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LEASE AGREEMENT

Lease Agreement

LEASE AGREEMENT | Document Parties: CORNERSTONE THERAPEUTICS INC | CORNERSTONE BIOPHARMA HOLDINGS, INC | CRESCENT LAKESIDE, LLC You are currently viewing:
This Lease Agreement involves

CORNERSTONE THERAPEUTICS INC | CORNERSTONE BIOPHARMA HOLDINGS, INC | CRESCENT LAKESIDE, LLC

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Title: LEASE AGREEMENT
Governing Law: North Carolina     Date: 11/5/2008
Industry: Biotechnology and Drugs     Sector: Healthcare

LEASE AGREEMENT, Parties: cornerstone therapeutics inc , cornerstone biopharma holdings  inc , crescent lakeside  llc
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Exhibit 10.26

LEASE AGREEMENT

by and between

CRESCENT LAKESIDE, LLC

LANDLORD

and

CORNERSTONE BIOPHARMA HOLDINGS, INC.

TENANT

Dated as of: May 1, 2008

© 2006 Capital Associates. All rights reserved.

 


 

 

 

 

 

 

ARTICLE 1 - LEASED PREMISES

 

 

1

 

 

 

 

 

 

1.01 Leased Premises.

 

 

1

 

 

 

 

 

 

ARTICLE 2 - BASIC LEASE PROVISIONS

 

 

1

 

 

 

 

 

 

2.01 Basic Lease Provisions.

 

 

1

 

 

 

 

 

 

ARTICLE 3 - TERM AND POSSESSION

 

 

3

 

 

 

 

 

 

3.01 Term.

 

 

3

 

 

 

 

 

 

3.02 Commencement.

 

 

3

 

 

 

 

 

 

3.03 Tenant’s Delay.

 

 

4

 

 

 

 

 

 

3.04 Tenant’s Possession.

 

 

4

 

 

 

 

 

 

3.05 Acceptance of Leased Premises.

 

 

4

 

 

 

 

 

 

3.06 Holdover.

 

 

4

 

 

 

 

 

 

ARTICLE 4 - RENT AND SECURITY FOR THE LEASE

 

 

4

 

 

 

 

 

 

4.01 Base Rent.

 

 

4

 

 

 

 

 

 

MONTH OF THE TERM

 

 

5

 

 

 

 

 

 

4.02 Payment of Rent.

 

 

5

 

 

 

 

 

 

4.03 Additional Rent

 

 

5

 

 

 

 

 

 

4.04 Operating Expense Adjustment.

 

 

5

 

 

 

 

 

 

4.05 Cost of Living Adjustment.

 

 

8

 

 

 

 

 

 

4.06 Security for the Lease.

 

 

8

 

 

 

 

 

 

4.07 Late Charge.

 

 

10

 

 

 

 

 

 

ARTICLE 5 - SERVICES

 

 

10

 

 

 

 

 

 

5.01 Services.

 

 

10

 

 


 

 

 

 

 

 

ARTICLE 6 - USE AND OCCUPANCY

 

 

12

 

 

 

 

 

 

6.01 Use and Occupancy.

 

 

12

 

 

 

 

 

 

6.02 Care of the Leased Premises.

 

 

13

 

 

 

 

 

 

6.03 Hazardous or Toxic Materials.

 

 

13

 

 

 

 

 

 

6.04 Entry for Repairs and Inspection.

 

 

14

 

 

 

 

 

 

6.05 Compliance with Laws; Rules of Building.

 

 

14

 

 

 

 

 

 

6.06 Access to Building.

 

 

14

 

 

 

 

 

 

6.07 Peaceful Enjoyment.

 

 

15

 

 

 

 

 

 

6.08 Relocation.

 

 

15

 

 

 

 

 

 

ARTICLE 7 - CONSTRUCTION, ALTERATIONS AND REPAIRS

 

 

15

 

 

 

 

 

 

7.01 Tenant Improvements.

 

 

15

 

 

 

 

 

 

7.02 Alterations.

 

 

15

 

 

 

 

 

 

7.03 Maintenance and Repairs by Landlord.

 

 

16

 

 

 

 

 

 

7.04 Maintenance and Repairs by Tenant.

 

 

16

 

 

 

 

 

 

ARTICLE 8 - CONDEMNATION, CASUALTY, INSURANCE AND INDEMNITY

 

 

17

 

 

 

 

 

 

8.01 Condemnation.

 

 

17

 

 

 

 

 

 

8.02 Damages from Certain Causes.

 

 

17

 

 

 

 

 

 

8.03 Fire or Other Casualty.

 

 

17

 

 

 

 

 

 

8.04 Insurance Policies.

 

 

18

 

 

 

 

 

 

8.05 Waiver of Subrogation Rights.

 

 

19

 

 

 

 

 

 

8.06 Indemnity/Waiver of Liability.

 

 

19

 

 

 

 

 

 

8.07 Limitation of Landlord’s Personal Liability.

 

 

20

 

 

 

 

 

 

8.08 Survival of Article 8.

 

 

20

 

 


 

 

 

 

 

 

ARTICLE 9 - LANDLORD’S LIEN, DEFAULT, REMEDIES AND SUBORDINATION

 

 

20

 

 

 

 

 

 

9.01 Lien for Rent.

 

 

20

 

 

 

 

 

 

9.02 Default by Tenant.

 

 

20

 

 

 

 

 

 

9.03 Landlord’s Remedies.

 

 

21

 

 

 

 

 

 

9.04 Mitigation of Damages.

 

 

22

 

 

 

 

 

 

9.05 Rights of Landlord in Bankruptcy.

 

 

22

 

 

 

 

 

 

9.06 Default by Landlord.

 

 

23

 

 

 

 

 

 

9.07 Non-Waiver.

 

 

23

 

 

 

 

 

 

9.08 Attorney’s Fees.

 

 

23

 

 

 

 

 

 

9.09 Subordination; Estoppel Certificate.

 

 

23

 

 

 

 

 

 

9.10 Attornment.

 

 

23

 

 

 

 

 

 

9.11 Accord and Satisfaction.

 

 

24

 

 

 

 

 

 

9.12 Survival of Article 9.

 

 

24

 

 

 

 

 

 

ARTICLE 10 - ASSIGNMENT AND SUBLEASE

 

 

24

 

 

 

 

 

 

10.01 Assignment or Sublease.

 

 

24

 

 

 

 

 

 

10.02 Assignment by Landlord.

 

 

25

 

 

 

 

 

 

ARTICLE 11 –TENANT WARRANTIES; INCORPORATION OF EXHIBITS; COMMISSION(S), CONFIDENTIALITY, SURVIVAL, NOTICES, BINDING EFFECT AND MISCELLANEOUS

 

 

26

 

 

 

 

 

 

11.01 Tenant Warranties.

 

 

26

 

 

 

 

 

 

11.02 Incorporation of Exhibits.

 

 

27

 

 

 

 

 

 

11.03 Commission(s).

 

 

27

 

 

 

 

 

 

11.04 Confidentiality.

 

 

27

 

 

 

 

 

 

11.05 Survival.

 

 

27

 

 


 

 

 

 

 

 

11.06 Notices.

 

 

27

 

 

 

 

 

 

11.07 Binding Effect.

 

 

27

 

 

 

 

 

 

11.08 Miscellaneous.

 

 

27

 

 

 

 

 

 

ARTICLE 12 - ENTIRE AGREEMENT AND LIMITATION OF WARRANTIES

 

 

29

 

 

 

 

 

 

12.01 ENTIRE AGREEMENT AND LIMITATION OF WARRANTIES.

 

 

29

 

 


 

EXHIBITS

 

 

 

 

 

A-1

 

-

 

Floor Plan(s) of the Leased Premises

 

 

 

 

 

A-2

 

-

 

The Land

 

 

 

 

 

A-3

 

-

 

The Project

 

 

 

 

 

B

 

-

 

Acceptance of Leased Premises Memorandum

 

 

 

 

 

C

 

-

 

Workletter Agreement

 

 

 

 

 

C-1

 

-

 

Schematic Space Plan

 

 

 

 

 

D

 

-

 

Building Rules

 

 

 

 

 

D-1

 

-

 

Release

 

 

 

 

 

E

 

-

 

Form of Estoppel Certificate

 

 

 

 

 

F

 

-

 

HVAC Schedule

 

 

 

 

 

G

 

-

 

Renewal Option

 


 

LEASE AGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is made and entered into as of this 1 st day of May, 2008 (the “Execution Date”), by and between Crescent Lakeside, LLC, a North Carolina limited liability company (“Landlord”), and Cornerstone BioPharma Holdings, Inc. , a Delaware corporation authorized to conduct business in the State of North Carolina (“Tenant”). In consideration of the representations and covenants contained herein and other good and valuable consideration, lie receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant hereby agree as follows:

ARTICLE 1 — LEASED PREMISES

1.01 Leased Premises.

Landlord leases to Tenant and Tenant leases from Landlord the space (the “Leased Premises”) set forth in Subsections (a) and (b) of the Basic Lease Provisions below and shown on the floor plan(s) attached hereto as Exhibit A-l upon the terms and conditions set forth in this Lease. The office building in which the Leased Premises are located, parcel “05” on which the office building is located (the “Land”, as described on Exhibit A-2 attached hereto), the parking facilities and all improvements and appurtenances to the building are collectively referred to as the “Building”. The Building and the larger complex of which the Building is a part are collectively referred to as the “Project”, as shown on the map attached hereto as Exhibit A-3 . Included within the Project are the Building and the Crescent Lakeside I building located at 1225 Crescent Green, Cary, North Carolina 27518 (the “1225 Building”) (the Building and the 1225 Building are collectively, the “Crescent Lakeside Complex”). No easement for light, air or view is granted hereunder or included within or appurtenant to the Leased Premises.

