**Exhibit 10.35**

 

LEASE AGREEMENT

 

 

BY AND BETWEEN:

 

 

Eastpark at 8A

 

“Landlord”

 

 

- and -

 

 

Pharmacopeia, Inc.

 

“Tenant”

 

 

PREMISES:                                  1002Eastpark Boulevard Cranbury, NJ 08512

DATED:                           August20, 2003

 

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**TABLEOFCONTENTS**

 
| 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 ACCEPTANCF                               |
| 22. | FORCE  MAJEURE                                        |
| 23. | STATEMENTS BY LANDLORD AND TENANT                     |
| 24. | CONDEMNATION                                          |
| 25. | LANDLORDS REMEDIES                                    |
| 26. | QUIET  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. | RIGHT OF FIRST REFUSAL                                |

 

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| 45. | CROSS  DEFAULT |
|-----|----------------|

 

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

 

# **WITNESSETH**

# ** **

WHEREAS, theLandlord intends to lease to the Tenant Suite #1002 with an address at 1002Eastpark Boulevard, Cranbury, NJ 08512, in Building 1000 (“Building”) whichconstitutes a portion of the office/industrial park known as Eastpark at 8A(“Office Park); 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 leased premises described inParagraph 1, and the Landlord and Tenant do hereby mutually covenant and agreeas follows:

 

1.                                       LEASED PREMISES

 

The leasedpremises shown on Exhibit “A” shall consist of 18,191 rentable square feet ofoffice and laboratory space (“Leased Premises”) as measured from outside ofexterior walls to center line of the common walls, together with allimprovements to be constructed thereon by the Landlord for the use of theTenant, and all easements, tenements, appurtenances, hereditaments, rights andprivileges appurtenant thereto, and any and all fixtures and equipment whichare to be installed in the Building by the Landlord for the use of the Tenantin its occupancy of the Leased Premises. Tenant shall also have the right touse all common areas of the Office Park in a similar manner as other OfficePark tenants.

 

2.                                       TERM OF LEASE

 

The term of the Lease shall be 12 years and shall be co-terminus with alease for Building #3, which is also to be occupied by Tenant. The rent shallcommence upon Substantial Completion (as defined hereafter). The 12 year termshall commence on the first day of the month following the date on whichSubstantial Completion is achieved for both Buildings 1 and 3, and shall expireon the day before the 12th anniversary of the Commencement Date, it being theintent of the parties that the leases for both Buildings shall expire on thesame date. The Commencement Date is projected to be January 15, 2004.

 

3.                                       CONSTRUCTION OF THE TENANTIMPROVEMENTS

 

3.1                                 TheLeased Premises consists of two existing, contiguous spaces which werepreviously leased to other tenants. Tenant is taking the Leased Premises in its“as is” condition, subject to modifications as shown on the Plans (as hereafterdefined) to be prepared by Tenant (“Tenant Improvements”). The Landlord shallprovide all necessary labor and materials and perform all the work required tocomplete the Tenant Improvements in order to ready the same for Tenant’soccupancy. Tenant’s designated representative for all work pertaining to theTenant Improvements shall be John Harrison

 

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or such other person as is designated in writing by Tenant(“Representative”). The Landlord shall supervise and direct the work on theTenant Improvements using Landlord’s best skill and attention, and Landlordshall be solely responsible for all construction means, methods, techniques,sequences and procedures and for coordinating all portions of the work on theTenant Improvements. Landlord warrants to the Tenant that all materials andequipment incorporated in the Tenant Improvements will be new unless otherwisespecified, and that all work on the Tenant Improvements will be of goodquality, free from known faults and defects, and in substantial conformity withthe 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 commencement of the 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 writtennotice to Landlord within five business days of receipt, as to whether or notthe Construction Budget is acceptable. If Tenant does not accept theConstruction Budget during such five business day period, then the partiesagree to negotiate in good faith to reach an agreement on the ConstructionBudget. Landlord shall not be obligated to order any equipment or commence workuntil Tenant has approved the Construction Budget. A complete set of the agreedupon Plans, 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 Tenant onlyif 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 work or upon the ordering of any equipment, whichever isapplicable. The Landlord shall have the right to substitute for the materialsand equipment required by the Plans, materials and equipment of equal qualityand

 

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standard,provided said substitutions conform with applicable building codes and are thesubject of a Change Order. Each and every Change Order shall state whether thechange will entail a delay in the date of Substantial Completion. Any ChangeOrder requested by Tenant which results in a delay to the date of SubstantialCompletion shall not delay the date for the commencement of the payment ofrent.

