1
EXHIBIT 10.29B
LEASE AMENDMENT NO. 3
THIS LEASE AMENDMENT NO. 3 (this "Amendment") is dated July 24, 1997,
for reference purposes only, and is made by and between AIRPORT ASSOCIATES, a
New Jersey general partnership ("Landlord"), and VIVUS, INC., a Delaware
corporation ("Tenant"). Terms which are capitalized in this Amendment and not
defined herein shall have the meanings ascribed to them in the Lease (as defined
below).
WITNESSETH
WHEREAS, Landlord and Tenant are parties to a certain Lease dated as of
January 1, 1997 (the "Original Lease"), as amended by Lease Amendment No. 1
dated as of February 15, 1997 (the "First Amendment") and Lease Amendment No. 2
of even date herewith (the "Second Amendment) (the Original Lease, as amended by
the First Amendment and Second Amendment, is hereinafter referred to as the
"Lease"), pursuant to which Landlord demised and leased to Tenant, and Tenant
hired and took from Landlord, certain premises located in Lakewood, New Jersey,
at 725 Airport Road (the "725 Premises"), 735 Airport Road (the "735 Premises"),
and 745 Airport Road (the "745 Premises") (the 735 Premises and 745 Premises are
sometimes herein referred to collectively as the "Premises"), as further
described in the Lease;
WHEREAS, on or about February 10, 1997, Tenant's contractor, Marshall
Contractors, Inc. (the "Contractor"), commenced construction of certain interior
improvements to the Premises (the "Tenant Improvements"); and
WHEREAS, Landlord and Tenant desire to enter into this amendment to
ratify and confirm that the construction of the Tenant Improvements does not
require Landlord's consent, to amend various provisions of the Lease with
respect to the construction and removal of the Tenant Improvements and other
Alterations made to the Premises by Tenant, and to make certain other amendments
to the Lease.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto,
Landlord and Tenant agree as follows:
1. Tenant Improvements. Landlord hereby ratifies and confirms that the
construction of the Tenant Improvements does not require Landlord's consent and
that, notwithstanding anything to the contrary set forth in the Lease, Tenant
shall not be required to furnish a performance and completion bond in connection
with such construction. The foregoing shall not constitute a waiver by Landlord
of Landlord's rights or Tenant's obligations in connection with (i) the other
provisions of the Lease governing the construction of the Tenant Improvements,
(ii) Landlord's approval of any future exterior Alterations to the Premises by
Tenant, or (iii) the furnishing of a performance and completion bond by Tenant
in connection with any future Alterations made to the Premises by Tenant.
1
2
2. Amendment of the Lease. Notwithstanding anything to the contrary
contained in the Lease, the Lease is modified as follows:
A. Section 9.3 is replaced with the following:
"9.3 Tenant shall have the right to make, at its
sole cost and expense, additions, alterations and changes (collectively,
"Alterations") in or to the buildings located on the 735 Premises and 745
Premises (Tenant shall have no right to make Alterations to the 725 Premises),
provided that Tenant shall not then be in default in the performance of any of
the covenants in this Lease beyond any applicable notice or grace period,
subject, however, in all cases to the following:"
B. Section 9.3.1 is replaced with the following:
"9.3.1 No exterior Alterations (including, without
limitation, any passageway connecting the buildings located on the 735 Premises
and 745 Premises) shall be commenced except after thirty (30) days' prior
written notice to Landlord, which notice shall include reasonably detailed final
plans and working drawings of the proposed Alterations and the name of the
contractor."
C. Section 9.3.2 is replaced with the following:
"9.3.2 No exterior Alterations (including, without
limitation, any passageway connecting the buildings located on the 735 Premises
and 745 Premises) shall be made without the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed."
D. The following provisions are added to Section 9.3 of the
Lease:
"9.3.7 As soon as reasonably practicable after the
completion of any Alterations (interior or exterior), but not later than sixty
(60) days after the final completion of any such Alterations, Tenant shall
deliver to Landlord copies of detailed "as built" plans and specifications
covering such Alterations, and all applicable permits and governmental
authorizations (including, without limitation, certificates of occupancy), if
any, issued in connection with such Alterations.
