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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1997, or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _________________ to __________________
Commission file number 000-21615
------------
BOSTON BIOMEDICA, INC.
(Exact name of Registrant as Specified in its Charter)
Massachusetts 04-2652826
- ------------------------ ----------------------
(State or other (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation or
Organization)
375 West Street,
West Bridgewater,
Massachusetts 02379
- ------------------------ ----------------------
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (508) 580-1900
--------------
Indicate by check 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 [ ]
The number of shares outstanding of the Registrant's only class of common
stock as of July 31, 1997 was 4,426,900.
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<PAGE>
Part I. Financial Information
Item 1. Financial Statements
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30 Ended June 30
------------------------ -------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
REVENUE:
<S> <C> <C> <C> <C>
Product sales $2,416,956 $2,130,278 $4,543,912 $3,945,759
Services 2,231,998 1,714,096 4,314,091 2,982,624
----------- ----------- ----------- -----------
Total revenue 4,648,954 3,844,374 8,858,003 6,928,383
COSTS AND EXPENSES:
Cost of product sales 1,271,662 1,107,007 2,327,084 2,006,833
Cost of services 1,456,194 1,116,171 2,931,726 2,249,610
Research and development 256,995 195,054 493,745 361,619
Selling and marketing 775,594 500,277 1,388,954 915,289
General and administrative 694,875 551,945 1,374,082 1,088,448
---------- ---------- ---------- ----------
Total operating costs and expenses 4,455,320 3,470,454 8,515,591 6,621,799
Income from operations 193,634 373,920 342,412 306,584
Interest income (expense), net 99,184 (74,909) 196,670 (168,469)
----------- ----------- ----------- -----------
Income before income taxes 292,818 299,011 539,082 138,115
Provision for income taxes (117,128) (119,604) (215,634) (55,246)
----------- ----------- ----------- -----------
Net income $ 175,690 $ 179,407 $ 323,448 $ 82,869
=========== =========== =========== ===========
Net income per share $ 0.04 $ 0.06 $ 0.07 $ 0.03
=========== =========== =========== ===========
Weighted average common and common
equivalent shares outstanding 4,851,623 3,263,711 4,831,747 3,252,643
</TABLE>
See Notes to Consolidated Financial Statements
2
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
------------ -------------
1997 1996
------------ -------------
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 5,777,048 $ 8,082,642
Accounts receivable, less allowances of $361,540 in 1997 and
$352,058 in 1996 3,389,579 3,415,994
Inventories 4,560,927 4,180,334
Prepaid expense and other 316,342 239,950
Deferred income taxes 302,948 283,200
----------- -----------
Total current assets 14,346,844 16,202,120
Property and equipment, net 3,193,896 2,699,158
OTHER ASSETS:
Long term investment 1,482,500 732,500
Goodwill and other intangibles, net 86,085 95,302
Notes receivable and other 989,322 69,234
2,557,907 897,036
----------- -----------
TOTAL ASSETS $20,098,647 $19,798,314
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long term debt $ 13,458 $ 12,820
Accounts payable 1,074,882 991,839
Accrued compensation 740,102 840,666
Accrued income taxes 27,607 427,140
Other accrued expenses 307,738 264,262
Deferred revenue 1,104,415 829,477
----------- -----------
Total current liabilities 3,268,202 3,366,204
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 34,055 40,948
Deferred income taxes 89,673 101,580
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 20,000,000 shares in
1997 and 1996; issued and outstanding 4,426,900 in 1997 and
4,378,157 in 1996 44,269 43,782
Additional paid-in capital 15,351,856 15,258,656
Retained earnings 1,310,592 987,144
----------- -----------
Total stockholders' equity 16,706,717 16,289,582
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $20,098,647 $19,798,314
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
3
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months Ended
----------------------------
1997 1996
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 323,448 $ 82,869
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 353,843 280,426
Provision for doubtful accounts 77,781 77,145
Deferred rent (53,916) (33,236)
Deferred income taxes (31,655) (29,514)
Changes in operating assets and liabilities:
Accounts receivable (51,366) 132,324
Other assets (27,083) 4,385
Inventories (380,593) (188,368)
Prepaid expenses (76,392) (40,447)
Accounts payable 83,043 70,730
Accrued compensation and other expenses (402,705) 20,846
Deferred revenue 274,938 307,843
------------ -------------
Net cash provided by operating activities 89,343 685,003
------------ -------------
CASH FLOWS FOR INVESTING ACTIVITIES:
Payments for additions to property and equipment (839,364) (282,518)
Advances under notes receivable and other assets (893,005) -
Purchase of long term investment (750,000) -
------------ -------------
Net cash used in investing activities (2,482,369) (282,518)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long term debt - 226,300
Repayments of long-term debt (6,255) (1,590,603)
Proceeds of common stock issued 93,687 960,903
------------ -------------
Net cash provided by (used in) financing activities 87,432 (403,400)
------------ -------------
DECREASE IN CASH: (2,305,594) (915)
Cash and cash equivalents, beginning of period 8,082,642 11,463
------------ -------------
Cash and cash equivalents, end of period $ 5,777,048 $ 10,548
============ =============
</TABLE>
See Notes to Consolidated Financial Statements
4
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of only normal
recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three and six months ended June
30, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Form 10-K filing for the fiscal year ended December 31,
1996 for Boston Biomedica, Inc. and Subsidiaries ("the Company" or
"Boston Biomedica"). Certain prior years' amounts in the consolidated
financial statements may have been reclassified to conform to the
current year's presentation.
(2) Inventories
Inventories consisted of the following:
June 30, December 31,
1997 1996
----------- -----------
Raw materials......................... $ 1,456,895 $ 1,359,569
Work-in-process....................... 667,078 697,749
Finished goods........................ 2,436,954 2,123,016
----------- -----------
$ 4,560,927 $ 4,180,334
=========== ===========
(3) Computation of Income Per Share
Net income per common share is computed based upon the weighted
average number of common shares and as appropriate, common equivalent
shares (using the treasury stock method) outstanding after certain
adjustments described below. Common equivalent shares consist of common
stock options and warrants outstanding. In accordance with Securities
and Exchange Commission Staff Accounting Bulletin No. 83, all common,
redeemable common, and common equivalent shares issued during the twelve
month period prior to the proposed date of the initial filing of the
Registration Statement have been included in the calculation as if they
were outstanding for all periods prior to the Initial Public Offering
(IPO) using the treasury stock method and an offering price of $8.50 per
share. Fully diluted net income per common share is not presented as it
does not materially differ from primary earnings per share.
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share." SFAS 128 establishes a different method of
computing net income per share than is currently required under the
provisions of Accounting Principles Board Opinion No. 15. Under SFAS No.
128, the Company will be required to present both basic net income per
share and diluted net income per share. Basic net income per share for
the three and six months ended June 30, 1997 and 1996 would have been
the same as the reported primary net income per share. The impact of
SFAS 128 on the calculation of diluted net income per share for these
quarters does not materially differ from basic net income per share. The
Company plans to adopt SFAS 128 for periods after December 15, 1997 and
at that time all historical net income per share data presented will be
restated to conform to the provisions of SFAS No. 128.
(4) Investment in BioSeq, Inc. (BioSeq).
In April 1997, the Company exercised its option to purchase an
additional 165,000 shares of BioSeq stock at an aggregate cost of
$750,000, thereby increasing its ownership of BioSeq to 19%. The
investment is carried at cost of $1,482,000 and classified as a long
term investment.
5
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Subsequent Event
In July 1997, the Company, through its wholly owned subsidiary
BBI-Source Scientific, Inc., completed the acquisition of all of the
assets, business, and selected liabilities of Source Scientific, Inc.
upon the cash payment of $1,894,000. The acquisition will be accounted
for as a purchase. In addition to the cash payment, the total purchase
price will include consulting, legal, accounting and other acquisition
costs. The purchase price will be allocated to the fair market value of
the assets and liabilities acquired. Any remaining portion will be
allocated to goodwill and amortized over a ten year period.
6
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition.
Three Months Ended June 30, 1997 and 1996
Total revenue increased 20.9%, or $805,000, to $4,649,000 for
the three months ended June 30, 1997 from $3,844,000 in the prior year
period. This increase was the result of an increase in product sales of
13.5%, or $287,000, to $2,417,000 from $2,130,000 and an increase in
specialty laboratory services of 30.2%, or $518,000, to $2,232,000 from
$1,714,000. Product revenue increased primarily as a result of continued
strong sales of new and existing Accurun( run controls and TQS products,
but was partially offset by lower than expected sales to diagnostic test
kit manufacturers. The increase in service revenue was primarily
attributable to a 45.7% increase in Specialty Clinical Laboratory
Testing revenue, driven once again by HIV molecular (PCR) tests needed
for disease management programs.
Gross profit increased 18.5%, or $300,000, to $1,921,000 for the
current three months from $1,621,000 in the prior year period. The gross
profit margin decreased to 41.3% for the current three months versus
42.2% in the prior year period. This decrease was primarily driven by a
shift in the mix of revenue towards services (48% of total revenue in
the current quarter versus 45% in the prior year period) as a result of
the growth in Specialty Clinical Laboratory Testing noted above. The
Company's services generally carry lower margins than its Quality
Control Products.
Research and development expenses increased 31.8%, or $62,000,
to $257,000 for the current three months from $195,000 in the prior year
period. This increase was primarily the result of additional research
project expenditures for new Quality Control Products, including panels
and Accurun(, as well as continued work on additional molecular tests
for our Specialty Clinical Laboratory.
Selling and marketing expenses increased 55.0%, or $275,000, to
$776,000 for the current three months from $500,000 in the prior year
period. This increase was primarily attributable to increased personnel
costs associated with the addition of field staff for Accurun( and the
Specialty Clinical Laboratory, increased spending for promotional
materials, and increased travel costs.
General and administrative expenses increased 25.9%, or
$143,000, to $695,000 for the current three months from $552,000 in the
prior year period. This increase was primarily a result of increased MIS
and other support personnel, as well as the increased costs incurred as
a public company.
Net interest income of $99,000 was earned for the three months
of 1997 versus a ($75,000) expense in the prior year period as the
Company repaid most of its debt in the fourth quarter of 1996 and
invested its available cash in short term, investment grade securities.
For both periods, the Company provided taxes at the combined
federal and state statutory rate of 40%.
Six Months Ended June 30, 1997 and 1996
Total revenue increased 27.9%, or $1,930,000, to $8,858,000 for
the six months ended June 30, 1997 from $6,928,000 in the prior year
period. This increase was the result of an increase in product sales of
15.2%, or $598,000, to $4,544,000 from $3,946,000 and an increase in
specialty laboratory services of 44.6%, or $1,331,000, to $4,314,000
from $2,983,000. Product revenue increased primarily as a result of an
overall sales increase of 24.4% in Quality Control Products, due to
continued strong sales of new and existing Accurun( and panel products
and partially offset by a decrease of 13.8% in sales of Diagnostic
Components. The increase in service revenue was primarily attributable
to a 57.1% increase in Specialty Clinical Laboratory Testing revenue,
particularly from HIV molecular (PCR) tests.
Gross profit increased 34.7%, or $927,000, to $3,599,000 for the
current six months from $2,672,000 in the prior year period. The gross
profit margin increased to 40.6% for the current six months versus 38.6%
in the prior year period. The gross margin improvement was almost
entirely driven by improved margins in services (24.6% in 1996 to 32.0%
in 1997) as the Company continued to benefit from both the addition of
several new tests and higher volume in Specialty Clinical Laboratory
Testing.
7
Research and development expenses increased 36.5%, or $132,000,
to $494,000 for the current six months from $362,000 in the prior year
period. This increase was primarily the result of additional research
project expenditures for new Quality Control Products, including panels
and Accurun(, as well as continued work on additional molecular tests
for our Specialty Clinical Laboratory.
Selling and marketing expenses increased 51.8%, or $474,000, to
$1,389,000 for the current six months from $915,000 in the prior year
period. This increase was primarily attributable to increased personnel
costs as well as increased costs for travel and promotional materials.
The increased personnel costs are associated with the addition of
marketing, technical support, and field sales staff for both Accurun(
and the Specialty Clinical Laboratory.
General and administrative expenses increased 26.2%, or
$286,000, to $1,374,000 for the current six months from $1,088,000 in
the prior year period. This increase was primarily a result of increased
MIS and other support personnel, as well as the increased costs incurred
as a public company.
Net interest income of $197,000 was earned for the six months of
1997 versus a ($168,000) expense in the prior year period as the Company
repaid most of its debt in the fourth quarter of 1996 and invested its
available cash in short term, investment grade securities.
For both periods, the Company provided taxes at the combined
federal and state statutory rate of 40%.
Liquidity and Financial Condition
The Company has financed its operations to date through cash
flow from operations, borrowings from banks and sales of equity. With
the repayment of debt from the IPO proceeds, the Company expects its
cash flow and cash position to meet existing operational needs. In
addition, the Company has available to it a $7.5 million
uncollateralized revolving line of credit with its bank should
additional needs arise.
Net cash provided by operations for the six months ended June
30, 1997 was $89,000 as compared to $685,000 in the prior year period.
This decrease in cash flow was primarily attributable to increased
working capital requirements related to new product inventory and
payments of income taxes and commissions.
Cash used in investing activities for the six months ended June
30, 1997 was $2,482,000 as compared to $283,000 in the prior year
period. This increase in investing activities was the result of: 1)
increased capital expenditures for improvements at its Massachusetts
manufacturing facility, 2) financing $800,000 of certain working capital
needs in connection with the acquisition of the assets and business of
Source Scientific, Inc.("Source"), and 3) the Company exercising its
option to purchase an additional 165,000 shares of BioSeq stock at an
aggregate cost of $750,000, thereby increasing its ownership of BioSeq
to 19%. On July 2, 1997, the Company completed the acquisition of
Source's assets and business at a contractually reduced purchase price
of $1.9 million as Source's net worth had fallen below an agreed upon
minimum amount. The Company is accounting for the acquisition as an
asset purchase, and expects to amortize goodwill approximating the
purchase price plus acquisition costs over a ten year period.
Cash provided by financing activities for the six months ended
June 30, 1997 was $87,000 as compared to $403,000 used in the prior
comparable year period. The prior year period use of cash was primarily
a $960,000 receipt from the sale of common stock offset by debt
repayments of approximately $1,364,000. The net cash provided in 1997
resulted from $94,000 received for the exercise of 48,750 stock options.
The Company anticipates capital expenditures to increase over
the near term as it expects to spend approximately $400,000 more to
expand its manufacturing capacity in West Bridgewater over the next six
months. In addition, the Company has entered into a ten year lease
agreement for space for its Maryland operation and expects to incur
costs for tenant improvements over the next six months. The Company
believes that existing cash balances, the borrowing capacity available
under its revolving line of credit and cash generated from operations
are sufficient to fund operations and anticipated capital expenditures
for at least the next twelve months. There were no material financial
commitments for capital expenditures as of June 30, 1997, and currently
there are no
8
material commitments for capital or investment expenditures other than
the Source Scientific, Inc. asset acquisition, the manufacturing
expansion, and tenant improvements all as previously discussed above.
Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share." SFAS 128 establishes a different method of
computing net income per share than is currently required under the
provisions of Accounting Principles Board Opinion No. 15. Under SFAS No.
128, the Company will be required to present both basic net income per
share and diluted net income per share. Basic net income per share for
the three and six months ended June 30, 1997 and 1996 would have been
the same as the reported primary net income per share. The impact of
SFAS 128 on the calculation of diluted net income per share for these
quarters does not materially differ from basic net income per share. The
Company plans to adopt SFAS 128 for periods after December 15, 1997 and
at that time all historical net income per share data presented will be
restated to conform to the provisions of SFAS No. 128.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking
statements concerning the Company's financial performance and business
operations. The Company wishes to caution readers of this Quarterly
Report on Form 10-Q that actual results might differ materially from
those projected in any forward-looking statements.
Factors which might cause actual results to differ materially
from those projected in the forward-looking statements contained herein
include the following: inability of the Company to develop the end user
market for quality control products; inability of the Company to
integrate the business of BBI-Source Scientific, Inc. into the Company's
business; inability of the Company to grow the sales of BBI-Source
Scientific, Inc. to the extent anticipated; a material adverse change in
the business, financial condition or prospects of BioSeq, Inc., an early
stage biotechnology company in which the Company has made a significant
investment; inability of the Company to obtain an adequate supply of the
unique and rare specimens of plasma and serum necessary for certain of
its products; significant reductions in purchases by any of the
Company's major customers; and the potential insufficiency of Company
resources, including human resources, plant and equipment and management
systems, to accommodate any future growth. Certain of these and other
factors which might cause actual results to differ materially from those
projected are more fully set forth under the caption "Risk Factors" in
the Company's Registration Statement on Form S-1 (SEC File No.
333-10759)
9
BOSTON BIOMEDICA, INC.
Part II. Other Information
Item 4. Submission of Matters to a Vote of Shareholders.
The Company held its Annual Meeting of Stockholders of June 12,
1997. Approximately 3,484,851 shares, or 79.4%, of the Common Stock
issued and outstanding as of the record date, were represented at the
meeting in person or by proxy. Set forth below is a brief description of
the matter voted upon at the meeting and the voting results of such
matter.
Voted: To elect each of the following persons as Class I
Directors of the Company, to serve as such until the Year 2000
Annual Meeting of Stockholders and until their successors have
been duly elected and qualified:
Francis E. Capitanio
Calvin A. Saravis
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits
Exhibit No.
