Exhibit 10.1

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

LEASE AGREEMENT

THIS LEASE is executed this 3rd day of August, 2007, by and between DUKE REALTY
LIMITED PARTNERSHIP, an Indiana limited partnership (“Landlord”), and
RESTORATION HARDWARE, INC., a Delaware corporation (“Tenant”).

WITNESSETH:

ARTICLE 1

LEASE OF PREMISES

Section 1.01 Basic Lease Provisions and Definitions.

 

A. Leased Premises: All of that certain to-be-constructed building as shown on
the site plan attached hereto as Exhibit A and made a part hereof which shall be
situated on Enterprise Parkway in West Jefferson, Ohio (the “Building”), as well
as the land described in Exhibit B attached hereto and made a part hereof (the
“Land”) located in that certain common interest industrial park commonly
referred to as Park 70 (the “Park”);

 

B. Rentable Area of the Building: Approximately eight hundred five thousand one
hundred twenty-five (805,125) square feet, subject to final measurement in
accordance with Section 1.03 (the “Rentable Area”);

 

C. Building Expense Percentage: One hundred percent (100%);

 

D. *Minimum Annual Rent:

 

Years 1 – 5

  

$3,152,869.50 per year

Years 6 – 10

  

$3,468,478.50 per year

Years 11 – 15

  

$3,815,487.38 per year;

 

E. *Monthly Rental Installments:

 

Months 1 – 60

  

$262,739.13 per month

Months 61 – 120

  

$289,039.88 per month

Months 121 – 180

  

$317,957.28 per month;

 

* (the foregoing rental amounts are subject to adjustment in accordance with
Section 2.02C below.)

 

F. Lease Term: Fifteen (15) years;

 

G. Commencement Date: The date upon which the Landlord Work (as defined in
Section 2.02 below) is Substantially Completed (as defined in Section 2.02G
below) and the Leased Premises has been delivered to Tenant. The parties
anticipate the Commencement Date to be June 22, 2008 (the “Projected
Commencement Date”);

 

H. Security Deposit: None;

 

I. Broker(s): Duke Realty Services Limited Partnership, representing Landlord,
and CB Richard Ellis Atlanta representing Tenant;

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

J. Permitted Use: General office and administration, sales to the general
public, warehousing and distribution of consumer products, and storage,
generation and use of limited amounts of hazardous materials that are related to
Tenant’s business and in accordance with all applicable laws and otherwise in
accordance with Article 16 of this Lease, and any other legally permitted use
reasonably acceptable to Landlord;

 

K. Address for payments and notices as follows:

 

Landlord:

   Duke Realty Limited Partnership    Attn.: Columbus Market, Vice President,   

Asset Management and Customer Service

5600 Blazer Parkway, Suite 100

Dublin, Ohio 43017

With Rental

  

Payments To:

   Duke Realty Limited Partnership    75 Remittance Drive, Suite 3205   
Chicago, Illinois 60675-3205

Tenant:

   Restoration Hardware, Inc.    Attn: Chief Financial Officer   

5725 Paradise Drive, Building D

Corte Madera, California 94925

With a Copy to:

   Restoration Hardware, Inc.    Attn: General Manager   

[STREET ADDRESS TO BE INSERTED WHEN ADDRESS IS ESTABLISHED]

Enterprise Parkway

West Jefferson, Ohio 43162

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

LIST OF EXHIBITS

 

Exhibit A    –    Site Plan Exhibit B    –    Legal Description of Land
Exhibit C    –    Form of Letter of Understanding Exhibit D    –    Preliminary
Drawings Exhibit E    –    Scope of Work Exhibit F    –    List of Allowances
Exhibit G    –    Project Schedule Exhibit H    –    MHE Plan Exhibit I    –   
Early Occupancy Schedule Exhibit J    –    Construction Rules of Conduct
Exhibit K    –    CCRs Exhibit L    –    Operating Expense Exclusions Exhibit M
   –    Design Standards Exhibit N    –    Rules and Regulations Exhibit O    –
   Subordination, Nondisturbance and Attornment Agreement Exhibit P    –   
Agency Disclosure Exhibit Q    –    Landlord Waiver Exhibit R    –    Offer
Space Exhibit S    –    CRA Act Exhibit T    –    Memorandum of Lease

Section 1.02 Leased Premises. Landlord hereby leases to Tenant and Tenant leases
from Landlord, subject to all of the terms and conditions set forth herein, the
entirety of the Leased Premises.

Section 1.03 Rentable Areas; Final Measurement of Leased Premises. Prior to
Substantial Completion of the Leased Premises, Landlord shall cause the project
architect (“Landlord’s Architect”) to calculate the rentable square footage of
the Leased Premises, as constructed, in accordance with customary industrial
standards using exterior wall dimensions, as promulgated by the Building Owners
and Managers Association “Standard Method of Measuring Floor Area in Industrial
Buildings” 2001. Following such remeasurement, (x) the rentable square footage
calculated by Landlord’s Architect pursuant to the terms of this Section 1.03
shall be binding and conclusive upon the parties, and (y) all amounts,
percentages and figures appearing or referred to in this Lease based upon
rentable square footage (or Rentable Area) shall be modified in accordance with
such determination; provided, however, that such remeasurement shall not modify
or affect the Minimum Annual Rent payable by Tenant during the initial Lease
Term.

ARTICLE 2

TERM AND POSSESSION

Section 2.01 Term. The term of this Lease (“Lease Term”) shall be the period of
time specified in the Basic Lease Provisions commencing on the Commencement Date
and ending on the end of the one hundred eightieth (180th) month thereafter (the
“Expiration Date”). Following the Commencement Date, Landlord and Tenant shall
promptly execute a Letter of Understanding in the form attached hereto as
Exhibit C, wherein the parties shall specify the Commencement Date, the
Expiration Date, and any changes to the Minimum Annual Rent and corresponding
Monthly Rental Installment schedules pursuant to Section 2.02C below.

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

Section 2.02 Construction.

A. Landlord Work.

(i) Turnkey Work. Upon Lease execution, Landlord and Tenant have approved the
preliminary drawings for the site plan, floor plan and the Building structure
(the “Preliminary Drawings”) attached hereto as Exhibit D. On or before the
thirtieth (30th) day following the date hereof, Landlord shall prepare and
submit to Tenant a set of construction drawings (the “Turnkey Construction
Drawings”) covering all work, except for the Allowance Work (defined below), to
be performed by Landlord in constructing the interior and exterior improvements
(the “Turnkey Work”), which shall be based on the scope of work attached hereto
as Exhibit E (the “Scope of Work”). Without limiting the foregoing, the Turnkey
Work shall include, and Landlord shall be responsible for, the construction of
Enterprise Parkway to the points of ingress and egress to and from the Leased
Premises shown on the Preliminary Drawings. Tenant shall have ten (10) days
after receipt of the Turnkey Construction Drawings in which to review the
Turnkey Construction Drawings and to give to Landlord written notice of Tenant’s
approval of the Turnkey Construction Drawings or its requested changes to the
Turnkey Construction Drawings. Tenant shall have the right to request changes to
the Turnkey Construction Drawings and Landlord shall implement such changes as
the parties mutually agree upon. If Tenant fails to approve or request changes
to the Turnkey Construction Drawings within ten (10) days after its receipt
thereof, Tenant shall be deemed to have approved the Turnkey Construction
Drawings and the same shall thereupon be final. If Tenant requests any changes
to the Turnkey Construction Drawings, Landlord shall make those changes which
are requested by Tenant and shall within ten (10) days of its receipt of such
request submit the revised portion of the Turnkey Construction Drawings to
Tenant. Tenant may not thereafter disapprove the revised portions of the Turnkey
Construction Drawings unless Landlord has failed to incorporate the comments of
Tenant in a manner acceptable to Tenant and, subject to the foregoing, the
Turnkey Construction Drawings, as modified by said revisions, shall be deemed to
be final upon the submission of said revisions to Tenant. Without limiting the
foregoing, following the completion of the Turnkey Construction Drawings in
accordance with this Section 2.02A(i), Tenant agrees to confirm Tenant’s consent
thereto in writing within three (3) business days following Landlord’s written
request therefor.

(ii) Allowance Work. In addition to the Turnkey Work, Landlord has agreed to
make certain improvements to the Leased Premises described in the List of
Allowances attached hereto as Exhibit F (the “Allowance Work”). Tenant shall
have the right to reallocate funds between the Allowance line items shown on
Exhibit F and to otherwise apply the Allowance toward any costs incurred by
Tenant in connection with the construction of, and the installation of MHE
Equipment (as hereinafter defined) in, the Leased Premises. Within thirty (30)
days following the date hereof, Tenant will confer with Landlord’s space planner
to develop a space plan for the Allowance Work that is reasonably acceptable to
Tenant and Landlord (the “Space Plan”). Within twenty (20) days after Landlord’s
receipt of the Space Plan, Landlord shall prepare and submit to Tenant a set of
construction drawings (the “Allowance Construction Drawings”) covering all work
to be performed by Landlord in constructing the Allowance Work in accordance
with the Space Plan. Tenant shall have ten (10) days after receipt of the
Allowance Construction Drawings in which to review the Allowance Construction
Drawings and to give Landlord written notice of Tenant’s approval of the
Allowance Construction Drawings or its requested changes thereto. Tenant shall
have the right to request changes to the Allowance Construction Drawings and
Landlord shall implement such changes as the parties mutually agree upon. If
Tenant fails to approve or request changes to the Allowance Construction
Drawings within ten (10) days after its receipt of the Allowance Construction
Drawings, then Tenant shall be deemed to have approved the Allowance
Construction Drawings and the same shall thereupon be final. If Tenant requests
any changes to the Allowance Construction Drawings, Landlord shall make those
changes which

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

are requested by Tenant and shall within ten (10) days of its receipt of such
request submit the revised portion of the Allowance Construction Drawings to
Tenant. Tenant may not thereafter disapprove the revised portions of the
Allowance Construction Drawings unless Landlord has failed to incorporate the
comments of Tenant in a manner acceptable to Tenant and, subject to the
foregoing, the Allowance Construction Drawings, as modified by said revisions,
shall be deemed to be final upon the submission of said revisions to Tenant.
After the Allowance Construction Drawings have been completed in accordance with
this Section 2.02A(ii), Tenant agrees to confirm Tenant’s consent thereto in
writing within three (3) business days following Landlord’s written request
therefor.

Following Tenant’s approval (or deemed approval) of the Allowance Construction
Drawings, Landlord shall solicit competitive bids from at least three (3)
subcontractors for each major trade (excluding any contractors also used for the
Turnkey Work). Landlord and Tenant shall review the bids jointly and Landlord
shall select the subcontractors mutually agreed upon by both parties. Promptly
following the selection of a subcontractor for each major trade, Landlord shall
deliver to Tenant a statement of the cost to construct and install all of the
Allowance Work (the “Cost Statement”). The Cost Statement shall include design
fees and general conditions, but shall not include any construction management
or contractor fees. Tenant agrees to approve or reject the Cost Statement in
writing within five (5) business days following Landlord’s written request
therefor. If Tenant rejects the Cost Statement, Landlord and Tenant shall
promptly meet to discuss changes to the Allowance Construction Drawings that
shall be necessary to reduce the cost of the Allowance Work to an amount
approved by Tenant.

Tenant shall be responsible for the cost to construct and install the Allowance
Work only to the extent that the Cost Statement, taking into account any
increases or decreases to the Allowance Work resulting from any Change Orders
(as hereinafter defined), exceeds Five Million Five Hundred Ten Thousand Two
Hundred Nine Dollars ($5,510,209.00) (the “Allowance”). If, following Tenant’s
approval (or deemed approval) of the Allowance Construction Drawings, the Cost
Statement shows that the cost to construct and install the Allowance Work will
exceed the Allowance (such excess being herein referred to as the “Excess
Allowance Work Costs”), then Tenant shall pay the Excess Allowance Work Costs to
Landlord as set forth herein. At such time as Landlord’s costs and expenses
incurred in connection with the construction and installation of the Allowance
Work exceed the Allowance, Landlord will have the right to invoice Tenant on a
monthly basis for the portion of the Excess Allowance Work Costs actually
incurred by Landlord during the prior month plus a ten percent
(10%) construction management fee thereon, and Tenant shall pay to Landlord the
amount set forth in such invoice within ten (10) days following receipt of such
invoice. Tenant’s failure to deliver the payments required in this paragraph
shall entitle Landlord to stop the construction and installation of the
Allowance Work until such payment is received, and such delay shall constitute a
Tenant Delay hereunder. In addition, all delinquent payments shall accrue
interest at fifteen percent (15%) per annum. Notwithstanding anything in this
Lease to the contrary, in the event the Allowance shall exceed the Cost
Statement (taking into account any increases or decreases to the Allowance Work
resulting from any Change Orders), then the Minimum Annual Rent and
corresponding Monthly Rental Installment schedules set forth in Section 1.01
above shall be reduced to reflect such decrease, as such costs have been
quantified in the Cost Statement approved by Tenant, plus a five percent
(5%) construction management fee. For purposes of calculating such reduction in
the Minimum Annual Rent, Landlord shall multiply the positive difference between
the Allowance and the Cost Statement plus five percent (5%) by 0.0795. [Example:
Assume $400,000 savings. Then, $400,000 × 1.05 = $420,000 × 0.0795 = $33,390
Minimum Annual Rent savings.]

(iii) The Turnkey Work and the Allowance Work together shall be collectively
referred to herein as the “Landlord Work.” The Turnkey Construction Drawings and
Allowance Construction Drawings together shall be collectively referred to
herein as the “Construction Drawings.” Landlord shall construct in a good
workmanlike manner all of the Landlord Work and supply all work,

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

labor, materials and equipment necessary to complete the Landlord Work in
accordance with the Construction Drawings, which shall include, without
limitation, the installation of landscaping, parking lots, driveways and all
improvements as shown on the Construction Drawings for the benefit of the Leased
Premises. Landlord shall use commercially reasonable speed and diligence to
Substantially Complete the Landlord Work on or before the Projected Commencement
Date.

B. Schedule. The Landlord Work shall be constructed by Landlord in a good and
workmanlike manner, in compliance with the Construction Drawings and all laws,
codes, and ordinances applicable to the Leased Premises, and in accordance with
the schedule attached hereto as Exhibit G (the “Project Schedule”). Landlord
shall apply for and obtain as expeditiously as possible, at its sole cost and
expense, all permits, licenses and certificates necessary for the construction
of the Landlord Work and for the occupancy of the Leased Premises by Tenant
(including, without limitation, temporary and final certificates of occupancy),
provided, Tenant shall be responsible for the installation of office furniture,
racking, and warehouse equipment to the extent required to obtain the temporary
and/or final occupancy permit for the Leased Premises. Landlord and Tenant will
coordinate the installation of Tenant’s MHE Equipment and warehouse equipment
pursuant to Section 2.02E.

