EX-10.5 LEASE AGREEMENT

 

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                                                                    EXHIBIT 10.5

 

                                 LEASE AGREEMENT

 

                                 BY AND BETWEEN

 

                              150 COLLEGE ROAD, LLC

 

                                        AND

 

                             PHYSIOME SCIENCES, INC.

 

                                      DATED

 

                                DECEMBER 21, 2000

 

                            FOR 150 COLLEGE ROAD WEST

                               PRINCETON, NEW JERSEY

 

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                                TABLE OF CONTENTS

 

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Section 1...........................................ERROR! BOOKMARK NOT DEFINED.

 

1.1.                Demise of the Premises.......................................     1

 

1.2.                License To Use Public Areas..................................     1

 

1.3.                Rentable Area................................................     2

 

1.4.                Term.........................................................     2

 

1.5.                Use..........................................................     3

 

Section 2.......................................................................     4

 

2.1.                Base Rental..................................................     4

 

2.2.                Additional Rental............................................     4

 

2.3.                Rental Payments..............................................    11

 

2.4.                Security Deposit.............................................    12

 

Section 3.......................................................................    13

 

3.1.                Services.....................................................    13

 

3.2.                Governmental Regulations.....................................    15

 

3.3.                Failure to Provide Required Services.........................    15

 

3.4.                Additional Services..........................................    16

 

3.5.                Landlord's Obligation........................................    16

 

Section 4.......................................................................    16

 

4.1.                Care of the Premises.........................................    16

 

4.2.                Entry for Repairs and Inspection.............................    17

 

4.3.                Nuisance.....................................................    18

 

4.4.                Laws and Regulations; Rules of the Building..................    18

 

4.5.                Hazardous Substances.........................................    19

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4.6.                ISRA Compliance..............................................    21

 

Section 5.......................................................................    25

 

5.1.                Condition of the Premises and the Project....................    25

 

5.2.                Alterations to the Premises other Than Work

 

                   Pursuant to EXHIBIT D........................................    25

 

5.3.                Alterations to the Building..................................    28

 

5.4.                Access Cards.................................................    28

 

5.5.                Graphics, Building Directory and Name........................    29

 

Section 6.......................................................................    29

 

6.1.                Condemnation.................................................    29

 

6.2.                Damages from Certain Causes..................................    31

 

6.3.                Casualty.....................................................    31

 

Section 7.......................................................................    32

 

7.1.                Property Insurance...........................................    32

 

7.2.                Liability Insurance..........................................    33

 

7.3.                Hold Harmless; Mutual Indemnity..............................    33

 

7.4.                Waiver of Claims and Recovery Rights.........................    34

 

Section 8.......................................................................    35

 

8.1.                Default by Tenant............................................    35

 

8.2.                Remedies.....................................................    36

 

8.3.                Landlord's Right to Cure Defaults............................    39

 

8.4.                Non-Waiver...................................................    39

 

8.5.                 Holding Over.................................................    39

 

8.6.                Landlord's Default...........................................    39

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Section 9.......................................................................    40

 

9.1.                Assignment or Sublease by Tenant.............................    40

 

9.2.                Assignment by Landlord.......................................    42

 

Section 10......................................................................    42

 

10.1.               Peaceful Enjoyment...........................................    42

 

10.2.               Limitation of Landlord's Personal Liability..................    42

 

10.3.               Limitation of Interest Holder's Personal Liability...........    43

 

Section 11......................................................................    43

 

11.1.               Subordination................................................    43

 

11.2.               Estoppel Certificate.........................................    45

 

11.3.               Right to Cure Landlord's Default.............................    46

 

11.4.               Compliance With Certain Mortgagee Requirements...............    46

 

Section 12......................................................................    47

 

12.1.               Food Service Facility........................................    47

 

12.2.               Fitness Center...............................................    48

 

12.3.               Name Change..................................................    48

 

12.4.               Legal Fees...................................................    48

 

Section 13......................................................................    48

 

13.1.               Notices......................................................    48

 

13.2.               Mailing Address..............................................    50

 

13.3.               Miscellaneous................................................    50

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EXHIBITS

 

EXHIBIT A           DESCRIPTION OF LAND

 

EXHIBIT A-1         SITE PLAN OF PROJECT

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EXHIBIT B            FLOOR PLANS OF THE PREMISES

 

EXHIBIT C           DETERMINATION OF RENTABLE AREA

 

EXHIBIT D            WORK LETTER

 

EXHIBIT E           COMMENCEMENT DATE AGREEMENT

 

EXHIBIT F           AIR CONDITIONING AND HEATING SERVICES

 

EXHIBIT G           BUILDING RULES

 

EXHIBIT H           JANITORIAL SPECIFICATIONS

 

EXHIBIT I           LIST OF PARTICIPATING PLANS

 

EXHIBIT J           NON-DISCLOSURE AGREEMENT

 

EXHIBIT K           PARKING

 

EXHIBIT L           RENEWAL OPTION

 

EXHIBIT M           RIGHT OF SECOND OFFER

 

EXHIBIT N           ANTENNA LICENSE

 

EXHIBIT O           SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE AGREEMENT

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                                 LEASE AGREEMENT

 

      THIS LEASE AGREEMENT (this "Lease") is made and entered into by and

between 150 College Road, LLC, a Delaware limited liability company (the

"Landlord"), and PHYSIOME SCIENCES, INC., a corporation of the State of Delaware

(the "Tenant").

 

      In consideration of the rentals reserved hereunder and the duties,

covenants and obligations of the other hereunder, Landlord and Tenant hereby

covenant and agree as follows:

 

                                       1.

 

      1.1. DEMISE OF THE PREMISES. Landlord hereby leases, demises and lets to

Tenant, and Tenant hereby leases and takes from Landlord, those certain premises

(hereinafter sometimes called the "Premises") consisting of the entire third

floor of the building known as 150 College Road West in Village South at

Princeton Forrestal Center which building is being developed as a Class A

building (the "Building") which is located at 150 College Road West, Plainsboro

Township (Middlesex County), New Jersey 08540 (hereinafter sometimes called the

"Land"). The Land is more particularly described on EXHIBIT A, and the Project

described and shown on EXHIBIT A-1 attached hereto and made a part hereof for

all purposes. A floor plan of the Premises is attached hereto and made a part

hereof for all purposes as EXHIBIT B. The Building, the Land, all surface

parking lots owned or controlled by Landlord and servicing the Building and any

such parking structures or parking lots constructed in the future on the Land

(the "Parking Facilities"), and such additional facilities or structures on the

Land to service any of the foregoing in subsequent years as may be necessary or

desirable in Landlord's reasonable judgment are hereinafter sometimes

collectively called the "Project." Landlord is the owner of the Project. The

term "Project" does not include any other buildings or structures not located on

the Land including but not limited to 100 College Road West.

 

      1.2. LICENSE TO USE PUBLIC AREAS. Subject to Section 5.3 below, Landlord

hereby grants Tenant, its employees, invitees and other visitors, a nonexclusive

license for the term of this Lease and all extensions and renewals thereof to

use, for the purpose of ingress and egress to the Building, the Parking

Facilities, and the Premises, and in accordance with the Building Rules (as

hereinafter defined) (a) the sidewalks and other exterior common areas located

on the Land; and (b) the lobbies, public corridors and elevator foyers of the

Building as such areas are designated by Landlord from time to time for the

common use of the Building's tenants.

 

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       1.3.   RENTABLE AREA. Landlord and Tenant stipulate and agree for all

purposes under this Lease that the Rentable Area (as set forth on EXHIBIT C

attached hereto and made a part hereof for all purposes) of the Premises is

25,338 rentable square feet, based upon the final Space Plan (as defined in

EXHIBIT D).

 

      1.4.   TERM.

 

            (a) The term of this Lease shall commence on the date Landlord

receives a temporary or permanent certificate of occupancy for the Premises

(hereinafter the "Commencement Date"), which is expected to be on or before July

1, 2001, and, unless sooner terminated in accordance with the terms and

conditions set forth herein, shall expire on the last day of the one-hundred

twentieth (120th) full calendar month after the Commencement Date (the

"Expiration Date"). In the event, however, the Commencement Date would have

occurred on July 1, 2001 but is delayed by Tenant Delay as defined in EXHIBIT D,

the term of this Lease shall be deemed to have commenced on the Completion Date,

as defined in EXHIBIT D. In the event the Commencement Date has not occurred by

July 31, 2001, as a result of Landlord Delay, Landlord shall pay to Tenant

monthly a penalty equal to the actual incremental increase in Tenant's current

rental obligation due to Tenant's current holdover provision, not to exceed an

amount of $23,613 per month, every month until the Commencement Date. The term

"Landlord Delay" means the delay in completion of Tenant's Work caused by (a)

Landlord's failure to act or provide the responses described in the Work Letter

attached as EXHIBIT D within the time specified, or (b) any delay within

Landlord's control that is not Tenant Delay, or (c) any delay not due to an

event of force majeure, as defined in the following sentence. Delay due to fire,

catastrophe, strikes or labor trouble, civil commotion, acts of God, inability

in obtaining materials, or any other cause beyond Landlord's control, shall not

be considered a Landlord Delay and the period of such delay shall be added to

Landlord's time to achieve the Commencement Date, and Landlord shall have no

obligation to pay any penalty including Tenant's incremental holdover rent on

its current space because of such delay.

 

            (b) EXHIBIT D is the Work Letter which shall be binding on the

parties in regard to Tenant's Work to be performed by Landlord.

 

            (c) Tenant, at Landlord's request, shall execute an agreement (in

the form attached hereto as EXHIBIT E and made a part hereof for all purposes)

specifying, among other matters, the date upon which the Commencement Date

occurred. Landlord shall use commercially reasonable efforts to prepare and

deliver such agreement to Tenant within fifteen (15) days after the Commencement

Date and Tenant shall execute and deliver the agreement to Landlord within five

(5) business days of Tenant's receipt thereof.

 

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            (d) Notwithstanding anything to the contrary set forth herein,

Tenant shall have the right to terminate this Lease if the Commencement Date has

not been achieved by December 31, 2001, plus the number of days of Tenant Delay,

as defined in EXHIBIT D, if any. In the event of such termination, any security

deposit furnished by Tenant pursuant to Section 2.4 of the Lease shall be

returned, or, in the case of a letter of credit, shall be terminated. In

addition, the Escrowed Funds, together with any interest earned, furnished

pursuant to Section 4.1 of the Work Letter shall be returned to Tenant.

 

      1.5.   USE.

 

             (a) The Premises are to be used and occupied by Tenant (and its

assignees and subtenants permitted hereunder) solely for general office use

including non-laboratory research and development of pharmaceuticals. Without

limiting the foregoing, the Premises shall not be used for any purpose which

would tend to lower the first-class character of the Building, or create

excessive elevator loads and/or usage, or increase wear and tear on the

Building's mechanical, electrical and plumbing systems, or increase the

Building's maintenance and/or janitorial services or otherwise interfere with

standard Building operations, and Tenant shall not engage in any activity which

is not in keeping with the written standards of the Building as furnished to

Tenant. Tenant shall not be allowed to (i) have more than five (5) persons per

one thousand (1,000) square feet of Rentable Area occupy the Premises without

consent of the Landlord (except for conferences, luncheons and other similar

occasional functions in the ordinary course of Tenant's business), (ii) operate

separate shifts of employees from the Premises (other than persons to operate

Tenant's computer facilities and a limited number of other employees who may

work so that the Premises are occupied twenty-four (24) hours a day seven (7)

days a week), (iii) use the space for the purpose of providing telemarketing

services other than telemarketing services and telephone customer support in the

normal course of Tenant's business, (iv) use the space as a consular office for

any foreign government, or (v) use the space as an office for any governmental

or regulatory authority, agency or bureau.

 

            (b) Tenant shall not occupy or use the Premises, or permit any

portion of the Premises to be occupied or used, for any business or purpose

which is unlawful or deemed to be hazardous on account of fire or other hazards,

or permit anything to be done which would in any way increase the rate of fire

or liability or any other insurance coverage on the Building and/or its

contents, or which would produce strong, unusual or offensive odors, fumes, dust

or vapors, or that is a public or private nuisance, or that emits noise or

sounds that are objectionable to a person of reasonable judgment due to

intermittence, beat, frequency, shrillness or loudness. Tenant shall not permit

any cooking within the Premises except the use of a

 

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microwave oven. Tenant agrees that no more than three food, soft drink or other

vending machines may be installed within the Premises without the written

consent of Landlord. The location of any vending machines is subject to

Landlord's approval and shall not be visible from Building common areas or the

exterior of the Building. The Building is a "non-smoking" Building. Tenant

agrees that no smoking is allowed in the Premises or in-the Public Areas of the

Building. "Public Areas" shall include but are not limited to: Building lobbies,

elevators, elevator lobbies, corridors, restrooms, mailrooms, public break

rooms, stairwells, fitness center and food service facility.

 

                                       2.

