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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file number 340-23520
QUINTILES TRANSNATIONAL CORP.
(Exact name of registrant as specified in its charter)
North Carolina 56-1714315
(State of incorporation) (I.R.S. Employer Identification Number)
4709 Creekstone Drive, Suite 300
Durham, North Carolina 27703-8411
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (919) 941-2000
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. [ ]
The aggregate market value of the registrant's Common Stock at March
12, 1997 (the most recent practicable date) held by those persons deemed by the
registrant to be non-affiliates was approximately $1,531,423,095.
As of March 12, 1997 (the most recent practicable date), there were
34,792,239 shares of the registrant's Common Stock, $.01 par value per share,
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Where Incorporated
- -------- ------------------
1. Annual Report to Shareholders for the year ended
December 31, 1996 Part II
2. Proxy Statement for the Annual Meeting of
Shareholders to be held April 30, 1997 Part III
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QUINTILES TRANSNATIONAL CORP.
Form 10-K Annual Report
INDEX
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Page
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Part I....................................................................................3
Item 1. Business.......................................................................3
Item 2. Properties....................................................................16
Item 3. Legal Proceedings.............................................................17
Item 4. Submission Of Matters To A Vote Of Security Holders...........................17
Part II..................................................................................17
Item 5. Market For Registrant's Common Equity And Related Stockholder Matters.........18
Item 6. Selected Financial Data.......................................................18
Item 7. Management's Discussion And Analysis Of Financial Condition And Results
Of Operations.................................................................18
Item 8. Financial Statements And Supplementary Data...................................18
Item 9. Changes In And Disagreements With Accountants On Accounting And
Financial Disclosure..........................................................18
Part III.................................................................................18
Item 10. Directors And Executive Officers Of The Registrant...........................18
Item 11. Executive Compensation.......................................................18
Item 12. Security Ownership Of Certain Beneficial Owners And Management...............18
Item 13. Certain Relationships And Related Transactions...............................18
Part IV..................................................................................19
Item 14. Exhibits, Financial Statement Schedules, And Reports On Form 8-K.............19
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PART I
ITEM 1. BUSINESS
GENERAL
Quintiles Transnational Corp. (the "Company") is a leading provider of
full-service contract research, sales and marketing services to the global
pharmaceutical, biotechnology and medical device industries. Supported by its
extensive information technology capabilities, the Company provides a broad
range of fully-integrated contract services in order to accelerate the time from
discovery to peak market acceptance of a new therapy by offering traditional
contract research services as well as contract sales and marketing services. In
addition, the Company also supports the developing information needs of the
healthcare industry by providing health economics and healthcare policy
consulting and disease and health information management services.
Since its inception in 1982, the Company has continued to expand the
scope of its services and its geographic presence to support the needs of its
clients on a worldwide basis. The Company has implemented a number of strategic
initiatives to broaden its array of services and create new opportunities for
growth. In November 1996, the Company completed a share exchange for all of the
outstanding shares of Innovex Limited ("Innovex"), an international contract
services organization specializing in contract research, sales and marketing of
new therapies for pharmaceutical companies. Innovex's contract sales and
marketing and clinical research activities are concentrated on the perimarketing
phase of product life, which the Company defines as the period from two years
before to two years after regulatory approval. Innovex enables the Company to
complement its clinical research focus on obtaining regulatory approval with
services designed to assist clients in achieving market penetration of new
therapies. Accordingly, with the addition of Innovex, the Company is now able to
provide late stage clinical trials and product launch services to clients during
a critical and costly stage of bringing a product to market.
Also in November 1996, the Company acquired BRI International, Inc.
("BRI"), a leading international contract research firm specializing in medical
device development and regulatory compliance consulting. The addition of BRI
allows the Company to offer contract services to medical device developers, and
consulting services relating to good manufacturing practices ("GMP"), good
clinical practices ("GCP") and good laboratory practices ("GLP"). In May 1996,
the Company acquired the operating assets of Lewin-VHI, Inc., a
nationally-recognized healthcare consulting firm, and formed The Lewin Group,
Inc. ("Lewin") as a new subsidiary of the Company. Combined with Benefit
International, a firm specializing in pharmacoeconomic and quality of life
evaluations that was acquired by the Company in May 1995, Lewin serves as the
foundation for the Company's efforts to offer broad-based disease and health
information management services. In February 1996, the Company acquired PMC
Contract Research AB ("PMC"), a contract research organization ("CRO") located
in Uppsala, Sweden which has extensive clinical trials management expertise as
well as a Phase I clinical trial testing unit and an analytical laboratory.
This acquisition enabled the Company to expand its ability to provide drug
development services in Scandinavia and position itself for further growth in
that important region for drug development. Also in 1996, in order to increase
its capacity in clinical trial drug formulation, manufacturing, packaging and
distribution, the Company began construction of a 171,000 square foot facility
in Bathgate, Scotland. The Bathgate facility also will house a clinical data
management center.
To facilitate the integration of these acquisitions and to capitalize
on the synergies each acquisition provides, the Company recently reorganized
into three operating divisions which work
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closely together to provide the Company's services on an integrated basis. The
Contract Research Division covers services through Phase IIIa clinical trials,
including study design, clinical data management and biostatistical analysis,
laboratory services, formulation and packaging of clinical trial drugs,
pre-clinical services, regulatory affairs and medical device consulting. The
Innovex Division includes perimarketing clinical studies in Phases IIIb and IV,
as well as the Company's pharmaceutical sales and marketing services. Finally,
the Lewin-Benefit Division encompasses the Company's health economics and
healthcare policy consulting and disease and health information management
services. The divisions provide an organizational framework for the Company to
cross-sell its services and enable it to offer both product development and
sales and marketing services to clients. Accordingly, the Company believes its
breadth of services strengthens its competitive position as it looks to become
the provider of choice for pharmaceutical, biotechnology and medical device
companies and the broader healthcare industry.
INDUSTRY OVERVIEW
The CRO industry provides independent product development services
primarily for the pharmaceutical and biotechnology industries. Companies in
these industries outsource product development services to CROs in order to
manage the drug development process more efficiently and cost-effectively to
maximize the benefits in time and profit of patent-protected products. CROs
derive substantially all of their revenue from the research and development
expenditures of pharmaceutical and biotechnology companies. The CRO industry has
evolved from providing primarily pre-clinical services in the 1970s to a
full-service industry, offering services during the pre-clinical, clinical and
post-marketing phases of development for new therapies. In addition to managing
clinical trials, CROs provide scientific evaluations and analyze the results
according to good clinical and laboratory practices as required by the
applicable regulatory authorities. CROs serving the medical device industry
provide similar services designed to assist medical device developers in
obtaining regulatory approval.
The contract sales industry emerged in the 1980's, most notably in the
U.K. where regulatory cost containment pressure, the Company believes, led
pharmaceutical companies to search for a more cost-effective way to launch new
products. As a result, in order to convert high fixed costs into variable costs,
large pharmaceutical companies began to outsource their sales and marketing
activities related to product launch. The Company believes that contract sales
and marketing opportunities could emerge in the medical device and biotechnology
industries, as well.
The Company believes that there is a significant market opportunity for
companies focusing on the perimarketing phase of a product life cycle. The
perimarketing period is characterized by significant spending on large scale
clinical trials and sales staff requirements necessary to gain commercial
acceptance of products. The Company believes that organizations offering
integrated product development and sales and marketing services during the
perimarketing period will be able to further shorten the product development
cycle and accelerate market penetration so that drug sponsors can maximize the
duration of a drug's commercial life under patent protection, and therefore
maximize related revenue and return on investment. Accordingly, the Company
believes that such organizations will have a competitive advantage over
companies that compete only in either the CRO or contract sales industries.
TRENDS AFFECTING OUTSOURCING
Worldwide spending on pharmaceutical products and medical devices is
increasing due to a combination of factors, including aging populations and a
growing number of pharmaceutical and medical device products that provide
enhanced therapeutic benefits. At the same time, regulatory pressures and
pricing constraints have intensified as governments and private healthcare
payors seek to
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manage the growth of total healthcare expenditures. These developments have led
to intense competition in the pharmaceutical, biotechnology and medical device
industries, where innovation, more focused research and development, rapid
product introduction and cost-effectiveness have become key competitive factors.
The Company believes that in response to these developments, pharmaceutical,
biotechnology and medical device companies are increasingly outsourcing a
variety of activities associated with product development and pharmaceutical
sales and marketing to specialist third party service providers such as the
Company. Although outsourcing has been prevalent for long periods of time in
many industries, outsourcing to CROs and contract sales organizations is a
relatively recent trend and one that is still evolving. Through such
outsourcing, drug and medical device developers are attempting to reduce fixed
costs and accelerate the time to market, commercial acceptance and market
penetration of their products, with the aim of maximizing their return on
investment.
The Company believes that the following factors will contribute to the
increased use of drug development and contract sales and marketing outsourcing
and an expansion of the scope of services outsourced: (i) competitive pressures
to contain costs and accelerate time to market; (ii) globalization of the
marketplace; (iii) importance of sales and marketing activities; (iv) stringent
regulation and the need for sophisticated information technology; (v) the growth
in the biotechnology and genomics industries; and (vi) medical device industry
growth.
SERVICES
The Company provides globally integrated contract research, sales and
marketing services to the pharmaceutical, biotechnology and medical device
industries. The Company also offers health economics and healthcare policy
consulting and disease and health information management services.
The Company provides its clients with a continuum of services that
develops a laboratory discovery into a product sale. The Company is organized
into three operating divisions that interface with the client at complementary
points in the process. Within the divisional structure, there is considerable
overlap in specific services and a free flow of communication to best meet each
client's needs. Traditional CRO services range from pre-clinical testing to
Phase IIIa clinical trials and are handled by the Contract Research Division.
Once the product has reached Phase IIIb clinical trials and is therefore in the
perimarketing period, client services generally are provided by the Innovex
Division. These two divisions generate significant amounts of data that are
processed and analyzed by a sophisticated information technology system.
Information technology is at the core of the Company's operations because it
enhances the quality of the Company's services and allows the free flow of
information between the divisions that is key to maximizing the value delivered
by the Company. In addition, the data can be used and further developed by the
Lewin-Benefit Division, which handles disease and health information management.
The Company's services are described in greater detail below.
CONTRACT RESEARCH SERVICES
Clinical Trial Services.
The Company offers comprehensive clinical trials services which are the
basis for obtaining regulatory approval for drugs and medical devices. The
Company has specialized business units and extensive experience in the
therapeutic areas of the central nervous system, cardiovascular, infectious and
respiratory diseases as well as in the field of oncology. The Company also has
significant clinical trials experience in the therapeutic areas of
endocrinological, gastroenterological, genitourinary and musculoskeletal
diseases. The Company is experienced in managing large trials involving several
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thousand patients at several hundred sites and in multinational trials conducted
simultaneously in the Americas, Europe, the Asia-Pacific region and South
Africa.
The Company provides its clients with one or more of the following core
clinical trials services:
Study Design. The Company uses its broad development expertise to serve
its clients in the critical area of study design by assisting in the preparation
of the study protocol and design of case report forms ("CRFs"). The protocol
defines the medical issues to be examined, the number of patients required to
produce statistically valid results, the period of time over which they must be
tracked, the frequency and dosage of drug administration and the study
procedures. The study's success often depends on the protocol's ability to
predict correctly the requirements of the applicable regulatory authorities.
Investigator Recruitment. During clinical trials, the drug is
administered to patients by physicians, also referred to as investigators, at
hospitals, clinics or other locations, also referred to as sites. The Company's
ability to identify and recruit investigators with the appropriate expertise and
an adequate base of patients who satisfy the requirements of the study protocol
is critical to the success of the trial. The Company has access to several
thousand investigators who have conducted clinical trials worldwide for the
Company.
Study Monitoring. The Company provides study monitoring services which
include investigational site initiation, patient enrollment assistance and data
collection and clarification. Site visits serve to assure the quality of the
data which are gathered according to GCP and to meet the sponsors' and
regulatory agencies' requirements as specified in the study protocol.
Clinical Data Management and Biostatistical Services. The Company's
clinical data management and biostatistical services were the original
foundations of the Company, and the Company believes that they are two of the
Company's primary competitive strengths. The Company has extensive experience in
the United States and Europe in the creation of scientific databases for all
phases of the drug development process, including the creation of customized
databases to meet client-specific formats, integrated databases to support New
Drug Application ("NDA") submissions and databases in accordance with the United
States Food and Drug Administration ("FDA") and European specifications. The
Company believes that its global database capabilities are a significant
competitive advantage, particularly in large-scale multi-jurisdictional trials
involving thousands of patients at hundreds of sites. For example, during 1996
the Company managed the NDA submission process for six large-scale programs. The
largest program included approximately 3,000 patients located throughout the
United States, Europe and Japan.
Phase I Services. The Company has Phase I units located in London,
England, Uppsala, Sweden, Freiburg, Germany and Lenexa, Kansas. The services
offered by these units include dose ranging, bioavailability/bioequivalence
studies, pharmacokinetic/pharmacodynamic modeling, first administration to
humans, multiple dose tolerance, dose effect relationship and metabolism
studies. Because its Phase I units focus primarily on studies for new,
innovative products, rather than generics, the Company believes there is greater
opportunity for winning contracts for larger, later stage studies of such
innovative products.
In addition to the Company's core clinical trials management services,
the Company provides its clients with the following specialized services:
Centralized Clinical Trial Laboratory. In addition to providing
comprehensive safety and efficacy testing for clinical trials, the Company's
centralized clinical trial laboratory provides site-specific study materials,
customized lab report design and specimen archival and management on behalf
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of a study sponsor. The centralized laboratory offers a 48-hour turnaround time
for laboratory results and is capable of providing direct electronic integration
of laboratory data into safety and efficacy reports for NDA submissions.
Formulation, Manufacturing and Packaging Services. The Company offers
services in the design and development of pharmaceutical dose forms as well as
the manufacture of study drug and placebos and the appropriate packaging of
these for double blinded studies. These services can expedite the drug
development process because clinical trials are often postponed by delays in the
manufacture of study drug materials. The Company is expanding its capacity for
delivering these services through the construction of a new 171,000 square foot
facility at Bathgate, Scotland which the Company believes will be one of the
largest specialist clinical trial supplies units in the world. The Company
anticipates construction will be completed in late 1997. The facility also will
house a clinical data management center.
Pre-Clinical Services.
The Company's pre-clinical unit in Edinburgh, Scotland is part of a
drug development facility acquired by the Company in 1995 from Syntex
Pharmaceuticals Limited. This unit, combined with the Company's pre-clinical
facility in Ledbury, England, provides clients with a wide array of pre-clinical
and toxicology services. These services are designed to produce the data
required to identify, quantify, and evaluate the risks to humans resulting from
the manufacture or use of pharmaceutical and biotechnology products, including
developmental and reproductive toxicology, genetic toxicology, neurotoxicology,
carcinogenicity testing, pharmacology, analytical chemistry, pathology,
metabolism and pharmacokinetics.
Regulatory Affairs Services.
The Company provides comprehensive medical and regulatory services for
its pharmaceutical and biotechnology clients. The Company's medical services
include medical oversight of studies, review and interpretation of adverse
experiences, medical writing of reports and study protocols and strategic
planning of drug development programs. Regulatory services for product
registration include regulatory strategy design, document preparation,
consultation, and liaison with various regulatory agencies. The Company's
regulatory affairs professionals help to define the steps necessary to obtain
registration in the most expeditious manner. The Company is able to provide such
services in numerous countries to meet its clients' needs to launch products in
multiple countries simultaneously.
Medical Device Services.
With its acquisition of BRI in November 1996, the Company believes it
obtained a leading international contract research firm specializing in medical
devices and regulatory consulting. The Company's service offerings include:
review of global strategies for device development and introduction; identifying
regulatory requirements in targeted markets; clinical study design and planning;
data management; statistical analysis of report preparations; global clinical
trial management and monitoring capabilities; consultation on quality control
and quality assurance issues; regulatory filings; compliance with United States,
European and European Union regulations relating to medical devices; long-range
planning for multinational product launches; compliance with legislative
requirements for market access; post-marketing requirements; managing
relationships with national governments and regulatory authorities; European
pricing strategies; and European personnel and recruitment services.
PERIMARKETING SERVICES (INNOVEX)
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The Company provides services to the pharmaceutical industry with a
strategic focus on the commercial launch of new drugs. These services include
contract sales, marketing and Phases IIIb and IV clinical trials. The Company
believes that there is significant potential for future growth in the market for
such contract services. The Company is well-positioned to benefit from this
opportunity by cross-selling its sales and marketing outsourcing capabilities to
its contract research clients. Similarly, the Company believes that its existing
and new sales and marketing relationships will benefit its future contract
research opportunities.
Sales and Marketing Services.
The Company offers a flexible range of contract sales services which
are delivered through dedicated and syndicated sales teams. Dedicated sales
teams are comprised of sales representatives recruited by the Company in
accordance with client specifications to conduct sales efforts for a particular
client. Dedicated sales teams can be managed by the Company or can report
directly to the client, depending on client preference. In certain
circumstances, the Company can transfer an entire dedicated sales team to the
client for an additional placement fee. Syndicated sales teams promote a number
of drugs for different clients and are generally managed directly by the
Company. The Company's contract sales teams form a highly skilled network of
professionals that afford clients substantial flexibility in selecting the
extent and cost of promoting products as well as their level of involvement in
managing the sales effort.
The Company believes that speed of recruitment, quality of training and
management of sales representatives, supported by advanced information
technology, are key to providing clients with a sales force tailored to meet
their geographic and scheduling needs. The Company's ability to assemble a sales
team quickly is a product of combining the talents of experienced personnel for
screening and interviewing candidates with the use of information technology,
such as scanning and resume tracking systems, to expedite recruitment. In the
United States, the Company maintains an electronic database of 54,000 resumes
and has recruited as many as 125 sales representatives per week. In addition,
the Company has established relationships with specialist healthcare recruitment
agencies in Europe, particularly the U.K., and the United States to assist in
its recruiting efforts. A client-specific national sales force can be recruited
by the Company in as few as eight weeks, whereas the Company believes
pharmaceutical companies often take six to nine months to build an internal
sales force. Sound hiring procedures, such as the Company's candidate assessment
program, background screenings and drug testing programs, supplemented by the
Company's internal training and development programs, help to ensure the quality
of recruited personnel. Once the sales teams are assembled, the Company uses its
electronic territory management system ("ETMS") to enhance the speed,
effectiveness and accountability to clients of its contract sales activities.
This system is currently being used in the United States and is being
implemented in the U.K. The Company intends to further expand the use of ETMS in
the U.K. and internationally in 1997.
The Company also provides a range of specialized marketing services
specifically for pharmaceutical companies aimed at influencing the decisions of
patients and physicians and accelerating the acceptance of drugs into treatment
guidelines and formularies. Such services are typically purchased by the
marketing departments of pharmaceutical companies, however, marketing of new
products often receives substantial attention from senior executives, creating
an opportunity for the Company to interact with the strategists of the
pharmaceutical industry. The Company believes that its commercial orientation,
clinical and promotional expertise and international experience enable it to
tailor programs to specific client needs in a wide range of geographic markets
and therapeutic areas.
The market for outsourced contract sales and marketing services in the
pharmaceutical industry has been predominantly national in nature and is most
highly developed in the U.K. where the Company
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estimates that one out of every four pharmaceutical sales representatives is a
contract sales representative. In 1996, the Company derived $76.7 million of its
net revenue from the contract sales and marketing services of its U.K.
operations. The Company believes that contract sales and marketing generally is
more developed in the U.K. because regulatory cost containment pressures
occurred much earlier there than in other markets. Although there is a much
lower level of market penetration for outsourced sales and marketing services in
most other countries, the market has been growing, particularly in the United
States and Germany, where increased cost containment pressures have emerged. Net
revenue from the Company's contract sales and marketing services in the United
States and Germany for 1996 was $55.4 million and $14.4 million, respectively.
The Company also currently offers contract sales and marketing services in The
Netherlands, Sweden and Spain and is seeking to develop such services in other
parts of the world.
Contract Research Services.
The Innovex Division also provides contract research services,
primarily for Phase IIIb and Phase IV clinical trials during the perimarketing
period. The Company believes that the focus by the Innovex Division on Phase
IIIb and Phase IV trials complements the Company's sales and marketing
activities and enables the Company to integrate marketing considerations with
the design of late stage clinical research protocols. The Company believes this
coordination between clinical investigators and marketing professionals enables
it to add value during the sales and marketing of a product.
HEALTH ECONOMICS AND DISEASE INFORMATION MANAGEMENT SERVICES (LEWIN-BENEFIT)
The Company offers a wide range of health economics and disease
management information services to private and public sector clients to develop
solutions in the public policy, managed care and medical technology arenas of
healthcare. The Company's capabilities encompass health economics and healthcare
policy research and consulting and disease and health information management
services. The Company serves clients throughout the healthcare industry,
including federal and state government agencies, associations, hospitals,
physician groups, managed care organizations, industry suppliers, pharmaceutical
companies and insurers.
Healthcare Policy Research and Consulting.
The Company's healthcare policy research and healthcare consulting
services are designed to assist clients in evaluating healthcare programs and
policies and developing strategies for doing business in the highly regulated
healthcare environment. The Company has over 100 consultants, including
clinicians, economists, marketing professionals and former high-level government
executives with experience in the private sector, providing interdisciplinary
skills and expert capabilities in corporate strategic planning and management,
program and policy development, financial and cost-effectiveness analysis,
evaluation design, microsimulation modeling and data analysis across five
general practice areas: public health and finance policy, healthcare
organizations, economic analysis, managed care and medical technology. The
Company has access to more than 76 healthcare-related databases and has
developed the expertise to analyze such complex data to respond to its clients'
information needs. These services represent the core competencies of Lewin, a
nationally-recognized healthcare consulting firm acquired by the Company in
1996. The Company believes that it can leverage Lewin's reputation, expertise
and access to providers and policymakers to cross-sell its other health
economics and information management services beyond its current market.
Health Economics Consulting and Disease Information Management
Services.
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The Company's health economics consulting and disease information
management services focus on applying healthcare outcomes analysis to the
economic valuation of drugs and the treatment of diseases using data generated
from its clinical trials services. These services enable regulators, health-care
providers and third parties to assess the pricing and cost-effectiveness of new
medical therapies. The Company believes that such economic valuation of
therapies will play an important role in the future determination of drug
pricing. Additionally, France, Germany, the U.K., Canada and Australia require
cost-benefit analyses in regulatory submissions, and the Company believes that
other countries may adopt similar requirements in the future. The Company
believes that it will benefit from cross-selling these services to its
pharmaceutical and biotechnology clients which are subject to pressures from
managed care providers and regulators to demonstrate the cost-effectiveness of
new products.
Platform for Future Growth.
The Company is positioning itself to serve as a health information
interface between the users of healthcare services and the developers of
healthcare treatments by developing health information management services
designed to evaluate alternative healthcare solutions and provide third parties
with the tools to select among them. While hospitals and healthcare provider
organizations are placing intense pressure on the prices of products and
services, the public is highly concerned about the resulting quality of care.
The Company believes that purchasers of healthcare services, such as individuals
and employers, as well as public interest groups and governments, are becoming
increasingly interested in the value of care, as a function of its cost and
level of quality, and accordingly, are seeking ways to measure and weigh the
value of various healthcare alternatives.
INFORMATION TECHNOLOGY
All of the Company's services are enhanced by the Company's ongoing
investment in information technology. The Company believes that it was a pioneer
in the CRO industry in building a comprehensive global information technology
network for gathering, managing and analyzing clinical trials data. The
Company's information technology systems consist of a wide area network linking
approximately 50 local area networks and interconnecting over 6,000
microcomputers worldwide. The Company continues to improve and expand this
network, supported by the development of data management software to further
streamline the drug development process. The Company's network enables the
exchange of information among the Company's offices on a worldwide basis,
facilitating concurrent multinational clinical trials and regulatory
submissions. In addition, through the Company's innovative systems, clients are
able to gain direct access to key data with respect to their products in
testing, such as adverse events, CRFs and clinical laboratory testing results on
a current basis. Clients using the Company's sales and marketing services can
access information related to sales calls and provide feedback about the
performance of the Company's sales representatives. The Company's sales and
marketing services are further supported by its ETMS for planning, targeting,
reporting, analysis and communications of sales and marketing activities,
allowing the Company to centralize management of sales activities across a broad
geographic area. The Company currently uses this system in the United States and
is implementing it in the U.K. The Company intends to further expand the use of
ETMS in the U.K. and internationally in 1997. Additionally, the Company utilizes
an enhanced system for screening and tracking resumes as the cornerstone of its
efforts to rapidly recruit qualified sales representatives.
Some of the Company's internally developed systems which facilitate its
drug development services, sales and marketing services and overall business
management are described below:
INNTRAX(R) Computerized clinical trial administrative management
system.
QTONE(TM) Touchtone and voice response patient information system.
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QCANDA(TM) System for electronic submission and review of NDA data.
QSTAR(TM) Imaging technology process which eliminates time and
minimizes errors in data management by electronically
routing and tracking optically scanned CRFs.
QLIMS(TM) A laboratory data management system which provides
protocol-specific validity checks.
QNET(TM) System which allows electronic monitoring of laboratory test
data.
QNOW(TM) Client contact management and investigator database.
IBDIS Client news-tracking system.
The Company's information technology systems are supported by
approximately 170 employees worldwide who are committed to the ongoing
development of technology solutions to support the Company's services on a
worldwide basis.
CLIENTS AND MARKETING
The Company coordinates its business development efforts across its
service offerings through a central business development function. The Company
believes that it is best able to capitalize on the synergies arising from its
broad array of fully-integrated contract services by cross-selling its services
at a centralized level. In addition, the Company believes that this structure
allows the Company to serve its clients more effectively, while permitting the
divisions to focus on the services provided.
The Company's business development function directs the activities of
business development personnel in each of the Company's United States locations
as well as the Company's locations in the U.K., Belgium, Canada, France,
Germany, Ireland, Italy, Japan, The Netherlands, Argentina, Denmark, Australia,
Spain, Sweden and Singapore. Most of the Company's business development
personnel have technical or scientific backgrounds and many are physicians,
pharmacologists, statisticians or regulatory affairs professionals. The Company
coordinates its worldwide marketing efforts through a computerized system
integrated into each of the Company's offices that is actively marketing
services.
The Company provides its clinical research, sales and marketing
services on a global basis to the pharmaceutical, biotechnology and medical
device industries. In addition, the Company provides health economics and
healthcare policy consulting and disease and health information management
services to the United States healthcare industry and governments. For the year
ended December 31, 1996, approximately 43.8% of the Company's net revenue was
attributed to operations in the Americas, 53.8% to European operations and 2.4%
to Asia-Pacific operations. The Company has provided services during 1996 to 49
of the 50 largest pharmaceutical companies in the world, as ranked by 1995
healthcare revenue, and to the 11 largest biotechnology companies in the world,
as ranked by market capitalization in December, 1996. In 1996, the Company
represented over 300 clients, including some of the largest American, European
and Japanese pharmaceutical companies.
In 1996, Novartis AG accounted for 11.9% of the Company's consolidated
net revenue. The Company has in the past derived, and may in the future derive,
a significant portion of its net revenue from a relatively limited number of
major projects or clients. As pharmaceutical companies continue to outsource
large projects and studies to fewer full-service global providers, the
concentration of business could increase. The Company is likely to experience
such concentration in 1997 and in future years. The loss of any such client
could materially and adversely affect the Company.
COMPETITION
11
<PAGE> 12
The market for the Company's contract research services is highly
competitive, and the Company competes against traditional CROs, the in-house
research and development departments of pharmaceutical companies, as well as
universities and teaching hospitals. Within the CRO industry, there are several
hundred small, limited-service providers, several medium-sized firms, and only
a few full-service companies with global capabilities. The Company believes
that it is the only company offering full-service contract research services
with annualized net revenue exceeding $500 million. Consolidation in the CRO
industry will likely result in greater competition among the larger contract
research providers for clients and acquisition candidates. The Company's
primary contract research competitors include Covance Pharmaceutical Product
Development, Inc., PAREXEL International Corp. and ClinTrials Research, Inc. In
sales and marketing services, the Company competes against the in-house sales
and marketing departments of pharmaceutical companies and small local contract
sales organizations in each country in which it operates. The Company also
competes against consulting firms offering healthcare consulting services,
including boutique firms specializing in the healthcare industry and the
healthcare departments of large firms.
Competitive factors for contract research services include previous
experience, medical and scientific experience in specific therapeutic areas, the
quality of contract research, the ability to organize and manage large-scale
trials on a global basis, the ability to manage large and complex medical
databases, the ability to provide statistical and regulatory services, the
ability to recruit investigators, the ability to integrate information
technology with systems to improve the efficiency of contract research, an
international presence with strategically located facilities, financial
viability, and price. The primary competitive factors affecting contract sales
and marketing services are the ability to quickly assemble, train and manage
large qualified sales forces to handle broad scale launches of new drugs and
price. Competitive factors affecting healthcare consulting services include
experience, reputation, access to data, ability to analyze data and price. The
Company believes that it competes favorably in these areas. In addition, the
Company believes that the synergies arising from integrating contract research
services with contract sales and marketing services, supported by global
operations and information technology, differentiate the Company from its
competitors.
EMPLOYEES
The Company has approximately 7,375 employees, comprised of
approximately 3,325 in the Americas, 3,925 in Europe and Africa and 125 in the
Asia-Pacific region, and over 50 offices in 20 countries.
CONTRACT REVENUE
Most of the Company's contracts are fixed price, with some variable
components, and range in duration from a few months to several years. Generally,
a portion of the contract fee is paid at the time the project is initiated with
performance-based installments payable over the contract duration. Most
contracts are terminable upon 15-90 days' notice by the client, and typically
provide for termination or winding down fees. Also, some client contracts call
for the client to reimburse the Company at cost for certain items such as
investigator payments and travel. These reimbursed costs are deducted from
professional fee income in calculating net revenue. The Company recognizes net
revenue from its contracts on a percentage-of-completion or per diem basis as
work is performed. Consistent with prior years' practice, the Company considers
net revenue its primary measure of revenue growth.
BACKLOG
The Company believes that backlog is not a consistent indicator of
future results because backlog can be affected by a number of factors, including
the variable size and duration of projects,
12
<PAGE> 13
many of which are performed over several years. Additionally, projects may be
terminated by the client or delayed by regulatory authorities for many reasons,
including unexpected test results. Moreover, the scope of a project can change
during the course of a study.
The Company reports backlog based on anticipated net revenue from
uncompleted projects which have been authorized by the client, through a written
contract or otherwise. Once work begins on a project, net revenue is recognized
over the duration of the project. Using this method of reporting backlog, at
December 31, 1996, backlog was approximately $708 million, as compared to
approximately $415 million at December 31, 1995.
POTENTIAL LIABILITY
In connection with its provision of contract research services, the
Company contracts with physicians to serve as investigators in conducting
clinical trials to test new drugs on human volunteers. Such testing creates risk
of liability for personal injury to or death of volunteers, particularly to
volunteers with life-threatening illnesses, resulting from adverse reactions to
the drugs administered. Although the Company does not believe it is legally
accountable for the medical care rendered by third party investigators, it is
possible that the Company could be held liable for the claims and expenses
arising from any professional malpractice of the investigators with whom it
contracts or in the event of personal injury to or death of persons
participating in clinical trials. The Company also could be held liable for
errors or omissions in connection with the services it performs. In addition, as
a result of its Phase I clinical trials facilities, the Company could be liable
for the general risks associated with a Phase I facility including, but not
limited to, adverse events resulting from the administration of drugs to
clinical trial participants or the professional malpractice of Phase I medical
care providers. The Company believes that its risks are reduced by contractual
indemnification provisions with clients and investigators, insurance maintained
by clients and investigators and by the Company, various regulatory
requirements, including the use of institutional review boards and the
procurement of each volunteer's informed consent to participate in the study.
The contractual indemnifications generally do not protect the Company against
certain of its own actions such as negligence. The contractual arrangements are
subject to negotiation with clients and the terms and scope of such
indemnification vary from client to client and from trial to trial. The
financial performance of these indemnities is not secured. Therefore, the
Company bears the risk that the indemnifying party may not have the financial
ability to fulfill its indemnification obligations. The Company maintains
professional liability insurance that covers worldwide territories in which the
Company currently does business and includes drug safety issues as well as data
processing errors and omissions. The Company could be materially and adversely
affected if it were required to pay damages or bear the costs of defending any
claim outside the scope of or in excess of a contractual indemnification
provision or beyond the level of insurance coverage or in the event that an
indemnifying party does not fulfill its indemnification obligations.
GOVERNMENT REGULATION
The preclinical, laboratory and clinical trial supply services
performed by the Company are subject to various regulatory requirements designed
to ensure the quality and integrity of the data or products of these services.
The industry standard for conducting preclinical and laboratory testing is
embodied in the GLP regulations. The requirements for facilities engaging in
clinical trial supplies preparation, labeling and distribution are set forth in
the GMP regulations. GLP and GMP regulations have been mandated by the FDA and
the Department of Health in the United Kingdom, and adopted by similar
regulatory authorities in other countries. GLP and GMP stipulate requirements
for facilities, equipment, supplies and personnel engaged in the conduct of
studies to which these regulations apply. The regulations require that written,
standardized procedures are followed during the conduct of studies and for the
recording, reporting and retention of study data and records. To help assure
compliance, the Company has established Quality Assurance programs at its
preclinical, laboratory and clinical trial supply facilities which monitor
ongoing compliance with GLP and GMP regulations by auditing study data and
conducting regular inspections of study procedures.
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<PAGE> 14
The industry standard for the conduct of clinical research and
development studies is embodied in GCP regulations and guidelines. The FDA and
many other regulatory authorities require that study results and data be
submitted to such authorities to be based on studies conducted in accordance
with GCP provisions. These provisions include (i) complying with specific
regulations governing the selection of qualified investigators; (ii) obtaining
specific written commitments from the investigators; (iii) verifying that
patient informed consent is obtained; (iv) instructing investigators to
maintain records and reports; (v) verifying drug or device accountability;
and (vi) permitting appropriate governmental authorities access to data for
their review. Records for clinical studies must be maintained for specified
periods for inspection by the FDA during audits. Non-compliance with GCP
requirements can result in the disqualification of data collected during the
clinical trial.
The Company's standard operating procedures related to clinical
studies are written in accordance with regulations and guidelines appropriate
to the region where they will be used, thus ensuring compliance with GCP.
Within Europe, all work is carried out in accordance with the European
Community Note For Guidance "Good Clinical Practice for Trials on Medicinal
Products in the European Community." In addition, FDA regulations and
guidelines serve as a basis for the Company's North American standard operating
procedures. The Company's offices in the Asia-Pacific region have developed
standard operating procedures in accordance with their local requirements and
in harmony with the Company's North American and European operations. From a
transnational perspective, the Company has implemented common standard
operating procedures across regions to assure consistency whenever it is
feasible to do so.
The Company's sales and marketing services are subject to detailed and
comprehensive regulation in each geographic market in which it operates. Such
regulation relates, among other things, to the qualifications of sales
representatives and the use of healthcare professionals in sales functions. In
the U.K., the Company complies with the ABPI Code of Practice for the
Pharmaceutical Industry, which prescribes, among other things, an examination
that must be passed by sales representatives within two years of their taking up
employment, and which prevents the employment of healthcare professionals as
sales representatives. Similar guidelines are in effect in other countries
where the Company offers sales and marketing services.
The Company's U.S. laboratories are subject to licensing and regulation
under federal, state and local laws relating to hazard communication and
employee right-to-know regulations, the handling and disposal of medical
specimens and hazardous waste and radioactive materials, as well as the safety
and health of laboratory employees. All of the Company's laboratories are
operated in material compliance with applicable federal and state laws and
regulations relating to the storage and disposal of all laboratory specimens
including the regulations of the Environmental Protection Agency, the Nuclear
Regulatory Commission, the Department of Transportation, the National Fire
Protection Agency and the Resource Conservation and Recovery Act. The use of
controlled substances in testing for drugs of abuse is regulated by the United
States Drug Enforcement Administration (the "DEA"). All of the Company's
laboratories using controlled substances for testing purposes are licensed by
the DEA. The regulations of the United States Department of Transportation, the
Public Health Service and the Postal Service apply to the surface and air
transportation of laboratory specimens. The Company's laboratories also comply
with International Air Transport Association regulations, which govern
international shipments of laboratory specimens. Furthermore, when the materials
are sent to a foreign country, the transportation of such materials becomes
subject to the laws, rules and regulations of such foreign country.
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<PAGE> 15
In addition to its comprehensive regulation of safety in the workplace,
the United States Occupational Safety and Health Administration has established
extensive requirements relating to workplace safety for healthcare employers,
whose workers may be exposed to blood-borne pathogens such as HIV and the
hepatitis B virus. These regulations, among other things, require work practice
controls, protective clothing and equipment, training, medical follow-up,
vaccinations and other measures designed to minimize exposure to chemicals, and
transmission of blood-borne and airborne pathogens. Furthermore, relevant
employees of the Company receive initial and periodic training to ensure
compliance with applicable hazardous materials regulations and health and safety
guidelines. Although the Company believes that it is currently in compliance in
all material respects with such federal, state and local laws, failure to comply
could subject the Company to denial of the right to conduct business, fines,
criminal penalties and other enforcement actions.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table provides information on the executive officers of the
Company. There are no family relationships between any of the executive officers
or directors of the Company.
<TABLE>
<CAPTION>
Name Age Position with the Company
- ---- --- -------------------------
<S> <C> <C>
Dennis B. Gillings, Ph.D. 52 Chairman of the Board of Directors and Chief Executive Officer
Barrie S. Haigh 58 Vice Chairman of the Board of Directors and Chief Customer
Officer
Santo J. Costa 51 President, Chief Operating Officer and Director
Rachel R. Selisker 41 Chief Financial Officer, Executive Vice President Finance,
Treasurer and Director
Gregory D. Porter 40 Executive Vice President, Chief Administrative and Legal
Officer and Secretary
Ludo J. Reynders, Ph.D. 43 Chief Executive Officer, CRO Division, and Director
David F. White 53 Chief Executive Officer, Innovex Division
Lawrence S. Lewin 58 Chief Executive Officer, Lewin-Benefit Division, and Director
</TABLE>
Dennis B. Gillings, Ph.D. founded the Company in 1982 and has served as
Chief Executive Officer and Chairman of the Board of Directors since its
inception. From 1972-1988, Dr. Gillings served as a professor in the Department
of Biostatistics at the University of North Carolina at Chapel Hill. During his
tenure as a professor, he was active in statistical consulting for the
pharmaceutical industry. Dr. Gillings currently serves on the Board of Directors
of the University of North Carolina School of Public Health Foundation. Dr.
Gillings has been published widely in scientific and medical journals. Dr.
Gillings received a Diploma in Mathematical Statistics from the University of
Cambridge and a Ph.D. in Mathematics from the University of Exeter.
Barrie S. Haigh became Vice Chairman of the Board of Directors and
Chief Customer Officer in January 1997. Mr. Haigh founded Innovex in 1979 and
served as its Chairman until November 1996 when Innovex merged with the Company.
From 1979 until August 1994, Mr. Haigh served as Chief Executive Officer and
Chairman of the Board of Innovex. Previously, Mr. Haigh held management
positions with Syntex, Merck Sharp and Dohme. Mr. Haigh is a member of the Board
of Management of the Association of the British Pharmaceutical Industry and a
Fellow of the Royal Pharmaceutical Society of Great Britain for distinction in
the profession of Pharmacy. Mr. Haigh received a degree in pharmacy from
Bradford University.
Santo J. Costa became President and Chief Operating Officer of the
Company on April 1, 1994 and has been a director since April 1994. From July 1,
1993 to March 31, 1994, Mr. Costa directed the affairs of his own consulting
firm, Santo J. Costa & Associates, which focused on pharmaceutical and
15
<PAGE> 16
biotechnology companies. Prior to June 30, 1993, Mr. Costa served seven years at
Glaxo, Inc., a pharmaceutical company, as Senior Vice President Administration
and General Counsel and a member of the Board of Directors. Mr. Costa serves as
a director of NPS Pharmaceuticals. Mr. Costa received his law degree from St.
John's University.
Rachel R. Selisker, a certified public accountant, serves as Chief
Financial Officer, Executive Vice President Finance and Treasurer for the
Company and has been the Company's principal financial officer since 1987. Ms.
Selisker has served as a director of the Company since November 1995. From
1981-1987, Ms. Selisker was with the accounting firm of Oppenheim, Appel, Dixon
& Co. in Raleigh, North Carolina.
Gregory D. Porter has served as Executive Vice President, Chief
Administrative and Legal Officer, General Counsel and Secretary since January
1997. Mr. Porter joined the Company in September 1994 as Vice President, General
Counsel and Secretary. From 1982 to September 1994, Mr. Porter was in the
private practice of law. From 1981 to 1982, Mr. Porter clerked with the
Honorable William Matthew Byrne of the U.S. District Court for the Central
District of California. Mr. Porter received his law degree from the University
of North Carolina at Chapel Hill.
Ludo J. Reynders, Ph.D. serves as Chief Executive Officer of the
Company's CRO Division. He has managed European clinical operations since
joining the Company in 1988. Dr. Reynders has served as a director of the
Company since January 1, 1995. Prior to joining the Company, Dr. Reynders
managed the biostatistics and data management department of the Bristol-Myers
Co. Pharmaceutical Research and Development Division, located in Brussels,
Belgium. Dr. Reynders received an M.S. and Ph.D. in Applied Sciences from the
University of Louvain, Louvain, Belgium.
David F. White serves as the Chief Executive Officer of the Company's
Innovex Division. Mr. White joined Innovex as Chief Executive Officer in
September 1994 from ICI plc. At ICI, he had a broad career principally in the
pharmaceutical business. After successive appointments as Managing Director of
Stuart Pharmaceuticals from June 1984 to October 1985 and General Manager, ICI
Pharmaceuticals (U.K.) from November 1985 to December 1988, he was promoted to
lead the global plastics and acrylics businesses.
Lawrence S. Lewin serves as the Chief Executive Officer of the
Company's Lewin-Benefit Division and has served as the Chief Executive Officer
of The Lewin Group, Inc., a subsidiary of the Company, since May 1996. Mr. Lewin
has been a director of the Company since June 1996. Between November 1992 and
May 1996, Mr. Lewin served as the Chairman and Chief Executive Officer of
Lewin-VHI, Inc., a healthcare consulting firm specializing in performing
economic analyses, product profiles, and strategic development for healthcare
reform and medical reimbursement and the establishment of medical guidelines.
Mr. Lewin serves as a director of Apache Medical Systems, Inc. and as a member
of the advisory boards of the Hambrecht & Quist Healthcare Investors Fund and
the Hambrecht & Quist Life Sciences Fund. Mr. Lewin received an M.B.A. from
Harvard Business School.
ITEM 2. PROPERTIES
The Company has over 50 offices located in 20 countries. The Company's
executive headquarters and one of its operating units are located adjacent to
Research Triangle Park, North Carolina. The Company also leases facilities in
Mountain View, California; San Diego, California; San Francisco California;
Smyrna, Georgia; Lenexa, Kansas; Bethesda, Maryland; Gaithersburg, Maryland;
Rockville, Maryland; Cambridge, Massachusetts; Cranford, New Jersey; Parsippany,
New Jersey; Yardley, Pennsylvania; Arlington, Virginia; Fairfax, Virginia;
Buenos Aires, Argentina; Melbourne, Australia; North Sydney, Australia; Vienna,
Austria; Antwerp, Belgium; Brussels, Belgium; Louvain-La-
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<PAGE> 17
Neuve, Belgium; Mechelin, Belgium; Montreal, Canada; Copenhagen, Denmark;
Adelaide, England; Battle, England; Esher, England; Ledbury, England; London,
England; Bracknell, England; Marlow, England; Staines, England; Espon, Finland;
Paris, France; Gennevilliers, France; Neuilly sur seine, France; Strasbourg,
France; Freiburg, Germany; Neu-Isenberg, Germany (Frankfurt); Mannheim, Germany;
Weil am Rhein, Germany; Dublin, Ireland; Milan, Italy; Tokyo, Japan; Osaka,
Japan; Hoofddorp, The Netherlands; Leiden, The Netherlands; Schiedam, The
Netherlands; Auckland, New Zealand; Pretoria, South Africa; Edinburgh, Scotland;
Madrid, Spain; Barcelona, Spain; Uppsala, Sweden; China, Hong Kong and
Singapore. In addition, the Company owns a facility in Ledbury, England and
Lenexa, Kansas. Quintiles believes that its facilities are adequate for the
Company's operations and suitable additional space will be available when
needed.
ITEM 3. LEGAL PROCEEDINGS
No material legal proceedings are pending to which Quintiles, its
subsidiaries or any of their properties are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 26, 1996, a Special Meeting of the Shareholders of the
Company, at which a quorum was present, was held to approve (1) the issuance by
the Company of 9,214,239 shares (plus an additional 786,226 shares subject to
options) of the Company's Common Stock to the shareholders of Innovex; and (2)
an amendment to the Company's Amended and Restated Articles of Incorporation to
increase the number of authorized shares of the Company's Common Stock from
50,000,000 to 200,000,000.
The number of votes cast for, against or withheld, as well as the
number of abstentions and broker non-votes as to each matter referenced above
were as follows:
Votes Against Broker
Votes For or Withheld Abstentions Non-Votes
--------- ------------- ----------- ---------
Proposal 1 13,779,082 11,167 37,268 0
Proposal 2 9,551,296 4,239,287 36,934 0
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information relating to the market for the Company's Common Stock is
incorporated by reference from page 47 and page 50, "Security Information", of
the Company's 1996 Annual Report to Shareholders included as Exhibit 13 to this
report.
RECENT SALES OF UNREGISTERED SECURITIES
In November 1996, in connection with the share exchange with Innovex,
the Company issued an aggregate of 8,920,588 shares of Common Stock, which were
not registered under the Securities Act of 1933, as amended, to certain
shareholders of Innovex in exchange for their shares of Innovex. The issuance of
such shares was made pursuant to Section 4(2) of the Securities Act of 1933, as
amended, as a transaction not involving any public offering and in reliance upon
Regulation D under Section 4(2). The Company previously reported on a Current
Report on Form 8-K, dated November 22, 1996, the
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<PAGE> 18
issuance in the share exchange with Innovex of 293,651 shares of Common Stock in
compliance with Regulation S under the Securities Act of 1933, as amended.
ITEM 6. SELECTED FINANCIAL DATA
This information is incorporated by reference from page 20, "Selected
Consolidated Financial Data", of the Company's 1996 Annual Report to
Shareholders included as Exhibit 13 to this report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This information is incorporated by reference from pages 22-28,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", of the Company's 1996 Annual Report to Shareholders included as
Exhibit 13 to this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary financial information are
incorporated by reference from pages 29-48 of the Company's 1996 Annual Report
to Shareholders included as Exhibit 13 to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information on the Company's directors is incorporated by reference
from the Company's definitive proxy statement to be filed with respect to the
Annual Meeting of Shareholders to be held April 30, 1997. Information on the
Company's executive officers is included under the caption "Executive Officers
of the Registrant" on page 15 of this report.
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the Company's
definitive proxy statement to be filed with respect to the Annual Meeting of
Shareholders to be held April 30, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference from the Company's
definitive proxy statement to be filed with respect to the Annual Meeting of
Shareholders to be held April 30, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the Company's
definitive proxy statement to be filed with respect to the Annual Meeting of
Shareholders to be held April 30, 1997.
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<PAGE> 19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements. The following financial statements and
supplementary data included in the 1996 Annual Report to Shareholders, filed as
Exhibit 13 to this report, are incorporated by reference in Item 8 of this
report.
<TABLE>
<CAPTION>
Annual Report to
Financial Statements Form 10-K Page Shareholders Page
-------------------- -------------- -----------------
<S> <C> <C>
Consolidated Statements of Income for the years ended 17 29
December 31, 1996, 1995 and 1994
Consolidated Balance Sheets as of December 31, 1996 17 30-31
and 1995
Consolidated Statements of Cash Flows for the years 17 32-33
ended December 31, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity for the 17 34
years ended December 31, 1996, 1995 and 1994
Report of Independent Auditors 17 48
</TABLE>
(a)(2) Financial Statement Schedules. All applicable financial statement
schedules required under Regulation S-X have been included in the Notes to the
Consolidated Financial Statements.
(a)(3) Exhibits. The exhibits required by Item 601 of Regulation S-K are listed
below.
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<C> <S>
3.01(1) Amended and Restated Articles of Incorporation, as amended
3.02(2) Amended and Restated Bylaws
4.01(3) Indenture, dated as of May 17, 1996, between the Company and Marine Midland
Bank, as Trustee, with respect to the Company's 4.25% Convertible Subordinated
Notes due May 31, 2000
4.02 Amended and Restated Articles of Incorporation, as amended (see Exhibit 3.01)
4.03 Amended and Restated Bylaws (see Exhibit 3.02)
4.04(4) Specimen certificate for Common Stock, $0.01 par value per share
4.05(1) Form of the Company's 4.25% Convertible Subordinated Notes in Unrestricted
Global Form
</TABLE>
19
<PAGE> 20
<TABLE>
<C> <S>
4.06(1) Form of the Company's 4.25% Convertible Subordinated Notes in Certificated
Form.
4.07(3) Registration Rights Agreement, dated as of May 17, 1996, by and among the
Company, Goldman Sachs International and Smith Barney, Inc.
10.01(4) Agreement for the Development of Standardized Nomenclature, dated March 22,
1993, by and between the Company and the United States Food and Drug
Administration
10.02(4) Stock Purchase Agreement, dated June 7, 1991, by and among Thompson Clive
Investments plc, Midland Bank Trust Company Limited, as Trustee of the
Thompson Clive Growth Companies Fund, Midland Bank Trust Corporation
(Jersey) Limited, as Trustee of Thompson Clive Ventures, Midland Bank Trust
Corporation (Jersey) Limited, as Trustee of Thompson Clive Ventures L.P., and the
Company
10.03(4) Stock Purchase Agreement, dated October 29, 1992, by and among Thompson Clive
Investments plc, Midland Bank Trust Company Limited, as Trustee of the
Thompson Clive Growth Companies Fund, Midland Bank Trust Corporation
(Jersey) Limited, as Trustee of Thompson Clive Ventures, Midland Bank Trust
Corporation (Jersey) Limited, as Trustee of Thompson Clive Ventures L.P., and the
Company
10.04(4) Stock Purchase Agreement, dated July 28, 1993, by and between Thompson Clive
Investments plc and the Company
10.05(4)(5) Employment Agreement, dated February 22, 1994, by and between Dr. Dennis B.
Gillings and the Company
10.06(4)(5)(6) Employment Agreement, dated February 22, 1994, by and between Santo J. Costa
and the Company, as amended on November 4, 1994
10.07(5)(6) Employment Agreement, dated January 1, 1995, by and between Rachel R. Selisker
and the Company
10.08(4)(5) Employment Agreement, dated January 15, 1988, by and between Dr. Ludo
Reynders and Quintiles (UK) Limited
10.09(5) Employment Agreement, dated November 29, 1996, by and between Barrie S. Haigh
and the Company
10.10(5) Deed of Non-Competition, dated as of November 29, 1996, between Barrie S. Haigh
and the Company
10.11(5) Employment Agreement, dated May 13, 1996, by and between Lawrence S. Lewin
and The Lewin Group, Inc. (a wholly-owned subsidiary of the Company)
10.12(5) Service Agreement, dated March 31, 1993, between Innovex Holdings Limited and
Paul Knott
</TABLE>
20
<PAGE> 21
<TABLE>
<C> <S>
10.13(5) Deed of Non-Competition, dated November 29, 1996, between Paul Knott and the
Company
10.14(5) Service Agreement, dated September 2, 1994, between Innovex Holdings Limited
and David F. White
10.15(5) Deed of Non-Competition, dated November 29, 1996, between David F. White and
the Company
10.16(2)(5) Employment letter agreement, dated May 31, 1994, by and between Gregory D.
Porter and the Company
10.17(4)(5) Non-Qualified Employee Incentive Stock Option Plan
10.18(4)(5) Equity Compensation Plan
10.19(5)(6) Amended and Restated Employee Stock Ownership Plan and Trust
10.20(4)(5) Quintiles (UK) Limited Approved Profit Sharing Scheme
10.21(4)(5) Quintiles Ireland Limited Approved Profit Sharing Scheme
10.22(4)(5) Quintiles (UK) Limited Executive Share Option Scheme
10.23(2)(5) Quintiles Group Executive Share Option Scheme
10.24(5)(7) Quintiles Employee Stock Purchase Plan
10.25(5)(7) Quintiles/BRI Nonqualified Stock Option Plan
10.26(5)(7) Innovex Limited 1996 Unapproved Executive Share Option Scheme
10.27(5)(8) Quintiles/Lewin Stock Option Plan
10.28(6) Loan Agreement, dated August 31, 1994, between the Company and Branch Banking &
Trust Company, as amended August 31, 1996 and February 28, 1997 (amendments filed
herewith)
10.29(6) Form of Guaranty Agreement, dated August 31, 1994, by and between Branch
Banking & Trust Company and each of Quintiles Pacific, Inc., Quintiles, Inc.,
Quintiles Laboratories Limited and International Clinical Research Corporation
10.30(4) Lease, dated January 20, 1992, by and between Durham Park, operating as a Joint
Venture, Imperial Center, and Quintiles, Inc. as amended on April 6, 1992, April 16,
1992, May 12, 1992, May 13, 1992, March 10, 1993, and September 1, 1993
10.31(2)(6) Lease dated September 8, 1994, by and between Petula Associates Ltd. and
Quintiles, Inc., as amended on September 30, 1994, January 10, 1995, April 12,
1995 and August 11, 1995
</TABLE>
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<PAGE> 22
<TABLE>
<C> <S>
10.32(4) Lease Agreement, dated December 9, 1992, by and between South Bay/Copley Joint
Venture and the Company, as amended March 3, 1993
10.33(6) Lease, effective January 1, 1995, by and between The Norwich Union Life Insurance
Society, Earlsfort Centre and Quintiles Ireland Limited and guaranteed by Quintiles,
Inc.
10.34(4) Leases, dated December 1, 1993, by and between The Norwich Union Life Insurance
Society, Quintiles (UK) Limited, and the Company (as surety)
10.35(2) Lease, dated August 31, 1995, by and between California Public Employees'
Retirement System and International Clinical Research Corp., as amended October
25, 1995
10.36 Lease, dated November 6, 1996, by and between Seagate Technology, Inc. and
Innovex
10.37 Lease, dated December 20, 1996, by and between The Norwich Union Life
Insurance Society and Quintiles (U.K.) Limited
10.38 Lease, dated August 14, 1996, by and between PRUBETA-3 and Innovex, Inc.
10.39 Lease, dated November 30, 1995, by and between Lenexa Industrial Park, Inc. and
Innovex, Inc.
10.40 Sublease, dated January 18, 1996, by and between Legent Corporation and Innovex,
Inc.
10.41(9) Agreement for the Provision of Research Services and Lease of Business Assets
dated as of March 3, 1995, between Syntex Pharmaceuticals Limited, Quintiles
Scotland Limited, Quintiles (UK) Limited, and Roche Products Limited
10.42(2)(5) Consulting Agreement dated as of March 15, 1995 between the Company and A.M.
Pappas & Associates, L.L.C.
10.43(10) Share Exchange Agreement dated as of May 2, 1995 by and between Quintiles
Transnational Corp., Quintiles Holding S.A., ACTA, Eric Jacques Souetre, Pierre
Souetre, Jean Claude Souetre, Christophe Celerier, Paul Boilait, Caroline Boilait,
Debessa BV, Marc Riviere
10.44(10) Employment and Consulting Agreement dated as of May 2, 1995 between Quintiles
Inc. and Eric Jacques Souetre
10.45(10) Stock Option Agreement dated as of May 2, 1995 between Quintiles Transnational
Corp. and Eric Jacques Souetre
10.46(10) Covenant to Assist Buyer and Covenant Not to Compete with Buyer dated as of May
2, 1995 between Quintiles Transnational Corp. or it assignee, Quintiles Holding
S.A., and Eric Jacques Souetre
</TABLE>
22
<PAGE> 23
<TABLE>
<C> <S>
10.47(11) Share Purchase Agreement dated as of September 19, 1995 by and among Quintiles
Holdings Limited, TSI Corporation (the sole shareholder of G.D.R.U. Limited) and
Genzyme Transgenics Corporation
10.48(12) Merger Agreement, dated as of September 16, 1996, by and among the Company,
BRI Acquisition Corp. and BRI
10.49(13) Share Exchange Agreement, dated as of October 4, 1996, among Innovex, the
Company and the shareholders of Innovex
10.50(14) Registration Rights Agreement, dated as of November 29, 1996, by and among the
Company and the shareholders of Innovex
10.51(15) Supplemental agreement to Registration Rights Agreement by and among the
Company and Certain Shareholders Party Thereto, dated as of February 11, 1997
10.52(16) Asset Purchase Agreement, dated as of April 16, 1996, among The Lewin Group,
Inc., the Company, Lewin-VHI, Inc., Value Health, Inc., Lawrence S. Lewin and
Robert J. Rubin
10.53 Underwriting Agreement, dated March 6, 1997, by and between the Company and
Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, Smith Barney Inc. and
William Blair & Company, L.L.C., as representatives of the several Underwriters
named in Schedule 1 thereto
10.54 Underwriting Agreement (International Version), dated March 6, 1997, by and
between the Company and Goldman Sachs International, Morgan Stanley & Co.
International Limited, Smith Barney Inc. and William Blair & Company, L.L.C., as
representatives of the several Underwriters named in Schedule 1 thereto
13 Portions of the Annual Report to Shareholders for fiscal year ended December 31,
1996, which are incorporated herein by reference.
21 Subsidiaries of the Company
23 Consent of Ernst & Young LLP
99.01 Risk Factors relating to the Company
</TABLE>
- ----------
(1) Exhibit to the Company's Registration Statement on Form S-3
as filed with the Securities and Exchange Commission
(Registration No. 333-19009) effective February 21, 1997 and
incorporated herein by reference.
(2) Exhibit to the Company's Annual Report on Form 10-K as filed
with the Securities and Exchange Commission on March 25,
1996, as amended on May 16, 1996, and incorporated herein by
reference.
(3) Exhibit to the Company's Quarterly Report on Form 10-Q as
filed with the Securities and Exchange Commission on
August 15, 1996 and incorporated herein by reference.
23
<PAGE> 24
(4) Exhibit to the Company's Registration Statement on Form S-1
as filed with the Securities and Exchange Commission
(Registration No. 33-75766) effective April 20, 1994 and
incorporated herein by reference.
(5) Executive compensation plans and arrangements.
(6) Exhibit to the Company's Annual Report on Form 10-K as filed
with the Securities and Exchange Commission on March 30,
1995 and incorporated herein by reference.
(7) Exhibit to the Company's Registration Statement on Form S-8
as filed with the Securities and Exchange Commission
(Registration No. 333-16553) effective November 21, 1996 and
incorporated herein by reference.
(8) Exhibit to the Company's Registration Statement on Form S-8
as filed with the Securities and Exchange Commission
(Registration No. 333-03603) effective May 13, 1996 and
incorporated herein by reference.
(9) Exhibit to the Company's Current Report on Form 8-K as filed
with the Securities and Exchange Commission on March 20,
1995 and incorporated herein by reference.
(10) Exhibit to the Company's Current Report on Form 8-K as filed
with the Securities and Exchange Commission on May 9, 1995
and incorporated herein by reference.
(11) Exhibit to the Company's Current Report on Form 8-K as filed
with the Securities and Exchange Commission on September 19,
1995 and incorporated herein by reference.
(12) Exhibit to the Company's Registration Statement on Form S-4
as filed with the Securities and Exchange Commission
(Registration No. 333-12573) effective October 15, 1996 and
incorporated herein by reference.
(13) Exhibit to the Company's Current Report on Form 8-K as filed
with the Securities and Exchange Commission on October 11,
1996 and incorporated herein by reference.
(14) Exhibit to the Company's Current Report on Form 8-K as filed
with the Securities and Exchange Commission on December 6,
1996 and incorporated herein by reference.
(15) Exhibit to the Company's Current Report on Form 8-K as filed
with the Securities and Exchange Commission on March 5, 1997
and incorporated herein by reference.
(16) Exhibit to the Company's Current Report on Form 8-K as filed
with the Securities and Exchange Commission on April 23,
1996 and incorporated herein by reference.
(b) Reports on Form 8-K. The Company filed one report on Form 8-K, dated
October 6, 1996, and one report on Form 8-K, dated November 22, 1996,
during the three months ended December 31, 1996. The report on Form
8-K, dated October 6, 1996, reported the signing of a definitive share
exchange agreement with Innovex Limited, an international contract
pharmaceutical organization based in Marlow, United Kingdom and the
shareholders of Innovex. The Company also filed the Financial
Statements of the Innovex Companies, which comprise a combination of
Innovex PLC and Innovex Holdings Limited and its subsidiaries, as of
March 31, 1995 and 1996 and Report of Independent Auditors. The Company
also filed the Unaudited ProForma
24
<PAGE> 25
Combined Condensed Financial Information for the Registrant for the
years ended December 31, 1995, 1994 and 1993 and the six months ended
June 30, 1996 and 1995 reflecting the acquisitions of BRI and Innovex.
The report on Form 8-K, dated November 22, 1996, reported the
consummation of both the acquisition of BRI and the combination with
Innovex. No financial statements were included with such report. No
other reports on Form 8-K were filed during the quarter ended December
31, 1996. On January 16, 1997, the Company filed a report on Form
8-K/A, dated January 16, 1997, which included Unaudited Interim
Condensed Financial Statements of Innovex and BRI and Unaudited
ProForma Combined Condensed Financial Statements of the Company,
Innovex and BRI. On February 7, 1997, the Company filed a report on
Form 8-K, dated February 7, 1997, reporting certain information
regarding certain effects of governmental regulation of its business
and filing the Consolidated Financial Statements of the Company for the
fiscal year ended December 31, 1996. On March 5, 1997, the Company
filed a report on Form 8-K with respect to a supplemental agreement to
the Registration Rights Agreement filed as Exhibit 10.51 to this
report. No other reports on Form 8-K have been filed since that date.
FORWARD-LOOKING STATEMENTS
Information set forth in this Annual Report on Form 10-K contains
various "forward looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
which statements represent the Company's judgment concerning the future and are
subject to risks and uncertainties that could cause the Company's actual
operating results and financial position to differ materially. Such forward
looking statements can be identified by the use of forward looking terminology
such as "may", "will", "expect", "anticipate", "estimate", "believe", or
"continue", or the negative thereof or other various thereof or comparable
terminology.
The Company cautions that any such forward looking statements are
further qualified by important factors that could cause the Company's actual
operating results to differ materially from those in the forward looking
statements, including without limitation, the Company's dependence on certain
industries and clients, the management of its growth, the risks associated with
acquisitions, risks relating to contract sales services, competition within the
industry, the loss or delay of large contracts, dependence on personnel and
government regulation and the other Risk Factors described in Exhibit 99.01
attached to this report.
25
<PAGE> 26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in Durham, North Carolina,
on the 25th day of March, 1997.
