Document:

exv10w4

Exhibit 10.4

[Executed]

AMENDED AND RESTATED INTERCREDITOR

AND SUBORDINATION AGREEMENT

     This Amended and Restated Intercreditor and Subordination Agreement (this
“Agreement”), dated as of September 19, 2008, is among JPMORGAN CHASE BANK, N.A., a
national banking association, as administrative agent (in such capacity, with its successors and
assigns, the “Senior Agent”) for the Senior First Priority Secured Parties, THE BANK OF NEW
YORK MELLON TRUST COMPANY, N.A., a national banking association, as collateral agent and
subordinated holder representative for the Subordinated Holders (the “Subordinated Holder
Representative”), TETON ENERGY CORPORATION, a Delaware corporation (“Borrower”), and
each of the other Loan Parties party hereto.

     WHEREAS, Borrower, the Senior Agent, and the Senior Lenders have entered into that certain
Second Amended and Restated Credit Agreement dated as of April 2, 2008 (as amended, supplemented,
restated or otherwise modified, including any refinancing thereof, from time to time, the
“Senior Credit Agreement”), pursuant to which the Senior Lenders have agreed to extend
credit to Borrower; and

     WHEREAS, Borrower and the Subordinated Holders party thereto entered into that certain
Securities Purchase Agreement dated as of June 9, 2008 (as the same may be amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms hereof, the
“Subordinated Debenture Purchase Agreement”), pursuant to which Borrower issued, and the
Subordinated Holders purchased, the June 2008 Subordinated Debentures; and

     WHEREAS, Borrower, each of the Loan Parties, and Whitebox Teton, Ltd, as collateral agent for
the Subordinated Holders (the “Original Subordinated Holder Representative”), entered into
that certain Intercreditor and Subordination Agreement dated as of June 9, 2008 (the “Original
Intercreditor and Subordination Agreement”), pursuant to which the Subordinated Holders and the
Original Subordinated Holder Representative agreed to subordinate the June 2008 Subordinated
Debentures on the terms and conditions set forth therein; and

     WHEREAS, the June 2008 Subordinated Debentures are being exchanged for the Exchanged
Debentures being issued pursuant to the Indenture, which Exchanged Debentures are being issued on
substantially the same terms as were the June 2008 Subordinated Debentures; and

     WHEREAS, the trustee under the Indenture, The Bank of New York Mellon Trust Company, N.A., is
being appointed as the Subordinated Holder Representative pursuant to an amendment to the
Subordinated Debenture Purchase Agreement of even date herewith; and

     WHEREAS, the parties desire to amend and restate the Original Intercreditor and Subordination
Agreement in its entirety with this Agreement; and

     WHEREAS, the execution and delivery of this Agreement is a condition to any extension (and/or
continued extension) of credit by the Senior Lenders under the Senior Credit Agreement.

1

 

     NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained and
other good and valuable consideration, the existence and sufficiency of which are expressly
recognized by all of the parties hereto, and to induce the Senior Lenders to continue to extend
credit under the Senior Credit Agreement, the parties agree as follows:

     SECTION 1 Definitions.

     The following terms, as used herein, have the following meanings:

     “Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. §101 et seq.), as
amended from time to time.

     “Business Day” means any day except a Saturday, Sunday or other day on which national
banks in New York City, Chicago, Illinois or Dallas, Texas are authorized or required by law to
close.

     “Commitments” means all commitments to lend, issue letters of credit or otherwise make
financial accommodations set forth in the Senior Credit Agreement (including, without limitation,
all “Commitments” as defined in the Senior Credit Agreement).

     “Common Collateral” means all assets that are both Senior Loan Collateral and
Subordinated Debenture Collateral.

     “DIP Financing” means any financing (including, without limitation, financings in the
form of loans or advances and financings providing for the issuance of letters of credit) provided
to any Loan Party (as debtor, debtor-in-possession or otherwise) under the Bankruptcy Code by one
or more of the Senior First Priority Secured Parties for which the use of the proceeds thereof is
restricted to providing for general corporate and working capital expenditures of Borrower and its
subsidiaries for costs and expenses that (a) are incurred in the ordinary course of business to
directly or indirectly support the continuing operations of Borrower and its subsidiaries
(including, without limitation, general and administrative expenses, employee compensation and
costs associated with benefits, payment of contractual obligations (to the extent payment is
permitted pursuant to the Insolvency Proceeding), and adequate assurance payments and expenses
incurred in connection with the Insolvency Proceeding), (b) are reasonably necessary to preserve
and maintain the value of the Common Collateral (including, without limitation, maintenance capital
expenditures, expenditures associated with reworking, plugging-back or similar operations designed
to maximize production from a well or field, and expenditures associated with drilling of low-risk
in-field prospects), (c) are attributable to the ownership and operation of Borrower’s and its
subsidiaries’ oil and gas properties (including, without limitation, payment of royalty payments,
taxes and other amounts due as a result of the hydrocarbons produced from such properties and
obligations under any joint operating or similar agreement that could reasonably be expected to
enhance the value of the properties subject thereto or could result in penalty or forfeiture if not
made), and (d) Borrower and the Senior Agent reasonably believe will enhance the value of
Borrower’s estate.

     “Enforcement Action” means, with respect to the Senior Indebtedness or the
Subordinated Indebtedness, any demand for payment or acceleration thereof, the bringing of any
lawsuit or other proceeding, the exercise of any rights and remedies, directly or indirectly, with

2

 

respect to any Common Collateral, any enforcement or foreclosure of any Lien, any sale in lieu
of foreclosure, the taking of possession, exercise of any offset, repossession, garnishment,
sequestration or execution, any collection of any Common Collateral, any notice to account debtors
on any Common Collateral or the commencement or prosecution of enforcement of any of the rights and
remedies under, as applicable, the Senior Loan Documents or the Subordinated Debenture Documents,
or applicable law, including, without limitation, the exercise of any rights of set-off or
recoupment, and the exercise of any rights or remedies of a secured creditor under the uniform
commercial code of any applicable jurisdiction, under the Bankruptcy Code or otherwise;
provided that any Permitted Action shall not constitute an Enforcement Action.

     “Exchanged Debentures” means the 10.75% Secured Subordinated Convertible Debentures
due 2013 issued pursuant to the Indenture by the Borrower and guaranteed by the other Loan Parties
which are issued in exchange for the June 2008 Subordinated Debentures (as amended, supplemented,
restated or otherwise modified from time to time in accordance with the terms hereof).

     “First Priority Liens” means all Liens created by any Senior Security Document and all
other Liens securing the Senior Indebtedness.

     “Indenture” means that certain Secured Subordinated Convertible Debenture Indenture of
even date herewith among Borrower, the other Loan Parties and the Subordinated Noteholder
Representative, as indenture trustee (as amended, supplemented, restated or otherwise modified from
time to time in accordance with the terms hereof).

     “Insolvency Proceeding” means any proceeding in respect of bankruptcy, insolvency,
winding up, receivership, dissolution or assignment for the benefit of creditors, in each of the
foregoing events whether under the Bankruptcy Code or any similar federal, state or foreign
bankruptcy, insolvency, reorganization, receivership or similar law.

     “June 2008 Subordinated Debentures” means the “Debentures” as defined in the
Subordinated Debenture Purchase Agreement.

     “Letters of Credit” means all “Letters of Credit” as defined in the Senior Credit
Agreement.

     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, deed to
secure debt, lien, pledge, hypothecation, assignment, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or title retention agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such asset and (c) in the case of securities,
any purchase option, call or similar right of a third party with respect to such securities.

     “Loan Parties” means, collectively, Borrower and its Subsidiaries under and as defined
in the Senior Credit Agreement, and “Loan Party” means any one of the foregoing.

     “Permitted Action” means (a) the acceleration of all or a portion of the Subordinated
Indebtedness after the acceleration of the Senior Indebtedness, and (b) the exercise by the
Subordinated Holder Representative, on behalf of the Subordinated Holders, of its rights and

3

 

remedies in respect of the Common Collateral under the Subordinated Security Documents or
applicable law after the passage of a period of 180 days (the “Standstill Period”) from the
date of delivery of a notice in writing to the Senior Agent of its intention to exercise such
rights and remedies, which notice may only be delivered following the occurrence of and during the
continuation of a Subordinated Debenture Default; provided, that, notwithstanding
the foregoing, in no event shall the Subordinated Holder Representative nor any Subordinated Holder
exercise or continue to exercise any such rights or remedies if, notwithstanding the expiration of
the Standstill Period, (i) the Senior Agent or any other Senior First Priority Secured Party shall
have commenced and be diligently pursuing the exercise of any of its rights and remedies with
respect to any of the Common Collateral (prompt notice of such exercise to be given to the
Subordinated Holder Representative) or (ii) an Insolvency Proceeding in respect of any Loan Party
shall have been commenced; and provided, further, that in any Insolvency Proceeding
commenced by or against any Loan Party, the Subordinated Holder Representative and the Subordinated
Holders may take any action expressly permitted by Section 6 to be taken by them.

     “Permitted Payments” means (a) any payment made as Permitted Reorganization
Securities, (b) reasonable and customary fees and expenses of professionals and advisors to the
Subordinated Holders and the Subordinated Holder Representative, and (c) reasonable and customary
annual agency fees and out-of-pocket expenses of the Subordinated Holder Representative acting in
its capacity as indenture trustee and collateral agent under the Subordinated Debenture Documents.

     “Permitted Reorganization Securities” means securities, whether debt or equity,
received in an Insolvency Proceeding or a consensual reorganization or restructuring that are
subordinated, junior and inferior to the Senior Indebtedness in all respects to at least the same
extent as the Subordinated Indebtedness as provided herein.

     “Person” means any person, individual, sole proprietorship, partnership, joint
venture, corporation, limited liability company, unincorporated organization, association,
institution, entity or other party, including, without limitation, any government and any political
subdivision, agency or instrumentality thereof.

     “Post-Petition Interest” means any interest or entitlement to fees or expenses that
accrues after the commencement of any Insolvency Proceeding, whether or not allowed or allowable in
any such Insolvency Proceeding.

     “Second Priority Liens” means all Liens created by any Subordinated Security Document
and all other Liens securing the Subordinated Indebtedness.

     “Secured Parties” means the Senior First Priority Secured Parties and the Subordinated
Holders.

     “Senior First Priority Secured Parties” means the Senior Agent, the Senior Lenders and
any other owner or holder of any Senior Indebtedness.

     “Senior Indebtedness” means (a) all principal of and interest (including, without
limitation, any Post-Petition Interest) and premium (if any) on all loans made pursuant to the
Senior Credit Agreement and the other Senior Loan Documents, (b) all reimbursement

4

 

obligations (if any) and interest thereon (including without limitation any Post-Petition
Interest) with respect to any Letter of Credit or similar instruments issued pursuant to the Senior
Credit Agreement and the other Senior Loan Documents, (c) all obligations of any Loan Party owed to
any Senior Lender or any affiliate of any Senior Lender under any Swap Agreement, (d) all fees,
expenses, costs and other amounts payable from time to time pursuant to the Senior Loan Documents,
in each case whether secured or unsecured or whether allowed or allowable in an Insolvency
Proceeding and (e) all other Indebtedness (as defined in the Senior Credit Agreement). To the
extent any payment with respect to any Senior Indebtedness (whether by or on behalf of any Loan
Party, as proceeds of security, enforcement of any right of setoff or otherwise) is declared to be
a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a
debtor in possession, any Subordinated Holder, receiver or similar Person, then the obligation or
part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the
rights and obligations of the Senior First Priority Secured Parties and the Subordinated Holders,
be deemed to be reinstated and outstanding as if such payment had not occurred.

     “Senior Indebtedness Payment Date” means the first date on which (a) the Senior
Indebtedness has been indefeasibly paid in cash in full, (b) all commitments (including, without
limitation, the Commitments) to extend credit under the Senior Loan Documents have been terminated,
(c) there are no outstanding Letters of Credit or similar instruments issued under the Senior Loan
Documents and (d) all Swap Agreements entered into between any Senior Lender or an affiliate
thereof and any Loan Party have been terminated.

     “Senior Lenders” means the Senior Agent and the financial institutions party to the
Senior Credit Agreement as Lenders (as therein defined).

     “Senior Loan Collateral” means all assets, whether now owned or hereafter acquired by
Borrower or any other Loan Party, in which a Lien is granted or purported to be granted to any
Senior First Priority Secured Party as security for any Senior Indebtedness.

     “Senior Loan Documents” means the Senior Credit Agreement and each Senior Security
Document, as the same may be amended, modified or supplemented from time to time in accordance with
the terms hereof.

     “Senior Loans” means the loans and other extensions of credit made by the Senior
Lenders to Borrower pursuant to the Senior Credit Agreement.

     “Senior Security Documents” means each “Guaranty Agreement,” as defined in the Senior
Credit Agreement, the mortgages, deeds of trust, amended and restated mortgages, amended and
restated deeds of trust and other documents or agreements executed or authorized by Borrower or any
other Loan Party granting or perfecting (or intending to grant or perfect) any Lien in any asset of
Borrower or any other Loan Party in favor of any Senior First Priority Secured Party.

     “Standstill Period” has the meaning set forth in the definition of “Permitted Action.”

5

 

     “Subordinated Debenture Collateral” means all assets, whether now owned or hereafter
acquired by Borrower or any other Loan Party, in which a Lien is granted or purported to be granted
to any Subordinated Holder as security for any Subordinated Indebtedness.

     “Subordinated Debenture Default” means an “Event of Default” as defined in any of the
Subordinated Debenture Documents.

     “Subordinated Debenture Documents” means the Subordinated Debenture Purchase
Agreement, the Subordinated Debentures, the Indenture, each other “Transaction Document” as defined
in the Subordinated Debenture Purchase Agreement and each other “Transaction Document” as defined
in the Indenture, including, without limitation, each Subordinated Security Document, as the same
may be amended, modified or supplemented in accordance with the terms hereof.

     “Subordinated Debentures” means the June 2008 Subordinated Debentures and the
Exchanged Debentures.

     “Subordinated Holder” means (a) any “Purchaser” as defined in the Subordinated
Debenture Purchase Agreement, (b) the Original Subordinated Holder Representative, (c) any “Holder”
as defined in the Indenture, (d) the Subordinated Holder Representative and (e) any other owner or
holder of any Subordinated Indebtedness, and their respective successors and assigns.

     “Subordinated Holder Optional Redemption” means the “Holder Optional Redemption” as
defined in the June 2008 Subordinated Debentures as in effect on June 9, 2008 or the Optional
Redemption at the Election of Holder as set forth in Section 3.02 of the Indenture as in effect on
the date hereof.

     “Subordinated Holder Optional Redemption Date” means the “Holder Optional Redemption
Date” as defined in the June 2008 Subordinated Debentures as in effect on June 9, 2008 or the
“Holder Optional Redemption Date” as defined in the Indenture as in effect on the date hereof.

     “Subordinated Indebtedness” means all of the following, whether secured or unsecured:
(a) all principal of and interest (including, without limitation, any Post-Petition Interest) and
premium (if any) on all indebtedness and other obligations under the Subordinated Debenture
Purchase Agreement and the other Subordinated Debenture Documents including, without limitation,
the Subordinated Debentures and the Indenture, (b) all fees, expenses, costs and other amounts
payable from time to time pursuant to the Subordinated Debenture Documents and any trust indenture
entered into in connection therewith (other than costs and expenses incurred in connection with the
negotiation, preparation, execution and delivery of the Subordinated Debenture Documents in an
amount not to exceed $100,000 plus any applicable filing or recording fees), (c) all guaranties of
any of the foregoing, in each case whether or not allowed or allowable in an Insolvency Proceeding,
(d) all deficiency claims of any Subordinated Holder in respect of the foregoing, (e) the other
obligations of Borrower under the Subordinated Debenture Purchase Agreement and the Registration
Rights Agreement (as defined in the Subordinated Debenture Purchase Agreement), (f) other
obligations of Borrower under the

6

 

Indenture and (g) all renewals, extensions, amendments and changes of, or substitutions or
replacements for, all or any part of the previously described subordinated indebtedness. To the
extent any payment with respect to any Subordinated Indebtedness (whether by or on behalf of any
Loan Party, as proceeds of security, enforcement of any right of setoff or otherwise) is declared
to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a
debtor in possession, any Senior First Priority Secured Party, receiver or similar Person, then the
obligation or part thereof originally intended to be satisfied shall, for the purposes of this
Agreement and the rights and obligations of the Senior First Priority Secured Parties and the
Subordinated Holders, be deemed to be reinstated and outstanding as if such payment had not
occurred.

     “Subordinated Security Documents” means the “Security Documents” as defined in the
Subordinated Debenture Purchase Agreement and the “Security Documents” as defined in the Indenture.

     “Swap Agreements” means all “Swap Agreements” as defined in the Senior Credit
Agreement.

     “Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in
effect from time to time in the State of Texas.

     SECTION 2 Subordination.

     2.1 Agreement to Subordinate. Each Loan Party agrees, and each Subordinated Holder
and the Subordinated Holder Representative by entering into the Subordinated Debenture Purchase
Agreement and/or the Indenture and purchasing the Subordinated Debentures thereunder (or otherwise
holding or owning any Subordinated Indebtedness) agrees, that the Subordinated Indebtedness is
subordinated in right of payment, to the extent and in the manner provided in this Agreement, to
the prior indefeasible payment in full in cash of all Senior Indebtedness, and that such
subordination is for the benefit of and enforceable by the Senior Agent on behalf of the Senior
First Priority Secured Parties.

     2.2 Liquidation, Dissolution, Bankruptcy. Upon any payment or distribution of the
assets of any Loan Party to creditors upon a restructuring, reorganization, total or partial
liquidation or a total or partial dissolution of any Loan Party or in an Insolvency Proceeding
relating to any Loan Party or its respective properties or during the pendency of any Insolvency
Proceeding: (a) holders of the Senior Indebtedness shall be entitled to receive indefeasible
payment in full in cash of all Senior Indebtedness before the Subordinated Holders shall be
entitled to receive any payment on or with respect to the Subordinated Indebtedness; and (b) until
the Senior Indebtedness Payment Date, any distribution to which the Subordinated Holders would be
entitled but for this Section 2 shall be made to Senior First Priority Secured Parties (or
the Senior Agent on their behalf) as their interests may appear, except that Subordinated Holders
may receive Permitted Payments. If no proof of claim is filed in any Insolvency Proceeding with
respect to any Subordinated Indebtedness by the tenth day prior to the bar date for any such proof
of claim, the Senior Agent may, after notice to the Subordinated Holder Representative, file such a
proof of claim on behalf of the Subordinated Holders, and each Subordinated Holder (by entering
into the Subordinated Debenture Purchase Agreement and/or the Indenture and

7

 

purchasing the Subordinated Debentures thereunder (or otherwise holding or owning any
Subordinated Indebtedness)) hereby irrevocably appoints the Senior Agent as its agent and
attorney-in-fact (which power of attorney is coupled with an interest and irrevocable) for such
limited purpose; provided, that the foregoing shall not confer to the holder of any
Senior Indebtedness the right to vote on behalf of the Subordinated Holders in any Insolvency
Proceedings.

     2.3 No Prepayments of Principal on Subordinated Indebtedness. No principal payments
are due upon the Subordinated Indebtedness and no payments in respect of any purchase, repurchase,
redemption or defeasance of the Subordinated Indebtedness, other than in respect of the
Subordinated Holder Optional Redemption, shall be due on the Subordinated Indebtedness prior to the
earliest of (a) the acceleration of the Subordinated Indebtedness upon the occurrence of a
Subordinated Debenture Default, (b) June 9, 2013, or (c) a “Change of Control Transaction” as
defined in the June 2008 Subordinated Debentures or in the Indenture. Notwithstanding anything to
the contrary contained in this Agreement, any Subordinated Holder shall have the right to exercise,
and Borrower shall have the obligation to honor, any properly noticed Subordinated Holder Optional
Redemption exercised in accordance with the terms of the Subordinated Debenture Purchase Agreement
or the Indenture notwithstanding that an “Event of Default” under and as defined in the Senior
Credit Agreement exists or would otherwise result from the exercise of such redemption and any
payment made by Borrower in connection therewith. Senior Agent, on behalf of itself and the Senior
Lenders, hereby consents to Borrower making payments in respect of the Subordinated Holder Optional
Redemption on or prior to the Subordinated Holder Optional Redemption Date, notwithstanding any
restrictions or prohibitions with respect to such payments contained in the Senior Credit
Agreement. In addition to the other restrictions hereunder, so long as any Senior Indebtedness is
outstanding, without the prior written consent of Senior Agent, neither Borrower nor any other
Person shall make any prepayment of principal of the Subordinated Indebtedness or prepayment in
respect of the purchase, repurchase, redemption or defeasance of principal on the Subordinated
Indebtedness prior to the time that such principal payment is due, and no Subordinated Holder shall
receive any prepayment of principal of the Subordinated Indebtedness or prepayment in respect of
the purchase, repurchase, redemption or defeasance of the Subordinated Indebtedness prior to the
time that such payment is due. At or after the time that any such payment, repurchase, redemption
or defeasance of principal becomes due to any Subordinated Holder, such Subordinated Holder may
collect such payment; provided that, except for payments in respect of the
Subordinated Holder Optional Redemption made in accordance with the terms of the Subordinated
Debenture Purchase Agreement or the Indenture, if any Senior Indebtedness is then outstanding, such
Subordinated Holder must receive and hold such payment for, and within three (3) Business Days
thereafter, pay over and deliver such payment to, Senior Agent to be applied as a payment or
prepayment of the Senior Indebtedness. In addition to the foregoing restrictions concerning
principal, except for payments in respect of the Subordinated Holder Optional Redemption made in
accordance with the terms of the Subordinated Debenture Purchase Agreement or the Indenture, so
long as any Senior Indebtedness is outstanding, without the prior written consent of Senior Agent,
neither Borrower nor any other Person shall make any voluntary prepayment or payment in respect of
any purchase, repurchase, redemption or defeasance of any item of Subordinated Indebtedness other
than principal prior to the time that such item is due, and no Subordinated Holder shall receive
any such voluntary prepayment or payment in respect of any purchase, repurchase, redemption or
defeasance; provided, that, and

8

 

notwithstanding the foregoing restrictions, nothing contained herein shall preclude (i) any
Subordinated Holder from converting its Subordinated Debentures or any part thereof into common
stock of Borrower in accordance with the terms of the Subordinated Debenture Documents, or (ii) at
any time that neither a Default, Event of Default or Borrowing Base Deficiency (as each such term
is defined in the Senior Credit Agreement) exists or would result therefrom, Borrower from making
regularly scheduled payments of interest on the Subordinated Debentures when due and in accordance
with the terms of such Subordinated Debentures, including, without limitation, payments of accrued
interest in connection with a conversion by a Subordinated Holder of its Subordinated Debentures
into common stock of Borrower in accordance with the terms of the Subordinated Debenture Documents.