 

      2.1. BASE RENTAL. Tenant hereby covenants and agrees to pay to Landlord as

partial consideration for Tenant's use and occupancy of the Premises a base

annual rental (the "Base Rental"), which Base Rental shall be payable in monthly

installments in advance on the first day of each month beginning on the

Commencement Date in accordance with the following schedule:

 

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                  Rate per Square Foot

Time Period          of Rentable Area      Annual Base Rental    Monthly Installment

---------------    --------------------    ------------------    -------------------

<S>                <C>                     <C>                   <C>

Months* 1 -   60    $               30.75    $        779,143.50    $          64,928.63

Months 61 - 120    $               34.50    $        874,161.00    $          72,846.75

</TABLE>

 

*      TABLE REFERS TO FULL MONTHS AND EXCLUDES ANY PARTIAL MONTH AT THE

      COMMENCEMENT OF THE LEASE TERM.

 

Tenant shall also pay Base Rental for that portion of the month in which the

Commencement Date occurs. In addition to Base Rental Tenant shall pay Tenant

electric as set forth in paragraph 3.1(f).

 

      2.2.   ADDITIONAL RENTAL.

 

             (a) In addition to the Base Rental for each calendar year (or

portion thereof) during the term of this Lease, Tenant shall pay as additional

rent (the "Additional Rental") Tenant's Proportionate Share (as hereinafter

defined) of the Operating Expenses (as hereinafter defined) for that year in

excess of the Base Operating Expenses (as hereinafter defined) and Tenant's

Proportionate Share of the Real Estate Taxes in excess of the Base Real Estate

Taxes (as hereinafter defined) for that year. Within ninety (90) days of the

beginning of each calendar year during the term of this Lease, Landlord shall

deliver to Tenant Landlord's good faith estimate (the "Estimated Additional

Rental") of the Additional Rental for that year. The Estimated Additional Rental

shall be paid in equal installments in advance on the first day of each month.

If Landlord

 

                                      -4-

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does not deliver an estimate to Tenant for any year by January 1 of that year,

Tenant shall continue to pay Estimated Additional Rental based on the prior

year's estimate. From time to time during any calendar year, Landlord may revise

its estimate of the Additional Rental for that year based on either actual or

reasonably anticipated increases in Operating Expenses or Real Estate Taxes, and

the monthly installments of Estimated Additional Rental shall be appropriately

adjusted for the remainder of that year in accordance with the revised estimate

so that by the end of the year, the total payments of Estimated Additional

Rental paid by Tenant shall equal the amount of the revised estimate. The

Estimated Additional Rent may be increased no more than two (2) times during any

calendar year.

 

            (b)    "Base Year" means calendar year 2001. If the Commencement Date

falls on or after September 1, 2001, the "Base Year" shall be calendar year

2002.

 

            (c)    "Base Real Estate Taxes" shall mean Real Estate Taxes of $3.35

per rentable square foot multiplied by the aggregate Rentable Area of the

Building for the calendar year 2001.

 

            (d)    "Tenant's Proportionate Share" means the percentage determined

by dividing the actual Rentable Area contained within the Premises by the

aggregate Rentable Area of the space within the Building, which percentage is

35.76%. Landlord and Tenant hereby stipulate and agree for all purposes under

this Lease that the aggregate Rentable Area of the Building is 70,850 square

feet, notwithstanding any different measurement thereof that may be made

hereafter by or on behalf of either party.

 

            (e)    "Operating Expenses" shall mean all expenses, costs and

disbursements of every kind and nature, computed on an accrual basis, incurred

in connection with the ownership, operation, maintenance and repair of the

Project, excluding only the costs and expenses described in Section 2.2(f)

below. The Expense Statement defined do Section 2.2(h) below shall identify and

reflect any and all credits due Tenant as the result of any refund, credit, or

other income that Landlord receives as to any Operating Expense. Without

limiting the generality of the foregoing, Operating Expenses include the

following, provided that in the event that any of the following are provided or

rendered for or as to buildings and/or property other than the Project owned or

operated by Landlord or its affiliates, then the costs of any of the following

shall be allocated to Operating Expenses by Landlord for the Project, and the

operating expenses of such other buildings or property, on a reasonably

equitable basis consistent with other relevant provisions of this Lease:

 

                  (i) Wages and salaries of all persons (up to and including the

level of building manager) directly engaged in the

 

                                      -5-

<PAGE>

 

operation, maintenance, cleaning, security or access control for the Project,

including taxes, insurance and benefits relating thereto.

 

                  (ii) All supplies, tools, equipment and materials used in the

operation and maintenance of the Project, and the reasonable rental value of

space which may be leased in the Building (which will be approximately 1,000

square feet initially) or space leased elsewhere, which space is used as a

Building management office. The costs of such space shall be allocated to the

buildings which are managed out of such office.

 

                  (iii) Cost of all utilities for the Project, including but not

limited to the cost of water, sewer, gas, electricity, telephone and cable

service other than utilities paid for directly by the Tenant or other tenants in

the Building.

 

                  (iv) Cost of all maintenance and service agreements for the

Project and the equipment therein, including but not limited to security

service, window cleaning, snow and ice removal, elevator maintenance, janitorial

service and landscaping maintenance.

 

                  (v) Cost of repairs and general maintenance for the Project

(excluding repairs and general maintenance costs that are paid by proceeds of

insurance or by Tenant or other third parties).

 

                  (vi) Amortization of the cost of installation of capital

investment items that are hereafter installed for the purpose of reducing

Operating Expenses (for expenditures that reduce Operating Expenses, the amounts

included in operating Expenses shall be limited to actual savings realized), to

improve Building life-safety systems or which may be required by any laws,

ordinances, orders, rules, regulations and requirements hereafter enacted. All

such costs which relate to the installation of such capital investment items

shall be amortized over the reasonable life of the capital investment item.

 

                  (vii) The cost of all insurance relating to the Project, as

set forth in Sections 7.1 and 7.2 hereof.

 

                  (viii) All property management fees (which shall not be in

excess of the greater of (1) three (3%) percent of gross Rent or (2) a

percentage which equals five (5%) percent higher than the market management fees

in the Princeton area).

 

                  (ix) All operating expenses, costs, lease payments, and

recoveries in connection with the food service facility and the fitness center

as provided for in Sections 12.1 and 12.2.

 

            (f)    Landlord hereby agrees that the term "Operating Expenses"

shall not include any of the following expenses:

 

                                      -6-

<PAGE>

 

                  (i) debt service, including any fees or commissions associated

therewith, or rentals under any ground lease;

 

                  (ii) costs for which Landlord is entitled to specific

reimbursement as a separate charge by Tenant, by any other tenant of the

Building or by any other third party;

 

                  (iii) costs incurred by Landlord in connection with procuring

new tenants or the negotiation of any tenant lease in the Project, including

leasing commissions, legal fees, leasehold improvements expenses (and/or

allowances therefor), advertising and promotions (excluding holiday parties and

similar activities provided to all tenants in the Building);

 

                  (iv) any other costs and expenses for services, amenities or

materials that are specifically for the benefit of a particular tenant and that

are of a nature not generally provided to all tenants in the Building;

 

                  (v) except as set forth in Section 2.2(e)(vi) above,

expenditures classified as capital expenditures for federal income tax purposes

or any non-cash charges such as depreciation or amortization.

 

                  (vi) repairs or other work occasioned by fire, windstorms, or

other insured casualty or hazard, to the extent that Landlord shall receive

proceeds of such insurance.

 

                  (vii) repairs or rebuilding necessitated by condemnation or

casualty.

 

                  (viii) all the items set forth in Section 2.2(e) (i) with

respect to any person above the level of building manager.

 

                  (ix) repairs of a structural nature not otherwise permitted to

be included under Section 2.2(e)(vi) as an Operating Expense.

 

                  (x) legal costs incurred by Landlord in enforcing the

obligations of, or otherwise related to, other tenants in the Building.

 

                  (xi) The cost of any items for which Landlord is reimbursed by

insurance or otherwise compensated by parties other than tenants of the Building

pursuant to clauses similar to those contained in this Lease.

 

                  (xii) Any expenses other than property management (see

2.2(e)(viii)) representing an amount paid to a Landlord-related

 

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<PAGE>

 

corporation, entity or person which are in excess of the amount which would be

paid in the absence of such relationship.

 

                  (xiii) Services provided for the exclusive benefit of other

tenants of the Building, but not Tenant.

 

                  (xiv) All costs for which Tenant or any other tenant in the

Building is being charged other than pursuant to provisions similar to the

operating expense clauses in this Lease.

 

                  (xv) The costs of overtime or other expense to Landlord in

curing its defaults, or in performing work expressly provided in this Lease to

be borne at Landlord's expense that are otherwise not Operating Expenses.

 

            (g)    All federal, state, county or municipal taxes, assessments,

fees, impositions, levies and governmental charges relating to the Project,

whether paid directly by Landlord or through an escrow arrangement with a

mortgagee or ground lessor, and whether they be by taxing districts or

authorities presently taxing or assessing the Project or by others subsequently

created or otherwise, and any other taxes, assessments, fees, impositions,

levies, and governmental charges attributable to the Project or its operation,

excluding, however, federal and state taxes on income, death taxes, franchise

taxes, and any taxes imposed or measured on or by the income of Landlord from

the operation of the Project; provided, however, that if at any time during the

term of this Lease, the present method of taxation or assessment shall be so

changed that the whole or any part of the taxes, assessments, levies,

impositions or charges now levied, assessed or imposed on real estate and the

improvements thereof shall be discontinued and as a substitute therefor, or in

lieu of an addition thereto, taxes, assessments, levies, impositions or charges

shall be levied, assessed and/or imposed wholly or partially as a capital levy

or otherwise on the rents received from the Project or the rents reserved herein

or any part thereof, then such substitute or additional taxes, assessments,

levies, impositions or charges, to the extent so levied, assessed or imposed,

shall be deemed to be included within Real Estate Taxes to the extent that such

substitute or additional tax would be payable if the Project, were the only

property of Landlord subject to such tax. The foregoing is hereinafter referred

to as "Real Estate Taxes." It is agreed that Tenant will be responsible for ad

valorem taxes on its personal property and on the value of the Leasehold

Improvements in the Premises (as defined in Section 5.1 of the Lease) to the

extent that the same exceed Building standard allowances (and if the taxing

authorities do not separately assess Tenant's Leasehold Improvements, Landlord

may make a reasonable allocation of the ad valorem taxes assessed on the Project

to give effect to this sentence). Provided, however, Tenant shall not be

responsible for any taxes on the value of other tenants' Leasehold Improvements

to the extent that such

 

                                       -8-

<PAGE>

 

other tenants' Leasehold Improvements exceed Building standard allowances,

unless the taxing authorities do not separately assess such tenants' Leasehold

Improvements and Landlord does not make any allocation of taxes assessed on the

Project. If the Landlord shall receive any tax refund, rebate recovery, or the

like in respect of any lease year, Landlord may deduct therefrom any actual

expense incurred in obtaining such tax relief and out of the remaining balance

Landlord shall promptly pay the Tenant's Proportionate Share to the Tenant. Upon

Tenant's request, Landlord shall provide Tenant with a written accounting in

reasonable detail as to any payment due pursuant to the immediately preceding

sentence.

 

            (h) Within one hundred fifty (150) days after the end of each

calendar year during the term of this Lease, Landlord shall provide Tenant a

statement ("Expense Statement") showing the Base Year Operating Expenses, Base

Real Estate Taxes, and Operating Expenses and Real Estate Taxes in excess of the

Base Year Operating Expenses and Base Real Estate Taxes respectively for said

calendar year, prepared in accordance with generally accepted accounting

principles, and a statement prepared by Landlord comparing Estimated Additional

Rental paid by Tenant with Additional Rental for such calendar year. For the

balance of calendar year 2001 the Expense Statement shall only show Base Year

Operating Expenses, Base Real Estate Taxes, and actual Real Estate Taxes in

excess of Base Real Estate Taxes. In the event that Estimated Additional Rental

paid by Tenant exceeds the amount of Additional Rental for said calendar year,

Landlord shall pay Tenant an amount equal to such excess at Tenant's option, by

either giving a credit against rentals next due, if any, or by direct payment to

Tenant within thirty (30) days of the date of such Expense Statement. In the

event that the Additional Rental exceeds estimated Additional Rental paid by

Tenant for said calendar year, Tenant shall pay the difference to Landlord

within thirty (30) days of receipt of the Expense Statement. The provisions of

this Section 2.2(h) shall survive the expiration or termination of this Lease.

In regard to Operating Expenses, Tenant shall not be required to pay any excess

of Additional Rental over Estimated Additional Rental unless it has received the

Expense Statement in regard to such Operating Expenses within twelve (12)

calendar months of the end of the calendar year to which the Expense Statement

applies. With regard to Real Estate Taxes Landlord must notify Tenant within

twelve (12) months of receipt of any notification from any taxing authority

regarding an adjustment in Real Estate Taxes.

 

            (i) If the actual Operating Expenses for any calendar year are less

than the Operating Expenses for the Base Year, Tenant shall not be entitled to

any credit or refund for such difference, except that if the Real Estate Taxes

for the Building are less than $3.35 per square foot during any calendar year of

the Lease, Tenant shall receive a credit equal to the difference between the

actual Real Estate Taxes and the $3.35 per square foot, pro rata.

 

                                      -9-

<PAGE>

 

            (j) Notwithstanding any other provision herein to the contrary, it

is agreed that if the Building is less than ninety-five percent (95%) occupied

during any calendar year (or portion thereof), an adjustment shall be made in

computing each component of the Operating Expenses, including Real Estate Taxes,

that actually varies with the rate of occupancy of the Building for that year

(including the Base Year and Base Real Estate Taxes) so that the total Operating

Expenses and Real Estate Taxes shall be computed for such year as though

ninety-five (95%) percent of the Building had been occupied during such year.

