LEASE AGREEMENT
VENTURE TECHNOLOGY CENTER VII BUILDING
8707 TECHNOLOGY FOREST PLACE
THE WOODLANDS, MONTGOMERY COUNTY, TEXAS
THIS LEASE AGREEMENT ("Lease") is made and entered into on this the 4th day
of April, 1997, between THE WOODLANDS CORPORATION, a Delaware corporation,
("Lessor"), and ARONEX PHARMACEUTICALS, INC., a Delaware corporation,
("Lessee").
l. Premises. Upon the terms and conditions hereinafter set forth,
Lessor does hereby lease, demise and let to Lessee and Lessee does hereby lease,
and take from Lessor, the following described premises ("Premises"):
All that certain tract or parcel of land containing approximately
3.6147 acres described in Exhibit "A" attached hereto ("Land"),
together with that certain structure to be constructed thereon by
Lessor having approximately 30,000 square feet of net rentable area
("Building") and a parking area;
known and referred to as Venture Technology Center VII Building ("Building"),
located at 8707 Technology Forest Place, The Woodlands, Montgomery County,
Texas. The Premises is shown on the site development plan attached hereto as
Exhibit "A-1" ("Site Plan").
2. Parking. Upon completion of the Building, a parking area providing
for approximately 81 parking spaces and access drives will be provided by Lessor
on the Land at no charge for the Initial Term, and any renewal thereof, in
accordance with the terms of the Lease.
"Initial Term", as used herein, shall mean the first 120 month term of the
Lease described in 3 below Lessee shall have the exclusive right to use the
parking areas and access drives during the Term for ingress and egress and
automobile parking, except that Lessor and any future owners shall have the
right to construct pathways in the forest preserves over the Land and utilize
the parking areas and access drives for ingress and egress and automobile
parking in connection with its rights and obligations under the Lease. During
the Term, Lessor shall keep the parking areas and access drives and the Building
exterior in a neat, clean and orderly condition, lighted and landscaped and
shall repair any damage to same. The use of such parking areas and access drives
shall at all times be subject to such reasonable rules and regulations as Lessor
may promulgate.
3. Term. The term of this Lease ("Term") shall commence on the date
("Commencement Date") which is the earlier of (a) 10 days after Lessor tenders
to Lessee possession of the Premises with all work to be performed by Lessor
pursuant to the tenant improvement letter attached hereto as Exhibit "B"
("Tenant Improvement Letter") substantially completed or (b) the day upon which
Lessee takes occupancy of the Premises, and shall expire on the last day of the
120th full calendar month following the Commencement Date, subject to earlier
termination as hereinafter provided. Lessor shall not be liable or responsible
for any claims, damages or liabilities of any nature whatsoever in connection
with or by reason of any delayed occupancy. Within 15 days following Lessee's
receipt from Lessor of a memorandum of this Lease specifying the Commencement
Date and date of expiration of the Term, Lessee agrees to execute the
memorandum.
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4. Use. Lessee shall use the entire Premises solely for general office,
research and development laboratory purposes , and for no other use.
5. Acceptance of the Premises. Upon taking possession of all or any
portion of the Premises, Lessee shall be deemed to have accepted the Premises,
to have acknowledged that the same are in the condition called for hereunder and
to have agreed that the obligations of the Lessor imposed by Exhibit "B"
attached hereto have been fully performed except for punch list items. Lessor
will use reasonable efforts to complete the punch list items within 30 days
after the Commencement Date (unless the failure to complete is due to events of
Lessee Delay as described Exhibit "B"). Lessee hereby waives any implied
warranty of Lessor that the Premises are suitable for their intended commercial
purpose and acknowledges and agrees that all of Lessee's obligations hereunder
(including without limitation, the obligation to pay rent) are independent of
any such implied warranty and agrees to perform all such obligations and pay
rent notwithstanding any breach or allegation of breach by Lessor of any such
implied warranty (which implied warranty as aforesaid is hereby waived by
Lessee).
6. Security Deposit. INTENTIONALLY DELETED.
7. Base Rent. The Base Rent, which Lessee hereby agrees to pay to
Lessor monthly, in advance, at Lessor's address stated above, shall be the
monthly sum calculated as described in Article 7 of the Tenant Improvement
Letter attached as Exhibit "B", due and payable on the first day of each
calendar month during the Term hereof, without offset or deduction, with a pro
rata portion being due and payable in advance for any partial month occurring at
the beginning of the Term.
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8. Additional Rent. Lessee agrees to pay all Operating Expenses (as
defined in Section 10 below) for the Premises. Within 90 days following the
completion of each Fiscal Year, Lessor will provide to Lessee a statement
showing in reasonable detail the Operating Expenses for the preceding Fiscal
Year, the Additional Rent due, and Lessor's reasonable estimate of Operating
Expenses for the then current Fiscal Year. Lessee shall, on or before 30 days
following receipt of said statement, pay to Lessor the amount of Additional Rent
due as provided herein, less the amount of Additional Rent paid in advance (if
any) during the preceding Fiscal Year. Any overpayment will be credited by
Lessor to the next rental payment(s) due on or before 30 days after delivery of
the statement to Lessee. Lessee agrees to pay Additional Rent each month
thereafter, in addition to Base Rent, in an amount necessary to amortize the
estimated Operating Expenses for the then current Fiscal Year over a period
equal to the lesser of (i) the number of months remaining in the Term on a pro
rata basis or (ii) the number of months remaining in the current Fiscal Year.
