Exhibit 10.3

 

LEASE AGREEMENT

 

 

between

 

 

PCCP HC Kierland, LLC,
a Delaware limited liability company,

 

as “Landlord”

 

 

and

 

 

The Ryland Group, Inc.,
a Maryland corporation,

 

as “Tenant”

 

 

Ryan Kierland Corporate Center
Scottsdale, Arizona

 

 

TABLE OF CONTENTS

 

SECTION

 

PAGE

 

 

 

 

 

1.

 

PREMISES

4

2.

 

TERM; POSSESSION

4

3.

 

RENT; SECURITY DEPOSIT

7

4.

 

RENTAL TAXES

12

5.

 

USE AND COMPLIANCE WITH LAWS

12

6.

 

TENANT IMPROVEMENTS AND ALTERATIONS

16

7.

 

MAINTENANCE AND REPAIRS

17

8.

 

TENANT’S PERSONAL PROPERTY TAXES

18

9.

 

UTILITIES AND SERVICES

18

10.

 

EXCULPATION AND INDEMNIFICATION

20

11.

 

INSURANCE

21

12.

 

DAMAGE OR DESTRUCTION

24

13.

 

CONDEMNATION

25

14.

 

ASSIGNMENT AND SUBLETTING

27

15.

 

DEFAULT AND REMEDIES

29

16.

 

LATE CHARGE AND INTEREST

32

17.

 

WAIVER

32

18.

 

ENTRY, INSPECTION AND CLOSURE

33

19.

 

SURRENDER AND HOLDING OVER

34

20.

 

ENCUMBRANCES

35

21.

 

ESTOPPEL CERTIFICATES

35

22.

 

NOTICES

36

23.

 

ATTORNEYS’ FEES

36

24.

 

QUIET POSSESSION

36

25.

 

SECURITY MEASURES

37

26.

 

FORCE MAJEURE

37

27.

 

RULES AND REGULATIONS

37

28.

 

LANDLORD’S LIABILITY

37

29.

 

CONSENTS AND APPROVALS

38

30.

 

WAIVER OF RIGHT TO JURY TRIAL

38

31.

 

BROKERS

38

32.

 

INTENTIONALLY DELETED

39

33.

 

PARKING

39

34.

 

ENTIRE AGREEMENT

39

35.

 

MISCELLANEOUS

40

36.

 

AUTHORITY

40

 

-i-

 

37.

 

SIGNAGE

40

38.

 

RIGHT OF FIRST OFFER

40

39.

 

LEASE CONTINGENCY

41

39.

 

LEASE CONTINGENCY

41

 

-ii-

 

BASIC LEASE INFORMATION

 

 

 

Lease Date:

 

For identification purposes only, the date of this Lease is February 28, 2006.

 

 

 

Landlord:

 

PCCP HC Kierland, LLC, a Delaware limited liability company

 

 

 

Tenant:

 

The Ryland Group, Inc., a Maryland corporation

 

 

 

Project:

 

Ryan Kierland Corporate Center

 

 

 

Building Address:

 

14635 North Kierland Boulevard, Scottsdale, Arizona 85254

 

 

 

Rentable Area of
Building:

 

106,548 rentable square feet

 

 

 

Premises:

 

Floor: Second

 

 

Suite Number: 200

 

 

Rentable Area: 56,608 rentable square feet

 

 

Usable Area: 53,225 usable square feet

 

 

 

Initial Term:

 

Seventy-six (76) full calendar months (plus any partial month at the beginning
of the Term)

 

 

 

Renewal Terms:

 

Two (2) additional periods of sixty (60) months each (for a total if all Renewal
Terms are exercised of one hundred twenty (120) months)

 

 

 

Commencement Date:

 

The date that is one hundred twenty (120) days following Landlord’s delivery of
the Premises to Tenant in accordance with Section 2.1 below

 

 

 

Expiration Date:

 

The last day of the seventy-sixth (76th)full calendar month in the Term

 

Base Rent:

 

Monthly Installments of
Base Rent

 

Annual Base Rent per rentable
square foot of the Premises

 

Months 01 through 04

 

$0.00

 

$0.00

 

Months 05 through 16

 

$125,009.33

 

$26.50

 

Months 17 through 28

 

$127,368.00

 

$27.00

 

Months 29 through 40

 

$129,726.67

 

$27.50

 

Months 41 through 52

 

$132,085.33

 

$28.00

 

Months 53 through 64

 

$134,444.00

 

$28.50

 

Months 65 through 76

 

$136,802.67

 

$29.00

 

 

1

 

Security Deposit:

 

$0.00

 

 

 

Tenant’s Share:

 

Approximately 53.13%

 

 

 

Operating Costs
Expense Stop:

 

An amount equal to the Operating Costs incurred by Landlord during calendar year
2006.

 

 

 

Improvement
Allowance:

 

$35.00 multiplied by the Usable Area of the Premises (or $1,862,875.00 based on
a Premises consisting of 53,225 usable square feet), subject to reduction based
upon the costs incurred by Landlord in connection with the Data Room Floor
Construction as more particularly described under Section 25 of Exhibit C to
this Lease.

 

 

 

Covered Reserved
Parking Spaces:

 

Fifty-three (53) covered/reserved parking stalls

 

 

 

Landlord’s Address
for Payment of Rent:

 

PCCP HC Kierland, LLC
c/o Transwestern Commercial Services
10040 North 25th Avenue, Suite 125
Phoenix, Arizona 85021
Attn: Joanne Damman

 

 

 

Business Hours:

 

Between 7:00 a.m. and 6:00 p.m., Monday through Friday, and between 8:00 a.m.
and noon on Saturday

 

 

 

Landlord’s Address
For Notices:

 

PCCP HC Kierland, LLC
c/o Transwestern Commercial Services
10040 North 25th Avenue, Suite 125
Phoenix, Arizona 85021
Attn: Joanne Damman

 

 

 

with a copy to:

 

PCCP HC Kierland, LLC
c/o Hibernia Capital Advisors, LLC
2398 East Camelback Road, Suite 245
Phoenix, Arizona 85016
Attn: Richard A. O’Brien

 

 

 

with a copy to:

 

Mr. R. Michael Valenzuela
Valenzuela Law Group, PLC
2398 East Camelback Road, Suite 760
Phoenix, Arizona 85016

 

2

 

Tenant’s Address
For Notices:

 

The Ryland Group, Inc.

6300 Canoga Avenue, 14th Floor
Woodlands, California 91367
Attn: Eric Menyuk

 

 

 

Landlord’s Broker:

 

Lee & Associates (Tom Boyle)

 

 

 

Tenant’s Broker:

 

Travers Realty Company (Jim Travers) and Core Realty Advisors (Mike Cavanaugh)

 

 

 

Property Manager:

 

Transwestern Commercial Services

 

Exhibits:

 

 

Exhibit A:

 

Legal Description of the Land

Exhibit B:

 

The Premises

Exhibit C:

 

Construction Rider

Exhibit D:

 

Building Rules

Exhibit E:

 

Subordination, Non-Disturbance and Attornment Agreement

Exhibit F:

 

Operating Costs Exclusions

Exhibit G:

 

Exterior Building Signage Locations

Exhibit G-1:

 

Landlord Approved Signage

 

The Basic Lease Information set forth above is part of the Lease. In the event
of any conflict between any provision in the Basic Lease Information and the
Lease, the Lease shall control.

 

3

 

THIS LEASE is made as of the Lease Date set forth in the Basic Lease
Information, by and between the Landlord identified in the Basic Lease
Information (“Landlord”), and the Tenant identified in the Basic Lease
Information (“Tenant”). Landlord and Tenant hereby agree as follows:

 

1.                                       PREMISES. Landlord hereby leases to
Tenant, and Tenant hereby leases from Landlord, upon the terms and subject to
the conditions of this Lease, the space identified in the Basic Lease
Information as the Premises (the “Premises”), in the Building located at the
address specified in the Basic Lease Information (the “Building”). The land upon
which the Building is located is described on Exhibit A (the “Land”). The
approximate configuration and location of the Premises is shown on Exhibit B.
Landlord and Tenant agree that, for all purposes of this Lease, the Rentable
Area of the Premises, the Usable Area of the Premises and the Rentable Area of
the Building shall be as specified in the Basic Lease Information. For purposes
of Landlord’s determination of the Rentable Area and Usable Area, the load
factor (the Floor R/U Ratio) is six and four-tenths percent (6.4%). The
Building, the Land, and all improvements thereon (collectively, the “Property”)
are part of the Project identified in the Basic Lease Information (the
“Project”).

 

2.                                       TERM; POSSESSION.

 

2.1 Term. The term of this Lease (the “Term”) shall commence on the Commencement
Date as described below and, unless sooner terminated, shall expire on the
Expiration Date set forth in the Basic Lease Information (the “Expiration
Date”). Subject to the timely satisfaction of the contingencies set forth in
Sections 39 and 40 below, Landlord will deliver the Premises to Tenant on or
before April 1, 2006 so that Tenant may cause the Tenant Improvements to be
constructed therein as soon as is reasonably practicable thereafter. Tenant
acknowledges and agrees that, subject to Landlord’s representations and
warranties concerning the Base Building as described in the Construction Rider
attached as Exhibit C (the “Construction Rider”), the Premises are being leased
to Tenant in an “AS IS” condition, without representation, warranty or covenant
of or from Landlord and without any obligation of Landlord to construct any
tenant improvements of any kind or character whatsoever. Tenant further
acknowledges that, except as expressly set forth to the contrary in this Lease,
Landlord has made no representations or warranties, express or implied,
concerning the tenant improvements presently existing at, or the condition of,
the Premises, and Tenant further acknowledges that it has had adequate
opportunity to inspect and approve, and has adequately inspected and approved,
the tenant improvements presently existing at, and the condition of, the
Premises. The “Commencement Date” shall be the date that is one hundred twenty
(120) days following Landlord’s delivery of the Premises to Tenant as specified
above in this Section notwithstanding the actual date of Substantial Completion
of the Tenant Improvements. Tenant shall not do anything that could delay
Substantial Completion of the Tenant Improvements and, in the event the Tenant
Improvements are not Substantially Completed on or before the Commencement Date,
then in that event Tenant shall complete the Tenant Improvements at the earliest
practicable date thereafter. When the Commencement Date has been established,
Landlord and Tenant shall confirm the Commencement Date and the Expiration Date
in writing.

 

4

 

2.2                                  Tenant’s Property. Tenant agrees that
Landlord shall not be liable in any way for any injury, loss or damage which may
occur to any of Tenant’s property placed upon or installed in the Premises prior
to the Commencement Date, the same being at Tenant’s sole risk, and Tenant shall
be liable for all injury, loss or damage to persons or property arising as a
result of such entry into the Premises by Tenant or its Representatives (as
hereinafter defined).

 

2.3                                  Occupancy of Premises. Tenant shall have
the right to occupy the Premises throughout the Term, seven (7) days a week,
twenty-four (24) hours a day, subject to all of the terms of this Lease,
including, without limitation, casualty, condemnation, Force Majeure or other
events beyond the control of Landlord. From and after the Commencement Date,
during any period that Tenant is not occupying and operating the Premises,
Tenant will keep those portions of the Premises visible from Common Areas (as
hereinafter defined) from appearing abandoned, including, without limitation,
keeping such areas lighted during Business Hours, free of stored materials,
clean and otherwise maintained such that it is not apparent that business is not
being conducted therein.

 

2.4                                  Renewal Options. In the absence of an Event
of Default by Tenant when it exercises a Renewal Option or when a Renewal Term
begins, Tenant has the option (each, a “Renewal Option”) to renew this Lease for
the number of successive terms set forth in the Basic Lease Information (each, a
“Renewal Term”) (for a total if all Renewal Options are exercised of ten
(10) years) by giving notice of exercise of a Renewal Option to Landlord at
least nine (9) months before the end of the then-current Term. If Tenant fails
to deliver timely written notice of exercise of a Renewal Option to Landlord,
all remaining Renewal Options shall lapse and Tenant will have no further
privilege to extend the Term. Time is of the essence of this provision. The
terms of the Renewal Terms are as follows:

 

(a)                    Each Renewal Term shall be on the same terms and
conditions of this Lease (unless clearly inapplicable), except that Base Rent
during each Renewal Term shall be based upon the fair market rental rate for
comparable space in buildings of similar size, type, quality, age and location
prevailing at the start of each Renewal Term (“Market Rental Rate”). Within
thirty (30) days after Landlord receives Tenant’s notice of exercise of a
Renewal Option, Landlord will reasonably calculate the Market Rental Rate and
will notify Tenant of same. Determination of the effective Market Rental Rate
will give appropriate consideration to rental rates for renewals, rental
escalations, common area charges, operating costs, and other terms that would
affect the economics in a similar lease renewal at a competing building in the
area.

 

(b)                   If Tenant disputes Landlord’s determination of the Market
Rental Rate for a Renewal Term, Tenant will deliver notice of such dispute,
together with Tenant’s proposed Market Rental Rate, to Landlord within five days
of Tenant’s receipt of Landlord’s determination. The parties will then attempt
in good faith to agree upon the Market Rental Rate. If they fail to agree within
fifteen (15) days, they will within seven days thereafter mutually appoint an
appraiser to select the

 

5

 

Market Rental Rate in the manner set forth below. The appraiser must have at
least five years of full-time commercial appraisal experience with projects
comparable to the Project and be a member of the American Institute of Real
Estate Appraisers or a similar appraisal association. The appraiser shall not
have any material financial or business interest in common with either of the
parties. If Landlord and Tenant are unable to agree upon an appraiser within
such seven days, the parties will within five days thereafter each appoint an
appraiser meeting the criteria set forth above, which appraisers will, within
seven days of their appointment, mutually select a third appraiser meeting the
criteria set forth above to select the Market Rental Rate in the manner set
forth below. Within seven days of the appointment (either by agreement or
selection) of the deciding appraiser, Landlord and Tenant will submit to that
appraiser their respective determinations of the Market Rental Rate and any
related information. Within twenty (20) days thereafter, the appraiser will
review each party’s submittal (and such other information as the appraiser deems
necessary) and will select one party’s submittal as representing the most
reasonable approximation of the Market Rental Rate for the Premises. The rate so
selected will be used for the applicable Renewal Term as the Base Rent rate.
Subject to the previous sentence, if the appraiser timely receives one party’s
submittal, but not both, the appraiser must designate the submitted rent rate as
the Market Rental Rate for the applicable Renewal Term. Landlord and Tenant will
each pay, directly to the appraiser selecting the Market Rental Rate, one-half
of all fees, costs and expenses of such appraiser. Landlord and Tenant will each
separately pay all costs, fees and expenses of their respective additional
appraiser (if any) appointed to determine the deciding appraiser.

 

(c)                    In addition to paying Base Rent determined pursuant to
this Section 2.4, Tenant will continue to pay Additional Rent and all other sums
required under this Lease during all Renewal Terms.

 

(d)                   If this Lease or Tenant’s right to possession of the
Premises shall expire or terminate for any reason whatsoever before Tenant
exercises all Renewal Options, then immediately upon such expiration or
termination, all Renewal Options shall simultaneously terminate and become null
and void. In addition, Tenant may not exercise a Renewal Option if it is
subletting or has assigned all or any portion of the Premises other than to a
Tenant Affiliate (as defined below) at the time Tenant seeks to exercise such
Renewal Option. The Renewal Options are personal to Tenant and its Tenant
Affiliates, and under no circumstances shall a subtenant or an assignee other
than a Tenant Affiliate have the right to exercise any Renewal Option. Until
such time as Tenant properly exercises a Renewal Option, all references to the
“Term” of this Lease will mean the Initial Term only. If Tenant properly
exercises its right to renew this Lease for a Renewal Term, then all references
to the “Term” of this Lease will include such Renewal Term.

 

6

 

3.                                       RENT; SECURITY DEPOSIT.

 

3.1                                 Base Rent. Tenant shall pay to Landlord
annual rent (“Base Rent”) in the amount set forth in the Basic Lease
Information, without prior notice or demand, in monthly installments equal to
one-twelfth (1/12) of the Base Rent, on or before the first day of each and
every calendar month during the Term, except that Base Rent for the first full
calendar month in which Base Rent is payable shall be paid upon Tenant’s
execution of this Lease and Base Rent for any partial month at the beginning of
the Term shall be paid on the Commencement Date. Base Rent for any partial month
at the beginning or end of the Term shall be prorated based on the actual number
of days in the month.

 

3.2                                 Additional Rent: Operating Costs and Taxes.

 

(a)          Definitions.

 

1)              “Operating Costs” means all Taxes (as defined below) and other
costs of managing, operating, maintaining and repairing the Property in good
condition and repair, including, without limitation, all costs, expenditures,
fees and charges set forth below. Operating Costs include:

 

(A) operation, maintenance and repair of the Property (including maintenance,
repair and replacement of glass, the roof covering or membrane, the parking lot
and driveways (including re-painting, re-striping, seal-coating, cleaning,
sweeping, resurfacing, patching and repairing parking areas and other paved
surfaces), sidewalks, exterior light fixtures, common signage, other common
areas and elements, regular painting of the exterior of the Building and lawn
care and landscaping). The terms “repair” or “repairs” shall include reasonable
replacements or renewals when necessary.

 

(B) utilities and services (including, without limitation, electricity, water,
sewer, gas (if used at the Project), telecommunications facilities and
equipment, recycling programs and trash removal), and associated supplies and
materials.

 

(C) wages, benefits and other compensation (including employment taxes and
fringe benefits) for persons who perform duties in connection with the
operation, management, maintenance and repair of the Property up to, and
including, level of Building Manager (or equivalent), such compensation to be
appropriately allocated for persons who also perform duties unrelated to the
Property.

 

(D) property (including coverage for earthquake and flood if carried by
Landlord), liability, rental income and other insurance relating to the
Property, and expenditures for deductible amounts paid under such insurance.

 

7

 

(E) licenses, permits and inspections.

 

(F) complying with the requirements of any law, statute, ordinance or
governmental rule or regulation or any orders pursuant thereto (collectively
“Laws”), but only to the extent such Laws are enacted and enforceable from and
after the date of this Lease.

 

(G) amortization of capital improvements required to comply with Laws, or which
are intended to reduce Operating Costs or improve the utility, efficiency or
capacity of any of the Building Systems, with interest on the unamortized
balance at the rate paid by Landlord on funds borrowed to finance such capital
improvements (or, if Landlord finances such improvements out of Landlord’s funds
without borrowing, the rate that Landlord would have paid to borrow such funds,
as reasonably determined by Landlord), over such useful life as Landlord shall
reasonably determine, but in no event greater than ten percent (10%) per annum.

 

(H) an office in the Project for the management of the Property, including
expenses of furnishing and equipping such office and the rental value of any
space occupied for such purposes.

 

(I) commercially reasonable property management fees not to exceed three percent
(3%) of Landlord’s gross rental revenue received for that fiscal year for the
Property.

 

(J) fees and costs for accounting, legal and other professional services
incurred in connection with the operation of the Property and the calculation of
Operating Costs.

 

(K) a reasonable allowance for depreciation on machinery and equipment used to
maintain the Property and on other personal property owned by Landlord in the
Property (including window coverings and carpeting in common areas).

 

(L) fees and costs incurred in contesting the validity or applicability of any
Laws that may affect the Property to the extent that contesting the Law results
in a savings to Tenant. “Savings” under this section would mean, by example, if
any Operating Expense is reduced (or if a proposed increase is avoided or
reduced) because a Law was contested, Landlord may include in its computation of
Operating Expenses the costs of any fees and costs incurred in connection with
such contest up to the amount of any Operating Expense reduction obtained in
connection with the contest or any Operating Expense increase avoided or reduced
in connection with the contest, as the case may be.

 

8

 

(M) the Building’s or Property’s share of any shared or common area maintenance
fees and expenses, property association fees, dues and assessments, and all
payments under any recorded documents (excluding mortgages and deeds of trust)
affecting the Property (including costs and expenses of operating, managing,
owning and maintaining the common areas of the Project and any fitness center or
conference center in the Project).

 

(N) janitorial services, window washing, cleaning, rubbish removal and other
services provided to the Property.

 

(o) security and access control equipment and services.

 

(P) subject to the remaining provisions of this Section 3.2(a)(l), any other
cost, expenditure, fee or charge, whether or not hereinbefore described, which
in accordance with generally accepted property management practices would be
considered an expense of managing, operating, maintaining and repairing the
Property.

 

Operating Costs shall not include:

 

(i) capital improvements (except as otherwise provided above).

 

(ii) costs of special services rendered to individual tenants (including Tenant)
for which a special charge is made.

 

(iii) interest and principal payments on loans or indebtedness secured by the
Building.

 

(iv) costs of interior improvements for Tenant or other tenants of the Building.

 

(v) costs of services or other benefits of a type which are not available to
Tenant but which are available to other tenants or occupants, and costs for
which Landlord is reimbursed by other tenants of the Building other than through
payment of tenants’ shares of Operating Costs.

 

(vi) leasing commissions, attorneys’ fees and other expenses incurred in
connection with leasing space in the Building or enforcing such leases.

 

9

 

(vii) depreciation or amortization, other than as specifically enumerated in the
definition of Operating Costs above.

 

(viii) costs, fines or penalties incurred due to Landlord’s violation of any
Law.

 

(ix) commercially unreasonable contributions to employee pension plans.

 

(x) Any other exclusions from Operating Costs specifically described on
Exhibit F attached hereto and incorporated herein.

