Exhibit 10.42

EXECUTION

LEASE

BETWEEN

SQUARE 54 OFFICE OWNER LLC

(as Landlord)

AND

VANDA PHARMACEUTICALS INC.

(as Tenant)

2200 Pennsylvania Avenue, N.W.

Washington, D.C.

 

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TABLE OF CONTENTS

 

ARTICLE I THE PREMISES

     2   

ARTICLE II TERM

     3   

ARTICLE III BASE RENT

     4   

ARTICLE IV ADDITIONAL RENT

     6   

ARTICLE V SECURITY DEPOSIT

     15   

ARTICLE VI USE OF PREMISES

     19   

ARTICLE VII ASSIGNMENT AND SUBLETTING

     22   

ARTICLE VIII TENANT’S MAINTENANCE AND REPAIRS

     28   

ARTICLE IX TENANT ALTERATIONS

     29   

ARTICLE X SIGNS AND FURNISHINGS

     32   

ARTICLE XI TENANT’S EQUIPMENT

     33   

ARTICLE XII ENTRY AND INSPECTION BY LANDLORD

     34   

ARTICLE XIII TENANT’S INDEMNITY AND INSURANCE

     34   

ARTICLE XIV SERVICES AND UTILITIES

     42   

ARTICLE XV LIABILITY OF LANDLORD

     46   

ARTICLE XVI RULES AND REGULATIONS

     47   

ARTICLE XVII DAMAGE OR DESTRUCTION

     48   

ARTICLE XVIII CONDEMNATION

     49   

ARTICLE XIX DEFAULT BY TENANT

     51   

ARTICLE XX BANKRUPTCY

     55   

ARTICLE XXI SUBORDINATION

     56   

ARTICLE XXII HOLDING OVER

     58   

ARTICLE XXIII COVENANTS OF LANDLORD

     59   

ARTICLE XXIV PARKING

     59   

ARTICLE XXV GENERAL PROVISIONS

     61   

ARTICLE XXVI COMMUNICATIONS AND ACCESS; BUILDING RISERS

     66   

 

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RIDER NO. 1    Renewal EXHIBIT A    Diagram of Premises EXHIBIT A-1    Office
Parking Area, Residential Parking Area, GWU Parking Area and Garage Common Area
EXHIBIT A-2    Description of Land EXHIBIT B    Work Agreement    Schedule I   
Base Building Office Shell Definition    Schedule II    List of Building Plans
and Specifications    Schedule III    [Intentionally Omitted]    Schedule IV   
Rules for Contractors    Schedule V    Close-Out Requirements EXHIBIT C    Rules
and Regulations EXHIBIT D    Form of Declaration EXHIBIT E    Janitorial
Specifications EXHIBIT F    Form of Acceptable Letter of Credit EXHIBIT G   
Current List of Additional Insureds EXHIBIT H    Acceptable Forms of
Certificates of Insurance EXHIBIT I    List of Environmental Reports EXHIBIT J
   Form of Current Ground Lessor’s Nondisturbance Agreement

 

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LEASE

THIS LEASE (this “Lease”) is made as of the 25th day of July, 2011 (the
“Effective Date”), by and between SQUARE 54 OFFICE OWNER LLC, a Delaware limited
liability company (hereinafter referred to as “Landlord”), and VANDA
PHARMACEUTICALS INC., a Delaware corporation (hereinafter referred to as
“Tenant”).

RECITALS:

A. The George Washington University, a federally chartered corporation (“GWU”),
owns fee simple title to the property known for assessment and taxation purposes
as Lots 841, 842, 7000, 7001, 7002, 7003, 7004, 7005, 7006, 7007, 7008, 7009,
7010, 7011 and 7012 in Square 54 in the District of Columbia in the subdivision
made by The George Washington University in said Square 54 (the “GW Property”).

B. The GW Property has been developed as a mixed use development consisting of
(collectively, the “Project”): (i) a Class A office building (as more
particularly described below), (ii) a high-end luxury residential building (with
two towers consisting in the aggregate of approximately 272,000 rentable square
feet of residential space), including affordable housing units (collectively,
the “Residential Building”), (iii) retail space to be located within the office
building and the residential building of approximately 72,000 rentable square
feet (the “Retail Space”), (iv) a parking garage (as more particularly described
below) and (v) a common courtyard.

C. Pursuant to that certain Lease dated February 4, 2008 and effective as of
February 1, 2008, between GWU, as ground lessor, and Square 54 Residential Owner
LLC (“Residential Owner”), as ground lessee (as amended by instrument recorded
on May 10, 2011, and as the same may be further amended from time to time, the
“Residential Ground Lease”), GWU leases a portion of the GW Property to
Residential Owner for the construction of the Residential Building. The
Residential Building includes certain below grade areas located within the
Garage (but expressly part of the gross area of the Residential Building and not
part of the gross area of the Garage) that solely serve the Residential
Building, including without limitation, the residential shuttle elevator lobby
vestibules, residential mechanical room, residential telephone room, residential
switchgear room, residential standby power room, residential domestic water
room, residential fire pump room, and residential support services room
(collectively, the “Residential MEP Rooms”)

D. Pursuant to that certain Lease dated February 4, 2008 and effective as of
February 1, 2008, between GWU, as ground lessor, and Landlord, as ground lessee
(as amended by instrument recorded on May 10, 2011, and as the same may be
amended from time to time, the “Office Ground Lease”), GWU leases a portion of
the GW Property as described on Exhibit A-2 attached hereto (the “Land”) to
Landlord. Landlord has constructed an office building (the “Building”) on the
Land.

 

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E. Landlord and the Residential Owner have constructed a parking garage on the
GW Property consisting of five (5) levels below grade (the “Garage”), a portion
of which will serve the Building (the “Office Parking Area”), and a loading dock
(the “Loading Dock”). In addition to the Office Parking Area within the Garage,
a portion of the Garage serves the Residential Building (the “Residential
Parking Area”), a portion of the Garage serves GWU (the “GWU Parking Area”), and
the remaining portion of the Garage will constitute common area (the “Garage
Common Area”). The Office Parking Area, Residential Parking Area, GWU Parking
Area and Garage Common Area all are more particularly shown on Exhibit A-1
attached hereto and made a part hereof. Landlord also has constructed on the
Land a common courtyard (the “Common Courtyard”). GWU, Landlord and the
Residential Owner have entered into a Declaration of Cross-Easements and
Operating, Parking and Common Area Agreement (as the same may be amended from
time to time, the “REA”) addressing the operation, maintenance and repair of the
Garage, the Loading Dock and the Common Courtyard.

F. The Building is located at 2200 Pennsylvania Avenue, N.W., Washington, D.C.,
and consists of ten (10) stories at and above grade, comprised of an “East
Tower” and a “West Tower,” and certain below grade areas located within the
Garage (but expressly part of the gross Building area and not part of the gross
Garage area) that solely serve the Building, including without limitation, the
office shuttle elevator lobby vestibules, office chiller room, office telephone
room, office gas room, office security room, office engineering shop, office
switchgear room, office standby power room, office domestic water room, and
office fire pump room (collectively, the “Office MEP Rooms”), such Building
totaling approximately 460,000 total rentable square feet, consisting of
approximately 440,000 square feet of rentable area of office space, sometimes
hereinafter referred to as the “Office Space” and approximately 20,000 square
feet of rentable area of retail space, sometimes hereinafter referred to as the
“Office Building Retail Space.”

G. Tenant desires to lease space in the Building from Landlord, and Landlord is
willing to lease space in the Building to Tenant, upon the terms, conditions,
covenants and agreements set forth herein.

NOW, THEREFORE, the parties hereto, intending legally to be bound, hereby
covenant and agree as set forth below:

ARTICLE I

THE PREMISES

1.1 Landlord hereby demises and leases to Tenant and Tenant hereby leases from
Landlord, for the term and upon the terms, conditions, covenants and agreements
herein provided, twenty-one thousand four hundred (21,400) square feet of
rentable area, located on, and comprising the entire rentable area of, the third
(3rd) floor of the East Tower of the Building (“Premises”), such amount of
rentable area having been conclusively determined and agreed-upon by the
parties, it being expressly understood and agreed that Tenant shall have no
right of remeasurement with respect to the Premises and/or Building (or any
portion thereof). The location and configuration of the Premises are outlined on
Exhibit A attached hereto and made a part hereof.

 

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1.2 The lease of the Premises includes the right, together with other tenants of
the Building and members of the public, to use the common and public areas
within the Building, but includes no other rights not specifically set forth
herein. The lease of the Premises also is subject to the Office Ground Lease and
any covenants, conditions and restrictions of record.

1.3 The rentable area in the Premises and the Building have been calculated in
accordance with the American National Standards Institute, Inc./Building Owners
and Managers Association standard method of measuring floor area, ANSI/BOMA
Z65.1-1996 (“BOMA”). Notwithstanding anything in this Lease to the contrary,
both parties acknowledge and agree that the rentable square footage of the
fitness facility referenced in Section 14.7 below and the property management
office have been included in calculating the “core area factor” for the
Building.

ARTICLE II

TERM

2.1 All of the provisions of this Lease shall be in full force and effect from
and after the Effective Date. The term of this Lease (“Lease Term”) shall be for
one hundred thirty-two (132) full calendar months, commencing on the Lease
Commencement Date, as determined pursuant to Section 2.2 hereof, and continuing
for a period of one hundred thirty-two (132) full calendar months thereafter,
unless such Lease Term shall be terminated earlier in accordance with the
provisions hereof or shall be extended in accordance with the provisions of
Rider No. 1 to this Lease. Notwithstanding the foregoing, if the Lease
Commencement Date shall occur on a day other than the first day of a month, the
Lease Term shall commence on such date and continue for the balance of such
month and for a period of one hundred thirty-two (132) full calendar months
thereafter. The term “Lease Term” shall include any and all renewals and
extensions of the term of this Lease.

2.2 The Premises will be delivered to Tenant in Ready for Buildout Condition (as
defined in Exhibit B) promptly following the date on which this Lease has been
fully executed and delivered (the “Premises Delivery”), and the “Lease
Commencement Date” shall be the date that is the earlier to occur of (a) the
date on which Tenant commences beneficial use of the Premises for the conduct of
its business and (b) April 1, 2012. Tenant’s taking possession of the Premises
shall constitute Tenant’s acknowledgement that the Premises is in Ready for
Buildout Condition. Tenant shall be deemed to have commenced beneficial use of
the Premises when Tenant commences business operations in the Premises. In the
event Premises Delivery is delayed, regardless of the reasons or causes of such
delay, this Lease shall not be rendered void or voidable as a result of such
delay, the Term of this Lease shall commence on the Lease Commencement Date as
determined in accordance with the foregoing, and except as expressly provided
herein, Landlord shall not have any liability whatsoever to Tenant on account of
any such delay. Notwithstanding the foregoing, if Premises Delivery does not
occur on or before the date that is five (5) business

 

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days following the date on which this Lease has been fully executed and
delivered by Landlord and Tenant, including Tenant’s delivery to Landlord of the
Advanced Rent and Security Deposit required hereunder (each such day beyond such
five business day period to constitute “Premises Delivery Delay”) and/or in the
event of any Landlord Delay (as defined in Paragraph 12 of Exhibit B hereto),
then, as Tenant’s sole and exclusive remedy in connection therewith, the
April 1, 2012 date set forth in this Section 2.2(b) above shall be extended by
one (1) day for each such day of Premises Delivery Delay or Landlord Delay, as
applicable.

2.3 Promptly after the Lease Commencement Date has occurred, Landlord and Tenant
shall execute a written declaration setting forth the Lease Commencement Date,
the date upon which the initial term of this Lease will expire, and the other
information set forth therein. The form of such declaration is attached hereto
as Exhibit D, and is made a part hereof. Any failure of the parties to execute
such declaration shall not affect the validity of the Lease Commencement Date as
determined in accordance with this Article.

2.4 For purposes of this Lease, the term “Lease Year” shall mean a period of
twelve (12) consecutive calendar months, commencing on the Lease Commencement
Date and each successive twelve (12) month period thereafter, except that if the
Lease Commencement Date shall occur on a date other than the first day of a
month, then the first Lease Year shall also include the period from the Lease
Commencement Date to the first day of the following month.

ARTICLE III

BASE RENT

3.1 (a) During the Lease Term, Tenant shall pay to Landlord as annual base rent
(used interchangeably as “Base Rent” or “base rent”) for the Premises, without
set off, deduction or demand, an amount equal to the product of Forty-Seven and
00/100 Dollars ($47.00), multiplied by the total number of square feet of
rentable area in the Premises as set forth in Section 1.1, which amount shall be
increased as provided in Section 3.2 below. The annual base rent payable
hereunder during each Lease Year shall be divided into equal monthly
installments and such monthly installments shall be due and payable in advance
on the first day of each month during such Lease Year. Concurrently with the
signing of this Lease, Tenant shall pay to Landlord the sum of Eighty-Three
Thousand Eight Hundred Sixteen and 67/100 Dollars ($83,816.67) (“Advanced
Rent”), which sum shall be credited by Landlord toward the monthly installment
of annual base rent due on the first (1st) day of the first calendar month
falling after the month in which the Lease Commencement Date occurs (subject to
any abatement to which Tenant is entitled pursuant to Section 3.1(b) below). In
addition, if the Lease Term begins on a date other than on the first day of a
month, rent from such date until the first day of the following month shall be
prorated on a per diem basis at the base rate payable during the first month,
and such prorated rent shall be payable in advance on the day immediately
following the last day of the Abatement Period (as hereinafter defined).

 

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(b) Notwithstanding anything to the contrary contained in this Article III and
provided no Event of Default by Tenant has occurred, Landlord hereby agrees to
grant Tenant an abatement of the annual base rent payable hereunder (and the
Operating Expenses payable pursuant to Section 4.1(a) below) for a period of
twelve (12) full calendar months from the Lease Commencement Date, as defined in
Section 2.2 above (the “Abatement Period”). Thereafter, commencing on the first
day of the second (2nd) Lease Year, Tenant shall pay the full amount of annual
base rent due in accordance with the provisions of this Article III (and the
full amount of Tenant’s proportionate share of Operating Expenses due in
accordance with the provisions of Article IV). Notwithstanding anything to the
contrary in this Section 3.1(b), the rent escalation, as required by Section 3.2
below, shall be based on the full and unabated amount of rent payable for the
first (1st) Lease Year as set forth in Section 3.1(a) above.

3.2 (a) Commencing on the first (1st) day of the second (2nd) Lease Year and on
the first day of each and every Lease Year thereafter during the Lease Term, the
annual base rent shall be increased by two and fifty hundredths percent
(2.50%) of the amount of annual base rent payable for the preceding Lease Year.

(b) Based on the foregoing, the Annual Base Rent and Monthly Base Rent payable
for the Premises during the initial Lease Term shall be as follows (subject to
Section 3.1(b) above):

 

Lease Year

   Base Rate/RSF      Annual Base Rent      Monthly Base Rent  

1

   $ 47.00       $ 1,005,800.04       $ 83,816.67   

2

   $ 48.18       $ 1,031,052.00       $ 85,921.00   

3

   $ 49.38       $ 1,056,732.00       $ 88,061.00   

4

   $ 50.61       $ 1,083,054.00       $ 90,254.50   

5

   $ 51.88       $ 1,110,231.96       $ 92,519.33   

6

   $ 53.18       $ 1,138,052.04       $ 94,837.67   

7

   $ 54.51       $ 1,166,514.00       $ 97,209.50   

8

   $ 55.87       $ 1,195,617.96       $ 99,634.83   

9

   $ 57.26       $ 1,225,364.04       $ 102,113.67   

10

   $ 58.70       $ 1,256,180.04       $ 104,681.67   

11

   $ 60.16       $ 1,287,423.96       $ 107,285.33   

3.3 All rent shall be paid to Landlord in legal tender of the United States at
c/o Boston Properties, P.O. Box 3557, Boston, MA 02241-3557, or to such other
address as Landlord may designate from time to time by written notice to Tenant.
If Landlord shall at any time accept rent after it shall become due and payable,
such acceptance shall not excuse a delay upon subsequent occasions, or
constitute or be construed as a waiver of any of Landlord’s rights hereunder. If
any sum payable by Tenant under this Lease is paid by check which is returned
due to insufficient funds, stop payment order, or otherwise, then: (a) such
event shall be treated as a failure to pay such sum when due; and (b) in
addition to

 

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all other rights and remedies of Landlord hereunder, Landlord shall be entitled
(i) to impose a returned check charge of Fifty Dollars ($50.00) to cover
Landlord’s administrative expenses and overhead for processing, and (ii) to
require that all future payments be remitted by wire transfer, money order, or
cashier’s or certified check.

3.4 Landlord and Tenant agree that no rental or other payment for the use or
occupancy of the Premises is or shall be based in whole or in part on the net
income or profits derived by any person or entity from the Building or the
Premises. Tenant further agrees that it will not enter into any sublease,
license, concession or other agreement for any use or occupancy of the Premises
which provides for a rental or other payment for such use or occupancy based in
whole or in part on the net income or profits derived by any person or entity
from the Premises so leased, used or occupied. Nothing in the foregoing
sentence, however, shall be construed as permitting or constituting Landlord’s
approval of any sublease, license, concession, or other use or occupancy
agreement not otherwise approved by Landlord in accordance with the provisions
of Article VII.

ARTICLE IV

ADDITIONAL RENT

4.1 Operating Expenses and Real Estate Taxes.

(a) Commencing on the Lease Commencement Date (subject to any abatement to which
Tenant is entitled, as described below in this sentence) and continuing with
each calendar year thereafter during the Lease Term, Tenant shall pay Landlord,
as additional rent for the Premises, Tenant’s proportionate share of the
operating expenses incurred by Landlord in connection with the management,
operation and ownership of the Building including the portion of the Garage and
the Loading Dock and the Common Courtyard serving the Building, and the Garage
Common Area (“Operating Expenses”) during any calendar year falling entirely or
partly within the Lease Term; provided, however, that Tenant is hereby granted
an abatement of the foregoing additional rent for the Abatement Period, subject
to the terms of Section 3.1(b) above. For purposes of this Article IV Tenant’s
proportionate share of such Operating Expenses shall be that percentage which is
equal to a fraction, the numerator of which is the number of square feet of
rentable area in the Premises from time to time and the denominator of which is
the total number of square feet of rentable area in the Building from time to
time, excluding the number of square feet devoted to storage space and parking.
It is understood that the number comprising such denominator is subject to
change because of changes in the use or configuration of space in the Building
or the addition of space to the Building or the deletion of space from the
Building or in the amount of space leased by tenants who pay by separate meter
for their electrical and/or janitorial, cleaning, or other utilities or services
so that Tenant actually pays its fair share of Operating Expenses. The
denominator with respect to Real Estate Taxes (as defined in Section 4.1(c)
below) shall be calculated based on the total number of square feet of rentable
area in the Building, including portions of the Building occupied by retail
tenants but exclusive of the Garage and storage areas. Space leased by retail
tenants is excluded from the denominator with respect to both (i)

 

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rubbish removal, water, electricity and janitorial service exclusively provided
to their premises (and expenses for such services to their premises are excluded
from Operating Expenses), and (ii) other costs and expenses determined by
Landlord to have been incurred in connection with services related to the office
portion of the Building. However, space leased by retail tenants is included in
the denominator with respect to common area water, electricity and janitorial,
and all other categories of expenses included in Operating Expenses. Tenant
acknowledges and understands that with respect to certain of the Operating
Expenses set forth herein (e.g., costs relating to the Garage Common Area, the
Loading Dock and the Common Courtyard), Tenant will be paying its proportionate
share of Operating Expenses which are attributable to the Building’s
proportionate share of such expenses relative to the Project, with appropriate
adjustments to the extent such expenses are not attributable to circumstances or
conditions present in the Building or otherwise applicable to the Project as a
whole. The specific obligations of Tenant with respect to such expenses shall be
governed by the remaining sections of this Article IV. Tenant’s proportionate
share shall increase in the event Tenant expands the Premises.

(b) Operating Expenses shall include, without limitation, the costs and expenses
described in Subsection (1) below, but shall not include the costs and expenses
described in Subsection (2) below.

(1) Included costs and expenses (which shall in all cases be net of any
discounts, credits, reimbursements and rebates received by Landlord):

(i) Gas, water, sewer, electricity and other utility charges (including
surcharges) of every type and nature (except to the extent separately metered to
individual tenants and payable by such tenants directly to the applicable
utility, or otherwise reimbursed to Landlord by tenants of the Building).

(ii) Insurance premiums paid by Landlord.

(iii) Personnel costs of the Building, including, but not limited to, salaries,
wages, fringe benefits and other direct and indirect costs of engineers,
superintendents, watchmen, porters, property accountants and any other personnel
related to the management, maintenance, repair and operation of the Building
(“Personnel”).

(iv) Costs of service and maintenance contracts, including, but not limited to,
chillers, boilers, controls, elevators, mail chute, windows, access control
service, landscaping, snow and ice removal, management fees in an amount not to
exceed for any calendar year during the initial Lease Term more than 5% of the
annual gross revenues for the Building, and air and water quality testing.

(v) All other maintenance and repair expenses and supplies which are deducted by
Landlord in computing its Federal income tax liability.

(vi) Amortization over the Approved Period (as defined below), with interest at
Landlord’s cost of financing, or, if the improvement is not financed, at the
prime

 

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rate reported by the Bank of America on the date of such expenditure, for
capital expenditures made by Landlord (A) to reduce operating expenses if and to
the extent the annual reduction in Operating Expenses will be equal to or will
exceed the annual amortization and financing costs therefor, or (B) to comply
with all present and future laws, ordinances (including zoning ordinances and
land use requirements), regulations and orders of the District of Columbia, the
United States of America and any other governmental or quasi-governmental agency
having jurisdiction over the Premises (collectively, “Legal Requirements”),
which Legal Requirements are first applicable to the Building after the Lease
Commencement Date; the “Approved Period” shall mean the time period equal to the
longest allowable useful life of the improvement permitted under generally
accepted accounting principles, except that with respect to an improvement made
for the purpose of reducing Operating Expenses, Landlord may reduce such time
period to the number of years that it will take to fully amortize the cost of
the capital expenditure if the yearly amortization amount (including interest as
aforesaid) is equal to the projected annual savings as reasonably estimated by
Landlord.

(vii) Any other costs and expenses reasonably incurred by Landlord in
maintaining or operating the Building (including major repairs for maintenance
purposes, but excluding capital improvements, except as permitted pursuant to
subsection 4.1(b)(1)(vi) above), except as provided in (2) below.

(viii) Real Estate Taxes (as hereinafter defined).

(ix) The costs of any additional services not provided to the Building at the
Lease Commencement Date but thereafter provided by Landlord in the prudent
management of the Building.

(x) Charges for concierge (if any), access control, janitorial, and cleaning
services (including supplies) for operation and maintenance of the Building
(including the loading dock serving the Building), the fitness facility and the
roof deck to the extent available for use by all office tenants of the Building
.

(xi) Personnel costs of the regional property manager and regional engineer,
even if such persons work off-site, so long as such persons are not part of the
corporate office and only if such person’s time is allocable to the Building,
consistent with the portion of such person’s time allocated to the Building.

(xii) Costs of maintaining management or engineering offices serving the
Building, including, without limitation, the costs of telephone services, office
equipment, including upgrades and replacements thereof, and office supplies, but
excluding any cost for the initial furnishing of such offices.

(xiii) Accounting expenses reasonably incurred by Landlord in calculating
Operating Expenses and legal fees and expenses reasonably incurred by Landlord
in connection with proceedings undertaken to reduce Operating Expenses.

(xiv) Project Common Expenses, hereinafter defined.

 

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(xv) Any costs or expenses incurred by Landlord with respect to the imposition
of taxes, charges or fees levied, assessed or imposed against the Building or
Landlord or any of Landlord’s constituent members in connection with the
development, financing, construction, operation, maintenance and/or use of any
major league baseball stadium and/or other sports complex in the District of
Columbia.

(2) Excluded costs and expenses:

(i) Principal, interest or other amounts payable on indebtedness, debt
amortization or ground rent paid by Landlord in connection with any mortgages,
deeds of trust or other financing encumbrances, or ground leases of the
Building.

(ii) Capital improvements to the Building other than those permitted in
subsection 4.1(b)(1)(vi) above.