C. Change Orders.

(i) Tenant shall have the right from time to time to request changes to the
Construction Drawings by way of written change order (each, a “Change Order,”
and collectively, “Change Orders”). Landlord shall prepare and submit to Tenant
within ten (10) days a memorandum setting forth the impact on cost and schedule,
if any, resulting from said Change Order (the “Change Order Memorandum of
Agreement”), with such cost including any additional design fees and, if the
applicable Change Order increases the cost to complete the Turnkey Work, a ten
percent (10%) construction management fee. Tenant shall, within three (3)
business days following Tenant’s receipt of the Change Order Memorandum of
Agreement, either (a) execute and return the Change Order Memorandum of
Agreement to Landlord, or (b) retract its request for the Change Order. Landlord
shall not be obligated to commence any work set forth in a Change Order until
such time as Tenant has delivered to Landlord the Change Order Memorandum of
Agreement executed by Tenant. The increase in the cost to construct the Turnkey
Work, if any, resulting from the Change Order, as set forth in the Change Order
Memorandum of Agreement, shall be herein referred to as the “Excess Turnkey
Change Order Costs.” Landlord shall invoice Tenant on a monthly basis for the
portion of the Excess Turnkey Change Order Costs actually incurred by Landlord
during the prior month and Tenant shall pay to Landlord the amount set forth in
such invoice within ten (10) days following receipt of such invoice.

(ii) Notwithstanding anything in this Lease to the contrary, in the event the
actual cost of the Turnkey Work is reduced as a result of a Change Order to the
Turnkey Work, as set forth in the Change Order Memorandum of Agreement, then the
Minimum Annual Rent and corresponding Monthly Rental Installment schedules set
forth in Section 1.01 above shall be modified to reflect such decrease, as such
costs have been quantified in the applicable Change Order Memorandum of
Agreement executed by Tenant. For purposes of calculating a reduction in the
Minimum Annual Rent due to Change Orders to the Turnkey Work, Landlord shall
multiply the net savings resulting from the Change Order, plus five percent
(5%), by 0.0795. [Example: Assume $400,000 savings. Then, $400,000 × 1.05 =
$420,000 × 0.0795 = $33,390 Minimum Annual Rent savings.]

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

D. Warranty.

(i) Landlord hereby warrants that the Landlord Work (including, without
limitation, the slab of the Leased Premises and all systems and equipment,
including heating, ventilation and air conditioning, electrical, sprinkler and
life safety, plumbing, and dock equipment, but specifically excluding the roof)
shall be, for a period of one (1) year after the Commencement Date, and that the
roof shall be, for a period of ten (10) years after the Commencement Date, free
from defects in materials and workmanship (“Landlord’s Warranty”). The
Landlord’s Warranty shall be absolute and unconditional subject only to routine
maintenance (except as to Landlord’s obligations herein), casualty, ordinary
wear and tear, and repairs and replacements necessitated by Tenant’s negligence
or willful misconduct. Landlord hereby further warrants that the Landlord Work
shall substantially and materially conform to the Construction Drawings. The
Landlord’s Warranty covers all materials, labor and equipment for replacement
and repairs but do not cover consequential damages, such as lost profits or
opportunity, incurred by Tenant. Tenant will notify Landlord following actual
discovery of any potential problems which may be covered by Landlord’s Warranty,
but no delay in providing such notice shall affect or limit Landlord’s Warranty.
Landlord also warrants that the recharge wells required for the Darby Watershed
shall be in good condition and repair for a period of three (3) years after the
Commencement Date.

(ii) In addition to the foregoing, Landlord shall obtain from all contractors
and material suppliers providing labor or materials in connection with the
development of the Leased Premises such warranties and guarantees as are
customary in the construction and development of similar premises in the market
area of the Leased Premises (collectively, “Contractor Warranties”). Without
limiting the generality of the foregoing, the Contractor Warranties shall
specifically include a ten (10) year “no dollar limit” material manufacturer’s
roof warranty. Landlord shall enforce, for the benefit of Tenant, at Landlord’s
sole cost and expense (and not as Additional Rent hereunder), during the Lease
Term, all Contractor Warranties. Landlord shall provide Tenant with copies of
all Contractor Warranties and Landlord shall consult with Tenant as to the
application and restrictions applicable to all such Contractor Warranties.
Tenant shall not take any action which to Tenant’s knowledge shall invalidate
any of the Contractor Warranties and shall provide Landlord with written notice
of all warranty claims. Tenant will notify Landlord as soon as reasonably
practicable following actual discovery of any potential problems which may be
covered by the Contractor Warranties, but no delay in providing such notice
shall affect or limit Landlord’s enforcement of any such Contractor Warranties.

(iii) Without limiting Landlord’s duty to perform (or to enforce the performance
of) repairs under any Landlord’s Warranty or Contractor Warranties, the timing
of the performance of any repairs will be mutually agreed to by Landlord and
Tenant so as to minimize the disruption to Tenant’s business operations.

E. Coordination of Tenant’s Work and Early Occupancy. Tenant agrees to
coordinate with Landlord regarding the installation of Tenant’s phone and data
wiring and any other trade related fixtures (including the “MHE Equipment”
delineated in the MHE Plan attached hereto as Exhibit H) that Tenant desires to
install in the Leased Premises prior to Substantial Completion. If and to the
extent permitted by applicable governmental laws and ordinances, Tenant,
Tenant’s contractors, subcontractors and agents shall have the right to enter
into portions of the Leased Premises prior to the Commencement Date in
accordance with the phased early occupancy schedule attached hereto as Exhibit I
in order to install fixtures (such as the MHE Equipment and conveyor), and
otherwise prepare such portions of the Leased Premises for occupancy, which
right shall expressly exclude making any structural modifications which would
interfere with the performance of the Landlord Work. During any entry prior to
the Commencement Date, (a) Tenant, Tenant’s contractors, subcontractors and
agents shall comply with all terms and conditions of this Lease other than the
obligation to pay Minimum Annual Rent, Additional Rent and utilities; provided,
Tenant shall pay its equitable share of any utility cost in connection with the
MHE Equipment and conveyor, (b) Tenant, Tenant’s contractors, subcontractors and
agents shall not interfere with Landlord’s completion of the Landlord Work,
(c) Tenant shall cause its personnel and contractors to comply in all material
respects with the terms and conditions of Landlord’s rules of conduct

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

attached hereto as Exhibit J, and (d) Tenant shall not begin operation of its
business (including any storage of Tenant’s product in the Building). Tenant
acknowledges that Tenant shall be responsible for obtaining all applicable
permits and inspections relating to any such entry by Tenant; provided that
Landlord shall cooperate with Tenant in obtaining such permits and inspections.
Landlord shall also cooperate with Tenant’s rack vendor in obtaining any permits
necessary for the installation of racks in the Leased Premises.

F. Late Completion. Notwithstanding anything to the contrary contained in the
Lease, if Substantial Completion of the Leased Premises is delayed beyond the
Projected Commencement Date as a result of Tenant Delay (as hereinafter
defined), then, for purposes of determining the Commencement Date (for rent
commencement), Substantial Completion shall be deemed to have occurred on the
date that Substantial Completion would have occurred but for such Tenant Delay.
Without limiting the foregoing, Landlord shall use commercially reasonable speed
and diligence to Substantially Complete the Landlord Work on or before the
Projected Commencement Date. Notwithstanding the foregoing, Landlord’s
obligation to perform the Landlord Work on a timely basis shall be subject to
the following additional terms and provisions:

(i) In the event the Commencement Date has not occurred within ten (10) days
after the Projected Commencement Date, as such date may be extended by
Completion Delays (as hereinafter defined), then Landlord shall pay to Tenant
the sum of Five Hundred Thousand Dollars ($500,000.00) as liquidated damages for
such delay.

(ii) In addition to the payment required pursuant to Section 2.02F(i) above, in
the event that the Commencement Date has not occurred within ten (10) days after
the Projected Commencement Date, as such date may be extended by Completion
Delays, Tenant shall receive one day of free Minimum Annual Rent and Additional
Rent from and after the Commencement Date for each day the Commencement Date is
delayed beyond such ten (10) day period as liquidated damages for such delay.

If Landlord contends that a Completion Delay has occurred, then Landlord shall
notify Tenant in writing or telephonically at (415) 945-3496 (Ken Dunaj) within
five (5) days of the event which constitutes such Completion Delay (a “Delay
Notice”). Landlord’s failure to so notify Tenant shall be deemed a waiver of
Landlord’s right to assert any such Completion Delay; provided, however, that in
the event a Completion Delay is not reasonably ascertainable or determinable by
Landlord in five (5) days (i.e., such as from cumulative unusual weather
conditions), Landlord shall have thirty (30) days in which to notify Tenant of
such Completion Delay.

G. Definitions. For purposes of this Lease: (a) “Completion Delays” means
(i) Tenant Delays (as defined below) or (ii) delays attributable to force
majeure events (as defined in Section 17.04 below) (collectively, a “Completion
Delay”); (b) the Leased Premises shall be deemed to be “Substantially Completed”
(or any grammatical variation thereof) at such time as (i) Landlord shall
certify in writing to Tenant that said Leased Premises have been completed in
substantial accordance with the Construction Drawings subject only to minor
punch list items (i.e., such unfinished items as shall not impair Tenant’s
ability to use the Leased Premises in the manner intended by the Lease) to be
mutually agreed to and identified by Tenant and Landlord during a joint
inspection of the Leased Premises prior to Substantial Completion, (ii) Landlord
shall have obtained all necessary governmental approvals and inspections, all
systems are fully operational, and sufficient utilities are available to service
the Leased Premises and are connected to mains and all meters are set and
activated, (iii) the project architect, shall certify in writing to Tenant
pursuant to and in accordance with form AIA-G704, or other form reasonably
acceptable to Landlord as to those same matters in (i) and (ii) immediately
preceding, and (iv) the

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

issuance of a temporary certificate of occupancy. At such time as the last of
the foregoing requirements shall have been satisfied, Landlord shall deliver
possession of the Leased Premises to Tenant for occupancy; (c) “Tenant Delay”
shall mean any actual delay in the Substantial Completion of the Leased Premises
to the extent caused by Tenant, including, without limitation, (i) Tenant’s
failure to meet any time deadlines specified herein (including deadlines in the
Project Schedule), (ii) delays attributable to Change Orders, (iii) the
performance of any other work in the Leased Premises by any person, firm or
corporation employed by or on behalf of Tenant, or any failure to complete or
delay in completion of such work, specifically including, but not limited to,
Tenant’s installation of office furniture, racking and warehouse equipment, and
(iv) Landlord’s inability to obtain a temporary occupancy permit for the Leased
Premises because of the need for completion of all or a portion of improvements
being installed in the Leased Premises directly by Tenant, specifically
including, but not limited to, Tenant’s installation of office furniture,
racking and warehouse equipment.

Section 2.03 Surrender of the Leased Premises. Upon the expiration or earlier
termination of this Lease, Tenant shall, at its sole cost and expense,
immediately (a) remove Tenant’s Property (as defined in Section 8.01 below) from
the Leased Premises, and repair any damage caused by any such removal,
(b) surrender the Leased Premises to Landlord in broom-clean condition and in
good order, condition and repair, reasonable wear and tear and damage due to
casualty or condemnation excepted, (c) remove from the Leased Premises
(i) Tenant’s Property (as defined in Section 8.01 below), and (ii) any
alterations required to be removed pursuant to Section 7.04 below, and
(d) repair any damage caused by any such removal and restore the Leased Premises
to the condition existing upon the Commencement Date reasonable wear and tear
and damage due to casualty or condemnation excepted. All of Tenant’s Property
that is not removed within ten (10) business days following ‘Landlord’s written
demand therefor (following the expiration or earlier termination of this Lease)
shall be conclusively deemed to have been abandoned and Landlord shall be
entitled to dispose of such property at Tenant’s cost without incurring any
liability to Tenant. This Section 2.03 shall survive the expiration or any
earlier termination of this Lease.

Section 2.04 Holding Over. If Tenant retains possession of the Leased Premises
after the expiration or earlier termination of this Lease without Landlord’s
permission, then Tenant shall be a tenant at sufferance at a rental rate equal
to one hundred fifty percent (150%) the Monthly Rental Installments for the
Leased Premises in effect upon the date of such expiration or earlier
termination and otherwise upon the terms, covenants and conditions herein
specified, so far as applicable. Acceptance by Landlord of rent after such
expiration or earlier termination shall not result in a renewal of this Lease,
nor shall such acceptance create a month-to-month tenancy. In the event a
month-to-month tenancy is created by operation of law, either party shall have
the right to terminate such month-to-month tenancy upon thirty (30) days’ prior
written notice to the other, whether or not said notice is given on the rent
paying date. Notwithstanding the foregoing, in the event Tenant provides
Landlord with at least six (6) months’ prior written notice of its intent to
holdover possession (a “Holdover Notice”), then Tenant shall have the right to
holdover beyond the expiration of the Lease Term as to all of the Leased
Premises for a period not to exceed three (3) months, as identified in the
Holdover Notice; provided, however, that Tenant shall have no such right if, at
the time of the delivery of the Holdover Notice, Landlord has entered into a
lease with a replacement tenant for the Leased Premises and requires immediate
possession of the Leased Premises upon the expiration of the Lease Term in order
to deliver possession thereof to the replacement tenant in accordance with the
terms of its lease, or has executed a term sheet or letter of intent for the
leasing of the Leased Premises to a replacement tenant and requires immediate
possession of the Leased Premises upon the expiration of the Lease Term in order
to commence the construction of interior improvements therein for such
replacement tenant. Any permitted holdover by Tenant pursuant to a Holdover
Notice shall be at the rental rate last due in this Lease, plus Additional Rent,
and shall otherwise be on the terms and conditions herein specified, so far as
applicable; provided, however, that in no event

 

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shall Tenant be permitted to deliver an additional Holdover Notice nor shall any
renewal or expansion option or other similar right or option contained in this
Lease be deemed applicable to any such tenancy. Except as expressly set forth
herein, this Section 2.04 shall in no way constitute a consent by Landlord to
any holding over by Tenant upon the expiration or earlier termination of this
Lease, nor limit Landlord’s remedies in such event.

ARTICLE 3

RENT

Section 3.01 Base Rent. Tenant shall pay to Landlord as Minimum Annual Rent for
the Leased Premises the sum specified in the Basic Lease Provisions, payable in
equal consecutive Monthly Rental Installments, in advance, without demand,
deduction or offset, beginning on the Commencement Date and on or before the
first day of each and every calendar month thereafter during the Lease Term. The
Monthly Rental Installment for any partial calendar months shall be prorated
based on the number of days during the month this Lease was in effect in
relation to the total number of days in such month.

