Exhibit 10.1
 
SUBLEASE AGREEMENT
 
This Sublease dated as of July 30, 2008 is made between the Sublandlord and
Subtenant listed in Article I below.
 
ARTICLE I: Defined Terms; Background
 
1.
Each reference in this Sublease to the capitalized terms set forth below shall
have the meanings given to them in this Article I.

 
Sublandlord:
 
Advantis Real Estate Services Company
     
Sublandlord’s Notice
Address:
 
 
 
 
 
 
 
 
4505 Emperor Boulevard, Suite 320
Durham, NC 27703
 
With a copy to:
 
Wyrick Robbins Yates Ponton LLP
4101 Lake Boone Trail, Suite 300
Raleigh, NC 27607-7506
ATTN: Eric A. Vernon
Subtenant:
 
Smart Online, Inc.
     
Subtenant’s Notice
Address:
 
P.O. Box 12794
Research Triangle Park, NC 27709
 
With a copy to:
 
Smith, Anderson, Blount, Dorsett,
Mitchell & Jernigan, L.L.P.
2500 Wachovia Capitol Center
Raleigh, North Carolina
ATTN: Margaret N. Rosenfeld
     
Master Lease:
 
Lease dated September 19, 2005 between Nottingham Hall, LLC and Sublandlord, a
copy of which is attached hereto as Exhibit A.
     
Master Landlord:
 
Nottingham Hall, LLC

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Master Leased Premises:
 
Approximately 9,837 square feet on the 3rd floor of Nottingham Hall (the
“Building”), shown on the plan attached hereto as Exhibit B.
     
Subleased Premises:
 
The entire Master Leased Premises.
     
Sublease Commencement Date:
 
September 13, 2008.
     
Sublease Term:
 
 
Sublease Commencement Date through the end of the original Master Lease term,
September 30, 2011.
     
Sublease Rent:
 
 
$500,000 payable on the later of: (i) the Sublease Commencement Date, or
(ii) the first business day after Sublandlord’s completion of the Initial
Improvements (as hereinafter defined).
     
Operating Expense Pass Through:
 
None.
     
Security Deposit Amount:
 
NA
     
Permitted Uses:
 
Office Use
     
Broker(s):
 
Advantis Real Estate Services Company:
Scott Stankavage
     
Other Terms:
 
Sublandlord agrees, at no separate charge, to transfer all furniture, equipment
and other assets identified on Exhibit C hereto (collectively, the “FF”) to
Subtenant as additional consideration for Subtenant’s agreement to enter into
this Sublease Agreement. Sublandlord shall deliver Subtenant a FF Conveyance
Agreement substantially in the form attached hereto as Exhibit D coincidentally
with receipt of the Sublease Rent.

2.
Sublandlord is the tenant under the Master Lease. Sublandlord and Subtenant wish
to enter into a sublease of the Subleased Premises on the terms and conditions
set forth herein.

 
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ARTICLE II: Agreements
 
NOW, THEREFORE, the parties agree as follows:
 
1.
SUBLEASED PREMISES

 
Sublandlord hereby subleases to Subtenant, on the terms and conditions set forth
in this Sublease, the Subleased Premises. Subject to Sublandlord’s obligations
pursuant to Section 10 hereof, Sublandlord shall deliver the Subleased Premises
to Subtenant on the Sublease Commencement Date in broom clean condition but
otherwise in such “AS IS, WHERE IS” condition as exists as of the date of this
Sublease (subject to latent defects not readily apparent through visual
inspection and the repair/maintenance obligations of Master Landlord under the
Master Lease), free of all occupants other than Subtenant. Subtenant
acknowledges that Sublandlord has made no representations or warranties
concerning the Subleased Premises or the Building or their fitness for
Subtenant’s purposes, except as expressly set forth in this Sublease.
Sublandlord covenants and agrees that it will perform all of its obligations
under the Master Lease, except to the extent Sublandlord’s compliance is
inhibited by Subtenant’s exclusive occupancy of the Subleased Premises. If
Subtenant’s occupancy is disturbed as a result of Sublandlord’s default under
the Master Lease, Tenant shall refund a prorated portion of the Sublease Rent.
 
2.
SUBLEASE TERM

 
The term of this Sublease shall commence on the Sublease Commencement Date and
continue for the Sublease Term unless terminated prior to such date pursuant to
the terms hereof or pursuant to law.
 
3.
RENT

 
Subtenant shall pay to Sublandlord the Sublease Rent on the Sublease
Commencement Date. All charges, costs, expenses and sums required to be paid or
borne by Subtenant under this Sublease in addition to Sublease Rent (for
example, any amount paid on Subtenant’s behalf to cure a default, as
contemplated by Section 14) shall be deemed “Additional Rent”, and Sublease Rent
and Additional Rent shall hereinafter collectively be referred to as “Rent”.
Subtenant’s covenant to pay Rent shall be independent of every other covenant in
this Sublease.
 
4.
OPERATING EXPENSES

 
Sublandlord shall be solely responsible for all operating expense pass-throughs
for the Subleased Premises and this Sublease incorporates the other provisions
of Section 4(b) and (c) of the Master Lease.
 
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5.
INSURANCE/WAIVER OF CLAIMS AND SUBROGATION

 

 
(a)
During the Sublease Term, Subtenant shall maintain insurance of such types, in
such policies, with such endorsements and coverages, in such amounts as are set
forth in the Master Lease. All insurance policies shall name the following
parties as additional insured and loss payees and shall contain an endorsement
that such policies may not be modified or cancelled without 30 days’ prior
written notice to Master Landlord and Sublandlord. Subtenant shall promptly pay
all insurance premiums and shall provide Sublandlord (upon request) with
policies or certificates which are reasonably acceptable to Sublandlord and
Master Landlord evidencing such insurance upon Subtenant’s execution of this
Sublease.

 
Additional Insureds

1.   ACP Mid – Atlantic, LLC
2.   Nottingham Hall, LLC
3.   Imperial I Associates, LLC
4.   ACP/Imperial I Manager, LLC
5.   Tri Properties, Inc.
6.   Advantis Real Estate Services Company
 

 
(b)
In the event Subtenant sustains a loss by reason of fire or other casualty which
is covered by its property insurance policy (or would have been covered had
Subtenant carried the insurance required hereunder), and regardless of whether
such fire or other casualty is caused in whole or in part by the acts or
omissions of Sublandlord or Master Landlord or their agents, servants, employees
or invitees, then Subtenant agrees to look first to the coverage provided by its
insurance proceeds, and Subtenant shall have no right of action against
Sublandlord, Master Landlord, or their agents, servants, employees or invitees,
and no third party shall have any right by way of assignment, subrogation or
otherwise against the party causing such loss; provided, however the foregoing
release of claims shall only apply to the extent of insurance proceeds actually
collected by such party (unless such party failed to maintain the coverage
required hereunder in which event it shall be deemed to have recovered the
entire policy amount required hereunder). In the event Sublandlord sustains a
loss by reason of fire or other casualty which is covered by its property
insurance policy and regardless of whether such fire or other casualty is caused
in whole or in party by the acts or omissions of Subtenant or its agents,
servants, employees or invitees, then Sublandlord agrees to look first to the
coverage provided by its insurance proceeds, and it shall have no right of
actions against Subtenant or its agents, servants, employees or invitees, and no
third party shall have any right by way of assignment, subrogation or otherwise
against Subtenant; provided, however the foregoing release of claims shall only
apply to the extent of insurance proceeds actually collected by Sublandlord. The
parties hereto agree that each of its policies of property insurance shall
include a waiver of subrogation to effectuate the provisions of this provision.

 
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(c)
Subtenant agrees the Master Landlord and not Sublandlord shall provide insurance
on the Building and restore the Premises, or the Building, as applicable, in the
event of a fire or other casualty.

 
6.
SECURITY DEPOSIT (Intentionally Deleted)

7.
USE OF PREMISES

 
Subtenant shall use and occupy the Subleased Premises only for the Permitted
Uses, and only to the extent permitted by the Master Lease and all laws
governing or affecting Subtenant’s particular use of the Subleased Premises.
 
8.
ASSIGNMENT AND SUBLETTING

 
Subtenant shall not assign this Sublease or further sublet all or any part of
the Premises without the prior written consent of Sublandlord and of Master
Landlord, which consent shall not be unreasonably withheld, conditioned, or
delayed. The following transactions shall be deemed assignments of this Sublease
requiring such prior written consents: (i) any assignment, mortgage, pledge,
hypothecation or other transfer of this Sublease; (ii) any sublease,
concessions, license or occupancy agreement with respect to all or any portion
of the Subleased Premises; (iii) if Subtenant or any of its successors or
assigns is a corporation, any sale, pledge or other transfer of all or a
majority of the capital stock of Subtenant or any such successor or assign
(unless such stock is publicly traded on a recognized security exchange or
over-the-counter market), any merger, consolidation or reorganization of or into
Subtenant or any such successor or assign, and any sale of all or substantially
all of the assets of Subtenant or such successor or assign.
 
Notwithstanding the foregoing, Sublandlord shall grant its consent (subject to
obtaining consent from Master Landlord) to assign this Sublease or to sublet the
Subleased Premises (in whole or in part) (i) to any parent or subsidiary
corporation of Subtenant or (ii) to any corporation or other business
organization controlled by or under common control with Subtenant or (iii) to
any corporation or other business organization into which Subtenant may be
converted or with which it may merge or (iv) to any business organization
acquiring all or substantially all of the assets of Subtenant (each, a
“Permitted Transfer”), provided that the entity to which this Sublease is so
assigned or which so sublets the Premises (or portion thereof) has the tangible
net worth, financial capability and liquidity which is the same or better than
the Subtenant as of the date of the Permitted Transfer.
 
Any attempt by Subtenant to assign, sublet or transfer its rights in the
Subleased Premises without the prior written consent of both Sublandlord and
Master Landlord (if required) shall be void, and at Sublandlord’s options, any
breach of this Section II.8 shall constitute a default by Subtenant entitling
Sublandlord to exercise all rights and remedies permitted hereunder without need
for any notice and cure period. No permitted assignment, transfer, encumbrance
or subletting shall relieve Subtenant from Subtenant’s obligations and
agreements hereunder and Subtenant shall continue to be liable as a principal
and not as a guarantor or surety to the same extent as though no assignment,
transfer, encumbrance or subletting had been made.
 
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9.
PROVISION OF SERVICES 

 
No services are currently included in Sublease Rent except for any provided by
Master Landlord to Sublandlord under Section 7 the Master Lease. Subtenant shall
have no right to require Sublandlord to perform any of such services.
Notwithstanding the foregoing, Sublandlord agrees that it shall use commercially
reasonable efforts to cause Master Landlord’s compliance with its Master Lease
obligations. If Sublandlord furnishes the Subleased Premises or Subtenant with
any additional services upon request of Subtenant, Sublandlord shall charge
Subtenant a reasonable charge therefor, and Subtenant shall pay the additional
charge within ten (10) business days after receipt of billing by Sublandlord.

10.
INITIAL IMPROVEMENTS; CONSTRUCTION ALLOWANCE 

At Subtenant’s expense, Sublandlord shall perform the work set forth on the
estimate attached hereto as Exhibit E (such work, the “Initial Improvements”).
Sublandlord shall provide Subtenant with a $1,000.00 construction allowance for
the Initial Improvements. Sublandlord shall comply with the requirements of the
Master Lease for the construction of the Initial Improvements and all
construction work shall be done in a good and workmanlike manner and in
compliance with all applicable laws and all lawful ordinances, regulations and
orders of governmental authority and insurers of the Building. If Sublandlord is
unable to complete the Initial Improvements prior to September 13, 2008, then
beginning on September 13, 2008, a fee of $1,000 per day shall be credited
against amounts owed or owing to Sublandlord hereunder (the “Late Delivery
Fee”). Notwithstanding the foregoing, the Late Delivery Fee shall not apply if
and to the extent any delay is proximately caused by the negligence, misconduct,
or unreasonable interference (with Landlord’s work) of the Subtenant (for
example, by requesting a change to the Initial Improvements that results in a
delay or delays to Sublandlord’s construction of the Initial Improvements caused
by Subtenant’s early access to the Subleased Premises in accordance with Section
11 hereof), or any governmental authority having jurisdiction over the Subleased
Premises. Any Late Delivery Fee will first be applied to amounts owed to
Sublandlord in connection with the Initial Improvements, and thereafter will be
applied to rent then due or next coming due. Additionally, if Master Landlord
and Sublandlord have not executed a written agreement consenting to this
Sublease (and stipulating that Subtenant shall not be required to remove the
Initial Improvements upon expiration or sooner termination of the Sublease Term)
on or before September 1, 2008, then Subtenant shall have the right to terminate
this Sublease and all of its obligations hereunder.

11.
EARLY ACCESS

Beginning after 5 p.m. on September 1, 2008, Subtenant shall be permitted
reasonable access to the Subleased Premises prior to the Sublease Commencement
Date for the purposes of reconfiguring modular workstations, running cables,
setting up information technology infrastructure and doing such other work as
may be appropriate or desirable to enable Subtenant to assume possession of and
operate in the Subleased Premises; provided, however, that such access shall not
interfere with the normal conduct of Sublandlord’s business operations or
Sublandlord’s construction of the Initial Improvements. Prior to any such entry,
Subtenant shall comply with all insurance provisions of the Sublease. All waiver
and indemnity provisions of the Sublease shall apply upon Subtenant’s entry onto
the Subleased Premises.

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12.
TRADE FIXTURES

 
Subtenant shall have the right to furnish and install any trade fixtures that
are necessary for the conduct of its business; provided, however, that at the
termination of this Sublease, Subtenant shall remove such trade fixtures and
restore the Subleased Premises at Subtenant’s sole cost to the state and
condition in which they existed on the Sublease Commencement Date, ordinary wear
and tear and approved alterations excepted. If Subtenant fails to comply with
the provisions of this paragraph, Sublandlord may make such repairs or
restoration, and the reasonable cost thereof shall be additional rent payable by
Subtenant on demand. All trade fixtures shall be and remain the property of
Subtenant, provided that any such trade fixtures remaining on the Premises after
the expiration or termination of the term hereof shall be deemed abandoned by
Subtenant and shall, at Sublandlord’s option, become the property of Sublandlord
without payment therefor.
 
13.
ALTERATIONS AND IMPROVEMENTS

 
Other than the Initial Improvements, Sublandlord shall have no obligation to
make any alterations or improvements to the Subleased Premises for Subtenant’s
use or occupancy thereof. Notwithstanding any provisions of the Master Lease to
the contrary, Subtenant shall not make any alterations, additions, improvements
or installments in the Subleased Premises without in each instance obtaining the
prior written consent of the Master Landlord, in accordance with the consent
requirements of the Master Lease, and the Sublandlord, which consent shall not
be unreasonably withheld, conditioned, or delayed. If Sublandlord and Master
Landlord consent to any such alterations, improvements or installations,
Subtenant shall perform and complete such alterations, improvements and
installations at its expense, in compliance with applicable laws and the Master
Lease. If Subtenant performs any alterations, improvements or installations
without obtaining the prior written consent of both Master Landlord and
Sublandlord, Sublandlord (or Master Landlord) may remove such alterations,
improvements or installations, restore the Subleased Premises and repair any
damage arising from such removal or restoration, and Subtenant shall be liable
for all costs and expenses incurred in the performance of such removal, repairs
or restoration. All approved alterations, additions and improvements (except
trade fixtures) shall be and remain the property of Sublandlord upon
installation and shall be surrendered to Sublandlord upon the termination of
this Sublease. If Master Landlord requires any removal and restoration of
alterations and improvements, Sublandlord shall undertake such removal and
restoration and Subtenant shall be liable to Sublandlord for all costs and
expenses incurred by Sublandlord in connection therewith, but only to the extent
attributable to alterations and improvements made by Subtenant after taking
possession of the Subleased Premises.
 
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14.
SUBORDINATION TO MASTER LEASE

 
This Sublease shall at all times be subject and subordinate to the terms and
provisions of the Master Lease. Except for Sections 3(b), 3(c), 4, 5(c), 7,
8(b), 9(c), 9(d), 9(e), 10, 14, 16(a), 16(c), 22, 23 (fourth (4th) sentence from
the end only), 31, 33, 39, 40, 41, 42(d), 42(i), 42(j), 42(k), 42(l), and
Exhibit C of the Master Lease and except as otherwise set forth in this
Sublease, all of the terms and conditions contained in the Master Lease are
hereby incorporated herein by this reference as terms and conditions of this
Sublease, except that references in the Master Lease to the terms listed in
Column A below shall be deemed to be references to the terms set forth in this
Sublease listed in the same row in Column B below:
 
Column A
 
Column B
     
Lease
 
 
Sublease
 
Landlord
 
 
Sublandlord
 
Tenant
 
 
Subtenant
 
Term
 
 
Sublease Term
 
Annual Rental
 
Premises
 
Sublease Rent
 
Subleased Premises
 
Commencement Date
 
Sublease Commencement Date

 
Subtenant shall not cause a default under the Master Lease or permit its
employees, agents, contractors or invitees to cause a default under the Master
Lease.
 
Notwithstanding any other provision of this Sublease, Sublandlord, as
sublandlord under this Sublease, shall have the benefit of all rights and
remedies (but not waivers or limitations of liability) enjoyed by Master
Landlord, as the landlord under the Master Lease, but (i) Sublandlord shall have
no obligation under this Sublease to perform the obligations of Master Landlord,
as landlord under the Master Lease, including without limitation any obligation
to provide services or maintain insurance; (ii) Sublandlord shall not be bound
by any representations or warranties of the Master Landlord under the Master
Lease; (iii) in any instance where the consent of Master Landlord is required
under the terms of the Master Lease, the consent of Sublandlord and Master
Landlord shall be required; and (iv) Sublandlord shall not be liable to
Subtenant for any failure or delay in Master Landlord’s performance of its
obligations, as landlord under the Master Lease. Upon request of Subtenant,
Sublandlord shall, at Subtenant’s expense, use reasonable efforts to cause
Master Landlord to perform its obligations under the Master Lease, including
without limitation, those obligations set forth in Sections 7 and 10 of the
Master Lease.
 
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Upon the default by Subtenant in the full and timely payment and performance of
its obligations under the Sublease (beyond any applicable notice and cure
period), Sublandlord may exercise any and all rights and remedies granted to
Master Landlord by the Master Lease with respect to default by the Tenant or
Lessee under the Master Lease. In the event that Subtenant breaches any of the
terms conditions or covenants of this Sublease or of the Master Lease and fails
to remedy such breach within ten (10) days after written notice, Sublandlord
shall have the right, but not the obligation, to cure such breach and charge
Subtenant for the costs incurred thereby, which costs Subtenant shall pay to
Sublandlord upon demand. Subtenant shall not commit or suffer any act or
omission that will violate any of the provisions of the Master Lease.
 
Notwithstanding any contrary provision of this Sublease, (i) in any instances
where Master Landlord, as landlord under the Master Lease, has a certain period
of time in which to notify Sublandlord, as tenant under the Master Lease,
whether Master Landlord will or will not take any particular action,
Sublandlord, as landlord under this Sublease, shall have an additional five
(5) business day period after receiving such notice in which to notify
Subtenant, (ii) in any instance where Sublandlord, as tenant under the Master
Lease, has a certain period of time in which to notify Master Landlord as
landlord under the Master Lease, whether Sublandlord will or will not take any
particular action, Subtenant, as tenant under this Sublease, must notify
Sublandlord, as landlord under this Sublease, at least five (5) business days
before the end of such period, but in no event shall Subtenant have a period of
less than five (5) business days in which so to notify Sublandlord unless the
relevant period under the Master Lease is five (5) business days or less, in
which case the period under this Sublease shall be two (2) days less than the
period provided to Sublandlord under the Master Lease, and (iii) in any instance
where a specific grace period is granted to Sublandlord, as tenant under the
Master Lease, before Sublandlord is considered in default under the Master
Lease, Subtenant, as tenant under this Sublease, shall be deemed to have a grace
period which is five (5) days less than Sublandlord before Subtenant is
considered in default under this Sublease, but in no event shall any grace
period be reduced to less than five (5) business days unless the relevant period
under the Master Lease is six (6) days or less, in which case the period under
this Sublease shall be two (2) days less than the period provided to Sublandlord
under the Master Lease. Provided that Subtenant is not in default hereunder
(beyond any applicable cure period), Sublandlord agrees not to enter into a
voluntary agreement with Master Landlord to terminate the Master Lease (with an
effective termination date prior to the expiration of the Sublease Term).
Additionally, Sublandlord acknowledges and agrees that it shall not exercise its
rights (if any) under Sections 39 and 40 of the Master Lease.

15.
INDEMNITY

 
Subtenant shall be liable for, and shall indemnify, defend and hold Sublandlord
harmless from and against, any and all claims, damages, judgments, suits, causes
of actions, losses, liabilities, and expenses, including, without limitation,
reasonable attorneys’ fees and court costs to the extent arising or resulting
from (a) the negligence or willful misconduct of Subtenant or any of Subtenant’s
agents, employees, subtenants, assignees, licensees, or invitees as to injuries
to persons or damage to property occurring in or about the Subleased Premises
and (b) the default by Subtenant of any obligation on Subtenant’s part to be
performed under the terms of this Sublease; provided, however, Subtenant’s
indemnity shall not apply or extend to any such damage or injury to the extent
the same are: (i) the result of the negligence or willful misconduct of
Sublandlord, or Sublandlord’s employees, agents or contractors, or (ii) paid to
Sublandlord out of the proceeds of any policy of insurance required hereunder.
In case any action or proceeding is brought against Sublandlord by reason of
Subtenant’s indemnification obligation set forth in this section, Subtenant,
upon notice from Sublandlord shall defend the same at Subtenant’s expense. The
terms and provisions of this section shall survive the termination or expiration
of this Sublease.

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Sublandlord shall be liable for, and shall indemnify, defend and hold Subtenant
and harmless from and against, any and all claims, damages, judgments, suits,
causes of actions, losses, liabilities, and expenses, including, without
limitation, reasonable attorneys’ fees and court costs to the extent arising or
resulting from (a) the negligence or willful misconduct of Sublandlord or any of
Sublandlord’s agents, employees, subtenants, assignees, licensees, or invitees
as to injuries to persons or damage to property occurring in or about the
Building (and outside the Subleased Premises) and (b) the default by Sublandlord
of any obligation on Sublandlord’s part to be performed under the terms of this
Sublease; provided, however, Sublandlord’s indemnity shall not apply or extend
to any such damage or injury to the extent the same are: (i) the result of the
negligence or willful misconduct of Subtenant, or Subtenant’s employees, agents
or contractors, or (ii) paid to Subtenant out of the proceeds of any policy of
insurance required hereunder. In case any action or proceeding is brought
against Subtenant by reason of Sublandlord’s indemnification obligation set
forth in this section, Sublandlord, upon notice from Subtenant shall defend the
same at Sublandlord’s expense. The terms and provisions of this section shall
survive the termination or expiration of this Sublease.
 