(iii) Legal, auditing, consulting and professional fees and other costs paid or
incurred in connection with financings, refinancings or sales of any interest in
Landlord or of Landlord’s interest in the Building, or in connection with any
ground lease (including, without limitation, recording costs, mortgage recording
taxes, title insurance premiums and other similar costs, but excluding those
legal, auditing, consulting and professional fees and other costs incurred in
connection with the normal and routine maintenance and operation of the
Building).

(iv) Legal fees, space planner’s fees, architect’s fees, leasing and brokerage
commissions, advertising and promotional expenditures and any other advertising
and marketing expenses incurred in connection with the leasing of space in the
Building (including new leases, lease amendments, lease terminations and lease
renewals).

(v) The cost of any items to the extent to which such cost is reimbursed to
Landlord by tenants of the Building (other than pursuant to this Section 4.1),
other third parties, or is covered by a warranty to the extent of reimbursement
for such coverage.

(vi) Expenditures for any leasehold improvements which are made in connection
with the preparation of any portion of the Building for occupancy by any tenant
or which are not made generally to or for the benefit of the Building.

(vii) The cost of performing work or furnishing service to or for any tenant
other than Tenant, at Landlord’s expense, to the extent such work or service is
in excess of any work or service Landlord is obligated to provide to Tenant or
generally to other tenants in the Building at Landlord’s expense.

(viii) The cost of repairs or replacements incurred by reason of fire or other
casualty, or condemnation (other than costs not in excess of the deductible on
any insurance maintained by Landlord which provides a recovery for such repair
or replacement), to the extent Landlord actually receives proceeds of property
and casualty insurance policies or condemnation awards or would have received
such proceeds had Landlord maintained the insurance required to be maintained by
Landlord pursuant to this Lease.

 

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(ix) The cost of acquiring (but not of maintaining) sculptures, paintings or
other objects of fine art in the Building.

(x) Reserves for bad debt loss or rent loss, or any other reserves, including
without limitation, reserves for tenant improvements and leasing commissions.

(xi) Unfunded contributions to operating expense reserves by other tenants.

(xii) Contributions to charitable or political organizations.

(xiii) Damage and repairs necessitated by the gross negligence or willful
misconduct of Landlord Parties.

(xiv) Fees, costs and expenses incurred by Landlord in connection with or
relating to claims against or disputes with tenants of the Building.

(xv) Interest, fines or penalties for late payment or violations of Legal
Requirements by Landlord, if any, except to the extent incurring such expense is
either (a) a reasonable business expense under the circumstances, or (b) caused
by a corresponding late payment or violation of a Legal Requirement by Tenant,
in which event Tenant shall be responsible for the full amount of such expense.

(xvi) The cost of remediation and removal of “Hazardous Materials” (as defined
in Section 6.3) in the Building required by “Environmental Law” (as defined in
Section 6.3), provided, however, that the provisions of this clause xvi shall
not preclude the inclusion of costs with respect to materials (whether existing
at the Building as of the Lease Commencement Date or subsequently introduced to
the Building) which are not as of the Lease Commencement Date (or as of the date
of introduction) deemed to be Hazardous Materials under applicable Hazardous
Materials Laws but which are subsequently deemed to be Hazardous Materials under
applicable Hazardous Materials Laws (it being understood and agreed that Tenant
shall nonetheless be responsible under Article VI for all costs of remediation
and removal of Hazardous Materials to the extent caused by Tenant Parties).

(xvii) Costs of replacements, alterations or improvements necessary to make the
Building comply with Legal Requirements in effect and applicable to the Building
prior to the Lease Commencement Date, provided, however, that the provisions of
this clause xvii shall not preclude the inclusion of costs of compliance with
Legal Requirements enacted prior to the Effective Date if such compliance is
required for the first time by reason of any amendment, modification or
reinterpretation of a Legal Requirement which is imposed after the Effective
Date.

 

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(xviii) Costs for the original construction and development of the Building
(including any “tap fees” or one-time lump sum sewer or water connection fees)
and nonrecurring costs for the repair or replacement of any structural portion
of the Building made necessary as a result of defects in the original design,
workmanship or materials.

(xix) Costs and expenses incurred for the administration of the entity which
constitutes Landlord, as the same are distinguished from the costs of operation,
management, maintenance and repair of the Building, including, without
limitation, entity accounting and legal matters.

(xx) Salaries and all other compensation (including fringe benefits) of
partners, officers and executives above the grade of regional property manager
or regional engineer.

(xxi) The wages and benefits of any employee who does not devote substantially
all of his or her employed time to the Building unless such wages and benefits
are reasonably allocated to the Building.

(xxii) Except as may be otherwise expressly provided in this Lease with respect
to specific items, the cost of any services or materials provided by any party
related to Landlord, to the extent such cost exceeds the reasonable cost for
such services or materials in Class A office buildings in the Market Area absent
such relationship.

(xxiii) Depreciation for the Building and personal property contained therein.

(xxiv) Except as may be otherwise expressly provided in this Lease with respect
to specific items, the cost of any services or materials provided by any party
related to Landlord, to the extent such cost exceeds the reasonable cost for
such services or materials in Class A office buildings in the Market Area absent
such relationship.

(xxv) Compensation paid to clerks, attendants or other persons in commercial
concessions operated by Landlord or by the operator thereof (i.e., newsstands).

(xxvi) Any entertainment expenses of Landlord’s employees, and any travel
expenses not related to the operation or management of the Building.

(c) “Real Estate Taxes” shall mean (i) all real estate taxes and other
impositions, including general and special assessments, property owner
association fees, business improvement district taxes, arena taxes, and other
similar taxes and assessments if any, which are imposed upon Landlord or
assessed against the Building or the Land upon which the Building is situated;
(ii) any other present or future taxes or governmental charges that are imposed
upon Landlord or assessed against the Building or the Land, including, but not
limited to, any tax levied on or measured by the rents payable by tenants of the
Building, which are in the nature of, or in substitution for, real estate taxes;
(iii) all taxes which are imposed upon

 

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Landlord, and which are assessed against the value of any improvements to the
Premises made by Tenant or any machinery, equipment, fixtures or other personal
property of Tenant used therein; (iv) expenses (including attorneys’ fees)
incurred in reviewing, protesting, negotiating or seeking (whether formally or
informally) a reduction or abatement of Real Estate Taxes; (v) any rental or
other charges or fees imposed upon Landlord in connection with the lease or use
of any vault space(s); (vi) any taxes or other charges levied pursuant to the
Business Improvement Districts Act of 1996 or any amendments thereto; and
(vii) any taxes, charges or fees imposed upon Landlord in connection with the
development, financing, construction, operation, maintenance and/or use of any
major league baseball stadium and/or other sports complex in the District of
Columbia, but only if and to the extent such taxes, charges or fees are
includable as Operating Expenses pursuant to this Article IV (including without
limitation, Section 4(b)(1)(xv) hereof). Notwithstanding the foregoing, except
as expressly included above, Real Estate Taxes shall not include any income
taxes, excess profits taxes, excise taxes, franchise taxes, estate taxes,
succession taxes and transfer taxes, except to the extent any of such taxes are
in the nature of or are in substitution for or recharacterization or replacement
of Real Estate Taxes. If Landlord contests the Real Estate Taxes for any
calendar year, and such contest results in an increase in Real Estate Taxes for
such calendar year, then Landlord shall have the right to bill Tenant for prior
underpayments of Real Estate Taxes thereby resulting. If Landlord receives a
refund of any portion of Real Estate Taxes that were included in the Real Estate
Taxes paid by Tenant, then Landlord shall credit against the next estimated
payment or payments due under this Article IV an amount equal to Tenant’s pro
rata share of the refunded taxes, less any expenses that Landlord incurred to
obtain the refund or if the Lease Term has expired, Landlord shall refund such
amount to Tenant.

(d) “Project Common Expenses” shall mean those Operating Expenses incurred by
Landlord in owning, operating and/or managing the Office Parking Area,
Residential Parking Area, GWU Parking Area, and Garage Common Area (as opposed
to those Operating Expenses related exclusively to the Building or the Office
Parking Area), as well as those Operating Expenses incurred in owning, operating
and/or managing the Loading Dock and the Common Courtyard components of the
Project, but only a portion of such expenses equal to the pro rata share
attributable to the Building relative to the Project or the applicable portion
of the Project. For purposes hereof, (i) the pro rata share of the Office
Parking Area, Residential Parking Area, GWU Parking Area and Garage Common Area
costs attributable to the Building shall be determined using the methodology set
forth on Exhibit A-1 attached hereto as applied to the actual gross square
footage of the applicable elements of the Project (which pro rata share is equal
to thirty-nine and sixteen hundredths percent (39.16%) as of the date hereof
based on the gross square footage of the applicable elements of the Project set
forth on Exhibit A-1), and (ii) the pro rata share of the Loading Dock costs and
the Common Courtyard costs attributable to the Building each shall be determined
using the methodology set forth on Exhibit A-1 as applied to the actual gross
square footage of the Building (including the Retail Space to be located in the
Building) and the Residential Building (including the Retail Space to be located
in the Residential Building) (which pro rata share is equal to fifty-five and
eighty-nine hundredths percent (55.89%) as of the date hereof based on the gross
square footage of the Building and the gross square footage of the Residential
Building set forth on Exhibit A-1). It is understood and agreed that any costs
or

 

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expenditures related to the Project that would have been excluded from Operating
Expenses if related solely to the Building, similarly shall be excluded from
Operating Expenses. It is further understood and agreed that except with respect
to certain expenses incurred in operating and/or managing the Office Parking
Area, Residential Parking Area, GWU Parking Area, and Garage Common Area, as
well as the expenses incurred in operating and/or maintaining the Loading Dock
and Common Courtyard components of the Project, operating expenses and real
estate taxes shall be separately accounted for with respect to the Building, the
Residential Building and the GWU Parking Area, and all operating expenses and
real estate taxes arising from the Residential Building (including the
Residential MEP Rooms) shall be excluded from Operating Expenses.

4.2 In the event the average occupancy rate for the entire Building shall be
less than one hundred percent (100%) or if any tenant is paying separately for
electricity or other utilities or services for any calendar year, for purposes
of calculating the additional rent payable by Tenant pursuant to this Article IV
for each calendar year, the Operating Expenses for such calendar year shall be
increased by the amount of additional costs and expenses that Landlord
reasonably estimates would have been incurred if the average occupancy rate for
the entire Building had been one hundred percent (100%) and as if no tenants had
separately paid for electricity or other utilities and services for such
calendar year. It is the intent of this provision to permit Landlord to recover
from Tenant its proportionate share of Operating Expenses attributable to
occupied space in the Building even though the aggregate of such expenses shall
have been reduced as a result of vacancies in the Building. This Section 4.2
shall not be construed to permit Landlord to recover from Tenant additional rent
pursuant to Article IV for any calendar year which, when added to the total
amount of additional rent payable (whether actually paid, payable but unpaid, or
that would have been payable except that it has been abated in accordance with
the terms of the applicable tenant’s lease) by all tenants of the Building on
account of Operating Expenses for such year, will exceed the actual amount of
Operating Expenses incurred by Landlord for such year.

4.3 On or about the Lease Commencement Date and at the beginning of each
calendar year thereafter during the Lease Term, Landlord shall submit to Tenant
a statement setting forth Landlord’s reasonable estimate of (a) the amount of
the Operating Expenses that are expected to be incurred during such calendar
year, and (b) the computation of Tenant’s proportionate share of such
anticipated Operating Expenses. Except as otherwise provided herein, Tenant
shall pay to Landlord on the first day of each month following receipt of such
statement during such calendar year an amount equal to Tenant’s proportionate
share of the anticipated Operating Expenses multiplied by a fraction, the
numerator of which is 1, and the denominator of which is the number of months
during such calendar year which fall entirely or partly within the Lease Term
and follow the date of the foregoing statement. Within approximately one hundred
twenty (120) days after the expiration of each calendar year falling entirely or
partly within the Lease Term, Landlord shall submit to Tenant a statement
showing (i) the actual amount of Operating Expenses paid or incurred by Landlord
during the immediately preceding calendar year, with reasonable detail, (ii) a
computation of Tenant’s proportionate share of the Operating Expenses actually
incurred during the preceding calendar year, and (iii) the

 

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aggregate amount of the estimated payments made by Tenant on account thereof. If
the aggregate amount of such estimated payments exceeds Tenant’s actual
liability for such Operating Expenses, then Tenant shall deduct the net
overpayment from its next estimated payment or payments due under this Article
IV for the then current year, or, in the case of the reconciliation for the
calendar year in which the Lease Term expires, Landlord shall pay Tenant the net
overpayment (after deducting therefrom any amounts then due from Tenant to
Landlord). If Tenant’s actual liability for such amounts exceeds the estimated
payments made by Tenant on account thereof, then Tenant shall pay to Landlord
the total amount of such deficiency as additional rent due hereunder in
accordance with Section 25.16 below.

4.4 In the event Tenant’s obligation for the payment of Operating Expenses
begins or expires on a day other than the first and last day of a calendar year,
respectively, then Tenant’s obligation for Operating Expenses for such partial
calendar year shall be an amount equal to the product of (i) Tenant’s
Proportionate Share of the Operating Expenses for the full calendar year,
multiplied by (ii) a fraction, the numerator of which is the number of days
during such calendar year for which Tenant is obligated for the payment of
Operating Expenses, and the denominator of which is three hundred sixty-five
(365).

4.5 All payments required to be made by Tenant pursuant to this Article IV shall
be paid to Landlord, without setoff or deduction, in the same manner as annual
base rent is payable pursuant to Article III hereof.

4.6 Tenant’s liability for its proportionate share of Operating Expenses
described in Section 4.1 hereof for the last calendar year falling entirely or
partly within the Lease Term shall survive the expiration of the Lease Term.
Similarly, Landlord’s obligation to refund to Tenant the excess, if any, of the
amount of Tenant’s estimated payments on account of such Operating Expenses for
such last calendar year over Tenant’s actual liability therefor shall survive
the expiration of the Lease Term.

4.7 In the event that Tenant, in good faith, believes that the amounts paid by
Tenant to Landlord relating to Operating Expenses during any calendar year
falling within the Lease Term exceeded the amounts to which Landlord was
entitled to hereunder and Tenant details the alleged discrepancy in writing to
Landlord, then, a regular employee of Tenant or an Acceptable CPA (as defined
below) shall have the right, during regular business hours and after giving not
less than ten (10) business days’ advance written notice to Landlord, to inspect
and complete an audit of Landlord’s books and records relating to such Operating
Expenses for a period of one hundred eighty (180) days following receipt by
Tenant of the statement required to be delivered by Landlord to Tenant pursuant
to Section 4.3 hereof for such calendar year. As used herein, an “Acceptable
CPA” shall mean an independent, certified public accountant who is employed by a
nationally recognized accounting firm and retained by Tenant on a
non-contingency basis. If such audit shows that the amounts paid by Tenant to
Landlord on account of such Operating Expenses exceeded the amounts to which
Landlord was entitled hereunder, or that Tenant is entitled to a credit with
respect to any such Operating Expenses, Landlord shall promptly refund to Tenant
the amount of such excess or the amount of such credit, as the

 

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case may be. Similarly, if it is determined that the amounts paid by Tenant to
Landlord on account of Operating Expenses were less than the amounts to which
Landlord was entitled hereunder, then Tenant shall promptly pay to Landlord, as
additional rent hereunder, the amount of such deficiency. Tenant shall (and
shall cause its agents to) keep the results of such audit or audited statement
strictly confidential and shall execute Landlord’s standard form of
confidentiality agreement prior to commencing the audit. All costs and expenses
of any such audit shall be paid by Tenant, except that if such audit shows that
the amount of Operating Expenses was overstated by more than five percent
(5%) in the aggregate, Landlord shall reimburse Tenant for the reasonable
out-of-pocket costs and expenses incurred by Tenant in such audit, up to a
maximum of the lesser of (a) Five Thousand Dollars ($5,000) and (b) the amount
of the overstatement of Tenant’s proportionate share of Operating Expenses.
Notwithstanding the foregoing, if Tenant does not notify Landlord in writing of
any objection to the statement required of Landlord pursuant to Section 4.3
hereof within said one hundred eighty (180) day period, then Tenant shall be
deemed to have waived any such objection and any potential claim against
Landlord for any refunds with respect to such Operating Expenses.

ARTICLE V

SECURITY DEPOSIT

5.1 (a) Simultaneously with Tenant’s execution of this Lease, Tenant shall post
a Letter of Credit (as defined below) in an amount equal to Five Hundred
Thousand and 00/100 Dollars ($500,000.00), as a security deposit (hereinafter
referred to as “security deposit” or “Security Deposit”), which sum shall be in
addition to the Advanced Rent paid by Tenant to Landlord pursuant to Section 3.1
hereof. Among other things, Landlord has assigned (or intends to assign) to the
holder of the mortgage now or hereafter encumbering the Building, all of
Landlord’s interest in this Lease, including, without limitation, the Security
Deposit.

(b) The Security Deposit shall be security for the performance by Tenant of all
of Tenant’s obligations, covenants, conditions and agreements under this Lease.
Within ninety (90) days after the expiration of the Lease Term, provided Tenant
has vacated the Premises, Landlord shall return the Security Deposit to Tenant,
less such portion thereof as Landlord shall have appropriated to satisfy any
Event of Default under this Lease and such portion as Landlord reasonably
believes will be payable by Tenant in connection with the reconciliation of
Operating Expenses for the calendar year in which the Lease Term expires. In the
event of any Event of Default by Tenant under this Lease, Landlord shall have
the right, but not the obligation, to use, apply or retain all or any portion of
the Security Deposit for (i) the payment of any annual base rent or additional
rent or any other sum due under this Lease, (ii) the payment of any amount
Landlord may spend or become obligated to spend as a result of the Event of
Default, (iii) for the compensation of Landlord for any losses incurred by
reason of the Event of Default, or (iv) any damage or deficiency arising in
connection with the reletting of the Premises. If any portion of the Security
Deposit is so used or applied, within five (5) business days after written
notice to Tenant of such use or application, Tenant shall restore the Security
Deposit by providing a replacement Letter of Credit, an additional

 

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Letter of Credit or an amendment to the initial Letter of Credit, as the case
may be, such that Landlord is holding one or more Letters of Credit in the
aggregate amount of the Security Deposit required hereunder. Tenant’s failure to
restore the Letter of Credit shall constitute an Event of Default under this
Lease. Tenant hereby authorizes Landlord to deposit the Security Deposit with
the holder of any mortgage now or hereafter encumbering the Building if and to
the extent required by said holder; provided, however, that such holder shall
hold the Security Deposit subject to Tenant’s rights with respect to the
Security Deposit set forth herein.

(c) The Security Deposit shall be in the form of one or more unconditional,
irrevocable letters of credit (each, a “Letter of Credit”), subject to the terms
and conditions set forth herein. Such Letter of Credit shall (i) be in the form
attached hereto as Exhibit F or otherwise in form and substance reasonably
satisfactory to Landlord; (ii) be at all times in the amount of the Security
Deposit (subject to any reduction to which Tenant is entitled pursuant to
Section 5.1(d) below), (iii) permit multiple draws; (iv) be issued by a
commercial bank reasonably acceptable to Landlord from time to time; (v) be made
payable to, and expressly transferable and assignable at no charge by, the owner
from time to time of the Building or, at Landlord’s option, the holder of any
mortgage (which transfer/assignment shall be conditioned only upon the execution
of a written document in connection therewith; provided, however, that in the
event the issuing bank of the Letter of Credit charges a fee for a transfer
and/or assignment, any and all such fees shall be payable by Tenant); (vi) be
payable at sight or by facsimile upon presentation of a simple sight draft to
the issuing bank of the Letter of Credit; (vii) have a term not less than one
(1) year; and (viii) be at least thirty (30) days prior to the then-current
expiration date of such Letter of Credit, automatically renewed (or
automatically and unconditionally extended) from time to time through the
ninetieth (90th) day after the expiration of the Lease Term. Notwithstanding
anything in this Lease to the contrary, any cure or grace periods set forth in
this Lease shall not apply to any of the foregoing, and, specifically, if Tenant
fails to timely comply with the requirements of Subsection (v) and/or
(viii) above, then Landlord shall have the right to immediately draw upon the
Letter of Credit without notice to Tenant and apply the proceeds to the Security
Deposit. Each Letter of Credit shall be issued by and drawn on a bank reasonably
approved by Landlord and at a minimum having a long-term issuer credit rating
from Standard & Poor’s Professional Rating Service of A or a comparable rating
from Moody’s Professional Rating Service, and the Letter of Credit shall be
otherwise acceptable to Landlord in its sole and absolute discretion. If the
issuer’s credit rating is reduced below A (or equivalent) by Standard & Poor’s
Corporation or by Moody’s Professional Rating Service, or if the financial
condition of such issuer changes in any other materially adverse way, then
Landlord shall have the right to require that Tenant obtain from a different
issuer a substitute letter of credit that complies in all respects with the
requirements of this Article, and Tenant’s failure to obtain such substitute
letter of credit within ten (10) days following Landlord’s written demand
therefor (with no other notice or cure or grace period being applicable thereto,
notwithstanding anything in this Lease to the contrary) shall entitle Landlord
to immediately draw upon the then existing Letter of Credit in whole or in part,
without notice to Tenant. In the event the issuer of any Letter of Credit held
by Landlord is placed into receivership or conservatorship by the Federal
Deposit Insurance Corporation or any successor or similar entity, then,
effective as of the date such receivership or conservatorship occurs, said
Letter of Credit shall be deemed to not meet the requirements of this Section,
and, within ten (10) days

 

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thereof, Tenant shall replace such Letter of Credit with other collateral
acceptable to Landlord in its sole and absolute discretion (and Tenant’s failure
to do so shall, notwithstanding anything in this Lease to the contrary,
constitute an Event of Default for which there shall be no notice or grace or
cure periods being applicable thereto other than the aforesaid ten (10) day
period). Tenant shall be responsible for the payment of any and all costs
incurred by Landlord in connection with the replacement Letter of Credit
(including without limitation Landlord’s reasonable attorneys’ fees), which
replacement is required pursuant to this Section or is otherwise requested by
Tenant. Any failure or refusal of the issuer to honor the Letter of Credit shall
be at Tenant’s sole risk and shall not relieve Tenant of its obligations
hereunder with respect to the Security Deposit.

(d) (i) As required by Section 25.4(b) below, Tenant shall deliver to Landlord
Tenant’s financial statements for Tenant’s most recently completed fiscal year,
audited by a certified public accountant (“Financial Statements”). Tenant’s
Financial Statements provided to Landlord hereunder shall state, among other
things, Tenant’s Liquidity (“Liquidity” is equal to the sum of cash, market
securities and credit line availability, if any) and Cash Flow from Operations
(“Cash Flow from Operations” definition is consistent with that found in the
statement of cash flows from Tenant’s Financial Statements). Tenant shall make
its chief financial officer reasonably available to answer any questions
Landlord may have concerning such Financial Statements and shall deliver any
additional information reasonably requested by Landlord to clarify or verify the
data shown on the Financial Statements provided pursuant hereto.

