Document:

Exhibit 10.26

 

LEASE AGREEMENT

 

 

BY AND BETWEEN

 

PETULA ASSOCIATES, LTD. AND PRINCIPAL

LIFE INSURANCE COMPANY

(AS LANDLORD)

 

 

AND

 

 

CLINICAL TRIALS SUPPORT SERVICES, INC.

(AS TENANT)

 

1

 

STATE OF NORTH CAROLINA

LEASE AGREEMENT 

COUNTY OF DURHAM

 

THIS LEASE AGREEMENT (the “Lease”) made and entered into as of the 3rd
day of November, 1999, by and between PETULA ASSOCIATES, LTD., an Iowa
corporation, and PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation, as tenants-in-common,
hereinafter collectively called “Landlord”; and CLINICAL TRIALS SUPPORT
SERVICES, INC., a North Carolina corporation, hereinafter called “Tenant”:

 

W I T N E S S E T H:

 

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

 

1.            BASIC
LEASE TERMS.

 

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

 

(a)          Premises:  Suites 240 and 206 containing a total of
approximately 8,080 rentable square feet of office space on the second floor of
the Building, as more particularly described on the floor plan attached hereto
as Exhibit A.

 

(b)          Building:  Canterbury Hall, located at 4815 Emperor
Boulevard, Durham, North Carolina.

 

(c)          Business
Park:  Imperial Center Business
Park.

 

(d)          Common
Areas:  All areas of the Building or
the Business Park available for the common use or benefit of all tenants
primarily or to the public generally, including without limitation, parking
areas, driveways, sidewalks, loading docks, the lobby, corridors, communication
shafts, building management offices, elevators, stairwells, entrances, public
restrooms, mechanical rooms, janitorial closets, telephone rooms, mail rooms,
electrical rooms, and other similar areas of the Building providing for
building systems, and any other common facilities furnished by Landlord from
time to time.

 

(e)          Commencement
Date:  February 14, 2000 (subject to
adjustment pursuant to Section 3 of this Lease).

 

(f)           Term;
Expiration Date:  The “Term” of this
Lease shall be approximately fifty-nine (59) months commencing as of the
Commencement Date and, subject to Tenant’s option to extend the Term in
accordance with Exhibit E attached hereto, expiring on December 31, 2004
(the “Expiration Date”).

 

2

 

(g)          Minimum
Rental:

 

	
  PERIOD

  	
   

  	
  RATE

  	
   

  	
  MONTHLY
  RENT

  	
   

  	
  ANNUAL
  RENT

  	
   

  
	
  2/14/00-12/31/00

  	
   

  	
  $

  	
  17.15 per r.s.f.

  	
   

  	
  $

  	
  11,547.67

  	
   

  	
  $

  	
  138,572.00

  	
   

  
	
  1/1/01-12/31/01

  	
   

  	
  $

  	
  17.65 per r.s.f.

  	
   

  	
  $

  	
  11,884.33

  	
   

  	
  $

  	
  142,612.00

  	
   

  
	
  1/1/02-12/31/02

  	
   

  	
  $

  	
  18.15 per r.s.f.

  	
   

  	
  $

  	
  12,221.00

  	
   

  	
  $

  	
  146,652.00

  	
   

  
	
  1/1/03-12/31/03

  	
   

  	
  $

  	
  18.65 per r.s.f.

  	
   

  	
  $

  	
  12,557.67

  	
   

  	
  $

  	
  150,692.00

  	
   

  
	
  1/1/04-12/31/04

  	
   

  	
  $

  	
  19.15 per r.s.f.

  	
   

  	
  $

  	
  12,894.33

  	
   

  	
  $

  	
  154,732.00

  	
   

  

 

(subject to adjustment as provided in Section 2 and subject to
escalation as provided in Section 4(b)).

 

(h)          Operating
Expense Stop:  Actual Operating
Expenses for the calendar year 2000.

 

(i)           Tenant’s
Proportionate Share:  A fraction,
the numerator of which shall be the number of rentable square feet within the
Premises and the denominator of which shall be the number of rentable square
feet within the Building, currently estimated to be 18.3% (8,080÷44,161).

 

(j)           [Intentionally
Deleted]

 

(k)          Notice
Addresses:

 

	
  Landlord:

  	
  Petula Associates, Ltd.

  
	
   

  	
  c/o Tri
  Properties, Inc.

  
	
   

  	
  4309 Emperor
  Boulevard, Suite 110

  
	
   

  	
  Durham,
  North Carolina 27703

  
	
   

  	
   

  
	
  Tenant:

  	
  Clinical Trials Support Services, Inc.

  
	
   

  	
  P.O.Box 1815

  
	
   

  	
  Burlington,
  North Carolina 27216-1815

  
	
   

  	
  Attention:
  Tracy A. Blethen

  

 

(1)          Security
Deposit: Eleven Thousand Five Hundred and No/100 Dollars ($11,500.00).

 

(m)         Broker(s):  Tri Properties, Inc. and Corporate Realty
Advisors.

 

(n)          Guarantor:  None.

 

(o)          Parking:  Tenant shall have the right, at no
additional cost to Tenant, to use four (4) unreserved parking spaces per 1,000
rentable square feet of the Premises in the surface parking areas adjacent to
the Building which constitute a portion of the Common Areas, such use to be in
common with other tenants of the Building.

 

3

 

2.            DESCRIPTION
OF PREMISES.

 

Landlord hereby leases to Tenant, and Tenant hereby accepts and rents
from Landlord, the Premises within the Building located in the Business Park;
together with the nonexclusive right to use the Common Areas. The useable area
of the Premises shall be determined in accordance with the standards set forth
in ANSI Z65.1-1996, as promulgated by the Building Owners and Managers
Association (“BOMA Standard”). The rentable area of the Premises shall be
determined by multiplying the useable area of the Premises by a “core factor”
equal to 1.15. Landlord may, at any time, have its architect or engineer
measure the actual total square footage of the Premises. In the event the
Premises shall contain an amount of square footage different than the amount of
square feet referenced in Section 1(a) above, the Annual Rental (as hereinafter
defined) shall be proportionately adjusted based on the actual square footage
multiplied by the applicable square foot rental rate (and such adjustment shall
relate back to the Commencement Date if there is a variance). The reasonable
cost of such measurement shall be borne by Landlord.

 

3.            TERM;
COMMENCEMENT DATE; DELIVERY OF PREMISES.

 

Unless otherwise adjusted as hereinbelow provided, the Term shall
commence on the Commencement Date and expire on the Expiration Date. In the
event the Commencement Date is a day other than the first day of the calendar
month, the Term shall be extended and shall expire on that date which is
fifty-nine (59) full months from the first day of the first full calendar month
immediately following the Commencement Date (the “Adjustment Date”). As used
herein, the term “Lease Year” shall mean each consecutive twelve-month period
of the Term, beginning on January 1 of each calendar year; provided, however,
the first Lease Year shall be that period commencing on the Commencement Date
and continuing until December 31, 2000.

 

Notwithstanding anything contained herein to the contrary, the
Commencement Date shall occur on the earlier of: (a) the date Tenant, or any
person occupying any portion of the Premises with Tenant’s permission,
commences business operations from the Premises, or (b) the first (1st)
business day following the date of Landlord’s delivery of the Premises in its
“as is” condition without any further improvements thereto by Landlord or the
date upon which Landlord would have delivered the Premises to Tenant but for
delays within the control of Tenant or Tenant’s Invitees (as hereinafter
defined). If Landlord for any reason whatsoever cannot deliver possession of
the Premises to Tenant on or before the Commencement Date as above specified,
this Lease shall not be void or voidable nor shall Landlord be liable to Tenant
for any loss or damages resulting therefrom; but in that event, except to the
extent that any such delay(s) has been caused by Tenant or its agents,
employees, contractors, subcontractors, licensees, invitees or sub-tenants
(hereinafter collectively referred to as “Tenant’s Invitees”), the Commencement
Date shall be adjusted to be the date when Landlord does in fact deliver
possession of the Premises to Tenant.

