is payable upon the maturity of the notes. The principal amount of the notes, together with any accrued but unpaid interest, is payable in April 2005.

On January 11, 1999, Lionbridge entered into two substantially identical promissory note agreements with the former owners of VeriTest in connection with the acquisition of this business (see Note 5). The notes were for an aggregate amount of $750,000, bore interest at an annual rate of 8% and were payable in one installment on January 11, 2001. The notes and all accrued interest thereon were paid in full in January 2001.

On April 9, 1999, Lionbridge’s wholly owned subsidiary, INT’L.com, assumed ILE’s obligation under a promissory note to a former ILE stockholder in the amount of $3,250,000 as part of the acquisition of ILE. The promissory note accrues interest at 8.5% per year and matures June 27, 2002. The promissory note is subordinate to all indebtedness owed by INT’L.com to any bank, pension fund, insurance fund or other financial institutions.

Subordinated Debt

In 1999, Lionbridge entered into two subordinated debt agreements pursuant to which 12% senior subordinated notes were issued. The outstanding aggregate principal amount of such notes, together with all accrued and unpaid interest thereon, was required to repaid upon the earlier of January 31, 2002 or an underwritten public offering by Lionbridge with aggregate proceeds of at least $10,000,000. In December 2001, the subordinated debt agreements were amended to extend the maturity date of the notes to April 15, 2002. The notes are subject to certain covenant restrictions, including maintenance of certain financial ratios, and are collateralized by certain assets of Lionbridge. The terms of the subordinated debt agreements prohibit Lionbridge from paying dividends to its stockholders. As of December 31, 2001 and 2000, $5,981,000 was outstanding under these subordinated notes. In connection with the issuance of these notes, Lionbridge issued detachable warrants to purchase 1,533,260 shares of common stock at a price of $0.015 per share, valued at $5,967,000. These warrants were exercised in full in 1999. The aggregate value of the warrants issued in connection with these financings was recorded as a discount on subordinated notes payable and was amortized as additional

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LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

interest expense using the straight-line method over the period from issuance until August 1999, based on the initially expected repayment of the debt upon the initial public offering of securities by Lionbridge.

On June 29, 2001, Lionbridge entered into a subordinated debt agreement pursuant to which a 12% promissory note in the amount of $5,000,000 was issued. The principal under the note was initially due on October 31, 2001, with interest payable quarterly in arrears. However, as a result of terms included in the original subordinated debt agreement, on October 31, 2001, the note automatically converted into a new note with essentially identical terms but with a principal amount of $8,000,000. The new note is due on September 30, 2006, with interest payable quarterly in arrears at 12% per year. In connection with the issuance of the $5,000,000 note, Lionbridge issued a warrant to purchase up to 900,000 shares of common stock at a price of $0.80 per share. The fair value ascribed to this warrant was $738,000 and was recorded as a discount on subordinated notes payable and was amortized to interest expense through October 31, 2001, the date of originally expected repayment. The note is subject to certain covenant restrictions and the terms of the subordinated debt agreement restricts Lionbridge from paying dividends to its stockholders. The $3,000,000 discount on the new note is being accreted through interest expense on a straight-line basis over the period from November 1, 2001 to September 30, 2006. Accretion of $101,000 was recorded in the year ended December 31, 2001.

Equipment Financing Facility

On February 25, 2000, Lionbridge entered into a equipment financing arrangement whereby it may borrow an aggregate of $1,350,000 to fund equipment purchases. Advances under the arrangement are collateralized by certain fixed assets and are payable in monthly installments with interest through September 2003. Borrowings under the notes totaled $535,000 and $848,000 at December 31, 2001 and 2000, respectively, and bear interest at rates ranging from 15.6% to 16.3%.

Convertible Promissory Notes to Stockholders

In August 1999, Lionbridge’s wholly owned subsidiary, INT’L.com, received $2,000,000 through the issuance of convertible promissory notes to existing investors. The convertible notes accrued interest at 10% per year and were due to mature in August 2001. The convertible promissory notes were subordinate to the INT’L.com line of credit. The outstanding principal and accrued interest were convertible at the option of the lenders into shares of INT’L.com equity securities. The notes and all accrued interest thereon were paid in full upon the closing of the merger (see Note 4). As additional consideration to the investors, INT’L.com issued warrants to purchase 56,753 shares of its common stock at an exercise price of $1.45 per share. The warrants were exercised in full in May 2000 by means of a cashless exercise, resulting in the issuance of 49,547 shares of Lionbridge common stock.

7.    Commitments:

Lease Commitments

The Company leases certain equipment and office space under noncancelable agreements and leases which expire at various dates through 2026. Future minimum lease payments under noncancelable operating leases at December 31, 2001 were as follows:

Year ending December 31,
2002	$	4,622,000
2003		2,779,000
2004		1,207,000
2005		763,000
2006		523,000
Thereafter		5,670,000
	$	15,564,000

F-19

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Total rental expense charged to operations was $4,615,000, $4,729,000, and $3,115,000 in 2001, 2000, and 1999, respectively.

8.    Stockholders’ Equity (Deficit):

Private Placements of Common Stock

In June 2000, Lionbridge issued 1,500,000 shares of its common stock at $8.50 per share in a private placement for total consideration received of approximately $12.8 million before expenses. These shares were subsequently registered in a Registration Statement on Form S-3 filed with the Securities and Exchange Commission in September 2000.

In August 2001, Lionbridge sold 460,000 shares of its common stock at $0.55 per share, the then fair market value, to its Chairman and Chief Executive Officer for aggregate consideration of $253,000 in a private placement.

Reverse Stock Split

Effective August 13, 1999, the Company’s Board of Directors declared a 2-for-3 reverse common stock split. All references in these consolidated financial statements to shares of common stock have been retroactively adjusted to reflect this reverse stock split.

Deferred Compensation

During the year ended December 31, 1999, Lionbridge recorded deferred compensation in connection with options granted at exercise prices below the then fair market value of Lionbridge’s common stock totaling $3,803,000, representing the aggregate difference between the estimated fair market value of Lionbridge’s common stock on the date of grant and the exercise price of each option. This deferred compensation is being amortized over the four-year vesting period of the related options, resulting in amortization of $565,000, $799,000 and $730,000 in the years ended December 31, 2001, 2000 and 1999, respectively. Additionally, $484,000, $348,000 and $236,000 of deferred compensation has been reversed due to cancellation of the underlying options in the years ended December 31, 2001, 2000 and 1999, respectively.

Employee Stock Purchase Plan

On June 15, 1999, the Board of Directors adopted the 1999 Employee Stock Purchase Plan (the “Purchase Plan”), effective upon the consummation of the Company’s initial public offering. The Purchase Plan is a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended. The Purchase Plan allows for the issuance of 1,000,000 shares of Lionbridge’s common stock to eligible employees. Under the Purchase Plan, Lionbridge is authorized to make a series of offerings during which employees may purchase shares of common stock through payroll deductions made over the term of the offering. The per-share purchase price at the end of each offering is equal to 85% of the fair market value of the common stock at the beginning or end of the offering period (as defined by the Purchase Plan), whichever is lower. The Company issued 73,763 and 31,228 shares of common stock during 2001 and 2000, respectively, pursuant to the Purchase Plan at a weighted-average price per share of $1.55 and $9.08, respectively.

Stock Option Plans

Lionbridge maintains a stock option plan (the “Plan”) for the issuance of incentive and nonqualified stock options. As amended through October 2000, the maximum number of shares of common stock available for issuance under the Plan is 8,522,032 shares. Options to purchase common stock are granted at the discretion of

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LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the Board of Directors. Generally, stock options vest over a four-year period as follows: 25% on the first anniversary of the date of grant and semi-annually thereafter in equal installments over the remaining three-year period. Stock options generally expire ten years (five years in certain cases) from the date of grant.

Under the terms of the Plan, the exercise price of incentive stock options granted must not be less than 100% (110% in certain cases) of the fair market value of the common stock on the date of grant, as determined by the Board of Directors. The exercise price of nonqualified stock options may be less than the fair market value of the common stock on the date of grant, as determined by the Board of Directors, but in no case may the exercise price be less than the statutory minimum. Prior to the Company’s initial public offering of securities, the Board of Directors, in assessing the fair market value of Lionbridge’s common stock, considered factors relevant at the time, including recent third-party transactions, significant new customers, composition of the management team, recent hiring results, Lionbridge’s financial condition and operating results and the lack of a public market for Lionbridge’s common stock.

Harvard Translations and INT’L.com also maintained stock option plans which were assumed by Lionbridge and provided for grants of options to officers, consultants and employees that expire ten years (five years in certain cases) from date of grant. The stock option grants generally vest over four to five years except for certain options that have acceleration clauses effective upon certain circumstances including a change of ownership or control. Upon the mergers of Harvard Translations and INT’L.com, Lionbridge assumed options for the purchase of 742,584 shares of common stock. No further options will be granted under these plans.

Data Dimensions maintained stock option plans which provided for grants to employees and directors that generally expire in five years from the date of grant. The stock options generally vest over four years. Upon the acquisition of Data Dimensions, Lionbridge assumed options for the purchase of 408,911 shares of Lionbridge common stock. No further options will be granted under these plans.

Transactions involving all plans for the period from January 1, 1999 to December 31, 2001 are summarized as follows:

	Number of Shares		Weighted- Average Exercise Price
Outstanding at January 1, 1999	2,651,303		$  0.668
Granted	1,614,542		5.855
Exercised	(758,693	)	1.100
Canceled	(255,783	)	3.806
Outstanding at December 31, 1999	3,251,369		2.896
Granted	2,056,400		10.271
Exercised	(952,059	)	1.239
Canceled	(519,655	)	8.973
Outstanding at December 31, 2000	3,836,055		6.440
Granted	3,780,211		4.734
Exercised	(448,460	)	0.327
Canceled	(1,397,116	)	9.494
Outstanding at December 31, 2001	5,770,690		5.058

F-21

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During the year ended December 31, 2000, the Company issued 68,022 shares of Lionbridge common stock in connection with a net settlement exercise of stock options for the purchase of 166,473 shares of common stock.

Options for 1,873,997, 1,129,057, and 852,350 shares were exercisable at December 31, 2001, 2000 and 1999, respectively. There were 997,321, 3,204,738, and 1,872,274 shares available for future grant under the Plan at December 31, 2001, 2000 and 1999, respectively.

The following table summarizes information about stock options outstanding at December 31, 2001:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Exercise Price
$0.15	316,960	5.2 years	$	0.15	316,960	$	0.15
0.30	103,980	6.1 years		0.30	84,203		0.30
0.45	2,562	6.3 years		0.45	1,623		0.45
0.90-1.31	163,573	8.9 years		1.14	30,411		1.05
1.50-2.15	1,629,548	8.3 years		1.53	361,630		1.60
2.40-3.59	1,344,700	8.4 years		3.11	100,000		3.19
3.61-4.92	158,133	7.0 years		4.83	139,189		4.82
5.81-8.49	1,400,841	8.1 years		7.34	522,044		7.84
9.01-9.75	180,167	7.3 years		9.73	112,165		9.73
10.79-11.38	60,980	8.2 years		11.36	24,417		11.33
17.03-19.73	392,694	8.1 years		18.38	164,803		18.30
40.55-59.51	3,106	5.1 years		52.83	3,106		52.83
65.48-89.06	7,915	5.8 years		80.94	7,915		80.94
107.40-146.06	5,341	5.5 years		130.81	5,341		130.81
173.56	190	5.7 years		173.56	190		173.56
	5,770,690				1,873,997

Had compensation cost for stock options granted to employees been determined based on the fair value at the date of grant consistent with the provisions of SFAS No. 123, Lionbridge’s net loss for 2001, 2000 and 1999 would have been increased to $28,498,000, $23,179,000, and $33,955,000, respectively, and the net loss per common share attributable to common stockholders for 2001, 2000 and 1999 would have been increased to $0.97, $1.08, and $3.14, respectively. The weighted-average fair value of options granted during 2001 and 2000 was $1.89 and $6.64 per share, respectively. The estimated weighted-average fair value of Lionbridge, Harvard Translations and INT’L.com options granted during 1999 was $3.04, $3.55 and $0.83, respectively. Stock options granted with an exercise price in the range from $1.50 through $9.75 per share have an exercise price which exceeded the fair value of the underlying common stock on the date of the grant. The weighted average fair value of these options, which were all granted in 1999, was $2.18 per share.

The fair value of each option was estimated on the date of the grant using the Black-Scholes option pricing model. The following assumptions were used for options granted: (i) weighted-average risk free interest rates of 4.8%, 6.4%, and 5.3% to 6.0% for 2001, 2000 and 1999, respectively, (ii) weighted-average expected option

F-22

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

lives of 4.0 years for each of 2000 and 2001 and 4.0 to 10.0 years for 1999, (iii) no expected dividend yield, and (iv) an expected volatility factor of 94.0% for 2001, 85.0% for 2000, and 85.0% for the period since Lionbridge’s initial public offering of securities in August 1999 through December 31, 1999.

9.    Income Taxes:

The components of the provision for income taxes are as follows for the years ended December 31:

	2001		2000		1999
Current:
State	$	—	$	—	$	20,000
Foreign		424,000		373,000		160,000
Total current provision	$	424,000	$	373,000	$	180,000
Deferred:
Foreign	$	15,000	$	243,000	$	519,000
Total deferred provision	$	15,000	$	243,000	$	519,000

The benefit from the utilization of net operating loss carryforwards in Europe during the years ended December 31, 2001, 2000 and 1999 was recorded as a reduction of goodwill of $15,000, $243,000 and $519,000, respectively, rather than a tax provision benefit, since the deferred tax assets associated with these carryforwards had been fully reserved at the time of the original acquisition of the businesses in 1996.

The components of the loss before income taxes were as follows for the years ended December 31:

	2001			2000			1999
United States	$	(23,943,000	)	$	(19,576,000	)	$	(28,337,000	)
Foreign		(69,000	)		(83,000	)		(4,171,000	)
Loss before income taxes	$	(24,012,000	)	$	(19,659,000	)	$	(32,508,000	)

The consolidated deferred tax assets (liabilities) of the Company were as follows at December 31:

	2001			2000
U.S. net operating loss carryforwards	$	20,721,000		$	12,412,000
Foreign net operating loss carryforwards		5,847,000			5,427,000
Difference in accounting for amortization and depreciation		2,816,000			1,128,000
Nondeductible reserves and accruals		1,731,000			1,350,000
Research and development tax credits		247,000			203,000
Other		342,000			215,000
Valuation allowance		(31,704,000	)		(20,959,000	)
Net deferred tax liabilities	$	—		$	(224,000	)

Management of Lionbridge has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Under the applicable accounting standards, management has considered Lionbridge’s history of losses and concluded that it is not certain that Lionbridge will generate future taxable income prior to

F-23

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the expiration of these net operating losses. Accordingly, the deferred tax assets have been fully reserved. Management reevaluates the positive and negative evidence periodically.

At December 31, 2001, Lionbridge had net operating loss carryforwards for U.S. federal income tax purposes of approximately $53,000,000 that may be used to offset future taxable income, which begin to expire in 2012. Of this amount, $1,078,000 relates to deductions from the exercise of stock options. The future benefit from these deductions will be recorded as a credit to additional paid-in capital when realized. The Company has federal research and development tax credits which may be used to offset future income tax of approximately $180,000, which expire in 2019. Additionally, Lionbridge has net operating loss carryforwards in France of approximately $2,078,000, which begin to expire in 2003; net operating loss carryforwards in Japan of approximately $2,297,000, which begin to expire in 2003; net operating loss carryforwards in Canada of approximately $2,808,000, which begin to expire in 2007; net operating loss carryforwards in Germany of approximately $1,004,000, which may be carried forward indefinitely; and net operating loss carryforwards in The Netherlands of approximately $8,370,000, which may be carried forward indefinitely.

Under the provisions of the Internal Revenue Code, certain substantial changes in Lionbridge’s ownership may limit in the future the amount of net operating loss carryforwards which could be used annually to offset future taxable income and income tax liability.

10.    Merger, Restructuring and Other Charges:

The following table summarizes activity with respect to merger, restructuring and other charges for the years ended December 31:

	2001			2000		1999
Merger costs (credits), net	$	(20,000	)	$	2,465,000	$	—
Restructuring charges, net		2,537,000			915,000		1,197,000
Impairment of long-lived assets		336,000			886,000		—
	$	2,853,000		$	4,266,000	$	1,197,000

During the year ended December 31, 2001, Lionbridge recorded a net merger credit of $20,000 in operating expenses. This amount consists primarily of fees for professional services incurred in connection with Lionbridge’s attempted acquisition of Mendez S.A., offset by the receipt of a $1.0 million fee from the successful bidder for Mendez S.A.

Restructuring charges of $2,537,000 were recorded in the year ended December 31, 2001. These charges relate to: (i) the costs of consolidating Lionbridge facilities in the United States as a result of the acquisition of Data Dimensions, consisting primarily of accruals for lease payments on vacant office space, and (ii) costs associated with workforce reductions in the United States, Canada, Brazil, Japan, China, Korea, Germany, Ireland, The Netherlands, the United Kingdom and France, consisting of 154 technical staff, 26 sales and marketing staff and 50 administrative staff. All employees had been informed of their termination and related benefits in the period that the charge was recorded. The restructuring charge for the year ended December 31, 2001 is presented net of a $66,000 reversal of a charge recorded in the quarter ended March 31, 2001 due to subsequent events which reduced the amount of benefits paid on behalf of a terminated employee.

Impairment charges for long-lived assets for the year ended December 31, 2001 of $336,000 relate primarily to the write-off of acquired workforce and software licenses as a result of the closure of the Company’s office in Montreal, Canada during the second quarter of 2001.

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LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Merger costs for the year ended December 31, 2000 of $2,465,000 consist of fees for investment banking, legal and accounting services and other direct costs incurred in connection with Lionbridge’s mergers with Harvard Translations and INT’L.com.

Restructuring charges for the year ended December 31, 2000 of $915,000 relate to: (i) the costs of closing facilities in the United States, France and The Netherlands as a result of the merger with INT’L.com, consisting primarily of accruals for lease payments on vacant office space, and (ii) costs associated with workforce reductions in Canada, the United States and France, consisting of six technical staff and three administrative staff. All employees had been informed of their termination and related benefits in the period that the charge was recorded. The restructuring charge for the year ended December 31, 2000 is presented net of a $162,000 reversal of a charge recorded in the second quarter of 2000, due to subsequent events which have reduced the potential loss on vacant office space.

Impairment charges for long-lived assets for the year ended December 31, 2000 of $886,000 relate to the write-off of property and equipment, primarily consisting of previously capitalized licenses for software, that was abandoned as a result of Lionbridge’s merger with INT’L.com.

Restructuring charges for the year ended December 31, 1999 of $1,197,000 consist of charges related to workforce reductions in INT’L.com’s United States operating sites, consisting of 36 technical staff, 14 administrative staff and four sales staff.

At December 31, 2001, accruals totaling $364,000 related to restructuring charges, in addition to accruals of $2,078,000 related to restructuring charges which were assumed upon the acquisition of Data Dimensions, remained on the consolidated balance sheet. Lionbridge currently anticipates that all merger and restructuring accrual balances will be fully utilized by December 31, 2002, except for certain long-term contractual obligations relating to leases for facilities, $648,000 of which related to long-term lease obligations on unused facilities and is included in Other Long-term liabilities.

During the years ended December 31, 2001 and 2000, the Company utilized $917,000 and $2,465,000, respectively, of accruals related to merger costs and $3,800,000 and $712,000, respectively, related to restructuring charges.

11.    Employee Benefit Plans:

Lionbridge maintains an employee benefit plan qualified under Section 401(k) of the Internal Revenue Code. All U.S. employees may participate in the 401(k) plan subject to certain eligibility requirements. Under the 401(k) plan, a participant may contribute a maximum of 15% of his or her pre-tax salary, commissions and bonuses through payroll deductions (up to the statutorily prescribed annual limit—$10,500 in 2001) to the 401(k) plan. The percentage elected by more highly compensated participants may be required to be lower. In addition, at the discretion of the Board of Directors, Lionbridge may make discretionary profit-sharing contributions into the 401(k) plan for all eligible employees. For the years ended December 31, 2001, 2000 and 1999, discretionary contributions totaled approximately $315,000, $0 and $0, respectively. In addition, as of December 31, 2001, the Company maintained defined benefit pension plans for employees in The Netherlands and France, and a defined contribution scheme for employees in Ireland. Total benefit plan contributions charged to operations were $407,000, $361,000 and $416,000 in 2001, 2000 and 1999, respectively.

Harvard Translations, INT’L.com, and Data Dimensions maintained 401(k) retirement plans for employees meeting certain age and service requirements. The plans provided for voluntary employee contributions from their annual compensation as well as matching contributions by Harvard Translations, INT’L.com or Data Dimensions. For the years ended December 31, 2001, 2000 and 1999, matching contributions totaled approximately $0, $51,000, and $87,000, respectively. These plans are in the process of being terminated and the assets of the Harvard Translations and INT’L.com plans will be transferred to the Lionbridge 401(k) plan. Assets of the Data Dimensions plan are in the process of being refunded to the participating employees.

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LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

12.    Operating Segment and Geographical Information:

Lionbridge has determined that its operating segments are those that are based on its method of internal reporting, which separately presents its business by the geographic site in which services are performed. Lionbridge has combined those segments which meet the aggregation criteria of SFAS No. 131 in determining its reportable segments.

The Company’s reportable segments are Localization and Testing. The Localization segment provides product localization and content globalization services that enable simultaneous worldwide release and ongoing maintenance of products and related technical support, training materials, and sales and marketing information in multiple languages. The Testing segment provides comprehensive testing of software, hardware and Web sites, as well as product certification programs. Application and development services as well as all other unallocated enterprise costs are reflected in the “Corporate and Other” category.

The table below presents information about the reported net loss of the Company for the years ended December 31, 2001, 2000 and 1999. Asset information by reportable segment is not reported, since the Company does not produce such information internally.

	Localization			Testing			Corporate and Other			Eliminations			Total
2001
External revenue	$	80,976,000		$	17,250,000		$	2,978,000					$	101,204,000
Depreciation and amortization	$	1,965,000		$	1,558,000		$	6,989,000					$	10,512,000
Segment contribution	$	10,671,000		$	(667,000	)	$	629,000					$	10,633,000
Interest income (expense), income tax expense and other items of income (expense)		(5,520,000	)		(3,855,000	)		(25,709,000	)					(35,084,000	)
Net income (loss)	$	5,151,000		$	(4,522,000	)	$	(25,080,000	)				$	(24,451,000	)
2000
External revenue	$	103,532,000		$	11,617,000		$	—					$	115,149,000
Inter-segment revenue	$	—		$	27,000		$	—		$	(27,000	)	$	—
Depreciation and amortization	$	2,898,000		$	464,000		$	6,866,000					$	10,228,000
Segment contribution	$	20,192,000		$	1,607,000		$	—					$	21,799,000
Interest income (expense), income tax expense and other items of income (expense)		(10,235,000	)		(1,596,000	)		(30,243,000	)					(42,074,000	)
Net income (loss)	$	9,957,000		$	11,000		$	(30,243,000	)				$	(20,275,000	)
1999
External revenue	$	81,582,000		$	7,182,000		$	—					$	88,764,000
Inter-segment revenue	$	—		$	315,000		$	—		$	(315,000	)	$	—
Depreciation and amortization	$	2,678,000		$	402,000		$	6,310,000					$	9,390,000
Segment contribution	$	3,378,000		$	1,384,000		$	—					$	4,762,000
Interest income (expense), income tax expense and other items of income (expense)		(10,018,000	)		(1,120,000	)		(26,831,000	)					(37,969,000	)
Net income (loss)	$	(6,640,000	)	$	264,000		$	(26,831,000	)				$	(33,207,000	)

F-26

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In 2001, revenue from one customer totaled 13% of consolidated revenue.

A summary of Lionbridge’s operations and other financial information by geographical region follows:

	Year Ended December 31,
	2001			2000			1999
Revenues:
United States	$	53,162,000		$	63,267,000		$	47,981,000
Ireland		18,001,000			14,390,000			14,398,000
France		13,449,000			14,442,000			11,725,000
China		6,763,000			6,422,000			3,710,000
The Netherlands		6,510,000			8,341,000			7,618,000
Japan		3,797,000			5,096,000			3,817,000
Germany		2,729,000			3,674,000			2,947,000
Other		2,330,000			6,224,000			548,000
Eliminations		(5,537,000	)		(6,707,000	)		(3,980,000	)
	$	101,204,000		$	115,149,000		$	88,764,000

A summary of Lionbridge’s operations and other financial information by geographical region follows:

	December 31,
	2001		2000		1999
Long-lived assets:
United States	$	3,967,000	$	1,835,000	$	4,052,000
Asia		559,000		665,000		455,000
France		439,000		1,210,000		847,000
Ireland		521,000		434,000		552,000
Other		168,000		1,436,000		899,000
	$	5,654,000	$	5,580,000	$	6,805,000

Foreign revenue is presented based on the country in which projects are managed.

Lionbridge has agreements with the Irish Industrial Development Agency regarding financial grants to its Irish subsidiaries from this agency. Under the agreements, the Irish subsidiaries may not pay dividends or otherwise distribute cash, including any distributions to Lionbridge.

