Document:

Exhibit 10.1

 

ARTICLE I

 

REFERENCE DATA

 

1.1                                 SUBJECTS REFERRED TO:

 

Each reference in this Lease to any of the following subjects shall be
construed to incorporate the data stated for that subject in this
Section 1.1:

 

	
  LANDLORD:

  	
  California
  State Teachers’ Retirement System

  
	
   

  	
   

  
	
  MANAGING
  AGENT:

  	
  Clarion
  Partners, LLC

  
	
   

  	
   

  
	
  LANDLORD’S
  & MANAGING AGENT’S ADDRESS:

  
	
   

  	
  c/o
  Clarion Partners, LLC

  
	
   

  	
  One
  Federal Street

  
	
   

  	
  Boston,
  MA 02110

  
	
   

  	
  Attn.:
  Asset Manager

  
	
   

  	
   

  
	
  TENANT:

  	
  Cubist
  Pharmaceuticals, Inc., a Delaware corporation

  
	
   

  	
   

  
	
  TENANT’S
  ADDRESS (FOR NOTICE AND BILLING):

  
	
   

  	
   

  
	
  a.

  	
  Prior
  to commencement of occupancy:

  
	
   

  	
   

  
	
   

  	
  65
  Hayden Avenue, Lexington, MA 02421

  
	
   

  	
   

  
	
  b.

  	
  After
  commencement of occupancy:

  
	
   

  	
   

  
	
   

  	
  55
  Hayden Avenue, Lexington, MA 02421

  
	
   

  	
   

  
	
  BROKERS:

  	
  Richards,
  Barry Joyce & Partners and Grubb & Ellis Company

  
	
   

  	
   

  
	
  PREMISES:

  	
  The
  space in the building at 45/55 Hayden Avenue, Lexington, Massachusetts (the
  Building) located on the fourth (4th) and second (2nd)
  floors of the Building as shown on Exhibit
  A.

  
			

 

RENTABLE
FLOOR AREA OF THE PREMISES: Approximately 15,475 rentable square feet
consisting of approximately 6,755 rentable square feet located on the second (2nd)
floor of the Building and 8,720 rentable square feet located on the fourth (4th)
floor of the Building

 

TOTAL
RENTABLE FLOOR AREA OF THE BUILDING: Approximately 190,079 square feet

 

ALLOWANCE
FOR INITIAL ALTERATIONS: $433,300 ($28.00) per rentable square foot)

 

PARKING:                                      Three (3) parking spaces per 1,000 rentable
square feet of Premises

 

TERM
COMMENCEMENT DATE:      Lease Execution Date

 

 

	
  RENT
  COMMENCEMENT DATE:

  	
  August 1,
  2004

  
	
   

  	
   

  
	
  TERM:

  	
  Commencing
  on the Term Commencement Date and continuing until July 31, 2009 unless
  sooner terminated as provided herein

  
	
   

  
	
  ANNUAL
  RENT:

  	
  Rent
  Commencement

  	
   

  
	
   

  	
  Date – January 31, 2005

  	
  $22.00
  per rentable square foot

  
	
   

  	
  February 1,
  2005 – January 31, 2006

  	
  $23.00
  per rentable square foot

  
	
   

  	
  February 1,
  2006 – January 31, 2007

  	
  $24.00
  per rentable square foot

  
	
   

  	
  February 1,
  2007 – January 31, 2008

  	
  $25.00
  per rentable square foot

  
	
   

  	
  February 1,
  2008 – July 31, 2009

  	
  $26.00
  per rentable square foot

  
	
   

  	
   

  
	
  TOTAL
  ANNUAL AGGREGATE RENT:

  	
  Rent
  Commencement Date - January 31, 2005 -

  $340,450.00 ($28,370.83 per month; based upon

  $22.00 per rentable square foot)

  February 1, 2005 – January 31, 2006 -

  $355,925.00 ($29,660.42 per month; based upon

  $23.00 per rentable square foot)

  February 1, 2006 – January 31, 2007 -

  $371,400.00 ($30,950.00 per month; based upon

  $24.00 per rentable square foot)

  February 1, 2007 – January 31, 2008 -

  $386,875.00 ($32,239.58 per month; based upon

  $25.00 per rentable square foot)

  February 1, 2008 – July 31, 2009 -

  $402,350.00 ($33,529.17 per month; based upon

  $26.00 per rentable square foot)

  
	
   

  	
   

  	
   

  
	
  PERMITTED
  USES:

  	
  Office
  Uses and Computer Lab Uses and uses incidental thereto (provided that such computer
  lab use shall not exceed 6,755 rentable square feet and such computer lab use
  shall be in compliance with all laws and shall comply with the provisions of
  this Lease)

  
	
   

  	
   

  
	
  COMMERCIAL
  GENERAL LIABILITY INSURANCE:  See
  Article VI

  
	
   

  
	
  SECURITY
  DEPOSIT:

  	
  $355,000.00
  (as the same may be reduced pursuant to Article XI hereof)

  
	
   

  	
   

  
	
  TENANT’S
  REPRESENTATIVE FOR THE PURPOSES OF ARTICLE III:

  
	
   

  
	
  Steve
  Lewis

  c/o Cubist Pharmaceuticals

  65 Hayden Avenue

  Lexington, MA 02421

  Phone (781) 860-8365

  
							

 

2

 

	
  LANDLORD’S REPRESENTATIVE FOR THE PURPOSES OF ARTICLE III:

  
	
   

  
	
  Deke Schultze

  c/o Clarion Realty Services

  880 Winter Street

  Waltham, MA 02451

  Phone (781)522-0312

  
	
   

  
	
  LEASE EXECUTION DATE:

  	
  January     , 2004

  

 

3

 

1.2                                 EXHIBITS.

 

The exhibits listed below in this section are incorporated in this
Lease by reference and are to be construed as part of this Lease:

 

	
   

  	
  EXHIBIT
  A

  	
  Plan
  showing Premises.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  B

  	
  Intentionally
  Deleted

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  C

  	
  Landlord’s
  Services

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  D

  	
  Rules
  and Regulations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  E

  	
  Extension
  Option

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  F

  	
  Tenant
  Work Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  G

  	
  Right
  of First Offer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT
  H

  	
  Holidays

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I
  REFERENCE DATA

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  SUBJECTS
  REFERRED TO:

  	
   

  
	
  1.2

  	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II
  PREMISES AND TERM

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  DESCRIPTION OF PREMISES

  	
   

  
	
  2.2

  	
  TERM

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  DELIVERY OF PREMISES

  	
   

  
	
  3.2

  	
  PREPARATION OF PREMISES FOR OCCUPANCY

  	
   

  
	
  3.3

  	
  GENERAL PROVISIONS APPLICABLE TO
  CONSTRUCTION

  	
   

  
	
  3.4

  	
  ALTERATIONS AND ADDITIONS

  	
   

  
	
  3.5

  	
  REPRESENTATIVES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV
  RENT

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  ANNUAL
  RENT

  	
   

  
	
  4.2

  	
  ANNUAL OPERATING COST AND REAL ESTATE TAX
  ESCALATION

  	
   

  
	
  4.3

  	
  ESTIMATED ANNUAL OPERATING EXPENSE AND REAL
  ESTATE TAX ESCALATION PAYMENT

  	
   

  
	
  4.4

  	
  ELECTRICITY

  	
   

  
	
  4.5

  	
  CHANGE OF FISCAL YEAR

  	
   

  
					

 

4

 

	
  4.6

  	
  PAYMENTS

  	
   

  
	
  4.7

  	
  AUDITS

  	
   

  
	
  4.8

  	
  CAPITAL EXPENDITURES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V LANDLORDS
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  LANDLORD’S
  COVENANTS DURING THE TERM

  	
   

  
	
  5.1.1

  	
  Building Services

  	
   

  
	
  5.1.2

  	
  Additional
  Building Services

  	
   

  
	
  5.1.3

  	
  Repairs

  	
   

  
	
  5.1.4

  	
  Tenant Directory

  	
   

  
	
  5.1.5

  	
  Food Service

  	
   

  
	
  5.1.6

  	
  Quiet Enjoyment

  	
   

  
	
  5.1.7

  	
  Monument Signage

  	
   

  
	
  5.2

  	
  INTERRUPTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI TENANT’S
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  TENANT’S
  COVENANTS DURING THE TERM

  	
   

  
	
  6.1.1

  	
  Tenant’s Payments

  	
   

  
	
  6.1.2

  	
  Repairs and
  Yielding Up

  	
   

  
	
  6.1.3

  	
  Occupancy and Use

  	
   

  
	
  6.1.4

  	
  Rules and
  Regulations

  	
   

  
	
  6.1.5

  	
  Safety Appliances

  	
   

  
	
  6.1.6

  	
  Assignment and
  Subletting

  	
   

  
	
  6.1.7

  	
  Indemnity

  	
   

  
	
  6.1.8

  	
  Tenant’s Insurance

  	
   

  
	
  6.1.9

  	
  Tenant’s
  Insurer Rating; Certification of Insurance

  	
   

  
	
  6.1.10

  	
  Landlord’s
  Right of Entry

  	
   

  
	
  6.1.11

  	
  Loading

  	
   

  
	
  6.1.12

  	
  Landlord’s Costs

  	
   

  
	
  6.1.13

  	
  Tenant’s Property

  	
   

  
	
  6.1.14

  	
  Labor or
  Materialmen’s Liens

  	
   

  
	
  6.1.15

  	
  Changes or
  Additions

  	
   

  
	
  6.1.16

  	
  Holdover

  	
   

  
	
  6.1.17

  	
  Independent
  Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII DAMAGE
  AND DESTRUCTION; CONDEMNATION

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  FIRE OR OTHER
  CASUALTY

  	
   

  
	
  7.2

  	
  EMINENT DOMAIN

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  RIGHTS OF MORTGAGEE

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  PRIORITY OF LEASE

  	
   

  
	
  8.2

  	
  RIGHTS
  OF MORTGAGE HOLDERS; LIMITATION OF MORTGAGEE’S LIABILITY

  	
   

  
	
  8.3

  	
  NO
  PREPAYMENT OR MODIFICATION, ETC

  	
   

  
					

 

5

 

	
  8.4

  	
  NO RELEASE OR TERMINATION

  	
   

  
	
  8.5

  	
  CONTINUING
  OFFER

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX
  DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  EVENTS
  OF DEFAULT

  	
   

  
	
  9.2

  	
  TENANT’S OBLIGATIONS AFTER TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  NOTICE
  OF LEASE

  	
   

  
	
  10.2

  	
  INTENTIONALLY DELETED

  	
   

  
	
  10.3

  	
  NOTICES FROM ONE PARTY TO THE OTHER

  	
   

  
	
  10.4

  	
  BIND
  AND INURE

  	
   

  
	
  10.5

  	
  NO
  SURRENDER

  	
   

  
	
  10.6

  	
  NO
  WAIVER, ETC

  	
   

  
	
  10.7

  	
  NO ACCORD AND SATISFACTION

  	
   

  
	
  10.8

  	
  CUMULATIVE REMEDIES

  	
   

  
	
  10.9

  	
  LANDLORD’S RIGHT TO CURE

  	
   

  
	
  10.10

  	
  ESTOPPEL CERTIFICATE

  	
   

  
	
  10.11

  	
  WAIVER OF SUBROGATION

  	
   

  
	
  10.12

  	
  ACTS
  OF GOD

  	
   

  
	
  10.13

  	
  BROKERAGE

  	
   

  
	
  10.14

  	
  SUBMISSION NOT AN OFFER

  	
   

  
	
  10.15

  	
  APPLICABLE LAW AND CONSTRUCTION

  	
   

  
	
  10.16

  	
  AUTHORITY OF TENANT

  	
   

  
	
  10.17

  	
  MISCELLANEOUS

  	
   

  
	
  10.18

  	
  ASSIGNMENT OF LEASE AND/OR RENTS

  	
   

  
	
  10.19

  	
  PARKING

  	
   

  
	
  10.20

  	
  RIGHT OF FIRST OFFER

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI
  SECURITY DEPOSIT

  	
   

  

 

ARTICLE II

 

PREMISES AND TERM

 

2.1                                 DESCRIPTION
OF PREMISES.

 

Subject to and with the benefit of the
provisions of this Lease, Landlord hereby leases to Tenant, and Tenant leases
from Landlord, the Premises.

 

Subject to Landlord’s rights reserved in this
Lease, Tenant shall have, as appurtenant to the Premises, the right to use in
common with others entitled thereto: (a) the common facilities included in the
Building or on the lot on which the Building is located (the “Lot”), including,
without limitation, sidewalks, parking, loading areas, lobbies, elevators,
restrooms and the like, and (b) the building service fixtures and equipment
serving the Premises.

 

6

 

Landlord reserves the right from time to
time, without unreasonable interference with Tenant’s use, (a) to install,
repair, replace, use, maintain and relocate for service to the Premises
building service fixtures and equipment wherever located in the Building or on
the Lot and (b) to alter or relocate any common facilities.  Landlord also reserves the right at all
reasonable times upon reasonable advance notice (except no notice is required
in the event of an emergency) to enter upon the Premises, inspect the same and
show the same to others, and in Landlord’s discretion to make repairs,
alterations or substitutions for the protection and maintenance of the Building
or any part thereof.

 

Landlord also reserves the right to enter the
Premises to install ducts, wires, beams, walls and other equipment provided
that such ducts, etc. are located above dropped ceilings, below the slab
between demising walls, attached to bearing columns, and the like so that no
such materials are visible in the Premises.

 

2.2                                 TERM.

 

To have and to hold for a period (the “Term”)
commencing on the Term Commencement Date and continuing for the Term, unless
sooner terminated as provided herein, subject to Tenant’s option to extend the
Term, as set forth in Exhibit E
attached hereto and incorporated herein.

 

ARTICLE III

 

CONSTRUCTION

 

3.1                                 DELIVERY
OF PREMISES.

 

Tenant acknowledges that Tenant has had an
opportunity to inspect the Premises. 
The Premises, shall be delivered to Tenant “As Is,” “Where Is” with all
faults and without representations, warranty or guaranty of any kind by
Landlord to Tenant.

 

3.2                                 PREPARATION
OF PREMISES FOR OCCUPANCY.

 

Tenant agrees to accept the Premises in its
“As Is,” “Where Is” condition and configuration, it being agreed that Landlord
shall not be required to perform any work or, except as provided below with
respect to the Allowance, incur any costs in connection with the construction
or demolition of any improvements in the Premises.

 

Tenant, following the Term Commencement Date
and provided there is no default by Tenant hereunder, shall have the right to
perform alterations and improvements in the Premises (the “Initial
Alterations”) in accordance with the Tenant Work Agreement attached hereto as Exhibit F and subject to all of the terms
and obligations of this Lease except for Tenant’s obligation to pay Annual Rent
hereunder.  Notwithstanding the
foregoing, Tenant and its contractors shall not have the right to perform
Initial Alterations in the Premises unless and until Tenant has complied with
all of the terms and conditions of the Tenant Work Agreement and
Article III of this Lease.  Tenant
shall be responsible for all elements of the design of Tenant’s plans,
including without limitation the “Space Plan” and the “Construction Drawings
and Specifications” as defined in the Tenant Work Agreement (including, without
limitation,

 

7

 

compliance with law, functionality of design, the structural integrity
of the design, the configuration of the Premises and the placement of Tenant’s
furniture, appliances and equipment), and Landlord’s approval of Tenant’s plans
shall in no event relieve Tenant of the responsibility for such design.

 

3.3                                 GENERAL
PROVISIONS APPLICABLE TO CONSTRUCTION.

 

All construction work required or permitted
by this Lease, whether by Landlord or by Tenant, shall be done in a good and
workmanlike manner, using new materials of first quality and in compliance with
all applicable laws and all lawful ordinances, regulations and orders of
governmental authority and insurers of the Building and the Lot.  Either party may inspect the work of the
other at reasonable times and promptly shall give notice of observed defects.

 

3.4                                 ALTERATIONS
AND ADDITIONS.

 

This Section 3.4 shall apply before and
during the Term.  Tenant shall not make
any alterations and additions to the Premises except in accordance with plans
and specifications first approved by Landlord which approval shall not be
unreasonably withheld or delayed.  In no
event shall any alterations or additions be considered or approved by Landlord
which (a) involve or might affect any structural or exterior element of the
Building or building mechanical systems, including the common facilities of the
Building, or (b) will require unusual expense to readapt the Premises to normal
office use on Lease termination or increase the cost of insurance or taxes on
the Building or the Lot.  Landlord shall
allow for the installation and use by Tenant of a sprinkler system for use in
conjunction with Tenant’s occupancy of the Premises which installation shall be
completed in accordance with the terms of the Tenant Work Agreement attached
hereto as Exhibit F.  All alterations and additions shall become a
part of the Premises, unless and until Landlord, at its option, shall, at the
time of approval of the plans therefor, specify the same for removal pursuant
to Section 6.1.2. All of Tenant’s alterations and additions and
installation and delivery of telephone systems, furnishings, and equipment
shall be coordinated with any work being performed by Landlord and shall be
performed in such manner, and by such persons as shall maintain harmonious
labor relations and not cause any damage to the Building or interference with
Building construction or operation and, except for installation of furnishings,
equipment and telephone systems, and except as otherwise expressly set forth
herein, shall be performed by general contractors first approved by Landlord,
which approval shall not be unreasonably withheld.  Before commencing any work Tenant shall: secure all licenses and
permits necessary therefor; deliver to Landlord a statement of the names of all
its contractors and subcontractors (the identity of which must have been
previously approved by Landlord as hereinabove contemplated) and the estimated
cost of all labor and material to be furnished by them; and cause each
contractor and subcontractor to carry worker’s compensation insurance in
statutory amounts covering all the contractor’s and subcontractor’s employees
and comprehensive public liability insurance pursuant to the requirements of
Section 6.1.9 hereof.  Tenant
agrees to pay promptly when due, and to defend and indemnify Landlord from and
against, the entire cost of any work done on the Premises by Tenant, its agents,
employees or independent contractors, and not to cause or permit any liens for
labor or materials performed or furnished in connection therewith to attach to
the Building or the Lot and immediately to discharge any such liens which may
so attach.  Tenant shall pay within
fourteen (14) days after being billed therefor by Landlord, as additional rent,
one hundred percent (100%) of any increase

 

8

 

in real estate taxes on the Premises not
otherwise billed to Tenant which shall, at any time after the commencement of
the Term, be directly attributable to any alteration, addition or improvement
to the Premises made by or on behalf of Tenant.

 

Landlord will not approve any construction,
alterations, or additions requiring unusual expense to readapt the Premises to
normal office use on lease termination or increasing the cost of, insurance or
taxes on the Building or of Landlord’s services called for by Section 5.1.

 

In connection with the installation of
telecommunication equipment by Tenant, such installation shall occur only in
such locations and in such a manner as approved in writing by the Landlord and
none of such wires, ducts or equipment shall be located in areas outside the
Premises, provided, however, that Tenant may install wires and cables in risers
and ducts outside the Premises which are in existence on the date of this Lease
and for which there exists, in Landlord’s sole discretion, adequate space for
Tenant’s wires and cables.  Telephone
switches, antennae, electronic distribution boxes and similar equipment shall
only be located within the Premises. 
Landlord shall not be liable for any loss, damage or interruption of
service related to such facilities, except to the extent caused by the
negligence or willful misconduct of Landlord, its agents, contractors or
employees.

 

3.5                                 REPRESENTATIVES.

 

Each party authorizes the other to rely in
connection with their respective rights and obligations under this
Article III upon approval and other actions on the party’s behalf by
Landlord’s Representative in the case of the Landlord or Tenant’s
Representative in the case of Tenant or by any person designated in
substitution or addition by notice to the party relying.

 

ARTICLE IV

 

RENT

 

4.1                                 ANNUAL
RENT.

 

Tenant agrees to pay to Landlord, without any
offset or reduction whatever (except as made in accordance with the express
provisions of this Lease), the Annual Rent in equal monthly installments in
advance on the first day of each calendar month included in the Term after the
Rent Commencement Date; and for any portion of a calendar month at the
beginning or end of the Term, at the proportionate rate payable for such
portion, in advance.  Upon execution of
this Lease, Tenant shall pay the first month of Annual Rent due hereunder.

 

4.2                                 ANNUAL
OPERATING COST AND REAL ESTATE TAX ESCALATION.

 

In addition to Annual Rent, Tenant shall pay
to Landlord as additional rent, Tenant’s proportionate share of Annual
Operating Costs (as hereinafter defined) which is in excess of the total
Operating Costs incurred during calendar year 2004. In addition, Tenant shall
also pay to Landlord as additional rent, Tenant’s proportionate share of Real
Estate Taxes (as hereinafter defined) which is in excess of the total Real
Estate Taxes incurred for fiscal year 2005. Tenant’s proportionate share of
Annual Operating Costs shall be determined by multiplying Annual Operating
Costs by a fraction, the numerator of which is the Rentable Floor Area of the
Premises

 

9

 

and the denominator of which is the Total Rentable Floor Area of the
Building.  In the event that the
Building is not fully occupied, such Annual Operating Costs shall be adjusted
to reflect the costs which would be incurred if the Building were 100%
occupied.  Tenant’s proportionate share
of Real Estate Taxes shall be determined by multiplying annual Real Estate
Taxes by a fraction, the numerator of which is the Rentable Floor Area of the
Premises and the denominator of which is the Total Rentable Floor Area of the
Building.

 

Annual Operating Costs shall mean the actual
expenses paid or incurred by Landlord in the operation, maintenance and
management of the Building and Lot. 
Operating Costs shall include without limitation:

 

(a) service, repair, replacement (in
accordance with the following paragraph) and other maintenance to the Building
and Lot and components thereof; (b) wages and salaries (and taxes and other
charges imposed upon employers with respect to such wages and salaries) and
fringe benefits and worker’s compensation insurance premiums paid to persons
employed by the Landlord for rendering service in the operation, maintenance,
and repair of the Building and Lot and related facilities and amenities; (c)
cost of independent contractors hired for the operation, maintenance and repair
of the Building and Lot and related facilities and amenities (which payments
may be to affiliates of Landlord provided the same are at reasonable rates
consistent with the type of occupancy and the services rendered); (d) costs of
electricity, steam, water, fuel, heating, lighting, air conditioning, sewer,
and other utilities chargeable to the operation and maintenance of the Building
and Lot exclusive of electricity costs passed through directly to tenants; (e)
cost of insurance for and relating to the Building and the Lot, including fire
and extended coverage (or such greater coverages as Landlord may elect to
carry), elevator, boiler, sprinkler leakage, water damage, public liability and
property damage, plate glass, and rent protection; (f) costs of supplies; (g)
costs of window cleaning, janitorial services, security services, landscaping,
snow and ice removal and painting; (h) sales or use taxes on supplies and
services; (i) consulting, accounting fees, legal, tax appeal, engineering and
other professional fees and expenses; (j) management fees; (k) contributions,
costs or expenses related to common areas or facilities of any office park or
development of which the Building or Lot are a part, (l) alterations and
improvements to the Building and Lot made by reason of any requirement of any
insurance underwriters or any federal, state, or local statutes, regulations,
ordinances, or any other duly constituted public authorities having
jurisdiction over the Building and Lot; (m) any losses incurred by Landlord in
connection with providing cafeteria style food service to the Building as set
forth in Section 5.1.5 of this Lease; and (n) without limiting any of the
foregoing, any other expense or charge which, in accordance with sound
accounting and management principles generally accepted, would be construed as
an operating expense.  The term
Operating Costs shall not include the interest and amortization on mortgages
for the Building and Lot or leasehold interests therein; any charge for
depreciation; leasing commissions or legal fees for the negotiation and
enforcement of leases; and the cost of special services rendered to tenants
(including Tenant) for which a special charge is made.

 

Operating Costs shall also exclude:

 

(a)                                  the cost of painting,
decorating and redecorating for any tenant, and any work or service performed
or rendered exclusively, to a greater extent or in a materially more favorable
manner for any tenant, including Tenant;

 

10

 

(b)                                 costs relating to maintaining Landlord’s
existence as a corporation, partnership or other entity;

 

(c)                                  advertising and other fees and costs incurred
in procuring tenants;

 

(d)                                 franchise or income taxes imposed on
Landlord;

 

(e)                                  the cost of any items for which Landlord is
reimbursed by insurance, condemnation awards, refund, rebate or otherwise and
any expenses for repairs and maintenance to the extent covered and reimbursed
by warranties, guarantees and service contracts;

 

(f)                                    costs incurred by Landlord relating to any
violation by any other tenant of the terms and conditions of any lease of space
in the Building; and

 

(g)                                 costs paid directly by individual tenants to
suppliers, including tenant electricity, telephone and other utility costs.

