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Exhibit
10.6
EXECUTION
COPY
LEASE
AGREEMENT
between
ABRAXIS BIOSCIENCE,
LLC
and
APP PHARMACEUTICALS,
LLC
LEASE
AGREEMENT
THIS LEASE AGREEMENT
(this “Lease”), dated effective the 13 th day of November, 2007 (the
“Effective Date”), is made by and between Abraxis
BioScience, LLC, a Delaware limited liability company
(“LESSOR”), and APP Pharmaceuticals, LLC, a Delaware
limited liability company (
“LESSEE”).
RECITALS
WHEREAS, LESSOR and LESSEE
have entered into a Separation and Distribution Agreement dated as
of the date hereof (the “Separation
Agreement”);
WHEREAS, simultaneously
herewith, New Abraxis, Inc., to be renamed Abraxis BioScience,
Inc., parent company of LESSOR, and LESSEE are entering into a
Manufacturing Agreement (the “Manufacturing
Agreement”);
WHEREAS, LESSOR is the owner
of that certain improved real property located at and commonly
known as the Ruby Street facility more particularly described in
Exhibit A (together with all buildings, structures, fixtures
and improvements and betterments thereon and appurtenances thereto
other than the Machinery and Equipment (as defined in the
Separation Agreement) of LESSEE located at the Ruby Street
facility) thereon attached hereto and made a part hereof (the
“Property”)(for the avoidance of doubt, the Property
shall not include those areas indicated as “Dedicated
Abraxane Process Areas” in Exhibit A);
WHEREAS, notwithstanding that
LESSOR owns the Property and this Lease, LESSEE is, and remains,
the owner of the Contributed Machinery and Equipment (as defined in
the Separation Agreement); and
WHEREAS, LESSOR desires to
lease to LESSEE, and LESSEE desires to lease from LESSOR,
(i) the Property (ii) all improvements at any time
existing thereon, and (iii) all fixtures, equipment, furniture
and machinery, excluding, for all purposes, any Machinery and
Equipment of LESSOR located at the Property (collectively, the
“Premises”).
NOW, THEREFORE, in
consideration of the mutual promises and premises hereinafter
contained, it is hereby mutually agreed as follows:
ARTICLE I
Definitions
1.1 All capitalized terms
used in this Lease and not defined herein shall have the meaning
ascribed to such terms in the Separation Agreement.
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ARTICLE II
Property
2.1 Lease . LESSOR
hereby leases to LESSEE the LESSEE’s share of the Premises,
hereinafter referred to as the “LESSEE Premises,” and
LESSEE leases, hires and takes from LESSOR the LESSEE Premises.
LESSEE has inspected the Premises and accepts the same “As
Is.” The LESSEE Premises consists of approximately 122,000
square feet of office, warehouse and pharmaceutical space and shall
include the right to use and obligation to share (as applicable)
any common areas.
ARTICLE III
Term
3.1 Initial Term . The
term of this Lease shall commence on the Effective Date (the
“Commencement Date”) and end on December 31, 2011
(the “Term”), unless earlier terminated in accordance
with the provisions of this Lease.
3.2 Option Term
.
(a) LESSEE shall have the
right and option to renew and extend the term of this Lease until
December 31, 2012, provided, that (x) LESSEE gives
written notice regarding exercise of the option to renew and extend
(such notice to be delivered no earlier than six months, and no
later than three months, before the expiration of the Term in
Section 3.1), and (y) during the one year period from
July 1, 2010 through June 30, 2011, the aggregate
production of LESSEE’s products at the Premises shall have
totaled more than ten million (10,000,000) units. LESSEE will
in good faith use commercially reasonable efforts to expedite the
transfer of its products manufactured at the Premises to the Grand
Island Facility (as defined in the Separation Agreement) or to the
Cruce Davila Property (as defined in the Separation Agreement)
beginning on the date hereof.