 

            (k) Tenant shall have the right to request, review and copy, at

Tenant's expense, Landlord's books and records regarding the determination of

Operating Expenses for the calendar year that is the basis of an Expense

Statement only upon written notice to Landlord and scheduling an appointment in

advance. Such notice must be delivered within thirty (30) days following

Landlord's delivery of the Expense Statement to Tenant and such review performed

within ninety (90) days following Tenant's written notice to Landlord. Any such

review shall be conducted during normal business hours at Landlord's office in

Houston, Texas, or at Tenant's option, at such other office as reasonably

designated by Landlord within the New York-New Jersey metropolitan area. Any

party conducting the review must be a certified public accountant on Tenant's

staff or with an accounting firm duly licensed in its state(s) of operation,

reasonably acceptable to Landlord, which approval shall not be unreasonably

withheld. Tenant may not have such review performed on a contingency fee basis.

In the event that Landlord and Tenant confirm pursuant to an Expense Statement

or Landlord's acceptance (subject to dispute resolution below) of the results of

Tenant's review (as applicable) that Estimated Additional Rental paid by Tenant

exceeds Additional Rental for said calendar year, Landlord shall pay Tenant an

amount equal to such excess at Landlord's option, by either giving a credit

against Rent next due, or by direct payment to Tenant within thirty (30) days of

the date of such Expense Statement or acceptance. Notwithstanding the foregoing,

if no Event of Default has occurred and is continuing and Tenant requests a

refund rather than a credit from Landlord in writing, Landlord shall refund said

amount to Tenant within thirty (30) days of Landlord's receipt of Tenant's

request. In the event that the Additional Rental exceeds Estimated Additional

Rental for said calendar year, Tenant shall pay the difference to Landlord

within thirty (30) days of receipt of the Expense Statement. If Tenant does not

object in writing to an Expense Statement within one hundred twenty (120) days

following the date thereof, specifying the nature of the item(s) in dispute and

the reasons therefor, then the Expense Statement shall be considered final and

accepted by Tenant. Any amount due to Landlord as shown on an Expense Statement,

whether or not disputed by Tenant as provided herein shall be paid by Tenant

when due as provided in Section 2.02(a) above, without

 

                                      -10-

<PAGE>

 

prejudice to any such written exception pending resolution thereof. The results

of any such review shall be held in strict confidence by Tenant and its

representatives. If Landlord disputes the review, both parties shall within

twenty (20) days agree upon a neutral third party certified public accountant

whose determination shall be binding upon both parties. If it is finally

determined that Tenant overpaid Additional Rental by more than five (5%)

percent, then Landlord shall pay all reasonable costs of Tenant incurred in such

proceeding; Tenant shall pay all of Landlord's expenses incurred in connection

with such proceeding if it is finally determined that Tenant either underpaid or

overpaid Additional Rent by less than five (5%) percent. The provisions of this

subsection (i) shall survive the expiration or termination of this Lease.

 

      2.3.   RENTAL PAYMENTS.

 

            (a) Tenant hereby covenants and agrees to pay the Base Rental and

Estimated Additional Rental (collectively, the "Stated Rentals") and all other

sums of money as shall become due from and payable by Tenant to Landlord under

this Lease inclusive of the exhibits hereto (collectively, "Rent") in lawful

money of the United States or by wire transfer to Landlord at Landlord's address

as provided herein (or to such other persons or at such other address(es) as may

be designated by Landlord in writing from time to time) monthly in advance on

the first day of each month.

 

            (b) If the term of this Lease as described above commences on other

than the first day of a calendar month or terminates on other than the last day

of a calendar month, then the installments of Stated Rentals for such month or

months shall be prorated and the installment or installments so prorated shall

be paid in advance. The payment for such prorated month shall be calculated by

multiplying the monthly installment by a fraction, the numerator of which shall

be the number of days of the lease term occurring during said commencement or

termination month, as the case may be, and the denominator of which shall be the

total number of days occurring in said commencement or termination month.

 

            (c) Tenant shall pay all Rent at the times and in the manner

provided in this Lease, without demand, set-off or counterclaim. Tenant hereby

acknowledges and agrees that except as otherwise provided in this Lease,

Tenant's covenants to pay Rent under this Lease are separate and independent

from Landlord's covenant to provide services and other amenities hereunder.

 

            (d) In the event any Rent is not paid when due, then Landlord and

Tenant agree that Landlord will incur additional administrative expenses, the

amount of which will be difficult, if not impossible to determine. Accordingly,

in addition to the obligation to pay Rent, Tenant shall pay to Landlord a late

charge

 

                                      -11-

<PAGE>

 

for such late payment in the additional amount of four percent (4%) of the

amount of such late payment of Rent, except in the case of the first instance of

lateness within any period of 12 consecutive calendar months, in which case said

four (4%) percent late charge shall be due and owing only in the event Landlord

has provided Tenant with written notice of such late payment, and Tenant has not

made the payment within five (5) calendar days after receipt of said notice.

 

            (e) All Rent shall bear interest from the date due until paid at a

rate (the "Default Rate") equal to five (5%) percent above the Prime Rate

reported in the Money Rates column or section of the most recent issue of The

Wall Street Journal ("Prime Rate"), automatically adjusting with each change in

the Prime Rate.

 

      2.4.   SECURITY DEPOSIT. On the date of execution of this Lease by Tenant,

there shall be due and payable by Tenant a security deposit in an amount equal

to 20 monthly installment(s) of the initial Base Rental, such deposit to be held

for the performance by Tenant of Tenant's covenants and obligations under the

Lease, it being expressly understood that the deposit shall not be considered an

advance payment of Rent or a measure of Landlord's damages in case of default by

Tenant. Upon the commencement of the second lease year, Landlord will reduce the

security deposit by three (3) months per year until the security deposit is

equal to three (3) months of Base Rental. The security deposit may be in the

form of cash or a letter of credit from a bank, and in form, satisfactory to

Landlord.

 

       Upon the occurrence of any Event of Default by Tenant under this Lease,

Landlord may, from time to time, without prejudice to any other remedy, use the

security deposit to the extent necessary to make good any arrears of Rent or

other payments hereunder and/or any damage, injury, expense or liability caused

to Landlord by such event of default or breach of covenant. Following any such

application of the security deposit, Tenant shall pay to Landlord on demand the

amount so applied in order to restore the security deposit to the amount thereof

existing prior to such application. Any remaining balance of the security

deposit shall be returned by Landlord to Tenant within thirty (30) days after

the termination of this Lease; provided, however, Landlord shall have the right

to retain and expend such remaining balance (a) to reimburse Landlord for any

and all Rent or other sums due hereunder that have not been paid in full by

Tenant and/or (b) for cleaning and repairing the Premises if Tenant shall fail

to deliver same at the termination of this Lease in a neat and clean condition

and in as good a condition as existed at the date of possession of same by

Tenant, ordinary wear and tear only excepted. If the security deposit is applied

twice by Landlord during the Lease term, following the second application,

Landlord may require Tenant to restore the depleted security deposit plus an

additional security deposit equal to two (2) additional monthly installments of

Stated Rentals at the rate payable for the first month of the Lease term.

 

                                      -12-

<PAGE>

 

                                       3.

 

      3.1. SERVICES. Provided no Event of Default (as hereinafter defined) has

occurred and is continuing hereunder, and subject to the provisions of Sections

3.2 and 3.3 below, Landlord shall furnish the following services and amenities

(collectively, the "Required Services") to Tenant (and its assignees and

subtenants permitted hereunder) while occupying the Premises:

 

            (a) Tempered and cold domestic water at those points of supply

provided for general use of the tenants of the Building;

 

            (b) Central heat, ventilation and air conditioning, at such times,

at such temperatures and in such amounts, all as more particularly described on

EXHIBIT F attached hereto and made a part hereof for all purposes. Landlord will

pay the expenses of maintenance and operating the heating and air conditioning

equipment which shall be an Operating Expense.

 

            (c) Electric lighting service for all public areas of the Building,

Project and service areas of the Building in the manner and to the extent deemed

by Landlord to be in keeping with the standards of other first class office

buildings of comparable age and size in the office market area in which the

Building is located.

 

            (d) Janitorial service comparable to that provided by landlords of

other class A office buildings (including, but not limited to, bonding) of

comparable age and size in the office market in which the Building is located

and consistent with other similar tenants in the Building on a five (5) day per

week basis in accordance with the specifications set forth in EXHIBIT H attached

hereto; provided, however, if Tenant's floor coverings or other improvements

require special cleaning or care in excess of that provided for by Landlord in

EXHIBIT H, Landlord will provide such additional cleaning or care only upon

special agreement with Tenant; it being understood and agreed at Tenant's

request that Landlord will not provide any janitorial service for Tenant's

computer room or executive offices which are locked and not accessible for such

service at any time. Any discernable reduction, as determined by Landlord, in

janitorial expenses as a result of Landlord not providing for cleaning of

Tenant's computer room and such locked offices shall be passed through to Tenant

as reduction in Additional Rent. Tenant shall provide such janitorial services

either by its own employees or by separate arrangement with Landlord's cleaning

service. Tenant shall not be permitted to retain any third party janitorial

service for the Premises.

 

            (e) On-site security equipment for the Building perimeter; provided,

however, that Tenant agrees that Landlord shall not be

 

                                       -13-

<PAGE>

 

responsible for the adequacy or effectiveness of such security equipment;

 

            (f) Electricity during normal operating hours as provided in EXHIBIT

D. Electricity for the Premises (other than electricity for the common areas and

HVAC) will be separately metered, invoiced directly to Tenant by the utility

provider, and paid for by the Tenant directly to the utility provider. If any

electrical equipment requires air conditioning in excess of Building standard as

reasonably determined by Landlord's engineer, the same shall be installed with

applicable meters, at Tenant's expense and Tenant shall pay all operating costs

relating thereto, including, without limitation, any additional maintenance,

repairs and utilities related to such electrical equipment and above Building

standard air conditioning equipment. In the event Landlord receives a special

bulk rate from the utility company, Tenant shall receive the benefit of such

bulk rate.

 

            (g) On-site management (i.e., building personnel located within one

(1) mile, of the Building) by an affiliate of the Patrinely Group, LLC, or by a

third party selected by the Patrinely Group, as long as Landlord controls the

Building;

 

            (h) Non-exclusive passenger elevator service to the Premises

twenty-four (24) hours per day;

 

            (i) Maintenance and repair of the roof, exterior walls, load-bearing

columns, foundation, floor slabs, and other structural components and base

building components of the Project including but not limited to the following:

mechanical, electrical and plumbing systems of the Project, common areas, public

restrooms, restrooms on multi-tenant floors, parking area, and exterior lighting

and landscaping of the Project;

 

             (j) Reasonably complete and prompt snow and ice removal for the

Building and parking area (including salting of walks) during the operating

hours of the Building.

 

            (k) In the event of deregulation of any utility services, Landlord

will use reasonable efforts to obtain service from the lowest cost provider as

long as that provider is deemed in Landlord's sole judgment to be reliable and

capable of delivering such service.

 

                                      -14-

<PAGE>

 

      3.2. GOVERNMENTAL REGULATIONS. The obligations of Landlord to provide the

Required Services shall be subject to governmental regulation thereof (i.e.,

rationing, temperature control, etc.) and any such regulation that impairs

Landlord's ability to provide the Required Services as herein stipulated shall

not constitute a default hereunder but rather providing the applicable Required

Services to the extent allowed pursuant to such regulations shall be deemed to

be full compliance with the obligations and agreements of Landlord hereunder.

 

      3.3. FAILURE TO PROVIDE REQUIRED SERVICES. To the extent any of the

Required Services require electricity, gas and water supplied by public

utilities or others, Landlord's covenants hereunder shall only impose on

Landlord the obligation to use its good faith efforts to cause the applicable

public utilities or other providers to furnish the same. Failure by Landlord to

furnish any of the Required Services to any extent, or any cessation thereof,

due to failure of any public utility or other provider to furnish service to the

Building, or any other cause beyond the reasonable control of Landlord, shall

not render Landlord liable in any respect for damages to either person or

property, nor be construed as an eviction of Tenant, nor result in an abatement

of Rent, nor relieve Tenant from fulfillment of any covenant or agreement

hereof. In the event of any failure by Landlord to furnish any of the Required

Services to any extent, or any cessation thereof, due to malfunction of any

equipment or machinery, or any other cause within the reasonable control of

Landlord, Tenant shall have no claim for rebate of Rent or damages on account

thereof, provided that Landlord utilizes its commercially reasonable efforts to

promptly repair said equipment or machinery and to restore said Required

Services as soon thereafter as is reasonably practicable. Notwithstanding the

previous sentence, in the event due to causes within the reasonable control of

Landlord, the HVAC or electricity to the Premises is terminated or substantially

reduced such that the Premises are rendered untenantable in the reasonable

determination of Landlord and Tenant for seven (7) consecutive days, then Base

Rent shall abate on a per diem basis until such services are restored in a

manner reasonably consistent with the level of such HVAC or electrical services

provided prior to the event giving rise to the abatement. In no event shall

there be any abatement if the problem with the HVAC or the electrical services

was caused in whole or in part by Tenant, its agents, employees, contractors,

sublessees or licensees or if Tenant's sublessees or licensees are not entitled

to rent abatement from Tenant.