ARTICLE 2 — BASIC LEASE PROVISIONS

2.01 Basic Lease Provisions.

The following provisions set forth various basic terms of this Lease and are sometimes referred to as the “Basic Lease Provisions”.

 

 

 

 

 

(a)

 

Building Name:

 

Crescent Lakeside II

 

 

Building Address:

 

1255 Crescent Green

 

 

 

 

Cary, North Carolina 27518

 

 

 

 

 

(b)

 

Floor(s):

 

Second (2 nd )

 

 

Suite Number:

 

250, subject to approval by the Town of Cary, North Carolina

 

 

Square Feet Area in the Leased Premises:

 

14,863

 

 

 

 

 

(c)

 

Total Area of Building:

 

Approximately 144,000 square feet

 

 

 

 

 

(d)

 

Base Rent:

 

 

 

 

     Initial per Square Foot/Annum:

 

$23.25 per Square Foot leased

 

 

     Initial Annual Base Rent:

 

$345,564.72

 

 

     Initial Monthly Base Rent:

 

$28,797.06

 

 

 

 

 

 

 

     Payment Schedule:

 

See chart on the following page:

Crescent Lakeside II

1


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price Per

 

 

 

Annual (or for

 

 

Full Month(s) of

 

 

 

Square Foot,

 

Square

 

time period noted)

 

Monthly Base

The Term

 

Targeted Date(s)

 

Per annum

 

Feet

 

Base Rent

 

Rent

Landlord and Tenant specifically acknowledge and agree that the Base Rent set forth below shall be adjusted by Landlord’s
obligation to nay Tenant the Base Rent Abatement (defined in Section 4.01 ).

I through 2

 

12/1/08 through 1/31/09

 

$0.00
($23.25/SF
Base Rent abated)

 

14,863

 

$0.00
($23.25/SF
Base Rent abated)

 

$0.00
($23.254/SF
Base Rent abated)

3 through 14

 

2/1/09 through 1/31/10

 

$23.25

 

14,863

 

$345,564.72

 

$28,797.06

15 through 26

 

2/1/10 through 1/31/11

 

$23.83

 

14,863

 

$354,185.28

 

$29,515.44

27 through 38

 

2/1/11 through 1/31/12

 

$24.43

 

14,863

 

$363,103.08

 

$30,258.59

39 through 50

 

2/1/12 through 1/31/13

 

$25.04

 

14,863

 

$372,169.56

 

$31,014.13

51 through 62

 

2/1/13 through 1/31/14

 

$25.67

 

14,863

 

$381,533.16

 

$31,794.43

63 through 74

 

2/1/14 through 1/31/15

 

$26.31

 

14,863

 

$391,045.56

 

$32,587.13

75 through 86

 

2/1/15 through 1/31/16

 

$26.96

 

14,863

 

$400,706.52

 

$33,392.21

87 through 88

 

2/1/16 through 3/31/16

 

$27.63

 

14,863

 

$68,444.12
($for 2 months)

 

$34,222.06

 

 

 

 

 

 

(e)

 

Base Operating Expense Factor:

 

Year 2009 actual Operating Expenses expressed by a
price per square foot leased

 

 

 

 

 

(f)

 

Parking:

 

3 unreserved parking spaces per each 1,000 Square Foot leased (rounded down to the nearest whole number) subject to Subsection 6.01(f)

 

 

 

 

 

 

 

Monthly Rent per Parking Space:

 

N/A

 

 

 

 

 

(g)

 

Term:

 

7 Year(s)           4 Month(s)

 

 

 

 

 

(h)

 

Target Commencement Date:

 

December 1, 2008

 

 

Target Expiration Date:

 

March 31, 2016

 

 

 

 

 

(i)

 

Security for the Lease:

 

$29,000.00 cash or Letter of Credit (defined and set forth in Section 4.06 )

 

 

 

 

 

(j)

 

Permitted Use:
Permitted Occupancy:

 

General business offices for a biopharmaceuticals firm 52 persons (rounded down to the nearest whole number), subject to Section 6.01(b ).

 

 

 

 

 

(k)

 

Addresses for notices and other communications (including Rent payments) under this Lease:

 

 

 

 

 

 

 

Landlord:

 

Tenant:

 

 

Prior to the Commencement Date:

 

Prior to the Commencement Date:

 

 

Crescent Lakeside, LLC

 

Cornerstone BioPharma Holdings, Inc.

 

 

c/o Capital Associates

 

2000 Regency Parkway

 

 

1100 Crescent Green, Suite 250

 

Suite 255

 

 

Cary, North Carolina 27518

 

Cary, North Carolina 27518

 

 

(919) 233-9901

 

(888) 466-6505

 

 

 

 

 

 

 

After the Commencement Date:

 

After the Commencement Date:

 

 

 

 

 

 

 

Crescent Lakeside, LLC

 

Cornerstone BioPharma Holdings, Inc.

 

 

c/o Capital Associates

 

1255 Crescent Green, Suite 250

 

 

1100 Crescent Green, Suite 250

 

Cary, North Carolina 27518

 

 

Cary, North Carolina 27518

 

Attn: Chenyqua Baldwin

Crescent Lakeside II

2


 

 

 

 

 

 

 

 

(919) 233-9901

 

Ph: (888) 466-6505

 

 

 

 

 

(l)

 

Broker:

 

Capital Associates

 

 

Co-Broker:

 

The Staubach Company

ARTICLE 3 — TERM AND POSSESSION

3.01 Term.

     (a) This Lease shall be and continue in full force and effect for the term set forth in Subsection 2.01(g) . as it may be modified, renewed and extended pursuant to Exhibit G or by written agreement between Landlord and Tenant (the “Term”). Subject to the remaining provisions of this Article, the “Commencement Date” shall be the date on which Landlord tenders possession of the Leased Premises to Tenant, which such date is anticipated to be the Target Commencement Date shown in Subsection 2.01(h) . The Term shall commence on the Commencement Date and shall expire, without notice to Tenant, on the last day of the last month of the Term (the “Expiration Date”) (i.e. if the Commencement Date is other than the first (1st) day of the month, the Expiration Date shall nevertheless be the last day of the last month of the Term).

     (b) If the Commencement Date and Expiration Date are different from the Target Commencement Date and the Target Expiration Date, respectively, as set forth in Subsection 2.01(h) . Landlord and Tenant shall execute an amendment to the Lease setting forth such actual dates, and adjusting any Base Rent payment schedule, if applicable. If such amendment is not executed, the Commencement Date and Expiration Date shall be conclusively deemed to be the Target Commencement Date and the Target Expiration Date set forth in Subsection 2.01(h) .

     (c) Upon the expiration or other termination of this Lease, Landlord shall have the right to immediately re-enter and take possession of the Leased Premises.

3.02 Commencement

     (a) Subject to Section 3.03 hereof, if, (i) any of the work described in Exhibit C that is required to be performed by Landlord or Landlord’s contractors) to prepare the Leased Premises for occupancy has not been substantially completed (as set forth below) on or before the Target Commencement Date or (ii) Landlord is unable to tender possession of the Leased Premises to Tenant on the Target Commencement Date, then the Commencement Date (and commencement of installments of Base Rent) shall be postponed until Landlord is able to tender possession of the Leased Premises to Tenant with the work to be performed in the Leased Premises having been substantially completed, and the postponement shall operate to extend the Expiration Date in order to give full effect to the stated duration of the Term.

