Exhibit 10.1

 

 

 

 

EXECUTION VERSION

 

 

LEASE AGREEMENT

 

BETWEEN

 

 

WITMAN PROPERTIES, L.L.C.,

a New Jersey limited liability company

 

and

 

ALEXANDER ROAD AT DAVANNE, L.L.C.,

a New Jersey limited liability company

 

 

as Tenants in Common,

 

AS LANDLORD

 

 

-AND-

 

 

ARALEZ PHARMACEUTICALS US INC.,

a Delaware corporation

 

AS TENANT

 

 

 

 

PREMISES:                     400 Alexander Road

West Windsor, New Jersey

 

 

 

DATED:         April 18, 2016

 

 

 

 

 

 

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INDEX

 

 

 

 

 

 

ARTICLE

    

CAPTION

    

PAGE

 

 

 

 

 

1

 

Demised Premises; Term; Rent

 

4 

2

 

Use

 

5 

3

 

Base Building Work

 

6 

4

 

Tenant Improvements

 

7 

5

 

Additional Rent

 

12 

6

 

Subordination to Mortgagees

 

19 

7

 

Quiet Enjoyment

 

20 

8

 

Assignment, Mortgaging, Subletting

 

20 

9

 

Compliance with Laws

 

22 

10

 

Insurance

 

23 

11

 

Rules and Regulations

 

25 

12

 

Tenant’s Changes

 

25 

13

 

Tenant’s Property

 

25 

14

 

Repairs and Maintenance

 

26 

15

 

Electricity

 

27 

16

 

Heating, Ventilation and Air-Conditioning

 

28 

17

 

Landlord’s Other Services

 

28 

18

 

Access, Changes in Building Facilities, Signage

 

30 

19

 

Notice of Accidents

 

32 

20

 

Non-Liability and Indemnification

 

32 

21

 

Destruction or Damage

 

33 

22

 

Eminent Domain

 

34 

23

 

Surrender

 

35 

 

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24

 

Conditions of Limitation

35 

25

 

Re-Entry by Landlord

36 

26

 

Damages

37 

27

 

Waivers

38 

28

 

No Other Waivers or Modifications

39 

29

 

Curing Tenant’s Defaults

39 

30

 

Broker

39 

31

 

Notices

39 

32

 

Estoppel Certificate

40 

33

 

Tenant's Tax Credit Application

41 

34

 

No Other Representations, Construction, Governing Law

41 

35

 

Security and Guaranty

42 

36

 

Parties Bound

44 

37

 

Consents

44 

38

 

Mortgage Financing - Tenant Cooperation

45 

39

 

Environmental Compliance

45 

40

 

Holding Over

45 

41

 

Certain Definitions and Constructions

45 

42

 

Early Termination

47 

43

 

Renewal Options

48 

44

 

Right of First Refusal

50 

 

 

 

 

 

 

EXHIBIT A – Base Building Work

 

 

 

EXHIBIT B – Cleaning and Maintenance Specifications

 

 

 

EXHIBIT C – Rules and Regulations

 

 

 

EXHIBIT D – Signage

 

 

 

EXHIBIT E – Guaranty

 

 

 

EXHIBIT F – Form of SNDA

 

 

 

 

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THIS LEASE AGREEMENT (this “Lease”), dated as of April 18, 2016, is made by and
between WITMAN PROPERTIES, L.L.C., a New Jersey limited liability company and
ALEXANDER ROAD AT DAVANNE, L.L.C., a New Jersey limited liability company, as
Tenants in Common, having offices at c/o Woodmont Properties, 100 Passaic
Avenue, Suite 240, Fairfield, New Jersey 07004 (collectively, “Landlord”), and
ARALEZ PHARMACEUTICALS US INC., a Delaware corporation having offices at 1414
Raleigh Road, Suite 400, Chapel Hill, North Carolina 27517 (“Tenant”).  Landlord
and Tenant may be referred to collectively in the Lease as the “Parties”, or
each may be referred to singularly as a “Party”.

 

PREAMBLE:

 

BASIC LEASE PROVISIONS AND DEFINITIONS

 

In addition to other terms elsewhere defined in this Lease, the following terms
whenever used in this Lease shall have the meanings set forth in this section,
unless such meanings are expressly modified, limited or expanded elsewhere
herein.

 

“Actual Delivery Date” shall be the date upon which Landlord delivers the
Demised Premises (as hereinafter defined) to Tenant in Delivery Condition.

 

“Additional Rent” shall mean all sums in addition to Fixed Base Rent payable by
Tenant to Landlord pursuant to the provisions of this Lease.

 

“Base Building Work” shall have the meaning set forth in Section 3.01.

 

“Broker” shall collectively mean both Tactix Real Estate Advisors LLC and
Newmark Grubb Knight Frank.

 

“Building” shall mean the building more commonly known as 400 Alexander Road,
West Windsor, New Jersey 08540.

 

“Building Hours” shall be Monday through Friday, 8:00 A.M. to 6:00 P.M. and
Saturday 8:00 A.M. to 1:00 P.M., but excluding the following holidays (“Building
Holidays”):  President’s Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day, New Year’s Day (and if any of the foregoing
holidays falls on a weekend, then the day such holiday is observed shall be
deemed a Building Holiday) and the day immediately following Thanksgiving
Day.  Common area lighting in the Building and on the Land shall be maintained
for such additional hours as, in Landlord’s sole judgment, is necessary or
desirable to insure proper operation of the Building and Land.

 

“Commencement Date” shall be the earlier of (i) thirty (30) days after the
Actual Delivery Date and (ii) the date Tenant commences the conduct of business
from the Premises.

 

“Delivery Condition” shall mean the delivery of the Premises to Tenant with both
the Base Building Work Substantially Completed and the Tenant Improvements
Substantially Completed.

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“Demised Premises” or “Premises” shall be deemed for purposes of this Lease to
be stipulated as thirty-six thousand six hundred and two (36,602) rentable
square feet, consisting of the entire third (3rd) and fourth (4th) floors of the
Building.

 

“Exhibits” shall be the following, which are attached to this Lease and
incorporated herein and made a part hereof:

 

Exhibit A        Base Building Work

Exhibit B        Cleaning and Maintenance Specifications

Exhibit C        Rules and Regulations

Exhibit D        Signage

Exhibit E        Guaranty

Exhibit F        Form of SNDA

 

 

“Fair Market Value” shall be determined in accordance with Section 43.04.

 

“Fixed Base Rent” shall mean annual base rent for the Term payable as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Lease Year

 

 

Annual Fixed Base Rent

 

 

Monthly Installments

 

 

$ PSF

 

1

    

$

1,125,511.50

    

$

93,792.62

    

$

30.75

 

2

 

$

1,143,812.50

 

$

95,317.71

 

$

31.25

 

3

 

$

1,162,113.50

 

$

96,842.79

 

$

31.75

 

4

 

$

1,180,414.50

 

$

98,367.87

 

$

32.25

 

5

 

$

1,198,715.50

 

$

99,892.96

 

$

32.75

 

6

 

$

1,217,016.50

 

$

101,418.04

 

$

33.25

 

7

 

$

1,235,317.50

 

$

102,943.12

 

$

33.75

 

8

 

$

1,253,618.50

 

$

104,468.21

 

$

34.25

 

9

 

$

1,271,919.50

 

$

105,993.29

 

$

34.75

 

10

 

$

1,290,220.50

 

$

107,518.37

 

$

35.25

 

 

“Guarantor” shall mean Aralez Pharmaceuticals Inc., a corporation organized
under the laws of British Columbia, Canada.

 

“Land” shall mean Lot 4.01, Block 6.07 as shown on the Tax Map of West Windsor,
New Jersey, upon which the Building and its related parking areas are located.

 

“Lease Year” shall mean the period beginning on the Rent Commencement Date and
ending on the day immediately preceding the first (1st) anniversary of the Rent
Commencement Date, or if the Rent Commencement Date shall occur other than on
the first day of the month, then the period beginning on the Rent Commencement
Date and ending on the last day of the month in which the first (1st)
anniversary of the Rent Commencement Date occurs, and each succeeding period of
twelve (12) consecutive calendar months during the Term.

 

“Permitted Transfer” shall have the meaning set forth in Section 8.03.

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“Permitted Use” shall be executive and general office use and uses incidental
and ancillary thereto; and, subject to Landlord’s prior written consent, which
shall not be unreasonably withheld, conditioned or delayed, for any other lawful
purpose.

 

“Prime Rate” shall mean the prime rate as published in the Wall Street Journal.

 

“Property”  shall collectively refer to the Land and the Building.

 

“Rent” shall have the meaning set forth in Section 1.04.

 

“Rent Commencement Date” shall be the first day following the last day of the
ninth (9th) full calendar month following the Commencement Date, and it shall be
the date when Tenant’s obligation to pay Fixed Base Rent shall commence.

 

“Security Deposit” shall mean the sum of Two Hundred Eighty-One Thousand Three
Hundred Seventy-Seven and 86/100 Dollars ($281,377.86); provided,  however, if
an Event of Default has not occurred under this Lease as of the first (1st)
anniversary of the Rent Commencement Date, then on such date the Security
Deposit shall be reduced down to One Hundred Eighty-Seven Thousand Five Hundred
Eighty-Five and 24/100 Dollars ($187,585.24) for the remainder of the Term.

 

“Substantially Complete”, “Substantial Completion”, or words of similar import,
shall mean the substantial completion, as evidenced by the issuance of a
temporary certificate of occupancy, of the Base Building Work in accordance with
Article 3, and the Tenant Improvements in accordance with Article 4.  The
Parties agree that the Base Building Work and/or the Tenant Improvements, as
applicable, shall be deemed Substantially Complete notwithstanding the fact that
minor or insubstantial details of construction or demolition and/or mechanical
adjustment and/or decorative items (collectively, “Punch List Items”) remain to
be performed, provided that the non-completion of the Punch List Items does not
interfere with Tenant’s use of the Premises for the operation of its business.

 

“Tenant Improvements” shall have the meaning set forth in Section 4.01.

 

“Tenant’s Percentage” shall mean, and is stipulated by the Parties to be,
fifty-two percent (52%).

 

“Term” shall mean the term of this Lease, which is ten (10) years and nine (9)
months in duration, and which runs from the Commencement Date forward, together
with the number of days, if any, which are needed to have the Lease expire on
the last day of a calendar month, unless extended pursuant to any Renewal Option
(as later defined) contained herein.  If Tenant exercises any applicable Renewal
Option pursuant to Article 43, then the Term shall automatically be extended to
include the applicable Renewal Period(s).

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WITNESSETH:

 

ARTICLE 1

 

DEMISED PREMISES; TERM; RENT

 

1.01.      In consideration of the terms, conditions, and agreements set forth
in this Lease, and for good and valuable consideration the sufficiency of which
are hereby acknowledged, Landlord hereby agrees to lease to Tenant, and Tenant
hereby hires from Landlord, the Demised Premises, for the Term, for the rents
hereinafter reserved and upon and subject to the terms, conditions (including
limitations, restrictions and reservations) and covenants hereinafter provided,
all of which are regarded as strict legal conditions.  Each Party hereby
expressly covenants and agrees to observe and perform all of the conditions and
covenants herein contained on its part to be observed and performed.

 

1.02.      Landlord and Tenant have mutually agreed and stipulated that the
Demised Premises leased hereunder has a rentable area of 36,602 square
feet.  Said Premises, together with all fixtures and equipment, which at the
commencement or during the term of this Lease are thereto attached (except items
not deemed to be included therein and removable by Tenant as provided in
Article 13), shall constitute the Demised Premises.

 

1.03.      The Term of this Lease, for which the Demised Premises are hereby
leased, shall commence on the Commencement Date and, subject to Tenant’s renewal
rights as set forth herein, shall end at 5:00 P.M. on the last day of the
calendar month immediately preceding the ten (10) year anniversary of the Rent
Commencement Date, which ending date is hereinafter called the “Expiration
Date”, or shall end on such earlier date upon which said Term may expire or be
canceled or terminated pursuant to any of the provisions of this Lease or
pursuant to law.  Promptly following the Commencement Date, but in no event more
than five (5) business days later, Landlord and Tenant shall execute and
acknowledge a memorandum, which shall be prepared and circulated by Landlord, in
a form and substance which are reasonably satisfactory to Tenant, confirming the
Commencement Date, the Rent Commencement Date and the Expiration Date; provided,
 however, failure to execute and deliver such memorandum shall not affect the
validity of the Commencement Date, the Rent Commencement Date or the Expiration
Date as herein set forth.

 

1.04.      The rents reserved under this Lease (collectively the “Rent”), for
the Term thereof, shall be and consist of:

 

(a)      Fixed Base Rent in the amounts set forth in the Preamble, which shall
be payable in monthly installments, as above described, on the first day of each
and every calendar month during the Term commencing on the Rent Commencement
Date (except as otherwise set forth in Section 1.06); and

 

(b)      Additional Rent consisting of all such other sums of money as shall
become due from and payable by Tenant to Landlord hereunder (for default in
payment of which Landlord shall have the same remedies as for a default in
payment of fixed rent), all to be paid to

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Landlord at its office, or such other place, or to such agent at such place, as
Landlord may designate by notice to Tenant, in lawful money of the United States
of America.

 

1.05.      Tenant shall pay the Fixed Base Rent and Additional Rent as herein
reserved promptly as and when the same shall become due and payable, pursuant to
the terms and conditions of this Lease, without further demand therefor, and
without any rights of abatement, deduction, counterclaim or setoff whatsoever
except as otherwise expressly set forth herein.

 

1.06.      Notwithstanding anything herein to the contrary, Tenant shall pay
upon the execution and delivery of this Lease an amount equal to the sum of (i)
the Security Deposit and (ii) one (1) month’s Fixed Base Rent.  If the Rent
Commencement Date is on the first day of a month, such payment of Fixed Base
Rent shall be credited against the first full monthly installment of Fixed Base
Rent due and payable under this Lease.  If the Rent Commencement Date is not on
the first day of a month, then on the Rent Commencement Date, Tenant shall pay
prorated Fixed Based Rent for the period from the Rent Commencement Date through
the last day of such month (both dates inclusive) and the payment of Fixed Base
Rent made by Tenant upon the execution and delivery of this Lease shall be
credited toward Fixed Base Rent for the next succeeding calendar month.

 

1.07.      Any payment of Rent, including monthly Fixed Base Rent or any portion
thereof, and any Additional Rent, which is not received within five (5) business
days after it is due (any such period to be referred to as a “Grace Period”),
will be subject to a late charge equal to five percent (5%) of the unpaid
amount.  However, not more than once in each calendar year, if applicable,
Tenant may have an additional five (5) business day period after the Grace
Period (any such additional period to be referred to as a “Second Grace Period”)
before any late payment of Rent is subject to the late charge in the preceding
sentence.  The late charge, if assessed, will be compensation for Landlord’s
additional cost of processing late payments.  In addition, any Rent which is not
paid within thirty (30) days after it is due, including monthly Fixed Base Rent,
will accrue interest at a rate equal to the Prime Rate as defined herein plus
five percent (5%) per annum, from the date on which it was due until the date on
which it is paid in full with accrued interest.  If Tenant is in default of this
Lease for failure to pay Rent, in addition to the late charges and interest set
forth above, Tenant shall be charged with and responsible for payment of all
reasonable attorney fees incurred by Landlord in connection with the collection
of all sums due Landlord.

 

ARTICLE 2

 

USE

 

2.01.      Tenant shall use and occupy the Demised Premises for the Permitted
Use and for no other purpose.

 

2.02.      Tenant shall not at any time use or occupy, or do or permit anything
to be done in the Demised Premises, in violation of any law, ordinance or
regulation governing the use and occupation of the Demised Premises or the
Building.

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2.03.      In no event shall the population density in the Demised Premises
exceed one (1) person for every two hundred (200) rentable square feet, or such
lesser amount as may be required by the certificate of occupancy for the
Building.

 

ARTICLE 3

 

BASE BUILDING WORK

 

3.01.      Landlord shall be responsible for constructing, performing and
installing, at its sole cost and expense, (a) all of the work and furnishing all
of the items and materials identified on the attached Exhibit A; (b) the new
Building curtain wall system in accordance with the specifications set forth on
the attached Exhibit A; (c) certain upgrades, supplements, and additions to the
HVAC system in the Building described in the proposal from Hollister
Construction Services set forth in the attached Exhibit A (collectively the
“Supplemental HVAC Work”); and (d) certain parking lot and other base building
improvements more fully described on attached Exhibit A (collectively such
improvements referenced in clauses (a) - (d) are referred to as the “Base
Building Work”).  All Base Building Work shall be performed on an “open shop”
basis.  The Base Building Work shall be completed in a workmanlike manner,
consistent with the attached Exhibit A, and will be Substantially Completed on
or before the Required Delivery Date, it being agreed that Tenant shall have no
right to require any changes to the Base Building Work after the execution and
delivery of this Lease by Tenant and Landlord, except for insubstantial changes
to the Supplemental HVAC Work and any associated or related changes to any
Building systems made on or before April 28, 2016 as a result of the refining of
the existing plans and specifications for the Supplemental HVAC Work.  Without
limitation, the Base Building Work shall include Landlord delivering the
Building and Premises compliant with all applicable local and federal laws,
ordinances and governmental regulations, including without limitation the
Americans with Disabilities Act and all other local access ordinances, use and
occupancy ordinances, environmental regulations and fire codes.  Notwithstanding
any of the foregoing to the contrary, it is the intent of Landlord and Tenant
that, other than typical, routine, or usual demolition costs, no unusual or
extraordinary costs will need to be incurred by Tenant in order to prepare the
Premises prior to construction of the Tenant Improvements, such as by example,
and not limitation: asbestos or hazardous substance abatement or removal,
cabling removal and the like (collectively “Extraordinary Prep
Costs”).  Landlord shall be responsible for all Extraordinary Prep Costs, and
for promptly and in a workmanlike manner performing any work in connection
therewith, all of which shall thereafter be considered part of the Base Building
Work.