 

                                      -15-

<PAGE>

 

      3.4. ADDITIONAL SERVICES. Tenant hereby acknowledges and agrees that

Landlord is obligated to provide only the Required Services under this Lease,

and that Landlord, its agents and representatives, have made no representations

whatsoever of any additional services or amenities to be provided by Landlord

now or in the future under this Lease. Notwithstanding the foregoing, Tenant

recognizes that Landlord may, at Landlord's sole option, elect to provide

additional services or amenities for the tenants of the Building from time to

time, and hereby agrees that Landlord's discontinuance of any provision of any

such additional services or amenities shall not constitute a default of Landlord

under this Lease nor entitle Tenant to any abatement of or reduction in Rent.

 

      3.5. LANDLORD'S OBLIGATION. Subject to the provisions of this Lease and

provided no Event of Default has occurred and is continuing hereunder, Landlord

agrees (as an Operating Expense) to keep and maintain the Project in a manner

and at levels reasonably consistent with other first-class office buildings of

comparable age and size in the Princeton, New Jersey office market which

obligation includes the common areas of the Building and Project and the

structural portions of the Building, taking into consideration normal wear and

tear. Furthermore, Landlord agrees to make reasonable efforts to give to Tenant

reasonable advance notice (except in the event of any matter reasonably

considered by Landlord to be an emergency) of any planned shutdowns of services

materially affecting in Landlord's reasonable judgment, Tenant's use of the

common areas or the Premises.

 

                                       4.

 

      4.1. CARE OF THE PREMISES.

 

            (a) Tenant shall not commit or allow to be committed any waste or

damage to any portion of the Premises or the Building, and shall at its own cost

and expense, maintain the Premises in good condition and repair. If Tenant fails

to make required repairs or replacements to the Premises promptly, Landlord may,

at its option upon three business (3) days prior written notice to the Tenant,

except in the event of an emergency as determined in the sole discretion of

Landlord, make such repairs or replacements, and Tenant shall repay the cost

thereof plus a charge of fifteen percent (15%) to Landlord on demand. Tenant

shall not undertake the repair or replacement of any damage or injury to the

structural components of the Building or its mechanical, electrical or plumbing

systems caused by Tenant, its agents, contractors, employees, invitees or

visitors, but shall reimburse Landlord for all costs and expenses incurred in

effecting any such repair or replacement, plus a charge of fifteen percent

(15%).

 

                                      -16-

<PAGE>

 

            (b) Unless otherwise expressly stipulated herein, Landlord shall not

be required to make any improvements to or repairs of any kind or character to

the Premises during the term of this Lease.

 

            (c) Upon termination of this Lease, by lapse of time or otherwise,

Tenant shall, subject to the provisions of Section 5.2(c), deliver up the

Premises to Landlord in as good condition as existed on the Commencement Date,

ordinary wear and tear, casualty not caused by Tenant and condemnation only

excepted. Upon such termination of this Lease, Landlord shall have the right to

re-enter and resume possession of the Premises.

 

      4.2. ENTRY FOR REPAIRS AND INSPECTION. Tenant shall permit Landlord and

its contractors, agents or representatives to enter into and upon any part of

the Premises at all reasonable hours and upon reasonable notice (except for

entry after-hours for cleaning and in the case of emergency, in which events no

notice shall be required) to inspect or clean the same, to make repairs,

alterations or additions thereto, to show the same to prospective lenders or

purchasers to determine whether Tenant is performing its obligations hereunder

or for any other purpose as Landlord may deem necessary or desirable and, during

the last twelve (12) months of the initial term (so long as Tenant has not

exercised its option to renew the Lease) or any extension thereof, to show the

same to prospective tenants. Notwithstanding the foregoing, the computer room(s)

shall be entered only in the event of an emergency, or for a prospective

purchaser or lender with the prior approval of Tenant (which approval shall not

be unreasonably withheld), and provided a representative of Tenant shall have a

right to be present. Landlord agrees to exercise reasonable good faith efforts

(i) to prosecute completion of any work within the Premises diligently, (ii) to

minimize interference with Tenant's use, access, occupancy, safety and quiet

enjoyment of the Premises, and (iii) to protect Tenant's property located in the

Premises from damage. Entry to the Premises and the conduct of work therein by

Landlord and its contractors, agents or representatives pursuant to this Section

4.2 shall not constitute a trespass or an eviction (constructive or otherwise)

nor shall Tenant be entitled to any abatement or reduction of Rent or claim for

damages for any injury to or interference with Tenant's business, loss of

occupancy or quiet enjoyment or for any other consequential damages by reason

thereof; provided, however, the Landlord shall be responsible for property

damage resulting from wilful destruction or negligence in the performance of

work done by Landlord and its contractors, agents or representatives pursuant to

this Section 4.2.

 

                                      -17-

<PAGE>

 

      4.3. NUISANCE. Tenant shall conduct its business and control its agents,

employees, invitees, contractors and visitors in such manner as not to create

any nuisance, or unreasonably interfere with, annoy or disturb any other tenant,

or Landlord in its operation of the Building.

 

      4.4. LAWS AND REGULATIONS; RULES OF THE BUILDING. Tenant, at Tenant's

expense, shall comply with, and Tenant shall cause its visitors, employees,

contractors, agents and invitees to comply with (a) all laws, ordinances,

orders, rules, regulations and other requirements of governmental authority

which impose any duty with respect to or otherwise relate to the use, condition,

occupancy, maintenance or alteration of the Premises, whether now in force or

hereafter enacted, and (b) all rules and regulations reasonably adopted and

altered by Landlord from time to time for the use, care and cleanliness of the

Building and for preservation of good order therein (the "Building Rules"),

which Building Rules will be sent by Landlord to Tenant in writing and shall be

thereafter carried out and observed by Tenant, its employees, contractors,

agents, invitees and visitors. The current Building Rules are attached hereto as

EXHIBIT G and made a part hereof for all purposes. Notwithstanding anything

stated in this Paragraph to the contrary, it shall be Landlord's responsibility

to obtain the certificate of occupancy pursuant to the Work Letter attached as

EXHIBIT D hereto.

 

                                      -18-

<PAGE>

 

      4.5. HAZARDOUS SUBSTANCES.

 

            (a) Landlord represents that the Project is not an "industrial

establishment" as defined in ISRA and Landlord shall not conduct any operations

that shall cause the Project on the Premises to be deemed an "industrial

establishment." Landlord shall clean up and remediate, at its sole cost, any

Hazardous Substance caused by it or its employees to be introduced to the

Building or Project. Landlord has delivered to, and Tenant acknowledges receipt

of, the Phase I Environmental Report dated September 1998, the Memorandum of

Agreement for Non-Residential Property dated July 23, 1999, Deed Notice dated

October 15, 1999 and No Further Action Letter and Covenant Not to Sue dated

February 8, 2000 (collectively the "Reports"). To the best of Landlord's

knowledge the Reports disclose all the Hazardous Substances on or in the Project

as of the dates of such Reports and, to the best of Landlord's knowledge, it has

disclosed all third-party reports or studies in its possession which disclose

the existence of any other Hazardous Substances in or on the Project.

 

            (b) Landlord shall not permit other tenants in the Building, to

cause or permit any Hazardous Substance to be used, stored, generated or

disposed of on or in the Building or the Project except for small quantities

customarily used in connection with general office uses. Landlord shall enforce

the provisions of leases with other tenants in the Building to cause the tenants

to clean up and remediate, at their sole cost, any Hazardous Substance caused by

them, their agents, employees, contractors or invitees to be introduced to the

Building or Project.

 

            (c) Except for small quantities of Hazardous Substances customarily

used in connection with general office uses, Tenant shall not cause or permit

any Hazardous Substance to be used, stored, generated or disposed of on or in

the Building, the Project or the Premises, by Tenant, Tenant's agents,

employees, contractors or invitees without first obtaining Landlord's written

consent, which may be given or withheld in Landlord's sole discretion. If any

Hazardous Substances are used, stored, generated, or disposed of on or in the

Building, the Project or the Premises, including those customarily used in

connection with general office uses, or if the Building, the Project or the

Premises, become contaminated in any manner or otherwise become affected by any

storage, release or discharge of a Hazardous Substance caused by Tenant,

Tenant's agents, employees, contractors or invitees, Tenant shall immediately

notify Landlord of the release or discharge of a Hazardous Substance and Tenant

shall indemnify, defend and hold harmless Landlord and its partners from and

against any and all claims, damages, fines, judgments, penalties, costs,

liabilities, or losses (including,

 

                                       -19-

<PAGE>

 

without limitation, a decrease in value of the Project, the Building or the

Premises, damages caused by loss or restriction of rentable or usable space, or

any damages caused by adverse impact on marketing of the space, and any and all

sums paid for settlement of claims, attorneys' fees, consultant, and expert

fees) arising during or after the term of this Lease, and arising as a result of

such contamination, release or discharge. This indemnification includes, without

limitation, any and all costs incurred because of any investigation of the site

or any cleanup, removal, or restoration mandated by federal, state or local

agency or political subdivision or required by any Interest Holder. Without

limitation of the foregoing, if Tenant causes or permits the presence of any

Hazardous Substance on the Premises, the Building or the Project and the same

results in any contamination, release or discharge, Tenant shall promptly, at

its sole expense, take any and all necessary actions to return the Premises, the

Building or the Project, to the conditions existing prior to the presence of any

such Hazardous Substance on the Premises, the Building or the Project and in

compliance with all applicable laws. Tenant shall first obtain Landlord's

approval for any such remedial action and the approval of the contractors doing

the work. Landlord shall have the right to do the work, at Tenant's sole cost

and expense, if Landlord determines an emergency exists or if necessary to

protect the health and safety of other tenants of the Project.

 

            (d) As used herein, "Hazardous Substance" means any substance that

is toxic, ignitable, reactive, infectious or corrosive and that is regulated by

any local government, the State of New Jersey or the United States Government.

"Hazardous Substance" includes, any and all material or substances that are

defined as "hazardous waste," "extremely hazardous waste," or a "hazardous

substance" pursuant to federal, state or local governmental law. "Hazardous

Substance" includes, but is not restricted to, asbestos, polychlorobiphenyls,

and petroleum.

 

            (e) Tenant's indemnification of Landlord under Section 4.5(c) hereof

shall survive the expiration or termination of this Lease.

 

             (f) Landlord, with respect to Landlord's Work and any work performed

by Landlord on a going forward basis, and Tenant, with respect to Tenant's Work

and with respect to any work performed by or on behalf of Tenant at the Premises

on a going forward basis, shall ensure that no Hazardous Substances (including

without limitation, asbestos) are used in the construction of, or become present

on, the Premises in a form or quantities that will present a health risk. In the

event repairs and modifications have been necessitated by Tenant's breach of a

covenant or obligation hereunder, the cost of such repairs and modifications

shall be the sole responsibility of Tenant and shall be paid by Tenant to

Landlord within thirty (30)

 

                                       -20-

<PAGE>

 

days of receipt by Tenant of an invoice from Landlord for the cost of such

repairs and modifications. Any repairs and modifications required as a result of

a breach by Landlord of its responsibilities hereunder shall be at Landlord's

sole cost.

 

      4.6. ISRA COMPLIANCE.

 

            (a) Tenant shall, at Tenant's own expense, comply with the

Industrial Site Recovery Act, N.J.S.A., 13:1K-6, et seq., the regulations

promulgated thereunder, and any amending and successor legislation and

regulations (ISRA). Tenant shall, at Tenant's own expense, make all submissions

to provide all information to, and comply with all requirements of, the

Industrial Site Evaluation Element or its successor ("Element") of the New

Jersey Department of Environmental Protection or its successor ("Element") of

the New Jersey Department of Environmental Protection or its successor (NJDEP).

 

            (b) Tenant's obligations under this paragraph shall arise if there

is a closing of Tenant's operations, a transfer of Tenant's ownership or

operations, or a change in Tenant's ownership at or affecting the Premises

pursuant to ISRA.

 

            (c) Provided this Lease is not previously canceled or terminated by

either party or by operation of law, Tenant shall commence its submission to the

Element in anticipation of the end of the lease term, no later than one year

prior to the expiration of the lease term.

 

            (d) For purposes of this paragraph, the term "Environmental

Documents" shall mean all environmental documentation concerning the Premises or

its environs, in the possession or under the control of Tenant, including

without limitation all sampling plans, cleanup plans, preliminary assessment

plans and reports, site investigation plans and reports, remedial investigation

plans and reports, remedial action plans and reports or the equivalent, sampling

results, sampling result reports, data, diagrams, charts, maps, analyses,

conclusions, quality assurance/quality control documentation, correspondence to

or from the Element or any other municipal, county, state or federal

governmental authority, submissions to the Element or any other municipal,

county, state, or federal governmental authority, and directives, orders,

approvals, and disapprovals issued by the Element or any other municipal,

county, state, or federal governmental authority. During the term of this Lease

and subsequently promptly upon receipt by Tenant or Tenant's representatives,

Tenant shall deliver to Landlord all Environmental Documents concerning or

generated by or on behalf of Tenant with respect to the Premises, whether

currently or hereafter existing.

