<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1998
Commission File Number: 0-27058
PAREXEL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its Charter)
Massachusetts 04-2776269
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
195 West Street
Waltham, Massachusetts 02451
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (781) 487-9900
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of February 8, 1999, there
were 24,794,179 shares of PAREXEL International Corporation common stock
outstanding.
<PAGE>
PAREXEL INTERNATIONAL CORPORATION
INDEX
Page
Part I. Financial Information
Item 1 Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets-- December 31
and June 30,1998 3
Condensed Consolidated Statements of Operations --
Three months ended December 31, 1998 and 1997; Six
months ended December 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows-- Six
months ended December 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Risk Factors 14
Part II. Other Information 18
Item 1 Legal Proceedings 18
Item 4 Submission of Matters to a Vote of Security Holders 18
Item 6 Exhibits and Reports on Form 8-K 18
Signatures 20
Exhibit Index 21
<PAGE>
Part I. Financial Information
Item 1 - Financial Statements
<TABLE>
PAREXEL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<CAPTION>
December 31, 1998 June 30, 1998
(Unaudited)
----------------- ---------------
<S> ASSETS <C> <C>
Current assets:
Cash and cash equivalents $ 62,973 $ 39,941
Marketable securities 17,850 37,479
Accounts receivable, net 133,199 109,741
Prepaid expenses 9,852 11,895
Other current assets 9,939 10,674
------------------ ----------------
Total current assets 233,813 209,730
Property and equipment, net 45,401 45,311
Other assets 7,262 6,717
================== ================
$286,476 $261,758
================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Credit arrangements $ 111 $ 1,413
Accounts payable 12,262 10,923
Advance billings 59,579 45,273
Other current liabilities 31,547 33,184
------------------ ----------------
Total current liabilities 103,499 90,793
Other liabilities 2,804 2,585
------------------ ----------------
Total liabilities 106,303 93,378
------------------ ----------------
Stockholders' equity:
Preferred stock - $0.01 par value; shares
authorized: 5,000,000; none issued and outstanding - -
Common stock - $0.01 par value; shares authorized:
50,000,000; shares issued: 24,822,291 and 24,657,637 at
December 31 and June 30, 1998, respectively; shares
outstanding: 24,792,879 and 24,628,225 at December 31
and June 30, 1998, respectively 248 246
Additional paid-in capital 152,221 149,921
Retained earnings and cumulative translation adjustment 27,704 18,213
------------------ ----------------
Total stockholders' equity 180,173 168,380
================== ================
$286,476 $261,758
================== ================
See notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
PAREXEL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
<CAPTION>
For the three months For the six months
ended December 31, ended December 31,
1998 1997 1998 1997
-------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net revenue $87,855 $67,993 $170,690 $130,984
-------------- ------------ ------------- -------------
Costs and expenses:
Direct costs 58,890 44,252 112,627 85,561
Selling, general and administrative 17,215 14,089 34,394 27,311
Depreciation and amortization 4,473 3,167 8,715 5,797
Acquisition-related charges - 4,100 - 4,100
-------------- ------------ ------------- -------------
80,578 65,608 155,736 122,769
-------------- ------------ ------------- -------------
Income from operations 7,277 2,385 14,954 8,215
Other income, net 627 883 1,340 2,041
-------------- ------------ ------------- -------------
Income before provision for income taxes 7,904 3,268 16,294 10,256
Provision for income taxes 2,763 1,361 5,648 4,010
-------------- ------------ ------------- -------------
Net income $5,141 $1,907 $10,646 $6,246
============== ============ ============= =============
Earnings per common share:
Basic $0.21 $0.08 $0.43 $0.26
Diluted $0.21 $0.08 $0.42 $0.25
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
PAREXEL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
<CAPTION>
For the six months ended
December 31,
1998 1997
---------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 10,646 $ 6,246
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 8,715 5,797
Stock compensation charges of acquired company - 2,900
Changes in operating assets and liabilities (7,060) (12,344)
---------------- -----------------
Net cash provided by operating activities 12,301 2,599
---------------- -----------------
Cash flows from investing activities:
Purchase of marketable securities (30,550) (46,319)
Proceeds from sale of marketable securities 50,179 78,073
Acquisition activities - (1,410)
Dividend paid by pooled entity - (1,293)
Purchase of plant and equipment (8,754) (13,862)
---------------- -----------------
Net cash provided by investing activities 10,875 15,189
---------------- -----------------
Cash flows from financing activities:
Proceeds from issuance of common stock 2,302 2,118
Repayments of long-term debt (1,246) (1,754)
---------------- -----------------
Net cash provided by financing activities 1,056 364
---------------- -----------------
Elimination of net cash activities of acquired companies
for duplicated periods - 672
---------------- -----------------
Effect of exchange rate changes on cash and cash equivalents (1,200) 436
---------------- -----------------
Net increase in cash and cash equivalents 23,032 19,260
Cash and cash equivalents at beginning of period 39,941 38,592
---------------- -----------------
Cash and cash equivalents at end of period $62,973 $57,852
================ =================
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
PAREXEL INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 -- Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
PAREXEL International Corporation (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions of Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and notes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (primarily consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the three months ended December 31, 1998, are
not necessarily indicative of the results that may be expected for other
quarters or the entire fiscal year. The financial statements for the three and
six month periods ended December 30, 1997 have been restated to reflect fiscal
1998 acquisitions accounted for under the pooling of interests method. Certain
prior year balances have been reclassified in order to conform to current year
presentation. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended June 30, 1998.
Note 2 -- Earnings per Share
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). Earnings per
share amounts for prior periods presented have been restated to conform to the
SFAS 128 requirements. The following table outlines the basic and diluted
earnings per common share computations (in thousands, except per share data):
<TABLE>
For the three months For the six months
ended December 31, ended December 31,
1998 1997 1998 1997
---------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net income attributable to
common shares $5,141 $1,907 $10,646 $6,246
========== =========== ============= ============
Basic Earnings Per Common Share
Computation:
Weighted average common shares
outstanding 24,787 23,790 24,732 23,751
========== =========== ============= ============
Basic earnings per common share $0.21 $0.08 $0.43 $0.26
========== =========== ============= ============
Diluted Earnings Per Common Share
Computation:
Weighted average common shares outstanding:
Shares attributable to common stock 24,787 23,790 24,732 23,751
Shares attributable to common stock
options 290 862 352 899
---------- ----------- ------------- ------------
25,077 24,652 25,084 24,650
========== =========== ============= ============
Diluted earnings per common share $0.21 $0.08 $0.42 $0.25
========== =========== ============= ============
</TABLE>
<PAGE>
Note 3 - Comprehensive Income
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income" at the beginning of fiscal 1999. SFAS No.
130 establishes new rules for the reporting and display of comprehensive income
and its components. The adoption of SFAS 130 had no impact on the Company's net
income or stockholders' equity. SFAS No. 130 requires the Company's foreign
currency translation adjustments, which prior to adoption were reported
separately in shareholders' equity, to be included in other comprehensive
income. Prior year financial statements have been reclassified to conform to the
requirements of this Statement. Total comprehensive income, which was comprised
of net income and foreign currency translation adjustments, was $4.4 million and
$3.2 million for the three months ended December 31, 1998 and 1997,
respectively. Total comprehensive income for the six months ended December 31,
1998 and 1997 totaled $9.5 million and $7.8 million, respectively.
Note 4 - New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131
"Disclosures about Segments of an Enterprise and Related Information." SFAS No.
131 requires selected information to be reported on the Company's operating
segments. Operating segments are determined by the way management structures the
segments in making operating decisions and assessing performance. The Company is
currently reviewing what changes, if any, this will require on the presentation
of the financial statements for fiscal year 1999. The adoption of this statement
will not have an effect on the Company's financial position or results of
operations but may result in additional disclosures.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes new standards for
the recognition of gains and losses on derivative instruments and provides
guidance as to whether a derivative may be accounted for as a hedging
instrument. Gains or losses from hedging transactions may be wholly or partially
recorded in earnings or comprehensive income as part of a cumulative translation
adjustment. Gains or losses on derivative instruments not classified as hedging
instruments are recognized in earnings in the period of change. SFAS No. 133
will be effective for the Company beginning in fiscal 2000. The Company does not
believe that adoption of SFAS No. 133 will have a material impact on its
financial position or its results of operations.
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The financial information discussed below is derived from the Condensed
Consolidated Financial Statements included herein. The financial information set
forth and discussed below is unaudited but, in the opinion of management,
reflects all adjustments (primarily consisting of normal recurring adjustments)
necessary for a fair presentation of such information. The Company's results of
operations for a particular quarter may not be indicative of results expected
during subsequent fiscal quarters or for the entire year.
The following discussion contains forward-looking statements that involve risks
and uncertainties. Such forward-looking statements include those related to the
adequacy of the Company's existing capital resources and future cash flows from
operations, the Company's Year 2000 readiness and the Company's desire to
continue to expand through acquisitions. The forward-looking statements
contained in the following discussion include, but are not limited to, any
statements containing the words "expects," "anticipates," "estimates,"
"believes," "may," "will," "should" and similar expressions, and the negatives
thereof. The Company's actual experience may differ materially from that
discussed in the forward-looking statement. Factors that might cause such a
difference include, but are not limited to, the potential loss or cancellation
of, or delay of work under, one or more large contracts; the adequacy and
effectiveness of the Company's sales force in winning new business; the ability
to attract, train and retain qualified employees; the Company's ability to
manage adequately its continued expansion; the Company's ability to meet its
deadlines regarding Year 2000 readiness; and future events that have the effect
of reducing the Company's available cash balances such as unexpected operating
losses, capital expenditures or cash expenditures related to possible future
acquisitions; and those discussed in Risk Factors.
Overview
The Company is a leading contract research and medical marketing organization
providing a broad range of knowledge-based product development and product
launch services to the worldwide pharmaceutical, biotechnology and medical
device industries. The Company's primary objective is to help clients quickly
obtain the necessary regulatory approvals of their products and, ultimately,
optimize the market penetration of those products. The Company's service
offerings include: clinical trials management, data management, biostatistical
analysis, medical marketing, clinical pharmacology, regulatory and medical
consulting, performance improvement, industry training and publishing, and other
drug development consulting services.
The Company's contracts are typically fixed price, multi-year contracts that
require a portion of the fee to be paid at the time the contract is entered
into, with the balance of the fee paid in installments during the contract's
duration. Net revenue from contracts is generally recognized on a percentage of
completion basis as work is performed.
Generally, the Company's contracts are terminable upon sixty days' notice by the
client. Clients terminate or delay contracts for a variety of reasons,
including, among others, the failure of products being tested to satisfy safety
requirements, unexpected or undesired clinical results of the product, the
client's decision to forego a particular study, insufficient patient enrollment
or investigator recruitment, or production problems resulting in shortages of
the drug.
As is customary in the industry, the Company routinely subcontracts with third
party investigators in connection with clinical trials and other third party
service providers for laboratory analysis and other specialized services. These
and other reimbursable costs, which vary from contract to contract, are paid by
the client and, in accordance with industry practice, are included in gross
revenue. Reimbursed costs vary from contract to contract. Accordingly, the
Company views net revenue, which consists of gross revenue less reimbursed
costs, as its primary measure of revenue growth.
Direct costs primarily consist of compensation and related fringe benefits for
project-related employees, other project-related costs not reimbursed and
allocated facilities and information systems costs. Selling, general and
administrative expenses primarily consist of compensation and related fringe
benefits for selling and administrative employees, professional services and
advertising costs, as well as allocated costs related to facilities and
information systems.
The Company's stock is currently quoted on the Nasdaq Stock Market under the
symbol "PRXL."
Results of Operations
Three Months Ended December 31, 1998 Compared to Three Months Ended December 31,
1997
Net revenue increased by $19.9 million, or 29.2%, from $68.0 million for the
three months ended December 31, 1997 to $87.9 million for the three months ended
December 31, 1998. This net revenue growth was primarily attributable to an
increase in the volume of projects serviced by the Company. There can be no
assurance that the Company can sustain this rate of increase in net revenue from
continuing operations in future periods. See "Risk Factors."
Direct costs increased by $14.6 million, or 33.1%, from $44.3 million for the
three months ended December 31, 1997 to $58.9 million for the three months ended
December 31, 1998. This increase in direct costs was primarily due to hiring and
personnel costs along with related facilities and information systems costs to
support current and future increased levels of operation. Direct costs as a
percentage of net revenue increased from 65.1% for the three months ended
December 31, 1997 to 67.0% for the three months ended December 31, 1998,
reflecting an increase in overall operational capacity.
Selling, general and administrative expenses increased by $3.1 million, or
22.2%, from $14.1 million for the three months ended December 31, 1997 to $17.2
million for the three months December 31, 1998. This increase was due to
increased personnel, hiring expenses, and facilities costs necessary to
accommodate the Company's growth. As a percentage of net revenue, selling,
general and administrative expenses decreased from 20.7% for the three months
ended December 31, 1997 to 19.6% for the three months ended December 31, 1998.
Depreciation and amortization expense increased by $1.3 million, from $3.2
million for the three months ended December 31, 1997 to $4.5 million for the
three months ended December 31, 1998. The increase is due to capital spending on
information technology, facility improvements and furnishings to support the
increased level of operations. As a percentage of net revenue, depreciation
increased from 4.7% for the three months ended December 31, 1997 to 5.1% for the
three months ended December 31, 1998, reflecting an increase in overall
operational capacity.
Income from operations increased $4.9 million, or 205%, from $2.4 million for
the three months ended December 31, 1997 to $7.3 million for the three months
ended December 31, 1998. During the three months ended December 31, 1997, the
Company incurred a $4.1 million charge related to the acquisition of
Kemper-Masterson, Inc. Excluding the impact of this charge, income from
operations increased from $6.5 million, or 9.6% of net revenue for the three
months ended December 31, 1997 to $7.3 million, or 8.3% of net revenue, for the
three months ended December 31, 1998.
Other income, net decreased by $0.3 million from $0.9 million for the three
months ended December 31, 1997 to $0.6 million for the three months ended
December 31, 1998. This decrease is due to lower average cash, cash equivalent
and marketable securities balances during the second quarter of fiscal 1999 in
comparison to the second quarter of fiscal 1998 due to capital spending and to
fund working capital for an increased level of operations.
The Company had an income tax provision of $2.8 million for the three months
ended December 31, 1998. The effective income tax rate for the three months
ended December 31, 1998, was 35.0% compared to 41.6% for the three months ended
December 31, 1997. Prior to restatement for certain acquisitions accounted for
as pooling of interests, the Company's effective tax rate was 35.0% for the
three months ended December 31, 1997. After restatement, the effective tax rate
increased to 41.6% for the three months ended December 31, 1997 due to unusable
net operating loss carryforwards and non-deductible expenses of the acquired
companies.
Results of Operations
Six Months Ended December 31, 1998 Compared to Six Months Ended December 31,
1997
Net revenue increased by $39.7 million, or 30.3%, from $131.0 million for the
six months ended December 31, 1997 to $170.7 million for the six months ended
December 31, 1998. This net revenue growth was primarily attributable to an
increase in the volume of projects serviced by the Company. There can be no
assurance that the Company can sustain this rate of increase in net revenue from
continuing operations in future periods. See "Risk Factors."
Direct costs increased by $27.1 million, or 31.6%, from $85.6 million for the
six months ended December 31, 1997 to $112.6 million for the six months ended
December 31, 1998. This increase in direct costs was primarily due to hiring and
personnel costs along with related facilities and information systems costs to
support current and future increased levels of operation. Direct costs as a
percentage of net revenue increased from 65.3% for the six months ended December
31, 1997 to 66.0% for the six months ended December 31, 1998, reflecting an
increase in overall operational capacity.
Selling, general and administrative expenses increased by $7.1 million, or
25.9%, from $27.3 million for the six months ended December 31, 1997 to $34.4
million for the six months December 31, 1998. This increase was due to increased
personnel, hiring expenses, and facilities costs necessary to accommodate the
Company's growth. As a percentage of net revenue, selling, general and
administrative expenses decreased from 20.8% for the six months ended December
31, 1997 to 20.1% for the six months ended December 31, 1998.
Depreciation and amortization expense increased by $2.9 million, from $5.8
million for the six months ended December 31, 1997 to $8.7 million for the six
months ended December 31, 1998. The increase was due to capital spending on
information technology, facility improvements and furnishings to support the
increased level of operations. As a percentage of net revenue, depreciation
increased from 4.4% for the six months ended December 31, 1997 to 5.1% for the
six months ended December 31, 1998, reflecting an increase in overall
operational capacity.
Income from operations increased $6.7 million, or 82.0%, from $8.2 million for
the six months ended December 31, 1997 to $15.0 million for the six months ended
December 31, 1998. During the six months ended December 31, 1997, the Company
incurred a $4.1 million charge related to the acquisition of Kemper-Masterson,
Inc. Excluding the impact of this charge, income from operations increased from
$12.3 million, or 9.4% of net revenue for the six months ended December 31, 1997
to $15.0 million, or 8.8% of net revenue, for the six months ended December 31,
1998.
Other income, net decreased by $0.7 million from $2.0 million for the six months
ended December 31, 1997 to $1.3 million for the six months ended December 31,
1998. This decrease resulted from lower interest rates obtained due to a shift
to tax-exempt securities in fiscal 1998, along with lower average balances of
cash, cash equivalents, and marketable securities due primarily to capital
spending and to fund working capital for an increased level of operations.
The Company had an income tax provision of $5.6 million for the six months ended
December 31, 1998. The effective income tax rate for the six months ended
December 31, 1998, was 34.7% compared to 39.1% for the six months ended December
31, 1997. Prior to restatement for certain acquisitions accounted for as pooling
of interests, the Company's effective tax rate was 35.0% for the six months
ended December 31, 1997. After restatement, the effective tax rate increased to
39.1% for the six months ended December 31, 1997 due to unusable net operating
loss carryforwards and non-deductible expenses of the acquired companies.
Liquidity and Capital Resources
Since its inception, the Company has financed its operations and growth,
including acquisition costs, with cash flows from operations and the proceeds
from the sale of equity securities. Investing activities primarily reflect
capital expenditures for information systems enhancements and leasehold
improvements.
The Company's clinical research and development contracts are generally fixed
price, with some variable components, and range in duration from a few months to
several years. The cash flows from contracts typically consist of a down payment
required at the time the contract is entered into and the balance in
installments over the contract's duration, usually on a milestone achievement
basis. Revenue from the contracts is generally recognized on a percentage of
completion basis as work is performed. Accordingly, cash receipts do not
necessarily correspond to costs incurred and revenue recognized on contracts.
The Company's operating cash flow is influenced by changes in the levels of
billed and unbilled receivables and advance billings. These account balances and
the number of days revenue outstanding in accounts receivable, net of advance
billings, can vary based on contractual milestones and the timing and size of
cash receipts. The number of days revenue outstanding in accounts receivable,
net of advance billings, improved to 56 days at December 31, 1998 compared to 65
days at September 30, 1998 due to an increase in cash collections during the
quarter.
The Company had cash and cash equivalents of $63.0 million at December 31, 1998
compared to $39.9 million at June 30, 1998. Net cash provided by operating
activities of $12.3 million resulted primarily from net income excluding
depreciation and amortization expense of $19.4 million, a $14.3 million increase
in deferred revenue and a $2.8 million decrease in other current assets and
prepaid expenses, partially offset by a $23.5 million increase in accounts
receivable.
Net cash provided by investing activities of $10.9 million consisted primarily
of net proceeds from sales of marketable securities of $19.6 million, partially
offset by capital expenditures of $8.8 million related to information
technology, facility improvements and furnishings.
Financing activities consisted primarily of net proceeds from the issuance of
common stock of $2.3 million, partially offset by the repayment of credit
arrangements of $1.2 million.
The Company has domestic and foreign line of credit arrangements with banks
totaling approximately $15.3 million. At December 31, 1998, the Company had
approximately $15.1 million in available credit under these arrangements.
The Company's primary cash needs are for the payment of salaries and fringe
benefits, hiring and recruiting expenses, business development costs,
acquisition-related costs, capital expenditures and facility-related expenses.
The Company believes that its existing capital resources, together with cash
flows from operations and borrowing capacity under its existing lines of credit,
will be sufficient to meet its foreseeable cash needs. In the future, the
Company will continue to consider acquiring businesses to enhance its service
offerings, therapeutic base, and global presence. Any such acquisitions may
require additional external financing and the Company may from time to time seek
to obtain funds from public or private issuance of equity or debt securities.
There can be no assurance that such financing will be available on terms
acceptable to the Company.
Year 2000 Readiness Disclosure Statement
Information systems are an integral part of the services the Company provides.
As such, the Company recognizes that it must ensure that its service and
operations will not be adversely affected by Year 2000 software and equipment
failures (the "Year 2000 Issue") which can arise from the use of date-dependent
systems that utilize only two digits to represent the year applicable to a
transaction; for example, "99" to represent "1999" rather than the full four
digits. Computer systems engineered in this manner may not operate properly when
the last two digits of the year become "00", as will occur on January 1, 2000.
The Company has initiated a four-phase program, led by its Chief Information
Officer and a global, cross-functional team, to assess and remediate the effect
of the Year 2000 Issue on the Company's operations. As part of this program, the
Company is contacting its clients, principal suppliers, and other vendors to
assess whether their Year 2000 Issues, if any, will affect the Company. This
effort is ongoing, with responses already received from more than half of these
entities.
This Company-wide effort began in 1997, and to date, several Year 2000 issues
have already been identified and addressed through planned systems and
infrastructure evolution, replacement, or elimination. The continuing program
described below is to ensure that the Company identifies and addresses all
remaining Year 2000 issues in advance of the year 2000.
The first phase of the program, conducting an inventory of all systems that may
be affected by the Year 2000 Issue, is complete for all critical business
functions. The second phase of the program, the assessment and categorization of
all the inventoried systems by level of priority, reflecting their potential
impact on business continuation, is substantially complete for all key business
areas and is expected to be completed by March 1999. Based on this
prioritization, the third phase is to develop detailed plans to address each
Year 2000 Issue and to develop a general contingency plan in the event that any
critical systems cannot be made fully compliant by January 1, 2000. Contingency
plans will vary by function and will identify the work procedure change or
sourcing alternative to be utilized in the event that the primary system fails.
This third phase is currently in process, with detailed plans already completed
for most critical business functions. The fourth phase of the program is the
implementation of the detailed plans. This phase is also in various states of
completion within the numerous functional areas. It is anticipated that all
functions essential for business continuity will be fully compliant by June 30,
1999.
The Company estimates that the aggregate cost of its Year 2000 program will be
approximately $3 million, of which approximately 20% has already been incurred.
The Company's estimates regarding the cost, timing and impact of addressing the
Year 2000 Issue are based on numerous assumptions of future events, including
the continued availability of certain resources, the ability of the Company to
meet its deadlines and the cooperation of third parties. However, if the Company
cannot continue to utilize certain resources or rely on third parties to respond
timely, or the Company fails to meet its deadlines, actual results could differ
materially from those expected by the Company.
Euro Conversion
On January 1, 1999, certain member countries of the European Union established
fixed conversion rates between their existing currencies and the European
Union's common currency ("Euro"). The transition period for the introduction of
the Euro is from January 1, 1999 to January 1, 2002. The Company has established
a Euro Initiative Project Team to determine how this will affect the Company
with its business processes, applications, and internal and external contracts.