     (b) The deferment of installments of Base Rent shall be Tenant’s exclusive remedy for postponement of the Commencement Date, and Tenant shall have no, and waives any, claim against Landlord because of any such delay.

     (c) Notwithstanding the foregoing, if the Leased Premises are not substantially completed on or before March 1, 2009, due solely to delays caused by Landlord, then Landlord shall provide Tenant with notice as to the cause(s) for the delay in substantial completion of the Leased Premises. Tenant may then by giving Landlord notice on or before March 10, 2009, terminate this Lease so long as the Leased Premises are not substantially complete prior to the date notice is given. If Tenant does not provide notice on or before March 10, 2009, Tenant shall waive its right to terminate this Lease in accordance with this provision. The Leased Premises shall be deemed to be substantially complete the day after inspection and approval for occupancy for the intended use, whether permanent, conditional, or temporary, by the Town of Cary, North Carolina, provided said approval is subsequently evidenced by a certificate of occupancy, whether permanent, conditional, or temporary, issued by said municipality, which such certificate of occupancy may be dated when actually processed by such municipality, rather than the date of the inspection and approval for occupancy. Further notwithstanding, Tenant shall not have the right to terminate the Lease if Tenant has taken possession of any part of the Leased Premises.

Crescent Lakeside II

3


 

3.03 Tenant’s Delay.

     No delay in the completion of the Leased Premises resulting from delay or failure on the part of Tenant in furnishing information or other matters required in Exhibit C . and no delay resulting from any cause set forth in Section 6 of Exhibit C . shall delay the Commencement Date, Expiration Date or commencement of payment of Rent (as defined in Section 4.02 below).

3.04 Tenant’s Possession.

     If, prior to the Commencement Date, Tenant shall enter into possession of all or any part of the Leased Premises, the Term, the payment of monthly installments of Base Rent and all other obligations of Tenant to be performed during the Term shall commence on, and the Commencement Date shall be deemed to be, the date of such entry; provided, no such early entry shall operate to change the Expiration Date.

3.05 Acceptance of Leased Premises.

     Tenant shall confirm its acceptance of the Leased Premises by execution of the Acceptance of Leased Premises Memorandum attached hereto as Exhibit B . Tenant shall execute and deliver such Acceptance of Leased Premises Memorandum to Landlord within ten (10) business days of receipt thereof, and Tenant’s failure to do same shall be considered an event of default under this Lease.

3.06 Holdover.

     If Tenant shall remain in possession of the Leased Premises after the expiration or earlier termination of this Lease, without the execution of a new lease or an amendment to this Lease or other written agreement by and between Landlord and Tenant extending the Term, Tenant shall become a tenant-at-sufferance, and for a period of sixty (60) calendar days after such termination or expiration, as the case may be, shall pay daily rent at one hundred fifty percent (150%) of the per day Rent (as defined in Section 4.02 ) payable with respect to the last full calendar month immediately prior to the end of the Term or termination of this Lease, but otherwise shall be subject to all of the terms, conditions, provisions and obligations of this Lease, and such tenancy may be terminated by Landlord or Tenant at any time on seven (7) calendar days’ prior notice. After such sixty (60) day period Tenant shall continue to be a tenant-at-sufferance, terminable on one (1) day’s notice, and shall pay daily rent at double the per day Rent payable with respect to the last full calendar month immediately prior to the end of the Term or termination of this Lease, but otherwise shall be subject to all of the obligations of Tenant under this Lease. Tenant shall indemnify Landlord (i) against all claims for damages by any other tenant to whom Landlord may have leased all or any part of the Leased Premises effective upon the termination or expiration of this Lease, and (ii) for all other losses, costs and expenses, including consequential damages and reasonable attorneys’ fees, sustained or incurred by reason of such holding over. In the event of any holdover and failure of Tenant to pay the holdover rent set forth herein, Landlord shall have the right to immediately apply the Security (as defined and set forth in Section 4.06 ) to the Rent, at the holdover rate set forth herein, for as many days as would be represented by the amount of the Security. Nothing contained herein shall be construed as a consent by Landlord to any holding over by Tenant. The rights and obligations contained in this Section shall survive the expiration or other termination of this Lease.

ARTICLE 4 — RENT AND SECURITY FOR THE LEASE

4.01 Base Rent

     Tenant shall pay to Landlord rent (“Base Rent”) beginning on the Commencement Date and throughout the Term in the amount of the Annual Base Rent set forth in Subsection 2.01(d) . Base Rent shall be payable in monthly installments in the amount set forth in Subsection 2.01(d) (“Monthly Base Rent”) in advance and without demand, on the first day of each and every calendar month during the Term. If the Commencement Date is not the first day of a month, Tenant shall be required to pay on the Commencement Date a pro rata portion of the Initial Monthly Base Rent for the first partial month of the Term. However, any references to any “month” of the Term elsewhere in this Lease shall mean a full month of the Term. Notwithstanding anything to the contrary contained in this Lease, Tenant shall pay Landlord Base Rent as set forth in Section 2.01(d) . and Landlord shall reimburse Tenant in the amounts set forth in the chart below within five (5) calendar days of the first (1st) day of each appropriate month (individually or collectively as the sense requires, the “Base Rent Abatement"’) without demand, deduction or offset Further notwithstanding anything contained in this Lease, Landlord, in its sole discretion, reserves the right to accelerate and pay any unpaid portion of the Base Rent Abatement prior to the time scheduled to make a Base Rent Abatement

Crescent Lakeside II

4


 

payment. Tenant shall not be entitled to a Base Rent Abatement payment if it has not paid Rent for the month in which the payment is to occur.

 

 

 

 

 

 

 

 

 

Month of the Term

 

Percent Abatement

 

Base Rent Abatement Amount

February, 2009

 

 

100

%

 

$

28,797.06

 

March, 2009

 

 

100

%

 

$

28,797.06

 

November, 2010

 

 

100

%

 

$

29,515.44

 

December, 2010

 

 

100

%

 

$

29,515.44

 

February, 2011

 

 

100

%

 

$

30,258.59

 

April, 2011

 

 

100

%

 

$

30,258.59

 

January, 2012

 

 

50

%

 

$

15,129.30

 

February, 2012

 

 

50

%

 

$

15,507.06

 

March, 2012

 

 

50

%

 

$

15,507.06

 

April, 2012

 

 

50

%

 

$

15,507.06

 

January, 2013

 

 

50

%

 

$

15,507.06

 

February 2013

 

 

50

%

 

$

15,897.22

 

4.02 Payment of Rent.

     As used in this Lease, “Rent” shall mean the Base Rent, Additional Rent (defined below), late charges, and all other amounts required to be paid by Tenant pursuant to this Lease. The Rent shall be paid at the times and in the amounts provided herein by check drawn on a United States of America bank to Landlord at its address specified in Subsection 2.0l(k) above, or to such other person or at such other address as Landlord may from time to time designate in writing. The Rent shall be paid without notice, demand, abatement, deduction or offset except as may be expressly set forth in this Lease.

4.03 Additional Rent

     The term “Additional Rent” shall mean the total of the “Operating Expense Adjustment”, as such term is defined below, and any other amounts in addition to Base Rent which Tenant is required to pay to Landlord under this Lease.

4.04 Operating Expense Adjustment

     (a) Commencing January 1, 2010, if the Operating Expenses (defined below) for the Building for any calendar year, expressed on a per square foot basis, exceed the Base Operating Expense Factor specified in Subsection 2.01(e) . Tenant shall pay to Landlord increased Rent (an “Operating Expense Adjustment”) in an amount equal to the product of such excess times the square feet of the Leased Premises as stated in Subsection 2.01(b) . The Operating Expense Adjustment shall be payable in monthly installments on the first day of each calendar month based on Landlord’s estimate of the Operating Expenses for the then current year. Landlord and Tenant specifically acknowledge and agree that the Operating Expense Adjustment shall not be subject to any Base Rent Abatement.

     (b) Landlord may at any time give Tenant written notice specifying Landlord’s estimate of the Operating Expenses for the then current calendar year or the subsequent calendar year and specifying the Operating Expense Adjustment to be paid by Tenant for each such year, and Tenant shall adjust its payments accordingly beginning with the monthly installment immediately following Landlord’s notice.

