EX-10 3 a2092502zex-10.txt EXHIBIT 10 LEASE EXHIBIT 10 DATE OF LEASE EXECUTION: July 26, 2002 ARTICLE I REFERENCE DATA 1.1 SUBJECTS REFERRED TO: Each reference in this Lease to any of the following subjects shall be construed to incorporate the data stated for that subject in this Section 1.1: LANDLORD: John A. Pirovano, as Trustee of the CC&F Cambridge Parkway Trust under Declaration of Trust dated May 26, 1982, recorded with the Middlesex South Registry of Deeds in Book 14637, Page 527, and not individually MANAGER: Finard & Company LLC, or such other manager appointed by Landlord from time to time LANDLORD'S & MANAGER'S ADDRESS: John A. Pirovano, as Trustee of the CC&F Cambridge Parkway Trust c/o Cabot, Cabot & Forbes 125 Summer Street Boston, MA 02110 Facsimile Number: 617-603-4033 Attention: Mr. Peter Sullivan Finard & Company LLC One Burlington Woods Drive Burlington, MA 01803 Facsimile Number: 781-272-8408 Attention: Mr. Robert Hayes with a copy to: Hale and Dorr LLP 60 State Street Boston, MA 02109 Facsimile Number: 617-526-5000 Attention: William R. O'Reilly, Jr., Esq. LANDLORD'S CONSTRUCTION REPRESENTATIVE: Mr. Robert Hayes TENANT: Genzyme Corporation TENANT'S ADDRESS: Genzyme Corporation One Mountain Road P.O. Box 9322 Framingham, MA 01701-9322 Facsimile Number: 508-872-9080 Attention: Evan Lebson With a copy to: Thomas G. Schnorr, Esq. Palmer & Dodge LLP 111 Huntington Avenue at the Prudential Boston, Massachusetts 02199 Facsimile Number: 617-227-4420 and a copy to: Genzyme Corporation One Kendall Square Cambridge, Massachusetts 02139 Facsimile Number: 617-252-7553 Attention: Bob Hesslein and Jodie Vasily-Cioffi TENANT'S CONSTRUCTION REPRESENTATIVE: Lou Cicchese Senior Project Manager Genzyme Corporation 11 Pleasant Street Connector Framingham, Massachusetts 01701 Facsimile Number: 508-661-1673 LOT: The land known and numbered as 55 Cambridge Parkway, Cambridge, MA, more particularly described on Exhibit A. BUILDING: The building known and numbered as 55 Cambridge Parkway, Cambridge, MA located on the Lot. PREMISES: The space located on the third, fourth, fifth and sixth floors (west) of the Building as shown on Exhibit A-1. RENTABLE FLOOR AREA OF THE PREMISES: - 2 - 61,101 square feet, which the parties agree shall be conclusive for all purposes hereunder TOTAL RENTABLE 275,968 square feet, which the parties agree shall be conclusive FLOOR AREA OF for all purposes hereunder. THE BUILDING: TENANT ACCESS DATE: The Date of Lease Execution TERM COMMENCEMENT DATE: The earlier of (x) October 1, 2002 or (y) the date Tenant occupies any portion of the Premises for the conduct of business (provided that installation of Initial Tenant Improvements (hereafter defined), installation of furniture, fixtures, equipment and phone lines, and testing of computers and other equipment shall not constitute the conduct of business for the purposes of this Lease.) LEASE YEAR: The first Lease Year shall consist of any partial calendar month following the Term Commencement Date and the successive twelve (12) calendar months. Each successive Lease Year shall consist of each successive twelve (12) full calendar month period thereafter. TERM: That period commencing on the Term Commencement Date and expiring on the 84th full calendar month thereafter, subject to extension as provided in Section 2.2. ANNUAL BASE Lease Years 1 and 2: $2,074,990 per annum; subject to the RENT: reduction during the Reduced Rent Period pursuant to Section 4.1 hereof (i.e., $33.96 per square foot of Rentable Floor Area of the Premises per year). Lease Year 3: $2,136,091 per annum (i.e., $34.96 per square foot of Rentable Floor Area of the Premises per year). Lease Years 4, 5, 6 $2,197,192 per annum (i.e., $35.96 per and 7: square foot of Rentable Floor Area of the Premises per year). OPERATING COST BASE: All Landlord's Operating Costs for calendar year 2002, calculated in the manner provided for in Section 4.2.1, including without limitation the penultimate sentence thereof. REAL ESTATE TAX BASE: All Real Estate Taxes attributable to calendar year 2002, calculated in the manner provided for in Section 4.2.2, including without limitation the final sentence thereof. - 3 - TENANT'S PRO RATA SHARE: The percentage equivalent of a fraction, the numerator of which is the Rentable Floor Area of the Premises and the denominator of which is the Rentable Floor Area of the Building. As of the Term Commencement Date, Tenant's Pro Rata Share is 22.14%. TENANT IMPROVEMENT $2,138,535 ALLOWANCE: PERMITTED USE: Office use and the following accessory uses to office use: (i) computer room, (ii) kitchenette and vending machine room, and (iii) any other lawful uses accessory to office use which are consistent with the use and operation of the Building and approved by Landlord in writing, such approval not to be unreasonably withheld or delayed. COMMERCIAL GENERAL LIABILITY INSURANCE: $3,000,000 combined single limit per occurrence; $3,000,000 annual aggregate. BROKERS: Meredith & Grew, Inc. and Trammell Crow Company - 4 - 1.2 EXHIBITS. The exhibits listed below in this section are incorporated in this Lease by reference and are to be construed as part of this Lease: EXHIBIT A Description of Lot EXHIBIT A-1 Plan showing Premises EXHIBIT A-2 Plan showing First Floor East Expansion Space and Plan showing Third Floor East Expansion Space EXHIBIT A-3 Plan showing Eighth Floor East Expansion Space EXHIBIT B Landlord's Common Area Work EXHIBIT C Rules and Regulations. EXHIBIT D Form of Notice of Commencement Date EXHIBIT E Form of Tenant Estoppel Certificate EXHIBIT F Preliminary description of Initial Tenant Improvements EXHIBIT G Construction Rules and Regulations EXHIBIT H Minimum Tenant Improvement Standards EXHIBIT I Cleaning Specifications EXHIBIT J Stacking Plan EXHIBIT K Form of SNDA EXHIBIT L Intentionally Omitted EXHIBIT M List of Initially Approved Contractors - 5 - 1.3 TABLE OF CONTENTS
PAGE Article I REFERENCE DATA.................................................................................1 1.1 SUBJECTS REFERRED TO..........................................................................1 1.2 EXHIBITS......................................................................................5 1.3 TABLE OF CONTENTS.............................................................................6 Article II PREMISES AND TERM..............................................................................8 2.1 DESCRIPTION OF PREMISES.......................................................................8 2.2 TERM..........................................................................................9 2.3 EXTENSION OPTIONS.............................................................................9 2.4 THIRD FLOOR EAST EXPANSION OPTION............................................................13 2.5 EIGHTH FLOOR EAST EXPANSION OPTION...........................................................16 2.6 RIGHT OF FIRST OFFER.........................................................................18 Article III CONSTRUCTION..................................................................................23 3.1 DELIVERY OF PREMISES.........................................................................23 3.2 PREPARATION OF PREMISES BY TENANT............................................................23 3.3 GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION................................................24 3.4 CONSTRUCTION REPRESENTATIVES.................................................................25 3.5 ALTERATIONS AND ADDITIONS....................................................................25 Article IV RENT..........................................................................................29 4.1 RENT.........................................................................................29 4.2 OPERATING COSTS AND REAL ESTATE TAXES........................................................29 4.2.1 Landlord's Operating Costs............................................................29 4.2.2 Real Estate Taxes.....................................................................31 4.2.3 Tenant's Pro Rata Share of Operating Costs and Real Estate Taxes......................32 4.2.4 Landlord's Estimates at End of Term...................................................32 4.2.5 Tenant's Audit Rights.................................................................32 4.3 ESTIMATED PREMISES EXPENSE PAYMENTS..........................................................33 4.4 ELECTRICITY..................................................................................33 4.5 CHANGE OF FISCAL YEAR........................................................................34 4.6 PAYMENTS.....................................................................................34 Article V LANDLORD'S COVENANTS..........................................................................34 5.1 LANDLORD'S COVENANTS DURING THE TERM.........................................................34 5.1.1 Building Services.....................................................................34 5.1.2 Additional Building Services..........................................................35 5.1.3 Repairs...............................................................................35 5.1.4 Tenant Directory and Exterior Signage.................................................35 5.1.5 Quiet Enjoyment.......................................................................36 5.2 INTERRUPTIONS................................................................................37 Article VI TENANT'S COVENANTS............................................................................38 6.1 TENANT'S COVENANTS DURING THE TERM...........................................................38 6.1.1 Tenant's Payments.....................................................................38 6.1.2 Repairs and Yielding Up...............................................................38 6.1.3 Occupancy and Use.....................................................................38 6.1.4 Rules and Regulations.................................................................39 6.1.5 Safety Appliances.....................................................................39 6.1.6 Assignment and Subletting.............................................................40
- 6 - 6.1.7 Indemnity.............................................................................43 6.1.8 Tenant's Insurance....................................................................43 6.1.9 Tenant's Worker's Compensation Insurance..............................................44 6.1.10 Landlord's Right of Entry.............................................................44 6.1.11 Loading...............................................................................44 6.1.12 Landlord's Costs......................................................................45 6.1.13 Tenant's Property.....................................................................45 6.1.14 Labor or Materialmen's Liens..........................................................45 6.1.15 Changes or Additions..................................................................45 6.1.16 Holdover..............................................................................45 6.1.17 Security..............................................................................46 6.1.18 Financial Statements..................................................................46 Article VII CASUALTY AND TAKING...........................................................................46 7.1 CASUALTY AND TAKING..........................................................................46 7.2 RESERVATION OF AWARD.........................................................................48 Article VIII RIGHTS OF MORTGAGEE AND GROUND LESSOR.........................................................48 8.1 PRIORITY OF LEASE............................................................................48 8.2 Rights of Mortgagee and Ground Lessor to Cure................................................49 Article IX DEFAULT.......................................................................................49 9.1 EVENTS OF DEFAULT............................................................................49 9.2 TENANT'S OBLIGATIONS AFTER TERMINATION.......................................................50 Article X MISCELLANEOUS.................................................................................51 10.1 NOTICE OF LEASE..............................................................................51 10.2 NOTICES FROM ONE PARTY TO THE OTHER..........................................................51 10.3 BIND AND INURE...............................................................................52 10.4 LIMITATION ON LIABILITY......................................................................52 10.4.1 ......................................................................................52 10.4.2 ......................................................................................52 10.4.3 ......................................................................................52 10.4.4 ......................................................................................52 10.4.5 ......................................................................................52 10.4.6 ......................................................................................52 10.5 NO SURRENDER.................................................................................52 10.6 NO WAIVER, ETC...............................................................................53 10.7 NO ACCORD AND SATISFACTION...................................................................53 10.8 CUMULATIVE REMEDIES..........................................................................53 10.9 LANDLORD'S RIGHT TO CURE.....................................................................54 10.10 ESTOPPEL CERTIFICATE.........................................................................54 10.11 ACTS OF GOD..................................................................................54 10.12 BROKERAGE....................................................................................55 10.13 SUBMISSION NOT AN OFFER......................................................................55 10.14 APPLICABLE LAW AND CONSTRUCTION..............................................................55 10.15 AUTHORITY OF TENANT..........................................................................56 10.16 CONFIDENTIALITY..............................................................................57 10.17 LANDLORD'S FEES; ENFORCEMENT COSTS...........................................................57 10.18 WAIVER OF SUBROGATION........................................................................57
