**Exhibit 10.36**

 

LEASE AGREEMENT

 

 

BY AND BETWEEN:

 

 

Eastpark at 8A

 

“Landlord”

 

 

- and -

 

 

Pharrnacopeia, Inc.

 

“Tenant”

 

 

PREMISES:       3000Eastpark Boulevard Cranbury, NJ 08512

 

 

DATED:       August20, 2003

 

----

 

**TABLE OFCONTENTS**

 
| 1.    |   | LEASED  PREMISES                                      |
|-------|--------|-------------------------------------------------------|
| 2.    |   | TERM  OF LEASE                                        |
| 3.    |   | CONSTRUCTION OF THE TENANT IMPROVEMENTS               |
| 4.    |   | RENT                                                  |
| 5.    |   | PARKING AND USE OF EXTERIOR AREA                      |
| 6.    |   | USE                                                   |
| 7.    |   | REPAIRS AND MAINTENANCE                               |
| 8.    |   | COMMON AREA EXPENSES. TAXES AND INSURANCE             |
| 9.    |   | SIGNS                                                 |
| 10.   |   | ASSIGNMENT AND SUBLETTING                             |
| 11.   |   | FIRE  AND CASUALTY                                    |
| 12.   |   | COMPLIANCE WITH LAWS, RULES AND REGULATIONS           |
| 13.   |   | INSPECTION BY LANDLORD                                |
| 14.   |   | DEFAULT  BY TENANT                                    |
| 15.   |   | LIABILITY OF TENANT FOR DEFICIENCY                    |
| 16.   |   | NOTICES                                               |
| 17.   |   | NON-WAIVER BY EITHER PARTY                            |
| 18.   |   | RIGHT OF TENANT TO MAKE ALTERATIONS AND  IMPROVEMENTS |
| 19.   |   | NON-LIABILITY OF LANDLORD                             |
| 20.   |   | RESERVATION OF EASEMENT                               |
| 21.   |   | STATEMENT OF ACCEPTANCE                               |
| 22.   |   | FORCE  MAJEURE                                        |
| 23.   |   | STATEMENTS BY LANDLORD AND TENANT                     |
| 24.   |   | CONDEMNATION                                          |
| 25.   |   | LANDLORD’S REMEDIES                              |
| 26.   |   | OUIET  ENJOYMENT                                      |
| 27.   |   | SURRENDER OF PREMISES                                 |
| 28.   |   | INDEMNITY                                             |
| 29.   |   | BIND AND CONSTRUE CLAUSE                              |
| 30.   |   | INCLUSIONS                                            |
| 31.   |   | DEFINITION OF TERM “LANDLORD”               |
| 32.   |   | COVENANTS OF FURTHER ASSURANCES                       |
| 33.   |   | COVENANT AGAINST LIENS                                |
| 34.   |   | SUBORDINATION                                         |
| *35.* |   | EXCULPATION OF LANDLORD                               |
| 36.   |   | NET RENT                                              |
| 37.   |   | SECURITY                                              |
| 38.   |   | BROKERAGE                                             |
| 39.   |   | LATE  CHARGES                                         |
| 40.   |   | PRESS  RELEASES                                       |
| 41.   |   | WAIVER OF JURY TRIAL                                  |
| 42.   |   | LAWS OF NEW JERSEY                                    |
| 43.   |   | OPTION  TO RENEW                                      |
| 44.   |   | CROSS  DEFAULT                                        |

 

2

----

 

AGREEMENT,made August 20, 2003, between Eastpark at 8A, 1000 Eastpark Blvd., Cranbury,New Jersey 08512, “Landlord”; and Pharmacopeia, Inc., 3000 Eastpark Boulevard,Cranbury, NJ 08512, “Tenant”.

 

**WITNESSETH:**

 

WHEREAS, theLandlord intends to lease to the Tenant the entire property known as 3000Eastpark Boulevard, Cranbury, NJ 08512, (Block 7, Lot 7.03 on the SouthBrunswick Township Tax Map) (the “Land”) which constitutes a portion of theoffice/industrial park known as Eastpark at 8A (“Office Park”) together with abuilding of 58,852 rentable square feet located thereon (“Building” or “LeasedPremises”), (the Land and Building shall be referred to together as the“Property”); and

 

WHEREAS, theparties hereto wish to mutually define their rights, duties and obligations inconnection with the Lease;

 

NOW THEREFORE,in consideration of the promises set forth herein, the Landlord leases unto theTenant and the Tenant rents from the Landlord the Property, and the Landlordand Tenant do hereby mutually covenant and agree as follows:

 

1.                                       LEASED PREMISES

 

The LeasedPremises shall consist of the entire Building of 58,852 rentable square feet ofoffice and laboratory space, plus an area in the basement of approximately6,297 rentable square feet, as measured from outside of exterior walls tocenter line of common walls, together with all improvements to be constructedthereon by the Landlord for the use of the Tenant, and all easements,tenements, appurtenances, hereditaments, rights and privileges appurtenantthereto, and any and all fixtures and equipment which are to be installed bythe Landlord for the use of the Tenant in its occupancy of the Leased Premises.Tenant shall also have the right to use all common areas of the Office Park ina similar manner as other Office Park tenants.

 

2.                                       TERM OF LEASE

 

The term ofthe Lease shall be 12 years and shall be co-terminus with a lease for Building#1, which is also to be occupied by Tenant. The rent shall commence uponSubstantial Completion (as defined hereafter). The 12 year term shall commenceon the first day of the month following the date on which SubstantialCompletion is achieved for both Buildings 1 and 3, and shall expire on the daybefore the 12th anniversary of the Commencement Date, it being the intent ofthe parties that the leases for both Buildings shall expire on the same date.The Commencement Date is projected to be January 15, 2004.

 

3.                                       CONSTRUCTION OF THE TENANTIMPROVEMENTS

 

3.1                                 TheLeased Premises consists of the entire Building currently leased to Tenant. Tenantis taking the Leased Premises in its “as is” condition subject to modificationsas shown on the Plans (as hereafter defined) to be prepared by Tenant (“TenantImprovements”). The Landlord shall provide all necessary labor and materialsand perform all the work required to complete the Tenant Improvements. Tenant’sdesignated

 

3

----

 

representativefor all work pertaining to the Tenant Improvements shall be John Harrison andor such other person as is designated in writing by Tenant (“Representative”).The Landlord shall supervise and direct the work on the Tenant Improvementsusing Landlord’s best skill and attention, and Landlord shall be solelyresponsible for all construction means, methods, techniques, sequences andprocedures and for coordinating all portions of the work on the TenantImprovements. Landlord warrants to the Tenant that all materials and equipmentincorporated in the Tenant Improvements will be new unless otherwise specified,and that all work on the Tenant Improvements will be of good quality, free fromknown faults and defects, and in substantial conformity with the Plans.