 

                                      -21-

<PAGE>

 

            (e) Tenant shall notify Landlord in advance of all meetings

scheduled between Tenant or Tenant's representatives and the NJDEP or any other

environmental authority, and Landlord and Landlord's representatives shall have

the right, without the obligation, to attend and participate in all such

meetings.

 

            (f) Should the Element or any other division of the NJDEP or other

governmental authority determine that a remedial action workplan be prepared and

that remediation be undertaken because Tenant has caused fill materials, or

hazardous or toxic substances, pollutants, or wastes exist, or have been

spilled, discharged, or placed in, on, under, or about the Premises during the

lease term, Tenant shall, at Tenant's own expense, promptly prepare and submit a

remedial action workplan and establish a remediation funding source, which plan

and funding source shall be satisfactory to Landlord, and shall promptly

implement the approved remedial action workplan to the satisfaction of Landlord.

In no event shall Tenant's remedial action involve engineering or institutional

controls, including without limitation capping, deed notice, declaration of

restriction, or other institutional control notice pursuant to P.L. 1993, ch.

139, and notwithstanding the NJDEP's requirements, Tenant's remedial action

shall meet the most stringent NJDEP remediation standards for soil, surface

water, and groundwater. Promptly upon completion of all required investigatory

and remedial activities, Tenant shall restore the affected areas of the Premises

from any damage or condition caused by the work, including without limitation,

closing, pursuant to law, any wells installed at the Project.

 

            (g) At no expense to Landlord, Tenant shall promptly provide all

information requested by Landlord or the NJDEP for preparation of a

non-applicability affidavit, de minimus quantity exemption application, limited

conveyance application or other submission and shall promptly sign such

affidavits and submissions when requested by Landlord or the NJDEP.

 

            (h) Should Tenant's operations at the Premises be outside of those

industrial operations covered by ISRA, Tenant shall, at Tenant's own expense,

obtain a letter of non-applicability or de minimus quantity exemption from the

Element prior to termination of the lease term, and shall promptly provide

Tenant's submission and the Element's exemption letter to Landlord. Should

Tenant not be able to obtain a letter of non-applicability or a de minimus

quantity exemption from the Element, then Tenant shall, at Landlord's option,

hire a consultant satisfactory to Landlord to undertake sampling at the Premises

sufficient to determine whether fill materials, or hazardous or toxic

substances, pollutants, or wastes exist or have been spilled, discharged or

placed in, on, under, or about the Premises during the lease term. Tenant's

sampling shall also establish the integrity of all underground storage tanks at

the Premises. Should the sampling reveal any spill, discharge, or placing

 

                                      -22-

<PAGE>

 

of fill materials, or of hazardous or toxic substances, pollutants, or wastes,

in, on, under, or about the Premises caused by Tenant, then Tenant shall, at

Tenant's expense, prior to the expiration or earlier termination of the lease

term, promptly remediate the Premises to the satisfaction of Landlord and the

NJDEP. In no event shall Tenant's remedial action involve engineering or

institutional controls, including without limitation capping, deed notice,

declaration of restriction, or other institutional control notice pursuant to

P.L. 1993, ch. 139, and notwithstanding the NJDEP's requirements, Seller's

remedial action shall meet the most stringent NJDEP remediation standards for

soil, surface water, and groundwater.

 

            (i) If Tenant fails to obtain either (A) a non-applicability letter;

(B) a de minimus quantity exemption; (C) an unconditional approval of Tenant's

negative declaration; or (D) a no further action letter with respect to Tenant's

remedial action workplan (collectively referred to as "ISRA Clearance") from the

Element; or fails to remediate the Premises pursuant to subparagraph (h), above,

prior to the expiration or earlier termination of the lease term as to

conditions caused by Tenant, then upon the expiration or earlier termination of

the lease term Landlord shall have the option either to consider the Lease as

having ended or to treat Tenant as a holdover tenant in possession of the

Premises. If Landlord considers the Lease as having ended, then Tenant shall

nevertheless be obligated to promptly obtain ISRA Clearance as to conditions

caused by Tenant or fulfill the obligations set forth in subparagraph (h),

above, as the case may be. If Landlord treats Tenant as a holdover tenant in

possession of the Premises, then Tenant shall monthly pay to Landlord double the

regular and additional monthly rent that Tenant would otherwise have paid, until

such time as Tenant obtains ISRA Clearance or fulfills its obligations under

subparagraph (h), above, as the case may be, and during the holdover period all

of the terms of this Lease shall remain in full force and effect.

Notwithstanding anything contained in this Section 4.6(i) to the contrary, if

the failure to obtain ISRA clearance is not due to acts of the Tenant, the

Tenant shall not be obligated to pay any additional rental if the Lease cannot

be terminated due to such non-Tenant caused failure to obtain ISRA clearance.

 

            (j) Tenant represents and warrants to Landlord that Tenant intends

to use the Premises as set forth in Section 1.5, which operations have the

following Standard Industrial Classification (SIC) numbers as defined by the

most recent edition of the Standard Industrial Classification Manual published

by the Federal Executive Office of the President, Office of Management and

Budget: _____. Tenant's use of the Premises shall be restricted to the

classifications set forth above unless Tenant obtains Landlord's prior written

consent to any change in use of the Premises. Prior to the Commencement Date of

Tenant's Lease term, Tenant shall supply to

 

                                       -23-

<PAGE>

 

Landlord an affidavit of an officer of Tenant ("Officer's Affidavit) setting

forth Tenant's SIC numbers and a detailed description of the operations and

processes Tenant shall undertake at the Premises, organized in the form of a

narrative report including a description and quantification of hazardous or

toxic substances, pollutants, and wastes to be generated, manufactured, refined,

transported, treated, stored, handled, or disposed of at the Premises. Following

commencement of the Lease term, Tenant shall notify Landlord by way of a

supplemental Officer's Affidavit as to any changes in Tenant's operation, SIC

numbers, or use, generation, manufacture, refining, transportation, treatment,

storage, handling, or disposal of hazardous or toxic substances, pollutants, and

wastes. Tenant shall not commence or alter any operations at the Premises prior

to (A) obtaining all required operating and discharge permits or approvals,

including but not limited to air pollution control permits and water pollution

discharge elimination system permits from the NJDEP, from all governmental or

public authorities having jurisdiction over Tenant's operations or the Premises,

and (B) providing a copy of the permits or approvals to Landlord.

 

             (k) Upon twenty-four hours notice, Tenant shall permit Landlord and

Landlord's agents, servants and employees, including but not limited to legal

counsel and environmental consultants and engineers, access to the Premises for

the purposes of environmental inspection and sampling during regular business

hours, or during other hours either by agreement of the parties or in the event

of any environmental emergency. Tenant shall not restrict access to any part of

the Premises, and Tenant shall not impose any conditions to access. In the event

that Landlord's environmental inspection shall include sampling and testing of

the Premises, Landlord shall use its best efforts to avoid unreasonably

interfering with Tenant's use of the Premises and, on completion of sampling and

testing, shall, to the extent reasonably practicable, repair and restore the

affected areas of the Premises from any damage caused by the sampling and

testing.

 

            (l) Tenant shall indemnify, defend and hold harmless Landlord from

and against all claims, liabilities, losses, damages, penalties and costs,

foreseen or unforeseen, including without limitation, counsel, engineering and

other professional or expert fees, which Landlord may incur resulting directly

and wholly from Tenant's or Tenant's agents' or employees' action or non-action

with regard to Tenant's obligations under this Section.

 

            (m) This Section shall survive the expiration or earlier termination

of this Lease. Tenant's failure to abide by the terms of this Section shall be

restrainable by injunction.

 

                                      -24-

<PAGE>

 

            (n) Landlord shall cooperate with Tenant in regard to Tenant's

compliance with ISRA requirements to the extent Landlord's cooperation is

reasonably necessary.

 

            (o) Tenant shall cooperate with Landlord in regard to compliance by

Landlord or another tenant of the Building with ISRA requirements to the extent

Tenant's cooperation is reasonably necessary.

 

            (p) The Landlord shall indemnify the Tenant under Sections 4.5 and

4.6 hereof for the failure of the Landlord to comply with Sections 4.5 and 4.6

hereof, including ISRA compliance and the use of Hazardous Substances at the

Project. In addition, the Landlord's indemnification under this subsection shall

survive the expiration or termination of the Lease.

 

                                       5.

 

      5.1 CONDITION OF THE PREMISES AND THE PROJECT.

 

            (a) The Premises shall be delivered to Tenant, and Tenant shall

accept same, with the improvements to be provided by Landlord as provided in

EXHIBIT D. As used in this Lease, the term "Leasehold Improvements" means any

and all improvements and tenant finish existing in the Premises as of the

Commencement Date including Tenant's Work as set forth and described in EXHIBIT

D, as well as any and all Premises Alterations (as hereinafter defined) and

subsequent improvements made to the Premises during the term of this Lease.

 

            (b) Tenant acknowledges that no representations as to the condition

of the Premises or the Project, nor promises to alter, remodel or improve the

Premises or the Project, have been made by Landlord, except as are expressly set

forth in this Lease.

 

      5.2 ALTERATIONS TO THE PREMISES OTHER THAN WORK PURSUANT TO EXHIBIT D.

 

            (a) Without first obtaining Landlord's written approval of Tenant's

contractors and the plans and specifications therefor, which approval shall not

be unreasonably withheld with regard to non-structural alterations, Tenant shall

not make or allow to be made any alterations, physical additions or other

Leasehold Improvements (including fixtures) in or to the Premises (such

alterations, additions and other Leasehold Improvements being herein called

"Premises Alterations"); or place safes, vaults, file systems or other heavy

furniture or equipment within the Premises in excess of a weight of eighty (80)

pounds per square foot. Advance written approval shall not be required for the

non-structural installation of telephones, telegraph equipment, or electrical

devices and attachments. To the extent the Building Rules (EXHIBIT G) require

 

                                      -25-

<PAGE>

 

Landlord's consent to positioning of safes, files, filing systems and other

heavy equipment, such consent shall not unreasonably be withheld. If such

approval is given, prior to commencement of construction Tenant shall deliver to

Landlord all building permits required for such construction, a certificate of

insurance from Tenant's contractors confirming the existence of all insurance

reasonably required by Landlord and a copy of the executed construction contract

covering such Premises Alterations. Landlord's approval, if given, shall create

no responsibility or liability on the part of Landlord for, or warranty by

Landlord with respect to, the completeness or design sufficiency or compliance

with any laws, ordinances, orders, rules, regulations or other requirements of

governmental authority applicable thereto. Tenant shall pay to Landlord, upon

demand, a fee to reasonably compensate Landlord for the actual cost of review

and monitoring the construction of such Premises Alterations. Tenant shall

deliver to Landlord a copy of the "as-built" plans and specifications for all

Premises Alterations on a diskette in AutoCAD or compatible format.

 

            (b) With respect to all Premises Alterations, Tenant shall have sole

responsibility for payment of, and shall pay, such contractors. Tenant shall

have sole responsibility for coordinating, and shall coordinate, the work to be

supplied or performed by such contractors, both among themselves and with any

contractors selected by the Landlord. Each such contractor shall perform its

work in a good and workmanlike manner and shall not interfere with or hinder the

Landlord or any other contractor in any manner. With respect to all Premises

Alterations, there shall be no labor dispute of any nature whatsoever involving

any such contractor or any workmen of such contractor or the unions of which

they are members; and if such a labor dispute exists or comes into existence the

Tenant shall forthwith, at the Tenant's sole cost and expense, remove all such

contractors and their workmen from the Premises, from the Building, and from the

Project. During any Premises Alterations, Tenant shall have the sole

responsibility for the security of the Premises and all contractors' materials

equipment and work, regardless of whether their work is in progress or

completed.

 

            (c) All items of Tenant's Work, Premises Alterations and Leasehold

Improvements whether or not the cost is covered by the Allowance, as defined in

EXHIBIT D (other than Tenant's trade fixtures) shall immediately become the

property of Landlord and shall be surrendered to Landlord with the Premises as

part thereof at the end of the Lease term; provided, however, that if at the

time the Working Drawings are approved or Landlord's consent is obtained to any

Premises Alterations, Landlord requests Tenant to remove any such items

installed by or on behalf of Tenant, Tenant shall cause the same to be removed

at Tenant's expense on or before the expiration of the Lease term, or shall

reimburse Landlord for the cost of such removal, as elected by landlord. It is

understood and agree that

 

                                       -26-

<PAGE>

 

Tenant shall be obligated without further request to remove at its cost and

expense all of Tenant's cable installed in Tenant's computer room or elsewhere

in the Premises as well as the raised floor in Tenant's computer room. Tenant

shall remove all of Tenant's personal property from the Premises on or before

the expiration of the Lease term except as provided in this Section 5.2(c) as to

Premises Alterations. Any personal property belonging to Tenant or to any other

person or entity which is left in the Premises after the date this Lease is

terminated for any reason shall be deemed to have been abandoned. In such event,

Landlord shall have the right to store such property at Tenant's sole cost

and/or to dispose of it in whatever manner Landlord considers appropriate,

without waiving its right to claim from Tenant all expenses and damages caused

by Tenant's failure to remove such property, and Tenant and any other person or

entity shall have no right to compensation from or any other claim against

Landlord as a result.