- 7 - ARTICLE II PREMISES AND TERM 2.1 DESCRIPTION OF PREMISES. Subject to and with the benefit of the provisions of this Lease, Landlord hereby leases to Tenant, and Tenant leases from Landlord, the Premises, excluding common facilities and building service fixtures and equipment located therein and serving the Premises exclusively or in common other parts of the Building. Throughout the Term, Tenant shall have, as appurtenant to the Premises, the right to use in common with others entitled thereto: (a) the common facilities included in the Building or on or appurtenant to the Lot, including, without limitation, the right to use the existing emergency stairs for routine daily floor-to-floor access between floors 3-6 west, (b) the right to continuously use 86 underground parking spaces on a nonexclusive basis within the parking facilities provided by Landlord for the Building ("Parking Spaces"), and Tenant shall pay for each such space, throughout the Term as additional rent the Monthly Parking Charge (hereafter defined), such amount to be paid at the same time and in the same manner as Annual Base Rent, and (c) the building service fixtures and equipment serving the Premises. Tenant shall not assign its rights to the Parking Spaces or any interest therein, or sublease or otherwise allow the use of all or any part of the Parking Spaces to or by any other person (other than together with a Transfer in compliance with the provisions of Section 6.1.6), except with Landlord's prior written consent, which may be withheld or conditioned in Landlord's sole discretion. The Monthly Parking Charge shall be the fair market rate from time to time for structured parking spaces in Class A office buildings the vicinity of the Building, as reasonably determined in good faith by Landlord, which the parties agree shall be $200 per month for calendar year 2002. The Monthly Parking Charge may be altered from time to time but in no event more than once a year, by written notice given to Tenant at least fifteen days prior to the beginning of any calendar month. Landlord reserves the right from time to time, without unreasonable interference with Tenant's use, and with reasonable, prior written notice to Tenant (except that in the case of emergency such notice requirement will be deemed satisfied if Landlord uses commercially reasonable efforts in light of the nature of the emergency to place a telephone call to the following telephone numbers: 617-562-4555 and 617-560-6834 prior to such entry (and speak with or leave a message for Tenant)) (i) to install, repair, replace, use, maintain and relocate for service to the Premises and to other parts of the Building, or either, building service fixtures and equipment wherever located in the Building or on the Lot (provided that to the extent practicable any such fixture and equipment shall be placed above the finished ceiling, within columns, inside demising walls, beneath the floor slab or otherwise not visible within the Premises), and (ii) to alter or relocate any common facilities (provided that any altered or relocated common facilities shall be of substantially the same quality and convenience as the facilities being altered or relocated). Without limiting the foregoing, Parking Spaces may be temporarily relocated from time to time by Landlord with reasonable, prior written notice to Tenant (except that no prior - 8 - notice is required in the case of emergency) to a location within reasonable walking distance of the Building in the event of emergencies or (after reasonable notice) in the event of required repairs or maintenance work. Landlord also reserves the right at all reasonable times upon reasonable advance notice (except that in the case of emergency such notice requirement will be deemed satisfied if Landlord uses commercially reasonable efforts in light of the nature of the emergency to place a telephone call to the following telephone numbers: 617-562-4555 and 617-560-6834 prior to such entry and speak with or leave a message for Tenant) to enter upon the Premises, inspect the same and in Landlord's discretion to make repairs, alterations or substitutions for the protection and maintenance of the Building. Landlord further reserves the right upon at least one (1) business day's prior notice to show the Premises to others. In exercising any of its rights under this Section, Landlord shall not unreasonably obstruct Tenant's access to or egress from the Premises, Landlord shall use reasonable efforts to perform or cause such work to be performed in such manner as to minimize any disruption to Tenant's use and occupancy of the Premises and to minimize any disruption to Tenant's business (provided the forgoing shall not be interpreted so as to require Landlord to incur overtime or similar costs). 2.2 TERM. To have and to hold for a period (the "Term") commencing on the Term Commencement Date (as defined in Section 1.1 hereof) and continuing for the Term, unless sooner terminated as provided herein. Notwithstanding the fact that the Term shall not commence until the Term Commencement Date, from and after the Tenant Access Date, Tenant shall have access to the Premises for the purposes of constructing the Initial Tenant Improvements and installing furniture, fixtures and equipment, and Tenant shall comply with all of the terms, provisions and conditions of this Lease, other than the obligation to pay Annual Base Rent and Rent on account of Landlord's Operating Costs and Real Estate Taxes (as defined in Article IV). Upon Landlord's written request, Tenant will execute a certificate acknowledging the Term Commencement Date and the obligation of Tenant to pay Rent hereunder, promptly upon the occurrence of the Term Commencement Date, and in no event later than ten (10) business days following receipt of Landlord's proper request for such certificate. 2.3 EXTENSION OPTIONS. (a) Tenant shall have the option to extend the Term for two (2) additional periods of five (5) years (each an "Extension Term") commencing upon the expiration of the original Term referred to in Section 2.2 (the "Original Term") or the preceding Extension Term, as applicable, provided that Tenant shall give Landlord written notice of Tenant's irrevocable exercise of such option at least three hundred sixty-five (365) days prior to the expiration of the then existing Term, and provided further that at both the time of the giving such notice and at the time of the commencement of the applicable Extension Term: (a) the Lease is in full force and effect, (b) Tenant is not in default beyond any applicable grace or cure period in the performance or observance of any of the terms and provisions of this Lease on the part of the Tenant to be performed or observed, and (c) Tenant has neither assigned the Lease nor sublet more than 25% of the rentable square feet of the Premises (other than a Permitted Transfer (as defined below) and subleases which have expired or terminated as of the date Tenant exercises its extension option) (the foregoing clauses (a) - (b) being collectively referred to as the "Article - 9 - II Conditions"). Prior to the exercise by Tenant of such an option, the expression "Term" shall mean the Original Term, and after the exercise by Tenant of each option, the expression "Term" shall mean the Original Term as it has been extended by the Extension Term. All the terms, covenants, conditions, provisions and agreements in the Lease contained shall be applicable to each Extension Term, except that (i) Landlord shall not be obligated to undertake any Landlord Work or leasehold improvements or otherwise prepare the Premises for Tenant or provide any tenant improvement allowance to Tenant, (ii) the Annual Base Rent shall be as set forth below, and (iii) in no event shall Tenant have the right to extend the Term for more than two (2) Extension Terms. If Tenant shall give notice of its exercise of an option to extend in the manner and within the time period provided aforesaid, the Term shall be extended upon the giving of such notice without the requirement of any further action on the part of either Landlord or Tenant, except that the Term shall not be so extended if Tenant timely makes the election set forth in Section 2.3(c)(A) below. If Tenant shall fail to give timely notice of the exercise of any such option as aforesaid, Tenant shall have no right to extend the Term of this Lease, time being of the essence of the foregoing provisions. (b) The Annual Base Rent payable during each Extension Term shall be the amount which is the greater of (i) the Annual Base Rent in effect for the Lease Year immediately preceding the commencement of the Extension Term or (ii) the Fair Market Rent for the Premises, as defined below and as determined below, as of the commencement of the applicable Extension Term. If for any reason the Annual Base Rent payable during the applicable Extension Term has not been determined as of the commencement of the Extension Term, until the Annual Base Rent for the Extension Term is determined Tenant shall pay Annual Base Rent at a rate equal to the average of the Fair Market Rent specified by Landlord's Appraiser pursuant to subparagraph (d) below and the Fair Market Rent specified by Tenant's Appraiser pursuant to subparagraph (d) below, or at the rate specified by either of such Appraisers if the other has not so specified a Fair Market Rent by the date it is required to do so, but in no event less than Annual Base Rent payable during the immediately preceding Lease Year. Within ten (10) days after determination of the Annual Base Rent in accordance with the provisions hereof, an appropriate adjustment, if any, shall be made between Landlord and Tenant. For purposes hereof, the "Fair Market Rent" shall mean ninety-five percent (95%) of the fair market rent for Class A office use of the Premises, free and clear of this Lease, as of the commencement of the applicable Extension Term under market conditions then existing, taking into account all relevant factors and considerations for a market lease transaction, including Tenant's Pro Rata Share of Operating Costs (as defined in Section 4.2.3 below), Tenant's Pro Rata Share of Real Estate Taxes (as defined in Section 4.2.3 below), the base year for the Operating Costs and the Real Estate Taxes (which shall be reset to a base year of calendar year 2009 for the first Extension Term and a base year of calendar year 2014 for the second Extension Term), and the then current market rental rates for leases of comparable space in comparable buildings in the East Cambridge/Kendall Square area to new tenants. Fair Market Rent shall be determined pursuant to the following provisions: (c) Landlord shall give Tenant notice of its determination of the Fair Market Rent for the Premises for the applicable period by the later of (i) three hundred thirty-five (335) days prior to the commencement of the Extension Term, or (ii) 60 days after Tenant notifies - 10 - Landlord of its election to exercise an extension option. If Tenant disagrees with Landlord's determination of the Fair Market Rent, Tenant may, in its sole discretion, elect, by notice given to Landlord within thirty (30) days after Landlord's notice of the Fair Market Rent is given ("Tenant's Rent Notice"), either to (A) revoke Tenant's exercise of its option to extend in which case this Lease shall terminate on the scheduled expiration date of the then current Term in accordance with the terms hereof, or (B) have the Fair Market Rent determined by the appraisal process (the "Appraisal Process") set forth in subparagraph (d) below, in which case Tenant's Rent Notice shall include the name of Tenant's Appraiser (defined in subparagraph (d) below). The Fair Market Rent determination pursuant to Section 2.3 shall be binding on both Landlord and Tenant. If Tenant does not give a Tenant's Rent Notice within such thirty (30) day period, Tenant shall be deemed to have agreed with Landlord's determination of the Fair Market Rent for the applicable Extension Term, which determination shall be binding on both Landlord and Tenant, and to have waived any right to elect either of the options set forth at clauses (A) and (B) above. If Tenant gives a Tenant's Rent Notice within such thirty (30) day period but such notice does not expressly make the election set forth in Section 2.3(c)(A), Tenant shall have waived any right to revoke its exercise of its option to extend and the Term shall remain extended for the applicable Extension Term. (d) If Tenant shall timely give a Tenant's Rent Notice making the election set forth in Section 2.3(c)(B), the following procedures shall apply to such determination of Fair Market Rent: (1) Within fourteen (14) days of Tenant's Rent Notice, Landlord will choose one Appraiser. "Appraiser" shall mean a disinterested real estate professional of recognized competence in the greater Boston area who has at least ten (10) years experience in the leasing or appraising of properties in the Cambridge, MA area. If the two Appraisers are appointed by the parties as stated in this Section, such Appraisers shall meet promptly and attempt to set the Fair Market Rent. If such Appraisers are unable to agree on the Fair Market Rent within thirty (30) days after appointment of the second Appraiser, then within five (5) days after the expiration of such thirty day period, on a date selected by the Appraisers, both of the Appraisers and a representative of Landlord and a representative of Tenant shall meet at the offices of Landlord in Boston, Massachusetts. At such meeting, each of the Appraisers shall set forth his or her determination of the Fair Market Rent in a separate writing executed by such Appraiser, and then simultaneously Landlord's Appraiser shall deliver its written determination to Tenant's representative and Tenant's Appraiser shall deliver its determination to Landlord's representative. If the higher of the Appraisers' determinations is 105% or less of the amount set forth in the lower determination, the average of the two determinations shall be the Fair Market Rent. In the event the higher of the two determinations is more than 105% of the amount set forth in the lower determination, the two Appraisers shall within ten (10) days after the expiration of such 30-day period, appoint a third Appraiser satisfying the above qualifications. If the two Appraisers cannot agree on a third Appraiser, they shall immediately apply to the President of the Greater Boston Real Estate Board or, if the same refuses to act, to a court of competent jurisdiction, to select a third Appraiser satisfying the above qualifications. The third Appraiser, however selected, shall not have acted previously in any capacity for either Landlord or Tenant. If either Landlord or Tenant fails to appoint an Appraiser within the allotted time, and such - 11 - failure continues for ten (10) business days after written notice given to the failing party, the single Appraiser who has been appointed shall determine the Fair Market Rent for the applicable Extension Period. Each party shall bear the costs of its own Appraiser and one-half of the cost of the third Appraiser. (2) The third Appraiser shall conduct his own investigation of the Fair Market Rent, shall consider relevant information supplied to him by Landlord or Tenant, and shall be instructed not to advise either party of his determination of the Fair Market Rent except as follows: When the third Appraiser has made his determination, which shall occur within thirty (30) days after the selection of the third Appraiser, he shall set forth his determination in writing and deliver copies to the parties set forth in this Lease to receive notices. If the value determined by the third Appraiser is the average of the values proposed by Landlord's Appraiser and Tenant's Appraiser, the third Appraiser's determination of Fair Market Rent shall be the Fair Market Rent. If such is not the case, Fair Market Rent shall be the average of (a) the Fair Market Rent proposed by the third Appraiser and (b) the Fair Market Rent proposed by either Landlord's Appraiser or Tenant's Appraiser, whichever is closest to the determination of Fair Market Rent by the third Appraiser. 