 

3.2                                 (a)                                  Landlordshall complete the Tenant Improvements in a good and workmanlike manner and insubstantial accordance with plans and specifications (“Plans”) to be preparedby Tenant’s architect, CUH2A. The Plans shall be provided to Landlord on orbefore September 1, 2003 and shall be in sufficient detail to permit Landlordto apply for a building permit for the Tenant Improvements (which Landlordshall promptly do), and to prepare a construction budget for the constructionof the Tenant Improvements (“Construction Budget”). In the event Tenant doesnot deliver the Plans to Landlord by the date set forth above, such failureshall not delay the date for the commencement of rent, which shall be presumedto be the projected Commencement Date set forth in paragraph 2. TheConstruction Budget shall set forth the lump sum amount payable by Tenant toLandlord for the construction of the Tenant Improvements, which amount shallinclude Landlord’s standard mark-up for general conditions, overhead andprofit, which total in the aggregate 20%. The only exception to the lump sumamount shall be the actual fees charged by the Township of South Brunswick forconstruction permits in connection with the Tenant Improvements, which sumsshall be paid by Tenant as set forth hereafter. Landlord shall submit theConstruction Budget to Tenant for its approval. Tenant shall give written noticeto Landlord within five business days of receipt, as to whether or not theConstruction Budget is acceptable. If Tenant does not accept the ConstructionBudget during such five business day period, then the parties agree tonegotiate in good faith to reach an agreement on the Construction Budget.Landlord shall not be obligated to order any equipment or commence work untilTenant has approved the Construction Budget. A complete set of the agreed uponPlans, and the agreed upon Construction Budget, shall be initialed by anddistributed to Landlord and Tenant.

 

(b)                                 Neitherthe Construction Budget nor the Plans shall be changed or altered in any wayexcept by change order approved in writing by Landlord and Tenant (“ChangeOrder”). All Change Orders shall be valid and binding upon Landlord and Tenantonly if authorized by written Change Order signed by Landlord and Tenant’sRepresentative prior to commencement of the work on the Tenant Improvementsreflected thereby. The cost or credit to the Tenant due to any Change Ordershall be determined per the terms of such Change Order. In the event the ChangeOrder increases the cost set forth in the Construction Budget, then Landlordshall submit an invoice to Tenant and Tenant shall pay the invoice uponcompletion of the work or upon the ordering of any equipment, whichever isapplicable. The Landlord shall have the right to substitute for the materialsand

 

4

----

 

equipmentrequired by the Plans, materials and equipment of equal quality and standard,provided said substitutions conform with applicable building codes and are thesubject of a Change Order.

 

3.3                                 (a)                                  TheLandlord may secure and advance payment for the construction permits and forall other permits and governmental fees, licenses and inspections necessary forthe proper execution and completion of the Tenant Improvements. Tenant shallpay such amounts to Landlord not later than 10 business days after receipt ofan invoice therefore. Landlord shall not, however, be responsible for securingany environmental or operating permits or certifications which are required inorder for Tenant to actually conduct its business.

 

(b)                                 Tenantshall be responsible for providing Landlord with, and bearing the cost ofsufficient copies of the Plans, and sufficient copies of any revisions made tothe Plans, in order to obtain the permits and efficiently manage theconstruction of the Leased Premises. In the event any Change Orders arerequired during construction, Tenant shall be responsible for all costs relatedto the preparation and reproduction of plans therefor, unless the Change Orderwas solely initiated by Landlord, in which case Landlord shall be responsiblefor such costs. After construction is complete, Tenant shall be responsible forall costs related to the reproduction of “as built” Plans. In all instanceswhere Plans are required, Tenant shall provide Landlord with a reproducibleset. Landlord will also be provided with a current plot file containing thePlans at no cost to Landlord. Tenant agrees to have its Architect executeExhibit “A” affirming Landlord’s right to the Plans.

 

3.4                                 (a)                                  Tenantshall pay Landlord directly for the construction costs of Tenant Improvementsin accordance with the schedule attached hereto as Exhibit “B”. In the eventTenant fails to pay to Landlord any sum set forth on Exhibit “B” when it isdue, Landlord shall not be obligated to commence or continue work on the TenantImprovements. Such failure to pay shall constitute a default under this Lease,but shall not delay the Commencement Date of this Lease, which shall bepresumed to be the projected Commencement Date set forth in paragraph 2, or anyof Tenant’s obligations hereunder including, without limitation, Tenant’sobligation to pay all Rent. In the event that Tenant fails to pay to Landlordthe final sum set forth on Exhibit “B”, such failure shall constitute a defaultunder this Lease; and Tenant shall not be permitted to occupy the LeasedPremises; and Tenant shall commence payment of all Rent; and Landlord shall beentitled to all rights and remedies available hereunder, at law or in equity,which rights shall be cumulative. All sums so owing to Landlord shallconstitute Additional Rent and shall be subject to the imposition of late chargesas provided in this Lease.

 

(b)                                 Apartfrom extensions of time for delays and extensions of the date for the paymentof rent, no payment or allowance of any kind shall be claimed by Tenant, ormade to the Landlord as compensation for damages on account of any delay fromany cause in the Initial: Landlord completion of the Tenant Improvements,whether such delay be avoidable or unavoidable, anything in this Agreementinconsistent herewith or to the contrary notwithstanding.

 

3.5                                 Tenantshall be responsible for the design and installation of its own phone, data

 

5

----

 

andcommunication systems which systems shall be installed in a manner not tointerfere with Landlord’s construction efforts. During construction of TenantImprovements, a representative of Tenant shall inspect the site no lessfrequently than once a week and verify and agree that the work in progress hasbeen completed in a manner acceptable to Tenant.

 

3.6                                 TheTenant Improvements shall be commenced upon issuance of the building permit bygovernmental entities having jurisdiction therefor and, subject to authorizedadjustments, completion of the Tenant Improvements is estimated to be achievedon or about January 15, 2004. As used herein the term “Substantial Completion”shall mean that the Leased Premises have been built and completed insubstantial conformity with the Plans, and a temporary or permanent certificateof occupancy or a temporary or permanent certificate of acceptance (“CO/CA”)has been issued permitting Tenant to use and occupy the Leased Premises, eventhough minor details, adjustments or punch list items which shall notmaterially impair Tenant’s use and enjoyment of the Leased Premises may nothave been finally completed, but which work Landlord agrees shall be diligentlypursued to final completion. Tenant shall allow Landlord and its contractors toenter the Leased Premises during normal working hours after issuance of theCO/CA to complete remaining minor work or punch list items, provided Landlordgives advance notice and makes reasonable efforts not to interfere withTenant’s operations. It is agreed that for the purpose of this Lease, whereverand whenever the term Substantial Completion is used, it shall not includeitems of maintenance, service, punch list, or guarantee.

 

4.                                       RENT

 

4.1                                 Tenantis currently occupying the Building under an existing lease (“Old Lease”) andshall continue to occupy the space during construction of the TenantImprovements and pay Landlord the Rent set forth in the Old Lease untilSubstantial Completion. The Old Lease shall be deemed terminated uponcommencement of this Lease as set forth in paragraph 2. Tenant shall pay baserent (“Base Rent”) hereunder as follows:

 

(a)                                  Duringthe first 4 years of the term, an estimated annual base rent per square foot of$20.58 for all above ground space and $4.00 for the basement space (provided itis only used in its “as is” condition), for an aggregate annual base rent of$l,236,362.16 (“Initial Base Rent”), payable monthly in the sum of $l03,030.l8.

 

(b)                                 Duringthe second 4 years of the term, the Base Rent shall be increased by adding tothe Initial Base Rent the increase in the Consumer Price Index (“CPI”) asfollows, and such sum shall be the Base Rent for the second 4 years of the term(the “Adjusted Base Rent”):

 

The “AllItems” Index Figures for the New York-Northeastern New Jersey average of the“Consumer Price Index for All Urban Consumers” (revised CPI-U) (1982-1984 equalto 100) published by the Bureau of Labor Statistics of the U.S. Department ofLabor (“Index”) for the month 2 months prior to the date of SubstantialCompletion shall be compared with the same index for the month 2 months priorto the beginning month of the second 4 years of the Lease term. If there is anincrease in the Index that percentage increase shall be used to determine therent increase over the original Base Rent, as shown in the following example:

 

6

----

 

If the Indexfigure for the month 2 months prior to the date of Substantial Completion is100 (the denominator) and the Index figure for the month 2 months prior to thebeginning of the second 4 years of the lease term is 110, the increase in theIndex figures will produce an increase of 10%.

 
|   | (110-100) |  = 10% |
|--------|-----------|-------------|
|   | 100       |        |

 

Applying theformula, 10% of $1,236,362.16 is equal to $123,636.22. Adding that amount tothe original Base Rent produces an annual rent for the second 4 years of$1,359,998.38 payable in equal monthly installments of $l13,333.20.