 

            (d) Tenant shall indemnify and hold harmless Landlord from and

against all costs (including reasonable attorneys' fees and costs of suit),

losses, liabilities, or causes of action arising out of or relating to any

Premises Alterations, including but not limited to any mechanics' or

materialmen's liens asserted in connection therewith. The Tenant shall not

permit or suffer the filing of any mechanic's notice of intention or other lien

or prospective lien by any contractor or subcontractor with respect to the

Building or the Land or any interest therein. Should any mechanics' or other

liens be filed against any portion of the Building and/or the Land or any

interest therein by reason of Tenant's acts or omissions or because of a claim

against Tenant or its contractors, Tenant shall cause the same to be canceled or

discharged of record or provide such payment bond(s) from a reputable,

financially sound institutional surety as will in the reasonable opinion of the

Landlord, or any Interest Holder (as that term is defined in Section 11.1) be

adequate to assure the complete discharge and release thereof within fifteen

(15) days after written notice by Landlord. If Tenant shall fail to cancel or

discharge said lien or liens, or provide said bond(s) within said fifteen (15)

day period, which failure shall be deemed to be a default hereunder, Landlord

may, at its sole option and in addition to any other remedy of Landlord

hereunder, cancel or discharge the lien or liens and upon Landlord's demand,

Tenant shall promptly reimburse Landlord for all actual costs incurred in

canceling or discharging such lien or liens. Tenant's indemnification of

Landlord under this paragraph shall survive the expiration or termination of

this Lease.

 

                                      -27-

<PAGE>

 

      5.3 ALTERATIONS TO THE BUILDING. Notwithstanding anything herein to the

contrary, Landlord hereby expressly reserves the right in its reasonable

discretion to (a) temporarily or permanently change the location of, close,

block or otherwise alter any entrances, corridors, skywalks, tunnels, doorways

or walkways leading to or providing access to the Building or any part thereof

or otherwise restrict the use of same provided such activities do not

unreasonably impair Tenant's access to the Premises or otherwise unreasonably or

materially impair Tenant's use of the Premises, and (b) improve, remodel or

otherwise alter any of the Building, and it is agreed that Landlord shall not

incur any liability whatsoever to Tenant as a consequence thereof and such

activities shall not be deemed to be a breach of any of Landlord's obligations

hereunder. Landlord agrees to exercise good faith in notifying Tenant in writing

within a reasonable time in advance of any alterations, modifications or other

actions of Landlord under this Section 5.3. Any diminution or obstruction of

light, air or view by any structure which is now or may hereafter be constructed

on lands adjacent to the Project shall in no way affect this Lease or impose any

liability on Landlord. Noise, dust or vibration or other incidents to any

construction work in or around the Building shall in no way affect this Lease or

impose any liability on Landlord.

 

      5.4 ACCESS CARDS. Landlord shall furnish Tenant with one hundred

twenty-five (125) security access cards for the Building. Tenant shall be

permitted to install and utilize, at its sole cost, within the Premises door

control access devices complimentary to the access system utilized in the

Building and to install locks on doors entering or within the Premises provided

Tenant supplies Landlord and property management with copies of keys to all such

locks. Access cards will be furnished by Landlord at Tenant's sole cost and

expense. Upon termination of this Lease, Tenant shall surrender to Landlord all

access cards and keys to any locks on doors entering or within the Premises, and

give to Landlord the explanation of the combination of all locks for safes, safe

cabinets and vault doors, if any, in the Premises. Tenant shall not permit any

unauthorized use of the access cards. If Tenant loses any access card, all costs

and expenses incurred by Landlord to adjust the access system due to such loss

or to replace the card shall be paid by Tenant. Upon the termination of any

employee's employment with Tenant, Tenant shall immediately notify Landlord and

the Building's property manager if such employee did not return his access card

prior to his or her departure. If the employee did not, then Landlord shall,

upon notice from Tenant, immediately adjust the access system, at Tenant's sole

cost and expense. Notwithstanding the above, at the time any access card is

lost, or at any time an employee is terminated, Tenant may elect not to adjust

the access system, provided Tenant in either case waives and releases Landlord,

its agents, employees and property

 

                                      -28-

<PAGE>

 

manager from all claims and expenses of any kind or nature known or unknown

arising directly or indirectly in whole or in part from such loss of the access

card and agrees to indemnify and hold all such parties harmless from all such

claims and expenses including reasonable attorneys' fees and costs.

 

      5.5 GRAPHICS, BUILDING DIRECTORY AND NAME.

 

       No signs, numerals, letters or other graphics shall be used or permitted

on the exterior of the Premises, or which may be visible from outside the

Premises, unless approved in advance and in writing by Landlord. Tenant shall be

permitted at Tenant's own cost and expense, to install appropriate signage on

walls adjacent to or on the entrance doors to the Premises, subject to

Landlord's reasonable approval. Maintenance, repair, restoration and removal of

any such interior signage shall also be at Tenant's sole cost and expense. All

signage will be designed using the Building's standard graphics and shall be

subject to all applicable codes and regulations and any development regulations

established for the Building. So long as Tenant occupies at least one entire

floor of the Building and Tenant is the largest tenant in the Building, Tenant

will be permitted exclusive signage on a monument sign adjacent to Route 1. In

addition, Tenant will be permitted signage on a monument at the entrance to the

Project from College Road West and on a monument in front of the Building. The

design, construction, installation, maintenance and any removal of any such

monument signage shall be at the sole cost and expense of Tenant. The initial

cost can be paid out of Tenant's Allowance. All monument signage will be subject

to Princeton Forrestal Center's design and development criteria and the

Restrictive Covenant Declaration for Village South and receipt of all required

approvals from Princeton and Plainsboro Township.

 

      Landlord, at its sole cost and expense, shall include a listing of

Tenant's name on the Building's directory. Tenant shall be permitted its

proportionate share of total lineage on the Building directory board or

directory monitor.

 

                                        6.

 

      6.1 CONDEMNATION.

 

            (a) In the event of a taking or damage related to the exercise of

the power of eminent domain, by any agency, authority, public utility, person,

corporation or entity empowered to condemn property (including without

limitation a voluntary conveyance by Landlord in lieu of such taking or

condemnation) (a "Taking") of (i) the entire Premises, (ii) so much of the

Premises (but not less than 75%) as to prevent or substantially impair its use

by Tenant during the term of this Lease, or (iii) portions of the Building or

Project (but not less than 75%) required for reasonable access to, or

 

                                      -29-

<PAGE>

 

reasonable use of, the Premises (a "Total Taking"), the rights of Tenant under

this Lease and the leasehold estate of Tenant in and to the Premises shall cease

and terminate as of the date upon which title to the property taken passes to

and vests in the condemner or the effective date of any order for possession if

issued prior to the date title vests in the condemner ("Date of Taking").

 

            (b) In the event of a Taking of only a part of the Premises or of a

part of the Project which does not constitute a Total Taking during the term of

this Lease (a "Partial Taking"), the rights of Tenant under this Lease and the

leasehold estate of Tenant in and to the portion of the property taken shall

cease and terminate as of the Date of Taking, and an adjustment to the Rent

shall be made based upon the reduced area of the Premises.

 

            (c) In the event of a Taking of a material portion of the Building

(other than the Premises) such that, in Landlord's reasonable opinion, the

Building cannot be restored in a manner that makes its continued operation

practically or economically feasible, Landlord may terminate this Lease by

giving notice to Tenant within ninety (90) days after the date notice of such

Taking is received by Landlord, provided Landlord terminates all other tenants

in the Building.

 

            (d) If this Lease is terminated pursuant to this Section 6.1,

Landlord shall refund to Tenant any prepaid unaccrued Rent and any other sums

due and owing to Tenant (less any then due and owing Landlord by Tenant), and

Tenant shall pay to Landlord any remaining sums due and owing Landlord under

this Lease, each prorated as of the Date of Taking where applicable.

 

            (e) If this Lease is not terminated as provided for in this Section

6.1, Landlord at its expense shall promptly repair and restore the Building,

Project and/or the Premises to approximately the same condition that existed

immediately prior to the Date of Taking, wear and tear only excepted (and

Landlord shall have no obligation to repair or restore Tenant's improvements to

the Premises or Tenant's property), except for the part taken, so as to render

the Building or Project as complete an architectural unit as practical, but only

to the extent of the condemnation award received by Landlord for the damage.

 

            (f) Landlord reserves all rights to damages and awards paid because

of any Partial or Total Taking of the Premises or the Project. Tenant assigns to

Landlord any right Tenant may have to the damages or award. Further, Tenant

shall not make claims against Landlord or the condemning authority for damages.

Notwithstanding the above, Tenant may pursue a separate claim against the

condemning authority for the value of Tenant's moving expenses, business

interruption and dislocation damages, Tenant's property and trade

 

                                       -30-

<PAGE>

 

fixtures and any other award that would not reduce the award payable to

Landlord.

 

      6.2. DAMAGES FROM CERTAIN CAUSES. Unless any action of Landlord

constitutes recklessness, gross negligence or willful misconduct, Landlord shall

not be liable or responsible to Tenant for (i) any loss or damage to any

property or person occasioned by theft, fire, act of God, public enemy,

injunction, riot, strike, insurrection, war, court order, requisition or order

of governmental body or authority, or any cause beyond Landlord's control, or

(ii) any damage or inconvenience which may arise through repair or alteration of

any part of the Building made necessary by virtue of any such cause. The terms

and provisions of this Section 6.2 shall survive the expiration or termination

of this Lease.

 

      6.3. CASUALTY.

 

            (a) If at any time during the term of this Lease, including any

extension or renewal thereof, the Building is damaged by fire or other casualty,

then, unless this Lease is terminated by Landlord or Tenant as hereinafter

provided, Landlord shall be obligated to promptly commence, and thereafter

prosecute with due diligence, the reconstruction, restoration and repair of the

Building and the Premises to a condition substantially equivalent to that

existing immediately prior to the casualty. If the damage renders the Premises

inaccessible or untenantable in whole or in part, the Rent provided for herein

shall abate thereafter as to the portion of the Premises so effected until such

time as same is accessible and restored to a tenantable condition.

 

            (b) If (i) the Building is damaged to an extent that Landlord's good

faith estimate of the cost of reconstruction, restoration and repair thereof

exceeds sixty percent (60%) of the replacement cost of the Premises, (ii) the

reconstruction, restoration and repair of the Premises or the Building cannot

with reasonable diligence be completed within one hundred eighty (180) days

after the casualty, or (iii) the casualty occurs during the last twelve (12)

calendar months of the term of this Lease, then in any such event Landlord shall

have the right, exercisable by written notice given to Tenant at any time within

thirty (30) days after the occurrence of the casualty, to elect not to

reconstruct, restore or repair the Premises, and in such event this Lease shall

be terminated in all respects effective as of the date of the casualty, all Rent

shall be prorated to the date of the casualty, and the parties hereto shall be

released from any obligations thereafter accruing under this Lease (except as

otherwise provided herein). If Landlord does not complete such repair within two

hundred and seventy (270) days of the date of casualty (which date shall be

extended by any delay in reconstruction caused or contributed to by Tenant),

then Tenant may

 

                                      -31-

<PAGE>

 

terminate this Lease upon ten (10) days prior notice to Landlord received prior

to the date of completion.

 

            (c) Notwithstanding anything contained in this Section 6.3, in no

event shall Landlord be required to expend more to reconstruct, restore and

repair the Building than the amount actually received by Landlord from the

proceeds of the property insurance required to be carried by Landlord under

Section 7.1 hereof, plus the amount of any deductible. Landlord shall notify

Tenant within 120 days of a casualty whether it has received or expects to

receive insurance proceeds sufficient to reconstruct, restore and repair the

Building. Provided, however, the preceding sentence does not give Tenant a

separate right to terminate the Lease if on the 120th day Landlord has received

or still expects to receive sufficient insurance but has simply failed to notify

Tenant, or if Tenant believes such insurance is insufficient to reconstruct,

restore and repair the Building.

 

            (d) In addition to Tenant's right to terminate set forth in

subsection 6.3(b) above, Landlord agrees to notify Tenant within thirty (30)

days of the date of the casualty of Landlord's good faith estimate as to whether

the repair of the Premises can be completed in 180 days or less. If it cannot be

completed in 180 days or less, then (provided Landlord has not elected to

terminate the Lease) Tenant may upon written notice to Landlord (received by

Landlord within thirty (30) days of receipt of such good faith estimate from

Landlord) elect to terminate this Lease, which election shall be effective as of

the date of receipt of such notice by Landlord. In no event shall Tenant have

the right to holdover for more than thirty (30) days without the express written

consent of Landlord. If Tenant does not elect to terminate in accordance with

the above, time being of the essence, the provisions of subsection 6.3(b) shall

apply; however, the periods in which Landlord is obligated to complete repairs

shall commence on the earlier of Landlord's receipt of written notice to proceed

with repair from Tenant or expiration of the Tenant's thirty (30) day period for

election to terminate.

 

                                        7.