The project team has begun the process of determining the many issues involved
with the introduction of the Euro, including the conversion of information
technology systems, recalculating currency risk, and impacts on the processes
for preparing taxation and accounting records.
While the Company has not yet completed its full assessment of the scope of the
Euro Conversion Issue facing its systems and dependencies, based on its analysis
to date it does not believe that the costs to be incurred will be material.
However, until the full analysis is complete, the Company is unable to
definitively determine whether or not future costs will be material.
<PAGE>
RISK FACTORS
In addition to the other information in this report, the following risk factors
should be considered carefully in evaluating the Company and its business,
including the forward-looking statements made in the section of this report
entitled Management's Discussion and Analysis of Financial Condition and Results
of Operations and other forward-looking statements that the Company may make
from time to time.
Loss or Delay of Large Contracts
Generally, the Company's contracts are terminable upon sixty days' notice by the
client. Clients terminate or delay contracts for a variety of reasons,
including, among others, the failure of products being tested to satisfy safety
requirements, unexpected or undesired clinical results of the product, the
client's decision to forego a particular study, such as for economic reasons,
insufficient patient enrollment or investigator recruitment or production
problems resulting in shortages of the drug. In addition, the Company believes
that cost-containment and competitive pressures have caused pharmaceutical
companies to apply more stringent criteria to the decision to proceed with
clinical trials, and therefore, may result in higher cancellation rates on
contracts with contract research organizations. The loss or delay of a large
contract or the loss or delay of multiple contracts could have a material
adverse effect on the financial performance of the Company.
Variability of Quarterly Operating Results
The Company's quarterly operating results have been subject to variation, and
will continue to be subject to variation, depending upon factors such as the
level of new business authorizations, the timing of the initiation, progress, or
cancellation of significant projects, exchange rate fluctuations, the mix of
services offered, the opening of new offices and other internal expansion costs,
the costs associated with integrating acquisitions and the startup costs
incurred in connection with the introduction of new products and services.
Because a high percentage of the Company's operating costs are relatively fixed,
variations in the initiation, completion, delay or loss of contracts, or in the
progress of client projects can cause material adverse variations in quarterly
operating results.
Dependence on Certain Industries and Clients
The Company's revenues are highly dependent on research and development
expenditures by the pharmaceutical and biotechnology industries. The Company's
operations could be materially and adversely affected by general economic
downturns in its clients' industries, the impact of the current trend toward
consolidation in these industries or any decrease in research and development
expenditures. Furthermore, the Company has benefited to date from the increasing
tendency of pharmaceutical companies to outsource large clinical research
projects. A reversal or slowing of this trend would have a material adverse
effect on the Company. In fiscal 1998, the Company's top five clients accounted
for 34% of the Company's consolidated net revenue. For the three months ended
December 31, 1998, the Company's top five clients accounted for 47% of the
Company's consolidated net revenue, and for the six months ended December 31,
1998, the top five clients accounted for 44% of consolidated net revenue. In
fiscal 1998, one client accounted for 12% of consolidated net revenue, and for
the three months ended December 31, 1998 a different client accounted for 20% of
consolidated net revenue. For the six months ended December 31, 1998, one client
accounted for 19% of consolidated net revenue. The loss of business from a
significant client could have a material adverse effect on the Company.
Management of Business Expansion
The Company's business and operations have experienced substantial expansion
particularly over the past few years. The Company believes that such expansion
places a strain on operational, human and financial resources. In order to
manage such expansion, the Company must continue to improve its operating,
administrative and information systems, accurately predict its future personnel
and resource needs to meet client contract commitments, track the progress of
ongoing client projects and attract and retain qualified management, sales,
professional, scientific and technical operating personnel. Expansion of foreign
operations also may involve the additional risks of assimilating differences in
foreign business practices, hiring and retaining qualified personnel, and
overcoming language barriers. In the event that the operation of an acquired
business does not meet expectations, the Company may be required to restructure
the acquired business or write-off the value of some or all of the assets of the
acquired business. Failure by the Company to meet the demands of and to manage
expansion of its business and operations could have a material adverse effect on
the Company's business.
Risks Associated with Acquisitions
The Company has made a number of acquisitions and will continue to review future
acquisition opportunities. Acquisition candidates may not continue to be
available on terms and conditions acceptable to the Company. Acquisitions
involve numerous risks, including, among other things, difficulties and expenses
incurred in connection with the acquisitions and the subsequent assimilation of
the operations and services or products of the acquired companies, the diversion
of management's attention from other business concerns and the potential loss of
key employees of the acquired company. Acquisitions of foreign companies also
may involve the additional risks of assimilating differences in foreign business
practices and overcoming language barriers. In the event that the operations of
an acquired business do not meet expectations, the Company may be required to
restructure the acquired business or write-off the value of some or all of the
assets of the acquired business. The Company may experience difficulty
integrating acquired companies into the Company's operations.
Dependence on Personnel; Ability to Attract and Retain Personnel
The Company relies on a number of key executives, including Josef H. von
Rickenbach, its President, Chief Executive Officer and Chairman, upon whom the
Company maintains key man life insurance. Although the Company has entered into
agreements containing non-competition restrictions with its senior officers, the
Company does not have employment agreements with certain of these persons and
the loss of the services of any of the Company's key executives could have a
material adverse effect on the Company. In addition, in order to compete
effectively, the Company must attract and maintain qualified sales,
professional, scientific and technical operating personnel. The level of
competition among employers for skilled personnel, particularly those with M.D.,
Ph.D. or equivalent degrees, is high. The Company may not be able to continue to
attract and retain qualified staff.
Potential Liability; Possible Insufficiency of Insurance
Clinical research services primarily involve the testing of experimental drugs
on consenting human volunteers pursuant to a study protocol. Such services
involve a risk of liability for personal injury or death to patients who
participate in the study or who use a drug approved by regulatory authorities
after the clinical research has concluded, due to, among other reasons, possible
unforeseen adverse side effects or improper administration of the new drug by
physicians. In certain cases, these patients are already seriously ill and are
at risk of further illness or death. The Company could be materially and
adversely affected if it were required to pay damages or incur defense costs in
connection with a claim that is outside the scope of an indemnity or insurance
coverage, or if the indemnity, although applicable, is not performed in
accordance with its terms or if the Company's liability exceeds the amount of
applicable insurance. In addition, such insurance may not continue to be
available on terms acceptable to the Company.
Potential Volatility of Stock Price
The market price of the Company's common stock could be subject to wide
fluctuations in response to quarter-to-quarter variations in operating results,
changes in earnings estimates by analysts, market conditions in the industry,
prospects of health care reform, changes in government regulation and general
economic conditions. In addition, the stock market has from time to time
experienced significant price and volume fluctuations that have been unrelated
to the operating performance of particular companies. These market fluctuations
may adversely affect the market price of the Company's common stock. Because the
Company's common stock currently trades at a relatively high price-earnings
multiple, due in part to analysts' expectations of continued earnings growth,
even a relatively small shortfall in earnings from, or a change in, analysts'
expectations may cause an immediate and substantial decline in the Company's
stock price. Investors in the Company's common stock must be willing to bear the
risk of such fluctuations in earnings and stock price.
Dependence on Government Regulation
The Company's business depends on the comprehensive government regulation of the
drug development process. In the United States, the general trend has been in
the direction of continued or increased regulation, although the FDA recently
announced regulatory changes intended to streamline the approval process for
biotechnology products by applying the same standards as are in effect for
conventional drugs. In Europe, the general trend has been toward coordination of
common standards for clinical testing of new drugs, leading to changes in the
various requirements currently imposed by each country. Japan also legislated
GCP and legitimatized the use of contract research organizations in April 1997.
Changes in regulation, including a relaxation in regulatory requirements or the
introduction of simplified drug approval procedures, as well as anticipated
regulation, could materially and adversely affect the demand for the services
offered by the Company. In addition, failure on the part of the Company to
comply with applicable regulations could result in the termination of ongoing
research or the disqualification of data, either of which could have a material
adverse effect on the Company.
Competition
The Company primarily competes against in-house departments of pharmaceutical
companies, full service CROs, and to a lesser extent, universities, teaching
hospitals and other site organizations. Some of these competitors have greater
capital, technical and other resources than the Company. CROs generally compete
on the basis of previous experience, medical and scientific expertise in
specific therapeutic areas, the quality of services, the ability to organize and
manage large-scale trials on a global basis, the ability to manage large and
complex medical databases, the ability to provide statistical and regulatory
services, the ability to recruit investigators and patients, the ability to
integrate information technology with systems to improve the efficiency of
contract research, an international presence with strategically located
facilities, financial viability and price.
The CRO industry is fragmented, with participants ranging from several hundred
small, limited-service providers to several large, full-service CROs with global
operations. Large CROs against whom PAREXEL competes include Quintiles
Transnational Corporation, Covance Inc., and Pharmaceutical Product Development,
Inc. The trend toward CRO industry consolidation has resulted in heightened
competition among the larger CROs for clients and acquisition candidates. In
addition, consolidation within the pharmaceutical industry, as well as
pharmaceutical companies outsourcing to a fewer number of preferred CROs, has
led to heightened competition for CRO contracts.
Potential Adverse Impact of Health Care Reform
Numerous governments have undertaken efforts to control growing health care
costs through legislation, regulation and voluntary agreements with medical care
providers and pharmaceutical companies. In the last few years, several
comprehensive health care reform proposals were introduced in the U.S. Congress.
The intent of the proposals was, generally, to expand health care coverage for
the uninsured and reduce the growth of total health care expenditures. While
none of the proposals were adopted, health care reform may again be addressed by
the U.S. Congress. Implementation of government health care reform may adversely
affect research and development expenditures by pharmaceutical and biotechnology
companies, resulting in a decrease of the business opportunities available to
the Company. Management is unable to predict the likelihood of health care
reform proposals being enacted into law or the effect such law would have on the
Company.
Many governments outside the U.S. have also reviewed or undertaken health care
reform. The Company cannot predict the impact that any pending or future health
care reform proposals may have on the Company's business in other countries.
Adverse Effect of Exchange Rate Fluctuations
Approximately 41% of the Company's net revenue for fiscal 1998, 42% for the
three months ended December 31, 1998, and 43% for the six months ended December
31, 1998, was derived from the Company's operations outside of North America.
Since the revenue and expenses of the Company's foreign operations are generally
denominated in local currencies, exchange rate fluctuations between local
currencies and the United States dollar will subject the Company to currency
translation risk with respect to the results of its foreign operations. To the
extent the Company is unable to shift to its clients the effects of currency
fluctuations, these fluctuations could have a material adverse effect on the
Company's results of operations. The Company does not currently hedge against
the risk of exchange rate fluctuations.
Anti-Takeover Provisions; Possible Issuance of Preferred Stock
The Company's Restated Articles of Organization, as amended, and Restated
By-Laws contain provisions that may make it more difficult for a third party to
acquire, or may discourage a third party from acquiring, the Company. These
provisions could limit the price that certain investors might be willing to pay
in the future for shares of the Company's common stock. In addition, shares of
the Company's preferred stock may be issued in the future without further
stockholder approval and upon such terms and conditions, and having such rights,
privileges and preferences, as the Board of Directors may determine. The rights
of the holders of common stock will be subject to, and may be adversely affected
by, the rights of any holders of preferred stock that may be issued in the
future. The issuance of preferred stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
adversely affect the market price of the common stock and could have the effect
of making it more difficult for a third party to acquire, or discouraging a
third party from acquiring, a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue any shares of preferred
stock.
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
The Company has been named as one of many defendants in several
product liability actions pending in two state courts. The claims
relate to drugs approved for use by the Food & Drug Administration
and for which the Company provided clinical research services. These
actions were brought by individual plaintiffs and not as class
actions. The Company has provided notice of these matters to its
insurance carrier and has submitted requests to its clients for
indemnification under the terms of its indemnification arrangements
with those companies.
Item 4. Submission of Matters to a Vote of Security Holders
(a) On November 12, 1998, the Company held its 1998 Annual Meeting of
Stockholders.
(b) Not applicable.
(c) At the meeting, the stockholders of the Company voted:
(1) to elect the following persons to serve as Class III
directors, to serve for a three-year term (until the Annual
Meeting of Stockholders in 2001). The votes cast were as
follows:
For Withheld
Josef H. von Rickenbach 20,070,138 193,125
A. Dana Callow, Jr. 20,069,812 193,451
(2) to ratify the selection of PricewaterhouseCoopers LLP as
independent auditors for the fiscal year ending June 30,
1999. The votes cast were as follows:
For Against Abstain
20,248,251 5,811 9,201
(d) Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. Description
10.1 Third Amendment to Lease dated 11/17/98
between Boston Properties Limited Partnership
and the Company.
10.2 Lease dated 11/17/98 between Boston
Properties Limited Partnership and the
Company.
27 Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K dated January 27,
1999 reporting financial results for the three months ended
December 31, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on this 9th day of February, 1999.
PAREXEL International Corporation
By:/s/ Josef H. von Rickenbach__________
Josef H. von Rickenbach
President, Chief Executive Officer and Chairman
By:/s/ William T. Sobo, Jr. ______________
William T. Sobo, Jr.
Senior Vice President, Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
10.1 Third Amendment to Lease dated 11/17/98 between Boston Properties
Limited Partnership and the Company.
10.2 Lease dated 11/17/98 between Boston Properties Limited Partnership
and the Company
27 Financial Data Schedule
<PAGE>
EXHIBIT 10.1 THIRD AMENDMENT TO LEASE
THIRD AMENDMENT TO LEASE dated as of this 17th day of November, 1998 by
and between BOSTON PROPERTIES LIMITED PARTNERSHIP, a Delaware limited
partnership ("Landlord") (as successor-in-interest to 200 West Street Limited
Partnership) and PAREXEL INTERNATIONAL CORPORATION, a Massachusetts corporation
("Tenant").
R E C I T A L S
WHEREAS, by lease dated June 14, 1991 (the "Original Lease"), Landlord
did lease to Tenant and Tenant did hire and lease from Landlord certain premises
in the building known as and numbered 195 West Street, Waltham, Massachusetts
(the "Building") containing a total of 48,258 square feet of rentable floor area
(hereinafter sometimes referred to as the "Initial Premises").
WHEREAS, by First Amendment to Lease dated January 3, 1992 (the "First
Amendment"), Tenant exercised its right pursuant to Section 2.1.1.1 of the
Original Lease to lease from Landlord an additional 15,242 square feet of
rentable floor area in the Building (the "Additional Premises") upon the terms
and conditions contained in the First Amendment. The Initial Premises and the
Additional Premises are hereinafter sometimes collectively referred to as the
"Premises".
WHEREAS, by Second Amendment to Lease dated June 28, 1993 (the "Second
Amendment"), Tenant leased from Landlord an additional 660 square feet in the
basement of the Building (the "Tenant's Storage Space") upon the terms and
conditions contained in the Second Amendment. The Original Lease, First
Amendment and Second Amendment are hereinafter collectively referred to as the
"Lease."
WHEREAS, the term of the Lease (the "Term") is currently scheduled to
expire on August 31, 2001, at which point Tenant has the option to extend the
Term for two (2) consecutive periods of five (5) years each, as set forth in the
Lease.
WHEREAS, by lease to be executed and delivered simultaneously herewith
(the "200 West Street Lease"), Landlord shall lease to Tenant and Tenant shall
hire and lease from Landlord certain premises (the "200 West Street Premises")
located in a building to be constructed by Landlord and known as and numbered
200 West Street, Waltham, Massachusetts.
Landlord and Tenant are entering into this instrument to provide Tenant
with the option to make the Term of the Lease coterminous with the date
established as the expiration date of the 200 West Street Lease, and to amend
the Lease accordingly.
NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good
and valuable consideration in hand this date paid by each of the parties to the
other, the receipt and sufficiency of which are hereby severally acknowledged,
and in further consideration of the mutual promises herein contained, Landlord
and Tenant hereby agree to and with each other as follows:
1. (A) Notwithstanding anything contained in Section 2.4.1 of the Lease
to the contrary and provided that at the time of exercise and
commencement of the extension option period described below (i) there
exists no Event of Default (as defined in Section 7.1 of the Lease),
(ii) the Lease is still in full force and effect and (iii) Tenant has
not assigned the Lease or sublet more than forty percent (40%) of the
Rentable Floor Area of the Premises in the aggregate (not including any
assignment or subleasing under Section 5.6.1 of the Lease), Tenant
shall have the right to extend the Term of the Lease upon all the same
terms, conditions, covenants and agreements contained in the Lease
(except for Annual Fixed Rent, which shall be adjusted during the
option period as hereinbelow set forth) for one (1) period of seven (7)
years and eight (8) months (or such other time period as will make the
expiration of the Term of the Lease coterminous with the date
established as the expiration date of the 200 West Street Lease, it
being understood that the commencement date for the 200 West Street
Lease has yet to be determined and accordingly that the date
established as the expiration date of the 200 West Street Lease has
also yet to be determined) as hereinafter set forth. The option period
is sometimes herein referred to as the "Interim Extended Term".
(B) (i) If Tenant desires to exercise the option to extend the Term,
then Tenant shall give notice to Landlord, not earlier than fifteen
(15) months nor later than twelve (12) months prior to the expiration
of the Term of the Lease, of Tenant's request for Landlord's quotation
to Tenant of a proposed annual fixed rent for the Interim Extended
Term, which shall not be less than $21.00 per square foot of Rentable
Floor Area of the Premises and shall be expressed in relation to the
tax and operating cost bases and provisions for payment of tenant
electricity as contained in the Lease. If at the expiration of thirty
(30) days after the date when Landlord receives Tenant's written
request as aforesaid (the "Negotiation Period"), Landlord and Tenant
have not reached agreement on a determination of an annual rental for
the Interim Extended Term and executed a written instrument extending
the Term of this Lease pursuant to such agreement, then Tenant shall
have the right, for fifteen (15) days following the expiration of the
Negotiation Period, to make a request to Landlord for a broker
determination (the "Broker Determination") of the Prevailing Market
Rent (as defined in Exhibit G to the Original Lease) for the Interim
Extended Term, which Broker Determination shall be made in the manner
set forth in the aforesaid Exhibit G.
(B) (ii) If Tenant timely shall have requested the Broker
Determination, then in order to exercise its right to extend the Term
of the Lease for the Interim Extended Term, Tenant, within fifteen (15)
days after receipt of the Broker Determination, shall give written
notice to Landlord of Tenant's exercise of its right to extend the
Lease Term for the Interim Extended Term pursuant to this Section
1(B)(ii), in which case the Annual Fixed Rent for the Interim Extended
Term shall be the greater of (a) the Prevailing Market Rent as
determined by the Broker Determination or (b) $21.00 per square foot of
Rentable Floor Area of the Premises and shall be expressed in relation
to the tax and operating cost bases and provisions for payment of
tenant electricity as contained in the Lease. Upon the giving of notice
by Tenant within said fifteen (15) day period as provided in this
subsection (B)(ii) then this Lease and Lease Term hereof shall be
extended to the date established as the expiration date of the 200 West
Street Lease upon all of the same terms, conditions, covenants and
agreements contained in this Lease except that the Annual Fixed Rent
for the Interim Extended Term shall be the rent determined as described
in this subparagraph.
(C) Upon the giving of notice by Tenant to Landlord exercising Tenant's
option to extend the Lease Term in accordance with the provisions of
either subsection B(i) or B(ii) above, then the Lease and the Lease
Term hereof shall be extended, for the Interim Extended Term, without
the necessity for the execution of any additional documents, except
that Landlord and Tenant agree to enter into an instrument in writing
setting forth the Annual Fixed Rent for the Interim Extended Term as
determined in the relevant manner set forth in this Section 1; and in
such event all references herein to the Lease Term or the term of the
Lease shall be construed as referring to the Lease Term, as so
extended, unless the context clearly otherwise requires.
(D) Notwithstanding anything contained in the Lease to the contrary, it
is understood and agreed that (i) upon the expiration of the Original
Term of the Lease, Tenants only extension option shall be the extension
option described in this Section 1, (ii) if Tenant shall exercise the
extension option described in this Section 1, the extension option(s)
described in Section 2.4.1 of the Lease shall be subsequently
exercisable by Tenant at the times and in the manner set forth in said
Section 2.4.1, as if the expiration of the Interim Extended Term were
the expiration of the Original Term of the Lease and (iii) if Tenant
shall not exercise the extension option described in this Section 1,
the extension options described in Section 2.4.1 shall be null and void
and of no further force and effect.
2. (A) Tenant warrants and represents that Tenant has not dealt with
any broker in connection with the consummation of this Third Amendment
other than Meredith & Grew Incorporated (the "Recognized Broker"); and
in the event any claim is made against Landlord relative to dealings by
Tenant with brokers other than the Recognized Broker, Tenant shall
defend the claim against Landlord with counsel of Tenant's selection
first approved by Landlord (which approval will not be unreasonably
withheld) and save harmless and indemnify Landlord on account of loss,
cost or damage which may arise by reason of such claim.
(B) Landlord warrants and represents that Landlord has not
dealt with any broker in connection with the consummation of this Third
Amendment other than the Recognized Broker; and in the event any claim
is made against Tenant relative to dealings by Landlord with brokers
other than the Recognized Broker, Landlord shall defend the claim
against Tenant with counsel of Landlord's selection first approved by
Tenant (which approval will not be unreasonably withheld) and save
harmless and indemnify Tenant on account of loss, cost or damage which
may arise by reason of such claim. Landlord agrees that it shall be
solely responsible for the payment of brokerage commissions to the
Recognized Broker.
3. Except as otherwise expressly provided herein, all capitalized terms
used herein without definition shall have the same meanings as are set
forth in the Lease.
4. Except as herein amended the Lease shall remain unchanged and in
full force and effect. All references to the "Lease" shall be deemed to
be references to the Lease as amended by the First Amendment, the
Second Amendment and as herein amended.
<PAGE>
EXECUTED as a sealed instrument as of the date and year first above
written.
WITNESS: LANDLORD:
BOSTON PROPERTIES LIMITED PARTNERSHIP
By: Boston Properties, Inc., its
General Partner
By_/s/James C. Rosenfeld________
Name__James C. Rosenfeld________
Title_Senior Vice President_____
ATTEST: TENANT:
PAREXEL INTERNATIONAL CORPORATION
By
Name
Title SECRETARY
(OR ASSISTANT SECRETARY) By_/s/Josef von Rickenbach_____
Name__Josef von Rickenbach_____
Title_CEO and Chairman_________
HEREUNTO DULY AUTHORIZED
By_/s/William T. Sobo, Jr.________
Name__William T. Sobo, Jr.________
Title TREASURER
HEREUNTO DULY AUTHORIZED
<PAGE>
EXHIBIT 10.2
200 WEST STREET
WALTHAM, MASSACHUSETTS
LEASE DATED November 17, 1998
THIS INSTRUMENT IS AN INDENTURE OF LEASE in which the Landlord and the
Tenant are the parties hereinafter named, and which relates to space in a
certain building (the "Building") known as, and with an address at, 200 West
Street, Waltham, Massachusetts.