 

3.02.      The Base Building Work includes the restrooms within the Demised
Premises in accordance with the standards set forth in the plans for the Base
Building Work.  Tenant has requested, and Landlord has agreed, to use certain
dividers in the restrooms (the “Upgraded Partitions”) which constitute an
upgrade over the metal partitions otherwise contemplated in the plans for the
Base Building Work (the “Standard Partitions”).  Tenant shall be obligated to
pay the difference in cost between the Standard Partitions and the Upgraded
Partitions (the “Partition Upgrade Costs”).  Tenant shall pay the Partition
Upgrade Costs within ten (10) business days after its receipt of an invoice
therefor from Landlord together with documentation or other evidence of the
Partition Upgrade Costs reasonably acceptable to Tenant.  If Tenant fails

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to pay the Partition Upgrade Costs in full, then the Tenant Improvement
Allowance shall be reduced by the amount of the Partition Upgrade Costs that
Tenant fails to pay.

 

3.03.      The Base Building Work includes upgrades, supplements, and additions
to the Building’s HVAC system and other related systems with the Building in
accordance with the proposal set forth in the plans for the Base Building
Work.  Tenant has requested that Landlord certify that certain U-values will be
met by the Building when the Base Building Work and all other related
construction activities have concluded in order to insure that the Building’s
HVAC system will properly and efficiently function as intended in the Demised
Premises.  As such, Landlord hereby covenants and promises that at the
completion of the Base Building Work and all other related construction
activities, the Building will have the following U-values:

 

Curtain Wall Glass U-value:  summertime – .26; wintertime – .28

 

Curtain Wall Glass Solar Heat Gain:  .27

 

Wall U-value: 0.051

 

Roof U-value: 0.045

 

3.04.      All Base Building work shall be done in a good and workmanlike manner
and shall comply at the time of completion with all applicable laws and
requirements of the governmental authorities having jurisdiction.

 

3.05.      Notwithstanding anything in this Lease to the contrary, Tenant hereby
agrees to pay for two-thirds (2/3) of the total cost of the Supplemental HVAC
Work (“Tenant’s Supplemental HVAC Contribution”).  Landlord and Tenant
acknowledge that, as of the date of this Lease, the Supplemental HVAC Work is
anticipated to cost approximately One Hundred Fifty-Seven Thousand Dollars
($157,000).  Tenant’s Supplemental HVAC Contribution shall be paid for by
reducing the amount of the Tenant Improvement Allowance by an amount equal to
Tenant’s Supplemental HVAC Contribution.  Promptly following the completion of
the Supplemental HVAC Work, Landlord and Tenant shall enter into an agreement
(or an amendment to this Lease), in form and substance reasonably satisfactory
to both parties, memorializing the total cost of the Supplemental HVAC Work and
the resulting reduction in the amount of the Tenant Improvement Allowance;
provided,  however, the failure to execute and deliver such agreement or
amendment shall not impair Landlord’s ability to reduce the Tenant Improvement
Allowance by an amount equal to Tenant’s Supplemental HVAC Contribution.

 

ARTICLE 4

 

TENANT IMPROVEMENTS

 

4.01.      By no later than April 14, 2016 (the “CD Due Date”), Tenant shall
prepare and deliver to Landlord a complete set of architectural and engineering
construction documents (the “TI Construction Documents”) delineating and
detailing all of the renovations, alterations and improvements to the Demised
Premises to be performed by Landlord prior to the delivery of the Demised
Premises to Tenant hereunder (the “Tenant Improvements”).  The date upon which

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the TI Construction Drawings are actually delivered to Landlord with the CD
Delivery Conditions having been satisfied shall be referred to as the “CD
Delivery Date”.  For the avoidance of doubt, the Tenant Improvements do not
include the Base Building Work, nor shall it include any data wiring and cabling
or any of Tenant’s furniture or equipment.  Tenant shall not make any material
modifications to the TI Construction Documents after the CD Delivery Date,
except that Tenant shall be permitted to provide additional or supplemental
architectural and engineering construction documents related to the Supplemental
HVAC Work and any associated or related changes to any Building systems to
Landlord on, or before, April 28, 2016.  Tenant shall be responsible for
ensuring that the TI Construction Documents (i) comply with all applicable laws,
building codes and ordinances, (ii) do not require Landlord to obtain any
approvals from any planning or zoning board, (iii) do not require any
modifications to the Base Building Work (unless previously approved in writing
by Landlord), and (iv) are in a form sufficient for Landlord to apply for and
receive construction permits and, upon the issuance thereof, construct the
Tenant Improvements (collectively, the “CD Delivery Conditions”).  Tenant and
its architect may select any materials and parts it chooses for the Tenant
Improvements; provided,  however, that if any materials and/or parts selected by
Tenant or its architect cannot be delivered on-time for installation in
accordance with the project schedule for the Tenant Improvements maintained by
Landlord’s contractor and if waiting for the delivery of such materials and/or
parts will result in an aggregate delay of more than three (3) days in the
completion of the Tenant Improvements (including the inability to complete other
work comprising part of the Tenant Improvements as a result of the delay in
delivery of such materials and/or parts) (“Long Lead-Time Items”), then Landlord
may deliver written notice of same to Tenant’s construction representative, and
if Tenant’s construction representative fails to designate suitable replacements
that do not constitute Long Lead-Time Items within three (3) business days after
delivery of such written notice, then Landlord’s contractor shall have the right
to select replacements for such Long Lead-Time Items.  If any such replacements
selected by Landlord’s contractor are unacceptable to Tenant, then (a) Landlord
shall cause its contractor to use the Long Lead-Time Items requested by Tenant,
(b) the Required Delivery Date shall be postponed, and the Rent Commencement
Date shall be accelerated, by one (1) day for each day of delay in the
completion of the Tenant Improvements resulting from the use of such Long
Lead-Time Items, and (c) Tenant shall be responsible for the payment of any
additional mobilization costs incurred as a result of using the Long Lead-Time
Items required by Tenant.  Landlord will (and will cause its contractor to)
cooperate with Tenant’s construction representative to provide alternatives for
any Long Lead-Time Items that are compatible with Tenant’s design intent and
budget.

 

4.02.      Following the CD Delivery Date, Landlord shall promptly and after a
brief review period, immediately file and apply for all necessary building and
construction permits with the local municipality and agencies as applicable and
shall make all reasonable efforts to expedite issuance of all required building
and constructions permits.  Landlord shall thereafter have until the date that
is one hundred eighty (180) days after the CD Delivery Date (the “Required
Delivery Date”) to deliver the Demised Premises to Tenant in the Delivery
Condition; provided,  however, that if the municipality in which the Property is
located fails to issue building permits for the Tenant Improvements within
forty-five (45) days after Landlord’s submission of an application for such
permits despite Landlord’s commercially reasonable efforts to obtain such

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building permits, then the Required Delivery Date shall be postponed by one (1)
day for each day after the expiration of such 45-day period until the building
permits for the Tenant Improvements are issued.  If the Actual Delivery Date
does not occur on or before the Required Delivery Date (except if and to the
extent such failure results from the delay of, or interference by, Tenant or any
of its employees, agents or contractors, in which event Section 4.04 shall
apply), then Tenant shall be entitled to an abatement of Fixed Base Rent equal
to one (1) day of Fixed Base Rent for each day after the Required Delivery Date
that Landlord fails to deliver the Demised Premises to Tenant in the Delivery
Condition, up to and including the thirtieth (30th) day after the Required
Delivery Date, and two (2) days of Fixed Base Rent for each day beyond the
thirtieth (30th) day after the Required Delivery Date that Landlord does not
deliver the Demised Premises to Tenant in the Delivery Condition.  Any such rent
abatement shall be applied as of the Rent Commencement Date and shall not result
in an extension of the Term.  If the Actual Delivery Date does not occur by the
date that is one hundred twenty (120) days after the Required Delivery Date (the
“Outside Delivery Date”), then Tenant in its sole and absolute discretion shall
have the right to terminate this Lease upon written notice to Landlord, and upon
delivery of such notice this Lease shall terminate and be deemed null and void
and neither party shall have any further rights or obligations hereunder.  If
Tenant fails to terminate this Lease within five (5) business days after the
Outside Delivery Date (the “Termination Deadline”) as provided in the
immediately preceding sentence, then Landlord shall be given an additional sixty
(60) days after the Termination Deadline to deliver the Demised Premises to
Tenant in the Delivery Condition, and until the expiration of such 60-day period
this Lease shall remain in full force and effect and Tenant shall continue to
receive an abatement of Fixed Base Rent equal to two (2) days of Fixed Base Rent
for each day until the Actual Delivery Date, but Tenant shall have no right to
terminate this Lease pursuant to this Section 4.02 during such 60-day
period.  If the Actual Delivery Date does not occur within such 60-day period,
then Tenant shall have the right at any time thereafter (until the Actual
Delivery Date, at which time such right shall automatically expire) to terminate
this Lease upon written notice to Landlord, and upon delivery of such notice
this Lease shall terminate and be deemed null and void and neither party shall
have any further rights or obligations hereunder.

 

4.03.      Tenant shall not be responsible for any removals and/or restorations
of any items related to or concerning the Tenant Improvements, nor shall Tenant
be responsible for removing any IT Systems installed immediately following the
completion of the Tenant Improvements.  Landlord reserves the right to notify
Tenant of any removal and restoration of any improvements to the Demised
Premises, other than the Tenant Improvements and the IT Systems, for which
Tenant shall be responsible (including any Tenant Changes, as hereinafter
defined) upon the expiration or sooner termination of this Lease, provided that
Tenant shall only be obligated to remove such improvements and restore the
damage caused by such removal if Landlord notifies Tenant that such improvements
must be removed upon the expiration or earlier termination of this Lease within
sixty (60) days after Tenant’s delivery to Landlord of written notice that such
improvements have been completed.  For purposes of this Section 4.03, “IT
Systems” means any equipment comprising Tenant’s voice, data and security
systems, including associated outlets, wires, wiring trays and other equipment,
materials and facilities, whether located in the ceiling, floor and/or walls,
that in any way relate, pertain to, constitute or are connected with Tenant’s

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voice, data and/or security systems, regardless of whether Landlord or Tenant
installed and/or paid for the installation of such systems.

 

4.04.      If Tenant fails to deliver the TI Construction Documents to Landlord
on or before the CD Due Date with the CD Delivery Conditions satisfied in
accordance with Section 4.01, then the Rent Commencement Date shall be
accelerated by one (1) day for each day after the CD Due Date until the date
such TI Construction Documents are provided to Landlord.  If the Substantial
Completion of the Tenant Improvements or the Base Building Work shall be delayed
by any act or omission of Tenant or any of its employees, agents or contractors
(other than failure to deliver the TI Construction Documents to Landlord by the
CD Due Date), including the presentation of any change order requests submitted
by Tenant to Landlord following the CD Delivery Date, then for all purposes the
Tenant Improvements and the Base Building Work shall be deemed as Substantially
Completed on the date when they would have been Substantially Completed but for
such delay.  Tenant delays shall include the failure of Tenant’s architect to
respond to municipal building department questions within three (3) business
days.

 

4.05.      Within ten (10) business days after the Actual Delivery Date,
Landlord, Tenant and Landlord’s general contractor, the project architect, and
the project manager together shall inspect the Demised Premises and prepare a
list of Punch List Items (the “Punch List”).  Within thirty (30) days after
preparation of the Punch List, Landlord shall install, complete, repair or
otherwise remedy all of the Punch List Items set forth on the Punch List, it
being understood and agreed that Tenant shall not be “double-charged” for any
Punch List work (i.e., work that should have been performed as part of the
Tenant Improvements and was included in the Tenant Improvement Costs (as
hereinafter defined) but either was not performed or was not properly
performed), but Tenant shall be responsible for the payment (subject to offset
against the Tenant Improvement Allowance if not previously exhausted) of all
costs incurred by Landlord for Punch List work requested by Tenant to the extent
such work falls outside of the original scope of the Tenant Improvements (as
reflected in the TI Construction Documents).  During the period following the
preparation of the Punch List and prior to the Commencement Date, Tenant shall
have the right to enter upon the Demised Premises, subject to all of the terms
and conditions hereof (other than the obligation to pay Fixed Base Rent or
Additional Rent) for the purposes of installation of its telephone, data and
computer wiring and furniture, fixtures and equipment (the “Pre-Commencement
Installations”), provided that Tenant and its contractors shall not interfere
with the completion of any Punch List Items by Landlord or its contractors.  If
such interference shall occur, the Parties shall amicably seek to resolve their
differences, but in the event that they are unable to do so, Landlord shall have
the right to order Tenant and its contractors to leave the Demised Premises
temporarily until the Punch List Items are completed and Tenant and its
contractors can resume their work.  Tenant shall be responsible for repairing
all damage to the Demised Premises (or any other portions of the Building)
caused by Tenant or its contractors or subcontractors in connection with the
Pre-Commencement Installations.

 

4.06.      Landlord will warrant the Tenant Improvements against defective or
non-conforming work for a period of twelve (12) months after the Substantial
Completion thereof (the “Warranty Period”).  During the Warranty Period,
Landlord at its sole cost will repair or replace any defective work comprising a
part of the Tenant Improvements, or any work that does not substantially conform
to the TI Construction Documents, upon its receipt of written notice

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from Tenant detailing the circumstances that exist which cause such work to be
defective or non-conforming.  The cost incurred by Landlord in performing any
such repairs or replacements shall not be included in Operating Expenses (as
hereinafter defined), nor shall they otherwise be payable by Tenant.

 

4.07.      Subject to Sections 3.02 and 3.05, Landlord shall pay toward the
Tenant Improvements the sum of Two Million One Hundred Four Thousand Six Hundred
Fifteen Dollars ($2,104,615), calculated based upon an allowance of $57.50 per
rentable square foot, or such lesser amount as may actually be expended by
Landlord and Tenant (the “Tenant Improvement Allowance”).  The Tenant
Improvement Allowance may be utilized for the architectural and engineering
costs incurred in designing the Tenant Improvements, the “hard costs” (i.e.,
labor, materials and equipment) of constructing the Tenant Improvements
(collectively, the “Tenant Improvement Costs”), and for cabling and wiring costs
associated with Tenant’s planned use of the Demised Premises.  Tenant shall be
responsible for the excess Tenant Improvement Costs, if any, above the Tenant
Improvement Allowance, but only after Landlord has paid sums in connection with
the Tenant Improvements equal to the entire amount of the Tenant Improvement
Allowance.  If the Tenant Improvement Costs exceed the Tenant Improvement
Allowance, and provided Landlord has expended the entire amount of the Tenant
Improvement Allowance, then Landlord may send invoices to Tenant on a monthly
basis for any excess Tenant Improvement Costs and Tenant shall pay any excess
Tenant Improvement Costs within ten (10) business days after its receipt of an
invoice therefor from Landlord together with a certification from Landlord that
the work for which Tenant is paying the excess Tenant Improvement Costs has been
completed.  For the avoidance of doubt, the Tenant Improvement Costs shall
include all construction permit fees and a supervisory fee payable to Landlord
equal to three percent (3%) of the total hard costs of the Tenant Improvements
(which supervisory fee shall be in addition to any overhead, general conditions,
profit and the like payable to Landlord’s contractor as part of the Tenant
Improvement Costs).  If the Tenant Improvement Allowance is not fully expended
by Landlord in connection with the construction of the Tenant Improvements,
Tenant shall have no right to receive all or any portion of the remaining
balance of the Tenant Improvement Allowance.

 

4.08.      Landlord and Tenant agree that the Tenant Improvement work will be
performed by Hollister Construction Services (the “General Contractor”) on a
lump sum basis pursuant to a construction contract between Landlord and the
General Contractor under which (i) the fee to the General Contractor shall not
exceed three percent (3%) of the total cost of the Tenant Improvements
(inclusive of general conditions) and (ii) the general conditions line item
shall not exceed the sum of One Hundred Forty-Four Thousand Seven Hundred
Dollars ($144,700) plus the cost to obtain commercial general liability
insurance in connection with the Tenant Improvements.  The General Contractor
shall be charged with bidding out all subcontractor work under the supervision
of a construction representative designated by Tenant and a construction
representative designated by Landlord, each of whom shall be permitted to
participate in the evaluation of the subcontractor bids, provided that in the
event of a disagreement between such representatives the determination of the
Landlord’s representative shall control.  The General Contractor shall be
required to obtain and provide for review by the construction representatives at
least three (3) competitive subcontractor bids for each major trade (defined for
this purpose as any trade costing in excess of Fifty Thousand Dollars ($50,000)
in the aggregate) utilized for the

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Tenant Improvements.  Further, due to Tenant’s receipt of Tax Credits (as
defined in Article 33.01), Landlord and Tenant agree that the Tenant
Improvements will be constructed using prevailing wage labor.

 

4.09.      All Tenant Improvement work shall be done in a good and workmanlike
manner and shall comply at the time of completion with all applicable laws and
requirements of the governmental authorities having jurisdiction.

 

ARTICLE 5

 

ADDITIONAL RENT

 

5.01.      For the purpose of Sections 5.01 through 5.03:

 

(a)      “Taxes” shall mean real estate taxes, and assessments, general or
special, ordinary or extraordinary, foreseen or unforeseen (including lease
taxes) assessed or imposed upon the Property, plus the expenses of any contests
(administrative or otherwise) of tax assessments or proceedings to reduce taxes,
including attorneys’ and appraisers’ fees, incurred each calendar year during
the Term (and any renewals or extensions thereof) including, without limit, the
first calendar year during which the Term of this Lease shall have commenced.
However, if at any time during the term of this Lease the method of taxation
prevailing at the date of this Lease shall be altered so that in lieu of, or as
an addition to, or as a substitute for any or all of the above there shall be
assessed, levied or imposed (i) a tax, assessment, levy, imposition or charge
based on the income or rents received therefrom whether or not wholly or
partially as a capital levy or otherwise; or (ii) a tax, assessment, levy,
imposition or charge measured by or based in whole or in part upon all or any
part of the Land and/or Building and imposed upon Landlord; or (iii) a license
fee measured by the rents; or (iv) any other tax, assessment, levy, imposition,
charge or license fee however described or imposed, then all such taxes,
assessments, levies, impositions, charges or license fees or the part thereof so
measured or based shall be deemed to be included in the definition of “Taxes.”