 

However, in noevent shall the increase in rent be more than 12%.

 

(1)                                  Inthe event that the Index figure is discontinued the parties shall agree on anequivalent and substituted Cost of Living Index to be applied in the samemanner. In the event the parties cannot mutually agree as to a substitutedIndex, then the issue shall be submitted for arbitration to the AmericanArbitration Association to take place in South Brunswick or any of itscontiguous municipalities, with the cost thereof divided between the parties.

 

(2)                                  Ifthe base year (1982-84 equal to 100) herein above referred to with respect tothe “Index” shall be changed after the execution of the Lease, appropriateadjustments based on such new Index shall be made so as to have a proper applicationof the Cost of Living formula.

 

(c)                                  Duringthe third 4 years of the term, the Base Rent shall increase according to thesame CPI formula set forth above using the Adjusted Base Rent, but not morethan 12 % over the Adjusted Base Rent for the second 4 years.

 

4.2                                 Inaddition to the Base Rent, Tenant shall pay as additional rent (“AdditionalRent”) all real estate taxes for the Property, plus its proportionate share ofthe repairs, maintenance, insurance and any other charges allocated amongsttenants, as more specifically described in paragraph 8 (“Common AreaExpenses”), based on the relationship between the rentable square footageleased to Tenant and the rentable square footage of building constructioncompleted and occupied in the Office Park. Tenant’s Common Area Expenses shallbe adjusted as of each January 1st during the term based on the increase inCommon Area Expenses set forth in paragraph 8.

 

4.3                                 TheBase Rent and Additional Rent shall be referred to hereafter as “Rent”.

 

4.4                                 Tenantcovenants to pay the Rent in lawful money of the United States which shall belegal tender for the payment of all debts, public and private, at the time ofpayment. Such Rent shall be paid to Landlord at its office address hereinaboveset forth, or at such other place as Landlord may, from time to time, designateby notice to Tenant.

 

4.5                                 Rentalpayments shall be payable in advance in equal monthly installments on the

 

7

----

 

first day ofeach calendar month. The Rent shall be payable by Tenant without any set-off ordeduction of any kind or nature whatsoever and without notice or demand. Thesum of all increases required to be paid as Additional Rent or Base Rent inaccordance with this Lease, shall be paid to Landlord within 10 days followingthe giving of notice hereof by Landlord of such increases.

 

5.                                       PARKING AND USE OF EXTERIOR AREA

 

5.1                                 TheTenant shall have the right to the exclusive use of all parking spaces servingthe Property. The Landlord and Tenant mutually agree that they will not block,hinder or otherwise obstruct the access driveways and parking areas so as toimpede the free flow of vehicular traffic in the Office Park. In connectionwith the use of the loading platforms, if any, Tenant agrees that it will notuse the same so as to unreasonably interfere with the use of the accessdriveways and parking areas. Tenant shall not store trailers or other vehicleson any portion of the access driveways or does parking areas, and may notutilize any portion often Property for any other purpose unless consented to inadvance by Landlord.

 

6.                                       USE

 

The Tenantcovenants and agrees to use and occupy the Leased Premises only as an office,pilot scale manufacturing facility and laboratory, which use is expresslysubject to all applicable zoning ordinances, rules and regulations of anygovernmental instrumentalities, boards or bureaus having jurisdiction thereof.Tenant’s use of the Leased Premises shall not interfere with the peaceable andquiet use and enjoyment by other tenants at their respective leased premiseslocated in the Office Park, nor shall Tenant’s activities cause Landlord to bein default under its leases with such other tenants.

 

7.                                       REPAIRS AND MAINTENANCE

 

7.1                                 Tenantshall generally maintain and repair the Leased Premises, in a good andworkmanlike manner, and shall, at the expiration of the term, deliver theLeased Premises in good order and condition, damages by fire or casualty, theelements and ordinary wear and tear excepted. Tenant covenants and agrees thatit shall not cause or permit any waste, damage or disfigurement to the LeasedPremises, or any overloading of the floors. Tenant shall maintain and make allrepairs to the floor surface, plumbing and electrical systems including allballasts and fluorescent fixtures located within the Leased Premises, and theentire HVAC system. Landlord shall be responsible for repairs necessary to theroof, exterior and load-bearing walls, and electric and plumbing systems to thepoint where they enter the Leased Premises, unless repair is necessitated byany act of Tenant, or its agents, employees or contractors.

 

7.2                                 TheTenant shall, at its own cost and expense, pay all utility meter and servicecharges, including gas, water and electric servicing the Leased Premises. TheTenant agrees to maintain all leased areas at a minimum temperature of 45degrees, excluding cold rooms on other rooms specifically designed for a lowertemperature, to prevent the freezing of domestic water and sprinkler pipes.Tenant shall not store any items outside the Leased Premises, and shall deliverits garbage and recyclables to the central receiving area on the Property.Tenant shall dispose of all hazardous/medical waste with an approved hauler atits own cost.

 

8

----

 

7.3                                 Landlorddoes not warrant that any services Landlord or any public utilities supply willnot be interrupted. Services may be interrupted because of accidents, repairs,alterations, improvements or any other reason beyond the reasonable control ofLandlord, not including the gross negligence of Landlord or its agents.

 

8.                                     COMMON AREA EXPENSES. TAXES ANDINSURANCE

 

8.1                                 TheTenant shall pay to the Landlord, monthly, as Additional Rent its proportionateshare of the following items all of which shall be known as Common AreaExpenses:

 

(a)                                  Thecosts incurred by the Landlord for the operation, maintenance or repair of thefollowing items in the Office Park, (“Operating Costs”):

 

(1)                                  lawnsand landscaping;

 

(2)                                  standardwater usage and standby sprinkler charges;

 

(3)                                  exteriorlighting;

 

(4)                                  exteriorsewer lines;

 

(5)                                  exteriorutility lines;

 

(6)                                  repairand maintenance of any signs serving the Office Park;

 

(7)                                  snowremoval;

 

(8)                                  standardgarbage disposal and recycling;

 

(9)                                  generalground maintenance;

 

(10)                            parkinglot, driveways and walkways;

 

(11)                            maintenancecontracts for the roof;

 

(12)                            pestcontrol;

 

(13)                            centralstation monitoring for fire sprinkler system; and

 

(14)                            otherordinary maintenance expenses normally incurred by Landlord relating to theBuilding and common areas of the Office Park.

