Exhibit 10.20
SECOND AMENDMENT TO LEASE
This SECOND AMENDMENT TO LEASE is made by and between David E. Clem and
David M. Roby, Trustees of Fort Washington Realty Trust under Declaration of
Trust dated June 19, 1995 and recorded with the Middlesex County (South
District) Registry of Deeds in Book 25422, Page 360 (the "Landlord") and Vertex
Pharmaceuticals Incorporated (the "Tenant").
Reference is hereby made to that certain lease (the "Lease") dated March
3, 1995, by and between Landlord's predecessor, Fort Washington Limited
Partnership and Tenant with respect to a portion of the property (the
"Premises") located at 40 Erie Street, Cambridge, Massachusetts, (the
"Building") as more particularly described in the Lease as amended by a First
Amendment to Lease (the "First Amendment").
WHEREAS, the Tenant has requested, and the Landlord has agreed, to further
amend the Lease to add additional space to the Premises upon the terms and
conditions set forth in this Second Amendment to Lease.
WHEREAS, Landlord and Tenant desire to amend and modify the terms of the
Lease to incorporate the additional space and to ratify and confirm the terms of
the Lease as amended by the First Amendment as more particularly set forth
below.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Landlord and Tenant agree as follows:
1. Upon occupancy by Tenant, the definition of the Premises set forth in
the Lease shall be amended to include the addition of 41,132 r.s.f. of space
(the "Additional Space") in the Building currently leased to Millennium
Pharmaceuticals, Inc. ("Millennium"). See Exhibit A annexed hereto for the
layout of the Additional Space.
2. Tenant shall take occupancy of the Additional Space beginning on the
later of (i) the date upon which Millennium vacates the Additional Space, or
(ii) March 19, 1999, and continuing for a period of ten (10) years from the date
upon which Tenant occupies the Additional Space (the "Additional Space Term").
On or after March 19, 1999, if necessary, Landlord shall use best efforts to
expedite Millennium's departure from the Additional Space, including filing an
eviction proceeding. Landlord warrants and represents that according to the
terms of its lease with Millennium that the lease expires on March 18, 1999 as
to the Premises and the associated parking spaces. As to the Premises and the
associated parking spaces, Landlord hereby agrees that Landlord will not extend
or renew the term of Millennium's lease or waive any failure by Millennium to
vacate. Landlord shall not be held liable for any loss or damage incurred by
Tenant as a
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result of a hold-over by Millennium. Landlord represents that in addition to
other sums for holding over, Millennium must pay a holdover premium equal to the
greater of (a) twice the then fair market rent as reasonably determined by
Landlord, or (b) the total of the Fixed Rent, Additional Rent (as those terms
are defined in the Millennium lease) and all other payments then payable under
the Millennium lease. Landlord agrees that it shall not waive the payment to
Landlord of any such holdover premium by Millennium.
Provided that Tenant has exercised in each instance its options to extend
the Lease Term for the original Premises: (a) Tenant shall have two (2) options
to extend the Additional Space Term (the "Additional Space Options") for
successive periods of five (5) years each (the "Additional Space Extension
Periods"), subject to and on the terms set forth herein. Tenant may only
exercise the Additional Space Options with respect to the entire Additional
Space. If Tenant shall desire to exercise any Additional Space Option, it shall
give Landlord a notice (the "Additional Space Inquiry Notice") of such desire
not later than fifteen (15) months prior to the expiration of the Additional
Space Term of this Lease or the preceding Additional Space Extension Period, as
the case may be. Thereafter, the Fair Market Rent (as defined in Subsection (c)
below) for the applicable Additional Space Extension Period shall be
determined in accordance with Subsection (d) below. After the applicable Fair
Market Rent has been so determined, Tenant shall exercise each Additional Space
Option by giving Landlord notice (the "Additional Space Exercise Notice") of
its election to do so not later than twelve (12) months prior to the expiration
of the Additional Space Term of this Lease, or the preceding Additional Space
Extension Period, as the case may be. If Tenant fails to timely give either the
Additional Space Inquiry Notice or the Additional Space Exercise Notice to
Landlord with respect to any Additional Space Option, Tenant shall be
conclusively deemed to have waived such Additional Space Option hereunder.
