LEASE OF PREMISES

EXHIBIT 10.18

THIS LEASE is made this 18th day of May , 2005, between 300 CRA LLC, having an office at 2 Research Way, Princeton, NJ 08540, hereinafter called “Landlord”, and Pharmasset, Inc. with an office located at 303A College Road East, Princeton, NJ 08540 hereinafter called “Tenant”.

LEASE OF PREMISES

Landlord hereby leases to Tenant and Tenant hereby hires from Landlord, subject to all of the terms and conditions hereinafter set forth, those certain premises including use of all furniture, fixtures and equipment existing within the premises on the date hereof (the “Premises”) as set forth in Items 1 of the Basic Lease Provisions and as shown in the drawings attached hereto as Exhibit A being located on the floor indicated in that certain office building (the “Building”) and on that certain lot (the “Parcel”) together hereinafter referred to as (the “Project”) being located at 2 Research Way, Township of Plainsboro, County of Middlesex, State of New Jersey. Landlord shall deliver the Premises to Tenant on the Commencement Date (as defined below) with walls ready to paint, base floors, ceiling, lighting, standard electrical, plumbing, sprinkler, life and safety and HVAC systems provided Tenant accepts and occupies the Premises in their as-is condition.

BASIC LEASE PROVISIONS

 

 

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14.	Addresses for Notices:

 

 

15.	All payments under this Lease shall be payable to:

300 CRA LLC

And mail to:

P.O. Box 6030

Bellmawr, NJ 08099

or such other payee or address as Landlord may designate.

IN WITNESS WHEREOF , the parties hereto have executed this Lease, consisting of the foregoing and Paragraphs 1 through 50 which follow, together with Exhibits A through D, inclusive, incorporated herein by this reference as of the date first above written.

 

 

 

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STATE OF NEW YORK :

                                                     :ss

COUNTY OF NEW YORK :

BE IT REMEMBERED , that on this 18th day of May , 2005, before me, the subscriber, a Notary Public of the State of New York , personally appeared John Zirinsky, President of 300 CRA Manager LLC the Member of 300 CRA LLC, who, I am satisfied, is the person who has signed the within instrument, and he did acknowledge that he signed, sealed and delivered the same as such officer aforesaid; and that the within instrument is the voluntary act and deed of said limited liability company.

 

STATE OF GEORGIA :

                                                     :ss

COUNTY OF DEKALB :

BE IT REMEMBERED , that on this 16th day of May, 2005, before me, the subscriber, a Notary Public of the State of Georgia, personally appeared P. Schaefer Price, President and CEO of Pharmasset, Inc., who, I am satisfied, is the person who has signed the within instrument, and he did acknowledge that he signed, sealed and delivered the same as such officer aforesaid; and that the within instrument is the voluntary act and deed of said entity made by virtue of authority from its Board of Directors or its Managers, or members, or several partners as appropriate.

 

 

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TABLE OF CONTENTS

 

 

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COMMENCEMENT DATE AND TERM

PARAGRAPH 1

(A) The term of this Lease (including any exercised renewal options, the “Term”) shall commence on the Commencement Date (defined as the date five (5) days after the signing of this Lease by both parties) and terminate on the Expiration Date (five (5) years after the Commencement Date) unless otherwise extended or terminated pursuant to the terms hereof.

(B) Notwithstanding the Commencement Date, if for any reason Landlord cannot deliver possession of the Premises to Tenant on said Commencement Date, then Landlord shall not be subject to any liability therefor; nor shall such failure affect the validity of this Lease or the obligations of Tenant hereunder, provided that Tenant shall not be obligated to pay Rent (except a sum equal to the first Basic Monthly Rental Installment) until possession of the Premises is rendered to Tenant. If Landlord is unable to deliver the Premises in their current “as-is” condition within five (5) days of the signing of this Lease by both parties, Tenant may elect to terminate this Lease.

BASIC ANNUAL RENT

PARAGRAPH 2

(A) Tenant agrees to pay as Basic Annual Rent for the Premises the initial sum shown in Item 6 of the Basic Lease Provisions. Except for months when this Lease is not in effect for the full calendar month (partial month), the Basic Annual Rent shall be payable in U.S. currency in equal monthly installments, hereinafter sometimes referred to as “Basic Monthly Rental Installments”, in advance without notice, deduction, demand, offset, or abatement. Basic Monthly Rental Installments shall be in the initial sum shown in Item 7 of the Basic Lease Provisions. Payment of Basic Annual Rent shall commence on the Commencement Date (except that the first month’s rent shall be due upon the signing of this Lease), and continue on the first day of each calendar month thereafter except that Basic Rent for any partial month during the Term hereof shall be prorated in the proportion that the number of days this lease is in effect during such partial month bears to the number of days in that calendar month, and shall be paid at the commencement of such partial month, and except further that the Basic Monthly Rental Installment for the first full calendar month of this Lease for which an installment of Basic Annual Rent is due will be paid on execution hereof.

(B) In addition to the Basic Annual Rent stipulated herein, Tenant covenants and agrees to pay Landlord without offset or deduction as additional Rent, hereinafter “Additional Rent”, all other sums and charges which are to be paid by Tenant pursuant to the terms of this Lease. Except as otherwise provided in this Lease, Additional Rent shall be due and payable on the first day of the month following the date on which Tenant is given notice that Additional Rent is due, but in no event less than ten (10) business days after the date Tenant receives notice that such Additional Rent is due. “Rent” means Basic Annual Rent and Additional Rent.