16.
HOLDING OVER

 
If Subtenant remains in possession of the Subleased Premises or any part thereof
after the expiration or other termination of the Term hereof, such occupancy
shall be as a tenancy at sufferance at a rental in the amount equal to
Sublandlord’s liability under Section 31 of the Master Lease, and upon all the
other provisions of this Sublease pertaining to the obligations of Subtenant.
Notwithstanding anything to the contrary herein, Subtenant shall be liable to
Sublandlord for all costs, liabilities, losses and expenses incurred by
Sublandlord as a result of Subtenant’s holding over.
 
17.
ATTORNEYS’ FEES; OTHER FEES

 
If Sublandlord or Subtenant shall commence an action against the other arising
out of or in connection with this Sublease, the prevailing party shall be
entitled to recover its costs of suit and reasonable attorneys’ fees.
 
18.
NOTICES OR DEMANDS

 
All notices and demands under this Sublease shall be in writing and shall be
effective (except for notices to Master Landlord, which shall be given in
accordance with the provisions of the Master Lease) upon the earlier of
(i) actual receipt at the Sublandlord’s Notice Addresses or the Subtenant’s
Notice Addresses, or the notice address of the Master Landlord set forth in the
Master Lease, as the case may be, by the party being served, or (ii) upon
delivery being refused. All such notices or demands shall be sent by United
States certified mail, return receipt requested, postage prepaid, or by a
nationally recognized overnight delivery service that provides tracking and
proof of receipt. Either party may change its address for notices and demands
under this Sublease by ten (10) days’ advance written notice to the other party.
Sublandlord agrees to promptly deliver to Subtenant copies of all notices sent
or received by Sublandlord which allege a default under the Master Lease by
either Landlord or Sublandlord.
 
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19.
SIGNAGE

 
Subtenant shall not place any sign in or on the Building or the Subleased
Premises without the prior written consent of Sublandlord, which consent shall
not be unreasonably withheld, conditioned, or delayed. Subject to Master
Landlord’s consent, Subtenant shall have the same signage rights as provided in
Section 16 of the Master Lease. Such signage shall be provided at Subtenant’s
expense.
 
20.
PARKING

 
Subtenant shall have the same parking rights as provided in the Master Lease.
 
21.
MASTER LANDLORD’S CONSENT

 
This Sublease is expressly conditioned upon the receipt of Master Landlord’s
written consent hereto. Subtenant agrees to reasonably cooperate with
Sublandlord in providing such information as is necessary to satisfy such
condition and to execute all agreements reasonably requested by Master Landlord
in connection therewith. If Sublandlord is unable to secure Master Landlord’s
written consent within thirty (30) days after Subtenant’s execution of this
Sublease, then either party shall have the right (prior to Master Landlord
actually granting its written consent) to terminate this Sublease and all of its
obligations hereunder.
 
22.
CHOICE OF LAW

 
This Sublease shall be governed by the laws of the State in which the Subleased
Premises are located.
 
23.
ENTIRE AGREEMENT

 
This Sublease, together with any exhibits and attachments hereto, Master
Landlord’s consent form, and the Master Lease, constitutes the entire agreement
between Sublandlord and Subtenant relative to the Subleased Premises, and this
Sublease and the exhibits and attachments may be altered, amended or revoked
only by an instrument in writing signed by both Sublandlord and Subtenant.
Sublandlord and Subtenant agree hereby that all prior or contemporaneous oral
discussions, letters or written documents between and among themselves and their
agents and representatives relative to the subleasing of the Subleased Premises
are merged in or revoked by this Sublease.
 
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24.
SUCCESSORS AND ASSIGNS

 
This Sublease shall inure to the benefit of and be binding upon the respective
heirs, administrators, executors, successors and assigns of the parties hereto;
provided, however, that this provision shall not be construed to allow an
assignment or subletting which is otherwise specifically prohibited hereby.
 
25.
SECTION AND PARAGRAPH HEADINGS

 
The section and paragraph headings are included only for the convenience of the
parties and are not part of this Sublease and shall not be used to interpret the
meaning of provisions contained herein or the intent of the parties hereto.
 
26.
REPRESENTATIONS AND WARRANTIES; AUTHORITY

 
Sublandlord and Subtenant each represent and warrant to the other that the
individual(s) executing and delivering this Sublease on its behalf is/are duly
authorized to do so and that this Sublease is binding on Subtenant and
Sublandlord in accordance with its terms, assuming the due authorization,
execution and delivery by the other party.
 
Sublandlord represents and warrants that (i) to the best of Sublandlord’s
knowledge, Master Landlord is not in default under the Master Lease, nor has any
event occurred which, after any applicable notice and/or the expiration of any
grace period, shall constitute a material default by Master Landlord under the
Master Lease; and (ii) to the best of Sublandlord’s knowledge, Sublandlord is
not in default under the Master Lease, nor has any event occurred which, after
any applicable notice and/or the expiration of any grace period, shall
constitute a default by Sublandlord under the Master Lease.
 
Except as expressly set forth in this Sublease, no representation or warranty
has been given by either party, its agents and representatives, with respect to
the subject matter of this Sublease, and neither party has relied upon any
representations or warranty not expressly set forth herein.
 
27.
BROKERS

 
Sublandlord and Subtenant each represent and warrant to the other that it has
not dealt with any broker other than the Brokers identified in Article I hereof
in connection with the consummation of this Sublease. Sublandlord and Subtenant
each shall indemnify and hold harmless the other against any loss, damage,
claims or liabilities arising out of the inaccuracy of its representation or the
breach of its warranty set forth in the previous sentence. Sublandlord shall be
solely responsible for the payment of the brokerage commission due to the
Brokers pursuant to a separate written agreement.
 
28.
NO OFFER

 
The submission of this Sublease or some or all of its provisions for examination
does not constitute an option or an offer to enter into this Sublease, it being
understood and agreed that neither Sublandlord or Subtenant shall be legally
bound hereunder unless and until this Sublease has been executed and delivered
by both Sublandlord and Subtenant, and then subject to the conditions hereof,
including Article II Section 21.
 
12

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27.
MEMORANDUM OF SUBLEASE

At the request of either party, the parties shall promptly execute (and
Sublandlord shall use commercially reasonable efforts to have Master Landlord
execute) and record, at the cost of the requesting party, a short form
memorandum describing the Subleased Premises and stating the Sublease Term, and
other information that the parties agree to include.

28.
COUNTERPARTS

This Sublease may be executed in a number of identical counterparts, each of
which for all purposes is deemed an original, and all of which constitute
collectively one (1) agreement, but in making proof of this Sublease, it shall
not be necessary to produce or account for more than one such counterpart.

29.
WAIVER OF “LANDLORD’S LIEN”

Sublandlord hereby agrees and affirms that it has no lien on, or security
interest in, or claim to any of Subtenant’s personal property located in the
Subleased Premises to secure Subtenant’s obligations hereunder, and Sublandlord
hereby waives any such presumptive interest, statutory or otherwise, in any such
personal property of Subtenant.

30.
LIABILITY OF SUBLANDLORD 

In the event of a transfer of Sublandlord’s interest in the Master Lease, or in
this Sublease, it shall be deemed without further agreement between the parties
and such transferee that the transferee has assumed and agreed to observe and
perform all obligations of the Sublandlord hereunder. With regard to any such
transfer, Sublandlord shall be released and remain without liability to
Subtenant for the observance and performance of all obligations of the
Sublandlord hereunder arising after the effective date of such transfer, and for
breach of any of the representations and warranties made by Sublandlord herein.
With respect to any provision of this Sublease which provides, in effect, that
Sublandlord shall not unreasonably withhold or unreasonably delay any consent or
any approval, Subtenant, in no event, shall be entitled to make, nor shall
Subtenant make, any claim for, and Subtenant hereby waives any claim for money
damages; nor shall Subtenant claim any money damages by way of setoff,
counterclaim or defense, based upon any claim or assertion by Subtenant that
Sublandlord has unreasonably withheld or unreasonably delayed any consent or
approval; but Subtenant’s sole remedy shall be an action or proceeding to
enforce any such provisions, or for specific performance, injunction or
declaratory judgment.
 
[SIGNATURE PAGE FOLLOWS]

13

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IN WITNESS WHEREOF, the parties have caused this Sublease to be signed by their
duly authorized representatives to be effective on the date first set out above.
 
Sublandlord:
 
Subtenant:
     
Advantis Real Estate Services Company
 
Smart Online, Inc.
     
By:
/s/ David Townsend
 
By:
/s/ David E. Colburn
     
Print Name: David Townsend 
 
Print Name: David Colburn
     
Print Title: Managing Director
 
Print Title: President
     
Date: 7/31/08
 
Date: 7/30/08 

List of Exhibits
 
Exhibit A - Master Lease
 
Exhibit B - Plan showing Subleased Premises
 
Exhibit C - Inventory of FF
 
Exhibit D - FF Conveyance Agreement
 
Exhibit E - Initial Improvements
 
14

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EXHIBIT A

MASTER LEASE
 
A-1

--------------------------------------------------------------------------------

OFFICE LEASE AGREEMENT

BY AND BETWEEN

NOTTINGHAM HALL LLC
(AS LANDLORD)

AND

ADVANTIS REAL ESTATE SERVICES COMPANY
(AS TENANT)

Nottingham Hall
4505 Emperor Boulevard
Durham, North Carolina

HOLLAND + KNIGHT LLP
2099 Pennsylvania Avenue, N.W.
Suite 100
Washington, DC 20006
Ph. (202) 955-3000
(202) 955-5564

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS
 

   
Page
1.
BASIC LEASE TERMS
 
1
 
2.
DESCRIPTION OF PREMISES
 
3
 
3.
TERM; COMMENCEMENT DATE; DELIVERY OF PREMISES
 
3
 
4.
RENTAL
 
5
 
5.
ALTERATIONS AND IMPROVEMENTS BY TENANT
 
11
 
6.
USE OF PREMISES
 
12
 
7.
SERVICES BY LANDLORD
 
13
 
8.
TAXES ON LEASE AND TENANT’S PROPERTY
 
14
 
9.
INSURANCE AND INDEMNITY
 
15
 
10.
LANDLORD’S COVENANT TO REPAIR AND REPLACE
 
16
 
11.
PROPERTY OF TENANT
 
17
 
12.
TRADE FIXTURES AND EQUIPMENT
 
18
 
13.
DAMAGE OR DESTRUCTION OF PREMISES
 
18
 
14.
GOVERNMENTAL ORDERS
 
19
 
15.
MUTUAL WAIVER OF SUBROGATION
 
19
 
16.
SIGNS AND ADVERTISING
 
20
 
18.
INTENTIONALLY OMITTED
 
22
 
19.
EMINENT DOMAIN
 
22
 
20.
EVENTS OF DEFAULT AND REMEDIES
 
22
 
21.
SUBORDINATION
 
24
 
22.
ASSIGNMENT AND SUBLETTING
 
24
 
23.
LANDLORD DEFAULT
 
27
 
24.
TRANSFER OF LANDLORD’S INTEREST
 
27
 
25.
COVENANT OF QUIET ENJOYMENT
 
28
 
26.
ESTOPPEL CERTIFICATES
 
28
 
27.
PROTECTION AGAINST LIENS
 
28
 
28.
MEMORANDUM OF LEASE
 
29
 
29.
FORCE MAJEURE
 
29
 
30.
REMEDIES CUMULATIVE – NONWAIVER
 
29
 
31.
HOLDING OVER
 
29
 
32.
NOTICES
 
30
 
33.
LEASING COMMISSION
 
30
 
34.
SEVERABILITY
 
30
 
35.
REVIEW OF DOCUMENTS
 
30
 
36.
PAYMENT OF TENANT’S OBLIGATIONS BY LANDLORD AND UNPAID RENT
 
31
 
37.
ENVIRONMENTAL CONCERNS
 
31
 
38.
USA PATRIOT ACT AND ANTI-TERRORISM LAWS
 
32
 
39.
RIGHT OF FIRST OFFER
 
33
 
40.
TENANT TERMINATION RIGHT
 
35
 
41.
OPTION TO EXTEND TERM
 
36
 
42.
MISCELLANEOUS
 
38
 

 

--------------------------------------------------------------------------------

STATE OF NORTH CAROLINA
LEASE AGREEMENT
COUNTY OF DURHAM

THIS LEASE AGREEMENT (the “Lease”) made and entered into as of the 19th day of
September, 2005 (the “Effective Date”), by and between NOTTINGHAM HALL LLC, a
Delaware limited liability company (“Landlord”), and ADVANTIS REAL ESTATE
SERVICES COMPANY, a Florida corporation (“Tenant”).

WITNESSETH:

In consideration of the mutual covenants and agreements contained herein, the
parties hereto agree for themselves, their successors and assigns, as follows:

1. BASIC LEASE TERMS.

The following terms shall have the following meanings in this Lease:

(a) Premises: Approximately Nine Thousand Eight Hundred Thirty-Seven (9,837)
rentable square feet of office space on the third (3rd) floor of the Building
and known as Suite 300, as more particularly described on the floor plan
attached hereto as Exhibit A.

(b) Building: Nottingham Hall, located at 4505 Emperor Boulevard, Durham, North
Carolina, containing approximately 105,263 rentable square feet of office space.

(c) Business Park: Imperial Center Business Park.

(d) Common Areas: All areas of the Building, the land on which the Building is
located (the “Land”), the Other Buildings (hereinafter defined), the Project
Land (hereinafter defined) and/or the Business Park, as applicable, which are
available for the common use or benefit of all tenants primarily or to the
public generally, including without limitation, parking areas, driveways,
sidewalks, loading docks, the lobby, corridors, elevators, stairwells,
entrances, public restrooms, mechanical rooms, janitorial closets, telephone
rooms, mail rooms, electrical rooms, and other similar areas of the Building
providing for building systems, and any other common facilities furnished by
Landlord from time to time.

(e) Commencement Date: December 1, 2005.

(f) Term: Five (5) years, nine (9) months.
 

--------------------------------------------------------------------------------

(g) Minimum Rental:
 
[***]

(h) Operating Expense Stop: Actual Operating Expenses for calendar year 2006.

(i) Tenant’s Proportionate Share: [9.35%] (representing a fraction, the
numerator of which is the number of rentable square feet within the Premises and
the denominator of which is the number of rentable square feet within the
Building).
 
(j) Notice Addresses:

Landlord:
 
Nottingham Hall LLC
444 Brickell Avenue, Suite 900
Miami, Florida 33131
Attention: Chief Operating Officer
     
and to:
 
Nottingham Hall LLC
c/o ACP Mid-Atlantic LLC, as Agent
2350 Corporate Park Drive, Suite 110 Herndon, Virginia 20171
Attention: Asset Manager
     
with a copy to:
 
Holland & Knight LLP
2099 Pennsylvania Avenue, N.W., Suite 100
Washington, D.C. 20006
Attention: David S. Kahn, Esq.
     
Tenant:
 
Advantis Real Estate Services Company Nottingham Hall
4505 Emperor Boulevard, Suite 300
Durham, North Carolina 27703
Attention: David P. Oddo

[***] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

2

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with a copy to:
 
John Hutcheson, CFO/COO
Advantis Real Estate Services Company
3455 Peachtree Road, NE, Suite 400
Atlanta, Georgia 30320
     
and to:
 
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina 27607
Attention: Eric A. Vernon, Esq.

 
(k) Security Deposit: None.

(1) Brokers: Tri-Properties, Inc. and ACP Mid-Atlantic LLC, as Landlord’s
broker; Advantis Real Estate Services
              Company, as Tenant’s broker.

(m) Guarantor: None.

(n) Parking. Tenant shall have the right to use [forty-five (45)] unreserved
parking spaces (or 4.5 unreserved parking spaces per 1,000 rentable square feet
of the Premises) in the surface parking areas adjacent to the Building which
constitutes a portion of the Common Areas of the Land.

(o) Extension Option: One (1) five (5) year period.

2. DESCRIPTION OF PREMISES.

In consideration of Tenant’s agreement to pay Minimum Rental (hereinafter
defined) and Additional Rental (hereinafter defined), Landlord hereby leases to
Tenant, and Tenant hereby accepts and rents from Landlord, the Premises within
the Building located in the Business Park; together with the nonexclusive right
to use the Common Areas of the Land and the Building. The useable area of the
Premises has been determined in accordance with the standards set forth in ANSI
Z65.1-1996, as promulgated by the Building Owners and Managers Association
(“BOMA Standard”).

3. TERM; COMMENCEMENT DATE; DELIVERY OF PREMISES.

(a) Term. The term of this Lease (the “Term”) shall commence on the date set
forth in Section 1(e), above (hereinafter defined), and expire at 11:59 p.m. on
August 31, 2011 (the “Expiration Date”), unless the Term is otherwise extended
or terminated in accordance with the terms hereof. As used herein, the term
“Lease Year” shall mean (i) each consecutive twelve-month period of the Term,
beginning with the Commencement Date, except that if the Commencement Date does
not occur on the first day of a calendar month, the first Lease Year shall
commence on the Commencement Date and terminate on the last day of the twelfth
(12th) full calendar month after the Commencement Date, and (ii) each successive
period of twelve (12) calendar months thereafter during the Term.
 
3

--------------------------------------------------------------------------------

 

(b) Delivery of Premises to Tenant; Delay in Delivery of Premises. Promptly
after the Commencement Date, Landlord shall complete and deliver to Tenant the
completed form of Declaration of Commencement Date which is attached to this
Lease as Exhibit B (the “Declaration”). Within five (5) days after Tenant
receives the completed Declaration from Landlord, Tenant shall execute and
return the Declaration to Landlord to confirm the Commencement Date, the Rent
Commencement Date (hereinafter defined), the Term and the actual number of
rentable square feet in the Premises. Failure to execute the Declaration shall
not affect the commencement or expiration of the Term. Notwithstanding anything
contained herein to the contrary: (i) Landlord shall not be liable to Tenant for
any delay by Landlord in delivering the Premises to Tenant; and (ii) except as
otherwise expressly set forth immediately below, Tenant shall not be released
from its obligation to accept possession of the Premises from Landlord in the
event of any such delay by Landlord in delivering the Premises to Tenant;
provided however, for each day after November 30, 2005, as such date is extended
day-for-day due to Force Majeure (hereinafter defined) and Tenant Delay (the
“Anticipated Outside Delivery Date”) that Landlord fails to deliver the Premises
to Tenant in its “as is” condition, in addition to a delay in the Commencement
Date caused thereby, Tenant shall receive one (1) day of abatement of Minimum
Rental (hereinafter defined) otherwise owing under the Lease, not to exceed one
hundred twenty (120) days of abatement in the aggregate, which rent abatement
shall be applicable to the period commencing immediately after the Abatement
Period (hereinafter defined). In addition, in the event that Landlord fails to
deliver the Premises to Tenant in its “as is” condition within one hundred
twenty (120) days after the Anticipated Outside Delivery Date (the “Outside
Delivery Date”), then Tenant may, upon thirty (30) days’ written notice to
Landlord delivered to Landlord by Tenant after the Outside Delivery Date,
terminate this Lease, and upon such termination, the parties shall have no
further rights or obligations hereunder; provided however if Landlord delivers
the Premises to Tenant within this thirty (30) day period, the Lease shall not
terminate and shall continue in full force and effect throughout the Term. In
the event Landlord is unable to deliver possession of the Premises to Tenant on
or before the Commencement Date, the Expiration Date shall be postponed by the
same number of days the Commencement Date is delayed and Landlord shall not be
liable or responsible for any claims, damages, or liabilities by reason of such
delay, except as otherwise expressly set forth herein.

(c) Tenant Improvements.

(i) Landlord shall deliver the Premises to Tenant in its then “as-is” condition,
without (A) any obligation on Landlord’s part to construct or, except for the
Improvement Allowance (hereinafter defined), pay for any improvements or
alterations therein; or (B) any representations or warranties regarding the
condition thereof, except as expressly set forth herein. Tenant shall, at
Tenant’s sole cost and expense, subject to the application of the Improvement
Allowance, construct in the Premises the Tenant Improvements (as defined in the
Work Agreement) described in the Work Agreement attached hereto as Exhibit C
(the “Work Agreement”), in substantial accordance with the terms and conditions
of the Work Agreement. In the event that Landlord and Tenant have not finally
agreed upon the scope and details of the Tenant Improvements as of the date of
execution of this Lease, Tenant’s submissions to Landlord of plans and
specifications detailing such work shall be subject to Landlord’s written
approval in accordance with the Work Agreement, such approval not to be
unreasonably withheld, conditioned or delayed, except to the extent that any
Tenant Improvements proposed by Tenant involve changes to the base Building or
any of the systems therein, in which event Landlord may withhold its consent in
its sole discretion. The Tenant Improvements shall be subject to Landlord’s
prior written approval in accordance with the terms of the Work Agreement, shall
comply with all applicable building codes, laws and regulations (including,
without limitation, the Americans with Disabilities Act), shall not require any
material changes to or modifications of any of the mechanical, electrical,
plumbing or other systems of the Building, and shall otherwise be constructed in
strict accordance with the terms of the Work Agreement.

4

--------------------------------------------------------------------------------

(ii) The cost of all design, architectural and engineering work, construction
costs, construction supervision, contractor’s overhead and profit, licenses and
permits, and all other costs and expenses incurred in connection with the Tenant
Improvements shall be at Tenant’s sole cost and expense, subject to the
application of the Improvement Allowance as more fully set forth in the Work
Agreement. Landlord shall disburse the Improvement Allowance as provided in the
Work Agreement. All costs incurred in respect of the Tenant Improvements in
excess of the Improvement Allowance shall be paid by Tenant. Any portion of the
Improvement Allowance not expended by Tenant within twelve (12) months of the
Effective Date in undertaking the design and construction of the Tenant
Improvements shall be retained by Landlord.

4. RENTAL.
During the Term, Tenant shall pay to Landlord, in care of Landlord’s agent, ACP
Mid-Atlantic LLC (“Landlord’s Agent”), at the notice address set forth for such
agent in Section 1(j) herein, without notice, demand, reduction (except as may
be applicable pursuant to the Sections of this Lease entitled “Damage or
Destruction of Premises”, “Eminent Domain” and Tenant Improvements”), setoff or
any defense, a total rental (the “Annual Rental”) consisting of the sum total of
the following:

(a) Minimum Rental.

Beginning with the Commencement Date and continuing through the Expiration Date
or earlier termination of this Lease, Tenant shall pay Minimum Rental in
accordance with the schedule set forth in Section 1(g) in equal monthly
installments each in advance on or before the first day of each calendar month,
with the first full monthly installment of Minimum Rental due upon the execution
and delivery of this Lease by Tenant. If the Commencement Date is a date other
than the first day of a calendar month, the Minimum Rental shall be prorated
daily from such date to the first day of the next calendar month and paid on or
before the Commencement Date.

5

--------------------------------------------------------------------------------

(b) Operating and Maintenance Expenses.