(b) For any extension, the
base rent shall be the base rent of the immediately preceding lease
year plus three percent (3%).
3.3 Holding Over . If
LESSEE retains possession of the Premises or any part thereof after
the termination of this Lease or expiration of the Term, LESSEE
shall pay to LESSOR a monthly Rent equal to 2.00 times the monthly
Rent in effect as of the last month of the Term. This charge shall
not limit LESSOR’s right to seek such other remedy as may be
available to it at law or equity.
ARTICLE IV
Rent
4.1 Rent . During the
Term, LESSEE covenants and agrees to pay LESSOR, as annual rent for
the Premises, the aggregate amount of $823,500, which shall be paid
monthly (i.e., $68,625) on the 1 st day
of each month during the Term at LESSOR’s address for notice
hereunder or otherwise as LESSOR may designate (the
“Rent”). LESSEE shall pay, as additional rent, the fees
for the services described in Section 5.1
below.
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ARTICLE V
Services and
Utilities
5.1 Services and
Utilities . During the Term, LESSEE shall be solely responsible
for and shall promptly pay, as additional rent, all utilities used
or consumed at the Premises, including but not limited to all
water, gas, heat, light, power, telephone and other utilities and
services supplied to the Premises, together with any taxes thereon.
If LESSEE desires to install any equipment which shall require
additional utility facilities or utility facilities of a greater
capacity than the facilities existing on the Effective Date, such
installation shall be subject to LESSOR’s prior written
approval (such approval not to be unreasonably withheld,
conditioned, denied or delayed) of LESSEE’s plans and
specifications therefor. If approved by LESSOR, LESSEE agrees to
pay the cost of providing such additional utility facilities or
utility facilities of greater capacity.
5.2 LESSOR Not Responsible
For Interruption of Service . LESSOR shall in no way be liable
or responsible for any loss, damage or expense that LESSEE may
sustain or incur by reason of any change, failure, interference,
disruption or defect in the supply or character of the utilities
furnished to the Premises, or if the quantity or character of the
utilities supplied to the Premises are no longer available or
suitable for LESSEE’s requirements, and no such change,
failure, defect, unavailability or unsuitability shall constitute
an actual or constructive eviction in whole or in part, or entitle
LESSEE to any abatement or diminution of rent or additional rent,
or relieve LESSEE from any obligations under this Lease; provided,
however, if any service failure arises from the gross negligence or
willful misconduct of LESSOR, then (a) the Rent and any
additional rent payable under this Lease shall abate in proportion
to the fraction of the total rentable area of the Premises that is
materially affected by such service failure and (b) LESSEE
shall have the right to pursue any and all remedies available at
law or in equity.
ARTICLE VI
Repairs and
Maintenance
6.1 LESSEE’s
Obligations .
(a) Except for Capital
Repairs (as hereinafter defined), LESSEE shall be responsible for
(i) all repairs (including replacements) necessary to maintain
the Premises in substantially the same condition as exists on the
Effective Date, normal wear and tear and damage by fire or other
casualty and eminent domain excepted. LESSEE shall not be
responsible for any maintenance, repairs or replacement in or
affecting any portions of the Premises occupied by any tenant or
occupant other than LESSEE. In the event that LESSEE has not
performed such repairs and LESSOR elects to perform the repair,
after written notice and a reasonable opportunity to cure, LESSEE
shall reimburse LESSOR the repair costs within thirty
(30) days following LESSEE’s receipt of LESSOR’s
written demand and evidence of payment therefor.
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(b) LESSEE shall also be
responsible for making any repairs to the Property caused by any
act, omission or negligence of LESSEE or its employees, agents,
invitees, licensees, subtenants or contractors and shall indemnify
and save harmless LESSOR from any and all expenses, liens, claims
or damages to either persons or property arising out of, or
resulting from, the failure to make such repairs; provided,
however, LESSEE shall not be obligated to make any repairs to the
Property if the need for such repairs is caused by LESSOR or its
agents, contractors, employees, guests or invitees. LESSOR shall
have the right to make any repairs that are the responsibility of
LESSEE under this Section 6.1(b) at LESSEE’s sole cost
and expense after written notice and reasonable opportunity to make
the repair, and LESSEE shall reimburse LESSOR the repair costs
within thirty (30) days following LESSEE’s receipt of
LESSOR’s written demand and evidence of payment
therefor.