(ii) Provided that, as of the applicable Reduction Date (as defined below)
(x) no Event of Default shall then be in existence under this Lease,
(y) Tenant’s then-current Liquidity is equal to or greater than the sum of
Tenant’s remaining obligations under this Lease, and (z) if Cash Flow from
Operations is negative, Tenant’s then current Liquidity also is equal to or
greater than the product of (I) the annual Cash Flow from Operations multiplied
by (II) the number of years remaining in the Lease Term (i.e., the cash burn),
Tenant shall have the right with respect to each Reduction Date to reduce the
Security Deposit to the amount of the Security Deposit set forth below as of
each Reduction Date. For purposes of example only, assume for the particular
fiscal year of Tenant that Tenant’s Financial Statements reflect liquidity equal
to $200,000,000 (based on $155,000,000 in market securities and $45,000,000 in
cash) and cash burn from operations equal to $10,000,000, and there remain ten
(10) years in the Lease Term. In such event, (A) the total cash burn would equal
$100,000,000 (i.e., $10M cash burn from operations x 10 remaining years in Lease
Term), and (B) Tenant’s then current Liquidity would exceed the total cash burn
by $100,000,000 (i.e. $200M Liquidity – $100M cash burn), such that, provided no
Event of Default then exists under this Lease, Tenant would be entitled to the
applicable reduction in Security Deposit. The following chart reflects the
potential dates on which a reduction in the amount the Security Deposit may
occur, and the resulting required amount of the Security Deposit in the event of
the applicable reduction:

 

Reduction Date,

being later of (A) 30 days after Audited Financial Statements are delivered to
Landlord for
fiscal year ending immediately prior to start of applicable Lease Year below or
(B) first day
of applicable Lease Year below:

  

Required Amount of

Security Deposit

 

Fourth Lease Year

   $ 400,000   

Sixth Lease Year

   $ 300,000   

Eighth Lease Year

   $ 200,000   

 

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If all of the aforesaid conditions are met, within ten (10) business days after
Landlord’s receipt of Tenant’s written request certifying that all conditions to
the applicable reduction have been met, Landlord shall notify the issuer of the
Letter of Credit that the Letter of Credit shall be reduced in the amount of the
reduction so authorized and the security deposit shall be so reduced in
accordance with this Section 5.1(d); provided, however, that in no event shall
the security deposit be reduced to an amount that is less than Two Hundred
Thousand Dollars ($200,000). Such reduction shall occur by means of delivery by
Tenant to Landlord of an amendment to the Letter of Credit reducing the amount
thereof as directed by Landlord, or a substitute Letter of Credit in such amount
and in strict conformity with the terms of this Article V, in which latter
event, the original Letter of Credit will be promptly returned to Tenant.
Substitutions of the Letter of Credit shall be made in a manner such that at all
times one of the Letters of Credit in the required amount of the security
deposit is in full force and effect and may be drawn upon (as permitted hereby).
If Tenant does not qualify for a reduction as of any applicable Reduction Date
due to Tenant’s failure to satisfy either of the conditions in clauses (x) and
(y) of this Section 5.1(d) as of such Reduction Date, but Tenant subsequently
does qualify for such reduction, then such reduction shall be deferred to the
first day of the Lease Year following the Lease Year in which Tenant so
qualifies, and all further scheduled reductions shall be deferred by one year
(e.g., if Tenant does not qualify for a reduction on the first day of the sixth
(6th) Lease Year, but Tenant does so qualify upon its delivery of financial
statements during the seventh (7th) Lease Year, then the reduction in the amount
of the Security Deposit that otherwise would have occurred during the sixth
(6th) Lease Year shall occur instead on the first day of the eighth (8th) Lease
Year, and the reduction in the amount of the Security Deposit that was scheduled
for the first day of the eighth (8th) Lease Year shall be deferred until the
first day of the ninth (9th) Lease Year (subject to satisfaction of the terms
and conditions herein). In no event shall the amount of the Letter of Credit be
reduced unless the issuing bank receives prior written notice from Landlord,
authorizing a reduction by a certain amount (it being understood that in no
event shall the reduction exceed the amount so authorized by Landlord).
Notwithstanding anything in this Article to the contrary, if two (2) or more
monetary Events of Default have occurred (whether or not the same are later
cured), then there shall occur no further reduction in the security deposit.

5.2 In the event of the sale or transfer of Landlord’s interest in the Building,
Landlord shall have the right to transfer the Security Deposit to the purchaser
or assignee.

 

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If Landlord transfers the Security Deposit to a purchaser or assignee, Tenant
shall look only to such purchaser or assignee for the return of the Security
Deposit, and Landlord shall thereupon be released from all liability to Tenant
for the return of the Security Deposit. Tenant shall, at Landlord’s sole
expense, within ten (10) days after Landlord’s request therefor, have the Letter
of Credit amended or reissued by the issuing bank to indicate the new
beneficiary.

5.3 Tenant hereby acknowledges that Tenant will not look to the holder of any
mortgage now or hereafter encumbering the Building for return of the Security
Deposit if such holder, or its successors or assigns, shall succeed to the
ownership of the Building, whether by foreclosure or deed in lieu thereof,
except if and to the extent the Security Deposit is actually transferred to such
holder.

ARTICLE VI

USE OF PREMISES

6.1 (a) Tenant shall use and occupy the Premises solely for general office use
and for no other use or purpose. Tenant shall not use or occupy the Premises for
any unlawful purpose or in any manner that will constitute waste, nuisance or
unreasonable annoyance to Landlord or other tenants of the Building. Tenant
shall comply with all Legal Requirements concerning the use, occupancy or
condition of the Premises and all machinery, equipment and furnishings therein,
including, but not limited to applicable Environmental Law (as defined in
Section 6.3), the Americans with Disabilities Act and regulations promulgated
from time to time thereunder. Tenant’s compliance with Legal Requirements shall
include, but not be limited to, permitting employees, agents or contractors of
any governmental or quasi-governmental agency access to the Premises in
connection with public safety issues or any Legal Requirement. If any Legal
Requirements require an occupancy or use permit, license or other authorization
for the Premises or the operation of the business conducted therein, then Tenant
shall obtain and keep current such permit, license or authorization at Tenant’s
expense and shall promptly deliver a copy thereof to Landlord. It is expressly
understood that if any change in the use of the Premises by Tenant, or any
alterations to the Premises by Tenant, or any future Legal Requirements require
a new or additional permit from, or approval by, any governmental agency having
jurisdiction over the Building, such permit or approval shall be obtained by
Tenant on its behalf and at its sole expense. Further, Tenant shall comply with
all Legal Requirements which shall impose a duty on Landlord or Tenant relating
to or as a result of the use or occupancy of the Premises. Tenant shall pay all
fines, penalties and damages that may arise out of or be imposed on Landlord or
Tenant because of Tenant’s or an Invitee’s (as defined in Section 8.2) failure
to comply with applicable Legal Requirements or the provisions of this Lease.

(b) Subject to Tenant’s obligations under Article IV of this Lease, Landlord
shall comply in all material respects with all Legal Requirements, including
without limitation, fire/life safety regulations and the Americans with
Disabilities Act (“ADA”), that are applicable to the structural components of
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structural components located within the Premises), the Base Building systems,
the machinery and equipment provided by Landlord in the operation of the
Building, and the operation of the common and public areas of the Building which
are within Landlord’s sole and exclusive control, including but not limited to,
Building standard restrooms on any floor of the Building leased entirely by
Tenant, but expressly excluding the elevator lobby on any floor of the Building
leased entirely by Tenant; provided, however, that if Tenant makes any change to
the Base Building, including without limitation, the Base Building restrooms
(whether as part of the initial build out or as a subsequent Alteration), then
compliance with Legal Requirements with respect to such changes shall be the
sole responsibility and at the sole expense of Tenant. Notwithstanding anything
to the contrary in this Section 6.1, all additions, replacements or alterations
to the Building (other than the Premises) which are required due to the
enactment of any Legal Requirements on or after the Effective Date shall be
performed by Landlord and the cost thereof shall be an Operating Expense (if and
to the extent permitted in accordance with Article IV of this Lease) unless such
addition, replacement or alteration is necessitated by Tenant’s particular use,
design or layout of the Premises (but not to the extent solely arising out of
Tenant’s use for general office use) or caused by Tenant or any of its
employees, agents, contractors or subtenants, in which case (i) Tenant shall pay
its proportionate share of the costs of performing such addition, replacement or
alteration if and to the extent Landlord is permitted to pass through such costs
to Tenant as an Operating Expense pursuant to Article IV above, and (ii) Tenant
shall bear the entire cost of performing such addition, replacement or
alteration if and to the extent Landlord is not permitted to pass through such
costs to Tenant as an Operating Expense pursuant to Article IV above.

6.2 Tenant shall pay any business, rent or other taxes that are now or hereafter
levied upon Tenant’s use or occupancy of the Premises, the conduct of Tenant’s
business at the Premises, or Tenant’s equipment, fixtures or personal property.
In the event that any such taxes are enacted, changed or altered so that any of
such taxes are levied against Landlord or the mode of collection of such taxes
is changed so that Landlord is responsible for collection or payment of such
taxes, Tenant shall pay any and all such taxes to Landlord upon written demand
from Landlord.

6.3 Tenant shall not cause or permit any Hazardous Materials (as defined below)
to be generated, used, released, stored, disposed, or abandoned in, on, under or
about the Premises, Building, or the Land provided that Tenant may use and store
in the Premises such quantities of standard cleaning and office materials as may
be reasonably necessary for Tenant to conduct normal general office use
operations in the Premises, but only to the extent that such materials are used,
stored, and disposed by Tenant in compliance with Environmental Law. At the
expiration or earlier termination of this Lease, Tenant shall surrender the
Premises to Landlord free of Hazardous Materials and in compliance with all
Environmental Laws. “Hazardous Materials” means any of the following and any
substance or material that contains any of the following: (a) asbestos, asbestos
containing materials, and presumed asbestos containing materials; (b) oils,
petroleum, petroleum products and by-products, drilling fluids, produced waters,
and other wastes associated with the exploration, development, or production of
crude oil, natural gas, or geothermal resources; (c) polychlorinated biphenyls,
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materials (including any source, special nuclear, or byproduct material),
medical waste, chlorofluorocarbons, lead or lead-based products, and any other
substance whose presence could be detrimental to the Premises, Building, or the
Land or to health or the environment and (d) any substance that is then defined
or listed in, or otherwise classified pursuant to, any Environmental Law or any
other applicable Legal Requirements as a “hazardous substance,” “hazardous
material,” “hazardous waste,” infectious waste,” “toxic substance,” “toxic
pollutant,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, and reproductive toxicity.
“Environmental Law” means any present and future law and any amendments thereto
(whether common law, statute, rule, order, regulation or otherwise), permits,
directives, and other requirements of governmental authorities applicable to the
Premises, the Building or the Land and relating to the environment,
environmental conditions, health, safety, or to any Hazardous Material,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. § 9601 et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. § 5101 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42 U.S.C.
§ 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the
Safe Drinking Water Act, 42 U.S.C. § 300f et seq., the Emergency Planning and
Community Right-To-Know Act, 42 U.S.C. § 11001 et seq., the Occupational Safety
and Health Act, 29 U.S.C. § 651 et seq., any so-called “Super Fund” or “Super
Lien” law, any Legal Requirements requiring the filing of reports or notices
relating to Hazardous Materials, and any similar state and local laws, all
amendments thereto, and all regulations, orders, decisions, and decrees now or
hereafter promulgated thereunder concerning the environment, industrial hygiene
or public health or safety.

6.4 Notwithstanding the expiration or early termination of this Lease, Tenant
shall release, indemnify and hold harmless Landlord, its affiliates, employees,
agents and contractors, in accordance with the applicable terms of Section 13.1
below, from and against any damage, injury, loss, liability, violation, charge,
demand or claim (including reasonable attorneys’ fees, consultants’ fees, and
any costs of litigation) based on, arising out of, or related to: (a) the actual
or alleged release, presence, removal, or failure to remove, of Hazardous
Materials generated, used, released, stored, disposed, or abandoned by Tenant or
its employees, agents or contractors, in, on, under or about the Premises, the
Building, or the Land whether before or after the Effective Date, (b) any
violation of Environmental Law by Tenant or its employees, agents or
contractors, or (c) any investigation, assessment, removal, cleanup, abatement,
or other corrective action taken with respect to the use or occupancy of the
Premises by Tenant or its employees, agents or contractors. In addition, Tenant
shall give Landlord immediate verbal and follow-up written notice of any actual
Environmental Default, or any threatened Environmental Default of which Tenant
has knowledge, which Environmental Default in any event Tenant shall cure in
compliance with all Environmental Law and to the satisfaction of Landlord. An
“Environmental Default” means any of the following by Tenant or its employees,
agents or contractors relating to the Premises, the Building or the Land: (x) a
violation of Environmental Law; (y) a release, spill or discharge of Hazardous
Materials whether or not required to be reported under Environmental Law; or
(z) an environmental condition

 

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requiring responsive action, whether or not the condition presents an emergency.
Upon any Environmental Default, in addition to all other rights available to
Landlord under this Lease, at law or in equity, Landlord shall have the right
but not the obligation to immediately enter the Premises, to supervise and
direct actions taken by Tenant to address the Environmental Default, and, if
Tenant fails to promptly address same to Landlord’s satisfaction, to perform, at
Tenant’s sole cost and expense, any action Landlord deems necessary to address
same. If any lender or governmental agency shall require an assessment, testing
or other action to ascertain whether an Environmental Default is pending or
threatened, then Tenant shall pay the reasonable costs therefor as additional
rent. Promptly upon request, if reasonably requested by Landlord or its
mortgagee, Tenant shall execute commercially reasonable forms, affidavits,
representations and similar documents concerning Tenant’s best knowledge and
belief regarding compliance with Environmental Law and the presence, use,
storage, and disposal of Hazardous Materials in, on, under or from the Premises,
the Building and the Land by Tenant.

6.5 Landlord represents that, as of the Effective Date, Landlord has provided to
Tenant all of the environmental reports in its possession or control regarding
the Building and the Land (“Environmental Reports”). A list of such reports is
attached hereto as Exhibit I. Landlord shall deliver the Premises to Tenant in
compliance with all applicable Environmental Law. Landlord shall not knowingly
permit the use of any Hazardous Materials in violation of any Environmental Law
in the construction or development of the Building or the Project. From and
after the Effective Date and continuing throughout the Lease Term, in the event
Landlord is advised, or it shall come to Landlord’s attention, that Hazardous
Materials exist in the Building or in, on, or about the Land in violation of
Environmental Law, then Landlord shall take all reasonable steps necessary to
abate, encapsulate, manage, or remove, at Landlord’s expense, all such Hazardous
Materials to the extent mandated by Environmental Law, and in doing so, Landlord
shall use its commercially reasonable efforts not to materially interfere with
the conduct of Tenant’s business; provided, however, that Landlord shall be
permitted (but not required) to remove, at Tenant’s expense, any Hazardous
Materials from the Premises, the Building or the Land which Tenant, its
employees, agents, subcontractors or subtenants shall have introduced or
otherwise brought in, on or about the Premises, the Building or the Land that
result in an Environmental Default. Notwithstanding anything herein to the
contrary, no holder of any mortgage (nor any person or entity claiming by,
through or under any such holder) shall have any liability under this
Section 6.5 or any responsibility under this Section 6.5 to perform any of
Landlord’s obligations set forth in this Section 6.5 (other than to deliver to
Tenant the Premises in compliance with applicable Environmental Law).

ARTICLE VII

ASSIGNMENT AND SUBLETTING

7.1 Assignments.

(a) Tenant shall not have the right to assign (in whole or in part) this Lease
or its interest in this Lease without the prior written consent of Landlord,
which

 

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consent shall not be unreasonably withheld, conditioned or delayed, except as
otherwise specifically provided in this Article. Without limiting any other
instances in which it may not be unreasonable for Landlord to withhold its
consent to an assignment, it shall not be unreasonable for Landlord to withhold
its consent to an assignment for any of the reasons set forth in Section 7.2
below. The following transactions will be deemed assignments for purposes of
this Section 7.1 and will require Landlord’s prior written consent in accordance
with and subject to the provisions of this Section 7.1 and the other applicable
provisions of this Article VII: (i) an assignment by operation of law; (ii) an
imposition (whether or not consensual) of a lien, mortgage, or other encumbrance
upon Tenant’s interest in this Lease; (iii) if Tenant is a partnership or a
limited liability company, a withdrawal or change, whether voluntary,
involuntary or by operation of law, of partners or members owning, individually
or collectively, a controlling interest in Tenant (occurring in one transaction
or in a series of related transactions); (iv) if Tenant is a corporation, any
dissolution, merger, consolidation or other reorganization of Tenant, or the
sale or transfer of a controlling interest of the capital stock of Tenant
(occurring in one transaction or in a series of related transactions), except
that this clause will not apply to corporations, the stock of which is traded
through a national or regional stock exchange; and (v) if Tenant is a general
partnership, conversion of Tenant from a general partnership to a limited
liability partnership. Any attempted assignment of this Lease or Tenant’s
interest in this Lease without Landlord’s prior written consent shall, at the
option of Landlord, terminate this Lease; however, in the event of such
termination, Tenant shall remain liable for all rent and other sums due under
this Lease and all damages suffered by Landlord on account of such breach by
Tenant.

(b) In the event of any assignment of this Lease, Tenant shall remain fully
liable as a primary obligor and principal for Tenant’s obligations under this
Lease, including, without limitation, the payment of all rent and other sums or
charges required hereunder. The limitations in this Section 7.1 shall be deemed
to apply to any subtenant(s), assignee(s) and guarantors(s) of this Lease.

7.2 Subleases.

(a) Tenant shall not have the right to sublease (which term, as used herein,
shall include any type of subrental arrangement and any type of license to
occupy) all or any part of the Premises without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed. Without limiting the other instances in which it may not be
unreasonable for Landlord to withhold its consent to a sublease, it shall not be
unreasonable for Landlord to withhold its consent in any one of the following
instances: (i) there exists a monetary default or non-monetary Event of Default
by Tenant under this Lease as of the effective date of the sublease; (ii) in the
case of subletting of less than the entire Premises, if the subletting would
result in the division of the Premises into more than three (3) subparcels,
would require access be provided through space leased or held for lease to
another tenant, or improvements be made outside of the Premises; (iii) the
sublease is prohibited by Landlord’s lender (except for any Affiliate
Transaction permitted pursuant to Section 7.4 below); (iv) Landlord determines,
in its reasonable discretion, that the character, reputation or business of the
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subtenant would adversely affect the other tenants of the Building or would
impair the reputation of the Building as a Class A office and retail building;
(v) [intentionally omitted]; (vi) the financial capacity or credit rating of the
proposed subtenant is unacceptable to Landlord in its reasonable discretion,
based on the obligations of Tenant under this Lease for the remainder of the
Lease Term; (vii) the proposed sublease may have an adverse effect on the real
estate investment trust qualification tests applicable to Landlord and its
affiliates; (viii) the proposed sublease raises unrelated business taxable
income concerns for the holder of the mortgage on the Building; (ix) the use of
the Premises by the proposed subtenant will violate any provisions or
restrictions contained in this Lease, including but not limited to, any relating
to the use or occupancy of the Premises; or (x) the business to be conducted or
the proposed use of the Premises by the proposed subtenant is likely to increase
Operating Expenses beyond that which Landlord incurs prior to such proposed
subletting, or is likely to increase the burden on elevators or other Building
systems or equipment over the burden prior to such proposed subletting;
provided, however, that such determination shall not be based solely on an
increase in headcount that is within the permitted occupancy load for the
portion of the Premises to be sublet, and in any event, such proposed sublease
shall not be prohibited on the basis of this clause (ix) if Tenant agrees to be
responsible for such increase, whether financial or otherwise. Any attempted
subletting by Tenant of any portion of the Premises without Landlord’s prior
written consent shall, at the option of Landlord, terminate this Lease; however,
in the event of such termination, Tenant shall remain liable for all rent and
other sums due under this Lease and all damages suffered by Landlord on account
of such breach by Tenant. Furthermore, Tenant shall not have the right to
sublease all or any portion of the Premises without first complying with the
provisions of Section 7.3 below.

(b) In the event of any sublease, Tenant shall remain fully liable as a primary
obligor and principal for Tenant’s obligations under this Lease, including,
without limitation, the payment of all rent and other sums required hereunder.

7.3 (a) Tenant shall give Landlord written notice of its desire to sublease all
or a portion of the Premises (“Tenant’s Sublease Notice”). Tenant’s Sublease
Notice shall specify the portion of the Premises proposed to be sublet
(“Proposed Sublease Premises”) and the date on which the Proposed Sublease
Premises will be made available for subleasing. If (i) the Proposed Sublease
Premises is (or, when aggregated with all other space then being subleased by
Tenant, will be) more than fifty percent (50%) of the rentable area of the
Premises, and/or (ii) the term of the sublease for the Proposed Sublease
Premises is for ninety percent (90%) or more of the remaining Lease Term as of
the commencement date of the sublease for the Proposed Sublease Premises, then
within thirty (30) days after receipt of the Tenant’s Sublease Notice, Landlord
shall notify Tenant in writing whether or not Landlord will retake possession of
all or any portion of the Proposed Sublease Premises and thereby terminate this
Lease with respect to such portion Landlord elects to retake. If Landlord elects
to retake all or any portion of the Proposed Sublease Premises, then
(1) Landlord shall retake possession of such portion on the date specified in
the Tenant’s Sublease Notice or such other date mutually agreed upon by Landlord
and Tenant, (2) Tenant’s obligation to pay rent for such portion shall cease on
such date, and (3) Landlord and Tenant shall promptly execute an amendment to
this Lease setting forth the new square footage of the reduced Premises to be

 

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occupied by Tenant. Thereafter, Tenant shall not have any further rights of any
kind, including any rights of renewal, in or to the portion of the Premises so
retaken. If the Proposed Sublease Premises constitutes less than the entire
Premises, Tenant shall cause to be constructed and installed, at Tenant’s sole
cost and expense, a demising wall separating the Proposed Sublease Premises from
the remaining Premises in accordance with all applicable Legal Requirements,
except that, at Landlord’s option, Landlord shall cause such demising wall to be
constructed and installed at Tenant’s cost and expense. If Landlord does not
elect to retake all or any portion of the Proposed Sublease Premises within the
aforesaid thirty (30) day period, Tenant shall comply with the provisions of
Subsections (b) through (e) below with respect to any proposed sublease of such
portion of the Premises.

(b) Subject to the requirements of Section 7.2 hereof, Tenant shall have the
right to sublease any portion of the Proposed Sublease Premises that Landlord
has not elected to retake pursuant to Subsection 7.3 (a) above (“Eligible
Sublease Premises”).

(c) Tenant’s right to sublease the Eligible Sublease Premises shall expire one
hundred eighty (180) days after the date of the Tenant’s Sublease Notice.
Thereafter, Tenant shall have no right to sublease the Eligible Sublease
Premises unless Tenant shall have again complied with the procedures set forth
in this Section 7.3.

(d) Provided there does not exist an Event of Default by Tenant under this
Lease, Tenant shall be entitled to retain fifty percent (50%) of any Profit
Derived From Subletting the Premises (hereinafter defined) or any part thereof.
“Profit Derived From Subletting the Premises” shall mean any and all sums paid
to Tenant pursuant to any sublease (other than the fair market value
consideration for furniture and equipment) that exceed the base rent and
additional rent due under this Lease for such portion of the Premises sublet
(but shall not include any period of vacancy), less all reasonable out-of-pocket
third-party costs and expenses actually incurred by Tenant in connection with
such subletting, including, but not limited to, brokerage commissions,
reasonable attorneys’ fees, improvements to the Premises and reasonable
advertising expenses. For any period during which there exists an Event of
Default by Tenant under this Lease, Landlord shall be entitled to one hundred
percent (100%) of the rent due from any subtenant of Tenant and Tenant shall
provide written notice to each subtenant to pay said rent directly to Landlord.
Landlord shall have the right to inspect and audit Tenant’s books and records
relating to any sublease and expenses incurred by Tenant in connection
therewith.

(e) If Tenant requests Landlord’s consent to a sublease to a specific subtenant,
Tenant will give Landlord at the time of its request, which must be in writing
(“Sublease Consent Request”), reasonably sufficient information about the
proposed subtenant to enable Landlord to make the determination called for by
Section 7.2 hereof, including, without limitation, the following information
(collectively, the “Subtenant Information”): (i) the name and address of the
proposed subtenant, (ii) a copy of the proposed sublease, (iii) reasonable
information about the nature, business, and business history of the proposed
subtenant, and its proposed use of the Premises, and (iv) audited financial
statements and/or such other banking, financial or other credit information.
Provided Tenant provides the Subtenant Information and such other information
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Landlord, Landlord agrees to advise Tenant of its decision to grant or withhold
its consent to such subletting within [thirty (30)] days after Landlord’s
receipt of the Sublease Consent Request and the Subtenant Information.