 

Subject to Landlord’s obligation to pay the Allowance (as hereinafter
defined), Tenant shall, at its sole cost and expense and within one hundred
(100) days after the Commencement Date, design and install the initial
improvements in the Premises (the “Tenant Improvements”) in strict accordance
with plans and specifications for such improvements designed by Tenant and
reviewed and approved in advance by Landlord. Notwithstanding the foregoing, in
connection with the planning and construction of the Tenant Improvements and
any future alterations to the Premises (as described in Section 5 herein),
Tenant shall use Landlord’s electrical engineer and 

 

4

 

Landlord’s mechanical engineer.
Provided no Event of Default has occurred and is continuing hereunder, Landlord
agrees to pay Tenant at the time and in the manner set forth below an allowance
in the sum of Five and No/100 Dollars ($5.00) per rentable square foot of the
Premises (the “Allowance”) for the design, construction and installation in the
Premises of the Tenant Improvements and for the payment to Landlord of a
construction management fee equal to five percent (5%) of the total cost of
constructing the Tenant Improvements. Tenant shall submit to Landlord the
certificates and receipts setting forth the cost of labor and materials
expended in the course of constructing and installing the Tenant Improvements
and within thirty (30) days of Landlord’s receipt of such certificates and
receipts, Landlord shall pay to Tenant the amount of all costs and expenses
shown thereby less the amount of any such payment or payments previously made
by Landlord to Tenant; provided, however, that the aggregate amount of all sums
to be paid by Landlord to Tenant hereunder shall not in any event exceed the
sum of Forty Thousand Four Hundred and No/100 Dollars ($40,400.00); provided
further, Landlord shall have no obligation hereunder to make any payment with
respect to any such improvement which, when made, shall not be a fixture and
thus part of the Building to be surrendered to Landlord upon the expiration of
the Term or earlier termination of this Lease, nor shall Landlord be obligated
to disburse any portion of the Allowance after that date which is one hundred
(100) days after the Commencement Date. Tenant shall cause any costs and
expenses associated with the Tenant Improvements to be paid and shall furnish
Landlord evidence of such payment in form and substance reasonably satisfactory
to Landlord including waivers of lien and releases executed by Tenant’s
contractor and any sub-contractor (if applicable). Landlord shall not be
obligated to make any disbursements of the Allowance prior to the commencement
of the construction of the Tenant Improvements and all savings or unused
portions of the Allowance shall be retained by Landlord. Notwithstanding
anything contained herein to the contrary, a portion of the Allowance (not to
exceed One and No/100 Dollars ($1.00) per rentable square foot of the Premises)
may be applied by Tenant to the costs associated with the installation of
telecommunications wiring and equipment and/or the construction of support
features for systems based furniture within the Premises (but in no event may
such funds be used for the furniture itself).

 

4.            RENTAL.

 

During the Term, Tenant shall pay to Landlord, in care of Landlord’s
agent, Tri Properties, Inc. at the notice address set forth in Section 1(k)
herein, without notice, demand, reduction (except as may be applicable pursuant
to the paragraphs of this Lease entitled “Damage or Destruction of Premises”
and “Eminent Domain”), setoff or any defense, a total rental (the “Annual
Rental”) consisting of the sum total of the following:

 

(a)          Minimum
Rental.

 

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

 

(b)          Additional Rental.  
[Intentionally Deleted]

 

5

 

(c)          Operating and Maintenance Expenses.

 

Tenant
shall pay Tenant’s Proportionate Share (as set forth in Section 1(i)) of the
reasonable costs and expenses paid or incurred by Landlord each calendar year
in the operation, repair and maintenance of the Building, the Common Areas and
the Business Park (the “Operating Expenses”) to the extent such costs exceed
the Operating Expense Stop set forth in Section l(h). For purposes hereof,
Operating Expenses shall include without limitation, all: (i) ad valorem taxes
(or any tax hereafter imposed in lieu thereof) levied on the Premises, the Building,
the Common Areas or any improvements thereon, (ii) insurance premiums and
policy deductibles paid with respect to the Building, including fire and
extended coverage insurance and liability insurance, (iii) personal property
taxes applicable to the Building or the Premises, (iv) any reasonable fees or
costs incurred in connection with protesting any tax assessment, (v) Standard
Building Services (as hereinafter defined) including utilities, heat and air
conditioning, standard janitorial service and window cleaning, (vi) building
management (including management fees), (vii) the cost of grass mowing, shrub
care and general landscaping, irrigation systems, maintenance and repair to
parking and loading areas, driveways, sidewalks, exterior lighting, garbage
collection and disposal, water and sewer, plumbing, signs and other facilities
serving or benefiting the Premises or the Building, (viii) the cost of all
services rendered by third parties with respect to the Building and all costs
paid or incurred by Landlord in providing any of the services to be provided by
Landlord pursuant to the terms of this Lease; (ix) costs of all capital
improvements, repairs or equipment to the Building which are either required
under any governmental law or regulation which was not applicable to the
Building as of the date of this Lease or which reduced Operating Expenses;
provided that the cost of any such capital improvements, repairs or equipment
shall be amortized on a straight line basis over a reasonable period of time (as
determined in accordance with generally accepted accounting principles), and
(x) Common Area operating and maintenance costs, and (xi) the Building’s
proportionate share of the reasonable costs and expenses paid or incurred by
Landlord in the operation, repair and maintenance of the Business Park.
Landlord shall use good faith efforts to keep the Operating Expenses in line
with costs for other similarly situated first-class buildings in the
Raleigh/Durham market.

 

Notwithstanding
the foregoing, if in any year the Building is less than one hundred percent
(100%) occupied, the variable portion of Operating Expenses shall be adjusted
to reflect the level of such Operating Expenses which would reasonably be
expected to be incurred by Landlord if the Building was one hundred percent
(100%) occupied. Notwithstanding the foregoing, in no event shall the
adjustments in Operating Expenses as hereinabove described result in a profit
to Landlord.

 

Notwithstanding anything contained herein to the contrary, in no event
shall the Operating Expenses include any costs associated with the following:
(i) depreciation expenses, (ii) expenditures for any alteration, renovation,
redecoration or finish of any other tenant space in the Building, (iii) leasing
commissions, (iv) financing or refinancing costs, mortgage interest and
amortization payments (except as expressly permitted in subsection (ix) above),
(v) executive salaries or salaries of service personnel to the extent such
personnel perform services not associated with the management, operation or
maintenance of the Business Park, (vi) attorney’s fees incurred in leasing
space in the Building or enforcing the obligations of the tenants of the
Building, (vii) rent under any ground lease, (viii) expenses which would be capitalized
under generally accepted accounting principles as reasonably interpreted by
Landlord, except as otherwise permitted in this Lease, and (ix) expenses
incurred by Landlord relative to remediation of Hazardous Substances on or
within the Building. Landlord covenants 

 

6

 

and agrees that Landlord will
consistently apply its internal accounting procedures for the calculation of
the Operating Expenses throughout the Term, including without limitation the calculation
of the Operating Expense Stop.

 

(d)          Payment
of Operating Expenses.

 

Commencing as of January 1, 2001 and continuing throughout the Term,
Tenant shall pay to Landlord each month, along with Tenant’s installments of
Minimum Rental (and Additional Rental, if applicable) an amount (the “Tenant
Contribution”) equal to one-twelfth (1/12) of Tenant’s Proportionate Share of
the Operating Expenses as hereinabove described for any calendar year
(including any applicable partial calendar year) to the extent such costs
exceed the Operating Expense Stop, as estimated by Landlord (in its reasonable
discretion). Landlord will make reasonable efforts to provide Tenant with
Landlord’s estimate of Tenant’s Contribution for the upcoming calendar year on
or before December 15 of each calendar year during the Term hereof. If Landlord
fails to notify Tenant of the revised amount of Tenant’s Contribution by such
date, Tenant shall continue to pay the monthly installments, if any, last
payable by Tenant until notified by Landlord of such new estimated amount. No
later than May 1 of each calendar year of the Term, Landlord shall deliver to
Tenant a written statement setting forth the actual amount of Tenant’s
Contribution for the preceding calendar year. Tenant shall pay the total amount
of any balance due shown on such statement within thirty (30) days after its
delivery. In the event such annual costs decrease for any such year, Landlord
shall reimburse Tenant for any overage paid and the monthly rental installments
for the next period shall be reduced accordingly, but not below the Minimum
Rental. For the calendar year in which this Lease commences, Tenant’s
Contribution shall be prorated from the Commencement Date through December 31
of such year. Further, Tenant shall be responsible for the payment of Tenant’s
Contribution for the calendar year in which this Lease expires, prorated from
January 1 thereof through the Expiration Date. Upon the Expiration Date,
Landlord may elect either (i) to require Tenant to pay any unpaid estimated
amount within thirty (30) days after the Expiration Date, which estimate shall
be made by Landlord based upon actual and estimated costs for such year, or
(ii) to withhold Tenant’s security deposit until the exact amount payable by
Tenant is determinate, at which time Tenant shall promptly pay to Landlord any
deficiencies or Landlord shall return any excess security deposit to Tenant.

 

In the event the Operating Expenses increase by more than three percent
(3.0%) in any calendar year (as measured against such expenses for the
immediately preceding calendar year), Tenant may audit Landlord’s records and
all information pertaining to Operating Expenses (no more than once during any
calendar year) in order to verify the accuracy of Landlord’s determination of
the Tenant Contribution, provided that:

 

(i)           Tenant
must give notice to Landlord of its election to undertake said audit within one
hundred twenty (120) days after receipt of the statement of the actual amount
of Tenant’s Contribution for the preceding calendar year from Landlord;

 

(ii)          Such
audit will be conducted only during regular business hours at the office where
Landlord maintains records of Operating Expenses and only after Tenant gives
Landlord fourteen (14) days’ advance written notice;

 

(iii)        Tenant
shall deliver to Landlord a copy of the results of such audit within fifteen
(15) days of its receipt by Tenant and no such audit shall be conducted if any
other tenant of the 

 

7

 

Building has conducted an
independent audit for the time period Tenant intends to audit and Landlord
furnishes to Tenant a copy of such audit;

 

(iv)         No
audit shall be conducted at any time that Tenant is in default of any of the
terms of this Lease;

 

(v)          No
subtenant shall have any right to conduct an audit and no assignee shall
conduct an audit for any period during which such assignee was not in
possession of the Premises;

 

(vi)         Such
audit review by Tenant shall not postpone or alter the liability and obligation
of Tenant to pay any amounts due under the terms of this Lease.

 

(vii)        Such
audit shall be conducted by an independent, reputable accounting firm which is
not being compensated by Tenant on a contingency fee basis.