(b) Notwithstanding any contrary provision of this Lease, each Additional
Space Option and any exercise by Tenant thereof shall be void and of no force or
effect unless on the dates. Tenant gives Landlord its Additional Space Inquiry
Notice and Additional Space Exercise Notice for each Additional Space Option
and on the date of commencement of each Additional Space Extension Period (i)
this Lease is in full force and effect, (ii) there is no Event of Default of
Tenant under this Lease, and (iii) Tenant has not assigned or subleased (or
agreed to assign or sublease) more than fifty percent (50%) of the rentable
floor area then comprising the Additional Space.
(c) All of the terms, provisions, covenants, and conditions of this Lease
shall continue to apply during each Additional Space Extension Period, except
that the Additional Space Annual Fixed Rent Rate during each Additional Space
Extension Period (the "Extension Rent") shall be equal to the fair market rent
for the Additional Space determined as of the date twelve (12) months prior to
expiration of the Additional Space Term or the preceding Additional Space
Extension Period, as the case may be, in accordance with the procedure set forth
in Subsection (d) below (the "Fair Market Rent").
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(d) The Fair Market Rent for each Additional Space Extension Period shall
be determined as follows: Within five (5) days after Tenant gives Landlord its
Additional Space Inquiry Notice with respect to any Additional Space Option,
Landlord shall give Tenant notice of Landlord's determination of the Fair Market
Rent for the applicable Additional Space Extension Period. Within ten (10) days
after Tenant receives such notice, Tenant shall notify Landlord of its agreement
with or objection to Landlord's determination of the Fair Market Rent, whereupon
the Fair Market Rent shall be determined by arbitration conducted in the manner
set forth below. If Tenant does not notify Landlord within such ten (10) day
period of Tenant's agreement with or objection to Landlord's determination of
the Fair Market Rent, then the Fair Market Rent for the applicable Additional
Space Extension Period shall be deemed to be Landlord's determination of the
Fair Market Rent as set forth in the notice from Landlord described in this
subsection.
(e) If Tenant notifies Landlord of Tenant's objection to Landlord's
determination of Fair Market Rent under the preceding subsection, such notice
shall also set forth a request for arbitration and Tenant's appointment of a
commercial real estate broker having at least ten (10) years experience in the
commercial leasing market in the City of Cambridge, Massachusetts (an
"Arbitrator"). Within five (5) days thereafter, Landlord shall by notice to
Tenant appoint a second Arbitrator. Each Arbitrator shall be advised to
determine the Fair Market Rent for the applicable Additional Space Extension
Period within thirty (30) days after Landlord's appointment of the second
Arbitrator. On or before the expiration of such thirty (30) day period, the two
Arbitrators shall confer to compare their respective determinations of the Fair
Market Rent. If the difference between the amounts so determined by the two
Arbitrators is less than or equal to ten percent (10%) of the lower of said
amounts then the final determination of the Fair Market Rent shall be equal to
the average of said amounts. If such difference between said amounts is greater
than ten percent (10%), then the two arbitrators within ten (10) days thereafter
shall appoint a third Arbitrator (the "Third Arbitrator"), who shall be
instructed to determine the Fair Market Rent for the applicable Additional Space
Extension Period within ten (10) days after his appointment by selecting one of
the amounts determined by the other two Arbitrators. Each party shall bear the
cost of the Arbitrator selected by such party. The cost for the Third
Arbitrator, if any, shall be shared equally by Landlord and Tenant.
3. Tenant shall accept the Additional Space in "as is" condition. Tenant
acknowledges that Landlord has made, in anticipation of Tenant's future
occupancy, for the benefit of Tenant at Landlord's sole cost and expense,
certain improvements to the Additional Space as outlined in Exhibit B. Landlord
agrees to consult with Tenant prior to agreeing to any changes requested by
Millennium to the Additional Space.
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4. Upon execution of this Second Amendment to Lease, section 4.1(d) of the
Lease will be stricken in its entirety and be null and void and of no further
force and effect.
5. Upon occupancy by Tenant of the Additional Space, Tenant shall pay to
Landlord Annual Fixed Rent for the Additional Space in the amount of
$1,460,186.00 (the "Additional Space Annual Fixed Rent Rate"), payable in equal
monthly installments of $121,682.17 in advance on the first day of each calendar
month; and for any portion of a calendar month at the beginning or end of the
Term, at that rate payable in advance for such portion.