(i) Beginning on January 1, 2007 and continuing throughout the remainder of the
Term, Tenant shall pay Tenant’s Proportionate Share (as set forth in Section
l(i), above) of all Operating Expenses (hereinafter defined) paid or incurred by
Landlord each calendar year to the extent such costs exceed the Operating
Expense Stop set forth in Section 1(h), above. As used herein, the term
“Operating Expenses” means all costs and expenses paid or incurred by Landlord
in connection with the ownership, operation, repair or maintenance of the
Building and the Land, including without limitation, all: (A) ad valorem
property taxes (or any tax hereafter imposed in lieu thereof) levied on the
Premises, the Building, the Land or any improvements thereon, (B) insurance
premiums and policy deductibles paid with respect to the Building, including
fire and extended coverage insurance and liability insurance, (C) personal
property taxes applicable to the Building or the Premises, (D) fees or costs
incurred in connection with protesting any tax assessment provided such amounts
shall not exceed the amount of the net effective reduction in such tax, (E)
Standard Building Services (as hereinafter defined) including utilities, heat
and air conditioning, standard janitorial service and window cleaning, (F)
building management (including management fees), (G) the cost of grass mowing,
shrub care and general landscaping, irrigation systems, maintenance and repair
to parking and loading areas, (including storage of materials), driveways,
sidewalks, exterior lighting, garbage collection and disposal, snow removal,
water and sewer, plumbing, signs and other facilities serving or benefiting the
Premises or the Building, (H) the cost of all services rendered by third parties
with respect to the Building and the Land, including the Common Areas thereof,
and all costs paid or incurred by Landlord in providing any of the services to
be provided by Landlord pursuant to the terms of this Lease; (I) costs of all
capital improvements, repairs or equipment in or to the Building which are
undertaken to comply with applicable law or which are intended to reduce
Operating Expenses; provided that the cost of any such capital improvements,
repairs or equipment shall be amortized on a straight line basis over a
reasonable period of time (as determined in accordance with generally accepted
accounting principles as reasonably interpreted by Landlord), with imputed
interest at eight percent (8%) per annum, and (J) the Building’s proportionate
share of the costs and expenses paid or incurred by Landlord in the operation,
repair and maintenance of the Business Park, including without limitation the
costs and expenses associated with the maintenance and operation and repair of
Business Park amenities made available for the common use and enjoyment of the
tenants of the Business Park from time to time. In the event that Landlord
elects to employ a single service provider to provide to the Building and the
Other Buildings (hereinafter defined) any category of goods or services relating
to the operation, repair or maintenance thereof, Operating Expenses hereunder
shall include the Building’s share of the total cost of such goods or services
provided during any calendar year, as reasonably determined by Landlord. As used
herein, the term “Other Buildings” means the office buildings located at 5827
South Miami Boulevard, Durham, North Carolina and 5927 South Miami Boulevard,
Durham, North Carolina. As used herein, the term “Project Land” means the Land
and the land on which the Other Buildings are located. Notwithstanding any
provisions in the Lease to the contrary, the following shall be excluded from
the meaning of “Operating Expenses” payable by Tenant under this Lease:

 
·
depreciation on the Building;

 
·
expenses for which the Landlord is reimbursed (either by an insurer, condemnor,
tenant or otherwise), but expressly excluding reimbursement by means of
pass-through payments by tenants of the Building;

 
·
expenses incurred in leasing or procuring new tenants for the Building
(including, without limitation, legal fees, lease commissions, advertising
expenses, space planning costs and expenses of renovating space for new
tenants);

6

--------------------------------------------------------------------------------

 
·
legal expenses arising out of the construction or leasing of the Building or the
enforcement of the provisions of any agreements affecting Landlord with respect
to the Building or the Business Park;

 
·
any principal, interest or amortization payments on any mortgage or mortgages,
and rental under any ground or underlying lease or leases;

 
·
wages, salaries or other compensation or benefits paid to any executive
employees above the grade of property manager;

 
·
wages, salaries or other compensation paid for clerks or attendants in
concessions or newsstands operated by the Landlord;

 
·
the portion of any fees, wages, salaries and other compensation to the extent
allocable to services not rendered at, or in connection with the operation or
maintenance of, the Building;

 
·
the cost of installing, operating and maintaining a specialty improvement
(including an observatory, broadcasting, cafeteria or dining facility, luncheon,
or club) the use of which is not offered to all tenants of the Building;

 
·
any cost or expense representing an amount paid to a corporation related to
Landlord which is in excess of the amount which would be paid in the absence of
such relationship;

 
·
the costs of signs in or on the Building identifying Landlord or any tenant of
the Building;

 
·
cost of professional fees applicable to services not rendered in connection with
the operation, leasing or maintenance of the Building;

 
·
cost of dues and/or subscriptions;

 
·
cost of travel and/or entertainment;

 
·
any fines or penalties (excluding tax penalties);

 
·
expenses resulting directly or indirectly from the negligence or willful
misconduct of Landlord or its agents, employees or contractors, but only to the
extent that such cost would not have been incurred but for such negligence or
willful misconduct;

 
·
any bad debts loss, rent loss, or reserves for bad debts or rent loss;

 
·
costs associated with the operation of the business of the entity which
constitutes Landlord (as the same are distinguished from the costs of operation
of the Building or common areas);

 
·
costs (including without limitation permit, license and inspection costs)
incurred in connection with tenant improvement work performed by Landlord for
its tenants (including Tenant) or in vacant rentable space in the Building;

 
·
repairs or replacements with respect to which Landlord is reimbursed under
warranties or guaranties;

 
·
cost of damage and repairs attributable to condemnation;

 
·
any sale, syndication, financing or refinancing costs and expenses, including,
but not limited to, interest or amortization on debt;

 
·
contributions to employee pension plans;

7

--------------------------------------------------------------------------------

 
·
tax penalties incurred as a result of Landlord’s negligence or its inability or
unwillingness to make payments when due;

 
·
costs incurred by the Landlord due to the violation by Landlord of the terms and
conditions of any lease of space in the Building;

 
·
rental costs for air conditioning systems, elevators or other equipment (except
for temporary rentals or rentals needed in connection with emergencies or normal
repairs and maintenance of permanent systems) which, if purchased, rather than
rented, would constitute a capital improvement (except for items that, if
purchased, would be Permitted Capital Expenditures and equipment not affixed to
the Building which is used in providing janitorial, security or other similar
services);

 
·
acquisition costs of sculpture, paintings or works of art; and

 
·
reserve accounts of all types.

Under no condition shall Landlord collect in excess of 100% of all Landlord’s
Operating Expenses actually incurred in any calendar year or recover, through
Operating Expenses, any item of cost actually incurred by Landlord more than
once. Operating Expenses shall be reduced by the amount of any reimbursement,
recoupment, payment, discount, credit, reduction, allowance, or the like
actually received by Landlord that is allocable to any Operating Expenses.

(ii) If, at any time during calendar year 2006 or any subsequent calendar year,
less than ninety-five percent (95%) of the total rentable square feet of office
space in the Building is occupied by tenants, the amount of Operating Expenses
for such year shall be deemed to be the amount of Operating Expenses as
reasonably estimated by Landlord that would have been incurred if the percentage
of occupancy of the Building during such year was ninety-five percent (95%). If
at any time during any calendar year, any part of the Building is leased to a
tenant (hereinafter referred to as a “Special Tenant”) who, in accordance with
the terms of its lease, provides its own utilities, cleaning or janitorial
services or other services or is not otherwise required to pay a share of
Operating Expenses in accordance with the methodology set forth in this Section
4(b), and Landlord does not incur the cost of such services, Operating Expenses
for such calendar year shall be increased by the additional costs for cleaning
and janitorial services and such other applicable expenses as reasonably
estimated by Landlord that would have been incurred by Landlord if Landlord had
furnished and paid for cleaning and janitorial services and such other services
for the space occupied by the Special Tenant, or if Landlord had included such
costs in “operating expenses” as defined in the Special Tenant’s lease.
Notwithstanding the foregoing, in no event shall Landlord collect in excess of
100% of all Landlord’s Operating Expenses actually incurred in any calendar year
or recover, through Operating Expenses, any item of cost actually incurred by
Landlord more than once.

8

--------------------------------------------------------------------------------

(c) Payment of Operating Expenses.

Tenant shall pay to Landlord in advance each month, along with Tenant’s
installments of Minimum Rental (and Additional Rental, if applicable) an amount
(the “Tenant Contribution”) equal to one-twelfth (1/12th) of Landlord’s estimate
of Tenant’s Proportionate Share of Operating Expenses for any calendar year
(including any partial calendar year, as applicable) in excess of the Operating
Expense Stop. Landlord will make reasonable efforts to provide Tenant with
Landlord’s estimate of Tenant’s Contribution for the upcoming calendar year on
or before December 15th of each calendar year during the Term hereof. Not more
than once during any calendar year, Landlord may in good faith revise Tenant’s
Proportionate Share of the Operating Expenses and upon Tenant’s receipt of a
revised statement, Tenant shall pay Tenant’s Proportionate Share of Operating
Expenses on the basis of such statement. If Landlord fails to notify Tenant of
the revised amount of Tenant’s Contribution by such date, Tenant shall continue
to pay the monthly installments of Tenant’s Contribution, if any, last payable
by Tenant until notified by Landlord of such new estimated amount. Within one
hundred twenty (120) days of the end of each calendar year of the Term, Landlord
shall deliver to Tenant a written statement setting forth the actual amount of
Tenant’s Contribution for the preceding calendar year (the “Expense Statement”).
Tenant shall pay the total amount of any balance due shown on such Expense
Statement within thirty (30) days after its delivery. In the event such annual
costs decrease for any such year, Landlord shall reimburse Tenant for any
overage paid and the monthly rental installments for the next period shall be
reduced accordingly, but not below the Minimum Rental; provided however, that in
the event that any overage has been paid by Tenant with respect to the calendar
year in which this Lease is terminated or expires, Landlord shall pay to Tenant
an amount equal to such overage within sixty (60) days after the later to occur
of: (i) the expiration or termination of this Lease, (ii) Tenant’s vacation of
the Premises, or (iii) the last day of the calendar year in which such
termination or expiration occurs. Further, Tenant shall be responsible for the
payment of Tenant’s Contribution for the calendar year in which this Lease
expires, prorated from January 1st thereof through the Expiration Date. Upon the
Expiration Date, Landlord may elect either (i) to require Tenant, to pay any
unpaid estimated amount within thirty (30) days after the Expiration Date, which
estimate shall be made by Landlord based upon actual and estimated costs for
such year, or (ii) to withhold the Security Deposit, if any, until the exact
amount payable by Tenant is determinable, at which time Tenant shall promptly
pay to Landlord any deficiencies or Landlord shall return any excess Security
Deposit to Tenant.

(d) Audit Rights.

Within ninety (90) days of Tenant’s receipt of any Expense Statement, Tenant
shall be entitled to the following audit right with respect to such Expense
Statement. Such audit right shall be exercisable by Tenant providing Landlord
with a written notice setting forth Tenant’s reasonable basis for challenging
the Expense Statement delivered by Landlord. If within sixty (60) days after
Landlord’s receipt of Tenant’s written notice and statement, Landlord and Tenant
are unable to resolve Tenant’s reasonable objections set forth in its notice to
Landlord, then not later than fifteen (15) days after the expiration of such
sixty (60)-day period Tenant shall deliver to Landlord written notice (the
“Audit Notice”) that it wishes to employ on an hourly rate (and not a
contingency fee) basis an independent certified public accounting firm
reasonably acceptable to Landlord to inspect and audit Landlord’s books and
records at the Building relating to the reasonable objections raised in Tenant’s
statement. If Tenant elects to employ such accountant as set forth above, then
Tenant shall deliver to Landlord a confidentiality and nondisclosure agreement
reasonably satisfactory to Landlord executed by such accounting firm, and
provide Landlord not less than fifteen (15) days’ notice of the date on which
the accounting firm desires to examine Landlord’s books and records at the
Building during regular business hours; provided, however, that such date shall
be between thirty (30) and ninety (90) days after Tenant delivers to Landlord
the Audit Notice. Such audit shall be limited to a determination of whether
Landlord calculated the Expense Statement in accordance with the terms and
conditions of this Lease. Except as otherwise expressly set forth below, all
costs and expenses of any such audit shall be paid by Tenant. Any audit
performed pursuant to the terms of this Section 4.d shall be conducted only by
an independent certified public accounting firm reasonably acceptable to
Landlord. Notwithstanding anything contained herein to the contrary, Tenant
shall be entitled to exercise its right to audit pursuant to this Section 4.d
only in strict accordance with the foregoing procedures and each such audit
shall relate only to the most recent calendar year covered by the audited
Expense Statement. The audit rights pursuant to this Section 4.d shall not
transfer or apply to any subtenant or any other person or entity other than the
“Tenant” hereunder. If the results of such audit determine that Tenant overpaid
Operating Expenses during the calendar year in question by more than five
percent (5%) of the correct amount owing, then, in addition to reimbursing
Tenant for such overpayment, Landlord shall reimburse Tenant for the reasonable
cost of such audit (not to exceed $3,500.00, however).

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(e) Late Payment.

If any monthly installment of Minimum Rental, Additional Rental (if any) or any
other sum due and payable pursuant to this Lease remains due and unpaid five (5)
days after said amount becomes due, Tenant shall pay as Additional Rent
hereunder a late payment charge equal to Five Hundred and No/100 Dollars
($500.00); provided, however, that Landlord agrees to waive the first (1st) such
late payment charge in any twelve (12) month period, provided that Tenant pays
the amount then due within three (3) days after Tenant’s receipt of written
notice from Landlord. All unpaid rent and other sums of whatever nature owed by
Tenant to Landlord under this Lease shall bear interest from the tenth (10th)
day after the due date thereof until paid at the lesser of two percent (2%) per
annum above the “prime rate” as published in The Wall Street Journal from time
to time (the “Prime Rate”) or the maximum interest rate per annum allowed by
law. Acceptance by Landlord of any payment from Tenant hereunder in an amount
less than that which is currently due shall in no way affect Landlord’s rights
under this Lease and shall in no way constitute an accord and satisfaction.

(f) Rental Abatement.

Notwithstanding anything to the contrary provided in this Section 4, provided
that Tenant is not in default of this Lease (beyond any applicable notice and
cure period) at any time during the Abatement Period (hereinafter defined),
Landlord hereby agrees to abate Minimum Rental and Additional Rental for the
period (the “Abatement Period”) beginning on the Commencement Date and ending on
the date which is the earlier to occur of: (i) August 31, 2006; or (ii) the date
first occurring after the Commencement Date on which there occurs a default by
Tenant under this Lease. On the day immediately following the last day of the
Abatement Period (the “Rent Commencement Date”), and thereafter throughout the
Term, Tenant shall pay Landlord full Minimum Rental and Additional Rental in the
amounts set forth in this Section 4.

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5. ALTERATIONS AND IMPROVEMENTS BY TENANT.

(a) After the Tenant Improvements have been completed in accordance with the
terms of the Work Agreement, Tenant shall make no alterations, improvement or
other changes in or to the Premises which will or may affect the mechanical,
electrical, plumbing, HVAC or other systems of, or the exterior, roof or
structural elements of, the Building, and shall make no changes of any kind
respecting the Premises or the Building which are visible from the exterior of
the Premises, without Landlord’s prior written consent, to be granted or
withheld in Landlord’s sole discretion. Any other nonstructural changes or other
alterations, additions, or improvements to the Premises shall be made by or on
behalf of Tenant only with the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed. All alterations, additions or
improvements, including without limitation all partitions, walls, railings,
carpeting, floor and wall coverings and other fixtures (excluding, however,
Tenant’s trade fixtures as described in the Section entitled “Trade Fixtures and
Equipment” below) made by, for, or at the direction of Tenant shall, when made,
become the property of Landlord, at Landlord’s sole election.

(b) Notwithstanding anything contained herein to the contrary, all alterations
and improvements undertaken by Tenant shall be consistent with the then-existing
quality, color scheme (where appropriate), general aesthetic appearance and
tenor of the balance of the Building and, in any event, Landlord may withhold
its consent to any proposed alteration or improvement by Tenant unless Tenant
agrees to remove said improvement at the end of the Term and restore the
Premises to the condition in which it existed prior to the undertaking of the
proposed alteration or improvement. Landlord shall also have the right to
approve the contractor or contractors who shall perform any alterations, repairs
in, to or about the Premises and to post notices of non-responsibility and
similar notice, as appropriate. In addition, immediately after completion of any
alterations, Tenant shall assign to Landlord any and all warranties applicable
to such alterations and shall provide Landlord with as-built plans of the
Premises depicting such alterations. All alterations and improvements to the
Premises which are undertaken by, or on behalf of, Tenant, shall be subject to
Tenant’s payment to Landlord of a fee (the “Construction Management Fee”) equal
to two percent (2%) of the total cost of such alterations and improvements;
provided, however, that Tenant shall not be obligated to pay Landlord a
Construction Management Fee in connection with the construction by Tenant of the
initial Tenant Improvements in the Premises. Except as otherwise provided
herein, Tenant agrees to pay Landlord the Construction Management Fee within ten
(10) days after receipt of Landlord’s invoice therefor.

(c) Any alterations of any kind to the Premises or any part thereof, except
Tenant’s furniture and moveable trade fixtures, shall at once become part of the
realty and shall be surrendered with the Premises, as a part thereof, at the end
of the Term hereof; provided, however, that Landlord may, by written notice to
Tenant at least thirty (30) days prior to the end of the Term, require Tenant to
remove any alterations (including all telecommunications cabling installed by
Tenant in the Premises or between the Premises and any other portion of the
Building) and to repair any damage to the Premises caused by such removal, all
at Tenant’s sole expense. Any article of personal property, including business
and trade fixtures, not attached to or built into the Premises, which were
installed or placed in the Premises by Tenant at its sole expense, shall be and
remain the property of Tenant and may be removed by Tenant at any time during
the Term as long as Tenant is not in default hereunder and provided that Tenant
repairs any damage to the Premises or the Building caused by such removal.

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6. USE OF PREMISES.

(a) Tenant shall use the Premises only for general office purposes and for no
other purposes. Tenant shall comply with all laws, ordinances, orders,
regulations or zoning classifications of any lawful governmental authority,
agency or other public or private regulatory authority (including insurance
underwriters or rating bureaus) having jurisdiction over the Premises. Tenant
shall not do any act or follow any practice relating to the Premises, the
Building or the Common Areas which shall constitute a nuisance or detract in any
way from the reputation of the Building as a first-class real estate development
comparable to other comparable buildings in the Raleigh/Durham market taking
into account rent and other relevant factors. Tenant’s duties in this regard
shall include allowing no noxious or offensive odors, fumes, gases, smoke, dust,
steam or vapors, or any loud or disturbing noise or vibrations to originate in
or emit from the Premises. In addition, Tenant shall not conduct a sale of any
personal property on or about the Premises, the Building or in the Common Areas
without the prior written consent of Landlord.

(b) Without limiting the generality of Section 6(a), above, and excepting only
office supplies and cleaning materials used by Tenant in its ordinary day to day
business operations (but not held for sale, storage or distribution) and then
only to the extent used, stored, transported and disposed of strictly in
accordance with all applicable laws, regulations and manufacturer’s
recommendations, the Premises shall not be used for the treatment, storage,
transportation to or from, use or disposal of toxic or hazardous wastes,
materials, or substances, or any other substance that is prohibited, limited or
regulated by any governmental or quasi-governmental authority or that, even if
not so regulated, could or does pose a hazard to health and safety of the
occupants of the Building or surrounding property (collectively “Hazardous
Substances”). In addition, Tenant shall be liable for, and shall indemnify and
hold Landlord harmless from, all costs, damages and expenses (including
reasonable attorneys’ fees) incurred in connection with the use, storage,
discharge or disposal of any Hazardous Substances by Tenant or Tenant’s
Invitees.

(c) Tenant shall exercise due care in its use and occupancy of the Premises and
shall not commit or allow waste to be committed on any portion of the Premises;
and at the expiration or earlier termination of this Lease, Tenant shall deliver
the Premises to Landlord in the same condition in which it existed as of the
Commencement Date, ordinary wear and tear, fire or other casualty and acts of
God alone excepted. Further, at the expiration or earlier termination of this
Lease, Tenant shall, at its sole cost and expense, remove all telecommunications
and computer cabling installed by Tenant within the Premises or any other
portion of the Building. In the event Tenant fails to remove such cabling within
five (5) days after the expiration or earlier termination of this Lease,
Landlord may elect to remove same and Tenant shall promptly reimburse Landlord
for all costs incurred by Landlord in connection with the removal of such
equipment plus an administration fee equal to twenty-five percent (25%) of such
cost. In the event Tenant fails to promptly pay such amounts, Landlord shall be
entitled to deduct such amounts from the Security Deposit, if any, prior to
returning same to Tenant.

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(d) Tenant’s use and occupancy of the Premises shall include the use in common
with others entitled thereto of the Common Areas and all other improvements
provided by Landlord for the common use of the Building tenants, and any other
common facility as may be designated from time to time by the Landlord, subject,
however, to the terms and conditions of this Lease and to the reasonable rules
and regulations for use therefor as prescribed from time to time by the
Landlord. Subject to the terms hereof, Tenant, its employees, agents, customers
and invitees shall have the nonexclusive use (in common with other benefiting
tenants) to use the Common Areas for purposes intended and the non-exclusive use
of the adjacent surface parking areas in accordance with Section l(n) herein.
Tenant shall not at any time interfere with the use of the Common Areas by
Landlord, another tenant or any other person entitled to use the same. Landlord
reserves the right, from time to time, to alter any of the Common Areas, to
exercise control and management of the same, and to establish, modify, change
and enforce such reasonable rules and regulations as Landlord in its discretion
may deem desirable for the management of the Building or the Common Areas
provided that no alteration of the Common Areas shall reduce the number of
parking spaces provided by Landlord on any surface lot or parking structure
located adjacent to the Building below the number of parking spaces required by
applicable law.

(e) Tenant shall save Landlord harmless from any claims, liabilities, penalties,
fines, costs, expenses or damages resulting from the failure of Tenant to comply
with the provisions of this Section 6. This indemnification shall survive the
termination or expiration of this Lease.

7. SERVICES BY LANDLORD.

(a) Provided that Tenant has fully complied with all terms and conditions of
this Lease and is not then in default hereunder, Landlord shall cause to be
furnished to the Premises (subject to reimbursement as part of the Operating
Expenses) in common with other tenants during “Standard Hours of Operation”
(hereinafter defined), Monday through Friday and Saturday (excluding holidays),
the following services (the “Standard Building Services”): janitorial services
(once per working day after normal weekday working hours); water if available
from city mains for drinking, lavatory and toilet purposes; operatorless
elevator service; electricity for general office space use (including
fluorescent lighting replacements to building standard fixtures only); trash
removal in accordance with city schedules; and heating and air conditioning for
reasonably comfortable use and occupancy of the Premises, provided that the
provision of heating and cooling conforming to any governmental regulation
prescribing limitations thereon shall be deemed to comply with this service. All
additional costs resulting from Tenant’s extraordinary usage of heating, air
conditioning or electricity, as reasonably determined by Landlord, shall be paid
by Tenant, but Tenant shall not install equipment with unusual demands for any
of the foregoing without Landlord’s prior written consent which Landlord may
withhold if it determines that in its opinion such equipment may not be safely
used in the Premises or that electrical service is not adequate therefor.
Notwithstanding anything contained herein to the contrary, Landlord reserves the
right to contract with any third party provider of such utilities to provide
such services to the Premises, the Building and the Business Park in the most
economical manner and Tenant shall not contract with any other third party
provider to supply such utilities to the Premises without Landlord’s prior
written consent. So long as Landlord acts reasonably and in good faith, there
shall be no abatement or reduction of rent by reason of any of the foregoing
services not being continuously provided to Tenant.