 

Notwithstandingthe above, the following items shall be excluded from Common Area Expenses:

 

(a)                                  Costof decorating, redecorating, cleaning or other services not provided on aregular basis to the tenants of the Office Park;

 

(b)                                 Wages,salaries, fees and fringe benefits paid to administrative or executivepersonnel or officers or partners of Landlord, unless employed at competitiverates as independent contractors at the building or Office Park;

 

(c)                                  Allcost relating to activities for the solicitation, negotiation and execution ofleases of space in the Office Park;

 

(d)                                 Costof any repair made by Landlord because of the total or partial destruction ofthe building or the condemnation of a portion

 

9

----

 

of thebuilding;

 

(e)                                  Anyinsurance premium for which Landlord is to be reimbursed by Tenant, pursuant tothis Lease, or by any other tenant of the Office Park;

 

(f)                                    Depreciation,interest or rents paid or incurred by Landlord;

 

(g)                                 Anycharge to Landlord for income taxes, franchise taxes or similar taxes:

 

(h)                                 Collectioncosts for bad debt expenses not related to Tenant;

 

(i)                                     Costof tenant improvements;

 

(j)                                     Legal,accounting, bank or other fees incurred in connection with any equity or debtfinancing or sale of the building or Office Park;

 

(k)                                  Costsof specialized services provided to other tenants but not provided to tenantsgenerally;

 

(l)                                     Capitalexpenditures;

 

(m)                               Costto comply with ADA related to the interior of the individual buildings, but notexterior doors or the Office Park;

 

(n)                                 Coststo cure violations of law or ordinances;

 

(o)                                 Electricfor non-public areas.

 

(b)                                 Thecost of the annual insurance premiums charged to the Landlord for insurancecoverage which insure the buildings in the Office Park. The insurance shall befor the full replacement value of all insurable improvements with any customaryextensions of coverage including, but not limited to, vandalism, maliciousmischief, sprinkler damage and comprehensive liability, and insurance for oneyear’s rent. The Landlord shall maintain said insurance in effect at all timeshereunder. Any increase in the insurance premiums due to a change in rating ofthe Building which is solely attributable to Tenant’s use, or due to specialTenant equipment, shall be paid entirely by the Tenant. Tenant expresslyacknowledges that Landlord shall not maintain insurance on Tenant’s furniture,fixtures, machinery, inventory, equipment or other personal property; and

 

(c)                                  Amanagement fee of 3% of the Tenant’s Base Rent.

 

8.2                                 Within90 days of the expiration of the first calendar year of the Term, the Landlordshall furnish to Tenant a detailed breakdown of the actual Common AreaExpenses. Tenant shall have the right, within 30 days of receipt of thebreakdown, and during normal business hours, to examine Landlords books andrecords with respect to the Common Area Expenses. In the event Tenant’sProportionate Share shall be greater than the aggregate paid by the Tenantduring the prior period, Tenant shall pay any difference, in one lump sumwithin 30 days after demand. In the event Tenant shall have overpaid itsProportionate Share, any such overage shall be applied to the Base Rent and

 

10

----

 

AdditionalRent prospectively due under the Lease. This procedure shall be followed duringeach year of the lease term, and at the expiration of the Lease, any overage orunderage shall be credited or paid after computation by the Landlord, whichobligation of Landlord and Tenant shall survive the expiration of the leaseterm.

 

8.3                                 Inaddition to the payments set forth in Paragraph 8.1, from and afterCommencement Date and during the term, Tenant shall pay all real estate taxesand assessments levied by the municipality on the Leased Premises and theTenant Improvements. Landlord shall immediately forward to Tenant all tax billsreceived by Landlord, and shall cooperate with Tenant to facilitate the paymentof taxes by Tenant. If at any time during the term of this Lease the method orscope of taxation prevailing at the Commencement Date shall be altered,Tenant’s substituted tax or imposition shall be payable and discharged by theTenant in the manner required pursuant to the law which shall authorize suchchange. The real estate tax obligation of the Tenant shall include any tax orimposition for parking lot usage which may be levied by any governmental bodyhaving jurisdiction thereof.  Tenantshall not be obligated to pay any part of (1) any taxes on the income of theLandlord or the holder of an underlying mortgage and any taxes on the income ofthe lessor under any underlying lease, (2) any corporation, unincorporatedbusiness or franchise taxes, (3) any estate, gift, succession or inheritancetaxes, (4) any capital gains, mortgage recording or transfer taxes, (5) anytaxes or assessments attributable to any sign attached to, or located on, theBuilding or the land or (6) any similar taxes imposed on the Landlord, the holderof any underlying mortgage or the lessor under any underlying lease.

 

8.4                                 Tenant’sShare of Common Area Expenses for any calendar year, part of which falls withinthe term of this Lease and part of which does not, shall be appropriatelyprorated.

 

8.5                                 Ifat any time during the term of this Lease the method or scope of taxationprevailing at the commencement of the lease term shall be altered, Tenant’sProportionate Share of such substituted tax or imposition shall be payable anddischarged by the Tenant in the manner required pursuant to the law which shallauthorize such change.

 

8.6                                 TheTenant covenants and agrees that it will, at its sole cost and expense, carryliability insurance covering the Leased Premises in the minimum amount of$1,000,000.00 per accident for 1 person, $3,000,000.00 per accident for 2 ormore persons, and a minimum amount of $300,000.00 for property damage. Tenantshall at all times, carry sufficient insurance to avoid any coinsurancepenalties on Tenant’s furniture, furnishings, fixtures, machinery, equipmentand installations as well as on any alterations or improvements made to theLeased Premises by Tenant subsequent to the Commencement Date. Such coverage isto include all additions and alterations contemplated hereunder, and shallcover the value of equipment and supplies awaiting installation. The Tenantshall add the Landlord as an additional insured on such policy and will furnishLandlord with a certificate of said liability insurance prior to theCommencement Date and annually thereafter. The certificate shall contain aclause that the policy will not be canceled except on 10 days written notice tothe Landlord.

 

8.7                                 Theparties covenant and agree that the insurance policies required to be furnishedin accordance with the terms and conditions of this Lease, or in connectionwith

 

11

----

 

insurancepolicies which they obtain insuring such insurable interest as Landlord orTenant may have in its own properties, whether personal or real, shallexpressly waive any right of subrogation on the part of the insurer against theLandlord or Tenant. Landlord and Tenant each waives all right of recoveryagainst the other, its agents or employees for any loss, damage or injury ofany nature whatsoever to property or person for which the waiving party isrequired by this Lease to carry insurance.

 

9.                                     SIGNS

 

Landlord willprovide a sign monument listing all of the tenants in the Building. At its soleexpense the Tenant shall have the right to install on the interior doors at theLeased Premises, only such signs as are required by Tenant for the purpose ofidentifying the Tenant.

 

10.                                 ASSIGNMENT AND SUBLETTING

 

10.1                           TheTenant may not assign or sublet the Leased Premises without Landlord’s consent,which shall not be unreasonably withheld. Tenant shall advise the Landlord inwriting, by certified mail, return receipt requested of its desire to assign orsublease and Landlord shall have 45 days from receipt of such notice to notifyTenant whether it rejects or consents to the assignment or sublease. Landlordshall also have the option to elect to re-capture the Leased Premises andterminate the Lease, if and only if Tenant desires to sublease all of theLeased Premises for the entire term. If Landlord elects to recapture the LeasedPremises, Tenant shall surrender the Leased Premises no later than 90 daysafter Landlord’s written notice of its election to recapture.

 

10.2                           TheLandlord’s consent shall not be required and the terms and conditions of Paragraph10.1 shall not apply as to Landlord’s right to recapture if the Tenant assignsor subleases the Leased Premises to a parent, subsidiary, affiliate or acompany into which Tenant is merged or with which Tenant is consolidated, or tothe purchaser of all or substantially all of the assets of Tenant.

 

10.3                           Inconnection with any permitted assignment or subletting, (i) the Tenant shallpay monthly to the Landlord 50% of any increment in rent (net of any reasonablebroker’s commissions, attorney’s fees and marketing costs incurred by Tenant inconnection therewith) received by Tenant per square foot over the Base Rentthen in effect during the year of the assignment or subletting, which paymentshall be made monthly together with the required rent hereunder; and (ii) ifTenant receives any consideration or value for such assignment or subletting,Landlord shall be paid 50% of any such consideration or value within 10 daysafter receipt of the same by Tenant. As a condition hereunder, Tenant covenantswith Landlord that it will furnish to Landlord a copy of all pertinentdocuments with respect to any such assignment or subletting so as to establishTenant’s obligation to Landlord hereunder.