3.1 Amended and Restated Articles of Organization of the
Company**
3.2 Amended and Restated Bylaws of the Company**
4.1 Specimen Certificate for Shares of the Company's Common
Stock**
4.2 Description of Capital Stock (contained in the Restated
Articles of Organization of the Company filed as Exhibit
3.1) **
10.1 Agreement, dated January 17, 1994, between Roche
Molecular Systems, Inc. and the Company**
10.2 Exclusive License Agreement, dated December 6, 1994,
between the University of North Carolina at Chapel Hill
and the Company**
10.3 Contract, dated September 30, 1995, between the National
Institutes of Health and the Company (No. 1-AI55273) **
10.4 Contract, dated September 30, 1995, between the National
Institutes of Health and the Company (No. 1-AI-55277) **
10.6 Agreement, dated October 1, 1995, between Ajinomoto Co.,
Inc. and the Company**
10.7 Lease Agreement, dated June 30, 1992, for Rockville,
Maryland Facility between Cambridge Biotech Corporation
and the Company**
10.8 Lease Agreement, dated July 28, 1995, for New Britain,
Connecticut Facility between MB Associates and the
Company**
10.9 Worcester County Institution for Savings Warrant dated
December 1, 1995 (No. 1) **
10.10 Worcester County Institution for Savings Warrant dated
July 26, 1993 (No. 2) **
10.11 Stock Purchase Agreement, dated June 5, 1990, between
G&G Diagnostics Limited Partnership I and the Company,
as amended**
10.14 Stock Purchase Agreement, dated April 26, 1996, between
Kyowa Medex Co., Ltd. And the Company**
10.15 1987 Non-Qualified Stock Option Plan**++
10.16 Employee Stock Option Plan**++
10
10.17 Underwriters Warrants, each dated November 4, 1996,
between the Company and each of Oscar Gruss & Son
Incorporated and Kaufman Bros., L.P. **
10.20 Purchase Agreement, dated October 7, 1996, between
BioSeq, Inc. and the Company**
10.21 Warrant Agreement, dated October 7, 1996, between
BioSeq, Inc. and the Company**
10.22 Stockholders' Agreement, dated October 7, 1996, between
BioSeq, Inc. and the Company**
10.23 License Agreement, dated October 7, 1996, between
BioSeq, Inc. and the Company**
10.24.1 Commercial Loan Agreement, dated as of March 28, 1997,
between The First National Bank of Boston and the
Company**
10.25 Asset Purchase Agreement, dated March 26, 1997 between
Source Scientific, Inc. and the Company**
10.26 Contract, dated March 1, 1997, between National Cancer
Institute and the Company**
10.27 Lease Agreement, dated May 16, 1997, for Rockville,
Maryland facility between B.F. Saul Real Estate
Investment Trust and the Company
11 Statement re: Computation of Per Share Earnings
21.1 Subsidiaries of the Company
27 Financial Data Schedule
________________________
++ Management contract or compensatory plan or arrangement.
** In accordance with Rule 12b-32 under the Securities Exchange Act
of 1934, as amended, reference is made to the documents
previously filed with the Securities and Exchange Commission,
which documents are hereby incorporated by reference.
(b) Reports on Form 8K
The Company filed a form 8K dated July 17, 1997 regarding the
acquisition of the assets, business, and selected liabilities of
Source Scientific, Inc.
11
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.
BOSTON BIOMEDICA, INC.
Date: August 14, 1997 By /s/ KEVIN W. QUINLAN
---------------- ---------------------
Kevin W. Quinlan, Chief Financial Officer
(Principal Financial Officer)
12
BOSTON BIOMEDICA, INC.
EXHIBIT INDEX
EXHIBIT INDEX
- -------------
<TABLE>
<CAPTION>
Exhibit No. Reference
----------- -----------
<S> <C> <C>
3.1 Amended and Restated Articles of Organization of the Company A**
3.2 Amended and Restated Bylaws of the Company A**
4.1 Specimen Certificate for Shares of the Company's Common Stock A**
4.2 Description of Capital Stock (contained in the Restated A**
Articles of Organization of the Company filed as Exhibit 3.1)
10.1 Agreement, dated January 17, 1994, between Roche Molecular A**
Systems, Inc. and the Company
10.2 Exclusive License Agreement, dated December 6, 1994, between A**
the University of North Carolina at Chapel Hill and the
Company
10.3 Contract, dated September 30, 1995, between the National A**
Institutes of Health and the Company (No. 1-AI55273)
10.4 Contract, dated September 30, 1995, between the National A**
Institutes of Health and the Company (No. 1-AI-55277)
10.6 Agreement, dated October 1, 1995, between Ajinomoto Co., Inc. A**
and the Company
10.7 Lease Agreement, dated June 30, 1992, for Rockville, Maryland A**
Facility between Cambridge Biotech Corporation and the Company
10.8 Lease Agreement, dated July 28, 1995, for New Britain, A**
Connecticut Facility between MB Associates and the Company
10.9 Worcester County Institution for Savings Warrant dated A**
December 1, 1995 (No. 1)
10.10 Worcester County Institution for Savings Warrant dated A**
July 26, 1993 (No. 2)
10.11 Stock Purchase Agreement, dated June 5, 1990, between G&G A**
Diagnostics Limited Partnership I and the Company, as amended
10.14 Stock Purchase Agreement, dated April 26, 1996, between Kyowa A**
Medex Co., Ltd. and the Company
10.15 1987 Non-Qualified Stock Option Plan* A**
10.16 Employee Stock Option Plan* A**
10.17 Underwriters Warrants, each dated November 4, 1996, between B**
the Company and each of Oscar Gruss & Son Incorporated and
Kaufman Bros., L.P.
10.20 Purchase Agreement, dated October 7, 1996, between BioSeq, A**
Inc. and the Company
13
10.21 Warrant Agreement, dated October 7, 1996, between BioSeq, Inc. A**
and the Company
10.22 Stockholders' Agreement, dated October 7, 1996, between A**
BioSeq, Inc. and the Company
10.23 License Agreement, dated October 7, 1996, between BioSeq, Inc. A**
and the Company
10.24.1 Commercial Loan Agreement, as of dated March 28, 1997, between C**
The First National Bank of Boston and the Company
10.25 Asset Purchase Agreement, dated March 26, 1997 between Source C**
Scientific, Inc. and the Company
10.26 Contract, dated March 1, 1997, between National Cancer D**
Institute and the Company
10.27 Lease Agreement, dated May 16, 1997, for Rockville, Maryland Filed herewith
facility between B.F. Saul Real Estate Investment Trust and the
Company
11 Statement re: Computation of Per Share Earnings Filed herewith
21.1 Subsidiaries of the Company Filed herewith
27 Financial Data Schedule
</TABLE>
________________________
A Incorporated by reference to the Company's Registration
Statement on Form S-1 (Registration No. 333-10759)(the "Registration
Statement"). The number set forth herein is the number of the
Exhibit in said registration statement.
B Incorporated by reference to the Registration Statement, where
the Exhibit was filed as Exhibit No. 10.17 and contained in
Exhibit 1.1.
C Incorporated by reference to the Company's Form 10K filed
March 31, 1997
D Incorporated by reference to the Company's Form 10Q filed
May 14, 1997
* Management contract or compensatory plan or arrangement.
** In accordance with Rule 12b-32 under the Securities Exchange Act
of 1934, as amended, reference is made to the documents
previously filed with the Securities and Exchange Commission, which
documents are hereby incorporated by reference.
14
OFFICE LEASE
THIS LEASE, made this 16th day of May, 1997, by and between B.F. SAUL REAL
ESTATE INVESTMENT TRUST (hereinafter "Landlord"); and BBI-BIOTECH RESEARCH
LABORATORIES, INC., a Massachusetts corporation (hereinafter "Tenant").
WITNESSETH:
1. Premises. For and in consideration of the rent hereinafter reserved and
the mutual covenants hereinafter contained, Landlord does hereby lease and
demise unto Tenant, and Tenant does hereby hire, lease and accept, from
Landlord, (i) Suite No. 1 containing approximately twenty-five thousand (25,000)
rentable square feet of space (the "Gross Area") located at 215 Perry Parkway
(the "Building"), situated on Avenel Business Park, Gaithersburg, Maryland (the
"Property") and (ii) the Outside Storage Area and Flammable Storage Units Area
(as defined in Article 52 below), all upon the terms and conditions hereafter
set forth. That portion of the Gross Area which Tenant shall be entitled to
occupy and the Outside Storage Area and Flammable Storage Units Area are
hereinafter referred to as the "Premises" or "Demised Premises", and is outlined
in red on the floor plan attached hereto as Exhibit A and by this reference made
a part hereof. It is specifically understood that for purposes of calculating
any payments or pro-rations hereunder, the number of rentable square feet set
forth above shall control. The square footage of the Premises shall be measured
by Landlord's architect in accordance with the Washington D.C. Association of
Realtors Standard Method of Measurement dated January 1, 1989.
2. Term. The term of this Lease shall commence on the date hereof (the
"Lease Date") and shall end one hundred twenty (120) months after the "Rent
Commencement Date", as hereinafter defined. The "Rent Commencement Date" shall
be the earlier of (i) the date of the Premises is Substantially Complete (as
hereinafter defined), or (ii) the date Tenant actually commences occupancy of
the Premises. In the event the Rent Commencement Date is a date other than the
first day of a calendar month, the term of the Lease shall run for the number of
months set forth above from the first day of the calendar month following the
Rent Commencement Date. The parties agree that they shall execute an agreement
specifying the Rent Commencement Date and the date of termination of this Lease
and such other matters as Landlord may require (the "Commencement and Estoppel
Agreement" attached hereto as Exhibit D). Tenant agrees, to execute and deliver
to Landlord said agreement within ten (10) business days' after receipt of
written notice from Landlord. If Tenant fails to execute and return any such
agreement to Landlord within such ten (10) day period, then Landlord shall be
entitled to collect from Tenant, as liquidated damages with respect to such
default of Tenant in addition to Base Rent and other amounts payable hereunder,
as Additional Rent, an amount equal to one-half of one percent (0.5%) of the
then monthly amount of Base Rent then payable under this Lease, for each day
Tenant delays in returning the requested agreement to Landlord.
3. Rent. (a) Commencing with the Rent Commencement Date, Tenant shall pay
annual "Base Rent" for the Premises in accordance with the schedule set forth
below. All monthly installments of Rent shall be payable to Landlord at the
address specified in Article 33 of this Lease, in advance, without previous
notice or demand therefor, and without deduction, setoff or recoupment, with the
first monthly installment to be due and payable no later than the Rent
Commencement Date and each subsequent monthly installment to be due and payable
on the first day of each and every month following the Rent Commencement Date
during the term hereof. If the Rent Commencement Date is a date other than the
first day of a month, Rent for the period commencing with and including the Rent
Commencement Date until the first day of the following month shall be pro-rated
at the rate of one-thirtieth (1/30th) of the fixed monthly rental per day.
(i) Tenant shall pay Base Rent in the amount of Three Hundred Twenty-Five
Thousand and No One Hundredth Dollars ($325,000.00) per annum, payable in equal
monthly installments of Twenty-Seven Thousand Eighty-Three and Thirty-Three One
Hundredth Dollars ($27,083.33) each for the period commencing on the Rent
Commencement Date and ending on the last day of the first Lease Year inclusive;
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(ii) Tenant shall pay Base Rent in the amount of Three Hundred Thirty-Four
Thousand Seven Hundred Fifty and No One Hundredth Dollars ($334,750.00) per
annum, payable in equal monthly installments of Twenty-Seven Thousand Eight
Hundred Ninety-Five and Eighty-Three One Hundredth Dollars ($27,895.83) each for
the period commencing on the first day of the second Lease Year and ending on
the last day of the second Lease Year inclusive;
(iii) Tenant shall pay Base Rent in the amount of Three Hundred Forty-Four
Thousand Seven Hundred Ninety-Two and No One Hundredth Dollars ($344,792.00)
per annum, payable in equal monthly installments of Twenty-Eight Thousand Seven
Hundred Thirty-Two and Sixty- Seven One Hundredth Dollars ($28,732.67) each for
the period commencing on the first day of the third Lease Year and ending on the
last day of the third Lease Year inclusive;
(iv) Tenant shall pay Base Rent in the amount of Three Hundred Fifty-Five
Thousand One Hundred Thirty-Six and No One Hundredth Dollars ($355,136.00) per
annum, payable in equal monthly installments of Twenty-Nine Thousand Five
Hundred Ninety-Four and Sixty-Seven One Hundredth Dollars ($29,594.67) each for
the period commencing on the first day of the fourth Lease Year and ending on
the last day of the fourth Lease Year inclusive;
(v) Tenant shall pay Base Rent in the amount of Three Hundred Sixty-Five
Thousand Seven Hundred Ninety and No One Hundredth Dollars ($365,790.00) per
annum, payable in equal monthly installments of Thirty Thousand Four Hundred
Eighty-Two and Fifty One Hundredth Dollars ($30,482.50) each for the period
commencing on the first day of the fifth Lease Year and ending on the last day
of the fifth Lease Year inclusive;
(vi) Tenant shall pay Base Rent in the amount of Three Hundred Eighty-Nine
Thousand Two Hundred Sixty-Four and No One Hundredth Dollars ($389,264.00) per
annum, payable in equal monthly installments of Thirty-Two Thousand Four Hundred
Thirty-Eight and Sixty-Seven One Hundredth Dollars ($32,438.67) each for the
period commencing on the first day of the sixth Lease Year and ending on the
last day of the sixth Lease Year inclusive;
(vii) Tenant shall pay Base Rent in the amount of Four Hundred Thousand
Five Hundred Sixty-Seven and No One Hundredth Dollars ($400,567.00) per annum,
payable in equal monthly installments of Thirty-Three Thousand Three Hundred
Eighty and Fifty-Eight One Hundredth Dollars ($33,380.58) each for the period
commencing on the first day of the seventh Lease Year and ending on the last day
of the seventh Lease Year inclusive;
(viii) Tenant shall pay Base Rent in the amount of Four Hundred Twelve
Thousand Two Hundred Nine and No One Hundredth Dollars ($412,209.00) per annum,
payable in equal monthly installments of Thirty-Four Thousand Three Hundred
Fifty and Seventy-Five One Hundredth Dollars ($34,350.75) each for the period
commencing on the first day of the eighth Lease Year and ending on the last day
of the eighth Lease Year inclusive;
(ix) Tenant shall pay Base Rent in the amount of Four Hundred Twenty-Four
Thousand Two Hundred and No One Hundredth Dollars ($424,200.00) per annum,
payable in equal monthly installments of Thirty-Five Thousand Three Hundred
Fifty and No One Hundredth Dollars ($35,350.00) each for the period commencing
on the first day of the ninth Lease Year and ending on the last day of the ninth
Lease Year inclusive;
(x) Tenant shall pay Base Rent in the amount of Four Hundred Thirty-Six
Thousand Five Hundred Fifty-One and No One Hundredth Dollars ($436,551.00) per
annum, payable in equal monthly installments of Thirty-Six Thousand Three
Hundred Seventy-Nine and Twenty-Five One Hundredth Dollars ($36,379.25) each for
the period commencing on the first day of the tenth Lease Year and ending on the
last day of the term of this Lease.
(b) Landlord hereby acknowledges receipt of Twenty-Seven Thousand
Eighty-Three and Thirty-Three One Hundredth Dollars ($27,083.33) to be held as
security for the performance by Tenant of Tenant's covenants and obligations
under this Lease, it being expressly understood that the deposit shall not be
considered an advance payment of rental or a measure of Landlord's damage in
case of default by Tenant. Upon the occurrence of any event of default by
Tenant or breach by Tenant of Tenant's covenants under this Lease, Landlord may,
from time to time, without prejudice to any other remedy, use the security
deposit to the extent necessary to make good any arrears of rent and/or any
damage, injury, expense or liability caused to Landlord by the event of default
or breach of covenant. In the event that Tenant shall fully and faithfully
comply with all the terms, conditions and
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covenants of this Lease, any part of the security not used or retained by
Landlord shall be returned to Tenant after the expiration date of the term of
this Lease and after delivery of exclusive possession of the Premises to
Landlord; provided, however, that Landlord may retain all or a portion of the
security until Landlord delivers to Tenant the final Annual Statement as
provided in Article 5(b) hereof.
(c) When the square footage of the Premises is determined by Landlord's
architect, in accordance with Article 1, the Base Rent, the computation of all
additional charges payable by Tenant under this Lease, and Landlord's
Contribution [as defined in Article 47(v) (iv)] that are based on the Premises'
rentable square footage, shall be deemed automatically increased or decreased
based on the square footage as thus determined, and Landlord and Tenant shall
execute and deliver an agreement setting forth the rentable square footage of
the Premises thus determined and the proper Base Rent, Operating Costs, Real
Estate Taxes, Pro-Rata Share and Landlord's Contribution, in proportion to such
increase or decrease .
4. Rent Escalation. (a) Intentionally deleted.
(b) For all purposes of this Lease, the term "Lease Year" shall be defined to
mean a period of twelve (12) full calendar months. The first Lease Year shall
commence on the Rent Commencement Date (or on the first day of the first
calendar month following the Rent Commencement Date if said date is other than
the first day of a calendar month), and each succeeding Lease Year shall
commence on the anniversary date of the beginning of the first Lease Year.
5. Annual Operating Costs. (a) Tenant agrees to pay to Landlord, as
additional rent, its Pro-Rata Share (as hereinafter defined) of Annual Operating
Costs (as hereinafter defined).
(b) Tenant shall pay to Landlord on the Rent Commencement Date and on the
first day of each calendar month thereafter, as its estimated monthly payment of
the Annual Operating Costs, the sum of $7,916.67, calculated at the rate of
$3.80 per rentable square foot, as may be adjusted upon the expiration of any
applicable warranties related to new construction. If the Rent Commencement
Date is a date other than the first day of the month, Tenant's Pro-Rata share
shall be pro-rated in the same manner as Base Rent under Article 3 hereof.
Within one hundred eighty (180) days following each fiscal year as determined by
Landlord during the term hereof, Landlord shall submit to Tenant a statement
(the "Annual Statement") in reasonable detail of the actual Annual Operating
Costs. If such statement shows that Tenant's share of the actual Annual
Operating Costs exceeded Tenant's monthly payments, then Tenant shall, within
thirty (30) days of receipt of such Annual Statement, pay the total amount of
such deficiency to Landlord. Thereafter, upon receipt of such succeeding Annual
statement, Tenant's monthly payments during the period covered by said Annual
Statement shall be adjusted to the actual Annual Operating Cost, and such
adjustment shall be paid within thirty (30) days of the date of said Statement.