 

Real Estate Taxes shall mean and all real estate taxes and assessments,
general or special, ordinary or extraordinary, foreseen or unforeseen, imposed
upon the Building and Lot and any future improvement of whatever kind thereto
or thereon.  Real Estate Taxes shall
include, without limitation:

 

(a)                                  real estate taxes on the Building and Lot;
(b) installments and interest on assessments for public betterments or public
improvements assessed after the date of this Lease; and (c) expenses of any
proceedings for abatement of taxes and assessments with respect to any fiscal
year or fraction of a fiscal year.

 

4.3                                 ESTIMATED ANNUAL OPERATING EXPENSE AND REAL
ESTATE TAX ESCALATION PAYMENT.

 

If, with respect to any fiscal year or fraction thereof during the
Term, Landlord estimates that Tenant will be obligated to pay Annual Operating
Costs, then Tenant shall pay, as additional rent, on the first day of each
month of such fiscal year and each ensuing fiscal year thereafter, Estimated
Monthly Operating Expense Cost Payments equal to 1/12th of the estimated Annual
Operating Cost Escalation for the respective fiscal year, with an appropriate
additional payment or refund to be made within 30 days after Landlord’s
Statement (as hereafter defined) is delivered to Tenant.  Landlord may adjust such Estimated Monthly
Annual Operating Cost Payment from time to time and at any time during a fiscal
year (but not more than twice each year), and Tenant shall pay, as additional
rent, on the first day of each month following receipt of Landlord’s notice
thereof, the adjusted Monthly Annual Operating Cost Payment.

 

As soon as practicable after the end of each fiscal year ending during
the Term and after lease termination, Landlord shall render a statement
(Landlord’s Statement) in reasonable detail and according to generally accepted
accounting practices certified by Landlord and showing for the preceding fiscal
year or fraction thereof, as the case may be, Landlord’s Annual Operating
Costs, and Tenant’s proportionate share thereof, as defined above.

 

11

 

If, with respect to any fiscal year or fraction thereof during the
Term, Landlord estimates that Tenant will be obligated to pay annual Real
Estate Taxes, then Tenant shall pay, as additional rent, on the first day of
each month of such fiscal year and each ensuing fiscal year thereafter,
Estimated Monthly Real Estate Tax Payments equal to 1/12th of the estimated
annual Real Estate Tax escalation for the respective fiscal year, with an
appropriate additional payment or refund to be made within 30 days after a copy
of the actual Real Estate Tax Bill for the Premises and the Lot is delivered to
Tenant showing, for the preceding fiscal year or fraction thereof, as the case
may be, Landlord’s Real Estate Taxes, and Tenant’s proportionate share
thereof.  Landlord may adjust such
Estimated Monthly Real Estate Tax Payment from time to time and at any time
during a fiscal year (but not more than twice each year), and Tenant shall pay,
as additional rent, on the first day of each month following receipt of
Landlord’s notice thereof, the adjusted Monthly Real Estate Tax Payment.

 

4.4                                 ELECTRICITY.

 

Tenant will be billed for electricity for Tenant’s lights and outlet
consumption on a monthly basis based on Landlord’s annual estimate of
electricity charges per rentable square foot. 
Should the actual average expense to Landlord per square foot for
Tenant’s electricity be different than Landlord’s estimate, an additional
charge or a credit will be made at the end of each year’s occupancy to be paid
with or credited against the next monthly charge for Tenant’s electricity.  Notwithstanding the foregoing, Landlord
reserves the right to assess Tenant’s charge for electricity based on an engineer’s
survey of Tenant’s electrical usage conducted from time to time or on the
sub-metering of all or part of the Premises. 
Such charges for Tenant’s electricity shall be paid by Tenant as
additional rent at the same time and in the same manner as payments of Annual
Rent.

 

Tenant covenants and agrees that its use of electric current (including
without limitation, the electric current necessary for any supplemental HVAC at
the Premises) shall not exceed 6.0 watts per rentable square foot of floor area
on the fourth floor of the Premises and 80 watts per rentable square foot of
floor area on the second floor of the Premises and that its total connected
lighting load will in no event exceed the maximum load from time to time
permitted by applicable governmental regulations.  In the event Tenant introduces into the Premises personnel or
equipment which overloads the capacity of the Building’s electrical system or
in any other way interferes with the system’s ability to perform properly,
supplementary systems including check meters may, if and as needed, at
Landlord’s option, be provided by Landlord, at Tenant’s expense.  Landlord shall not in any way be liable or
responsible to Tenant for any loss or damage or expense which Tenant may
sustain or incur if, during the Term of this Lease, either the quantity or
character of electric current is changed or electric current is no longer
available or suitable for Tenant’s requirements due to a factor or cause beyond
Landlord’s control.

 

Landlord reserves the exclusive right to provide electric and other
utility service to the Building.  Tenant
may request permission from Landlord (which consent may be withheld in its sole
discretion) to arrange electric and other utility service exclusively serving
the Premises.  Should such permission be
granted, however, such service shall be installed only in such locations and in
such manner as shall be specifically approved by Landlord in its sole
discretion, Tenant shall be responsible for restoration of any damage caused by
such installation and Tenant shall be responsible for removal of such
installations at the termination of this Lease.  Landlord

 

12

 

may
limit Tenant’s choice of electrical or other utility providers in order to
avoid proliferation of such services to the Building or for any other
reason.  In no event, however, shall
Landlord be responsible for any damages or inconvenience caused by interruption
in or poor quality of electricity or other utility services provided to the
Building or the Premises unless such damages are caused by the negligence or
willful misconduct of Landlord, its agents or employees.

 

4.5                                 CHANGE OF FISCAL YEAR.

 

Landlord shall have the right from time to time to change the periods
of accounting under Section 4.2 to any annual period other than a calendar
year, and upon any such change all items referred to in Section 4.2 shall
be appropriately apportioned.  In all
Landlord’s Statements rendered under Section 4.2, amounts for periods
partially within and partially without the accounting periods shall be
appropriately apportioned, and any items which are not determinable at the time
of a Landlord’s Statement shall be included therein on the basis of Landlord’s
estimate, and with respect thereto Landlord shall render promptly after
determination a supplemental Landlord’s Statement, and appropriate adjustment
shall be made according thereto.

 

4.6                                 PAYMENTS.

 

All payments of Annual Rent and additional rent shall be made to
Managing Agent, or to such other person as Landlord may from time to time designate.  If any installment of Annual Base Rent or
additional rent or payments due on account of leasehold improvements is paid
more than five (5) days after the due date thereof (provided that Tenant shall
not receive such five (5) day grace period more often than twice during any
twelve (12) month period), at Landlord’s election, it shall bear interest at a
rate equal to the average prime commercial rate from time to time established
by the three largest national banks plus 4% per annum from such due date, which
interest shall be immediately due and payable as further additional rent.

 

4.7                                 AUDITS.

 

Within two (2) months after receipt of Landlord’s statement (as defined
in Section 4.3), Tenant may request to audit (at Tenant’s expense)
Landlord’s Operating Costs for the preceding fiscal year.  Such audit shall take place at Landlord’s
Office in the Metropolitan Boston Area where its books and records are kept or
at such other location in the Metropolitan Boston area designated by
Landlord.  Such audit may only be
conducted by an independent, nationally recognized firm of certified public
accountants.  In no event may such firm
be compensated on a contingency fee basis or in any other manner which is
dependent upon the results of such audit or inspection.  If such audit discloses a discrepancy in
excess of 5% of the annual Operating Costs, and Landlord concurs with such
audit, appropriate adjustments shall be paid to Landlord or Tenant, as the case
may be.  If the Landlord does not concur
with the results of such audit, the matter shall be submitted to binding
arbitration with the American Arbitration Association at its office in Boston,
Massachusetts in accordance with procedures designated by its applicable rules.

 

4.8                                 CAPITAL EXPENDITURES.

 

If Landlord shall make a capital expenditure, Tenant shall pay, in
addition to Tenant’s proportionate share of Annual Operating Costs, Tenant’s
proportionate share of the annual charge-off of such capital expenditure so
long as it is incurred (i) to reduce the anticipated

 

13

 

amount of Operating Costs or to prevent an anticipated increase in
Operating Costs, (ii) to maintain the condition of the building as a
first-class office building in the suburban Lexington, Massachusetts market, or
(iii) in order to comply with requirements of law promulgated and enacted after
the date of this Lease.  Annual
charge-off shall be determined by dividing the original capital expenditure
plus an interest factor, reasonably determined by Landlord, as being the
interest rate then being charged for long-term mortgages, by institutional
lenders on like properties within the locality in which the Building is
located, by the number of years of useful life reasonably contemplated for such
capital expenditure.  Useful life shall
be determined reasonably by Landlord in accordance with generally accepted
practices in effect at the time of making such expenditure.  Landlord represents, to the best of
Landlord’s knowledge without independent investigation, that as of the Lease
Execution Date, the only planned capital expenditure at the Building costing in
excess of $70,000 is the installation of an energy management system for the
Building.  The foregoing representation
shall in no way derogate from Landlord’s right to make any future capital
expenditures in accordance with the terms of this Lease.

 

ARTICLE V

 

LANDLORDS COVENANTS

 

5.1                                 LANDLORD’S
COVENANTS DURING THE TERM.

 

Landlord covenants during the Term:

 

5.1.1                        Building
Services.  To furnish during normal
working hours heat, air-conditioning, elevator service, cleaning service, hot
and chilled water service as shown in Exhibit
C.  “Normal working hours”
shall mean the hours of 8:00 a.m. through 6:00 p.m.  Monday through Friday and the hours of 8:00 a.m. through 1:00
p.m. on Saturdays, and no hours on legal holidays (as listed in Exhibit H to Lease and as such list of
holidays may be reasonably amended by Landlord from time to time) and Sundays;
provided, however, that Tenant shall have access to the Building 24 hours a
day, 365 days a year, by means of a key or other access device to the main
lobby of the Building to be provided to Tenant by Landlord.  Tenant shall pay when due all amounts and
charges for such services during hours other than normal working hours and
shall indemnify and hold harmless Landlord from and against any and all claims,
liabilities, damages, losses, costs and expenses (including reasonable
attorney’s fees) in connection therewith. 
Landlord’s current hourly rate for such services during other than
normal working hours is $50.00 per hour. 
Landlord has the right to increase such hourly charge upon prior notice
to Tenant.  Landlord is not and shall
not be required to furnish to Tenant or any other occupant of the Premises
telephone or other communication service.

 

5.1.2                        Additional
Building Services.  To furnish, through
Landlord’s employees or independent contractors, reasonable additional Building
operation services upon reasonable advance request of Tenant at rates from time
to time established by Landlord to be paid by Tenant;

 

5.1.3                        Repairs.  Except as otherwise provided in
Article VII, to make such repairs to the roof, exterior walls, floor
stabs, other structural components and common facilities of the

 

14

 

Building
as may be necessary to keep them in good and serviceable condition consistent
with the operation of the Building as a first-class office and research
facility; however, the parties hereby recognize and agree that the Premises is
being delivered to Tenant with Leibert units connected thereto and in no event
shall Landlord at any time have any obligation to maintain, repair or replace
any such Leibert units, it being the sole responsibility of Tenant.  Notwithstanding the foregoing, Tenant shall
have no obligation to remove or restore such Leibert units.

 

5.1.4                        Tenant Directory.  To include Tenant’s name on the Tenant directory maintained by
Landlord in the main lobby of the Building.

 

5.1.5                        Food Service.  Landlord may, in its sole discretion, provide, within the
Building, a cafeteria style food service appropriate for the number of patrons
which will use the facility.  Landlord
reserves the right to approve Tenant’s use of a food service operator other
than the Landlord’s food service operator, if any.

 

5.1.6                        Quiet Enjoyment.  That Landlord has the right to make this Lease and that Tenant on
paying the rent and performing its obligations hereunder shall peacefully and
quietly have, hold and enjoy the Premises throughout the Term without any
manner of hindrance or molestation from Landlord or anyone claiming under
Landlord, subject however to all the terms and provisions hereof.

 

5.1.7                        Monument Signage.  In the event that Tenant leases more than fifty percent (50%) of
the Rentable Floor Area of the Building from Landlord, to include Tenant’s name
on the existing monument signage outside the Building.

 

5.2                                 INTERRUPTIONS.

 

Landlord shall not be liable to Tenant for any compensation or
reduction of rent by reason of inconvenience or annoyance, injury, death or for
loss of business arising from power or other utility losses or shortages, air
pollution or contamination, or from the necessity of Landlord’s entering the
Premises for any of the purposes in this Lease authorized, or for repairing the
Premises or any portion of the Building or the Lot or for any interruption or
termination (by reason of any cause reasonably beyond Landlord’s control,
including without limitation, loss of any applicable license or government
approval) of the food service provided by Landlord pursuant to
Section 5.1.5. Landlord shall use reasonable efforts to promptly restore
such service.  Tenant hereby waives all
claims against Landlord, its agents, servants, employees, invitees, or
contractors for any injury to or death of any person or damage to or
destruction of property in or about the Premises or the Lot by or from any
cause whatsoever, including, without limitation, gas, fire, oil, electricity or
leakage of any character from the roof, walls, basement or other portion of the
Premises or the Lot, but excluding, however, the gross negligence or willful
misconduct of Landlord.

 

In case Landlord is prevented or delayed from making any repairs,
alterations or improvements, or furnishing any service or performing any other
covenant or duty to be performed on Landlord’s part, by reason of any cause
beyond Landlord’s reasonable control, Landlord shall not be liable to Tenant
therefor, nor, except as expressly otherwise provided in Article VII,
shall Tenant be entitled to any abatement or reduction of rent by reason
thereof, nor

 

15

 

shall the same give rise to a claim in Tenant’s favor that such failure
constitutes actual or constructive total or partial, eviction from the
Premises.

 

Landlord reserves the right to stop any
service or utility system when necessary by reason of accident or emergency or
until necessary repairs have been completed. 
Except in case of emergency repairs, Landlord will give Tenant reasonable
advance notice of any contemplated stoppage and will use reasonable efforts to
avoid unnecessary inconvenience to Tenant by reason thereof.

 

Landlord also reserves the right to institute
such policies, programs and measures as may be necessary, required or expedient
for the conservation or preservation of energy or energy services or as may be
necessary or required to comply with applicable codes, rules, regulations or
standards.

 

ARTICLE VI

 

TENANT’S COVENANTS

 

6.1                                 TENANT’S
COVENANTS DURING THE TERM.

 

Tenant covenants during the Term and such
further time as Tenant occupies any part of the Premises:

 

6.1.1                        Tenant’s
Payments.  To pay when due (a) all
Annual Rent, (b) all taxes which may be imposed on Tenant’s personal property
in the Premises (including, without limitation, Tenant’s fixtures and
equipment) regardless to whomever assessed, (c) as additional rent, Tenant’s
proportionate share of Annual Operating Costs, (d) all charges by public
utilities for electricity, telephone (including service inspections therefor)
and other services rendered to the Premises not otherwise required hereunder to
be furnished by Landlord without charge and not consumed in connection with any
services required to be furnished by Landlord without charge, and (e) as
additional rent, all charges to Landlord for services rendered pursuant to
Section 5.1.2 hereof.

 

6.1.2                        Repairs
and Yielding Up.  Except as otherwise
provided in Article VII and Section 5.1.3, to keep the Premises in
good order, repair and condition, reasonable wear, damage by fire or other
casualty, damage by taking, and damage caused by Landlord’s failure to perform
its obligations only excepted; and at the expiration or termination of this
Lease peaceably to yield up the Premises and all alterations and additions
therein in such order, repair and condition, first removing all goods and
effects of Tenant, all cabling and wiring and any alterations and additions,
the removal of which is specified to be removed by Landlord by notice to Tenant
given prior to the expiration of the Term, and repairing all damage caused by
such removal and leaving them clean and neat. 
If Tenant shall request, Landlord will inform Tenant whether or not
Landlord will require removal of any alterations of installations at the
expiration of the Term, at the time of Landlord’s plan review and approval of
any such requested alterations or installations.  Tenant may, throughout the Term, at its expense, replace its own
light bulbs in the Premises to Building standards.

 

16

 

6.1.3                        Occupancy
and Use.  To use and occupy the Premises
only for the Permitted Uses; not to injure or deface the Building or the Lot;
to keep the Premises clean and in a neat and orderly condition; and not to
permit in the Premises any use thereof which is improper, offensive, contrary
to law or ordinances, or liable to create a nuisance or to create an unsafe or
hazardous condition, or to invalidate or increase the premiums for any
insurance on the Building or its contents or liable to render necessary any
alteration or addition to the Building; not to dump, flush, or in any way
introduce any hazardous substances or any other toxic substances into the
septic, sewage or other waste disposal system serving the Premises; not to generate,
store or dispose of hazardous substances in or on the Premises (except for
customary quantities of cleaning supplies that are used in small amounts in
accordance with all laws), or the Lot or dispose of hazardous substances from
the Premises to any other location without the prior written consent of
Landlord and then only in compliance with the Resource Conservation and
Recovery Act of 1976, as amended, 42 U.S.C. § 6901 et seq., and all other
applicable laws, ordinances and regulations; to notify Landlord immediately of
any incident which would require the filing of a notice under applicable
federal, state, or local law; not to use, store or dispose of hazardous
substances on the Premises without first submitting to Landlord a list of all
such hazardous substances and all permits required therefore and thereafter
providing to Landlord on an annual basis Tenant’s certification that all such
permits have been renewed with copies of such renewed permits; and to comply
with the orders and regulations of all governmental authorities with respect to
zoning, building, fire, health and other codes, regulations, ordinances or laws
applicable to the Premises.  “Hazardous
substances” as used in this paragraph shall mean “hazardous substances” as
defined in the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended, 42 U.S.C. § 9601 and regulations adopted pursuant
to said Act, and “hazardous substances”, “hazardous wastes”, “toxic
substances”, “toxic wastes” and terms of similar import under other applicable
federal and state statutes and regulations adopted pursuant thereto.

 

The Premises shall be used only for the
Permitted Use and for no other use whatsoever. 
Tenant shall not use or permit the use of the Premises for any purpose which
is illegal, dangerous to persons or property or which, in Landlord’s reasonable
opinion, unreasonably disturbs any other tenants of the Building or interferes
with the operation of the Building. 
Tenant shall comply with all laws, including the Americans with
Disabilities Act, regarding the operation of Tenant’s business and the use,
condition, configuration and occupancy of the Premises.  Tenant, within three (3) days after receipt,
shall provide Landlord with copies of any notices it receives regarding a
violation or alleged violation of any Laws.

 

6.1.4                        Rules
and Regulations.  To comply with the
Rules and Regulations set forth in Exhibit D and
all other reasonable Rules and Regulations hereafter made by Landlord, of which
Tenant has been given notice, for the care and use of the Building and the Lot
and their facilities and approaches, it being understood that Landlord shall
not be liable to Tenant for the failure of other tenants of the Building to
conform to such Rules and Regulations.

 

6.1.5                        Safety
Appliances.  To keep the Premises
equipped with all safety appliances required by law or ordinance or any other
regulation of any public authority because of any use made by Tenant and to
procure all licenses and permits so required because of such use and, if
requested by Landlord, to do any work so required because of such use, it being
understood that the foregoing provisions shall not be construed to broaden in
any way Tenant’s Permitted Uses.

 

17

 

6.1.6                        Assignment and Subletting.  Not without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed, to
assign, mortgage, pledge, encumber, sell or transfer this Lease, in whole or in
part, to make any sublease, or to permit occupancy of the Premises or any part
thereof by anyone other than Tenant, voluntarily or by operation of law (any of
the foregoing being referred to herein as a “transfer”) (it being understood
that in no event shall Landlord consent to any transfer other than a sublease
if the same is on terms more favorable to the successor occupant than to the
then occupant); as additional rent, to reimburse Landlord promptly for
reasonable legal and other expenses incurred by Landlord in connection with any
request by Tenant for consent to assignment or subletting; no assignment or
subletting shall affect the continuing primary liability of Tenant (which,
following assignment, shall be joint and several with the assignee); no consent
to any of the foregoing in a specific instance shall operate as a waiver in any
subsequent instance.  Landlord’s consent
to any proposed assignment or subletting is required both as to the terms and
conditions thereof, and as to the creditworthiness of the proposed assignee or
subtenant and as to the consistency of the proposed assignee’s or subtenant’s
business with other uses and tenants in the Building.  In the event that any assignee or subtenant pays to Tenant any
amounts in excess of the rent payable hereunder by Tenant, Tenant shall pay to
Landlord, as additional rent, fifty percent (50%) of such excess rent as and
when received by Tenant.  For purposes
of this Section 6.1.6, the term “rent” shall mean all Annual Rent,
additional rent or other payment and/or consideration payable hereunder.  Tenant’s obligation to pay fifty percent
(50%) of such excess shall not apply to a permitted assignment or subletting in
which the imputed value of this Lease is aggregated with the value of Tenant’s
business in connection with a corporate transaction with a Permitted Affiliate
(as defined below).  If Tenant requests
Landlord’s consent to assign this Lease or sublet all or any portion of the
Premises, Landlord shall have the option, exercisable by written notice to
Tenant given within thirty (30) days after receipt of such request, to
terminate this Lease.  In clarification
of the foregoing, in the event of a proposed sublease for less than all of the
rentable square feet of the Premises, Landlord shall only have the option to
terminate the Lease with respect to that portion of the Premises included as a
part of such sublease.  Notwithstanding
the foregoing, Landlord shall waive such termination right (a) in the event of
a transfer to a Permitted Affiliate (as defined below); or (b) in the event
that the term of the proposed sublease is for a duration which is less than the
lesser of: (i) 2 years; or (ii) one half of the remaining Term under this
Lease,

 

Without limitation, it is agreed mat Landlord’s consent shall not be
considered unreasonably withheld if: (l) the proposed transferee’s financial
condition does not meet the criteria Landlord uses to select Building tenants
having similar leasehold obligations; (2) the proposed transferee’s business is
not suitable for the Building considering the business of the other tenants and
the Building’s prestige, or would result in a violation of another tenant’s
rights; (3) the proposed transferee is a governmental agency or occupant of the
Building; (4) any portion of the Building or Premises would likely become
subject to additional or different laws as a consequence of the proposed
Transfer; (5) the assignee or subtenant proposes to use the Premises (or part
thereof) for a purpose other than the purpose for which the Premises may be
used as stated in Section 1.1 hereof; (6) the proposed subtenant or
assignee is a tenant or subtenant of any portion of the Building so long as
comparable space is then available, or is reasonably expected to become
available within the next six (6) months following the date of the proposed
transfer; or (7) there exists a Tenant default, or event which with the giving
of notice or the passage of time, or both, would constitute a default, unless
the same is cured within the

 

18

 

applicable
cure period.  Tenant shall not be
entitled to receive monetary damages based upon a claim that Landlord
unreasonably withheld its consent to a proposed transfer and Tenant’s sole
remedy shall be an action to enforce any such provision through specific
performance or declaratory judgment. 
Any attempted transfer in violation of this Section shall, at
Landlord’s option, be void.  Consent by
Landlord to one or more transfer(s) shall not operate as a waiver of Landlord’s
rights to approve any subsequent transfers. 
In no event shall any transfer release or relieve Tenant from any
obligation under this Lease.

 

If Landlord shall consent to the proposed assignment or subletting, as
the case may be, then, in such event, Tenant may thereafter sublease or assign
pursuant to Tenant’s notice, as given hereunder; provided, however, that if
such assignment or sublease shall not be executed and delivered to Landlord
within sixty (60) days after the date of Landlord’s consent, the consent shall
be deemed null and void and the provisions of Section 6.1.6 shall be
applicable.

 

As part of its request for Landlord’s consent to a transfer, Tenant
shall provide Landlord with financial statements for the proposed transferee, a
complete copy of the proposed assignment, sublease and other contractual
documents and such other information as Landlord may reasonably request.  Landlord shall, by written notice to Tenant
within thirty (30) days of its receipt of the required information and
documentation, either: (1) consent to the transfer by the execution of a
consent agreement in a form reasonably designated by Landlord or reasonably
refuse to consent to the transfer in writing; or (2) exercise its right to
terminate this Lease with respect to the portion of the Premises that Tenant is
proposing to assign or sublet.  Any such
termination shall be effective on the proposed effective date of the transfer
for which Tenant requested consent.