 

Within thirty (30) days after Tenant’s receipt of such audit, Tenant
must give notice to Landlord of any disputed amounts and identify all items
being contested in Landlord’s statement of the Tenant Contribution. If Landlord
and Tenant cannot agree upon any such item as to which Tenant shall have given
such notice, the dispute shall be resolved by an audit by a major accounting
firm mutually acceptable to Landlord and Tenant and the cost of said audit
shall be paid by the non-prevailing party; provided however, Tenant will not be
considered the “prevailing party” for purposes of this paragraph unless the
accounting firm’s audit reveals an overcharge by Landlord in excess of five
percent (5%) of the Tenant Contribution for the particular calendar year in
question.

 

Any adjustment required as a result of any audit shall be made by
adjustment to the Tenant Contribution so that said adjustment is fully made (or
recovered) in equal installments over the twelve (12) month period immediately
following the final resolution of said audit.

 

(e)          Documentary
Tax.

 

In the event that any documentary stamp tax, sales tax or any other tax
or similar charge (exclusive of any income tax payable by Landlord as a result
hereof) becomes applicable to the rental, leasing or letting of the Premises,
whether local, state or federal, and is required to be paid due to the
execution hereof or otherwise with respect to this Lease or the payments due
hereunder, the cost thereof shall be borne by Tenant and shall be paid promptly
and prior to same becoming past due. Tenant shall provide Landlord with copies
of all paid receipts respecting such tax or charge promptly after payment of
same.

 

(f)           Late
Payment.

 

If any monthly installment of Minimum Rental, Additional Rental (if
any) or any other sum due and payable pursuant to this Lease remains due and
unpaid five (5) business days after said amount becomes due, Tenant shall pay
as additional rent hereunder a late payment charge equal to Five Hundred and
No/100 Dollars ($500.00) on the unpaid rent or other payment. All unpaid rent
and other sums of whatever nature owed by Tenant to Landlord under this Lease
shall bear interest from the tenth (10th) day after the due date thereof until
paid at the lesser of two percent (2%) per annum above the “prime rate” as
published in The Wall Street Journal from 

 

8

 

time to time (the “Prime Rate”)
or the maximum interest rate per annum allowed by law. Acceptance by Landlord
of any payment from Tenant hereunder in an amount less than that which is
currently due shall in no way affect Landlord’s rights under this Lease and
shall in no way constitute an accord and satisfaction.

 

5.            ALTERATIONS
AND IMPROVEMENTS BY TENANT.

 

Tenant shall make no structural changes to the Premises or the Building
(or to the mechanical or building systems of the Building) and shall make no
changes of any kind respecting the Premises or the Building which are visible
from the exterior of the Premises without Landlord’s prior written consent, to
be granted or withheld in Landlord’s sole discretion. Any other nonstructural
changes or other alterations, additions, or improvements to the Premises shall
be made by or on behalf of Tenant only with the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed. All
alterations, additions or improvements, including without limitation all
partitions, walls, railings, carpeting, floor and wall coverings and other
fixtures (excluding, however, Tenant’s trade fixtures as described in the
paragraph entitled “Trade Fixtures and Equipment” below) made by, for, or at
the direction of Tenant shall, when made, become the property of Landlord, at
Landlord’s sole election and shall, unless otherwise specified by Landlord at
the time of Landlord’s approval of same or Tenant’s installation of same,
remain upon the Premises at the expiration or earlier termination of this
Lease.

 

Notwithstanding anything contained herein to the contrary, all
alterations and improvements undertaken by Tenant shall be consistent with the
then-existing quality, color scheme (where appropriate), general aesthetic
appearance and tenor of the balance of the Building and, in any event, Landlord
may withhold its consent to any proposed alteration or improvement by Tenant
unless Tenant agrees to remove said improvement at the end of the Term and/or
restore the Premises to the condition in which it existed prior to the
undertaking of the proposed alteration or improvement. Further, all alterations
and improvements to the Premises, including without limitation the Tenant
Improvements, whether undertaken by Tenant or Landlord shall be subject to a
fee (the “Construction Management Fee”). Tenant agrees to pay Landlord the
Construction Management Fee as follows:

 

(a)          Five
percent (5%) of the total cost of planning and constructing any alterations and
improvements if such construction costs exceed Ten Thousand and No/100 Dollars
($10,000.00); and

 

(b)          Ten
percent (10%) of the total cost of planning and constructing any alterations
and improvements if such construction costs are less than Ten Thousand and
No/100 Dollars ($10,000.00).

 

6                          USE
OF PREMISES.

 

(a)          Tenant
shall use the Premises only for general office purposes and for no other
purposes. Tenant shall comply with all laws, ordinances, orders, regulations or
zoning classifications of any lawful governmental authority, agency or other
public or private regulatory authority (including insurance underwriters or
rating bureaus) having jurisdiction over the Premises. Tenant shall not do any
act or follow any practice relating to the Premises, the Building or the Common
Areas which shall constitute a nuisance or detract in any way from the 

 

9

 

reputation of the Building as a
real estate development comparable to other comparable buildings in the
Raleigh/Durham market taking into account rent and other relevant factors.   Tenant’s duties in this regard shall
include allowing no noxious or offensive odors, fumes, gases, smoke, dust,
steam or vapors, or any loud or disturbing noise or vibrations to originate in
or emit from the Premises. In addition, Tenant shall not conduct a sale of any
personal property on or about the Premises, the Building or in the Common Areas
without the prior written consent of Landlord.

 

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

 

(c)          Tenant
shall exercise due care in its use and occupancy of the Premises and shall not
commit or allow waste to be committed on any portion of the Premises; and at
the expiration or earlier termination of this Lease, Tenant shall deliver the
Premises to Landlord in the same condition in which it existed as of the
Commencement Date, ordinary wear and tear, fire or other casualty and acts of
God alone excepted.

 

(d)          Tenant’s
use and occupancy of the Premises shall include the use in common with others
entitled thereto of the Common Areas and all other improvements provided by
Landlord for the common use of the Building tenants, and any other common facility
as may be designated from time to time by the Landlord, subject, however, to
the terms and conditions of this Lease and to the reasonable rules and
regulations for use therefor as prescribed from time to time by the Landlord.  Tenant, its employees, agents, customers and
invitees shall have the nonexclusive use (in common with other benefiting
tenants) to use the common areas for purposes intended and the non-exclusive
use of the adjacent surface parking areas in accordance with Section 1(o) herein.  Tenant shall not at any time interfere with
the use of the common areas by Landlord, another tenant or any other person
entitled to use the same.  Landlord
reserves the right, from time to time, to alter any of the common areas, to
exercise control and management of the same, and to establish, modify, change
and enforce such reasonable rules and regulations as Landlord in its discretion
may deem desirable for the management of the Building or the common areas.

 

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

 

10

 

7.            SERVICES
BY LANDLORD.

 

Provided that Tenant has fully complied with all terms and conditions
of this Lease and is not then in default hereunder, Landlord shall cause to be
furnished to the Premises (subject to reimbursement as part of the Operating
Expenses) in common with other tenants during “Standard Hours of Operation” (as
defined below), Monday through Friday and Saturday (excluding holidays), the
following services: janitorial services (once per working day after normal
weekday working hours); water if available from city mains for drinking,
lavatory and toilet purposes; operatorless elevator service; electricity for
general office space use (including fluorescent lighting replacements to
building standard fixtures only); trash removal in accordance with city
schedules; and heating and air conditioning for reasonably comfortable use and
occupancy of the Premisesk providing heating and cooling conforming to any
governmental regulation prescribing limitations thereon shall be deemed
consistent with the services provided by landlords of comparable buildings in
the Raleigh/Durham market.  All
additional costs resulting from Tenant’s extraordinary usage of heating, air
conditioning or electricity shall be paid by Tenant, but Tenant shall not
install equipment with unusual demands for any of the foregoing without
Landlord’s prior written consent which Landlord may withhold if it determines
that in its opinion such equipment may not be safely used in the Premises or
that electrical service is not adequate therefor.  Notwithstanding anything contained herein to the contrary,
Landlord reserves the right to contract with any third party provider of such
utilities to provide such services to the Premises, the Building and the Business
Park in the most economical manner and Tenant shall not contract with any other
third party provider to supply such utili8ties to the Premises without
Landlord’s prior written consent.  So
long as Landlord acts reasonably and in good faith, there shall be no abatement
or reduction of rent by reason of any of the foregoing services not being
continuously provided to Tenant.

 

Landlord agrees to provide heating and air conditioning after-hours
(i.e., hours before or after the Standard Hours of Operation) at Tenant’s
request after reasonable notice and if the area to be served is zoned for this
purpose. The cost of after-hours service of heating or air conditioning shall
be additional rent payable monthly by Tenant at $25.00 per hour.

 

As used herein, “Standard Hours of Operation” shall mean and refer to
those hours of operation at the Building which are 7:30 a.m. to 6:30 p.m.
Monday through Friday and 8:00 a.m. through 1:00 p.m. on Saturday, except
holidays. Holidays shall mean and refer to each of the following days (on the
day set aside for observance): New Year’s Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, Christmas Day and any other holiday(s) generally
recognized as such by landlords of office space in the Triangle Area office market,
as reasonably determined by Landlord.