The amount of the actual Annual Statement shall be used as the basis for
calculating Tenant's monthly payments for the next succeeding twelve (12) month
period; notwithstanding the foregoing, in no event shall Tenant's Pro-Rata Share
of Annual Operating Costs, excluding the Excluded Items (as defined below) for
the second Lease Year of the Term or for any succeeding Lease Year increase by
more than five percent (5%) over the Annual Operating Costs for the immediately
preceding Lease Year; provided, however, that if the Annual Operating Costs
increase for any Lease Year exceeds five percent (5%), then the amount of the
Annual Operating Cost increase in excess of five percent (5%) may be added to
the Annual Operating Cost increase for any succeeding Lease Year (or Lease
Years) when the Annual Operating Cost increase is less than five percent (5%),
so that, to the fullest extent possible (subject to the maximum increase of five
percent (5%) per Lease Year in Annual Operating Costs provided for herein),
Annual Operating Costs increases shall reflect all increases in the Annual
Operating Costs occurring after the Lease Date; provided, however, that Tenant's
Pro-Rata Share of Real Estate Taxes, snow removal costs, utility rate increases,
or insurance rate increases or any other cost Landlord can reasonably
demonstrate to be increased beyond Landlord's reasonable control (the "Excluded
Items") shall not be subject to the above limitations on increases in Annual
Operating Costs, and Tenant shall be obligated to pay its full Pro-Rata Share of
the Excluded Items. Notwithstanding anything contained herein to the contrary,
after the fifth (5th) Lease Year, Tenant shall pay its full Pro-Rata Share of
Annual Operating Costs, without any limitations.
(c) All monthly payments as may be required hereunder shall be payable in
full on the first day of each of the calendar month. Failure of the Landlord to
provide any Annual Statement within the said one hundred eighty (180) day period
shall not constitute a waiver by Landlord of its rights to payments due pursuant
to this Article, and the obligations hereunder shall survive the expiration or
other termination of this Lease.
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(d) For any applicable Fiscal Year that begins prior to the Rent Commencement
Date or ends after the expiration date of this Lease, the amount due for that
Fiscal Year shall be apportioned on a per diem basis so that only that portion
attributable to the portion of such Fiscal Year that occurs during the term of
this Lease, shall be payable by Tenant.
(e) The Tenant's Pro-Rata Share as used herein is estimated to be 53.95% of
the Annual Operating Costs for the Building and the Property. The rentable
square footage of the Building is estimated to be 46,335.
(f) Annual Operating Costs as used herein shall mean all costs of operation,
maintenance and repair of the Property, (except structural repairs), and its
appurtenances, and shall include the following by way of illustration but not
limitation: Real Estate Taxes (as hereinafter defined), the cost of labor,
materials and services for the operation, maintenance and repair of the Building
and its appurtenances (including service roads and parking areas), including but
not limited to, water and sewer charges; heating, ventilating and air
conditioning maintenance and repairs; refuse and rubbish disposal; snow removal;
license, permits and inspection fees; maintenance and service contracts;
management fees in an amount customarily charged in Avenel Business Park; all
landscaping costs (including upgrades and replacements thereto); parking lot
lighting; watchman, guards, and any personnel engaged in the operation,
maintenance or repair of the Property and its appurtenances together with
payroll taxes and employee benefits applicable thereto; reserve for asphalt and
roof repairs; Landlord's administrative costs equal to fifteen percent (15%) of
the Annual Operating Costs (excluding Real Estate Taxes); and insurance. Any of
the services, supplies or materials which may be included in the computation of
Annual Operating costs for the Property may be performed by subsidiaries or
affiliates of Landlord; provided, however, with the exception of the foregoing
management fees and administrative costs, such costs shall be in the customary
amounts. Notwithstanding the foregoing to the contrary, Operating Costs shall
not include: (i) expenses incurred in leasing or procuring tenants (including
lease commissions, advertising expenses and expenses of renovating space for
tenants); (ii) interest or amortization on any mortgages or deeds of trust;
(iii) depreciation or capital improvements costs with respect to the Building,
the Property or any equipment, machinery, fixtures or improvements therein,
except for amortization of the cost of improvements or equipment which are
capital in nature and which are installed for the purpose of either (i) reducing
Operating Costs of the Building or (ii) complying with any laws, ordinances,
rules and regulations first taking effect after the Lease Commencement Date (and
all of such permitted capital costs shall be amortized on a straight-line basis
over the useful life of the capital improvement(s) in question, such useful life
being deemed the longest period permissible by IRS regulations, with only the
annual amortized portion being included in Operating Costs for such Lease Year);
(iv) legal fees and other expenses incurred by Landlord or agents in connection
with negotiations or disputes with tenants or prospective tenants for the
Building; (v) any item for which Landlord is reimbursed by insurance or
otherwise compensated for, including direct reimbursement by any tenant or
occupant; (vi) any items which are performed under warranty for which no payment
is required to be made by Landlord; and (vii) except as provided above,
reserves. For the purposes of this Lease, the capitalizable cost of any capital
improvement items shall be determined in accordance with generally-accepted
accounting principles consistently applied.
(g) The term "Real Estate Taxes" means all taxes, rates and assessments,
general and special, levied or imposed with respect to the land, buildings and
improvements comprising the Property, including all taxes, rates and
assessments, general and special, levied or imposed for schools, public
betterment, general or local improvement and operations and taxes imposed in
connection with any special taxing district. If the system of real estate
taxation shall be altered or varied and any new tax or levy shall be levied or
imposed on said land, buildings and improvements, and/or Landlord in
substitution for real estate taxes presently levied or imposed on immovables in
the jurisdiction where the Building is located, then any such new tax or levy
shall be included within the term "Real Estate Taxes". Should any governmental
taxing authority acting under any regulation, levy, assess, or impose a tax,
excise and/or assessment however described (other than an income or franchise
tax) upon, against, on account of, or measured by, in whole or in part, the rent
expressly reserved hereunder, or upon the rent expressly reserved under any
other leases or leasehold interests in the Property, as a substitute (in whole
or in part) or in addition to any existing real estate taxes on land and
buildings and otherwise, such tax or excise on rents shall be included within
the term "Real Estate Taxes". In the event Landlord is required to pay Real
Estate Taxes in advance, Tenant agrees that Landlord shall immediately be
entitled to reimbursement therefor. Reasonable expenses (consisting of
attorneys' fees, consulting fees, expert witness fees and similar costs)
incurred by Landlord in obtaining or attempting to obtain a reduction of any
Real Estate Taxes shall be added to and included in the amount of any such Real
Estate Taxes. Real Estate Taxes which are being contested by Landlord shall
nevertheless be included for purposes of the computation of the liability of
Tenant under this Article, provided, however, that in the event that Tenant
shall have paid any amount of increased rent pursuant to this Article 5 and the
Landlord shall thereafter receive a refund of any portion of any Real Estate
Taxes on which such payment shall have been based, Landlord shall pay to Tenant
the appropriate portion of such
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refund. Landlord shall have no obligation to contest, object to or litigate the
levying or imposition of any Real Estate Taxes and may settle, compromise,
consent to, waive or otherwise determine in its discretion to abandon any
contest with respect to the amount of any Real Estate Taxes without consent or
approval of the Tenant. The obligation to pay Real Estate Taxes accruing during
the term, and Landlord's obligation to refund to Tenant any overpayment, shall
survive the expiration of this Lease.
6. Tenant Payments and Additional Rent. (a) Tenant shall (i) pay
directly for all utility services provided for the benefit of the Tenant,
including all charges associated with the metering or sub-metering therefor;
(ii) pay directly for all telephone charges; and (iii) be responsible for the
prompt and sanitary storage of Tenant's refuse and rubbish in the Premises.
(b) Any amounts required to be paid by Tenant hereunder and any charges or
expenses incurred by Landlord on behalf of Tenant under the terms of this Lease
shall be considered additional rent payable in the same manner and upon the same
terms and conditions as the rent reserved hereunder. Any failure on the part of
Tenant to pay such additional rental when and as the same shall become due shall
entitle Landlord to the remedies available to it for non-payment of rent.
Tenant's failure to object to any statement, invoice or billing rendered by the
Landlord within a period of sixty (60) days after receipt thereof shall
constitute Tenant's acquiescence with respect thereto, and such statement,
invoice or billing shall thereafter be deemed to be correct and shall be an
account stated between Landlord and Tenant. Landlord shall, within twenty (20)
days after receipt of written request by Tenant, allow Tenant, at its sole cost
and expense, to inspect and copy in Landlord's offices, any and all reasonable
backup information and documentation pertaining to such charges or expenses
incurred by Landlord on behalf of Tenant. If Tenant requests that Landlord
prepare, review, or execute any document, consent or waiver in connection with
this Lease or otherwise, Tenant shall be obligated to pay to Landlord, as
Additional Rent, a reasonable fee, in the amount set forth on a fee schedule
adopted by Landlord from time to time, to compensate Landlord for the cost of
reviewing and processing any such request, and Landlord shall not be obligated
to process any such request of Tenant until Tenant has paid Landlord the
applicable processing fee. Landlord will supply Tenant with a copy of
Landlord's then current processing fee schedule upon Tenant's request. Nothing
herein shall be deemed to require that Landlord consent to, execute or approve
any document, consent or waiver submitted to Landlord by Tenant notwithstanding
Tenant's payment of the applicable processing fee.
7. Laws and Ordinances. (a) Tenant will, at its own cost, promptly comply
with and carry out all orders, requirements or conditions now or hereafter
imposed upon it during the Lease Term, by the ordinances, laws and/or
regulations of the municipality, county and/or state in which the Premises are
located and which affect Tenant's occupancy of the Premises or are as a result
of Tenant's use and occupancy of the Premises ("Legal Requirements"), whether
required of Landlord or otherwise, in the conduct of Tenant's business,
including, without limitation, all local, state and federal laws and regulations
respecting the storage, handling and use of any hazardous waste, infectious
waste or other hazardous materials, except that Landlord shall comply with any
orders, laws rules or regulations affecting structural walls and columns, roof
or other Common Facilities (as hereinafter defined) unless due to Tenant's
particular business or use of the Premises. However, Tenant shall not be
required to comply financially or otherwise, with any such ordinance, law and/or
regulation not required to be complied with during the Lease Term unless the
same is a result of Tenant's use and occupancy and are required to be complied
with prior to turnover to Landlord at the expiration or earlier termination of
this Lease. Tenant will indemnify and save Landlord harmless from all
penalties, claims, and demands resulting from Tenant's failure or negligence in
this respect. "Common Facilities" means all areas provided by Landlord, from
time to time, for the common or joint use and benefit of the occupants of the
Building and their employees, agents, servants, customers and other invitees,
including management offices, parking areas, parking decks, access roads,
driveways, retaining walls, landscaped areas, truck serviceways, sidewalks,
parcel pickup stations and common electrical and plumbing systems, except to the
extent such systems exclusively serve the Premises. Notwithstanding anything
contained herein to the contrary, if, after the initial improvements to the
Premises, Tenant is obligated to make alterations to the Premises pursuant to
any law, order, rule or regulation, Landlord's consent shall not be unreasonably
withheld. Tenant shall provide Landlord with written notice of any such legal
requirement, including therewith documentation indicating the legal requirement
for such alteration and detailed plans showing the work proposed to be done to
comply with such legal requirement.
(b) Tenant shall have the right to contest the validity of any law or its
application to the Premises at Tenant's sole cost and expense, unless such
contest would cause any criminal or civil liability or any fine or other penalty
to be imposed upon Landlord. Tenant shall defend, indemnify and hold landlord
harmless from and against all costs, expenses (including reasonable attorney
fees), claims, fines, or other liability resulting from any such contest of
legal requirements by Tenant.
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8. Furniture; Fixtures; Electrical Equipment. (a) Tenant shall not
place a load upon the floor of the Premises exceeding one hundred twenty-five
(125) pounds per square foot without Landlord's prior written consent. Business
machines, mechanical equipment and materials in the Premises which cause
vibration, noise, cold, heat or fumes that may be transmitted to the Building or
to any other leased space therein to such a degree as to be objectionable to
Landlord or to any other tenant in the Building shall be placed, maintained,
isolated, stored and/or vented by Tenant at its sole expense so as to absorb and
prevent such vibration, noise, cold, heat or fumes. Subject to Article 53,
Tenant shall not keep within or about the Premises any dangerous, inflammable,
toxic or explosive material. Tenant shall indemnify Landlord and hold it
harmless against any and all damage, injury, or claims resulting from the moving
of Tenant's equipment, furnishings and/or materials into or out of the Premises
or from the storage or operation of the same. Any and all damage or injury to
the Premises, the Building, or the Property caused by such moving, storage or
operation shall be repaired by Tenant at Tenant's sole cost.
(b) Tenant shall not install any equipment whatsoever which will or may
necessitate any changes, replacements or additions to the water system, plumbing
system, heating system, air conditioning system or the electrical system of the
Premises without the prior written consent of Landlord. Tenant shall, at its
sole cost and expense, pay all charges for electricity used by the Tenant during
the term of this Lease, including that used for interior lighting and the
operation of the heating and air conditioning system in the Premises.
9. Alterations. (a) Tenant shall make no alterations or changes,
structural or otherwise, to any part of the Premises, either exterior or
interior, without Landlord's written consent. In the event of any such approved
changes, Tenant shall have all work done at its own expense. Request for such
consent shall be accompanied by plans stating in detail precisely what is to be
done. Notwithstanding the foregoing to the contrary, Tenant may make
non-structural, cosmetic alterations to the interior of the Premises with
Landlord's written consent which shall not be unreasonably withheld. Tenant
shall comply with the building codes, regulations and laws now or hereafter to
be made or enforced in the municipality, county and/or state, which pertain to
such work. Any additions, improvements (made after the initial improvements to
the Premises), alterations and/or installations made by Tenant (except only
office furniture, business equipment and trade fixtures including, but not
limited to, wet laboratories, cabinetry, benches and scientific equipment;
provided Tenant shall repair any damage to the Premises upon removal of same)
shall become and remain a part of the Building and be and remain Landlord's
property upon the termination of Tenant's occupancy of said Premises; provided,
however, Landlord shall notify Tenant, at the time Tenant requests Landlord's
approval to make alterations, that Landlord will or will not require Tenant to
remove the proposed alterations from the Premises upon the expiration or earlier
termination of this Lease. If Landlord requires Tenant to remove such
alterations as aforesaid, Tenant shall remove same, repair any damage to the
Premises upon removing same, and restore the Premises to the condition the
Premises were in upon delivery of same to Tenant, at Tenant's sole cost and
expense, ordinary wear and tear and damage due to casualty not required to be
repaired by Tenant excepted. Tenant shall save Landlord harmless from and
against all expenses, liens, claims or damages to either property or person
which may or might arise by reason of the making of any such additions,
improvements, alterations and/or installations. Landlord reserves the right,
subject to Articles 22 and 52, to change, increase or reduce, from time to time,
the number, composition, dimensions or location of any parking areas, signs, the
Building name, service areas, walkways, roadways or other common areas or make
alterations or additions to the Building, in its sole discretion. Landlord's
approval of Tenant's plans and specifications under this Article 9 or any other
provisions of this Lease is solely for the purpose of ascertaining whether
Tenant's proposed alterations will have an adverse impact on the structural
components or Common Facilities of the Building and to insure the aesthetic and
architectural harmony of the Tenant's proposed alterations with the remainder of
the Building. No approval of plans by Landlord shall be deemed to be a
representation or warranty by Landlord that such plans or the work provided for
therein will comply with applicable codes, laws or regulations or be in
conformance with any insurance or other requirements which affect the Premises
or the Building, and Tenant shall have the sole responsibility of complying with
all such requirements notwithstanding Landlord's approval of Tenant's plans.
(b) NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR
OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT UPON CREDIT, AND THAT NO
MECHANICS' OR OTHER LIEN FOR ANY SUCH LABOR OR MATERIALS SHALL ATTACH TO OR
AFFECT THE ESTATE OR INTEREST OF LANDLORD IN AND TO THE PREMISES OR THE
BUILDING. WHENEVER AND AS OFTEN AS ANY LIEN ARISING OUT OF OR IN CONNECTION
WITH ANY WORK PERFORMED, MATERIALS FURNISHED OR OBLIGATIONS INCURRED BY OR ON
BEHALF OF TENANT SHALL HAVE BEEN FILED AGAINST THE PREMISES OR THE BUILDING, OR
IF ANY CONDITIONAL BILL OF SALE SHALL HAVE BEEN FILED FOR OR AFFECTING ANY
MATERIALS, MACHINERY OR FIXTURES USED IN THE CONSTRUCTION,
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REPAIR OR OPERATION THEREOF, OR ANNEXED THERETO BY TENANT, TENANT SHALL
FORTHWITH TAKE SUCH ACTION BY BONDING, DEPOSIT OR PAYMENT AS WILL REMOVE OR
SATISFY THE LIEN OR CONDITIONAL BILL OF SALE WITHIN TEN (10) DAYS OF LANDLORD'S
WRITTEN REQUEST THEREFOR.