 

Notwithstanding the foregoing, Tenant may assign this Lease (or sublet
to an entity described in the following clause (i)) without Landlord’s consent
to (i) an entity controlling, controlled by or under common control with
Tenant, or (ii) an entity purchasing all or substantially all of Tenant’s
business, assets and liabilities, or (iii) any entity into or with which Tenant
is merged or consolidated, provided that any such entity described in the
foregoing clauses (ii) and (iii) must have a net worth at least equal to the
net worth of Tenant at the time of the assignment (such entity described in
clauses (i), (ii) or (iii), a “Permitted Affiliate”).

 

It shall be a condition of the validity of any assignment or subletting
hereunder, that both Tenant and the assignee or sublessee agree directly with
Landlord in a separate written instrument reasonably satisfactory to Landlord
which contains terms and provisions reasonably required by Landlord, including,
without limitation, the agreement of the assignee or sublessee to be bound by
all the obligations of the Tenant hereunder, including, without limitation, the
obligation to pay the rent and other amounts provided for under this Lease (but
in the case of a partial subletting, such subtenant shall agree on a pro rata
basis to be so bound), but such assignment or subletting shall not relieve the
Tenant named herein of any of the obligations of the Tenant hereunder, Tenant
shall remain fully and primarily liable therefor and the liability of Tenant
and such assignee (or subtenant, as the case may be) shall be joint and
several.  Further, and notwithstanding
the foregoing, the provisions hereof shall not constitute a recognition of the
assignment or the assignee thereunder or the sublease or the subtenant
thereunder, as the case may be, and at Landlord’s option, upon the termination
of the Lease, the assignment or sublease shall be terminated.

 

19

 

As additional rent, Tenant shall reimburse Landlord promptly for
reasonable out-of-pocket legal and other expenses incurred by Landlord in
connection with any request by Tenant for consent to assignment or subletting.

 

If this Lease be assigned, or if the Premises or any part thereof be
sublet or occupied by anyone other than Tenant, Landlord may upon prior notice
to Tenant, at any time and from time to time, upon an Event of Default, collect
rent and other charges from the assignee, sublessee or occupant and apply the
net amount collected to the rent and other charges herein reserved, but no such
assignment, subletting, occupancy or collection shall be deemed a waiver of
this covenant, or a waiver of the provisions of Section 6.16 hereof, or
the acceptance of the assignee, sublessee or occupant as a tenant or a release
of Tenant from the further performance by Tenant of covenants on the part of
Tenant herein contained, the Tenant herein named to remain primarily liable
under this Lease.

 

No assignment or subletting under any of the provisions of
Section 6.1.6 shall in any way be construed to relieve Tenant from
obtaining the express consent in writing to Landlord to any further assignment
or subletting.

 

6.1.7                        Indemnity. 
To defend, with counsel approved by Landlord, all actions against
Landlord, any partner, member, trustee, stockholder, officer, director,
employee or beneficiary of Landlord, Managing Agent, holders of mortgages
secured by the Premises or the Building and Lot and any other party having an
interest in the Premises (“Indemnified Parties”) with respect to, and to pay,
protect, indemnify and save harmless, to the extent permitted by law, all
Indemnified Parties from and against, any and all liabilities, losses damages,
costs, expenses (including reasonable attorney’s fees and expenses), causes of
action, suits, claims, demands or judgments of any nature (a) to which any
Indemnified Party is subject because of its estate or interest in the Premises,
or (b) arising from or related to (i) injury to or death of any person, or
damage to or loss of property, on the Premises unless caused by the gross
negligence or willful misconduct of Landlord or its servants or agents, (ii)
injury to or death of any person, or damage to or loss of property on adjoining
sidewalks, streets or ways, or connected with the use, condition or occupancy
of the foregoing, where liability is claimed to have resulted from the
negligence of Tenant or its servants or agents, (iii) violation of this Lease,
(iv) any act, fault, omission, or other misconduct of Tenant or its agents,
employees, contractors, licensees, sublessees or invitees or (v) the use,
generation, storage or disposal of Hazardous Materials by Tenant or its agents,
employees or invitees on the Premises, the Building or Lot or any portion
thereof or any surrounding area or the presence of Hazardous Materials thereon
including, without limitation, any and all liabilities, losses, damages, costs,
expenses (including reasonable attorney’s fees and expenses), causes of action,
suits, claims, demands or judgments of any nature arising from or related to
removal of or other remediation of any Hazardous Materials or precautions
required to protect against the release of Hazardous Materials into the
environment to the extent required by any Environmental Laws (as defined
below).

 

As used herein, “Hazardous Materials” shall mean and include, but shall
not be limited to, any petroleum product and all hazardous or toxic substances
or wastes including any asbestos-containing materials, waste oils, solvents and
chlorinated oils, polychlorinated biphenyls (PCBs), or substances which are
included under or regulated by any federal, state or local law, rule or
regulation (whether now existing or hereafter enacted or promulgated, as they

 

20

 

may
be amended from time to time) pertaining to the environment, contamination or
clean-up (all such laws, rules and regulations being referred to collectively
as the “Environmental Laws”).

 

6.1.8                        Tenant’s Insurance.  Tenant, at Tenant’s expense, agrees to keep in force during the
Term of this Lease:

 

(a)                                  Commercial general liability insurance which
insures against claims for bodily injury, personal injury, advertising injury,
and property damage based upon, involving, or arising out of the use,
occupancy, or maintenance of the Premises and the Lot, indemnifying Landlord
and Tenant against all claims and demands for (i) injury to or death of any
person or damage to or loss of property, on the Premises or adjoining walks,
streets or ways, or connected with the use, condition or occupancy of any of
the foregoing unless caused by the negligence of Landlord or its servants or
agents, (ii) violation of this Lease, or (iii) any act, fault or omission, or
other misconduct of Tenant or its agents, employees, contractors, licensees,
sublessees or invitees, in amounts which shall, at the beginning of the Term.  Such insurance shall afford, at a minimum,
the following limits:

 

	
  Each Occurrence

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  General Aggregate

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Products/Completed Operations Aggregate

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Personal and Advertising Injury Liability

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Fire Damage Legal Liability

  	
   

  	
  $

  	
  50,000

  	
   

  
	
  Medical Payments

  	
   

  	
  $

  	
  5,000

  	
   

  

 

Any
general aggregate limit shall apply on a per location basis.  Tenant’s commercial general liability
insurance shall name Landlord, its trustees, officers, directors, agents, and
employees, Landlord’s mortgagees, Landlord’s managing agent and Landlord’s
representatives, as additional insureds. 
This coverage shall include blanket contractual liability, broad form
property damage liability, premises/operations and products/completed
operations hazards, and shall contain an exception to any pollution exclusion
which insures damage or injury arising out of heat, smoke, or fumes from a
hostile fire.  Such insurance shall be
written on an occurrence basis and contain a standard separation of insureds
provision.

 

(b)                                 Business automobile liability insurance
covering owned, hired and non-owned vehicles with limits of $1,000,000 combined
single limit per occurrence.

 

(c)                                  Umbrella/excess liability insurance, on an
occurrence basis, that applies excess of required commercial general liability,
business automobile liability, and employers liability policies with the
following minimum limits:

 

	
  Each
  Occurrence

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
  Annual
  Aggregate

  	
   

  	
  $

  	
  5,000,000

  	
   

  

 

These
limits shall be in addition to and not including those stated for the
underlying commercial general liability, business automobile liability, and
employers liability insurance required herein. 
Such excess liability policies shall name Landlord, its trustees,
officers, directors, agents, and employees, Landlord’s mortgagees, Landlord’s
managing agent and Landlord’s representatives as additional insureds.

 

21

 

(d)                                   All risk property insurance including theft,
sprinkler leakage and boiler and machinery coverage on all of Tenant’s trade
fixtures, furniture, inventory and other personal property in the Premises, and
on any alterations, additions, or improvements made by or on behalf of Tenant
upon the Premises including, without limitation, the Initial Alterations, all
for the full replacement cost thereof. 
Tenant shall use the proceeds from such insurance for the replacement of
trade fixtures, furniture, inventory and other personal property and for the
restoration of Tenant’s improvements, alterations, and additions to the Premises.  Landlord shall be named as loss payee with
respect to alterations, additions, or improvements of the Premises.  Landlord reserves the right to request
Tenant to have an appraisal of its trade fixtures, furniture, inventory and
other personal property in the Premises done not less than once every three (3)
years during the Term at Tenant’s sole cost.

 

(e)                                    Business income and extra expense insurance
with limits not less than one hundred percent (100%) of all charges payable by
Tenant under this lease for a period of twelve (12) months.

 

(f)                                    Tenant’s Worker’s Compensation Insurance -
Workers compensation and employers liability insurance.  The employers liability insurance shall
afford limits not less than $500,000 per accident, $500,000 per employee for
bodily injury by disease, and $500,000 policy limit for bodily injury by
disease.  Such insurance shall comply
with Tenant’s obligations to its employees under the laws of the state in which
the Premises are located.

 

6.1.9                        Tenant’s Insurer Rating; Certification of
Insurance.  All policies required to be
carried by Tenant hereunder shall be issued by and binding upon an insurance
company licensed to do business in the state in which the Premises is located
with a rating of at least “A - X” or better as set forth in the most current
issue of Best’s Insurance Reports, unless otherwise approved by Landlord.  Tenant shall not do or permit anything to be
done that would invalidate the insurance policies required herein.  Liability insurance maintained by Tenant
shall be primary coverage without right of contribution by any similar
insurance that may be maintained by Landlord. 
Certificates of insurance, acceptable to Landlord, evidencing the
existence and amount of each insurance policy required hereunder shall be
delivered to Landlord prior to delivery or possession of the Premises and
thereafter not less than 30 days prior to the expiration dates of the expiring
policies theretofore furnished pursuant to Section 6.1.8, Tenant shall
deliver to Landlord certificates of insurance issued by the insurers evidencing
all such policies in form satisfactory to Landlord, accompanied by evidence
satisfactory to Landlord of payment of the first installment of the
premiums.  Certificates of insurance
shall include an endorsement for each policy showing that Landlord, its
trustees, officers, directors, agents, and employees, Landlord’s managing
agent, Landlord’s mortgagees, and Landlord’s representatives are included as
additional insureds on liability policies and that Landlord is loss payee for
property insurance.  Further, the
certificates must include an endorsement for each policy whereby the insurer
agrees not to cancel, non-renew, or materially alter the policy without at
least thirty (30) days’ prior written notice to Landlord.

 

(a)                                  In the event that Tenant fails to provide
evidence of insurance required to be provided by Tenant in this Lease, prior to
the Commencement Date and thereafter during the Term, within ten (10) days
following Landlord’s request thereof, and thirty (30) days prior to the
expiration of any such coverage, Landlord shall be authorized (but not
required) to procure such

 

22

 

coverage
in the amount stated with all costs thereof to be chargeable to Tenant and
payable upon written invoice thereof.

 

(b)                                 The limits of insurance required by this
Lease, or as carried by Tenant, shall not limit the liability of Tenant or
relieve Tenant of any obligation thereunder. 
Any deductibles selected by Tenant shall be the sole responsibility of
Tenant.

 

(c)                                  Tenant insurance requirements stipulated in
Section 6.1.8 are based upon current industry standards.  Landlord reserves the right to require
additional coverage or to increase limits as industry standards change.

 

(d)                                 Should Tenant engage the services of any
contractor to perform work in the Premises, Tenant shall ensure that such
contractor (including all subcontractors) carries commercial general liability
insurance (including completed operations coverage for a period of three (3)
years following completion of the work), business automobile liability,
umbrella/excess liability, worker’s compensation and employers liability
coverages in substantially the same amounts as are required of Tenant under
this Lease.  Contractor shall name
Landlord, its trustees, officers, directors, agents and employees, Landlord’s
managing agent, Landlord’s mortgagees and Landlord’s representatives as
additional insureds on the liability policies required hereunder.

 

All policies required to be carried by any contractor shall be issued
by and binding upon an insurance company licensed to do business in the state
in which the Premises is located with a rating of at least “A – X” or better as
set forth in the most current issue of Best’s Insurance Reports, unless
otherwise approved by Landlord. 
Certificates of insurance, acceptable to Landlord, evidencing the
existence and amount of each insurance policy required hereunder shall be
delivered to Landlord prior to the commencement of any work in the
Premises.  Further, the certificates
must include an endorsement for each policy whereby the insurer agrees not to
cancel, non-renew, or materially alter the policy without at least thirty (30)
days’ prior written notice to Landlord. 
The above requirements shall apply equally to any subcontractor engaged
by contractor.

 

6.1.10                  Landlord’s Right of Entry.  To permit Landlord and Landlord’s agents
entry; to examine the Premises at reasonable times upon reasonable notice
(except in the event of emergency when no notice shall be required) and, if
Landlord shall so elect, to make repairs or replacements; to remove, at
Tenant’s expense, any changes, additions, signs, curtains, blinds, shades,
awnings, aerials, or the like not consented to in writing; and to show the
Premises to prospective tenants during the 12 months preceding expiration of
the Term and to prospective purchasers and mortgagees at all reasonable times.

 

6.1.11                  Loading. 
Not to place Tenant’s Property, as defined in Section 6.1.13, upon the Premises so as to exceed a rate of 50 pounds
of live load per square foot and not to move any safe, vault or other heavy
equipment in, about or out of the Premises except in such manner and at such
times as Landlord shall in each instance approve; Tenant’s business machines
and mechanical equipment which cause vibration or noise that may be transmitted
to the Building structure or to any other leased space in the Building shall be
placed and maintained by Tenant in settings of cork, rubber, spring, or other types
of vibration eliminators sufficient to eliminate such vibration or noise.

 

23

 

6.1.12                  Landlord’s Costs.  In case Landlord shall be made party to any litigation commenced
against Tenant or by or against any parties in possession of the Premises or
any part thereof claiming under Tenant, to pay, as additional rent, all costs
including, without implied limitation, reasonable counsel fees incurred by or
imposed upon Landlord in connection with such litigation and, as additional
rent, also to pay all such costs and fees incurred by Landlord in connection
with the successful enforcement by Landlord of any obligations of Tenant under
this Lease.  Notwithstanding the foregoing,
if Landlord or Tenant litigate any provision of this Lease or the subject
matter of this Lease, the unsuccessful litigant shall pay to the successful
litigant all costs and expenses, including attorneys’ fees and court costs,
incurred by the successful litigant at trial and on appeal.

 

6.1.13                  Tenant’s Property.  All the furnishings, fixtures, equipment, effects and property of
every kind, nature and description of Tenant and of all persons claiming by,
through or under Tenant which, during the continuance of this Lease or any
occupancy of the Premises by Tenant or anyone claiming under Tenant, may be on
the Premises or elsewhere in the Building or on the Lot shall be at the sole
risk and hazard of Tenant, and if the whole or any part thereof shall be
destroyed or damaged by fire, water or otherwise, or by the leakage or bursting
of water pipes, steam pipes, or other pipes, by theft, or from any other cause,
no part of said loss or damage is to be charged to or to be borne by Landlord
unless due to the gross negligence of Landlord.

 

6.1.14                  Labor or Materialmen’s Liens.  To pay promptly when due the entire cost of
any work done on the Premises by Tenant, its agents, employees, or independent
contractors; not to cause or permit any liens for labor or materials performed
or furnished in connection therewith to attach to the Premises; and immediately
to discharge any such liens which may so attach.

 

6.1.15                  Changes or Additions.  Not to make any changes or additions to the
Premises without Landlord’s prior written consent, which shall not be
unreasonably withheld or delayed and only in accordance with Article III
hereto, provided that Tenant shall reimburse Landlord for all out-of-pocket
costs incurred by Landlord in reviewing Tenant’s proposed changes or additions
(other than the initial buildout), and provided further that, in order to
protect the functional integrity of the Building, all changes and additions
shall be performed by contractors approved by Landlord which approval shall not
be unreasonably withheld.

 

6.1.16                  Holdover. 
For the first sixty (60) days of any Holdover (as defined below), to pay
to Landlord on a monthly basis, 200% of the greater of: (i) the Annual Rent and
all additional rent then applicable for the entire Premises; or (ii) the fair
market value, as reasonably determined by Landlord, of the Annual Rent and all
additional rent for the entire Premises for each month or portion thereof that
Tenant shall retain possession of the Premises or any part thereof after the
rightful termination of this Lease, whether by lapse of time or otherwise (a
“Holdover”). On the 61st day of any Holdover and thereafter, in
addition to the amounts set forth above, Tenant shall also pay to Landlord all
“direct damages” sustained by Landlord on account of such Holdover.   “Direct damages” as used in this
Section 6.1.16 shall mean: (i) the total amount of the rent, fees and
other charges set forth in any lease which lease was terminated due to a
Holdover; (ii) the total amount of rent, fees and other charges from any lease
which rent, fees and other charges never came due and owing to Landlord as a
result of a Holdover; (iii) the total amount of rent, fees and other charges
that were never realized due to Landlord’s inability to enter into any new
leases as a result of a Holdover; (iv) any and all costs, fees, charges and

 

24

 

expenses
incurred by Landlord in connection with entering into a lease that was
terminated as a result of a Holdover, including, without limitation, the fees
and costs of architects, engineers, attorneys, brokers or consultants; and (v)
any and all costs, fees, charges and expenses incurred by Landlord as the
result of any third party lawsuit (including attorneys’ fees and costs in
defending any such suit and any awards for damages) brought as a result of a
Holdover.  The provisions of this
subsection shall in no way derogate from Landlord’s ability to evict
Tenant from the Premises in the event of a Holdover nor shall the provisions of
this subsection operate as a waiver by Landlord of the right of reentry
provided in this Lease.

 

6.1.17                  Independent Covenants.  Landlord and Tenant hereby acknowledge and
agree that the covenants set forth in this Lease (as the same may apply to
Landlord and Tenant, respectively), are to be treated as independent covenants
and Rent shall continue to be payable in all events and that the obligations of
Tenant hereunder shall continue unaffected, unless the requirement to pay or
perform the same shall have been terminated pursuant to an express provision of
this Lease.

 

ARTICLE VII

 

DAMAGE AND DESTRUCTION; CONDEMNATION

 

7.1                                 FIRE OR OTHER CASUALTY.

 

7.1.1                        Subject to the provisions of
Section 7.1.2 hereof, in the event during the Term hereof the Premises
and/or access thereto, or damage to any of the common facilities to which
Tenant has rights shall be partially damaged (as distinguished from
“substantially damaged” as such term is hereinafter defined) by fire,
explosion, casualty or any other occurrence covered or as may be required to be
covered, as herein provided, by Landlord’s insurance or by such casualty plus
required demolition, or by action taken to reduce the impact of any such event,
Landlord shall forthwith proceed to repair such damage and restore the
Premises, or so much thereof as was originally constructed or delivered by
Landlord to substantially its condition at the time of such fire, explosion,
casualty or occurrence, provided that Landlord shall not be obligated to expend
for such repair an amount in excess of the insurance proceeds recovered or
recoverable, plus the amount of the deductible as a result of such damage and,
further provided that Tenant is not then in default of any of its obligations
under this Lease beyond any applicable cure period.  Landlord shall not be responsible for any delay which may result
from any cause beyond Landlord’s reasonable control, provided that Landlord
uses reasonable efforts to overcome the delay. 
Landlord shall use reasonable efforts to complete such repair as quickly
as practicable.

 

7.1.2                        If, however, (i) the Premises should be
damaged or destroyed (a) by fire or other casualty (1) to the extent of 25% or
more of the cost of replacement, or (2) so that 25% or more of the principal
area contained in the Premises shall be rendered untenantable, or (b) by any
casualty other than those covered by insurance policies maintained or required
to be maintained by Landlord under this Lease (hereinafter “substantially
damaged”), or (ii) the Premises shall be damaged in whole or in part during the
last two years of the Term, or (iii) there shall be damage to the Premises of a
character as cannot reasonably be expected to be repaired within 12 months from
the date of casualty, or (iv) such restoration involves the demolition of or
repair of damage

 

25

 

to
25% percent or more of the Premises, or (v) applicable law requires the
demolition of the Building or forbids the rebuilding of the damaged portion of
the Building, or (vi) such restoration requires repairs in an amount in excess
of the insurance proceeds recovered or recoverable, or (vii) Landlord’s
mortgagee shall require that the insurance proceeds from such damage or
destruction be applied against the principal balance due on any mortgage,
Landlord may, at its option, either terminate this Lease or elect to repair the
Premises and Landlord shall notify Tenant as to its election within 120 days
after such fire or casualty.  If
Landlord elects to terminate this Lease, the Term hereof shall end on the date
specified in the notice (which shall be the end of a calendar month and not
sooner than 30 days after such election was made). If Landlord does not elect
to terminate this Lease, then Landlord shall perform such repairs set forth in
Section 7.1.3 hereof and Tenant shall perform such repairs in the Building
as set forth in Section 7.1.4 hereof, and the Term shall continue without
interruption and this Lease shall remain in full force and effect.

 

7.1.3                        If Landlord does not elect to terminate this
Lease as provided in Section 7.1.2 hereof and if Tenant is not then in
default of any of its obligations under the Lease beyond any applicable cure
period provided for herein, Landlord shall, provided any third party mortgagee
of the Building makes insurance proceeds available for restoration, reconstruct
of the Premises as was originally constructed by Landlord (it being understood
by Tenant that Landlord shall not be responsible for any reconstruction of
leasehold improvements, including, without limitation, the Initial Alterations
which reconstruction is the sole responsibility of Tenant) to substantially its
condition at the time of such damage, but Landlord shall not be responsible for
any delays which may result from any cause beyond Landlord’s reasonable
control, provided Landlord uses reasonable efforts to overcome such delay.

 

7.1.4                        If Landlord does not elect to terminate this
Lease as provided in Section 7.1.2 hereof, Tenant shall, at its own cost
and expense, repair and restore the Premises in accordance with the provisions
of Section 6.1.15 hereof to the extent not required to be repaired by
Landlord pursuant to the provisions of this Section 7.1, including, but
not limited to, the repairing and/or replacement of its merchandise, trade
fixtures, furnishings and equipment in a manner and to substantially the same
condition as existed prior to its damage or destruction.  Tenant agrees to commence the performance of
its work when notified by Landlord that the work to be performed by Tenant can,
in accordance with good construction practices, then be commenced and Tenant
shall complete such work as promptly thereafter as is practicable, but in no
event more than 120 days thereafter.

 

7.1.5                        All proceeds payable from Landlord’s
insurance policies with respect to the Premises shall belong to and shall be
payable to Landlord.  If Landlord does
not elect to terminate this Lease as provided in Section 7.1.2 hereof,
Landlord shall disburse and apply so much of any insurance recovery as shall be
necessary against the cost to Landlord of restoration and rebuilding of
Landlord’s work referred to in Section 7.1.3 hereof, subject to the prior
rights of any lessor under a ground or underlying lease covering the Building
and/or the holder of any mortgage liens against the Building.

 

7.1.6                        In the event that the provisions of
Section 7.1.1 or Section 7.1.2 shall become applicable, the Annual
Rent and additional rent shall be abated or reduced proportionately to the
extent that Tenant does not have use of a portion of the Premises during any
period in which, by

 

26

 

reason
of such damage or destruction, there is interference with the operation of the
business of Tenant in the Premises, having regard to the extent to which Tenant
may be required to discontinue its business in the Premises, and such abatement
or reduction shall continue for the period commencing with such destruction or
damage and ending with the completion by Landlord of such work of repair and/or
reconstruction as Landlord is obligated to do.

 

7.2                                 EMINENT DOMAIN.

 

If, after the execution and before termination of this Lease, the
entire Premises, access to the Premises without substantially equivalent
substitute access being provided, or 25% of the Parking on the Lot shall be
taken by eminent domain or destroyed by the action of any public or
quasi-public authority, or in the event of conveyance in lieu thereof, the Term
shall cease as of the day possession shall be taken by such authority, and
Tenant shall pay rent up to that date with a pro-rata refund by Landlord of
such rent and additional rent as shall have been paid in advance for a period
subsequent to the date of the taking of possession.

 

If less than 25% of the Premises shall be so taken or conveyed, this
Lease shall cease only with respect to the parts so taken or conveyed, as of
the day possession shall be taken, and Tenant shall pay rent up to that day,
with an appropriate refund by Landlord of such rent as may have been paid in
advance for a period subsequent to the date of the taking of possession, and
thereafter the Annual Rent shall be equitably adjusted.  Pending agreement of such rental adjustment,
Tenant agrees to pay to Landlord the Annual Rent and additional rent in effect
immediately prior to the taking by eminent domain.  Landlord shall at its expense make all necessary repairs or
alterations so as to constitute the remaining premises a complete architectural
unit.