The parties to this Indenture of Lease hereby agree with each other as
follows:
ARTICLE I
REFERENCE DATA
1.1 Subjects Referred To:
Each reference in this Lease to any of the following subjects shall be
construed to incorporate the data stated for that subject in this
Article:
LANDLORD: Boston Properties Limited Partnership,
a Delaware limited partnership
LANDLORD'S ORIGINAL c/o Boston Properties, Inc.
ADDRESS: 8 Arlington Street
Boston, Massachusetts 02116
LANDLORD'S CONSTRUCTION James C. Rosenfeld
REPRESENTATIVE:
TENANT: PAREXEL International Corporation,
a Massachusetts corporation.
TENANT'S ORIGINAL 195 West Street
ADDRESS: Waltham, Massachusetts 02154
TENANT'S CONSTRUCTION Jeanette Indorato
REPRESENTATIVE:
TENANT PLAN INFORMATION
DATE: September 1, 1998
TENANT PLAN DELIVERY
DATE: October 23, 1998
TENANT PLAN APPROVAL
DATE: December 1, 1998
SPECIAL ALLOWANCE: As defined in Section 3.1.1.
INITIAL PHASE I SCHEDULED
COMPLETION DATE: May 1, 1999
FOURTH FLOOR SCHEDULED
COMPLETION DATE: July 1, 1999
PHASE I OUTSIDE
COMPLETION DATE: December 1, 1999
COMMENCEMENT DATE: As defined in Sections 2.4 and 3.2
hereof for that portion of the Premises
that Tenant is leasing at any time
pursuant to the provisions of this
Lease.
PREMISES A SCHEDULED
COMMENCEMENT DATE: May 1, 1999
PREMISES B SCHEDULED
COMMENCEMENT DATE: July 1, 1999
PREMISES C SCHEDULED
COMMENCEMENT DATE: October 1, 1999
PREMISES D SCHEDULED
COMMENCEMENT DATE: May 1, 2000
TERM (SOMETIMES CALLED One hundred twenty (120) months THE ORIGINAL TERM):
commencing on the first of the Commencement Dates to occur pursuant to
Sections 2.4 and 3.2 hereof (the Measuring Date) plus the partial month, if
any, in which the Measuring Date occurs, unless sooner terminated or
extended in accordance with the terms and provisions of this Lease.
PREMISES A TERM: That period of time commencing on the Commencement Date for
Premises A and expiring, unless sooner terminated or extended in accordance
with the terms and provisions of this Lease, upon the expiration of the
Term.
PREMISES B TERM: That period of time commencing on the Commencement Date for
Premises B and expiring, unless sooner terminated or extended in accordance
with the terms and provisions of this Lease, upon the expiration of the
Term.
PREMISES C TERM: That period of time commencing on the Commencement Date for
Premises C and expiring, unless sooner terminated or extended in accordance
with the terms and provisions of this Lease, upon the expiration of the
Term.
PREMISES D TERM: That period of time commencing on the Commencement Date for
Premises D and expiring, unless sooner terminated or extended in accordance
with the terms and provisions of this Lease, upon the expiration of the
Term.
EXTENSION OPTIONS: Two (2) periods of five (5) years each as provided in and on
the terms set forth in Section 2.4.1 hereof.
THE SITE: That certain parcel of land known as and numbered 200 West Street,
Waltham, Middlesex County, Massachusetts, being more particularly described
in Exhibit A attached hereto.
THE BUILDING: The Building known as and numbered 200 West Street, Waltham,
Massachusetts; it being understood and agreed that the Building is to be
constructed in two phases of 129,199 rentable square feet (Phase I of the
Building) and 119,142 rentable square feet (Phase II of the Building),
respectively, and that the term Building as used herein shall mean that
Phase of the Building for which a base building certificate of occupancy
has been issued by the City of Waltham at any given time. Phase I of the
Building and Phase II of the Building are appropriately labeled on Exhibit
A-1 and Exhibit E attached hereto and hereby made a part hereof.
THE COMPLEX: The Building together with all parking areas, the Site and all
improvements (including landscaping) thereon and thereto.
TENANT'S SPACE That portion of the Building that Tenant is (SOMETIMES ALSO
leasing at any time pursuant to the CALLED THE PREMISES): provisions of
this Lease.
PREMISES A: That certain portion of Phase I of the Building, consisting of the
greater of (i) 35,554 rentable square feet of floor area and (ii) the
product of (x) 185 rentable square feet of floor area or (y) the number of
Tenant employees to be occupying Premises A (as set forth in a notice from
Tenant to Landlord to be given no later than April 1, 1999) located on the
first, second and/or third floors of Phase I of the Building and to be
designated by Tenant in the aforesaid notice to Landlord (it being
understood and agreed that if no such notice is given, Premises A shall
consist of 35,554 rentable square feet of floor area).
PREMISES B: That certain portion of Phase I of the Building (exclusive of
Premises A), consisting of the greater of (i) 33,534 rentable square feet
of floor area or (ii) the product of (x) 185 rentable square feet of floor
area and (y) the number of Tenant employees to be occupying Premises B (as
set forth in a notice from Tenant to Landlord to be given no later than
June 1, 1999) located on the first, second, third and/or fourth floors of
Phase I of the Building and to be designated by Tenant in the aforesaid
notice to Landlord. Notwithstanding the foregoing, in no event shall the
sum of the Rentable Floor Area of Premises A and the Rentable Floor Area of
Premises B (each as hereinafter defined) be less than 69,088 rentable
square feet of floor area or greater than the greater of (a) 69,088
rentable square feet of floor area or (b) 185 square feet times the total
number of Tenant employees to be occupying Premises A and Premises B.
PREMISES C: That certain portion of Phase I of the Building (exclusive of
Premises A and Premises B), consisting of the greater of (i) 24,624
rentable square feet of floor area or (ii) the product of (x) 185 rentable
square feet of floor area and (y) the number of Tenant employees to be
occupying Premises C (as set forth in a notice from Tenant to Landlord to
be given no later than September 1, 1999) located on the first, second,
third and/or fourth floors of Phase I of the Building and to be designated
by Tenant in the aforesaid notice to Landlord. Notwithstanding the
foregoing, in no event shall the sum of the Rentable Floor Area of Premises
A, the Rentable Floor Area of Premises B and the Rentable Floor Area of
Premises C (each as hereinafter defined) be less than 93,712 rentable
square feet of floor area or greater than the greater of (a) 93,712
rentable square feet of floor area or (b) 185 square feet times the total
number of Tenant employees to be occupying Premises A, B and C.
PREMISES D: That certain portion of Phase I of the Building (exclusive of
Premises A, Premises B and Premises C), consisting of an amount of rentable
floor area located on the first, second, third and/or fourth floors of the
Building (which such amount shall equal the difference between the Total
Rentable Floor Area of Phase I of the Building and the sum of the Rentable
Floor Area of Premises A, the Rentable Floor Area of Premises B and the
Rentable Floor Area of Premises C, as hereinafter defined). Tenant shall
provide Landlord with thirty (30) days prior written notice of the date on
which it intends to occupy Premises D.
RENTABLE FLOOR AREA The rentable floor area of all of the space at OF TENANT'S
SPACE any given time under lease to Tenant in the (SOMETIMES ALSO Building
under this Lease, including the CALLED RENTABLE FLOOR Rentable Floor Area
of Premises A, the AREA OF THE PREMISES): Rentable Floor Area of Premises
B, the Rentable Floor Area of Premises C, the Rentable Floor Area of
Premises D and any space added thereto by Tenant pursuant to its rights
under this Lease.
RENTABLE FLOOR AREA The square footage to be determined as set OF PREMISES A:
forth in the definition of Premises A above.
RENTABLE FLOOR AREA The square footage to be determined as set OF PREMISES B:
forth in the definition of Premises B above.
RENTABLE FLOOR AREA The square footage to be determined as set OF PREMISES C:
forth in the definition of Premises C above.
RENTABLE FLOOR AREA The square footage to be determined as set OF PREMISES D:
forth in the definition of Premises D above.
TOTAL RENTABLE FLOOR
AREA OF PREMISES A,
PREMISES B, PREMISES
C AND PREMISES D: 129,199 square feet.
TOTAL RENTABLE FLOOR
AREA OF PHASE I OF THE
BUILDING: 129,199 square feet.
TOTAL RENTABLE FLOOR
AREA OF PHASE II OF
THE BUILDING: 119,142 square feet.
TOTAL RENTABLE FLOOR
REA OF THE BUILDING: 248,341 square feet.
NUMBER OF TENANT'S To be provided at a ratio of 3.8 spaces per PARKING
SPACES: 1,000 square feet of Rentable Floor Area of Tenant's
Space, exclusive of the Parking Structure to be constructed
pursuant to and in accordance with Section 8.22 below.
ANNUAL FIXED RENT The sum of the Annual Fixed Rents (SOMETIMES ALSO
CALLED applicable to the Premises under lease FIXED RENT): to
Tenant in the Building under this Lease.
ANNUAL FIXED RENT FOR (a) During the first thirty-six (36) months
PREMISES A: of the Original Term of this Lease plus the partial
month, if any, in which the Measuring Date (as defined above)
occurs (to the extent occurring during any portion of the
Premises A Term) at an annual rate equal to the product of (i)
$29.50 and (ii) the Rentable Floor Area of Premises A? (as
defined in this Section 1.1).
(b) During the thirty-seventh (37th) through the seventy-second
(72nd) months of the Original Term of this Lease at an annual
rate equal to the product of (i) $31.00 and (ii) the Rentable
Floor Area of Premises A.
(c) During the seventy-third (73rd) through the one hundred twentieth
(120th) months of the Original Term of this Lease at an annual
rate equal to the product of (i) $33.00 and (ii) the Rentable
Floor Area of Premises A.
ANNUAL FIXED RENT FOR (a) During the first thirty-six (36) months of
PREMISES B: the Original Term of this Lease plus the partial
month, if any, in which the Measuring Date (as defined above)
occurs (to the extent occurring during any portion of the
Premises B Term) at an annual rate equal to the product of (i)
$29.50 and (ii) the "Rentable Floor Area of Premises B" (as
defined in this Section 1.1).
(b) During the thirty-seventh (37th) through the seventy-second
(72nd) month of the Original Term of this Lease at an annual rate
equal to the product of (i) $31.00 and (ii) the Rentable Floor
Area of Premises B.
(c) During the seventy-third (73rd) through the one hundred twentieth
(120th) months of the Original Term of this Lease at an annual
rate equal to the product of (i) $33.00 and (ii) the Rentable
Floor Area of Premises B.
ANNUAL FIXED RENT FOR (a) During the first thirty-six (36) months of
PREMISES C: the Original Term of this Lease plus the partial
month, if any, in which the Measuring Date (as defined above)
occurs (to the extent occurring during any portion of the
Premises C Term) at an annual rate equal to the product of (i)
$29.50 and (ii) the "Rentable Floor Area of Premises C" (as
defined in this Section 1.1).
(b) During the thirty-seventh (37th) through the seventy-second
months of the Original Term of this Lease at an annual rate equal
to the product of (i) $31.00 and (ii) the Rentable Floor Area of
Premises C.
(c) During the seventy-third (73rd) through the one hundred twentieth
(120th) months of the Original Term of this Lease at an annual
rate equal to the product of (i) $33.00 and (ii) the Rentable
Floor Area of Premises C.
ANNUAL FIXED RENT FOR (a) During the first thirty-six (36) months of
PREMISES D: the Original Term of this Lease plus the partial
month, if any, in which the Measuring Date (as defined above)
occurs (to the extent occurring during any portion of the
Premises D Term) at an annual rate equal to the product of (i)
$29.50 and (ii) the "Rentable Floor Area of Premises D" (as
defined in this Section 1.1).
(b) During the thirty-seventh (37th) through the seventy-second
months of the Original Term of this Lease at an annual rate equal
to the product of (i) $31.00 and (ii) the Rentable Floor Area of
Premises D.
(c) During the seventy-third (73rd) through the one hundred twentieth
(120th) months of the Original Term of this Lease at an annual
rate equal to the product of (i) $33.00 and (ii) the Rentable
Floor Area of Premises D.
ANNUAL FIXED RENT As determined pursuant to Section 2.4.1 DURING THE
EXTENDED if the extension option(s) are exercised TERM(S): in
accordance with Section 2.4.1.
OPERATING EXPENSES: As provided in Section 2.6 hereof.
REAL ESTATE TAXES: As provided in Section 2.7 hereof.
TENANT ELECTRICITY: Initially as provided in Section 2.5 subject to
adjustment as provided in Section 2.8.
PERMITTED USES: General office purposes.
INITIAL MINIMUM $5,000,000.00 per occurrence on a LIMITS OF TENANT'S
per location basis and in the aggregate, COMMERCIAL GENERAL which
can be made up with a combination of LIABILITY INSURANCE: primary
and excess coverage.
BROKER: Meredith & Grew, Inc.
160 Federal Street
Boston, Massachusetts 02110
1.2 Exhibits. There are incorporated as part of this Lease:
EXHIBIT A Description of Site
EXHIBIT A-1 Site Plan
EXHIBIT B Base Building Outline Specifications
EXHIBIT B-1 Tenant Plan and Working Drawing
Requirements
EXHIBIT C Tenant Improvements
EXHIBIT D Landlord's Services
EXHIBIT E Floor Plans
EXHIBIT F Form of Commencement Date Agreement
EXHIBIT G Broker Determination of Prevailing
Market Rent
EXHIBIT H Dense File Room
1.3 Table of Articles and Sections
ARTICLE I-REFERENCE DATA
1.1 Subjects Referred to
1.2 Exhibits
1.3 Table of Articles and Sections
ARTICLE II-THE BUILDINGS, PREMISES, TERM AND RENT
2.0 Construction of Phase II of the Building
2.1 The Premises
2.1.1 Tenant's Initial Right of First Offer
2.1.2 Tenant's Secondary Right of First Offer
2.1.3 Tenant's Expansion Obligation
2.2 Rights To Use Common Facilities
2.2.1 Tenant's Parking
2.3 Landlord's Reservations
2.4 Original Term
2.4.1 Extension Options
2.5 Monthly Fixed Rent Payments
2.6 Adjustment for Operating Expenses
2.7 Adjustment for Real Estate Taxes
2.8 Adjustment for Tenant Electricity
2.9 Certain Adjustments to Operating Expenses
ARTICLE III-CONSTRUCTION
3.0 Base Building
3.1 Tenant's Plans and Tenant Plan Excess Costs
3.1.1 Special Allowance
3.1.2 Change Orders
3.2 Landlord's and Tenant's Work; Delays
3.3 Alterations and Additions
3.4 General Provisions Applicable to Construction
ARTICLE IV-LANDLORD'S COVENANTS; INTERRUPTIONS AND DELAYS
4.1 Landlord's Covenants
4.1.1 Services Furnished by Landlord
4.1.2 Additional Services Available to Tenant
4.1.3 Roof, Exterior Wall, Floor Slab and Common Facility
Repairs
4.1.4 Door Signs
4.2 Interruptions and Delays in Services and Repairs, etc.
4.3 Environmental Laws
4.4 Insurance
4.5 Indemnity
4.6 Leasing Restrictions
ARTICLE V-TENANT'S COVENANTS
5.1 Payments
5.2 Repair and Yield Up
5.3 Use
5.4 Obstructions; Items Visible From Exterior; Rules and
Regulations
5.5 Safety Appliances; Licenses
5.6 Assignment; Sublease
5.7 Indemnity; Insurance
5.8 Personal Property at Tenant's Risk
5.9 Right of Entry
5.10 Floor Load; Prevention of Vibration and Noise
5.11 Personal Property Taxes
ARTICLE VI-CASUALTY AND TAKING
6.1 Fire and Casualty-Termination or Restoration; Rent Adjustment
6.2 Uninsured Casualty
6.3 Eminent Domain-Termination or Restoration
6.4 Eminent Domain Damages Reserved
ARTICLE VII-DEFAULT
7.1 Tenant's Default
7.2 Landlord's Default
ARTICLE VIII-MISCELLANEOUS PROVISIONS
8.1 Extra Hazardous Use
8.2 Waiver
8.3 Cumulative Remedies
8.4 Quiet Enjoyment
8.5 Notice To Mortgagee and Ground Lessor
8.6 Assignment of Rents
8.7 Surrender
8.8 Brokerage
8.9 Invalidity of Particular Provisions
8.10 Provisions Binding, Etc.
8.11 Recording
8.12 Notices
8.13 When Lease Becomes Binding
8.14 Section Headings
8.15 Rights of Mortgagee
8.16 Status Report
8.17 Self-Help
8.18 Holding Over
8.19 Non-Subrogation
8.20 Corporate Signage
8.21 Food Service Facility
8.22 Parking Structure
8.23 Governing Law
ARTICLE II
BUILDING, PREMISES, TERM AND RENT
2.0 CONSTRUCTION OF PHASE II OF THE BUILDING. Phase I of the Building is
presently under construction on the Site. In addition, Landlord shall
construct Phase II of the Building and parking areas, garages,
structures and/or decks and other improvements associated therewith
(collectively called "Phase II of the Building And Improvements") of
substantially similar size, shape, dimensions, architecture and
location as shown on Exhibit A-1 attached hereto. In conjunction
therewith, Landlord shall perform any and all site work or other work
to the Site and Phase I of the Building required therefor and/or to
integrate Phase I of the Building and Phase II of the Building and all
parking areas, garages, structures and decks into one unified Complex
including, but not limited to, the layout, modification and
installation of utilities, access, landscaping and additional parking
as set forth in Exhibit A-1. During construction of Phase II of the
Building And Improvements, Landlord shall use good faith efforts to
minimize material interference with Tenant's use of the Complex
consistent with the fact that construction will be occurring.
2.1 Landlord hereby demises and leases to Tenant, and Tenant hereby hires
and accepts from Landlord, Tenant's Space in the Building excluding
exterior faces of exterior walls, the common stairways, stairwells and
exitways, elevators and elevator wells, elevator lobbies, toilets, fan
rooms, electric and telephone closets, janitor closets, and pipes,
ducts, conduits, wires and appurtenant fixtures serving exclusively, or
in common, other parts of the Building.
Tenant's Space with such exclusions is hereinafter referred to as the
"Premises". The term "Building" means the Building as defined in
Section 1.1, and which is the subject of this Lease; the term "Site"
means all, and also any part of the Land described in Exhibit A, plus
any additions or reductions thereto resulting from the change of any
abutting street line and all parking areas and structures. The term
"Property" means the Building and the Site.
2.1.1 (A) Landlord shall give Tenant notice every three (3) months
(Landlord's Availability Notice), beginning with the first day of the
third (3rd) month following the Date of this Lease, as to the
availability of space for lease in Phase II of the Building and the
business terms upon which Landlord is currently offering the space in
the marketplace, until such time as all such space has been initially
leased. Landlord agrees not to enter into a lease for any portion of
Phase II of the Building identified as being available in the most
recent Landlord's Availability Notice without first giving to Tenant
an opportunity to lease such space as hereinafter set forth (Tenant's
Initial Right of First Offer), provided that at the time Landlord
receives the above-described notice from Tenant (i) there exists no
Event of Default (as defined in Section 7.1 below), (ii) this Lease is
still in full force and effect and (iii) Tenant has not sublet more
than forty percent (40%) of the Rentable Floor Area of the Premises in
the aggregate (not including any subleasing under Section 5.6.1).
Landlord shall otherwise use its best efforts to keep Tenant informed
of the expansion opportunities and leasing activity for Phase II of
the Building.
(B) If Tenant wishes to exercise Tenant's Initial Right of First Offer
with respect to any portion of Phase II of the Building identified
Initial in the most recent Landlord's Availability Notice (the Initial
Offer Space), Tenant shall do so by giving Landlord notice of Tenant's
desire to lease such space on the business terms described by Landlord
in the most recent Landlord's Availability Notice within five (5)
business days after the date thereof. If Tenant shall give such notice,
the same shall constitute an agreement to enter into an amendment to
this Lease to incorporate such space into the Premises upon the terms
set forth in Landlord's notice. Notwithstanding the foregoing, if
Tenant commits to lease any of the Initial Offer Space before or within
the first six (6) months of the Term of this Lease, such space shall be
leased by Tenant upon the same terms and conditions as set forth in
this Lease (including, without limitation, the term of the Lease,
annual fixed rent rate, operating expense and tax bases and provisions
for tenant electricity with respect to such space; provided that the
tenant improvements for such space shall be in the same proportion to
the rentable square footage of such space as the Tenant Improvements
referred to in Exhibit C below are to the Rentable Floor Area of the
Premises and Landlord shall also provide Tenant with an allowance of
$2.13 per rentable square foot of the Initial Offer Space). If Tenant
shall not so exercise such right within such period, time being of the
essence in respect of such exercise, Landlord shall be free at any time
thereafter to enter into a lease of such space with another prospective
tenant upon terms substantially no less favorable to Landlord than
those set forth in the most recent Landlord's Availability Notice,
provided that Landlord shall reoffer such space to Tenant in accordance
with the terms of this Section 2.1.1 prior to leasing such space upon
terms substantially less favorable to Landlord.
2.1.2 (A) If Tenant shall not exercise Tenant's Initial Right of First Offer
in accordance with the provisions of Section 2.1.1 above, Landlord
shall be free to lease such space in accordance with the terms of said
Section. The terms of such leases, including, but not limited to, the
original terms thereof, options to extend the terms thereof and
amendments thereto are hereinafter individually and collectively
called the "Initial Leases" and the tenants under the Initial Leases
are hereinafter individually and collectively called the "Initial
Tenants". Subject to the Initial Leases and the rights of the Initial
Tenants thereunder, which rights are hereby made prior to the rights
of Tenant under this Section 2.1.2, notwithstanding that the Initial
Leases and amendments thereto may have been executed subsequent to the
date of this Lease, and subject to the terms of this Section 2.1.2,
Landlord agrees not to enter into a lease or leases to relet space
within the Initial Offer Space without first giving to Tenant an
opportunity to lease such space as hereinafter set forth, provided
that at any time any portion of the Initial Offer Space becomes so
available hereunder for reletting (i) there exists no Event of
Default, (ii) this Lease is still in full force and effect and (iii)
Tenant continues to occupy at least 91,000 square feet of rentable
floor area in the Building. Landlord shall use best efforts to keep
Tenant informed of the possibility of such space becoming so
available.
(B) When any such space becomes available for reletting, Landlord shall
notify Tenant of the availability of such space and shall advise Tenant
of the business terms upon which Landlord is willing so to lease such
space. If Tenant wishes to exercise Tenant's right of first offer or to
negotiate the business terms upon which such space is to be leased,
Tenant shall do so by giving Landlord notice of Tenant's desire to
lease such space on such terms within seven (7) business days after
Landlord's notice to Tenant of the availability of such space and of
such terms. If Tenant shall give such notice, the same shall constitute
an agreement to enter into an amendment to this Lease to incorporate
such space into the Premises upon the terms set forth in Landlord's
notice. If Tenant shall not so exercise such right within such seven
(7) day period, or if Landlord and Tenant shall be unable to negotiate
in good faith the terms upon which the space is to be leased within ten
(10) business days following receipt by Landlord of Tenant's notice,
time being of the essence in respect of either such time period,
Landlord shall be free at any time thereafter to enter into a lease of
such space with another prospective tenant upon terms substantially no
less favorable to Landlord than those set forth in Landlord's notice to
Tenant, provided that Landlord shall reoffer such space to Tenant in
accordance with the terms of this Section 2.1.2 prior to leasing such
space upon terms substantially less favorable to Landlord.