Notwithstanding that the Term has expired or been terminated, Lessee shall
remain liable for and agrees to pay to Lessor within 30 days following receipt
of an invoice therefor, Operating Expenses for the Fiscal Year during which the
Term expired or was terminated. Lessee shall have the right, at its expense and
at a reasonable time, to audit Lessor's books relevant to the Additional Rent
due under this Section. In the event Lessee determines that Lessor has
overstated Lessee's Additional Rent in any Fiscal Year by greater than 3%, then
Lessor agrees to promptly refund any overpayment to Lessee after written notice
from Lessee, accompanied by evidence substantiating the overpayment, and to
reimburse Lessee for Lessee's reasonable costs of the audit, not to exceed
$1,000.00. If Lessor and Lessee are unable to agree upon the accuracy of any
such statement, either party may initiate a civil suit in any court of competent
jurisdiction and the amount of said Additional Rent shall be paid to Lessor
pending the rendering of a decision. The term "Fiscal Year", as used herein,
shall mean Lessor's fiscal year for accounting purposes which currently is the
12-month period beginning January 1 and ending December 31. Lessor shall have
the right to change the Fiscal Year, from time to time, and, in such event,
Lessor shall notify Lessee in writing of such change. Lessee also agrees to pay
to Lessor, as Additional Rent, a management fee ("Management Fee") of 3% of the
annual Base Rent. Lessee agrees to pay the Management Fee each month, in
addition to other Additional Rent and Base Rent, during each Fiscal Year in an
amount necessary to amortize the Management Fee and Additional Rent due for the
then current Fiscal Year over a 12 month period. For the Fiscal Year in which
the Term begins or ends, Lessee shall only be responsible for the amortized
Management Fee and Additional Rent due for the months of each such Fiscal Year
that the Lease is in force. This Section of the Lease is subject to the terms of
Section 6. of Rider 1 to the Lease.
9. Payment of Rentals. Lessee covenants to promptly pay all rentals
when due and payable. A late charge of 7% shall be added to any payment of Base
Rent or Additional Rent which is more than 10 days past due in order to
compensate Lessor for the extra administrative expenses incurred. If Lessor
shall pay any monies or incur any expenses in correction of violations of the
covenants herein set forth, the amounts so paid or incurred shall, on notice to
Lessee, be considered additional rent payable by Lessee with the first
installment of Base Rent thereafter to become due and payable, and may be
collected or enforced as by law provided in respect of rentals.
10. Operating Expenses. The term "Operating Expenses" means all of
Lessor's costs, expenses and disbursements (but not acquisition of capital
investment items, except as hereinafter
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expressly provided or specific costs billed to specific lessees) to operate and
maintain the Land, the Building, and all improvements on the Land from time to
time (to the extent and only to the extent same are Lessor's obligation to pay
or furnish under the other provisions of this Lease), including, but not limited
to, Lessor's costs of providing utilities, including, but not limited to
lighting; porter services and supplies; refuse removal (if Lessor elects to
furnish this service); courtesy guard services; landscaping, including
irrigation; and general maintenance and repairs, including, but not limited to,
repairs to roof surface and preventive maintenance, parking area restriping,
exterior painting and other activities. Operating Expenses shall also include a
reasonable amortization charge on account of any capital expenditure incurred to
effect a reduction of Operating Expenses and a reasonable charge for
amortization of all capital items Lessor installs (a) to reduce Operating
Expenses, so long as the amortization charge never exceeds the savings in any
future year, or (b) which Lessor is required to install on or for the benefit of
the Building by any governmental law, code or regulation passed or enacted on or
after the Commencement Date, or (c) which is a replacement (as opposed to
additions or new improvements) of items located in the common areas adjacent to
the Building, the parking area and other facilities used in connection with the
Building, or involving the exterior of the Building, including, but not limited
to, the roof and structural elements. Additionally, Operating Expenses shall
include all ad valorem taxes or assessments, and Annual Assessments of The
Woodlands Commercial Owners Association which accrue against the Building or the
Land during the Term, together with all insurance premiums which Lessor is
required to pay or deems necessary to pay with respect to the Building or the
Land, including, but not limited to, casualty insurance and liability insurance.
11. Utilities. Lessor shall make available to the Building gas,
electricity, water and sewer facilities. Lessee agrees to assume all costs and
expenses for water and sewer, except as herein provided, gas, electricity,
telephone, and any other service needed for its use at the Premises, including
any license or deposit required to establish or maintain such services, and the
costs of hook-up. Lessor agrees to pay all costs and expenses for water and
sewer service. The cost of these services shall be included with Operating
Expenses as defined in Section 10 hereof. Lessee shall promptly pay for all
utility services furnished to the Premises during the term of this Lease. Lessor
shall under no circumstances be liable to Lessee in damage or otherwise for any
interruption in service of water, electricity, heating, air conditioning or
other utilities or services caused by govern mental regulation, emergencies,
Acts of God, by the making of any necessary repairs or improve ments, or by any
cause beyond Lessor's reasonable control. Lessor shall endeavor in good faith to
give at least 24 hours notice to Lessee when any necessary interruption in
service will be made by Lessor. Notwithstanding the preceding sentence, if there
shall occur an interruption or discontinuance of utilities or services to be
provided or made available by Lessor of such nature that (i) Lessee is unable
to, or does not, make normal use of the Premises, (ii) such interruption or
discontinuance has not been caused in whole or substantial part, directly or
indirectly, by the gross negligence or willful misconduct of Lessee, or Lessee's
agents, employees, contractors, subcontractors, subtenants or assignees, (iii)
the interruption or continuance is within the control of Lessor, and (iv) Lessee
shall have given written notice to Lessor respecting such interruption or
discontinuance and Lessor shall have failed to cure such interruption or
discontinuance for 5 consecutive business days after Lessor receives said
notice, then all Base Rent and Additional Rent
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payable herein shall automatically abate from the expiration of the 5 day
period, until such time as the services or utilities are restored or Lessee
begins normal use of the Premises again, whichever occurs first, and Lessee
shall have the right to terminate the Lease if the interruption or
discontinuance, which meets the requirements of (i) - (iv) above continues for
more than 30 days. For purposes of determining whether there is an interruption
or discontinuance of utilities or services, an outage or series of outages
totalling 6 hours or more between 7:00 a.m. and 6:00 p.m. on any day, Monday
through Friday, excluding Holidays, shall constitute an interruption or
discontinuance of services or utilities for such day, but outages that are of
shorter duration shall not be considered. In the event of any such interruption,
however, Lessor shall use reasonable diligence to restore such service. For
purposes of this Section, all existing improvements in the Premises shall be
deemed to be "building standard".