 

2)              “Taxes” means all real property taxes and general, special or
district assessments or other governmental impositions, of whatever kind, nature
or origin, imposed on or by reason of the ownership or use of the Property; any
state, county or municipal governmental property lease excise tax or the
equivalent thereof; service payments in lieu of taxes and taxes and assessments
of every kind and nature whatsoever levied or assessed in addition to, in lieu
of or in substitution for existing or additional real or personal property taxes
on the Property or the personal property described above; and the reasonable
cost of contesting by appropriate proceedings the amount or validity of any
taxes, assessments or charges described above. Taxes shall include all Taxes
either payable in, or attributable to, each calendar year or portion thereof
during the Term.

 

3)              “Tenant’s Share” means the Rentable Area of the Premises divided
by the Rentable Area of the Building. If the Rentable Area of the Premises is
increased by Tenant’s leasing of additional space hereafter, Tenant’s Share
shall be increased accordingly.

 

(b)         Additional Rent.

 

1)              Tenant shall pay Landlord as “Additional Rent” for each calendar
year during the Term Tenant’s Share of the amount by which Operating Costs for
such year exceed the Operating Costs Expense Stop, which amount shall be
prorated for the last year of the Term if such year is less than a full calendar
year. Both Landlord and Tenant acknowledge that basing the Operating Costs
Expense Stop on expenses for 2006, the intent is to base such Expense Stop on
the actual Operating Expenses that Tenant would have incurred had the Building
been fully occupied the entire year. Therefore, Tenant will not incur any costs
associated with Tenant’s Share of Operating Costs until January 2007. In
addition, in determining the Operating Costs Expense Stop, the actual Operating
Costs incurred in 2006 that vary with occupancy shall be adjusted to an amount
reasonably determined by Landlord to be the Operating Costs that would have been
incurred and paid had such occupancy been at least ninety-five percent (95%)
during all of 2006.

 

10

 

2)              Prior to the beginning of the Term and each calendar year
thereafter, Landlord shall notify Tenant of Landlord’s estimate of Operating
Costs and Tenant’s Additional Rent for the remaining and following calendar
year, as applicable. Commencing on the first day of the Term and continuing on
the first day of every month thereafter, Tenant shall pay to Landlord
one-twelfth (1/12th) of the estimated Additional Rent. If Landlord thereafter
estimates that Operating Costs for any year will vary from Landlord’s prior
estimate, Landlord may, by notice to Tenant, revise the estimate for such year
(and Additional Rent shall thereafter be payable based on the revised estimate).

 

3)              As soon as reasonably practicable after the end of each calendar
year during the Term, Landlord shall furnish Tenant a reconciliation statement
with respect to such year, showing Operating Costs and Additional Rent for the
year, and the total payments made by Tenant with respect thereto. Unless Tenant
raises any objections to Landlord’s statement within thirty (30) days after
receipt of the same, such statement shall presumptively be deemed correct and
Tenant shall have no right thereafter to dispute such statement or any item
therein or the computation of Additional Rent based thereon, subject only to
Tenant’s right of audit. If Tenant does object to such statement, then Landlord
shall provide Tenant with reasonable verification of the figures shown on the
statement and the parties shall negotiate in good faith to resolve any disputes.
Any objection of Tenant to Landlord’s statement and resolution of any dispute
shall not postpone the time for payment of any amounts due Tenant or Landlord
based on Landlord’s statement, nor shall any failure of Landlord to deliver
Landlord’s statement in a timely manner relieve Tenant of Tenant’s obligation to
pay any amounts due Landlord based on Landlord’s statement.

 

4)              If Tenant’s Additional Rent as finally determined for any
calendar year exceeds the total payments made by Tenant on account thereof,
Tenant shall pay Landlord the deficiency within fifteen (15) business days of
Tenant’s receipt of Landlord’s statement. If the total payments made by Tenant
on account thereof exceed Tenant’s Additional Rent as finally determined for
such year, Tenant’s excess payment shall be credited toward the rent next due
from Tenant under this Lease. For any partial calendar year at the beginning or
end of the Term, Additional Rent shall be prorated on the basis of a 365-day
year by computing Tenant’s Share of Operating Costs for the entire year and then
prorating such amount for the number of days during such year included in the
Term. Notwithstanding the termination of this Lease, Landlord shall pay to
Tenant or Tenant shall pay to Landlord, as the case may be, within fifteen (15)
business days after Tenant’s receipt of Landlord’s final statement for the
calendar year in which this Lease terminates, the difference between Tenant’s
Additional Rent for that year, as finally determined by Landlord, and the total
amount previously paid by Tenant on account thereof.

 

5)              Tenant shall have the right at any time during Landlord’s normal
business hours and upon reasonable prior notice to Landlord, which shall not be

 

11

 

given later than the first anniversary of Tenant’s receipt of Landlord’s
reconciliation statement for the preceding year, to audit Landlord’s books and
records with respect to such reconciliation statement, at Tenant’s sole expense.
Should the audit disclose an overcharge to Tenant or an underpayment to
Landlord, the party owing an amount to the other party shall reimburse the other
party within fifteen (15) business days after the results of the audit are known
to Landlord and Tenant. Additionally, if the audit report shows that Tenant was
overcharged by five percent (5%) or more, Landlord shall reimburse Tenant for
its reasonable out of pocket costs of conducting the audit, not to exceed
$3,000.00 per audit.

 

3.3                                 Payment of Rent. All amounts payable or
reimbursable by Tenant under this Lease, including late charges and interest,
shall constitute “Rent” and shall be payable and recoverable as Rent in the
manner provided in this Lease. All sums payable to Landlord on demand under the
terms of this Lease shall be payable within ten (10) days after notice from
Landlord of the amounts due. Except as specifically provided for in this Lease
to the contrary, all Rent shall be paid without offset, recoupment or deduction
in lawful money of the United States of America to Landlord at Landlord’s
Address for Payment of Rent as set forth in the Basic Lease Information, or to
such other person or at such other place as Landlord may from time to time
designate.

 

3.4                                 Intentionally Deleted.

 

4.                                       RENTAL TAXES. Tenant shall pay to
Landlord with each installment of Rent the amount of any gross receipts,
transaction privilege, sales, excise or similar tax, exclusive of any income
tax, payable by Landlord on account of this Lease or Tenant’s payment of such
items to, or on behalf of, Landlord.

 

5.                                       USE AND COMPLIANCE WITH LAWS.

 

5.1                                 Use. The Premises shall be used and occupied
solely for general business office purposes for Tenant’s mortgage and
information technology departments and for no other use or purpose. Tenant shall
comply with all present and future Laws relating to Tenant’s use or occupancy of
the Premises (and make any repairs, alterations or improvements as required to
comply with all such Laws), and shall observe the Building Rules (as defined in
Section 27 - Rules and Regulations). Tenant shall not do, bring, keep or sell
anything in or about the Premises that is prohibited by, or that will cause a
cancellation of or an increase in the existing premium for, any insurance policy
covering the Property or any part thereof. Tenant shall not permit the Premises
to be occupied or used in any manner that will constitute waste or a nuisance,
or disturb the quiet enjoyment of or otherwise annoy other tenants in the
Building. Except as may be provided in the Construction Rider, Tenant shall not,
without the prior consent of Landlord, (i) bring into the Building or the
Premises anything that may cause substantial noise, odor or vibration, overload
the floors in the Premises or the Building or any of the heating, ventilating
and air-conditioning (“HVAC”), mechanical, elevator, plumbing, electrical, fire
protection, life safety, security or other systems in the Building (“Building
Systems”), or jeopardize the structural integrity of the Building or any part
thereof; (ii) connect to the utility systems of the Building any apparatus,
machinery or

 

12

 

 

other equipment other than typical office equipment; or (iii) connect to any
electrical circuit in the Premises any equipment or other load with aggregate
electrical power requirements in excess of 80% of the rated capacity of the
circuit.

 

5.2                                 Hazardous Materials.

 

(a)          Definitions.

 

1)              “Hazardous Materials” shall mean any substance: (A) that now or
in the future is regulated or governed by, requires investigation or remediation
under, or is defined as a hazardous waste, hazardous substance, pollutant or
contaminant under, any governmental statute, code, ordinance, regulation,
rule or order, and any amendment thereto, including the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.  §9601 et
seq., and the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq.,
or (B) that is toxic, explosive, corrosive, flammable, radioactive,
carcinogenic, dangerous or otherwise hazardous, including gasoline, diesel fuel,
petroleum hydrocarbons, polychlorinated biphenyls (PCBs), asbestos, radon and
urea formaldehyde foam insulation.

 

2)              “Environmental Requirements” shall mean all present and future
Laws, orders, permits, licenses, approvals, authorizations and other
requirements of any kind applicable to Hazardous Materials.

 

3) “Handled by Tenant” and “Handling by Tenant” shall mean and refer to any
installation, handling, generation, storage, use, disposal, discharge, release,
abatement, removal, transportation, or any other activity of any type by Tenant
or its agents, employees, contractors, licensees, assignees, sublessees,
transferees or representatives (collectively, “Representatives”) or its guests,
customers, invitees, or visitors (collectively, “Visitors”), at or about the
Premises in connection with or involving Hazardous Materials.

 

4) “Environmental Losses” shall mean all costs and expenses of any kind, damages
(including foreseeable and unforeseeable consequential damages), fines and
penalties incurred in connection with any violation of or compliance with
Environmental Requirements, and all losses of any kind attributable to the
diminution of value, loss of use or adverse effects on marketability or use of
any portion of the Premises or the Property.

 

(b)                     Tenant’s Covenants. No Hazardous Materials shall be
Handled by Tenant at or about the Premises or Property without Landlord’s prior
written consent, which consent may be granted, denied, or conditioned upon
compliance with Landlord’s requirements, all in Landlord’s absolute discretion.
Notwithstanding the foregoing, normal quantities and use of those Hazardous
Materials customarily used in the conduct of general office activities, such as
copier

 

13

 

fluids and cleaning supplies (“Permitted Hazardous Materials”), may be used and
stored at the Premises without Landlord’s prior written consent, provided that
Tenant’s activities at or about the Premises and Property and the Handling by
Tenant of all Hazardous Materials shall comply at all times with all
Environmental Requirements. At the expiration or termination of the Lease,
Tenant shall promptly remove from the Premises and Property all Hazardous
Materials Handled by Tenant at the Premises or the Property. Tenant shall keep
Landlord fully and promptly informed of all Handling by Tenant of Hazardous
Materials other than Permitted Hazardous Materials. Tenant shall be responsible
and liable for the compliance with all of the provisions of this Section by all
of Tenant’s Representatives and Visitors, and all of Tenant’s obligations under
this Section (including its indemnification obligations under paragraph
(e) below) shall survive the expiration or termination of this Lease.

 

(c)                      Compliance. Tenant shall at Tenant’s expense promptly
take all actions required by any governmental agency or entity in connection
with or as a result of the Handling by Tenant of Hazardous Materials at or about
the Premises or the Property, including inspection and testing, performing all
cleanup, removal and remediation work required with respect to those Hazardous
Materials, complying with all closure requirements and post-closure monitoring,
and filing all required reports or plans. All of the foregoing work and all
Handling by Tenant of all Hazardous Materials shall be performed in a good, safe
and workmanlike manner by consultants qualified and licensed to undertake such
work and in a manner that will not interfere with any other tenant’s quiet
enjoyment of the Property or Landlord’s use, operation, leasing and sale of the
Property. Tenant shall deliver to Landlord prior to delivery to any governmental
agency, or promptly after receipt from any such agency, copies of all permits,
manifests, closure or remedial action plans, notices, and all other documents
relating to the Handling by Tenant of Hazardous Materials at or about the
Premises or the Property. If any lien attaches to the Premises or the Property
in connection with or as a result of the Handling by Tenant of Hazardous
Materials, and if Tenant does not cause the same to be released, by payment,
bonding or otherwise, within ten (10) days after the attachment thereof,
Landlord shall have the right but not the obligation to cause the same to be
released and any sums expended by Landlord (plus Landlord’s administrative
costs) in connection therewith shall be payable by Tenant on demand.

 

(d)                     Landlord’s Rights. Landlord shall have the right, but
not the obligation, to enter the Premises at any reasonable time (i) to confirm
Tenant’s compliance with the provisions of this Section 5.2, and (ii) to perform
Tenant’s obligations under this Section if Tenant has failed to do so after
reasonable notice to Tenant. Landlord shall also have the right to engage
qualified Hazardous Materials consultants to inspect the Premises and review the
Handling by Tenant of Hazardous Materials, including review of all permits,
reports, plans, and other documents regarding same. Tenant shall pay to Landlord
on demand the costs of Landlord’s consultants’ fees and all costs incurred by
Landlord in performing Tenant’s obligations under this

 

14

 

Section. Landlord shall use reasonable efforts to minimize any interference with
Tenant’s business caused by Landlord’s entry into the Premises, but Landlord
shall not be responsible for any interference caused thereby.

 

(e)                      Tenant’s Indemnification. Tenant agrees to indemnify,
defend, protect and hold harmless Landlord and its partners or members and its
or their partners, members, directors, officers, shareholders, employees and
agents from all Environmental Losses and all other claims, actions, losses,
damages, liabilities, costs and expenses of every kind, including reasonable
attorneys’, experts’ and consultants’ fees and costs, incurred at any time and
arising from or in connection with the Handling by Tenant of Hazardous Materials
at or about the Property or Tenant’s failure to comply in full with all
Environmental Requirements with respect to the Premises.

 

(f)                        Landlord’s Representations. Landlord represents to
Tenant that the Base Building does not contain any Hazardous Materials other
than insubstantial amounts, if any, in quantities not having any materially
adverse effect on Tenant’s health and safety, and that Landlord has not released
any Hazardous Materials onto the Property in violation of Environmental
Requirements. Landlord is making no further representations to Tenant with
respect to Hazardous Materials.

 

5.3                                Americans With Disabilities Act. The parties
agree that the liabilities and obligations of Landlord and Tenant under that
certain federal statute commonly known as the Americans With Disabilities Act,
as well as the regulations and accessibility guidelines promulgated thereunder,
as each of the foregoing is supplemented or amended from time to time
(collectively, the “ADA”), shall be apportioned as follows:

 

(a)                      Except as otherwise provided in (c) below, if the
structural elements of the Premises or any other portion of the Base Building
(as defined in the Construction Rider) are not in compliance with the public
accommodations provisions of the ADA on the Commencement Date, including
lavatory facilities, such nonconformity shall be promptly made to comply by
Landlord.

 

(b)                     Except as otherwise provided in (c) below, from and
after the commencement date of the Lease, Tenant covenants and agrees to conduct
its operations within the Premises in compliance with the ADA. If any of the
Premises fails to comply with the ADA, such nonconformity shall be promptly made
to comply by Tenant. In the event that Tenant elects to undertake any
alterations to, for or within the Premises, including initial build-out work,
Tenant agrees to cause such alterations to be performed and constructed in
compliance with the ADA.

 

(c)                      Notwithstanding the foregoing, Tenant shall cause all
parts of the Premises, the Building or the Project designed by Tenant or its own
architects, space planners and designers (“Tenant Design”) to comply with the
ADA, and Landlord

 

15

 

shall have no responsibility therefor or liability for any noncompliance
resulting from Tenant Design.

 

6.                                       TENANT IMPROVEMENTS AND ALTERATIONS.

 

6.1                                 Landlord and Tenant shall perform their
respective obligations with respect to design and construction of any
improvements to be constructed and installed in the Premises as provided in the
Construction Rider attached hereto as Exhibit C. Except for (i) any improvements
to be constructed by Tenant as provided in the Construction Rider and
(ii) non-structural alterations not affecting the Building Systems and costing
less than $50,000.00 in the aggregate (for which no Landlord consent shall be
required), Tenant shall not make any alterations, improvements or changes to the
Premises, including installation of any security system or telephone or data
communication wiring (“Alterations”), without Landlord’s prior written consent,
not to be unreasonably withheld, conditioned or delayed; provided, however, that
it shall in all events be reasonable for Landlord to withhold such consent if
the proposed Alterations affect the structure of the Building and/or any of the
Building Systems. Any such Alterations shall be completed by Tenant at Tenant’s
sole cost and expense: (i) with due diligence, in a good and workmanlike manner,
using new materials; (ii) in compliance with plans and specifications approved
by Landlord; (iii) in compliance with the construction rules and regulations
promulgated by Landlord from time to time; (iv) in accordance with all
applicable Laws (including all work, whether structural or non-structural,
inside or outside the Premises, required to comply fully with all applicable
Laws and necessitated by Tenant’s work); and (v) subject to all conditions which
Landlord may in Landlord’s reasonable discretion impose. Such conditions may
include requirements for Tenant to: (i) provide payment or performance bonds or
additional insurance (from Tenant or Tenant’s contractors, subcontractors or
design professionals); (ii) use contractors or subcontractors designated by
Landlord (provided that such contractors or sub-contractors priced competitively
with others chosen by Tenant); and (iii) remove all or part of the Alterations
prior to or upon expiration or termination of the Term, as designated by
Landlord prior to the commencement of such Alterations. If any work outside the
Premises, or any work on or adjustment to any of the Building Systems, is
required in connection with or as a result of Tenant’s work, such work shall be
performed at Tenant’s expense by contractors designated by Landlord (provided
that such contractors or sub-contractors are priced competitively with market
rates). Landlord’s right to review and approve (or withhold approval of)
Tenant’s plans, drawings, specifications, contractor(s) and other aspects of
construction work proposed by Tenant is intended solely to protect Landlord, the
Property and Landlord’s interests. No approval or consent by Landlord shall be
deemed or construed to be a representation or warranty by Landlord as to the
adequacy, sufficiency, fitness or suitability of the proposed Alterations or
compliance thereof with applicable Laws or other requirements. Except as
otherwise provided in Landlord’s consent, all Alterations shall upon
installation become part of the realty and be the property of Landlord.

 

6.2                                 Before making any Alterations, Tenant shall
submit to Landlord for Landlord’s prior approval reasonably detailed final plans
and specifications prepared by a licensed architect or engineer, a copy of the
construction contract, including the name of the contractor and all
subcontractors proposed by Tenant to make the Alterations, and a copy of the
contractor’s license. Tenant shall reimburse Landlord upon demand for any
reasonable expenses incurred by

 

16

 

Landlord in connection with any Alterations made by Tenant, including reasonable
fees charged by Landlord’s contractors or consultants to review plans and
specifications prepared by Tenant and to update the existing as-built plans and
specifications of the Building to reflect the Alterations. Tenant shall obtain
all applicable permits, authorizations and governmental approvals and deliver
copies of the same to Landlord before commencement of any Alterations.

 

6.3                                 Tenant shall keep the Premises and the
Property free and clear of all mechanics’, materialmen’s, contractors’ or other
liens arising out of any work performed, materials furnished or obligations
incurred by Tenant. If any such lien attaches to the Premises or the Property,
and Tenant does not cause the same to be released by payment, bonding or
otherwise within ten (10) days after notice of the attachment thereof, Landlord
shall have the right but not the obligation to cause the same to be released,
and any sums expended by Landlord (plus Landlord’s administrative costs) in
connection therewith shall be payable by Tenant on demand with interest thereon
from the date of expenditure by Landlord at the Interest Rate (as defined in
Section 16.2 -Interest). Tenant shall give Landlord at least ten (10) business
days’ notice prior to the commencement of any Alterations and cooperate with
Landlord in posting and maintaining notices of non-responsibility in connection
therewith.

 

6.4                                 Subject to the provisions of Section 5 - Use
and Compliance with Laws and the foregoing provisions of this Section, Tenant
may install and maintain furnishings, equipment, movable partitions, business
equipment and other trade fixtures (“Trade Fixtures”) in the Premises, provided
that the Trade Fixtures do not become an integral part of the Premises or the
Building, without first obtaining approval from Landlord. Tenant shall promptly
repair any damage to the Premises or the Building caused by any installation or
removal of such Trade Fixtures.

 

7.                                       MAINTENANCE AND REPAIRS.

 

7.1                                 By taking possession of the Premises, Tenant
agrees that the Premises are then in a good and tenantable condition. During the
Term, Tenant at Tenant’s expense but under the direction of Landlord, shall
repair and maintain the Premises, including the interior walls, floor coverings,
ceiling (ceiling tiles and grid), Tenant Improvements, Alterations, fire
extinguishers, outlets and fixtures, and any appliances (including dishwashers,
hot water heaters and garbage disposers) in the Premises, in a first class
condition, and keep the Premises in a clean, safe and orderly condition.

 

7.2                                 Landlord shall maintain or cause to be
maintained in reasonably good order, condition and repair, the structural
portions of the roof, foundations, floor slab and exterior walls of the
Building, the Building Systems, and the public and common areas of the Property;
provided, however, that Tenant shall pay the cost of repairs for any damage
occasioned by Tenant’s use of the Premises or the Property or any act or
omission of Tenant or Tenant’s Representatives or Visitors, to the extent (if
any) not covered by Landlord’s property insurance. Landlord shall be under no
obligation to inspect the Premises. Tenant shall promptly report in writing to
Landlord any defective condition known to Tenant which Landlord is required to
repair.