F-27

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

13.    Supplemental Disclosure of Cash Flow Information:

	Year Ended December 31,
	2001			2000			1999
Interest paid	$	1,860,000		$	2,291,000		$	2,083,000
Income taxes paid (refunded), net	$	(4,817,000	)	$	124,000
Noncash investing and financing activities:
Issuance of warrants for common stock in connection with debt (Note 6)	$	853,000					$	6,221,000
Lionbridge acquired all of the outstanding capital stock of Data Dimensions in exchange for common stock valued at $12,652,000 and the assumption of options and warrants valued at $1,179,000 in 2001. In conjunction with the purchase, liabilities were assumed as follows:
Fair value of assets acquired and goodwill	$	22,278,000
Fair value of options and warrants assumed		(1,179,000	)
Common stock issued		(12,652,000	)
Liabilities assumed	$	8,447,000
Lionbridge acquired all of the outstanding capital stock of Quality Group Labs for cash of $483,000 in 2001. In conjunction with the purchase, liabilities were assumed as follows:
Fair value of assets acquired and goodwill	$	483,000
Cash paid for assets acquired		(250,000	)
Common stock issued		(233,000	)
Liabilities assumed	$	—
Lionbridge acquired certain assets of the language services operation of Nortel for $2,476,000 in 2000. In conjunction with the purchase, liabilities were assumed as follows:
Fair value of assets acquired and goodwill				$	2,533,000
Cash paid for assets acquired					(2,476,000	)
Liabilities assumed				$	57,000
Lionbridge, or a wholly owned subsidiary of Lionbridge, purchased all of the outstanding capital stock of VeriTest, ILE and Motus! in 1999 for $13,715,000. In conjunction with these acquisitions, liabilities were assumed as follows:
Fair value of assets acquired and goodwill							$	22,201,000
Cash paid for capital stock								(3,384,000	)
Common stock issued								(3,751,000	)
Preferred stock issued								(5,830,000	)
Notes issued								(750,000	)
Liabilities assumed							$	8,486,000

F-28

LIONBRIDGE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

14.    Valuation and Qualifying Accounts:

The following table sets forth activity in Lionbridge’s accounts receivable reserve:

Year ended:	Balance at Beginning of Year		Charges to Operations		Deductions			Balance at End of Year
December 31, 1999	$	722,000	$	614,000	$	(214,000	)	$	1,122,000
December 31, 2000		1,122,000		498,000		(921,000	)		699,000
December 31, 2001		699,000		520,000		(287,000	)		932,000

15.    Net Loss per Share Attributable to Common Stockholders:

Diluted net loss per share attributable to common stockholders does not differ from basic net loss per share attributable to common stockholders since potential common shares from the conversion of preferred stock and the exercise of stock options and warrants are anti-dilutive for all years presented and are therefore excluded from the calculation. Preferred stock convertible into 0, 0 and 2,639,766 shares of common stock, options to purchase 5,734,434, 3,836,055 and 3,251,369 shares of common stock, and warrants to purchase 524,275, 0 and 347,084 shares of common stock outstanding were not included in the calculation of diluted net loss per share for the years ended December 31, 2001, 2000 and 1999, respectively .

16.    Subsequent Events:

In March 2002, the commercial bank which holds the Company’s line of credit indicated in a letter to Lionbridge its intention to extend the credit facility through April 1, 2003. As a result, the amount outstanding under this line of credit of $8,551,000 has been classified as a long-term liability on the consolidated balance sheet as of December 31, 2001.

In March 2002, the United States District Court for the Southern District of New York entered an order dismissing without prejudice the claims against Lionbridge and its officers and directors in a certain securities class action lawsuit filed in July 2001. The complaint in this action asserted, among other things, that Lionbridge’s initial public offering prospectus and registration statement contained material misrepresentations and/or omissions regarding the conduct of Lionbridge’s initial public offering underwriters in allocating shares in Lionbridge’s initial public offering to the underwriters’ customers. In connection with this dismissal, Lionbridge and the individual defendants have agreed to extend the duration of applicable limitations periods as to such claims until December 31, 2002.

In March 2002, Nasdaq notified Lionbridge that Lionbridge’s common stock may be subject to delisting from the Nasdaq National Market due to Lionbridge’s noncompliance with listing standards that require Lionbridge to maintain either (i) minimum stockhoders’ equity of at least $10,000,000 or (ii) a minimum bid price of $3.00 per share (regardless of the amount of Lionbridge’s stockholders’ equity). Lionbridge has until June 17, 2002 to regain compliance with either standard.

F-29

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:    March 29, 2002

LIONBRIDGE TECHNOLOGIES, INC. (Registrant)
By:	/s/    STEPHEN J. LIFSHATZ
	Stephen J. Lifshatz Senior Vice President, Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

POWER OF ATTORNEY AND SIGNATURES

We, the undersigned officers and directors of Lionbridge Technologies, Inc., hereby severally constitute and appoint Stephen J. Lifshatz, our true and lawful attorney, with full power to him singly, to sign for us and in our names in the capacities indicated below, any amendments to this Annual Report on Form 10-K, and generally to do all things in our names and on our behalf in such capacities to enable Lionbridge Technologies, Inc. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all the requirements of the Securities Exchange Commission.

Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Titles	Date
/s/    RORY J. COWAN	Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	March 29, 2002
Rory J. Cowan
/s/    STEPHEN J. LIFSHATZ	Senior Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)	March 29, 2002
Stephen J. Lifshatz
/s/    MARCIA J. HOOPER	Director	March 29, 2002
Marcia J. Hooper
/s/    GUY L. DE CHAZAL	Director	March 29, 2002
Guy L. de Chazal
/s/    ROGER O. JEANTY	Director	March 29, 2002
Roger O. Jeanty
/s/    CLAUDE P. SHEER	Director	March 29, 2002
Claude P. Sheer
/s/    PAUL KAVANAGH	Director	March 29, 2002
Paul Kavanagh

S-1

EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K

FOR FISCAL YEAR ENDED DECEMBER 31, 2001

Exhibit No.	Exhibit
3.1, 4.1	Second Amended and Restated Certificate of Incorporation of Lionbridge (filed as Exhibit 3.2 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
3.2, 4.2	Form of Amended and Restated By-laws of Lionbridge (filed as Exhibit 3.4 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
4.3	Specimen Certificate for shares of Lionbridge’s Common Stock (filed as Exhibit 4.3 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.1**	1998 Stock Plan (filed as Appendix A to the Definitive Proxy Statement on Schedule 14A filed September 14, 2000 (File No. 333-81233) and incorporated herein by reference).
10.2**	1999 Employee Stock Purchase Plan (filed as Exhibit 10.2 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.3	Lease dated as of February 13, 1997 between Shorenstein Management, Inc., as Trustee of SRI Two Realty Trust, and Lionbridge Technologies, Inc. (filed as Exhibit 10.3 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.4**	Employment Agreement dated as of December 23, 1996 between Lionbridge Technologies, Inc. and Rory J. Cowan (filed as Exhibit 10.4 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.5**	Employment Agreement dated as of February 24, 1997 between Lionbridge Technologies, Inc. and Myriam Martin-Kail (filed as Exhibit 10.5 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.6**	Employment Agreement dated as of February 11, 1997 between Lionbridge Technologies, Inc. and Stephen J. Lifshatz (filed as Exhibit 10.6 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.7	Third Restated Registration Rights Agreement dated May 22, 2000 between Lionbridge, the Lionbridge shareholders party to the Second Restated Registration Rights Agreement, the former shareholders of INT’L.com, Inc. and the former shareholder of Harvard Translations, Inc. (filed as Exhibit 99.2 to the Current Report on Form 8-K filed June 1, 2000 (File No. 333-81233) and incorporated herein by reference).
10.8	Lease dated as of January 1, 1998 between Corke Abbey Investments Limited and Lionbridge Technologies Ireland (filed as Exhibit 10.36 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.9	Lease dated as of March 1, 1991 between Corke Abbey Investments and Andrews Travel Consultants Limited; Assignment to European Language Translations Limited as of March 12, 1993 (filed as Exhibit 10.37 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.10	Lease dated as of September 14, 1990 between Corke Abbey Investments Limited and European Language Translations Limited (filed as Exhibit 10.38 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.11	Agreement dated as of December 4, 1998 between the Industrial Development Agency (Ireland) and Lionbridge (filed as Exhibit 10.39 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).

Exhibit No.	Exhibit
10.12**	Form of Non-Competition Agreement as entered into between Lionbridge and each of Rory J. Cowan, Stephen J. Lifshatz, and Peter Wright (filed as Exhibit 10.41 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.13	Senior Subordinated Note Purchase Agreement by and among Lionbridge, Morgan Stanley Venture Capital Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P. dated as of March 9, 1999 (filed as Exhibit 10.44 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.14	Senior Subordinated Note Purchase Agreement by and among Lionbridge Technologies Holdings B.V., Morgan Stanley Venture Capital Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P. dated as of March 9, 1999 (filed as Exhibit 10.45 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.15	First Amended and Restated Senior Subordinated Note Purchase Agreement by and between Lionbridge and Capital Resource Lenders III, L.P. dated as of February 26, 1999 (filed as Exhibit 10.46 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.16	Senior Subordinated Note Purchase Agreement by and between Lionbridge Technologies Holdings B.V. and Capital Resource Lenders III, L.P. dated as of February 26, 1999 (filed as Exhibit 10.47 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.17	Form of Senior Subordinated Promissory Notes issued pursuant to Senior Subordinated Note Purchase Agreements (filed as Exhibit 10.48 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.18	Letter Agreements amending each of the Senior Subordinated Note Purchase Agreements (filed as Exhibit 10.49 to the Registration Statement on Form S-1 (File No. 333-81233) and incorporated herein by reference).
10.19	First Amendment to lease dated as of June 29, 1999 between Bay Colony Corporate Center LLC and Lionbridge (filed as Exhibit 10.48 to the Annual Report on Form 10-K (File No. 000-26933) for the year ended December 31, 1999 and incorporated herein by reference).
10.20	Second Amendment to lease dated as of December 10, 1999 between Bay Colony Corporate Center LLC and Lionbridge (filed as Exhibit 10.49 to the Annual Report on Form 10-K (File No. 000-26933) for the year ended December 31, 1999 and incorporated herein by reference).
10.21	Harvard Translations, Inc. 1997 Stock Option Plan (filed as Exhibit 4.4 to the Registration Statement on Form S-8 filed on June 9, 2000 (File No. 333-38996) and incorporated herein by reference).
10.22	IC Global Services, Inc. 1998 Stock Plan(Amended and Restated April 6, 1999) (filed as Exhibit 4.5 to the Registration Statement on Form S-8 filed on June 9, 2000 (File No. 333-38996) and incorporated herein by reference).
10.23	International Language Engineering Corporation Amended and Restated 1997 Stock Option Plan (filed as Exhibit 4.6 to the Registration Statement on Form S-8 filed on June 9, 2000 (File No. 333-38996) and incorporated herein by reference).
10.24	Letter Agreement by and between Capital Resource Lenders III, L.P., Morgan Stanley Venture Capital Fund II Annex, L.P., Morgan Stanley Venture Investors II Annex, L.P. and Lionbridge Technologies, Inc. dated March 27, 2001 (filed as Exhibit 10.70 to the Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 000-26933) and incorporated herein by reference).

Exhibit No.	Exhibit
10.25	Letter Agreement by and between Capital Resource Lenders III, L.P., Morgan Stanley Venture Capital Fund II Annex, L.P., Morgan Stanley Venture Investors II Annex, L.P. and Lionbridge Technologies Holdings, B.V. dated March 27, 2001 (filed as Exhibit 10.71 to the Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 000-26933) and incorporated herein by reference).
10.26	Agreement and Plan of Reorganization by and among Lionbridge Technologies, Inc., Diamond Acquisition Corp. and Data Dimensions, Inc. dated March 8, 2001 (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on March 19, 2001 (File No. 000-26933) and incorporated herein by reference).
10.27	Amendment No. 1 to Agreement and Plan of Reorganization by and among Lionbridge Technologies, Inc., Diamond Acquisition Corp. and Data Dimensions, Inc. dated March 16, 2001 (filed as Exhibit 2.2 to the Current Report on Form 8-K filed on March 19, 2001 (File No. 000-26933) and incorporated herein by reference).
10.28**	Agreement between Lionbridge Technologies, Inc. and Roger Jeanty dated as of June 20, 2001 (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.29**	Agreement between Lionbridge Technologies, Inc. and Peter Wright dated as of June 21, 2001 (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.30	Loan and Security Agreement between INT’L.com, Inc., International Language Engineering Corporation, Harvard Translations, Inc., Lionbridge Technologies California, Inc. and Silicon Valley Bank dated as of June 28, 2001 (filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.31	Promissory Note between INT’L.com, Inc., International Language Engineering Corporation, Harvard Translations, Inc., Lionbridge Technologies California, Inc. and Silicon Valley Bank dated as of June 28, 2001 (filed as Exhibit 10.4 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.32	Guarantee between Lionbridge Technologies, Inc. and Silicon Valley Bank dated as of June 28, 2001 (filed as Exhibit 10.5 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.33	Loan Agreement between Lionbridge Technologies Holdings B.V., Lionbridge Technologies B.V., Lionbridge Technologies Ireland and Silicon Valley Bank dated as of June 28, 2001 (filed as Exhibit 10.6 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.34	Promissory note between Lionbridge Technologies Holdings B.V., Lionbridge Technologies B.V., Lionbridge Technologies Ireland, and Silicon Valley Bank dated as of June 28, 2001 (filed as Exhibit 10.7 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30 , 2001 and incorporated herein by reference).
10.35	Guarantee between Lionbridge Technologies, Inc. and Silicon Valley bank dated as of June 28, 2001 (filed as Exhibit 10.8 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.36	Warrant to Purchase Stock of Lionbridge dated as of June 28, 2001 issued to Silicon Valley Bank (filed as Exhibit 10.9 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).

Exhibit No.	Exhibit
10.37	Note and Warrant Purchase Agreement between Lionbridge Technologies, Inc. and Capital Resource Partners IV, L.P. dated as of June 29, 2001 (filed as Exhibit 10.10 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.38	Promissory note between Lionbridge Technologies, Inc. and Capital Resource Partners IV, L.P. dated as of June 29, 2001 (filed as Exhibit 10.11 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.39	Warrant to Purchase Stock of Lionbridge dated as of June 29, 2001 issued to Capital Resource Partners IV, L.P. (filed as Exhibit 10.12 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.40	Guarantee between each of the direct or indirect subsidiaries of Lionbridge Technologies, Inc. in favor of Capital Resource Partners IV, L.P. dated as of June 29, 2001 (filed as Exhibit 10.13 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended June 30, 2001 and incorporated herein by reference).
10.41	Amended and Restated Promissory Note between INT’L.com, Inc., International Language Engineering Corporation, Harvard Translations, Inc., Lionbridge Technologies California, Inc., Data Dimensions, Inc., and Silicon Valley Bank dated as of September 24, 2001 (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended September 30, 2001 and incorporated herein by reference).
10.42	Loan Document Modification Agreement between INT’L.com, Inc., International Language Engineering Corporation, Harvard Translations, Inc., Lionbridge Technologies California, Inc., Data Dimensions, Inc., and Silicon Valley Bank dated as of September 24, 2001 (field as Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 000-26933) for the quarter ended September 30, 2001 and incorporated herein by reference).
10.43	Data Dimensions, Inc. 1988 Incentive Stock Option Plan (filed as Exhibit 4.4 to the Registration Statement on Form S-8 filed on the Registration Statement on Form S-8 filed on August 3, 2001 (File No. 333-66720) and incorporated herein by reference).
10.44	Data Dimensions, Inc. 1997 Stock Option Plan (filed as Exhibit 4.5 to the Registration Statement on Form S-8 filed on the Registration Statement on Form S-8 filed on August 3, 2001 (File No. 333-66720) and incorporated herein by reference).
10.45	ST Labs Stock Option Plan (filed as Exhibit 4.6 to the Registration Statement on Form S-8 filed on the Registration Statement on Form S-8 filed on August 3, 2001 (File No. 333-66720) and incorporated herein by reference).
10.46	Non-Qualified Stock Option Agreement between Peter Allen and Data Dimensions, Inc. (filed as Exhibit 4.7 to the Registration Statement on Form S-8 filed on the Registration Statement on Form S-8 filed on August 3, 2001 (File No. 333-66720) and incorporated herein by reference).
10.47*	Office Lease between Flatirons Cottonwood, Inc. and International Language Engineering Corporation dated as of December 28, 2001.
10.48*	Amendment to First Amended and Restated Senior Subordinated Note Purchase Agreement by and among Lionbridge Technologies Holdings, Inc., Capital Resource Lenders III, L.P. and Capital Resource Investment Partners III, L.L.C. dated as of December 31, 2001.
10.49*	Amendment to First Amended and Restated Senior Subordinated Note Purchase Agreement by and among Lionbridge Technologies Holdings B.V., Capital Resource Lenders III, L.P. and Capital Resource Investment Partners III, L.L.C. dated as of December 31, 2001.

Exhibit No.	Exhibit
10.50*	Amendment to Senior Subordinated Promissory Note between Lionbridge Technologies Holdings B.V., Morgan Stanley Venture Capital Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P. dated as of December 31, 2001.
10.51*	Amendment to Senior Subordinated Promissory Note among Lionbridge Technologies Holdings, Inc., Morgan Stanley Venture Capital Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P. dated as of December 31, 2001.
10.52*	First Amendment to Lease by and between Mission Street Development LLC and INT’L.com, Inc. dated as of February 28, 2002.
10.53*	Second Amendment to Lease by and between Cornerstone Suburban Office, L.P. and Lionbridge Technologies, Inc. dated as of February 28, 2002.

10.54*	Amendment No. 1 to Third Restated Registration Rights Agreement dated as of June 29, 2001 among Lionbridge Technologies, Inc., each of the other parties listed in Schedule A to the Third Restated Registration Rights Agreement dated as of May 22, 2000, Capital Resource Lenders III, L.P., CRP Investment Partners III, LLC, Morgan Stanley Venture Capital Fund II Annex, L.P., Morgan Stanley Venture Investors Annex, L.P., and each of the affiliates of both INT’L.com, Inc. and Harvard Translations, Inc. listed on Schedule B thereto.
21.1*	Subsidiaries of Lionbridge.
23.1*	Consent of PricewaterhouseCoopers LLP.
23.2*	Consent of Arthur Andersen LLP.
24.1*	Power of Attorney (included in signature page).

* Filed herewith.

** Indicates a management contract or compensatory plan, contract or arrangement required to be filed as an Exhibit pursuant to Item 14(c).

EX-10.47

                                                                   Exhibit 10.47

                                  OFFICE LEASE



                               TABLE OF CONTENTS

ARTICLE 1
(Fundamental Lease Provisions) ...............................................1

ARTICLE 2
(Lease of Demised Premises) ..................................................3
          2.1 Lease of Demised Premises ......................................3
          2.2 Term ...........................................................3
          2.3 Common Areas ...................................................3
          2.4 Delay in Commencement ..........................................3
          2.5 Condition of Demised Premises ..................................3
          2.6 Quiet Enjoyment ................................................3

ARTICLE 3
(Rent) .......................................................................5
          3.1 Rent ...........................................................5
          3.2 [Intentionally omitted] ........................................5
          3.3 [Intentionally omitted] ........................................5
          3.4 Interest on Delinquent Rent ....................................5
          3.5 Late Charge ....................................................5

ARTICLE 4
(Operating Costs) ............................................................5
          4.1 Payment of Costs ...............................................5
          4.2 Definition .....................................................7
          4.3 Estimated Payments .............................................7
          4.4 Annual Settlement ..............................................7
          4.5 Final Proration ................................................8
          4.6 No Representation ..............................................8
          4.7 Additional Rent ................................................8

ARTICLE 5
(Occupancy) ..................................................................8
          5.1 Use ............................................................8
          5.2 Compliance with Law ............................................8
          5.3 Food, Beverages and Odors ......................................9
          5.4 Waste ..........................................................9
          5.5 Signs ..........................................................9



ARTICLE 6
(Assignment and Subletting) ..................................................9
          6.1 Assignment, Mortgage, Subletting ...............................9
          6.2 Procedure for Assignment ......................................12

ARTICLE 7
(Alterations) ...............................................................12
          7.1 Alterations ...................................................12
          7.2 Notice ........................................................12
          7.3 Title to Improvements .........................................13

ARTICLE 8
(Repairs) ...................................................................13
          8.1 Tenant's Repairs ..............................................13
          8.2 Window and Floor Coverings ....................................13
          8.3 Landlord's Repairs ............................................13
          8.4 No Rent Abatement .............................................14

ARTICLE 9
(Insurance) .................................................................14
          9.1 Landlord's Insurance Coverage .................................14
          9.2 Tenant's Insurance Coverage ...................................14
          9.3 Form of Policies ..............................................15
          9.4 Waiver of Subrogation .........................................15
          9.5 Liability .....................................................15
          9.6 Tenant's Indemnification ......................................16

ARTICLE 10
(Subordination and Attornment) ..............................................17
          10.1 Subordination ................................................17
          10.2 Attornment ...................................................17
          10.3 Mortgages ....................................................17
          10.4 Amendments to Lease ..........................................17

ARTICLE 11
(Rules and Regulations) .....................................................18
          11.1 Compliance with Rules ........................................18

ARTICLE 12
(Damage or Destruction) .....................................................18
          12.1 Damage .......................................................18
          12.2 Landlord's Right to Terminate Lease ..........................18
          12.3 Obligations of Tenant ........................................18



ARTICLE 13
(Eminent Domain) ............................................................19
          13.1 Eminent Domain ...............................................19
          13.2 Damages ......................................................19
          13.3 Restoration ..................................................19

ARTICLE 14
(Utilities and Services) ....................................................19
          14.1 Installation and Use .........................................19
          14.2 Utility Services by Landlord .................................20
          14.3 Interruption of Service ......................................20
          14.4 Excessive Use ................................................20
          14.5 Plumbing .....................................................20
          14.6 Cessation of Services ........................................20

ARTICLE 15
(Access) ....................................................................21
          15.1 Access for Repairs ...........................................21
          15.2 Access to Show or Renovate ...................................21
          15.3 Conditions of Entry ..........................................21

ARTICLE 16
(Certificates of Occupancy) .................................................22
          16.1 Certificates of Occupancy ....................................22

ARTICLE 17
(Life Safety Systems) .......................................................22
          17.1 Life Safety Systems ..........................................22

ARTICLE 18
(Bankruptcy) ................................................................22
          18.1 Bankruptcy Prior to Term .....................................22
          18.2 Bankruptcy During Term .......................................23
          18.3 Measure of Damages ...........................................23
          18.4 Other Remedies ...............................................23

ARTICLE 19
(Default) ...................................................................23
          19.1 Events of Default ............................................23

ARTICLE 20
(Remedies) ..................................................................24
          20.1 Landlord's Remedies ..........................................24
          20.2 Certain Damages ..............................................24
          20.3 Continuing Liability After Termination .......................25
          20.4 Cumulative Remedies ..........................................26
          20.5 Redemption ...................................................27



          20.6 Fees and Expenses ............................................27

ARTICLE 21
(End of Term) ...............................................................28

          21.1 Condition of Demised Premises ................................28
          21.2 Holding Over .................................................28
          21.3 Holdover Without Consent .....................................28
          21.4 Termination ..................................................29

ARTICLE 22
(Surrender, Waiver and Integration) .........................................29
          22.1 Surrender ....................................................29
          22.2 No Waiver ....................................................29
          22.3 Integration ..................................................29

ARTICLE 23
(Jury Trial) ................................................................30
          23.1 Waiver of Jury Trial .........................................30

ARTICLE 24
(Landlord's Default) ........................................................30
          24.1 Landlord .....................................................30
          24.2 Force Majeure ................................................30

ARTICLE 25
(Notice) ....................................................................31
          25.1 Notice .......................................................31

ARTICLE 26
(Security) ..................................................................31
          26.1 Security Deposit .............................................31
          26.2 Return of Deposit ............................................31
          26.3 Transfer of Project ..........................................31
          26.4 [Intentionally omitted] ......................................32

ARTICLE 27
(Transfer by Landlord and Landlord's Liability) .............................32
          27.1 Transfer of Landlord's Interest ..............................32
          27.2 Limited Liability of Landlord ................................32

ARTICLE 28
(Environmental Covenants) ...................................................32
          28.1 Definition of Hazardous Materials ............................32
          28.2 Hazardous Materials Covenant .................................32
          28.3 Tenant's Indemnity ...........................................33



ARTICLE 29
(Tenant's Taxes) ............................................................33
          29.1 Personal Property Taxes ......................................33
          29.2 Sales and Withholding Tax Reporting ..........................33
          29.3 Exemption of Demised Premises from Tax Lien ..................33

ARTICLE 30
(Miscellaneous) .............................................................34
          30.1 Plans ........................................................34
          30.2 Broker .......................................................34
          30.3 Binding Effect ...............................................34
          30.4 Act of Tenant ................................................34
          30.5 Headings .....................................................35
          30.6 Construction .................................................35
          30.7 Severability .................................................35
          30.8 Security .....................................................35
          30.9 [Intentionally omitted] ......................................35
          30.10 Storage .....................................................35
          30.11 Time ........................................................35
          30.12 No Recording ................................................35
          30.13 Name Change .................................................36
          30.14 Estoppel ....................................................36
          30.15 Publicity and Advertisement .................................36
          30.16 Choice of Law ...............................................36
          30.17 Days ........................................................36
          30.18 Food, Beverages and Odors ...................................36
          30.19 Financial Statements ........................................37
          30.20 Exculpation .................................................37
          30.21 PERA ........................................................37
          30.22 Incorporation of Exhibits....................................38



                                    OFFICE LEASE

          This Office Lease (the "Lease") is entered into effective as of
December 28, 2001, between Flatirons Cottonwood, Inc., a Delaware corporation,
by LaSalle Investment Management, Inc., a Maryland corporation, as Advisor to
Public Employees' Retirement Association of Colorado, the sole shareholder of
Flatirons Cottonwood, Inc. ("Landlord"), and the tenant named in Section 1.4
below ("Tenant"). In consideration of the covenants set forth herein, Landlord
hereby leases to the Tenant and Tenant hereby hires from Landlord, the premises
described in Section 1.7 of this Lease ("Demised Premises") which are located at
2477 55th Street, Suite 101, Boulder, Colorado 80301, upon the conditions set
forth below, and it is agreed that each of the terms, covenants, provisions and
agreements hereinafter specified will be a condition.