 

Landlord shall not be liable to Tenant for any damage caused to Tenant
and its property due to the Building or any part or appurtenance thereof being
improperly constructed or being or becoming out of repair, or arising from the
leaking of a pipe, facility or system for any utility. Tenant shall immediately
report to Landlord any defective condition in or about the Premises known to
Tenant, and if such defect is not so reported and such failure results in other
damage, Tenant shall be liable for the same.

 

11

 

8.            TAXES
ON LEASE AND TENANT’S PROPERTY.

 

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

 

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

 

9.            INSURANCE
AND INDEMNITY.

 

(a)          Fire and Extended
Coverage Insurance.  Landlord shall
maintain and pay for fire and casualty special form “all risk” insurance, with
extended coverage (including boiler and machinery coverage), covering the
Building equal to at least eighty percent (80%) of the replacement cost
thereof. Tenant shall not do or cause to be done or permit on the Premises
anything deemed extrahazardous on account of fire and Tenant shall not use the
Premises, the Common Areas or the Building in any manner which will cause an
increase in the premium rate for any insurance in effect on the Building or a
part thereof. If, because of anything done, caused to be done, permitted or
omitted by Tenant or Tenant’s Invitees, the premium rate for any kind of
insurance in effect on the Building or any part thereof shall be raised, Tenant
shall pay Landlord on demand the amount of any such increase in premium which
Landlord shall pay for such insurance and if Landlord shall demand that Tenant
remedy the condition which caused any such increase in an insurance premium
rate, Tenant shall remedy such condition within five (5) days after receipt of
such demand. Tenant shall maintain and pay for all fire and extended coverage
insurance on its contents in the Premises, including trade fixtures, equipment,
machinery, merchandise or other personal property belonging to or in the
custody of Tenant. In addition, at all times during the Term, Tenant shall
procure and maintain business income and extra expense coverage in such amounts
as will reimburse Tenant for direct or indirect loss or earnings attributable
to any loss caused by fire or other casualty or cause including, but not
limited to, vandalism, theft and water damage of any type.

 

Notwithstanding anything herein to the contrary, Landlord reserves the
right for itself, successors and assigns to self-insure against any risk
required hereunder to be insured or otherwise assumed by Landlord so long as
any such program of self-insurance affords the same coverage of risks and
benefits which would be afforded in the event Landlord procured insurance from
a third-party insurer.

 

(b)          Liability
Insurance.  At all times during the
term of this Lease, Tenant shall, at its sole cost and expense, keep in force
adequate public liability insurance under the terms of a commercial general
liability policy (occurrence coverage) in the amount of not less than Three
Million and No/100 Dollars ($3,000,000.00) single limit with such company(ies)
licensed to do business in North Carolina and as shall from time to time be
reasonably acceptable to Landlord (and to any lender having a mortgage interest
in the Premises) and naming Landlord and Landlord’s agent as an additional
insured (and, if requested by Landlord from time to time, naming Landlord’s
mortgagee as an additional insured).  
In the event Tenant employs any 

 

12

 

contractor to perform any work
in the Premises, Tenant shall provide Landlord with insurance certificates
naming Landlord and such other parties as Landlord may designate as additional
insureds under policies of builders risk and general liability insurance and
shall also provide Landlord with evidence of satisfactory workers compensation
coverage in accordance with applicable statutory requirements. All policies of
insurance required to be maintained by Tenant shall be with companies rated A-X
or better in the most current issue of Best’s Insurance Reports and shall have
a deductible of $25,000.00 or less. Such insurance shall include, without
limitation, personal injury and contractual liability coverage for the
performance by Tenant of the indemnity agreements set forth in this Lease.
Tenant shall first furnish to Landlord copies of policies or certificates of
insurance evidencing the required coverage prior to the Commencement Date and
thereafter prior to each policy renewal date. 
All policies required of Tenant hereunder shall contain a provision
whereby the insurer is not allowed to cancel or change materially the coverage
without first giving thirty (30) days’ written notice to Landlord.

 

(c)          Indemnity.  Tenant shall indemnify and save Landlord
harmless against any and all claims, suits, demands, actions, fines, damages,
and liabilities, and all costs and expenses thereof (including without
limitation reasonable attorneys’ fees) attributable to Tenant’s use or
occupancy of the Premises, or otherwise arising out of injury to persons
(including death) or property occurring in, on or about, or arising out of the
Premises or other areas in the Building if caused or occasioned wholly or in
part by any act or omission of Tenant or Tenant’s Invitees, except to the
extent caused by the gross negligence or willful misconduct of Landlord. The
non-prevailing party shall also pay all costs, expenses and reasonable
attorneys’ fees that may be incurred by the prevailing party in enforcing the
agreements of this Lease, whether incurred as a result of litigation or
otherwise. Tenant shall give Landlord immediate notice of any such happening
causing injury to persons or property.

 

(d)          Landlord
Insurance.  Landlord shall keep in
force during the term of this Lease insurance in such amounts and coverages as
Landlord deems appropriate or is otherwise required of Landlord by third
parties, such as its lender.

 

10.          LANDLORD’S
COVENANT TO REPAIR AND REPLACE.

 

(a)          During
the Term, Landlord shall be responsible for necessary repairs or replacements
to the base building structural components of the Building which are designated
as Landlord’s Work on Exhibit C-l attached hereto, including without
limitation, the central plumbing and electrical systems serving the Building,
except for repairs or replacements to any Tenant Improvements or any trade
fixtures or equipment required or requested by Tenant, or otherwise
necessitated by the negligence, misconduct, acts or omissions of Tenant or
Tenant’s Invitees, which shall be made at Tenant’s sole cost and expense,
unless such amounts are paid to Landlord pursuant to an insurance policy.
Landlord shall maintain the Building in a manner which is comparable with other
comparable buildings in the Raleigh/Durham market, taking into account rent and
other relevant factors, and in compliance with applicable laws, regulations,
ordinances and codes; however, any non-compliance shall not materially impair
Tenant’s use and enjoyment of the Premises or constitute a threat or danger to
the health or safety of Tenant or Tenant’s Invitees. Landlord’s repairs and
replacements shall be made as soon as reasonably possible using due diligence
and reasonable efforts, taking into account in each instance all circumstances
surrounding the repair or replacement including without limitation, the
materiality of the repair or replacement to Tenant’s use and operation of its
business within the Premises and the relation thereof to the enjoyment of same,
such period not to exceed 120 days after receiving 

 

13

 

written notice from Tenant of
the need for repairs or such longer period of time as is reasonably necessary
under the circumstances so long as Landlord is diligently pursuing the
completion of same; provided, however, in no event shall such period of time exceed
180 days after receipt of written notice from Tenant. If Landlord cannot, using
due diligence, complete its repairs within the time period herein specified and
such failure to repair has a material adverse impact on Tenant’s use or
occupancy of the Premises, then (unless the need for such repairs or
replacements is the result of the negligence, misconduct or acts or omissions
of Tenant or Tenant’s Invitees, in which event Tenant shall not be entitled to
any remedy), such failure to repair shall be deemed to be a Landlord default
hereunder. If the need for such repairs or replacements is the result of the
negligence, misconduct or acts or omissions of Tenant or Tenant’s Invitees, and
the expense of such repairs or replacements are not fully covered and paid by
Landlord’s insurance, then Tenant shall pay Landlord the full amount of
expenses not covered. Landlord’s duty to repair or replace as prescribed in
this paragraph shall be Tenant’s sole remedy and shall be in lieu of all other
warranties or guaranties of Landlord, express or implied; provided, however, in
the event Landlord, following receipt of written notice detailing such repair,
negligently fails to repair the Premises in accordance with this Section 10(a)
and as a result of Landlord’s negligence, a material portion of the. Premises
is rendered untenantable for a period of thirty (30) consecutive days, the
Annual Rental payable hereunder shall abate as of the expiration of said thirty
(30) days period until the earlier of: (i) Tenant’s occupancy of any portion of
the Premises, or (ii) Landlord’s completion of the repair in accordance with
the terms hereof.

 

(b)          Except
as otherwise expressly provided herein, Landlord shall not be liable for any
failure to make any repairs or to perform any maintenance required of Landlord
hereunder unless such failure shall persist for an unreasonable period of time
after written notice from Tenant setting forth the need for such repair(s) or
replacement(s) in reasonable detail has been received by Landlord. Except as
set forth in the paragraph of this Lease entitled “Damage or Destruction of
Premises” and Section 10(a) herein, there shall be no abatement of rent. There
shall be no liability of Landlord by reason of any injury to or interference
with Tenant’s business arising from the making of any repairs, replacements,
alterations or improvements to any portion of the Building or the Premises, or
to fixtures, appurtenances and equipment therein except to the extent of
Landlord’s gross negligence or willful misconduct. To the extent permitted
under applicable law, Tenant waives the right to make repairs at Landlord’s
expense under any law, statute or ordinance now or hereafter in effect.

