LEASE AGREEMENT
LANDLORD: 525 VIRGINIA DRIVE ASSOCIATES LIMITED PARTNERSHIP
a Pennsylvania limited partnership
443 South Gulph Road
King of Prussia, Pennsylvania 19406
TENANT: BIO-PHARM PHARMACEUTICS SERVICES, INC.
a Delaware corporation
425 Delaware Drive
Fort Washington, Pennsylvania 19034-2703
PREMISES: 525 Virginia Drive
Fort Washington, Upper Dublin Township
Montgomery County, Pennsylvania.
DATE OF LEASE: December 3, 1996
TABLE OF CONTENTS
PREAMBLE........................................................................... 1
Basic Lease Provisions and Definitions........................................... 1
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ARTICLE ONE........................................................................ 2
PREMISES AND TERM................................................................ 2
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Section 1.01. Grant of Lease.................................................. 2
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Section 1.02. Term of Lease................................................... 3
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ARTICLE TWO........................................................................ 4
RENT............................................................................. 4
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Section 2.01. Fixed Basic Rent................................................ 4
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Section 2.02. Additional Rent................................................. 4
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Section 2.03. Manner of Payment............................................... 4
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Section 2.04. Partial Months.................................................. 4
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Section 2.05. Late Charge..................................................... 4
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ARTICLE THREE...................................................................... 5
EXPENSES AND TAXES............................................................... 5
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Section 3.01. Tenant's Obligations............................................ 5
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Section 3.02. Installment Payment............................................. 5
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Section 3.03. Apportionment of Taxes; Tenant's Proportionate Share of Taxes... 5
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Section 3.04. Receipts........................................................ 5
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Section 3.05. Right to Contest Taxes.......................................... 5
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Section 3.06. Taxes and Impositions Payable by Landlord....................... 6
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Section 3.07. Utilities....................................................... 6
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Section 3.08. Insurance....................................................... 6
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ARTICLE FOUR....................................................................... 6
CONSTRUCTION OF IMPROVEMENTS..................................................... 6
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Section 4.01. Landlord Improvements........................................... 6
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Section 4.02. Tenant Work..................................................... 7
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Section 4.03. Time for Completion............................................. 8
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Section 4.04 Delays in Substantial Completion................................ 8
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Section 4.05. Signs........................................................... 9
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ARTICLE FIVE....................................................................... 9
USE AND COMPLIANCE WITH LAWS; ENVIRONMENTAL COVENANTS............................ 9
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Section 5.01. Use of Premises................................................. 9
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Section 5.02. Compliance with Law............................................. 9
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Section 5.03. Right to Contest................................................ 9
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ARTICLE SIX........................................................................ 10
REPRESENTATIONS AND WARRANTIES................................................... 10
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Section 6.01. Landlord's Representations and Warranties....................... 10
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Section 6.02. Brokerage Commissions........................................... 11
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ARTICLE SEVEN...................................................................... 12
INDEMNIFICATION.................................................................. 12
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Section 7.01. Tenant's Indemnity.............................................. 12
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Section 7.02. Landlord's Indemnity........................................... 12
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ARTICLE EIGHT..................................................................... 13
MAINTENANCE AND REPAIRS......................................................... 13
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Section 8.01. Tenant's Obligations........................................... 13
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Section 8.02. Landlord's Obligations......................................... 13
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Section 8.04 Access to Premises............................................. 13
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Section 8.05. Landlord as Building Manager; Manager's Fee.................... 14
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ARTICLE NINE...................................................................... 14
ALTERATIONS..................................................................... 14
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Section 9.01. Structural Alterations......................................... 14
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Section 9.02. Non-Structural Alterations..................................... 14
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Section 9.03 Mechanics' Liens............................................... 14
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Section 9.04. Status of Improvements; "As Built" Drawings.................... 15
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ARTICLE TEN....................................................................... 15
INSURANCE AND DAMAGE............................................................ 15
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Section 10.01. Insurance..................................................... 15
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Section 10.02. Damage or Casualty............................................ 15
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Section 10.03. Cooperation in Actions........................................ 16
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Section 10.04. Notice of Casualty............................................ 16
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Section 10.05. Waiver of Subrogation; Rights Under Insurance Policies........ 16
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ARTICLE ELEVEN.................................................................... 17
CONDEMNATION.................................................................... 17
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Section 11.01. Condemnation.................................................. 17
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Section 11.02. Total Condemnation............................................ 17
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Section 11.03. Partial Condemnation.......................................... 17
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ARTICLE TWELVE.................................................................... 18
DEFAULT......................................................................... 18
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Section 12.01. Events of Default; Termination................................ 18
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Section 12.02. Remedies...................................................... 18
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Section 12.03. Non-Waiver.................................................... 19
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Section 12.04. Rights and Remedies Cumulative................................ 20
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Section 12.05. Waiver of Trial by Jury....................................... 20
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ARTICLE THIRTEEN.................................................................. 20
QUIET ENJOYMENT; SUBORDINATION.................................................. 20
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Section 13.01. Quiet Enjoyment............................................... 20
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Section 13.02. Subordination, Non-Disturbance and Attornment................. 20
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Section 13.03. Tenant Estoppel Certificate................................... 21
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Section 13.04. Landlord's Lien Waiver........................................ 21
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ARTICLE FOURTEEN.................................................................. 21
OPTION TO RENEW LEASE........................................................... 21
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Section 14.01. Option to Renew............................................... 21
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Section 14.02. Adjustment to Fixed Basic Rent................................ 21
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ARTICLE FIFTEEN................................................................... 22
OPTION TO PURCHASE AND RIGHT OF FIRST REFUSAL................................... 22
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Section 15.01. Tenant's Option to Purchase................................... 22
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Section 15.02. Tenant's Right of First Refusal............................... 23
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Section 15.03. Memorandum of Lease and Option to Purchase.................... 24
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ARTICLE SIXTEEN................................................................... 24
MISCELLANEOUS................................................................... 24
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Section 16.01. Assignment; Sublease.......................................... 24
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Section 16.02. Notice........................................................ 25
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Section 16.03 Signage....................................................... 26
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Section 16.04. Survival of Valid Terms....................................... 26
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Section 16.05. Covenants to Bind and Benefit Respective Parties.............. 26
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Section 16.06. Captions and Headings......................................... 26
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Section 16.07. Governing Law................................................. 26
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Section 16.08 Confidentiality............................................... 26
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Section 16.09 Lease Guaranty................................................ 27
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Section 16.10 Counterparts.................................................. 27
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LEASE AGREEMENT
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THIS LEASE (the "Lease") is made as of the 3rd day of December, 1996
between 525 VIRGINIA DRIVE ASSOCIATES LIMITED PARTNERSHIP, a Pennsylvania
limited partnership (herein referred to as "Landlord") whose address is 443
South Gulph Road, King of Prussia, Pennsylvania 19406 and BIO-PHARM
PHARMACEUTICS SERVICES, INC., a Delaware corporation (herein referred to as
"Tenant") whose address is Four Valley Square, 512 Township Line Road, Blue
Bell, PA 19422.
PREAMBLE
Basic Lease Provisions and Definitions
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In addition to other terms elsewhere defined in this Lease, the following
terms whenever used in this lease shall have only the meanings set forth in this
section, unless such meanings are expressly modified, limited or expanded
herein.
A. ADDITIONAL RENT shall mean any and all sums other than Fixed Basic
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Rent which may be due from time to time from Tenant to Landlord pursuant to the
terms of the Lease.
B. BROKERS shall mean Preferred Real Estate Advisors, Inc. and Julien J.
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Studley, Inc.
C. BUILDING shall mean the commercial building situate at 525 Virginia
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Drive, Fort Washington, Upper Dublin Township, Montgomery County, Pennsylvania,
consisting of approximately 124,000 gross rentable square feet as shown on
Exhibit "A" attached hereto.
D. DEMISED PREMISES OR PREMISES shall mean for Lease Year 1:
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approximately 40,000 square feet of the Building, as described in Exhibit "A"
and for Lease Year 2: approximately 80,000 square feet of the Building, as
described in Exhibit "A" and for the balance of the Term and any Renewal Term,
the entire Building.
E. EXHIBITS shall be the following, attached to this Lease, incorporated
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herein and made a part hereof:
Exhibit A Description of Building
Exhibit B-1 Plans and Specifications for Landlord Improvements
Exhibit B-2 Plans and Specifications for Tenant Work
Exhibit C Permitted Exceptions
Exhibit D Memorandum of Lease
Exhibit E Form of Lease Guaranty
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F. FIXED BASIC RENT shall mean: Twelve Million Three Hundred Seventy
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Eight Thousand and 00/l00 Dollars ($12,378,000.00), for the Term, payable as
follows:
Year Yearly Payments Equal Monthly Payments
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Lease Year 1 $220,000.00 $18,333.34
Lease Year 2 $440,000.00 $36,666.67
Lease Year 3 - 4 $806,000.00 $67,166.67
Lease Year 5 - 6 $868,000.00 $72,333.34
Lease Year 7 - 15 $930,000.00 $77,500.00
G. RENT COMMENCEMENT DATE is as defined in Section 1.02 hereof.
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H. PERMITTED USES is as defined in Section 5.01
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I. PURCHASE OPTION is as defined in Article 15 hereof.
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J. RENEWAL OPTION is as defined in Article 14 hereof.