10. Damage. (a) If the Premises are damaged by fire or other cause covered
by Landlord's policy of fire insurance with extended coverage or other property
damage insurance carried by Landlord, the damage shall be repaired by and at the
expense of Landlord and the rent until such repairs shall have been made shall
abate pro-rata according to the part of the Premises which is unusable by
Tenant. However, if such damage was caused by the negligence of Tenant, its
employees, agents, contractors, visitors or licensees, then all rentals shall be
payable by Tenant during such period, unless and solely to the extent that any
abatement of rent is covered by a policy of rent loss insurance which Landlord
may, at its option, then have in effect. Due allowance shall be made for
reasonable delay which may arise by reason of adjustment of fire insurance by
Landlord, and for personnel delay on account of "labor troubles" or any other
cause beyond Landlord's control. If, however, the Premises are rendered wholly
untenantable by fire or other cause and Landlord shall decide not to rebuild the
same, or if the entire Building be so damaged that Landlord shall decide to
demolish it or not to rebuild it, then or in any of such events, Landlord may,
at its option, cancel and terminate this Lease by giving Tenant notice in
writing of its intention to cancel this Lease, whereupon the term of this Lease
shall terminate upon the thirtieth (30th) day after such notice is given, and
Tenant shall vacate the Premises and surrender the same to Landlord. In neither
of the certain contingencies in this paragraph mentioned shall there be any
liability on the part of Landlord to Tenant covering or in respect of any period
during which the occupation of said Premises by Tenant may not be possible
because of the matters hereinabove stated, nor shall Landlord be liable for any
damage incurred by Tenant. Without limiting the foregoing, Landlord shall not
be responsible for consequential damages, lost profits or any damage to Tenant's
personal property.
(b) Notwithstanding anything to the contrary contained in this Lease, if the
Premises are damaged or destroyed by fire, accident, the elements or other
casualty (a "Casualty") during the term, Landlord shall notify Tenant within
thirty (30) days after such Casualty of Landlord's good faith estimate of the
time needed to undertake reconstruction of the Premises. If the estimated time
for repairs to the Premises exceeds one hundred eighty (180) days from the date
of Casualty, Tenant shall have the right to terminate this Lease by giving to
Landlord notice of such termination within fifteen (15) days after Landlord
provides notice of such good faith estimate. In the event that Landlord or
Tenant do not exercise a right of termination as provided in this Lease,
Landlord shall commence to repair the damage caused by such Casualty and,
thereafter, shall diligently and continuously pursue completion of such repairs,
within the estimated completion date as set forth in Landlord's notice. If
Landlord fails to so complete the repairs to the extent sufficient to allow
Tenant to reasonably use and occupy the Premises for its intended use, within
the estimated completion date, Tenant shall have the right and option, as its
sole and exclusive remedy upon no less than sixty (60) days prior notice to
Landlord to terminate this Lease; provided, however, that if Landlord completes
its repairs within said sixty (60) day period, then Tenant's notice to terminate
as aforesaid shall be null and void and this Lease shall continue in full force
and effect.
11. Condemnation. If the Premises or any part thereof shall be taken by any
governmental or quasi-governmental authority pursuant to the power of eminent
domain, or by deed in lieu thereof, Tenant agrees to make no claim for
compensation in the proceedings, and hereby assigns to Landlord any rights which
Tenant may have to any portion of any award made as a result of such taking, and
this Lease shall terminate as to the portion of the Premises taken by the
condemning authority and rental shall be adjusted to such date. The foregoing
notwithstanding, Tenant shall be entitled to claim, prove and receive in the
condemnation proceedings such awards as may be allowed for relocation expenses
and for fixtures and other equipment installed by it which shall not, under the
terms of this Lease, be or become the property of Landlord at the termination
hereof, but only if such awards shall be made by the condemnation court in
addition to and stated separately from the award made by it for the land and the
Building or part thereof so taken. If the nature, location or extent of any
proposed condemnation affecting the Building is such that Landlord elects in
good faith to demolish the Building, then Landlord may terminate this Lease by
giving at least sixty (60) days' written notice of termination to Tenant at any
time after such condemnation and this Lease shall terminate on the date
specified in such notice. If the Premises shall be taken by any governmental or
quasi-governmental authority pursuant to the power of eminent domain, on a
temporary basis exceeding one hundred eighty (180) days, then Tenant shall have
the right to terminate this Lease with thirty (30) days prior written notice to
Landlord.
12. Use of Premises. The Premises shall be used and occupied by Tenant
solely for the purpose of a scientific research and laboratory facility,
including a scientific/biomedical testing laboratory, test kit
production/assembly facility, and for activities related thereto, including the
storage of the chemicals and materials in strict accordance with Article 53 and
Exhibit F used by Tenant in
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the conduct of its business in the Premises, and general office purposes, and
for no other purpose whatsoever. The Premises shall not be used for any illegal
purpose or in violation of any valid regulation of any governmental body, or in
any manner to (i) create any nuisance or trespass; (ii) annoy or embarrass
Landlord or any other tenant of the Property; (iii) vitiate any insurance; or
(iv) alter the classification or increase the rate of insurance on the property.
13. Repairs by Tenant. Tenant shall be responsible for repairing,
maintaining and cleaning the Premises and the fixtures therein, keeping same in
good order and condition during the term of this Lease at its sole cost and
expense, and will, at the expiration or other termination of the term hereof,
surrender and deliver up the same and all keys, locks and other fixtures
connected therewith (except only trade fixtures installed by Tenant at Tenant's
expense, office furniture and business equipment) in safe, clean, sanitary, and
non-hazardous condition, and otherwise in good order and condition, as the same
were required to be in on the date Tenant occupied the Premises for the conduct
of Tenant's business, ordinary wear and tear excepted.
14. Repairs by Landlord. Landlord shall have no duty to Tenant to make any
repairs or improvements to the interior of the Premises except structural
repairs necessary for safety and tenantability, and then only if not brought
about by any act or neglect of Tenant, its agents, employees or invitees,
excluding accidents covered by Landlord's insurance, subject to Article 17(f).
Unless due to Landlord's gross negligence or willful misconduct, Landlord shall
not be liable for any damage caused to the person or property of Tenant, its
agents, employees or invitees, due to the Property or the Building or any part
or appurtenances thereof being improperly constructed or being or becoming out
of repair, or arising from the leaking of water or sewer, or from electricity,
or from any other cause whatsoever. Tenant agrees to use commercially
reasonable efforts to report as soon as practicable under the circumstances, in
writing to Landlord any defective condition in or about the Premises known to
Tenant which Landlord is required to repair, and a failure to so report shall
make Tenant liable to Landlord for any expense, damage or liability resulting
from such defects. Landlord shall not be liable for failure to furnish or for
suspension or delay in furnishing such services due to breakdown, maintenance,
or repair work, strike, riot, civil commotion, governmental action or any other
cause beyond the reasonable control of Landlord, or for interruptions of service
for reasonable periods in connection with construction work being performed in
the Building. If such interruption is caused by the gross negligence or willful
misconduct of Landlord, its agents or employees, and Tenant is precluded from
being open for business within the Premises for a period of seventy-two (72)
continuous hours, and provided that business interruption insurance that may be
carried by Tenant, at its option, at the time in question would not provide
reimbursement to Tenant for rental payments during this period, then Tenant's
Base Rent and other charges shall abate commencing after such seventy-two (72)
hour period, until the earlier of the date on which such utility service is
restored or the date the Tenant reopens for business.
15. Roof Rights. Except as otherwise provided in this Lease, Landlord shall
have the exclusive right to use all or any portion of the roof of the Building
for any purposes. Landlord shall use commercially reasonable efforts in
exercising its rights under this paragraph to minimize any undue noise that may
unreasonably interfere with Tenant's use and occupancy of the Premises.
16. Landlord's Remedies Upon Default. Tenant shall be in default under this
Lease if Tenant (i) fails to pay any installment of Base Rent, Additional Rent
or other charges or money obligation to be paid by Tenant hereunder within five
(5) days after the same shall become due (all of which monetary obligations of
Tenant shall bear interest at the highest rate allowable by law, not to exceed
18% per annum from the date due until paid); or (ii) defaults in the performance
of any of the covenants, terms or provisions of this Lease (other than the
payment, when due, of any of Tenant's monetary obligations hereunder) or any of
the Rules and Regulations now or hereafter established by Landlord to govern the
operation of this Building and fails to cure such default within twenty (20)
days after written notice thereof from Landlord; provided, however, that solely
with respect to non- monetary defaults which cannot with due diligence be cured
within such 20-day period, if, within such 20-day period, Tenant commences and
thereafter diligently pursues the cure of any such non-monetary default, Tenant
shall be granted an additional reasonable period of time to effect a cure, but
in no event later than sixty (60) days after the date Tenant commences to cure
the default; or (iii) abandons the Premises or fails to keep the Premises
continuously and uninterruptedly open for business; or (iv) files a voluntary
petition in bankruptcy, or any similar petition seeking relief under any present
or future federal, or other bankruptcy or insolvency statue or law; or if a
proceeding under any present or future federal, state or other bankruptcy or
insolvency statute or law shall be filed against Tenant or any asset of Tenant,
and such proceeding shall not have been dismissed or vacated within ninety (90)
days of the date of such filing; or (v) makes an assignment for the benefit of
its creditors. Upon the occurrence of any of the above events, Landlord, at its
option, may pursue any one or more of the following remedies without any notice
or demand whatsoever:
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(a) Landlord, at its option, may at once, or at any time thereafter,
terminate this Lease by written notice to Tenant, whereupon this Lease shall
end. Upon such termination by Landlord, Tenant will at once surrender
possession of the Premises to Landlord and remove all of Tenants's effects
therefrom, and Landlord may forthwith re-enter the Premises and repossess itself
thereof, and remove all persons and effects therefrom, in accordance with law;
provided, however, Landlord agrees that it will not breach the peace in the
exercise of its rights herein. Notwithstanding the foregoing to the contrary,
solely with respect to monetary defaults as provided in clause (i) above,
Landlord agrees that it shall not exercise its right of re-entry as provided
herein without a court order, unless Tenant has failed to cure said monetary
default within five (5) days' after receipt of written notice from Landlord.
(b) Landlord may, without terminating this Lease, enter upon and take
possession of the Premises and expel or remove Tenant and any other person who
may be occupying the Premises or any part thereof, without being liable for
prosecution or any claim for damages therefor and, if Landlord so elects, make
such alterations and repairs as, in Landlord's judgement, may be necessary to
relet the Premises, and relet the Premises or any part thereof for such rent and
for such period of time and subject to such terms and conditions as Landlord may
deem advisable and receive the rent therefor; provided, however, Landlord agrees
that it will not breach the peace in the exercise of its right herein.
Notwithstanding the foregoing to the contrary, solely with respect to monetary
defaults as provided in clause (i) above, Landlord agrees that it shall not
exercise its right of re- entry as provided herein without a court order, unless
Tenant has failed to cure said monetary default within five (5) days' after
receipt of written notice from Landlord. Upon each such reletting, the rent
received by Landlord in respect of such reletting shall be applied first to the
payment of any indebtedness other than rent due hereunder from Tenant to
Landlord, including interest thereon; second, to the payment of any loss and
expenses of such reletting, including brokerage fees, attorneys' fees and the
cost of such alterations and repair; third, to the payment of rent due and
unpaid hereunder, together with interest thereon as herein provided; and the
residue, if any, shall be held by Landlord and applied in payment of future rent
as the same may become due and payable hereunder. Tenant agrees to pay to
Landlord, on demand, any deficiency that may arise by reason of such reletting.
Notwithstanding any such reletting without termination, Landlord may at any time
thereafter elect to terminate this Lease for such prior default.
(c) In the event Landlord shall re-enter the Premises and/or terminate this
Lease in accordance with the provisions of this Article 16, Landlord may, in
addition to any other remedy it may have, recover from Tenant all damages and
expenses Landlord may suffer or incur by reason of Tenant's default hereunder,
including without limitation , the cost of recovering the Premises and
reasonable attorney fees. Tenant agrees that actual damages to Landlord
resulting from Landlord's exercise of the remedies set forth in paragraphs (a)
or (b) above, will be difficult to ascertain, and therefore, after a default of
Tenant hereunder, Tenant shall also pay to Landlord "Liquidated Damages" for the
failure of Tenant to observe and perform the covenants of this Lease, which at
the election of Landlord, shall be either: (A) (x) the sum of (i) the minimum
monthly rent, plus (ii) the Additional Rent payable hereunder for the month
immediately preceding such failure to operate, re-entry or termination, less (z)
the net amount, if any, of the rents collected on account of the lease or leases
of the Premises for each month of the period which would otherwise have
constituted the balance of the term of this Lease, all of which sums shall
become due and payable by Tenant to Landlord upon the first day of each calendar
month during the otherwise unexpired portion of the term hereof; or (B) the
whole of said Liquidated Damages calculated under clause (A) multiplied by the
number of months then remaining in the lease term, discounted to present value
at a rate of six percent (6%) per annum as of the date of termination or
re-entry by Landlord; provided, however, that in the event Landlord shall relet
the Premises and the rent received by Landlord in respect of such reletting
together with the discounted Liquidated Damages paid by Tenant, less the costs
and expenses incurred by Landlord in such reletting, shall exceed the rent
reserved hereunder for that period which would otherwise have constituted the
remainder of the term hereof, then Landlord shall, upon the expiration of the
period which would have constituted the term of this Lease, refund to Tenant the
lesser of the amount of such excess or the discounted Liquidated Damages
theretofore paid by Tenant.
(d) If the rent agreed to be paid, including all other sums of money which
under the provisions hereto are declared to be rent, shall be in arrears in
whole or in part for five (5) or more days, Landlord may at its option (if such
arrearage remains unpaid after ten (10) days' written notice to Tenant) declare
the tenancy hereunder converted into a tenancy from month to month, and upon
giving written notice to Tenant of the exercise of such option, Landlord shall
forthwith be entitled to all provisions of law relating to the summary eviction
of monthly tenants in default in rent.
(e) Anything in this Lease to the contrary notwithstanding, in order to
cover the extra expense involved in handling delinquent payments, Tenant shall
pay a "late charge" in an amount equal to the greater of (i) 5% of any
delinquent payment, or (ii) $250.00, when any installment of Base Rent (or any
other amount as may be considered Additional Rental under this Lease)
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is paid more than five (5) days after the due date thereof. It is hereby
understood that this charge is for extra expenses incurred by the Landlord in
processing the delinquency.
(f) Tenant hereby appoints as its agent to receive service of all
dispossessory or other proceedings and notices thereunder and under this Lease
the person apparently in charge of the Premises at the time, and if no person
then appears to be in charge of the Premises, then such service or notice may be
made by attaching the same to the main entrance of the Premises, provided that,
in such later event, a copy of any such proceedings or notice shall also be
mailed to Tenant in the manner set forth in Article 33 hereof.
(g) Tenant shall be considered in "Habitual Default" of this Lease upon (i)
Tenant's failure, on two (2) or more occasions during any Lease Year, to pay,
when due, any installment of Base Rent, Additional Rent, or any other sum
required by the terms of this Lease, or (ii) Tenant's repeated (on three (3) or
more occasions) violation of, or failure to comply with, any term covenant or
condition of this Lease after written notice of such violation or failure to
comply has been given by Landlord to Tenant. Upon the occurrence of an event of
Habitual Default on the part of Tenant, Tenant shall immediately be deemed to
have released any and all options or rights granted, or to be granted, to Tenant
under the terms of this Lease (including, without limitation, rights of renewal,
rights to terminate, or rights of first refusal).
(h) Pursuit of any of the foregoing remedies shall not preclude Landlord
from pursuing any other remedies therein or at law or in equity provided, nor
shall pursuit of any remedy by Landlord constitute a forfeiture or waiver of any
rent due to Landlord hereunder or of any damages accruing to Landlord by reason
of Tenant's violation of any of the covenants and provisions of this Lease.
Tenant hereby waives any right to assert or maintain any non-compulsory
counterclaims against Landlord in any action brought by Landlord to obtain
possession of the Premises. No act of Landlord (including, without limitation,
acts of maintenance, efforts to relet the Premises, or any other actions taken
by Landlord or its agents to protect Landlord's interests under this Lease)
other than a written notice of termination, shall terminate this Lease. The
acceptance of keys to the Premises by Landlord, its agents, employees,
contractors or other persons on Landlord's behalf shall not be deemed or
constitute to effect a termination of this Lease unless such early termination
is evidenced by a written instrument signed by Landlord.
17. Insurance (a) Tenant agrees to indemnify and save Landlord and
Landlord's Managing Agent harmless from any and all liabilities, damages, causes
of action, suits, claims, judgements, costs and expenses of any kind (including
attorneys fees): (i) relating to or arising from or in connection with the
possession, use, occupancy, management, repair, maintenance or control of the
Premises, or any portion thereof; (ii) arising from or in connection with any
act or omission of Tenant or Tenant's agents, employees or invitees; or (iii)
resulting from any default, violation or injury to person or property or loss of
life sustained in or about the Premises. To assure such indemnity, Tenant shall
carry and keep in full force and effect at all times during the term of this
Lease for the protection of Landlord and Landlord's Managing Agent and Tenant
herein, public liability and property damage insurance with combined single
limits of not less than One Million Dollars ($1,000,000.00) per occurrence; with
not less than a Two Million Dollar ($2,000,000.00) aggregate per location.
(b) Tenant shall be and remain liable for the maintenance, repair and
replacement of all plate glass in the Premises with glass of like kind and
quality. If requested by Landlord, Tenant shall keep the same insured under a
policy of place glass insurance.
(c) Tenant shall obtain and at all times during the term hereof maintain, at
its sole cost and expense, policies of insurance covering its fixtures,
equipment and inventory installed and located on the Premises, in an amount of
not less than eighty percent (80%) of the replacement cost of said items. Such
insurance shall cover any peril included under insurance industry practice in
the state in which the Property is located, within the classification "Fire and
Extended Coverage" together with insurance against vandalism, malicious
mischief, and sprinkler leakage or other sprinkler damage, boiler and pressure
vessel insurance, and any proceeds of such insurance so long as this Lease shall
remain in effect, shall be used only to repair or replace the items so insured.