     2.4 Default on Senior Indebtedness. Except (a) as otherwise expressly provided in
Section 2.3 in respect of the Subordinated Holder Optional Redemption, or (b) in connection
with a conversion by a Subordinated Holder of its Subordinated Debentures into common stock of
Borrower in accordance with the terms of the Subordinated Debenture Documents, no Loan Party may,
and no Subordinated Holder may ask or require a Loan Party to, pay the principal of or interest on
or other amounts with respect to the Subordinated Indebtedness, make any deposit pursuant to any
Subordinated Debenture Document or prepay, purchase, redeem or otherwise acquire or retire any
Subordinated Indebtedness (each such event referred to herein as “pay the Subordinated
Indebtedness”) if (i) any default in payment of any Senior Indebtedness shall have occurred
(whether such payment was due at maturity, on account of acceleration or otherwise, and whether for
principal, interest or other amounts), or (ii) any Borrowing Base Deficiency (as defined in the
Senior Credit Agreement) then exists unless, in each case, (A) the default or Borrowing Base
Deficiency has been cured or waived and any such acceleration has been rescinded or (B) the Senior
Indebtedness Payment Date has occurred. During the continuance of any Event of Default (as defined
in the Senior Credit Agreement), no Loan Party may, and no Subordinated Holder may ask or require a
Loan Party to, pay the Subordinated Indebtedness (other than payments in respect of the
Subordinated Holder Optional Redemption or otherwise constituting Permitted Payments).

     2.5 Acceleration. If payment of any Subordinated Indebtedness is accelerated, any
payment thereon prior to the Senior Indebtedness Payment Date shall be paid directly to the Senior
Agent for the benefit of the Senior First Priority Secured Parties for application to the payment
of the Senior Indebtedness until the date on which (a) the Senior Indebtedness has been
indefeasibly paid in full in cash, (b) there are no outstanding Letters of Credit or similar
instruments issued under the Senior Loan Documents for which cash collateral equal to 105% of the
face amount thereof has not been deposited with the Senior Agent to secure drawings thereunder and
(c) all Swap Agreements entered into between any Senior Lender or an affiliate thereof and any Loan
Party have been terminated, and thereafter to the Subordinated Holder Representative, on behalf of
the Subordinated Holders for application to the Subordinated Indebtedness.

     2.6 When Distributions Must Be Paid Over. In the event that the Subordinated Holder
Representative or any Subordinated Holder receives any payment of any Subordinated Indebtedness at
a time when such payment is prohibited by this Agreement or is to be paid to the Senior Agent or
any Senior First Priority Secured Party, such payment shall be held by the Subordinated Holder
Representative or such Subordinated Holder, in trust for the benefit of, and

9

 

shall be paid forthwith over and delivered (together with any necessary endorsements) to, the
Senior First Priority Secured Parties (or the Senior Agent), as their respective interests may
appear, for application to the payment of the Senior Indebtedness. If any Subordinated Holder or
the Subordinated Holder Representative shall fail to make any such endorsement, then each such
Person hereby irrevocably authorizes and grants a power of attorney (which is irrevocable and
coupled with an interest) to the Senior Agent to make such endorsement.

     2.7 Subrogation. After the Senior Indebtedness Payment Date and until the
Subordinated Indebtedness is paid in full, the Subordinated Holders shall be subrogated to the
rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness
to the extent that distributions otherwise payable to the Subordinated Holders have been applied to
payment of Senior Indebtedness. A distribution made under this Agreement to the Senior First
Priority Secured Parties that otherwise would have been made to Subordinated Holders is not, as
between Borrower and Subordinated Holders, a payment by Borrower on the Subordinated Indebtedness.

     2.8 Agreement Not to Pursue Actions; Relative Rights. Until the Senior Indebtedness
Payment Date shall have occurred, neither the Subordinated Holder Representative nor any
Subordinated Holder will commence any Enforcement Action against any Loan Party to recover all or
any part of the Subordinated Indebtedness or join with any other creditor unless the Senior First
Priority Secured Parties shall also join in bringing any proceedings against such Loan Party in an
Insolvency Proceeding or such action is permitted by Section 6.1. This Agreement defines
the relative rights of Subordinated Holders and the Senior First Priority Secured Parties. Nothing
in this Agreement shall impair, as between Borrower or any Loan Party and the Subordinated Holders,
the obligations of Borrower and the Loan Parties to pay principal of and interest on the
Subordinated Indebtedness in accordance with their terms.

     2.9 Distribution or Notice to Representative. Whenever a distribution is to be made
or a notice given to the Senior First Priority Secured Parties or the Subordinated Holders, the
distribution may be made and the notice given to the Senior Agent and the Subordinated Holder
Representative, respectively.

     2.10 Subordination Not To Prevent Subordinated Debenture Default. The failure to make
a payment on the Subordinated Indebtedness by reason of any provision in this Agreement shall not
be construed as preventing the occurrence of a Subordinated Debenture Default.

     2.11 Subordinated Holder Representative Entitled to Rely. Upon any payment or
distribution pursuant to this Section 2, the Subordinated Holder Representative and the
Subordinated Holders shall be entitled to rely upon (a) any order or decree of a court of competent
jurisdiction in which any Insolvency Proceedings are pending that is consistent with this
Agreement, or (b) the Senior Agent, in any such case, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the Senior Indebtedness,
the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Agreement. In the event that the Subordinated Holder
Representative determines, in good faith, that evidence is required with respect to the right of
any Person as a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Agreement, the Subordinated Holder Representative may

10

 

request such Person to furnish evidence to the reasonable satisfaction of the Subordinated
Holder Representative as to the amount of Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and other facts
pertinent to the rights of such Person under this Agreement, and, if such evidence is not
furnished, the Subordinated Holder Representative may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.

     2.12 Subordinated Holder Representative To Effectuate Subordination. Each
Subordinated Holder by entering into the Subordinated Debenture Purchase Agreement and/or the
Indenture and purchasing the Subordinated Debentures thereunder (or otherwise holding or owning any
Subordinated Indebtedness) authorizes and directs the Subordinated Holder Representative on its
behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the
subordination between the Subordinated Holders and the Senior First Priority Secured Parties as
provided in this Agreement and appoints the Subordinated Holder Representative as attorney-in-fact
for any and all such purposes, including the filing of a claim in any Insolvency Proceeding.

     2.13 Nature of Senior Indebtedness. The Subordinated Holder Representative on behalf
of itself and the other Subordinated Holders acknowledges that, subject to Section 7.2, (a)
all or a portion of the Senior Indebtedness is revolving in nature and that the amount thereof that
may be outstanding at any time or from time to time may be increased or reduced and subsequently
reborrowed, (b) the terms of the Senior Indebtedness may be modified, extended or amended from time
to time, and (c) the aggregate amount of the Senior Indebtedness may be increased, replaced or
refinanced, in each event, without prior notice to or consent by the Subordinated Holders and
without affecting the provisions hereof. Subject to the limits set forth in Section 7.2,
the terms of subordination contained in this Agreement and Lien priorities provided in Section
3.1 shall not be altered or otherwise affected by any such amendment, modification, supplement,
extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of
either the Senior Indebtedness or the Subordinated Indebtedness, or any portion thereof.

     SECTION 3 Lien Priorities.

     3.1 Subordination of Liens. Any and all Liens now existing or hereafter created or
arising in favor of the Subordinated Holder Representative or any Subordinated Holder securing any
of the Subordinated Indebtedness, regardless of how acquired, whether by grant, statute, operation
of law, subrogation or otherwise are expressly junior in priority, operation and effect to any and
all Liens now existing or hereafter created or arising in favor of the Senior First Priority
Secured Parties securing any of the Senior Indebtedness, notwithstanding (a) anything to the
contrary contained in any agreement or filing to which any Senior First Priority Secured Party or
Subordinated Holder or their respective representatives may now or hereafter be a party, and
regardless of the time, order or method of grant, attachment, recording or perfection of any
financing statements or other security interests, assignments, pledges, deeds, mortgages and other
Liens, charges or encumbrances or any defect or deficiency or alleged defect or deficiency in any
of the foregoing, (b) any provision of the UCC or any applicable law or any Senior Loan Document or
Subordinated Debenture Document or any other circumstance whatsoever and (c) the fact that any such
Liens in favor of any Senior First Priority Secured Party securing any of

11

 

the Senior Indebtedness are (i) subordinated to any Lien securing any obligation of any Loan
Party other than the Subordinated Indebtedness or (ii) otherwise subordinated, voided, avoided,
invalidated or lapsed.

     3.2 Priority and Perfection Not To Be Challenged. Neither the Subordinated Holder
Representative nor any Subordinated Holder shall object to or contest, or support any other Person
in contesting or objecting to, in any proceeding (including, without limitation, any Insolvency
Proceeding), the validity, extent, perfection, priority or enforceability of any Lien in the Common
Collateral granted in favor of any Senior First Priority Secured Party. Notwithstanding any
failure by any Senior First Priority Secured Party or Subordinated Holder or their respective
representatives to perfect its Liens in the Common Collateral or any avoidance, invalidation or
subordination by any third party or court of competent jurisdiction of the Liens in the Common
Collateral granted in favor of the Senior First Priority Secured Parties or the Subordinated
Holders, the priority and rights as between the Senior First Priority Secured Parties and/or the
Subordinated Holders and their representatives with respect to the Common Collateral shall be as
set forth herein. Neither the Senior Agent nor any Senior First Priority Secured Party shall
object to or contest, or support any other Person in contesting or objecting to, in any proceeding
(including, without limitation, any Insolvency Proceeding), the validity, extent, perfection,
priority or enforceability of any Lien in the Common Collateral granted in favor of any
Subordinated Holder.

     3.3 Agreements Regarding Actions to Perfect Liens.

     (a) The Subordinated Holder Representative and the other Subordinated Holders agree (by their
execution of the Subordinated Debenture Purchase Agreement and/or the Indenture and by their
purchase of the Subordinated Debentures thereunder (or otherwise holding or owning any Subordinated
Indebtedness)) that all mortgages, deeds of trust, deeds or other security instruments or
letter-in-lieu or other similar notices (collectively, “Mortgages”) now or hereafter filed
against real property or other assets of a Loan Party in favor of or for the benefit of the
Subordinated Holder Representative or any Subordinated Holder, or delivered to any third party
shall be in form and content satisfactory to the Senior Agent and shall contain the following
notation (or similar language tailored to the nature of the instrument) in bold type:

     “The lien created by this mortgage/deed of trust or referred to herein
on the property described herein is junior and subordinate to the lien on
such property created by any mortgage, deed of trust or similar instrument
now or hereafter granted by Mortgagor to JPMorgan Chase Bank, N.A., as
administrative agent, and its successors and assigns in such capacity, in
such property, in accordance with the provisions of the Amended and Restated
Intercreditor and Subordination Agreement dated as of                     , 2008
among JPMorgan Chase Bank, N.A., as Senior Agent, The Bank of New York
Mellon Trust Company, N.A., as Subordinated Holder Representative and
collateral agent, Mortgagor [or Teton Energy Corporation, as applicable] and
certain affiliates of Mortgagor [or Teton Energy Corporation, as
applicable], as amended from time to time.”

12

 

     (b) The Senior Agent hereby acknowledges that, to the extent that it holds, or a third party
holds on its behalf, physical possession of or “control” (as defined in the Uniform Commercial
Code) over Common Collateral pursuant to the Senior Security Documents, such possession or control
is also for the benefit of the Subordinated Holder Representative and the other Subordinated
Holders solely to the extent required to perfect their Lien in such Common Collateral. Nothing in
the preceding sentence shall be construed to impose any duty on the Senior Agent (or any third
party acting on its behalf) with respect to such Common Collateral or to provide the Subordinated
Holder Representative or any other Subordinated Holder with any rights with respect to such Common
Collateral beyond those specified in this Agreement; provided that subsequent to the
occurrence of the Senior Indebtedness Payment Date, the Senior Agent shall (i) deliver to the
Subordinated Holder Representative, at no cost or expense to the Senior Agent, the Common
Collateral in its possession or control together with any necessary endorsements, without recourse,
representation or warranty, to the extent required by the Subordinated Debenture Documents or (ii)
deliver such Common Collateral as a court of competent jurisdiction otherwise directs;
provided further that the provisions of this Agreement are intended solely to
govern the respective Lien priorities as between the Senior First Priority Secured Parties and the
Subordinated Holders and shall not impose on the Senior First Priority Secured Parties or their
representatives any obligations in respect of the disposition of any Common Collateral (or any
proceeds thereof) that would conflict with prior perfected Liens or any claims thereon in favor of
any other Person that is not a Secured Party.

     3.4 New Liens. So long as the Senior Indebtedness Payment Date has not occurred, the
parties hereto agree that if the Subordinated Holders or the Subordinated Holder Representative on
their behalf shall acquire or hold any Lien on any assets of any Loan Party securing any
Subordinated Indebtedness, which assets are not also subject to the First Priority Lien of the
Senior Agent under the Senior Loan Documents, then such Subordinated Holder or the Subordinated
Holder Representative will immediately without the need for any further consent of any other
Subordinated Holder, notwithstanding anything to the contrary in any other Subordinated Debenture
Document, promptly (a) notify the Senior Agent of such fact, specifying the property that does not
then constitute Senior Loan Collateral and (b) if requested in writing by the Senior Agent, execute
and deliver additional subordination documentation consistent with Section 10.2(c). If the
filing of an Insolvency Proceeding prevents the Senior Agent from obtaining a Lien (or avoids any
such Lien), then the Subordinated Holders will exercise their rights in respect of such Lien at the
direction of the Senior Agent in a manner consistent with this Agreement for the benefit of the
Senior Indebtedness. If the Senior Agent or any Senior First Priority Secured Party shall acquire
or hold any Lien on any assets of any Loan Party securing any Senior Indebtedness, then no
provision of this Agreement shall prohibit, nor shall the Senior Agent or any Senior First Priority
Secured Party take any actions to prevent, the Subordinated Holder Representative or any
Subordinated Holder from obtaining and perfecting a Second Priority Lien on such assets. The
Subordinated Holders, by their purchase of any Subordinated Debentures under the Subordinated
Debenture Documents and notwithstanding any provision of any Subordinated Debenture Document to the
contrary, hereby authorize the Subordinated Holder Representative to comply with its obligations
under this Section 3.4.

13

 

     SECTION 4 Enforcement Rights.

     4.1 Exclusive Enforcement. Subject to the Subordinated Holders’ rights to commence a
Permitted Action, until the Senior Indebtedness Payment Date has occurred, whether or not an
Insolvency Proceeding has been commenced by or against any Loan Party, the Senior First Priority
Secured Parties shall have the exclusive right to take and continue any Enforcement Action with
respect to the Common Collateral, without any consultation with or consent of any Subordinated
Holder, but subject to the proviso set forth in Section 6.1. Upon the occurrence and
during the continuance of a Default or an Event of Default (as each such term is defined in the
Senior Credit Agreement), the Senior Agent and the other Senior First Priority Secured Parties may
take and continue any Enforcement Action with respect to the Senior Indebtedness and the Common
Collateral in such order and manner as they may determine in their sole discretion, subject to
their obligation to account for excess proceeds as contemplated by Section 5.1.

     4.2 Standstill and Waivers. The Subordinated Holder Representative and the
Subordinated Holders (by their execution of the Subordinated Debenture Purchase Agreement and/or
the Indenture and their purchase of the Subordinated Debentures thereunder (or otherwise holding or
owning any Subordinated Indebtedness)) agree that, until the Senior Indebtedness Payment Date has
occurred, subject to the terms of Section 5.1 and the proviso set forth in Section
6.1 and except for Permitted Actions:

     (a) they will not take or cause to be taken any action, the purpose or effect of which is to
make any Lien in respect of any Subordinated Indebtedness pari passu with or senior to, or to give
any Subordinated Holder any preference or priority relative to, the Liens with respect to the
Senior Indebtedness or the Senior First Priority Secured Parties with respect to any of the Common
Collateral;

     (b) they will not contest, oppose, object to, interfere with, hinder or delay, in any manner,
whether by judicial proceedings (including, without limitation, the filing of an Insolvency
Proceeding) or otherwise, any foreclosure, sale, lease, exchange, transfer or other disposition of
the Common Collateral by the Senior Agent or any other Senior First Priority Secured Party or any
other Enforcement Action taken by or on behalf of the Senior Agent or any other Senior First
Priority Secured Party;

     (c) they have no right to (i) direct either the Senior Agent or any other Senior First
Priority Secured Party to exercise any right, remedy or power with respect to the Common Collateral
or pursuant to the Senior Security Documents or (ii) consent or object to the exercise by the
Senior Agent or any other Senior First Priority Secured Party of any right, remedy or power with
respect to the Common Collateral or pursuant to the Senior Loan Documents or to the timing or
manner in which any such right is exercised or not exercised (or, to the extent they may have any
such right described in this clause (c), whether as a junior lien creditor or otherwise, they
hereby irrevocably waive such right);

     (d) they will not institute any suit or other proceeding or assert in any suit, Insolvency
Proceeding or other proceeding any claim against the Senior Agent or any other Senior First
Priority Secured Party seeking damages from or other relief by way of specific performance,

14

 

instructions or otherwise, with respect to, and neither the Senior Agent nor any other Senior
First Priority Secured Party shall be liable for, any action taken or omitted to be taken by the
Senior Agent or any other Senior First Priority Secured Party with respect to the Common
Collateral;

     (e) they will not make any judicial or nonjudicial claim or demand or commence any judicial or
non-judicial proceedings against any Loan Party or any subsidiary or affiliate of any Loan Party
under or with respect to any Subordinated Security Document seeking payment or damages from or
other relief by way of specific performance, instructions or otherwise under or with respect to any
Subordinated Security Document (other than filing a proof of claim in an Insolvency Proceeding) or
exercise any right, remedy or power under or with respect to, or otherwise take any action to
enforce, other than filing a proof of claim, any Subordinated Debenture Document;

     (f) they will not commence judicial or nonjudicial foreclosure proceedings with respect to,
seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any
action to take possession of, exercise any right, remedy or power with respect to, or otherwise
take any action to enforce their interest in or realize upon, any Common Collateral or pursuant to
the Subordinated Security Documents, including delivery of letters-in-lieu to buyers of
hydrocarbons or other letters of direction to account debtors; and

     (g) they will not seek, and hereby waive any right, to have the Common Collateral or any part
thereof marshaled upon any foreclosure or other disposition of the Common Collateral.

     4.3 Judgment Creditors. In the event, in accordance with Section 2.8, that
any Subordinated Holder becomes a judgment lien creditor in respect of Common Collateral as a
result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be
subject to the terms of this Agreement for all purposes (including in relation to the First
Priority Liens and the Senior Indebtedness) as the other Liens securing the Subordinated
Indebtedness (created pursuant to the Subordinated Security Documents) are subject to this
Agreement.

     4.4 Cooperation. The Subordinated Holder Representative and the other Subordinated
Holders (by their execution of the Subordinated Debenture Purchase Agreement and/or the Indenture
and purchase of the Subordinated Debentures thereunder (or otherwise holding or owning any
Subordinated Indebtedness)) agree that each of them shall take such actions as the Senior Agent
shall reasonably request in connection with the exercise by the Senior First Priority Secured
Parties of their rights set forth herein.

     4.5 Actions Upon Breach.

     (a) If any Subordinated Holder, contrary to this Agreement, commences or participates in any
Enforcement Action against any Loan Party or the Common Collateral, such Loan Party, with the prior
written consent of the Senior Agent, may interpose as a defense or dilatory plea the making of this
Agreement, and any Senior First Priority Secured Party may intervene and interpose such fact as a
defense or dilatory plea in its or their name or in the name of such Loan Party.

     (b) Should any Subordinated Holder, contrary to this Agreement, in any way take, attempt to or
threaten to take any action with respect to the Common Collateral (including,

15

 

without limitation, any attempt to realize upon or enforce any remedy with respect to this
Agreement), or fail to take any action required by this Agreement, any Senior First Priority
Secured Party (in its or their own name) may obtain relief against such Subordinated Holder by
injunction, specific performance and/or other appropriate equitable relief, it being understood and
agreed by the Subordinated Holder Representative on behalf of each Subordinated Holder that (i) the
Senior First Priority Secured Parties’ damages from its actions may at that time be difficult to
ascertain and may be irreparable, and (ii) each Subordinated Holder waives any defense that any
Senior First Priority Secured Party cannot demonstrate damage and/or be made whole by the awarding
of damages.

     4.6 Permitted Actions. The Subordinated Holder Representative shall promptly notify
the Senior Agent of the commencement of any Permitted Action, any judgment in any Permitted Action
and any other material developments related to its efforts in any of the foregoing. The Borrower
shall promptly notify the Senior Agent of any exercise by any Subordinated Holder of any
Subordinated Holder Optional Redemption.

     SECTION 5 Application of Proceeds of Common Collateral; Dispositions and Releases of
Common Collateral; Inspection and Insurance.

     5.1 Application of Proceeds; Turnover Provisions. All proceeds of Common Collateral
(including, without limitation, any interest earned thereon) resulting from the sale, collection or
other disposition of Common Collateral in connection with or resulting from any Enforcement Action,
and whether or not pursuant to an Insolvency Proceeding, shall be distributed as follows:
first to the Senior Agent for application to the Senior Indebtedness in accordance with the
terms of the Senior Loan Documents, until the Senior Indebtedness Payment Date has occurred and
thereafter, to the Subordinated Holder Representative for application to the Subordinated
Indebtedness in accordance with the Subordinated Debenture Documents and thereafter to Borrower in
accordance with the Subordinated Debenture Documents. Until the occurrence of the Senior
Indebtedness Payment Date, any Common Collateral, including, without limitation, any such Common
Collateral constituting proceeds, received by any Subordinated Holder in violation of this
Agreement shall be segregated and held in trust and promptly paid over to the Senior Agent, for the
benefit of the Senior First Priority Secured Parties, in the same form as received, with any
necessary endorsements, and each Subordinated Holder, by entering into the Subordinated Debenture
Purchase Agreement and/or the Indenture and purchasing the Subordinated Debentures thereunder (or
otherwise holding or owning any Subordinated Indebtedness), hereby authorizes the Senior Agent to
make any such endorsements as agent for such Subordinated Holder (which authorization, being
coupled with an interest, is irrevocable).

     5.2 Releases of Second Priority Lien.

     (a) Upon any sale or other disposition of Common Collateral that results in the release of the
First Priority Lien on any Common Collateral (including, without limitation, any sale or other
disposition pursuant to any Enforcement Action), the Second Priority Lien on such Common Collateral
shall be automatically released with no further consent or action of any Person. The parties
acknowledge that the Liens of the parties shall attach in the same priority as contemplated by this
Agreement to the proceeds of such sale or other disposition in accordance

16

 

with applicable law and that any such proceeds realized from an Enforcement Action shall be
applied in accordance with the terms of Section 5.1.

     (b) The Subordinated Holder Representative and the Subordinated Holders shall authorize and/or
promptly execute and deliver such release documents and instruments and shall take such further
actions as the Senior Agent shall reasonably request to evidence any release of the Second Priority
Lien described in paragraph (a). The Subordinated Holder Representative hereby appoints the Senior
Agent and any officer or duly authorized person of the Senior Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable power of attorney in
the place and stead of the Subordinated Holder Representative and in the name of the Subordinated
Holder Representative or in the Senior Agent’s own name, from time to time, in the Senior Agent’s
sole discretion, for the purposes of carrying out the terms of this paragraph, to take any and all
appropriate action and to execute and deliver any and all documents and instruments as may be
necessary or desirable to accomplish the purposes of this paragraph, including, without limitation,
any financing statements, endorsements, assignments, releases or other documents or instruments of
transfer (which appointment, being coupled with an interest, is irrevocable).