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K. SECURITY DEPOSIT shall be Zero and 00/100 Dollars ($0.00)
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L. TERM is as defined in Section 1.02 hereof.
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M. GUARANTOR shall mean I.B.A.H., INC., a Delaware corporation.
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For and in consideration of the covenants and mutual promises contained
herein, and upon the terms and conditions set forth herein, and intending to be
legally bound hereby, the parties hereby covenant and agree as follows:
ARTICLE ONE
Premises and Term
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Section 1.01. Grant of Lease. Landlord does hereby demise, lease and let
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to Tenant and Tenant does hereby let from Landlord, upon and subject to all
terms, covenants and conditions herein contained, the Premises. Notwithstanding
that the Tenant shall not be occupying the entire Building until Lease Year 3,
Landlord shall have no right to use or occupy, or lease to any third party, any
portion of the Building, without Tenant's prior written consent in each
instance. In addition to the Premises, Tenant shall have the right and license,
to place or install temporary modular office and laboratory space on the grounds
surrounding the Building, at a location reasonably satisfactory to Landlord, and
provided that (i) Tenant has provided notice to Landlord of Tenant's intention
and identified the proposed location of such modular office and laboratory
space, and (ii) such temporary modular office and laboratory space is permitted
under and complies with all applicable federal, state and local laws,
regulations and code requirements and all of the terms of
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this Lease. Tenant and its contractors shall have access to the entire Premises
during Lease Year 1, at Tenant's sole risk, for the purposes of commencing
construction of improvements in anticipation of Tenant's occupancy and in
accordance with Section 4.02 hereof.
Section 1.02. Term of Lease. The term of this Lease ("Term") shall
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include a preliminary term, as described in Section 1.02 (a) (the "Preliminary
Term"); an initial term, as described in Section 1.02(b) (the "Initial Term")
and certain Renewal Terms, as described in Article 14 hereof.
(a) Preliminary Term. The Preliminary Term shall commence on the date
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this Lease is executed by all parties hereto, and shall terminate on the day
prior to the commencement of the Initial Term. All of the terms and conditions
set forth in this Lease shall apply during the Preliminary Term except for the
provisions of Articles 2 and 3, it being the intention of the parties that
during the Preliminary Term, Tenant shall have no obligation to pay Fixed Basic
Rent, Additional Rent or any other rent to Landlord. During the Preliminary
Term, Tenant shall be permitted to enter the Demised Premises solely for the
purpose of performing the Tenant Work (as defined below).
(b) Initial Term. The Initial Term of this Lease shall commence on
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the later to occur of the following: (i) January 15, 1997 or (ii) a date which
is ten (10) days after the Landlord Improvements (as herein defined) have been
substantially completed in accordance with Article 4 hereof. The Initial Term
as determined above shall be set forth on a written notice from Landlord to
Tenant, and the Initial Term of this Lease shall continue for a period of
fifteen years, unless this Lease shall be renewed by the Tenant in accordance
with Article 14 hereof or sooner terminated as hereinafter provided. (The date
upon which the Initial Term commences is referred to hereinafter as the "Rent
Commencement Date").
(c) Renewal Terms. Tenant shall have two consecutive options to
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extend the Initial Term of this Lease, in accordance with the provisions of
Article 14 hereof.
(d) Lease Year. The Lease Year 1 of the Term shall commence on the
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Rent Commencement Date and shall end (i) on the day immediately preceding the
first anniversary of the Rent Commencement Date, if the Rent Commencement Date
is the first day of the month, or (ii) on the last day of the month in which the
first anniversary of the Rent Commencement Date occurs, if the Rent Commencement
Date is any day other than the first day of a calendar month. Each subsequent
lease year shall be a period of twelve (12) months commencing on the day
immediately following the expiration of the prior lease year and expiring on the
day immediately preceding the anniversary of the commencement of such lease
year.
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ARTICLE TWO
Rent
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Section 2.01. Fixed Basic Rent. Except as hereinafter provided, the
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minimum annual rent for such Lease Years is in the amounts set forth in the
Preamble as "Fixed Basic Rent." The Fixed Basic Rent shall be payable during the
Initial Term, in advance, without notice or demand, in equal monthly
installments of one-twelfth of the annual amount, on the first day of each month
during the Initial Term.
Section 2.02. Additional Rent. All other amounts payable by Tenant
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hereunder, whether payable to Landlord or to third parties, including without
limitation, Taxes pursuant to Section 3.01, insurance premiums, and utility
charges, shall be considered additional rent ("Additional Rent") payable by
Tenant hereunder. Tenant's obligation for the payment of Additional Rent shall
commence upon the Rent Commencement Date.
Section 2.03. Manner of Payment. All amounts payable under Section 2.01
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of this Lease, as well as all other amounts payable by Tenant to Landlord under
the terms of this Lease, shall be paid, at the office of Landlord set forth
above, or at such other place as Landlord shall from time to time designate by
notice to Tenant. Tenant's obligation to pay the Fixed Basic Rent and Additional
Rent shall survive the expiration of the Term.
Section 2.04. Partial Months. In the event that the Rent Commencement Date
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is a day other than the first day of a calendar month, Fixed Basic Rent for the
month in which the first anniversary of the Rent Commencement Date occurs shall
be prorated such that the monthly payment of Fixed Basic Rent for such month
shall be equal to the sum of (i) the monthly installment payment that is due
during Lease Year 1, as set forth in Section F of the Preamble hereof divided by
thirty (30) and multiplied by the number of days in such month prior to the
anniversary of the Rent Commencement Date, plus (ii) the monthly installment
payment that is due during Lease Year 2, as set forth in Section F of the
Preamble hereof, divided by thirty (30) and multiplied by the number of days
remaining in such month on and after the Rent Commencement Date..
Section 2.05. Late Charge. Landlord shall be entitled to receive from
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Tenant a late charge equal to five percent (5%) of the amount of any payment or
installment of Fixed Basic Rent and Additional Rent, or any portion thereof, if
not received within ten (10) days of the date when due. The acceptance of any
such payment by Landlord shall not be deemed to be a waiver of any other rights
which Landlord may have under the provisions of this Lease or as provided by
law.
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ARTICLE THREE
Taxes; Utility Charges
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Section 3.01. Tenant's Obligations. Tenant will pay and discharge,
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punctually as and when the same shall become due and payable, but in any event
not later than five (5) business days before any fine, penalty, interest or cost
may be added thereto for nonpayment, all real estate taxes water charges and
sewer charges (each such tax, water charge and sewer charge hereinafter
sometimes called a "Tax").
Section 3.02. Installment Payment. If by law any Tax is payable, or may
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at the option of the taxpayer be paid, in installments, Tenant may, whether or
not interest shall accrue on the unpaid balance thereof, pay the same, and any
accrued interest or any unpaid balance thereof, in installments as each
installment becomes due and payable, but in any event not later than five (5)
business days before any fine, penalty, interest or cost may be added thereto
for nonpayment of any installment or interest.
Section 3.03. Apportionment of Taxes; Tenant's Proportionate Share of
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Taxes. Any Tax, a part of which is within the Term and a part of which is
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subsequent to the Term, shall be apportioned and adjusted between Landlord and
Tenant as of the expiration of the Term so that Landlord shall pay the amount of
the Tax due after the expiration of the Term, and Tenant shall pay the remainder
thereof. With respect to any Tax for public improvements or benefits which by
law is payable in installments, a part of which is within the Term and a part of
which is subsequent to the Term, Landlord shall pay the installments thereof
which become due and payable with respect to periods of time subsequent to the
expiration of the Term, and Tenant shall pay all such installments which become
due and payable with respect to periods of time prior to the expiration of the
Term.
Section 3.04. Receipts. Tenant shall furnish to Landlord reasonable
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evidence of payment of any Tax, including official receipts from the appropriate
taxing authority evidencing payment or other proof satisfactory to Landlord, not
later than five (5) business days prior to the date that such Tax would have
become delinquent or within ten (10) days after receipt by Tenant of such
receipt or other evidence from the tax authority, whichever is earlier.
Section 3.05. Right to Contest Taxes. Notwithstanding anything to the
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contrary herein contained, if Tenant deems any Tax excessive or illegal, Tenant,
upon prior written notice to Landlord, may defer payment thereof so long as (a)
the validity or the amount thereof is contested by Tenant with diligence and in
good faith, and (b) no tax sale or other action in connection therewith against
the Premises or Landlord is threatened. So long as Tenant is not in default
under this Lease, and in good faith and by appropriate legal action shall
contest the validity of any Tax, and shall have established by deposit of cash
with Landlord, or other securities satisfactory to Landlord, a reserve for the
payment thereof in such amount as shall be subject to such contest, the Tenant
shall not be required to pay the contested Tax or produce the required receipt
while the reserve is maintained and so long as the contest that operates to
prevent collection is maintained and prosecuted with diligence, and shall not
have been terminated or discontinued adversely to
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Tenant. Any such cash held in reserve with Landlord shall be deposited by
Landlord with a federally insured financial institution in a separate escrow or
trust account, and such funds shall not be co-mingled with other monies of the
Landlord.
Section 3.06. Taxes and Impositions Payable by Landlord. Tenant shall not
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be required to pay any of the following Taxes which shall be imposed against
Landlord by any governmental authority, whether federal, state, county, city,
municipal, or otherwise:
(a) any estate, inheritance, succession, transfer, legacy or gift tax
which may be imposed upon or with respect to any transfer of Landlord's interest
in the Premises;
(b) any capital stock tax or other tax imposed against Landlord for
the privilege or franchise of doing business; and
(c) any federal, state or local income tax levied upon or against the
income of Landlord.