                                    ARTICLE 1
                         (Fundamental Lease Provisions)

          1.1  Date of Lease: December 28, 2001.

          1.2  Development Rentable Area: 170,978 square feet.

          1.3  Landlord: Flatirons Cottonwood, Inc., a Delaware corporation.

          1.4  Tenant: International Language Engineering Corporation, d/b/a
               Lionbridge Technologies, Inc.

          1.5  Trade Name (if any): Lionbridge Technologies, Inc.

          1.6  Guarantor (if any): None.

          1.7  Demised Premises: A portion of the first floor, as shown hatched
               in black on the plan attached hereto as Exhibit A and made a part
                                                       ---------
               hereof, known as Suite 101 in the office building located at 2477
               55th Street, Boulder, Colorado (the "Building").

          1.8  Demised Premises Rentable Area: 10,480 square feet.

          1.9  Lease Term: Approximately, 61 months, beginning April 1, 2002
               (the "Commencement Date") and ending April 30, 2007.

          1.10 Option(s) to Renew: Tenant will have the right to renew this
               Lease as set forth in Article 34 of the Addendum, attached hereto
               and by this reference incorporated herein

          1.11 Minimum Rent: At an annual rate as set forth in Article 32 of the
               Addendum.



          1.12 Additional Rent: Tenant will pay as Additional Rent Tenant's
               Percentage of all Operating Costs, the cost of any utilities
               supplied by Landlord to the Demised Premises, and any other
               amounts owed by Tenant hereunder.

          1.13 Use of Premises: the Premises will be used solely for general
               office use.

          1.14 Addresses for Notice:

                To Tenant:        International Language Engineering Corporation
                                  c/o Lionbridge Technologies, Inc.
                                  2477 55th Street, Suite 101
                                  Boulder, Colorado 80301

                To Landlord:      Flatirons Cottonwood, Inc.
                                  c/o Trammell Crow Company
                                  7535 East Hampden Avenue, Suite 650
                                  Denver, Colorado 80231-4845

                With a copy to:   Flatirons Cottonwood, Inc.
                                  c/o LaSalle Investment Management, Inc.
                                  950 Seventeenth Street, Suite 1850
                                  Denver, Colorado 80202

          1.15 Security Deposit: Tenant will deliver a Letter of Credit to
               Landlord in the amount of $50,000 upon execution of this Lease,
               as more particularly described in Article 35 of the Addendum.

          1.16 Tenant's Percentage: 6.1294%.

          1.17 The Project: The office buildings (including the Building) and
               the land and improvements known as Flatiron Park West located at
               2425, 2477, 2511 and 2555 55th Street, Boulder, Colorado 80301.

                                       2



          1.18 Broker(s): Mr. Richard Damm
                          Trammell Crow
                          7535 E. Hampden Avenue
                          Suite 650
                          Denver, Colorado 80231-4845

                          Mr. Ken Gooden
                          The Staubach Company
                          1125 17th Street
                          Suite 1420
                          Denver, Colorado 80202

          1.19 Addendum: This Lease has one Addendum, attached hereto and by
               this reference incorporated herein.

                                       3



                                   ARTICLE 2
                          (Lease of Demised Premises)

               2.1 Lease of Demised Premises. Landlord hereby leases to Tenant,
                   -------------------------
and Tenant hereby hires from Landlord, the Demised Premises.

               2.2 Term. The term of this Lease will be for the term specified
                   ----
in Section 1.9 and will commence on the Commencement Date set forth in Section
1.9.

               2.3 Common Areas. The portions of the Project designated by
                   ------------
Landlord from time to time for the common use of all tenants, including,
hallways, restrooms, stairs, entrances, sidewalks, parking, loading areas,
curbs, landscaping and other improvements, will constitute the "Common Area."
The Common Area will be operated and maintained in such a manner consistent with
similar buildings in the City of Boulder, Colorado. The Landlord reserves the
right to reconfigure or change the Common Area and to close portions of the
Common Area from time to time for repairs, to prevent accrual of public rights
therein, or for any other purpose. In connection therewith, Landlord agrees to
use reasonable efforts to minimize interference with Tenant's use of the Demised
Premises and the Common Area. Landlord will have the right to assign parking
spaces to specific tenants and to restrict parking areas to customer parking
only. Tenant and its employees, customers and invitees will have a non-exclusive
right to use the Common Area as it exists from time to time with other tenants
and any other persons permitted by Landlord to use the same, subject to any
rules and regulations governing use of the Common Area which Landlord may
prescribe. Except in the event of emergency, Tenant may have access to the
Demised Premises at all times.

               2.4 Delay in Commencement. If, for any reason, Landlord cannot
                   ---------------------
deliver possession of the Demised Premises to Tenant on the Commencement Date,
Landlord will not be liable to Tenant for such failure, but in such case subject
to the last paragraph of Paragraph 31 of the Addendum Tenant will not be
obligated to pay rent or any other charges pursuant to this Lease until
possession is delivered to Tenant. If Tenant, with the prior written consent of
Landlord, occupies the Demised Premises prior to the Commencement Date, such
occupancy will be subject to the terms hereof but will not advance the
termination date, and Tenant will pay Minimum Rent and Additional Rent
commencing with the date of such occupancy, but such occupancy will not cause
Tenant to pay rent prior to March 1, 2002.

               2.5 Condition of Demised Premises. Neither Landlord nor
                   -----------------------------
Landlord's agents have made any representations or promises with respect to the
Building, the Project, or the Demised Premises except as expressly set forth in
this Lease. The rentable area in the Demised Premises and the Building and
Project will be measured and calculated in Landlord's standard manner; provided,
however, no remeasurement will affect the Minimum Rent or Tenant's Percentage
under this Lease. The taking of possession of the Demised Premises by Tenant
will be conclusive evidence, as against Tenant, that Tenant accepts the same "as
is" in their condition existing as of the Commencement Date, and that the
Demised Premises were in good and satisfactory order, condition

                                       4



and repair at the time such possession was so taken. As of the Commencement
Date, all Building systems are in operational order.

               2.6 Quiet Enjoyment. Landlord covenants and agrees with Tenant
                   ---------------
that, upon Tenant's payment of rent and observance and performance of all of the
terms, covenants, conditions, provisions and agreements of this Lease on
Tenant's part to be observed or performed, Tenant will have quiet possession of
the Demised Premises for the term aforesaid, subject, however, to the terms of
this Lease and of any ground leases, underlying leases, mortgages and deeds of
trust affecting all or any portion of the Building or the Project.

                                    ARTICLE 3
                                     (Rent)

               3.1 Rent. Tenant will pay Landlord the Minimum Rent specified in
                   ----
Section 1.11 on the first day of each calendar month during the term of this
Lease in lawful money of the United States in equal monthly installments without
notice or demand in advance at the address of Landlord specified in Section 1.14
or such other place as Landlord may designate with notice to Tenant, without any
set off or deduction whatsoever. Installments of Minimum Rent for the first and
last months of the term hereof will be prorated based upon the number of days
during each of said months that the Lease is in effect.

               3.2 [Intentionally omitted.]

               3.3 [Intentionally omitted.]

               3.4 Interest on Delinquent Rent. The time of payment of Minimum
                   ---------------------------
Rent, Additional Rent and any other amounts due hereunder is of the essence in
this Lease. In addition to all other remedies available to Landlord, all sums
payable hereunder will bear interest at an annual rate equal to 4% over the
prime rate of interest announced publicly by Wells Fargo Bank, Denver, Colorado
(or any successor to that bank) from time to time (but in no event in excess of
the maximum rate of interest permitted by law) after the due date until paid in
full, but the payment of such interest will not excuse or cure any default by
Tenant under this Lease. Failure to collect or charge interest in connection
with any one or more delinquent payments will not constitute a waiver of
Landlord's right to charge or collect interest in connection with any other or
similar payment.

               3.5 Late Charge. In the event Tenant fails to pay Minimum Rent,
                   -----------
Additional Rent or any other amount due hereunder within 10 days after the date
such payment is due, Tenant acknowledges that Landlord will incur additional
administrative expenses, the amount of which will be difficult, if not
impossible, to determine. Accordingly, Landlord will be entitled to assess
Tenant a one-time late charge of five percent (5%) of the amount of the payment
for each delinquent payment.

                                       5



                                   ARTICLE 4
                               (Operating Costs)

               4.1 Payment of Costs. In addition to Minimum Rent adjusted as
                   ----------------
provided in Article 3, beginning on the Commencement Date, Tenant will pay as
Additional Rent Tenant's Percentage of Operating Costs paid, payable or incurred
by Landlord in each calendar year or partial calendar year during the term of
this Lease and any renewal period.

               4.2 Definition. As used in this Lease, the term "Operating Costs"
                   ----------
means the sum of all costs and expenses of whatever kind or nature incurred in
managing, operating, maintaining, administering, over-hauling and repairing the
Project, in respect of a calendar year, including, but not limited to, the
following:

                    (a) Taxes and assessments upon or with respect to the
Project and the areas used in connection with the operation of the Project,
imposed by federal, state or local governments, but not including income,
franchise, capital stock, estate or inheritance taxes, but including gross
receipts taxes regarding rentals and other payments under this Lease and other
business taxes imposed regarding this Lease. If, because of any change in the
method of taxation of real estate, any tax or assessment is imposed upon
Landlord, the Project, the areas used in connection with the operation of the
Project, or upon or with respect to the land, or the rents or income therefrom,
in substitution for or in lieu of any tax or assessment which would otherwise be
a real estate tax or assessment subject matter, such other tax or assessment
will be included in the determination of Operating Costs; and

                    (b) Wage and labor costs applicable to the persons engaged
in the management, operation, maintenance, overhaul or repair of the Project and
the areas used in connection with the operation of the Project, whether they be
employed by Landlord or by an independent contractor with whom Landlord will
have contracted or may contract for such services, which costs will be similar
to those charged by similar parties for similar services rendered in the
Boulder, Colorado area; provided that any increase or decrease in the hours of
employment or the number of paid holidays or vacation days, social security
taxes, unemployment insurance taxes and the cost (if any) of providing
disability, hospitalization, medical, welfare, pension, retirement or other
benefits applicable with respect to such employees, will correspondingly affect
the wage and labor costs; and

                    (c) Costs of utilities, fuel, building supplies and
materials, insurance, service contracts and the other common area maintenance
charge obligation allocated to the Project, and the areas used in connection
with the operation of the Project; and

                    (d) Alterations to the Project or the areas used in
connection with the operation of the Project for lifesafety systems or energy
conservation required by any governmental or quasi-governmental authority having
jurisdiction over the Project (together with all costs, and interests thereon at
a rate equal to the annual prime rate of interest announced publicly by Wells
Fargo Bank, Denver, Colorado from time to time (but in no event in excess of the

                                       6



maximum rate of interest permitted by law), incurred in connection with any
such alterations, all amortized over their useful life, except that any such
costs (and the interest thereon) incurred in connection with alterations for
energy conservation will be amortized at a yearly rate offset by the savings
actually realized during such period as a result of such alteration or
replacement. Tenant will be liable only for Tenant's Percentage of the annual
amortized cost of such improvements during the primary term and any extended
term of this Lease, and no liability therefor will survive the expiration of the
Lease term; and

                    (e) Consultant, management and professional fees, including
attorneys' fee associated with the operation, maintenance and repair of the
Project, which costs will be similar to those charged by similar parties for
similar services rendered in the Boulder, Colorado area; and

                    (f) Such other items as are included in the cost to Landlord
of owning, managing, operating, maintaining, overhauling and repairing the
Project and the areas used in connection with operation of the Project, in
accordance with accepted accounting or management principles or practices
including, but not limited to, hazard liability insurance and the replacement
and refitting of building operating components.

          Operating Costs will not include (1) mortgage principal or interest;
(2) ground lease payments; (3) leasing commissions; (4) costs of advertising
space for lease in the Project; (5) costs for which Landlord is reimbursed by
insurance proceeds or from tenants of the Project (other than such tenants'
regular contributions to Operating Costs); (6) any depreciation or capital
expenditures (except as expressly provided above); (7) legal fees incurred for
negotiating leases or collecting rents; and (8) costs directly and solely
related to the maintenance and operation of the entity that constitutes the
Landlord, such as accounting fees incurred solely for the purpose of reporting
Landlord's financial condition.

          The fact that it is listed specifically in the foregoing definition of
Operating Costs will not be deemed to impose on Landlord an obligation to supply
a particular service to the Project or incur a particular expense on behalf of
the Project, it being understood that the only services Landlord will be
required to provide to Tenant hereunder are those described in Sections 8.3 and
14.2 below.

               4.3 Estimated Payments. Beginning on the Commencement Date and
                   ------------------
continuing throughout the term of this Lease, Tenant will pay to Landlord on the
first day of each month an amount equal to 1/12 of the product of Tenant's
Percentage multiplied by Estimated Operating Costs (as defined below) for such
calendar year. "Estimated Operating Costs" for any calendar year means
Landlord's estimate of such Operating Costs which will be subject to revision as
provided in Sections 4.4 and 4.5 below. The Estimated Operating Costs for
calendar year 2001 is attached to this Lease as Exhibit D. For any partial
                                                ---------
calendar year during the term of this Lease, Estimated Operating Costs will be
calculated on a full-year basis. During December of each year or as soon after
each December as practicable, Landlord will give Tenant a written notice of
Estimated Operating Costs for the ensuing calendar year and Tenant immediately
will begin paying

                                       7



Tenant's Percentage of Estimated Operating Costs based upon this calculation. If
such written notice is not given in December, Tenant will continue making
monthly payments based on the prior year's Estimated Operating Costs until the
first day of the month after which such revised notice is given. In the month in
which Tenant first makes a payment based upon the revised Estimated Operating
Costs, Tenant will pay to Landlord for each month which has elapsed since the
immediately prior December the difference between the amount payable based on
the revised estimate and the amount payable based on the prior year's estimate.
If, at any time but no more than twice a year, it reasonably appears to Landlord
that actual Operating Costs will vary from the Estimated Operating Costs for
such calendar year, Landlord, by written notice to Tenant, may revise the
Estimated Operating Costs and subsequent payments by Tenant in such calendar
year will be adjusted accordingly.

               4.4 Annual Settlement. Within 90 days after the end of each
                   -----------------
calendar year, Landlord will deliver to Tenant a statement of amounts payable
under Section 4.1 for such calendar year. Upon receipt, Tenant shall have a
10-day period in which to review such statement and make any reasonable
objection to the Landlord. If no reasonable objections are made after expiration
of such 10-day period, such statement will be final and binding upon Landlord
and Tenant. If reasonable objections are made, Landlord and Tenant shall
negotiate in good faith to resolve any reasonable and legitimate discrepancy,
and to resolve such matter, Landlord can require Tenant, at Tenant's sole cost
and expense, to conduct an audit of such records on terms reasonably specified
by Landlord. If the audit discloses that Operating Costs were overstated by more
than 5.0%, Landlord will pay for the cost of the audit. If such statement shows
an amount owing by Tenant that is less than the Estimated Operating Costs
previously paid by Tenant for such calendar year, the excess will be held by
Landlord and credited against the next payment of rent; however, if the term has
ended and Tenant was not in default at its end, Landlord will refund the excess
to Tenant. If such statement shows an amount owing by Tenant that is more than
the Estimated Operating Costs previously paid by Tenant for such calendar year,
Tenant will pay the deficiency to Landlord within 45 days after the delivery of
such statement.

               4.5 Final Proration. If this Lease ends on a day other than the
                   ---------------
last day of a calendar year, the amount of increase (if any) in the Operating
Costs payable by Tenant applicable to the calendar year in which this Lease ends
will be calculated on the basis of the number of days of the term falling within
such calendar year, and Tenant's obligation to pay any increase or Landlord's
obligation to refund any overage will survive the expiration or other
termination of this Lease.

               4.6 No Representation. Tenant acknowledges that Landlord has not
                   -----------------
made any representation or given Tenant any assurance as to the amount or
approximate amount of Operating Costs for any calendar year during the term of
this Lease and any renewal period.

               4.7 Additional Rent. Amounts payable by Tenant according to this
                   ---------------
Article 4 constitute Additional Rent, without deduction or offset. If Tenant
fails to pay any amounts due pursuant to this Article 4, Landlord will have
available to it all of the rights and remedies applicable to Tenant's failure to
pay Minimum Rent.

                                       8



                                    ARTICLE 5
                                   (Occupancy)

               5.1 Use. Tenant will use and occupy the Demised Premises for the
                   ---
purpose set forth in Section 1.13 and for no other purpose. The Demised Premises
will not be used for any auction, fire, bankruptcy or distress sale. The
character of the occupancy of the Demised Premises, as restricted by this
Article and as further restricted by Articles 6 and 17 and any of the Rules and
Regulations attached to this Lease, or hereafter adopted, is an additional
consideration and inducement for the granting of this Lease.

               5.2 Compliance with Law. Tenant will not use or occupy, or permit
                   -------------------
any portion of the Demised Premises to be used or occupied, in violation of any
law, ordinance, order, rule, regulation, certificate of occupancy or other
governmental requirement or any recorded restriction, or for any activity or in
any manner that is hazardous on account of fire or other hazards, or that would
in any way violate, suspend, void or increase the rate of fire, liability or any
other insurance of any kind at any time carried by Landlord. Any increase in the
cost of such insurance attributable to Tenant's activities, property or
improvements in the Demised Premises or Tenant's failure to perform and observe
its obligations under this Lease, will be payable by Tenant to Landlord on
demand. Tenant, at its own expense, will comply with all laws, ordinances,
orders, rules, regulations and other governmental requirements now or hereafter
relating to the use, condition or occupancy of the Demised Premises and all
rules, orders, regulations and requirements of the board of fire underwriters,
the Insurance Services Office or any other similar body having jurisdiction over
the Building. Tenant will not do or permit to be done any act or thing upon the
Demised Premises which will or might subject Landlord to any liability or
responsibility for injury to any person or persons or to any property by reason
of any business or operation being carried on upon the Demised Premises. Tenant
will not place a load upon any floor of the Demised Premises exceeding the floor
load per square foot area which such floor was designed to carry and which is
allowed by law. Business machines and mechanical equipment will be placed and
maintained by Tenant at Tenant's expense in settings sufficient in Landlord's
judgment to absorb and prevent vibration, noise and annoyance.

               5.3 Food, Beverages and Odors. Tenant will not prepare any food
                   -------------------------
or do any cooking or conduct any restaurant, luncheonette or cafeteria for the
sale or service of food or beverages to its employees or to others, or cause or
permit any odors of cooking or other processes or any unusual or objectionable
odors to emanate from the Demised Premises; provided, however, Tenant may use a
microwave oven and have coffee service. Tenant will not install or permit the
installation or use of any vending machine except by such persons and in such
manner as are approved by Landlord, which shall not be unreasonably withheld.

               5.4 Waste. Tenant will not commit, suffer or permit any waste,
                   -----
damage, disfiguration or injury to the Demised Premises or the Project or the
fixtures or equipment located therein, nor will Tenant conduct any dangerous,
noxious, or offensive trade, business or other activity in the Demised Premises.

                                       9



               5.5 Signs. Tenant will not install, paint, display, inscribe,
                   -----
place or affix any sign, picture, advertisement, notice, lettering or direction
in the interior or exterior of the Demised Premises which is visible from the
outside of the Demised Premises, without Landlord's prior written consent, which
may be withheld in Landlord's sole discretion. All of Tenant's exterior signs
and identifications will conform to the design criteria outlined by Landlord
from time to time and will comply with all applicable laws, rules or regulations
governing same. Tenant agrees to keep all signs in good condition and repair and
agrees to keep such signs lighted, if lighting is available, during those hours
from time to time required by Landlord in accordance with Landlord's Rules and
Regulations.

                                   ARTICLE 6
                          (Assignment and Subletting)

               6.1 Assignment, Mortgage, Subletting. Neither Tenant nor Tenant's
                   --------------------------------
legal representatives, successors or assigns will voluntarily or involuntarily
assign, mortgage or encumber this Lease, or sublet or use or occupy or permit
the Demised Premises or any part thereof to be used or occupied by others (other
than independent contractors occupying a portion of the demised premises without
the payment of rent or similar monetary charge and performing services directly
related to Tenant's translation and localization business) without the prior
written consent of Landlord in each instance, which will not be unreasonably
withheld, as more fully explained below. Any assignment, encumbrance, or
sublease without Landlord's prior written consent will be voidable and, at
Landlord's option, will constitute a default. A transfer of control of Tenant
will be deemed an assignment under this Lease and will be subject to all the
provisions of this Article.

               1. Assignment or Sublease to Unrelated Party. Notwithstanding the
                  -----------------------------------------
above, Tenant may assign this Lease or sublease the Demised Premises upon
fulfillment of all of the following express conditions, but not otherwise:

                    (A) Tenant has notified Landlord in writing of any
interest in this Lease which Tenant wishes to assign or any portion of the
Demised Premises which Tenant wishes to sublet or permit others to occupy;
such notice will specify the terms and conditions of such transaction and
will be accompanied by any information Landlord may require with respect to
the proposed assignee, sublessee or occupant;

                    (B) Tenant is not then in uncured default under any of the
terms, covenants, conditions, provisions, or agreements of this Lease;

                    (C) The proposed assignee or subtenant will be subject to
the prior written consent of Landlord, which consent will not be unreasonably
withheld or delayed, but, without limiting the generality of the foregoing, it
will be reasonable for Landlord to deny such consent if:

                                       10



                         (1) the use to be made of the Demised Premises by the
proposed assignee or subtenant is (a) not generally consistent with the
character and nature of all other tenancies in the Building, or (b) a use which
conflicts with any so-called "exclusive" then in favor of, or any use which is
the same as that stated in any percentage lease to, another tenant of the
Building, or [c] a use which would be prohibited by any other portion of this
Lease (including but not limited to any Rules and Regulations then in effect);
or

                         (2) the character, moral stability, reputation and
financial responsibility of the proposed assignee or subtenant are not
reasonably satisfactory to Landlord or in any event not at least equal to those
which were possessed by Tenant as of the date of execution of this Lease;

                    (D) Neither such assignment or sublease, nor Landlord's
consent thereto, will release or discharge Tenant of or from any liability,
whether past, present or future, under this Lease;

                    (E) The consent by Landlord to any such assignment or
sublease will not in any way be construed to relieve Tenant or any assignee or
subtenant from obtaining the express consent in writing of Landlord to any
further assignment or sublease;

                    (F) Tenant will not be released from any liability under
this Lease because of Landlord's failure to give Tenant notice of default under
any of the terms, covenants, conditions, provisions or agreements of this Lease;

                    (G) Tenant does not sublease the Demised Premises to more
than two subtenants;

                    (H) The term of each sublease is not less than one year,
unless the unexpired term of this Lease is less than one year, in which event
the term of such sublease will be for the unexpired term of this Lease, less one
day; and, in no event will the term of the sublease be for a longer period than
the unexpired term of this Lease, less one day;

                    (I) Each sublease will expressly provide that it is subject
and subordinate to this Lease;

                    (J) Tenant will pay to Landlord, Landlord's then standard
processing fee and the reasonable attorneys' fees (not to exceed $1,000)
incurred in connection with each such request;

                    (K) The proposed assignee or subtenant will execute an
agreement pursuant to which it will agree to perform faithfully and be bound by
all of the terms, covenants, conditions, provisions and agreements of this
Lease; and

                                       11



                    (L) An executed duplicate original of an assignment and
assumption agreement or sublease, in a form reasonably acceptable to Landlord,
will be delivered to Landlord within five days after the execution of the
agreement, and such assignment or sublease will not be binding upon Landlord
until the delivery of the agreement to Landlord and the execution and delivery
of Landlord's consent to the agreement.

               Landlord will receive 50% of any profits which Tenant may receive
by assigning this Lease or subleasing the Demised Premises, including increased
Minimum Rent collected by Tenant. As used in this Lease, the term "profits" will
mean the consideration payable by the assignee or subtenant to Tenant fairly
attributable to this Lease and the Demised Premises (which, if payable on other
than a monthly schedule, will be prorated on a monthly basis), including the
gross monthly rental receivable by Tenant under such assignment or sublease,
less the pro rata base monthly rent and escalation rent payable by Tenant to
Landlord with respect to the Demised Premises covered by the assignment or
sublease. Landlord will have the option to terminate this Lease, rather than
approve the assignment or subleasing of it; provided that before exercising such
option, Landlord provides Tenant notice of its intention to exercise the option
and Tenant has the opportunity to withdraw its request for Landlord's consent.
In addition, Landlord's option to terminate shall not apply to a sublease or
assignment to a Related Party (defined below).