9.3.8 In connection with the construction of the
Tenant Improvements and any other future Alterations (interior or exterior) made
by Tenant to either of the buildings located on the Premises, Landlord may, at
its option, require Tenant to provide additional security in connection with the
removal of such Alterations and restoration of such buildings (the "Removal
Security"). Landlord must give Tenant written notice of Landlord's exercise (the
"Removal Notice") within thirty (30) days after Landlord's receipt of "as built"
plans for the Alterations in question. Landlord's failure to give Tenant a
Removal Notice prior to the expiration of the foregoing time period shall
constitute Landlord's election not to require such Removal Security from Tenant
in connection with the Alterations in question. The amount of the Removal
Security shall be the sum of the amount reasonably expected to be the cost of
the following (collectively, the "Restoration
2
3
Cost"): (i) removing the Alterations in question, (ii) repairing any damage
caused by such removal, and (iii) restoring the portion of the Premises in
question to substantially its condition immediately preceding the construction
of such Alterations. As more fully described in Section 9.3.8.1 below, Tenant
shall have the option of depositing either cash or a letter of credit, or a
combination of both, as its Removal Security. Each Removal Notice shall include
Landlord's estimate of the applicable Restoration Cost. For a period of thirty
(30) days following Landlord's delivery of a Removal Notice to Tenant, Landlord
and Tenant shall use reasonable good faith efforts to reach agreement on the
amount of the Removal Cost. If Landlord and Tenant have not mutually agreed upon
the Removal Cost in writing within thirty (30) days after Landlord's delivery of
the Removal Notice to Tenant, then each party shall place in a separate sealed
envelope their final proposal as to the Removal Cost. Landlord and Tenant shall
meet with each other within five (5) business days after the expiration of such
30-day period and exchange the sealed envelopes and then open such envelopes in
each other's presence. If Landlord and Tenant do not mutually agree upon the
Removal Cost in writing within five (5) business days after the exchange and
opening of envelopes, then the determination of the Removal Cost shall be
submitted to arbitration in accordance with Section 9.3.8.2 below.
9.3.8.1 Tenant shall have the option of submitting
as its Removal Security either cash or a letter of credit, or a combination of
both, provided that the total amount of the Removal Security submitted to
Landlord equals the applicable Removal Cost. Any cash Removal Security submitted
by Tenant shall be placed in an interest-bearing account with a bank or other
financial institution approved in writing by Tenant, which approval Tenant shall
not unreasonably withhold or delay, and all interest earned thereon shall accrue
for the benefit of Tenant and shall be due and payable by Landlord to Tenant
within thirty (30) days after each annual anniversary of the Commencement Date
of the Lease. Notwithstanding the foregoing, Landlord shall have no obligation
to pay any such accrued interest to Tenant during the pendency of any default by
Tenant under the Lease, provided that written notice of such default has been
given by Landlord to Tenant. Any Removal Security submitted by Tenant if the
form of a letter of credit shall (i) be a stand-by, irrevocable letter of credit
issued by a bank or other financial institution reasonably acceptable to
Landlord (the "Issuer"), (ii) be payable to Landlord; (iii) require that any
draw on the letter of credit shall be made only upon receipt by the Issuer of a
written certification from Landlord certifying tha t Tenant has failed to
perform its removal and restoration obligations under the Lease with respect to
Alterations to the Premises made by Tenant and the cash security held by
Landlord is not sufficient to cover the damages likely to be incurred by
Landlord as a result of such failure, and further certifying that the amount
drawn on the letter of credit is the net amount due Landlord on account of
Tenant's failure to perform its removal and restoration obligations after
application by Landlord of any cash security deposit or cash Removal Security
held by Landlord; (v) not expire prior to one year or longer after the date of
its issuance; and (vi) provide that it is governed by the Uniform Customs and
Practice for Documentary Credits (1993 revisions), International Chamber of
Commerce Publication No. 500. On or before the fourteenth (14th) day prior to
the expiration of the Removal Security letter of credit, Tenant shall either
deliver to Landlord cash Removal Security in the amount of such letter of
credit, which amount shall be held by Landlord in accordance with the provisions
of this Section 9.3.8.1, or shall cause the Issuer to issue and deliver to
Landlord a letter of credit to replace the expiring letter to credit
("Replacement Letter of Credit"); provided, however, that if Tenant does not
3
4
provide either cash Removal Security or a Replacement Letter of Credit in
substitution for the full amount of such Removal Security letter of credit on or
before the fourteenth (14th) day prior to the expiration of the Removal Security
letter of credit, then Landlord may draw down the full amount of the expiring
letter of credit and hold such funds as cash Removal Security until such time as
Tenant provides Landlord with a Replacement Letter of Credit. The Replacement
Letter of Credit shall be in the same amount as the expiring letter of credit
less any cash Removal Security submitted by Tenant in substitution thereof, and
shall be on the terms and conditions set forth in clauses (i) through (vi) above
of this Section 9.3.8.1. In the event Landlord transfers its interest in this
Lease, at Landlord's request and at Landlord's cost (not to exceed Five Hundred
Dollars ($500) in any one instance) a new Restoration Security letter of credit
shall be issued to the transferee of the Landlord (the "Transferee") on the same
terms and conditions as any existing letter of credit, except that the new
letter of credit shall be payable to the Transferee. Landlord shall surrender
the existing letter of credit to Tenant simultaneously with Tenant's delivery of
the new letter of credit to the Transferee. Additionally, Landlord shall
transfer any cash Restoration Security held by Landlord to the Transferee. Upon
the expiration or earlier termination of this Lease, Landlord shall promptly
return the full amount of the Removal Security, including all accrued interest
on any Removal Security submitted in cash by Tenant, less any amount applied by
Landlord to cure any default by Tenant of Tenant's obligations hereunder
regarding the removal and restoration of Alterations made by Tenant. In
connection with any such default by Tenant, Landlord shall first apply any cash
security deposit (provided such cash security deposit is not required to cure
any other default by Tenant) or cash Removal Security (including accrued
interest) held by Landlord before drawing on any letter of credit submitted as
Removal Security.