 

If more than 25% of the Premises shall be so taken or conveyed, then
the Term shall cease only as respects the part so taken or conveyed, from the
day possession shall be taken, and Tenant shall pay rent to that date with an
appropriate refund by Landlord of such rent as may have been paid in advance
for a period subsequent to the date of the taking of possession, but Landlord
shall have the right to terminate this Lease upon notice to Tenant in writing
within 30 days after such taking of possession.  If Landlord does not elect to terminate the Lease, all of the
terms herein provided shall continue in effect except that the Annual Rent
shall be equitably adjusted, and Landlord shall make all necessary repairs or
alterations so as to constitute the remaining premises a complete architectural
unit.

 

All compensation awarded for any such taking or conveyance, whether for
the whole or a part of the Premises, shall be the property of Landlord, whether
such damages shall be awarded as compensation for diminution in the value of
the leasehold or of the fee of or underlying leasehold interest in the
Premises, and Tenant hereby assigns to Landlord all of Tenant’s right, title
and interest in and to any and all such compensation, provided, however, that
Tenant shall be entitled to seek a separate award for Tenant’s trade fixtures
and relocation expense.

 

In the event of any taking of the Premises or any part thereof for
temporary use, this Lease shall be and remain unaffected thereby.

 

27

 

ARTICLE VIII

 

RIGHTS OF MORTGAGEE

 

8.1                                 PRIORITY OF LEASE.

 

This Lease is and shall continue to be subject and subordinate to any
presently existing mortgage or deed of trust of record covering the Lot or
Building or both (the “mortgaged premises”). The holder of any such presently
existing mortgage or deed of trust shall have the election to subordinate the
same to the rights and interests of Tenant under this Lease exercisable by
filing with the appropriate recording office a notice of such election,
whereupon the Tenant’s rights and interests hereunder shall have priority over
such mortgage or deed of trust.  Tenant
represents that as of the date hereof, there is no mortgage or deed of trust on
the Lot or the Building.

 

Unless the option provided for in the next following sentence shall be
exercised, this Lease shall be superior to and shall not be subordinate to, any
mortgage, deed of trust or other voluntary lien hereafter placed on the
mortgaged premises.  The holder of any
such mortgage, deed of trust or other voluntary lien shall have the option to subordinate
this Lease to the same, provided that such holder enters into an agreement with
Tenant by the terms of which the holder will agree to recognize the rights of
Tenant under this Lease and to accept Tenant as tenant of the Premises under
the terms and conditions of this Lease in the event of acquisition of title by
such holder through foreclosure proceedings or otherwise and Tenant will agree
to recognize the holder of such mortgage as Landlord in such event, which
agreement shall be made to expressly bind and inure to the benefit of the successors
and assigns of Tenant and of the holder and upon anyone purchasing the
mortgaged premises at any foreclosure sale. 
Any such mortgage to which this Lease shall be subordinated may contain
such terms, provisions and conditions as the holder deems usual or customary.

 

8.2                                 RIGHTS OF MORTGAGE HOLDERS; LIMITATION OF
MORTGAGEE’S LIABILITY.

 

The word “mortgage” as used herein includes mortgages, deeds of trust
or other similar instruments evidencing other voluntary liens or encumbrances,
and modifications, consolidations, extensions, renewals, replacements and
substitutes thereof.  The word “holder”
shall mean a mortgagee, and any subsequent holder or holders of a
mortgage.  Until the holder of a
mortgage shall enter and take possession of the Premises for the purpose of
foreclosure, such holder shall have only such rights of Landlord as are
necessary to preserve the integrity of this Lease as security.  Upon entry and taking possession of the
Premises for the purpose of foreclosure, such holder shall have all the rights
of Landlord.  Notwithstanding any other
provision of this Lease to the contrary, including without limitation
Section 10.4, no such holder of a mortgage shall be liable, either as
mortgagee or as assignee, to perform, or be liable in damages for failure to
perform any of the obligations of Landlord unless and until such holder shall
enter and take possession of the Premises for the purpose of foreclosure, and
such holder shall not in any event be liable to perform or for failure to
perform the obligations of Landlord under Section 3.1. Upon entry for the
purpose of foreclosure, such holder shall be liable to perform all of the
obligations of Landlord (except for the obligations under Section 3.1),
subject

 

28

 

to and with the benefit of the provisions of Section 10.4,
provided that a discontinuance of any foreclosure proceeding shall be deemed a
conveyance under said provisions to the owner of the equity of the Premises.

 

8.3                                 NO
PREPAYMENT OR MODIFICATION, ETC.

 

Tenant shall not pay Annual Rent, additional
rent, or any other charge more than 10 days prior to the due date thereof.  No prepayment of Annual Rent, additional
rent or other charge, no assignment of this Lease that requires Landlord’s consent
hereunder and no agreement to modify so as to reduce the rent, change the Term,
or otherwise materially change the rights of Landlord under this Lease, or to
relieve Tenant of any obligations or liability under this Lease, shall be
binding on Landlord’s mortgagees of record, if any, unless such mortgagee
consents thereto.

 

8.4                                 NO
RELEASE OR TERMINATION.

 

No act or failure to act on the part of
Landlord which would entitle Tenant under the terms of this Lease, or by law,
to be relieved of Tenant’s obligations hereunder or to terminate this Lease,
shall result in a release or termination of such obligations or a termination
of this Lease unless (i) Tenant shall have first given written notice of
Landlord’s act or failure to act to Landlord’s mortgagees of record, if any,
specifying the act or failure to act on the part of Landlord which could or
would give basis to Tenant’s rights and (ii) such mortgagees, after receipt of
such notice, have failed or refused to correct or cure the condition complained
of within 30 days (or such longer time as may be reasonably required to cure,
so long as the mortgagee is diligently pursuing such cure), but nothing
contained in this Section 8.4 shall be deemed to impose any obligation on
any such mortgagee to correct or cure any such condition. “Reasonable time” as
used above means and includes a reasonable time to obtain possession of the
mortgaged premises, if the mortgagee elects to do so, and a reasonable time to
correct or cure the condition if such condition is determined to exist.

 

8.5                                 CONTINUING
OFFER.

 

The covenants and agreements contained in
this Lease with respect to the rights, powers and benefits of a mortgagee
(particularly, without limitation thereby, the covenants and agreements
contained in this Article VIII) constitute a continuing offer to any
person, corporation or other entity, which by accepting or requiring an
assignment of this Lease or by entry or foreclosure assumes the obligations
herein set forth with respect to such mortgagee; such mortgagee is hereby
constituted a party to this Lease as an obligee hereunder to the same extent as
though its name were written hereon as such; and such mortgagee shall be
entitled to enforce such provisions in its own name.  Tenant agrees on request of Landlord to execute and deliver from
time to time any agreement which may reasonably be deemed necessary to
implement the provisions of this Article VIII.

 

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ARTICLE IX

 

DEFAULT

9.1                                 EVENTS
OF DEFAULT.

 

If any default by Tenant continues, in case
of Annual Rent, additional rent or any other monetary obligation to Landlord
for more than 5 business days after notice; or if Tenant fails to provide an
estoppel certificate in accordance with Section 10.10 hereof; or if Tenant
fails to insure in accordance with Section 6.1.8 hereof; or if Tenant
fails to continuously occupy the Premises; or if Tenant fails to deliver to
Landlord, maintain or restore the Security Deposit as required hereunder, or if
Tenant, prior to the Term Commencement Date or at any time during the Term of
this Lease, becomes insolvent, fails to pay its debts as they fall due, files a
petition under any chapter of the U.S. Bankruptcy Code, 11 U.S.C. 101 et seq.,
as it may be amended (or any similar petition under any insolvency law of any
jurisdiction), or if such petition is filed against Tenant; or if Tenant, prior
to the Term Commencement Date or at any time during the Term of this Lease,
proposes any dissolution, liquidation, composition, financial reorganization or
recapitalization with creditors, makes an assignment or trust mortgage for
benefit of creditors, or if a receiver, trustee, custodian or similar agent is
appointed or takes possession with respect to any property of Tenant; or if the
leasehold hereby created is taken on execution or other process of law in any
action against Tenant; or if any default by Tenant continues in any other case
for more than 30 days after notice and such additional time, if any, as is
reasonably necessary to cure the default if the default is of such a nature
that it cannot reasonably be cured in 30 days and Tenant promptly commences to
cure such default and diligently pursues such cure without interruption to
completion (but in all events no later than sixty (60) days thereafter), then,
and in any such case, Landlord and the agents and servants of Landlord may, in
addition to and not in derogation of any remedies for any preceding breach of
covenant, immediately or at any time thereafter while such default continues
and without further notice, at Landlord’s election, do any one or more of the
following: (1) give Tenant written notice stating that the Lease is terminated,
effective upon the giving of such notice or upon a date stated in such notice,
as Landlord may elect, in which event the Lease shall be irrevocably
extinguished and terminated as stated in such notice without any further
action, or (2) with or without process of law, in a lawful manner enter and
repossess the Premises as of Landlord’s former estate, and expel Tenant and
those claiming through or under Tenant, and remove its and their effects,
without being guilty of trespass, in which event the Lease shall be irrevocably
extinguished and terminated at the time of such entry, to the extent permitted
by law or (3) pursue any other rights or remedies permitted by law or in
equity.  Any such termination of the
Lease shall be without prejudice to any remedies which might otherwise be used
for arrears of rent or prior breach of covenant, and in the event of such termination
Tenant shall remain liable under this Lease as hereinafter provided.  Tenant hereby waives all statutory rights
(including, without limitation, rights of redemption, if any), and Landlord,
without notice to Tenant, may store Tenant’s effects and those of any person
claiming through or under Tenant at the expense and risk of Tenant and, if
Landlord so elects, may sell such effects at public auction or private sale and
apply the net proceeds to the payment of all sums due to Landlord from Tenant,
if any, and pay over the balance, if any, to Tenant.

 

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9.2                                 TENANT’S
OBLIGATIONS AFTER TERMINATION.

 

In the event that this Lease is terminated
under any of the provisions contained in Section 9.1 or shall be otherwise
terminated for breach of any obligation of Tenant, Tenant covenants to pay
forthwith to Landlord, as compensation, (i) the excess of the total rent
reserved for the residue of the Term over the rental value of the Premises for
said residue of the Term and (ii) the unamortized portion of the actual
out-of-pocket costs and expenses incurred by Landlord in completing Landlord’s
Work and the Tenant Allowance and fees and commissions paid to the Broker,
amortized on a straight-line reduction basis from 100% to 0% over the Term of
the Lease set forth in Section 1.1 hereof.  In calculating the rent reserved, there shall be included, in
addition to the Annual Rent and all additional rent, the value of all other
consideration agreed to be paid or performed by Tenant for said residue.  Tenant further covenants as an additional
and cumulative obligation after any such ending to pay punctually to Landlord
all the sums and perform all the obligations which Tenant covenants in this
Lease to pay and to perform in the same manner and to the same extent and at
the same time as if this Lease had not been terminated.  In calculating the amounts to be paid by
Tenant under the foregoing covenant, Tenant shall be credited with any amount
paid to Landlord as compensation as provided in the first sentence of this
Section 9.2 and also with the net proceeds of any rents obtained by
Landlord by reletting the Premises, after deducting all Landlord’s expenses in
connection with such reletting, including, without implied limitation, all
repossession costs, brokerage commissions, fees for legal services and expenses
of preparing the Premises for such reletting, it being agreed by Tenant that
Landlord may (i) relet the Premises or any part or parts thereof for a term or
terms which may at Landlord’s option be equal to or less than or exceed the
period which would otherwise have constituted the balance of the Term and may
grant such concessions and free rent as Landlord in its reasonable judgment
considers advisable or necessary to relet the same and (ii) make such
alterations, repairs and decorations in the Premises as Landlord in its
reasonable judgment considers advisable or necessary to relet the same, and no
action of Landlord in accordance with the foregoing or failure to relet or to
collect rent under reletting shall operate or be construed to release or reduce
Tenant’s liability as aforesaid. 
Nothing set forth herein shall require Landlord to relet the Premises in
preference to any other space in the Building or to relet the Premises to any
party that Landlord could reasonably reject as a transferee pursuant to
Section 6.1.6 hereof.

 

So long as at least 12 months of the Term
remain unexpired at the time of such termination, in lieu of any other damages
or indemnity and in lieu of full recovery by Landlord of all sums payable under
all the foregoing provisions of this Section 9.2, Landlord may by written
notice to Tenant, at any time after this Lease is terminated under any of the
provisions contained in Section 9.1, or is otherwise terminated for breach
of any obligation of Tenant and before such full recovery, elect to recover and
Tenant shall thereupon pay, as liquidated damages, an amount equal to the
aggregate of the Annual Rent and additional rent accrued under Article IV
in the 12 months ended next prior to such termination plus the amount of Annual
Rent and additional rent of any kind accrued and unpaid at the time of
termination and less the amount of any recovery by Landlord under the foregoing
provisions of this Section 9.2 up to the time of payment of such
liquidated damages.

 

Nothing contained in this Lease shall,
however, limit or prejudice the right of Landlord to prove and obtain in
proceedings for bankruptcy or insolvency by reason of the termination of this

 

31

 

Lease, an amount equal to the maximum allowed by any statute or rule of
law in effect at the time when, and governing the proceedings in which, the
damages are to be proved, whether or not the amount be greater, equal to, or
less than the amount of the loss or damages referred to above.

 

ARTICLE X

 

MISCELLANEOUS

 

10.1                           NOTICE
OF LEASE.

 

Upon request of either party, both parties
shall execute and deliver, after the Term begins, a short form of this Lease in
form appropriate for recording or registration, and if this Lease is terminated
before the Term expires, an instrument in such form acknowledging the date of
termination.

 

10.2                           INTENTIONALLY
DELETED.

 

10.3                           NOTICES
FROM ONE PARTY TO THE OTHER.

 

All notices required or permitted hereunder
shall be in writing and addressed, if to the Tenant, at Tenant’s Address or
such other address as Tenant shall have last designated by notice in writing to
Landlord, with a copy to Steven A. Ross, Esquire, Gilmartin, Magence, Camiel
& Ross LLP, 376 Boylston Street, Boston, Massachusetts 02116 and, if to
Landlord, at Landlord’s Address or such other address as Landlord shall have
last designated by notice in writing to Tenant, with a copy to Cynthia B.
Keliher, Esquire, Gadsby Hannah LLP, 225 Franklin Street, Boston, Massachusetts
02110. Any notice shall have been deemed duly given if mailed to such address
postage prepaid, registered or certified mail, return receipt requested, when
deposited with the U.S. Postal Service, or if delivered to such address by
hand, when so delivered.

 

10.4                           BIND
AND INURE.

 

The obligations of this Lease shall run with
the land, and this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Landlord named herein and each successive owner of the Premises shall be liable
only for the obligations accruing during the period of its ownership.  The obligations of Landlord shall be binding
upon the assets of Landlord which comprise the Building and the Lot but not
upon other assets of Landlord.  No
individual partner, member, trustee, stockholder, officer, director, employee
or beneficiary of Landlord shall be personally liable under this Lease and
Tenant shall look solely to Landlord’s interest in the Building and the Lot in
pursuit of its remedies upon an event of default hereunder, and the general
assets of the individual partners, trustees, stockholders, officers, employees
or beneficiaries of Landlord shall not be subject to levy, execution or other
enforcement procedure for the satisfaction of the remedies of Tenant.

 

10.5                           NO
SURRENDER.

 

The delivery of keys to any employee of
Landlord or to Landlord’s agent or any employee thereof shall not operate as a
termination of this Lease or a surrender of the Premises.

 

32

 

10.6                           NO
WAIVER, ETC.

 

The failure of Landlord or Tenant to seek
redress for violation of, or to insist upon the strict performance of any
covenant or condition of this Lease or any of the Rules and Regulations
referred to in Section 6.1.4, whether heretofore or hereafter adopted by
Landlord, shall not be deemed a waiver of such violation nor prevent a
subsequent act, which would have originally constituted a violation, from
having all the force and effect of an original violation, nor shall the failure
of Landlord to enforce any of said Rules and Regulations against any other
tenant in the Building be deemed a waiver of any such Rules or Regulations.  The payment by Tenant or the receipt by
Landlord of Annual Rent or additional rent with knowledge of the breach of any
covenant of this Lease shall not be deemed a waiver of such breach by Tenant or
Landlord, unless such waiver be in writing and signed by such party.  No consent or waiver, express or implied, by
Landlord or Tenant to or of any breach of any agreement or duty shall be
construed as a waiver or consent to or of any other breach of the same or any
other agreement or duty.

 

10.7                           NO
ACCORD AND SATISFACTION.

 

No acceptance by Landlord of a lesser sum
than the Annual Rent and additional rent then due shall be deemed to be other
than on account of the earliest installment of such rent due, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed as accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord’s right to recover the
balance of such installment or pursue any other remedy in this Lease provided.

 

10.8                           CUMULATIVE
REMEDIES.

 

The specific remedies to which either party
may resort under the terms of this Lease are cumulative and are not intended to
be exclusive of any other remedies or means of redress to which it may be
lawfully entitled in case of any breach or threatened breach of any provisions
of this Lease.  In addition to the other
remedies provided in this Lease, Landlord or Tenant shall be entitled to the
restraint by injunction of the violation or attempted or threatened violation
of any of the covenants, conditions or provisions of this Lease or to a decree
compelling specific performance of any such covenants, conditions or
provisions.

 

10.9                           LANDLORD’S
RIGHT TO CURE.

 

If Tenant shall at any time default in the
performance of any obligation under this Lease and such default continues
beyond any applicable notice, grace and cure period, Landlord shall have the
right, but shall not be obligated, upon 24 hours prior oral notice to Tenant
(except in the event of emergency when no notice shall be required) to enter
upon the Premises and to perform such obligation, notwithstanding the fact that
no specific provision for such substituted performance by Landlord is made in
this Lease with respect to such default. 
In performing such obligation, Landlord may make any payment of money or
perform any other act.  All sums so paid
by Landlord (together with interest at the rate of 4% per annum in excess of
the then average prime commercial rate of interest being charged by the three
largest national banks) and all necessary incidental costs and expenses in
connection with the performance of any such act by Landlord, shall be deemed to
be additional rent under this Lease and shall be payable to

 

33

 

Landlord immediately on demand. 
Landlord may exercise the foregoing rights without waiving any other of
its rights or releasing Tenant from any of its obligations under this Lease.

 

10.10                     ESTOPPEL
CERTIFICATE.

 

Tenant agrees, from  time to time, upon not less than 20 days’ prior written
request by Landlord, to execute, acknowledge and deliver to Landlord a
statement in writing certifying that, if true (and if not true, specifying in
what respect) this Lease is unmodified and in full force and effect; that
Tenant has no defenses, offsets or counterclaims against its obligations to pay
the Annual Rent and additional rent and to perform its other covenants under
this Lease; that there are no uncured defaults of Landlord or Tenant under this
Lease (or, if there have been modifications, that this Lease is in full force
and effect as modified and stating the modifications, and, if there are any
defenses, offsets, counterclaims, or defaults, setting them forth in reasonable
detail); and the dates to which the Annual Rent, additional rent and other
charges have been paid.  Any such
statement delivered pursuant to this Section 10.10 shall be in a form
reasonably acceptable to and may be relied upon by any prospective purchaser or
mortgagee of premises which include the Premises or any prospective assignee of
any such mortgagee.

 

10.11                     WAIVER
OF SUBROGATION.

 

Any insurance carried (or required hereunder
to be carried) by either party with respect to the Premises and property
therein or occurrences thereon shall include a clause or endorsement denying to
the insurer rights of subrogation against the other party to the extent rights
have been waived by the insured prior to occurrences of injury or loss.  Each party, notwithstanding any provisions
of this Lease to the contrary, hereby waives any rights of recovery against the
other for injury or loss due to hazards covered by insurance containing such
clause or endorsement to the extent of the indemnification received thereunder.

 

10.12                     ACTS
OF GOD.

 

In any case where either party hereto is
required to do any act, delays caused by or resulting from Acts of God, war,
civil commotion, fire, flood or other casualty, labor difficulties, shortages
of labor, materials or equipment, government regulations, unusually severe
weather, or other causes beyond such party s reasonable control shall not be
counted in determining the time during which work shall be completed, whether
such time be designated by a fixed date, a fixed time or a “reasonable time,”
and such time shall be deemed to be extended by the period of such delay.

 

10.13                     BROKERAGE.

 

Tenant and Landlord represent and warrant
that they dealt with no brokers in connection with this transaction other than
the Brokers and agree to defend, with counsel approved by the other, indemnify
and save the other harmless from and against any and all cost, expense or
liability for any compensation, commissions or charges claimed by a broker or
agent, other than the Brokers in connection with this Lease.  Landlord hereby agrees to pay the brokerage
fees to the Brokers in connection with the execution and delivery of this Lease
pursuant to the terms of a separate agreement between Landlord and Brokers.

 

34

 

10.14                     SUBMISSION
NOT AN OFFER.

 

The submission of a draft of this Lease or a
summary of some or all of its provisions does not constitute an offer to lease
or demise the Premises, it being understood and agreed that neither Landlord
nor Tenant shall be legally bound with respect to the leasing of the Premises
unless and until this Lease has been executed by both Landlord and Tenant and a
fully executed copy has been delivered to each of them.

 

10.15                     APPLICABLE
LAW AND CONSTRUCTION.

 

This Lease shall be governed by and construed
in accordance with the laws of the state in which the Premises are
located.  If any term, covenant,
condition or provision of this Lease or the application thereof to any person
or circumstances shall be declared invalid or unenforceable by the final ruling
of a court of competent jurisdiction having final review, the remaining terms,
covenants, conditions and provisions of this Lease and their application to
persons or circumstances shall not be affected thereby and shall continue to be
enforced and recognized as valid agreements of the parties, and in the place of
such invalid or unenforceable provision, there shall be substituted a like, but
valid and enforceable provision which comports to the findings of the aforesaid
court and most nearly accomplishes the original intention of the parties.

 

There are no oral or written agreements
between Landlord and Tenant affecting this Lease.  This Lease may be amended, and the provisions hereof may be
waived or modified, only by instruments in writing executed by Landlord and
Tenant.

 

The titles of the several Articles and
Sections contained herein are for convenience only and shall not be considered
in construing this Lease.

 

Unless repugnant to the context, the words
“Landlord” and “Tenant” appearing in this Lease shall be construed to mean
those named above and their respective heirs, executors, administrators,
successors and assigns, and those claiming through or under them
respectively.  If there be more than one
tenant, the obligations imposed by this Lease upon Tenant shall be joint and
several.

 

All times set forth herein shall be of the
essence.

 

10.16                     AUTHORITY
OF TENANT.

 

Tenant represents and warrants to Landlord
(which representations and warranties shall survive the delivery of this Lease)
that: (a) Tenant (i) is duly organized, validly existing and in good standing
under the laws of its state of incorporation, (ii) has the corporate power and
authority to carry on businesses now being conducted and is qualified to do
business in every jurisdiction where such qualification is necessary and (iii) has
the power to execute and deliver and perform its obligations under this Lease
and (b) the execution, delivery and performance by Tenant of its obligations
under this Lease have been duly authorized by all requisite corporate action
and will not violate any provision of law, any order of any court or other
agency of government, the partnership agreement of the Tenant or any indenture,
agreement or other instrument to which it is a party or by which it is bound.

 

35

 

10.17                     MISCELLANEOUS.

 

Landlord represents that it is the owner of the Building and Lot and
upon execution of this Lease and the occurrence of the Commencement Date for
the Premises, Tenant shall be entitled to the quiet enjoyment of the Premises in
accordance with the terms of this Lease by others claiming by, through or under
the Landlord.  Notwithstanding anything
to the contrary herein, if Landlord is unable to deliver possession of the
Premises to Tenant on the Term Commencement Date, then (a) Landlord shall not
be liable to Tenant for any direct or indirect damages or expenses, including,
without limitation, consequential damages incurred by Tenant which arise out of
such inability to deliver possession on the Term Commencement Date, (b) this Lease
shall remain in full force and effect, (c) the Term Commencement Date shall
automatically be adjusted to the date on which Landlord delivers possession of
the Premises to Tenant, and (d) Landlord shall use reasonable efforts to
deliver possession of the Premises to Tenant on the earliest possible date.