 

(b)      “Base Taxes” shall mean the Taxes imposed upon the Property for the
calendar year 2016, increased by (i) the additional Taxes resulting from an
added assessment or omitted assessment imposed by the tax assessor of the
Township of West Windsor (the “Municipality”) as a result of the completion of
the Base Building Work and the Tenant Improvements, and (ii) the additional
Taxes resulting from all other added assessment or omitted assessment imposed by
the Municipality as a result of the completion of any tenant improvements for
any of the currently vacant office space on the first and/or second floors of
the Building until such time as the Building first reaches ninety-five percent
(95%) occupancy.  For the avoidance of doubt, Base Taxes shall not be increased
in connection with any increase in Taxes after calendar year 2016 resulting from
(x) a revaluation or reassessment applicable throughout the Municipality,
(y) any increases in the Municipality’s tax rate, or (z) an added assessment or
omitted assessment by the Municipality as a result of the completion of any
improvements to the Building or any space within the Building imposed
subsequently to when the Building has reached ninety-five percent (95%)
occupancy for the first time. 

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(c)      “Tax Year” shall mean each calendar year for which Taxes are levied by
any governmental authority.

 

(d)      “Operating Year” shall mean each calendar year commencing with calendar
year 2017.

 

(e)      “Tenant’s Proportionate Share of Increase” shall mean Tenant’s
Percentage multiplied by the increase in Taxes in any Operating Year in excess
of the Base Taxes.

 

(f)      “Tenant’s Projected Share of Increase” shall mean Tenant’s
Proportionate Share of Increase in Taxes as reasonably estimated by Landlord for
the ensuing Operating Year divided by twelve (12) and payable monthly by Tenant
to Landlord as Additional Rent.

 

5.02.      Commencing on the one (1) year anniversary of the Commencement Date,
and thereafter, upon each successive Operating Year, Tenant shall pay to
Landlord as Additional Rent for the then Operating Year, Tenant’s Projected
Share of Increase in Taxes in equal monthly installments; provided,  however,
that Tenant shall not be required to pay Tenant’s Projected Share of Increase
for any period prior to the first (1st) anniversary of the Commencement Date.

 

5.03.      Within one hundred fifty (150) days after the expiration of each
Operating Year, Landlord shall furnish to Tenant a written statement of the
Taxes incurred for each such Operating Year as well as Tenant’s Proportionate
Share of Increase, if any.  If the statement furnished by Landlord to Tenant
pursuant to this Section shall indicate that Tenant’s Projected Share of
Increase exceeded Tenant’s Proportionate Share of Increase, then Landlord shall
either forthwith pay the amount of such excess directly to Tenant concurrently
with the statement, or shall credit the same against Tenant’s next owed monthly
installment of rent within ten days thereafter.  If such statement furnished by
Landlord to Tenant shall indicate that the Tenant’s Proportionate Share of
Increase exceeded Tenant’s Projected Share of Increase for the then Operating
Year, Tenant shall then pay the amount of such excess to Landlord within thirty
(30) days; provided,  however, that Tenant shall not be required to pay Tenant’s
Proportionate Share of Increase for any period prior to the first (1st)
anniversary of the Commencement Date.  If Landlord has not provided Tenant a
written statement for Tenant’s Projected Share of Increase as of the
commencement of any Operating Year, Tenant shall be obligated to continue to pay
additional rent each month at the same rate as reflected in the previous
Operating Year’s estimate furnished by Landlord until such time as Landlord has
sent the statement for the current Operating Year, whereupon appropriate
adjustments will be made.

 

5.04.      As used in Sections 5.04 through 5.06:

 

(a)      “Operating Expenses” shall mean the actual expenses and costs incurred
by Landlord in connection with the operating and maintaining the Property
(including without limit, all improvements thereto) during each Operating
Year.  Such expenses shall include by way of example and not by way of
limitation: (i) salaries, wages, medical, surgical and general welfare benefits,
(including group life insurance) and pension payments of employees of

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Landlord engaged in the operation and maintenance of the Building at the level
of building manager and below; (ii) social security, unemployment, and payroll
taxes, workers’ compensation, disability coverage, uniforms, and dry cleaning
for the employees referred to in Subsection (i); (iii) the cost for the Building
and common areas of all charges for oil, gas, electricity (including, but not
limited to, fuel cost adjustments), steam, heat, ventilation, air-conditioning,
heating, and water, including any taxes on any such utilities, but excluding
from Operating Expenses the Landlord’s cost, including taxes thereon, of
electric energy, other than for heating and air-conditioning, furnished to the
Demised Premises (which electric energy so furnished shall be paid for by Tenant
pursuant to the provisions of Article 15 hereof); (iv) the cost of all premiums
and charges for insurance for the Building and Land, including but not limited
to: rent loss/rental income, casualty, liability, fidelity and war risk (if
obtainable from the United States Government); (v) the cost of all building and
cleaning supplies for the Building and common areas and charges for telephone
and data service for the Building; (vi) the cost of all charges for management
fees limited to three percent (3%) of the gross receipts of Landlord from the
Building, window cleaning, security services, if any, and janitorial services,
and any independent contractor performing work servicing or maintaining the
Property; (vii) legal and accounting services and other professional fees and
disbursements incurred in connection with the operation and management of the
Land and Building (other than as related to new leases, enforcing Landlord’s
rights under existing leases, or sales of the Building); (viii) general
maintenance of the Building and Land, including but not limited to, the cost of
maintaining, repairing or  replacing the landscaping, sidewalks, driveways and
other improvements and facilities serving the Building; (ix) maintenance of the
common areas, including sums payable to the Alexander Park Master Association,
Inc., a New Jersey non-profit corporation, its successors and assigns (the
“Association”), pursuant to that certain Master Declaration of Covenants,
Conditions and Restrictions for the Alexander Park Master Association, Inc.,
Alexander Park Office Development recorded in Deed Book 2345 at Page 753,
amended as set forth in Deed Book 2436 at Page 376, Deed Book 3438 at Page 173,
and Deed Book 3450 at Page 1 (as heretofore and hereafter amended, the “DCR”);
and (x) the cost of capital expenditures, including the purchase of any item of
capital equipment or the leasing of capital equipment, which (X) have the effect
of reducing the expenses which would otherwise be included in Operating Expenses
(provided the amount included in Operating Expenses in any Operating Year shall
not exceed an amount equal to the savings reasonably anticipated to result from
the installation and operation of such improvement), and/or (Y) are required by
applicable law enacted after the date of this Lease, which costs shall be
included in Operating Expenses for the Operating Year in which the costs are
incurred and subsequent Operating Years amortized on a straight-line basis over
the useful life of the capital item (as determined in accordance with GAAP),
with an annual interest factor equal to the Prime Rate at the time of Landlord’s
having made such expenditure plus three percent (3%).  The amount included in
Operating Expenses in any Operating Year (until such improvement has been fully
amortized) shall be equal to the annual amortized amount.  If Landlord shall
have leased any such items of capital equipment designed to result in savings or
reductions in Operating Costs, then the rental and other costs paid pursuant to
such leasing shall be included in Operating Costs for the Operating Year in
which they shall have been incurred.

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For purposes of Operating Expenses the Base Year shall be adjusted to reflect a
ninety-five percent (95%) occupied Building and shall be inclusive of all
Operating Expense line items reasonably anticipated in the Building during the
twelve (12) month period following the Commencement Date.

 

Notwithstanding the foregoing, the following costs and expenses shall not be
included in Operating Expenses:

 

(1)      Executives’ or officers’ salaries above the grade of building manager;

 

(2)      Costs incurred in performing work or furnishing services for any tenant
(including Tenant), whether at such tenant’s or Landlord’s expense, to the
extent that such work or service is in excess of any work or service that
Landlord is obligated to furnish to Tenant at Landlord’s expense;

 

(3)      Depreciation, except as provided above;

 

(4)      Brokerage commissions;

 

(5)      Taxes (as hereinbefore defined);

 

(6)      The cost of electricity (for other than heating and air-conditioning)
furnished to the Demised Premises or any other space leased to tenants as
reasonably estimated by Landlord;

 

(7)      Refinancing costs and mortgage interest and amortization payments;

 

(8)      Ground rent paid to the holder of any ground lease;

 

(9)      Management fees paid in excess of three percent (3%) of the gross
receipts of Landlord from the Land and Building;

 

(10)      Sums paid to Landlord or its affiliates, if and to the extent such
sums are in excess of those that would be charged by third parties for similar
services in an arms’ length transaction.

 

(11)      Payments of principal, interest, or other finance charges made on any
debt, or the amortization of funds borrowed by Landlord;

 

(12)      [intentionally deleted];

 

(13)      Costs of legal, space planning, construction, and other expenses
incurred in procuring tenants for the Building or with respect to individual
tenants or occupants of the Building;

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(14)      Costs of painting, redecorating, or other services or work performed
for the benefit of another tenant, prospective tenant or occupant (other than
for Common Areas);

 

(15)      Salaries, wages, or other compensation or benefits paid to off-site
employees or other employees of Landlord who are not assigned full-time to the
operation, management, maintenance, or repair of the Building; provided however,
Operating Expenses shall include a reasonably allocable portion of compensation
paid to any employee of Landlord (or an affiliate of Landlord) at the level of
building manager or below, whether onsite or offsite, who is assigned part-time
to the operation, management, maintenance, or repair of the Property;

 

(16)      Costs of advertising and public relations and promotional costs
associated with the promotion or leasing of the Building;

 

(17)      Any costs, fines or penalties incurred due to the violation by
Landlord of any governmental law, rule or regulation, unless caused by Tenant or
its employees, agents or contractors;

 

(18)      The costs or repairs, replacements and alterations for which and to
the extent that Landlord is actually reimbursed therefore from any source.

 

(19)      Costs and expenses incurred by Landlord in connection with casualty to
or condemnation of all or a portion of the Building; provided,  however, that
with respect to the cost to repair damage caused by casualty or condemnation,
Landlord may include in Operating Expenses (1) the amount of a commercially
reasonable deductible applied to each such occurrence and (2) if Landlord
reasonably determines that the effect of making a claim under Landlord’s
insurance policy or policies would be to increase, in the aggregate, the future
cost of insurance premiums and repair maintenance expenses relating to the
Building, Landlord may include in Operating Expenses the cost to repair such
damage to the extent such cost does not exceed two hundred percent (200%) of the
deductible amount applicable under Landlord’s insurance policy or policies to
such occurrence; provided,  however, that Landlord may only include such cost in
Operating Expenses if Landlord actually makes such repair and does not submit an
insurance claim in connection therewith;

 

(20)      [intentionally deleted];

 

(21)      Costs incurred in connection with disputes with tenants, other
occupants, or prospective tenants, or costs and expenses incurred in connection
with negotiations or disputes with employees, consultants, management agents,
leasing agents, purchasers or mortgagees of the Building;

 

(22)      Costs incurred in connection with the original construction of the
Building;

 

(23)      Costs attributable to any “tap fees” or one-time lump sum sewer or
water connection fees payable in connection with the initial construction of the
Building;

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(24)      Costs of repairing, replacing or otherwise correcting defects
(including latent defects) in (but not the costs of ordinary and customary
repair for normal wear and tear, which shall be included in Operating Expenses)
the initial design or construction of the Building or the costs of repairing,
replacing or correcting defects in the initial design or construction of any
tenant improvements;

 

(25)      Costs incurred in connection with the sale, financing, refinancing,
mortgaging, selling or change of ownership of the Building;

 

(26)      Costs, fines, interest, penalties, legal fees or costs of litigation
incurred due to the late payments of taxes, utility bills and other costs
incurred as a result of Landlord's failure to make such payments when due (but
not if caused by Tenant);

 

(27)      General overhead and general administrative expenses and accounting,
record-keeping and clerical support of Landlord or the management agent;

 

(28)      [intentionally deleted];

 

(29)      Increased insurance premiums caused by Landlord's or any other
tenant's hazardous acts;

 

(30)      Costs incurred to correct violations by Landlord of any law, rule,
order or regulation which was in effect as of the date that the Building's
Certificate of Occupancy was validly issued;

 

(31)      Costs arising from the presence of hazardous substances in or about or
below the Land or the Building, including without limitation, hazardous
substances in the groundwater or soil (unless introduced or caused by Tenant);

 

(32)      Costs incurred for any items to the extent covered by a manufacturer's
materialman's, vendor's or contractor's warranty, but only to the extent
Landlord is actually reimbursed as a result of such warranty;

 

(33)      Non-cash accounting items, such as deductions for depreciation and
amortization of the Building and the Building’s equipment, interest on capital
invested, bad debt losses, rent losses and reserves for such losses;

 

(34)      Services provided and costs incurred in connection with the operation
of retail or other ancillary operations owned, operated or subsidized by
Landlord;

 

(35)      Costs of overtime HVAC service whether provided to the Tenant or any
other tenant of the Building;

 

(36)      Costs incurred by Landlord because a tenant violated or was alleged to
have violated the terms of its lease;

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(37)      Costs incurred by Landlord for trustees’ fees or partnership or
corporate organizational groups;

 

(38)      [intentionally deleted];

 

(39)      [intentionally deleted];

 

(40)      Charitable or political contributions or trade association dues;

 

(41)      Accounting and legal expenses, except if and to the extent that the
same are directly related to operating the Building;

 

(42)      Any entertainment, dining or travel expenses of Landlord for any
purpose; or

 

(43)      “In-house” legal and/or accounting fees.

 

(b)      “Operating Year” shall mean each calendar year commencing with calendar
year 2017.

 

(c)      “Base Year” shall mean calendar year 2016.

 

(d)      “Tenant’s Proportionate Share of Increase” shall mean Tenant’s
Percentage multiplied by the increase in Operating Expenses for the Operating
Year over Operating Expenses for the Base Year.

 

(e)      “Tenant’s Projected Share of Increase” shall mean Tenant’s
Proportionate Share of Increase as reasonably estimated by Landlord for the
ensuing Operating Year.  Tenant shall pay to Landlord in equal monthly
installments together with its payment of fixed rent one-twelfth (1/12) of
Tenant’s Projected Share of Increase as Additional Rent.

 

5.05.      Commencing with the first Operating Year and thereafter, Tenant shall
pay to Landlord as Additional Rent for the then Operating Year, Tenant’s
Projected Share of Increase; provided,  however, that Tenant shall not be
required to pay Tenant’s Projected Share of Increase for any period prior to the
first (1st) anniversary of the Commencement Date.

 

5.06.      After the expiration of the first Operating Year and after the
expiration of each Operating Year thereafter, Landlord shall furnish to Tenant a
commercially reasonable written detailed statement of the Operating Expenses
incurred for such Operating Year which statement shall set forth Tenant’s
Proportionate Share of Increase, if any.  If the statement furnished by Landlord
to Tenant, pursuant to this Section, at the end of the then Operating Year shall
indicate that Tenant’s Projected Share of Increase exceeded Tenant’s
Proportionate Share of Increase, Landlord shall either forthwith pay the amount
of excess directly to Tenant concurrently with the statement or credit same
against Tenant’s next monthly installment of rent within thirty (30) days.  If
such statement furnished by Landlord to Tenant hereunder shall indicate that the
Tenant’s Proportionate Share of Increase exceeded Tenant’s Projected Share of
Increase for the then Operating Year, Tenant shall forthwith pay the amount of
such excess to Landlord within

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thirty (30) days.  If Landlord has not provided Tenant a written statement for
Tenant’s Projected Share of Increase as of the commencement of any Operating
Year, Tenant shall be obligated to continue to pay as Additional Rent each month
at the same rate as reflected in the previous estimate furnished by Landlord
until such time as Landlord has sent the statement whereupon appropriate
adjustments will be made.

 

5.07.      Every statement given by Landlord pursuant to Sections 5.03 and 5.06
shall be conclusive and binding upon Tenant unless (i) within ninety (90) days
after the receipt of such statement Tenant shall have given a notice to Landlord
that Tenant disputes the correctness of the statement, specifying in reasonable
detail the basis for such assertion.  Pending resolution of such a dispute,
Tenant shall pay the Additional Rent in accordance with the statement furnished
by Landlord.  Landlord agrees, upon prior written request, during normal
business hours to make available for Tenant’s inspection, at Landlord’s offices,
Landlord’s books and records which are relevant to any items in dispute.  If
after such inspection, Tenant still disputes such statement of Taxes or
Operating Expenses, either party may refer the decision of the issues raised to
a reputable independent firm of certified public accountants, selected by
Landlord and approved by Tenant, which approval shall not be unreasonably
withheld as long as such firm is a regionally or nationally recognized firm with
at least twenty (20) partners or principals who are certified public
accountants, and the decision of such accounting firm shall be conclusively
binding upon the Parties.  The fees and expenses involved in such decision shall
be borne by Tenant, unless the accounting firm determines that Landlord’s
original calculation of the actual Taxes or Operating Expenses was in error by
more than five percent (5%), in which event Landlord shall pay the reasonable
fees of such accounting firm.  If the inspection shows an undercharge to Tenant,
Tenant shall pay the amount due to Landlord within thirty (30) days after
completion of the audit.  If the audit indicates an overpayment by Tenant, then
Tenant shall be entitled at Landlord’s sole option to either (i) to receive a
refund from Landlord within thirty (30) days after finalization of such audit,
or (ii) a credit in an amount equal to such excess against Rent next becoming
due under this Lease.  In no event shall this Lease be terminable nor shall
Landlord be liable for damages based upon any disagreement regarding an
adjustment of Operating Expenses, except as otherwise expressly set forth in
this Section 5.07.  Tenant recognizes the confidential nature of Landlord’s
books and records and agrees to maintain the information obtained from any
examination conducted pursuant to this Section 5.07 in strict confidence.  In no
event shall Landlord profit in the collection of Operating Expenses or Taxes
from Tenant over its actual costs for such Operating Expenses or Taxes.