     5.3 Inspection Rights and Insurance.

     (a) Subject to the terms of Section 3.3(b) and Section 5.1, any Senior First
Priority Secured Party and its representatives and invitees may at any time inspect, repossess,
remove and otherwise deal with the Common Collateral in accordance with the terms of the Senior
Loan Documents, and the Senior Agent may advertise and conduct public auctions or private sales of
the Common Collateral, in each case without notice to, the involvement of or interference by any
Subordinated Holder or liability to any Subordinated Holder.

     (b) Until the Senior Indebtedness Payment Date has occurred and, in each case, in accordance
with the terms of the Senior Loan Documents, the Senior Agent will have (i) the right, along with
the Subordinated Holder Representative, to be named as loss payee under any insurance policies
maintained from time to time by any Loan Party; (ii) the exclusive right to adjust or settle any
insurance policy or claim covering the Common Collateral in the event of any loss thereunder; and
(iii) the exclusive right to approve any award granted in any condemnation or similar proceeding
affecting the Common Collateral. All such proceeds shall be applied in a manner consistent with
this Agreement. With respect to any check or other instrument issued jointly to the Senior Agent
and the Subordinated Holder Representative or the Subordinated Holders, the Subordinated Holder
Representative and the Subordinated Holders (by entering into the Subordinated Debenture Purchase
Agreement and/or the Indenture and purchasing the Subordinated Debentures thereunder (or otherwise
holding or owning any Subordinated Indebtedness)) hereby appoint the Senior Agent and any officer
or duly authorized person of the Senior Agent, with full power of substitution, as their true and
lawful attorney-in-fact with full irrevocable power of attorney in the place and stead of the
Subordinated Holder Representative and the Subordinated Holders and in the name of the Subordinated
Holder Representative or the Subordinated Holders or in the Senior Agent’s own name, from time to
time, in the Senior Agent’s sole discretion, for the purposes of carrying out the terms of this
paragraph, to take any and all appropriate action and to endorse, execute and deliver any and all
documents and instruments as may be necessary to accomplish the purposes of this paragraph,
including,

17

 

without limitation, any endorsements, assignments, releases or other documents or instruments
(which appointment, being coupled with an interest, is irrevocable). Notwithstanding the
foregoing, the Senior Agent hereby agrees that, in exercising its rights under this Section
5.3(b), it shall not enter into any settlement agreement binding on the Subordinated Holders or
the Subordinated Holder Representative that imposes affirmative obligations on the Subordinated
Holders or the Subordinated Holder Representative.

     SECTION 6 Insolvency Proceedings.

     6.1 Filing of Motions. Until the Senior Indebtedness Payment Date has occurred, the
Subordinated Holder Representative and the other Subordinated Holders (by their execution of the
Subordinated Debenture Purchase Agreement and/or the Indenture and purchase of the Subordinated
Debentures thereunder (or otherwise holding or owning any Subordinated Indebtedness)) agree that no
Subordinated Holder shall, in or in connection with any Insolvency Proceeding, file any pleadings
or motions, take any position at any hearing or proceeding of any nature, or otherwise take any
action whatsoever, in each case, that would breach a provision of this Agreement, including,
without limitation, any challenge or contest with respect to the determination of any Liens or
claims (including the validity and enforceability thereof) held by the Senior Agent or any other
Senior First Priority Secured Party or the value of any claims of such parties under Section 506(a)
of the Bankruptcy Code or otherwise; provided that the Subordinated Holder Representative
and the Subordinated Holders may file a proof of claim in an Insolvency Proceeding. For the
avoidance of doubt, nothing in this Agreement should be construed to prohibit the Subordinated
Holder Representative and the Subordinated Holders from pursuing the rights and taking actions and
filing motions that other unsecured creditors are generally permitted to pursue or filing and
pursuing any Permitted Action or other motion or action to the extent not prohibited by
Sections 2.8, 3.2, 4.1, 4.2, and this Section 6.1.

     6.2 Financing Matters. If any Loan Party becomes subject to any Insolvency
Proceeding, and if the Senior Agent or one or more of the other Senior First Priority Secured
Parties desire to consent (and not object) to the use of cash collateral under the Bankruptcy Code
or to provide DIP Financing to any Loan Party, then the Subordinated Holder Representative and the
Subordinated Holders agree that they (a) will be deemed to have consented to, will raise no
objection to, nor support any other Person objecting to, the use of such cash collateral or to such
DIP Financing, (b) will not request or accept adequate protection or any other relief in connection
with the use of such cash collateral or such DIP Financing except as set forth in Section
6.4 below, (c) will subordinate (and will be deemed hereunder to have subordinated) the Second
Priority Liens (i) to such DIP Financing on the same terms as the First Priority Liens are
subordinated thereto (and such subordination will not alter in any manner the terms of this
Agreement), (ii) to any adequate protection provided to the Senior First Priority Secured Parties,
and (iii) to any “carve-out” agreed to by the Senior Agent or the other Senior First Priority
Secured Parties, and (d) agrees that notice received two calendar days prior to the entry of an
order approving such usage of cash collateral or approving such DIP Financing shall be adequate
notice.

     6.3 Relief From the Automatic Stay. The Subordinated Holder Representative and the
other Subordinated Holders agree that none of them will seek relief from the automatic stay

18

 

or from any other stay in any Insolvency Proceeding in respect of any Common Collateral,
without the prior written consent of the Senior Agent.

     6.4 Adequate Protection. The Subordinated Holder Representative and the other
Subordinated Holders agree that they shall not object to, contest, or support any other Person
objecting to or contesting, (a) any request by the Senior Agent or the Senior First Priority
Secured Parties for adequate protection or any adequate protection provided to the Senior Agent or
the other Senior First Priority Secured Parties, (b) any objection by the Senior Agent or any other
Senior First Priority Secured Parties to any motion, relief, action or proceeding based on a claim
of a lack of adequate protection or (c) the payment of interest, fees, expenses or other amounts to
the Senior Agent or any other Senior First Priority Secured Party under Section 506(b) or 506(c) of
the Bankruptcy Code or otherwise. Notwithstanding anything to the contrary in this Agreement, in
any Insolvency Proceeding, (i) if the Senior First Priority Secured Parties (or any of them) are
granted adequate protection in the form of additional collateral or super priority claims in
connection with any DIP Financing or use of cash collateral, and the Senior First Priority Secured
Parties do not object to the adequate protection being provided to them, then the Subordinated
Holder Representative and any of the Subordinated Holders may seek or accept adequate protection
solely in the form of (A) a replacement Lien on such additional collateral, subordinated to the
Liens securing the Senior Indebtedness and such DIP Financing on the same basis as the other Liens
securing the Subordinated Indebtedness is so subordinated to the Senior Indebtedness under this
Agreement and (B) super priority claims junior in all respects to the super priority claims granted
to the Senior First Priority Secured Parties; provided, however, that the
Subordinated Holder Representative shall have irrevocably agreed, pursuant to Section 1129(a)(9) of
the Bankruptcy Code, on behalf of itself and the Subordinated Holders, in any stipulation and/or
order granting such adequate protection, that such junior superpriority claims may be paid under
any plan of reorganization in any combination of cash, debt, equity or other property having a
value on the effective date of such plan equal to the allowed amount of such claims and (ii) in the
event the Subordinated Holder Representative, on behalf of itself and the Subordinated Holders,
seeks or accepts adequate protection in accordance with clause (a) above and such adequate
protection is granted in the form of additional collateral, then the Subordinated Holder
Representative, on behalf of itself or any of the Subordinated Holders, agrees that the Senior
Agent shall also be granted a senior Lien on such additional collateral as security for the Senior
Indebtedness and any such DIP Financing and that any Lien on such additional collateral securing
the Subordinated Indebtedness shall be subordinated to the Liens on such collateral securing the
Senior Indebtedness and any such DIP Financing (and all obligations relating thereto) and any other
Liens granted to the Senior First Priority Secured Parties as adequate protection, with such
subordination to be on the same terms that the other Liens securing the Subordinated Indebtedness
are subordinated to such Senior Indebtedness under this Agreement. The Subordinated Holder
Representative, on behalf of itself and the Subordinated Holders, agrees that except as expressly
set forth in this Section none of them shall seek or accept adequate protection without the prior
written consent of the Senior Agent.

     6.5 Avoidance Issues. If any Senior First Priority Secured Party is required in any
Insolvency Proceeding or otherwise to disgorge, turn over or otherwise pay to the estate of any
Loan Party, because such amount was avoided or ordered to be paid or disgorged for any reason,
including, without limitation, because it was found to be a fraudulent or preferential transfer,
any

19

 

amount (a “Recovery”), whether received as proceeds of security, enforcement of any
right of set-off or otherwise, then the Senior Indebtedness shall be reinstated to the extent of such
Recovery and deemed to be outstanding as if such payment had not occurred and the Senior
Indebtedness Payment Date shall be deemed not to have occurred. If this Agreement shall have been
terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and
such prior termination shall not diminish, release, discharge, impair or otherwise affect the
obligations of the parties hereto. The Subordinated Holders (by entering into the Subordinated
Debenture Purchase Agreement and/or the Indenture and purchasing the Subordinated Debentures
thereunder (or otherwise holding or owning any Subordinated Indebtedness)) agree that none of them
shall be entitled to benefit from any avoidance action affecting or otherwise relating to any
distribution or allocation made in accordance with this Agreement, whether by preference or
otherwise, it being understood and agreed that the benefit of such avoidance action otherwise
allocable to them shall instead be allocated and turned over for application in accordance with the
priorities set forth in this Agreement.

     6.6 Asset Dispositions in an Insolvency Proceeding. Neither the Subordinated Holder
Representative nor any other Subordinated Holder shall, in an Insolvency Proceeding or otherwise,
oppose any sale or disposition of any assets of any Loan Party that is supported by the Senior
First Priority Secured Parties. Without limitation of the foregoing, the Subordinated Holder
Representative and each other Subordinated Holder will not object to any sale under Section 363 of
the Bankruptcy Code (and otherwise under the Bankruptcy Code and the rules promulgated thereunder)
to any sale supported by the Senior First Priority Secured Parties and will agree to have released
their Liens in such assets.

     6.7 Separate Grants of Security and Separate Classification. Each Subordinated Holder
(by entering into the Subordinated Debenture Purchase Agreement and/or the Indenture and purchasing
the Subordinated Debentures thereunder (or otherwise holding or owning any Subordinated
Indebtedness)) acknowledges and agrees that (a) the grants of Liens pursuant to the Senior Security
Documents and the Subordinated Security Documents constitute two separate and distinct grants of
Liens and (b) because of, among other things, their differing rights in the Common Collateral, the
Subordinated Indebtedness is fundamentally different from the Senior Indebtedness and must be
separately classified in any plan of reorganization proposed or adopted in an Insolvency
Proceeding. To further effectuate the intent of the parties as provided in the immediately
preceding sentence, if it is held that the claims against the Senior First Priority Secured Parties
and Subordinated Holders in respect of the Common Collateral constitute only one secured claim
(rather than separate classes of senior and junior secured claims), then the Subordinated Holders
(by entering into the Subordinated Debenture Purchase Agreement and/or the Indenture and purchasing
the Subordinated Debentures thereunder (or otherwise holding or owning any Subordinated
Indebtedness)) hereby acknowledge and agree (i) that all distributions shall be made as if there
were separate classes of senior and junior secured claims against the Loan Parties in respect of
the Common Collateral with the effect being that, to the extent that the aggregate value of the
Common Collateral is sufficient (for this purpose ignoring all claims held by the Subordinated
Holders), the Senior First Priority Secured Parties shall be entitled to receive, in addition to
amounts distributed to them in respect of principal, pre-petition interest and other claims, all
amounts owing in respect of Post-Petition Interest before any distribution is made in respect of
the claims held by the Subordinated Holders, and (ii) to turn over to the Senior First Priority
Secured Parties amounts otherwise received or receivable by them to the

20

 

extent necessary to effectuate the intent of this sentence, even if such turnover has the
effect of reducing the claim or recovery of the Subordinated Holders.

     6.8 No Waivers of Rights of Senior First Priority Secured Parties. Nothing contained
herein shall prohibit or in any way limit the Senior Agent or any other Senior First Priority
Secured Party from objecting in any Insolvency Proceeding or otherwise to any action taken by any
Subordinated Holder not expressly permitted hereunder, including the seeking by any Subordinated
Holder of adequate protection (except as provided in Section 6.4).

     6.9 Plans of Reorganization. Neither the Subordinated Holder Representative nor any
Subordinated Holder shall support or vote in favor of any plan of reorganization (and each shall be
deemed to have voted to reject any plan of reorganization) unless such plan (a) pays off, in cash
in full, all Senior Indebtedness or (b) is accepted by the class of holders of Senior Indebtedness
voting thereon and is supported by the Senior Agent.

     6.10 Other Matters. To the extent that the Subordinated Holder Representative or any
Subordinated Holder has or acquires rights as a junior lienholder under Section 363 or Section 364
of the Bankruptcy Code with respect to any of the Common Collateral, the Subordinated Holder
Representative and such other Subordinated Holders agree not to assert any of such rights without
the prior written consent of the Senior Agent; provided that if requested by the Senior
Agent, the Subordinated Holder Representative and such Subordinated Holder shall timely exercise
such rights in the manner requested by them, including any rights to payments in respect of such
rights.

     6.11 Effectiveness in Insolvency Proceedings. This Agreement shall be effective both
before and after the commencement of an Insolvency Proceeding. All references in this Agreement to
any Loan Party shall include such Loan Party as a debtor-in-possession and any receiver or trustee
for such Loan Party in any Insolvency Proceeding.

     SECTION 7 Agreements of the Parties.

     7.1 Agreements Relating to the Subordinated Debenture Documents. Each Loan Party and
the Subordinated Holder Representative, on behalf of itself and the Subordinated Holders, agrees
that it shall not (a) at any time execute or deliver any waiver, amendment or other modification to
any of the Subordinated Debenture Documents inconsistent with or in violation of this Agreement; or
(b) amend, modify, waive or otherwise change, consent or agree to any amendment, modification,
waiver or other change to, any of the terms of the Subordinated Debenture Purchase Agreement, the
Indenture or any other Subordinated Debenture Document if (i) the effect of such amendment,
modification or waiver is to shorten the final maturity or create amortization of principal or
increase the amount of any payment of principal thereof or increase the rate or shorten any period
for payment of interest thereon or modify the method of calculating the interest rate, (ii) such
action requires the payment of a consent, amendment, waiver or other similar fee in excess of 500
basis points during any 12-month period, (iii) such action adds covenants, events of default or
other agreements to the extent materially more restrictive than those contained in the Subordinated
Debenture Documents as in effect on June 9, 2008 unless the corresponding covenant in the Senior
Loan Document shall be added or so modified, provided that (A) any such addition or
modification shall be subject to a “cushion”

21

 

mutually agreed by the Senior Lenders and the Subordinated Holders (but in any event not
greater than any related cushion applicable to similar corresponding covenants in the Senior Credit
Agreement and the Subordinated Debenture Purchase Agreement, each as in effect on June 9, 2008),
and (B) the Subordinated Holders shall remove any such addition and revert to its earlier terms any
modification at the time and to the extent that the Senior Lenders shall remove any corresponding
addition or revert to its early terms any corresponding modification, or (iv) such action adds
collateral unless the Senior Loan Documents are being amended at the same time to reflect such new
Senior Loan Collateral.

     7.2 Agreements Relating to the Senior Loan Documents.

     (a) Each Loan Party and the Senior Agent, on behalf of itself and the Senior First Priority
Secured Parties, agrees that it shall not at any time execute or deliver any amendment or other
modification to any of the Senior Loan Documents if the effect thereof (i) extends the final
maturity of the Senior Loans beyond April 2, 2013, (ii) increases the applicable margin over the
Alternate Base Rate (as defined in the Senior Credit Agreement), LIBO Rate (as defined in the
Senior Credit Agreement) or other reference rate specified in the Senior Loan Documents by an
amount greater than two percent (2%) per annum over the highest amount set forth in the Senior
Credit Agreement as in effect on the date hereof, plus during the continuation of an Event of
Default (as defined in the Senior Credit Agreement), any applicable default rate as in effect on
the date hereof, or (iii) increases the principal amount of the loans made under the Senior Credit
Agreement to an amount in excess of $150,000,000.

     (b) If all of the events described in clauses (a), (b), (c) and (d) of the definition of
“Senior Indebtedness Payment Date” have occurred to the satisfaction of the Senior First Priority
Secured Parties, the Senior Agent agrees to promptly deliver a written notice to the Subordinated
Holder Representative to that effect; provided that neither the Senior Agent nor any other
Senior First Priority Secured Party shall have any liability for the failure to deliver such notice
or to timely deliver such notice other than to return amounts received after the Senior
Indebtedness Payment Date in excess of the amount of the Senior Indebtedness to the Subordinated
Holder Representative (or as otherwise directed by a court of competent jurisdiction).

     7.3 Subordinated Holders’ Purchase Option.

     (a) The Subordinated Holders, jointly or separately, shall have the option, upon three
Business Days’ prior written notice to the Senior Agent, to purchase through a refinancing or
otherwise all, but not less than all, of the Senior Indebtedness (other than outstanding Letters of
Credit) then outstanding under the Senior Loan Documents at a purchase price in cash equal to the
sum of (i) the aggregate principal amount of the Senior Loans then outstanding under the Senior
Loan Documents, (ii) all accrued and unpaid interest, fees, expenses, breakage costs and other
liquidated amounts then due and liquidated claims of indemnity and (iii) the termination value of
all Swap Agreements constituting Senior Indebtedness; provided, that,
contemporaneously with the payment of such purchase price, provision of cash collateral is made
with respect to all Letters of Credit then issued and outstanding under the Senior Loan Documents
in the manner set forth below.

22

 

     (b) On the date specified by the Subordinated Holders in such notice (which shall not be less
than five Business Days, nor more than eight Business Days, after the receipt by the Senior Agent
of the notice from the applicable Subordinated Holder of such election to exercise such option),
the Senior Lenders shall sell to the applicable Subordinated Holder (or its designee), and the
applicable Subordinated Holder (or its designee) shall purchase from the Senior Lenders, all, but
not less than all, of the Senior Loans and other Senior Indebtedness (other than outstanding
Letters of Credit).

     (c) Upon the date of such purchase and sale, the applicable Subordinated Holder (or its
designee) shall (i) cause to be paid in cash to the Senior Agent on behalf of the Senior Lenders
the purchase price set forth in clause (a) above, as applicable (as calculated and determined by
the Senior Agent in its sole reasonable and good faith judgment), (ii) if applicable, furnish cash
collateral to the Senior Agent in such amounts as the Senior Agent, in reasonable and good faith
judgment, determines is reasonably necessary to secure any issued and outstanding Letters of Credit
(but not in any event in an amount greater than 105% of the aggregate undrawn face amount of such
Letters of Credit), and (iii) agree to reimburse the Senior Agent for any loss, cost, damage or
expense (including reasonable attorneys’ fees and legal expenses) in connection with any
commissions, fees, costs or expenses related to any issued and outstanding Letters of Credit as
described above and any checks or other payments provisionally credited to such Senior
Indebtedness, and/or as to which the Senior Agent has not yet received final payment. Such cash
purchase price and cash collateral shall be remitted by wire transfer in federal funds to such bank
account as the Senior Agent may designate in writing to the applicable Subordinated Holder for such
purpose. Interest shall be calculated to but excluding the Business Day on which such purchase and
sale shall occur if the amounts so paid to the bank account designated by the Senior Agent are
received in such bank account later than 11:00 a.m., Chicago, Illinois time.

     (d) Such purchase shall be made without representation or warranty of any kind by the Senior
Agent and the Senior Lenders and without recourse to such Senior Lenders, except that each such
Senior Lender shall represent and warrant: (i) the amount of the Senior Loans to be purchased that
is owing to it, (ii) that such Senior Lender owns its interests in the Senior Loans free and clear
of any Liens, and (iii) such Senior Lender has the right to assign its interest in the Senior
Loans.

     SECTION 8 Reliance; Waivers; etc.

     8.1 Reliance. The Senior Loan Documents are deemed to have been executed and
delivered, and all extensions of credit thereunder are deemed to have been made or incurred, in
reliance upon this Agreement. The Subordinated Holder Representative and the Subordinated Holders
expressly waive all notice of the acceptance of and reliance on this Agreement by the Senior First
Priority Secured Parties. The Subordinated Debenture Documents are deemed to have been executed
and delivered, and all extensions of credit thereunder are deemed to have been made or incurred, in
reliance upon this Agreement. The Senior Agent expressly waives all notices of the acceptance of
and reliance by the Subordinated Holder Representative and the Subordinated Holders.

23

 

     8.2 No Warranties or Liability. The Subordinated Holder Representative, the
Subordinated Holders and the Senior Agent acknowledge and agree that none of them have made any
representation or warranty with respect to the execution, validity, legality, completeness,
collectibility or enforceability of any Senior Loan Document or any Subordinated Debenture
Document. Except as otherwise provided in this Agreement, the Subordinated Holder Representative,
the Subordinated Holders and the Senior Agent will be entitled to manage and supervise their
respective extensions of credit to any Loan Party in accordance with law and their usual practices,
modified from time to time as they deem appropriate, with, in each case, the consent of the Loan
Parties (or any of them), as applicable, to the extent required by the applicable Senior Loan
Document or Subordinated Debenture Document.

     8.3 No Waivers. No right or benefit of any party hereunder shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of such party or any other
party hereto or by any noncompliance by any Loan Party with the terms and conditions of any of the
Senior Loan Documents or the Subordinated Debenture Documents.

     SECTION 9 Obligations Unconditional.

     9.1 Senior Indebtedness Unconditional. All rights and interests of the Senior First
Priority Secured Parties hereunder, and all agreements and obligations of the Subordinated Holder
Representative and the Subordinated Holders (and, to the extent applicable, the Loan Parties)
hereunder, shall remain in full force and effect irrespective of:

     (a) any lack of validity or enforceability of any Senior Loan Document;

     (b) any change in the time, place or manner of payment of, or in any other term of, all or any
portion of the Senior Indebtedness, or any amendment, waiver or other modification, whether by
course of conduct or otherwise, or any refinancing, replacement, refunding or restatement of any
Senior Loan Document;

     (c) prior to the Senior Indebtedness Payment Date, any exchange, release, voiding, avoidance
or non-perfection of any security interest in any Common Collateral or any other collateral, or any
release, amendment, waiver or other modification, whether by course of conduct or otherwise, or any
refinancing, replacement, refunding or restatement of all or any portion of the Senior Indebtedness
or any guarantee or guaranty thereof; or

     (d) any other circumstances that otherwise might constitute a defense available to, or a
discharge of, any Loan Party in respect of the Senior Indebtedness, or of any of the Subordinated
Holder Representative, or any Loan Party, to the extent applicable, in respect of this Agreement.