 

10.18                     ASSIGNMENT OF LEASE AND/OR RENTS.

 

With reference to any assignment by Landlord of its interest in this
Lease and/or the Rent payable hereunder, conditional in nature or otherwise,
which assignment is made to or held by a bank, trust company, insurance company
or other institutional lender holding a mortgage on the Building, Landlord and
Tenant agree:

 

(i)                                     that the execution thereof by Landlord and
acceptance thereof by such mortgagee shall never be deemed an assumption by
such mortgagee of any of the obligations of Landlord hereunder, unless such
mortgagee shall, by written notice sent to Tenant, specifically otherwise
elect; and

 

(ii)                                  that, except as aforesaid, such mortgagee
shall be treated as having assumed Landlord’s obligations hereunder only upon
foreclosure of such mortgagee’s mortgage and the taking possession of the
Premises after having given notice of its intention to succeed to the interest
of Landlord under this Lease.

 

10.19                     PARKING

 

Tenant is specifically granted non-reserved vehicle access to the
parking lot located adjacent to the Building at a ratio of three (3) vehicle
spaces per each one thousand (1,000) rentable square feet of the Premises (i.e.
non-reserved parking for forty-seven (47) motor vehicles based upon the
Tenant’s occupancy of 15,475 rentable square feet; the foregoing referred to
herein as “Tenant’s Parking Rights”). Tenant’s Parking Rights shall be
non-transferable (directly or indirectly) to any other institutions, entities
or individuals.  Tenant’s use of the
Tenant’s Parking Rights shall be limited to normal working hours and overnight
parking at the Building shall be strictly prohibited unless otherwise consented
to, in writing, by Landlord.

 

Landlord shall not be responsible for money, jewelry, automobiles or
other personal property lost in or stolen from the parking lot.  Landlord shall not be liable for any loss,
injury or damage to persons using the parking lot or automobiles or other
property thereon, it being agreed that, to the fullest extent permitted by law,
the use of the parking lot and the parking spaces shall

 

36

 

be
at the sole risk of Tenant and its employees.  
Except for emergency repairs, Tenant and its employees shall not perform
any work on any automobiles while located in the parking lot.

 

Tenant’s Parking Rights shall be subject to such reasonable rules and
regulations therefor as may be set and changed with reasonable prior notice by
the Landlord from time to time. Tenant’s Parking Rights above are
non-assignable and intended solely for the use of Tenant’s employees working
from and business invitees to the Premises; and as such Tenant shall not offer
them for “use” or “license” to any other entity, the general public, or any
other tenants of the Building. All such appurtenant rights for parking as set
forth in this Section are automatically terminated upon termination of
this Lease, and shall have no separate independent validity or legal standing.

 

10.20                     RIGHT OF FIRST OFFER

 

Tenant shall have a specific right of first offer as set forth in Exhibit G attached hereto and incorporated
herein on the First Offer Space (as defined in Exhibit G).

 

ARTICLE XI

 

SECURITY DEPOSIT

 

The Security Deposit specified in Section 1.1 of this Lease shall
be held as security for the performance by Tenant of all of the obligations on
the part of Tenant to be performed. Upon execution and delivery of this Lease,
Tenant shall deliver to Landlord the Security Deposit in the amount of
$355,000.00. Landlord shall have no obligation to segregate the Security
Deposit from any of Landlord’s other accounts, including, without limitation,
Landlord’s operating accounts. Landlord shall have the right, from time to
time, without prejudice to any other remedy Landlord may have on account
thereof, to use all or any portion of the Security Deposit on account of, and
to apply such amounts to Landlord’s damages arising from, or to cure, any
default of Tenant, (subject to applicable notice and cure periods set forth
herein). If a default by Tenant occurs (subject to applicable notice and cure
periods set forth herein), then Landlord shall have the right, at any time
after such event, without giving any further notice to Tenant, to use all or
any portion of the Security Deposit (a) necessary to cure such default or (b)
if such default cannot reasonably be cured by the expenditure of money, to
exercise all rights and remedies Landlord may have on account of such default,
the amount which, in Landlord’s reasonable opinion, is necessary to satisfy
Tenant’s liability on account thereof. Notwithstanding the foregoing, in the
event that Landlord shall have applied any part of the Security Deposit as
permitted hereunder, Landlord shall use reasonable efforts to thereafter
provide Tenant with written notice of such application. In no event shall
Landlord’s failure to provide such notice to Tenant in any way limit Landlord’s
ability or right apply the Security Deposit as permitted herein.

 

Provided no event of default exists under the Lease and there exists no
event which, with the passage of time, would become an event of default under
the Lease, Landlord will reimburse Tenant, on an annual basis, interest on the
Security Deposit in the amount of one and one half percent (1.5%) per annum.

 

37

 

In addition, in the event of a termination of the Lease based upon the
default of Tenant under the Lease, or a rejection of the Lease pursuant to the
provisions of the US. Bankruptcy Code, Landlord shall have the right to use all
or any portion of the Security Deposit (from time to time, if necessary) to
cover the full amount of damages and other amounts due from Tenant to Landlord
under the Lease. Any amounts so used shall, at Landlord’s election, be applied
first to any unpaid rent and other charges which were due prior to the filing
of the petition for protection under the U.S. Bankruptcy Code.

 

Tenant shall not have the right to call upon Landlord to apply all or
any part of the Security Deposit to cure any default or fulfill any obligation
of Tenant, but such use shall be solely in the discretion of Landlord. If
Landlord shall so apply any such sums from the Security Deposit, Tenant shall
immediately restore the Security Deposit to its original amount of $355,000.00.

 

It is agreed that in the event Tenant defaults in respect of any of the
terms, provisions and conditions of this Lease, including, but not limited to,
the payment of rent, Landlord may apply or retain the whole or any part of the
Security Deposit to the extent required for the payment of any rent or any
other sum as to which Tenant is in default or for any sum which Landlord may
expend or may be required to expend by reason of Tenant’s default in respect of
any of the terms, covenants and conditions of this Lease, including but not
limited to, any damages or deficiency in the reletting of the Premises, whether
such damages or deficiency accrue or accrues before or after summary
proceedings of other reentry by Landlord. The Security Deposit is not to be
used or applied by Tenant as a substitute for rent due any month, but may be so
applied by Landlord at any time at Landlord’s option in the event of a default
beyond the expiration of any applicable cure period. The use, application or
retention of the Security Deposit, or any portion thereof, by Landlord shall
not prevent Landlord from exercising any other right or remedy provided by this
Lease or by law and shall not operate as a limitation on any recovery to which
Landlord may otherwise be entitled. If Tenant shall fully and faithfully comply
with all of the terms, provisions, covenants and conditions of this Lease, the
balance of the Security Deposit, if any, shall be returned to Tenant within
thirty (30) days after the Termination Date and after the delivery of the
entire possession of the Premises in the condition specified herein.

 

The Security Deposit shall originally be in the amount of $355,000.00.
If, on February 1, 2006: (i) no event of default exists under the Lease;
and (ii) there exists no event which, with the passage of time, would become an
event of default under the Lease; and (iii) Tenant has a cash balance
consisting of cash and cash equivalents totaling in excess of Twenty Five Million
Dollars ($25,000,000.00), as evidenced by Tenant’s most recent filings with the
Securities and Exchange Commission (the “SEC”), (requirements (i) through (iii)
hereafter collectively referred to as the “Financial Conditions”), then, upon
not less than thirty (30) days prior written notice to Landlord (which notice
shall include copies of Tenant’s most recent SEC filings that reasonably
evidence Tenant’s cash balance), Landlord will agree to reduce the amount of
the Security Deposit to One Hundred Seventy Seven Thousand Five Hundred and
00/100 Dollars ($177,500.00). If, on August 1, 2006, Tenant can satisfy
the Financial Conditions, then, upon not less than thirty (30) days prior
written notice to Landlord (which notice shall include copies of Tenant’s most recent
SEC filings that reasonably evidence Tenant’s cash balance), Landlord will
agree to reduce the amount of the Security Deposit to Eighty Eight Thousand
Seven Hundred and Fifty and 00/100 Dollars ($88,750.00). Notwithstanding the
foregoing, in the event

 

38

 

Tenant
shall at any time fail to satisfy any of the Financial Conditions, Tenant shall
immediately restore the Security Deposit to the original amount of $355,000.00.
If at any time Tenant fails to satisfy any of the Financial Conditions and
Tenant fails to immediately restore the Security Deposit as required herein, it
shall be an event of default under this Lease.

 

Upon any conveyance by Landlord of its interest under this Lease, the
Security Deposit shall be delivered by Landlord to Landlord’s grantee or
transferee. Upon any delivery, Tenant hereby releases Landlord herein named of
any and all liability with respect to the Security Deposit and hereby agrees to
look solely to such grantee or transferee. It is further understood that this
provision shall also apply to subsequent grantees and transferees.

 

In no event shall the Security Deposit be deemed to be a prepayment of
rent nor shall it be considered as a measure of liquidated damages.

 

39

 

EXECUTED as a sealed instrument in two or
more counterparts on the day and year first above written.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  CALIFORNIA STATE TEACHERS’ RETIREMENT SYSTEM, a public entity

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CLARION PARTNERS, LLC

  
	
   

  	
   

  	
  a New York limited liability company, its Authorized Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Stephen Latimer

  
	
   

  	
   

  	
   

  	
  Name: Stephen Latimer

  
	
   

  	
   

  	
   

  	
  Title: Authorized Person

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
  CUBIST PHARMACEUTICALS, INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David W. J. McGirr

  
	
   

  	
   

  	
  Name:

  	
  David W. J. McGirr

  
	
   

  	
   

  	
  Title:

  	
  SVP & CFO

  
	
   

  	
   

  	
  Hereunto duly authorized

  
						

 

40

 

EXHIBIT A

 

Plan
Showing Premises

 

41

 

 

	
  HAYDEN WOODS CORPORATE CENTER

  	
   

  
	
  LEXINGTON, MASSACHUSETTS

  
	
  FOURTH FLOOR - SPACE ‘A’ - RENTABLE 8,720 SF

  

 

	
  ROJAS GROUP, INC. Architecture • Landscape Architecture • Interior Design • Planning

  	
   

  	
  RG 23278

  	
   

  	
  30 AUGUST 2002

  

 

 

 

 

EXHIBIT B

 

Intentionally
Deleted

 

42

 

EXHIBIT C

 

LANDLORD’S
SERVICES

 

I.                                         CLEANING

 

A.                                    General

 

1.                                       All cleaning work will be performed between 8
a.m. and 12 midnight, Monday through Friday, unless otherwise necessary for
stripping, waxing, etc.

 

2.                                       Abnormal waste removal (e.g., computer
installation paper, bulk packaging, wood or cardboard crates, refuse from
cafeteria operation, etc.) shall be Tenant’s responsibility.

 

B.                                    Daily Operations (5 times
per week)

 

1.                                       Tenant Areas

 

a.                                       Empty and clean all waste receptacles; wash
receptacles  as necessary.

 

b.                                      Vacuum all rugs and carpeted areas.

 

c.                                       Empty, damp-wipe and dry all ashtrays.

 

2.                                       Lavatories

 

a.                                       Sweep and wash floors with disinfectant.

 

b.                                      Wash both sides of toilet seats with
disinfectant.

 

c.                                       Wash all mirrors, basins, bowls, and urinals.

 

d.                                      Spot clean toilet partitions.

 

e.                                       Empty and disinfect sanitary napkin disposal
receptacles.

 

f.                                         Refill toilet tissue, towel, soap, and
sanitary napkin dispensers.

 

3.                                       Public Areas

 

a.                                       Wipe down entrance doors and clean glass
(interior and exterior).

 

b.                                      Vacuum elevator carpets and wipe down doors
and wall

 

c.                                       Clean water coolers.

 

43

 

C.                                    Operations as Needed (but
not less than every other day)

 

1.                                       Tenant and Public Areas

 

a.                                       Buff all resilient floor areas.

 

D.                                    Weekly Operations

 

1.                                       Tenant Areas, Lavatories, Public Areas

 

a.                                       Hand-dust and wipe clean all horizontal
surfaces with treated cloths to include furniture, office equipment, window
sills, door ledges, chair rails, baseboards, convector tops, etc., within
normal reach.

 

b.                                      Remove finger marks from private entrance
doors, light switches, and doorways.

 

c.                                       Sweep all stairways.

 

E.                                      Monthly Operations

 

1.                                       Tenant and Public Areas

 

a.                                       Thoroughly vacuum seat cushions on chairs, sofas,
etc.

 

b.                                      Vacuum and dust grillwork.

 

2.                                       Lavatories

 

a.                                       Wash down interior walls and toilet
partitions.

 

F.                                      As Required and Weather
Permitting

 

1.                                       Entire Building

 

a.                                       Clean inside of all windows.

 

b.                                      Clean outside of all windows.

 

G.                                    Yearly

 

1.                                       Tenant and Public Areas

 

a.                                       Strip and wax all resilient tile floor areas.

 

II                                        HEATING, VENTILATING, AND
AIR CONDITIONING

 

1.                                       Heating, ventilating, and air conditioning as
required to provide reasonably comfortable temperatures for normal business day
occupancy (excepting holidays); Monday through Friday from 8:00 a.m. to 5:00
p.m. and Saturday from 8:00 a.m. to 1:00 p.m.

 

44

 

2.                                       Maintenance of any additional or special air
conditioning equipment and the associated operating cost will be at Tenant’s
expense.

 

Tenant may request such additional services by contacting the Building
Manager 24 hours prior to such services being needed.

 

III.                                 WATER

 

Hot water for lavatory purposes and cold water for drinking, lavatory
and toilet purposes, and cold water for tenant’s kitchen and tenant’s hot water
heater (tenant is to supply hot water heater).

 

IV.                                ELEVATORS

 

Elevators for the use of all tenants and the general public for access
to and from all floors of the Building. Programming of elevators (including,
but not limited to, service elevators) shall be as Landlord from time to time
determines best for the Building as a whole.

 

V.                                    RELAMPING OF LIGHT FIXTURES

 

Tenant will reimburse Landlord for the cost of lamps, ballasts and starters
and the cost of replacing same within the Premises.

 

VI.                                CAFETERIA AND VENDING
INSTALLATIONS

 

1.                                       Any space to be used primarily for lunchroom
or cafeteria operation shall be Tenant’s responsibility to keep clean and
sanitary, it being understood that Landlord’s approval of such use must be
first obtained in writing. Vending machines or refreshment service
installations by Tenant must be approved by Landlord in writing and shall be
restricted in use to employees and business callers.  All cleaning necessitated by such installations shall be at
Tenant’s expense.

 

2.                                       Vending machines or refreshment service
installations by Tenant must be approved by Landlord in writing and shall be
restricted in use to employees and business callers.  All cleaning necessitated by such installations shall be at
Tenant’s expense.

 

VII.                            ELECTRICITY

 

A.                                   Landlord, at Landlord’s expense, shall
furnish electrical energy required for lighting, electrical facilities,
equipment, machinery, fixtures, and appliances used in or for the benefit of
the Premises, in accordance with the provisions of the Lease of which this
Exhibit is part.

 

B.                                     Tenant shall not, without prior written
notice to Landlord in each instance, connect to the Building electric
distribution system such as personal computers,

 

45

 

desk-top calculators and typewriters, or any fixtures, appliances or
equipment which Tenant on a regular basis operates beyond normal building
operating hours. In the event of any such connection, Tenant agrees to pay any
increase in the electrical costs for the Premises and a corresponding increase
in Annual Rent by an amount which will reflect the cost to Landlord of the
additional electrical service to be furnished by Landlord, such increase to be
effective as of the date of any such installation. If Landlord and Tenant
cannot agree thereon, such amount shall be conclusively determined by a
reputable independent electrical engineer or consulting firm to be selected by
Landlord and paid equally by both parties, and the cost to Landlord will be
included in Landlord’s Operating Costs provided in Section 4.2 hereof.

 

C.                                     Tenant’s use of electrical energy in the
Premises shall not at any time exceed the capacity of any of the electrical
conductors or equipment in or otherwise serving the Premises. In order to
insure that such capacity is not exceeded and to avert possible adverse effect
upon the Building electric service, Tenant shall not, without prior written
notice to Landlord in each instance, connect to the Building electric
distribution system any fixtures, appliances or equipment which operate on a
voltage in excess of 120 volts nominal or make any alteration or addition to
the electric system of the Premises. Unless Landlord shall reasonably object to
the connection of any such fixtures, appliances or equipment, all additional
risers or other equipment required therefor shall be provided by Landlord, and
the cost thereof shall be paid by Tenant upon Landlord’s demand. In the event
of any such connection, Tenant agrees to pay any increase in the electrical
costs for the Premises and a corresponding increase in Annual Rent by an amount
which will reflect the cost to Landlord of the additional service to be
furnished by Landlord, such increase to be effective as of the date of any such
connection. If Landlord and Tenant cannot agree thereon, such amount shall be
conclusively determined by a reputable independent electrical engineer or
consulting firm to be selected by Landlord and paid equally by both parties,
and the cost to Landlord will be included in Landlord’s Operating Costs
provided in Section 4.2 hereof.

 

D.                                    If at any time after the date of this Lease,
the rates at which Landlord purchases electrical energy from the public utility
supplying electric service to the Building, or any charges incurred or taxes
payable by Landlord in connection therewith, shall be increased or decreased,
the Annual Rent and electrical costs for the Premises shall be increased or
decreased, as the case may be, by an amount equal to the estimated increase or
decrease, as the case may be, in Landlord’s cost of furnishing the electricity
referred to in Paragraph A above as a result of such increase or decrease in
rates, charges, or taxes. If Landlord and Tenant cannot agree thereon, such
amount shall be conclusively determined by a reputable independent electrical
engineer or consulting firm to be selected by Landlord and paid equally by both
parties, and the cost to Landlord will be included in Landlord’s Operating Costs
as provided in Section 4.2 hereof. Any such increase or decrease shall be
effective as of the date of the increase or decrease in such rate, charge or
taxes.

 

46

 

E.                                      Landlord may, at any time, elect to discontinue
the furnishing of electrical energy. In the event of any such election by
Landlord: (1) Landlord agrees to give reasonable advance notice of any such
discontinuance to Tenant; (2) Landlord agrees to permit Tenant to receive
electrical service directly from the public utility supplying service to the
Building and to permit the existing feeders, risers, wiring and other
electrical facilities serving the Premises to be used by Tenant and/or such
public utility for such purpose to the extent they are suitable and safely
capable; (3) Landlord agrees to pay such charges and costs, if any, as such
public utility may impose in connection with the installation of Tenant’s
meters and to make or, at such public utility’s election, to pay for such other
installations as such public utility may require, as a condition of providing
comparable electrical service to Tenant; (4) the Annual Rent shall be equitably
decreased to reflect such discontinuance by an amount equal to the electrical
costs for the Premises then in effect; and (5) Tenant shall thereafter pay,
directly to the utility furnishing the same, all charges for electrical
services to the Premises.

 

F.                                      Whenever the Annual Rent is increased or
decreased pursuant to any of the foregoing paragraphs of this Article, the
parties agree, upon request of either, to execute and deliver each to the other
an amendment to this Lease confirming such increase or decrease.

 

47

 

EXHIBIT D

 

RULES AND REGULATIONS

 

The following rules and regulations have been formulated for the safety
and well-being of all tenants of the Project and to insure compliance with
governmental and other requirements. Strict adherence to these rules and
regulations is necessary to guarantee that each and every tenant will enjoy a
safe and undisturbed occupancy of its premises in the Project. Any violation of
these rules and regulations by Tenant shall constitute a default by Tenant
under the Lease.

 

Landlord may, upon request of any tenant, waive the compliance by such
tenant of any of the following rules and regulations, provided that (i) no
waiver shall be effective unless signed by Landlord’s authorized agent, (ii)
any such waiver shall not relieve such tenant from the obligation to comply
with such rule or regulation in the future unless otherwise agreed to by
Landlord, (iii) no waiver granted to any tenant shall relieve any other tenant
from the obligation of complying with these rules and regulations, unless such
other tenant has received a similar written waiver from the Landlord, and (iv)
any such waiver shall not relieve Tenant from any liability to Landlord for any
loss or damage occasioned as a result of Tenant’s failure to comply with any
rule or regulation.

 

1.                                       The entrances, lobbies, passages, corridors,
elevators, halls, courts, sidewalks, vestibules, and stairways shall not be
encumbered or obstructed by Tenant, Tenant’s agents, servants, employees,
licensees or visitors or used by them for any purposes other than ingress or
egress to and from the Premises. 
Landlord shall have the right to control and operate portions of the
Project and the facilities furnished for common use of the tenants in such
manner as Landlord deems best for the benefit of the tenants generally.

 

2.                                       The moving in or out of all safes, freight,
furniture, or bulky matter of any description shall take place during the hours
which Landlord may determine from time to time. Landlord reserves the right to
inspect all freight and bulky matter to be brought into the Building and to
exclude from the Building all freight and bulky matter which violates any of
these Rules and Regulations or the Lease of which these Rules and Regulations
are a part. Landlord reserves the right to have Landlord’s structural engineer
review Tenant’s floor loads on the Premises at Tenant’s expense.

 

3.                                       Tenant, or the employees, agents, servants,
visitors or licensees of Tenant, shall not at any time place waste or discard
any rubbish, paper, articles, or objects of any kind whatsoever outside the doors
of the Premises or in the corridors or passageways of the Building. No animals
or birds shall be brought or kept in or about the Building. Bicycles shall not
be permitted in the Building.

 

4.                                       Tenant shall not place objects against glass
partitions or doors or windows or adjacent to any common space which would be
unsightly from the Building corridors or from the exterior of the Building and
will promptly remove the same upon notice from Landlord.

 

48

 

5.                                       Tenant shall not make noises, cause
disturbances, create vibrations, odors or noxious fumes or use or operate any
electric or electrical devices or other devices that emit sound waves or are
dangerous to other tenants and occupants of the Building or that would
interfere with the operation of any device or equipment or radio or television
broadcasting or reception from or within the Building or elsewhere, or with the
operation of roads or highways in the vicinity of the Building, and shall not
place or install any projections, antennae, aerials, or similar devices inside
or outside of the Premises, without the prior written approval of Landlord.

 

6.                                       Tenant may not (without Landlord’s approval
therefor, which approval will be signified on Tenant’s Plans submitted pursuant
to the Lease) and Tenant shall not permit or suffer anyone to: (a) cook in the
Premises except as accessory to the use of a coffee room/ kitchenette
containing a microwave oven; (b) place vending or dispensing machines of any
kind in or about the Premises; (c) at any time sell, purchase or give away, or
permit the sale, purchase, or gift of food in any form.

 

7.                                       Tenant shall not: (a) use the Premises for
lodging, manufacturing or any immoral or illegal purposes; (b) use the Premises
to engage in the manufacture or sale of, or permit the use of spirituous,
fermented, intoxicating or alcoholic beverages on the Premises; (c) use the
Premises to engage in the manufacture or sale of, or permit the use of, any
illegal drugs on the Premises.

 

8.                                       No awning or other projections (including
antennae) shall be attached to the outside walls or windows. No curtains,
blinds, shades, screens or signs other than those furnished by Landlord shall
be attached to, hung in, or used in connection with any window or door of the
Premises without prior written consent of Landlord.

 

9.                                       No signs, advertisement, object, notice or
other lettering shall be exhibited, inscribed, painted or affixed on any part
of the outside or inside of the Premises if visible from outside of the
Premises. Interior signs on doors shall be painted or affixed for Tenant by
Landlord or by sign painters first approved by Landlord at the expense of
Tenant and shall be of a size, color and style acceptable to Landlord.

 

10.                                 Tenant shall not use the name of the Building
or use pictures or illustrations of the Building in advertising or other
publicity without prior written consent of Landlord.  Landlord shall have the right to prohibit any advertising by
Tenant which, in Landlord’s opinion and upon written notice from Landlord,
Tenant will refrain from or discontinue such advertising.

 

11.                                 Door keys for doors in the Premises will be
furnished at the Commencement of the Lease by Landlord. Tenant shall not affix
additional locks on doors and shall purchase duplicate keys only from Landlord
and will provide to Landlord the means of opening of safes, cabinets, or vaults
left on the Premises. Notwithstanding the foregoing, Tenant is nonetheless
responsible for the removal

 

49

 

of all safes, cabinets and vaults from the Premises after the
termination of the Lease. In the event of the loss of any keys so furnished by
Landlord, Tenant shall pay to Landlord the cost thereof. Each tenant shall,
upon the termination of its tenancy, restore to Landlord all keys of offices,
storage and toilet rooms either furnished to, or otherwise procured by, such
tenant.