 

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 Tenant Improvements. In the event any Change Orders arerequired during construction, Tenant shall be responsible for all costs relatedto the preparation and reproduction of plans therefore, 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”. The onlyexception to Tenant’s responsibility to pay for all construction costs shall befor the work necessary to upgrade the existing HVAC reheat system currently inthe space previously occupied by Biomira, Inc. (currently known as 1002Eastpark Boulevard), which cost is estimated to be $150,000 and will he dividedequally between the parties. In the event Tenant fails to pay to Landlord anysum set forth on Exhibit “B” when it is due, Landlord shall not be obligated tocommence or continue work on the Tenant Improvements. Such failure to pay shallconstitute a default under this Lease, but shall not delay the CommencementDate of this Lease, which shall be presumed to be the projected CommencementDate set forth in paragraph 2; or any of Tenant’s obligations hereunderincluding, without limitation, Tenant’s obligation to pay all Rent. In theevent that Tenant fails to pay to Landlord, upon Substantial Completion of theTenant Improvements, a sum equal to the remaining balance then due, suchfailure shall constitute a default under this Lease; and Tenant shall not bepermitted to occupy the Leased Premises; and Tenant shall commence payment ofall Rent; and Landlord shall be entitled to all rights and remedies availablehereunder, at law or in equity, which rights shall be cumulative. All sums soowing to Landlord shall constitute Additional Rent and shall be subject to

 

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the imposition of late charges as 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 completion of the Tenant Improvements, whether such delay beavoidable or unavoidable, anything in this Agreement inconsistent herewith orto the contrary notwithstanding.

 

3.5                                 Tenantshall be responsible for the design and installation of its own phone, data 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, Substantial Completion is estimated to be achieved on or aboutJanuary 15*,*2004. As used hereinthe term “Substantial Completion” shall mean that the Leased Premises have beenbuilt and completed in substantial conformity with the Plans, and a temporaryor permanent certificate of occupancy or a temporary or permanent certificateof acceptance (“CO/CA”) has been issued permitting Tenant to use and occupy theLeased Premises, even though minor details, adjustments or punch list itemswhich shall not materially impair Tenant’s use and enjoyment of the LeasedPremises may not have been finally completed, but which work Landlord agreesshall be diligently pursued to final completion. Tenant shall allow Landlordand its contractors to enter the Leased Premises during normal working hoursafter issuance of the CO/CA to complete remaining minor work or punch listitems, provided Landlord gives advance notice and makes reasonable efforts notto interfere with Tenant’s operations. It is agreed that for the purpose ofthis Lease, wherever and whenever the term Substantial Completion is used, itshall not include items of maintenance, service, punch list, or guarantee. Ifthe date of Substantial Completion occurs on a day other than the first day ofa month, rent from such day until the first day of the following month shall beprorated (at a rate of 1/30th of the monthly rent per day). During said periodof partial monthly occupancy, all other terms and conditions of this Leaseshall apply.

 

4.                                       RENT

 

4.1                                 Tenantshall pay, as base rent (“Base Rent”) for the Leased Premises, as follows:

 

(a)                                  Duringthe first 4 years of the term, an estimated annual base rent per square foot of$30.35, for an aggregate annual base rent of $552,096.85 (“Initial Base Rent”),payable monthly in the sum of $46,008.07.

 

(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

 

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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:

 

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 $552,096.85 is equal to $55,209.69. Adding that amount to theoriginal Base Rent produces an annual rent for the second 4 years of$607,306.54 payable in equal monthly installments of $50,608.88.