Section 3.07. Utilities. Tenant shall timely pay or cause to be paid all
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charges for gas, electricity, light, heat, power, water, telephone or other
communication service or other utility or service used, rendered or supplied to,
upon or in connection with the Premises throughout the Term.
Section 3.08. Insurance. Tenant shall pay or cause to be paid all
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insurance premiums for the coverages required to be purchased and maintained by
Tenant in accordance with Article 10 of this Lease.
ARTICLE FOUR
Construction of Improvements
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Section 4.01. Landlord Improvements. Landlord, at Landlord's sole cost
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and expense, shall cause to be completed upon the Premises in accordance with
all applicable federal, state and local laws, regulations, and code
requirements, including all applicable zoning, building, electrical, health,
safety, or fire code requirements, the code requirements and standards
established in the most recent editions of "The BOCA National Building Code,"
and the federal law known as The Americans with Disabilities Act
("ADA")(collectively, the "Laws") affecting the Premises, and in a good and
workmanlike manner, the following work (collectively, the "Landlord
Improvements"), all in accordance with the plans and specifications attached
hereto as Exhibit "B-2" (the "Plans and Specifications for Landlord
Improvements" or the "Plans and Specifications"):
(a) demolition of all interior improvements currently existing in the
Premises, including but not limited to, the removal of any asbestos containing
materials, polychlorinated biphenyls, underground storage tanks, and any
"Hazardous Substances" or "Hazardous Waste" as
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defined under any "Environmental Laws" (defined below), and all partitions,
ceiling and floor coverings, walls (except for structural or load bearing
walls), and the removal of the rooftop HVAC units;
(b) installation of new asphalt paving and striping of the existing
parking lot, entrances and exits resulting in a total of 360 parking spaces on
the Premises;
(c) installation of new exterior lighting;
(d) landscaping around the entire Building;
(e) painting and stucco repair and/or replacement of the entire
exterior of the Building; and
(f) replacement of the entire roof on the Building; and
Section 4.02. Tenant Work. Tenant shall cause to be completed upon the
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Premises in accordance with applicable Laws, those improvements, other than the
Landlord improvements, which are necessary or desirable to Tenant in order to
make the Premises suitable for Tenant's use and occupancy ("Tenant Work").
Tenant Work shall be subject to the following conditions:
(a) Not later than ten (10) days prior to commencing the Tenant Work,
Tenant shall provide Landlord with plans and specifications of the Tenant Work,
and the identity of the general contractor engaged by Tenant to perform the
Tenant Work. Attached to this Lease as Exhibit "B-2" are any plans and
specifications of the Tenant Work that Tenant has completed prior to the date
hereof.
(b) Tenant or Tenant's contractor shall, throughout the period of
construction, procure and maintain builder's risk insurance coverage in an
amount sufficient to cover the cost of Tenant Work, and naming the Tenant and
Landlord as additional insureds, as their interests may appear.
(c) Tenant shall promptly pay and discharge all costs, expenses,
damages and other liabilities which may arise in connection with or by reason of
the Tenant Work.
(d) Tenant shall not permit the filing of any mechanic's lien and,
within thirty (30) days after written notice of its existence thereof from
Landlord shall discharge or bond over any mechanic's lien for material or labor
claimed to have been furnished to the Premises on Tenant's behalf (except for
work contracted for by Landlord). Prior to commencing any of the Tenant Work,
Tenant shall (i) file waivers on behalf of each contractor waiving such
contractor's right to file for or claim a mechanic's lien under Pennsylvania's
Mechanic's Lien Law, and (ii) provide to Landlord a time-stamped copy of such
filings.
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(e) The Tenant Work shall be completed in accordance with a the plans
and specifications and construction schedule prepared by Tenant and attached
hereto or provided to Landlord, subject to changes as may be approved by Tenant
pursuant to a written change order signed by Tenant. Tenant shall provide
Landlord with a copy of any change orders approved by Tenant, and any
modification or revision to the plans and specifications resulting therefrom
prior to commencing any change in the Tenant Work pursuant thereto, unless the
change is of an urgent nature or if the prior delivery of such documentation to
Landlord is otherwise not reasonably practicable under the circumstances and in
such cases Tenant shall provide a copy of any such change orders, and any such
modifications to plans and specifications to the Landlord, promptly following
the execution of any such change orders or the completion of any such revised
plans and specifications.
(f) The Tenant Work will not weaken or impair the structural integrity
or lessen the value of the Premises or any part thereof.
(g) Not later than two (2) business days prior to commencement of the
Tenant Work, Tenant shall obtain, at Tenant's sole cost and expense, all permits
and approvals necessary for construction of the Tenant Work and shall provide a
copy of same to Landlord promptly upon receipt.
Section 4.03. Time for Completion. Subject only to delays caused by
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Tenant's actions, or delays caused by events wholly beyond the control of
Landlord, the Landlord Improvements described in clauses (a) and (f) (except
with respect to the portion of the roof above the office spaces in the Building)
of Section 4.01 shall be substantially completed on or before the January 15,
1997. The Landlord Improvements pertaining to the removal and replacement of the
roof above the office spaces in the Building shall be finally completed by no
later than January 31, 1997. The Landlord Improvements described in clauses (b),
(c), (d) and (e) of Section 4.01, and any minor or cosmetic repairs that have
not been completed by January 15, 1997, shall be finally completed by no later
than May 31, 1997.
For purposes of Section 1.02 (b), and the last sentence of Section 4.04, the
Landlord Improvements shall be deemed "substantially completed" when the
Landlord Improvements described in clauses (a) and (f) (except with respect to
the portion of the roof above the office spaces in the Building) have been
completed, except for any minor or cosmetic repairs.
Section 4.04 Delays in Substantial Completion. If the Landlord is
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delayed for reasons other than those described in this Section 4.03, and fails
to achieve substantial completion of the Landlord Improvements, or final
completion of the Landlord Improvements, within the times provided herein, then
the Tenant's sole and exclusive remedy for such failure shall be to recover from
the Landlord the sum of $150.00 for each such calendar day substantial
completion or final completion, as the case may be, is so delayed by Landlord
and provided that such delay continues for five (5) business days following
written notice by Tenant of such failure. The parties acknowledge and agree that
it would be extremely difficult and impracticable under the presently known and
anticipated circumstances to ascertain and fix the actual damages that the
Tenant would incur should Landlord delay in achieving completion of the Landlord
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Improvements within the times provided herein, and that the aforesaid stipulated
liquidated damages is not punitive, but represents an acceptable sum to
compensate Tenant for all such damages and losses. In accordance with Section
1.02(b), Tenant shall have no obligation to pay Fixed Basic Rent and Additional
Rent or other charges payable by Tenant hereunder, and all such rent and other
charges shall be abated, and the Rent Commencement Date shall not occur, until
the Landlord Improvements have been substantially completed.
Section 4.05. Signs. Tenant shall not place, erect, construct, or install
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any signs on the exterior of the Premises or Building, except in accordance with
applicable Laws. Tenant shall provide Landlord with a copy of all plans and
specifications pertaining to any such exterior signs. Tenant shall be solely
responsible for all costs and expenses associated with the construction or
installation of any signs installed by Tenant. Any signs erected by Tenant shall
remain the property of Tenant, who shall have the right to remove same upon the
expiration of the Term, provided that the Premises shall be restored to its
present condition, reasonable wear and tear excepted.
ARTICLE FIVE
Use and Compliance With Laws; Environmental Covenants
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Section 5.01. Use of Premises. Tenant shall use and occupy the Premises as
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space for its offices, laboratories, and warehouse use in connection with the
conduct of Tenant's business of manufacturing, testing and analyzing, packaging,
and distribution of pharmaceutical products, and in support of Tenant's clinical
research divisions, in accordance with Section 5.02 hereof, and for no other
purpose. Tenant shall not place any weights in any portion of the Premises in
excess of the floor load limits, as estimated by Tenant's engineer.
Section 5.02. Compliance with Law. Tenant shall comply in all material
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aspects with all Laws respecting the occupancy, use, enjoyment, maintenance,
management, improvement, repair, or alteration of the Premises, provided,
however, that such obligation shall not include making any structural or system
repairs to the Building, except for the Tenant Work or structural or system
repairs to the Building required to correct damage caused by Tenant or Tenant's
invitees. Tenant shall not be deemed to have violated this covenant solely
because of non-compliance or alleged non-compliance with any regulation, order,
direction or rule issued by the U.S. Food and Drug Administration, or any state
agency or department with jurisdiction over Tenant's business operations,
provided any such non-compliance does not impair or affect, in Landlord's
reasonable judgment, in any material aspect, Tenant's ability to perform its
other obligations under this Lease.