     9.2 Subordinated Indebtedness Unconditional. All rights and interests of the
Subordinated Holder Representative and the Subordinated Holders hereunder, and all agreements and
obligations of the Senior First Priority Secured Parties (and, to the extent applicable, the Loan
Parties) hereunder, shall remain in full force and effect irrespective of:

     (a) any lack of validity or enforceability of any Subordinated Debenture Document;

24

 

     (b) any change in the time, place or manner of payment of, or in any other term of, all or any
portion of the Subordinated Indebtedness, or any amendment, waiver or other modification, whether
by course of conduct or otherwise, or any refinancing, replacement, refunding or restatement of any
Subordinated Debenture Document;

     (c) any exchange, release, voiding, avoidance or non-perfection of any security interest in
any Common Collateral or any other collateral, or any release, amendment, waiver or other
modification, whether by course of conduct or otherwise, or any refinancing, replacement, refunding
or restatement of all or any portion of the Subordinated Indebtedness or any guarantee or guaranty
thereof; or

     (d) any other circumstances that otherwise might constitute a defense available to, or a
discharge of, any Loan Party in respect of the Subordinated Indebtedness or any Senior First
Priority Secured Party in respect of this Agreement.

     SECTION 10 Miscellaneous Agreements.

     10.1 Representations of Subordinated Holder. Each Subordinated Holder and the
Subordinated Holder Representative by entering into the Subordinated Debenture Purchase Agreement
and/or the Indenture and purchasing the Subordinated Debentures thereunder (or otherwise holding or
owning any Subordinated Indebtedness) severally represent and warrant that:

     (a) neither the execution nor delivery of this Agreement nor fulfillment of or compliance with
the terms and provisions hereof will conflict with, or result in a breach of the terms, conditions
or provisions of, or constitute a default under, any agreement or instrument to which it is now
subject to;

     (b) it has all requisite authority to execute, deliver and perform its obligations under this
Agreement; and

     (c) this Agreement constitutes its legal, valid, and binding obligation in accordance to its
terms, subject to applicable bankruptcy, insolvency or similar laws and general principles of
equity.

     10.2 Covenants. Each Subordinated Holder and the Subordinated Holder Representative
by entering into the Subordinated Debenture Purchase Agreement and/or the Indenture and purchasing
the Subordinated Debentures thereunder (or otherwise holding or owning any Subordinated
Indebtedness) covenant that until the Senior Indebtedness Payment Date, it will:

     (a) cause the Subordinated Debenture Purchase Agreement, the Indenture and the Subordinated
Debentures to contain the following statement or legend in bold type:

     “The indebtedness and other obligations of Borrower and its
subsidiaries evidenced by this Agreement (or by this Indenture, as
applicable) and the Debentures issued hereunder owed to the Purchasers and
Holders party to this Agreement (or Indenture, as

25

 

applicable) are junior and subordinate to the indebtedness and other
obligations of Borrower and its subsidiaries in accordance with the
provisions of the Amended and Restated Intercreditor and Subordination
Agreement dated as of                     , 2008, among JPMorgan Chase Bank, N.A., as
Senior Agent, The Bank of New York Mellon Trust Company, N.A., as
Subordinated Holder Representative and collateral agent, Borrower and
certain of its affiliates, as amended from time to time.”

     (b) not assign or transfer to others any Subordinated Indebtedness or any claim of any
Subordinated Holder against Borrower or any Loan Party, unless such assignment or transfer is
expressly made subject to this Agreement.

     (c) execute any and all other instruments necessary as reasonably required by the Senior Agent
to effect the subordinations intended hereby.

     10.3 Representations of Senior Agent. The Senior Agent represents and warrants that:

     (a) neither the execution nor delivery of this Agreement nor fulfillment of or compliance with
the terms and provisions hereof will conflict with, or result in a breach of the terms, conditions
or provisions of, or constitute a default under, any agreement or instrument to which it is now
subject to;

     (b) it has all requisite authority to execute, deliver and perform its obligations under this
Agreement; and

     (c) this Agreement constitutes its legal, valid, and binding obligation in accordance to its
terms, subject to applicable bankruptcy, insolvency or similar laws and general principles of
equity.

     SECTION 11 Miscellaneous.

     11.1 Conflicts. In the event of any conflict between the provisions of this Agreement
and the provisions of any Senior Loan Document or any Subordinated Debenture Document, the
provisions of this Agreement shall govern.

     11.2 Continuing Nature of Provisions. This Agreement shall continue to be effective,
and shall not be revocable by any party hereto, until the Senior Indebtedness Payment Date shall
have occurred. This is a continuing agreement and the Senior First Priority Secured Parties and
the Subordinated Holders may continue, at any time and without notice to the other parties hereto,
to extend credit and other financial accommodations, lend monies and provide indebtedness to, or
for the benefit of, Borrower or any other Loan Party on the faith hereof.

     11.3 Amendments; Waivers. No amendment or modification of any of the provisions of
this Agreement shall be effective unless the same shall be in writing and signed by the Senior
Agent, the Subordinated Holder Representative and, only if the rights or duties of any Loan Party
are directly affected thereby, such Loan Party.

26

 

     11.4 Information Concerning Financial Condition of Borrower and the other Loan
Parties. The Subordinated Holder Representative and each of the Subordinated Holders hereby
assume responsibility for keeping themselves informed of the financial condition of Borrower and
each of the other Loan Parties and all other circumstances bearing upon the risk of nonpayment of
the Subordinated Indebtedness. The Subordinated Holder Representative and each Subordinated Holder
by entering into the Subordinated Debenture Purchase Agreement and/or the Indenture and purchasing
the Subordinated Debentures thereunder (or otherwise holding or owning any Subordinated
Indebtedness) agree that neither the Senior Agent, any holder of Senior Indebtedness nor any of
their affiliates shall have any duty to advise any Subordinated Holder or any of their
representatives of information known to it regarding such condition or any such circumstances. In
the event the Senior Agent or any Senior Lender or other Person, in its sole discretion, undertakes
at any time or from time to time to provide any information to any other party to this Agreement,
such Person shall be under no obligation (a) to provide any such information to such other party or
any other party on any subsequent occasion, (b) to undertake any investigation not a part of its
regular business routine, or (c) to disclose any other information.

     11.5 Governing Law. This Agreement shall be construed in accordance with and governed
by the law of the State of Texas, except as otherwise required by mandatory provisions of law and
except to the extent that remedies provided by the laws of any jurisdiction other than the State of
Texas are governed by the laws of such jurisdiction.

     11.6 Submission to Jurisdiction.

     (a) Each party hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the courts of the State of Texas sitting in Dallas
County and of the United States District Court for the Northern District of Texas, and any
appellate court from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding
may be heard and determined in such Texas State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment (after all rights to appeal have
been taken or waived) in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in
this Agreement shall affect any right that any Senior First Priority Secured Party may otherwise
have to bring any action or proceeding relating to this Agreement or any Senior Loan Documents
against Borrower or any other Loan Party or its properties in the courts of any jurisdiction.

     (b) Borrower, each other Loan Party and the Subordinated Holders hereby irrevocably and
unconditionally waive, to the fullest extent they may legally and effectively do so (i) any
objection they may now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in paragraph (a) of this
Section and (ii) the defense of an inconvenient forum to the maintenance of such action or
proceeding.

27

 

     (c) Nothing in this Agreement will affect the right of any party to this Agreement to serve
process in any manner permitted by law.

     11.7 Notices. Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and may be personally
served, telecopied, or sent by overnight express courier service or United States mail and shall be
deemed to have been given when delivered in person or by courier service, upon receipt of a
telecopy or five (5) days after deposit in the United States mail (certified, with postage prepaid
and properly addressed). For the purposes hereof, the addresses of the parties hereto (until
notice of a change thereof is delivered as provided in this Section) shall be as set forth below
each party’s name on the signature pages hereof, or, as to each party, at such other address as may
be designated by such party in a written notice to all of the other parties (except that notices to
be delivered to the Subordinated Holders may be delivered to the Subordinated Holder Representative
indicated on such party’s signature page hereto).

     11.8 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto and each of the Senior First Priority Secured Parties and
Subordinated Holders and their respective successors and assigns, and nothing herein is intended,
or shall be construed to give, any other Person any right, remedy or claim under, to or in respect
of this Agreement or any Common Collateral. All references to any Loan Party shall include any
Loan Party as debtor-in-possession and any receiver or trustee for such Loan Party in any
Insolvency Proceeding.

     11.9 Headings. Section headings used herein are for convenience of reference only,
are not part of this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

     11.10 Severability. Any provision of this Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

     11.11 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other
electronic transmission (e.g., pdf) shall be effective as delivery of a manually executed
counterpart of this Agreement. This Agreement shall become effective when it shall have been
executed by each party hereto.

     11.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.

28

 

     11.13 No Third Party Beneficiaries. All undertakings, agreements, representations and
warranties contained in this Agreement are solely for the benefit of parties hereto, the Senior
First Priority Secured Parties and the Subordinated Holders, and there are no other parties who are
intended to be benefited in any way by this Agreement. Nothing contained in this Agreement is
intended to affect or limit in any way the Liens each of the parties hereto has in or on any or all
of the property and assets of the Loan Parties, whether tangible or intangible, insofar as any Loan
Party or any third party is concerned. The parties hereto specifically reserve all respective
Liens and related rights to assert such Liens as against any Loan Party or third party.

     11.14 Actions of the Senior Agent. Actions undertaken by the Senior Agent pursuant to
this Agreement on behalf of the other Senior First Priority Secured Parties shall be undertaken at
the direction or with the consent of the requisite number or percentage of Senior Lenders to the
extent required by, and in accordance with the terms of, the Senior Loan Documents.

     11.15 Actions of the Subordinated Holder Representative. Actions undertaken by the
Subordinated Holder Representative pursuant to this Agreement on behalf of the Subordinated Holders
shall be undertaken at the direction or with the consent of the requisite number or percentage of
Subordinated Holders to the extent required by, and in accordance with the terms of, the
Subordinated Debenture Documents.

     11.16 Waiver of Punitive Damages and Consequential Damages. In no event shall any of
the Subordinated Holders, the Subordinated Holder Representative, the Senior Lenders, the Senior
First Priority Secured Parties, the Loan Parties or the Senior Agent be liable for any
consequential, exemplary or punitive damages as a result of, or arising from, any of such party’s
acts or omissions under or with respect to this Agreement.

     11.17 Restatement. This Agreement is a restatement of, and an amendment and
supplement to, the Original Intercreditor and Subordination Agreement.

[Signature Pages to Follow]

29

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as Senior

Agent for and on behalf of the Senior First Priority

Secured Parties

 	 
	                                                       
	 	By:  	/s/ Brian Orlando	 
	 	 	Brian Orlando	 
	 	 	Senior Vice President 	 
	                                                        
	 
	 	
Address for Notices:

JPMorgan Chase Bank, N.A.

712 Main Street, Floor 12

Houston, Texas 77002-3201

Attention: Ryan Fuessel

Telecopy No.: (832) 487-1765

 	 

[Signature Page]

Amended and Restated Intercreditor And Subordination Agreement

Teton Energy Corporation

 

 

	 	 	 	 	 
	 	THE BANK OF NEW YORK MELLON 

TRUST COMPANY, N.A., as Subordinated 

Holder Representative and collateral agent for and 

on behalf of the Subordinated Holders

 	 
	                                                       
	 	By:  	/s/ Van K. Brown	 
	 	 	Name:  	Van K. Brown	 
	 	 	Title:  	Vice President	 
	                                                        
	 
	 	
Address for Notices:

The Bank of New York Mellon Trust Company, N.A.

601 Travis Street, 18th floor

Houston, Texas 77002

Attention: Brian Echausse

Telecopy: (713) 483-7038
 	 

[Signature Page]

Amended and Restated Intercreditor And Subordination Agreement

Teton Energy Corporation

 

 

	 	 	 	 	 
	 	TETON ENERGY CORPORATION

 	 
	                                                       
	 	By:  	/s/ Lonnie R. Brock	 
	 	 	Name:  	Lonnie R. Brock 	 
	 	 	Title:  	Executive Vice President and 
Chief Financial Officer 	 
	                                                        
	 
	 	
Address for Notices:

410 17th Street, Suite 1850

Denver, Colorado 80202

Attention: Lonnie Brock

Telecopy: (303) 565-4606
 	 

	 	 	 	 	 
	 	TETON NORTH AMERICA LLC

 	 
	                                                       
	 	By:  	/s/ Lonnie R. Brock	 
	 	 	Name:  	Lonnie R. Brock 	 
	 	 	Title:  	Executive Vice President and 
Chief Financial Officer 	 
	                                                        
	 
	 	
Address for Notices:

410 17th Street, Suite 1850

Denver, Colorado 80202

Attention: Lonnie Brock

Telecopy: (303) 565-4606
 	 

[Signature Page]

Amended and Restated Intercreditor And Subordination Agreement

Teton Energy Corporation

 

 

	 	 	 	 	 
	 	TETON PICEANCE LLC

 	 
	                                                       
	 	By:  	/s/ Lonnie R. Brock	 
	 	 	Name:  	Lonnie R. Brock 	 
	 	 	Title:  	Executive Vice President and 
Chief Financial Officer 	 
	                                                        
	 
	 	

Address for Notices:

410 17th Street, Suite 1850

Denver, Colorado 80202

Attention: Lonnie Brock

Telecopy: (303) 565-4606

 	 

	 	 	 	 	 
	 	TETON DJ LLC

 	 
	                                                       
	 	By:  	/s/ Lonnie R. Brock	 
	 	 	Name:  	Lonnie R. Brock 	 
	 	 	Title:  	Executive Vice President and
 Chief Financial Officer 	 
	                                                        
	 
	 	

Address for Notices:

410 17th Street, Suite 1850

Denver, Colorado 80202

Attention: Lonnie Brock

Telecopy: (303) 565-4606
 	 

[Signature Page]

Amended and Restated Intercreditor And Subordination Agreement

Teton Energy Corporation

 

 

	 	 	 	 	 
	 	TETON WILLISTON LLC

 	 
	                                                       
	 	By:  	/s/ Lonnie R. Brock	 
	 	 	Name:  	Lonnie R. Brock 	 
	 	 	Title:  	Executive Vice President and 
Chief Financial Officer 	 
	                                                        
	 
	 	
Address for Notices:

410 17th Street, Suite 1850

Denver, Colorado 80202

Attention: Lonnie Brock

Telecopy: (303) 565-4606

 	 
	 	TETON BIG HORN LLC

 	 
	                                                       
	 	By:  	/s/ Lonnie R. Brock	 
	 	 	Name:  	Lonnie R. Brock 	 
	 	 	Title:  	Executive Vice President and 
Chief Financial Officer 	 
	                                                        
	 
	 	
Address for Notices:

410 17th Street, Suite 1850

Denver, Colorado 80202

Attention: Lonnie Brock

Telecopy: (303) 565-4606
 	 

[Signature Page]

Amended and Restated Intercreditor And Subordination Agreement

Teton Energy Corporation

 

 

	 	 	 	 	 
	 	TETON DJCO LLC

 	 
	                                                       
	 	By:  	
/s/ Lonnie R. Brock	 
	 	 	Name:  	Lonnie R. Brock 	 
	 	 	Title:  	Executive Vice President and 
Chief Financial Officer 	 
	                                                        
	 	

Address for Notices:

410 17th Street, Suite 1850

Denver, Colorado 80202

Attention: Lonnie Brock

Telecopy: (303) 565-4606
 	 

[Signature Page]
Amended and Restated Intercreditor And Subordination Agreement

Teton Energy Corporation

 

 

	 	 	 	 	 
	 	WHITEBOX TETON, LTD.

 	 
	 	By:  	
/s/ Jonathan Wood	 
	 	 	Name:  	Jonathan Wood	 
	 	 	Title:  	Director COO	 
	 
	 
	 	WHITEBOX ADVISORS, LLC

 	 
	 	By:  	
/s/ Jonathan Wood	 
	 	 	Name:  	Jonathan Wood	 
	 	 	Title:  	Director COO	 
	 	

Address for Notices:

c/o Whitebox Advisors, LLC

3033 Excelsior Blvd., Suite 300

Minneapolis, Minnesota 55416

Attention: Mark Strefling

Telecopy: (612) 253-6118
 	 

[Signature Page]
Amended and Restated Intercreditor And Subordination Agreement

Teton Energy Corporationexv10w19

Exhibit 10.19

SHORT FORM OFFICE LEASE

BY
AND BETWEEN

BERNARDO REGENCY, LLC,

a Delaware limited liability company,

AS LANDLORD

AND

LIFEVANTAGE CORPORATION

a Colorado corporation,

AS TENANT

FOR
THAT PROPERTY LOCATED AT

11545
W. Bernardo
Court,
San
Diego, California

i

 

Table of Contents

	 	 	 	 	 	 	 
	1.

	 	BASIC LEASE PROVISIONS
	 	 	1	 
	 
	 	 	 	 	 	 
	2.

	 	PROJECT
	 	 	2	 
	 
	 	 	 	 	 	 
	3.

	 	TERM
	 	 	4	 
	 
	 	 	 	 	 	 
	4.

	 	RENT
	 	 	5	 
	 
	 	 	 	 	 	 
	5.

	 	USE & OCCUPANCY
	 	 	8	 
	 
	 	 	 	 	 	 
	6.

	 	SERVICES & UTILITIES
	 	 	9	 
	 
	 	 	 	 	 	 
	7.

	 	REPAIRS
	 	 	11	 
	 
	 	 	 	 	 	 
	8.

	 	ALTERATIONS
	 	 	11	 
	 
	 	 	 	 	 	 
	9.

	 	INSURANCE
	 	 	12	 
	 
	 	 	 	 	 	 
	10.

	 	DAMAGE OR DESTRUCTION
	 	 	13	 
	 
	 	 	 	 	 	 
	11.

	 	INDEMNITY
	 	 	14	 
	 
	 	 	 	 	 	 
	12.

	 	CONDEMNATION
	 	 	15	 
	 
	 	 	 	 	 	 
	13.

	 	TENANT TRANSFERS
	 	 	16	 
	 
	 	 	 	 	 	 
	14.

	 	LANDLORD TRANSFERS
	 	 	17	 
	 
	 	 	 	 	 	 
	15.

	 	DEFAULT AND REMEDIES
	 	 	18	 
	 
	 	 	 	 	 	 
	16.

	 	SECURITY
	 	 	19	 
	 
	 	 	 	 	 	 
	17.

	 	MISCELLANEOUS
	 	 	20	 
	 
	 	 	 	 	 	 
	18.

	 	OPTION TO EXTEND
	 	 	20	 
	 
	 	 	 	 	 	 
	Exhibits:	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBIT A — RULES & REGULATIONS	 	 	A-1	 
	 
	 	 	 	 	 	 
	EXHIBIT B — PARKING	 	 	B-1	 
	 
	 	 	 	 	 	 
	EXHIBIT C —NOTICE OF LEASE TERM	 	 	C-1	 
	 
	 	 	 	 	 	 
	EXHIBIT D — WORK LETTER	 	 	D-1	 
	 
	 	 	 	 	 	 
	EXHIBIT E — TENANT ESTOPPEL CERTIFICATE	 	 	ED-1	 

ii

 

Index of Defined Terms

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 
	 		 	 
	Additional Insured

	 		12		Mechanical Systems
	 		2	 
	Additional Rent

	 		5		Month
	 	 	4	 
	Affiliates

	 		15		NLT
	 	 	4	 
	Alterations

	 		11		Notice Addresses
	 	 	1	 
	Amortization Rate

	 		6		Option Rent
	 	 	21	 
	Approved Working Drawings

	 	Exhibit   	D		Option/Rent/Notice
	 	 	21	 
	Architect

	 	Exhibit   	D		Option Rent
	 	 	21	 
	Base Building

	 		2		Options
	 	 	21	 
	Base Rent

	 		5		Original Tenant
	 	 	21	 
	Billing Address

	 		2		Outside Agreement Date
	 	 	22	 
	Brokers

	 		2		Over-Allowance Amount
	 	Exhibit	D	 
	Building

	 		1		Parking Allotment
	 	 	2	 
	Building Standard
	 		3		Parking Facilities	 	 	C-1	 
	Building Structure

	 		2		Patron
	 	 	C-1	 
	Business Hours

	 		2		Permitted Transferee
	 	 	16	 
	Claims

	 		14		Plans
	 	Exhibit	D	 
	Commencement Date

	 		4		Premises
	 	 	1	 
	Common Areas

	 		2		Project
	 	 	2	 
	Construction Allowance

	 		2		Quality Expenses
	 	 	6	 
	Contractor

	 	Exhibit   	D		Rent Exhibit D
	 	 	8	 
	Cost-Saving Expenses

	 		6		Repair Estimate
	 	 	13	 
	Date

	 		1		Replacement Premises
	 	 	20	 
	Default

	 		18		RSF
	 	 	3	 
	Default Rate

	 		19		Scheduled Commencement Date
	 	 	1	 
	Design Problem

	 		11		Scheduled Term
	 	 	1	 
	Encumbrance

	 		17		Security Deposit
	 	 	1	 
	Estimated Additional Rent

	 		7		Standard Services
	 	 	9	 
	Expenses

	 		5		Substantial Completion
	 	Exhibit	D	 
	Expiration Date

	 		4		Successor Landlord
	 	 	17	 
	Force Majeure

	 		19		Taking
	 	 	15	 
	Hazardous Materials

	 		9		Taxes
	 	 	5	 
	Holdover

	 		4		Telecommunication Services
	 	 	10	 
	Holidays

	 		2		Tenant
	 	 	1	 
	HVAC

	 		9		Tenant Delays
	 	Exhibit	D	 
	Interest Notice

	 		21		Tenant’s Personal Property
	 	 	3	 
	Interruption Estimate

	 		13		Tenant’s Share
	 	 	1	 
	Land

	 		2		Tenant’s Wiring
	 	 	10	 
	Landlord

	 		1		Tenant’s Acceptance
	 	 	21	 
	Late Charge

	 		8		Term
	 	 	4	 
	Lease

	 		1		Transfer
	 	 	16	 
	Leasehold Improvements

	 		3		Untenantable
	 	 	13	 
	Liability Limit

	 		2		Use
	 	 	1	 
	Mandated Expenses

	 		6		Vehicles
	 	 	C-1	 
	Market Rent

	 		21		Working Drawings
	 	Exhibit	D	 
	 
	 		 		Year
	 	 	4	 

iii

 

Lease

          Landlord and Tenant enter into this Lease (“Lease”) as of the Date on the following
terms, covenants, conditions and provisions:

	1.	 	BASIC LEASE PROVISIONS

	 	 	 	 	 	 	 
	 

	 	1.1
	 	Basic Lease Definitions.
	 	In this Lease, the following defined terms have the meanings indicated.
	 
	 	 	 	 	 	 
	 

	 	(a)
	 	Date:
	 	May 5, 2008.
	 
	 	 	 	 	 	 
	 

	 	(b)
	 	Landlord:
	 	BERNARDO REGENCY, LLC, a Delaware limited liability company.
	 
	 	 	 	 	 	 
	 

	 	(c)
	 	Tenant:
	 	LIFEVANTAGE CORPORATION, a Colorado corporation.
	 
	 	 	 	 	 	 
	 

	 	(d)
	 	Building:
	 	11545 W. Bernardo Court, San Diego, California, deemed to contain 48,055 RSF
	 
	 	 	 	 	 	 
	 

	 	(e)
	 	Premises:
	 	Suites 301 and 302 deemed to contain 3,204 RSF (2,818 USF).
	 
	 	 	 	 	 	 
	 

	 	(f)
	 	Use:
	 	General administrative
non-governmental office use consistent with that of a first-class office building.
	 