 

ARTICLE 6

 

SUBORDINATION TO MORTGAGEES

 

6.01.      This Lease shall be subject and subordinate at all times to the lien
of any mortgage, deed of trust, ground lease, installment sale agreement and/or
other instrument or encumbrance heretofore or hereafter placed upon any or all
of Landlord’s interest or estate in the Premises or the remainder of the
Property and of all renewals, modifications, consolidations, replacements and
extensions thereof (all of which are hereinafter referred to collectively as a
“mortgage”), all automatically and without the necessity of any further action
on the part of the

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Tenant to effectuate such subordination.  The Tenant shall, at the request of
the holder of any such mortgage, attorn to such holder, and shall execute,
enseal, acknowledge and deliver, upon demand by the Landlord or such holder,
such further instrument or instruments evidencing such subordination of the
Tenant’s right, title and interest under this Lease to the lien of any such
mortgage, and such further instrument or instruments evidencing and elaborating
such attornment, as shall be reasonably desired by such holder.  Further,
Landlord, at Landlord’s sole cost, shall, within thirty (30) days of execution
of this Lease, use commercially reasonable efforts to obtain an SNDA from the
holder of any pre-existing ground lease and/or mortgage in the form and
substance attached hereto as Exhibit F.  Further, Landlord shall use
commercially reasonable efforts to obtain an SNDA from any future ground lessors
and/or mortgage holders, within thirty (30) of any new mortgage on the Property,
in the form and substance attached hereto as Exhibit F.

 

ARTICLE 7

 

QUIET ENJOYMENT

 

7.01.      Landlord covenants that if and so long as Tenant pays Fixed Base Rent
and any Additional Rent as herein provided and performs Tenant’s covenants
hereof, Landlord shall do nothing to affect Tenant’s right to peacefully and
quietly have, hold and enjoy the Demised Premises for the term herein defined,
subject to all provisions of this Lease and to any mortgage to which this Lease
shall be subordinate.

 

ARTICLE 8

 

ASSIGNMENT, MORTGAGING, SUBLETTING

 

8.01.      Tenant may not mortgage, pledge, hypothecate, assign, transfer,
sublet or otherwise deal with this Lease or the Premises in any manner except as
specifically provided for in this Article 8.

 

8.02.      (a) Except for a Permitted Transfer (as hereinafter defined), in the
event that Tenant desires to sublease the whole or any portion of the Demised
Premises or assign the within Lease to any other party, the terms and conditions
of such sublease or assignment shall be communicated to Landlord in writing not
less than forty-five (45) days prior to the effective date of any such sublease
or assignment and Landlord shall thereafter have ten (10) business days to
respond to Tenant’s request for such sublease or assignment.

 

(b)      Tenant may assign this Lease or sublet the whole or any portion of the
Premises, subject to Landlord’s prior written consent, which consent shall not
be unreasonably withheld, conditioned, or delayed, on the basis of the following
terms and conditions (it being agreed that if the terms of any mortgage loan
documents encumbering the Property require the mortgagee of the Property to
consent to any sublease or assignment, and the mortgagee of the Property fails
or refuses to consent to a proposed sublease or assignment, then Landlord shall
not

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be deemed to have acted unreasonably in withholding its consent to such sublease
or assignment):

 

(1)      The Tenant shall provide to Landlord the name and address of the
assignee or subtenant.

 

(2)      The assignee shall assume, by written instrument, all of the
obligations of this Lease, and a copy of such assumption agreement shall be
furnished to Landlord within ten (10) days of its execution.  Any sublease shall
expressly acknowledge that said subtenant’s rights against the Landlord shall be
no greater than those of the Tenant.

 

(3)      The Tenant, each guarantor of Tenant’s obligations hereunder, and each
assignee shall be and remain liable for the observance of all the covenants and
provisions of this Lease, including, but not limited to, the payment of Fixed
Base Rent and Additional Rent reserved herein, as and when required to be paid,
through the entire Term of this Lease.

 

(4)      The Tenant and any assignee shall promptly pay to Landlord one-half
(1/2) of any net consideration received for any assignment or one-half (1/2) of
the net sublease rent, as and when received, in excess of the Fixed Base Rent
and Additional Rent required to be paid by Tenant for the period affected by
said assignment or sublease for the area sublet, computed on the basis of an
average square foot rent for the gross square footage Tenant has leased.  As
used herein, net consideration and/or net rent shall mean gross rent (Fixed Base
and Additional) or gross consideration less any reasonable brokerage or tenant
work paid by Tenant in connection with the assignment or sublet, said brokerage
or tenant work to be amortized over the term of the assignment or sublet.

 

(5)      In any event, the acceptance by Landlord of any rent (Fixed Base and
Additional) from the assignee or from any of the subtenants or the failure of
Landlord to insist upon a strict performance of any of the terms, conditions and
covenants herein shall not release Tenant herein, nor any assignee assuming this
Lease, from any and all of the obligations herein during and for the entire Term
of this Lease.

 

(6)      Except for Permitted Transfers, Landlord may require a One Thousand
Five Hundred and 00/100 Dollar ($1,500.00) payment to cover its handling charges
for each request for consent to any sublet or assignment prior to its
consideration of the same.

 

(7)      Tenant shall have no claim, and hereby waives the right to any claim,
against Landlord for money damages by reason of any refusal, withholding or
delaying by Landlord of any consent, and in such event, Tenant’s only remedies
therefor shall be an action for specific performance, injunction or declaratory
judgment to enforce any such requirement.

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8.03.      Any sublet or assignment to (i) an entity controlling, controlled by
or under common control with Tenant, or (ii) any successor of Tenant resulting
from a merger, consolidation, sale of all or substantially all of the assets or
equity interests of Tenant or other form of corporate reorganization (in any
such case, a “Permitted Transfer”), shall not be subject to the provisions of
Subsection 8.02(b)(4) and shall not require Landlord’s prior written consent,
but the provisions of Subsections 8.02(b)(2), (3) and (5) shall apply to any
Permitted Transfer.  Any sublet or assignment to an entity controlling,
controlled by or under common control with Tenant shall not be subject to a net
worth test and/or financial examination by Landlord.  Notwithstanding the
foregoing, in order for an assignment resulting from a sale of all or
substantially all of the assets of Tenant to a third party to be deemed a
Permitted Transfer, (x) the purchaser of Tenant’s assets must have a net worth
computed in accordance with United States generally accepted accounting
principles at least equal to the net worth of Tenant on the date of such sublet
or assignment, and (y) proof satisfactory to Landlord of such net worth shall
have been delivered to Landlord prior to the effective date of any such
transaction.

 

8.04.      Except as specifically set forth above, no portion of the Demised
Premises or of Tenant’s interest in this Lease may be acquired by any other
person or entity, whether by assignment, mortgage, sublease, transfer, operation
of law or act of the Tenant, nor shall Tenant pledge its interest in this Lease
or in any security deposit required hereunder.

 

ARTICLE 9

 

COMPLIANCE WITH LAWS

 

9.01.      Tenant covenants to comply with all present and future laws, orders
and regulations of the federal, state and municipal governments or any of their
departments affecting Tenant’s particular manner of use and occupancy of the
Demised Premises.

 

9.02.      Tenant may, at its expense (and if necessary, in the name of but
without expense to Landlord) contest, by appropriate proceedings prosecuted
diligently and in good faith, the validity, or applicability to the Demised
Premises, of any law or requirement of public authority, and Landlord shall
reasonably cooperate with Tenant at no cost to Landlord in such proceedings
provided that:

 

(a)      Tenant shall defend, indemnify, and hold harmless Landlord against all
liability, loss or damage which Landlord shall suffer by reason of such
non-compliance or contest, including reasonable attorney’s fees and other
expenses reasonably incurred by Landlord;

 

(b)      Such non-compliance or contest shall not constitute or result in any
violation of any superior mortgage, or, if such superior mortgage shall permit
such non-compliance or contest on condition of the taking of action or
furnishing of security by Landlord, such action shall be taken and such security
shall be furnished at the expense of Tenant;

 

(c)      Tenant shall keep Landlord advised as to the status of such
proceedings;

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(d)      Tenant, by its acts or omissions, does not place Landlord or other
tenants in jeopardy or subject to any form of penalty or fine; and

 

(e)      Any such proceedings shall not affect the payment of Fixed Rent or
Additional Rent or other sums payable hereunder, nor prevent Tenant from using
the Demised Premises for its intended purpose.

 

ARTICLE 10

 

INSURANCE

 

10.01.      Tenant shall obtain and keep in full force and effect at all times
during the Term of this Lease, at its own cost and expense: (a) “All Risk”
property insurance against fire, theft, vandalism, malicious mischief, sprinkler
leakage and such additional perils (including flood and earthquake) as are now,
or hereafter may be, included in a standard extended coverage endorsement from
time to time in general use in the State of New Jersey upon property of every
description and kind owned by Tenant and or under Tenant’s care, custody or
control located in the Building or for which Tenant is legally liable or
installed by or on behalf of Tenant, including by way of example and not by way
of limitation, furniture, fixtures, installation and any other personal property
in an amount equal to the full replacement costs thereof; (b) Commercial General
Liability Insurance Coverage to include personal injury, bodily injury, broad
form property damage, operations hazard, owner’s protective coverage, blanket
contractual liability, products and completed operations liability naming
Landlord, and Landlord’s mortgagee or trust deed holder and ground landlord (if
any) as additional named insureds in an amount per occurrence of not less than
One Million and 00/100 ($1,000,000) Dollars combined single limit per occurrence
and Two Million and 00/100 ($2,000,000) Dollars general aggregate for bodily
injury or death and property damage occurring in, upon, adjacent, or connected
with the Demised Premises and any part thereof on a per location basis, as well
as at least One Million and 00/100 ($1,000,000) Dollars of coverage for property
insurance.  Tenant shall name such other insureds associated with the Building
as Landlord reasonably requests.  Tenant shall pay all premiums and charges
therefor and upon failure to do so Landlord may, but shall not be obligated to,
make payments, and in such latter event the Tenant agrees to pay the amount
thereof to Landlord on demand and said sum shall be deemed to be additional
rent, and in each instance collectible on the first day of any month following
the date of notice to Tenant in the same manner as though it were rent
originally reserved hereunder, together with interest thereon at the rate of
three points in excess of Prime Rate.  Copies of the original insurance policies
or appropriate certificates shall be deposited with Landlord together with any
renewals, replacements or endorsements at all times to the end that said
insurance shall be in full force and effect for the benefit of the Landlord
during the Term of this Lease; (c) business interruption insurance in such
amounts as will reimburse Tenant for direct or indirect loss of earnings, for a
period of not less than twelve (12) months, attributable to all perils, commonly
insured against by prudent tenants or assumed by Tenant pursuant to this Lease
or attributable to prevention or denial of access to the demised Premises or the
Building as a result of such perils; (d) Worker’s Compensation insurance in form
and amount as required by law; (e) excess or “umbrella” liability insurance in
an amount of not less than Three Million and 00/100 ($3,000,000) Dollars; and
(f) any other form or forms of insurance or any increase in the limits of any of
the aforesaid enumerated coverages or other

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forms of insurance as Landlord or the mortgagee of Landlord may reasonably
require from time to time if in the reasonable opinion of Landlord or said
mortgagees or said coverage and/or limits become inadequate or less than that
commonly maintained by prudent tenants in similar buildings in the area by
tenants making similar uses.

 

10.02.      All insurance policies required pursuant to this Article shall be
taken out with insurers rated A- XII by A.M. Best Company, who are licensed to
do business in the State of New Jersey and shall be in form satisfactory from
time to time to Landlord.  A policy or certificate evidencing such insurance
together with a paid bill shall be delivered to Landlord not less than fifteen
(15) days prior to the commencement of the Term hereof.  Such insurance policy
or certificates will unequivocally provide an undertaking by the insurers to
notify Landlord and the mortgages of Landlord in writing not less than thirty
(30) days prior to any material change, reduction in coverage, cancellation or
other termination thereof (except that any cancellation for non-payment shall
require only ten (10) days prior written notice).  Should a certificate of
insurance initially be provided, a policy shall be furnished by Tenant within
thirty (30) days of the Term’s commencement.  The aforesaid insurance shall be
written with no reasonable and customary deductibles.

 

10.03.      Landlord and Tenant agree to include in each of its property
insurance policies a waiver of the insurer’s right of subrogation against the
other party.

 

10.04.      Each party hereby releases the other party with respect to any claim
(including a claim for negligence) which it might otherwise have against the
other party for loss, damage, or destruction with respect to its property
(including rental value or business interruption) occurring during the term of
this Lease to the extent to which it is insured under a policy or policies
containing a waiver of subrogation or naming the other party as an additional
insured, as provided in this Article. 

 

10.05.      Landlord covenants and agrees that throughout the Term it will
insure the Building (excluding any property with respect to which Landlord is
obligated to insure pursuant to Section 10.01, above) against damage by fire and
standard extended coverage perils, “all-risk” or fire and extended coverage
insurance and public liability insurance in such reasonable amounts with such
reasonable deductibles as required by any mortgagee or ground Landlord (if any),
or if none, as would be carried by a prudent owner of a similar building in the
area.  In addition, Landlord shall maintain and keep in force and effect during
the Term, rental income insurance insuring Landlord against abatement or loss of
Fixed Base Rent and Additional Rent, in case of fire or other casualty similarly
insured against, in an amount at least equal to one year’s Fixed Base Rent for
the Building.  Landlord may, but shall not be obligated to, take out and carry
any other forms of insurance as it or the mortgagee or ground lessor (if any) of
Landlord may require or reasonably determine available.  All insurance carried
by Landlord on the Building or Land shall be included as an Operating Expense
pursuant Article 5.

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ARTICLE 11

 

RULES AND REGULATIONS

 

11.01.      Tenant and its employees and agent shall faithfully observe and
comply with the Rules and Regulations annexed hereto as Exhibit C, and such
reasonable changes therein (whether by modification, elimination, or addition)
as Landlord at any time or times hereafter may make and communicate in writing
to Tenant; provided,  however, that in case of any conflict or inconsistency
between the provisions of this Lease and any of the Rules and Regulations as
originally promulgated or as changed, the provisions of this Lease shall
control.

 

11.02.      Nothing contained in this Lease shall be construed to impose upon
Landlord any duty or obligation to Tenant to enforce the Rules and Regulations
or the terms, covenants, or conditions in any other lease, as against any other
tenant and Landlord shall not be liable to Tenant for violation of the same by
any other tenant or its employees, agents or visitors.  However, Landlord shall
not enforce any of the Rules and Regulations in such manner as to discriminate
against Tenant or anyone claiming under or through Tenant.

 

ARTICLE 12

 

TENANT’S CHANGES

 

12.01.      Tenant shall not, without first obtaining the written consent of
Landlord, make any alterations, additions or improvements in, to or about the
Demised Premises (any such to be “Tenant Changes”).  Notwithstanding the
foregoing, Landlord’s consent shall not be required for any Tenant Changes that
(i) are non-structural and will not, in Landlord’s sole judgment, affect the
HVAC, electric, sanitary, elevator or other Building systems serving the Demised
Premises or any other portion of the Building (“Major Changes”), and (ii) do not
cost, in the aggregate, more than (a) Thirty-Five Thousand Dollars ($35,000.00)
for Tenant Changes that require a building permit from the municipality in which
the Property is located, or (b) Seventy-Five Thousand Dollars ($75,000.00) for
Tenant Changes that do not require a building permit from the municipality in
which the Property is located.  Landlord’s consent shall not be unreasonably
withheld, conditioned or delayed with respect to any Tenant Changes other than
Major Changes, it being agreed that Landlord may withhold or condition its
consent to any Major Changes for any reason or no reason in Landlord’s sole and
absolute discretion without any liability whatsoever to Tenant.  All Tenant
Changes shall become the property of Landlord and shall remain at the Premises
upon the expiration or earlier termination of this Lease unless Landlord
notifies Tenant, within ten (10) business days after its receipt of notice of
such Tenant Changes, that Tenant will be required to remove such Tenant Changes
upon the expiration or earlier termination of this Lease.

 

ARTICLE 13

 

TENANT’S PROPERTY

 

13.01.      All fixtures, equipment, improvements, and appurtenances attached to
or built into the Demised Premises at the commencement of or during the term of
this Lease, whether or not

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by or at the expense of Tenant, shall be and remain a part of the Demised
Premises, shall be deemed the property of Landlord and shall not be removed by
Tenant, except as hereinafter in this Article expressly provided.

 

13.02.      All business and trade fixtures, machinery and equipment,
communications equipment and office equipment, whether or not attached to or
built into the Demised Premises, which are installed in the Demised Premises by
or for the account of Tenant, without expense to Landlord, and can be removed
without permanent structural damage to the Building, and all furniture,
furnishings and other articles of movable personal property owned by Tenant and
located in the Demised Premises (all of which are sometimes called “Tenant’s
Property”), shall be and shall remain the property of Tenant and may be removed
by it at any time during the term of this Lease; provided that if any of
Tenant’s Property is removed, Tenant shall repair or pay the cost of repairing
any damage to the Demised Premises or to the Building resulting from such
removal.  Any equipment or other property for which Landlord shall have granted
any allowance or credit to Tenant shall not be deemed to have been installed by
or for the account of Tenant, without expense to Landlord, and shall not be
considered Tenant’s Property.

 

13.03.      At or before the Expiration Date, or the date of an earlier
termination of this Lease, or as promptly as practicable after such an earlier
termination date, Tenant at its expense, shall remove from the Demised Premises
all of Tenant’s Property except such items thereof as Tenant shall have
expressly agreed in writing with Landlord were to remain and to become the
property of Landlord, and, if requested by Landlord, at the time of approval,
all items of work done by or on behalf of Tenant after the Commencement Date
shall be removed by Tenant and Tenant shall repair any damage to the Demised
Premises or the Building resulting from such removal.

 

13.04.      Any other items of Tenant’s Property which shall remain in the
Demised Premises after the Expiration Date or after a period of fifteen (15)
days following an earlier termination date, may, at the option of the Landlord,
be deemed to have been abandoned, and in such case either may be retained by
Landlord as its property or may be disposed of, without accountability, in such
manner as Landlord may see fit, at Tenant’s expense.