               II. Assignment or Sublease to Related Party. Landlord agrees to
                   ---------------------------------------
give its consent as a matter of course to an assignment of this Lease or
sublease of the Demised Premises to (a) any entity controlled by Tenant, or (b)
any entity which controls Tenant, or (c) any entity under the common control of
Tenant and a third party, or (d) any entity resulting from merger or
consolidation with Tenant (hereinafter collectively referred to as "Related
Party") if, but only if, Tenant, and such Related Party fully comply with
subparagraphs (C), (D), (E) and (G) above of Section I of this Article.

               6.2 Procedure for Assignment. Tenant will notify Landlord in
                   ------------------------
writing of any interest in this Lease which Tenant wishes to assign or any
portion of the Demised Premises which Tenant wishes to sublet or permit others
to occupy. Such notice will specify the terms and conditions of such transaction
and will be accompanied by any information Landlord may require with respect to
the proposed assignee, sublessee or occupant. Fifty percent of all rent or other
consideration paid by the assignee, sublessee or occupant to Tenant in excess of
the Minimum Rent, as adjusted, and Additional Rent due to Landlord under this
Lease will be paid to Landlord. Tenant will reimburse Landlord for Landlord's
reasonable expenses as set forth in Section 6.1 (J) (not to exceed $1,000 per
request), and reasonable attorneys' fees, incurred in connection with the review
and documentation of any transfer of the Demised Premises or this Lease for
which Landlord's consent is requested, regardless of whether Landlord's consent
is granted.

                                   ARTICLE 7
                                 (Alterations)

               7.1 Alterations. Tenant may not make any alterations,
                   -----------
installations, additions or improvements affecting the structural components of
the Building or the Building

                                       12



systems. Tenant will make no other alterations, installations, additions or
improvements in or to the Demised Premises without first obtaining the written
consent of Landlord, which will not be unreasonably withheld. Tenant understands
that Landlord's consent will be conditioned on Tenant's compliance with
Landlord's requirements in effect at the time permission is requested, which
requirements will include, but not be limited to, Landlord's reasonable approval
of plans, specifications, contractors, insurance, and hours of construction.
Tenant will be required to pay as Additional Rent to Landlord a reasonable fee
for supervising Tenant's contractor and for Landlord's related costs, such as,
but not limited to, trash removal and utilities. Prior to the commencement of
any work in or about the Demised Premises by Tenant's contractors, Tenant will
on request deliver to Landlord certificates issued by applicable insurance
companies evidencing that workmen's compensation, commercial general liability
and property damage insurance, all in amounts and with companies and on forms
satisfactory to Landlord, are in full force and effect and maintained by all
contractors and subcontractors engaged by Tenant to perform such work. Each such
certificate will provide that it may not be canceled without 10 days' prior
written notice to Landlord. Upon completion of such work, Tenant will provide
Landlord with as-built plans and specifications and with lien releases from
every person who supplied labor or materials for the work. All work done by
Tenant will be performed in full compliance with all laws, rules, orders,
ordinances, directions, regulations and requirements of all governmental
agencies, offices, departments, bureaus and boards having jurisdiction of the
Project.

               7.2 Notice. Before commencing any work, Tenant will give Landlord
                   ------
at least five days' written notice of the proposed commencement of such work.
Preceding and during the course of such work, Tenant will post and keep posted
in conspicuous places on the Demised Premises such notice as Landlord will
prepare as may be permitted by law to protect Landlord from having its interest
in the Demised Premises made subject to a mechanic's lien, and if requested by
Landlord and the cost of such work is expected to or actually does exceed
$5,000, Tenant will secure, at Tenant's own cost and expense, a completion and
lien indemnity bond satisfactory to Landlord for said work. Any mechanic's lien
filed against the Demised Premises, the Building or the Project for work claimed
to have been done for, or materials claimed to have been furnished to, Tenant,
will be discharged by Tenant, by bond or otherwise, within 10 days after the
filing thereof, at the cost and expense of Tenant.

               7.3 Title to Improvements. All alterations, additions or
                   ---------------------
improvements upon the Demised Premises made by either Landlord or Tenant which
are fixtures of the realty, including, without limiting the generality of the
foregoing, all paneling, partitions, railings, and the like, unless Landlord
elects otherwise (which election will be made by giving a notice pursuant to the
provisions of Article 25 below at the time Landlord consents to such
alterations), will become the property of Landlord, and will remain upon and be
surrendered with the Demised Premises, as a part of the Demised Premises, at the
end of the term of this Lease. If Tenant will be required to remove any fixtures
or other property from the Demised Premises, Tenant will fully repair or, at
Landlord's option, will pay to Landlord the cost of fully repairing, any damage
arising from such removal. Tenant's obligation to perform and observe this
covenant will survive the expiration or other termination of this Lease.

                                       13



                                    ARTICLE 8
                                    (Repairs)

               8.1 Tenant's Repairs. Tenant will take good care of the Demised
                   ----------------
Premises and fixtures therein and will make all repairs, maintenance and
replacements in and about the Demised Premises necessary to preserve them in
good order and condition equal to the condition of the Demised Premises on the
Commencement Date. Tenant will make, at its sole expense, repairs to any special
equipment or systems installed by Tenant or by Landlord on Tenant's behalf. All
repairs required under this section will be made only by contractors and
mechanics reasonably approved by Landlord. If an Event of Default by Tenant has
occurred under this Lease or in case of emergency, Landlord may, but will not be
obligated to, perform any of Tenant's obligations hereunder and Tenant will pay
the cost of same promptly to Landlord within 10 days of Tenant's receipt of
Landlord's written demand therefor.

               8.2 Window and Floor Coverings. Tenant will take good care of any
                   --------------------------
and all floor and window coverings installed at any time in any portion of the
Demised Premises, and Tenant will make, as and when needed, all repairs in and
to the said coverings and shampoo and/or clean any of said coverings as
necessary to preserve them in good order, condition and appearance. Upon the
expiration or other termination of this Lease, Tenant will surrender said
coverings to Landlord in good order, condition and repair, ordinary wear and
tear excepted.

               8.3 Landlord's Repairs. Except as otherwise provided in this
                   ------------------
Lease, Landlord will repair the mechanical, plumbing, heating, air conditioning,
ventilation and electrical equipment and systems, the Common Area, and the roof,
foundation and exterior walls, and will make structural repairs within the
Demised Premises arising from ordinary wear and tear or through causes over
which Tenant has no control, all of which repairs will constitute Operating
Costs (except for acts of Landlord's gross negligence). Landlord may repair at
the expense of Tenant, subject to Section 9.4 below, any damage or injury to the
Demised Premises, or to the Building or to its fixtures, appurtenances or
equipment or to any of the Project done by Tenant or Tenant's agents, servants,
employees, contractors, visitors or licensees, or caused by moving property of
Tenant in or out of the Building, or resulting from the carelessness,
negligence, or improper conduct of Tenant or Tenant's agents, servants,
employees, contractors, visitors or licensees. Landlord will have the right to
replace any and all plate and other glass damaged or broken from any cause
whatsoever, except the negligence or willful misconduct of Tenant, in which case
this will be Tenant's responsibility) in or about the Demised Premises, which
shall be a part of Operating Costs.

               8.4 No Rent Abatement. There will be no allowance to Tenant for a
                   -----------------
diminution of rental value, and no liability on the part of Landlord by reason
of inconvenience, annoyance, or injury to business arising from the making of,
or the failure to make, any repairs, alterations, additions or improvements in
or to any portion of the Demised Premises or the Project, or in or to fixtures,
appurtenances or equipment contained therein, and in no event will Landlord be
responsible for any consequential damages arising or alleged to have arisen from
any such event. Tenant hereby waives all rights under any law in existence
during the term of this Lease authorizing a tenant to make repairs at the
expense of a landlord or to terminate a lease upon the complete or

                                       14



partial destruction of the leased premises. Nothing in this Section 8.4 will
limit Tenant's rights to obtain damages (exclusive of consequential damages) for
Landlord's failure to perform its obligations under Section 8.3 or otherwise in
this Lease.

                                   ARTICLE 9
                                  (Insurance)

               9.1 Landlord's Insurance Coverage. Landlord will maintain
                   -----------------------------
liability insurance, hazard insurance on the Building and such other insurance
coverage as it reasonably deems necessary, the cost of which will be included in
Operating Costs. Tenant acknowledges that it has no right to receive any
proceeds from any such insurance policies carried by Landlord and that such
insurance is for the sole benefit of Landlord. Landlord will not be responsible
for insuring any alterations, installations or other improvements made by Tenant
or Landlord to the Demised Premises or any personal property of Tenant, except
for the initial build out of the Demised Premises by Landlord.

               9.2 Tenant's Insurance Coverage. Tenant agrees, at Tenant's sole
                   ---------------------------
cost and expense, to carry and maintain (i) commercial general liability
insurance, including bodily injury and property damage, personal injury and
contractual liability with respect to all claims, demands, or actions by any
person, firm or corporation, in any way arising from, related to, or connected
with, the conduct and operation of Tenant's business or use of the Demised
Premises (such policies will be written on a comprehensive basis, with limits of
not less than $2,000,000 and include contractual liability coverage for
performance by Tenant of the indemnities set forth in this Lease); (ii) fire and
extended coverage insurance, including endorsements for vandalism, malicious
mischief, theft and sprinkler leakage, covering all of Tenant's property in the
Demised Premises, including, but not limited to, furniture, fittings,
installations, alterations, additions, partitions, fixtures, merchandise and
anything in the nature of a leasehold improvement owned by Tenant in an amount
equal to the full replacement cost of such property without deduction for
depreciation; (iii) standard form workers' compensation and employers' liability
insurance in amounts as required by an applicable governmental agency or
authority; (iv) plate glass (other than Building exterior glass windows)
insurance in an amount not less than the full replacement costs of any such
glass breakage; (v) comprehensive automobile liability insurance policy insuring
all owned, non-owned and hired vehicles used in the conduct of Tenant's business
and operated upon or parked on the Project with limits of liability of not less
than $1,000,000 each person and $1,000,000 each occurrence for bodily injury and
$500,000 each occurrence for property damage; and (vi) business interruption
insurance in amounts and for insurance risks against which a prudent tenant
would protect itself as specified by Landlord.

               9.3 Form of Policies. All policies of commercial general
                   ----------------
liability insurance and property damage insurance which Tenant is obligated to
maintain according to this Lease will name Landlord as an additional insured.
Tenant will deliver to Landlord a copy of all such policies or certificates of
insurance (including, in any case, documentation naming Landlord as an
additional insured) and evidence of payment of all premiums for any such
policies prior to Tenant's occupancy of the Demised Premises and from time to
time during the Lease term, at least

                                       15



30 days prior to the expiration of the term of each such policy. All policies of
commercial general liability insurance and property damage insurance maintained
by Tenant also will contain a provision that Landlord, although named as an
additional insured, will nevertheless be entitled to recover under such policies
for any loss sustained by Landlord, its agents and employees as a result of the
acts or omissions of Tenant. Such commercial general liability insurance and
property damage insurance policies also will be written as primary policies, not
contributing with and not in excess of coverage that Landlord may carry. All
policies required to be maintained by Tenant will provide that they may not be
terminated or amended except after 30 days' prior written notice to Landlord.

               9.4 Waiver of Subrogation. Notwithstanding any other provision of
                   ---------------------
this Lease to the contrary, Landlord and Tenant waive any and all rights to
recover against each other and their respective officers, members, employees,
agents and representatives for any loss or damage to such waiving party arising
from any cause to the extent covered by the greater of any valid and collectible
insurance required to be carried by such party pursuant to this Article 9 or any
other insurance actually carried by such party to the extent of the proceeds
paid under such insurance. Such waiver will be effective only with respect to
loss or damage occurring during such time as Landlord's and Tenant's policies
will be in force and effect and so long as it does not adversely affect or
impair such policies or prejudice the right of the releasing party to recover
under such policies. Landlord and Tenant will cause their respective insurers to
issue appropriate waiver of subrogation rights endorsements to all policies of
insurance carried in connection with the Demised Premises and any personal
property located thereon.

               9.5 Liability. Neither Landlord nor Landlord's agents will be
                   ---------
liable for any property entrusted to them, their employees or the Building
personnel, or for the loss of such property by theft or otherwise. Neither
Landlord nor Landlord's agents will be liable for any injury to or death of
persons or for loss of or damage to property occurring in, on, or about the
Project resulting from falling plaster, explosion, flood, sprinkling devices,
defective wiring, excessive heat or cold, frost, broken glass, steam, gas,
electricity, snow, wind, hail, water, broken or leaking pipes or plumbing
fixtures, earthquake, war, civil disorder, strike, water, or rain which may leak
from any part of the Building or from the pipes, appliances or plumbing works of
the same or from the street or sub-surface or from any other place or resulting
from dampness or any other cause of any nature, and Tenant hereby indemnifies
Landlord against any and all claims, losses, damages, costs, and expenses
(including, but not limited to, attorneys' fees and expenses) arising out of the
foregoing, unless caused by or due solely to the negligence of Landlord,
Landlord's agents, servants or employees. Neither Landlord nor Landlord's agents
will be liable for any such damage caused by other tenants or parties in the
Building or Project or any of the areas used in connection with the operation of
the Building or Project, or for interference with light or other incorporeal
hereditaments, or caused by construction of any private, public or quasi public
work or by any repairs, alterations, injuries or accidents in or about the
Project or adjacent premises; nor will Landlord be liable for any latent defect
in the Building or for interference with light or other incorporeal
hereditaments. Tenant will reimburse Landlord for all expenses, damages or fines
incurred or suffered by Landlord by reason of any breach, violation or
nonperformance by Tenant, or Tenant's agents, servants, employees, contractors,
visitors or licensees of any term, covenant, condition, provision or agreement
of this Lease, or by reason of damage to persons or property caused by moving
property

                                       16



in or out of the Building or by the installation or removal of furniture or
other property of or for Tenant, or by reason of or arising out of the occupancy
or use by Tenant of the Demised Premises or of the Building or any of the areas
used in connection with the operation of the Building or any part thereof, or
from any other cause due in whole or in part to the negligence or other wrongful
act of Tenant or Tenant's agents, servants, employees, contractors, visitors or
licensees. Tenant will give immediate notice to Landlord in case of fire or
accident to or defect in the Building or any of its fixtures, appurtenances or
equipment. All property belonging to Tenant or any occupant of the Demised
Premises will be at the risk of Tenant or such person only, and Landlord will
not be liable for damage thereto or theft or misappropriation thereof.

               9.6 Tenant's Indemnification. Tenant hereby indemnifies and holds
                   ------------------------
harmless Landlord from and against any and all claims, liabilities damages,
losses, costs, and expenses (including reasonable attorneys' fees) arising out
of (i) the conduct of Tenant's business in the Demised Premises, (ii) any breach
or default by Tenant of the covenants, terms and conditions contained in this
Lease, or (iii) any negligent act or omission by, or the intentional misconduct
of, Tenant, its agents, contractors, servants, employees, invitees or licensees.
Tenant will give immediate notice to Landlord in case of fire or accident to or
defect in the Building or any of its fixtures, appurtenances or equipment or any
other portion of the Project.

                                   ARTICLE 10
                         (Subordination and Attornment)

               10.1 Subordination. It is agreed that this Lease may, at the
                    -------------
option of Landlord, be made subordinate to any ground or underlying leases,
mortgages, or deeds of trust which may now or hereafter affect the real property
of which the Demised Premises form apart and that Tenant, or Tenant's
successors-in-interest, will execute and deliver upon the demand of Landlord any
and all instruments desired by Landlord subordinating in the manner requested by
Landlord this Lease to such lease, mortgage or deed of trust. Landlord agrees to
use reasonable efforts to obtain a non-disturbance agreement from future lenders
of the Building. Landlord is hereby irrevocably appointed and authorized as
agent and attorney-in-fact of Tenant to execute and deliver all such
subordination instruments in the event Tenant fails to execute and deliver said
instruments within five days after its receipt of notice from Landlord demanding
the execution thereof.

               10.2 Attornment. Tenant agrees that, at the option of the
                    ----------
landlord under any ground lease hereafter affecting the real property of which
the Demised Premises form a part, Tenant will attorn to said landlord in the
event of the termination or cancellation of such ground lease and if requested
by said landlord, Tenant will enter into a new lease with said landlord (or a
successor ground lessee designated by said landlord) for the balance of the term
then remaining under this Lease upon the same terms and conditions as those
herein provided.

               10.3 Mortgages. In the event of a foreclosure or exercise of
                    ---------
power of sale under any mortgage or deed of trust now or hereafter affecting the
real property of which the Demised Premises form a part, the holder of any such
mortgage or deed of trust (or purchaser at any sale pursuant thereto) will have
the option of (i) requiring Tenant to attorn to such holder or

                                       17



purchaser, and to enter into a new lease with such holder or purchaser (as
landlord) for the balance of the term then remaining under this Lease upon the
same terms and conditions as those provided in this Lease, or (ii) electing that
this Lease become or remain, as the case may be, superior to said mortgage or
deed of trust; provided, that, in no event will such holder or purchaser (x) be
liable for the act or omission of any prior Landlord, or (y) be subject to any
offsets or defenses which Tenant may have against any prior Landlord, or (z) be
bound by any payment of Minimum or Additional Rent which Tenant might have paid
for more than one month in advance to any prior Landlord. Any attornment
pursuant to this Article 10 will occur automatically but Tenant, upon request
and without cost to Landlord, will execute and deliver any and all instruments
reasonably desired by such holder or purchaser evidencing such attornment to any
said mortgage, deed of trust or ground lease.

               10.4 Amendments to Lease. In the event that Landlord or any such
                    -------------------
holder at any time requests that this Article contain different language to the
same general effect that is not a material adverse change of the then existing
terms of the Lease, Tenant agrees promptly to execute and deliver an amendment
of this Lease memorializing the same.

                                   ARTICLE 11
                            (Rules and Regulations)

               11.1 Compliance with Rules. Tenant and Tenant's agents, servants,
                    ---------------------
employees, contractors, visitors and licensees will observe faithfully and
comply strictly with the Rules and Regulations attached as Exhibit B and made a
                                                           ---------
part of this Lease, and such other and further Rules and Regulations as Landlord
or Landlord's agents may from time to time adopt. Notice of any additional Rules
or Regulations will be given in accordance with the provisions of Article 25
below. Landlord will not be liable to Tenant for any violation of said Rules and
Regulations, or the breach of any term, covenant, condition, provision, or
agreement in any lease, by any other tenant or other party. Landlord will use
reasonable efforts in a non-discriminatory manner to enforce the Rules and
Regulations. Any new Rules and Regulations will not adversely affect Tenant's
rights under this Lease.

                                   ARTICLE 12
                            (Damage or Destruction)

               12.1 Damage. If the Demised Premises will be damaged by fire or
                    ------
other cause without the fault or neglect of Tenant, Tenant's agents, servants,
employees, contractors, visitors or licensees, the damages will be repaired by
and at the expense of Landlord to the extent insurance proceeds are available
therefor unless Landlord elects not to repair as hereinafter provided, and rent
will abate during such time as and to the extent that the demised premises are
untenantable. No liability will accrue for any delay in repairing the Demised
Premises which may arise by reason of adjustment of insurance on the part of
Landlord or Tenant or for delay on account of "labor troubles," or for any other
cause beyond Landlord's control.

               12.2 Landlord's Right to Terminate Lease. Landlord may elect to
                    -----------------------------------
terminate this Lease if the Building or the Demised Premises are (i) destroyed
or substantially damaged by

                                       18



casualty not covered by insurance, (ii) destroyed or rendered untenantable to an
extent in excess of twenty-five percent (25%) of the rentable area of the
Building or the Demised Premises, or (iii) damaged to such extent that the
remaining term of this Lease is not sufficient to amortize the costs of
reconstruction thereof. Should Landlord elect to terminate this Lease, it will
give written notice of such election to Tenant within 90 days after the
occurrence of such casualty. The term of this Lease will expire upon the third
day after such notice is given and Tenant will vacate the Demised Premises and
surrender the same to Landlord.

               12.3 Obligations of Tenant. Tenant agrees that, during any period
                    ---------------------
of reconstruction or repair, it will continue the operation of its business
within the Demised Premises to the extent practicable. Tenant also will proceed
with reasonable diligence, at its sole cost and expense, to rebuild, repair,
restore and replace any furnishings, fixtures, equipment, merchandise and other
property belonging to Tenant. Tenant agrees that, in the event of damage or
destruction to the leasehold improvements or Landlord's property in the Demised
Premises covered by insurance required to be taken out by Tenant pursuant to
this Lease, Tenant will repair, restore or replace such leasehold improvements
or property at Tenant's expense. In the event of damage or destruction of the
Building or Demised Premises entitling the Landlord to terminate this Lease
pursuant to this Article 12, Tenant will pay to Landlord all of its insurance
proceeds relating to the leasehold improvements and Landlord's property in the
Demised Premises and surrender to Landlord, in accordance with the provisions of
this Lease, the leasehold improvements and such property in the Demised
Premises.

                                   ARTICLE 13
                                (Eminent Domain)

               13.1 Eminent Domain. In the event the entire Demised Premises
                    --------------
will be appropriated or taken under the power of eminent domain by any public or
quasi-public authority, this Lease will terminate and expire as of the date of
such taking. In the event more than twenty-five percent (25%) of the rentable
area of the Demised Premises is taken under the power of eminent domain by any
public or quasi-public authority, or if more than twenty-five percent (25%) of
the total land area in the Project is taken, then the Landlord will have the
right to terminate this Lease by giving Tenant written notice of such
termination within 60 days after the taking of possession by such public or
quasi-public authority. In the event more than twenty-five percent (25%) of the
rentable area of the Demised Premises is taken under the power of eminent domain
by any public or quasi-public authority Tenant may elect to terminate this Lease
by delivering 10 days' prior written notice to Landlord within 10 days after the
date of such taking.

               13.2 Damages. All compensation awarded for any taking (or the
                    -------
proceeds of any private sale in lieu thereof) of the Demised Premises or the
Project will be the property of Landlord and Tenant hereby assigns its interest
in any such award to Landlord. However, Tenant may make a separate claim against
the condemning authority for Tenant's personal property and moving costs, so
long as such claim does not reduce the award to Landlord.

                                       19



               13.3 Restoration. If this Lease is not terminated as a result of
                    -----------
any condemnation or taking, Tenant will remain in that portion of the Demised
Premises which will not have been appropriated or taken as herein provided, and
Landlord agrees, at Landlord's sole cost and expense, as soon as reasonably
possible, to restore the remaining portion of the Demised Premises to a complete
unit of like quality and character as existed prior to such appropriation or
taking; and thereafter, the Minimum Rent provided for herein will be adjusted on
an equitable basis, taking into account the relative value of the portion taken
as compared to the portion remaining. In the event that no part of the Demised
Premises is taken, Landlord agrees to restore and repair any remaining part of
the Project and where there is no taking of the Demised Premises there will be
no reduction in the Minimum Rent hereunder unless the rentable area of the
Demised Premises is reduced, in which event Minimum Rent will be reduced
proportionately. In no event will there be an abatement or reduction of
Additional Rent.

                                   ARTICLE 14
                            (Utilities and Services)

               14.1 Installation and Use. Tenant will use the utilities
                    --------------------
(including water, gas, electricity, sewer and telephone supplied to or serving
the Demised Premises) in accordance with Landlord's Rules and Regulations and
the rules and regulations of the public utility company or the governmental
agency supplying the same. Except as otherwise provided herein, Landlord will
not be responsible for providing any meters or other devices for the measurement
of utilities supplied to the Demised Premises. Tenant will pay for all utilities
servicing the Demised Premises.

               14.2 Utility Services by Landlord. Should Landlord elect to
                    ----------------------------
supply any utility services used or consumed in the Demised Premises, Tenant
agrees to purchase and pay Landlord as Additional Rent for the same at a cost
not to exceed that which the utility company would have charged Tenant for
furnishing such utilities directly to Tenant. Tenant will pay such utility costs
to Landlord within 10 days after written notice from Landlord. If Landlord is
furnishing Tenant any utilities hereunder, Landlord, at any time at Landlord's
sole option and upon not less than 30 days' prior written notice to Tenant, may
discontinue furnishing such utility to the Demised Premises, and in such case,
Tenant will contract with the public utility company or governmental agency
supplying such utility service for the purchase and obtaining by Tenant of such
utility directly from such company or agency. In the event any of Tenant's
utility charges are not separately metered, Tenant will pay its proportionate
share of such charges, as Additional Rent, upon written notice thereof from
Landlord to Tenant.

               14.3 Interruption of Service. Landlord will not be liable to
                    -----------------------
Tenant or any other person for any damages or injury to person or property,
including, without limitation, damages for injury to or loss of Tenant's
business, resulting from interruption, curtailment or cessation of any utility
service, air conditioning, heat, snow removal or parking nor will the same
entitle Tenant to any abatement of Rent or be deemed an eviction of Tenant in
whole or in part. Notwithstanding the foregoing, in the event that an
interruption or curtailment of services (other than cleaning) which Landlord is
obligated to furnish at Landlord's expense renders the Demised Premises totally
unusable and the same are actually unused by Tenant for more than five
consecutive business days, then and

                                       20



in that event Tenant will be entitled to an abatement of rent commencing with
the sixth business day that the same are unusable and unused; provided, however,
that Tenant will not be entitled to any abatement of rent under the foregoing
due to unusability (1) caused directly or indirectly by any act or omission of
Tenant or any of Tenant's servants, employees, agents, contractors, visitors or
licensees, (2) where Tenant makes or requests a decoration, alteration,
improvement or addition which requires interruption of services, or (3) where
the service in question is one which Tenant is obligated to furnish or pay for
under the provisions of this Lease.