(c) All repairs conducted by
LESSEE shall be accomplished promptly with first class materials,
in a good and workmanlike manner, in compliance with all applicable
laws of all governmental authorities and in a style, character and
quality conforming to the existing construction of the
Premises.
6.2 LESSOR’s
Obligations .
(a) For the purposes of this
Lease, “ Capital Repairs ” shall mean
(i) any maintenance, repairs or replacements to the roof,
foundation and structural elements of the Premises, (ii) any
maintenance, repairs or replacements to the Premises’ systems
(which shall include the heating, ventilating, air conditioning,
plumbing, electrical, mechanical and other systems and equipment
serving the Premises generally), the common areas or the exterior
of the Premises and (iii) maintenance, repairs or replacements
to the Premises required to comply with any laws applicable to the
Premises (to the extent not relating to LESSEE’s use or
occupancy of the Premises) enacted or promulgated after the
Effective Date, in each case, the cost of which is properly
characterized as property, plant and equipment according to
generally accepted accounting practices. LESSOR, at its expense
(subject to reimbursement by LESSEE to the extent provided in
Section 6.1(b)), shall be responsible for all Capital Repairs
necessary to keep the Premises in as good condition as exists as of
the Effective Date or to comply with any laws applicable to the
Premises (to the extent not relating to LESSEE’s use or
occupancy of the Premises) enacted or promulgated after the
Effective Date. LESSOR shall complete such repairs in a good and
workmanlike manner consistent with normal and customary industry
standards for buildings similar to the Premises and in compliance
with all applicable laws.
(b) Notwithstanding the
foregoing, LESSEE may give written notice to LESSOR of its election
to perform any Capital Repair obligation of LESSOR hereunder for
the account of LESSOR. All Capital Repair work performed by LESSEE,
including, without limitation, construction, as well as
preparation, review and approval of plans, costs and specifications
and selection of architects, engineers, consultants and
contractors, shall be at LESSOR’s sole cost and expense and
subject to LESSOR’s prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed. If
LESSOR shall fail to reasonably approve, disapprove or request
reasonable revisions for any request or plans submitted by LESSEE
in connection with a Capital Repair within fifteen
(15) business days from LESSOR’s receipt of such notice,
then LESSOR’s consent shall be deemed approved. If an
emergency shall exist (as determined in LESSEE’s good faith
judgment), LESSEE may perform any Capital Repair obligation of
LESSOR hereunder for the account of LESSOR, after first notifying
LESSOR of the
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same by telephone or
facsimile of such emergency and receiving LESSOR’s prior
written consent, which consent shall not be unreasonably withheld,
conditioned or delayed. If, in the event of an emergency (as deemed
by LESSEE in good faith), LESSOR shall fail to reasonably approve,
disapprove or request reasonable revisions for any request or plans
submitted by LESSEE in connection with a Capital Repair within
seventy-two (72) hours from LESSOR’s receipt of such
notice (unless circumstances warrant a shorter period), then
LESSOR’s consent shall be deemed approved. If LESSEE believes
that LESSOR has unreasonably withheld its consent, approval or
permission to any matter requiring LESSOR’s consent, approval
or permission pursuant to this Section 6.2(b), LESSEE may
submit such dispute to arbitration. Arbitration shall be in
accordance with the Expedited Procedures set forth in the
Commercial Arbitration Rules of the American Arbitration
Association (“ AAA ”) then in effect. The demand
for arbitration shall be filed in writing with the other party, and
the AAA in Chicago, Illinois. A demand for arbitration shall be
made within ten (10) days of the event giving rise to the
right of arbitration. The award rendered by the arbitrators shall
be final, and judgment may be entered upon it in accordance with
applicable law in any court having jurisdiction thereof.