12. Peaceful Enjoyment. Lessee shall and may peacefully have, hold and
enjoy the Premises for the Term, subject to the terms and conditions of this
Lease, provided that Lessee pays the rentals and other sums herein recited and
performs all of its covenants and agreements herein contained. It is understood
and agreed that this covenant and any and all other covenants of Lessor
contained in this Lease shall be binding upon Lessor and its successors and
assigns, but only with respect to breaches occurring during its and their
respective ownership of Lessor's interest hereunder.
13. Alterations, Additions and Improvements. Lessee shall not make or
allow to be made any alterations or physical additions in or to the Premises
without first obtaining the written consent of Lessor, which consent shall not
be unreasonably withheld or delayed, except that Lessee shall not be required to
obtain Lessor's consent for alterations or additions to the Premises the cost of
which do not exceed $10,000.00 in the aggregate, provided such alterations or
additions do not affect the structural integrity of the Building or the
mechanical systems thereof. Lessor shall not be liable as a result of any such
consent for completeness, design sufficiency, or compliance with any law,
ordinance, order, rule, or regulation and Lessee shall indemnify, defend and
hold Lessor harmless from all claims, demands, damages, causes of action or
litigation, arising out of or resulting from such consent. Prior to performing
any alterations or additions with the request for consent, Lessee must submit to
Lessor detailed plans and specifications for the proposed alterations or
physical additions. Any and all alterations, additions or improvements, other
than that portion of the initial tenant improvements which are to be provided by
Lessor pursuant to the terms of Exhibit "B" hereto, shall be made at Lessee's
sole expense. All such alterations, additions or improvements shall, upon
completion, become the property of Lessor and shall be surrendered to Lessor
upon the termination of this Lease by lapse of time or otherwise; provided,
however this clause shall not apply to removable equipment, trade fixtures, or
furniture owned by Lessee and which can be removed without damage to the
Building or the Premises, or if there will be damage, said damages are repaired
by Lessee at Lessee's expense and Lessor approves the repairs, provided there is
no default by Lessee in any of the terms and conditions of the Lease.
14. Exterior Repairs. Lessor will keep the exterior of the Building,
including any doors, windows, or glass, in repair, provided Lessee shall give
Lessor written notice of the necessity for such repairs, and provided that the
damage thereto shall not have been caused by the negligence of
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Lessee, its agents, employees, licensees or invitees, in which event Lessee
shall be responsible therefor for the cost, except as may be provided for in the
Lease. Lessor shall be under no liability for repair, maintenance, alteration or
any other action with reference to any plumbing, electrical or other mechanical
installation within or serving the Premises or any part thereof, except for the
service lines leading to the Premises. Lessor agrees that Lessee will receive
the benefit of all warranties received by Lessor on the improvements and
mechanical systems.
15. Operation by Lessee. Lessee agrees to (a) keep the inside of all
glass in the doors and windows of the Premises clean; (b) keep all interior
surfaces of the Premises clean; (c) replace promptly, at its expense, any
cracked or broken window glass inside the Premises with glass of like kind and
quality; (d) maintain the Premises in a clean, orderly and sanitary condition
and free of insects, rodents, vermin and other pests; (e) keep any garbage,
trash, rubbish or refuse in rat-proof containers within the interior of the
Premises until removed from the area; (f) have such garbage, trash, rubbish and
refuse removed at its expense on a regular basis from location points and at
such times as designated by Lessor, if said service is not provided by Lessor;
(g) keep all mechanical apparatus free of vibration, noise or pollution which
may be transmitted beyond the Premises; (h) comply with all laws, ordinances,
rules and regulations of the Fire Underwriters Rating Bureau now or hereafter in
affect; (i) conduct its business in all respects in a manner in accordance with
normal customary industry practices and (j) the terms of this Section 15. Lessor
understands that Lessee intends to work with hazardous materials, but that such
use will comply with all present and future federal, state and local government
laws, ordinances, orders, rules and regulations.
In addition, Lessee shall not (a) place or maintain any merchandise or
other articles in any vestibule or entry of the Premises, on the footwalks
adjacent thereto or elsewhere on the exterior of the Premises or Building
without the written reasonable consent of Lessor; (b) permit undue accumulation
of garbage, trash, rubbish or other refuse within or without the Premises; (c)
cause or permit objectionable odors to emanate or be dispelled from the
Premises; (d) occupy, use or permit the use or occupancy of any portion of the
Premises for any business or purpose which is immoral, disreputable or in
violation of any legal direction of any public officer; or (e) occupy, use or
permit the use or occupancy of any portion of the Premises for any business or
purpose which, in the opinion of Lessor, reasonably formed, constitutes a public
or private nuisance.
Lessor shall have the right, upon written approval by Lessee, to
provide for rubbish and refuse removal services as required of Lessee above, and
Lessee agrees to reimburse Lessor for the cost incurred in providing such
service, provided the cost of the service provided by Lessor is competitively
priced, within 30 days after receipt of a statement setting forth the cost of
such service.
Lessee agrees to discharge all waste materials from the Premises in
compliance with the rules and regulations as set forth in The Woodlands Metro
Center Municipal Utility District Policy Manual - Industrial Waste Discharges -
Permits and Charges - No. R&S-50, issued July 12, 1979, with an effective date
of July 12, 1979, as it may be amended from time to time. Lessee shall haul away
for disposal at its own expense, any waste material not meeting the standards
for discharge set forth in the above-referenced manual.
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Lessee shall comply, at Lessee's cost and expense, with all private
restrictions encumbering the Land and all present and future laws, ordinances,
orders, rules, regulations and requirements of all federal, state, and municipal
governments, including all municipal and road utility districts and municipal
utility districts, and all departments, commissions, boards and officers
thereof, and any other body exercising similar functions, which now or hereafter
may be applicable to the Premises, the improvements in the Premises, or to the
use or manner of use of the Premises or the improvements, including but not
limited to, all environmental laws and the Americans With Disabilities Act. In
the event of a violation of any environmental law by Lessee and cleanup of
contamination is required, in addition to all other remedies of Lessor under
this Lease or at law or in equity, Lessee shall conduct a Standard 1 cleanup so
that there is a total and complete removal of all contaminates from the
Premises. Lessee agrees that no such cleanup shall be subject to a risk
reduction standard and no deed recordation notice shall be recorded against the
Premises.