 

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ADDITIONAL RENT

PARAGRAPH 3

(A) For each calendar year during the Term of this Lease, Tenant agrees to pay as items of Additional Rent for the Premises, Tenant’s “Percentage Share” (being the percentage indicated in Item 3 of Basic Lease Provisions) of all increases in “Project Operating Expenses” and “Project Property Taxes” (as hereinafter defined) incurred by Landlord in the operation of the Building or Project over the Base Project Operating Expenses and Base Project Property Taxes as stipulated in Items 4 and 5 respectively in the Basic Lease Provisions.

(B) The items of Additional Rent contemplated under subparagraph 3(A) shall be calculated in accordance with the following procedures:

 

(i)

Each December during the Term hereof or as soon thereafter as practical, Landlord shall give Tenant written notice of Landlord’s estimate of any amounts payable under subparagraph 3(A) above for the ensuing calendar year. On or before the first day of each month during the ensuing calendar year, Tenant shall pay Landlord without further notice 1/12 (One-twelfth) of such estimated amounts, provided that if such notice is not given in December, Tenant shall continue to pay on the basis of the then applicable rental until the month after such notice is given. If at any time or times it appears to Landlord that the adjusted amounts payable under subparagraph 3(A) for the current calendar year will exceed its estimate, Landlord may, by written notice to Tenant, revise its estimate for such year. Subsequent payments by Tenant for such year shall be based upon such revised estimate.

 

(ii)

Within ninety (90) days after the close of each calendar year or as soon thereafter as is practical, Landlord shall deliver to Tenant a statement of the annual adjustment of those Additional Rent items made pursuant to subparagraph 3(A) for such calendar year. If on the basis of such statement Tenant owes an amount that is less than the estimated payments for such calendar year previously made by Tenant, Landlord shall refund or credit such excess to Tenant within thirty (30) days after delivery of the statement. If on the basis of such statement Tenant owes an amount that is more than the estimated payment for such calendar year previously made by Tenant, Tenant shall pay the deficiency to Landlord within thirty (30) days after delivery of the statement.

 

(iii)

The Additional Rent due under the terms and conditions of this Paragraph 3 shall survive termination of this Lease, shall be payable by Tenant without any setoff or deduction, and shall be computed by Landlord on a prorated basis for any period less than a full calendar year; provided, however, in no event shall Tenant be responsible for payment of any Additional Rent for which Tenant is billed more than one hundred eighty (180) days following the end of any calendar year or the Term.

 

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(iv)

Anything to the contrary contained in this Paragraph 3 notwithstanding, if the average occupancy of the Building is less than ninety-five (95%) percent during the Base Year hereinafter defined, then Landlord shall make a determination (“Landlord’s Determination”) which shall be used equally among all tenants of the Building) of what the Project Operating Expenses for such year would have been if during the entire year the average tenant occupancy of the Building were ninety-five (95%) percent. Landlord’s Determination shall be binding and conclusive upon Tenant and shall for all purposes of this Lease be deemed to be the Project Operating Expenses for the Base Year. Landlord shall notify Tenant of Landlord’s Determination within ninety (90) days following the last day of the Base Year. Thereafter, if for any subsequent calendar year beginning after the Commencement Date the average tenant occupancy of the Building is below ninety-five (95%) percent, the Project Operating Expenses for any such year shall be adjusted by Landlord to the amount that such Project Operating Expenses would have been if the average tenant occupancy during that year had been ninety-five (95%) percent. The term “Base Year” means the twelve (12) month period during which Base Project Operating expenses are calculated.

(C) Definitions:

 

(i)

The term “Project Operating Expenses” as used herein shall (except as noted in Paragraph 3(C)(iii), include all costs of operation and maintenance of the Project for each calendar year as determined by generally accepted accounting principles consistently applied. Project Operating Expenses shall, by way of illustration but not limitation, include water and sewer charges, insurance premiums, license, permit, and inspection fees, fuel, heat, light, power (except for electricity charged directly to the Premises and other rental space on the Project; steam, janitorial and security services, labor, salaries for owners’ on-site personnel, air conditioning, landscaping maintenance and repair of the Building and driveways, parking structures and surface parking areas, ice and snow removal, supplies, materials, equipment, tools, property management fees, office costs, and the cost incurred in contesting the validity of Project Property Taxes. Project Operating Expenses shall also include but not be limited to the cost of any capital improvements made to the Building by Landlord that reduce Project Operating Expenses or that are required under any governmental law or regulation not previously applicable to the Building or not in effect at the time it was constructed. Such capital cost shall be amortized over such reasonable periods as Landlord shall determine with a return on capital at the then current prime interest rate of the largest national bank in New York City or at such higher rate as may have been paid by Landlord on the funds borrowed for the purpose of purchasing such capital improvements. In no event shall Project Operating Expenses ever be less than Base Project Operating Expenses stipulated in Item 4 of Basic Lease Provisions.