7.4 Affiliate Transactions.

(a) Notwithstanding the above restrictions on subletting and assignments,
Landlord’s prior consent shall not be required with respect to any assignment or
subletting to an “Affiliate of Tenant” (as hereinafter defined) or a “Parent of
Tenant” (as hereinafter defined), or to any entity resulting from the merger,
consolidation, or other corporate reorganization of Tenant, or the sale or
transfer of all or substantially all of the assets, capital stock, partnership
interests, membership interests or other ownership interests of Tenant (a
“Successor to Tenant”), provided that Tenant delivers to Landlord not more than
ninety (90) days and not less than thirty (30) days prior to the effective date
of such assignment or subletting a written certification (together with
reasonable back-up information to support such certification, including, without
limitation, certified financial statements) that the following conditions are
satisfied: (i) that such Affiliate of Tenant, Parent of Tenant or Successor to
Tenant, as applicable, has (x) a net worth (which shall be determined on a pro
forma basis using generally accepted accounting principles consistently applied
and using the most recent financial statements) at least equal to the lesser of
(I) the net worth of Tenant as of the Effective Date and (II) the net worth of
Tenant immediately prior to the effective date of such proposed assignment or
sublease, and (y) then-current Liquidity equal to or greater than the sum of
Tenant’s remaining obligations under this Lease; provided, however, that such
financial requirements shall not be applicable solely with respect to a sublease
to an Affiliate of Tenant; (ii) that such Affiliate of Tenant, Parent of Tenant
or Successor to Tenant, as applicable, agrees in writing to be bound by the
terms and conditions of this Lease and to assume all of the obligations of
Tenant under this Lease; (iii) that such Affiliate of Tenant, Parent of Tenant
or Successor to Tenant, as applicable, shall conduct substantially the same
business on the Premises as that conducted by Tenant or a related business which
is a permitted use pursuant to Article VI of this Lease; (iv) that the character
of such Affiliate of Tenant, Parent of Tenant or Successor to Tenant, as
applicable, and the nature of its activities in the Premises and in the Building
will not adversely affect other tenants in the Building or impair the reputation
of the Building as a Class A office and retail building; and (v) that the
assignment or sublease is not a so-called “sham” transaction intended by Tenant
to circumvent the provisions of this Article VII. Any assignment or subletting
that is permitted pursuant to this Section 7.4 shall be referred to herein as an
“Affiliate Transaction” and any Affiliate of Tenant, Parent of Tenant or
Successor to Tenant in connection with an Affiliate Transaction shall be
referred to as a “Permitted Transferee.”

(b) In the event of any such assignment or subletting pursuant to this
Section 7.4, Tenant shall remain fully liable as a primary obligor and principal
for Tenant’s obligations under this Lease, including without limitation, the
payment of all rent and other sums required hereunder.

 

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(c) For purposes of this Section 7.4, an “Affiliate of Tenant” shall mean any
corporation, association, trust, limited liability company or partnership
(i) which Controls (as herein defined) Tenant, or (ii) which is under the
Control of Tenant through stock ownership or otherwise, or (iii) which is under
common Control with Tenant. For the purposes of this Section 7.4, a “Parent of
Tenant” shall mean any corporation, association, trust, limited liability
company or partnership which Controls Tenant, or which owns more than fifty
percent (50%) of the issued and outstanding voting securities or other ownership
interests of Tenant. The terms “Control” or “Controls” as used in this
Section 7.4 shall mean the power directly or indirectly to influence the
direction, management or policies of Tenant or such other entity.

7.5 General Provisions.

(a) Landlord’s consent to an assignment or sublease will not be effective until
(i) a fully executed copy of the instrument of assignment or sublease has been
delivered to Landlord, and the form and substance of the instrument has been
approved by Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed; (ii) in the case of an assignment, Landlord has received
a written instrument in which the assignee has assumed and agreed to perform all
of Tenant’s obligations under this Lease; and (iii) Landlord has been reimbursed
for the costs pursuant to Section 7.5(f) hereof.

(b) The consent by Landlord to any assignment or subletting shall not be
construed as a waiver or release of Tenant from any and all liability for the
performance of all covenants and obligations to be performed by Tenant under
this Lease.

(c) Landlord’s collection or acceptance of rent from any assignee, transferee or
subtenant shall not constitute a waiver or release of Tenant from any of its
obligations under this Lease.

(d) Notwithstanding the provisions of Section 7.1 or 7.2 hereof to the contrary,
if consent to any assignment or subletting is required by the holder of any
mortgage on the Building, no assignment of this Lease in whole or in part or
sublease of all or any portions of the Premises shall be permitted without the
prior written consent of such holder (except for any Affiliate Transaction
permitted pursuant to Section 7.4 above).

(e) Landlord’s consent to any one assignment or subletting will not waive the
requirement of its consent to any subsequent assignment or subletting.

(f) Tenant shall reimburse Landlord for all reasonable third-party costs
incurred by Landlord in connection with any request by Tenant to sublease all or
any portion of the Premises or to assign this Lease or its interest therein,
plus an administrative fee of One Thousand and 00/100 Dollars ($1,000.00) per
request (whether or not Landlord’s consent thereto is granted).

 

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(g) Tenant shall require its subtenants and other occupants of the Premises to
comply with the applicable provisions of Article XIII below, including without
limitation, Sections 13.1(d), 13.9 and 13.13 thereof.

ARTICLE VIII

TENANT’S MAINTENANCE AND REPAIRS

8.1 Tenant will keep and maintain the Premises and all fixtures and equipment
located therein in clean, safe and sanitary condition, will take good care
thereof and make all required repairs thereto, and will suffer no waste or
injury thereto, all in a manner consistent with a Class A office and retail
Building. Tenant acknowledges the importance of maintaining a uniform and
attractive appearance in all areas of the Premises that are visible from:
(i) common or public areas of the Building; (ii) the lobby areas serving the
Building; (iii) other tenant premises; and (iv) the exterior of the Building,
and agrees to comply with all rules established from time to time by Landlord in
connection therewith. At the expiration or earlier termination of this Lease,
Tenant shall surrender the Premises, broom clean, in the same order and
condition in which they are in on the Lease Commencement Date, ordinary wear and
tear and unavoidable damage by the elements excepted. Landlord shall provide and
install (subject to reimbursement in accordance with Article IV) replacement
tubes and bulbs for Building standard light fixtures in the Premises, if any;
all other bulbs and tubes for the Premises shall be Tenant’s responsibility,
however, at Tenant’s request, Landlord shall stock and install such other bulbs
and tubes and Tenant shall reimburse Landlord for its costs and expenses
incurred in connection with said stocking and installation.

8.2 Except as otherwise provided in Section 13.13 and Article XVII hereof, all
injury, breakage and damage to the Premises and to any other part of the
Building or Project caused by any act or omission of Tenant, or of any agent,
employee, subtenant, contractor, customer, client, licensee, family member,
guest or other invitee of Tenant (each, an “Invitee” or, collectively,
“Invitees”), shall be repaired by and at the sole expense of Tenant, except that
Landlord shall have the right, at its option, to make such repairs and to charge
Tenant for all costs and expenses incurred in connection therewith as additional
rent hereunder. The liability of Tenant for such costs and expenses shall be
reduced by the amount of any insurance proceeds received by Landlord on account
of such injury, breakage or damage. Landlord shall not be deemed to be an
Invitee of Tenant.

8.3 Landlord shall keep and maintain the exterior and demising walls,
foundations, floor slabs (other than any deflection thereof), exterior pane of
window glass, roof and common areas that form a part of the Building, the Office
Parking Area, and the Building standard heating, ventilation and air
conditioning, mechanical, electrical and plumbing systems, pipes and conduits
that are provided by Landlord in the operation of the Building or, on a
non-exclusive basis, to the Premises, in clean, safe, sanitary and operating
condition in accordance with standards customarily maintained by Class A office
and retail buildings in the central business district, west end and east end
submarkets of Washington, D.C. (“Market Area”) and will make all required
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common or public areas of the Building and the land upon which it is situated
(including without limitation the first floor lobby area and the exterior
landscaping) shall be maintained by Landlord in accordance with standards
customarily maintained by Class A office and retail buildings in the Market
Area. Tenant shall promptly provide Landlord with written notice of any defect
or need for repairs in or about the Building of which Tenant is aware, and
Landlord shall perform such repair after notice by Tenant, if and to the extent
expressly the obligation of Landlord under this Lease. Notwithstanding any of
the foregoing to the contrary: (a) maintenance and repair of special tenant
areas, facilities, finishes and equipment (including, but not limited to, any
special fire protection equipment, telecommunications and computer equipment,
kitchen/galley equipment, or internal staircase(s) which may be installed by or
at the request of Tenant, supplemental air-conditioning equipment serving the
Premises only and all other furniture, furnishings and equipment of Tenant and
all Alterations) shall be the sole responsibility of Tenant and shall be deemed
not to be a part of the Building structure and systems; and (b) Landlord shall
have no obligation to make any repairs brought about by any act or neglect of
Tenant or any Invitee.

ARTICLE IX

TENANT ALTERATIONS

9.1 The initial improvements shall be constructed in the Premises in accordance
with Exhibit B attached hereto and made a part hereof. It is understood and
agreed that Landlord will not make, and is under no obligation to make, any
structural or other alterations, decorations, additions or improvements in or to
the Premises, except as provided in this Section 9.1.

9.2 (a) Tenant will not make or permit anyone to make any alterations,
decorations, additions or improvements (hereinafter referred to collectively as
“improvements” or “Alterations”) in or to the Premises or the Building, without
the prior reasonable written consent of Landlord; provided however Landlord’s
sole consent shall be required for any Alteration which is deemed to be a
Structural Alteration. “Structural Alterations” shall be any Alterations that
(i) will or may necessitate any changes, replacements or additions to columns or
floors or other structural elements of the Building; (ii) are readily visible to
the exterior of the Building, or the common and public areas thereof, or the
main lobby of the Building, (iii) adversely affect the base building systems of
the Building or the roof of the Building, or (iv) would have a negative impact
on any building warranty. Notwithstanding the foregoing, provided Tenant gives
Landlord reasonable prior written notice thereof, Tenant may install in the
Premises, without obtaining Landlord’s prior written consent, minor,
nonstructural Alterations of a decorative nature (“Cosmetic Alterations”) the
value of which (as reasonably determined by Landlord) is less than Fifty
Thousand Dollars ($50,000) and which do not require a building permit, for
example, the hanging of artwork or the installation of carpeting.

(b) Any Alterations made by Tenant shall be made: (i) in a good, workmanlike,
first-class and prompt manner and otherwise in accordance with Landlord’s

 

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rules, including any rules for contractors, that may be established by Landlord
from time to time; (ii) using new or sustainable materials only; (iii) by a
contractor, on days, at times and under the supervision of an architect approved
in writing by Landlord; (iv) after coordinating the work schedule and scope with
the Building’s property manager to avoid undue interference with the normal
operations and use of the Building; (v) in accordance with plans and
specifications prepared by an engineer or architect reasonably acceptable to
Landlord, which plans and specifications shall be approved in writing by
Landlord, and Tenant shall reimburse Landlord for all reasonable, third-party,
out-of-pocket costs (if any) incurred by Landlord in connection therewith;
(vi) in accordance with all Legal Requirements, Insurance Requirements (as
defined below) and the requirements of the Underwriters’ Association of the
District of Columbia; (vii) after having obtained any required consent of the
holder of any mortgage (if any such consent is required); and (viii) after
obtaining public liability and worker’s compensation insurance policies in
accordance with the terms and conditions of Article XIII approved in writing by
Landlord, which policies shall cover every person who will perform any work with
respect to such Alteration.

(c) Prior to each payment to any contractor, subcontractor, laborer, or material
supplier for all work, labor, and services to be performed and materials to be
furnished in connection with Alterations, Tenant shall obtain and deliver to
Landlord written waivers of mechanics’ and materialmen’s liens against the
Premises and the Building from all contractors, subcontractors, laborers and
material suppliers for all work, labor and services performed and materials
furnished in connection with Alterations through the date of the then-current
requisition, conditioned only on payment of the amount requisitioned. If any
lien (or a petition to establish such lien) is filed in connection with any
Alteration, such lien (or petition) shall be discharged by Tenant within ten
(10) days thereafter, at Tenant’s sole cost and expense, by the payment thereof
or by the filing of a bond acceptable to Landlord. If Landlord gives its consent
to the making of any Alteration, such consent shall not be deemed to be an
agreement or consent by Landlord to subject its interest in the Premises or the
Building to any liens which may be filed in connection therewith. If Tenant
shall fail to discharge any such mechanic’s or materialmen’s lien, Landlord may,
at its option, discharge such lien and treat the cost thereof (including
reasonable attorneys’ fees incurred in connection therewith) as additional rent
payable with the next monthly installment of annual base rent falling due; it
being expressly agreed that such discharge by Landlord shall not be deemed to
waive or release the default of Tenant in not discharging such lien. It is
understood and agreed that any improvements to the Premises shall be conducted
on behalf of Tenant and not on behalf of Landlord, and that Tenant shall be
deemed the “owner” of such improvements (and not the agent of Landlord) for
purposes of the application of District of Columbia lien laws.

(d) All Alterations involving tie-ins to the Building’s fire and life safety
systems, changes and modifications to the Building’s exterior envelope (roof,
glass, glazing, etc.), or any other item affecting a warranty shall, at
Landlord’s election, be performed by Landlord’s designated contractor or
subcontractor at Tenant’s expense.

 

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(e) Tenant’s contractor shall use light sensors in connection with performance
of the Alterations.

(f) Promptly after the completion of an Alteration, Tenant at its expense shall
deliver to Landlord one (1) set of accurate as-built drawings and one
(1) AutoCAD computer disc showing such Alteration in place.

(g) When granting its consent, Landlord may impose any reasonable conditions it
deems appropriate, including, without limitation, the approval of plans and
specifications, approval of the contractor or other persons who will perform the
work, and the obtaining of required permits and specified insurance. Portions of
the Premises visible to the public shall maintain a uniform appearance with the
rest of the Building. Landlord’s review and approval of any such plans and
specifications and its consent to perform work described therein shall not be
deemed an agreement by Landlord that such plans, specifications and work conform
with all applicable Legal Requirements and requirements of the insurers of the
Building (“Insurance Requirements”) nor deemed a waiver of Tenant’s obligations
under this Lease with respect to all applicable Legal Requirements and Insurance
Requirements nor impose any liability or obligation upon Landlord with respect
to the completeness, design sufficiency or compliance with all applicable Legal
Requirements or Insurance Requirements of such plans, specifications and work.

(h) Tenant acknowledges and agrees that Landlord shall be the owner of any
additions, alterations and improvements in the Premises or the Building to the
extent paid for by Landlord.

9.3 Tenant shall indemnify and hold Landlord harmless from and against any and
all expenses, liens, claims, liabilities and damages based on or arising,
directly or indirectly, by reason of the making of any improvements to the
Premises by Tenant, or its contractors, agents or employees. If any improvements
(other than Cosmetic Alterations) are made without the prior written consent of
Landlord, Landlord shall have the right to remove and correct such improvements
and restore the Premises to their condition immediately prior thereto, and
Tenant shall be liable for all expenses incurred by Landlord in connection
therewith. All improvements to the Premises or the Building made by either party
shall remain upon and be surrendered with the Premises as a part thereof at the
end of the Lease Term, unless Landlord specifies in its approval of the plans
and specifications for such improvements that Tenant must remove the
improvements upon the expiration or earlier termination of the Lease Term
(subject to the terms of the last sentence of this Section 9.3), except that if
Tenant is not in default under this Lease, Tenant shall have the right to
remove, at Tenant’s sole expense, prior to the expiration of the Lease Term, all
movable furniture, furnishings and equipment installed in the Premises solely at
the expense of Tenant. All damages and injury to the Premises or the Building
caused by such removal shall be repaired by Tenant, at Tenant’s sole expense. If
such property of Tenant is not removed by Tenant prior to the expiration or
termination of this Lease, the same shall become the property of Landlord and
shall be surrendered with the Premises as a part thereof. Notwithstanding
anything to the contrary contained in this Lease, (a) any

 

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removal and restoration that Landlord may require hereunder will be limited to
above standard improvements (whether performed as part of the Leasehold Work or
as a subsequent Alteration), including without limitation, supplemental HVAC
units, LAN rooms, raised flooring and private lavatories, and (b) removal and
restoration shall be required in all events for all voice and data cabling if
required pursuant to Section 26.1(j) below, which must be bundled and identified
at installation and removed in accordance with the terms of Article XXVI below.

ARTICLE X

SIGNS AND FURNISHINGS

10.1 No sign, advertisement or notice referring to Tenant shall be inscribed,
painted, affixed or otherwise displayed on any part of the exterior or the
interior of the Building or the Project except on the directories and doors of
offices and such other areas as are designated by Landlord, and then only in
such place, number, size, color and style as are approved by Landlord and are in
accordance with any applicable state or local building code or zoning
regulations. Notwithstanding the foregoing, Tenant shall be permitted, at its
sole cost and expense, to install and maintain signage identifying Tenant in the
elevator lobby of the third (3rd) floor of the East Tower (provided Tenant is
leasing the entire rentable area of such floor), but only in such place, number,
size, color and style as are approved by Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed provided that such signage is
consistent with signage standards in other Class A office buildings in the
Market Area. All of Tenant’s signs that are approved by Landlord shall, at
Landlord’s election, be installed by Tenant at Tenant’s cost and expense and
shall be removed by Tenant at Tenant’s sole cost and expense at the end of the
Lease Term (and Tenant shall repair any damage to the Building or the Premises
caused by such removal). If any sign, advertisement or notice that has not been
approved by Landlord is exhibited or installed by Tenant, Landlord shall have
the right to remove the same at Tenant’s expense. Landlord shall list Tenant’s
name and the names of its employees who work at the Premises as of the Lease
Commencement Date in the Building lobby directory; provided however, that if
Tenant requests Landlord to change the names on such lobby directory, then
Tenant shall reimburse Landlord for all actual costs incurred by Landlord
therefor. Landlord’s acceptance of any name for listing on the Building
directory will not be deemed, nor will it substitute for, Landlord’s consent, as
required by this Lease, to any sublease, assignment or other occupancy of the
Premises. Landlord shall have the right to prohibit any advertisement of or by
Tenant which in its opinion tends to impair the reputation of the Building or
its desirability as a Class A office and retail building, and upon notice from
Landlord, Tenant shall immediately refrain from and discontinue any such
advertisement. Landlord reserves the right to affix, install and display signs,
advertisements and notices on any part of the exterior or interior of the
Building but not in the Premises except as may be required by law or in
emergency situations.

10.2 Landlord shall have the right to prescribe the weight and position of safes
and other heavy equipment and fixtures, which, if considered necessary by
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be installed in such manner as Landlord directs in order to distribute their
weight adequately. Any additional structural support or upgrading of the floor
supports that may be needed to accommodate any of Tenant’s equipment that
exceeds the floor loading specifications for the Building (i.e., 100 pounds per
square foot, comprised of 80 pounds per square foot live load and 20 pounds per
square foot partition load) shall be installed at Tenant’s sole cost and expense
and shall be subject to the prior written approval of Landlord, which approval
shall be granted or withheld in Landlord’s sole and absolute discretion. Any and
all damage or injury to the Premises or the Building caused by moving the
property of Tenant into or out of the Premises, or due to the same being in or
upon the Premises, shall be repaired at the sole cost of Tenant. No furniture,
equipment or other bulky matter of any description will be received into the
Building or carried in the elevators except as coordinated in advance with
Landlord, and all such furniture, equipment and other bulky matter shall be
delivered only through the designated delivery entrance of the Building and the
designated freight elevator. All moving of furniture, equipment and other
materials shall be under the supervision of Landlord, who shall not, however, be
responsible for any damage to or charges for moving the same. Tenant agrees to
remove promptly from the sidewalks adjacent to the Building any of Tenant’s
furniture, equipment or other material there delivered or deposited.

ARTICLE XI

TENANT’S EQUIPMENT

11.1 The Base Building is designed and will be constructed to, and the Base
Building shall provide electrical capacity to the Premises in accordance with,
Schedule I to Exhibit B. Any electrically operated equipment or machinery to be
installed in the Premises as part of the initial Leasehold Work or subsequent
alterations shall conform to the requirements of such Schedule I to Exhibit B
and this Article XI. The following installations and operations shall require
Landlord’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed, however Landlord may condition such consent
upon the payment by Tenant for the cost of any separate metering or
sub-metering, the cost of any additional wiring or apparatus that may be
occasioned by the operation of such equipment or machinery, and additional rent
in compensation for any excess consumption of electricity or other utilities:

(a) The installation of any supplemental heating, ventilation and air
conditioning equipment for the Premises, excluding the installation of
additional VAV boxes without any other supplemental equipment;

(b) The installation of lighting for the Premises that consumes, in the
aggregate, more than 1.5 watts per usable square foot (“USF”) of any floor of
the Premises in the East Tower or the West Tower;

(c) The use or installation in the Premises of any electrically operated
equipment or machinery that operates on greater than 120/208 volt power,
excluding tenant lighting and all VAV boxes; and

 

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(d) The use or installation in the Premises of any electrically operated
equipment or machinery that operates on 120/208 volt power and that consumes, in
the aggregate, more than 5.0 watts per USF of any floor of the Premises in the
East Tower or the West Tower, or that requires the installation of any
additional electrical capacity in excess of the 5.0 watts per USF per floor of
the East Tower or the West Tower provided by the Base Building. In addition to
the foregoing, Tenant shall not install any equipment of any type or nature that
will or may necessitate any changes, replacements or additions to, or in the use
of, the Base Building water system, heating system, plumbing system,
air-conditioning system or electrical system of the Premises or the Base
Building, without first obtaining the prior written consent of Landlord and
Landlord may require that any additional equipment be sub-metered and any excess
consumption be paid for by Tenant. Business machines and mechanical equipment
belonging to Tenant which cause noise or vibration that may be transmitted to
the structure of the Building or to any space therein to such a degree as to be
objectionable to Landlord or to any tenant in the Building shall be installed
and maintained by Tenant, at Tenant’s expense, on vibration eliminators or other
devices sufficient to reduce such noise and vibration to a level satisfactory to
Landlord.

ARTICLE XII

ENTRY AND INSPECTION BY LANDLORD

12.1 Tenant shall permit Landlord, its agents or representatives, to enter the
Premises, without charge therefor to Landlord and without diminution of the rent
payable by Tenant, to examine, inspect and protect the Premises and the
Building, to make such alterations or repairs (as in the sole judgment of
Landlord may be deemed necessary), and to exhibit the same to prospective
tenants at any time during the Lease Term. In connection with any such entry,
Landlord shall endeavor to (i) minimize the disruption to Tenant’s use of the
Premises and (ii) provide twenty-four (24) hours’ prior verbal notice to Tenant
(except in cases of emergency).

ARTICLE XIII

TENANT’S INDEMNITY AND INSURANCE

13.1 Tenant’s Indemnity

(a) Indemnity. To the fullest extent permitted by law, Tenant waives any right
to contribution against the Landlord Parties (as hereinafter defined) and agrees
to indemnify and save harmless the Landlord Parties from and against all claims
of whatever nature arising from or claimed to have arisen from (i) any act,
omission or negligence of the Tenant Parties (as hereinafter defined); (ii) any
accident, injury or damage whatsoever caused to any person, or to the property
of any person, occurring in or about the Premises from the earlier of (A) the
date on which any Tenant Party first enters the Premises for any reason or
(B) the Lease Commencement Date, and thereafter throughout and until the end of
the Lease Term and after the end of the Lease Term for as long as Tenant or
anyone acting by, through or under Tenant is in occupancy

 

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of the Premises or any portion thereof; (iii) any accident, injury or damage
whatsoever occurring outside the Premises but within the Building or the parking
facility, or on common areas or other areas of the Complex, where such accident,
injury or damage results, or is claimed to have resulted, from any act, omission
or negligence on the part of any of the Tenant Parties; (iv) any breach of this
Lease by Tenant; or (v) Tenant’s or its employees’ or agent’s use of the fitness
facility in the Building or the Risers (as defined in Section 26.1). Tenant
shall pay such indemnified amounts as they are incurred by the Landlord Parties.
This indemnification shall not be construed to deny or reduce any other rights
or obligations of indemnity that the Landlord Parties may have under this Lease
or the common law. Notwithstanding anything contained herein to the contrary,
Tenant shall not be obligated to indemnify a Landlord Party for any claims to
the extent such Landlord Party’s damages in fact result from such Landlord
Party’s negligence or willful misconduct.

(b) Breach. In the event that Tenant breaches any of its indemnity obligations
hereunder or under any other contractual or common law indemnity: (i) Tenant
shall pay to the Landlord Parties all liabilities, loss, cost, or expense
(including attorney’s fees) incurred as a result of said breach, and the
reasonable value of time expended by the Landlord Parties as a result of said
breach; and (ii) the Landlord Parties may deduct and offset from any amounts due
to Tenant under this Lease any amounts owed by Tenant pursuant to this section.

(c) No limitation. The indemnification obligations under this Section shall be
limited to actual damages, but shall not otherwise be limited in any way by any
limitation on the amount or type of damages, compensation or benefits payable by
or for Tenant or any subtenant or other occupant of the Premises under workers’
compensation acts, disability benefit acts, or other employee benefit acts.
Tenant waives any immunity from or limitation on its indemnity or contribution
liability to the Landlord Parties based upon such acts.