Section 5.03. Right to Contest. Tenant shall have the right, upon prior
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written notice to Landlord, to contest by appropriate legal proceedings, without
cost or expense to Landlord, the validity of any Laws so long as (a) such
contest is prosecuted in good faith, and (b) no sale or other action in
connection therewith is threatened against the Premises or Landlord. If at any
time, such a sale or other action against the Premises or Landlord is
threatened, then Tenant either (i) shall
9
comply with the Laws, or (ii) post such bonds or other security with the court
or appropriate governmental authority in either event in sufficient time and
amount to prevent such threat. Tenant agrees to indemnify and hold harmless
Landlord against any and all liability, loss, damage, cost and expense which
Landlord may sustain during the Term by reason of Tenant's contest, including
but not limited to any penalties which may be levied or assessed against the
Landlord or the Premises. In the event that any such contest by Tenant involves
the dispute over the payment of any fine, penalty, or other charge, and so long
as Tenant is not in default under this Lease, and in good faith and by
appropriate legal action shall contest the validity of any such fine, penalty or
charge, and shall have established by deposit of cash with Landlord, or other
securities satisfactory to Landlord, a reserve for the payment thereof in such
amount shall be subject to such contest , the Tenant shall not be required to
pay the contested item or produce the required receipt while the reserve is
maintained and so long as the contest that operates to prevent collection is
maintained and prosecuted with diligence, and shall not have been terminated or
discontinued adversely to Tenant. Any such cash held in reserve with Landlord
shall be deposited by Landlord with a federally insured financial institution in
a separate escrow or trust account, and such funds shall not be co-mingled with
other monies of the Landlord.
ARTICLE SIX
Representations and Warranties
------------------------------
Section 6.01. Landlord's Representations and Warranties. Landlord hereby
-----------------------------------------
represents and warrants to Tenant as follows:
(a) Landlord has or shall obtain good and indefeasible fee title to
the Premises, subject only to those matters set forth on Exhibit "C" attached
hereto (the "Permitted Exceptions") which matters do not adversely interfere
with or prohibit Tenant's proposed use of the Premises. Tenant's obligations
under this Lease are contingent upon Landlord first acquiring such title to the
Premises with thirty (30) days of the date of this Lease. In the event that
Landlord fails to obtain such title within such thirty (30) day period Tenant
may elect to terminate this Lease upon written notice to Landlord of such
election. Notwithstanding whether Tenant elects to terminate, Landlord shall
indemnify, defend, and hold Tenant harmless from and against any liability,
loss, cost and expense incurred by Tenant as a result of Landlord failing to
acquire such title as aforesaid.
(b) There is no claim, litigation, proceeding or governmental
investigation pending, or, so far as is known to you, threatened, against or
relating to the Premises, nor is there any basis known to Landlord for any such
action.
(c) The Premises comply, and upon completion the Landlord Improvements
and Tenant Work, will comply, with all Laws, and are not in violation of any
covenants, conditions or restrictions affecting the Premises.
10
(d) There are no outstanding violations of any Laws respecting the
Premises. Landlord covenants that it shall be solely responsible for
alterations, construction, and improvements to the Landlord Improvements, as may
be required by any applicable Laws.
(e) The Leased Premises shall be ready for use and occupancy by
Tenant, and all systems and improvements, including, but not limited to the
roof, exterior walls, foundation, structural frame, water supply system, sewage
disposal system, and electrical system shall be in good operating condition and
repair at the Rent Commencement Date, except to the extent that any such systems
or improvements are altered or modified by the Tenant Work.
(f) To the best of Landlord's knowledge, based on the following
environmental reports: (i) "Facility Closure Assessment and Remediation
Activities Report Tele-Dynamics Division of Hamilton Standard Fort Washington,
Pennsylvania," submitted by Baker Environmental, Inc., dated February, 1993,"
(ii) "Environmental Site Assessment Update of the Tele-Dynamics Facility Fort
Washington, Pennsylvania," prepared by Baker Environmental, Inc., dated April,
1995," (iii) "(Draft) Phase I Environmental Site Assessment of the former Tele-
Dynamics Facility Fort Washington, PA, TSD Job No. CRW96003" prepared by TSD
Environmental Services, Inc., dated April, 1996, and (iv) "Underground Storage
Tank Closure Assessment at the Hamilton Standard Division of UTC Tele-Dynamics
Facility Ft. Washington, Pennsylvania," prepared by Baker Environmental, Inc.,
dated February, 1993," (collectively, the reports described in clauses (i)
through (iv) are referred to herein as the "Environmental Assessment Reports"),
and without any further investigation by Landlord, (A) neither Landlord, nor any
prior owner, tenant, or operator of the Building has performed any activities
which would subject the Building to liability under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq.
------ -- ---
("CERCLA"), or any other environmental or quasi-environmental law, statute, act,
rule, regulation or ordinance enacted by a municipal, county, state or federal
governmental entity or agency (all of the foregoing along with any and all
amendments thereof and supplements thereto, are hereinafter referred to
individually as an "Environmental Law" and collectively as the "Environmental
Laws"); (B) the Building is not now and has never been in violation of any
Environmental Law; and (C) neither Landlord, nor any prior owner, tenant, or
operator of the Building have used the Building to refine, produce, store,
handle, transfer, process, transport or dispose of any "Hazardous Substances" or
"Hazardous Waste" as defined under any Environmental Laws, except strictly in
accordance with all such Environmental Laws. Landlord acknowledges that Tenant
has not undertaken any independent environmental assessment of the Premises, and
has executed and accepted the Lease in reliance upon the Environmental
Assessment Reports provided by Landlord and above representations and warranty
of Landlord.
Section 6.02. Brokerage Commissions. Landlord and Tenant warrant to each
---------------------
other that neither has dealt with any broker or other intermediary with respect
to this transaction or the Premises in any manner which would create a right to
a commission other than with the Brokers, whose compensation Landlord has
separately agreed to pay. Landlord authorizes and directs Preferred Real Estate
Advisors, Inc. to share its commissions on the rent paid by Tenant to Landlord
with Julien J. Studley, Inc., acting as agent for Tenant.
11
ARTICLE SEVEN
Indemnification
---------------
Section 7.01. Tenant's Indemnity. Subject to Section 10.05 hereof, Tenant
------------------
will protect, indemnify and hold harmless Landlord and its agents, affiliates,
subsidiaries, parent companies and the officers and directors thereof, from and
against any and all claims, actions, damages, liability and expense (including
fees of attorneys, investigators and experts) in connection with loss of life,
personal injury or damage to property in or about the Premises or arising out of
the occupancy or use of the Premises by Tenant or its Agents or occasioned
wholly or in part by any act or omission of Tenant or its Agents, whether during
the Term, except to the extent such loss, injury or damage was caused by the
negligence or willful misconduct of Landlord or its agents. In case any action
or proceeding is brought against Landlord and/or its agents, affiliates, parent
companies, officers, directors by reason of the foregoing, Tenant, at its
expense, shall resist and defend such action or proceeding, or cause the same to
be resisted and defended by counsel (reasonably acceptable to Landlord and its
Agents) designated by the insurer whose policy covers such occurrence or by
counsel designated by Tenant and approved by Landlord. Tenant's obligations
pursuant to this Section 7.01 shall survive the expiration or termination of
this Lease.
Section 7.02. Landlord's Indemnity. Subject to Section 10.05 hereof,
--------------------
Landlord will protect, indemnify and hold harmless Tenant and its agents,
affiliates, subsidiaries, parent companies, and the officers and directors
thereof, from and against any and all claims, actions, damages, liability and
expense (including fees of attorneys, investigators and experts) in connection
with loss of life, personal injury or damage to property in or about the
Premises occasioned wholly or in part by any act or omission of Landlord or its
agents, during the Term, except to the extent such loss, injury or damage was
caused by the negligence or willful misconduct of Tenant or its agents. In case
any action or proceeding is brought against Tenant and/or its agents,
affiliates, parent companies, officers, directors by reason of the foregoing,
Landlord, at its expense, shall resist and defend such action or proceeding, or
cause the same to be resisted and defended by counsel (reasonably acceptable to
Tenant and its agents) designated by the insurer whose policy covers such
occurrence or by counsel designated by Landlord and approved by Tenant.
Landlord's obligations pursuant to this Section 7.02 shall survive the
expiration or termination of this Lease. Landlord agrees that Landlord shall be
solely responsible for and shall indemnify and defend and save Tenant harmless
from any loss, damage, or liability caused by the presence of any asbestos
containing materials, polychlorinated biphenyls, underground storage tanks, or
any "Hazardous Substances" or "Hazardous Waste" that were refined, produced,
stored, handled, transferred, processed, transported or disposed of on the
Premises prior to the Rent Commencement Date.
12
ARTICLE EIGHT
Maintenance and Repairs
-----------------------
Section 8.01. Tenant's Obligations. Subject to Landlord's obligations set
--------------------
forth in this Lease, Tenant shall, throughout the Term, keep the Premises in
good working order and condition, at Tenant's sole cost and expense, including
all driveways, parking areas, curbs, landscaped areas, and sidewalks, and other
improvements now or hereafter erected thereon, including but not limited to the
roof, HVAC equipment, finishes, plumbing, lighting and other improvements now or
hereafter located upon the Building, or any part of the Premises. Tenant shall,
at Tenant's sole cost and expense, during the entire Term, engage a reputable
and licensed mechanical contractor to provide routine preventive maintenance
service on the heating, ventilation and air conditioning equipment ("HVAC")
pursuant to a written service contract, and shall provide a copy of same to
Landlord promptly following receipt of same. Tenant shall also provide Landlord
with a list of contractors whom Tenant has engaged pursuant to a written
agreement for scheduled maintenance or routine repairs of the Premises, or the
systems or equipment therein. At the expiration of the Term, Tenant shall
deliver the Premises in broom clean condition, reasonable wear and tear
excepted.