2.4 THIRD FLOOR EAST EXPANSION OPTION Provided that at the time Tenant exercises its expansion right under this Section 2.4 the Article II Conditions are satisfied, Tenant shall have the option (the "Third Floor East Expansion Option") exercisable by written notice given no later than March 31, 2003 (the "Third Floor East Expansion Option Notice") to add to the Premises the space located on the third floor (east) of the Building as shown on Exhibit A-2, which the parties conclusively agree contains 15,969 square feet of rentable floor area (the "Third Floor East Expansion Space"). All of the terms and conditions of this Lease shall apply to such Third Floor East Expansion Space, except as provided in this Section 2.4. The date on which the Third Floor East Expansion Space shall be added to the Premises shall be five (5) business days after the effective delivery of the Third Floor East Expansion Option Notice; provided that Tenant's obligation to pay Annual Base Rent and Rent on Account of Landlord's Operating Costs and Real Estate Taxes on account of the Third Floor East Expansion Space shall not commence until the "Third Floor East Expansion Space Rent Commencement Date" as defined in the next sentence. The date on which Tenant shall be obligated to pay Annual Base Rent and Rent on account of Landlord's Operating Costs and Real Estate Taxes on account of the Third Floor East Expansion Space shall be the earlier of (x) April 1, 2003 and (y) 90 days after effective delivery of the Third Floor East Expansion Option Notice (the "Third Floor East Expansion Space Rent Commencement Date"), on the same terms applicable to the original Premises described in Section 1.1, with Annual Base Rent at the same per square foot rates then applicable to the original Premises described in Section 1.1, and as increased, as applicable, so that at all times the per square foot rate applicable to the Third Floor East Expansion Space shall be the same as the per square foot rate then applicable to the remainder of the Premises. By way of clarification, during Lease Years 1 and 2 the applicable square foot rate for the Annual Base Rent is $33.96, during Lease Year 3 it is $34.96 and during Lease Years 4, 5, 6 and 7 it is $35.96, in each case per square foot of rentable floor - 12 - area per year (i.e., $542,307, $558,276 and $574,245 per annum, respectively, for the Third Floor East Expansion Space), and the Operating Cost Base and Real Estate Tax Base will likewise remain those set forth in Section 1.1. Landlord will provide Tenant with an allowance in the amount of $558,915 (the "Third Floor East Tenant Allowance") to be used for any initial tenant improvements to be constructed by or for Tenant in the Third Floor East Expansion Space. Such improvements shall be made in the manner and subject to the procedure set forth in Section 3.2 for the construction of the Initial Tenant Improvements and the Third Floor East Tenant Allowance shall be disbursed in accordance with and subject to the procedure and conditions set forth in Section 3.2 for the disbursement of the Tenant Improvement Allowance, it being understood that, (i) as applied to the Third Floor East Expansion Space, references in Section 3.2 to the Initial Tenant Improvements shall be deemed to mean references to a general office build out of the Third Floor East Expansion Space pursuant to and plans specifications approved by Landlord pursuant to Section 3.5, (ii) references in Section 3.2 to the Premises shall be deemed to mean references to the Third Floor East Expansion Space, (iii) references in Section 3.2 to the Tenant Improvement Allowance shall be deemed to mean references to the Third Floor East Tenant Allowance, and (iv) the full amount of the Third Floor East Tenant Allowance must be properly requisitioned as specifically provided for in Section 3.2 within one year of the Third Floor East Rent Commencement Date. Landlord hereby represents and warrants that Landlord has not granted and will not grant a lease, option, right to first offer, right to first refusal or any other right to occupy the Third Floor East Expansion Space. Landlord shall deliver the Third Floor East Expansion Space in its "as is," "where is" condition, without representation, warranty or guaranty, express or implied. As of the Third Floor East Rent Commencement Date, the number of Parking Spaces shall be increased in number by 22, and the Tenant's Pro Rata Share shall be recalculated to be a percentage, to the second decimal point, representing the percentage equivalent of a fraction, the numerator of which is the Rentable Floor Area of the Premises and the denominator of which is the Rentable Floor Area of the Building. Upon the addition of the Third Floor East Expansion Space to the Premises, all references to the "Premises" in this Lease shall be deemed to mean and include reference to the Third Floor East Expansion Space and, by way of example, any Extension Option thereafter arising shall apply to the entire Premises so defined, and not to any lesser portion thereof. Landlord's failure to deliver and any delay in delivering the Third Floor East Expansion Space for any reason beyond Landlord's control shall not give rise to any liability of Landlord hereunder, and shall not affect the full force and validity of this Lease 2.4A FIRST FLOOR EAST EXPANSION OPTION - 13 - This Section 2.4A shall be applicable if and only if Tenant timely and validly exercises the Third Floor East Expansion Option set forth in Section 2.4; in all other cases, this Section 2.4A shall be null and void and have no force or effect. Provided Tenant has timely and validly exercised the Third Floor East Expansion Option as set forth in Section 2.4, then at least three hundred sixty-five (365) days prior to the Estimated Delivery Date (as hereinafter defined) for the First Floor East Expansion Space, Landlord shall provide Tenant with written notice (the "First Floor East Notice") of the Estimated Delivery Date. The "Estimated Delivery Date" shall be the date specified as such by Landlord in the First Floor East Notice, which date shall be no earlier than the first day of the 37th full calendar month of the Term and no later than the first day of the 61st full calendar month of the Term, on which Landlord believes it can deliver to Tenant the First Floor East Expansion Space, which the parties unconditionally agree consists of 8,986 rentable square feet, shown on the plan attached hereto as Exhibit A-2. Provided that at the time Tenant exercises its expansion right under this Section 2.4A the Article II Conditions are satisfied, Tenant has neither assigned the Lease nor sublet more than 25% of the Premises (other than a Permitted Transfer and subleases which have expired or terminated as of the date Tenant exercises its extension option), and Tenant has timely and validly exercised the Third Floor East Expansion Option, then Tenant shall have the option (the "First Floor East Expansion Option") exercisable by written notice given to Landlord within thirty (30) days of the First Floor East Notice (the "First Floor East Expansion Option Notice") to add to the Premises the First Floor East Expansion Space. All of the terms and conditions of this Lease shall apply to such First Floor East Expansion Space, except as provided in this Section 2.4A. The date on which the First Floor East Expansion Space shall be added to the Premises and the date on which Tenant shall be obligated to pay rent on account of the First Floor East Expansion Space shall be the earlier of (A) the later of (x) the Estimated Delivery Date and (y) the date on which Landlord delivers the First Floor East Expansion Space free and clear of occupants or (B) the date Tenant occupies any portion of the First Floor East Expansion Space for the conduct of its business (the "First Floor East Expansion Space Commencement Date"). Tenant shall be obligated to pay rent for the First Floor East Expansion Space on the same terms applicable to the original Premises described in Section 1.1, with Annual Base Rent at the same per square foot rates then applicable to the original Premises described in Section 1.1, and as increased, as applicable, so that at all times the per square foot rate applicable to the First Floor East Expansion Space shall be the same as the per square foot rate then applicable to the remainder of the Premises. By way of clarification, during Lease Years 4, 5 and 6 the applicable square foot rate for the Annual Base Rent is $35.96 per square foot of rentable floor area per year (i.e., $323,137 per annum for the First Floor East Expansion Space), and the Operating Cost Base and Real Estate Tax Base will likewise remain those set forth in Section 1.1. Landlord will provide Tenant with an allowance in the amount of the First Floor East Tenant Improvement Allowance Amount (hereinafter defined) to be used for any initial tenant improvements constructed by or for Tenant in the First Floor East Expansion Space. Such improvements shall be made in the manner and subject to the procedure set forth in Section 3.2 for the construction of the Initial Tenant Improvements and the allowance shall be disbursed in accordance with and subject to the procedure and conditions set forth in Section 3.2 for the disbursement of the Tenant Improvement Allowance, it being understood that (i) as applied to the First Floor East Expansion Space, references in Section 3.2 to the Initial Tenant Improvements shall be deemed to mean references to a general office build out of the First Floor - 14 - East Expansion Space pursuant to plans and specifications approved by Landlord Pursuant to Section 3.5 (ii) references in Section 3.2 to the Premises shall be deemed to mean references to the First Floor East Expansion Space, (iii) references in Section 3.2 to the Tenant Improvement Allowance shall be deemed to mean references to the First Floor East Tenant Improvement Allowance, and (iv) the full amount of the First Floor East Tenant Improvement Allowance must be properly requisitioned within one year of the First Floor East Expansion Space Commence Date as specifically provided for in Section 3.2. The "First Floor East Tenant Improvement Allowance" shall be an amount equal to the product of (A) 8,986, being the number of rentable square feet of floor area in the First Floor East Expansion Space, multiplied by (B) a number which is the product of $35 multiplied by a fraction, the numerator of which is the number of months remaining in the Term at the time of the First Floor East Expansion Space Commencement Date and the denominator of which is 84. Landlord hereby represents and warrants that Landlord has not granted and will not grant a lease, option, right of first offer, right of first refusal or any other right to occupy the First Floor East Expansion Space which is prior to Tenant's rights hereunder. It is agreed that Landlord shall have the right to lease the First Floor East Expansion Space to others for occupancy prior to the Estimated Delivery Date, provided that the initial term of any such lease expires before the Estimated Delivery Date and any extension rights are conditioned on Tenant not exercising its First Floor East Expansion Option. Landlord shall deliver the First Floor East Expansion Space in its "As Is" "Where Is" condition, without representation, warranty or guaranty, express or implied. As of the First Floor East Commencement Date, the number of parking spaces shall be increased in number by 12, and the Tenant's Pro Rata Share shall be recalculated to be a percentage, to the second decimal point, representing the percentage equivalent of a fraction, the numerator of which is the Rentable Floor Area of the Premises and the denominator of which is the Rentable Floor Area of the Building. Otherwise, upon the addition of the First Floor East Expansion Space to the Premises, all references in this Lease to the "Premises" shall be deemed to mean and include references to the First Floor East Expansion Space, and, by way of example, any Extension Option thereafter arising shall apply to the entire Premises so defined, and not to any lesser portion thereof. Landlord's failure to deliver and any delay in delivering the First Floor East Expansion Space for any reason beyond Landlord's control (including, without limitation, the continued occupancy of any such space by a prior occupant thereof or the holding over by any tenant whose lease has expired or been terminated) shall not give rise to any liability of Landlord hereunder, and shall not effect the full force and validity of this Lease. Landlord, in the case of any occupant who holds over for more than thirty (30) days, agrees to prosecute with due diligence appropriate legal proceedings for the removal of such occupant, and in all other cases agrees to use reasonable and diligent efforts to make such space available to Tenant. Notwithstanding the foregoing, in the event that Tenant has validly and timely exercised the First Floor East Expansion Option, and Landlord fails to deliver to Tenant the First Floor East Expansion Space by the Estimated Delivery Date, and such failure continues for one (1) month, Landlord shall reimburse Tenant for Tenant's actual Third Party out-of-pocket architectural and engineering - 15 - costs directly caused by Landlord's failure to timely deliver the First Floor East Expansion Space, up to a maximum aggregate reimbursement for the First Floor East Expansion Space of $26,958 (i.e. $3.00 per square foot of rentable floor area). Further, in the event that Tenant has validly and timely exercised the First Floor East Expansion Option, and Landlord fails to deliver to Tenant the First Floor East Expansion Space by the Estimated Delivery Date, and such failure continues for one hundred five (105) days, then Tenant shall have the right, exercisable in its sole discretion, to revoke and rescind its First Floor East Expansion Option Notice by giving written notice to Landlord within the first ten (10) business days following the expiration of such period, provided that such notice shall have no force or effect and the First Floor East Expansion Option Notice shall not be revoked or rescinded if Landlord delivers the First Floor East Expansion Space within 30 days followings its receipt of such notice. The reimbursement and termination rights specifically set forth herein shall be Tenant's sole and exclusive remedy in the event Landlord fails to timely deliver the First Floor East Expansion Space. The parties acknowledge that Landlord has the right to, and intends to, initially lease the First Floor East Expansion Space to one or more other tenants for occupancy prior to the period during which Tenant has the option to occupy the First Floor East Expansion Space pursuant to the foregoing provisions. If Landlord leases the space to more than one tenant, Landlord shall use reasonable efforts to have the various leases be coterminous and, in any event, Landlord shall use reasonable efforts to have the Estimated Delivery Date occur early during the time period during which the same is permitted to occur as set forth above; provided, however, that except as expressly set forth herein otherwise, in no event will Landlord be restricted in the terms or conditions upon which it is entitled to lease the First Floor East Expansion Space as set forth in this paragraph, including, without limitation, with respect to the term thereof. In the event Landlord leases the First Floor East Expansion Space to more than one tenant and the leases are not coterminous, or Landlord only leases a portion of the First Floor East Expansion Space, then Landlord may deliver separate First Floor East Notices for different portions of the First Floor East Expansion Space, and such notice(s) may set forth different Estimated Delivery Dates for different portions of the First Floor East Expansion Space. In the event this occurs, the provisions of this Section 2.4A shall apply separately to each such portion of the First Floor East Expansion Space and each such Estimated Delivery Date, with appropriate prorations (including without limitation with respect to tenant improvement allowances and parking spaces) made on a square foot basis. If Tenant fails to timely give a First Floor East Expansion Option Notice within thirty (30) days following a First Floor East Notice, Tenant shall be deemed to have waived its option rights hereunder with respect to the space offered in the First Floor East Notice. If Tenant waives or is deemed to have waived its option rights with respect to the space offered in a First Floor East Notice, Tenant shall have no further right or option with respect to such space and the provisions of this Section 2.4A shall no longer be applicable thereto. Tenant shall have no right to give a First Floor East Expansion Option Notice with respect to a portion, but less than all, of the space offered in a First Floor East Notice. 