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(b) Landlord agrees to provide heating and air conditioning after-hours (i.e.,
hours before or after the Standard Hours of Operation) at Tenant’s request after
reasonable notice and if the area to be served is zoned for this purpose. The
cost of after-hours service of heating or air conditioning shall be Additional
Rent payable monthly by Tenant at $25.00 per hour. As used herein, “Standard
Hours of Operation” shall mean and refer to those hours of operation at the
Building which are 7:00 a.m. to 7:00 p.m. Monday through Friday and 8:00 a.m.
through 1:00 p.m. on Saturday, except holidays. Holidays shall mean and refer to
each of the following days (on the day set aside for observance): New Year’s
Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day
and any other holiday(s) generally recognized as such by landlords of office
space in the Raleigh/Durham Area office market, as determined by Landlord.

(c) Landlord shall not be liable to Tenant for any damage caused to Tenant and
its property due to the Building or any part or appurtenance thereof being
improperly constructed or being or becoming out of repair or, except to the
extent that same results from Landlord’s negligence or willful misconduct,
arising from the leaking of a pipe, facility or system for any utility. Tenant
shall promptly report to Landlord any defective condition in or about the
Premises known to Tenant.

(d) Except for repairs and maintenance necessitated by acts or omissions of
Tenant, or by any employee, agent, contractor, assignee, subtenant, invitee or
customer of Tenant, Landlord shall be responsible for maintenance and repair of
the structural elements and common areas of the Building.

8. TAXES ON LEASE AND TENANT’S PROPERTY.

(a) Tenant shall pay any taxes, documentary stamps or assessments of any nature
which may be imposed or assessed upon this Lease, Tenant’s rental, leasing,
letting or occupancy of the Premises or Tenant’s trade fixtures, equipment,
machinery, inventory, merchandise or other personal property located on the
Premises and owned by or in the custody of Tenant as promptly as all such taxes
or assessments may become due and payable without any delinquency.

(b) Landlord shall pay, subject to reimbursement from Tenant as provided in the
Section entitled “Rental” of this Lease, all ad valorem property taxes which are
now or hereafter assessed upon the Building, the Premises and the Common Areas,
except as otherwise expressly provided in this Lease.

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9. INSURANCE AND INDEMNITY.

(a) Fire and Extended Coverage Insurance. Landlord shall maintain and pay,
subject to reimbursement by Tenant as provided in Section 4 hereof, for fire and
casualty special form “all risk” insurance, with extended coverage (including
boiler and machinery coverage), covering the Building equal to at least eighty
percent (80%) of the replacement cost thereof. Tenant shall not do or cause to
be done or permit on the Premises or in the Building anything deemed extra
hazardous on account of fire and Tenant shall not use the Premises, the Common
Areas or the Building in any manner which will cause an increase in the premium
rate for any insurance in effect on the Building or a part thereof. If, because
of anything done, caused to be done, permitted or omitted by Tenant or Tenant’s
Invitees, the premium rate for any kind of insurance in effect on the Building
or any part thereof shall be raised, Tenant shall pay Landlord on demand the
amount of any such increase in premium which Landlord shall pay for such
insurance and if Landlord shall demand that Tenant remedy the condition which
caused any such increase in an insurance premium rate, Tenant shall remedy such
condition within five (5) days after receipt of such demand, provided that if
the nature of such condition is such that it cannot be cured in five (5) days,
Tenant shall have a reasonable time beyond such five (5) day period (not to
exceed an additional thirty (30) days) to effect such remedy. Tenant shall
maintain and pay for all fire and extended coverage insurance on its contents in
the Premises, including trade fixtures, equipment, machinery, merchandise or
other personal property belonging to or in the custody of Tenant. In addition,
at all times during the Term, Tenant shall procure and maintain business income
and extra expense coverage in such amounts as will reimburse Tenant for direct
or indirect loss or earnings attributable to any loss caused by fire or other
casualty or cause including, but not limited to, vandalism, theft and water
damage of any type. Tenant shall first furnish to Landlord copies of insurance
policies or certificates of insurance (ACORD 28 only) evidencing the required
coverage prior to the Commencement Date and thereafter prior to each policy
renewal date.

(b) Liability Insurance. At all times during the term of this Lease, Tenant
shall, at its sole cost and expense, keep in force adequate public liability
insurance under the terms of a commercial general liability policy (occurrence
coverage) in the amount of not less than Three Million and No/100 Dollars
($3,000,000.00) single limit with such company(ies) licensed to do business in
North Carolina and as shall from time to time be reasonably acceptable to
Landlord (and to any lender having a mortgage interest in the Premises) and
naming Landlord and Landlord’s Agent as additional insureds (and, if requested
by Landlord from time to time, naming Landlord’s mortgagee as an additional
insured). In the event Tenant employs any contractor to perform any work in the
Premises, Tenant shall provide Landlord with insurance certificates naming
Landlord and such other parties as Landlord may designate as additional insureds
under policies of builders risk and general liability insurance and shall also
provide Landlord with evidence of satisfactory workers compensation coverage in
accordance with applicable statutory requirements. All policies of insurance
required to be maintained by Tenant shall be with companies rated A-X or better
in the most current issue of Best’s Insurance Reports and shall have a
deductible of $25,000.00 or less. Such insurance shall include, without
limitation, personal injury and contractual liability coverage for the
performance by Tenant of the indemnity agreements set forth in this Lease.
Tenant shall first furnish to Landlord copies of policies or certificates of
insurance (ACORD 28 only) evidencing the required coverage prior to the
Commencement Date and thereafter prior to each policy renewal date. All policies
required of Tenant hereunder shall contain a provision whereby the insurer is
not allowed to cancel or change materially the coverage without first giving
thirty (30) days’ written notice to Landlord.

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(c) Tenant Indemnity. Tenant shall indemnify and save Landlord harmless against
any and all claims, suits, demands, actions, fines, damages, and liabilities,
and all costs and expenses thereof (including without limitation reasonable
attorneys’ fees) incurred by or claimed against Landlord and its agents,
officers, directors and employees, directly or indirectly, as a result of or in
any way arising from (i) Tenant’s use and occupancy of the Premises or in any
other manner which arises out of, relates to, the business of Tenant, including,
but not limited to, any cost, damage, claim, liability or expense arising from
any violation of any zoning, health, environmental or other law, ordinance,
order, rule or regulation of any governmental body or agency; (ii) injury to
persons (including death) or property occurring in, on or about the Premises,
except to the extent caused by the gross negligence or willful misconduct of
Landlord; or (iii) injury to persons (including death) or property occurring
elsewhere in the Building if caused or occasioned wholly or in part by the
negligence or willful misconduct of Tenant, its employees, agents or
contractors, or any Tenant Invitees.
 
(d) Landlord Indemnity. Landlord shall indemnify, defend and save Tenant
harmless against any and all claims, suits, demands, actions, fines, damages,
and liabilities, and all costs and expenses thereof (including without
limitation reasonable attorneys’ fees) incurred by or claimed against Tenant and
its agents, officers, directors and employees, arising from injury to persons
(including death) or damage to property occurring in, on or about the Building
or the Land which is caused by the negligence or willful misconduct of Landlord.

(e) Landlord Insurance. Landlord shall keep in force during the term of this
Lease fire and extended coverage insurance in an amount equal to eighty percent
(80%) of the replacement value of the Building.

10. LANDLORD’S COVENANT TO REPAIR AND REPLACE.

(a) During the Term, Landlord shall be responsible for necessary repairs or
replacements to the base building structural components of the Building,
including without limitation the Building’s central plumbing, electrical and
HVAC systems; provided however in no event shall Landlord be responsible for any
repairs or replacements (i) to any portion of the Premises, or any improvements
or alterations therein (including the Tenant Improvements) or any trade fixtures
or equipment required or requested by Tenant, or (ii) which are necessitated by
the negligence, misconduct, or acts or omissions of Tenant or Tenant’s Invitees,
which shall be made at Tenant’s sole cost and expense, unless such amounts are
paid to Landlord pursuant to an insurance policy. Landlord shall maintain the
Building in a manner which is comparable with other comparable buildings in the
Raleigh/Durham market, taking into account rent and other relevant factors, and
in substantial compliance with applicable laws, regulations, ordinances and
codes; however, any non-compliance shall not materially impair Tenant’s use and
enjoyment of the Premises or constitute a threat or danger to the health or
safety of Tenant or Tenant’s Invitees. Landlord’s repairs and replacements shall
be made as soon as reasonably possible using due diligence and reasonable
efforts, taking into account in each instance all circumstances surrounding the
repair or replacement including without limitation, the materiality of the
repair or replacement to Tenant’s use and operation of its business within the
Premises and the relation thereof to the enjoyment of same, such period not to
exceed (90) days after receiving written notice from Tenant of the need for
repairs or such longer period of time as is reasonably necessary under the
circumstances so long as Landlord is diligently pursuing the completion of same;
provided, however, in no event shall such period of time exceed 180 days after
receipt of written notice from Tenant. If Landlord cannot, using due diligence,
complete its repairs within 180 days after written notice for Tenant, and such
failure to repair has a material adverse impact on Tenant’s use or occupancy of
the Premises, then (unless the need for such repairs or replacements is (i)
caused by fire or other casualty, or (ii) the result of the negligence or
willful misconduct of Tenant or Tenant’s Invitees, in either event Tenant shall
not be entitled to any remedy, except as provided in Section 13, below) Tenant
may terminate this Lease effective upon thirty (30) days prior written notice to
Landlord. If the need for such repairs or replacements is the result of the
negligence, misconduct or acts or omissions of Tenant or Tenant’s Invitees, and
the expense of such repairs or replacements are not fully covered and paid by
Landlord’s insurance, then Tenant shall pay Landlord the full amount of expenses
not covered, less the deductible amount for which Landlord shall be solely
responsible. Landlord’s duty to repair or replace as prescribed in this Section
shall be Tenant’s sole remedy and shall be in lieu of all other warranties or
guaranties of Landlord, express or implied.

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(b) Landlord shall not be liable for any failure to make any repairs or to
perform any maintenance required of Landlord hereunder unless such failure shall
persist for an unreasonable period of time after written notice from Tenant
setting forth the need for such repair(s) or replacement(s) in reasonable detail
has been received by Landlord. Except as set forth in this Section and the
Section of this Lease, entitled “Damage or Destruction of Premises” and “Rental
Abatement”, there shall be no abatement of rent. There shall be no liability of
Landlord by reason of any injury to or interference with Tenant’s business
arising from the making of any repairs, replacements, alterations or
improvements to any portion of the Building or the Premises, or to fixtures,
appurtenances and equipment therein except to the extent caused directly by
Landlord’s gross negligence or willful misconduct. To the extent permitted under
applicable law, Tenant waives the right to make repairs at Landlord’s expense
under any law, statute or ordinance now or hereafter in effect. In the event of
an interruption of HVAC, electricity, or other utility service to the Premises
that is caused by Landlord’s negligence or willful misconduct, and Landlord
fails to restore such service to the Premises within five (5) business days
after such interruption, and Tenant does not use or occupy the Premises during
such the entire period of interruption, then Landlord shall abate the rent for
each day or partial day after the fifth (5th) business day until such service
has been restored.

11. PROPERTY OF TENANT.

All property placed on the Premises by, at the direction of, or with the consent
of Tenant or Tenant’s Invitees, shall be at the risk of Tenant or the owner
thereof and Landlord shall not be liable for any loss of or damage to said
property resulting from any cause whatsoever except to the extent of any loss or
damage caused by the gross negligence or willful misconduct of Landlord or its
agents, provided same is not covered by the insurance Tenant is required to
maintain under the terms of this Lease.

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12. TRADE FIXTURES AND EQUIPMENT.

Prior to installation, Tenant shall furnish to Landlord notice of all trade
fixtures and equipment which it intends to install within the Premises and the
installation of same shall be subject to Landlord’s consent, such consent not to
be unreasonably withheld, conditioned or delayed. So long as no Event of Default
has occurred and is continuing hereunder, any trade fixtures and equipment
installed in the Premises at Tenant’s expense shall remain Tenant’s personal
property and Tenant shall have the right at any time during the Term to remove
such trade fixtures and equipment. Upon removal of any trade fixtures or
equipment, Tenant shall immediately restore the Premises to substantially the
same condition in which it existed when the Premises was delivered to Tenant by
Landlord, ordinary wear and tear, fire or other casualty the responsibility for
the repair of which is Landlord’s, and acts of God alone excepted. Any trade
fixtures not removed by Tenant within ten (10) days after the expiration or an
earlier termination of the Lease shall, at Landlord’s sole election, either (i)
become the property of Landlord, in which event Landlord shall be entitled to
handle and dispose of same in any manner Landlord deems fit without any
liability or obligation to Tenant or any other third party with respect thereto,
or (ii) be subject to Landlord’s removing such property from the Premises and
storing same, all at Tenant’s expense and without any recourse against Landlord
with respect thereto. Without limiting the generality of the foregoing, the
following property shall in no event be deemed to be “trade fixtures” and Tenant
shall not remove any such property from the Premises under any circumstances,
regardless of whether installed by Landlord or Tenant: (a) any air conditioning,
air ventilating or heating fixtures or equipment; (b) any lighting fixtures or
equipment; (c) any carpeting or other permanent floor coverings; (d) any
paneling or other wall coverings; (e) plumbing fixtures and equipment; or (f)
permanent shelving.
 
13. DAMAGE OR DESTRUCTION OF PREMISES.

If the Premises are damaged by fire or other casualty, but are not rendered
untenantable for Tenant’s business, either in whole or in part, Landlord shall
cause such damage to be repaired without unreasonable delay and the Annual
Rental shall not abate. If by reason of such casualty the Premises are rendered
untenantable for Tenant’s business, either in whole or in part, Landlord shall
cause the damage to the physical structure of the Building (excluding any tenant
improvements or alterations therein) to be repaired or replaced without
unreasonable delay, and, in the interim, the Annual Rental shall be
proportionately reduced as to such portion of the Premises as is rendered
untenantable. Any such abatement of rent shall not, however, create an extension
of the Term. Provided, however, if by reason of such casualty, the Premises are
rendered untenantable in some material portion, and Landlord, in its reasonable
estimation, determines that the amount of time required to repair the damage
using due diligence is in excess of one year (as measured from the date of
casualty), then either party shall have the right to terminate this Lease by
giving written notice of termination within thirty (30) days after the date of
casualty, and the Annual Rental shall (i) abate as of the date of such casualty
in proportion to the part of the Premises rendered untenantable and (ii) abate
entirely as of the effective date of the termination of this Lease.
Notwithstanding the foregoing, in the event the casualty giving rise to an
election to terminate is caused by the negligence, misconduct or acts or
omissions of Tenant or Tenant’s Invitees, Tenant shall have no right to
terminate this Lease. Notwithstanding the other provisions of this Section, in
the event there should be a casualty loss to the Premises during the last Lease
Year of the Term which renders at least four thousand (4,000) rentable square
feet of the Premises untenantable, either party may, at its option, terminate
this Lease by giving written notice to the other party within thirty (30) days
after the date of the casualty and the Annual Rental shall abate as of the date
of such notice. Except as provided herein, Landlord shall have no obligation to
rebuild or repair in case of fire or other casualty, and no termination under
this Section shall affect any rights of Landlord or Tenant hereunder arising
from the prior defaults of the other party. Tenant shall give Landlord prompt
notice of any fire or other casualty in the Premises, and Landlord shall give
Tenant Landlord’s determination of the time period which Landlord estimates will
be required to repair such casualty damage promptly after Landlord ascertains
same with reasonable certainty. Notwithstanding anything contained in this
Section 13 to the contrary, Landlord shall only be obligated to restore the
Premises to a building standard condition unless Tenant makes available to
Landlord proceeds from Tenant’s insurance sufficient to repair and restore the
Premises to the condition in which it existed immediately prior to such
casualty, including those items in excess of building standard. In any event,
Landlord shall not be required to expend more funds than the amount received by
Landlord from the proceeds of any insurance (plus the amount of any deductible)
and any amounts received from Tenant.

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14. GOVERNMENTAL ORDERS.

Except as hereinbelow set forth regarding compliance of the physical structure
of the Building with applicable governmental regulations, including without
limitation compliance by the Common Areas thereof with the applicable
requirements of the Americans with Disabilities Act and the implementing
regulations thereof (the “ADA”) as of the Commencement Date, Tenant agrees, at
its own expense, to comply promptly with all requirements of any legally
constituted public authority that may be in effect from time to time made
necessary by reason of Tenant’s use or occupancy of the Premises. Landlord
agrees to comply promptly with any such requirements if not made necessary by
reason of Tenant’s use or occupancy. With regard to the Common Areas of the
Building, Landlord agrees to use good faith and due diligence to undertake those
actions that are “readily achievable” (as such term is defined in the ADA) in
order to attempt to bring the Common Areas of the Building in compliance with
the applicable requirements of the ADA in effect as of the Commencement Date. If
it is determined that for any reason Landlord shall have failed to cause the
Common Areas of the Building to be brought into compliance with the ADA as of
the Commencement Date (to at least the minimum extent required under applicable
regulations then in effect), then Landlord, as its sole obligation, will take
the action(s) necessary to cause the Common Areas of the Building (excluding any
tenant improvements or alterations) to so comply, and Tenant acknowledges and
agrees that Landlord has and shall have no other obligation or liability
whatsoever to Tenant, or to anyone claiming by or through Tenant, regarding any
failure of the Building or the activities therein to comply with the applicable
requirements of the ADA. Notwithstanding anything contained herein to the
contrary, it is agreed that: (a) Tenant is exclusively responsible for all
compliance with all requirements of any legally constituted public authority in
the event non-compliance relates to the Premises or Tenant’s use thereof, and
(b) in the event of any non-compliance for which Landlord is responsible,
Landlord shall not be deemed in breach of this Lease if such non-compliance does
not materially impair Tenant’s use of, or operations from, the Premises or
threaten or endanger the health or safety of Tenant or Tenant’s Invitees.

15. MUTUAL WAIVER OF SUBROGATION.

For the purpose of waiver of subrogation, the parties mutually release and waive
unto the other all rights to claim damages, costs or expenses for any injury to
property caused by a casualty or any other matter whatsoever in, on or about the
Premises if the amount of such damage, cost or expense has been paid to such
damaged party under the terms of any policy of insurance or would have been paid
if the injured party had carried the insurance required of it hereunder. All
insurance policies carried with respect to this Lease, if permitted under
applicable law, shall contain a provision whereby the insurer waives, prior to
loss, all rights of subrogation against either Landlord or Tenant.

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16. SIGNS AND ADVERTISING.

(a) Landlord shall install, at Landlord’s sole cost and expense, tenant
identification signage in accordance with building standards at or near the
suite entrance to the Premises and in the directory located in the lobby of the
Building.

(b) In order to provide architectural control for the Building and the Business
Park, Tenant shall not install any exterior signs, marquees, billboards, outside
lighting fixtures and/or other decorations on the Building, the Premises or the
Common Areas. Landlord shall have the right to remove any such sign or other
decoration restore fully the Building, the Premises or the Common Areas at the
cost and the expense of Tenant if any such exterior work is done without
Landlord’s prior written approval, which approval Landlord shall be entitled to
withhold or deny in its sole discretion. Tenant shall not permit, allow or cause
to be used in, on or about the Premises any sound production devices, mechanical
or moving display devices, bright lights, or other advertising media, the effect
of which would be visible or audible from the exterior of the Premises.

(c) Landlord shall install, at Tenant’s written request and at Tenant’s sole
expense, one (1) sign adjacent to the main entrance of the Premises identifying
Tenant. The exact location, design and materials of such sign shall be subject
to Landlord’s interior signage guidelines, as well as Landlord’s written
approval, which shall not be unreasonably withheld, conditioned or delayed.
 
17. RIGHTS OF LANDLORD.

(a) Landlord reserves the following rights:

(i) to change the name or street address of the Building with thirty (30) days
prior notice to Tenant;

(ii) to approve the design, location, number, size and color of all signs or
lettering on the Premises or visible from the exterior of the Premises,
provided, however, that Landlord shall provide a single listing of Tenant’s name
in the Building directory, if any, and the initial Building standard suite
identification signage near Tenant’s suite entry door at no charge to Tenant;

(iii) to have pass keys and/or access cards to the Premises and key codes or
cards for the telephone access system installed by Tenant;

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(iv) to grant to anyone the exclusive right to conduct any particular business
or undertaking in the Building provided such exclusive right shall not conflict
with Tenant’s then permitted use of the Premises;

(v) to enter the Premises at any reasonable time for inspection upon reasonable
prior notice to Tenant (which notice may be oral), or at any time, without prior
notice, in the event of any emergency; to supply any service to be provided by
Landlord hereunder; to submit the Premises to prospective purchasers or tenants;
to post notices of non-responsibility; to affix and display “For Rent” signs;
and to make repairs, alterations, additions or improvements to the Premises or
the Building; and

(vi) to approve the design, location, number, size and color of all signs
located on the exterior of the Building.

(b) Without limiting the generality of the provisions of Section 17(a), above,
at any time during the Term of this Lease, Landlord shall have the right to
remove, alter, improve, renovate or rebuild the Common Areas of the Building
(including, but not limited to, the lobby, hallways and corridors thereof), and
to install, repair, replace, alter, improve or rebuild in the Premises, other
tenants’ premises and/or the Common Areas of the Building (including the lobby,
hallways and corridors thereof), any mechanical, electrical, water, sprinkler,
plumbing, heating, air conditioning and ventilating systems, at any time during
the Term, provided such actions shall not permanently and materially impair
Tenant’s access to the Premises. In connection with making any such
installations, repairs, replacements, alterations, additions and improvements
under the terms of this Section 17, Landlord shall have the right to access
through the Premises as well as the right to take into and upon and through the
Premises or any other part of the Building, all materials that may be required
to make any such repairs, replacements, alterations, additions or improvements,
as well as the right in the course of such work to close entrances, doors,
corridors, elevators or other facilities located in the Building or temporarily
to cease the operations of any services or facilities therein or to take
portion(s) of the Premises reasonably necessary in connection with such work,
without being deemed or held guilty of an eviction of Tenant; provided, however
that Landlord agrees to use all reasonable efforts not to interfere with or
interrupt Tenant’s business operation in the Premises. Landlord shall have the
right to install, use and maintain pipes and conduits in and through the
Premises, including, without limitation, telephone and computer installations,
provided that they do not permanently materially adversely affect Tenant’s
access to or use of the Premises.

(c) Landlord shall not be liable to Tenant for any expense, injury, loss or
damage resulting from Landlord’s exercise of any rights in accordance with this
Section 17 (except with regard to claims, loss or damages relating to injury to
person or property arising from Landlord’s negligence), all claims against
Landlord for any and all such liability being hereby expressly released by
Tenant. Landlord shall not be liable to Tenant for damages by reason of
interference with the business of Tenant or inconvenience or annoyance to Tenant
or the customers of Tenant. The Rent reserved herein shall not abate while the
Landlord’s rights under this Section 17 are exercised, and Tenant shall not be
entitled to any set-off or counterclaims for damages of any kind against
Landlord by reason thereof, all such claims being hereby expressly released by
Tenant.