Section 3.02 Additional Rent. Except as otherwise expressly provided, Tenant is
responsible for all commercially reasonable costs, charges and expenses incurred
by Landlord in connection with operating and maintaining the Leased Premises
during the Lease Term including, but not limited to: Real Estate Taxes (as
contemplated in this Section 3.02 and Section 17.22 hereof); insurance premiums
(but not insurance deductibles or self-insured amounts retained by Landlord);
utilities; expenses for maintenance, repair and replacement of driveways and
parking areas, including snow and ice removal; costs of trash removal;
landscaping costs; management fees (not to exceed one percent (1%) of the
Minimum Annual Rent); costs incurred under the recorded documents and owners’
association affecting the Leased Premises and shown on Exhibit K hereto, and
costs incurred under any other recorded documents or owners’ association
affecting the Leased Premises (including the CCRs referenced below) and approved
by Tenant in writing, which approval shall not be unreasonably withheld,
conditioned or delayed; repairs and maintenance to those portions of the Leased
Premises as contemplated in Section 7.02B below; and all other costs and
expenses, reasonably necessary in maintaining the Leased Premises in good order,
condition and repair as a warehouse distribution center) (collectively,
“Operating Expenses”); provided, however, that Operating Expenses shall not
include those costs, charges or expenses as set forth on Exhibit L attached
hereto. Tenant acknowledges receipt of the CCRs set forth on Exhibit K hereto,
which are intended to be recorded in connection with the development of the Park
(the “CCRs”). Tenant hereby approves the form and substance of such CCRs.
Landlord agrees that the Leased Premises, as designed and constructed in
accordance with this Lease, shall be deemed to comply with the CCRs (or Landlord
hereby waives any element of noncompliance). Promptly following the Commencement
Date, Landlord shall assign to Tenant the membership interests of Landlord in
the Association (as defined in the CCRs, but excluding the “Class B Member” or
“Developer” rights under Section 9.3 of the CCRs) for the Lease Term (including
any “Extension Terms,” as hereinafter defined) in accordance with, and as
contemplated by, Section 9.1 of the CCRs, and Tenant shall thereafter have the
rights of a Member (as defined in the CCRs) in the Association.

A. Uncontrollable Expenses. Notwithstanding anything in this Lease to the
contrary, Tenant will be responsible for Real Estate Taxes, including the
reasonable costs and expenses of contesting the validity or amount of Real
Estate Taxes; fees or charges imposed by any governmental entity; insurance
premiums; utilities; association dues and costs imposed by covenants or
easements (subject to the limitations contained above in this Section 3.02), and
snow removal costs (collectively, “Uncontrollable Expenses”), without regard to
the level of increase in any or all of the above in any year or other period of
time.

 

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B. Controllable Expenses. Tenant’s obligation to pay all other Operating
Expenses which are not Uncontrollable Expenses (herein “Controllable Expenses”)
shall be limited to a five percent (5%) per annum increase over the amount the
Controllable Expenses for the immediately preceding calendar year would have
been had the Controllable Expenses increased at the rate of five percent (5%) in
all previous calendar years beginning with the actual Controllable Expenses for
the year ending December 31 of the second full calendar year of the Lease Term.

C. Real Estate Taxes. “Real Estate Taxes” shall include any form of real estate
tax or assessment, general, special, ordinary or extraordinary, payments in lieu
of taxes, and any license fee, commercial rental tax, improvement bond or bonds,
levy or tax (other than inheritance, personal income or estate taxes) imposed
upon the Leased Premises or appurtenant land (or against Landlord’s business of
leasing the Building) by any authority having the direct or indirect power to
tax, together with costs and expenses of contesting the validity or amount of
Real Estate Taxes. If the property is not separately assessed, then Tenant’s
liability shall be an equitable proportion of the real estate taxes for all of
the land and improvements included within the tax parcel assessed. Landlord’s
reasonable determination thereof, in good faith, shall be conclusive. Tenant, at
its cost, shall have the right at any time to seek a reduction in or otherwise
contest any Real Estate Taxes for which it is obligated to reimburse Landlord by
action or proceeding against the entity with authority to assess or impose the
same. Landlord shall not be required to join in any such proceeding or action
brought by Tenant unless the provisions of applicable Laws require that such
proceeding or action be brought by or in the name of Landlord, in which event
Landlord shall join in such proceeding or action or permit it to be brought in
Landlord’s name, provided that Tenant protect, indemnify, and hold Landlord free
and harmless from and against any liability, cost or expense in connection with
such proceeding or contest. Tenant shall continue, during the pendency of such
proceeding or action, to pay the Real Estate Taxes due as determined by Landlord
pursuant to this Section 3.02. If Tenant is successful in such action or
proceeding, Landlord shall reimburse to Tenant the reduction in Real Estate
Taxes realized by Tenant in such contest or proceeding within ten (10) days
after the amount of such reduction has been reimbursed to Landlord.
Notwithstanding anything herein to the contrary, in no event shall Real Estate
Taxes include any franchise, estate, gift, succession, inheritance, transfer,
net income, or excess profits tax imposed upon Landlord, or any penalties or
fees.

Tenant shall pay, prior to delinquency, all taxes assessed against and levied
upon trade fixtures, furnishings, equipment and all other personal property of
Tenant contained in the Leased Premises or elsewhere. Tenant shall cause such
trade fixtures, furniture, equipment and all other personal property to be
assessed and billed separately from the Leased Premises.

D. Capital Expenses. Notwithstanding anything to the contrary contained in this
Lease, any costs of a capital nature (including, but not limited to, capital
improvements and alterations, capital repairs, capital equipment, and capital
tools, all as determined in accordance with generally accepted accounting
principles, consistently applied (“GAAP”)) that would otherwise be properly
included within “Operating Expenses” hereunder shall be capitalized by Landlord,
and Tenant shall be required to pay as Operating Expenses only the pro rata
share of the cost of the applicable item falling due within the Lease Term based
upon the amortization of the same over the useful life of such item, such amount
to be payable in substantially equal monthly installments over the
then-remaining balance of the Lease Term.

Section 3.03 Payment of Additional Rent. Landlord shall be entitled to estimate
annually the total amount of Additional Rent to be paid by Tenant during each
calendar year of the Lease Term and written notice thereof shall be given to
Tenant within a reasonable time period prior to the beginning of each calendar
year (in the event the Lease Term shall commence in a calendar year, Tenant
shall be furnished with said notice on the Commencement Date). Not later than
November 30th of each calendar year, Landlord shall deliver to Tenant a proposed
budget of Operating Expenses (each, an “Expense

 

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Budget”) for the following calendar year (except that, for the first year of the
Lease Term, Tenant shall be provided with an Expense Budget not later than
sixty (60) days prior to the Commencement Date). Tenant shall have the right to
review and consult with Landlord regarding each Expense Budget within
fifteen (15) days after Tenant’s receipt of the same. Tenant shall provide to
Landlord, within such fifteen (15) day period, written approval of the
applicable Expense Budget or, if Tenant disapproves any line item or line items
contained therein, written notice of such disapproval on a line item basis. In
the event Tenant delivers a notice of disapproval, Landlord shall act reasonably
and in good faith to develop an Expense Budget that is responsive to Tenant’s
concerns; provided, however, that in the event of a disagreement between
Landlord and Tenant concerning the Expense Budget, the decision of Landlord
shall control. Commencing on the Commencement Date, Tenant shall pay to Landlord
each month, at the same time the Monthly Rental Installment is due, an amount
equal to one-twelfth (1/12) of the estimated Additional Rent for such year. Any
amount required to be paid by Tenant hereunder (in addition to Minimum Annual
Rent) and any charges or expenses incurred by Landlord on behalf of Tenant under
the terms of this Lease shall be considered “Additional Rent” payable in the
same manner and upon the same terms and conditions as the Minimum Annual Rent
reserved hereunder, except as set forth herein to the contrary. Any failure on
the part of Tenant to pay such Additional Rent when and as the same shall become
due shall entitle Landlord to the remedies available to it for non-payment of
Minimum Annual Rent.

A. Increases or Decreases in Estimated Additional Rent. If any expenses
comprising Additional Rent increase during a calendar year, Landlord may
increase or decrease the estimated Additional Rent during such year by giving
Tenant written notice to that effect, and thereafter Tenant shall pay to
Landlord, in each of the remaining months of such year, an amount equal to the
amount of such increase or decrease in the estimated Additional Rent divided by
the number of months remaining in such year.

B. Adjustment to Additional Rent. Within a reasonable time after the end of each
calendar year, Landlord shall prepare and deliver to Tenant a statement showing
the actual Additional Rent for the prior calendar year (the “Statement”). Within
thirty (30) days after receipt of the Statement, Tenant shall pay to Landlord,
or Landlord shall credit against the next rent payment or payments due from
Tenant, as the case may be, the difference between the actual Additional Rent
for the preceding calendar year and the estimated amount paid by Tenant during
such year, subject to the limitations contained in Section 3.02B and this
Section 3.03. For any fractional portion of a calendar year at the commencement
or termination of this Lease, any such deficiency or overage shall be settled
and adjusted between the parties after the end of that calendar year in the same
manner as above, but prorated based on the number of days of the Lease Term
within such calendar year.

C. Audit Rights. Within two hundred seventy (270) days of receipt of the
Statement, Tenant shall have the right, upon at least ten (10) days’ prior
written notice to Landlord, to audit at Landlord’s local offices, at Tenant’s
expense, Landlord’s accounts and records relating to Additional Rent. Such audit
shall be conducted by a certified public accountant (not billing on a
contingency fee basis) selected by Tenant, which certified public accountant may
be an employee of Tenant. If Landlord and Tenant agree that Landlord has
overcharged Tenant, then the amount overcharged shall be paid to Tenant within
thirty (30) days after the audit is concluded, together with interest thereon at
the rate of ten percent (10%) per annum, from the date the Statement was
delivered to Tenant until payment of the overcharge is made to Tenant. If Tenant
provides Landlord with written notice disputing the correctness of Landlord’s
statement, and if such dispute shall have not been settled by agreement between
Landlord and Tenant within thirty (30) days after Tenant provides Landlord with
such written notice, Tenant may submit the dispute to a reputable firm of
independent certified public accountants selected by Tenant and approved by
Landlord, such approval not to be unreasonably withheld, and the decision of
such accountants shall be

 

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conclusive and binding upon the parties. If such accountant decides that there
was an error, Landlord will make a correcting payment if Tenant overpaid such
amount, and Tenant shall pay Landlord if Tenant underpaid such amount. In
addition, if the Statement exceeds the actual Additional Rent which should have
been charged to Tenant by more than five percent (5%), then the cost of the
audit shall be paid by Landlord.

All of the information obtained through Tenant’s inspection with respect to
financial matters (including, without limitation, costs, expenses and income)
and any other matters pertaining to Landlord, the Leased Premises, the Building
and/or the Park as well as any compromise, settlement or adjustment reached
between Landlord and Tenant relative to the results of the inspection shall be
subject to the confidentiality restrictions set forth in Section 17.15 below.

Section 3.04 Late Charges. Tenant acknowledges that Landlord shall incur certain
additional unanticipated administrative and legal costs and expenses if Tenant
fails to pay timely any payment required hereunder. Therefore, in addition to
the other remedies available to Landlord hereunder, if any payment required to
be paid by Tenant to Landlord hereunder shall not be paid within five (5) days
after written notice of delinquency, then such unpaid amount shall bear interest
from the due date thereof to the date of payment at the prime rate (as reported
in the Wall Street Journal on the date such payment was due) of interest (“Prime
Rate”) plus four percent (4%) per annum; provided, however, that Tenant shall be
entitled to only two (2) such notices in any twelve (12) month period and,
thereafter during such period, a late charge shall be due if Tenant fails to pay
to Landlord any amount required to be paid hereunder within five (5) days after
the date the same is due.

ARTICLE 4

SECURITY DEPOSIT

[INTENTIONALLY OMITTED].

ARTICLE 5

USE

Section 5.01 Use of Leased Premises. The Leased Premises are to be used by
Tenant solely for the Permitted Use, and for no other purposes without the prior
written consent of Landlord. Landlord warrants that the Land is currently or
shall as of the Commencement Date be zoned for general office use and
warehousing and distribution of consumer products, and the Leased Premises shall
be, as of the Commencement Date, in compliance with all federal and municipal
statutes, rules and regulations taking into account the foregoing uses. Based
upon (i) that certain Zoning Ordinance 03-022 from the Village of West Jefferson
passed April 21, 2003 and effective May 21, 2003; and (ii) that certain letter
to Duke Realty Corporation from Thomas C. Philips, Mayor of the Village of West
Jefferson, dated June 1, 2007, Landlord also warrants that the Land is currently
zoned for sales to the general public. Landlord shall assist Tenant from time to
time (including, without limitation, meeting with governmental officials) as
reasonably necessary to enable Tenant to conduct sales to the general public
from the Leased Premises. For purposes of this Lease, “Tenant’s Intended Use”
shall mean general office use, warehousing and distribution of consumer
products, and sales to the general public.

Section 5.02 Covenants of Tenant Regarding Use. Tenant shall (i) use and
maintain the Leased Premises and conduct its business thereon in a safe,
careful, reputable and lawful manner, (ii) following the Substantial Completion
of the Leased Premises and subject to Landlord’s obligations herein, be
responsible for meeting all applicable codes with regard to its storage, racking
and warehousing, (iii) comply with all covenants that encumber the Building,
including (except with respect

 

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to the Landlord Work) the “Design Standards” attached hereto as Exhibit M and
the CCRs, whether or not such Design Standards and/or CCRs are yet recorded, but
only to the extent the same do not prohibit Tenant’s use of the Leased Premises
for Tenant’s Intended Use, and to the extent the same do not increase Tenant’s
express obligations or decrease Tenant’s rights under this Lease, (iv) subject
to Landlord’s obligations herein, comply with all laws, rules, regulations,
orders, ordinances, directions and requirements of any governmental authority or
agency, now in force or which may hereafter be in force, pertaining to Tenant’s
particular use or occupancy of the Leased Premises, including, without
limitation, those which shall impose upon Landlord or Tenant any duty with
respect to or triggered by a change in the use or occupation of, or any
improvement or alteration by Tenant to, the Leased Premises, and (v) comply with
and obey the Rules and Regulations attached hereto as Exhibit N and as may be
reasonably modified from time to time by Landlord on reasonable notice to
Tenant; provided that any application and/or enforcement of any such Rules and
Regulations shall be consistently applied among the tenants and occupants of the
Park and shall not, unless required by law, materially alter, reduce or
adversely affect any of Tenant’s rights or enlarge Tenant’s obligations under
this Lease. Tenant shall not do or permit anything to be done in or about the
Leased Premises or common areas of the Park which constitutes a nuisance or
which interferes with the rights of other tenants within the Park or injures or
annoys them. Landlord shall not be responsible to Tenant for the nonperformance
by any other tenant or occupant of the Park of its lease or of any rules and
regulations. Tenant shall not overload the floors of the Building or exceed
traffic criteria for the truck courts beyond the Scope of Work attached hereto
as Exhibit E. All damage to the floor structure or foundation of the Building
due to improper positioning or storage of items or materials beyond that
contemplated in the Scope of Work attached hereto as Exhibit E shall be repaired
by Landlord at the sole expense of Tenant, who shall reimburse Landlord
immediately therefor upon demand (or such cost shall be deemed Additional Rent).
Tenant shall not use the Leased Premises, or allow the Leased Premises to be
used, for any purpose or in any manner which would invalidate any policy of
insurance now or hereafter carried on the Building or increase the rate of
premiums payable on any such insurance policy unless Tenant reimburses Landlord
as Additional Rent for any increase in premiums charged. Tenant shall have
access to the Leased Premises, including, without limitation, in and out-going
truck traffic for shipping and receiving of Tenant’s goods and products,
twenty-four (24) hours a day, seven (7) days a week.