2.5 EIGHTH FLOOR EAST EXPANSION OPTION Provided that at the time Tenant exercises its expansion right under this Section 2.5 the Article II Conditions are satisfied and Tenant has neither assigned the Lease or sublet more than 25% of - 16 - the Premises (other than Permitted Transfer), Tenant shall have the option (the "Eighth Floor East Expansion Option") exercisable by written notice given no later than October 1, 2006 (the "Eighth Floor East Expansion Option Notice") to add to the Premises the space located on the eighth floor (east) of the Building shown on Exhibit A-3, which the parties conclusively agree contains 20,622 square feet of rentable floor area. All of the terms and conditions of this Lease shall apply to such Eighth Floor East Expansion Space, except as provided in this Section 2.5. The date on which the Eighth Floor East Expansion Space shall be added to the Premises, and the date on which Tenant shall be obligated to pay Rent on account of the Eighth Floor East Expansion Space shall be the earlier of (A) the later of (x) July 1, 2007 and (y) the date on which Landlord delivers the Eighth Floor Expansion Space free and clear of any occupants and (B) the date Tenant occupies any portion of the Eighth Floor East Expansion Space for the conduct of its business (the "Eighth Floor East Expansion Space Commencement Date"). Tenant shall be obligated to pay Rent on account of the Eighth Floor East Expansion Space on the same terms applicable to the original Premises described in Section 1.1, with Annual Base Rent at the same per square foot rates then applicable to the original Premises described in Section 1.1, and as increased, as applicable, so that at all times the per square foot rate applicable to the Eighth Floor East Expansion Space shall be the same as the per square foot rate then applicable to the remainder of the Premises. By way of clarification, during Lease Years 5, 6 and 7 the applicable square foot rate for the Annual Base Rent is $35.96 per square foot of rentable floor area per year (i.e., $741,567 per annum for the Eighth Floor East Expansion Space), and the Operating Cost Base and Real Estate Tax Base will likewise remain those set forth in Section 1.1. Landlord will provide Tenant with an allowance for the Eighth Floor East Expansion Space in the amount of $231,997 (i.e., $11.25 per square foot of rentable floor area of the Eighth Floor East Expansion Space) (the "Eighth Floor East Tenant Improvement Allowance") to be used for any initial tenant improvements constructed in the Eighth Floor East Expansion Space by or for Tenant. Such improvements shall be made in the manner and subject to the procedures set forth in Section 3.2 for the construction of the Initial Tenant Improvements, and the allowance shall be disbursed in accordance with and subject to the procedures and conditions set forth in Section 3.2 of the Lease for the disbursements of the Tenant Improvement Allowance, it being understood that (i) as applied to the Eighth Floor East Expansion Space, references in Section 3.2 to the Initial Tenant Improvements shall be deemed to mean references to the general office build out of the Eighth Floor East Expansion Space pursuant to plans and specifications approved by Landlord pursuant to Section 3.5, (ii) references in Section 3.2 to the Premises shall be deemed to mean references to the Eighth Floor East Expansion Space, (iii) references in Section 3.2 to the Tenant Improvement Allowance shall be deemed to mean references to the Eighth Floor East Tenant Improvement Allowance, and (iv) the full amount of the Eighth Floor East Tenant Improvement Allowance must be properly requisitioned as specifically provided for in Section 3.2. within one year of the Eighth Floor East Expansion Space Commencement Date. Landlord hereby represents and warrants that Landlord has not granted and will not grant a lease, option, right of first offer, right of first refusal or any other right to occupy or use the Eighth Floor East Expansion Space which is prior to Tenant's rights hereunder. It is agreed that Landlord shall have the right to lease the Eighth Floor East Expansion Space to others for occupancy prior to the Eighth Floor East Expansion Space Commencement Date, provided that the initial term of any such lease expires before July 1, 2007 and any extension rights are conditioned on Tenant not exercising its Eighth Floor East Expansion Option. - 17 - Landlord shall deliver the Eighth Floor East Expansion Space in its "As Is" "Where Is" condition, without representation, warranty or guaranty, express or implied. As of the Eighth Floor East Space Commencement Date, the number of Parking Spaces shall be increased in number by 29, and the Tenant's Pro Rata Share shall be recalculated to be a percentage, to the second decimal point, representing the percentage equivalent of a fraction, the numerator of which is the Rentable Floor Area of the Premises and the denominator of which is the Rentable Floor Area of the Building. Upon the addition of the Eighth Floor East Expansion Space to the Premises, all references in this Lease to the "Premises" shall be deemed to mean and include references to the Eighth Floor East Expansion Space, and, by way of example, any Extension Option thereafter arising shall apply to the entire Premises so defined, and not to any lesser portion thereof. Landlord's failure to deliver and any delay in delivering the Eighth Floor East Expansion Space for any reason beyond Landlord's control (including, without limitation, the continued occupancy of any such space by a prior occupant thereof or the holding over of any tenant whose lease has expired or been terminated) shall not give rise to any liability of Landlord hereunder, and shall not affect the full force and validity of this Lease. Landlord, in the case of any occupant who holds over for more than thirty (30) days, agrees to prosecute with due diligence appropriate legal proceedings for the removal of such occupant, and in all other cases agrees to use reasonable and diligent efforts to make such space available to Tenant. Notwithstanding the foregoing, in the event Tenant has validly and timely exercised the Eighth Floor East Expansion Option and Landlord fails to deliver to Tenant the Eighth Floor East Expansion Space by July 1, 2007, and such failure continues for one (1) month, Landlord shall reimburse Tenant for Tenant's actual Third Party out-of-pocket architectural and engineering costs directly caused by Landlord's failure to timely deliver the Eighth Floor East Expansion Space, up to a maximum aggregate reimbursement for the Eight Floor East Expansion Space of $41,244 (i.e. $2.00 per square foot of rentable floor area). Further, in the event Tenant has validly and timely exercised the Eighth Floor East Expansion Option and Landlord fails to deliver to Tenant the Eighth Floor East Expansion Space by July 1, 2007, and such failure continues for one hundred five (105) days, then Tenant shall have the right, exercisable in its sole discretion, to revoke and rescind its Eighth Floor East Expansion Option Notice by giving written notice to Landlord during the first ten (10) business days following the expiration of such period, provided that such notice shall have no force or effect and the Eighth Floor East Expansion Option Notice will not be revoked or rescinded if Landlord delivers the Eighth Floor East Expansion Space within 30 days following its receipt of such notice. The reimbursement and termination rights specifically set forth herein shall be Tenant's sole and exclusive remedy in the event Landlord fails to timely deliver the Eighth Floor East Expansion Space. 2.6 RIGHT OF FIRST OFFER This Section 2.6 shall apply to those portions of the Building identified as the "First Offer Space" and the "Special First Offer Space" on Exhibit J (collectively referred to herein as the "First Offer Space"). Additionally, if Tenant does not timely and validly exercise the Third Floor East Expansion Option, First Floor East Expansion Option or Eighth Floor East Expansion Option, then for each such expansion option not exercised, from and after the date on which the - 18 - applicable expansion option expires or is extinguished in accordance with the terms of the Lease, the space for which the expansion option has expired or been extinguished shall be included within the definition of "First Offer Space" hereunder and shall be individually referred to as "Expansion/Offer Space". Landlord has entered into leases demising a portion of the First Offer Space ("Existing Leases") and is negotiating leases for or marketing the remainder of such space. Landlord shall have the right, in its sole and absolute discretion, to enter into any and all leases or other occupancy arrangements and amendments thereto (as the same may be amended from time to time, a "New Lease") for those portions of the First Offer Space not leased under the Existing Leases, and to enter into amendments to Existing Leases and New Leases, all as it deems advisable in its sole and absolute discretion, upon such terms as it deems advisable in its sole and absolute discretion (which terms may include, without limitation, the grant of any expansion, extension or other options or rights). For purposes hereof, the "Superior Leases" (each, a "Superior Lease") shall mean (x) the Existing Leases and (y) for each and every portion of the First Offer Space not subject to an Existing Lease, the first New Lease Landlord enters into with a tenant for such space that actually takes possession and commences paying rent therefor ("First New Lease"), which means that for any Expansion/Offer Space the "First New Lease" is the first New Lease entered into for such space after the applicable expansion option has expired or been extinguished for which the tenant actually takes possession and commences paying rent; provided that if Landlord leases such space to a tenant for an initial term expiring prior to the date on which Tenant would have had the right to expand into the space (the "Delivery Date"), and such tenant validly exercises an extension option under the lease for an extension term commencing upon or after the Delivery Date, and remains in possession and continues to pay rent at the commencement of such extension term, then such lease shall be deemed to be the First New Lease for such space (it being understood that any such extension option for a term after the Delivery Date would be conditioned on Tenant not exercising the applicable expansion option), and (z) any other New Lease of First Offer Space, which is not a First New Lease with respect to any particular space, entered into by Landlord after Landlord has first offered such space to Tenant in accordance with this Section 2.6 ("Subsequent New Leases"). As used in this Lease, the phrase "tenants under Superior Leases" or "a tenant under a Superior Lease" or similar such phrases or references shall include the original parties holding the tenants' interests under the Superior Leases and all such parties' successors, assigns and sublessees. Tenant's rights under this Section 2.6 shall be subject to the rights of tenants under Superior Leases (including without limitation all expansion and extension options, all rights of first offer and all other options and rights) subject to the following: (a) if the First New Lease for any First Offer Space initially contains an expansion option, such expansion option shall have priority over the rights of Tenant hereunder only as long as no other person or entity leases the space subject to the expansion option prior to the exercise of such expansion option; (b) notwithstanding (a) above, (a) if Landlord enters into a lease of space in the Building with Cambridge Energy Research Associates Inc. or an affiliate thereof ("CERA") within one (1) year following the date hereof for initial premises consisting of all or substantially all of the sixth floor (east) of the Building, all or substantially all of the seventh - 19 - floor (east) of the Building and approximately 13,222 square feet of the fifth floor (east) of the Building, or space which is materially consistent with the foregoing, and (b) Landlord grants to CERA in the initial lease with CERA expansion and/or first offer rights with respect to the balance of the space on the fifth floor east containing approximately 8,167 rentable square feet and/or first offer rights with respect to the entirety of the fourth floor east, as shown as Special First Offer Space on the Stacking Plan, which rights may be effective continuously after the initial lease up of such space, the rights of first offer and/or expansion so granted to the tenant under the CERA lease shall have priority over the rights of Tenant under this Section 2.6 even if another person or entity leases space subject to such rights prior to the exercise of such rights; (c) if Landlord offers space to Tenant in accordance with the provisions of this Section 2.6 and such offer includes expansion options, and Tenant does not accept such offer in accordance with the provisions of this Section 2.6, and Landlord thereafter enters into a Superior Lease containing any such expansion options, the expansion options