     (c) Within one hundred twenty (120) calendar days after the end of each calendar year, Landlord shall give written notice to Tenant specifying the actual Operating Expenses for the prior calendar year and any necessary adjustment to the Operating Expense Adjustment paid by Tenant for that calendar year. Tenant shall pay any deficit amount to Landlord within fifteen (15) business days after receipt of Landlord’s written notice. Any excess payment by Tenant for the prior calendar year shall be applied towards Tenant’s obligation to pay its proportionate share of adjusted Operating Expenses for the following calendar year, or, if the Lease has expired or terminated, be returned to Tenant by Landlord.

     (d) Tenant shall have the right, one (1) time per year, upon written notice to Landlord, within sixty (60) calendar days of receipt of the Operating Expense statement, to have Landlord’s books and records relating solely to Operating Expenses contained in the statement for the prior year, reviewed. If Landlord’s calculation of

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Operating Expenses fails to comply with the requirements of this Section 4.04 or contains any other error, as determined by the review, Tenant’s past payments of its proportionate share of Operating Expenses for the subject year shall be adjusted in accordance with the results of the review, and appropriate payments shall be made by Landlord or Tenant, as the case may be, within forty-five (45) calendar days after completion of the review.

     (e) All books and records necessary to accomplish any review permitted under this Section 4.04 shall be retained by Landlord for a period of one (1) year, and shall be made available to the person conducting the review at the Building, Project or the office of Landlord’s property manager, during normal business hours. All of Landlord’s and Tenant’s costs of the review shall be paid by Tenant unless the review reveals that total Operating Expenses were misstated by seven and one-half percent (7.5%) or more in the calendar year reviewed, in which case Landlord shall reimburse Tenant for Tenant’s reasonable costs of the review, not to exceed Two Thousand Five Hundred Dollars ($2,500.00). The rights and obligations contained in this Section shall survive the expiration or other termination of this Lease.

     (f) The term “Operating Expenses” shall mean, except as otherwise specified in this definition, all expenses, costs, and disbursements of every kind and nature, computed on an accrual basis, which Landlord shall pay or become obligated to pay because of or in connection with the ownership and operation of the Building, or Landlord’s efforts to reduce Operating Expenses, including, without limitation:

 

(1)

 

wages and salaries of all employees to an extent commensurate with such employees’ involvement in the operation, repair, replacement, maintenance, and security of the Building, including, without limitation, amounts attributable to the employer’s Social Security Tax, unemployment taxes, and insurance, and any other amount which may be levied on such wages and salaries, and the cost of all insurance and other employee benefits related thereto;

 

 

 

 

 

(2)

 

all supplies and materials used in the operation, maintenance, repair, replacement and security of the Building;

 

 

 

 

 

(3)

 

the rental costs of any and all leased capital improvements and the annual amortization of any and all capital improvements made to the Building which, although capital in nature, can reasonably be expected to reduce the normal operating costs of the Building, to the extent of the lesser of such expected reduction in Operating Expenses or the annual amortization of such capital improvements, as well as all capital improvements made in order to comply with any legal requirement hereafter promulgated by any governmental authority including, but not limited to, requirements relating to the environment, energy, conservation, public safety, access for the disabled or security, as amortized over the useful life of such improvements by Landlord for federal income tax purposes;

 

 

 

 

 

(4)

 

the cost of all utilities, other than the cost of electricity supplied to tenants of the Building which is separately metered and reimbursed to Landlord by such tenants;

 

 

 

 

 

(5)

 

the cost of all maintenance and service agreements with respect to the operation of the Building or any part thereof, including, without limitation, management fees, alarm service, equipment, window cleaning, elevator maintenance, landscape maintenance, and parking area maintenance and operation;

 

 

 

 

 

(6)

 

the cost of all insurance relating to the Building and each of the premises contained therein, including, without limitation, casualty and liability insurance applicable to the Building and Landlord’s personal property used in connection therewith;

 

 

 

 

 

(7)

 

all taxes and assessments and governmental charges, whether federal, state, county, or municipal, and whether by taxing districts or authorities presently taxing or by others, subsequently created or otherwise, including all taxes levied or assessed against or for leasehold improvements and any other taxes and assessments attributable to the Building and/or the operation thereof, together with the reasonable cost (including attorneys, consultants and appraisers) of any negotiation, contest or appeal pursued by Landlord in an effort to reduce any such tax, assessment or charge, excluding, however, federal and state taxes on Landlord’s income, but including all rental, sales, use and occupancy taxes or other similar taxes, if any, levied or imposed by any city, state, county, or other governmental body having jurisdiction; and

 

 

 

 

 

(8)

 

the cost of all repairs, replacements, removals and general maintenance with respect to the Building.

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     (g) Specifically excluded from Operating Expenses are:

 

(1)

 

expenses for capital improvements made to the Building, other than capital improvements described in Section 4.04(f)(3) above and except for items which, though capital for accounting purposes, are properly considered maintenance and repair items, such as painting and/or wallpapering of common areas, replacement of carpet in elevator lobbies and like items;

 

 

 

 

 

(2)

 

expenses for repair, replacement and general maintenance paid by proceeds of insurance or by Tenant or other third parties;

 

 

 

 

 

(3)

 

alterations attributable solely to tenants of the Building including the initial Tenant Improvements and those made on Tenant’s behalf;

 

 

 

 

 

(4)

 

increases in taxes resulting from higher valuations of the Building attributable to Tenant’s Tenant Improvements (defined in Exhibit C ) or alterations made by Tenant in excess of typical fitups in the Building, which increase shall be paid by Tenant as Additional Rent;

 

 

 

 

 

(5)

 

depreciation of the Building;

 

 

 

 

 

(6)

 

leasing commissions; and

 

 

 

 

 

(7)

 

federal and state income taxes imposed on Landlord.

                    Notwithstanding anything to the contrary in the specific exclusions from Operating Expenses set forth above, Operating Expenses shall, also, not include the following:

 

(i)

 

Landlord’s general corporate overhead and general administrative expenses, other than charges for property management and in-house labor provided for maintenance of the Building;

 

 

 

 

 

(ii)

 

costs arising from Landlord’s charitable or political contributions;

 

 

 

 

 

(iii)

 

federal and state income and franchise taxes of Landlord or any other such taxes not in the nature of real estate taxes, except taxes on Rent;

 

 

 

 

 

(iv)

 

management fees to the extent they exceed the greater of (a) reasonable, similar costs incurred in comparable office buildings in the Raleigh, North Carolina area, or (b) five percent (5%) of the gross rent received for the Building;

 

 

 

 

 

(v)

 

salaries, wages or other compensation paid to officers or executives of Landlord above the level of property manager in their respective capacities;

 

 

 

 

 

(vi)

 

overhead and profit increments paid to subsidiaries or affiliates of Landlord for services on or to the Building or Project, to the extent only that the costs of such services exceed competitive costs of such services were they not rendered by a subsidiary or affiliate;

 

 

 

 

 

(vii)

 

any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord;

 

 

 

 

 

(viii)

 

capital expenditures required by Landlord’s gross negligence or willful misconduct to comply with laws enacted on or before the Commencement Date of the Lease;

 

 

 

 

 

(ix)

 

costs incurred by Landlord for the repair of damage to the Building, to the extent Landlord is reimbursed by insurance proceeds;

 

 

 

 

 

(x)

 

renovating or otherwise improving or decorating, painting or redecorating space leased to other tenants or other occupants of the Building;

 

 

 

 

 

(xi)

 

costs for sculpture, paintings or other objects of art;

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(xii)

 

electrical power costs and other services for which any tenant directly contracts with the local service company;

 

 

 

 

 

(xiii)

 

expenses in connection with services or other benefits which are not available to Tenant or for which Tenant is charged directly, but which are not made available to another tenant or occupant of the Building;

 

 

 

 

 

(xiv)

 

all items and services for which Tenant has reimbursed Landlord or has paid to third persons;

 

 

 

 

 

(xv)

 

any ground lease rental;

 

 

 

 

 

(xvi)

 

interest, principal, points and fees on debts, or amortization on any mortgage or other debt instrument encumbering the Building or the Land;

 

 

 

 

 

(xvii)

 

legal and other costs associated with the mortgaging, refinancing or sale of the Building, Land or Project or any interest therein;

 

 

 

 

 

(xviii)

 

tax penalties incurred as a result of Landlord’s gross negligence, willful misconduct or inability to make payments when due;

 

 

 

 

 

(xix)

 

any costs and expenses related to or incurred in connection with disputes with tenants of the Building or Land or any lender for the Building or Land; and

 

 

 

 

 

(xx)

 

costs associated with leasing or marketing space in the Building, including tenant improvements, advertising, lease commissions, legal fees to negotiate leases, space planning and marketing materials.