QUINTILES TRANSNATIONAL CORP.
By: /s/ Dennis B. Gillings
-----------------------------------------
Dennis B. Gillings
Chairman of the Board of Directors and
Chief Executive Officer
26
<PAGE> 27
SIGNATURES AND POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Dennis B. Gillings and Rachel R. Selisker
and each of them, each with full power to act without the other, his true and
lawful attorneys-in-fact and agents, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully for all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Dennis B. Gillings, Ph.D. Chairman of the Board of Directors and Chief Executive March 25, 1997
- ----------------------------- Officer
Dennis B. Gillings, Ph.D.
/s/ Rachel R. Selisker Chief Financial Officer, Executive Vice President Finance, March 25, 1997
- ----------------------------- Treasurer and Director
Rachel R. Selisker
/s/ Robert C. Bishop, Ph.D. Director March 21, 1997
- -----------------------------
Robert C. Bishop, Ph.D.
/s/ Vaughn D. Bryson Director March 25, 1997
- -----------------------------
Vaughn D. Bryson
/s/ Santo J. Costa President, Chief Operating Officer and Director March 25, 1997
- -----------------------------
Santo J. Costa
/s/ Chester W. Douglass, Ph.D. Director March 25, 1997
- -----------------------------
Chester W. Douglass, Ph.D.
/s/ John G. Fryer, Ph.D. Director March 23, 1997
- -----------------------------
John G. Fryer, Ph.D.
/s/ Barrie S. Haigh Vice Chairman of the Board of Directors and Chief March 25, 1997
- -----------------------------
Barrie S. Haigh Customer Officer
/s/ Paul Knott, Ph.D. Senior Vice President, International Strategic Development, March 25, 1997
- ----------------------------- and Director
Paul Knott, Ph.D.
/s/ Lawrence S. Lewin Chief Executive Officer, Lewin-Benefit Division, and March 25, 1997
- -----------------------------
Lawrence S. Lewin Director
/s/ Arthur M. Pappas Director March 21, 1997
- -----------------------------
Arthur M. Pappas
Chief Executive Officer, CRO Division, and Director March , 1997
- -----------------------------
Ludo J. Reynders, Ph.D.
/s/ Eric J. Souetre President, Benefit International SNC, and Director March 25, 1997
- -----------------------------
Eric J. Souetre
/s/ Richard H. Thompson Director March 25, 1997
- -----------------------------
Richard H. Thompson
</TABLE>
27
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C> <C>
3.01(1) Amended and Restated Articles of Incorporation, as amended
3.02(2) Amended and Restated Bylaws
4.01(3) Indenture, dated as of May 17, 1996, between the Company and
Marine Midland Bank, as Trustee, with respect to the Company's
4.25% Convertible Subordinated Notes due May 31, 2000
4.02 Amended and Restated Articles of Incorporation, as amended (see
Exhibit 3.01)
4.03 Amended and Restated Bylaws (see Exhibit 3.02)
4.04(4) Specimen certificate for Common Stock, $0.01 par value per share
4.05(1) Form of the Company's 4.25% Convertible Subordinated Notes in
Unrestricted Global Form
4.06(1) Form of the Company's 4.25% Convertible Subordinated Notes in
Certificated Form.
4.07(3) Registration Rights Agreement, dated as of May 17, 1996, by and
among the Company, Goldman Sachs International and Smith
Barney, Inc.
10.01(4) Agreement for the Development of Standardized Nomenclature,
dated March 22, 1993, by and between the Company and the United
States Food and Drug Administration
10.02(4) Stock Purchase Agreement, dated June 7, 1991, by and among
Thompson Clive Investments plc, Midland Bank Trust Company
Limited, as Trustee of the Thompson Clive Growth Companies Fund,
Midland Bank Trust Corporation (Jersey) Limited, as Trustee of
Thompson Clive Ventures, Midland Bank Trust Corporation (Jersey)
Limited, as Trustee of Thompson Clive Ventures L.P., and the
Company
10.03(4) Stock Purchase Agreement, dated October 29, 1992, by and among
Thompson Clive Investments plc, Midland Bank Trust Company
Limited, as Trustee of the Thompson Clive Growth Companies Fund,
Midland Bank Trust Corporation (Jersey) Limited, as Trustee of
Thompson Clive Ventures, Midland Bank Trust Corporation (Jersey)
Limited, as Trustee of Thompson Clive Ventures L.P., and the
Company
</TABLE>
28
<PAGE> 29
<TABLE>
<S> <C> <C>
10.04(4) Stock Purchase Agreement, dated July 28, 1993, by and between
Thompson Clive Investments plc and the Company
10.05(4)(5) Employment Agreement, dated February 22, 1994, by and between
Dr. Dennis B. Gillings and the Company
10.06(4)(5)(6) Employment Agreement, dated February 22, 1994, by and between
Santo J. Costa and the Company, as amended on November 4, 1994
10.07(5)(6) Employment Agreement, dated January 1, 1995, by and between
Rachel R. Selisker and the Company
10.08(4)(5) Employment Agreement, dated January 15, 1988, by and between Dr.
Ludo Reynders and Quintiles (UK) Limited
10.09(5) Employment Agreement, dated November 29, 1996, by and between
Barrie S. Haigh and the Company
10.10(5) Deed of Non-Competition, dated as of November 29, 1996, between
Barrie S. Haigh and the Company
10.11(5) Employment Agreement, dated May 13, 1996, by and between
Lawrence S. Lewin and The Lewin Group, Inc. (a wholly-owned
subsidiary of the Company)
10.12(5) Service Agreement, dated March 31, 1993, between Innovex
Holdings Limited and Paul Knott
10.13(5) Deed of Non-Competition, dated November 29, 1996, between Paul
Knott and the Company
10.14(5) Service Agreement, dated September 2, 1994, between Innovex
Holdings Limited and David F. White
10.15(5) Deed of Non-Competition, dated November 29, 1996, between David
F. White and the Company
10.16(2)(5) Employment letter agreement, dated May 31, 1994, by and between
Gregory D. Porter and the Company
10.17(4)(5) Non-Qualified Employee Incentive Stock Option Plan
10.18(4)(5) Equity Compensation Plan
10.19(5)(6) Amended and Restated Employee Stock Ownership Plan and Trust
10.20(4)(5) Quintiles (UK) Limited Approved Profit Sharing Scheme
</TABLE>
29
<PAGE> 30
<TABLE>
<S> <C> <C>
10.21(4)(5) Quintiles Ireland Limited Approved Profit Sharing Scheme
10.22(4)(5) Quintiles (UK) Limited Executive Share Option Scheme
10.23(2)(5) Quintiles Group Executive Share Option Scheme
10.24(5)(7) Quintiles Employee Stock Purchase Plan
10.25(5)(7) Quintiles/BRI Nonqualified Stock Option Plan
10.26(5)(7) Innovex Limited 1996 Unapproved Executive Share Option Scheme
10.27(5)(8) Quintiles/Lewin Stock Option Plan
10.28(6) Loan Agreement, dated August 31, 1994, between the Company and
Branch Banking & Trust Company, as amended August 31, 1996 and
February 28, 1997 (amendments filed herewith)
10.29(6) Form of Guaranty Agreement, dated August 31, 1994, by and
between Branch Banking & Trust Company and each of Quintiles
Pacific, Inc., Quintiles, Inc., Quintiles Laboratories Limited and
International Clinical Research Corporation
10.30(4) Lease, dated January 20, 1992, by and between Durham Park,
operating as a Joint Venture, Imperial Center, and Quintiles, Inc. as
amended on April 6, 1992, April 16, 1992, May 12, 1992, May 13,
1992, March 10, 1993, and September 1, 1993
10.31(2)(6) Lease dated September 8, 1994, by and between Petula Associates
Ltd. and Quintiles, Inc., as amended on September 30, 1994, January
10, 1995, April 12, 1995 and August 11, 1995
10.32(4) Lease Agreement, dated December 9, 1992, by and between South
Bay/Copley Joint Venture and the Company, as amended March 3,
1993
10.33(6) Lease, effective January 1, 1995, by and between The Norwich Union
Life Insurance Society, Earlsfort Centre and Quintiles Ireland
Limited and guaranteed by Quintiles, Inc.
10.34(4) Leases, dated December 1, 1993, by and between The Norwich Union
Life Insurance Society, Quintiles (UK) Limited, and the Company (as
surety)
10.35(2) Lease, dated August 31, 1995, by and between California Public
Employees' Retirement System and International Clinical Research
Corp., as amended October 25, 1995
</TABLE>
30
<PAGE> 31
<TABLE>
<S> <C> <C>
10.36 Lease, dated November 6, 1996, by and between Seagate
Technology, Inc. and Innovex
10.37 Lease, dated December 20, 1996, by and between The Norwich
Union Life Insurance Society and Quintiles (U.K.) Limited
10.38 Lease, dated August 14, 1996, by and between PRUBETA-3 and
Innovex, Inc.
10.39 Lease, dated November 30, 1995, by and between Lenexa Industrial
Park, Inc. and Innovex, Inc.
10.40 Sublease, dated January 18, 1996, by and between Legent
Corporation and Innovex, Inc.
10.41(9) Agreement for the Provision of Research Services and Lease of
Business Assets dated as of March 3, 1995, between Syntex
Pharmaceuticals Limited, Quintiles Scotland Limited, Quintiles (UK)
Limited, and Roche Products Limited
10.42(2)(5) Consulting Agreement dated as of March 15, 1995 between the
Company and A.M. Pappas & Associates, L.L.C.
10.43(10) Share Exchange Agreement dated as of May 2, 1995 by and between
Quintiles Transnational Corp., Quintiles Holding S.A., ACTA, Eric
Jacques Souetre, Pierre Souetre, Jean Claude Souetre, Christophe
Celerier, Paul Boilait, Caroline Boilait, Debessa BV, Marc Riviere
10.44(10) Employment and Consulting Agreement dated as of May 2, 1995
between Quintiles Inc. and Eric Jacques Souetre
10.45(10) Stock Option Agreement dated as of May 2, 1995 between Quintiles
Transnational Corp. and Eric Jacques Souetre
10.46(10) Covenant to Assist Buyer and Covenant Not to Compete with Buyer
dated as of May 2, 1995 between Quintiles Transnational Corp. or it
assignee, Quintiles Holding S.A., and Eric Jacques Souetre
10.47(11) Share Purchase Agreement dated as of September 19, 1995 by and
among Quintiles Holdings Limited, TSI Corporation (the sole
shareholder of G.D.R.U. Limited) and Genzyme Transgenics
Corporation
10.48(12) Merger Agreement, dated as of September 16, 1996, by and among
the Company, BRI Acquisition Corp. and BRI
10.49(13) Share Exchange Agreement, dated as of October 4, 1996, among
Innovex, the Company and the shareholders of Innovex
</TABLE>
31
<PAGE> 32
<TABLE>
<S> <C> <C>
10.50(14) Registration Rights Agreement, dated as of November 29, 1996, by and
among the Company and the shareholders of Innovex
10.51(15) Supplemental agreement to Registration Rights Agreement by and
among the Company and Certain Shareholders Party Thereto, dated as
of February 11, 1997
10.52(16) Asset Purchase Agreement, dated as of April 16, 1996, among The
Lewin Group, Inc., the Company, Lewin-VHI, Inc., Value Health,
Inc., Lawrence S. Lewin and Robert J. Rubin
10.53 Underwriting Agreement, dated March 6, 1997, by and between the
Company and Goldman, Sachs & Co., Morgan Stanley & Co.
Incorporated, Smith Barney Inc. and William Blair & Company,
L.L.C., as representatives of the several Underwriters named in
Schedule 1 thereto
10.54 Underwriting Agreement (International Version), dated March 6,
1997, by and between the Company and Goldman Sachs
International, Morgan Stanley & Co. International Limited, Smith
Barney Inc. and William Blair & Company, L.L.C., as representatives
of the several Underwriters named in Schedule 1 thereto
13 Portions of the Annual Report to Shareholders for fiscal year ended
December 31, 1996, which are incorporated herein by reference.
21 Subsidiaries of the Company
23 Consent of Ernst & Young LLP
99.01 Risk Factors relating to the Company
</TABLE>
- ----------
(1) Exhibit to the Company's Registration Statement on Form S-3 as filed
with the Securities and Exchange Commission (Registration No.
333-19009) effective February 21, 1997 and incorporated herein by
reference.
(2) Exhibit to the Company's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission on March 25, 1996, as amended on May
16, 1996, and incorporated herein by reference.
(3) Exhibit to the Company's Quarterly Report on Form 10-Q as filed with
the Securities and Exchange Commission on August 15, 1996 and
incorporated herein by reference.
(4) Exhibit to the Company's Registration Statement on Form S-1 as filed
with the Securities and Exchange Commission (Registration No. 33-75766)
effective April 20, 1994 and incorporated herein by reference.
32
<PAGE> 33
(5) Executive compensation plans and arrangements.
(6) Exhibit to the Company's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission on March 30, 1995 and incorporated
herein by reference.
(7) Exhibit to the Company's Registration Statement on Form S-8 as filed
with the Securities and Exchange Commission (Registration No.
333-16553) effective November 21, 1996 and incorporated herein by
reference.
(8) Exhibit to the Company's Registration Statement on Form S-8 as filed
with the Securities and Exchange Commission (Registration No.
333-03603) effective May 13, 1996 and incorporated herein by reference.
(9) Exhibit to the Company's Current Report on Form 8-K as filed with the
Securities and Exchange Commission on March 20, 1995 and incorporated
herein by reference.
(10) Exhibit to the Company's Current Report on Form 8-K as filed with the
Securities and Exchange Commission on May 9, 1995 and incorporated
herein by reference.
(11) Exhibit to the Company's Current Report on Form 8-K as filed with the
Securities and Exchange Commission on September 19, 1995 and
incorporated herein by reference.
(12) Exhibit to the Company's Registration Statement on Form S-4 as filed
with the Securities and Exchange Commission (Registration No.
333-12573) effective October 15, 1996 and incorporated herein by
reference.
(13) Exhibit to the Company's Current Report on Form 8-K as filed with the
Securities and Exchange Commission on October 11, 1996 and incorporated
herein by reference.
(14) Exhibit to the Company's Current Report on Form 8-K as filed with the
Securities and Exchange Commission on December 6, 1996 and incorporated
herein by reference.
(15) Exhibit to the Company's Current Report on Form 8-K as filed with the
Securities and Exchange Commission on March 5, 1997 and incorporated
herein by reference.
(16) Exhibit to the Company's Current Report on Form 8-K as filed with the
Securities and Exchange Commission on April 23, 1996 and incorporated
herein by reference.
33
<PAGE> 1
EXHIBIT 10.09
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and dated as of
November 29, 1996 by and between Quintiles Transnational Corp., a corporation
organized under the laws of North Carolina (the "Company"), and Barrie Stevens
Haigh ("Haigh").
WHEREAS, the Company and Innovex Limited ("Innovex"), a company
organized under the laws of England and Wales, are parties to a Share Exchange
Agreement dated as of October 4, 1996 (the "Share Exchange Agreement") providing
for the exchange of all of Innovex's issued and outstanding share capital for
shares of Common Stock of Quintiles based upon the terms and subject to the
conditions set forth therein;
WHEREAS, upon completion of the share exchange pursuant to the Share
Exchange Agreement, Haigh will own approximately 4,302,327 shares of the
outstanding common stock of the Company; and
WHEREAS, the execution and delivery of this Agreement by the parties
hereto is a condition precedent to certain of the parties' obligations under the
Share Exchange Agreement.
NOW, THEREFORE, in consideration of the mutual promises set forth below
and of other good and valuable consideration, the receipt and legal sufficiency
of which they hereby acknowledge, and intending to be legally bound hereby, the
Company and Haigh agree as follows:
1. Employment. The Company hereby employs Haigh and Haigh hereby
accepts employment on the terms and conditions set forth in this Agreement.
2. Nature of Employment. Haigh shall serve as Vice Chairman and shall
have the responsibilities and authority customarily associated with such office
and Haigh shall serve the Company in such capacity during the term of this
Agreement. Haigh shall be based in Marlow, United Kingdom, and shall travel to
such locations on such occasions as may from time to time be necessary in the
conduct of his duties.
2.1. Haigh shall perform all duties and exercise all authority
in accordance with, and otherwise comply with, the policies, procedures and
practices as may from time to time be adopted by the Company's Board of
Directors.
2.2. Haigh shall devote all working time and best efforts to
perform successfully his duties and advance the Company's and/or its Affiliates'
interests; provided, however that Haigh will not be precluded from acting as a
non-executive director of any company for which he currently is so engaged, as a
director or officer in any company through which he has made investments for his
personal benefit, or as a trustee of any trust the principal beneficiaries of
which are members of Haigh's family so long as such action does not violate the
non-competition provisions hereof or
<PAGE> 2
interfere with his duties hereunder; provided further, however, this provision
does not prohibit Haigh from personally owning and trading in stocks, bonds,
securities, real estate, commodities or other investment properties for his own
benefit to the extent that such activities are not otherwise inconsistent with
the terms of this Agreement. As used in this Agreement, "Affiliates" shall mean:
(i) the Company; (ii) any Company subsidiary or related entity (including
without limitation Innovex and its subsidiaries); and/or (iii) any entity
directly or indirectly controlled or beneficially owned in whole or part by the
Company or any Company subsidiary or related entity, in each case as existing at
or prior to the date of termination of Haigh's employment.
3. Remuneration.
3.1. Haigh's base salary for all services rendered shall be
(pound)250,000 per annum (less applicable withholdings) payable in accordance
with the Company's policies, procedures and practices as they may exist from
time to time, such salary being comparable to that provided to other Level 2
employees of the Company. Haigh's salary shall be reviewed at least annually and
may be increased in accordance with the Company's policies, procedures and
practices as they may exist from time to time.
3.2. Haigh may participate in the Quintiles Transnational
Corp. Executive Compensation Plan (or successor plans) and any other cash bonus
plan which may be made available from time to time to Level 2 employees of the
Company on terms that are comparable to those provided to other Level 2
employees of the Company; provided, however, that Haigh's participation is
subject to the applicable terms, conditions and eligibility requirements of each
such plan, some of which are within the plan administrator's discretion, as they
may exist from time to time.
3.3. Haigh may participate in the Quintiles Transnational
Corp. Equity Compensation Plan (or successor plans) and any other incentive
stock option or similar plan which may be made available from time to time to
Level 2 employees of the Company on terms that are comparable to those provided
to other Level 2 employees of the Company; provided, however, that Haigh's
participation is subject to (i) satisfactory performance as determined by the
Company Board of Directors or Compensation Committee in its sole discretion,
(ii) continued Company employment and (iii) the applicable terms, conditions and
eligibility requirements of each such plan, some of which are within the plan
administrator's discretion, as they may exist from time to time. The terms of
any such stock options will be set forth in separate option agreements between
Haigh and the Company but shall be no less favorable than provided to other
Level 2 employees of the Company; provided, however, that the Company will make
or cause to be made two contributions of (pound)100,000 each on or before the
last day of March 1997 and 1998, respectively, to the Cookham Security Plan
(Haigh's occupational pension scheme approved by the Inland Revenue). Such
payments shall be in lieu of, and the Company shall have no obligation to make,
contributions to the Company's ESOP or successor plan and grant of stock options
to Haigh otherwise contemplated by this Section 3.4 for the period through March
31, 1998, but the Company will make such contributions and grants for the year
ended December 31, 1998, on a pro rata basis, for the period beginning April 1,
1998.
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3.4. Haigh may participate in all medical, dental, disability,
insurance, pension, tax return preparation and financial planning, consultation
and advice by the Company's accounting firm, legal counsel or financial
consultants as may be provided by the Company for Level 2 employees of the
Company and other employee benefit plans and programs (excluding time off for
holidays which shall be governed by Section 3.4) which may be made available
from time to time to Level 2 employees of the Company on terms that are
comparable to those provided to other level 2 employees of the Company;
provided, however, that Haigh's participation is subject to the applicable
terms, conditions and eligibility requirements of these plans and programs, some
of which are within the plan administrator's discretion, as they may exist from
time to time.
In addition, Haigh shall be entitled to: (i) retain,
at the Company's expense, the private medical insurance for Haigh and his family
as heretofore maintained by Innovex (currently at a cost of approximately
(pound)2,200 per year); (ii) maintain the two automobiles currently maintained
by the Company for Haigh's benefit at a lease cost of approximately (pound)5,500
per month and to be retained by the Company at the end of Haigh's employment
(for which the Company shall bear the cost of petrol, oil and other expenses
reasonably and properly incurred in the use of such automobiles); (iii)
reimbursement (in amounts up to $10,000 per annum) for the cost of financial
consulting, tax return preparation and similar financial services, (iv) dues and
expenses (in amounts up to $5,000 per annum) for business and country club dues
maintained principally for business purposes and (v) reimbursement of ordinary
and necessary expenses, in reasonable amounts, which Haigh incurs in performing
his duties under this Agreement, including, but not limited to, travel,
entertainment, professional dues and subscriptions, and all dues, fees and
expenses associated with membership in various professional, business and civic
associations and societies of which Haigh's participation is in the best
interest of the Company.
3.5 In addition to public holidays Haigh shall be entitled in
every calendar year to 30 working days' paid holiday to be taken at such time or
times as will not interfere with the operations of the Company.
3.6. Nothing in this Agreement shall require the Company to
create, continue or refrain from amending, modifying, revising or revoking any
of the plans or programs made available to officers or employees of the Company
generally and referred to in Sections 3.2, 3.3, and 3.4. Haigh acknowledges that
the Company, in its sole discretion, may amend, modify, revise or revoke any
such general plans or programs. Any amendments, modifications, revisions and
revocations of these general plans or programs shall apply to Haigh from their
respective effective dates. Nothing in this Agreement shall afford Haigh any
greater rights or benefits with regard to these general plans or programs than
are afforded to him under their applicable terms, conditions and eligibility
requirements, some of which are within each plan administrator's discretion, as
they may exist from time to time.
3.7. If, at any time during which Haigh is receiving salary or
post-termination payments from the Company, Haigh receives payments on account
of mental or physical disability from any source referred to in this Agreement,
then the
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Company, at its discretion, may reduce Haigh's salary or post-termination
payments by the amount of such disability payments.
The above-stated items of compensation shall not be
deemed all-inclusive, and Haigh may receive other compensation, as may from time
to time be determined by the Board, including bonuses that may be provided by
the Company under the Company's annual incentive bonus plan or any comparable
bonus plan that may succeed it. Except as is otherwise provided herein, Haigh
shall be entitled to participate in all current and future employee stock option
and other employee benefit plans and arrangements in which the senior management
of the Company is permitted to participate and the provisions herein are not
meant to be exclusive.
4. Term of Employment. The original term of employment shall be for a
three (3) year period commencing on the date of this Agreement and terminating
on the third anniversary of the date of this Agreement, subject to the following
provisions.
4.1. On the third anniversary date of this Agreement, and each
anniversary date thereafter the terms of Haigh's employment will be
automatically extended one (1) year unless, ninety (90) days prior to such
anniversary date, the Company or Haigh shall have delivered to the other written
notice that the term of Haigh's employment hereunder will not be extended.
During all periods of employment, the terms, conditions and provisions set forth
in this Agreement shall remain in effect unless modified in accordance with
Section 12.
4.2. The Company may terminate Haigh's employment immediately
and without notice, at any time during the original term of employment or
thereafter, for "cause." For purposes of this Agreement, "cause" shall be
defined as (i) a willful and continued failure by Haigh to perform his duties as
Vice Chairman of the Company as established by the Board (other than due to
disability), or (ii) a material breach by Haigh of his fiduciary duties of
loyalty or care to the Company, or (iii) a willful violation by Haigh of any
provision of this Agreement, or (iv) a conviction of, or the entering of a plea
of nolo contendre by Haigh for, any felony or any crime involving fraud or
dishonesty.
4.3 Upon giving Haigh notice of its intent to terminate the
employment relationship, the Company, in its sole discretion, may elect to pay
Haigh his salary and, subject to the terms, conditions and eligibility
requirements of the applicable plans, continue his benefits during the notice
period and, in lieu of requiring him to continue his duties as Vice Chairman,
may require him to perform only such other duties as it may assign to him or
require him not to perform any duties whatsoever for the Company and/or exclude
him from the Company and/or Affiliates' premises (without providing any reason
therefor), all subject to his performance of his duties as a director.
4.4 Upon termination of his employment for whatever reason,
Haigh shall immediately tender his resignation from all offices, directorships
or other positions in the Company and/or its Affiliates; provided that the
Company and Haigh will each agree to provide the other reasonable cooperation to
assure the orderly disposition by Haigh of Haigh's shareholdings in the Company.
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4.5. Sections 6 (Trade Secrets, Confidential Information,
Company Property and Competitive Business Activities), 7 (Intellectual Property
Ownership), 8 (License), and 9 (Release) shall survive the termination of
Haigh's employment and/or the termination of this Agreement regardless of the
reasons for such termination.
5. Compensation and Benefits Upon Termination.
5.1. If Haigh's employment terminates for any reason, the
Company's obligation to remunerate Haigh shall cease on the effective
termination date except as to amounts due at that time.
5.2. Haigh is not entitled to receive any compensation or
benefits upon Haigh's termination except as: (i) set forth in this Agreement;
(ii) otherwise required by law; or (iii) otherwise required by any employee
benefit plan in which Haigh participates. The terms and conditions afforded
Haigh under this Agreement are in lieu of any severance benefits to which Haigh
otherwise might be entitled pursuant to a severance plan, policy or practice.
Nothing in this Agreement, however, is intended to waive or supplant any death,
disability, retirement, or pension benefits to which Haigh may be entitled under
employee benefit plans in which he participates.
6. Trade Secrets, Confidential Information, Company Property and
Competitive Business Activities. Haigh acknowledges and agrees that: (i) by
virtue of his employment by and position with the Company, he has or will have
access to Trade Secrets and Confidential Information (as defined in Sections
6.1.5 and 6.1.6) of the Company and its Affiliates, including valuable
information about their worldwide business operations and entities with whom
they do business in various locations throughout the world, and has developed or
will develop relationships with their customers and others with whom they do
business in various locations throughout the world; and (ii) the Trade Secret,
Confidential Information and Competitive Business Activities' provisions set
forth in this Agreement are reasonably necessary to protect the Company's and
its Affiliates' legitimate business interests, are reasonable as to the time,
territory and scope of activities which are restricted, do not interfere with
public policy or public interest, and are described with sufficient accuracy and
definiteness to enable him to understand the scope of the restrictions imposed
on him.
6.1. Trade Secrets and Confidential Information. Haigh
acknowledges and agrees that: (i) the Company and/or its Affiliates will
disclose to him certain Trade Secrets and Confidential Information; (ii) Trade
Secrets and Confidential Information are the sole and exclusive property of the
Company and/or its Affiliates (or a third party providing such information to
the Company and/or its Affiliates); and (iii) the disclosure of such Trade
Secrets and Confidential Information to Haigh does not confer upon Haigh any
license, interest or rights of any kind in or to the Trade Secrets or
Confidential Information.
6.1.1. Haigh may use the Trade Secrets and Confidential
Information only in accordance with applicable Company policies and procedures
and solely for the Company's benefit, and only while Haigh is employed or
otherwise retained by the Company. Except in the performance of services for the
Company, Haigh will hold in confidence and not directly or indirectly, in any
form, by any means, or for any purpose,
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<PAGE> 6
disclose, reproduce, distribute, transmit, or transfer Trade Secrets or
Confidential Information or any portion thereof.
6.1.2. If Haigh is required to disclose Trade Secrets or
Confidential Information pursuant to a court order or other government process
or such disclosure is necessary to comply with applicable law or defend against
claims, Haigh shall: (i) notify the Company promptly before any such disclosure
is made; (ii) at the Company's request and expense take all reasonably necessary
steps to defend against such disclosure, including defending against the
enforcement of the court order, other government process or claims; and (iii)
permit the Company to participate with counsel of its choice in any proceeding
relating to any such court order, other government process or claims.
6.1.3. Haigh's obligations with regard to Trade Secrets shall
remain in effect for as long as such information shall remain a trade secret
under applicable law.
6.1.4. Haigh's obligations with regard to Confidential
Information shall remain in effect while he is employed or otherwise retained by
the Company and/or its Affiliates and for fifteen (15) years thereafter.
6.1.5. As used in this Agreement, "Trade Secrets" means
information of the Company, its Affiliates and its and/or their licensors,
suppliers, customers, or prospective licensors or customers, including, but not
limited to, data, formulas, patterns, compilations, programs, devices, methods,
techniques, processes, financial data, financial plans, product plans, or lists
of actual or potential customers or suppliers, which: (i) derives independent
actual or potential commercial value from not being generally known to or
readily ascertainable through independent development or reverse engineering by
persons or entities who can obtain economic value from its disclosure or use;
and (ii) is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy.
6.1.6. As used in this Agreement, "Confidential Information"
means information (other than Trade Secrets) that is of value to the Company and
is treated as confidential, including, but not limited to, future business
plans, licensing strategies, advertising campaigns, information regarding
executives and employees, and the terms and conditions of this Agreement;
provided, however, Confidential Information shall not include information which
is in the public domain or becomes public knowledge through no fault of Haigh.
6.2. Company Property. Upon the termination of Haigh's
employment, Haigh shall at the Company's request: (i) deliver to the Company all
records, memoranda, data, documents and other property of any description which
refer or relate in any way to Trade Secrets or Confidential Information,
including all copies thereof, which are in Haigh's possession, custody or
control; (ii) deliver to the Company all Company and/or Affiliate property
(including, but not limited to, keys, credit cards, client files, contracts,
proposals, work in process, manuals, forms, computer-stored work in process and
other computer data, research materials, other items of business information
concerning any Company and/or Affiliate client, or Company and/or Affiliate
business or business methods, including all copies thereof) which is in Haigh's
possession, custody or control; and (iii) provide reasonable cooperation to the
Company at the Company's expense in
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winding up Haigh's work and transferring that work to other individuals
designated by the Company.
6.3. Competitive Business Activities. During Haigh's
employment and the Non-Competition Period (as defined in Section 6.3.3), Haigh
will not engage in the following activities:
(a) Haigh shall not, either alone or jointly with
another or others, whether as principal, agent, director, shareholder,
independent contractor, officer, employee or in any other capacity, whether
directly or indirectly, and whether for his own benefit or that of others,
during the continuation of his employment by the Company nor after the
termination of his employment for two years(howsoever caused):
(i) be engaged or interested in any business
which competes with any business carried on or engaged in by the Company or any
of its Affiliates at or before (provided such business has not been terminated
or abandoned by the Company or such Affiliate) the date of termination of
Haigh's employment (hereinafter, a "Competitive Business");
(ii) solicit or endeavor to solicit on
behalf of a Competitive Business from or with any person or entity:
(aa) who or which was a customer of
the Company or any of its Affiliates at any time during the period of twelve
(12) months preceding the date of the termination of the employment;
(bb) whom or which Haigh or someone
for whom he was directly responsible solicited, negotiated, contracted,
serviced, advised or had contact with on the Company's or any of its Affiliates'
behalf; or
(cc) to whom the Company or any of
its Affiliates had made proposals to do business at any time during the period
of twelve (12) months preceding the date of the termination of the employment;
(iii) deal, do business or endeavor to deal
or do business for a Competitive Business, from or with any person or entity:
(aa) who or which was a customer of
the Company or any of its Affiliates at any time during the period of twelve
(12) months preceding the date of the termination of the employment;
(bb) whom or which Haigh or someone
for whom he was directly responsible solicited, negotiated, contracted,
serviced, advised or had contact with on the Company's or any of its Affiliates'
behalf; or
(cc) to whom the Company or any of
its Affiliates had made proposals to do business at any time during the period
of twelve (12) months preceding the date of the termination of the employment;
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(iv) without the written permission of the
Board of the Company (such permission not to be unreasonably withheld if the
Company considers that Haigh has neither a personal influence with clients nor
is in possession of confidential information) offer employment to or otherwise
solicit for employment the services of any individual who was an employee or
director of the Company or any of its Affiliates during the period of twelve
(12) months preceding the date of termination of employment whether or not such
person would commit any breach of his contract of employment with the Company or
any of its Affiliates by reason of his leaving service.
(v) directly or indirectly take any action
which is materially detrimental or otherwise intended to be adverse to the
Company's and/or any of its Affiliates' goodwill, name, business relations,
prospects and operations.
Notwithstanding anything in this Agreement
to the contrary, the following activities will not be deemed to contravene the
provisions of Section 6.3 of this Agreement:
(i) Owning, operating, controlling or
serving as a director, officer or employee of or consultant to any company the
principal business of which is manufacturing, distributing, marketing and/or
selling pharmaceutical products the rights to which are owned by or licensed to
such company; provided that no more than five percent (5%) of the consolidated
revenues of such company in any year will be derived from operations (as defined
below, "Related Activities") involving providing, on a contract, for hire, or
similar basis (i) drug development services, (ii) pharmaceutical or clinical
research services, (iii) pharmaceutical sales or marketing services, (iv) health
information management services, and/or (v) any other activity which constitutes
a significant part of the business of the Company or any of its Affiliates (in
the case of subparagraph (v), at or before the date of termination of Vendor's
employment); provided further that Vendor shall have no direct involvement in
such Related Activities as a director, officer, employee, consultant or
otherwise; provided further, it is agreed that Related Activities are intended
to be limited to activities which are incidental to the operations of a
pharmaceutical business and are not, without limiting the foregoing , any
activities dedicated primarily to a Competitive Business or the purpose of drug
development, marketing, sales services, or health benefit analysis of the
products or potential products of third parties.
(ii) the provision of executive search
consulting services so long as such services are not provided to entities
engaged in Related Activities; and
(iii) the provision of financial consulting
services so long as such services are not provided to entities engaged in
Related Activities.
(b) Section 6.3(a) shall not prohibit the holding
(directly or through nominees or otherwise) of shares or other securities of
another company which are listed or traded on any recognized stock exchange
being a holding (which phrase shall include any interest in any such holding)
entitling the holder to no more than two and one half percent (2.5%) of the
voting power of such body corporate.
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(c) Haigh shall not either before or after the
termination of his employment hereunder disclose to any person or persons any
confidential information in relation to the affairs of the Company or any of its
Affiliates or any client or customer thereof of which he has become or any have
become possessed whilst in the service of the Company except in the proper
course of his duties hereunder or as authorized by the Board or as ordered by a
court of competent jurisdiction or pursuant to other governmental process.
(d) The restriction contained in clauses (a) and (c)
are considered reasonable by the parties but if any such restriction shall be
found void but would be valid if some part thereof were deleted or the period or
area of application reduced, such restriction shall apply with such
modifications as may be necessary to make it valid and effective.
6.3.1. The restriction set forth in Section 6.3(a)(i) apply to
the following geographical areas: the United Kingdom, the Federal Republic of
Germany and the United States of America, including the territories and
possessions thereof.
6.3.2. Notwithstanding the foregoing, Haigh's ownership,
directly or indirectly, of not more than two and one half percent (2.5%) of the
issued and outstanding stock of a corporation the shares of which are regularly
traded on a national securities exchange or in the over-the-counter market shall
not violate Section 6.3.
6.3.3. As used in this Agreement "Non-Competition Period"
means the greater of: (i) the two (2) year period following the termination of
Haigh's employment (irrespective of the circumstances of such termination); or
(ii) five years from November 26, 1996.
6.4. Remedies. Haigh acknowledges and agrees that Haigh's
failure to abide by the Trade Secrets, Confidential Information, Company
Property or Competitive Business Activities provisions of this Agreement would
cause irreparable harm to the Company and/or its Affiliates for which legal
remedies would be inadequate. Therefore, in addition to any legal or other
relief to which the Company and/or its Affiliates may be entitled by virtue of
Haigh's failure to abide by these provisions: (i) the Company may seek legal and
equitable relief, including but not limited to preliminary and permanent
injunctive relief, for Haigh's actual or threatened failure to abide by these
provisions; (ii) Haigh will indemnify, upon final judicial determination that
Haigh has breached the terms of Section 6 or Section 7, the Company and/or its
Affiliates for all expenses (including attorneys' fees) in seeking to enforce
these provisions; and (iii) if, as a result of Haigh's failure to abide by the
Trade Secrets, Confidential Information, Company Property or Competitive
Business Activities provisions, any commission or fee becomes payable to Haigh
or to any person, corporation or other entity with which Haigh has become
employed or otherwise associated, Haigh shall pay the Company or cause the
person, corporation or other entity with whom he has become employed or
otherwise associated to pay the Company an amount equal to such commission or
fee. Notwithstanding that Haigh returns all post-termination payments received
pursuant to this Agreement, Haigh shall remain obligated to abide by the Trade
Secrets, Confidential
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Information, Company Property and Competitive Business Activities provisions set
forth in this Agreement.
6.5. Other Agreements. Nothing in this Agreement shall
terminate, revoke or diminish Haigh's obligations or the Company's and/or its
Affiliates' rights and remedies under law or under Haigh's Deed of
Non-Competition with the Company and the Share Exchange Agreement relating to
trade secrets, confidential information, non-competition and intellectual
property.
7. Intellectual Property Ownership.
7.1. As used in this Agreement, "Work Product" shall mean the
data, materials, documentation, computer programs, inventions (whether or not
patentable), picture, audio, video, artistic works, and all works of authorship,
including all worldwide rights therein under patent, copyright, trade secret,
confidential information, or other property rights, created or developed in
whole or in part by Haigh while employed by the Company (whether developed
during work hours or not), whether prior or subsequent to the date of this
Agreement.
7.2. All Work Product shall be considered work made for hire
by Haigh and owned by the Company. If any of the Work Product may not, by
operation of law, be considered work made for hire by Haigh for the Company, or
if ownership of all right, title, and interest of the intellectual property
rights therein shall not otherwise vest exclusively in the Company, Haigh hereby
assigns to the Company, and upon the future creation thereof automatically
assigns to the Company, without further consideration, the ownership of all Work
Product. The Company shall have the right to obtain and hold in its own name
copyrights, registrations, and any other protection available in the Work
Product. Haigh agrees to perform, during or after Haigh's employment, such
further acts which the Company requests as may be necessary or desirable to
transfer, perfect, and defend the Company's ownership of the Work Product.
7.3. Notwithstanding the foregoing, this Agreement shall not
require assignment of any invention that: (i) Haigh developed entirely on his
own time without using the Company's equipment, supplies, facilities, Trade
Secrets or Confidential Information; and (ii) does not relate to the Company's
business or actual or anticipated research or development or result from any
work performed by Haigh for the Company.
7.4. Haigh shall promptly disclose to the Company in writing
all Work Product conceived, developed or made by him, individually or jointly
that relates in any way to the business conducted by the Company.
8. License. To the extent that any preexisting materials are contained
in Work Product which Haigh delivers to the Company or its customers, Haigh
grants to the Company an irrevocable, nonexclusive, worldwide, royalty-free
license to: (i) use and distribute (internally or externally) copies of, and
prepare derivative works based upon, such preexisting materials and derivative
works thereof; and (ii) authorize others to do any of the foregoing.
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9. Releases. Haigh acknowledges and agrees that: (i) as a part of his
services, he may provide his image, likeness, voice, or other characteristics;
and (ii) the Company may use his image, likeness, voice, or other
characteristics in its products and services with Haigh's reasonable review and
approval. Haigh consents to the use of such characteristics and expressly
releases the Company, its Affiliates and its and their respective agents,
employees, licensees and assigns from and against any and all claims which Haigh
has or may have for invasion of privacy, right of privacy, defamation, copyright
infringement, or any other causes of action arising out of the use, adaptation,
reproduction, distribution, broadcast, or exhibition of such characteristics.
10. Haigh Representation. Haigh represents and warrants that neither
Haigh's employment nor the performance of Haigh's obligations under this
Agreement will (i) breach any duty or obligation Haigh owes to another or (ii)
violate any law, recognized ethics standard or recognized business custom.
11. Waiver of Breach. The Company's or Haigh's waiver of any breach of
a provision of this Agreement shall not waive any subsequent breach by the other
party.
12. Entire Agreement. Except as expressly provided in this Agreement,
this Agreement: (i) supersedes and cancels all other understandings and
agreements, oral or written, with respect to Haigh's employment with Innovex,
including without limitation that certain Service Agreement dated March 31, 1993
between Haigh and Innovex; (ii) supersedes all other understandings and
agreements, oral or written, between the parties with respect to the subject
matter of this Agreement; and (iii) constitutes the sole agreement between the
parties with respect to the terms of the Haigh's employment. Each party
acknowledges that: (i) no representations, inducements, promises or agreements,
oral or written, have been made by any party or by anyone acting on behalf of
any party, which are not embodied in this Agreement; and (ii) no agreement,
statement or promise not contained in this Agreement shall be valid. No change
or modification of this Agreement shall be valid or binding upon the parties
unless such change or modification is in writing and is signed by the parties.
13. Severability. If a court of competent jurisdiction holds that any
provision or sub-part thereof contained in this Agreement is invalid, illegal or
unenforceable, that invalidity, illegality or unenforceability shall not affect
any other provision in this Agreement. Additionally, if any of the provisions,
clauses or phrases in the Trade Secrets, Confidential Information or Competitive
Business Activities provisions set forth in this Agreement are held
unenforceable by a court of competent jurisdiction, then the parties desire that
they be "blue-penciled" or rewritten by the court to the extent necessary to
render them enforceable to the maximum similar effect permitted by applicable
law.
14. Parties Bound. The terms, provisions, covenants and agreements
contained in this Agreement shall apply to, be binding upon and inure to the
benefit of the Company's successors and assigns. The Company, at its sole
discretion, may assign this Agreement to any of its Affiliates. Haigh may not
assign this Agreement without the Company's prior written consent.
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15. Remedies. Haigh acknowledges and agrees that Haigh's breach of this
Agreement would cause the Company and/or its Affiliates irreparable harm for
which damages would be difficult, if not impossible, to ascertain and legal
remedies would be inadequate. Therefore, in addition to any legal or other
relief to which the Company and/or its Affiliates may be entitled by virtue of
the Haigh's breach or threatened breach of this Agreement, the Company and/or
its Affiliates may seek equitable relief, including but not limited to
preliminary and injunctive relief, and such other available remedies.
16. Costs and Expenses. If a dispute occurs between the Company and
Haigh in connection with or arising under this Agreement, the prevailing party
in a final judgment in respect of such dispute shall be reimbursed by the other
party for all reasonable costs, including attorneys' fees and any other
necessary costs or expenses, incurred as a result of such dispute.
17. Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with English law and the parties irrevocably submit to
the non-exclusive jurisdiction of the High Court of Justice in London for all
purposes connected with it.
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IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date set forth in the preamble above.
----------------------------------------
Barrie Stevens Haigh
QUINTILES TRANSNATIONAL CORP.
By:
-------------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 10.10
DEED OF NON-COMPETITION
BETWEEN
QUINTILES TRANSNATIONAL CORP.
AND
BARRIE STEVENS HAIGH
29 NOVEMBER 1996
<PAGE> 2
INDEX
CLAUSE PAGE
- ------ ----
1. Certain Definitions............................................ 3
1.1 Certain Definitions.................................... 3
2. Non-competition and Non-solicitation Covenants................. 3
2.1 General................................................ 3
2.2 Non-Competition........................................ 3
2.3 Holding of Shares or Securities........................ 5
2.4 Nondisclosure.......................................... 5
2.5 Geographical Restriction............................... 5
2.6 Non-Competition Period................................. 6
2.7 Remedies............................................... 6
2.8 Other Agreements....................................... 6
3. General Provisions............................................. 6
3.1 Notices................................................ 6
3.2 Variation.............................................. 7
3.3 Entire Agreement....................................... 8
3.4 Assignment............................................. 8
3.5 Law and Jurisdiction................................... 9
2
<PAGE> 3
THIS NON-COMPETE AGREEMENT dated 29 November, 1996 is executed as a Deed and
is made
BETWEEN
(1) QUINTILES TRANSNATIONAL CORP., a corporation incorporated under the
laws of North Carolina, U.S.A. (the "Purchaser"); and
(2) BARRIE STEVENS HAIGH, an individual residing at Chimneys, Winter
Hill, Cookham Dean, Berkshire, SL6 9TN (the "Vendor").
WHEREAS:
(A) Concurrently with the execution of this Agreement, the Purchaser,
the Vendor and others are consummating certain transactions
under a Share Exchange Agreement ("the Share Exchange Agreement")
pursuant to which the Vendor and other vendors are exchanging their
shares of Innovex Limited ("Innovex") for shares of Quintiles
Transnational Corp.
(B) The Vendor is entering into this Agreement as a condition precedent
to completion under the Share Exchange Agreement.
(C) Upon completion of the share exchange pursuant to the Share Exchange
Agreement, Vendor will own approximately 4,302,327 shares of the
outstanding common stock of the Purchaser.
NOW THIS DEED WITNESSETH as follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions. In this Agreement the following words and
expressions shall have the meanings respectively ascribed to them:
"Affiliates" shall mean: (i) the Purchaser; (ii) any Purchaser
subsidiary or related entity (including without limitation Innovex
and its subsidiaries); and (iii) any entity directly or indirectly
beneficially owned or controlled in whole or part by the Purchaser
or any Purchaser subsidiary or related entity, in each case as
existing at or prior to the date of termination of Vendor's
employment.
2. NON-COMPETITION AND NON-SOLICITATION COVENANTS
2.1 General. In consideration of the Purchaser agreeing to complete the
Share Exchange Agreement, during the Vendor's employment with the
Purchaser and the Non-Competition Period (as defined in Section 2.6):
2.2 Non-Competition. The Vendor shall not, either alone or jointly with
another or others, whether as principal, agent, director,
shareholder, independent contractor, officer, employee or in any
other capacity, whether directly or indirectly, and whether for his
own benefit or that of others:
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(a) be engaged or have an economic interest in any business which competes
with any business carried on or engaged in by the Purchaser or any of its
Affiliates at or before (provided such business has not been terminated or
abandoned by Purchaser or such Affiliate) the date of termination of Vendor's
employment, including without limitation Related Activities (as defined below)
(hereinafter, a "Competitive Business");
(b) solicit or endeavor to solicit on behalf of a Competitive Business, from
or with any person or entity:
(i) who or which was a customer of the Purchaser or any of its
Affiliates at any time during the period of twelve (12) months preceding the
date of the termination of the Vendor's employment;
(ii) who or which the Vendor or someone for whom he was directly
responsible solicited, negotiated, contracted, serviced, advised or had contact
with on the Purchaser's or any of its Affiliates' behalf; or
(iii) to whom the Purchaser or any of its Affiliates had made
proposals to do business at any time during the period of twelve (12) months
preceding the date of the termination of the employment;
(c) deal, do business or endeavor to deal or do business for a Competitive
Business from or with any person or entity:
(i) who or which was a customer of the Purchaser or any of its
Affiliates at any time during the twelve (12) months preceding the date of the
termination of the employment;
(ii) who or which the Vendor or someone for whom he was directly
responsible solicited, negotiated, contracted, serviced, advised or had contact
with on the Purchaser's or any of its Affiliates' behalf; or
(iii) to whom the Purchaser or any of its Affiliates had made
proposals to do business at any time during the period of twelve (12) months
preceding the date of the termination of the employment;
(d) without the written permission of the Board of the Purchaser (such
permission not to be unreasonably withheld or delayed and in particular such
permission will not be withheld if the Purchaser considers that the Vendor has
neither a personal influence with clients nor is in possession of confidential
information) offer employment to or otherwise solicit for employment the
services of any individual who was an employee or director of the Purchaser or
any of its Affiliates during the period of twelve (12) months preceding the
date of termination of employment whether or not such persons would commit any
breach of his contract of employment with the Purchaser or any of its
Affiliates by reason of his leaving service; or
(e) directly or indirectly take any action which is intended to be materially
detrimental or otherwise intended to be adverse to the Purchaser's and/or any
of its Affiliates'
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<PAGE> 5
goodwill, name, business relations, prospects and operations.
Notwithstanding anything in this Agreement to the contrary, the following
activities will not be deemed to contravene the provisions of Section 2 of
this Agreement:
(i) Owning, operating, controlling or serving as a director, officer or
employee of or consultant to any company the principal business of which is
manufacturing, distributing, marketing and/or selling pharmaceutical
products the rights to which are owned by or licensed to such company;
provided that the amount of the consolidated revenues of such company in
any year derived from operations (as defined below, "Related Activities")
involving providing, on a contract, for hire, or similar basis (i) drug
development services, (ii) pharmaceutical or clinical research services,
(iii) pharmaceutical sales or marketing services (iv) health information
management services, and/or (v) any other activity which constitutes a
significant part of the business of the Purchaser (in the case of
subparagraph (v), at or before the date of termination of Vendor's
employment) will not exceed the greater of five percent (5%) of
consolidated revenues or five percent (5%) of consolidated expenses of such
company; provided further that Vendor shall have no direct involvement in
such Related Activities as a director, officer, employee, consultant or
otherwise; provided further, it is agreed that Related Activities are
intended to be limited to activities which are incidental to the
operations of a pharmaceutical business and are not, without limiting the
foregoing, any activities dedicated primarily to a Competitive Business or
the purpose of drug development, marketing, sales services, or health
benefit analysis of the products or potential products of third parties.
(ii) the provision of executive search consulting services so long as
such services are not provided to an entity engaged in Related
Activities; and
(iii) the provision of financial consulting services so long as such
services are not provided to an entity engaged in Related Activities.
2.3 Holding of Shares or Securities. Section 2.2 shall not prohibit the
holding (directly or through nominees or otherwise) of shares or other
securities of another company which are listed or traded on any recognized
stock exchange being a holding (which phrase shall include any
interest in any such holding) entitling the holder to no more than two and
one half percent (2.5%) of the voting power of such body corporate.
2.4 Nondisclosure. The Vendor shall not either before or after the termination
of his employment hereunder disclose to any person or persons any
confidential information in relation to the affairs of the Purchaser or any
of its Affiliates or any client or customer thereof which he has become or
may have become possessed whilst in the service of the Purchaser except in
the proper course of his duties as an officer, director or employee of the
Purchaser or as authorized by the Board or as ordered by a Court of
competent jurisdiction or pursuant to other governmental process.
2.5 Geographical Restriction. The restrictions set forth in Sections 2.2(a)
apply to the following geographical areas: the United Kingdom, the Federal
Republic of Germany and the United States of America, including the
territories and possessions thereof.
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<PAGE> 6
2.6 Non-Competition Period. As used in this Agreement "Non-Competition
Period" means: the greater of: (i) the two (2) year period following the
termination of Vendor's employment with Purchaser (irrespective of the
circumstances of such termination); or (ii) five (5) years from November
26, 1996.
2.7 Remedies. Vendor acknowledges and agrees that Vendor's failure to abide by
the provisions of this Agreement would cause irreparable harm to the
Purchaser and/or its Affiliates for which legal remedies would be
inadequate. Therefore, in addition to any legal or other relief to which
the Purchaser and/or its Affiliates may be entitled by virtue of Vendor's
failure to abide by these provisions: (i) the Purchaser may seek legal and
equitable relief, including but not limited to preliminary and permanent
injunctive relief, for Vendor's actual or threatened failure to abide by
these provisions; (ii) Vendor will, upon final judicial determination that
Vendor has breached the terms of this Agreement, indemnify the Purchaser
and/or its Affiliates for all expenses (including legal fees) in seeking to
enforce these provisions; and (iii) if, as a result of Vendor's failure to
abide by the provisions, any commission or fee becomes payable to Vendor or
to any person, corporation or other entity with which Vendor has become
employed or otherwise associated, Vendor shall pay the Purchaser or cause
the person, corporation or other entity with whom he has become employed or
otherwise associated to pay the Purchaser an amount equal to such
commission or fee.
2.8 Other Agreements. Nothing in this Agreement shall terminate, revoke or
diminish Vendor's obligations or the Purchaser's and/or its Affiliates'
rights and remedies under law or under Vendor's Employment Agreement with
Purchaser and the Share Exchange Agreement relating to trade secrets,
confidential information, non-competition and intellectual property.
3. GENERAL PROVISIONS
3.1 Notices. All notices, demands, requests, or other communications which may
be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class registered
post, postage prepaid, return receipt requested or transmitted by telegram,
telecopy or telex, addressed as follows:
(a) If to the Purchaser:
Quintiles Transnational Corp.
4709 Creekstone Drive
Riverbirch Building, Suite 300
Durham, North Carolina
U.S.A. 27703
Attention: Gregory D. Porter
Fax: 919-941-2090
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with a copy which shall not constitute notice to:
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan L.L.P.
2500 First Union Capital Center
Raleigh, North Carolina
U.S.A. 27601
Attention: Gerald F. Roach
Fax: 919-821 6800
(b) If to the Vendor:
Barrie Stevens Haigh
Chimneys, Winter Hill
Cookham Dean
Berkshire SL6 9TN
With a copy which shall not constitute notice to:
Attention:
Fax:
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request, or communication which shall be
hand delivered, sent, mailed, telecopied or telexed in the manner described
above, or which shall be delivered to a telegraph company, shall be deemed
sufficiently given, served, sent, received or delivered for all purposes at
such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, or (with respect to a telecopy or telex) the answerback
being deemed conclusive, but not exclusive, evidence of such delivery) or
at such time as delivery is refused by the addressee upon presentation.
3.2 Variation. No variation of this Agreement shall be valid or effective
unless made by one or more instruments in writing signed by all of the
parties hereto.
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<PAGE> 8
3.3 Entire Agreement. Except as expressly provided in this Agreement, this
Agreement: (i) supersedes and cancels all other understandings and
agreements, oral or written, with respect to Vendor's obligations with
respect to non-competition which Vendor has executed in the past; (ii)
supersedes all other understandings and agreements, oral or written,
between the parties with respect to the subject matter of this
Agreement; and (iii) constitutes the sole agreement between the parties with
respect to the matters covered. No change or modification of this
Agreement shall be valid or binding upon the parties unless such change or
modification is in writing and is signed by the parties.
3.4 Assignment. Neither of the parties hereto shall assign or otherwise deal
with any of its right, title or interest in this Agreement without the
prior written consent of the other party to this Agreement, which consent
may be withheld in such party's absolute discretion, provided, however,
that the Purchaser may in its absolute discretion assign all or any of
its right title and interest in this Agreement to a an Affiliate or to a
subsequent purchaser of all of the share capital of the Company or all or
substantially all of the assets of the Company.
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<PAGE> 9
3.5 Law and Jurisdiction. This Agreement shall be governed by and construed in
accordance with English law and the parties irrevocably submit to the
non-exclusive jurisdiction of the High Court of Justice in London for all
purposes connected with it.
IN WITNESS whereof this Agreement has been executed and unconditionally
delivered as a Deed the day and year first-above written.
Signed and delivered as a Deed )
by Quintiles Transitional Corp. )
by its duty authorized )
Vice President, Rachel R. Selisker, )
and by its duly authorized )
Secretary, Gregory D. Porter )
/s/ Rachel R. Selisker
- -------------------------------
Rachel R. Selisker
Vice President
/s/ Gregory D. Porter
- -------------------------------
Gregory D. Porter
Secretary
Signed and delivered as a Deed ) /s/ Barrie Stevens Haigh
by Barrie Stevens Haigh )
in the presence of:
Name: David B. Rockwell )
------------------------- )
Address: 28 Willow Road )
----------------------- )
Hampstead, London )
----------------------- )
NW3 1TL, England )
----------------------- )
Occupation: Attorney )
------------------- )
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<PAGE> 1
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into by
The Lewin Group, Inc., a North Carolina corporation (hereinafter the "Company")
and Lawrence S. Lewin (hereinafter "Employee").
Pursuant to the Asset Purchase Agreement dated as of April 16, 1996
(hereinafter "Asset Purchase Agreement") by and between Company, Quintiles
Transnational Corp. ("Quintiles"), Lewin - VHI, Inc. ("Lewin - VHI"), Value
Health, Inc. ("VHI"), Lawrence S. Lewin, and Robert J. Rubin, Company agreed
to purchase certain of the assets and assume certain of the liabilities of
Lewin - VHI.
As a condition of the Asset Purchase Agreement, Employee shall execute
a written Employment Agreement with the Company upon the terms and conditions
hereinafter set forth.
In consideration of the mutual promises contained herein and the Asset
Purchase Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is mutually acknowledged, the parties agree as follows:
1. EMPLOYMENT. The Company employs Employee and Employee accepts
employment on the terms and conditions set forth below.
2. NATURE OF EMPLOYMENT. Employee shall serve as Chief Executive
Officer and have such responsibilities and authority as may from time to time
be assigned by the Company's Board of Directors. Subject to the Board's
direction, Employee shall perform such duties as are commensurate with and
required by the position of Chief Executive Officer. Employee shall devote all
his working time and best efforts to successfully perform his duties and
advance the Company's interests; provided, however, to the extent that there is
no interference with Employee's performance of his duties under this Agreement,
Employee may: (a) without consent of the Board, write professionally (subject
to Section 9 below), (b) without consent of the Board, continue to serve and
may be reelected to serve as a member of any Board of Directors and/or Board of
Trustees on which he served as of the date of this Agreement (and to retain
director's fees and other compensation, including stock options and awards, for
services rendered), (c) with prior consent of Quintiles (which shall not be
unreasonably withheld), accept election to Boards of Directors and/or Boards of
Trustees other than those specified in clause (b) during the term of this
Agreement, and (d) without consent of the Board, engage in voluntary or
charitable activities and be elected to serve on the boards of voluntary,
not-for-profit organizations. As to actions permitted by the preceding
sentence, Employee shall (i) conduct any such professional writing individually
or as an employee of or consultant to a person or entity other than the Company
or any Affiliate (as defined below) and not as an employee of or consultant to
the Company or any
<PAGE> 2
Affiliate, and (ii) shall indemnify and hold harmless the Company and its
Affiliates and their respective directors, officers, employees, agents and
shareholders from and against any and all losses, claims, actions, damages,
liabilities, costs and expenses (including attorneys' fees), joint or several,
relating to or arising out of any such professional writing by Employee or any
other conduct, act or omission of Employee, occurring on or after the date of
this Agreement, other than in his capacity as an employee, officer or director
of the Company or Quintiles. For purposes of this Agreement, "Affiliates"
shall mean Quintiles, or any subsidiary or related entity of either the Company
or Quintiles, or any entity directly or indirectly controlled or beneficially
owned in whole or substantial part by the Company or Quintiles or any
subsidiary or related entity of either.
3. TERM. The original term of employment shall begin on the
Closing Date (as defined in the Asset Purchase Agreement) and end on the third
anniversary date thereafter (the "Term") unless terminated earlier as set forth
in Section 10. Upon the original term's or any renewal term's expiration,
Employee's employment shall be automatically renewed for an additional one (1)
year period unless either party gives the other party not less than ninety (90)
days prior notice of its intent not to continue the employment relationship.
During any renewal terms, all terms, conditions, and provisions of this
Agreement shall remain in full force and effect. Sections 2 (Nature of
Employment), 5 (Consultancy), 6 (Non-Competition), 7 (Remedies for Certain
Breaches), 8 (Confidentiality), 9 (Intellectual Property), 14 (Arbitration) and
17 (Governing Law) shall survive any termination of this Agreement as provided
herein.
4. COMPENSATION.
(A) SALARY. Employee shall receive an annual salary of
not less than $288,750 (less applicable withholdings) payable in equal biweekly
installments. Employee's salary shall be subject to at least annual review and
adjustment in accordance with the Company's current standard practice for
executive compensation and subject to the discretion of the Company's Board of
Directors or Compensation Committee thereof. The Company shall not reduce
Employee's salary without Employee's consent.
In addition, Employee shall be eligible to earn a
discretionary annual performance bonus (the "Annual Bonus") at a target level
of not less than 50% of salary pursuant to criteria to be approved by the
Company's Board of Directors (or the Compensation Committee thereof). Employee
may also be eligible to receive an additional discretionary bonus of up to 50%
of the Annual Bonus (the "Additional Bonus Target Percentage") pursuant to
criteria to be approved by the Company's Board of Directors (or the
Compensation Committee thereof). Pursuant to Paragraph 1 (f) of the
Indemnification Agreement entered into on April 16, 1996, by and among the
Company, Quintiles, Lewin-VHI, VHI, Lawrence S. Lewin, Robert J. Rubin, Robert
F. Atlas, Raymond J. Baxter, Donald W. Moran, and Kevin J. Sexton
("Indemnification Agreement"), any cash bonus pool established by the Company
for Employee's or other employees' benefit shall be reduced by an amount
necessary to recover a Loss (as defined in the Indemnification Agreement).
Employee's total compensation under this Agreement (salary
plus bonus) for payment dates following the date of any final determination or
agreement described in clause (i) or (ii) below shall be reduced by: (i) any
amount that a court or arbitrator with jurisdiction over
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<PAGE> 3
the subject matter finally determines, or that Employee agrees, is owed by
Employee to either the Company or Quintiles pursuant to the Indemnification
Agreement; and (ii) any amount that a court or arbitrator with jurisdiction
over the subject matter finally determines, or that Employee agrees, is owed by
Employee to either Lewin-VHI or VHI pursuant to that certain
cross-indemnification agreement, dated April 16, 1996, by and among Employee,
Lewin-VHI, VHI, and other employees of the Company (the "VHI
Cross-Indemnification Agreement"). Such reduction shall be applied to payments
of compensation hereunder until the aggregate amount of such reductions is
equal to the amount so determined or agreed to be owed, plus interest at the
rate of eight percent (8%) per annum. No salary reduction shall exceed the
extent of Employee's remaining liability to the Company and Quintiles pursuant
to Schedule 1 of the Indemnification Agreement.
(B) STOCK OPTION.
(i) Nonqualified. Employee shall be entitled to
such stock options as are granted under the Stock Option Agreement attached as
Exhibit 1; such options shall be governed by the terms and conditions of the
Quintiles Lewin Nonqualified Stock Option Plan. Twenty-five percent (25%) of
such options shall vest and become exercisable immediately and the remainder of
such options shall vest and become exercisable in equal monthly installments
over a three year period beginning as of the Closing Date. The options shall
have an exercise price per share equal to the closing price per share of
Quintiles Common Stock on the Nasdaq National Market as of the Closing Date.
Any unvested stock options shall vest and become exercisable immediately: 1)
upon the Company's termination of the employment relationship created by this
Agreement, unless such termination is "for cause" pursuant to Section 10(a)
hereof; 2) in the event Quintiles should sell all or substantially all of the
assets or stock of the Company to any entity other than an Affiliate of
Quintiles and, because of such sale, Employee elects to terminate the
employment relationship created by this Agreement; and, 3) in the event of
Employee's total disability (as defined hereinafter) or death.
(ii) Qualified. As soon as practicable after the
execution of this Agreement by all parties, Employee shall be granted an
incentive stock option pursuant to Quintiles' Equity Compensation Plan ("the
Plan") to purchase ten thousand (10,000) shares of Quintiles Common Stock.
This option shall be governed by the terms and conditions of the Plan and,
subject to the applicable terms and conditions, shall be evidenced by a stock
option agreement in the standard form employed by Quintiles for incentive stock
options issued pursuant to the Plan; shall vest and become exercisable in equal
monthly installments over a three year period beginning as of the Closing Date;
and shall have an exercise price per share equal to the closing price per share
of Quintiles Common Stock on the Nasdaq National Market on the last trading day
prior to the date the option is granted (subject to adjustment as provided in
the applicable stock option agreement).