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(d) Landlord shall have the right to use any and all means which Landlord may
deem proper to open all of the doors in, upon and about the Premises, excluding
Tenant’s vaults and safes, in any emergency in order to obtain entry to the
Premises. Any entry to the Premises obtained by Landlord by any of said means
shall not be construed or deemed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or an eviction of Tenant from the Premises or any
portion thereof.

(e) Notwithstanding anything to the contrary contained in this Section 17, at no
time shall any agent or representative of Landlord which in the ordinary course
of business performs real estate management or brokerage services be permitted
to have access to the Premises without prior notice to Tenant and without a
representative of Tenant present during such access.

18. INTENTIONALLY OMITTED.

19. EMINENT DOMAIN.

If any substantial portion of the Premises is taken under the power of eminent
domain (including any conveyance made in lieu thereof) or if such taking shall
materially impair the normal operation of Tenant’s business, then either party
shall have the right to terminate this Lease by giving written notice of such
termination within thirty (30) days after such taking. If neither party elects
to terminate this Lease, Landlord shall repair and restore the Premises to the
best possible tenantable condition (but only to the extent of any condemnation
proceeds made available to Landlord) and the Annual Rental shall be
proportionately and equitably reduced as of the date of the taking. All
compensation awarded for any taking (or the proceeds of a private sale in lieu
thereof) shall be the property of Landlord whether such award is for
compensation for damages to the Landlord’s or Tenant’s interest in the Premises,
and Tenant hereby assigns all of its interest in any such award to Landlord;
provided, however, Landlord shall not have any interest in any separate award
made to Tenant for loss of business, moving expense or the taking of Tenant’s
trade fixtures or equipment if a separate award for such items is made to Tenant
and such separate award does not reduce the award to Landlord. Notwithstanding
the foregoing, in no event shall Tenant be entitled to any compensation or award
for the loss of its leasehold estate, if such compensation or award would reduce
the award to which Landlord would otherwise be entitled.
 
20. EVENTS OF DEFAULT AND REMEDIES.
 
(a) Upon the occurrence of any one or more of the following events (the “Events
of Default,” any one an “Event of Default”), Landlord shall have the right to
exercise any rights or remedies available in this Lease, at law or in equity.
Events of Default shall include:

(i) Tenant’s failure to pay any rental or other sum of money payable hereunder
within five (5) days after delivery of written notice by Landlord (provided that
with respect to the second (2nd) and each subsequent failure by Tenant, during
any twenty-four (24) month period during the Term, to pay any installment of
Minimum Rental by the fifth (5th) day of the calendar month in which such
installment is due shall, without any notice by Landlord, constitute an Event of
Default hereunder);

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(ii) Tenant’s conveyance, assignment, sublease or mortgage of the Premises (or
any part thereof) or the Lease, without the prior written consent of Landlord;

(iii) Tenant’s failure to maintain the insurance coverage required by Section 9,
above;

(iv) Tenant having become bankrupt or insolvent, or having filed any debtor
proceedings, or filed pursuant to any statute a petition in bankruptcy or
insolvency or for reorganization, or filed a petition for the appointment of a
receiver or trustee for all or substantially all of Tenant’s assets and such
petition or appointment shall not have been set aside within sixty (60) days
from the date of such petition or appointment, or if Tenant makes an assignment
for the benefit of creditors, or petitions for or enters into an arrangement; or

(v) Tenant’s failure to perform any other of the terms, covenants or conditions
contained in this Lease if not remedied within thirty (30) days after receipt of
written notice thereof, or if such default cannot be remedied within such
period, Tenant does not within thirty (30) days after written notice thereof
commence such act or acts as shall be necessary to remedy the default and shall
not thereafter diligently prosecute such cure and complete such act or acts
within a reasonable time period after the expiration of such thirty (30) day
period, not to exceed an additional sixty (60) days, however.

(b) In addition to its other remedies, Landlord, upon an Event of Default by
Tenant, shall have the immediate right, after any applicable grace period
expressed herein, to terminate and cancel this Lease and/or terminate Tenant’s
right of possession and reenter and remove all persons and properties from the
Premises and dispose of such property as it deems fit, all without being guilty
of trespass or being liable for any damages caused thereby. If Landlord reenters
the Premises, it may either terminate this Lease or, from time to time without
terminating this Lease, terminate Tenant’s right of possession and make such
alterations and repairs as may be necessary or appropriate to relet the Premises
and relet the Premises upon such terms and conditions as Landlord deems
advisable. In the event Landlord relets all or any portion of the Premises, all
rents collected by Landlord shall reduce Tenant’s obligations hereunder. No
retaking of possession of the Premises by Landlord shall be deemed as an
election to terminate this Lease unless a written notice of such intention is
given by Landlord to Tenant at the time of reentry; but, notwithstanding any
such reentry or reletting without termination, Landlord may at any time
thereafter elect to terminate for such previous default. In the event of an
elected termination by Landlord, whether before or after reentry, Landlord may
recover from Tenant damages, including the costs of recovering the Premises and
any costs incurred in reletting the Premises, and Tenant shall remain liable to
Landlord for the total Annual Rental (which may at Landlord’s election be
accelerated to be due and payable in full as of the Event of Default and
recoverable as damages in a lump sum) as would have been payable by Tenant
hereunder for the remainder of the term less the rentals actually received from
any reletting or, at Landlord’s election, less the reasonable rental value of
the Premises for the remainder of the term. In determining the Annual Rental
which would be payable by Tenant subsequent to default, except with respect to
Minimum Rental (which shall be calculated in accordance with Section 1(g)
hereof), the Annual Rental for each Lease Year of the unexpired term shall be
equal to the Annual Rental payable by Tenant for the last Lease Year prior to
the default. If any rent owing under this Lease is collected by or through an
attorney, Tenant agrees to pay Landlord’s reasonable attorneys’ fees incurred.

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21. SUBORDINATION.

This Lease is subject and subordinate to any and all mortgages or deeds of trust
which now exist or may hereafter be executed affecting the Building or the Land,
and this clause shall be self-operative without any further instrument necessary
to effect such subordination; however, if requested by Landlord, Tenant shall
promptly execute and deliver to Landlord any such certificate(s) in such form as
Landlord may reasonably request evidencing the subordination of this Lease to,
or the assignment of this Lease as additional security for, such mortgages or
deeds of trust. If, at any time, or from time to time during the Term, any
mortgagee shall request that this Lease have priority over the lien of such
mortgage, and if Landlord consents thereto, this Lease shall have priority over
the lien of such mortgage and all renewals, modifications, replacements,
consolidations and extensions thereof and all advances made thereunder and
interest thereon, and Tenant shall, within ten (10) days after receipt of a
request therefor from Landlord, execute, acknowledge and deliver any and all
documents and instruments confirming the priority of this Lease. In any event,
however, if this Lease shall have priority over the lien of a first mortgage,
this Lease shall not become subject or subordinate to the lien of any
subordinate mortgage, and Tenant shall not execute any subordination documents
or instruments for any subordinate mortgagee, without the written consent of the
first mortgagee. Notwithstanding the foregoing, at Tenant’s request, Landlord
shall use reasonable efforts to obtain from any current or future mortgagee a
subordination non-disturbance and attornment agreement (“SNDA”) for Tenant’s
benefit on such mortgagee’s standard form of SNDA; provided, that Tenant shall
pay for (or reimburse Landlord for) all reasonable costs incurred in such
endeavor (including without limitation the attorneys’ fees incurred by
Landlord), whether or not Landlord is ultimately able to obtain such SNDA.

22. ASSIGNMENT AND SUBLETTING.

(a) Tenant shall not assign, sublet, mortgage, pledge or encumber this Lease,
the Premises, or any interest in the whole or in any portion thereof, directly
or indirectly, without the prior written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed. In the event of any
assignment, sublease, mortgage, pledge or encumbrance, Tenant shall: (i) remain
primarily liable for the performance of all terms of this Lease, (ii) pay
Landlord’s reasonable attorneys’ fees incurred in connection with such sublease
or assignment, and (iii) pay to Landlord fifty percent (50%) of any rental or
any fees or charges received by Tenant in excess of the Annual Rental payable to
Landlord hereunder as further rental under this Lease (after deducting therefrom
all reasonable costs incurred by Tenant in procuring such assignee or subtenant
and/or undertaking improvements in or to the Premises, and all other reasonable
expenses associated with such assignment or sublease). Landlord’s consent to one
assignment or sublease will not waive the requirement of its consent to any
subsequent assignment or sublease as required herein. Any attempted assignment
or sublease by Tenant in violation of the terms and conditions of this Section
22 shall be null and void. Upon notice to Landlord of a proposed sublease or
assignment of all or any portion of the Premises (the “Proposed Space”),
Landlord shall have the option, within fifteen (15) days after its receipt of
such notice, to terminate this Lease with respect to the Proposed Space,
whereupon the parties hereto shall have no further rights or liabilities with
respect to the Proposed Space except as otherwise expressly set forth herein.
 
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(b) In the event of a proposed assignment of this Lease or subletting of all or
a part of the Premises, Tenant shall submit to Landlord, in writing, (i) the
name of the proposed assignee or sublessee, (ii) current financial statements
available to Tenant disclosing the financial condition of the proposed assignee
or subtenant, (iii) the nature of the business of the proposed assignee or
sublessee, and its proposed use of the Premises (any assignment or subletting
being subject to restrictions on use contained in this Lease, the violation of
which by the proposed assignee or sublessee shall constitute absolute grounds
for Landlord’s denial of the requested assignment or subletting, such grounds
not being the exclusive grounds for denial under clause (iii)) and (iv) the
proposed commencement date of the assignment or subletting, together with a copy
of the proposed assignment or sublease. Within thirty (30) days after its
receipt of such notice, Landlord shall either approve or disapprove such
proposed assignment or sublease in writing. Tenant shall promptly deliver a copy
of the fully executed assignment or sublease to Landlord upon its receipt of
same.

(c) Notwithstanding anything in this Lease to the contrary, Tenant further
agrees that any assignment or sublease shall be subject to the following
additional limitations: (i) for so long as Tenant, or any affiliate of Tenant,
is Landlord’s leasing agent with respect to the Building, in no event may Tenant
assign this Lease or sublet all or any portion of the Premises to an existing
Tenant of the Building or its subtenant or assignee (unless Landlord consents to
such assignment or sublease); (ii) for so long as Tenant, or any affiliate of
Tenant, is Landlord’s leasing agent with respect to the Building, in no event
shall the proposed subtenant or assignee be a person or entity with whom
Landlord or its agent is negotiating and to or from whom Landlord, or its agent,
has given or received any written or oral proposal within the past six (6)
months regarding a lease of space in the Building; and (iii) Tenant shall not
publicly advertise the rate for which Tenant is willing to sublet the Premises
if such rate is below then-market rates; and all public advertisements of the
assignment of the Lease or sublet of the Premises, or any portion thereof, shall
be subject to prior written approval by Landlord, such approval not to be
unreasonably withheld, conditioned or delayed. Said public advertisement shall
include, but not be limited to, the placement or display of any signs or
lettering on the exterior of the Premises or on the glass or any window or door
of the Premises or in the interior of the Premises if it is visible from the
exterior.

(d) All proposed subleases and assignments shall be on a form, and contain terms
and provisions, reasonably acceptable to Landlord; and shall contain, inter
alia, the following provisions: (i) any such assignment or sublease shall
include an assumption by the assignee or subtenant, from and after the effective
date of such assignment or sublease, of the performance and observance of the
covenants and conditions to be performed and observed on the part of Tenant as
contained in this Lease, and (ii) any such sublease or assignment shall specify
that the term of such sublease shall not extend beyond one (1) day prior to the
expiration of this Lease. The consent by Landlord to any assignment, transfer or
subletting to any person or entity shall not be construed as a waiver or release
of Tenant from any provision of this Lease, unless expressly agreed to in
writing by Landlord (it being understood that Tenant shall remain primarily
liable as a principal and not as a guarantor or surety), nor shall the
collection or acceptance of rent from any such assignee, transferee, subtenant
or occupant constitute a waiver or release of Tenant from any such provision. No
consent by Landlord to any such assignment, transfer or subletting in any one
instance shall constitute a waiver of the necessity for such consent in a
subsequent instance.
 
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(e) For purposes of this Section 22, a transfer, conveyance, grant or pledge,
directly or indirectly, in one or more transactions, of an interest in Tenant
(whether stock, partnership interest or other form of ownership or control, or
the issuance of new interests) by which an aggregate of more than fifty percent
(50%) of the beneficial interest in Tenant shall be vested in a party or parties
who are not holders of such interest(s) as of the date hereof) shall be deemed
an assignment of this Lease; provided, however, that this limitation shall not
apply to any corporation, all of the outstanding voting stock of which is listed
on a national securities exchange as defined in the Securities Exchange Act of
1934. The merger or consolidation of Tenant into or with any other entity, the
sale of all or substantially all of Tenant’s assets, or the dissolution of
Tenant shall each be deemed to be an assignment within the meaning of this
Section 22.

(f) Notwithstanding any consent by Landlord to an assignment or subletting,
Tenant shall remain primarily liable for the performance of all covenants and
obligations contained in this Lease. Each approved assignee or subtenant shall
also automatically become liable for the obligations of Tenant hereunder.
Landlord shall be permitted to enforce the provisions of this Lease directly
against Tenant and/or against any assignee or sublessee without proceeding in
any way against any other person. Collection or acceptance of Minimum Rental or
Additional Rental from any such assignee, subtenant or occupant shall not
constitute a waiver or release of Tenant from the terms of any covenant or
obligation contained in this Lease, nor shall such collection or acceptance in
any way be construed to relieve Tenant from obtaining the prior written consent
of Landlord to such assignment or subletting or any subsequent assignment or
subletting.

(g) Notwithstanding anything contained herein to the contrary, the consent
requirement set forth in Section 22(a), above, shall not be applicable to any
assignment of this Lease or subletting of the Premises to an Affiliate
(hereinafter defined) of Tenant; provided, however, that in each instance,
Tenant shall give Landlord at least ten (10) business days prior written notice
of any proposed sublease or assignment to an Affiliate, which notice shall
contain information and documentation reasonably acceptable to Landlord
evidencing that the proposed assignee or subtenant is an Affiliate, and (ii) a
copy of the proposed assignment or sublease document. As used herein, the term
“Affiliate” shall refer to a person or entity that directly or indirectly
(through one or more intermediaries) controls (hereinafter defined), is
controlled by, or is under common control with Tenant. “Control” as used herein
shall mean the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of the entity in question, whether
through ownership of voting securities or by contract. Notwithstanding any
assignment of this Lease or any subletting of all or any portion of the Premises
to an Affiliate of Tenant, Landlord shall, at its sole option be permitted to
enforce the provisions of this Lease directly against Tenant without proceeding
in any way against such Affiliate.
 
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23. LANDLORD DEFAULT.
 
In the event of any default by Landlord under this Lease, Tenant will give
Landlord written notice specifying such default with particularity, and Landlord
shall thereupon have thirty (30) days (or such longer period as may be required
in the exercise of due diligence) in which to cure any such default. Unless and
until Landlord fails to so cure any default after such notice, Tenant shall not
have any remedy or cause of action by reason thereof. All obligations of
Landlord hereunder will be construed as covenants, not conditions.
Notwithstanding any other provisions of this Lease to the contrary, Tenant shall
look solely to Landlord’s equity in the Building, and not to any other or
separate business or non-business assets of Landlord, or any partner,
shareholder, officers or representative of Landlord, for the satisfaction of any
claim brought by Tenant against Landlord, and if Landlord shall fail to perform
any covenant, term or condition of this Lease upon Landlord’s part to be
performed, and as a consequence of such default, Tenant shall recover a money
judgment against Landlord, such judgment shall be satisfied only: (i) out of the
proceeds of sale received upon levy against Landlord’s equity in the Building,
and /or (ii) to the extent not encumbered by a secured creditor, out of the
rents or other incomes receivable by Landlord from the Building from and after
the date of such judgment. Further, in the event the owner of Landlord’s
interest in this Lease is at any time a partnership, joint venture or
unincorporated association, Tenant agrees that the members or partners of such
partnership, joint venture or unincorporated association shall not be personally
or individually liable or responsible for the performance of any of Landlord’s
obligations hereunder. With respect to any provisions of this Lease which
provides that Landlord shall not unreasonably withhold or delay any consent or
approval, Tenant shall not have, and Tenant hereby waives, any claim for money
damages; nor shall Tenant claim any money damages by way of setoff, counterclaim
or defense, based upon any allegation of unreasonableness by Landlord. Tenant’s
sole remedy shall be an action or proceeding to enforce any such provisions, or
for specific performance, injunction or declaratory judgment.

24. TRANSFER OF LANDLORD’S INTEREST.

If Landlord shall sell, assign or transfer its interest in the Building or in
this Lease to a successor in interest which expressly assumes the obligations of
Landlord hereunder and shall transfer any to such transferee any Security
Deposit held by Landlord at the time of sale, then Landlord shall thereupon be
released or discharged from all covenants and obligations hereunder, and Tenant
shall look solely to such successor in interest for performance of all of
Landlord’s obligations and such successor shall be obligated to perform all of
Landlord’s obligations under this Lease which accrue after the date of such
transfer. Tenant’s obligations under this Lease shall in no manner be affected
by Landlord’s sale, assignment, or transfer of all or any part of such
interest(s) of Landlord, and Tenant shall thereafter attorn and look solely to
such successor in interest as the Landlord hereunder.
 
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25. COVENANT OF QUIET ENJOYMENT.

Landlord represents that it has full right and authority to lease the Premises
and Tenant shall peacefully and quietly hold and enjoy the Premises for the full
Term hereof so long as no Event of Default occurs hereunder.

26. ESTOPPEL CERTIFICATES.

Within ten (10) days after a request by Landlord, Tenant shall deliver a written
estoppel certificate, in form supplied by or reasonably acceptable to Landlord,
certifying that (i) this Lease is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications); (ii) the Term of the Lease has
commenced and the full rental is now accruing hereunder; (iii) Tenant has
accepted possession of the Premises and is presently occupying the same; (iv)
all improvements required by the terms of the Lease to be made by Landlord have
been completed and all tenant improvement allowances have been paid in full; (v)
there are no offsets, counterclaims, abatements or defenses against or with
respect to the payment of any rent or other charges due under the Lease; (vi) no
rent under the Lease has been paid more than thirty (30) days in advance of its
due date; (vii) to the best of the knowledge of the Tenant, Landlord is not in
default in the performance of any covenant, agreement, provision or condition
contained in the Lease or, if so, specifying each such default of which Tenant
may have knowledge; (viii) the address for notices to be sent to Tenant; (ix)
the only security deposit, if any, tendered by Tenant is as set forth in the
Lease, and such security deposit has been paid to Landlord; and (x) any other
information reasonably requested by Landlord or any mortgagee or ground lessor
of the Building and/or the Land it being intended that any such statement
delivered pursuant hereto may be relied upon by any prospective purchaser or
lessee of the Building or any part thereof, any mortgagee or prospective
mortgagee thereof, any prospective assignee of any mortgage thereof, any ground
lessor or prospective ground lessor of the Land and/or the Building, or any
prospective assignee of any such ground lease. Within thirty (30) days after a
request by Tenant, Landlord shall deliver to Tenant a similar estoppel
certificate covering such matters as are reasonably required by Tenant.

27. PROTECTION AGAINST LIENS.

Tenant shall do all things necessary to prevent the filing of any mechanics’,
materialmen’s or other types of liens whatsoever, against all or any part of the
Premises by reason of any claims made by, against, through or under Tenant. If
any such lien is filed against the Premises, Tenant shall either cause the same
to be discharged of record within twenty (20) days after filing or, if Tenant in
its discretion and in good faith determines that such lien should be contested,
it shall furnish such security as may be necessary to prevent any foreclosure
proceedings against the Premises during the pendency of such contest. If Tenant
shall fail to discharge such lien within said time period or fail to furnish
such security, then Landlord may at its election, in addition to any other right
or remedy available to it, discharge the lien by paying the amount claimed to be
due or by procuring the discharge by giving security or in such other manner as
may be allowed by law. If Landlord acts to discharge or secure the lien then
Tenant shall immediately reimburse Landlord for all sums paid and all costs and
expenses (including reasonable attorneys’ fees) incurred by Landlord involving
such lien together with interest on the total expenses and costs at an interest
rate equal to the Prime Rate plus five percent (5%).
 
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28. MEMORANDUM OF LEASE.

If requested by Tenant, Landlord shall execute a recordable Memorandum or Short
Form Lease, prepared at Tenant’s expense, specifying the exact term of this
Lease and such other terms as the parries shall mutually determine.
 
29. FORCE MAJEURE.

In the event Landlord or Tenant shall be delayed, hindered or prevented from the
performance of any act required hereunder, by reason of governmental
restrictions, scarcity of labor or materials, strikes, fire, or any other
reasons beyond its reasonable control (“Force Majeure”), the performance of such
act shall be excused for the period of delay, and the period for performance of
any such act shall be extended as necessary to complete performance after the
delay period. However, the provisions of this Section shall in no way be
applicable to Tenant’s obligations to pay Minimum Rental or any other sums,
monies, costs, charges or expenses required by this Lease.

30. REMEDIES CUMULATIVE - NONWAIVER.

Unless otherwise specified in this Lease, no remedy of Landlord or Tenant shall
be considered exclusive of any other remedy, but each shall be distinct,
separate and cumulative with other available remedies. Each remedy available
under this Lease or at law or in equity may be exercised by Landlord or Tenant
from time to time as often as the need may arise. No course of dealing between
Landlord and Tenant or any delay or omission of Landlord or Tenant in exercising
any right arising from the other party’s default shall impair such right or be
construed to be a waiver of a default.

31. HOLDING OVER.

If Tenant remains in possession of the Premises or any part thereof after the
expiration of the Term, whether with or without Landlord’s acquiescence, Tenant
shall be deemed only a tenant at will and there shall be no renewal of this
Lease without a written agreement signed by both parties specifying such
renewal. The “monthly” rental payable by Tenant during the first month of such
tenancy at will shall be one hundred twenty-five percent (125%) of the monthly
installment of Annual Rent payable during the final Lease Year immediately
preceding such expiration. For each month (or portion thereof) thereafter any
such tenancy at will shall be one hundred fifty percent (150%) of the monthly
installments of Annual Rental payable during the final Lease Year immediately
preceding such expiration. Tenant shall also remain liable for any and all
damages, direct and consequential, suffered by Landlord as a result of any
holdover without Landlord’s unequivocal written acquiescence.

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32. NOTICES.

Any notice allowed or required by this Lease shall be deemed to have been
sufficiently served if the same shall be in writing and placed in the United
States mail, via certified mail, return receipt requested, with proper postage
prepaid or delivered by a nationally recognized overnight courier and addressed
to the appropriate party at the address set forth in Section l(j) hereof. Notice
shall be deemed given: (a) in the case of certified mail, three (3) business
days after tendering same to the post office, or (b) in the case of overnight
delivery, one (1) business day after tendering same to national courier service.