     (h) If the average occupancy rate for the Building is less than ninety-five percent (95%) in any calendar year of the Term, or if Landlord is providing less than ninety-five percent (95%) of the Building with any item or items of work or service which would constitute an Operating Expense hereunder, then the amount of the Operating Expenses for such period shall be adjusted to include any and all items enumerated under the definition of Operating Expenses set forth in this Subsection which Landlord reasonably determines Landlord would have incurred if the Building had been at least ninety-five percent (95%) leased and occupied with all tenant improvements constructed or if Landlord had been providing such item or items of work or service to at least ninety-five percent (95%) of the Building. If the actual occupancy rate for the Building is ninety-five percent (95%) or greater, then the actual Operating Expenses shall be used for purposes of determining the Operating Expense Adjustment described in this Section 4.04 . The parties agree that since the Building is under construction and will not be completed until around September 2008, Operating Expenses for 2009 shall be adjusted so that they are consistent with Operating Expenses for a stabilized class “A” office building in the greater Raleigh, Durham and Chapel Hill areas of North Carolina.

4.05 Cost of Living Adjustment

     Intentionally deleted.

4.06 Security for the Lease.

     (a) Tenant shall deposit with Landlord on or before October 31, 2008, security for the payment of all Rent and other charges owed by Tenant pursuant to this Lease and the performance by Tenant of all of Tenant’s obligations under this Lease in the amount specified in Subsection 2.01(i ) (the “Security”), which Security may be in the form of cash or a Letter of Credit (defined below) on the understanding that: (i) the Security or any portion thereof may be applied to the curing of any default, or the payment of any damages sustained by Landlord due to Tenant’s failure to perform its obligations, including, but not limited to, the payment of Rent and any alteration and repair obligations under Article 7 herein, without prejudice to any other remedy or remedies at law or in equity which Landlord may have on account thereof, and upon such application Tenant shall pay Landlord on demand, by check drawn on a United States of America bank, the amount so applied which shall be added to the remaining balance of the Security so the same will be restored to its original amount; (ii) Landlord shall not be obligated to

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hold the Security as a separate fund, and may commingle it with other funds; and (iii) within thirty (30) calendar days after the expiration of the Term, provided Tenant is not in default at the expiration of the Term and has delivered exclusive possession of the Leased Premises to Landlord, the remaining balance of the Security shall be returned to Tenant, without interest, which shall belong to Landlord.

     (b) In the event Tenant elects to provide Landlord with a Letter of Credit in lieu of cash Security, then prior to October 31, 2008, Tenant shall provide Landlord with and shall maintain in effect at all times during the Term of this Lease, security in the form of a clean, unconditional and irrevocable letter of credit (“Letter of Credit”) as described below. Landlord may draw on the Letter of Credit, in whole or in part (at Landlord’s option), if: (i) Tenant defaults with respect to any of the terms, conditions or provisions of this Lease on the Tenant’s part to be observed or performed, including but not limited to, the payment of Rent or Additional Rent, and such default continues beyond the applicable cure period, if any, or (ii) Tenant, or anyone holding possession of the Leased Premises through Tenant, holds over in the Leased Premises after the expiration or sooner termination of the Term of this Lease, or (iii) Landlord is given notice that the bank issuing the Letter of Credit is terminating the Letter of Credit, or (iv) the Letter of Credit is scheduled to expire as of the stated date by its terms and is not replaced with a Letter of Credit meeting the criteria set forth in this Section 4.06 at least sixty (60) calendar days prior to the Letter of Credit’s stated expiration date.

     (c) Landlord shall have the right to draw down the Letter of Credit and apply the proceeds of the Letter of Credit to the curing of any default by Tenant, including, but not limited to, the payment of Rent or Additional Rent, or the payment of any damages sustained by Landlord due to Tenant’s failure to perform its obligations, including, but not limited to, alteration and repair obligations under Article 7 herein, without notice to Tenant and prejudice to any other remedy or remedies at law or in equity which Landlord may have on account thereof. Landlord’s right to draw upon the Letter of Credit shall be based upon Landlord’s written statement to the issuer that Tenant is in default under the terms of the Lease and presentation of a sight draft. Upon any such application, Tenant shall, within ten (10) calendar days after Landlord gives Tenant notice thereof, cause the Letter of Credit to be reissued for the full face amount required herein, so that the Letter of Credit will be restored to its original amount. In the event that any of the proceeds of the Letter of Credit are not applied to cure such default of Tenant, Landlord shall hold such unapplied proceeds as cash security for the full and faithful performance by Tenant of its obligations under this Lease.

     (d) Any cash proceeds received by Landlord and held as security may be commingled with other funds of Landlord without Landlord being responsible to Tenant for the payment of any interest thereon. If Tenant fully and faithfully complies with all of the terms, covenants and provisions of this Lease, the Letter of Credit and/or any unapplied cash proceeds drawn from the Letter of Credit and held as security for this Lease shall be returned to Tenant, without interest, within thirty (30) calendar days after the expiration of the Term of this Lease and delivery of exclusive possession of the Leased Premises to Landlord.

     (e) The Letter of Credit shall be an unconditional, irrevocable, clean Letter of Credit (which permits partial draws), payable on sight in cash, in favor of Landlord, Landlord’s lender or an assignee of Landlord, at Landlord’s election and shall be in the amount of Twenty-nine Thousand Dollars ($29,000.00). The Letter of Credit shall be acceptable to Landlord, acting reasonably with regard to both form and content, and shall be executed by a third-party nationally recognized banking institution (“Bank”) with local offices, acceptable to Landlord, acting reasonably, and Bank shall have an office in Raleigh, North Carolina, available as a designated payment center in order that Landlord may present the Letter of Credit for same-day payment. The Letter of Credit shall be transferable by Landlord or any other beneficiary. The Letter of Credit shall be governed by the International Standby Practices set forth by the International Chamber of Commerce. The Letter of Credit shall either: (i) have an expiration date no earlier than thirty (30) calendar days after the expiration date of the Term of this Lease, or (ii) have an expiration date no earlier than the first anniversary of the date of issuance therefor and shall provide that it shall be automatically renewed from year to year unless terminated by Bank by notice to Landlord given not less than sixty (60) calendar days prior to the then expiration date thereof by certified or registered mail, in which such event Tenant shall, within fifteen (15) calendar days after notice is given to Tenant by Landlord, deliver to Landlord either a substitute letter of credit meeting the requirements herein or cash Security in the Letter of Credit amount. The final expiration date of the Letter of Credit (including any renewals) shall be no earlier than thirty (30) calendar days after the expiration date of this Lease. Tenant’s failure to provide Landlord with the Letter of Credit when due, including any renewal(s) of the Letter of Credit, shall be deemed an event of monetary default under this Lease.

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     (f) If Landlord at any time requests any reasonable change in the terms, conditions or provisions of the Letter of Credit, Tenant shall promptly cause such Letter of Credit to be so modified. If the Letter of Credit is lost, mutilated, stolen or destroyed while in Landlord’s possession, Tenant shall cooperate with Landlord’s efforts to cancel the lost, mutilated, stolen or destroyed Letter of Credit and to replace such Letter of Credit at Landlord’s expense. If the Bank becomes unacceptable to Landlord, at Landlord’s reasonable discretion, Tenant shall, within fifteen (15) calendar days after notice is given to Tenant by Landlord, deliver to Landlord either a substitute letter of credit meeting the requirements herein or cash security in the Letter of Credit amount. In the event Landlord transfers its interest in the Land and Building to another owner, Landlord may transfer the Letter of Credit to the new owner. If the Letter of Credit is so transferred, Landlord shall thereupon be released by Tenant from all liability for the return of the Letter of Credit, and Tenant shall look solely to the new owner for the return of the Letter of Credit in accordance with the terms of this Lease. If Landlord desires to transfer the Letter of Credit to such new owner, Tenant shall cooperate in effecting such transfer; provided that Landlord shall pay the Bank’s usual and customary fee for transferring such Letter of Credit.

     (g) The rights and obligations contained in this Section 4.06 shall survive the expiration or other termination of this Lease.

4.07 Late Charge.

     If Tenant fails or refuses to pay any installment of Rent when due, Landlord, shall have the right to collect a late charge of five percent (5%) of the amount of the late payment to compensate Landlord for the additional expense involved in handling delinquent payments and not as interest; provided, however, that Tenant shall be allowed one (1) late payment of Rent in each calendar year of the Term, which late payment shall not be subject to a late charge hereunder so long as such Rent is paid within five (5) calendar days of the due date. If the payment of a late charge required by this Section is found to constitute interest notwithstanding the contrary intention of Landlord and Tenant, the late charge shall be limited to the maximum amount of interest that lawfully may be collected by Landlord under applicable law, and if any payment is determined to exceed such lawful amount, the excess shall be applied to any unpaid Rent then due and payable hereunder and/or credited against the next succeeding installment of Rent payable hereunder. If all Rent payable hereunder has been paid in full, any excess shall be refunded to Tenant. Tenant shall reimburse Landlord for any processing fees charged to Landlord as a result of Tenant’s checks having been returned for insufficient funds.