(d) Subtenants and other occupants. Tenant shall require its subtenants and
other occupants of the Premises to provide similar indemnities to the Landlord
Parties in a form acceptable to Landlord.

(e) Survival. The terms of this section shall survive any termination or
expiration of this Lease.

(f) Costs. The foregoing indemnity and hold harmless agreement shall include
indemnity for all costs, expenses and liabilities (including, without
limitation, attorneys’ fees and disbursements) incurred by the Landlord Parties
in connection with any such claim or any action or proceeding brought thereon,
and the defense thereof. In addition, in the event that any action or proceeding
shall be brought against one or more Landlord Parties by reason of any such
claim, Tenant, upon request from the Landlord Party, shall resist and defend
such action or proceeding on behalf of the Landlord Party by counsel appointed
by Tenant’s insurer (if such claim is covered by insurance without reservation)
or otherwise by counsel reasonably satisfactory to the Landlord Party. The
Landlord Parties shall not be bound by any compromise or settlement of any such
claim, action or proceeding without the prior written consent of such Landlord
Parties.

 

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13.2 Tenant’s Risk. Tenant agrees to use and occupy the Premises, and to use
such other portions of the Building and the Project as Tenant is given the right
to use by this Lease at Tenant’s own risk. The Landlord Parties shall not be
liable to the Tenant Parties for any damage, injury, loss, compensation, or
claim (including, but not limited to, claims for the interruption of or loss to
a Tenant Party’s business) based on, arising out of or resulting from any cause
whatsoever, including, but not limited to, repairs to any portion of the
Premises or the Building or the Project, any fire, robbery, theft, mysterious
disappearance, or any other crime or casualty, the actions of any other tenants
of the Building or of any other person or persons, or any leakage in any part or
portion of the Premises or the Building or the Project, or from water, rain or
snow that may leak into, or flow from any part of the Premises or the Building
or the Project, or from drains, pipes or plumbing fixtures in the Building or
the Project. Any goods, property or personal effects stored or placed in or
about the Premises shall be at the sole risk of the Tenant Party, and neither
the Landlord Parties nor their insurers shall in any manner be held responsible
therefor. The Landlord Parties shall not be responsible or liable to a Tenant
Party, or to those claiming by, through or under a Tenant Party, for any loss or
damage that may be occasioned by or through the acts or omissions of persons
occupying adjoining premises or any part of the premises adjacent to or
connecting with the Premises or any part of the Building or otherwise. The
provisions of this section shall be applicable to the fullest extent permitted
by law, and until the expiration or earlier termination of the Lease Term, and
during such further period as Tenant may use or be in occupancy of any part of
the Premises or of the Building. Notwithstanding anything to the contrary
contained in this Lease, the Landlord Parties shall not be released from
liability for any injury, loss, damages or liability to the extent arising from
the gross negligence or willful misconduct of the Landlord Parties on or about
the Premises, Building or Project; provided, however, in no event shall the
Landlord Parties have any liability to a Tenant Party based on any loss with
respect to or interruption in the operation of Tenant’s business (except for any
rent abatement to which Tenant otherwise may be expressly entitled pursuant to
the terms of this Lease).

13.3 Tenant’s Commercial General Liability Insurance. Tenant agrees to maintain
in full force on or before the earlier of (i) the date on which any Tenant Party
first enters the Premises for any reason or (ii) the Lease Commencement Date,
and thereafter throughout and until the end of the Lease Term, and after the end
of the Lease Term, for so long after the end of the Lease Term as Tenant or
anyone acting by, through or under Tenant is in occupancy of the Premises or any
portion thereof, a policy of commercial general liability insurance, on an
occurrence basis, issued on a form at least as broad as Insurance Services
Office (“ISO”) Commercial General Liability Coverage “occurrence” form CG 00 01
10 01 or another ISO Commercial General Liability “occurrence” form providing
equivalent coverage. Such insurance shall include broad form contractual
liability coverage, specifically covering but not limited to the indemnification
obligations undertaken by Tenant in this Lease. The minimum limits of liability
of such insurance shall be Five Million Dollars ($5,000,000.00) per occurrence.
In addition, in the event Tenant hosts a function in the Premises, Tenant agrees
to obtain, and cause any persons or parties providing services for such function
to obtain, the appropriate insurance coverages as determined by Landlord
(including liquor liability coverage, if applicable) and provide Landlord with
evidence of the same.

 

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13.4 Tenant’s Property Insurance. Tenant shall maintain at all times during the
Term of the Lease, and during such earlier time as Tenant may be performing work
in or to the Premises or have property, fixtures, furniture, equipment,
machinery, goods, supplies, wares or merchandise on the Premises, and continuing
thereafter so long as Tenant is in occupancy of any part of the Premises,
business interruption insurance and insurance against loss or damage covered by
the so-called “all risk” type insurance coverage with respect to Tenant’s
property, fixtures, furniture, equipment, machinery, goods, supplies, wares and
merchandise, and all alterations, improvements and other modifications made by
or on behalf of the Tenant in the Premises, and other property of Tenant located
at the Premises, except to the extent paid for by Landlord (collectively
“Tenant’s Property”). The business interruption insurance required by this
section shall be in minimum amounts typically carried by prudent tenants engaged
in similar operations, but in no event shall be in an amount less than the Base
Rent then in effect during any Lease Year, plus any Additional Rent (as
hereinafter defined) due and payable for the immediately preceding Lease Year.
The “all risk” insurance required by this section shall be in an amount at least
equal to the full replacement cost of Tenant’s Property. In addition, during
such time as Tenant is performing work in or to the Premises, Tenant, at
Tenant’s expense, shall also maintain, or shall cause its contractor(s) to
maintain, builder’s risk insurance for the full insurable value of such work.
Landlord and such additional persons or entities as Landlord may reasonably
request shall be named as loss payees, as their interests may appear, on the
policy or policies required by this section. In the event of loss or damage
covered by the “all risk” insurance required by this section, the
responsibilities for repairing or restoring the loss or damage shall be
determined in accordance with Article XVII below. To the extent that Landlord is
obligated to pay for the repair or restoration of the loss or damage covered by
the policy, Landlord shall be paid the proceeds of the “all risk” insurance
covering the loss or damage. To the extent Tenant is obligated to pay for the
repair or restoration of the loss or damage, covered by the policy, Tenant shall
be paid the proceeds of the “all risk” insurance covering the loss or damage. If
both Landlord and Tenant are obligated to pay for the repair or restoration of
the loss or damage covered by the policy, the insurance proceeds shall be paid
to each of them in the pro rata proportion of their obligations to repair or
restore the loss or damage. If the loss or damage is not repaired or restored
(for example, if the Lease is terminated pursuant to Article XVII), the
insurance proceeds shall be paid to Landlord and Tenant in the pro rata
proportion of their relative contributions to the cost of the leasehold
improvements covered by the policy.

13.5 Tenant’s Other Insurance. Throughout the Lease Term, Tenant shall obtain
and maintain (1) comprehensive automobile liability insurance (covering any
automobiles owned or operated by Tenant) issued on a form at least as broad as
ISO Business Auto Coverage form CA 00 01 07 97 or other form providing
equivalent coverage; (2) worker’s compensation insurance or participation in a
monopolistic state workers’ compensation fund; and (3) employer’s liability
insurance or (in a monopolistic state) Stop Gap Liability insurance. Such
automobile liability insurance shall be in an amount not less than One

 

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Million Dollars ($1,000,000) for each accident. Such worker’s compensation
insurance shall carry minimum limits as defined by the law of the jurisdiction
in which the Premises are located (as the same may be amended from time to
time). Such employer’s liability insurance shall be in an amount not less than
One Million Dollars ($1,000,000) for each accident, One Million Dollars
($1,000,000) disease-policy limit, and One Million Dollars ($1,000,000)
disease-each employee.

13.6 Requirements For Insurance. All insurance required to be maintained by
Tenant pursuant to this Lease shall be maintained with responsible companies
that are admitted to do business, and are in good standing, in the jurisdiction
in which the Premises are located and that have a rating of at least “A” and are
within a financial size category of not less than “Class X” in the most current
Best’s Key Rating Guide or such similar rating as may be reasonably selected by
Landlord. All such insurance shall: (1) be acceptable in form and content to
Landlord; (2) be primary and noncontributory; and (3) contain an endorsement
prohibiting cancellation, failure to renew, reduction of amount of insurance, or
change in coverage without the insurer first giving Landlord thirty (30) days’
prior written notice (by certified or registered mail, return receipt requested,
or by fax or email) of such proposed action. No such liability policy shall
contain any deductible or self-insured retention greater than Twenty-Five
Thousand Dollars ($25,000.00) and no such property damage policy shall contain
any deductible or self-insured retention greater than One Hundred Thousand
Dollars ($100,000.00). Such deductibles and self-insured retentions shall be
deemed to be “insurance” for purposes of the waiver in Section 13.13 below.
Landlord reserves the right from time to time to require Tenant to obtain higher
minimum amounts of insurance based on such limits as are customarily carried
with respect to similar properties in the area in which the Premises are
located. The minimum amounts of insurance required by this Lease shall not be
reduced by the payment of claims or for any other reason. In the event Tenant
shall fail to obtain or maintain any insurance meeting the requirements of this
Article, or to deliver such policies or certificates as required by this
Article, Landlord may, at its option, on five (5) days notice to Tenant, procure
such policies for the account of Tenant, and the cost thereof shall be paid to
Landlord within five (5) days after delivery to Tenant of bills therefor.

13.7 Additional Insureds. To the fullest extent permitted by law, the commercial
general liability and auto insurance carried by Tenant pursuant to this Lease,
and any additional liability insurance carried by Tenant pursuant to
Section 13.3 of this Lease, shall name Landlord and the other persons and
entities set forth on Exhibit G attached hereto and made a part hereof, and such
other persons and entities as Landlord may reasonably request from time to time
as additional insureds with respect to liability arising out of or related to
this Lease or the operations of Tenant (collectively “Additional Insureds”).
Such insurance shall provide primary coverage without contribution from any
other insurance carried by or for the benefit of Landlord, Landlord’s managing
agent, or other Additional Insureds. Such insurance shall also waive any right
of subrogation against each Additional Insured.

13.8 Certificates of Insurance. On or before the earlier of (i) the date on
which any Tenant Party first enters the Premises for any reason or (ii) the
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Date, Tenant shall furnish Landlord with certificates evidencing the insurance
coverage required by this Lease, and renewal certificates shall be furnished to
Landlord at least annually thereafter, and at least thirty (30) days prior to
the expiration date of each policy for which a certificate was furnished.
(Acceptable forms of such certificates for liability and property insurance,
respectively, are attached as Exhibit H.) In jurisdictions requiring mandatory
participation in a monopolistic state workers’ compensation fund, the insurance
certificate requirements for the coverage required for workers’ compensation
will be satisfied by a letter from the appropriate state agency confirming
participation in accordance with statutory requirements. Such current
participation letters required by this Section shall be provided every six
(6) months for the duration of this Lease. Failure by the Tenant to provide the
certificates or letters required by this Section shall not be deemed to be a
waiver of the requirements in this Section. Upon request by Landlord, a true and
complete copy of any insurance policy required by this Lease shall be delivered
to Landlord within ten (10) days following Landlord’s request.

13.9 Subtenants and Other Occupants. Tenant shall require its subtenants and
other occupants of the Premises to provide written documentation evidencing the
obligation of such subtenant or other occupant to indemnify the Landlord Parties
to the same extent that Tenant is required to indemnify the Landlord Parties
pursuant to section 13.1 above, and to maintain insurance that meets the
requirements of this Article, and otherwise to comply with the requirements of
this Article. Tenant shall require all such subtenants and occupants to supply
certificates of insurance evidencing that the insurance requirements of this
Article have been met and shall forward such certificates to Landlord on or
before the earlier of (i) the date on which the subtenant or other occupant or
any of their respective direct or indirect partners, officers, shareholders,
directors, members, trustees, beneficiaries, servants, employees, principals,
contractors, licensees, agents, invitees or representatives first enters the
Premises or (ii) the commencement of the sublease. Tenant shall be responsible
for identifying and remedying any deficiencies in such certificates or policy
provisions.

13.10 No Violation of Building Policies. Tenant shall not commit or permit any
violation of the policies of fire, boiler, sprinkler, water damage or other
insurance covering the Project and/or the fixtures, equipment and property
therein carried by Landlord, or do or permit anything to be done, or keep or
permit anything to be kept, in the Premises, which in case of any of the
foregoing (i) would result in termination of any such policies, (ii) would
adversely affect Landlord’s right of recovery under any of such policies, or
(iii) would result in reputable and independent insurance companies refusing to
insure the Project or the property of Landlord in amounts reasonably
satisfactory to Landlord.

13.11 Tenant to Pay Premium Increases. If, because of anything done, caused or
permitted to be done, or omitted by Tenant (or its subtenant or other occupants
of the Premises), the rates for liability, fire, boiler, sprinkler, water damage
or other insurance on the Project or on the property and equipment of Landlord
or any other tenant or subtenant in the Building shall be higher than they
otherwise would be, Tenant shall reimburse Landlord and/or the other tenants and
subtenants in the Building for the additional insurance premiums thereafter paid
by Landlord or by any of the other tenants and subtenants in the Building which
shall have been charged because of the aforesaid reasons, such reimbursement to
be made from time to time on Landlord’s demand.

 

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13.12 Landlord’s Insurance.

(a) Required insurance. Landlord shall maintain insurance against loss or damage
with respect to the Building on an “all risk” type insurance form, with
customary exceptions, subject to such deductibles as Landlord may determine, in
an amount equal to at least the replacement value of the Building. Landlord
shall also maintain such insurance with respect to any improvements,
alterations, and fixtures of Tenant located at the Premises to the extent paid
for by Landlord. The cost of such insurance shall be treated as a part of
Operating Expenses. Such insurance shall be maintained with an insurance company
selected by Landlord. Payment for losses thereunder shall be made solely to
Landlord.

(b) Optional insurance. Landlord may maintain such additional insurance with
respect to the Building and the Project, including, without limitation,
earthquake insurance, terrorism insurance, flood insurance, liability insurance
and/or rent insurance, as Landlord may in its sole discretion elect. Landlord
may also maintain such other insurance as may from time to time be required by
the holder of any mortgage encumbering the Building or the Project. The cost of
all such additional insurance shall also be part of the Operating Expenses.

(c) Blanket and self-insurance. Any or all of Landlord’s insurance may be
provided by blanket coverage maintained by Landlord or any affiliate of Landlord
under its insurance program for its portfolio of properties, or by Landlord or
any affiliate of Landlord under a program of self-insurance, and in such event
Operating Expenses shall include the portion of the reasonable cost of blanket
insurance or self-insurance that is allocated to the Building.

(d) No obligation. Landlord shall not be obligated to insure, and shall not
assume any liability of risk of loss for, Tenant’s Property, including any such
property or work of tenant’s subtenants or occupants. Landlord will also have no
obligation to carry insurance against, nor be responsible for, any loss suffered
by Tenant, subtenants or other occupants due to interruption of Tenant’s or any
subtenant’s or occupant’s business.

13.13 Waiver of Subrogation.

(a) To the fullest extent permitted by law, the parties hereto waive and release
any and all rights of recovery against the other, and agree not to seek to
recover from the other or to make any claim against the other, and in the case
of Landlord, against all Tenant Parties, and in the case of Tenant, against all
Landlord Parties, for any loss or damage incurred by the waiving/releasing party
to the extent such loss or damage is insured under any insurance policy required
by this Lease or which would have been so insured had the party carried the
insurance it was required to carry hereunder. Tenant shall obtain from its
subtenants and other occupants of the Premises a similar waiver and release of
claims against any or all of Tenant or Landlord. In addition, the parties hereto
(and in the case of Tenant, its subtenants and other occupants of the

 

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Premises) shall procure an appropriate clause in, or endorsement on, any
insurance policy required by this Lease pursuant to which the insurance company
waives subrogation. The insurance policies required by this Lease shall contain
no provision that would invalidate or restrict the parties’ waiver and release
of the rights of recovery in this section. The parties hereto covenant that no
insurer shall hold any right of subrogation against the parties hereto by virtue
of such insurance policy.

(b) The term “Landlord Party” or “Landlord Parties” shall mean Landlord, any
affiliate of Landlord, Landlord’s managing agents for the Building, the holder
of any mortgage encumbering the Building, the Land or the Project, the ground
lessor under any ground lease encumbering the Land, and each of their respective
direct or indirect partners, officers, shareholders, directors, members,
trustees, beneficiaries, servants, employees, principals, contractors,
licensees, agents or representatives. For the purposes of this Lease, the term
“Tenant Party” or “Tenant Parties” shall mean Tenant, any affiliate of Tenant,
any permitted subtenant or any other permitted occupant of the Premises, and
each of their respective direct or indirect partners, officers, shareholders,
directors, members, trustees, beneficiaries, servants, employees, principals,
contractors, licensees, agents, invitees or representatives.

13.14 Tenant’s Work. During such times as Tenant is performing work or having
work or services performed in or to the Premises, Tenant shall require its
contractors, and their subcontractors of all tiers, to obtain and maintain
commercial general liability, automobile, workers compensation, employer’s
liability, builder’s risk, and equipment/property insurance in accordance with
the terms and conditions of Schedule IV to Exhibit B attached hereto and made a
part hereof, as the same may be modified by written notice from Landlord from
time to time consistent with such terms as are customarily required of such
contractors and subcontractors on similar projects. The amounts and terms of all
such insurance are subject to Landlord’s written approval, which approval shall
not be unreasonably withheld. The commercial general liability and auto
insurance carried by Tenant’s contractors and their subcontractors of all tiers
pursuant to this section shall name Landlord, Landlord’s managing agent, and the
other Additional Insureds provided by Landlord pursuant to Section 13.7 above.
Such insurance shall provide primary coverage without contribution from any
other insurance carried by or for the benefit of Landlord, Landlord’s managing
agent, or other Additional Insureds. Such insurance shall also waive any right
of subrogation against each Additional Insured. Tenant shall obtain and submit
to Landlord, prior to the earlier of (i) the entry onto the Premises by such
contractors or subcontractors or (ii) commencement of the work or services,
certificates of insurance evidencing compliance with the requirements of this
section and Schedule IV to Exhibit B hereto.

 

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ARTICLE XIV

SERVICES AND UTILITIES

14.1 Landlord shall furnish to the Premises year-round HVAC during normal hours
of operation of the Building, as hereinafter provided, during the seasons when
such utilities are required, as determined in Landlord’s reasonable judgment.
The base Building HVAC system has been designed to provide heating and cooling
in accordance with the specifications included in the Base Building Office Shell
Definition described on Schedule I to Exhibit B, subject to the terms and
conditions of this Article XIV. Landlord shall also provide reasonably adequate
electricity, water, exterior window-cleaning service (at least two times per
year), and janitorial service (after 6:00 p.m.) on Monday through Friday only,
excluding legal holidays, in accordance with the janitorial specifications
outlined in Exhibit E attached hereto. Landlord will also provide elevator
service; provided, however, that Landlord shall have the right to remove
elevators from service as may be required for moving freight, or for servicing
or maintaining the elevators or the Building. At least one elevator cab shall be
available for use by Tenant at all times (except in the event of an emergency).
The normal hours of operation of the Base Building HVAC system will be 7:00 a.m.
to 8:00 p.m. on Monday through Friday (except legal holidays) and, upon request
by Tenant provided to Landlord prior to 3:00 p.m. on the preceding Friday, in
writing, via telephone, or via email, 9:00 a.m. to 4:00 p.m. on Saturday (except
legal holidays). There will be no normal hours of operation of the Building on
Sundays or legal holidays, and Landlord shall not be obligated to maintain or
operate the Building at such times unless special arrangements are made by
Tenant. In the event Tenant requires after-hours HVAC service on Saturdays
(after 4:00 p.m.), Sundays or legal holidays, Tenant shall request such service
prior to 3:00 p.m. on the preceding Friday (or 3:00 p.m. on the preceding
business day in the case of desired service on a legal holiday). In the event
Tenant requires after-hours HVAC service on regular business days (i.e. service
after 8:00 p.m.), Tenant shall give notice to Landlord on or before 3:00 p.m. of
such business day. It is understood and agreed that any such advance notice
requirement may be satisfied through the use of Tenant’s direct, 24/7 telephone
or internet access system to after-hours air conditioning and heat, which shall
activate such air conditioning or heat on a per zone basis, without the
requirement that such notice be provided to Landlord. The services and utilities
required to be furnished by Landlord, other than electricity and water, will be
provided only during the normal hours of operation of the Building, except as
otherwise specified herein. It is agreed that if Tenant requires HVAC beyond the
normal hours of operation set forth herein, Landlord will furnish such HVAC,
provided Tenant gives Landlord’s agent sufficient advance notice of such
requirement (as set forth above) and Tenant agrees to pay for the cost of such
overtime HVAC in accordance with Landlord’s then current schedule of costs and
assessments for such HVAC as charged to other tenants in the Building (which
overtime HVAC rate, as of the Effective Date, is $38.25 per hour per zone, and
is subject to change from time to time). Landlord agrees to provide an
access-control system in the Building comparable to the system

 

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in Class A office and retail buildings in the Market Area, and Tenant shall have
access to the Premises on a 24-hour, seven-days-a-week basis (except in the
event of emergency). Landlord shall, at its cost, provide an initial set of
access cards to the Building and Garage in an amount equal to the number of
initial employees of Tenant who work on a full-time basis at the Premises as of
the Lease Commencement Date in an aggregate amount not to exceed one (1) access
card for each five hundred (500) square feet of above grade rentable area in the
Premises (excluding any storage space leased by Tenant); provided, however, that
any replacement or additional cards requested by Tenant after the Lease
Commencement Date shall be provided by Landlord and Tenant shall reimburse
Landlord for Landlord’s cost therefor. Any access control system installed by
Tenant for the Premises, whether as part of the initial Leasehold Work or as a
subsequent Alteration, shall be subject to Landlord’s prior written approval and
the other terms and conditions of this Lease, and shall be compatible with the
base Building access control system. Upon Tenant’s written request, Landlord
shall program the Building elevators to require access cards for access to the
floor on which the Premises are located, provided Tenant is leasing the entire
rentable area on such floor. Landlord shall provide an attendant for the
Building on a twenty-four (24)-hour basis, which attendant will be stationed in
the main lobby of the Building during the normal hours of operation of the
Building, the costs of which will be included in Operating Expenses to the
extent permitted pursuant to Article IV above. Landlord also agrees to provide
cameras directed at certain means of ingress/egress to the Building for
recording purposes only and for no other use or purpose, the costs of which will
be included in Operating Expenses to the extent permitted pursuant to Article IV
above. Notwithstanding anything contained in this Lease to the contrary, Tenant
expressly acknowledges and agrees that (a) in no event shall Landlord or any
employee, agent or contractor of Landlord be required to man, monitor or respond
to any output of any cameras or other devices recording access to or from the
Building, and (b) no liability or obligation whatsoever on the part of Landlord
or any employee, agent or contractor of Landlord is imposed or implied by any
such cameras or other recording devices that may be installed in the Building.

14.2 It is understood and agreed that Landlord shall not have any liability to
Tenant whatsoever as a result of Landlord’s failure or inability to furnish any
of the utilities or services required to be furnished by Landlord hereunder,
whether resulting from breakdown, removal from service for maintenance or
repairs, strikes, scarcity of labor or materials, acts of God, governmental
requirements, or any other cause whatsoever. It is further agreed that any such
failure or inability to furnish the utilities or services required hereunder
shall not be considered an eviction, actual or constructive, of Tenant from the
Premises, and shall not entitle Tenant to terminate this Lease or to an
abatement of any rent payable hereunder.