Lessee also agrees to comply with the Rules and Regulations of the
Building, a copy of which is attached as Exhibit "C". Lessor may amend said
Rules and Regulations, from time to time, if reasonably necessary for the
safety, care, or cleanliness of the Building, provided that no amendment shall
alter any covenant or provision contained in this Lease. Lessee agrees to comply
with any amendment which is made to said rules and Regulations in compliance
with the terms of this subsection after Lessee receives written notice of the
amendment.
16. Interior Repairs and Maintenance. Except as provided for in the
Lease, Lessee will, at Lessee's cost and expense, keep the interior of the
Premises, together with all electrical, plumbing and other mechanical
installations therein, all heating and air conditioning equipment, and all
interior windows or doors serving the Premises, in good order and repair, and
will make all replacements thereto as its expense. Lessee will surrender the
Premises at the expiration or earlier termination of this Lease, in as good
condition as when received, excepting depreciation caused by ordinary wear and
tear or casualty covered by insurance. Lessee will not overload the electrical
wiring serving the Premises or within the Premises, and will install at its
expense, but only after obtaining Lessor's reasonable written approval, any
additional electrical service which may be required in connection with Lessee's
use or occupancy. Notwithstanding anything herein to the contrary, Lessor, and
not Lessee, shall be liable for any and all interior repairs which may result
from any structural failure of the Building, unless caused by Lessee, its
agents, employees or invitees. Lessee will repair promptly, at its expense, any
damage to the Premises caused by bringing into the Premises any property for
Lessee's use, or by the installation or removal of such property, regardless of
fault or by whom such damage was caused, unless caused by Lessor, its agents,
employees or contracts. Upon execution of this Lease, Lessee, at its own cost
and expense, shall enter into a regularly scheduled preventative
maintenance/service contract with Lessor, or a maintenance contractor approved
by Lessor, for servicing all hot water, heating, and air-conditioning systems
and equipment within the Premises. If Lessee fails to make such repairs and/or
to perform the maintenance and repairs to the Premises which are Lessee's
obligation under this Lease, Lessor may make same, and Lessee agrees to pay, as
additional rent, the cost thereof, plus 10% overhead, to Lessor promptly upon
Lessor's demand therefor.
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17. Roof and Walls. Lessor or its designee shall have the exclusive
right (a) to erect in connection with the construction thereof temporary
scaffolds and other aids to construction on the exterior of the Premises,
provided that access to the Premises shall not be denied; and (b) to install,
maintain, use, repair and replace within the Premises, pipes, ducts, conduits,
wires and all other mechanical equipment serving other parts of the Building,
the same to be in locations within the Premises as will not materially interfere
with Lessee's use thereof. Lessee shall have no right to penetrate or erect
improvements on the roof without the prior written consent of Lessor, which
consent shall not be unreasonably withheld or delayed, and any approval by
Lessor will require Lessee executing Lessor's license agreement. Lessee shall be
liable in damages to Lessor for any breach of this provision, including damages
for loss of any and all warranties.
18. Signs and Advertising. Lessee will not place or suffer to be placed
or maintained on or displaced to the exterior of the Premises, any sign,
advertising matter or other thing of any kind, and will not place or maintain
any decoration, lettering or advertising matter on the glass of any window or
door of the Premises without first obtaining the written approval of Lessor,
which consent shall not be unreasonably withheld or delayed. Lessee will
maintain any approved sign, decoration, lettering, advertising matter or other
thing in good condition and repair at all times.
19. Entry by Lessor. Lessee shall permit Lessor or Lessor's agents,
representatives, or employees to enter upon the Premises at reasonable times,
and upon having given Lessee reasonable advance notice, (a) to inspect the
Premises, to determine whether Lessee is in compliance with the terms of this
Lease; (b) to show the Premises to prospective purchasers, lessees, mortgagees,
bene ficiaries under trust deeds, or insurers (but as to prospective lessees
only during the last 6 months of the Term), and (c) to make repairs,
improvements, additions and alterations thereto, as Lessor is permitted to make
according to the terms of the Lease. Any inspections of the Premises pursuant to
this subsection shall be at Lessor's cost and expense; provided, however, in the
event it is determined by Lessor that an environmental study should be conducted
on the Premises and said environmental study determines that Lessee has not
complied with all then existing environmental laws, Lessee shall reimburse
Lessor for the cost of the study within 15 days after receipt of an invoice
setting forth the cost, and Lessee shall promptly take all action necessary, at
Lessee's sole expense, to remedy any noncompliance by Lessee discovered by such
study in accordance with Section 15 above.
20. Liens. In the event that any mechanic's, materialmen's, or other
lien shall at any time be filed against the Premises, the Building or the Land
purporting to be for work, labor, services or materials performed for or
furnished to Lessee or anyone holding the Premises through or under Lessee, or
arising out of any alleged act or omission of Lessee, Lessee shall forthwith
cause the same to be properly bonded or released. If Lessee shall fail to cause
such lien to be bonded or released within 15 days after being notified of the
filing thereof, then, in addition to any other right or remedy of Lessor, Lessor
may, but shall not be obligated to, discharge the same by posting a bond or
paying the amount claimed to be due, and the amount so paid by Lessor, and all
costs and expenses incurred by Lessor in procuring the discharge of such lien,
including reasonable attorney's fees, shall be due and payable by Lessee to
Lessor as additional rent on the first day of the next succeeding month.
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Lessor shall not be liable for any labor or materials furnished to Lessee upon
credit, and that no mechanics', materialmen's or other liens for any such labor
or materials shall attach to or affect the estate or interest of Lessor in and
to the Land or Building.