 

17

 

7.3                                 Landlord hereby reserves the right, at any
time and from time to time, without liability to Tenant, and without
constituting an eviction, constructive or otherwise, or entitling Tenant to any
abatement of rent or to terminate this Lease or otherwise releasing Tenant from
any of Tenant’s obligations except as may be specifically provided for under
this Lease:

 

(a)                      To make alterations, additions, repairs, improvements
to or in, or to decrease the size of area of, all or any part of the Building,
the fixtures and equipment therein, and the Building Systems, so long as such
alterations, additions, repairs and improvements do not alter the size of the
Premises or materially interfere with Tenant’s use and enjoyment of the
Premises, excepting only temporary inconvenience or interference reasonably
necessary and unavoidable as a result of the necessity of such alterations,
additions, repairs or improvements;

 

(b)                     To change the Building’s name, provided that the name
shall not be the name of a competitor of Tenant or a Tenant Affiliate;

 

(c)                      To install and maintain any and all signs on the
exterior and interior of the Building, subject to the provisions of this Lease;

 

(d)                     To reduce, increase, enclose or otherwise change at any
time and from time to time the size, number, location, lay-out and nature of the
common areas and other tenancies and premises in the Property, and to create
additional rentable areas through use or enclosure of common areas; and

 

If any governmental authority promulgates or revises any Law or imposes
mandatory or voluntary controls or guidelines on Landlord or the Property
relating to the use or conservation of energy or utilities or the reduction of
automobile or other emissions or reduction or management of traffic or parking
on the Property (collectively “Controls”), to comply with such Controls, whether
mandatory or voluntary, or make any alterations to the Property related thereto.

 

8.                                      TENANT’S PERSONAL PROPERTY TAXES. Tenant
shall pay prior to delinquency all taxes levied by any governmental authority on
Tenant’s personal property including, but not limited to, unsecured personal
property taxes.

 

9.                                      UTILITIES AND SERVICES.

 

9.1                                 Description of Services. Landlord shall
furnish to the Premises: reasonable amounts of heat, ventilation and
air-conditioning during the Business Hours specified in the Basic Lease
Information (“Business Hours”) on weekdays and Saturday except public holidays
(“Business Days”); reasonable amounts of electricity; janitorial services five
days a week (except public holidays); and hot and cold water from standard
outlets for lavatory, restroom and drinking purposes. Landlord shall also
provide the Building with normal fluorescent lamp replacement, window washing,
elevator service, and common area toilet room supplies. Any additional utilities
or services that Landlord may agree to provide (including lamp or tube
replacement for other than Building Standard lighting fixtures) shall be at
Tenant’s sole expense. Landlord will provide the

 

18

 

following utility connections: 1600 AMPS at 277/480, 3 phase, 4 wire, 50,000
A.I.C. NEMA 1, which will be provided to the second (2nd) floor of the Building
via the Project’s SES and distributed to such second (2nd) floor at Distribution
Panel #2, which is located on such second (2nd) floor. Notwithstanding the
foregoing, all step-down transformers shall be provided by Tenant, at Tenant’s
sole cost and expense, in order to distribute the available power per the Tenant
Improvements as defined in the Construction Rider.

 

9.2                                 Payment for Additional Utilities and
Services.

 

(a)                      Upon request by Tenant in accordance with the
procedures established by Landlord from time to time for furnishing HVAC service
at times other than Business Hours on Business Days, Landlord shall furnish such
service to Tenant and Tenant shall pay for such services on an hourly basis at
the then prevailing rate established for the Building by Landlord (which rate is
$8.00 per hour per zone as of the date of this Lease), which usage by Tenant
shall be reasonably estimated by Landlord.

 

(b)                     If the temperature otherwise maintained in any portion
of the Premises by the HVAC systems of the Building is affected as a result of
(i) any lights, machines or equipment used by Tenant in the Premises, or
(ii) the occupancy of the Premises by more than one person per 150 square feet
of rentable area, then Landlord shall have the right to install any machinery or
equipment reasonably necessary to restore the temperature, including
modifications to the standard air-conditioning equipment. The cost of any such
equipment and modifications, including the cost of installation and any
additional cost of operation and maintenance of the same, shall be paid by
Tenant to Landlord upon demand.

 

(c)                      If Tenant’s usage of electricity, water or any other
utility service exceeds the use of such utility Landlord determines to be
typical, normal and customary for the Building, Landlord may determine the
amount of such excess use by any reasonable means (including the installation at
Landlord’s request but at Tenant’s expense of a separate meter or other
measuring device) and charge Tenant for the cost of such excess usage. In
addition, Landlord may impose a reasonable charge for the use of any additional
or unusual janitorial services required by Tenant because of any unusual Tenant
Improvements or Alterations, the carelessness of Tenant or the nature of
Tenant’s business (including hours of operation).

 

9.3                                Interruption of Services. Subject to
Section 9.4 below, in the event of an interruption in or failure or inability to
provide any services or utilities to the Premises or Building for any reason (a
“Service Failure”), such Service Failure shall not, regardless of its duration,
impose upon Landlord any liability whatsoever, constitute an eviction of Tenant,
constructive or otherwise, entitle Tenant to an abatement of rent or to
terminate this Lease or otherwise release Tenant from any of Tenant’s
obligations under this Lease. Tenant waives the protection of any statute or
rule of law that gives or purports to give Tenant any right to terminate this
Lease or surrender possession of the Premises upon a Service Failure.

 

19

 

9.4                                 Abatement. Notwithstanding the foregoing, if
there is a Service Failure which is (a) specific to the Building and/or Property
(as opposed to an interruption or curtailment in essential services which
extends beyond the Building or Property), (b) causes the Premises to be
untenantable, (c) is caused solely by Landlord, and (d) lasts for more than five
(5) consecutive Business Days after Landlord has notice of such Service Failure
or otherwise prevents Tenant from reasonably being able to access the Premises
for more than five (5) consecutive Business Days after notice to Landlord, then
Tenant will be entitled to an abatement of Basic Rent as provided in this
Section 9.4. If Tenant properly delivers such an abatement notice to Landlord,
and the untenantability caused by the interruption is not remedied within such
five (5) Business Day period, then, subject to the following sentence, Tenant
shall thereafter be entitled to an abatement of Basic Rent and Additional Rent
(in proportion to the portion of the Premises rendered untenantable by Service
Failure) until such service is restored. Notwithstanding the foregoing, if Basic
Rent and Additional Rent are abated pursuant to the preceding sentence for a
period of ninety (90) consecutive days, then, unless otherwise mutually agreed
to in writing between Landlord and Tenant, Tenant shall elect, in writing
delivered to Landlord within ten (10) Business Days following the expiration of
such 90-day period, to either terminate this Lease as of the date of such notice
or commence paying full Basic Rent and Additional Rent from and after the date
of such notice as otherwise provided under this Lease. In the event Tenant fails
to provide such written notice within the aforementioned 10-Business Day period,
then in that event Tenant will be deemed to have elected not to terminate this
Lease and, unless otherwise mutually agreed to in writing between Landlord and
Tenant, will immediately return to paying full Basic Rent and Additional Rent as
otherwise provided under this Lease.

 

10.                                 EXCULPATION AND INDEMNIFICATION.

 

10.1                           Landlord’s Indemnification of Tenant. Landlord
shall indemnify, protect, defend and hold Tenant harmless from and against any
claims, actions, liabilities, damages, costs or expenses, including reasonable
attorneys’ fees and costs incurred in defending against the same (“Claims”),
asserted by any third party against Tenant which arise out of (i) any bodily
injury, death or property damage occurring to such third parties at the Project
(other than within the Premises) to the extent caused by the willful misconduct
or negligent acts of Landlord or its authorized representatives and are not
caused in whole or in part by Tenant and (ii) Landlord’s uncured breach of any
representation, warranty or obligation under this Lease.

 

10.2                           Tenant’s Indemnification of Landlord. Tenant
shall indemnify, protect, defend and hold Landlord and Landlord’s authorized
representatives harmless from and against Claims arising from (a) the acts or
omissions of Tenant or Tenant’s Representatives or Visitors in or about the
Property, or (b) any construction or other work undertaken by Tenant on the
Premises (including any design defects), or (c) any breach or default or
occurrence of Tenant Delay under this Lease by Tenant, or (d) any loss, injury
or damage, howsoever and by whomsoever caused, to any person or property,
occurring in or about the Premises during the Term, excepting only Claims
described in this clause (d) to the extent they are caused by the willful
misconduct or negligent acts of Landlord or its authorized representatives.

 

20

 

10.3                           Damage to Tenant and Tenant’s Property. Landlord
shall not be liable to Tenant for any loss, injury or other damage to Tenant or
to Tenant’s property in or about the Premises or the Property from any cause
(including defects in the Property or in any equipment in the Property; fire,
explosion or other casualty; bursting, rupture, leakage or overflow of any
plumbing or other pipes or lines, sprinklers, tanks, drains, drinking fountains
or washstands in, above, or about the Premises or the Property; or acts of other
tenants in the Property) unless caused by the gross negligence or willful
misconduct of Landlord or its employees or agents. Notwithstanding any other
provision of this Lease to the contrary, in no event shall Landlord be liable to
Tenant for any punitive or consequential damages or damages for loss of business
by Tenant.

 

10.4                           Survival. The obligations of the parties under
this Section 10 shall survive the expiration or termination of this Lease.

 

11.                                INSURANCE.

 

11.1                          Tenant’s Insurance.

 

(a)                      Liability Insurance. Tenant shall maintain in full
force throughout the Term commercial general liability insurance providing
coverage on an occurrence form basis with limits of not less than Two Million
Dollars ($2,000,000.00) each occurrence for bodily injury and property damage
combined, Two Million Dollars ($2,000,000.00) annual general aggregate, and Two
Million Dollars ($2,000,000.00) products and completed operations annual
aggregate. Tenant’s liability insurance policy or policies shall: (i) include
premises and operations liability coverage, products and completed operations
liability coverage, broad form property damage coverage, including completed
operations, blanket contractual liability coverage, including, to the maximum
extent possible, coverage for the indemnification obligations of Tenant under
this Lease, and personal and advertising injury coverage; (ii) provide that the
insurance company has the duty to defend all insureds under the policy;
(iii) provide that defense costs are paid in addition to and do not deplete any
of the policy limits; and (iv) cover liabilities arising out of or incurred in
connection with Tenant’s use or occupancy of the Premises or the Property. Each
policy of liability insurance required by this Section shall: (i) contain a
cross liability endorsement or separation of insureds clause; (ii) provide that
any waiver of subrogation rights or release prior to a loss does not void
coverage; (iii) provide that it is primary to and not contributing with, any
policy of insurance carried by Landlord covering the same loss; (iv) provide
that any failure to comply with the reporting provisions shall not affect
coverage provided to Landlord or its partners, property managers or Mortgagees
(as defined below); and (v) name Landlord and its partners, the Property Manager
identified in the Basic Lease Information (the “Property Manager”), and such
other parties in interest as Landlord may from time to time designate to Tenant
in writing, as additional insureds. Such additional insureds shall be provided
at least the same extent of coverage as is provided to Tenant under such
policies. All endorsements effecting such additional insured

 

21

 

 

status shall be at least as broad as additional insured endorsement form number
CG 20 11 11 85 promulgated by the Insurance Services Office.

 

(b)                     Property Insurance. Tenant shall at all times maintain
in effect with respect to any Alterations and Tenant’s Trade Fixtures and
personal property, commercial property insurance providing coverage, on an “all
risk” or “special form” basis, in an amount equal to at least 90% of the full
replacement cost of the covered property. Tenant may carry such insurance under
a blanket policy, provided that such policy provides coverage equivalent to a
separate policy. During the Term, the proceeds from any such policies of
insurance shall be used for the repair or replacement of the Alterations, Trade
Fixtures and personal property so insured. Landlord shall be provided coverage
under such insurance to the extent of its insurable interest and, if requested
by Landlord, both Landlord and Tenant shall sign all documents reasonably
necessary or proper in connection with the settlement of any claim or loss under
such insurance. Landlord will have no obligation to carry insurance on any
Alterations or on Tenant’s Trade Fixtures or personal property.

 

(c)                      Requirements For All Policies. Each policy of insurance
required under this Section 11.1 shall: (i) be in a form, and written by an
insurer, reasonably acceptable to Landlord, (ii) be maintained at Tenant’s sole
cost and expense, and (iii) require at least thirty (30) days’ written notice to
Landlord prior to any cancellation, nonrenewal or modification of insurance
coverage. Insurance companies issuing such policies shall have rating
classifications of “A” or better and financial size category ratings of “VII” or
better according to the latest edition of the A.M. Best Key Rating Guide. All
insurance companies issuing such policies shall be admitted carriers licensed to
do business in the state where the Property is located. To the extent Tenant
does not self-insure as permitted under subsection (f) below, any deductible
amount under such insurance shall not exceed $5,000. Tenant shall provide to
Landlord, upon request, evidence that the insurance required to be carried by
Tenant pursuant to this Section, including any endorsement effecting the
additional insured status, is in full force and effect and that premiums
therefor have been paid.

 

(d)                     Updating Coverage. Tenant shall increase the amounts of
insurance as required by any Mortgagee and, not more frequently than once every
three (3) years, as recommended by Landlord’s insurance broker, if, in the
opinion of either of them, the amount of insurance then required under this
Lease is not adequate. Any limits set forth in this Lease on the amount or type
of coverage required by Tenant’s insurance shall not limit the liability of
Tenant under this Lease.

 

(e)                      Certificates of Insurance. Prior to occupancy of the
Premises by Tenant, and not less than thirty (30) days prior to expiration of
any policy thereafter, Tenant shall furnish to Landlord a certificate of
insurance reflecting that the insurance required by this Section is in force,
accompanied by an endorsement showing the required additional insureds
satisfactory to Landlord in substance and

 

22

 

form. Notwithstanding the requirements of this paragraph, Tenant shall at
Landlord’s request provide to Landlord a certified copy of each insurance policy
required to be in force at any time pursuant to the requirements of this Lease
or its Exhibits.

 

(f)                                    Self-Insurance. Subject to the provisions
of this subsection (f), Tenant may self-insure under a commercially reasonable
self-insurance program with respect to the insurance coverages set forth in
subsection (b) above. Tenant must demonstrate to Landlord’s satisfaction at the
beginning of each calendar year of such self insurance that Tenant maintains a
tangible net financial worth of at least $100,000,000. Tenant will, to the
fullest extent allowable under the applicable laws, indemnify, protect, defend
(with counsel reasonably acceptable to Landlord) and hold harmless Landlord from
and against any and all claims that would have been covered by the insurance
replaced by the self-insurance. Such self-insurance will not affect any waivers,
releases or limitations of liability of Landlord set forth in this Lease. If
Tenant elects to self-insure, Tenant will deliver written notice to Landlord
(a) detailing the coverages being self insured; (b) setting forth the amount,
limits, and scope of the self insurance for each such coverage (which will not
be less than those required herein); (c) demonstrating such tangible net worth;
and (d) describing Tenant’s self-insurance program (including, without
limitations, its funding, claim defense policies, coverage provisions, and other
relevant matters). Upon Landlord’s request, Tenant will provide a certificate
reasonably satisfactory to any mortgagee or assignee of Landlord setting forth
the self-insured coverages and naming (as applicable) such party as an
additional insured and/or loss payee, as its interests may appear.

 

11.2                         Landlord’s Insurance. During the Term, to the
extent such coverages are available at a commercially reasonable cost, Landlord
shall maintain in effect insurance on the Building with responsible insurers, on
an “all risk” or “special form” basis, insuring the Building and the Tenant
Improvements in an amount equal to at least 90% of the replacement cost thereof,
excluding land, foundations, footings and underground installations. Landlord
may, but shall not be obligated to, carry insurance against additional perils
and/or in greater amounts.

 

11.3                         Mutual Waiver of Right of Recovery and Waiver of
Subrogation. Landlord and Tenant each hereby waive any right of recovery against
each other and the partners, managers, members, shareholders, officers,
directors and authorized representatives of each other for any loss or damage
that is covered by any policy of property insurance maintained by either party
(or required by this Lease to be maintained) with respect to the Premises or the
Property or any operation therein, regardless of cause, including negligence
(active or passive) of the party benefiting from the waiver. If any such policy
of insurance relating to this Lease or to the Premises or the Property does not
permit the foregoing waiver, or if the coverage under any such policy would be
invalidated as a result of such waiver, the party maintaining such policy shall
obtain from the insurer under such policy a waiver of all right of recovery by
way of subrogation against either party in connection with any claim, loss or
damage covered by such policy.

 

23

 

 

12.           DAMAGE OR DESTRUCTION.

 

12.1         Landlord’s Duty to Repair.

 

(a)  If all or a substantial part of the Premises are rendered untenantable or
inaccessible by damage to all or any part of the Property from fire or other
casualty then, unless either party is entitled to and elects to terminate this
Lease pursuant to Sections 12.2 - Landlord’s Right to Terminate and 12.3 -
Tenant’s Right to Terminate, Landlord shall, at its expense, use reasonable
efforts to repair and restore the Premises and/or the Property, as the case may
be, to substantially their former condition to the extent permitted by then
applicable Laws; provided, however, that in no event shall Landlord have any
obligation for repair or restoration beyond the extent of insurance proceeds
received by Landlord for such repair or restoration, or for any of Tenant’s
personal property, Trade Fixtures or Alterations.

 

(b)  If Landlord is required or elects to repair damage to the Premises and/or
the Property, this Lease shall continue in effect, but Tenant’s Base Rent and
Additional Rent shall be abated with regard to any portion of the Premises that
Tenant is prevented from using by reason of such damage or its repair from the
date of the casualty until substantial completion of Landlord’s repair of the
affected portion of the Premises as required under this Lease. In no event shall
Landlord be liable to Tenant by reason of any injury to or interference with
Tenant’s business or property arising from fire or other casualty or by reason
of any repairs to any part of the Property necessitated by such casualty.

 

12.2         Landlord’s Right to Terminate. Landlord may elect to terminate this
Lease following damage by fire or other casualty under the following
circumstances:

 

(a)  If, in the reasonable judgment of Landlord, the Premises and the Property
cannot be substantially repaired and restored under applicable Laws within one
hundred eighty (180) days from the date of the casualty;

 

(b)  If, in the reasonable judgment of Landlord, adequate proceeds are not, for
any reason, made available to Landlord from Landlord’s insurance policies
(and/or from Landlord’s funds made available for such purpose, at Landlord’s
sole option) to make the required repairs;

 

(c)  If the Building is damaged or destroyed to the extent that, in the
reasonable judgment of Landlord, the cost to repair and restore the Building
would exceed twenty-five percent (25%) of the full replacement cost of the
Building, whether or not the Premises are at all damaged or destroyed; or

 

(d)  If the fire or other casualty occurs during the last year of the Term.

 

24

 

If any of the circumstances described in subparagraphs (a), (b), (c) or (d) of
this Section 12.2 occur or arise, Landlord shall give Tenant notice within
thirty (30) days after the date of the casualty, specifying whether Landlord
elects to terminate this Lease as provided above and, if not, Landlord’s
estimate of the time required to complete Landlord’s repair obligations under
this Lease.

 

12.3         Tenant’s Right to Terminate. If all or a substantial part of the
Premises are rendered untenantable or inaccessible by damage to all or any part
of the Property from fire or other casualty, and Landlord does not elect to
terminate as provided above, then Tenant may elect to terminate this Lease if
(a) Landlord’s estimate of the time required to complete Landlord’s repair
obligations under this Lease is greater than one hundred eighty (180) days, or
(b) Tenant receives a certified, written statement from a contractor stating
that repairs cannot be executed in one hundred eighty (180) days, in which event
Tenant may elect to terminate this Lease by giving Landlord notice of such
election to terminate within thirty (30) days after Landlord’s notice to Tenant
pursuant to Section 12.2 - Landlord’s Right to Terminate or within thirty (30)
days of receiving the contractor’s statement under this Section 12.3 – Tenant’s
Right to Terminate.

 

12.4         Waiver of Statutory Rights. Tenant waives any statutory right to
terminate this Lease or abate Rent because of any damage or destruction to the
Premises due to fire or other casualty.

 

13.           CONDEMNATION.

 

13.1         Definitions.

 

(a)  “Award” shall mean all compensation, sums, or anything of value awarded,
paid or received on a total or partial Condemnation.

 

(b)  “Condemnation” shall mean (i) a permanent taking (or a temporary taking for
a period extending beyond the end of the Term) pursuant to the exercise of the
power of condemnation or eminent domain by any public or quasi-public authority,
private corporation or individual having such power (“Condemnor”), whether by
legal proceedings or otherwise, or (ii) a voluntary sale or transfer by Landlord
to any such authority, either under threat of condemnation or while legal
proceedings for condemnation are pending.

 

(c)  “Date of Condemnation” shall mean the earlier of the date that title to the
property taken is vested in the Condemnor or the date the Condemnor has the
right to possession of the property being condemned.

 

13.2         Effect on Lease.

 

(a)  If the Premises are totally taken by Condemnation, this Lease shall
terminate as of the Date of Condemnation. If a portion but not all of the
Premises is taken by Condemnation, this Lease shall remain in effect; provided,
however, that if the portion of the Premises remaining after the Condemnation
will be unsuitable for

 

25

 

Tenant’s continued use, then, upon notice to Landlord within thirty (30) days
after Landlord notifies Tenant of the Condemnation, Tenant may terminate this
Lease effective as of the Date of Condemnation.

 

(b)  If twenty-five percent (25%) or more of the Project or of the parcel(s) of
land on which the Building is situated or of the floor area in the Building is
taken by Condemnation, or if as a result of any Condemnation the Building is no
longer reasonably suitable for use as an office building, whether or not any
portion of the Premises is taken, Landlord may elect to terminate this Lease,
effective as of the Date of Condemnation, by notice to Tenant within thirty (30)
days after the Date of Condemnation.

 

(c)  If all or a portion of the Premises is temporarily taken by a Condemnor for
a period not extending beyond the end of the Term, this Lease shall remain in
full force and effect.