(C) If Tenant shall exercise any such right of first offer and if,
thereafter, the then occupant of the premises with respect to which
Tenant shall have so exercised such right wrongfully fails to deliver
possession of such premises at the time when its tenancy is scheduled
to expire, Landlord shall use all reasonable efforts and due diligence
(which shall be limited to the commencement and prosecution thereafter
of eviction proceedings and to the payment of legal fees and other
expenses reasonably associated with such proceedings but which shall
not require the taking of any appeal) to evict such occupant from the
applicable portion of the Initial Offer Space and to deliver possession
of the applicable portion of the Initial Offer Space to Tenant as soon
as may be practicable. Commencement of the term of Tenant's occupancy
and lease of such additional space shall, in the event of such holding
over by such occupant, be deferred until possession of the additional
space is delivered to Tenant. The failure of the then occupant of such
premises to so vacate shall not give Tenant any right to terminate this
Lease or to deduct from, offset against or withhold Annual Fixed Rent,
additional rent or other charges due under this Lease (or any portions
thereof), provided that the obligation to pay rent with respect to such
Initial Offer Space shall not commence until the delivery of such
space.
2.1.3 (A) Landlord shall reserve approximately 20,000 to 30,000 square feet
of rentable floor area in Phase II of the Building (the Expansion
Premises), which shall be made available to Tenant upon no less than
twelve (12) month's notice from Landlord to Tenant that such space is
available (Landlord's Expansion Notice). Landlord's Expansion Notice
shall set forth the following, each as determined by Landlord in its
sole discretion except as expressly set forth in this Section 2.1.3:
(i) the actual rentable floor area and location of the Expansion
Premises, (ii) the date upon which the Expansion Premises shall be
made available to Tenant (the Effective Date), which such date may
occur at any time during the thirty-seventh (37th) through
fifty-second (52nd) months of the Term of this Lease and (iii)
Landlord's quotation of an annual fixed rent for the Expansion
Premises. In the event that parties are unable to agree after
negotiating in good faith on a determination of an annual rental for
the Expansion Premises within twenty-one (21) days after receipt by
Tenant of Landlord's Expansion Notice, then such rental shall be
determined pursuant to the Broker Determination procedure set forth in
Section 2.4.1(B) below. Effective as of the Effective Date, for the
remainder of the Term of this Lease (including any extensions thereof)
the Expansion Premises shall be automatically added to the Premises
demised under this Lease upon all the same terms and conditions
applicable to the Premises; provided, however, that (x) the annual
fixed rent for the Expansion Premises shall be the rental rate as
mutually agreed upon by the parties within the twenty-one (21) day
period referred to in subsection (iii) above or the rate as determined
by the Broker Determination, as appropriate, and (y) the Expansion
Premises shall be delivered in as is condition and Landlord shall have
no obligation to perform or to provide to Tenant any allowance for
additions, alterations or improvements in and to the Expansion
Premises. Notwithstanding anything contained in this Section 2.1.3 to
the contrary, the Expansion Premises shall only be so added to the
Premises if both as of the date of Landlord's Expansion Notice and as
of the Effective Date (a) there exists no Event of Default and (b)
this Lease is still in full force and effect. If the Expansion
Premises shall be added to the Premises as provided in this Section
2.1.3, Landlord and Tenant shall enter into an instrument amending
this Lease to add such Expansion Premises within thirty (30) days
prior to the Effective Date, provided, however, that the failure to
enter into such an instrument shall not affect the addition of the
Expansion Premises to the Premises.
(B) If the then occupant(s) of the Expansion Premises wrongfully fails
to deliver possession of such premises at the time when its tenancy is
scheduled to expire, Landlord shall use all reasonable efforts and due
diligence (which shall be limited to the commencement and prosecution
thereafter of eviction proceedings and to the payment of legal fees and
other expenses reasonably associated with such proceedings but which
shall not require the taking of any appeal) to evict such occupant(s)
from the Expansion Premises and to deliver possession of the Expansion
Premises to Tenant as soon as may be practicable. Commencement of the
term of Tenant's occupancy and lease of the Expansion Premises shall,
in the event of such holding over by such occupant(s), be deferred
until possession of the Expansion Premises is delivered to Tenant. The
failure of the then occupant(s) of such premises to so vacate shall not
give Tenant any right to terminate this Lease or to deduct from, offset
against or withhold Annual Fixed Rent, additional rent or other charges
due under this Lease (or any portions thereof), provided that the
obligation to pay rent with respect to the Expansion Premises shall not
commence until the delivery of such space.
2.2 Tenant shall have, as appurtenant to the Premises, the non- exclusive
right to use in common with others, subject to reasonable rules of
general applicability to tenants of the Building from time to time made
by Landlord of which Tenant is given reasonable prior notice (a) the
common lobbies, corridors, stairways, stairwells, exit ways, elevators,
elevator wells, fan rooms, electrical and telephone closets, janitor
closets and loading area of the Building, and the pipes, ducts,
conduits, wires and appurtenant meters, fixtures and equipment serving
the Premises in common with others, (b) common walkways, driveways and
parking areas necessary for access to the Building and the Property,
and (c) if the Premises include less than the entire rentable floor
area of any floor, the common toilets, corridors and elevator lobby of
such floor.
2.2.1 In addition, Tenant shall have the right to use the Number of Tenant's
Parking Spaces (referred to in Section 1.1), in common with use by
other tenants from time to time of the Complex, of the parking area.
Tenant covenants and agrees that it and all persons claiming by,
through and under it, shall at all times abide by all reasonable rules
and regulations promulgated by Landlord with respect to the use of the
parking areas on the Site, provided that Landlord shall not charge
additional rent or fees for use of the parking areas. The parking
privileges granted herein are non- transferable except to a permitted
assignee or subtenant as provided in Section 5.6 through Section
5.6.6. Further, Landlord assumes no responsibility whatsoever for loss
or damage due to fire, theft or otherwise to any automobile(s) parked
on the Site or to any personal property therein, except to the extent
caused by Landlord's negligence, and Tenant covenants and agrees, upon
request from Landlord from time to time, to notify its officers,
employees, agents and invitees of such limitation of liability. Tenant
acknowledges and agrees that a license only is hereby granted, and no
bailment is intended or shall be created.
2.3 Landlord reserves the right from time to time, without unreasonable
interference with Tenant's use: (a) to install, use, maintain, repair,
replace and relocate for service to the Premises and other parts of the
Building, or either, pipes, ducts, conduits, wires and appurtenant
fixtures, wherever located in the Premises or Building, and (b) to
alter or relocate any other common facility, provided that
substitutions are substantially equivalent or better and are in
compliance with all applicable building and zoning laws, and that the
total number of parking spaces available to Tenant is not decreased
below that required to be provided under this Lease, and provided
further that Tenant is given seven (7) days prior notice of Landlord's
exercise of such right, except in emergencies. Installations,
replacements and relocations referred to in clause (a) above shall be
located so far as practicable in the central core area of the Building,
above ceiling surfaces, below floor surfaces or within perimeter walls
of the Premises.
2.4 (A) Unless sooner terminated as provided in Article VI or VII or unless
extended as provided in Section 2.4.1, Tenant shall have and hold: (a)
Premises A for a period commencing on (the Premises A Commencement
Date) the earlier to occur of (i) the later of (x) the date such
premises are "Substantially Complete" (as defined in Section 3.2) and
(y) the Premises A Scheduled Commencement Date and (ii) the date on
which Tenant commences occupancy of Premises A for the Permitted Uses,
and continuing thereafter for the Premises A Term; (b) Premises B for a
period commencing on (the Premises B Commencement Date) the earlier to
occur of (i) the later of (x) the date such premises are Substantially
Complete and (y) Premises B Scheduled Commencement Date and (ii) the
date on which Tenant commences occupancy of Premises B for the
Permitted Uses, and continuing thereafter for the Premises B Term; (c)
Premises C for a period commencing on (the Premises C Commencement
Date) the earlier to occur of (i) the later of (x) the date such
premises are Substantially Complete and (y) the Premises C Scheduled
Commencement Date and (ii) the date on which Tenant commences occupancy
of Premises C for the Permitted Uses, and continuing thereafter for
Premises C Term: and (d) Premises D for a period commencing on (the
Premises D Commencement Date) the earlier to occur of (i) the later of
(x) the date such premises are Substantially Complete and (y) the
Premises D Scheduled Commencement Date and (ii) the date on which
Tenant commences occupancy of Premises D for the Permitted Uses, and
continuing thereafter for the Premises D Term.
Notwithstanding the fact that the Premises A Commencement Date, the
Premises B Commencement Date, the Premises C Commencement Date and/or
the Premises D Commencement Date shall not have occurred, Landlord
shall permit Tenant access to the applicable portion of the Premises,
when it can be done without material interference to any remaining work
to be completed under Article III below, so that Tenant may install its
trade fixtures, furniture and telecommunications and computer systems;
provided, however, that such early access shall be governed by the
terms and conditions of this Lease (with the exception of Tenant's
obligation to pay Annual Fixed Rent and Tenant's payments for
electricity charges, operating expenses and real estate taxes, as
herein provided).
(B) As soon as may be convenient after the date has been determined on
which each of the Premises A Term, the Premises B Term, the Premises C
Term, and the Premises D Term commence, respectively, Landlord and
Tenant agree to join with each other in the execution of a written
Declaration, in the form of Exhibit F, in which the date on which each
such Term commences as aforesaid and the Term of the Lease for each of
the Premises A, Premises B, Premises C and Premises D shall be stated.
2.4.1 (A) Provided that at the time of exercise and commencement of the
applicable option to extend (i) there exists no Event of Default
(defined in Section 7.1), (ii) this Lease is still in full force and
effect, and (iii) Tenant has not sublet more than forty percent (40%)
of the Rentable Floor Area of the Premises in the aggregate (not
including any subleasing under Section 5.6.1), Tenant shall have the
right to extend the Term hereof upon all the same terms, conditions,
covenants and agreements herein contained (except for the Annual Fixed
Rent which shall be adjusted during the applicable option period as
hereinbelow set forth) for two (2) successive periods of five (5)
years each as hereinafter set forth. Each option period is sometimes
herein referred to as an "Extended Term."
(B) (i) If Tenant desires to exercise the applicable option to extend
the Term, then Tenant shall give notice to Landlord, not earlier than
fifteen (15) months nor later than twelve (12) months prior to the
expiration of the Term of this Lease, or Extended Term if previously
extended, of Tenant's request for Landlord's quotation to Tenant of a
proposed annual fixed rent for the applicable Extended Term, which
shall be expressed in relation to the tax and operating cost bases and
provisions for payment of tenant electricity contained in this Lease.
If at the expiration of thirty (30) days after the date when Landlord
receives Tenant's written request as aforesaid (the "Negotiation
Period"), Landlord and Tenant have not reached agreement on a
determination of an annual rental for the applicable Extended Term and
executed a written instrument extending the Term of this Lease pursuant
to such agreement, then Tenant shall have the right, for fifteen (15)
days following the expiration of the Negotiation Period, to make a
request to Landlord for a broker determination (the "Broker
Determination") of the Prevailing Market Rent (as defined in Exhibit G)
for the applicable Extended Term, which Broker Determination shall be
made in the manner set forth in Exhibit G.
(B) (ii) If Tenant timely shall have requested the Broker
Determination, then in order to exercise its right to extend the Term
of this Lease for the applicable Extended Term, Tenant, within fifteen
(15) days after receipt of the Broker Determination, shall give written
notice to Landlord of Tenant's exercise of its right to extend the Term
of this Lease for the applicable Extended Term pursuant to this
subsection (B) (ii), in which case the Annual Fixed Rent for the
applicable Extended Term shall be the Prevailing Market Rent as
determined by the Broker Determination and shall be expressed in
relation to the tax and operating cost bases and provisions for payment
of tenant electricity as contained in this Lease. Upon the giving of
notice by Tenant within said fifteen (15) day period as provided in
this subsection (B) (ii) then this Lease and Term hereof shall be
extended for an additional term of five (5) years upon all of the same
terms, conditions, covenants and agreements contained in this Lease
except that the Annual Fixed Rent for the applicable Extended Term
shall be the rent determined as described in this subparagraph.
(C) Upon the giving of notice by Tenant to Landlord exercising Tenant's
option to extend the Term of this Lease in accordance with the
provisions of either subsection B(i) or B(ii) above, then this Lease
and the Term hereof shall be extended, for the applicable Extended
Term, without the necessity for the execution of any additional
documents, except that Landlord and Tenant agree to enter into an
instrument in writing setting forth the Annual Fixed Rent for the
applicable Extended Term as determined in the relevant manner set forth
in this Section 2.4.1; and in such event all references herein to the
Lease Term or the term of this Lease shall be construed as referring to
the Lease Term, as so extended, unless the context clearly otherwise
requires. Notwithstanding anything herein contained to the contrary, in
no event shall Tenant have the right to exercise more than one
extension option at a time and, further, Tenant shall not have the
right to exercise its second extension option unless it has duly
exercised its first extension option and in no event shall the Term
hereof be extended for more than ten (10) years after the expiration of
the Original Term hereof.
2.5 Tenant agrees to pay to Landlord, or as directed by Landlord, at
Landlord's Original Address specified in Section 1.1 hereof, or at such
other place as Landlord shall from time to time designate by notice, on
the applicable Commencement Date (defined in Section 1.1 hereof) and
thereafter monthly, in advance, (i) on the first day of each and every
calendar month during the Original Term, a sum equal to (a) one twelfth
(1/12th) of the Annual Fixed Rent for each of Premises A, Premises B,
Premises C and the Fourth Floor Premises, respectively, and (b) one
twelfth (1/12th) of $1.00 per annum for each square foot of Rentable
Floor Area of Tenant's Space for Tenant Electricity subject to
escalation as provided in Section 2.8 and (ii) on the first day of each
and every calendar month during each extension option period (if
exercised), a sum equal to (a) one twelfth (1/12th) of the annual fixed
rent as determined in Section 2.4.1 for the applicable extension option
period plus (b) the then applicable monthly electricity charges
(subject to escalation as provided in Section 2.8). Until notice of
some other designation is given, fixed rent and all other charges for
which provision is herein made shall be paid by remittance to or for
the order of Boston Properties Limited Partnership, Agents, P.O. Box
3557, Boston, Massachusetts 02241-3557, and all remittances received by
Boston Properties Limited Partnership, as Agents as aforesaid, or by
any subsequently designated recipient, shall be treated as payment to
Landlord.
Annual Fixed Rent and electricity charges for any partial month shall
be paid by Tenant to Landlord at such rate on a pro rata basis, and, if
the applicable Commencement Date is a day other than the first day of a
calendar month, the first payment which Tenant shall make to Landlord
shall be a payment equal to a proportionate part of such monthly Annual
Fixed Rent for the partial month from the Commencement Date to the
first day of the succeeding calendar month.
Other charges payable by Tenant on a monthly basis, as hereinafter
provided, likewise shall be prorated, and the first payment on account
thereof shall be determined in similar fashion but shall commence on
the applicable Commencement Date; and other provisions of this Lease
calling for monthly payments shall be read as incorporating this
undertaking by Tenant.
The Annual Fixed Rent and all other charges for which provision is
herein made shall be paid by Tenant to Landlord, without offset,
deduction or abatement except as otherwise specifically set forth in
this Lease.
2.6 "Landlord's Operating Expenses" means the cost of operation of the
Building and the Site which shall exclude costs of special services
rendered to tenants (including Tenant) for which a separate charge is
made, but shall include, without limitation, the following: premiums
for insurance carried with respect to the Building and the Site
(including, without limitation, liability insurance, insurance against
loss in case of fire or casualty and insurance of monthly installments
of fixed rent and any additional rent which may be due under this Lease
and other leases of space in the Building for not more than twelve (12)
months in the case of both fixed rent and additional rent and if there
be any first mortgage of the Property, including such insurance as may
be required by the holder of such first mortgage); compensation and all
fringe benefits, workmen's compensation insurance premiums and payroll
taxes paid to, for or with respect to all persons to the extent engaged
in the operating, maintaining or cleaning of the Building or Site;
water, sewer, electric, gas, oil and telephone charges (excluding
utility charges separately chargeable to tenants for additional or
special services); cost of building and cleaning supplies and
equipment; cost of maintenance, cleaning and repairs (other than
repairs not properly chargeable against income or reimbursed from
contractors under guarantees); cost of operating and maintaining the
food service facility described in Section 8.21 below, less any rent
actually received by Landlord from any third-party operator of such
facility, but only at such time as Landlord shall have been issued a
certificate of occupancy and use (temporary or permanent) from the City
of Waltham and obtained all other required permits and licenses to
operate such facility and the facility shall be open for business; cost
of snow removal and care of landscaping; payments under service
contracts with independent contractors; management fees at reasonable
rates consistent with the type of occupancy and the service rendered
for comparable or similar building in the Boston-West Suburban market;
and all other reasonable and necessary expenses paid in connection with
the operation, cleaning and maintenance of the Building and the Site
and properly chargeable against income, provided that Operating
Expenses shall explicitly exclude cost of correcting initial
construction defects of the Premises and the Site; cost of constructing
the Premises, the Site or Phase II of the Building; legal expenses and
brokerage commissions incurred in connection with the leasing of the
Building; any items to the extent that Landlord has actually received
reimbursement from insurance proceeds or from a third party; repairs
necessary to cause the Building and the Site to comply with Legal
Requirements (as hereinafter defined) in effect and applicable to the
Building and the Site on or before the date of this Lease; and "capital
expenditures" (as defined in generally accepted accounting principles
used in the real estate industry); provided, however, there shall be
included (a) depreciation for capital expenditures made by Landlord (i)
to reduce Operating Expenses if Landlord shall have reasonably
determined that the annual reduction in Operating Expenses shall exceed
depreciation therefor or (ii) to comply with applicable laws, rules,
regulations, requirements, statutes, ordinances, by-laws and court
decisions of all public authorities which are enacted or become
applicable to the Building or the Site after the Premises A
Commencement Date (herein collectively called "Legal Requirements"),
plus (b) in the case of both (i) and (ii) an interest factor,
reasonably determined by Landlord, as being the interest rate then
charged for long term mortgages by institutional lenders on like
properties within the locality in which the Building is located (it
being understood and agreed that depreciation in the case of both (i)
and (ii) shall be determined by dividing the original cost of such
capital expenditure by the number of years of useful life of the
capital item acquired and the useful life shall be reasonably
determined by Landlord in accordance with generally accepted accounting
principles and practices in effect at the time of acquisition of the
capital item).
"Operating Expenses Allocable to the Premises" shall mean the same
proportion of Landlord's Operating Expenses for and pertaining to the
Buildings and the Site as the Rentable Floor Area of Tenant's Space at
the time of allocation bears to the Total Rentable Floor Area of the
Buildings.
"Base Operating Expenses" shall mean Landlord's Operating Expenses for
the first twelve (12) months of the Lease Term, adjusted to reflect
ninety-five percent (95%) occupancy of the Building.
"Base Operating Expenses Allocable to the Premises" means the same
proportion of Base Operating Expenses for and pertaining to the
Building and the Site as the Rentable Floor Area of Tenant's Space
bears at the time allocation to the Total Rentable Floor Area of the
Building.
If with respect to any calendar year falling within the Term, or
fraction of a calendar year falling within the Term at the beginning or
end thereof, the Operating Expenses Allocable to the Premises for a
full calendar year exceed Base Operating Expenses Allocable to the
Premises, or for any such fraction of a calendar year exceed the
corresponding fraction of Base Operating Expenses Allocable to the
Premises, then, Tenant shall pay to Landlord, as additional rent, the
amount of such excess. Such payments shall be made at the times and in
the manner hereinafter provided in this Section 2.6.
Not later than ninety (90) days after the end of the first full
calendar year and of each succeeding calendar year during the Term or
fraction thereof at the end of the Term, Landlord shall render Tenant a
statement in reasonable detail and according to generally accepted
accounting practices used in the real estate industry consistently
applied certified by the chief financial officer of Landlord, showing
for the preceding calendar year or fraction thereof, as the case may
be, Landlord's Operating Expenses and Operating Expenses Allocable to
the Premises. Said statement to be rendered to Tenant shall also show
for the preceding year or fraction thereof as the case may be the
amounts of Operating Expenses already paid by Tenant as additional
rent, and the amount of operating expenses remaining due from, or
overpaid by, Tenant for the year or other period covered by the
statement. Within thirty (30) days after the date of delivery of such
statement, Tenant shall pay to Landlord the balance of the amounts, if
any, required to be paid pursuant to the above provisions of this
Section 2.6 with respect to the preceding year or fraction thereof, or
Landlord shall credit any amounts due from it to Tenant pursuant to the
above provisions of this Section 2.6 against (i) monthly installments
of fixed rent next thereafter coming due or (ii) any sums then due from
Tenant to Landlord under this Lease (or refund such portion of the
overpayment as aforesaid if the Term has ended and Tenant has no
further obligation to Landlord). At the request of Tenant, Landlord
shall make available for Tenant's review, at Tenant's expense and at a
time and place reasonably determined by Landlord, the records of
Landlord used to prepare such statement. The Base Operating Expenses
Allocable to the Premises do not include the $1.00 for tenant
electricity to be paid by Tenant at the time of payment of Annual Fixed
Rent and for which provision is made in Section 2.5 hereof, separate
provision being made in Section 2.8 below for Tenant's share of
increases in electricity costs.
In addition, Tenant shall make payments monthly on account of Tenant's
share of increases in Operating Expenses anticipated for the then
current year at the time and in the fashion herein provided for the
payment of fixed rent. The amount to be paid to Landlord shall be an
amount reasonably estimated annually by Landlord to be sufficient to
cover, in the aggregate, a sum equal to Tenant's share of such
increases in operating expenses for each calendar year during the Term.
Notwithstanding the foregoing provisions, no decrease in Landlord's
Operating Expenses shall result in a reduction of the amount otherwise
payable by Tenant if and to the extent said decrease is attributable to
variable costs related solely to vacancies in the Buildings rather than
to any other causes.