 

13.05.      This Article 13 shall survive the expiration or earlier termination
of this Lease.

 

ARTICLE 14

 

REPAIRS AND MAINTENANCE

 

14.01.      Landlord shall at its expense, maintain the Building in good repair
and condition, including but not limited to the maintenance and repair of the
roof, foundation, air conditioning, heating, plumbing and electrical systems and
structural components.  Tenant will not in any manner deface or injure the
Building, and will pay the cost of repairing any damage or injury done to the
Building or any part thereof by Tenant or Tenant’s agents, employees or
invitees.  Tenant shall take good care of the Premises and keep the Premises
free from waste and nuisance of any kind.  Tenant shall keep the Premises,
including all fixtures installed by Tenant and any plate glass and special store
fronts, in good condition, reasonable wear and tear and damage

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caused by casualty excepted, and make all necessary non-structural repairs
except those caused by fire, casualty or acts of God covered by Landlord’s fire
insurance policy covering the Building.  The performance by Tenant of its
obligations to maintain and make repairs shall be conducted only by contractors
and subcontractors approved in writing by Landlord (which approval shall not be
unreasonably withheld, conditioned, or delayed), it being understood that Tenant
shall procure and maintain and shall cause contractors and subcontractors
engaged by or on behalf of Tenant to procure and maintain insurance coverage
against such risks, and in such amounts as Landlord may reasonable require and
with such companies as landlord may reasonably approve, in connection with any
such maintenance and repair.  If Tenant fails to make such repairs or take steps
to have such condition corrected after the occurrence of the damage or injury,
Landlord may at its option make such repair, and Tenant, shall within thirty
(30) days of request therefor, pay Landlord for the cost thereof.  At the end or
other termination of this Lease, Tenant shall deliver up the Premises with all
improvements located thereon (except as otherwise herein provided) in good
repair and condition, reasonable wear and tear and damage caused by casualty
excepted, and shall deliver to Landlord all keys to the Premises.

 

ARTICLE 15

 

ELECTRICITY

 

15.01.      Electricity shall be furnished by Landlord to the Premises and
Tenant shall pay to Landlord, as Additional Rent for such service, during the
Term, an amount equal to the amount Landlord actually pays to the utility
company to provide electricity to the Premises, including all applicable
surcharges, demand charges, taxes and other sums payable in respect thereof,
without any mark-up, service charge or other additional fees or profit margin
imposed by Landlord and Tenant shall receive the net of any rebates or credits
actually received by Landlord in respect of such electricity supplied to the
Premises and paid for by Tenant, based on Tenant's demand and/or consumption of
electricity as registered on a meter or sub-meter installed by Landlord as part
of the Base Building Work in the Premises for purposes of measuring such demand
and consumption.  Landlord, at Landlord's sole cost and expense (but subject to
recoupment by Landlord pursuant to Sections 5.05 and 5.06) shall maintain such
meters or sub-meters in good working order.  Tenant, from time to time, shall
have the right to review and audit Landlord's meter readings and electricity
bills, and Landlord's calculation of the Additional Rent attributable to
Tenant’s electricity consumption and usage, at reasonable times and on
reasonable prior notice, and if at any time the Demised Premises are not
separately metered Tenant shall also have the right to audit such readings,
bills and calculations.  For the avoidance of doubt, electric energy for the
HVAC system and all common areas of the Building is included in Operating
Expenses, and Tenant shall pay Tenant’s Percentage of the same.

 

15.02.      Landlord shall not be liable in any way to Tenant for any failure or
defect in the supply or character of electric energy furnished to the Demised
Premises only by reason of any requirement, act, or omission of the public
utility serving the Building with electricity.  Landlord shall reasonably
furnish and promptly install all replacement lighting tubes, lamps, bulbs, and
ballasts required in the Demised Premises at Tenant’s expense.

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15.03.      The risers and/or other electrical conductors or equipment serving
the Demised Premises shall be capable of supplying 15 watts of electricity per
rentable square foot, and Tenant shall not use any electrical equipment which,
in Landlord’s reasonable judgment, would exceed such capacity or interfere with
the electrical service to other tenants of the Building.

 

ARTICLE 16

 

HEATING, VENTILATION AND AIR-CONDITIONING

 

16.01.      Landlord, subject to the provisions of Section 5.04, shall maintain
and operate the heating, ventilating, and air-conditioning systems (hereinafter
called “the systems”) in good working order, and shall furnish heat,
ventilating, and air conditioning (hereinafter collectively called “air
conditioning service”) in the Demised Premises through the systems, for
comfortable occupancy of the Demised Premises from 8:00 A.M. to 6:00 P.M. Monday
through Friday (“Regular Hours”) and 8:00 A.M. to 1:00 P.M. on Saturdays, except
for Building Holidays (78 degree F. dry bulb and 50% relative humidity when
outside conditions are 93 degrees F. dry bulb and 75 degree F. wet bulb, and 68
degree F. inside when outside temperature are 10 degrees F) provided the Demised
Premises are used for general office purposes, it being acknowledged that the
air conditioning service provided by Landlord may not be sufficient for other
specific uses such as server rooms.  If Tenant shall require air-conditioning
service at any other time (hereinafter called “after hours”), Landlord shall
furnish such after hours air-conditioning service upon reasonable advance notice
from Tenant, and Tenant shall pay Landlord’s then established charges therefor
on Landlord’s demand, which is currently One Hundred Fifty Dollars ($150.00) per
hour per zone. 

 

16.02.      Use of the Demised Premises, or any part thereof, in a manner
exceeding the design conditions for air-conditioning service to the Demised
Premises or rearrangement of partitioning which interferes with normal operation
of the air-conditioning in the Demised Premises, may require changes in the
air-conditioning system servicing the Demised Premises.  Such changes, so
occasioned, shall be made by Landlord at Tenant’s expense.

 

ARTICLE 17

 

LANDLORD’S OTHER SERVICES

 

17.01.      Landlord, subject to the provisions of Section 5.04, shall provide
public elevator service, passenger and service, by elevators serving the floors
on which the Demised Premises are situated during Regular Hours, and shall have
at least one passenger elevator subject to call at all other times.

 

17.02.      Landlord, subject to the provisions of Section 5.04, shall cause the
Demised Premises to be cleaned with regular janitorial services in accordance
with the specifications set forth on attached Exhibit B.  Tenant shall pay to
Landlord on demand the costs incurred by Landlord for (a) extra cleaning work in
the Demised Premises required because of (i) misuse or neglect on the part of
Tenant or its employees or visitors; (ii) use of portions of the Demised
Premises for preparation, serving or consumption of food or beverages, data
processing, or

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reproducing operations, private lavatories or toilets or other special purpose
areas requiring greater or more difficult cleaning work than office areas; (iii)
unusual quantity of interior glass surfaces; (iv) non-building standard
materials or finishes installed by Tenant or at its request; and (b) removal
from the Demised Premises and the Building of so much of any refuse and rubbish
of Tenant as shall exceed that ordinarily accumulated daily in the routine of
business office occupancy.  Landlord, its cleaning contractor, and their
employees shall have after-hours access to the Demised Premises and the free use
of light, power, and water in the Demised Premises as reasonably required for
the purpose of cleaning the Demised Premises in accordance with Landlord’s
obligations hereunder.  Tenant shall be permitted to impose reasonable security
procedures and practices (e.g., not permitting access to limited “secure” areas
without a representative of Tenant being present) on Landlord, its cleaning
contactor, and their employees for any after-hours access to the Demised
Premises during the Term. 

 

17.03.      Landlord, subject to the provisions of Section 5.04, shall furnish
adequate hot and cold water to each floor of the Building for drinking,
lavatory, and cleaning purposes, together with soap, towels, and toilet tissue
for each lavatory.  If Tenant uses water for any other purpose, Landlord, at
Tenant’s expense, may install meters to measure Tenant’s consumption of cold
water and/or hot water for such other purposes and/or steam, as the case may
be.  In such instances Tenant shall then pay for the quantities of cold water
and hot water shown on such meters, at Landlord’s cost thereof, on the rendition
of Landlord’s bills therefor.

 

17.04.      Landlord, at its expense, and at Tenant’s request, shall insert
initial listings on the Building directory of the name of Tenant, and the names
of any of their officers and employees, provided that the names so listed shall
not take up more than Tenant’s proportionate share of the space on the Building
directory.  All Building directory changes made at Tenant’s request after the
Tenant’s initial listings have been placed on the Building directory shall be
made by Landlord at the expense of Tenant, and Tenant agrees to promptly pay to
Landlord as Additional Rent the cost of such changes within ten (10) days after
Landlord has submitted an invoice therefor.

 

17.05.      If the Demised Premises or any portion thereof are rendered
untenantable and are not able to be used by Tenant for a period of five (5)
consecutive business days or ten (10) business days in any one hundred and
eighty (180) day period (the time the Demised Premises are untenantable being
referred to as the “Eligibility Period”) as a result of a failure of the water,
heating, ventilating, air conditioning, electric, sanitary, elevator, or other
Building systems serving the Demised Premises, Tenant’s Rent shall be abated
after the expiration of the Eligibility Period for such time as the Demised
Premises or any portion thereof remains untenantable, provided that there shall
be no abatement of Rent if such failure is caused by the negligent or willful
acts or omission of Tenant, its licensees or invitees.

 

17.06.      Landlord shall make available for Tenant’s use one hundred twenty
(120) non-reserved parking spaces (which is Tenant’s Percentage of the total
parking spaces adjacent to the Building) in common use with other tenants of the
Building in the parking area adjacent to the Building; provided,  however, that
six (6) of Tenant’s parking spaces shall be reserved expressly for Tenant and
shall be located in the area adjacent to the main entrance of the Building
designated on attached Exhibit D.

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17.07.      The Building and the Demised Premises shall be cleaned in accordance
with the Cleaning and Maintenance Schedule set forth on Exhibit B annexed hereto
and made a part hereof.

 

17.08.      Landlord shall have no obligation to provide personnel for Building
and parking lot security (including but not limited to a staffed lobby security
desk and/or a parking lot security guard or patrol car) (collectively, “Security
Personnel”).  If Landlord elects, in its sole and absolute discretion, to
provide Security Personnel at any time, the costs of such Security Personnel
shall be included in Operating Expenses, unless such Security Personnel is being
supplied due to a requirement by, or at the request of, any tenants of the
Building other than Tenant.

 

ARTICLE 18

 

ACCESS; CHANGES IN BUILDING FACILITIES; SIGNAGE

 

18.01.      All walls, windows, and doors bounding the Demised Premises
(including exterior Building walls, core corridor walls and doors, and any core
corridor entrance), except the inside surfaces thereof, any terraces or roofs
adjacent to the Demised Premises, and any space in or adjacent to the Demised
Premises used for shafts, stacks, pipes, conduits, fan room, ducts, electric or
other utilities, sinks or other Building facilities, and the use thereof, as
well as access thereto through the Demised Premises for the purposes of
operation, maintenance, decoration, and repair, are reserved to Landlord.

 

18.02.      Subject to Tenant’s quiet enjoyment of the Premises, Tenant shall
permit Landlord to install, use, and maintain pipes, ducts, and conduits within
the demising walls, bearing columns, and ceilings of the Demised Premises.  All
of Landlord’s work shall be conducted in a manner that will not unreasonably
interfere with the Tenant’s operations in the Premises.

 

18.03.      Landlord or Landlord’s agent shall have the right upon twenty-four
(24) hour notice to request (except in emergency under clause (ii) hereof, for
which no prior notice or request shall be necessary) to enter and/or pass
through the Demised Premises or any part thereof, at reasonable times during
reasonable hours, (i) to examine the Demised Premises and to show them to the
holders of superior mortgages, prospective purchasers or mortgagees of the
Building as an entirety; and (ii) for the purpose of making such repairs or
changes or doing such repainting in or to the Demised Premises or its
facilities, as may be provided for by this Lease or as may be mutually agreed
upon by the parties or as Landlord may be required to make by law or in order to
repair and maintain said structure or its fixtures or facilities.  Landlord
shall be allowed to take all materials into and upon the Demised Premises that
may be required for such repairs, changes, repainting, or maintenance, without
liability to Tenant but Landlord shall not unreasonably interfere with Tenant’s
use of the Demised Premises or Tenant’s business operations.  Landlord shall
also have the right to enter on and/or pass through the Demised Premises, or any
part thereof, at such times as such entry shall be required by circumstances of
emergency affecting the Demised Premises or the Building.

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18.04.      During the period of twelve (12) months prior to the Expiration
Date, Landlord may exhibit the Demised Premises to prospective tenants.

 

18.05.      Landlord reserves the right, at any time after completion of the
Base Building Work and Tenant Improvements, without incurring any liability to
Tenant therefor, to make such changes in or to the Building and the fixtures and
equipment thereof, as well as in or to the street entrances, halls, passages,
elevators, escalators, and stairways thereof, as it may deem reasonably
necessary provided that such changes shall not reduce the size of the Demised
Premises, nor interrupt Tenant’s quiet enjoyment of the Premises or unreasonably
interfere with Tenant’s business operations in the Premises.

 

18.06.      Subject to applicable law and the terms and conditions of this Lease
including Article 16 regarding after hours charges for HVAC, the Building shall
be accessible by Tenant twenty-four (24) hours per day, seven (7) days per week,
three hundred sixty-five (365) days per year through a card key access system.

 

18.07.      Tenant shall be permitted to install its own signage within the
Premises.  Landlord shall provide, at its sole cost and expense, Building
standard signage/directory in the first (1st) floor lobby.  Tenant shall receive
“top” or “first” placement on such signage/directory.  In addition, Landlord
shall, at no cost to Tenant, provide Tenant with nine (9) square feet of space
in a location to be agreed upon in the first floor lobby of the Building where
Tenant can place a sign using Tenant’s own branding that identifies Tenant’s
presence in the Building (“Tenant’s Lobby Sign”).  Notwithstanding Landlord
permitting Tenant to place such a sign and providing a location to do so free of
charge, any other costs associated with Tenant’s Lobby Sign (including, without
limitation, the design, manufacturing and installation of such sign) shall be at
Tenant’s sole cost and expense, provided that such costs and expenses may be
paid out of the funds from the Tenant Improvement Allowance.

 

18.08.      Tenant shall be permitted to place identifying signage on the
exterior of the Building in the area designated on Exhibit D attached hereto
(the “Building Façade Signage”).  So long as the Premises continues to consist
of the entire 3rd and 4th floors of the Building, no other Tenant of the
Building shall be permitted to have signage anywhere on the Building
façade.  Further, Tenant shall be permitted to have “top” or “first” placement
on the monument signage serving the Building, which monument sign is in the
location designated on Exhibit D attached hereto (the “Monument Signage”).  The
Building Façade Signage and Monument Signage shall be subject to (i) applicable
laws, codes and ordinances, (ii) the approval of the Association if and to the
extent required by the DCR, and (iii) the prior written approval of Landlord
(which shall not be unreasonably withheld, conditioned or delayed), and shall be
at Tenant’s sole cost and expense, provided that such costs and expenses may be
paid out of the funds from the Tenant Improvement Allowance (except that
Landlord shall be responsible for the costs of designing and constructing any
monuments upon which a Monument Sign is placed, subject to reimbursement through
Operating Expenses).  Landlord shall use its commercially reasonable efforts to
cooperate with Tenant in connection with any governmental approvals that Tenant
seeks in connection with any Building Façade Signage or Monument Signage.

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ARTICLE 19

 

NOTICE OF ACCIDENTS

 

19.01.      Tenant shall give notice to Landlord, promptly after Tenant learns
thereof, of (i) any theft, accident or injury occurring within the Demised
Premises; (ii) all fires in the Demised Premises; (iii) all damage to or defects
in the Demised Premises, including the fixtures, equipment, and appurtenances
thereof, for the repair of which Landlord might be responsible; and (iv) all
damage to or defects in any parts or appurtenances of the Building’s sanitary,
electrical, heating, ventilating, air-conditioning, elevator, and other systems
located in or passing through the Demised Premises or any part thereof or any
part of the Building.

 

ARTICLE 20

 

NON-LIABILITY AND INDEMNIFICATION

 

20.01.      Landlord shall not be held responsible for and is hereby expressly
relieved from any and all liability by reason of any injury, loss, or damage to
any person or property in or about the Premises or the Property, whether the
loss, injury or damage be to the person or property of Tenant or any other
person, except to the extent such injury, loss or damage is due to the
negligence or willful misconduct of Landlord.  Tenant agrees to indemnify,
defend and save Landlord harmless from and against all claims, actions, damages,
liabilities and expenses, including but not limited to reasonable attorneys'
fees and other legal expenses, on account of such injury, loss or damage arising
(i) from any occurrence in, upon or at the Premises, except to the extent due to
the negligence or willful misconduct of Landlord, or (ii) from any occurrence in
or about the Property arising from the negligence or willful misconduct of
Tenant or its employees, agents, contractors, guests or invitees.

 

20.02.      Tenant shall not be held responsible for and is hereby expressly
relieved from any and all liability by reason of any injury, loss, or damage to
any person or property in or about the Property (exclusive of the Premises),
whether the loss, injury or damage be to the person or property of Landlord or
any other person, except to the extent such injury, loss or damage is due to the
negligence or willful misconduct of Tenant.  Landlord agrees to indemnify,
defend and save Tenant harmless from and against all claims, actions, damages,
liabilities and expenses, including but not limited to reasonable attorneys'
fees and other legal expenses, on account of such injury, loss or damage to the
extent arising from the negligence or willful misconduct of Landlord or its
employees, agents, contractors, guests or invitees (excluding any other tenants
of the Building).

 

The provisions of Section 20.01 and 20.02 shall survive the expiration or
earlier termination of this Lease.

 

20.03.      Except as otherwise expressly provided in this Lease, this Lease and
the obligations of Tenant hereunder shall be in no way affected, impaired or
excused because Landlord is unable to fulfill, or is delayed in fulfilling, any
of its obligations under this Lease by reason of strike, other labor trouble,
governmental pre-emption or priorities or other controls in

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connection with a national or other public emergency or shortages of fuel
supplies or labor resulting therefrom, or other like cause beyond Landlord’s
reasonable control.

 

ARTICLE 21

 

DESTRUCTION OR DAMAGE

 

21.01.      If the Building or the Demised Premises shall be partially or
totally damaged or destroyed by fire or other cause, then whether or not the
damage or destruction shall have resulted from the fault or neglect of Tenant,
or its employees, agents or visitors (and if this Lease shall not have been
terminated as in this Article hereinafter provided), Landlord shall repair the
damage and restore and rebuild the Building and/or the Demised Premises, at its
expense, with reasonable dispatch after notice to it of the damage or
destruction; provided,  however, that Landlord shall not be required to repair
or replace any of the Tenant’s Property.