               14.4 Excessive Use. If Tenant uses unusual amounts of
                    -------------
electricity, water, or other utilities in the sole discretion of Landlord, then
Landlord may install a meter and thereby measure Tenant's electricity, water or
other utility consumption for all purposes. Tenant will pay Landlord for the
cost of the meter and the cost of the installation thereof, and, throughout the
duration of Tenant's occupancy, Tenant will keep the meter in good working order
and repair at Tenant's own cost and expense, in default of which Landlord may
cause such meter to be replaced or repaired and collect the cost thereof from
Tenant as Additional Rent. Tenant agrees to pay for electricity, water or other
utility consumed, as shown on the meter, as and when bills are rendered, and on
default in making such payment Landlord may pay such charges and collect the
same from Tenant. At all times Tenant's use of electric current will never
exceed the capacity of the feeders to the Building or the risers or wiring
installation.

               14.5 Plumbing. Tenant will at all times maintain at its own cost
                    --------
and expense all plumbing facilities and related equipment within the Demised
Premises in good order, condition and repair to the satisfaction of Landlord.
Nothing herein contained will be construed to confer upon Tenant the right to
install any plumbing facilities without the prior consent of Landlord.

               14.6 Cessation of Services. Landlord reserves the right to stop
                    ---------------------
service of the elevator, plumbing, heating, ventilating, air conditioning and
electric or other mechanical systems, or cleaning services, when necessary, by
reason of accident or emergency or of inspection, repairs, alterations,
additions or improvements which in the judgment of Landlord are desirable or
necessary to be made, until same will have been completed, and will further have
no responsibility or liability for failure to supply any such services in such
instance. Notwithstanding the foregoing, Landlord will use commercially
reasonable efforts to minimize any interference associated with such cessation
of services.

                                   ARTICLE 15
                                    (Access)

               15.1 Access for Repairs. Tenant will permit Landlord to use and
                    ------------------
maintain pipes, conduits and other facilities in and through the Demised
Premises. Landlord and Landlord's agents will have the right to enter the
Demised Premises at all times after reasonable advance notice, except in the
case of emergency in which case no notice is required, to examine the same and
to make such repairs, alterations, additions, and improvements as Landlord may
deem necessary or desirable, and Landlord will be allowed to take all material
into and upon the Demised Premises that may be required therefor without the
same constituting an eviction of Tenant in whole or in part, and

                                       21



the rent will in no wise abate while such repairs, alterations, additions or
improvements are being made, by reason of inconvenience, annoyance or injury to
the business of Tenant because of the prosecution of any such work, or
otherwise. Notwithstanding the foregoing, Landlord will use commercially
reasonable efforts to minimize any interference associated with such activities.

               15.2 Access to Show or Renovate. After reasonable advance notice,
                    --------------------------
except in the case of emergency in which case no notice is required, Landlord
and Landlord's agents may inspect the Demised Premises at any time and may show
the Demised Premises at any time to prospective tenants, mortgagees, and
purchasers of the Building and other persons with a business interest therein.
If, during the last month of the term, Tenant will have removed all or
substantially all of Tenant's property therefrom, Landlord immediately may enter
and alter, renovate and redecorate the Demised Premises, without elimination or
abatement of rent or other compensation, and such acts will have no effect upon
this Lease.

               15.3 Conditions of Entry. If Tenant will not be personally
                    -------------------
present to open and permit an entry into the Demised Premises at any time when,
for any reason, an entry will be necessary or permissible under this Lease,
Landlord or Landlord's agents may enter the same by a master key, or may
forcibly enter the Demised Premises, without rendering Landlord or such agents
liable therefor (if during such entry Landlord or Landlord's agents will accord
reasonable care to Tenant's property), and without in any manner affecting the
obligations, terms, covenants, conditions, provisions or agreements of this
Lease. Landlord will have the right to change the arrangement and location of
entrances and passageways, doors and doorways, and corridors, stairs, toilets,
and other Common Areas, and after reasonable notice, to change the name, number
and designation by which the Building is commonly known. Nothing contained in
this Article 15, however, will be deemed or construed to impose upon Landlord
any obligation, responsibility or liability whatsoever for the care, supervision
or repair of the Building or any part thereof, other than as otherwise provided
in this Lease.

                                   ARTICLE 16
                           (Certificates of Occupancy)

               16.1 Certificates of Occupancy. Tenant will not at any time use
                    -------------------------
or occupy the Demised Premises in violation of the certificates of occupancy
issued for the Building, and, in the event that any department of the city or
county in which the Building is located, or of the State of Colorado, will
hereafter at any time contend or declare that the Demised Premises are used for
a purpose which is in violation of such certificate or certificates of
occupancy, Tenant will, upon five days' written notice from Landlord or any
governmental agency, immediately discontinue such use of the Demised Premises.
Failure by Tenant to discontinue such use after such notice will be considered a
default under this Lease, and Landlord will have the right to terminate this
Lease immediately, and, in addition thereto, will have the right to exercise any
and all rights and privileges and remedies given to Landlord by and pursuant to
the provisions of Article 19 below. The statement in this Lease of the nature of
the business to be conducted by Tenant in the Demised Premises will not be
deemed or construed to constitute a representation or guaranty by Landlord that
such business is lawful or permissible under any certificate of occupancy issued
for the Building,

                                       22



or otherwise permitted by law. Landlord will provide a copy of the certificate
of occupancy for the Demised Premises upon completion of the tenant improvement
work to be performed by Landlord.

                                   ARTICLE 17
                              (Life Safety Systems)

               17.1 Life Safety Systems. If there now is or hereafter will be
                    -------------------
installed in the Building a sprinkler system, heat, or smoke detection system or
any other so-called life-safety system and any such system or any of its
appliances will be damaged or injured or not in proper working order by reason
of any act or omission of Tenant, Tenant's agents, servants, employees,
contractors, visitors, or licensees, Tenant will forthwith restore the same to
good working condition. If Landlord's insurer, or any bureau, department or
official of the state, county or city government, or any governmental authority
having jurisdiction, requires or recommends that any changes, modifications,
alterations, or additional equipment be made or supplied in or to any such
system by reason of Tenant's business or the location of partitions, trade
fixtures, or other contents of the Demised Premises, or if any such changes,
modifications, alterations or additional equipment become necessary to prevent
the imposition of a penalty or charge against the full allowance for any such
system in the insurance rate as fixed by said governmental authority or by
Landlord's insurance company, Tenant will, at Tenant's expense, promptly make
and supply such changes, modifications, alterations or additional equipment.

                                   ARTICLE 18
                                  (Bankruptcy)

               18.1 Bankruptcy Prior to Term. If at any time prior to the
                    ------------------------
Commencement Date, there will be filed by or against Tenant in any court
pursuant to any statute either of the United States or of any state a petition
in bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee or conservator of all or a portion of Tenant's property, or
if Tenant makes an assignment for the benefit of creditors, this Lease will ipso
facto be canceled and terminated, and in such event neither Tenant nor any
person claiming through or under Tenant or by virtue of any statute or of an
order of any court will be entitled to possession of the Demised Premises; and
Landlord, in addition to the other rights and remedies given by Section 18.3
below or by virtue of any other provision in this Lease contained or by virtue
of any statute or rule of law, may retain as damages any rent, security deposit
or moneys received by it from Tenant or others on behalf of Tenant.

               18.2 Bankruptcy During Term. If at any time during the term of
                    ----------------------
this Lease there will be filed by or against Tenant in any court pursuant to any
statute either of the United States or of any state a petition in bankruptcy or
insolvency or for reorganization or for the appointment of a receiver or trustee
or conservator of all or a portion of Tenant's property, or if Tenant makes an
assignment for the benefit of creditors, this Lease, at the option of Landlord
exercised within a reasonable time after notice of the happening of any one or
more of such events, may be canceled and terminated, and in such event neither
Tenant nor any person claiming through or under Tenant or by virtue of any
statute or of an order of any court will be entitled to possession or to remain
in

                                       23



possession of the Demised Premises, but will forthwith quit and surrender the
Demised Premises, and Landlord, in addition to the other rights and remedies
granted by Section 18.3 below or by virtue of any other provision in this Lease
contained or by virtue of any statute or rule of law, may retain as damages any
rent and any security deposit or moneys received by it from Tenant or others on
behalf of Tenant.

               18.3 Measure of Damages. In the event of the termination of this
                    ------------------
Lease pursuant to Sections 18.1 or 18.2 of this Article, Landlord will be
entitled to the same rights and remedies as those set forth in Articles 19 and
in Article 21 of this Lease.

               18.4 Other Remedies. Upon the occurrence of any of the events
                    --------------
specified in this Article, if Landlord will not choose to exercise, or by law
will not be able to exercise, its rights hereunder to terminate this Lease,
then, in addition to any other rights of Landlord provided hereunder or by law,
(i) Landlord will not be obligated to provide Tenant with any of the services
specified in this Lease, unless Landlord has received compensation in advance
for such services, and the parties agree that Landlord's estimate of the
compensation required with respect to such services will control, and (ii)
neither Tenant, as debtor-in-possession, nor any trustee or other person
(hereinafter collectively called the "Assuming Tenant") will be entitled to
assume this Lease unless, on or before the date of such assumption, the Assuming
Tenant (x) cures, or provides adequate assurance that the latter will promptly
cure, any existing default under this Lease, (y) compensates, or provides
adequate assurance that the Assuming Tenant will promptly compensate, Landlord
for any pecuniary loss (including, without limitation, attorneys' fees and
disbursements) resulting from such default, and (z) provides adequate assurance
of future performance under this Lease; it being covenanted and agreed by the
parties that, for such purposes, any cure or compensation will be effected by
the immediate payment of any monetary default or any required compensation, or
the immediate correction or bonding of any nonmonetary default, and "adequate
assurance" of future performance will be effected by the establishment of an
escrow fund for the amount at issue or by bonding, it being covenanted and
agreed by Landlord and Tenant that the foregoing provision is a material part of
the consideration for this Lease.

                                   ARTICLE 19
                                    (Default)

               19.1 Events of Default. The occurrence of any one or more of the
                    -----------------
following events will constitute a default under this Lease ("Event of
Defaulf"):

                    (a) Tenant will fail to pay any installment of rent or any
other sum payable by Tenant pursuant to this Lease following the date the
payment is due; provided, however, Landlord will give Tenant up to two written
notices of non-payment, with 10 days' opportunity to cure, in any 12-month
period;

                    (b) Tenant will fail to perform or observe any other term,
covenant, condition, provision or agreement of this Lease and Tenant will fail
to remedy said default within 15 days after written notice specifying such
default is given by Landlord to Tenant;

                                       24



                    (c) The Demised Premises become vacant or deserted in whole
or in part in excess of 30 days;

                    (d) Tenant will cease to occupy the Demised Premises or will
remove substantially all of Tenant's property therefrom unless Tenant continues
to pay rent;

                    (e) Tenant will fail to move into or take possession of the
Demised Premises within 15 days after the Commencement Date unless Tenant
continues to pay rent;

                    (f) Any execution or attachment will be issued against
Tenant or any of Tenant's property located on the Demised Premises;

                    (g) The Demised Premises will be taken or occupied or
attempted to be taken or occupied by someone other than Tenant without
compliance with the provisions of Article 6 above;

                    (h) Tenant assigns or otherwise transfers substantially all
of the assets used in connection with the business conducted in the Demised
Premises without compliance with the provisions of Article 6 above;

                    (i) Tenant or any officer, director, shareholder, member or
partner of Tenant makes any statement or omits to make any statement so as to
materially mislead Landlord with regard to Tenant's financial condition or
ability to perform its covenants and obligations under this Lease; or

                    (j) Tenant or any guarantor of Tenant's obligations under
this Lease will die, cease to exist as a corporation, limited liability company
or partnership or will be otherwise dissolved or liquidated or will make a
transfer in fraud of creditors.

                                   ARTICLE 20
                                   (Remedies)

               20.1 Landlord's Remedies. If any Event of Default set forth in
                    -------------------
Article 19 occurs, then Landlord will have the right, at its election:

                    (a) To give Tenant written notice of Landlord's intent to
terminate this Lease on the earliest date permitted by law or on any later date
specified in such notice, in which case Tenant's right to possession of the
Demised Premises will cease and this Lease will be terminated, except as to
Tenant's liability, as if the expiration of the term fixed in such notice were
the end of the term;

                    (b) Without further demand or notice, to reenter and take
possession of the Demised Premises or any part of the Demised Premises,
repossess the same, expel

                                       25



Tenant and those claiming through or under Tenant, and remove the effects of
both or either, using such force for such purposes as may be necessary, without
being liable for prosecution, without being deemed guilty of any manner of
trespass, and without prejudice to any remedies for arrears of rent or other
amounts payable under this Lease or as a result of any preceding breach of
covenants or conditions; or

                    (c) Without further demand or notice, to cure any Event of
Default and to charge Tenant for the cost of effecting such cure, including,
without limitation, reasonable attorneys' fees and interest on the amount so
advanced at the rate set forth in Section 3.4, provided that Landlord will have
no obligation to cure any such Even of Default of Tenant.

               Should Landlord elect to reenter as provided in subsection (b),
or should Landlord take possession pursuant to legal proceedings or pursuant to
any notice provided by law, Landlord may, from time to time, without terminating
this Lease, relet the Demised Premises or any part of the Demised Premises in
Landlord's or Tenant's name, but for the account of Tenant, for such term or
terms (which may be greater or less than the period which would otherwise have
constituted the balance of the term) and on such conditions and upon such other
terms (which may include concessions of free rent and alteration and repair of
the Demised Premises) as Landlord, in its reasonable discretion, may determine,
and Landlord may collect and receive the rent. Landlord will in no way be
responsible or liable for any failure to relet the Demised Premises, or any part
of the Demised Premises, or for any failure to collect any rent due upon such
reletting. Neither reentry and taking possession of the Demised Premises by
Landlord, nor the change of any locks or security devices in the Demised
Premises, nor appointment of a receiver upon initiative of Landlord to protect
Landlord's interest under this Lease, will constitute an election on Landlord's
part to terminate this Lease unless a written notice of such intention is given
to Tenant. No written notice from Landlord under this section or under a
forcible or unlawful entry and detainer statute or similar law will constitute
an election by Landlord to terminate this Lease unless such notice specifically
so states. Landlord reserves the right following any such reentry or reletting
to exercise its right to terminate this Lease by giving Tenant such written
notice, in which event this Lease will terminate as specified in such notice. As
used in this Lease, the terms "reenter," "reentry," "take possession,"
"repossess" and "repossession" are not restricted to their technical legal
meanings.

               20.2 Certain Damages. In the event that Landlord does not elect
                    ---------------
to terminate this Lease as permitted in Section 20.1(a), but on the contrary
elects to take possession as provided in Section 20.1, Tenant will pay to
Landlord Minimum Rent, Additional Rent and other sums as provided in this Lease
that would be payable under this Lease if such repossession had not occurred,
less the net proceeds, if any, of any reletting of the Demised Premises after
deducting all of Landlord's expenses in connection with such reletting,
including, without limitation, all repossession costs, brokerage commissions,
attorneys' fees, expenses of employees, alteration and repair costs, and
expenses of preparation for such reletting. If, in connection with any
reletting, the new lease term extends beyond the existing term, or the Demised
Premises covered by such new lease include other premises not part of the
Demised Premises, a fair apportionment of the rent received from such reletting
and the expenses incurred in connection with such reletting as provided in this
section will be made in determining the net proceeds from such reletting, and
any rent

                                       26



concessions will be equally apportioned over the term of the new lease. Tenant
will pay such rent and other sums to Landlord monthly on the day on which the
Minimum Rent and Additional Rent would have been payable under the Lease if
possession had not been retaken, and Landlord will be entitled to receive such
rent and other sums from Tenant on each such day.

               20.3 Continuing Liability After Termination. If this Lease is
                    ---------------------------------------
terminated on account of the occurrence of an Event of Default, Tenant will
remain liable to Landlord for damages in an amount equal to Minimum Rent,
Additional Rent and other amounts that would have been owing by Tenant for the
balance of the term, had this Lease not been terminated, less the net proceeds,
if any, of any reletting of the Demised Premises by Landlord subsequent to such
termination, after deducting all of Landlord's expenses in connection with such
reletting, including, without limitation, the expenses enumerated in Section
20.2. Landlord will be entitled to collect such damages from tenant monthly on
the day on which Minimum Rent and other amounts would have been payable under
this Lease if this Lease had not been terminated, and Landlord will be entitled
to receive such Minimum Rent, Additional Rent and other amounts from Tenant on
each such day. Alternatively, at the option of Landlord, in the event this Lease
is so terminated, Landlord will be entitled to recover against Tenant as damages
for loss of the bargain and not as a penalty:

                    (a) The worth at the time of award of the unpaid Minimum
Rent, Additional Rent, late charges and other sums due hereunder that had been
earned at the time of termination;

                    (b) The worth at the time of award of the amount by which
the unpaid Minimum Rent, Additional Rent, late charges and other sums that would
have been earned after termination until the time of award exceeds the amount of
such rental loss that Tenant proves could have been reasonably avoided;

                    (c) The worth at the time of award of the amount by which
the unpaid Minimum Rent, Additional Rent, late charges and other sums which
would have been owing for the balance of the term of this Lease (had the same
not been so terminated by Landlord) after the time of award exceeds the amount
of such rental loss that Tenant proves could be reasonably avoided;

                    (d) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom.

               The "worth at the time of award" of the amounts referred to in
clauses (a) and (b) above is computed by adding interest at the per annum rate
described in Section 3.4 in effect on the date on which this Lease is terminated
from the date of termination until the time of the award. The "worth at the time
of award" of the amount referred to in clause (c) above is computed by
discounting to present value such amount at the discount rate of the Federal
Reserve Bank of Topeka, Kansas at the time of award plus one percent (1%).

                                       27



               20.4 Cumulative Remedies. Any suit or suits for the recovery of
                    -------------------
the amounts and damages set forth in Sections 20.2 and 20.3 may be brought by
Landlord, from time to time, at Landlord's election, and nothing in this Lease
will be deemed to require Landlord to await the date upon which this Lease or
the term would have expired had there occurred no Event of Default. Each right
and remedy provided for in this Lease is cumulative and is in addition to every
other right or remedy provided for in this Lease or now or after the lease date
existing at law or in equity or by statute or otherwise, and the exercise or
beginning of the exercise by Landlord of any one or more of the rights or
remedies provided for in this Lease or now or after the Commencement Date
existing at law or in equity or by statute or otherwise will not preclude the
simultaneous or later exercise by Landlord of any and all other rights or
remedies. All costs and expenses incurred by Landlord in collecting any amounts
and damages owing by Tenant pursuant to the provisions of this Lease, or in
connection with the appointment of a receiver for the Demised Premises, or to
enforce any provision of this Lease, including reasonable attorneys' fees from
the date any such matter is turned over to an attorney, whether or not one or
more actions are commenced by Landlord, also will be recoverable by Landlord
from Tenant. In the event of a breach or threatened breach by Tenant of any of
the terms, covenants, conditions, provisions or agreements of this Lease,
Landlord will additionally have the right of injunction, and Tenant agrees to
pay the premium for any bond required in connection with such injunction.
Mention in this Lease of any particular remedy will not preclude Landlord from
any other remedy, at law or in equity.

               20.5 Redemption. Tenant hereby expressly waives any and all
                    ----------
rights of redemption granted by or under any present or future law in the event
of Tenant's being evicted or dispossessed for any cause, or in the event of
Landlord's obtaining possession of the Demised Premises, by reason of the
violation by Tenant of any of the terms, covenants, conditions, provisions or
agreements of this Lease, or otherwise.

               20.6 Fees and Expenses. If Tenant will default in the performance
                    -----------------
of any obligation on Tenant's part to be performed under this Lease, Landlord
may immediately, or at any time thereafter, without notice, perform the same for
the account of Tenant. If Landlord at any time is compelled to pay or elects to
pay any sum of money or do any act which will require the payment of any sum of
money (including, but not limited to, employment of attorneys or incurring of
costs), by reason of the failure of Tenant to comply with any term, covenant,
condition, provision or agreement hereof, or, if Landlord is compelled to incur
or elects to incur any expense (including but not limited to reasonable
attorneys' fees in instituting prosecuting or defending any action or
proceeding, regardless of whether such action or proceeding proceeds to
judgment) by reason of any default of Tenant hereunder, the sum or sums so paid
by Landlord with interest at the rate set forth in Section 3.4 and costs and
damages will be due from Tenant to Landlord promptly upon demand by Landlord.

                                       28



                                   ARTICLE 21
                                  (End of Term)

               21.1 Condition of Demised Premises. Upon the expiration or other
                    -----------------------------
termination of this Lease, Tenant will quit and surrender to Landlord the
Demised Premises, broom clean, in as good order, condition and repair as they
were in on the Commencement Date, ordinary wear excepted. Subject to Landlord's
rights under Section 7.3 above, Tenant will remove all property of Tenant, as
directed by Landlord. Any property left on the Demised Premises at the
expiration or other termination of this Lease, or after the happening of any of
the Events of Default set forth in Article 19 above, may, at the option of
Landlord, either be deemed abandoned or be placed in storage at a public
warehouse in the name of and for the account of and at the expense and risk of
Tenant. If such property is not claimed by Tenant within 10 days after such
expiration, termination, or the happening of an Event of Default, it may be sold
or otherwise disposed of by Landlord and any costs incurred by Landlordin
connection with such sale or disposition will be paid by Tenant immediately upon
demand therefor by Landlord. Tenant expressly releases Landlord of and from any
and all claims and liability for damage to or loss of property left by Tenant
upon the Demised Premises at the expiration or other termination of this Lease,
and Tenant hereby indemnifies Landlord against any and all claims and
liabilities with respect thereto.

               21.2 Holding Over. Should Tenant hold over after the termination
                    ------------
of this Lease, whether such termination occurs by lapse of time or otherwise,
such tenancy will not constitute a renewal hereof but will be from month to
month only, subject to all terms provided herein as may be applicable; provided,
however, during any such holdover period, Tenant will pay Minimum Rent at 150%
the rate payable for the month immediately preceding termination of this Lease,
in addition to Additional Rent and all other sums due and payable under this
Lease. This Section 21.2 will not limit or waive Landlord's right of reentry or
any other right hereunder.

               21.3 Holdover Without Consent. In the event Tenant holds over
                    ------------------------
without Landlord's consent, Tenant will be responsibleto Landlord for all
reasonable damage (including, but not limited to, the loss of rent) which
Landlord will suffer by reason thereof, and Tenant hereby indemnifies Landlord
against any and all claims made by any succeeding tenant against Landlord,
resulting from delay by Landlord in delivering possession of the Demised
Premises to such succeeding tenant due to Tenant's unauthorized holdover.
Tenant's obligation to observe or perform all of the terms, covenants,
conditions, provisions and agreements of this Article will survive the
expiration or other termination of this Lease.

               21.4 Termination. In the event that this Lease terminates for any
                    -----------
reason (including but not limited to termination by Landlord) prior to its
natural expiration date, such termination will effect the termination of any and
all agreements for the extension of this Lease (whether expressed in an option,
exercised or not, or collateral document or otherwise). Any right herein
contained on the part of Landlord to terminate this Lease will continue during
any extension hereof.

                                       29



                                   ARTICLE 22
                       (Surrender, Waiver and Integration)

               22.1 Surrender. No act or thing done by Landlord or Landlord's
                    ---------
agents during the term hereby demised will be deemed an acceptance of a
surrender of the Demised Premises, and no agreement to accept such surrender
will be valid unless it is set forth in a writing signed by Landlord. No
employee of Landlord or Landlord's agents will have any power to accept the keys
of the Demised Premises prior to the termination of this Lease. The delivery of
keys to any employee of Landlord or Landlord's agents will not operate as a
termination of this Lease or as a surrender of the Demised Premises.

               22.2 No Waiver. The failure of Landlord to seek redress for
                    ---------
violation of, or to insist upon the strict performance of, any term, covenant,
condition, provision or agreement of this Lease or any of the Rules and
Regulations attached to this Lease or hereafter adopted by Landlord, will not
prevent a subsequent act, which would have originally constituted a violation,
from having all the force and effect of an original violation. The receipt by
Landlord of rent or other sums with knowledge of the breach of any term,
covenant, condition, provision or agreement of this Lease will not be deemed a
waiver of such breach. The failure of Landlord to enforce any of the Rules and
Regulations attached to this Lease, or hereafter adopted, against Tenant or any
other tenant in the Building will not be deemed a waiver of any such Rule and
Regulation. No provision of this Lease will be deemed to have been waived by
Landlord, unless such waiver is contained in a writing signed by Landlord. No
payment by Tenant or receipt by Landlord of a lesser amount than the rent herein
stipulated will be deemed to be other than on account of the earliest stipulated
rent, nor will any endorsement, legend or statement on any check or any letter
accompanying any check or payment as rent 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 pursue any other remedy in this
Lease provided.

               22.3 Integration. This Lease contains the entire agreement
                    -----------
between the parties, and recites the entire consideration given and accepted by
the parties. Any agreement hereafter made will be ineffective to change, modify,
waive or discharge it in whole or in part unless such agreement is in writing
and signed by the party against whom enforcement of the change, modification,
waiver or discharge is sought.

                                   ARTICLE 23
                                  (Jury Trial)

               23.1 Waiver of Jury Trial. The respective parties hereto hereby
                    --------------------
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties against the other on any matter whatsoever arising out of, or in
any way connected with, this Lease, the relationship of Landlord and Tenant,
Tenant's use or occupancy of the Demised Premises, any claim of injury or damage
to property or person, or the enforcement of any remedy under any statute,
emergency or otherwise.