6. Article 4.1(b) shall be renumbered as 4.1(b)(1) and the following shall
be added to the Lease as Article 4.1(b)(2):
(b) (2) Adjustment for CPI - Additional Space. (a) On December 31,
2000 (the "First Adjustment Date"), the Additional Space Annual Fixed Rent
Rate shall be increased by multiplying said rate by the lesser of (i) a
fraction, the numerator of which shall be the Price Index (as hereinafter
defined) most recently established prior to the First Adjustment Date, and
the denominator of which shall be the Base Price Index (as hereinafter
defined), or (ii) one hundred four percent (104%) per year, compounded
annually over the period of time beginning April 1, 1997 through the First
Adjustment Date. (b) On December 31, 2005 (the "Second Adjustment Date"),
the Additional Space Annual Fixed Rent Rate (as adjusted) shall be
increased by multiplying said rate by the lesser of (i) a fraction, the
numerator of which shall be the Price Index (as hereinafter defined) most
recently established prior to the Second Adjustment Date, and the
denominator of which shall be the Base Price Index (as hereinafter
defined), or (ii) one hundred four percent (104%) per year; compounded
annually over the five (5) years of the Additional Space Term of this
Lease. As used herein, the term "Price Index" shall mean and refer to the
"Consumer Price Index for Urban Wage Earners and Clerical Workers, for
the Boston, Massachusetts area, All Items (1982-84-100)" published by the
Bureau of Labor Statistics of the United States Department of Labor or
successor or substitute index appropriately adjusted, and the term "Base
Price Index" shall mean and refer to the Price Index most recently
established prior to the Commencement Date. In the event the Price Index
(or a successor or substitute index) shall not be published for the City
of Boston, Massachusetts area or for the months indicated above, the
corresponding index for the United States City Average (and if this is not
available, a reliable governmental or other nonpartisan publication
evaluating similar or equivalent information as used in the Price Index)
shall be used. In the event the Price Index ceases to use the 1982-84
average of
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100 as the basis of calculation, or if a substantial change is made in the
terms or numbers of items contained in the Price Index, then the Price
Index shall be adjusted to the figure that would have been arrived at had
the manner of computing the Price Index in effect at the date of this
Lease not been changed.
7. Upon commencement of the Additional Space Term, the Tenant's
Proportionate Fraction as set forth in the Lease will be amended to 100%.
8. The provisions of Paragraph 10.11 of the Lease shall include reference
to the Additional Space Annual Fixed Rent Rate in determining the "Security
Deposit Amount" as the same may be adjusted. Upon commencement of the Additional
Space Term, the Tenant shall increase the Security Deposit Amount by an amount
equal to one (1) year Additional Space Annual Fixed Rent plus additional
amounts, if any, as set forth in paragraph 10.11 as amended. The Security
Deposit Amount shall be adjusted as provided in Section 10.11 by including the
Additional Space Annual Fixed Rent Rate and other rental amounts due with
respect to the Additional Space, as the same may be adjusted in accordance with
Section 4.1(b), Section 4.1(c), Section 10.12, Section 10.13 and Section 10.14
of the Lease as amended. The additional Security Deposit Amount may be in the
form of a Letter of Credit in the form of Exhibit L to the Lease and must be
delivered on the commencement of the Additional Space Term.
9. Upon Tenant's reasonable request and subject to availability on the lot
upon which the Building is situated, Landlord shall provide additional surface
parking spaces to Tenant on a tenancy-at-will basis for an additional charge of
$75.00 per space per month.
10. Landlord acknowledges that Tenant presently intends to reconfigure the
Additional Space upon taking occupancy. The process for such reconfiguration of
the Additional Space shall be in accordance with paragraph 3.3 of the Lease.
However, Tenant shall be under no obligation to reconfigure the Additional
Space.
11. Exhibit I of the Lease is hereby replaced with the Exhibit "I"
attached hereto.
All capitalized terms used herein shall have the same meaning as set forth
in the Lease.
Except as otherwise expressly set forth herein, all other terms of the
Lease shall apply to the Additional Space, are hereby ratified and confirmed and
shall remain unchanged and in full force and effect.
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Executed this 13th day of June, 1997.
LANDLORD:
By: /s/ David E. Clem, Trustee
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David E. Clem, Trustee as aforesaid
and not individually
By: /s/ David M. Roby
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David M. Roby, Trustee as aforesaid
and not individually
TENANT:
VERTEX PHARMACEUTICALS INCORPORATED
By: /s/ Richard H. Aldrich
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Name: Richard H. Aldrich
Title: Senior Vice president