(d) Said public liability and property damage insurance policies and any
other insurance policies carried by Tenant with respect to the Premises shall:
(i) be issued in form reasonably acceptable to Landlord by good and solvent
insurance companies qualified to do business in the state in which the Premises
is located and reasonably satisfactory to Landlord; (ii) be endorsed to name
Landlord, Landlord's Managing Agent, Tenant and any other parties in interest
from time to time designated in writing by notice from Landlord to Tenant as
Additional Insureds; (iii) be written as primary policy coverage and not
contributing either to or
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in excess of any coverage which Landlord may carry; (iv) provide for 30 days'
prior written notice to Landlord of any cancellation or other expiration of such
policy or any defaults or material changes thereunder; and (v) contain an
express waiver of any right of subrogation by the insurance company against
Landlord and Landlord's Managing Agent. Such insurance policies shall be
obtained from an approved insurance company and Tenant shall deliver a copy of
said policy or an original Certificate of Insurance to Landlord, before Tenant
takes occupancy of the Premises, showing the same to be in full force and
effect. Neither the issuance of any insurance policy required hereunder, nor
the minimum limits specified herein with respect to Tenant's insurance coverage
shall be deemed to limit or restrict in any way Tenant's liability arising under
or out of this Lease.
(e) In addition to the indemnity and insurance provision stipulated in this
Article 17, the Tenant shall also obtain and at all times during the term of
this Lease maintain the following additional insurance of the type marked below
with an "X":
Gradual Pollution and/or Contamination Liability
- -----
X Umbrella Liability in limits of not less than Two Million Dollars
- ----- ($2,000,000.00)
(f)(1) Notwithstanding anything contained herein to the contrary, to the
extent permitted by law, each of Landlord and Tenant hereby releases the other
, to the extent of all insurance carried (or required to be carried) by each
party under the terms of this Lease, from liability for any loss or damage
caused by fire or other of the extended casualties insured against; provided,
however, that this release shall be in force and effect only with respect to
loss or damage occurring during such time as the releasing party's insurance
policy contain a clause or clauses which provides that: (i) the insurance
company waives subrogation or consents to a waiver of right of recovery, and
(ii) such waiver of subrogation or consent to a waiver of a right of recovery
does not adversely affect or prejudice said policy or the releasing party's
right of full recovery thereunder. Landlord's release of Tenant under this
subparagraph 17(f) is expressly conditioned upon Tenant's full cooperation with
Landlord's insurance carrier in inspections of the Premises and Tenant's
compliance with all requirements imposed by Landlord's insurance carrier with
respect to any activities in or use of the Premises which increases the risk of
loss to the Building or the Premises.
(2) If a party advises the other party that a clause of the type described
in paragraph (1) above is (i) not obtainable, or (ii) only obtainable at
additional cost, then such party shall not be obligated to obtain a waiver;
provided, however, that with respect to an inability to obtain a waiver due to
the imposition of additional cost, the party shall promptly notify the other
party of the amount of such additional cost and, if the party desiring that the
other party obtain a waiver agrees in writing to pay the additional cost of
obtaining the waiver, then, upon receipt of such payment, that party shall
obtain a waiver of subrogation for the benefit of the other party, as described
in paragraph (a) above To the extent that Tenant is permitted to self insure
as to its personal property located in the Premises, Tenant will nevertheless be
deemed to be insured for such personal property for the purposes of this
subparagraph 17(f).
18. Property at Tenant's Risk. It is understood and agreed that all
personal property in the Premises, of whatever nature, whether owned by Tenant
or any other person, shall be and remain at Tenant's sole risk and unless due to
Landlord's gross negligence or willful misconduct, Landlord shall not assume any
liability or be liable for any damage to or loss of such personal property,
arising from the bursting, overflowing, or leaking of the roof or of water or
sewer pipes, or from heating or plumbing fixtures or from the handling of
electric wires or fixtures or from any other cause whatsoever.
19. Assignment; Subletting. (a) Except as provided in this Article 19,
neither Tenant, nor any of its permitted successors or assigns, shall transfer,
assign, mortgage, encumber, or, by operation of law or otherwise, pledge,
hypothecate, or assign all or any of its interest in this Lease, or sublet or
permit the Premises, or any part thereof, to be used by others, including, but
not by way of limitation, licensees of Tenant, without the prior written consent
of Landlord, in each instance, which consent Landlord may withhold in its sole
and absolute discretion, for any reason or for no reason. Any such subletting
or assignment shall be referred to as a "Transfer", and the person to whom
Tenant's interest is transferred shall be referred to as a "Transferee".
(b) The prohibition against any Transfer without the prior written consent of
Landlord shall apply, without limitation, to the following circumstances, each
of which shall be deemed a Transfer: (i) if Tenant or any guarantor of this
Lease is a corporation (other than a corporation, the outstanding voting stock
of which is listed on a "national securities exchange," as defined in the
Securities Exchange Act of 1934), and if shares of such corporation are
transferred by sale, assignment, bequest, inheritance, operation of law or
otherwise (including, without limitation, a transfer to or by a receiver or
trustee in federal or state bankruptcy,
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insolvency or other proceeding), so as to result in or make possible a change in
the present control of such corporation; (ii) if Tenant or any guarantor of this
Lease is a partnership, any change in control or ownership of such partnership;
(iii) any transfer by sale, assignment, bequest, inheritance, operation of law
or other disposition of all or substantially all of the assets of Tenant or any
guarantor which results in or makes possible a change in the present control of
the business of Tenant or any such guarantor; (iv) any other change in ownership
of Tenant, any guarantor of this Lease or the business operated by Tenant; or
(v) any subletting or assignment which occurs by operation of law, merger,
consolidation, or reorganization or any change of Tenant's corporate or
proprietary structure. In no event may Tenant assign this Lease, or sublease
the Leased Premises, if Tenant is in default under this Lease.
(c) In the event that Tenant desires to effect a Transfer hereunder, Tenant
shall give Landlord written notice (the Transfer Notice") thereof. To be
effective, the Transfer Notice shall be accompanied by Tenant's check, payable
to the order of Landlord, or Landlord's Agent, in an amount equal to $500.00 to
compensate Landlord for the cost of reviewing the proposed Transfer and specify
the proposed Transferee, and the proposed terms of the Transfer, and contain
such information about the proposed Transferee, its experience, its financial
situation, its methods of operation, and its impact on the Building, as a
prudent businessman would require in making the Transfer decision. Tenant
specifically agrees to use diligent, good faith efforts to apprise Landlord of
any adverse or negative information in its possession concerning the proposed
Transfer and the proposed Transferee including, without limitation, information
that would adversely affect the value, marketability, financing or insurability
of the Building or Avenel Business Park. The Transfer Notice shall also contain
a certificate by Tenant (or an officer or general partner of Tenant if Tenant is
a corporation or partnership) of all "Transfer Consideration" (as defined below)
or payable in connection with the proposed Transfer. Within sixty (60) days of
the receipt of the Transfer Notice Landlord shall, by written notice to Tenant,
elect: (i) to permit the proposed Transfer; (ii) to terminate this Lease; (iii)
to sublet with the right to further sublet from Tenant for the balance of the
term of this Lease (a) all of the Premises, or (b) only so much of the Lease
Premises as Tenant proposed to Transfer, at the same rental as Tenant is
obligated to pay to Landlord hereunder; or (iv) to deny consent to the proposed
Transfer, in which event Tenant shall continue to occupy the Lease Premises and
comply with all of the terms and conditions hereof. In the event that Landlord
fails to give Tenant written notice of its election hereunder within the
specified sixty (60) day period, Landlord shall be deemed to have denied its
consent to the proposed Transfer. Notwithstanding anything contained herein to
the contrary, Landlord will not unreasonably withhold its consent to a Transfer
provided (i) such Transferee's net worth shall be equal to at least
$16,450,000.00; (ii) such Transferee's business in the Premises shall be
substantially comparable to Tenant's business on the date hereof or to research
and development facilities similar to those operating in Avenel Business Park;
(iii) such Transferee shall assume in writing all of Tenant's obligations
hereunder; and (iv) Tenant continues to remain liable under this Lease for the
performance of all of the terms contained herein including but not limited to,
the payment of Base Rent and all Additional Rent due under this Lease.
Notwithstanding any other provision hereof, Landlord shall have the absolute
right to refuse consent to any Transfer if at the time of either Tenant's notice
of the proposed Transfer or the proposed effective date thereof, there shall
exist any uncured default of Tenant or matter which will become a default of
Tenant with passage of time unless cured. Landlord's refusal to consent to a
Transfer shall be deemed to be reasonable if the proposed Transferee is an
entity that is already an occupant of the Building or the Avenel Business Park
unless Landlord (or its affiliates) is unable to provide the amount of space
required by such occupant. Further, Landlord may deny consent to a proposed
Transfer if (i) Landlord is or has been in negotiation with Tenant's proposed
Transferee within three (3) months or less of the date of Tenant's proposed
Transfer notice to Landlord, as evidenced by any two- way correspondence or
other documents between Landlord and the proposed Transferee; or (ii) Landlord
is or has been in negotiation with Tenant's proposed Transferee within six (6)
months or less of the date of Tenant's proposed Transfer notice to Landlord, as
evidenced by a written proposal, letter of intent, broker's report or other
written documentation, and the negotiation is confirmed (said confirmation to be
obtained by Landlord) by the proposed Transferee.
(d) If Landlord consents to a Transfer, the permitted Transferee shall
assume by written instrument all of Tenant's obligations under the Lease and
such Transferee, at least ten (10) days prior to the effective date of the
permitted Transfer, shall deliver to Landlord the proposed sublease, assignment
and assumption agreement or other instrument evidencing the Transfer and the
Transferee's undertaking of Tenant's obligations under the Lease. All of such
documents shall be subject to Landlord's prior written approval. In the event
of a permitted Transfer, Tenant shall continue to be liable hereunder, and shall
not be released from performance hereunder. In addition to the Rent reserved
hereunder, Tenant shall pay to Landlord fifty percent (50%) of all monies,
property and other consideration of every kind whatsoever paid or payable to
Tenant in consideration of or related to such Transfer and for all property
transferred to the Transferee, as all or part of the consideration including,
without limitation, fixtures,
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other Leasehold Improvements, furniture, equipment and furnishings
(collectively, all of the foregoing monies, property and other consideration
shall be referred to as the "Transfer Consideration"), less the reasonable costs
and expenses incurred by Tenant to effect such Transfer, and excluding bona fide
consideration paid for transfer of Tenant's Property. Following a permitted
Transfer of this Lease, Landlord shall send the named Tenant herein, notice of
default to the named Tenant's last known Notice address.
(e) Any Transfer without Landlord's consent, whether as a result of any act
or omission of Tenant, or by operation of law or otherwise, shall not be binding
upon Landlord, and shall confer no rights upon any third person. Each such
unpermitted Transfer shall, without notice or grace period of any kind,
constitute a default by Tenant under this Lease. The acceptance by Landlord of
the payment of Rent following any Transfer prohibited by this Article 19 shall
not be deemed to be a consent by Landlord to any such Transfer, an acceptance of
the Transferee as a tenant, a release of Tenant from the performance of any
covenants herein contained, or a waiver by Landlord of any remedy of Landlord
under this Lease, although amounts actually received shall be credited by
Landlord against Tenant's Rend obligations. Consent by Landlord to any one
Transfer shall not constitute a waiver of the requirement for consent to any
other Transfer. No reference in this Lease to assignees, subtenants or
licensees shall be deemed to be a consent by Landlord to the occupancy of the
Leased Premises by any such assignee, subtenant or licensee.
(f) Notwithstanding anything set forth in this Article 19 to the contrary,
Tenant may, without Landlord's consent but with written notice to Landlord given
thirty (30) days' prior to the effective date of such assignment, assign this
Lease for the use and occupation of the Premises solely for the purpose set
forth in Article 12 to (i) Tenant's parent or subsidiary corporation or to a
corporation under common ownership with and controlled by the same persons who
control Tenant, or (ii) any party which acquires substantially all of the assets
of Tenant, or (iii) to a corporation into which Tenant merges or consolidates,
provided, however, that in each such event, (1) such assignee shall possess
qualifications for conducting the business at the Premises to the satisfaction
of Landlord; (2) such assignee shall assume in writing all of Tenant's
obligations hereunder; and (3) Tenant continues to remain liable under this
Lease for the performance of all of the terms contained herein including but not
limited to, the payment of Base Rent, and all Additional Rent due under this
Lease; provided, however, that the provisions of this paragraph shall not permit
a Transfer in the event that Tenant is acquired by another corporation and
becomes a subsidiary thereof, (x) unless Tenant continues to be operated as a
separately identified company, substantially in the same manner as before such
acquisition, or (y) if, after such acquisition, or as a result thereof, Tenant's
net worth will decline by ten percent (10%) or more, unless in either of such
cases, the parent of the party acquiring Tenant agrees to guaranty Tenant's
obligations under this Lease. The liability of any Guarantor of this Lease
shall not be affected as a result of any assignment permitted under this
subparagraph (g). Notwithstanding any provisions of clause (i) of this
paragraph 19 (f) to the contrary, the provisions of clauses (i), (ii) and (iv)
of paragraph (b) of this Article 19 shall apply to the transfer or sale of the
stock, partnership interests or other ownership interests of any Transferee to
which Tenant would otherwise be permitted to Transfer its interest under this
paragraph (f), and no Transfer will be permitted under this paragraph (f)
without Landlord's consent, if such Transfer would result in a Transfer of this
Lease or the ownership interests in any Transferee to an entity not affiliated
with Tenant through common ownership and control. It is the intention of the
parties that the provisions of clause (i) of this paragraph 19 (f) are included
herein for the purpose of providing Tenant with flexibility in the manner of
operating its business but such provisions are not intended to permit, and do
not permit, a Transfer of this Lease to an entity outside the ownership family
to which Tenant belongs as a means of defeating the other provisions of this
Article 19 which require Landlord's consent to a Transfer.
20. Signs. No sign, advertisement or notice shall be inscribed, painted,
affixed or displayed on the windows or exterior walls of the Premises or on any
public area of the Building, except the directories and the office doors, and
then only in such places, numbers, sizes, color and style as are approved by
Landlord and which confirm to all applicable laws and/or ordinances. Any and
all permitted signs shall be installed and maintained by Landlord at Tenant's
sole expense. During the period of six months prior to the expiration of this
Lease or any renewal thereof, Landlord shall have the right to display on the
exterior of the Premises a sign advertising the space as available "For Rent".
21. Rules and Regulations. Tenant shall at all times comply with the rules
and regulations set forth on Exhibit B attached hereto, and with any reasonable
additions thereto and reasonable modifications thereof adopted from time to time
by Landlord, and each such rule or regulation shall be deemed to be a covenant
of this Lease to be performed and observed by Tenant. Landlord agrees that it
will not unreasonably discriminate in the application of its rules and
regulations.
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22. Parking. Landlord shall provide a minimum of three (3) parking spaces
per 1,000 rentable square feet of Premises, within reasonable walking distance
to the Building. Landlord grants Tenant the non-exclusive, unassigned right to
use the parking area or areas designated by the Landlord from time to time, free
of charge. Tenant hereby agrees to comply with all traffic and parking rules
and regulations imposed by Landlord from time to time.
23. Landlord Access. Landlord shall have the right, with reasonable prior
notice (which may be oral) to Tenant (except in the event of an emergency where
no notice shall be required), to enter upon the Premises for purposes of (i)
showing the Premises to prospective tenants; (ii) to post the Premises with "For
Rent" or other offering signs, as Landlord may deem appropriate; (iii) to
exhibit the same to prospective purchasers or mortgagees; and (iv) to inspect
the Premises to see that Tenant is complying with all its obligations hereunder,
or to make required repairs. Landlord shall exercise its rights of access to
the Premises in such a commercially reasonable manner so as to minimize
interference with Tenant's use and occupancy of the Premises, provided that
Landlord shall incur no additional expense thereby.
24. Subordination (a) This Lease is subject and subordinate to the lien of
any ground leases and to all mortgages, deeds of trust or deeds to secure debt
which may now or hereafter affect or encumber the Building or the real property
of which the Premises form any part, and to all renewals, modifications,
consolidations, replacements or extensions thereof. This Article shall be
self-operative and no further instrument of subordination shall be required. In
confirmation of any such subordination, Tenant shall execute within five (5)
days after receipt, any certificate that Landlord may reasonably so request. No
foreclosing lender nor any purchaser at foreclosure shall be liable for and
defaults (including defaults of a continuing nature) by any prior landlord, or
for the return of any security deposit; Tenant covenants and agrees to attorn
to Landlord or to any successor to Landlord's interest in the Premises, whether
by sale, foreclosure or otherwise. As of the date hereof, there is no mortgage
lien on the Building and/or Property. Notwithstanding the foregoing to the
contrary, this Lease shall not be subordinate to any future mortgage, deed of
trust or other lien on the Building and/or Property unless the party secured by
any such instrument enters into a non-disturbance agreement with Tenant on such
future lender's customary form that is reasonably acceptable to Tenant.
(b) Notwithstanding the foregoing, in the event any ground lessor, mortgagee
or the holder of any deed of trust or deed to secure debt shall elect to make
the lien of this Lease prior to the lien of its ground lease or mortgage, then,
upon such party giving Tenant written notice to such effect at any time prior to
the commencement of foreclosure by filing a notice thereof for record among the
land records, this Lease shall be deemed to be prior in lien to the lien of such
ground lease or mortgage, whether dated prior or subsequent thereto.
25. Mortgagee Protection. Tenant agrees to give any Mortgagees and/or Trust
Deed Holders, by Registered Mail, a copy of any Notice of Default served upon
Landlord, provided that prior to such notice Tenant has been notified, in
writing, (by way of Notice of Assignment of Rents and Leases, or otherwise) of
the address of such Mortgagees and/or Trust Deed Holders. Tenant further agrees
that if Landlord shall have failed to cure such default within the time provided
for in this Lease, then the Mortgagees and/or Trust Deed Holders shall have an
additional thirty (30) days within which to cure such default or if such default
cannot be cured within that time, then such additional time as may be necessary
if within such thirty (30) days, any Mortgagee and/or Trust Deed Holder has
commenced and is diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure proceedings, if
necessary to effect such cure), in which event this Lease shall not be
terminated while such remedies are being so diligently pursued. Tenant agrees
that in the event of the sale of the Property, by foreclosure or deed in lieu
thereof, the purchaser at such sale shall only be responsible for the return of
any security deposit paid by Tenant to Landlord in connection with this Lease to
the extent that such purchaser actually receives such security deposit.