 

10.4                           In theevent of any assignment or subletting permitted by the Landlord, the Tenantshall remain and be directly and primarily responsible for payment andperformance of the within Lease obligations, and the Landlord reserves theright, at all times, to require and demand that the Tenant pay and perform theterms and conditions of this Lease. In the case of a complete recapture, Tenantshall be released from all further liability with respect to the recapturedspace. No such assignment or subletting shall be made to any tenant who shalloccupy the Leased Premises for any use other than that which is

 

12

----

 

permitted tothe Tenant, or which would in any way violate applicable laws, ordinances orrules and regulations of governmental boards and bodies having jurisdiction.

 

11.                                 FIRE AND CASUALTY

 

11.1                           In caseof any damage to or destruction of any portion of the building of which theLeased Premises is a part by fire or other casualty occurring during the termof this Lease (or previous thereto), which shall render at least 1/3 of thefloor area of the Leased Premises or the building untenantable or unfit foroccupancy, which damage cannot be repaired within 180 days from the happeningof such casualty, using reasonable diligence (“Total Destruction”) then theterm hereby created shall, at the option of the Landlord or Tenant, uponwritten notice to the Tenant or Landlord, as the case may be, within 15 days ofsuch fire or casualty, cease and become null and void from the date of suchTotal Destruction. In such event the Tenant shall immediately surrender theLeased Premises to the Landlord and this Lease shall terminate. The Tenantshall only pay rent to the time of such Total Destruction. However, in theevent of Total Destruction if the Landlord shall elect not to cancel this Leasewithin the 15 day period the Landlord shall repair and restore the same tosubstantially the same condition as it was prior to the damage or destruction,with reasonable speed and dispatch. The rent shall not be accrued after saiddamage or while the repairs and restorations are being made, but shallrecommence immediately after the premises are Substantially Complete as definedin paragraph 3.6. In any case where Landlord must restore, consideration shallbe given for delays under the Force Majeure paragraph in this lease. Whether ornot this Lease has been terminated as a result of a casualty, in everyinstance, all insurance proceeds payable as a result of damage or destructionto the Building shall be paid to Landlord as its sole and exclusive property.

 

11.2                           In theevent of any other casualty which shall not be tantamount to Total Destructionthe Landlord shall repair and restore the Building and the Leased Premises tosubstantially the same condition as they were prior to the damage ordestruction, with reasonable speed and dispatch. The rent shall abate or shallbe equitably apportioned as to any portion of the Leased Premises which shallbe unfit for occupancy by the Tenant, or which cannot be used by the Tenant toconduct its business. The rent shall recommence immediately after the LeasedPremises are Substantially Complete as defined in paragraph 3.6.

 

11.3                           In theevent of any casualty caused by an event which is not covered by Landlord’sinsurance policy; the Landlord may elect to treat the casualty as though it hadinsurance or it may terminate the Lease. If it treats the casualty as though ithad insurance then the provisions of this paragraph shall apply. The Landlordshall serve a written notice upon the Tenant within 15 days of the casualtyspecifying the election which it chooses to make.

 

11.4                           In theevent the Landlord rebuilds, the Tenant agrees, at its cost and expense, toforthwith remove any and all of its equipment, fixtures, stock and personalproperty in order to permit Landlord to expedite the construction. The Tenantshall assume at its sole risk the responsibility for damage to or security ofsuch fixtures and equipment in the event that any portion of the building areahas been damaged and is not secure.

 

13

----

 

12.                                 COMPLIANCE WITH LAWS. RULES ANDREGULATIONS

 

12.1                           (a)                                  TheTenant agrees that upon acceptance and occupancy of the Leased Premises, itwill, at its own cost and expense, comply with all statutes, ordinances, rules,orders, regulations and requirements of the Federal, State and Municipalgovernments arising from the operations of Tenant at the Leased Premises. TheTenant also agrees that it will not commit any nuisance or excessive noise, andwill dispose of all garbage and waste in connection with its operations so asto avoid unreasonable emissions of dirt, fumes, odors or debris.

 

(b)                                 TheTenant agrees, at its own cost and expense, to comply with such regulations orrequests as may be required by the fire or liability insurance carriersproviding insurance for the Leased Premises, and the Board of FireUnderwriters, in connection with Tenant’s use and occupancy of the LeasedPremises.

 

12.2                           In casethe Tenant shall fail to comply with all material provisions of the aforesaidstatutes, ordinances, rules, orders, regulations and requirements then theLandlord may, after 10 days’ notice (except for emergency repairs, which may bemade immediately), enter the Leased Premises and take any reasonable actions tocomply with them, at the cost and expense of the Tenant, unless the Tenant isdiligently pursuing the correction of the problem. The cost thereof shall beadded to the next month’s rent and shall be due and payable as such, or theLandlord may deduct the same from the balance of any sum remaining in theLandlord’s hands. This provision is in addition to the right of the Landlord toterminate this Lease under the provisions of paragraph However, in the eventthat all necessary repairs are made by Tenant, the initial failure to complywith the aforesaid laws and regulations shall not constitute an event ofdefault.

 

12.3                           Tenantexpressly covenants and agrees to indemnify, defend and save the Landlordharmless against any claim, damage, liability, cost, penalties, or fines whichthe Landlord may suffer as a result of air, ground or water pollution caused bythe Tenant in its use of the Leased Premises. The Tenant covenants and agreesto notify the Landlord immediately of any claim or notice served upon it withrespect to any claim that the Tenant is causing air, ground or water pollution;and the Tenant shall take immediate steps to halt, remedy or cure any pollutionof air, ground or water caused by the Tenant by its use of the Leased Premises.

 

12.4                           Tenantexpressly covenants and agrees to fully comply with the provisions of the NewJersey Industrial Site Recovery Act (N.J.S.A. 13:1K-6, et seq.) “ISRA”, and itsregulations, prior to the termination of the Lease or at any time that anyaction of the Tenant triggers the applicability of ISRA. In particular, theTenant agrees that it shall comply with the provisions of ISRA in the event ofany “closing, terminating or transferring” of Tenant’s operations, as definedby and in accordance with the regulations. In the event evidence of suchcompliance is not delivered to the Landlord prior to surrender of the LeasedPremises by the Tenant to the Landlord, it is understood and agreed that theTenant shall be liable to pay to the Landlord an amount equal to two times theBase Rent then in effect, together with all applicable Additional Rent from thedate of such surrender until such time as evidence of compliance with ISRA hasbeen delivered to the Landlord, and together with any costs and expensesincurred by Landlord in enforcing Tenant’s obligations under this paragraph.Evidence of compliance, as used herein, shall mean a “letter of nonapplicability” issued by the New Jersey Department of

 

14

----

 

EnvironmentalProtection (“NJDEP”), an approved “negative declaration” or a “remediationaction plan” which has been fully implemented and approved by NJDEP, or otherequivalent document as may then be prescribed by applicable regulations.Evidence of compliance shall be delivered to the Landlord, together with copiesof all submissions made to the NJDEP, including all environmental reports, testresults and other supporting documentation. In addition to the above, Tenantagrees that it shall cooperate with Landlord in the event ISRA is applicable toany portion of the property of which the Leased Premises are a part. In suchcase, Tenant agrees that it shall fully cooperate with Landlord in connectionwith any information or documentation which may be requested by the NJDEP. Inthe event that any remediation of the Property is required in connection withthe conduct by Tenant of its business at the Leased Premises, Tenant expresslycovenants and agrees that it shall be responsible for that portion of theremediation which is attributable to the Tenant’s operation. Tenant herebyrepresents and warrants that its Standard Industrial Classification No. is8731, and that Tenant shall not generate, manufacture, refine, transport,treat, store, handle or dispose of “hazardous substances” as the same aredefined under ISRA and the regulations promulgated pursuant thereto, except instrict compliance with all governmental rules, regulations and procedures.Tenant hereby agrees that it shall promptly inform Landlord of any change inits SIC number and obtain Landlord’s consent for any change in the nature ofthe business to be conducted in the Leased Premises. The within covenants shallsurvive the expiration or earlier termination of the lease term.