(C) PARTICIPATION IN OTHER BENEFITS. Employee may
participate (subject to applicable terms and conditions) in all pension, profit
sharing, bonus, incentive, insurance, medical, disability and other benefit
plans and programs made available to Company executives from time to time.
Nothing in this Agreement, however, shall require the Company to create or
confirm any such employee benefits. In addition, the Company agrees to
purchase within sixty
3
<PAGE> 4
days of the date this Agreement is executed, a term life policy on the life of
Employee with an approximate annual cost to the Company of $15,000 so long as
this Agreement remains in effect, but not beyond April 25, 2000, and provided
that Employee is insurable. The Company may, in its discretion, satisfy its
obligation with respect to such term life insurance policy by assuming any
existing term life insurance policy which Employee may have. The beneficiary
of such policy shall be designated by Employee. Employee shall be considered a
level 3 employee (or the substantial equivalent thereof) under Quintiles'
Executive Compensation Plan except that Employee shall not be eligible for
Quintiles' cash bonus, automobile policy, vacation and noncompetition benefits
and policies.
(D) EXPENSES. Subject to the terms and conditions of
applicable reimbursement policies, Employee shall be entitled to reimbursement
of expenses actually incurred by Employee in performing the services under this
Agreement.
5. CONSULTANCY. Upon the Company's request, Employee will serve
as a consultant to the Company or its Affiliates for a term of one year after
the termination of the employment relationship and make himself available for
consulting assignments as requested by the Company or its Affiliates; such
requests shall be upon reasonable notice and shall not require Employee's
services as a consultant for more than twenty (20) hours per week or in a
manner that would interfere with Employee's subsequent employment. Company
will pay Employee a consulting fee for making himself available under this
section equal to the base salary paid to Employee for the year immediately
preceding the term of consultancy. As a consultant, Employee shall be an
independent contractor, not an employee, and shall be responsible for paying
all applicable income and other taxes on or related to such consulting fees and
shall not be entitled to benefits, but shall remain subject to all obligations
set forth in this Agreement in Sections 6 (Non-competition), 8
(Confidentiality) and 9 (Intellectual Property).
6. NON-COMPETITION. The Employee acknowledges that he shall have
access to and control of confidential information concerning the Company and
its Affiliates. In consideration of the Company's commitments to the Employee
under this Agreement and under the Asset Purchase Agreement, Employee expressly
covenants and agrees that during his employment and for a period that shall
expire upon the latter of either one (1) year after termination of employment
or five (5) years from the Closing Date unless such termination by the Company
is not "for cause," in which case the period shall be one (1) year after
termination of employment, Employee will not, without the Company's prior
written consent duly authorized by resolution of the Board of Directors:
(a) serve as a partner, trustee, officer, director, employee,
consultant, stockholder, option holder, or guarantor of, or lender of money to,
or otherwise assist, or have any interest in or referral or other agreement
with, any other health economics or health policy consulting firm, contract
research organization, corporation, firm or business engaged in the same
business as, or a business competitive with, the Company's or its Affiliates'
business, in any capacity connected with such entities' competitive activities
in the geographical areas set forth below. This prohibition shall not apply to
any business which the Company or its Affiliates did not engage in or
contemplate engaging in on the Employee's termination date. It is agreed that
ownership,
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<PAGE> 5
directly or indirectly, of not more than one (1%) percent of the issued and
outstanding stock of a corporation, the shares of which are regularly traded on
a national securities exchange or in the over-the-counter market, shall not be
deemed to be in violation of the preceding sentence.
Notwithstanding the foregoing provisions of this section,
Employee may, after termination of employment under this Agreement,: (i)
obtain employment with an institution of higher education or a local, state, or
federal governmental body; (ii) accept speaking engagements, provided that such
engagements shall not be presented to, on behalf of, or under the sponsorship
of, a competitor of the Company; and (iii) unless the termination of his
employment is "for cause," provide his personal consulting services to a person
or entity which is not in competition with the Company. The provision of such
personal consulting services is permissible during the term of this
non-competition provision only if such services are performed through the
Company and in accordance with any applicable Company policies or practices.
Fees charged for such personal consulting services shall be charged through the
Company to the consulting client and shall not exceed $500,000 in any twelve
(12) month period. For the first $50,000 in fees received by the Company from
such consulting clients in any twelve (12) month period, the Company shall pay
Employee $50,000. For fees received by the Company in excess of $50,000 in the
twelve (12) month period, the Company shall pay Employee an amount equal to the
amount of fees received by the Company less a deduction for operating profit
payable to the Company in the amount of fifteen percent (15%) of such fees.
Arrangements for office space and secretarial services, if any, shall be
separately negotiated to the mutual satisfaction of the parties. In performing
such consulting services, Employee shall be an independent contractor and not
an employee. If termination of employment is "for cause," then, unless the
Company and the Employee agree otherwise, in lieu of the foregoing consulting
arrangement, Employee may provide personal consulting services as a sole
proprietor (or similar individual business without other consultants) directly
to consulting clients which are not in competition with the Company so long as
Employee's consulting does not in any way benefit a competitor, the Employee
otherwise complies with the provisions of this Section 6, and so long as
consulting fees arising from such services do not exceed $500,000 in any twelve
(12) month period. Provided that, Employee must give reasonably prompt notice
of personal consulting services to be so provided, and Employee must provide
contemporaneous copies of billing and make payment to the Company of fifteen
percent (15%) of net revenues (as defined by the Company's standard accounting
practices) from such personal consulting services. Payment shall be made to
the Company immediately upon Employee's receiving payment for such consulting
services. For purposes of this subparagraph 6(a), "personal consulting
services" shall be specialized services which Employee uniquely is qualified to
provide (either by virtue of Employee's skills, knowledge, or experience or by
virtue of Employee's past relationship with the client), and which are provided
without any assistance from other consultants or staff except a personal
secretary.
(b) solicit, interfere with the Company's contractual
relationship with, or entice away from Company, any customer, supplier, person,
firm, or corporation who has at any time during the one (1) year immediately
preceding termination of Employee's employment or consultancy done business
with the Company or its Affiliates, or offer employment to or procure
employment for any person who at any time during the one (1) year immediately
preceding the termination of Employee's employment or consultancy with the
Company, shall have been
5
<PAGE> 6
employed by the Company or its Affiliates or done any substantial work for the
Company or its Affiliates; provided, however, that this paragraph shall not
apply in any manner to Employee's secretary.
(c) take or engage in any action, in any form or manner,
which directly or indirectly is materially detrimental to the goodwill or name
of the Company or its Affiliates, or is otherwise intended to be adverse to the
Company or its Affiliates; provided, however, that this paragraph shall not
prohibit lawful competitive conduct so long as the Employee does not violate
the restrictions in Section 6(a) and 6(b) above.
The restrictions set forth above, in Sections 6(a) and 6(b), apply to
the following geographical areas: (i) any city, metropolitan area or county in
which the Company, or its subsidiaries or Affiliates, does or, during the
Employee's employment, did business; (ii) any city, metropolitan area or county
in which the Company, or its subsidiaries or Affiliates, or the Employee's
services were provided, or for which the Employee had responsibility, while
employed by the Company.
In the event a court of competent jurisdiction holds that the five (5)
year non-competition period is unenforceable, then the non-competition period
shall be four (4) years; unless that period is held unenforceable, then the
non-competition period shall be three (3) years; unless that period is held
unenforceable, then the non-competition period shall be two (2) years; unless
that period is held unenforceable, then the non-competition period shall be one
(1) year.
7. REMEDIES FOR CERTAIN BREACHES. In addition to any other right
and remedy it may have, the Company shall be entitled to an injunction
enjoining or restraining the Employee from any violation or threatened
violation of Sections 6, 8 and 9. If a court of competent jurisdiction should
determine that any provision of Sections 6, 8 or 9 is unenforceable for any
reason, Employee specifically agrees and requests that the court making such
determination shall modify and reform the provision or provisions found to be
unenforceable and, in its modified form, specifically enforce Sections 6, 8 and
9. Notwithstanding anything to the contrary, Employee's obligations under
Sections 6, 8, and 9 are independent covenants without any conditions precedent
or subsequent and the Company may enforce the provisions of Sections 6, 8 and 9
in any and all circumstances including but not limited to a termination of
employment without cause and irrespective of whether the Company has fulfilled
any or all its obligations to Employee; provided that Employee may specifically
enforce any obligations owed to Employee by the Company, but Employee may not
assert any alleged breach by the Company as a defense to the enforcement of any
of the Company's rights under Sections 6, 8 or 9. The Company's rights under
this Agreement are cumulative with, and not to the exclusion or limitation of,
any and all rights of the Company and its Affiliates under the Asset Purchase
Agreement or otherwise. It is specifically acknowledged and agreed by both
parties that the Asset Purchase Agreement and this Employment Agreement were
simultaneously bargained for by the parties and that the Asset Purchase
Agreement was an inducement to each party to enter into this Agreement and vice
versa. It is further agreed that neither party would have entered into the
Asset Purchase Agreement without entry into this Agreement or vice versa. It
is specifically agreed that the
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<PAGE> 7
provisions of Sections 6, 8 and 9 are reasonable and that they shall be
interpreted, construed and enforced according to the laws of North Carolina.
8. CONFIDENTIALITY. During employment and for five (5) years
thereafter, or such longer time as may be required by any obligation of
confidentiality to third parties, which obligation is known to the Employee,
Employee shall not, for any purpose other than in the performance of his work
for the Company and in accordance with applicable policies and procedures, use,
disclose or aid third parties in obtaining or using any confidential
information of the Company or its Affiliates. For the purposes of this
Agreement, Confidential Information means information of the Company or its
Affiliates, not generally available to the public, including without
limitation, information about customer identity, needs, practices; pricing
lists and policies; marketing contracts and practices; and other corporate,
business, marketing and technical information, methods and plans including
without limitation formulae, computer programming techniques, documentation,
software source codes, object codes, documentation, "know-how", processes,
methods, research, development or marketing techniques, programs, materials or
plans, client lists or any other of its or their trade secrets or confidential
information. In the event that Employee shall be required to make disclosure
pursuant to court order or other government process or that disclosure is
necessary to enable the Employee to comply with applicable law or defend
against claims, Employee shall promptly notify the Company and take at the
Company's expense all reasonably necessary steps requested by the Company to
defend against the enforcement of such court order or other government process,
and permit the Company to participate with counsel of its choice in any
proceeding relating to the enforcement thereof. Upon the termination of
employment, Employee shall deliver to the Company all records, memoranda, data
and other documents of any description which refer or relate in any way to such
information, the disclosure of which is prohibited by these provisions, and
return to the Company any of its equipment and property which may then be in
Employee's possession or control.
9. INTELLECTUAL PROPERTY. Intellectual Property includes but is
not limited to all ideas, discoveries and inventions (including without
limitation machinery, apparatus, products, processes, methods, formulas,
techniques, computer hardware, software, information systems and programs and
works of authorship), and improvements thereof, and know-how related
thereto--whether or not patentable, copyrightable or subject to other
protection.
(A) DISCLOSURE. Employee will disclose to the Company
promptly in writing all Intellectual Property conceived, developed or made by
him, individually or jointly, during his employment or consultancy with the
Company.
(B) ASSIGNMENT. Employee, upon the Company's request
during his employment or consultancy with the Company or thereafter, will
assign to the Company any of his rights or interest in any Intellectual
Property, make all applications for patents, execute all other writings and
perform all other acts, which in the Company's opinion may be necessary to
establish and perfect in the Company the Employee's entire right, title and
interest, foreign and domestic, in the Intellectual Property, patent
applications and patents; provided, however, the Employee will not be required
to assign any rights in any Intellectual Property that:
7
<PAGE> 8
(i) he developed entirely on his own time without
using the Company's equipment, supplies, facilities or confidential or trade
secret information, including any professional writing as described in Section
2 hereof; and
(ii) does not relate to the Company's business or
actual or anticipated research or development, or result from his work for the
Company.
(c) Employee acknowledges that the name, "The Lewin
Group, Inc.," is the property of the Company. Accordingly, Employee shall not
use the name "Lewin," or grant the right to others to use the name "Lewin," as
part of the name or identification of any other contract research organization,
corporation, firm, or business engaged in the same business as, or a business
competitive with, the Company's or its Affiliates' business for such time as
the Company or its Affiliates may be in existence.
10. TERMINATION.
(a) The Company shall have the right to terminate
Employee's employment immediately for cause, or in the event of Employee's
total disability as determined by an independent physician selected jointly by
the Company and Employee, or death. For purposes of this Agreement, "total
disability" shall mean a physical or mental infirmity which impairs the
Employee's ability substantially to perform his employment duties for the
Company and which continues for a period of at least one hundred and eighty
(180) days. For purposes of this Agreement, "cause" shall include: (i)
Employee's commission of any act of negligence, unlawfulness, or dishonesty ,
which is materially detrimental to the Company's interests; (ii) Employee's
personal performance of his job in a grossly unsatisfactory manner, as
reasonably determined by the Board of Directors of the Company and specified in
writing, or failure to comply with the Company's directions, policies, rules or
regulations, which performance or failure to comply, is materially detrimental
to the Company's interests; or (iii) Employee's material breach of this
Agreement. In the event of "cause" arising under Section 10(a)(i)(except for
unlawfulness or dishonesty), (ii), or (iii), Employee shall be entitled to
receive written notice from the Company specifying the deficiency giving rise
to "cause" and a reasonable opportunity to cure such deficiency, and such
notice shall be accompanied by an opinion of outside counsel to the Company
confirming that in such counsel's opinion the facts alleged (which such counsel
can assume as true) constitute cause under this Agreement.
The Company also may terminate Employee's employment during
the Term (or any renewal term) in its full discretion, for any reason or no
reason, as provided for in subparagraph (c) below.
(b) In the event that the Company terminates Employee's
employment as provided in subparagraph (a) above, then the Company shall have
no obligation to make any payments under this Agreement for any period
subsequent to the date of such termination. Nothing in this Agreement is
intended to supplant, waive, terminate or otherwise affect Employee's
eligibility for or receipt of any death, disability or dismemberment benefits
to which Employee otherwise would be entitled.
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<PAGE> 9
(c) In the event that the Company terminates Employee's
employment during the Term (or any renewal term) otherwise than as provided in
subparagraph (a) above or Employee terminates his employment during the Term
(or any renewal term) by reason of the Company's breach of this Agreement, such
termination by Employee being only after the Company receives written notice
from the Employee specifying the deficiency alleged to constitute breach and a
reasonable opportunity to cure such deficiency:
(i) the Company shall continue to pay Employee's
salary (in the amount and manner established in paragraph 4(a) above) for any
then-remaining balance of the initial three (3) year Term, less any amount
payable pursuant to paragraph (ii) below; and
(ii) the Company's sole and exclusive other
obligation, upon the Employee's execution of an enforceable waiver and release
of all claims under this Agreement and claims related to employment, shall be
to pay to Employee, in equal monthly installments, the greater of (A) an amount
equal to Employee's salary pursuant to paragraph 4(a) at the rate in effect
prior to such termination, for a period of one year or (B) the amount of
severance pay applicable to Employee pursuant to the Company's standard
severance policy as then in effect, if any. Notwithstanding anything to the
contrary, the Company shall have no further liability or obligation to the
Employee except as provided by law or if the terms of any employee benefit plan
continue benefits under these circumstances of termination.
(d) In the event Employee's employment terminates upon
the Company's election not to renew the Term (or any extension of the Term),
the Company's sole and exclusive obligation shall be to pay to Employee, in
equal monthly payments, the greater of (i) an amount equal to the Employee's
then current annual salary or (ii) the amount of severance pay applicable to
Employee pursuant to the Company's standard severance policy as then in effect,
if any.
(e) If Quintiles should sell all or substantially all of
the assets or stock of the Company to any entity other than an Affiliate of
Quintiles, Employee may elect to terminate the employment relationship created
by this Agreement. In the event Employee so elects, he shall have no
entitlement to any further compensation or severance pay from the Company and
he shall not be subject to the provisions of Section 6 (Non-competition)
hereof, unless the Company should request his services as a consultant under
Section 5 (Consultancy) hereof, in which case, he shall be subject to the
provisions of Section 6 (Non-competition) as if the termination of employment
were without "cause."
(f) Notwithstanding anything in the foregoing to the
contrary, upon the termination, for any reason, of Employee's employment
pursuant to this Agreement, the Employee shall continue to receive health
insurance coverage from the Company until Employee reaches age sixty-five (65)
or is eligible for Medicare, whichever is earlier. If, in order to provide
such insurance at a commercially reasonable rate, it is necessary for the
Employee to remain an employee of the Company outside the terms of this
Agreement, then the Company and the Employee shall agree to an employment
relationship which would accomplish such provision; provided, however, that any
such agreement shall not impose upon Employee any additional non-
9
<PAGE> 10
compete, confidentiality, or related restriction. Employee and the Company
agree to cooperate in the obtaining of such insurance at commercially
reasonable rates. Employee agrees that he shall contribute to the cost of such
insurance in an amount equal to the Company's average cost per employee for
health insurance during the period Employee shall receive such coverage, and
Employee also shall pay any ordinary employee contributions for such insurance.
11. GARNISHMENT OF WAGES. The Company will not garnish Employee's
wages except as may be required by law or by court order or as expressly
authorized by the third paragraph of Section 4(a).
12. ILLNESS OR INCAPACITY. If the Employee is unable to perform
his services by reason of illness or incapacity, but is not totally disabled as
defined herein, the Company shall continue the Employee's regular compensation
for a period of up to, but not more than, one hundred eighty (180) days in any
twelve (12) month period.
13. REPRESENTATION OF EMPLOYEE. Employee represents and warrants
that his performance of the terms under this Agreement will not breach any duty
or obligation owed by Employee to another under contract or otherwise, violate
any confidence of another, or violate any law or recognized standard of ethics
or business custom. Employee's breach of a representation or warranty in the
Asset Purchase Agreement shall constitute a breach by Employee of this
Agreement only if the representation or warranty in the Asset Purchase
Agreement were made by Employee with actual and personal knowledge that such
representation or warranty was untrue when made or upon the Closing Date.
14. ARBITRATION. The parties agree that any controversy or claim
arising out of this Agreement shall be settled by arbitration in Raleigh, North
Carolina in accordance with applicable rules of the American Arbitration
Association and Exhibit 2 hereto. Any judgment of the arbitrator shall be
final and binding on the parties. Provided, however, should a party desire to
seek injunctive or other equitable relief with respect to such controversy or
claim, then such party may bring the matter to a court of competent
jurisdiction in lieu of arbitration and such judicial proceeding may resolve
damages and other similar relief in addition to injunctive or equitable relief.
Should the party seeking injunctive or equitable relief not be awarded any such
relief, then to the extent unresolved, the claim or controversy shall be
submitted to binding arbitration as described herein at the request of either
party. Nothing herein shall be construed to require arbitration of disputes
with respect to the Asset Purchase Agreement or other Transaction Documents.
15. WAIVER OF BREACH. Waiver by the Company or Employee of any
breach of any of the provisions of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by the parties.
16. NOTICES. Any notice required or permitted to be given under
this Agreement shall be considered sufficient if in writing, sent by overnight
courier or fax to Employee at his residence of record with Company and/or to
the Company at its principal office.
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<PAGE> 11
17. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of North Carolina.
18. ENTIRE AGREEMENT. This Agreement together with the Option
Agreement: (i) supersedes all other understandings and agreements, oral or
written, between the parties with respect to its subject matter; and (ii)
constitutes the sole agreement between the parties with respect to its subject
matter. Each party acknowledged that: (i) no representations, inducements,
promises or agreements, oral or written, have been made by any party or by
anyone acting on behalf of any party, which are not embodied in the Agreement;
and (ii) no agreement, statement or promise not contained in the Agreement
shall be valid or binding on the parties unless such change or modification is
in writing and is signed by the parties.
19. SEVERABILITY. If a court of competent jurisdiction holds that
any provision or sub-part thereof contained in the Agreement is invalid,
illegal or unenforceable, that invalidity, illegality or unenforceability shall
not affect any other provision in the Agreement.
20. PARTIES BOUND. The Agreement shall apply to, be binding upon
and inure to the benefit of the parties' successors, assigns, heirs and other
representatives; provided, however, the Employee cannot assign this Agreement
without the Company's prior written consent, which consent the Company may
withhold. In addition, the Company may not assign this Agreement to any entity
that is not wholly-owned by Quintiles without Employee's consent, which consent
Employee may withhold.
21. DUPLICATE ORIGINALS. This Agreement is executed in duplicate
originals one of which is retained by each party.
IN WITNESS WHEREOF, the parties have executed this Agreement this the
13th day of May, 1996.
THE LEWIN GROUP, INC.
By: /s/ Gregory D. Porter
------------------------
Title: Vice President
------------------------
EMPLOYEE:
/s/ Lawrence S. Lewin
--------------------------------
Lawrence S. Lewin
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<PAGE> 12
EXHIBIT 2
Dispute Resolution Procedures
1.0 For purposes of this Exhibit, "Dispute" shall mean
any dispute, controversy or claim arising out of or related to the
interpretation, application, or enforcement of the Employment Agreement or any
breach, termination or claim of invalidity of the Employment Agreement.
2.0 In the event of any Dispute, the matter -- upon
written request of either party detailing the nature of the Dispute (a "Dispute
Notice") -- shall immediately be referred the arbitrator selected as provided
below. Except as otherwise provided in Section 14 of the Employment Agreement,
the Employee and the Company agree to submit all Disputes to binding
arbitration. The arbitration shall be administered by the American Arbitration
Association in Washington, D.C., and conducted in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association,
with the hearing locale to be Raleigh, North Carolina.
3.0 If a Dispute Notice is served, the parties shall
promptly attempt to agree on and appoint a single arbitrator. If the parties
have not, within 15 days of the delivery of the Dispute Notice, agreed
unanimously on a single arbitrator to resolve the Dispute, either party may
request that the American Arbitration Association appoint a neutral arbitrator
in accordance with its rules.
4.0 A single neutral arbitrator (the "Arbitrator"),
selected in accordance with the preceding subparagraph, shall preside over the
arbitration and decide the Dispute (the "Decision"). The Decision shall be
binding, and the prevailing party may enforce such decision in any court of
competent jurisdiction.
5.0 The parties shall cooperate with each other in
causing the arbitration to be held in as efficient and expeditious a manner as
practicable and in this connection to furnish such documents and make available
such of their respective personnel as the Arbitrator may request. The parties
have selected arbitration in order to expedite the resolution of Disputes and
to reduce the costs and burdens associated with litigation. The parties agree
that the Arbitrator should take these concerns into account when determining
whether to authorize discovery and, if so, the scope of permissible discovery
and other hearing and pre-hearing procedures.
6.0 The Arbitrator shall render a Decision within 30 days
after accepting an appointment to serve as Arbitrator unless the parties
otherwise agree or the Arbitrator makes a finding that a party has carried the
burden of showing good cause for a longer period.
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<PAGE> 1
EXHIBIT 10.12
DATED 31ST MARCH 1993
(1) INNOVEX HOLDINGS LIMITED
-and-
(2) PAUL KNOTT
___________________________
SERVICE AGREEMENT
___________________________
HOBSON AUDLEY
7 Pilgrim Street
London EC4V 6DR
<PAGE> 2
THIS AGREEMENT is made the 31st day of March 1993
BETWEEN:
(1) INNOVEX HOLDINGS LIMITED ("the Company") registered in England under
number 1413055 whose registered office is at Innovex House, Reading
Road, Henley-on-Thames, Oxon RG9 1EL; and
(2) PAUL KNOTT of 9 Duncan Gardens, Purley on Thames, Berkshire RG8 8DW
("the Executive").
IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement the following words and expressions shall have the
following meanings:
"Associated Company": In relation to the Company, another company
which is a subsidiary of, or a holding company of, or another
subsidiary of a holding company of, the Company;
"the Board": the Board of Directors from time to time of the Company
including any committee of the Board duly appointed by it;
"the Bonus Incentive Scheme": the bonus scheme for executives operated
by the Company from time to time;
"the Business": the carrying on of the business of the provision of
advice and services connected with the provision of contract hire human
resources and clinical research to serve the pharmaceutical industry;
"Industrial Property": includes inventions, designs, processes,
formulae, notations, improvements, know-how, goodwill, reputation,
moulds, get-up, logos, devices, plans, models, literary, dramatic,
musical and artistic works as defined by the Copyright Designs and
Patents Act 1986;
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<PAGE> 3
"Industrial Property Rights": includes patents, designs, trademarks,
trade names, goodwill, copyrights, and all other forms of industrial or
intellectual property (in each case in any part of the world and
whether or not registered or registrable and to the fullest extent
thereof and for the full period thereof and all extensions and renewals
thereof) and all applications for registration thereof, and all rights
and interests thereto and therein;
"the Pension Scheme": the Innovex Holdings Limited Pension and Life
Assurance Scheme;
"production": (and consonant expressions) used in relation to
Industrial Property includes the invention, creation, discovery, design,
research, development and manufacture thereof;
"relevant Industrial Property": all Industrial Property produced
invented or discovered by the Executive either alone or with any other
person at any time now or hereafter during the continuance in force of
this Agreement (whether or not in the course of his employment
hereunder) which is Industrial Property of the kind produced at any
such time by the Company or any Associated Company, or relates directly
or indirectly to the business of the Company or any Associated Company
or which may in the opinion of the Company be capable of being used or
adapted for use therein or in connection therewith;
"the Restricted Territories": the United Kingdom, the Channel Islands,
the Isle of Man, the Republic of Ireland, the Federal Republic of
Germany and the United State of America;
"subsidiary" and "holding company": the meanings respectively ascribed
thereto by Section 736 of the Companies Act 1985;
"the 1978 Act": the Employment Protection (Consolidation) Act 1978.
1.2 References in this Agreement to statutes shall include any statute
modifying, re-enacting, extending or made pursuant to the same or which
is modified, re-enacted, or extended by the same.
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<PAGE> 4
1.3 Headings are for ease of reference only and shall not be taken into
account in the construction of this Agreement.
2. APPOINTMENT
The Company hereby engages the Executive and the Executive hereby
agrees to serve the Company as Group Finance Director upon the terms and
conditions hereinafter appearing.
3. TERM
3.1 The Executive's employment hereunder shall be deemed to have commenced
on the date hereof and shall continue (subject to earlier termination as
provided for herein) for an initial term of three years expiring on
31st day of March 1996 and thereafter until terminated by either party
giving to the other twelve months' prior notice such notice to expire
at or at any time after 31st March 1996.
3.2 The Company shall be entitled to pay salary in lieu of notice.
3.3 The Executive's previous employment with Innovex Limited from 30th
November 1992 to date shall count as part of the Executive's continuous
period of employment with the Company for the purposes of the 1978 Act.
3.4 In the event that the Company gives notice to terminate the employment
of the Executive under this Agreement the Executive agrees:-
(a) that for a period not exceeding the period of such notice the Board
may in its absolute discretion require the Executive to perform
only such duties as it may allocate to him or not to perform any of
his duties under this Agreement and/or to exclude him from any
premises of the Company or of any Associated Company (without
providing any reason therefor); and
(b) that such action taken on the part of the Company shall not
constitute a breach of this Agreement of any kind whatsoever
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<PAGE> 5
in respect of which the Executive has any claim against the
Company;
PROVIDED ALWAYS that throughout the period of any such action the
Executive's salary and all other contractual benefits shall continue to
be paid and provided to him unless and until his employment shall be
terminated.
4. POWERS, DUTIES AND WORKING HOURS
4.1 During the continuance of his employment hereunder the Executive
shall:-
(a) unless prevented by ill health or accident devote all of his time
and all his attention and abilities during normal business hours to
carrying out his duties hereunder;
(b) carry out his duties in a proper and efficient manner and use his
best endeavours to promote and maintain the interests and
reputation of the Company and of its Associated Companies;
(c) exercise such powers and perform such duties in relation to the
business of the Company and/or of its Associated Companies as may
from time to time be vested in or assigned to him by the Board;
such powers and duties may from time to time fall outside the
normal ambit of the Executive's position but will not be duties
inappropriate to the Executive's status;
(d) comply with all reasonable directions from time to time given to
him by the Board and with all rules and regulations from time to
time laid down by the Company concerning its employees which are
consistent with this Agreement;
(e) work at such location in the United Kingdom as the Company shall
require from time to time and, if the Company shall so require for
this purpose, and subject to the Company's bearing the Executive's
reasonable moving expenses in accordance with
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<PAGE> 6
its then current policy for the relocation of executives shall move
to and reside at such location; and
(f) travel to such places (whether within or outside the United
Kingdom) in such manner and on such occasions as the Company may
from time to time reasonably require.
4.2 The Executive's normal working hours shall be such hours as are
reasonably necessary for the proper performance of the Executive's
duties.
5. REPORTING
The Executive shall report to the Board and shall at all times keep the
Board informed of his conduct of the affairs of the Company and its
Associated Companies.
6. REMUNERATION
6.1 During the continuance of his employment hereunder the Executive shall
be paid a salary at the initial rate of L.60,000 per annum which shall
be reviewed annually on or with effect from 1st April each year but
without commitment to increase (the first such review to be made on or
to take effect from 1st April 1993) and such salary shall accrue from
day to day and be paid by equal monthly installments in arrears on the
last day of each month or if that is not a business day the immediately
preceding business day.
6.2 The Executive shall be paid a Director's fee of L.250 in respect of
each Board Meeting of the Company which he shall attend.
6.3 Save as provided in clause 6.2, notwithstanding anything to the
contrary in the Articles of Association of the Company or of any
Associated Company the Executive shall not be entitled to any
remuneration as an officer or employee of the Company or of any
Associated Company in addition to that specified in this Agreement.
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<PAGE> 7
7. EXPENSES
The Company shall reimburse to the Executive all reasonable travelling,
hotel, entertainment and other out-of-pocket expenses properly incurred
by him in the proper performance of his duties subject to production if
required of receipts and vouchers.
8. COMPANY CAR
8.1 The Company shall provide the Executive with a motor car commensurate
with the Executive's position for the purpose of performing his duties
hereunder and the Company shall bear the cost of all petrol and oil,
both business and private mileage, and all other expenses reasonably
and properly incurred by him in the use of such motor car.
8.2 The Executive shall take good care of the vehicle and procure that the
provisions and conditions of any policy of insurance relating thereto
are observed in all respects, and shall comply with all regulations of
the Company relating to company cars.
8.3 Upon the determination (howsoever arising) of his employment hereunder
the Executive shall forthwith return the vehicle, its keys and all
documents relating to it to the Company at its principal place of
business or as otherwise directed by the Company.
9. PENSION, ETC. BENEFITS
9.1 During the continuance of his employment hereunder the Executive shall
be entitled to become a member of the Pension Scheme (in relation to
which there is not a contracting out certificate in force) subject to
the rules and regulations of the Pension Scheme from time to time. The
Company will at the Executive's option make contributions to a personal
pension plan equal to those which it would pay in respect of the
Executive to the Pension Scheme.
9.2 During the continuance of his employment hereunder the Executive shall
be entitled to participate at the Company's expense in the Company's:-
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<PAGE> 8
(a) life assurance scheme with Zurich Life;
(b) private medical scheme with BUPA; and
(c) permanent health scheme with Unum;
subject to the rules of the schemes from time to time.
9.3 During the continuance of his employment hereunder the Executive shall
be entitled to participate in:-
(a) the Company's Bonus Incentive Scheme; and
(b) the Innovex Limited profit related pay scheme;
subject to the rules of such schemes as from time to time amended.
9.4 The Executive will be invited to participate in the share option scheme
proposed to be adopted by the Company.
10. HOLIDAYS
10.1 In addition to bank and other public holidays the Executive shall be
entitled in every calendar year to 25 working days' paid holiday,
22 days to be taken at such time or times as may be approved by the
Board and 3 days to be taken at such time as shall be designated by the
Board PROVIDED THAT to the extent that any holiday entitlement is not
taken in any calendar year the same shall be lost.
10.2 Holiday entitlement shall be deemed to accrue at the rate of 2 days per
month and on the determination of his employment hereunder the
Executive shall be entitled to pay in lieu of outstanding holiday
entitlement and shall be required to repay to the Company pay for
holiday taken in excess of his actual entitlement and for the purposes
of this Clause the basis for payment shall be 1/261 annual salary for
each day's holiday entitlement.
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<PAGE> 9
11. INCAPACITY
11.1 If the Executive is absent from work due to illness or accident he
shall notify the Company Secretary as soon as possible and if this
incapacity continues for seven or more consecutive days or for more
than fourteen working days in any year he shall submit a doctor's
certificate to the Company.
11.2 If the Executive is absent from work due to illness or accident duly
notified and certified in accordance with Clause 11.1 the Company shall
pay the Executive his full remuneration (including bonus/commission)
for up to an aggregate of 130 working days absence in any period of
twelve months and thereafter such remuneration (if any) as the Board
shall in its discretion approve.
11.3 The remuneration paid under Clause 11.2 shall include any Statutory
Sick Pay payable and when this is exhausted shall be reduced by the
amount of any Social Security Sickness Benefit or other benefits
recoverable by the Executive (whether or not recovered).
11.4 The Company may at its expense at any time whether or not the Executive
is then incapacitated require the Executive to submit to such medical
examinations and tests by doctor(s) nominated by the Company and the
Executive hereby authorizes such doctor(s) to disclose to and discuss
with the Company and its medical adviser(s) the results of such
examinations and tests.
12. SECRECY
The Executive shall during the continuance of his employment hereunder
and at all times thereafter keep with inviolable secrecy and shall not
reveal, disclose or publish to any person other than the Board or
persons nominated by them or otherwise utilise other than for the
proper performance of his duties any information of a confidential or
secret nature (including without limitation trade secrets, know-how,
inventions, designs, processes, formulae, notations, improvements,
financial information and lists of customers) concerning the affairs or
business or products of the
-8-
<PAGE> 10
Company or of any Associated Company or of any of their predecessors in
business or of their suppliers, agents, distributors or customers of
which he may now know or have learned or which he may hereafter know or
learn while in the Company's employment, and shall not use for his own
purposes or for any purposes other than those of the Company or of any
Associated Company any such confidential information.
13. INTELLECTUAL PROPERTY
13.1 All relevant Industrial Property and all Industrial Property Rights
therein shall to the fullest extent permitted by law belong to, vest in
and be the absolute, sole and unencumbered property of the Company or
an Associated Company.
13.2 The Executive hereby:-
(a) acknowledges for the purposes of Section 39, Patents Act 1977 that
because of the nature of his duties and the particular
responsibilities arising from the nature of his duties he has and
at all times during his employment will have a special obligation
to further the interests of the undertakings of the Company and of
any Associated Company;
(b) undertakes to notify and disclose to the Company in writing full
details of all relevant Industrial Property forthwith upon the
production of the same, and promptly whenever requested by the
Company and in any event upon the determination of his employment
with the company deliver up to the Company all correspondence and
other documents, papers and records, and all copies thereof in his
possession, custody and power relating to any relevant Industrial
Property;
(c) undertakes to hold upon trust for the benefit of the Company or any
Associated Company any relevant Industrial Property and the
Industrial Property Rights therein to the extent the same may not
be and until the same are vested absolutely in the Company or any
Associated Company;
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<PAGE> 11
(d) assigns by way of present assignment of future copyright all
copyright in all relevant Industrial Property;
(e) acknowledges that save as provided by law no further remuneration
or compensation other than that provided for herein is or may
become due to the Executive in respect of the performance of his
obligations under this Clause; and
(f) undertakes at the expense of the Company to execute all such
documents, make such applications, give such assistance and do such
acts and things as may in the opinion of the Board be necessary or
desirable to vest in and register or obtain letters patents in the
name of the Company or any Associated letters patents in the name
of the Company or any Associated Company and otherwise to protect
and maintain the relevant Industrial Property and the Industrial
Property Rights therein.
13.3 To the extent that by law any relevant Industrial Property or the
Industrial Property Rights therein do not, or are not permitted to,
vest in or belong to the Company or any Associated Company the
Executive agrees immediately upon the same coming into existence to
offer to the Company or any Associated Company in writing a right of
first refusal to acquire the same on arm's length terms to be
negotiated and agreed between the parties in good faith.
14. RESTRICTIONS DURING EMPLOYMENT
The Executive shall not during the continuance of his employment
hereunder without the prior consent in writing of the Board either
alone or jointly with or on behalf of others and whether directly or
indirectly and whether as principal, partner, agent, shareholder,
director, employee or otherwise howsoever engage in, carry on or be
interested or concerned in any business other than that of the Company
and its Associated Companies PROVIDED THAT nothing in this Clause shall
preclude the Executive from:-
(a) holding shares or other securities as a bona fide investment only
in any company where such shares or other securities are quoted or
otherwise dealt in on a recognized or designated
-10-
<PAGE> 12
investment exchange and the Executive's aggregate holding of such
shares or securities does not constitute more than five per cent
of all the equity shares in the capital of that company or confer
the right to cast more than five per cent of all the votes
ordinarily capable of being cast at general meetings of the
shareholders of that company; or
(b) maintaining his present outside business interests and investments
as disclosed to, and approved by, the Board (such approval not to
be unreasonably withheld) and PROVIDED ALWAYS that:-
(i) such business is not at any time in competition with the Company
or any of its subsidiaries; and
(ii) the Executive's duties hereunder to the Company shall have
priority and the pursuit of such outside interests shall not
unduly interfere with the due and proper performance of such
duties.
15. GRIEVANCE AND DISCIPLINARY PROCEDURE
15.1 If the Executive wishes to seek redress of any grievance relating to
his employment he should refer such grievances to the Board for
resolution.
15.2 The Company's disciplinary procedures from time to time in force shall
apply to the Executive.
16. TERMINATION
16.1 If:-
(a) the Executive shall be or become of unsound mind or be or become a
patient for any purpose of any statute relating to mental health; or
-11-
<PAGE> 13
(b) the Executive shall enter into any composition or arrangement with
or for the benefit of his creditors including a voluntary
arrangement under the Insolvency Act 1986; or
(c) a bankruptcy petition is presented against the Executive or if
circumstances exist now or in the future under which such a
petition could be presented; or
(d) the Executive shall commit any act of dishonesty whether relating
to the Company, any Associated Company, an employee or otherwise; or
(e) the Executive is guilty of any misconduct or commits any serious
or persistent breach of any of his obligations to the Company or
any Associate Company (whether under this Agreement or otherwise)
or refuses or neglects to comply with any lawful orders or
directions given to him by the Board consistent with the terms of
this Agreement; or
(f) the Executive is guilty of any conduct tending to bring himself, the
Company or any Associated Company into disrepute; or
(g) the Executive shall be or be prohibited or disqualified from
holding the office which he holds in the Company or any Associated
Company or shall be removed from any such office or shall resign
from any such office without the prior written consent of the Board;
THEN the Company shall be entitled by notice in writing to the Executive to
determine his employment under this Agreement forthwith whereupon the Executive
shall have no claim against the Company for damages or otherwise by reason of
such determination.
-12-
<PAGE> 14
16.2 This Agreement shall automatically terminate on the Executive's 65th
birthday.
16.3 Upon the termination of the Executive's employment for whatever reason
the Executive shall:-
(a) immediately tender his resignation from all offices he holds in the
Company and in any Associated Company without prejudice to any
other rights accruing to either party hereto: and
(b) deliver to the Company forthwith all documents, (including copies),
and all keys, credit cards, books and other property of the Company
or any Associated Company then in his possession.
16.4 After the termination of the Executive's employment hereunder he shall
not at any time thereafter represent himself as being in any way
connected with or interested in the business of or employed by the
Company or any Associated Company; or use for trade or other purposes
the name of the Company or any Associated Company or any name capable
of confusion therewith.
16.5 The termination of the Executive's employment hereunder for whatever
reason shall not affect those terms of this Agreement which are
expressed to have effect thereafter and shall be without prejudice to
any accrued rights or remedies of the parties.
17. POST-TERMINATION OBLIGATIONS
17.1 The Executive undertakes to and covenants with the Company that,
unless he shall be wrongfully dismissed:-
(a) he will not for a period of 18 months after termination of this
Agreement in the Restricted Territories directly or indirectly
deal with or engage in business with or be in any way interested in
or connected with (in each case in relation to the Business) any
concern, undertaking, firm or body corporate which engages in or
carries on within any part of
-13-
<PAGE> 15
the Restricted Territories the Business in competition with the
Company or any Associated Company; and
(b) he will not for a period of 2 years after the termination of this
Agreement directly or indirectly:-
(i) in competition with the Company or any Associate Company
solicit the custom of (or offer or agree to provide goods or
services of a like description to those provided by the Company
or any Associated Company to) any person firm or company which
is, or which has at any time during the period of 2 years
preceding the termination of this Agreement been a customer or
client of the Company or any Associated Company;
(ii) interfere or seek to interfere with the relations between the
Company or any Associated Company and any of its suppliers;
(iii) solicit, interfere with or endeavour to entice away from the
Company or any Associated Company any person who is an employee
or director of the Company or any Associated Company (whether
or not such person would commit a breach of the terms of his
contract of employment by leaving the service of the company
concerned) or knowingly employ, or assist in or procure the
employment by any other person firm or company of, any such
person.
17.2 Each of the obligations on the Executive contained in the above
provisions of this Clause constitutes an entirely separate and
independent restriction on the Executive notwithstanding that they may
be contained in the same sub-clause, paragraph, sentence or phrase.
17.3 If any obligation set out in Clause 17.1 or any part thereof shall be
held invalid or unenforceable or void but would not be so held if some
part of it were deleted or modified or varied then such
-14-
<PAGE> 16
provision shall apply with such deletion, modification or variation as
may be necessary to make it valid and effective.
18. GENERAL
18.1 No failure or delay by the Company in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor
shall any single or partial exercise by the Company of any right, power
or privilege preclude any further exercise thereof or the exercise of
any other right, power or privilege.
18.2 The Executive hereby irrevocably and by way of security appoints the
Company and each Associated Company now or in the future existing to be
his attorney and in his name and on his behalf and as his act and deed
to sign, execute and do all acts, things and documents which he is
obliged to execute and do under the provisions of this Agreement and
the Executive hereby agrees forthwith on the request of the Company to
ratify and confirm all such acts, things and documents signed, executed
or done in pursuance of this power.
19. NOTICES
19.1 Any notice or other communication given or made under this Agreement
shall be in writing and may be delivered to the relevant party or sent
by first class prepaid post to the address of that party specified in
this Agreement or such other address in England as may be notified by
that party from time to time for this purpose, and shall be effectual
notwithstanding any change of address not so notified.
19.2 Unless the contrary shall be proved each such notice or communication
shall be deemed to have been given or made, if by first class prepaid
post, 72 hours after posting and, if by delivery, at the time of
delivery.
-15-
<PAGE> 17
20. OTHER AGREEMENTS
This Agreement supersedes all other agreements whether written or oral
between the Company or any Associated Company and the Executive
relating to the employment of the Executive and the Executive
acknowledges and warrants to the Company that he is not entering into
this Agreement in reliance on any representation not expressly set out
herein.
21. GOVERNING LAW
This Agreement shall be governed by and construed in all respects in
accordance with English law and the parties agree to submit to the
exclusive jurisdiction of the English Courts as regards any claim or
matter arising in respect of this Agreement.
IN WITNESS whereof this Agreement has been signed for and on behalf of the
Company and duly executed as a Deed by the Executive the day and year first
above written
SIGNED by )
for and on behalf of ) /s/ Barrie S. Haigh
INNOVEX HOLDINGS LIMITED )
in the presence of:-
/s/ A.R. Gordon
EXECUTED and DELIVERED as a ) /s/ Paul Knott
Deed by PAUL KNOTT )
in the presence of:-
/s/ A.R. Gordon
<PAGE> 1
EXHIBIT 10.13
DEED OF NON-COMPETITION
BETWEEN
QUINTILES TRANSNATIONAL CORP.
AND
PAUL KNOTT
29 NOVEMBER 1996
<PAGE> 2
INDEX
CLAUSE PAGE
------ ----
1. Certain Definitions.............................................. 3
1.1 Certain Definitions.................................. 3
2. Non-competition and Non-solicitation Covenants.................... 3
2.1 General.............................................. 3
2.2 Non-Competition...................................... 3
2.3 Holding of Shares or Securities...................... 5
2.4 Nondisclosure........................................ 5
2.5 Geographical Restriction............................. 5
2.6 Non-Competition Period............................... 6
2.7 Remedies............................................. 6
2.8 Other Agreements..................................... 6
3. General Provisions................................................ 6
3.1 Notices.............................................. 6
3.2 Variation............................................ 7
3.3 Entire Agreement..................................... 7
3.4 Assignment........................................... 8
3.5 Law and Jurisdiction................................. 9
2
<PAGE> 3
THIS NON-COMPETE AGREEMENT dated 29 November 1996 is executed as a Deed and
is made
BETWEEN
(1) QUINTILES TRANSNATIONAL CORP., a corporation incorporated under the
laws of North Carolina, U.S.A. (the "Purchaser"); and
(2) PAUL KNOTT, an individual residing at The Gables, Elvendon Road,
Goring-on-Thames, Oxon, RG8 ODT (the "Vendor").
WHEREAS:
(A) Concurrently with the execution of this Agreement, the Purchaser, the
Vendor and others are consummating certain transactions under a Share
Exchange Agreement ("the Share Exchange Agreement") pursuant to which
the Vendor and other vendors are exchanging their shares of Innovex
Limited ("Innovex") for shares of Quintiles Transnational Corp.
(B) The Vendor is entering into this Agreement as a condition precedent to
completion under the Share Exchange Agreement.
(C) Upon completion of the share exchange pursuant to the Share Exchange
Agreement, Vendor will own approximately 57,006 shares of the
outstanding common stock of the Purchaser.
NOW THIS DEED WITNESSETH as follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions. In this Agreement the following words and
expressions shall have the meanings respectively ascribed to them:
"Affiliates" shall mean: (i) the Purchaser; (ii) any Purchaser
subsidiary or related entity (including without limitation Innovex
and its subsidiaries); and (iii) any entity directly or indirectly
beneficially owned or controlled in whole or part by the Purchaser or
any Purchaser subsidiary or related entity, in each case as existing
at or prior to the date of termination of Vendor's employment.
2. NON-COMPETITION AND NON-SOLICITATION COVENANTS
2.1 General. In consideration of the Purchaser agreeing to complete the
Share Exchange Agreement, during the Vendor's employment with the
Purchaser and the Non-Competition Period (as defined in Section 2.6):
2.2 Non-Competition. The Vendor shall not, either alone or jointly with
another or others, whether as principal, agent, director,
shareholder, independent contractor, officer, employee or in any
other capacity, whether directly or indirectly, and whether for his
own benefit or that of others:
3
<PAGE> 4
(a) be engaged or have an economic interest in any business which competes
with any business carried on or engaged in by the Purchaser or any of its
Affiliates at or before (provided such business has not been terminated or
abandoned by Purchaser or such Affiliate) the date of termination of Vendor's
employment, including without limitation Related Activities (as defined below)
(hereinafter, a "Competitive Business");
(b) solicit or endeavor to solicit on behalf of a Competitive Business,
from or with any person or entity:
(i) who or which was a customer of the Purchaser or any of its
Affiliates at any time during the period of twelve (12) months preceding the
date of the termination of the Vendor's employment;
(ii) who or which the Vendor or someone for whom he was directly
responsible solicited, negotiated, contracted, serviced, advised or had contact
with on the Purchaser's or any of its Affiliates' behalf; or
(iii) to whom the Purchaser or any of its Affiliates had made
proposals to do business at any time during the period of twelve (12) months
preceding the date of the termination of the employment;
(c) deal, do business or endeavor to deal or do business for a Competitive
Business from or with any person or entity:
(i) who or which was a customer of the Purchaser or any of its
Affiliates at any time during the twelve (12) months preceding the date of the
termination of the employment;
(ii) who or which the Vendor or someone for whom he was directly
responsible solicited, negotiated, contracted, serviced, advised or had contact
with on the Purchaser's or any of its Affiliates' behalf; or
(iii) to whom the Purchaser or any of its Affiliates had made
proposals to do business at any time during the period of twelve (12) months
preceding the date of the termination of the employment;
(d) without the written permission of the Board of the Purchaser (such
permission not to be unreasonably withheld or delayed and in particular such
permission will not be withheld if the Purchaser considers that the Vendor has
neither a personal influence with clients nor is in possession of confidential
information) offer employment to or otherwise solicit for employment the
services of any individual who was an employee or director of the Purchaser or
any of its Affiliates during the period of twelve (12) months preceding the
date of termination of employment whether or not such persons would commit any
breach of his contract of employment with the Purchaser or any of its
Affiliates by reason of his leaving service; or
(e) directly or indirectly take any action which is intended to be
materially detrimental or otherwise intended to be adverse to the Purchaser's
and/or any of its Affiliates'
4
<PAGE> 5
goodwill, name, business relations, prospects and operations.
Notwithstanding anything in this Agreement to the contrary, the following
activities will not be deemed to contravene the provisions of this
Agreement:
(i) Owning, operating, controlling or serving as a director,
officer or employee of or consultant to any company the principal business
of which is manufacturing, distributing, marketing and/or selling
pharmaceutical products the rights to which are owned by or licensed
to such company; provided that the amount of the consolidated revenues of
such company in any year derived from operations (as defined below,
"Related Activities") involving providing, on a contract, for hire, or
similar basis (i) drug development services, (ii) pharmaceutical or
clinical research services, (iii) pharmaceutical sales or marketing
services, (iv) health information management services, and/or (v) any other
activity which constitutes a significant part of the business of the
Purchaser (in the case of subparagraph (v), at or before the date of
termination of Vendor's employment) will not exceed the greater of five
percent (5%) of consolidated revenues or five percent (5%) of consolidated
expenses of such company; provided further that Vendor shall have no direct
involvement in such Related Activities as a director, officer, employee,
consultant or otherwise; provided further, it is agreed that Related
Activities are intended to be limited to activities which are incidental to
the operations of a pharmaceutical business and are not, without limiting
the foregoing, any activities dedicated primarily to a Competitive Business
or the purpose of drug development, marketing, sales services, or health
benefit analysis of the products or potential products of third parties.
(ii) the provision of executive search consulting services so long
as such services are not provided to an entity engaged in Related
Activities; and
(iii) the provision of financial consulting services so long as such
services are not provided to an entity engaged in Related Activities.
2.3 Holding of Shares or Securities. Section 2.2 shall not prohibit the
holding (directly or through nominees or otherwise) of shares or other
securities of another company which are listed or traded on any recognized
stock exchange being a holding (which phrase shall include any interest in
any such holding) entitling the holder to no more than two and one half
percent (2.5%) of the voting power of such body corporate.
2.4 Nondisclosure. The Vendor shall not either before or after the termination
of his employment disclose to any person or persons any confidential
information in relation to the affairs of the Purchaser or any of its
Affiliates or any client or customer thereof which he has become or may
have become possessed whilst in the service of the Purchaser except in the
proper course of his duties as an officer, director or employee of the
Purchaser or as authorized by the Board or as ordered by a Court of
competent jurisdiction or pursuant to other governmental process.
2.5 Geographical Restriction. The restrictions set forth in Sections 2.2(a)
apply to the following geographical areas: the United Kingdom, the
Federal Republic of Germany and the United States of America, including the
territories and possessions thereof.
5
<PAGE> 6
2.6 Non-Competition Period. As used in this Agreement "Non-Competition
Period" means the eighteen (18) month period following the termination of
Vendor's employment, (irrespective of the circumstances of such
termination, except that the final six months of any garden leave shall run
concurrently with the first six months of the Non-Competition Period),
except that for purposes of the restrictions set forth in Sections 2.2(b)
and 2.2(c) (regarding solicitation, etc.), "Non-Competition Period" shall
mean the twenty-four (24) month period following the termination of
Vendor's employment (irrespective of the circumstances of such
termination).
2.7 Remedies. Vendor acknowledges and agrees that Vendor's failure to abide by
the provisions of this Agreement would cause irreparable harm to the
Purchaser and/or its Affiliates for which legal remedies would be
inadequate. Therefore, in addition to any legal or other relief to which
the Purchaser and/or its Affiliates may be entitled by virtue of Vendor's
failure to abide by these provisions: (i) the Purchaser may seek legal and
equitable relief, including but not limited to preliminary and permanent
injunctive relief, for Vendor's actual or threatened failure to abide by
these provisions; (ii) Vendor will, upon final judicial determination that
Vendor has breached the terms of this Agreement, indemnify the Purchaser
and/or its Affiliates for all expenses (including legal fees) in seeking to
enforce these provisions; and (iii) if, as a result of Vendor's failure to
abide by the provisions, any commission or fee becomes payable to Vendor or
to any person, corporation or other entity with which Vendor has become
employed or otherwise associated, Vendor shall pay the Purchaser or cause
the person, corporation or other entity with whom he has become employed or
otherwise associated to pay the Purchaser an amount equal to such
commission or fee.
2.8 Other Agreements. Nothing in this Agreement shall terminate, revoke or
diminish Vendor's obligations or the Purchaser's and/or its Affiliates'
rights and remedies under law or under Vendor's existing service agreement
and the Share Exchange Agreement relating to trade secrets, confidential
information, non-competition and intellectual property.
3. GENERAL PROVISIONS
3.1 Notices. All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be
hand delivered, sent by overnight courier or mailed by first-class
registered post, postage prepaid, return receipt requested or transmitted
by telegram, telecopy or telex, addressed as follows:
(a) If to the Purchaser:
Quintiles Transnational Corp.
4709 Creekstone Drive
Riverbirch Building, Suite 300
Durham, North Carolina
U.S.A. 27703
Attention: Gregory D. Porter
Fax: 919-941-2090
6
<PAGE> 7
with a copy which shall not constitute notice to:
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan L.L.P.
2500 First Union Capital Center
Raleigh, North Carolina
U.S.A. 27601
Attention: Gerald F. Roach
Fax: 919-821 6800
(b) If to the Vendor:
Paul A. Knott
The Gables
Elvendon Road
Goring-on-Thames
Oxon, RG8 ODT, England
With a copy which shall not constitute notice to:
Attention:
Fax:
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served
or sent. Each notice, demand, request, or communication which shall be
hand delivered, sent, mailed, telecopied or telexed in the manner described
above, or which shall be delivered to a telegraph company, shall be deemed
sufficiently given, served, sent, received or delivered for all purposes at
such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, or (with respect to a telecopy or telex) the answerback
being deemed conclusive, but not exclusive, evidence of such delivery) or
at such time as delivery is refused by the addressee upon presentation.
3.2 Variation. No variation of this Agreement shall be valid or effective
unless made by one or more instruments in writing signed by all of the
parties hereto.
3.3 Entire Agreement. Except as expressly provided in this Agreement, this
Agreement: (i) supersedes and cancels all other understandings and
agreements, oral or written,
7
<PAGE> 8
with respect to Vendor's obligations with respect to non-competition which
Vendor has executed in the past; (ii) supersedes all other understandings
and agreements, oral or written, between the parties with respect to the
subject matter of this Agreement; and (iii) constitutes the sole agreement
between the parties with respect to the matters covered. No change or
modification of this Agreement shall be valid or binding upon the parties
unless such change or modification is in writing and is signed by the
parties.
3.4 Assignment. Neither of the parties hereto shall assign or otherwise deal
with any of its right, title or interest in this Agreement without the
prior written consent of the other party to this Agreement, which consent
may be withheld in such party's absolute discretion, provided, however,
that the Purchaser may in its absolute discretion assign all or any of its
right title and interest in this Agreement to an Affiliate or to a
subsequent purchaser of all of the share capital of the Company or all or
substantially all of the assets of the Company.
8
<PAGE> 9
3.5 Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with English law and the parties irrevocably
submit to the non-exclusive jurisdiction of the High Court of Justice
in London for all purposes connected with it.
IN WITNESS whereof this Agreement has been executed and unconditionally
delivered as a Deed the day and year first-above written.
Signed and delivered as a Deed )
by Quintiles Transitional Corp. )
by its duly authorized )
Vice President, Rachel R. Selisker, )
and by its duly authorized )
Secretary, Gregory D. Porter )
/s/ Rachel R. Selisker
- ---------------------------
Rachel R. Selisker
Vice President
/s/ Gregory D. Porter
- ---------------------------
Gregory D. Porter
Secretary
Signed and delivered as a Deed ) /s/ Paul Knott
by Paul Knott )
in the presence of:
Name: David B. Rockwell )
-----------------------
Address: 28 Willow Road )
-------------------
Hampstead, London )
-------------------
NW3 1TL, England )
-------------------
Occupation: Attorney )
----------------
9
<PAGE> 1
EXHIBIT 10.14
DATED 2nd September 1994
(1) INNOVEX PLC
- and -
(2) DAVID FINDLAY WHITE
------------------------------------------
SERVICE AGREEMENT
------------------------------------------
Hobson Audley
7 Pilgrim Street
London EC4V 6DR
<PAGE> 2
THIS AGREEMENT is made the 2nd day of September 1994
BETWEEN:
(1) INNOVEX PLC ("the Company") registered in England under number 1413055
whose registered office is at Innovex House, Marlow Park, Marlow,
Bucks; and
(2) DAVID FINDLAY WHITE of Boughmoor Farm, Timbersbrook, Congleton,
Cheshire CW123PS ("the Director").
IT IS HEREBY AGREED as follows:
1. Interpretation
1.1 In this Agreement the following words and expressions shall have the
following meanings:
"Associated Company": in relation to the Company, another company which
is a subsidiary of, or a holding company of, or another subsidiary of
a holding company of, the Company;
"the Board": the Board of Directors from time to time of the Company
including any Committee of the Board duly appointed by it;
"the Bonus Incentive Scheme": the bonus scheme for executives operated
by the Company from time to time;
"the Business": the carrying on of the business of the provision of
advice and services connected with the provision of contract hire human
resources and clinical research to serve the pharmaceutical industry;
"Industrial Property": includes inventions, designs, processes,
formulae, notations, improvements, know-how, goodwill, reputation,
moulds, get-up, logos, devices, plans, models, literary, dramatic
musical and artistic works as defined by the Copyright Designs and
Patents Act 1988;
"Industrial Property Rights": includes patents, trademarks, designs,
trade names, goodwill. Copyrights, and all other forms of industrial or
intellectual property (in each case in any part of the world and
whether or not registered or registrable and to the fullest extent
thereof and for the full period thereof and all extensions and renewals
thereof) and all applications for registration thereof, and all rights
and interests thereto and therein;
-2-
<PAGE> 3
"Production": (and consonant expressions) used in relation to
Industrial Property includes the invention, creation, discovery,
design, research, development and manufacture thereof;
"relevant Industrial Property": all Industrial Property produced
invented or discovered by the Director either alone or with any other
person at any time now or hereafter during the Continuance in force of
this Agreement (whether or not in the course of his employment
hereunder) which is Industrial Property of the kind produced at any
such time by the Company or any Associated Company, or relates directly
or indirectly to the business of the Company or any Associated Company
or which may in the opinion of the Company be capable of being used or
adapted for use therein or in connection therewith;
"the Restricted Territories": the United Kingdom, the Channel Islands,
the Isle of Man, the Republic of Ireland, the Federal Republic of
Germany and the United States of America;
"subsidiary" and "holding company": the meanings respectively ascribed
thereto by Section 736 of the Companies Act 1985;
"the 1978 Act": the Employment Protection (Consolidation) Act 1978.
1.2 References in this Agreement to statutes shall include any statute
modifying, re-enacting, extending or made pursuant to the same or which
is modified, re-enacted, or extended by the same.
1.3 Headings are for ease of reference only and shall not be taken into
account in the construction of this Agreement.
2. Appointment
The Company hereby engages the Director and the Director hereby agrees
to serve the Company as a director of the Company and as Group Chief
Executive Officer upon the terms and conditions hereinafter appearing.
3. Term
3.1 The Director's employment hereunder shall commence on 1st September
1994 ("the Commencement Date") and shall continue (subject to earlier
termination as provided for herein) for an initial term of two years
expiring on the second anniversary of the Commencement Date and
thereafter until terminated by either party giving to the other twelve
months' prior notice such notice to expire at or at any time after the
second anniversary of the Commencement Date.
3.2 The Company shall be entitled to pay salary in lieu of notice.
-3-
<PAGE> 4
3.3 No previous period of employment shall count as part of the Director's
continuous period of employment with the Company for the purposes of
the 1978 Act.
3.4 In the event that the Company gives notice to terminate the employment
of the Director under this Agreement the Director agrees:
(a) that for a period not exceeding the period of such notice the
Board may in its absolute discretion require the Director to
perform only such duties as it may allocate to him or not to
perform any of his duties under this Agreement and/ or to
exclude him from any premises of the Company or of any
Associated Company (without providing any reason therefor);
and
(b) that such action taken on the part of the Company shall not
constitute a breach of this Agreement of any kind whatsoever
in respect of which the Director has any claim against the
Company;
PROVIDED ALWAYS that throughout the period of any such action the Director's
salary and all other contractual benefits shall continue to be paid and provided
to him unless and (until his employment shall be terminated).
4. Powers, Duties, and Working Hours
4.1 During the continuance of his employment hereunder the Director shall:
(a) unless prevented by ill health or accident devote all of his
time and all his attention and abilities during normal
business hours to carrying out his duties hereunder;
(b) carry out his duties in a proper and efficient manner and use
his best endeavors to promote and maintain the interests and
reputation of the Company and of its Associated Companies;
(c) exercise such powers and perform such duties in relation to
the business of the Company and/or of its Associated Companies
as may from time to time be vested in or assigned to him by
the Board; such powers and duties may from time to time fall
outside the normal ambit of the Director's position but will
not be duties inappropriate to the Director's status;
(d) comply with all reasonable directions from time to time given
to him by the Board and with all rules and regulations form
time to time laid down by the Company concerning its employees
which are consistent with this Agreement;
-4-
<PAGE> 5
(e) the Director shall as soon as reasonably practicable relocate
his residence to within a reasonable commuting distance of
Marlow, Bucks. Notwithstanding the foregoing the Director
shall work at such location in the United Kingdom as the
Company shall require from time to time and, if the Company
shall so require for this purpose. The Company shall bear the
Director's reasonable moving expenses in compliance with the
foregoing provisions of this sub-clause 4.1(e) in accordance
with its then current policy for the relocation of executives;
and
(f) travel to such places (whether within or outside the United
Kingdom) in such manner and on such occasions as the Company
may from time to time reasonably require.
4.2 The Director's normal working hours shall be such hours as are
reasonably necessary for the proper performance of the Director's
duties.
5. Reporting
The Director shall report to the Board and shall keep the Board informed of his
conduct of the affairs of the Company and its Associated Companies.
6. Remuneration
6.1 During the continuance of his employment hereunder the Director shall
be paid a salary at the initial rate of (pound)120,000 per annum which
shall be reviewed annually on or with effect from 1st April each year
but without commitment to increase (the first such review to be made on
or to take effect from 1st April 1995) and such salary shall accrue
from day to day and be paid by equal monthly installments in arrears on
the last day of each month or if that is not a business day the
immediately preceding business day.
6.2 Notwithstanding anything to the contrary contained in the Articles of
Association of the Company or of any Associated Company the Director
shall not be entitled to any remuneration as an officer or employee of
the Company or of any Associated Company in addition to that specified
in this Agreement.