ARTICLE VII
Alterations, and
Additions
7.1 Alterations and
Additions . LESSEE shall have the right, from time to time,
without LESSOR’s consent, to make interior alterations,
improvements and/or additions in and to the Premises that will have
no effect on the roof, foundation or other structural elements of
the Premises (the “ Building Structure ”) and
will have no adverse effect on the heating, ventilating, air
conditioning, plumbing, electrical, mechanical and other systems
and equipment serving the Premises generally (the “
Building Systems ”). LESSEE may make alterations,
improvements and/or additions that affect the exterior of the
Premises or may have a material adverse effect on the Building
System only after first obtaining the prior written consent of
LESSOR, which consent shall not be unreasonably withheld,
conditioned, delayed or denied. All such approved additions,
alterations or improvements shall be in accordance to plans and
specifications prepared by a duly qualified architect or engineer
who shall submit such plans and specifications to LESSOR for
written approval, not to be unreasonably withheld, conditioned,
delayed or denied. All alterations, improvements and additions to
the Premises shall be made in accordance with all applicable laws
and shall at once when made or installed be deemed to have attached
to the freehold and to have become the property of LESSOR and shall
remain for the benefit of LESSOR at the end of the Term, or earlier
termination of this Lease. Any equipment installed by LESSEE during
the Term shall at LESSEE’s election be removed at the
expiration or termination of this Lease or shall remain at the
Premises. In the event of making such alterations, improvements
and/or additions as herein provided, LESSEE shall indemnify and
save harmless LESSOR from any and all expenses, liens, claims or
damages to either persons or Premises arising out of, or resulting
from the undertaking or making of said alterations, additions and
improvements. Notwithstanding anything to the contrary set forth
herein, LESSEE shall have the right, without LESSOR’s consent
or approval, to make non-structural alterations of less than
$50,000 in any instance.
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ARTICLE
VIII
Taxes
8.1 Payment of Taxes .
LESSOR shall pay all real property taxes applicable to the
Premises. LESSEE shall pay LESSOR in advance the monthly estimated
real property tax amount together with all applicable rental taxes
due thereon, within ten (10) days after receipt of an invoice
from LESSOR setting forth LESSOR’s estimate of such amount.
Within ninety (90) days following the end of each calendar
year during the Term or as soon thereafter as is reasonably
possible, LESSOR shall furnish LESSEE with a statement of all real
property taxes relating to the Premises for the previous calendar
year and the payments made by LESSEE during such calendar year. If
LESSEE’s aggregate estimated monthly payments actually paid
to LESSOR for the calendar year are greater than the real property
taxes relating to the Premises for such calendar year, LESSOR shall
promptly pay the excess to LESSEE or apply the excess to any past
due amounts owing from LESSEE to LESSOR; if the payments made are
less than the real property taxes relating to the Premises for such
calendar year, LESSEE shall pay the difference to LESSOR within
thirty (30) days of its receipt of such statement. If the Term
does not commence or concurrently with the commencement or
expiration of the tax year, LESSEE’s liability for real
property taxes for such partial year shall be prorated on an annual
basis. LESSOR’s and LESSEE’s obligations under this
Section 8.1 shall survive the expiration or termination of
this Lease.
8.2 Definition of Real
Property Tax . As used herein, the term “real property
tax” shall include any form of fee or tax imposed by any
authority having the direct or indirect power to tax or assess,
including any city, county, state or federal government, any
school, agricultural, lighting, drainage or other improvement
district thereof, or any private owners association created by
covenants, conditions and restrictions binding on the Premises, as
against any legal or equitable interest of LESSOR in the Premises,
or as against LESSOR’s business of leasing the Premises. The
term “real property tax” shall also include any tax,
fee, levy, assessment or charge, or any increase therein, imposed
by reason of events occurring during the Term, including, but not
limited to, a change in the ownership of the Premises.