 

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(ii)

The term “Project Property Taxes” as used herein shall include all real estate taxes or personal property taxes and other taxes, charges and assessments, unforeseen as well as foreseen, which are levied with respect to the Project and any improvements, fixtures and equipment and other property of Landlord, real or personal, located in the Building or on the Project and used in connection with the operation of the Project for each calendar year and shall include any tax, surcharge or assessment which shall be levied in addition to or in lieu of real estate or personal property taxes, other than taxes covered in Paragraph 11, and shall also include any rental, excise, sales, transaction, privilege, or other tax or levy, however, denominated, imposed upon or measured by the rental reserved hereunder or on Landlord’s business of leasing the Premises and Project, excepting only net income taxes. In no event shall Project Property Taxes ever be less than Base Project Property taxes stipulated in Item 5 of Basic Lease Provisions.

 

(iii)

(Notwithstanding anything to the contrary, Project Operating Expenses shall not include: (a) leasing commissions, attorneys’ fees, costs and disbursements and other expenses incurred in connection with leasing, renovating or improving space for tenants or prospective tenants of the Project; (b) costs and expenses incurred by Landlord in the discharge of its obligations pursuant to the Work Letter attached hereto as Exhibit B-1; (c) costs (including permit, license and inspection fees) incurred in renovating or otherwise improving or decorating, painting or redecorating space for tenants or vacant space; (d) Landlord’s costs of any services sold to tenants for which Landlord is entitled to be reimbursed by such tenants as an additional charge or rental over and above the base annual rent, energy costs and Project Operating Expenses payable under the lease with such tenant or other occupant; (e) depreciation; (f) amortization on the Project and its equipment; (g) costs incurred due to violation by Landlord of any of the terms and conditions of this Lease or any other lease or agreement relating to the Project; (h) interest on debt or principal/amortization payments on any mortgages or deeds of trust or rental payments on any ground lease of the Project including the land of which the Building is a part, or any other debt for borrowed money; (i) all items and services for which Tenant reimburses Landlord outside of Project Operating Expenses by insurance proceeds or otherwise except for Tenant’s Percentage Share of Project Operating Expenses as set forth herein, or pays third persons or which Landlord provides selectively to one or more tenants or occupants of the Project (other than Tenant) without reimbursement; (j) cost of tenant concessions incurred by Landlord in securing new tenants of the Project or retaining existing tenants including advertising and promotional expenditures; (k) costs of repairs or replacements incurred by reason of fire, windstorm or other insured casualty or condemnation (except for actual out of pocket

 

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expenses such as insurance deductibles); (l) repairs resulting from any defect in the original design or construction of the Project or the Project’s systems, machinery or equipment; (m) the cost of installing, operating and maintaining any specialty service, such as an observatory, broadcasting facilities, luncheon club, daycare center; (n) general corporate overhead and administrative expenses of Landlord (including salaries, fringe benefits and other compensation paid to partners, officers and executives of Landlord) not incurred in the operation of the Project; (o) the cost of any work or service performed for any tenant of the Project to a materially greater extent or in a materially more favorable manner than that furnished generally to the tenants and other occupants (including Tenant) of the Project; and, without limiting the generality of the foregoing, this exclusion shall be deemed to include the cost of HVAC provided in excess of that described in this Lease; (p) the cost of any work or service performed for any facility other than the Project; (q) the cost of capital improvements and any additions, repairs, alterations, additional, changes, replacements and other items which under generally accepted accounting principles are not properly classified as an expense or which are made in order to prepare for a new tenant’s occupancy; (r) insurance premiums and fees to the extent Landlord may be reimbursed therefore; (s) rental and other charges under any ground lease or other underlying lease; (t) any costs included in Operating Expenses representing an amount paid to any person or entity related to Landlord which is in excess of the amount which would have been paid in the absence of such relationship; (u) equipment rentals and other related expenses incurred such as air conditioning systems or other building equipment ordinarily considered to be of a capital nature; (v) any expense for repairs or maintenance which was covered by warranties and service contracts in existence on the Commencement Date; (w) franchise, income, capital levy, capital stock, succession, transfer, gift, corporate, estate or inheritance taxes imposed upon Landlord; (x) legal and auditing fees which are for the benefit of Landlord such as collecting delinquent rents, preparing tax returns and other financial statements, and audits other than those incurred in connection with the preparation of reports required; (y) the wages of any employee for services not related directly to the management, maintenance, operation and repair of the Project; (z) charitable and political contributions; (aa) costs of removal, abatement or treatment of any toxic or hazardous substance in or under the Project or the land associated therewith; (ss) overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for services or materials in the Project to the extent the same exceeds the market costs of such services or materials rendered by comparable unaffiliated third parties on a competitive basis; (cc) costs of purchasing paintings, sculptures or other art work for display at the Project; (dd) costs incurred in connection with the sale, financing, refinancing, mortgaging, selling or change of ownership of Landlord, the Project or the land associated therewith; (ee) moving expense costs of tenants of the Project; (ff) management fees in excess of three

 

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percent (4%) of the aggregate of all gross receipts from income or rentals derived from the Project; (gg) late charges, fines, penalties and interest incurred by Landlord for its failure to pay timely any debt installment required to be paid by Landlord in connection with the Project (except to the extent a result of Tenant not paying timely Tenant’s Percentage Share of Project Operating Expense pursuant to this Lease); (hh) bad debt loss, rent loss or reserves of any kind for repairs, maintenance or replacement; (ii) any cost or expense, fines, penalties or interest resulting from the negligence or willful misconduct of Landlord or its employees, agents, officers or contractors; (jj) attorney’s fees and other legal expenses incurred in connection with negotiations or disputes of tenants or occupants of the Project; and (kk) any cost or expense, fines, penalties or interest incurred as a result of violation by Landlord of any applicable law.