Section 5.03 Landlord’s Rights Regarding Use. In addition to the rights
specified elsewhere in this Lease, Landlord shall have the following rights
regarding the use of the Leased Premises or the common areas of the Park:
(a) Landlord may install such signs, advertisements, notices or tenant
identification information within the Park as it shall deem necessary or proper
(provided that no such signs (other than Tenant’s Signage), advertisements,
notices or tenant identification information shall be installed or displayed on
the Building or within the Leased Premises, except “for sale” or “for lease”
signs nine (9) months prior to the expiration of the Lease Term, without the
prior written consent of Tenant, which consent may be given or withheld in
Tenant’s sole discretion); (b) Landlord shall have the right at any time to
control, change or otherwise alter the common areas of the Park as it shall deem
necessary or proper; provided, however, that no such change or alteration shall
adversely affect vehicular ingress to or egress from the Leased Premises;
(c) Landlord reserves the right to reserve or grant drainage and other utility
easements over, upon, under and across the portion of the Leased Premises
located outside the Building to the extent reasonably deemed necessary by
Landlord for the use, development or benefit of other land owned by Landlord or
any affiliate of Landlord or other land in the Park, which easements shall be
created by commercially reasonable easement agreements; provided, however, that
such easements shall be non-exclusive and shall not interfere with Tenant’s use
of the affected portions of the Leased Premises; and (d) subject to Tenant’s
security requirements, Landlord, its employees and agents shall be permitted to
inspect or examine the Leased Premises at any reasonable time upon no less than
twenty-four (24) hours’ notice (except in an emergency when no notice shall be
required), and to enter the Leased Premises for the purposes of showing the same
to prospective tenants (during the last twelve (12)

 

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months of the Lease Term) and performing Landlord’s obligations under this
Lease; provided, however, that except in the case of an emergency, a
representative of Tenant shall have the right to accompany Landlord and its
employees and agents during all such visits to the Leased Premises. Landlord
shall incur no liability to Tenant for such entry, nor shall such entry
constitute an eviction of Tenant or a termination of this Lease, or entitle
Tenant to any abatement of rent therefor. Notwithstanding anything herein to the
contrary, Landlord’s rights pursuant to this Section 5.03 shall be subject to
the conditions that (i) the exercise of any of such rights shall not
unreasonably interfere with Tenant’s use of the Leased Premises, (ii) except in
emergencies, Landlord shall provide reasonable prior notice to Tenant before
exercising any such rights which may interfere with Tenant’s business, and
(iii) Landlord shall use commercially reasonable efforts to minimize to the
extent possible any interference with Tenant’s business.

ARTICLE 6

UTILITIES AND SERVICES

Tenant shall obtain in its own name and shall pay directly to the appropriate
supplier the cost of all utilities and services serving the Leased Premises,
including, but not limited to: natural gas, heat, light, electrical power,
water, sewer, telephone, janitorial service, refuse disposal and other utilities
and services. Except as set forth below, Landlord shall not be liable in damages
or otherwise for any failure or interruption of any utility service or other
service furnished to the Leased Premises; and no such failure or interruption
shall entitle Tenant to terminate this Lease or withhold sums due hereunder.
Notwithstanding the foregoing, in the event that (i) such interruption is due to
Landlord’s, or its employees’, agents’ or contractors’, negligence or
intentional wrongful acts, and (ii) the Leased Premises are untenantable
(meaning that Tenant is not reasonably able to use such space in the normal
course of its business for the Intended Use), then Tenant shall notify Landlord
in writing that Tenant intends to abate rent. If service has not been restored
within five (5) days of Landlord’s receipt of Tenant’s notice, then Minimum
Annual Rent and Additional Rent shall abate on a per diem basis commencing on
the date of the interruption and continuing during the time when the Leased
Premises remains untenantable. Such abatement shall be Tenant’s sole remedy for
Landlord’s failure to restore service as set forth above, and Tenant shall not
be entitled to damages (consequential or otherwise) as a result thereof.

ARTICLE 7

MAINTENANCE AND REPAIRS

Section 7.01 Tenant’s Responsibility.

A. Except as otherwise expressly provided in Section 2.02D and Section 7.02,
during the term of this Lease, Tenant shall, at its own cost and expense,
maintain the Leased Premises in good condition and repair as a
warehouse/industrial development, regularly servicing and promptly making all
repairs and replacements to the heating and air conditioning systems, plate
glass, floors, windows and doors, sprinkler and plumbing systems, electrical
systems, interior walls, and mechanical systems. Tenant, at its expense, shall
obtain a preventive maintenance contract on the heating, ventilating and air
conditioning systems which shall be subject to Landlord’s reasonable approval.
Tenant shall provide Landlord with a copy of the preventive maintenance contract
no later than thirty (30) days after the Commencement Date. The preventive
maintenance contract shall provide for the inspection and maintenance of the
heating, ventilating and air conditioning system on not less than a semi-annual
basis.

B. In the event Tenant Defaults in connection with its obligation to maintain or
repair the Leased Premises, or in the case of emergency, in which case no
Default is required, Landlord shall have the right (but not the obligation) in
order to preserve the Leased Premises or portion thereof, and/or the appearance
thereof, to perform such maintenance and/or to make such repairs, or have a
contractor make

 

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such repairs, and charge Tenant for the cost thereof (including a four percent
(4%) management/administrative fee for such work) as Additional Rent, which
shall be paid by Tenant within thirty (30) days following Landlord’s demand for
reimbursement. Notwithstanding anything contained herein to the contrary, if
Tenant Defaults more than three (3) times in any consecutive twelve (12) month
period with respect to separate instances of a particular and ongoing
maintenance or repair obligation, regardless of whether such failures were
ultimately cured, then Landlord may assume Tenant’s responsibilities with
respect to that particular obligation upon thirty (30) days’ prior written
notice to Tenant, and upon such assumption, the costs related thereto and
incurred by Landlord shall be paid by Tenant as Additional Rent (including a
four percent (4%) management/administrative fee for such work).

Section 7.02 Landlord’s Responsibility.

A. Landlord shall maintain the Leased Premises in good condition and repair,
regularly servicing and promptly making all repairs and replacements to the roof
(structure and membrane), exterior walls, gutters, downspouts, structural
components of the Leased Premises, landscaping, parking lot pavement and
striping, all as Additional Rent subject to Sections 3.02 and 3.03 above, and
this Section 7.02. In addition to the foregoing, Landlord shall perform all
maintenance and repairs necessary in connection with the drainage of surface
water from the Property, including, without limitation, all maintenance and
repairs to the recharge wells and pumps and the retention ponds, if any, on or
serving the Leased Premises, all as Additional Rent but subject to Sections 3.02
and 3.03 above, and this Section 7.02.

B. In the event Landlord fails to maintain the Leased Premises as required
herein and/or if Landlord fails to commence repairs that are Landlord’s
responsibility hereunder (as requested by Tenant in writing) within thirty (30)
days after such request, except in the case of emergency, when no notice is
required, Tenant shall have the right (but not the obligation) in order to
preserve the Leased Premises or portion thereof, and/or the appearance thereof,
to perform such maintenance and/or to make such repairs, or have a contractor
make such repairs, and charge Landlord for the cost thereof (including a four
percent (4%) management/administrative fee for such work), which shall be paid
by Landlord within thirty (30) days following Tenant’s demand for reimbursement.

Section 7.03 Provisions Governing Repairs. All repairs, modifications and
replacements made by Tenant or by Landlord shall be equal in quality and class
to the original work and shall be performed in compliance with all applicable
warranties in effect with respect to the Leased Premises and, with respect to
modifications and replacements made by Tenant, the requirements for Tenant-made
alterations (as set forth in Section 7.04 below).

Section 7.04 Alterations. Tenant shall not permit structural alterations or
additions in or to the Leased Premises unless and until the plans and
specifications, including architectural drawings, have been approved by Landlord
in writing, which approval shall not be unreasonably withheld, delayed or
conditioned. Tenant shall have the right, without Landlord’s consent and in
compliance with all other provisions of this Section, to make any non-structural
alterations to the Leased Premises which do not materially impact the Building’s
mechanical or electrical systems and which do not adversely affect the
Building’s appearance or value, provided that Tenant gives Landlord fifteen (15)
business days’ prior written notice of any such alterations, along with copies
of plans and specifications relating thereto. At the time of Landlord’s approval
of any alterations (or, with respect to any alterations permitted to be made by
Tenant hereunder without Landlord’s approval, within five (5) business days
after Landlord receives Tenant’s architectural drawings for the same), Landlord
shall provide Tenant with notice if Landlord will require Tenant to remove the
alterations and restore the Leased Premises (with respect to such alterations)
upon the expiration or earlier termination of this Lease; otherwise, all such
alterations or improvements,

 

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except movable office furniture and equipment and trade fixtures, shall at the
expiration or earlier termination of the Lease become a part of the realty and
the property of Landlord and shall not be removed by Tenant. If Landlord
consents to Tenant’s performance of alterations or additions to the Leased
Premises, then Tenant shall ensure that all such alterations and improvements
which are made or necessitated thereby shall be made in accordance with all
applicable laws, regulations and building codes, in a good and workmanlike
manner and in quality equal to or better than the original construction of the
Building. Landlord’s approval of the plans and specifications and architectural
drawings for Tenant’s alterations shall create no responsibility or liability on
the part of Landlord for their completeness, design sufficiency, or compliance
with existing warranties or any and all laws, rules and regulations of
governmental agencies or authorities. To the extent that Tenant’s alterations or
improvements void or reduce any warranties assigned hereunder, the liability
shall thereafter be the responsibility of Tenant. Tenant shall indemnify and
save harmless Landlord from all costs, loss or expense in connection with any
construction or installation by Tenant. No person shall be entitled to any lien
directly or indirectly derived through or under Tenant or through or by virtue
of any act or omission of Tenant upon the Leased Premises for any improvements
or fixtures made thereon or installed therein or for or on account of any labor
or material furnished to the Leased Premises or for or on account of any matter
or thing whatsoever; and nothing in this Lease contained shall be construed to
constitute a consent by Landlord to the creation of any lien. If any lien is
filed against the Leased Premises for work claimed to have been done for, or
material claimed to have been furnished to, Tenant, Tenant shall cause such lien
to be discharged of record within thirty (30) days after Tenant’s knowledge of
the same, by bonding or in any other lawful manner. Tenant shall indemnify and
save harmless Landlord from all costs, losses, expenses, and attorneys’ fees in
connection with any such lien. Provided that Duke Realty Limited Partnership is
then Landlord (or affiliated with Landlord) under this Lease, Tenant agrees that
at Landlord’s option, Duke Construction Limited Partnership or a subsidiary or
affiliate of Landlord (collectively, “DCLP”), who shall receive a ten percent
(10%) fee as Landlord’s construction manager or general contractor, shall
perform all work on any structural alterations made to the Leased Premises on or
before the fifth (5th) anniversary of the Commencement Date. DCLP shall solicit
competitive bids from at least three (3) subcontractors for each major trade.
Landlord will competitively bid all subcontractors as in Section 2.02A(ii)
above, and Landlord and Tenant shall review the bids jointly and Landlord shall
select the subcontractors mutually agreed upon by both parties.

ARTICLE 8

INDEMNITY AND INSURANCE

Section 8.01 Release. Subject to Section 8.03 below, all of Tenant’s trade
fixtures, merchandise, inventory and all other personal property in or about the
Leased Premises or the Building, which is deemed to include the trade fixtures,
merchandise, inventory and personal property of others located in or about the
Leased Premises at the invitation, direction or acquiescence (express or
implied) of Tenant (all of which property shall be referred to herein,
collectively, as “Tenant’s Property”), shall be and remain at Tenant’s sole
risk. Subject to Section 8.03 below, Landlord shall not be liable to Tenant or
to any other person for, and Tenant hereby releases Landlord from (a) any and
all liability for theft or damage to Tenant’s Property, and (b) any and all
liability for any injury to Tenant or its employees, agents, contractors, guests
and invitees in or about the Leased Premises or the Building, except to the
extent caused by the negligence or willful misconduct of Landlord, its agents,
employees or contractors. Nothing contained in this Section 8.01 shall limit (or
be deemed to limit) the waivers contained in Section 8.06 below. In the event of
any conflict between the provisions of Section 8.06 below and this Section 8.01,
the provisions of Section 8.06 shall prevail. This Section 8.01 shall survive
the expiration or earlier termination of this Lease.

 

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Section 8.02 Indemnification by Tenant. Tenant shall protect, defend, indemnify
and hold Landlord, its agents, employees and contractors harmless from and
against any and all claims, damages, demands, penalties, costs, liabilities,
losses, and expenses (including reasonable attorneys’ fees and expenses at the
trial and appellate levels) to the extent (a) arising out of or relating to any
act, omission, negligence, or willful misconduct of Tenant or Tenant’s agents,
employees, contractors, customers or invitees in or about the Leased Premises or
the Building, (b) arising out of or relating to any of Tenant’s Property, or
(c) arising out of any other act or occurrence within the Leased Premises, in
all such cases except to the extent caused by the negligence or willful
misconduct of Landlord, its agents, employees or contractors. Nothing contained
in this Section 8.02 shall limit (or be deemed to limit) the waivers contained
in Section 8.06 below. In the event of any conflict between the provisions of
Section 8.06 below and this Section 8.02, the provisions of Section 8.06 shall
prevail. This Section 8.02 shall survive the expiration or earlier termination
of this Lease.

Section 8.03 Indemnification by Landlord. Landlord shall protect, defend,
indemnify and hold Tenant, its agents, employees and contractors harmless from
and against any and all claims, damages, demands, penalties, costs, liabilities,
losses and expenses (including reasonable attorneys’ fees and expenses at the
trial and appellate levels) to the extent arising out of or relating to any act,
omission, negligence or willful misconduct of Landlord or Landlord’s agents,
employees or contractors. Nothing contained in this Section 8.03 shall limit (or
be deemed to limit) the waivers contained in Section 8.06 below. In the event of
any conflict between the provisions of Section 8.06 below and this Section 8.03,
the provisions of Section 8.06 shall prevail. This Section 8.03 shall survive
the expiration or earlier termination of this Lease.