 

12.                                 Tenant shall cooperate and participate in all
security programs affecting the Building.

 

13.                                 Tenant assumes full responsibility for
protecting its space from theft, robbery and pilferage, which includes keeping
doors locked and other means of entry to the Premises closed and secured.

 

14.                                 Tenant shall not make any room-to-room
canvass to solicit business from other tenants in the Building, and shall not
exhibit, sell or offer to sell, use, rent or exchange any item or services in
or from the Premises unless ordinarily embraced within Tenant’s use of the
Premises as specified in its Lease. 
Canvassing, soliciting and peddling in the Building are prohibited and
Tenant shall cooperate to prevent the same. 
Peddlers, solicitors and beggars shall be reported to the Management
Office.

 

15.                                 Tenant shall not mark, paint, drill into, or
in any way deface any part of the Building or Premises.  No boring, driving of nails or screws
(except for picture hanging), cutting or stringing of wires shall be permitted,
except with the prior written consent of Landlord, and as Landlord may direct.   Tenant shall not construct, maintain, use
or operate within their respective premises any electrical device, wiring or
apparatus in connection with a loud speaker system or other sound system,
except as reasonably required as part of a communication system approved in
writing by Landlord, prior to the installation thereof. Tenant shall not
install any resilient tile or similar floor covering in the Premises except
with the prior written approval of Landlord. The use of cement or other similar
adhesive material is expressly prohibited.

 

16.                                 Tenant shall not waste electricity or water
and agrees to cooperate fully with Landlord to assure the most effective
operation of the Building’s heating and air conditioning and shall refrain from
attempting to adjust controls.  Tenant
shall keep corridor doors closed except when being used for access.

 

17.                                 The water and wash closets and other plumbing
fixtures shall not be used for any purposes other than those for which they
were constructed, and no sweepings, rubbish, rags, or other substances shall be
thrown therein.  All damage resulting
from misuse of said fixtures shall be borne by the tenant who, or whose
servant, employees, agents, licensees, invitees, customers or guests shall have
caused the same.

 

18.                                 Building employees shall not be required to
perform, and shall not be requested by any tenant or occupant to perform, any
work outside of their regular duties,

 

50

 

unless under specific instructions from the office of the Managing
Agent of the Building. The requirements of tenants will be attended to only
upon application to Landlord, and any special requirements shall be billed to
Tenant (and paid when the next installment of rent is due) in accordance with
the schedule of charges maintained by Landlord from time to time or at
such charge as is agreed upon in advance by Landlord and Tenant.

 

19.                                 Tenant may request heating and/or air
conditioning during other periods in addition to normal working hours by
submitting its request in writing to the office of the Managing Agent of the
Building no later than 2:00 p.m. the preceding work day (Monday through Friday)
on forms available from the office of the Managing Agent.  The request shall clearly state the start
and stop hours of the “off-hour” service.  
Tenant shall submit to the Building Manager a list of personnel
authorized to make such request. The Tenant shall be charged for such operation
in the form of additional rent; such charges are to be determined by the
Managing Agent and shall be fair and reasonable and reflect the additional
operating costs involved.

 

20.                                 Tenant covenants and agrees that its use of
the Premises shall not cause a discharge of more than the gallonage per foot of
Premises Design Floor Area per day of sanitary (non-industrial) sewage allowed
under the sewage discharge permit for the Building. Discharges in excess of
that amount, and any discharge of industrial sewage, shall only be permitted if
Tenant, at its sole expense, shall have obtained all necessary permits and
licenses therefor, including without limitation permits from state and local
authorities having jurisdiction thereof. Tenant shall submit to Landlord on
December 31 of each year of the Term of this Lease a statement, certified
by an authorized officer of Tenant, which contains the following information:
name of all chemicals, gases, and hazardous substances, used, generated, or
stored on the Premises; type of substance (liquid, gas or granular); quantity
used, stored or generated per year; method of disposal; permit number, if any,
attributable to each substance, together with copies of all permits for such
substances;  and permit expiration date
for each substance.    No flammable,
combustible or explosive fluid, chemical or substance shall be brought into or
kept upon the Premises, the Building or the Project (other than those fluids or
chemicals customarily used by tenants of other first-class office buildings in
connection with office purposes and then only those types and quantities
permitted under Landlord’s policies of insurance for the Building or the
Project).

 

21.                                 Landlord reserves the right to exclude from
the Project at all times any person who is not known or does not properly
identify himself to the Project management. Landlord may, at its option,
require persons admitted to or leaving the Project between the hours of 6:00
p.m. and 8:00 a.m., Monday through Friday, and at any hour on Saturdays,
Sundays and legal holidays, to register. 
Each tenant shall be responsible for all persons for whom it authorizes
entry into the Project, and shall be liable to Landlord for all acts or
omissions of such persons.

 

51

 

22.                                 Landlord
reserves the right to inspect all freight to be brought into the Project and to
exclude from the Project all freight which violates any of these rules and
regulations. There shall not be used in any space or in the common halls of the
Project, either by any tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber
tires and side guards.

 

As used herein, the term “Project” shall mean
the Building and the Lot.

 

52

 

EXHIBIT E

 

EXTENSION
OPTION

 

Provided the original Tenant named herein or a Permitted Affiliate are
occupying the entire Premises at the time of giving its notice to exercise its
option and at the commencement of the Extension Term (as defined herein),
Tenant shall have the right and option to extend the Term for one (1) additional
period of five (5) years (“Extension Term”). The Extension Term is to commence
immediately upon expiration of the initial Term of approximately five (5) year
and seven (7) month Term (the “Original Term”), provided that Tenant
shall give Landlord notice of Tenant’s exercise of such option by no later than
nine (9) months and no earlier than twelve (12) months prior to the then
scheduled expiration of the Term, and provided  further that no
default, or event which with the giving of notice or the passage of time, or
both, would constitute a default, unless the same is cured within the
applicable cure period which exists at the time of giving such notice or at the
commencement of the Extension Term. If an event of default, or event which with
the giving of notice or the passage of time, or both, would constitute a
default, exists at the time of giving such notice or at the time of
commencement of the Extension Term, Tenant’s exercise of such option shall, at
the option of Landlord, be null and void and of no further force and effect.
Prior to the exercise by Tenant of any such option, the expression “Term” shall
mean the Original Term. Except as expressly otherwise provided in the following
paragraph, all the terms, covenants, conditions, provisions and agreements in
the Lease contained herein shall be applicable to the Extension Term, except
that there shall be no further extension terms. If Tenant shall give notice of
its exercise of said option to extend in the manner and within the time period
provided aforesaid, the Term shall be extended upon the giving of such notice
without the requirement of any further action on the part of either Landlord or
Tenant. If Tenant shall fail to give timely notice of the exercise of such
option as aforesaid, Tenant shall have no right to extend the Term of this
Lease, time being of the essence of the foregoing provisions.

 

The Annual Base Rent payable during the Extension Term shall be the
greater of (a) an amount equal to the Fair Market Rent for the Premises as of
the commencement date of the Extension Term or (b) the Annual Base Rent payable
in the year immediately preceding the Extension Term. The Fair Market Rent
shall be determined in accordance with the provisions set forth below. If for
any reason the Annual Base Rent payable during the Extension Term has not been
determined as of the commencement date of the Extension Term, Tenant shall pay
the Annual Base Rent payable for the year immediately preceding the
commencement of the Extension Term until the Annual Base Rent for the Extension
Term is determined, at which time, an appropriate adjustment, if any, shall be
made.

 

The Fair Market Rent shall mean the anticipated rent for the Premises
as of the commencement of the Extension Term under market conditions then
existing for comparable space. No later than the one (1) month after Tenant’s
Extension Notice, Landlord shall notify Tenant of Landlord’s estimate of the
Fair Market Rent. No later than fifteen (15) days after such notification,
Tenant may dispute Landlord’s estimate of Fair Market Rent upon written notice
thereof to Landlord which written notice shall contain Tenant’s estimate of the
Fair Market Rent. If Tenant disputes Landlord’s estimate of Fair Market Rent
within such fifteen (15) day period, then the Fair Market Rent shall be
determined by agreement between Landlord and Tenant

 

53

 

during the next thirty (30) day period (the “Discussion Period”), but
if Landlord and Tenant are unable to agree upon the Fair Market Rent during the
Discussion Period, then the Fair Market Rent shall be determined by the
determination of a board of three (3) M.A.I. appraisers as hereafter provided,
each of whom shall have at least five (5) years experience in the Lexington
office rental market and each of whom is hereinafter referred to as
“appraiser”, Tenant and Landlord shall each appoint one such appraiser and the
two appraisers so appointed shall appoint the third appraiser (the “Neutral
Appraiser”). The cost and expenses of each appraiser appointed separately by
Tenant and Landlord shall be borne by the party who appointed the appraiser.
The cost and expenses of the third appraiser shall be shared equally by Tenant
and Landlord. Landlord and Tenant shall appoint their respective appraisers no
later than fifteen (15) days after the expiration of the Discussion Period and
shall designate the appraisers so appointed by notice to the other party. The
two appraisers so appointed and designated shall appoint the Neutral Appraiser
no later than fifteen (15) days after the end of the Discussion Period and
shall designate such appraiser by notice to Landlord and Tenant. The Neutral
Appraiser shall then choose either the Landlord’s estimate of Fair Market Rent
or the Tenant’s estimate of Fair Market Rent as the Fair Market Rent of the
space in question as of the commencement of the Extension Term and shall notify
Landlord and Tenant of its determination no later than sixty (60) days after
the end of the Discussion Period. The Fair Market Rent of the subject space
determined in accordance with the provisions of this Section shall be
deemed binding and conclusive on Tenant and Landlord. Notwithstanding the
foregoing, if either party shall fail to appoint its appraiser within the
period specified above (such party referred to hereinafter as the “failing
party”) the other party may serve notice on the failing party requiring the
failing party to appoint its appraiser within ten (10) days of the giving of
such notice and if the failing party shall not respond by appointment of its
appraiser within said (10) day period, then the appraiser appointed by the
other party shall be the sole appraiser whose choice of either the Landlord’s
or the Tenant’s estimate of Fair Market Rent shall be binding and conclusive
upon Tenant and Landlord. All times set forth herein are of the essence.

 

54

 

EXHIBIT F

 

TENANT’S
WORK AGREEMENT

 

This Tenant Work Agreement (the “Agreement”) is attached to and made a
part of that certain lease (“Lease”) of even date herewith, by and between
California State Teachers’ Retirement System (“Landlord”) and Cubist
Pharmaceuticals, Inc. (“Tenant”). The terms used in this Agreement that are
defined in the Lease shall have the same meanings as provided in the Lease.

 

1.                                       General

 

1.1                                 Purpose.  This Agreement sets forth the
terms and conditions governing Tenant’s construction of tenant improvements to
be installed in the Premises (the “Initial Alterations”).

 

1.2                                 Construction Representatives. 
Landlord hereby appoints and Tenant hereby approves the following person
as Landlord’s representative (“Landlord’s Representative”) to act for Landlord
in all matters regarding the Initial Alterations and Tenant hereby appoints and
Landlord hereby approves the following person as Tenant’s representative
(“Tenant’s Representative”) to act for Tenant in all matters regarding the
Initial Alterations:

 

	
  Landlord’s
  Representative:

  	
   

  	
  Tenant’s Representative

  
	
   

  	
   

  	
   

  
	
  Deke
  Schultze

  	
   

  	
  Steve
  Lewis

  
	
  c/o
  Clarion Really Services

  	
   

  	
  c/o
  Cubist Pharmaceuticals, Inc.

  
	
  880
  Winter Street

  	
   

  	
  65
  Hayden Avenue

  
	
  Waltham,
  MA 02451

  	
   

  	
  Lexington,
  MA 02421

  
	
  Phone
  (781) 522-0312

  	
   

  	
  Phone
  (781) 860-8365

  

 

All inquiries, requests, instructions, authorizations or other
communications with respect to the Initial Alterations shall be made to
Landlord’s Representative or Tenant’s Representative, as the case may be.
Authorizations made by Tenant’s Representative shall be binding and Tenant
shall be responsible for all costs authorized by Tenant’s Representative.
Either party may change its representative at any time by written notice to the
other party. Landlord shall not be obligated to respond to or act upon any
plan, drawing, change order approval or other matter relating to the Initial
Alterations until it has been executed by Tenant’s Representative.

 

2.                                       Initial Alterations Allowance.

 

2.1                                 Allowance for Initial Alterations. Tenant shall receive as a credit against
the costs associated with the design and construction of the Initial
Alterations an amount up to $433,300.00 ($28.00 per rentable square foot of the
Premises) (the “Allowance”). Landlord shall pay the cost of design and
construction of the Initial Alterations directly to Tenant or, at Tenant’s
option, to Tenant’s architect or Tenant’s general contractor, as the case may
be. All costs of the Initial Alterations in excess of the Allowance shall be
payable by Tenant. Landlord shall

 

55

 

have no obligations to pay, reimburse or allow Tenant any right of offset
to the extent of any unspent portion of the Allowance. The costs of the Initial
Alterations may only include all actual costs expended in connection with the
construction of the Initial Alterations, including the (i) architectural and
engineering fees incurred in connection with the preparation of the Tenant’s
Plans; (ii) governmental agency plan check, permit and other fees (including
any code compliance changes required by any governmental entity or authority
having jurisdiction thereof); (iii) sales and use taxes, if any; (iv) insurance
fees associated with the construction of the Initial Alterations; (v) testing
and inspecting costs; and (vi) the actual costs and charges for material and
labor, contractor’s profit and contractor’s general overhead incurred in
constructing the Initial Alterations, including Landlord’s administrative fee,
which shall be two percent (2%) of such cost of the Initial Alterations.

 

In the event that Tenant does not use the entire Allowance for the
Initial Alterations, Tenant may apply any unused portion of the Allowance
towards the cost of furniture, fixtures, equipment, and date cabling. In the
event Tenant does not use the entire Allowance by January 1, 2005, and
invoice Landlord for the Initial Alterations by March 1, 2005, any unused
amount shall accrue to the sole benefit of Landlord, it being understood that
Tenant shall not be entitled to any credit, abatement or other concession in
connection therewith.

 

2.2                                 Disbursement of Allowance for Initial
Alterations. The Allowance
shall be paid by Landlord to Tenant within thirty (30) calendar days after the
last to occur of: (i) final completion and acceptance of the Initial
Alterations by Landlord’s Representative after completion of all punch list
items; (ii) acceptance of the Initial Alterations by all governmental agencies
having authority therefore and issuance of a certificate of occupancy; (iii)
Tenant’s delivery to Landlord of final mechanic’s lien releases from Tenant’s
subcontractors, laborers, materialmen and suppliers with respect to the Initial
Alterations in the form of Schedule I attached
hereto and made a part hereof; (iv) Tenant’s delivery to Landlord of receipted
bills covering all labor and materials expended and used in the Initial
Alterations; (v) delivery to Landlord of sworn contractor’s affidavit from the
general contractor and a request to disburse from Tenant containing an approval
by Tenant of the work done; (vi) delivery to Landlord of as-built plans of the
Initial Alterations; and (vii) delivery to Landlord of certification of
Tenant’s architect that the Initial Alterations have been installed in a good
and workmanlike manner in accordance with the approved plans, and in accordance
with the applicable laws, codes and ordinances. The Allowance shall be
disbursed in the amount reflected on the receipted bills meeting the
requirements above. Notwithstanding the foregoing, Landlord is not obligated to
disburse during an uncured default under the Lease.

 

In the event that any mechanic’s lien is recorded against the Building
or Premises or any stop notices are served on Landlord during the course of the
Initial Alterations, then Landlord shall have the right to withhold from the
Allowance a sum equal to one hundred fifty percent (150%) of the disputed amount.
Landlord shall have the right to make payment of the disputed sum directly to
the claimant to cause the release of any mechanic’s lien that has been filed
against the Building

 

56

 

or Premises or to cause the release of any stop notice served on
Landlord where said lien has not been removed by the recordation of either a
release of mechanic’s lien or a statutory lien release bond issued by a
corporate surety reasonably acceptable to Landlord within ten (10) business
days following the date Tenant receives notice of filing of the mechanic’s lien
or Landlord’s receipt of the stop notice.

 

3.                                       Design and Schedule.

 

3.1                                 Tenant Plans for Initial Alterations.

 

(a)                                  Space Plan:    The “Space Plan” as used herein shall mean a plan containing,
among other things, a partition layout, door location and some furniture
located in key spaces within the Premises.

 

(b)                                 Construction Drawings and
Specifications:  The “Construction
Drawings and Specifications” as used herein shall mean the construction working
drawings, the mechanical, electrical and other technical specifications, and
the finishing details, including wall finishes and colors and technical and
mechanical equipment installation, if any, all of which details the installation
of the Initial Alterations in the Premises. 
The Construction Drawings and Specifications shall:

 

(i)                                     be compatible with the Building shell, and
with the design, construction and equipment of the Building;

 

(ii)                                  comply with all applicable laws, codes and
ordinances including the Americans With Disabilities Act, and the rules and
regulations of all governmental authorities having jurisdiction;

 

(iii)                               comply with all applicable insurance
regulations and the requirements of the Board of Underwriters for a fire
resistant Class A building; and

 

(iv)                              include locations of all Initial Alterations
including complete dimensions.

 

(c)                                  Except as specified by Landlord pursuant to
Section 8 hereof, all Initial Alterations, whether covered by the
Allowance or not, which is permanently affixed to the Premises or alters the
operational systems of the Building shall become the property of Landlord upon
expiration or earlier termination of the Lease and shall remain on the Premises
at all times during the term of the Lease, unless otherwise directed by the
Landlord.

 

3.2                                 Approvals by Landlord.  The
Space Plan and all Construction Drawings and Specifications for the Initial
Alterations shall be subject to Landlord’s prior written approval, which shall
not be unreasonably withheld, except that Landlord

 

57

 

shall have complete discretion with regard to granting or withholding
approval of Construction Drawings and Specifications to the extent they impact
the Building’s structure or systems, affect future marketability of the
Building or would be visible from the common areas or exterior of the Building.
Any changes, additions or modifications that Tenant desires to make to the
Tenant Plans shall also be subject to Landlord’s prior written approval, which
shall not be unreasonably withheld except as provided above for Building
structure, system or appearance impact.

 

4.                                       Construction of Initial Alterations. Following Landlord’s final approval of the
Tenant Plans and Tenant obtaining permits, Tenant shall commence and diligently
proceed with the construction of the Initial Alterations. Landlord and Tenant
acknowledge that Tenant shall hire its own general contractor or contractors to
complete the Initial Alterations subject to Landlord’s approval. The Initial
Alterations shall be conducted with due diligence, in a good and workmanlike
manner befitting a first class office building, and in accordance with the
Tenant Plans and all applicable laws, codes, ordinances and rules and regulations
of all governmental authorities having jurisdiction.

 

Tenant hereby agrees to indemnify Landlord and hold Landlord harmless
from any and all claims for personal or bodily injury and property damage that
may arise from the performance of the Initial Alterations, whether resulting
from the negligence or willful misconduct of its general contractors,
subcontractors or otherwise. Tenant and its contractors and subcontractors
shall execute such additional documents as Landlord deems reasonably appropriate
to evidence said indemnity.

 

Notwithstanding the foregoing, Tenant shall not commence the Initial
Alterations until the following is provided:

 

(a)                                  Insurance. Prior to construction, Tenant shall provide Landlord with an original
certificate of All Risk Builder’s Risk Insurance (the “Builder’s Risk Insurance
Policy”), subject to Landlord’s reasonable approval, in the minimum amount of
the replacement cost of the Initial Alterations issued by a company or
companies acceptable to Landlord pursuant to the requirements of
Section 6.1.9 of the Lease, covering the Premises, with premiums prepaid,
and which names the Landlord as an additional insured. Said policy shall insure
the Initial Alterations and all materials and supplies for the Initial
Alterations stored on the Premises (or at any other sites) against loss or
damage by fire and the risks and hazards insured against by the standard form
of extended coverage, and against vandalism and malicious mischief, and such
other risks and hazards as Landlord may reasonably request. Said insurance
coverage shall be for 100% of replacement cost, including architectural fees.
The Builder’s Risk Insurance Policy shall contain a provision that the
insurance company waive the rights of recovery or subrogation against Landlord,
its agents, servants, invitees, employees, co-Tenants, co venturers, affiliate
companies, and their insurers.

 

58

 

(b)                                 Governmental Permits. 
Building permits and other appropriate permits and licenses from the
appropriate agency or office of any governmental or regulatory body having
jurisdiction over the Premises and which are required for the construction of
the Initial Alterations.

 

(c)                                  Additional Insurance. Additional insurance in the form of and
meeting the requirements of Section 6.1.8 and Section 6.1.9 of the
Lease.

 

(d)                                 Accepted Bid. Tenant shall provide Landlord with a copy
of the general contractor bid selected (the “Accepted Bid”), including the name
of the general contractor and all subcontractors, materialmen and suppliers,
for Landlord’s approval thereof.

 

5.                                       Change Orders.  If
Tenant requests any change or addition to or subtraction from the Initial
Alterations (“Change Order”) after Tenant’s and Landlord’s approval of the
final and complete Construction Drawings and Specifications for the Initial
Alterations, Landlord shall respond to Tenant’s request for consent as soon as
possible, but in no event later than five (5) business days after being
made.  Any changes, additions or
modifications that Tenant desires to make to the Tenant Plans shall not be
unreasonably withheld, except that Landlord shall have complete discretion with
regard to granting or withholding approval for Building structure, system or
appearance as provided in Section 3.2 above.

 

6.                                       Cooperation With Other Tenants. Tenant shall promptly remove from the
common areas any of Tenant’s vehicles, equipment, materials, supplies or other
property deposited in the common areas during the construction the Initial
Alterations. Further, Tenant shall at no time disrupt or allow disruption to
any existing tenant’s parking vehicles and pedestrian access, nor allow
disruptions of mechanical, electrical, telephone and plumbing services.  In addition, Tenant shall not interrupt the
normal business operation of any other tenant at the Building.

 

7.                                       Inspection by Landlord. Landlord shall have the right to inspect
the Initial Alterations at all reasonable times upon prior notice to Tenant.
Landlord’s failure to inspect the Initial Alterations shall in no event
constitute a waiver of any of Landlord’s rights hereunder nor shall Landlord’s
inspection of the Initial Alterations constitute the Landlord’s approval of
same.

 

8.                                       Removal of Specialized Tenant Improvements. Portions of the Initial Alterations, if
any, as reasonably determined by Landlord to be specialized improvements (i.e.
Liebert units, computer rooms, auditoriums, laboratories, wiring, cabling,
etc.), shall, at the election of Landlord, either be removed by Tenant at its
expense before the expiration of the term or shall remain upon the Premises and
be surrendered therewith at the expiration date or earlier termination of this
Lease as the property of Landlord without disturbance, molestation or injury.
If Landlord requires the removal of all or part of said specialized Tenant
improvements, Tenant, at its expense, shall repair any damage to the Premises
or the Building caused by such removal and restore the Premises to its
condition prior to the installation of such specialized Tenant improvements.  If Tenant fails to remove said

 

59

 

specialized Tenant improvements upon
Landlord’s request, then Landlord may (but shall not be obligated to) remove
the same and the cost of such removal, repair and restoration, together with
any and all damages which Landlord may suffer and sustain by reason of the
failure of Tenant to remove the same, shall be charged to Tenant and paid upon
demand.

 

9.                                       Completion
of Initial Alterations. Tenant shall notify Landlord in writing when the
Initial Alterations have been substantially completed. Landlord shall thereupon
have the opportunity to inspect the Premises in order to determine if the
Premises have been substantially completed in accordance with the Tenant Plans.
If the Initial Alterations have not been substantially completed in accordance
with the Tenant Plans, Landlord shall provide Tenant with written notification
of the items deemed incorrect or incomplete. Tenant shall forthwith proceed to
correct the incorrect or incomplete items. Notwithstanding anything to the
contrary, the Initial Alterations shall not be considered suitable for review
by Landlord until all designated or required governmental inspections, permits
and certifications necessary for the Initial Alterations, including, but not
limited to a permanent certificate of occupancy, have been made, given and/or
posted.

 

IN WITNESS WHEREOF, Landlord and Tenant have
executed this Agreement for the Premises as of the      day of 
        , 2004.