(D) Unless Tenant takes written exception to any item in the statement referred to in subparagraph 3(B) (ii) within thirty (30) days after the furnishing of the statement, such statement shall be considered as final and accepted by Tenant. Any amount due Landlord as shown on any such statement shall be paid by Tenant within thirty (30) days after it is furnished to Tenant. If Tenant shall dispute in writing any specific item, or items in the statement of Project Operating Expenses and Project Property Taxes, and such dispute is not resolved between Landlord and Tenant within sixty (60) days after the date the statement was rendered, either party may, during the thirty (30) days next following the expiration of the sixty (60) days, refer such disputed item or items to any independent certified public accountant mutually selected by Landlord and Tenant, for a determination. Pending the determination of any dispute with respect to the statement submitted by Landlord, Tenant shall pay when due the sums shown as due on such statement. If it shall be determined that any portion of such sums were not properly chargeable to Tenant, then Landlord shall credit or refund the appropriate sum to Tenant. The costs for the accountant’s review and determination will be borne by Landlord if it is determined that Landlord’s original calculation of both Project Property Taxes and Project Operating Expenses was in error by more than five (5%) percent, otherwise such costs will be borne by Tenant.

(E) As one of the items of Additional Rent, payable monthly, Tenant shall also pay to Landlord the full cost of Tenant’s consumption of electricity for the Premises (such electricity consumption is sub-metered by an existing sub-meter).

(F) The Basic Annual Rent plus Additional Rent are sometimes collectively referred to as “Rent”.

SECURITY DEPOSIT

PARAGRAPH 4

Tenant has paid or agrees to pay Landlord such sum(s) as are set forth in Item 10 of the Basic Lease Provisions as security for the performance of the terms hereof by Tenant. Unless required by law, Landlord shall not be required to keep said Security Deposit separate from its general funds and

 

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Tenant shall not be entitled to receive interest thereon. In no instance shall the amount of such Security Deposit be considered a measure of liquidated damages. If Tenant defaults with respect to any provision of this Lease, including but not limited to, the provisions relating to the payment of Rent or the surrender of the Premises in accordance with the terms hereof upon the termination of the Lease, Landlord may, but shall not be required to use, apply or retain all or any part of this Security Deposit for the payment of any Rent or any other sum in Default, or for the payment of any other amount which Landlord may spend or become obligated to spend by reason of Tenant’s Default or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s Default including, without limitation, costs and attorneys’ fees incurred by Landlord. If any portion of said deposit is so used or applied, Tenant shall, upon demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount and Tenant’s failure to do so shall constitute a Default hereunder by Tenant. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the Security Deposit, or any balance thereof, shall be returned to Tenant (or at Landlord’s option, to the permitted assignee of Tenant’s interest hereunder) within thirty (30) days following the expiration of the Lease Term and after Tenant has vacated and delivered possession of the Premises to Landlord in accordance with the provisions of this Lease. In the event of bankruptcy or other debtor-creditor proceeding against Tenant, such Security Deposit shall be deemed to have been applied first to the payment of Rent and other charges due Landlord for all periods prior to filing of such proceedings.

REPAIRS

PARAGRAPH 5

(A) Subject to Paragraph 5(B), Landlord shall cause all necessary repairs to be made to the exterior doors, windows, corridors and other common areas of the Building and the Project, and all floors, structural elements, roofs and building systems (including plumbing and electrical systems) in the office portion of the Premises, it being understood that Landlord shall also be responsible to repair the structural elements of the Building for the lab portion of the Premises including the floors, roof and base Building systems; and Landlord shall cause the Building and the Project to be kept in a safe, clean and neat condition and shall use reasonable efforts to keep all equipment used in common with other tenants (such as elevators, plumbing, heating, air conditioning and similar equipment) in good condition and repair. Although Landlord will make direct payments for these repairs, Tenant’s obligation to pay its share of increase in Project Operating Expenses (to the extent set forth in Paragraph 3) which will supply funds to Landlord to pay for certain of these repairs will not be diminished. Tenant shall be responsible for and pay for the repair and maintenance of all HVAC equipment servicing the laboratory portion of the Premises. Except as provided in Paragraphs 13 & 14 hereof, there shall be no abatement of Rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of any repairs, alterations or improvements in or to any portion of the Building or the Project or in or to fixtures, appurtenances and equipment therein or thereon.

(B) While Tenant may repair its own non-Building Standard items such as its own laboratory equipment, Tenant agrees that all repairs to the Premises not required above to be made by

 

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Landlord and all decorating, remodeling, alteration and painting required by Tenant during the Term of this Lease, if approved by Landlord, shall be made by Landlord at the sole cost and expense of Tenant. Tenant will pay for any repairs to the Premises, the Building or the Project made necessary by any negligence or willful acts or omissions of Tenant or its assignees, subtenants, employees or their respective agents or other persons permitted in the Building or on the Project by Tenant, or any of them, and Tenant will maintain the Premises, and, upon termination of this Lease, will leave the Premises in a safe, clean, neat and sanitary condition. Notwithstanding the foregoing, Tenant shall be permitted to decorate, remodel and paint the Premises without the necessity of obtaining Landlord’s consent if such decorating, remodeling or painting will not materially negatively affect the structural elements or systems of the Building.