 

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 properapplication of 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.

 

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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 firstday of each calendar month. The Rent shall be payable by Tenant without anyset-off or deduction of any kind or nature whatsoever and without notice ordemand. The sum of all increases required to be paid as Additional Rent or BaseRent in accordance with this Lease, shall be paid to Landlord within 10 daysfollowing the giving of notice hereof by Landlord of such increases.

 

5.                                       PARKING AND USE OF EXTERIOR AREA

 

The Tenant shall have the right to use parking spaces on anon-exclusive basis in common with other tenants of the Building. Landlordreserves the right to allocate specific parking spaces if it chooses. TheLandlord and Tenant mutually agree that they will not block, hinder orotherwise obstruct the access driveways and parking areas so as to impede thefree flow of vehicular traffic in the Office Park. In connection with the useof the loading platforms, if any, Tenant agrees that it will not use the sameso as to unreasonably interfere with the use of the access driveways andparking areas. Tenant shall not store trailers or other vehicles on any portionof the access driveways or parking areas, and may not utilize any portion ofthe land or Building outside of the Leased Premises for any purpose unlessconsented to in advance by Landlord.

 

6.                                       USE

 

The Tenant covenants and agrees to use and occupy the Leased Premisesonly as an office and laboratory, which use is expressly subject to allapplicable zoning ordinances, rules and regulations of any governmentalinstrumentalities, boards or bureaus having jurisdiction thereof. Tenant’s useof the Leased Premises shall not interfere with the peaceable and quiet use andenjoyment by other tenants at their respective leased premises located at theBuilding or in the Office Park, nor shall Tenant’s activities cause Landlord tobe in 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.Landlord shall

 

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have theoption to install, at its own cost, a separate water meter and invoice Tenantdirectly for its water usage. The Tenant agrees to maintain all leased areas ata minimum temperature of 45 degrees, excluding cold rooms on other roomsspecifically designed for a lower temperature, to prevent the freezing ofdomestic water and sprinkler pipes. Tenant shall not store any items outsidethe Leased Premises, and shall deliver its garbage and recyclables to thecentral receiving area on the lot. Tenant shall dispose of allhazardous/medical waste with an approved hauler at its own cost.

 

7.3                                 Landlorddoes not warrant that any services Landlord or any public utilities supply willnot be interrupted. Services maybe 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

 

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administrativeor executive personnel or officers or partners of Landlord, unless employed atcompetitive rates 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 of the building;

 

(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 oneyears 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 Tenants use, or due to specialTenant equipment, shall be paid entirely by the Tenant. Tenant expresslyacknowledges that Landlord shall not maintain insurance on Tenants furniture,fixtures, machinery, inventory, equipment or other personal property; and

 

(c)                                  Thereal estate and personal property taxes assessed against the Office Park forland, building and improvements, along with any levy for the installation

 

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of localimprovements affecting the Office Park assessed by any governmental body havingjurisdiction thereof. Tenant shall he entitled to Tenant’s Proportionate Shareof any refund obtained by Landlord with respect to any taxes. The real estatetax obligation of the Tenant shall include any tax or imposition for parkinglot usage which may be levied by any governmental body having jurisdictionthereof. In addition to its Proportionate Share of the above items, Tenantshall pay directly all real estate taxes assessed by the municipality on itsTenant Improvements. Anything in this Section 8.1(b) or elsewhere in this Leaseto the contrary notwithstanding, Tenant shall not be obligated to pay any partof (l) any taxes on the income of the Landlord or the holder of an underlyingmortgage and any taxes on the income of the lessor under any underlying lease,(2) any corporation, unincorporated business or franchise taxes, (3) anyestate, gift, succession or inheritance taxes, (4) any capital gains, mortgagerecording or transfer taxes, (5) any taxes or assessments attributable to anysign attached to, or located on, the Building or the land or (6) any similartaxes imposed on the Landlord, the holder of any underlying mortgage or thelessor under any underlying lease; and

 

(d)                                 Amanagement fee of 3% of the Tenants 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 Landlord’s 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 andAdditional Rent prospectively due under the Lease. This procedure shall be followedduring each year of the lease term, and at the expiration of the Lease, anyoverage or underage shall be credited or paid after computation by theLandlord, which obligation of Landlord and Tenant shall survive the expirationof the lease term.