2.7 If with respect to any full Tax Year or fraction of a Tax Year falling
within the Term, Landlord's Tax Expenses Allocable to the Premises (as
hereinafter defined) (a) for a full Tax Year exceed $3.00 per square
foot of Rentable Floor Area of Tenant's Space, or for any such fraction
of a Tax Year exceed the corresponding fraction of $3.00 per square
foot of Rentable Floor Area of Tenant's Space, or (b) for a full Tax
Year are less than $3.00 per square foot of Rentable Floor Area of
Tenant's Space, or for any such fraction of a Tax Year subsequent to
the date of full assessment are less than the corresponding fraction of
$3.00 per square foot of Rentable Floor area of Tenant's Space; then,
on or before the thirtieth (30th) day following receipt by Tenant of
the certified statement referred to below in this Section 2.7, in the
case of (a) Tenant shall pay to Landlord, as additional rent, the
amount of such excess, or in the case of (b), Landlord shall credit
such difference against (i) monthly installments of annual Fixed Rent
next thereafter coming due or (ii) any sums then due from Tenant to
Landlord under this Lease (or refund such overpayment if the Term has
ended and Tenant has no further obligation to Landlord). In addition,
payments by Tenant on account of increases in real estate taxes
anticipated for the then current year shall be made monthly at the time
and in the fashion herein provided for the payment of Annual Fixed
Rent. The amount so to be paid to Landlord shall be an amount
reasonably estimated by Landlord in good faith to be sufficient to
provide Landlord, in the aggregate, a sum equal to Tenant's share of
such increases, at least ten (10) days before the day on which such
payments by Landlord would become delinquent. Not later than ninety
(90) days after Landlord's Tax Expenses Allocable to the Premises are
determined for the first such Tax Year or fraction thereof and for each
succeeding Tax Year or fraction thereof during the Term, Landlord shall
render Tenant a statement in reasonable detail certified by an officer
of Landlord showing for the preceding year or fraction thereof, as the
case may be, real estate taxes on the Building and the Site and
abatements and refunds of any taxes and assessments. Expenditures for
legal fees and for other expenses incurred in obtaining the tax refund
or abatement may be charged against the tax refund or abatement before
the adjustment are made for the Tax Year.
Provided that and so long as (i) Tenant shall be leasing the entire
Rentable Floor Area of Phase I of the Building and (ii) there shall not
have occurred any Event of Default (defined in Section 7.1 hereof), if
Tenant reasonably believes that Landlord should attempt to obtain an
abatement for any Tax Year for which Landlord has not filed an
abatement application, Tenant may so notify Landlord and Landlord shall
enter into good faith discussions with Tenant regarding whether such an
abatement application should be filed. Any expenditures for legal fees
or other expenses incurred in seeking to obtain an abatement shall be
paid by Tenant.
To the extent that real estate taxes shall be payable to the taxing
authority in installments with respect to periods less than a Tax Year,
the foregoing statement shall be rendered and payments made on account
of such installments. Notwithstanding the foregoing provisions, no
decrease in Landlord's Tax Expenses with respect to any Tax Year shall
result in a reduction of the amount otherwise payable by Tenant if and
to the extent said decrease is attributable to vacancies in the
Building.
Terms used herein are defined as follows:
(i) "Tax Year" means the twelve-month period beginning
July 1 each year during the Term or, if the
appropriate governmental tax fiscal period shall
begin on any date other than July 1, such other date.
(ii) "Landlord's Tax Expenses Allocable to the Premises"
shall mean the same proportion of Landlord's Tax
Expenses for and pertaining to the Building and the
Site as the Rentable Floor Area of Tenant's Space
bears at the time of allocation to the Total Rentable
Floor Area of the Building.
(iii) "Landlord's Tax Expenses" with respect to any Tax
Year means the aggregate real estate taxes on the
Building and Site with respect to that Tax Year,
reduced by any abatement receipts with respect to
that Tax Year.
(iv) "Real estate taxes" means all taxes and special assessments of
every kind and nature assessed by any governmental authority on the
Building or Site which the Landlord shall become obligated to pay
because of or in connection with the ownership, leasing and operation
of the Site, the Building and the Property and reasonable expenses of
any proceedings for abatement of taxes. The amount of special taxes or
special assessments to be included shall be limited to the amount of
the installment (plus any interest, other than penalty interest,
payable thereon) of such special tax or special assessment required to
be paid during the year in respect of which such taxes are being
determined. There shall be excluded from such taxes all income,
estate, succession, inheritance and transfer taxes; provided, however,
that if at any time during the Term the present system of ad valorem
taxation of real property shall be changed so that in lieu of the
whole or any part of the ad valorem tax on real property there shall
be assessed on Landlord a capital levy or other tax on the gross rents
received with respect to the Site or Building or Property, or a
federal, state, county, municipal, or other local income, franchise,
excise or similar tax, assessment, levy or charge (distinct from any
now in effect in the jurisdiction in which the Property is located)
measured by or based, in whole or in part, upon any such gross rents,
then any and all of such taxes, assessments, levies or charges, to the
extent so measured or based, shall be deemed to be included within the
term "real estate taxes" but only to the extent that the same would be
payable if the Site and Building were the only property of Landlord.
2.8 If with respect to any calendar year falling within the Term or
fraction of a calendar year falling within the Term at the beginning or
end thereof, the actual cost to Landlord of furnishing electricity for
lighting and outlets to space in the Building occupied by tenants, but
expressly excluding utility charges separately chargeable to tenants
for additional or special services or otherwise, for a full calendar
year exceeds $1.00 per square foot of Rentable Floor Area of the
Building, or for any such fraction of a calendar year exceeds the
corresponding fraction of $1.00 per square foot of Rentable Floor Area
of the Building, then Tenant shall pay to Landlord, as additional rent,
on or before the thirtieth (30th) day following receipt by Tenant of
the statement referred to below in this Section 2.8, its proportionate
share of the amount of such excess. Payments by Tenant on account of
Tenant's share of such excess (i.e. the same ratio of such excess as
the Rentable Floor Area of Tenant's Space bears to the Total Rentable
Floor Area of the Building) shall be made monthly at the time and in
the fashion herein provided for the payment of Annual Fixed Rent. The
amount so to be paid to Landlord shall be an amount from time to time
reasonably estimated by Landlord to be sufficient to cover, in the
aggregate, a sum equal to Tenant's share of such excess for each
calendar year during the Term.
Not later than ninety (90) days after the end of the first calendar
year or fraction thereof ending December 31 and of each succeeding
calendar year during the Term or fraction thereof at the end of the
Term, Landlord shall render Tenant a reasonably detailed accounting
certified by a representative of Landlord showing for the preceding
calendar year, or fraction thereof, as the case may be, the costs of
furnishing electricity to the Building. Said statement to be rendered
to Tenant also shall show for the preceding year or fraction thereof,
as the case may be, the amount already paid by Tenant on account of
electricity, and the amount remaining due from, or overpaid by, Tenant
for the year or other period covered by the statement. Within thirty
(30) days after the date of delivery of such statement, Tenant shall
pay to Landlord the balance of the amounts, if any, required to be paid
pursuant to the above provisions of this Section 2.8 with respect to
the preceding year or fraction thereof, or Landlord shall credit any
amounts due from it to Tenant pursuant to the above provisions of this
Section 2.8 against (i) monthly installments of Annual Fixed Rent next
thereafter coming due or (ii) any sums then due from Tenant to Landlord
under this Lease (or refund such portion of the overpayment as
aforesaid if the Term has ended and Tenant has no further obligation to
Landlord).
Notwithstanding the foregoing provisions of this Section 2.8 and any
other provision of this Lease, Landlord, at Landlord's option, may, at
any time and from time to time, check meter the electricity usage in
all or any portion of the Premises. In addition to amounts which Tenant
is required to pay for electricity pursuant to Section 2.5 and the
foregoing provisions of this Section 2.8, Landlord shall have the right
to bill Tenant from time to time, and Tenant shall make payment to
Landlord, as additional rent, within thirty (30) days after receipt of
Landlord's bill, for the cost of electricity used in the Premises in
excess of electricity used for a normal office use in the Building
during Normal Building Operating Hours, as shown by such check
meter(s). In calculating Landlord's bill for such excess electricity,
Landlord shall give credit to Tenant for Tenant's payments for
electricity under this Section 2.8.
2.9 Notwithstanding the provisions of Section 2.6 of this Lease, Tenant's
obligation to make payments for escalations of Operating Expenses in
regard to the Premises shall be to the extent, and only to the extent,
that Operating Cost Expenses Allocable to the Premises exceed the
greater of (i) $6.00 per year per square foot of Rentable Floor Area of
the Premises or (ii) the Base Operating Expenses Allocable to the
Premises.
ARTICLE III
CONSTRUCTION
3.0 BASE BUILDING. At its sole cost and expense, Landlord shall use due
diligence to perform the base building construction of Phase I of the
Building and at a later date Phase II of the Building, together with
all common areas and facilities, substantially in accordance with the
Base Building Outline Specifications attached hereto as Exhibit B.
3.1 TENANT'S PLANS AND TENANT PLAN EXCESS COSTS. (A) On or before the
Tenant Plan Information Date (as defined in Section 1.1), Tenant shall
deliver to Landlord the data and information necessary for the
preparation of plans meeting the requirements of Exhibit B-1 hereof
(the Tenant's Submission"). Landlord shall prepare, at its sole cost
and expense, working drawings based upon the Tenant's Submission. On or
prior to the Tenant Plan Delivery Date, Landlord shall submit the
working drawings (herein called "Tenant Plans") to Tenant for its
approval and Tenant shall approve Tenant's Plans on or before the
Tenant Plan Approval Date. As soon as practicable after the Tenant Plan
Delivery Date, but in no event later than ten (10) days prior to the
Tenant Plan Approval Date, Landlord shall furnish to Tenant in writing
a statement of all costs of construction work and material necessary to
complete construction in accordance with Tenant's Plans that are not
covered by the Tenant Improvements referred to in Exhibit C, which
statement shall be the lowest cost of three (3) competitive bids where
appropriate with respect to work not shown on Exhibit C. The cost of
such work shall be the subcontractor cost of such work plus fifteen
percent (15%) for general conditions, overhead and fee. To the extent
such costs exceed the cost of the Tenant Improvements set forth in
Exhibit C, such excess cost are hereinafter referred to as "Tenant Plan
Excess Costs". In the statement submitted with the Tenant Plan Excess
Costs, Landlord shall identify and notify Tenant of any items contained
in the Tenant Plans which Landlord then reasonably believes will
require long lead time for the design, fabrication, milling or other
procurement (the Long Lead Items). Landlord will give to Tenant
Landlord's best, good faith estimate of the period(s) of any such delay
which would be caused by a Long Lead Item. Landlord shall include in
such notice reasonable recommendations to substitute for or eliminate
the need for such Long Lead Items, and Tenant shall have the right, at
Tenant's option to be exercised by notice given to Landlord within the
time period for action under the next paragraph of this subsection (A),
(a) to revise the Tenant Plans to eliminate any such Long Lead Items
(Long Lead Deleted Items) or (b) to authorize Landlord to construct the
Tenant Improvements in accordance with the approved Tenant Plans
including any such Long Lead Items (Tenant Approved Long Lead Items).
Tenant shall notify Landlord in writing, within five (5) days of
receipt by Tenant of Landlord's notification of Tenant Plan Excess
Costs, of either its approval thereof and its authorization to Landlord
to proceed with construction in accordance with Tenant's Plans,
(including all Tenant Approved Long Lead Items) or of any changes in
Tenant's Plans (including all Long Lead Deleted Items). In the event of
any such changes, Landlord shall, as soon as practicable after Landlord
obtains price quotations for any changes in Tenant's Plans, quote to
Tenant all changes in Tenant Plan Excess Costs resulting from said
changes. Tenant shall, within three (3) days following the date of
receipt from Landlord of Landlord's revised quotation of Tenant Plan
Excess Costs give authorization to Landlord to proceed with the
construction in accordance with Tenant's Plans as modified (including
all Tenant Approved Long Lead Items).
(B) To the extent, if any, that Tenant Plan Excess Costs exceed
Tenant's special allowance as provided for in Section 3.1.1 below,
Tenant shall reimburse Landlord, as additional rent, for Tenant Plan
Excess Costs as follows: during said construction work Landlord may, on
or about the first day of each month, deliver to Tenant a statement
showing the proportion of Tenant Plan Excess Costs allocable to the
previous month's work. Tenant shall pay to Landlord as additional rent
eighty-five percent (85%) of the amount specified in each such
statement within ten (10) days after receipt of such statement. Final
payment by Tenant to Landlord shall be made ten (10) days after the
work is completed and accepted by Tenant as being constructed in
accordance with the requirements of this Lease. Tenant shall, if
requested by Landlord, execute a work letter confirming the amount of
Tenant Plan Excess Costs prior to the time Landlord shall be required
to commence work.
3.1.1 Landlord shall provide to Tenant a special allowance of Two Hundred
seventy-five Thousand Dollars ($275,000.00) to be used and applied by
Tenant on account of any Tenant Plan Excess Costs. Any unused portion
of said allowance may be, at Tenant's option, used to pay for Tenant's
move related expenses, including the cost of the physical move, custom
furnishing and decor items, telephone and data wiring, furniture, work-
stations and appliances, or credited against Annual Fixed Rent due from
Tenant after the applicable Commencement Date.
3.1.2 In the event that Tenant shall request any changes to the Tenant Plans
(a Change Order), Landlord shall notify Tenant in writing of the cost
of such Change Order and Landlord's reasonable determination of the
delay, if any, in the completion of construction as contemplated by
this Article III caused by the Change Order (the Change Order Delay).
The Phase I Outside Completion Date shall be automatically extended
for a period of time equal to the Change Order Delay. In addition,
notwithstanding any term or provision of this Lease to the contrary,
if Tenant shall request a Change Order, the Commencement Date of that
portion of the Premises to which the Change Order relates shall be the
date reasonably determined by Landlord as being the appropriate
Commencement Date if Tenant had not requested such Change Order.
The cost of any Change Order shall be based on the actual cost of all
labor, materials, plans, engineering, permits and other costs of the
work described in the Change Order plus fifteen percent (15%) for
general conditions, overhead and fees. All Change Order costs shall be
paid by Tenant to Landlord as additional rent (but only to the extent
that the Change Order actually increases the cost of the work being
performed by Landlord hereunder) within ten (10) days after delivery by
Landlord of an invoice with respect to such costs; provided, however,
that if Tenant notes defective or uncompleted Change Order work, it
shall promptly notify Landlord of the same and shall be entitled to
retain an amount equal to one hundred ten percent (110%) of the
estimated cost to repair any defect or complete any unfinished work.
Landlord shall promptly arrange to have the deficiencies remedied and
any unfinished work completed to Tenant's reasonable satisfaction, at
which point payment of the retention will be made by Tenant.
3.2.1 Landlord agrees to use due diligence to complete the work described in
Section 3.1 with respect to the first, second and third floors of
Phase I of the Building on or before the Initial Phase I Scheduled
Completion Date and with respect to the fourth floor of Phase I of the
Building on or before the Fourth Floor Scheduled Completion Date.
Landlord shall not be required to install any improvements which are
not in conformity with the plans and specifications for the Building
or which are not approved by Landlord's architect. In case of delays
due to governmental regulation, unusual scarcity of or inability to
obtain materials, inability to obtain labor as a result of strike,
casualty or other causes reasonably beyond Landlord's control
(collectively, "Landlord's Force Majeure"), the Initial Phase I
Scheduled Completion Date and the Fourth Floor Scheduled Completion
Date shall be extended, respectively, for the period of such delays.
Each of Premises A, Premises B, Premises C and Premises D shall be
"Substantially Complete" on the date on which Landlord (a) has
obtained a certificate from its architect that the work described in
Section 3.1, together with common facilities for access and service to
the applicable portion of the Premises, has been substantially
completed except for (i) items of work and adjustment of equipment and
fixtures which can be completed within twenty (20) days after
occupancy thereof has been taken without causing adverse interference
with Tenant's use of the Premises (i.e. so-called "punch list" items)
(Landlord hereby agrees that it will use good faith efforts to
minimize interference with Tenant's use as aforesaid consistent with
the fact that certain items of work remain to be completed) and (ii)
Tenant Approved Long Lead Items, (b) receives a certificate of
occupancy, temporary or permanent, issued by applicable governmental
authority permitting occupancy of the applicable portion of the
Premises by Tenant and (c) has provided Tenant with parking spaces in
the ratio of 3.8 spaces per 1,000 square feet of Rentable Floor Area
of Tenant's Space. Landlord shall use due diligence to complete as
soon as conditions practically permit the punch list items within
twenty (20) days after occupancy of the Premises by Tenant and the
Tenant Approved Long Lead Items, and Tenant shall not use the Premises
in such manner as will increase the cost of completion. Landlord shall
deliver the Premises in broom clean condition, free of debris and with
all utilities being readily available for use by Tenant. In addition,
Landlord shall use due diligence to complete its work on the exterior
of the Building and the landscaping of the Site prior to the Initial
Phase I Scheduled Completion Date, consistent with the fact that the
Building is being constructed in two phases.
3.2.2 Except as expressly provided herein, the failure of Landlord to
Substantially Complete Premises A, Premises B, Premises C and Premises
D on or prior to a particular date shall not entitle Tenant to any
abatement or reduction of Annual Fixed Rent or additional rent or the
right to withhold or set off against Annual Fixed Rent or additional
rent nor give rise to any right to terminate this Lease.
Notwithstanding the foregoing, in the event that (i) the first, second
and third floors of Phase I of the Building are not Substantially
Complete (excluding punch list items and Tenant Approved Long Lead
Items) by July 1, 1999 and (ii) the fourth floor of Phase I of the
Building is not Substantially Complete (excluding punch list items and
Tenant Approved Long Lead Items) by September 1, 1999 (both of which
such dates shall be extended automatically for such periods of time as
Landlord is prevented from proceeding with or completing the same by
reason of (a) Landlord's Force Majeure (such periods of time not to
exceed sixty (60) days in the aggregate for any Landlord's Force
Majeure) or (b) any Tenant Delays (as defined below)), Tenant shall be
entitled to an abatement of payments on account of Annual Fixed Rent
for each day after July 1, 1999 (with respect to those portions of the
Premises located on the first, second and third floors of Phase I of
the Building) and September 1, 1999 (with respect to those portions of
the Premises located on the fourth floor of Phase I of the Building)
until the date on which Landlord shall Substantially Complete the
respective portions of Phase I of the Building, as appropriate. Except
as provided in the next paragraph of this Section 3.2.2, such rental
abatement shall be Tenant's sole and exclusive remedy at law or in
equity or otherwise for Landlord's failure to Substantially Complete
the appropriate portions of Phase I of the Building within the time
periods specified above. Notwithstanding the foregoing, Tenant shall
not have any right to an abatement with respect to any portion of the
Premises with respect to which Tenant shall not have delivered the
notice described in the definition of the applicable portion of the
Premises in Section 1.1 above at least thirty (30) days prior to July
1, 1999 (with respect to those portions of the Premises located on the
first, second and third floors of Phase I of the Building) or
September 1, 1999 (with respect to those portions of the Premises
located on the fourth floor of Phase I of the Building).
In addition to and not in limitation of the foregoing, if Premises A,
Premises B, Premises C and Premises D are not Substantially Complete
(excluding punch list items and Tenant Approved Long Lead Items) on or
before the Phase I Outside Completion Date (which date shall be
extended automatically for such periods of time as Landlord is
prevented from proceeding with or completing the same by reason of (a)
Landlord's Force Majeure (such periods of time not to exceed sixty (60)
days in the aggregate for any Landlord's Force Majeure) or (b) any act
or failure to act of Tenant which interferes with Landlord's
construction of the Premises (collectively with any Change Order
Delays, such acts being hereinafter referred to as Tenant Delays),
including, without limitation, any delay by Tenant in delivering the
Tenant's Submission, approving the Tenant's Plans or approving any
Tenant Plan Excess Costs, within the time periods set forth in Section
3.1 (without limiting Landlord's other rights on account thereof),
until Landlord shall so Substantially Complete Premises A, Premises B,
Premises C and Premises D as aforesaid, Tenant shall have the right to
terminate this Lease by giving notice to Landlord of Tenant's desire so
to do; and, upon the giving of such notice, the Term of this Lease
shall cease one hundred eighty (180) days from the effective date of
such notice and come to an end without further liability or obligation
on the part of either party unless, within thirty (30) days after
Landlord's receipt of Tenant's notice Landlord substantially completes
the work to be performed by Landlord under Section 3.1 with respect to
Premises A, Premises B, Premises C and Premises D (except for punch
list items and Tenant Approved Long Lead Items) and such right of
termination shall be Tenant's sole and exclusive remedy at law or in
equity or otherwise for Landlord's failure so to complete such work
within such time. In the event of any termination of this Lease by
Tenant as aforesaid, Tenant shall continue to pay Annual Fixed Rent and
all other charges relating to any portion of Premises A, Premises B,
Premises C and Premises D occupied by Tenant prior to the effective
date of termination through such effective date, shall deliver such
previously occupied premises to Landlord in the condition required by
this Lease and shall vacate such premises as of the effective date of
termination. Notwithstanding the foregoing, Tenant shall not have any
right of termination with respect to any portion of the Premises with
respect to which Tenant shall not have delivered the notice described
in the definition of the applicable portion of the Premises in Section
1.1 above at least thirty (30) days prior to the Phase I Outside
Completion Date.
Tenant agrees that no delay to the extent caused by it, or anyone
employed by it, in performing work to prepare the Premises for
occupancy (including, without limitation, the work in installing
telephones and other communications equipment or systems) shall delay
commencement of the Term or the obligation to pay rent.
3.3 This Section 3.3 shall apply before and during the Term. Except as
expressly provided in this Section 3.3, Tenant shall not make
alterations and additions to Tenant's space except in accordance with
plans and specifications therefor first approved by Landlord, which
approval shall not be unreasonably withheld. Landlord shall not be
deemed unreasonable for withholding approval of any alterations or
additions which (a) involve or might affect any structural or exterior
element of the Building, any area or element outside of the Premises,
or any facility serving any area of the Building outside of the
Premises, or (b) will delay completion of the Premises or Building, or
(c) will require unusual expense to readapt the Premises to normal
office use on Lease termination or increase the cost of construction or
of insurance or taxes on the Building or of the services called for by
Section 4.1 unless Tenant first gives assurance acceptable to Landlord
for payment of such increased cost and that such readaptation will be
made prior to such termination without expense to Landlord. All
alterations and additions shall be part of the Building (except
Tenant's movable furnishings, trade fixtures and office equipment
unless and until Landlord shall specify the same for removal pursuant
to Section 5.2. All of Tenant's alterations and additions and
installation of furnishings shall be coordinated with any work being
performed by Landlord and in such manner as to maintain harmonious
labor relations and not to damage the Buildings or Site or interfere
with construction or operation of the Buildings and other improvements
to the Site and, except for installation of furnishings, shall be
performed by Landlord's general contractor or by contractors or workmen
first approved by Landlord. Except for work by Landlord's general
contractor, Tenant, before its work is started, shall secure all
licenses and permits necessary therefor; deliver to Landlord a
statement of the names of all its contractors and subcontractors and
the estimated cost of all labor and material to be furnished by them
and security satisfactory to Landlord protecting Landlord against liens
arising out of the furnishing of such labor and material; and cause
each contractor to carry workmen's compensation insurance in statutory
amounts covering all the contractor's and subcontractor's employees and
commercial general liability insurance or comprehensive general
liability insurance with a broad form comprehensive liability
endorsement with such limits as Landlord may reasonably require, but in
no event less than $2,000,000.00 combined single limit per occurrence
on a per location basis (all such insurance to be written in companies
approved by Landlord and naming and insuring Landlord as an additional
insured and insuring Tenant as well as the contractors), and to deliver
to Landlord certificates of all such insurance. Tenant agrees to pay
promptly when due the entire cost of any work done on the Premises by
Tenant, its agents, employees, or independent contractors, and not to
cause or permit any liens for labor or materials performed or furnished
in connection therewith to attach to the Premises or the Building or
the Site and immediately to discharge any such liens which may so
attach. Tenant shall pay, as additional rent, 100% of any real estate
taxes on the Complex which shall, at any time after commencement of the
Term, to the extent resulting from any alteration, addition or
improvement to the Premises made by Tenant.