 

      7.1. PROPERTY INSURANCE. Landlord shall maintain "all risk" property

insurance on the Building including all Tenant's Work, Premises Alterations and

all Building Standard Improvements equal to full replacement value. Landlord may

also maintain such other additional insurance as is customary for a landlord to

maintain or as may be required by Landlord's lender, including, but not limited

to environmental/pollution insurance, rental abatement insurance and personal

property insurance. There currently is in place an umbrella pollution insurance

policy covering the Project for a three-year period at a total premium of

$20,562.00. Such policy covers the Project and the building and land adjacent to

the Project, consisting

 

                                      -32-

<PAGE>

 

of a total of approximately 24 acres. Said insurance shall be maintained with an

insurance company authorized to do business in New Jersey, in amounts desired by

Landlord and at the expense of Landlord (but with the same to be included in

Operating Expenses) and payments for losses thereunder shall be made solely to

Landlord. If the annual premiums to be paid by Landlord shall exceed the

standard rates because of Tenant's operations within or contents of the Premises

or because the improvements to the Premises are beyond the Building Allowance

set forth in EXHIBIT D, Tenant shall promptly pay the excess amount of the

premium upon request by Landlord (and if necessary, Landlord may allocate the

insurance costs of the Building to give effect to this sentence). Tenant shall

maintain at its expense "all risk" property insurance with vandalism, malicious

mischief and sprinkler leakage endorsements on all of its personal property,

including removable trade fixtures, and any Satellite Dish, defined in EXHIBIT

L, located in or on the Premises and not required to be insured by Landlord

above, such coverage to be for an amount not less than the full replacement cost

of such insured items. All such insurance required to be maintained by Tenant

and shall provide that it shall not be cancellable, nor shall the coverage

thereunder be reduced, without at least thirty (30) days advance written notice

to Landlord. Tenant shall deliver copies of such policies to Landlord, or

certificates of insurance in a form satisfactory to Landlord, within ten (10)

days after any request therefor.

 

      7.2. LIABILITY INSURANCE. Tenant shall at its expense, maintain a policy

or policies of commercial general liability insurance with the premiums thereon

fully paid on or before the due dates, issued by and binding upon a solvent

insurance company, such insurance to afford minimum protection (which may be

effected by primary and/or excess coverage) of not less than $2,000,000 combined

single limit for personal injury or death in any one occurrence. All such

insurance required to be maintained by Tenant shall name Landlord and any

Interest Holder as an additional insured thereunder and shall provide that it

shall not be cancellable, nor shall the coverage thereunder be reduced, without

at least thirty (30) days advance written notice to Landlord. In addition, such

insurance policies to be maintained by Tenant shall have deductible amounts or

self-insured retention not greater than $100,000. Tenant shall deliver copies of

such policies to Landlord or certificates of insurance in a form satisfactory to

Landlord (as directed by Landlord) within ten (10) days after any request

therefor.

 

      7.3. HOLD HARMLESS; MUTUAL INDEMNITY.

 

            (a) Tenant releases Landlord from all liability for any bodily

injury or property damage occurring in the Premises, and agrees to protect,

defend, indemnify and hold Landlord harmless from and against all liabilities,

claims, suits, actions and costs (including reasonable attorneys' fees and costs

of suit) arising out

 

                                      -33-

<PAGE>

 

of or in connection with any such bodily injury or property damage, except to

the extent that such injury or damage is attributable to any breach of this

Lease by Landlord or the negligence or willful misconduct of Landlord, its

agents, servants, employees or contractors, or except to the extent Landlord may

be liable under Section 6.2 of the Lease. Landlord hereby agrees to protect,

defend, indemnify and hold Tenant harmless from and against all liabilities,

claims, suits, actions and costs (including reasonable attorneys' fees and costs

of suit) arising out of or in connection with any bodily injury or property

damage occurring in the Premises, to the extent that such injury or damage is

attributable to any breach of this Lease by Landlord or the negligence or

willful misconduct of Landlord, its agents, servants, employees or contractors,

or except to the extent Landlord may be liable under Section 6.2 of the Lease.

 

            (b) Landlord releases Tenant from all liability for any bodily

injury or property damage occurring in any area of the Building other than the

Premises and Landlord agrees to indemnify and hold Tenant harmless from and

against all claims for such bodily injury or property damage, except to the

extent that such injury or damage is attributable to any breach of this Lease by

Tenant or the negligence or willful misconduct of Tenant, its agents, servants,

employees, contractors, customers or invitees. Tenant hereby agrees to protect,

defend, indemnify and hold Landlord harmless from and against all liabilities,

claims, suits, actions and costs (including reasonable attorneys' fees and costs

of suit) arising out of or in connection with any bodily injury or property

damage occurring in any area of the Building other than the Premises, to the

extent that such injury or damage is attributable to any breach of this Lease by

Tenant or the negligence or willful misconduct of the Tenant, its agents,

servants, employees, contractors, customers or invitees.

 

      7.4. WAIVER OF CLAIMS AND RECOVERY RIGHTS. Anything in this Lease to the

contrary notwithstanding, Landlord and Tenant each, on behalf of themselves and

their respective heirs, successors, legal representatives, assigns and insurers,

hereby (a) waives any and all rights of recovery, claims, actions or causes of

action against the other and its respective officers, directors, partners,

shareholders, agents, servants, employees, guests, licensees or invitees for any

loss or damage that may occur to the Premises or other portion of the Project,

or any improvements thereto, or any personal property of such party therein, by

reason of fire, the elements, or any other cause which is required to be insured

against under the terms of the insurance policies referred to in Section 7.1

hereof, regardless of cause or origin, including negligence of the other party

hereto or its respective officers, directors, partners, shareholders, agents,

servants, employees, guests, licensees or invitees, and (b) covenants that no

insurer shall hold any right of subrogation against such other party; provided,

however, the waiver set forth in this Section 7.4 shall not apply to any

deductibles on insurance policies carried

 

                                      -34-

<PAGE>

 

by Landlord or Tenant or to any coinsurance penalty which Landlord or Tenant

might sustain. If the respective insurer of Landlord and Tenant does not permit

such a waiver without an appropriate endorsement to such party's insurance

policy, then Landlord and Tenant each shall notify its insurer of the waiver set

forth herein and to secure from such insurer an appropriate endorsement to its

respective insurance policy with respect to such waiver.

 

                                        8.

 

      8.1 DEFAULT BY TENANT. The occurrence of any one or more of the following

events shall constitute an "Event of Default" under this Lease:

 

            (a) Tenant shall fail to pay any sum of Rent when due, and such

failure shall continue for ten (10) days after such due date provided; however,

that Landlord agrees that Landlord shall, prior to exercising any remedies for

nonpayment set forth in Section 8.2 hereunder, provide Tenant with written

notice of nonpayment on the first occasion of nonpayment during any consecutive

twelve month period and Tenant shall not be in default if it cures such

nonpayment within ten (10) days of receipt of such notice. Once given by

Landlord on the one occasion, Landlord shall have no further obligation to give

written notice with respect to such default or any subsequent monetary default

during such twelve month period;

 

            (b) Tenant shall fail to execute and acknowledge or otherwise

respond in good faith and in writing within ten (10) days after submission to

Tenant of a request for confirmation of the subordination of this Lease pursuant

to Section 11.1(a), confirmation of the subordination of a mortgage or deed of

trust lien to this Lease pursuant to Section 11.1(b) or an estoppel certificate

pursuant to Section 11.2;

 

            (c) Tenant shall fail in the performance of any of the other

covenants or conditions not included in subparagraphs (a) and (b) of this

Section 8.1 which Tenant is required to observe and to perform under this Lease

and such failure shall continue for thirty (30) days after written notice to

Tenant; unless such failure materially and adversely affects the Building or the

operation thereof or other tenants or violates law and in such event Tenant

fails to cure same within ten (10) days of receipt of written notice; however,

if the failure requires performance of any obligation that cannot be fully

performed within such thirty (30) day period then Tenant shall not be in default

hereof if it commences to cure such failure within such thirty (30) day period

and diligently prosecutes completion of such cure;

 

            (d) the interest of Tenant under this Lease shall be levied on under

execution or other legal process; any petition shall

 

                                       -35-

<PAGE>

 

be filed by or against Tenant to declare Tenant a bankrupt or to delay, reduce

or modify Tenant's debts or obligations, or to reorganize or modify Tenant's

capital structure; provided, however, in the event such petition or proceeding

is involuntary, Tenant shall have sixty (60) days after its commencement to have

such petition or proceeding dismissed; Tenant is declared insolvent according to

law; any assignment of Tenant's property shall be made for the benefit of

creditors; or a receiver or trustee is appointed for Tenant or its property and

such levy, execution, legal process, petition, declaration, assignment or

appointment is not removed or vacated within thirty (30) days from the date of

its creation, service or filing;

 

            (e) Tenant shall fail to occupy the Premises within thirty (30) days

following the Commencement Date, or shall vacate or abandon the Premises for a

period of thirty (30) or more continuous days at any time during the term of

this Lease or any renewals or extensions thereof, and shall fail to perform its

other obligations under this Lease; or

 

            (f) Tenant, if a corporation, shall cease to exist as a corporation

in good standing in the state of its incorporation, or Tenant, if a partnership

or other entity, shall be dissolved or otherwise liquidated except as otherwise

permitted in Section 9.1(f) of this Lease.

 

      8.2 REMEDIES. Upon the occurrence of any Event of Default, at Landlord's

option, Landlord may (without further notice or grace) exercise any one or more

of the following remedies, in addition to all other rights and remedies provided

at law or in equity:

 

            (a) Terminate this Lease and immediately repossess the Premises by

forcible entry and detainer suit or otherwise, in accordance with applicable

law, and be entitled to recover forthwith as damages a sum of money equal to the

total of (i) the cost of recovering the Premises (including reasonable legal

fees and costs of suit), (ii) the unpaid Rent earned at the time of termination,

plus interest thereon at the Default Rate which shall be equal to the Prime Rate

as defined in Section 2.3(e), (iii) the balance of the Stated Rentals for the

remainder of the term of this Lease, less the fair market rental value of the

Premises for said period, taking into account the period of time during which

the Premises is likely to remain vacant until a new tenant commences payment of

rental and the reasonably anticipated out-of-pocket expenses to be incurred by

Landlord to relet the Premises (such as the cost of preparation of the Premises,

leasing commissions and reasonable legal fees associated with occupancy by a new

tenant), and (iv) any other sum of money and damages owed by Tenant to Landlord

under the terms of this Lease. The provisions of this paragraph shall survive

the expiration or termination of this Lease. For the purpose of calculating

 

                                      -36-

<PAGE>

 

Landlord's damages under clause (iii) of this paragraph, Tenant covenants and

agrees that:

 

                  (i) it shall be assumed that the Additional Rental for the

calendar year in which this Lease is terminated would be equal to the Additional

Rental for the last full calendar year prior to termination, increased at a rate

equal to the average rate of increase (if any) of Operating Expenses for the

three (3) full calendar years preceding the calendar year of termination (the

"Escalation Rate"), and that the Additional Rental for each year thereafter for

the remainder of the term would be equal to the Additional Rental for the

preceding calendar year (calculated in the same manner as for the year of

termination), increased at the Escalation Rate; and

 

                  (ii) Landlord may rely upon the average of the determinations

of the fair market rental value of the Premises for the remainder of the term of

this Lease made independently and in writing by three (3) reputable real estate

brokers active in the leasing of office space comparable to the Premises in the

Princeton, New Jersey area office market selected by Landlord. Provided,

however, Landlord shall not select a broker that is currently engaged by

Landlord in the Princeton market, Tenant shall have no right to dispute the

value so calculated.

 

            (b)    Terminate Tenant's right of possession (but not this Lease)

and immediately repossess the Premises by forcible entry and detainer suit or

otherwise, in accordance with applicable law, without thereby releasing Tenant

from any liability hereunder and without terminating this Lease, and shall be

entitled to recover forthwith as damages a sum of money equal to the total of

(i) the cost of recovering the Premises (including reasonable legal fees and

costs of suit), (ii) the unpaid Rent earned at the time of termination, plus

interest thereon at the Default Rate, and (iii) any other sum of money and

damages then owed by Tenant to Landlord under the terms of this Lease. In

addition, Tenant shall remain liable for the payment of all Stated Rentals as

same become due under the terms of this Lease. After regaining possession of the

Premises under this Section 8.3(b), Landlord shall use commercially reasonable

efforts to relet the Premises on such terms and conditions as Landlord in its

sole, good faith judgment deems acceptable, and if the Premises are so relet,

Tenant shall receive credit against the sums otherwise payable to Landlord

hereunder only for the amount of the Net Reletting Income (as hereinafter

defined). For the purpose of such reletting Landlord shall be authorized but not

obligated to decorate or to make any repairs, changes, alterations or additions

in or to Premises as may be reasonably necessary or desirable. Landlord reserves

the right, however (x) to lease any other space available in the Building prior

to offering the Premises for lease, (y) to refuse to lease the Premises to any

potential tenant that does not meet

 

                                      -37-

<PAGE>

 

Landlord's standards and criteria for leasing other comparable space in the

Building (including, without limitation, rental rates), and (z) to reconfigure

the Premises and lease only portions thereof or lease all or part of the

Premises in combination with other space. Any payments due Landlord under this

Section 8.3(b) shall be made upon demand therefor from time to time, and Tenant

agrees that Landlord may file suit to recover any sums falling due under the

terms of this Section 8.3(b) from time to time. No delivery to or recovery by

Landlord of any portion due Landlord hereunder shall be any defense in any

action to recover any amount not theretofore reduced to judgment in favor of

Landlord, nor shall any reletting be construed as an election on the part of

Landlord to terminate this Lease unless a written notice of such intention be

given to Tenant by Landlord. Notwithstanding any such reletting without

termination, Landlord may at any time thereafter elect to terminate this Lease

for such previous breach. As used above, the term "Net Reletting Income" means

the amount of all rentals actually received by Landlord in respect of a

reletting of the Premises during the term of this Lease, less all the actual

costs and expenses incurred by Landlord in connection with such reletting,

including, without limitation, leasing commissions, demolition of existing

improvements and installation of new improvements and/or the allowances provided

therefor, and legal fees.