7. Expenses
The Company shall reimburse to the Director all reasonable travelling,
hotel, entertainment and other out-of-pocket expense, properly incurred
by him in the proper performance of his duties subject to production if
required of receipts and Vouchers.
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<PAGE> 6
8. Company Car
8.1 The Company shall provide the Director with a motor car up to the value
of (pound)35,000 and commensurate with the Director's position for the
purpose of performing his duties hereunder and the Company shall bear
the cost of all petrol and oil, both business and private mileage, and
all other expenses reasonably and properly incurred by him in the use
of such motor car. The vehicle shall be replaced in accordance with the
Company's car fleet policy from time to time.
8.2 The Director shall take good care of the vehicle and procure that the
provisions and conditions of any policy of insurance relating thereto
are observed in all respects, and shall comply with all regulations of
the Company relating to company cars.
8.3 Upon the determination (howsoever arising) of his employment hereunder
the Director shall forthwith return the vehicle, its keys and all
documents relating to it to the Company at its principal place of
business or as otherwise directed by the Company.
9. Pension, etc. Benefits
9.1 The Company will make contributions to a personal pension plan equal to
10% of the Director's salary.
9.2 During the continuance of his employment hereunder the Director shall
be entitled to participate at the Company's expense in the Company's:
(a) life assurance scheme; and
(b) permanent health scheme;
subject to the rules of the schemes and in accordance with the
Company's participation policy from time to time.
9.3 During the continuance of his employment hereunder the Director shall
be entitled to participate in:
(a) the Company's Bonus Incentive Scheme; and
(b) the Innovex Limited profit related pay scheme; subject to the
rules of such schemes as from time to time amended.
9.4 The Director will be invited to participate in the Innovex PLC 1993
Executive Share Option Scheme.
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<PAGE> 7
10. Holidays
10.1 In addition to bank and other public holidays the Director shall be
entitled in every calendar year to 30 working days' paid holiday, 27
days to be taken at such time or times as may be approved by the Board
and 3 days to be taken at such time as shall be designated by the Board
PROVIDED THAT to the extent that any holiday entitlement is not taken
in any calendar year the same shall be lost.
10.2 Holiday entitlement shall be deemed to accrue at the rate of 2.5 days
per month and on the determination of his employment hereunder the
Director shall be entitled to pay in lieu of outstanding holiday
entitlement and shall be required to repay to the Company pay for
holiday taken in excess of his actual entitlement and for the purposes
of this Clause the basis for payment shall be 1/261 annual salary for
each day's holiday entitlement.
11. Incapacity
11.1 If the Director is absent from work due to illness or accident he shall
notify the Company Secretary as soon as possible and if this incapacity
continues for seven or more consecutive days or for more than fourteen
working days in any year he shall submit a doctors certificate to the
Company.
11.2 If the Director is absent from work due to illness or accident duly
notified and certified in accordance with Clause 11.1 the Company shall
pay the Director his full remuneration (including bonus/commission) for
up to an aggregate of 130 working day, absence in any period of twelve
months and thereafter such remuneration (if any) as the Board shall in
its discretion approve.
11.3 The remuneration paid under Clause 11.2 shall include any Statutory
Sick Pay payable and when this is exhausted shall be reduced by the
amount of any Social Security Sickness Benefit or other benefit,
recoverable by the Director (whether or not recovered).
11.4 The Company may at its expense at any time whether or not the Director
is then incapacitated require the Director to submit to such medical
examinations and tests by doctor(s) nominated by the Company and the
Director hereby authorises such doctor(s) to disclose to and discuss
with the Company and its medical adviser(s) the results of such
examinations and tests.
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<PAGE> 8
12. Secrecy
The Director shall during the continuance of his employment hereunder
and at all times thereafter keep with inviolable secrecy and shall not
reveal, disclose or publish to any person other than the Board or
persons nominated by them or otherwise utilise other than for the
proper performance of his duties any information of a confidential or
secret nature (including without limitation trade secrets, know-how,
inventions, designs, processes, formulae, notations, improvements,
financial information and lists of customers) concerning the affairs or
business or products of the Company or of any Associated Company or of
any of their predecessors in business or of their suppliers, agents
distributors or customers of which he may now know or have learned or
which he may hereafter know or learn while in the Company, employment,
and shall not use for his own purposes or for any purposes other than
those of the Company or of any Associated Company any such confidential
information.
13. Intellectual Property
13.1 All relevant Industrial Property and all Industrial Property Right,
therein shall to the fullest extent permitted by law belong to, vest in
and be the absolute, sole and unencumbered property of the Company or
an Associated Company.
13.2 The Director hereby:
(a) acknowledges for the purposes of Section 39, Patents Act 1977
that because of the nature of his duties and the particular
responsibilities arising from the nature of his duties he has
and at all times during his employment will have a special
obligation to further the interests of the undertakings of the
Company and of any Associated Company;
(b) undertakes to notify and disclose to the Company in writing
full details of all relevant Industrial Property forthwith
upon the production of the same, and promptly whenever
requested by the Company and in any event upon the
determination of his employment with the Company deliver up to
the Company all correspondence and other documents, papers,
and records, and all copies thereof in his possession, custody
and power relating to any relevant Industrial Property;
(c) undertakes to hold upon trust for the benefit of the Company
or any Associated Company any relevant Industrial Property and
the Industrial Property Rights therein to the extent the same
may not be and until the same are vested absolutely in the
Company or any Associated Company;
(d) assigns by way of present assignment of future copyright all
copyright in all relevant Industrial Property;
(e) acknowledges that save as provided by law no further
remuneration or compensation
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<PAGE> 9
other than that provided for herein is or may become due to
the Director in respect of the performance of his obligations
under this Clause; and
(f) undertakes at the expense of the Company to execute all such
documents, make such applications, give such assistance and do
such acts and things as may in the opinion of the Board be
necessary or desirable to vest in and register or obtain
letters patents in the name of the Company or any Associated
Company and otherwise to protect and maintain the relevant
Industrial Property and the Industrial Property Rights
therein.
13.3 To the extent that by law any relevant Industrial Property or the
Industrial Property Rights therein do not, or are not permitted to,
vest in or belong to the Company or any Associated Company the Director
agrees immediately upon the same coming into existence to offer to the
Company or any Associated Company in writing a right of first refusal
to acquire the same on arm's length terms to be negotiated and agreed
between the parties in good faith.
14. Restrictions During Employment
The Director shall not during the continuance of his employment
hereunder without the prior consent in writing of the Board either
alone or jointly with or on behalf of others and whether directly or
indirectly and whether as principal, partner, agent, shareholder,
director, employee or otherwise howsoever engage in, carry on or be
interested or concerned in any business other than that of the Company
and its Associated Companies PROVIDED THAT nothing in this Clause shall
preclude the Director from:
(a) holding shares or other securities as a bona fide investment
only in any company where such shares or other securities are
quoted or otherwise dealt in on a recognized or designated
investment exchange and the Directors aggregate holding of
such shares or securities does not constitute more than five
per cent of all the equity shares in the capital of that
company or confer the right to cast more than five per cent of
all votes ordinarily capable of being cast at general meetings
of the shareholders of that company; or
(b) maintaining his present outside business interests and
investments as disclosed to, and approved by, the Board (such
approval not to be unreasonably withheld) and PROVIDED ALWAYS
that:
(i) such business is not at any time in competition with
the Company or any of its subsidiaries; and
(ii) the Director's duties hereunder to the Company shall
have priority and the pursuit of such outside
interests shall not unduly interfere with the due and
proper performance of such duties.
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<PAGE> 10
15. Grievance and Disciplinary Procedure
15.1 If the Director wishes to seek redress of any grievance relating to his
employment he should refer such grievances to the Board for resolution.
15.2 The Company's disciplinary procedures from time to time in force shall
apply to the Director.
16. Termination
16.1 If:
(a) the Director shall be or become of unsound mind or be or
become a patient for any purpose of any statute relating to
mental health; or
(b) the Director shall enter into any composition or arrangement
with or for the benefit of his creditors including a voluntary
arrangement under the Insolvency Act 1986; or
(c) a bankruptcy petition is presented against the Director or if
circumstances exist now or in the future under which such a
petition could be presented; or
(d) the Director shall commit any act of dishonesty whether
relating to the Company, any Associated Company, an employee
or otherwise; or
(e) the Director is guilty of any misconduct or commits any
serious or persistent breach of any of his obligations to the
Company or any Associated Company (whether under this
Agreement or otherwise) or refuses or neglects to comply with
any lawful orders or directions given to him by the Board
consistent with the terms of this Agreement; or
(f) the Director is guilty of any conduct tending to bring
himself, the Company or any Associated Company into disrepute;
or
(g) the Director shall be or be prohibited or disqualified from
holding the office which he holds in the Company or any
Associated Company or shall be removed from any such office or
shall resign from any such office without the prior written
consent of the Board;
THEN the Company shall be entitled by notice in writing to the Director
to determine his employment under this Agreement forthwith whereupon
the Director shall have no claim against the Company for damages or
otherwise by reason of such determination.
16.2 This Agreement shall automatically terminate on the Director's 65th
birthday.
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<PAGE> 11
16.3 Upon the termination of the reason employment for whatever reason the
Director shall:
(a) immediately tender his resignation from all offices he holds
in the Company and in any Associated Company without prejudice
to any other rights accruing to either party hereto; and
(b) deliver to the Company forthwith all documents, (including
copies), and all keys, credit cards, books and other property
of the Company or any Associated Company then in his
possession.
16.4 After the termination of the Director's employment hereunder he shall
not at any time thereafter represent himself as being in any way
connected with or interested in the business of or employed by the
Company or any Associated Company; or use for trade or other purposes
the name of the Company or any Associated Company or any name capable
of confusion therewith.
16.5 The termination of the Director's employment hereunder for whatever
reason shall not affect those terms of this Agreement which are
expressed to have effect thereafter and shall be without prejudice to
any accrued rights or remedies of the parties.
17. Post-Termination Obligations
17.1 The Director undertakes to and covenants with the Company that, unless
he shall be wrongfully dismissed:
(a) he will not for a period of 18 months after termination of
this Agreement in the Restricted Territories directly or
indirectly deal with or engage in business with or be in any
way interested in or connected with (in each case in relation
to the Business) any concern, undertaking, firm or body
corporate which engages in or carries on within any part of
the Restricted Territories the Business in competition with
the Company or any Associated Company; and
(b) he will not for a period of 2 years after the termination of
this Agreement directly or indirectly:
(i) in competition with the Company or any Associated
Company solicit the custom of (or offer or agree to
provide goods or services of a like description to
those provided by the Company or any Associated
Company to) any person firm or company which is, or
which has at any time during the period of 2 years
preceding the termination of this Agreement been a
customer or client of the Company or any Associated
Company;
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<PAGE> 12
(ii) interfere or seek to interfere with the relations
between the Company or any Associated Company and
any of its suppliers;
(iii) solicit, interfere with or endeavor to entice away
from the Company or any Associated Company any person
who is an employee or director of the Company or any
Associated Company (whether or not such person would
commit a breach of the terms of his contract of
employment by leaving the service of the company
concerned) or knowingly employ, or assist in or
procure the employment by any other person firm or
company of, any such person.
17.2 Each of the obligations on the Director contained in the above
provisions of this Clause constitutes an entirely separate and
independent restriction on the Director notwithstanding that they may
be contained in the same sub-clause, paragraph, sentence or phrase.
17.3 If any obligation set out in Clause 17.1 or any part thereof shall be
held invalid or unenforceable or void but would not be so held if some
part of it were deleted or modified or varied then such provision shall
apply with such deletion, modification or variation as may be necessary
to make it valid and effective.
18. General
18.1 No failure or delay by the Company in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor
shall any single or partial exercise by the Company of any right, power
or privilege preclude any further exercise thereof of the exercise of
any other right, power or privilege.
18.2 The Director hereby irrevocably and by way of security appoints the
Company and each Associated Company now or in the future existing to be
his attorney and in his name and on his behalf and as his act and deed
to sign, execute and do all acts, things and documents which he is
obliged to execute and do under the provisions of this Agreement and
the Director hereby agrees forthwith on the request of the Company to
ratify and confirm all such acts, things and documents signed, executed
or done in pursuance of this power.
19. Notices
19.1 Any notice or other communication given or made under this Agreement
shall be in writing and may be delivered to the relevant party or sent
by first class prepaid post to the address of that party specified in
this Agreement or such other address in England as may be notified by
that party from time to time for this purpose, and shall be effectual
notwithstanding any change of address not so notified.
19.2 Unless the contrary shall be proved each such notice or communication
shall be deemed to
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<PAGE> 13
have been given or made, if by first class prepaid post, 72 hours after
posting and, if by delivery, at the time of delivery.
20. Other Agreements
This Agreement supersedes all other agreements whether written or oral
between the Company or any Associated Company and the Director relating
to the employment of the Director and the Director acknowledges and
warrants to the Company that he is not entering into this Agreement in
reliance on any representation not expressly set out herein.
21. Governing Law
This Agreement shall be governed by and construed in all respects in
accordance with English law and the parties agree to submit to the
exclusive jurisdiction of the English Courts as regards any claim or
matter arising in respect of this Agreement.
IN WITNESS whereof this Agreement has been signed for and on behalf of the
Company and duly executed as a Deed by the Director the day and year first
above written.
SIGNED by )
For and on behalf of )
INNOVEX PLC ) /s/ Barrie S. Haigh
in the presence of: )
/s/ D. A. Walter
D. A. Walter
EXECUTED and DELIVERED as a )
Deed by DAVID FINDLAY WHITE ) /s/ David F. White
in the presence of: )
/s/ D. A. Walter
D. A. Walter
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<PAGE> 1
EXHIBIT 10.15
DEED OF NON-COMPETITION
BETWEEN
QUINTILES TRANSNATIONAL CORP.
AND
DAVID F. WHITE
29 NOVEMBER 1996
<PAGE> 2
INDEX
Clause Page
------ ----
1. Certain Definitions.............................................. 3
1.1 Certain Definitions................................. 3
2. Non-competition and Non-solicitation Covenants................... 3
2.1 General............................................. 3
2.2 Non-Competition..................................... 3
2.3 Holding of Shares or Securities..................... 5
2.4 Nondisclosure....................................... 5
2.5 Geographical Restriction............................ 5
2.6 Non-Competition Period.............................. 6
2.7 Remedies............................................ 6
2.8 Other Agreements.................................... 6
3. General Provisions............................................... 6
3.1 Notices............................................. 6
3.2 Variation........................................... 7
3.3 Entire Agreement.................................... 7
3.4 Assignment.......................................... 8
3.5 Law and Jurisdiction................................ 9
2
<PAGE> 3
THIS NON-COMPETE AGREEMENT dated 29 November 1996 is executed as a Deed and
is made
BETWEEN
(1) QUINTILES TRANSNATIONAL CORP., a corporation incorporated under the
laws of North Carolina, U.S.A. (the "Purchaser"); and
(2) DAVID F. WHITE, an individual residing at Little Barlows, Frieth,
Henley on Thames, Oxon, RG9 6PR (the "Vendor").
WHEREAS:
(A) Concurrently with the execution of this Agreement, the Purchaser, the
Vendor and others are consummating certain transactions under a Share
Exchange Agreement ("the Share Exchange Agreement") pursuant to which
the Vendor and other vendors are exchanging their shares of Innovex
Limited ("Innovex") for shares of Quintiles Transnational Corp.
(B) The Vendor is entering into this Agreement as a condition precedent to
completion under the Share Exchange Agreement.
(C) Upon completion of the share exchange pursuant to the Share Exchange
Agreement, Vendor will own approximately 39,904 shares of the
outstanding common stock of the Purchaser.
NOW THIS DEED WITNESSETH as follows:
1. CERTAIN DEFINITIONS
1.1 Certain Definitions. In this Agreement the following words and
expressions shall have the meanings respectively ascribed to them:
"Affiliates" shall mean: (i) the Purchaser; (ii) any Purchaser
subsidiary or related entity (including without limitation Innovex and
its subsidiaries); and (iii) any entity directly or indirectly
beneficially owned or controlled in whole or part by the Purchaser
or any Purchaser subsidiary or related entity, in each case as
existing at or prior to the date of termination of Vendor's
employment.
2. NON-COMPETITION AND NON-SOLICITATION COVENANTS
2.1 General. In consideration of the Purchaser agreeing to complete the
Share Exchange Agreement, during the Vendor's employment with the
Purchaser and the Non-Competition Period (as defined in Section 2.6):
2.2 Non-Competition. The Vendor shall not, either alone or jointly with
another or others, whether as principal, agent, director, shareholder,
independent contractor, officer, employee or in any other capacity,
whether directly or indirectly, and whether for his own benefit or
that of others:
3
<PAGE> 4
(a) be engaged or have an economic interest in any business which competes
with any business carried on or engaged in by the Purchaser or any of its
Affiliates at or before (provided such business has not been terminated or
abandoned by Purchaser or such Affiliate) the date of termination of Vendor's
employment, including without limitation Related Activities (as defined below)
(hereinafter, a "Competitive Business");
(b) solicit or endeavor to solicit on behalf of a Competitive
Business, from or with any person or entity:
(i) who or which was a customer of the Purchaser or any of its
Affiliates at any time during the period of twelve (12) months preceding the
date of the termination of the Vendor's employment;
(ii) who or which the Vendor or someone for whom he was directly
responsible solicited, negotiated, contracted, serviced, advised or had contact
with on the Purchaser's or any of its Affiliates' behalf; or
(iii) to whom the Purchaser or any of its Affiliates had made
proposals to do business at any time during the period of twelve (12) months
preceding the date of the termination of the employment;
(c) deal, do business or endeavor to deal or do business for a Competitive
Business from or with any person or entity:
(i) who or which was a customer of the Purchaser or any of its
Affiliates at any time during the twelve (12) months preceding the date of the
termination of the employment;
(ii) who or which the Vendor or someone for whom he was directly
responsible solicited, negotiated, contracted, serviced, advised or had contact
with on the Purchaser's or any of its Affiliates' behalf; or
(iii) to whom the Purchaser or any of its Affiliates had made
proposals to do business at any time during the period of twelve (12) months
preceding the date of the termination of the employment;
(d) without the written permission of the Board of the Purchaser (such
permission not to be unreasonably withheld or delayed and in particular such
permission will not be withheld if the Purchaser considers that the Vendor has
neither a personal influence with clients nor is in possession of confidential
information) offer employment to or otherwise solicit for employment the
services of any individual who was an employee or director of the Purchaser or
any of its Affiliates during the period of twelve (12) months preceding the
date of termination of employment whether or not such persons would commit any
breach of his contract of employment with the Purchaser or any of its
Affiliates by reason of his leaving service; or
(e) directly or indirectly take any action which is intended to be
materially detrimental or otherwise intended to be adverse to the Purchaser's
and/or any of its Affiliates'
4
<PAGE> 5
goodwill, name, business relations, prospects and operations.
Notwithstanding anything in this Agreement to the contrary, the following
activities will not be deemed to contravene the provisions of this
Agreement:
(i) Owning, operating, controlling or serving as a director,
officer or employee of or consultant to any company the principal business
of which is manufacturing, distributing, marketing and/or selling
pharmaceutical products the rights to which are owned by or licensed to
such company; provided that the amount of the consolidated revenues of such
company in any year derived from operations (as defined below, "Related
Activities") involving providing, on a contract, for hire, or similar basis
(i) drug development services, (ii) pharmaceutical or clinical research
services, (iii) pharmaceutical sales or marketing services, (iv) health
information management services, and/or (v) any other activity which
constitutes a significant part of the business of the Purchaser (in the
case of subparagraph (v), at or before the date of termination of Vendor's
employment) will not exceed the greater of five percent (5%) of
consolidated revenues or five percent (5%) of consolidated expenses of such
company; provided further that Vendor shall have no direct involvement in
such Related Activities as a director, officer, employee, consultant or
otherwise; provided further, it is agreed that Related Activities are
intended to be limited to activities which are incidental to the operations
of a pharmaceutical business and are not, without limiting the foregoing,
any activities dedicated primarily to a Competitive Business or the purpose
of drug development, marketing, sales services, or health benefit analysis
of the products or potential products of third parties.
(ii) the provision of executive search consulting services so long
as such services are not provided to an entity engaged in Related
Activities; and
(iii) the provision of financial consulting services so long as such
services are not provided to an entity engaged in Related Activities.
2.3 Holding of Shares or Securities. Section 2.2 shall not prohibit the
holding (directly or through nominees or otherwise) of shares or other
securities of another company which are listed or traded on any recognized
stock exchange being a holding (which phrase shall include any interest in
any such holding) entitling the holder to no more than two and one half
percent (2.5%) of the voting power of such body corporate.
2.4 Nondisclosure. The Vendor shall not either before or after the
termination of his employment disclose to any person or persons any
confidential information in relation to the affairs of the Purchaser or any
of its Affiliates or any client or customer thereof which he has become
or may have become possessed whilst in the service of the Purchaser except
in the proper course of his duties as an officer, director or employee of
the Purchaser or as authorized by the Board or as ordered by a Court of
competent jurisdiction or pursuant to other governmental process.
2.5 Geographical Restriction. The restrictions set forth in Sections
2.2(a) apply to the following geographical areas: the United Kingdom, the
Federal Republic of Germany and the United States of America, including the
territories and possessions thereof.
5
<PAGE> 6
2.6 Non-Competition Period. As used in this Agreement "Non-Competition
Period" means the eighteen (18) month period following the termination of
Vendor's employment, (irrespective of the circumstances of such
termination, except that the final six months of any garden leave period
shall run concurrently with the first six months of the Non-Competition
Period), except that for purposes of the restrictions set forth in Sections
2.2(b) and 2.2(c) (regarding solicitation, etc.), "Non-Competition Period"
shall mean the twenty-four (24) month period following the termination of
Vendor's employment (irrespective of the circumstances of such termination).
2.7 Remedies. Vendor acknowledges and agrees that Vendor's failure to
abide by the provisions of this Agreement would cause irreparable harm to
the Purchaser and/or its Affiliates for which legal remedies would be
inadequate. Therefore, in addition to any legal or other relief to which
the Purchaser and/or its Affiliates may be entitled by virtue of
Vendor's failure to abide by these provisions: (i) the Purchaser may seek
legal and equitable relief, including but not limited to preliminary and
permanent injunctive relief, for Vendor's actual or threatened failure to
abide by these provisions; (ii) Vendor will, upon final judicial
determination that Vendor has breached the terms of this Agreement,
indemnify the Purchaser and/or its Affiliates for all expenses (including
legal fees) in seeking to enforce these provisions; and (iii) if, as a
result of Vendor's failure to abide by the provisions, any commission or
fee becomes payable to Vendor or to any person, corporation or other entity
with which Vendor has become employed or otherwise associated, Vendor shall
pay the Purchaser or cause the person, corporation or other entity with
whom he has become employed or otherwise associated to pay the Purchaser an
amount equal to such commission or fee.
2.8 Other Agreements. Nothing in this Agreement shall terminate, revoke
or diminish Vendor's obligations or the Purchaser's and/or its Affiliates'
rights and remedies under law or under Vendor's existing service agreement
and the Share Exchange Agreement relating to trade secrets, confidential
information, non-competition and intellectual property.
3. GENERAL PROVISIONS
3.1 Notices. All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be
hand delivered, sent by overnight courier or mailed by first-class
registered post, postage prepaid, return receipt requested or transmitted
by telegram, telecopy or telex, addressed as follows:
(a) If to the Purchaser:
Quintiles Transnational Corp.
4709 Creekstone Drive
Riverbirch Building, Suite 300
Durham, North Carolina
U.S.A. 27703
Attention: Gregory D. Porter
Fax: 919-941-2090
6
<PAGE> 7
with a copy which shall not constitute notice to:
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan L.L.P
2500 First Union Capital Center
Raleigh, North Carolina
U.S.A. 27601
Attention: Gerald F. Roach
Fax: 919-821-6800
(b) If to the Vendor:
David F. White
Little Barlows, Frieth
Henley on Thames
Oxon, RG9 6PR
With a copy which shall not constitute notice to:
Attention:
Fax:
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so given,
served or sent. Each notice, demand, request, or communication which
shall be hand delivered, sent, mailed, telecopied or telexed in the
manner described above, or which shall be delivered to a telegraph
company, shall be deemed sufficiently given, served, sent, received or
delivered for all purposes at such time as it is delivered to the
addressee (with the return receipt, the delivery receipt, or (with
respect to a telecopy or telex) the answerback being deemed conclusive,
but not exclusive, evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
3.2 Variation. No variation of this Agreement shall be valid or effective
unless made by one or more instruments in writing signed by all of the
parties hereto.
3.3 Entire Agreement. Except as expressly provided in this Agreement, this
Agreement: (i) supersedes and cancels all other understandings and
agreements, oral or written, with respect to Vendor's obligations with
respect to non-competition which Vendor has
7
<PAGE> 8
executed in the past; (ii) supersedes all other understandings and
agreements, oral or written, between the parties with respect to the
subject matter of this Agreement; and (iii) constitutes the sole
agreement between the parties with respect to the matters covered. No
change or modification of this Agreement shall be valid or binding
upon the parties unless such change or modification is in writing and is
signed by the parties.
3.4 Assignment. Neither of the parties hereto shall assign or otherwise
deal with any of its right, title or interest in this Agreement without
the prior written consent of the other party to this Agreement, which
consent may be withheld in such party's absolute discretion, provided,
however, that the Purchaser may in its absolute discretion assign all or
any of its right title and interest in this Agreement to a an Affiliate
or to a subsequent purchaser of all of the share capital of the Company
or all or substantially all of the assets of the Company.
8
<PAGE> 9
3.5 Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with English law and the parties irrevocably
submit to the non-exclusive jurisdiction of the High Court of Justice
in London for all purposes connected with it.
IN WITNESS whereof this Agreement has been executed and unconditionally
delivered as a Deed the day and year first-above written.
Signed and delivered as a Deed )
by Quintiles Transitional Corp. )
by its duly authorized )
Vice President, Rachel R. Selisker, )
and by its duly authorized )
Secretary, Gregory D. Porter )
/s/ Rachel R. Selisker
- ------------------------------
Rachel R. Selisker
Vice President
/s/ Gregory D. Porter
- ------------------------------
Gregory D. Porter
Secretary
Signed and delivered as a Deed )
by David F. White ) /s/ David F. White
in the presence of:
Name: P. Knott
----------------------------- )
Address: The Gables )
------------------------- )
Elvendon Road, Gorine-on- )
------------------------- )
Thames, Oxon RG8 ODT )
------------------------- )
Occupation: Director )
---------------------- )
9
<PAGE> 1
EXHIBIT 10.28
Maker QUINTILES TRANSNATIONAL CORP.
------------------------------------------------------------------------
Address PO BOX 13979 430-0064227
--------------------------------- --------------------
RESEARCH TRIANGLE PARK, NC 27709 Customer Number
--------------------------------- [BB&T LOGO]
Attn: Vincent Morgus 00007
--------------------------------- --------------------
Note Number
<TABLE>
<CAPTION>
NOTE MODIFICATION AGREEMENT
<C> <C> <C> <C>
$ 15,000,000.00 08/31/94 $ 15,000,000.00 08-31-1996
----------------------- ------------- ------------------- ------------------
Original Amount of Note Original Date Modification Amount Modification Date
</TABLE>
This Note Modification Agreement (hereinafter Agreement) is made and entered
into this 31 day of AUGUST, 1996, by and between QUINTILES TRANSNATIONAL CORP,
maker(s), co-maker(s), endorser(s), or other obligor(s) on the Promissory
Note(s) (as below defined) hereinafter also referred to jointly and severally
as Borrower(s); Branch Banking and Trust Company, a North Carolina banking
corporation, hereinafter referred to as Bank; and______________________________
________________________________________, owners other than Borrower(s) (if any)
of any property pledged to secure performance of Borrower(s)'s obligations to
Bank, hereinafter referred to jointly and severally as Debtor(s)/Grantor(s).
Witnesseth: Whereas, Borrower(s) has previously executed Promissory Note(s) in
favor of Bank, (which Promissory Note(s) includes any original Promissory
Note(s) and any renewal, extension or modification of said Promissory Note(s))
(collectively Promissory Note(s)), said Promissory Note(s) being more
particularly identified by description of the original note above; and Whereas
Borrower(s) and Bank agree that said Promissory Note(s) be modified only to the
limited extent as is hereinafter set forth; that all other terms, conditions,
and covenants of said Promissory Note(s) remain in full force and effect, and
that all other obligations and covenants of Borrower(s), except as herein
modified, shall remain in full force and effect, and binding between Borrower(s)
and Bank; and Whereas Debtor(s)/Grantor(s), if different from Borrower(s), has
agreed to the terms of this modification; NOW THEREFORE, in mutual consideration
of the premises, the sum of Ten Dollars ($10) and other good and and valuable
consideration, each to the other parties paid, the parties hereto agree that
said Promissory Note(s) is amended as hereinafter described:
INTEREST RATE, PRINCIPAL AND INTEREST PAYMENT TERM MODIFICATIONS (To the extent
no change is made, existing terms continue. Sections not completed are deleted.)
Interest shall accrue from the date hereof on the unpaid principal balance
outstanding from time to time at the:
[ ]Fixed Rate of __________________% per annum.
[ ]Variable rate of the Bank's Prime Rate plus ______% per annum to be
adjusted [ ] daily [ ]monthly beginning on the [ ] 1st [ ] 15th day of
___________ [ ] quarterly beginning on the [ ] 1st [ ] 15th day of ____________
as the Bank's Prime Rate changes.
[ ] As of the Modification Date, any fixed, floating, or average maximum rate
and fixed minimum rate in effect by virtue of the Promissory Note(s)
are hereby deleted. If checked here [ ],the interest rate will not exceed
a(n) [ ] fixed [ ] average maximum rate of ______% or a [ ] floating
maximum rate of the greater of ______% or the Bank's Prime Rate; and the
interest rate will not decrease below a fixed minimum rate of _____%. If
an average maximum rate is specified, a determination of any required
reimbursement of interest by Bank will be made: [ ] when the Note is repaid
in full by Borrower [ ] annually beginning on ____________________.
[ ] ___________________________________________________________________________
___________________________________________________________________________
PRINCIPLE AND INTEREST IS PAYABLE AS FOLLOWS:
<TABLE>
<S> <C>
[ ] Principal (plus any accrued interest }
not otherwise scheduled herein) } Is due in full at maturity on FEBUARY 28, 1997.
}
[X] Principal plus accrued interest
[ ] Payable in consecutive __________ installments of [ ] Principal commencing on _____________.
[ ] Principal and interest
and continuing on the same day of each calendar period thereafter, in
____________ equal payments of $____________, with one final payment of all
remaining principal and accrued interest due on _______________.
</TABLE>
[ ] Accrued interest is payable ______ commencing on ____________ and continuing
on the same day of each calendar period thereafter, with one final payment
of all remaining interest due on __________________________________________.
[ ] Prior to an event of default, Borrower may borrow, repay, and reborrow
pursuant to the terms of a Loan Agreement dated ___________________________
between Borrower and Bank.
[ ] ___________________________________________________________________________
___________________________________________________________________________
The following scheduled payment(s) is (are) deferred:
[ ] $_________ principal
[ ] $_________ interest payment(s) due on _____________________
[ ] $_________ principal and interest
is (are) hereby deferred. Payments will resume on ______________ according
to the schedule contained herein or to the existing schedule (if no other
changes are made herein).
The Borrowor(s) promises to pay Bank, or order, a late fee in the amount of four
percent (4%) of any installment past due for fifteen (15) or more days. Where
any installment payment past due for fifteen (15) or more days, subsequent
payments shall first be applied to the past due balance.
COLLATERAL: [ ] If marked, the Promissory Note(s), as modified, and the
performance of the terms of any agreement or instrument relating to, evidencing,
or securing the Promissory Note(s), as modified, shall be additionally secured
by collateral hereafter described, a new security instrument shall be executed
by Borrower(s), and/or Debtor(s)/Grantor(s), and all other steps necessary to
perfect or record the Bank's lien with priority acceptable to Bank shall be
taken.
Date:_____________________ Type of Agreement:______________ From:______________
Collateral:____________________________________________________________________
Date:_____________________ Type of Agreement:______________ From:______________
Collateral:____________________________________________________________________
In addition to the collateral described above, the undersigned hereby grants to
the Bank as collateral security for the indebtedness evidenced by the Note(s),
as modified, a security interest and lien in and to all deposit accounts,
certificates of deposit, securities and stocks now or hereafter in Bank's
possession or on deposit with the Bank, including all renewals, amendments and
proceeds thereof (if applicable), including but not limited to the following:
[ ] #___________ in the amount of $__________ in the name(s)__________________.
[ ] __________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
If any stock or securities are pledged to the Bank herein, the security interest
includes all stock splits, reissued shares, substitute shares, and all proceeds
thereof, which the undersigned promises to deliver to Bank.
[ ] If marked, the collateral hereinafter described shall be and hereby is
deleted as security interest for payment of the aforesaid Promissory Note(s):
___________________________________________________________________________
___________________________________________________________________________
OTHER:_________________________________________________________________________
If the Promissory Note(s) being modified by this Agreement is signed by more
than one person or entity, the modified Promissory Note(s) shall be the JOINT
and SEVERAL obligation of all signers and the property and liability of each and
all of them. It is expressly understood and agreed that this Agreement is a
modification only and not a novation. The original obligation of the Borrower(s)
as evidenced by the Promissory Note(s) above described is not extinguished
hereby. It is also understood and agreed that except for the modification(s)
contained herein said Promissory Note(s), and any other Loan Documents or
Agreements evidencing, securing or relating to the Promissory Note(s) and all
singular terms and conditions thereof, shall be and remain in full force and
effect. This Agreement shall not release or affect the liability of any
co-makers, obligors, endorsers or guarantors of said Promissory Note(s).
Borrower(s) and Debtor(s)/Grantor(s), if any, jointly and severally consent to
the terms of this Agreement, waive any objection thereto, affirm any and all
obligations to Bank and certify that there are no defenses or offsets against
said obligations or the Bank, including without limitation the Promissory
Note(s). Bank expressly reserves all rights as to any party with right of
recourse on the aforesaid Promissory Note(s).
In the event periodic accruals of interest shall exceed any periodic fixed
payment amount described above, the fixed payment amount shall be immediately
increased or supplemental interest payments required on the same periodic basis
as specified above (increased fixed payments or supplemental payments to be
determined in
Page 1 of 2
BBT373 (9701)
<PAGE> 2
the Bank's sole discretion), in such amounts and at such times as shall be
necessary to pay all accruals of interest for the period and all accruals of
unpaid interest from previous periods. Such adjustments to the fixed payment
amount or supplemental payments shall remain in effect for so long as any
interest accruals shall exceed the original fixed payment amount and shall be
further adjusted upward or downward to reflect changes in any variable interest
rate based on an index such as Bank's Prime Rate. In no event shall the fixed
payment amount be reduced below the original fixed payment amount specified in
this Agreement or in the Promissory Note(s). Notwithstanding any other provision
contained in this agreement, in no event shall the provisions of this paragraph
be applicable to any Promissory Note(s) which requires disclosures pursuant to
the Consumer Protection Act (Truth-in-Lending Act), 15 USC section 1601, et
seq., as implemented by Regulation Z.
The Bank may, at its option, charge any fees for the modification, renewal,
extension, or amendment of any of the terms of the Promissory Note(s) permitted
by N.C.G.S. section 24-1.1.
In the words "Prime Rate", "Bank Prime Rate", "BB&T Prime Rate", Bank's Prime
Rate" or "BB&T's Prime Rate" are used in this Agreement, they shall refer to
the rate announced by the Bank from time to time as its Prime Rate. The Bank
makes loans both above and below the Prime Rate and uses indexes other than the
Prime Rate. Prime Rate is the name given a rate index used by the Bank and does
not in itself constitute a representation of any preferred rate or treatment.
Unless otherwise provided herein, it is expressly understood and agreed by and
between Borrower(s), Debtor(s)/Grantor(s) and Bank that any and all collateral
(including but not limited to real property, personal property, fixtures,
inventory, accounts, instruments, general intangibles, documents, chattel paper,
and equipment) given as security to insure faithful performance by Borrower(s)
and any third party of any and all obligations to Bank, however created, whether
now existing or hereafter arising, shall remain as security for the Promissory
Note(s) as modified hereby.
It is understood and agreed that if Bank has released collateral herein, it
shall not be required or obligated to take any further steps to release said
collateral from any lien or security interest unless Bank determines, in its
sole discretion, that it may do so without consequence to its secured position
and relative priority in other collateral; and unless Borrower(s) bears the
reasonable cost of such action. No delay or omission on the part of the Bank in
exercising any right hereunder shall operate as a waiver of such right or of any
other right of the Bank, nor shall any delay, omission or waiver on any one
occasion be deemed a bar to or waiver of the same, or of any other right on any
further occasion. Each of the parties signing this Agreement regardless of the
time, order or place of signing waives presentment, demand, protest, and notices
of every kind, and assents to any one or more extensions or postponements of the
time of payment or any other indulgences, to any substitutions, exchanges or
releases of collateral if at any time there is available to the Bank collateral
for the Promissory Note(s), as amended, and to the additions or releases of any
other parties or persons primarily or secondarily liable. Whenever possible the
provisions of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of the Agreement
prohibited by or invalid under such law, such provisions shall be ineffective to
the extent of any such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provision of this Agreement. All
rights and obligations arising hereunder shall be governed by and construed in
accordance with the laws of the same state which governs the interpretation and
enforcement of the Promissory Note(s). From and after any event of default under
this Agreement, the Promissory Note(s), or any related deed of trust or other
security agreement or loan agreement, interest shall accrue on the sum of the
principal balance and accrued interest then outstanding at the variable rate
equal to the Bank's Prime Rate plus 5% per annum ("Default Rate"), provided that
such rate shall not exceed at any time the highest rate of interest permitted by
the laws of the State of North Carolina; and further that such rate shall apply
after judgement. In the event of any default, the then remaining unpaid
principal amount and accrued but unpaid interest then outstanding shall bear
interest at the Default Rate called for hereunder until such principal and
interest have been paid in full. BANK SHALL NOT BE OBLIGATED TO ACCEPT ANY
CHECK, MONEY ORDER, OR OTHER PAYMENT INSTRUMENT MARKED "PAYMENT IN FULL" ON ANY
DISPUTED AMOUNT DUE HEREUNDER, AND BANK EXPRESSLY RESERVES THE RIGHT TO REJECT
ALL SUCH PAYMENT INSTRUMENTS. BORROWER AGREES THAT TENDER OF ITS CHECK OR OTHER
PAYMENT INSTRUMENT SO MARKED WILL NOT SATISFY OR DISCHARGE ITS OBLIGATION UNDER
THIS NOTE, DISPUTED OR OTHERWISE, EVEN IF SUCH CHECK OR PAYMENT INSTRUMENT IS
INADVERTENTLY PROCESSED BY BANK UNLESS IN FACT SUCH PAYMENT IS IN FACT
SUFFICIENT TO PAY THE AMOUNT DUE HEREUNDER.
CREDIT LIFE AND DISABILITY INSURANCE
------------------------------------
Subject to certain underwriting criteria and limitations, INDIVIDUAL BORROWERS
AND ADDITIONAL CO-MAKERS HAVE THE RIGHT TO REQUEST CREDIT LIFE AND DISABILITY
INSURANCE PROTECTION FOR THIS LOAN. One or two Borrowers/Co-makers may be
covered by BB&T Credit Life Insurance and one Borrower/Co-maker may be covered
by BB&T Credit Disability Insurance. However, the purchase of credit life and
credit disability insurance from the Bank is not a condition of obtaining or
maintaining this loan.
I, the undersigned, desire the credit insurance with the cost and terms
described below and promise to pay the premium of such insurance coverage.
I understand that I may cancel this credit insurance at any time. I
represent that, to the best of my knowledge, I am in good health and am
insurable.
[ ] BB&T Type 1: Complete the following: [ ] BB&T Type 2: Complete
separate application.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CREDIT LIFE INSURANCE Effective Date Term in Mos. Initial Ins. Amount Credit Life Premium
[ ] Single [ ] Level
[ ] Joint [ ] Decreasing $ $
---------------- ----------- ------------------ -------------------
</TABLE>
<TABLE>
Monthly Benefit Amount Credit Disability Premium
<CAPTION>
<S> <C> <C>
CREDIT DISABILITY INSURANCE
Effective Date and Terms in Mos.
Same as Credit Life Insurance Above $ $
----------------------------------- --------------------------- ----------------------------
</TABLE>
Credit Disability Insurance is subject to a 14-day elimination period
and a 60-month maximum benefit period. Only the Borrower or Co-Maker
who signs on the first line under "Signature(s) of Insured" is covered
by Credit Disability insurance.
<TABLE>
<S> <C> <C>
Date of Birth Signature(s) of Insured Total Credit Life and Disability
Insurance Premium
-------------- --------------------------------------
Signature of Primary Insured
$
-------------- -------------------------------------- ---------------------------------------
Signature of Secondary Insured
</TABLE>
Witness the hand and seal of the undersigned. Each of the undersigned adopts as
his seal the word or symbol for "seal" appearing beside or near his signature
below.
IF BORROWER IS A CORPORATION:
Quintiles Transnational Corp
-------------------------------------------
NAME OF CORPORATION
ATTEST:/s/ Guy D. Porter By: /s/ Dennis B. Gillings
----------------------- ---------------------------------------
Dennis B. Gillings
Title:EVP Secretary Title: Chairman and Chief Executive Officer
------------------------ ------------------------------------
(SEAL) (Affix seal or By:
insert name of ----------------------------------------
corporation in
seal to adopt as Title:
seal of borrower) -------------------------------------
IF BORROWER IS A PARTNERSHIP, LIMITED LIABILITY COMPANY, OR LIMITED LIABILITY
PARTNERSHIP:
WITNESS:
-------------------------------------------
NAME OF PARTNERSHIP, LLC, OR LLP
By: (SEAL)
- ------------------------------ ----------------------------------
GENERAL PARTNER OR MANAGER
By: (SEAL)
- ----------------------------- ----------------------------------
GENERAL PARTNER OR MANAGER
By: (SEAL)
- ----------------------------- ----------------------------------
GENERAL PARTNER OR MANAGER
IF BORROWER IS AN INDIVIDUAL
WITNESS:
(SEAL)
- ----------------------------- -------------------------------------
ADDITIONAL BORROWERS AND DEBTORS/GRANTORS:
WITNESS:
<TABLE>
<S> <C>
/s/ Guy D. Porter Quintiles, Inc. CEO
- --------------------------------------------- -------------------------------------------- (SEAL)
Quintiles, Inc., Guarantor
By: Dennis B. Gillings, CEO
- --------------------------------------------- -------------------------------------------- (SEAL)
/s/ Guy D. Porter Quintiles Pacific, Inc. CEO
- --------------------------------------------- -------------------------------------------- (SEAL)
Quintiles Pacific, Inc., Guarantor
By: Dennis B. Gillings
- --------------------------------------------- -------------------------------------------- (SEAL)
/s/ Guy D. Porter Quintiles Laboratories Limited CEO
- --------------------------------------------- -------------------------------------------- (SEAL)
Quintiles Laboratories Limited, Guarantor
By: Dennis B. Gillins
- --------------------------------------------- -------------------------------------------- (SEAL)
</TABLE>
Page 2 of 2
<PAGE> 3
Maker QUINTILES TRANSNATIONAL CORP
------------------------------------------------------------------------
Address PO BOX 13979 430-0064227
--------------------------------- --------------------
RESEARCH TRIANGLE PARK, NC 27709 Customer Number
--------------------------------- [BB&T LOGO]
Attn: Vincent Morgus 00007
--------------------------------- --------------------
Note Number
<TABLE>
<CAPTION>
NOTE MODIFICATION AGREEMENT
<C> <C> <C> <C>
$ 15,000,000.00 08/31/94 $ 15,000,000.00 02-28-1997
- ------------------------ ------------- ------------------- ------------------
Original Amount of Note Original Date Modification Amount Modification Date
</TABLE>
This Note Modification Agreement (hereinafter Agreement) is made and entered
into this 28 day of FEBRUARY, 1997, by and between QUINTILES TRANSNATIONAL CORP,
maker(s), co-maker(s), endorser(s), or other obligor(s) on the Promissory
Note(s) (as below defined) hereinafter also referred to jointly and severally
as Borrower(s); Branch Banking and Trust Company, a North Carolina banking
corporation, hereinafter referred to as Bank; and______________________________
________________________________________, owners other than Borrower(s) (if any)
of any property pledged to secure performance of Borrower(s)'s obligations to
Bank, hereinafter referred to jointly and severally as Debtor(s)/Grantor(s).
Witnesseth: Whereas, Borrower(s) has previously executed Promissory Note(s) in
favor of Bank, (which Promissory Note(s) includes any original Promissory
Note(s) and any renewal, extension or modification of said Promissory Note(s))
(collectively Promissory Note(s)), said Promissory Note(s) being more
particularly identified by description of the original note above; and Whereas
Borrower(s) and Bank agree that said Promissory Note(s) be modified only to the
limited extent as is hereinafter set forth; that all other terms, conditions,
and covenants of said Promissory Note(s) remain in full force and effect, and
that all other obligations and covenants of Borrower(s), except as herein
modified, shall remain in full force and effect, and binding between Borrower(s)
and Bank; and Whereas Debtor(s)/Grantor(s), if different from Borrower(s), has
agreed to the terms of this modification; NOW THEREFORE, in mutual consideration
of the premises, the sum of Ten Dollars ($10) and other good and and valuable
consideration, each to the other parties paid, the parties hereto agree that
said Promissory Note(s) is amended as hereinafter described:
INTEREST RATE, PRINCIPAL AND INTEREST PAYMENT TERM MODIFICATIONS (To the extent
no change is made, existing terms continue. Sections not completed are deleted.)
Interest shall accrue from the date hereof on the unpaid principal balance
outstanding from time to time at the:
[ ]Fixed Rate of __________________% per annum.
[ ]Variable rate of the Bank's Prime Rate plus ______% per annum to be
adjusted [ ] daily [ ]monthly beginning on the [ ] 1st [ ] 15th day of
________ [ ] quarterly beginning on the [ ] 1st [ ] 15th day of ____________
as the Bank's Prime Rate changes.
[ ] As of the Modification Date, any fixed, floating, or average maximum rate
and fixed minimum rate in effect by virtue of the Promissory Note(s)
are hereby deleted. If checked here [ ], the interest rate will not exceed
a(n) [ ] fixed [ ] average maximum rate of ______% or a [ ] floating
maximum rate of the greater of ______% or the Bank's Prime Rate; and the
interest rate will not decrease below a fixed minimum rate of _____%. If
an average maximum rate is specified, a determination of any required
reimbursement of interest by Bank will be made: [ ] when the Note is repaid
in full by Borrower [ ] annually beginning on ____________________.
[ ] ___________________________________________________________________________
___________________________________________________________________________
PRINCIPLE AND INTEREST IS PAYABLE AS FOLLOWS:
<TABLE>
<S> <C>
[ ] Principal (plus any accrued interest } Is due in full at maturity on APRIL 30, 1997.
not otherwise scheduled herein) }
[X] Principal plus accrued interest }
[ ] Payable in consecutive __________ installments of [ ] Principal commencing on _____________.
[ ] Principal and interest
and continuing on the same day of each calendar period thereafter, in
_____________ equal payments of $____________,with one final payment of all
remaining principal and accrued interest due on _______________.
</TABLE>
[ ] Accrued interest is payable ______ commencing on ____________ and continuing
on the same day of each calendar period thereafter, with one final payment
of all remaining interest due on _________________________________________ .
[ ] Prior to an event of default, Borrower may borrow, repay, and reborrow
pursuant to the terms of a Loan Agreement dated __________________________
between Borrower and Bank.
[ ] ___________________________________________________________________________
___________________________________________________________________________
The following scheduled payment(s) is (are) deferred:
[ ] $_________ principal
[ ] $_________ interest payment(s) due on_______________________
[ ] $_________ principal and interest
is (are) hereby deferred. Payments will resume on _____________ according
to the schedule contained herein or to the existing schedule (if no other
changes are made herein).
The Borrowor(s) promises to pay Bank, or order, a late fee in the amount of four
percent (4%) of any installment past due for fifteen (15) or more days. Where
any installment payment past due for fifteen (15) or more days, subsequent
payments shall first be applied to the past due balance.
COLLATERAL: [ ] If marked, the Promissory Note(s), as modified, and the
performance of the terms of any agreement or instrument relating to, evidencing,
or securing the Promissory Note(s), as modified, shall be additionally secured
by collateral hereafter described, a new security instrument shall be executed
by Borrower(s), and/or Debtor(s)/Grantor(s), and all other steps necessary to
perfect or record the Bank's lien with priority acceptable to Bank shall be
taken.
Date:_____________________ Type of Agreement:______________ From:______________
Collateral:____________________________________________________________________
Date:_____________________ Type of Agreement:______________ From:______________
Collateral:____________________________________________________________________
In addition to the collateral described above, the undersigned hereby grants to
the Bank as collateral security for the indebtedness evidenced by the Note(s),
as modified, a security interest and lien in and to all deposit accounts,
certificates of deposit, securities and stocks now or hereafter in Bank's
possession or on deposit with the Bank, including all renewals, amendments and
proceeds thereof (if applicable), including but not limited to the following:
[ ] #___________ in the amount of $__________ in the name(s)__________________.
[ ] __________________________________________________________________________.
______________________________________________________________________________
______________________________________________________________________________
If any stock or securities are pledged to the Bank herein, the security interest
includes all stock splits, reissued shares, substitute shares, and all proceeds
thereof, which the undersigned promises to deliver to Bank.
[ ] If marked, the collateral hereinafter described shall be and hereby is
deleted as security interest for payment of the aforesaid Promissory Note(s):
______________________________________________________________________________
______________________________________________________________________________
OTHER:________________________________________________________________________
If the Promissory Note(s) being modified by this Agreement is signed by more
than one person or entity, the modified Promissory Note(s) shall be the JOINT
and SEVERAL obligation of all signers and the property and liability of each and
all of them. It is expressly understood and agreed that this Agreement is a
modification only and not a novation. The original obligation of the Borrower(s)
as evidenced by the Promissory Note(s) above described is not extinguished
hereby. It is also understood and agreed that except for the modification(s)
contained herein said Promissory Note(s), and any other Loan Documents or
Agreements evidencing, securing or relating to the Promissory Note(s) and all
singular terms and conditions thereof, shall be and remain in full force and
effect. This Agreement shall not release or affect the liability of any
co-makers, obligors, endorsers or guarantors of said Promissory Note(s).
Borrower(s) and Debtor(s)/Grantor(s), if any, jointly and severally consent to
the terms of this Agreement, waive any objection thereto, affirm any and all
obligations to Bank and certify that there are no defenses or offsets against
said obligations or the Bank, including without limitation the Promissory
Note(s). Bank expressly reserves all rights as to any party with right of
recourse on the aforesaid Promissory Note(s).
In the event periodic accruals of interest shall exceed any periodic fixed
payment amount described above, the fixed payment amount shall be immediately
increased or supplemental interest payments required on the same periodic basis
as specified above (increased fixed payments or supplemental payments to be
determined in
Page 1 of 2
BBT373 (9701)
<PAGE> 4
the Bank's sole discretion), in such amounts and at such times as shall be
necessary to pay all accruals of interest for the period and all accruals of
unpaid interest from previous periods. Such adjustments to the fixed payment
amount or supplemental payments shall remain in effect for so long as any
interest accruals shall exceed the original fixed payment amount and shall be
further adjusted upward or downward to reflect changes in any variable interest
rate based on an index such as Bank's Prime Rate. In no event shall the fixed
payment amount be reduced below the original fixed payment amount specified in
this Agreement or in the Promissory Note(s). Notwithstanding any other provision
contained in this agreement, in no event shall the provisions of this paragraph
be applicable to any Promissory Note(s) which requires disclosures pursuant to
the Consumer Protection Act (Truth-in-Lending Act), 15 USC section 1601, et
seq., as implemented by Regulation Z.
The Bank may, at its option, charge any fees for the modification, renewal,
extension, or amendment of any of the terms of the Promissory Note(s) permitted
by N.C.G.S. section 24-1.1.
In the words "Prime Rate", "Bank Prime Rate", "BB&T Prime Rate", Bank's Prime
Rate" or "BB&T's Prime Rate" are used in this Agreement, they shall refer to
the rate announced by the Bank from time to time as its Prime Rate. The Bank
makes loans both above and below the Prime Rate and uses indexes other than the
Prime Rate. Prime Rate is the name given a rate index used by the Bank and does
not in itself constitute a representation of any preferred rate or treatment.
Unless otherwise provided herein, it is expressly understood and agreed by and
between Borrower(s), Debtor(s)/Grantor(s) and Bank that any and all collateral
(including but not limited to real property, personal property, fixtures,
inventory, accounts, instruments, general intangibles, documents, chattel paper,
and equipment) given as security to insure faithful performance by Borrower(s)
and any third party of any and all obligations to Bank, however created, whether
now existing or hereafter arising, shall remain as security for the Promissory
Note(s) as modified hereby.
It is understood and agreed that if Bank has released collateral herein, it
shall not be required or obligated to take any further steps to release said
collateral from any lien or security interest unless Bank determines, in its
sole discretion, that it may do so without consequence to its secured position
and relative priority in other collateral; and unless Borrower(s) bears the
reasonable cost of such action. No delay or omission on the part of the Bank in
exercising any right hereunder shall operate as a waiver of such right or of any
other right of the Bank, nor shall any delay, omission or waiver on any one
occasion be deemed a bar to or waiver of the same, or of any other right on any
further occasion. Each of the parties signing this Agreement regardless of the
time, order or place of signing waives presentment, demand, protest, and notices
of every kind, and assents to any one or more extensions or postponements of the
time of payment or any other indulgences, to any substitutions, exchanges or
releases of collateral if at any time there is available to the Bank collateral
for the Promissory Note(s), as amended, and to the additions or releases of any
other parties or persons primarily or secondarily liable. Whenever possible the
provisions of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of the Agreement
prohibited by or invalid under such law, such provisions shall be ineffective to
the extent of any such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provision of this Agreement. All
rights and obligations arising hereunder shall be governed by and construed in
accordance with the laws of the same state which governs the interpretation and
enforcement of the Promissory Note(s). From and after any event of default under
this Agreement, the Promissory Note(s), or any related deed of trust or other
security agreement or loan agreement, interest shall accrue on the sum of the
principal balance and accrued interest then outstanding at the variable rate
equal to the Bank's Prime Rate plus 5% per annum ("Default Rate"), provided that
such rate shall not exceed at any time the highest rate of interest permitted by
the laws of the State of North Carolina; and further that such rate shall apply
after judgement. In the event of any default, the then remaining unpaid
principal amount and accrued but unpaid interest then outstanding shall bear
interest at the Default Rate called for hereunder until such principal and
interest have been paid in full. BANK SHALL NOT BE OBLIGATED TO ACCEPT ANY
CHECK, MONEY ORDER, OR OTHER PAYMENT INSTRUMENT MARKED "PAYMENT IN FULL" ON ANY
DISPUTED AMOUNT DUE HEREUNDER, AND BANK EXPRESSLY RESERVES THE RIGHT TO REJECT
ALL SUCH PAYMENT INSTRUMENTS. BORROWER AGREES THAT TENDER OF ITS CHECK OR OTHER
PAYMENT INSTRUMENT SO MARKED WILL NOT SATISFY OR DISCHARGE ITS OBLIGATION UNDER
THIS NOTE, DISPUTED OR OTHERWISE, EVEN IF SUCH CHECK OR PAYMENT INSTRUMENT IS
INADVERTENTLY PROCESSED BY BANK UNLESS IN FACT SUCH PAYMENT IS IN FACT
SUFFICIENT TO PAY THE AMOUNT DUE HEREUNDER.
CREDIT LIFE AND DISABILITY INSURANCE
------------------------------------
Subject to certain underwriting criteria and limitations, INDIVIDUAL BORROWERS
AND ADDITIONAL CO-MAKERS HAVE THE RIGHT TO REQUEST CREDIT LIFE AND DISABILITY
INSURANCE PROTECTION FOR THIS LOAN. One or two Borrowers/Co-makers may be
covered by BB&T Credit Life Insurance and one Borrower/Co-maker may be covered
by BB&T Credit Disability Insurance. However, the purchase of credit life and
credit disability insurance from the Bank is not a condition of obtaining or
maintaining this loan.
I, the undersigned, desire the credit insurance with the cost and terms
described below and promise to pay the premium of such insurance coverage.
I understand that I may cancel this credit insurance at any time. I
represent that, to the best of my knowledge, I am in good health and am
insurable.
[ ] BB&T Type 1: Complete the following: [ ] BB&T Type 2: Complete
separate application.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CREDIT LIFE INSURANCE Effective Date Term in Mos. Initial Ins. Amount Credit Life Premium
[ ] Single [ ] Level
[ ] Joint [ ] Decreasing $ $
---------------- ----------- ------------------ -------------------
</TABLE>
<TABLE>
Monthly Benefit Amount Credit Disability Premium
<CAPTION>
<S> <C> <C>
CREDIT DISABILITY INSURANCE
Effective Date and Terms in Mos.
Same as Credit Life Insurance Above $ $
----------------------------------- --------------------------- ----------------------------
</TABLE>
Credit Disability Insurance is subject to a 14-day elimination period
and a 60-month maximum benefit period. Only the Borrower or Co-Maker
who signs on the first line under "Signature(s) of Insured" is covered
by Credit Disability insurance.
<TABLE>
<S> <C> <C>
Date of Birth Signature(s) of Insured Total Credit Life and Disability
Insurance Premium
-------------- --------------------------------------
Signature of Primary Insured
$
-------------- -------------------------------------- ---------------------------------------
Signature of Secondary Insured
</TABLE>
Witness the hand and seal of the undersigned. Each of the undersigned adopts as
his seal the word or symbol for "seal" appearing beside or near his signature
below.
IF BORROWER IS A CORPORATION:
Quintiles Transnational Corp
-------------------------------------------
NAME OF CORPORATION
ATTEST:/s/ Guy D. Porter By: /s/ Dennis B. Gillings
----------------------- ---------------------------------------
Dennis B. Gillings
Title:EVP Secretary Title: Chairman and Chief Executive Officer
------------------------ ------------------------------------
(SEAL) By:
----------------------------------------
Title:
-------------------------------------
IF BORROWER IS A PARTNERSHIP, LIMITED LIABILITY COMPANY, OR LIMITED LIABILITY
PARTNERSHIP:
WITNESS:
-------------------------------------------
NAME OF PARTNERSHIP, LLC, OR LLP
By: (SEAL)
- ------------------------------ ----------------------------------
GENERAL PARTNER OR MANAGER
By: (SEAL)
- ----------------------------- ----------------------------------
GENERAL PARTNER OR MANAGER
By: (SEAL)
- ----------------------------- ----------------------------------
GENERAL PARTNER OR MANAGER
IF BORROWER IS AN INDIVIDUAL
WITNESS:
(SEAL)
- ----------------------------- -------------------------------------
ADDITIONAL BORROWERS AND DEBTORS/GRANTORS
WITNESS:
<TABLE>
<S> <C> <C>
/s/ Guy D. Porter /s/ Quintiles, Inc. "By Dennis Gillings CEO" (SEAL)
- ----------------------------- -----------------------------------------------------------
Quintiles, Inc., Guarantor
By: Dennis B. Gillings, CEO (SEAL)
- ----------------------------- -----------------------------------------------------------
/s/ Guy D. Porter /s/ Quintiles Pacific, Inc. "By Dennis Gillings CEO" (SEAL)
- ----------------------------- -----------------------------------------------------------
Quintiles Pacific, Inc., Guarantor
By: Dennis B. Gillings, CEO (SEAL)
- ----------------------------- -----------------------------------------------------------
/s/ Guy D. Porter /s/ Quintiles Laboratories Limited "By Dennis Gillings CEO" (SEAL)
- ----------------------------- -----------------------------------------------------------
Quintiles Laboratories Limited, Guarantor
By: Dennis B. Gillings, CEO (SEAL)
- ----------------------------- -----------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.36
DATED 6th November, 1996
------------------------
REPORT
SECOND FLOOR OFFICES
SOLAR HOUSE FIELDHOUSE LANE
GLOBE PARK, MARLOW, BUCKINGHAMSHIRE
Hobson Audley Hopkins & Wood
7 Pilgrim Street
London EC4V 6DR
MJH/INNB40
05.1l.96
[HA 38534]
<PAGE> 2
1. THE PROPERTY
The property comprises the leasehold interest in the premises known as Second
floor, Solar House, Fieldhouse Lane, Globe Park, Marlow, Buckinghamshire ("the
property"), shown on the plan numbered one annexed to this Report. This plan is
taken from the Lease.
2. THE CONTRACT
The Contract is governed by the standard Conditions of Sale (3rd Edition). We
confirm that the Contract has been drawn in comprehensive and equitable form
which properly protects the interests of both parties
The following terms should be noted:
2.1 The Contract obliges both parties to complete the Lease within seven
working days after the Contract becomes unconditional.
2.2. The Contract is conditional upon the superior landlord's consent being
granted and also the parties obtaining a court order to exclude the
security of tenure provisions of the Landlord and Tenant Act 1954. When
both the consent and court order have been obtained the contract becomes
unconditional.
2.3 There is a long stop date of three months from the date of the Contract
and if the superior landlord's consent and the court order are not
obtained within this period then either party can rescind the Contract.
2.4 The Contract allows you to occupy the demised premises as licensee at
will from the date of exchange until the Lease is formally completed.
Your occupation will be on the same terms as the Lease but can be brought
to an end at any time by the landlord.
2.5 You will also be entitled to carry out your fitting out works whilst you
occupy as licensee provided that they have been previously approved in
writing by the landlord.
3. THE TITLE
As Seagate are only granting you a lease for three years they are not obliged to
deduce title to the property although we confirm that we have been provided with
a copy of the lease under which they hold Solar House which is dated 31st May
1990 and made between AMEC Properties Limited (1) and Seagate Technology Inc (2)
("the Headlease"). AMEC's interest is now vested in The Prudential Insurance
Company. We have not, however, been provided with a copy of the lease under
which Prudential hold the development.
4. THE LEASE
The Lease is an underlease and as such follows very closely the form of the
Headlease. A summary of the main provisions of the Lease together with the
agreed form of Lease are given in Appendix 1. Please note that not all the
obligations under
-1-
<PAGE> 3
the Lease are repeated. We have merely tried to summarise the most important
provisions.
5. PLANNING & LOCAL SEARCH INFORMATION
We have obtained a personal local authority search through ICC Site Search
Limited which is dated 30th October 1996. The results of the search reveal the
following salient entries.
5.1 The property falls within the administrative district of Wycombe District
Council.
5.2 The foul drainage is connected to the public foul water sewer. The property
is not, however, connected to the public service water sewer.
5.3 Fieldhouse Lane is maintained at public expense.
5.4 The property is located within an employment area.
5.5 It appears that Solar House was erected pursuant to a Planning Permission
W/88/6223 which authorised the redevelopment of the site and construction
of two buildings for B1 business use together with associated parking.
The search does not, in other respects, reveal anything adverse.