	 	 	 	 	 	 
	 

	 	(g)
	 	Scheduled Term:
	 	Five (5) years and Three (3) months.
	 
	 	 	 	 	 	 
	 

	 	(h)
	 	Scheduled
Commencement Date:
	 	July 1, 2008.
	 
	 	 	 	 	 	 
	 

	 	(i)
	 	Base Rent:
	 	The following amounts, payable in accordance with Article 4:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Period	 	Monthly Rate	 	Annual Base Rent	 	Monthly Base Rent
	Year 1

	 	$	2.45	 	 	$	94,197.60	 	 	$	7,849.80	*
	Year 2

	 	$	2.54	 	 	$	97,494.52	 	 	$	8,124.54	 
	Year 3

	 	$	2.63	 	 	$	100,906.79	 	 	$	8,408.90	 
	Year 4

	 	$	2.72	 	 	$	104,438.54	 	 	$	8,703.21	 
	Year 5

	 	$	2.81	 	 	$	108,093.87	 	 	$	9,007.82	 

 

			
	*	 	subject to abatement as set forth in Section 4.1, below.

	 	 	 	 	 	 	 
	 

	 	(j)
	 	Base Year;
	 	The calendar year 2008.
	 
	 	 	 	 	 	 
	 

	 	 	 	Tenant’s Share:
	 	6.67%
	 
	 	 	 	 	 	 
	 

	 	(k)
	 	Security Deposit:
	 	$7,849.80
	 
	 	 	 	 	 	 
	 

	 	(l)
	 	Notice Address:
	 	For each party, the following addresses:

	 	 	 
	To Landlord	 	To Tenant
	Bernardo Regency, LLC

	 	Before the Commencement Date:
	c/o CABI Developers

	 	Life Vantage Corporation
	9911 W. Pico Boulevard, Suite 1200

	 	6400 S. Fiddler’s Green Circle, Suite 1970
	Los Angeles, California 90035

	 	Greenwood Village, CO 80111
	Attn: V.P./Legal

	 	Attn: David Brown
	 

	 	(858) 442-4924
	 
	 	 
	 

	 	After the Commencement Date:
	 

	 	Life Vantage Corporation
	 

	 	Attn: 11545 W. Bernardo Court, Suite 301
	 

	 	San Diego, California 92127

1

 

	 	 	 	 	 	 	 
	 

	 	(m)
	 	Billing Address:
	 	For each party, the following address:

	 	 	 
	For Landlord	 	For Tenant
	Bernardo Regency, LLC

	 	LifeVantage Corporation
	c/o CABI Developers

	 	Attn: 11545 W. Bernardo Court, Suite 301
	9911 W. Pico Boulevard, Suite 1200

	 	San Diego, California 92127
	Los Angeles, California 90035
	 	 
	Attn: V.P./Legal
	 	 

	 	 	 	 	 	 	 
	 

	 	(n)
	 	Brokers:
	 	CB Richard Ellis, Inc. (for Landlord); and
Corporate Real Estate Consultants (for
Tenant). Brokers will be paid by Landlord in
accordance with a separate agreement with
Landlord.

	 
	 	 	 	 	 	 
	 

	 	(o)
	 	Parking Allotment:
	 	Twelve (12) unreserved parking passes, for
the use and access to the Building’s Parking
Facility subject to the terms set forth in
Exhibit C to this Lease.

	 
	 	 	 	 	 	 
	 

	 	(p)
	 	Liability Limit:
	 	$3 million for any one accident or occurrence.
	 
	 	 	 	 	 	 
	 

	 	(q)
	 	Construction Allowance:
	 	None; Landlord shall construct the
Improvements on a “turn key” basis in
accordance with the Work Letter attached to
this Lease as Exhibit E.

	 
	 	 	 	 	 	 
	 

	 	(r)
	 	Business Hours:
	 	From 8:00 a.m. to 6:00 p.m., Monday through
Friday, and from 9:00 a.m. to 1:00 p.m. on
Saturdays, except for the days observed for: excepting New Year’s Day, Martin Luther King
Day, President’s Day, Memorial Day,
Independence Day, Labor Day, Veteran’s Day,
Thanksgiving and the day after Thanksgiving
and Christmas, and in Landlord’s reasonable
discretion, any other holidays recognized by
landlords of comparable projects to the
Building (“Holidays”).

	2.	 	PROJECT

          2.1 Project. The Land, Building, Common Areas and Premises (as defined in §1 and below) are
collectively referred to as the “Project.” As of the Date, the Project is named “Bernardo Regency.”

          2.2 Land. “Land” means the real property on which the Building and Common Areas are located,
including easements and other rights that benefit or encumber the real property. Landlord’s
interest in the Land may be in fee or a leasehold. The Land may be expanded or reduced after the
Date.

          2.3 Base Building. “Base Building” means the Building Structure and Mechanical Systems,
collectively, defined as follows:

	 	(a)	 	Building Structure. “Building Structure” means the structural
components in the Building, including foundations, floor and ceiling slabs, roofs,
exterior walls, exterior glass and mullions, columns, beams, shafts, and emergency
stairwells. The Building Structure excludes the Leasehold Improvements (and similar
improvements to other premises) and the Mechanical Systems.

	 
	 	(b)	 	Mechanical Systems. “Mechanical Systems” means the mechanical,
electronic, physical or informational systems generally serving the Building or Common
Areas, including the sprinkler, plumbing, heating, ventilating, air conditioning,
lighting, communications, security, drainage, sewage, waste disposal, vertical
transportation, and fire/life safety systems.

          2.4 Common Areas. Tenant will have a non-exclusive right to use the Common Areas subject to
the terms of this Lease. “Common Areas” means those interior and exterior common and public areas
on the Land (and appurtenant easements) and in the Building designated by Landlord for the
non-exclusive use by Tenant in common with Landlord, other tenants and occupants, and their
employees, agents and invitees. The Common Areas includes parking facilities serving the Building
that are owned or leased by Landlord.

          2.5 Premises. Landlord leases to Tenant the Premises subject to the terms of this Lease. If
Landlord does not deliver possession of the Premises to Tenant on or before the estimated
Commencement Date (as set forth above), Landlord

2

 

shall not be subject to any liability for its failure to do so, and such failure shall not affect
the validity of this Lease nor the obligations of Tenant hereunder, provided that Tenant shall have
no obligation to commence paying Rent payments until the Commencement Date. Notwithstanding the
foregoing, if Landlord fails to deliver the Premises within one hundred eighty (180) days after the
Scheduled Commencement Date (accounting for Tenant Delays, if any and subject to extension for
Force Majeure), Tenant may elect to either (1) terminate this Lease and receive any amounts prepaid
by Tenant hereunder; or (ii) continue this Lease until the Premises are so delivered. Landlord and
Tenant hereby agree that the Premises shall be measured in accordance with BOMA ANSI Z65.1-1996
standards, as modified for the Project pursuant to Landlord’s standard rentable measurements for
the Project, and in the event that Landlord’s architect/space planner determines that the amounts
thereof shall be different from those set forth in this Lease, all amounts, percentages and figures
appearing or referred to in this Lease based upon such incorrect amount (including, without
limitation, the amount of the Base Rent and Tenant’s Share shall be modified in accordance with
such determination. If such determination is made, it will be confirmed in writing by Landlord to
Tenant. Except as provided elsewhere in this Lease, by taking possession of the Premises, Tenant
accepts the Premises in its “as is” condition and with all faults, and the Premises is deemed in
good order, condition, and repair. The Premises includes the Leasehold Improvements and excludes
certain areas, facilities and systems, as follows:

	 	(a)	 	Leasehold Improvements. “Leasehold Improvements” means all
non-structural improvements in the Premises or exclusively serving the Premises, and
any structural improvements to the Building made to accommodate Tenant’s particular use
of the Premises. The Leasehold Improvements may exist in the Premises as of the Date,
or be installed by Landlord or Tenant under this Lease at the cost of either party. The
Leasehold Improvements include: (1) interior walls and partitions (including those
surrounding structural columns entirely or partly within the Premises); (2) the
interior one-half of walls that separate the Premises from adjacent areas designated
for leasing; (3) the interior drywall on exterior structural walls, and walls that
separate the Premises from the Common Areas; (4) stairways and stairwells connecting
parts of the Premises on different floors, except those required for emergency exiting;
(5) the frames, casements, doors, windows and openings installed in or on the
improvements described in the foregoing clauses (1) through (4), or that provide
entry/exit to/from the Premises; (6) all hardware, fixtures, cabinetry, railings,
paneling, woodwork and finishes in the Premises or that are installed in or on the
improvements described in the foregoing clauses (1) through (5); (7) if any part of the
Premises is on the ground floor, the ground floor exterior windows (including mullions,
frames and glass); (8) integrated ceiling systems (including grid, panels and
lighting); (9) carpeting and other floor finishes; (10) kitchen, rest room, laboratory
or other similar facilities that exclusively serve the Premises (including plumbing
fixtures, toilets, sinks and built-in appliances); and (11) the sprinkler, plumbing,
heating, ventilating, air conditioning, electrical, metering, lighting, communications,
security, drainage, sewage, waste disposal, vertical transportation, fire/life safety,
and other mechanical, electronic, physical or informational systems that exclusively
serve the Premises, including the parts of each system that are connected to the
Mechanical Systems from the common point of distribution for each system to and
throughout the Premises (such items in this subsection (11) shall be referred to the
“Systems”).

	 	(b)	 	Exclusions from the Premises. The Premises does not include: (1) any
areas above the finished ceiling or integrated ceiling systems, or below the finished
floor coverings that are not part of the Leasehold Improvements, (2) janitor’s closets, (3)
stairways and stairwells to be used for emergency exiting or as Common Areas, (4)
rooms for Mechanical Systems or connection of telecommunication equipment, (5) vertical
transportation shafts, (6) vertical or horizontal shafts, risers, chases, flues or
ducts, and (7) any easements or rights to natural light, air or view.

     2.6 Building Standard. “Building Standard” means the minimum or exclusive type, brand, quality
or quantity of materials Landlord designates for use in the Building from time to time.

     2.7 Tenant’s Personal Property. “Tenant’s Personal Property” means those trade fixtures,
furnishings, equipment, work product, inventory, stock-in-trade and other personal property of
Tenant that are not permanently affixed to the Project in a way that they become a part of the
Project and will not, if removed, impair the value of the Leasehold Improvements that Tenant is
required to deliver to Landlord at the end of the Term under §3.3.

     2.8 Rentable Area. “RSF” means rentable square feet or rentable square foot, as the
case may be, as the same may be reasonably modified by Landlord in accordance with BOMA ANSI
Z65.1-1996 standards.

3

 

3. TERM

     3.1
Term. “Term” means the period that begins on the Commencement Date and ends on the
Expiration Date, subject to renewal, extension or earlier termination as may be further provided
in this Lease. “Month” means a full calendar month of the Term. “Year” means a full calendar year
in which all or a part of the Term occurs.

	 	(a)	 	Commencement Date. The “Commencement Date” means the date that is the
earlier of:

	 	(1)	 	The day that Tenant first conducts business in the Premises; or

	 
	 	(2)	 	The later of:

	 	(A)	 	The Scheduled Commencement Date, or
	 
	 	(B)	 	The day that Landlord tenders the Premises to
Tenant with Landlord’s Work substantially complete or that date that
Landlord would have tendered possession of the Premises but for delay
caused by Tenant.

	 	(b)	 	Expiration Date. “Expiration Date” means the date that is the Scheduled
Term (plus that many additional days required for the Expiration Date to be the last
day of a Month) after the later of:

	 	(1)	 	The Scheduled Commencement Date, or
	 
	 	(2)	 	The Commencement Date.

	 	(c)	 	Early Occupancy. Tenant may not enter the Premises for any purpose
until Landlord tenders the Premises to Tenant. If Tenant conducts business in any part
of the Premises before the Scheduled Commencement Date, Tenant will pay Base Rent for
that period at the rate for the first Month that Base Rent is due, without discount or
excuse. Notwithstanding anything to the contrary provided herein, and provided that
Tenant and its agents do not interfere with Landlord’s Contractor’s work in the
Building and the Premises, Landlord shall allow Tenant access to the Premises ten (10)
days prior to the Substantial Completion of the Premises for the purpose of Tenant
installing overstandard equipment or fixtures (including Tenant’s data and telephone
equipment) in the Premises. Prior to Tenant’s entry into the Premises as permitted by
the terms of this Section, Tenant shall submit a schedule to Landlord and Contractor,
for their approval, which schedule shall detail the timing and purpose of Tenant’s
entry. Tenant shall hold Landlord harmless from and indemnify, protect and defend
Landlord against any loss or damage to the Building or Premises and against injury to
any persons caused by Tenant’s actions pursuant to this Section.

	 	(d)	 	Late Occupancy. If Landlord fails to tender possession of the Premises
to Tenant by the Scheduled Commencement Date due to delay caused by Tenant or Force
Majeure, Landlord will not be in default of this Lease.

	 	(e)	 	Confirmation of Term. If applicable, Landlord shall notify Tenant of
the Commencement Date using a Notice of Lease Term (“NLT”) in the form attached to this
Lease as Exhibit D. Tenant shall execute and deliver to Landlord the NLT within 10
business days after its receipt, but Tenant’s failure to do so will not reduce Tenant’s
obligations or Landlord’s rights under this Lease.

     3.2
Holdover. If Tenant keeps possession of the Premises after the
Expiration Date (or earlier termination of this
Lease) without Landlord’s prior written consent (a “Holdover”), which may be withheld in its
sole discretion, then in addition to the remedies available elsewhere under this Lease or by
law, Tenant will be a tenant-at-sufferance and must comply with all of Tenant’s obligations
under this Lease (including the payment of Additional Rent), except that for each Month of
Holdover Tenant will pay 150% of the Base Rent payable for the last Month of the Term (or
that would have been payable but for abatement or excuse), without prorating for any partial
Month of Holdover, plus Additional Rent for such period. Tenant shall indemnify and defend
Landlord from and against all claims and damages, both consequential and direct, that
Landlord suffers due to Tenant’s failure to return possession of the Premises to Landlord at
the end of the Term. Landlord’s deposit of Tenant’s Holdover payment will not constitute
Landlord’s consent to a Holdover, or create or renew any tenancy.

     3.3 Condition on Expiration.

	 	(a)	 	Return of the Premises. At the end of the Term, Tenant will return
possession of the Premises to Landlord vacant, free of Tenant’s Personal Property, in
broom-clean condition, and with all Leasehold Improvements in good working order and
repair (excepting ordinary wear and tear), except that Landlord may require

4

 

	 	 	 	Tenant, by notice at least 10 days before the expiration of the Term, to remove (and
restore the Premises damaged by removal):

	 	(1)	 	All Tenant’s Wiring; and

	 
	 	(2)	 	Any item of Leasehold Improvements (not part of the original
Leasehold Improvements made by Landlord as outlined in the Work Letter or the
Systems) or Alterations (other than Tenant’s Wiring) if either:

	 	(A)	 	When Landlord consented to the
installation of the improvement, Landlord reserved Landlord’s right
to have Tenant remove the improvement at the end of the Term; or

	 
	 	(B)	 	Tenant failed to obtain Landlord’s
written consent under § 8.1 (a) for an item of Alterations to
become part of the Premises.

	 	(b)	 	Correction by Landlord. If Tenant fails to return possession of the
Premises to Landlord in the condition required under (a), then Tenant shall reimburse
Landlord for the costs incurred by Landlord to put the Premises in the condition
required under (a), plus Landlord’s standard administration fee.

	 
	 	(c)	 	Abandoned Property. Tenant’s Personal Property left behind in the
Premises after the end of the Term will be considered abandoned and Landlord may move,
store, retain or dispose of these items at Tenant’s cost, including Landlord’s standard
administration fee.

	4.	 	RENT

     4.1 Base Rent. Tenant shall prepay one Month’s installment of Base Rent by the Date, to be
applied against Base Rent first due under this Lease. During the Term, Tenant shall pay all other
Base Rent in advance, in equal Monthly installments, on the
1st of each Month. Base Rent
for any partial Month will be prorated based on a 30-day month. Notwithstanding anything to the
contrary contained in the Lease, and provided that Tenant faithfully performs all of the terms and
conditions of the Lease, Landlord hereby agrees to abate Tenant’s obligation to pay Monthly Base
Rent for the second (2nd), third (3rd) and fourth (4th) full
months of the Term. During such abatement period, Tenant shall still be responsible for the payment
of all of its other monetary obligations under the Lease.

     4.2 Additional Rent. Tenant’s obligation to pay Taxes and Expenses under this §4.2 is
referred to in this Lease as “Direct Costs.”

	 	(a)	 	Taxes. For each full or partial Year Tenant shall pay as in the manner
described below the Tenant’s Share of the Taxes for such Year in
excess of the Taxes for
the Base Year. “Taxes” means the total costs incurred by Landlord for: (1) real and
personal property taxes and assessments (including ad valorem and special assessments)
levied on the Project and Landlord’s personal property used in connection with the
Project; (2) taxes on rents or other income derived from the Building; (3) capital and
place-of-business taxes; (4) taxes, assessments or fees in lieu of the taxes described
in the foregoing clauses (1) through (3); and (5) the reasonable costs incurred to
reduce the taxes described in the foregoing clauses (1) through (4). Taxes excludes net
income taxes and taxes paid under §4.3.

	 
	 	(b)	 	Expenses. For each full or partial Year, Tenant shall pay in the manner
described below the Tenant’s Share of the Expenses for such Year in excess of the
Expenses for the Base Year. “Expenses” means the total costs incurred by Landlord to
operate, manage, administer, equip, secure, protect, repair, replace, refurbish, clean,
maintain, decorate and inspect the Project, including a fee to manage the Project not
to exceed 5% of the gross revenue of the Project. Expenses that vary with occupancy will
be calculated as if the Building is 95% occupied and operating and all such services
are provided to all tenants.

	 	(1)	 	Expenses include:

	 	(A)	 	Standard Services provided under §6.1 (excluding
electrical service pursuant to Section 6.3);

	 
	 	(B)	 	Repairs and maintenance performed under §7.2;

	 
	 	(C)	 	Insurance maintained under §9.2 (including deductibles paid);

	 
	 	(D)	 	Wages, salaries and benefits of personnel to the extent they render
services to the Project;

5

 

	 	(E)	 	Costs of operating the Project management office (including reasonable rent);

	 
	 	(F)	 	Amortization installments of costs required to be capitalized and incurred:

	 	(i)	 	To comply with insurance requirements or laws (“Mandated
Expenses”);

	 
	 	(ii)	 	That are reasonably calculated to
reduce other Expenses or the rate of increase in other Expenses
(“Cost-Saving Expenses”); or

	 
	 	(iii)	 	That are reasonably calculated to improve or maintain the
safety, health or access of Project occupants, and otherwise maintain the
quality, appearance, or integrity of the Project (“Quality Expenses”).

	 	(2)	 	Expenses exclude:

	 	(A)	 	Taxes;

	 
	 	(B)	 	Mortgage payments (principal and interest), and ground lease rent;

	 
	 	(C)	 	Commissions, advertising costs, attorney’s fees and costs of
improvements in connection with leasing space in the Building;

	 
	 	(D)	 	Costs reimbursed by insurance proceeds or tenants of the Building (other
than as Direct
Costs);

	 
	 	(E)	 	Depreciation;

	 
	 	(F)	 	Except for the costs identified in §4.2(b)(1)(F), costs
required to be capitalized according to sound real estate accounting and
management principles, consistently applied;

	 
	 	(G)	 	Collection costs and legal fees paid in disputes with tenants; and

	 
	 	(H)	 	Costs to maintain and operate the entity that is
Landlord (as opposed to operation and maintenance of the Project).

	 
	 	(I)	 	Costs incurred by Landlord due to the violation by
Landlord of the terms and conditions of any lease of space in the Project or
any law, code, regulation, ordinance or the like;

	 
	 	(J)	 	Landlord’s general corporate overhead and general and administrative
expenses; and

	 
	 	(K)	 	Costs incurred to (i) comply with laws relating to the
removal of any Hazardous Material, unless caused by Tenant or any Tenant
Parties, and (ii) to remove, remedy, contain, or treat any Hazardous Material,
which Hazardous Material is brought onto the Project after the date hereof by
Landlord or any other tenant of the Project or any other person.

	 	(c)	 	Amortization and Accounting Principles.

	 	(1)	 	Each item of Mandated Expenses and Quality Expenses will be fully amortized in
equal annual installments, with interest on the principal balance at Amortization Rate,
over the number of years, not to exceed 10, that Landlord projects the item of Expenses
will be productive for its intended use, without replacement, but properly repaired and
maintained.

	 
	 	(2)	 	Each item of Cost-Saving Expenses will be fully amortized in equal annual
installments, with interest on the principal balance at the Amortization Rate, over
the number of years that Landlord reasonably estimates for the present value of the
projected savings in Expenses (discounted at the Amortization Rate) to equal the cost.

	 
	 	(3)	 	Any item of Expenses of significant cost that is not required to be capitalized
but is unexpected or does not typically recur may, in Landlord’s discretion, be
amortized in equal annual installments, with interest on the principal balance at the
Amortization Rate, over a number of years determined by Landlord.

	 
	 	(4)	 	“Amortization Rate” means the prime rate of Citibank, N.A. (or a comparable
financial institution selected by Landlord), plus 3%.

6

 

	 	(5)	 	Landlord may allocate Direct Costs for the Project to various components of
the Project on an equitable basis.
	 
	 	(6)	 	Subject to the specific provisions of this Article 4, Landlord will use
sound real estate accounting and management principles, consistently applied, to
determine Direct Costs.

	 	(d)	 	Estimates. Landlord will provide to Tenant a reasonably detailed itemization of
estimated Direct Costs for each Year. During the Term, if for any Year, Tenant’s Share exceeds
Tenant Share for the Base Year, Tenant will pay an amount equal to the excess (“Excess”), in
equal Monthly installments, on the first day of each Month. If Landlord has not provided
Tenant with Landlord’s estimate of Direct Costs for a Year, then Tenant will pay the estimated
Excess until the estimate is revised by Landlord. Landlord may reasonably revise its estimate
of Direct Costs for a Year and after receipt of the revised estimate,
Tenant will pay the
monthly installments of Excess based on the revised estimate for the remainder of the Year or
until the estimate is later revised by Landlord. The aggregate estimates of Direct Costs paid
by Tenant in a Year is the “Estimated Direct Costs.”

	 
	 	(e)	 	Settlement. As soon as practicable after the end of each Year, Landlord will give
Tenant a statement of the actual Direct Costs for the Year, and which shall indicate the
amount, if any, of the Excess. Direct Costs for any partial Year will be prorated based on a
365-day calendar year. The statement of Direct Costs is conclusive, binds Tenant, and Tenant
waives all rights to contest the statement, except for items of Direct Costs to which Tenant
objects by notice to Landlord given within 90 days after receipt of Landlord’s statement;
however, Tenant’s objection will not relieve Tenant from its obligation to pay Direct Costs
pending resolution of any objection. If the Direct Costs exceed the Estimated Direct Costs for
the Year, then Tenant shall pay any underpayment in Excess to Landlord in a lump sum as Rent
within 30 days after receipt of Landlord’s statement of Direct Costs. If the Estimated Direct
Costs exceeds the Direct Costs for the Year, then Landlord shall credit any overpayment in
Excess against Rent next due. However, if the Term ends during a Year, then Landlord may, in
Landlord’s sole discretion, elect either of the following:
(1) to forego the settlement of Excess Direct Costs for the Year that is otherwise required
and accept the payments of estimated Excess for the final Year in satisfaction of Tenant’s
obligations to pay Excess for the final Year, or (2) to have Landlord’s and Tenant’s
obligations under this §4.2(e) survive the end of the Term.