 

13.                                 INSPECTIONBYLANDLORD

 

The Tenantagrees that the Landlord shall have the right to enter into the Leased Premisesat all reasonable hours for the purpose of examining the same upon reasonableadvance notice of not less than 24 hours (except in the event of emergency), orto make such repairs as are necessary. Any repair shall not unduly interferewith Tenant’s use of the Leased Premises and Landlord agrees to comply withTenant’s reasonable requirements with regard to access to any sensitive areas.

 

14.                                 DEFAULTBYTENANT

 

14.1                           Each ofthe following shall be deemed a default by Tenant and a breach of this Lease:

 

(b)                                 (1)                                  filingof a petition by the Tenant for adjudication as a bankrupt, or forreorganization, or for an arrangement under any federal or state statute,except in a Chapter 11 Bankruptcy where the rent and Additional Rent stipulatedherein is being paid and the terms of the Lease are being complied with;

 

(2)                                  dissolutionor liquidation of the Tenant;

 

(3)                                  appointmentof a permanent receiver or a permanent trustee of all or substantially all ofthe property of the Tenant, if such appointment shall not be vacated within 60days, provided the rent and Additional Rent stipulated herein is being paid andthe terms of the Lease are being complied with, during said 60 day period;

 

(4)                                  takingpossession of the property of the Tenant by a governmental

 

15

----

 

officer oragency pursuant to statutory authority for dissolution, rehabilitation,reorganization or liquidation of the Tenant if such taking of possession shallnot be vacated within 60 days, provided the rent and Additional Rent stipulatedherein is being paid and the terms of the Lease are being complied with, duringsaid 60 day period;

 

(5)                                  makingby the Tenant of an assignment for the benefit of creditors;

 

(6)                                  abandonment,desertion or vacation of the Leased Premises by the Tenant; and

 

(7)                                  failureof the Tenant to move into or take possession of the Leased Premises within 15days of the Commencement Date.

 

(b)                                 Defaultin the payment of the rent or Additional Rent herein reserved or any partthereof, which continues for 10 days.

 

(c)                                  Adefault in the performance of any other covenant or condition which this Leaserequires the Tenant to perform, for a period of 15 days after notice.  However, no default on the part of Tenantshall be deemed to exist if it diligently commences efforts to rectify same andLandlord is indemnified against loss or liability arising from the default.

 

14.2                           In theevent of any default set forth above and the lapse of any applicable grace period,Landlord may serve written notice upon the Tenant electing to terminate thisLease upon a specified date not less than 10 days after the date of servingsuch notice and this Lease shall then expire on the date so specified as ifthat date had been originally fixed as the expiration date of the term hereingranted.

 

14.3                           In casethis Lease shall be terminated due to Tenants default as set forth above,Landlord or its agents may, immediately or any time thereafter, re-enter andresume possession of the Leased Premises or such part thereof, it and removeall persons and property therefrom, either by summary proceedings or a suitableaction or proceeding at law, without being liable for any damages therefor. Nore-entry by Landlord shall be deemed an acceptance of a surrender of thisLease. However, if the Tenant is in default and moves out, or is dispossessed,and fails to remove any property, machinery, equipment and fixtures or otherproperty within 10 days of the date Landlord sends a written notice to the lastknown address of the Tenant, then the property, machinery, equipment andfixtures or other property left at the Leased Premises shall, at the option ofthe Landlord, be conclusively presumed to be abandoned and may be disposed ofby the Landlord without accounting to Tenant for any of the proceeds, or theLandlord may remove such property and charge the reasonable cost and expense ofremoval and storage to the Tenant before disposing of such property. The Tenantshall be liable for any damage which it causes in the removal of said propertyfrom the Leased Premises.

 

14.4                           In casethis Lease shall be terminated, due to Tenant’s default as set forth aboveLandlord may relet the whole or any portion of the Leased Premises for anyperiod equal to or greater or less than the remainder of the then current term,for any sum which it may deem reasonable, to any tenant which it may deemsuitable and satisfactory, and for any use and purpose which it may deemappropriate. In connection with any such lease Landlord may make such changesin the character of the improvements on the Leased

 

16

----

 

Premises asLandlord may determine to be appropriate or helpful in effecting such lease andmay grant concessions or free rent. Landlord shall make reasonable efforts torelet the Leased Premises. Landlord shall not in any event be required to payTenant any sums received by Landlord on such reletting of the Leased Premises.

 

14.5                           In theevent this Lease is terminated due to Tenant’s default as set forth above, andwhether or not the Leased Premises be relet, Landlord shall be entitled torecover from the Tenant all rent due and all expenses, including reasonablecounsel fees, incurred by Landlord in recovering possession of the LeasedPremises, and all reasonable costs and charges for the care of the LeasedPremises while vacant, which damages shall be due at such time as they areincurred by Landlord; and all other damages set forth in this Paragraph 14 andin Paragraph 15. Without any previous notice or demand, separate actions may bemaintained by Landlord against Tenant from time to time to recover any damageswhich have become due and payable to the Landlord without waiting until the endof the term.

 

15.                                 LIABILITY OF TENANT FOR DEFICIENCY

 

In the event that the relationof the Landlord and Tenant terminates by reason of any default set forth inparagraph 14, and the Landlord reenters the Property as permitted herein, it ishereby agreed that the Tenant shall remain liable to pay in monthly paymentsthe Rent and any other charges which shall accrue. The Tenant expressly agreesto pay as Landlords damages for such breach of this Lease the differencebetween the Rent herein and the rent received, if any, by the Landlord during theremainder of the unexpired term.

 

16.                                 NOTICES

 

All noticesrequired by this Lease shall be given either by certified mail, return receiptrequested, or overnight courier, or personal delivery with receipt, at theaddress set forth on the first page of this Lease, and/or such other place asthe parties may designate in writing.

 

17.                                 NON-WAIVER BY EITHER PARTY

 

The failure ofeither party to insist upon the strict performance of any of the terms of thisLease, or to exercise any option contained herein, shall not be construed as awaiver of any such term. Acceptance by either party of the performance ofanything required by this Lease to be performed, with the knowledge of thebreach of any term of this Lease, shall not be deemed a waiver of such breach,nor shall acceptance of Rent by Landlord in a lesser amount than is due(regardless of any endorsement on any check, or any statement in any letteraccompanying any payment of Rent) be construed either as an accord andsatisfaction or in any manner other than as payment on account of the earliestrent then unpaid by Tenant. No waiver by either party of any term of this Leaseshall be deemed to have been made unless expressed in writing and signed bythat party.