Section 8.04 Tenant’s Insurance.

A. During the Lease Term (and any period of early entry or occupancy or holding
over by Tenant, if applicable), Tenant shall maintain the following types of
insurance, in the amounts specified below:

(i) Liability Insurance. Commercial General Liability Insurance (which insurance
shall not exclude blanket contractual liability, broad form property damage,
personal injury, or fire damage coverage) covering the Leased Premises and
Tenant’s use thereof against claims for bodily injury or death and property
damage, which insurance shall provide coverage on an occurrence basis with a per
occurrence limit of not less than Eleven Million Dollars ($11,000,000.00) for
each policy year, which limits may be satisfied by any combination of primary
and excess or umbrella per occurrence policies, and which insurance shall
contain such deductibles as Tenant may deem prudent.

(ii) Property Insurance. Special Form Insurance (specifically excluding,
however, flood and earthquake insurance) in the amount of the full replacement
cost of Tenant’s Property and betterments (including alterations or additions
performed by Tenant pursuant hereto), which insurance shall include an agreed
amount endorsement waiving coinsurance limitations and shall contain such
deductibles as Tenant may deem prudent. The foregoing insurance shall not
include flood or earthquake coverage. Tenant waives any claims against Landlord
for damage to Tenant’s Property to the extent Tenant’s losses would be covered
by policies of flood or earthquake insurance.

(iii) Worker’s Compensation Insurance. Worker’s Compensation insurance in
amounts required by applicable law.

(iv) Business Interruption Insurance. Tenant will either obtain insurance or
self insure for business interruption in such amounts as Tenant deems prudent.

 

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B. All insurance required by Tenant hereunder shall (i) be issued by one or more
insurance companies reasonably acceptable to Landlord, licensed to do business
in the State in which the Leased Premises is located and having an A.M. Best’s
rating of A-:VIII or better, and (ii) provide that said insurance shall not be
materially changed, canceled or permitted to lapse on less than thirty (30)
days’ prior written notice to Landlord. In addition, Tenant’s insurance shall
protect Tenant and Landlord as their interests may appear, naming Landlord,
Landlord’s property manager, and any mortgagee requested by Landlord (but
specifically excluding all construction managers and contractors, whether or not
affiliates of Landlord, providing services in connection with the performance of
the Landlord Work), as additional insureds under its commercial general
liability policies. On or before the Commencement Date (or the date of any
earlier entry or occupancy by Tenant), and thereafter, within thirty (30) days
prior to the expiration of each such policy, Tenant shall furnish Landlord with
certificates of insurance in the form of ACORD 25 or ACORD 25 S (or other
evidence of insurance reasonably acceptable to Landlord), evidencing all
required coverages, together with a copy of the endorsement(s) to Tenant’s
commercial general liability policy evidencing primary and non contributory
coverage afforded to the appropriate additional insureds. If Tenant fails to
carry such insurance and furnish Landlord with such certificates of insurance,
and such failure continues for a period in excess of three (3) business days,
then Landlord may obtain such insurance on Tenant’s behalf and Tenant shall
reimburse Landlord upon demand for the cost thereof as Additional Rent.
Effective as of the first day of the first Extension Term (if any), Landlord
shall have the right from time to time (but not more frequently than every five
years) to require Tenant to obtain higher minimum amounts or different types of
insurance if it becomes customary for other landlords of similar buildings in
the area to require similar sized tenants in similar industries to carry
insurance of such higher minimum amounts or of such different types.

C. Tenant may provide self insurance in lieu of the insurance required in
Section 8.04A by the establishment of an insurance fund or reserve to be held
and applied to make good losses from casualties, or otherwise conforming to the
prudent practice of large corporations maintaining systems of self insurance. As
a condition to establishing a self insurance plan in lieu of the insurance
provided in Section 8.04A, Tenant shall deliver to Landlord the following: (1) a
certificate of an independent actuary or other independent, qualified person
reasonably acceptable to Landlord stating that the self insurance plan is
adequate to provide the protection of the insurance policies described in
Section 8.04A and (2) a balance sheet as of the end of the most recent quarter
of the then-current fiscal year of Tenant (or, if the first quarter in such
fiscal year has not expired, the last quarter of the previous fiscal year),
indicating that the tangible net worth of Tenant exceeds One Hundred Million
Dollars ($100,000,000.00). If at any time thereafter Tenant’s tangible net worth
is less than One Hundred Million Dollars ($100,000,000.00), then Tenant shall be
required to immediately obtain and maintain the insurance provided in
Section 8.04A. “Tangible net worth” means the excess of total assets over the
sum of total liabilities and intangible assets (in each case, determined in
accordance with GAAP).

Section 8.05 Landlord’s Insurance. During the Lease Term, Landlord shall
maintain the following types of insurance, in the amounts specified below (the
cost of which shall be included in Operating Expenses):

A. Liability Insurance. Commercial General Liability Insurance (which insurance
shall not exclude blanket, contractual liability, broad form property damage,
personal injury, or fire damage coverage) covering the Leased Premises against
claims for bodily injury or death and property damage, which insurance shall
provide coverage on an occurrence basis with a per occurrence limit of not less
than Eleven Million Dollars ($11,000,000.00) for each policy year, and which
limits may be satisfied by any combination of primary and excess or umbrella per
occurrence policies.

 

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B. Property Insurance. Special Form Insurance in the amount of the full
replacement cost of the Building, including, without limitation, the Landlord
Work performed pursuant to Section 2.02 above, but excluding Tenant’s Property
and any other items required to be insured by Tenant pursuant to Section 8.04
above; and

C. Builder’s Risk Insurance. During the course of any construction or repair on
the Leased Premises (including, without limitation, during the performance of
the Landlord Work prior to the Commencement Date), builder’s completed value
risk insurance against “all risks of physical loss,” including collapse and
transit coverage, during such construction, with deductibles not to exceed
Twenty-Five Thousand Dollars ($25,000.00), in nonreporting form, covering the
total value of work performed and equipment, supplies and materials furnished.
Said policy of insurance shall contain the “permission to occupy upon completion
of work or occupancy” endorsement. Said policy of insurance shall provide
coverage against increases in costs of construction in the minimum amount of the
lesser of (i) ten percent (10%) of the replacement cost of the Building or
(ii) Five Million Dollars ($5,000,000.00).

Section 8.06 Landlord’s Contractors’ Insurance. In addition to and without
limitation on the requirements set forth in the Lease, Landlord shall ensure
that Landlord’s general contractor(s) and all subcontractors procure and
maintain in full force and effect during the course of construction on the
Leased Premises all worker’s compensation insurance required by law and a policy
of Commercial General Liability Insurance (which insurance shall not exclude
blanket, contractual liability, broad form property damage, personal injury, or
fire damage coverage) covering the Leased Premises against claims for bodily
injury or death and property damage, naming, Landlord and Tenant as additional
insureds. The minimum limit of coverage of the aforesaid commercial general
liability policies shall be the following:

A. Landlord’s General Contractor(s) (including DCLP). The amount of not less
than Five Million Dollars ($5,000,000.00) for injury or death of one person in
any one accident or occurrence and in the amount of not less than Five Million
Dollars ($5,000,000.00) for injury or death of more than one person in any one
accident or occurrence. Such insurance shall further insure Landlord and Tenant
against liability for property damage of at least Three Million Dollars
($3,000,000.00).

B. Subcontractors (Major Trades). The amount of not less than Two Million
Dollars ($2,000,000.00) for injury or death of one person in any one accident or
occurrence and in the amount of not less than Two Million Dollars
($2,000,000.00) for injury or death of more than one person in any one accident
or occurrence. Such insurance shall further insure Landlord and Tenant against
liability for property damage of at least Two Million Dollars ($2,000,000.00).

C. Subcontractors (other than Major Trades). The amount of not less than One
Million Dollars ($1,000,000.00) for injury or death of one person in any one
accident or occurrence and in the amount of not less than One Million Dollars
($1,000,000.00) for injury or death of more than one person in any one accident
or occurrence. Such insurance shall further insure Landlord and Tenant against
liability for property damage of at least One Million Dollars ($1,000,000.00).

The foregoing insurance policies shall each contain a severability of interest
clause or a cross liability endorsement.

Section 8.07 Waiver of Subrogation. Notwithstanding anything contained in this
Lease to the contrary, Landlord and Tenant hereby waive any rights each may have
against the other on account of any loss of or damage to their respective
property, the Leased Premises, its contents, of the Land and the Building
arising from any risk which is required to be insured against by
Sections 8.04A(ii) and Section 8.05B above. The special form coverage insurance
policies maintained by Landlord and Tenant

 

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as provided in this Lease shall include an endorsement containing an express
waiver of any rights of subrogation by the insurance company against Landlord
and Tenant, as applicable. In addition to the foregoing, the worker’s
compensation insurance carried by Landlord’s contractors pursuant to
Section 8.06 above shall include an endorsement containing an express waiver of
any rights of subrogation by the insurance company against Tenant.

ARTICLE 9

CASUALTY

In the event of total or partial destruction of the Building or the Leased
Premises by fire or other casualty, Landlord agrees promptly to restore and
repair same to substantially the same condition as existed as of the
Commencement Date, with respect to the Landlord Work required to be made by
Landlord pursuant to Section 2.02 above (and, in the event of any damage arising
prior to the Commencement Date, Landlord shall repair the same and continue with
the performance of the Landlord Work in accordance with the terms of this
Lease). Rent shall proportionately abate during the time that the Leased
Premises or any part thereof are unusable because of any such damage.
Notwithstanding the foregoing, if the Leased Premises are (a) destroyed or
damaged to the extent that they cannot reasonably be repaired or rebuilt within
three hundred sixty-five (365) days from the casualty date; or (b) destroyed by
a casualty that is not covered by the insurance required hereunder or by
insurance actually maintained by Landlord; then, in case of a clause (a)
casualty, either Landlord or Tenant may, or, in the case of a clause (b)
casualty, then Landlord may, upon thirty (30) days’ written notice to the other
party, terminate this Lease with respect to matters thereafter accruing. Any
such notice of termination shall be given, if at all, not later than ninety (90)
days after the casualty date (or, in the case of a notice by Tenant, ninety (90)
days after Landlord informs Tenant in writing of the projected time for the
repairs and of the availability or unavailability of insurance proceeds). In
addition to the foregoing, if Landlord elects to rebuild and restore the Leased
Premises but fails to actually substantially complete the same in such time so
that Tenant can again occupy the Leased Premises and conduct business operations
therein on or before the three hundred sixty-sixth (366th) day after the
casualty date, then subject to extension for force majeure events, Tenant shall
have the right to terminate this Lease upon written notice to Landlord, which
notice shall be given, if at all, not later than three hundred ninety-six
(396) days after the casualty date; provided, however, that if Landlord
substantially completes the Leased Premises so that Tenant can occupy the Leased
Premises and conduct business operations therein on or before the three hundred
ninety-sixth (396th) day after the casualty date, then Tenant’s termination
notice shall be void. Tenant waives any right under applicable laws inconsistent
with the terms of this paragraph.

ARTICLE 10

EMINENT DOMAIN

If all or any substantial part of the Building shall be acquired by the exercise
of eminent domain, Landlord may terminate this Lease by giving written notice to
Tenant on or before the date that actual possession thereof is so taken. If all
or any part of the Leased Premises shall be acquired by the exercise of eminent
domain in such a manner that the Leased Premises shall become unusable by Tenant
for the purpose for which it is then being used, Tenant may terminate this Lease
as of the date actual possession thereof is taken by giving written notice to
Landlord. Tenant shall have no claim against Landlord on account of any such
acquisition for the value of any unexpired lease term remaining after possession
of the Leased Premises is taken. All damages awarded shall belong to and be the
sole property of Landlord; provided, however, that Tenant shall be entitled to
any award expressly made to Tenant by any governmental authority for the cost of
or the removal of Tenant’s stock, equipment and fixtures and other moving
expenses.

 

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ARTICLE 11

ASSIGNMENT AND SUBLEASE

Section 11.01 Assignment and Sublease.

A. Tenant shall have the right to assign this Lease or sublet the Leased
Premises in whole or in part during the Lease Term and any extensions subject to
Landlord’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. In the event of any permitted assignment or
subletting under this Section 11.01, Tenant shall remain primarily liable
hereunder, and the expansion option and right of first offer granted to Tenant
pursuant to Section 17.19 and Section 17.20 below, respectively, shall be
rendered void and of no further force or effect. The acceptance of rent from any
other person shall not be deemed to be a waiver of any of the provisions of this
Lease or to be a consent to the assignment of this Lease or the subletting of
the Leased Premises. Any assignment or sublease consented to by Landlord shall
not relieve Tenant (or its assignee) from obtaining Landlord’s consent to any
subsequent assignment or sublease.

B. By way of example and not limitation, Landlord shall be deemed to have
reasonably withheld consent to a proposed assignment or sublease under this
Section 11.01 if in Landlord’s reasonable opinion the proposed use of the Leased
Premises by such assignee or subtenant is inconsistent with the Permitted Use,
or the financial worth of the proposed assignee or subtenant, together with
Tenant’s financial worth, is insufficient to meet the obligations of Tenant
hereunder.