 

11.          PROPERTY
OF TENANT.

 

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

 

12.          TRADE
FIXTURES AND EQUIPMENT.

 

Prior to installation, Tenant shall furnish to Landlord notice of all
trade fixtures and equipment which it intends to install within the Premises
and the installation of same shall be subject to Landlord’s consent, which
shall not be unreasonably withheld, conditioned or delayed 

 

14

 

so long as said equipment is
not visible from the exterior of the Building and does not otherwise affect any
structural components of the Building or any of the Building systems. So long
as no Event of Default has occurred and is continuing hereunder, any trade
fixtures and equipment installed in the Premises at Tenant’s expense and
identified by Tenant in notice to Landlord shall remain Tenant’s personal
property and Tenant shall have the right at any time during the Term to remove
such trade fixtures and equipment. Upon removal of any trade fixtures and
equipment, Tenant shall immediately restore the Premises to substantially the
same condition in which it existed as of the Commencement Date, ordinary wear
and tear, casualty and acts of God alone excepted. Any trade fixtures not
removed by Tenant at the expiration or an earlier termination of the Lease
shall, at Landlord’s sole election, either (i) become the property of Landlord,
in which event Landlord shall be entitled to handle and dispose of same in any
manner Landlord deems fit without any liability or obligation to Tenant or any
other third party with respect thereto, or (ii) be subject to Landlord’s
removing such property from the Premises and storing same, all at Tenant’s
expense and without any recourse against Landlord with respect thereto. Without
items in excess of building standard. In any event, Landlord shall not be
required to expend more funds than the amount received by Landlord from the
proceeds of any insurance and any amounts received from Tenant.

 

13.          DAMAGE
OR DESTRUCTION OF PREMISES.

 

If the Premises are damaged by fire or other casualty, but are not
rendered untenantable for Tenant’s business, either in whole or in part,
Landlord shall cause such damage to be repaired without unreasonable delay and
the Annual Rental shall not abate. If by reason of such casualty the Premises
are rendered untenantable for Tenant’s business, either in whole or in part,
Landlord shall cause the damage to the physical structure of the Building
(excluding any tenant improvements or alterations therein) to be repaired or
replaced without unreasonable delay, and, in the interim, the Annual Rental
shall be proportionately reduced as to such portion of the Premises as is
rendered untenantable. Any such abatement of rent shall not, however, create an
extension of the Term. Provided, however, if by reason of such casualty, the
Premises are rendered untenantable in some material portion, and Landlord, in
its reasonable estimation, determines that the amount of time required to
repair the damage using due diligence is in excess of one hundred fifty (150)
days after the issuance of a building permit by the applicable governmental
authorities (Landlord agreeing to use reasonable, diligent efforts to procure
said permit), then either party shall have the right to terminate this Lease by
giving written notice of termination within thirty (30) days after the date of
casualty, and the Annual Rental shall (i) abate as of the date of such casualty
in proportion to the part of the Premises rendered untenantable and (ii) abate
entirely as of the effective date of the termination of this Lease. In the
event Landlord is unable to repair the Premises in accordance with this Section
13 on or before that date which is sixty (60) days following the targeted
completion date (as reasonably determined by Landlord), subject to delays
beyond Landlord’s reasonable control, either party shall have the right to
terminate the Lease upon thirty (30) days advance written notice to the other
following the expiration of said sixty (60) day period. Notwithstanding the
foregoing, in the event the casualty giving rise to an election to terminate is
caused by the negligence, misconduct or acts or omissions of Tenant or Tenant’s
Invitees, Tenant shall have no right to terminate this Lease. Notwithstanding
the other provisions of this paragraph, in the event there should be a casualty
loss to the Premises during the last Lease Year of the Term, Landlord may, at
its option, terminate this Lease by giving written notice to Tenant within
thirty (30) days after the date of the casualty and the Annual Rental shall
abate as of the date of such notice and Tenant shall have a period of fifteen
(15) days following its receipt of such notice of 

 

15

 

termination from Landlord to
vacate the Premises. Except as provided herein, Landlord shall have no
obligation to rebuild or repair in case of fire or other casualty, and no
termination under this paragraph shall affect any rights of Landlord or Tenant
hereunder because of prior defaults of the other party. Tenant shall give
Landlord immediate notice of any fire or other casualty in the Premises.
Notwithstanding anything contained in this Section to the contrary, Landlord
shall only be obligated to restore the Premises to a building standard
condition unless Tenant makes available to Landlord proceeds from Tenant’s
insurance sufficient to repair and restore the Premises to the condition in
which it existed immediately prior to such casualty, including those items in
excess of building standard.  In any
event, Landlord shall not be required to expend more funds than the amount
received by Landlord from the proceeds of any insurance and any amounts
received from Tenant.

 

14.          GOVERNMENTAL
ORDERS.

 

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

 

15.          MUTUAL
WAIVER OF SUBROGATION.

 

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

 

16

 

law, shall contain a provision
whereby the insurer waives, prior to loss, all rights of subrogation against
either Landlord or Tenant.

 

16.          SIGNS
AND ADVERTISING.

 

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

 

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

 

17.          LANDLORD’S
RIGHT OF ENTRY.

 

Landlord, and those persons authorized by it, shall have the right to
enter the Premises at all reasonable times and upon reasonable notice for the purposes
of making repairs, making connections, installing utilities, providing services
to the Premises or for any other tenant, making inspections, showing the same
to prospective purchasers or lenders or, during the last nine (9) months of the
Term, as same may be extended, showing the same to prospective tenants, as well
as at any time without notice in the event of emergency involving possible
injury to property or persons in or around the Premises or the Building.

 

18.          LANDLORD’S
LIEN.

 

In addition to any statutory lien in Landlord’s favor, Landlord shall
have and Tenant hereby grants to Landlord a continuing first security lien
interest for all rentals and other sums of money due or to become due hereunder
from Tenant, and to secure payment for any damages or loss which Landlord may
suffer by reason of the breach by Tenant of any covenant, agreement or
condition contained herein, upon all goods, wares, equipment, fixtures,
furniture, inventory, and other personal property of Tenant now or hereafter situated
at the Premises, and all proceeds therefrom; and such property shall not be
removed from the Premises without the consent of Landlord until all arrearages
in rent as well as any and all other sums of money then due to Landlord
hereunder shall first have been paid and discharged and all the covenants,
agreements and conditions hereof have been fully complied with and performed by
Tenant. In the event any of the foregoing described property is removed from
the Premises in violation of the covenant in the preceding sentence, the
security interest shall continue in such property regardless of location. Upon
the occurrence of a default by Tenant hereunder, Landlord shall have, in
addition to all other rights and remedies, all rights and remedies under the Uniform
Commercial Code then in effect in the State of North Carolina, including,
without limitation, the right to sell the property described in this Section at
public or private sale. Any surplus shall be paid Tenant or as otherwise
required by law; and Tenant shall pay any deficiencies therein to Landlord 

 

17

 

forthwith. Tenant hereby agrees
to execute such other instruments necessary or desirable under applicable law
to perfect the security interest hereby created, including a financing
statement. In no event shall Tenant or Tenant’s lender cause to be recorded any
financing statements, Uniform Commercial Code filings or their equivalents in
connection with this Lease which would affect or otherwise impair or encumber
title to the Building or Landlord’s fixtures and real or personal property
located in the Building or the Business Park. Notwithstanding the foregoing,
upon the request of Tenant, Landlord agrees to execute and deliver any
instruments reasonably acceptable to Landlord which are necessary to
subordinate the above-described Landlord’s lien to the security interest of any
third party encumbering any readily removable or unattached furniture and
miscellaneous equipment of Tenant situated in or on the Premises; provided,
however, in no event may any fixtures or attached equipment be removed from the
Premises without Landlord’s prior written consent.

 

19.          EMINENT
DOMAIN.

 

If any substantial portion of the Premises is taken under the power of
eminent domain (including any conveyance made in lieu thereof) or if such
taking shall materially impair the normal operation of Tenant’s business, then
either party shall have the right to terminate this Lease by giving written
notice of such termination within thirty (30) days after such taking. If
neither party elects to terminate this Lease, Landlord shall repair and restore
the Premises to the best possible tenantable condition (but only to the extent
of any condemnation proceedings made available to Landlord) and the Annual
Rental shall be proportionately and equitably reduced as of the date of the
taking. All compensation awarded for any taking (or the proceeds of a private
sale in lieu thereof) shall be the property of Landlord whether such award is
for compensation for damages to the Landlord’s or Tenant’s interest in the
Premises, and Tenant hereby assigns all of its interest in any such award to
Landlord; provided, however, Landlord shall not have any interest in any
separate award made to Tenant for loss of business, moving expense or the
taking of Tenant’s trade fixtures or equipment if a separate award for such
items is made to Tenant and if such separate award does not reduce the award to
Landlord. Notwithstanding the foregoing, in no event shall Tenant be entitled
to any compensation for the loss of its leasehold estate.

 

20.          EVENTS
OF DEFAULT AND REMEDIES.

 

(a)          Upon
the occurrence of any one or more of the following events (the “Events of
Default,” any one an “Event of Default”), Landlord shall have the right to
exercise any rights or remedies available in this Lease, at law or in equity.
Events of Default shall be:

 

(i) Tenant’s failure to pay any rental or other sum of money payable
hereunder within five (5) days after same becomes due; provided, however,
Tenant shall be entitled to written notice from Landlord that such amounts are
past due no more than twice in any Lease Year and it shall not be deemed an
Event of Default hereunder so long as Tenant makes any such payments to
Landlord within five (5) days after receipt of said written notice from
Landlord;

 

(ii) Tenant’s failure to perform any other of the terms, covenants or
conditions contained in this Lease if not remedied within thirty (30) days
after receipt of written notice thereof, or if such default cannot be remedied
within such period, Tenant does not within thirty (30) days after written
notice thereof commence such act or acts as shall be necessary to remedy the
default and shall not thereafter diligently prosecute such cure and complete such
act or acts within ninety (90) days after written notice thereof:

 

18

 

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

 

(iv) A default by Tenant under any other lease heretofore or hereafter
made by Tenant for any other space in the Project.