 

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14.3 Landlord will use its commercially reasonable efforts to cause the
restoration of any interrupted utility services; further, should any equipment
or machinery in the Building break down so as to render the Premises unusable by
Tenant, Landlord shall promptly repair or replace it (subject to delays which
result from strikes, unavailability of parts or other materials, or other
matters beyond Landlord’s reasonable control). Notwithstanding the provisions of
Section 14.2 to the contrary, if (a) the services described in Section 14.1
hereof are interrupted for (i) a period of more than five (5) consecutive
business days as a result of Landlord’s (or its agents’ or employees’)
negligence or willful misconduct, or (ii) a period of more than eight
(8) consecutive business days for any other reason (other than Tenant’s or its
agents’ or employees’ negligence or willful misconduct), or (b) Tenant’s access
to the Premises is prevented for a period of more than five (5) consecutive
business days as a result of Landlord’s (or its agents’ or employees’)
negligence or willful misconduct, (c) such interruption of services or access is
not the result of any act of Tenant or its Invitees, and (d) such interruption
of services or access renders all or a substantial portion of the Premises
untenantable by Tenant and the Premises or such portion thereof are not used or
occupied by Tenant, then, as Tenant’s sole and exclusive remedy therefor, Tenant
shall be entitled to a pro rata abatement of Base Rent and Operating Expenses
beginning on the sixth (6th) consecutive business day or the ninth
(9th) consecutive business day, whichever is applicable, that the Premises are
untenantable (and not used or occupied) and continuing until the Premises or
such portion thereof is rendered tenantable, it being agreed that such time
periods shall not be extended as a result of a Force Majeure Event (as defined
below).

14.4 The parties hereto agree to comply with all energy conservation controls
and requirements applicable to office and retail buildings that are imposed or
instituted by the Federal, state or local governments, including without
limitation, controls on the permitted range of temperature settings in office
and retail buildings, and requirements necessitating curtailment of the volume
of energy consumption or the hours of operation of the Building. Any terms or
conditions of this Lease that conflict or interfere with compliance with such
controls or requirements shall be suspended for the duration of such controls or
requirements. It is further agreed that compliance with such controls or
requirements shall not be considered an eviction, actual or constructive, of
Tenant from the Premises and shall not entitle Tenant to terminate this Lease or
to an abatement of any rent payable hereunder.

14.5 Tenant shall reimburse Landlord for any excess water usage in the Premises.
“Excess water usage” shall mean the excess of Tenant’s water usage during any
billing period for water services over the estimated average water usage during
the same period for all office tenants of the Building (excluding Tenant), as
computed by Landlord. If Tenant connects into Landlord’s supplemental cooling
system currently located (or to be located) on the roof of the Building, then
Tenant shall reimburse Landlord for all costs incurred by Landlord therefor, as
reasonably determined by Landlord. Landlord may install checkmeters to
electrical circuits serving Tenant’s equipment to verify that Tenant is not
consuming excessive electricity. If such checkmeters indicate that Tenant’s
electricity consumption is excessive, then Landlord may install at Tenant’s
expense submeters to ascertain Tenant’s actual electricity consumption, and
Tenant shall thereafter

 

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pay for such consumption at the then-current price per kilowatt hour charged
Landlord by the utility. Tenant’s electricity consumption shall be deemed
excessive if the electricity consumption in the Premises per square foot of
rentable area (including, without limitation, electricity consumed in connection
with outlets and lighting use) during any billing period exceeds the average
electricity consumption per square foot of rentable area during the same period
for typical, similarly situated tenants in the Building, as reasonably
calculated by Landlord. Similarly, Tenant shall reimburse Landlord for any
excess usage of supplemental condenser water, which excess usage shall be paid
for by Tenant in the same manner and subject to similar conditions as apply to
excess water usage and electricity usage pursuant to this Section 14.5.

14.6 The Building (including the roof deck and the Garage) is a non-smoking
facility. Tenant agrees to adhere to Landlord’s rules and regulations pertaining
to such policy (as the same may be amended from time to time), as set forth in
the Building’s Rules and Regulations, a current copy of which are attached
hereto as Exhibit C.

14.7 Subject to applicable Legal Requirements and governmental and
quasi-governmental prohibitions and/or restrictions, for so long as Tenant is a
tenant in the Building, Tenant’s employees who work in the Building shall have
the nonexclusive right (subject to reasonable rules and regulations and
reasonable fees for elective services, if any, but excluding membership fees) to
use the fitness facility. The fitness facility shall be available to Tenant’s
employees who work in the Building on a regular basis on a non-exclusive
first-come, first-served basis. Landlord may specifically condition the use of
the fitness facility by any person upon such person’s execution of a written
waiver and release holding Landlord harmless from any and all liability, damage,
expense, cause of action, suit, claim, judgment and cost of defense arising from
injury to such employee or guest occurring in the fitness facility or resulting
from the use thereof. Neither Landlord nor Landlord’s agents or partners, shall
have any liability to Tenant or its Invitees for any damage, injury, loss,
expense, compensation or claim whatsoever arising out of the use of the fitness
facility.

14.8 Subject to applicable Legal Requirements, governmental or
quasi-governmental prohibitions and/or restrictions (including without
limitation any temporary or permanent closure(s) of the roof deck and/or
restriction of tenants’ use thereof due to concerns about terror or terrorism),
the availability of insurance at commercially reasonable rates, and Landlord’s
reasonable rules with respect thereto that may be established from time to time,
the Building shall contain a roof deck located on the top floor of the Building
that will be available for Tenant’s use on a non-exclusive, first-come,
first-served basis. Except in the event of an emergency, Tenant’s employees
shall have access to the roof deck during the normal hours of operation of the
Building, excluding Inauguration Day, Independence Day and other legal holidays,
as well as such other days and times as Landlord shall reasonably determine,
including such dates and times as Landlord may have granted another Tenant
exclusive use of the roof deck. With prior authorization from Landlord and
subject to availability and to compliance with rules and regulations established
from time to time by Landlord (including Tenant’s reimbursing Landlord as
additional rent for all costs associated therewith including, but not limited
to,

 

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cleaning, landscaping and access control), Tenant shall have the right to hold
“events” on the roof deck. Landlord shall not be liable to Tenant or any of its
Invitees for injuries received by Tenant or its Invitees while using the roof
deck, and Tenant agrees to indemnify and save harmless Landlord from any such
liability. Landlord reserves the right to institute a card-key (or similar type
of) access system to permit access to the roof deck (the cost of which shall be
included as an Operating Expense), and Tenant agrees to reimburse Landlord for
the costs of any such cards distributed to Tenant.

14.9 Unless otherwise expressly provided in this Lease, costs for the services
and utilities required to be furnished and/or performed by Landlord that are
described in this Article XIV shall be passed through to Tenant as an Operating
Expense to the extent permitted pursuant to Article IV hereof.

ARTICLE XV

LIABILITY OF LANDLORD

15.1 Landlord shall not be liable to Tenant or to its Invitees for any damage,
injury, loss, compensation or claim, including but not limited to claims for the
interruption of or loss to Tenant’s business, based on, arising out of, or
resulting from any cause whatsoever, including but not limited to the following:
repairs to any portion of the Premises or the Building; interruption in the use
of the Premises; any accident or damage resulting from the use or operation (by
Landlord, Tenant or any other person or persons) of elevators, or of the
heating, cooling, electrical or plumbing equipment or apparatus; the termination
of this Lease by reason of the destruction of the Premises or the Building; any
fire, robbery, theft, mysterious disappearance or any other casualty; the
actions of any other tenants of the Building or of any other person or persons;
and any leakage in any part or portion of the Premises or the Building, or from
water, rain or snow that may leak into, or flow from, any part of the Premises
or the Building, or from drains, pipes or plumbing fixtures in the Building. Any
goods, property or personal effects stored or placed by Tenant or its employees
in or about the Premises or the Building shall be at the sole risk of Tenant,
and Landlord shall not in any manner be held responsible therefor. It is
understood that the employees of Landlord are prohibited from receiving any
packages or other articles delivered to the Building for Tenant, and if any such
employee receives any such package or articles, such employee shall be acting as
the agent of Tenant for such purposes and not as the agent of Landlord.
Notwithstanding the foregoing provisions of this Section 15.1 to the contrary,
Landlord shall not be released from liability to Tenant for damage or injury
caused by the negligence or willful misconduct of Landlord or its employees;
provided, however, in no event shall Landlord have any liability to Tenant for
any claims based on the interruption of or loss to Tenant’s business (except for
any rent abatement to which Tenant otherwise may be expressly entitled pursuant
to the terms of this Lease) or for any indirect losses or consequential damages
or punitive damages or other special damages whatsoever.

15.2 In the event that at any time Landlord shall sell or transfer title to the
Building, provided the purchaser or transferee assumes the obligations of
Landlord

 

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hereunder arising from and after the date of the transfer, Landlord named herein
shall not be liable to Tenant for any obligations or liabilities based on or
arising out of events or conditions occurring on or after the date of such sale
or transfer. Furthermore, Tenant agrees to attorn to any such purchaser or
transferee upon all the terms and conditions of this Lease.

15.3 In the event that Tenant shall have a claim against Landlord, Tenant shall
not have the right to deduct the amount allegedly owed to Tenant from any rent
or other sums payable to Landlord hereunder, it being understood that Tenant’s
sole remedy for recovering upon such claim shall be to institute an independent
action against Landlord.

15.4 Tenant agrees that in the event Tenant is awarded a money judgment against
Landlord, Tenant’s sole recourse for satisfaction of such judgment shall be
limited to execution against the estate and interest of Landlord in the
Building. In no event shall any other assets of Landlord, any partner of
Landlord, the holder of any mortgage (or anyone claiming by through or under
such holder) or any other person or entity be available to satisfy, or be
subject to, such judgment, nor shall any partner of Landlord or any such other
person or entity be held to have any personal liability for satisfaction of any
claims or judgments that Tenant may have against Landlord or any partner of
Landlord in such partner’s capacity as a partner of Landlord.

ARTICLE XVI

RULES AND REGULATIONS

16.1 Tenant and its Invitees shall at all times abide by and observe the Rules
and Regulations attached hereto as Exhibit C. In addition, Tenant and its
Invitees shall abide by and observe all other rules or regulations that Landlord
may promulgate from time to time for the operation and maintenance of the
Building, provided that notice thereof is given to Tenant and such rules and
regulations are commercially reasonable and are not inconsistent with the
provisions of this Lease. Nothing contained in this Lease shall be construed as
imposing upon Landlord any duty or obligation to enforce such rules and
regulations, or the terms, conditions or covenants contained in any other lease,
as against any other tenant, and Landlord shall not be liable to Tenant or its
Invitees for the violation of such rules or regulations by any other tenant or
such other tenant’s employees, agents, invitees, licensees, customers,
subtenants, contractors, clients, family members or guests. Landlord shall use
reasonable efforts to enforce all such rules and regulations, although it is
understood that Landlord may grant exceptions to such rules and regulations in
circumstances in which it reasonably determines such exceptions are warranted.
If there is any inconsistency between this Lease and the Rules and Regulations
set forth in Exhibit C, this Lease shall govern.

 

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ARTICLE XVII

DAMAGE OR DESTRUCTION

17.1 (a) Subject to subparagraphs (c) and (d) below, if the Premises or the
Building are totally or partially damaged or destroyed from any cause, thereby
rendering the Premises totally or partially inaccessible or untenantable,
Landlord shall diligently (taking into account the time necessary to effectuate
a satisfactory settlement with any insurance company involved) restore and
repair the Premises and/or the Building to substantially the same condition they
were in prior to such damage or destruction.

(b) Within forty-five (45) days after the occurrence of such damage or
destruction (the “Determination Period”), Landlord will provide Tenant, in
writing (the “Restoration Notice”), with a good faith estimate of the date by
which the repairs and restoration will be completed, including the time needed
for removal of debris, preparation of plans, bidding of contracts, and issuance
of all required governmental permits.

(c) If, in the sole judgment of Landlord, the repairs and restoration cannot be
completed within one hundred eighty (180) days after the occurrence of such
damage or destruction, including the time needed for removal of debris,
preparation of plans, bidding of contracts, and issuance of all required
governmental permits, Landlord shall have the right, at its sole option, to
terminate this Lease by giving written notice to Tenant at any time prior to the
expiration of the Determination Period.

(d) Additionally, if, in the sole judgment of Landlord, exercised in good faith,
the Building is damaged or destroyed from any cause to such an extent that the
costs of repairing and restoring the Building would exceed fifty percent
(50%) of the replacement value of the Building at the time of such damage or
destruction, whether or not the Premises are damaged or destroyed, then Landlord
shall have the right, at its sole option, to terminate this Lease by giving
written notice of termination to Tenant at any time prior to the expiration of
the Determination Period.

17.2 If the Restoration Notice provides that the repairs and restoration cannot
be substantially completed within one hundred and eighty (180) days after the
occurrence of such damage or destruction, then Tenant shall have the right to
terminate this Lease by providing written notice to Landlord within thirty
(30) days after the date of the Restoration Notice. Notwithstanding the
foregoing, Tenant shall not have the right to terminate this Lease if the act or
omission of Tenant, or any Tenant Party, shall have caused the damage or
destruction.

17.3 If this Lease is terminated pursuant to this Article XVII, all rent payable
hereunder shall be apportioned and paid to the date of the occurrence of such
damage or destruction and Tenant shall have no further rights or remedies
against Landlord pursuant to this Lease, or otherwise. If this Lease is not
terminated pursuant to the terms of this Article XVII, and provided that such
damage or destruction was not caused by the act or omission to act of Tenant, or
any Tenant Party, until the repair and restoration of the Premises is completed,
Tenant shall be required to pay annual base rent and additional rent only for
that portion of the Premises that Tenant is able to use while repairs are being
made, based on the ratio that the amount of rentable area in the usable portion
of the Premises bears to the total rentable area of the Premises.

 

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17.4 If this Lease is not terminated as provided in this Article XVII, Landlord
shall proceed to diligently repair and restore the Premises (including the
Leasehold Work) and/or the Building using (i) the proceeds of Landlord’s
insurance (covering damage to the Building and to the Leasehold Work up to the
amount of the Improvement Allowance, as defined in Exhibit B attached hereto),
calculated on a per rentable square foot basis and adjusted to reflect a
commercially reasonable rate of inflation, and (ii) the proceeds of Tenant’s
insurance (covering the Leasehold Work in excess of the amount of the
Improvement Allowance, calculated on a per rentable square foot basis and
adjusted in accordance with the foregoing). Tenant shall be required to repair
and restore at its sole expense all decorations, trade fixtures, furnishings,
equipment and personal property installed by or belonging to Tenant. In
connection with any restoration of the Leasehold Work, Landlord shall perform
the Leasehold Work, and Landlord shall be obligated to pay for the cost of the
Leasehold Work only up to the amount of the Improvement Allowance. Tenant shall
reimburse Landlord (within thirty (30) days of demand therefor) for the cost of
any Leasehold Work above the amount of the Improvement Allowance.

17.5 Notwithstanding anything provided herein to the contrary, Landlord shall
not be obligated to restore the Premises and/or the Building if (i) the damage
or destruction was not caused by an insurable event, or (ii) the estimated cost
of such repair or restoration, as determined by Landlord in its sole judgment,
exceeds the amount of insurance proceeds available to Landlord for such repair
or restoration. This right of termination shall be in addition to any other
right of termination provided in this Lease.

ARTICLE XVIII

CONDEMNATION

18.1 (a) If the whole or a substantial part (as hereinafter defined) of the
Building or the Premises, or the use or occupancy of a substantial part of the
Premises, shall be taken or condemned by any governmental or quasi-governmental
authority for any public or quasi-public use or purpose (including a sale
thereof under threat of such a taking), then this Lease shall terminate on the
date title thereto vests in such governmental or quasi-governmental authority,
and all rent payable hereunder shall be apportioned as of such date. If less
than a substantial part of the Premises, or the use or occupancy thereof, is
taken or condemned by any governmental or quasi-governmental authority for any
public or quasi-public use or purpose (including a sale thereof under threat of
such a taking), this Lease shall continue in full force and effect, but the
annual base rent and additional rent thereafter payable hereunder shall be
equitably adjusted (on the basis of the ratio of the number of square feet of
rentable area taken to the total rentable area of the Premises prior to such
taking) as of the date title vests in the governmental or quasi-governmental
authority. For purposes of this Section 18.1(a), a “substantial part” of the
Building or the Premises shall be considered to have been taken if, as a result
of any permanent taking, the remainder of the Premises is not reasonably
satisfactory for the conduct of Tenant’s business operations in the ordinary
course therein, including without limitation, as a result of Tenant’s inability
to access such remainder of the Premises.

 

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(b) In addition to the foregoing, if (i) there occurs a taking of such portion
of the Garage or Tenant’s parking rights therein so as to deprive Tenant of the
use of more than fifty percent (50%) of the number of parking permits to which
Tenant is entitled pursuant to Article XXIV below for a period of more than one
hundred eighty (180) consecutive days, and (ii) Landlord is unable to provide
Tenant with (A) an equal number of substitute parking permits within a six
(6)-block radius of the Building (in which event, in lieu of paying Landlord the
charge for the parking permits for which Tenant is deprived of the use as a
result of such taking, Tenant will contract directly for such substitute permits
and Landlord will reimburse Tenant therefor in an amount not to exceed the
product of the then current rate for unreserved parking permits at the Building
multiplied by the number of parking permits for which Tenant is deprived of the
use under this Lease) or (B) other reasonable parking accommodations, then
Tenant shall have the right to terminate this Lease by providing Landlord,
within thirty (30) days after the end of such one hundred eighty (180) day
period, with sixty (60) days prior written notice thereof. If Tenant fails to
provide such termination notice within such thirty (30)-day period, Tenant shall
have no right to terminate this Lease pursuant to this Section 18.1(b). If
Tenant provides such termination notice within such thirty (30)-day period, but
Landlord, within sixty (60) days after the date of Tenant’s termination notice,
provides Tenant with alternative parking arrangements permitted hereunder or
otherwise makes available in the Garage the permits to which Tenant is entitled
hereunder, Tenant’s termination notice automatically shall be void and without
force or effect; otherwise, Tenant’s termination notice shall be effective as of
the date that is sixty (60) days from the date of such notice.

18.2 All awards, damages and other compensation paid by the condemning authority
on account of such taking or condemnation (or sale under threat of such taking)
shall belong to Landlord, and Tenant hereby assigns to Landlord all rights to
such awards, damages and compensation. Tenant agrees not to make any claim
against Landlord or the condemning authority for any portion of such award or
compensation attributable to damage to the Premises, the value of the unexpired
term of this Lease, the loss of profits or goodwill, leasehold improvements or
severance damages. Nothing contained herein, however, shall prevent Tenant from
pursuing a separate claim against the condemning authority for the value of
furnishings, equipment and trade fixtures installed in the Premises at Tenant’s
expense and for relocation expenses, provided that such claim does not in any
way diminish the award or compensation payable to or recoverable by Landlord in
connection with such taking or condemnation.

 

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ARTICLE XIX

DEFAULT BY TENANT

19.1 In addition to those events or occurrences described in this Lease as an
Event of Default, the occurrence of any of the following shall constitute an
“Event of Default” by Tenant under this Lease:

(a) If Tenant shall fail to pay any installment of base rent, additional rent or
any other sums required by this Lease when due and such failure shall remain
uncured for a period of five (5) days after Landlord notifies Tenant in writing
of such failure; provided however, that Landlord shall not be required to give
Tenant more than one (1) such written notice in any twelve (12) month period,
nor more than five (5) such written notices over the Lease Term (after which
time nonpayment on the date due shall constitute an Event of Default).

(b) If Tenant shall violate or fail to perform any other term, condition,
covenant or agreement to be performed or observed by Tenant under this Lease and
such violation or failure shall continue uncured for a period of thirty
(30) days after Landlord notifies Tenant of such violation or failure. If such
violation or failure is not capable of being cured within such thirty (30) day
period, then provided Tenant commences curative action within such thirty
(30) day period and proceeds diligently and in good faith thereafter to cure
such violation or failure, such cure period shall be extended for a reasonable
time not to exceed ninety (90) days.

(c) If Tenant shall assign its interest in this Lease or sublet any portion of
the Premises in violation of the requirements of Article VII of this Lease.

(d) [Intentionally Omitted].

(e) If Tenant permits any liens to continue on the Premises, or any part
thereof, beyond the periods set forth herein.

(f) If an Event of Bankruptcy, as defined in Section 20.1 of this Lease, shall
occur.

(g) If an Environmental Default, as defined in Section 6.4 of this Lease, shall
occur.

19.2 (a) If there shall be an Event of Default, then the provisions of this
Section 19.2 shall apply. Landlord shall have the right, at its sole option, to
terminate this Lease. In addition, with or without terminating this Lease,
Landlord may reenter, terminate Tenant’s right of possession and take possession
of the Premises. The provisions of this Article shall operate as a notice to
quit, and Tenant hereby waives any other notice to quit or notice of Landlord’s
intention to reenter the Premises or terminate this Lease. If necessary,
Landlord may proceed to recover possession of the Premises under the applicable
Legal Requirements, or by such other proceedings, including reentry and
possession, as may be applicable. If Landlord elects to terminate this Lease
and/or elects to terminate Tenant’s right of possession, everything contained in
this Lease required to be done or performed by Landlord shall cease, without
prejudice, however, with regard to Tenant’s liability for all base rent,
additional rent and other sums due under this Lease. Whether or not this Lease
and/or Tenant’s right of possession is terminated, Landlord shall have the
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contained in this Lease and to grant or withhold any consent or approval
pursuant to this Lease in its sole and absolute discretion. Landlord may relet
the Premises or any part thereof, alone or together with other premises, for
such term(s) (which may extend beyond the date on which the Lease Term would
have expired but for Tenant’s default) and on such terms and conditions (which
may include any concessions or allowances granted by Landlord) as Landlord, in
its sole and absolute discretion, may determine, but Landlord shall not be
liable for, nor shall Tenant’s obligations hereunder be diminished by reason of,
any failure by Landlord to relet all or any portion of the Premises or to
collect any rent due upon such reletting. If there has occurred an Event of
Default under this Lease, and Landlord has either terminated this Lease or
Tenant’s right of possession hereunder, and Tenant has vacated the Premises,
then Landlord shall thereafter use reasonable efforts to remarket the Premises
and consummate market leasing transactions. Notwithstanding anything to the
contrary in this Section 19.2, Tenant expressly acknowledges that Landlord’s
agreement to use reasonable efforts to relet the Premises in accordance with the
terms and conditions herein specified shall in no event limit, restrict or
prejudice Landlord’s right to lease all other vacant or to be vacated space in
the Building prior to reletting the Premises.

(b) Whether or not this Lease and/or Tenant’s right of possession is terminated
or any suit is instituted, Tenant shall be liable for any base rent, additional
rent, damages or other sum which may be due or sustained prior to such Event of
Default, and for all costs, fees and expenses (including, but not limited to,
reasonable attorneys’ fees and costs, brokerage fees, expenses incurred in
enforcing any of Tenant’s obligations under this Lease or in placing the
Premises in Class A rentable condition, advertising expenses, and any
concessions or allowances granted by Landlord) incurred by Landlord in pursuit
of its remedies hereunder and/or in recovering possession of the Premises and
renting the Premises to others from time to time plus other damages suffered or
incurred by Landlord on account of such Event of Default (including, but not
limited to late fees or other charges incurred by Landlord under any mortgage).
Tenant also shall be liable for additional damages which at Landlord’s election
shall be either one or any combination of the following:

(i) an amount equal to the Base Rent and additional rent due or which would have
become due from the date of such Event of Default through the remainder of the
Lease Term, plus all expenses (including broker and attorneys’ fees) incurred in
connection with the reletting of the Premises, less the amount of rental income,
if any, which Landlord actually receives during such period from others to whom
Landlord may (but is not required to) relet the Premises, other than any
additional rent received by Landlord as a result of any failure of such other
person to perform any of its obligations to Landlord, which amount shall be
computed and payable in monthly installments, in advance, on the first day of
each calendar month following such Event of Default and continuing until the
date on which the Lease Term would have expired but for such Event of Default,
it being understood that separate suits may be brought, at Landlord’s
discretion, from time to time to collect any such damages for any month(s) (and
any such separate suit shall not in any manner prejudice the right of Landlord
to collect any damages for any subsequent month(s)), or Landlord may defer
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until after the expiration of the Lease Term (in which event such deferral shall
not be construed as a waiver of Landlord’s rights as set forth herein and
Landlord’s cause of action shall be deemed for limitations purposes not to have
accrued until the expiration of the Lease Term), and it being further understood
that if Landlord elects to bring suits from time to time prior to reletting the
Premises, Landlord shall be entitled to its full damages through the date of the
award of damages without regard to any Base Rent, additional rent or other sums
that are or may be projected to be received by Landlord upon reletting of the
Premises; or

(ii) an amount equal to the sum of (a) all base rent, additional rent and other
sums due or which would be due and payable under this Lease as of the date of
such Event of Default through the end of the scheduled Lease Term, plus (b) all
expenses (including broker and attorneys’ fees) incurred in connection with the
reletting of the Premises, minus (c) any base rent, additional rent and other
sums which Tenant proves by a preponderance of the evidence would be received by
Landlord upon reletting of the Premises from the end of the vacancy period
projected by Landlord through the expiration of the scheduled Lease Term.