IMPROVEMENTS AND ALTERATIONS

PARAGRAPH 6

(A) Landlord’s sole construction obligation under this Lease is as set forth in the Work Letter attached hereto as Exhibit B-1 and incorporated herein by reference.

(B) Landlord shall have the right at any time to change the arrangement and/or location of entrances or passageways, doors and doorways, and corridors, elevators, stairs, toilets, or other public parts of the Building or Project, and upon giving Tenant reasonable notice thereof, to change the name, number or designation by which the Building or the Project is commonly known.

(C) The alterations, additions or improvements to or of the Premises or any part thereof referred to in this subparagraph (6)(C) do not include the initial tenant improvements. The initial improvements made to the Premises by either Landlord or Tenant shall remain at the end of the Term of this Lease provided that the laboratories are fully operable and ready for use. In the event that the laboratories are not in a ready to use condition, then Tenant shall remove and demo the entire laboratories and cap all utilities in compliance with all codes. Tenant shall not make or cause to be made any alterations, additions or improvements to or of the Premises or any part thereof, or attach any fixtures or equipment thereto, without first obtaining Landlord’s prior written consent (Landlord agrees to use reasonable judgment in its consideration of Tenant’s request for such consent). Any such alterations, additions or improvements to the Premises consented to by Landlord shall at Landlord’s option be made by Landlord for Tenant’s account and Tenant shall pay Landlord for the costs thereof (including reasonable charge for Landlord’s overhead) within ten (10) days after receipt of Landlord’s statement. All such alterations, additions and improvements shall (without compensation to Tenant) at Landlord’s option become Landlord’s property (except movable furniture and trade fixtures) and at the end of the Term hereof, shall remain on the Premises unless Landlord elects by notice to Tenant to have Tenant remove same, in which event Tenant shall promptly restore the Premises to their condition prior to the installation of (i) such alterations, additions and improvements, and (ii) equipment of any nature, or leave the Premises in a condition that complies with all state and local codes. Further, Landlord may elect by notice to Tenant to have Tenant remove not only Tenant’s alterations, additions and improvements, but also any items of Tenant’s equipment including but not limited to movable furniture, trade fixtures, office equipment and any cafeteria equipment. Any such equipment not

 

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removed from the Premises at the end of the Term hereof shall at the option of the Landlord become Landlord’s property without payment of any consideration therefor. The removal of any such equipment and any alterations, additions and improvements which Landlord elects Tenant to remove will be accomplished by Tenant prior to the expiration of the Term of this Lease and if not done, Tenant will be deemed a tenant at sufferance pursuant to Paragraph 26. If Tenant does not perform such removal, Landlord may remove, destroy, store or otherwise dispose of such alterations, additions, improvements and equipment, whether or not Landlord takes title thereto. In addition, Tenant will pay (i) all Landlord’s costs of removing, disposing or destroying any such alterations, additions, improvements and equipment whether or not Landlord takes title thereto, that Tenant is supposed to remove, which Tenant does not remove, and (ii) Landlord’s cost to restore the Premises to their condition prior to the installation of any alterations, additions, improvements and equipment of any nature referred to in subdivision (i) of this sentence. Such costs will include Landlord’s fees and expenses in collecting such costs and interest on such costs at the rate of fourteen (14%) percent per annum. Tenant will pay to Landlord Landlord’s costs of storage of any equipment which Tenant is supposed to remove pursuant to this paragraph that Tenant does not remove. Further, Landlord reserves and shall have right of access to the Premises at any time within ninety (90) days prior to any projected termination of this Lease to inspect the Premises to determine alterations, additions, improvements and equipment Landlord desires Tenant to remove. This right of access is in addition to Landlord’s right of access set forth in Paragraph 16 hereof. Notwithstanding anything to the contrary and except as set forth in Paragraph 6(E), Landlord, at Landlord’s sole expense, shall be responsible for the compliance of the Building and Premises with all requirements of an regulations issued under the Americans With Disabilities Act of 1990, 42 U.S.C. §§12101-12213, or other applicable law, statute, ordinance, order, rule or regulation relating to access to the Property by disabled individuals (collectively, the “Disability Acts”). Tenant shall comply with the Disability Acts solely with respect to any alterations to the Premises made by Tenant and any equipment installed within the Premises by Tenant.

LIENS

PARAGRAPH 7

Tenant shall keep the Premises free from any liens arising out of any work performed, materials furnished, or obligations incurred by or for Tenant. In the event that Tenant shall not, within ten (10) days following the imposition of any such lien, cause the same to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other remedies provided herein or by law, the right but not the obligation, to cause the same to be released by such means as it shall deem proper, including payment of or defense against the claim giving rise to such lien. All sums paid by Landlord and all expenses incurred by it in connection therewith, shall create automatically an obligation of Tenant to pay an equivalent amount as Additional Rent, which Additional Rent shall be payable by Tenant on Landlord’s demand with interest at the maximum rate per annum permitted by law until paid. For purposes of this Paragraph 7, “liens” shall include, but not be limited to, lien claims filed under the “Construction Lien Law”.