ARTICLE 5 — SERVICES

5.01 Services.

     (a) Landlord shall furnish Tenant while occupying the Leased Premises, subject to curtailment as required by governmental laws, rules or regulations, the following:

 

(1)

 

central heat and air conditioning in season, at such times as Landlord normally furnishes these services to other tenants in the Building and at such temperatures and in such amounts as are considered by Landlord to be standard for other class “A” office buildings in the greater Raleigh, Durham and Chapel Hill areas of North Carolina, but such service on Saturday afternoons, Sundays and the holidays listed in the “Building Rules” (which such Building Rules are attached hereto as Exhibit D and are incorporated herein by reference in their entirety), shall be furnished only upon request of Tenant, who shall bear the cost thereof as provided in Exhibit F attached hereto;

 

 

 

 

 

(2)

 

elevator service;

 

 

 

 

 

(3)

 

routine maintenance for the Building pursuant to Section 7.03, in the manner and to the extent deemed by Landlord to be standard for other class “A” office buildings in the greater Raleigh, Durham and Chapel Hill areas of North Carolina;

 

 

 

 

 

(4)

 

Building-standard electric lighting service for the Building;

 

 

 

 

 

(5)

 

janitor service on a five (5) day week basis, provided, however, if Tenant’s floor coverings or other improvements require special care, Tenant shall pay the additional cleaning cost attributable to same;

 

 

 

 

 

(6)

 

water and sewer service that is considered standard for other class “A” office buildings in the greater Raleigh, Durham and Chapel Hill areas of North Carolina, but in no event

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more than Tenant’s pro rata share of water and sewer service that is available to the Building;

 

(7)

 

proper electrical facilities to furnish sufficient power for personal computers, fax machines, desktop computer printers, calculating machines and other machines of similar low electrical consumption, but not including electricity required for any equipment or machine which (individually) consumes more than 0.25 kilowatts per hour at a rated capacity or requires a voltage other than 120 volts single phase. Tenant shall not use more than its pro rata share of electrical circuits for power and lighting available for all tenants on the floor of the Building where the Leased Premises are located;

 

 

 

 

 

(8)

 

general landscaping for the Building;

 

 

 

 

 

(9)

 

snow and ice removal from Building parking lots.

     (b) Tenant shall not contract with janitor, window washing or maintenance services.

     (c) If Landlord’s engineer determines that Tenant’s electrical, water or sewer usage exceeds the usage set forth in Subsection 5.01(a) , or that maintenance and repair costs have increased because Tenant’s use is excessive, then Tenant shall pay Landlord for all increased costs related to the excess use or usage, including increased utility charges, janitorial costs and maintenance and repair costs. Tenant shall pay any excess use costs immediately upon receipt of notice from Landlord which notice shall include any relevant invoices and supporting documentation therefor. For the purposes of this Lease, excess usage or use shall include, but not be limited to, continuous occupancy of the Leased Premises above the Permitted Occupancy number shown in Subsection 2.01(j) and Section 6.01(b) , use or occupancy of the Leased Premises more than twenty (20) straight hours per day, and continuous operation (24/7) of Building systems.

     (d) If Tenant uses any heat generating machines, equipment, fixtures or other devices of any nature whatsoever in the Leased Premises which affect the temperature otherwise maintained by the Building standard air conditioning, Tenant shall pay the additional cost necessitated by Tenant’s use of such machines, equipment, fixtures or other devices, including the cost of installation of any necessary additional air conditioning equipment and the cost of operation and maintenance thereof. Tenant shall pay such additional cost immediately upon receipt of notice from Landlord which notice shall include any relevant invoices and supporting documentation therefor.

     (e) Should any of Landlord’s equipment or machinery break down, or for any cause cease to function properly, Landlord shall use reasonable diligence during normal business hours to repair same promptly, but Tenant shall have no claim for rebate of rent or damages on account of any interruptions in service occasioned thereby or resulting therefrom, except as otherwise set forth herein or if such breakdown or malfunction resulted solely from Landlord’s negligence or willful misconduct.

     (f) Landlord shall, as an Operating Expense hereunder, provide receptacles and containers as necessary for Tenant to comply with all orders, requirements and conditions now or hereafter imposed by any ordinances, laws, orders and/or regulations (hereinafter collectively called “Recycling Regulations”) of any governmental body having jurisdiction over the Leased Premises or the Building regarding the collection, sorting, separation and recycling of waste products, garbage, refuse and trash.

     (g) Failure by Landlord to any extent to commence or continue the furnishing of services in accordance with this Section 5.01 which results from causes beyond the reasonable control of Landlord shall not render Landlord liable in any respect for damages to either person or property, nor be construed as an eviction of Tenant, nor work an abatement of rent, nor relieve Tenant from its obligation to fulfill any covenant or agreement hereof.

     (h) If (i) the services which Landlord is obligated to provide are continuously interrupted for four (4) consecutive business days after Landlord’s receipt of notice from Tenant (“Interruption”), and (ii) Tenant is unable to conduct business in the Leased Premises as a result of the Interruption, and (iii) Tenant has notified Landlord immediately in writing that Tenant is unable to conduct its business, and (iv) the Interruption is due to the gross negligence or willful misconduct of Landlord, its employees or agents, and such services are not restored by Landlord, if under Landlord’s reasonable control, Tenant shall be entitled to an abatement of Rent for each day Tenant is unable to conduct its business operations in the Leased Premises. The abatement shall begin on the fifth

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(5th) consecutive business day after Tenant’s delivery to Landlord of the notice of the Interruption and shall end automatically when the services are restored.

ARTICLE 6 — USE AND OCCUPANCY

6.01 Use and Occupancy.

     (a) Tenant (and its permitted assignees, subtenants, invitees, customers, and guests) shall use and occupy the Leased Premises solely for the purpose that is specified in Subsection 2.01(j) , and Tenant may not change said purpose absent Landlord’s prior written agreement, in Landlord’s reasonable discretion.

     (b) Tenant shall not use or occupy the Leased Premises, or permit any portion of the Leased Premises to be used or occupied, for any business or purpose, or in any manner, other than that specified in Subsection 2.01(j) and/or by any number of persons greater man that specified in Subsection 2.01(j) . Notwithstanding the foregoing, Tenant may, from time to time but not as a consistent and regular occurrence, exceed the occupancy limitation set forth above, as long as such excess occupancy does not have an adverse effect upon Landlord or the other tenants in the Building, in Landlord’s sole, reasonable discretion. For the purposes of this Section, it shall not be consistent or regular if the occupancy limitation is exceeded less than five (5) consecutive days or ten (10) cumulative days, per month in order for Tenant to conduct training in the Leased Premises.

     (c) Tenant shall not use or occupy the Leased Premises, or permit any portion of the Leased Premises to be used or occupied, for any business or purpose, or in any manner, which (i) is unlawful, disreputable or deemed to be extra-hazardous on account of fire or exposure to or interference from electromagnetic rays and/or fields, (ii) violates the Building Rules, (iii) increases the rate of fire insurance coverage on the Building or its contents, and/or (iv) is inconsistent with the first-class nature of the Building.

     (d) Tenant shall conduct its business and control its employees and agents and all other persons entering the Building under the express or implied invitation of Tenant, in such manner as not to create any nuisance, or interfere with, annoy or disturb any other tenant or Landlord in its operation of the Building.

     (e) Tenant shall not grant any concession or license within the Leased Premises or allow any person other than Tenant, its partners, managers, members, officers, directors, employees, contractors and agents to occupy or use the Leased Premises or any portion thereof.

     (f) Landlord shall provide Tenant with the number of unreserved parking spaces set forth in Subsection 2.01(f) of this Lease (which number includes Tenant’s pro rata share of the total number of spaces for the Building designated for handicapped or visitors), at no additional charge. The parties acknowledge that Tenant will use more spaces than the pro rata share of parking when it conducts training in the Leased Premises in accordance with Subsection 6.01 (b) above. Landlord agrees that Tenant may use more than its allotment of parking during the training, so long as Tenant’s excess parking does not occur more than five (5) consecutive days or ten (10) cumulative days per month or Tenant’s excess parking does not prevent other Building tenants from being able to use their pro rata share of parking spaces. In the event that Tenant’s excess parking does not comply with this Section, Landlord shall have the right immediately upon notice to Tenant to require Tenant to cease its excess parking and use only the spaces allotted to it in Subsection 2.01(l). Tenant shall notify Landlord promptly of any additional parking needs, which needs may, in Landlord’s sole but reasonable discretion, be considered on a case-by-case basis.