Section 11.02 Permitted Transfer. Notwithstanding anything to the contrary
contained in Section 11.01 above, Tenant shall have the right, without
Landlord’s consent, but upon ten (10) days’ prior notice to Landlord (or if such
notice would violate any applicable law to which Tenant is subject, then such
prior written notice shall not be required but Tenant shall furnish such notice
to Landlord immediately upon Tenant being permitted to deliver such notice under
such applicable law), to (a) sublet all or part of the Leased Premises to any
related corporation or other entity which controls Tenant, is controlled by
Tenant or is under common control with Tenant; (b) assign all or any part of
this Lease to any related corporation or other entity which controls Tenant, is
controlled by Tenant, or is under common control with Tenant, provided that such
assignee assumes all of the obligations and liabilities of Tenant hereunder
arising from and after the date of such assignment and the financial worth of
the assignee, together with Tenant’s financial worth, is sufficient to meet the
obligations of Tenant hereunder; or (c) assign this Lease in connection with a
change of control of Tenant, including a change of control effectuated pursuant
to a transfer of partnership or membership interests, or to a successor entity
into which Tenant is merged or consolidated or which acquires substantially all
of Tenant’s assets or property; provided that such successor entity assumes all
of the obligations and liabilities of Tenant hereunder arising from and after
the date of such assignment and the financial worth of the successor entity,
together with Tenant’s financial worth (if the entity that comprises Tenant
survives such transaction), is sufficient to meet the obligations of Tenant
hereunder (any such entity hereinafter referred to as a “Permitted Transferee”).
Notwithstanding anything to the contrary contained in Section 11.01 above or
this Section 11.02, neither a sale or transfer of Tenant’s Capital Stock (as
hereinafter defined), including, without limitation, a transfer in connection
with the merger, consolidation or nonbankruptcy reorganization of Tenant and any
sale through any private or public offering, nor the pledge of or grant of a
security interest in any of the Tenant’s Capital Stock shall be deemed an
assignment, subletting or other transfer of this Lease or the Leased Premises.
For the purpose of this Article 11 “control” shall mean ownership of not less
than fifty percent (50%) of all voting stock or legal and equitable interest in
such corporation or entity. Any such transfer shall not relieve Tenant of its
obligations under this Lease; and “Capital Stock” means, with respect to any
entity, any and all shares, interests, participations, rights in, or other
equivalents (however designated and whether voting or non-voting) of, such
entity’s capital stock

 

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and any and all rights, warrants or options exchangeable for or convertible into
such capital stock (but excluding any debt security whether or not it is
exchangeable for or convertible into such capital stock). Nothing in this
paragraph is intended to nor shall permit Tenant to transfer its interest under
this Lease as part of a fraud or subterfuge to intentionally avoid its
obligations under this Lease (for example, transferring its interest to a shell
corporation that subsequently files a bankruptcy), and any such transfer shall
constitute a Default hereunder. Any change in control of Tenant resulting from a
merger, consolidation, a transfer of partnership or membership interests, or any
sale of substantially all of the assets of Tenant that does not meet the
requirements of this Section 11.02 shall be deemed an assignment or transfer
that requires Landlord’s prior written consent pursuant to Section 11.01 above.

ARTICLE 12

TRANSFERS BY LANDLORD

Section 12.01 Sale and Conveyance of the Building. Landlord shall have the right
to sell and convey the Building or any interest in this Lease at any time during
the term of this Lease following the Substantial Completion of the Leased
Premises, subject only to the rights of Tenant hereunder; and such sale and
conveyance shall operate to release Landlord from liability hereunder accruing
after the date of such conveyance, provided that the transferee shall have
assumed all of Landlord’s obligations hereunder from and after the date of such
conveyance. Nothing contained herein shall preclude Landlord from entering into
a “pre-sale” of the Building prior to the Substantial Completion of the Leased
Premises, provided that such sale transaction shall not close, and the
obligations of Landlord hereunder are not assigned to the transferee, until such
Substantial Completion has occurred.

Section 12.02 Subordination and Estoppel Certificate. Subject to Tenant’s
receipt of an SNDA (as hereinafter defined) as provided below, Landlord shall
have the right to subordinate this Lease to any mortgage hereafter placed upon
the Building. Within ten (10) business days following receipt of a written
request from Landlord, Tenant shall execute and deliver to Landlord, without
cost, a subordination nondisturbance and attornment agreement in the form of
Exhibit O hereto (an “SNDA”), which SNDA shall be effective only if the same is
executed by Landlord and the holder of the mortgage, deed of trust, or other
instrument of security to which this Lease is to become subordinated by such
SNDA. Additionally, from time to time, upon written request of either Landlord
or Tenant, the party receiving such request shall execute, acknowledge and
deliver to the requesting party or its designee, within ten (10) business days
following receipt of a written request, a commercially reasonable form of
estoppel certificate certifying (i) that this Lease is in full force and effect
and unmodified or stating the nature of any modification, (ii) the date to which
rent has been paid, (iii) that there are not, to the certifying party’s
knowledge, any uncured defaults or specifying such defaults if any are claimed,
and (iv) any other matters or state of facts reasonably required respecting the
Lease. Any such estoppel certificate delivered pursuant to this Section 12.02
may be relied upon by a prospective purchaser of Landlord’s interest or a
mortgagee of Landlord’s interest or assignee of any mortgage upon Landlord’s
interest in the Leased Premises, or by any potential assignee, subtenant or
other transferee of Tenant’s interest in the Leased Premises.

Section 12.03 Lender’s Rights. Landlord shall have the right, at any time and
from time to time, to notify Tenant in writing that Landlord has placed a
mortgage on the Building, specifying the identity of the lender (“Lender”).
Following receipt of such notice, Tenant agrees to endeavor to give such Lender
a copy of any notice of default served by Tenant on Landlord. Tenant further
agrees that if Landlord fails to cure any default as provided in Section 13.03
herein, Lender shall have an additional thirty (30) days within which to cure
such default before Tenant exercises its rights and remedies under this Lease
(other than Tenant’s rights pursuant to Section 7.02B).

 

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ARTICLE 13

DEFAULT AND REMEDY

Section 13.01 Default. The occurrence of any of the following shall be deemed a
Default:

A. Tenant fails to pay any Monthly Rental Installments or Additional Rent within
five (5) days after written notice of delinquency.

B. Tenant shall fail to perform or observe any term, condition, covenant or
obligation (other than the obligation to pay Monthly Rental Installments and
Additional Rent) as required under this Lease for a period of thirty (30) days
after notice thereof from Landlord; provided, however, that if the nature of
Tenant’s default is such that more than thirty (30) days are reasonably required
to cure, then such default shall be deemed to have been cured if Tenant
commences such performance within said thirty-day period and thereafter
diligently completes the required action within a reasonable time.

C. Tenant shall assign or sublet all or a portion of the Leased Premises in
contravention of the provisions of Article 11 of this Lease.

D. All or substantially all of Tenant’s assets in the Leased Premises or
Tenant’s interest in this Lease are attached or levied under execution (and
Tenant does not discharge the same within ninety (90) days thereafter); a
petition in bankruptcy, insolvency, or for reorganization or arrangement is
filed by or against Tenant (and Tenant fails to secure a stay or discharge
thereof within ninety (90) days thereafter); Tenant shall be insolvent and
unable to pay its debts as they become due; Tenant makes a general assignment
for the benefit of creditors; Tenant takes the benefit of any insolvency action
or law; the appointment of a receiver or trustee in bankruptcy for Tenant or its
assets if such receivership has not been vacated or set aside within ninety (90)
days thereafter; dissolution or other termination of Tenant’s corporate charter
if Tenant is a corporation.

Section 13.02 Remedies. Upon the occurrence of any Event of Default, Landlord
shall have the following rights and remedies, in addition to those stated
elsewhere in this Lease and those allowed by law or in equity, any one or more
of which may be exercised without further notice to or demand upon Tenant:

A. Landlord may re-enter the Leased Premises and cure any default of Tenant, and
Tenant shall reimburse Landlord as Additional Rent for any costs and expenses
which Landlord thereby incurs; and Landlord shall not be liable to Tenant for
any loss or damage which Tenant may sustain by reason of Landlord’s action,
regardless of whether caused by Landlord’s negligence or otherwise.

B. Without terminating this Lease, Landlord may terminate Tenant’s right to
possession of the Leased Premises, and thereafter, neither Tenant nor any person
claiming under or through Tenant shall be entitled to possession of the Leased
Premises, and Tenant shall immediately surrender the Leased Premises to
Landlord, and Landlord may re-enter the Leased Premises and dispossess Tenant
and any other occupants of the Leased Premises by any lawful means and may
remove their effects, without prejudice to any other remedy that Landlord may
have. Upon termination of possession, Landlord may (i) re-let all or any part
thereof for a term different from that which would otherwise have constituted
the balance of the Lease Term and for rent and on terms and conditions different
from those contained herein, whereupon Tenant shall be immediately obligated to
pay to Landlord an amount equal to the present value (discounted at the Prime
Rate) of the difference between the rent provided for herein and that provided
for in any lease covering a subsequent re-letting of the Leased Premises, for
the period which would otherwise have constituted the balance of the Lease Term
(the “Accelerated Rent Difference”), or

 

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(ii) without re-letting, declare the present value (discounted at the Prime
Rate) of all rent which would have been due under this Lease for the balance of
the Lease Term to be immediately due and payable as liquidated damages (the
“Accelerated Rent”). Upon termination of possession, Tenant shall be obligated
to pay to Landlord (A) the Accelerated Rent Difference or the Accelerated Rent,
whichever is applicable, (B) all loss or damage that Landlord may sustain by
reason of Tenant’s Default (“Default Damages”), which shall include, without
limitation, expenses of preparing the Leased Premises for re-letting,
demolition, repairs, tenant finish improvements, brokers’ commissions and
attorneys’ fees, and (C) all unpaid Minimum Annual Rent and Additional Rent that
accrued prior to the date of termination of possession, plus any interest and
late fees due hereunder (the “Prior Obligations”).

C. Landlord may terminate this Lease and declare the Accelerated Rent to be
immediately due and payable, whereupon Tenant shall be obligated to pay to
Landlord (i) the Accelerated Rent, (ii) all of Landlord’s Default Damages, and
(iii) all Prior Obligations. It is expressly agreed and understood that all of
Tenant’s liabilities and obligations set forth in this subsection C shall
survive termination.

D. Landlord and Tenant acknowledge and agree that the payment of the Accelerated
Rent Difference or the Accelerated Rent as set above shall not be deemed a
penalty, but merely shall constitute payment of liquidated damages, it being
understood that actual damages to Landlord are extremely difficult, if not
impossible, to ascertain. Neither the filing of a dispossessory proceeding nor
an eviction of personality in the Leased Premises shall be deemed to terminate
the Lease.

E. Landlord may sue for injunctive relief or to recover damages for any loss
resulting from the Default.

F. If Landlord terminates this Lease or Tenant’s right to possession, Landlord
shall use reasonable efforts to mitigate damages hereunder, which shall not
exceed those required by applicable law or such efforts as Landlord generally
uses to lease other space in the Building. If Landlord has not terminated this
Lease or Tenant’s right to possession, Landlord shall have no obligation to
mitigate except as required by applicable law and may permit the Leased Premises
to remain vacant or abandoned. Landlord will not be deemed to have failed to
mitigate if Landlord leases any other portions of the Building before reletting
all or any portion of the Leased Premises. Landlord shall not be deemed to have
failed to mitigate if it incurs reasonable reletting costs. In recognition that
the value of the Building depends on the rental rates and terms of leases
therein, Landlord’s rejection of a prospective replacement tenant based on an
offer of rentals below Landlord’s published rates for new leases of comparable
space at the Building at the time in question, or at Landlord’s option, below
the rates provided in this Lease, or containing terms less favorable than those
contained herein, shall not give rise to a claim by Tenant that Landlord failed
to mitigate Landlord’s damages. Notwithstanding the foregoing, Tenant shall
retain the burden of pleading mitigation of damages as an affirmative defense
and retain the burden of proof.

Section 13.03 Landlord’s Default and Tenant’s Remedies. Landlord shall be in
default if it shall fail to perform or observe any term, condition, covenant or
obligation as required under this Lease for a period of thirty (30) days after
written notice thereof from Tenant to Landlord and to any Lender of which Tenant
has been notified; provided, however, that if the term, condition, covenant or
obligation to be performed by Landlord is of such nature that the same cannot
reasonably be performed within such thirty-day period, then such default shall
be deemed to have been cured if Landlord commences such performance within said
thirty-day period and thereafter diligently completes the same within a
reasonable time. Upon the occurrence of any such default, Tenant may sue for
injunctive relief or to recover damages for any loss resulting from the breach,
but Tenant shall not be entitled to terminate this Lease or withhold, offset or
abate any rent due hereunder except as may be expressly set forth herein.

 

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Section 13.04 Limitation of Landlord’s Liability. If Landlord shall fail to
perform or observe any term, condition, covenant or obligation required to be
performed or observed by it under this Lease and if Tenant shall, as a
consequence thereof, recover a money judgment against Landlord (whether
compensatory or punitive in nature), Tenant agrees that it shall look solely to
Landlord’s right, title and interest in and to the Leased Premises (and any
proceeds thereof) for the collection of such judgment; and Tenant further agrees
that no other assets of Landlord shall be subject to levy, execution or other
process for the satisfaction of Tenant’s judgment and that Landlord shall not be
personally liable for any deficiency.

The references to “Landlord” in this Lease shall be limited to mean and include
only the owner or owners, at the time, of the fee simple interest in the Leased
Premises. In the event of a sale or transfer of such interest (except a mortgage
or other transfer as security for a debt), the “Landlord” named herein, or, in
the case of a subsequent transfer, the transferor, shall, after the date of such
transfer, be automatically released from all liability for the performance or
observance of any term, condition, covenant or obligation thereafter required to
be performed or observed by Landlord hereunder, provided that the transferee
shall have assumed all of such terms, conditions, covenants and obligations.

Section 13.05 Nonwaiver of Defaults. Neither party’s failure or delay in
exercising any of its rights or remedies or other provisions of this Lease shall
be construed to be a waiver thereof or affect its right thereafter to exercise
or enforce each and every such right or remedy or other provision. No waiver of
any default shall be deemed to be a waiver of any other default. Landlord’s
receipt of less than the full rent due shall not be construed to be other than a
payment on account of rent then due, nor shall any statement on Tenant’s check
or any letter accompanying Tenant’s check be deemed an accord and satisfaction,
and Landlord may accept such payment without prejudice to Landlord’s right to
recover the balance of the rent due or to pursue any other remedies provided in
this Lease. No act or omission by Landlord or its employees or agents during the
term of this Lease shall be deemed an acceptance of a surrender of the Leased
Premises, and no agreement to accept such a surrender shall be valid unless in
writing and signed by Landlord.

Section 13.06 Attorneys’ Fees. If either party defaults in the performance or
observance of any of the terms, conditions, covenants or obligations contained
in this Lease and the non-defaulting party obtains a judgment against the
defaulting party, then the defaulting party agrees to reimburse the
non-defaulting party for reasonable attorneys’ fees incurred in connection
therewith. In addition, if a monetary Default shall occur and either party
engages outside counsel to exercise its remedies hereunder, and then the
defaulting party cures such monetary Default, the defaulting party shall pay to
the non-defaulting party, on demand, all expenses incurred by the non-defaulting
as a result thereof, including reasonable attorneys’ fees, court costs and
expenses actually incurred.

ARTICLE 14

LANDLORD’S RIGHT TO RELOCATE TENANT

[INTENTIONALLY OMITTED].

ARTICLE 15

NOTICE AND PLACE OF PAYMENT

Section 15.01 Notices. Any notice required or permitted to be given under this
Lease or by law shall be deemed to have been given if it is written and
delivered in person or by overnight courier or mailed by certified mail, postage
prepaid, to (i) the party who is to receive such notice at the address specified
in the Basic Lease Provisions and (ii) in the case of a default notice from
Tenant to Landlord, any Lender designated by Landlord. When so mailed, the
notice shall be deemed to have been given as of the date it was received. Either
party may change its notice address(es) by giving written notice thereof to the
other party.