26. Intentionally Deleted.
27. Hold-Over. If Tenant shall not immediately surrender the Premises the
day after the end of the term hereby created, then Tenant shall, by virtue of
this agreement, become, at Landlord's option, either (a) a tenant at sufferance,
or (b) a tenant from month-to-month. In either of such events, rent shall be
payable at a monthly or daily rate, as the case may be, of one and one-half
(1.5) times the Base Rent and Additional Rental payable by Tenant immediately
prior to the expiration or termination of the term, with said tenancy to
commence on the first day after the end of the term above demised; and said
tenancy shall be subject to all of the conditions and covenants of this Lease
insofar as such covenants and conditions are applicable thereto. Nothing
contained in this Lease shall be construed as a consent by Landlord to the
occupancy or possession of the Premises after the expiration of the term
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of this Lease. If Landlord fails to make an election under clause (a) or (b)
within ten (10) days after the expiration or termination of the term, the
hold-over tenancy shall be deemed to be a tenancy from month-to-month. If
Tenant holds over a s a month-to- month tenant, each party hereto shall give to
the other at least thirty (30) days' written notice to quit the Premises (any
right to a longer notice period being hereby expressly waived), except in the
event of non-payment of rent in advance or of the other Additional Rents
provided for herein when due, or of the breach of any other covenant by the said
Tenant, in which event Tenant shall not be entitled to any notice to quit, the
usual thirty (30) days' notice to quit being expressly waived; provided,
however, that in the event Tenant shall hold over after expiration of the term
hereby created, and if Landlord shall desire to regain possession of said
Premises promptly at the expiration of the term aforesaid, then at any time
prior to the date Landlord makes (or is deemed to have made) its election under
clause (b) of this Article 27, Landlord at its option, may re-enter and take
possession of the Premises forthwith, without process, or by any legal action or
process in force in the state in which the Premises is located; provided,
however, that if Landlord has accepted rent for any period beyond the expiration
of the term and Tenant is not then in default under any of the provisions of
this Lease, Landlord shall promptly refund to Tenant an amount equal to any
excess rental received by Landlord with respect to any period after Landlord
exercises its right to re-enter the Premises under this Article 27.
28. Estoppel Certificates. Tenant agrees, at any time and from time to
time, upon not less than five (5) days' prior written notice by Landlord, to
execute, acknowledge and deliver to Landlord or to such person(s) as may be
designated by Landlord, a statement in writing (i) certifying that Tenant is in
possession of the Premises, has unconditionally accepted the same and is
currently paying the rents reserved hereunder, (ii) certifying that this Lease
is unmodified and in full force and effect (or if there have been modifications,
that the Lease is in full force and effect as modified and stating the
modifications), (iii) stating the Rent Commencement Date and the dates to which
the rent and other charges hereunder have been paid by Tenant and (iv) stating
whether or not to the best knowledge of Tenant, Landlord is in default in the
performance of any covenant, agreement or condition contained in this Lease,
and, if so, specifying each such default of which notices to Landlord should be
sent. If Tenant fails to execute and return any such agreement to Landlord
within such five (5) day period, then, in addition to all other rights and
remedies available to Landlord at law or in equity, Landlord shall be entitled
to collect from Tenant, as liquidated damages with respect to such default of
Tenant in addition to Base Rent and other amounts payable hereunder, as
Additional Rent, an amount equal to one-half of one percent (0.5%) of the then
monthly amount of Base Rent then payable under this Lease, for each day Tenant
delays in returning the requested agreement to Landlord. Any such statement
delivered pursuant hereto may be relied upon by any owner, prospective
purchaser, mortgagee or prospective mortgagee of the Building or of Landlord's
interest therein, or any prospective assignee of any such mortgagee.
29. Quiet Enjoyment. Landlord warrants that it has the right to make this
Lease for the term aforesaid and that it will put Tenant into complete and
exclusive possession of the Premises. Landlord covenants that if Tenant pays
the rent and all other charges provided for herein, performs all of its
obligations provided for hereunder and observes all of the other provisions
hereof, Tenant shall at all times during the term hereof peaceably and quietly
have, hold and enjoy the Premises, without any interruption or disturbance from
Landlord, or anyone claiming through or under Landlord, subject to the terms
hereof.
30. Intentionally Deleted.
31. Modifications Due to Financing. If, in connection with obtaining
temporary or permanent financing for the Building or the land upon which the
Building is located, any such lender shall request reasonable modifications of
this Lease as a condition to such financing, Tenant agrees that Tenant will not
unreasonably withhold, delay or defer the execution of any agreement of
modification of this Lease provided such modifications do not increase the
financial obligations of Tenant hereunder or materially adversely affect the
leasehold interest hereby created or Tenant's reasonable use and enjoyment of
the Premises.
32. Attorneys. Tenant shall reimburse Landlord upon demand for any
reasonable costs or expenses, including reasonable attorney fees, incurred by
Landlord in connection with the enforcement of Tenant's obligations hereunder or
otherwise incurred by Landlord in connection with any judicial proceedings
regarding the rights and obligations of Tenant under this Lease. Any and all
costs or expenses incurred by Landlord pursuant to the provisions hereof shall
be considered as Additional Rent hereunder. Tenant acknowledges that it has
engaged counsel in connection with the negotiation of this Lease, or that Tenant
has freely decided to enter into this Lease without engaging the services of
counsel.
33. Notices. All notices, rent or other payments required or desired to be
given hereunder by either party to the other shall be sent by first class mail,
postage prepaid, or by a reputable commercial messenger service, except that
notices of default shall
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be sent by certified mail, return receipt requested or by a receipted commercial
messenger service (such as Federal Express or Airborne Express) for delivery on
the next following business day. Notices to the respective parties, and any
amounts required to be paid hereunder, shall be addressed and sent as follows:
<TABLE>
<CAPTION>
If to Landlord: NOTICES AND CORRESPONDENCE RENT, PAYMENTS, ETC.
<S> <C> <C>
c/o Franklin Property Management Company B.F. Saul Real Estate Investment Trust
8401 Connecticut Avenue c/o Franklin Property Management Company
Chevy Chase, Maryland 20815 P.O. Box 64772
cc: Legal Department Baltimore, Maryland 21264-4772
If to Tenant: BBI-Biotech Research Laboratories, Inc. with a copy to:
c/o Boston Biomedica Boston Biomedica
375 West Street 375 West Street
West Bridgewater, MA 02378 West Bridgewater, MA 02378
Attn: Treasurer Attn: President
</TABLE>
Either party may designate a substitute address, from time to time, by notice in
writing sent in accordance with the provisions of this Article 33.
34. Applicable Law. This Lease shall be construed under the laws of the
State in which the Premises is located.
35. No Reservation. The submission of this Lease for examination does not
constitute a reservation of or option for the Premises, and this Lease becomes
effective only upon execution and delivery thereof by Landlord. Neither party
shall have any legal obligation to the other in the event that the lease
contemplated herein is not consummated for any reason. Discussions between the
parties respecting the proposed lease described herein, shall not serve as a
basis for a claim against either party or any officer, director or agent of
either party.
36. Parties; Assigns and Successors. Feminine or neuter pronouns may be
substituted for those of the masculine form, and the plural may be substituted
for the singular number, in any place or places herein in which the context may
require such substitution or substitutions. The term "Landlord" as used in this
Lease, means only the owner for the time being of the Landlord's interest in
this Lease; and, in the event of the sale, assignment or transfer by such owner
of the Landlord's interest in this Lease, such owner shall thereupon be released
and discharged of all covenants and obligations of Landlord hereunder thereafter
accruing. Except as provided in the preceding sentence, all of the covenants,
agreements, terms, conditions, provisions and undertakings in this Lease shall
inure to the benefit of, and shall extend to and be binding upon, the parties
hereto and their respective heirs, executors, legal representatives, successors
and assigns, to the same extent as if they were in every case named and
expressed. If two or more individuals, corporations, partnerships or other
business associations (or any combination of two or more thereof) shall sign
this Lease as Tenant, the liability of each such individual, corporation,
partnership or other business association to pay rent and perform all other
obligations hereunder shall be deemed to be joint and several and any notice
required or permitted by the terms of this Lease may be given by or to any one
thereof, and shall have the same force and effect as if given by or to all
thereof. In like manner, if the Tenant named in this Lease shall be a
partnership or other business association, the members of which are, by virtue
or statute or general law, subject to personal liability, the liability of each
such member shall be joint and several.
37. Severability. If any term, covenant or condition of this Lease or the
application thereof to any person or circumstance shall to any extent be held
invalid or unenforceable, the remainder of this Lease or the application of such
term, covenant or condition to persons or circumstances other than those as to
which it is held or unenforceable, shall not be affected thereby and each term,
covenant and condition of this Lease shall be valid and enforced to the fullest
extent permitted by law.
38. Rent Tax. If applicable in the jurisdiction where the Premises are
situated, Tenant shall pay and be liable for all rental, sales and use taxes or
other similar taxes, if any, levied or imposed by any City, State, County or
other governmental body having authority, such payments to be in addition to all
other payments required to be paid to Landlord by Tenant under the terms of this
Lease. Any such payments shall be paid concurrently with the payment of the
rent upon which the tax is based as set forth above.
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39. Acts of God. Landlord and/or Tenant shall be excused for the period of
any delay and shall not be deemed in default with respect to the performance of
any of the non-monetary terms, covenants and conditions of this Lease when
prevented from so doing by cause or causes beyond the Landlord's and/or Tenant's
reasonable control, which shall include, without limitation, all labor disputes,
fire or other casualty, inability to obtain any material, services, acts of God,
or any other cause, whether similar or dissimilar to the foregoing, not within
the reasonable control of the Landlord and/or Tenant. Any party desiring to
claim a delay as a result of the occurrence of any of the above described events
shall notify the other party within five (5) business days after the date the
party first knows of such event. Lack of funds shall not, in any event, be
considered an event of force majeure for any purposes under this Lease.
40. Landlord's Liability. Tenant agrees that Landlord shall have no personal
liability with respect to any of the provisions of this Lease and Tenant shall
look solely to the estate and property of Landlord in the land and buildings
comprising the Property of which the Premises forms a part, Landlord's interest
in rents related to the Building, Landlord's interest in insurance and
condemnation proceeds related to the Building, Landlord's net interest in sale
and refinancing proceeds related to the Building received, and Landlord's
interest in operating and reserve accounts related to the Building for the
satisfaction of Tenant's remedies, including, without limitation, the collection
of any judgement or the enforcement of any other judicial process requiring the
payment or expenditure of money by Landlord, subject, however, to the prior
rights of any holder of any Mortgage covering all or part of the Property, and
no other assets of Landlord shall be subject to levy, execution or other
judicial process for the satisfaction of Tenant's claim and, in the event Tenant
obtains a judgement against Landlord, the judgement docket shall be so noted.
This Section shall inure to the benefit of Landlord's successors and assigns and
their respective principals. The name B.F. Saul Real Estate Investment Trust
(the "Trust") is the designation of the trustees for the time being under a
Declaration of Trust dated July 31, 1962, as amended and restated from time to
time, a copy of which, together with all amendments thereto, is filed with the
Maryland State Department of Assessments and Taxation, and in accordance with
such Declaration of Trust, notice is hereby given (i) that all persons dealing
with the Trust must look solely to the trust property for the enforcement of any
claims against the Trust, (ii) that any agreement, obligation or liability made,
entered into or incurred by or on behalf of B.F. Saul Real Estate Investment
Trust binds only its trust property, and (iii) that no shareholder, trustee,
officer or agent of the Trust assumes or shall be held to any liability
therefor.
41. Remedies Cumulative; No Waiver. All rights and remedies given herein
and/or by law or in equity to Landlord are separate, distinct and cumulative,
and no one of them, whether exercised by Landlord or not, shall be deemed to be
in exclusion of any of the others. No failure of Landlord to exercise any power
given Landlord hereunder, or to insist upon strict compliance by Tenant with his
obligations hereunder, and no custom or practice of the parties at variance with
the terms hereof shall constitute a waiver of Landlord's right to demand exact
compliance with the terms hereof.
42. Modification. This writing is intended by the parties as the final
expression of their agreement and as a complete and exclusive statement of the
terms thereof, all negotiations, considerations and representations between the
parties having been incorporated herein. No course of prior dealings between
the parties or their affiliates shall be relevant or admissible to supplement,
explain or vary any of the terms of this Lease. Acceptance of, or acquiescence
in, a course of performance rendered under this or any prior agreement between
the parties or their affiliates shall not be relevant or admissible to determine
the meaning of any of the terms of this Lease. No representations,
understandings or agreements have been made or relied upon in the making of this
Lease other than those specifically set forth herein. This Lease can only be
modified by a written agreement signed by all of the parties hereto or their
duly authorized agents.
43. Waivers. Landlord and Tenant each hereby waives all right to trial by
jury in any claim, action, proceeding or counterclaim by either party against
the other on any matters arising out of or in any way connected with this Lease,
the relationship of Landlord and Tenant and/or Tenant's use or occupancy of the
Premises. Tenant hereby expressly waives (to the extent legally permissible)
for itself and all persons claiming by, through or under it, any right of
redemption or right for the restoration of the operation of this Lease under any
present or future law in case Tenant shall be dispossessed for any cause, or in
case Landlord shall obtain possession of the Premises as provided in this Lease.
Tenant understands that the Premises are leased exclusively for business,
commercial and mercantile purposes and therefore shall not be redeemable under
any provision of law.
44. Interpretation. Captions and headings are for convenience and reference
only. Whenever in this Lease any printed portion, or any part thereof, has been
stricken out, whether or not any replacement provision has been added, this
Lease shall be read and construed as if the material so stricken out were never
included herein, and no implication shall be drawn from the text
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of the material so stricken out which would be inconsistent in any way with the
construction or interpretation which would be appropriate if such material had
never been contained herein. The Exhibits referred to in this Lease and
attached hereto are a substantive part of this Lease and are incorporated herein
by reference. In any legal proceeding respecting this Lease, this Lease will be
construed with equal weight for the rights of both parties, the terms hereof
having been determined by free and fair negotiation, with due consideration for
the rights and requirements of both parties. Both parties agree that they have
had equal input into the wording and phraseology of the provisions of this
Lease, and that, therefore, no provision will be construed as drafted by one
party or the other, without respect to whose draft of this Lease the wording or
phraseology arises. If any of the typewritten portions of this Lease conflict
with any of the printed provisions of this Lease, the provisions set forth in
the typewritten portions shall control; provided, however, that to the extent
the printed portions of this Lease may be read in a manner which will not
conflict with the provisions of the typewritten portions, then such
interpretation shall be deemed to be the correct interpretation of the
provisions of this Lease.
45. Financial Statements. Tenant, upon Lease execution, and thereafter upon
written request by Landlord, will provide Landlord with a copy of its current
financial statements consisting of a balance sheet, an earnings statement,
statement of changes in financial position, statement of changes in tenant's
equity, and related footnotes, prepared in accordance with generally accepted
accounting principles. Such financial statements must be either certified by a
CPA or sworn to as to their accuracy by Tenant's most senior official and its
chief financial officer. The financial statements provided must be as of a date
not more than 12 months prior to the date of request. Landlord shall retain
such statements in confidence, but may provide copies to lenders and potential
lenders. Notwithstanding the foregoing to the contrary, so long as Tenant is a
wholly-owned subsidiary of the Guarantor herein, Tenant shall not be required to
provide financial statements to Landlord.
46. Special Stipulations. The terms, covenants and conditions set forth in
any Articles of this Lease numbered higher than this Article 46 ("Special
Stipulations") are intended to supplement and, in certain events, modify or
vary, the other provisions set forth in the foregoing provisions of this Lease.
If any of the Special Stipulations conflict with any of the foregoing provisions
of this Lease, the provisions set forth in the Special Stipulations shall
control; provided, however, that to the extent the preceding portions of this
Lease may be read in a manner which will not conflict with the provisions of the
Special Stipulations, then such interpretation shall be deemed to be the correct
interpretation of the provisions of this Lease and the Special Stipulations.
47. Landlord's Work. (a) Landlord shall construct a new building in which
the Premises will be located containing approximately 46,335 rentable square
feet. The base building work to be performed by Landlord and the specifications
for such work are described on Exhibit E.
(b) (i) Tenant shall, within fifteen (15) days from the date hereof, provide
Landlord with schematic plans and specifications (the "Plans") showing the work
which Tenant desires Landlord to perform in the Premises which will include
improvements required to make the Premises suitable for use by Tenant in
Tenant's business (the "Interior Improvements"). Within fifteen (15) days after
Tenant submits plans and specifications to Landlord, Landlord shall advise
Tenant that Landlord has either (a) approved the Plans or (b) disapproved the
Plans, in which event Landlord shall specify in writing in what respects the
Plans are not acceptable to Landlord and what revisions to the Plans will be
required in order to make the Plans acceptable to Landlord, in which event
Tenant shall promptly revise the Plans in order to accommodate the revisions
required by Landlord. If Landlord does not approve or disapprove the Plans
submitted to it by Tenant within fifteen (15) days after the Plans have been
received by Landlord, the Plans shall be deemed to be approved by Landlord, and
the Premises shall be constructed in accordance with the Plans submitted by
Tenant. Landlord shall notify Tenant of those initial Tenant improvements of
which the Landlord will require the Tenant to remove from the Premises at the
expiration or earlier termination of this Lease, at Tenant's sole cost and
expense. Within thirty (30) days after Landlord's approval of the Plans,
Landlord shall have prepared construction drawings and specifications,
consistent with the approved Plans, and sufficient for Landlord to bid out and
construct all improvements desired by Tenant in the Premises (the "Construction
Drawings"). The Construction Drawings for Landlord's work shall be provided to
Tenant for review, but shall not be subject to Tenant's approval unless and to
the extent the Construction Drawings are materially inconsistent with the Plans,
in which event Tenant's consent, which shall not be unreasonably withheld and
which shall be deemed given if Tenant does not object within five (5) days after
receipt of the Construction Drawings, shall be required. If Tenant objects to
the Construction Drawings prepared by Landlord, Tenant shall specify in writing
in what respects the Construction Drawings are not acceptable and what revisions
will be required in order to make the Construction Drawings acceptable to
Tenant.