Notwithstanding the foregoing, “real property tax”
shall not include: (i) all excess profits taxes, franchise
taxes, succession taxes, estate taxes, capital stock taxes,
inheritance taxes, gift taxes, mortgage taxes, federal and state
income taxes or any other taxes imposed upon or measured by
LESSOR’s gross income or profits unless the same is
specifically imposed in lieu of real estate taxes or ad valorem
taxes; (ii) penalties for late payments; (iii) special
assessments; and (iv) transfer taxes imposed upon any transfer
of the Premises or any interest therein. Tax refunds shall be
refunded to LESSEE in the calendar year they are received by
LESSOR.
8.3 Personal Property
Taxes .
(a) LESSEE shall pay prior to
delinquency all taxes assessed against and levied upon
LESSEE’s trade fixtures, furnishings, Contributed Machinery
and Equipment and all other personal property of LESSEE contained
in the Premises or otherwise owned or operated by LESSEE at the
Premises. When possible, LESSEE shall cause said trade fixtures,
furnishings, Contributed Machinery and Equipment and all other
personal property to be assessed and billed separately from the
real property of LESSOR.
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(b) If any of LESSEE’s
personal property shall be assessed and billed with LESSOR’s
real property, LESSEE shall pay LESSOR the taxes attributable to
LESSEE within thirty (30) days after receipt of a written
statement setting forth the taxes applicable to LESSEE’s
property.
ARTICLE IX
Indemnification;
Insurance
9.1 Indemnity . LESSEE
shall indemnify, defend and hold harmless LESSOR (solely with
respect to LESSOR’s position as the owner of the Premises and
the landlord under this Lease) from and against any and all claims
arising from LESSEE’s use of the Premises, or from the
conduct of LESSEE’s business or from any activity, work or
things done, permitted or suffered by LESSEE in or about the
Premises or elsewhere, and shall further indemnify, defend and hold
harmless LESSOR (solely with respect to LESSOR’s position as
the owner of the Premises and the landlord under this Lease) from
and against any and all claims arising from any breach or default
in the performance of any obligation on LESSEE’s part to be
performed under the terms of this Lease or arising from any
negligence of LESSEE, or any of LESSEE’s agents, contractors
or employees, and from and against all costs, attorneys’
fees, expenses and liabilities incurred in the defense of any such
claim or any action or proceeding brought thereon; provided,
however, LESSEE shall not indemnify, defend or hold harmless LESSOR
from and against any claim, liability, expense, lawsuit, cost, loss
or other damage, including reasonable attorneys’ fees, which
arise from or are caused by or in anyway connected to the
negligence or willful misconduct of LESSOR, its employees, agents,
contractors, guests or invitees. Subject to Section 9.2 below,
LESSOR shall indemnify, defend and hold harmless LESSEE (solely
with respect to LESSEE’s position as the tenant under this
Lease) from and against any and all claims arising from
LESSOR’s use of or entry onto the Premises, and shall further
indemnify, defend and hold harmless LESSEE (solely with respect to
LESSEE’s position as the tenant under this Lease) from and
against any and all claims arising from any breach or default in
the performance of any obligation on LESSOR’s part to be
performed under the terms of this Lease or arising from any gross
negligence or willful misconduct of LESSOR, or any of
LESSOR’s agents, contractors or employees and from and
against all costs, attorneys’ fees, expenses and liabilities
incurred in the defense of any such claim or any action or
proceeding brought thereon; provided, however, LESSOR shall not
indemnify, defend or hold harmless LESSEE from and against any
claim, liability, expense, lawsuit, cost, loss or other damage,
including reasonable attorneys’ fees, which arise from or are
caused by or in anyway connected to the negligence or willful
misconduct of LESSEE, its employees, tenants, agents, guests or
invitees.