21. Subordination. Lessee agrees that this Lease is and shall be
subordinate to any mortgage or deed of trust which may now or hereafter encumber
the Building or the Land, and to all renewals, modifications, consolidations,
replacements and extensions thereof, provided, however, that the holder of any
such mortgage or deed of trust shall agree that Lessee shall not be disturbed in
its possession of the Premises or its rights hereunder terminated or amended by
the mortgagee, any purchaser at or in lieu of foreclosure or other party so long
as Lessee is not in default under this Lease. Lessor agrees to use reasonable
efforts to obtain a nondisturbance agreement in a commercially reasonable form
from its lender at the time a mortgage or deed of trust is placed upon the
Building or Land. In confirmation of such subordination, Lessee shall at
Lessor's request execute promptly any appropriate certificate or instrument that
Lessor may reasonably request. In the event of the enforcement by the trustee or
the beneficiary under a mortgage or deed of trust of the remedies provided for
by law or by such mortgage or deed of trust, Lessee will, upon request of any
person or party succeeding to the interest of Lessor as a result of such
enforcement, automatically become the lessee of such successor in interest
without change in the terms or other provisions of this Lease; provided,
however, that such successor in interest shall not be bound by (i) any payment
of Base Rent or Additional Rent for more than one month in advance except
prepayments in the nature of security for the performance by Lessee of its
obligations under this Lease; (ii) any amendment or modifications under this
Lease made without the written consent of such trustee, beneficiary, or
successor in interest; (iii) any default by the prior owner or landlord in the
observance or performance of any of its covenants or obligations hereunder any
right of offset which Lessee may have had against the prior owner or landlord.
Upon request by any successor in interest, Lessee shall execute and deliver an
instrument or instruments confirming the attornment herein provided for.
Within 15 days after Lessor's request, Lessee agrees to execute an
estoppel certificate or other agreement certifying to Lessor and/or any
mortgagee of the Building such facts and agreeing to such reasonable notice
provisions as such mortgagee may request in connection with Lessor's financing,
subject, however, to the non-disturbance rights of Lessee above-described. If
Lessee fails or refuses to give a certificate hereunder within the time period
herein specified, then the information contained in such certificate as
submitted by Lessor shall be deemed correct for all purposes, and all notice
provisions and other matters in the certificate shall be deemed agreed to, but
Lessor shall have the right to treat such failure or refusal as default by
Lessee.
This Lease and all rights of Lessee hereunder are further subject and
subordinate to the extent that the same relate to the Premises to all ground or
underlying leases covering the Land/or any part thereof which may now or
hereinafter affect the Land or the Building, and any renewals or modifications
thereof; provided, however that the holder of any ground lease or underlying
leases covering the Land or the Building shall agree that Lessee shall not be
disturbed in its possession of
9
the Premises or its rights hereunder terminated or amended by such holder as
long as Lessee is not in default under this Lease.
22. Condemnation. If the whole or any part of the Premises shall be
taken under the power of eminent domain, this Lease shall terminate as to the
part so taken on the date Lessee is required to yield possession thereof to the
condemning authority. Lessor shall, with reasonable diligence, make such repairs
and alterations as may be necessary in order to restore the part not taken to a
useful condition, and the Base Rent shall be reduced proportionately to the
portion of the Premises so taken. If the amount of the Premises so taken
substantially impairs the usefulness of the Premises for the purposes set forth
in Section 4 , either party may terminate this Lease within 30 days after Lessee
is dispossessed, effective as of the date when Lessee is required to yield
posses sion. All compensation awarded for any taking shall belong to and be the
property of Lessor.
23. Fire and Casualty. In the event of a fire or other casualty in the
Premises, Lessee shall immediately give notice thereof to Lessor. If the
Premises, through no fault or neglect of Lessee, its agents, employees,
invitees, licensees or visitors, shall be destroyed by fire or other casualty so
as to render the Premises untenantable, the rental herein shall be reduced
proportionally to the portion of the Premises rendered untenantable until such
time as the Premises are made tenantable by Lessor. If from such cause the same
shall be so damaged that Lessor shall decide not to rebuild, then all rent and
other sums owed hereunder up to the time of such destruction or casualty shall
be paid by Lessee, and thenceforth this Lease shall cease and come to an end.
Notwithstanding anything contained herein to the contrary, if within 60 days of
the fire or casualty it is determined that the Premises cannot be restored
within 150 days from the date of the fire or casualty, Lessor shall give written
notice to Lessee. Lessee shall have the right within 60 days from the date of
Lessor's notice to terminate the Lease. Further, notwithstanding anything
contained herein to the contrary, in the event the Building shall be destroyed
or damaged prior to the final 2 years of the then current Lease Term to such
extent that rebuilding or repairing can be completed within 150 days from the
date of the damage, Lessor shall, at its sole cost and expense, diligently
proceed forthwith to rebuild and repair said Premises as closely as possible to
the Building to be constructed in accordance with Exhibit "B", except that
Lessor shall not be obligated for such repair in an amount in excess of the
insurance proceeds recovered as a result of such damage or which could have been
recovered had Lessor maintained the insurance Lessor was required to maintain in
this Lease. If the Premises should be substantially damaged by fire or other
casualty during the final 2 years of the Lease Term, Lessor shall not be
required to rebuild or repair such damage and at Lessor or Lessee's option, by
written notice to the other within 60 days after the date of the damage, this
Lease shall terminate and all Base Rent and Additional Rent shall be abated as
of the date of the damage. However, if during the last 2 years of the then
current Lease Term, Lessor shall exercise said right of termination and at that
time Lessee shall have the right to renew the Lease Term, Lessee may render
Lessor's notice of termination nugatory and reinstate Lessor's obligation to
rebuild, provided that Lessee, within 15 days of receipt of Lessor's notice of
termination, exercises its right to renew the Term of the Lease.
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24. Casualty Insurance. Lessor shall, at all times during the Term,
maintain a policy or policies of insurance with the premiums thereon fully paid
in advance, issued by and binding upon some solvent insurance company, licensed
to do business in the State of Texas, insuring Lessor's interest in the Building
against loss or damage by fire and other hazards within the coverage of a Texas
standard form of fire and extended coverage policy, for the full replacement
value thereof, with payments for losses thereunder payable solely to Lessor or
its designee. Lessee shall maintain in force a like policy insuring Lessee's
interest in any furniture, equipment, machinery, goods or supplies which Lessee
may bring or obtain upon the Premises.