 

	
   

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  CALIFORNIA STATE TEACHERS’

  RETIREMENT SYSTEM, a public entity

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
  CLARION PARTNERS, LLC

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
  a New York limited liability company,

  
	
   

  	
   

  	
   

  	
  its Authorized Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Stephen Latimer

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Stephen Latimer

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Authorized Person

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  CUBIST PHARMACEUTICALS, INC.

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Steve Lewis

  	
   

  	
   

  	
  By:

  	
  /s/ David W. J. McGirr

  
	
  Name:

  	
  STEVE LEWIS

  	
   

  	
   

  	
  Name:

  	
  David W. J. McGirr

  
	
   

  	
   

  	
  Title:

  	
  SVP & CFO

  
	
   

  	
   

  	
  Hereunto duly authorized

  
															

 

60

 

SCHEDULE I

 

CONTRACTOR’S
AFFIDAVIT AND FINAL RELEASE OF LIEN

 

1.                                       Contractor, pursuant to a contract,
hereinafter referred to as “Contract”, with
                 ,
the Tenant of
                 ,
hereinafter referred to as “Owner”, has heretofore furnished, or caused to be
furnished, labor, material and services for the construction of certain
improvements located on the
                 
floor of the building known as                  
, on property more particularly described on EXHIBIT A  attached hereto.

 

2.                                       Contractor represents that all work to be
performed under the Contract has been fully completed and that all persons and
firms who furnished material, labor and/or services incident to the final
completion of said work have been paid in full.

 

3.                                       The undersigned affiant, for and in
consideration of final payment to him in the amount of
                 
($                 ),
and all previous payments paid by Tenant to Contractor, does hereby for and on
behalf of the Contractor fully waive, release, remise and relinquish the
Contractor’s right to claim, demand or impose a lien or liens for work done or
materials and/or services furnished or any other class whatsoever, on any of
the premises owned by Owner on which improvements have been completed in
connection with the Contract.  This
final release of lien is contingent upon clearance of all funds paid to
Contractor for construction of the improvements.

 

4.                                       The affiant herein does hereby represent that
he has authority to execute a final release of lien for and on behalf of the
Contractor as set forth above.

 

5.                                       This Contractor’s Affidavit and Final Release
of Lien is made by affiant with full knowledge of the applicable laws of the
state of
                 .  In addition to such rights as may be
afforded to Owner under such applicable laws, affiant expressly agrees to
indemnify and save Owner harmless from any and all actual costs and expenses,
including reasonable attorney’s fees, arising out of claims by laborers,
subcontractors or materialmen who might claim that they have not been paid for
services or material furnished by or through the Contractor in connection with
the work performed under the Contract.

 

I hereby acknowledge that the statements contained herein are true and
correct.

 

Dated this
                 
day of
                 ,
200                 .

 

	
   

  	
  CONTRACTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

61

 

	
  COMMONWEALTH OF

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  COUNTY OF

  	
  §

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Sworn to and subscribed before me this
            day
  of             ,
  200     .

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public in and for

  
	
   

  	
   

  	
  the State of

  	
   

  	
   

  
	
   

  	
   

  	
  My commission expires:

  	
   

  
								

 

62

 

EXHIBIT G

 

RIGHT OF
FIRST OFFER

 

Provided the original Tenant named herein or a Permitted Affiliate is
itself occupying the entire Premises at the time of giving its notice to accept
its offer and at the time of delivery of the First Offer Space (as herein defined)
to Tenant, Tenant shall have a one time right of first offer for each of the
following spaces which may now be or hereafter may become vacant and available
(the “First Offer Space”):

 

1.                                       19,058 rentable square feet of space located
on the second floor of the Building with an expected availability on
December 1, 2004 (“Offer Space 1”);

 

2.                                       12,046 rentable square feet of space located
on the first floor of the Building with an expected availability on
April 16, 2005 (“Offer Space 2”);
and

 

3.                                       31,453 rentable square feet of space located
on the fourth floor of the Building with an expected availability on
January 1, 2006 (“Offer Space 3”).

 

The one time right and option to so expand the Premises shall be
personal to the Tenant executing this Lease and such right and option may not
be assigned or transferred to any other party or entity. Landlord, by written
notice (“First Offer Notice”),
shall advise Tenant of the availability of any of the First Offer Space.
Landlord may deliver the First Offer Notice at any time that Landlord
determines the expected availability of any portion of the First Offer Space.

 

Offer Space 1 and Offer Space 2 shall be offered to Tenant at the same
per square foot Annual Rent, Annual Operating Costs, Real Estate Taxes and any
other additional rent or charges (subject to applicable increases in Tenant’s
proportionate share) as is then in effect under this Lease (subject to all
increases set forth in this Lease). Provided that Tenant has not satisfied all
of the Financial Conditions as set forth in Article XI of the Lease, the
Security Deposit for Offer Space 1 and Offer Space 2 shall be increased by the
amount of one (1) year’s Annual Rent for such Offer Space 1 or Offer Space 2,
as the case may be. The term for Offer Space 1 and Offer Space 2 shall be
co-terminous with the Term of this Lease. In no event shall Tenant be entitled
to any periods of free rent in connection with Offer Space 1 or Offer Space 2.
Tenant shall be entitled to an improvement allowance for Offer Space 1 and Offer
Space 2 which shall be subject to the terms and conditions of Tenant’s Work
Agreement attached hereto as Exhibit F (except
with regard to the dates by which the allowance must be used and invoiced). The
amount of the improvement allowance for Offer Space 1 and Offer Space 2 shall
be the product of $28.00 multiplied by a fraction the numerator of which is
number of full months remaining in the Term of this Lease at the time of rent
commencement for the applicable First Offer Space and the denominator of which
is sixty-six (66), multiplied by the number of rentable square feet in the
applicable First Offer Space (By way of an example, if fifty-six (56) months of
the Term remain upon the rent commencement date for Offer Space 1, the
improvement allowance for Offer Space 1 shall be: $28 x 56/66 = 23.8 x 19,058
s.f. = $453,580.40)

 

With respect to Offer Space 3, Landlord’s First Offer Notice shall
advise Tenant of the rental rate, required security deposit and terms upon
which it is willing to lease Offer Space 3 on the open market. If Tenant does
not accept Landlord’s offer for Offer Space 3 as required

 

63

 

hereunder,
then for the period of twelve (12) months after the date of the First Offer
Notice, Landlord may not enter into a lease for such Offer Space 3 pursuant to
which there is a reduction of monetary terms of more than ten (10%) percent
from the annual rent set forth in the First Offer Notice without again having
to offer Offer Space 3 to Tenant. In the event that during such twelve (12)
month period Landlord receives a third party offer for Offer Space 3 pursuant
to which there is a reduction of monetary terms of more than ten (10%) percent
from the annual rent set forth in the First Offer Notice, then Landlord shall
provide Tenant a notice of such terms (a ‘Second
Offer Notice”) and Tenant shall have ten (10) days after receipt of
such Second Offer Notice within which to deliver acceptance of such offer. If
Tenant fails to accept such new offer as set forth in the Second Offer Notice
within such ten (10) day period, Tenant shall have waived such offer set forth
in the Second Offer Notice, time being of the essence, and Landlord shall be
free to rent Offer Space 3 on the terms set forth in such Second Offer Notice
or on any greater monetary terms than the terms set forth in said Second Offer
Notice. In any event, after such twelve (12) month period, Landlord shall be
free to lease Offer Space 3 to any party on any terms.

 

Landlord, at its election, may increase the Security Deposit hereunder
upon Tenant’s acceptance of any First Offer Space.

 

Tenant shall have thirty (30) days after receipt of any First Offer
Notice within which to deliver written acceptance of such offer to Landlord. If
an event of default, or event which with the giving of notice or the passage of
time, or both, would constitute a default, exists at the time Tenant accepts
such offer or at the time of delivery of any portion of the First Offer Space
to Tenant, Tenant’s exercise of such offer shall, at the option of Landlord, be
null and void and of no further force and effect. In the event Tenant exercises
its right to any portion of the First Offer Space, Landlord and Tenant hereby
agree to amend those provisions of this Lease which are affected by the
exercise of such right. If Tenant shall fail to give timely written notice of
the acceptance of such offer for Offer Space 1 as aforesaid, Tenant shall have
waived such offer for the remainder of the Term, time being of the essence of
the foregoing provisions. If Tenant shall fail to give timely written notice of
the acceptance of such offer for Offer Space 2 as aforesaid, Tenant shall have
waived such offer for the remainder of the Term, time being of the essence of
the foregoing provisions. If Tenant shall fail to give timely written notice of
the acceptance of such offer for Offer Space 3 as aforesaid, Tenant shall have
waived such offer for the remainder of the Term, time being of the essence of
the foregoing provisions. After Tenant takes possession of any portion of the
First Offer Space, the term “Premises,” as used in this Lease, shall be deemed
to refer to and include the First Offer Space so accepted. Tenant’s rights
hereunder are subject to the right of Landlord or any partner, affiliate or
subsidiary of Landlord to occupy the First Offer Space and the rights of other
tenants in the Building to the First Offer Space that exist as of the date of
this Lease. Tenant’s rights hereunder shall be applicable only during the
Original Term.

 

64

 

EXHIBIT H

 

LIST OF
HOLIDAYS

 

•                  New
Year’s Day

•                  Memorial
Day

•                  Fourth
of July

•                  Labor
Day

•                  Thanksgiving
Day

•                  Day
after Thanksgiving

•                  Christmas

 

65Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT (the “Agreement”) is made as
of the 6th day of May, 2004 (the “Effective Date”) by and between NTL
Incorporated, a Delaware corporation (the “Company”), and Simon Duffy (the
“Executive”).

 

WHEREAS, the Company and the Executive have
entered into an employment agreement, made as of March 19, 2003 (the
“Existing Agreement”); and

 

WHEREAS, on August 15, 2003, the
Executive became Chief Executive Officer of the Company; and

 

WHEREAS, the parties intend that (i) the
Executive will reside in the United Kingdom and perform duties on behalf of the
consolidated enterprise as its President and Chief Executive Officer while
present in the United Kingdom, particularly with regard to the United Kingdom
businesses, and (ii) he will also travel to the United States where he will
perform duties on behalf of the Company as its President and Chief Executive
Officer, in each case upon the terms and conditions of this Agreement; and

 

WHEREAS, the Company and the Executive wish to
enter into a new employment agreement superseding the Existing Agreement.

 

NOW, THEREFORE, in consideration of the
mutual covenants contained herein, the parties hereto agree as follows:

 

1.                                       Effectiveness.  This Agreement shall become effective as of
the Effective Date.

 

 

2.                                       Employment
Term.

 

(a)                                  The term of the
Executive’s employment pursuant to this Agreement shall commence on
January 16, 2004 and shall end on January 15, 2007, unless the
employment terminates earlier pursuant to Section 7 of this Agreement (the
“Employment Term”).  The Employment Term
may be extended by mutual agreement of the Company and the Executive, provided
that the Company shall give the Executive at least 60 days’ notice prior to
January 15, 2007 if it does not intend to seek an extension of the
Employment Term.  Failure to provide
such notice shall not constitute a Termination Without Cause or Constructive
Termination Without Cause.  The
Executive’s period of continuous employment for statutory purposes commenced on
March 31, 2003.

 

(b)                                 Title; Duties.  The Executive shall serve as the Company’s
Chief Executive Officer.  He shall
perform such duties, services and responsibilities as are reasonably requested
from time to time by the Board of Directors of the Company (the “Board”) and as
are normal and customary for the Chief Executive Officer position on behalf of
the Company and the Company Affiliated Group (as hereinafter defined),
recognizing for this purpose that the Company’s current Chairman of the Board,
James L. Mooney,  is an employee of the
Company and performs significant management services with respect to the
Company.  The Executive will report to
the Board.  During the Employment Term,
the Executive shall be based in the United Kingdom but shall undertake such
overseas travel as is necessary for the proper performance of his duties
hereunder.

 

2

 

During the Employment Term, the Executive
shall devote substantially all of his time to the performance of the
Executive’s duties hereunder.  During
the Employment Term, the Executive will not, without the prior written approval
of the Board, engage in any other business activity which interferes in any
material respect with the performance of the Executive’s duties hereunder or
which is in violation of written policies established from time to time by the
Company.  Nothing contained in this
Agreement shall preclude the Executive from devoting a reasonable amount of
time and attention during the Employment Term to (i) serving as a non-executive
director, trustee or member of a committee of up to two for-profit
organizations; (ii) engaging in charitable and community activities; and (iii)
managing personal and family investments and affairs, so long as any activities
of the Executive which are within the scope of clause (i), (ii) or (iii) of
this Section 2(b) do not interfere in any material respect with the
performance of the Executive’s duties hereunder.

 

3.                                       Monetary
Remuneration.

 

(a)                                  Base Salary.  During the Employment Term, in consideration
of the performance by the Executive of the Executive’s obligations hereunder to
the Company and its parents, subsidiaries, associated and affiliated companies
and joint ventures (collectively, the “Company Affiliated Group”) in any capacity
(including any services as an officer, director, employee, member of any Board
committee or management committee or otherwise), the Company shall cause to be
paid to the Executive an annual salary of £500,000 (the “Base Salary”), which
shall accrue on a daily basis.  The Base
Salary shall be payable in accordance with normal payroll practices in effect
from time

 

3

 

to time for senior management. 
The Executive shall receive no additional compensation for services that
he provides to the Company Affiliated Group other than as set forth herein.

 

(b)                                 Annual Cash Bonus.  During each fiscal year of the Company that
the Employment Term is in effect, the Executive shall be eligible to earn a
cash bonus in the sole discretion of the Board (the “Annual Cash Bonus”).  For the fiscal year ending December 31,
2004, the Executive shall participate in the NTL Group 2004 Bonus Scheme with
bonus eligibility of 100% of the Base Salary payable if the “target”
performance is achieved, and up to a maximum bonus of 200% of the Base Salary
if the “target” is exceeded.

 

(c)                                  Signing Bonus.  As soon as practicable after the Effective
Date, the Company shall cause to be paid to the Executive a lump sum payment
(representing (1) a retroactive salary increase effective August 15, 2003
from £385,000 to £500,000 and (2) and a pro-rata increase of the Executive’s
2003 bonus) of £153,542  (with £32,841 thereof to be paid in shares
of common stock).

 

4.                                       Equity-Based
Compensation.

 

On the day following the Company’s 2004
regularly scheduled annual meeting, the Company and the Executive shall enter
into the Stock Option Agreement substantially in the form attached hereto as
Exhibit A.

 

5.                                       Benefits.

 

(a)                                  During the Employment
Term, the Executive shall be entitled to participate in all of the employee
benefit plans, programs, policies and arrangements

 

4

 

(including fringe benefit and executive perquisite programs and
policies) made available by the Company Affiliated Group to, or for the benefit
of, its executive officers in accordance with the terms thereof as they may be
in effect from time to time, in so far as such benefits are capable of being
provided in the United Kingdom.

 

(b)                                 Reimbursement of Expenses.  During the Employment Term, the Company
shall cause the Executive to be reimbursed for all reasonable business expenses
incurred by the Executive in carrying out the Executive’s duties, services and
responsibilities under this Agreement, so long as the Executive complies with
the general procedures of the Company Affiliated Group for submission of
expense reports, receipts or similar documentation of such expenses applicable
to senior management generally.

 

(c)                                  Car Allowance.  For each full twelve month period during the
Employment Term, the Company shall cause to be paid to the Executive £10,620 as
a car allowance.

 

(d)                                 Pension.  For each full twelve month period during the
Employment Term, the Company shall cause a contribution of 20% of Base Salary
to be made to an agreed-upon pension scheme, and, to the maximum extent
possible, such contribution shall be made to a pension scheme approved by the
Inland Revenue.  In addition, to the
extent it has not already done so, the Company shall, for the period from
April 1, 2003 to the Effective Date, cause a contribution of 20% of base
salary to be made to the agreed-upon pension scheme at a rate of annual base
salary of £385,000 for the period from April 1, 2003 through
August 15, 2003, and at a rate of

 

5

 

annual base salary of £500,000 for the period from August 15, 2003
through the Effective Date.  All such
contributions shall be subject to the applicable Inland Revenue rules and other
applicable law, and, to the extent any such contribution cannot be made to such
pension scheme under applicable Inland Revenue rules or applicable law, it
shall be made as directed by the Executive.

 

6.                                       Vacations.  For each full twelve month period during the
Employment Term, the Executive shall be entitled, in addition to public and
statutory holidays, to 28 days of paid vacation (prorated for any partial
calendar year), to be credited and taken in accordance with the policy of the
Company Affiliated Group as in effect from time to time for its executive
officers.

 

7.                                       Termination;
Severance.

 

(a)                                  Termination of
Employment.  The Company may
terminate the employment of the Executive without Cause upon 30 days’ written
notice to the Executive (save that the Company will not terminate the
Executive’s employment on ill health grounds where any entitlement to or
benefit of a permanent health scheme would be forfeited by reason of such
termination).  The Company may (at its
discretion) at any time following the giving of such notice (but not exceeding
the length of the notice given) cease to provide work for the Executive in
which event during such notice period the other provisions of this Agreement
shall continue to have full force and effect but the Executive shall not be
entitled to access to any premises of the Company or of any member of the
Company Affiliated Group.  In addition,
the employment of the Executive shall automatically terminate as of the date on
which the Executive dies or (except where

 

6

 

such termination would have the effect of forfeiting the Executive’s
entitlement to or benefit of a permanent health scheme) is Disabled.  For purposes of this Agreement, the
Executive shall be “Disabled” as of any date if, as of such date, the Executive
has been unable, due to physical or mental incapacity, to substantially perform
the Executive’s duties, services and responsibilities hereunder either for a
period of at least 180 consecutive days or for at least 270 days in any consecutive
365-day period, whichever may be applicable. 
Upon termination of the Executive’s employment because the Executive
dies or is Disabled, the Company shall cause the Executive (or the Executive’s
estate, if applicable) to be provided with death or disability benefits (as
applicable) pursuant to the plans, programs, policies and arrangements of the
Company Affiliated Group as are then in effect with respect to executive
officers.  In addition, upon any
termination of the Executive’s employment, the Company shall cause to be paid
to the Executive any earned but unpaid portion of the Base Salary and Annual
Cash Bonus for previous fiscal years. 
Immediately following termination of the Executive’s employment for any
reason, the Employment Term shall terminate.

 

(b)                                 Termination Without
Cause; Constructive Termination Without Cause.  Upon a Termination Without Cause or a Constructive Termination
Without Cause, the Company shall, as soon as practicable following the
Executive’s execution and delivery to the Company of the general release of
claims set forth in Section 7(f) and following the expiration of any
applicable revocation period, cause the Executive to be paid a lump-sum
severance payment of cash equal to the product of the Base Salary times

 

7

 

3.  This sum shall be subject to
deductions for income tax and national insurance contributions.

 

(c)                                  Termination upon
Non-Renewal of the Employment Term. 
If (i) the Employment Term shall expire on January 15, 2007, (ii)
the Executive’s employment hereunder shall terminate between January 16,
2007 and January 31, 2007 and such termination is not a termination by the
Company for a reason which would constitute Cause or by reason of the Executive
having died or becoming Disabled and (iii) the Company has not offered in
writing to extend the Employment Term for one year pursuant to a written
agreement on substantially the same terms, or terms more favorable to the
Executive, as the terms of this Agreement, then the Company shall, as soon as
practicable following the Executive’s execution and delivery to the Company of
the general release set forth in Section 7(f) and following the expiration
of any applicable revocation period, cause the Executive to be paid a lump-sum severance
payment of cash equal to the product of the Base Salary times 2, which sum
shall be subject to deductions for income tax and national insurance
contributions. For avoidance of doubt, during the period contemplated by clause
(ii) of the preceding sentence, the Executive shall continue to receive the
compensation and employee benefits that he was receiving immediately prior to
the expiration of the Employment Term.

 

(d)                                 Upon a termination of
the Executive’s employment by the Company for Cause, or upon termination by the
Executive with 30 days’ written notice given to the Company (other than a
Constructive Termination Without Cause), the Executive shall be

 

8

 

entitled to earned but unpaid Base Salary and benefits through the date
of termination, and the Executive shall not be entitled to any other payments
or benefits.

 

(e)                                  Upon any termination
of the Executive’s employment other than by the Company for Cause, the
Executive and his family shall be entitled to continued medical benefits under
(and in accordance with the terms of) the Company’s benefit plans for 1 year
from the date of termination.

 

For purposes of this Agreement:

 

(i)                                     A “Constructive
Termination Without Cause” means a termination of the Executive’s
employment during the Employment Term by the Executive following the occurrence
of any of the following events without the Executive’s prior consent: (A)
failure by the Company to continue the Executive as the Company’s Chief
Executive Officer (excluding a promotion) and as a member of the Board; (B) any
material diminution in the Executive’s working conditions, responsibilities or
authorities; (C) assignment to the Executive of duties that are inconsistent,
in a material respect, with the scope of duties and responsibilities associated
with his position as described in Section 2(b) hereof, recognizing for
this purpose that the Company’s current Chairman of the Board, James L.
Mooney,  is an employee of the Company
and performs significant management services with respect to the Company; (D)
any change that causes the Executive to no longer report to the Board; (E) the
failure of the Company to maintain commercially reasonable directors’ and
officers’ liability insurance; (F) a material breach by the Company (or any
member of the Company Affiliated Group) of a fundamental term of this
Agreement; or (G) a Change in

 

9

 

Control occurs and during the period commencing on the date of the
Change in Control and ending on the first anniversary thereof the Employment
Term is not renewed.  For purposes of
this Agreement, a “Change in Control” is defined in Appendix A attached hereto,
and incorporated by reference.  The
Executive shall give the Company 10 days’ notice of the Executive’s intention
to terminate the Executive’s employment and claim that a Constructive
Termination Without Cause (as defined in (A), (B), (C), (D), (E), (F) or (G)
above) has occurred, and such notice shall describe the facts and circumstances
in support of such claim in reasonable detail. 
The Company shall have 10 days thereafter to cure such facts and
circumstances if possible, failing which the Executive’s employment shall
terminate.

 

(ii)                                  A “Termination
Without Cause” means a termination of the Executive’s employment during the
Employment Term by the Company other than for Cause.

 

(iii)                               “Cause” means (x)
the Executive is convicted of any criminal offence including fraud or breach of
trust; (y) the willful or continued failure of the Executive to perform the
Executive’s material duties hereunder (other than as a result of physical or
mental illness); and (z) in carrying out the Executive’s duties hereunder, the
Executive has engaged in conduct that constitutes gross neglect or willful misconduct,
unless the Executive believed in good faith that such conduct was in, or not
opposed to, the best interests of the Company and each member of the Company
Affiliated Group.  The Company shall
give the Executive 10 days’ notice of the Company’s intention to terminate the
Executive’s employment and claim that facts and circumstances

 

10

 

constituting Cause exist, and such notice shall describe the facts and
circumstances in support of such claim. 
The Executive shall have 10 days thereafter to cure such facts and
circumstances if possible.  If the Board
reasonably concludes that the Executive has not cured such facts or
circumstances within such time, Cause shall not be deemed to have been
established unless and until the Executive has received a hearing before the
Board (if promptly requested by the Executive) and a majority of the Board
within 10 days of the date of such hearing (if so requested) reasonably
confirms the existence of Cause and the termination of the Executive
therefor.  The Executive hereby recuses
himself from the deliberations and vote of the Board at such subsequent
meeting.

 

(f)                                    Release; Full
Satisfaction.  Notwithstanding any
other provision of this Agreement, no amount shall become payable under this
Section 7 unless and until the Executive executes a general release of
claims in form and manner reasonably satisfactory to the Company including
where relevant a release of any statutory claims, but excluding (i) any claim
for payment or benefits under this Section 7 and (ii) any claim or
entitlement with respect to stock options granted to the Executive under the
Amended and Restated NTL 2004 Stock Incentive Plan (or any other stock
incentive plan of the Company Affiliated Group), and such release has become
irrevocable; provided, that the Executive shall not be required to release any
indemnification rights.  The payments to
be provided to the Executive pursuant to this Section 7 upon termination
of the Executive’s employment shall constitute the exclusive payments in the
nature of severance or termination pay or salary continuation which shall be
due to the Executive upon a termination of employment and shall be in lieu of
any other such payments under any

 

11

 

plan, program, policy or other arrangement which has heretofore been or
shall hereafter be established by any member of the Company Affiliated Group.

 

(g)                                 Resignation as a
Director.  Upon termination of the
Executive’s employment for any reason, the Executive shall resign from the
Board and from all other boards of, and other positions with, any member of the
Company Affiliated Group, as applicable.