 

8.3                                 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.

 

8.4                                 Ifat any time during the term of this Lease the method or scope of taxation prevailingat the commencement of the lease term shall be altered, Tenant’s ProportionateShare of such substituted tax or imposition shall be payable and discharged bythe Tenant in the manner required pursuant to the law which shall authorizesuch change.

 

8.5                                 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

 

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CommencementDate. Such coverage is to include all additions and alterations contemplatedhereunder, and shall cover the value of equipment and supplies awaitinginstallation. The Tenant shall add the Landlord as an additional insured onsuch policy and will furnish Landlord with a certificate of said liabilityinsurance prior to the Commencement Date and annually thereafter. The certificateshall contain a clause that the policy will not be canceled except on 10 dayswritten notice to the Landlord.

 

8.6                                 Theparties covenant and agree that the insurance policies required to be furnishedin accordance with the terms and conditions of this Lease, or in connectionwith insurance policies which they obtain insuring such insurable interest asLandlord or Tenant may have in its own properties, whether personal or real,shall expressly waive any right of subrogation on the part of the insureragainst the Landlord or Tenant. Landlord and Tenant each waives all right ofrecovery against the other, its agents or employees for any loss, damage orinjury of any nature whatsoever to property or person for which the waivingparty is required by this Lease to carry insurance.

 

9.                                       SIGNS

 

Landlord will provide a sign monument listing all of the tenants in theBuilding. At its sole expense the Tenant shall have the right to install on theinterior doors at the Leased Premises, only such signs as are required byTenant for the purpose of identifying 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 in writing,by certified mail, return receipt requested of its desire to assign or subleaseand Landlord shall have 60 days from receipt of such notice to notify Tenantwhether it rejects or consents to the assignment or sublease. Landlord shallalso have the option to elect to re-capture the Leased Premises and terminatethe Lease, if and only if Tenant desires to sublease all of the Leased Premisesfor the entire term. If Landlord elects to recapture the Leased Premises,Tenant shall surrender the Leased Premises no later than 90 days afterLandlord’s written notice of its election to recapture.

 

10.2                           TheLandlord’s consent shall not be required and the terms and conditions ofParagraph 10.1 shall not apply as to Landlord’s right to recapture if theTenant assigns or subleases the Leased Premises to a parent, subsidiary,affiliate or a company into which Tenant is merged or with which Tenant isconsolidated, or to the purchaser of all or substantially all of the assets ofTenant.

 

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 anysuch consideration or value within 10 days after receipt of the same by Tenant.As a condition hereunder, Tenant covenants with Landlord that it will furnishto Landlord a copy of all pertinent documents with respect to any suchassignment or subletting so as to

 

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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 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 to substantiallythe same condition as it was prior to the damage or destruction, withreasonable speed and dispatch. The rent shall not be accrued after said damageor while the repairs and restorations are being made, but shall recommenceimmediately after the premises are Substantially Complete as defined inparagraph 3.6. In any case where Landlord must restore, consideration shall begiven 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

 

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notice uponthe Tenant within 15 days of the casualty specifying the election which itchooses 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.

 

12.                                 COMPLIANCE WITH LAWS, RULES AND REGULATIONS

 

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 Fire Underwriters,in connection with Tenant’s use and occupancy of the Leased Premises.