Section 8.02. Landlord's Obligations. Landlord shall be responsible for
----------------------
and covenants and agrees to maintain in good condition all structural and weight
bearing elements of the Building, and shall make all structural repairs to the
Building, including but not limited to the external walls, weight-bearing
elements and base flooring (below floor covering). Notwithstanding anything to
the contrary contained in this Section 8.02, Landlord shall not be responsible
for repairs or replacements necessary to correct damage caused by Tenant or
Tenant's invitees.
Section 8.03 Access to Premises. Landlord may enter upon the Premises
------------------
during normal business hours, upon 48 hours prior verbal notice to Tenant's
designated representative (except no notice shall be required in the case of
emergency), and accompanied by an employee of Tenant, and further provided that
the individual or individuals seeking access on behalf of Landlord shall have
executed a confidentiality agreement satisfactory to Tenant, for the following
purposes:
(a) to inspect the condition of the Premises;
(b) to make repairs to the Building or Premises pursuant to the terms
of the Lease, provided that Landlord shall make every reasonable effort to
minimize any interference with Tenant's use of the Premises, and so long as
Landlord is using reasonable efforts to minimize interference, there will be no
liability or abatement of Fixed Basic Rent or Additional Rent while such repairs
are being undertaken, and
(c) to show the Premises to prospective purchasers, mortgagees, or
other persons having a legitimate interest in viewing the same, and, at any time
within nine (9) months
13
prior to the expiration of the Term for the Premises, to brokers or persons
wishing to rent the Premises;
Section 8.04. Landlord as Building Manager; Manager's Fee. Tenant shall
-------------------------------------------
pay Landlord, or at Landlord's direction, to Landlord's agent, a fee of $400.00
per month, as Additional Rent in accordance with Section 2.02 hereof (the
"Manager's Fee").
ARTICLE NINE
Alterations
-----------
Section 9.01. Structural Alterations. Except as provided in Section 9.02
----------------------
hereof, and other than the Tenant Work, Tenant will make no other structural
alterations to the Premises or any part thereof , without the prior written
consent of Landlord, which consent will not be unreasonably withheld,
conditioned, or delayed. Landlord shall not withhold, its consent unless such
structural alterations would materially change the character, appearance or use
of the Premises, or would weaken or impair the structural integrity or lessen
the value of the Premises or any part thereof. Any such permitted alterations
shall be performed in accordance with plans and specifications, and a
construction schedule, previously approved in writing Landlord. Nevertheless,
Tenant shall be permitted to install roof top HVAC units in accordance with
plans and specifications previously approved in writing by Landlord. The
location of such roof top HVAC units shall be subject to Landlord's reasonable
discretion, and such installation shall be performed by a licensed mechanical
contractor, which contractor shall be subject to Landlord's approval, which
approval shall not be unreasonably withheld, conditioned or delayed. Any such
structural alterations to the Premises shall be subject to the same conditions
as apply to the Tenant Work pursuant to Section 4.02 hereof.
Section 9.02. Non-Structural Alterations. Tenant may, at its sole cost,
--------------------------
and without the prior written consent of Landlord, make such interior
nonstructural alterations, additions, and improvements in and to the Premises as
it may deem desirable for its use, provided that Tenant notifies Landlord of
Tenant's intention to perform such alterations, additions and improvements and
provides Landlord with a copy of any plans and specifications relating thereto.
Any such non-structural alterations to the Premises shall be subject to the same
conditions as apply to the Tenant Work pursuant to Section 4.02 hereof.
Section 9.03 Mechanics' Liens. Tenant shall not, in the making of any
----------------
repairs or alterations pursuant to the provision of this Lease, suffer or permit
any mechanic's, laborer's or materialmen's lien to be filed against the
Premises, Building, or any part thereof by reason of labor or materials supplied
or claimed to have been supplied to Tenant; and if any such lien shall be filed,
Tenant, within forty-five days after notice of filing, shall cause it to be
discharged of record. In the event that Tenant fails to discharge any such lien
as aforesaid, then Landlord may, but shall not be required to, cause such lien
to be discharged. Any such payments or expenses incurred by Landlord in
connection therewith, shall constitute Additional Rent hereunder and shall be
due and payable with the next monthly installment of Fixed Basic Rent. Tenant
shall
14
provide Landlord with copies of the praecipe or other record evidencing the
discharge of such lien promptly following receipt of same.
Section 9.04. Status of Improvements; "As Built" Drawings. Any
-------------------------------------------
alterations or improvements made pursuant to this Lease shall remain on the
Premises at the expiration of the Term, unless Landlord and Tenant shall agree
otherwise in writing; provided, however, that Tenant shall, at its option, have
the right to remove Tenant's trade fixtures, equipment, furnishings or personal
property, provided that if damage is caused by such removal, the damage shall be
repaired by Tenant by the expiration of the Term.
ARTICLE TEN
Insurance and Damage
--------------------
Section 10.01. Insurance. Tenant, at Tenant's sole cost and expense,
---------
shall keep or cause the Premises to be kept continuously insured during the
Term, under policies providing the following insurance coverages: (i) commercial
general liability insurance on an occurring basis with a combined single limit
for bodily injury and property damage of not less than $2,000,000.00, including
the broad form general liability endorsement, contract liability, and products
liability coverage; and (ii) a policy of standard fire, extended coverage and
special extended coverage insurance (all risks), including a vandalism and
malicious mischief endorsement, in an amount equal to the full replacement value
of the Premises, new and without deduction for depreciation of fixtures,
furniture and improvements. On or before the Rent Commencement Date, Tenant
shall provide Landlord with satisfactory evidence that such insurance is in full
force and effect or effectively renewed and that the insurance premiums for such
insurance have been paid for the first year of the term. Tenant's obligation to
carry or maintain any insurance required to be maintained by Tenant under the
Lease may be satisfied by Tenant by providing such coverages under Tenant's
existing blanket insurance policy. Such liability policy shall name Landlord as
an additional insured, and such casualty policy shall name Landlord as the loss
payee, and shall provide for at least thirty (30) days' prior notice of
cancellation or modification to Landlord. Upon the execution of this Lease,
Tenant shall deposit certificates evidencing such insurance coverages with
Landlord, and thereafter shall deposit with Landlord certificates evidencing
renewal of such coverages at least fifteen (15) days prior to the expiration
thereof. In the event that Tenant shall fail to maintain any such required
insurance coverages during the Term, Landlord may, but shall not be obligated
to, procure and obtain such insurance coverages and Landlord's costs for such
insurance shall constitute Additional Rent hereunder and shall be due and
payable with the next monthly installment of Fixed Basic Rent.
Section 10.02. Damage or Casualty.
------------------
(a) In case the Premises or any portion thereof shall be totally or
partially damaged or destroyed by fire or by any other casualty whatsoever, then
Landlord and Tenant shall proceed with reasonable promptness, and in accordance
with paragraph (c) below, to repair
15
and restore the Premises to at least as good a condition as that which existed
immediately prior to such fire or other casualty and during such repair period,
there shall be an abatement of rent. In the event Landlord receives any
insurance proceeds from the property insurance maintained by Tenant pursuant to
Section 10.01, Landlord shall turn such proceeds over to Tenant for the purpose
of making such repairs.
(b) In the event that any of the insurance monies paid by the
insurance companies to Tenant shall remain after the completion of such repairs,
restoration or reconstruction, the excess shall be paid to or retained by
Tenant, as Tenant's property. In the event that the proceeds of any insurance
policies are insufficient to restore the Premises to the condition that they
were in prior to the occurrence of the casualty, either party hereto may
terminate this Lease upon ten (10) days prior written notice to the other party
of such election, and the Lease shall terminate on the date set forth in such
notice unless the other party shall elect and agree to pay any short fall
necessary to effect the required repairs, restoration or reconstruction, and in
which case the insurance proceeds shall be apportioned between the parties
hereto in the same proportion as the cost of the Tenant Work bears to the
aggregate of the cost of the Landlord Improvements plus (i) the actual cost to
Landlord to acquire the Building (exclusive of the land and appurtenances) or
(ii) $1,800,000, whichever is less.
(c) All repairs, restoration and reconstruction to the interior of the
Building, or other portions of the Premises comprising the Tenant Work shall be
performed by Tenant subject to the conditions set forth in Section 4.02 and
Section 9.01 hereof. All repairs, restoration and reconstruction to the
exterior of the Building, or other exterior improvements to the Premises shall
be performed by Landlord. The parties shall cooperate with one another and
shall have mutual responsibility for the adjustment of all insurance claims.
Section 10.03. Cooperation in Actions. Landlord and Tenant each will
----------------------
cooperate with the other, to such extent as such other party may reasonably
require, in connection with the prosecution or defense of any action or
proceeding arising out of, or for the collection of any insurance monies that
may be due in the event of, any loss or damage, and each will execute and
deliver to such other party such instruments as may be required to facilitate
the recovery of any insurance monies.
Section 10.04. Notice of Casualty. Tenant shall give prompt written and
------------------
verbal notice to Landlord with respect to all fires or other casualties
occurring upon the Premises.
Section 10.05. Waiver of Subrogation; Rights Under Insurance Policies.
------------------------------------------------------
Each of the parties hereto hereby release the other, to the extent of the
releasing party's insurance coverage, from any and all liability for any loss or
damage which may be inflicted upon the Premises of such party even if such loss
or damage shall be brought about by the fault or negligence of the other party,
its agents or employees; provided, however, that this release shall be effective
only with respect to loss or damage occurring during such time as the
appropriate policy of insurance shall contain a clause to the effect that this
release shall not affect said policy or the right of the insured to recover
thereunder. If any policy does not permit such a waiver, and if the party to
16
benefit therefrom requests that such a waiver be obtained, the other party
agrees to obtain an endorsement to its insurance policies permitting such waiver
of subrogation if it is available and if such policies do not provide therefor.