The damage amounts calculated under option (ii) shall be accelerated and
discounted using a discount factor equal to the yield of the Treasury Note or
Bill, as appropriate, having a maturity period approximately commensurate to the
remainder of the Term, and such resulting amount shall be payable to Landlord in
a lump sum on demand, and Landlord may bring suit to collect any such damages at
any time after an Event of Default if Tenant does not make such payment on
demand, it being understood that upon payment of such liquidated and agreed
final damages, Tenant shall be released from further liability under this Lease
with respect to the period after the date of such payment.

(c) In the event Landlord relets the Premises together with other premises or
for a term extending beyond the scheduled expiration of the Lease Term, it is
understood that Tenant will not be entitled to apply any base rent, additional
rent or other sums generated or projected to be generated by either such other
premises or in the period extending beyond the scheduled expiration of the Lease
Term (collectively, “Extra Rent”) against Landlord’s damages. Similarly in
proving the amount that would be received by Landlord upon a reletting of the
Premises as set forth in subparagraph (b) above, Tenant shall not take into
account the Extra Rent. The provisions contained in this Section shall be in
addition to, and shall not prevent the enforcement of, any claim Landlord may
have against Tenant for anticipatory breach of this Lease. Nothing herein shall
be construed to affect or prejudice Landlord’s right to prove, and claim in
full, unpaid rent accrued prior to termination of this Lease. If Landlord is
entitled, or Tenant is required, pursuant to any provision hereof to take any
action upon the termination of the Lease Term, then Landlord shall be entitled,
and Tenant shall be required, to take such action also upon the termination of
Tenant’s right of possession.

 

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19.3 (a) Tenant hereby expressly waives, for itself and all persons claiming by,
through or under it, any right of redemption, reentry or restoration of the
operation of this Lease under any present or future Legal Requirements,
including without limitation any such right which Tenant would otherwise have in
case Tenant shall be dispossessed for any cause, or in case Landlord shall
obtain possession of the Premises as herein provided.

(b) All rights and remedies of Landlord set forth herein are in addition to all
other rights and remedies available to Landlord hereunder or at law or in
equity. All rights and remedies available to Landlord hereunder or at law or in
equity are expressly declared to be cumulative. The exercise by Landlord of any
such right or remedy shall not prevent the concurrent or subsequent exercise of
any other right or remedy. No delay in the enforcement or exercise of any such
right or remedy shall constitute a waiver of any default by Tenant hereunder or
of any of Landlord’s rights or remedies in connection therewith. Landlord shall
not be deemed to have waived any default by Tenant hereunder unless such waiver
is set forth in a written instrument signed by Landlord. If Landlord waives in
writing any default by Tenant, such waiver shall not be construed as a waiver of
any covenant, condition or agreement set forth in this Lease except as to the
specific circumstances described in such written waiver.

19.4 If Landlord shall institute proceedings against Tenant and a compromise or
settlement thereof shall be made, the same shall not constitute a waiver of
default or of any other covenant, condition or agreement set forth herein, nor
of any of Landlord’s rights hereunder. Neither the payment by Tenant of a lesser
amount than the installments of annual base rent, additional rent or of any sums
due hereunder nor any endorsement or statement on a check or letter accompanying
a check for payment of rent or other sums payable hereunder shall be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the balance of such rent or other sums
or to pursue any other remedy available to Landlord. No re-entry by Landlord,
and no acceptance by Landlord of keys from Tenant, shall be considered an
acceptance of a surrender of this Lease.

19.5 If Tenant defaults in the making of any payment or in the doing of any act
herein required to be made or done by Tenant, then Landlord may, but shall not
be required to, make such payment or do such act. If Landlord elects to make
such payment or do such act, all costs and expenses incurred by Landlord, plus
interest thereon at the rate per annum (“Default Rate”) which is two percent
(2%) higher than the publicly announced “prime rate” then being reported by the
Bank of America, from the date paid by Landlord to the date of payment thereof
by Tenant, shall be immediately paid by Tenant to Landlord; provided, however,
that nothing contained herein shall be construed as permitting Landlord to
charge or receive interest in excess of the maximum legal rate then allowed by
law. The taking of such action by Landlord shall not be considered as a cure of
such default by Tenant or prevent Landlord from pursuing any remedy it is
otherwise entitled to in connection with such default.

19.6 If Tenant fails to make any payment of base rent or of additional rent on
or before the date such payment is due and payable, Tenant shall pay to Landlord
a late

 

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charge of five percent (5%) of the amount of such payment. In addition, such
payment shall bear interest at the Default Rate from the date such payment
became due to the date of payment thereof by Tenant; provided, however, that
nothing contained herein shall be construed as permitting Landlord to charge or
receive interest in excess of the maximum legal rate then allowed by law. Such
late charge and interest shall constitute additional rent due and payable
hereunder with the next installment of annual base rent due hereunder.

19.7 [Intentionally Omitted].

19.8 In the event either Landlord or Tenant shall employ an attorney to enforce
the other party’s covenants and obligations under this Lease, whether or not
Landlord proceeds to recover possession or Landlord or Tenant commence any other
proceeding against the other party, the non-prevailing party shall be liable for
all costs and expenses sustained by the prevailing party in the enforcement of
such covenants and obligations, including but not limited to attorneys’ fees and
expenses, costs of collection and court costs.

ARTICLE XX

BANKRUPTCY

20.1 Each of the following shall be an “Event of Bankruptcy” under this Lease:

(a) Tenant’s or any guarantor’s (i) becoming insolvent, as that term is defined
in Title 11 of the United States Code (“Bankruptcy Code”) or under the
insolvency laws of any state, district, commonwealth or territory of the United
States (“Insolvency Laws”); (ii) generally not paying its debts as they become
due unless such debts are the subject of a bona fide dispute, or (iii) inability
to pay its debts as they become due;

(b) The appointment of a receiver, trustee, custodian or any similar responsible
party or representative for any or all of Tenant’s or any guarantor’s property
or assets, or the institution of a foreclosure, replevin, forfeiture, seizure,
attachment, garnishment, or any similar action, proceeding or process upon or
against any of Tenant’s or any guarantor’s real, personal or other property;

(c) The filing by Tenant or any guarantor of a voluntary petition under the
provisions of the Bankruptcy Code or Insolvency Laws;

(d) The filing of an involuntary petition against Tenant or any guarantor as the
subject debtor under the Bankruptcy Code or Insolvency Laws, which either (i) is
not dismissed within sixty (60) days of filing, or (ii) results in the issuance
of an order for relief against the debtor; or

(e) Tenant’s or any guarantor’s making or consenting to an assignment for the
benefit of creditors or a common law composition of creditors, or otherwise
consenting to the default rights or remedies of Tenant’s or any guarantor’s
other creditors.

 

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ARTICLE XXI

SUBORDINATION

21.1 (a) This Lease and Tenant’s rights under this Lease are subject to and
subordinate to the Office Ground Lease, and any other ground lease or underlying
lease, first mortgage, first deed of trust, or other first lien encumbrance or
indenture, together with any renewals, extensions, modifications,
consolidations, and replacements of them (each a “Superior Lien”) that now or
hereafter affects the Premises or any interest of Landlord in the Premises or
Landlord’s interest in this Lease and the estate created by this Lease (except
to the extent that the recorded instrument evidencing the Superior Lien
expressly provides that this Lease is superior to the Superior Lien). The holder
of any Superior Lien shall be referred to herein as a “Superior Lien Holder.”
This Lease shall also be subject and subordinate to the lien of any second or
junior mortgages that may hereafter encumber the Building, provided the holder
of the first mortgage consents to such subordination. At any time after the
execution of this Lease, a Superior Lien Holder shall have the right to declare
this Lease to be superior to the lien of its Superior Lien, and Tenant agrees to
execute all documents required by such holder in confirmation thereof.

(b) There are no mortgages or ground leases (other than the Office Ground Lease)
encumbering the Building as of the Effective Date. Landlord shall obtain from
GWU, concurrently with the execution and delivery of this Lease, a
nondisturbance agreement on the form attached hereto as Exhibit J for the
benefit of Tenant (“GW NDA”). In addition, Landlord shall, at no cost to
Landlord, obtain from any future holder of any mortgage or deed of trust on the
Building a subordination, non-disturbance and attornment agreement (“SNDA”) on
such holder’s standard form. Notwithstanding anything to the contrary contained
herein, subordination of this Lease to any such mortgage or deed of trust
hereafter placed on the Building is conditioned upon receipt of an SNDA as
described herein. In connection with each SNDA obtained in favor of Tenant,
Tenant shall reimburse Landlord, as additional rent, for the out-of-pocket costs
and expenses incurred by Landlord in connection therewith, up to an amount equal
to One Thousand Dollars ($1,000.00) per SNDA.

21.2 In confirmation of the foregoing subordination, Tenant shall, at Landlord’s
request, promptly execute, acknowledge and deliver any requisite or appropriate
certificate or other document. If Tenant fails to execute, acknowledge and
deliver such certificate or other document within ten (10) days after Landlord’s
written request, and such failure continues for two (2) business days after a
second (2nd) written notice from Landlord, Landlord and its successors and
assigns will be entitled to execute, acknowledge and deliver any such
certificate or other document on behalf of Tenant as Tenant’s attorney-in-fact.
Tenant hereby constitutes and appoints Landlord, its successors and assigns, as
Tenant’s attorney-in-fact to execute, acknowledge and deliver any such
certificate or other document on behalf of Tenant. Tenant agrees that in the
event any ground lease encumbering the Land is terminated, (a) Tenant shall
attorn to the ground lessor and shall recognize the ground lessor as the
Landlord under this Lease, (b) Tenant shall execute and deliver, upon the
reasonable request of the ground lessor, an instrument evidencing its agreement
to attorn to the ground lessor, and (c) Tenant hereby waives

 

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the provisions of any statute or rule of law which may give Tenant any right of
election to terminate this Lease or to surrender possession of the Premises in
the event of a termination of the ground lease, and this Lease shall not be
affected in any way whatsoever by any such termination of the ground lease.
Tenant agrees that upon such attornment, (I) the ground lessor shall be required
to provide only those services that (x) are generally and customarily provided
in buildings comparable to the Building in downtown Washington, D.C., but not in
the event of any force majeure affecting the Building, or (y) are expressly
approved by the ground lessor in a non-disturbance agreement with Tenant, (II)
the ground lessor shall not be obligated to construct or pay for any
improvements required under this Lease, or pay any allowances, concessions or
other amounts that may be provided for in this Lease, (III) the ground lessor
shall not be bound by any payment of rent under this Lease for more than one
(1) month prior to its due date, (IV) the ground lessor shall not be liable for
damages for any breach, act or omission of Landlord or any prior landlord under
this Lease, or subject to any offsets or defenses which Tenant may have against
Landlord or any prior landlord under this Lease, (V) the ground lessor shall not
be responsible for the return of any security deposit furnished to Landlord or
any prior landlord under this Lease that has not been received by the ground
lessor, and (VI) the ground lessor shall not be obligated to recognize the right
to possession granted to Tenant under this Lease if Tenant is in default under
this Lease beyond the expiration of any cure period provided for herein, and in
no event shall the ground lessor be obligated to recognize any right to
possession beyond the expiration date of the ground lease, unless specifically
agreed to in a separate document executed by an authorized officer of the ground
lessor. Tenant further agrees that in the event any proceedings are brought for
the foreclosure of any mortgage encumbering the Building, Tenant shall attorn to
the purchaser at such foreclosure sale, if requested to do so by such purchaser,
and shall recognize such purchaser as the landlord under this Lease, and Tenant
waives the provisions of any statute or rule of law, now or hereafter in effect,
which may give or purport to give Tenant any right to terminate or otherwise
adversely affect this Lease and the obligations of Tenant hereunder in the event
any such foreclosure proceeding is prosecuted or completed or any deed in lieu
obtained. Tenant agrees that upon such attornment, such purchaser shall not
(i) be bound by any payment of annual base rent or additional rent for more than
one (1) month in advance, except prepayments in the nature of security for the
performance by Tenant of its obligations under this Lease, but only to the
extent such prepayments have been delivered to such purchaser; (ii) be bound by
any amendment of this Lease made without the consent of any lender providing
construction or permanent financing for the Building; (iii) be liable for
damages for any act or omission of any prior landlord; (iv) be subject to any
offsets or defenses which Tenant might have against any prior landlord
(expressly excluding any offset to which Tenant is entitled pursuant to
Paragraph 6(d) of Exhibit B hereto); (v) be obligated for construction of any
improvements otherwise to be constructed by Landlord under this Lease; or
(vi) be obligated under any provision of this Lease setting forth terms of
indemnification by Landlord of Tenant. After succeeding to Landlord’s interest
under this Lease, such purchaser shall perform in accordance with the terms of
this Lease all obligations of Landlord arising after the date such purchaser
acquires title to the Building. Upon request by such purchaser, Tenant shall
execute and deliver an instrument or instruments confirming its attornment.

21.3 (a) After receiving notice from any person, firm or other entity that it
holds Superior Lien, no notice from Tenant to Landlord alleging any default by
Landlord shall be effective unless and until a copy of the same is given to such
Superior Lien Holder; provided,

 

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however, that Tenant shall have been furnished with the name and address of such
Superior Lien Holder. The curing of any of Landlord’s defaults by such Superior
Lien Holder shall be treated as performance by Landlord.

(b) In addition to the time afforded Landlord for the curing of any default, any
such Superior Lien Holder shall have such additional time as may be necessary
given the nature and extent of the default (including such time as may be
necessary in order to foreclose the mortgage, deed of trust or other similar
security instrument, or obtain a deed in lieu therefor or otherwise obtain
possession of the Land and Building) after the expiration of the period allowed
to Landlord for the cure of any such default within which to cure such default
so long as any such holder, trustee or ground lessor acts with reasonable
diligence.

(c) In the event that any lender providing construction or permanent financing
or any refinancing for the Building requires, as a condition of such financing,
that modifications to this Lease be obtained, and provided that such
modifications (i) are reasonable, (ii) do not adversely affect in a material
manner Tenant’s use of the Premises as herein permitted, (iii) do not increase
the rent and other sums to be paid by Tenant hereunder and (iv) do not diminish
in a material manner any of Tenant’s other rights under this Lease or increase
any of Tenant’s other obligations or liabilities under this Lease, Landlord may
submit to Tenant a written amendment to this Lease incorporating such required
changes, and Tenant hereby covenants and agrees to execute, acknowledge and
deliver such amendment to Landlord within five (5) days of Tenant’s receipt
thereof.

ARTICLE XXII

HOLDING OVER

22.1 In the event that Tenant shall not immediately surrender the Premises on
the date of the expiration of the Lease Term, Tenant shall become a tenant by
the month at a base rent and additional rent equal to one hundred fifty percent
(150%) of the amount of the annual base rent and all additional rent in effect
during the last month of the Lease Term. Said monthly tenancy shall commence on
the first day following the expiration of the Lease Term. As a monthly tenant,
Tenant shall be subject to all the terms, conditions, covenants and agreements
of this Lease. Tenant shall give to Landlord at least thirty (30) days’ written
notice of any intention to quit the Premises. Tenant shall be entitled to thirty
(30) days’ written notice to quit the Premises, which notice shall not be given
until the expiration of the Lease Term, unless Tenant is in default hereunder,
in which event Tenant shall not be entitled to any notice to quit, the usual
thirty (30) days’ notice to quit being hereby expressly waived. Notwithstanding
the foregoing provisions of this Section 22.1, in the event that Tenant shall
hold over after the expiration of the Lease Term, and if Landlord shall desire
to regain possession of the Premises promptly at the expiration of the Lease
Term, then at any time prior to Landlord’s acceptance of rent from Tenant as a
monthly tenant hereunder, Landlord, at its option may forthwith re-enter and
take possession of the Premises without process, or by any legal process in
force in the jurisdiction in which the Building is located.

 

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ARTICLE XXIII

COVENANTS OF LANDLORD

23.1 Landlord covenants that it has the right to make this Lease for the term
aforesaid, and that if Tenant shall pay all rent when due and punctually perform
all the covenants, terms, conditions and agreements of this Lease to be
performed by Tenant, Tenant shall, during the term hereby created, freely,
peaceably and quietly occupy and enjoy the full possession of the Premises
without molestation or hindrance by Landlord or any party claiming through or
under Landlord, subject to the provisions of this Lease, including, without
limitation, Section 23.2 hereof. Tenant acknowledges and agrees that its
leasehold estate in and to the Premises vests on the date this Lease is
executed, notwithstanding that the term of this Lease will not commence until a
future date.

23.2 Landlord hereby reserves to itself and its successors and assigns the
following rights (all of which are hereby consented to by Tenant): (i) to change
the street address or name of the Building, or the arrangement or location of
entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets,
or other public parts of the Building (provided same does not materially,
adversely affect Tenant’s use of or access to the Premises); (ii) to erect, use
and maintain pipes and conduits in and through the concealed portions of the
Premises; (iii) to grant to anyone the exclusive right to conduct any particular
legal business or undertaking in the Building; (iii) in the event that Tenant
vacates the Premises prior to the expiration of the Lease Term, to make
alterations to or otherwise prepare the Premises for re-occupancy by another
tenant without relieving Tenant of its obligation to pay all base rent,
additional rent and other sums due under this Lease through such expiration; and
(iv) to grant anyone the exclusive right from time to time on a temporary basis
to use any portion of the common public areas of the Building (provided it does
not materially, adversely affect Tenant’s use of or access to the Premises).
Landlord shall use commercially reasonable efforts to minimize any interference
to the operation of Tenant’s business in the Premises as a result of the
exercise of such rights; provided that Landlord shall not be required to incur
any additional, unusual risk, cost, or expense in connection therewith. Provided
Landlord acts prudently and complies with the immediately preceding sentence,
Landlord may exercise any or all of the foregoing rights without being deemed to
be guilty of an eviction, actual or constructive, or a disturbance or
interruption of the business of Tenant or of Tenant’s use or occupancy of the
Premises.

ARTICLE XXIV

PARKING

24.1 Upon the written request of Tenant received by Landlord on or before the
Lease Commencement Date, Landlord agrees to make available to Tenant and its
employees and to Tenant’s permitted subtenants monthly parking permits in an
aggregate amount not to exceed one (1) monthly parking permit for each one
thousand three hundred fifty (1,350) square feet of above grade rentable area in
the Premises (excluding any storage space leased by Tenant) for the parking of
standard-sized and compact passenger vehicles,

 

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including standard-sized sport utility vehicles, in the Office Parking Area of
the Garage on a non-exclusive, unassigned, first-come, first-served basis.
Tenant hereby elects to so purchase the entire amount of unreserved parking
permits available to Tenant in accordance with the foregoing. Notwithstanding
the foregoing, by providing written notice to Landlord on or before the Lease
Commencement Date, Tenant may elect to convert up to five (5) of such unreserved
monthly parking permits from Tenant’s parking ratio to reserved parking permits,
in locations to be designated by Landlord and/or the garage operator in their
sole discretion, which notice shall state the number of permits (up to the
aforesaid maximum of 5 permits) that Tenant wishes to convert, it being
understood and agreed that any such reserved parking permits shall be a part of,
and not in addition to, Tenant’s total ratio of one permit for every 1,350
rentable square feet of above grade rentable area in the Premises. Further
notwithstanding the foregoing, upon the written request of Tenant delivered to
Landlord concurrently with Tenant’s execution and delivery of this Lease,
Landlord agrees to make available to Tenant up to five (5) temporary additional
monthly parking permits for the parking of standard-sized and compact passenger
vehicles, including standard-sized sport utility vehicles, in the Garage on a
non-exclusive, unassigned, first-come, first-served basis (the “Temporary
Permits”). Any such Temporary Permits so elected by Tenant shall be subject to
all of the terms and conditions of this Article XXIV that are applicable to
Tenant’s unreserved permits comprising Tenant’s parking ratio, except that, on
thirty (30) days prior written notice to Tenant, Landlord shall have the right
to recapture all or any of such Temporary Permits if Landlord needs the same in
connection with the leasing of the Building (i.e., such Temporary Permits may be
recaptured for Building occupants, but not for daily parkers that do not occupy
the Building), in which event Tenant shall have no further right or obligation
with respect thereto. The charge for all such permits shall be the prevailing
rates for unreserved and reserved parking permits (as applicable) charged from
time to time by Landlord or the operator of the Garage. Notwithstanding the
foregoing, Landlord does not guarantee (a) the right to convert any such
unreserved monthly parking permits to reserved parking permits following the
Lease Commencement Date if and to the extent that Tenant does not provide
written notice to Landlord converting such monthly parking permits (up to the
aforesaid maximum of 5 permits) on or before the Lease Commencement Date, or
(b) the right to any such reserved or unreserved parking permits hereunder if
Tenant fails continuously to maintain such permits.

24.2 It is understood and agreed that the Office Parking Area of the Garage will
be operated on a self-parking basis, including without limitation, stacked
self-park spaces, and that no specific parking spaces will be allocated for use
by Tenant. Landlord reserves the right to establish other parking controls,
rules or regulations, at any time and in its commercially reasonable discretion.
Each user of the Office Parking Area of the Garage will have the right to park
in any available unreserved parking space in accordance with regulations of
uniform applicability promulgated by Landlord or the Garage operator.
Notwithstanding anything herein to the contrary, Landlord hereby reserves the
right from time to time to designate any portion of the Office Parking Area of
the Garage to be used exclusively by Building visitors, retail patrons to the
Building, other tenants of the Building, and/or members of the public.

 

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24.3 Tenant agrees that it and its employees shall observe reasonable safety
precautions in the use of the Garage and shall at all times abide by all rules
and regulations promulgated by Landlord or the Garage operator governing its
use. Tenant’s employees having the use of monthly parking permits shall be
required to display an identification or parking sticker at all times in all
vehicles parked in the Garage. Any car not displaying such a sticker may be
towed away at the vehicle owner’s expense in accordance with the Garage rules
and regulations. In addition, Landlord’s and Tenant’s use of the Garage shall be
subject to all Legal Requirements. If an employee of Tenant or other person who
has been issued a permit for standard unreserved parking in the Garage parks in
a reserved parking space or in areas of the Garage that are designated as
reserved for the exclusive use of tenants other than Tenant, such employee shall
be subject to enforcement measures, which may include violation ticketing at
125% of the daily parking rates then in effect in the Garage. If any violation
fee is not paid to an attendant at the time of departure, the violator will be
billed and if such violation fee is not paid by the violator within thirty
(30) days following the date of invoice, such unpaid sums will be charged to and
become the responsibility of Tenant.

24.4 The Office Parking Area of the Garage will remain open on Monday through
Friday (excluding legal holidays) during the normal hours of operation of the
Building on such days. Landlord reserves the right to close the Garage during
periods of unusually inclement weather and portions of the Garage during periods
of repair, cleaning and/or maintenance. At all times when the Garage is closed,
monthly permit holders shall be afforded access to the Garage by means of a
magnetic card or other procedure provided by Landlord or the Garage operator.

24.5 It is understood and agreed that Landlord does not assume any
responsibility for, and shall not be held liable for, any damage or loss to any
vehicles parked in the Garage or to any personal property located therein, or
for any injury sustained by any person in or about the Garage, and in no event
shall Landlord or any employee, agent or contractor of Landlord be required to
monitor or respond to any panic alarms within the Garage.

ARTICLE XXV

GENERAL PROVISIONS

25.1 Tenant acknowledges that neither Landlord nor any broker, agent or employee
of Landlord has made any representations or promises with respect to the
Premises or the Building except as herein expressly set forth, and no rights,
privileges, easements or licenses are being acquired by Tenant except as herein
expressly set forth.

25.2 Nothing contained in this Lease shall be construed as creating a
partnership or joint venture of or between Landlord and Tenant, or to create any
other relationship between the parties hereto other than that of landlord and
tenant.