 

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 14.2. However, in theevent that all necessary repairs are made by Tenant, the initial failure tocomply with 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. I3:lK-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

 

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comply withthe provisions of ISRA in the event of any “closing, terminating ortransferring” of Tenant’s operations, as defined by and in accordance with theregulations. In the event evidence of such compliance is not delivered to theLandlord prior to surrender of the Leased Premises by the Tenant to theLandlord, it is understood and agreed that the Tenant shall be liable to pay tothe Landlord an amount equal to two times the Base Rent then in effect,together with all applicable Additional Rent from the date of such surrenderuntil such time as evidence of compliance with ISRA has been delivered to theLandlord, and together with any costs and expenses incurred by Landlord inenforcing Tenant’s obligations under this paragraph. Evidence of compliance, asused herein, shall mean a “letter of non-applicability” issued by the NewJersey Department of Environmental Protection (“NJDEP”), an approved “negativedeclaration”**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 such case,Tenant agrees that it shall fully cooperate with Landlord in connection withany information or documentation which may be requested by the NJDEP. In theevent that any remediation of the Property is required in connection with theconduct 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.                                 INSPECTION BY LANDLORD

 

13.1                           TheTenant agrees that the Landlord shall have the right to enter into the LeasedPremises at all reasonable hours for the purpose of examining the same uponreasonable advance notice of not less than 24 hours (except in the event ofemergency), or to make such repairs as are necessary. Any repair shall notunduly interfere with Tenant’s use of the Leased Premises and Landlord agreesto comply with Tenant’s reasonable requirements with regard to access to anysensitive areas.

 

14.                                 DEFAULT BY TENANT

 

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

 

(a)                                  (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

 

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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 officer or agencypursuant to statutory authority for dissolution, rehabilitation, reorganizationor liquidation of the Tenant if such taking of possession shall not be vacatedwithin 60 days, provided the rent and Additional Rent stipulated herein isbeing paid and the terms of the Lease are being complied with, during said 60day 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 graceperiod, Landlord may serve written notice upon the Tenant electing to terminatethis Lease upon a specified date not less than 10 days after the date ofserving such notice and this Lease shall then expire on the date so specifiedas if that date had been originally fixed as the expiration date of the termherein granted.

 

14.3                           In casethis Lease shall be terminated due to Tenant’s 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, and remove allpersons 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 maybe disposed of bythe

 

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Landlordwithout accounting to Tenant for any of the proceeds, or the Landlord mayremove such property and charge the reasonable cost and expense of removal andstorage to the Tenant before disposing of such property. The Tenant shall beliable for any damage which it causes in the removal of said property from theLeased 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 Premises as Landlord maydetermine to be appropriate or helpful in effecting such lease and may grantconcessions or free rent. Landlord shall make reasonable efforts to relet theLeased Premises. Landlord shall not in any event be required to pay Tenant anysums 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 relation of the Landlord and Tenant terminates byreason of any default set forth in paragraph 14, and the Landlord reenters theProperty as permitted herein, it is hereby agreed that the Tenant shall remainliable to pay in monthly payments the Rent and any other charges which shallaccrue. The Tenant expressly agrees to pay as Landlord’s damages for suchbreach of this Lease the difference between the Rent herein and the rentreceived, if any, by the Landlord, during the remainder of the unexpired term.

 

16.                                 NOTICES

 

All notices required by this Lease shall be given either by certifiedmail, return receipt requested, or overnight courier, or personal delivery withreceipt, at the address set forth on the first page of this Lease, and/or suchother place as the parties may designate in writing.

 

17.                                 NON-WAIVER BY EITHER PARTY

 

The failure of either party to insist upon the strict performance ofany of the terms of this Lease, or to exercise any option contained herein,shall not be construed as a waiver of any such term. Acceptance by either partyof the performance of anything required by this Lease to be performed, with theknowledge of the breach of any term of this Lease, shall not be deemed a waiverof such breach, nor shall acceptance of Rent by Landlord in a lesser amountthan is due (regardless of any endorsement on any check, or any statement inany letter accompanying any payment of Rent) be construed either as an accordand satisfaction or in any manner other than as

 

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payment on account of the earliest rent then unpaid by Tenant. Nowaiver by either party of any term of this Lease shall be deemed to have beenmade unless expressed in writing and signed by that party.