 

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

 

21.          SUBORDINATION.

 

This Lease is subject and subordinate to any and all mortgages or deeds
of trust currently existing on the property of which the Premises is a part,
and this clause shall be self-operative without any further instrument
necessary to effect such subordination; however, if requested by Landlord,
Tenant shall promptly execute and deliver to Landlord any such certificate(s)
in a commercially reasonable form as Landlord may reasonably request evidencing
the subordination of this Lease to, or the assignment of this Lease as
additional security for, such mortgages or deeds of trust; provided, further,
upon Tenant’s request, Landlord shall use reasonable efforts to 

 

19

 

obtain a non-disturbance
agreement in a commercially reasonable form from any such mortgagee, trustee or
beneficiary currently having an interest in all or any portion of the Premises.
Subject to the condition precedent that Landlord provide Tenant with a
non-disturbance agreement in a commercially reasonable form in favor of Tenant
from any mortgagee, trustee or beneficiary, this Lease shall be subject and
subordinate to any mortgage or deed of trust which may hereafter encumber the
property of which the Premises is a part. Tenant’s obligations under this Lease
shall continue in full force and effect notwithstanding any such default
proceedings under a mortgage or deed of trust and shall attorn to the mortgagee,
trustee or beneficiary of such mortgage or deed of trust, and their successors
or assigns, and to the transferee under any foreclosure or default proceedings.
Tenant will, upon request by Landlord, execute and deliver to Landlord or to
any other person designated by Landlord, any instrument or instruments in a
commercially reasonable form required to give effect to the provisions of this
paragraph.

 

22.          ASSIGNMENT
AND SUBLETTING.

 

Except with respect to an assignment or sublease to an Affiliate (as hereinafter
defined), which shall only require advance written notice to Landlord, Tenant
shall not assign, sublet, mortgage, pledge or encumber this Lease, the
Premises, or any interest in the whole or in any portion thereof, directly or
indirectly, without the prior written consent of Landlord, which consent shall
not be unreasonably withheld or delayed. In the event of any assignment,
sublease, mortgage, pledge or encumbrance, Tenant shall: (i) remain primarily
liable for the performance of all terms of this Lease, (ii) pay all reasonable
costs incurred by Landlord in connection with such assignment, sublease or
mortgage, including without limitation, attorneys’ fees and a $500.00
processing fee, and (iii) pay to Landlord one-half (1/2) of any rental or any
fees or charges received by Tenant (less any reasonable expenses incurred by
Tenant in connection with such assignment or sublease, including without
limitation, reasonable attorney’s fees and brokerage commissions) in excess of
the Annual Rental payable to Landlord hereunder as further rental under this
Lease. Landlord’s consent to one assignment or sublease will not waive the
requirement of its consent to any subsequent assignment or sublease as required
herein. Upon notice to Landlord of a proposed sublease or assignment of all or
any portion of the Premises for the balance of the Term (the “Proposed Space”),
Landlord shall have the option, within fifteen (15) days after its receipt of
such notice, to terminate this Lease with respect to the Proposed Space,
whereupon the parties hereto shall have no further rights or liabilities with
respect to the Proposed Space except as otherwise expressly set forth herein.
For purposes hereof, an “Affiliate” shall be deemed to be any entity which
controls, is controlled by, or is under common control with, Tenant.

 

In the event of a proposed assignment of this Lease or subletting of
all or a part of the Premises, Tenant shall submit to Landlord, in writing, (i)
the name of the proposed assignee or sublessee, (ii) current financial
statements available to Tenant disclosing the financial condition of the
proposed assignee or subtenant, (iii) the nature of the business of the
proposed assignee or sublessee, and its proposed use of the Premises (any
assignment or subletting being subject to restrictions on use contained in this
Lease, the violation of which by the proposed assignee or sublessee shall
constitute absolute grounds for Landlord’s denial of the requested assignment
or subletting, such grounds not being the exclusive grounds for denial under
clause (iii)) and (iv) the proposed commencement date of the assignment or
subletting, together with a copy of the proposed assignment or sublease. Within
thirty (30) days after its receipt of such notice, Landlord shall either
approve or disapprove such proposed assignment or sublease in writing. 

 

20

 

Tenant shall promptly deliver a
copy of the fully executed assignment or sublease to Landlord upon its receipt
of same.

 

Notwithstanding anything in this Lease to the contrary, Tenant further
agrees that any assignment or sublease shall be subject to the following
additional limitations: (i) in no event may Tenant assign this Lease or sublet
all or any portion of the Premises to an existing Tenant of the Business Park
or its subtenant or assignee; (ii) in no event shall the proposed subtenant or
assignee be a person or entity with whom Landlord or its agent is negotiating
and to or from whom Landlord, or its agent, has given or received any written
proposal within the past three (3) months regarding a lease of space in the
Business Park; and (iii) Tenant shall not publicly advertise the rate for which
Tenant is willing to sublet the Premises; and all public advertisements of the
assignment of the Lease or sublet of the Premises, or any portion thereof,
shall be subject to prior written approval by Landlord, such approval not to be
unreasonably withheld or delayed. Said public advertisement shall include, but
not be limited to, the placement or display of any signs or lettering on the
exterior of the Premises or on the glass or any window or door of the Premises
or in the interior of the Premises if it is visible from the exterior.

 

23           LANDLORD
DEFAULT.

 

In the event of any default by Landlord under this Lease, Tenant will
give Landlord written notice specifying such default with particularity, and
Landlord shall thereupon have thirty (30) days (or such longer period as may be
required in the exercise of due diligence) in which to cure any such default.
Unless and until Landlord fails to so cure any default after such notice,
Tenant shall not have any remedy or cause of action by reason thereof. All
obligations of Landlord hereunder will be construed as covenants, not
conditions. Notwithstanding any other provisions of this Lease to the contrary,
Tenant shall look solely to Landlord’s equity in the Building, and not to any
other or separate business or non-business assets of Landlord, or any partner,
shareholder, officers or representative of Landlord, for the satisfaction of
any claim brought by Tenant against Landlord, and if Landlord shall fail to
perform any covenant, term or condition of this Lease upon Landlord’s part to
be performed, and as a consequence of such default, Tenant shall recover a
money judgment against Landlord, such judgment shall be satisfied only: (i) out
of the proceeds of sale received upon levy against Landlord’s equity in the
Building, and/or (ii) to the extent not encumbered by a secured creditor, out
of the rents or other incomes receivable by Landlord from the Building.
Further, in the event the owner of Landlord’s interest in this Lease is at any
time a partnership, joint venture or unincorporated association, Tenant agrees
that the members or partners of such partnership, joint venture or
unincorporated association shall not be personally or individually liable or
responsible for the performance of any of Landlord’s obligations hereunder.
With respect to any provisions of this Lease which provides that Landlord shall
not unreasonably withhold or delay any consent or approval, Tenant shall not
have, and Tenant hereby waives, any claim for money damages; nor shall Tenant
claim any money damages by way of setoff, counterclaim or defense, based upon
any allegation of unreasonableness by Landlord. Tenant’s sole remedy shall be
an action or proceeding to enforce any such provisions, or for specific
performance, injunction or declaratory judgment.

 

21

 

24.          TRANSFER
OF LANDLORD’S INTEREST.

 

If Landlord shall sell, assign or transfer all or any part of its
interest in the Building or in this Lease to a successor in interest which
expressly assumes the obligations of Landlord hereunder, then Landlord shall
thereupon be released or discharged from all covenants and obligations
hereunder, and Tenant shall look solely to such successor in interest for
performance of all of Landlord’s obligations. Tenant’s obligations under this
Lease shall in no manner be affected by Landlord’s sale, assignment, or
transfer of all or any part of such interest(s) of Landlord, and Tenant shall
thereafter attorn and look solely to such successor in interest as the Landlord
hereunder.

 

25.          COVENANT
OF QUIET ENJOYMENT.

 

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

 

26.          ESTOPPEL
CERTIFICATES.

 

Within ten (10) business days after a request by Landlord, Tenant shall
deliver a written estoppel certificate, in form supplied by or acceptable to
Landlord, certifying any facts that are then true with respect to this Lease to
the best of Tenant’s knowledge, including without limitation that this Lease is
in full force and effect, that no Event of Default exists on the part of
Landlord or Tenant, that Tenant is in possession, that Tenant has commenced the
payment of rent, and that Tenant claims no defenses or offsets with respect to
payment of rentals under this Lease. Likewise, within ten (10) business days
after a request by Tenant, Landlord shall deliver to Tenant a similar estoppel
certificate covering such matters as are reasonably required by Tenant.

 

27.          PROTECTION
AGAINST LIENS.

 

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

 

22

 

28.          MEMORANDUM
OF LEASE.

 

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

 

29.          FORCE
MAJEURE.

 

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

 

30.          REMEDIES
CUMULATIVE – NONWAIVER.

 

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

 

31.          HOLDING
OVER.

 

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

 

32.          NOTICES.

 

Any notice allowed or required by this Lease shall be deemed to have
been sufficiently served if the same shall be in writing and placed in the
United States mail, via certified mail or registered mail, return receipt
requested, with proper postage prepaid or delivered by a nationally recognized
overnight courier and addressed to the appropriate party at the address set
forth in Section l(k) hereof.