 

18.                                 RIGHT OF TENANT TO MAKE ALTERATIONSAND IMPROVEMENTS

 

The Tenant maynot make alterations, additions or improvements to the Leased Premises, orchange the door locks or window coverings, or in any way alter access to theLeased Premises (“Alterations”) without the consent of the Landlord, whichconsent shall not be unreasonably withheld. Landlord agrees to review anyAlterations proposed by Tenant within 15 days of receipt of plans andspecifications, and advise Tenant whether such Alterations are permissible andwhether Tenant will be required to remove such Alterations at the conclusion ofthe Lease

 

17

----

 

term. Tenantshall be permitted to make cosmetic or decorative changes to the LeasedPremises, such as painting, wallpaper or carpeting. Any approval given is notintended to subject the Landlord’s property to liability under any lien law.Tenant shall be responsible for obtaining at its own cost and expense alllicenses, permits and approvals that may be required by any governmental entityhaving jurisdiction over the approved alterations, additions and/orimprovements. Tenant shall furnish to Landlord as-built drawings of anyalterations, additions or improvements which are made.

 

19.                                 NON-LIABILITY OF LANDLORD

 

Tenant agreesto assume all risk of damage to its property, equipment and fixtures occurringin or about the Leased Premises, whatever the cause of such damage or casualty.Landlord shall not be liable for any damage or injury to property or personcaused by or resulting from steam, electricity, gas, water, rain, ice or snow,or any leak or flow from or into any part of the building, or from any damageor injury resulting or arising from any other cause or happening whatsoever.

 

20.                                 RESERVATION OF EASEMENT

 

Landlordreserves the right, easement and privilege to enter on the Leased Premises inorder to install, at its own cost and expense, any utility lines and servicesin connection therewith as may be required by the Landlord. It is understoodand agreed that if such work as may be required by Landlord requires anyinterior installation, or displaces any exterior paving or landscaping, theLandlord shall at its own cost and expense, restore such items, tosubstantially the same condition as they were before such work. The Landlordcovenants that the foregoing work shall not unreasonably interfere with thenormal operation of Tenant’s business.

 

21.                                 STATEMENT OF ACCEPTANCE

 

Upon thedelivery of the Leased Premises to the Tenant the Tenant covenants and agreesthat it will furnish to Landlord a statement which shall set forth the Date ofCommencement and the Date of Expiration of the lease term.

 

22.                                 FORCE MAJEURE

 

Except for theobligation of the Tenant to pay Rent and other charges, the period of timeduring which the Landlord or Tenant is prevented from performing any actrequired to be performed under this Lease by reason of fire, catastrophe,strikes, lockouts, civil commotion, weather conditions, acts of God, governmentprohibitions or preemptions or embargoes, inability to obtain material or laborby reason of governmental regulations, the act or default of the other party,or other events beyond the reasonable control of Landlord or Tenant, as thecase may be, shall be added to the time for performance of such act.

 

23.                                 STATEMENTS BY LANDLORD AND TENANT

 

Landlord andTenant agree at any time and from time to time upon not less than 10 days’prior notice from the other to execute, acknowledge and deliver to the partyrequesting same, a statement in writing, certifying that this Lease isunmodified and in full force and effect (or if there have been modifications,that the same is in****full force andeffect as modified and stating the modifications), that it is not in default(or if claimed to be in default, stating the amount and nature of the default)and specifying the dates to which the Rent and other charges have been paid inadvance.

 

18

----

 

24.                                 CONDEMNATION

 

24.1                           If dueto condemnation, (i) more than 15% of the Leased Premises is taken or rendereduntenantable, or (ii) more than 25% of the ground is taken (including parkingareas, but excluding front, side and rear set back areas) and, in Landlord’sopinion, said taking unreasonably or unduly interferes with the use of theLeased Premises, the lease term created shall terminate from the date when theauthority exercising the power of eminent domain takes or interferes with theuse of the Property. The Tenant shall be responsible for the payment of Rentuntil the time of surrender. In any event, no part of the Landlord’scondemnation award shall be claimed by the Tenant. Without diminishingLandlord’s award, the Tenant shall have the right to make a claim against thecondemning authority for such independent claim which it may have, including,without limit, Tenant Improvements made or paid for by Tenant.

 

24.2                           In theevent of any partial taking which would not be cause for termination of theLease, or in the event of any taking in excess of the percentages providedabove and Tenant retains the balance of the Leased Premises remaining aftersuch taking, then the Rent shall abate in an amount to be mutually agreed uponbetween the Landlord and Tenant based on the relationship that the character ofthe property prior to the taking bears to the property which shall remain afterthe condemnation. The Landlord shall, to the extent permitted by applicable lawand as the same may be practicable, promptly make such repairs and alterationsin order to restore the Building and/or improvements to a usable condition to theextent of any condemnation award received by Landlord.

 

25.                                 LANDLORD’S REMEDIES

 

25.1                           Therights and remedies given to the Landlord in this Lease are distinct, separateand cumulative remedies, and no one of them, whether or not exercised by theLandlord, shall be deemed to be in exclusion of any of the others.

 

25.2                           Inaddition to any other legal remedies for violation or breach of this Lease bythe Tenant or by anyone holding or claiming under the Tenant such violation orbreach shall be restrainable by injunction at the suit of the Landlord.

 

25.3                           Noreceipt of money by the Landlord from any receiver, trustee or custodian ordebtors in possession shall reinstate, or extend the term of this Lease oraffect any notice theretofore given to the Tenant, or to any such receiver,trustee, custodian or debtor in possession, or operate as a waiver or estoppelof the right of the Landlord to recover possession of the Leased Premises forany of the causes therein enumerated by any lawful remedy; and the failure ofthe Landlord to enforce any covenant or condition by reason of its breach bythe Tenant shall not be deemed to void or affect the right of the Landlord toenforce the same covenant or condition on the occasion of any subsequentdefault or breach.

 

26.                                 QUIET ENJOYMENT

 

The Landlordcovenants that the Tenant, on paying the Rent and performing the covenants andconditions contained in this Lease, may peaceably and quietly have, hold andenjoy the Leased Premises, in the manner of a single-tenanted building, for theLease term.

 

27.                                 SURRENDER OF PREMISES

 

On the lastday, or earlier permitted termination of the Lease, Tenant shall quit andsurrender the Leased Premises in good and orderly condition and repair(reasonable wear and tear, and damage

 

19

----

 

by fire orother casualty excepted) and shall deliver and surrender the Leased Premises tothe Landlord peaceably, together with all Tenant Improvements. The Landlordreserves the right, however, to require the Tenant at its cost and expense toremove any Alterations installed by the Tenant, and restore the Leased Premisesto its original state, normal wear and tear excepted, unless Landlord haspreviously consented to allow such Alterations to remain. Prior to the expirationof the Lease term the Tenant shall remove all of its tangible property,fixtures and equipment from the Leased Premises. All property not removed byTenant shall be deemed abandoned by Tenant, and Landlord reserves the right tocharge the reasonable cost of such removal and disposal to the Tenant. If theLeased Premises are not surrendered at the end of the Lease term, the Tenantshall be liable for double rent under NJSA 2A:42-6, and Tenant shallindemnify Landlord against Loss or liability resulting from delay by Tenant insurrendering the Leased Premises, including, without limitation any claims madeby any succeeding tenant founded on the delay, and any loss of income sufferedby Landlord. These covenants shall survive the termination of the Lease.

 

28.                                 INDEMNITY

 

Anything inthis Lease to the contrary notwithstanding, and without limiting the Tenant’sobligation to provide insurance hereunder, the Tenant covenants and agrees thatit will indemnify, defend and save harmless the Landlord against and from allliabilities, obligations, damages, penalties, claims, costs, charges andexpenses, including without limitation reasonable attorneys’ fees, which may beimposed upon or incurred by Landlord by reason of any of the followingoccurring during the term of this Lease:

 

(a)                                  Anymatter, cause or thing arising out of Tenant’s use, occupancy, control ormanagement of the Leased Premises and any part thereof.