under such Superior Lease shall take priority over Tenant's rights hereunder; otherwise, any expansion options granted in such a Superior Lease not included in the offer to Tenant shall be subject to the rights of Tenant under this Section 2.6; (d) the right of first offer granted to a tenant under an Existing Lease, which right of first offer is with respect to 5,997 s.f. on eighth floor west as shown on the Stacking Plan, and which right of first offer is effective continuously after the initial lease up of such space, shall have priority over the rights of Tenant under this Section 2.6; (e) except as set forth in (b) and (d) any first offer rights granted to tenants in Superior Leases shall be subject to Tenant's rights under this Section 2.6; and (f) if Landlord amends a Superior Lease to grant the tenant thereunder an option to renew, extend or expand not originally contained in such Superior Lease, the exercise of rights by the tenant thereunder will be subject to Tenant's rights under this Section 2.6. Notwithstanding the foregoing, if Landlord enters into a lease of space which is not First Offer Space, and in that lease or an amendment thereto grants the tenant thereunder expansion or first offer rights with respect to First Offer Space, such rights shall be subject to Tenant's right of first offer in accordance with the provisions of this Section 2.6. Each and every time during the term of this Lease, if Landlord intends to market for lease to third parties the First Offer Space or any portion thereof upon the expiration or termination of any Superior Lease applicable thereto (provided that such marketing may occur prior to such expiration or termination), and if at such time (i) the Lease is in full force and effect, (ii) Tenant is not in default, beyond applicable grace and cure periods, in the performance or observance of any of the terms and provisions of this Lease on the part of the Tenant to be performed or observed, and (iii) Tenant has neither assigned the Lease nor sublet twenty-five (25) percent or more of the Premises (other than a Permitted Transfer and excluding subleases which have expired or terminated as of the date Tenant exercises its first offer right), then Landlord shall first offer (in writing) to lease such space to Tenant (the "Offer Notice") on such terms and conditions as are determined by Landlord in its sole discretion; provided that the rental rate shall be the "Offer Fair Market Rent" (as hereinafter defined) as determined by Landlord in its sole - 20 - discretion (a "First Offer"). The "Offer Fair Market Rent" shall mean one hundred percent (100%) of the fair market rent for Class A office use of the subject First Offer Space, free and clear of any lease, as of the commencement of the term of the First Offer Lease (as defined below) under market conditions then existing, upon the terms and conditions set forth in the Offer Notice, taking into account relevant factors and considerations for a market lease transaction, including the treatment of operating costs and taxes, and the then current market rental rates for leases of comparable space in comparable buildings in the East Cambridge/Kendall Square area to new tenants. The foregoing covenant shall not prohibit Landlord from marketing First Offer Space at the same time Tenant is considering a First Offer from Landlord, provided that Landlord shall not enter a lease of space subject to a First Offer until Tenant rejects or is deemed to have rejected such First Offer. If Tenant has not accepted such First Offer by written notice to Landlord within thirty (30) days (or if the First Offer is for more than 30,000 rentable square feet, forty-five (45) days) after the date the Offer Notice is given to Tenant, the First Offer shall conclusively be deemed to have been rejected by Tenant. Thereafter, Landlord shall be free to lease the space subject to the Offer Notice to other parties on such terms and conditions as are determined by Landlord in its sole discretion. Notwithstanding the foregoing, Landlord agrees not to enter into a lease of such space if (i) the gross rent under such lease would be less than ninety-two and one-half percent (92.5%) of the gross rent in Landlord's offer to Tenant, (ii) the tenant allowance under such lease would be more than one hundred seven and one-half (107.5%) percent of the tenant allowance offered to Tenant, or (iii) the term of such lease would be more than twelve (12) months longer or shorter than the term offered to Tenant, without first again offering the subject space to Tenant pursuant to the foregoing procedure, except that Tenant shall be deemed to have conclusively rejected such new First Offer if it does not accept the same within ten (10) business days of the date of Landlord's revised Offer Notice. Additionally, if Landlord has not entered into a lease within one hundred eighty (180) days following the rejection or deemed rejection by Tenant of Landlord's First Offer for such offered space, then the provisions of this Section 2.6 shall apply to Landlord and Tenant with respect to such previously offered and unleased space as if such unleased space had not been offered to Tenant. Notwithstanding any provision herein to the contrary, Landlord (i) shall have no obligation to make any offer to Tenant under this Section 2.6 if at such time as an offer would otherwise be required to be made hereunder there are three hundred sixty-four (364) or fewer days remaining in the Term, as the same may have been extended at such time and (ii) shall be free to offer to lease space or grant rights to occupy space to others without first making such offer to Tenant hereunder so long as the right to occupy the subject space commences after the expiration of the Term hereof, as the same has been extended. If Tenant timely accepts a First Offer pursuant to the provisions hereof, Tenant may elect by written notice to Landlord ("Arbitration Notice") given within five (5) business days following its acceptance of the First Offer to have the Offer Fair Market Rent determined pursuant to the arbitration procedures set forth in Section 2.3(d); provided that (i) references in Section 2.3(d) to Tenant's Rent Notice shall be deemed references to Tenant's Arbitration Notice, (ii) Tenant shall include with its Arbitration Notice the name of Tenant's Appraiser, and (iii) references to Fair Market Rent in Section 2.3(d) shall be deemed references to Offer Fair Market Rent. Without derogating from the foregoing, it is expressly agreed that Tenant shall have no right to cancel or withdraw its acceptance of the First Offer, whether in a manner set forth in Section 2.3(c) with - 21 - respect to Tenant's Rent Notice or otherwise, any acceptance of a First Offer being irrevocable except as set forth below. If Tenant timely accepts a First Offer pursuant to the provisions hereof, Tenant and Landlord shall execute and deliver to each other within forty (40) days following Tenant's acceptance of the First Offer (or if Offer Fair Market Rent is arbitrated pursuant to the foregoing paragraph, within ten (10) days following the determination of the Offer Fair Market Rent), a lease drafted by Landlord and commented on by and reasonably acceptable to Tenant, substantially in the form of this Lease, modified to reflect the terms set out in the Offer Notice (a "First Offer Lease"), provided that it is agreed that Landlord will not be obligated to undertake any Landlord's Work or leasehold improvements or otherwise prepare the subject space for Tenant or provide a tenant allowance therefore, that there will be no free rental period or other period during which annual base rent or other sums payable by Tenant are not due, there will be no extension or expansion rights, and that Tenant shall have no additional first offer rights, under any such First Offer Lease, all except to the extent set forth in the Offer Notice. Landlord's failure to deliver and any delay in delivering any First Offer Space for any reason beyond Landlord's control (including, without limitation, the continued occupancy of any such space by a prior occupant thereof or the holding over of any tenant whose lease has expired or been terminated) shall not give rise to any liability of Landlord hereunder, and shall not affect the full force and validity of this Lease. Landlord, in the case of any occupant who holds over for more than 30 days, agrees to prosecute with due diligence appropriate legal proceedings for the removal of such occupant and in all other cases agrees to use reasonable and diligent efforts to make such space available to Tenant. Notwithstanding the foregoing, in the event that Landlord and Tenant have entered into a First Offer Lease and Landlord fails to deliver to Tenant the applicable First Offer Space by the scheduled delivery date therefore, and such failure continues for one (1) month, Landlord shall reimburse Tenant for Tenant's actual Third Party out-of-pocket architectural and engineering costs directly caused by Landlord's failure to timely deliver the applicable First Offer Space, up to a maximum aggregate reimbursement equal to the product of $1.00 and the number of rentable square feet in the First Offer Space. Further, in the event that Landlord and Tenant have entered into a First Offer Lease and Landlord fails to deliver the applicable First Offer Space to Tenant by the scheduled delivery date therefor, and such failure continues for one hundred five (105) days, then Tenant shall have the right, exercisable in its sole discretion, to revoke and rescind its acceptance of the applicable Offer Notice and to terminate the applicable First Offer Lease by giving notice to Landlord during the first ten (10) business days immediately following the expiration of such period, provided that such notice shall be of no force or effect and the acceptance of the Offer Notice will not be revoked or rescinded and the First Offer Lease will not be terminated if the applicable space is delivered within thirty (30) days following the Landlord's receipt of such notice. The reimbursement and termination rights specifically set forth herein shall be Tenant's sole and exclusive remedy in the event Landlord fails to timely deliver the applicable space. Subject to the foregoing and except as otherwise may be provided in the Offer Notice, any and all portions of the First Offer Space for which Tenant validly accepts Landlord's offer and executes a Lease as set forth herein shall be delivered to Tenant, broom clean, in its then "As Is," "Where Is" condition, with all faults and without representation, warranty or guaranty of any kind by Landlord to Tenant. Time is of the essence with respect to the provisions hereof. - 22 - ARTICLE III CONSTRUCTION 3.1 DELIVERY OF PREMISES. Tenant acknowledges that Tenant has had an opportunity to inspect the Premises. Except for Landlord's Common Area Work as expressly set forth hereinafter, the Premises shall be delivered to Tenant "As Is", "Where Is" with all faults and without representation, warranty or guaranty of any kind by Landlord to Tenant. Notwithstanding the foregoing, subject to the following provisions, Landlord, at Landlord's sole expense, shall complete the work in the Building as set forth in Exhibit B hereto ("Landlord's Common Area Work"). Landlord agrees to use diligent efforts to have Landlord's Common Area Work completed no later than the time set forth in Exhibit B, subject to delays beyond Landlord's reasonable control and delays caused by Tenant. Landlord shall in no way be liable to Tenant or any other party, and Tenant's obligations shall not be reduced hereunder in the event such construction work is not substantially completed by the applicable time set forth on Exhibit B. Notwithstanding the foregoing, Landlord represents and warrants that Landlord's Common Area Work shall not be performed in any manner that would unreasonably interfere with Tenant's use of or access to the Premises. Landlord's Common Area Work shall be deemed completed on the date on which the required Landlord's Common Area Work is substantially completed as certified by Landlord's architect, with the exception of minor items which would not interfere with the completion of the Tenant Improvements or Tenant's business operations (collectively, "Punch List Items"). Landlord agrees to complete all Punch List Items within sixty (60) days of substantial completion of the relevant Landlord's Common Area Work. 3.2 PREPARATION OF PREMISES BY TENANT. Subject to the provisions of this Lease, Tenant shall begin construction on the initial build out of its Premises promptly following the Tenant Access Date and shall diligently pursue the same to completion (such initial construction is referred to as the "Initial Tenant Improvements"). The Initial Tenant Improvements shall be constructed by Tenant in compliance with the provisions of the Lease, including without limitation Section 3.5 of the Lease. A preliminary description of the Initial Tenant Improvements is attached hereto on Exhibit F. No delay or failure of the Initial Tenant Improvements to be constructed or completed shall affect the Term Commencement Date or any obligations of Tenant under this Lease, unless and to the extent such delays are directly caused by Landlord or its agents, employees or independent contractors and Tenant gives notice to Landlord within five (5) business days of any alleged delay caused by Landlord or its agents, employees or independent contractors. The Initial Tenant Improvements shall be constructed by Tenant at its sole cost and expense (including without limitation costs for any trash removal services, utilities, and any costs required to cause the Premises to comply with all laws, orders and regulations of all governmental authorities and all insurance requirements); provided that Tenant may be reimbursed out of the Tenant Improvement Allowance for its actual, third party design, - 23 - engineering and construction, wiring, cabling, installation of telecommunications systems and construction management costs (collectively, "Costs") for the Initial Tenant Improvements pursuant to the provisions of this paragraph. Prior to commencing Initial Tenant Improvements, Tenant shall deliver to Landlord a certificate executed by Tenant's construction manager setting forth a good faith estimate of the total Costs for all of the Initial Tenant Improvements. The Tenant Improvement Allowance shall be disbursed as follows. Tenant shall submit to Landlord from time to time, and not more frequently than once a month, a requisition for reimbursement setting forth the actual, third party Costs of the applicable Initial Tenant Improvements for which reimbursement is sought (a "Requisition"). Such Requisition for payment shall contain such invoices or other evidence of the Costs incurred as Landlord may reasonably request, together with evidence reasonably satisfactory to Landlord that the same have been paid or are due and payable by Tenant and a certificate by the architect that the work covered by the application has been completed in compliance with the plans and specifications approved by Landlord pursuant to Section 3.5. Provided such information is provided by the third to last business day in a month, by the thirtieth (30th) calendar day of the next month, Landlord shall reimburse Tenant (or in the case of Costs which are payable, at its election pay directly to the vendor), from the applicable Tenant Improvement Allowance in an amount equal to any actual, third party Costs paid by Tenant for the Initial Tenant Improvements properly set forth in the Requisition, or if such amount remains due and payable by Tenant, Landlord shall pay such amount to the party to which it is owed as indicated on the applicable invoices. In the event the overall Costs of the Initial Tenant Improvements for the Premises exceed the Tenant Improvement Allowance, then Tenant shall be solely responsible for any such Costs in excess of the Tenant Improvement Allowance. The Tenant Improvement Allowance shall be used for Initial Tenant Improvements. Notwithstanding the foregoing, if, following completion of the Initial Tenant Improvements, as certified to Landlord by Tenant's architect, the full amount of the applicable Tenant Improvement Allowance has not been properly requisitioned for the Initial Tenant Improvements, Tenant may requisition the same in accordance with the procedures set forth in this Section 3.2 for any Initial Tenant Improvements to the other portions of the Premises or any non-cosmetic alterations or additions to the other portions of the Premises approved by Landlord pursuant to Section 3.3 below, provided any such alteration or addition to the other portions of the Premises are completed within one (1) year of the Term Commencement Date therefor and any requisition therefor is submitted to Landlord by such date. Otherwise, any Tenant Improvement Allowance not properly requisitioned by Tenant shall not be available to Tenant. Notwithstanding anything to the contrary contained herein, Landlord shall have no obligation to disburse any Tenant Improvement Allowance at any time that Tenant is in default of any of its obligations under this Lease beyond any applicable grace or cure period. Landlord shall not be entitled to charge any inspection or supervision or similar cost or fee in connection with Initial Tenant Improvements or any initial tenant improvements constructed in connection with Tenant's expansion rights, extension rights or rights of first offer. 