 

13.3         Restoration. If this Lease is not terminated as provided in
Section 13.2 - Effect on Lease, Landlord, at its expense, shall diligently
proceed to repair and restore the Premises to substantially its former condition
(to the extent permitted by then applicable Laws) and/or repair and restore the
Building to an architecturally complete office building; provided, however, that
Landlord’s obligations to so repair and restore shall be limited to the amount
of any Award received by Landlord and not required to be paid to any Mortgagee.
In no event shall Landlord have any obligation to repair or replace any
improvements in the Premises beyond the amount of any Award received by Landlord
for such repair or to repair or replace any of Tenant’s personal property, Trade
Fixtures, or Alterations.

 

13.4         Abatement and Reduction of Rent. If any portion of the Premises is
taken in a Condemnation or is rendered permanently untenantable by repairs
necessitated by the Condemnation, and this Lease is not terminated, the Base
Rent and Additional Rent payable under this Lease shall be proportionally
reduced as of the Date of Condemnation based upon the percentage of rentable
square feet in the Premises so taken or rendered permanently untenantable. In
addition, if this Lease remains in effect following a Condemnation and Landlord
proceeds to repair and restore the Premises, the Base Rent and Additional Rent
payable under this Lease shall be abated during the period of such repair or
restoration to the extent such repairs prevent Tenant’s use of the Premises.

 

13.5         Awards. Any Award made shall be paid to Landlord, and Tenant hereby
assigns to Landlord, and waives all interest in or claim to, any such Award,
including any claim for the value of the unexpired Term; provided, however, that
Tenant shall be entitled to receive, or to prosecute a separate claim for, an
Award for a temporary taking of the Premises or a portion thereof by a Condemnor
where this Lease is not terminated (to the extent such Award relates to the
unexpired Term), or an Award or portion thereof separately designated for
relocation expenses or the interruption of or damage to Tenant’s business or as
compensation for Tenant’s personal property, Trade Fixtures or Alterations.

 

26

 

14.           ASSIGNMENT AND SUBLETTING.

 

14.1         Landlord’s Consent Required. Tenant shall not assign this Lease or
any interest therein, or sublet or license or permit the use or occupancy of the
Premises or any part thereof by or for the benefit of anyone other than Tenant
or a Tenant Affiliate, or in any other manner transfer all or any part of
Tenant’s interest under this Lease (each and all a “Transfer”), without the
prior written consent of Landlord, which consent (subject to the other
provisions of this Section 14) shall not be unreasonably conditioned, withheld
or delayed. The term “Tenant Affiliate” shall mean an entity controlling,
controlled by, or under common control with Tenant, or a successor to Tenant by
reason of merger or consolidation. If Tenant is a business entity, any direct or
indirect transfer of twenty five percent (25%) or more of the ownership interest
of the entity (whether in a single transaction or in the aggregate through more
than one transaction) shall be deemed a Transfer. Notwithstanding any provision
in this Lease to the contrary, Tenant shall not mortgage, pledge, hypothecate or
otherwise encumber this Lease or all or any part of Tenant’s interest under this
Lease.

 

14.2         Reasonable Consent.

 

(a)  Prior to any proposed Transfer, Tenant shall submit in writing to Landlord
(i) the name and legal composition of the proposed assignee, subtenant, user or
other transferee (each a “Proposed Transferee”); (ii) the nature of the business
proposed to be carried on in the Premises; (iii) such reasonable financial and
other information concerning the Proposed Transferee as Landlord may request;
and (iv) a copy of the proposed assignment, sublease or other agreement
governing the proposed Transfer. Within fifteen (15) Business Days after
Landlord receives all such information, it shall notify Tenant whether it
approves or disapproves such Transfer or if it elects to proceed under
Section 14.6 - Landlord’s Right to Space.

 

(b)  Tenant acknowledges and agrees that, among other circumstances for which
Landlord could reasonably withhold consent to a proposed Transfer, it shall be
reasonable for Landlord to withhold consent where (i) the Proposed Transferee
does not intend itself to occupy the entire portion of the Premises that is the
subject of such Transfer, (ii) Landlord disapproves of the Proposed Transferee’s
business operating ability or history, reputation or creditworthiness or the
character of the business to be conducted by the Proposed Transferee at the
Premises, (iii) the proposed Transfer would violate any “exclusive” rights of
any tenants in the Project or any use restrictions governing the Project,
(iv) Landlord or Landlord’s agent has shown space in the Building to the
Proposed Transferee, or responded to any inquiries from the Proposed Transferee
or the Proposed Transferee’s agent concerning availability of space in the
Building, at any time within the preceding nine months and space remains
available within the Building which is substantially as large as the portion of
the Premises contemplated to be occupied by the Proposed Transferee, or
(v) Landlord otherwise determines that the proposed Transfer would have the
effect of decreasing the value of the Building or increasing the expenses
associated with operating, maintaining and repairing the Property. In no event
may

 

27

 

Tenant publicly offer or advertise all or any portion of the Premises for
assignment or sublease at a rental less than that then sought by Landlord for a
direct lease (non-sublease) of comparable space in the Project.

 

14.3         Excess Consideration. If Landlord consents to a Transfer, Tenant
shall pay to Landlord as additional rent, within ten (10) days after receipt by
Tenant, any consideration paid by any transferee (the “Transferee”) for the
Transfer, including, in the case of a sublease, fifty percent (50%) of the
excess of the rent and other consideration payable by the subtenant (net of
Tenant’s reasonable, documented out-of-pocket leasing costs and commissions
incurred in connection with the sublease) over the amount of Base Rent and
Additional Rent payable hereunder applicable to the subleased space.

 

14.4         No Release Of Tenant. No Transfer (nor any consent by Landlord to
any Transfer), including, without limitation, a Transfer to a Tenant Affiliate,
shall relieve Tenant of any obligation to be performed by Tenant under this
Lease, whether occurring before or after such Transfer. Each Transferee shall be
jointly and severally liable with Tenant (and Tenant shall be jointly and
severally liable with each Transferee) for the payment of Rent (or, in the case
of a sublease, rent in the amount set forth in the sublease) and for the
performance of all other terms and provisions of this Lease. The consent by
Landlord to any Transfer shall not relieve Tenant or any such Transferee from
the obligation to obtain Landlord’s express prior written consent to any
subsequent Transfer by Tenant or any Transferee. The acceptance of rent by
Landlord from any other person (whether or not such person is an occupant of the
Premises) shall not be deemed to be a waiver by Landlord of any provision of
this Lease or a consent to any Transfer.

 

14.5         Effectiveness of Transfer. Prior to the date on which any permitted
Transfer (whether or not requiring Landlord’s consent) becomes effective, Tenant
shall deliver to Landlord a counterpart of the fully executed Transfer document
and Landlord’s standard form of Consent to Assignment or Consent to Sublease
executed by Tenant and the Transferee in which each of Tenant and the Transferee
confirms its obligations pursuant to this Lease. Failure or refusal of a
Transferee to execute any such instrument shall not release or discharge the
Transferee from liability as provided herein. The voluntary, involuntary or
other surrender of this Lease by Tenant, or a mutual cancellation by Landlord
and Tenant, shall not work a merger, and any such surrender or cancellation
shall, at the option of Landlord, either terminate all or any existing subleases
or operate as an assignment to Landlord of any or all of such subleases.

 

14.6         Intentionally Deleted.

 

14.7         Assignment of Sublease Rents. Subject to Section 14.3, Tenant
hereby absolutely and irrevocably assigns to Landlord any and all rights to
receive rent and other consideration from any sublease and agrees that Landlord,
as assignee or as attorney-in-fact for Tenant for purposes hereof, or a receiver
for Tenant appointed on Landlord’s application may (but shall not be obligated
to) collect such rents and other consideration and apply the same toward
Tenant’s obligations to Landlord under this Lease; provided, however, that
Landlord grants to Tenant at all times prior to occurrence of any breach or
default by Tenant a revocable license to

 

28

 

collect such rents (which license shall automatically and without notice be and
be deemed to have been revoked and terminated immediately upon any Event of
Default).

 

14.8         Costs. Tenant will pay to Landlord, as additional rent, all costs
and expenses Landlord actually incurs in connection with any proposed Transfer,
including, without limitation, reasonable attorneys’ fees and costs, regardless
whether Landlord consents to the Transfer.

 

15.           DEFAULT AND REMEDIES.

 

15.1         Events of Default by Tenant. The occurrence of any of the following
shall constitute an “Event of Default” by Tenant:

 

(a)  Tenant fails to make any payment of Rent when due, or any amount required
to replenish the Security Deposit, if payment in full is not received by
Landlord within five (5) days after written notice to Tenant that it is due;
provided, however, that such failure will not constitute an Event of Default
hereunder on the first late payment in any calendar year during the Term so long
as that payment is made within five (5) days of Tenant’s receipt of a follow-up
notice of nonpayment from Landlord.

 

(b)  Intentionally Deleted.

 

(c)  Tenant fails timely to deliver any subordination document, estoppel
certificate or financial statement requested by Landlord within the applicable
time period specified in Sections 20 - Encumbrances - and 21 - Estoppel
Certificates and Financial Statements - below.

 

(d)  Tenant violates the restrictions on Transfer set forth in Section 14 -
Assignment and Subletting.

 

(e)  Tenant ceases doing business as a going concern; makes an assignment for
the benefit of creditors; is adjudicated an insolvent, files a petition (or
files an answer admitting the material allegations of a petition) seeking relief
under any state or federal bankruptcy or other statute, law or regulation
affecting creditors’ rights; all or substantially all of Tenant’s assets are
subject to judicial seizure or attachment and are not released within 30 days,
or Tenant consents to or acquiesces in the appointment of a trustee, receiver or
liquidator for Tenant or for all or any substantial part of Tenant’s assets; or
there is a material adverse change in Tenant’s financial condition.

 

(f)  Tenant fails, within thirty (30) days after the commencement of any
proceedings against Tenant seeking relief under any state or federal bankruptcy
or other statute, law or regulation affecting creditors’ rights, to have such
proceedings dismissed, or Tenant fails, within thirty (30) days after an
appointment, without

 

29

 

Tenant’s consent or acquiescence, of any trustee, receiver or liquidator for
Tenant or for all or any substantial part of Tenant’s assets, to have such
appointment vacated.

 

(g)  Tenant fails to perform or comply with any provision of this Lease other
than those described in (a) through (f) above, and does not fully cure such
failure within fifteen (15) days after notice to Tenant.

 

15.2         Landlord’s Remedies. Upon the occurrence of an Event of Default,
Landlord shall have the following rights and remedies, which rights and remedies
shall be cumulative and not exclusive, and which shall be in addition to all
other rights and remedies now or hereafter allowed by law or in equity, and
which may be exercised without further notice or demand:

 

(a)  Landlord may cure the Event of Default at Tenant’s expense. If Landlord
pays any sum or incurs any expense in curing the Event of Default, Tenant shall
reimburse Landlord upon demand for the amount of such payment or expense with
interest at the Interest Rate from the date the sum is paid or the expense is
incurred until Landlord is reimbursed by Tenant.

 

(b)  Landlord may terminate Tenant’s right to possess the Premises by any lawful
means.

 

(c)  Landlord may, by giving written notice to Tenant, terminate this Lease.

 

(d)  Upon a termination of Tenant’s right to possess the Premises or a
termination of this Lease, (i) Tenant shall immediately surrender possession of
the Premises to Landlord and shall remove all of its property therefrom,
(ii) Landlord may re-enter the Premises in the manner provided by law,
(iii) Landlord may relet all or any portion of the Premises to one or more third
parties on such terms as Landlord determines in its sole and unfettered
discretion, and (iv) Landlord may, at its election, remove all or any portion of
Tenant’s property from the Premises and place the same in storage at the sole
expense and risk of Tenant.

 

(e)  If Landlord exercises any of the remedies stated above, Landlord shall be
entitled to recover from Tenant, and Tenant shall pay to Landlord, as current
damages for the applicable Event of Default, all damages incurred by Landlord by
reason of the Event of Default, which shall include, without limitation, (i) an
amount equal to the Rent payable under this Lease by Tenant for the remainder of
the Term (assuming this Lease had not been terminated), less (ii) the net
proceeds of any reletting of the Premises by Landlord after deducting all of
Landlord’s expenses in connection with such reletting, which shall include,
without limitation, repossession costs, repairs, redecorating, refurbishments
and improvements to the Premises, brokerage commissions, attorneys’ fees, and
legal expenses (such expenses in connection with such reletting only to be
deducted from net proceeds of such reletting if this Lease is terminated as a
result of an Event of Default prior to

 

30

 

the final eighteen (18) months of the Term). Tenant shall pay such current
damages to Landlord, in the amount set forth in the preceding sentence
(hereinafter called the “Deficiency”), in monthly installments on the days on
which Base Rent would have been payable under this Lease if this Lease were
still in effect.

 

(f)  If Landlord exercises any of the remedies stated above, and regardless of
whether Landlord has collected any Deficiency, Landlord shall be entitled to
recover from Tenant, and Tenant shall pay to Landlord, on demand, as final
damages for the applicable Event of Default, the sum of (i) the then present
worth of (A) the aggregate of the Rent payable under this Lease by Tenant for
the remainder of the Term (assuming this Lease had not been terminated), less
(B) the amount of such loss Tenant proves could have been reasonably avoided,
plus (ii) repossession costs, Landlord’s expenses in connection with any
attempts it may have made to relet the Premises (which shall include, without
limitation, repairs, redecorating, refurbishments and improvements to the
Premises and brokerage commissions if this Lease is terminated as a result of an
Event of Default prior to the final eighteen (18) months of the Term),
attorneys’ fees, legal expenses, and all other damages incurred by Landlord as a
result of such Event of Default. For purposes of determining such present worth,
Landlord will use a discount equal to the Federal Reserve rate of the Federal
Reserve Bank in San Francisco in effect at the time of the award plus one
percent (1%).

 

(g)  Landlord may exercise its statutory lien rights and remove Tenant’s
property from the Premises, which may be stored by Landlord in a public
warehouse or elsewhere at the sole cost and for the account of Tenant and sold
pursuant to law. If Landlord does not elect to store any or all of Tenant’s
property left in the Premises, Landlord may consider such property to be
abandoned by Tenant, and Landlord may thereupon dispose of such property in any
manner deemed appropriate by Landlord. Any proceeds realized by Landlord on the
disposal of any such property shall be applied first to offset all expenses of
storage and sale, then credited against Tenant’s outstanding obligations to
Landlord under this Lease, and any balance remaining after satisfaction of all
obligations of Tenant under this Lease shall be delivered to Tenant.

 

(h)  No action of Landlord shall be construed as an election to terminate this
Lease or to accept a surrender of the Premises unless written notice of such
intention is given by Landlord to Tenant. Tenant shall pay all attorneys’ fees,
costs and expenses incurred by Landlord in enforcing Tenant’s obligations under
this Lease.

 

31

 

(i)  Acceptance of payment of Rent or partial payment of Rent or other partial
performance, with or without Landlord’s knowledge of an Event of Default by
Tenant, or failure of Landlord to take action on account of an Event of Default
by Tenant or to enforce its rights under this Lease, shall not be deemed a
waiver by Landlord of any Event of Default by Tenant.

 

15.3         Landlord’s Default.

 

(a) Landlord shall not be in default of this Lease unless and until Tenant has
given Landlord written notice of a breach of this Lease by Landlord and Landlord
shall have failed to cure such breach within thirty (30) days after Landlord’s
receipt of Tenant’s notice; provided, however, that if such breach cannot
reasonably be cured within such 30-day period, Landlord will have such
additional time as may be reasonably necessary to cure the breach.

 

(b)  Upon a default by Landlord under this Lease, Tenant may pursue its rights
and remedies under this Lease and Arizona law, excepting only the right of
offset, deduction or termination of this Lease, unless such remedy is expressly
conferred by this Lease.

 

16.           LATE CHARGE AND INTEREST.

 

16.1         Late Charge. If any payment of Rent is not received by Landlord ten
(10) days after due, Tenant shall pay to Landlord, as a late charge, a sum equal
to four percent (4%) of the payment(s) of Rent overdue. A late charge shall not
be imposed more than once on any particular installment not paid when due, but
imposition of a late charge on any payment not made when due does not eliminate
or supersede late charges imposed on other (prior) payments not made when due or
preclude imposition of a late charge on other installments or payments not made
when due. Notwithstanding the foregoing, Tenant will not be assessed the late
charge described above on the first late Rent payment in any calendar year
during the Term so long as that payment is made within five (5) days of Tenant’s
receipt of notice of nonpayment from Landlord.

 

16.2         Interest. In addition to the late charges referred to above, which
are intended to defray Landlord’s costs resulting from late payments, any
payment from Tenant to Landlord not paid ten (10) days after due shall bear
interest from the date due until paid to Landlord by Tenant at the rate of
eighteen percent (18%) per annum or the legal rate of interest in Arizona,
whichever is less (the “Interest Rate”). Acceptance of any late charge and/or
interest shall not constitute a waiver of Tenant’s default with respect to the
overdue sum or prevent Landlord from exercising any of its other rights and
remedies under this Lease.

 

17.           WAIVER. No provisions of this Lease shall be deemed waived unless
such waiver is in writing. The waiver of any breach of any provision of this
Lease shall not be deemed a waiver of such provision or of any subsequent breach
of the same or any other provision of this Lease. No delay or omission in the
exercise of any right or remedy upon any default shall impair such right or
remedy or be construed as a waiver. Landlord’s acceptance of any payments of
Rent due under this

 

32

 

Lease shall not be deemed a waiver by Landlord of any default by Tenant under
this Lease (including Tenant’s recurrent failure to timely pay Rent), and no
endorsement or statement on any check or payment or in any letter or document
accompanying any check or payment shall be deemed an accord and satisfaction.
Landlord’s consent to or approval of any act by Tenant requiring Landlord’s
consent or approval shall not be deemed to waive or render unnecessary
Landlord’s consent to or approval of any subsequent act by Tenant.

 

18.           ENTRY, INSPECTION AND CLOSURE. Upon reasonable oral or written
notice to Tenant (and without notice in emergencies), Landlord and its
authorized representatives may enter the Premises at all reasonable times to:
(a) determine whether the Premises are in good condition, (b) determine whether
Tenant is complying with its obligations under this Lease, (c) perform any
maintenance or repair of the Premises or the Building that Landlord has the
right or obligation to perform, (d) install or repair improvements for other
tenants where access to the Premises is required for such installation or
repair, (e) serve, post or keep posted any notices required or allowed under the
provisions of this Lease, (f) show the Premises to prospective brokers, agents,
buyers, transferees, Mortgagees, or, in the case of prospective tenants, no
earlier than one (1) year prior to the Expiration Date, or (g) do any other act
or thing necessary for the safety or preservation of the Premises or the
Building. When reasonably necessary Landlord may temporarily close entrances,
doors, corridors, elevators or other facilities in the Building without
liability to Tenant by reason of such closure. Landlord shall conduct its
activities under this Section in a manner that will minimize inconvenience to
Tenant without incurring additional expense to Landlord. In no event shall
Tenant be entitled to an abatement of Rent on account of any entry by Landlord,
and Landlord shall not be liable in any manner for any inconvenience, loss of
business or other damage to Tenant or other persons arising out of Landlord’s
entry on the Premises in accordance with this Section. Subject to the remaining
provisions of this paragraph, no action by Landlord pursuant to this paragraph
shall constitute an eviction of Tenant, constructive or otherwise, entitle
Tenant to an abatement of Rent or to terminate this Lease or otherwise release
Tenant from any of Tenant’s obligations under this Lease. Notwithstanding the
foregoing, if any such entry or closure under this Section causes the Premises
to be reasonably untenantable and lasts for more than five (5) consecutive
Business Days after Landlord is notified of such untenantability or otherwise
prevents Tenant from being able to access the Premises for more than five
(5) consecutive Business Days after notice to Landlord, Tenant will be entitled
to an abatement of Basic Rent. If Tenant properly delivers such an abatement
notice to Landlord, and the untenantability caused by the entry or closure is
not remedied within such five (5) Business Day period, then, subject to the
following sentence, Tenant shall thereafter be entitled to an abatement of Basic
Rent and Additional Rent (in proportion to the portion of the Premises rendered
untenantable by the entry or closure) until the Premises are again rendered
tenantable. Notwithstanding the foregoing, if Basic Rent and Additional Rent are
abated pursuant to the preceding sentence for a period of ninety (90)
consecutive days, then, unless otherwise mutually agreed to in writing between
Landlord and Tenant, Tenant shall elect, in writing delivered to Landlord within
ten (10) Business Days following the expiration of such 90-day period, to either
terminate this Lease as of the date of such notice or commence paying full Basic
Rent and Additional Rent from and after the date of such notice as otherwise
provided under this Lease. In the event Tenant fails to provide such written
notice within the aforementioned 10-Business Day period, then in that event
Tenant will be deemed to have elected not to terminate this Lease and, unless
otherwise mutually agreed to

 

33

 

in writing between Landlord and Tenant, will immediately return to paying full
Basic Rent and Additional Rent as otherwise provided under this Lease.