25. Liability Insurance. Lessee shall maintain, at its expense, at all
times during the Term, a policy or policies of commercial general liability
insurance, with the premiums thereon fully paid in advance, issued by (i) an
insurance company or companies rated "A-" or higher under the most current
edition of A.M. Best's Key Rating Guide, (ii) a Lloyds of London underwriter, or
(iii) an insurance company agreed to by Lessor. All insurers must be licensed to
do business in the State of Texas. The insurance shall afford protection of not
less than $1,000,000 combined single limit bodily injury and property damage per
occurrence. The policy or policies shall name Lessor as an additional insured.
As to any injury or damage occurring in or on the Premises, Lessee's insurance
shall be primary. Lessee's policy shall contain an agreement by the insurer that
such policy, or policies may not be cancelled or materially modified without 30
days' prior notice to Lessor. Lessee shall provide Lessor a copy of the required
policy or policies, or a certificate evidencing the required coverage, before
beginning any work in the Premises or taking occupancy of same. Additionally,
Lessee shall provide Lessor evidence of the renewal of each policy at least 30
days before the expiration of the policy.
26. Release of Claims; Waiver of Subrogation. Anything in this Lease to
the contrary notwithstanding, Lessor and Lessee each waive any and all right of
recovery, claim, action or cause of action against the other and its partners
(if any), and the agents, officers, and employees of the other party or its
partners, for any loss or damage:
(i) to the Premises, the Building, or any improvements
thereto, or any personal property of such party
therein, by reason of fire, the elements or any other
cause which could have been insured against under a
Texas standard form of fire and extended coverage
insurance policy, or
(ii) arising out of any business interruption, including
but not limited to loss of profits, by reason of
fire, the elements or any other cause,
regardless of cause or origin, including the sole or concurrent negligence of
the other party or its partners, or the agents, officers, or employees of the
other party or its partners. Lessor and Lessee covenant that no insurer shall
hold any right of subrogation against the other party for losses which must be
insured against by the terms of this Lease. This Section shall survive the
termination of this Lease.
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27. Release and Indemnification by Lessee. Subject to Section 26 above,
Lessee releases and agrees to defend, indemnify and hold Lessor and its
partners, and the agents, officers and employees of Lessor or its partners,
harmless from and against all claims or causes of action for damage or injury or
death to persons or property occurring on or in the Premises, including, but not
limited to, any claims or causes of action caused by or resulting from (i) the
negligence, but not the gross negligence or willful misconduct of Lessor or its
partners, or the agents, officers, or employees of Lessor or its partners, or
(ii) strict liability or product liability. Subject to Section 26 above, Lessor
releases and agrees to defend, indemnify and hold Lessee and its partners, and
the agents, officers and employees of Lessee or its partners, harmless from and
against all claims or causes of action for damage or injury or death to persons
or property occurring on or in the Premises, including, but not limited to, any
claims or causes of action caused by or resulting from (i) the negligence, but
not the gross negligence or willful misconduct of Lessee or its partners, or the
agents, officers, or employees of Lessee or its partners, or (ii) strict
liability or product liability. This Section shall survive the termination of
this Lease.
28. Holding Over. In the event of holding over by Lessee after the
expiration or termination of the Term and without the written consent of Lessor,
Lessee shall be a tenant at will and shall pay monthly rent equal to 150% of the
amount of all Base Rent, and Additional Rent pay able during the last month of
the Term. Further, Lessee shall indemnify Lessor against all actual damages by
any other lessee to whom Lessor may have leased all or any part of the Premises.
Lessor may terminate the tenancy by giving written notice to Lessee. No holding
over by Lessee, either with or without the consent and acquiescence of Lessor,
shall operate to extend the Lease for a longer period than l month. Any holding
over with the consent of Lessor in writing shall thereafter constitute this
Lease a lease from month to month.
29. Default by Lessee. If (a) Lessee fails to timely pay any sum to be
paid by Lessee under this Lease and such default continues for 5 business days
after Lessor delivers written notice of such failure to pay to Lessee or
deposits written notice in the U. S. Mail addressed to Lessee's address set
forth in Section 35; (b) Lessee fails to perform any of its other duties or
obligations under this Lease and such default continues for 20 days after Lessor
delivers written notice to Lessee or deposits written notice in the U. S. Mail
addressed to Lessee's address set forth in Section 35, provided such notice sets
forth the nature and extent of such default. The period of time to cure such a
default described in this subparagraph (b) shall be extended, provided Lessee
commences to cure such default within said 20 days and continues to completion
with due diligence, speed and continuity, said period of extension, however, not
to exceed 40 days from the expiration of the 20 days; (c) any of the following
actions occur and Lessee fails to vigorously contest and cause same to be
removed, dismissed, or vacated within 30 days from the date of entry or filing:
(i) Lessee's interest under this Lease is levied on under execution or other
legal process, or (ii) any petition is filed by or against Lessee to declare
Lessee a bankrupt or to delay, reduce or modify Lessee's debts or obligations,
or (iii) any petition under the Bankruptcy Code is filed or other action taken
to reorganize or modify Lessee's capital structure, or (iv) Lessee is declared
insolvent according to law, or (v) any general assignment of Lessee's property
is made for the benefit of creditors, or (vi) a
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receiver or trustee is appointed for Lessee or its property; (d) Lessee vacates
or abandons the Premises and does not pay rent provided for herein; (e) if
Lessee is a corporation, Lessee ceases to exist as a corporation in good
standing in the State of Texas; or (f) if Lessee is a partnership or other
entity, Lessee is dissolved or otherwise liquidated, then Lessor may treat the
occurrence of any one or more of the foregoing events as a breach of this Lease.