 

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Section 15.02 Place of Payment. All payments required to be made by Tenant to
Landlord shall be delivered or mailed to Landlord’s management agent at the
address specified in the Basic Lease Provisions or any other address Landlord
may specify from time to time by written notice to Tenant.

ARTICLE 16

TENANT’S RESPONSIBILITY REGARDING

ENVIRONMENTAL LAWS AND HAZARDOUS SUBSTANCES

Section 16.01 Definitions.

A. “Environmental Laws” – All federal, state and municipal laws, ordinances,
rules and regulations applicable to the environmental and ecological condition
of the Leased Premises, including, without limitation, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended; the
Federal Resource Conservation and Recovery Act; the Federal Toxic Substance
Control Act; the Clean Air Act; the Clean Water Act; the rules and regulations
of the Federal Environmental Protection Agency, or any other federal, state or
municipal agency or governmental board or entity having jurisdiction over the
Leased Premises.

B. “Hazardous Substances” – Includes:

(i) Those substances included within the definitions of “hazardous substances,”
“hazardous materials,” “toxic substances” “solid waste” or “infectious waste” in
any of the Environmental Laws; and

(ii) Such other substances, materials and wastes which are or become regulated
under applicable local, state or federal law, or which are classified as
hazardous, toxic or infectious under present or future Environmental Laws or
other federal, state, or local laws or regulations.

Section 16.02 Compliance. Tenant, at its sole cost and expense, shall promptly
comply with the Environmental Laws which shall impose any duty upon Tenant with
respect to Tenant’s use, handling, generating, storage or disposal of Hazardous
Substances on or about the Leased Premises. Tenant shall promptly comply with
any notice from any source issued pursuant to the Environmental Laws or with any
notice from any insurance company pertaining to Tenant’s use, handling,
generating, storage or disposal of Hazardous Substances on or about the Leased
Premises, whether such notice shall be served upon Landlord or Tenant.

Section 16.03 Restrictions on Tenant. Tenant shall not cause or permit to occur:

A. Any violation of the Environmental Laws related to environmental conditions
on, under, or about the Leased Premises, or arising from Tenant’s use, handling,
generating, storage or disposal of Hazardous Substances on or about the Leased
Premises, including, but not limited to, soil and ground water conditions.

B. The use, generation, release, manufacture, refining, production, processing,
storage or disposal of any Hazardous Substances on, under, or about the Leased
Premises, or the transportation to or from the Leased Premises of any Hazardous
Substances, except as necessary and appropriate for Tenant’s Intended Use in
which case the use, storage or disposal of such Hazardous Substances shall be
performed in compliance with the Environmental Laws.

 

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Section 16.04 Notices, Affidavits, Etc.

A. Tenant shall immediately notify Landlord of (i) any violation by Tenant, its
employees, agents, representatives, customers, invitees or contractors of the
Environmental Laws on, under or about the Leased Premises, or (ii) the presence
or suspected presence of any Hazardous Substances on, under or about the Leased
Premises and shall immediately deliver to Landlord any notice received by Tenant
relating to (i) and (ii) above from any source.

B. Tenant shall execute affidavits, representations and the like from time to
time, within five (5) days of Landlord’s request therefor, concerning Tenant’s
actual knowledge (without duty of investigation) regarding the presence of any
Hazardous Substances on, under or about the Leased Premises.

Section 16.05 Landlord’s Rights.

A. Landlord and its agent shall have the right, but not the duty, upon advance
notice (except in the case of emergency when no notice shall be required) to
inspect the Leased Premises and conduct tests thereon at any time to determine
whether or the extent to which there has been a violation of Environmental Laws
by Tenant or whether there are Hazardous Substances on, under or about the
Leased Premises. In exercising its rights herein, Landlord shall use reasonable
efforts to minimize interference with Tenant’s business but such entry shall not
constitute an eviction of Tenant, in whole or in part, and Landlord shall not be
liable for any interference, loss, or damage to Tenant’s property or business
caused thereby. Additionally, Landlord shall provide reasonable prior notice to
Tenant before exercising any such rights which may interfere with Tenant’s
business.

B. If Landlord, any lender or governmental agency shall ever require testing to
ascertain whether there has been a release of Hazardous Substances on, under or
about the Leased Premises or a violation of the Environmental Laws, and such
requirement arose in whole or in part because of Tenant’s failure to comply with
its obligations under this Article 16, then the reasonable costs thereof shall
be reimbursed by Tenant to Landlord upon demand as Additional Rent.

Section 16.06 Tenant’s Indemnification. Tenant shall indemnify and hold harmless
Landlord and Landlord’s managing agent from any and all claims, loss, liability,
costs, expenses or damage, including attorneys’ fees and costs of remediation,
incurred by Landlord in connection with any breach by Tenant of its obligations
under this Article 16. The covenants and obligations of Tenant under this
Article 16 shall survive the expiration or earlier termination of this Lease.

Section 16.07 Landlord’s Indemnification. In the event that Landlord or
Landlord’s affiliates, employees, contractors or agents shall use, release or
dispose of any Hazardous Substances in, on or about the Leased Premises or the
Park in violation of any Environmental Laws, Landlord shall remediate the same
to the extent required by Environmental Laws at Landlord’s sole cost and expense
(and the same shall not be included in Additional Rent).

Section 16.08 Existing Conditions.

A. Landlord hereby represents and warrants to Tenant that, as of the date of
this Lease to the best of Landlord’s knowledge and based solely upon Landlord’s
environmental report relating to the Land, there are, and as of the Commencement
Date there will be, no Hazardous Substances in, on, under or about the Leased
Premises in violation of Environmental Laws.

 

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B. Notwithstanding anything contained in this Article 16 to the contrary, Tenant
shall not have any liability to Landlord under this Article 16 resulting from
any conditions existing, or events occurring, or any Hazardous Substances
existing or generated, at, in, on, under or in connection with the Leased
Premises prior to the Commencement Date of this Lease (or any earlier occupancy
of the Leased Premises by Tenant) except to the extent Tenant knowingly
exacerbates the same.

ARTICLE 17

MISCELLANEOUS

Section 17.01 Benefit of Landlord and Tenant. This Lease and all of the terms
and provisions hereof shall inure to the benefit of and be binding upon Landlord
and Tenant and their respective successors and assigns.

Section 17.02 Governing Law. This Lease shall be governed in accordance with the
laws of the State of Ohio.

Section 17.03 Guaranty. [INTENTIONALLY OMITTED].

Section 17.04 Force Majeure. Landlord and Tenant shall each be excused for the
period of any delay in the performance of any obligation hereunder when such
delay is occasioned by causes beyond their respective control, including, but
not limited to, war, invasion or hostility; work stoppages, boycotts, slowdowns
or strikes; shortages of materials, equipment, labor or energy; man-made or
natural casualties; unusual weather conditions; acts or omissions of
governmental or political bodies; or civil disturbances or riots; provided that
the party claiming the benefit of such force majeure shall provide to the other
party prompt written notice and reasonable evidence of the occurrence of such
force majeure event and shall cooperate with the other party in taking all such
commercially reasonable actions as may be necessary or appropriate to mitigate,
avoid or lessen the adverse effects of such force majeure event.

Section 17.05 Condition of Premises. Tenant acknowledges that neither Landlord
nor any agent of Landlord has made any representation or warranty with respect
to the Leased Premises or the Building or with respect to the suitability or
condition of any part thereof for the conduct of Tenant’s business except as
provided in this Lease.

Section 17.06 Examination of Lease. Submission of this instrument for
examination or signature to Tenant does not constitute a reservation of or
option for Lease, and it is not effective as a Lease or otherwise until
execution by and delivery to both Landlord and Tenant.

Section 17.07 Indemnification for Leasing Commissions. The parties hereby
represent and warrant that the only real estate brokers involved in the
negotiation and execution of this Lease are the Brokers named in the Basic Lease
Provisions and that no other broker or person is entitled to any leasing
commission or compensation as a result of the negotiation or execution of this
Lease. Each party shall indemnify and hold the other harmless from any and all
liability for the breach of this representation and warranty on its part and
shall pay any compensation to any other broker or person who may be deemed or
held to be entitled thereto.

Section 17.08 Quiet Enjoyment. If Tenant shall perform all of the covenants and
agreements herein provided to be performed by Tenant, Tenant shall, at all times
during the Lease Term, have the quiet enjoyment and peaceful possession of the
Leased Premises without hindrance from Landlord or any persons lawfully claiming
under Landlord.

 

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Section 17.09 Severability of Invalid Provisions. If any provision of this Lease
shall be held to be invalid, void or unenforceable, the remaining provisions
hereof shall not be affected or impaired, and such remaining provisions shall
remain in full force and effect.

Section 17.10 Financial Statements. During the Lease Term and any extensions
thereof, Tenant shall provide to Landlord on an annual basis, within ninety (90)
days following the end of Tenant’s fiscal year, a copy of Tenant’s most recent
financial statements prepared as of the end of Tenant’s fiscal year, which
statements shall be audited and shall be prepared in conformity with GAAP.
Notwithstanding the foregoing, provided that Tenant is a public company, Tenant
shall only be required to deliver to Landlord the financial statements and other
information which Tenant delivers to the SEC or which is otherwise publicly
available. Landlord shall keep Tenant’s financial statements confidential,
except that (i) Landlord shall have the right to disclose such statements to
prospective purchasers and lenders and to Landlord’s partners, property
managers, consultants and advisors, including accountants and attorneys, and
otherwise as required by law or legal process, and (ii) Landlord shall have no
obligation to maintain the confidentiality of any financial statements or other
information which has been delivered to the SEC or is otherwise in the public
domain.

Section 17.11 Representations and Warranties. Landlord and Tenant each represent
and warrant to the other that (i) such party is a legal entity that is duly
organized, validly existing and in good standing in accordance with the laws of
the state under which it was organized; (ii) all action necessary to authorize
the execution of this Lease has been taken; and (iii) the individual executing
and delivering this Lease on behalf of such party has been authorized to do so,
and such execution and delivery shall bind such party.

Section 17.12 Representations and Indemnifications. Any representations and
indemnifications of Landlord contained in the Lease shall not be binding upon
(i) any mortgagee having a mortgage presently existing or hereafter placed on
the Building, or (ii) a successor to Landlord which has obtained or is in the
process of obtaining fee title interest to the Building as a result of a
foreclosure of any mortgage or a deed in lieu thereof.

Section 17.13 Agency Disclosure. Tenant acknowledges having previously received
and reviewed the Agency Disclosure Statement and Tenant acknowledges that said
Statement is signed and attached hereto and made a part hereof as Exhibit P. The
broker representing Landlord, as provided in the Basic Lease Provisions, its
agent and employees, have represented only Landlord, and have not in any way
represented Tenant, in the marketing, negotiation, and completion of this lease
transaction.

Section 17.14 Landlord Lien Waiver. Notwithstanding anything herein to the
contrary, Landlord subordinates any and all rights, title and interest Landlord
now has, or hereafter may have, whether statutory or otherwise, to Tenant’s
inventory, equipment, furnishings, trade fixtures, fixtures, books and records
and personal property owned or leased by Tenant located at the Leased Premises
(singly and/or collectively, the “Collateral”), to the lien of any lender
providing financing to Tenant that is secured by the Collateral. Landlord
further agrees that Tenant shall have the right, at its discretion, to mortgage,
pledge, hypothecate or grant a security interest in the Collateral (or its
leasehold interest therein) as security for its obligations under any equipment
lease or other financing arrangement related to the conduct of Tenant’s business
at the Leased Premises. Concurrently with the execution of this Lease, Landlord
shall execute and deliver to Tenant Landlord’s waiver (the “Waiver Form”) in the
form of Exhibit Q hereto. Landlord further agrees to execute and deliver within
ten (10) business days following

 

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any request therefore any UCC filing statement or other documentation with
respect to any such lease or financing arrangement, and any real estate consent
or subordination forms submitted by any vendors, equipment lessors, chattel
mortgagees, lenders, or holders or owners of the Collateral, so long as such
forms are substantially similar to the Waiver Form in all material aspects
(“Equipment Lessors”). The Collateral shall not become the property of Landlord
or a part of the realty no matter how affixed to the Leased Premises and may be
removed by Tenant or any Equipment Lessors or lenders at any time and from time
to time during the entire term of this Lease. Tenant shall promptly repair any
damage caused by the removal of such property, whether effected by Tenant or
Equipment Lessors or lenders.

Section 17.15 Confidentiality. Landlord and Tenant hereby agree that until the
expiration or earlier termination of this Lease, all terms and conditions of the
Lease shall be kept strictly confidential. Accordingly, no portion of the Lease
or any other drafts or documents prepared in connection with this Lease
(including that certain CRA and Zoning Agreement to be entered into by the
Village of West Jefferson, a municipal corporation in the State of Ohio, for the
benefit of Tenant), shall be disclosed to any other person or entity except as
provided on a “need to know” basis to their respective accountants, attorneys,
consultants, engineers, lenders, or any potential occupants of the Leased
Premises. Additionally, both Landlord and Tenant shall have the right, without
the consent of the other, to disclose information with respect to the Lease (and
including, without limitation, if required, the entire Lease) that is in the
public domain and/or as may be required by applicable law or as may be legally
required in connection with any enforcement actions under this Lease.

Section 17.16 Consent. Where the consent of a party is required, such consent
will not be unreasonably withheld, conditioned or delayed, and whenever this
Lease grants Landlord or Tenant the right to take action, exercise discretion,
establish rules and regulations or make an allocation or their determination,
Landlord and Tenant shall act reasonably and in good faith.

Section 17.17 Time. Time is of the essence of each term and provision of this
Lease.

Section 17.18 Patriot Act. Each of Landlord and Tenant, each as to itself,
hereby represents its compliance with all applicable anti-money laundering laws,
including, without limitation, the USA Patriot Act, and the laws administered by
the United States Treasury Department’s Office of Foreign Assets Control,
including, without limitation, Executive Order 13224 (“Executive Order”). Each
of Landlord and Tenant further represents (i) that it is not, and it is not
owned or controlled directly or indirectly by any person or entity, on the SDN
List published by the United States Treasury Department’s Office of Foreign
Assets Control and (ii) that it is not a person otherwise identified by
government or legal authority as a person with whom a U.S. Person is prohibited
from transacting business. As of the date hereof, a list of such designations
and the text of the Executive Order are published under the internet website
address www.ustreas.gov/offices/enforcement/ofac.

Section 17.19 Option to Expand. Any time prior to [*] and provided that: (i) no
default (beyond applicable notice and cure periods) has occurred and is then
continuing, (ii) the creditworthiness of Tenant is not materially different than
it was on the Commencement Date, and (iii) Tenant originally named herein or its
Permitted Transferee remains in possession of the Leased Premises, Tenant shall
have an option to expand the Leased Premises by approximately [*] rentable
square feet [*] (the “Expansion Space”). In the event Tenant elects to exercise
its expansion option, Tenant shall provide Landlord with written notice of its
desire to expand on or before [*] or this right shall be null and void. The term
for the Expansion Space shall be for fifteen (15) years from the Substantial
Completion of the Expansion Space and the Lease Term for the existing Leased
Premises shall be extended to be conterminous with term of the Expansion Space.