 

(b)                                 Anynegligence on the part of the Tenant or any of its agents, employees, licenseesor invitees, arising in or about the Leased Premises.

 

(c)                                  Anyfailure on the part of Tenant to perform or comply with any of its covenants,agreements, terms or conditions contained in this Lease.

 

Landlord shallpromptly notify Tenant of any such claim asserted against it and shall promptlysend to Tenant copies of all papers or legal process served upon it inconnection with any action or proceeding brought against Landlord.

 

29.                                 BIND AND CONSTRUE CLAUSE

 

The terms,covenants and conditions of this Lease shall be binding upon, and inure to thebenefit of, each of the parties hereto and their respective heirs, successorsand assigns. If any one of the provisions of this Lease shall be held to beinvalid by a court of competent jurisdiction such adjudication shall not affectthe validity or enforceability of the remaining portions of this Lease. Theparties each acknowledge to the other that this Lease has been drafted by bothparties, after consultation with their attorneys, and in the event of anydispute, the provisions are not to be interpreted against either party as thedrafter of the Lease.

 

30.                                 INCLUSIONS

 

The neutergender when used herein, shall include all persons and corporations, and wordsused in the singular shall include words in the plural where the text of theinstrument so requires.

 

20

----

 

31.                                 DEFINITION OF TERM “LANDLORD”

 

When the term“Landlord” is used in this Lease it shall be construed to mean and include onlythe entity which is the owner of title to the building. Upon the transfer bythe Landlord of the title, the Landlord shall advise the Tenant in writing bycertified mail, return receipt requested, of the name of the Landlord’stransferee. In such event, the Landlord shall be automatically freed andrelieved from and after the date of such transfer of title of all personalliability with respect to the performance of any of the covenants andobligations on the part of the Landlord herein contained to be performed,provided any such transfer and conveyance by the Landlord is expressly subjectto the assumption by the transferee of the obligations of the Landlordhereunder.

 

32.                                 COVENANTS OF FURTHER ASSURANCES

 

If, inconnection with obtaining financing for the improvements on the Leased Premises,the mortgage lender shall request reasonable modifications in this Lease as acondition to such financing, Tenant will not unreasonably withhold, delay orrefuse its consent thereto, provided that such modifications do not in Tenant’sreasonable judgment increase the obligations of Tenant hereunder or materiallyadversely affect the leasehold interest hereby created or Tenant’s use andenjoyment of the Leased Premises.

 

33.                                 COVENANT AGAINST LIENS

 

Tenant agreesthat it shall not encumber, or permit to be encumbered, the Leased Premises orthe fee thereof by any lien, charge or encumbrance, and Tenant shall have noauthority to mortgage or hypothecate this Lease in any way whatsoever. Anyviolation of this Paragraph shall be considered a breach of this Lease.

 

34.                                 SUBORDINATION

 

This Leaseshall be subject and subordinate at all times to the lien of any mortgages orground leases or other encumbrances now or hereafter placed on the land,Building and Leased Premises without the necessity of any further instrument oract on the part of Tenant to effectuate such subordination. However, Tenantagrees to execute such further documents solely evidencing the subordination ofthe Lease to the lien of any mortgage or ground lease as shall be desired byLandlord within 5 days, provided Landlord’s mortgagee agrees to anon-disturbance agreement.

 

35.                                 EXCULPATION OF LANDLORD

 

NeitherLandlord nor its principals shall have any personal obligation for the paymentof any indebtedness or for the performance of any obligation under this Lease.The performance of Landlord’s obligations expressed herein may be enforced onlyagainst the Building and land of which the Leased Premises are a part, and therents, issues and profits thereof. The Tenant agrees that no deficiency judgmentor other judgment for money damages shall be entered by it against the Landlordor its principals personally in any action.

 

36.                                 NET RENT

 

It is theintent of the Landlord and Tenant that this Lease shall yield, net to Landlord,the Base Rent specified and all Additional Rent and charges in each monthduring the term of the Lease, and that all costs, expenses and obligations ofevery kind relating to the Leased Premises shall be paid by the Tenant, unlessexpressly assumed by the Landlord.

 

21

----

 

37.                                 SECURITY

 

Landlordcurrently holds a security deposit in the sum of $101,050.75 with regard to theOriginal Lease with Tenant for the Building. Landlord shall continue to holdthat sum as the security deposit for this Lease and Tenant shall not berequired to pay any additional security deposit.

 

38.                                 BROKERAGE

 

The partiesmutually represent to each other that Julian J. Studley, Inc. is the broker whonegotiated and consummated the within transaction, and that neither party dealtwith any other broker in connection with the Lease. In the event either partyviolates this representation, it shall indemnify and defend and hold the otherparty harmless from all claims and damages. It is agreed that the Landlord shallbe responsible, at its sole cost and expense, to pay the brokerage commissionin connection with this Lease.

 

39.                                 LATE CHARGES

 

In addition to any otherremedy, a late charge of 1-1/2% per month, retroactive to the date any Rent orpayment for Tenant Improvements was due, shall be payable without notice fromLandlord, on any such charges not paid within 5 days of the due date.

 

40.                                 PRESS RELEASES

 

Subject to theprior written approval of Tenant (which shall not be unreasonably withheld),Landlord shall have the right to announce the execution of this Lease, theparties hereto, and the real estate brokers involved in such press releases asLandlord shall deem advisable. In addition, Tenant shall permit Landlord to useits name and photographs of the Leased Premises (all photographs being subjectto Tenant’s prior consent) in Landlord’s marketing brochures and materials, andTenant agrees to reasonably cooperate with Landlord in such regard, but at nocost or expense to Tenant.

 

41.                                 WAIVER OF JURY TRIAL

 

Landlord andTenant both irrevocably waive a trial by jury in any action or proceedingbetween them or their successors or assigns arising out of this Lease or any ofits provisions, or Tenant’s use or occupancy of the Leased Premises.

 

42.                                 LAWS OF NEW JERSEY

 

Without regardto principles of conflicts of laws, the validity, interpretation, performanceand enforcement of this Lease shall be governed by and construed in accordancewith the laws of the State of New Jersey. The sole and exclusive venue for anydispute between the parties shall be in Middlesex County, New Jersey.

 

43.                                 OPTION TO RENEW

 

Provided theTenant is not then in default hereunder, it has the right to renew the Lease,for two additional terms of 5 years each, to commence at the end of the prior termof this Lease. The renewal shall be upon the same terms and conditions ascontained in this Lease, except that the Base Rent for the option term shallincrease by 15% over the Base Rent for the year prior to the year in which theoption term commences. The option of the Tenant to renew this Lease isexpressly conditioned upon the Tenant delivering to the Landlord a notice, inwriting, by certified mail, return receipt requested at least 180 days prior tothe date fixed for termination of the then existing Lease term.

 

22

----

 

44.                                 CROSS DEFAULT

 

Landlord andTenant have entered into another lease at Eastpark at 8A for Suite 1002, inaddition to this Lease. Any default, monetary or otherwise, in either lease shallgive the Landlord the option to declare a default under both Leases. In theevent of such a default, and exercise of this right by Landlord, it shall haveall the rights set forth in either Lease.

 

IN WITNESSWHEREOF, the parties hereto have executed this document on the date first abovewritten.

 
| East Park at  8A            |
|-----------------------------|
|                        |
| s/A. Joseph  Stern, Partner |   |
|                        |
|                        |
| Pharmacopeia,  Inc.         |
|                        |
| S/ Joseph A.  Mollica       |   |

 

23

----