Upon the occurrence of any of the foregoing events, at Lessor's option, Lessor
shall have any one or more of the following described remedies, in addition to
all other rights and remedies provided at law or in equity:
A. Lessor may terminate this Lease and forthwith repossess the
Premises and recover damages in a sum of money equal to the total of (i) the
cost of recovering the Premises, including the cost of the removal and storage
of any of Lessee's possessions left within the Premises, (ii) the unpaid Base
Rent and Additional Rent earned at the time of termination, plus interest
thereon at the lesser of 18% or the then maximum interest rate permitted to be
charged by applicable law ("Interest") from the due date until paid, (iii) the
balance of the Base Rent and Additional Rent for the remainder of the Term,
discounted to its present value at the rate of 6% per annum, less the fair
market rental value (allowing a reasonable period for reletting) of the Premises
for said period (provided said sum shall not be less than zero), and (iv) any
other sum of money and damages owed by Lessee to Lessor.
B. Without terminating this Lease, Lessor may terminate
Lessee's right of possession and repossess the Premises by forcible detainer
suit or otherwise, without demand or notice of any kind to Lessee. If Lessor
pursues this remedy, Lessor may, but shall not be obligated to, relet the
Premises for Lessee's account, for such rent and upon such terms and conditions
as Lessor deems satisfactory. For the purpose of such reletting, Lessor is
authorized to decorate or to make any repairs, changes, alterations or
modifications in or to the Premises as it deems necessary to prepare the
Premises to relet at Lessee's expense. If Lessor fails to relet the Premises,
then Lessee shall pay to Lessor as damages a sum equal to the amount of the Base
Rent and Additional Rent provided for in this Lease for such period or periods.
If Lessor relets the Premises and fails to realize a sufficient sum from such
reletting after deducting (a) the due and unpaid Base Rent and Additional Rent,
(b) the accrued Interest thereon, (c) the cost of recovering possession, (d) the
costs and expenses of all decorations, repairs, changes, alteration and
modifications, and (e) the expense of such reletting and the collection of the
rent accruing therefrom, then Lessee shall pay to Lessor any such deficiency
upon demand from time to time. Lessor may file one or more suits to recover any
sums falling due under this Section from time to time. Any reletting shall not
be an election by Lessor to terminate this Lease unless Lessor gives a written
notice of such intention to Lessee. Notwithstanding any such reletting without
termination, Lessor may at any time thereafter elect to terminate this Lease for
such previous default.
C. Lessor may change the locks on the Premises. The Lessor
will not have to give the Lessee a new key unless the Lessee cures the
default(s); the new key will be provided only during Lessor's regular business
hours.
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30. Waiver. Failure of Lessor to declare any default immediately upon
occurrence thereof, or delay in taking any action in connection therewith, shall
not waive such default, but Lessor shall have the right to declare any such
default at any time and take such action as might be lawful or authorized
hereunder, either in law or at equity. Likewise, failure of Lessee to declare
any default immediately upon occurrence thereof, or delay in taking any action
in connection therewith, shall not waive such default, but Lessee shall have the
right to declare any such default at any time and take such action as might be
lawful or authorized hereunder, either in law or at equity.
31. Lien for Rent. Lessee hereby grants to Lessor a lien on all
property of Lessee now or hereafter placed in or upon the Premises, including,
but not limited to, all goods, wares, fixtures, machinery, equipment,
furnishings, and other articles of personal property , and all proceeds from the
sale or lease thereof (except such part of any property as may be exchanged,
replaced or sold from time to time in the ordinary course of business, operation
or trade), and such property shall be and remain subject to such lien of Lessor
for payment of all rent and other sums agreed to be paid by Lessee herein. This
Lease shall constitute a security agreement under the Texas Uniform Commercial
Code ("TUCC") so that Lessor shall have and may enforce a security interest in
all property of Lessee now or hereafter placed in or on the Premises, including
but not limited to all goods, wares, fixtures, machinery, equipment, furnishings
and other articles of personal property now or hereafter placed in or upon the
Premises by Lessee, and all proceeds from the sale or lease thereof. Lessee
agrees to execute as debtor such financing statement or statements as Lessor may
now or hereafter reasonably request in order that such security interest or
interests may be perfected pursuant to said TUCC. Lessor may at its election at
any time file a copy of this Lease as a financing statement. Lessor, as secured
party, shall be entitled to all of the rights and remedies afforded a secured
party under said TUCC, which rights and remedies shall be in addition to and
cumulative of the landlord's liens and rights provided by law or by the other
terms and provisions of this Lease.
Notwithstanding anything contained herein to the contrary, Lessor
agrees to subordinate its liens to bona fide liens to secure loans for the
purchase of furniture, equipment, and inventory using the subordination
agreement substantially in the form attached hereto as Exhibit "D".
32. Assignment by Lessor. Lessor shall have the right to sell, transfer
or assign, in whole or in part, all of its rights and obligations hereunder and
in the Building and the Land. In such event and upon the assumption by such
transferee of Lessor's obligations hereunder, no further liability or obligation
shall thereafter accrue against Lessor hereunder.
33. Assignment by Lessee. Lessee shall not assign this Lease or any
interest therein, nor sublet the Premises or any part thereof or any right or
privilege appurtenant thereto, nor permit any other person, firm or entity to
occupy or use the Premises or any portion thereof without first obtaining the
written consent of Lessor, which consent shall not be unreasonably withheld or
delayed. Lessor shall have the right, at its option, to terminate this Lease as
to any portion of the Premises covered by a proposed assignment or sublease, or
to approve any such assignment or sublease only upon the condition that (a) 50%
of all rentals, after all reasonable expenses associated with the assignment or
sublease are deducted, paid by the assignee or sublessee in excess of the
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rentals due from Lessee hereunder, shall be paid directly to Lessor, the
proposed assignee or sublessee is financially capable of assuming Lessee's
obligations hereunder, in the sole judgment of Lessor, and (b) the proposed
assignee or sublessee agrees to use the Premises only for the uses permitted by
Lessee under this Lease, and to comply with all of the other terms and
conditions of this Lease. Notwithstanding anything contained herein to the
contrary, if Lessor elects to terminate the Lease pursuant to this Section 33,
Lessee, no more than once during the initial Term, may rescind its request to
assign the Lease or sublet the Premises within 10 business days after Lessor's
notice of termination. Consent by Lessor to one assignment, subletting,
occupation or use by another person shall not be deemed to be a consent to any
subsequent assignment, subletting, occupation or use by the same or another
person. Consent to an assignment or sublease shall not release Lessee from
liability for the continued performance of the terms and provisions to be kept
and performed by Lessee hereunder, unless Lessor specifically and in writing
releases Lessee from said liability. In addition, an amendment, modification, or
extension of the Lease after the assignment or sublease shall not release Lessee
from liability for the continued performance of the terms and provisions to be
performed by Lessee hereunder. Any assignment or subletting by operation of law
or otherwise, (including without limitation, a transfer of controlling interest
in Lessee to any other person, firm or entity) without the prior written
reasonable consent of Lessor, shall be void and shall, at the option of Lessor,
terminate this Lease. Lessee covenants and agrees that when the prior written
consent of Lessor is obtained, and in the event the subletting or assignment is
to be arranged through public advertisement or listing of any kind, Lessee will
treat all applications for sublease or assignment in a uniform manner and will
award leases according to objective standards. No decision on any application
shall be made on the grounds of the applicant's race, color, religion, sex,
handicap, familial status, or national origin.