 

19.           SURRENDER AND HOLDING OVER.

 

19.1         Surrender. Upon the expiration or termination of this Lease, Tenant
shall surrender the Premises and all Tenant Improvements and Alterations to
Landlord broom-clean and in their original condition, except for reasonable wear
and tear, damage from casualty or condemnation and any changes resulting from
approved Alterations; provided, however, that prior to the expiration or
termination of this Lease, Tenant shall remove all telephone and other cabling
installed in the Building by Tenant and remove from the Premises all Tenant’s
personal property and any Trade Fixtures and all Alterations that Landlord has
elected to require Tenant to remove as provided in Section 6.1 - Tenant
Improvements and Alterations, and repair any damage caused by such removal. If
such removal is not completed before the expiration or termination of the Term,
Landlord shall have the right (but no obligation) to remove the same, and Tenant
shall pay Landlord on demand for all costs of removal and storage thereof and
for the rental value of the Premises for the period from the end of the Term
through the end of the time reasonably required for such removal. Landlord shall
also have the right to retain or dispose of all or any portion of such property
if Tenant does not pay all such costs and retrieve the property within ten
(10) days after notice from Landlord (in which event title to all such property
described in Landlord’s notice shall be transferred to and vest in Landlord).
Tenant waives all Claims against Landlord for any damage or loss to Tenant
resulting from Landlord’s removal, storage, retention, or disposition of any
such property. Upon expiration or termination of this Lease or of Tenant’s
possession, whichever is earliest, Tenant shall surrender all keys to the
Premises or any other part of the Building and shall deliver to Landlord all
keys for or make known to Landlord the combination of locks on all safes,
cabinets and vaults that may be located in the Premises. Tenant’s obligations
under this Section shall survive the expiration or termination of this Lease.

 

19.2         Holding Over. If Tenant (directly or through any Transferee or
other successor-in-interest of Tenant) remains in possession of the Premises
after the expiration or termination of this Lease, Tenant’s continued possession
shall be at the sufferance of Landlord and Tenant shall be deemed to be
occupying the Premises without claim of right. In such event, Tenant shall
continue to comply with or perform all the terms and obligations of Tenant under
this Lease, except that the Base Rent during Tenant’s holding over shall be at
one hundred fifty percent (150%) of the then-current Base Rent (on a daily
basis) payable immediately prior to the expiration or termination of this Lease.
In the event of any holdover without Landlord’s prior written consent, Tenant
shall indemnify, defend and hold Landlord harmless from and against all Claims
arising or resulting directly or indirectly from Tenant’s failure to timely
surrender the Premises, including, without limitation, (i) any rent payable by
or any loss, cost, or damages claimed by any tenant or prospective tenant of the
Premises, and (ii) Landlord’s damages as a result of such tenant or prospective
tenant rescinding its lease or refusing to enter into the prospective lease of
the Premises by reason of Tenant’s failure to timely surrender the Premises.

 

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20.           ENCUMBRANCES.

 

20.1         Subordination. This Lease is expressly made subject and subordinate
to any mortgage, deed of trust, ground lease, development agreement, underlying
lease or other encumbrance affecting any part of the Property or any interest of
Landlord therein which is now existing or hereafter executed or recorded
(“Encumbrance”); provided, however, that this Lease shall survive the
termination of the Encumbrance by lapse of time, foreclosure or otherwise so
long as Tenant is not in default under this Lease. Tenant shall execute and
deliver to Landlord, within ten (10) business days after written request
therefor by Landlord at any time during this Lease, any additional documents
evidencing the foregoing self-effectuating subordination of this Lease and
nondisturbance protection, which documents may contain such other terms as may
be requested by the Mortgagee. Tenant will also execute and deliver to Landlord,
promptly following Tenant’s execution of this Lease and delivery thereof to
Landlord, a subordination, non-disturbance and attornment agreement in the form
of Exhibit E attached hereto (“SNDA Agreement”). Landlord will use its
commercially reasonable efforts to cause the Mortgagee to execute the SNDA
Agreement. Upon receipt from the Mortgagee of the executed SNDA Agreement,
Landlord shall promptly provide Tenant with a fully executed copy of the SNDA
Agreement. If the interest of Landlord in the Property is transferred pursuant
to or in lieu of proceedings for enforcement of any Encumbrance, Tenant shall
immediately and automatically attorn to the new owner, and this Lease shall
continue in full force and effect as a direct lease between the transferee and
Tenant on the terms and conditions set forth in this Lease. Tenant waives the
protection of any statute or rule of law that gives or purports to give Tenant
any right to terminate this Lease or surrender possession of the Premises upon
the transfer of Landlord’s interest.

 

20.2         Mortgagee Protection. Tenant agrees to give any holder of any
Encumbrance covering any part of the Property (“Mortgagee”), by registered mail,
a copy of any notice of default served upon Landlord, provided that prior to
such notice Tenant has been notified in writing (by way of notice of assignment
of rents and leases or otherwise) of the address of such Mortgagee. If Landlord
shall have failed to cure such default within thirty (30) days from the
effective date of such notice of default, then the Mortgagee shall have an
additional thirty (30) days within which to cure such default or if such default
cannot be cured within that time, then such additional time as may be necessary
to cure such default (including the time necessary to foreclose or otherwise
terminate its Encumbrance, if necessary to effect such cure), and Tenant shall
not pursue any remedy against Landlord so long as such cure is being diligently
pursued.

 

21.           ESTOPPEL CERTIFICATES. Within ten (10)  business days after
written request therefor, Tenant shall execute and deliver to Landlord, in a
form provided by or satisfactory to Landlord, a certificate stating that this
Lease is in full force and effect, describing any amendments or modifications
hereto, acknowledging that this Lease is subordinate or prior, as the case may
be, to any Encumbrance and stating any other information Landlord may reasonably
request, including the Term, the monthly Base Rent, the date to which Rent has
been paid, the amount of any security deposit or prepaid rent, whether either
party hereto is in default under the terms of the Lease, and whether Landlord
has completed its construction obligations hereunder (if any). Tenant
irrevocably constitutes, appoints and authorizes Landlord as Tenant’s special
attorney-in-fact for such purpose to complete, execute and deliver such
certificate if Tenant fails timely to execute and deliver such

 

35

 

certificate as provided above. Any person or entity purchasing, acquiring an
interest in or extending financing with respect to the Property shall be
entitled to rely upon any such certificate. If Tenant fails to deliver such
certificate within ten (10)  business days after Landlord’s second written
request therefor, Tenant shall be liable to Landlord for any damages incurred by
Landlord including any profits or other benefits from any financing or attempted
financing of the Property or any interest therein which are lost or made
unavailable as a result, directly or indirectly, of Tenant’s failure or refusal
to timely execute or deliver such estoppel certificate.

 

22.           NOTICES. Any notice, demand, request, consent or approval that
either party desires or is required to give to the other party under this Lease
shall not be effective unless it is in writing and served personally, delivered
by messenger or courier service, or sent by U.S. certified mail, return receipt
requested, postage prepaid, addressed to the other party at the party’s address
for notices set forth in the Basic Lease Information. Any notice required
pursuant to any Laws may be incorporated into, given concurrently with or given
separately from any notice required under this Lease. Notices shall be deemed to
have been given and be effective on the earlier of (a) receipt (or refusal of
delivery or receipt); or (b) one (1) day after acceptance by the independent
service for delivery, if sent by independent messenger or courier service, or
three (3) days after mailing if sent by mail in accordance with this Section.
Either party may change its address for notices hereunder, effective fifteen
(15) days after notice to the other party complying with this Section. If Tenant
sublets the Premises, notices from Landlord shall be effective on the subtenant
when given to Tenant pursuant to this Section.

 

23.           ATTORNEYS’ FEES. In the event of any dispute between Landlord and
Tenant in any way related to this Lease, and whether involving contract and/or
tort claims, the non-prevailing party shall pay to the prevailing party all
reasonable attorneys’ fees and costs and expenses of any type, without
restriction by statute, court rule or otherwise, incurred by the prevailing
party in connection with any action or proceeding (including any appeal and the
enforcement of any judgment or award), whether or not the dispute is litigated
or prosecuted to final judgment (collectively, “Fees”). The “prevailing party”
shall be determined based upon an assessment of which party’s major arguments or
positions taken in the action or proceeding could fairly be said to have
prevailed (whether by compromise, settlement, abandonment by the other party of
its claim or defense, final decision, after any appeals, or otherwise) over the
other party’s major arguments or positions on major disputed issues. Any Fees
incurred in enforcing a judgment shall be recoverable separately from any other
amount included in the judgment and shall survive and not be merged in the
judgment. The Fees shall be deemed an “actual pecuniary loss” within the meaning
of Bankruptcy Code Section 365(b)(l)(B) and, notwithstanding the foregoing, all
Fees incurred by either party in any bankruptcy case filed by or against the
other party, from and after the order for relief until this Lease is rejected or
assumed in such bankruptcy case, will be “obligations of the debtor” as that
phrase is used in Bankruptcy Code Section 365(d)(3).

 

24.           QUIET POSSESSION. Subject to Tenant’s full and timely performance
of all of Tenant’s obligations under this Lease and subject to the terms of this
Lease, including Section 20 - Encumbrances, Tenant shall have the right to
occupy the Premises throughout the Term as against any persons or entities
lawfully claiming by, through or under Landlord.

 

36

 

25.           SECURITY MEASURES. Landlord may, but shall be under no obligation
to, implement security measures for the Property, such as the registration or
search of all persons entering or leaving the Building, requiring identification
for access to the Building, evacuation of the Building for cause, suspected
cause, or for drill purposes, the issuance of magnetic pass cards or keys for
Building or elevator access, and other actions that Landlord deems necessary or
appropriate to prevent any threat of property loss or damage, bodily injury or
business interruption; provided, however, that such measures shall be
implemented in a way as not to inconvenience tenants of the Building
unreasonably. If Landlord uses an access card system, Landlord may require
Tenant to pay Landlord a deposit for each after-hours Building access card
issued to Tenant. Tenant shall be responsible for any loss, theft or breakage of
any such cards, which must be returned by Tenant to Landlord upon expiration or
earlier termination of the Lease. Landlord may retain the deposit for any card
not so returned. Landlord shall at all times have the right to change, alter or
reduce any such security services or measures. Tenant shall cooperate and comply
with, and cause Tenant’s Representatives and Visitors to cooperate and comply
with, such security measures. Landlord and its agents and employees shall have
no liability to Tenant or its Representatives or Visitors for the implementation
or exercise of, or the failure to implement or exercise, any such security
measures or for any resulting disturbance of Tenant’s use or enjoyment of the
Premises.

 

26.           FORCE MAJEURE. “Force Majeure” shall mean Landlord’s inability to
obtain equipment or building materials despite the timely and diligent effort by
Landlord or its contractors to obtain such equipment and materials, acts of God,
fire, earthquake, flood, rainfall or other weather-caused delays which interfere
with construction, vandalism, acts or delays of public agencies or governmental
bodies, or the authority under the covenants, conditions and restrictions, any
moratorium on the issuance of governmental approvals or utility service
connections or other similar government actions, strikes, union labor disputes
or other union work stoppages, freight embargoes or inability to obtain basic
materials, supplies or fuels, uncommon or unusual delays in the issuance of
governmental permits or approvals, or other events beyond the reasonable control
of Landlord or its contractors.

 

27.           RULES AND REGULATIONS. Tenant shall be bound by and shall comply
with the rules and regulations attached to and made a part of this Lease as
Exhibit D, as well as any reasonable rules and regulations hereafter adopted by
Landlord for all tenants of the Building, upon notice to Tenant thereof
(collectively, the “Building Rules”). Landlord shall not be responsible to
Tenant or to any other person for any violation of, or failure to observe, the
Building Rules by any other tenant or person.

 

28.           LANDLORD’S LIABILITY. The term “Landlord,” as used in this Lease,
shall mean only the owner or owners of the Building at the time in question. In
the event of any conveyance of title to the Building, then from and after the
date of such conveyance, the transferor Landlord shall be relieved of all
liability with respect to Landlord’s obligations to be performed under this
Lease after the date of such conveyance. Notwithstanding any other term or
provision of this Lease, the liability of Landlord for its obligations under
this Lease is limited solely to Landlord’s interest in the Building as the same
may from time to time be encumbered, and no personal liability shall at any time
be asserted or enforceable against any other assets of Landlord or against
Landlord’s partners or members or its or their respective partners,
shareholders, members,

 

37

 

directors, officers or managers on account of any of Landlord’s obligations or
actions under this Lease.

 

29.           CONSENTS AND APPROVALS.

 

29.1         Determination in Good Faith. Wherever the consent, approval,
judgment or determination of Landlord is required or permitted under this Lease,
Landlord may, in its sole and unfettered discretion, exercise its good faith
business judgment in granting or withholding such consent or approval or in
making such judgment or determination without reference to any extrinsic
standard of reasonableness, unless the specific provision contained in this
Lease providing for such consent, approval, judgment or determination specifies
that Landlord’s consent or approval is not to be unreasonably withheld, or that
such judgment or determination is to be reasonable, or otherwise specifies the
standards under which Landlord may withhold its consent. If it is determined
that Landlord failed to give its consent where it was required to do so under
this Lease, Tenant shall be entitled to injunctive relief, or other relief as
may be provided for under this Lease, but shall not to be entitled to monetary
damages or to terminate this Lease for such failure.

 

29.2         No Liability Imposed on Landlord. The review and/or approval by
Landlord of any item or matter to be reviewed or approved by Landlord under the
terms of this Lease or any Exhibits or Addenda hereto shall not impose upon
Landlord any liability for the accuracy or sufficiency of any such item or
matter or the quality or suitability of such item for its intended use. Any such
review or approval is for the sole purpose of protecting Landlord’s interest in
the Property, and no third parties, including Tenant or the Representatives and
Visitors of Tenant or any person or entity claiming by, through or under Tenant,
shall have any rights as a consequence thereof.

 

30.           WAIVER OF RIGHT TO JURY TRIAL. Landlord and Tenant waive their
respective rights to trial by jury of any contract or tort claim, counterclaim,
cross-complaint, or cause of action in any action, proceeding, or hearing
brought by either party against the other on any matter arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant, or
Tenant’s use or occupancy of the Premises, including any claim of injury or
damage or the enforcement of any remedy under any current or future law,
statute, regulation, code, or ordinance.

 

31.           BROKERS. With the exception of the Landlord’s Broker and the
Tenant’s Broker designated in the Basic Lease Information, Landlord and Tenant
each represents and warrants to the other that it has not had any dealings with
any other realtors, brokers, finders or agents in connection with this Lease and
each releases and agrees to indemnify the other from and against any claim or
claims, including, without limitation, costs, expenses and reasonable attorney’s
fees incurred by the other in connection with such claim or claims, based on the
failure or alleged failure to pay any realtors, brokers, finders or agents
(other than Landlord’s Broker and the Tenant’s Broker) and from any cost,
expense or liability for any compensation, commission or charges claimed by any
realtors, brokers, finders or agents (other than Landlord’s Broker and the
Tenant’s Broker) claiming by, through or on behalf of it with respect to this
Lease or the negotiation of this

 

38

 

Lease. Landlord will pay the Landlord’s Broker and the Tenant’s Broker in
accordance with a separate agreement between Landlord and the applicable broker.

 

32.           INTENTIONALLY DELETED.

 

33.           PARKING. Tenant is entitled to use the number of Covered Reserved
Parking Spaces specified in the Basic Lease Information. Landlord will either
designate such spaces as reserved spaces or will mark Tenant’s name thereon, and
Landlord will not grant any other tenant the right to use such spaces; provided,
however, that Landlord will have no obligation to prevent unauthorized persons
from using such Covered Reserved Parking Spaces. During the Initial Term, Tenant
will pay to Landlord, concurrently with each payment of Base Rent, a fee of
$35.00 per month for each Covered Reserved Parking Space. Upon the expiration of
the Initial Term, the fee for the Covered Reserved Parking Spaces will be
adjusted from time to time by Landlord to an amount equal to Landlord’s
then-standard fee for covered reserved parking spaces at the Property, provided
that such fee will not increase at a rate of more than three percent (3%) per
year, compounded annually, over the $35.00 per month per Covered Reserved
Parking Space fee initially charged hereunder and provided further that such cap
is cumulative. Tenant is also entitled to use, on a non-exclusive basis, those
parking spaces within the Property that are made available by Landlord for the
common use of the tenants of the Property (“Unreserved Parking Spaces”).
Landlord will designate the initial locations of the Covered Reserved Parking
Spaces and the Unreserved Parking Spaces, and Landlord reserves the right to
designate and redesignate such locations and to grant other parties the
exclusive right to use parking spaces at the Property. The use of Covered
Reserved Parking Spaces and Unreserved Parking Spaces by Tenant and its
Representatives and Visitors shall be equal to five (5) spaces for each 1,000
rentable square feet of space in the Premises. Tenant agrees not to use, nor
permit the use by its employees, Representatives, or Visitors of, the driveways
or parking lot for overnight or other storage, or for the maintenance, repair or
cleaning of automobiles or other vehicles. Tenant shall not place or store
goods, materials, supplies, equipment, or other property of Tenant in the
driveways or parking lot or anywhere else in the Property or in the Building,
excepting the Premises. Landlord is not responsible for any theft, loss or
damage with respect to vehicles at the Property or the contents thereof.

 

34.           ENTIRE AGREEMENT. This Lease, including the Exhibits and any
Addenda attached hereto, and the documents referred to herein, if any,
constitute the entire agreement between Landlord and Tenant with respect to the
leasing of space by Tenant in the Building, and supersede all prior or
contemporaneous agreements, understandings, proposals and other representations
by or between Landlord and Tenant, whether written or oral, all of which are
merged herein. Neither Landlord nor Landlord’s agents have made any
representations or warranties with respect to the Premises, the Building, the
Project or this Lease except as expressly set forth herein, and no rights,
easements or licenses shall be acquired by Tenant by implication or otherwise
unless expressly set forth herein. The submission of this Lease for examination
does not constitute an option for the Premises and this Lease shall become
effective as a binding agreement only upon execution and delivery thereof by
Landlord to Tenant.

 

39

 

35.           MISCELLANEOUS. This Lease may not be amended or modified except by
a writing signed by Landlord and Tenant. Subject to Section 14 - Assignment and
Subletting and Section 28 - Landlord’s Liability, this Lease shall be binding on
and shall inure to the benefit of the parties and their respective successors,
assigns and legal representatives. The determination that any provisions hereof
may be void, invalid, illegal or unenforceable shall not impair any other
provisions hereof and all such other provisions of this Lease shall remain in
full force and effect. The unenforceability, invalidity or illegality of any
provision of this Lease under particular circumstances shall not render
unenforceable, invalid or illegal other provisions of this Lease, or the same
provisions under other circumstances. This Lease shall be construed and
interpreted in accordance with the laws (excluding conflict of laws principles)
of the State of Arizona. The provisions of this Lease shall be construed in
accordance with the fair meaning of the language used and shall not be strictly
construed against either party, even if such party drafted the provision in
question. When required by the context of this Lease, the singular includes the
plural. Wherever the term “including” is used in this Lease, it shall be
interpreted as meaning “including, but not limited to” the matter or matters
thereafter enumerated. The captions contained in this Lease are for purposes of
convenience only and are not to be used to interpret or construe this Lease. If
more than one person or entity is identified as Tenant hereunder, the
obligations of each and all of them under this Lease shall be joint and several.
Time is of the essence with respect to this Lease, except as to the conditions
relating to the delivery of possession of the Premises to Tenant. Neither
Landlord nor Tenant shall record this Lease.

 

36.           AUTHORITY. If Tenant is a corporation, partnership, limited
liability company or other form of business entity, each of the persons
executing this Lease on behalf of Tenant warrants and represents that Tenant is
a duly organized and validly existing entity, that Tenant has full right and
authority to enter into this Lease and that the persons signing on behalf of
Tenant are authorized to do so and have the power to bind Tenant to this Lease.
Tenant shall provide Landlord upon request with evidence reasonably satisfactory
to Landlord confirming the foregoing representations.

 

37.           SIGNAGE. Provided Tenant, at its cost, receives all necessary
governmental and quasi-governmental approvals therefor as well as Landlord’s and
the Kierland Master Association’s prior written consent in connection therewith,
Landlord shall allow Tenant to erect Tenant’s sign in two (2) locations on the
exterior of the Building as depicted on Exhibit G attached hereto and
incorporated herein, which sign shall be Tenant’s name, “subordinate” to
Landlord’s building designation sign, if any. Tenant shall pay all annual and
other permit fees therefor, shall pay all costs of installation and maintenance
thereof, shall keep the same in good condition, order and repair at its sole
cost and expense, shall remove the same prior to termination of this Lease, and
shall repair and restore any damage to the Building caused by such installation
and/or removal. Any such sign, and the display of Tenant’s name thereon, shall
be subject to the terms of any restrictive covenants and/or sign criteria
applicable thereto and all applicable laws, ordinances and regulations. Landlord
hereby approves Tenant’s signage depicted on Exhibit G-1 attached hereto and
incorporated herein.

 

38.           RIGHT OF FIRST OFFER. So long as no Event of Default then exists
under this Lease, Tenant will have the first right (“First Right”) to be offered
by Landlord the opportunity to lease all remaining space (other than the
Premises) within the Building (the “First Right Space”).

 

40

 

The First Right is subject to the terms and conditions set forth in this
Section 38, and is further subject to any prior rights to such space granted to
any other tenants in the Building. If at any time after the Commencement Date
while this First Right is in effect Landlord intends to lease all or any part of
the First Right Space, then Landlord will first notify Tenant that such First
Right Space is available for lease (the “Available Space”). Tenant must notify
Landlord in writing within five (5) days of receiving Landlord’s notice whether
Tenant desires to lease the Available Space from Landlord. If Tenant notifies
Landlord that Tenant does not desire to lease the Available Space, or if Tenant
does not respond in writing to Landlord’s notice within such five (5) day
period, then Landlord may freely lease the Available Space without restriction.
If Tenant notifies Landlord in writing within such five (5) day period that
Tenant desires to lease the Available Space, the parties will thereafter
negotiate for Tenant’s lease of the Available Space from Landlord. If Landlord
and Tenant fail to mutually agree upon the terms of Tenant’s lease of the
Available Space and to execute a written amendment to this Lease within ten
(10) days after Tenant delivers Tenant’s offer notice to Landlord, then
Landlord’s obligations under this Section 38 shall automatically terminate and
be of no further force or effect at the end of such ten (10) day period. The
purpose of this Section 38 is to provide notice to Tenant so that Tenant may be
in a position to offer to lease such space on a competitive basis with others,
and, notwithstanding anything to the contrary contained in this Section 38,
nothing in this Section 38 shall be deemed to be an option or right of first
refusal.