6. FIRE CERTIFICATE
A Fire Certificate will be required in respect of the property due to the number
of employees that it will house.
You should also obtain confirmation from the Fire Officer that your fitting out
works comply in all respects with fire precaution requirements.
7. DELETERIOUS MATERIALS
The Vendor has provided no warranties concerning the use of non-deleterious
materials but in view of the short term nature of the letting and the fact that
the service charge is capped we do not consider this a cause of concern.
8. ENVIRONMENTAL LIABILITY
No information has been provided by the landlord's solicitors. Again, in view of
the short term nature of the letting we do not consider that an environmental
audit is necessary.
9. REPLIES TO ENQUIRIES
The replies reveal very little information and the information given does not
appear to be adverse. The following points should be noted:
-2-
<PAGE> 4
9.1 No information has been provided in respect of rates or any other
outgoings. Please let us know if you require us to make further enquiries.
9.2 Seagate give no warranty as to the condition of the property.
9.3 Seagate has received no notices of any breach of the terms of its lease or
of any of the conditions attached to the planning permission referred to in
paragraph 5.5 above.
9.4 The central heating was installed when the building was erected
approximately 8 years ago and is regularly serviced under a maintenance
contract.
9.5 The telephones will be removed.
9.6 The Superior Landlord is The Prudential Insurance Company Limited and the
freehold reversioner is believed to be Wycombe District Council.
9.7 We have not been provided with any insurance information.
9.8 Limited service charge information has been provided.
Copies of the replies to enquiries are attached at Appendix 2. Please note that
the red edging on Plan 1 attached to the replies to enquiries is incorrect. The
extent of the property to be let to you is shown on the Plan numbered 2 annexed
to this report.
10. WORKS
10.1 The Contract provides that you are permitted to carry out your fitting out
works.
10.2 We have negotiated that you will not be obliged to reinstate the existing
partitioning that you intend to remove. You will, however, be obliged to
take down the existing parkhousing carefully and store it until the end of
the Term and then release it to Seagate. You are also obliged to remove the
new partitioning that you install, if required.
10.3 The erection of the microwave dishes requires the consent of both Seagate
and the Prudential which have both been obtained in principle. You are
permitted to put up the dishes before a formal licence has been obtained
provided that you sign the letter of indemnity which provides that the
works are carried out at your own risk and that you will enter into a
licence of alterations in a form reasonably required by Prudential. You are
also liable to remove the dishes within 7 days of being required to.
10.4 With regard to the dishes required at Medina House, we confirm that a
licence to erect the dishes will be required from your Landlord's YJ Lovell
(Holdings) Limited and that this has been applied for. As you are aware
such a licence may take a number of weeks. We would recommend that you
discuss the situation with us if you need to erect the dishes before such a
licence is available.
-3-
<PAGE> 5
10.5 You are obliged to obtain the necessary planning and building regulations
consents in respect of the dishes.
11. CONCLUSION
Subject to the points mentioned in this report we confirm that the terms of the
Lease and Contract are acceptable.
Dated the 6th day of November, 1996
/s/Hobson Audley Hopkins & Wood
-------------------------------
HOBSON AUDLEY HOPKINS & WOOD
-4-
<PAGE> 6
THE PLANS REFERRED TO:
---------------------
-5-
<PAGE> 7
SECOND FLOOR OFFICES
SOLAR HOUSE FIELD HOUSE LANE
GLOBE PARK, MARLOW, BUCKINGHAMSHIRE
[FLOOR PLAN]
PLAN 1
<PAGE> 8
LOCATION MAP
SOLAR HOUSE FIELD HOUSE LANE
GLOBE PARK, MARLOW, BUCKINGHAMSHIRE
[FLOOR PLAN]
<PAGE> 9
APPENDIX 1:
----------
-6-
<PAGE> 10
LEASE SUMMARY
<TABLE>
<S> <C> <C>
1. PROPERTY: Second Floor, Solar House, Fieldhouse Lane,
Globe Park, Marlow, Buckinghamshire. A full
definition is provided at the end of this
summary.
2. LANDLORD: Seagate Technology Inc
3. TENANT: Innovex Holdings Limited
4. SUPERIOR LANDLORD: The Prudential Insurance Company. Their
development is shown edged blue on the plan
numbered 2 annexed to this report.
5. TERM: 3 years commencing on 1st November 1996
and expiring on 31st October 1999
6. RENT: L 92,300 per annum + VAT
7. RENT REVIEW: None
8. PAYMENT DATES: Quarterly in advance on the usual quarter
days.
9. TENANT'S PERCENTAGE: 14.9%. It is the ratio that the net internal area
of the Demised Premises bears to the net
internal area of the building (Solar House)
and is to be determined by the landlord's
appointed surveyor in case of dispute.
10. BREAK CLAUSE: None.
11. RATES: Paid by Tenant.
12. SECURITY OF TENURE: No
TENANT'S COVENANTS
1. RENT: To pay the rent on the usual quarter days
without any deduction. Rent and other
outgoings are payable from 1st November
1996.
2. OUTGOINGS: To pay all outgoings and other charges
relating to the property including the Tenant's
Percentage of all payments as may be
assessed, charged or payable in respect of the
building.
</TABLE>
-1-
<PAGE> 11
<TABLE>
<S> <C> <C>
3. SERVICE CHARGE: To pay the Tenant's Percentage of the cost
incurred by the Landlord in providing the
Services and also the Tenant's Percentage of
the amount paid by the Landlord for services
under the Superior Lease. Payments are
subject to a cap of L 4.00 per square foot. (i.e.
L 14,045 per annum). Service charge is subject
to VAT.
The Tenant is liable for all the costs incurred
by the Landlord in lighting and cleaning the toilets
on the second floor and providing hot water to them.
4. REPAIRS AND DECORATION The tenant is responsible for keeping the
property in good and substantial repair and
condition. In addition the tenant is
responsible for redecorating the Property in
the last 6 months of the term. However there
is no obligation to replace ceiling tiles or the
carpet.
5. ALTERNATIONS/IMPROVEMENTS Alterations or additions to the property are
prohibited. However, the tenant may with
the prior written consent of the landlord
which is not to be unreasonably withheld or
delayed make non structural internal
alterations or additions and install internal
demountable partitions.
The tenant is responsible for supplying the
landlord with full specifications and
drawings. The landlord can withhold its
consent until such time as the tenant obtains
confirmation that any such proposed
partitioning conforms to the requirements of
local fire officers.
The landlord can insist on reinstatement.
6. USER: Only for uses within Class B1 of the Town and
Country Planning (Use Classes) Order 1987.
This covers (a) office use (other than for
financial and professional services)
(b) research and development or (c) any
industrial process which can be carried out in
any residential area without detriment to the
amenity of that area.
</TABLE>
-2-
<PAGE> 12
<TABLE>
<S> <C> <C>
7. ALIENATION Any dealing with part only of the property is
prohibited.
Underletting of the whole is prohibited.
Assignment of the whole is permitted
provided that the prior written
consent of the landlord is obtained
(such consent not to be unreasonably
withheld or delayed).
The landlord can reasonably withhold its
consent if at the date of the application
the tenant is in breach of its covenants
under the lease or if the proposed assignee
is not in the landlord's reasonable opinion
of sound financial standing and capable of
performing the tenant's covenants under the
lease or if the landlord reasonably believes
that the assignment would adversely affect
its interest in Solar House. In addition, the
assignee is to be a limited company whose annual
profits before tax in each of the three years
prior to the application for assignment
exceeds 3 times the annual rent.
The landlord can on all occasions require the
tenant to guarantee the proposed assignee's
obligations and where reasonable it can request
the assignee to enter into a rent deposit deed
or to provide a guarantor.
In addition a proposed assignee must enter into
a direct deed of covenant with the landlord.
Notice of any assignment must be given
within one calendar month.
The tenant may share occupation with any
subsidiary or holding company of the tenant.
8. REGULATIONS: The tenant must observe any reasonable regulations
stipulated by the landlord.
9. SUPERIOR LEASE: The tenant must not do anything which might
cause the landlord to be in breach of the terms
of the superior lease dated 31st May 1990 and
made between the Superior Landlord (1) and
the Landlord (2). The form of the lease
follows the superior lease and performance of
the covenants in the lease will not be a breach
of any covenants in the superior lease.
</TABLE>
-3-
<PAGE> 13
<TABLE>
LANDLORD'S COVENANTS
<S> <C> <C>
1. SUPERIOR LEASE To pay the rents reserved by the Superior
Lease and to perform the lessee's covenants
thereunder and to use all reasonable
endeavours to procure that the superior
landlord observes and performs its covenants
in the Superior Lease subject to the tenant
bearing the Tenant's Percentage of the
landlord's costs thereby incurred.
2. SERVICES To use its reasonable endeavours in an
efficient manner and in accordance with the
principals of good estate management unless
so prevented by an event beyond its control
and (subject to the tenant paying the service
charge) to provide:
(a) Air conditioning.
(b) Cold water to the toilets and
washroom facilities on the second
floor of the building and hot
water during normal office working
hours from 8.00 a.m. to 6.00 p.m.
(c) To keep the halls and passages leading
to the demised premises and toilet and
washroom facilities on the second floor
of the building reasonably clean and lit
during normal office working hours.
(d) To keep the conducting media within
the building in good and substantial
repair.
3. SUPERIOR LEASE SERVICE CHARGE The landlord is obliged to supply to the tenant
ACCOUNTS within fourteen days of receiving the same
copies of such accounts together with copies
of any written estimates.
4 SERVICE CHARGE ACCOUNTS The landlord is obliged to and to make
available any receipts and vouchers for
inspection and to provide accounts for each
service charge year.
INSURANCE The superior landlord is obliged to insure the
building and the tenant is liable to repay to
the landlord the Tenant's Percentage of the cost.
</TABLE>
-4-
<PAGE> 14
<TABLE>
<S> <C>
The landlord is obliged to insure plate glass within
the building and again the tenant is obliged to pay
to the landlord the Tenant's Percentage of the cost.
If the property or any part or access to it is damaged
or destroyed by an insured risk and the superior
landlord's insurance policy has not been vitiated
the rent is suspended until the damage is remedied or the
end of the lease whichever is the sooner.
If insurance money is refused due to an act or default of
the tenant the tenant is responsible for repaying to the
landlord the cost (or a fair proportion as the
case may be) of rebuilding and reinstating the building.
RE-ENTRY (a) If the rent is unpaid for 21 days; or
(b) any of the tenant's covenants are not
performed; or
(c) there is an insolvency event (as
defined on page 49 of the lease); or
(d) the tenant's re-registers with unlimited
liability or reduces its capital or is
struck off the register of companies; or
(e) distress is levied on any of the tenant's
goods at the property; or
(f) either of (c) or (d) happen in relation to
a surety
then the landlord can lawfully re-enter
the property.
SERVICES UNDER SUPERIOR LEASE (a) To light, clean, drain, repair and
maintain in good condition and free
from rubbish and litter and from time
to time resurface or renew the common
areas and all roads, footpaths, lawns,
trees, gardens and landscaped amenity
areas.
(b) To clean, repair and maintain in good
working order all conducting media that
are laid from time to time under the common
areas.
</TABLE>
-5-
<PAGE> 15
<TABLE>
<S> <C>
(c) To pay all outgoings in respect of the common
areas.
(d) To insure the common areas.
(e) To manage the common areas.
The Tenant is responsible for paying the Tenant's
Percentage of the costs to the Landlord for such items.
SERVICES UNDER THE LEASE (a) Provision of air conditioning in the building.
(b) Keeping halls and passages in the building clean and lit.
(c) Repairing, maintaining, renewing and cleaning
the conducting media within the building and
the plant within the building.
(d) Providing security.
(e) Insurance which the landlord may reasonably deem
prudent in connection with any services.
(f) Employing agent's contractors etc.
(g) Procuring the supply of gas, water and
electricity for the use of air conditioning
and central heating.
(h) providing hot and cold water to the water outlets
in the Building.
RIGHTS AND RESERVATIONS 1. Rights
(a) to use the car parking spaces shown edged green
on the plan numbered 2 annexed to this report or
such other spaces that the landlord may be allocated
under the Headlease.
(b) to use the entrance halls and passages within
the Building and also the toilets and washroom
facilities on the first and second floors.
(c) right of passage of services through the
conducting media within the Building and
Common Areas.
</TABLE>
-6-
<PAGE> 16
<TABLE>
<S> <C>
(d) right of support.
(e) right to use Common Areas.
2. Reservations
(a) support.
(b) right of passage of services through
the conducting media within the property.
(c) right to alter any other property of the
Landlord.
(d) rights of entry upon the property for the purposes
mentioned in the lease.
DEMISED PREMISES A full definition is provided on the first schedule to
the lease. It is recommended that this is read carefully.
You will note that the demised premises comprise the second
floor and the internal finishes but not the main structure.
</TABLE>
-7-
<PAGE> 17
DATED 1996
-----------------------------------
(1) SEAGATE TECHNOLOGY INC.
(2) INNOVEX HOLDINGS LIMITED
---------------------------------------------
Counterpart
UNDERLEASE
relating to second floor of
Solar House, Fieldhouse Lane,
Marlow, Buckinghamshire
Term: Commencing on 1st November 1996
expiring on 31 October 1999
Rent: L 92,300 pa
---------------------------------------------
Baker & McKenzie
100 New Bridge Street
London EC4V 6JA
Tel: 0171-919 1000
Fax: 0171-919 1999
Ref: MDS/JFM
<PAGE> 18
CONTENTS
<TABLE>
<CAPTION>
Clause Page
- ------ ----
<S> <C>
1. Preliminary .................................................................1
1.1 Definitions ........................................................1
1.2 Gender .............................................................5
1.3 Number..............................................................5
1.4 Obligations ........................................................5
1.5 Statutory References ...............................................5
1.6 Covenants by the Tenant ............................................5
2. Demise Habendum and Reddendum ...............................................6
3. Tenant's Covenants ..........................................................7
3.1 Pay Rents ..........................................................7
3.2 Discharge Outgoings and Pay for Services ...........................8
3.3 Value Added Tax ...................................................11
3.4 Observance of Statutory Requirements ..............................12
3.5 Fire Precautions ..................................................13
3.6 Repair ............................................................13
3.7 Decoration and Maintenance ........................................14
3.8 Rubbish and Appearance ............................................16
3.9 Matters Prejudicial to the Demised Premises .......................17
3.10 Improvements and Alterations ......................................19
3.11 Signs and Erections ...............................................21
3.12 Planning ..........................................................21
3.13 Inspection and Remedial Works .....................................24
3.14 User ..............................................................26
3.15 Assignment and Underletting .......................................27
3.16 Facilitate Landlord's Dealings with the Demised Premises ..........33
3.17 Landlord's Access to the Demised Premises .........................34
3.18 Provision of Information to the Landlord ..........................35
3.19 Payment of Fees and Expenses ......................................36
3.20 Substitution of Surety ............................................37
3.21 Indemnities .......................................................38
3.22 Yield Up ..........................................................40
3.23 Regulations .......................................................41
3.24 Superior Lease ....................................................41
4. Landlord's Covenants .......................................................41
4.1 Quiet enjoyment ...................................................41
</TABLE>
<PAGE> 19
<TABLE>
<S> <C>
5. Insurance ..................................................................45
5.1 Information regarding cover ............................................45
5.2 Suspension of Rent on Occurrence of Insured Risk .......................45
5.3 Access for reinstatement ...............................................46
5.4 Tenant not to Prejudice Insurance ......................................46
5.5 Re-building if Insurance Money Irrecoverable ...........................46
5.6 Tenant's User and Insurance - To Pay Costs .............................47
5.8 Tenant's Insurances ....................................................48
6. No Liability ...............................................................48
7. Provisos ...................................................................48
7.1 Re-Entry ...............................................................49
7.2 Distress ...............................................................51
7.3 Formal Licences ........................................................51
7.4 Resolution of Differences ..............................................52
7.6 Tenant's Goods Left in Premises ........................................52
7.7 Service of Notices .....................................................53
7.8 Exclusion of Implied Easements .........................................53
7.9 Superior leases ........................................................53
7.11 No Warranty as to Permitted Use .......................................54
7.12 Denial of Waiver ......................................................54
7.13 Exclusion of set off ..................................................55
7.14 Rights of Access ......................................................55
7.15 Consents and Approvals ................................................55
7.16 Exclusion of Landlord and Tenant Act 1954 .............................55
8. Surety Covenants ...........................................................56
9. Jurisdiction ...............................................................56
THE FIRST SCHEDULE ..............................................................56
The Demised Premises .......................................................56
THE SECOND SCHEDULE .............................................................57
Rights included in the Demise ..............................................57
THE THIRD SCHEDULE ..............................................................59
Part I .....................................................................59
Part 11 ....................................................................60
THE FOURTH SCHEDULE .............................................................60
The Surety's Covenants .....................................................60
</TABLE>
<PAGE> 20
THIS UNDERLEASE is made the day of One thousand nine
hundred and ninety-six
BETWEEN:
(1) SEAGATE TECHNOLOGY INC. of 920 Disc Drive, Scotts Valley, California
95066-4544 ("the Landlord" which expression includes the person for the
time being entitled to the reversion immediately expectant on the
determination of the Term)
2) INNOVEX HOLDINGS LIMITED whose registered office is at Innovex House,
Marlow Park, Buckinghamshire SL7 1TB ("the Tenant" which expression
includes its successor or successors in title and permitted assigns)
WITNESSETH as follows:
1. PRELIMINARY
1.1 Definitions
In these presents:
"Building" means the building situate at and known as Solar
House Fieldhouse Lane Marlow Buckinghamshire shown
for the purposes of identification only edged red
on the plan annexed hereto marked "Plan 2";
"the Carparking Spaces" means those fourteen carparking spaces which are
for the purposes of identification only shown
edged green on the plan annexed hereto marked
"Plan 1" or such other carparking spaces as the
Landlord may designate from time to time being
1
<PAGE> 21
either within the Estate or within the car park
spaces allocated to the Landlord by the Superior
Landlord pursuant to the Superior Lease;
"the Common Areas" means all parts of the Estate not comprised nor
intended to be comprised in any demise to tenants
of the buildings constructed thereon and the use
whereof is intended to be common to tenants on the
Estate;
"the Conducting Media" means drains sewers pipes wires and cables for the
passage and running of water and soil gas
electricity telecommunications and other
electronic impulses fuel and oil;
"Demised Premises" means (save where the context otherwise
requires) the whole and each and every part of
the premises described in the First Schedule
hereto and any alterations or additions to the
same together with the fixtures and fittings in
the nature of landlord's fixtures which are now
or at any time hereafter may be affixed to or
upon the said premises;
"the Estate" means the Superior Landlord's development situate
at Fieldhouse Lane Marlow Buckinghamshire as the
same is shown edged blue on the plan annexed
hereto marked "Plan 2";
"Interest" means interest (as well after as before judgment)
at that rate which is 4 percentage points above
the base rate or its equivalent for the time being
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<PAGE> 22
in force of Royal Bank of Scotland plc (or if such
rate shall no longer be published then such rate
as the Landlord shall reasonably consider to be
comparable and an appropriate replacement for the
same);
"Planning Acts" means the Town and Country Planning Acts 1971 to
1990 the Town and Country Planning (Amendment) Act
1977 the Local Government Planning and Land Act
1980 the Local Government and Planning (Amendment)
Act 1981 the Local Government (Miscellaneous
Provisions) Act 1982 and every other statute for
the time being in force amending or replacing the
same or dealing with planning or related matters
or otherwise of a similar nature and every
regulation order direction plan instrument
permission or ruling made or issued under or
deriving validity from any of the same;
"the Plant" means all plant and machinery now in or serving
the Building (other than tenant's trade plant and
machinery) including (without prejudice to the
generality of the foregoing) all lifts and lift
machinery all air conditioning heating and
ventilation plant and machinery all sprinklers and
associated Conducting Media all window cleaning
plant and machinery all drinking fountains all
electrical systems all fire detection and fire
prevention systems and all control or monitoring
systems and installations (including in each case
all associated Conducting Media
3
<PAGE> 23
whether or not exclusively serving the Demised
Premises) and together also with all plant and
machinery which may from time to time be installed
to replace any item of the foregoing;
"the Service Charge Cap" means in each year of the Term the amount of
L 16,052 (sixteen thousand and fifty-two
pounds) being the maximum amount of service
charge which may be charged to the Tenant in any
twelve month period;
"the Superior Landlord" means Amec Properties Limited or its successor in
title for the time being entitled to the reversion
immediately expectant upon the determination of
the Superior Lease;
"the Superior Lease" means the superior lease of the Building dated the
31st day of May 1990 and made between the Superior
Landlord (1) and the Landlord (2);
"the Surveyor" means a chartered surveyor appointed by the
Landlord from time to time for the purposes of
these presents;
"the Tenant's Percentage" means the percentage attributable to the Demised
Premises according to the ratio which the net
internal area of the Demised Premises bears to
the net internal area of the Building such
percentage being 14.9% at the date hereof and
to be determined by the Surveyor in the event of
a dispute;
4
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"Term" means the term hereby granted;
"these presents" means this Lease as from time to time amended
and any licence consent approval or other deed
or document supplemental hereto.
1.2 Gender
Each gender includes each other gender
1.3 Number
Words importing the singular include the plural and vice versa
1.4 Obligations
For so long as there are two or more persons included in the expressions
"the Landlord ", "the Tenant" or "the Surety" covenants contained in these
presents which are expressed to be made by or with such party shall be
deemed to be made by or with such persons jointly and severally
1.5 Statutory References
(Whether to a specific statute or to statutes generally) shall include any
modification or re-enactment thereof for the time being in force and all
instruments orders plans regulations permissions and directions for the
time being issued or given thereunder or deriving validity therefrom
1.6 Covenants by the Tenant
Not to do or omit any act or thing shall include an obligation not to
permit cause or suffer such act or thing to be done or omitted by any other
person
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<PAGE> 25
2. DEMISE HABENDUM AND REDDENDUM
In consideration of the rents hereby reserved and of the covenants by the Tenant
hereinafter contained the Landlord hereby demises unto the Tenant ALL THOSE the
Demised Premises TOGETHER WITH the rights set out in the Second Schedule hereto
EXCEPTING AND RESERVING unto the Landlord and persons authorised by it from time
to time and all others entitled to the like rights the rights specified in Part
1 of the Third Schedule hereto and subject to all rights easements
quasi-easements grants and wayleaves to which the Demised Premises are or may be
subject and as mentioned in Part II of the Third Schedule hereto TO HOLD the
same UNTO the Tenant for a term commencing on 1st November 1996 and expiring on
31st October 1999 YIELDING AND PAYING therefor to the Landlord by bankers
standing order (if required) to an account specified by the Landlord:
FIRST the rent (exclusive of value added tax) and so in proportion for any
period less than a year of L 92,300 (ninety-two thousand three hundred
pounds) per annum such rent to be paid quarterly in advance on the usual quarter
days in each year and in each case without any deduction counterclaim or set-off
whatsoever but with the first payment of rent in respect of the period from 1st
November 1996 up to but not including the quarter day next following to be paid
on the date hereof
SECOND by way of further or additional rent payable throughout the Term on
demand:
(a) an amount or amounts equal to the Tenant's Percentage of the aggregate of
all sums payable (whether incurred or to be incurred) by the Landlord to
the Superior Landlord in respect of the rent secondly reserved by the
Superior Lease and
(b) an amount or amounts equal to the Tenant's Percentage of the aggregate of
all sums payable (whether incurred or to be incurred) by the Landlord
pursuant to clause 5.3 of the Superior Lease;
THIRD by way of further or additional rent payable on demand an amount or
amounts equal to the Tenant's Percentage of the aggregate of all sums payable
(whether incurred or to be
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incurred during the Term) by the Landlord to the Superior Landlord under Clause
7 of the Superior Lease;
FOURTH by way of further or additional rent the sums payable by the Tenant under
sub-clauses 3.2.1.(b), 3.2.2., 3.6.2. and 3.7.6. hereof; and
Provided that the Tenant shall not be liable for paying to the Landlord any rent
secondly thirdly or fourthly reserved more than 7 days before the Landlord is
obliged to pay such sums.
FIFTH by way of further or additional rent payable on demand but without
prejudice to any other right remedy or power herein contained or otherwise
available to the Landlord such sum or sums as shall equal Interest upon rents or
other sums payable by the Tenant to the Landlord pursuant to these presents
which shall have become due but remain unpaid for more than:
(a) seven days (in all cases except the rent first reserved herein)
(b) one day (in the case of the rent first reserved herein)
after the date such rents or other sums are due
3. TENANT'S COVENANTS
The Tenant hereby covenants with the Landlord that it will:
3.1 Pay Rents
Pay the rents sums and payments at the times and in the manner at and in
which the same are hereinbefore reserved and made payable without any
deduction (except as required by law) and not to exercise or seek to
exercise any right or claim to withhold rent or any right or claim to legal
or equitable set off in relation to
7
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withholding such rent sums and payment
3.2 Discharge Outgoings and Pay for Services
3.2.1 DISCHARGE OUTGOINGS
Pay and discharge and indemnify the Landlord against:
(a) all rates taxes duties charges assessments impositions
and outgoings whatsoever whether parliamentary parochial
local or of any other description and whether capital or
non-recurring and even if of a wholly novel nature which
are now or may at any time hereafter be taxed assessed
charged or imposed upon or payable in respect of the
Demised Premises or on the owners or occupiers in
respect thereof;
(b) (i) the Tenant's Percentage of all sums payable
(whether incurred or to be incurred during
the Term) by the Landlord pursuant to
sub-clause 3.2(b) of the Superior Lease;
(ii) the Tenant's Percentage of any rates taxes
duties charges assessments impositions and
outgoings of the nature hereinbefore
mentioned which are now or may at any time
hereafter be taxed assessed charged or
imposed upon or payable in respect of the
whole of the Building (or on the owners or
occupiers in respect of the same;
(c) any rates payable by the Landlord relating to the
Demised Premises because of loss of rating relief
applicable to empty premises suffered by it after the
end of the Term by reason of such relief being allowed
to the Tenant in respect of any period
8
<PAGE> 28
before the end of the Term;
(d) all charges for electricity water and gas supplied to or
consumed in the Demised Premises and the meter rents in
connection therewith and all telephone and other
communications charges in respect of the Demised
Premises and all other charges whatsoever for or in
respect of any service whatsoever to or for or used in
the Demised Premises
3.2.2 PAY FOR SERVICES
To pay to the Landlord on demand (but subject always to the Service
Charge Cap) an amount or amounts equal to the Tenant's Percentage of
the costs expenses and outgoings reasonably incurred by the Landlord
in:
(a) providing air-conditioning to the Building including the
cost of maintenance repairs or replacement of the
air-conditioning system presently installed in the
Building
(b) providing or procuring the provision of hot and cold
water to the water outlets situate in the Building
(c) keeping the halls and passages in the Building clean and
lit
(d) repairing maintaining renewing and cleaning of the
Conducting Media over under or within the Building which
are used by the Demised Premises in common with other
parts of the Building
(e) repairing maintaining renewing and cleaning such of the
Plant in the Building which is used in the provision of
services to the Tenant hereunder
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<PAGE> 29
(f) repairing maintaining renewing and cleaning any matter
or thing or providing any other service the use of which
is enjoyed by the Tenant in common with the landlord or
any other occupiers of the Building and the payment for
which is not specifically provided for in any other
provision of this Underlease Provided that this
sub-clause (f) shall not include any repairing
maintaining or renewing of the structural parts load
bearing parts framework foundations and joists of the
Building
(g) providing security for the Building
(h) insuring against any claim or liability which the
Landlord may reasonably deem prudent including without
limitation any which may arise in relation to or from
any services provided or the provision of which is
procured by the Landlord and Landlord's employees third
party occupiers and public liability in connection with
the parts of the Building which are not and are not
intended to be used as offices including the halls
passages staircases reception and toilet accommodation
in the Building
(i) employing such agents contractors and other persons and
effecting such maintenance contracts as the Landlord may
deem expedient in connection with the provision of
services and other matters referred to in sub-clause
3.2.2 hereof
(j) procuring a supply of electricity water and gas
(including metered charges) for the use of the
air-conditioning and central heating plant the lifts the
stairwell lighting the reception area lighting and the
toilet lighting in the Building and the external
lighting equipment for the car park which is in the
curtilage of the Building and any other matter or thing
the use of which is either enjoyed by the Tenant in
common with the Landlord and/or which
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<PAGE> 30
is not (in the case of electricity or gas) recorded on
any of the meters for a particular floor in the Building
3.2.3 To pay to the Landlord on demand a fair proportion (according to
user) of the costs expenses and outgoings reasonably incurred by
the Landlord in:
(a) providing or procuring the provision of hot and cold
water to the toilets and washroom facilities and the
water outlets situate on the first and second floor of
the Building
(b) keeping the washroom facilities on the first and second
floors clean and lit
PROVIDED THAT nothing in this sub-clause 3.2 shall oblige the Tenant
to pay or indemnify the Landlord against any tax assessed or charged
upon any dealing with the reversion expectant hereon or on the rents
hereby reserved (other than Value Added Tax subject to the
provisions of clause 3.3 hereof if charged by the Landlord on the
rents hereby reserved)
3.3 Value Added Tax
In addition to the rents fees and other payments of whatsoever
nature which are or shall be reserved or which are or may become
payable pursuant to the provisions of these presents by or on behalf
of the Tenant to the Landlord or any person acting on its behalf the
Tenant shall pay by way of further and additional rent to the
Landlord or any such person Value Added Tax at the appropriate rate
which is or may at any time hereafter become payable in respect of
such payment or the supply to which it relates (including without
limitation where the Tenant reimburses the Landlord for payments and
such taxation (hereon made by the Landlord save to the extent that
any Value Added Tax is recoverable by the Landlord as an input) and
to indemnify the Landlord against the same
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3.4 Observance of Statutory Requirements
In relation to any and every statute and other obligation for the
time being having the force of law (including without limitation the
requirements of any government department local authority or other
public authority or duly authorised officer or court of competent
jurisdiction acting under or in pursuance of the same):
(a) observe and comply in all respects with the provisions
and requirements of the same so far as they relate to or
affect the Demised Premises or any part thereof or the
user thereof or the employment therein of any person or
persons whether by the Landlord or Tenant or owner or
occupier thereof;
(b) execute all works and provide and maintain all
arrangements which by or under the same are or may be
directed or required to be executed provided and
maintained (whether by the Landlord or Tenant or owner
or occupier thereof) at any time during the Term upon or
in respect of the Demised Premises or any part thereof
or in respect of any user thereof or employment therein
of any person or persons
(c) indemnify the Landlord at all times against all costs
charges and expenses of or incidental to the execution
of any works or the provision or maintenance of any
arrangements so directed or required as aforesaid;
(d) not at any time during the Term do on or about the
Demised Premises any act or thing by reason of which the
Landlord may under any statute incur or have imposed
upon the Landlord or become liable to pay any penalty
damages compensation cost charge or expense
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3.5 Fire Precautions
3.5.1 COMPLIANCE WITH RECOMMENDATIONS
Without limiting the preceding sub-clause comply at all times with
all recommendations from time to time of the appropriate authorities
and with all reasonable recommendations from time to time of any
insurer of the Demised Premises in relation to fire precautions
affecting the Demised Premises and keep and maintain sufficient fire
fighting and extinguishing apparatus in and about the Demised
Premises installed in compliance with such recommendations and with
any legal requirements and open to inspection and maintained to the
reasonable satisfaction of the Landlord and not to obstruct the
access to or means of working of the same
3.5.2 NOT OBSTRUCT ESCAPES
Not at any time obstruct any fire escape doors corridors stairs or
other equipment facilities or arrangements upon or in the Demised
Premises
3.6 Repair
3.6.1 SOLE OBLIGATIONS
To keep the Demised Premises in good and substantial repair and
condition and properly maintained cleansed and amended in every
respect and the Tenant hereby further agrees that the liability of
the Tenant hereunder shall not be affected or lessened by reason of
the age or state of dilapidation of the building or buildings or the
fixtures fittings plant or equipment contained therein which are
from time to time comprised in the Demised Premises (damage by any
of the Insured Risks (as defined in the Superior Lease) excepted
provided the policy or policies of insurance shall not have been
vitiated or payment of any of the policy monies withheld or refused
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<PAGE> 33
by reason of any act neglect or default of the Tenant or their
respective employees agents or of such licensees or invitees for
whose acts the Tenant is or ought to be responsible)
3.6.2 CONTRIBUTIONS TO REPAIRS AND COMMON PAYMENTS
Pay to the Landlord on demand (but subject always to the Service
Charge Cap) the Tenant's Percentage of all costs expenses and
outgoings incurred or to be incurred by the Landlord in complying
with the provisions of sub-clause 3.6 of the Superior Lease (save
for repairing maintaining and renewing of the structural parts load
bearing parts framework foundations and joists of the Building and
save insofar as the obligations therein contained fall to be
performed by the Tenant in relation to the Demised Premises under
the covenants on its part herein contained) and to keep the Landlord
indemnified against such costs expenses and outgoings
3.7 Decoration and Maintenance
3.7.1 DECORATION
During the six months immediately preceding termination of the Term
(howsoever the same may be determined) properly prepare paint paper
or otherwise treat as appropriate all the internal surfaces
originally painted papered or treated and all additions thereto in
the Demised Premises with appropriate materials and generally to
redecorate the Demised Premises throughout restoring and making good
the Demised Premises in accordance with good standards of
workmanship and materials to a colour scheme previously approved in
writing by the Landlord if different from that existing provided
always that the Tenant will not be required to replace any ceiling
tiles or the Carpet
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3.7.2 CLEANING
As often as necessary clean and treat in an appropriate manner to
the reasonable satisfaction of the Landlord all materials surfaces
and finishes of the Demised Premises which ought normally to be so
cleaned and treated (including without limitation all wood plaster
metal stonework cladding and concrete) and wash all surfaces
requiring to be washed and keep clear all gutters drains downpipes
and gulleys exclusively serving the Demised Premises
3.7.3 EQUIPMENT
Keep all the equipment plant machinery apparatus and services for
the time being exclusively serving the Demised Premises in good
working order and properly and regularly maintained by competent and
suitably qualified persons and operate the same properly
3.7.4 WINDOWS
Clean the insides of the window glazing of the Demised Premises at
least once in every month
3.7.5 GENERAL OBLIGATION
Without limiting the foregoing obligations the Tenant shall in any
event at all times keep the Demised Premises in every respect in
good order well maintained tended decorated clean and tidy so as to
be consistent with high standards of office and estate management
and ensure the Demised Premises retain the attributes of high class
administrative offices
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3.7.6 CONTRIBUTIONS TO DECORATIONS AND CLEANING
Pay to the Landlord on demand (but subject always to the Service
Charge Cap) the Tenant's Percentage of all costs expenses and
outgoings incurred or to be incurred by the Landlord in complying
with the provisions of sub-clause 3.7 of the Superior Lease (save
insofar as the obligations therein contained fall to be performed by
the Tenant in relation to the Demised Premises under the covenants
on its behalf however contained) and to keep the Landlord
indemnified against such costs expenses and outgoings
3.8 Rubbish and Appearance
3.8.1 REMOVAL OF RUBBISH
Not form any refuse dump or scrap heap on the Demised Premises or
any part thereof but instead deposit and store all refuse rubbish
scrap and waste material at all times in proper receptacles within
the Demised Premises so as not to be unsightly and ensure that all
the same is removed therefrom regularly and not less often than
weekly
3.8.2 MAINTENANCE OF APPEARANCE
Not bring or do upon the Demised Premises anything which is or may
become in the reasonable opinion of the Landlord untidy unclean
unsightly or otherwise detrimental to the amenities or appearance of
the Demised Premises or any neighboring premises and comply
forthwith with the requirements of any written notice given by the
Landlord to restore the amenities or appearance of the Demised
Premises or any neighbouring premises
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3.8.3 GOODS OUTSIDE THE BUILDINGS
Not place exhibit or hang any goods or articles outside the Demised
Premises
3.9 Matters Prejudicial to the Demised Premises
3.9.1 NOT DAMAGE
Not do or suffer on or to the Demised Premises anything which may
prejudice damage weaken or endanger the same in any way or lessen
their value
3.9.2 OVERLOADING
Not place or keep in the Demised Premises any article in such
position or in such quantity or weight or otherwise in such manner
howsoever as to overload or cause damage to or be in the reasonable
opinion of the Landlord likely to overload or damage the Demised
Premises nor otherwise treat or use any part of the Demised Premises
in such a manner as to subject them to any strain beyond that which
they are designed to bear or otherwise to be likely to damage them
in any respect
3.9.3 PROHIBITED EQUIPMENT
Not instal or bring upon the Demised Premises any machinery or
equipment which may cause a nuisance or annoyance to others or by
vibration weight noise or otherwise be likely to damage or weaken
the Demised Premises in any respect
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3.9.4 DRAINAGE
Take all such measures as may be reasonably necessary to ensure that
any effluent or other matter discharged into or placed in the drains
and sewers which belong to or are used for the Demised Premises
alone or in common with other premises will not be corrosive or in
any way harmful to the said drains or sewers or cause any
obstruction or deposit therein
3.9.5 ELECTRICAL INSTALLATION
Not use or treat the electrical wiring and electrical installations
in the Demised Premises or any part thereof in such a way as to
overload the same nor otherwise prejudice or cause damage to the
same
3.9.6 DELETERIOUS SUBSTANCES
Not store nor bring upon any part of the Demised Premises (including
without limitation the car park save normal fuel in the fuel tanks
of permitted vehicles) any petrol benzol kerosene or other highly or
especially offensive combustible inflammable explosive radioactive
or dangerous spirit liquor fluid or substance or any materials that
may attack or in any way injure by percolation corrosion vibration
or otherwise the structure of the Building except with the prior
written consent of the Landlord and within a store properly designed
and constructed for that purpose to the satisfaction of the Landlord
and the storage of such substances and materials and their use
within the Demised Premises shall in all respects be in accordance
with all general or local statutes and any local regulation or
byelaw and any provisions of the insurance effected in respect of
the Demised Premises
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3.9.7 ENCROACHMENTS
Not obstruct any of the windows or lights belonging to the Demised
Premises and use its best endeavours to prevent any new window light
passage drainage or other encroachment or easement being made into
against upon or over the Demised Premises and if any encroachment or
easement whatsoever shall be attempted to be made or acquired by any
person or persons give notice thereof in writing to the Landlord as
soon as reasonably practicable after the same shall come to its
notice and at the cost of the Tenant do all such things as the
Landlord may request or which may be proper for preventing any
encroachment or easement being made or acquired
3.9.8 SECURITY
Reasonably ensure that the Demised Premises are at all times secure
against damage by vandalism and malicious damage and to comply with
all security arrangements relating to the Building as the Landlord
reasonably considers appropriate
3.10 Improvements and Alterations
3.10.1 ANY CHANGES
Not to make any alteration or addition to the Demised Premises
(whether internal external structural or otherwise) or otherwise cut
maim or remove any of the walls ceilings roofs floors girders or
timbers of the Demised Premises
<PAGE> 39
3.10.2 INTERNAL DEMOUNTABLE PARTITIONS
3.10.2.1 Notwithstanding the provisions of sub-clause 3.10.1 above the Tenant
may with the prior written consent of the Landlord (which will not
be unreasonably withheld or delayed) make non-structural internal
alterations or additions and install internal demountable partitions
Provided that the Tenant shall supply the Landlord with full
specifications and scale drawings of any such proposed partitioning
and the Landlord shall be reasonable in withholding its consent
until such time as the Tenant obtains confirmation that any such
proposed partitioning conforms to the requirements of the local Fire
Officers
3.10.2.2 The Tenant may remove the existing internal demountable partitions
at the Demised Premises provided that the Tenant does so in a
careful and diligent manner causings as little damage as reasonably
possible to the said partitions and provided further that the Tenant
stores at its own cost the partitions and delivers up the partitions
to the Landlord at the Demised Premises upon the expiry or sooner
determination of the Term.
3.10.3 REINSTATEMENTS
Unless otherwise requested by the Landlord to reinstate the Demised
Premises to the condition in which they were in immediately prior to
any permitted alterations and additions and remove any partitioning
to the reasonable satisfaction of the Landlord at the end or sooner
determination of the Term
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<PAGE> 40
3.10.4 NOTIFICATION OF VALUE OF ALTERATIONS
Upon completion of any material alterations permitted hereunder
notify the Landlord of the full reinstatement value thereof
3.10.5 WASTE
Not commit any waste save as expressly permitted by the preceding
sub-clause of this sub-clause 3.10
3.11 Signs and Erections
Not exhibit on the Demised Premises (including the windows) (so as to be
visible from the outside of the Demised Premises) any aerial antennae
mast wire dish flagpole sign signboard advertisement hoarding fascia
placard bill notice poster symbol sticker or other notification
whatsoever save with the prior written consent of the Landlord which
shall not be unreasonably withheld or delayed in addition to any
permission required by statute and maintain to the reasonable
satisfaction of the Landlord any of the same which are so approved and in
the event Landlord's consent is given for the same to remove any such
signs at the end or sooner determination of the Term and make good any
damage done to the Demised Premises to the reasonable satisfaction of the
Landlord
3.12 Planning
3.12.1 NOT BREACH THE PLANNING ACTS
Not at any time during the Term do or omit anything on or in
connection with the Demised Premises the doing or omission of which
contravenes the Planning Acts or any licences consents permissions
approvals and conditions (if any) granted or imposed thereunder or
under any enactment repealed thereby and indemnify the Landlord
against all actions proceedings
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damages penalties costs charges claims and demands in respect of any
such acts and omissions
3.12.2 APPROVAL OF APPLICATIONS
Not enter into any agreement with the planning authority nor make
any application for planning permission to develop including change
of use of the Demised Premises without the prior written consent of
the Landlord and not submit such application to the planning
authority unless and until the form and wording of the application
has been approved in writing by the Landlord and subject thereto any
application shall be made forthwith at the cost of the Tenant and
(if requested) in the name of the Landlord and all other persons (if
any) interested in the Demised Premises
3.12.3 COPY PLANNING DECISIONS
Give to the Landlord immediately upon receiving the same a copy of
every licence consent permission approval and other decision by any
planning authority whether granted or refused
3.12.4 CONDITIONAL GRANTS
If the planning authority indicates its willingness to grant any
desired licence consent permission or approval only with
modifications or subject to conditions not effect such modifications
or conditions without the prior written consent of the Landlord and
give to the Landlord forthwith full particulars of such
modifications or conditions
3.12.5 OBSERVANCE OF CONDITIONS
Observe and perform all conditions attached to any planning
permission and keep the Landlord fully and effectually indemnified
against all actions
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<PAGE> 42
proceedings damages penalties costs charges claims and demands
whatsoever in respect of the costs of the said application and works
and things done in pursuance of the said planning permission and in
respect of all breaches (if any) of the said conditions and every
part thereof respectively and (without limiting the foregoing)
unless the Landlord otherwise directs carry out during the Term all
works required to be carried out by a date after its termination as
a condition of any planning consent granted during the Term for
development commenced during the Term
3.12.6 NOTIFY LANDLORD OF PLANNING COMMUNICATIONS
Give notice forthwith to the Landlord of any notice order or
proposal for a notice or order served on the Tenant under the
Planning Acts and if so required by the Landlord at the Landlord's
cost produce or join in making such objections or representations in
respect of any proposal as the Landlord may reasonably require
3.12.7 COMPLIANCE WITH PLANNING REQUIREMENTS
Promptly comply at the Tenant's own cost with any notice or order
served under the provisions of the Planning Acts on the Landlord or
the Tenant relating to the Demised Premises except any such that
result from any action or application of or by the Landlord or its
predecessor or predecessors
3.12.8 PLANNING COMPENSATION
If the Tenant receives any compensation with respect to its interest
hereunder because of revocation or modification of a planning
permission or of any restriction placed upon the user of the Demised
Premises under or by virtue of the Planning Acts then upon the
termination of the Term in
23
<PAGE> 43
any manner the Tenant shall forthwith make such provision as is just
and equitable for the Landlord to receive a due proportion of such
compensation Any dispute as to the proportion payable to the
Landlord shall be determined in accordance with sub-clause 7.4
3.12.9 NOT PRECIPITATE COMPULSORY PURCHASE ORDER
Not make any application or do any act which may give rise to a
proposal or cause to be served an order for the compulsory
acquisition of the Demised Premises or any part thereof
3.12.10 RESTRICTION ON PLANNING APPLICATIONS AND DEVELOPMENT
Not make any application for planning permission in respect of the
Demised Premises or any part thereof nor carry out any development
or other works whatsoever at the Demised Premises or any part
thereof if the making of such application for planning permission or
the grant of a planning permission pursuant thereto or the carrying
out of such development or other works would give rise to any tax
charge or other levy payable by the Landlord or any Superior
Landlord
3.13 Inspection and Remedial Works
3.13.1 PERMIT INSPECTION
Permit the Landlord or the Landlord's agents and any Superior
Landlord or any Superior Landlord's agents or such workmen as may be
authorised by them upon reasonable prior written notice except in
the case of emergency at reasonable times and as often as may be
necessary to enter into and upon the Demised Premises and examine
the state of repair and condition of the same
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3.13.2 OPENING-UP AND TEST
In any examination pursuant to sub-clause 3.13.1 the Landlord or any
Superior Landlord may cause parts of the Demised Premises to be
opened up or tested or subjected to other works and if any defect or
breach of covenant is thereby revealed (or the extent of any defect
or breach established) the Tenant shall make good any damage caused
by such opening up tests or other works at its own expense but
otherwise the Landlord shall make good the same
3.13.3 REMEDIAL WORKS
Within six weeks (or sooner if requisite) after notice in writing to
the Tenant by the Landlord of any defects wants of reparation
maintenance decoration renewals or replacements for which the Tenant
is liable under these presents and any other matters found on such
examination to be in breach of the covenants by the Tenant in these
presents the Tenant shall commence and proceed diligently to repair
and make good maintain decorate or renew and replace the same as the
case may be or (in the case of items existing in breach of covenant)
remove the same or otherwise rectify the breach in a good and proper
manner in all respects to the reasonable satisfaction of the
Landlord and will complete all such works as soon as practicable and
in any event within three months of such notice according to such
notice and the covenants in that behalf hereinbefore contained
3.13.4 DEFAULT BY TENANT
If the Tenant defaults in performing its obligations under
sub-clause 3.13.3 it shall be lawful but not obligatory for the
workmen or others to be employed by the Landlord to enter upon the
Demised Premises and carry out the works required by the notice and
all expenses properly incurred
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thereby shall be paid on demand by the Tenant to the Landlord and if
not so paid shall be recoverable by the Landlord as liquidated
damages together with Interest thereon from the date of demand until
the date of actual payment (both dates inclusive) AND the Tenant
hereby irrevocably appoints the Landlord to be the agent of the
Tenant throughout the Term (but without liability to account) for
the purpose of entering on inspecting and viewing any parts of the
Demised Premises not at the time of such inspection in the
occupation of the Tenant
3.14 User
3.14.1 PERMITTED USER
Not to use the Demised Premises or any part thereof or permit the
same to be used except solely for uses within Class B.1 of the
Schedule to the Town & Country Planning (Use Classes) Order 1987 as
enacted at the date hereof
3.14.2 PROHIBITED ACTIVITIES
Not use the Demised Premises or any part thereof for any illegal
immoral noisy noxious offensive or dangerous purpose nor for any
sale by auction public exhibition show or political meeting nor do
or allow to remain upon the Demised Premises anything which may
reasonably be considered to be an annoyance nuisance disturbance
damage or otherwise to the detriment of the Landlord or the owners
or occupiers of any adjoining or neighbouring premises
3.14.3 ELECTRONIC EQUIPMENT
Not use any radio electric or electronic equipment in the Demised
Premises in such manner or condition as to cause electric electronic
or other
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interference to adjoining or neighbouring premises or equipment
owned or operated therein
3.14.4 MUSICAL INSTRUMENTS
Not use any musical instruments radio sets television sets tape
recorders or record players or other audio equipment in the Demised
Premises so as to be audible from outside the Demised Premises
3.14.5 PARKING SPACES
Use the Carparking Spaces of which the Tenant is granted the use
solely for the parking of private motor cars for the benefit of
persons occupying or visiting the Demised Premises and in particular
but without limitation not to permit washing maintenance or (save in
emergency to vehicles brought onto the Demised Premises for a
purpose permitted by this sub clause other than the execution of
such work) repair work to or upon motor vehicles and not burn or
store rubbish or other material thereon
3.14.6 RESIDENTIAL PURPOSES
Not use the Demised Premises or any part thereof as sleeping
accommodation or for residential purposes
3.15 Assignment and Underletting
3.15.1 DEALINGS WITH PART
Not assign mortgage charge underlet or part with or share the
possession or occupation of part only of the Demised Premises or
suffer any person or company to occupy or share the occupation of
any part of the Demised Premises whether as a licensee or otherwise
or grant or allow any rights
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over the same same as permitted by clause 3.15.8
3.15.2 DEALINGS WITH WHOLE
Not mortgage charge underlet or part with or share possession of the
whole of the Demised Premises or suffer any person or company to
occupy or share the occupation of the whole of the Demised Premises
whether as a licencee or otherwise or grant or allow any rights over
the same in accordance with the remainder of this clause
3.15.3 ASSIGNMENT
3.15.3.1 Not to assign the whole of the Demised Premises without
first obtaining the prior written consent of the
Landlord (which shall not be unreasonably withheld or
delayed) and the Landlord and the Tenant agree that for
the purpose of Section 19(1)(A) of the Landlord & Tenant
Act 1927 the Landlord may (without prejudice to the
rights of the Landlord to refuse consent on any other
reasonable ground) withhold consent to an assignment if
any of the following circumstances exist at the date of
the application for consent:
3.15.3.1.1 there is in the reasonable opinion of the
Landlord a substantial breach of any of the
Tenant's covenants in this Lease
3.15.3.1.2 the proposed assignee is not an Acceptable
Assignee and for the purposes of this
paragraph an Acceptable Assignee shall be a
person who in the reasonable opinion of the
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Landlord will be a respectable and
responsible tenant and
-- is of sound financial standing
and capable of performing the
Tenant's covenants in this Lease
throughout the residue of the
Term
-- is a limited liability Company
whose annual profits before tax
in each of the three completed
financial years preceding the
date of the application for the
consent to assignment (as
evidenced by properly audited
accounts) exceed an amount equal
to three times the yearly rent
payable in accordance with this
Lease
3.15.3.1.3 in the reasonable opinion of the Landlord
the effect of the proposed assignment
would be to diminish or adversely affect
the value of the Landlord's interest in
the Demised Premises
3.15.3.2 Prior to an assignment the Landlord may require:
3.15.3.2.1 on or before completion of any
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assignment the Tenant to enter
into an authorised guarantee
agreement in a form form
reasonably required by the
Landlord; or
3.15.3.2.2 if the Landlord shall so
reasonably require on or before
completion of the assignment to
it the assignee to deposit
with the Landlord an amount
equal to the yearly rent for six
months payable at the date of
the assignment as security for
the performance of the Tenant's
covenants in this Lease; or
3.15.3.2.3 on or before completion of the
assignment if the Landlord shall
reasonably so require the
assignee to procure an
acceptable guarantor or
guarantors who shall execute and
deliver to the Landlord a deed
containing direct covenants by
such guarantor (or if more than
one such guarantor joint and
several covenants) with the
Landlord in the terms contained
in clause 8 herein
3.15.3.3 Within 21 days of:
3.15.3.3.1 the death during the Term of any
person who has or shall have
guaranteed to the Landlord the
payment to the Landlord of the
rents and the
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observance and performance of
the covenants on the part of the
Tenant herein contained or
3.15.3.3.2 a person or body (as the case
may be) who has guaranteed to
the Landlord as mentioned in
sub-clause 3.15.3.3.1 being
adjudged a bankrupt or (being
a company) going into
liquidation (other than a
voluntary liquidation for the
purposes of amalgamation or
reconstruction of a solvent
company in respect of which the
Landlord's consent has first
been obtained such consent not
to be unreasonably withheld) or
a Receiver Administrator
Administrative Receiver or other
encumbrancer taking possession
of or being appointed in respect
of the whole or any part of such
person or body's assets or such
person or body making any
arrangement with creditors for
the liquidation of his or its
debts by composition composition
or otherwise or any voluntary
arrangement as defined in the
Insolvency Act 1986 or ceasing
or threatening to cease to carry
on his or its business as a
whole or becoming unable to pay
its debts within the meaning of
Section 123 of the Insolvency
Act 1986
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then to give notice thereof to
the Landlord and if reasonably
so required by the Landlord at
the expense of the Tenant within
21 days to procure some other
person reasonably acceptable to
the Landlord to execute a
Guarantee in respect of the
payment of rents and the
observance and performance of
the covenants in the form set
out in clause 8 (or in such
other form as the Landlord may
reasonably require)
3.15.4 COVENANTS BY DISPONSEES
Not in any event assign the whole of the Demised Premises unless and
until the intended assignee ("the Permitted Assignee") has entered
into a Deed to be prepared by the Landlord at the cost of the Tenant
containing a covenant with the Landlord by the Permitted Assignee to
perform and observe during the Term the covenants terms and
conditions contained in these presents and to be performed and
observed by the Tenant in the same manner as if such covenants and
conditions were therein repeated with the substitution of the name
of the Permitted Assignee for the name of the Tenant
3.15.5 BENEFICIAL INTEREST
Not hold or occupy the Demised Premises or any part thereof as
trustee or agent or otherwise for the benefit of any other person
3.15.6 NOTICE OF ASSIGNMENT
Within one calendar month next after any assignment or devolution of
the Demised Premises to give notice in writing to the Landlord of
such assignment or devolution and of the name address and
description of the assignee or person upon whom the relevant term or
any part thereof may
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have devolved AND produce to the Landlord or the Solicitor for the
time being of the Landlord the instrument of assignment or
devolution or a certified copy thereof and to pay to him his
reasonable fee (being not less than fifteen pounds) for the
registration thereof
3.15.7 ASSOCIATED COMPANIES
Notwithstanding the other provisions of this sub-clause the Tenant
may share occupation (on the basis that no relationship of landlord
and tenant is thereby created) of the whole or any part of the
Demised Premises with any subsidiary company or holding company of
the Tenant (the expressions "subsidiary company" and "holding
company" having the meanings respectively assigned to them by
section 736 Companies Act 1985)
3.16 Facilitate Landlord's Dealings with the Demised Premises
3.16.1 PERMIT INSPECTION BY PROSPECTIVE PURCHASERS
At all reasonable times and subject to reasonable prior notice
during the Term and provided that the same shall not materially
interrupt or prejudice the business of the Tenant or of any lawful
occupier of the Demised Premises permit all prospective purchasers
of or dealers in the Landlord's reversionary interest or any
Superior Landlord's reversionary interest by order in writing of the
Landlord or the Landlord's agents to view and take measurements of
the Demised Premises without interruption
3.16.2 PERMIT RE-LETTING NOTICES
Permit the Landlord or the Landlord's agents at any time within six
calendar months next before the expiration or sooner determination
of the Term to enter upon the Demised Premises and to fix and retain
without interference upon any suitable part or parts thereof a
notice board for
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re-letting the same provided that it does not obscure
any window or access of light or air to the Demised
Premises and permit all prospective lessees by order in
writing of the Landlord or the Landlord's agents and by
prior appointment to view the Demised Premises at
reasonable hours in the daytime without interruption but
not so as to materially interrupt or prejudice the
business of the Tenant
3.17 Landlord's Access to the Demised Premises
Permit the Landlord and any superior landlord with or without their
agents surveyors workmen and others and the Surveyor at reasonable
times (after at least forty-eight hours' notice except in case of
emergency) to enter the Demised Premises:
(a) for the purposes referred to in sub-clause 3.16 hereof;
(b) to take inventories of the fixtures and things in the
Demised Premises to be yielded up at the determination
of the Term;
(c) to estimate the value thereof for any purpose;
(d) to execute any works to any adjacent adjoining or
neighbouring premises;
(e) to make the same secure against entry by any
unauthorised person or against any danger which may
appear to the Landlord or any superior landlord to
threaten or endanger the Demised Premises or the
Landlord's interest therein or any superior landlord's
interest therein (and so that the Landlord shall be
under no obligation to take such action and shall not by
so doing be deemed to re-enter or determine the Term);
(f) to ascertain whether the covenants and conditions herein
contained on the part of the Tenant are being observed
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3:18 Provision of Information to the Landlord
3.18.1 GIVE NOTICES
Immediately upon becoming aware of the same give written notice to
the Landlord of:
(a) any notice order or proposal for a notice or order
served on the Tenant by any person or authority and to
provide the Landlord with a copy thereof and if so
reasonably required by the Landlord to join in making
such objections or representations in respect of any
such notice order or proposal as the Landlord may
require; and
(b) any defect in the Demised Premises which is a 'relevant
defect' as that expression is defined in Section 4
Defective Premises Act 1972
3.18.2 KEYHOLDERS
Keep the Landlord informed as to the names addresses and telephone
numbers for use at all times of the day and night including weekends
of the person or persons for the time being responsible for the
Demised Premises outside business hours and who have the means of
access thereto in case of emergency Provided that such names
addresses and telephone numbers shall only be made available for the
purpose of the Landlord gaining access to the Demised Premises
outside business hours and shall otherwise be strictly confidential
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3.18.3 DISCLOSE INFORMATION
Give to the Landlord at its request from time to time such plans
drawings papers and other information relating to the Demised
Premises as may be within the knowledge of the Tenant or available
to it and which the Landlord may reasonably require whether in
connection with any application or request by the Tenant or
concerning any alteration or addition or user or safety matters or
otherwise howsoever (and the Tenant hereby warrants that all
information supplied by it or on its behalf to the Landlord will be
complete accurate and not misleading so far as the Tenant is aware)
3.19 Payment of Fees and Expenses
3.19.1 ABATEMENT OF NUISANCE
Pay all costs charges and expenses incurred by the Landlord in
abating any nuisance in respect of the Demised Premises and
executing all such works as may be necessary for abating a nuisance
in respect of the Demised Premises in obedience to a notice served
by a local or other competent authority
3.19.2 SECTIONS 146 AND 147 LAW OF PROPERTY ACT 1925
Pay to the Landlord all costs charges and expenses (including legal
costs and fees payable to a surveyor) which may be properly incurred
by the Landlord in or in contemplation of any proceedings under
Section 146 or Section 147 Law of Property Act 1925 or either of
them notwithstanding forfeiture is avoided otherwise than by relief
granted by the court
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3.19.3 COSTS OF LICENCES
Pay the Landlord's reasonable legal expenses managing agents' and
surveyors' and consultants' fees and other fees and expenses (in
each case where reasonably incurred)(including disbursements and
stamp duty and the fees of any surveyors in approving plans or the
execution of any works carried out pursuant to any licence) in
respect of all licences consents and approvals of or by the Landlord
its agents or advisers in respect of all applications by the Tenant
for any of the same including charges fees and disbursements
actually incurred in cases where consent is reasonably refused or
the application is withdrawn for any reason whatsoever
3.19.4 ENFORCEMENT EXPENSES
Pay all proper expenses including solicitors' and other legal costs
and surveyors' consultants' managing agents' and other fees and
expenses incurred by the Landlord of and incidental to the
preparation service and enforcement of any notice hereunder or the
recovery or attempted recovery of any rent or other monies payable
by the Tenant hereunder or otherwise in enforcing the obligations of
the Tenant hereunder including without limitation those relating to
the preparation and service of and otherwise concerning any
schedules relating to want of repair to the Demised Premises and
whether served during or after the determination of the Term
3.20 Substitution of Surety
To notify the Landlord within 28 days of any of the following events:
3.20.1 If any surety being an individual (or if individuals any one of
them) shall become bankrupt or make any assignment for the benefit
of or enter into any arrangement with his creditors either by
composition or otherwise
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3.20.2 If any surety being an individual (or if individuals any one of
them) shall die
3.20.3 If any surety being a company (or if companies any one of them)
shall be wound up either voluntarily (save for the purpose of
amalgamation or reconstruction) or compulsorily or shall for any
reason be removed from the register of companies or (where the
surety is a company incorporated outside the United Kingdom)
proceedings or events analogous thereto shall occur in the country
or state of its incorporation
3.21 Indemnities
Indemnify and keep fully and effectually indemnified the Landlord in
respect of:
(a) all actions proceedings costs claims and demands which may be made
by any adjoining owner tenant occupier or any other person
whatsoever or any competent authority by reason of:
(i) any defect in the Demised Premises for which the Tenant is
liable or in the execution of any works or the existence of
any alterations or additions to the Demised Premises for
which the Tenant is liable;
(ii) any interference or alleged interference or obstruction of
any right or alleged right of light air drainage or other
right or alleged right now existing for the benefit of any
adjoining or neighbouring property caused by the Tenant or
its employees or agents or by such licensees or invitees
for whose acts the Tenant is or ought to be responsible;
(iii) any stoppage of the drains used in common with the owner or
occupier of adjoining or neighbouring property caused by
the
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Tenant
(b) all liability which may be incurred by the Landlord in
respect of any of the matters referred to in paragraph
(a) of this sub-clause for which the Tenant is liable;
(c) any claims proceeding or demands and the costs and
expenses incurred thereby which may be brought against
the Landlord by any employees workpeople agents or
visitors of the Tenant in respect of any accident loss
or damage whatsoever to person or property howsoever
caused and occurring in or upon the Demised Premises for
which the Tenant is liable;
(d) all general rates and other outgoings which are payable
by the Landlord as a result of the Tenant's vacating the
Demised Premises at any date prior to the said expiry or
earlier determination of the Term;
(e) every loss and damage whatsoever incurred by the
Landlord by reason of any negligence by the Tenant or
any breach or non-observance of the Tenant's obligations
in this Lease and indemnify the Landlord from and
against all actions claims liabilities costs and
expenses thereby arising all monies becoming payable
under this covenant being payable by way of further rent
(f) all liabilities costs claims demands arising by virtue
of any breach act or omission caused by the Tenant or
its employees or agents or by such licensees or invitees
for whose acts the Tenant is or ought to be responsible
in respect of the matters referred to in Part II of the
Third Schedule hereto
AND this sub-clause shall remain in force notwithstanding the expiry
or earlier determination of the Term as aforesaid
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3.22 Yield Up
3.22.1 YIELD UP
At the expiration or sooner determination of the Term quietly yield
up unto the Landlord the Demised Premises in such state and
condition as shall in all respects be consistent with a full and due
performance by the Tenant of its covenants in these presents
PROVIDED ALWAYS that portable partitions and/or Tenant's fixtures
and fittings affixed by the Tenant may or will if required by the
Landlord be removed by the Tenant the Tenant making good to the
reasonable satisfaction of the Landlord any damage caused to the
Demised Premises by reason of such removal
3.22.2 REMOVAL OF ANCILLARY ITEMS
The removal of the Tenant's portable partitions or fixtures as
aforesaid may or shall if required by the Landlord include the
removal of all ancillary equipment and supports of any kind and any
other ancillary items placed or constructed upon the Demised
Premises by the Tenant in relation to any items removed by the
Tenant
3.22.3 DISCONNECTION FROM SERVICES
Wherever such fixtures fittings plant or machinery are connected to
or take supplies from any of the main services they shall be
disconnected by the appropriate statutory undertaker or by a
competent and properly qualified individual or company in such a
manner that all redundant service media are removed and sealed off
at points as close as possible to the various ring mains or
principal distribution pipes which provide the supplies and such
removal and sealing off shall be carried out so as not to interfere
with the continued function of the main services
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3.22.4 Make Good all buildings walls floors main services and any other
parts of the Demised Premises after the removal of any such fixtures
fittings plant or machinery
3.23 Regulations
To observe and to use the Tenant's reasonable endeavours to ensure
that the Tenant its employees agents licensees and invitees and
persons doing business with the Tenant observe any reasonable
regulations from time to time made in writing by the Landlord with
regard to the management security or occupation of the Building or
any part thereof
3.24 Superior Lease
Not to do omit or allow anything which might cause the Landlord to
be in breach of the Superior Lease or which if done omitted or
allowed by the Landlord might be a breach of the covenants on the
part of the Lessee or the conditions contained in the Superior Lease
4. LANDLORD'S COVENANTS
4.1 Quiet enjoyment
THE Landlord so as to bind the persons for the time being entitled
to the immediate reversion expectant on the Term but not so as to
impose any personal liability on itself except as to the acts and
defaults of it or of any person lawfully claiming under or in trust
for it hereby covenants with the Tenant that the Tenant duly paying
the said rents and sums and other payments (if any) hereby reserved
and made payable and observing and performing the covenants and
conditions herein contained and on the Tenant's part to be observed
and performed shall and may peaceably and quietly possess and enjoy
the Demised Premises during the Term without any disturbance by the
Landlord or any persons lawfully claiming under or in trust for
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the Landlord
4.2 Superior Lease
At the request of the Tenant to use all reasonable endeavours to
procure that the Superior Landlord observes and performs its
covenants contained in the Superior Lease subject to the Tenant
bearing the Tenants Percentage of the Landlord's costs thereby
incurred
4.3 Superior Lease
To pay the rents reserved by the Superior Lease and perform and
observe the lessee's covenants and the conditions contained in the
Superior Lease (save insofar as the same relate to the Demised
Premises and are obligations which are the same or similar to those
assumed by the Tenant to the Landlord hereunder)
4.4 Services
To use its reasonable endeavours in an efficient manner and in
accordance with the principles of good estate management unless
prevented by any cause or event beyond its control and subject to
payment by the Tenant of the payments referred to in sub-clause
3.2.2 to provide the following services ("the Services"):
(a) to provide air-conditioning through the air conditioning
system presently installed in the Building and to keep
the same in good and substantial repair
(b) to provide cold water to the toilets and washroom
facilities situate on the first and second floors of the
Building and other existing water outlets within the
Demised Premises and hot water to the same during normal
office working hours from 8 a.m. to 6 p.m.