 

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USE OF PREMISES

PARAGRAPH 8

(A) Tenant shall use the Premises only as set forth in Item 15 of the Basic Lease Provisions and shall not use or permit the Premises to be used for any other purpose without the prior written consent of Landlord. Tenant shall comply with all laws and covenants and restrictions of record affecting use of the Premises, and shall not use or occupy the Premises in violation of law or of the certificate of occupancy issued for the Building, and shall immediately discontinue any use of the Premises which is declared by any governmental authority having jurisdiction to be a violation of law or of said certificate of occupancy. Tenant shall comply with any direction of any governmental authority having jurisdiction which shall, by reason of the nature of Tenant’s use or occupancy of the Premises impose any duty upon Tenant or Landlord with respect to the Premises or with respect to the use or occupancy thereof. Tenant shall not do or permit to be done anything which will invalidate or increase the cost of any fire, extended coverage or any other insurance policy covering the Building, the Project and/or property located therein and shall comply with all rules, orders, regulations and requirements of the appropriate fire rating bureau or any other organization performing a similar function. Tenant shall within thirty (30) days after written notice reimburse Landlord for the full amount of any additional premium charged for such policy by reason of Tenant’s failure to comply with the provisions of this paragraph. Such reimbursement shall not be Landlord’s exclusive remedy. Tenant shall not in any way obstruct or interfere with the rights of other tenants or occupants of the Building or the Project or injure or annoy them, or use or allow the Premises to be used for any improper, immoral, unlawful, or objectionable purpose, nor shall Tenant cause, maintain, or permit any nuisance in, on, or about the Premises. Tenant shall not commit or suffer to be committed any waste in or upon the Premises.

(B) Tenant may use, store and generate on the Premises such types of materials in such typical amounts as are reasonably and customarily used, stored or generated in the Tenant’s industry provided that such use, storage or generation is in compliance with all applicable federal, state or local statutes, regulations and ordinances. In no event shall Tenant dispose of, or permit the disposal of Hazardous Material on the Premises in any manner other than the manner permitted by applicable federal, state or local statutes, regulations and ordinances.

(C) Tenant shall notify Landlord promptly after Tenant has actual knowledge of: (i) any enforcement, cleanup or other regulatory action taken or threatened by any regulatory authority with respect to any Hazardous Material on or from the Premises or the migration thereof from or to other property, and (ii) any release, discharge, spill, leak, disposal or transportation of any Hazardous Material on or from the Premises in violation of this Paragraph, and any damage, loss or injury to persons, property or business resulting or claimed to have resulted therefrom.

(D) If any Hazardous Material is, or has been, released, discharged or disposed of, or permitted to spill or leak, in violation of the foregoing provisions, Tenant immediately and properly shall clean up and remove the Hazardous Materials from the Premises, the building and all other improvements now or thereafter located on the Premises and any other affected property and clean or replace any affected property (whether or not owned by Landlord) in compliance with applicable laws

 

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and then prevailing industry practices and standards, at Tenant’s expense (without limiting Landlord’s other remedies therefor).

(E) “Hazardous Materials” shall include, but not be limited to: (i) any flammable, explosive, toxic, radioactive, biological, corrosive or otherwise hazardous chemical, substance, liquid, gas, device, form of energy, material or waste or component thereof, (ii) petroleum-based products, diesel fuel, paints, solvents, lead, radioactive materials, cyanide, biohazards, infectious or medical waste and “sharps”, printing inks, acids, DDT, pesticides, ammonia compounds, and any other items that now or subsequently are found to have an adverse effect on the environment or the health and safety of persons or animals or the presence of which require investigation or remediation under any Law or governmental policy, and (iii) any item defined as a “hazardous substance”, “hazardous material”, “hazardous waste”, “regulated substance” or “toxic substance” under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601, et seq., Hazardous Materials Transportation Act, 49 U.S.C. 1801, et seq., Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et seq., Clean Water Act, 33 U.S.C. 1251, et seq., Safe Drinking Water Act, 14 U.S.C. 300f, et seq., Toxic Substances Control Act, 15 U.S.C. 2601, et seq., Atomic Energy Act of 1954, 42 U.S.C. 2014 et seq., New Jersey Environmental Rights Act, N.J.S.A. 2A:35A-1 et seq.; the Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq.; the New Jersey Air Pollution Control Act, N.J.S.A. 26:2C-1 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq.; the Comprehensive Environmental Response, Compensation and Recovery Act, 42 U1S.C. 1251 et seq.; the New Jersey Water Pollution Control Act, N.J.S.A. 58:10A-1 et seq.; and the Hazardous Substance Discharge: Reports and Notices Act, N.J.S.A. 13:1K-15 et seq., and any similar federal, state or local laws, and all regulations, guidelines, directives and other requirements thereunder, all as may be amended or supplemented from time to time.

(F) Tenant shall pay, prior to delinquency, any and all fees, taxes (including excise taxes), penalties and fines arising from or based on Tenant’s activities involving Hazardous Material on or about the Premises or the buildings or other improvements on the Premises, and shall not allow such obligations to become a lien or charge against the Premises, the building and all other improvements now or thereafter located on the Premises or against Landlord.