 

21.02.      If the Building or the Demised Premises shall be partially damaged
or partially destroyed by fire or other cause then the rents payable hereunder
shall be abated to the extent that the Demised Premises shall have been rendered
untenantable and for the period from the date of such damage or destruction to
the date the damage shall be repaired or restored; provided,  however, if the
damage shall be attributable to the fault or negligence of Tenant, its agents or
employees, then rent shall continue but shall be reduced by any amounts received
by Landlord pursuant to Landlord’s coverage for business interruption and/or
rent insurance attributable to the Demised Premises.  If all or a substantial
majority of the Demised Premises shall be totally (which shall be deemed to
include substantially totally) damaged or destroyed or rendered completely
(which shall be deemed to include substantially completely) untenantable on
account of fire or other cause, the Rents shall abate as of the date of the
damage or destruction and until Landlord shall repair, restore, and rebuild the
Building and the Demised Premises; provided,  however, that should Tenant
reoccupy a portion of the Demised Premises during the period of restoration work
is taking place and prior to the date that the same are made completely
tenantable, Rents allocable to such portion shall be payable by Tenant from the
date of such occupancy.

 

21.03.      If the Building or the Demised Premises shall be totally damaged or
destroyed by fire or other cause, or if the Building shall be so damaged or
destroyed by fire or other cause (whether or not the Demised Premises are
damaged or destroyed) as to require a reasonably estimated expenditure of more
than twenty-five percent (25%) of the full insurable value of the Building
immediately prior to the casualty, then in either such case, Landlord may
terminate this Lease by giving Tenant notice to such effect within one hundred
eighty (180) days after the date of the casualty.  In case of any damage or
destruction mentioned in this Article, Tenant may terminate this Lease by notice
to Landlord if Landlord has not completed the making of the required repairs and
restored and rebuilt the Building and the Demised Premises within twelve (12)
months from the date of such damage or destruction, or within such period after
such date (not exceeding six (6) months) as shall equal the aggregate period
Landlord may have been delayed in doing so by adjustment of insurance, labor
trouble, governmental controls, act of God, or any other cause beyond Landlord’s
reasonable control.

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21.04.      No damages, compensation, or claim shall be payable by Landlord for
inconvenience, loss of business, or annoyance arising from any repair or
restoration of any portion of the Demised Premises or of the Building pursuant
to this Article. Landlord shall endeavor to restore such repair or restoration
promptly and in such manner as not unreasonably to interfere with Tenant’s use
and occupancy during such time that Tenant is able to use the Demised Premises
during Landlord’s restoration.

 

21.05.      Notwithstanding any of the foregoing provisions of this Article, if
Landlord or the holder of any superior mortgage shall be unable to collect all
of the insurance proceeds (including rent insurance proceeds) applicable to
damage or destruction of the Demised Premises or the Building by fire or other
cause, by reason of some action or inaction on the part of Tenant or any of its
employees, agents or contractors in connection with the processing of any claim,
then, without prejudice to any other remedies which may be available against
Tenant, there shall be no abatement of Tenant’s rents.

 

21.06.      Landlord will not carry insurance of any kind on Tenant’s Property,
and shall not be obligated to repair any damage thereto or replace the same.

 

21.07.      The provisions of this Article shall be considered an express
agreement governing any case of damage or destruction of the Demised Premises by
fire or other casualty, and any law of the State of New Jersey providing for
such a contingency in the absence of an express agreement, and any other law of
like import, now or hereafter in force, shall have no application in such case.

 

21.08.      If the Demised Premises and/or access thereto become partially or
totally damaged or destroyed by any casualty not insured against, and Landlord
does not elect, by written notice to Tenant delivered within forty-five (45)
days after the casualty event, to use its own funds to restore the Demised
Premises, then either Party shall have the right to terminate this Lease upon
thirty (30) days’ notice to the other Party.

 

ARTICLE 22

 

EMINENT DOMAIN

 

22.01.      If the whole or a substantial part of the Building shall be lawfully
taken by condemnation or in any other manner for any public or quasi-public use
of purpose, this Lease and the term and estate hereby granted shall forthwith
terminate as of the date of vesting of title on such taking (which date is
herein after also referred to as the “date of the taking”), and the rents shall
be prorated and adjusted as of such date.

 

22.02.      If any part of the Building shall be so taken, this Lease shall be
unaffected by such taking, except that Tenant may elect to terminate this Lease
in the event of a partial taking, if the area of the Demised Premises shall not
be reasonably sufficient for Tenant to continue feasible operation of its
business. 

 

22.03.      Landlord shall be entitled to receive the entire award in any
proceeding with respect to any taking provided for in this Article without
deduction therefrom for any estate

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vested in Tenant by this Lease, and Tenant shall receive no part of such
award.  Tenant hereby expressly assigns to Landlord all of its right, title, and
interest in or to every such award. The foregoing shall not, however, deprive,
limit, nor restrict Tenant of, or from, any separate award for moving expenses,
business dislocation damages or for any other award which would not reduce the
award payable to Landlord.  Upon the date the right to possession shall vest in
the condemning authority, this Lease shall cease and terminate with Rent
adjusted to such date.

 

ARTICLE 23

 

SURRENDER

 

23.01.      On the last day of the term of this Lease, or upon any earlier
termination of this Lease, or upon any re-entry by Landlord upon the Demised
Premises, Tenant shall quit and surrender the Demised Premises to Landlord in
good order, condition, and repair, except for ordinary wear and tear, casualty
and condemnation damages, and Tenant shall remove all of Tenant’s Property
therefrom and perform such restoration work as is required by this Lease.  This
Article 23 shall survive the expiration or earlier termination of this Lease.

 

ARTICLE 24

 

DEFAULTS- REMEDIES

 

24.01.      Each of the following shall constitute an “Event of Default” under
this Lease:

 

(i)      the failure of Tenant to pay any Fixed Base Rent, Additional Rent or
any other charge required to be paid by Tenant hereunder, when the same shall be
due and payable, and such failure shall continue beyond the Grace Period;

 

(ii)      the failure by Tenant to perform or observe any covenant or
requirement of this Lease not specifically referred to in this Section, and such
failure continuing for thirty (30) days after notice from Landlord to Tenant
specifying the covenant or requirement that Tenant failed to perform or observe,
provided,  however, that if such failure cannot reasonably be cured within said
thirty (30) day period, then Tenant shall have such longer period (but in no
event longer than ninety (90) days) as may reasonably be necessary to cure such
failure provided Tenant promptly commences and thereafter diligently proceeds in
good faith to cure the default;

 

(iii)      the commencement by Tenant of a case in bankruptcy, or under the
insolvency laws of any State naming Tenant as the debtor;

 

(iv)      the commencement by anyone other than the Tenant of a case in
bankruptcy or under the insolvency laws of any State naming Tenant as the
debtor, which case shall not have been discharged within sixty (60) days of the
commencement thereof;

 

(v)      the making by Tenant of an assignment for the benefit of creditors or
any other arrangement involving all or substantially all of its assets under any
state statute;

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(vi)      the appointment of a receiver or trustee for the Tenant or for all or
any portion of the property of Tenant in any proceeding, which receivership
shall not have been set aside within sixty (60) days of such appointment;

 

(vii)      the refusal by Tenant to take possession of the Demised Premises upon
completion of the Tenant Improvements or the vacation and abandonment of the
Demised Premises by Tenant, permitting the same to remain unoccupied and
unattended; or

 

(viii)      if Tenant shall be in violation of the transfer, assignment and/or
sublet provisions of this Lease.

 

24.02.      At any time after the occurrence of an Event of Default, Landlord
may give written notice to Tenant specifying such Event(s) of Default and
stating that this Lease and the Term shall terminate three (3) business days
after the giving of such notice, unless Tenant cures the Event of Default.  At
the expiration of such three (3) business days, if Tenant has not cured the
Event of Default, this Lease and the Term and all of the right, title and
interest of the Tenant hereunder shall wholly cease, terminate and expire, and
Tenant shall quit and surrender the Demised Premises to the
Landlord.  Notwithstanding such termination, surrender, and the expiration of
Tenant's right, title, and interest, Tenant's liability and responsibility under
all of the provisions of this Lease (including for the Fixed Base Rent and
Additional Rent which subsequently accrues and for all accrued but unpaid Fixed
Base Rent and Additional Rent as of the date of the termination) and for damages
as provided for, and calculated pursuant to Article 26 shall continue.

 

ARTICLE 25

 

LANDLORD’S RIGHT OF RE-ENTRY

 

25.01.      If this Lease shall be terminated pursuant to Section 24.02, or if
any Event of Default shall have occurred and be continuing, Landlord, or its
agents or employees, may re-enter the Demised Premises at any time and remove
therefrom Tenant, Tenant's agents, and any subtenants, licensees,
concessionaires or invitees, together with any of its or their property, either
by summary dispossess proceedings or by any suitable action or proceeding at
law.  In the event of such termination, Landlord may repossess and enjoy the
Demised Premises.  Landlord shall be entitled to the benefits of all provisions
of law respecting the speedy recovery of lands and tenements, or proceedings in
forcible entry and detainer (to the extent permitted under applicable
law).  Tenant waives any rights to the service of any notice of Landlord's
intention to re-enter provided for by any present or future law, if
any.  Landlord shall not be liable to Tenant in any way in connection with any
action it takes pursuant to the foregoing.  Notwithstanding any such re-entry,
repossession, dispossession or removal, Tenant's liability and responsibility
under all of the provisions of this Lease shall continue.  In the event of any
termination of this Lease under the provisions of Article 24 or if Landlord
shall re-enter the Demised Premises under the provisions of this Article or in
the event of the termination of this Lease, or of re-entry, by or under any
summary dispossess or other proceeding or action or any provision of law by
reason of default hereunder on the part of Tenant, Tenant shall thereupon pay to
Landlord the accrued but unpaid Fixed Base Rent and Additional Rent due from
Tenant to Landlord up to the time of such termination of this Lease,

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or of such recovery of possession of the Demised Premises by Landlord, as the
case may be, and shall also pay to Landlord damages as provided in Article
26.  This Article 25 shall survive the termination of this Lease.

 

ARTICLE 26

 

DAMAGES

 

26.01.      If this Lease is terminated under the provisions of Article 24, or
if Landlord shall re-enter the Demised Premises under the provisions of Article
25, or in the event of the termination of this Lease, or of re-entry, by or
under any summary dispossess or other proceeding or action of any provision of
law by reason of an Event of Default hereunder on the part of Tenant, Tenant
shall pay to Landlord, in a lump sum, an amount equal to the Fixed Base Rent and
Additional Rent payable hereunder which would have been payable by Tenant for
the remainder of the Term had this Lease not so terminated, or had Landlord not
so re-entered the Demised Premises, discounted to present value at the rate of
four percent (4%) per annum; provided,  however, that if Landlord shall relet
the Demised Premises during said period, Landlord shall credit Tenant with the
net rents (including additional rent) received by Landlord from such reletting,
such net rents to be determined by first deducting from the gross rents as and
when received by Landlord from such reletting, the expenses incurred or paid by
Landlord in terminating this Lease or in re-entering the Demised Premises and in
securing possession thereof, as well as the expenses of reletting, including
altering and preparing the Demised Premises for new tenants, brokers’
commissions, and all other expenses properly chargeable against the Demised
Premises and the rental therefrom; it being understood that any such reletting
may be for a period shorter or longer than the remaining term of this Lease; but
in no event shall Tenant be entitled to receive any excess of such net rents
over the sums payable by Tenant to Landlord hereunder, nor shall Tenant be
entitled in any suit for the collection of damages pursuant to this Subsection
to a credit in respect of any net rents from a reletting, except to the extent
that such net rents are actually received by Landlord. If the Demised Premises
or any part thereof should be relet in combination with other space, then proper
apportionment on a square foot basis shall be made of the rent received from
such reletting and of the expenses of reletting.

 

26.02.      Suit or suits for the recovery of such damages, or any installments
thereof, may be brought by Landlord from time to time at its election, and
nothing contained herein shall be deemed to require Landlord to postpone suit
until the date when the term of this Lease would have expired if it had not been
so terminated under the provisions of Article 24, or under any provision of law,
or had Landlord not re-entered the Demised Premises.  Nothing herein contained
shall be construed to limit or preclude recovery by Landlord against Tenant of
any sums or damages to which, in addition to the damages particularly provided
above, Landlord may lawfully be entitled by reason of any Event of Default
hereunder on the part of Tenant.

 

26.03.      In addition to the foregoing and without regard to whether this
Lease is terminated, if an Event of Default occurs then Tenant shall pay to
Landlord upon demand, all costs and expenses incurred by Landlord, including
reasonable attorney’s fees, with respect to any lawsuit instituted or any action
taken by Landlord to enforce all or any of the provisions of this Lease after
such Event of Default.

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26.04.      If an Event of Default occurs which results in Landlord's recovering
possession of the Demised Premises, Landlord shall utilize commercially
reasonable efforts to mitigate its damages.  Landlord may relet the Demised
Premises or any portion thereof for such term or terms (which may be greater or
less than the period which would otherwise have constituted the balance of the
Term of this Lease) and on such conditions (which may include concessions or
free rent and alterations to the Premises) as Landlord, in its commercially
reasonable discretion, may determine; provided,  however, that Landlord shall be
under no obligation whatsoever to (i) prefer the Demised Premises over any other
space in the Building or other properties in the geographic area owned by
Landlord or its affiliates which is then available or is expected to become
available within the following six (6) months; (ii) accept any lease on terms
materially less favorable to Landlord than those contained herein; (iii) accept
any lease proposal for less than the then current fair rental value of the
Demised Premises, as reasonably determined by Landlord; or (iv) accept any lease
with a tenant unless such tenant will be obligated to use the Demised Premises
for a use that will not detract from, and will maintain, the reputation of the
Building, as determined in Landlord’s sole discretion.  Landlord shall in no way
be responsible or liable for any failure to relet the Demised Premises or any
part thereof, or for any failure to collect any rent due upon such
reletting.  Landlord need not give Tenant notice of reletting prior to such
reletting.

 

26.05.      Landlord waives the right to assert any statutory liens against
Tenant’s property.

 

26.06.      This Article 26 shall survive the termination of this Lease.

 

ARTICLE 27

 

WAIVERS

 

27.01.      Tenant, for Tenant, and on behalf of any and all persons claiming
through or under Tenant, including creditors of all kinds, does hereby waive and
surrender all right and privilege which they or any of them might have under or
by reason of any present or future law, to redeem the Demised Premises or to
have a continuance of this Lease for the term hereby demised after being
dispossessed or ejected therefrom by process of law or under the terms of this
Lease or after the termination of this Lease as herein provided.

 

27.02.      In the event that Tenant is in arrears in payment of fixed rent or
additional rent hereunder, Tenant waives Tenant’s right, if any, to designate
the items against which any payments made by Tenant are to be credited, and
Tenant agrees that Landlord may apply any payments made by Tenant to any items
it sees fit, irrespective of and notwithstanding any designation or request by
Tenant as to the items against which any such payments shall be credited.

 

27.03.      Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim brought by either 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 or occupancy of the Demised
Premises, including any claim of injury or damage, or any emergency or other
statutory remedy with respect thereto.

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ARTICLE 28

 

NO OTHER WAIVERS OR MODIFICATIONS

 

28.01.      The failure of either Party to insist in any one or more instances
upon the strict performance of any one or more of the obligations of this Lease,
or to exercise any election herein contained, shall not be construed as a waiver
or relinquishment for the future of the performance of such one or more
obligations of this Lease or of the right to exercise such election, but the
same shall continue and remain in full force and effect with respect to any
subsequent breach, act, or omission. No executory agreement hereafter made
between Landlord and Tenant shall be effective to change, modify, waive,
release, discharge, terminate or effect an abandonment of this Lease, in whole
or in part, unless such executory agreement is in writing, refers expressly to
this Lease and is signed by the Party against whom enforcement of the change,
modification, waiver, release, discharge, or termination of effectuation of the
abandonment is sought.

 

ARTICLE 29

 

CURING TENANT’S DEFAULTS

 

29.01.      If Tenant shall default in the performance of any of Tenant’s
obligations under this Lease, Landlord, without thereby waiving such default,
may (but shall not be obligated to) perform the same for the account and at the
expense of Tenant, without notice, in a case of emergency, and in any other
case, only if such default continues after the expiration of (i) ten (10) days
from the date Landlord gives Tenant notice of its intention to cure, or (ii) the
applicable Grace Periods provided for in this Lease for cure of such default,
whichever occurs later.

 

ARTICLE 30

 

BROKER

 

30.01.      The Parties covenant, warrant, and represent to each other that
there was no broker except the Broker instrumental in consummating this Lease
and that no conversations or negotiations were had with any broker except Broker
concerning the renting of the Demised Premises.  Each Party agrees to indemnify
and hold the other Party harmless against any claims for a brokerage commission
arising out of any conversations or negotiations had by the indemnifying Party
with any broker except Broker.  Landlord and Tenant hereby warrant to each other
that they shall satisfy or resolve any payment owed to their own retained
individual broker (one of the two parties identified as Broker) pursuant to a
separate agreement or payment arrangement.

 

ARTICLE 31

 

NOTICES

 

31.01.      Any notice, statement, demand, or other communications required or
permitted to be given, rendered, or made by either party to the other, pursuant
to this Lease or pursuant to any

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applicable law or requirement of public authority, shall be in writing (whether
or not so stated elsewhere in this Lease) and shall be deemed to have been
properly given, rendered or made, if sent by registered or certified mail,
return receipt requested, addressed to the other Party at the address
hereinabove set forth in the opening paragraph of this Lease (except that after
the Commencement Date, Tenant’s address, unless Tenant shall give notice to the
contrary, shall be the Building) and shall be deemed to have been given,
rendered, or made three (3) business days following the date of mailing.  Notice
may also be given by overnight mail, in which case it shall be deemed received
on the first business day after it was sent.  Either Party may, by notice as
aforesaid, designate a different address or addresses for notices, statements,
demands, or other communications intended for it.  In the event of the cessation
of any mail delivery for any reason, personal delivery shall be substituted for
the aforementioned method of serving notices.  Notwithstanding the previous
terms, duplicate notices for Tenant shall be sent to:

 

Eric L. Trachtenberg, General Counsel, Chief Compliance Officer and Corporate
Security

Pozen, Inc.