 

39.           LEASE CONTINGENCY. Tenant acknowledges that, as of the date of
this Lease, Landlord is presently leasing portions of the Premises to two
(2) tenants (the “Existing Tenants”) pursuant to two (2) separate leases (the
“Existing Leases”). All obligations of Landlord hereunder are contingent upon
Landlord’s receipt of written terminations of both of the Existing Leases
executed by the Existing Tenants (the “Termination Agreements”), wherein the
Existing Tenants each agree to vacate their respective premises within the
Building on or before March 31, 2006. In the event that Landlord has not
received both of the fully executed Termination Agreements on or before March 1,
2006 (the “Contingency Date”), then in that event Landlord or Tenant may
terminate this Lease by delivery of written notice to the other party within
fifteen (15) days thereafter, in which event this Lease will terminate and
neither party will have any further rights or obligations hereunder.

 

40.           LENDER APPROVAL CONTINGENCY. Tenant acknowledges that Landlord’s
existing Mortgagee must consent to this Lease as a condition to its
effectiveness. Promptly following the full execution of this Lease, Landlord
will submit a signed copy of this Lease to such Mortgagee for approval of the
same. Upon receipt of such approval, Landlord will notify Tenant of the same. In
the event that such Mortgagee fails to consent to this Lease and Landlord fails
to notify Tenant of such consent on or before the Contingency Date, then in that
event this Lease shall terminate automatically, and without further action of
the parties, unless Landlord and Tenant mutually agree in writing to extend the
Contingency Date. If this Lease terminates in accordance with this Section 40,
then neither party will have any further rights or obligations hereunder from
and after such termination.

 

[SIGNATURES APPEAR ON NEXT PAGE]

 

41

 

IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as of the
date first above written.

 

 

LANDLORD:

 

 

 

PCCP HC KIERLAND, LLC, a Delaware limited

 

liability company

 

 

 

By:

PCCP HC Kierland Owner, LLC, a Delaware

 

 

limited liability company

 

 

Its Sole Member

 

 

 

 

 

By:

PCCP LB Hibernia LLC, a Delaware limited

 

 

 

liability company

 

 

 

Its Managing Member

 

 

 

 

 

 

 

By:

PCCP Equities II, LLC, a Delaware

 

 

 

 

limited liability company

 

 

 

 

Its Co-Managing Member

 

 

 

 

 

 

 

 

 

By:

/s/ [ILLEGIBLE]

 

 

 

 

 

Its

[ILLEGIBLE]

 

 

 

 

 

Vice President

 

 

 

TENANT:

 

 

 

THE RYLAND GROUP, INC.,

 

a Maryland corporation

 

 

 

 

 

By:

/s/ Daniel Schreiner

 

Name:

Daniel Schreiner

 

Title:

Senior Vice President

 

42

 

EXHIBIT A

 

ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT

DATED AS OF               , 2006,
BETWEEN

PCCP HC KIERLAND, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
AS LANDLORD,
AND

THE RYLAND GROUP, INC., A MARYLAND CORPORATION,
AS TENANT

 

LEGAL DESCRIPTION OF THE LAND

 

A portion of Lot 4, KIERLAND COMMERCE SOUTH, according to Book 465 of Maps,
page 10, records of Maricopa County, Arizona, being more particularly described
as follows:

 

COMMENCING at the Centerline intersection of Kierland Boulevard with Marilyn
Road, as recorded on the plat of Kierland Commerce South, according to Book 465
of Maps, page 10, records of Maricopa County, Arizona; thence along said
centerline of Marilyn Road North 89 degrees 44 minutes 11 seconds East, a
distance of 485.24 feet;

 

thence South 00 degrees 15 minutes 52 seconds East, leaving said centerline, a
distance of 30.00 feet to a point on the Southern right-of-way of said Marilyn
Road, said point also being the Point of Beginning of the parcel herein
described;

 

thence South 00 degrees 15 minutes 52 seconds East, leaving said Southern
right-of-way a distance of 213.49 feet;

 

thence South 44 degrees 57 minutes 48 seconds East a distance of 357.95 feet to
a point on the Western right-of-way of 71st Street;

 

thence South 45 degrees 02 minutes 42 seconds West, along said western
right-of-way of 7lst Street a distance of 201.40 feet;

 

thence North 44 degrees 57 minutes 48 seconds West leaving said Western
right-of-way a distance of 26.96 feet;

 

thence North 12 degrees 32 minutes 47 seconds West, a distance of 64.48 feet;

 

thence South 89 degrees 44 minutes 08 seconds West, a distance of 324.50 feet to
a point of curvature of a non-tangent curve concave to the Northwest whose
radius bears North 75 degrees 28 minutes 55 seconds West, a distance 72.91 feet;

 

A-1

 

thence Southwesterly along the arc of said curve through a central angle of 37
degrees 08 minutes 40 seconds, a distance of 47.27 feet to a point of tangency;

 

thence South 51 degrees 23 minutes 17 seconds West, a distance of 107.98 feet to
a point on the Eastern right-of-way of said Kierland Boulevard, said point also
being a point of curvature of a non-tangent curve concave to the Northeast,
whose center bears North 53 degrees 11 minutes 17 seconds East, a distance of
465.00 feet;

 

thence Northerly, along the arc of said curve and along said Eastern
right-of-way through a central angle of 36 degrees 32 minutes 51 seconds, a
distance of 296.61 feet;

 

thence North 00 degrees 15 minutes 52 seconds West, along said Eastern
right-of-way, a distance of 192.21 feet;

 

thence North 01 degrees 46 minutes 52 seconds West, along said Eastern
right-of-way, a distance of 138.17 feet;

 

thence North 45 degrees 45 minutes 30 seconds East, leaving said Eastern
right-of-way, a distance of 37.42 feet to a point on said Southern right-of-way
of Marilyn Road;

 

thence North 89 degrees 44 minutes 11 seconds East, along said Southern
right-of-way, a distance of 418.38 feet to the Point of Beginning of the parcel
herein described.

 

[END OF LEGAL DESCRIPTION]

 

A-2

 

EXHIBIT B

 

ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT

DATED AS OF                , 2006,
BETWEEN

PCCP HC KIERLAND, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
AS LANDLORD,
AND

THE RYLAND GROUP, INC., A MARYLAND CORPORATION,
AS TENANT

 

THE PREMISES

 

[See attached page]

 

B-1

 

[g185771km15i001.jpg]

 

B-2

 

EXHIBIT C

 

ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT

DATED AS OF           , 2006,
BETWEEN

PCCP HC KIERLAND, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
AS LANDLORD,
AND

THE RYLAND GROUP, INC., A MARYLAND CORPORATION,
AS TENANT

 

CONSTRUCTION RIDER

 

This Construction Rider describes Landlord’s obligations regarding the Base
Building and Tenant’s obligations regarding the initial Tenant Improvements
which Tenant is obligated to construct or install in the Premises. This
Construction Rider is a part of the Lease and all actions and obligations
hereunder are subject to all terms and conditions of the Lease unless expressly
provided otherwise herein. Capitalized terms which are not otherwise defined in
this Construction Rider have the meanings set forth in the Lease. Any breach or
default by either party hereunder also constitutes a default by such party under
the Lease.

 

1.            Base Building. The core and shell of the Building and all
lavatories are referred to in this Lease as “Base Building”. Landlord represents
and warrants that the Base Building has been built in compliance with (a) the
applicable building code; (b) the Americans with Disabilities Act of 1990
(“ADA”); and (c) other applicable laws, in each case as such matters in
(a)-(c) are enforced, interpreted and applied to the Project as of the date of
this Lease. Such compliance shall be conclusively established by the issuance of
all governmental permits necessary for the initial occupancy of the Building.

 

2.            Tenant Improvements; Space Plan. Tenant will engage a licensed
architect reasonably acceptable to Landlord (“Architect”) to develop and design
a space plan (“Space Plan”) for the initial improvements to be installed by
Tenant in the Premises (“Tenant Improvements”). Tenant will provide Landlord
with the Space Plan for Landlord’s approval, which shall not be unreasonably
conditioned, withheld or delayed. The Space Plan must (a) be compatible with the
Building and the mechanical components of the Building (as reasonably determined
by Landlord); (b) show, in reasonable detail, the design and appearance of the
finishing material Tenant will use in connection with installing Tenant
Improvements; and (c) conform to all applicable governing codes, ordinances and
other Laws. All Space Plan drawings must be not less than 1/8” scale. Without
limiting those general requirements, the Space Plan must expressly specify and
include (without limitation) all of the following: (1) wall types and heights
and insulation, if needed; (2) door types and hardware groups; (3) door frames
types; (4) ceiling heights; (5) ceiling materials; (6) floor finishes and
locations; (7) wall finishes and locations; (8) any appliances, special systems
or equipment to be furnished as a part of the construction; (9) any mechanical
requirements beyond

 

C-1

 

that provided in the base building; (10) any fire protection requirements beyond
that provided in the base building; (11) any plumbing requirements; (12) all
power and data locations; (13) any power required other than building standard
power distribution; (14) any power requirements for modular furniture; (15) any
emergency power requirement; (16) any lighting requirements beyond that provided
in the base building; and (17) millwork elevations and details. The Space Plan
must include enlarged sketch layouts for any non-standard rooms, including
reflected ceiling plans, and must state the approximate usable/rentable square
footage of the Premises.

 

3.            Construction Drawings and Specifications. After Landlord receives
and has approved Tenant’s Space Plan, Tenant will cause the Architect to prepare
the construction drawings and specifications for the Tenant Improvements
(“Construction Drawings and Specifications”). Tenant will provide Landlord with
the Construction Drawings and Specifications for Landlord’s approval, which
shall not be unreasonably conditioned, withheld or delayed. If Landlord
disapproves the Construction Drawings and Specifications, Tenant will provide
appropriately revised Construction Drawings and Specifications to Landlord for
approval (or disapproval) until Landlord has approved the Construction Drawings
and Specifications. All revisions to the Construction Drawings and
Specifications will be clouded, blacklined, or otherwise clearly marked to
highlight such revisions for easy identification as a revised item.

 

4.            Changes to Construction Drawings and Specifications. After
Landlord’s approval, no significant changes, modifications or alterations may be
made to the Construction Drawings and Specifications without Landlord’s prior
written consent, which shall not be unreasonably conditioned, withheld or
delayed.

 

5.            Building Standard. Tenant will utilize items designated by
Landlord as “Building Standard” or items of equal or higher quality, in
Landlord’s reasonable opinion, to assure the consistent quality and appearance
of the Building. No deviation from the Building Standard will be permitted in
the Space Plan and Construction Drawings and Specifications without Landlord’s
consent, which may be withheld in Landlord’s sole discretion. However, Landlord
will not unreasonably withhold approval of deviations from the Building Standard
as to partitions, floor coverings, wall finishes, or special lighting fixtures,
provided that no such deviation is of lesser quality than the Building Standard.
Landlord will not approve any deviations which Landlord believes (a) do not
conform to applicable codes, ordinances and other Laws or are disapproved by any
governmental agency, (b) require services beyond the level normally provided to
other tenants in the Building, or (c) are of a nature or quality that are
inconsistent with Landlord’s overall plan or objectives for the Building. No
approval by Landlord of any deviation constitutes an acknowledgment by Landlord
that such deviations are in conformance with applicable codes, ordinances and
other Laws.

 

6.            Landlord’s Approval Rights. Landlord may withhold its approval of
the Space Plan, Construction Drawings and Specifications, and/or any change
orders in connection therewith requested by Tenant if they require work which:
(a) exceeds or adversely affects the structural integrity of the Building;
(b) adversely affects, or exceeds Tenant’s pro rata capacity of, any part of the
heating, ventilating, air conditioning, plumbing, mechanical, electrical,
communication or other systems of the Building; (c) is not approved by the
holder of any

 

C-2

 

mortgage or deed of trust encumbering the Building at the time the work is
proposed; (d) would not be approved by a prudent owner of property similar to
the Building; (e) violates any agreement which affects the Building or binds
Landlord; (f) Landlord reasonably believes will increase the cost of operation
or maintenance of any of the systems of the Building; (g) Landlord reasonably
believes will reduce the market value of the Premises or Building; (h) does not
conform to applicable codes, ordinances and other Laws or is not approved by any
governmental authority with jurisdiction over the Building; (i) in Landlord’s
determination detrimentally affects the uniform exterior appearance of the
Project; or (j) is reasonably disapproved by Landlord for any other reason not
set forth herein.

 

7.            Improvement Allowance. Landlord has agreed to contribute a
one-time Improvement Allowance against the Total Costs (defined below) of the
Tenant Improvements in an amount equal to $35.00 multiplied by the Usable Area
of the Premises, subject to reduction based upon the costs incurred by Landlord
in connection with the Data Room Floor Construction as provided under Section 25
of this Exhibit C (as reduced, the “Improvement Allowance”). Tenant shall be
solely responsible for any and all costs of constructing the Tenant Improvements
in excess of the Improvement Allowance. Not more than once per month prior to
Substantial Completion of the Tenant Improvements, Tenant may deliver to
Landlord a request for payment of a portion of the Improvement Allowance,
accompanied by all of the following in form and substance satisfactory to
Landlord: (i) a copy of each invoice evidencing a payment made by Tenant to any
contractor, subcontractor or supplier for which Tenant is then requesting
reimbursement from the Improvement Allowance and (ii) full, final and
unconditional lien waivers from any contractor, subcontractor or supplier for
which Tenant is then requesting reimbursement from the Improvement Allowance,
specifying in such lien waivers the amount paid in consideration for such
release; provided, however, that Tenant’s election not to make any such monthly
payment requests shall not operate as a waiver of Tenant’s right to receive any
portion of the Improvement Allowance as otherwise provided in the remaining
provisions of this Section 7. Promptly following Substantial Completion of the
Tenant Improvements, Tenant will deliver to Landlord a request for payment of
the remaining portion of the Improvement Allowance, if any, not paid to Tenant
in accordance with the preceding sentence, accompanied by all of the following
in form and substance satisfactory to Landlord: (a) a Certificate of Substantial
Completion duly executed by the Architect certifying that the Tenant
Improvements are Substantially Completed; (b) a final Certificate of Occupancy
for the Premises; (c) duly executed unconditional lien waivers and such other
affidavits, certificates, information, and data as may be requested by Landlord
from all general contractors, subcontractors and materialmen performing work on
the Premises; (d) such documentation as Landlord deems reasonably necessary to
obtain an endorsement to the policy of title insurance insuring Landlord’s
lender, if any; (e) copies of all warranties and guaranties relating to the
Tenant Improvements together with duly executed assignments thereof to Landlord;
(1) an itemized computation of the actual Total Costs incurred by Tenant
(“Actual Costs”); (g) final as-built plans and specifications for the Tenant
Improvements; and (h) such other information and documentation as Landlord may
reasonably request to evidence the proper, lien-free Substantial Completion of
the Tenant Improvements. Unless Landlord reasonably disputes Tenant’s assertion
that Substantial Completion has occurred, upon Landlord’s receipt, review and
reasonable approval of all of the foregoing, Landlord will pay to Tenant the
amount of the Actual Costs, up to the maximum amount of the Improvement
Allowance, less any portion

 

C-3

 

of the Improvement Allowance previously paid to Tenant by way of any monthly
payment requests therefor as provided above. Landlord may retain from such final
payment, if any, an amount equal to 150% of the estimated cost of completing all
“punch list” items identified as provided in Section 17 below, which retained
amount will be paid to Tenant when all such punch list items are completed to
Landlord’s satisfaction. If the Actual Costs are less than the Improvement
Allowance, Tenant may credit the amount by which the Improvement Allowance
exceeds the Actual Costs against future refurbishments made to the Premises by
Tenant during the Lease Term until all such excess funds have been credited;
provided, however, that Tenant will receive no payment or credit for any amount
by which the Improvement Allowance exceeds the sum of the Actual Costs plus the
costs of any and all such future refurbishments.

 

8.            Total Costs. “Total Costs” means all costs reasonably incurred by
Tenant in connection with (a) the construction and installation of the Tenant
Improvements, and (b) any other measures taken by Tenant which may be reasonably
required to accomplish the construction of the Tenant Improvements, including
without limitation, Tenant’s procurement of bonds, insurance and governmental
permits.

 

9.            Cost Quotation. Promptly after Landlord’s approval of the
Construction Drawings and Specifications, Tenant will provide to Landlord a
computation, along with reasonable supporting documentation, setting forth
Tenant’s estimate of the Total Costs relating to the Tenant Improvements (“Cost
Quotation”) based upon the approved Construction Drawings and Specifications. If
the Cost Quotation exceeds the Improvement Allowance, Tenant will, within five
(5) business days of Landlord’s receipt thereof, either: (a) agree in writing to
pay the cost by which the Cost Quotation exceeds the Improvement Allowance
(“Excess Costs”), or (b) revise the Construction Drawings and Specifications
(subject to Landlord’s approval as set forth above) so that the Cost Quotation
is either (i) no more than the Improvement Allowance, or (ii) in excess of the
Improvement Allowance by an amount of Excess Costs which Tenant agrees in
writing to pay. The failure of Tenant to so respond within the five business day
period shall be deemed to be Tenant’s agreement to pay all of the Excess Costs.
Any agreement by Tenant to pay Excess Costs is subject to Landlord’s reasonable
approval, which may (without limitation) be conditioned upon Tenant’s providing
Landlord with satisfactory assurance of payment.

 

10.          Construction of Tenant Improvements. Tenant will hire a general
contractor with demonstrated expertise and experience in the construction of
tenant improvement projects similar to the Tenant Improvements and otherwise
reasonably acceptable to Landlord in all respects (“Tenant’s General
Contractor”). Tenant will cause Tenant’s General Contractor to construct the
Tenant Improvements in accordance with the approved Construction Drawings and
Specifications. All of the Tenant Improvements and Tenant Work (defined below)
must be undertaken and performed in strict accordance with the provisions of the
Lease and this Construction Rider. All subcontractors and suppliers utilized by
Tenant’s General Contractor must also have demonstrated expertise and experience
in the construction of tenant improvement projects similar to the Tenant
Improvements and be otherwise reasonably acceptable to Landlord.

 

11.          Tenant’s General Obligations. Tenant will, before commencing
construction or delivering (or accepting delivery of) any materials to be used
in connection with Tenant

 

C-4

 

Improvements, deliver to Landlord copies of all contracts, copies of all
contractor safety programs, copies of all necessary permits and licenses and
such other information relating to the construction as Landlord reasonably
requests. Tenant will also deliver to Landlord (a) reasonable evidence that
Tenant or Tenant’s General Contractor have in force builder’s “all risk”
insurance in an amount at least equal to the Cost Quotation and naming Landlord
as a loss payee as its interest may appear; and (b) reasonable evidence that
Tenant and each of Tenant’s contractors have in force liability insurance
insuring against construction related risks in at least the form, amounts and
coverages required of Tenant under the Lease and naming Landlord and Property
Manager as additional insureds (specifically including coverage for completed
operations). Tenant will not commence construction before Landlord has, in
Landlord’s reasonable discretion, provided Landlord’s written approval of the
foregoing deliveries. Tenant will cause the Tenant Improvements and any Tenant
Work to be constructed and performed (i) during times and in a manner reasonably
determined by Landlord to minimize interference with other tenants’ use and
enjoyment of the Property, and (ii) in compliance with Landlord’s
rules/regulations applicable to third party contractors, subcontractors and
suppliers performing work at the Property.

 

12.          Substantial Completion of Tenant Improvements. With regard to the
Tenant Improvements, “Substantial Completion” or “Substantially Completed” as
used in this Construction Rider (and as used in the Lease) means completion of
construction of the Tenant Improvements in accordance with the approved
Construction Drawings and Specifications with the exception of minor details of
construction, installation, decoration, or mechanical adjustments and other such
punch list items as certified by Architect and/or as may be determined by
Landlord during an inspection of the Premises. Substantial Completion of the
Tenant Improvements will be deemed to have occurred notwithstanding the
requirement to complete “punch list” items or similar minor work of correction
or completion.

 

13.          Post Substantial Completion Delivery Requirements. Promptly
following Substantial Completion of the Tenant Improvements, Tenant will deliver
to Landlord the following in form and substance satisfactory to Landlord: (a) a
Certificate of Substantial Completion duly executed by the Architect certifying
that the Tenant Improvements are Substantially Completed; (b) a final
Certificate of Occupancy for the Premises; (c) duly executed unconditional lien
waivers and such other affidavits, certificates, information, and data as may be
requested by Landlord from all general contractors, subcontractors and
materialmen performing work on the Premises; (d) such documentation as Landlord
deems reasonably necessary to obtain an endorsement to the policy of title
insurance insuring Landlord’s lender, if any; (e) copies of all warranties and
guaranties relating to the Tenant Improvements together with duly executed
assignments thereof to Landlord; (f) an itemized computation of the actual Total
Costs incurred by Tenant (“Actual Costs”); (g) final as-built plans and
specifications for the Tenant Improvements; and (h) such other information and
documentation as Landlord may reasonably request to evidence the proper,
lien-free Substantial Completion of the Tenant Improvements.