3.3 GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION. All construction work required or permitted by this Lease, whether by Landlord or by Tenant, shall be done in a good and workmanlike manner and in compliance with all applicable laws and - 24 - all lawful ordinances, regulations and orders of governmental authority and insurers of the Building and the Lot. Either party may inspect the work of the other at reasonable times and promptly shall give notice of observed defects. Landlord shall provide Tenant reasonable prior notice before inspecting the work on the Premises (except in case of emergency when no prior notice is required) and Landlord will allow Tenant to have an agent of Tenant or Tenant's Construction Representative accompany Landlord in such inspection. Tenant shall comply at all times with the construction rules and regulations attached hereto as Exhibit G. 3.4 CONSTRUCTION REPRESENTATIVES. In connection with the parties' respective rights and obligations under this Article III, each party authorizes the other to rely upon approvals and other actions given or made on such party's behalf by any person designated as its Construction Representative in Section 1.1 hereof. Each party may change its Construction Representative by notice to the other. 3.5 ALTERATIONS AND ADDITIONS. This Section 3.5 shall apply before and during the Term. Tenant may make interior alterations and additions of a decorative or cosmetic nature (as defined below), the cost of which does not exceed $75,000 in the aggregate in any twelve (12) month period, without the need of any approval from Landlord, provided (i) any alteration or addition affecting the Building structure (including alterations affecting the roof, the structural weight-bearing walls or columns or any weight-bearing floor slab of the Building), (ii) any alteration or addition affecting the Building systems (including plumbing, electrical, mechanical or HVAC systems), (iii) any interior alteration or addition of a decorative or cosmetic nature, the cost of which is equal to or exceeds $75,000 in the aggregate in any twelve (12) month period, and (iv) any other alteration or addition not otherwise described in this paragraph costing more than $25,000 (in 2002 dollars) in any one instance or in the aggregate in any twelve (12) month period, (x) shall not be performed without Tenant first having received Landlord's written consent thereto, (y) shall be conducted under the supervision of a licensed architect or licensed professional engineer approved by Landlord and (z) shall be conducted with plans and specifications submitted to and approved by Landlord, subject in all events to the "Review Conditions" (described below). Without limiting the foregoing, all plans and specifications and all alterations and additions (including without limitation the Initial Tenant Improvements) shall comply with the Minimum Tenant Improvement Standards attached hereto as Exhibit H (the "Minimum Standards"). Landlord shall not unreasonably withhold its consent to any alterations or additions proposed by Tenant or to any plans and specifications submitted to Landlord in connection therewith. Landlord's failure to respond to Tenant's request for consent to alterations or additions or for approval of plans and specifications for any alterations or additions consented to by Landlord, or as to which Landlord's consent is simultaneously being requested, within thirty (30) days of Landlord's receipt of such request(s) shall constitute Landlord's disapproval of same. Landlord hereby approves Tenant's construction of a high density file room on the third floor of the Building in accordance with the plans to be submitted by Tenant to Landlord prior to August 15, 2002 for Landlord's approval (such approval not to be unreasonably withheld or delayed so long as the work shown thereon can reasonably be completed by September 30, 2002); provided that all work in connection therewith that requires access to or interferes with the use and occupancy of the second floor (west) of the Building shall be undertaken by Landlord's contractor at Tenant's - 25 - sole cost and expense (Landlord hereby agreeing to cause its contractor to cooperate with Tenant in connection therewith) and shall be completed by September 30, 2002. Tenant shall have no access to the second floor (west) after such date, and any access to the second floor (west) prior to such date shall be exclusively through Landlord's contractor as aforesaid. Landlord also hereby approves Tenant's installation of a two stage pre-action sprinkler system, subject to Landlord's review and approval of plans and specifications therefor, such approval not to be unreasonably withheld or delayed. Landlord's approval of any plans or specifications shall not be deemed its opinion that the plans and specifications or the work depicted thereon comply with any or all applicable laws, ordinances, regulations or orders of governmental authorities or requirements of insurers of the Building and the Lot, or with the Minimum Standards, and no waiver from the requirement of the Minimum Standards shall be deemed to have been granted by such approval unless such waiver is expressly stated in writing. At Landlord's request, Tenant will cause its architect to certify that its plans and specifications and the work depicted thereon comply with such laws, ordinances, regulations and orders of governmental authorities and with the Minimum Standards. Except in connection with the Initial Tenant Improvements (including any Initial Tenant Improvement for the Third Floor East Expansion Space), and except for any alteration or addition for which Landlord's consent is not required under this Lease, Tenant shall pay Landlord's actual, reasonable, third-party out of pocket costs of reviewing or inspecting any proposed non-decorative or non-cosmetic alterations and/or additions and the plans therefore, such as costs and fees of third party consultants hired by Landlord. In no event shall any non-decorative or non-cosmetic alterations and/or additions be considered or approved by Landlord except in Landlord's sole discretion which (a) involve or might affect any structural or exterior element of the Building, Building systems, including mechanical, fire protection or life safety systems, or the common facilities of the Building, or (b) will require unusual expense to readapt the Premises to normal office use on Lease termination or increase the cost of construction or of insurance or taxes on the Building or the Lot (collectively, the "Review Conditions"). All non-decorative and/or non-cosmetic alterations and additions shall become a part of the Premises except that at the time Landlord approves any alterations or additions, Landlord may require that upon yielding up of the Premises pursuant to Section 6.1.2, Tenant shall remove any items which are not typical and customary for the Permitted Use hereunder ("Specialty Items"); in the event Landlord does not affirmatively require Tenant to remove Specialty Items at the time Landlord approves the same, which it may do in its sole discretion, Landlord will be deemed to have waived such requirements. Tenant shall provide Landlord with written notice specifying in reasonable detail any alterations or additions which Tenant intends to make for which Landlord's consent is not required prior to commencing the same. All of Tenant's alterations and additions and installation and delivery of telephone systems, furnishings, and equipment shall be coordinated in a reasonable manner with any work being performed by Landlord and other tenants in the Building (and Landlord shall use reasonable efforts to facilitate such coordination with other tenants in the Building), and shall be performed in such manner, and by such persons as shall maintain harmonious labor relations (Tenant acknowledging that it has been advised that Landlord's contractor and contractors for other tenants in the Building employ exclusively union labor) and not cause any damage to the Building or interference with Building construction or operation, or with other tenants in the Building, and, except for installation of furnishings, equipment and telephone systems, shall be - 26 - performed by contractors approved in writing by Landlord (an "Approved Contractor"), which approval shall not be unreasonably withheld or delayed. For purposes of this Lease, an "Approved Contractor" shall mean a contractor or mechanic identified by Tenant in writing, who has been approved by Landlord (such approval not to be unreasonably withheld or delayed). Contractors may be approved in one of two ways. First, Tenant may submit to Landlord in writing from time to time a list (or revised list) of contractors that Tenant anticipates using from time to time to make alterations, repairs and improvements to the Premises. Each of the contractors identified on such list and approved in writing by Landlord shall be deemed "Approved Contractors". Second, Tenant may submit to Landlord from time to time requests for Landlord to approve specific contractors (not already on the list of Approved Contractors) for work in the Premises. If Landlord approves such contractor in writing, such contractor shall be an Approved Contractor for the project in question. Landlord hereby approves the list of contractors attached hereto as Exhibit M as "Approved Contractors". Landlord shall have the right, upon written notice to Tenant to withdraw its approval of previously approved contractors at any time for any cause as determined in Landlord's reasonable judgment. A contractor's failure to provide or maintain adequate insurance levels shall be a reasonable basis for Landlord to withhold or withdraw approval unless Tenant notifies Landlord in writing that such contractor shall be covered by insurance then being maintained by Tenant and if Tenant provides documentary evidence that said Contractor is covered and of the amount of coverage. Landlord may post any notices it considers necessary to protect it from responsibility or liability for any alteration, addition or other work by Tenant, its agents, employees, or independent contractors, and Tenant shall give sufficient notice to Landlord to permit such posting. In the event Tenant sends its non-decorative and/or non-cosmetic work out for bid, before doing so Tenant shall provide Landlord with a list of proposed bidders for Landlord's review; Landlord shall have seven (7) business days to reasonably object to such bidders; if Landlord does not so object, such bidders shall be presumptively approved by Landlord. Before commencing any work Tenant shall: secure all licenses and permits necessary therefor; deliver to Landlord a statement of the names of all its contractors and major subcontractors (the identity of which must have been previously approved by Landlord as hereinabove contemplated) and the estimated cost of all labor and material to be furnished by them (a major subcontractor being a subcontractor performing work which costs more than $10,000 in the aggregate); and cause each contractor and subcontractor to carry (i) workers' compensation insurance in statutory amounts covering all the contractor's and subcontractor's employees, (ii) commercial general liability insurance with such limits as Landlord may reasonably require, but in no event less than a combined single limit of $3,000,000 per occurrence and (iii) other insurance specified in the Construction Rules and Regulations attached hereto as EXHIBIT G, (all such insurance to be maintained with a responsible insurance company, qualified to do business and in good standing in Massachusetts with a Best's insurance rating of not less than A:X, and insuring Landlord, Manager and Tenant as well as the contractors), and to deliver to Landlord, certificates of all such insurance naming Landlord, Manager and Tenant as additional insureds as their interests may appear with respect to commercial general liability coverage. Tenant agrees to pay promptly when due, and to defend and indemnify Landlord from and against, any cost, claim or liability arising from any work done on the Premises by Tenant, its agents, employees or independent contractors, except to the extent any cost, claim or liability is due to the negligent, acts or omissions of Landlord, and not to cause or permit any liens for labor or materials performed or furnished in connection therewith to attach to the Building or the Lot and immediately to discharge or bond over any - 27 - such liens which may so attach. Tenant shall be solely responsible for the effect of any alterations, additions or other work on the Building's structure and systems, whether or not Landlord has consented thereto. Upon completion of the Tenant Improvements and any other non-cosmetic or non-decorative alteration or addition, Tenant shall provide Landlord with a complete set of "as built" plans therefor, which may consist of a mark-up of any plans previously prepared for such work showing actual construction. Alterations and/or additions shall be considered "cosmetic" and/or "decorative" if they involve