 

18.                                 RIGHT OF TENANT TO MAKE ALTERATIONSAND IMPROVEMENTS

 

The Tenant may not makealterations, additions or improvements to the Leased Premises, or change thedoor locks or window coverings, or in any way alter access to the LeasedPremises (“Alterations”) without the consent of the Landlord, which consentshall not be unreasonably withheld. Landlord agrees to review any Alterationsproposed by Tenant within 15 days of receipt of plans and specifications, andadvise Tenant whether such Alterations are permissible and whether Tenant willbe required to remove such Alterations at the conclusion of the Lease term.Tenant shall 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 agrees to assume allrisk of damage to its property, equipment and fixtures occurring in or aboutthe Leased Premises, whatever the cause of such damage or casualty. Landlordshall not be liable for any damage or injury to property or person caused by orresulting from steam, electricity, gas, water, rain, ice or snow, or any leakor flow from or into any part of the building, or from any damage or injuryresulting or arising from any other cause or happening whatsoever.

 

20.                                 RESERVATION OF EASEMENT

 

Landlord reserves the right, easement and privilege to enter on theLeased Premises in order to install, at its own cost and expense, any utilitylines and services in connection therewith as may be required by the Landlord.It is understood and agreed that if such work as may be required by Landlordrequires any interior installation, or displaces any exterior paving orlandscaping, the Landlord shall at its own cost and expense, restore suchitems, to substantially the same condition as they were before such work. TheLandlord covenants that the foregoing work shall not unreasonably interferewith the normal 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 prescriptions or embargoes, inability to obtain material orlabor by reason of governmental regulations, the act or default of the otherparty, or other events beyond the reasonable control of Landlord or Tenant, asthe case may be,

 

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shall be addedto 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 5 days’ priornotice 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 and effect as modified and stating themodifications), 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 whichthe Rent and other charges have been paid in advance.

 

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, includingwithout 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 tothe extent 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                           In additionto any other legal remedies for violation or breach of this Lease by the Tenantor by anyone holding or claiming under the Tenant such violation or breachshall 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

 

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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 multi-tenanted building, for theLease term.

 

27.                                 SIJRRENDER 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 by fire or other casualty excepted) andshall deliver and surrender the Leased Premises to the Landlord peaceably,together with all Tenant Improvements. The Landlord reserves the right,however, to require the Tenant at its cost and expense to remove anyAlterations installed by the Tenant, and restore the Leased Premises to itsoriginal state, normal wear and tear excepted, unless Landlord has previouslyconsented to allow such Alterations to remain. Prior to the expiration of theLease term the Tenant shall remove all of its tangible property, fixtures andequipment from the Leased Premises. All property not removed by Tenant shall bedeemed abandoned by Tenant, and Landlord reserves the right to charge thereasonable cost of such removal and disposal to the Tenant. If the Leased Premisesare not surrendered at the end of the Lease term, the Tenant shall be liablefor double rent under NJSA 2A:42-6, and Tenant shall indemnify Landlordagainst loss or liability resulting from delay by Tenant in surrendering theLeased Premises, including, without limitation any claims made by anysucceeding tenant founded on the delay, and any loss of income suffered byLandlord. 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.

 

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29.                                 BIND AND CONSTRUE CLAUSE

 

The terms, covenants and conditions of this Lease shall be bindingupon, and inure to the benefit of, each of the parties hereto and theirrespective heirs, successors and assigns. If any one of the provisions of thisLease shall be held to be invalid by a court of competent jurisdiction, suchadjudication shall not affect the validity or enforceability of the remainingportions of this Lease. The parties each acknowledge to the other that thisLease has been drafted by both parties, after consultation with theirattorneys, and in the event of any dispute, the provisions are not to beinterpreted against either party as the drafter 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 the instrumentso requires.

 

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 LeasedPremises, the mortgage lender shall request reasonable modifications in thisLease as a condition to such financing, Tenant will not unreasonably withhold,delay or refuse its consent thereto, provided that such modifications do not inTenant’s reasonable judgment increase the obligations of Tenant hereunder ormaterially adversely affect the leasehold interest hereby created or Tenant’suse and enjoyment of the Leased Premises.