If an additional premium is charged for such waiver, the party benefiting
therefrom, if it desires to have the waiver, agrees to pay to the other the
amount of such additional premium promptly upon being billed therefor.
ARTICLE ELEVEN
Condemnation
------------
Section 11.01. Condemnation. In the event that the Premises, or any part
------------
thereof, shall be taken in condemnation proceedings or by exercise of any right
of eminent domain or by agreement between Landlord, Tenant and those authorized
to exercise such right (hereinafter collectively called "Condemnation
Proceedings"), Tenant shall have the right to make a claim against the condemnor
for moving expenses, business dislocation damages or damages to Tenant's
business and personal property owned by Tenant, including but not limited to
those items constituting Tenant Work. The parties agree to execute any and all
further documents that may be required in order to facilitate collection of any
such award or awards.
Section 11.02. Total Condemnation. If title to the fee of the whole or
------------------
materially all of the Premises shall be taken by Condemnation Proceedings, for
any public or quasi-public use, this Lease shall cease and terminate, and all
Fixed Basic Rent, Additional Rent and other charges paid or payable by Tenant
hereunder shall be apportioned, as of the date possession of the Premises must
be delivered to the condemning authority, and the total award, except for any
award specifically to Tenant as described in Section 11.01 above, shall be
retained by Landlord. For the purposes of this Section, a taking of the whole or
materially all of the Premises shall be deemed to have occurred if the portion
of the Premises not so taken, in Landlord's reasonable, good faith judgment,
cannot be reconstructed or repaired so as to constitute a facility usable by
Tenant for the purposes which the Premises were being used by Tenant immediately
prior to such taking.
Section 11.03. Partial Condemnation. Unless otherwise required by any
--------------------
mortgage lender of Landlord, if at any time during the term of this Lease, title
to less than the whole or materially all of the Premises shall be taken in
Condemnation Proceedings, all the award or proceeds collected by Landlord
pursuant to Section 11.01 hereof shall be held by Landlord and applied and paid
over toward the cost of demolition, repair and restoration, substantially in the
same manner and subject to the same conditions as those provided in Section
10.03 hereof with respect to insurance and other monies and provided no Event of
Default shall have occurred. Any balance remaining in the hands of Landlord
after payment of such costs of demolition, repair and restoration as
aforementioned shall be the sole property of Landlord. This Lease shall continue
in full force and effect; provided however, the Fixed Basic Rent shall be
reduced by the proportion that the square footage of the Building taken in
condemnation bears to the total square footage of the Building.
17
ARTICLE TWELVE
Default
-------
Section 12.01. Events of Default; Termination. The occurrence of each of
------------------------------
the following shall be an "Event of Default" hereunder:
(a) if Tenant shall make an assignment of a material portion of its
assets for the benefit of its creditors, or if a material portion of Tenant's
assets shall become subject to a levy or attachment by any judgment creditors or
governmental authorities and such attachment or levy is not discharged or
dissolved within forty-five (45) days after the date of such attachment or levy;
or
(b) if Tenant indicates an intention to file a petition or if any
petition shall be filed by or against Tenant in any court, whether or not
pursuant to any statute of the United States or of any State, in any bankruptcy,
reorganization, composition, extension, arrangement or insolvency proceedings,
and in the case of an involuntary bankruptcy petition such proceedings shall not
be dismissed within ninety (90) days after the institution of the same; or
(c) if, in any proceeding, a receiver or trustee be appointed for all
or any portion of Tenant's property, and such receivership or trustee shall not
be vacated or set aside within ninety (90) days after the appointment of such
receiver or trustee; or
(d) if Tenant shall fail to pay any installment of Fixed Basic Rent
or Additional Rent, or any part thereof, when the same shall become due and
payable for a period of ten (10) business days after written notice to Tenant
from Landlord; or
(e) if Tenant shall abandon the Premises, without the prior consent
of Landlord, by removing all or substantially all of Tenant's furniture,
equipment and personal property from the Premises, provided that Tenant shall
also be delinquent in the payment of Fixed Basic Rent or fail to obtain any
additional insurance coverage that may be required by Tenant's insurance carrier
in order to insure a vacant building; or
(f) if Tenant shall fail to perform or observe any other material
provision, condition or requirement of this Lease (not hereinbefore in this
Section 12.01 specifically referred to) on the part of Tenant to be performed or
observed, and such failure shall continue for thirty (30) days after notice
thereof from Landlord to Tenant, or, if such Event of Default is of such a
nature that it cannot, with due diligence, be cured within a period of thirty
(30) days, if Tenant shall have failed to commence the curing of such default
within the period of thirty (30) days referred to above and shall thereafter
fail to continue with all due diligence to complete the curing of such default
and completes such cure in any event within ninety (90) days after notice
thereof.
Section 12.02. Remedies. Upon the occurrence of an Event of Default, and
--------
at any time thereafter, Landlord shall have the following rights and may elect
any one or more of the following remedies:
18
(a) To accelerate the whole or any part of the Fixed Basic Rent for
the remainder of the Term (the "Accelerated Rent"), which Accelerated Rent shall
be discounted to present value on the basis of a discount rate equal to the
prime rate offered by CoreStates Bank, N.A., applied and calculated on the date
of receipt by Landlord of such Accelerated Rent; and shall be deemed due and
payable as if, by the terms and provisions of this Lease, such Accelerated Rent
was on that date payable in advance.
(b) Without waiving Landlord's right to recover the Accelerated Rent
as herein provided, Landlord may re-enter the Premises, and, at the option of
Landlord, remove all persons and all or any property therefrom, either by
summary dispossess proceedings or by any suitable action or proceeding at law or
by force or otherwise, without being liable for prosecution or damages therefor,
and repossess and enjoy the Premises. Upon recovering possession of the
Premises by reason of an Event of Default, Landlord may, at Landlord's option,
either terminate this Lease or make such alterations and repairs as may be
necessary in order to relet the Premises and relet the Premises or any part or
parts thereof, either in Landlord's name or otherwise, for a term or terms which
may, at Landlord's option, be less than or exceed the period which would
otherwise have constituted the balance of the Term of and at such rent or rents
and upon such other term and conditions as in Landlord's sole discretion may
seem advisable and to such person or persons as may in Landlord's discretion
seem best; upon each such reletting all rents received by Landlord from such
reletting shall be applied: first, to the payment of any costs and expenses of
such reletting, including brokerage fees and attorney's fees and all costs of
such alterations and repairs; second, to the payment of any indebtedness other
than Fixed Basic Rent due hereunder from Tenant to Landlord; third, to the
payment of Additional Rent due and unpaid hereunder; and the residue, if any,
shall be held by Landlord and applied in payment of future rent as it may become
due and payable hereunder. If such rentals received from such reletting during
any month shall be less than that to be paid during that month by Tenant, Tenant
shall pay any such deficiency to Landlord. Such deficiency shall be calculated
and paid monthly. No such re-entry or taking possession of the Premises or the
making of alterations or improvements thereto or the reletting thereof shall be
construed as an election on the part of Landlord to terminate this Lease unless
written notice of such intention be given to Tenant. Landlord shall in no event
be liable in any way whatsoever for failure to relet the Premises, or in the
event that the Premises or any portion thereof is relet, for failure to collect
the rent thereof under such reletting. Notwithstanding any such reletting
without termination, Landlord may at any time thereafter elect to terminate this
Lease for such previous breach.
(c) Without waiving Landlord's right to recover the Accelerated Rent
as herein provided, Landlord may terminate the Lease and thereupon all rights of
Tenant under this Lease shall expire and terminate and Tenant shall forthwith
quit and surrender possession of the Premises in the condition specified in
Section 8.01 hereof.
Section 12.03. Non-Waiver. No waiver by Landlord of any breach by Tenant
----------
or any of Tenant's obligations, agreements or covenants herein shall be a waiver
of any subsequent breach,
19
nor shall any forbearance by Landlord to seek a remedy for any breach by Tenant
be a waiver by Landlord of any rights and remedies with respect to any
subsequent breach.
Section 12.04. Rights and Remedies Cumulative. No right or remedy
------------------------------
herein conferred upon or reserved to Landlord is intended to be exclusive of any
other right or remedy provided herein or by law, but each shall be cumulative
and in addition to every other right or remedy given herein or now or hereafter
existing at law or in equity or by statute.
Section 12.05. Waiver of Trial by Jury. LANDLORD AND TENANT HEREBY
-----------------------
IRREVOCABLY AGREE TO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON ANY
MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OF OR OCCUPANCY OF THE
PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE OR REMEDY.
ARTICLE THIRTEEN
Section 13.01. Quiet Enjoyment. Tenant, upon paying the rent herein
---------------
reserved, and performing and observing the covenants, conditions and agreements
hereof upon the part of Tenant to be performed and observed, shall and may
peaceably hold and enjoy the said Premises during the term hereof, without any
interruption or disturbance from Landlord or anyone claiming by, through or
under Landlord, subject, however, to the terms of this Lease and subject to all
matters which now affect the Premises and subject to the rights of Landlord's
mortgage lenders under all present and future mortgages of Landlord covering the
Premises. This covenant shall be construed as running with the land to and
against subsequent owners and successors in interest, and is not, nor shall it
operate or be construed as, a personal covenant of Landlord, except to the
extent of Landlord's interest in said Premises and only so long as such interest
shall continue, and thereafter this covenant shall be binding only upon such
subsequent owners and successors in interest, to the extent of their respective
interests, as and when they shall acquire the same, and only so long as they
shall retain such interest.