 

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

 

23

 

33.          LEASING
COMMISSION.

 

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

 

34.          MISCELLANEOUS.

 

(a)          Rules
and Regulations.

 

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

 

(b)          Evidence
of Authority.

 

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

 

(c)          Nature
and Extent of Agreement.

 

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

 

(d)          Binding
Effect.

 

This Lease shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, successors and assigns. This Lease
shall not be binding on Landlord until executed by an authorized signature of
Landlord and delivered to Tenant. No amendment or 

 

24

 

modification to this Lease
shall be binding upon Landlord unless same is in writing and executed by an
authorized signatory of Landlord.

 

(e)          Captions
and Headings.

 

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

 

(f)           Lease
Review.

 

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

 

(g)          Prevailing
Party.

 

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

 

(h)          Security
Deposit.

 

Tenant has paid to Landlord upon signing this Lease the Security
Deposit as described in Section 1(1) as security for Tenant’s performance of all
obligations hereunder. The Deposit may be held by Landlord in such manner as it
shall elect and Landlord shall be entitled to any interest which accrues on the
Deposit.  In the event of a default by
Tenant, Landlord may, at its option, apply all or any part of the Deposit to
cure the default, and thereupon Tenant shall immediately redeposit with
Landlord the amount so applied in order that Landlord will always have the full
Deposit on hand during the term of this Lease. Upon the termination of this Lease,
provided that Tenant is not in default hereunder, Landlord shall refund to
Tenant any of the remaining balance of the Deposit within ninety (90) days
after the termination of this Lease subject to final adjustments for payment of
any rental required by this Lease. If the Building is sold, Landlord shall have
the right to transfer the Deposit to the new owner, and upon the new owner’s
express assumption of the obligations for the Deposit required by this Lease,
Landlord shall thereupon be released from all liability for such Deposit, and
Tenant thereafter shall look only to the new owner for such Deposit. The terms
hereof shall apply to every transfer of the Deposit.

 

(i)           Right
to Relocate.  [Intentionally
Deleted]

 

(j)           Building
Access.  There shall be open access
to the Building during Standard Hours of Operation (as herein defined). At all
other times, access to the Building may be restricted, at Landlord’s election,
by use of a card access system at an entrance to the Building. Landlord shall
furnish Tenant at no cost up to four (4) access cards per 1,000 rentable square
feet occupied by Tenant (as of the Commencement Date) for entering the
Building. Additional cards and replacement cards (for lost access cards) shall
be made available to Tenant at a charge equal to $25.00 per card upon
Landlord’s receipt of an order signed by Tenant. Tenant shall promptly provide
Landlord with written notice of any lost or stolen access cards for the
Building. Landlord shall replace all defective or worn access cards without
charge. All cards 

 

25

 

shall remain the property of
Landlord. No additional locks shall be allowed on any exterior door of the
Premises without Landlord’s written permission and locks on any interior door
shall be permitted only to the extent such locks are permissible under
applicable laws and relevant insurance requirements. Upon termination of this
Lease, Tenant shall surrender to Landlord all access cards and keys related to
the Premises, and give to Landlord the combination of all locks for sages, safe
cabinets and vault doors, if any, to remain in the Premises and in the event
Tenant fails to return all such access cards to Landlord at the end of the
Term, Tenant shall pay Landlord $25.00 for each such access card not returned
to Landlord.

 

(k)          Principal
Life Approval.  This Lease may be
subject to approval by the Principal Life Insurance Company Investment
Committee and the Board of Directors of Petula Associates, Ltd. In the event
Landlord is unable to obtain such approval within thirty (30) days after the
date of this Lease, either party may elect to terminate this Lease upon written
notice to the other and the parties hereto shall have no further rights or
obligations hereunder.

 

(1)          Contingency.
 This Lease, and all of the obligations
of Landlord and Tenant hereunder, is contingent in all respects upon the timely
expiration or termination of the existing lease (the “Existing Lease”) by and
between Landlord and OgilvyOne Worldwide (the “Existing Tenant”) of
approximately 4,888 rentable square feet in the Building (which constitutes a
portion of the Premises) on or before February 14, 2000 and the Existing Tenant
promptly vacating the Premises in accordance with the terms of the Existing
Lease.

 

35.          SEVERABILITY.

 

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

 

36.          REVIEW
OF DOCUMENTS.

 

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

 

26

 

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

 

 

 

	
   

  	
   

  	
  “LANDLORD”

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PETULA ASSOCIATES, LTD.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ illegible

  
	
   

  	
   

  	
  Its:

  	
  President

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PRINCIPAL LIFE INSURANCE COMPANY,

  
	
   

  	
   

  	
  an Iowa corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  PRINCIPAL CAPITAL MANAGEMENT,

  
	
   

  	
   

  	
   

  	
  LLC, a Delaware limited liability company,

  
	
   

  	
   

  	
   

  	
  Its authorized
  agent                (SEAL)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Bill Bramwell

  
	
   

  	
   

  	
  Name:

  	
  Bill Bramwell

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “TENANT”

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CLINICAL TRIALS SUPPORT SERVICES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jan R. Blethen

  
	
  ATTEST:

  	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Tracy A. Blethen

  	
   

  	
   

  	
   

  
	
  Assistant Secretary

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  10/12/99

  

 

 

27

 

EXHIBIT “A”

 

FLOOR PLAN

 

EXHIBIT “B”

 

RULES AND REGULATIONS

 

EXHIBIT “C”

 

INTENTIONALLY DELETED

 

EXHIBIT C-1

 

LANDLORD’S WORK (EXISTING BUILDINGS)

 

EXHIBIT “D”

 

INTENTIONALLY DELETED

 

EXHIBIT “E”

 

OPTION TO EXTEND

 

 

 

Exhibits are available upon request 

 

28Exhibit 10.27

 

STATE OF NORTH CAROLINA

 

FIRST AMENDMENT TO LEASE

 

COUNTY OF DURHAM

 

THIS FIRST AMENDMENT TO LEASE (the “Amendment”) is
made and entered into as of the 20th day of December, 1999, by and
between PETULA ASSOCIATES, LTD., an Iowa corporation and PRINCIPAL LIFE
INSURANCE COMPANY, an Iowa corporation as tenants-in-common, (collectively
“Landlord”) and CLINICAL TRIALS SUPPORT SERVICES, INC., a North Carolina
corporation (“Tenant”).

 

WITNESSETH

 

A.           Landlord and Tenant entered into a lease
dated as of November 3, 1999 (the “Existing Lease”) for the occupancy of
approximately 8,080 rentable square feet of space (the “Original Premises”) on
the second floor in the Canterbury Hall Building (the “Building”) in the
Imperial Center Business Park, Durham, North Carolina, as more particularly
described in the Lease.

 

B.            Landlord and Tenant desire to amend the terms
of the Lease (i) expand the Original Premises to include approximately 4,664
rentable square feet of space (the “Expansion Space”) on the third floor of the
Building (as shown on the floor plan attached hereto as Exhibit A and
incorporated herein by reference) so that the Original Premises when combined
with the Expansion Space shall contain approximately 12,744 rentable square
feet (the “Combined Premises”), (ii) to address the amortization of an
additional construction allowance provided by Landlord to Tenant to finance the
construction of the Tenant Improvements in the Expansion Space, and (iii) to
change certain other terms and conditions of the Existing Lease. For purposes
hereof, the Existing Lease as amended by this Amendment is referred to as the
“Lease”.

 

NOW, THEREFORE, in consideration of the premises,
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree to amend the Existing Lease on the terms set forth below. The
terms used but not defined herein shall have the meaning set forth within the
lease.

 

1.             Expansion
Space.  Effective as of the Expansion Space
Commencement Date (as hereinafter defined), Landlord agrees to lease to Tenant,
and Tenant hereby agrees to lease from Landlord and occupy under the terms of
the Original Lease as herein amended, the Expansion Space.

 

2.             Term.  Beginning
as of the earliest of: (a) the date Tenant, or any person occupying any portion
of the Expansion Space with Tenant’s permission, commences business operations
from the Expansion Space, or (b) the first (1st) business day
following the date of

 

1

 

Landlord’s delivery of the
Expansion Space with the Expansion Space Improvements (as hereinafter defined)
completed in substantial accordance with the preliminary plans and
specifications attached hereto as Exhibit B (the “Expansion Plans”) or
the date upon which Landlord would have so delivered the Expansion Space to
Tenant but for delays within the control of Tenant or Tenant’s invitees, which
date shall hereafter be referred to as the “Expansion Space Commencement Date”)
and continuing throughout the Term of the Lease, the Expansion Space shall be
deemed a part of the Original Premises. Accordingly, on and after the Expansion
Space Commencement Date, any reference in the Lease to the Premises shall be
deemed to mean the Combined Premises. Notwithstanding the foregoing, if
Landlord, for any reason whatsoever, cannot deliver possession of the Expansion
Space to Tenant on or before the Expansion Space Commencement Date as
above-specified, the Lease shall not be void or voidable nor shall Landlord be
liable to Tenant for any loss or damages resulting therefrom; but in that
event, except to the extent that any such delay(s) have been caused by Tenant
or Tenant’s Invitees, the Expansion Space Commencement Date shall be adjusted
to be the date when Landlord does in fact deliver possession of the Expansion
Space to Tenant in accordance with the terms hereof.