Notwithstanding the provisions of the immediately preceding paragraph,
Tenant shall have the right, without obtaining the prior consent of
Landlord, to make non-structural alterations, additions or improvements
to the Premises where:
(i) the same are within the interior of the Premises
within the Building, and do not affect the exterior
of the Premises and the Building;
(ii) the same do not affect the roof, any structural
element of the Building, the mechanical, electrical,
plumbing, heating, ventilating, air-conditioning and
fire protection systems of the Building;
(iii) the cost of said alterations, additions or
improvements made by Tenant on any single occasion
shall not exceed $15,000.00;
(iv) the cumulative sum of the costs of said alterations,
additions or improvements made by Tenant during any
twelve (12) month period of the Lease Term shall not
exceed $30,000.00 in cost;
(v) Tenant shall comply with the provisions of this Lease
and if such work increases the cost of insurance or
taxes or of services, Tenant shall pay for any such
increase in cost;
provided, however, that Tenant shall, within thirty (30) days after the
making of such changes, send to Landlord plans and specifications
describing the same in reasonable detail. Tenant shall be required to
remove any alteration, addition or improvement for which Landlord's
consent is not required as set forth above and to restore the Premises
to its condition prior to such alteration, addition or improvement at
the expiration or earlier termination of the Lease Term to the extent
that any such alteration, addition or improvement would cause the
Premises, the Building or the Site not to comply with applicable laws,
regulations or codes.
3.4 All construction work required or permitted by this Lease to be
performed by either Landlord or Tenant shall be done in a good and
workmanlike manner and in compliance with all applicable laws and all
lawful ordinances, regulations and orders of governmental authority and
insurers of the Building. Each party may inspect the work of the other
at reasonable times and shall promptly give notice of observed defects.
Each party authorizes the other to rely in connection with design and
construction upon approval and other actions on the party's behalf by
any Construction Representative of the party named in Article I or any
person hereafter designated in substitution or addition by notice to
the party relying. Except to the extent to which Tenant shall have
given Landlord notice of respects in which Landlord has not performed
Landlord's construction obligations under this Article III (including,
without limitation, work on the heating, ventilating and air
conditioning systems servicing the Premises) not later than the end of
the twelfth (12th) full calendar month following the Premises A
Commencement Date, Tenant shall be deemed conclusively to have approved
Landlord's construction and shall have no claim that Landlord has
failed to perform any of Landlord's obligations under this Article III.
Landlord agrees to correct or repair, at its expense, items which are
then incomplete and as to which Tenant shall have given notice to
Landlord, as aforesaid.
ARTICLE IV
LANDLORD'S COVENANTS; INTERRUPTIONS AND DELAYS
4.1 Landlord covenants:
4.1.1 To furnish services, utilities, facilities and supplies set forth in
Exhibit D equal to those customarily provided by landlords in
first-class office buildings in the Boston West Suburban Market subject
to escalation reimbursement in accordance with Section 2.6.
4.1.2 To furnish, at Tenant's expense, reasonable additional Building
operation services which are usual and customary in similar first-class
office buildings in the Boston West Suburban Market upon reasonable
advance request of Tenant at reasonable and equitable rates from time
to time established by Landlord.
4.1.3 Subject to the escalation provisions of Section 2.6 and except as
otherwise provided in Article VI, (i) to make such repairs (exclusive
of Tenant's responsibilities under this Lease) to the electrical,
plumbing, mechanical, fire protection, heating, ventilating and air
conditioning systems of the Building, roof, exterior walls, floor slabs
and common areas and facilities as may be necessary to keep them in
serviceable condition and (ii) to maintain the Building (exclusive of
Tenant's responsibilities under this Lease) in a first class manner
comparable to the maintenance of similar first-class office properties
in the Boston West Suburban Market.
4.1.4 To provide and install, at Landlord's expense, letters or numerals on
the entrance doors to the Premises to identify Tenant's official name
and Building address; all such letters and numerals shall be in the
building standard graphics and no others shall be used or permitted on
the Premises. In addition, Landlord shall, at its own expense, provide
an interior lobby directory in the Building identifying the Building as
containing space leased by Tenant (it being understood and agreed that
Landlord shall have the right to list the names of other tenants of the
Building in such lobby directory at any time in its sole discretion).
4.2 Landlord shall not be liable to Tenant for any compensation or
reduction of rent by reason of inconvenience or annoyance or for loss
of business arising from the necessity of Landlord or its agents
entering the Premises at reasonable times after three (3) days prior
notice to Tenant (except in the event of an emergency) for any of the
purposes in this Lease authorized, or for repairing the Premises or any
portion of the Building however the necessity may occur. Landlord
shall, however, use good faith efforts to minimize material
interference with Tenant's use of the Premises consistent with the fact
that Landlord is exercising the aforesaid right of entry. In case
Landlord is prevented or delayed from making any repairs, alterations
or improvements, or furnishing any services or performing any other
covenant or duty to be performed on Landlord's part, by reason of
Landlord's Force Majeure, Landlord shall not be liable to Tenant
therefor, nor, except as expressly otherwise provided in this Lease,
shall Tenant be entitled to any abatement or reduction of rent by
reason thereof. In the event that the electrical, heating, ventilating,
air conditioning, or all elevator service within the Premises shall be
shut down for more than five (5) full and consecutive business days,
but only as a result of causes which are covered by Landlord's loss of
rentals insurance, then, Tenant shall be entitled to an abatement of
Annual Fixed Rent equal to the Insurance Amount (hereinafter defined).
The Insurance Amount shall be an amount equal to the payment actually
received by Landlord (but only such portions allocable to and on
account of the Premises) from the insurance carrier providing such loss
of rents insurance less the amount of any deductible contained in such
loss of rents insurance coverage. Notwithstanding anything herein
contained to the contrary, in no event shall any of the events referred
to in this Section 4.2 give rise to a claim in Tenant's favor that such
failure constitutes actual or constructive, total or partial, eviction
from the Premises.
Landlord reserves the right to stop any service or utility system, when
necessary by reason of accident or emergency, or until necessary
repairs have been completed; provided, however, that in each instance
of stoppage, Landlord shall exercise reasonable diligence to eliminate
the cause thereof and to resume service as soon as reasonably
practicable. Except in case of emergency repairs, Landlord will give
Tenant reasonable advance notice of any contemplated stoppage and will
use reasonable efforts to avoid unnecessary inconvenience to Tenant by
reason thereof.
4.3 Landlord represents to Tenant that as of the Date of this Lease, to
Landlord's actual knowledge and belief, the Building, the Premises or
the Complex do not violate any environmental laws, rules or regulations
applicable as of the Date of this Lease.
4.4 Subject to the provisions of Section 2.6 hereof, Landlord agrees to
maintain during the term of this Lease commercial general liability
insurance insuring Landlord with respect to the Building in an amount
not less than $5,000,000.00 combined single limit and insurance against
loss or damage to the Building covered by "all risk" type insurance,
which insurance shall be in an amount at least equal to the replacement
cost of the Building. Any and all of such insurance (i) may be
maintained under a blanket policy affecting other premises of Landlord
and/or its affiliated business organizations and (ii) may be written
with such deductibles as reasonably determined by Landlord in good
faith. Nothing herein shall limit Landlord's right to maintain such
other insurance as provided in the aforesaid Section 2.6.
4.5 Subject to the limitations of Section 8.4 below, to the maximum extent
this agreement is effective according to law and to the extent not
resulting from any act, omission, fault, negligence or misconduct of
Tenant or its contractors, agents, licensees, invitees or employees,
Landlord agrees to indemnify and save harmless Tenant from and against
any claim arising from an injury to any person occurring in the
Building or on the Site after the date that possession is first
delivered to Tenant and until the expiration or earlier termination of
the Lease Term, to the extent that such injury results from the
negligence or willful misconduct of Landlord or Landlord's employees;
provided, however, that in no event shall the aforesaid indemnity
render Landlord responsible or liable for any loss or damage to
fixtures or personal property of Tenant (except to the extent that such
loss or damage to fixtures or personal property is not covered by
insurance either maintained by Tenant or required to be maintained by
Tenant under this Lease) and Landlord shall in no event be liable for
any special, indirect or consequential damages; and provided further
that the provisions of this Section shall not be applicable (i) to the
holder of any mortgage now or hereafter on the Building or the Site
(whether or not such holder shall be a mortgagee in possession of or
shall have exercised any rights under a conditional, collateral or
other assignment of leases and/or rents respecting the Building and/or
the Site) or (ii) any person acquiring title as a result of, or
subsequent to, a foreclosure, except to the extent of liability
insurance maintained by the foregoing.
4.6 Provided that, on the condition that and only so long as (i) there
shall not have occurred an Event of Default (as defined in Section
7.1(a) hereof), (ii) this Lease shall be in full force and effect,
(iii) Tenant shall be in actual occupancy of the Premises and be
engaged in the business of clinical trials management, statistical
analysis of clinical research and product development for
pharmaceutical and diagnostic products and (iv) Tenant shall not have
assigned this Lease or sublet more than forty-five percent (45%) of the
Rentable Floor Area of the Premises then leased by Tenant, Landlord
shall not hereafter directly enter into a lease of other space in the
Building with any of the "Named Companies" (as hereinafter defined).
For the purposes of this Section 4.6, the "Named Companies" shall be
the three (3) largest (based on market capitalization), publicly-traded
competitors of Tenant engaged in the business described in subsection
(iii) above, as may from time to time be designated by Tenant upon
reasonable prior notice to Landlord. Notwithstanding anything contained
herein to the contrary, the provisions of this Section 4.6 shall not
apply to a company designated by Tenant as one of the Named Companies
after such time as Landlord shall have submitted a lease proposal to,
or entered into a lease with, such company for space in the Building.
Tenant hereby designates Quintiles Transnational Corporation, Covance,
Inc. and Pharmaceutical Product Development, Inc. as the Named
Companies as of the date of this Lease.
ARTICLE V
TENANT'S COVENANTS
Tenant covenants during the term and such further time as Tenant
occupies any part of the Premises:
5.1 To pay when due all fixed rent and additional rent and all charges for
utility services rendered to the Premises (except as otherwise provided
in Exhibit D) and, further, as additional rent, all charges for
additional services rendered pursuant to Section 4.1.2.
5.2 Except as otherwise provided in Article VI and Section 4.1.3, to keep
the Premises in good order, repair and condition, reasonable wear and
tear only excepted, and all glass in windows (except glass in exterior
walls unless the damage thereto is attributable to Tenant's negligence
or misuse) and doors of the Premises whole and in good condition with
glass of the same type and quality as that injured or broken, damage by
fire, other casualty or taking under the power of eminent domain only
excepted, and at the expiration or termination of this Lease peaceably
to yield up the Premises all construction, work, improvements, and all
alterations and additions thereto in good order, repair and condition,
reasonable wear and tear only excepted, first removing all goods and
effects of Tenant and, to the extent specified by Landlord by notice to
Tenant given at least ten (10) days before such expiration or
termination, all alterations and additions made by Tenant and all
partitions, and repairing any damage caused by such removal and
restoring the Premises and leaving them clean and neat. Tenant shall
not permit or commit any waste, and Tenant shall be responsible for the
cost of repairs which may be made necessary by reason of damage to
common areas in the Building or to the Site to the extent caused by
Tenant, Tenant's independent contractors, Tenant's employees or
Tenant's invitees.
5.3 Continuously from the commencement of the Term, to use and occupy the
Premises for the Permitted Uses only, and not to injure or deface the
Premises, the Building, the Site or any other part of the Complex nor
to permit in the Premises or on the Site any auction sale, vending
machine, or inflammable fluids or chemicals, or nuisance, or the
emission from the Premises of any reasonably objectionable noise or
odor, nor to use or devote the Premises or any part thereof for any
purpose other than the Permitted Uses, nor for any use thereof which is
inconsistent with maintaining the Building as a first class office
building in the quality of its maintenance, use and occupancy, or which
is improper, offensive, contrary to law or ordinance or liable to
render necessary any alteration or addition to the Building. Further,
Tenant shall not nor shall Tenant permit its employees, invitees or
contractors to engage in any activity which may produce a hazardous
material, waste or substance, or keep or maintain any substance which
is or may hereafter be classified a hazardous material, waste or
substance under federal, state or local laws, rules and regulations,
including, without limitation, 42 U.S.C. Section 6901 et seq., 42
U.S.C. Section 9601 et seq., 42 U.S.C. Section 2601 et seq., 49 U.S.C.
Section 1802 et seq. and Massachusetts General Laws, Chapter 21E and
the rules and regulations promulgated under any of the foregoing, as
such laws, rules and regulations may be amended from time to time and,
further, Tenant shall comply and shall cause its employees, invitees,
agents and contractors to comply with each of the foregoing.
5.4 Not to obstruct in any manner any portion of the Building not hereby
leased or any portion thereof or of the Site used by Tenant in common
with others; not without prior consent of Landlord to permit the
painting or placing of any signs, curtains, blinds, shades, awnings,
aerials or flagpoles, or the like, visible from outside the Premises;
and to comply with all reasonable Rules and Regulations now or
hereafter made by Landlord (which such Rules and Regulations shall not
have an adverse effect on Tenant's use and occupancy of the Premises as
contemplated by this Lease and shall be applied in a non-discriminatory
manner to all occupants of the Building), of which Tenant has been
given reasonable prior notice, for the care and use of the Building and
Site and their facilities and approaches; Landlord shall not be liable
to Tenant for the failure of other occupants of the Building to conform
to such Rules and Regulations. Landlord shall use good faith efforts to
enforce its Rules and Regulations against non-conforming occupants of
the Building, provided that the failure of Landlord to enforce such
Rules and Regulations shall not constitute a default of Landlord
hereunder.
5.5 To keep the Premises equipped with all safety appliances required by
any public authority because of any use made by Tenant other than
normal office use, and to procure all licenses and permits so required
because of such use and, if requested by Landlord, to do any work so
required because of such use, it being understood that the foregoing
provisions shall not be construed to broaden in any way Tenant's
Permitted Uses.
5.6 Except as otherwise expressly provided herein, Tenant covenants and
agrees that it shall not assign, mortgage, pledge, hypothecate or
otherwise transfer this Lease and/or Tenant's interest in this Lease or
sublet (which term, without limitation, shall include granting of
concessions, licenses or the like) the whole or any part of the
Premises. Any assignment, mortgage, pledge, hypothecation, transfer or
subletting not expressly permitted in or consented to by Landlord under
Sections 5.6.1-5.6.6 shall be void, ab initio; shall be of no force and
effect; and shall confer no rights on or in favor of third parties. In
addition, Landlord shall be entitled to seek specific performance of or
other equitable relief with respect to the provisions hereof.
5.6.1 Notwithstanding the provisions of Section 5.6 above and the provisions
of Section 5.6.3 and 5.6.4 below, Tenant shall have the right to assign
this Lease or to sublet the Premises (in whole or in part) without
Landlord's consent to any parent or subsidiary corporation of Tenant or
to any corporation into which Tenant may be converted or with which it
may merge, or to any affiliated entity controlling, controlled by or
under common control with Tenant. Any such assignment or subletting
shall be subject to the provisions of the first two paragraphs of
Section 5.6.2 and the provisions of Section 5.6.5 below.
5.6.2 Notwithstanding the provisions of Section 5.6 above, in the event
Tenant desires to assign this Lease or to sublet the Premises, Tenant
shall notify Landlord thereof in writing, and said notice shall
specify the provisions of the proposed assignment or subletting,
including (a) the name and address of the proposed assignee or
subtenant, (b) except in the case of a proposed assignment or
subletting pursuant to Section 5.6.1, such information as to the
proposed assignee's or proposed subtenant's net worth and financial
capability and standing as may reasonably be required for Landlord to
make the determination referred to in Section 5.6.3 below (provided,
however, that Landlord shall hold such information confidential having
the right to release same to its officers, accountants, attorneys and
mortgage lenders on a confidential basis), (c) all of the terms and
provisions upon which the proposed assignment or subletting is to be
made, (d) in the case of a proposed assignment or subletting pursuant
to Section 5.6.1, such information as may be necessary for Landlord to
determine that such proposed assignment or subletting complies with
the requirements of Section 5.6.1, and (e) except in the case of a
proposed assignment or subletting pursuant to Section 5.6.1, all other
information necessary to make the determination referred to in Section
5.6.3 below.
If Landlord shall consent to the proposed assignment or subletting or
in the case of a proposed assignment of subletting pursuant to Section
5.6.1 Landlord shall confirm that the proposed assignment or subletting
complies with the requirements of Section 5.6.1, as the case may be,
then, in such event, Tenant may thereafter sublease or assign pursuant
to Tenant's notice, as given hereunder; provided, however, that if such
assignment or sublease shall not be executed and delivered to Landlord
within one hundred-twenty (120) days after the date of Landlord's
consent, the consent shall be deemed null and void and the provisions
of Sections 5.6.2-5.6.5 shall be applicable.
5.6.3 Notwithstanding the provisions of Section 5.6 above, but subject to
the provisions of this Section 5.6.3 and the provisions of Sections
5.6.4 and 5.6.5 for a period of one hundred twenty (120) days after
the receipt of Tenant's notice referred to in Section 5.6.2, Tenant
shall have the right to assign this Lease or sublet the Premises in
accordance with Tenant's notice to Landlord given as provided in
Section 5.6.2 provided that, in each instance (except for transfers in
accordance with Section 5.6.1 above), Tenant first obtains the express
prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed. Landlord shall not be deemed to be
unreasonably withholding its consent to such a proposed assignment or
subleasing if:
(a) the operations of the proposed assignee or subtenant
are not consistent with the operation of a first
class office building (by way of example Landlord
shall not be deemed to be unreasonably withholding
its consent to an assignment or subleasing to any
governmental agency), or
(b) the proposed assignee or subtenant does not possess
adequate financial capability to perform the Tenant
obligations as and when due or required, or
(c) the assignee or subtenant proposes to use the
Premises (or part thereof) for a purpose other than
the purpose for which the Premises may be used as
stated in Section 1.1 hereof, or
(d) there shall be existing an Event of Default (defined
in Section 7.1)
(e) in the case of a proposed subletting, the proposed
location of the subtenant's premises would, in
Landlord's reasonable judgment, negatively impact the
configuration of the remainder of the Premises or the
Building or make the management of the Building
significantly more difficult given the size and
layout of such subtenant's premises.
5.6.4 In addition, in the case of any assignment or subleasing as to which
Landlord may consent (other than an assignment or subletting permitted
under Section 5.6.1 hereof) such consent shall be upon the express and
further condition, covenant and agreement, and Tenant hereby covenants
and agrees that, in addition to the Annual Fixed Rent, additional rent
and other charges to be paid pursuant to this Lease, fifty percent
(50%) of the "Assignment/Sublease Profits" (hereinafter defined), if
any, shall be paid to Landlord.
The "Assignment/Sublease Profits" shall be the excess, if any, of (a)
the "Assignment/ Sublease Net Revenues" as hereinafter defined over (b)
the Annual Fixed Rent and additional rent and other charges provided in
this Lease. The "Assignment/Sublease Net Revenues" shall be the fixed
rent, additional rent and all other charges and sums payable either
initially or over the term of the sublease or assignment plus all other
profits and increases to be derived by Tenant as a result of such
subletting or assignment, less the reasonable costs of Tenant incurred
in such subleasing or assignment (the definition of which shall include
but not necessarily be limited to rent concessions, brokerage
commissions and alteration allowances).
All payments of the Assignment/Sublease Profits due Landlord shall be
made within thirty (30) days of receipt of same by Tenant.
5.6.5 (A) It shall be a condition of the validity of any assignment or
subletting of right under Section 5.6.1 above, or consented to under
Section 5.6.3 above, that the assignee or sublessee agrees directly
with Landlord, in form reasonably satisfactory to Landlord, to be
bound by all the obligations of the Tenant hereunder, including,
without limitation, the obligation to pay the rent and other amounts
provided for under this Lease (but in the case of a partial
subletting, such subtenant shall agree on a pro rata basis to be so
bound) including the provisions of Sections 5.6 through 5.6.5 hereof,
but such assignment or subletting shall not relieve the Tenant named
herein of any of the obligations of the Tenant hereunder, and Tenant
shall remain fully and primarily liable thereof.
(B) As additional rent, Tenant shall reimburse Landlord promptly for
reasonable out of pocket legal and other expenses incurred by Landlord
in connection with any request by Tenant for consent to assignment or
subletting.
(C) If this Lease be assigned, or if the Premises or any part thereof
be sublet or occupied by anyone other than Tenant, Landlord may upon
seven (7) days prior notice to Tenant, at any time and from time to
time, collect rent and other charges from the assignee, sublessee or
occupant and apply the net amount collected to the rent and other
charges herein reserved and Tenant shall have no obligation to make
payment for such amount collected, but no such assignment, subletting,
occupancy or collection shall be deemed a waiver of this covenant, or a
waiver of the provisions of Sections 5.6 through 5.6.5 hereof, or of
the obligation to payment for other or future amounts due under this
Lease, or the acceptance of the assignee, sublessee or occupant as a
tenant or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained, the Tenant herein
named to remain primarily liable under this Lease.
(D) The consent by Landlord to an assignment or subletting under
Section 5.6.3 shall in no way be construed to relieve Tenant from
obtaining the express consent in writing to Landlord to any further
assignment or subletting.
5.6.6 Notwithstanding anything contained in this Lease to the contrary, in
the case of (a) a proposed assignment of this Lease or (b) a proposed
subleasing of 58,000 rentable square feet or more of the Rentable
Floor Area of the Premises (it being understood and agreed that in the
event Tenant should desire to sublease 58,000 square feet or more in a
single sublease transaction, for the purposes of this paragraph Tenant
need only provide Landlord with notice of its intent to sublease such
space, as opposed to providing Landlord with the notice and
information described in the first paragraph of Section 5.6.2),
Landlord may elect, at its option, by notice given within fifteen (15)
days after receipt of Tenant's notice given pursuant to this Section
5.6.6, to terminate this Lease in its entirety in the case of an
assignment or as to such portions of the Premises proposed to be
sublet which would, if made, trigger Landlord's rights under this
paragraph (herein called the "Terminated Portion of the Premises") as
of a date which shall be not earlier than sixty (60) days nor later
than one hundred (100) days after Landlord's notice to Tenant;
provided, however that upon the termination date as set forth in
Landlord's notice, all of Landlord's and Tenant's obligations as to
either the Premises or to the Terminated Portion of the Premises (as
applicable) relating to the period after such termination date (but
not those relating to the period before such termination date) shall
cease and provided, further, that in the event of a subletting, this
Lease shall remain in full force and effect as to the remainder of the
Premises, except that from and after the termination date the Rentable
Floor Area of the Premises shall be reduced to the rentable floor area
of the remainder of the Premises and after such termination all
references in this Lease to the "Premises" or the "Rentable Floor Area
of the Premises" shall be deemed to be references to the remainder of
the Premises and accordingly Tenant's payments for Annual Fixed Rent,
operating costs and real estate taxes shall be reduced on a pro rata
basis to reflect the size of the remainder of the Premises, and
provided further that Landlord shall have the right at Landlord's sole
cost and expense to make such alterations and improvements as may be
required to separately demise the Terminated Portion of the Premises;
provided, further that such notice of termination shall be null and
void of no force and effect and this Lease shall remain in full force
and effect as to both the Terminated Portion of the Premises and the
remainder of the Premises if within five (5) days after Landlord's
termination notice Tenant shall give notice to Landlord that Tenant
withdraws Tenant's assignment or sublease request.