                                       30



                                   ARTICLE 24
                              (Landlord's Default)

               24.1 Landlord. Landlord will not be deemed to have defaulted
                    --------
under or breached any term, covenant, condition, provision, or agreement of this
Lease unless Tenant will have given Landlord a written notice describing the
alleged default or breach with particularity and Landlord thereafter will have
failed to cure the default within 20 days following its receipt of the notice;
provided, that if the default is of a nature which cannot reasonably be cured
within such period, Landlord will not be in default if it commences to cure the
default or breach within the 20day period and diligently pursues completion of
same. In the event of any default or breach by Landlord hereunder and expiration
of the cure period without cure of such default or breach, Tenant agrees that
its exclusive remedy will be an action for damages, and Tenant will have no
right to terminate the Lease.

               24.2 Force Majeure. Notwithstanding the above Section 24.1, this
                    -------------
Lease and the obligation of Tenant to pay rent hereunder and to keep, observe
and perform all of the other terms, covenants, conditions, provisions and
agreements of this Lease on the part of Tenant to be kept, observed or performed
will in no wise be affected, impaired or excused because Landlord is unable to
fulfill any of its obligations under this Lease, or is delayed or curtailed in
supplying, any service expressly or impliedly to be supplied, or is unable to
make, or is delayed or curtailed in making, any repairs, alterations,
decorations, additions or improvements, or is unable to supply, or is delayed or
curtailed in supplying, any equipment or fixtures, if Landlord is prevented,
delayed or curtailed from so doing by reason of any cause beyond Landlord's
control, including, but not limited to, acts of God, strike or labor troubles,
riots and civil disturbances, fuel or energy shortages, including, but not
limited to, natural gas shortages, governmental preemption or curtailment in
connection with a national emergency or in connection with any rule, order,
guideline or regulation of any department or governmental agency, or by reason
of the conditions of supply and demand which have been or are affected by a war
or other emergency. Any such prevention, delay or curtailment will be deemed
excused and Landlord will not be subject to any liability resulting therefrom.

                                   ARTICLE 25
                                    (Notice)

               25.1 Notice. Any notice, demand or other communication required
                    ------
or permitted to be given to Landlord hereunder will be in writing and will be
deemed given and received three days after it is deposited in the U.S. Mail,
postage prepaid, marked certified or registered mail, addressed to Landlord at
the address provided in Section 1.14 above. Any notice, demand or other
communication required or permitted to be given to Tenant hereunder will be in
writing and will be deemed given and received immediately if left at the Demised
Premises addressed to Tenant, or three days following its deposit into the U.S.
Mail, postage prepaid, marked certified or registered mail, addressed to Tenant
at the address provided in Section 1.14 above.

                                       31



                                   ARTICLE 26
                                   (Security)

               26.1 Security Deposit. Tenant has deposited with Landlord the sum
                    ----------------
specified in Section 1.15 as security for the faithful performance and
observance by Tenant of all of the terms, covenants, conditions, provisions and
agreements of this Lease. Tenant will not be entitled to interest on such
security deposit, and Landlord will not be obligated to hold such deposit as a
separate fund, but may commingle it with other funds. In the event Tenant
defaults in respect of any of the terms, covenants, conditions, provisions or
agreements of this Lease, including, but not limited to, the payment of rent or
other sums due hereunder, Landlord may use, apply or retain the whole or any
part of the security so deposited to the extent required for the payment of any
rent or any other sums as to which Tenant is in default, or for any sum which
Landlord may expend or may be required to expend by reason of Tenant's default
in respect of any of the terms, covenants, conditions, provisions or agreements
of this Lease. Tenant, upon demand by Landlord, will forthwith replenish the
security deposit or any portion thereof so used or applied by Landlord.

               26.2 Return of Deposit. In the event that Tenant will fully and
                    -----------------
faithfully comply with all of the terms, covenants, conditions, provisions and
agreements of this Lease, the security deposit, without interest, will be
returned to Tenant within 60 days after the date fixed as the end of this Lease,
but only if Tenant delivers entire possession of the Demised Premises to
Landlord and pays Minimum Rent, Additional Rent and all other sums due under
this Lease.

               26.3 Transfer of Project. In the event of a sale of the Project
                    -------------------
and/or Building or leasing of the Project and/or the entire Building, or the
sale of such leasehold, Landlord will have the right to transfer the security
deposit to the transferee or lessee, and Landlord will thereupon be released by
Tenant from all liability for the return of such security deposit; and the
provisions hereof will apply to every transfer or assignment made of the
security deposit to a new landlord. Tenant will not assign or encumber or
attempt to assign or encumber the security deposit, and neither Landlord nor its
successors or assigns will be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance. In the event of the termination
of any ground lease or foreclosure of any fee or leasehold mortgage or deed of
trust (or conveyance in lieu thereof) now or hereafter affecting the real
property of which the Demised Premises form a part, Tenant will look to the new
landlord for the return of said security deposit if said security deposit is
transferred to the new landlord.

               26.4 [Intentionally omitted.]

                                       32



                                   ARTICLE 27
                 (Transfer by Landlord and Landlord's Liability)

               27.1 Transfer of Landlord's Interest. In the event of a transfer
                    -------------------------------
sale, conveyance, or assignment by Landlord of Landlord's interest in the
Project (other than a transfer for security purposes only), Landlord will be
relieved from and after the date specified in any notice to Tenant of such
transfer or assignment of all of Landlord's obligations and liabilities accruing
under this Lease thereafter and Tenant agrees to look only to such assignee or
transferee of Landlord's interest for performance of Landlord's obligations
under this Lease.

                                   ARTICLE 28
                            (Environmental Covenants)

               28.1 Definition of Hazardous Materials. For purposes of this
                    ---------------------------------
Lease, "Hazardous Materials" means any explosives, radioactive materials,
hazardous wastes, or hazardous substances, including, without limitation,
substances defined as "hazardous substances" or "hazardous wastes" or "solid
wastes" in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended 42 U.S.C. Sections ''9601-9657; the Hazardous Materials
Transportation Act of 1975, 49 U.S.C. Sections 1801-1812; the Resource
Conservation and Recovery Act of 1976, 42 U.S.C.Sections ''6901-6987; or any
other federal, state, or local statue, law, common law, ordinance, code, rule,
regulation, order, or decree regulating, relating to, or imposing liability or
standards of conduct concerning hazardous materials, wastes, or substances now
or at any time hereafter in effect (collectively, "Hazardous Materials Laws").

               28.2 Hazardous Materials Covenant. Tenant will not cause or
                    ----------------------------
permit the storage, use, generation, or disposition of any Hazardous Materials
in, on, or about the Demised Premises or the Project by Tenant, its agents,
employees, or contractors. Tenant will not permit the Demised Premises to be
used or operated in a manner that may cause the Demised Premises or the Project
to be contaminated by any Hazardous Materials in violation of any Hazardous
Materials Laws. Tenant will immediately advise Landlord in writing of (i) any
and all enforcement, cleanup, remedial, removal, or other governmental or
regulatory actions instituted, completed, or threatened pursuant to any
Hazardous Materials Laws relating to any Hazardous Materials affecting the
Demised Premises, and (ii) all claims made or threatened by any third party
against Tenant, Landlord, or the Demised Premises relating to damage,
contribution, cost recovery, compensation, loss, or injury resulting from any
Hazardous Materials on or about the Demised Premises. Without Landlord's prior
written consent, Tenant will not take any remedial action or enter into any
agreements, or settlements in response to the presence of any Hazardous
Materials in, on, or about the Demised Premises.

               28.3 Tenant's Indemnity. Tenant will be solely responsible for
                    ------------------
and will defend, indemnify and hold Landlord, its agents, and employees harmless
from and against all claims, costs, and liabilities, including reasonable
attorneys' fees and costs, arising out of or in connection with Tenant's breach
of its obligations in this Article 28. Tenant will be solely responsible for and
will defend, indemnify, and hold Landlord, its agents, and employees harmless

                                       33



from and against any and all claims, costs, and liabilities, including
attorneys' fees and costs, arising out of or in connection with the removal,
remediation, and restoration work and materials necessary to return the Demised
Premises and any other property of whatever nature located on the Project to
their condition existing prior to the appearance of Tenant's Hazardous Materials
on the Demised Premises. Tenant's obligations under this Article 28 will survive
the expiration or other termination of this Lease.

                                   ARTICLE 29
                                (Tenant's Taxes)

               29.1 Personal Property Taxes. Tenant will pay prior to
                    -----------------------
delinquency all taxes assessed against and levied upon the trade fixtures,
furnishings, equipment and all other personal property of Tenant contained in
the Demised Premises or elsewhere. If any of Tenant's personal property is
assessed with Landlord's real property, Tenant will pay to Landlord the taxes
attributable to Tenant's property within 10 days following Tenant's receipt of a
written demand therefor from Landlord.

               29.2 Sales and Withholding Tax Reporting. Tenant will timely pay
                    -----------------------------------
all federal, state and local taxes applicable to Tenant and Tenant's business
before the same are delinquent, including, without limitation, all income taxes,
withholding taxes for employees, and state and local sales and use taxes.

               29.3 Exemption of Demised Premises from Tax Lien. Pursuant to
                    -------------------------------------------
Colo. Rev. Stat. Section '39-26-117(1)(b) and Section '39-26-205(3), as amended
from time to time, the Demised Premises, any other part of the Project used by
Tenant, and all of the business fixtures, alterations, installations, additions
and improvements made to or installed in the Demised Premises (whether
constructed by, for or at the expense of Landlord or Tenant), and any equipment
owned by Landlord and used by Tenant, all of which are, and will be deemed to
be, property owned by Landlord and all of which Landlord hereby leases to
Tenant, will be exempt from any lien for sales and use taxes otherwise imposed
by the taxing authorities of the State of Colorado. Pursuant to Colo. Rev. Stat.
Section '39-22-604(7)(c), as amended from time to time, the Demised Premises and
any other part of the Project used by Tenant and all of the business fixtures,
alterations, installations, additions and improvements made to or installed in
the Demised Premises (whether constructed by, for or at the expense of Landlord
or Tenant), and any equipment owned by Landlord and used by Tenant, all of which
are, and will be deemed to be, property owned by Landlord and all of which
Landlord hereby leases to Tenant, will be exempt from any lien for withholding
taxes otherwise imposed by the taxing authorities of the State of Colorado. In
furtherance of obtaining such exemptions from the date of execution of this
Lease, upon the request of Landlord, Tenant will execute a memorandum of this
Lease for filing with the Colorado Department of Revenue, such memorandum to be
in the form as may be prescribed by the Department of Revenue and consistent
with the terms of this Lease.

                                       34



                                   ARTICLE 30
                                 (Miscellaneous)

               30.1 Plans. Any plan attached to and made part of this Lease,
                    -----
except as otherwise specifically provided, is used solely for the purpose of
identifying or designating the Demised Premises and any markings, measurements,
dimensions or notes of 1any kind contained thereon have no bearing upon any of
the terms, covenants, conditions, provisions or agreements of this Lease and are
not to be considered a part of it.

               30.2 Broker. Tenant represents that Tenant has dealt directly
                    ------
with (and only with) any broker listed in Section 1.18 as broker in connection
with this Lease and that, insofar as Tenant is aware, no other broker negotiated
this Lease or is entitled to any commission in connection with it. Tenant hereby
indemnifies and holds harmless Landlord from and against any liability loss or
damage (including attorneys' fees) arising of any misrepresentation by Tenant
contained in this Section 30.2.

               30.3 Binding Effect. All of the terms, conditions, provisions and
                    --------------
agreements of this Lease will be deemed to be covenants. The covenants contained
in this Lease will bind and inure to the benefit of Landlord and Tenant and
their respective legal representatives and successors, and, except as otherwise
provided in this Lease, their assigns. This Lease is offered to Tenant for
signature by Tenant, and this Lease will not be binding upon Landlord unless and
until such time as Landlord will have executed and delivered the same to Tenant.

               30.4 Act of Tenant. If a partnership or more than one legal
                    -------------
person is at any time Tenant, (i) each partner and each legal person is jointly
and severally liable for the keeping, observing and performing of all of the
terms, covenants, conditions, provisions and agreements of this Lease to be
kept, observed or performed by Tenant, and (ii) the term "Tenant" as used in
this Lease will mean and include each of them jointly and severally, and the act
of or notice from, or notice or refund to, or the signature of, any one or more
of them, with respect to the tenancy or this Lease, including but not limited
to, any renewal, extension, expiration, termination or modification of this
Lease, will be binding upon each and all of the persons executing this Lease as
Tenant with the same force and effect as if each and all of them had so acted or
so given or received such notice or refund or so signed. Termination of a Tenant
which is a partnership will be deemed to be an assignment jointly to all of the
partners, who will thereafter be governed by the next preceding clauses (i) and
(ii) hereof just as if each and all such former partners initially had signed
this Lease as individuals.

               30.5 Headings. Article and Section headings are used herein for
                    --------
convenience of reference only. Such headings do not constitute part of this
Lease and may not be used to define or limit the scope or intent of this Lease
or any of its provisions.

               30.6 Construction. The language in all parts of this Lease will
                    ------------
be construed according to its normal and usual meaning and not strictly for or
against either Landlord or Tenant,

                                       35



regardless of whether Landlord or Tenant, or Landlord's or Tenant's legal
representative, drafted this Lease or any provision hereof.

               30.7 Severability. In the event any term, covenant, condition,
                    ------------
provision or agreement herein contained is held to be invalid or unenforceable
by any court of competent jurisdiction, the invalidity of any such term,
covenant, condition, provision or agreement will in no way affect the validity
or enforceability of any other term, covenant, condition, provision or agreement
herein contained.

               30.8 Security. Landlord will not be obligated to provide or
                    --------
maintain any security patrol or security system. However, if Landlord decides to
provide such patrol or system, the cost thereof will be included in Operating
Costs as defined in Article 4 above. Landlord will not be responsible for the
quality of any such patrol or system which may be provided hereunder or for any
damage or injury to Tenant, its employees, invitees or others due to the defect,
failure, action or inaction of such patrol or system.

               30.9 [Intentionally omitted.]

               30.10 Storage. Any basement storage space or other storage space
                     -------
at any time demised to Tenant hereunder will be used exclusively for storage.
Notwithstanding any other provision of this Lease to the contrary, (i) only such
ventilation and heating will be furnished by Landlord as will, in Landlord's
judgment, be adequate for use of said space for storage, (ii) no cleaning, water
or air conditioning will be furnished therefor, and (iii) only such electricity
will be furnished thereto as will, in Landlord's judgment, be adequate to light
said space as storage space.

               30.11 Time. Time is of the essence with respect to the
                     ----
performance of each and every provision of this Lease. In the event the last day
for performance of any act required or permitted under this Lease falls on a
Saturday, Sunday, or holiday, the time for such performance will be extended to
the next succeeding business day. Each time period under this Lease will exclude
the first day and include the last day of such period.

               30.12 No Recording. Neither this Lease, nor any notice or
                     ------------
memorandum regarding the terms hereof will be recorded by Tenant. Any such
unauthorized recording will give Landlord the right to declare a breach of this
Lease and pursue the remedies provided herein.

               30.13 Name Change. If the name of Tenant or any successor or
                     -----------
assign will be changed during the term of this Lease, such party will promptly
notify Landlord thereof, which notice will be accompanied by a certified copy of
the document effectuating such change of name.

               30.14 Estoppel. Tenant will at anytime and from time to time upon
                     --------
not less than 15 days' prior notice from Landlord execute, acknowledge and
deliver to Landlord a statement in writing certifying to those facts for which
certification has been requested by Landlord or by any current or prospective
purchaser, mortgagee or beneficiary under a deed of trust, including, without
limitation, (i) that this Lease is unmodified and in full force and effect (or,
if modified, adequately

                                       36



identifying such modification and certifying that this Lease, as so modified, is
in full force and effect), (ii) the dates to which the Minimum Rent, Additional
Rent and other charges have been paid, (iii) whether there is any default by
Landlord or Tenant in the performance of any term, covenant, condition,
provision or agreement contained in this Lease, and (iv) whether there are any
setoffs, defenses or counterclaims against enforcement of the obligations to be
performed under this Lease and, if there are, specifying each such default,
setoff, defense or counterclaim. Any such statement may be relied upon
conclusively by any prospective purchaser or lessee or encumbrancer of the
Demised Premises or of all or any portion of the Building or the Project.
Tenant's failure to certify such statement within such 15-day period will be
conclusive upon Tenant that this Lease is in full force and effect, without
modification except as may be represented by Landlord, that there are no uncured
defaults in Landlord's performance, and that not more than one month's Minimum
and Additional Rent has been paid in advance.

               30.15 Publicity and Advertisement. Landlord and Tenant agree that
                     ---------------------------
prior to the full execution of this Lease, neither party or their agents,
employees, or brokers, will issue or authorize the issuance of any press
release, publicity, or information concerning the details of this Lease, without
the prior written consent of the other party. After full execution of this
Lease, Tenant will submit to Landlord for Landlord's approval all advertising,
sales promotion and other publicity matters relating to the Demised Premises,
this Lease and any product(s) furnished or service(s) performed by Tenant
wherein the name of Landlord are or may be mentioned or may, in Landlord's
judgment, be inferred or implied. Tenant further agrees not to publish or use
such advertising, sales promotion, or publicity matter or to use Landlord's name
as a reference without the prior written approval of Landlord, which consent may
be given or withheld, in Landlord's discretion.

               30.16 Choice of Law. This Lease will be governed by, and
                     -------------
interpreted in accordance with, the laws of the State of Colorado, without
giving effect to conflicts of law principles.

               30.17 Days. References herein to "days" will be deemed to refer
                     ----
to calendar and not business days, unless the context clearly indicates
otherwise.

               30.18 Food, Beverages and Odors. Tenant will not prepare any food
                     -------------------------
or do any cooking or conduct any restaurant, luncheonette or cafeteria for the
sale or service of food or beverages to its employees or to others, or cause or
permit any odors of cooking or other processes or any unusual or objectionable
odors to emanate from the Demised Premises; provided, however, Tenant may use a
microwave oven and coffee makers in the Demised Premises. Tenant will not
install or permit the installation or use of any vending machine or permit this
delivery of any food or beverage to the Demised Premises except by such persons
and in such manner as are approved by Landlord.

               30.19 Financial Statements. Tenant covenants and agrees to
                     --------------------
furnish to Landlord not less than annually, within ninety (90) days after the
end of each fiscal year of Tenant, and at such other times as requested by
Landlord from time to time, copies of financial statements of Tenant on a
consolidated basis with Tenant's ultimate parent, Lionbridge Technologies, Inc.,

                                       37



audited by a certified public accountant, and agrees that Landlord may deliver
any such financial statements to any existing or prospective mortgagee or
purchaser of the Property. The financial statements will include a balance sheet
as of the end of, and a statement of profit and loss and a statement of cash
flow for, the preceding fiscal year of Tenant and, if regularly prepared by
Tenant, a statement of sources and use of funds for the preceding fiscal year of
Tenant.

               30.20 Exculpation. Landlord (and in case Landlord will be a joint
                     -----------
venture, partnership, tenancy-in-common, association, or other form of joint
ownership, the members of any such form of joint ownership) will have absolutely
no personal liability arising from or in connection with this Lease or any
obligation or liability arising from or in connection with this Lease in the
event of a breach or default by Landlord of any of its obligations. Tenant will
look solely to the equity of the Landlord in the Building at the time of the
breach or default (or if the interest of Landlord is a leasehold interest at
that time, Tenant will look solely to such leasehold interest) for satisfaction
of any remedies of Tenant. Such exculpation of liability will be absolute and
without exception.

               30.21 PERA. PERA is a nominee for Public Employees' Retirement
                     ----
Association of Colorado. The partners of PERA, and officers, trustees,
directors, employees and agents of Public Employees' Retirement Association of
Colorado will not be responsible for Landlord's covenants and will not be
otherwise liable under this Lease.

               30.22 Incorporation of Exhibits. Any addendum, rider or exhibit
                     -------------------------
annexed hereto is made a part hereof. See attached Addendum for additional
provisions.

                                LANDLORD:

                                     FLATIRONS COTTONWOOD, INC., a Delaware
                                     corporation


                                     By: /s/ Kathryn G. Spritzer
                                         ---------------------------------------
                                     Its: Vice President
                                         ---------------------------------------


                                TENANT:


                                     INTERNATIONAL LANGUAGE ENGINEERING
                                     CORPORATION, a Colorado corporation, d/b/a
                                     Lionbridge Technologies, Inc.


                                     By: /s/ Stephen J. Lifshatz
                                         ---------------------------------------
                                     Its: Chief Financial Officer
                                         ---------------------------------------

                                       38



                            ADDENDUM TO OFFICE LEASE
                BETWEEN FLATIRONS COTTONWOOD, INC., AS LANDLORD,
               AND INTERNATIONAL LANGUAGE ENGINEERING CORPORATION,
                                    AS TENANT

          This Addendum is executed by Flatirons Cottonwood, Inc., a Delaware
corporation, as Landlord, and International Language Engineering Corporation, as
Tenant, to supplement the foregoing Office Lease relating to premises designated
as Suite 101 on the first floor of the building located at 2477 55th Street,
Boulder, Colorado 80301.

          All terms used in this Addendum will have the same definitions as
those given such terms in the Office Lease form, unless the context indicates
otherwise.

          The Office Lease is supplemented as follows:

          31. COMMENCEMENT OF TERM. Notwithstanding any article of this Lease to
the contrary, the Commencement Date and (subject to the last paragraph of this
Paragraph 31) Tenant's liability for the payment of Minimum Rent will not
commence until after a certificate of occupancy is issued for the Demised
Premises or the date Landlord delivers the Demised Premises to Tenant, whichever
is first but in no event earlier than March 1, 2002, upon the completion of any
tenant finish work to be performed by Landlord. However, if completion of
Landlord's work is delayed because of any act or omission of Tenant, including,
without limitation, Tenant's failure to proceed diligently with selections for
the work or Tenant's insistence upon changes to the work, then Tenant will pay
Minimum Rent beginning the date Landlord's work would have been completed
without such delays.

          Furthermore, if Tenant's obligation for the payment of Minimum Rent
under this Lease is postponed due to Landlord's failure to complete any Tenant
finish work as described in the construction credit letter about to be executed
by Tenant of even date herewith, then (i) the term of this Lease will be
extended so that the term will end, unless sooner terminated in accordance with
the provisions hereof, on the last day of the 61st calendar month after
Landlord completes the work; and (ii) the effective dates of increases in the
amount of the Minimum Rent payable for the Demised Premises specified in Article
32 below (which are the 13th month, 25th month, 37th month, and 49th month after
the Commencement Date) will be appropriately extended by the number of days by
which the completion of the Landlord's work in the Demised Premises (or the date
of delivery thereof to Tenant) is postponed beyond March 1, 2002. The extension
of the term of this Lease and such rent increase dates will be effective on the
date of completion of Landlord's work in the Demised Premises (or the date of
delivery thereof to Tenant) in accordance with the foregoing, without any
further act by Tenant or by Landlord, except that such extended term and such
extended rent increase dates may be confirmed by Landlord in a notice to Tenant
given in the manner provided in Article 25 of this Lease. Landlord and Tenant
will execute an addendum to this Lease to confirm the commencement date under
this Article above.

                                       -1-



          Landlord agrees to allow Tenant early access to the Demised Premises
at least seven days prior to the Commencement Date for the purpose of installing
Tenant's furniture, fixtures and equipment. All such access and entry into the
Demised Premises will be subject to all of the terms and conditions of this
Lease, except the payment of rent.

          32. MINIMUM RENT. Tenant will pay Minimum Rent according to the
following schedule:

                           Annual
   Lease                   Payment                  Monthly
   Period                   Rate                  Installment
   ------                  -------                -----------

Month 1                                            abated
Months 2-12                $154,580                $12,881.66
Months 13-24               $157,200                $13,100.00
Months 25-36               $159,820                $13,318.34
Months 37-48               $162,440                $13,536.66
Months 49-61               $165,060                $13,755.00

          On the condition that Tenant is not in default under the terms of this
Lease, the installments of Minimum Rent payable with respect to the Demised
Premises for month one of the Lease term will be abated, being a total value of
$12,881.66. The fact that Minimum Rent will be abated will not relieve Tenant
from the obligation to pay any other additional rent or other charges or both
for which provision is made in this Lease. In the event of any uncured default
by Tenant, the entire amount of Minimum Rent which was otherwise abated will be
due and payable by Tenant to Landlord immediately upon demand.

          If the Commencement Date has not occurred on or before April 1, 2002,
then Tenant will receive one additional day of rent abatement of Minimum Rent
for each day of delay of the Commencement Date, not resulting from delays by
Tenant or changes in the work by Tenant, that the Commencement Date is extended
beyond April 1, 2002.

          33. OPERATING COSTS. For purposes of calculating Operating Costs in
accordance with Article 4 of this Lease, increases in Controlled Expenses, as
defined below, in operation of the Project will not be greater than 5% on an
average yearly basis over the term of this Lease; provided, however, any
increase in Controlled Expenses in any one year or consecutive years may be more
than 5% annually, but increases in Controlled Expenses over the Lease term will
not exceed 5% per year on an average basis. "Controlled Expenses" will mean all
Operating Costs as defined and calculated in accordance with Article 4 above,
except for real estate taxes, insurance premiums, and utility charges
(including, without limitation, steam, fuel, water, sewer, storm drainage, and
electricity). The aforementioned limit on Controlled Expenses will be for the
purposes of calculations under Article 4 only and Tenant's obligation to pay
Operating Costs and will not act as a limit on the amount that Landlord will
actually expend for such purposes.