 

3.             Rental. 
Beginning as of the Expansion Space Commencement Date and continuing
throughout the Term, Tenant shall pay to Landlord Minimum Rental on the
Combined Premises in accordance with the Minimum Rental Schedule set forth
below. Accordingly, as of the Expansion Space Commencement Date, the schedule
of Monthly Rent and Annual Rent amounts set forth in said Section l(g) of the
Lease shall be deleted in its entirety and the following schedule shall be
substituted in lieu thereof:

 

	
  Period

  	
   

  	
  Rate

  	
   

  	
  Monthly Rent

  	
   

  	
  Annual Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expansion Space

  	
   

  	
  $

  	
  17.25
  per r.s.f.

  	
   

  	
  $

  	
  18,319.50

  	
   

  	
  $

  	
  219,834.00

  	
   

  
	
  Commencement Date - 12/31/00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01/01/01-12/31/01

  	
   

  	
  $

  	
  17.75
  per r.s.f.

  	
   

  	
  $

  	
  18,850.50

  	
   

  	
  $

  	
  226,206.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01/01/02-12/31/02

  	
   

  	
  $

  	
  18.25
  per r.s.f.

  	
   

  	
  $

  	
  19,381.50

  	
   

  	
  $

  	
  232,578.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01/01/03-12/31/03

  	
   

  	
  $

  	
  18.75
  per r.s.f.

  	
   

  	
  $

  	
  19,912.50

  	
   

  	
  $

  	
  238,950.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01/01/04-12/31/04

  	
   

  	
  $

  	
  19.25
  per r.s.f.

  	
   

  	
  $

  	
  20,443.50

  	
   

  	
  $

  	
  245,322.00

  	
   

  

 

If the Expansion Space
Commencement Date falls on a day other than the first day of the month, Tenant
shall make a pro rata payment for the remainder of said month on the Expansion
Space Commencement Date and make regular payments on the first day of the
following month and for each month thereafter throughout the Lease Term
including any prorated payment for any partial month at the end of the Lease
Term.

 

4.             Operating
Expense Stop. The Operating
Expense Stop as set forth in Section 1(h) shall continue to be the calendar
year 2000 for the Combined Premises..

 

2

 

5.             Additional Rent. 
Pursuant to the provisions of Section 1(i), Tenant’s Proportionate Share
shall be revised as of the Expansion Space Commencement Date to be 28.9%
(12,744 ÷  44,161) to reflect the
addition of the Expansion Space to the Original Premises.

 

6.             Security Deposit. 
Effective as of the date hereof, the amount of the Security Deposit set
forth in Section 1(1) shall be increased and restated to be Eighteen Thousand
Five Hundred and No/100 Dollars ($18,500.00) and contemporaneously with its
execution of this Amendment, Tenant shall pay an additional Security Deposit to
Landlord in an amount equal to Seven Thousand and No/100 Dollars ($7,000.00).

 

7.             Expansion Space Allowance. 
Provided no Event of Default has occurred and is continuing hereunder,
Landlord shall supervise the design and construction of the Tenant’s initial,
permanent improvements in the Expansion Space (the “Expansion Space
Improvements”) in accordance with the Expansion Plans. Landlord shall
contribute up to Seven and No/100 Dollars ($7.00) per rentable square foot of
the Expansion Space (the “Expansion Space Allowance”) for the design,
construction and installation of the Expansion Space Improvements and for the
payment to Landlord of a construction management fee equal to five percent (5%)
of the total cost of constructing the Expansion Space Improvements (the
“Construction Management Fee”); provided, however, in no event shall the
Expansion Space Allowance be used for any costs associated with Tenant’s
personal property, equipment, trade fixtures or other items of a non-permanent
nature installed in the Expansion Space, including without limitation,
telephone and data cable lines. The aggregate amount of all sums to be paid by
Landlord to Tenant as the Expansion Space Allowance shall not in any event
exceed the sum of Thirty-Two Thousand Six Hundred Forty Eight and No/100
Dollars ($32,648.00). In the event that either prior to the commencement of the
installation of the Expansion Space Improvements or at any time during or
following the installation of the Expansion Space Improvements, the cost of the
Expansion Space Improvements exceeds the Expansion Space Allowance or Tenant
requests any change to the aforementioned Expansion Plans which has resulted or
might result in an increase in the cost of the installation of such Expansion
Space Improvements so that the cost exceeds the Expansion Space Allowance, then
Tenant shall, subject to the Additional Allowance, promptly deliver the
necessary funds to defray such excess cost to Landlord no later than fifteen
(15) days after Landlord demands same. Any savings or unused portion of the
Expansion Space Allowance after the Expansion Space Improvements are completed
shall be retained by Landlord.

 

8.             Additional Construction Allowance. In  addition
to the Expansion Space Allowance, Landlord has agreed to provide Tenant at
Tenant’s election, with an additional improvement allowance in an amount up to
Nine Thousand Three Hundred Twenty-Eight and No/100 Dollars ($9,328.00) (the
“Additional Allowance”) for the design, construction and installation of the
Expansion Space Improvements and payment of the Construction Management Fee.
Tenant shall repay the full amount of the Additional Allowance, together with
interest thereon at a rate equal to twelve percent (12%) per annum, to Landlord
as additional rent under the Lease in equal monthly, self amortizing payments
throughout the Term. Accordingly, in addition to all other amounts due and
payable by Tenant under the Lease, commencing as of the Expansion Space
Commencement Date, Tenant shall pay additional monthly rent to Landlord in an
amount equal to Two Hundred Twelve and 40/100 Dollars ($212.40) per month
throughout the Term. Such additional amount shall be deemed Rent for purposes of the Lease and shall be 

 

3

 

subject to acceleration in the event of a default by Tenant under the
Lease. All other terms and conditions applicable to the disbursement of the
Allowance shall apply to the disbursement of the Additional Allowance.

 

9.             Option
Minimum Rental.  Exhibit E to
the Lease is hereby amended to reflect the revised Monthly and Annual Rent
amounts as follows:

 

	
  Period

  	
   

  	
  Rate

  	
   

  	
  Monthly Rent

  	
   

  	
  Annual Rent

  	
   

  
	
  01/01/05 –
  12/31/05

  	
   

  	
  $

  	
  19.75

  	
   

  	
  $

  	
  20,974.50

  	
   

  	
  $

  	
  251,694.00

  	
   

  
	
  01/01/06 –
  12/31/06

  	
   

  	
  $

  	
  20.25

  	
   

  	
  $

  	
  21,505.50

  	
   

  	
  $

  	
  258,066.00

  	
   

  
	
  01/01/07 –
  12/31/07

  	
   

  	
  $

  	
  20.75

  	
   

  	
  $

  	
  22,036.50

  	
   

  	
  $

  	
  264,438.00

  	
   

  
	
  01/01/08 –
  12/31/08

  	
   

  	
  $

  	
  21.25

  	
   

  	
  $

  	
  22,567.50

  	
   

  	
  $

  	
  270,810.00

  	
   

  
	
  01/01/09 –
  12/31/09

  	
   

  	
  $

  	
  21.75

  	
   

  	
  $

  	
  23,098.50

  	
   

  	
  $

  	
  277,182.00

  	
   

  

 

 

10.           Ratification.
Except as expressly or by necessary implication amended or modified hereby, the
terms of the Lease are hereby ratified, confirmed and continued in full force
and affect.

 

IN WITNESS WHEREOF, the parties hereto have cause this Amendment to be
executed under seal as of the date and year first above written.

 

	
   

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PETULA ASSOCIATES, LTD.,

  
	
   

  	
   

  	
  an Iowa corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Bill Bramwell

  
	
  ATTEST:

  	
   

  	
  Name:

  	
   

  	
  Bill Bramwell

  
	
  /s/ Ronald B. Franklin

  	
   

  	
  Title:

  	
   

  	
  Vice President

  
	
  Vice President & Secretary

  	
   

  	
  Date:

  	
   

  	
  1/4/2000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [CORPORATE SEAL]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PRINCIPAL LIFE INSURANCE COMPANY,

  
	
   

  	
   

  	
  an Iowa corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  PRINCIPAL CAPITAL MANAGEMENT,

  
	
   

  	
   

  	
   

  	
  LLC, a Delaware limited liability company,

  
	
   

  	
   

  	
   

  	
  Its authorized agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  Bill Bramwell

  	
  (SEAL)

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Bill Bramwell

  
	
   

  	
   

  	
  Title:

  	
   

  	
  Director C.R.E. Equity

  
	
   

  	
   

  	
  Date:

  	
   

  	
  1/4/2000

  
								

 

4

 

	
   

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CLINICAL TRIALS SUPPORT SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  NAME:

  	
  /s/ Jan Blethen

  
	
   

  	
   

  	
  TITLE:

  	
  President

  
	
  /s/  Tracy A.
  Blethen

  	
   

  	
  Date:

  	
    12/20/99

  
	
  Assistant Secretary

  	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
   

  	
   

  
					

 

5

 

EXHIBIT A

 

FLOOR PLAN

 

 

Exhibits are
available upon request

 

6

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