(c) to keep the halls and passages leading to the Demised
Premises and the
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toilets and washroom facilities situate on the first and
d second floors of the Building (i) reasonably clean and
(ii) lit during normal office working hours from 8 a.m.
to 6 p.m.
(d) to keep the Conducting Media within the Building in
good and substantial repair.
4.5 Superior Lease service charge accounts
The Landlord shall supply to the Tenant within fourteen days of
receiving the same from the Superior Landlord copies of such
accounts and vouchers as may be supplied to the Landlord in respect
of the provision of the Services (as defined in the Superior Lease)
together with a copy of any written estimate of the Surveyor
(as defined in the Superior Lease).
PROVIDED ALWAYS that:
(i) Notwithstanding any obligation of the Landlord expressed
or implied herein the Landlord shall not be liable to
the Tenant for any interruption in or any failure to
comply with its obligations because of breakdown works
of maintenance repairs or renewals or because of
shortage of materials government restrictions or damage
by any Insured Risks (as defined in the Superior Lease)
storm frost or other inclement conditions or by reason
of another cause (not necessarily of a like nature)
beyond the control of the Landlord and not until notice
of the defect or want of repair shall have been given to
and received by the Landlord and a reasonable period of
time in which to remedy the same shall have elapsed
(ii) The Landlord shall be free to make such alterations as
it thinks fit to the internal arrangements of the
Building (excepting the Demised Premises) and to the
Plant and if the Landlord thinks fit the Landlord may
install plant of a different type and suspend any
services while the works of
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alteration or installation are being executed PROVlDED
ALWAYS that any such suspension of services shall be for
as short a period of time as reasonably practicable
4.6 At the reasonable request of the Tenant and at the Tenant's expense
to exercise the Landlord's rights to enter into parts of the
Building for the purpose of repairing, renewing or maintaining any
of the Tenant's conducting media
4.7.1 In this clause the "yearly cost of the services" shall
mean the whole yearly cost reasonably incurred by the
Landlord in providing the services referred to in clause
3.2.2 down to 31 December (or such other date as the
Landlord may from time to time notify to the Tenant in
writing) in each year of the Term ("an Account Period")
4.7.2 The Landlord shall keep a proper account (with vouchers
so far as reasonably possible) of its income and
expenditure in each calendar year in respect of the
services which shall be available for inspection by the
Tenant and its agents upon prior appointment with the
Landlord and such account shall (save in the case of
manifest error) be prima facie evidence of all matters
recorded therein
4.7.3 Where the rent commencement date and the date of
determination of the Term do not coincide with the
beginning or end respectively of an Account Period the
Tenant's liability for the initial and final partial
Account Periods shall be that proportion of the Service
Charge which relates to the period on and from the rent
commencement date or ending on the date of determination
of the Term as the case may be apportioned on a daily
basis according to the number of days in the whole of
the relevant Account Period.
4.7.4 Any over payment by the Tenant towards the yearly cost
of the services shall be deducted from the amount next
payable by the Tenant pursuant to
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clause 3.2.2 provided that any overpayments to which the
tenant may be entitled at the termination of the Term
shall be repaid to the Tenant as soon as reasonably
practicable
5. INSURANCE
5.1 Information regarding cover
At the Tenant's request but not more than once in any year the
Landlord shall ask the Superior Landlord to provide the information
regarding insurance and a copy of the relevant policy or policies
(or such other sufficient evidence of insurance) which the Landlord
is entitled to require the Superior Landlord to provide pursuant to
Clause 5.2 of the Superior Lease and upon receipt of the same from
the Superior Landlord the Landlord shall immediately provide to the
Tenant copies thereof
5.2 Suspension of Rent on Occurrence of Insured Risk
If the Demised Premises or any part thereof or all the means of
access thereto shall at any time be destroyed or so damaged by an
Insured Risk (as the same are defined in the Superior Lease) as to
be unfit for occupation or use and the relative policy or policies
of insurance effected by the Superior Landlord shall not be vitiated
or payment of the policy monies refused wholly or partly by any act
or default of or suffered by the Tenant its contractors employees or
licensees or invitees then the rents reserved by clause 2 of this
Lease or a fair and just proportion thereof according to the nature
duration and extent of the damage sustained shall be suspended and
cease to be payable until the expiration of three years (or such
longer period of years for which the Superior Landlord shall insure
against loss of rent pursuant to the Superior Lease) from the
occurrence of such damage or until the date on which the Demised
Premises are again made fit for occupation and use (whichever shall
first occur) and any dispute about such suspension and cesser shall
be conclusively determined in accordance with sub-clause 9.4 of the
Superior Lease
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5.3 Access for reinstatement
For the purpose of the Superior Landlord repairing and reinstating
the Demised Premises in accordance with sub-clause 5.6 of the
Superior Lease the Tenant shall permit the Superior Landlord and all
persons authorised by it with equipment and materials to have full
and uninterrupted right of entry at all times upon the Demised
Premises and every part thereof and the Tenant shall not do or cause
anything likely to impede such works
5.4 Tenant not to Prejudice Insurance
The Tenant shall not do or permit or suffer any act or thing which
may render void or voidable or otherwise vitiate or prejudice any
insurance of or relating to the Demised Premises or any rents or
other monies or the recoverability of any monies thereunder or
render any increased premium payable for any such insurance (and
without prejudice to the Landlord's remedies for a breach of such
obligation the Tenant shall pay to the Landlord any sum paid by way
of increased premiums or loading or other expenses thereby incurred
by the Landlord) or which may make void or voidable any policy of
insurance thereon and shall comply with all recommendations of the
insurers as to fire precautions and otherwise relating to the
Premises
5.5 Re-building if Insurance Money Irrecoverable
If the Demised Premises or any part thereof are destroyed or damaged
by any of the Insured Risks and the insurance money under any
insurance against the same effected thereon by the Landlord being
wholly or partially irrecoverable by reason solely or in part of any
act neglect or default of the Tenant or any underlessee or other
occupant of the Demised Premises or any employee of or contractor to
or visitor for whose acts the Tenant or any sub-tenant is or ought
to be responsible to any of the same then and in every such case the
Tenant will pay to the Landlord upon demand the whole or (as the
case may be) a fair proportion of the cost of
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completely rebuilding and reinstating the same
5.6 Tenant's User and Insurance - To Pay Costs
If the Tenant's user of the Demised Premises results in an increase
in the insurance premium payable by the Superior Landlord or if the
Superior Landlord's insurers shall require any works to be carried
out to the Demised Premises or its appurtenances as a result of such
user the Tenant shall repay on demand to the Landlord the full
amount of such increased premium and shall comply with all
requirements of the Superior Landlord's insurers as aforesaid and
shall pay on demand to the Landlord the Landlord's and the Superior
Landlord's proper costs arising as a result of any such requirement
including all proper legal expenses and managing agents and
surveyors' fees and disbursements
5.7 Frustration
(a) If the rebuilding or reinstatement of the Demised
Premises or any part thereof shall be frustrated or
prove impossible or impracticable any insurance monies
relating to the Demised Premises or part in respect of
which the frustration occurs shall belong to and be the
absolute property of the Superior Landlord without
further obligation hereunder
(b) If rebuilding or reinstatement has not been
substantially completed within 3 years following damage
or destruction to the Demised Premises by an Insured
Risk either the Landlord or the Tenant may on giving to
the other not less than 3 months written notice
terminate the Term and upon expiry of such notice this
Lease shall determine absolutely but without prejudice
to any rights or remedy of either party in respect of
any antecedent breaches
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5.8 Tenant's Insurances
If the Tenant shall be or become entitled to the benefit of any
insurance relating to the Demised Premises or any part of the same
the Tenant shall forthwith notify the Landlord of the same with all
details which are relevant or requested by the Landlord and shall
apply any monies received in respect thereof in making good the loss
or damage to which the same relate in accordance with any directions
of the Landlord
5.9 Notification of Damage
Promptly upon the Tenant becoming aware of the same occurring the
Tenant shall give notice to the Landlord of the occurrence of any
damage to the Demised Premises by any means
6. NO LIABILITY
Notwithstanding anything herein contained the Landlord shall not be liable to
the Tenant nor any person or persons in the Demised Premises or the remainder of
the Building with the actual or implied authority of the Tenant in respect of:
(i) any interruption or failure of any of the services nor of the
supplies of any public utility caused by circumstances beyond the
Landlord's reasonable control;
(ii) any accident happening or injury suffered or damage to or loss of
any chattel or property sustained on the Demised Premises or the
remainder of the Building unless caused by the act or neglect or
default of the Landlord or of the relevant servants agents or
contractors of the Landlord
7. PROVISOS
PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED as follows:
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7.1 Re-Entry
(a) These presents are upon the express condition that if
any of the events specified in paragraph (b) of this
sub-clause shall occur then and in any of such
circumstances and thenceforth it shall be lawful for the
Landlord or any person or persons duly authorised by the
Landlord in that behalf to re-enter into or upon the
Demised Premises or any part thereof in the name of the
whole and the same to re-possess and enjoy as if these
presents had not been made without prejudice to any
right of action or remedy of the Landlord in respect of
any antecedent breach of any of the covenants by the
Tenant
(b) The events referred to in paragraph (a) of this
sub-clause are:
(i) the rents reserved herein or any part
thereof remaining unpaid for twenty-one days
after becoming payable (whether formally
demanded or not); or
(ii) any covenant or stipulation by the Tenant or
the Surety contained in this Underlease not
being performed or observed; or
(iii) in relation to the Tenant an Insolvency
Event as defined in paragraphs (c) or (d) of
this sub-clause occurring; or
(iv) the Tenant being a company re-registering
with unlimited liability or effecting a
return or reduction of capital or being
struck off the Register of Companies;
(v) the Tenant permitting any execution or
distress to be levied on any goods for the
time being in the Demised Premises; or
(vi) in relation to the Surety proceedings or
events analogous to those
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referred to in sub-clauses (iii) or (iv)
occurring
(c) "Insolvency Event" in relation to a company or corporation means any
of the following events being:
(i) the Company being deemed unable to pay its debts as
defined in section 123 Insolvency Act 1986 (referred to
as "the Act" in the remainder of this definition);
(ii) a proposal being made for a voluntary arrangement under
Part I of the Act;
(iii) a petition being presented for an administration order
under Part II of the Act;
(iv) a receiver or manager being appointed whether under Part
III of the Act (including an administrative receiver) or
otherwise;
(v) the company going into liquidation as defined in section
247(2) of the Act (other than a voluntary winding up
solely for the purposes of amalgamation of
reconstruction while solvent);
(vi) a provisional liquidator being appointed under section
135 of the Act;
(vii) a proposal being made for a scheme of arrangement under
section 425 of the Companies Act 1985
(d) "Insolvency Event" in relation to an individual means:
(i) an application being made for an interim order or a
proposal being made for a voluntary arrangement under
Part VIII of the Act:
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(ii) a bankruptcy petition being presented to the Court under
Part IX of the Act;
(iii) his entering into an arrangement for the benefit of his
creditors
7.2 Distress
If any monies payable hereunder by way of rent shall be in arrear for
twenty-one days whether lawfully demanded or not it shall be lawful for
the Landlord to enter into and upon the Demised Premises or any part
thereof to enter and distrain and the distress or distresses then and
there found to dispose of in due course of law and to apply the proceeds
thereof in or towards payment of the said rents sums or other payments so
in arrear and all costs charges and expenses occasioned by the
non-payment thereof and so that the power of the Landlord to distrain
upon the Demised Premises for rent in arrear shall extend to and include
any tenant's fixtures or fittings not otherwise by law distrainable which
may from time to time be thereon and further if any such monies shall be
paid only after the Landlord or the Landlord's Solicitors have
instructed or caused distress to be levied therefor then the Tenant shall
pay to the Landlord on demand the Landlord's Solicitors' reasonable costs
incurred by reason of the foregoing including but without limiting the
foregoing bailiff's commission
7.3 Formal Licences
In any case where the consent of the Landlord is required hereunder the
Landlord may require the Tenant and any surety for the time being to
enter into a deed in such form containing such covenants conditions and
provisions as the Landlord may reasonably require and in such event
(whether or not the Landlord has previously consented in writing unless
it has expressly stated in writing that it does not require such deed)
the Tenant and any surety shall enter into such deed and the consent of
the Landlord shall be deemed not to be given until the Landlord has
received such deed duly executed by the relevant persons
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7.4 Resolution of Differences
Any matter (other than a matter of construction or law) on which a
dispute or difference arises between the Landlord and the Tenant which
these presents refer to this sub-clause for settlement shall be
determined by an independent chartered surveyor agreed between them or in
default of agreement appointed on the application of either of them by
the President for the time being of the Royal Institution of Chartered
Surveyors and a dispute or difference upon a matter of construction or
law shall be determined as hereinbefore provided by senior counsel to be
appointed in the absence of agreement as aforesaid by the President for
the time being of the Law Society Any such surveyor or senior counsel
shall act as an expert not arbitrator his determination of the matter
shall be final and conclusive and his fees shall be borne as he directs
and he shall afford the opportunity to the Landlord and the Tenant to
make representations to him
7.5 Compensation
Except where any statutory provision prohibits the Tenant's right to
compensation being reduced or excluded by agreement the Tenant shall not
be entitled to claim from the Landlord on quitting the Demised Premises
or any part thereof any compensation whether under the Landlord and
Tenant Act 1954 as amended by the Law of Property Act 1969 or otherwise
howsoever
7.6 Tenant's Goods Left in Premises
If at such time as the Tenant has vacated the Demised Premises after the
determination of the Term either by effluxion of time or otherwise any
property of the Tenant remains in or on the Demised Premises and the
Tenant fails to remove the same within twenty eight days after being
requested by the Landlord so to do by a notice in that behalf then and in
such case the Landlord may as the agent of the Tenant (and the Landlord
is hereby appointed by the Tenant to act in that behalf) sell such
property (without being responsible for ensuring that the sale price is
the
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best price obtainable) and shall then hold the proceeds of sale after
deducting the costs and expenses of removal storage and sale reasonably
and properly incurred by it to the order of the Tenant PROVIDED THAT the
Tenant will indemnify the Landlord against any liability incurred by it
to any third party whose property shall have been sold by the Landlord in
the bona fide mistaken belief (which shall be presumed unless the
contrary be proved) that such property belonged to the Tenant and was
liable to be dealt with as such pursuant to this sub-clause
7.7 Service of Notices
In addition to any other prescribed mode of service any notice hereunder
shall be validly served if served in accordance with Section 196 Law of
Property Act 1925 as amended by the Recorded Delivery Act 1962 provided
that in the case of the Tenant if there shall be more than one to any of
them so that service on any one of the Tenant shall be good service on
all or in the case of the Landlord Tenant and any surety if sent to it
him or any of them by post or left at the last known address or addresses
of it him or any of them in Great Britain and any notice sent by post
shall be conclusively deemed to have been served twenty four hours after
the same was posted
7.8 Exclusion of Implied Easements
The Tenant shall not be entitled to any right easement liberty privilege
or advantage whatsoever other than those expressly granted herein and no
further right easement liberty privilege or advantage of any kind shall
be implied herein whether by statutory implication or otherwise howsoever
7.9 Superior leases
All of the rights powers and privileges of the Landlord shall be
exercisable by any superior landlord and where the consent to act of the
Tenant is required from the Landlord hereunder the grant of such consent
by the Landlord shall (if requisite
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under any superior lease) be subject also to the consent of the relevant
superior landlord
7.10 No Restriction on use of Adjoining Land
Nothing herein contained or implied shall impose or be deemed to impose
any restriction on the use of any land or buildings of the Landlord or
any superior landlord not comprised in this Lease or give the Tenant the
benefit of or the right to enforce or to have enforced or to prevent the
release or modification of any agreement covenant condition or
stipulation entered into by any lessee or tenant of the Landlord in
respect of property not comprised in this Lease or shall operate to
prevent or restrict in any way the development of any land not comprised
in this Lease so long as the light or air enjoyed by the Demised Premises
is not thereby materially obstructed or diminished
7.11 No Warranty as to Permitted Use
Nothing herein contained or implied shall be taken to be a covenant
warranty or representation by the Landlord that the Demised Premises can
lawfully be used for any particular purpose
7.12 Denial of Waiver
No demand for or acceptance of rent by the Landlord or anyone on its
behalf nor any other act or conduct consonant with a continuance of the
tenancy whether or not made with knowledge of any breach of covenant or
obligation by the Tenant shall constitute a waiver in whole or in part of
such breach which shall be deemed to be a continuing breach and neither
the Tenant nor any successor to the Tenant may set up any such demand
acceptance act or conduct as a defence in any action for forfeiture or
otherwise Each of the covenants by the Tenant herein shall continue in
full effect notwithstanding that the Landlord may have waived any former
breach of the same by the Tenant or may have waived any similar
obligation of any other
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person
7.13 Exclusion of set off
Any payment due from the Tenant or Surety to the Landlord hereunder
whether by way of rent or otherwise shall be paid without any set off
deduction or counterclaim whatsoever
7.14 Rights of Access
Rights of access reserved or allowed to the Landlord shall be exercisable
as well by any superior landlord or any mortgagee of any interest of the
Landlord or any superior landlord or both as by the Landlord and shall
permit access by any persons authorised by the Landlord any superior
landlord or such mortgagee including agents advisers contractors workmen
and others whether with or without equipment and materials.
7.15 Consents and Approvals
Consents and approvals required of the Landlord hereunder shall if the
Landlord so requires be required equally from any mortgagee or superior
landlord but nothing herein contained shall be construed as implying that
any mortgagee or superior landlord is obliged not to unreasonably
withhold its consent or approval (save as expressly specified herein)
7.16 Exclusion of Landlord and Tenant Act 1954
Having been authorised to do so by an Order of the Mayor's and City of
Landlord Court made on the day of 1996 under the
provisions of Section 38(4) Landlord and Tenant Act 1954 (as amended by
Section 5 Law of Property Act 1969) the Landlord and the Tenant hereby
agree that the provisions of Sections 24 to 28 (inclusive) of the said
Act shall be excluded in relation to the tenancy hereby
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created
8. SURETY COVENANTS
8.1 The Surety in consideration of the demise hereinbefore contained being
made by the Landlord at the request of the Surety herein covenants with
and guarantees to the Landlord as more particularly specified in the
Fourth Schedule
8.2 The consent of the Surety shall not be required to the assignment by the
Landlord or its successors in title of the benefit of the covenants and
guarantees on the part of the Surety herein contained
9. JURISDICTION
The proper law of these presents is English law. The parties hereby agree
declare and irrevocably consent that the courts of England and Wales are in all
respects convenient as a forum for the exercise of jurisdiction in respect of
the Lease and the parties each irrevocably submit to the non-exclusive
jurisdiction of such courts
IN WITNESS whereof the parties hereto have executed this instrument as a deed
and have delivered it upon dating it
THE FIRST SCHEDULE
The Demised Premises
ALL THOSE offices and premises situate on the second floor of the Building which
Demised Premises are for the purposes of identification only shown edged red on
the plan annexed hereto marked "Plan 1" which shall include where they exist and
where the context so admits for the purpose of obligation as well as grant:
(a) the tiles the plaster work and the coverings of the main walls and
of the ceilings including all suspended ceilings and all ornamental
or architectural features
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(b) all internal non load-bearing walls and internal partitioning
(c) the boards and screed of floors and any floor sealants coverings
carpets and carpet tiles in the Demised Premises provided by or at
the cost of the Landlord
(d) all windows the internal surface of all external window frames the
whole of all internal window frames all doors and door frames and
window and door furniture and all glass therein
(e) all Conducting Media exclusively serving the Demised Premises up to
the point of connection with the common or public system
(f) all fire prevention and detection equipment all fire fighting
equipment alarms and fire sprinklers and any intruder alarms therein
save in so far as the same are part of the common system forming
part of services relating to the Building
BUT EXCLUDING all parts of the structural parts loadbearing parts framework
foundations and joists of the Building and the Plant Conducting Media and
machinery within but not exclusively serving the Demised Premises
THE SECOND SCHEDULE
Rights included in the Demise
1. The sole and exclusive right (subject to the extent that the
Carparking Spaces are affected thereby to the right of the Southern
Electricity Board to lay use inspect maintain repair relay
supplement and remove cables and ducts for the transmission and
distribution of electricity and the necessary ducts pipes and other
apparatus appurtenant thereto granted by an Underlease dated 30th
October 1989 and made between the Superior Landlord (1) and Southern
Electricity Board (2)) to use the Carparking Spaces together with
the right in common with the Landlord any person authorised by the
Landlord and all other persons entitled thereto on foot or with
vehicles for all purposes connected to the use of the Demised
Premises to pass and
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repass to and from the Demised Premises or any part thereof and to
and from the Carparking Spaces or any part thereof over and along
the road or way shown coloured blue on the plan annexed hereto
marked "Plan 1" and the accessways to the Carparking Spaces
2. Subject to such security arrangements as the Landlord reasonably
considers appropriate the right in common with the Landlord and any
person authorised by the Landlord and all other persons entitled
thereto to use (i) the entrance doors halls and passages leading to
the Demised Premises for the purposes of ingress and egress to and
from the Demised Premises and the toilets and washroom facilities
situate on the first and second floors of the Building and (ii) the
toilets and washroom facilities situate on the first and second
floor of the Building AND PROVIDED ALWAYS that the Tenant exercises
its right to use the toilet and washroom facilities on the first
floor of the Building in a proper manner and does not thereby cause
a nuisance to the Landlord.
3. The right of free passage of water and soil gas electricity fuel oil
telecommunications and other electrical impulses serving the Demised
Premises through the Conducting Media now or during the Term laid
under through or across the Building or the Common Areas
4. Full right of support shelter and protection either now or intended
to be enjoyed in connection with the Demised Premises
5. The right in common with all other persons entitled thereto to use
the Common Areas for all purposes
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THE THIRD SCHEDULE
Part I
Particulars of rights excepted and reserved unto the Landlord
1. Full right of support shelter and protection either now or intended
to be enjoyed in connection with the Building and any other building
or structure erected or to be erected over or under Demised Premises
2. Full and free right of passage of water and soil gas electricity
fuel oil telecommunications and other electric impulses from and to
all other parts of the Estate and adjoining or neighbouring
buildings premises and land whether belonging to the Landlord or not
through the Conducting Media now or during the Term laid under
through or across the Demised Premises Together with the right of
entry onto the Demised Premises for the Landlord with or without
workmen and others at all reasonable times upon not less than
forty-eight hours' prior written notice (except in case of
emergency) for the purpose of inspecting maintaining renewing
replacing and relaying and making connections with any of the
Conducting Media and laying moving and maintaining new Conducting
Media the person or persons exercising such right causing as little
damage and inconvenience as possible to the Demised Premises and
making good all damage thereby occasioned
3. Full and free right to build on or alter any building on the Estate
(save for the Demised Premises) or other adjoining premises of the
Landlord and to use such adjoining premises for any purpose provided
the same does not materially affect or interfere with the passage of
light and air to the Demised Premises
4. The right to enter upon the Demised Premises for all or any of the
purposes mentioned in this Underlease and for all purposes relative
to the services provided by the Landlord and for any purpose that is
in the opinion of the Landlord necessary to enable it to comply with
any of the covenants on the part of the lessee and the conditions
contained in the Superior Lease the person or persons so entering
causing
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as little damage and inconvenience as possible to the Demised
Premises and make good all damage thereby occasioned
5. All other easements or other rights in the nature of easements or
quasi-easement now enjoyed by any adjoining or neighbouring property
Part II
Particulars of Matters to which the Demised Premises are subject
The exceptions and reservation contained in (a) the Superior Lease and (b) a
lease dated 6th October 1989 made between Wycombe District Council (1) and Amec
Properties Limited (2) so far as the same affect the Demised Premises
THE FOURTH SCHEDULE
The Surety's Covenants
1. The Surety hereby covenants with by way of full indemnity and also
guarantees to the Landlord and without the need for express
assignment to the successors in title of the Landlord that the
Tenant will at all times during the Term pay the rents and all other
payments agreed to be paid by the Tenant in this Lease at the
respective times and in manner appointed for payment thereof and
will also duly perform and observe and keep the several covenants
and stipulations on the part of the Tenant contained in this Lease
(as well after as before any disclaimer of this Lease) and that the
Surety will pay and make good to the Landlord all losses costs
damages and expenses sustained by the Landlord through the default
of the Tenant in respect of the before mentioned matters PROVIDED
ALWAYS that any neglect forbearance or delay in endeavouring to
obtain payment of such rents and payments as and when the same
become due or in taking steps to enforce performance or observance
of the several covenants and stipulations on the part of the Tenant
in this Lease or any variation in this Lease (including any consents
given or licences granted) or the transfer of the reversion or the
assignment hereof or the release of any Surety or
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any time which may be given or any other act omission or thing
whereby (but for this provision) the Surety might be released or
exonerated shall not release or in any way lessen or affect the
liability of the Surety under the guarantee on the part of the
Surety herein contained and the Surety hereby covenants with the
Landlord that it will not do or omit to do anything by way of
registration of land charges or otherwise howsoever that may
prejudice the enforceability by the Landlord of the covenants on the
part of the Surety herein contained
2. The Surety hereby further covenants as aforesaid with the Landlord
that:
(a) if the Tenant (being a company) shall go into
liquidation and the liquidator shall disclaim this Lease
or
(b) if the Tenant (being a company) shall be dissolved and
the Crown shall disclaim this Lease or
(c) if the Tenant (being an individual) shall become
bankrupt and the trustee in bankruptcy shall disclaim
this Lease or
(d) if this Lease shall be forfeited under the provisions in
that behalf hereinbefore contained or
(e) if the Tenant (being a company) shall cease for any
reason to be registered with the registrar of companies
then this schedule shall remain in full force and effect
notwithstanding such disclaimer or forfeiture and the Landlord may
within 3 months after any such disclaimer forfeiture or cessation by
notice in writing require the Surety to accept a new Lease of the
Demised Premises for a term equivalent to the residue which if there
had been no disclaimer forfeiture or cessation would have remained
of the Term granted by this Lease at the same Rent and subject to
the like covenants and conditions (including those as to the review
of rent) as are reserved by and
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contained in this Lease the said new Lease and the rights and
liabilities thereunder to take effect as from the date of such
disclaimer forfeiture or cessation and in such case the Surety shall
pay the Landlord's costs of and accept such new Lease accordingly
and will execute and deliver to the Landlord a counterpart thereof
3. If the Landlord shall not require the Surety to take a new Lease of
the Demised Premises pursuant to paragraph 2 of this schedule the
Surety shall nevertheless upon demand pay to the Landlord a sum
equal to the Rent and all other payments and outgoings that would
have been payable under this Lease but for the disclaimer or other
event as aforesaid in respect of the period from and including the
date of the disclaimer or other event as aforesaid until the
expiration of 6 months therefrom or until the Demised Premises shall
have been re-let by the Landlord (whichever shall first occur)
4. The Surety waives any right it may have of first requiring the
Landlord to proceed against or claim payment from the Tenant and the
Surety agrees to subordinate and does hereby subordinate any and all
claims the Surety may have against the Tenant existing now or
arising later (whether in respect of payment made under this
schedule or otherwise) to any and all claims by the Landlord
Signed as a deed by SEAGATE )
TECHNOLOGY INC acting by )
its authorised signatory:- )
Authorised Signatory
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<PAGE> 82
Signed as a deed by )
INNOVEX HOLDINGS LIMITED )
acting by:- )
Director
Director/Secretary
63
<PAGE> 1
EXHIBIT 10.37
THIS LEASE made the twentieth of December, One thousand nine hundred and
ninety-six BETWEEN
(1) THE NORWICH UNION LIFE INSURANCE SOCIETY whose registered office is situate
at Surrey Street in the City of Norwich (hereinafter called "the Landlord")
(2) QUINTILES (UK) LIMITED whose registered office is at Indigo House 29 Bedford
Street London WC2E 9RT (hereinafter called "the Tenant")
(3) QUINTILES TRANSNATIONAL CORPORATION of PO Box 13979 Research Triangle Park
North Carolina 27708-3979 U.S.A. (hereinafter called "the Surety") WITNESSETH as
follows:-
1. DEFINITIONS
IN these presents except as otherwise provided or where the context
otherwise requires:-
1.1 "Base Rate" means the base lending rate of Barclays Bank plc or should
such rate cease to exist or be published in its present form such other
rate of interest as the parties shall agree is most closely comparable
to such rate and in default of agreement such rate as shall be
determined by a Chartered Accountant who shall act and be deemed to act
as an expert and shall be appointed in the absence of agreement between
the Landlord and the Tenant by the President for the time being of the
Institute of Chartered Accountants in England and Wales on the
application of either party
1.2 "the Building" means the development at the corner of High Street and
The Ring Bracknell in the County of Berkshire shown within the blue
edging on the plan numbered 1 attached hereto
1.3 "the Car Park" means the underground car park forming part of the
Building
1.4 "the Common Parts" means all parts of the Building the occupation or
control of which shall be retained by the Landlord or which are from
time to time designated by the Landlord for common use and not intended
to be let or demised and shall include without prejudice to the
generality of the foregoing all of the following which may from time to
time be comprised in or appurtenant to
1
<PAGE> 2
Tenant's own risk and it will reimburse the Landlord with any additional
expense incurred in the provision of services or any increased
insurance premium payable
8. The Tenant will advise the Landlord immediately should any of the said
keys be lost or misplaced and if such keys shall be lost or misplaced
and the Landlord considers it necessary to change the locks to the doors
of the Building then the cost incurred will be borne by the Tenant
9. On the expiration or sooner determination of this Lease for any reason
whatsoever or in the case of any assignment or underletting of the
Demised Premises the keys are to be returned forthwith to the Landlord
10. The Tenant will observe all requirements communicated to it on the
Landlord's behalf and comply with any reasonable regulations that the
Landlord may from time to time impose in connection with the use of the
Building outside the specified hours
EXECUTED AS A DEED (but not )
delivered until the date inserted )
above) and the COMMON SEAL ) [SEAL]
of THE NORWICH UNION LIFE )
INSURANCE SOCIETY affixed in )
the presence of:- )
Authorised Signatory
Assistant Secretary
<PAGE> 3
[QUINTILES LETTERHEAD]
This is hereby certified to be a true copy of the original
Signed /s/ Medaphis
Dated 20/12/96
20 December 1996
Dear Sirs,
THIRD FLOOR RINGSIDE 79 HIGH STREET BRACKNELL BERKSHIRE
This letter is supplemental to a Lease of even date herewith and made between
the Norwich Union Life Insurance Society (1) Quintiles (UK) Limited (2) and
Quintiles Transnational Corporation (3) ("the Lease").
In consideration of your today completing the Lease we hereby covenant to notify
you immediately upon the occurrence at any time while the Lease is vested in us
of either of the following events and to indemnify you against any reasonable
and proper costs incurred by you as a consequence of our failure to do so:
ceasing to be a taxable person for the
1. Our ceasing to be a taxable person for the purposes of Value Added Tax.
2. The rate at which we are able to recover Value Added Tax (in respect of
supplies made from the above named premises or generally) altering such
as to permit or prevent (as the case may be) any election made or which
might be made by you under paragraph 2 of Schedule 10 of the Value Added
Tax Act 1995 applying to the grant of the Lease or to the supplies made
to us under the Lease.
Yours faithfully,
/s/
- -------------------------------
SIGNED FOR AND on BEHALF
QUINTILES (UK) LIMITED
<PAGE> 4
DATED 20TH DECEMBER 1996
------------------------
THE NORWICH UNION LIFE
INSURANCE SOCIETY
TO
QUINTILES (UK) LIMITED
LEASE
Of
Office Premises on third floor of
"Ringside" 79 High Street
Bracknell Berkshire
[NORWICH UNION LOGO]
Property Legal
Surrey Street
Norwich
<PAGE> 5
DATED 1996
------------------------
THE NORWICH UNION LIFE
INSURANCE SOCIETY
TO
QUINTILES (UK) LIMITED
COUNTERPART/
LEASE
Of
Office Premises on third floor of
"Ringside" 79 High Street
Bracknell Berkshire
[NORWICH UNION LOGO]
Property Legal
Surrey Street
Norwich
<PAGE> 6
THIS LEASE made the day of One thousand nine hundred and
ninety-six BETWEEN
(1) THE NORWICH UNION LIFE INSURANCE SOCIETY whose registered office is situate
at Surrey Street in the City of Norwich (hereinafter called "the Landlord")
(2) QUINTILES (UK) LIMITED whose registered office is at Indigo House 29 Bedford
Street London WC2E 9RT (hereinafter called "the Tenant")
(3) QUINTILES TRANSNATIONAL CORPORATION of PO Box 13979 Research Triamgle Park
North Carolina 27708-3979 U.S.A. (hereinafter called "the Surety") WITNESSETH as
follows:-
1. DEFINITIONS
IN these presents except as otherwise provided or where the context
otherwise requires:-
1.1 "Base Rate" means the base lending rate of Barclays Bank plc or
should such rate cease to exist or be published in its present
form such other rate of interest as the parties shall agree is
most closely comparable to such rate and in default of agreement
such rate as shall be determined by a Chartered Accountant who
shall act and be deemed to act as an expert and shall be
appointed in the absence of agreement between the Landlord and
the Tenant by the President for the time being of the Institute
of Chartered Accountants in England and Wales on the application
of either party
1.2 "the Building" means the development at the comer of High Street
and The Ring Bracknell in the County of Berkshire shown within
the blue edging on the plan numbered 1 attached hereto
1.3 "the Car Park" means the underground-car park forming part of
the Building
1.4 "the Common Parts" means all parts of the Building the
occupation or control of which shall be retained by the Landlord
or which are from time to time designated by the Landlord for
common use and not intended to be let or demised and shall
include without prejudice to the generality of the foregoing all
of the following which may from time to time be comprised in or
appurtenant to
1
<PAGE> 7
the Building namely the Common Service Media (but excluding the
Tenants Service Media) party and perimeter walls all doors
within and on the boundaries of the Building landscaped areas
loading and unloading facilities entrance ways halls corridors,
passages stairways lifts fire escape ways access roads ramps
sign and notice boards toilet facilities air conditioning
ventilation heating and cooling plant and machinery fire
precaution and alarm system sprinklers
1.5 "the Common Service Media" means the common water courses water
supply pipes waste water pipes sewer pipes drains sewers gutters
downpipes sprinkler systems gas pipes fuel pipes oil pipes
electricity cables telephone cables ducts conduits flues wires
and all other common conducting media plant equipment meters and
apparatus which now are or may during the period of eighty years
from the date hereof be in upon through under or over the
Building for the provision or supply of services serving the
Building or any part thereof and where applicable serving in
common any adjoining or adjacent building or premises
1.6 "the Demised Premises" means ALL THOSE premises shown edged red
on the plan numbered 2 annexed hereto which premises include
1.6.1 the internal surfaces and finishes of the walls and
columns therein bounding the Demised Premises
1.6.2 the floor finishes down to but excluding the structural
slab
1.6.3 the ceiling finishes up to and excluding the underside
of the structural slab but including any light fittings
grilles and false ceilings
1.6.4 all internal faces of the window frames window
furniture doors door frames and door furniture
1.6.5 the entirety of all non-structural or non-load-bearing
walls and columns situate entirely within the Demised
Premises
1.6.6 all Landlord's fixtures and fittings plant machinery
apparatus and equipment (if any) now or at any time in
or upon the Demised Premises
1.6.7 all additions alterations and improvements made thereto
2
<PAGE> 8
1.6.8 the Tenants Service Media but excludes (for the
avoidance of doubt)
1.6.9 all structural columns slabs walls and members
(including the facade of the Building) the Common
Service Media and any service media exclusively serving
other premises and any fire precaution and alarm systems
1.7 "the Insured Risks" means the risks of fire explosion riot civil
commotion malicious damage aircraft and other aerial devices and
articles dropped therefrom and such additional risks as may from
time to time be reasonably required by the Landlord
1.8 "the Landlord" means the person in whom the reversion for the
time being immediately expectant on the determination of the
Term is vested
1.9 "the Office Block" means the office block known as "Ringside" 79
High Street Bracknell forming part of the Building
1.10 "the Planning Acts" means the Town & Country Planning Act 1990
and any subsequent legislation of a similar nature and any
Statutory Instrument Order or Direction made or issued pursuant
thereto
1.11 "the Tenant" includes the successors in title of the Tenant and
where more than one person is party hereto as tenant includes
all or either or any of such persons and their liability in
respect of the obligations on the part of the Tenant contained
or implied herein shall be joint and several
1.12 "the Tenants Service Media" means all drains pipes flues wires
cables meters gutters and sewers and all other conducting media
plant equipment and apparatus exclusively serving the Demised
Premises (whether the same are within the Demised Premises or
any adjoining or adjacent premises owned by the Landlord) save
those of statutory undertakers
1.13 "the Term" means the term hereby created and includes any
statutory continuation or extension thereof
3
<PAGE> 9
1.14 Any references to a specific statute include any statutory
extension or modification amendment or re-enactment of such
statute and any general reference to "statute" or "statutes"
includes any regulations or orders made under such statute or
statutes
2. DEMISE
THE Landlord HEREBY DEMISES unto the Tenant ALL THOSE the Demised
Premises TOGETHER with the rights set out in the First Schedule hereto
EXCEPT AND RESERVING unto the Landlord and all other persons entitled
thereto the matters set out in the Second Schedule hereto TO HOLD unto
the Tenant for the term from the Twenty-fifth day of December One
thousand nine hundred and ninety-six until the Thirtieth day of November
Two thousand and eight (determinable as hereinafter provided) YIELDING
AND PAYING therefor the principal yearly rent of ONE HUNDRED AND FORTY
TWO THOUSAND FIVE HUNDRED POUNDS (Pounds 142,500) (capable of increase
as provided in the Third Schedule hereto) and the additional yearly rent
payable in accordance with the Fourth Schedule hereto such rents clear
of all deductions to be paid by equal quarterly payments in advance on
the usual quarter days in every year the first of such payments of the
principal rent to be made on the Twenty-fifth day of December One
thousand nine hundred and ninety-six and to be in respect of the period
from the said Twenty-fifth day of December One thousand nine hundred and
ninety-six to the next following quarter day
3. TENANT'S COVENANTS
THE Tenant hereby covenants with the Landlord as follows:-
3.1 Rent
To pay the said rent or rents at the times and in the manner
aforesaid without any deductions
3.2 Rates and outgoings
3.2.1 To pay and discharge all existing and future rates taxes
duties charges assessments and outgoings payable in
respect of the Demised Premises whether by the owner or
occupier and also all charges for water
4
<PAGE> 10
electricity and gas used on the Demised Premises and in
case any rate tax duty charge assessment or outgoing
shall be assessed charged imposed upon or payable in
respect of the Demised Premises jointly with other
premises or the water electricity or gas shall be
metered jointly with that used on other premises or any
rate or charge for water shall be assessed on or payable
in respect of the Building or any lavatories or
water-closets therein used by the Tenant in common with
others to pay to the Landlord on demand a fair
proportion to be settled in case of difference by the
Landlord's surveyor acting reasonably (except such as
are payable on a disposal of any interest in reversion
to this Lease)
3.2.2 As soon as the same shall come to the notice of the
Tenant the Tenant shall notify the Landlord of any
actual or proposed change in the details of or reference
to the Demised Premises (or any part thereof or any
hereditament of which the Demised Premises form part) in
the local non-domestic rating list and of any material
change in circumstances by reference to which any such
change has been is being or might be proposed
3.2.3 The Tenant shall not make in relation to the local
non-domestic rating list any proposal concerning the
listing of the Demised Premises (or any part thereof or
any hereditament of which the Demised Premises form
part) without first having written details of such
proposal to the Landlord
3.3 Costs of Notices
3.3.1 To pay all reasonable costs charges and expenses
(including solicitors' costs and disbursements and
surveyors' fees) properly incurred by the Landlord
3.3.1.1 for the purpose of incidental to or in
contemplation of the preparation and service of
a notice whether under Section 146
5
<PAGE> 11
of the Law of Property Act 1925 and/or Section
147 of that Act or pursuant to the provisions
hereof requiring the Tenant to remedy a breach
of any of the Tenant's covenants herein
contained (and including the costs (where
appropriate) of the preparation and service of a
schedule of dilapidations whether before or
after the expiration of the Term)
notwithstanding that forfeiture is avoided
otherwise than by relief granted by the Court
and
3.3.1.2 in the recovery or attempted recovery of arrears
of rent or other sums due from the Tenant
whether by distress levied upon the Tenants
goods in the Demised Premises or otherwise
3.3.1.3 in respect of any action reasonably taken by or
on behalf of the Landlord in order to prevent or
procure the remedying of any breach or
non-observance or non-performance of any of the
covenants conditions or agreements herein
contained and on the part of the Tenant to be
observed and performed
3.3.2 to pay all reasonable costs and expenses (including
solicitors costs and disbursements and surveyors' fees)
properly incurred by the Landlord in considering and (if
such be the case) granting consent licence or approval
to any request or application for the Landlord's consent
licence or approval to any matter in respect of which
the Tenant seeks such consent licence or approval
hereunder whether or not the request or application is
withdrawn or refused or preferred subject to any lawful
qualification or condition
3.4 Signboard
To pay within 21 days of demand to the Landlord the cost
incurred by the Landlord in writing in the general style adopted
by the Landlord for the Office Block the name of the Tenant and
the situation of the Demised Premises on such
6
<PAGE> 12
name board and in such other situations within the Office Block
as the Tenant shall desire and the Landlord shall approve
3.5 Entry by Landlord
To permit the Landlord its agents and employees and all persons
authorised by the Landlord with or without workmen and equipment
to enter the Demised Premises at all reasonable times by
appointment except in the event of emergency and then at any
time -
3.5.1 to take inventories of the Landlord's fixtures therein
or
3.5.2 to view the state of repair and condition of the Demised
Premises
3.5.3 to inspect repair maintain decorate clean improve or
alter any adjoining or adjacent property and any areas
structures or things (if any) the maintenance of which
is the responsibility of the Landlord hereunder but only
to the extent that this cannot be done without entering
the Demised Premises
3.5.4 to enable the Landlord to comply with its covenants
hereunder or
3.5.5 to prepare a Schedule of dilapidations or
3.5.6 to exercise the rights excepted and reserved hereunder
or
3.5.7 to ascertain that the covenants and conditions of this
Lease have been observed and performed
PROVIDED THAT the Landlord shall make good as soon as reasonably
practicable any damage done to the Demised Premises and shall
cause as little interruption to the Tenant's business as
reasonably possible but the Tenant shall not be entitled to
compensation for any inconvenience occasioned by such entry
3.6 Repair
To keep the Demised Premises (including without prejudice in any
way to the foregoing words all doors window furniture window
stays the inner sills to windows inner framing and glazing beads
and whole of any secondary double glazing units floors ceilings
and plaster and other finishes to walls pipes and electrical and
gas installations from the points where the supplies enter the
7
<PAGE> 13
meters serving the demised premises) in good and tenantable
repair and condition (damage by any of the Insured Risks
excepted and the Tenant need not remedy but the Landlord will
remedy at its own expense any defect in design or construction
revealed by the 30th November 1998) and in such repair and
condition (except as aforesaid) to yield up the same at the
expiration or sooner determination of the Term
AND in particular to clean treat repair or maintain in
accordance with the manufacturers requirements (such
requirements to be notified to the Tenant in writing by the
Landlord) any part of the Demised Premises specified in writing
by the Landlord and to indemnify and keep indemnified the
Landlord against the consequences of failure so to do including
(without limitation) the consequences of invalidating any
guarantee or warranty given by the manufacturer or supplier of
any such part
3.7 Repairs after notice
Within 21 days or sooner if requisite and possible after receipt
of written notice requiring the Tenant so to do to commence and
diligently to proceed to repair such defects and wants of
reparation as shall be specified in such notice and for which
the Tenant is liable hereunder And if the Tenant shall fail so
to do it shall be lawful for the Landlord and its workmen to
enter the Demised Premises with all necessary equipment to carry
out such repairs and all expenses incurred thereby shall be paid
by the Tenant to the Landlord forthwith on demand as liquidated
damages and the Tenant shall keep the Landlord indemnified
against all costs claims actions or demands that may arise from
the existence or remedying of any such defects or wants of
reparation or the exercise of (or entitlement to exercise) the
right of entry hereby reserved including without prejudice to
the generality of the foregoing any liability arising under
Section 4 of the Defective Premises Act 1972
8
<PAGE> 14
3.8 Defects etc
Upon any defect or want of repair for which the Landlord is
responsible pursuant to Clause 4.1 hereof coming to the notice
of the Tenant forthwith to give written notice thereof to the
Landlord
3.9 Statutory Works
To do and execute or cause to be done or executed all such works
and things as under or by virtue of any enactment or statutory
instrument or any notice order or direction given or made
pursuant thereto for the time being in force are or shall be
directed or necessary to be done or executed upon or in respect
of the Demised Premises or any part thereof whether by owner or
occupier landlord or tenant and not to do suffer or omit
anything in contravention thereof and at all times to keep the
Landlord indemnified against all claims demands and liability in
respect thereof
3.10 Observe rules and regulations
To abide by and observe all reasonable and proper general rules
and regulations for the conduct of the tenants of the Building
laid down by the Landlord from time to time and notified in
writing to the Tenant a copy of those (if any) in force at the
date hereof being annexed hereto
3.11 Decoration
Once in every five years of the Term and in any event
immediately before giving up possession of the Demised Premises
to paint with two coats of good quality paint paper emulsion
grain varnish or otherwise treat to the reasonable satisfaction
in each case in all respects of the Landlord's surveyor (and
where appropriate in accordance with the manufacturers
requirements) such parts of the interior of the Demised Premises
as have been previously or usually or which ought to be so
treated
3.12 Cleaning
To keep the interior of the Demised Premises properly cleaned
and to clean the windows of the Demised Premises both inside and
out at least once every month
9
<PAGE> 15
3.13 Planning
3.13.1 To comply in all respects with the provisions and
requirements of the Planning Acts and of all consents
permissions and conditions (if any) granted or imposed
or having effect thereunder so far as the same
respectively relate to or affect the Demised Premises or
any part thereof or any operations works acts or things
already or hereafter to be carried out executed done or
omitted thereon or the use thereof for any purpose
3.13.2 So often as occasion shall require at the expense in all
respects of the Tenant to obtain all such consents and
permissions (if any) as may be required for the carrying
out of any operations on the Demised Premises or the
institution or continuance thereon of any use thereof
which may constitute development within the meaning of
the Planning Acts but so that no application for
planning permission shall be made without the previous
written consent of the Landlord which consent shall not
be unreasonably withheld or delayed
3.13.3 To pay and satisfy any charge that may hereafter be
imposed under the Planning Acts in respect of the
carrying out or maintenance of any such operations or
the institution or continuance of any such use as
aforesaid
3.13.4 Notwithstanding any consent which may be granted by the
Landlord under this Lease not to carry out or make any
alteration or addition to the Demised Premises or any
change of use thereof (being an alteration or addition
or change of use which is prohibited by or for which the
Landlord's consent is required to be obtained under this
Lease and for which a planning permission needs to be
obtained) before a planning permission therefor has been
produced to the Landlord and acknowledged by it in
writing as satisfactory to it But so that the Landlord
may refuse so to express its satisfaction with any such
planning permission on the ground that the period
thereof or any condition contained therein or anything
omitted therefrom in the
10
<PAGE> 16
reasonable opinion of its surveyor would be or be likely
to be prejudicial to its interest in the Demised
Premises whether during the Term or follow the
determination or expiration thereof
3.13.5 Unless the Landlord shall otherwise direct to carry out
and complete before the expiration or sooner
determination of the Term any works stipulated to be
carried out to the Demised Premises by a date subsequent
to such expiration or sooner determination as a
condition of any planning permission granted for any
development begun before such expiration or sooner
determination
3.13.6 If and when called upon so to do to produce to the
Landlord or its surveyor all such plans documents and
other evidence as the Landlord may reasonably require in
order to satisfy itself that the provisions of this
covenant have been complied with in all respects
3.14 Letting and sale notices
Where the Tenant has lost or is not pursuing its rights to renew
this Lease under the terms of the Landlord and Tenant Act 1954
or otherwise or where the Landlord has indicated that it will
oppose any such renewal to permit the Landlord or its agent at
any time during the Term to put up boards or notices at or on
the Demised Premises advertising that the Landlord's interest in
the Building is for sale and during the last three months before
the expiration or sooner determination of the Term to put up
boards or notices at or on the Demised Premises stating that the
Demised Premises are to let which boards or notices shall not
unreasonably obstruct any light or air to the Demised Premises
and shall not be interfered with by the Tenant and to admit
prospective purchasers or tenants who have written authority
from the Landlord to view the Demised Premises during ordinary
business hours causing as little interruption to the Tenant's
business as reasonably possible
11
<PAGE> 17
3.15 Notices
Within seven days of the service thereof to give full
particulars to the Landlord of any notice order or proposal
therefor relating to or affecting the Demised Premises given
made or issued by any competent authority and without delay to
comply with the same PROVIDED that if the Landlord so requires
in writing the Tenant will join with the Landlord in objecting
to or contesting the same
3.16 Telecommunications Act 1984
Without prejudice to any other provisions of this Lease to give
notice to the Landlord of any rights to be granted by the Tenant
pursuant to the Telecommunications Act 1984 and full details of
any works to be carried out prior to or as a result of the grant
of such rights and (unless such rights or works shall have been
approved by the Landlord under any other provision of this
Lease) to withhold any agreement in writing by the Tenant to
such rights or works for so long as it shall be competent to the
Tenant so to do or for so long as shall be necessary to afford
the Landlord a reasonable opportunity to make representations to
the operator (as in the said Act defined) concerning any aspect
of the rights or works which may affect the Landlord or any
other tenant of the Landlord (whichever period shall be the
shorter)
3.17 Alterations
Not to make or suffer to be made any alterations in the
construction or arrangement of the Demised Premises or the
external appearance thereof or to cut maim or injure or permit
or suffer to be cut maimed or injured any of the walls columns
or structural members of the Demised Premises and in the event
of non-observance to remove any such alterations and make good
and restore the Demised Premises to their former state within
twenty-one days of the Landlord giving written notice to the
Tenant so to do PROVIDED THAT if the Tenant shall so fail to do
it shall be lawful for the Landlord and its workmen to enter the
Demised Premises with or without all necessary equipment to so
remove such alterations make good and so restore the Demised
Premises and all
12
<PAGE> 18
expenses incurred or sustained thereby shall be paid by the
Tenant to the Landlord on demand as liquidated damages and the
Tenant shall keep the Landlord indemnified against all costs
claims actions or demands that may arise from the existence of
such alterations or such removal making good and restoration and
the exercise of the right of entry hereby reserved PROVIDED THAT
(subject always to Clause 3.31 hereof) this prohibition shall
not prevent the Tenant from erecting or altering internal
non-structural partitioning with the previous consent in writing
of the Landlord (which consent shall not be unreasonably
withheld or delayed)
3.18 User
Not to use or suffer the use of the Demised Premises as a
betting office or as offices in connection with any public or
social service dealing with the payment of benefits to the
public nor otherwise than as high class offices
3.19 Alienation
3.19.1 Not to assign underlet or charge part only of the
Demised Premises
3.19.2 Not to assign the whole of the Demised Premises without
the prior written consent of the Landlord (such consent
not to be unreasonably withheld and which shall if the
Landlord requires take the form of a formal licence
under hand) provided that the Landlord shall be
entitled:-
3.19.2.1 to withhold its consent in any of the
circumstances set out in clause 3.19.4
3.19.2.2 to impose all or any of the matters set out in
clause 3.19.5 as a condition of its consent
3.19.3 The provisos to clause 3.19.2 shall operate without
prejudice to the right of the Landlord to withhold such
consent on any other ground or grounds where such
withholding of consent is reasonable or to impose any
further condition or conditions upon the grant of
consent where the imposition of such condition or
conditions is reasonable
13
<PAGE> 19
3.19.4 The circumstances referred to in clause 3.19.2 are as
follows:-
3.19.4.1 where the assignee is an associated company of
the Tenant unless that associated company is of
no lesser financial strength than the Tenant at
the date of the application for consent to
assign
3.19.4.2 where in the reasonable opinion of the Landlord
it has not been satisfactorily demonstrated
that the proposed assignee is able and likely
to perform and observe and will be able and
likely to perform and observe the tenant's
covenants and obligations under this Lease and
any deed which has then been entered into
supplemental or pursuant to this Lease
3.19.4.3 Where the proposed assignee enjoys diplomatic
or state immunity
3.19.4.4 Where the assets of the proposed assignee upon
which any reasonable assessment of financial
strength is based are not in the United Kingdom
or some other jurisdiction with which there is
subsisting with the United Kingdom a system of
reciprocal enforcement of judgements
3.19.5. The conditions refrred to in clause 3.19.2 are as
follows:-
3.19.5.1 the execution and delivery to the Landlord
prior to or contemporaneously with the
assignment in question of a deed of guarantee
in the form set out in the Fifth Schedule
hereto (being an authorised guarantee
agreement within Section 16 of the Landlord
and Tenant (Covenants) Act 1995)
3.19.5.2 the payment to the Landlord of all rents and
other sums which have fallen or which fall due
under this Lease prior to the date of the
assignment
14
<PAGE> 20
3.19.6 Not to underlet hold in trust part with or share
possession or occupation of the Demised Premises or any
part thereof except to the extent permitted under this
clause
3.19.7 Not to underlet the Demised Premises as a whole unless
each of the following conditions is fulfilled:-
3.19.7.1 the Tenant obtains the prior written consent of
the Landlord (such consent not to be
unreasonably withheld)
3.19.7.2 the intended undertenant enters into a covenant
by deed with the Landlord to observe and
perform all the covenants herein contained and
on the Tenant's part to be observed and
performed (except the covenant to pay the rent
reserved by this Lease)
3.19.7.3 the intended Underlease:-
3.19.7.3.1 is granted without any fine or
premium and at the open market
rental value at the time of the
grant of the underlease
3.19.7.3.2 contains provisions for the upwards
only review of the rent reserved by
such underlease on the same terms
and occurring at least as frequently
as under this Lease
3.19.7.3.3 contains covenants conditions and
provisions no less onerous than
those imposed on the Tenant by or
pursuant to this Lease (except the
covenant to pay the rent reserved by
this Lease)
3.19.7.3.4 contains a covenant by the
undertenant with the Tenant not to
assign charge underlet hold in trust
part with or share possession or
occupation of the Demised Premises
or any part thereof Provided that
the undertenant may assign or charge
the
15
<PAGE> 21
whole of the Demised Premises with
the prior written consent of the
Landlord (such consent not to be
unreasonably withheld)
3.19.7.3.5 contains a covenant prohibiting the
undertenant from doing or suffering
any act or thing on or in relation
to the Demised Premises underlet
inconsistent with or in breach of
the provisions of this Lease
3.19.7.3.6 contains a condition for re-entry on
breach of any covenant by the
undertenant
3.19.8 In relation to any permitted underlease to ensure that:-
3.19.8.1 all the covenants and obligations of the
undertenant thereunder are enforced
3.19.8.2 the rent reserved by any underlease is neither
reduced or commuted nor payable further in
advance than provided for by that underlease
3.19.8.3 the rent reserved by any underlease is reviewed
in accordance with its terms but the same shall
not be agreed without the prior written consent
of the Landlord (such consent not to be
unreasonably withheld)
3.19.8.4 there is no waiver of any breach on the part of
any undertenant and no variation in the terms
or a surrender of any underlease without the
prior written consent of the Landlord (such
consent not to be unreasonably withheld)
3.19.8.5 every such underletting shall include rights to
use all the said car parking spaces
3.19.8.6 the Tenant and the prospective undertenant
first obtain from the Court an Order pursuant
to section 38(4) of the Landlord and Tenant Act
1954 (as amended by the Law of Property
16
<PAGE> 22
Act 1969) authorizing the inclusion in the
proposed underlease of a provision that the
terms of sections 24 to 28 of the said Act of
1954 shall be disregarded in relation to the
said underletting and that the said underlease
includes such a provision
3.19.9 Within one month after any assignment charge underletting
or other disposition of the Demised Premises or of a
devolution thereof in case of death to supply to the
Landlord for registration two certified copies of every
such assignment charge underlease instrument probate or
letters of administration and pay to the Landlord a
reasonable fee (but not less than twenty-five pounds) for
every such registration
3.19.10 Within fourteen days of being requested so to do by the
Landlord to give written notice to the Landlord of the
names and addresses or registered offices of all persons
or companies in occupation of the Demised Premises the
rent review date or dates in any underleases relating to
the Demised Premises and the rent or rents currently paid
by such occupiers
3.20 Lavatories
Not to use or suffer the use of the lavatories and water-closets for
the disposal of refuse oil grease or any deleterious objectionable
dangerous poisonous or explosive matter or substance or for any
purpose which may cause a stoppage in the pipes connecting the
lavatory basins and water-closets with the waste water pipes and
soil pipes or in such waste water pipes and soil pipes
3.21 Nuisance
Not to do or permit or suffer to be done upon the Demised Premises or
the Car Park or any area over which the Tenant is granted rights
under this Lease anything which may be or tend to be illegal or a
nuisance annoyance or disturbance or cause damage to the Landlord or
any of the occupants of the Building or the adjoining or adjacent
property
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3.22 Obstruction
Not to place or deposit anything in or to obstruct or to suffer
anything to be placed or deposited or any obstruction to be made in
the vestibules passages and staircases or the Car Park the forecourt
areas yards and fire escapes of the Building or to cover up or
obstruct or suffer to be covered up or obstructed any glass windows
or partitions in any manner whatsoever
3.23 Floor loading
Not to overload the floors and where a loading capacity is prescribed
by the Landlord's surveyor not to exceed such prescribed loading
capacity
3.24 Auction
Not to hold or suffer to be held any auction assembly or public
meeting upon the Demised Premises
3.25 Machinery, etc
Not to store or place or suffer to be stored or placed in or about
the Demised Premises any articles or materials of a specially
combustible inflammable or dangerous nature or any machinery or
mechanical or electrical/electronic equipment other than small
machines or mechanical or electrical/ electronic equipment generally
used in offices subject at all times to the provisions of Clause 3.23
hereof
3.26 Signs etc
Not without the written consent of the Landlord to affix paint or
exhibit or suffer to be affixed painted or exhibited on the exterior
of the Demised Premises or the Office Block or on or from the windows
vestibules passages or staircases thereof any flag signboard placard
poster or advertisement or show of business whatsoever
3.27 Hours of use etc
Not to sleep nor suffer anyone to sleep upon the Demised Premises nor
to use or suffer the use of the same or any part thereof for
residential purposes nor to use or suffer the same to be used for any
purpose whatsoever on Sundays or Bank or
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other public holidays or before eight a.m. or after two p.m. on
Saturdays or before eight a.m. or after seven p.m. on other days
Provided that following a written request by the Tenant to the
Landlord the Tenant may have access to the Demised Premises outside
the said hours in accordance with the provisions contained in the
Seventh Schedule hereto which provisions the Tenant hereby covenants
to observe and perform
3.28 Not to leave premises vacant
Not to leave the Demised Premises vacant for more than thirty
consecutive days
3.29 Lifts
Not without the consent of the Landlord to use any available
passenger lift in the Office Block otherwise than for the conveyance
of passengers
3.30 Not to invalidate insurance
Not to do or suffer to be done anything whereby the policy or
policies of insurance on the Demised Premises or on the Building
against damage by the Insured Risks may become void or voidable or
whereby the rate of premium thereon may be increased or the renewal
thereof may be refused and to repay to the Landlord all sums paid by
it by way of increased premium and all expenses incurred by it in or
about any renewal of such policy or policies rendered necessary by a
breach or non-observance hereof
3.31 Air-conditioning/cooling system
That no equipment machinery or apparatus shall be installed or
operated in the Demised Premises and nothing shall be done or omitted
in the Demised Premises which may cause the efficiency of the heating
ventilation air-conditioning and cooling system (if any) installed in
the Demised Premises to be diminished or impaired in any way
whatsoever
3.32 Car Park
(a) Not to use or suffer the use of the Car Park otherwise
than for the parking of private motor vehicles
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(b) Not to bring in or upon the Car Park any inflammable or
combustible material or substance save such petrol and oil
as is contained in the storage tanks of any cars which the
Tenant is at the time being entitled to park thereon
(c) To comply with such reasonable regulations or directions
as may from time to time be given by the Landlord to the
Tenant concerning the use of the Car Park and the means of
access thereto
(d) Not to do or cause or permit or suffer to be done any
damage to the Car Park or the Building or to any property
of the Landlord of any kind whatsoever in or about or
adjoining or adjacent to the Car Park or the Building and
in the event of the Tenants doing or causing or permitting
or suffering to be done any such damage as aforesaid
forthwith to make good the same provided that in default
the Landlord may make good such damage and recover the
cost as a debt due from the Tenant
4. LANDLORD'S COVENANTS
THE Landlord hereby covenants with the Tenant as follows:-
4.1 Repair
To keep the roof external walls and load bearing members of the
structure of the Office Block and all things in or about the Building
used by the Tenant in common with others and not included in the
Demised Premises and those parts of the windows of the Demised
Premises not the responsibility of the Tenant in good and tenantable
repair and condition
PROVIDED THAT
4.1.1 the Landlord shall not be liable to make good any damage
by any of the Insured Risks where the insurance moneys are
irrecoverable through the act or default of the Tenant or
any sub-tenant or licensee of his and
4.1.2 any liability of the Landlord hereunder to rebuild the
Building or any part thereof shall be deemed to have been
satisfied if the Landlord provides in the rebuilt premises
accommodation as convenient and
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commodious as but not necessarily identical with that
previously existing
4.2 Insurance
4.2.1 To effect and maintain insurance of the Demised Premises
(including insurance against loss of rent for three years
and in respect of professional fees and debris removal) in
the full reinstatement value thereof against damage by the
Insured Risks and to apply any monies received by virtue
of such insurance in making good the damage or loss to
which it relates and any liability of the Landlord to
reinstate the Demised Premises shall be satisfied if the
Landlord provides in the rebuilt or reinstated premises
accommodation as convenient and commodious as but not
necessarily identical with that previously existing And if
the Demised Premises shall be rendered wholly or partially
unfit for occupation through damage by any of the Insured
Risks then unless the insurance monies are irrecoverable
through the act or default of the Tenant or any sub-tenant
or Licensee of his the rent payable hereunder shall be
abated to an extent proportionate to the extent of the
damage and the duration of such unfitness for occupation
but for a period not exceeding three years PROVIDED THAT
the term "Insured Risks" and the Landlord's obligations
under this subclause shall each be deemed to be qualified
to the extent that Norwich Union Fire Insurance Society
Limited (or such other company with which the Demised
Premises are from time to time insured) shall decline to
effect cover or shall impose any excess or qualification
on the cover effected
4.2.2 Any dispute as to the amount or extent of such cesser of
rent shall be referred to the award of a single arbitrator
if the Landlord and the Tenant can agree upon one and
otherwise to an arbitrator appointed by the President for
the time being of the Royal Institution of Chartered
Surveyors upon the application of either party and in
either case in
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accordance with the provisions of the Arbitration Acts
1950-1979 any statutory modification thereof for the time
being in force
4.3 Quiet enjoyment
That the Tenant paying the rent or rents and observing the covenants
on the Tenant's part herein contained shall during the Term
quietly enjoy the Demised Premises without any interruption by the
Landlord or any person lawfully claiming under or in trust for it
4.4 Services
To use reasonable endeavours to provide the services and carry out
the works set out in sub-paragraphs 2 to 19 inclusive of Part II of
the Schedule hereto
Provided that -
(a) no claim for loss damage or compensation shall lie
against the Landlord for any failure to supply the same
(b) if the Landlord acting reasonably deems it desirable in
accordance with the principles of good estate management
it may add to withdraw change or vary any of the services
to be provided under this Lease or the method of
providing or carrying out any such services
5. PROVISOS
PROVIDED and it is hereby agreed and declared as follows:-
5.1 Re-entry
If the rent or rents hereinbefore mentioned or any part thereof shall
at any time be unpaid for twenty-one days after becoming payable
(whether formally demanded or not) or if any covenant on the
Tenant's part herein contained shall not be performed or observed or
if the Tenant shall suffer any execution to be levied on the goods
of the Tenant or being a company go into liquidation (otherwise
than for the purpose of a reconstruction or amalgamation) or become
the subject of an Administration Order or be struck off or dissolved
or being a private person become bankrupt or make any assignment for
the benefit of creditors or make any arrangement with creditors for
liquidation of the debts of
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the Tenant by composition or otherwise then and in any of the said
cases it shall be lawful for the Landlord at any time thereafter to
enter upon the Demised Premises or any part thereof in the name of
the whole and thereupon the Term shall absolutely determine but
without prejudice to the right of action of the Landlord in respect
of any antecedent breach of the Tenant's covenants herein contained
5.2 Liability on Covenants
No liability shall attach in respect of any breach of any positive
covenant (other than covenants for the payment of money) on the part
of the Landlord or the Tenant herein contained or implied so long as
the Landlord or the Tenant as the case may be shall be prevented from
performing the same by statutory restrictions non-availability of
labour or materials or matters beyond their control except that if
such breach shall occur as aforesaid the Landlord or the Tenant as
the case may be shall immediately conditions permit remedy such
breach and in the event of any such breach of a Tenant's covenant
nothing been remedied before the Tenant gives up possession of the
Demised Premises the Tenant shall forthwith pay to the Landlord such
an amount as shall be necessary to remedy such breach as aforesaid
5.3 Lifts
The Landlord shall not be responsible for any loss or inconvenience
occasioned by the closing of any lift in the Building for repairs or
any other necessary purposes or for any accidents that may occur to
the Tenant
5.4 Light and air
The Tenant shall not be entitled to any right of access of light or
air to the Demised Premises which would restrict or interfere with
the free user of any adjoining or neighbouring property for building
or any other purpose
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5.5 Service of notices
Section 196 of the Law of Property Act 1925 (as amended by the
Recorded Delivery Service Act 1962) shall apply to any notice to be
served hereunder as if such notice were a notice authorized by that
Act
5.6 Disputes
Any disputes arising between the Tenant and other lessees tenants or
occupiers of the Building as to any easement right or privilege in
connection with the use of the Demised Premises and the Building
shall either be decided by the Landlord acting fairly and reasonably
whose decision shall be binding upon all parties to the dispute or be
settled in such manner as the Landlord shall reasonably direct
5.7 Compensation
To the extent permitted by sub-section (3) of Section 38 of the
Landlord and Tenant Act 1954 any right of the Tenant to compensation
under Section 37 of the said Act is hereby excluded and any right to
compensation under any statutory amendment or re-enactment of such
Act is hereby excluded to the extent therein permitted
5.8 Interest on arrears
If and whenever the Tenant shall fail to pay the rent or rents hereby
reserved or any part thereof by the date on which the same shall
become due the Tenant shall pay to the Landlord interest on such
arrears of rent or rents at the rate of four per cent above the Base
Rate calculated from the date it was due to the date of actual
payment thereof and where the Tenant pays any such arrears of rent
following the appearance of a bailiff instructed by the Landlord then
any such bailiffs charges and/or commissions shall be paid by the
Tenant
5.9 VAT
5.9.1 Output Tax
Any obligation of the Tenant hereunder or under any
document entered into pursuant hereto to make payment to
the Landlord shall include an
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obligation to pay in addition any VAT payable in respect
of the supply to which the payment relates
5.9.2 Unless the contrary is specified any sum specified in this
Lease is (and any sum to be agreed certified determined or
ascertained pursuant to the provisions hereof shall be) a
sum net of VAT
5.9.3 Input Tax
Any obligation of the Tenant hereunder to repay to the
Landlord any expenditure incurred by the Landlord shall
include an obligation to repay any VAT forming part of
such expenditure but only to the extent that the Landlord
is unable to recover such VAT from the Customs & Excise
5.10 Abandoned
If at such time as the Tenant has vacated the Demised Premises on the
determination of the Term either by effluxion of time or otherwise
any property of the Tenant shall remain in or on the Demised Premises
and the Tenant shall fail to remove the same within fourteen days
after being requested by the Landlord so to do the Landlord may as
agent of the Tenant (and the Landlord is hereby appointed by the
Tenant to act in that behalf) sell such property and shall then hold
the proceeds of sale after deducting the costs and expenses of
removal storage and sale reasonably and properly incurred by it and
any other moneys due from the Tenant to the Landlord to the order of
the Tenant PROVIDED ALWAYS THAT if such proceeds of sale shall be
insufficient to meet the costs and expenses as aforesaid the Tenant
shall pay the amount of the deficiency on demand and will indemnify
the Landlord against any claim or liability in respect thereof
PROVIDED FURTHER THAT the Tenant will indemnify the Landlord against
any liability by it to any third party whose property shall have been
sold by the Landlord in the bona fide mistaken belief (which shall be
presumed unless the contrary be proved) that such property belonged
to the Tenant
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5.11 Managing Agents
The Landlord shall be at liberty to employ managing agents or other
professional advisers to discharge the Landlord's duties under these
presents and whenever the duties of the Landlord have been delegated
to managing agents or other professional advisers the Tenant shall be
entitled and required to accept their requirements in discharge of
the Landlord's duties as being the requirements under these presents
of the Landlord itself
5.12 Car Park
The Landlord shall not be liable for any loss or damage whatsoever
caused to or suffered by the Tenant or the servants agents licensees
or visitors of the Tenant or any property of such person or to any
private motor car or any of the contents or property of on or in any
such car while it is approaching or in or upon or departing from the
Car Park whether such loss or damage be due to the negligence of the
Landlord or any of its servants or agents or to any other cause
whatsoever
5.13 Tenant's option to determine
5.13.1 In this clause "Determination Date" means 25 December 1998
5.13.2 If the Tenant wishes to determine this Lease on the
Determination Date it must
5.13.2.1 serve notice upon the Landlord not less than
twelve months before the Determination Date of
its intention to determine this Lease
5.13.2.2 yield up the Demised Premises on the
Determination Date with vacant possession and
otherwise in accordance with clause 3.6
5.13.3 Subject to compliance with clause 5.13.2 and the proviso
hereinafter contained this Lease shall determine upon the
Determination Date but without prejudice to the rights of
any party against another in respect of any antecedent
breach of covenant
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5.13.4 Upon the Determination Date and subject to clauses 5.13.2
and 5.13.3 and the said proviso the Tenant shall hand
over to the Landlord the original lease and all other
title deeds and documents relating to the Demised Premises
PROVIDED that in the event of the Tenant exercising this option it
shall pay to the Landlord on or prior to the Determination Date a sum
of SEVENTY ONE THOUSAND TWO HUNDRED AND FIFTY POUNDS (POUNDS 71,250)
BUT PROVIDED FURTHER that in the event of the Tenant not exercising
this option the Landlord shall grant to the Tenant a 7 month
rent-free period with effect from the Determination Date which
rent-free period for the avoidance of doubt shall apply to a reviewed
rent payable in accordance with the provisions of the Third Schedule
from the Determination Date whether or not such reviewed rent has
been agreed on the Determination Date.