 

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If Tenant exercises the expansion option contained herein, then Landlord shall
promptly design and construct the Expansion Space utilizing design, review,
construction, installation, warranty and phased occupancy procedures consistent
with the procedures set forth in Section 2.02 above. Landlord and Tenant shall
act reasonably and in good faith to agree upon the Minimum Annual Rent for the
Expansion Space, but in no event shall such Minimum Annual Rent exceed an amount
equal to the product resulting from multiplying the Landlord Expansion Cost (as
hereinafter defined) by a rental rate constant based upon a [*] basis point
increase over the then-published ten (10) year United States Treasury Note Rate
(as published in the Wall Street Journal or, if the Wall Street Journal is no
longer published, a substitute publication reasonably acceptable to Landlord and
Tenant) as of the Expansion Space Rent Commencement Date (as hereinafter
defined).

The “Expansion Space Rent Commencement Date” shall mean the date when the
construction of the Expansion Space is Substantially Completed in accordance
with the final expansion plan, so that Tenant can lawfully occupy the Expansion
Space as evidenced by the issuance of a Certificate of Occupancy by the
applicable governing authority.

“Landlord Expansion Cost” shall mean all Landlord costs including, but not
limited to, site acquisition costs (which costs shall, for purposes of this
Section 17.19, be stipulated to equal [*] per acre of land), site costs, the
total cost of the design and construction of the Expansion Space including all
construction costs, architectural, civil and design fees, site preparation and
construction costs, building and interior construction, additional landscaping,
professional fees, permits, licenses, title costs, material testing,
construction financing interest accrued during the construction, brokerage
commissions, a development fee [*], and a reasonable construction fee to be
included in the contractor’s bid. Landlord will competitively bid all
subcontractors as in Section 2.02A(ii) above, and Landlord and Tenant shall
review the bids jointly and Landlord shall select the subcontractors mutually
agreed upon by both parties. Following the selection of the subcontractors,
Landlord shall notify Tenant in writing of the Landlord Expansion Cost (the
“Expansion Cost Statement”). Notwithstanding anything to the contrary contained
herein, Tenant shall have the right to rescind its exercise of the expansion
option if Tenant does not approve the Expansion Cost Statement within
thirty (30) days of receipt of the same.

Landlord and Tenant shall enter into a lease amendment incorporating the terms
provided above.

Section 17.20 Right of First Offer. Anytime prior to [*] and provided that
(i) Tenant has timely exercised its Option to Expand under Section 17.19,
(ii) no default (beyond applicable notice and cure periods) has occurred and is
then continuing and (iii) the creditworthiness of Tenant is not materially
different than it was on the Commencement Date, and (iv) Tenant originally named
herein or its Permitted Transferee remains in possession of the Leased Premises,
Landlord shall, before entering into a build-to-suit lease with a third party
for a building to be constructed on [*] shown cross-hatched on the attached
Exhibit R (the “Offer Space”), or a third-party construction contract or land
purchase and sale agreement for the Offer Space, notify Tenant in writing of the
availability of the Offer Space and setting forth the terms and conditions upon
which Landlord is willing to build and lease, or sell the Offer Space to Tenant
(“Landlord’s Notice”). Tenant shall have fifteen (15) business days from its
receipt of Landlord’s Notice to deliver to Landlord a written notice agreeing to
lease or purchase the Offer Space on the terms and conditions contained in
Landlord’s Notice (“Tenant’s Acceptance”). In the event Tenant fails to deliver
Tenant’s Acceptance to Landlord within said fifteen (15) business day period,
then such failure shall be conclusively deemed a rejection of the Offer Space
and a waiver by Tenant of this right of first offer and Landlord shall be free
to lease or sell the Offer Space to a third party; provided that Landlord shall
not execute a lease or purchase and sale agreement for the Offer Space later
than one (1) year following the date of Landlord’s Notice, without sending a new
Landlord’s Notice to Tenant, in which event Tenant may exercise its rights with
respect to such Landlord’s Notice in accordance with this Section 17.20. If
Tenant properly exercises its right of first offer, Landlord and Tenant shall
enter into a separate lease or purchase and sale agreement (consistent with the
form of this Lease in the case of a lease) setting forth the terms and
conditions of the Offer Space.

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

Section 17.21 Option to Extend.

A. Grant and Exercise of Option. Provided that no default (beyond applicable
notice and cure periods) has occurred and is then continuing, Tenant shall have
the option to extend the Lease Term for three (3) additional periods of five (5)
years each (the “Extension Term(s)”). Each Extension Term shall be upon the same
terms and conditions contained in the Lease except (x) this provision giving
three (3) extension options shall be amended to reflect the remaining options to
extend, if any, and (y) any improvement allowances or other concessions
applicable to the Leased Premises under the Lease shall not apply to the
Extension Term, and (z) the Minimum Annual Rent shall be adjusted as set forth
below (the “Rent Adjustment”). Tenant shall exercise each option by delivering
to Landlord, no later than twelve (12) months prior to the expiration of the
preceding term, written notice of Tenant’s desire to extend the Lease Term.
Tenant’s failure to timely exercise such option shall be deemed a waiver of such
option and any succeeding option. Landlord shall notify Tenant of the amount of
the Rent Adjustment no later than ninety (90) days prior to the commencement of
the Extension Term. Tenant shall be deemed to have accepted the Rent Adjustment
if it fails to deliver to Landlord a written objection thereto within ten (10)
business days after receipt thereof. If Tenant properly exercises its option to
extend, Landlord and Tenant shall execute an amendment to the Lease reflecting
the terms and conditions of the Extension Term within thirty (30) days after
Tenant’s acceptance (or deemed acceptance) of the Rent Adjustment.

B. Rent Adjustment. Subject to arbitrations as set forth below, the Minimum
Annual Rent for the applicable Extension Term shall be an amount equal to the
Minimum Annual Rent then being quoted by Landlord to prospective tenants for
space of comparable size and quality and with similar or equivalent improvements
as are found in the Building, and if none, then in similar buildings in the
vicinity; provided, however, that if Tenant delivers to Landlord a written
objection to Landlord’s calculation of the Rent Adjustment within ten (10)
business days after Tenant’s receipt of Landlord’s determination of the Rent
Adjustment, and the parties cannot agree on a Rent Adjustment within ten (10)
days after Tenant’s written objection then Tenant may, in its sole and absolute
discretion, either retract its exercise of its option to extend or choose
arbitration to determine the Rent Adjustment. If Tenant chooses arbitration,
Tenant shall give Landlord written notice of its desire to seek arbitration
within five (5) days after expiration of such ten (10) day period (“Arbitration
Notice”). Within ten (10) days after Tenant provides Landlord with its
Arbitration Notice, the parties shall each appoint an appraiser to determine the
Rent Adjustment for the Leased Premises. Each appraiser so selected shall be
either an MAI appraiser or a licensed real estate broker, each having at least
ten (10) years prior experience in the appraisal or leasing of comparable space
in the metropolitan area in which the Leased Premises are located and with a
working knowledge of current rental rates and practices. If the two appraisers
cannot agree upon the Rent Adjustment for the Leased Premises within twenty (20)
days after their appointment, then, within ten (10) days after the expiration of
such twenty (20) day period, the two appraisers shall select a third appraiser
meeting the above criteria. Once the third appraiser has been selected as
provided for above, then such third appraiser shall within ten (10) days after
appointment make its determination of the Rent Adjustment. The average of the
two closest determinations of the Rent Adjustment shall be used as the Minimum
Annual Rent for the applicable Extension Term and shall be binding on both
Landlord and Tenant. Landlord and Tenant shall each bear the cost of its
appraiser and shall share the cost of the third. If Tenant fails to provide the
Arbitration Notice as provided above, then Tenant’s exercise of its option to
extend shall be deemed retracted.

 

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Section 17.22 Ohio Economic Development Incentives.

A. The CRA Agreement. By Tenant’s execution of this Lease and acceptance of the
delivery of the Leased Premises, Tenant hereby recognizes that the Leased
Premises is subject to that certain Community Reinvestment Area Agreement (the
“CRA Agreement”) entered into under Ohio Revised Code Sections 3735.65 through
3735.70 (the “CRA Act”) by and between the Village of West Jefferson, Ohio (the
“Village”) and Landlord, a true and accurate copy of which is attached hereto as
Exhibit S. Landlord shall perform and observe with respect to the Project Site
those obligations, agreements, covenants and restrictions of the Owner contained
in the CRA Agreement, subject to this Section 17.22A. Tenant hereby acknowledges
and agrees that Tenant is relying upon Tenant’s examination of the CRA Agreement
and Landlord has not made and is not making any express or implied warranties,
whether oral or written, with respect to the CRA Agreement. Unless otherwise
defined in this Lease, capitalized terms utilized in this Section 17.22 shall
have the definitions assigned to them in the CRA Agreement.

B. Tenant’s Obligations. Tenant shall provide to Landlord, as soon as possible
following written request and no later than within thirty (30) days following
written request, such information as Landlord may request from time to time
relating to Tenant’s business operations in the Leased Premises as shall be
necessary for Landlord to perform its obligations under the CRA Agreement. Such
information shall include, but not be limited to, the following: (1) Federal
Employer Identification Number of Tenant; (2) a breakdown of all full-time and
part-time permanent and temporary employees working in the Leased Premises
during the previous calendar year, including the beginning and ending dates of
each employee’s employment; (3) the cost of any tangible personal property owned
or leased by Tenant and located within the Leased Premises; and (4) real
property taxes paid and foregone by Tenant with respect to the Leased Premises.

C. Waiver. Tenant hereby waives any claim, or cause or right of action of any
nature whatsoever against Landlord for the modification, suspension or
termination of or any failure to receive any exemptions provided under the CRA
Agreement with regard to the Leased Premises or property located therein, unless
such modification, suspension or termination of or failure to receive exemptions
is the direct and proximate result of Landlord’s failure to perform its
obligations under the CRA Agreement or Landlord’s gross negligence or willful
misconduct.

Section 17.23 Signage. Landlord shall provide to Tenant, as part of the
Allowance Work to the Leased Premises, the signage described in the Allowance
Construction Drawings, including, without limitation, exterior façade and
pylon/monolith signage. Landlord shall be responsible for obtaining all permits
required for the installation of such signage. Tenant shall have exclusive
exterior and interior signage rights relating to the Leased Premises, including,
without limitation, any monument signage. During the Lease Term, Tenant shall
have the right, at its sole cost and expense, to install additional or
substitute signage in, on or about the Leased Premises, provided that:
(i) Tenant complies with all zoning and other municipal and county regulations,
and (ii) the location, style and size of such additional or replacement signage
shall be subject to Landlord’s prior written approval, which approval shall not
be unreasonably withheld, delayed or conditioned. The initial signage installed
by Landlord in accordance with the Construction Drawings, and such additional or
substitute signage as may be installed by Tenant, shall be herein referred to
collectively as “Tenant’s Signage.” Tenant agrees to maintain Tenant’s Signage
in good condition and repair, and any replacement or substitute signage
installed by Tenant shall be maintained by Tenant in compliance with all zoning
and building codes throughout the Lease Term. Upon expiration or early
termination of the Lease Term, Tenant shall remove Tenant’s Signage and repair
all damage to the Building caused thereby, returning the Building to the
condition existing prior to the installation of Tenant’s Signage. Landlord shall
install the initial Tenant’s Signage as part of the

 

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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

Landlord Work, in accordance with all laws, codes and ordinances but,
thereafter, Landlord does not warrant the continuing availability of such
Tenant’s Signage to Tenant. The obligations of Tenant herein shall survive the
expiration or earlier termination of this Lease.

Section 17.24 Memorandum of Lease. Tenant shall not record this Lease in any
form during the Lease Term, including any renewals or extensions thereof;
provided, however, Landlord and Tenant shall record a memorandum of lease
(“Memorandum”) in the form attached hereto as Exhibit T. Tenant shall pay all
costs incurred in the preparation and recording of the Memorandum. In addition,
Tenant shall be obligated to release the Memorandum, at its cost, upon
expiration or earlier termination of this Lease.

Section 17.25 Reasonable Expenditures. Any expenditure by a party permitted or
required under this Lease, for which such party is entitled to demand and does
demand reimbursement from the other party, shall be reasonably incurred, and
shall be substantiated by documentary evidence available for inspection and
review by the other party or its representative during normal business hours.
The terms of this Section 17.25 shall not apply to the payment of Additional
Rent by Tenant, which shall be governed solely by the terms of Section 3.03
above, nor shall it apply to Section 2.02.

Section 17.26 Contingency. This Lease is contingent upon Landlord acquiring the
Land on or before September 1, 2007. Upon the satisfaction of this contingency,
Landlord and Tenant shall execute an amendment removing the contingency from
this Lease. In the event the above contingency is not satisfied, upon written
notice from Landlord, this Lease shall be null and void and of no further force
or effect.

[SIGNATURES CONTAINED ON THE FOLLOWING PAGES]

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and year
first above written.

 

LANDLORD:   DUKE REALTY LIMITED PARTNERSHIP,
an Indiana limited partnership   By:   Duke Realty Corporation,
an Indiana corporation,
its general partner   By:   /s/ James T. Clark     James T. Clark    

Senior Vice President

Columbus Operations

 

STATE OF OHIO    )       )    SS: COUNTY OF FRANKLIN    )   

Before me, a Notary Public in and for said County and State, personally appeared
James T. Clark, by me known and by me known to be the Senior Vice President,
Columbus Operations, of Duke Realty Corporation, an Indiana corporation, general
partner of Duke Realty Limited Partnership, an Indiana limited partnership, who
acknowledged execution of the foregoing “Lease Agreement” on behalf of said
partnership.

WITNESS my hand and Notarial Seal this 7th day of August, 2007.

 

/s/ Lauren H. McElhaney Notary Public Lauren H. McElhaney Printed Signature

My Commission Expires: 10.19.09

My County of Residence: Franklin

 

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[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

TENANT:    

RESTORATION HARDWARE, INC.,

a Delaware corporation

  By:   /s/ Chris Newman   Name:   Chris Newman   Title:   Senior Vice
President, Chief Financial Officer

STATE OF CALIFORNIA

COUNTY OF MARIN

On August 6, 2007, before me, Stephanie Borzoni Alvarez, notary public,
personally appeared

Chris Newman,

¨ personally known to me    –OR–

¨ proved to me on the basis of satisfactory evidence to be the person whose name
is subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on the instrument
the person or the entity upon behalf of which the person acted, executed the
instrument.

 

WITNESS my hand and official seal. /s/ Stephanie Borzoni Alvarez Signature of
Notary

 

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