	 
	 	(f)	 	Audit. Tenant shall have the right to review and/or audit Landlord’s books and
records regarding Tenant’s Share of Operating Costs at Landlord’s offices during normal
business hours on ten (10) business days’ prior notice (“Review Notice”) for a period of
ninety (90) days following Tenant’s receipt of the Annual Statement (the “Review Period”).
Within a reasonable time after receipt of Tenant’s review/audit notice, Landlord shall make
all pertinent records available for inspection that are reasonably necessary for Tenant to
conduct its review. If any records are maintained at a location other than the office of the
Project, Tenant may either inspect the records at such other location or pay for the
reasonable cost of copying and shipping the records. Any audit shall
be conducted by a
reputable firm of certified public accountants (“Tenant’s
CPA”) which, along with Tenant,
agrees to be bound by a confidentiality agreement, on a noncontingent fee basis. Tenant shall
have no right to contest, review or audit such statement if a Default has occurred and is
continuing, or if Tenant fails to give such written notice during the Review Period. Within
ninety (90) days after the records are made available to Tenant, Tenant shall have the right
to give Landlord written notice (an “Objection Notice”) stating in reasonable detail any
objection to the books and records that Tenant has reviewed. If Tenant fails to give Landlord
an Objection Notice within the 90-day period or fails to provide Landlord with a Review Notice
within the 90-day period described above, Tenant shall be deemed to have approved Landlord’s
statement of Operating Costs for such year and shall be barred from raising any claims
regarding the Operating Costs for that year. Landlord may elect to contest the conclusion of
Tenant’s auditor in the Objection Notice by giving a written contest notice (the “Contest
Notice”) to Tenant within sixty (60) days after receipt of the Objection Notice, such Contest
Notice containing the name of a firm of certified public accountants appointed by Landlord
(“Landlord’s CPA”). Landlord’s CPA and Tenant’s CPA shall meet and confer within forty-five
(45) days after the Contest Notice is given in an attempt to agree on any disputed items. If
Landlord’s CPA and Tenant’s CPA are unable to agree on all disputed items within forty-five
(45) days after the Contest Notice, then each of Landlord’s CPA and Tenant’s CPA shall propose
and deliver to each other in writing an amount to be paid by Tenant to Landlord or Landlord to
Tenant relating to the Operating Costs being audited. Tenant’s CPA and Landlord’s CPA shall
agree on a third CPA experienced in real estate accounting
unaffiliated with

7

 

	 	 	 	Landlord, Tenant and their respective CPA’s and who has not worked for Landlord,
Tenant or their respective CPA’s in the last ten (10) years. Such third CPA (the
“Deciding CPA”) shall meet for one day or less with Landlord’s CPA and Tenant’s CAP
within fifteen (15) business days after the appointment of such Deciding CPA, and at
the end of such meeting the Deciding CPA shall choose in writing either Tenant’s
CPA’s proposal or Landlord’s CPA’s proposal, and such decision shall be final,
binding and nonappealable. If Landlord and Tenant determine that Operating Costs for
the calendar year are less than reported, Landlord shall provide Tenant with a credit
against the next installment of Rental in the amount of the overpayment by Tenant.
Likewise, if Landlord and Tenant determine that Operating Costs for
the calendar year
are greater than reported, Tenant shall pay Landlord the amount of any underpayment
within thirty (30) days. Landlord shall pay for Landlord’s CPA, Tenant shall pay for
Tenant’s CPA and the cost of the Deciding CPA shall be divided equally among the
parties. No books and records may be removed from Landlord’s office. Notwithstanding
the foregoing, if it is determined that Operating Costs reflected in the Annual
Statement have been overstated by five percent (5%) or more, than Landlord shall pay
for the reasonable cost of Tenant’s CPA and the Deciding
CPA.

     4.3 Other Taxes. Upon demand, Tenant will reimburse Landlord for taxes paid by Landlord
on (a) Tenant’s Personal Property, (b) Rent, (c) Tenant’s occupancy of the Premises, or (d) this
Lease. If Tenant cannot lawfully reimburse Landlord for these taxes, then the Base Rent will be
increased to yield to Landlord the same amount after these taxes were imposed as Landlord would
have received before these taxes were imposed.

     4.4 Terms of Payment. “Rent” means all amounts payable by Tenant under this Lease and the
exhibits, including Base Rent and Additional Rent. If a time for payment of an item of Rent is not
specified in this Lease, then Tenant will pay Rent within 30 days after receipt of Landlord’s
statement or invoice. Unless otherwise provided in this Lease, Tenant shall pay Rent without
notice, demand, deduction, abatement or setoff, in lawful U.S. currency, at Landlord’s Billing
Address. Landlord will send invoices payable by Tenant to Tenant’s Billing Address; however,
neither Landlord’s failure to send an invoice nor Tenant’s failure to receive an invoice for Base
Rent (and installments of Estimated Direct Costs) will relieve Tenant of its obligation to timely
pay Base Rent (and installments of Estimated Direct Costs). Any partial payment of Rent by Tenant
will be considered a payment on account. No endorsement or statement on any Rent check or any letter
accompanying Rent will be deemed an accord and satisfaction, affect Landlord’s right to collect the
full Rent due, or require Landlord to apply any payment to any Rent other than Rent earliest due.
No payment by Tenant to Landlord will be deemed to extend the Term or render any notice, pending
suit or judgement ineffective. By notice to the other, each
party may change its Billing Address.

     4.5 Late Payment. If Landlord does not receive all or part of any item of Rent when due, then
Tenant shall pay Landlord 5% of the overdue Rent (“Late
Charge”) as Additional Rent. Tenant agrees
that the Late Charge is not a penalty, and will compensate Landlord for costs not contemplated
under this Lease that are impracticable or extremely difficult to fix. Landlord’s acceptance of a
Late Charge does not waive Tenant’s default.

5. USE & OCCUPANCY

     5.1 Use. Tenant shall use and occupy the Premises only for the Use. Landlord does not
represent or warrant that the Project is suitable for the conduct of
Tenant’s particular business.

     5.2 Compliance with Laws and Directives.

	 	(a)	 	Tenant’s Compliance. Subject to the remaining terms of this
Lease, Tenant shall comply at Tenant’s expense with all laws and directives of
Landlord’s insurers concerning:

	 	(1)	 	The Leasehold Improvements and Alterations,
	 
	 	(2)	 	Tenant’s use or occupancy of the Premises,
	 
	 	(3)	 	Tenant’s employer/employee obligations,
	 
	 	(4)	 	A condition created by Tenant, its Affiliates or their contractors or invitees,
	 
	 	(5)	 	Tenant’s failure to comply with this Lease,
	 
	 	(6)	 	The negligence of Tenant or its Affiliates or contractors, or
	 
	 	(7)	 	Any chemical wastes, contaminants, pollutants or substances
that are hazardous, toxic, infectious, flammable or dangerous, or regulated by any
local, state or federal statute, rule, regulation or

8

 

ordinance for the protection of health or the environment (“Hazardous
Materials”) that are introduced to the Project, handled or disposed by
Tenant or its Affiliates, or any of their contractors.

	 	 	 	Notwithstanding the foregoing, nothing in this Paragraph 5.2(a) shall require Tenant
to bear any expenses for any structural changes, modifications or Alterations to the
Premises or the Project or any changes to the Systems unless such changes are
necessitated by Tenant’s particular use of, or improvement to, the Premises or the
Project.

	 
	 	(b)	 	Landlord’s Compliance. The cost of Landlord’s compliance with laws
or directives of Landlord’s insurers concerning the Project, other than those that
are Tenant’s obligation under subsection (a), will be included in Expenses to the
extent allowed under §4.2.

     5.3 Occupancy. Tenant shall not interfere with Building services or other tenants’
rights to quietly enjoy their respective premises or the Common Areas. Tenant shall not make or
continue a nuisance, including any objectionable odor, noise, fire hazard, vibration, or wireless
or electromagnetic transmission. Tenant will not maintain any Leasehold Improvements or use the
Premises in a way that increases the cost of insurance required under §9.2, or requires insurance
in addition to the coverage required under §9.2.

     5.4 OFAC Certification. Tenant represents that: (a) Tenant is not now and has never
been listed or named as a Blocked Person, or (b) Tenant is not now and has never been acting
directly or indirectly for, or on behalf of, any Blocked Person. “Blocked Person” means any person,
group, entity or nation designated by the United States Treasury Department as a terrorist or a
“Specially Designated National and Blocked Person,” or that is a banned or blocked person, entity,
nation under any law, order, rule or regulation that is enforced or administered by the Office of
Foreign Assets Control.

	6.	 	SERVICES & UTILITIES

	 	6.1	 	Standard Services.
	 
	 	(a)	 	Standard Services Defined. “Standard Services” means:

	 	(1)	 	Heating, ventilation and air-conditioning (“HVAC”) during
Business Hours as reasonably required to comfortably use and occupy the Premises
and interior Common Areas;

	 
	 	(2)	 	Tempered water from the public utility for use in Common Areas
rest rooms, and water from the public utility for use in customary kitchen
facilities located in the Premises;

	 
	 	(3)	 	Janitorial services to the Premises and interior Common Areas 5
days a week, except Holidays, and pest control services in the Common Areas as
needed to keep the Common Areas free from infestation;

	 
	 	(4)	 	Access to the Premises (by at least 1 passenger elevator if not on the ground
floor);

	 
	 	(5)	 	Labor to replace fluorescent tubes and ballasts in Building Standard light
fixtures in the Premises;

	 
	 	(6)	 	Access control services; and
	 
	 	(7)	 	Electricity from Landlord’s selected provider(s) for Common Areas lighting;

	 	(b)	 	Standard Services Provided. During the Term, Landlord shall provide the
Standard Services to Tenant. The cost of the Standard Services is included in Expenses.
Landlord is not responsible for any inability to provide Standard Services due to
either the concentration of personnel or equipment in the Premises; or Tenant’s use of
equipment in the Premises that is not customary office equipment or has special cooling
requirements.

     6.2 Additional Services. Landlord will provide utilities and services in excess of
the Standard Services subject to the following:

	 	(a)	 	HVAC. If Tenant requests HVAC service to the Premises during non-Business
Hours, Tenant will pay as Rent Landlord’s scheduled rate for this service.

	 
	 	(b)	 	Lighting. Landlord will furnish Building Standard lamps, bulbs, ballasts
and starters that are part of the Leasehold Improvements at no cost to Tenant (but shall
be included in Direct Costs), and non Building standard lamps, bulbs, ballasts and
starters that are part of the Leasehold Improvements for purchase by

9

 

	 	 	 	Tenant at Landlord’s cost, plus Landlord’s standard administration fee. Landlord
will install non-Building Standard items at Landlord’s scheduled rate for this
service.

	 
	 	(c)	 	Other Utilities and Services. Tenant will pay as Rent the actual cost
of utilities or services (other than HVAC and lighting addressed in (a) and (b), and
subject to Section 6.3 below) either used by Tenant or provided at Tenant’s request in
excess of that provided as part of the Standard Services, plus Landlord’s standard
administration fee. Tenant’s excess consumption may be estimated by Landlord unless
either Landlord requires or Tenant elects to install Building Standard meters to
measure Tenant’s consumption.

	 
	 	(d)	 	Additional Systems and Metering. Landlord may require Tenant, at
Tenant’s expense, to upgrade or modify existing Mechanical Systems serving the
Premises or the Leasehold Improvements to the extent necessary to meet Tenant’s excess
requirements (including installation of Building Standard meters to measure the same).

     6.3 Separate Metering and Electrical Billing. Notwithstanding anything to the contrary
in this Article 6, Tenant shall contract directly with San Diego Gas and Electric Company
(“Electric Provider”) for all electrical power and services in the Premises. Such services shall
not be included in Landlord’s Standard Services. Tenant’s total consumption of electricity in the
Premises, including lighting and convenience outlets, shall be separately metered and Tenant shall
be solely responsible for the costs thereof. Landlord shall be responsible for (as part of Direct
Costs) the installation of any meters in, on or about the Premises. Tenant shall pay all costs
associated with electrical consumption directly to the Electric Provider or pay as Rent the actual
cost of Tenant’s electricity consumption, plus Landlord’s standard administrative fee, at
Landlord’s election. Notwithstanding the foregoing, the total connected load shall not exceed 4
watts per RSF of the Premises.

     6.4 Telecommunication Services. Tenant will contract directly with third party providers
and will be solely responsible for paying for all telephone, data transmission, video and other
telecommunication services (“Telecommunication Services”) subject to the following:

	 	(a)	 	Providers. Each Telecommunication Services provider that does not
already provide service to the Building shall be subject to Landlord’s approval, which
Landlord may withhold in Landlord’s sole discretion. Without
liability to Tenant, the
license of any Telecommunication Services provider servicing the Building may be
terminated under the terms of the license, or not renewed upon the expiration of the
license.

	 
	 	(b)	 	Tenant’s Wiring. Landlord may, in its sole discretion, designate the
location of all wires, cables, fibers, equipment, and connections
(“Tenant’s Wiring”)
for Tenant’s Telecommunication Services, restrict and control access to telephone
cabinets and rooms. Tenant may not use or access the Base Building, Common Areas or
roof for Tenant’s Wiring without Landlord’s prior written consent, which Landlord may
withhold in Landlord’s sole discretion. Tenant’s Wiring will be subject to removal in
accordance with §3.3.

	 
	 	(c)	 	No Beneficiaries. This §6.4 is solely for
Tenant’s benefit, and no one
else shall be considered a beneficiary of these provisions.

     6.5 Special Circumstances. Without breaching this Lease or creating any liability on
the part of Landlord, Landlord may interrupt, limit or discontinue any utility or services Landlord
provides under this Article 6 under any of the following circumstances: (a) without notice, in an
emergency; (b) with reasonable notice, to comply with laws or to conform to voluntary government or
industry guidelines; (c) with reasonable notice, to repair and maintain the Project under §7.2
(including scheduled annual Building-wide shutdowns); or (d) with reasonable notice, to modify,
renovate or improve the Project under §8.2. Notwithstanding the foregoing, in the event that Tenant
is prevented from using, and does not use, the Premises or any portion thereof, as a result of (i)
any repair, maintenance or alteration to the Common Areas, the Premises or other portions of the
Project required to performed by Landlord under this Lease (unless the same is required due to the
negligence or willful misconduct of Tenant or any of Tenant’s employees), (ii) the unavailability
of any utility to the Premises where such unavailability is principally due to the gross negligence
or willful misconduct of Landlord or Landlord’s employees, or (iii) the presence of Hazardous
Materials on or about the Project not caused by the acts or omissions of Tenant or Tenant’s
employees (any such set of circumstances as set forth in items (i), through (iii), above, to be
known as an “Abatement Event”), then Tenant shall give Landlord prompt notice of such Abatement
Event, and if such Abatement Event continues for five (5) consecutive days after the commencement
of such Abatement Event or the same Abatement Event occurs ten (10) or more nonconsecutive days in
any twelve month period (the “Eligibility Period”), then the Base Rent, recurrent Additional Rent
and parking charges shall be abated or reduced, as the case may be, beginning on the date of such
Abatement Event and continuing for such time that Tenant continues to be so prevented from using,
and does not use, the Premises, or a portion thereof, in the proportion that the rentable area of
the portion of the Premises that Tenant is prevented

10

 

from using, and does not use (“Unusable Area”), bears to the total rentable area of the Premises;
provided, however, in the event that Tenant is prevented from using, and does not use, the
Unusable Area for a period of time in excess of the Eligibility Period and the remaining portion
of the Premises is not sufficient to allow Tenant to effectively conduct its business therein, and
if Tenant does not conduct its business from such remaining portion,
then for such time after
expiration of the Eligibility Period during which Tenant is so prevented from effectively
conducting its business therein, the Base Rent and recurrent
Additional Rent for the entire
Premises shall be abated for such time as Tenant continues to be so prevented from using, and does
not use, the Premises. If, however, Tenant reoccupies any portion of
the Premises during such
period, the Rent allocable to such reoccupied portion, based on the proportion that the rentable area
of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall
be payable by Tenant from the date Tenant reoccupies such portion of the Premises. Such right to
abate Base Rent, the recurrent Additional Rent and parking charges shall be Tenant’s sole and
exclusive remedy at law or in equity for an Abatement Event.

7. REPAIRS

     7.1 Tenant’s Repairs. Except as provided in Articles 10 and 12, during the Term Tenant shall,
at Tenant’s cost, repair, maintain and replace, if necessary, the Leasehold Improvements (other than
the Systems) and keep the Premises in good order, condition and repair, ordinary wear and tear
excepted. Tenant’s work under this §7.1 must be
(a) approved by Landlord before commencement, (b) supervised by Landlord at Tenant’s cost, if Landlord so reasonably requires, (c) performed in
compliance with laws and Building rules and regulations, and (d) performed lien free and in a
first-class manner with materials of at least Building Standard.

     7.2 Landlord’s Repairs. Except as provided in Articles 10 and 12, during the Term Landlord
shall repair, maintain and replace, if necessary, all parts of the Project that are not Tenant’s
responsibility under §7.1, or any other tenant’s responsibility under their respective lease, and
otherwise keep the Project in good order and condition according to the standards prevailing for
comparable office buildings in the area in which the Building is
located. Except in an emergency, Landlord will use commercially reasonable efforts to avoid disrupting the Use of the Premises in
performing Landlord’s duties under this §7.2; however, Landlord will not be required to employ
premium labor to perform any of Landlord’s duties under this §7.2. Tenant may not repair or
maintain the Project on Landlord’s behalf or offset any Rent for any repair or maintenance of the
Project that is undertaken by Tenant.

8. ALTERATIONS

     8.1 Alterations by Tenant. “Alterations” means any modifications, additions or improvements
to the Premises or Leasehold Improvements made by Tenant during the Term, including modifications
to the Base Building or Common Areas required by law as a condition of performing the work.
Alterations do not include work performed under a Work Letter that is part of this Lease.
Alterations are made at Tenant’s sole cost and expense, subject
to the following:

	 	(a)	 	Consent Required. All Alterations to excess of $1,500 require Landlord’s prior
written consent. If a Design Problem exists, Landlord may withhold its consent in Landlord’s
sole discretion; otherwise, Landlord will not unreasonably withhold
its consent. Unless Tenant
obtains Landlord’s prior written consent to the Alterations becoming part of the Premises to
be tendered to Landlord on termination of the Lease, Landlord may require Tenant to remove
Alterations and restore the Premises under §3.3 upon termination of this Lease.

	 
	 	(b)	 	Design Problem Defined. “Design Problem” means a condition
that results, or will result, from work proposed, being performed or
that has been completed that either:

	 	(1)	 	Does not comply with laws;
	 
	 	(2)	 	Does not meet or exceed the Building Standard;
	 
	 	(3)	 	Exceeds the capacity, adversely affects, is incompatible with,
or impairs Landlord’s ability to maintain, operate, alter, modify or improve
the Base Building;

	 
	 	(4)	 	Affects the exterior appearance of the Building or Common Areas;
	 
	 	(5)	 	Violates any agreement affecting the Project;
	 
	 	(6)	 	Costs more to demolish than Building Standard improvements;
	 
	 	(7)	 	Violates any insurance regulations or standards for a fire-resistive office
building;

11

 

	 	(8)	 	Locates any equipment, Tenant’s Wiring or Tenant’s Personal Property on the
roof of the Building, in Common Areas or in telecommunication or electrical
closets, except for connections of Tenant’s Wiring to service provided by
Telecommunications Services providers; or

	 
	 	(9)	 	Cases a “work of visual art” (as defined in the Visual
Artists Rights Act of 1990) to be incorporated into or made a part of
the Building.

	 	(c)	 	Performance of Alterations. Alterations shall be performed by Tenant
in a good and workman-like manner according to plans and specifications approved by
Landlord. All Alterations shall comply with law and insurance requirements. Landlord’s
designated contractors must perform Alterations affecting the Base Building or
Mechanical Systems; and, all other work will be performed by qualified contractors that
meet Landlord’s insurance requirements and are otherwise approved by Landlord. Promptly
after completing Alterations, Tenant will deliver to Landlord “as-built” CADD plans,
proof of payment, a copy of the recorded notice of completion, and all unconditional
lien releases.

	 
	 	(d)	 	Bonding. If requested by Landlord, before commencing Alterations Tenant
shall at Tenant’s cost obtain bonds, or deposit with Landlord other security acceptable
to Landlord for the payment and completion of the Alterations. These bonds or other
security shall be in form and amount acceptable to Landlord.

	 
	 	(e)	 	Alterations Fee. Tenant shall pay Landlord as Rent 5% of
the total construction costs of the Alterations to cover review of Tenant’s plans and
construction coordination by Landlord’s employees. In addition, Tenant shall reimburse
Landlord for the actual cost that Landlord reasonably incurs to have engineers,
architects or other professional consultants review Tenant’s plans and work in
progress, or inspect the completed Alterations.

     8.2 Alterations by Landlord. Landlord may modify, renovate or improve the Project as
Landlord deems appropriate, provided Landlord uses commercially reasonable efforts to avoid
disrupting Tenant’s business and shall not materially impair Tenant’s access to the Premises
or the Project.

     8.3 Liens and Disputes. Tenant will keep title to the Land and Building free of any
liens concerning the Leasehold Improvements, Alterations, or Tenant’s Personal Property, and will
promptly take whatever action is required to have any of these liens released and removed of record
(including, as necessary, posting a bond or other deposit). To the extent legally permitted, each
contract and subcontract for Alterations will provide that no lien attaches to or may be claimed
against the Project. Tenant will indemnify Landlord for costs that Landlord reasonably incurs
because of Tenant’s violation of this §8.3.

9. INSURANCE

     9.1 Tenant’s Insurance.

	 	(a)	 	Tenant’s Coverage. Before taking possession of
the Premises for any purpose (including construction of
Tenant improvements, if any) and during the Term, Tenant will provide and keep in
force the following coverage:

	 	(1)	 	Commercial general liability insurance insuring Tenant’s use
and occupancy of the Premises and use of the Common Areas, and covering personal
and bodily injury, death, and damage to others’ property of not less than the
Liability Limit. Each of these policies shall include cross liability and
severability of interests clauses, and be written on an occurrence, and not
claims-made, basis. Each of these policies shall name Landlord, the Building
property manager, each secured lender, and any other party reasonably designated
by Landlord as an additional insured (“Additional Insured”).

	 
	 	(2)	 	All risk insurance (including standard extended coverage
endorsement perils, leakage from fire protective devices and other water damage)
covering the full replacement cost of the Leasehold Improvements and Tenant’s
Personal Property. Each of these policies shall name Landlord and each Additional
Insured an additional insured to the extent of their interest in the Leasehold
Improvements. Each of these policies shall include a provision or endorsement in
which the insurer waives its right of subrogation against Landlord and each
Additional Insured.