Section 13.02. Subordination, Non-Disturbance and Attornment. This Lease,
---------------------------------------------
and Tenant's rights hereunder, including, without limitation the Option granted
pursuant to Article 15 hereof, shall not be subject or subordinate to the lien
of any mortgage, ground lease, or other encumbrance, encumbering the Premises,
unless Tenant and such encumbrancer execute an agreement, certificate or other
writing, which contains a provision that so long as Tenant shall not be in
default under the terms of the Lease, the Lease, the Option and all of Tenant's
other rights hereunder, and Tenant attorns to such encumbrancer, the Lease shall
remain in full force and effect regardless of any event of foreclosure or
termination upon any such mortgage, ground lease or other encumbrance. Such
agreement shall also contain a provision, which obligates Tenant,
notwithstanding any claim, defense or right of setoff that otherwise may be
available to
20
Tenant in the event that Landlord is in default under the terms of this Lease,
to make payments of Fixed Basic Rent to such encumbrancer, and provides any
claim, defense or right of setoff that Tenant may have under applicable law
would only apply to such portion of the Fixed Basic Rent that exceeds the amount
of Landlord's regular monthly installment payment of debt service to such
encumbrancer.
Section 13.03. Tenant Estoppel Certificate. Tenant shall, within ten
---------------------------
(10) days following request of Landlord, execute an estoppel certificate or
similar writing, certifying to Landlord's mortgagee or purchaser such facts, if
true, and agreeing to such notice provisions and other matters as such mortgagee
or purchaser may reasonably require in connection with Landlord's present or
future financing or sale of the Building.
Section 13.04. Landlord's Lien Waiver. Within thirty (30) days following
----------------------
the written request of Tenant, Landlord shall execute a waiver or similar
writing, as may be reasonably required in connection with any present or future
financing provided to Tenant by any creditor, in order to evidence that Landlord
waives, releases and relinquishes any and all rights (including the right to a
landlord's lien), interest, or claim, if any, in or to all equipment, trade
fixtures, goods, inventory, accounts, or accounts receivable (as those terms are
defined under the Uniform Commercial Code), which are now or hereafter located
or stored on, or otherwise do now or hereafter pertain to, the Premises, and
which are subject to a security interest or lease agreement granted or entered
into by Tenant in favor of any creditor of Tenant (collectively, such items are
referred to as the "Collateral").. Landlord shall not take custody or possession
of the Collateral, or distrain or remove any of the Collateral from the
Premises, or interfere with the shipment, removal or delivery of any Collateral
to or from the Premises by Tenant (or any third party acting with Tenant's
permission), without having first provided thirty (30) days written notice of
such proposed action to any such creditor of Tenant to whom Landlord shall have
previously delivered a waiver or similar writing.
ARTICLE FOURTEEN
Option to Renew Lease
--------------------
Section 14.01. Option to Renew. Provided that this Lease has not been
---------------
sooner terminated or expired as provided for herein and that no Event of Default
shall have occurred and be continuing on the date of the exercise of the option
to renew, Tenant shall have two consecutive options to extend the term (the
"Renewal Options") of this Lease beyond the initial term for five year periods
each. Such option shall be exercised by Tenant giving its written notice to
Landlord at least one hundred and eighty (180) days prior to the expiration of
the then current term of this Lease (collectively, the "Renewal Terms" and in
the case of the first five year renewal term, the "First Renewal Term" and in
the case of the second five year renewal term, the "Second Renewal Term").
Section 14.02. Adjustment to Fixed Basic Rent. Adjustment to In the event
------------------------------
Tenant elects to exercise such option to extend the term of this Lease, the
Fixed Basic Rent during the Renewal Terms
21
shall be as follows: (a) during the First Renewal Term, the Fixed Basic Rent
shall be $930,000.00 per annum, payable in equal monthly installments of
$77,500.00 each (the "First Renewal Fixed Basic Rent") and (b) during the Second
Renewal Term, the Fixed Basic Rent shall be as follows:
Year Yearly Payments Monthly Payments
---- --------------- ----------------
Lease Year 21 $ 957,900.00 $79,825.00
Lease Year 22 $ 986,637.00 $82,219.75
Lease Year 23 $1,016,236.11 $84,686.35
Lease Year 24 $1,046,723.19 $87,226.93
Lease Year 25 $1,078,124.89 $89,843.74
All other terms of the Lease shall remain the same.
ARTICLE FIFTEEN
Option to Purchase and Right of First Refusal
---------------------------------------------
Section 15.01. Tenant's Option to Purchase. In consideration of
---------------------------
Tenant's acceptance of this Lease, Tenant is hereby granted the exclusive right
and option to purchase the Building, together with all of all those certain
parcels and tracts of land on which the Building is situate, and all of
Landlord's estate, right, title and interest thereto, including all easements
and appurtenances thereto (collectively, the "Real Estate"), at any time prior
to Lease Year 3, provided the Lease is then in full force and effect (the
"Option"). The Option is to be exercised by Tenant's giving written notice of
its intention to purchase the Real Estate to Landlord not less than sixty (60)
days prior to Lease Year 3. This Lease and the aforesaid notice of Tenant's
exercise of the Option shall constitute an agreement of sale between the
parties, whereby Landlord agrees to sell and Tenant agrees to purchase the Real
Estate upon the following terms and conditions:
(a) Settlement for the purchase of the Real Estate shall be on the
earlier of (i) the date designated in Tenant's notice, which date shall be not
less than thirty (30) days after the date such notice is delivered to Landlord,
or (ii) the commencement date of Lease Year 3. Settlement shall occur in the
office of Tenant's title insurance company, on such date as shall be designated
in the aforesaid notice from Tenant to Landlord.
(b) In the event that Tenant effectively exercises the Option, the
purchase price for the Real Estate shall be equal to the sum of $6,500,000.00,
plus $21,000.00 multiplied by the number of full calendar months occurring after
the first full calendar month of Lease Year 1 and before the calendar month
during which settlement occurs, but including a pro rated portion of the $21,000
for the calendar month during which settlement occurs; provided however, that in
the event that settlement is delayed through no fault of Tenant, the purchase
22
price shall be calculated as if settlement had occurred on the date designated
in Tenant's notice; and provided further that in no event shall the purchase
price exceed the sum of $7,000,000.00.
(c) The purchase price, computed as above provided, shall be payable
by Tenant to Landlord, or to Landlord's mortgage lender if required by such
lender, at the time of settlement, by title company check, cashier's check,
certified check, or other immediately available funds.
(d) Tenant and Landlord shall each pay fifty percent (50%) of all
realty transfer taxes, documentary stamp taxes or other taxes and charges
imposed by the federal, state or local authorities upon the conveyance.
(e) Landlord shall convey to Tenant a good and marketable fee simple
title to the Real Estate, free and clear of all liens, encumbrances, easements,
restrictions or other exceptions or objections, except for the Permitted
Exceptions, and except as have been created or consented to by Tenant during the
term of this Lease. Tenant's title shall be insurable as such at ordinary rates
by Commonwealth Land Title Insurance Company or such other title insurance
company selected by Tenant. Except for Landlord's special warranty contained in
the deed conveying the Real Estate to Tenant, which warranty shall be subject to
the aforesaid permitted exceptions, Landlord shall make no representations or
warranties regarding the Real Estate.
(f) Tenant acknowledges that Tenant's obligation to purchase the Real
estate following the effective exercise of the Option shall not be subject to
Tenant's ability to obtain purchase money financing or any other contingency,
except for Landlord's obligation to deliver title to the Real estate as
aforesaid. In the event Tenant fails to complete settlement for any reason
whatsoever, this Lease shall remain in full force and effect in accordance with
its terms, including the right to exercise the Renewal Options. In the event
that Tenant is in default of its obligation to purchase the Real Estate, when
and as required hereunder, and such default is not cured within ten (10) days of
the date of such default, Tenant shall reimburse Landlord for Landlord's
reasonable costs and expenses actually incurred by Landlord in anticipation of
completing settlement, but in no event shall Tenant be obligated to reimburse
Landlord for more than $5,000.00.