1414 Raleigh Road, Suite 400

Chapel Hill, NC 27517

 

 

Jennifer L. Armstrong, Executive Vice President, Human Resources and
Administration

Pozen, Inc.

1414 Raleigh Road, Suite 400

Chapel Hill, NC 27517

 

 

Martin N. Lisman, Esquire

Earp Cohn P.C.

123 S. Broad Street, Suite 2170

Philadelphia, PA 19109

 

ARTICLE 32

 

ESTOPPEL CERTIFICATE

 

32.01.      Both Parties agree that from time to time, and within ten (10)
business days after a written request from the other Party, to execute, enseal,
acknowledge and deliver to the requesting Party a written instrument certifying
that: (1) this Lease is in full force and effect and has not been modified,
supplemented or amended in any way (or, if there have been modifications,
supplements or amendments thereto, that it is in full force and effect as
modified, supplemented or amended and describing such modifications, supplements
and amendments) and that this Lease (as modified, supplemented or amended, as
aforesaid) represents the entire agreement between Landlord and Tenant as to the
Premises and the Property; (2) the dates to which the Fixed Base Rent,
Additional Rent and other charges arising under this Lease have been paid, if
any; (3) the amount of any prepaid rents or credits due to Tenant, if any; and
(4) if applicable, that Tenant has accepted the possession of the Premises and
has entered into occupancy of the Premises and the date on which the Rent
Commencement Date shall have occurred and the corresponding Expiration Date
(stating whether or not to the best knowledge of

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the signer of such certificate all conditions under this Lease to be performed
by the other Party prior to the Rent Commencement Date have been satisfied and
whether or not the other Party is then in default in the performance of any
covenant, agreement or condition contained in this Lease and specifying, if any,
each such unsatisfied condition and each such default of which the signer may
have knowledge); and stating any other fact or certifying any other condition
reasonably requested by the other Party or requested by any mortgagee or
prospective mortgagee or purchaser of the Property or of any interest therein,
and/or any party doing business of any kind with Tenant.  It is intended that
any statement delivered pursuant to the provisions of this Section be relied
upon by any such purchaser, mortgagee, or other related third party.

 

ARTICLE 33

 

TENANT’S TAX CREDIT APPLICATION

 

33.01.      Landlord acknowledges Tenant’s intent to apply for a tax credit
award (the “Tax Credits”) pursuant to the Grow New Jersey Assistance Act and the
regulations promulgated thereunder in connection with Tenant’s occupancy of the
Premises.  Landlord shall reasonably cooperate with and support Tenant and sign
any applications and other documents reasonably requested by Tenant in
connection with Tenant’s application for Tax Credits, but shall not be required
to pay any fees or otherwise expend more than a de minimis amount of its own
funds in connection therewith (other than in connection with the Tenant
Improvements and Base Building Work).

 

ARTICLE 34

 

REPRESENTATIONS, CONSTRUCTION, GOVERNING LAW

 

34.01.      Tenant expressly acknowledges and agrees that Landlord has not made
and is not making, and Tenant, in executing and delivering this Lease, is not
relying upon any warranties, representations, promises or statements, except to
the extent that the same are expressly set forth in this Lease.  It is
understood and agreed that all understandings and agreements heretofore had
between the parties are merged in this Lease, which alone fully and completely
express their agreements and that the same are entered into after full
investigation, neither party relying upon any statement or representation not
embodied in this Lease made by the other.

 

34.02.      Landlord hereby warrants that its current mortgage lender is
Lakeland Bank, and that Landlord has not received written notice of any default
that remains uncured under its current mortgage loan documents on the Building.

 

34.03.      Landlord hereby warrants that it has funds available to fund the
Tenant Improvements and Base Building Work provided for by this Lease.

 

34.04.      Landlord hereby covenants that as of the Commencement Date, with the
exception of any work performed by Tenant or its agents, contractors or
representatives after the Actual Delivery Date, the Building will be in
compliance with all applicable laws, rules, ordinances, and regulations,
including without limitation all zoning, fire, life safety, building

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codes, environmental laws, and the Americans with Disabilities Act (as amended)
(collectively the “Laws”) and there will be no pending or threatened action
against Landlord or the Building relating to any alleged violations of the Laws
from any governmental authority or third party.

 

34.05.      Landlord is not aware of the existence of any Hazardous Substances
at, on or under the Property that require remediation under any Environmental
Laws.  For purposes of this subsection: “Hazardous Substances” means any
pollutant, toxic substance, hazardous substance, hazardous waste or any similar
term as defined in any Environmental Law; and “Environmental Laws” means any Law
applicable to Landlord or the Property and relating to environmental matters or
concerning pollution or protection of the environment, including Laws governing
the use, storage, disposal, discharge, cleanup or reporting of Hazardous
Substances.

 

34.06.      Landlord warrants that it holds an exclusive leasehold interest in
the Property, and has the full power and authority to enter in to this Lease
with Tenant, and that no approval or consent was needed from any third party to
enter in to this Lease with Tenant except for approvals or consents that were
previously obtained.

 

34.07.      If any of the provisions 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 provision
or provisions to persons or circumstances other than those as to whom or which
it is held invalid or unenforceable, shall not be affected thereby, and every
provision of this Lease shall be valid and enforceable to the fullest extent
permitted by law.

 

34.08.      This Lease shall be governed in all respects by the laws of the
State of New Jersey, without regard to any conflict of law principles that might
otherwise cause the laws of a different jurisdiction to govern or apply.

 

34.09.   In the event of any litigation, arbitration, or other legal proceedings
that may arise between the Parties to enforce any of the provisions of this
Lease, or any right of either Party hereunder except for litigation as described
in Article 26.03, the prevailing Party shall be entitled to recover its costs,
expenses, and reasonable attorneys’ fees in addition to any other relief to
which such Party many be entitled.  An award for such costs, expenses, and
reasonable attorneys’ fees may be included in any judgment rendered in such
litigation, arbitration, or other legal proceeding.  This paragraph shall
survive the termination of this Lease.

 

ARTICLE 35

 

SECURITY AND GUARANTY

 

35.01.      Tenant shall deposit with Landlord the Security Deposit upon the
execution of this Lease.  If no Event of Default has occurred as of the first
(1st) anniversary of the Rent Commencement Date, then on such date the Security
Deposit shall be reduced to One Hundred Eighty-Seven Thousand Five Hundred
Eighty-Five and 24/100 Dollars ($187,585.24).  The Security Deposit shall be
held by Landlord as security for the faithful performance by Tenant of all the
terms of this Lease by said Tenant to be observed and performed.  The Security
Deposit shall not and may not be mortgaged, assigned, transferred, or encumbered
by Tenant, without the

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written consent of Landlord, and any such act on the part of Tenant shall be
without force and effect and shall not be binding upon Landlord.  If any of the
fixed or additional rent herein reserved or any other sum payable by Tenant to
Landlord shall be overdue and unpaid, or if Landlord makes payment on behalf of
Tenant, or if Tenant shall fail to perform any of the terms, covenants, and
conditions of this Lease, then Landlord may, at its option and without prejudice
to any other remedy which Landlord may have on account thereof, appropriate and
apply the entire Security Deposit or so much thereof as may be necessary to
compensate Landlord toward the payment of fixed or additional rent and any loss
or damage sustained by Landlord due to such breach on the part of Tenant, plus
expenses; and Tenant shall forthwith, and within three (3) business days after
receipt of demand restore the Security Deposit to the amount on deposit
immediately prior to such reduction in the funds.  The issuance of a warrant
and/or the re-entering of the Demised Premises by Landlord for any default on
the part of Tenant or for any other reason prior to the expiration of the term
shall not be deemed such a termination of this Lease as to entitle Tenant to the
recovery of the Security Deposit.  If Tenant complies with all of the terms,
covenants, and conditions of this Lease and pays all of the Fixed Base Rent and
Additional Rent and all other sums payable by Tenant to Landlord as they fall
due, the Security Deposit shall be returned in full to Tenant within thirty (30)
days after the expiration of the Term of this Lease and Tenant’s satisfaction of
all its obligations accruing prior to this Lease expiration date.  In the event
of bankruptcy or other creditor-debtor proceedings against Tenant, the Security
Deposit and all other securities shall be deemed to be applied first to the
payment of fixed and additional rent and other charges due Landlord for all
periods prior to the filing of such proceedings.  In the event of sale by
Landlord of the Building, this Lease and the Security Deposit must be assumed by
the transferee and Landlord shall deliver the then balance of the Security
Deposit to the transferee of Landlord’s interest in the Demised Premises and
Landlord shall thereupon be discharged from any further liability with respect
to the Security Deposit and this provision shall also apply to any subsequent
transferees.  No holder of a superior mortgage to which this Lease is
subordinate shall be responsible in connection with the Security Deposit, by way
of credit or payment of any fixed or additional rent, or otherwise, unless such
mortgagee actually shall have received the entire Security Deposit.

 

35.02.      Notwithstanding anything in Section 35.01 to the contrary, the
Security Deposit shall be in the form of a “clean”, unconditional, irrevocable
and transferable letter of credit (the “Letter of Credit”) in form and substance
satisfactory to Landlord, issued by and drawn on a bank satisfactory to Landlord
and which is a member of the New York Clearing House Association, for the
account of Landlord, for a term of not less than the Term.  If applicable,
Tenant shall renew any Letter of Credit from time to time, at least thirty (30)
days prior to the expiration thereof, and deliver to Landlord a new Letter of
Credit or an endorsement to the Letter of Credit, and any other evidence
required by Landlord that the Letter of Credit has been renewed for a period of
at least one (1) year.  If Tenant shall fail to renew the Letter of Credit as
aforesaid, Landlord may present the Letter of Credit for payment and retain the
proceeds thereof as the Security Deposit in lieu of the Letter of Credit.

 

35.03.      Concurrently with the execution and delivery of this Lease, Tenant
shall cause Guarantor to execute and deliver to Landlord a full and
unconditional joint and several guaranty of Tenant’s payment and performance
obligations under this Lease, in the form set forth on Exhibit E attached hereto
and made a part hereof.  Thereafter, if during the Term any individual

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or entity shall acquire (i) fifty percent (50%) or more of the equity interests
of Guarantor, Tenant, or any direct or indirect parent company of Tenant, or
(ii) all or substantially all of the assets of Guarantor, Tenant, or any direct
or indirect parent company of Tenant, then within thirty (30) days after any
such acquisition Tenant shall cause such individual or entity to execute and
deliver to Landlord a full and unconditional guaranty of Tenant’s payment and
performance obligations under this Lease in a form substantially similar to the
form attached hereto as Exhibit E.

 

ARTICLE 36

 

PARTIES BOUND

 

36.01.      The obligations of this Lease shall bind and benefit the successors
and assigns of the Parties with the same effect as if mentioned in each instance
where a Party is named or referred to, except that no violation of the
provisions of Article 8 shall operate to vest any rights in any successor or
assignee of Tenant.  However, the obligations of Landlord under this Lease shall
not be binding upon Landlord herein named with respect to any period subsequent
to the transfer of its interest in the Building as owner and in the event of
such a transfer of Landlord’s interest in the Building, said obligations shall
thereafter be binding upon each transferee of such interest.

 

36.02.      If Landlord shall be an individual, joint venture, tenancy in
common, partnership, trust, unincorporated association, or other unincorporated
aggregate of individuals and/or entities or a corporation, Tenant shall look
only to such Landlord’s estate and property in the Building and on the Land,
and, where expressly so provided in this Lease, to offset against the rents
payable under this Lease for the collection of a judgment (or other judicial
process) which requires the payment of money by Landlord in the event of any
default by Landlord hereunder.  No other property or assets of such Landlord
shall be subject to levy, execution or other enforcement procedure for the
satisfaction of Tenant’s remedies under or with respect to this Lease, the
relationship of Landlord and Tenant hereunder, or Tenant’s use or occupancy of
the Demised Premises. 

 

36.03      The Parties agrees that, except as otherwise set forth in Article 40,
neither Party shall be liable to the other Party for any special, indirect, or
consequential damages arising out of a breach of this Lease.

 

ARTICLE 37

 

CONSENTS

 

37.01.      Wherever it is specifically provided in this Lease that a Party’s
consent is not to be unreasonably withheld, a response to a request for such
consent shall also not be unreasonably delayed or conditioned.  If either
Landlord or Tenant considers that the other had unreasonably withheld, delayed,
or conditioned a consent, it shall so notify the other Party within ten (10)
days after receipt of notice of denial of the requested consent or, in case
notice of denial is not received, within ten (10) days after making its request
for the consent, or in the case such requested consent is conditioned, within
ten (10) days of receiving notice of such condition.

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37.02.      Tenant hereby waives any claim for damages against Landlord which it
may have based upon any assertion that Landlord has unreasonably withheld or
unreasonably delayed any such consent, and Tenant agrees that its sole remedy
shall be an action or proceeding to enforce any such provision or for specific
performance, injunction or declaratory judgment.  The sole remedy for Landlord’s
unreasonably withholding, conditioning or delaying of consent shall be as
provided in this Article.

 

ARTICLE 38

 

MORTGAGE FINANCING - TENANT COOPERATION

 

38.01.      In the event that Landlord desires to seek mortgage financing
secured by the Demised Premises or Landlord’s interest therein, Tenant agrees to
reasonably cooperate with Landlord in support of Landlord’s application(s) by
delivery to Landlord’s mortgage broker or mortgagee, of such information as they
shall require with respect to Tenant’s occupancy of the Demised Premises,
including, but not limited to the current financial statement of Tenant.  Any
such cooperation by Tenant pursuant to this Section shall be at no cost or
expense to Tenant.

 

ARTICLE 39

 

ENVIRONMENTAL COMPLIANCE

 

39.01.      Tenant shall, at Tenant’s sole cost and expense, comply with the New
Jersey Industrial Site Recovery Act and the regulations promulgated thereunder
(referred to as “ISRA”) as same relate to Tenant’s occupancy of the Demised
Premises, as well as all other state, federal or local environmental law,
ordinance, rule, or regulation either in existence as of the date hereof or
enacted or promulgated after the date of this Lease, that concern the
management, control, discharge, treatment and/or removal of hazardous discharges
or otherwise affecting or affected by Tenant’s use and occupancy of the Demised
Premises.  Tenant represents that Tenant’s North American Industry
Classification System (“NAICS”) number does not subject it to ISRA. 

 

ARTICLE 40

 

HOLDING OVER

 

40.01.      Tenant will have no right to remain in possession of all or part of
the Demised Premises after the expiration or earlier termination of the
Term.  The parties recognize and agree that the damage to Landlord resulting
from any failure by Tenant to timely surrender possession of the Demised
Premises as aforesaid will be extremely substantial, will exceed the amount of
the monthly installments of the Fixed Base Rent and Additional Rent theretofore
payable hereunder, and will be impossible to accurately measure.  Tenant
therefore agrees that if possession of the Premises is not surrendered to
Landlord upon the expiration or termination of this Lease, in addition to any
other rights or remedies Landlord may have hereunder or at law, and without in
any manner limiting Landlord’s right to demonstrate and collect any damages
suffered by Landlord and arising from Tenant’s failure to surrender the Demised
Premises as provided herein, Tenant shall pay to Landlord on account of use and
occupancy of the Demised Premises for each month and for each portion of any
month during which Tenant holds over in

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the Demised Premises after the expiration or termination of this Lease, in
addition to all Additional Rent otherwise required to be paid hereunder, a sum
equal to one hundred fifty percent (150%) of the Fixed Base Rent which was
payable under this Lease during the last month of the Term.  In addition, Tenant
agrees to indemnify and save Landlord harmless from and against all claims,
losses, damages, liabilities, costs and expenses (including, without limitation,
reasonable attorneys’ fees and disbursements) resulting from Tenant failing to
so surrender the Premises within thirty (30) days after the expiration or
termination of the Term, including, without limitation, any claims made by any
succeeding tenant founded on such delay exceeding thirty (30) days.  Nothing
herein contained shall be deemed to permit Tenant to retain possession of the
Demised Premises after the expiration or termination of this Lease or to limit
in any manner Landlord’s right to regain possession of the Demised Premises
through summary proceedings, or otherwise, and no acceptance by Landlord of
payments from Tenant after the expiration or termination of this Lease shall be
deemed to be other than on account of the amount to be paid by Tenant in
accordance with the provisions of this Article 40.  The provisions of this
Article 40 shall survive the expiration or termination of this Lease.

 

ARTICLE 41

 

CERTAIN DEFINITIONS AND CONSTRUCTIONS

 

41.01.      The terms “include,” “including,” and “such as”, as used in this
Lease, shall each be construed as if followed by the phrase “without being
limited to.”

 

41.02.      The various terms which are italicized and defined in other Articles
of this Lease or are defined in Exhibits annexed hereto, shall have the meanings
specified in such other Articles and such Exhibits for all purposes of this
Lease and all agreements supplemental thereto, unless the context shall
otherwise require.

 

41.03.      The submission of this Lease for examination does not constitute a
reservation of, or option for, the Demised Premises, and this Lease becomes
effective as a Lease only upon execution and delivery thereof by Landlord and
Tenant.

 

41.04.      The Article headings in this Lease and the Index prefixed to this
Lease are inserted only as a matter of convenience in reference and are not to
be given any effect whatsoever in construing this Lease.

 

41.05.       This Lease shall be construed without regard to any presumption or
other rule requiring construction against the Party causing this Lease to be
drafted. 

 

41.06.      (a)      References to Landlord as having no liability to Tenant or
being without liability to Tenant, shall mean the Tenant is not entitled to
terminate this Lease, or to claim actual or constructive eviction, partial or
total, or to receive any abatement or diminution of rent, or to be relieved in
any manner of any of its other obligations hereunder, or to be compensated.

 

(b)      The term Laws and/or requirements of public authorities and words of
like import shall mean laws and ordinances of any or all of the Federal, state,
city, county, and borough governments and rules, regulations, orders and/or
directives of any or all departments,

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subdivisions, bureaus, agencies, or office thereof, or of any other
governmental, public, or quasipublic authorities, having jurisdiction in the
premises, and/or the direction of any public officer pursuant to law.