 

            (c) Enter upon the Premises by use of a master key, a duplicate key

or other peaceable means, and alter the door locks on all entry doors of the

Premises, thereby excluding Tenant and its officers, principals, agents,

employees, contractors, representatives and invitees. If Landlord elects to so

exclude Tenant from the Premises without terminating this Lease or Tenant's

right to possession of the Premises pursuant to the provisions of this Lease,

then Landlord shall be obligated to provide Tenant a key to re-enter the

Premises only upon payment in full of all delinquent Rent and other amounts due

under this Lease and the curing of all other defaults, if any. If this Lease or

Tenant's right of possession of the Premises is terminated, Landlord shall have

no obligation to provide Tenant a key to re-enter the Premises, but Landlord

will, during Landlord's regular business hours, at Landlord's convenience and

upon written request by Tenant, escort Tenant or its authorized personnel to the

Premises to retrieve personal belongings of Tenant's employees and any property

of Tenant.

 

            (d) If Landlord terminates this Lease or Tenant's right to

possession (without terminating the Lease), Landlord shall use commercially

reasonable efforts to mitigate Landlord's damages by re-letting the Premises

following Tenant's vacancy thereof, but in doing so, Tenant agrees that Landlord

shall not be required to (i) give preference to re-letting the Premises prior to

leasing other space that Landlord has available, i.e., any prospective tenant's

space requirements will dictate Landlord's leasing activities, (ii) expend

 

                                       -38-

<PAGE>

 

any sums to so re-let or (iii) re-let at rental rates less than rental rates

then being offered to new tenants of the Building. Landlord shall not be liable

for nor shall Tenant's obligation hereunder be diminished because of Landlord's

failure to relet the Premises or collect any rentals due in respect of such

reletting.

 

      8.3 LANDLORD'S RIGHT TO CURE DEFAULTS. All agreements and provisions to be

performed by Tenant under any of the terms of this Lease shall be at Tenant's

sole cost and expense and without any abatement of Rent. If Tenant shall fail to

pay any sum of money, other than Stated Rentals, required to be paid by it

hereunder or shall fail to cure any default and such failure shall continue for

ten (10) days, or such longer period elsewhere provided, after notice thereof by

Landlord, then Landlord may, but shall in no event be obligated to, make any

such payment or perform any such act on Tenant's account, and such cure by

Landlord shall not be deemed a waiver by Landlord of any of its other remedies

or a release of Tenant from any obligations hereunder. All sums so paid by

Landlord and all costs incurred by Landlord in taking such action shall be

deemed additional rent hereunder and shall be paid to Landlord on demand, and

Landlord shall have (in addition to all other rights and remedies of Landlord)

the same rights and remedies in the event of the non-payment thereof by Tenant

as in the case of default by Tenant in the payment of Rent hereunder.

 

      8.4 NON-WAIVER. Failure of Landlord to declare any default immediately

upon occurrence thereof, or delay in taking any action in connection therewith,

shall not waive such default, but Landlord shall have the right to declare any

such default at any time and take such action as might be lawful or authorized

hereunder, either in law or in equity.

 

      8.5 HOLDING OVER. If Tenant continues in occupancy of the Premises after

expiration or termination of this Lease without the written consent of Landlord,

Tenant shall pay as Rent for the holdover period (pro rated on a daily basis) an

amount equal to one hundred fifty (150%) percent of the Stated Rentals payable

immediately prior to the expiration or termination. No holding over by Tenant

after the term of this Lease without the written consent of Landlord shall be

construed to extend the term hereof. Any holding over with the written consent

of Landlord shall constitute this a tenancy at sufferance relationship between

Landlord and Tenant, unless specifically stated otherwise in such consent. The

provisions of this paragraph shall survive the expiration or termination of this

Lease.

 

      8.6 LANDLORD'S DEFAULT. Landlord shall not be deemed in default hereunder

unless Tenant shall have given Landlord written notice of such default

specifying such default with particularity and Landlord shall thereupon have

thirty (30) days in which to cure any

 

                                      -39-

<PAGE>

 

default unless such default cannot reasonably be cured within such period

wherein Landlord shall not be in default if it commences to cure the default

within the thirty (30) day period and diligently pursues completion of same. If

Landlord disputes the existence of such default, Landlord's commencement to cure

any alleged default shall not be an admission by Landlord that it is in default,

nor shall anything herein abrogate or diminish Tenant's obligation to mitigate

its damages. In the event of any default by Landlord, Tenant agrees that its

exclusive remedy shall be an action for damages, except that Tenant shall have

the right to bring an action for specific performance if Tenant is not in

default.

 

                                       9.

 

      9.1 ASSIGNMENT OR SUBLEASE BY TENANT.

 

            (a) Tenant shall not assign this Lease, sublet all or any part of

the Premises or allow the Premises to be used or occupied by others (any such

event being referred to herein as a "Transfer"), or mortgage or otherwise

encumber its leasehold estate under this Lease or its property within the

Premises, without Landlord's prior written consent, which consent shall not to

be unreasonably withheld, conditioned or delayed.

 

            (b) Tenant shall give Landlord at least thirty (30) days advance

written notice of any proposed Transfer, stating the anticipated terms thereof.

Landlord shall then have a period of fifteen (15) days following receipt of such

notice within which to notify Tenant in writing that Landlord elects to either

(i) terminate this Lease as to the space so affected, in which event Tenant

shall be relieved of all obligations hereunder as to such space arising from and

after such date, or (ii) consent to the proposed Transfer, subject to Landlord's

subsequent written approval of the proposed transferee. Notwithstanding the

foregoing, Landlord will not have a right of re-capture if Tenant continues to

occupy more than fifty (50%) percent of the Premises.

 

            (c) Tenant agrees that it will be reasonable for Landlord to

withhold its consent to a proposed Transfer if any one of the following is true,

(i) Tenant is then in default under the Lease beyond any applicable notice and

cure period, (ii) the nature and character of the proposed transferee, its

business activities or its intended use of the Premises are not consistent with

the standards of the Building in Landlord's sole judgment, (iii) the proposed

transferee (including any "Affiliate" as defined in Paragraph (f), below) has a

net worth less than that of Tenant on the anticipated date of such proposed

Transfer, (iv) the proposed occupancy would impose an extra burden upon the

Building systems or Landlord's ability to provide services to the other tenants

of the Buildings, (v) the granting of such consent would constitute a default

under any

 

                                       -40-

<PAGE>

 

other agreement to which Landlord is a party or by which Landlord is bound,

including, without limitation, any exclusives previously granted to other

tenants of the Project as of the date of this Lease and any restrictions on

leasing contained in any other leases of space in the Building, which Tenant has

written notice of prior to any approved assignment or sublease, or (vi) the

proposed transferee is then a tenant in the Building (unless Landlord has no

available space for such tenant's expansion) or has executed a document to

become a tenant in a Building.

 

            (d) If Landlord consents to a Transfer, Tenant agrees that one-half

of all Rent amounts payable to Tenant in respect of the Transfer (net of the

costs incurred by Tenant with respect to such Transfer) in excess of the Stated

Rentals for the Premises or the portion thereof subject to the Transfer shall be

paid to Landlord as additional rental hereunder immediately upon Tenant's

receipt thereof. Tenant acknowledges and agrees that, notwithstanding Landlord's

consent to any Transfer, Tenant shall remain directly and primarily liable for

the performance of all the obligations of Tenant hereunder except as set forth

in Section 9.1(b)(i) (including, without limitation, the obligation to pay all

Stated Rentals). The consent by Landlord to any Transfer shall not be deemed in

any manner to be a consent to a use not permitted under Section 1.5(a). Any

consent by Landlord to a particular Transfer shall not constitute Landlord's

consent to any other or subsequent Transfer.

 

            (e) For purposes of this Section 9.1, if Tenant is a corporation,

partnership or limited liability company, the shares or interests of which at

the time of execution of this Lease or during the term hereof are or shall be

held by fewer than one hundred (100) persons, and if at any time during the term

of this Lease a majority or controlling amount of shares or interests shall be

transferred other than by bequest, inheritance, inter vivos gift or transfer in

trust, or to an Affiliated Entity as provided in Paragraph (f) below, without

the prior written consent of Landlord, then such transfer of shares or interests

shall be deemed to be an assignment of this Lease.

 

            (f) Notwithstanding Sections 9.1(b) and (e) above, and provided no

Event of Default has occurred and has not been cured within any applicable cure

period under this Lease, Tenant may effect a Transfer to any Affiliated Entity

without Landlord's prior consent provided Tenant delivers to Landlord a copy of

the executed Transfer documents on a Landlord approved form within thirty (30)

days after such Transfer. Tenant or successor Affiliated Entity, as applicable,

shall not be released of any of its liabilities and obligations under this Lease

including any such liabilities or obligations related to the Transfer. For

purposes hereof, "Affiliated Entity" shall mean an entity which has a net worth

equal to or greater than Tenant on the date of the Transfer and which (i)

controls, is controlled by, or is

 

                                      -41-

<PAGE>

 

in common control with Tenant; or (ii) results from the merger or consolidation

with Tenant; or (iii) acquires all or substantially all of the assets of,

interest in or stock of Tenant; or (iv) is a successor to Tenant by name change

or a change of the state of incorporation.

 

            (g) Notwithstanding Sections 9.1(b) and (e) above, and provided no

Event of Default has occurred and has not been cured within any applicable cure

period under this Lease, Tenant may effect a Transfer in the following instances

without Landlord's prior consent provided Tenant delivers to Landlord a copy of

the executed Transfer documents on a Landlord approved form within thirty (30)

days after such Transfer: (i) in the event Tenant becomes a public company; or

(ii) in the event Tenant is involved in a merger, exchange or other transaction

in which Tenant is not the surviving entity and the transferee has a net worth

of at least $100 million on the date of the Transfer.

 

            (h) Tenant agrees to pay Landlord's reasonable attorneys' fees and

costs if any subletting or assignment is not on Landlord's approved form.

 

      9.2 ASSIGNMENT BY LANDLORD. Landlord shall have the right to transfer

and assign its rights and obligations hereunder to any person or entity

acquiring ownership of the Project, and in such event and upon such transfer

(any such person or entity to have the benefit of, and be subject to, the

provisions of Section 10.1 and 10.2 hereof) no further liability or obligation

shall thereafter accrue against Landlord hereunder, provided such transferee or

assignee assumes full responsibility for Tenant's security deposit described in

Section 2.4 hereof.

 

                                       10.

 

       10.1 PEACEFUL ENJOYMENT. Landlord covenants that Tenant shall and may

peacefully have, hold and enjoy the Premises from those parties claiming

possession or rights to the Premises by or through Landlord, subject to the

other terms hereof, provided that Tenant pays the Rent and other sums herein

recited to be paid by Tenant and performs all of Tenant's covenants and

agreements herein contained. It is understood and agreed that this covenant and

any and all other covenants of Landlord contained in this Lease shall be binding

upon Landlord and its successors only with respect to breaches occurring during

its and their respective ownership of Landlord's interest hereunder.

 

      10.2 LIMITATION OF LANDLORD'S PERSONAL LIABILITY. Tenant agrees to look

solely to Landlord's interest in the Project for the recovery of any judgment

against Landlord, it being agreed that Landlord, its managers, members,

partners, officers, directors and employees shall

 

                                      -42-

<PAGE>

 

never be personally liable for any such judgment. The provision contained in the

foregoing sentence is not intended to, and shall not, limit any right that

Tenant might otherwise have to obtain injunctive relief against Landlord or

Landlord's successors in interest or any suit or action in connection with

enforcement or collection of amounts which may become owing or payable under or

on account of insurance maintained by Landlord.

 

      10.3 LIMITATION OF INTEREST HOLDER'S PERSONAL LIABILITY. If an Interest

Holder shall succeed to the interest of Landlord, the Interest Holder shall have

no personal liability as successor to Landlord, and Tenant shall look only to

the estate and property of the Interest Holder in the Project or the proceeds

thereof for the satisfaction of Tenant's remedies for the collection of a

judgment (or other judicial procedure) requiring the payments of money in the

event of any default by the Interest Holder as landlord under the Lease. In

addition, the Interest Holder as holder of the Mortgage Document or as landlord

under the Lease if it succeeds to that position, shall in no event (a) be liable

to the Tenant for any act or omission of any prior landlord, (b) be subject to

any offset or defense which Tenant might have against any prior landlord, (c) be

liable to the Tenant for any liability or obligation of any prior landlord

occurring prior to the date that the Interest Holder or any subsequent owner

acq