The addresses of Landlord and Tenant and the party, if any, to whose attention a
notice or copy of same shall be directed may be changed or added from time to
time by either party giving notice to the other in the prescribed manner.
 
33. LEASING COMMISSION.

Landlord and Tenant represent and warrant each to the other that they have not
dealt with any broker(s) or any other person claiming any entitlement to any
commission in connection with this transaction except the brokers set forth in
Section 1(1) hereof (the “Brokers”). Tenant agrees to indemnify and save
Landlord and Landlord’s Agent harmless from and against any and all claims,
suits, liabilities, costs, judgments and expenses, including reasonable
attorneys’ fees, for any leasing commissions or other commissions, fees, charges
or payments resulting from or arising out of its respective actions in
connection with this Lease. Landlord agrees to indemnify and save Tenant
harmless from and against any and all claims, suits, liabilities, costs,
judgments and expenses, including reasonable attorneys’ fees, for any leasing
commissions or other commissions, fees, charges or payments resulting from or
arising out of its actions in connection with this Lease. Landlord agrees to be
responsible for the leasing commission due Brokers pursuant to separate written
agreements between Landlord and Brokers, and to hold Tenant harmless respecting
same.

34. SEVERABILITY.

If any term or provision of this Lease or the application thereof to any person
or circumstance shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of this Lease shall
be valid and enforced to the fullest extent permitted by law notwithstanding the
invalidity of any other term or provision hereof.

35. REVIEW OF DOCUMENTS.

If, following the execution of this Lease, either party hereto requests that the
other party execute any document or instrument that is other than (i) a document
or instrument the form of which is attached hereto as an exhibit, or (if) a
document that solely sets forth facts or circumstances that are then existing
and reasonably ascertainable by the requested party with respect to the Lease,
then the party making such request shall be responsible for paying the
out-of-pocket costs and expenses, including without limitation, the attorneys’
fees, incurred by the requested party in connection with the review (and, if
applicable, the negotiations) related to such document(s) or instrument(s),
regardless of whether such document(s) or instrument(s) is (are) ever executed
by the requested party. In the event the requesting party is Tenant, all such
costs and expenses incurred by Landlord in connection with its review and
negotiation of any such document(s) or instrument(s) shall be deemed to be
Additional Rental due hereunder and shall be payable by Tenant promptly upon
demand.
 
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36. PAYMENT OF TENANT’S OBLIGATIONS BY LANDLORD AND UNPAID RENT.

All covenants and agreements to be performed by Tenant under any of the terms of
this Lease shall be performed by Tenant at Tenant’s sole cost and expense. If
Tenant shall fail to pay any sum of money, other than Rent, required to be paid
by it hereunder or shall fail to perform any other act on its part to be
performed hereunder, and such failure shall continue beyond any applicable grace
period set forth in this Lease, Landlord may, without waiving or releasing
Tenant from any of its obligations hereunder, make any such payment or perform
any such other required act on Tenant’s part, provided that Landlord shall first
give Tenant five (5) days prior written notice of Landlord’s intention to
exercise its rights to any such remedy. All sums so paid by Landlord, and all
necessary incidental costs, together with interest thereon at four percentage
points (4%) over the Prime Rate then in effect, from the date of such payment by
Landlord, shall be payable by Tenant to Landlord as Additional Rental hereunder,
on demand, and Tenant covenants and agrees to pay any such sums. Landlord shall
have (in addition to any other right or remedy of Landlord hereunder or at law)
the same rights and remedies in the event of the nonpayment thereof by Tenant as
in the case of default by Tenant in the payment of Additional Rental.

37. ENVIRONMENTAL CONCERNS.

(a) Except as expressly permitted in Section 6(b), above, but subject to the
terms and conditions of that section, Tenant, its agents, employees, contractors
or invitees shall not (i) cause or permit any Hazardous Materials (hereinafter
defined) to be brought upon, stored, used or disposed on, in or about the
Premises and/or the Building, or (ii) knowingly permit the release, discharge,
spill or emission of any Hazardous Material in or from the Premises.

(b) Tenant hereby agrees that it is and shall be fully responsible for all
costs, expenses, damages or liabilities (including, but not limited to those
incurred by Landlord and/or its mortgagee) which may occur from the use,
storage, disposal, release, spill, discharge or emissions of Hazardous Materials
in or about the Premises, the Building or the Land by Tenant whether or not the
same may be permitted by this Lease. Tenant shall defend, indemnify and hold
harmless Landlord, its mortgagee and its agents from and against any claims,
demands, administrative orders, judicial orders, penalties, fines, liabilities,
settlements, damages, costs or expenses (including, without limitation,
reasonable attorney and consultant fees, court costs and litigation expenses) of
whatever kind or nature, known or unknown, contingent or otherwise, arising out
of or in any way related to the use, storage, disposal, release, discharge,
spill or emission of any Hazardous Material, or the violation of any
Environmental Laws (hereinafter defined), by Tenant, its agents, employees,
contractors or invitees. The provisions of this Section 37 shall be in addition
to any other obligations and liabilities Tenant may have to Landlord at law or
in equity and shall survive the transactions contemplated herein or any
termination of this Lease.
 
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(c) As used in this Lease, the term “Hazardous Materials” shall include, without
limitation:

(i) those substances included within the definitions of “hazardous substances”,
“hazardous materials,” toxic substances,” or “solid waste” in the Comprehensive
Environmental Response Compensation and Liability Act of 1980 (42 U.S.C. §9601
et seq.) (“CERCLA”), as amended by Superfund Amendments and Reauthorization Act
of 1986 (“SARA”), the Resource Conservation and Recovery Act of 1976 (“RCRA”),
and the Hazardous Materials Transportation Act, and in the regulations
promulgated pursuant to said laws, all as amended;

(ii) those substances listed in the United States Department of Transportation
Table (49 CFR 172.101 and amendments thereto) or by the Environmental Protection
Agency (of any successor agency) as hazardous substances (40 CFR Part 302 and
amendments thereto); and

(iii) any material, waste or substance which is (A) petroleum, (B) asbestos, (C)
polychlorinated biphenyl, (D) designated as a “hazardous substance” pursuant to
Section 311 of the Clean Water Act, 33 U.S.C. §1251 et seq. (33 U.S.C. §1321) or
listed pursuant to Section of the Clean Water Act (33 U.S.C. §1317); (E)
flammables or explosives; or (F) radioactive materials.
 
(d) All federal, state or local laws, statutes, regulations, rules, ordinances,
codes, standards, orders, licenses and permits of any governmental authority or
issued or promulgated thereunder shall be referred to as the “Environmental
Laws”.

(e) Landlord represents and warrants to Tenant that to the best of Landlord’s
actual knowledge (without investigation or inquiry), as of the date hereof
Landlord has not received any notice from any governmental authority of the
violation of any Environmental Laws regarding the presence of Hazardous
Materials in, on, under or about the Premises, Building or Land, the violation
of which would have a material adverse affect on Tenant’s use of the Premises or
expose Tenant to any unreasonable health or safety risk.

38. USA PATRIOT ACT AND ANTI-TERRORISM LAWS.

(a) Tenant represents and warrants to, and covenants with, Landlord that neither
Tenant nor any of its respective constituent owners or affiliates currently are,
or shall be at any time during the Term hereof, in violation of any laws
relating to terrorism or money laundering (collectively, the “Anti-Terrorism
Laws”), including without limitation Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001 and relating to Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism (the “Executive Order”) and/or the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001 (Public Law 107-56) (the “USA Patriot Act”).
 
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(b) Tenant covenants with Landlord that neither Tenant nor any of its respective
constituent owners or affiliates is or shall be during the Term hereof a
“Prohibited Person,” which is defined as follows: (i) a person or entity that is
listed in the Annex to, or is otherwise subject to, the provisions of the
Executive Order; (ii) a person or entity owned or controlled by, or acting for
or on behalf of, any person or entity that is listed in the Annex to, or is
otherwise subject to the provisions of, the Executive Order; (iii) a person or
entity with whom Landlord is prohibited from dealing with or otherwise engaging
in any transaction by any Anti-Terrorism Law, including without limitation the
Executive Order and the USA Patriot Act; (iv) a person or entity who commits,
threatens or conspires to commit or support “terrorism” as defined in Section
3(d) of the Executive Order; (v) a person or entity that is named as a
“specially designated national and blocked person” on the then-most current list
published by the U.S. Treasury Department Office of Foreign Assets Control at
its official website, http://www.treas.gov/offices/eotffc/ofac/sdn/t11sdn.pdf,
or at any replacement website or other replacement official publication of such
list; and (vi) a person or entity who is affiliated with a person or entity
listed in items (i) through (v), above.

(c) At any time and from time-to-time during the Term, Tenant shall deliver to
Landlord, within ten (10) days after receipt of a written request therefor, a
written certification or such other evidence reasonably acceptable to Landlord
evidencing and confirming Tenant’s compliance with this Section 38.

39. RIGHT OF FIRST OFFER.

(a) Subject to (i) any expansion rights, renewal rights, rights of first offer
or refusal or other rights possessed by any tenant in the Building with respect
to the ROFO Space (hereinafter defined) or any portion thereof existing as of
the Effective Date, (ii) any renewal rights granted by Landlord after the
Effective Date to any tenant of all or any portion of the ROFO Space, and (iii)
the right of any tenant of the ROFO Space (or any portion thereof) to negotiate
an extension of the term of its lease of such space or a new lease demising such
space, Tenant shall be granted during the initial Term the following rights with
respect to the ROFO Space. As used herein, the term “ROFO Space” shall mean the
space on the third (3rd) floor of the Building which is contiguous to the
Premises, as shown on the attached Exhibit A-l. Notwithstanding any provision of
the Lease to the contrary, Tenant shall have no rights with respect to the ROFO
Space or any other rights of first offer or refusal, or first right to
negotiate, or any other expansion rights whatsoever, except as expressly
provided in this Section 39.
 
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(b) In the event that any ROFO Space which is currently leased to third parties
becomes or is reasonably anticipated by Landlord to become vacant during the
Term hereof, then, except as provided below, Landlord shall notify Tenant in
writing (the “Availability Notice”) of the availability of the ROFO Space in
question (the “Available Space”) and set forth in such Availability Notice (i)
the terms and conditions pursuant to which Landlord would lease all (but not
less than all) of the Available Space to Tenant; and (ii) the date on which such
Available Space is anticipated by Landlord to be available for lease by Tenant
(the “Availability Date”). Provided that (A) no Event of Default then exists
under the Lease; (B) Tenant has not assigned the Lease, or sublet more than
twenty percent (20%) of the Premises; (C) not less than forty-eight (48) months
will remain in the Term as of the Availability Date (provided, however, Landlord
shall notify Tenant of the availability of such space, even though Tenant is not
necessarily entitled to lease same pursuant to this Section 39, if less than 48
months, but not less than eighteen (18) months, then remain in the Term); and
(D) Tenant notifies Landlord, in writing, within ten (10) business days after
Tenant’s receipt of the Availability Notice, time being of the essence, of
Tenant’s election to lease all (but not less than all) of the Available Space in
question (the “Tenant Election Notice”), Tenant shall have the right to lease
the Available Space described in the Availability Notice on the terms and
conditions hereinafter set forth. The term of the demise in respect of the
Available Space to be leased by Tenant pursuant to this Section 39 shall (1)
commence on the date on which Landlord delivers such space to Tenant, at which
time Tenant’s obligation to pay Minimum Rental with respect to such space shall
commence, and (2) be coterminous with the Term hereof. In the event that all of
the conditions set forth in (A) through (D), above, are satisfied except that
less than forty-eight (48) months (but not less than eighteen (18) months)
remain in the Term as of the Availability Date, and provided that (1) Tenant
notifies Landlord in writing (the “Short Term ROFO Extension Notice”), within
ten (10) business days of receipt of the Availability Notice, that Tenant will
agree to extend the Term so that at least forty-eight (48) months will remain in
the Term as of the Availability Date, and (2) within five (5) days after
Landlord’s receipt from Tenant of the Short Term ROFO Extension Notice, the
parties agree in writing to the economic terms and conditions pursuant to which
Landlord shall lease the Premises to Tenant during such extension period, then
Tenant shall have the right to lease the Available Space described in the
Availability Notice on the terms and conditions set forth herein.

(c) In the event that Tenant timely delivers a Tenant Election Notice to
Landlord, Landlord and Tenant shall negotiate in good faith for a period of ten
(10) days after Landlord’s receipt of the Tenant Election Notice in order to
execute and deliver an amendment to this Lease incorporating the Available
Space, which amendment shall set forth, among other things: (i) the amount of
Minimum Rental and the Additional Rental attributable to the Available Space;
(ii) the adjustment to Tenant’s Proportionate Share of Operating Expenses
resulting from the demise of the Available Space hereunder; (iii) the increase
in the Security Deposit, if any, resulting from the leasing by Tenant of the
Available Space; and (iv) the amount of the improvement allowance, if any, which
Landlord shall provide to Tenant. In the event that the parties do not execute
the lease amendment within such ten (10) day period, time being of the essence,
then Tenant’s right of first offer to lease the Available Space shall be null
and void and of no further force or effect and Landlord may lease the Available
Space to any person or entity of its choice on whatever terms and conditions
Landlord elects in its sole discretion.

(d) In the event Landlord and Tenant execute an amendment to this Lease pursuant
to which Tenant leases the Available Space from Landlord, and Landlord is unable
to deliver possession of such space to Tenant on the Availability Date for any
reason whatsoever, including without limitation the failure of an existing
tenant to vacate such space, Landlord shall not be liable or responsible for any
claims, damages or liabilities in connection therewith or by reason thereof. In
such event, Landlord shall use reasonable efforts to make such space available
to Tenant as soon as reasonably practicable after the Availability Date.
 
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40. TENANT TERMINATION RIGHT.

(a) Tenant shall have a one (l)-time right to terminate the Lease, subject to
the terms and conditions set forth in this Section 40. In the event that Tenant
is not the Building’s leasing agent on the last day of the thirty-fifth (35th)
full calendar month of the Term (unless Tenant was terminated by Landlord for
“cause”, in which event Tenant shall not have the right to terminate this Lease
pursuant to the terms of this Section 40), and provided Tenant is not in default
of its obligations hereunder, either at the time it delivers the Termination
Notice (hereinafter defined) to Landlord or at any time between such date and
the Termination Date (hereinafter defined), Tenant shall have the right to
terminate this Lease by delivering to Landlord an irrevocable written notice of
termination (the ‘Termination Notice”) on or before the last day of the
thirty-sixth (36th) full calendar month of the Term, time being of the essence,
and if Tenant timely delivers the Termination Notice to Landlord, this Lease
shall terminate as of the last day of the forty-fifth (45th) full calendar month
of the Term (the ‘Termination Date”), provided that Tenant has fulfilled all of
the conditions set forth in Section 40(b), below.

(b) In order for the Termination Notice to be effective, the Termination Notice
shall include a certified check payable to Landlord in an amount equal to the
then-unamortized costs (as of the Termination Date) incurred by Landlord in
leasing the Premises to Tenant (the “Leasing Costs”), including but not limited
to all leasing commissions paid by Landlord in connection with the leasing of
the Premises and the amount of the Improvement Allowance (“Termination
Payment”). The amortization of the Leasing Costs shall be effected as though the
total of such costs was the principal amount of a promissory note, bearing
interest at the rate of ten percent (10%) per annum, where the principal (and
all interest thereon) shall be repaid during a five (5) year period commencing
on the Rent Commencement Date in equal monthly installments of principal and
interest in such amount as to cause the principal balance to be reduced to zero
as of the last day of the Term. The Termination Payment shall be in addition to,
and not in lieu of, the payments of Minimum Rental, Additional Rental and all
other charges accruing under the Lease through the Termination Date. Time shall
be of the essence with respect to delivery of the Termination Notice and the
Termination Payment. Notwithstanding the foregoing, in the event that Tenant is
in default under the Lease on the date on which Tenant delivers the Termination
Notice or is in default under the Lease at any time between such date and the
Termination Date, or if Tenant fails to deliver the Termination Payment at the
time it delivers the Termination Notice to Landlord (time being of the essence),
then, at Landlord’s sole option, the Termination Notice may be deemed by
Landlord to be void and of no further force and effect and the Lease shall
continue in full force and effect for balance of the Term, and Landlord, if the
Termination Notice is deemed invalid, shall return the Termination Payment to
Tenant.
 
(c) If the Lease is terminated pursuant to and in accordance with the provisions
of this Section 40, then, as of the Termination Date, neither Landlord nor
Tenant shall have any rights or obligations under the Lease and Landlord shall
be free to lease the Premises to any persons or entities for a term beginning on
the Termination Date; provided that Tenant shall vacate the Premises in
accordance with the terms and conditions of Section 6, above, on or before the
Termination Date; and provided further, however, that Tenant shall remain
obligated for any liabilities or obligations under the Lease (including without
limitation the obligation to pay Minimum Rental, Additional Rental and all other
amounts payable under the Lease) accruing prior to the Termination Date, which
obligation shall survive indefinitely the termination of the Lease.
 
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(d) Should Tenant fail to surrender the Premises to Landlord on or before the
Termination Date, time being of the essence, then, at Landlord’s sole option:
(i) Landlord shall be entitled to exercise all of the rights and remedies
available to Landlord under the Lease upon the occurrence of an Event of Default
hereunder (and such other rights and remedies as may be available to Landlord at
law or equity); (ii) Tenant shall be liable to Landlord as a hold-over tenant
under the Lease and shall be subject to the terms and conditions of Section 31,
above; and (iii) if Tenant fails to surrender the Premises to Landlord within
ten (10) days after notice by Landlord, the Termination Notice may be deemed
void and of no further force or effect and the Lease shall continue in full
force and effect, in which event Landlord shall return the Termination Payment
to Tenant and all rights of Tenant under this Section 40 shall immediately lapse
and be of no further force or effect. Tenant shall indemnify and hold harmless
Landlord from and against any and all costs, expenses, liabilities and damages
(including attorneys’ fees) resulting from such holding over, including but not
limited to any costs, expenses, liabilities or damages resulting from (A)
Landlord’s failure to deliver the Premises to a prospective tenant; and (B)
Landlord’s removal from the Premises of any of Tenant’s equipment, furniture or
personal property in order to deliver possession of the Premises to a
prospective tenant.

41. OPTION TO EXTEND TERM.

(a) Tenant shall have and is hereby granted the option to extend the Term hereof
for one (1) additional period of five (5) years (the “Extension Period”),
provided (i) Tenant gives written notice (the “Extension Notice”) to Landlord of
Tenant’s irrevocable election to exercise such extension option between nine (9)
and twelve (12) months prior to the expiration of the initial Term, time being
of the essence, as determined by Landlord and Tenant during the Negotiation
Period (hereinafter defined) or, if the parties fail to reach agreement during
this period, by utilizing the “three broker method” described in Section 41(c),
below; (ii) no Event of Default has occurred during the Term and no event exists
at the time of the exercise of such option or arises subsequent thereto, which
event by notice and/or the passage of time would constitute an Event of Default
if not cured within the applicable cure period; and (iii) Tenant has not
assigned its interest in this Lease or sublet more than twenty percent (20%) of
the Premises.

(b) All terms and conditions of the Lease, including without limitation all
provisions governing the payment of Additional Rent and annual increases in
Minimum Rental, shall remain in full force and effect during the Extension
Period, except that (i) Minimum Rental (on a per rentable square foot basis)
payable during the first year of the Extension Period shall equal the
then-current Fair Market Rental Rate (hereinafter defined) at the time of the
commencement of the Extension Period, as agreed upon by Landlord and Tenant
during the Negotiation Period (hereinafter defined) or, if the parties fail to
reach such agreement during the Negotiation Period, by utilizing the “three
broker method” described in Section 41(c), below; (ii) Landlord shall provide a
“market” improvement allowance, rental abatement and other tenant concessions
then being provided by similar landlords with respect to comparable lease
renewals; and (iii) the “Operating Expense Stop” to be used during the Extension
Period shall be the amount of Operating Expenses incurred by Landlord during the
calendar year in which occurs the first day of the Extension Period. As used in
this Lease, the term “Fair Market Rental Rate” shall mean the fair market rental
rate that would be agreed upon between a landlord and a tenant entering into a
lease renewal for comparable space as to location, configuration, size and use,
in a comparable building as to quality, reputation and age which is located in
the Durham, North Carolina submarket, with a comparable build-out and a
comparable term assuming the following: (A) the landlord and tenant are informed
and well-advised and each is acting in what it considers its own best interests;
(B) the landlord shall provide a “market” tenant improvement allowance, free
rent period and other tenant concessions typically provided to tenants renewing
leases of comparable space in comparable buildings for renewal terms comparable
to the Extension Period; and (C) the Tenant will continue to pay its share of
increases in Operating Expenses over the Operating Expense Stop as described
above.
 
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(c) Landlord and Tenant shall negotiate in good faith to determine the Minimum
Rental for the Extension Period, for a period of thirty (30) days after the date
on which Landlord receives the Extension Notice (the “Negotiation Period”). In
the event Landlord and Tenant are unable to agree upon the Minimum Rental for
the Extension Period within said thirty (30)-day period, the Fair Market Rental
Rate for the Premises shall be determined by a board of three (3) licensed real
estate brokers, one of whom shall be named by the Landlord, one of whom shall be
named by Tenant, and the two so appointed shall select a third (the “Third
Broker”). Each real estate broker so selected shall be licensed in the State of
North Carolina as a real estate broker specializing in the field of office
leasing in Raleigh/Durham area, having no fewer than ten (10) years experience
in such field, and recognized as ethical and reputable within the field.
Landlord and Tenant agree to make their appointments promptly within ten (10)
days after the expiration of the thirty (30)-day period, or sooner if mutually
agreed upon. The two (2) brokers selected by Landlord and Tenant shall select
the Third Broker within ten (10) days after they both have been appointed, and
all three (3) brokers shall, within fifteen (15) days after the Third Broker is
selected, submit his or her determination of the Fair Market Rental Rate. The
Third Broker shall determine which determination of Fair Market Rental Rate made
by Landlord’s broker or Tenant’s broker is closest to the determination of Fair
Market Rental Rate made by the Third Broker (the “Closest Determination”). The
Fair Market Rental Rate hereunder shall be the mean of the Closest Determination
and the determination of Fair Market Rental Value made by the Third Broker.
Landlord and Tenant shall each pay the fee of the broker selected by it, and
they shall equally share the payment of the fee of the Third Broker.

(d) Should the Term of the Lease be extended hereunder, Tenant shall, if
required by Landlord, execute an amendment modifying this Lease within ten (10)
days after Landlord presents same to Tenant, which agreement shall set forth the
Minimum Rental for the first year of the Extension Period and the other economic
terms and provisions in effect during the Extension Period. Should Tenant fail
to execute the amendment (which amendment accurately sets forth the economic
terms and provisions in effect during the Extension Period) within ten (10)
business days after presentation of same by Landlord, time being of the essence,
Tenant’s right extend the Term of the Lease shall, at Landlord’s sole option,
terminate, and Landlord shall be permitted to lease such space to any other
person or entity upon whatever terms and conditions are acceptable to Landlord
in its sole discretion.
 
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42. MISCELLANEOUS.

(a) Rules and Regulations.