painting, carpeting and the like, and provided they do not involve and will not or could not affect any structural or exterior element of the Building, Building systems, including mechanical, fire protection or life safety systems, or the common facilities of the Building. Tenant shall have the right to install in locations on the roof of the Building designated by Landlord (such area or areas, the "Roof Area"), up to two five-ton Liebert units (the "Roof Equipment"). Tenant shall have the ancillary right to connect the Premises to the Roof Area through a reasonably sized conduit or conduits, installed at Tenant's sole cost and expense, such conduit or conduits to be in a location designated by Landlord in its reasonable discretion. The term "Roof Equipment" shall be deemed to include such conduit and any wiring or other materials contained therein. Roof Equipment shall be installed and maintained so as (a) not to cause any adverse impact on the structural integrity of the Building or the roof of the Building and (b) not to void or jeopardize any roof membrane warranty or other roof warranty, provided a copy of which is supplied to Tenant. Prior to the installation of any Roof Equipment, Tenant shall obtain and submit to Landlord, for its approval in its reasonable discretion, plans and specifications for the proposed Roof Equipment (including its size, location, height, weight and function), along with copies of all required permits and licenses required from all applicable governmental authorities. Without derogating from the other provisions of the Lease (including those governing alterations and additions), all of which shall apply to the Roof Equipment, Tenant specifically agrees to abide by the following terms and conditions: (a) No Roof Equipment shall be installed except in compliance with plans and specifications approved by Landlord as set forth above, such work to be performed by contractors reasonably approved by Landlord and at Tenant's sole cost and expense, provided that any roof penetration shall be by Shea Roofing or such other contractor designated by Landlord in its sole discretion. As soon as practicable during the installation or removal of any Roof Equipment, Tenant, at its sole cost and expense, will have any roof penetrations occurring or remaining by reason of the installation or removal process sealed by Shea Roofing or another roofing contractor selected by Landlord. (b) Tenant shall at all times during the installation or removal process and during any use, maintenance or repair of any Roof Equipment, comply with all roof membrane warranties and other roof warranties which are supplied to Tenant, building, safety, fire, plumbing, electrical and other codes and regulations, and insurance requirements set forth in the Lease. (c) Prior to the commencement of any work related to the Roof Equipment, Tenant will coordinate with the building engineer, roof material manufacturers and Landlord's - 28 - roofing contractors regarding the scope and schedule of such work. The Building engineer, roof material manufacturers and Landlord's roofing contractors will have the opportunity to be present during construction to ensure that all work is completed in a good and workmanlike manner and is performed in accordance with the terms of the Lease. (d) Tenant shall keep the Roof Equipment, and every part thereof, in good condition and repair at all times during the Term at Tenant's sole cost and expense. (e) Tenant shall yield up the Roof Area and any other areas containing the Roof Equipment in the same manner and condition as set forth herein for the yield up of the Premises. Notwithstanding the foregoing, by notice given at the time Landlord approves the plans and specifications for the Roof Equipment, Landlord may require Tenant to remove the Roof Equipment upon Tenant's yielding up the Premises and to repair any damage caused thereby in compliance with any roof membrane warranty and other roof warranties and paragraphs (a), (b) and (c) above. ARTICLE IV RENT 4.1 RENT. Tenant agrees to make rental payments to Landlord, without any offset or reduction whatsoever, except as expressly set forth in Section 5.2 (but taking into account the "Reduced Rent Period" following the Term Commencement Date for the Initial Space described below), in equal monthly installments of 1/12th of the Annual Base Rent as set forth in Section 1.1, in advance on the first day of each calendar month included in the Term after the Term Commencement Date; pro-rated on a daily basis as applicable for any calendar month which includes the Term Commencement Date, and at the end of the Term. For the first 120 days following the Term Commencement Date (the "Reduced Rent Period"), the Rent otherwise due hereunder shall be reduced by $1,420 per day. The rent reduction provided for herein is a one-time reduction and shall not apply to the Third Floor East Expansion Space, First Floor East Expansion Space or Eighth Floor East Expansion Space or any first offer space. 4.2 OPERATING COSTS AND REAL ESTATE TAXES. 4.2.1 LANDLORD'S OPERATING COSTS. Tenant shall pay to Landlord, as additional rent, Tenant's Pro Rata Share of Landlord's Operating Costs (as set forth in Section 4.2.3 below), if any, on or before the thirtieth (30th) day following receipt by Tenant of Landlord's Statement (as defined below). As soon as practicable, but in no event more than 120 days after the end of each calendar year ending during the Term and after Lease termination, Landlord shall render a statement ("Landlord's Statement") in reasonable detail and according to Landlord's usual accounting practices, which shall be in accordance with generally accepted accounting practices, showing for the preceding calendar year or fraction thereof, as the case may be, "Landlord's Operating Costs" together with Real Estate Taxes (as defined in Section 4.2.2 hereof). - 29 - Landlord's Operating Costs shall EXCLUDE: Real Estate Taxes; the principal, interest and amortization on mortgages for the Building and the Lot or leasehold interests therein; or any other financing cost or fee; ground rent; depreciation on the Building or equipment or systems therein; costs in connection with leasing, releasing, or subleasing space at the Building (including but not limited to brokerage commissions); costs incurred in connection with the sale, financing or refinancing of the Building and/or the Lot; the cost of repairs or other work to the extent Landlord is reimbursed by insurance or condemnation proceeds or by any other third party; costs incurred in enforcing leases against other tenants; the cost of special services rendered to tenants (including Tenant) for which a special charge is made; any expense to the extent resulting from the negligent act or omission of Landlord, its agents, contractors or employees; costs resulting from Landlord's breach of this Lease or any lease for space in the Building; except to the extent required by a new law, regulation or code or a new interpretation of an existing law, regulation or code, the cost of correcting any code or legal violations in the Building; except to the extent required by a new law, regulation or code or a new interpretation of an existing law, regulation or code, any costs related to Landlord's Building being in violation of the American with Disabilities Act ("ADA") (it being understood and agreed that Tenant shall be solely responsible for causing the Premises to be compliance with all laws, regulations and codes, including ADA, at all times); the costs of cleaning any tenant space; and capital expenses not otherwise included in Landlord's Operating Costs pursuant to the next paragraph. Landlord's Operating Costs may INCLUDE, without limitation: installments and interest on assessments for public betterments or public improvements; premiums for insurance (including, without limitation, all-risks commercial property, rental value, casualty and liability insurance, and insurance required to be carried by any mortgage lender), and deductible amounts thereunder; fees payable to third parties for financial audits of Landlord's Operating Costs; compensation and all fringe benefits, worker's compensation insurance premiums and payroll taxes paid by Landlord, and consistent with other Class A buildings in the East Cambridge/Kendall Square area, for or with respect to all persons engaged in the operating, maintaining, or cleaning of the Building and the Lot, including, without limitation, a building manager located at the Building, and a pro rata portion of one regional manager to the extent available to the Building; the cost of cleaning and maintaining and the cost of utilities servicing any space occupied by the manager for a building office; all electricity charges related to the common areas of the Building and heat pumps servicing the Building, and all utility charges incurred in the operation and maintenance of the Premises, the Building and the Lot not billed directly to tenants by Landlord or by the utility company; all costs of cleaning the common areas of the Building and all windows on the exterior of the Building; all costs of maintenance, repairing and operating the Building (including without limitation, all structural components and common facilities of the Building); payments under service contracts for cleaning the common areas and windows of the Building as aforesaid and for operating, managing, maintaining and repairing the Building and the Lot; management fees not to exceed 4% of annual gross revenues (Landlord hereby representing that the management fees for the Operating Cost Base are equal to 4% of annual gross revenues for calendar year 2002); all costs, expenses, payments or fees paid by Landlord for any regional transportation shuttle (such as that proposed to be operated by the presently so-called "Charles River Transportation Association") funded or paid for either partially or wholly by Landlord and owners of other properties in the area of the Building, whether such expenditures and shuttle are voluntary or involuntary, public or private; the cost of maintaining and cleaning and the cost of utilities provided to any cafe available for the use of - 30 - Tenant in common with others; personnel, rent and other subsidies for the cafe (such subsidies not to exceed $20,000 per annum (in 2002 dollars) for the entire Building); all charges to Landlord reasonably and equitably allocable to the Building and the Lot for services performed in connection with the Building, the Lot and any common facilities appurtenant thereto and other buildings and properties with which they are jointly operated, including, without limitation, any shared parking facilities or other amenities, and, to the extent Landlord incurs additional charges applicable to the Building and/or the Lot together with one or more other buildings or properties, the pro rata share (as reasonably determined by Landlord) of such charges allocable to the Building and the Lot; and all other reasonable and necessary expenses paid in connection with the operating, administering, cleaning, maintaining and repairing of the Building and the Lot or either, and properly chargeable against income, it being also agreed that if Landlord installs a new or replacement capital item in order to comply with a legal requirement or interpretation thereof first arising after the date of this Lease, or for the purposes of reducing Operating Expenses, or for the purposes of complying with the terms of this Lease, the cost thereof as reasonably amortized by Landlord, with interest at the rate of interest charged to Landlord for borrowing funds to finance such item (or the rate that Landlord reasonably determines would have been charged if Landlord does not finance such item), on the unamortized amount, shall be included in Landlord's Operating Costs. In any calendar year in which the average annual occupancy of the Building is less than 100%, Landlord's Operating Costs as defined herein shall also include such additional costs as would reasonably have been incurred by Landlord with respect to the operation, administration, management, cleaning, maintenance and repair of the Property with 100% average annual occupancy. Payments for any services may be to Landlord or affiliates thereof provided the same are at reasonable rates consistent with the type of occupancy. 4.2.2 REAL ESTATE TAXES. Tenant shall pay to Landlord, as additional rent, Tenant's Pro Rata Share of Real Estate Taxes (as set forth in Section 4.2.3 below), if any, on or before the fifteenth (15th) day following receipt by Tenant of Landlord's Statement. The term "Real Estate Taxes" as used herein shall mean all taxes, impositions and charges of every kind and nature assessed by any governmental authority on the Lot, Building and improvements, and the reasonable expenses incurred by Landlord in connection with any proceedings for abatement of taxes and assessments with respect to any calendar year or fraction of a calendar year; together with the Building's allocable share of such taxes, impositions and charges with respect to other parcels on which any common facilities serving the Building are located, which Landlord shall become obligated to pay because of or in connection with the ownership, leasing and operation of the Lot, Building and improvements, subject to the following: There shall be excluded from Real Estate Taxes all income taxes, excise taxes, franchise taxes, and estate, succession, inheritance and transfer taxes, provided, however, that if at any time during the Term the present system of ad valorem taxation of real property shall be changed so that in lieu of the whole or any part of the ad valorem tax on real property, there shall be assessed on Landlord a capital levy or other tax on the gross rents received with respect to the Lot, Building and improvements, or both, or a federal, state, county, municipal, or other local income, franchise, excise or similar tax, assessment, levy or charge (distinct from any now in effect) measured by or based, in whole or in part, upon any such gross rents, then any and all of such taxes, assessments, levies or charges, to the extent so measured or based, shall be deemed to be included within the term "Real Estate Taxes." If the amount of Real Estate Taxes for the base year referred to in Section 1.1 hereof shall be calculated to reflect a fully leased and assessed building. - 31 - 4.2.3 TENANT'S PRO RATA SHARE OF OPERATING COSTS AND REAL ESTATE TAXES. If with respect to any calendar year falling within the Term or for any fraction of any calendar year falling at the beginning or end of the Term, Landlord's Operating Costs for a full calendar year exceed the Operating Cost Base or for any such fraction of a calendar year, exceed the corresponding fraction of the Operating Cost Base, then Tenant shall pay to Landlord, as additional rent, an amount (such amount being referred to as "Tenant's Pro Rata Share of Operating Costs") equal to the product of (i) the amount of such excess multiplied by (ii) Tenant's Pro Rata Share (which represents a fraction, the numerator of which is the Rentable Floor Area of the Premises and the denominator of which is the Total Rentable Floor Area of the Building and which fraction as of the date hereof is set forth in Section 1.1 hereof). Notwithstanding the foregoing, if any Operating Costs are incurred for a service which is not provided to one or more tenants who are not obligated to pay for a proportionate share of the cost of such service, then Tenant's Pro Rata Share thereof shall be based upon a fraction, the numerator of which is the Rentable Floor Area of the Premises and the denominator of which is the Total Rentable Floor Area of the Building less the rentable floor area of the premises of the tenant or tenants not receiving and not paying for such service. In addition, if with respect to any calendar year falling within the Term or for any fraction of any calendar year falling at the beginning or end of the Term, Real Estate Taxes for a full calendar year exceed the Real Estate Tax Base, or for any fraction of a calendar year exceed the corresponding fraction of the Real Estate Tax Base, then Tenant shall pay to Landlord, as additional rent, an amount (such amount being referred to as "Tenant's Pro Rata Share of Real Estate Taxes") equal to the product of (x) the amount of such excess multiplied by (y) Tenant's Pro Rata Share. (The sum of Tenant's Pro Rata Share of Operating Costs and Tenant's Pro Rata Share of Real Estate Taxes is referred to herein as "Tenant's Pro Rata Share of Expenses"). 