9.3.8.2 The procedures for arbitrating the
determination of Removal Cost shall be as follows: (i) within ten (10) business
days after the exchange and opening of envelopes containing each parties' final
proposal as to the Removal Cost, Landlord and Tenant shall agree upon and
jointly appoint a single arbitrator who shall have at least twenty (20) years
experience in the construction of commercial warehouse, assembly and
manufacturing buildings in the Ocean County, New Jersey area. If Landlord and
Tenant fail to agree upon and appoint an arbitrator within such 10 business day
period, then the appointment of the arbitrator shall be made by the presiding
judge of the Superior Court of the State of New Jersey, Ocean County (the
"Court"), and neither Landlord nor Tenant shall raise any objection as to the
Court's full power and jurisdiction to entertain the application and make the
appointment. The determination of the arbitrator shall be limited solely to the
issue of whether Landlord's or Tenant's submitted Removal Cost is the closest to
the actual Removal Cost of the Alterations as determined by the arbitrator. Such
arbitrator may hold a hearing and require submission of such further information
as the arbitrator, in his or her sole discretion, determines to be necessary.
The arbitrator shall, within thirty (30) days after his or her appointment,
reach a decision as to whether the parties shall use Landlord's or Tenant's
submitted Removal Cost, and shall notify Landlord and Tenant of such
determination in writing. Within fifteen (15) days after the arbitrator's
determination of Removal Cost is received by Tenant, Tenant shall submit to
Landlord Removal Security in the amount of such Removal Cost. The determination
by the arbitrator shall be binding upon Landlord and Tenant. The cost of
arbitration shall be paid by Landlord and Tenant equally.
4
5
9.3.8.3 Notwithstanding anything to the contrary
contained herein, (i) Tenant shall not be allowed to draw against the Removal
Security to pay for Tenant's Removal Costs, and (ii) the Removal Security shall
not be deemed to limit Tenant's liability in connection with any default by
Tenant of Tenant's obligations under Section 18 to remove Alterations upon the
expiration or earlier termination of this Lease, repair any damage caused by
such removal, and restore the Premises to substantially its condition
immediately prior to the construction of such Alterations, reasonable use, wear
and tear, casualty and condemnation damage, and hazardous substances (as defined
herein) for which Tenant is not responsible excepted."
E. Section 9.4 of the Lease is hereby amended to delete the
second (2nd) sentence thereof in its entirety.
F. Exhibits B and C of the Lease are hereby deleted in their
entirety.
G. Section 12.1.1 of the Lease is hereby amended to insert after
the word "thereof" in line 2, the following: "...(including, without limitation,
any Alteration made by Tenant)..."
3. Effect of Amendment: In the event of any inconsistency between this
Third Amendment and the Lease, the terms of this Third Amendment shall prevail.
Except as otherwise provided herein, the Lease is hereby ratified and shall
remain in full force and effect. Landlord and Tenant each represent to the other
that to the best of its knowledge that neither party is in default of its
obligations under the Lease as of the effective date of this Third Amendment.
This Third Amendment shall become effective and binding upon the parties as of
the date both Landlord and Tenant have executed this Third Amendment.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as
of the day and year first above written.
LANDLORD
AIRPORT ASSOCIATES
a New Jersey general partnership
/s/ June Langbein By: /s/ Edmund Bennett, Jr.
- -------------------------------- ------------------------------
Witness Edmund Bennett, Jr., Partner
/s/ June Langbein By: /s/ Ronald Bennett, Jr.
- -------------------------------- ------------------------------
Witness Ronald Bennett, Jr., Partner
5
6
TENANT
ATTEST: VIVUS, INC.,
a Delaware corporation
/s/ Marnia Brownell By: /s/ David C. Yntema
- -------------------------------- ------------------------------
Print Name: Marnia Brownell Print Name: David C. Yntema
Title: Corporate Counsel Title: CFO
6