Notwithstanding anything contained to the contrary, it is agreed that
the requirement for prior written consent in this Section 33, an assignment or
subletting by operation of the transfer of the controlling interest in Lessee
relates to the protection of Lessor's economic rights and interests under this
Lease. The requirement for receiving Lessor's prior written consent shall not be
necessary if any such transfer does not have an adverse impact on Lessor's
economic rights and interests. "Transfer of the controlling interest", for
purposes of this Section 33 is defined to mean the transfer or accumulation, by
or in any one entity or person, of twenty percent (20%) or more of the corporate
shares or the voting rights that accompany ownership of corporate shares.
34. Notices. Any notice required or permitted to be given pursuant to
the terms of this Lease shall be sent by certified or registered U.S. mail to
Lessor at 2201 Timberloch Place, The Woodlands, Texas 77380, Attn: Property
Management, and to Lessee at 8707 Technology Forest Place, The Woodlands, Texas
77380. The place to which such notices shall be sent may be changed by either
party giving notice of such change to the other party in the manner hereinabove
provided. A notice shall be deemed given and received on the 3rd business day
following deposit in the U. S.
Mail as provided above.
35. Severability. If any of the provisions of this Lease shall
contravene or be invalid under the laws of the particular state, county, or
jurisdiction where applied, such contravention or
15
invalidity shall not invalidate the Lease or any other portions thereof and the
remainder of this Lease or the application thereof to other persons or
circumstances shall not be affected thereby.
36. Corporate Authority. If Lessee signs as a corporation, each of the
persons executing this Lease on behalf of Lessee represents and warrants that
Lessee is a duly organized and existing corporation, that Lessee has and is
qualified to do business in Texas, that the corporation has full right and
authority to enter into this Lease, and that all persons signing on behalf of
the corporation were authorized to do so by appropriate corporate actions.
37. Title. This Lease is subject to all matters of record in the Real
Property Records of Montgomery County, Texas. By execution of this Lease, Lessee
consents to all plats and replats of the Land, if any, in compliance with all
applicable laws.
38. Not an Offer. The submission of this Lease to Lessee shall not be
construed as an offer, nor shall Lessee have any rights with respect thereto
unless Lessor executes a copy of this Lease and delivers the same to Lessee.
39. Exhibits, Riders and Addenda. This Lease also includes and
incorporates herein for all purposes all attached Exhibits, Riders, and Addenda,
if any.
40. Joint and Several Tenancy. If more than one person executes this
Lease as Lessee, their obligations hereunder are joint and several, and any act
or notice of or to, or refund to, or the signature of, any one or more of them,
in relation to the renewal or termination of this Lease, or under or with
respect to any of the terms hereof shall be fully binding on each and all of the
persons executing this Lease as a Lessee.
41. Binding Effect. This Lease shall be binding upon and inure to the
benefit of the heirs, successors or assigns of Lessor and Lessee, subject to the
limitation on subleasing and assignment herein contained.
42. Entire Agreement. This Lease shall constitute the sole and only
agreement of Lessor and Lessee with regard to the Lease of the Premises, and
shall supercede any prior or contemporaneous oral or written agreements. This
Lease may not be altered, changed or amended, except by an instrument in
writing, signed by both parties hereto.
43. Pronouns. Pronouns which refer to either Lessor or Lessee shall be
construed to mean the appropriate number and gender intended.
44. Force Majeure. If either party shall be delayed or prevented from
the performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor troubles, inability to procure materials, restrictive
governmental laws or regulations or other cause without fault and beyond the
control of the party obligated (Lessee's financial inability, such as inability
to obtain financing or lack of capital, excepted), performance of such act shall
be excused for the period of
16
the delay, and the period for the performance of any such act shall be extended
by a period equal to the period of such delay; provided, however, nothing in
this Section shall excuse Lessee from the prompt payment of any rental or other
charge required of Lessee hereunder, except as may be expressly provided
elsewhere in this Lease.
45. General. Time is of the essence of this Lease. All rights and
remedies of Lessor and Lessee under this Lease shall be cumulative and none
shall exclude any other rights or remedies allowed by law. This Lease shall be
declared to be a Texas lease, and all of the terms hereof shall be construed
according to the laws of the State of Texas. Said Lease shall be performable
only in Montgomery County, Texas, and venue for any action hereunder shall lie
exclusively in Montgomery County, Texas or in the Southern District of Texas,
Houston Division, as appropriate.
IN TESTIMONY WHEREOF, the parties hereto have executed this Lease in
multiple counterparts, each of which shall constitute an original but
collectively shall constitute only one document, such execution to be effective
on the date first above written.
LESSOR
Date: April 4, 1997 THE WOODLANDS CORPORATION
By: s/s: Michael H. Richmond
-------------------
Name: Michael H. Richmond
Title: Executive Vice President
Originator
Legal
Financial
- ------------ ---------
LESSEE
Date: April 4, 1997 ARONEX PHARMACEUTICALS, INC.
By: s/s: James M. Chubb
--------------
Name: James M. Chubb
Title: President
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