9.2 Exemption of LESSOR
From Liability .
(a) Except to the extent
caused by the gross negligence or willful misconduct of LESSOR, its
employees, agents, guests or invitees, LESSEE hereby agrees that
LESSOR and its agents shall not be liable for injury to
LESSEE’s business or any loss of income therefrom or for
damage to the goods, wares, merchandise or other property of
LESSEE, LESSEE’s employees, invitees, customers or any other
person in or about the Premises, nor shall LESSOR be liable for
injury to the person of LESSEE, LESSEE’s employees, agents or
contractors, whether such damage or injury is caused by or results
from fire, steam, electricity,
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gas, water or rain, or from
the breakage, leakage, obstruction, or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning, light
fixtures or from any other cause whether said damage or injury
results from conditions arising upon the Premises or upon other
portions of the building of which the Premises are a part, or from
other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is
inaccessible to LESSEE. LESSOR shall not be liable for any damages
arising from any act or neglect of any other lessee, if any, of the
building in which the Premises are located.
(b) No directors, officers,
employees or agents of LESSOR or individual, member of a joint
venture, tenancy in common, firm or partnership, general or
limited, which may be LESSOR or any successor in interest, shall be
subject to personal liability with respect to any of the covenants
or conditions of this Lease. LESSEE will not seek recourse against
the directors, officers, employees or agents of LESSOR or an
individual, member of a joint venture, tenancy in common, firm or
partnership, general or limited, which may be LESSOR or any
successor-in-interest or any of their personal assets for such
satisfaction. It is mutually agreed that this clause is and shall
be considered an integral part of this Lease.
(c) No directors, officers,
employees or agents of LESSEE or individual, member of a joint
venture, tenancy in common, firm or partnership, general or
limited, which may be LESSEE or any successor in interest, shall be
subject to personal liability with respect to any of the covenants
or conditions of this Lease. LESSOR will not seek recourse against
the directors, officers, employees or agents of LESSEE or an
individual, member of a joint venture, tenancy in common, firm or
partnership, general or limited, which may be LESSEE or any
successor-in-interest or any of their personal assets for such
satisfaction. It is mutually agreed that this clause is and shall
be considered an integral part of this Lease.
(d) Remedies and limitations
thereon set forth in this Lease shall only apply in this
Lease.
9.3 Insurance
.
(a) LESSOR shall obtain and
maintain “all risk” property and casualty insurance on
the Property, including the Premises. LESSEE shall pay the cost of
the premiums for said insurance pertaining to the Premises or, if
LESSOR consents, obtain Property & General Liability
coverage of its own on the Premises, with LESSOR as loss payee on
the Property and as additional named insured on the general
liability policy. LESSEE shall carry and maintain at all times
throughout the Term, at its expense, insurance with terms, coverage
and companies satisfactory to LESSOR:
(i) commercial
(comprehensive) liability insurance, with coverage against assumed
or contractual liability under this Lease, with respect to
liability arising out of ownership, use, occupancy or maintenance
of the Premises and all areas appurtenant thereto, to afford
protection with respect to personal injury, loss of life and
property damage, of not less than $2,000,000 per occurrence
combined single limit subject to a $2,000,000 general
aggregate;
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(ii) “all risk”
property insurance, including boiler and machinery comprehensive
form, if applicable, covering damage to or loss of any of
LESSEE’s personal property, fixtures, equipment and
alterations, including electronic data processing equipment (and
coverage for the full replacement cost thereof including business
interruption of LESSEE), together with, if the property of
LESSEE’s invitees is to be kept in the Premises,
warehouser’s legal liability or bailee customers insurance
for the full replacement cost of the property belonging to invitees
and located in the Premises; and
(iii) worker’s
compensation insurance and employer’s liability insurance in
amounts required by applicable law or statute covering
all
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