(G) Upon the expiration, or early termination of the Term of this Lease or the permanent assignment of this Lease, or subletting of the Premises, or cessation or transferring of Tenant’s operations at the Premises, or upon any action or non-action of Landlord including a sale of the Building in which the Premises are located, Tenant, if its operations are subject to the Environmental Clean-up Laws hereinafter defined, shall comply, at Tenant’s own expense, except as hereinafter stated, and with diligence, with the Industrial Site Recovery Act, 1993 N.J. Law’s Chapter 139, the regulations promulgated thereunder and any successor legislation and regulations (collectively “Environmental Clean-up Laws”). Tenant, if its operations are subject to the Environmental Clean-up Laws shall, at Tenant’s own expense, except as hereinafter stated, make prompt submissions to, provide all information to and comply with all requirements of the Industrial Site Evaluation Element (“ISEE”) or its successor of the New Jersey Department of Environmental Protection or its successor (“NJDEP”) arising out of the expiration, termination, assignment, subletting or transferring of Tenant’s operation at the Premises or arising out of any action or non-action of the Landlord including the sale of the Building in which the Premises are located, and Tenant will obtain from NJDEP either a) a Letter of Non-Applicability; b) Negative Declaration approval; c) No Further Action Letter; d) a Deminimus

 

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Quantity Exemption; e) authorization letter; or f) final approval of clean-up, thirty (30) days prior to the expiration or earlier termination of this Lease. If Landlord’s actions or non-actions including a sale of the Building in which the Premises are located necessitate compliance with Environmental Clean-up Laws, Landlord, at its expense, will make the submissions to NJDEP or any of its elements in order to obtain a statement of non-applicability, authorization letter, No Further Action Letter, Deminimus Quantity Exemption or negative declaration, but Tenant whether or not it is subject to Environmental Clean-up Laws, will cooperate with Landlord to aid in the making of Landlord’s submission by providing information and signing such documents as are necessary for Landlord to make its submission. Clean-up expenses or the making up of any clean-up plan, remedial action work plan, or remediation agreement or sampling plan or the taking of any corrective action to comply with Environmental Clean-up Laws and expenses therefore, will be borne by the party whose actions or failure to act necessitated the clean-up.

(H) Each party shall, within a reasonable time and receipt of same, furnish to the other party true and complete copies of all documents, submissions, correspondence and oral or written reports, directives, correspondence and oral or written communications by ISEE to the recipient party. Each party shall also promptly furnish to the other party true and complete copies of all sampling and test results and reports obtained and prepared from samples and tests taken at and around the Premises that is obtained by the party first obtaining the results and reports.

(I) Tenant shall immediately and diligently cause any and all Hazardous Materials it, its agents, employees, invitees or licensees released in, onto or under or disposed from the Premises during the Term of the Lease to be removed in compliance with all applicable laws, rules, ordinances and regulations and all conditions resulting therefrom to be remediated in compliance with all applicable laws, rules, ordinances and regulations and the Premises restored to their condition without said Hazardous Materials as quickly as possible.

(J) Tenant shall indemnify, defend and save harmless Landlord from all fines, suits, procedures, claims and actions of any kind arising out of or in any way connected with any release or discharge of Hazardous Materials at the Premises which occur during the Term of the Lease as a result of the acts of Tenant, its invitees or licensees; and from all fines, suits, procedures, claims and actions of any kind arising out of Tenant’s failure to provide all information to NJDEP or the Landlord as appropriate to make all submissions other than those Landlord is required to make as provided herein, and take all actions required by the NJDEP or any of its divisions.

(K) Landlord hereby agrees to defend, indemnify and hold Tenant harmless from and against any and all claims, lawsuits, liabilities, losses, damages and expenses (including, but not limited to, reasonable attorneys’ fees arising by reason of any of the aforesaid or any action against the Landlord under this indemnity) arising directly or indirectly from, out of or by reason of (i) any spills or discharges of toxic or hazardous waste or substances at the Premises or Project which occur prior to or during the Term of this Lease caused by Landlord, its employees, agents or invitees; or (ii) any pre-existing conditions including underground tanks, which are the subject of federal, state or local environmental laws.

 

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(L) Tenant’s obligations and liabilities under this Paragraph shall continue so long as Landlord remains responsible for any releases or discharges of Hazardous Materials at the Premises which occur as a result of the acts of Tenant, its invitees or licensees. Tenant’s failure to abide by the terms of this Paragraph shall be restrainable by injunction.

UTILITIES AND SERVICES

PARAGRAPH 9

(A) Provided that Tenant is not in Default hereunder, Landlord agrees to furnish or cause to be furnished to the Premises the following utilities and services, subject to the conditions and standards set forth below:

 

(i)

Tenant shall have twenty-four (24) hours per day, seven (7) days per week access to the Premises.

 

(ii)

Heating, air conditioning and ventilation systems are available for use by Tenant at the Premises. Consistent with subparagraph (E) of Paragraph 3, Tenant will pay to Landlord the full cost of Tenant’s consumption of electric including that associated with those systems. Should the Tenant use the office portion of the Premises, at anytime that is not between 8 A.M. to 6 P.M., on those Mondays through Fridays that are not legal holidays, Tenant will pay to Landlord on demand Fifty Dollars ($50.00) per hour for use of heating and air conditioning systems during those hours. This charge which is in addition to Tenant’s duty to pay for all consumption of electricity in the Premises is Fifty Dollars ($50.00) per hour. That charge is subject to increase for subsequent increases in the cost of labor and materials in connection with Tenant’s use of heating and air conditioning systems for the office portion of the Premises at times other than 8 A.M. to 6 P.M. on those Mondays through Fridays that are not legal holidays.