Landlord shall have the right from time to time to prescribe reasonable rules
and regulations (the “Rules and Regulations”) for Tenant’s use of the Premises
and the Building. A copy of Landlord’s current Rules and Regulations respecting
the Premises and the Building is attached hereto as Exhibit D. Tenant shall
abide by and actively enforce on all Tenant’s Invitees such regulations
including without limitation rules governing parking of vehicles in designated
areas and during designated times.

(b) Evidence of Authority.

If requested by Landlord, Tenant shall furnish appropriate legal documentation
evidencing the valid existence and good standing of Tenant and the authority of
any parties signing this Lease to act for Tenant.

(c) Nature and Extent of Agreement.

This Lease, together with all exhibits hereto, contains the complete agreement
of the parties concerning the subject matter, and there are no oral or written
understandings, representations, or agreements pertaining thereto which have not
been incorporated herein. This Lease creates only the relationship of landlord
and tenant between the parties, and nothing herein shall impose upon either
party any powers, obligations or restrictions not expressed herein. This Lease
shall be construed and governed by the laws of the state in which the Premises
are located.

(d) Binding Effect.

This Lease shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, successors and assigns. This Lease shall not
be binding on Landlord until executed by an authorized signatory of Landlord and
delivered to Tenant. No amendment or modification to this Lease shall be binding
upon Landlord unless same is in writing and executed by an authorized signatory
of Landlord.

(e) Captions and Headings.

The captions and headings in this Lease are for convenience and reference only,
and they shall in no way be held to explain, modify, or construe the meaning of
the terms of this Lease.

(f) Lease Review.

The submission of this Lease to Tenant for review does not constitute a
reservation of or option for the Premises, and this Lease shall become effective
as a contract only upon execution and delivery by Landlord and Tenant.
 
38

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(g) Prevailing Party.

If either Landlord or Tenant places in the hands of an attorney the enforcement
of this Lease or any portion thereof, for the collection of any rent due or to
become due hereunder, or recovery of the possession of the Premises, or files
suit upon same, the non-prevailing (or defaulting) party shall pay the other
party reasonable attorney’s fees and court costs.
 
(h) Intentionally Omitted.

(i) Representations and Warranties.

The person or persons executing this Lease on behalf of Tenant represent,
covenant and warrant to Landlord as of the date Tenant executes and delivers
this Lease that: (i) Tenant is duly constituted, in good standing and qualified
to do business in the State of North Carolina, (ii) Tenant has paid all
corporate taxes (if applicable), (iii) Tenant will file when due all forms,
reports, fees and other documents necessary to comply with applicable laws, and
(iv) the signatories signing on behalf of Tenant have the requisite authority to
bind Tenant pursuant to Tenant’s organizational documents (i.e. partnership
agreement, operating agreement or bylaws) or a certified copy of a resolution
from Tenant authorizing same.

(j) Building Access.

There shall be open access to the Building during Standard Hours of Operation.
At all other times, access to the Building may be restricted, at Landlord’s
election, by use of a card or key access system at an entrance to the Building.
In the event Landlord elects to install such an access system, Landlord shall,
within sixty (60) days following the Commencement Date, furnish Tenant, at no
cost to Tenant, up to four (4) access cards or keys per 1,000 rentable square
feet occupied by Tenant (as of the Commencement Date) as requested by Tenant for
entering the Building. For purposes hereof, any such access cards, keys or other
comparable access devices are collectively referred to as “access cards.”
Thereafter, additional access cards and replacement access cards (for lost
access cards) shall be made available to Tenant at a charge equal to $15.00 per
card (subject to reasonable adjustment by Landlord from time to time) upon
Landlord’s receipt of an order signed by Tenant. Tenant shall promptly provide
Landlord with written notice of any lost or stolen access cards for the
Building. Landlord shall replace all defective or worn access cards without
charge. All cards shall remain the property of Landlord. No additional locks
shall be allowed on any exterior door of the Premises without Landlord’s written
permission and locks on any interior door shall be permitted only to the extent
such locks are permissible under applicable laws and relevant insurance
requirements. Upon termination of this Lease, Tenant shall surrender to Landlord
all access cards and keys related to the Premises, and give to Landlord the
combination of all locks for sages, safe cabinets and vault doors, if any, to
remain in the Premises and in the event Tenant fails to return all such access
cards to Landlord at the end of the Term, Tenant shall pay Landlord $15.00 for
each such access card not returned to Landlord.

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(k) Lender Approval.

This Lease may be subject to approval by Landlord’s lender. In the event such
approval is required and Landlord is unable to obtain such approval within ten
(10) days after the date of this Lease, either party may elect to terminate this
Lease upon written notice to the other and the parties hereto shall have no
further rights or obligations hereunder.

(l) Financial Disclosures. Tenant shall at any time upon receipt of a written
request from Landlord (such request to be made no more than twice in any Lease
Year), provide true, complete and accurate financial information and
documentation about itself and any Guarantor to Landlord, within ten (10) days
after such request. The individuals executing this Lease on Tenant’s behalf
hereby represent and warrant to Landlord that the financial statements and other
information submitted to Landlord by Tenant prior to the execution hereof are
true, complete and accurate, were prepared in accordance with generally accepted
cash accounting principles applied on a consistent basis, and accurately reflect
Tenant’s net worth as of the date hereof. Landlord covenants and agrees to keep
such records confidential; provided, however, Landlord may share the information
contained within such records with its legal counsel, accountants and employees,
prospective purchasers and lenders, and as may otherwise be required by
applicable law.

(m) Tenant hereby elects domicile at the Premises for the purpose of service of
all notices, writs of summons or other legal documents or process in any suit,
action or proceeding which Landlord or any mortgagee may undertake under this
Lease.

(n) If in this Lease it is provided that Landlord’s consent or approval as to
any matter will not be unreasonably withheld or delayed, and it is established
by a court or body having final jurisdiction thereover that Landlord has been
unreasonable, the sole effect of such finding shall be that Landlord shall be
deemed to have given its consent or approval, but Landlord shall not be liable
to Tenant in any respect for money damages or expenses incurred by Tenant by
reason of Landlord having withheld its consent. Nothing contained in this
paragraph shall be deemed to limit Landlord’s right to give or withhold consent
unless such limitation is expressly contained in the paragraph to which such
consent pertains.

(o) Time of the Essence. Time is of the essence with respect to all of Tenant’s
obligations under this Lease.

(p) No Liability. Landlord shall not be liable to Tenant for any damage caused
by other tenants or persons in the Building or caused by operations of others in
the construction of any private, public or quasi-public work.

[signatures on next page]

40

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IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed and
sealed pursuant to authority duly given as of the day and year first above
written.
 

   
LANDLORD:
             
NOTTINGHAM HALL LLC, a Delaware limited liability company

   
By:
Imperial I Associates LLC, a Delaware limited liability company, its sole member

   
By:
ACP/Imperial I LLC, a Delaware limited liability company, its managing member

   
By:
ACP/Imperial I Manager LLC, a Delaware limited liability company, its managing
member

WITNESS
By
/s/ [illegible]
     
Name: Douglas [illegible]
     
Title: Manager
/s/ [illegible]
       

   
TENANT:
         
WITNESS
 
ADVANTIS REAL ESTATE SERVICES COMPANY, a Florida corporation
         
/s/ [illegible]
 
By
/s/ David P. Oddo
     
Name: David P. Oddo
     
Title: Managing Director

41

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EXHIBIT A

FLOOR PLAN OF THE PREMISES

[Attach]

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[GRAPHIC OMITTED]
 

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EXHIBIT A-1

ROFO SPACE

[Attach]

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[GRAPHIC OMITTED]

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EXHIBIT B

DECLARATION OF COMMENCEMENT DATE

This Declaration of Commencement Date is made as of _______________, 2005, by
NOTTINGHAM HALL LLC (“Landlord”), and ADVANTIS REAL ESTATE SERVICES COMPANY
(“Tenant”), who agree as follows:

1. Landlord and Tenant entered into an Office Lease Agreement dated September
____, 2005, in which Landlord leased to Tenant, and Tenant leased from Landlord,
certain Premises described therein in the office building located at 4505
Emperor Boulevard, Durham, North Carolina (the “Building”). All capitalized
terms herein are as defined in the Lease.

2. Pursuant to the Lease, Landlord and Tenant agreed to and do hereby confirm
the following matters as of the Commencement Date of the Term:

 
a.
the Commencement Date of the Lease is December 1, 2005;

 
b.
the Rent Commencement Date of the Lease is ___________, 2006;

 
c.
the Expiration Date of the Lease is August 31, 2011;

 
d.
the number of rentable square feet of the Premises is 9,837; and

 
e.
Tenant’s Proportionate Share is 9.35%.

3. Tenant confirms that:

 
a.
it has accepted possession of the Premises as provided in the Lease;

 
b.
Landlord is not required to perform any work or furnish any improvements to the
Premises under the Lease;

 
c.
Landlord has fulfilled all of its obligations under the Lease as of the date
hereof;

 
d.
the Lease is in full force and effect and has not been modified, altered, or
amended, except as follows: _______________________; and

 
e.
there are no set-offs or credits against Rent, and no Security Deposit or
prepaid Rent has been paid except as provided by the Lease.

4. The provisions of this Declaration of Commencement Date shall inure to the
benefit of, or bind, as the case may require, the parties and their respective
successors and assigns, and to all mortgagees of the Building, subject to the
restrictions on assignment and subleasing contained in the Lease, and are hereby
attached to and made a part of this Lease.

[Signature page follows hereafter]

--------------------------------------------------------------------------------

   
LANDLORD:
             
NOTTINGHAM HALL LLC, a Delaware limited liability company

   
By:
Imperial I Associates LLC, a Delaware limited liability company, its sole member

   
By:
ACP/Imperial I LLC, a Delaware limited liability company, its managing member

   
By:
ACP/Imperial I Manager LLC, a Delaware limited liability company, its managing
member

WITNESS:
By
     
Name:
   
Title:
         

   
TENANT:
         
WITNESS:
 
ADVANTIS REAL ESTATE SERVICES COMPANY,
a Florida corporation
             
By
       
Name:
     
Title:

Exhibit B, Page 2

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EXHIBIT C

WORK AGREEMENT

This Work Agreement (the “Work Agreement”) is attached to and made a part of
that certain Office Lease Agreement (the “Lease”) dated September ___, 2005 by
and between NOTTINGHAM HALL LLC, as landlord (“Landlord”), and ADVANTIS REAL
ESTATE SERVICES COMPANY, as tenant (“Tenant”), for the premises (the “Premises”)
described therein in the building having a street address of 4505 Emperor
Boulevard, Durham, North Carolina (the “Building”). It is the intent of this
Work Agreement that Tenant shall be permitted freedom in the design and layout
of the Premises, consistent with applicable building codes and requirements of
law, including without limitation the Americans with Disabilities Act, and with
sound architectural and construction practice in first-class office buildings,
provided that neither the design nor the implementation of the Tenant
Improvements (hereinafter defined) shall cause any interference to the operation
of the Building’s HVAC, mechanical, plumbing, life safety, electrical or other
systems or to other Building operations or functions, nor shall they increase
maintenance or utility charges for operating the Building. Capitalized terms not
otherwise defined in this Work Agreement shall have the meanings set forth in
the Lease. In the event of any conflict between the terms hereof and the terms
of the Lease, the terms hereof shall prevail for the purposes of design and
construction of the Tenant Improvements.

A. TENANT IMPROVEMENTS.

1. As-Is Condition. Landlord shall have no obligation to perform or cause the
performance or construction of any improvements in or to the Premises and
Landlord shall deliver the Premises to Tenant in its “as is” condition on the
Commencement Date. Tenant hereby acknowledges that Landlord has made no
representations or warranties to Tenant with respect to the condition of the
Premises or the working order of any systems or improvements therein existing as
of the date of delivery, except as may be expressly set forth in the Lease.

2. Tenant Improvements. Tenant, at its sole cost and expense, subject to the
application of the Improvement Allowance (hereinafter defined), shall furnish
and install in the Premises in accordance with the terms of this Work Agreement,
the improvements set forth in the Tenant’s Plans (hereinafter defined) which
shall be approved by Landlord in accordance with Paragraph B.3, below (the
“Tenant Improvements”). Except as otherwise expressly set forth herein, all
costs of all design, space planning, and architectural and engineering work for
or in connection with the Tenant Improvements, including without limitation all
drawings, plans, specifications, licenses, permits or other approvals relating
thereto, and all insurance and other requirements and conditions hereunder, and
all costs of construction, including supervision thereof, shall be at Tenant’s
sole cost and expense, subject to the application of the Improvement Allowance
in accordance with the terms of this Work Agreement. Notwithstanding the
foregoing, Landlord shall reimburse Tenant for one-half (1/2) of the reasonable
costs (without subtracting such costs from the Improvement Allowance) incurred
by Tenant in constructing the demising wall in the location set forth on the
attached Exhibit A (the “Demising Wall”) within thirty (30) days after
Landlord’s receipt of the information set forth in subparagraphs (a) through (d)
in Paragraph C.2, below, with respect to the Demising Wall. Tenant shall
construct the Demising Wall as part of Tenant’s construction of the Tenant
Improvements in the Premises. Tenant shall cause the Contractor (hereinafter
defined) to separately price the Demising Wall as part of its bid pricing for
the construction of the Tenant Improvements. The Contractor shall provide “open
book” pricing with respect to its proposed bid price for the construction of the
Demising Wall, and Landlord shall be permitted to negotiate said pricing with
the Contractor after the Tenant receives the Contractor’s bid price for the
construction of the Tenant Improvements.

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B. PLANS AND SPECIFICATIONS.

1. Space Planner. Tenant shall retain the services of an architectural firm
reasonably acceptable to Landlord (the “Space Planner”) to design the Tenant
Improvements to be constructed by Tenant in the Premises and prepare the Final
Space Plan (hereinafter defined) and the Contract Documents (hereinafter
defined). The Space Planner shall meet with the Construction Supervisor
(hereinafter defined) from time to time to obtain information about the Building
and to insure that the improvements envisioned in the Contract Documents do not
interfere with and/or affect the Building or any systems therein. The Space
Planner shall prepare all space plans, working drawings, and plans and
specifications described in Paragraph B.3, below, in conformity with the base
Building plans and systems, and the Space Planner shall coordinate its plans and
specifications with the Engineers (hereinafter defined) and the Construction
Supervisor. All fees of the Space Planner shall be borne solely by Tenant,
subject to application of the Improvement Allowance as hereinafter provided.

2. Engineers. Tenant shall retain the services of mechanical, electrical,
plumbing and structural engineers designated by Landlord and reasonably
acceptable to Tenant (the “Engineers”) to (i) design the type, number and
location of all mechanical systems in the Premises, including without limitation
the heating, ventilating and air conditioning system therein, fire alarm system
and to prepare all of the mechanical plans, (ii) to assist Tenant and the Space
Planner in connection with the electrical design of the Premises, including the
location and capacity of light fixtures, electrical receptacles and other
electrical elements, and to prepare all of the electrical plans, (iii) to assist
Tenant and the Space Planner in connection with plumbing-related issues involved
in designing the Premises and to prepare all of the plumbing plans and (iv)
assist Tenant and the Space Planner in connection with the structural elements
of the Space Planner’s design of the Premises and to prepare all of the
structural plans. All fees of the Engineers shall be borne solely by Tenant,
subject to application of the Improvement Allowance as hereinafter provided.

3. Time Schedule.

a. Tenant shall promptly furnish to Landlord for its review and approval a
proposed detailed space plan for the Tenant Improvements (the “Final Space
Plan”) prepared by the Space Planner, in consultation with the Construction
Supervisor and the Engineers. The Final Space Plan shall contain the information
and otherwise comply with the requirements therefor described in Schedule C-1
attached hereto. Landlord shall, advise Tenant of Landlord’s approval or
disapproval of the Final Space Plan within five (5) business days after Tenant
submits the Final Space Plan to Landlord. Tenant shall promptly revise the
proposed Final Space Plan to meet Landlord’s objections, if any, and resubmit
the Final Space Plan to Landlord for its review and approval within three (3)
days of Tenant’s receipt of Landlord’s objections, if any,

Exhibit C, Page 2

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b. Within fifteen (15) days after Landlord approves the Final Space Plan, Tenant
shall furnish to Landlord for its review and approval, all architectural plans,
working drawings and specifications (the “Contract Documents”) necessary and
sufficient (i) for the construction of the Tenant Improvements; and (ii) to
enable Tenant to obtain a building permit for the construction of the Tenant
Improvements by the Contractor (hereinafter defined). The Contract Documents
shall contain the information and otherwise comply with the requirements
therefore described in Schedule C-2 attached hereto and shall set forth the
location of any core drilling by Tenant (the approval of same shall be subject
to Landlord’s approval in its sole discretion). Landlord shall advise Tenant of
Landlord’s approval or disapproval of the Contract Documents, or any of them,
within ten (10) business days after Tenant submits the Contract Documents to
Landlord. Tenant shall promptly revise the Contract Documents to meet Landlord’s
objections, if any, and resubmit the Contract Documents to Landlord for its
review and approval within three (3) days of Tenant’s receipt of Landlord’s
objections, if any. Landlord shall advise Tenant of Landlord’s approval or
disapproval of the revised Contract Documents within five (5) business days
after Tenant submits same. Notwithstanding anything herein to the contrary,
approval by Landlord of the Contract Documents shall not constitute an assurance
by Landlord that the Contract Documents: (a) satisfy Legal Requirements
(hereinafter defined), (b) are sufficient to enable Tenant to obtain a building
permit for the undertaking of the Tenant Improvements in the Premises, or (c)
will not interfere with, and/or otherwise affect, base Building or base Building
systems.

c. The Final Space and the Contract Documents are referred to collectively
herein as the “Tenant’s Plans.”

d. The Tenant Improvements shall be of first-class quality, commensurate with
the level of improvements for a first-class tenant in a first-class office
building in the Durham, North Carolina area. The Tenant’s Plans shall be
prepared in accordance with a Data Cadd or convertible DXF format for working
drawings (using 1/8” reproducible drawings) in conformity with the base Building
plans and Building systems and with information furnished by and in coordination
with the Engineers. Tenant’s Plans shall comply with all applicable building
codes, laws and regulations (including without limitation the Americans with
Disabilities Act), shall not contain any improvements which interfere with or
require any changes to or modifications of the Building’s HVAC, mechanical,
electrical, plumbing, life safety or other systems or to other Building
operations or functions, and, unless Tenant agrees in writing to pay all such
excess costs or charges, shall not increase maintenance or utility charges for
operating the Building in excess of the standard requirements for normal
first-class office buildings in the Durham, North Carolina area. Notwithstanding
anything to the contrary contained in this Work Agreement, Landlord shall have
the right to disapprove, in its sole discretion, any portion of the Tenant’s-
Plans that Landlord believes will or may affect the exterior or structure of the
Building or will or may affect the mechanical, electrical, plumbing, life
safety, HVAC or other base Building systems.

Exhibit C, Page 3

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4. Base Building Changes. If Tenant requests work to be done in the Premises or
for the benefit of the Premises that necessitates revisions or changes in the
design or construction of the base Building or affect the Building or the base
Building systems therein, any such changes shall be subject to the prior written
approval of Landlord, in its sole discretion. Tenant shall be responsible for
all costs and delays resulting from such design revisions or construction
changes, including architectural and engineering charges, and any special
permits or fees attributed thereto.

5. Changes.

a. In the event that Tenant requests any changes to the Contract Documents or
the Final Space Plan after Landlord has approved same, or if it is determined
that the Contract Documents prepared in accordance with the Final Space Plan do
not conform to the plans for the base Building, deviate from applicable Legal
Requirements or contain improvements which will or may interfere with and/or
affect the base Building or any of the base Building systems, or in the event of
any change orders, Tenant shall be responsible for all costs and expenses and
all delay resulting therefrom, including without limitation costs or expenses
relating to (i) any additional architectural or engineering services and related
design expenses, (ii) any changes to materials in process of fabrication, (iii)
cancellation or modification of supply or fabricating contracts, (iv) removal or
alteration of work or plans completed or in process, or (v) delay claims made by
any subcontractor.

b. No changes shall be made to the Contract Documents without the prior written
approval of Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed, provided, however, that Landlord shall have the right to
disapprove, in its sole discretion, any such change that Landlord believes will
affect the exterior or structure of the Building or will affect the mechanical,
electrical, plumbing, life safety, HVAC or other base Building systems. Landlord
shall not be responsible for delay in occupancy by Tenant because of any changes
to the Final Space Plan or the Contract Documents after approval by Landlord, or
because of delay caused by or attributable to any deviation by the Contract
Documents from applicable Legal Requirements. Tenant shall be required to pay to
Landlord the costs incurred by Landlord in connection with any changes to the
Contract Documents or Final Space Plan, in full, within thirty (30) days after
invoice, subject however to application of the Improvement Allowance in
accordance with Paragraph C.2, below. As used herein, the term “Legal
Requirements” shall mean any laws, ordinances, regulations and orders of the
United States of America, the State of North Carolina and any other governmental
authority with jurisdiction over the Building or the construction of the Tenant
Improvements.

C. COST OF TENANT IMPROVEMENTS/ALLOWANCES

1. Construction Costs. All costs of design and construction of the Tenant
Improvements, including without limitation the costs of all space planning,
architectural and engineering work related thereto, all governmental and
quasi-governmental approvals and permits required therefor, any costs incurred
by Landlord because of changes to the base Building, the Building systems, all
construction costs, contractors’ overhead and profit, insurance and other
requirements, and all other costs and expenses incurred in connection with the
Tenant Improvements (collectively, “Construction Costs”), shall be paid by
Tenant, subject, however, to the application of the Improvement Allowance in
accordance with Paragraph C.2, below, not previously disbursed pursuant to this
Work Agreement (the “Available Allowance”).

Exhibit C, Page 4

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2 Improvement Allowance. Provided Tenant is not in default of the Lease,
Landlord agrees to provide to Tenant an allowance (the “Improvement Allowance”)
in an amount up to Two Hundred Ninety-Five Thousand One Hundred Ten Dollars
($295,110.00) (or Thirty Dollars ($30.00) per rentable square foot of the
Premises) to be applied solely to the Construction Costs (hereinafter defined),
except as otherwise expressly permitted herein. Notwithstanding the foregoing
(a) the Improvement Allowance, in whole or in part, may be used by the Tenant to
pay for (i) Tenant’s lease termination costs under its current lease, and (ii)
costs incurred by Tenant in connection with relocating Tenant’s equipment,
furniture and personal property to the Premises, and (b) in no event shall
Tenant expend more than Ninety-Eight Thousand Three Hundred Seventy Dollars
($98,370.00) (or Ten Dollars ($10.00) per rentable square foot of the Premises)
of the Improvement Allowance on costs associated with the purchase and
installation of Tenant’s furniture, data and voice wiring, telecom systems and
logo signage. Construction Costs shall be disbursed by Landlord from the
Available Allowance, as and when such costs are actually incurred by Tenant.
Tenant shall submit to Landlord, from time to time, but not more often then once
per calendar month, requests for direct payments to third parties, of or for
reimbursement to Tenant for Construction Costs incurred by Tenant out of the
Available Allowance, which requests shall be accompanied by (a) paid receipts or
invoices substantiating the costs for which payment is requested; (b) a signed
statement from Tenant certifying that the costs were actually incurred for the
stated amount; (c) lien waivers from the party supplying the services or
materials for which payment is sought; and (d) such other information as
Landlord reasonably requires. Provided Tenant delivers to Landlord an approved
draw request, prepared as set forth above, Landlord shall pay the costs covered
by such payment request within thirty (30) days following receipt thereof (but
Landlord shall not be obligated to make more than one (1) such payment in any
calendar month). Notwithstanding the foregoing, in no event shall Landlord be
obligated to pay, in the aggregate, an amount in excess of eighty percent (80%)
of the Improvement Allowance until satisfaction of the following conditions: (A)
Tenant’s occupancy of the Premises; (B) Tenant’s execution and delivery to
Landlord of the Declaration attached to the Lease as Exhibit B; (C) receipt by
Landlord of appropriate paid receipts or invoices and a final lien waiver from
each subcontractor and supplier covering all work performed by the
subcontractors and all materials used in connection with the construction of the
Tenant Improvements; and (D) Tenant’s delivery to Landlord of all receipts,
invoices or other documentation reasonably necessary to substantiate all costs
payable by Landlord hereunder. If Tenant does not expend all of the Improvement
Allowance for Construction Costs as permitted hereunder within twelve (12)
months of execution of the Lease, any unused portion of the Improvement
Allowance not so used shall be retained by Landlord.
 