 

(c)      The term requirements of insurance bodies and words of like import
shall mean rules, regulations, orders, and other requirements of the New Jersey
Board of Fire Underwriters and/or similar body performing the same or similar
functions and having jurisdiction or cognizance of the Building and/or the
Demised Premises.

 

(d)      The term repair shall be deemed to include restoration and replacement
done in workmanlike manner as may be necessary to achieve and/or maintain good
working order and condition.

 

(e)      Reference to termination of this Lease includes expiration or earlier
termination of the term of this Lease or cancellation of this Lease pursuant to
any of the provisions of this Lease or to law.  Upon a termination of this
Lease, the term and estate granted by this Lease shall end at noon of the date
of termination as if such date were the date of expiration of the term of this
Lease and neither Party shall have any further obligation or liability to the
other after such termination (i) except as shall be expressly provided for in
this Lease, or (ii) except for such obligation as by its nature or under the
circumstances can only be, or by the provisions of this Lease, may be performed
after such termination and, in any event, unless expressly otherwise provided in
this Lease, any liability for a payment which shall have accrued to or with
respect to any period ending at the time of termination shall survive the
termination of this Lease.

 

ARTICLE 42

 

EARLY TERMINATION

 

42.01.      Subject to the provisions of Subsection 42.02, Tenant shall have the
right to terminate this Lease (the “Early Termination Option”) effective as of
the seventh (7th) anniversary of the Commencement Date (the “Early Termination
Date”) by delivering written notice of such termination to Landlord at least
twelve (12) months prior to the Early Termination Date, TIME BEING OF THE
ESSENCE.  If Tenant fails to give such notice to Landlord at least twelve (12)
months prior to the Early Termination Date, Tenant will be deemed to have waived
the Early Termination Option and the provisions of this Section shall be null
and void.  The Early Termination Option accorded in this Article 42 is personal
to Tenant and may not be assigned except in connection with a Permitted
Transfer.

 

42.02.      If Tenant exercises the Early Termination Option in accordance with
Subsection 42.01, Tenant shall pay Landlord a termination payment (the
“Termination Fee”) in an amount equal to the sum of (X) an amount equal to four
(4) months of the Fixed Base Rent in effect as of the Early Termination Date,
plus (Y) the unamortized costs, as of the Early Termination Date, of the
following: (a) the funds actually disbursed by Landlord under the Tenant
Improvement Allowance, (b) all brokerage commissions paid by Landlord in
connection with this Lease, and (c) Landlord’s legal costs incurred in
connection with negotiating this Lease (up to a maximum

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of $25,000), which amounts described in clauses (a) through (c) shall be
amortized on a straight-line basis over the Term using a six percent (6%)
interest rate.  Payment of fifty percent (50%) of the Termination Fee shall be
tendered within five (5) business days after Landlord has confirmed the exact
amount of the Termination Fee to Tenant in writing.  Tenant’s exercise of the
Early Termination Option shall be deemed null and void and of no force or effect
if the balance of the Termination Fee is not paid by Tenant at least thirty (30)
days prior to the Early Termination Date.

 

ARTICLE 43

 

RENEWAL OPTIONS

 

43.01.      Provided that at the time of the exercise of the applicable option
to renew, and upon the commencement of the applicable Renewal Period, an Event
of Default has not occurred that remains uncured, then Landlord hereby grants to
Tenant the option (the “Renewal Option”) to renew the term of this Lease for two
(2) additional periods of five (5) years each (each, a “Renewal Period”).  The
first Renewal Period, if the Renewal Option therefor is exercised, will commence
on the day after the initial Expiration Date upon the same terms and conditions
as set forth in this Lease other than the Fixed Base Rent which shall be the
Fair Market Value of the Demised Premises at the time of the commencement of the
Renewal Period multiplied by the rentable square footage of the Demised Premises
(but in no event less than the Fixed Base Rent payable hereunder by Tenant for
the last 12 months of the original Term).  The second Renewal Period, if the
Renewal Option therefor is exercised, will commence on the day after the
scheduled expiration of the first Renewal Period upon the same terms and
conditions as set forth in this Lease other than the Fixed Base Rent which shall
be the Fair Market Value of the Demised Premises at the time of the commencement
of the second Renewal Period multiplied by the rentable square footage of the
Demised Premises (but in no event less than the Fixed Base Rent payable
hereunder by Tenant for the last 12 months of the first Renewal Period).  The
Fixed Base Rent shall automatically increase on each anniversary of the
commencement of the applicable Renewal Period by an amount equal to $0.50
multiplied by the rentable square footage of the Demised Premises.

 

43.02.      Tenant shall exercise the first Renewal Option by giving written
notice to Landlord (a “Renewal Notice”) not earlier than eighteen (18) months
and not later than fifteen (15) months prior to the initial Expiration Date,
TIME BEING OF THE ESSENCE.  Tenant shall exercise the second Renewal Option, if
applicable, by giving a Renewal Notice to Landlord not earlier than eighteen
(18) months and not later than fifteen (15) months prior to the scheduled
expiration date of the first Renewal Period, TIME BEING OF THE ESSENCE.  If
Tenant fails to give a Renewal Notice with respect to the first Renewal Option
or the second Renewal Option, Tenant will be deemed to have waived such Renewal
Option and the provisions of this Section shall be null and void.  The Renewal
Options accorded in this Article 43 are personal to Tenant and may not be
assigned except in connection with a Permitted Transfer.

 

43.03.      Fair Market Value shall mean the amount, on a per square foot basis,
that a willing tenant would pay and a willing landlord would accept in an arms’
length transaction for office space comparable to the Demised Premises in the
Plainsboro/Princeton New Jersey office

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market area, giving appropriate consideration to tenant improvements, free rent
periods, brokerage commissions and other applicable factors.

 

43.04.      For purposes of determining “Fair Market Value” for either Renewal
Period, the following procedure shall apply:

 

(a)      Landlord shall, within fifteen (15) business days after its receipt of
a Renewal Notice, provide its written determination of the Fair Market Value at
the commencement of the applicable Renewal Period (“Landlord’s Determination”)
to Tenant. 

 

(b)      Within fifteen (15) business days after its receipt of Landlord’s
Determination, Tenant may, if it does not agree with Landlord’s Determination,
deliver notice to Landlord setting forth Tenant’s determination of the Fair
Market Value at the commencement of the applicable Renewal Period (“Tenant’s
Determination”).  If Tenant fails to object to Landlord’s Determination and
provide Tenant’s Determination in writing within such fifteen (15) business day
period, then Landlord’s Determination shall be deemed the Fair Market Value for
the commencement of the applicable Renewal Period and shall be binding upon
Tenant for purposes of determining Fixed Base Rent for such Renewal Period.

 

(c)      If, within thirty (30) days after the delivery of Tenant’s
Determination (the “Negotiation Period”), Landlord and Tenant shall mutually
agree upon the determination of Fair Market Value (a “Mutual Determination”) for
the commencement of the applicable Renewal Period, then their Mutual
Determination shall constitute the Fair Market Value for purposes of determining
Fixed Base Rent during the applicable Renewal Period.

 

(d)      If Landlord and Tenant shall be unable to reach a Mutual Determination
during the Negotiation Period, then Tenant may revoke its Renewal Notice at its
sole option by advising Landlord in writing of such, or if Tenant fails or
elects not to revoke its Renewal Notice then Landlord and Tenant shall jointly
appoint an independent qualified commercial real estate broker with at least
fifteen (15) years of office leasing experience in the Plainsboro/Princeton New
Jersey office market area (the “Arbiter”) to determine Fair Market Value at the
commencement of the applicable Renewal Period.  Notwithstanding anything herein
to the contrary, Tenant shall have no right to revoke its Renewal Notice after
the first to occur of (i) the date that is twelve (12) months prior to the
expiration of the initial Expiration Date or the expiration of the first Renewal
Period, as applicable, or (ii) the appointment of the Arbiter.

 

(e)      If appointed, the Arbiter’s fee shall be borne equally by Landlord and
Tenant.  In the event that Landlord and Tenant shall be unable to jointly agree
on the designation of the Arbiter within fifteen (15) business days after the
end of the Negotiation Period, then the Parties agree to allow the American
Arbitration Association, or any successor organization, to designate the Arbiter
in accordance with its commercial rules.

 

(f)      The Arbiter shall conduct such investigations as he or she may deem
appropriate and shall, within thirty (30) days after the date of designation of
the Arbiter, choose either Landlord’s Determination or Tenant’s Determination
only, and such choice by the Arbiter shall be conclusive and binding upon
Landlord and Tenant for purposes of determining Fixed

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Base Rent at the commencement of the applicable Renewal Period.  Each Party
shall pay its own counsel fees and expenses, if any, in connection with any
arbitration under this Article.  The Arbiter shall not have the power to add to,
modify or change any of the provisions of this Lease.

 

ARTICLE 44

 

RIGHT OF FIRST OFFER; RIGHT OF FIRST REFUSAL

 

44.01.      Provided that at the time of exercise or execution of such rights
set forth in this article, an Event of Default has not occurred that remains
uncured, then Landlord hereby grants to Tenant on-going rights of first offer
(individually or collectively referred to herein as the “Right of First Offer”)
and first refusal (individually or collectively referred to herein as the “Right
of First Refusal”) during the Term of this Lease that can be exercised to lease
any additional space in the Building that is or becomes vacant at any time
during the Term (hereinafter “Expansion Space”), with such rights subject only
to the prior rights of existing tenants of the Building extending the terms of
their existing leases.  The Right of First Offer is subject to the following
terms and conditions set forth in Section 44.02 and in Section 44.04.  The Right
of First Refusal is subject to the following terms and conditions set forth in
Section 44.03 and in Section 44.04.  Any lease by Tenant of additional space in
the Building pursuant to this Article 44 shall be referred to herein as an
“Expansion”.

 

(a)      In addition to the Right of First Offer and Right of First Refusal,
Tenant may at any time during the Term exercise a right of expansion (the “Right
of Expansion”) whereby Tenant may lease any Expansion Space in the Building
provided that (i) such Expansion Space is not subject to a lease with any third
party (regardless of whether such third party is in occupancy), (ii) such
expansion would not leave less than Four Thousand (4,000) square feet of
remaining rental space on such floor, and (iii) such Expansion Space consists of
at least Nine Thousand (9,000) square feet if the Expansion Space is located on
the second floor of the Building and at least Seven Thousand Five Hundred
(7,500) square feet if the Expansion Space is located on the first floor of the
Building.

 

(b)      Should Tenant exercise its Right of Expansion then the Fixed Base Rent
for any such leased Expansion Space shall be pursuant to the same terms used for
determining Fixed Base Rent on a per square foot basis as is stated below in
Section 44.04.

 

(c)      Notwithstanding anything herein to the contrary, should Landlord agree
to permit Tenant to lease any Expansion Space within the Building, and such
Expansion does not meet the criteria provided for in Section 44.01(a) for the
exercise of the Right of Expansion, then the Fixed Base Rent for any such leased
Expansion Space shall be pursuant to the same terms used for determining Fixed
Base Rent on a per square foot basis as is stated below in Section 44.04

 

44.02.      Landlord shall deliver written notice to Tenant (a “ROFO Notice”) no
later than ten (10) business days after any previously leased space in the
Building becomes available for lease; if such ROFO Notice is sent more than
three (3) years after the Rent Commencement Date of this Lease then such ROFO
Notice shall include Landlord’s Determination as to the Fair

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Market Value of such offered leased space.  Tenant shall have an exclusive
period of fifteen (15) business days after receipt of a ROFO Notice within which
to notify Landlord of Tenant’s desire to lease the applicable Expansion Space
that is the subject of the ROFO Notice, or any portion thereof (a “ROFO
Acceptance Notice”).  A ROFO Acceptance Notice shall specify the exact space
(which must be at least 10,000 square feet if the applicable ROFO Notice is for
more than 10,000 square feet, and must be all of the offered square footage if
the applicable ROFO Notice is for 10,000 square feet or less) that Tenant is
electing to rent.  If Tenant timely delivers a ROFO Acceptance Notice, then
Landlord shall be obligated to lease the applicable Expansion Space to Tenant,
and Tenant shall be obligated to lease such Expansion Space from Landlord, upon
the terms described in Section 44.04.  If Tenant fails to deliver a ROFO
Acceptance Notice within fifteen (15) business days after its receipt of a ROFO
Notice, the Right of First Offer with respect to such Expansion Space shall be
deemed to be exhausted for this particular circumstance only, and, subject to
Section 44.03, Landlord may proceed to offer such Expansion Space to third
parties on such terms as Landlord may determine in its sole discretion.

 

44.03.      Landlord shall deliver written notice to Tenant (a “ROFR Notice”)
within ten (10) business days after Landlord’s receipt of a signed offer letter,
term sheet or letter of intent from a prospective Expansion Space tenant which
Landlord desires to accept (a “Bona Fide Offer”).  Tenant shall have an
exclusive period of ten (10) business days after receipt of the ROFR Notice
within which to notify Landlord of Tenant’s desire to lease the applicable
Expansion Space that is the subject of the Bona Fide Offer (a “ROFR Acceptance
Notice”).  Tenant shall have no right to lease less than all of the Expansion
Space that is the subject of the Bona Fide Offer.  If Tenant timely delivers a
ROFR Acceptance Notice, then Landlord shall be obligated to lease the applicable
Expansion Space described in the Bona Fide Offer to Tenant, and Tenant shall be
obligated to lease such Expansion Space from Landlord, upon the terms described
in Section 44.04.  If Tenant fails to deliver a ROFR Acceptance Notice within
ten (10) business days after its receipt of a ROFR Notice, the Right of First
Refusal with respect to such Expansion Space shall be deemed to be exhausted for
this particular circumstance only and Landlord may proceed to lease such
Expansion Space to the party that submitted the Bona Fide Offer subject to the
following conditions: (a) a lease must be signed with the party that submitted
the Bona Fide Offer within nine (9) months of the date of exhaustion of the
Right of First Refusal or such leased space must be offered back to Tenant and a
new ROFR Notice must be sent to Tenant pursuant to the terms of this Article;
and/or (b) should the leased space become available again then it must be
offered back to Tenant and a new ROFO Notice must be sent to Tenant pursuant to
the terms of Article 44.02; and/or (c) should Landlord offer such leased space
on economic terms that are, after giving effect to all rental concessions, 10%
or more favorable to such other party than the economic terms that were offered
to Tenant in Landlord’s ROFO Notice or pursuant to Article 44.04, then Landlord
must issue a new ROFR Notice to Tenant and comply with the terms of this
Article.

 

44.04.      If Tenant exercises its Right of First Offer, its Right of First
Refusal, its Right of Expansion, or any other permitted Expansion as provided
for in Section 44.01(c), for any Expansion Space prior to the third (3rd)
anniversary of the Rent Commencement Date, then the lease for such Expansion
Space shall be upon the terms and conditions of this Lease (including the Fixed
Base Rent, which shall be the same (on a per square foot basis) as the Fixed
Base Rent

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then payable by Tenant at the time of such Expansion for the space originally
comprising the Demised Premises) except that the Tenant Improvement Allowance
and any free rent period for such Expansion Space shall be reduced
proportionately based on the remaining term of this Lease.  If Tenant exercises
its Right of First Offer or Right of First Refusal for any Expansion Space from
and after the third (3rd) anniversary of the Rent Commencement Date, the lease
for such Expansion Space shall be upon the terms and conditions of this Lease
except that the Fixed Base Rent for such Expansion Space shall be based upon
Fair Market Value at the time of such Expansion and Tenant shall not be entitled
to any free rent period or Tenant Improvement Allowance with respect to the
Expansion Space.  In no event shall Tenant’s exercise of its Right of First
Offer, its Right of First Refusal, its Right of Expansion, or any other such
permitted Expansion as provided for in Section 44.01(c) for Expansion Space
result in an extension of the Term or the granting of any additional Renewal
Options not otherwise provided for in the terms and conditions of this Lease,
unless otherwise agreed upon by Landlord and Tenant.  If Fixed Base Rent for any
Expansion Space is to be based on the Fair Market Value at the time of such
Expansion, and such Fair Market Value cannot be determined by Landlord and
Tenant prior to the commencement of the term for the Expansion Space, then until
Fair Market Value can be determined in accordance with Sections 43.04(d), (e)
and (f), Tenant shall pay Fixed Base Rent based upon the same per square foot
rent then payable by Tenant at the time of such Expansion for the original
Demised Premises.  If Tenant exercises its Right of First Offer, its Right of
First Refusal, its Right of Expansion, or Tenant is permitted to lease Expansion
Space pursuant to Section 44.01(c), then for any such Expansion Space, this
Lease shall be amended by Landlord and Tenant to incorporate such Expansion
Space and the terms applicable to such Expansion Space, to modify Tenant’s
Percentage, and as otherwise may be necessary in Landlord’s commercially
reasonable judgment.

 

44.05.      Notwithstanding anything herein to the contrary, Tenant may at any
time during the Term deliver to Landlord a written request for Landlord to
provide a listing of all lease termination dates and anticipated vacancies at
the Building.  Landlord shall provide such listing within fifteen (15) business
days thereafter.

 

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease Agreement
as of the day and year first above written.

 

 

 

 

WITNESS:

LANDLORD:

 

 

 

WITMAN PROPERTIES, L.L.C., a New Jersey limited liability company

 

 

    

By:

/s/ Eric Witmondt

 

 

 

Name:  Eric Witmondt

 

 

 

Title:  Manager

 

 

 

ALEXANDER ROAD AT DAVANNE, L.L.C., a New Jersey limited liability company

 

 

 

 

 

/s/ Barbara Gamba

    

By:

/s/ David Mandelbaum

 

 

 

Name:  David Mandelbaum

 

 

 

Title:  Manager

 

 

 

ATTEST:

TENANT:

 

 

 

ARALEZ PHARMACEUTICALS US INC., a Delaware corporation

 

 

 

 

 

/s/ Eric L. Trachtenberg

    

By:

/s/ Andrew I. Koven

 

 

 

Name:  Andrew I. Koven

 

 

 

Title: President

 

 

 

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