     (g) (i) Landlord shall include up to two (2) listings for Tenant’s name and suite number on (i) the Building directory(ies) located inside the Building, and (ii) up to two (2) Building-standard suite sign(s) to be located at the entrance to the Leased Premises. For Tenant’s initial listing, the cost of such directory(ies) and suite signage shall be paid for by Landlord. Any subsequent changes to directory(ies) and suite signage requested by Tenant shall be paid for by Tenant within ten (10) calendar days of receipt of Landlord’s invoice therefor.

     (ii) In addition to the foregoing, when the Building becomes nine-five percent (95%) leased, and provided Tenant is one of the four (4) largest tenants in the Building based upon the amount of square footage leased, is not and has not been in default of the Lease beyond any applicable cure period, and has not vacated or assigned the Leased Premises, then Tenant will be entitled to a non-exclusive position on one (1) slot of the

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monument sign for the Building with the priority of signage right being determined by the amount of space leased by the tenant(s) in the Building. Landlord shall pay for the initial placement of Tenant’s name or legally assumed name on the monument sign, and Tenant shall pay for any changes to Tenant’s name or legally assumed name on such monument sign thereafter. Any monument signage shall be (I) non-exclusive, (II) designed, installed, constructed, maintained and removed at the expiration or other termination of this Lease, at Landlord’s sole cost and expense, and (III) with regard to design (size, style and font of the lettering), location, construction and all other aspects, subject to prior written approval from Landlord (which approval shall not be unreasonably withheld), the Town of Cary, North Carolina, and any other governing entity having jurisdiction with regard to signage at the Building. This type of signage shall not automatically apply to any subtenant of the Leased Premises, unless agreed to by Landlord, in its sole discretion.

6.02 Care of the Leased Premises.

     (a) Tenant shall not commit or allow to be committed any waste or damage to any portion of the Leased Premises or the Building. Except as provided otherwise in Section 7.02 of this Lease, at the expiration or other termination of this Lease, or at the termination of any holdover, Tenant shall deliver the Leased Premises to Landlord in the same condition as existed on the Commencement Date, ordinary wear and tear and loss by insured casualty and condemnation excepted.

     (b) Tenant shall notify Landlord at least ten (10) business days prior to vacating the Leased Premises and shall arrange to meet with Landlord to jointly inspect the Leased Premises. If Tenant does not give such notice or meet for such joint inspection, then Landlord’s inspection of the Leased Premises shall be deemed accurate for the purpose of determining Tenant’s responsibility for repair and restoration of the Leased Premises.

     (c) In the event Tenant has not removed all of its equipment and personal property from the Leased Premises at the expiration or other termination of this Lease, then Landlord shall have the right to (i) remove Tenant equipment and personal property from the Leased Premises, and/or (ii) retain, dispose of or sell any or all of Tenant’s equipment and personal property, all without incurring any liability to Tenant whatsoever, and in the event of any such sale, Landlord shall have the right to immediately apply the proceeds of the sale and/or the Security to any amount(s) due under this Lease, including the costs of such removal, retention, disposal and/or sale.

     (d) The rights and obligations contained in this Section 6.02 shall survive the expiration or other termination of this Lease.

6.03 Hazardous or Toxic Materials.

     (a) Tenant, or any of Tenant’s agents, officers or employees, shall not cause or allow the receipt, storage, use, location, handling, production, refinement or disposal anywhere in the Building or the Project of any product, material or merchandise which is explosive, highly flammable, injurious to health, or a hazardous or toxic material, as hereafter defined. “Hazardous or Toxic Materials)” shall include all materials and substances which have been determined to be hazardous to health or the environment and are regulated by any applicable federal, state or local laws, ordinances or regulations.

     (b) Notwithstanding the foregoing, Tenant shall not be in breach of this provision as a result of the presence in the Leased Premises of minor amounts of Hazardous or Toxic Materials which are in compliance with all applicable laws, ordinances and regulations and are customarily used in a general office environment (e.g., copying machine chemicals and kitchen cleansers), provided Tenant properly stores, uses and disposes such Hazardous or Toxic Materials in accordance with all applicable governmental laws and in accordance with this Section.

     (c) If requested by Landlord or any ground lessor, Tenant shall identify, in writing, any or all of Tenant’s Hazardous or Toxic Materials at the Leased Premises and their quantity(ies), purpose(s), method(s) of disposal and other related information.

     (d) Landlord represents and warrants to Tenant, to the best of Landlord’s actual knowledge and based upon no independent investigation, that, as of the date of this Lease, the Leased Premises and Building are free from any Hazardous or Toxic Materials which are prohibited by any federal, state or local law or regulation. In the event that Hazardous or Toxic Materials are discovered upon the Leased Premises after the Commencement Date and the

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Hazardous or Toxic Materials were not placed in the Leased Premises by Landlord or any of Landlord’s agents, officers or employees, Tenant shall bring the Leased Premises into compliance with all relevant statutes, ordinances and regulations at Tenant’s sole cost.

     (e) The rights and obligations contained in this Section 6.03 shall survive the expiration or other termination of this Lease.

6.04 Entry for Repairs and Inspection.

     Tenant shall, upon reasonable advance oral notice in regards to janitorial and routine maintenance services and otherwise with advance notice by Landlord (which such notice may be sent by electronic mail), except in the case of an emergency when no notice is required, permit Landlord and its contractors, agents and representatives to enter into and upon any part of the Leased Premises at all reasonable hours to inspect and clean the same, make repairs, alterations and additions thereto, show the same to prospective tenants, lenders or purchasers, and for any other purpose as Landlord may reasonably deem necessary or desirable. Landlord shall use commercially reasonable efforts to minimize disruption to Tenant’s business in entering the Leased Premises. Tenant shall not be entitled to any abatement or reduction of Rent by reason of any such entry. In the event of an emergency, when entry to the Leased Premises shall be necessary, and if Tenant shall not be personally present to open and permit entry into the Leased Premises, Landlord or Landlord’s agent may enter the same by master key, code, card or switch, or may forcibly enter the same, without rendering Landlord or such agents liable therefor, and without, in any manner, affecting the obligations and covenants of this Lease.

6.05 Compliance with Laws; Rules of Building.

     (a) Tenant shall comply with, and Tenant shall cause its employees and agents and all other persons entering the Building under the express or implied invitation of Tenant to comply with, all laws, ordinances, orders, rules, regulations (state, federal, municipal and other agencies or bodies having any jurisdiction thereof), and any recorded covenants, conditions and restrictions of the Project, which relate to the use, condition or occupancy of the Leased Premises, the Building or the Project, including, without limitation, all local, state and federal environmental laws, and the Building Rules, as such are reasonably altered by Landlord from time to time and provided to Tenant in writing.

     (b) Landlord represents and warrants, to the best of its knowledge and based upon no independent investigation that, as of the date of this Lease, Landlord has complied with all laws, ordinances, orders, rules and regulations (state, federal, municipal and other agencies or bodies having any jurisdiction thereof) relating to the use, condition or occupancy of the Building, including the Americans with Disabilities Act of 1990 (“ADA”).

6.06 Access to Building.

     (a) Subject to Section 6.01 and the other terms and conditions set forth below, Tenant and its employees shall have access to the Building and the Leased Premises twenty-four (24) hours a day, three hundred sixty-five (365) days per year. Tenant shall have no right of access to the roof of the Leased Premises or the Building or to the roof of any building in the Project.

     (b) Tenant expressly agrees that neither Landlord nor Landlord’s partners, managers, members, agents, officers, directors, or employees shall be liable to Tenant or Tenant’s partners, managers, members, agents, officers, directors and employees or to any person entering the Leased Premises, Building or Project under the express or implied invitation of Tenant for any injury, death, loss or damage arising out of any crime attempted or committed in the Leased Premises, Building or Project, except as may be provided otherwise in Section 8 of this Lease.