Section 15.02. Tenant's Right of First Refusal. Tenant's Landlord hereby
-------------------------------
grants to Tenant an exclusive right of first refusal to purchase the Real Estate
on the terms set forth in this Section 15.02. In the event that at any time
during the Term, and provided the Lease is then in full force and effect,
Landlord shall receive a bona fide offer to purchase all or any part of the Real
Estate, and desires to accept such offer, then Landlord shall promptly notify
Tenant in writing of such offer, such notice to specify the price, payment and
other material terms of such offer, and Landlord shall first offer to sell the
Real Estate or such portion of the Real Estate which is the subject of such
offer to Tenant on the same such terms. Tenant may accept such offer by written
notice to Landlord within fifteen (15) business days following the receipt of
Landlord's notice to Tenant. Upon Tenant's acceptance of such offer, closing
shall occur in accordance with the terms of the offer provided to Tenant by
Landlord. If Tenant does not agree to purchase the Real Estate
23
or the subject portion thereof, Landlord shall have the right to proceed to sell
the Real Estate, or the subject portion thereof, pursuant to the terms of such
offer or on other terms no more favorable to the purchaser than were presented
to Tenant, subject to this Lease, the Option, and the other rights of Tenant
hereunder, and provided such sale is completed within the later of (i) 120 days
from the date Tenant gives notice that it does not elect to purchase the Real
Estate, or (ii) the period of time set forth in such offer. Notwithstanding
anything set forth herein to the contrary, Landlord shall not be permitted to
sell or convey the Real Estate during the first two years of the Term to anyone
but Tenant, except for a conveyance to a partnership, trust, or other legal
entity in which Brian O'Neill, an individual who presently owns an interest in
Landlord, shall continue to own a legal or beneficial interest, and with respect
to such conveyance Tenant's right of first refusal granted under this Section
shall not be deemed to be extinguished and the deed or other writing evidencing
such conveyance shall expressly provide that the conveyance and the grantee's
rights with respect thereto are and shall be subject to this Lease.
Section 15.03. Memorandum of Lease and Option to Purchase. Concurrently
------------------------------------------
with the execution hereof, the parties hereto shall execute and deliver a
memorandum of this lease and option to purchase in the form attached hereto as
Exhibit "D," which memorandum shall thereafter be promptly recorded in the
Office of the Recorder of Deeds of Montgomery County, Pennsylvania. The
memorandum shall indicate the terms by which the lease and option to purchase
granted herein shall expire.
ARTICLE SIXTEEN
Miscellaneous
-------------
Section 16.01. Assignment; Sublease.
--------------------
(a) Except as provided in paragraph (b) below, Tenant shall not
assign or sublet the Premises or any part thereof without Landlord's prior
written approval, which approval shall not be unreasonably withheld, conditioned
or delayed. If Tenant desires to assign this Lease or sublet any or all of the
Premises, Tenant shall give Landlord written notice prior to the anticipated
effective date of the assignment or sublease, and shall provide Landlord with a
written sublease or assignment, signed by each of Tenant and Tenant's assignee
or subtenant, and a copy of the most recently available financial statement for
such assignee or subtenant. Landlord shall then have a period of ten (10) days
following receipt of such notice to notify Tenant in writing that Landlord
elects either (1) to terminate this Lease as to the space so affected as of the
date so requested by Tenant, or (2) to permit Tenant to assign this Lease or
sublet such space. If Landlord shall fail to notify Tenant in writing of such
election within such period, Landlord shall be deemed to have approved such
assignment or sublease.
(b) Notwithstanding anything to the contrary contained in paragraph
(a) above, Tenant may assign or sublet all or any portion of the Premises if
either (A) (1) Tenant is not in default of any its obligations under this Lease,
(2) Tenant remains obligated hereunder, (3)
24
the proposed use of the Premises is in compliance with all applicable Laws
pertaining to the Premises, and does not violate any restrictive covenant to
which the Landlord may be bound, and (4) the prospective assignee or subtenant
has signed a written sublease or assignment with Tenant and therein agrees to be
bound by all the terms and conditions of the Lease respecting the portion of the
Premises that is the subject of the assignment or sublease, or (B) (1) such
assignee or subtenant is a subsidiary or an affiliate of Tenant, or owns or
controls Tenant, (2) acquires all or substantially all of the assets of Tenant,
or (3) acquires all or a majority of the capital stock of Tenant, Landlord shall
consent and approve the proposed assignment or sublease within ten (10) days of
Tenant's notice and shall not be permitted to withhold or condition such
approval and consent.
(c) Any rent or other consideration realized by Tenant under any such
sublease or assignment in excess of Fixed Basic Rent payable hereunder, net of
the reasonable cost of any improvements which Tenant has made for the purpose of
assigning or subletting all or a part of the Premises and other expenses
incurred by Tenant associated with such assignment or subletting, including,
without limitation, brokerage commissions and legal fees, shall be divided and
paid, ten percent (10%) to Tenant, and ninety percent (90%) to Landlord.
(d) No assignment or subletting by Tenant shall relieve Tenant of any
obligations under this Lease. Any assignment of subletting which conflicts with
the provisions hereof shall be void.
Section 16.02. Notice. All notices, requests and other communications
------
under this Lease shall be in writing and shall either be sent by registered or
certified mail, return receipt requested, postage prepaid, by an overnight
courier guaranteeing next day delivery (e.g., Federal Express, Purolator, UPS),
in each instance addressed, as follows:
To Landlord: 525 VIRGINIA DRIVE ASSOCIATES LIMITED PARTNERSHIP
443 South Gulph Road
King of Prussia, Pennsylvania 19406
Attention:
With Copy to: Kevin W. Walsh, Esquire
Adelman, Lavine, Gold & Levin
1900 Two Penn Center Plaza
Philadelphia, PA 19102
25
To Tenant: BIO-PHARM PHARMACEUTICS SERVICES, INC.
425 Delaware Drive
Fort Washington, Pennsylvania 19034-2703
Attention: John Santoro
With Copy to: Linda Ann Galante, Esquire
Stradley, Ronon, Stevens & Young. LLP
30 Valley Stream Parkway
Malvern, PA 19355
or at such other address of which Seller or Purchaser shall have given notice as
herein provided. All such notices, requests and other communications shall be
deemed to have been sufficiently given for all purposes hereon on the second
(2nd) day after the date of mailing thereof, or one day after overnight
delivery, and may be given on behalf of any party by its counsel.
Section 16.03 Signage. During the last nine (9) months of the term,
-------
Landlord may place and maintain a "For Rent" or "For Sale" sign in or on the
Premises, subject to Upper Dublin Township regulations.
Section 16.04. Survival of Valid Terms. Survival of Valid If any term or
-----------------------
provision of this Lease or the application thereof to any person or
circumstances, shall to any extent be invalid or unenforceable, the remainder of
this Lease, or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each term and provision of this Lease shall be
valid and be enforced to the fullest extent permitted by law.
Section 16.05. Covenants to Bind and Benefit Respective Parties 16.05.
------------------------------------------------------
The terms, conditions, covenants, provisions and agreements herein contained
shall be binding upon and inure to the benefit of Landlord and Tenant, their
successors and assigns.
Section 16.06. Captions and Headings. The captions and headings
---------------------
throughout this Lease are for convenience and reference only and the words
contained therein shall in no way be held or deemed to define, limit, describe,
or add to the interpretation, construction or meaning of any provision of or the
scope or intent of this Lease.
Section 16.07. Governing Law. This Lease and the relative rights,
-------------
privileges, duties and obligations of the parties hereunder shall be governed by
the Laws of the Commonwealth of Pennsylvania.
Section 16.08 Confidentiality.
---------------
(a) Landlord acknowledges that in the course of managing the Building
Landlord may gain access to information or materials that are confidential or
proprietary to Tenant, including information or materials pertaining to Tenant's
business operations or information or materials with respect to which Tenant may
be under an obligation of
26
confidentiality to third parties ("Confidential Information"). Additionally the
names, terms, conditions, facts, or other information pertaining to this Lease
shall be deemed Confidential Information. Landlord shall keep all Confidential
Information in strict confidence under appropriate safeguards. Except as may be
required by judicial process, neither Landlord nor any employee, officer,
director, agent or attorney of Landlord shall (i) disclose or reveal any
Confidential Information, except with respect to the terms and conditions of
this Lease, which may be disclosed to a limited group of the Landlords'
officers, agents, and attorneys, who are actively participating in the
negotiation, approval and execution of the Lease ("Party Representatives"), each
of whom shall be informed of the confidential nature of the Lease; or (b) use
any confidential Information in any way that could be detrimental to Tenant.
This Section 16.08 shall be binding upon and inure to the benefit of all parties
hereto and to each of their respective Party Representatives.
Section 16.09 Lease Guaranty. Contemporaneously with the execution of
--------------
this Lease by Tenant, Guarantor shall execute and deliver to Landlord a guaranty
in the form attached hereto as Exhibit "E".
Section 16.10 Counterparts. This Lease may be executed by the parties
------------
in any number of counterparts, each of which so executed shall be deemed an
original; and such counterparts shall together constitute but one and the same
Lease.
27
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly
executed as of the day and year first above written.
525 VIRGINIA DRIVE ASSOCIATES
LIMITED PARTNERSHIP, a Pennsylvania limited
partnership, by its sole general partner 525
VIRGINIA DRIVE ASSOCIATES ACQUISITION CORPORATION,
a Pennsylvania corporation
By:_________________________________
President
BIO-PHARM PHARMACEUTICS SERVICES, INC.,
a Delaware corporation
By:_________________________________
Vice President
28
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PREMISES
29
EXHIBIT "B-1"
PLANS AND SPECIFICATIONS FOR LANDLORD IMPROVEMENTS
(Comprised of the HSC Work Letter, as amended, the roofing contractor's letter,
the artist's rendering, landscaping plan, and the parking plan, all to be
attached hereto).
30
EXHIBIT "B-2"
PLANS AND SPECIFICATIONS FOR TENANT WORK
(Comprised of any available plans and specifications that may have been approved
by Tenant prior to the execution of the Lease, if any, to be attached hereto).
31
EXHIBIT "C"
PERMITTED EXCEPTIONS
32
EXHIBIT "D"
MEMORANDUM OF LEASE
33
EXHIBIT "E"
FORM OF LEASE GUARANTY
34