                                       -2-



          34. RENEWAL. Tenant will have the right, to be exercised as provided
below, to extend the term of this Lease for an additional term of five years
commencing on the first day of the 62nd month after the Commencement Date and
ending on the last day of the 121st month after the Commencement Date, upon the
following terms and conditions:

               (a) Tenant will not be in default under any of the terms,
covenants, conditions, provisions or agreements of this Lease, and Tenant will
not have assigned this Lease or sublet the Demised Premises (except for
assignments or subleases to a Related Party);

               (b) The Minimum Rent for the Demised Premises will be the number
of rentable square feet in the Demised Premises (the same to be measured in
Landlord's standard manner) multiplied by the then existing market rate Landlord
is asking of its existing tenants or prospective tenants for comparable space in
the Building, or (ii) if no comparable space in the Building is then being
offered for Lease, the Minimum Rent rate which Landlord or other landlords are
asking of tenants or prospective tenants for comparable space in other
comparable developments in the area;

               (c) Other economic terms of this Lease throughout the renewal
term will be comparable to (i) those which Landlord is asking of its existing
tenants or prospective tenants for comparable space in the Building, or (ii) if
no comparable space in the Building is then being offered for lease, the highest
rates which Landlord or other landlords are asking of tenants or prospective
tenants for comparable space in other comparable developments in the area;

               (d) Tenant will have notified Landlord, in the manner provided in
Article 25 above, not later than 180 days and not sooner than 270 days prior to
the expiration of the term of Tenant's election to exercise this right of
renewal, and otherwise this right will be null and void;

               (e) There will be no further right of renewal beyond this five
year renewal period; and

               (f) All of the other terms, covenants, conditions, provisions and
agreements of this Lease will remain in full force and effect.

          35. LETTER OF CREDIT. Tenant will obtain and deliver to Landlord an
irrevocable letter of credit in the initial amount of $50,000 issued to Landlord
by a bank acceptable to Landlord ("Bank"). Such letter of credit will have a
term commencing as of the date of execution of this Lease and ending on the last
day of the 61st month after the Commencement Date. The form of such letter of
credit will be subject to Landlord's right of approval or disapproval and will
be in the form attached to this Lease as Exhibit E, attached hereto and by this
                                         ---------
reference incorporated herein, and will, in substance and among other things,
provide that:

               (a) such letter of credit is irrevocable and Landlord, or its
successors in interest, may at any time "call" for any portion of the then
uncalled upon amount thereof without regard to and without the Bank inquiring as
to the rights or lack of right of the holder of the letter

                                       -3-



of credit to effect such calls or the existence or lack of existence of any
defenses by Tenant with respect thereto;

               (b) the Bank agrees for the benefit of Landlord to renew such
letter of credit each successive year (if only a one-year letter of credit is
delivered) unless, with respect to any given renewal year, the Bank has notified
Landlord (by certified mail, return receipt requested) not less than 90 days
prior to the expiration thereof that the Bank declines to renew the letter of
credit and as a matter between Landlord and Tenant, Tenant agrees that in the
event the Bank so declines to renew the original letter of credit or any renewal
letter of credit as herein provided, Landlord will have the right
(notwithstanding the fact that no default exists on the part of the Tenant) to
"draw down" the entire amount of the then current letter of credit at any time
prior to the expiration thereof and Landlord will thereafter hold all the
proceeds of the letter of credit (together with any theretofore existing cash
security) as an entirely cash security deposit and to whatever extent such
security is at any time less than $50,000, subject to the reductions set forth
in Subparagraph (d) below, Tenant agrees to immediately replenish such security
or any amount thereof used or theretofore used and applied by Landlord to cure
any default of Tenant; if the letter of credit will not be renewed, Tenant shall
have the right to replace the letter of credit within 30 days prior to and in no
event later than 20 days prior to its expiration date, if the bank and form of
letter of credit is satisfactory to Landlord, in its sole discretion;

               (c) the premium or purchase price of each such letter of credit
will be paid entirely in advance by Tenant and Tenant will submit evidence of
payment of such purchase price to Landlord;

               (d) on the condition that Tenant has not been in monetary default
under this Lease, the face amount of the letter of credit shall without act of
Landlord or Tenant or the Bank reduce to $25,000 on the first day of the 37th
month after the Commencement Date under this Lease, but the fact of such
reduction will not affect or diminish the right of the holder thereof to receive
any "draws" against such letter of credit which may have been demanded in
writing from the Bank prior to any such anniversary date (that is, if a demand
has been made upon the Bank prior to 10:01 a.m. of the date upon which such a
reduction is to take place, the holder of such letter of credit will
nevertheless be entitled to such "draw" that has been theretofore demanded but
has not then as yet been paid by the Bank); and

               (e) in the event of insolvency of the Bank or failure of the Bank
to honor any demand by the holder of such letter of credit, Tenant will
immediately post with Landlord a substitute letter of credit entirely
satisfactory to Landlord or, if Tenant is unable to provide such a letter of
credit, cash in the amount of the face amount of such letter of credit (less any
"draws" theretofore actually received by Landlord).

          The failure of the Bank to honor the letter of credit or the failure
of Tenant to otherwise comply with the provisions of this Article will at the
option of Landlord be deemed a default under the terms, covenants, conditions,
provisions and agreements of this Lease.

                                       -4-



          Landlord agrees, except for the matters contained in (b) above, not to
draw upon the letter of credit unless Landlord claims default by Tenant with
respect to the terms, covenants, conditions, provisions or agreements of this
Lease, but if Landlord does effect such a "draw" Tenant will replenish the
amount of security so drawn by depositing with Landlord cash in the amount which
Landlord then "drew" from the letter of credit and used to reduce any amounts
due under the Lease from Tenant.

          Landlord may at Landlord's option resort to the cash security first or
to the letter of credit security first or to any combination of the two as
Landlord in Landlord's sole and exclusive discretion may determine and the fact
that Landlord makes a demand upon the Bank under the letter of credit will not
preclude Landlord from resorting to the cash security, for the same default, in
the event that the Bank for any reason fails to honor Landlord's demand or if
there is insufficient funds to pay the "draw" requested by Landlord from such
letter of credit.

          36. RIGHT OF FIRST OFFER. Landlord hereby grants to Tenant the option
to add the first of the following spaces to come available: (i) that certain
space located on the second floor of the Building shown hatched in black on
Exhibit C, attached hereto and by this reference incorporated herein and known
- ---------
as Suite 250A ("Suite 250A") or (ii) that certain space located on the first
floor of the Building shown hatched in black on Exhibit F, attached hereto and
                                                ---------
by this reference incorporated herein and known as Suite 101A ("Suite 101A"), if
and when Landlord makes such space available for leasing, to the premises
previously demised under this Lease upon the following terms and conditions
(either Suite 250A or Suite 101A, depending on which first comes available for
leasing, will be referred to herein as "Space A"):

               (a) In the event that Space A becomes or is about to become
available for leasing and any other tenants in the Building with prior rights to
Tenant, which with respect to Suite 250A is Aztek Engineering or any successor,
assign or subtenant thereof, do not exercise their option to renew or expand or
otherwise occupy Space A, Landlord will notify Tenant of such fact and Tenant
will have five business days within which to exercise said option, in the manner
provided in Article 25 above, to acquire Space A as of the day after the date
the same is vacated by its then existing tenant (or, if the same be then vacant,
on a date fixed by Landlord in said notice but not sooner than the first day of
the next succeeding week); and

               (b) In the event of exercise of this option by Tenant, Space A
will be added to the premises previously demised as of the day after the same is
so vacated or, if vacant, the date set forth in Landlord's notice, which
addition will be upon the following basis:

               (c) Space A will be added for the balance of the term of this
Lease;

               (d) Tenant will accept Space A in its then "as is" condition;

               (e) If Space A is added to the Demised Premises on or before 180
days after the Commencement Date, the Minimum Rent for Space A will be
calculated at the same per square foot rates as in effect from time to time as
applicable to the Demised Premises. If Space A is added

                                       -5-



to the Demised Premises after 180 days after the Commencement Date, the Minimum
Rent for Space A will be the Minimum Rent Landlord is then offering to similar
tenants for similar premises, or if no such premises is then available, the rate
similar landlords are offering to similar tenants for similar premises;

               (f) The percentage of increase or decrease of taxes and operating
costs to be borne by Tenant pursuant to Article 4 of this Lease will be
increased accordingly; and

               (g) All of the other terms, covenants, conditions, provisions and
agreements of this Lease will apply to Space A.

          Notwithstanding any other provision set forth above, it is agreed that
(1) Tenant will not be permitted to exercise any of its rights contained in this
Article at any time when the lease is not in effect or at any time when Tenant
is in default under any of the terms, covenants, conditions, provisions or
agreements of this Lease, and (2) in the event that Tenant assigns this lease or
sublets any portion of the premises at any time demised, this Article will be of
no further force or effect, and (3) Tenant may not exercise the option contained
in this Article if the effective date of addition of Space A to the premises
previously demised would be at any time during the last 12 months of the term of
this lease.

          The fact of any proposed or actual assignment or subletting by any
tenant of Space A, or the default of said tenant or his desire to terminate his
lease will not make the same "available" for exercise of Tenant's rights
hereunder unlessLandlord elects in writing to Tenant to treatthe same as causing
"availability," and Landlord will have the right to renew or extend the tenancy
of any present or future tenant of Space A without first offering the same to
Tenant.

          This option will be in effect during the first 61 months after the
Commencement Date, but will not be effective during any extension or renewal of
this Lease. If Tenant does not exercise this option within the five-business day
period referenced above, time being strictly of the essence, Landlord will be
entitled to market the space at any terms and lease the space at any terms to
prospective tenants. If a lease is entered into between Landlord and a
prospective tenant within 180 days after Landlord offered Space A to Tenant,
Tenant's rights under this Article will be terminated and of no further force or
effect. If Landlord does not so enter into a lease for Space A within such
180-day period, Landlord will once again offer Space A to Tenant pursuant to
subparagraph A above before entering into a new lease with a prospective Tenant.
If Tenant exercises its rights with respect to either Suite 250A or Suite 101A,
depending on which first comes available, Tenant's rights under this Article
will terminate and be of no further force or effect, and Tenant will have no
further rights to Suite 250A or Suite 101A, except with respect to the then
exercised option for one of such suites.

          37. PARKING. Tenant, at no additional rental cost to Tenant, will have
the right to use 41 unassigned unreserved and uncovered parking spaces in the
parking lots for the Building during the term of this Lease.

                                       -6-



          38. CONTROLLING EFFECT. In the event of a conflict between the
provisions of the foregoing lease form and the Addendum, the provisions of this
Addendum will control the covenants and obligations of the parties.

                                LANDLORD:

                                FLATIRONS COTTONWOOD, INC., a Delaware
                                corporation


                                By:  /s/ Kathryn G. Spritzer
                                    --------------------------------------------
                                Its: Vice President
                                    --------------------------------------------


                                TENANT:
                                INTERNATIONAL LANGUAGE ENGINEERING
                                CORPORATION, a Colorado corporation, d/b/a
                                Lionbridge Technologies, Inc.


                                By:  /s/ Stephen J. Lifshatz
                                    --------------------------------------------
                                Its: Chief Financial Officer
                                    --------------------------------------------

                                       -7-

EX-10.48

                                                                   Exhibit 10.48

                                    AMENDMENT

     Pursuant to the terms of the First Amended and Restated Senior Subordinated
Note Purchase Agreement dated as of February 26, 1999 between Lionbridge
Technologies Holdings, Inc. ("LTHI") and Capital Resource Lenders III, L.P.
("CRL III"), as amended (the "LTHI Purchase Agreement"), the undersigned hereby
amend the LTHI Purchase Agreement by (i) deleting Sections 7.01(n) and (o) in
their entirety; and (ii) LTHI covenants to CRL III that it will abide by and be
in compliance with the financial covenants set forth in its commercial lending
agreements with Silicon Valley Bank, as such covenants may from time to time be
amended. In addition, CRL III hereby irrevocably waive its rights under Article
VIII of the LTHI Purchase Agreement with respect to any violation by LTHI of the
covenants set forth in such Sections 7.01(n) and (o).

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers or duly authorized representatives as of
the 31st day of December, 2001.

                                CAPITAL RESOURCE LENDERS III, L.P.


                                By:  Capital Resource Partners III, L.L.C.
                                     Its General Partner


                                By:  /s/ Stephen Jenks
                                     ---------------------------------------
                                     Member


                                CAPITAL RESOURCE INVESTMENT
                                PARTNERS III, L.L.C.


                                By:  /s/ Stephen Jenks
                                     ---------------------------------------
                                     Member


                                LIONBRIDGE TECHNOLOGIES HOLDINGS, INC.


                                By:  /s/ Stephen J. Lifshatz
                                     --------------------------

EX-10.49

                                                                   Exhibit 10.49

                                    AMENDMENT

     Pursuant to the terms of the First Amended and Restated Senior Subordinated
Note Purchase Agreement dated as of February 26, 1999 between Lionbridge
Technologies Holdings, Inc. ("LTBV") and Capital Resource Lenders III, L.P.
("CRL III"), as amended (the "LTBV Purchase Agreement"), the undersigned hereby
amend the LTBV Purchase Agreement by (i) deleting Sections 7.01(n) and (o) in
their entirety; and (ii) LTBV covenants to CRL III that it will abide by and be
in compliance with the financial covenants set forth in its commercial lending
agreements with Silicon Valley Bank, as such covenants may from time to time be
amended. In addition, CRL III hereby irrevocably waive its rights under Article
VIII of the LTBV Purchase Agreement with respect to any violation by LTBV of the
covenants set forth in such Sections 7.01(n) and (o).

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers or duly authorized representatives as of
the 31st day of December, 2001.

                                CAPITAL RESOURCE LENDERS III, L.P.


                                By:  Capital Resource Partners III, L.L.C.
                                     Its General Partner


                                By:  /s/ Stephen Jenks
                                     Member


                                LIONBRIDGE TECHNOLOGIES HOLDINGS B.V.


                                By:  /s/ Stephen J. Lifshatz

EX-10.50

                                                                   Exhibit 10.50

                                    AMENDMENT

     Lionbridge Technologies Holdings B.V. ("LTBV") and Morgan Stanley Venture
Capital Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P.,
(collectively, "Morgan"), amend the Senior Subordinated Promissory Note issued
by LBTV to Morgan on March 9, 1999 by changing the payment date reflected
therein to April 15, 2002.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers or duly authorized representatives as of
the 31st day of December, 2001.

                                MORGAN STANLEY VENTURE CAPITAL FUND II ANNEX,
                                L.P.


                                By:  Morgan Stanley Venture Partners II, L.P.,
                                its General Partner


                                By:  Morgan Stanley Venture Capital II, Inc.,
                                its Managing General Partner


                                By:  /s/ Debra Abramovitz
                                     ---------------------------------------


                                MORGAN STANLEY VENTURE INVESTORS ANNEX, L.P.


                                By:  Morgan Stanley Venture Partners II, L.P.,
                                its General Partner


                                By:  Morgan Stanley Venture Capital II, Inc.,
                                its Managing General Partner


                                By:  /s/ Debra Abramovitz
                                     ---------------------------------------


                                LIONBRIDGE TECHNOLOGIES HOLDINGS B.V.


                                By:  /s/ Stephen J. Lifshatz
                                     ---------------------------------------

EX-10.51

                                                                   Exhibit 10.51

                                    AMENDMENT

     Lionbridge Technologies Holding, Inc. ("LTHI") and Morgan Stanley Venture
Capital Fund II Annex, L.P. and Morgan Stanley Venture Investors Annex, L.P.,
(collectively, ("Morgan"), amend the Senior Subordinated Promissory Note issued
by LTBV to Morgan on March 9, 1999 by changing the payment date reflected
therein to April 15, 2002.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers or duly authorized representatives as of
the 31st day of December, 2001.

                                MORGAN STANLEY VENTURE CAPITAL FUND II ANNEX,
                                L.P.


                                By:  Morgan Stanley Venture Partners II, L.P.,
                                its General Partner


                                By:  Morgan Stanley Venture Capital II, Inc.,
                                its Managing General Partner


                                By:  /s/ Debra Abramovitz
                                     ---------------------------------------


                                MORGAN STANLEY VENTURE INVESTORS ANNEX, L.P.


                                By:  Morgan Stanley Venture Partners II, L.P.,
                                its General Partner


                                By:  Morgan Stanley Venture Capital II, Inc.,
                                its Managing General Partner


                                By:  /s/ Debra Abramovitz
                                     ---------------------------------------


                                LIONBRIDGE TECHNOLOGIES HOLDINGS, INC.


                                By:  /s/ Stephen J. Lifshatz
                                     ---------------------------------------

EX-10.52

                                                                   Exhibit 10.52

                            FIRST AMENDMENT TO LEASE
                            ------------------------

This FIRST AMENDMENT TO LEASE ("Amendment") is dated as of February 28, 2002 by
and between MISSION STREET DEVELOPMENT LLC, successor in interest to WTR
PROPERTIES, INC., pursuant to that certain Assignment of Leases dated as of June
29, 2001, as "Lessor" and INT'L.COM,INC., as successor by merger to DIRECT
LANGUAGE COMMUNICATIONS, as "Lessee," amending and supplementing the lease dated
as of February 19, 1997 between the parties' predecessors in interest (the
"Lease").

WHEREAS, Lessor intents to redevelop the real property located at 301 Mission
Street, San Francisco, California, and has informed Lessee of its intent to
commence the redevelopment in calendar year 2002 (the "Redevelopment Work");

WHEREAS, the Lease expires by its terms on February 28, 2002;

WHEREAS, Lessee, as successor in interest to IC Global Services, Inc., has
previously entered into a lease with Lessor dated November 2, 1998 for certain
space at 124 Beale Street, San Francisco, California, which Lessee now desires
to allow to expire by its terms;

WHEREAS, Lessee now desires to extend its tenancy of its spaces in the Building
pursuant to the terms of the Lease, and Lessor and Lessee desire to amend
certain provisions of the Lease on the terms and conditions contained herein.

NOW THEREFORE, for good and valuable consideration paid by Lessee to Lessor and
in consideration of the agreements between the parties hereto, the parties agree
as follows:

1. Effective Date of Amendment. This Amendment shall be effective as of February
   ---------------------------
28, 2002, which shall be the "Effective Date."

2. Changes To Lease. All capitalized terms used in this section that are not
   ----------------
otherwise defined herein shall have the same meaning as in the Lease.

          (a) On and after the Effective Date, the first sentence of Paragraph 2
of the Lease shall be deleted and replaced with the following language:

               "The initial term of this Lease shall commence on March 1, 1997
     (the "Commencement Date"), and unless sooner terminated as hereinafter
     provided, shall expire on May 31, 2002 (the "Expiration Date").
     Notwithstanding the foregoing, this Lease shall be terminable by either
     party upon 30 days' written notice to the other party."

          (b) On and after the Effective Date, the final sentence of Paragraph
22 of the Lease shall be amended to read as follows:

               "Lessee understands and acknowledges that Lessor intends to
     commence redevelopment work on the real property located at 301 Mission
     Street, San Francisco, California, during calendar year 2002 (the
     "Redevelopment Work"). Lessee hereby agrees to indemnify, defend and hold
     Lessor, Lessor's predecessor in interest and any officer, director,
     shareholder, employee or agent of Lessor or Lessor's predecessor in
     interest, harmless against any claim resulting from any delay of Lessee to
     surrender the leased premises upon termination or expiration of this Lease,
     including, but not limited to, any consequential damages related to the
     Redevelopment Work."



          (c) The Basic Lease Information in the Lease shall be substituted with
the BASIC LEASE INFORMATION (revised 2/28/02) attached hereto as Appendix 1 and
                                                                 ----------
made a part hereof.

          (d) On and after the Effective Date, Paragraphs 3(c)-(e) (Additional
Rent and Operating Expenses), 3(h) (Rent Abatement), 4(b) & (c) (Tax
Pass-Throughs), 8(c) (Tenant Improvement Allowance), 41 (Option to Extend), 42
(Lessee's Option to Terminate) and 43 (Right of First Offer) shall be deleted in
their entirety.

3. No Other Modifications. All prior agreements, understandings, and discussions
   ----------------------
with respect to the subject matter set forth in this Amendment are hereby
superseded by this Amendment. Except as modified by the terms of this Amendment,
all provisions of the Lease shall remain unchanged and are in full force and
effect, and shall continue to be binding on the parties hereto. Subsequent to
the Effective Date, the Lease and this Amendment shall be read as one document.

4. Governing Law. This Amendment shall be governed by, and interpreted in
   -------------
accordance with, the law of the State of California.

5. No Broker. Lessee represents and warrants that Lessee has not dealt with any
   ---------
real estate broker, sales person or finder (collectively, "Broker") representing
Lessee in connection with this Amendment, and no such person initiated or
participated in the negotiation of this Amendment on behalf of Lessee. No
commission is payable by Lessor to any Broker acting on behalf of Lessee, and
Lessee hereby agrees to indemnify and hold Lessor harmless from and against any
and all liabilities and claims for commissions and fees arising out of a breach
of Lessee's foregoing representation.

IN WITNESS WHEREOF, the parties hereto have caused this FIRST AMENDMENT TO LEASE
to be executed by their duly authorized representatives as of the respective
dates listed below.


LESSOR                                    LESSEE
MISSION STREET DEVELOPMENT LLC            LIONBRIDGE TECHNOLOGIES INC.


By: /s/Sean Jeffries                      By: /s/ Kevin Bothwell
    -----------------------------------       ------------------------------
Name:  Sean Jeffries                      Name: Kevin Bothwell
       --------------------------------         ----------------------------
Title: Authorized Representative          Title: Corporate Buyer
       --------------------------------          ---------------------------


                                          By: /s/ Stephen J. Lifshatz
                                              ------------------------------
                                          Name: Stephen J. Lifshatz
                                                ----------------------------
                                          Title: Chief Financial Officer
                                                 ---------------------------


Date:  March 13, 2002                         Date: 2/28/02
                                                    ------------------------

                                        2

EX-10.53

                                                                   Exhibit 10.53

                            SECOND AMENDMENT TO LEASE

     THIS SECOND AMENDMENT TO LEASE (this "Amendment") is made as of February
28, 2002, by and between CORNERSTONE SUBURBAN OFFICE, L.P., a Delaware limited
partnership ("Cornerstone Suburban") through its agent CORNERSTONE REAL ESTATE
ADVISERS, INC. with an address at One Financial Plaza, 17th Floor, Hartford,
Connecticut 06103-2604, and LIONBRIDGE TECHNOLOGIES, INC., a Delaware
corporation with an office at Framingham Corporate Center, 492 Old Connecticut
Path, Framingham, Massachusetts 02194 ("Lionbridge").

                                    RECITALS:
                                    --------

     A. International Communications, Inc., a Massachusetts corporation ("ICI",
together with Lionbridge, "Tenant"), as predecessor-in-interest to the Lease (as
hereinafter defined) to Lionbridge, entered into a certain Lease dated February
16, 1996 (the "Original Lease"), with Framingham Corporate Center Limited
Partnership, a Massachusetts limited partnership (together with Cornerstone
Suburban, "Landlord"), as predecessor-in-interest to the Original Lease to
Cornerstone Suburban, whereby Landlord leased to Tenant approximately 27,907
rentable square located on the fifth floor (the "Original Premises") of that
certain office building known as Framingham Corporate Center, 492 Old
Connecticut Path, Framingham, Massachusetts (the "Building"), as more
particularly set forth in the Original Lease.

     B. Landlord and Tenant entered into a certain First Amendment to Lease
dated April 29, 1997 (together with the Original Lease, the "Lease"), whereby
Landlord agreed to lease to Tenant an additional 3,797 rentable square feet
located on the third floor of the Building, for a total lease of 31,704 rentable
square feet (together with the Original Premises, the "Premises").

     C. Landlord and Tenant desire to amend the Lease to, among other things,
reflect Tenant's relinquishment of certain space located on the third floor of
the Building and extend the term of the Lease.

     NOW THEREFORE, in consideration of the mutual covenants, conditions and
agreements hereunder contained and intending to be legally bound, the parties
hereto agree that:

     1. Defined Terms. Terms not otherwise defined in this Amendment shall have
        -------------
the same meanings as set forth in the Lease.

     2. Extension of Term. Landlord and Tenant hereby agree to extend the term
        -----------------
of the Lease for five years (the "Extension Term"). The Extension Term shall
commence on March 1, 2002 (the "Extension Term Commencement Date"), and shall
expire on February 28, 2007. The Extension Term shall be on all the same terms
and conditions of the Lease, except: (i) Landlord shall not contribute, or have
any obligation to pay, any allowance, including, without limitation, any
construction or improvements allowance, or to perform any alterations or
improvements to the Premises with respect to the Extension Term except as
otherwise provided herein; (ii) there shall be no rent abatement prior to or
during the Extension Term; and (iii) as otherwise set forth herein. Articles 22,
23 and 24 of the Lease are hereby deleted from the Lease in its entirety. Tenant
acknowledges and agrees that Tenant maintains no further renewal or extension
options in connection with the Lease. As of the Extension Term Commencement
Date, except as otherwise set forth herein to the contrary, the words "Term or
term", as such words appears in the Lease as amended hereby, shall include the
Extension Term.