5.7 To defend with counsel first approved by Landlord (which approval shall
not be unreasonably withheld or delayed), save harmless, and indemnify
Landlord from any liability for injury, accident or damage to any
person or property, and from any claims, actions, proceedings and
expenses and costs in connection therewith (including without
limitation reasonable counsel fees) to the extent (i) arising from (a)
the omission, fault, willful act, negligence or other misconduct of
Tenant or (b) from any use made or thing done or occurring on the
Premises not due to the omission, fault, willful act, negligence or
other misconduct of Landlord, or (ii) resulting from the failure of
Tenant to perform and discharge its covenants and obligations under
this Lease; to maintain in responsible companies qualified to do
business, and in good standing, in Massachusetts commercial general
liability insurance or comprehensive general liability insurance with a
broad form comprehensive liability endorsement covering the Premises
insuring Landlord (as an additional insured) as well as Tenant with
limits which shall, at the commencement of the Term, be at least equal
to those stated in Section 1.1 and from time to time during the Term
shall be for such higher limits, if any, as are customarily carried in
Greater Boston with respect to similar properties or which may
reasonably be required by Landlord, and workmen's compensation
insurance with statutory limits covering all of Tenant's employees
working in the Premises, and to deposit with Landlord on or before the
Commencement Date and concurrent with all renewals thereof,
certificates for such insurance bearing the endorsement that the
policies will not be canceled until after thirty (30) days' written
notice to Landlord. Notwithstanding anything contained in this Section
5.7 to the contrary, in no event shall Tenant be liable for any
special, indirect or consequential damages.
5.8 That all of the furnishings, fixtures, equipment, effects and property
of every kind, nature and description of Tenant and of all persons
claiming by, through or under Tenant which, during the continuance of
this Lease or any occupancy of the Premises by Tenant or anyone
claiming under Tenant, may be on the Premises or elsewhere in the
Building or on the Site, shall be at the sole risk and hazard of
Tenant, and if the whole or any part thereof shall be destroyed or
damaged by fire, water or otherwise, or by the leakage or bursting of
water pipes, or other pipes, by theft or from any other cause, no part
of said loss or damage is to be charged to or be borne by Landlord,
provided that this limitation shall not apply to damage to the extent
caused by Landlord's negligent act or negligent failure to act and not
covered by insurance either maintained by Tenant or required to be
maintained by Tenant under this Lease, and provided further that
Landlord shall in no event be indemnified or held harmless or
exonerated from any liability to Tenant or to any other person, for any
injury, loss, damage or liability to the extent such indemnity, hold
harmless or exoneration is prohibited by law.
5.9 To permit Landlord and its agents to examine the Premises upon
reasonable prior notice (except in the event of an emergency) at
reasonable times and, if Landlord shall so elect, to make any repairs
or replacements Landlord may deem necessary; to remove, at Tenant's
expense, any alterations, addition, signs, curtains, blinds, shades,
awnings, aerials, flagpoles, or the like not consented to in writing
(to the extent Landlord's consent is required hereunder) or not
conforming to the requirements of the second paragraph of Section 3.3
(to the extent Landlord's consent is not required hereunder); and to
show the Premises to prospective tenants during the nine (9) months
preceding expiration of the Term and to prospective purchasers and
mortgagees upon reasonable prior notice at all reasonable times.
5.10 With the exception of the dense file room to be located as shown on
Exhibit H on the first floor of the Building (for which the live load
per square foot of floor area shall not exceed 300 pounds), not to
place a load upon the Premises exceeding an average rate of 100 pounds
of live load per square foot of floor area (partitions shall be
considered as part of the live load); and not to move any safe, vault
or other heavy equipment in, about or out of the Premises except in
such manner and at such time as Landlord shall in each instance
authorize; Tenant's business machines and mechanical equipment which
cause vibration or noise that may be transmitted to the Building
structure or to any other space in the Building shall be so installed,
maintained and used by Tenant so as to eliminate such vibration or
noise.
5.11 To pay promptly when due all taxes which may be imposed upon personal
property (including, without limitation, fixtures and equipment) in the
Premises to whomever assessed.
ARTICLE VI
CASUALTY AND TAKING
6.1 In case during the Lease Term the Building or the Site are damaged by
fire or other casualty and such fire or casualty damage cannot, in the
ordinary course, reasonably be expected to be repaired within one
hundred fifty (150) days from the time that repair work would commence,
Landlord or Tenant may, at either party's election, terminate this
Lease by notice given to the other party within sixty (60) days after
the date of such fire or other casualty, specifying the effective date
of termination. The effective date of termination specified by such
notice shall not be less than thirty (30) days nor more than forty-five
(45) days after the date of notice of such termination.
Unless terminated pursuant to the foregoing provision, this Lease shall
remain in full force and effect following any such damage subject,
however, to the following provisions.
If the Building or the Site or any part thereof are damaged by fire or
other casualty and this Lease is not so terminated, or Landlord or
Tenant have no right to terminate this Lease, and in any such case the
holder of any mortgage which includes the Building as a part of the
mortgaged premises or any ground lessor of any ground lease which
includes the Site as part of the demised premises allows the net
insurance proceeds to be applied to the restoration of the Building
(and/or the Site), Landlord shall, promptly after such damage and the
determination of the net amount of insurance proceeds available, use
due diligence to restore the Premises and the Building in the event of
damage thereto (excluding any furniture, fixtures or equipment of
Tenant, or any other items installed, or paid for, by Tenant, other
than the initial tenant improvement work described in Article III
hereof), into proper condition for use and occupation and a just
proportion of the Annual Fixed Rent, Tenant's share of Operating
Expenses and Tenant's share of real estate taxes shall be abated
according to the nature and extent of the injury to the Premises, from
the date of such fire or other casualty until the Premises shall have
been restored by Landlord substantially into such condition except for
punch list items and long lead items. Notwithstanding anything herein
contained to the contrary, Landlord shall not be obligated to expend
for such repair and restoration any amount in excess of the net
insurance proceeds.
6.2 Notwithstanding anything to the contrary contained in this Lease, if
the Building or the Premises shall be substantially damaged by fire or
casualty as the result of a risk not covered by the forms of casualty
insurance at the time maintained by Landlord and such fire or casualty
damage cannot, in the ordinary course, reasonably be expected to be
repaired within ninety (90) days from the time that repair work would
commence, Landlord or Tenant may, at either party's election, terminate
the Term of this Lease by notice to the other party given within thirty
(30) days after such loss, specifying the effective date of
termination. The effective date of termination specified by such notice
shall be not less than thirty (30) days nor more than forty-five (45)
days after the date of notice of such termination. Unless terminated
pursuant to the foregoing provision, this Lease shall remain in full
force and effect following any such damage. If the Lease is not
terminated as aforesaid, then a just proportion of the Annual Fixed
Rent, Tenant's share of Operating Expenses and Tenant's share of Real
Estate Taxes shall be abated according to the nature and extent of the
injury to the Premises, from and after the date of such fire or other
casualty until the Premises shall have been restored by Landlord into
proper condition for use and occupation except for punch list items and
long lead items.
6.3 If the entire Building, or such portion of the Premises as to render
the balance (if reconstructed to the maximum extent practicable in the
circumstances) unsuitable for Tenant's purposes, shall be taken by
condemnation or right of eminent domain, Landlord or Tenant shall have
the right to terminate this Lease by notice to the other of its desire
to do so specifying the effective date of termination, provided that
such notice is given not later than thirty (30) days after Tenant has
been deprived of possession. The effective date of termination
specified by such notice shall be not less than thirty (30) days or
more than forty-five (45) days after the date of notice of such
termination. Unless terminated pursuant to the foregoing provision,
this Lease shall remain in full force and effect following any such
taking, subject, however, to the following provisions.
Further, if so much of the Building shall be so taken that continued
operation of the Building would be uneconomic as a result of the
taking, Landlord shall have the right to terminate this Lease by giving
notice to Tenant of Landlord's desire to do so not later than thirty
(30) days after Tenant has been deprived of possession of the Premises
(or such portion thereof as may be taken). If Landlord shall give such
notice, then this Lease shall terminate as of the date of such notice
with the same force and effect as if such date were the date originally
established as the expiration date hereof.
Should any part of the Premises be so taken or condemned during the
Lease Term hereof, and should this Lease not be terminated in
accordance with the foregoing provisions, and the holder of any
mortgage which includes the Premises as part of the mortgaged premises
or any ground lessor of any ground lease which includes the Site as
part of the demised premises allows the net condemnation proceeds to be
applied to the restoration of the Building, Landlord agrees, after the
determination of the net amount of condemnation proceeds available to
Landlord, to use due diligence to put what may remain of the Premises
into proper condition for use and occupation as nearly like the
condition of the Premises prior to such taking as shall be practicable
(excluding any furniture, fixtures or equipment of Tenant, or any other
items installed or paid for by Tenant). Notwithstanding the foregoing,
Landlord shall not be obligated to expend for such repair and
restoration any amount in excess of the net condemnation proceeds.
If the Premises shall be affected by any exercise of the power of
eminent domain, then the Annual Fixed Rent, Tenant's share of Operating
Expenses and Tenant's share of real estate taxes shall be justly and
equitably abated and reduced from the date of the taking according to
the nature and extent of the loss of use thereof suffered by Tenant;
and in case of a taking which permanently reduces the Rentable Floor
Area of the Premises, a just proportion of the Annual Fixed Rent,
Tenant's share of Operating Expenses and Tenant's share of real estate
taxes shall be abated and/or reduced from the date of the taking for
the remainder of the Lease Term. Landlord shall deliver to Tenant
copies of any notices from the taking authority regarding an exercise
of the power of eminent domain affecting the Premises with reasonable
business expedience.
6.4 Landlord shall have and hereby reserves to itself any and all rights to
receive awards made for damages to the Premises, the Building, the
Complex and the Site and the leasehold hereby created, or any one or
more of them, accruing by reason of exercise of eminent domain or by
reason of anything lawfully done in pursuance of public or other
authority. Except as provided in the next paragraph, Tenant hereby
grants, releases and assigns to Landlord all Tenant's rights to such
awards, and covenants to execute and deliver such further assignments
and assurances thereof as Landlord may from time to time request,
unless Tenant is entitled to such awards as a matter of law
irrespective of any contractual provisions to the contrary.
Nothing contained herein shall be construed to prevent Tenant from
prosecuting in any condemnation proceeding a claim for the value of any
of Tenant's usual trade fixtures installed in the Premises by Tenant at
Tenant's expense and for relocation and moving expenses and loss of
Tenant's business, provided that such action and resulting award shall
not affect or diminish the amount of compensation otherwise recoverable
by Landlord from the taking authority.
ARTICLE VII
DEFAULT
7.1 (a) If at any time subsequent to the date of this Lease any one or more
of the following events (herein sometimes called an "Event of Default")
shall occur:
(i) Tenant shall fail to pay the Annual Fixed Rent,
additional rent or other charges for which provision
is made herein on or before the date on which the
same become due and payable, and the same continues
for seven (7) days after notice from Landlord
thereof, or
(ii) Landlord having rightfully given the notice specified
in subsection (a) (i) above three (3) times in any
calendar year, Tenant shall thereafter in the same
calendar year fail to pay the Annual Fixed Rent,
additional rent or other charges on or before the
date on which the same become due and payable, or,
(iii) Tenant shall neglect or fail to perform or observe
any other covenant herein contained on Tenant's part
to be performed or observed and Tenant shall fail to
remedy the same within thirty (30) days after notice
to Tenant specifying such neglect or failure, or if
such failure is of such a nature that Tenant cannot
reasonably remedy the same within such thirty (30)
day period, Tenant shall fail to commence promptly to
remedy the same and to prosecute such remedy to
completion with diligence and continuity; or
(iv) Tenant's leasehold interest in the Premises shall be
taken on execution or by other process of law
directed against Tenant and such execution or other
process is not released or dismissed within
forty-five (45) days; or
(v) Tenant shall make an assignment for the benefit of
creditors or shall file a voluntary petition in
bankruptcy or shall be adjudicated bankrupt or
insolvent, or shall file any petition or answer
seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar
relief for itself under any present or future
Federal, State or other statute, law or regulation
for the relief of debtors, or shall seek or consent
to or acquiesce in the appointment of any trustee,
receiver or liquidator of Tenant or of all or any
substantial part of its properties, or shall admit in
writing its inability to pay its debts generally as
they become due; or
(vi) A petition shall be filed against Tenant in
bankruptcy or under any other law seeking any
reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar
relief under any present or future Federal, State or
other statute, law or regulation and shall remain
undismissed or unstayed for an aggregate of sixty
(60) days (whether or not consecutive), or if any
debtor in possession (whether or not Tenant) trustee,
receiver or liquidator of Tenant or of all or any
substantial part of its properties or of the Premises
shall be appointed without the consent or
acquiescence of Tenant and such appointment shall
remain unvacated or unstayed for an aggregate of
sixty (60) days (whether or not consecutive);
then, and in any of said cases (notwithstanding any license of a former
breach of covenant or waiver of the benefit hereof or consent in a
former instance), Landlord lawfully may, immediately or at any time
thereafter, and without demand or further notice terminate this Lease
by notice to Tenant, specifying a date not less than ten (10) days
after the giving of such notice on which this Lease shall terminate,
and this Lease shall come to an end on the date specified therein as
fully and completely as if such date were the date herein originally
fixed for the expiration of the Lease Term (Tenant hereby waiving any
rights of redemption), and Tenant will then quit and surrender the
Premises to Landlord, but Tenant shall remain liable as hereinafter
provided.
(b) If this Lease shall have been terminated as provided in this
Article, then Landlord may, re-enter the Premises pursuant to summary
proceedings instituted in accordance with applicable laws or an
agreement with Tenant (provided that no such proceedings or agreement
shall be required for such entry if Tenant shall vacate or abandon the
Premises), and remove and dispossess Tenant and all other persons and
any and all property from the same, as if this Lease had not been made.
(c) In the event that this Lease is terminated under any of the
provisions contained in Section 7.1 (a) or shall be otherwise
terminated by breach of any obligation of Tenant, Tenant covenants and
agrees forthwith to pay and be liable for, on the days originally fixed
herein for the payment thereof, amounts equal to the several
installments of rent and other charges reserved as they would, under
the terms of this Lease, become due if this Lease had not been
terminated or if Landlord had not entered or re-entered, as aforesaid,
and whether the Premises be relet or remain vacant, in whole or in
part, or relet for a period less than the remainder of the Term, and
for the whole thereof, but in the event the Premises be relet by
Landlord, Tenant shall be entitled to a credit in the net amount of
rent and other charges received by Landlord in reletting, after
deduction of all reasonable expenses incurred in reletting the Premises
(including, without limitation, remodeling costs, brokerage fees and
the like), and in collecting the rent in connection therewith, in the
following manner:
Amounts received by Landlord after reletting shall first be applied
against such Landlord's reasonable expenses, until the same are
recovered, and until such recovery, Tenant shall pay, as of each day
when a payment would fall due under this Lease, the amount which Tenant
is obligated to pay under the terms of this Lease (Tenant's liability
prior to any such reletting and such recovery not in any way to be
diminished as a result of the fact that such reletting might be for a
rent higher than the rent provided for in this Lease); when and if such
expenses have been completely recovered, the amounts received from
reletting by Landlord as have not previously been applied shall be
credited against Tenant's obligations as of each day when a payment
would fall due under this Lease, and only the net amount thereof shall
be payable by Tenant. Further, amounts received by Landlord from such
reletting for any period shall be credited only against obligations of
Tenant allocable to such period, and shall not be credited against
obligations of Tenant hereunder accruing subsequent or prior to such
period; nor shall any credit of any kind be due for any period after
the date when the term of this Lease is scheduled to expire according
to its terms.
(d) (i) At any time after such termination (whether or not Landlord
shall have previously collected any damages under said Section
7.1 (c) as aforesaid) and upon written notice by Landlord to
Tenant of Landlord's election to collect damages under this
Section 7.1 (d) in lieu of damages under Section 7.1 (c) above,
Tenant shall pay to Landlord as liquidated final damages and in
lieu of all other damages (with respect to rent, operating costs,
taxes and electricity payable by Tenant under this Lease) beyond
the date of notice from Landlord to Tenant, at Landlord's
election, such a sum as at the time of the giving of such notice
represents the amount of the excess, if any, of the total rent
and other benefits which would have accrued to Landlord under
this Lease from the date of such notice for what would be the
then unexpired Lease Term if the Lease terms had been fully
complied with by Tenant over and above the then cash rental value
(in advance) of the Premises for the balance of the Lease Term.
(ii) For the purposes of this Article, if Landlord elects to require
Tenant to pay damages in accordance with the immediately
preceding paragraph, the total rent shall be computed by assuming
that Tenant's share of excess taxes, Tenant's share of excess
operating costs and Tenant's share of excess electrical costs
would be, for the balance of the unexpired Term from the date of
such notice, the amount thereof (if any) for the immediately
preceding annual period payable by Tenant to Landlord.
(e) In case of any Event of Default, and Tenant shall be dispossessed
by summary proceedings or pursuant to or an agreement with Landlord or
Tenant shall vacate or abandon the Premises, Landlord may (i) re-let
the Premises or any part or parts thereof, either in the name of
Landlord or otherwise, for a term or terms which may at Landlord's
option be equal to or less than or exceed the period which would
otherwise have constituted the balance of the Term of this Lease and
may grant concessions or free rent to the extent that Landlord
considers reasonably advisable or necessary to re-let the same and (ii)
may make such alterations, repairs and decorations in the Premises as
Landlord in its sole judgment considers advisable or necessary for the
purpose of reletting the Premises; and the making of such alterations,
repairs and decorations shall not operate or be construed to release
Tenant from liability hereunder as aforesaid. Tenant hereby expressly
waives any and all rights of redemption granted by or under any present
or future laws in the event of Tenant being evicted or dispossessed in
accordance with the provisions of this Lease, or in the event of
Landlord obtaining possession of the Premises in accordance with the
provisions of this Lease, by reason of the violation by Tenant of any
of the covenants and conditions of this Lease.
(f) The specified remedies to which Landlord may resort hereunder are
not intended to be exclusive of any remedies or means of redress to
which Landlord may at any time be entitled lawfully (provided, however,
that Landlord shall not be entitled to receive damages under Section
7.1(c) after such time as it has elected to receive liquidated damages
under Section 7.1(d) above), and Landlord may invoke any remedy allowed
at law or in equity as if specific remedies were not herein provided
for. Further, nothing contained in this Lease shall limit or prejudice
the right of Landlord to prove and obtain in proceedings for bankruptcy
or insolvency by reason of the termination of this Lease, an amount
equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, the damages are
to be proved, whether or not the amount be greater, equal to, or less
than the amount of the loss or damages referred to above.
7.2 Subject to the provisions of Section 8.17 (B) below, Landlord shall in
no event be in default in the performance of any of Landlord's
obligations hereunder unless and until Landlord shall have failed to
perform such obligations within thirty (30) days, or such additional
time as is reasonably required to correct any such default (provided
that if such default is of such a nature that Landlord cannot
reasonably remedy the same within such thirty (30) day period, Landlord
shall commence promptly to remedy the same and to prosecute such remedy
to completion with diligence and continuity), after notice by Tenant to
Landlord properly specifying wherein Landlord has failed to perform any
such obligation.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Tenant covenants and agrees that Tenant will not do or permit anything
to be done in or upon the Premises, or bring in anything or keep
anything therein, which shall invalidate or increase the rate of
insurance on the Premises or on the Building above the standard rate
applicable to premises being occupied for the use to which Tenant has
agreed to devote the Premises; and Tenant further agrees that, in the
event that Tenant shall undertake any of the foregoing non-permitted
uses, Tenant will promptly pay to Landlord, on demand, any such
increase resulting therefrom, which shall be due and payable as
additional rent thereunder.
8.2 Failure on the part of Landlord or Tenant to complain of any action or
non-action on the part of the other, no matter how long the same may
continue, shall never be a waiver by Tenant or Landlord, respectively,
of any of the other's rights hereunder. Further, no waiver at any time
of any of the provisions hereof by Landlord or Tenant shall be
construed as a waiver of any of the other provisions hereof, and a
waiver at any time of any of the provisions hereof shall not be
construed as a waiver at any subsequent time of the same provisions.
The consent or approval of Landlord or Tenant to or of any action by
the other requiring such consent or approval shall not be construed to
waive or render unnecessary Landlord's or Tenant's consent or approval
to or of subsequent similar act by the other.
No payment by Tenant, or acceptance by Landlord, of a lesser amount
than shall be due from Tenant to Landlord shall be treated otherwise
than as a payment on account. The acceptance by Landlord of a check for
a lesser amount with an endorsement or statement thereon, or upon any
letter accompanying such check, that such lesser amount is payment in
full, shall be given no effect, and Landlord may accept such check
without prejudice to any other rights or remedies which Landlord may
have against Tenant.
8.3 Except as otherwise expressly provided in Section 7.1(f) above, the
specific remedies to which Landlord may resort under the terms of this
Lease are cumulative and are not intended to be exclusive of any other
remedies or means of redress to which such party may be lawfully
entitled in case of any breach or threatened breach by Tenant of any
provisions of this Lease. In addition to the other remedies provided in
this Lease, Landlord shall be entitled to the restraint by injunction
of the violation or attempted or threatened violation of any of the
covenants, conditions or provisions of this Lease or to a decree
compelling specific performance of any such covenants, conditions or
provisions.
8.4 Tenant, subject to the terms and provisions of this Lease on payment of
the rent and observing, keeping and performing all of the terms and
provisions of this Lease on Tenant's part to be observed, kept and
performed, shall lawfully, peaceably and quietly have, hold, occupy and
enjoy (i) the Premises and (ii) any and all other rights,
responsibilities and appurtenances of Tenant under this Lease during
the Term subject to the terms of this Lease, without hindrance or
ejection by any persons lawfully claiming under or through Landlord to
have title to the Premises superior to Tenant or without hindrance or
ejection due to Landlord's failure to comply with the terms of this
Lease; the foregoing covenant of quiet enjoyment is in lieu of any
other covenant, express or implied; and 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 Landlord's
successors and assigns only with respect to breaches occurring during
Landlord's or Landlord's successors' or assigns respective ownership of
Landlord's interest hereunder, as the case may be.