 

14.          Liens and Claims. Tenant will keep the Property free from any
mechanics’, materialmens’, designers’ or other liens arising out of any work
performed, materials furnished or obligations incurred by or for Tenant or any
person or entity claiming by, through or under Tenant. Tenant will upon request
record and post notices of non-responsibility or such similar

 

C-5

 

protective notices as Landlord may reasonably request. If any such liens are
filed and Tenant, within 15 days after Tenant’s notice of such filing, does not
release the same of record or provide Landlord with a bond or other surety
satisfactory to Landlord protecting Landlord and the Property against such
liens, Landlord may, without waiving its rights and remedies based upon such
breach by Tenant and without releasing Tenant from any obligation under the
Lease, cause such liens to be released by any means Landlord deems proper,
including, but not limited to, paying the claim giving rise to the lien or
posting security to cause the discharge of the lien. In such event, Tenant will
reimburse Landlord, as Additional Rent, for all amounts Landlord pays
(including, without limitation, reasonable attorneys’ fees and costs). To the
fullest extent allowable under the Laws, Tenant releases and will indemnify,
protect, defend (with counsel reasonably acceptable to Landlord) and hold
harmless the Landlord Parties and the Property from and against any Claims in
any manner relating to or arising out of the Tenant Improvements, any Tenant
Work or any other work performed, materials furnished or obligations incurred by
or for Tenant or any person or entity claiming by, through or under Tenant,
provided that such Claim does not arise from the gross negligence or willful
misconduct of Landlord, its employees or agents.

 

15.          Tenant Work. “Tenant Work” means all finish work and decoration and
other work desired by Tenant and not included within the Tenant Improvements as
set forth in the approved Construction Drawings and Specifications, including
specifically, without limitation, all computer systems, telephone systems,
telecommunications systems, fixtures, furnishings, equipment and any
Alterations. All Tenant Work will be designed, furnished and installed by Tenant
at Tenant’s sole expense and shall not be included in Total Costs or chargeable
against the Improvement Allowance. If any Tenant Work is not submitted and
approved with the Construction Drawings and Specifications, Tenant will secure
Landlord’s prior consent for such Tenant Work in the same manner and following
the same procedures provided for in the Lease for Alterations which require
Landlord’s consent.

 

16.          Conformance with Laws. All Tenant Improvements and Tenant Work must
be done in conformance with all applicable codes, ordinances and other Laws.
Valid building permits and other necessary authorizations from appropriate
governmental agencies (when required) must be obtained by Tenant for the Tenant
Improvements and Tenant Work at Tenant’s expense. Any Tenant Improvements or
Tenant Work not acceptable to the applicable governmental authority or otherwise
not in conformance with all applicable codes, ordinances and other Laws must be
promptly corrected, replaced, or brought into compliance with such applicable
codes, ordinances and other Laws at Tenant’s expense. No failure by Landlord to
object to any such nonconforming Tenant Improvements or Tenant Work relieves
Tenant from its obligations or imposes any responsibility or liability therefor
upon Landlord.

 

17.          Landlord’s Inspections. Landlord shall have the right to inspect
and observe all work during construction and to inspect the Premises and develop
a “punch list” for the Tenant Improvements upon Substantial Completion.
Notwithstanding such rights, Landlord is under no obligation to inspect or
supervise construction of any of the Tenant Improvements or Tenant Work, and no
inspection by Landlord shall be construed as a representation that the Tenant
Improvements or Tenant Work (a) are in compliance with the Construction Drawings
and

 

C-6

 

Specifications; (b) are or will be free from faulty or defective materials or
workmanship; or (c) are in conformance with any applicable codes, ordinances or
other Laws.

 

18.          Responsibility for Function and Operation. Tenant will be
responsible for the function and operation of all Tenant Improvements whether or
not approved by Landlord or installed by Landlord at Tenant’s request.
Landlord’s preparation, review and/or approval of any design or construction
documents will not constitute any representation or warranty as to the adequacy,
efficiency, performance or desirability of the Tenant Improvements in the
Premises.

 

19.          Construction Warranty. Tenant shall cause Tenant’s General
Contractor and its subcontractors and suppliers to fully warrant and guaranty
the Tenant Improvements to both Tenant and Landlord for a period of not less
than one (1) year after Substantial Completion thereof.

 

20.          Tenant’s Representative. Tenant has designated Dan Schreiner as its
sole representative with respect to the matters set forth in this Construction
Rider, who shall have full authority and responsibility to act on behalf of
Tenant as required in this Construction Rider. Tenant may change its
representative under this Construction Rider at any time by providing five days
prior written notice to Landlord. All inquiries, requests, instructions,
authorizations and other communications with respect to matters covered by this
Construction Rider from Landlord may be made by Landlord to Tenant’s
Representative.

 

21.          Landlord’s Representative. Landlord has designated Rich O’Brien as
its representative with respect to the matters set forth in this Construction
Rider, who shall have full authority and responsibility to act on behalf of
Landlord as required in this Construction Rider. Landlord may change its
representative under this Construction Rider at any time by providing five days
prior written notice to Tenant. All inquiries, requests, instructions,
authorizations and other communications with respect to the matters covered by
this Construction Rider from Tenant will be made to Landlord’s representative.
Tenant will communicate solely with Landlord’s Representative and will not make
any inquiries of or requests to, and will not give any instructions or
authorizations to, any other employee or agent of Landlord, including Landlord’s
architect, engineers, and contractors or any of their agents or employees, with
regard to matters covered by this Construction Rider.

 

22.          Applicability. This Construction Rider shall not be deemed
applicable to: (a) any additional space added to the original Premises at any
time, whether by the exercise of any options under the Lease or otherwise, or
(b) any portion of the original Premises or any additions thereto in the event
of a renewal or extension of the original Term of the Lease, whether by the
exercise of any options under the Lease or any amendment or supplement thereto.
The construction of any additions or improvements to the Premises not
contemplated by this Construction Rider may only be performed pursuant to the
provisions of the Lease governing Alterations unless Landlord elects to prepare
a separate work letter agreement, in the form then being used by Landlord and
specifically addressed to such construction.

 

C-7

 

23.          Risk of Loss. All materials, work, installations and decorations of
any nature brought upon or installed in the Premises prior to final completion
of the Tenant Improvements and the payment of the Improvement Allowance by
Landlord as provided herein shall be at the risk of the party who brought such
materials or items onto the Premises. Neither Landlord nor any party acting on
Landlord’s behalf shall be responsible for any damage or loss or destruction of
such items brought to or installed in the Premises by Tenant prior to such date,
except if caused solely by Landlord’s gross negligence or willful misconduct.

 

24.          Ownership of Tenant Improvements. All Tenant Improvements shall
become a part of the Premises, shall be the property of Landlord, and, subject
to the provisions of the Lease, shall be surrendered by Tenant with the Premises
without any compensation to Tenant at the expiration or termination of the Lease
in accordance with the provisions of the Lease.

 

25.          Data Room Floor Construction. On or before the later to occur of
(i) the Contingency Date or (ii) the satisfaction and removal of the Lease
contingencies set forth in Sections 39 and 40 of the Lease, Landlord will
commence (or cause to be commenced) structural reinforcement of the floor area
of the “Data Room” portion of the Premises (the “Data Room Floor Construction”)
based upon Data Room load specifications to be provided by Tenant and reasonably
approved by Landlord within five (5) Business Days following Tenant’s full
execution and delivery of the Lease to Landlord. Landlord will cause the Data
Room Floor Construction to be completed on or before April 1, 2006, subject to
day-for-day extension to the extent the Data Room Floor Construction is delayed
as a result of Force Majeure events and/or delays caused by Tenant (including,
without limitation, Tenant’s failure to provide the Data Room load
specifications on a timely basis as provided above). Landlord will pay for the
costs of the Data Room Floor Construction; provided, however, that the
Improvement Allowance to be paid from Landlord to Tenant in accordance with
Section 7 of this Exhibit C will be reduced in the amount of such costs.

 

C-8

 

EXHIBIT D

 

ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT

DATED AS OF             , 2006,
BETWEEN

PCCP HC KIERLAND, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
AS LANDLORD,

AND

THE RYLAND GROUP, INC., A MARYLAND CORPORATION,
AS TENANT

 

BUILDING RULES

 

The following Building Rules are additional provisions of the foregoing Lease to
which they are attached. The capitalized terms used herein have the same
meanings as these terms are given in the Lease.

 

1.            Use of Common Areas. Tenant will not obstruct the sidewalks,
halls, passages, exits, entrances, elevators or stairways of the Building
(“Common Areas”), and Tenant will not use the Common Areas for any purpose other
than ingress and egress to and from the Premises. The Common Areas, except for
the sidewalks, are not open to the general public and Landlord reserves the
right to control and prevent access to the Common Areas of any person whose
presence, in Landlord’s opinion, would be prejudicial to the safety, reputation
and interests of the Building and its tenants.

 

2.             No Access to Roof. Tenant has no right of access to the roof of
the Building and will not install, repair or replace any antenna, aerial, aerial
wires, fan, air-conditioner or other device on the roof of the Building without
the prior written consent of Landlord. Any such device installed without such
written consent is subject to removal at Tenant’s expense without notice at any
time. Tenant will be liable for any damages or repairs incurred or required as a
result of its installation, use, repair, maintenance or removal of such devices
on the roof and agrees to indemnify and hold harmless Landlord from any
liability, loss, damage, cost or expense, including reasonable attorneys’ fees,
arising from any activities of Tenant or of Tenant’s Representatives on the roof
of the Building.

 

3.             Signage. No sign, placard, picture, name, advertisement or notice
visible from the exterior of the Premises will be inscribed, painted, affixed or
otherwise displayed by Tenant on or in any part of the Building without the
prior written consent of Landlord. Landlord reserves the right to adopt and
furnish Tenant with general guidelines relating to signs in or on the Building.
All approved signage will be inscribed, painted or affixed at Tenant’s expense
by a person approved by Landlord, which approval will not be unreasonably
withheld.

 

D-1

 

4.             Prohibited Uses. The Premises will not be used for manufacturing,
for the storage of merchandise held for sale to the general public, for lodging
or for the sale of goods to the general public. Tenant will not permit any food
preparation on the Premises, except that Tenant may use Underwriters’ Laboratory
approved equipment for brewing coffee, tea, hot chocolate and similar beverages
so long as such use is in accordance with all applicable federal, state and city
laws, codes, ordinances, rules and regulations.

 

5.             Janitorial Services. Tenant will not employ any person for the
purpose of cleaning the Premises nor permit any person to enter the Building for
such purpose other than Landlord’s janitorial service, except with Landlord’s
prior written consent. Tenant will not necessitate, and will be liable for the
cost of, any undue amount of janitorial labor by reason of Tenant’s carelessness
in or indifference to the preservation of good order and cleanliness in the
Premises. Janitorial service will not be furnished to areas in the Premises on
nights when such areas are occupied after 9:30 p.m., unless such service is
extended by written agreement to a later hour in specifically designated areas
of the Premises.

 

6.             Keys and Locks. Landlord will furnish Tenant, free of charge, two
keys to each door or lock in the Premises. Landlord may make a reasonable charge
for any additional or replacement keys. Tenant will not duplicate any keys,
alter any locks or install any new or additional lock or bolt on any door of its
Premises or on any other part of the Building without the prior written consent
of Landlord and, in any event, Tenant will provide Landlord with a key for any
such lock. On the termination of the Lease, Tenant will deliver to Landlord all
keys to any locks or doors in the Building which have been obtained by Tenant.

 

7.             Freight. Upon not less than twenty-four hours prior notice to
Landlord, which notice may be oral, an elevator will be made available for
Tenant’s use for transportation of freight, subject to such scheduling as
Landlord in its discretion deems appropriate. Tenant shall not transport freight
in loads exceeding the weight limitations of such elevator. Landlord reserves
the right to prescribe the weight, size and position of all equipment,
materials, furniture or other property brought into the Building, and no
property will be received in the Building or carried up or down the freight
elevator or stairs except during such hours and along such routes and by such
persons as may be designated by Landlord. Landlord reserves the right to require
that heavy objects will stand on wood strips of such length and thickness as is
necessary to properly distribute the weight. Landlord will not be responsible
for loss of or damage to any such property from any cause, and Tenant will be
liable for all damage or injuries caused by moving or maintaining such property.

 

8.             Nuisances and Dangerous Substances. Tenant will not conduct
itself or permit Tenant’s Representatives or Visitors to conduct themselves in
the Premises or anywhere on or in the Property in a manner which is offensive or
unduly annoying to any other Tenant or Landlord’s property managers. Tenant will
not install or operate any phonograph, radio receiver, musical instrument, or
television or other similar device in any part of the Common Areas and shall not
operate any such device installed in the Premises in such manner as to disturb
or annoy other tenants of the Building. Tenant will not use or keep in the
Premises or the Property any kerosene, gasoline or other combustible fluid or
material other than limited quantities thereof

 

D-2

 

reasonably necessary for the maintenance of office equipment, or, without
Landlord’s prior written approval, use any method of heating or air conditioning
other than that supplied by Landlord. Tenant will not use or keep any foul or
noxious gas or substance in the Premises or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors or vibrations, or interfere
in any way with other tenants or those having business therein. Tenant will not
bring or keep any animals in or about the Premises or the Property.

 

9.             Building Name and Address. Without Landlord’s prior written
consent, Tenant will not use the name of the Building in connection with or in
promoting or advertising Tenant’s business except as Tenant’s address.

 

10.          Building Directory. A directory for the Building will be provided
for the display of the name and location of tenants. Landlord reserves the right
to approve any additional names Tenant desires to place in the directory and, if
so approved, Landlord may assess a reasonable charge for adding such additional
names.

 

11.          Window Coverings. No curtains, draperies, blinds, shutters, shades,
awnings, screens or other coverings, window ventilators, hangings, decorations
or similar equipment shall be attached to, hung or placed in, or used in or with
any window of the Building without the prior written consent of Landlord, and
Landlord shall have the right to control all lighting within the Premises that
may be visible from the exterior of the Building.

 

12.          Floor Coverings. Tenant will not lay or otherwise affix linoleum,
tile, carpet or any other floor covering to the floor of the Premises in any
manner except as approved in writing by Landlord. Tenant will be liable for the
cost of repair of any damage resulting from the violation of this rule or the
removal of any floor covering by Tenant or its contractors, employees or
invitees.

 

13.          Wiring and Cabling Installations. Landlord will direct Tenant’s
electricians and other vendors as to where and how data, telephone, and
electrical wires and cables are to be installed. No boring or cutting for wires
or cables will be allowed without the prior written consent of Landlord. The
location of burglar alarms, smoke detectors, telephones, call boxes and other
office equipment affixed to the Premises shall be subject to the written
approval of Landlord.

 

14.           Office Closing Procedures. Tenant will see that the doors of the
Premises are closed and locked and that all water faucets, water apparatus and
utilities are shut off before Tenant or its employees leave the Premises, so as
to prevent waste or damage. Tenant will be liable for all damage or injuries
sustained by other tenants or occupants of the Building or Landlord resulting
from Tenant’s carelessness in this regard or violation of this rule. Tenant will
keep the doors to the Building corridors closed at all times except for ingress
and egress.

 

15.          Plumbing Facilities. The toilet rooms, toilets, urinals, wash bowls
and other apparatus shall not be used for any purpose other than that for which
they were constructed, and

 

D-3

 

no foreign substance of any kind whatsoever shall be disposed of therein. Tenant
will be liable for any breakage, stoppage or damage resulting from the violation
of this rule by Tenant, its employees or invitees.

 

16.          Use of Hand Trucks. Tenant will not use or permit to be used in the
Premises or in the Common Areas any hand trucks, carts or dollies except those
equipped with rubber tires and side guards or such other equipment as Landlord
may approve.

 

17.          Refuse. Tenant shall store all Tenant’s trash and garbage within
the Premises or in other facilities designated by Landlord for such purpose.
Tenant shall not place in any trash box or receptacle any material which cannot
be disposed of in the ordinary and customary manner of removing and disposing of
trash and garbage in the city in which the Building is located without being in
violation of any law or ordinance governing such disposal. All trash and garbage
removal shall be made in accordance with directions issued from time to time by
Landlord, only through such Common Areas provided for such purposes and at such
times as Landlord may designate. Tenant shall comply with the requirements of
any recycling program adopted by Landlord for the Building.

 

18.          Soliciting. Canvassing, peddling, soliciting and distribution of
handbills or any other written materials in the Building are prohibited, and
Tenant will cooperate to prevent the same.

 

19.          Parking. Tenant will use, and cause Tenant’s Representatives and
Visitors to use, any parking spaces to which Tenant is entitled under the Lease
in a manner consistent with Landlord’s directional signs and markings in the
parking area. Specifically, but without limitation, Tenant will not park, nor
permit Tenant’s Representatives or Visitors to park, in a manner that impedes
access to and from the Building or the parking area or that violates space
reservations for handicapped drivers or other parties registered as such.
Landlord may use such reasonable means as may be necessary to enforce the
directional signs and markings in the parking area, including towing services,
and Landlord will not be liable for any damage to vehicles towed as a result of
non-compliance with such parking regulations.

 

20.           Fire, Security and Safety Regulations. Tenant will comply with all
safety, security, fire protection and evacuation measures and procedures
established by Landlord or any governmental agency.

 

21.           Responsibility for Theft. Tenant assumes any and all
responsibility for protecting the Premises from theft, robbery and pilferage,
which includes keeping doors locked and other means of entry to the Premises
closed.

 

22.           Sales and Auctions. Tenant will not conduct or permit to be
conducted any sale by auction in, upon or from the Premises or elsewhere in the
Property, whether said auction be voluntary, involuntary, pursuant to any
assignment for the payment of creditors or pursuant to any bankruptcy or other
insolvency proceeding.

 

D-4

 

23.           Smoking. Tenant will not permit its employees, Representatives or
Visitors to smoke at the Property other than within designated smoking areas
located outside of the Building. Such smoking areas will be designated and
redesignated by Landlord from time to time.

 

24.           Waiver of Rules. Landlord may waive any one or more of these
Building Rules for the benefit of any particular tenant or tenants, but no such
waiver by Landlord will be construed as a waiver of such Building Rules in favor
of any other tenant or tenants nor prevent Landlord from thereafter enforcing
these Building Rules against any or all of the tenants of the Building.

 

25.           Effect on Lease. These Building Rules are in addition to, and
shall not be construed to in any way modify or amend, in whole or in part, the
terms, covenants, agreements and conditions of the Lease. Violation of these
Building Rules constitutes a failure to fully perform the provisions of the
Lease, as referred to in Section 15.1 - “Events of Default”.

 

26.           Non-Discriminatory Enforcement. Subject to the provisions of the
Lease (and the provisions of other leases with respect to other tenants),
Landlord shall use reasonable efforts to enforce these Building Rules in a
non-discriminatory manner, but in no event shall Landlord have any liability for
any failure or refusal to do so (and Tenant’s sole and exclusive remedy for any
such failure or refusal shall be injunctive relief preventing Landlord from
enforcing any of the Building Rules against Tenant in a manner that
discriminates against Tenant).

 

27.           Additional and Amended Rules. Landlord reserves the right to
rescind or amend these Building Rules and/or adopt any other and reasonable
rules and regulations as in its judgment may from time to time be needed for the
safety, care and cleanliness of the Building and for the preservation of good
order therein.

 

D-5

 

EXHIBIT E

 

ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT

DATED AS OF            , 2006,
BETWEEN

PCCP HC KIERLAND, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
AS LANDLORD,
 AND

THE RYLAND GROUP, INC., A MARYLAND CORPORATION,
AS TENANT

 

SUBORDINATION, NON-DISTURBANCE
 AND ATTORNMENT AGREEMENT

 

 

[See attached pages]

 

E-1

 

RECORDING REQUESTED BY AND
AFTER RECORDING, RETURN TO:

 

GMAC Commercial Mortgage Corporation

200 Witmer Road

Horsham, PA 19044-8015

Attn: Executive Vice President — Servicing Administration

 

 

SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE

 

SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT

 

This Subordination, Non-Disturbance and Attornment Agreement (“Agreement”), is
made as of this      day of         , 200   among LaSalle National Association,
not individually, but solely as Trustee for the Certificate Holders of GMAC
Commercial Mortgage               , Series      -      under certain
[Pooling/Trust and Servicing Agreement] dated as of
               ,                (“Lender”), by and through GMAC Commercial
Mortgage Corporation, a California corporation, its [Master] Servicer under said
[Pooling/Trust] and Servicing Agreement,                     , an
                     (“Landlord”), and                             , a
                                 (“Tenant”).

 

Background

 

A.         Lender is the owner and holder of a deed of trust or mortgage or
other similar security instrument (either, the “Security Instrument”), covering,
among other things, the real property commonly known and described as One
International Plaza, and further described on Exhibit “A” attached hereto and
made a part hereof for all purposes, and the building and improvements thereon
(collectively, the “Property”).

 

B.         Tenant is the lessee under that certain lease agreement between
Landlord and Tenant dated                 , 200    (“Lease”), demising a portion
of the Property described more particularly in the Lease (“Leased Space”).

 

C.         Landlord, Tenant and Lender desire to enter into the following
agreements with respect to the priority of the Lease and Security Instrument.

 

NOW, THEREFORE, in consideration of the mutual promises of this Agreement, and
intending to be legally bound hereby, the parties hereto agree as follows:

 

1.        Subordination. Tenant agrees that the Lease, and all estates, options
and rights created under the Lease, hereby are subordinated and made subject to
the lien and effect of the Security Instrument, as if the Security Instrument
had been executed and recorded prior to the Lease.