5.14 Headings
The clause and schedule headings and the index do not form part of
this Lease and shall not be taken into account in its construction or
interpretation
6. SURETY
The Surety in consideration of the demise hereinbefore contained having
been made at its request hereby covenants with the Landlord:-
6.1 as well after as before any disclaimer of this Lease that the Tenant
will pay the rent hereby reserved on the days and in manner aforesaid
and will perform and observe all the Tenant's covenants herein contained
or implied and that in case of default in such payment of rent or in the
performance or observance of such covenants as aforesaid or any one or
more of them then and in every such case the Surety will pay the rent or
observe and perform any covenant in respect whereof the Tenant shall be
in default as aforesaid PROVIDED ALWAYS and it is hereby agreed that any
neglect or forbearance of the Landlord in endeavouring to obtain payment
of the rent hereby reserved when the same become payable or to enforce
performance of the several covenants herein on
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the Tenant's part contained or implied and any time which may be given
to the Tenant by the Landlord shall not release or exonerate or in any
way affect the liability of the Surety under this clause
6.2 that if the Tenant shall cease to exist (whether by being struck off the
Register of Companies or otherwise) or shall go into liquidation
(otherwise than for the purpose of a reconstruction or amalgamation) or
being individuals or an individual is adjudicated bankrupt and the
liquidator or trustee in such bankruptcy as the case may be shall
disclaim this Lease or a Receiver shall abandon or in any other manner
terminate the Term or if the Landlord shall forfeit this Lease and if
the Landlord shall within six months after having actual notice that the
Tenant has ceased to exist or within six months after such disclaimer
abandonment termination or forfeiture by notice in writing require the
Surety to accept a lease of the Demised Premises for a term commencing
on the day after the Tenant ceased to exist or the day after any such
disclaimer abandonment termination or forfeiture and expiring on the day
the Term is due to expire at the same rents and under the like covenants
and conditions as are reserved by and contained in this Lease (the said
new lease and rights and liabilities thereunder to take effect as from
the date of the said disclaimer abandonment or termination) then and in
such case the Surety shall accept such lease accordingly and execute a
counterpart thereof
6.3 that if in relation to any assignment of this Lease the Tenant (which
term in this sub-clause means the party hereto as tenant and not any
successor in title) enters into an agreement with the Landlord (being an
authorised guarantee agreement within the meaning of section 16 of the
Landlord and Tenant (Covenants) Act 1995) the Surety will execute and
deliver to the Landlord an agreement under seal in the form set out in
the Sixth Schedule hereto under which the Surety will guarantee the
performance of the Tenant's obligations under the said authorised
guarantee agreement and will (if the Tenant is required by virtue of
such agreement to take a new lease of the Demised Premises or takes an
overriding
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lease of the Demised Premises under section 19 of the said Act)
guarantee in the terms of this clause 6 the performance of the covenants
on the part of the Tenant contained in such new lease or overriding
lease
7. AGREEMENT FOR LEASE
It is hereby certified that there is no Agreement for Lease to which this
Lease gives effect
IN WITNESS whereof this instrument has been duly executed as a deed by the
parties hereto the day and year first above written
The First Schedule hereinbefore referred to
Rights granted to the Tenant
(1) The right in common with the Landlord and all other persons having a like
right to use for the purpose of access to and egress from the Demised
Premises the vestibules passages and staircases of the Office Block and also
any available passenger lift therein AND ALSO the right to use in common
with all other persons authorised by the Landlord the lavatories and water
closets in the Office Block allocated to the Tenants use from time to time
by the Landlord AND ALSO the right in common with all other persons entitled
thereto and so far as the Landlord has power to grant the same of free
passage and running of water soil smoke gas and electricity from and to the
Demised Premises through the Common Service Media and the adjoining or
adjacent property
(2) The right to park 22 private motor vehicles in the Car Park in such space or
spaces as the Landlord in its sole discretion shall from time to time
allocate in writing to the use of the Tenant which allocation, may be
changed by the Landlord on giving previous notice as frequently as it may
deem fit and nothing herein shall be construed as conferring on the Tenant
the exclusive right to use any particular space or spaces in the Car Park
(3) The right for the Tenant and all persons authorised by the Tenant as
ancillary to the Tenant's occupation of the Demised Premises and in common
with the Landlord and all other persons having similar rights and in
accordance with such reasonable
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regulations (including those relating to security) as the Landlord may from
time to time determine to use
(A) on foot only and with or without trolleys and similar small-wheeled
vehicles the paladin store indicated as such on the plan numbered 3
attached hereto for the storage of refuse originating in the Demised
Premises pending its removal by the local authority
(B) with or without vehicles
(i) so much of the service yard shown coloured brown on the said
plan numbered 3 as is necessary for the unloading of goods
intended for the Demised Premises
(ii) the service road and ramps serving the said service yard and
the Car Park as means of access to and egress from the said yard
and the Car Park respectively
(iii) the roadway shown edged brown on the said plan numbered 3 as a
means of access between the public highway and the service road
and ramps referred to in item (B)(ii) hereof until the said
roadway edged brown becomes adopted as an area maintainable at
public expense
The Second Schedule hereinbefore referred to
Exceptions and Reservations
EXCEPT AND RESERVING unto the Landlord and all other persons entitled thereto
the free passage and running of water soil smoke gas and electricity from other
parts of the Building and the adjoining or adjacent property through the Common
Service Media in or under the Demised Premises and the right to enter the
Demised Premises at any time or times by previous appointment (except in the
event of emergency and then at any time) to inspect maintain alter add to or
repair the same the person or persons exercising such right making good any
damage caused thereby and
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The Third Schedule hereinbefore referred to
Rent Review
1. The rent payable hereunder shall be reviewed on the Twenty-fifth day of
December in the years One thousand nine hundred and ninety-eight and Two
thousand and three each such date being hereinafter called a "Rent
Review Date"
2. For the purpose of this Schedule the expression "Market Rental Value"
means the annual rack rent of the Demised Premises having the benefit of
(for the avoidance of doubt) the car parking rights referred to in the
First Schedule at the relevant Rent Review Date
(A) On the following assumptions:
(1) that the Demised Premises are available and fit for
immediate occupation and are ready for any use permitted
by this Lease or any licence or consent granted by the
Landlord or for such other purpose for which planning
permission may have been granted and that no work has
been carried out thereon by the Tenant its sub-tenants
or their predecessors in title during the Term which has
diminished the rental value of the Demised Premises and
that if the Demised Premises have been destroyed or
damaged they have been fully restored
(2) that the Demised Premises are available to be let in the
open market by a willing landlord to a willing tenant as
a whole without a premium but with vacant possession and
subject to the provisions of this Lease (other than the
amount of the rent hereby reserved but including the
provisions for rent review) for a term equal to the
residue of the Term of this Lease then remaining
unexpired or a Term of five years commencing on the Rent
Review Date whichever is the greater
(3) that the Demised Premises may be used for the purposes
permitted by this Lease or any licence or consent
granted by the Landlord or for such other purpose for
which planning permission may have been granted at the
request of the Tenant whichever would yield the highest
rent
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(4) that the covenants herein contained have been fully
performed and observed and
(5) that no reduction is to be made to take account of any
rental concession which on a new letting with vacant
possession might be granted to the incoming tenant
whether in respect of a period within which its
fitting-out works would take place or otherwise
(B) But disregarding:-
(1) any effect on rent of the fact that the Tenant its
sub-tenants or their respective predecessors in title
have been in occupation of the Demised Premises and
(2) any goodwill attached to the Demised Premises by reason
of the carrying on thereat of the business of the Tenant
its sub-tenants or their predecessors in title
(3) the effect on rent of any improvement (shown to be such
by the Tenant) to the Demised Premises or any part
thereof completed not more than twenty one years before
the relevant Rent Review Date and carried out:-
(a) by the Tenant its sub-tenants or their
respective predecessors in tide and
(b) with the previous written approval of the
Landlord and with all other necessary consents
where required and
(c) otherwise than in pursuance of an obligation to
the Landlord and
(d) without liability on the part of the Landlord to
reimburse any part of the cost thereof and
(e) during the Term or during any period of
occupation prior thereto arising out of an
agreement to grant such Term
(4) Any rent-free period granted to the Tenant by the
Landlord pursuant to the terms of Clause 5.13
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3. The Landlord and the Tenant shall endeavour to agree the Market Rental
Value as at the relevant Rent Review Date but in the event of the
Landlord and the Tenant failing so to agree in writing by the relevant
Rent Review Date (or within such extended period as the Landlord and the
Tenant shall agree) the Market Rental Value shall be determined by an
arbitrator such arbitrator to be nominated in the absence of agreement
between the Landlord and the Tenant by the President of the Royal
Institution of Chartered Surveyors on the application of the Landlord or
the Tenant and the decision of such arbitrator shall be binding on both
the Landlord and the Tenant save to the extent that such decision is set
aside or varied or remitted by any Court of competent jurisdiction
4. If the Market Rental Value so agreed or determined as at any Rent Review
Date shall be found to exceed the rent payable hereunder immediately
prior to such Rent Review Date there shall be substituted for the yearly
rent then payable hereunder an increased yearly rent equal to the Market
Rental Value so agreed or determined but if the Market Rental Value as
aforesaid shall be equal to or less than the rent payable hereunder
immediately prior to such Rent Review Date the rent payable immediately
prior to such Rent Review Date shall continue to be payable until such
time as it is increased pursuant to the provisions hereof
5. Such increased yearly rent shall be payable from the relevant Rent
Review Date for the residue of the Term or until a greater rent is
substituted therefor under this Schedule but in the event of the Market
Rental Value not having been agreed or determined by such Rent Review
Date then the rent payable immediately prior to such Rent Review Date
shall continue to be payable until such agreement or determination as
aforesaid and on demand following or in the event of no demand having
been made on the quarter day next after such agreement or determination
whichever is the earlier the Tenant shall pay in addition to the
increased quarter's rent then payable the sums by which the rent paid on
each rent payment date on or after the Rent Review Date in question fell
short of the rent subsequently agreed or determined to have been payable
on that date together with interest (at the annual rate of one per cent
above Base Rate)
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calculated in respect of each such sum from the rent payment date on
which it was payable to the date on which it is paid
6. it is hereby further provided in relation to the Market Rental Value as
follows:-
(A)
(1) the arbitration shall be conducted in accordance with
the Arbitration Acts 1950 and 1979 or any statutory
modification or re-enactment thereof for the time being
in force
(2) the arbitrator shall have knowledge of and be
experienced in the valuation and letting of premises
similar to the Demised Premises and in the locality of
the Demised Premises
(3) it is the intention of the parties that the arbitrator
shall make a reasoned award
(B) When the amount of any rent to be ascertained as hereinbefore
provided shall have been so ascertained memoranda thereof shall
thereupon be signed by or on behalf of the Landlord and the
Tenant and annexed to this Lease and counterpart thereof and the
parties shall bear their own costs in respect thereof
(C) For the purpose of this Schedule time shall not be of the
essence
(D) The fees and expenses of the arbitrator including the cost of
his appointment shall be borne equally by the Landlord and the
Tenant unless the arbitrator directs otherwise
The Fourth Schedule hereinbefore referred to
Part I
Payment of service charge
1. In this Schedule the expressions:-
1.1 "Accounting Period" shall mean the period from lst January to
31st December in any year or such other period (not being more
than twelve months) as the Landlord may in its discretion from
time to time determine
1.2 "the Building" shall also include all areas facilities and
features within the curtilage of the Building and any extensions
or alterations thereto
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1.3 "the Common Parts" means the Common Parts defined in Clause
1.1.4 of this Lease
1.4 "the Engineering Risks" means the risks of impact damage caused
by fragmentation of plant and machinery death or injury to
persons and damage to property caused by explosion or collapse
of boilers or pressure plant sudden and unforeseen physical
damage to boilers or pressure plant lifts and hoists and other
machinery (and damage thereby caused to the demised premises)
and liability to third parties in respect of any accident (other
than fire or explosion) involving lifts or hoists or such other
risks as the Landlord may from time to time require PROVIDED
that any additional or different risks required by the Landlord
shall be those against which Norwich Union Fire Insurance
Society Limited (or another comparable and reputable insurance
company) from time to time offers cover at standard rates in
respect of properly installed operated and maintained plant and
machinery
1.5 "the Expenditure" shall mean:-
1.5.1 the expenses and outgoings incurred by the Landlord in
the Accounting Period in effecting and maintaining
insurance carrying out the repairs and other
obligations providing the services and facilities and
making the payments relating to the Building all of
which are mentioned in Clause 4.1 hereof and Part II of
this Schedule
1.5.2 the reasonable and proper fees of any agents retained by
the Landlord to manage and supervise the Building or (at
the discretion of the Landlord) a surcharge of 10% of
the cost of the obligations and services set out in
Clause 4.1 hereof and in sub-paragraphs 2 to 19
inclusive of Part II of this Schedule as a management
fee
1.5.3 any Value Added Tax which the Landlord may incur and
which is irrecoverable as input tax by the Landlord
1.5.4 any Value Added Tax which the Landlord may be liable to
levy in respect of the Service Charge
35
<PAGE> 41
1.5.5 such provision for anticipated future expenditure in
relation to the services and works referred to in Clause
4.1 and Part II of this Schedule as the Landlord shall
reasonably deem appropriate but subject to the
provisions of Part III of this Schedule including for
the avoidance of doubt the replacement and renewal of
apparatus machinery or equipment
1.5.6 interest at:
(1) such reasonable borrowing rate as the Landlord
shall have incurred thereon
OR
(2) if the Landlord funds the expenditure itself a
rate of two per centrum. above Base Rate on any
expenditure charged to any subsequent Accounting
Period
1.6 "the Service Charge" shall be a fair proportion to be fixed by
the Landlords Surveyor acting fairly and reasonably of the
Expenditure The Landlord shall have the right to make allowances
in such calculation for the differences in the insurance of or
the repairs services and facilities provided or supplied to any
premises in the Building
2. As soon as may be practicable prior to the beginning of an Accounting
Period the Landlord may notify the Tenant in writing of the Landlord's
reasonable estimate of the Service Charge for the forthcoming Accounting
Period ("the Interim Sum") and the Tenant shall pay the Interim Sum to
the Landlord on account of the Service Charge by four equal instalments
on the usual quarter days Such Interim Sum shall be in substitution for
that previously payable. The Interim Sum for the period from the
Twenty-fifth day of December One thousand nine hundred and ninety-six
until the end of the first Accounting Period shall be the yearly sum of
FORTY ONE THOUSAND SEVEN HUNDRED POUNDS (Pounds 41,700)
3. If the Landlord shall fail to notify the Tenant in accordance with the
preceding subparagraph then until such notification the Tenant shall
continue to make payments in
36
<PAGE> 42
accordance with the last notified Interim Sum or if there has been no
such notification at the rate specified in the preceding paragraph
4. The amount of the Service Charge shall be ascertained and certified by a
certificate (hereinafter called "the certificate") so soon after the end
of the Accounting Period as may be practicable and shall relate to such
period and shall be signed by the Landlord's Surveyor (who shall be an
Associate or Fellow of the Royal Institution of Chartered Surveyors and
who may be an employee of the Landlord) or the Landlord's Accountant
(who shall be an Associate or Fellow of the Institute of Chartered
Accountants of England and Wales or the Chartered Association of
Certified Accountants and who may be an employee of the Landlord) or
managing agent (at the discretion of the Landlord) acting as an expert
and not as an arbitrator
5. In the event of
5.1 the Interim Sum being less than the Service Charge so certified
the Tenant shall within 21 days of demand pay to the Landlord
the difference between the Interim Sum and the Service Charge so
certified (and in relation to the Accounting Period in which the
term shall expire or determine the obligation to pay the said
difference shall continue notwithstanding such expiration or
determination) or
5.2 the Interim Sum being in excess of the Service Charge so
certified the overpayment shall be refunded to the Tenant or at
the discretion of the Landlord shall be credited to the Tenant
against any outstanding rent or other payments due from the
Tenant or if there are none against the next payment or payments
of the Interim Sum
6. A copy of the certificate for an Accounting Period shall be supplied by
the Landlord to the Tenant on written request and without charge
7. The certificate shall contain a summary of the Expenditure during the
Accounting Period to which it relates together with a summary of the
relevant details and figures forming the basis of calculation of the
Service Charge and the certificate (or a
37
<PAGE> 43
certified copy thereof) shall be conclusive evidence for the purposes
hereof of facts which it purports to certify save for any manifest
errors
Part 11
Service charge items
1. Premiums incurred by the Landlord
1.1 in insuring the Building and the Landlord's fixtures and
fittings therein of thereon (including insurance against loss of
rent for three years professional fees and debris removal)
against the Insured Risks
1.2 in effecting property owners liability insurance and third party
insurance in respect of the Building in a sum reasonably
determined by the Landlord from time to time
1.3 in effecting insurance in respect of any plant machinery
apparatus and equipment in the Building against the Engineering
Risks
AND including the cost of any valuation of the Building carried out for
the purpose of insurance Provided that there shall be no more than one
such valuation in any period of 3 years
2. Maintenance repair renewal and decoration of such parts of the Building
as are not the responsibility of the tenants of the Building including
(without limitations) the Common Parts the Car Park and the vehicle
control barriers at the entrance thereto any landscaped areas service
are as roadways ramps walls fences and ornamental features)
3. Providing maintaining repairing and renewing the lighting of the Car
Park the exterior of the Building and the interior of the Common Parts
including service areas paths paved areas roadways and ramps
4. The cost of carrying out any works (or other actions including adequate
fire drill instruction) upon or to such parts of the Building as shall
be necessary to comply with any statutory requirement or any notice or
direction deriving authority under statute and any reasonable
requirement or recommendation of any relevant authority or the
insurance company with which the Building is from time to time insured
and the cost
38
<PAGE> 44
of taking all steps deemed desirable or expedient by the Landlord in
making representations against or otherwise contesting the incidence of
the provisions of any statute byelaw or notice concerning town planning
public health highways streets drainage or other matters relating to or
alleged to relate to the Building or any part of it for which any tenant
is not directly and exclusively liable
5. Provision of a passenger lift service including maintenance repair
renewal and decoration
6. Heating the Office Block through the heating installation in the Office
Block to such temperatures and between such dates in the cold season as
the Landlord shall determine including insurance maintenance servicing
repair renewal and decoration of the installation
7. Ventilating and/or cooling the Office Block including maintenance repair
renewal and any decoration of the system
8. The cost of the supply of electricity gas oil or other fuel for the
provisions of the services
9. Cleaning the exterior of the Building and the interior of the Common
Parts including the cleaning of all windows both inside and out insofar
as such window cleaning is not the responsibility of the tenants of the
Budding including insurance maintenance repair and any decoration of the
equipment used in connection with such cleaning
10. Gritting sanding or treating with chemical ice prevention materials and
snow clearance when and where appropriate
11. Provision of such apparatus and equipment (including the maintenance
repair renewal and insuring of any such apparatus and equipment) and
staff for the servicing management supervision cleaning and security of
the Building as the Landlord shall reasonably consider necessary such
cost to include
11.1 insurance pension and welfare contributions
11.2 transport facilities and benefits in kind
11.3 the provision of uniforms and working clothing
39
<PAGE> 45
11.4 the provision of vehicles tools appliances cleaning and other
materials fixtures and fittings and other equipment for the
proper performance of their duties and a store for housing the
same and
11.5 a notional rent (not exceeding current market rent) for any
premises provided for every such person's use occupancy or
residence
12. Providing maintaining repairing and replacing all floor coverings all
signs signposts furniture furnishings seasonal decorations displays
ornamental features plants shrubs trees cut flowers public pay
telephones first aid or other amenities as the Landlord at its
discretion shall provide in the Common Parts
13. Provision of and maintaining repairing and replacing the fire fighting
equipment and securing a supply of water thereto including any sprinkler
system fire detection equipment and alarm system and any burglar alarms
or surveillance system and any loud speaker public address or music
broadcast system in the Building
14. Provision of hot and cold water and other requisites to the lavatories
in the Common Parts and including as appropriate the maintenance repair
renewal and cleaning of all equipment necessary for such provision
15. Removal and disposal of trade or other refuse from the Building at such
times and in such manner as the Landlord shall determine including the
provision maintenance replacement and renewal of any compacting or other
necessary equipment
16. Marking out the spaces in the Car Park
17. All rates taxes assessments duties charges impositions and outgoings
payable by the Landlord in respect of the Common Parts
18. The reasonable and proper cost of any works (forming part of the
services) carried out Pursuant to a planned maintenance programme for
the Building and the reasonable and proper fees payable by the Landlord
to any professional consultant engaged to prepare and implement such
programme
19. Any other services and facilities as may be provided or supplied by the
Landlord in accordance with the provisions of Clause 4.4 hereof
40
<PAGE> 46
Part III
The following Provisions shall apply to sums recovered by the Landlord from the
Tenant pursuant to 1aragraph 1.5.5 of Part I of this Schedule in respect of the
anticipated future expenditure:-
1. The annual sum recovered shall be the proper proportion attributable to
the Demised Premises of the annual amount (determined by the Landlord
acting reasonably) required to cover the cost of replacing or renewing
the item of items in question at prices current in the financial year
in respect of which the recovery is made and over the period estimated
(in the same year) to be the expected life of the said item or items
(whether or not extending beyond the Term)
2. All such sums shall be used by the Landlord (insofar as such sums are
adequate) in discharging the Landlord's obligations under Clause 4
hereof and any income arising therefrom shall be so used
3. The Tenant shall not be entitled to repayment of any such sums or any
part thereof in the event of an assignment or parting with the Tenant's
interest in the Demised Premises
4. If the Landlord shall sell or otherwise part with its interest in the
Building the sums recovered and any income (net of tax) accrued thereon
shall on completion be handed to the Purchaser or other party acquiring
the Landlord's interest in the Building
The Fifth Schedule hereinbefore referred to
Authorised Guarantee Agreement
THIS AGREEMENT is made the day of One thousand nine hundred
and ninety- BETWEEN
(1) THE NORWICH UNION LIFE INSURANCE SOCIETY whose registered office is at
Surrey Street in the City of Norwich ("the Landlord" which expression includes
the person in whom the reversion expectant on the determination of the Term
hereinafter defined is vested)
(2)
("the Assignor")
41
<PAGE> 47
WHEREAS:-
(1) This Agreement is supplemental to the document or documents ("the
Lease") short particulars whereof appear in the Schedule hereto whereby
the premises ("the Premises') described in the said Schedule were
demised for the term of years ("the Term") mentioned in the said
Schedule
(2) The Assignor is entitled to the Premises for the residue of the Term
subject to the covenants contained in the Lease and the reversion
expectant on the determination thereof is vested in the Landlord
(3) Pursuant to the covenant in the Lease application has been made to the
Landlord by the Assignor for consent to assign the Premises and the
Landlord has agreed to give licence to assign the Premises to
of ("the Assignee") for the residue of the Term subject
to the Assignor covenanting with the Landlord in manner hereinafter
appearing
NOW THIS DEED WITNESSETH as follows:-
IN consideration of the grant of the licence hereinbefore referred to the
Assignor covenants with the Landlord:-
1. (as an obligation distinct from and without prejudice to any contained
in the Lease) to:-
1.1 procure that notice is given to the Landlord within 14 days of
the completion of the assignment indicating the name and address
of the party to whom future rent demands should be sent
1.2 give to the Landlord within twenty-eight days of the completion
of the assignment full particulars thereof including the amount
of any consideration therefor
2. that the Assignee will from and after the date of the assignment to it
pay the rents reserved by the Lease on the days and in manner therein
provided and will perform and observe all the lessee's covenants in the
Lease contained or implied and that in case of default in such payment
of rent or in the performance or observance of such covenants as
aforesaid or any one or more of them then and in every such case the
42
<PAGE> 48
Assignor or the Personal Representative(s) of the Assignor will pay the
rents and observe and perform any covenant in respect whereof the
Assignee shall be in default as aforesaid PROVIDED ALWAYS and it is
hereby agreed that any neglect or forbearance of the Landlord in
endeavouring to obtain payment of the rents reserved by the Lease when
the same become payable or to enforce performance of the several
covenants on the lessee's part in the Lease contained or implied and any
time which may be given to the Assignee by the Landlord shall not
release or exonerate or in any way affect the liability of the Assignor
3. that if the Assignee shall cease to exist (whether by being struck off
the Register of Companies or otherwise) or shall go into liquidation
(otherwise than for the purpose of a reconstruction or amalgamation) or
being individuals or an individual is adjudicated bankrupt and the
liquidator or trustee in such bankruptcy as the case may be shall
disclaim the Lease or a Receiver shall abandon or in any other manner
terminate the Term or if the Landlord shall forfeit the Lease and if the
Landlord shall within six months after having actual notice that the
Assignee has ceased to exist or within six months after such disclaimer
abandonment termination or forfeiture by notice in writing require the
Assignor or his Personal Representative(s) to accept a lease of the
Premises for a term commencing on the day after the Assignee ceased to
exist or the day after any such disclaimer abandonment termination or
forfeiture and expiring on the day the Term is due to expire at the same
rents and under the like covenants and conditions as are reserved by and
contained in the Lease (the said new lease and rights and liabilities
thereunder to take effect as from the date of the said disclaimer
abandonment or termination) then and in such case the Assignor or his
Personal Representative(s) shall accept such lease accordingly and
execute a counterpart thereof and shall pay the Landlord's solicitors'
costs in connection. with the grant of such lease.
IN WITNESS whereof this instrument has been duly executed as a deed the day and
year first above written
43
<PAGE> 49
THE SCHEDULE above referred to
Nature of document:
Date:
Parties: (1)
(2)
Term:
Premises:
The Sixth Schedule hereinbefore referred to
Agreement guaranteeing obligations in an AGA
THIS AGREEMENT is made the day of One thousand nine hundred
and ninety- BETWEEN
(1) THE NORWICH UNION LIFE INSURANCE SOCIETY whose registered office is at
Surrey Street in the City of Norwich ("the Landlord" which expression includes
the person in whom the reversion expectant on the determination of the Term
hereinafter defined is vested)
(2)
("the Surety")
WHEREAS:-
(1) By an, Authorised Guarantee Agreement dated ____________ and made
between the Landlord of the one part and ("the Assignor") of the other
part the Assignor has entered into obligations guaranteeing the
performance by its assignee of the obligations of the tenant under the
lease short particulars whereof appear in the Schedule hereto whereby
the premises ("the Premises") described in the said Schedule were
demised for the term of years ("the Term") mentioned in the said
Schedule
(2) By virtue of the obligations on the part of the Surety contained in the
Lease ("the Original Surety Covenants") the Surety has agreed to enter
into this agreement to
44
<PAGE> 50
guarantee the performance of the obligations on the part of the Assignor
as hereinafter appears
NOW THIS DEED WITNESSETH as follows:-
THE Surety hereby covenants with the Landlord:-
1. that the Assignor will perform and observe all the obligations on its
part contained in the Authorised Guarantee Agreement and that in case of
default in such performance or observance as aforesaid then and in any
such case the Surety or the Personal Representative(s) of the Surety
will observe and perform any covenant in respect whereof the Assignor
shall be in default as aforesaid and shall pay or make good to the
Landlord any losses damages costs or expenses incurred by the Landlord
as a consequence of such default PROVIDED ALWAYS and it is hereby agreed
that any neglect or forbearance of the Landlord in endeavouring to
enforce performance of the said obligations on the part of the Assignor
or any of them and any time which may be given to the Assignor by the
Landlord shall not release or exonerate or in any way affect the
liability of the Surety
2. that if the Assignor shall (either) be called upon under the terms of
the Authorised Guarantee Agreement to take up a lease of the Premises
(or) shall call for the grant to the Assignor of an overriding lease of
the Premises pursuant to the provisions of section 19 of the Landlord
and Tenant (Covenants) Act 1995 or any amendment or reenactment thereof
having similar effect then and in either such case the Surety shall
enter into covenants with the Landlord mutatis mutandis the same as the
Original Surety Covenants (to be contained either in such lease or in a
separate deed as the Landlord shall require in writing) guaranteeing the
performance of the obligations o the Assignor under such lease
IN WITNESS whereof this instrument has been duly executed as a deed the day and
year first above written
THE SCHEDULE above referred to
Nature of document:
Date:
45
<PAGE> 51
Parties: (1)
(2)
Term:
Premises:
The Seventh Schedule hereinbefore referred to
The Landlord shall on written request supply to the Tenant keys to enable the
Tenant to use the Demised Premises outside the hours referred to in clause 3.27
hereof (hereinafter called "the specified hours") on the following conditions:-
1. The keys supplied are to remain in the possession of senior personnel of
the Tenant whose names shall be notified to the Landlord in writing and
no further copies of the keys are to be made
2. The Tenant will use all reasonable endeavours to ensure that no
unauthorised person gains access to the Building during such times and
the Tenant has access outside the specified hours
3. The exterior doors to the Building are to be locked when the Building is
used outside the specified hours and upon leaving the Building all doors
are to be locked and the Building left secure
4. The Tenant will indemnify the Landlord from and against any claim
arising from or in connection with or caused by the use of the Building
outside the specified hours attributable to misuse or negligence by the
Tenant or other permitted occupiers of the Demised Premises
5. The Landlord reserves the right to withdraw the privilege to use the
Demised Premises outside the specified hours at any time in the event of
the Tenant being in breach of the conditions of this Schedule or Clause
3.21 hereof and thereupon the Tenant will return the keys to the
Landlord
6. The Tenant accepts that the use of the Building outside the specified
hours is entirely at its own risk
7. The Landlord will not undertake to provide heating lifts or other
services outside the specified hours but if any such services are used
then this will be entirely at the
46
<PAGE> 52
Tenant's own risk and it will reimburse the Landlord with any additional
expense incurred in the provision of services or any increased insurance
premium payable
8. The Tenant will advise the Landlord immediately should any of the said
keys be lost or misplaced and if such keys shall be lost or misplaced
and the Landlord considers it necessary to change the locks to the doors
of the Building then the cost incurred will be borne by the Tenant
9. On the expiration or sooner determination of this Lease for any reason
whatsoever or in the case of any assignment or underletting of the
Demised Premises the keys are to be returned forthwith to the Landlord
10. The Tenant will observe all requirements communicated to it on the
Landlord's behalf and comply with any reasonable regulations that the
Landlord may from time to time impose in connection with the use of the
Building outside the specified hours
THE COMMON SEAL of )
QUINTILES (UK) LIMITED )
was hereunto affixed in the ) [SEAL]
presence of:- )
Director
Secretary
THE COMMON SEAL of )
QUINTILES TRANSNATIONAL )
CORPORATION was hereunto ) [SEAL]
affixed in the presence of:- )
Director
Assistant Secretary
47
<PAGE> 53
<TABLE>
<S> <C>
1. DEFINITIONS 1
2. DEMISE 4
3. TENANT'S COVENANT'S 4
3.1 Rent 4
3.2 Rates and outgoings 4
3.3 Costs of Notices 5
3.4 Signboard 6
3.5 Entry by Landlord 7
3.6 Repair 7
3.7 Repairs after notice 8
3.8 Defects etc 9
3.9 Statutory Works 9
3.10 Observe rules and regulations 9
3.11 Decoration 9
3.12 Cleaning 9
3.13 Planning 10
3.14 Letting and sale notices 11
3.15 Notices 12
3.16 Telecommunications Act 1984 12
3.17 Alterations 12
3.18 User 13
3.19 Alienation 13
3.20 Lavatories 17
3.21 Nuisance 17
3.22 Obstruction 18
3.23 Floor loading 18
3.24 Auction 18
3.25 Machinery etc 18
3.26 Signs etc 18
</TABLE>
i
<PAGE> 54
<TABLE>
<S> <C>
3.27 Hours of use etc 18
3.28 Not to leave premises vacant 19
3.29 Lifts 19
3.30 Not to invalidate insurance 19
3.31 Air-conditioning/cooling system 19
3.32 Car Park 19
4. LANDLORD'S COVENANTS 20
4.1 Repair 20
4.2 Insurance 21
4.3 Quiet enjoyment 22
4.4 Services 22
5. PROVISOS 22
5.1 Re-entry 22
5.2 Liability on Covenants 23
5.3 Lifts 23
5.4 Light and air 23
5.5 Service of notices 24
5.6 Disputes 24
5.7 Compensation 24
5.8 Interest on arrears 24
5.9 VAT 24
5.10 Abandoned Property 25
5.11 Managing Agents 26
5.12 Car Park 26
5.13 Tenant's option to determine 26
5.14 Headings 27
6. SURETY 27
7. AGREEMENT FOR LEASE 29
The First Schedule hereinbefore referred to 29
</TABLE>
ii
<PAGE> 55
<TABLE>
<S> <C>
Rights granted to the Tenant 29
The Second Schedule hereinbefore referred to 30
Exceptions and Reservations 30
The Third Schedule hereinbefore referred to 31
Rent Review 31
The Fourth Schedule hereinbefore referred to 34
The Fifth Schedule hereinbefore referred to 41
Authorised Guarantee Agreement 41
The Sixth Schedule hereinbefore referred to 44
Agreement guaranteeing obligations in an AGA 44
The Seventh Schedule hereinbefore referred to 46
</TABLE>
iii
<PAGE> 1
EXHIBIT 10.38
COMMENCEMENT DATE MEMORANDUM
THIS AGREEMENT made as of the 31st day of January, 1997 between PRUBETA-3, a
general partnership organized under the laws of New Jersey, with an office c/o
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, The Prudential Business Campus, 8
Campus Drive, Parsippany, New Jersey ("Landlord") and INNOVEX, INC. with an
office at 9 Campus Drive, Parsippany, New Jersey ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a Lease dated August 14, 1996
("Lease") setting forth the terms of occupancy by Tenant for 7,265 sf of space
on the second floor of 9 Campus Drive located at The Prudential Business Campus
in Parsippany-Troy Hills, New Jersey; and
WHEREAS, the Lease is for the initial term of five years with the
Target Commencement Date of the term being defined in Basic Lease Provisions;
and
NOW, THEREFORE, in consideration of the premises and covenants
hereinafter set forth, it is agreed:
1. The Commencement Date of the initial term of the Lease is December 1,
1996 and the Expiration Date thereof is November 30, 2001.
2. This Agreement is executed by the parties for purposes of providing a
record of the commencement date and termination date of the initial
term of the Lease.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first above written.
Landlord:
ATTEST: PRUBETA-3
BY: THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, General Partner
/s/ By:/s/
- ------------------------ ----------------------------------------
ASSISTANT SECRETARY VICE PRESIDENT
BY: EQUITY PARSIPPANY VENTURE, a
Colorado general partnership,
General Partner
By: US WEST Real Estate, Inc.,
a Colorado corporation, as Managing Partner
By: BetaWest, Inc., a Colorado corporation,
formerly known as BW Acquisitions, Inc., as
authorized agent
Approved as to legal form:
By: By:/s/
---------------------- ----------------------------------------
Date: Title:
Tenant:
ATTEST: (or Witness:) INNOVEX, INC.
/s/ Mary C. Foss By:/s/ Janet H. Parkey
- ------------------------ ----------------------------------------
JANET H. PARKEY
VICE PRESIDENT
FINANCE AND SUPPORT SERVICES
<PAGE> 3
LEASE AGREEMENT
for Premises located at
THE PRUDENTIAL BUSINESS CAMPUS
between
PRUBETA-3,
Landlord
and
INNOVEX INC.
Tenant
Date: as of August 14, 1996
<PAGE> 4
THIS LEASE (the "LEASE") is made this 14th day of August 1996, between
PRUBETA-3, a general partnership organized under the laws of New Jersey, with an
office c/o THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Newark Realty Group
Office, Three Gateway Center 100 Mulberry Street, 13th Floor, Newark, New Jersey
07102 hereinafter called "LANDLORD," and INNOVEX INC., a Corporation of the
State of Delaware, having its principal office at 9 Campus Drive, Parsippany,
New Jersey 07054 hereinafter called "TENANT."
LEASE OF PREMISES: Landlord hereby leases to Tenant and Tenant hereby
hires from Landlord, subject to all of the terms and conditions hereinafter set
forth, those certain premises (the "PREMISES") as set forth in Item 1 of the
Basic Lease Provisions and as shown in the drawing(s) attached hereto as Exhibit
"A-l"; said Premises being located on the floor(s) indicated in that certain
office building (the "BUILDING") situated on certain land, which said land
together with the parking facilities located thereon (the "PARKING AREAS") and
the Building are collectively hereinafter referred to as the "PROJECT," being
known as Linden Plaza and being located at 9 Campus Drive in the Township of
Parsippany-Troy Hills, County of Morris, State of New Jersey and being a part of
The Prudential Business Campus (the "COMPLEX" OR "CAMPUS").
BASIC LEASE PROVISIONS:
<TABLE>
<S> <C> <C>
l. Location of Premises: A portion of the second Floor:
2. Rentable Area of Premises: 7,265 rentable, not useable, square feet
3. Percentage Share: 4.64%
4. Term: Five years with one option, upon twelve
(12) months notice, to renew for one five
year period at Fair Market Value
5. Initial Estimated Annual
Electricity Charge: $1.25 per square foot per year
6. Basic Annual Rent: $159,830 ($22.00 per square foot) plus tenant
electric
7. Basic Monthly Rental $13,319.16 plus tenant electric
Installments:
8. Commencement Date: December 1, 1996
9. Security Deposit: $13,319.16
10. Parking Spaces: Twenty-eight(28)spaces of unreserved parking
for use in common with other tenants and one
reserved space in the Building's garage
11. Broker(s): Peter Elliot LLC, Incorporated and Cushman
Wakefield of New Jersey, Inc.
12. Permitted Use: General Office Use
</TABLE>
-2-
<PAGE> 5
<TABLE>
<S> <C> <C>
13. Base Year 1996
14. Addresses for Notices:
</TABLE>
LANDLORD: TENANT:
THE PRUDENTIAL INSURANCE INNOVEX INC.
COMPANY OF AMERICA 9 Campus Drive
Newark Realty Group Parsippany, NJ 07054
Three Gateway Center, 13th Floor
100 Mulberry Street
Newark, New Jersey 07102
Attn: Attn: David Stack, President
General Manager
with copy to: with a copy to:
THE PRUDENTIAL INSURANCE Innovex Inc.
COMPANY OF AMERICA 11250 Corporate Avenue
Newark Realty Group Lenexa, KS 66219
Three Gateway Center, 13th Floor
100 Mulberry Street Attn: Stephen Garlow, General Counsel
Newark, New Jersey 07102
Attn: Regional Counsel
with a copy to:
EQUITY PARSIPPANY VENTURE
c/o BetaWest Properties, Ltd.
1999 Broadway, Suite 2000
Denver, Colorado 80202
Attn: Legal Department
15. All payments under this Lease shall be payable and delivered to:
Premisys Real Estate Services, Inc.
Two Hilton
Parsippany-Troy Hills, New Jersey 07054
or such other payee or address as Landlord may designate from time to time.
-3-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Lease,
consisting of the foregoing and Paragraphs 1 through 45 which follow, together
with Exhibits A through F inclusive, incorporated herein by this reference as of
the date first above written.
LANDLORD:
PRUBETA-3
Attest: BY: THE PRUDENTIAL INSURANCE OF AMERICA,
a New Jersey Corporation, as General Partner
/s/ By: /s/ David B. Berkowitz
- ------------------------ --------------------------------------
Assistant Secretary Name: David B. Berkowitz
---------------------------------
Title: Vice President
---------------------------------
BY: EQUITY PARSIPPANY VENTURE,
a Colorado general partnership, as
General Partner
By: US WEST Real Estate, Inc., a Colorado
corporation, as Managing Partner
By: BetaWest, Inc., a Colorado corporation
formerly known as BW Acquisition, Inc.
as authorized agent
Approved as to legal form
by Counsel to Landlord: By: /s/
--------------------------------------
/s/Edward Lippincott Name:
- ------------------------- -------------------------------
Title:
------------------------------
By: Edward N. Lippincott
----------------------
Date: August 21, 1996
--------------------
ATTEST:(or Witness:) TENANT:
INNOVEX INC
/s/
- -------------------- By:/s/ David M Stack
-----------------------
Name: David M Stack
------------------
Title: President
-----------------
Tenant's Federal Tax identification Number is:
-4-
<PAGE> 7
STATE OF NEW JERSEY:
:ss
COUNTY OF ESSEX :
BE IT REMEMBERED, that on this 20th day of August 1996, before me, the
subscriber, a notary public of New Jersey, personally appeared David Berkowitz
Vice President of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, who I am
satisfied, is the person who has signed the within instrument; and he did
acknowledge that he signed, sealed and delivered the same as such officer
aforesaid; and that the within instrument is the voluntary act and deed of said
corporation made by virtue of authority from its Board of Directors.
/s/ Helen H. Graham
-------------------------------
Helen H. Graham
Notary Public of New Jersey
My Commission Expires 6/17/2000
STATE OF COLORADO )
ss.
COUNTY OF DENVER )
BE IT REMEMBERED, that on this 29th day of August, 1996, before me, the
subscriber, a notary public of Colorado, personally appeared Robert E. Cardwell,
who, I am satisfied, is the authorized agent of BetaWest, Inc., and who has
signed the within instrument, and he thereupon acknowledged that he signed,
sealed and delivered the said instrument as the voluntary act and deed of said
corporation as authorized agent of US WEST Real Estate, Inc., the managing
partner of Equity Parsippany Venture, and that the within instrument is the
voluntary act and deed of said partnership made in accordance with and fully
authorized by its partners and the partnership agreement.
/s/ Marta A. Caudle
------------------------------- [SEAL]
Marta A. Caudle
Notary Public of Colorado
My Commission Expires
3/23/97
STATE OF NEW JERSEY :
ss. 025428300
COUNTY OF MORRIS :
BE IT REMEMBERED, that on this 14th day of August, 1996, before me, the
subscriber a notary public of New Jersey, personally appeared David M. Stack
President of INNOVEX INC, who I am satisfied, is the person who has signed the
within instrument; and he did acknowledge that he signed, sealed and delivered
the same as such officer aforesaid; and that the within instrument is the
voluntary act and deed of said corporation made by virtue of authority from its
Board of Directors.
/s/ Melinda Ann Masek
----------------------------------
MELINDA ANN MASEK
NOTARY PUBLIC OF NEW JERSEY
MY COMMISSION EXPIRES MAR. 9, 1997
-5-
<PAGE> 8
PARAGRAPH 1 TERM: The term of this Lease shall be as shown in Item 4 of the
Basic Lease Provisions. The Lease shall commence on the Commencement Date as
shown in Item 8 of the Basic Lease Provisions, or upon such earlier date as
Tenant takes possession or commences use of the Premises for any purpose,
excluding construction. Such date of commencement, hereinafter the "COMMENCEMENT
DATE," and the date of expiration, hereinafter the "EXPIRATION DATE," shall be
confirmed by Landlord by means of a "COMMENCEMENT DATE MEMORANDUM" in form
substantially similar to Exhibit "C."
PARAGRAPH 2 BASIC ANNUAL RENT: (A) Tenant agrees to pay as Basic Annual Rent for
the Premises the sum or sums shown in Item 6 of the Basic Lease Provisions. The
Basic Annual Rent shall be payable in U.S. currency in equal monthly
installments, hereinafter sometimes referred to as "BASIC MONTHLY RENTAL
INSTALLMENTS," in advance and without notice, deduction, offset, or abatement
except as otherwise provided herein. Basic Monthly Rental Installments shall be
in the sum or sums shown in Item 7 of the Basic Lease Provisions. Basic Annual
Rent shall commence on the Commencement Date and continue on the first day of
each calendar month thereafter except the first Basic Monthly Rental Installment
shall be paid at execution hereof. The Basic Monthly Rental Installment for any
partial month during the term hereof shall be prorated in the proportion that
the number of days this Lease is in effect during such partial month bears to
the number of days in that calendar month, and such Basic Monthly Rental
Installment shall be paid at the commencement of such partial month.
(B) In addition to the Basic Annual Rent stipulated herein, Tenant
covenants and agrees to pay in U.S. currency, without deduction, offset, or
abatement except as otherwise provided herein to Landlord as additional rent,
hereinafter "ADDITIONAL RENT," all other sums and charges which are to be paid
by Tenant pursuant to the terms of this Lease. Except as otherwise provided in
this Lease, Additional Rent shall be due and payable on the first day of the
month following the date on which Tenant is given notice that Additional Rent is
due.
(C) The Basic Annual Rent plus Additional Rent are sometimes collectively
referred to as "RENT."
PARAGRAPH 3 ADDITIONAL RENT FOR TAXES AND OPERATING EXPENSES, ETC.: (A)
Commencing with the first anniversary of the Commencement Date, Tenant agrees to
pay as items of Additional Rent for the Premises, Tenant's "Percentage Share"
(being the percentage indicated in Item 3 of Basic Lease Provisions) of all
increases in "Project Operating Expenses" and "Project Property Taxes" over the
Base Year shown in Item 13 of the Basic Lease Provisions incurred by Landlord in
the operation of the Project. For purposes of this paragraph, during each year
actual occupancy of the Building is less than one hundred (100%) percent,
Landlord will adjust the costs of all Project Operating Expenses to assume one
hundred (100%) percent occupancy of the Building and Landlord will adjust
Project Property Taxes to reflect assumed standard tenant improvements for one
hundred (100%) percent occupancy.
(B) The items of Additional Rent contemplated under subparagraph 3(A) shall
be determined in accordance with the following procedures:
(i) Each December during the term hereof or as soon thereafter as
practical, Landlord shall give Tenant written notice of
Landlord's reasonable estimate of any amounts payable under
subparagraph 3(A) above for the ensuing calendar year. On or
before the first day of each month during the ensuing calendar
year, Tenant shall pay Landlord without further notice
one-twelfth (l/12) of such estimated amounts, provided that if
such notice is not given in December, Tenant shall continue to
pay
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<PAGE> 9
on the basis of the then applicable rental until the month
after such notice is given. If at any time or times it appears
to Landlord that the increased amounts payable under
subparagraph 3(A) for the current calendar year will exceed
its estimate, Landlord may, by notice to Tenant, revise its
estimate for such year. Subsequent payments by Tenant for such
year shall be based upon such revised estimate.
(ii) Within 90 (ninety) days after the close of each calendar year
or as soon thereafter as is practical, Landlord shall deliver
to Tenant a statement of the annual adjustment of those
Additional Rent items made pursuant to subparagraph 3(A) for
such calendar year. If on the basis of such statement Tenant
owes an amount that is less than the estimated payments for
such calendar year previously made by Tenant, Landlord shall
refund or credit such excess to Tenant. If on the basis of
such statement Tenant owes an amount that is more than the
estimated payments for such calendar year previously made by
Tenant, Tenant shall pay the deficiency to Landlord within 30
(thirty) days after delivery of the statement.
(iii) The Additional Rent or any credit or refund due Tenant due
under the terms and conditions of this Paragraph 3 shall
survive termination of this Lease, shall be payable by Tenant
without any setoff or deduction except as otherwise expressly
provided in this Lease, and shall be computed by Landlord on a
prorated basis for any period less than a full calendar year.
(C) Definitions:
(i) The term "Project Operating Expenses" as used herein shall
include all costs of operation, management, and maintenance of
the Project calculated on an accrual basis for each calendar
year as determined by generally accepted accounting principles
consistently applied. Project Operating Expenses shall, by way
of illustration but not limitation, include water and sewer
charges, insurance premiums, license, permit, and inspection
fees, fees assessed by any campus or owner's association
affecting the Project, fuel, heat, light, power (except for
that electricity charged directly to the Premises and other
rental space on the Project), steam, janitorial and security
services, labor, salaries to persons engaged full time in the
operation or maintenance of the Project but not above the
level of general manager, air conditioning, landscaping,
maintenance and repair of the Building and driveways, parking
structures and surface parking areas, ice and snow removal,
supplies, materials, equipment, tools; repair or replacement
of equipment, machinery, and other items of Landlord's
property; the property management fees and costs including but
not limited to office rent for the on-site property management
office; and the cost incurred in contesting the validity or an
assessment of Project Property Taxes. Project Operating
Expenses shall also include but not be limited to the cost of
any capital improvements made to the Project by Landlord that
reduce operating expenses (but only to the extent of the
annual savings) or that are required under any governmental
law or regulation not previously applicable to the Project or
not in effect at the time it was constructed. Such capital
cost shall be amortized over such reasonable periods as
Landlord shall determine with a return on capital at the then
current prime interest rate of the largest national bank in
New York City or at such higher rate as may have been paid by
Landlord on the funds borrowed for the purpose of providing
such capital improvements. Project Operating Expenses shall
not include (a) depreciation; (b) interest and amortization on
debt; (c) all other capital expenses; (d) costs of correcting
latent defects; (e) costs which are reimbursed by insurance
proceeds or eminent domain awards, (f) costs of any tenant
improvements or special service to another tenant not
furnished to tenants generally and any construction allowance
to Tenant or other tenants (g)
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<PAGE> 10
costs of collecting rent from other tenants and of enforcing
lease rights against other tenants, (h) leasing commissions,
costs, disbursements, and other expenses incurred for leasing,
renovating, or improving space for tenants; (i) Landlord's
cost of electricity or other service sold to tenants for which
Landlord is to be reimbursed as a charge over the Rent payable
under the lease with that tenant; (j) costs incurred because
the Landlord violated the terms of any lease; (k) overhead and
profit paid to subsidiaries or affiliates of Landlord for
management or other services, supplies or materials exceed the
competitive costs of the services, supplies, or materials were
they not provided by a subsidiary or affiliate; (l)
compensation paid to persons in commercial concessions
operated by Landlord; (m) advertising and promotional
expenditures directly related to leasing space; (n) repairs or
other work needed because of fire, windstorm, or other
casualty or cause insured against by Landlord; (o) any costs,
fines, or penalties incurred because landlord violated or
failed to timely comply with any governmental law or
ordinance, (p) costs incurred to cleanup, hazardous wastes or
asbestos containing materials from the Project unless the
wastes or asbestos containing materials were in or on the
Project because of Tenant's acts
(ii) The term "Project Property Taxes" as used herein shall include
all real estate taxes or personal property taxes and other
taxes, charges and assessments, unforeseen as well as
foreseen, which are levied with respect to the Project and any
improvements, fixtures and equipment and other property of
Landlord, real or personal, located in the Building or on the
Project and used in connection with the operation of the
Project for each calendar year and shall include any tax,
surcharge or assessment which shall be levied in addition to
or in lieu of real estate or personal property taxes, other
than taxes covered in Paragraph 11, and shall also include any
rental, excise, sales, transaction, privilege, or other tax or
levy, however denominated, imposed upon or measured by the
rental reserved hereunder or on Landlord's business of leasing
the Premises and Project, excepting only net income taxes.
Project Property Taxes shall be based upon the fully assessed
value of the fully completed Building including standard
tenant improvements, driveways, and other common areas of the
Building and Project. In the event tax assessment is not
detailed, sufficiently or, in the event either party shall
dispute the tax assessor's determination of full assessment
value, then Landlord and Tenant shall look to the following
two alternatives in the order given to determine assessed
value: (i) notes and records of tax assessor and (ii) any
reasonable method upon which the parties may agree.
Notwithstanding the provisions above, Project Property Taxes
exclude: (1) franchise gift, transfer, excise, capital stock,
estate, succession, or inheritance taxes, and (2) penalties or
interest for late payment of Project Property Taxes, and
(D) Tenant shall have ninety (90) days after receiving the statement
referred to in subparagraph 3(B)(ii) to audit Landlord's books and records at
Landlord's offices. Unless Tenant takes written exception to any item in the
statement referred to in subparagraph 3(B)(ii) within ninety (90) days after the
furnishing of the statement, such statement shall be considered as final and
accepted by Tenant. Any amount due Landlord as shown on any such statement shall
be paid by Tenant within thirty (30) days after it is furnished to Tenant. If
Tenant shall dispute in writing any specific item or items in the statement of
Project Operating Expenses and Project Property Taxes, and such dispute is not
resolved between Landlord and Tenant within sixty (60) days after the date the
statement was rendered, either party may, during the thirty (30) days next
following the expiration of the sixty (60) days, refer such disputed item or
items to an independent certified public accountant selected by Landlord, for a
determination which shall be final, conclusive and binding upon Landlord and
Tenant. Tenant agrees to pay all costs involved in such determination unless it
is determined that Landlord's original calculation of both Project Property
Taxes and Project
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<PAGE> 11
Operating Expenses was in error, in Landlord's favor, by more than five (5%)
percent. Pending the determination of any dispute with respect to the statement
submitted by Landlord, Tenant shall pay when due the sums shown as due on such
statement. If it shall be determined that any portion of such sums were not
properly chargeable to Tenant, then Landlord shall credit or refund the
appropriate sum to Tenant.