Further, Tenant specifically agrees to look solely to Landlord's then
equity interest in the Building at the time owned (or in which Landlord
holds an interest as ground lessee) and the proceeds of (i) any
property insurance policy covering the Building and/or the Site
resulting from a casualty where Landlord has elected not to restore and
(ii) any insurance which Landlord actually carries covering any claim
which Tenant may have against Landlord, less the amount of any
deductible, for recovery of any judgment from Landlord; it being
specifically agreed that neither Landlord (original or successor), nor
any partner in or of Landlord, nor any beneficiary of any Trust of
which any person holding Landlord's interest is Trustee, shall ever be
personally liable for any such judgment, or for the payment of any
monetary obligation to Tenant. 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 action not involving the
personal liability of Landlord (original or successor), any partner in
or of Landlord, any successor Trustee to the persons named herein as
Landlord, or any beneficiary of any Trust of which any person holding
Landlord's interest is Trustee, to respond in monetary damages from
Landlord's assets other than Landlord's equity interest aforesaid in
the Building. In no event shall Landlord ever be liable to Tenant for
any indirect or consequential damages suffered by Tenant from whatever
cause.
8.5 After receiving notice from any person, firm or other entity that it
holds a mortgage which includes the Premises as part of the mortgaged
premises, which notice shall set forth the name, mailing address,
telephone number, facsimile number and a contact person of the holder,
or that it is the ground lessor under a lease with Landlord, as ground
lessee, which includes the Premises as a part of the demised premises,
no notice from Tenant to Landlord shall be effective unless and until a
copy of the same is given to such holder or ground lessor, and the
curing of any of Landlord's defaults by such holder or ground lessor
within a reasonable time thereafter (including a reasonable time to
obtain possession of the premises if the mortgagee or ground lessor
elects to do so) shall be treated as performance by Landlord. For the
purposes of this Section 8.5 or Section 8.15, the term "mortgage"
includes a mortgage on a leasehold interest of Landlord (but not one on
Tenant's leasehold interest).
8.6 With reference to any assignment by Landlord or Landlord's interest in
this Lease, or the rents payable hereunder, conditional in nature or
otherwise, which assignment is made to the holder of a mortgage or
ground lease on property which includes the Premises, Tenant agrees:
(a) That the execution thereof by Landlord, and the acceptance
thereof by the holder of such mortgage or the ground lessor,
shall never be treated as an assumption by such holder or
ground lessor of any of the obligations of Landlord hereunder,
unless such holder, or ground lessor, shall, by notice sent to
Tenant, specifically otherwise elect; and
(b) That, except as aforesaid, such holder or ground lessor shall
be treated as having assumed Landlord's obligations hereunder
only upon foreclosure of such holder's mortgage and the taking
of possession of the Premises, or, in the case of a ground
lessor, the assumption of Landlord's position hereunder by
such ground lessor.
In no event shall the acquisition of title to the Building and the land
on which the same is located by a purchaser which, simultaneously
therewith, leases the entire Building or such land back to the seller
thereof be treated as an assumption by such purchaser-lessor, by
operation of law or otherwise, of Landlord's obligations hereunder, but
Tenant shall look solely to such seller-lessee, and its successors from
time to time in title, for performance of Landlord's obligations
hereunder subject to the provisions of Section 8.4 hereof. In any such
event, this Lease shall be subject and subordinate to the lease to such
purchaser provided that such purchaser agrees to recognize the right of
Tenant to use and occupy the Premises upon the payment of rent and
other charges payable by Tenant under this Lease and the performance by
Tenant of Tenant's obligations under this Lease and provided that
Tenant agrees to attorn to such purchaser. For all purposes, such
seller-lessee, and its successors in title, shall be the landlord
hereunder unless and until Landlord's position shall have been assumed
by such purchaser-lessor.
8.7 No act or thing done by Landlord during the Lease Term shall be deemed
an acceptance of a surrender of the Premises, and no agreement to
accept such surrender shall be valid, unless in writing signed by
Landlord. No employee of Landlord or of Landlord's agents shall have
any power to accept the keys of the Premises prior to the termination
of this Lease. The delivery of keys to any employee of Landlord or of
Landlord's agents shall not operate as a termination of the Lease or a
surrender of the Premises.
8.8 (A) Tenant warrants and represents that Tenant has not dealt with any
broker in connection with the consummation of this Lease other than the
broker, person or firm, if any, designated in Section 1.1 hereof; and
in the event any claim is made against the Landlord relative to
dealings by Tenant with brokers other than the Brokers, if any,
designated in Section 1.1 hereof, Tenant shall defend the claim against
Landlord with counsel of Tenant's selection first approved by Landlord
(which approval will not be unreasonably withheld or delayed) and save
harmless and indemnify Landlord on account of loss, cost or damage
which may arise by reason of such claim.
(B) Landlord warrants and represents that Landlord has not dealt with
any broker in connection with the consummation of this Lease other than
the broker, person or firm, if any, designated in Section 1.1 hereof;
and in the event any claim is made against the Tenant relative to
dealings by Landlord with brokers other than the Brokers, if any,
designated in Section 1.1 hereof, Landlord shall defend the claim
against Tenant with counsel of Landlord's selection first approved by
Tenant (which approval shall not be unreasonably withheld or delayed)
and save harmless and indemnify Tenant on account of loss, cost or
damage which may arise by reason of such claim. Landlord agrees that it
shall be solely responsible for the payment of brokerage commissions to
the Broker, if any, designated in Section 1.1 hereof.
8.9 If any term or provision of this Lease, or the application thereof to
any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such
term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Lease shall be valid and
be enforced to the fullest extent permitted by law.
8.10 The obligations of this Lease shall run with the land, and except as
herein otherwise provided, the terms hereof shall be binding upon and
shall inure to the benefit of the successors and assigns, respectively,
of Landlord and Tenant and, if Tenant shall be an individual, upon and
to his heirs, executors, administrators, successors and assigns. Each
term and each provision of this Lease to be performed by Tenant shall
be construed to be both a covenant and a condition. The reference
contained to successors and assigns of Tenant is not intended to
constitute a consent to subletting or assignment by Tenant.
8.11 Tenant agrees not to record the within Lease, but each party hereto
agrees, on the request of the other, to execute a so-called Notice of
Lease or short form lease in form recordable and complying with
applicable law and reasonably satisfactory to both Landlord's and
Tenant's attorneys. In no event shall such document set forth rent or
other charges payable by Tenant under this Lease; and any such document
shall expressly state that it is executed pursuant to the provisions
contained in this Lease, and is not intended to vary the terms and
conditions of this Lease.
8.12 Whenever, by the terms of this Lease, notice shall or may be given
either to Landlord or to Tenant, such notice shall be in writing and
shall be hand delivered (provided the delivery service provides a
delivery receipt) or sent by registered or certified mail postage
prepaid:
If intended for Landlord, addressed to Landlord at the address
set forth on the first page of this Lease (or to such other
address or addresses as may from time to time hereafter be
designated by Landlord by like notice) with a copy to
Landlord, Attention: General Counsel.
If intended for Tenant, addressed to Tenant at the address set
forth on the second page of this Lease (or to such other
address or addresses as may from time to time hereafter be
designated by Tenant by like notice).
All such notices shall be effective when received provided that the
same are not refused (in which case, the date such notice is first
attempted to be delivered shall be the effective date).
Where provision is made for the attention of an individual or
department, the notice shall be effective only if the wrapper in which
such notice is sent is addressed to the attention of such individual or
department.
8.13 Employees or agents of Landlord have no authority to make or agree to
make a lease or any other agreement or undertaking in connection
herewith. The submission of this document for examination and
negotiation does not constitute an offer to lease, or a reservation of,
or option for, the Premises, and this document shall become effective
and binding only upon the execution and delivery hereof by both
Landlord and Tenant. All negotiations, considerations, representations
and understandings between Landlord and Tenant are incorporated herein
and may be modified or altered only by written agreement between
Landlord and Tenant, and no act or omission of any employee or agent of
Landlord shall alter, change or modify any of the provisions hereof.
8.14 The titles of the Articles throughout this Lease are for convenience
and reference only, and the words contained therein shall in no way be
held to explain, modify, amplify or aid in the interpretation,
construction or meaning of the provisions of this Lease.
8.15 This Lease shall be subject and subordinate to any mortgage now or
hereafter on the Site or the Building, or both, and to each advance
made or hereafter to be made under any mortgage, and to all renewals,
modifications, consolidations, replacements and extensions thereof and
all substitutions therefor provided that the holder of such mortgage
agrees in writing to recognize any and all rights and appurtenances of
Tenant under this Lease (including the right to use and occupy the
Premises) upon the payment of rent and other charges payable by Tenant
under this Lease and the performance by Tenant of Tenant's obligations
hereunder. In confirmation of such subordination and recognition,
Tenant shall, within ten (10) days of Landlord's request, execute and
deliver such instruments of subordination and recognition as such
mortgagee may reasonably require, subject to the receipt of such
instruments of recognition from such mortgagee as Tenant may reasonably
request. In the event that any mortgagee or its respective successor in
title shall succeed to the interest of Landlord, then, this Lease shall
nevertheless continue in full force and effect and Tenant shall and
does hereby agree to attorn to such mortgagee or successor and to
recognize such mortgagee or successor as its landlord, subject to the
receipt by Tenant of a non-disturbance and attornment agreement from
such mortgagee in form and substance reasonably satisfactory to Tenant.
If any holder of a mortgage which includes the Premises, executed and
recorded prior to the date of this Lease, shall so elect, this Lease
and the rights of Tenant hereunder, shall be superior in right to the
rights of such holder, with the same force and effect as if this Lease
had been executed, delivered and recorded, or a statutory Notice hereof
recorded, prior to the execution, delivery and recording of any such
mortgage. The election of any such holder shall become effective upon
either notice from such holder to Tenant in the same fashion as notices
from Landlord to Tenant are to be given hereunder or by the recording
in the appropriate registry or recorder's office of an instrument in
which such holder subordinates its rights under such mortgage to this
Lease.
8.16 Recognizing that both parties may find it necessary to establish to
third parties, such as accountants, banks, mortgagees or the like, the
then current status of performance hereunder, either party, on the
request of the other made from time to time, will promptly furnish
within ten (10) days after request to Landlord, or the holder of any
mortgage encumbering the Premises, or to Tenant, as the case may be, a
statement, in form reasonably satisfactory to the party providing the
same, of the status of any matter pertaining to this Lease, including,
without limitation, acknowledgments that (or the extent to which) each
party is in compliance with its obligations under the terms of this
Lease. Any such statement delivered by Tenant pursuant to this Section
8.16 may be relied upon by any prospective purchaser or mortgagee of
the Premises or any prospective assignee of any mortgagee of the
Premises.
8.17 (A) If Tenant shall at any time default in the performance of any
obligation under this Lease, Landlord shall have the right, but shall
not be obligated, to enter upon the Premises and to perform such
obligation notwithstanding the fact that no specific provision for such
substituted performance by Landlord is made in this Lease with respect
to such default. In performing such obligation, Landlord may make any
reasonable payment of money or perform any other act. All sums so paid
by Landlord (together with interest at the rate of one and one-half
percentage points over the then prevailing prime rate in Boston as set
by The First National Bank of Boston) and all necessary incidental
costs and expenses in connection with the performance of any such act
by Landlord, shall be deemed to be additional rent under this Lease and
shall be payable to Landlord immediately on demand. Landlord may
exercise the foregoing rights without waiving any other of its rights
or releasing Tenant from any of its obligations under this Lease.
(B) In the event Landlord fails to make such repairs as are required of
Landlord by the terms of this Lease within thirty (30) days after
written notice from Tenant to Landlord and to the holder of any
mortgage on the Premises of which Landlord has given Tenant notice or
of which Tenant has actual notice, specifying the nature of such
repairs (or if such repairs are of the type which cannot be completed
within thirty (30) days, then if Landlord or the holder of any such
mortgage (at the option of such mortgagee) fails to (i) commence making
such repairs within thirty (30) days after such written notice from
Tenant and (ii) thereafter prosecute such repairs to completion with
due diligence given the nature of such repairs), then thereafter at any
time prior to Landlord's or such mortgagee's commencing such repairs or
subsequent to Landlord or such mortgagee commencing such repairs if
Landlord or such mortgagee has not prosecuted such repairs to
completion with due diligence given the nature of such repairs, Tenant
may, but need not, make such repairs and charge the reasonable cost
thereof to Landlord; provided, however, that in the case of emergency
repairs (i) such notice by Tenant to Landlord and such mortgagee need
not be in writing, and (ii) Tenant may make such emergency repairs and
charge the reasonable cost thereof to Landlord if either Landlord or
such mortgagee has not made such emergency repairs within a reasonable
time after such notice. If Landlord fails to reimburse Tenant for such
reasonable costs within thirty (30) days after the submission to
Landlord of documentation describing the nature of such repair work
performed by or for Tenant, Tenant shall have the right to commence and
prosecute suit against Landlord to collect such reasonable costs.
However, in no event shall Tenant have the right to offset against,
withhold or deduct from Annual Fixed Rent or additional rent payable
under this Lease for any reason relating to this Section 8.17(B).
8.18 Any holding over by Tenant after the expiration of the term of this
Lease shall be treated as a tenancy at sufferance at one hundred fifty
percent (150%) of the rents and other charges herein (prorated on a
daily basis) and shall otherwise be on the terms and conditions set
forth in this Lease, as far as applicable; provided, however, that
neither the foregoing nor any other term or provision of this Lease
shall be deemed to permit Tenant to retain possession of the Premises
or hold over in the Premises after the expiration or earlier
termination of the Lease Term.
8.19 Any insurance carried by either party with respect to the Premises or
property therein or occurrences thereon shall, if it can be so written
without additional premium or with an additional premium which the
other party agrees to pay, include a clause or endorsement denying to
the insurer rights of subrogation against the other party to the extent
rights have been waived by the insured prior to occurrence of injury or
loss. Each party, notwithstanding any provisions of this Lease to the
contrary, hereby waives any rights of recovery against the other for
injury or loss due to hazards covered by such insurance to the extent
of the indemnification received thereunder.
8.20 Notwithstanding any provision of this Lease to the contrary, Tenant
shall have the right to install signage with Tenant's name at the
Building entrance and at the driveway entrance to the Complex subject
to the following provisions:
(A) Tenant shall have the right to install, at its own expense, a
sign at the Building entrance with Tenant's name (the "Building
Entrance Signage"). The Building Entrance Signage shall be of a
size and design and placed in a location comparable to that found
in the 195 West Street building currently leased by Landlord to
Tenant, shall otherwise be mutually agreeable to Landlord and
Tenant, and shall be subject to the applicable provisions of the
Zoning By-Law of the City of Waltham and to any other applicable
laws and regulations. It is understood and agreed that Tenant
shall be responsible for obtaining all necessary permits relating
to such signage, and that the failure by Tenant to obtain the
same shall not give Tenant any right to terminate this Lease nor
entitle Tenant to any abatement, set-off or other reduction of
Annual Fixed Rent, additional rent or other charges payable
hereunder. Landlord agrees to assist Tenant with commercially
reasonable efforts regarding Tenant's obtaining of permits and
approvals for the Building Entrance Signage, provided Landlord
shall not be required to expend any monies, assume any costs or
expenses or undertake any liability with respect thereto.
Notwithstanding the foregoing and Tenant's right to the
Building Entrance Signage, Landlord shall have the right (i)
prior to such time as Tenant shall directly lease and occupy
(at a minimum) an amount of space at least equal to the
rentable square footage of Phase I of the Building in its
entirety and the Expansion Premises (the Threshold Amount), to
provide signage at the Building entrance for up to two (2)
other tenants of the Complex who lease the equivalent of more
than one (1) floor of Phase II of the Building (which such
signage may remain notwithstanding that Tenant's occupancy has
reached the Threshold Amount) and (ii) after Tenant's
occupancy has reached the Threshold Amount, to provide signage
at the Building entrance to one (1) tenant of the Complex who
leases the equivalent of two (2) floors of Phase II of the
Building. The foregoing limitation on Landlord's ability to
provide signage at the Building entrance to tenants of the
Complex shall terminate and be of no further force and effect
if Tenant shall assign this Lease or if Tenant's occupancy
shall fall below 100,000 rentable square feet of floor area as
the result of subleasing (other than to an approved assignee
of Tenant's entire interest in this Lease for the balance of
the Lease Term or in connection with an assignment or sublease
under Section 5.6.1 above); provided, however, that in no
event shall the number of Building entrance signs be greater
than three (3) (inclusive of the Building Entrance Signage
provided to Tenant hereunder).
(B) Tenant shall also have the right, at Tenant's own expense, to
install a sign at the driveway entrance to the Complex (the
"Driveway Entrance Signage"). The Driveway Entrance Signage shall
be placed in a location comparable to that found at the driveway
entrance to the 195 West Street building currently leased by
Landlord to Tenant, shall otherwise be mutually agreeable to
Landlord and Tenant with respect to size and design, and shall be
subject to the applicable provisions of the Zoning By-law of the
City of Waltham and to any other applicable laws and regulations.
It is understood and agreed that Tenant shall be responsible for
obtaining all necessary permits and approvals relating to such
signage, and that the failure by Tenant to obtain the same shall
not give Tenant any right to terminate this Lease nor entitle
Tenant to any abatement, set-off or other reduction of Annual
Fixed Rent, additional rent or other charges payable hereunder.
Landlord agrees to assist Tenant with commercially reasonable
efforts regarding Tenant's obtaining of permits and approvals for
the Driveway Entrance Signage, provided Landlord shall not be
required to expend any monies, assume any costs or expenses or
undertake any liability with respect thereto.
Notwithstanding the fact that Tenant has the right to the
Driveway Entrance Signage, Landlord shall have the right to
provide one (1) other tenant in the Complex who leases the
equivalent of two (2) floors in Phase II of the Building with
rights comparable to Tenant's with respect to signage at the
driveway entrance to the Building.
(C) Notwithstanding anything contained herein to the contrary, the
right to corporate signage provided in this Section 8.20 shall
be exclusive to PAREXEL International Corporation and shall
not pass to any assignee of this Lease or subtenant of the
Premises (other than an assignee or subtenant under Section
5.6.1 above or an approved assignee of Tenant's entire
interest in this Lease for the balance of the Lease Term).
(D) Notwithstanding anything contained in this Section 8.20 to the
contrary, Tenant's right to signage under this Section 8.20 shall
terminate and be of no further force and effect and Landlord
shall have the right, at Tenant's expense, to remove any signage
described in this Section 8.20 and repair any damage done to the
Building or the Site (i) upon the expiration or earlier
termination of the Term of this Lease, or (ii) upon the
occurrence of an Event of Default or (iii) with respect to the
Driveway Entrance Signage only, if Tenant shall assign this Lease
(other than to an approved assignee of Tenant's entire interest
in this Lease for the balance of the Lease Term or in connection
with an assignment or sublease under Section 5.6.1 above). In
addition, Tenant's right to Driveway Entrance Signage under this
Section 8.20 shall terminate and be of no further force and
effect and Landlord shall have the right, at Tenant's expense, to
remove such Driveway Entrance Signage and repair any damage done
to the Site if Tenant's occupancy shall fall below 90,000
rentable square feet of floor area and the space then occupied by
Tenant is either (x) less than the space occupied by any other
tenant in the Complex or (y) less than the equivalent square
footage of two (2) floors in Phase II of the Building.
8.21 Landlord shall construct a food service facility in the Building in a
location in the Building and of a size and scope as shown on Exhibit C
for use by tenants in the Building and their visitors, which facility
shall be operational on or before July 1, 1999, as such date may be
extended automatically for such periods of time as Landlord is
prevented from proceeding with or completing the same by reason of
Landlord's Force Majeure (such periods of time not to exceed one
hundred twenty (120) days in the aggregate for any Landlord's Force
Majeure) or any Tenant Delays (without limiting Landlord's other rights
on account thereof). Landlord agrees to provide Tenant with reasonable
interim food service if the food service facility contemplated hereby
is not operational by the Initial Phase I Scheduled Completion Date
until such time as the facility is completed as aforesaid.
8.22 In addition to the surface parking to be provided to Tenant in the
ratio set forth in Section 1.1, Landlord shall construct a structured
parking facility (the Parking Structure) on the Site for Tenant's
exclusive use. The Parking Structure shall contain at least 300 parking
spaces. Landlord shall use due diligence to complete the Parking
Structure by July 1, 1999, subject to Landlord's obtaining all
necessary permits and approvals for the construction and operation of
the Parking Structure, it being understood and agreed that the failure
of Landlord to complete the Parking Structure on or prior to any
particular date shall not entitle Tenant to any abatement or reduction
of Annual Fixed Rent or additional rent or the right to withhold or set
off against Annual Fixed Rent or additional rent otherwise payable
under this Lease. Tenant shall have the right to use 300 parking spaces
in the parking area serving Phase II of the Building until such time as
Phase II of the Building is fully leased to third-party tenants or such
time as construction of the Parking Structure has been completed.
Tenant shall be have the exclusive right to use parking spaces in the
Parking Structure, and shall pay to Landlord (as additional rent and at
the same time and in the same manner as Tenant's payments of Annual
Fixed Rent under Section 2.5) rent therefor, as follows:
<TABLE>
Time Period # of Spaces Amount
<S> <C> <C>
Months 1-3 75 $ 20,000 (for three month period)
Months 4-6 150 $ 40,000 (for three month period)
Months 7-9 225 $ 60,000 (for three month period)
Months 10-12 300 $ 80,000 (for three month period)
Year 2 300 $400,000 (annual)
Year 3 300 $400,000 (annual)
Year 4 300 $400,000 (annual)
Year 5 300 $400,000 (annual)
Year 6 300 $430,000 (annual)
Year 7 300 $430,000 (annual)
Year 8 300 $430,000 (annual)
Year 9 300 $430,000 (annual)
Year 10 300 $430,000 (annual)
Years 11-15 (if first
extension option exercised) 300 $415,000 (annual)
Years 16-20 (if second
extension option exercised) 300 $415,000 (annual)
</TABLE>
8.23 This Lease shall be governed exclusively by the provisions hereof and
by the law of the Commonwealth of Massachusetts, as the same may from
time to time exist.
<PAGE>
EXECUTED as a sealed instrument in two or more counterparts each of
which shall be deemed to be an original.
LANDLORD:
BOSTON PROPERTIES LIMITED PARTNERSHIP
WITNESS: By: BOSTON PROPERTIES, INC.,
its sole general partner
______________________ By:_/s/James C. Rosenfeld_________
Name:__James C. Rosenfeld_________
Title:_Senior Vice President______
TENANT:
PAREXEL INTERNATIONAL CORPORATION
By_/s/Josef von Rickenbach_______
Name__Josef von Rickenbach_______
Title_CEO and Chairman___________
HERETO DULY AUTHORIZED
ATTEST:
By
Name
Title Secretary By_/s/William T. Sobo, Jr.______
(Assistant Secretary) Name__William T. Sobo, Jr.______
Title TREASURER
HERETO DULY AUTHORIZED
(CORPORATE SEAL)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 62,973
<SECURITIES> 17,850
<RECEIVABLES> 137,805
<ALLOWANCES> 4,606
<INVENTORY> 0
<CURRENT-ASSETS> 233,813
<PP&E> 86,071
<DEPRECIATION> 40,670
<TOTAL-ASSETS> 286,476
<CURRENT-LIABILITIES> 103,499
<BONDS> 0
<COMMON> 248
0
0
<OTHER-SE> 179,925
<TOTAL-LIABILITY-AND-EQUITY> 286,476
<SALES> 0
<TOTAL-REVENUES> 87,855
<CGS> 0
<TOTAL-COSTS> 58,890
<OTHER-EXPENSES> 21,061
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,904
<INCOME-TAX> 2,763
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,141
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