	 
	 	(3)	 	Insurance covering the perils described in (2) for Tenant’s loss of
income or insurable gross profits with a limit not less than Tenant’s annual Rent.
Each of these policies shall include a provision or

12

 

	 	 	 	endorsement in which the insurer waives its right of subrogation against
Landlord and each Additional Insured.

	 
	 	(4)	 	If any boiler or machinery is operated in the Premises, boiler and machinery insurance.

	 
	 	(5)	 	Insurance required by law, including workers’ compensation insurance.

	 
	 	(6)	 	Employers liability insurance with limits not less than $1 million.

	 
	 	(7)	 	Commercial automobile liability insurance covering all owned,
hired, and non-owned vehicles
with a combined single limit of not less than $1 million for each accident
or person.

	 
	 	(8)	 	Insurance covering the Leasehold Improvements and Tenant’s
Personal Property against loss or
damage; provided, however, that Tenant may elect to self-insure this
coverage. If Tenant does not
elect to self-insure this coverage, then each of these policies shall name
Landlord and each
Additional Insured an additional insured to the extent of their interest in
the Leasehold
Improvements.

	 	(b)	 	Insurers and Terms. Each policy required under (a) shall be written
with insurance companies that are
licensed to do business in the state in which the Building is located and have a
rating of not less than A and
a Financial Size Class of at least VIII by A.M. Best Company. The proceeds
of policies providing
coverage under subsection (a)(2) of this §9.1 will be payable to Landlord, Tenant and
each Encumbrance
holder as their interests may appear. Tenant will cooperate with Landlord in
collecting any insurance
proceeds that may be due in the event of loss, and Tenant will execute and deliver to
Landlord proofs of
loss and any other instruments that Landlord may require to recover such insurance
proceeds.

	 
	 	(c)	 	Proof of Insurance. At least 10 days prior to the Commencement Date,
and throughout the Term, Tenant
will provide Landlord with certificates of insurance establishing that the coverage
required under
subsection (a) is in effect. Tenant will provide replacement certificates at least 30
days before any policy
expires that the expiring policy has been renewed or replaced.

	 
	 	9.2	 	Landlord’s Insurance.

	 
	 	(a)	 	Landlord’s Coverage. During the Term, Landlord
will provide and keep in force
the following coverage:

	 	(1)	 	Commercial general liability insurance.

	 
	 	(2)	 	All risk insurance (including standard extended coverage
endorsement perils, leakage from fire
protective devices and other water damage) covering the Project improvements
(excepting the
Leasehold Improvements to be insured by Tenant). Each of these policies shall
include a
provision or endorsement in which the insurer waives its right of subrogation
against Tenant.

	 
	 	(3)	 	Insurance covering the perils described in (2) for Landlord’s
loss of rental income or insurable
gross profits. Each of these policies shall include a provision or endorsement
in which the insurer
waives its right of subrogation against Tenant.

	 
	 	(4)	 	Boiler and machinery insurance.

	 
	 	(5)	 	Other insurance that Landlord elects to maintain.

	 	(b)	 	Terms. Each of the policies required under (a) will have those
limits, deductibles, retentions and other
terms that Landlord prudently determines.

10. DAMAGE OR DESTRUCTION

     10.1 Damage and Repair. If all or any part of the Project is damaged by fire or other
casualty, then the parties will proceed as follows:

	 	(a)	 	Landlord’s Estimates. Landlord will assess the damage to the Project
(but not the Leasehold
Improvements) and notify Tenant of Landlord’s reasonable estimate of the time required to
substantially
complete repairs and restoration of the Project (“Repair Estimate”) within 30 days after the
date of the
casualty. Landlord will also estimate the time that all or a portion of the Premises will be
Untenantable
(“Interruption Estimate”). “Untenantable” means that the Premises are not reasonably
accessible or are unfit for the Use. Within 30 days after the later of the casualty,
issuance of the Repair Estimate, issuance of

13

 

	 	 	 	the Interruption Estimate, or receipt of any denial of coverage or reservation of
rights from Landlord’s insurer, each party may terminate the Lease by written notice
to the other on the following conditions:

	 	(1)	 	Landlord may elect to terminate this Lease if either:

	 	(A)	 	The Repair Estimate exceeds 180 days, or

	 
	 	(B)	 	The damage or destruction occurs in the last 12 Months of the Term; or

	 
	 	(C)	 	The repair and restoration is not fully covered
by insurance maintained or required to be
maintained by Landlord (subject only to those deductibles or retentions Landlord elected
to maintain) or Landlord’s insurer denies coverage or reserves its
rights on coverage.

	 	(2)	 	Tenant may elect to terminate this Lease if the Interruption Estimate exceeds
180 days.

	 	(b)	 	Repairs. If neither party terminates the Lease under (a), then
the Lease shall remain in full force and effect and the parties will proceed as
follows:

	 	(1)	 	Landlord will repair and restore the Project (but not Leasehold
Improvements) to the condition
existing prior to such damage, except for modifications required by law.
Landlord will perform
such work reasonably promptly, subject to delay for loss adjustment, delay
caused by Tenant and
Force Majeure.

	 
	 	(2)	 	Tenant will repair and restore the Leasehold Improvements
reasonably promptly to the condition
existing prior to such damage, but not less than then current Building
Standards, except for
modifications required by law.

	 
	 	(3)	 	Tenant may not terminate this Lease if the actual time to
perform the repairs and restoration
exceeds the Repair Estimate, or the actual interruption exceeds the
Interruption Estimate.

     10.2
Rent Abatement. If as a result of the damage or destruction under §10.1 all or any part
of the Premises becomes Untenantable and Tenant does not actually use the Untenantable part of the
Premises for more than 3 consecutive business days, then Tenant’s Base Rent and Additional Rent for
the Untenantable part of the Premises that Tenant does not actually use will be abated from the
4th consecutive business day until the Untenantable part of the Premises becomes
tenantable; however, Tenant will not be entitled to abatement of Base Rent and Additional Rent
after the later of (a) that date that Landlord repairs and restores the Project to the extent
necessary for Tenant to reasonably access and use the Premises for the Use, or (b) that date that
repair and restoration of the Leasehold Improvements would have been substantially complete if
Tenant had performed its obligations under §10.1(b)(2) diligently and in coordination with
Landlord’s work. Tenant’s sole remedies against Landlord for damage or destruction of any part of
the Project is abatement of Base Rent and Additional Rent under this §10.2 and/or termination of
the Lease as provided in §10.1, and Landlord will not be liable to Tenant for any other amount,
including damages to Tenant’s Personal Property, consequential damages, actual or constructive
eviction, or abatement of any other item of Rent.

11. INDEMNITY

     11.1 Claims. “Claims” means any and all liabilities, losses, claims, demands, damages or
expenses that are suffered or incurred by a party, including attorneys’ fees reasonably incurred
by that party in the defense or enforcement of
the rights of that party.

     11.2 Landlord’s Waivers and Tenant’s Indemnity.

	 	(a)	 	Landlord’s Waivers. Landlord waives any Claims against Tenant and its
Affiliates for perils insured or
required to be insured by Landlord under subsections (2) and
(3) of §9.2(a), except
to the extent caused by
the gross negligence or willful misconduct of Tenant or its Affiliates.

	 
	 	(b)	 	Tenant’s Indemnity. Unless waived by Landlord under (a), Tenant will
indemnify and defend Landlord
and its Affiliates and hold each of them harmless from and against Claims arising
from:

	 	(1)	 	Any accident or occurrence on or about the Premises, except to the extent caused by
Landlord’s or
its Affiliates’ gross negligence or willful misconduct;

	 
	 	(2)	 	Tenant’s or its Affiliates’ negligence or willful misconduct; or

14

 

	 	(3)	 	Any claim for commission or other compensation by
any person other than the Brokers for services rendered to Tenant in
procuring this Lease.

	 	11.3	 	Tenant’s Waivers and Landlord’s Indemnity.

	 
	 	(a)	 	Tenant’s Waivers. Tenant waives any Claims against Landlord and its
Affiliates for:

	 	(1)	 	Any peril insured or required to be insured by Tenant under
subsections (2), (3) and (8) of §9.1(a),
except to the extent caused by the gross negligence or willful misconduct of
Landlord or its
Affiliates, but in no case will Landlord be liable for any special or
consequential damages
(including interruption of business, loss of income, or loss of opportunity);
or

	 
	 	(2)	 	Damage caused by any public utility, public work, other tenants
or occupants of the Project, or
persons other than Landlord; or

	 
	 	(3)	 	Damages in excess of the insurance Landlord maintains under §9.1.

	 	(b)	 	Landlord’s Indemnity. Unless waived by Tenant under (a),
Landlord will indemnify and defend Tenant and its Affiliates and hold each of them
harmless from and against Claims arising from:

	 	(1)	 	Landlord’s or its Affiliates’ gross negligence or willful misconduct; or

	 
	 	(2)	 	Any claim for commission or other compensation by any
person other than the Brokers for
services rendered to Landlord in procuring this Lease.

     11.4 Affiliates Defined. “Affiliates” means with respect to a party (a) that party’s
partners, co-members and joint venturers, (b) each corporation or other entity that is a parent or
subsidiary of that party, (c) each corporation or other entity that is controlled by or under
common control of a parent of such party, and (d) the directors, officers, employees and agents of
that party and each person or entity described in subsections (a) through (c) of this §11.4.

     11.5 Survival of Waivers and Indemnities. Landlord’s and Tenant’s waivers and indemnities
under §11.2 and §11.3 will survive the expiration or early termination of this Lease.

	12.	 	CONDEMNATION

     12.1
Taking. “Taking” means acquiring of all or part of the
Project for any public or quasi-public use by
exercise of a right of eminent domain or under any other law, or any
sale in lieu thereof. If a
Taking occurs:

	 	(a)	 	Total Taking. If because of a Taking substantially all of the Premises
is untenantable for substantially all of the remaining Term, then the Lease
terminates on the date of the Taking.

	 
	 	(b)	 	Partial Taking. If a Taking does not cause the Lease to be terminated under
(a), then Landlord will restore
(and alter, as necessary) the Premises to be tenantable, unless the Lease is
terminated by either Landlord or Tenant under the following circumstances:

	 	(1)	 	Landlord may terminate the Lease upon 60 days prior written
notice to Tenant if Landlord
reasonably determines that it is uneconomical to restore or alter the
Premises to be tenantable.

	 
	 	(2)	 	Tenant may terminate the Lease upon 60 days prior written notice
to Landlord if the Taking causes
more than 20% of the Premises to be Untenantable for the remainder of the Term
and Tenant cannot reasonably operate Tenant business for the Use in the remaining
Premises.

	 	(c)	 	If the Lease is not terminated under (a) or (b), the Rent payable by Tenant
will be reduced for the term of
the Taking based upon the RSF Premises rendered Untenantable by the Taking and that
Tenant does not actually use.

     12.2 Awards. Landlord is entitled to the entire award for any claim for a taking of any
interest in this Lease or the Project, without deduction or offset for Tenant’s estate or interest; however, Tenant may
make a claim for relocation expenses and damages to Tenant’s
Personal Property and business to the extent that Tenant’s
claim does not reduce Landlord’s award.

15

 

13. TENANT TRANSFERS

     13.1 Terms Defined.

     (a) Transfer Defined. “Transfer” means any:

	 	(1)	 	Sublease of all or part of the premises, or assignment,
mortgage, hypothecation or other conveyance of an interest in this
Lease;

	 
	 	(2)	 	Use of the Premises by anyone other than Tenant with Tenant’s consent;

	 
	 	(3)	 	Change in Tenant’s form of organization (e.g., a change from a
partnership to limited liability company);

	 
	 	(4)	 	Transfer of 51% or more of Tenant’s assets, shares (excepting
shares transferred in the normal course of public trading), membership interests,
partnership interests or other ownership interests; or

	 
	 	(5)	 	Transfer of effective control of Tenant.

     13.2 Prohibited Transfers. Tenant may not enter into a Transfer or other agreement to use
or occupy the Premises that provides for rent or other compensation based in whole or in part on
the net income or profits from the business operated in the Premises. Tenant may not enter into a
Transfer if the proposed transferee is directly or indirectly related to the Landlord under §856,
et seq. of the Internal Revenue Code of 1986 (as amended). Any such Transfers shall be considered
null, void and of no force or effect.

     13.3 Consent Not Required. Tenant may effect a Transfer to a Permitted Transferee without
Landlord’s prior consent and without application of § 13.5, below, but with notice to Landlord
given not later than the Permitted Transferee’s occupancy. “Permitted Transferee” means any
person or entity that:

	 	(a)	 	Either (1) controls, is controlled by, or is under common control with Tenant
(for purposes hereof, “control” shall mean ownership of not less than 50% of all of the
voting stock or legal and equitable interest in the entity in question), (2) results
from the merger or consolidation of Tenant, or (3) acquires all or substantially all of
the stock and/or assets of Tenant as a going concern;

	 
	 	(b)	 	Has a tangible net worth and liquid assets immediately following the Transfer
not less than the greater of (1) Tenant’s tangible net worth and liquid assets
preceding the Transfer, or (2) Tenant’s tangible net worth and liquid assets as of the
execution of this Lease;

	 
	 	(c)	 	Will not, by occupying the Premises, cause Landlord to breach any other lease
or other agreement affecting the Project; and

	 
	 	(d)	 	Is not named or listed as a Blocked Person.

     13.4 Consent Required. Each proposed Transfer other than those prohibited under § 13.2 or
permitted under §13.3 requires Landlord’s prior consent, in which case the parties will proceed as
follows:

	 	(a)	 	Tenant’s Notice. Tenant shall notify Landlord at least 30 days prior to
the proposed Transfer of the name and address of the proposed transferee and the
proposed use of the Premises, and include in the notice the Transfer documents and
copies of the proposed transferee’s balance sheet and income statement for the most
recent complete fiscal year.

	 
	 	(b)	 	Landlord’s Rights. Within 30 days after receipt of Tenant’s complete notice,
Landlord may either:

	 	(1)	 	If the proposed Transfer is either an assignment of this Lease or
sublease of substantially all of the Premises, terminate this Lease as of the
proposed Transfer date;

	 
	 	(2)	 	If the proposed Transfer is a sublease of all of the Premises or
any part of the Premises that will be separately demised and have its own
entrance from the Common Areas, exercise a right of first refusal to sublease
such portion of the Premises at the lesser of (A) the Rent (prorated for
subletting part of the Premises), or (B) the rent payable in the proposed
Transfer; or

	 
	 	(3)	 	Consent or deny consent to the proposed Transfer, consent not to be
unreasonably withheld if:

16

 

	 	(A)	 	The proposed transferee, in Landlord’s reasonable
opinion, has the financial capacity to meet its obligations under the
proposed Transfer;

	 
	 	(B)	 	The proposed use is
consistent with the Use and will not cause
Landlord to be in breach of any lease or other
agreement affecting the Project;

	 
	 	(C)	 	The proposed transferee is typical of tenants that directly lease
premises in first-class office buildings;

	 
	 	(D)	 	The proposed transferee is not an existing tenant
or an Affiliate of an existing tenant, or a party with which Landlord is
actively negotiating to lease space in the Building (or has, in the last
6 months, been actively negotiating to lease space in the Building);

	 
	 	(E)	 	The proposed transferee is not an agency of any
government, medical facility or entity having sovereign immunity;

	 
	 	(F)	 	Tenant is not in Default under this Lease; and
	 
	 	(G)	 	The proposed transferee is not named or listed as a Blocked Person.

	 	(c)	 	Compelling Consent. If Landlord does not consent to a Transfer,
Tenant’s sole remedy against Landlord will be an action for specific performance or
declaratory relief, and Tenant may not terminate this Lease or seek monetary damages.

     13.5 Payments to Landlord. Tenant will pay Landlord all of the Transfer receipts that exceed
Tenant’s Rent (on a per square foot basis); after Tenant is reimbursed for Tenant’s reasonable and
customary out-of-pocket costs incurred in the Transfer, including attorneys’ fees, cost of
improvements (or construction allowances) provided to the transferee,
Alterations, and broker
commissions. Tenant shall pay Landlord the greater of a $1,500 review fee or Landlord’s actual out-
of-pocket legal fees and costs incurred for each proposed Transfer requiring Landlord’s consent,
excepting those in which Landlord exercises its rights under
subsection (1) or (2) of §13.4(b).

     13.6 Effect of Transfers. No Transfer releases Tenant or any guarantor of this Lease from any
Lease obligation. Landlord’s acceptance of a payment from any person or entity other than Tenant
that occupies the Premises does not waive Tenant’s obligations under this Article 13. If Tenant is
in Default of this Lease, Landlord may proceed against Tenant without exhausting any remedies
against any transferee and may require (by written notice to any transferee) any transferee to pay
Transfer rent owed Tenant directly to Landlord (which Landlord will apply against Tenant’s Lease
obligations). Termination of this Lease for any reason will not result in a merger. Each sublease
will be deemed terminated upon termination of this Lease unless Landlord notifies the subtenant in
writing of Landlord’s election to assume any sublease, in which case the subtenant shall attorn to
Landlord under the executory terms of the sublease.

14. LANDLORD TRANSFERS

     14.1 Landlord’s Transfer. Landlord’s right to transfer any interest in the Project or this
Lease is not limited by this Lease. Upon any such transfer, Tenant will attorn to Landlord’s
transferee and Landlord will be released from liability under this Lease, except for any Lease
obligations accruing before the transfer that are not assumed by the transferee.

     14.2 Subordination. This Lease is, and will at all times be, subject and subordinate to each
ground lease, mortgage, deed to secure debt, mortgage or deed of trust now or later encumbering the
Building, including each renewal, modification, supplement, amendment, consolidation or replacement
thereof (each, an “Encumbrance”). At Landlord’s request, Tenant will, without charge, promptly
execute, acknowledge and deliver to Landlord (or, at Landlord’s request, the Encumbrance holder)
any instrument reasonably necessary to evidence this subordination. Notwithstanding the foregoing,
each Encumbrance holder may unilaterally elect to subordinate its Encumbrance to this Lease.

     14.3 Attornment. Tenant will automatically attorn to any transferee of Landlord’s interest in
the Project that succeeds Landlord by reason of a termination, foreclosure or enforcement
proceeding of an Encumbrance, or by delivery of a deed in lieu of any foreclosure or proceeding (a
“Successor Landlord”). In this event, the Lease will continue in full force and effect as a direct
lease between the Successor Landlord and Tenant on all of the terms of this Lease, except that the
Successor Landlord shall not be:

	 	(a)	 	Liable for any obligation of Landlord under this Lease, or be subject
to any counterclaim, defense or offset accruing before Successor Landlord succeeds to
Landlord’s interest;

17

 

	 	(b)	 	Bound by any modification or amendment of this Lease made without Successor
Landlord’s consent,

	 
	 	(c)	 	Bound by any prepayment of more than one month’s Rent;

	 
	 	(d)	 	Obligated to return any Security Deposit not paid over to Successor Landlord, or

	 
	 	(e)	 	Obligated to perform any improvements to the Premises (or provide an allowance therefor). Upon
Successor Landlord’s request, Tenant will, without charge, promptly execute, acknowledge and
deliver to Successor Landlord any instrument reasonably necessary required to evidence such
attornment.

     14.4 Estoppel Certificate. Tenant (and each guarantor of the Lease and transferee of an
interest in the Lease, including subtenants) shall within five (5) days after Tenant’s taking
possession of the Premises in accordance with the terms of the Tenant Work Letter, and at any time
and during the Term from time to time, upon not less than ten (10) days’ prior written notice from
Landlord, execute, acknowledge and deliver to Landlord a statement in writing (the “Estoppel
Certificate”) substantially in the form of Exhibit “F”, upon which Landlord and each existing or
prospective Encumbrance holder may rely confirming the following (or whether any exceptions exist
to the following):

	 	(a)	 	The Commencement Date and Expiration Date;

	 
	 	(b)	 	The documents that constitute the Lease, and that the Lease is unmodified and in full
force and effect;

	 
	 	(c)	 	The date through which Base Rent, Additional Rent, and other Rent has been paid;

	 
	 	(d)	 	That neither Landlord nor Tenant is in Default;

	 
	 	(e)	 	That Landlord has satisfied all Lease obligations to improve the Premises (or
provide Tenant an allowance therefor) and Tenant has accepted the Premises;

	 
	 	(f)	 	That Tenant solely occupies the Premises; and

	 
	 	(g)	 	Such other matters concerning this Lease or Tenant’s occupancy that Landlord may
reasonably require.

15. DEFAULT AND REMEDIES

	 	15.1	 	Tenant’s Default and Remedies.

	 	(a)	 	Tenant will be in “Default” of this Lease if Tenant either:

	 	(1)	 	Fails to pay Rent when due, and the failure continues for 5 days
after Landlord notifies Tenant of
this failure under §17.2 (Tenant waiving any other notice that may be
required by law);

	 
	 	(2)	 	Fails to perform a non-monetary Lease obligation of Tenant and the
failure continues for 30 days
after Landlord notifies Tenant of this failure, but if it will reasonably take
more than 30 days to
perform this obligation, then Tenant will have a reasonable time to perform
this obligation, but
only if Tenant commences performing this obligation within 30 days after
Landlord notifies
Tenant of this failure;

	 
	 	(3)	 	Consummates a Transfer that violates Article 13;

	 
	 	(4)	 	Fails, within 15 days after it occurs, to discharge any attachment
or levy on Tenant’s interest in
this Lease;

	 
	 	(5)	 	Fails, within 60 days after it occurs, to have vacated or dismissed
any appointment of a receiver or
trustee of Tenant’s assets (or any Lease guarantor’s assets), or any voluntary
or involuntary
bankruptcy or assignment for the benefit of Tenant’s creditors (or any Lease
guarantor’s
creditors); or

	 
	 	(6)	 	Is listed or named as a Blocked Person, or Tenant acts directly or
indirectly for or on behalf of any
Blocked Person in connection with this Lease.

	 	(b)	 	If Tenant is in Default, Landlord may, without prejudice to the exercise
of any other remedy, exercise any remedy available under law, including those described
below:

	 	(1)	 	Landlord has the remedy described in California Civil Code
§1951.4. Landlord may continue this Lease in effect after Tenant’s breach and
abandonment (until Landlord terminates Tenant’s right

18

 

	 	 	 	to possess the Premises under (2), below) and recover Rent as it becomes due.
If Landlord elects this remedy, any Transfer Tenant proposes will be subject
only to reasonable limitations.

	 	(2)	 	Landlord has the remedy described in California Civil
Code §1951.2. If Tenant does not abandon the Premises, Landlord may terminate
Tenant’s right to possess the Premises and recover from Tenant all of the
following:

	 	(A)	 	The worth at the time of award (computed
by allowing interest at the rate in (3), below, on amounts due prior to
award, and discounting amounts due after award at the discount rate of
the Federal Reserve Bank of San Francisco at the time of award plus 1%)
of:

	 	(i)	 	The unpaid Rent earned as of termination;

	 
	 	(ii)	 	The amount that the unpaid
Rent earned after termination to the date of award exceeds the
rental loss that Tenant proves could have been reasonably
avoided; and

	 
	 	(iii)	 	The amount that the unpaid Rent
for the balance of the Term after the date of award exceeds
the rental loss that Tenant proves could have been reasonably
avoided; and

	 	(B)	 	Any other amount necessary to compensate Landlord for damage caused
by Tenant’s
failure to observe this Lease (or which, in the ordinary course of
things would be likely to result therefrom, including costs of
obtaining mitigating rental income, such as excused
rent, brokerage commissions, improvements, parking concessions, lease
takeovers, cash payments, advertising, and moving costs).