 

(h)                                 Cooperation
Following Termination.  Following
termination of the Executive’s employment for any reason, the Executive agrees
to reasonably cooperate with the Company upon the reasonable request of the
Board and to be reasonably available to the Company with respect to matters
arising out of the Executive’s services to any member of the Company Affiliated
Group.  The Company shall cause the
Executive to be reimbursed for, or, at the Executive’s request, cause the
Executive to be advanced, expenses reasonably incurred in connection with such
matters.

 

8.                                       Executive’s
Representation.  The Executive
represents to the Company that the Executive’s execution and performance of
this Agreement does not violate any agreement or obligation (whether or not
written) that the Executive has with or to any person or entity including, but
not limited to, any prior employer.

 

9.                                       Executive’s
Covenants.

 

(a)                                  Confidentiality.  The Executive agrees and understands that
the Executive has been, and in the Executive’s position with the Company the
Executive will be, exposed to and receive information relating to the
confidential affairs of the Company Affiliated Group, including, but not
limited to, technical information, business and

 

12

 

marketing plans, strategies, customer (or potential customer)
information, other information concerning the products, promotions,
development, financing, pricing, technology, inventions, expansion plans,
business policies and practices of the Company Affiliated Group, whether or not
reduced to tangible form, and other forms of information considered by the
Company Affiliated Group to be confidential and in the nature of trade
secrets.  The Executive will not
knowingly disclose such information, either directly or indirectly, to any
person or entity outside the Company Affiliated Group without the prior written
consent of the Company; provided, however, that (i) the Executive shall have no
obligation under this Section 9(a) with respect to any information that is
or becomes publicly known other than as a result of the Executive’s breach of
the Executive’s obligations hereunder and (ii) the Executive may (x) disclose
such information to the extent he determines that so doing is reasonable or
appropriate in the performance of the Executive’s duties or, (y) after giving
prior notice to the Company to the extent practicable, under the circumstances,
disclose such information to the extent required by applicable laws or
governmental regulations or by judicial or regulatory process.  Upon termination of the Executive’s
employment, the Executive shall promptly supply to the Company all property,
keys, notes, memoranda, writings, lists, files, reports, customer lists,
correspondence, tapes, disks, cards, surveys, maps, logs, machines, technical
data and any other tangible product or document which has been produced by,
received by or otherwise submitted to the Executive in the course of or
otherwise in connection with the Executive’s services to the Company Affiliated
Group during or prior to the Employment Term.

 

13

 

(b)                                 Non-Competition and Non-Solicitation.  During
the Employment Term and ending on the 12-month anniversary of the termination
of the Executive’s employment with the Company, the Executive shall not, as an
employee, employer, stockholder, officer, director, partner, associate,
consultant or other independent contractor, advisor, proprietor, lender, or in
any other manner or capacity (other than with respect to the Executive’s
services to the Company Affiliated Group), directly or indirectly:

 

(i)                                     perform services
for, or otherwise have any involvement with, any business unit of a person,
where such business unit competes directly or indirectly with any member of the
Company Affiliated Group by owning or operating (x) broadband communications
networks for telephone, cable television or internet services or (y)
transmission networks for television and radio broadcasting, in each case
principally in the United Kingdom or Ireland (the “Core Business”); provided,
however, that this Agreement shall not prohibit the Executive from owning up to
1% of any class of equity securities of one or more publicly traded companies;

 

(ii)                                  hire any individual
who is, or within the 12 months prior to the Executive’s termination was, an
employee of any member of the Company Affiliated Group whose base salary at the
time of hire exceeded $100,000 per year and with whom the Executive had contact
(other than on a de minimis basis); and

 

(iii)                               solicit, in competition
with any member of the Company Affiliated Group in the Core Businesses, any
business, or order of business from any person that the Executive knows was a
current or prospective customer of any member of

 

14

 

the Company Affiliated Group during the Executive’s employment and with
whom the Executive had contact.

 

(c)                                  Proprietary Rights.  The Executive assigns all of the Executive’s
interest in any and all inventions, discoveries, improvements and patentable or
copyrightable works initiated, conceived or made by the Executive, either alone
or in conjunction with others, during the Employment Term and related to the
business or activities of any member of the Company Affiliated Group to the
Company or its nominee.  Whenever
requested to do so by the Company, the Executive shall execute any and all
applications, assignments or other instruments that the Company shall in good
faith deem necessary to apply for and obtain trademarks, patents or copyrights
of the United States or any foreign country or otherwise protect the interest
of any member of the Company Affiliated Group therein.  These obligations shall continue beyond the
conclusion of the Employment Term with respect to inventions, discoveries,
improvements or copyrightable works initiated, conceived or made by the
Executive during the Employment Term.

 

(d)                                 Acknowledgment.  The Executive expressly recognizes and
agrees that the restraints imposed by this Section 9 are reasonable as to
time and geographic scope and are not oppressive.  The Executive further expressly recognizes and agrees that the
restraints imposed by this Section 9 represent a reasonable and necessary
restriction for the protection of the legitimate interests of the Company
Affiliated Group, that the failure by the Executive to observe and comply with
the covenants and agreements in this Section 9 will cause irreparable harm
to the Company Affiliated Group, that it is and will

 

15

 

continue to be difficult to ascertain the harm and damages to the
Company Affiliated Group that such a failure by the Executive would cause, that
the consideration received by the Executive for entering into these covenants
and agreements is fair, that the covenants and agreements and their enforcement
will not deprive the Executive of an ability to earn a reasonable living, and
that the Executive has acquired knowledge and skills in this field that will
allow the Executive to obtain employment without violating these covenants and
agreements.  The Executive further expressly
acknowledges that the Executive has received an opportunity to consult
independent counsel, before executing this Agreement but has chosen not to
exercise that right.

 

10.                                 Indemnification.

 

(a)                                  To the extent
permitted by applicable law, the Company shall indemnify the Executive against,
and save and hold the Executive harmless from, any damages, liabilities,
losses, judgments, penalties, fines, amounts paid or to be paid in settlement,
costs and reasonable expenses (including, but not limited to, attorneys’ fees
and expenses), resulting from, arising out of or in connection with any
threatened, pending or completed claim, action, proceeding or investigation
(whether civil or criminal) against or affecting the Executive by reason of the
Executive’s service from and after March 31, 2003 as an officer, director
or employee of, or consultant to, any member of the Company Affiliated Group,
or in any capacity at the request of any member of the Company Affiliated
Group, or an officer, director or employee thereof, in or with regard to any
other entity, employee benefit plan or enterprise (other than arising out of
the Executive’s acts of misappropriation of funds or actual fraud).  In the event the Company

 

16

 

does not compromise or assume the defense of any indemnifiable claim or
action against the Executive, the Company shall promptly cause the Executive to
be paid to the extent permitted by applicable law all costs and expenses
incurred or to be incurred by the Executive in defending or responding to any
claim or investigation in advance of the final disposition thereof; provided,
however, that if it is ultimately determined by a final judgment of a court of
competent jurisdiction (from whose decision no appeals may be taken, or the
time for appeal having lapsed) that the Executive was not entitled to indemnity
hereunder, then the Executive shall repay forthwith all amounts so
advanced.  The Company may not agree to
any settlement or compromise of any claim against the Executive, other than a
settlement or compromise solely for monetary damages for which the Company is
solely responsible, without the prior written consent of the Executive, which
consent shall not be unreasonably withheld. 
This right to indemnification shall be in addition to, and not in lieu
of, any other right to indemnification to which the Executive shall be entitled
pursuant to the Company’s Certificate of Incorporation or By-laws or otherwise.

 

(b)                                 Directors’ and
Officers’ Insurance.  The Company
shall use its best efforts to maintain commercially reasonable directors’ and
officers’ liability insurance in respect of the Executive’s appointment as a
director or officer of the Company.

 

11.                                 Miscellaneous.

 

(a)                                  Non-Waiver of
Rights.  The failure to enforce at
any time the provisions of this Agreement or to require at any time performance
by the other party of any of the provisions hereof shall in no way be construed
to be a waiver of such

 

17

 

provisions or to affect either the validity of this Agreement or any
part hereof, or the right of either party to enforce each and every provision
in accordance with its terms.  No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
conditions or provisions at that time or at any prior or subsequent time.

 

(b)                                 Notices.  All notices required or permitted hereunder
will be given in writing, by personal delivery, by confirmed facsimile
transmission (with a copy sent by express delivery) or by express next-day
delivery via express mail or any reputable courier service, in each case
addressed as follows (or to such other address as may be designated):

 

	
  If to the
  Company:

  	
   

  	
  909 Third Avenue, Suite 2863
New York, NY 10022

  Attention:  Secretary

  Fax:  (212) 752-1157

  
	
   

  	
   

  	
   

  
	
  With a copy
  to:

  	
   

  	
  Jeffrey Bagner, Esq.
Fried, Frank, Harris,

  Shriver & Jacobson LLP

  One New York Plaza

  New York, NY  10004

  Fax: (212) 859-4000

  
	
   

  	
   

  	
   

  
	
  If to the
  Executive:

  	
   

  	
  Simon Duffy

  Raybourne House

  Mill Street

  Islip, Oxon., OX5 2SZ

  

 

Notices that are delivered personally, by
confirmed facsimile transmission, or by courier as aforesaid, shall be
effective on the date of delivery.

 

18

 

(c)                                  Binding Effect;
Assignment.  This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective heirs, executors, personal representatives, estates, successors
(whether direct or indirect, by purchase, merger, consolidation, reorganization
or otherwise) and assigns. 
Notwithstanding the provisions of the immediately preceding sentence,
the Executive shall not assign all or any portion of this Agreement without the
prior written consent of the Company.

 

(d)                                 Withholding.  The Company shall withhold or cause to be
withheld from any payments made pursuant to this Agreement any relevant taxes
as shall be required to be withheld pursuant to any law or governmental
regulation or ruling.

 

(e)                                  Entire Agreement.  This Agreement constitutes the complete
understanding between the parties with respect to the Executive’s employment
and supersedes any other prior oral or written agreements, arrangements or
understandings between the Executive and any member of the Company Affiliated
Group.  Without limiting the generality
of Section 11 of this Agreement or this Section 12(e), effective as
of the Effective Date, this Agreement supersedes any existing employment,
retention, severance and change-in-control agreements or similar arrangements
or understandings, including the Existing Agreement (collectively, the “Prior
Agreements”) between the Executive and the Company and any member of the
Company Affiliated Group, and any and all claims under or in respect of the
Prior Agreements that the Executive may have or assert on or following the
Effective Date shall be governed by and completely satisfied and discharged in
accordance with the terms and conditions of this Agreement.  No agreements or representations, oral or
otherwise, express or implied, with respect to the

 

19

 

subject matter hereof have been made by either party that are not set
forth expressly in this Agreement.

 

(e)                                  Severability.  If any provision of this Agreement, or any
application thereof to any circumstances, is invalid, in whole or in part, such
provision or application shall to that extent be severable and shall not affect
other provisions or applications of this Agreement.

 

(f)                                    Governing Law,
Etc.  This Agreement shall be
governed by and construed in accordance with the internal laws of England and
Wales, without reference to the principles of conflict of laws.  The parties irrevocably agree to submit to
the exclusive jurisdiction of the courts of England and Wales.

 

(g)                                 Modifications.  Neither this Agreement nor any provision
hereof may be modified, altered, amended or waived except by an instrument in
writing duly signed by the party to be charged.

 

(h)                                 Number and Headings.  Whenever any words used herein are in the
singular form, they shall be construed as though they were also used in the
plural form in all cases where they would so apply.  The headings contained herein are solely for purposes of
reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.

 

(i)                                     Counterparts.  This Agreement may be executed in 2 or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

(signature page follows)

 

20

 

IN WITNESS WHEREOF, the Company has caused
this Agreement to be executed, and the Executive has executed this Agreement as
of the day and year first above written. 

 

	
   

  	
   

  	
  NTL
  Incorporated

  
	
   

  	
   

  	
   

  
	
  /s/ Simon
  Duffy  

  	
   

  	
  /s/ James F.
  Mooney

  
	
   

  	
   

  	
   

  
	
  Simon Duffy

  	
   

  	
  By:  James F. Mooney

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:  Chairman

  

 

21

 

Appendix A

 

A “Change in Control” shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:

 

(i)                                     Any Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Company) representing 30% or more of the
combined voting power of the Company’s then outstanding securities, excluding
any Person who becomes such a Beneficial Owner in connection with a transaction
described in clause (a) of Paragraph (iii) below; or

 

(ii)                                  the following
individuals cease for any reason to constitute a majority of the number of
directors then serving: individuals who, on the date the Plan is adopted by the
Board of Directors of the Company (“Board”), constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for election
by the Company’s stockholders was approved or recommended by a vote of at least
a majority of the directors then still in office who either were directors on
the date hereof or whose appointment, election or nomination for election was
previously so approved or recommended; or

 

(iii)                               there is consummated a
merger or consolidation of the Company or any direct or indirect subsidiary of
the Company with any other corporation, other than (a) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) at least 50% of the combined
voting power of the securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or consolidation, or
(b) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directory or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company) representing 30% or more of the combined
voting power of the Company’s then outstanding securities; or

 

(iv)                              the stockholders of the
Company approve a plan of complete liquidation or dissolution of the Company or
there is consummated an agreement for the

 

22

 

sale or disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by the Company of all
substantially all of the Company’s assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by the
stockholders of the Company immediately prior to such sale.

 

Notwithstanding the foregoing, a “Change in Control” shall not be
deemed to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the record holders
of the common stock of the Company immediately prior to such transaction or
series of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets of the
Company immediately following such transaction or series of transactions.

 

For purposes of this Appendix A:

 

“Affiliate” shall have the meaning set forth in Rule 12b-2 under
Section 12 of the Securities Exchange Act of 1934.

 

“Person” shall have the meaning given in Section 3(a)(9) of the
Securities Exchange Act of 1934, as modified and used in Sections 13(d) and
14(d) thereof, except that such terms shall not include (i) the Company or any
of its Affiliates, (ii) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

 

“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under
the Securities Exchange Act of 1934, except that a Person shall not be deemed
to be the Beneficial Owner of any securities which are properly filed on a Form
13-G.

 

23

 

Exhibit A

 

NONQUALIFIED STOCK OPTION AGREEMENT

 

THIS AGREEMENT (this “Agreement”), made as of the 7th day of May (the
“Grant Date”), between NTL Incorporated, a Delaware corporation (the
“Corporation”), and Simon Duffy (the “Executive”).

 

WHEREAS, the Executive and the Corporation have entered into an
Employment Agreement, dated as of May 6, 2004 (the “Employment Agreement”);

 

WHEREAS, the Corporation has adopted the Amended and Restated 2004 NTL
Stock Incentive Plan (the “Plan”) in order to grant equity compensation to
(among others) officers and employees of the Corporation and its Subsidiary
Corporations; and

 

WHEREAS, as provided in Section 4 of the Employment Agreement, the
Corporation’s Compensation Committee has determined to grant an Option to the
Executive as provided herein;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1.                                       Grant
of Option.

 

The Corporation hereby grants to the Executive the right and option
(the “Option”) to purchase all or any part of an aggregate of 200,000 whole
Shares subject to, and in accordance with, the terms and conditions set forth
in this Agreement and in the Plan. The Option is not intended to qualify as an
Incentive Stock Option.  Except as
otherwise expressly set forth herein, the capitalized terms used in this
Agreement shall have the same definitions as set forth in the Plan.

 

2.                                       Purchase
Price.

 

The price at which the Executive shall be entitled to purchase Shares
upon the exercise of the Option shall be $0.01 per Share (the “Option Price”).

 

3.                                       Duration
of Option.

 

The Option shall be exercisable to the extent and in the manner
provided herein for a period of ten years from the Grant Date (the “Term”);
provided, however, that the Option may terminate earlier as provided in
Section 6 hereof.

 

4.                                       Exercisability
of Option.

 

Subject to Sections 6 and 7 hereof and to the Plan, the Option shall
become exercisable as follows:

 

24

 

(i)                                     as
to 33,333 Shares subject to the Option on each of August 15, 2004 and
August 15, 2005, and as to 33,334 Shares subject to the Option on
August 15, 2006 (each of August 15, 2004, 2005 and 2006, a “Vesting
Date”); and

 

(ii)                                  as to 33,333 Shares
subject to the Option in each of 2005 and 2006, and as to 33,334 Shares subject
to the Option in 2007, in each case on the date in such year, if any, that the
Compensation Committee certifies that the Corporation has achieved the annual
free cash flow and segment profit budgets for the immediately preceding year
(the “Subject Year”) established by the Board (or such other targets as may be
mutually agreed to between the Corporation and the Executive), and so long as
the Executive is employed by the Corporation or one of its Affiliates on
December 31 of the Subject Year.

 

5.                                       Manner
of Exercise and Payment.

 

5.1                                 Subject
to the terms and conditions of this Agreement and the Plan, the Option may be
exercised by delivery of written notice to the Corporation, at its principal
executive office.  Such notice shall
state that the Executive is electing to exercise the Option and the number of
Shares in respect of which the Option is being exercised and shall be signed by
the person or persons exercising the Option. 
If requested by the Committee, such person or persons shall (i) deliver
this Agreement to the Secretary of the Corporation who shall endorse on this
Agreement a notation of such exercise and (ii) provide satisfactory proof as to
the right of such person or persons to exercise the Option.

 

5.2                                 The
notice of exercise described in Section 5.1 shall be accompanied by the
full purchase price for the Shares in respect of which the Option is being
exercised, in cash or by check or, if indicated in the notice, such payment
shall follow by check from a registered broker acting as agent on behalf of the
Executive.

 

5.3                                 Upon
receipt of notice of exercise, full payment for the Shares in respect of which
the Option is being exercised, and full satisfaction of the Executive’s
obligation for Withholding Taxes, the Corporation shall take such action as may
be necessary to effect the transfer to the Executive of the number of Shares
subject to such exercise.

 

5.4                                 The
Executive shall not be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any Shares subject to the Option until (i) the
Option shall have been exercised pursuant to the terms of this Agreement and
the Executive shall have paid the full purchase price for the number of Shares
in respect of which the Option was exercised, (ii) the Corporation shall have
issued and delivered the

 

25

 

Shares to the Executive, and (iii) the Executive’s name shall have been
entered as a stockholder of record on the books of the Corporation, whereupon
the Executive shall have full voting and other ownership rights with respect to
such Shares.

 

6.                                       Termination
of Employment.

 

6.1                                 Upon
termination of the Executive’s employment for any reason, any portion of the
Option which is not exercisable as of the date of such termination shall be
automatically forfeited as of the date of such termination.  Upon termination of the Executive’s
employment by the Corporation (and its Affiliates, if applicable) for Cause (as
defined in the Employment Agreement), any unexercised portion of the Option
(whether exercisable or not exercisable) shall be automatically forfeited as of
the date of such termination.

 

6.2                                 Upon
termination of the Executive’s employment (i) by the Executive for any reason
other than retirement or (ii) by the Corporation (and its Affiliates, if
applicable) (x) other than for Cause (as defined in the Employment Agreement)
and (y) other than by reason of the Executive’s having become Disabled (as
defined in the Employment Agreement), the portion of the Option that is
exercisable as of the date of such termination (including, without limitation,
any portion of the Option that becomes exercisable pursuant to Section 7
of this Agreement) shall remain exercisable until the three-month anniversary
of the date of such termination (but not beyond the end of the Term).

 

6.3                                 Upon
termination of the Executive’s employment (i) by the Corporation (and its
Affiliates, if applicable) by reason of the Executive’s having become Disabled
(as defined in the Employment Agreement) or (ii) by reason of the Executive’s
death or retirement, the portion of the Option that is exercisable as of the
date of such termination (including, without limitation, any portion of the
Option that becomes exercisable pursuant to Section 7 of this Agreement)
shall remain exercisable until the twelve-month anniversary of the date of such
termination (but not beyond the end of the Term).

 

7.                                       Events
Resulting in Acceleration of the Option; Expiration of the Term of the
Employment Agreement.

 

7.1                                 Notwithstanding
anything contained in this Agreement to the contrary, if the Executive is
serving as Chief Executive Officer of the Corporation immediately preceding a
Change in Control (as defined in the Employment Agreement) and, within one year
following such Change in Control, the Executive no longer serves as Chief
Executive Officer of the Corporation, any unexercisable portion of the Option
shall become immediately and fully exercisable as of the date that the
Executive ceases so to serve; provided, that this Section 7 shall not
apply if the Executive ceases to serve as

 

26

 

Chief Executive Officer because his employment is terminated by the
Corporation for Cause (as defined in the Employment Agreement).

 

7.2                                 Notwithstanding
anything contained in this Agreement to the contrary, in the event of a
Termination Without Cause or a Constructive Termination Without Cause (in each
case as defined in the Employment Agreement) while any portion of the Option
subject to Section 4(i) of this Agreement is not exercisable, then that
portion of the Option subject to Section 4(i) of this Agreement that would
have become exercisable on the next following Vesting Date if the Executive’s
employment had continued through such Vesting Date shall become exercisable as
of the date of the Executive’s termination of employment.

 

7.3                                 Notwithstanding
anything contained in this Agreement to the contrary, if the employment of the
Executive terminates and the Executive is entitled to a severance payment
pursuant to Section 7(c) of the Employment Agreement by reason of such
termination, then, solely for purposes of determining whether the 33,334-Share
tranche of the Option set forth in Section 4(ii) of this Agreement shall
become exercisable, the Executive shall be deemed to remain employed through
the date on which the Compensation Committee determines whether the applicable
performance goals set forth therein have or have not been satisfied.  If the Compensation Committee makes the
certification set forth in Section 4(ii) of this Agreement with respect to
such tranche of the Option, such tranche of the Option shall become exercisable
and shall remain exercisable until the three-month anniversary of the date of
such certification.

 

8.                                       Non-transferability.

 

The Option shall not be transferable other than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order
(within the meaning of Rule 16a-12 promulgated under the Exchange Act).  During the lifetime of the Executive, the
Option shall be exercisable only by the Executive or his or her legal guardian
or legal representatives.

 

9.                                       No
Right to Continued Employment.

 

Nothing in this Agreement or the Plan shall be interpreted or construed
to confer upon the Executive any right with respect to continuance of
employment by the Corporation or any Subsidiary Corporation, nor shall this
Agreement or the Plan interfere in any way with the right of the Corporation or
any such Subsidiary Corporation to terminate the Executive’s employment at any
time.

 

10.                                 Withholding
of Taxes.

 

The Corporation shall have the right to deduct from any payment of cash
to the Executive an amount equal to the federal, state, local and non-U.S.
income taxes and

 

27

 

other amounts as may be required by law to be withheld (the
“Withholding Taxes”) with respect to the exercise or other settlement of the
Option.  The Executive shall make
arrangements satisfactory to the Corporation to pay the Withholding Taxes to
the Corporation prior to the issuance of any Shares subject to the Option or
other payment or distribution made pursuant to the Option.

 

11.                                 Executive
Bound by the Plan.

 

The Executive hereby acknowledges receipt of a copy of the Plan and
agrees that he and the Option shall be bound by all the terms and provisions
thereof.

 

12.                                 Modification
of Agreement.

 

This Agreement may be modified, amended, suspended or terminated, and
any terms or conditions may be waived, but only by a written instrument
executed by the parties hereto.

 

13.                                 Severability.

 

Should any provision of this Agreement be held by a court of competent
jurisdiction to be unenforceable or invalid for any reason, the remaining provisions
of this Agreement shall not be affected by such holding and shall continue in
full force in accordance with their terms.

 

14.                                 Governing
Law.

 

The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware without giving
effect to the conflicts of laws principles thereof.

 

15.                                 Successors
in Interest.

 

This Agreement shall inure to the benefit of and be binding upon any
successor to the Corporation.  This
Agreement shall inure to the benefit of the Executive’s heirs, executors,
administrators and successors.  All
obligations imposed upon the Executive and all rights granted to the
Corporation under this Agreement shall be final, binding and conclusive upon
the Executive’s heirs, executors, administrators and successors.

 

[signature page follows]

 

28

 

IN WITNESS WHEREOF, the parties have entered into this Agreement,
effective as of the Grant Date.

 

	
   

  	
   

  	
  NTL INCORPORATED

  
	
   

  	
   

  	
   

  
	
  /s/ Simon Duffy

  	
   

  	
  /s/ James F. Mooney

  
	
   

  	
   

  	
   

  
	
  Simon Duffy

  	
   

  	
  By:  James F. Mooney

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:  Chairman

  

 

29

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