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(ii) With respect to the cost of performing the work required by this
Article, for individual components of the work for any specific trades which are
in excess of $25,000.00, Landlord shall obtain, or cause its general contractor
to obtain, at least three (3) bids.
(iii) Landlord shall construct the Interior Improvements in accordance with
the Plans approved by (or deemed to be approved by) Landlord and Construction
Drawings in accordance with this section and in good and workmanlike manner.
Tenant agrees to designate two persons who are authorized to originate and/or
approve change orders and additions associated with the Interior improvements
to the Premises. These designees are: Paul DeRito and Mark Manak. Landlord
shall (subject to delays resulting from the occurrence of events of force
majeure) diligently pursue the construction of the Premises so that the Premises
will be Substantially Complete (as hereinafter defined) and ready for occupancy
within seven (7) months of the date of full execution and delivery of this Lease
to Landlord; provided, however, that if circumstances beyond Landlord's
reasonable control (including, without limitation, force majeure or Landlord's
inability to get appropriate governmental permits required for the Interior
Improvements) prevent Landlord from completing such work by such date, then the
period for Landlord to perform such work shall be extended by an amount of time
by which Landlord was unable to perform it work as a result of such delay.
(iv) Landlord shall pay all costs and expenses incurred in constructing the
Interior Improvements in accordance with the approved Construction Drawings to
the extent that such costs and expenses do not exceed Twenty-four and 00/100
Dollars ($24.00) per rentable square foot of Premises ("Landlord's
Contribution"). If bids or estimates received by Landlord for the completion of
the work described in the Plans and the Construction Drawings indicate that the
cost of performing such work will exceed Landlord's Contribution, Landlord shall
promptly advise Tenant of Landlord's estimate of the amount by which the cost of
the Interior Improvements will exceed Landlord's Contribution, in which event
Tenant shall either (i) within five (5) days after receipt of Landlord's notice
respecting the cost of the Interior Improvements, revise or amend the approved
Plans and the Construction Drawings in order to reduce the cost of constructing
the Premises to an amount equal to or less than Landlord's Contribution, or (ii)
deposit with Landlord the amount by which the cost of the Interior Improvements,
as estimated by Landlord, exceeds Landlord's Contribution. If Tenant fails to
revise or amend the Plans and the Construction Drawings, as aforesaid, Tenant
shall be deemed to have exercised the option set forth in clause (ii) above. The
costs of the Interior Work will include all architectural or engineering design
costs, the costs of obtaining permits and approvals for the Interior
Improvements, plan review and similar charges, a general conditions fee of not
more than nine percent (9%), a overhead fee of not more that five percent (5%)
and a construction supervision fee of not more that five percent (5%).
(c) The term "Substantially Complete" as used herein is defined as the
date upon which Landlord notifies Tenant that construction of the Premises is
substantially completed in accordance with Construction Drawings as determined
by Landlord's architect, except for "punch-list" items which will not materially
interfere with Tenant's intended use of the Premises. Prior to Tenant taking
occupancy of the Premises, or performing any construction or other work in the
Premises, or moving any materials, furniture and/or equipment into the Premises,
Landlord and Tenant shall, together, inspect the Premises for any minor
punch-list items, and Landlord covenants that it will within sixty (60) days of
the date of such inspection, repair or replace any such punch-list items,
provided, however, that if such punch-list items cannot, with due diligence be
cured within such sixty (60) day period, if, within such 60-day period, Landlord
commences and thereafter diligently pursues the cure of any such punch-list
item, then Landlord shall be granted an additional reasonable period of time to
effect a cure. Tenant shall have the benefit of any warranties provided to
Landlord with respect to the work set forth herein. Landlord shall warrant all
Landlord's Work as provided herein for a period of thirty (30) days from the
date of delivery of the Premises to Tenant, and shall warrant any latent defects
in Landlord's Work for a period of one (1) year from the date of delivery of the
Premises to Tenant. Landlord agrees that all the obligations of Landlord
hereunder shall be completed so as not to interfere with Tenant in obtaining its
occupancy permits.
48. Right of First Offer. Provided (i) Tenant is not then in default
(beyond any applicable cure period) in any of its obligations under this Lease,
and (ii) additional space in the Building becomes available (the "Option Space")
and Landlord desires to lease the Option Space to any party other than the party
then occupying the Option Space, Landlord agrees that, during the term of this
Lease, including any Option Term, Tenant shall have the one time right, after
the expiration or termination of the initial leases of other premises in the
Building (including any renewals or extensions of same), of first offer to enter
into a lease of such space as the space becomes available in accordance with the
terms and conditions set forth in this Article 48, as follows:
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(a) Landlord shall, prior to entering into a lease for the Option Space,
send to Tenant a notice of the availability of such space and the terms and
conditions under which Landlord proposes to lease the Option Space to Tenant as
set forth below (the "Offer Notice").
(b) Within ten (10) business days after Tenant's receipt of the Offer
Notice, Tenant shall notify Landlord that Tenant either (i) agrees to lease the
Option Space under the terms described in the Offer Notice, or (ii) does not
desire to lease the Option Space under the terms described in the Offer Notice.
A failure by Tenant to timely elect the option described in clauses (i) or (ii)
above shall be deemed a to be a waiver by Tenant of any further right to lease
the Option Space under this Article 48.
(c) If Tenant exercises its option to lease the Option Space under this
Article 48, then Tenant shall execute a lease amendment embodying the terms set
forth in the Offer Notice, within ten (10) business days after Landlord submits
any such lease amendment to Tenant. Said lease amendment shall provide that the
following terms and conditions shall apply to the Option Space:
(i) Tenant agrees to accept the Option Space "as is" in its then
existing condition and Landlord shall have no construction
obligations with respect thereto, unless an allowance for
renovation of the Option Space was specified in the Offer
Notice, in which event such provisions respecting such allowance
shall be included in the lease amendment; and
(ii) The Rent for the Option Space shall be equal to the greater of
(1) the then escalated Rent (on a per square foot basis)
including a proportionate increase in Additional Rent or (ii)
the then current Prevailing Market Rent (as defined in Article
49).
(d) Landlord may, at its option, in lieu of a narrative description of the
terms to be described in the Offer Notice, submit to Tenant a lease amendment
document setting forth the terms of a proposed lease amendment, in which event
Tenant's exercise of its option to lease the Option Space shall be made by
Tenant's execution of such lease amendment document and its return to Landlord
within the applicable time periods set forth in paragraph (b) or (c) of this
Article 48. If Landlord does not submit a lease amendment document to Tenant at
the time the Offer Notice or a revised Offer Notice is given, and Tenant
exercises its option to lease the Option Space under such terms, then Tenant
shall execute a lease embodying the terms set forth in the Offer Notice within
ten (10) days after Landlord submits any such lease to Tenant, as provided in
paragraph (c) above.
(e) Tenant shall have no further right to lease the Option Space under this
Article 48 after Landlord enters into a lease of the Option Space with another
tenant in accordance with this Article 48.
(f) Tenant's right to lease the Option Space shall be conditioned upon
Tenant's full and complete compliance with all of the terms and conditions of
the Lease prior to the date of any Offer Notice or a revised Offer Notice, and
Tenant's option to lease the Option Space shall terminate when the term of this
Lease expires or terminates.
(g) Time shall be of the essence with respect to Tenant's right of first
offer under this Article 48.
(h) Regardless of any election of Tenant to lease the Option Space, this
Lease shall nonetheless remain in full force and effect until the expiration
date provided herein.
49. Option to Renew. Tenant shall have the option to renew the term of the
Lease for two (2) additional periods of five (5) years each (the "Option Term")
following the expiration of the initial Lease term, provided that this Lease is
in full force and effect, the original Tenant named herein shall be in
possession and occupying the Premises, and Tenant shall not be in default in the
performance or observance of any of the terms, conditions, provisions and/or
covenants of this Lease. All such rights of a renewal shall be exercised by
delivery to Landlord of written notice of Tenant's intention to renew the term
at least nine (9) months but not more than twelve (12) months prior to the
expiration of the then applicable Lease term. The Option Terms shall be on the
same terms, covenants and conditions as the initial Lease term except Base Rent
for the first Lease Year of each Option Term shall be the greater of (i) one
hundred three percent (103%) of the previous year's Base Rent including
Additional Rent or (ii) one hundred
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percent (100%) of the then Prevailing Market Rent (as hereinafter defined) of
comparable space within the Gaithersburg market area, including current
operating costs and concessions, which Rent shall be established as follows:
(a) Within fifteen (15) business days after receipt of Tenant's notice
exercising its option to extend the term of this Lease, Landlord shall notify
Tenant of Landlord's estimate of the Prevailing Market Rent. If Tenant
disagrees with Landlord's estimate of the Prevailing Market Rent, Tenant
shall notify Landlord that it has elected to submit the determination of
Landlord's estimate of the Prevailing Market Rent to arbitration, in which
event the provisions of subparagraph (b) of this Article 49 shall govern for
the selection of arbitrators and the establishment of the Prevailing Market
Rent payable for the year of the then applicable Option Term; provided,
however, that if Tenant does not elect to submit the determination of
Prevailing Market Rent to arbitration during such fifteen (15) day period,
then the Landlord's estimate of Prevailing Market Rent shall be deemed to be
agreed to by Tenant, and, if the same is greater than 103% of the previous
year's Base Rent and Additional Rent, then Landlord's estimate of the
Prevailing Market Rent shall be the Base Rent payable by Tenant to Landlord
during the first year of the then applicable Option Term.
(b) (i) Definition: As used herein, the term "Prevailing Market Rent" means
the most probable rent (as determined pursuant to the appraisal procedure
hereinafter set forth) at which the Premises (and any Additional Premises)
would be leased in a comparable and open market, under all conditions
requisite to a fair lease, the Landlord and Tenant each acting prudently,
knowledgeable, and assuming the rent is not affected by undue stimulus.
Implicit in this definition is the consummation of the Lease beginning on the
commencement date of the Option Term under conditions whereby:
1. Landlord and Tenant are typically motivated (i.e., neither party is
compelled to enter into a lease and both parties are willing to enter into a
lease).
2. Both parties are well informed or well advised, and each acting in what
it considers its own best interest.
3. A reasonable time is allowed for exposure in the open market.
4. The Prevailing Market Rent shall be computed as an amount equal to the
then prevailing market rental rate of the Premises, as if vacant with
building standard improvements, and taking into account the annual
adjustments of the Initial Base Rent, Tenant's obligation to pay Tenant's
pro-rata share of Annual Operating Expenses and all existing market factors.
5. All of the terms, covenants and conditions of the Lease (except terms
respecting the amount of Base Rent) remain in effect throughout the
applicable Option Term.
(ii) In the event of a dispute as to determination of Prevailing Market Rent
referred to in this Article, such dispute shall be in accordance with the
following:
If Landlord and Tenant fail to agree upon the Prevailing Market Rent as
referred to in this Article, within the time periods provided for herein,
then Landlord and Tenant each shall give notice to the other setting both the
name and address of a licensed real estate broker or appraiser (hereinafter
"appraiser") who shall be a M.A.I. Real Estate professional with substantial
experience in commercial real estate appraisal designated by it to make the
determinations hereafter required. Each appraiser shall be instructed to
calculate the Prevailing Market Rent as provided in each of the foregoing
sections which is the subject of the dispute and is in accordance with the
criteria referenced therein. If either party shall fail to give notice of
such designations within ten (10) days after failing to agree between
themselves, then the appraisal made by the appraiser so designated shall be
the Appraisal Prevailing Market Rent. If two appraisers have been designated,
such two appraisers shall consult with each other and, within thirty (30)
days thereafter, issue their determinations of Appraisal Prevailing Market
Rent in writing, and give notice thereof to each other and to Landlord and
Tenant. If such two appraisers shall concur as to the determination of the
Prevailing Market Rent and submit their decision in writing to Landlord and
Tenant, such concurrence shall be final and binding upon Landlord and Tenant.
If the two determinations of Prevailing Market Rent shall be within five
percent (5%) (measured from the higher appraisal) of each other, the
Prevailing Market Rent shall be deemed to be the average of the two
appraisers' determinations. If such two appraisers' determinations shall not
so concur or coincide, then such two appraisers shall immediately (i)
designate a third
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appraiser, (ii) prepare detailed written appraisals, and
(iii) submit copies of such appraisal to Landlord, Tenant and such third
appraiser. If the two appraisers shall fail to agree upon the designation of
such third appraiser within eight (8) days of the date on which the last
determination was rendered, then either party may apply to the American
Arbitration Association or any successor thereto having jurisdiction, for the
designation of such third appraiser. The third appraiser shall be licensed
real estate appraisers who shall have had at least fifteen (15) years
continuous experience in the business of appraising real estate in the
Montgomery County area. The third appraiser shall conduct such hearings and
investigations as he may deem appropriate and shall, within twenty (20) days
after the date of designation of the third appraiser, choose the
determination of the two appraisers originally selected by the parties which
is the nearest to the determination such third appraiser would have made
acting alone and applying the standards set forth therefor in this Lease, and
that choice by the third appraiser shall be binding upon Landlord and Tenant.
Each party shall pay its own counsel fees and expenses, if any, in connection
with any arbitration under this Article, including the expenses and fees of
any appraiser selected by it in accordance with the provisions of this
Article, and the parties shall share equally all other expenses and fees of
any such arbitration, including the expenses of the third appraiser. The
determination rendered in accordance with the provisions of this Article
shall be final and binding in fixing the Prevailing Market Rent.
Notwithstanding the foregoing, in no event shall the Base Rent for the first
Lease Year of the applicable Option Term be less than the then Base Rent of
the last Lease Year of the previous term.
(c) Commencing on the first day of the second Lease Year of the applicable
Option Term and on the first day of every Lease Year thereafter during the
applicable Option Term, the annual Base Rent shall be increased by one
hundred three percent (103%) of the amount of the annual Base Rent which was
in effect during the Lease Year immediately preceding the Lease Year for
which the adjustment is being made.
50. Broker. Landlord shall pay the commission due in connection with this
Lease to Trammell Crow Real Estate Services, Inc. ("Broker"). Notwithstanding
the foregoing, Broker has acted as agent for Tenant and represented Tenant's
interests and not Landlord's interests, and Broker is not, and shall not be
deemed to be, the agent of Landlord for any purpose whatsoever. Except in
regard to Broker, Landlord and Tenant represent to each other that they have not
dealt with any broker(s) or finder(s) concerning this Lease. Landlord and Tenant
mutually agree to defend and hold each other harmless against any claims of any
person or entity involving a breach of the representation contained in this
Article 50. In the event of such a claim by any person or entity, the party
against whom the claim is made or the litigation is commenced shall give
reasonable notice to the other party with opportunity to such other party to
defend against any claim for which indemnity will be sought under this Article
50.
51. Building Sign. Tenant shall be permitted to install an exterior sign on
the Building with Landlord's prior written approval, which shall not be
unreasonably withheld, provided such sign shall conform to (i) any and all
applicable laws, ordinances or regulations of any governmental authorities, and
(ii) any insurance requirements. Any such approved signs shall be maintained by
Tenant in good condition and repair and in accordance with the standards of the
Building, and Landlord shall have the right to require Tenant to repair or
replace any such signs if the same is damaged or in disrepair. Tenant shall
obtain and pay for all permits and licenses required in connection with any such
approved sign(s), and shall be responsible for the proper installation thereof.
52. Outside Storage Area and Flammable Storage Units Area. Landlord shall
allow Tenant to allocate, from Tenant's parking allotment pursuant to Article
22, (i) a portion of the parking area equal a maximum of five hundred (500)
square feet, to install its emergency generator and chemical storage tanks
("Outside Storage Area") used in the operation of Tenant's business at the
Premises and (ii) a portion of the parking area to install two (2) flammable
storage units in accordance with Exhibit F, used in the operation of Tenant's
business at the Premises ("Flammable Storage Units Area"). The Outside Storage
Area and Flammable Storage Units Area shall be located immediately adjacent to
the rear of the Building, as reasonably approved by Landlord in writing. Tenant
shall install, at its sole cost and expense in accordance with applicable laws,
insurance requirements and plans approved by Landlord, bollards or fencing, with
locks to secure same, around the Outside Storage Area and Flammable Storage
Units Area. Tenant shall maintain the Outside Storage Area and Flammable
Storage Units Area and shall be responsible for all governmental permits and
approvals related thereto, its sole cost and expense and shall endorse its
insurance policies to include all matters arising out of such areas.
53. Environmental Matters. (a) Tenant represents that the list attached
hereto as Exhibit F, is a complete and accurate list of chemicals and hazardous
materials, including approximate quantities, to be used and stored in or about
the Premises. The amounts of chemicals and hazardous materials will be limited
to quantities necessary for the Tenant's day to day operations.
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Landlord is relying on the list in Exhibit F in not requiring Gradual Pollution
and/or Contamination Liability Insurance. Tenant shall provide Landlord with an
annual statement certified by an officer of Tenant that the chemicals, hazardous
materials, procedures and equipment (including but not limited to certification
of air handling units [bio-safety cabinets with HEPA filtered air pursuant to
Exhibit F]), listed on Exhibit F remain substantially the same with respect to
risk, quantities and characteristics. In addition, should Tenant's operation
change such that any additional chemicals and hazardous materials are utilized
or quantities of such items required for Tenant's operation will be
significantly larger than those stipulated in Exhibit F, Tenant shall provide
Landlord written notice prior to any such change, and Landlord shall have the
right to require Tenant to obtain and maintain Gradual Pollution and/or
Contamination Insurance. Tenant shall provide Landlord with all current, third
party contracts for handling, use, storage and disposal of all chemicals and
hazardous materials used and/or stored by Tenant on the Property, and make
available to Landlord any manifests, records or other documentation related
thereto for Landlord's inspection. Tenant shall allow Landlord or its agents,
prospective lenders, insurance agents and environmental auditors or consultants,
to inspect the Premises or any other area utilized by Tenant for the use and/or
storage of chemicals and hazardous materials on the Property, or records and
procedures related thereto, upon reasonable prior notice to Tenant.