     3. Reduction of the Premises. Effective as of the Extension Term
        -------------------------
Commencement Date, that portion of the Premises consisting of 3,797 rentable
square feet located on the third floor of the Building (the "Relinquished
Premises") shall be deleted from the Premises, and Tenant's lease of the
Relinquished Premises shall terminate. As of the Extension Term Commencement
Date, the Premises shall consist of 27,907 rentable



square feet on the fifth floor of the Building (the "Reduced Premises") as set
forth on Exhibit A attached hereto and incorporated herein, and except as
         ---------
otherwise set forth herein to the contrary, the term "Premises" as such term
appears in the Lease as amended hereby, shall refer to the Reduced Premises.
Tenant shall lease the Reduced Premises on all the same terms and conditions of
the Lease except as otherwise set forth herein.

     4.  Base Rent for the Extension Term. Commencing on the Extension Term
         --------------------------------
Commencement Date, rent for the Reduced Premises shall be as follows:

                                   Fixed Minimum
                                   -------------
           Effective Date         Annual Base Rent         Monthly Fixed Rent
           --------------         ----------------         ------------------

            March 1, 2002           $263,721.15                $21,976.76

            March 1, 2003           $781,396.00                $65,116.33

            March 1, 2004           $809,303.00                $67,441.92

            March 1, 2005           $837,210.00                $69,767.50

            March 1, 2006           $865,117.00                $72,093.08

     5.  Base Operating Costs for the Extension Term. The base year for the Base
         -------------------------------------------
Operating Costs for both of operating expenses and real estate taxes for the
Extension Term shall be the calendar year 2002.

     6.  Estimated Cost Electricity for Reduced Premises. Commencing on the
         -----------------------------------------------
Extension Term Commencement Date, Tenant shall pay $27,907.00 per annum as the
Estimated Cost of Electricity for the Reduced Premises in equal monthly
installments of $2,325.58.

     7.  Parking for the Reduced Premises. Commencing on the Extension Term
         --------------------------------
Commencement Date, Tenant shall be entitled to the non-exclusive right to use up
to 98 parking spaces at the Building's surface parking facilities, at no cost to
Tenant. All parking is available on a first come-first serve basis.

     8.  Security Deposit. Tenant shall provide Landlord with a cash security
         ----------------
deposit in the amount of $60,000.00. Tenant may substitute such cash security
deposit with a letter of credit substantially in the form attached hereto and
incorporated herein as Exhibit B, subject to Landlord's reasonable acceptance of
                       ---------
the form as modified.

     9.  Landlord's Notice Address. As of the date hereof, Landlord's Address
         -------------------------
shall be: "Cornerstone Suburban Office, L.P., c/o Cornerstone Real Estate
Advisers, Inc., One Financial Plaza, 17th Floor, Hartford, Connecticut
06103-2604, with a copy to: R.M. Bradley & Co., Inc., 73 Tremont Street, Boston,
Massachusetts 02108".

     10. Right of First Offer. Provided that Tenant is not in default of its
         --------------------
obligations under the Lease (or no event has occurred which, but for the giving
of notice or passage of time, or both, would constitute a default), and subject
to any existing rights, including renewal rights, of other tenants in the
Building to any portion of the First Offer Space (as hereinafter defined),
Tenant shall have one right of first offer to lease up to approximately 5,216
rentable square feet of office space located on the fifth floor of the Building
contiguous to the Reduced Premises (the "First Offer Space") during the Term of
this Lease in accordance with the following terms and conditions:

         (a)  Except as otherwise provided herein, prior to Landlord entering
into a lease for all or any part of the First Offer Space with a prospective
third party tenant ("Third Party"), Landlord shall first offer in writing the
portion of the First Offer Space for lease to Tenant on the same terms and
conditions quoted to the Third Party.

                                       2



         (b)  Within ten business days after Tenant receives said offer from
Landlord, Tenant shall either accept or reject such offer by written notice to
Landlord. Failure by Tenant to deliver to Landlord a written acceptance thereof
within such period shall be deemed a rejection by Tenant of such offer.

         (c)  If Tenant rejects or is deemed to have rejected said offer, then
this right of first offer shall be deemed to have terminated and shall be of no
further force or effect. Landlord may thereafter lease that portion of the First
Offer Space to any Third Party without any further obligation to Tenant
hereunder, whether or not such terms and conditions are more or less favorable
than those offered to Tenant.

         (d)  If Tenant accepts said offer in accordance with the provisions
hereof, then Landlord and Tenant shall thereupon execute an amendment to this
Lease (the "First Offer Space Amendment") adding the First Offer Space to this
Lease. If Tenant fails to execute the First Offer Space Amendment within 20 days
after Landlord furnishes same to Tenant, then the acceptance of Landlord's offer
shall be deemed to have been rejected by Tenant and thereupon the provisions of
Section 10(c) hereof shall apply.

         (e)  Prior to Landlord's execution of the First Offer Space Amendment,
Tenant shall furnish to Landlord its most current publicly available financial
statements of Tenant prepared in accordance with generally accepted accounting
principles. As a condition precedent to Landlord's adding the First Offer Space
to this Lease and Landlord executing the First Offer Space Amendment, Landlord
may evaluate and approve the financial condition of Tenant, and such approval
shall not be unreasonably withheld. If Landlord does not approve the financial
condition of Tenant, then Tenant's right of first offer shall terminate and
shall immediately be of no further force or effect, and Landlord shall be
entitled to lease the First Offer Space to any Third Party in accordance with
the provisions of this Section.

     11. Condition of Reduced Premises. Tenant's retaining possession of the
         -----------------------------
Reduced Premises as of the Extension Term Commencement Date shall be conclusive
evidence that the Reduced Premises were in good order and satisfactory condition
when Tenant retained possession. Tenant retains the Reduced Premises in an "As
Is" condition and acknowledges that no representation regarding the condition of
the Reduced Premises or the Building has been made by or on behalf of Landlord
or relied upon by Tenant. Except as otherwise provided herein, Tenant agrees
that Landlord shall not be obligated to alter, remodel, decorate, clean or
improve the Reduced Premises or the Building (or to provide Tenant with any
credit or allowance for the same). Notwithstanding the foregoing, Landlord shall
contribute up to a maximum of $167,442.00 towards the improvement of the Reduced
Premises in accordance with Exhibit C attached hereto and incorporated herein.
                            ---------

     12. Condition of Relinquished Premises. Tenant shall surrender the
         ----------------------------------
Relinquished Premises as of the date hereof in accordance with Section 10.01 of
the Lease, except as otherwise set forth herein. Tenant hereby represents and
covenants that nothing has been or shall be done or suffered whereby the Lease
or the term or estate thereby granted or the Relinquished Premises or any part
thereof, or any alterations, decorations, installation, additions or improvement
in and to the Relinquished Premises or any part thereof, have been or shall be
encumbered in any way whatsoever, and that Tenant owns and shall own Tenant's
interest in the Lease to the Relinquished Premises and has and shall have good
right to surrender the Relinquished Premises, and that no one other than Tenant
has acquired or shall acquire Tenant's interest in the Relinquished Premises, or
any part thereof, or in or to such alterations, decorations, installation,
additions and/or improvements or any part thereof. Landlord and its agents and
servants may immediately or at any time hereafter re-enter the Relinquished
Premises, or any part thereof.

     13. Brokerage Commissions. Tenant and Landlord each represent to the other
         ---------------------
party that other than R.M. Bradley & Co., Inc. ("Broker"), (i) neither party has
dealt with any real estate broker, salesperson or finder in connection with this
Amendment, (ii) no other such person initiated or participated in the
negotiation of this Amendment and (iii) no such person is entitled to any
commission in connection herewith. Tenant hereby agrees to indemnify, defend and
hold Landlord, its property manager and their respective employees harmless from
and against any and all liabilities, claims, demands, actions, damages, costs
and expenses (including attorneys' fees) arising from any claim for a fee or
commission made by any broker other than Broker claiming to have acted by or on
behalf of Tenant in connection with this Amendment.

                                       3



     14. Ratification; Binding Effect. Except as hereby amended, the Lease and
         ----------------------------
all covenants, agreements, terms and conditions thereof shall continue in full
force and effect, subject to the terms and provisions thereof and hereof, and is
ratified and confirmed by the parties hereto. Lionbridge does hereby further
ratify, confirm and assume all of the obligations and liabilities of ICI as
tenant arising under, or relating to, the Lease, as amended, and any of the
other documents executed and delivered to Landlord by or on behalf of Tenant or
its successors in connection with the Lease, as amended. This Amendment (i)
shall be governed, construed, and enforced under the laws of the Commonwealth of
Massachusetts, (ii) contains the entire understanding of the parties with
respect to the provisions of the Lease amended hereby, (iii) may not be modified
except by a writing signed by both parties and (iv) and shall be binding upon
and inure to the benefit of Landlord, Tenant and their respective successors and
permitted assigns.

     15. Conflict. In the event of any conflict between the terms of the Lease
         --------
and the terms of this Amendment, the terms of this Amendment shall control.

     16. Recitals. The recitals to this Amendment and the facts set forth
         --------
therein and each writing referred to herein as being annexed hereto as an
exhibit or otherwise designated herein as an exhibit hereto are hereby
incorporated herein by reference.

     17. Counterparts. This Amendment may be executed in any number of
         ------------
counterparts, each of which shall be deemed to be an original agreement and all
of which when taken together shall be deemed to be one and the same agreement.

     IN WITNESS WHEREOF, the parties have hereunder set their hands and seal as
of the date first written above.

                               LANDLORD:

                               CORNERSTONE SUBURBAN OFFICE, L.P.


                               By:   CORNERSTONE OFFICE MANAGEMENT,
                                     LIMITED LIABILITY COMPANY,
                                     its General Partner


                                     By:   CORNERSTONE REAL ESTATE
                                           ADVISERS, INC.,
                                           its Managing Member


                                                 By:  /s/ David M. Romano
                                                      --------------------------
                                                 Name Typed:  David M. Romano
                                                 Title:  Vice President


                               TENANT:


                               LIONBRIDGE TECHNOLOGIES, INC.


                                         By:  /s/ Stephen J. Lifshatz
                                              ----------------------------------
                                              Printed Name:  Stephen J. Lifshatz
                                              Title:  Chief Financial Officer

                                       4

EX-10.54

                                                                   EXHIBIT 10.54

                               Amendment No. 1 to
                  Third Restated Registration Rights Agreement

     Amendment No. 1 to Third Restated Registration Rights Agreement (this
"Amendment No. 1") dated as of June 29, 2001 amends that certain Third Restated
Registration Rights Agreement dated as of May 22, 2001 by and among Lionbridge
Technologies, Inc., a Delaware corporation (the "Company"), and each of the
other parties listed on Schedule A thereto, Capital Resource Lenders III, L.P.,
CRP Investment Partners III, LLC, Morgan Stanley Venture Capital Fund II Annex,
L.P., Morgan Stanley Venture Investors Annex, L.P., and each of the affiliates
of both INT'L.com, Inc. and Harvard Translations, Inc. listed on Schedule B
thereto (collectively, the "Investors").

     WHEREAS, the Company proposes to issue, and Capital Resource Partners IV,
L.P. ("CR IV") proposes to purchase, up to $5,000,000 principal amount of
promissory notes and warrants (the "Bridge Warrants") to purchase common stock
of the Company;

     WHEREAS, pursuant to and in accordance with Section 4.3 of the Third
Restated Registration Rights Agreement, the Company and the Investors desire to
amend the Third Restated Registration Rights Agreement to reflect the issuance
of the Bridge Warrants to CRP IV and to add CRP IV as a party to the Third
Restated Registration Rights Agreement; and

     NOW, THEREFORE, in consideration of the premises and the agreements herein
contained, and intending to be bound hereby, the parties hereby agree as
follows:

     1. Amendment of Section 1.1.

        (a) The definition of "Registrable Shares" at Section 1.1 of the Third
Restated Registration Rights Agreement is hereby amended and restated in its
entirety to read as follows:

        ""Registrable Shares" means (i) the shares of Common Stock issued to the
Prior Investors upon conversion of the shares of Series C Convertible Preferred
Stock, $.01 par value per share, of the Company issued to the Prior Investors
upon conversion of the shares of Series A Convertible Preferred Stock, $.01 par
value per share, and Series D Nonvoting Convertible Preferred Stock, $.01 par
value per share, issued to the Prior Investors in exchange for the shares of
Series A Preferred of Lionbridge America held by such Prior Investors, (ii) any
other shares of Common Stock of the Company issued in respect of the Series A
Preferred (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events), (iii) any shares of Common Stock issued
or issuable to CRL, CRP IV and Morgan Stanley upon exercise of the Warrants,
(vi) the shares of Common Stock issued to the INT'L.com Affiliates under the
terms of the Merger Agreements and (v) any other shares of Common Stock held by
the Prior Investors; provided, that for all purposes of this Agreement,
Registrable Shares shall not include shares of Common Stock which (a) have been
registered under the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with the registration
statement covering them, (b) have been sold pursuant to Rule 144 under the
Securities Act or (c) are eligible for sale under Rules 144(k), 145(d)(2) or
145(d)(3) under the Securities Act."

        (b) The definition of "Stockholders" at Section 1.1 of the Third
Restated Registration Rights Agreement is hereby amended and restated in its
entirety to read as follows:

        ""Stockholders" means the Prior Investors, CRL, CRP IV, Morgan Stanley
and the INT'L.com Affiliates."

        (c) The definition of "Warrants" at Section 1.1 of the Third Restated
Registration Rights


Agreement is hereby amended and restated in its entirety to read as follows:

        ""Warrants" shall mean the (i) Common Stock Purchase Warrants to
purchase Common Stock issued to CRL pursuant to the First Amended and Restated
Senior Subordinated Note and Warrant Purchase Agreement dated as of February 26,
1999, (ii) Common Stock Purchase Warrants issued to Morgan Stanley pursuant to
the Senior Subordinated Senior Note and Warrant Purchase Agreement dated March
9, 1999 and (iii) Common Stock Purchase Warrants to purchase Common Stock issued
to CRP IV pursuant to the Note and Warrant Purchase Agreement dated as of June
29, 2001."

     2. Amendment of Section 2.12. Section 2.12 of the Third Restated
Registration Rights Agreement is hereby amended and restated in its entirety to
read as follows:

        "2.12 Termination. The provisions of this Section 2 shall terminate on
the earlier to occur of (i) August 20, 2004; (ii) such time as a Prior Investor,
CRL, CRP IV, Morgan Stanley or an INT'L.com Affiliate remains an "affiliate" of
the Company pursuant to Rule 144 and can sell all of his remaining Registrable
Shares under Rules 144 or 145 within any three (3) month period; or (iii) such
time as a Prior Investor, CRL, CRP IV, Morgan Stanley or an INT'L.com Affiliate
ceases to be an affiliate of the Company pursuant to Rule 144 and all of the
Prior Investor's, CRL's, CRP IV's, Morgan Stanley's or the INT'L.com Affiliate's
Registrable Shares may be sold pursuant to Rules 144(k) or 145(d)(2) or (3)."

     3. Addition of CRP IV. CRP IV hereby agrees that, upon execution of this
Amendment No. 1, CRP IV shall become a party to the Third Restated Registration
Rights Agreement and shall be fully bound by, and subject to, all the covenants,
terms and conditions of the Third Restated Registration Rights Agreement as
though an original party thereto; and the Company and the Investors hereby agree
that the shares of common stock issuable upon exercise of the Bridge Warrants
shall be "Registrable Shares" for all purposes of the Third Restated
Registration Rights Agreement.

     4. Counterparts. This Amendment No. 1 may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     5. Governing Law. This Amendment No. 1 shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                     - 3 -

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
be executed by their respective officers or representatives thereunto duly
authorized, as of the date first above written.

                   THE COMPANY:

                   LIONBRIDGE TECHNOLOGIES, INC.


                   By: _________________________________________________________
                       Rory J. Cowan
                       Chief Executive Officer & President

                   CRP IV:

                   CAPITAL RESOURCE PARTNERS IV, L.P.

                   By: CRP Partners IV, L.C., its General Partner

                   By: ____________________________________________________
                       Member



                   INVESTORS:

                   CAPITAL RESOURCE LENDERS III, L.P.

                   By: Capital Resource Partners III, L.C., its General Partner

                   By: ____________________________________________________
                       Member

                   CRP INVESTMENT PARTNERS III, LLC


                   By: ____________________________________________________
                       Member



                                     - 4 -

                   GLOBAL PRIVATE EQUITY II LIMITED PARTNERSHIP
                   By: Advent International Limited Partnership,
                       General Partner

                         By: Advent International Corporation,
                             General Partner

                              By: _________________________________________


                   GLOBAL PRIVATE EQUITY II LIMITED - EUROPE LIMITED PARTNERSHIP

                   By: Advent International Limited Partnership,
                       General Partner

                         By: Advent International Corporation,
                             General Partner

                             By: __________________________________________


                   GLOBAL PRIVATE EQUITY II - PGGM LIMITED
                   PARTNERSHIP

                         By: Advent International Limited Partnership, General
                             Partner

                             By: Advent International Corporation,
                             General Partner

                             By: __________________________________________


                   ADVENT EURO-ITALIAN DIRECT INVESTMENT
                   PROGRAM LIMITED PARTNERSHIP

                         By: Advent International Limited Partnership,
                             General Partner

                             By: Advent International Corporation,
                             General Partner

                             By: __________________________________________



                                     - 5 -

                   ADVENT PARTNERS LIMITED PARTNERSHIP

                         By: Advent International Limited Partnership,
                             General Partner

                             By: __________________________________________


                   MORGAN STANLEY VENTURE CAPITAL
                   FUND II ANNEX, L.P.

                         By: Morgan Stanley Venture Partners II, L.P.,
                             its General Partner

                             By: Morgan Stanley Venture Capital II, Inc.,
                                 Managing General Partner

                             By: __________________________________________
                                 Name:
                                 Title:
                                 c/o Morgan Stanley Venture
                                 Partners II, L.P.
                                 1221 Avenue of the Americas
                                 New York, NY 10020

                   MORGAN STANLEY VENTURE INVESTORS ANNEX, L.P.

                         By: Morgan Stanley Venture Partners II, L.P., its
                             General Partner

                             By: Morgan Stanley Venture Capital II, Inc.,
                                 Managing General Partner

                             By: __________________________________________
                                 Name:
                                 Title:
                                 c/o Morgan Stanley Venture
                                 Partners II, L.P.
                                 1221 Avenue of the Americas
                                 New York, NY 10020



                                     - 6 -

                   ________________________________________________________
                   Rory J. Cowan
                   281 Fairhaven Road
                   Concord, MA 01742


                   ________________________________________________________
                   Milton Bordwin
                   87 Hillside Road
                   Newton, MA 02461

                   ________________________________________________________
                   Marilyn Brady
                   105 Lexington Road
                   Concord, MA 01742

                   ________________________________________________________
                   Barton L. Faber
                   4339 East Rose Lane
                   Paradise Valley, AZ 85238

                   ________________________________________________________
                   Jeffrey M. Fitzgerald
                   37 Wedgewood Drive
                   Hopkinton, MA 01748

                   FRANKENBERG FAMILY TRUST,
                   ROBERT J. FRANKENBERG TTE,
                   LINDA L. FRANKENBERG, TTE


                   ________________________________________________________
                   c/o Robert J. Frankenberg
                   701 East Sunburst Lane
                   Alpine, UT 84004

                   FLEET BANK, TRUSTEE FOR THE TH&T, LLP,
                   DEFERRED EARNINGS TRUST, F/B/O
                   GEORGE W. LLOYD

                   ________________________________________________________
                   c/o George W. Lloyd
                   Testa, Hurwitz & Thibeault, LLP
                   125 High Street
                   Boston, MA 02110



                                     - 7 -

                   ________________________________________________________
                   Stephen C. Morris
                   40 Coolidge Road
                   Concord, MA 01742

                   ________________________________________________________
                   IEA Private Investments Ltd
                   c/o China Access Ltd.
                   Attn: Mr. Mark Pu
                   25th Floor Penthouse
                   Prince's Building, Central
                   Hong Kong, China

                   ________________________________________________________
                   Charles M. Sincerbeaux
                   15 Perry Lane
                   Weston, MA 02193

                   ________________________________________________________
                   Paul Kavanagh
                   c/o Archachon
                   Strathmore Road
                   Killiney, Co. Dublin, Ireland

                   ________________________________________________________
                   Kenneth Coleman
                   133 Shaw Road
                   Chestnut Hill, MA 02167

                   COWAN MANCHESTER TRUST DATED 9/22/94

                   By: ____________________________________________________
                       Janet M. Smith, Trustee

                   c/o Rackemann, Sawyer & Brewster
                   One Financial Center
                   Boston, MA 02111

                   COWAN STREAM TRUST DATED 4/21/95

                   By: ____________________________________________________
                       Janet M. Smith, Trustee

                   c/o Rackemann, Sawyer & Brewster
                   One Financial Center
                   Boston, MA 02111

                   CORNERSTONE EQUITY INVESTORS IV, LLC


                   By: ____________________________________________________
                   Name:


                   Title:

                   c/o Michael E. Najjar
                   717 Fifth Avenue, Suite 1100
                   New York, NY 10022

                   ________________________________________________________
                   Michael Najjar
                   c/o Cornerstone Equity Investors IV, L.P.
                   717 Fifth Avenue, Suite 1100
                   New York, NY 10022

                   ________________________________________________________
                   Dana J. O'Brien
                   c/o Cornerstone Equity Investors IV, L.P.
                   717 Fifth Avenue, Suite 1100
                   New York, NY 10022


                   DAKOTA/EGI, LLC

                   By: Dakota Capital Partners, L.L.C.,
                       its Managing Member

                   By: ____________________________________________________
                   Name:
                   Title:

                   c/o Jeffrey Wellek
                   225 West Washington Street, Suite 1600
                   Chicago, IL 60606

                   ________________________________________________________
                   Jeffrey A. Wellek
                   c/o Dakota Capital Partners, L.L.C.
                   225 West Washington Street, Suite 1600
                   Chicago, IL 60606




                                     - 9 -

                   ________________________________________________________
                   Roger O. Jeanty
                   86 Hunting Lane
                   Sherborn, MA 01770

                   ________________________________________________________
                   Steven L. Fingerhood
                   87 Hillside Avenue
                   Mill Valley, CA 94941

                   ________________________________________________________
                   John Arcari

                   ________________________________________________________
                   Rod Dammeyer

                   ________________________________________________________
                   Mark S. Hauser
                   c/o DL Partners, L.P.
                   350 Park Avenue, 14th Floor
                   New York, NY 10022

                   ________________________________________________________
                   Alex McDonnell

                   ________________________________________________________
                   Robert C. Sprung
                   7 Gerry Street
                   Cambridge, MA 02138

EX-21.1

                                                                    Exhibit 21.1

                          LIONBRIDGE TECHNOLOGIES, INC.

                              LIST OF SUBSIDIARIES



                                                 JURISDICTION OF            NAME UNDER WHICH
                                                 INCORPORATION OR            SUBSIDIARY DOES
NAME OF SUBSIDIARY                                 ORGANIZATION                 BUSINESS
                                                 ----------------        -----------------------
                                                                   
Lionbridge America, Inc.                         Delaware                Lionbridge Technologies
Lionbridge Technologies California, Inc.         Delaware                VeriTest
Lionbridge Technologies Holdings, B.V.           The Netherlands         Lionbridge Technologies
Lionbridge Technologies, B.V.                    The Netherlands         Lionbridge Technologies
Lionbridge Technologies Ireland                  Ireland                 Lionbridge Technologies
Lionbridge Technologies S.A.R.L.                 France                  Lionbridge Technologies
Lionbridge Japan K.K.                            Japan                   Lionbridge Technologies
Japanese Language Services, Inc.                 Massachusetts           Lionbridge Technologies
Lionbridge Technologies (Canada) Inc.            Quebec                  Lionbridge Technologies
Harvard Translations, Inc.                       Massachusetts           Lionbridge Technologies
Lionbridge do Brasil, LTDA                       Brazil                  Lionbridge Technologies
INT'L.com, Inc.                                  Delaware                Lionbridge Technologies
International Language Engineering
   Corporation                                   Colorado                Lionbridge Technologies
Motus!                                           France                  Lionbridge Technologies
HuanQiu TongLian                                 China                   ChinaConnect
Lionbridge Technologies Deutschland,s
   GmbH                                          Germany                 Lionbridge Technologies
ILE Netherlands B.V.                             The Netherlands         Lionbridge Technologies
ILE International Corporation                    Colorado                Lionbridge Technologies
International Language Engineering, Ltd.         Hong Kong               Lionbridge Technologies
Data Dimensions, Inc.                            Delaware                VeriTest
Lionbridge Technologies Ireland Ltd.             Ireland                 Lionbridge Technologies
Lionbridge Technologies VeriTest UK Ltd.         United Kingdom          Lionbridge Technologies

EX-23.1

                                                                    Exhibit 23.1

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-66720) of Lionbridge Technologies, Inc. of
our report dated January 28, 2002, except as to Note 16 which is as of March 29,
2002, relating to the financial statements, which appears in this Form 10-K.


/s/ PricewaterhouseCoopers LLP
- ------------------------------
Boston, Massachusetts
March 29, 2002

EX-23.2

                                                                    Exhibit 23.2

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
report dated March 3, 2000 and included in this Form 10-K, into the Company's
previously filed Registration Statement on Form S-8 (File No. 333-66720). It
should be noted that we have not audited any financial statements of INT'L.com,
Inc. subsequent to December 31, 1999 or performed any audit procedures
subsequent to the date of our report.


/s/ Arthur Andersen LLP
- -----------------------
Boston, Massachusetts
March 28, 2002