 

(iii)

Landlord shall furnish to the Premises at all times, subject to interruptions beyond Landlord’s control and subject to subparagraph (E), Paragraph 3 – Tenant’s obligation to pay to Landlord the full cost of Tenant’s consumption of electricity - electric current in accordance with the Building Standard (as described in Exhibit B-2 of this Lease) office lighting and receptacle. At no time shall Tenant’s use of electric current exceed the capacity of the feeders to the Building or the risers or wiring installation. Tenant shall not install or use or permit the installation or use of any mainframe computer equipment in the Premises without the prior written consent of Landlord. Should Tenant request permission from Landlord to use additional equipment that requires excessive current, Landlord agrees to be reasonable in its consideration of consent to such request while such request must be approved and certified as safe by a licensed engineer.

 

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(iv)

Landlord shall furnish the building with water for (x) drinking and lavatory purposes only at no additional charge; and (y) for laboratory purposes at a reasonable charge.

 

(v)

Landlord shall provide janitorial services to the office portion of the Premises, comparable to such services provided in other first class office buildings in the vicinity, provided that the said other office buildings are used exclusively as offices, and provided further that the Premises are kept in good order by Tenant. Tenant shall pay to Landlord the cost of removal of any of Tenant’s refuse and rubbish to the extent that the same exceeds the refuse and rubbish usually attendant upon the use of the Premises as offices.

 

(vi)

Landlord shall replace, as necessary, the fluorescent tubes in the standard lighting fixtures installed by Landlord. Tenant agrees to reimburse Landlord upon demand for the cost of such fluorescent tubes and ballast and the labor and overhead for their installation. Initial installation of fixtures will be warranteed for one year for lamps and ballast.

(B) In addition to electricity paid under subparagraph (E) Paragraph 3, Landlord may impose a reasonable charge for any other utilities and services, except water for drinking and lavatory purposes, provided by Landlord by reason of any use of the Premises at any time. Separate meters for all utilities and services are installed in the Premises, and upon demand, Tenant shall immediately pay Landlord for all charges with respect to consumption of such utilities (including electricity being paid pursuant to subparagraph E of Paragraph 3) or services so metered or provided (it being understood that the cost for water for drinking and lavatory purposes is included in the Rent).

 

(i)

Intentionally Deleted.

 

(ii)

Intentionally Deleted.

 

(iii)

Landlord shall not be liable in any way to Tenant for any failure or defect in the supply or character of electric energy furnished to the Premises by reason of any requirement, act or omission of the public utility serving the Building with electricity or for any other reason not attributable to Landlord.

 

(iv)

Tenant’s use of electric energy in the Premises shall not at any time exceed the capacity of any of the electrical conductors and equipment serving the Premises. In order to ensure that such capacity is not exceeded and to avert possible adverse effect upon the Building’s electric service, Tenant shall not, without Landlord’s prior written consent in each instance (which shall not be unreasonably withheld), connect any additional fixtures, appliances or equipment to the Building’s electric distribution system or make any alteration or addition to the electric system of the Premises existing on the Commencement Date. Should Landlord grant such consent, all additional risers or other equipment required therefor shall be provided by Landlord and the cost thereof shall be paid by Tenant upon Landlord’s demand.

 

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(v)

If the public utility rate schedule for the supply of electric current to the Building shall be increased during the Term of this Lease, the Additional Rent payable pursuant to Paragraph 3 hereof shall be equitably adjusted to reflect the resulting increase in Landlord’s cost of furnishing electric service to the Premises. It is the intention hereof that Landlord only recapture the charges payable by Tenant under Paragraph 3 and under no circumstances shall Landlord earn any profit thereof.

(C) Tenant agrees to cooperate fully at all times with Landlord and to abide by all reasonable regulations and requirements which Landlord may prescribe for the use of the above utilities and services. Any failure to pay any costs as described above shall constitute a breach of the obligation to pay Rent under this Lease and shall entitle Landlord to rights herein granted for such breach.

(D) Landlord shall not be liable for, and Tenant shall not be entitled to, any abatement or reduction of Rent by reason of Landlord’s failure to furnish any of the foregoing services, nor shall any such failure, stoppage or interruption of any such service be construed either as an eviction of Tenant, or relieve Tenant from the obligation to perform any covenant or agreement. However, in the event of any failure, stoppage or interruption thereof, Landlord shall use reasonable diligence to have service resumed promptly.

(E) It is understood and agreed that Landlord has the sole right to choose the provider or providers of all utilities and services described or referred to in this Paragraph 9.

(F) Notwithstanding anything hereinafter to the contrary, Landlord reserves the right from time to time to make reasonable modifications to the above provisions for utilities and services.

RULES AND REGULATIONS

PARAGRAPH 10

Tenant agrees to abide by all rules and regulations of the Buildings and Project (“Rules and Regulations”) imposed by the Landlord as set forth in Exhibit C attached hereto, as th