(b) With at least two (2) business days' prior oral or written notice
(except in the event of an emergency where no notice shall be required),
Landlord's environmental consultant may inspect the Premises or any other area
on Landlord's Property utilized by Tenant, on an annual basis (unless Tenant is
not in compliance with this Lease, then on a quarterly basis until Tenant is in
compliance herewith) and within ninety (90) days of the expiration or earlier
termination of this Lease, and the Tenant's records and procedures regarding the
Tenant's storage, use, and disposal of chemicals and hazardous materials within
the Premises. If Landlord's environmental consultant finds Tenant to be in non-
compliance with the requirements hereof in a manner which, in the consultant's
reasonable opinion, may adversely affect the Property, Tenant shall reimburse
Landlord, as Additional Rent pursuant to the provisions of this Lease, for the
cost of that inspection and for any subsequent inspection until Tenant is in
compliance as determined by the environmental consultant. Further, in the event
that the Landlord's environmental consultant finds that the Tenant is not in
compliance with any applicable law, regulation, or codes regarding the storage,
use or disposal of chemicals or hazardous materials, such non-compliance shall
constitute a default under this Lease.
(c) Tenant shall defend, indemnify, and hold Landlord and Landlord's agents,
officers, directors, employees, and contractors harmless against and from any
and all injuries, costs, expenses, liabilities, losses, damages, injunctions,
suits, actions, fines, penalties, and demands of any kind or nature (including
reasonable attorneys fees) occasioned by or arising out of or relating to any
environmental pollution, damage, condition or problem arising from the presence
of any hazardous substances, asbestos or other toxic waste as defined in any
federal, state, or municipal governmental or quasi- governmental laws, rules,
regulations, or ordinances in or about the Premises, the Building or the
Property in violation of law that are existing in the Premises, the Building or
the Property not caused by Landlord's negligent act or omission. The
indemnification herein shall survive the expiration or earlier termination of
this Lease.
54. License for Early Partial Occupancy. Tenant desires to occupy
approximately ten thousand (10,000) square feet of the Premises, as shown on
Exhibit A-1 ("Early Occupancy Space"), on or about August 1, 1997, for the
purpose of controlled storage of biomedical specimens relating to Tenant's use.
Landlord hereby grants Tenant the right to enter upon and occupy the Premises
for said purpose upon the following conditions:
a. Tenant shall, at Tenant's sole cost and expense, apply for and obtain
all governmental permits and approvals necessary to occupy the Premises for the
use set forth herein.
b. Landlord shall notify Tenant within five (5) days of delivery of the
Early Occupancy Space that the same is ready for Tenant's occupancy. The term
of the license granted herein shall commence on the date Landlord delivers the
Early Occupancy Space to Tenant and shall expire on the date the Premises are
delivered to Tenant in accordance with Article 47 of the Lease.
c. At least one (1) day prior to the date Tenant takes possession of the
Early Occupancy Space, Tenant shall pay Landlord Rent in an amount equal to
$361.11 per diem (1/30th of the monthly amount), payable in equal monthly
installments of $10,833.33, in advance, on the first day of each calendar month
included in the term of this license. For any portion of a calendar month
included at the beginning of the term of this license, Tenant shall pay the per
diem installment as set forth above for such portion, payable on the first day
of such portion. If this license expires prior to the end of a full calendar
month, Landlord shall apply
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any overpayment of Rent payable hereunder, to the Base Rent then due under the
Lease. Tenant's obligation to pay all Operating Costs for the operation of the
Building as a result of Tenant's use of the Premises as provided herein, and
21.58% of Real Estate Taxes based on the Early Occupancy Space pursuant to
Article 5 of the Lease shall commence on the date Tenant takes possession of the
Early Occupancy Space, however, such costs shall only consist of actual
incremental Operating Costs in excess of what Landlord would have incurred but
for Tenant's occupancy.
d. Tenant shall defend, indemnify and save Landlord harmless from and
against all claims, liabilities, suits, fines, penalties, damages, losses, fees,
costs and expenses, including attorney fees, which may be imposed upon, incurred
by, or served against Landlord by reason of:
(i) any work or thing done by or on behalf of the Tenant, or any of
its agents, contractors, subcontractors, servants, employees, licensees, or
invitees, in or about the Premises or any parts thereof;
(ii) any use, occupation, condition, or operation by the Tenant, or
any of its agents, contractors, subcontractors, servants, employees, licensees,
or invitees, in or about the Premises or any part thereof, or any passageway or
space adjacent thereto, or elsewhere in the Premises or the Building;
(iii) any act or omission on the part of the Tenant, or any of its
agents, contractors, subcontractors, servants, employees, licensees, or
invitees;
(iv) any occurrence, accident, injury (including death), or damage,
directly or indirectly caused by the Tenant or any of its agents, contractors,
subcontractors, servants, employees, licensees, or invitees to any person or
property carried in, or about the Premises or any part thereof, or in or about
the Building; and
(v) any lien arising as a result of any of Tenant's actions or
omissions with respect to its activities on or with respect to the Premises.
This indemnity shall extend to any include the cost and expenses, including
reasonable attorney fees, incurred by Landlord in enforcing this indemnity.
e. Prior to Tenant's entry into the Premises, Tenant shall deliver to
Landlord evidence that Tenant has obtained public liability insurance, with an
insurer and having limits of coverage as defined in the Lease, covering Tenant's
activities in the Premises and the Building, with contractual indemnity coverage
with respect to Tenant's indemnity obligations under this Article 54, and which
names Landlord as an additional insured with respect to claims arising out of
Tenant's activities and occupancy in the Premises and the Building pursuant to
this Article.
f. Tenant acknowledges that any of Tenant's equipment, or other
materials stored in the Premises or improvements made to the Premises by Tenant,
are at Tenant's risk and Tenant hereby waives any claim for improvements,
damages, expenses or costs incurred in respect of Tenant's activities in or use
of the Premises during the this early partial occupancy period. The Tenant
shall not make any alterations to the Premises unless such alterations have been
approved by Landlord in writing. Tenant shall repair any damage to the
Premises or the Building resulting from activities in or use of the Premises
and the Building conducted by or on behalf of Tenant with respect to this
Article.
g. Tenant's obligations under this Article 54 shall survive the
termination of this license.
h. If the license herein is terminated, Tenant hereby agrees to vacate
and quit the Premises, and return the same in good condition, reasonable wear
and tear excepted, and the Tenant further agrees to cause all of its agents,
contractors, subcontractors, servants, employees, licensees, and invitees to
vacate and quit the Premises upon termination of this license.
i. Tenant shall not interfere with Landlord's Work and if Landlord or
its general contractor determine in their reasonable discretion that Tenant, as
a result of its activities or occupancy of the Premises pursuant to this
Article, has delayed or interfered with Landlord's Work, then (i) Landlord may
require that Tenant immediately cease any activity or occupancy of the
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Premises causing, or which may cause, any delay or interference with Landlord's
Work; and/or (ii) in such event, the Rent Commencement Date pursuant to Article
2 of this Lease shall be accelerated for each day Landlord's Work is delayed.
j. Notwithstanding the foregoing to the contrary, this license may be
revoked by Landlord at any time by written notice to Tenant if Tenant fails to
comply in all respects with the terms, covenants and conditions set forth
herein, as determined by Landlord, in Landlord's discretion.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease under seal on
the day and year first above written.
ATTEST/WITNESS: LANDLORD:
B.F. SAUL REAL ESTATE INVESTMENT TRUST
By: /s/ B.F. Saul (SEAL)
----------------------------
Name (Print):
Title:
ATTEST: TENANT:
BBI-BIOTECH RESEARCH LABORATORIES, INC.,
a Massachusetts corporation
/s/Richard T. Schumacher By:/s/Kevin W. Quinlan (SEAL)
- ------------------------ ----------------------------
Name (Print):
Title: Senior Vice President
(corporate seal)
Tenant's Tax I.D. Number:04-315-2484
-----------
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SECRETARY'S CERTIFICATE
I,_________________________ , Secretary of BBI-BIOTECH RESEARCH LABORATORIES,
INC., a Massachusetts corporation, do hereby certify (i) that the foregoing and
annexed Lease was executed and delivered pursuant to, and in strict conformity
with the provisions of resolutions of the Board of Directors of said Corporation
validly adopted at a regularly called meeting of said Board of Directors, and
that a quorum was present at said meeting (or validly adopted by unanimous
written consent of said Board of Directors in lieu of a meeting), in conformity
with the laws of the state of incorporation of said Corporation; and (ii) that
the following is a true, correct and complete reproduction of such resolutions:
RESOLVED: That __________________ ____________________________
(Name) (Title)
of the Corporation, shall be and is hereby authorized and empowered, for and on
behalf of the Corporation, to execute, acknowledge and deliver the foregoing and
annexed Lease between B.F. Saul Real Estate Investment Trust, as Landlord, and
BBI-Biotech Research Laboratories, Inc., as Tenant, for those certain Premises,
containing approximately Twenty-Five Thousand (25,000) rentable square feet of
space, located in the Building at 215 Perry Parkway, Avenel Business Park,
Gaithersburg, Maryland, at an annual Initial Base Rent of approximately Three
Hundred Twenty-Five Thousand and 00/100 Dollars ($325,000.00), as well as any
and all related documents, in order to expeditiously provide for the leasing of
such Premises, and in so doing, to make any and all related changes therein or
modifications thereof as he, in his sole discretion, acting for and on behalf of
the Corporation, shall deem necessary or advisable, and all of the officers of
the Corporation are hereby authorized, directed and empowered to do any and all
acts or things as shall be necessary or advisable in order to effectuate the
foregoing resolution.
/s/Richard T. Schumacher Assistant Clerk
- --------------------------
(Corporate Seal)
PRINTED NAME: Richard T. Schumacher
---------------------
Date: May 6, 1997
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CORPORATE GUARANTY
FOR VALUE RECEIVED, and in consideration for, and as an inducement to
Landlord to enter into the foregoing Lease with BBI-Biotech Research
Laboratories, Inc., a Massachusetts corporation, dated the __________ day of
__________________________, 1997, the undersigned hereby guarantees to Landlord,
its legal representatives, successors and assigns, the payment of the rent,
additional rent and all other payments to be made by Tenant under said Lease and
the full performance and observance by Tenant of all the other terms,
covenants, conditions and agreements (including the Rules and Regulations)
therein provided to be performed and observed by Tenant for which the
undersigned shall be jointly and severally liable with the Tenant, without
requiring any notice of non-payment, non-performance or non- observance, or
proof of notice or demand, whereby to charge the undersigned, all of which the
undersigned hereby expressly waives, and the undersigned expressly agrees that
Landlord may proceed against the undersigned separately or jointly before or
after or simultaneously with proceeding against Tenant for default and that
this Guaranty shall not be terminated, affected or impaired in any way or
manner whatsoever by reason of the assertion by Landlord against Tenant of any
of the rights or remedies reserved to Landlord pursuant to the provisions of
the said Lease, or by reason by summary or other proceedings against Tenant,
or by the omission of Landlord to enforce any of its rights against Tenant, or
by reason of any extension of time or indulgence granted by Landlord to Tenant.
The undersigned further covenants and agrees (i) that it will be bound by all
the provisions, terms, conditions, restrictions and limitations contained in
said lease, the same as though Guarantor was named therein as Tenant; and
(ii) that this Guaranty shall be absolute and unconditional and shall remain
and continue in full force and effect as to any renewal, extension, option,
amendment, additions, assignment, sublease, transfer, or other modification
of said lease, whether or not the undersigned shall have knowledge or have
been notified of or agreed or consented to any such renewal, extension,
option, amendment, addition, assignment, sublease, transfer, or other
modifications of said lease. Each signatory hereto shall be individually
bound by the terms of this Guaranty whether or not any other party or person
has executed the same. If Landlord at any time is compelled to take any
action or proceeding in court or otherwise to enforce or compel compliance
with the terms of this Guaranty, the undersigned shall, in addition to any
other rights or remedies to which Landlord may be entitled hereunder or as
a matter of law or in equity, be obligated to pay all costs, including
attorneys' fees, incurred or expended by Landlord in connection therewith.
All obligations and liabilities of Guarantor pursuant to this Guaranty shall
be binding upon the successors and assigns of the undersigned signatory.
Guarantor further agrees, at any time and from time to time, within
five (5) days' after written notice by Landlord, to deliver to Landlord its
most recent financial statement, which shall not, in any event, be more than
ninety (90) days old. If Guarantor files quarterly and annual statements with
the Securities and Exchange Commission, then Guarantor's most recent "10-Q"
(or, if applicable, "10-K") statement shall be supplied to Landlord. If
Guarantor has its financial statements audited on an annual basis, then
Guarantor shall supply Landlord with its most recent audited statement and
with its most recent unaudited financial statement, certified to be true and
correct by Guarantor's chief financial officer. If Guarantor does not
regularly have its financial statements audited, then Guarantor shall supply
Landlord with its most recent unaudited financial information, certified to
be true and correct by Guarantor's chief financial officer, which information
shall not, in any event, be more than ninety (90) days old. If Guarantor
does not regularly have financial statements prepared, then Guarantor shall
supply Landlord with such financial information respecting the financial
condition of Guarantor as Landlord may reasonably require including,
without limitation, copies of Guarantor's state and federal quarterly and
annual income tax reports and statements, certified to be true and correct by
Guarantor or Guarantor's chief financial officer.
As further inducement to Landlord to make and enter into said Lease, and in
consideration thereof, the Landlord and the undersigned covenant and agree that
in any action or proceeding brought on, under or by virtue of this Guaranty, the
Guarantor shall and hereby does waive trial by jury. This Guaranty shall be
governed by and construed in accordance with the laws of the state in which the
property demised under the said lease is located.
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WITNESS the following signatures this 6th day of May , 1997.
------ -------
ATTEST: GUARANTOR:
Boston Biomedica, Inc., a MA corporation
------
/s/Richard T. Schumacher By: /s/ Kevin W. Quinlan
- ------------------------ --------------------
Printed Name: Kevin Q. Quinlan
----------------
Title: Senior Vice President
---------------------
(corporate seal) Address:_______________________________
_______________________________
_______________________________
Tax I.D. No. 04-2652826
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SECRETARY'S CERTIFICATE
-----------------------
I, ____________________________________, Secretary of Boston Biomedica, Inc., a
_________________ corporation do hereby certify (i) that the foregoing and
annexed Guaranty was executed and delivered pursuant to, and in strict
conformity with the provisions of resolutions of the Board of Directors of said
corporation validly adopted at a regularly called meeting of said Board of
Directors, and that a quorum was present at said meeting (or validly adopted by
unanimous written consent of said Board of Directors in lieu of a meeting), in
conformity with the laws of the state of incorporation of said Corporation; and
(ii) that the following is a true, correct and complete reproduction of said
resolution:
RESOLVED: That ________________________________, President of the
Corporation, shall be, and is hereby authorized and empowered, for and
on behalf of the Corporation, to execute, acknowledge and deliver the
foregoing and annexed Guaranty of the Lease by and between B.F. Saul
Real Estate Investment Trust, as Landlord, and BBI-Biotech Research
Laboratories, Inc., as Tenant, for those certain Premises located at 215
Perry Parkway, Avenel Business Park, Gaithersburg, Maryland, as well as
any and all related documents, in order to expeditiously provide for the
leasing of such premises, and, in so doing, to make any and all changes
therein or modifications thereof as he, in his sole discretion, acting
for and on behalf of the Corporation, shall deem necessary or advisable,
and all of the officers of the Corporation are hereby authorized,
directed and empowered to do any and all acts or things as shall be
necessary or advisable in order to effectuate the foregoing resolution.
/s/Richard T. Schumacher , Ass't Clerk
------------------------
Printed Name: Richard T. Schumacher
---------------------
Date: 5/5/97
------
(corporate seal)
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EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
Name Jurisdiction of Organization
- ---- ----------------------------
<S> <C>
BBI Clinical Laboratories, iNC. Massachusetts
BBI-Biotech Research Laboratories, Inc. Massachusetts
BBI-Source Scientific, Inc. Massachusetts
</TABLE>
EXHIBIT 11
BOSTON BIOMEDICA, INC. AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF INCOME PER SHARE
WEIGHTED AVERAGE SHARES
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
----------------------- -------------------------
1997 1996 1997 1996
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Average common stock outstanding 4,395,918 2,636,309 4,388,045 2,625,241
Net effect of dilutive common stock
equivalents-based on treasury stock
method using average market price 455,705 623,044 443,702 623,044
Issuance of "cheap stock" - 4,358 - 4,358
--------- --------- --------- ---------
4,851,623 3,263,711 4,831,747 3,252,643
========= ========= ========= =========
Net income $175,690 $179,407 $323,448 $82,869
========= ========= ========= =========
Net income per share 0.04 0.06 0.07 0.03
========= ========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,777,048
<SECURITIES> 0
<RECEIVABLES> 3,751,119
<ALLOWANCES> 361,540
<INVENTORY> 4,560,927
<CURRENT-ASSETS> 14,346,844
<PP&E> 5,496,858
<DEPRECIATION> 2,302,962
<TOTAL-ASSETS> 20,098,647
<CURRENT-LIABILITIES> 3,268,202
<BONDS> 34,055
0
0
<COMMON> 15,396,125
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 20,098,647
<SALES> 4,543,912
<TOTAL-REVENUES> 8,858,003
<CGS> 2,327,084
<TOTAL-COSTS> 8,515,591
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 539,082
<INCOME-TAX> 215,634
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 323,448
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