 

33.                                 COVENANT AGAINST LIENS

 

Tenant agrees that it shall not encumber, or permit to be encumbered,the Leased Premises or the fee thereof by any lien, charge or encumbrance, andTenant shall have no authority to mortgage or hypothecate this Lease in any waywhatsoever. Any violation of this Paragraph shall be considered a breach ofthis 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, Tenant agrees to execute suchfurther documents evidencing the subordination of the Lease to the lien of anymortgage or ground lease as shall be desired by Landlord within 5 days,provided Landlord’s mortgagee agrees to a non-disturbance agreement.

 

35.                                 EXCULPATION OF LANDLORD

 

NeitherLandlord nor its principals shall have any personal obligation for the paymentof any

 

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indebtednessor for the performance of any obligation under this Lease. The performance ofLandlord’s obligations expressed herein may be enforced only against theBuilding and land of which the Leased Premises are a part, and the rents,issues and profits thereof. The Tenant agrees that no deficiency judgment orother judgment for money damages shall be entered by it against the Landlord orits 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.

 

37.                                 SECURITY

 

Tenant shallnot be required to pay any 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 Landlordshall be responsible, at its sole cost and expense, to pay the brokeragecommission in connection with this Lease.

 

39.                                 LATE CHARGES

 

In addition toany other remedy, a late charge of 1-1/2% per month, retroactive to the dateany Rent or payment for Tenant Improvements was due, shall be payable, withoutnotice from Landlord, on any such charges not paid within 5 days of the duedate.

 

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.

 

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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 priorterm of 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.

 

44.                                 RIGHT OF FIRST OFFER

 

During theterm of this Lease Agreement, Tenant may notify Landlord in writing if itdesires to lease specific units in the Building which are in close proximity tothe Leased Premises and leased to other tenants (“Designated Units”). Landlordshall first offer to Tenant any Designated Units that become vacant or thatLandlord knows will become vacant as of a certain date. Tenant shall then have5 days after receipt of Landlord’s offer to notify Landlord whether it isinterested in leasing such space. If Tenant does not respond during said 5 dayperiod, then Landlord shall be free to market the space to other tenants. IfTenant notifies Landlord, in writing, that it desires to lease said space thenthe parties agree to negotiate in good faith to reach an agreement on the termsof the lease. In the event the parties have not entered into a lease after a 30day period, Landlord shall be free to market the space to other tenants.

 

45.                                 CROSS DEFAULT

 

Landlord and Tenanthave entered into another lease at Eastpark at 8A for all of Building #3, inaddition to this Lease. Any default, monetary or otherwise, in either leaseshall give the Landlord the option to declare a default under both Leases. Inthe event of such a default, and exercise of this right by Landlord, it shallhave all 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       |   |

 

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## **Exhibit“B”**

 

#### **Payments forTenant Improvements**

 

The followingshall form the basis for the payments for the tenant improvements referred toin the Lease Agreement:

 

1.               Uponexecution of the Lease, Tenant shall pay to Landlord the mobilization feecontained in the Preliminary Estimate of Tenant Improvement Costs made part ofthis Exhibit.

 

2.               Landlordshall thereafter invoice Tenant on Mondays on a biweekly basis with payment forthat invoice due on Friday of that same week.

 

3.               Allpayments shall be based upon the approved Construction Budget pursuant toparagraph 3.2a of the Lease Agreement. Until the approval of the ConstructionBudget all payments shall be made based upon the Preliminary Estimate of TenantImprovement Costs contained in this Exhibit B. Any adjustments required to thepayments made prior to the issue of the Construction Budget shall be madewithin five (5) business days of the approval of the Construction Budget.

 

4.               Landlordshall use the standard AIA form as the method of invoicing. Payments made fordeposits, materials stored and work performed shall be contained in this shalland shall be paid as described in item 2 above.

 

5.               Noretention shall be held by Tenant.

 

6.               UponSubstantial Completion of the Tenant Improvements, full payment of theremaining construction costs shall be made by the Tenant, in accordance withthis Lease Agreement.

 

7.               Landlordshall proceed with any “punch list” work required and shall complete this workin accordance with the terms of this Lease Agreement.

 

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