 

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25.3 Landlord recognizes Studley, Inc. (“Broker”) as the sole broker procuring
this Lease and shall pay said Broker a commission pursuant to a separate
agreement between said Broker and Landlord. Landlord and Tenant each represent
and warrant to the other that, except as provided in the preceding sentence,
neither of them has employed or dealt with any broker, agent or finder in
carrying on the negotiations relating to this Lease. Landlord and Tenant shall
indemnify and hold the other harmless from and against any claim or claims for
brokerage or other commissions asserted by any broker, agent or finder engaged
by Landlord or Tenant or with whom Landlord or Tenant has dealt in connection
with this Lease, other than the Broker.

25.4 (a) Tenant agrees, at any time and from time to time, upon not less than
ten (10) days’ prior written notice from Landlord, to execute, acknowledge and
deliver to Landlord a true statement in writing (i) certifying that this Lease
is unmodified and in full force and effect (or if there have been any
modifications, that this Lease is in full force and effect as modified and
stating the modifications), (ii) stating the dates to which the rent and any
other charges hereunder have been paid by Tenant, (iii) stating whether or not,
to the best knowledge of Tenant, Landlord is in default in the performance of
any covenant, agreement or condition contained in this Lease, and if so,
specifying the nature of such default, (iv) stating the address to which notices
to Tenant are to be sent, and (v) stating such other information as Landlord,
Lender or any other holder of a mortgage secured by the Building may request on
such form as Landlord, Lender or such holder may reasonably request. If Tenant
fails to execute, acknowledge and deliver any such written statement within the
aforesaid ten (10) day period, and such failure continues for two (2) business
days after a second (2nd) written notice from Landlord, then Tenant shall be
deemed to have constituted and appointed Landlord as Tenant’s attorney-in-fact
to execute any such certificate or other document for or on behalf of Tenant.
Any such statement delivered by Tenant may be relied upon by any owner of the
Building or the Land, any prospective purchaser of the Building or the Land, any
mortgagee or prospective mortgagee of the Building or such Land or of Landlord’s
interest therein, or any prospective assignee of any such mortgagee.

(b) On each anniversary of the Effective Date, Tenant shall deliver to Landlord
Tenant’s financial statements, audited by a certified independent public
accountant, for the fiscal year ending in the previous calendar year stating,
among other things, Tenant’s revenues and net income; provided, however, that
during any such period for which (i) Tenant is not a public company and
(ii) Tenant does not prepare audited financial statements in the ordinary course
of Tenant’s business, then Tenant shall satisfy the requirement hereunder by
delivering to Landlord Tenant’s financial statements certified by Tenant’s chief
financial officer. Tenant shall make its chief financial officer available to
answer any questions Landlord may have concerning such financial statements and
shall deliver any additional information reasonably requested by Landlord to
clarify or verify the data shown on the statements provided pursuant to the
preceding sentence, provided Landlord agrees to hold the financial statements
and other such additional information subject to customary confidentiality
conditions. Notwithstanding the foregoing, Tenant shall not be required to
deliver to Landlord any such financial statements hereunder during any period in
which Tenant’s then-current, complete annual financial statements, audited by an
independent certified public accountant, are publicly available on Tenant’s
website.

 

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25.5 Landlord and Tenant each hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other in
connection with any matter arising out of or in any way connected with this
Lease, the relationship of landlord and tenant hereunder, Tenant’s use or
occupancy of the Premises, or any claim of injury or damage.

25.6 All notices or other communications required hereunder shall be in writing
and shall be deemed duly given if delivered in person (with receipt therefor),
or if sent by certified or registered mail, return receipt requested, postage
prepaid, or by recognized overnight courier, when received or refused to the
following addresses: (i) if to Landlord at c/o Boston Properties, 505 9th
Street, N.W., Suite 800, Washington, D.C. 20004, Attn: Regional Counsel, with a
copy to Boston Properties, 800 Boylston Street, Suite 1900, Boston,
Massachusetts 02199-8103, Attn: General Counsel, (ii) if to Tenant, at the
Premises, except that prior to the Lease Commencement Date, notices to Tenant
shall be sent to such address as Tenant shall designate and inform Landlord in
accordance with this Section 25.6. Either party may change its address for the
giving of notices by notice given in accordance with this Section.

25.7 If any 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 provision to persons or circumstances
other than those as to which it is invalid or unenforceable, shall not be
affected thereby, and each provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.

25.8 Feminine or neuter pronouns shall be substituted for those of the masculine
form, and the plural shall be substituted for the singular number, in any place
or places herein in which the context may require such substitution.

25.9 The provisions of this Lease shall be binding upon, and shall inure to the
benefit of, the parties hereto and each of their respective representatives,
successors and assigns, subject to the provisions hereof restricting assignment
or subletting by Tenant.

25.10 This Lease contains and embodies the entire agreement of the parties
hereto and supersedes all prior agreements, negotiations and discussions between
the parties hereto. Any representation, inducement or agreement that is not
contained in this Lease shall not be of any force or effect. This Lease may not
be modified or changed in whole or in part in any manner other than by an
instrument in writing duly signed by both parties hereto.

25.11 This Lease shall be governed by and construed in accordance with the laws
of the jurisdiction in which the Building is located, without regard to the
conflicts of laws principles.

 

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25.12 Article and section headings are used herein for the convenience of
reference and shall not be considered when construing or interpreting this
Lease.

25.13 The submission of an unsigned copy of this document to Tenant for Tenant’s
consideration does not constitute an offer to lease the Premises or an option to
or for the Premises. This document shall become effective and binding only upon
the execution and delivery of this Lease by both Landlord and Tenant.

25.14 Time is of the essence of each provision of this Lease.

25.15 Neither this Lease nor a memorandum thereof shall be recorded.

25.16 Except as otherwise provided in this Lease, any amounts (whether
referenced herein as “Additional Rent” or “additional rent”) owed by Tenant to
Landlord, and any cost, expense, damage, or liability shall be paid by Tenant to
Landlord no later than the later of (i) twenty (20) days after the date Landlord
notifies Tenant of the amount of such additional rent or such cost, expense,
damage or liability, or (ii) the day the next monthly installment of annual base
rent is due. If any payment hereunder is due after the end of the Lease Term,
such additional rent or such cost, expense, damage or liability shall be paid by
Tenant to Landlord not later than twenty (20) days after Landlord notifies
Tenant of the amount of such additional rent or such cost, expense, damage or
liability.

25.17 All of Tenant’s duties and obligations hereunder, including but not
limited to Tenant’s duties and obligations to pay annual base rent, additional
rent and the costs, expenses, damages and liabilities incurred by Landlord for
which Tenant is liable, shall survive the expiration or earlier termination of
this Lease for any reason whatsoever. Landlord’s obligation to refund to Tenant
any Security Deposit or overpayment made by Tenant pursuant to Article IV or
Article V shall likewise survive the expiration or earlier termination of this
Lease.

25.18 In the event Landlord is in any way delayed, interrupted or prevented from
performing any of its obligations under this Lease, and such delay, interruption
or prevention is due to fire, act of God, governmental act, action or inaction
(including, without limitation, government delays in issuing any required
building, construction, occupancy or other permit, certificate or approval or
performing any inspection or review in connection therewith), act(s) of war,
terror or terrorism, strike, labor dispute, inability to procure materials, or
any other cause beyond Landlord’s reasonable control (whether similar or
dissimilar) (each a “Force Majeure Event”), then Landlord shall be excused from
performing the affected obligations for the period of such delay, interruption
or prevention.

25.19 Landlord and Tenant hereby represents and warrants to the other that all
necessary action has been taken to enter this Lease and that the person signing
this Lease on behalf of Landlord and Tenant has been duly authorized to do so.

 

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25.20 Landlord and Tenant agree that the terms and conditions of this Lease
shall remain confidential and shall not be disclosed, directly or indirectly, to
any individual or entity by either Landlord or Tenant without the express
written consent of the other, with the exception of consultants, employees,
agents, lawyers, accountants and other professionals employed or retained
directly by either or both of the parties to negotiate or work on this Lease who
have a legitimate need to know such information and any other disclosures as may
be required to comply with applicable Legal Requirements (including without
limitation, SEC reporting and disclosure laws) or otherwise required by a court
of law or in connection with any other legal arbitration or dispute resolution
proceeding. In the event Tenant is required by a court of law or in connection
with any other legal arbitration or dispute resolution proceeding to provide
this Lease or disclose any of its terms, Tenant shall give Landlord prompt
notice of such requirement prior to making disclosure so that Landlord may seek
an appropriate protective order. If failing the entry of a protective order
Tenant is compelled to make disclosure, Tenant shall only disclose portions of
this Lease which Tenant is required to disclose and will exercise reasonable
efforts to obtain assurance that confidential treatment will be accorded to the
information so disclosed. Any and all public announcements regarding this Lease
and any public announcement using either party’s name must be approved in
writing by such party prior to publication or other dissemination.

25.21 [Intentionally Omitted].

25.22 Landlord and Tenant each hereby covenant and agree that each and every
provision of this Lease has been jointly and mutually negotiated and authorized
by both Landlord and Tenant; and, in the event of any dispute arising out of any
provision of this Lease, Landlord and Tenant do hereby waive any claim of
authorship against the other party.

25.23 The term “days,” as used herein, shall mean actual days occurring,
including, Saturdays, Sundays and holidays. The term “business days” shall mean
days other than Saturdays, Sundays and holidays. If any item must be
accomplished or delivered hereunder on a day that it is not a business day, it
shall be deemed to have been timely accomplished or delivered if accomplished or
delivered on the next following business day.

25.24 This Lease includes and incorporates Rider No.1 and Exhibits A, B, C, D,
E, F, G, H, I and J to this Lease.

25.25 As an inducement to Landlord to enter into this Lease, Tenant hereby
represents and warrants that: (a) Tenant is not, nor is it owned or controlled
directly or indirectly by, any person, group, entity or nation named on any list
issued by the Office of Foreign Assets Control of the United States Department
of the Treasury (“OFAC”) pursuant to Executive Order 13224 or any similar list
or any law, order, rule or regulation or any Executive Order of the President of
the United States as a terrorist, “Specially Designated National and Blocked
Person” or other banned or blocked person (any such person, group, entity or
nation being hereinafter referred to as a “Prohibited Person”); (b) Tenant is
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by any person, group, entity or nation which is) acting directly or indirectly
for or on behalf of any Prohibited Person; and (c) from and after the effective
date of the above-referenced Executive Order, Tenant (and any person, group, or
entity which Tenant controls, directly or indirectly) has not conducted nor will
conduct business nor has engaged nor will engage in any transaction or dealing
with any Prohibited Person in violation of the U.S. Patriot Act or any OFAC rule
or regulation, including, without limitation, any assignment of this Lease or
any subletting of all or any portion of the Premises or the making or receiving
of any contribution of funds, goods or services to or for the benefit of a
Prohibited Person in violation of the U.S. Patriot Act or any OFAC rule or
regulation. In connection with the foregoing, it is expressly understood and
agreed that (i) any breach by Tenant of the foregoing representations and
warranties shall be deemed a default by Tenant under Article XIX of this Lease
and shall be covered by the indemnity provisions of this Lease, (ii) Tenant
shall be responsible for ensuring that all assignees of this Lease and all
subtenants or other occupants of the Premises comply with the foregoing
representations and warranties, and (iii) the representations and warranties
contained in this subsection shall be continuing in nature and shall survive the
expiration or earlier termination of this Lease.

25.26 Landlord represents and warrants to Tenant, as of the date hereof, that
there is no mortgage lien affecting the Building or Landlord’s interest therein,
and Landlord owns a leasehold estate in and to the Land.

ARTICLE XXVI

COMMUNICATIONS AND ACCESS; BUILDING RISERS

26.1 Landlord agrees that, provided there does not exist an Event of Default by
Tenant under this Lease, Tenant and its contractor shall be permitted
non-exclusive access equal to its proportionate share (as determined from time
to time based upon the number of rentable square feet of office space Tenant is
leasing in the Building from Landlord) of the available space in the Building
risers and telecommunications closets, including without limitation the space
above the ceilings and below the floors of the Premises, except such risers or
closets being utilized exclusively by Landlord or other tenants in the Building
(and excluding, in any event, such Building risers and/or telecommunications
closets located in mechanical rooms, basement space or other common and/or
public areas of the Building) (collectively, “Risers”), at no additional charge
therefor, for the sole purpose of installing cabling and telecommunications
equipment therein; provided, however, that:

(a) Tenant shall submit to Landlord for Landlord’s prior written approval (which
approval shall not be unreasonably withheld or delayed) reasonably detailed
plans and specifications showing the locations within the Risers where such
cabling and equipment will be installed. Tenant shall appropriately mark and/or
tag all such cabling and equipment as reasonably required by Landlord to
identify the owner and/or user thereof. If any such cabling and/or equipment are
installed without Landlord’s prior written approval or without such appropriate
identification, and Tenant fails to remove same within thirty (30) days after
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notice from Landlord to do so, then Landlord shall have the right to remove and
correct such improvements and restore the Risers to their condition immediately
prior thereto, and Tenant shall be liable for all expenses incurred by Landlord
in connection therewith. Tenant shall not be entitled to use or occupy a
disproportionate amount of the available space in the Risers, based upon the
proportion of the rentable area then being leased by Tenant to the aggregate
rentable office area in the Building. Landlord makes no representation or
warranty that the Risers will be adequate to satisfy Tenant’s needs. Tenant has
previously inspected the Riser space and has satisfied itself as to the adequacy
of such space.

(b) Tenant and its contractor shall coordinate any access to the Risers with
Landlord’s property manager for the Building.

(c) Tenant shall pay, as additional rent, all actual, out of pocket costs and
expenses reasonably incurred by Landlord in connection with performance of such
work by or on behalf of Tenant or its contractors, agents or employees.

(d) Tenant and its contractor shall conduct their work in a manner that shall
minimize disruption and inconvenience to other tenants and occupants of the
Building.

(e) During the installation, maintenance, repair, replacement, and removal of
such cabling and equipment, Tenant shall keep all public areas of the Building
where such work is being performed neat and clean at all times and Tenant shall
remove or cause all debris to be removed from the Building at the end of each
work day.

(f) Tenant shall promptly repair, at its sole cost and expense, any damage done
to the Building or to the premises of any other tenant in the Building and to
any electrical, mechanical, HVAC, sprinkler, life safety and other operating
system serving the Building or other common areas appurtenant to the Building
that are caused by or arise out of any work performed by Tenant or its
contractor pursuant to this Section.

(g) Any contractor performing such work shall be subject to the prior written
approval of Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed.

(h) In performing such work, Tenant and its contractor shall observe Landlord’s
rules and regulations regarding the construction, installation, and removal of
Tenant improvements in the Building, which rules and regulations, together with
any modifications thereto, shall be provided to Tenant, in writing, prior to
enforcement.

(i) Tenant shall be solely responsible at its sole cost and expense to correct
and to repair any work or materials installed by Tenant or Tenant’s contractor.
Landlord shall have no liability to Tenant whatsoever on account of any work
performed or material provided by Tenant or its contractor.

(j) Tenant shall remove, at Tenant’s sole cost and expense, all cabling and
equipment installed by or on behalf of Tenant or other occupants of the Premises
from the

 

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Risers, by no later than the expiration or earlier termination of this Lease, if
and to the extent removal is required by the National Electric Code or other
applicable Legal Requirements. All damages and injury to the Risers, the
Premises or the Building caused by such removal shall be repaired by Tenant, at
Tenant’s sole expense and in a manner approved by Landlord.

(k) Landlord’s representative shall have the right to inspect any work performed
by Tenant or its contractor during the normal hours of operation of the Building
or such other hours as Landlord may request.

(l) All work done and materials furnished by Tenant and/or its contractor shall
be of good quality, shall be performed in a good and workmanlike manner and in
accordance and compliance with all applicable Legal Requirements and the other
applicable provisions of this Lease.

(m) Any casualty or other damage to all or any portion of the Risers shall not
affect Tenant’s obligations, duties, or responsibilities under this Lease.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGE FOLLOWS.]

 

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under seal on
or as of the day and year first above written.

 

   LANDLORD:          SQUARE 54 OFFICE OWNER LLC, a Delaware limited liability
company          By:    BP/DC Properties, Inc., a Maryland corporation, its sole
member and manager             By:    /s/ Raymond A. Ritchey    (SEAL)         
   Name:    Raymond A. Ritchey                  Title:    Executive Vice
President            TENANT:          VANDA PHARMACEUTICALS INC., a Delaware
corporation          By:    /s/ James P. Kelly    (SEAL)          Name:    James
P. Kelly                    Title:    Senior Vice President and Chief Financial
Officer   

 

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RIDER NO. 1

RENEWAL

THIS RIDER NO. 1, RENEWAL (“Rider”), is attached to and made a part of that
certain Lease dated July 25, 2011 (“Lease”), by and between SQUARE 54 OFFICE
OWNER LLC, a Delaware limited liability company (“Landlord”), and VANDA
PHARMACEUTICALS INC., a Delaware corporation (“Tenant”). The terms used in this
Rider which are defined in the Lease have the same meanings as provided in the
Lease.

WITNESSETH, that for and in consideration of Tenant’s entering into the Lease
described above, and other good and valuable consideration, and intending to be
legally bound hereby, Landlord hereby grants to Tenant the subordinate right to
renew the initial term of the Lease upon the following terms and conditions:

1. Landlord hereby grants to Tenant the subordinate and conditional right,
exercisable at Tenant’s option, to renew the term of the Lease for one
(1) additional term of five (5) years. If timely exercised and if the conditions
applicable thereto have been satisfied, such renewal term (“Renewal Term”) shall
commence immediately following the end of the initial term provided in
Section 2.1 of the Lease. The right of renewal herein granted to Tenant shall be
subject to, and shall be exercised in accordance with, the following terms and
conditions:

(a) Tenant shall exercise its right of renewal with respect to the Renewal Term
by giving Landlord written notice of the exercise thereof (“Renewal Option
Notice”) not less than twelve (12) months (“Outside Notice Deadline”) and not
more than fourteen (14) months prior to the expiration of the initial term of
the Lease. In the event that a Renewal Option Notice is not given in a timely
manner, Tenant’s right of renewal with respect to the Renewal Term shall lapse
and be of no further force or effect. If Tenant is in default under the Lease on
the date the Renewal Option Notice is given or any time thereafter, on or before
the commencement date of the Renewal Term, then, at Landlord’s option, the
Renewal Option Notice shall be totally ineffective and Tenant’s right of renewal
as to the Renewal Term shall lapse and be of no further force or effect.
Notwithstanding the foregoing, if Tenant is in default under this Lease on the
date Tenant delivers to Landlord the Renewal Option Notice or such default
occurs following Tenant’s delivery of the Renewal Option Notice, and Tenant
cures such default in full within the applicable notice and cure period provided
pursuant to Section 19.1 of the Lease, but in all events on or before the
Outside Notice Deadline, then Tenant’s right of renewal hereunder shall not be
voided on account of such default.

(b) Promptly following Landlord’s timely receipt of the Renewal Option Notice
for the Renewal Term, Landlord and Tenant shall commence negotiations concerning
the amount of annual base rent which shall be payable during each year of the
Renewal Term and the Lease security that may be required, it being intended that
such annual base rent shall be equal to the then prevailing fair market rent for
the Premises. The parties shall have thirty (30) days after Landlord’s receipt
of the Renewal Option Notice in which to agree on the annual base rent which
shall be payable during each year of the Renewal Term and the Lease

 

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security that may be required. The parties shall be obligated to conduct such
negotiations in good faith. Among the factors to be considered by the parties
during such negotiations shall be (i) the general office rental market for
Class A office buildings in the Market Area, (ii) rental rates then being
obtained (or quoted if comparables are not readily available) by other building
owners for office buildings of comparable size, location and quality to the
Building in the Market Area, (iii) the rental rates then being obtained by
Landlord for comparable office space, in “as is” condition, in the Building,
(iv) escalations and pass throughs of Operating Expenses as provided in the
Lease, (v) concession packages then being obtained (or offered if comparables
are not readily available) by other building owners for office buildings in the
Market Area of comparable size, location and quality to the Building,
(vi) concession packages then being obtained by Landlord for comparable office
space in “as-is” condition in the Building, and (vii) consideration of what
would constitute an appropriate security deposit securing the performance of
Tenant’s obligations with respect to the Renewal Term, given Tenant’s
creditworthiness at the time, any out-of-pocket expenditures by Landlord in
connection with such renewal, and prevailing market conditions at the time, and
Tenant shall be required to post any such security as a condition to the Renewal
Term. If the parties agree on the base rent payable during each year of the
Renewal Term, they shall promptly execute an amendment to the Lease stating the
rent so agreed upon.

(c) If, during such thirty (30) day period referred to in subparagraph
(b) above, the parties are unable to agree on the base rent payable during the
Renewal Term, then (i) the fair market rent and Lease security and (ii) the
related fair market concessions, abatements and allowances, if any, that will be
applicable thereto shall be determined in accordance with the procedure set
forth in this subparagraph (c). Within ten (10) days after expiration of such
thirty (30) day period, the parties shall appoint a real estate broker
(“Broker”) who shall be mutually agreeable to both Landlord and Tenant, shall be
a member of the National Association of Realtors or the Greater Washington, D.C.
Association of Realtors, and shall have at least ten (10) years relevant
experience in office rentals in the Market Area. If the parties are unable to
agree on a Broker within such ten (10) day period, then each party, within five
(5) days after the expiration of the aforesaid ten (10) day period, shall
appoint a Broker (with the same qualifications) and the two Brokers shall
together appoint a third Broker with the same qualifications (“Third Broker”).
The original agreed upon Broker, if applicable, or two Brokers appointed shall
determine, within thirty (30) days after appointment, the then fair market base
rent and Lease security (and related fair market concessions, abatements and
allowances, if any) that will be applicable to the Premises for the Renewal
Term. Among the factors to be considered by the Broker or Brokers in determining
the fair market base rent and Lease security for the Premises (and related fair
market concessions, abatements and allowances, if any ) that will be applicable
during the Renewal Term shall be those factors set out in subparagraph
(b) above. The fair market rent arrived at by the Broker, if only one, (or if
more than one Broker and the original two (2) Brokers appointed by the parties
agree on a fair market rent), shall be used as the fair market base rent for the
Renewal Term. If more than one Broker is appointed and the Brokers reach
different determinations, and the parties are unable to reach agreement within
five (5) business days of receipt of both Brokers’ determinations, then, the
Third Broker shall determine within thirty (30) days of receipt of both Brokers’
determinations, which of the Brokers’ determination of the fair market base rent
and lease security for the Premises (and related fair market

 

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concessions, abatements and allowances, if any) will be applicable for the
Renewal Term. The fair market base rent and Lease security (market concessions,
abatements and allowances, if any) selected by the Third Broker shall be used
for the Renewal Term. Landlord and Tenant shall each bear the cost of its Broker
and shall share equally the cost of the Third Broker.

(d) During the Renewal Term, all the terms, conditions, covenants and agreements
set forth in the Lease shall continue to apply and be binding upon Landlord and
Tenant, except that (i) the annual base rent payable during each year of the
Renewal Term shall be the amount agreed upon by Landlord and Tenant in the
manner provided in Paragraphs 1(b) and (c) above, and (ii) in no event shall
Tenant have the right to renew the term of the Lease, or any renewal term
thereof, beyond the expiration of the Renewal Term, and (iii) no abatements,
allowances or other concessions shall apply during the Renewal Term, except to
the extent otherwise agreed to by the parties in accordance with this Rider, and
(iv) Landlord shall not be responsible for any brokerage commissions in
connection with the Renewal Term.

2. Tenant’s rights under this Rider are personal to and may be exercised only by
Tenant and shall not be exercisable by any assignee or subtenant of Tenant
(except for any assignee that is a Permitted Transferee pursuant to Section 7.4
of the Lease).

3. Tenant shall not be entitled to renew the Term of this Lease, and Tenant’s
rights under this Rider shall lapse and be of no further force or effect, if, at
the time Tenant would otherwise be entitled to exercise its rights of renewal
(or at any time thereafter prior to the commencement of the Renewal Term),
Tenant is leasing less than one hundred percent (100%) or occupying less than
seventy-five percent (75%) of the rentable area contained in the Premises as of
the Effective Date.

4. Notwithstanding anything herein or in the Lease to the contrary, Tenant’s
rights under this Rider are subject and subordinate to the right of Hunton &
Williams LLP (and its successors and assigns) to expand into the Premises
pursuant to expansion rights contained in Hunton & Williams LLP’s lease pursuant
to the mutual agreement of Landlord and Hunton & Williams LLP.

 

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