 

2.        Nondisturbance. Lender agrees that no foreclosure (whether judicial or
nonjudicial), deed-in-lieu of foreclosure, or other sale of the Property in
connection with enforcement of the Security Instrument or otherwise in
satisfaction of the underlying loan shall operate to terminate the Lease or
Tenant’s rights thereunder to possess and use the leased space provided,
however, that (a) the term of the Lease has commenced, (b) Tenant is in
possession of the premises demised pursuant to the Lease, and (c) the Lease is
in full force and effect and no uncured default exists under the Lease.

 

3.        Attornment. Tenant agrees to attorn to and recognize as its landlord
under the Lease each party acquiring legal title to the Property by foreclosure
(whether judicial or nonjudicial) of the Security Instrument, deed-in-lieu of
foreclosure, or other sale in connection with enforcement of the Security
Instrument or otherwise in satisfaction of the underlying loan (“Successor
Owner”). Provided that the conditions set forth in Section 2 above are met at
the time Successor Owner becomes owners of the Property, Successor Owner shall
perform all obligations of the landlord under the Leases arising from and after
the date title to the Property was transferred to Successor Owner. In no event,
however, will any Successor Owner be: (a) liable for any default, act or
omission of any prior landlord under the Lease, (except that Successor Owner
shall not be relieved from the obligation to cure any defaults which are
non-monetary and

1

 

©GMACCM 2000. All Rights Reserved.

SNDA Agt. (existing lease) v. 6/2000

 

E-2

 

continuing in nature, and such that Successor Owner’s failure to cure would
constitute a continuing default under the Lease); (b) subject to any offset or
defense which Tenant may have against any prior landlord under the Lease;
(c) bound by any payment of rent or additional rent made by Tenant to Landlord
more than 30 days in advance; (d) bound by any modification or supplement to the
Lease, or waiver of Lease terms, made without Lender’s written consent thereto;
(e) liable for the return of any security deposit or other prepaid charge paid
by Tenant under the Lease, except to the extent such amounts were actually
received by Lender; (f) liable or bound by any right of first refusal or option
to purchase all or any portion of the Property; or (g) liable for construction
or completion of any improvements to the Property or as required under the Lease
for Tenant’s use and occupancy (whenever arising). Although the foregoing
provisions of this Agreement are self-operative, Tenant agrees to execute and
deliver to Lender or any Successor Owner such further instruments as Lender or a
Successor Owner may from time to time request in order to confirm this
Agreement. If any liability of Successor Owner does arise pursuant to this
Agreement, such liability shall be limited to Successor Owner’s interest in the
Property.

 

4.        Rent Payments; Notice to Tenant Regarding Rent Payments. Tenant agrees
not to pay rent more than one (1) month in advance unless otherwise specified in
the Lease. After notice is given to Tenant by Lender that Landlord is in default
under the Security Instrument and that the rentals under the Lease should be
paid to Lender pursuant to the assignment of leases and rents granted by
Landlord to Lender in connection therewith, Tenant shall thereafter pay to
Lender all rent and all other amounts due or to become due to Landlord under the
Lease, and Landlord hereby expressly authorizes Tenant to make such payments to
Lender upon reliance on Lender’s written notice (without any inquiry into the
factual basis for such notice or any prior notice to or consent from Landlord)
and hereby releases Tenant from all liability to Landlord in connection with
Tenant’s compliance with Lender’s written instructions.

 

5.        Lender Opportunity to Cure Landlord Defaults. Tenant agrees that,
until the Security Instrument is released by Lender, it will not exercise any
remedies under the Lease following a Landlord default without having first given
to Lender (a) written notice of the alleged Landlord default and (b) the
opportunity to cure such default within the time periods provided for cure by
Landlord, measured from the time notice is given to Lender. Tenant acknowledges
that Lender is not obligated to cure any Landlord default, but if Lender elects
to do so, Tenant agrees to accept cure by Lender as that of Landlord under the
Lease and will not exercise any right or remedy under the Lease for a Landlord
default. Performance rendered by Lender on Landlord’s behalf is without
prejudice to Lender’s rights against Landlord under the Security Instrument or
any other documents executed by Landlord in favor of Lender in connection with
the Loan.

 

6.        Miscellaneous.

 

(a)        Notices. All notices under this Agreement will be effective only if
made in writing and addressed to the address for a party provided below such
party’s signature. A new notice address may be established from time to time by
written notice given in accordance with this Section. All notices will be deemed
received only upon actual receipt.

 

(b)        Entire Agreement: Modification. This Agreement is the entire
agreement between the parties relating to the subordination and nondisturbance
of the Lease, and supersedes and replaces all prior discussions, representations
and agreements (oral and written) with respect to the subordination and
nondisturbance of the Lease. This Agreement controls any conflict between the
terms of this Agreement and the Lease. This Agreement may not be modified,
supplemented or terminated, nor any provision hereof waived, unless by written
agreement of Lender and Tenant, and then only to the extent expressly set forth
in such writing.

 

(c)        Binding Effect. This Agreement binds and inures to the benefit of
each party hereto and their respective heirs, executors, legal representatives,
successors and assigns, whether by voluntary action of the parties or by
operation of law. If the Security Instrument is a deed of trust, this Agreement
is entered into by the trustee of the Security Instrument solely in its capacity
as trustee and not individually.

 

(d)        Unenforceability. Any provision of this Agreement which is determined
by a government body or court of competent jurisdiction to be invalid,
unenforceable or illegal shall be ineffective only to the extent of such holding
and shall not affect the validity, enforceability or legality of any other
provision, nor shall such determination apply in any circumstance or to any
party not controlled by such determination.

 

(e)        Construction of Certain Terms. Defined terms used in this Agreement
may be used interchangeably in singular or plural form, and pronouns cover all
genders. Unless otherwise provided herein, all days

2

 

©GMACCM 2000. All Rights Reserved.

SNDA Agt. (existing lease) v. 6/2000

 

E-3

 

from performance shall be calendar days, and a “business day” is any day other
than Saturday, Sunday and days on which Lender is closed for legal holidays, by
government order or weather emergency.

 

(f)         Governing Law. This Agreement shall be governed by the laws of the
State in which the Property is located (without giving effect to its
rules governing conflicts of laws).

 

(g)        WAIVER OF JURY TRIAL. TENANT, AS AN INDUCEMENT FOR LENDER TO PROVIDE
THIS AGREEMENT AND THE ACCOMODATIONS TO TENANT OFFERED HEREBY, HEREBY WAIVES ITS
RIGHT, TO THE FULL EXTENT PERMITTED BY LAW, AND AGREES NOT TO ELECT, A TRIAL BY
JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT.

 

(h)        Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together constitute a fully executed agreement even though all signatures do not
appear on the same document. The failure of any party hereto to execute this
Agreement, or any counterpart hereof, shall not relieve the other signatories
from their respective obligations hereunder.

 

IN WITNESS WHEREOF, this Agreement is executed this     day of        , 200  .

 

LENDER:

TENANT:

 

 

[Insert Trustee Name]

[Insert Tenant Name]

 

 

 

 

By: GMAC Commercial Mortgage Corporation,
its [Master] Servicer

 

 

 

By:

 

 

By:

 

 

Name:

 

Name:

 

Title:

 

Title:

 

 

 

Lender Notice Address:

Tenant Notice Address:

 

 

[Insert Trustee name]

Tenant Name

c/o GMAC Commercial Mortgage Corporation

 

 

200 Witmer Road

 

 

Horsham, PA 19044

 

 

Attn: Executive Vice President — Servicing Administration

Attn:

 

 

 

 

LANDLORD:

 

[Landlord Name]

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Landlord Notice Address:

 

 

 

 

 

 

 

 

 

 

Attn:

 

 

 

 

3

 

©GMACCM 2000. All Rights Reserved.

SNDA Agt. (existing lease) v. 6/2000

 

E-4

 

Notary Acknowledgement for Lender:

 

Commonwealth of Pennsylvania

:

 

 

:ss

 

County of

:

 

 

On this, the         day of          , 200  , before me, the undersigned Notary
Public, personally appeared                 known to me (or satisfactorily
proven) to be the person whose name is subscribed to the within instrument, and
who acknowledged to me that he/she is an officer of GMAC Commercial Mortgage
Corporation in the capacity stated and that he/she executed the within
instrument in such capacity for the purposes therein contained.

 

                IN WITNESS WHEREOF, I have hereunto set my hand and official
seal.

 

 

 

 

 

 

Notary Public

 

 

 

{seal}

 

 

 

 

Notary Acknowledgement for Tenant:

 

State of

 

 

:

 

 

 

:ss

County of

 

 

:

 

On this, the      day of                   , 200  , before me, the undersigned
Notary Public, personally appeared                      known to me (or
satisfactorily proven) to be the person whose name is subscribed to the within
instrument and who acknowledged to me that he/she is an officer of the Tenant in
the capacity stated and that he/she executed the within instrument in such
capacity for the purposes therein contained.

 

                IN WITNESS WHEREOF, I have hereunto set my hand and official
seal.

 

 

 

 

 

Notary Public

 

 

 

{seal}

 

 

 

 

Notary Acknowledgement for Landlord:

 

State of

 

 

:

 

 

 

:ss

County of

 

 

:

 

On this, the        day of                   , 200  , before me, the undersigned
Notary Public, personally appeared                     known to me (or
satisfactorily proven) to be the person whose name is subscribed to the within
instrument and who acknowledged to me that he/she is an officer of the Landlord
in the capacity stated and that he/she executed the within instrument in such
capacity for the purposes therein contained.

 

                IN WITNESS WHEREOF, I have hereunto set my hand and official
seal.

 

 

 

 

 

Notary Public

 

 

 

{seal}

 

 

 

 

4

 

QMACCM 2000. All Right Reserved

SNDA Agt. (existing lease) v. 6/2000

 

E-5

 

Exhibit “A”

(Legal Description of the Property)

 

Parcel A

 

 

5

 

QMACCM 2000. All Right Reserved

SNDA Agt. (existing lease) v. 6/2000

 

E-6

 

EXHIBIT F

 

ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT

DATED AS OF                  , 2006,
BETWEEN

PCCP HC KIERLAND, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
AS LANDLORD,
AND

THE RYLAND GROUP, INC., A MARYLAND CORPORATION,
AS TENANT

 

OPERATING COSTS EXCLUSIONS

 

 

[See attached pages]

 

F-1

 

 

EXCLUSIONS FROM ANNUAL

OPERATING COSTS AND REAL ESTATE TAXES

 

 

1.             Any expenses, which under generally accepted accounting
principles and practice, would not be considered a normal maintenance or
operating expense:

 

2.             All costs associated with the operation of the business of the
ownership or entity which constitutes “Landlord”, as distinguished from the
costs Building operations, including costs of partnership accounting and legal
matters, costs of defending any lawsuits with any mortgagee (except as the
actions of Tenant may be an issue), costs of selling, syndicating, financing,
mortgaging, or hypothecating any of the Landlord’s interest in the Building, the
Project, and/or Common Areas, costs of any disputes between Landlord and its
employees, costs of disputes of Landlord with Building management, or costs paid
in connection with disputes with Tenant or any other tenants;

 

3.             All costs (including permit, license and inspection fees)
incurred in renovating or otherwise improving or decorating; painting or
redecorating space for tenants or other occupants or in renovating or
redecorating vacant space, including the cost of alterations or improvements to
Tenant’s Premises or to the premises of any other tenant or occupant of the
Building, the Project or its Common Areas;

 

4.             Any cash or other consideration paid by landlord on account of,
with respect to, or in lieu of the tenant improvement work or alterations
described in clause (3) above;

 

5.             Costs incurred by Landlord for alterations or additions, which
are considered capital improvements and replacement under generally accepted
accounting principles;

 

6.             Costs incurred by Landlord in connection with the initial
construction of the Building, the Project and related facilities, the correction
of defects in construction, or in the discharge of Landlord’s obligations under
the construction Rider attached to the Lease;

 

7.             Any improvement installed or work performed or any other cost or
expense incurred by Landlord in order to comply with the requirements for
obtaining or renewal of a certificate of occupancy for the Building, the Project
or any space therein;

 

8.             Cost of replacement of capital equipment;

 

9.             Any reserves for equipment of capital replacement;

 

10.           Costs of capital nature, including capital improvements, capital
repairs, capital equipment, and capital tools, all as determined in accordance
with generally accepted accounting principles;

 

F-2

 

EXCLUSIONS FROM ANNUAL

OPERATING COSTS AND REAL ESTATE TAXES

 

 

11.           Costs of any services sold or provided to tenants or other
occupants for which Landlord or Managing Agent is entitled to be reimbursed by
such tenants or other occupants as an additional charge or rental over and above
the basic rent (and escalations thereof);

 

12.           Expenses in connection with services or other benefits of a type
which are not provided Tenant but which are provided to another tenant or
occupant;

 

13.           Costs for all items and services for which Tenant reimburses
Landlord or pays to third parties or which Landlord provides selectively or one
or more tenants or occupants of the Building or the Project (other than Tenant)
without reimbursement;

 

14.           Depreciation and amortization;

 

15.           Costs incurred due to violation by Landlord or Managing Agent or
any tenant of the terms and conditions of any lease;

 

16.           Payments in respect to overhead or profit to subsidiaries or
affiliates of Landlord, or to any party as a result of non-competitive selection
process, for management or other services in or to the Building or the Project,
or for supplies or other materials to the extent that the costs of such
services, supplies, or materials exceed the costs that would have been paid had
the services, supplies or materials been provided by parties unaffiliated with
the Landlord on a competitive basis;

 

17.           Interest on debt or amortization payments on any mortgages or
deeds of trust;

 

18.           Landlord’s or Landlord’s Managing Agent’s general corporate
overhead and general administrative expenses (other than the administrative fee
provided for in the Lease);

 

19.           Any compensation paid to clerks, attendants, concierges or other
persons working in or managing commercial concession operated by Landlord or
Landlord’s Managing Agent;

 

20.           Rental Payments and other related expenses incurred in leasing air
conditioning systems, elevators or other equipment ordinarily considered to be
of capital nature, except equipment which is used in providing janitorial
services and which is not affixed to the Building or the Project;

 

21.           Advertising and promotional costs;

 

22.           Costs incurred in owning operating maintaining and repairing any
underground or above ground parking garage and/or any other parking facilities
associated with the Building and Common Areas including, but not limited to any
expenses for parking equipment, tickets, supplies, signage/signs, claims
insurance, cleaning, resurfeeing,

 

F-3

 

EXCLUSIONS FROM ANNUAL

OPERATING COSTS AND REAL ESTATE TAXES

 

 

 restriping, business taxes, management fees and costs structural maintenance
utilities insurance of any form, real estate taxes and the wages salaries
employee benefits and taxes for personnel working connection with any such
parking facilities.

 

23.           The cost of repairs or other work incurred by reason of fire,
windstorm or other casualty (except that deductibles paid to any insurance shall
be included as Building Operating costs), or by the exercise of the right of
eminent domain to the extent that Landlord is compensated therefore through
proceeds of insurance or condemnation awards, or would have been so reimbursed
if Landlord had in force all of the insurance required to be carried by Landlord
under the provisions of this Lease;

 

24.           Leasing commission, attorney fees, costs and disbursements and
other expenses incurred in connection with negotiations or disputes with tenants
or other occupants or prospective tenants or other occupants, or associated with
the enforcement of any leases or the defense of Landlord’s title to or interest
in the Building, the Project or any part thereof or Common Areas or any part
thereof;

 

25.           “Takeover” expenses, including the expenses incurred by Landlord
with respect to space located in another building of any kind or nature in
connection with the leasing of space in the Building or the Project;

 

26.           All administrative and other costs related to the Building’s
leasing, marketing and construction (tenant improvement or otherwise) programs,
including but not limited to the reasonable allocation of the wages, salaries
employee benefits and taxes for all personnal involved in the management office
expenses such as office supplies, office equipment, telephone expenses and all
other miscellaneous administrative expenses;

 

27.           Landlord’s gross receipts taxes, personal and corporate income
taxes, inheritance and estate taxes and other business taxes and assessments,
franchise, gift and transfer taxes;

 

28.           Any real estate taxes payable by Tenant or any other tenant in the
Building or the Project under the applicable provisions in their respective
leases;

 

29.           Real estate taxes allocable to tenant improvements of Tenant or
other tenant or occupants in the Building or Common Areas which are over and
above the Landlord’s standard tenant improvement allowance;

 

30.           Any special assessments or taxes from any city, county, state of
federal government of agency, including, but not limited to, such items as
parking income taxes, metro rail assessments, etc;

 

F-4

 

EXCLUSIONS FROM ANNUAL

OPERATING COSTS AND REAL ESTATE TAXES

 

 

31.           Any increase of real estate taxes and assessments due to any
changes in ownership (as defined in the California Revenue and Taxation Code)
including but not limited to the sale or any other form of transfer of title of
the building and/or Common Areas or any part thereof, or due to the transfer of
title of any leases in the Building, or due to any renovation or new
construction in the Building or Common Areas or related facilities;

 

32.           Costs of repair or replacement for any item covered by a warranty
to the extent of any recovery;

 

33.           Costs of which Landlord is reimbursed by its insurance carrier or
by any tenant’s insurance carrier or by any other entity;

 

34.           Costs of any “tap fees” or any sewer or water connection fees of
the Building, the Project or Common Areas;

 

35.           Costs of compliance with any fire, safety or other governmental
rules, regulations, laws, statutes, ordinances or requirements imposed by any
governmental authority or insurance company with respect to the Building, the
Project or Common Areas during the Term of the Lease, but only to the extent the
same were enacted and enforceable against the building prior to the date of this
Lease.

 

36.           Costs associated with the installation, maintenance and removal of
any signage associated with the Building, the Property, its tenants and all
related facilities and Common Areas.

 

37.           Any fines, costs, penalties or interest resulting from the gross
negligence or willful misconduct or the Landlord or its agents, contractors, or
employees;

 

38.           Rental payments of any related costs pursuant to any ground lease
of land underlying all or any portion of the Building, the Property and Common
Areas;

 

39.           Any costs or fees that are unreasonable in view of the goods or
services obtained for such costs or fees, but only to the extent that such costs
exceed what is reasonable;

 

40.           Any costs, fees, dues, contributions or similar expenses for
political, charitable, industry association or similar organizations;

 

41.           Any rental and any associated costs, either actual or not for the
Landlord’s or Landlord’s Managing Agent’s management or leasing office;

 

F-5

 

EXCLUSIONS FROM ANNUAL

OPERATING COSTS AND REAL ESTATE TAXES

 

 

42.           Any costs associated with the purchase or rental of furniture and
office equipment for the Landlord’s or Landlord’s Managing Agent’s management,
security, engineering, or other offices associated with the Building, the
Project and Common Areas.

 

43.           Any bad debt loss, rent loss, or reserves for bad debt or rent
loss;

 

44.           Any costs incurred in connection with the ground floor or any
other floor in the Building or the Project devoted to retail operations;

 

45.           All assessments and special assessments due to need restrictions,
descriptions and/or owners associations which accrue against the Building, the
Project and Common Areas and

 

46.           Acquisition costs for sculptures, paintings, or other objects of
art, but only the extent such costs are unreasonable in light of the
circumstances;

 

47.           Costs of changes that are required by law of government
authorities enacted and enforceable against the building prior to the date of
this Lease because of any act or failure to act by Landlord, its agents,
servants or contractors, including, without limitation alterations required in
connection with the grant of any permit or approval to Landlord;

 

48.           Contributions to employee pension plans;

 

49.           Any category of expense which is not included in the Operating
Expenses for the Base Year.

 

50.           Tax penalties incurred as a result of Landlord’s negligence or
inability or unwillingness to make payments when due;

 

51.           All assessments and premiums which are not specifically charged to
Tenant because of what Tenant has done, which can be paid by Landlord in
installments, shall be paid by Landlord in installments and shall be paid by
Landlord in the maximum number of installments permitted by law and not included
as Operating Costs except in the year in which the assessment installment is
actually paid;

 

52.           Any entertaining dining or travel expenses for any purpose; and

 

53.           The costs of providing or removing any cabling or wining to the
Building or the Project.

 

Under no circumstances shall Landlord collect in excess of 100% of all
Landlord’s Operating Expenses or recover, through Operating Expenses, any item
of cost more than once nor shall Landlord include in Operating Expenses any
costs in excess of those that would be reasonably

 

F-6

 

EXCLUSIONS FROM ANNUAL

OPERATING COSTS AND REAL ESTATE TAXES

 

 

incurred by prudent operators and managers of similar buildings in the area.
Operating Expenses shall be reduced by the amount of any reimbursement,
recoupment, payment, discount credit, reduction, allowance or the like received
or receivable by Landlord that is allocable to any Operating Expenses.

 

F-7

 

EXHIBIT G

 

ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT

DATED AS OF               , 2006,
BETWEEN

PCCP HC KIERLAND, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
AS LANDLORD,

AND

THE RYLAND GROUP, INC., A MARYLAND CORPORATION,
AS TENANT

 

EXTERIOR BUILDING SIGNAGE LOCATIONS

 

 

[See attached page(s)]

 

G-1

 

EXHIBIT G-1

 

ATTACHED TO AND FORMING A PART OF
LEASE AGREEMENT

DATED AS OF               , 2006,
BETWEEN

PCCP HC KIERLAND, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
AS LANDLORD,
AND

THE RYLAND GROUP, INC., A MARYLAND CORPORATION,

AS TENANT

 

LANDLORD APPROVED SIGNAGE

 

 

[See attached page(s)]

 

G-1-1