	 	(3)	 	For any amounts owed under (1) or (2), recover interest
at the greater of the interest rate permitted under law or 10% (“Default Rate”)
from the date each amount is due until paid by Tenant.

     15.2 Landlord’s Default and Remedies.

	 	(a)	 	Landlord will be in “Default” of this Lease if Landlord fails to perform any
Lease obligation of Landlord
and this failure continues for 30 days after Tenant notifies Landlord of such
failure, or such longer period
of time as is reasonable if more than 30 days is reasonably required to
perform this obligation if
performance commences within this 30-day period and is diligently prosecuted to
completion.

	 
	 	(b)	 	If Landlord is in Default, then Tenant may exercise any remedy available under
law that is not waived or
limited under this Lease, subject to the following:

	 	(1)	 	Tenant may not terminate this Lease due to any Landlord Default
until Tenant notifies each
Encumbrance holder and each Encumbrance holder is provided a reasonable
opportunity to gain
legal possession of the Project and, after gaining possession, cure the
Default.

	 
	 	(2)	 	Landlord’s liability under this Lease is limited to Landlord’s interest in the
Building.

	 
	 	(3)	 	No liability under this Lease is assumed by Landlord’s Affiliates.

     15.4 Enforcement Costs. If Landlord or Tenant brings any action against the other to enforce or
interpret any
provision of this Lease (including any claim in a bankruptcy or an assignment for the benefit
of creditors), the prevailing
party will be entitled to recover from the other reasonable costs and attorneys’ fees
incurred in such action.

     15.5 Jury Trial. Landlord and Tenant each waive trial by jury in any action, proceeding or
counterclaim
brought by either party against the other concerning any matter related to this Lease.

     15.6 Force Majeure. “Force Majeure” means any cause or event beyond both Landlord’s and
Tenant’s reasonable control, including any act of God, government act or restriction, labor
disturbance, general shortage of materials or supplies, riot, insurrection, or act of war or
terrorism. Force Majeure excuses a party from performing any non-monetary Lease obligation for a
commercially reasonable time.

16. SECURITY

     16.1 Security Deposit. Tenant will deposit the Security Deposit with Landlord on
execution of this Lease. Landlord is not required to either segregate the Security Deposit from
any other funds or pay any interest on the Security

19

 

Deposit. The Security Deposit secures Tenant’s performance of all Lease obligations. Landlord may
apply the Security Deposit against any cost Landlord incurs or damage Landlord suffers because
Tenant fails to perform any Lease obligation, including payment of
Rent. Tenant will replenish any
Security Deposit applied by Landlord within 10 days after receipt of Landlord’s demand. Tenant
waives §1950.7 of the California Civil Code to the extent to affects Landlord’s ability to apply
the Security Deposit.

     16.2 Refund. If Tenant fully and faithfully performs all of its Lease obligations, then
Landlord will refund the Security Deposit (or any balance remaining) to Tenant within 60 days after
the expiration or early termination of the Term and Tenant’s vacation and surrender of the Premises
to Landlord in the condition required by §3.3. If Tenant has assigned this Lease, Landlord may
return the Security Deposit to either Tenant or the then current assignee. Landlord’s transfer of
the Security Deposit to any transferee of Landlord’s interest in the Building relieves Landlord of
its obligations under this section, and Tenant will look solely to Landlord’s transferee for return
of the Security Deposit.

     16.3 Financial Statements. Unless Tenant is a public company traded on a major stock
exchange in the United States, Landlord may from time to time (but nor more often than once each
Year) require Tenant to furnish Landlord with an audited financial statement covering the preceding
Year and a certified financial statement covering each completed quarter of the current Year for
which a statement is reasonably available.

17. MISCELLANEOUS

     17.1 Rules and Regulations. Tenant will comply with the Rules and Regulations attached as
Exhibit B. Landlord may reasonably modify or add to the Rules
and Regulations upon notice to Tenant.
If the Rules and Regulations conflict with this Lease, the Lease shall govern.

     17.2 Notice. Notice to Landlord must be given to Landlord’s Notice Addresses. Notice to
Tenant must be given to Tenant’s Notice Addresses. By notice to the other, either party may change
its Notice Address. Each notice must be in writing and will be validly given if either: (a) the
notice is personally delivered and receipt is acknowledged in writing; (b) the notice is delivered
by a nationally recognized overnight courier service (e.g., FedEx) and receipt is acknowledged in
writing. If the party to receive notice fails or refuses to accept delivery or acknowledge receipt
of the notice in writing, then notice may be validly given by mailing the notice first-class,
certified or registered mail, postage prepaid, and the notice will be deemed received by such party
2 business days after the notice’s deposit in the U.S. Mail.

     17.3 Intentionally Omitted.

     17.4 Building Name and Image. Tenant shall not use the Building’s name for any purpose
other than Tenant’s address. Landlord may change the name of the Building without any obligation or
liability to Tenant. Tenant may not use any image of the Building without Landlord’s prior written
consent, which may be withheld in Landlord’s sole discretion.

     17.5 Entire Agreement. This Lease is deemed integrated and contains all of each
party’s representations, waivers and obligations. The parties may only modify or amend this
Lease in a writing that is fully executed by, and delivered to each party.

     17.6
Successors. Unless provided to the contrary elsewhere in this Lease, this Lease binds and
inures to the
benefit of each party’s heirs, successors and permissible assignees.

     17.7 No Waiver. A party’s waiver of a breach of this Lease will not be considered a waiver of
any other breach.
No custom or practice that develops between the parties will prevent either party from
requiring strict performance of the
terms of this Lease. No Lease provision or act of a party creates any relationship between the
parties other than that of
landlord and tenant.

     17.8 Independent Covenants. The covenants of this Lease are independent. A court’s declaration
that any part
of this Lease is invalid, void or illegal will not impair or invalidate the remaining parts of
this Lease, which will remain in
full force and effect.

     17.9 Captions. The use of captions, headings, boldface, italics or underlining is for
convenience only, and will
not affect the interpretation of this Lease.

     17.10 Authority. Individuals signing this Lease on behalf of either party represent and
warrant that they are
authorized to bind that party.

     17.11 Applicable Law. The laws of California govern this Lease. In any action brought
under this Lease,
Tenant submits to the jurisdiction of the courts of the State of California, and to venue
in the County of Los Angeles.

20

 

     17.12 Confidentiality. Tenant will not record this Lease or a memorandum of this Lease
without Landlord’s
written consent. Tenant will keep the terms of this Lease confidential and, unless required by
law, may not disclose the terms
of this Lease to anyone other than Tenant’s Affiliates to the extent necessary to Tenant’s
business.

     17.13 Reasonableness. Tenant’s sole remedy for any claim against Landlord that Landlord has
unreasonably
withheld or unreasonably delayed any consent or approval shall be an action for injunctive or
declaratory relief.

     17.14 Time. Time of the essence as to all provisions in this Lease in which time is a
factor.

     17.15 Quiet Enjoyment. So long as Tenant is not in Default and subject to the terms of this
Lease beyond the
applicable notice and cure periods, Tenant may peacefully and quietly enjoy the Premises for
the Term under the terms of this
Lease. Landlord will not be liable for any interference with Tenant’s peaceful and quiet
enjoyment of the Premises and use
of the Common Areas that is caused by anyone other than Landlord or its Affiliates.

     17.16
Landlord’s Entry. Landlord may enter the Premises at all reasonable hours to perform
its obligations
under this Lease. During the last 18 months of the Term, Landlord may enter the Premises with
reasonable prior notice to
Tenant to show the Premises to prospective tenants.

     17.17 Exhibits. The Exhibits attached to this Lease are part of this Lease. If any exhibit is
inconsistent with the
body of this Lease, then the provisions of the body of this Lease will govern.

18. OPTION TO EXTEND

     18.1
Option Right. Landlord hereby grants the Tenant named in
this Lease (the “Original Tenant”)
one (1)
option (“Option”) to extend the Term for the entire Premises for a period of five (5) years
(“Option Term”), which Option
shall be exercisable only by written notice delivered by Tenant to Landlord as set forth
below. The rights contained in this
Article 18 shall be personal to the Original Tenant and may only
be exercised by the Original
Tenant (and not any assignee,
sublessee or other transferee of the Original Tenant’s interest in this Lease) if the Original
Tenant occupies the entire
Premises as of the date of Tenant’s Acceptance (as defined in Section 18.3 below).

     18.2 Option Rent. The Basic Rental payable by Tenant during the Option Term (“Option Rent”)
shall be equal
to the “Market Rent” (defined below). “Market Rent” shall mean the applicable Monthly Basic
Rental, including all
escalations, Direct Costs, additional rent and other charges at which tenants, as of the time
of Landlord’s “Option Rent
Notice” (as defined below), are entering into leases for non-sublease space which is not
encumbered by expansion rights and
which is comparable in size, location and quality to the Premises in renewal transactions for
a term comparable to the Option
Term which comparable space is located in the Project and office buildings comparable to the
Project in San Diego,
California (as reasonably determined by Landlord), taking into consideration the value of the
existing improvements in the
Premises to Tenant, as compared to the value of the existing improvements in such comparable
space, with such value to be
based upon the age, quality and layout of the improvements and the extent to which the same
could be utilized by Tenant
with consideration given to the fact that the improvements existing in the Premises are
specifically suitable to Tenant.

     18.3 Exercise of Option. The Option shall be exercised by Tenant only in the following
manner: (i) Tenant shall not be in default, and shall not have
been in default under this Lease
more than once, on the delivery date of the Interest Notice and Tenant’s Acceptance; (ii) Tenant
shall deliver written notice (“Interest Notice”) to Landlord not more than twelve (12) months nor
less than nine (9) months prior to the expiration of the Term, stating that Tenant is interested in
exercising the Option, (iii) within fifteen (15) business days of Landlord’s receipt of Tenant’s
written notice, Landlord shall deliver notice (“Option Rent Notice”) to Tenant setting forth the
Option Rent; and (iv) if Tenant desires to exercise such Option, Tenant shall provide Landlord
written notice within five (5) business days after receipt of
the Option Rent Notice (“Tenant’s
Acceptance”). Tenant’s failure to deliver the Interest Notice or Tenant’s Acceptance on or before
the dates specified above shall be deemed to constitute Tenant’s election not to exercise the
Option. If Tenant timely and properly exercises its Option, the Term shall be extended for the
Option Term upon all of the terms and conditions set forth in this Lease, except that the rent for
the Option Term shall be as indicated in the Option Rent Notice unless Tenant, concurrently with
Tenant’s Acceptance, objects to the Option Rent contained in the Option Rent Notice, in which event
Landlord and Tenant shall use their best good faith efforts to agree
upon the Market Rent. If
Landlord and Tenant fail to reach agreement within fifteen (15) days following Tenant’s Acceptance
(the “Outside Agreement Date”), then three (3) arbitrators shall be selected pursuant to Section
18.4 below and within three (3) business days following such selection, each party shall submit to
each other and to the arbitrators a separate determination of the Market Rent. Tenant’s failure to
timely submit its determination of Market Rent shall be deemed acceptance of Landlord’s submitted
determination of Market Rent. If Tenant’s and Landlord’s

21

 

submitted Market Rent are within five percent (5%) of each other, the Market Rent shall be deemed
to be Landlord’s submitted Market Rent. If Landlord’s submitted Market Rent is more than 5% higher
than Tenant’s submitted Market Rent, then the parties shall follow the procedure and the Option
Rent shall be determined, as set forth in Section 18.4 below.

     18.4 Determination of Market Rent. If Tenant timely and appropriately objects to
the Market Rent in Tenant’s Acceptance, and Landlord and Tenant fail to reach agreement on the Market
Rent prior to the Outside Agreement Date, then each party shall make a separate determination of
the Market Rent which shall be submitted to each other and to arbitration in accordance with the
following items (a) through (g):

          (a) Landlord and Tenant shall each appoint, within ten (10) days of the Outside Agreement
Date, one
arbitrator who shall by profession be a current real estate broker or appraiser of comparable
commercial properties in the
immediate vicinity of the Project, and who has been active in such field over me last five
(5) years. The determination of the
arbitrators shall be limited solely to the issue of whether Landlord’s or Tenant’s submitted
Market Rent is the closest to the
actual Market Rent as determined by the arbitrators, taking into account the requirements of
item (b), above (i.e., the
arbitrators may only select Landlord’s or Tenant’s determination of Market Rent and shall not
be entitled to make a
compromise determination).

          (b) The two (2) arbitrators so appointed shall within five (5) business days of the
date of the
appointment of the last appointed arbitrator agree upon and appoint a third arbitrator who shall
be qualified under the same criteria set forth hereinabove for qualification of the initial two
arbitrators.

          (c) If Landlord’s submitted Market Rent is more than 5% higher than Tenant’s submitted Market
Rent, the three arbitrators shall within fifteen (15) days of the appointment of the third
arbitrator reach a decision as to whether the
parties shall use Landlord’s or Tenant’s submitted Market Rent, and shall notify Landlord and
Tenant thereof.

          (d) The decision of the majority of the three (3) arbitrators shall be binding upon
Landlord and
Tenant.

          (e) If either Landlord or Tenant fails to appoint an arbitrator within ten (10) days after
the applicable
Outside Agreement Date and Landlord’s submitted Market Rent is more than 5% higher than
Tenant’s submitted Market
Rent, the arbitrator appointed by one of them shall  reach a decision, notify Landlord and
Tenant thereof, and such arbitrator’s
decision shall be binding upon Landlord and Tenant.

          (f) If the two (2) arbitrators fail to agree upon and appoint a third (3rd) arbitrator, or
both parties fail to
appoint an arbitrator, then the appointment of the third arbitrator or any arbitrator shall
be dismissed and the matter to be
decided shall be forthwith submitted to arbitration under the provisions of the American
Arbitration Association, but subject
to the instruction set forth in this item (d).

          (g) The cost of arbitration shall be paid by Landlord and Tenant equally.

Landlord
and Tenant execute this Lease as follows:

	 	 	 	 	 	 	 	 	 	 	 
	LIFEVANTAGE CORPORATION	 	 	 	BERNARDO REGENCY, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ David W. Brown
	 	 
	 	By:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	Print:

	 	DAVID W. BROWN
	 	 
	 	Print:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	Title:

	 	President/CEO
	 	 
	 	Title:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 
	Print:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 

22

 

EXHIBIT A — RULES & REGULATIONS

     1. Rules Applied. These Rules and Regulations apply equally to Tenant’s Affiliates and
others permitted by Tenant to access, use or occupy the Premises.

     2. Right to Exclude. Landlord may require that Tenant, its Affiliates and guests comply
with each reasonable security measure that Landlord may establish as a condition entry to the
Premises, Building or Project. These measures may include submitting to a search by persons or
devices employed by Landlord, presenting an identification card or pass issued by the
government, Landlord, or both, being announced to Tenant and accepted as a visitor by Tenant,
and signing a register on entry and exit. Any person who cannot comply with these requirements
may be excluded from the Project. If Landlord requires a Building pass issued by Landlord as a
condition of entry to the Premises, Building or Project, Landlord will furnish a Building pass
to all persons reasonably designated by Tenant in writing. Landlord may exclude or expel from
the Project any person who, in Landlord’s reasonable opinion, is intoxicated or under the
influence of alcohol or drugs.

     3. Obstructions. Tenant will not cause the Common Areas, or sidewalks or driveways outside
the Building to be obstructed. Landlord may, at Tenant’s expense, remove any such obstruction
without prior notice to Tenant.

     4. Trash. Tenant may not litter. Tenant will reasonably participate in Landlord’s recycling
program. Tenant will place trash in proper receptacles in the Premises provided by Tenant at
Tenant’s cost, or in Building receptacles designated by Landlord for removal by Landlord;
however, Tenant, at Tenant’s cost, will be responsible for removing trash that results from
large move-ins or deliveries.

     5. Public Safety. Tenant will not throw anything out of doors, windows or skylights, down
passageways or over walls. Tenant will not use any fire exits or stairways in the Building
except in case of emergency. Firearms, weapons, explosives, flammable materials and other
hazardous liquids and materials may not be brought into or stored in the Premises, Building or
Project without the prior written consent of Landlord, which Landlord may withhold or condition
in Landlord’s sole discretion, excepting reasonable quantities of customary office and cleaning
supplies. Tenant must comply with all life safety programs established by Landlord or required
by law and use commercially reasonable efforts to cause each of Tenant’s employees, invitees and
guests to likewise comply, including participation in drills. Tenant will provide Landlord with
the names and telephone numbers of representatives of Tenant that may be contacted in an
emergency, and of all changes in personnel that may access the Premises.

     6. Keys, Access Cards and Locks. Landlord may from time to time install and change locks on
entrances to the Project, Building, Common Areas or Premises, and will provide Tenant a number
of keys to meet Tenant’s reasonable requirements. Additional keys will be furnished by Landlord
at Tenant’s cost. At the end of the Term, Tenant will promptly return to Landlord all keys for
the Building and Premises issued by Landlord to Tenant. Unless Tenant obtains Landlord’s prior
written consent, Tenant will not add any locks or change existing locks on any door to the
Premises, or in or about the Premises. If with Landlord’s consent, Tenant installs any lock
incompatible with the Building master locking system, Tenant will; relieve Landlord of each
Lease obligation that requires access to each affected area; indemnify Landlord against any
Claim resulting from forced entry to each affected area in an emergency; and, at the end of the
Term, remove each incompatible lock and replace it with a Building Standard lock at Tenant’s
expense.

     7. Aesthetics. Unless Tenant obtains Landlord’s prior written consent (which may be
withheld in Landlord’s sole discretion), Tenant may not:

	 	(a)	 	Attach any awnings, signs, displays or projections to either the outside
walls or windows of the Building, or to any part of the Premises visible from outside
the Premises;

	 
	 	(b)	 	Hang any non-Building Standard curtains, blinds, shades or screens in any window or
door of the Premises;

	 
	 	(c)	 	Coat or sunscreen the interior or exterior of any windows; or

	 
	 	(d)	 	Place any objects on windowsills.

     8. Directories
and Signs. Tenant may list 1 trade name and suite number in each
Building-wide directory in
the Building’s main lobby. Tenant will keep all listings
accurate and current. Tenant may install 1 Building Standard tenant identification sign containing Tenant’s trade name and suite number at the
entrance to each separately demised suite leased by Tenant. Tenant will reimburse Landlord for the
cost of all directory listings and signs, plus Landlord’s standard

A-1

 

administration fee. Except as provided in this paragraph or elsewhere in the Lease, Tenant may
not install any signs outside the Premises.

     9. HVAC
Operation. Tenant will not obstruct the HVAC convectors or
diffusers, or adjust or
interfere with
the HVAC system. Tenant will assist the HVAC system in maintaining comfort in the Premises by
drawing shades, blinds and other window coverings in the Premises as may be reasonably
required. Tenant may not use any method of heating or
cooling the Premises other than that supplied by Landlord.

     10. Plumbing. Tenant will use plumbing fixtures only for the purpose for which they
are constructed. Tenant will reimburse Landlord for any damage caused by Tenant’s misuse of
plumbing fixtures. Tenant will promptly advise Landlord of any damage, defects or breakage of
plumbing, electrical fixtures or HVAC equipment of which Tenant has
knowledge. Tenant may not dispose of liquids, materials or substances (including coffee grounds) that may damage
plumbing in any rest rooms, kitchen sinks, water closets, or other plumbing fixtures serving the
Premises or Building, and shall be responsible for the cost of repairs caused by any misuse or
neglect of such fixtures.

     11. Equipment Location. Landlord may specify the location of any of Tenant’s Business
machines, mechanical equipment or other property that are unusually heavy, may damage the
Building, or may cause vibration, noise or annoyance to other tenants. Tenant will reimburse
Landlord for any professional engineering certification or assistance reasonably required to
determine the location of these items.

     12. Bicycles. Tenant may not bring bicycles, scooters, or other means of personal
conveyance (other than medically prescribed devices for use by the physically impaired) into
the Building or Premises, and such devices must be parked in areas designated by Landlord.

     13. Animals. Tenant may not keep in or bring into the Building or Premises any fish, birds
or animals, except assistance animals that are permitted and identified in accordance with law.

     14. Intentionally omitted.

     15. Elevators. Any use of the passenger elevators for purposes other than normal passenger
use (such as moving to or from the Building or delivering freight), whether during or after
Business Hours, must be scheduled through the office of the Property
Manager. Tenant will reimburse Landlord for any extra costs incurred by Landlord in connection with any such
non-passenger use of the elevators.

     16. Moving and Deliveries. Moving of Tenant’s Personal Property and deliveries of materials
and supplies to the Premises must be made during the times and through the entrances, elevators
and corridors reasonably designated by Landlord. Moving and deliveries may not be made through any
of the main entrances to the Building without Landlord’s prior permission. Any hand truck or
other conveyance used in the Common Areas must be equipped with rubber tires and rubber side
guards to prevent damage to the Building and its property. Tenant will promptly reimburse Landlord
for the cost of repairing any damage to the Building or its property caused by any person making
deliveries to the Premises.

     17. Solicitation.
Canvassing, soliciting and peddling in the Building are prohibited and
Tenant will cooperate in preventing the same. Tenant may not post any notices, or distribute any
advertisements or handbills outside the Premises.

     18. Food and Vending Machines. Only persons approved from time to time by Landlord may
prepare, solicit orders for, sell, serve or distribute food in or around the Project. Except as
may be specified in the Lease or on construction drawings for the Premises approved by Landlord,
and except for microwave cooking, Tenant will not use the Premises for preparing or dispensing
food, or soliciting of orders for sale, serving or distribution of food without the prior written
approval of Landlord. Tenant may not place any vending machine or dispensing machine in the
Premises without Landlord’s prior written consent.

     19. Pest Control. At Tenant’s sole cost and expense, Tenant must keep the Premises free of
insects, rodents, vermin and other pests and to keep insects, rodents, vermin and other pests from
infesting the Premises, other premises and Common Areas. Tenant will use a pest control service
that is approved by Landlord to perform work in the Building and, if Landlord requests coordinate
Tenant’s pest control efforts with Landlord. Tenant will comply with all requirements of law to
post warnings in the Premises concerning the use of insecticides and other chemicals for pest
control, and post in the Premises or distribute to occupants of the Premises any warnings provided
by Landlord to Tenant concerning Landlord’s pest control efforts. If Tenant fails or refuses to
comply with this paragraph, then Landlord may provide pest control services to
the Premises at Tenant’s cost and expense, plus Landlord’s standard administration fee;
however, Landlord’s performance of pest control on Tenant’s behalf does not release Tenant from
any obligation under this paragraph.

A-2

 

     20. Work Orders and Service Requests. Only authorized representatives of Tenant may request
services or work on behalf of Tenant. Tenant may not request that Building employees perform any
work outside of their duties assigned by Landlord.

     21. Smoking. Neither Tenant nor its Affiliates shall smoke or permit smoking in any part of
the Project in which Landlord, in Landlord’s sole discretion, prohibits smoking. Landlord may
designate the entire Project a no-smoking area, excepting areas in which Landlord, in Landlord’s
sole discretion, permits smoking.

A-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]