Exhibit C, Page 5

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3. Excess Cost Allowance. In the event that Tenant notifies Landlord in writing,
on or before the date which is ninety (90) days prior to the Commencement Date,
that Tenant wishes to increase the Improvement Allowance, and specifies the
amount of such proposed increase, not to exceed the Maximum Increase Amount
(hereinafter defined), and evidences to Landlord’s reasonable satisfaction that
the cost of undertaking the Tenant Improvements exceeds the Improvement
Allowance by the approximate amount of the Excess Cost Allowance (hereinafter
defined) requested by Tenant, then Landlord shall make available to Tenant an
additional allowance (the “Excess Cost Allowance”) in the amount requested by
Tenant, but not to exceed the Maximum Increase Amount. As used herein, the term
“Maximum Increase Amount” means the sum of Ninety-Eight Thousand Three Hundred
Seventy Dollars ($98,370.00) (or Ten Dollars ($10.00) per rentable square foot
of the Premises). The Excess Cost Allowance shall be paid out by the Landlord in
accordance with the provisions of the Work Agreement. Tenant shall repay to
Landlord the amount of the Excess Cost Allowance over the sixty (60) full
calendar months commencing on the Rent Commencement Date in equal monthly
installments in the amount necessary to fully repay to Landlord the Excess Cost
Allowance, with interest at the rate of twelve percent (12%) per annum,
compounded monthly on a constant collection basis, on the outstanding amount
thereof, as though the Excess Cost Allowance were a loan made by Landlord to
Tenant on the Commencement Date. Such equal monthly installments shall be
considered Additional Rent under the Lease and shall be paid together with, and
in the same manner as, Annual Base Rent payable by the Tenant pursuant to
Section 4(a) of the Lease, provided that such installments shall not be subject
to the annual escalations applicable to Minimum Rental. Upon any termination of
the Lease, Tenant shall be immediately obligated to repay to Landlord the entire
amount of the Excess Cost Allowance that has not previously been repaid, plus
any accrued and unpaid interest thereon, and such obligation shall survive any
such termination.

4 Costs Exceeding Available Allowance. All Construction Costs in excess of the
Available Allowance shall be paid solely by Tenant on or before the date such
costs are due and payable (or if previously paid by Landlord, shall be
reimbursed to Landlord by Tenant within ten (10) days of receipt by Tenant of
invoices therefor from Landlord), and Tenant agrees to indemnify Landlord from
and against any such costs. All amounts payable by Tenant pursuant to this Work
Agreement shall be deemed to be Additional Rent for purposes of the Lease. If
required by Landlord, Tenant shall provide evidence satisfactory to Landlord
that Tenant has sufficient funds available to pay all Construction Costs in
excess of the Improvement Allowance.

D. CONSTRUCTION

1. General Contractor. Tenant shall retain a general contractor acceptable to
Landlord and licensed in the State of North Carolina to undertake construction
of the Tenant Improvements (the “Contractor”). The Contractor shall be
responsible for obtaining, at Tenant’s sole cost, all permits and approvals
required for the construction of the Tenant Improvements.

2. Construction By The Contractor. In undertaking the Tenant Improvements,
Tenant and the Contractor shall strictly comply with the following conditions:

a. No work involving or affecting the Building’s structure or the plumbing,
mechanical, electrical or life/safety systems of the Building shall be
undertaken without (i) the prior written approval of Landlord in its sole
discretion, whether pursuant to its approval of Tenant’s Plans or otherwise,
(ii) the supervision of Landlord’s building engineer, the actual cost of which
shall be borne by Tenant if more than one (1) hour of such engineer’s time is
spent in connection with the Tenant Improvements during any single day; (iii)
compliance by Tenant with the insurance requirements set forth in Paragraph
D.2.c, below; and (iv) compliance by Tenant with all of the terms and provisions
of this Work Agreement;
 
Exhibit C, Page 6

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b. All Tenant Improvement work shall be performed in strict conformity with (i)
the final approved Tenant’s Plans; (ii) all applicable codes and regulations of
governmental authorities having jurisdiction over the Building and the Premises;
(iii) valid building permits and other authorizations from appropriate
governmental agencies, when required, which shall be obtained by Tenant, at
Tenant’s expense; and (iv) Landlord’s construction policies, rules and
regulations attached hereto as Schedule C-3, as the same may be reasonably
modified by Landlord from time to time (“Construction Rules”). Any work not
acceptable to the appropriate governmental agencies or not reasonably
satisfactory to Landlord shall be promptly replaced at Tenant’s sole expense.
Notwithstanding any failure by Landlord to object to any such work, Landlord
shall have no responsibility therefor; and

c. Before any work is commenced or any of Tenant’s, Contractor’s or any
subcontractor’s equipment is moved onto any part of the Building, Tenant shall
deliver to Landlord policies or certificates evidencing the following types of
insurance coverage in the following minimum amounts, which policies shall be
issued by companies approved by Landlord, shall be maintained by Tenant at all
times during the performance of the Tenant Improvements, and which shall name
Landlord as additional insured:

(1) Worker’s compensation coverage in the maximum amount required by law and
employer’s liability insurance in an amount not less than $500,000.00 and
$500,000.00 per disease;

(2) Comprehensive general liability policy to include products/completed
operations, premises/operations, blanket contractual broad form property damage
and contractual liability with limits in an amount per occurrence of not less
than $1,000,000.00 Combined Single Limit for bodily injury and property damage
and $1,000,000.00 for personal injury; and

(3) Automobile liability coverage, with bodily injury limits of at least
$1,000,000.00 per accident.

3. Construction Supervision. All Tenant Improvements shall be performed by the
Contractor. Landlord shall retain a construction supervisor selected by Landlord
(the “Construction Supervisor”) as Landlord’s construction supervisor in
connection with the construction of the Tenant Improvements, and Landlord shall
pay the Construction Supervisor a construction supervision fee to cover the
costs of coordination and supervision of the Tenant Improvements work on
Landlord’s behalf, which fee shall not be deducted from the Improvement
Allowance.
 
Exhibit C, Page 7

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E. PERMITS AND LICENSES. Tenant shall be solely responsible for procuring, at
its sole cost and expense, all permits and licenses necessary to undertake the
Tenant Improvements and, upon completion of the Tenant Improvements, to occupy
the Premises. Tenant’s inability to obtain, or delay in obtaining, any such
license or permit shall not delay or otherwise affect the Commencement Date or
any of Tenant’s obligations under this Lease.

F. INSPECTION. Landlord is authorized, at its sole cost and expense, to make
such inspections of the Premises during construction as it deems reasonably
necessary or advisable.

G. INDEMNIFICATION. Tenant shall indemnify Landlord and hold it harmless from
and against all claims, injury, damage or loss (including reasonable attorneys’
fees) sustained by Landlord as a result of the construction of the Tenant
Improvements in the Premises.

LIST OF SCHEDULES

 
Schedule C-l
Requirements for Final Space Plan
 
Schedule C-2
Requirements for Contract Documents
 
Schedule C-3
Construction Rules and Regulations

 
Exhibit C, Page 8

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SCHEDULE C-l

REQUIREMENTS FOR FINAL SPACE PLAN

Floor plans, together with related information for mechanical, electrical and
plumbing design work, showing partition arrangement and reflected ceiling plans
(three (3) sets), including without limitation the following information:

 
a.
identify the location of conference rooms and density of occupancy;

 
b.
indicate the density of occupancy for all rooms;

 
c.
identify the location of any food service areas or vending equipment rooms;

 
d.
identify areas, if any, requiring twenty-four (24) hour air conditioning;

 
e.
indicate those partitions that are to extend from floor to underside of
structural slab above or require special acoustical treatment;

 
f.
identify the location of rooms for, and layout of, telephone equipment other
than building core telephone closet;

 
g.
identify the locations and types of plumbing required for toilets (other than
core facilities), sinks, drinking fountains, etc.;

 
h.
indicate light switches in offices, conference rooms and all other rooms in the
Premises;

 
i.
indicate the layouts for specially installed equipment, including computer and
duplicating equipment, the size and capacity of mechanical and electrical
services required and heat rejection of the equipment;

 
j.
indicate the dimensioned location of: (A) electrical receptacles (one hundred
twenty (120) volts), including receptacles for wall clocks, and telephone
outlets and their respective locations (wall or floor), (B) electrical
receptacles for use in the operation of Tenant’s business equipment which
requires two hundred eight (208) volts or separate electrical circuits, (C)
electronic calculating and CRT systems, etc., and (D) special audio-visual
requirements;

 
k.
indicate proposed layout of sprinkler and other life safety and fire protection
equipment, including any special equipment and raised flooring;

 
l.
indicate the swing of each door;

 
m.
indicate a schedule for doors and frames, complete with hardware, if applicable;
and

 
n.
indicate any special file systems to be installed.

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SCHEDULE C-2

REQUIREMENTS FOR CONTRACT DOCUMENTS

Final architectural detail and working drawings, finish schedules and related
plans (three (3) reproducible sets) including without limitation the following
information and/or meeting the following conditions:

 
a.
materials, colors and designs of wallcoverings, floor coverings and window
coverings and finishes;

 
b.
paintings and decorative treatment required to complete all construction;

 
c.
complete, finished, detailed mechanical, electrical, plumbing and structural
plans and specifications for the Tenant Improvements, including but not limited
to the fire and life safety systems and all work necessary to connect any
special or non¬ standard facilities to the Building’s base mechanical systems;

 
d.
all final drawings and blueprints must be drawn to a scale of one-eighth (1/8)
inch to one (1) foot. Any architect or designer acting for or on behalf of
Tenant shall be deemed to be Tenant’s agent and authorized to bind Tenant in all
respects with respect to the design and construction of the Premises;

 
e.
notwithstanding anything to the contrary set forth herein, in the Work Agreement
or in the Lease, Tenant shall not request any work which would: (1) require
changes to structural components of the Building or the exterior design of the
Building; (2) require any material modification to the Building’s mechanical
installations or installations outside the Premises; (3) not comply with all
applicable laws, rules, regulations and requirements of any governmental
department having jurisdiction over the construction of the Building and/or the
Premises, including specifically, but without limitation, the Americans With
Disabilities Act; (4) be incompatible with the building plans filed with the
appropriate governmental agency from which a building permit is obtained for the
construction of the Tenant Improvements or with the occupancy of the Building as
a first-class office building; or (5) materially delay the completion of the
Premises or any part thereof. Tenant shall not oppose or delay changes required
by any governmental agency affecting the construction of the Building and/or the
Tenant Improvements in the Premises.

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SCHEDULE C-3

CONSTRUCTION RULES AND REGULATIONS

1.
Tenant and/or the general contractor will supply Landlord with a copy of all
permits prior to the start of any work.

2.
Tenant and/or the general contractor will post the building permit on a wall of
the construction site while work is being performed.

3.
Public area corridor, and carpet, is to be protected by plastic runners or a
series of walk-off mats from the elevator to the suite under reconstruction.

4.
Walk-off mats are to be provided at entrance doors.

5.
Contractors will remove their trash and debris daily, or as often as necessary
to maintain cleanliness in the building. Building trash containers are not to be
used for construction debris. Landlord reserves the right to bill Tenant for any
cost incurred to clean up debris left by the general contractor or any
subcontractor. Further, the building staff is instructed to hold the driver’s
license of any employee of the contractor while using the freight elevator to
ensure that all debris is removed from the elevator.

6.
No utilities (electricity, water, gas, plumbing) or services to the tenants are
to be cut off or interrupted without first having requested, in writing, and
secured, in writing, the permission of Landlord.

7.
No electrical services are to be put on the emergency circuit, without specific
written approval from Landlord.

8.
When utility meters are installed, the general contractor must provide the
property manager with a copy of the operating instructions for that particular
meter.

9.
Landlord will be notified of all work schedules of all workmen on the job and
will be notified, in writing, of names of those who may be working in the
building after “normal” business hours.

10.
Passenger elevators shall not be used for moving building materials and shall
not be used for construction personnel except in the event of an emergency. The
designated freight elevator is the only elevator to be used for moving materials
and construction personnel. This elevator may be used only when it is completely
protected as determined by Landlord’s building engineer.

11.
Contractors or personnel will use loading dock area for all deliveries and will
not use loading dock for vehicle parking.

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12.
Contractors will be responsible for daily removal of waste foods, milk and soft
drink containers, etc. to trash room and will not use any building trash
receptacles but trash receptacles supplied by them.

13.
No building materials are to enter the building by way of main lobby, and no
materials are to be stored in any lobbies at any time.

 
14.
Construction personnel are not to eat in the lobby or in front of building nor
are they to congregate in the lobby or in front of building.

15.
Landlord is to be contacted by Tenant when work is completed for inspection. All
damage to building will be determined at that time.

16.
All key access, fire alarm work, or interruption of security hours must be
arranged with Landlord’s building engineer.

17.
There will be no radios allowed on job site.

18.
All workers are required to wear a shirt, shoes, and full length trousers.

19.
Protection of hallway carpets, wall coverings, and elevators from damage with
masonite board, carpet, cardboard, or pads is required.

20.
Public spaces - corridors, elevators, bathrooms, lobby, etc. - must be cleaned
immediately after use. Construction debris or materials found in public areas
will be removed at Tenant’s cost.

21.
There will be no smoking, eating, or open food containers in the elevators,
carpeted areas or public lobbies.

22.
There will be no yelling or boisterous activities.

23.
All construction materials or debris must be stored within the project confines
or in an approved lock-up.

24.
There will be no alcohol or controlled substances allowed or tolerated.

The general contractor and Tenant shall be responsible for all loss of their
materials and tools and shall hold Landlord harmless for such loss and from any
damages or claims resulting from the work.
 
Schedule C-3, Page 2

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EXHIBIT D

RULES AND REGULATIONS

The following rules and regulations have been adopted by the Landlord for the
care, protection and benefit of the Building and for the general comfort and
welfare of the tenants:

1. The sidewalks, entrances, halls, passages, elevators and stairways shall not
be obstructed by the Tenant or used by it for any other purpose than for ingress
and egress.

2. Toilet rooms and other water apparatus shall not be used for any purpose
other than those for which they are constructed.

3. The Tenant shall not do anything in the Premises, or bring or keep anything
therein, which shall in any way conflict with any law, ordinance, rule or
regulation affecting the occupancy and use of the Premises, which are or may
hereafter be enacted or promulgated by any public authority or by the Board of
Fire Underwriters.

4. In order to insure proper use and care of the Premises, neither the Tenant
nor agent nor employee of the Tenant shall:

(a) Allow any furniture, packages or articles of any kind to remain in corridors
except for short periods incidental to moving same in or out of Building or to
cleaning or rearranging occupancy of leased space.

(b) Maintain or utilize bicycles or other vehicles in the Building.

(c) Mark or defile elevators, toilet rooms, walls, windows, doors or any part of
the Building.

(d) Keep animals or birds on the Premises.

(e) Deposit waste paper, dirt or other substances in corridors, stairways,
elevators, toilets, restrooms, or any other part of the Building not leased to
him.

(f) Fasten any article, drill holes, drive nails or screws into walls, floors,
doors, or partitions or otherwise mar or deface any of them by paint, papers or
otherwise, unless written consent is first obtained from the Landlord.

(g) Operate any machinery within the Building except customary office equipment,
such as dictaphones, calculators, electric typewriters, and the like. Special
equipment or machinery used in the trade or profession of the Tenant may be
operated only with the prior written consent of the Landlord.

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(h) Tamper or interfere in any way with windows, doors, locks, air conditioning
controls, heating, lighting, electric or plumbing fixtures.

(i) Leave Premises unoccupied without locking all doors, extinguishing rights
and turning off all water outlets.
 
(j) Install or operate vending machines of any kind in the Premises without
written consent of Landlord.

5. The Landlord shall have the right to prohibit any advertising by the Tenant
which, in its opinion, tends to damage the reputation of the Building or its
desirability, and upon written notice from Landlord, the Tenant shall
discontinue any such advertising.

6. The Landlord reserves the right to designate the time when and method whereby
freight, furniture, safes, goods, merchandise and other articles may be brought
into, moved or taken from the Building and the Premises leased by the Tenant;
and workmen employed, designated or approved by the Landlord must be employed by
Tenant for repairs, painting, material moving and other similar work that may be
done on the Premises.

7. The Tenant will reimburse the Landlord for the cost of repairing any damage
to the Premises or other parts of the Building caused by the Tenant or the
agents or employees of the Tenant, including replacing any glass broken.

8. The Landlord shall furnish a reasonable number of door keys for the needs of
the Tenant, which shall be surrendered on expiration of the Lease, and reserves
the right to require a deposit to insure their return at expiration of Lease.
The Tenant shall obtain keys only from the Landlord, shall not obtain duplicate
keys from any outside source, and shall not alter the locks or effect any
substitution.

9. The Tenant shall not install in the Premises any metal safes or permit any
concentration of excessive weight in any portion thereof without first having
obtained the written permission of Landlord.

10. The Landlord reserves the right at all times to exclude newsboys, loiterers,
vendors, solicitors and peddlers, from the Building and to require registration,
satisfactory identification and credentials from all persons seeking access to
any part of the Building outside of the Standard Hours of Operation. The
Landlord will exercise its best judgment in the execution of such control but
shall not be held liable for the granting or refusal of such access. The
Landlord reserves the right to exclude the general public from the Building
after ordinary business hours and on weekends and holidays.

11. The attaching of wires to the outside of the Building is absolutely
prohibited, and no wires shall be run or installed in any part of the Building
without the Landlord’s permission and direction.
 
Exhibit D, Page 2

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12. Requests for services of janitors or other Building employees must be made
to the Landlord. Agents or employees of Landlord shall not perform any work or
do anything outside of their regular duties unless under special instructions
from Landlord.

13. Signs or any other tenant identification shall be in accordance with
building standard signage. No signs of any nature shall be placed in the windows
so as to be visible from the exterior of the Building. All signs not approved in
writing by the Landlord shall be subject to removal without notice.

14. Any improvements or alterations to the Premises by Tenant shall be approved
in advance by the Landlord and all such work, if approved, shall be done at the
Tenant’s sole expense under the supervision of the Landlord.

15. Tenant shall have a non-exclusive right to use all driveways and parking
areas located on the Common Areas of the Land. Landlord shall have the right
(but not the obligation) to tow, at the owner’s expense, any vehicles parked
overnight on the Land if in Landlord’s sole reasonable judgment exercised in
good faith such vehicle (i) is deemed to be a threat to the personal safety of
the occupants of the Building, (ii) unreasonably interferes with the traffic or
parking patterns within the Building, or (iii) is otherwise inconsistent with
the image and reputation of the Building as a first-class office building.

16. If additional drapes or window decorations are desired by Tenant, they shall
be approved by Landlord and installed at the Tenant’s expense under the
direction of the Landlord. Lining on drapes visible from the exterior shall be
of a color approved by Landlord.

17. The possession of weapons, including concealed handguns, is strictly
forbidden on the Premises.

18. No smoking shall be permitted within any portion of the Building.

19. The Landlord shall have the right to make such other and further reasonable
rules and regulations as, in the judgment of the Landlord, may from time to time
be necessary for the safety, care and cleanliness of the Premises, the Building
or adjacent areas, and for the preservation of good order therein effective five
(5) days after all tenants have been given written notice thereof.
 
Exhibit D, Page 3

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EXHIBIT B

PLAN SHOWING SUBLEASED PREMISES

[GRAPHIC OMITTED]

B-1

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EXHIBIT C

FF INVENTORY
 
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C-1

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C-2

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C-3

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C-4

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C-5

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C-6

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EXHIBIT D

FURNITURE AND FIXTURES CONVEYANCE AGREEMENT

This Furniture and Fixtures Conveyance Agreement (the “Agreement”) is executed
and delivered effective as of the ____ day of _________, 2008 by Advantis Real
Estate Services Company (“Seller”), in favor of Smart Online, Inc., a Delaware
corporation (“Purchaser”).
 
1. Sale of Personalty. For good and valuable consideration (which Seller
acknowledges the receipt and sufficiency thereof), Seller hereby sells,
transfers, assigns, sets over and conveys to Purchaser all of Seller’s right,
title and interest in and to all of the assets listed on Exhibit C to that
Sublease Agreement between Seller and Purchaser of even date herewith
(collectively, the “Personal Property”), all located in the leased premises at
4505 Emperor Boulevard, Suite 320, Durham, North Carolina (“Premises”):
 
2. Warranty of Title. Seller warrants and shall defend title to the Personal
Property unto Purchaser, its successors and assigns. Seller represents and
warrants that no consent of any third party is required to authorize the
transfer contemplated herein, and that it owns free and clear title to the
Personal Property (with no encumbrances).
 
3. Successors and Assigns. This Agreement shall inure to the benefit of and
shall be binding upon Purchaser and Seller and their respective successors and
assigns.
 
4. Power and Authority. Each party represents and warrants to the other that it
is fully empowered and authorized to execute and deliver this Agreement, and the
individual signing this Agreement on behalf of such party represents and
warrants to the other party that he or she is fully empowered and authorized to
do so.
 
5. Further Assurances. The Seller agrees to promptly execute any additional
documents reasonably required to complete or perfect the transfer contemplated
by this Agreement.
 
6. Multiple Counterparts. This Agreement may be executed in a number of
identical counterparts, each of which for all purposes is deemed an original,
and all of which constitute collectively one (1) agreement, but in making proof
of this Agreement, it shall not be necessary to produce or account for more than
one such counterpart.

[Remainder of page intentionally left blank]

D-1

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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed as
of the date written above.
 
SELLER:
   
Advantis Real Estate Services Company
   
By:
       
Name:
David Townsend
Title:
Managing Director
       
BUYER:
   
Smart Online, Inc.
   
By:
        
Name:
David Colburn
Title:
President

D-2

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EXHIBIT E

INITIAL IMPROVEMENTS
 
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