     (c) Landlord shall have the right to limit access to the Building after normal business hours. Landlord expressly reserves the right, in its sole discretion, to temporarily or permanently change the location of, close, block and otherwise alter any entrances, corridors, skywalks, tunnels, doorways and walkways leading to or providing access to the Building or any part thereof and otherwise restrict the use of same, and, provided such activities do not unreasonably impair Tenant’s access to, or use of, the Leased Premises, Landlord shall not incur any liability whatsoever to Tenant as a consequence thereof. Such activities shall not be deemed to be a breach of any of Landlord’s obligations hereunder. Landlord shall exercise good faith in notifying Tenant a reasonable time in advance of any alterations, modifications or other actions of Landlord under this Section.

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6.07 Peaceful Enjoyment.

     Tenant shall and may peacefully have, hold and enjoy the Leased Premises without interference from any party claiming by or through Landlord, subject to the terms of this Lease, provided Tenant pays the Rent and other sums required to be paid by Tenant and performs all of Tenant’s covenants and agreements herein contained. This covenant and any and all other covenants of Landlord contained in this Lease shall be binding upon Landlord and its successors only with respect to breaches occurring during its and their respective ownership of Landlord’s interest in the Building. Landlord shall not be responsible for the acts or omissions of any other tenant or third party that may interfere with Tenant’s use and enjoyment of the Leased Premises; provided, however, that Landlord shall use its reasonable best efforts to enforce the Building Rules.

6.08 Relocation.

     Landlord shall have the option to relocate the Tenant to alternative space in the Project in accordance with this Section. The alternative space shall be of comparable size to the Leased Premises, and shall have approximately the same number of windows and view of the lake. Landlord shall give Tenant not less than ninety (90) calendar days’ prior written notice of any such relocation, which notice shall include the date on which Tenant shall be required to relocate or move and a description of the space to which Tenant will be relocated. Landlord shall pay reasonable out-of-pocket costs and expenses of relocating Tenant, including the cost of reconstruction of all Tenant furnished and Landlord furnished improvements to the same standards of quantity and quality as in the Leased Premises, telephone transfer charges, data cabling, moving expenses, business stationery and printing charges for relocation notice. In the event of such relocation, the alternative space shall be deemed the Leased Premises hereunder, and this Lease shall continue in full force and effect without any change in the other terms and conditions hereof, including the payment of Rent based upon the original size of the Leased Premises and not based upon the size of the premises to which Tenant is relocated; provided, however, that upon Landlord’s request, Tenant shall execute an amendment to this Lease substituting such alternative space for the space previously occupied by Tenant.

ARTICLE 7 — CONSTRUCTION, ALTERATIONS AND REPAIRS

7.01 Tenant Improvements.

     The Leased Premises shall be delivered to Tenant “as is” and without improvements or alterations, except as provided otherwise in Exhibit C attached herein. Any increases in taxes resulting from higher valuations of the Building attributable to Tenant’s Tenant Improvements, as defined in Exhibit C , or alterations in excess of typical fitups in the Building shall be paid by Tenant as Additional Rent.

7.02 Alterations.

     (a) Tenant shall make no alterations, installations, additions or improvements (including demolition of existing walls) (any of the foregoing, the “Alterations”) in, on or to the Leased Premises without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Tenant shall notify Landlord in the event that it wants to make Alterations to the Leased Premises. A description of the desired Alterations shall be included with the notice. Unless Landlord agrees otherwise, any approved Alterations shall be completed on Tenant’s behalf by architects, engineers, workmen and/or contractors hired by Landlord. Tenant shall have the right to approve pricing for any Alterations completed on its behalf. If Landlord grants Tenant the right to hire its own architects, engineers, workmen or contractors to complete the Alterations, all such work shall be designed and made in a manner (including, but not limited to, obtaining all applicable permits), by architects, engineers, workmen and contractors, reasonably satisfactory to Landlord and completed in accordance with the requirements of (c) below. Except as provided otherwise herein, all Alterations (including, without limitation, partitions, millwork, fixtures and heating, ventilating and air conditioning modifications) made to the Leased Premises by or for Tenant shall remain upon and be surrendered with the Leased Premises and become the property of Landlord at the expiration or termination of this Lease or the termination of Tenant’s right to possession of the Leased Premises. Upon the expiration or termination of the Lease or Tenant’s right to possess the Leased Premises, Tenant shall be required to remove (or reconstruct in the instance of the demolition of walls) any Alterations made and restore the area from which the removal (or reconstruction) occurred with regard to any Alterations, unless otherwise requested or agreed to by Landlord at such time Landlord approves such Alterations.

     (b) In addition to the foregoing, Tenant shall, prior to or as of the Expiration Date or termination date, remove all telephone, data wiring and fire suppression systems installed by Tenant from and for the Leased

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Premises, and Tenant shall repair any damage to the Leased Premises or Building caused by any such removal. Tenant shall bear the costs of removal of Tenant’s property from the Building and of all resulting repairs thereto.

     (c) All Alterations performed in, on or to the Leased Premises must have Landlord’s prior approval and shall (i) not alter the exterior appearance of the Building or adversely affect the structure, safety, systems or services of the Building; (ii) comply with all (A) Building safety, fire and other regulations, (B) governmental codes and permitting requirements and (C) insurance requirements; (iii) not result in any usage in excess of Building-standard of water, electricity, gas, heating, ventilating or air conditioning, (either during or after such work) unless prior written arrangements satisfactory to Landlord are entered into; (iv) be completed promptly and in a good and workmanlike manner; (v) be performed in a manner that does not cause interference or disharmony with any labor used by Landlord, Landlord’s contractors or mechanics or by any other tenant or such other tenant’s contractors or mechanics; and (vi) not cause any mechanic’s, materialman’s or other liens to attach to Tenant’s leasehold estate. Tenant shall not permit, or be authorized to permit, any liens (valid or alleged) or other claims to be asserted against Landlord or Landlord’s rights, estates and interests with respect to the Building, the Project or this Lease in connection with any work done by or on behalf of Tenant, and Tenant shall indemnify and hold Landlord harmless against any such liens.

     (d) The rights and obligations contained in this Section 7.02 shall survive the expiration or other termination of this Lease.

7.03 Maintenance and Repairs by Landlord.

     (a) Landlord shall maintain and keep in good repair, as determined by Landlord in its reasonable discretion and as is customary in other class “A” office buildings in the greater Raleigh, Durham and Chapel Hill areas of North Carolina, the following portions of the Building which are not contained within the Leased Premises: parking lots (including snow and ice removal), Building landscaping, indoor and outdoor lighting (including parking lot lighting facilities), driveways, sidewalks, fences, all structural portions (including but not limited to foundations, roof, roof membrane, windows with respect to settling issues, walls and floors), common areas inside the Building (including corridors, stairs and restrooms), elevators, heating ventilation and air conditioning systems, and all electrical, water, plumbing and other utility equipment connections and facilities.

     (b) Landlord shall perform routine maintenance and repairs necessitated by ordinary wear and tear only for Building-standard leasehold improvements in the Leased Premises.

     (c) Notwithstanding any provisions of this Lease to the contrary, all maintenance, repairs, alterations, installations, additions or improvements to the Building and/or Tenant’s leasehold improvements, which affect the Building’s structural components or mechanical, electrical or plumbing systems, shall be made by Landlord or its contractor only, and, if on behalf of Tenant, shall be paid for by Tenant in an amount equal to Landlord’s costs plus fifteen percent (15%) (except for the initial Tenant Improvements).

     (d) Landlord shall not be liable to Tenant, except as expressly provided in this Lease, for any damage or inconvenience, and Tenant shall not be entitled to any abatement or reduction of rent by reason of any maintenance, repairs, alterations, installations, additions or improvements to any part of the Building. Landlord shall use commercially reasonable efforts to complete Tenant’s repairs in an efficient manner.

7.04 Maintenance and Repairs by Tenant

     (a) Tenant shall maintain and keep in good repair all non-Building-standard leasehold improvements, but at Tenant’s written request, Landlord will perform said maintenance and repairs at Tenant’s expense, at a cost or charge equal to the costs incurred in such maintenance or repairs plus an additional charge of fifteen percent (15%). The necessity for and adequacy of said maintenance and repairs shall be measured by the standards of other class “A” office buildings, located in the greater Raleigh, Durham and Chapel Hill areas of North Carolina, for improvements of similar construction. Prior to the Commencement Date, but after all construction drawings have been prepared, Landlord shall provide Tenant with notice of any items included in the initial Tenant Improvements that are not Building-standard and therefore subject to Tenant’s maintenance and/or repair.

     (b) Tenant shall be responsible for immediately notifying Landlord of any damage done to (i) the Leased Premises, (ii) Tenant’s Building-standard and/or non-Building-standard leasehold improvements, (iii) the


 
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