4.2.4 LANDLORD'S ESTIMATES AT END OF TERM. Notwithstanding any other provision of this Section 4.2, if the Term expires or is terminated as of a date other than the last day of a calendar year, then for such fraction of a calendar year at the end of the Term, Tenant's last payment to Landlord under this Section 4.2 shall be made on the basis of Landlord's best estimate of the items otherwise includable in Landlord's Statement and shall be made on or before the later of (a) thirty (30) days after Landlord delivers such estimate to Tenant or (b) the last day of the Term, with an appropriate payment or refund to be made upon submission of Landlord's Statement. 4.2.5 TENANT'S AUDIT RIGHTS. Landlord agrees to make its books and records relating to Landlord's Operating Expenses available for examination during normal business hours at Landlord's principal office or its Manager's office upon reasonable notice by Tenant and its representatives; provided that any such examination or audit shall be by an employee of Tenant or an accounting firm or property management firm, the fees of which are not determined on a contingent basis, shall be at Tenant's sole cost and expense, and may be conducted only if a notice is sent by Tenant requesting the same not later than ninety (90) days following delivery of Landlord's Statement. If Tenant's audit discloses a discrepancy which the parties agree (or a court of competent jurisdiction determines in a final non-appealable order) involves an overcharge of Tenant's Pro Rata Share of Expenses for the period covered by such Landlord's Statement, Landlord shall provide Tenant with a credit against the next installment(s) of Tenant's Pro Rata Share of Expenses in the amount of the overpayment by Tenant. If such discrepancy as so agreed upon or determined involves an overcharge to Tenant of more than 5% in the - 32 - aggregate for such year, Landlord shall be responsible for the reasonable hourly fees of the accounting firm or auditing firm conducting the audit. 4.3 ESTIMATED PREMISES EXPENSE PAYMENTS. If, with respect to any calendar year or fraction thereof during the Term, Landlord estimates that Tenant will be obligated to pay Tenant's Pro Rata share of Expenses, then Tenant shall pay, as additional rent, on the first day of each month of such calendar year and each ensuing calendar year thereafter, estimated monthly payments of Tenant's Pro Rata share of Expenses (hereinafter "Estimated Monthly Expense Payments") equal to 1/12th of Landlord's estimate of Tenant's Pro Rata Share of Expenses for the respective calendar year, with an appropriate additional payment (or credit by Landlord against Tenant's future payments of Tenant's Pro Rata Share of Expenses) to be made within thirty (30) days after Landlord's Statement is delivered to Tenant. Landlord agrees it shall base the amount of Estimated Monthly Expense Payments on the preceding year's actual Expenses adjusted to reflect Landlord's good faith estimates of increases. Landlord may adjust such Estimated Monthly Expense Payments from time to time, but not more than once during each calendar year in general plus one time during each calendar year for each time during such calendar year space is added to the Premises, and Tenant shall pay, as additional rent, on the first day of each month following receipt of Landlord's notice thereof, the adjusted Estimated Monthly Expense Payment. 4.4 ELECTRICITY. Electricity to the Premises shall be submetered or check metered to the Premises. Tenant shall pay for all charges for electric consumption in the Premises as reasonably determined by Landlord based on readings of such submeters or check meters, but without mark-up above actual cost, within ten (10) business days of Landlord's invoice therefor, from time to time, but not more often than monthly; provided that upon written notice from Landlord, Tenant shall pay an estimate of such charges, as reasonably determined by Landlord from time to time, monthly at the same time and in the same manner as payments of Annual Base Rent, with appropriate payment (or credit against future electric charges) to be made annually based upon Landlord's revised estimates for the prior year. If at any time electric charges for the Premises are payable to the utility therefor, because of the installation of submeters or check meters or otherwise, Tenant shall pay such charges as they become due, in lieu of such payments to Landlord as described above. Landlord shall install check meters to the Premises at Landlord's cost and expense. Landlord shall have the exclusive right to designate the electric service provider and primary telecommunications provider to serve the Building. Tenant shall make arrangements for its own telecommunications service, using the existing cabling to the Building. Subject to reasonable coordination with Building management, Tenant shall have access to the basement demarcation point for the telecommunications provider in order to provide such telecommunication services to the Premises and to maintain such services. Tenant covenants and agrees that its use of electric current (exclusive of HVAC) shall not exceed 8.0 watts per square foot of rentable floor area and that its total connected lighting load will not exceed the maximum load from time to time permitted by applicable governmental regulations. In the event Tenant introduces into the Premises personnel or equipment which overloads the capacity of the Building system or in any other way interferes with the system's ability to - 33 - perform adequately its proper functions, supplementary systems including check meters may, if and as needed, in Landlord's discretion and at Landlord's option, be provided by Landlord, at Tenant's expense. Landlord shall not in any way be liable or responsible to Tenant for any loss or damage or expense which Tenant may sustain or incur if, during the Term of this Lease, either the quantity or character of electric current is changed or electric current is no longer available or suitable for Tenant's requirements due to a factor or cause beyond Landlord's reasonable control. 4.5 CHANGE OF FISCAL YEAR. Landlord shall have the right from time to time, but not more frequently than once every three years, to change the periods of accounting under Section 4.2 to any annual period other than a calendar year, and upon any such change all items referred to in this Section 4.5 shall be appropriately apportioned, provided that any such changes in fiscal year shall not result in any inequitable shifting of or increase for amounts payable to Landlord by Tenant. In all Landlord's Statements rendered under this Section 4.5, amounts for periods partially within and partially without the accounting periods shall be appropriately apportioned, and any items which are not determinable at the time of a Landlord's Statement shall be included therein on the basis of Landlord's estimate, and with respect thereto Landlord shall render promptly after determination a supplemental Landlord's Statement, and appropriate adjustment shall be made according thereto. All Landlord's Statements shall be prepared on a cash basis of accounting. 4.6 PAYMENTS. All payments, fees, charges or other monetary obligations due from Tenant to Landlord under this Lease (other than Annual Base Rent) shall constitute additional rent. All payments of Annual Base Rent and additional rent shall be made to Manager, or to such other person as Landlord may from time to time designate in writing. If any installment of Annual Base Rent or additional rent is not paid on the due date and such failure continues for ten (10) days, Tenant shall pay to Landlord, as additional rent, a late fee equal to four percent (4%) of the past due amount. Additionally, if any installment of Annual Base Rent or additional rent is paid more than ten (10) business days after the due date thereof, at Landlord's election, it shall bear interest at a rate equal to the prime rate of lending announced by the Wall Street Journal or another financial newspaper selected by Landlord, plus four percent (4%), or if less, the maximum amount permitted by law (the "Default Interest Rate") from such due date, which interest shall be immediately due and payable as further additional rent. ARTICLE V LANDLORD'S COVENANTS 5.1 LANDLORD'S COVENANTS DURING THE TERM. Landlord covenants during the Term: 5.1.1 BUILDING SERVICES. To furnish during normal working hours during the Term heat, air-conditioning, elevator service and hot and chilled domestic water service, and after normal working hours, to furnish cleaning services to the common areas and facilities of the Building in - 34 - accordance with the cleaning specifications attached as Exhibit I (5 days a week, except for legal holidays). "Normal working hours" shall mean the hours of 7:00 A.M. through 7:00 P.M. Monday through Friday and the hours of 9:00 A.M. through 1:00 P.M. on Saturdays, and no hours on legal holidays and Sundays; provided, however, that Tenant shall have access to the Building 24 hours a day, 365 days a year, by means of a key or other access device to the main lobby of the Building to be provided to Tenant by Landlord. Landlord shall provide a security guard in the lobby 24 hours a day, 365 days a year. Tenant shall pay when due all amounts and charges for such services during hours other than normal working hours at commercially reasonable rates from time to time established by Landlord and consistent with other Class A buildings in the East Cambridge/Kendall Square area and shall indemnify and hold harmless Landlord from and against any and all claims, liabilities, damages, losses, costs and expenses (including reasonable attorneys' fees) in connection therewith. Landlord is not and shall not be required to furnish to Tenant or any other occupant of the Premises telephone or other communication service. Tenant agrees that Landlord shall not provide cleaning service to the Premises and Tenant agrees to employ a cleaning service to do janitorial work in the Premises consistent with the standards applicable to a first class office building in the East Cambridge/Kendall Square area. The identity of Tenant's cleaning service shall be subject to the approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Landlord hereby approves of Tenant's use of its own employees for janitorial services for the Premises. Any person employed by Tenant for cleaning services shall, while in the Building, be subject to and under the control and direction of the Manager (but not as an agent or servant of the Manager or of Landlord). 5.1.2 ADDITIONAL BUILDING SERVICES. To furnish, through Landlord's employees or independent contractors, reasonable additional Building operation services upon reasonable advance request of Tenant at commercially reasonable rates from time to time established by Landlord to be paid by Tenant. 5.1.3 REPAIRS. Except as otherwise provided in Article VII, to make such repairs to the roof, exterior walls, floor slabs, other structural components and common facilities of the Building (including base building systems serving more than one tenant and, after Tenant's initial repair thereof as part of the Initial Tenant Improvements, any damage to the Premises caused by the expansion or contraction of the base Building, including damage to the connections between the windowsills and exterior panels within the Premises) as may be necessary to keep them in good working order and repair, reasonable wear and tear excepted, and to keep the Building common areas in compliance with law, except that Landlord shall not be in default of this provision unless such noncompliance interferes with Tenant's use and occupancy of the Premises 5.1.4 TENANT DIRECTORY AND EXTERIOR SIGNAGE. To include Tenant's name on the Tenant directory maintained by Landlord in the main lobby of the Building, and to include Tenant's name on standard building directory signage in the elevator lobby on the floor in the Building where the Premises is located. - 35 - So long as Tenant and its Affiliates (as defined in Section 6.1.6 hereof) are occupying at least 75% in the aggregate of the Premises (excluding any additional space leased by Tenant under its expansion rights, right of first offer or otherwise), Tenant, at its expense, may, on a non-exclusive basis, install a sign appropriate for a first class office building on the exterior of the Building near the main Building entrance provided that prior to any such installation (i) Tenant has received Landlord's approval of the design, size (which in no event shall exceed 33% of the total area of all signage permitted on the Building by applicable laws, codes, ordinances and regulations), materials, lettering and location of such sign, which approval shall not be unreasonably withheld, conditioned or delayed, and (ii) Tenant has obtained and provided to Landlord any approvals, permits, and licenses required under applicable laws, codes, ordinances, and regulations. Tenant shall removal any such sign prior to such time as Tenant vacates more than 25% of the Premises, and upon such removal Tenant shall restore any portion of the Building damaged by such removal to good order, repair and condition. 5.1.5 QUIET ENJOYMENT. That Landlord has the right to make this Lease and that Tenant on timely paying the rent and performing its obligations hereunder shall peacefully and quietly have, hold and enjoy the Premises throughout the Term without any manner of hindrance or molestation from Landlord or anyone claiming under Landlord, subject however to all the terms and provisions hereof. 5.1.6 LANDLORD'S INSURANCE. Landlord shall take out and maintain throughout the Term of this Lease the following insurance: (i) Commercial General Liability insurance for the Building and the common areas, consistent with that being maintained from time to time by reasonably prudent owners of Class A office buildings in the East Cambridge/Kendall Square Massachusetts area which are of like kind and quality to the Building and have office uses, and with t