(E) As one of the items of Additional Rent, payable monthly, Tenant shall
also pay to Landlord the full cost of Tenant's consumption of electricity
(including heating and air-conditioning installed for a particular use by
Tenant), as reasonably determined from time to time by Landlord through
proration, engineering survey by Landlord's electric rate consultant, or other
reasonable method. In the event Landlord meters or submeters Tenant's
electricity usage, Tenant shall pay Tenant's share of any surcharge, "peak-hour"
premium or other similar additional charge. The initial estimated monthly
electricity charge for the Premises shall be as shown in Item 5 of the Basic
Lease Provisions. Commencing on Commencement Date Tenant shall also pay Landlord
any increase in the cost of electricity to the Premises based upon increases in
the billing rate after the date hereof.
(F) Notwithstanding anything to the contrary in this Lease, in no event
shall the Basic Annual Rent be reduced in any way because of anything in this
Paragraph 3.
PARAGRAPH 4 SECURITY DEPOSIT: Tenant has paid or agrees to pay to Landlord such
sum(s) as are set forth in Item 9 of the Basic Lease Provisions as security for
the performance of the terms hereof by Tenant. Unless required by law, Landlord
shall not be required to keep said Security Deposit separate from its general
funds and Tenant shall not be entitled to receive interest thereon. In no
instance shall the amount of such Security Deposit be considered a measure of
liquidated damages. If Tenant defaults with respect to any provision of this
Lease, including but not limited to the provisions relating to the payment of
Rent or the surrender of the Premises in accordance with the terms hereof upon
the termination of the Lease, Landlord may, but shall not be required to use,
apply or retain all or any part of this Security Deposit for the payment of any
Rent or any other sum in default, or for the payment of any other amount which
Landlord may spend or become obligated to spend by reason of Tenant's default or
to compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant's default including, without limitation, costs and attorneys'
fees incurred by Landlord. If any portion of said deposit is so used or applied,
Tenant shall, upon demand therefor, deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to its original amount and Tenant's
failure to do so shall constitute a default hereunder by Tenant. If Tenant shall
fully and faithfully perform every provision of this Lease to be performed by
it, the Security Deposit, or any balance thereof, shall be returned to Tenant
(or, at Landlord's option, to the permitted assignee of Tenant's interest
hereunder) within thirty (30) days following the expiration of the Lease term
and after Tenant has vacated and delivered possession of the Premises to
Landlord in accordance with the provisions of this Lease. In the event of
bankruptcy or other debtor-creditor proceeding against Tenant, such Security
Deposit shall be deemed to have been applied first to the payment of Rent and
other charges due Landlord for all periods prior to filing of such proceedings.
PARAGRAPH 5 REPAIRS: (A) Subject to subparagraph 5(B), Landlord shall cause all
necessary repairs to be made to the exterior walls, exterior doors, windows,
corridors and other common areas of the Building and the Project and Landlord
shall cause the Building and the Project to be kept in a safe, clean and neat
condition, and shall use reasonable efforts to keep all equipment used in common
with other Tenants (such as elevators, plumbing, heating, air conditioning and
similar equipment) in good condition and repair. Landlord shall also repair all
heat pumps, and shall repair or replace the heat pumps in the exterior or
peripheral areas of the Building in the Premises. Except as provided in
Paragraph 13 hereof, there shall be no abatement of Rent and no liability of
Landlord by reason of any injury to or interference with Tenant's business
arising from the making of any repairs, alterations or improvements in or to any
portion
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<PAGE> 12
of the Building or the Project or in or to fixtures, appurtenances and equipment
therein or thereon.
(B) Tenant agrees that all repairs to the Premises not required above to be
made by Landlord during the term of this Lease, if approved by Landlord, shall
be made by Landlord at the sole cost and expense of Tenant. Tenant will pay for
any repairs to the Premises, the Building or the Project made necessary by any
negligence or willful acts or omissions of Tenant or its assignees, subtenants,
employees or their respective agents or other persons permitted in the Building
or on the Project by Tenant, or any of them. Tenant will also maintain the
Premises, and, upon termination of this Lease, will leave the Premises in a
safe, clean, neat and sanitary condition.
PARAGRAPH 6 IMPROVEMENTS AND ALTERATIONS: (A) Landlord will provide a
construction allowance of $159,830.00 for planning, supervision and construction
of Tenant's interior Premises. Tenant shall contract separately for space
planning and preliminary design services. Landlord's sole construction
obligation under this Lease is as set forth in Landlord's Work Letter attached
hereto as Exhibit "B" and incorporated herein by this reference. Prior to the
Commencement Date, Tenant's obligations with respect to alterations and
improvements to the Premises are governed by Landlord's Work Letter. Any unused
portion of the Construction Allowance shall be applied in payment of Rent first
coming due.
(B) Landlord shall have the right at any time to change the arrangement
and/or location of entrances or passageways, doors and doorways, and corridors,
(provided that such changes do not unreasonably interfere with Tenant's access
to the Premises) elevators, stairs, toilets, or other public parts of the
Building or Project, and, upon giving Tenant reasonable notice thereof, to
change the name, number or designation by which the Building or the Project is
commonly known.
(C) From and after the Commencement Date, Tenant shall not make or suffer
to be made any alterations, additions or improvements (excluding decorating, and
painting) to or of the Premises or any part thereof, or attach any fixtures or
equipment thereto, without first obtaining Landlord's prior written consent,
which shall not be unreasonably withheld or delayed. Any consent by Landlord may
be subject to such reasonable conditions as Landlord may deem necessary. Any
such alterations, additions or improvements to the Premises consented to by
Landlord shall, at Landlord's option, be made by Landlord for Tenant's account
and Tenant shall pay Landlord for the cost thereof (including a reasonable
charge for Landlord's overhead) within ten (10) days after receipt of Landlord's
statement. All such alterations, additions and improvements shall (without
compensation to Tenant) immediately become Landlord's property (except easily
moveable furniture and trade fixtures) and, at the end of the term hereof, shall
remain on the Premises unless Landlord elects by notice given to Tenant at the
time of the original request for consent (which notice Landlord must give Tenant
at the time Landlord consents to the alteration, addition or improvement) to
have Tenant remove same, in which event Tenant shall promptly restore the
Premises to their condition prior to the installation of such alterations,
additions and improvements. Tenant will obtain, at Tenant's expense, all
necessary permits and certificates and Tenant shall furnish Landlord copies of
all such permits and certificates.
PARAGRAPH 7 LIENS: Tenant shall keep the Premises free from any mechanics
notices of intention, liens or encumbrances (collectively in this paragraph
hereinafter referred to as "lien" or "liens") arising out of any work performed,
materials furnished, or obligations incurred by or for Tenant. In the event that
Tenant shall not, within ten (10) days following the imposition of any such
lien, cause the same to he released of record by payment or posting of a proper
bond, Landlord shall have, in addition to all other remedies provided herein or
by law, the right, but not the obligation, to cause the same to be released by
such means as it shall deem proper, including payment of or defense against the
claim giving rise to such lien. All sums paid by Landlord and all expenses
(including, without limitation, reasonable attorneys' fees) incurred by it in
connection
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<PAGE> 13
therewith, shall create automatically an obligation of Tenant to pay to Landlord
an equivalent amount as Additional Rent, which Additional Rent shall be payable
by Tenant upon Landlord's demand, with interest at the maximum rate per annum
permitted by law, until paid. To the extent permitted by law, Tenant shall
require all Tenant's contractors and materialmen to waive any and all rights
they may have to file any liens.
PARAGRAPH 8 USE OF THE PREMISES: (A) Tenant shall use the Premises only as set
forth in Item 12 of the Basic Lease Provisions and shall not use or permit the
Premises to be used for any other purpose without the prior written consent of
Landlord. Tenant shall comply with all laws, and shall not use or occupy the
Premises in violation of law or of the certificate of occupancy issued for the
Building, and shall immediately discontinue any use of the Premises which is
declared by Landlord or any governmental authority having jurisdiction to be a
violation of law or of said certificate of occupancy. Tenant shall comply with
any direction of any governmental authority having jurisdiction which shall, by
reason of the nature of Tenant's use or occupancy of the Premises, impose any
duty upon Tenant or Landlord with respect to the Premises or with respect to the
use or occupancy thereof. Landlord represents that no applicable law prohibits
use of the Building for office purposes. Tenant shall not do or permit to be
done anything which will invalidate or increase the cost of any fire, extended
coverage or any other insurance policy covering the Building, the Project and/or
property located therein and shall comply with all rules, orders, regulations
and requirements of the appropriate fire rating bureau or any other organization
performing a similar function. Tenant shall upon demand reimburse Landlord for
the full amount of any additional premium charged for such policy by reason of
Tenant's failure to comply with the provisions of this paragraph. Such
reimbursement shall not be Landlord's exclusive remedy.
(B) With respect to Tenant's use and occupancy of the Premises, Tenant
shall not store, use, or dispose of any hazardous materials, in, on, under or
about the Premises or the Project other than office supplies and cleaning
products. Tenant shall, at Tenant's own expense, comply with the Industrial Site
Recovery Act, N.J.S.A. 13:1k-6 et seq., ("ISRA") and all other applicable
federal, state, and local laws, promulgated with respect to hazardous substances
and the regulations promulgated thereunder (the "Hazardous Substances Laws").
Tenant shall, at Tenant's own expense, make all submissions to, provide all
information to, and comply with all requirements of, the New Jersey Department
of Environmental Protection or its replacement and any similar federal, state or
local department, agency, bureau or division which is charged with the
enforcement of laws regulating hazardous wastes (the "Hazardous Substances
Agencies") and promptly comply with Landlord's requirements in connection
therewith.). Should any Hazardous Substance Agency determine that a Cleanup Plan
be prepared and that a cleanup be undertaken because of any spills or discharges
of hazardous substances or wastes at the Building or land in or on which the
Premises is located which were caused by Tenant or its officers, employees,
agents, contractors or invitees, then Tenant shall, at Tenant's own expense,
prepare and execute a Cleanup Plan which shall be approved by such Hazardous
Substance Agency and complete the cleanup. If the Hazardous Substance Agency
determines that a Cleanup Plan be prepared at the Building or land for reasons
other than those stated in the preceding sentence, then Landlord at Landlord's
own expense shall prepare and execute a Cleanup Plan which shall be approved by
NJDEP and Landlord shall complete the cleanup and Tenant shall cooperate with
Landlord in every way reasonable. Tenant shall defend, indemnify and hold
harmless Landlord from and against all claims, costs, and liabilities, including
reasonable attorneys' fees, arising out of or in connection with Tenant's breach
of its obligations under this Paragraph 8. Tenant's obligations under this
paragraph 8 shall survive the expiration or earlier termination of this Lease.
PARAGRAPH 9 UTILITIES AND SERVICES: (A) Provided that Tenant is not in material
default hereunder, Landlord agrees to furnish or cause to be furnished to the
Premises the following utilities and services, subject to the conditions and
standards set forth below and
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<PAGE> 14
elsewhere herein:
(i) Landlord shall provide automatic elevator facilities from 8:00
a.m. to 6:00 p.m., Monday through Friday (legal holidays
listed in Exhibit "E" "Legal Holidays" excepted), and shall
have at least one elevator available for use at all other
times.
(ii) From 8:00 a.m. to 6:00 p.m., Monday through Friday (Legal
Holidays excepted), Landlord shall, subject to interruptions
beyond Landlord's control and subject to subparagraph 3(E),
furnish heat or air-conditioning subject to any governmental
requirements or standards relating to, among other things,
energy conservation. Upon reasonable, prior written request,
Landlord shall make available at Tenant's expense, after-hours
heat or air-conditioning, and Tenant shall be responsible for
payment of all costs associated with such after hours heat or
air conditioning. The charge for after-hours heat or
air-conditioning shall be reasonably determined by Landlord
and confirmed in writing to Tenant, as the same may change
from time to time. At the date of this Lease the charge is
$50.00 per hour per zone There shall be a minimum charge of
one hour for every partial hour of usage. Tenant shall pay the
after hours charges promptly and, in any event, within ten
(10) days after receipt of written confirmation.
(iii) Landlord shall furnish to the Premises, subject to
interruptions beyond Landlord's control and subject to
subparagraphs 3(E) and 9(B), electric current as required by
the building standard office lighting and receptacles. At no
time shall Tenant's use of electric current exceed the
Premises' capacity of 3.5 watts per square foot for lighting
and power. Landlord represents that Landlord will furnish
electric current of 3.5 watts per square foot for lighting and
power and for purposes of air supply and distribution of HVAC
System and that Landlord will not reduce said capacity during
the term hereof. To the extent Tenant design exceeds the
electrical current design capacity, then Tenant will pay all
costs of providing additional required electrical service.
Tenant shall pay the after hours charges promptly and, in any
event, within ten (10) days after receipt of written
confirmation.
(iv) Landlord shall, subject to interruptions beyond Landlord's
control and other provisions hereunder, furnish the building
with water for heating, ventilating, air conditioning,
drinking and lavatory purposes only.
(v) Landlord shall provide janitorial services to the Building and
Premises, in accordance with Exhibit "F" provided that the
Premises are kept in good order by Tenant. Tenant shall pay to
Landlord the cost of removal of any of Tenant's refuse and
rubbish to the extent that the same exceeds the refuse and
rubbish usually attendant upon the use of the Premises as
offices.
(vi) Landlord shall replace, as necessary, the fluorescent tubes in
the standard lighting fixtures installed by Landlord. Tenant
agrees to reimburse Landlord upon demand for the cost of such
fluorescent tubes and the labor and overhead for their
installation.
(B) Landlord may impose a reasonable charge which Tenant hereby agrees to
pay upon demand, for any utilities and services, including without limitation,
heating, air-conditioning, electric current and water, provided by Landlord by
reason of any use of the Premises at any time other than the hours of 8:00 a.m.
to 6:00 p.m. Monday through Friday (excluding Legal Holidays), or any use beyond
that which Landlord agrees to furnish as described above, or special electrical,
cooling and ventilating needs created in certain areas by telephone equipment,
computers
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<PAGE> 15
and other similar equipment or uses. At Landlord's option, separate meters for
such utilities and services may be installed for the Premises, and upon demand,
Tenant shall immediately pay Landlord for the installation, maintenance and/or
repair of such meters and for all charges with respect to consumption of such
utilities or services so metered or provided.
(C) Tenant agrees to cooperate fully at all times with Landlord and to
abide by all reasonable regulations and requirements which Landlord may
prescribe for the use of the above utilities and services. Any failure to pay
any costs as described above shall constitute a breach of the obligation to pay
Rent under this Lease and shall entitle Landlord to the rights herein granted
for such breach.
(D) Landlord shall not be liable for, and, except as otherwise provided in
subsection E below, Tenant shall not be entitled to, any abatement or reduction
of Rent by reason of Landlord's failure to furnish any of the foregoing
services, nor shall any such failure, stoppage or interruption of any such
service be construed either as an eviction of Tenant, or relieve Tenant from the
obligation to perform any covenant or agreement. However, in the event of any
failure, stoppage or interruption thereof, Landlord shall use reasonable
diligence to have service resumed promptly, and
(E) If Landlord fails to deliver certain services as enumerated below
required under this Paragraph 9, and such failure continues for ten (10)
consecutive calendar days after Landlord's receipt of notice specifying the
exact nature of such failure and such failure is the result of Landlord's acts
or omissions and not caused by (i) Tenant or Tenant's contractors or any agent
or employee thereof, or (ii) by an event of Force Majeure as defined in
Paragraph 40 hereof, Tenant shall have the right to offset Basic Rent and
Additional Rent (except Additional Rent resulting from services requested by
Tenant) commencing on the 11th day according to the following schedule:
Service Not Provided Percent of Daily Basic Rent Withheld
<TABLE>
<S> <C>
Electricity 100%
HVAC 100%
Water 25%
Elevator service 25%
</TABLE>
(F) Notwithstanding anything herein to the contrary, Landlord reserves the
right from time to time to make reasonable modifications to the above provisions
for utilities and services; provided, such modifications do not diminish the
level or quality of service below that level or quality which is consistent with
a first class office building.
PARAGRAPH 10 RULES AND REGULATIONS: Tenant agrees to abide by all rules and
regulations of the Building and Project ("Rules and Regulations") imposed by
Landlord as set forth in Exhibit "D" attached hereto, and as the same may be
changed from time to time upon reasonable notice to Tenant. Landlord shall not
enforce these Rules and Regulations arbitrarily among tenants. Landlord shall
not be liable for the failure of any tenant, its agents or employees to conform
to the Rules and Regulations.
PARAGRAPH 11 TAXES ON TENANT'S PROPERTY: (A) Tenant shall be liable for and
shall pay not later than ten (10) days before delinquency, all taxes, levies
and assessments levied against any personal property or trade fixtures placed by
Tenant in or about the Premises. If any such taxes, levies and assessments on
Tenant's personal property or trade fixtures are levied against Landlord or
Landlord's property or if the assessed value of the Building or the Project is
increased by the inclusion therein of a value placed upon such personal property
or trade fixtures of Tenant and if Landlord pays the taxes, levies and
assessments based upon such increased assessment,
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Tenant shall, within five days after demand therefore, repay to Landlord the
taxes, levies and assessments so levied against Landlord, or the proportion of
such taxes, levies and assessments resulting from such increase in the
assessment, together with interest thereon at the default rate determined in
accordance with paragraph 36 of this Lease.
(B) If the Tenant Improvements, whether installed and/or paid for by
Landlord or Tenant and whether or not affixed to the real property so as to
become a part thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which tenant improvements conforming to
building standard (as determined by Landlord) are assessed, then the real
property taxes and assessments levied against Landlord or the Project by reason
of such excess assessed valuation shall be deemed to be taxes levied against
personal property of Tenant and shall be governed by the provisions of
subparagraph ll(A). If the records of the tax assessor are available and
sufficiently detailed to serve as a basis for determining whether said Tenant
Improvements are assessed at a higher valuation than building standard, such
records shall be binding on both Landlord and Tenant; otherwise, the actual cost
of construction shall be the basis for such determination.
PARAGRAPH 12 OMITTED
PARAGRAPH 13 FIRE OR CASUALTY: (A) In the event that the Project (regardless of
whether the Premises or access thereto is affected) is so damaged or destroyed
to the extent of more than one-third (1/3) of its replacement cost, or to any
substantial extent by a casualty not covered by Landlord's insurance (or, in the
event Landlord self-insures which Landlord reserves the absolute right to do, by
a casualty not ordinarily covered by all-risk insurance) or during the last two
years of this Lease, Landlord, upon giving thirty (30) days notice to Tenant,
may elect to terminate this Lease.
(B) In the event the Premises are completely destroyed or so badly damaged
that, in Landlord's reasonable opinion, repairs to the Premises cannot be
commenced within ninety (90) days and completed within one hundred eighty (180)
days from the date of damage or destruction, Landlord will so notify Tenant, in
which event this Lease may be terminated by either Landlord or Tenant by giving
thirty (30) days advance written notice, said notice to be given within 15 days
following receipt of Landlord's notice. Also, if notice of such opinion or
notice of termination has not been given, and if repairs have not been commenced
by Landlord within ninety (90) days from the date of damage or destruction, this
Lease may be terminated immediately thereafter upon written notice from Tenant
given no later than one hundred twenty (120) days after the date of damage or
destruction. In the event Tenant shall fail to terminate this Lease as provided
in this subparagraph (B) then, Tenant shall thereafter have no further right to
so terminate based upon the provisions of this subparagraph (B).
(C) If this Lease is not terminated as provided in Subsection 13(A) and ]
13(B), or if the damage or destruction is other than as provided in Subsection
13(A) and 13(B), then Landlord shall commence within ninety (90) days after such
damage or destruction to rebuild, repair or restore the Premises and access
thereto to substantially the same condition as when the same were delivered to
Tenant, excluding any improvements owned by Tenant, and the Lease shall continue
in full force and effect.
(D) If this Lease is terminated as provided above, Tenant's obligation to
pay Rent hereunder shall cease as of the date (i) of damage or destruction if
Premises are rendered untenantable or (ii) Tenant vacates the Premises if
Premises are not rendered untenantable.
(E) Landlord shall in no event: be obligated to make any repairs or
replacement of any fixtures furniture, equipment or other property (real or
personal) owned by Tenant. If the Lease is not
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<PAGE> 17
terminated but the Premises are rendered untenantable. Rent shall abate during
the period of such untenantability in proportion to that part of the Premises
that is unfit for use in Tenant's business Tenant acknowledges (i) that Landlord
shall not obtain insurance of any kind on Tenant Improvements, alterations,
additions and improvements to the Premises owned by Tenant or on Tenant's
furniture, fixtures, equipment and other personal property, (ii) that it is
Tenant's obligation to obtain such insurance at Tenant's sole cost and expense,
and (iii) that Landlord shall not be obligated to repair any damage thereto or
replace the same. The provisions of this Paragraph 13 shall be considered an
express agreement governing any case of damage or destruction of the Premises by
fire or other casualty, and any law of the State of New Jersey, providing for
such a contingency in the absence of an express agreement, and any other law of
like import, now or hereafter in force, shall have no application in such case.
PARAGRAPH 14 EMINENT DOMAIN: In case the whole of the Premises, or such part as
shall substantially interfere with Tenant's use and occupancy thereof, shall be
taken by any lawful power or authority by exercise of the power of eminent
domain, this Lease shall terminate effective as of the date possession is
required to be surrendered to said authority. In the event of any taking (in
whole or part) of the Project whether or not the Premises or access thereto are
affected thereby which taking in Landlord's judgment will render continued
operation of the Project economically infeasible, Landlord shall have the right
to terminate this Lease. Except as provided herein, Tenant shall not, because of
any taking, assert any claim against Landlord or the taking authority for any
compensation because of such taking, and Landlord shall be entitled to receive
the entire amount of any award without deduction for any estate or interest of
Tenant. In the event the amount of property or the type of estate taken shall
not substantially interfere with Tenant's use of the Premises, and Landlord does
not terminate this Lease, Landlord shall proceed to restore the Premises (to the
extent permitted by the taking) to substantially their condition prior to such
partial taking, and a proportionate allowance shall be made to Tenant for Rent
corresponding to the time during which, and to the part of the Premises of
which, Tenant shall be so deprived on account of such taking and restoration.
Provided same shall not diminish Landlord's award in any way, nothing contained
in this Paragraph 14 shall prevent Tenant from seeking any award against the
taking authority for the taking of personal property and fixtures owned by
Tenant or for relocation expenses recoverable from the taking authority. In no
event shall Landlord be required to expend more for restoration than received
from the taking authority for such taking. For the purposes of this paragraph,
"taking" shall also include any conveyance in lieu of condemnation.
PARAGRAPH 15 ASSIGNMENT AND SUBLETTING: (A) Tenant shall not voluntarily or
involuntarily assign, sublet, mortgage or otherwise encumber all or any portion
of its interest in this Lease or in the Premises without obtaining the prior
written consent of Landlord and any such attempted assignment, subletting,
mortgage or other encumbrance without such consent shall be null and void and of
no effect.
(B) No assignment, subletting, mortgage or other encumbrance of Tenant's
interest in this Lease shall relieve Tenant of its obligation to pay the Rent
and to perform all of the other obligations to be performed by Tenant hereunder.
The acceptance of rent by Landlord from any other person shall not be deemed to
be a waiver by Landlord of any provision of this Lease or be a consent to any
subletting, assignment, mortgage or other encumbrance. Consent to one sublease,
assignment, mortgage or other encumbrance shall not be deemed to constitute
consent to any subsequent attempted subletting, assignment, mortgage or other
encumbrance. No permitted assignment or sublease shall permit any further
assignment, subletting, mortgage or other encumbrance.
(C) If Tenant desires at any time to assign this Lease or to sublet the
Premises or any portion thereof, Tenant shall first notify Landlord of Tenant's
desire to do so and shall submit in writing to Landlord no less than forty-five
(45) days prior to such assignment or subletting (i) the name of the proposed
subtenant or assignee; (ii) the nature of the proposed subtenant's or assignee's
business
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<PAGE> 18
to be carried on in the Premises; (iii) the terms and provisions of the proposed
sublease or assignment and a copy of the proposed sublease or assignment; and
(iv) such financial information as Landlord may reasonably request concerning
the proposed subtenant or assignee.
(D) At any time within thirty (30) days after Landlord's receipt of the
information specified in subparagraph (C) above, Landlord may by written notice
to Tenant, elect (i) to take from Tenant a sublease of the Premises or the
portion thereof proposed to be subleased by Tenant, or to take an assignment of
Tenant's leasehold estate hereunder, or such part thereof as shall be specified
in said notice, upon the same terms as those offered to the proposed subtenant
or assignee, as the case may be; (ii) to give Tenant written consent to the
proposed assignment or sublease, provided that the Rent payable monthly by the
Tenant to the Landlord under the terms of this Lease shall be increased by a sum
equal to fifty (50%) percent of all rental and other considerations received by
Tenant from its subtenant or assignee in excess of the Rent payable by Tenant
under the terms of this Lease reasonable leasing commissions paid by Tenant,
free rent, payments attributable to the amortization of the cost of Tenant
improvements made to the Premises at Tenant's cost for the assignee or
sublessee, and other reasonable, out-of-pocket costs paid by Tenant, such as
attorneys' fees directly related to Tenant's obtaining an assignee or sub-
lessee; (iii) to terminate this Lease as to the portion (including all) of the
Premises proposed to be subleased or assigned with a proportionate abatement in
the Rent payable hereunder; or (iv) to deny consent, in writing, to Tenant's
proposed sublet or assignment, which shall specify the reasons for the denial.
If Landlord does not exercise any option set forth in this subparagraph (D)
within said thirty (30) days period, Landlord shall be deemed to have consented
to the proposed assignment or sublease.
(E) Landlord shall not unreasonably exercise its rights under
subparagraph (D) (iv) above, provided all the following conditions are present:
(i) Tenant shall send notice to Landlord, in writing, including all the
information specified in subparagraph (C) above; (ii) the subtenant or assignee
is of high quality, character and financial stability consistent with the high
standards of the Building as determined by Landlord in Landlord's reasonable
business judgment; (iii) the proposed subtenant or assignee is not a party then
occupying space in the Building or party who has negotiated with Landlord for
space in the Building within the three (3) month period preceding the date of
Tenant's notice pursuant to this subparagraph (E); (iv) Tenant shall not have
publicly advertised the availability for assignment, sublease or occupancy of
all or any part of the Premises at a rental rate lower than the rate at which
Landlord is then offering to lease similar space in the Building.
(F) Landlord, in any case which does not involve an assignment for the
benefit of creditors or an assignment growing out of, or having any connection
with, operation of law or any other of the eventualities made the subject of an
event of default in Paragraph 22 of this Lease, shall not withhold its consent
to bona-fide assignments of this Lease as a whole to "subsidiary or affiliate
corporations" as the term is hereinafter defined upon the satisfaction of the
respective conditions and upon compliance with the requirements by Tenant of all
notice provisions of this Paragraph 15. Subparagraph 15(D) shall not apply to
such an assignment. A "subsidiary or affiliate corporation" is defined for the
purposes of this Lease as a corporation or other legal entity organized and
existing or qualified or otherwise permitted to do business in the State of New
Jersey, and under common control and ownership of Tenant, or which owns and
controls Tenant or which is owned and controlled by Tenant or by any corporation
or legal entity wholly-owned and controlled directly or through other
corporations or legal entities wholly-owned and controlled by Tenant. For the
purposes of this Paragraph 15, "owned and controlled" shall, in the case of a
corporation, mean the ownership of at least fifty (50%) percent of the capital
stock entitled to vote, and shall, in the case of any other legal entity, mean
ownership of at least fifty (50%) percent of the beneficial interest therein and
at least a fifty (50%) percent voice in the management thereof:
(G) If Tenant is a corporation, an unincorporated association or
partnership, the transfer,
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<PAGE> 19
assignment or hypothecation of any stock or interest in such corporation,
association or partnership, in the aggregate in excess of twenty-five (25%)
percent, shall be deemed an assignment within the meaning and provisions of this
Paragraph 15. Any initial public offering of the stock of Tenant shall not be
deemed to be an assignment and the trading of shares of stock of Tenant on any
stock exchange shall not be deemed to be an assignment.
(H) Tenant shall not be entitled to make, nor shall Tenant make, any
claim, and Tenant hereby waives any claims, for money damages (nor shall Tenant
claim any money damages by way of setoff, counterclaim, or defense) based upon
any claim or assertion by Tenant that Landlord has unreasonably delayed its
consent or approval to a proposed assignment or subletting as provided for in
this section. Tenant's sole remedy shall be an action or proceeding to enforce
any such provision, or for specific performance, injunction, or declaratory
judgement.
PARAGRAPH 16 LANDLORD'S ACCESS TO PREMISES: Upon reasonable prior notice by
telephone, except in an emergency in which case no notice is required, Landlord
reserves and shall at any and all times have the right to enter the Premises to
inspect the same, to supply janitor service and any other service to be provided
by Landlord to Tenant hereunder, to show said Premises to prospective
purchasers, mortgagees, or tenants, to alter or repair the Premises or any
portion of the Building or Project, all without being deemed guilty of an
eviction of Tenant and without abatement of Rent, and may for that purpose erect
scaffolding and other necessary structures where reasonably required by the
character of the work to be performed, provided that the business of Tenant
shall be interfered with as little as is reasonably practicable. Tenant hereby
waives any claim for damages or any injury or inconvenience to or interference
with Tenant's business, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned thereby. For each of the aforesaid
purposes, Landlord shall at all times have and retain a key with which to unlock
all of the doors in, upon and about the Premises, excluding Tenant's vaults and
safes, and Landlord shall have the right to use any and all means which Landlord
may deem proper to open said doors in an emergency in order to obtain entry to
the Premises, and any entry to the Premises obtained by Landlord by any of said
means shall not under any circumstances be construed or deemed to be a forcible
or unlawful entry into, or a detainer of the Premises, or any eviction of Tenant
from the Premises or any portion thereof. No provision of this Lease shall be
construed as obligating Landlord to perform any repairs, alterations or
decoration except as otherwise expressly agreed to be performed by Landlord.
PARAGRAPH 17 SUBORDINATION, ATTORNMENT, ESTOPPEL CERTIFICATES: (A) This Lease is
junior, subject, and subordinate to all ground leases, mortgages, deeds of
trust, and other security instruments of any kind now covering the Project or
any portion thereof. Landlord reserves the right to place liens or encumbrances
on the Project or any part thereof or interest therein superior in lien and
effect to this Lease. This Lease, at the option of Landlord, shall be subject
and subordinate to any and all such liens or encumbrances now or hereafter
imposed by Landlord without the necessity of the execution and delivery of any
further instruments on the part of Tenant to effectuate such subordination.
Notwithstanding the foregoing, Tenant covenants and agrees to execute and
deliver upon request such further instruments evidencing such subordination of
this Lease as may be requested by Landlord.
(B) Either party ("Answering Party") shall at any time and from time to
time upon not less than ten (10) days prior notice by the other party ("Asking
Party"), execute, acknowledge and deliver to Asking Party a statement in writing
and in form and substance reasonably satisfactory to Asking Party certifying
that this Lease is unmodified and in full force and effect (or if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), and the dates to which the Basic Annual Rent,
Additional Rent and other charges have been paid in advance, if any, and 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 Answering Party may have knowledge
and such other
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<PAGE> 20
matters as may be reasonably requested by Asking Party or any lender or
purchaser of the Project. Any such statement delivered pursuant to this
Paragraph 17 may be relied upon by any prospective purchaser of the fee of the
Building or the Project or any mortgagee, ground lessor or other encumbrancer
thereof or any assignee of any such person, and by any prospective assignee of
this Lease, subtenant, party acquiring Tenant or underwriter of any stock
offering by Tenant. Tenant shall also, at any time, and from time to time, upon
not less than ten (10) days prior notice by Landlord execute and deliver to
Landlord forms and documents as may be necessary for compliance with any
applicable law, statute, ordinance, rule or regulation.
(C) Tenant agrees that in the event that any holder of any ground or
underlying lease, mortgage, deed of trust, or other encumbrance encumbering any
part of the Project succeeds to Landlord's interest in the Premises, Tenant
shall pay to such holder all rents subsequently payable under this Lease and
shall, upon request of any such person or party succeeding to Landlord's
interest, automatically become the Tenant of and attorn to such successor in
interest without change in the terms or provisions of this Lease. Such successor
in interest shall not be bound by (i) any payment of Basic Monthly Rental
Installments for more than one month in advance except prepayments in the nature
of a Security Deposit, or (ii) any amendment or modification of this Lease made
without the written consent of such successor in interest. Upon request by such
successor in interest and without cost to Landlord or such successor in
interest, Tenant shall execute, acknowledge, and deliver an instrument or
instruments confirming the attornment.
PARAGRAPH 18 SALE BY LANDLORD: In the event of a sale or conveyance by Landlord
of the Project or any part thereof, the same shall operate to release Landlord
from any and all liability under this Lease accruing after the date of such
conveyance of title. If any Security Deposit has been made by Tenant, Landlord
shall transfer such Security Deposit to the purchaser, and thereupon Landlord
shall be discharged from any further liability in reference thereto.
PARAGRAPH 19 INDEMNIFICATION AND INSURANCE: (A) Tenant shall indemnify, hold
Landlord harmless from and defend Landlord against any and all claims, loss,
costs, damage, expense or liability, including without limitation reasonable
attorneys' fees, for any injury or damages to any person or property whatsoever,
when such injury or damage has been caused in part or in whole by any default,
act, neglect, fault, or omission of Tenant, its agents, servants, employees or
invitees. This indemnity shall not require any payment by Landlord as a
condition precedent to recovery. In addition, if any person not a party to this
Lease shall institute any other type of action against Tenant in which Landlord
shall be made a party defendant, Tenant shall indemnify, hold Landlord harmless
from and defend Landlord from all liabilities and costs by reason thereof. For
the purposes of subparagraphs l9(A) and l9(B), the term "Landlord" shall also
include as indemnitees, as the case may be, Landlord's servants, employees,
officers, agents, and/or contract managers.
(B) Landlord shall indemnify, hold Tenant harmless from and defend
Tenant against any and all claims, loss, cost, damage, expense or liability
including, without limitation, reasonable attorneys' fees for any injury or
damage to any person or property whatsoever, occurring in the Common Areas of
the Building or Project when such injury or damage has been caused in part or in
whole by any default, act, neglect, fault or omission of Landlord, its agents,
employees or invitees. This indemnity shall not require any payment by Tenant as
a condition precedent to recovery. Landlord hereby agrees to maintain in full
force and effect at all times during the term of this Lease, at Landlord's own
expense (subject to reimbursement pursuant to Paragraph 3 hereof) property
insurance on the Building and improvements (the amount of such coverages and of
all deductibles to be in Landlord's absolute and sole discretion) or to
self-insure against the losses insured against by property coverage. Landlord
shall also be entitled, at its option, to carry such other insurance, as
Landlord shall, in its sole discretion, deem appropriate and the costs of such
insurance shall be reimbursable pursuant to paragraph 3 hereof.
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<PAGE> 21
(C) Tenant hereby agrees to maintain in full force and effect at all times
during the term of this Lease, at its own expense, for the protection of Tenant
and Landlord as their interests may appear, policies of insurance issued by a
responsible carrier or carriers acceptable to Landlord which afford the
following coverages:
(i) Worker's Compensation --Statutory or higher
Employer's Liability, if such --Not less than
coverage is available $250,000
(ii) General Liability Insurance --Not Less than
including Blanket $2,000,000
Contractual Liability, Combined Single
Broad Form Property Limit for both
Damage, Personal Injury, bodily injury and
Fire Damage property damage liability
(iii) Automobile liability for --Not less than
owned, non-owned, or $500,000 combined
hired vehicles operated on single limit for bodily
the Project injury and property damage
Landlord, and any other person or entity reasonably designated by Landlord,
shall be named as an additional insured on all policies listed under (ii) and
(iii).
(iv) All Risk Property Coverage in an amount sufficient to cover
the full cost of replacement of all improvements and
betterments to the Premises owned by Tenant and all of
Tenant's fixtures and other personal property.
(D) Tenant shall deliver to Landlord at least thirty (30) days prior to the
time such insurance is first required to be carried by Tenant, and thereafter at
least thirty (30) days prior to expiration of each such policy, certificates of
insurance evidencing the above coverage with limits not less than those
specified above. Such certificate, with the exception of Worker's Compensation,
shall expressly provide that the interest of Landlord therein shall not be
affected by any breach by Tenant of any provision of any such policy. Further,
all certificates shall expressly provide that no less than thirty (30) days
prior written notice shall be given Landlord in the event of material
alterations to or cancellation of the coverages evidenced by such certificates.
(E) Upon demand, Tenant shall provide Landlord, at Tenant's expense,
with such increased amount of existing insurance, and such other insurance in
such limits as Landlord may reasonably require and such other hazard insurance
as the nature and condition of the Premises may require in the judgment of
Landlord, to afford Landlord adequate protection for said risks.
(F) If on account of the failure of Tenant to comply with the
provisions of this Paragraph 19, Landlord is adjudged a co-insurer by its
insurance carrier, then any loss or damage Landlord shall sustain by reason
thereof shall be borne by Tenant and shall be immediately paid by Tenant upon
receipt of a bill therefor and evidence of such loss.
(G) Landlord makes no representation that the limits of liability
specified to be carried by Tenant under the terms of this Lease are adequate to
protect Tenant against Tenant's undertaking under this Paragraph 19. In the
event Tenant believes that any such insurance coverage called for under this
Lease is insufficient Tenant shall provide, at its own expense, such additional
insurance as Tenant deems adequate.
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<PAGE> 22
PARAGRAPH 20 WAIVER OF SUBROGATION: Tenant and Landlord each agree that the
respective insurance carried by it against loss or damage by fire or other
casualty shall contain a clause whereby the insurer waives its right of
subrogation against the other party. Notwithstanding anything to the contrary in
this Lease, Landlord and Tenant hereby waive all claims for recovery from the
other party for any loss or damage to any of its property insured under valid
and collectible insurance policies to the extent of any recovery collectible
under such insurance, or which is required to be insured pursuant to paragraph
19.
PARAGRAPH 21 NO WAIVER: No failure by Landlord to insist upon the strict
performance of any covenant, agreement, term or condition of this Lease, or to
exercise any right or remedy consequent upon a breach thereof, and no acceptance
of full or partial Rent during the continuance of any such breach, shall
constitute a waiver of any such breach or of such covenant, agreement, term or
condition. Landlord's waiver, if any, shall only be as expressly stated in
writing and signed by Landlord. No consent or waiver by Landlord to or of any
breach of any covenant, condition or duty of Tenant shall be construed as a
consent or waiver to or of any other breach of the same or any other covenant,
condition or duty, unless expressly stated otherwise in writing and signed by
Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than
the Rent and additional charges payable hereunder shall be deemed to be other
than a payment on account of the earliest stipulated Rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment for Rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such Rent or pursue any other remedy provided herein or by law.
PARAGRAPH 22 DEFAULT: (A) The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant:
(i) Any failure by Tenant to pay the Rent or to make any other
payment required to be made by Tenant hereunder within five
(5) days of date due;
(ii) The abandonment of the Premises by Tenant which for purposes
of this clause means Tenant's failure to maintain the Premises
as required hereunder, subject to notice and right to cure as
provided in clause (iii) hereof;
(iii) Any failure by Tenant to observe and perform any of its other
obligations under this Lease, where such failure continues for
fifteen (15) days (except where a different period of time is
specified in this Lease) after Landlord has given Tenant
written notice or such other notice as may be required by law;
provided, however, if such obligation cannot be cured within
said fifteen (15) day period, such longer period (but in no
event more than six (6) months) as may be reasonably necessary
to effect such cure and upon condition that Tenant is
diligently and continuously proceeding to effect said cure;
(iv) Tenant makes, or has made, or furnishes, or has furnished, any
warranty, representation or statement to Landlord in
connection with this Lease, or any other agreement to which
Tenant and Landlord are parties, which is or was false or
misleading in any material respect when made or furnished;
(v) Except as permitted in this Lease, any substantial portion of
the assets of Tenant is transferred unless such transfer is
incurred in the ordinary course of Tenant's business in good
faith for fair equivalent consideration;
(vi) Tenant becomes insolvent as defined in the Federal Bankruptcy
Code, admits in writing its insolvency or its present or
prospective inability to pay its debts as they
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<PAGE> 23
become due, is unable to or does not pay all or any material
portion in number or dollar amount) of its debts as they
become due, permits or suffers a judgment to exist against it
which affects Tenant's ability to conduct its business in the
ordinary course (unless enforcement thereof is stayed pending
appeal), makes or proposes an assignment for the benefit of
creditors or any class thereof for purposes of effecting a
moratorium upon or extension or composition of its debts,
proposes any such moratorium, extension or composition, or
commences or proposes to commence any bankruptcy,
reorganization or insolvency proceeding, or other proceeding
under any federal, state or other law for the relief of
debtors;
(vii) Tenant fails to obtain the dismissal, within ninety (90) days
after the commencement thereof, of any bankruptcy,
reorganization or insolvency proceeding, or other proceeding
under any law for the relief of debtors, instituted against it
by one or more third parties, or fails actively to oppose any
such proceeding, or, in any such proceeding, defaults or files
an answer admitting the material allegations upon which the
proceeding was based or alleges its willingness to have an
order for relief entered or its desire to seek liquidation,
reorganization or adjustment of any of its debts;
(viii) Any receiver, trustee or custodian is appointed to take
possession of all or any substantial portion of the assets of
Tenant, or any committee of Tenant's creditors, or any class
thereof is formed for the purpose of monitoring or
investigating the financial affairs of Tenant or enforcing
such creditors' rights.
(B) In the event of any such default by Tenant, then in addition to any
other remedies available to Landlord at law or in equity, Landlord shall have
the option to immediately terminate this Lease and all rights of Tenant
hereunder by giving written notice of such intention to terminate. In the event
that Landlord shall elect to so terminate the Lease then Landlord may recover
from Tenant:
(i) any unpaid Rent which shall have accrued at the time of such
termination; plus
(ii) the amount by which the entire amount of unpaid Rent for the
balance of the Lease term which amount shall, at Landlord's
option, be immediately due and payable, is greater than the
fair market rental value of the Premises, but discounted at
the interest rate payable on United States five (5) year
Treasury Notes issued immediately prior to default; plus
(iii) any other amount necessary to compensate Landlord for
Landlord's loss or damage caused directly or indirectly by
Tenant's failure to perform its obligations under this Lease
including, but not limited to, reasonable attorneys' fees and
costs; plus
(iv) at Landlord's election, such other amounts in addition to, or
in lieu of the foregoing, as may be permitted from time to
time by applicable law.
(C) In the event of any such default by Tenant, Landlord shall also
have the right, with or without terminating this Lease, to reenter and to take
possession of the Premises and to remove all persons and property from the
Premises. Landlord is hereby granted a lien, in addition to any statutory lien
or right to distrain that may exist, on all personal property of Tenant in or
upon the Premises, to assure payment of the Rent and performance of the
covenants and conditions of this Lease. Landlord shall have the right, as agent
of Tenant, to take possession of all personal property of Tenant found in or
about the Premises including without limitation furniture and fixtures of Tenant
and, to sell the same at public or private sale and to apply the proceeds
thereof to the payment of any monies due or becoming due under this Lease, or to
remove all such effects and store same in a public warehouse or elsewhere at the
cost of and for the account of Tenant, or
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any other owner or occupant, Tenant hereby waiving the benefit of all laws
exempting property from execution, levy and sale on distress or judgment.
(D) In the event of abandonment of the Premises by Tenant or in the
event that Landlord shall elect to reenter as provided above or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Landlord does not elect to terminate this Lease
as provided in this Paragraph 22, Landlord may from time to time, without
terminating this Lease, either recover all Rent as it becomes due or relet the
Premises or any part thereof for such term or terms and at such commercially
reasonable rental or rentals and upon such other commercially reasonable terms
and conditions as Landlord in its sole discretion may deem advisable with the
right to make alterations and repairs to the Premises. Tenant hereby waives all
Tenant's rights under N.J.S.A. 2A: 18-60.
(E) In the event that Landlord shall elect to so relet, then rentals
received by Landlord from such reletting shall be applied: first, to the payment
of any indebtedness other than Rent due hereunder from Tenant to Landlord;
second, to the payment of any cost of such reletting including, but not limited
to, broker's commissions and reasonable attorneys' fees; third, to the payment
of the cost of any alterations and repairs to the Premises; fourth, to the
payment of Rent due and unpaid hereunder; 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. Should any such reletting result in the payment of rentals
less than the Rent payable by Tenant hereunder, then Tenant shall pay such
deficiency to Landlord immediately upon demand therefor by Landlord. Tenant
shall also pay Landlord as soon as ascertained, any costs and expenses incurred
by Landlord in such reletting or in making such alterations and repairs not
covered by the rentals received from such reletting.
(F) No reentry or taking possession of the Premises by Landlord
pursuant to this Paragraph 22 shall be construed as an election to terminate
this Lease unless a written notice of such intention be given to Tenant.
Notwithstanding any reletting without termination by Landlord because of any
default by Tenant, Landlord may at any time after such reletting, elect to
terminate this Lease for any such default.
PARAGRAPH 23 RIGHT OF LANDLORD TO CURE TENANT'S DEFAULT: If Tenant defaults in
the making of any payment or in the doing of any act herein required to be made
or done by Tenant, then Landlord may, but shall not be required to, make such
payment or do such act and charge to Tenant the amount of all costs in
connection therewith including, but not limited to, reasonable legal fees and
expenses incurred by Landlord, with interest thereon as provided in Paragraph 36
from the date paid by Landlord to the date of payment thereof by Tenant. Such
payment and interest shall constitute Additional Rent hereunder due and payable
upon demand but the making of such payment or the taking of such action by
Landlord shall not operate to cure such default or to stop Landlord from the
pursuit of any other remedy to which Landlord would otherwise be entitled.
PARAGRAPH 24 NOTICES: All notices which Landlord or Tenant may be required or
may desire to serve on the other may be delivered either personally, by courier,
or by mailing the same by registered or certified mail, return receipt
requested, postage prepaid, addressed as set forth in Item 13 of the Basic Lease
Provisions, or addressed to such other address or addresses as either Landlord
or Tenant may from time to time designate to the other by written notice.
PARAGRAPH 25 INSOLVENCY OR BANKRUPTCY: In no event shall this Lease be assigned
or assignable by operation of law and in no event shall this Lease be an asset
of Tenant in any receivership, bankruptcy, insolvency, or reorganization
proceeding.
PARAGRAPH 26 SURRENDER AND HOLDOVER: (A) On the expiration or the sooner
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termination hereof, Tenant shall peaceably surrender the Premises broom clean,
in the same, condition that the Premises were in on the Commencement Date,
except for ordinary wear and tear, damage by fire or other casualty that Tenant
is not required to repair, repairs required to be completed by Landlord. On or
before the last day of the Lease term or the sooner termination hereof, Tenant
shall at its expense remove its trade fixtures, signs and other personal
property from the Premises. Any property not removed shall be deemed abandoned
and may either be retained by Landlord as its property, or disposed of, without
accountability and at Tenant's expense, in such manner as Landlord may
determine. If the Premises are not surrendered at the end of the Lease term or
the sooner termination Tenant shall indemnify Landlord against loss or liability
resulting from delay by Tenant in so surrendering the Premises, including,
without limitation, claims made by any succeeding tenants founded on such delay.
Tenant shall promptly surrender all keys for the Premises and Building restrooms
to Landlord at the place then fixed for payments of Rent. Tenant's covenants
hereunder shall survive the expiration or termination of this Lease.
(B) If Tenant holds over after the expiration or sooner termination
hereof without the express written consent of Landlord, Tenant shall become a
Tenant at sufferance only at two times the greater of (i) the Rent due hereunder
or (ii) the then prevailing market rate rent, as determined by Landlord in its
sole and absolute discretion, plus all items of Additional Rent provided herein,
and either (i) or (ii) shall be prorated on a daily basis according to the
number of days contained in the month that such expiration or earlier
termination takes place, and otherwise upon the terms, covenants and conditions
herein specified, so far as applicable. Acceptance by Landlord of Rent after
such expiration or earlier termination shall not constitute a consent to a
holdover hereunder or result in a renewal. The foregoing provisions of this
paragraph are in addition to and do not affect Landlord's rights of reentry or
any other rights of Landlord hereunder or as otherwise provided by law.
PARAGRAPH 27 CONDITION OF PREMISES: Landlord's responsibility with respect to
the condition of the Premises is set forth in Exhibit "B-1" Landlord's Work
Letter. Tenant acknowledges that except as expressly set forth herein neither
Landlord nor any agent of Landlord has made any representation or warranty with
respect to the Premises, the Building or the Project or with respect to the
suitability of any part of the Project for the conduct of Tenant's business. The
taking of possession of the Premises by Tenant shall conclusively establish that
the Building and the Premises were at such time in good order and repair.
PARAGRAPH 28 QUIET POSSESSION: Upon Tenant's paying the rent reserved hereunder
and observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire term hereof, subject to all of the
provisions of this Lease. This covenant shall be binding upon any landlord
hereunder only during its respective ownership of the Premises.
PARAGRAPH 29 LIMITATION OF LANDLORD'S LIABILITY: (A) Landlord and its employees
and agents shall not be liable for any damage to Tenant's property entrusted to
employees of Landlord or its agents, nor for any loss or interruption of
Tenant's possession, nor for loss of or damage to any property by theft or
otherwise, nor for any injury or damage to property resulting from fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak from any part of the Building or from the pipes, appliances or plumbing
works therein or from the roof, street or sub-surface or from any other place or
resulting from dampness or any other cause whatsoever in the Building or the
Project. Landlord and its employees and agents shall not be liable for any
property loss resulting from any latent defect in the Premises or in the
Building. Tenant shall give prompt notice to Landlord in case of fire, accidents
or defects in the Premises or in the Building.
(B) Tenant shall look solely to Landlord's estate and property in the
Project (or the proceeds thereof) for the satisfaction of Tenant's remedies for
the collection of a judgment (or other judicial
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process) requiring the payment of money by Landlord in the event of any default
by Landlord hereunder, and no other property or assets of Landlord or Landlord's
partners or members shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Tenant's remedies under or with respect to
either this Lease, the relationship of Landlord and Tenant hereunder, or
Tenant's use and occupancy of the Premises.
PARAGRAPH 30 GOVERNING LAW: This Lease shall be governed by and construed
pursuant to the law of the State of New Jersey.
PARAGRAPH 31 COMMON FACILITIES: Tenant shall have the non-exclusive right in
common with others, to the use of common entrances, lobbies, elevators, ramps,
drives, stairs, ad similar access and serviceways and the other common
facilities (except for parking spaces other than those provided for in Paragraph
39) in and adjacent to the Building or Project, as may be provided by Landlord
from time to time for general use, subject to such rules and regulations as
maybe adopted by the Landlord including, but not limited to, the right to close
from time to time all or any portion of said common facilities to such extent as
may be legally sufficient, in Landlord's sole opinion, to prevent a dedication
thereof or the accrual of rights to any person or to the public therein.
PARAGRAPH 32 SUCCESSORS AND ASSIGNS: Except as otherwise provided in this Lease,
all of the covenants, conditions and provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns. However, the
obligations of Landlord under this Lease shall not be binding upon Landlord
herein named with respect to any period subsequent to the transfer of its
interest in the Project as owner or lessee thereof, and in the event of such
transfer said obligations shall thereafter be binding upon each transferee of
the interest of Landlord herein named as such owner or lessee of the Project,
but only with respect to the period commencing with its respective transfer in
and ending with a subsequent transfer out, and such transferee, by accepting
such interest, shall be deemed to have assumed such obligations except only as
may be expressly otherwise provided in this Lease. Any lease of all or
substantially all of Landlord's interest in the Project as owner or lessee
thereof shall be deemed a transfer, to the tenant under such lease, within the
meaning of Paragraph 32.
PARAGRAPH 33 BROKERS: (A) Tenant represents and agrees that it has not directly
or indirectly dealt with any real estate broker(s) other than the firm(s)
specified in Item ll of the Basic Lease Provisions in connection with this
transaction. Tenant agrees to defend, indemnify and hold Landlord harmless from
and against any claims for brokerage commission or finder's fee arising out of
or based on any alleged actions of Tenant with any other broker or brokers.
(B) Landlord represents and agrees that it has not directly or
indirectly dealt with any real estate broker(s) other than the firm(s) specified
in Item ll of the Basic Lease Provisions in connection with this transaction,
whose fees shall he paid by Landlord. Landlord agrees to defend, indemnify and
hold Tenant harmless from and against any claims for brokerage commission or
finder's fee arising out of or based on any alleged actions of Landlord with any
other broker or brokers.
C) If, after the date hereof, either Landlord or Tenant shall employ,
retain or consult with any real estate broker or brokers other than the firms
specified in Item 11 of the Basic Lease Provisions in connection with any
matters pertaining to this Lease, the Premises or the Project, the employing
party hereby agrees to pay the broker or brokers and the employing party hereby
agrees to defend, indemnify and to hold harmless the other party hereto from and
against any claims for brokerage commission or finder's fee arising out of or
based on any alleged actions of the employing party with respect to said broker
or brokers not specified in Item 11.
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PARAGRAPH 34 NAME: LANDLORD'S RIGHTS: (A) Tenant shall not, without the written
consent of Landlord, use the name of the Building or the Project for any purpose
other than as the address of the business to be conducted by Tenant in the
Premises, and in no event shall Tenant acquire any rights in or to such names.
Landlord reserves the right to change the name and/or address of the Building or
Project at any time and from time to time, and agrees to give reasonable notice
of same to Tenant.
(B) It is understood and agreed that the architectural design,
aesthetic appeal and use of the Building and the Project are and shall remain
always in the sole control of Landlord. Therefore, notwithstanding anything to
the contrary contained herein, Landlord does hereby reserve the right from time
to time and at any time to make changes and additions, without restriction, to
the Building and the Project, improvements or other areas, including without
limitation, eliminating land, adding other lands, decreasing or changing the
Building and the Project, which are deemed desirable by Landlord, and the making
of such changes or additions shall not invalidate or affect this Lease or any
rights hereunder nor constitute an eviction of Tenant or a breach of this Lease,
nor give rise to any claim for damages. Notwithstanding the foregoing
provisions, Landlord represents and confirms that no such changes will
unreasonably and substantially interfere with Tenant's use and occupancy of the
Premises or Tenant's access to the Building.
PARAGRAPH 35 EXAMINATION OF LEASE: Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option for lease,
and it is not effective as a lease or otherwise until execution by and delivery
to both Landlord and Tenant.
PARAGRAPH 36 ADDITIONAL CHARGES: Any amount due from Tenant to Landlord which is
not paid when due, in addition to other remedies available to Landlord shall, at
Landlord's option, bear interest which shall be at the lesser of (i) eighteen
(18%) percent per annum or (ii) the maximum lawful rate per annum, from the date
such payment is due until the date actually paid, but the payment of such
interest shall not excuse or cure the default. In addition to the foregoing,
unless prohibited by law, Landlord may also impose a late charge of four (4%)
percent of the amount past due, and a charge for reasonable legal fees and
costs.
PARAGRAPH 37 DEFINED TERMS AND ADDITIONAL HEADINGS: The words "Landlord" and
"Tenant" as used herein shall, as the case may be, include the plural as well as
the singular. If more than one person or entity is named as Tenant the
obligations of such persons or entities are joint and several. The marginal
headings and titles to the Paragraphs of this Lease are not a part of this Lease
and shall have no effect upon the construction or interpretation of any part
hereof. This Lease shall be construed without regard to any presumption or other
rule requiring construction against the party causing this Lease to be drafted.
PARAGRAPH 38 PRIOR AGREEMENTS; SEVERABILITY: This Lease contains all of the
agreements of the parties hereto with respect to any matter covered or mentioned
in this Lease, and no prior agreement, understanding or representation
pertaining to any such matter shall be effective for any purpose. No provision
of this Lease may be amended or added to except by an agreement in writing
signed by the parties hereto or their respective successors in interest. If any
term or provision of this Lease, the deletion of which would not adversely
affect the receipt of any material benefit by either party hereunder, shall be
held invalid or unenforceable to any extent, the remainder of this Lease shall
not he affected thereby and each term and provision of this Lease shall be valid
and enforceable to the fullest extent permitted by law.
PARAGRAPH 39 PARKING: Tenant shall have the right to the use of the number of
parking spaces (the "Parking Spaces") shown in Item 10 of Basic Lease
Provisions. Landlord shall have, in its absolute discretion, the right to assign
parking spaces. Tenant covenants and agrees to comply with all reasonable rules
and regulations which Landlord may from time to time make to assure proper use
of parking spaces by permitted users, including but not limited to the
prohibition
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of overnight parking. Landlord's remedies under such rules and regulations may
include, but shall not be limited to, the right to tow away at owner's expense
any vehicles not parked in compliance with these rules and regulations. Landlord
shall not be responsible to Tenant for the noncompliance or breach by any other
tenant of said rules and regulations.
PARAGRAPH 40 FORCE MAJEURE: Except as otherwise expressly provided herein, this
Lease and the obligations of Tenant to pay Rent hereunder and perform all of the
other covenants, agreements, terms, provisions and conditions hereunder on the
part of Tenant to be performed shall in no way be affected, impaired or excused
because Landlord is unable to fulfill any of its obligations under this Lease,
if Landlord is prevented or delayed from so doing by reason of any cause beyond
Landlord's reasonable control including, but not limited to, Acts of God,
strikes, labor troubles, shortage of materials, governmental preemption in
connection with a national emergency or by reason of any rule, order or
regulations of any governmental agency or by reason of war, hostilities or
similar emergency; provided that Landlord shall in each instance exercise
reasonable diligence to effect performance as soon as possible. It is agreed
that Landlord shall not be required to incur any overtime or additional expenses
in Landlord's reasonable diligence to effect the performance of any of
Landlord's obligations hereunder.
PARAGRAPH 41 NO LIGHT, AIR OR VIEW EASEMENT: Any diminution or shutting off of
light, air or view by any structure which may be erected on lands adjacent to
the Building shall in no way affect this Lease or impose any liability on
Landlord.
PARAGRAPH 42 AUTHORITY AND SIGNATORIES: If Tenant executes this Lease in other
than individual capacity, each of the persons executing this Lease on behalf of
Tenant does hereby personally covenant and warrant that Tenant is a duly
authorized and existing entity as herein represented, that Tenant was and is
qualified to do business in the State of New Jersey, that the Tenant has full
right and authority to enter into this Lease, and that each person signing on
behalf of the Tenant is authorized to do so. Upon Landlord's request, the
Tenant's signatories hereto will furnish satisfactory evidence of Tenant's
authorization, and their personal authority on behalf of Tenant, to execute this
Lease.
PARAGRAPH 43 CAMPUS ASSOCIATION: (A) This lease, and all rights of Tenant
hereunder, are and shall be subject and subordinate in all respects to all
present and future recorded covenants and restrictions (and any amendments,
renewals, replacements, or modifications thereof) referring to any owners' or
campus association for the Complex or any part thereof in which the Building is
located. Landlord shall advise Tenant of such recordings. Tenant covenants and
agrees that it will not perform (or fail to perform) any act which may
constitute a default under such covenants and restrictions.
(B) Tenant further covenants and agrees to cooperate with programs of
any such aforesaid association including but not limited to: car and van
pooling; flex-time work scheduling; jitney buses to nearby train stations,
airports, etc.; relocation of, or new, bus routes and bus stops through and at
the Complex to Newark, Morristown, etc.; development of a park-and-ride
facility, possibly to ultimately become a transportation center; and other
programs and projects.
PARAGRAPH 44 TENANT'S OPTION TO RENEW: Upon condition that Tenant is not in
default in the payment of any Basic Annual Rent, Additional Rent or other charge
payable by Tenant under this lease and is not in default in the performance of
any covenant or obligation to be performed by Tenant under this lease; and upon
Tenant's giving Landlord twelve (12) months notice in writing in the manner
prescribed in Paragraph 24 hereof ("Notices") prior to the expiration of the
term hereof in accordance with Paragraph 1, Tenant shall have the option to
renew accordance with Item 4 of the Basic Lease Provisions and extend this
lease for the demised premises, including all additional space which Tenant
shall have acquired during each term of the
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Lease, for one further term of five (5) years, pursuant and subject to all the
terms, covenants, provisions and conditions of this lease, including, without
limitation, the payment of all items of Additional Rent as provided for
hereunder, except that Basic Annual Rent shall be adjusted to the then fair
market rent.
PARAGRAPH 45 FAIR MARKET RENTAL VALUE - APPRAISAL: (A) For purposes of Paragraph
44, "fair market rental value:" shall mean that rental value for the Premises
under the existing zoning on an "as is" basis which a landlord and tenant would
agree to in an arms-length transaction. If Tenant disagrees with the fair market
rental value determined by Landlord, then Tenant shall within thirty (30) days
of Landlord's notice so advise Landlord in writing, and thereafter, Landlord and
Tenant shall use their best efforts to reach agreement on the fair market rental
value during the thirty (30) days following Tenant's giving Landlord notice to
renew and extend this Lease.
(B) If Landlord and Tenant cannot reach agreement, the fair market
rental value of the Premises shall be determined by an appraisal made by three
reputable New Jersey real estate appraisers who shall be appointed in the manner
hereinafter provided and each of whom shall be a member of the American
Institute of Real Estate Appraisers or a successor body hereinafter constituted
exercising a similar function, shall have experience in appraising property
similar to the Premises, and shall have no substantial direct or indirect
financial or other business interests in Landlord, or its affiliates, or Tenant
or its affiliates. The appraisal of the Premises will be conducted by three
reputable real estate appraisers, one appointed by Landlord, one appointed by
Tenant and the third appointed by the first two appraisers. The costs and
expenses of each appraiser appointed separately by Tenant and Landlord will be
borne by the party who appointed the appraiser. The costs and expenses of the
third appraiser will be shared equally by Landlord and Tenant. Any appraisal
process required pursuant to this lease may be commenced by Landlord or Tenant
(the "Initiating Party") by notice to the other (the "Other Party") in which the
Initiating Party appoints its appraiser. Said notice shall be given no earlier
than thirty (30) days after Tenant sends Landlord notice of exercise of the
renewal option. The Other Party shall appoint its appraiser by notice given to
the Initiating Party within twenty (20) days after the Initiating Party's
Notice. The appraisers appointed by the Initiating Party and the Other Party
shall select a third appraiser within twenty (20) days of the appointment of the
appraiser appointed by the Other Party. If the first two appraisers are unable
to agree on a third appraiser, such third appraiser shall be appointed by the
President of the Society of Real Estate Appraisers, North Jersey Chapter,
Chatham, New Jersey. If such individual refuses to act, such third appraiser
shall be appointed pursuant to the rules of the American Arbitration
Association, as the same are applicable in the State of New Jersey.
(C) The appraisers shall appraise the Premises, and notify Tenant and
Landlord by written notice of the fair market rental value which notices shall
be accompanied by copies of their appraisal reports. If the determinations of
the fair market rental value of any two or all three of the appraisers shall be
identical in amount, said amount shall be deemed to be the fair market rental
value, but if such determinations of all three appraisers shall be different in
amount, the appraised value which is the closest in amount to the middle
appraised value, whether it be the highest or the lowest appraised value, shall
be averaged with the middle appraised value and the resulting averaged appraised
value shall be the fair market value of the Premises. The appraised value which
is the furthest from the middle appraised value will not be utilized or
considered.
(D) The fair market rental value, determined in accordance with the
provisions of this Paragraph, shall be binding and conclusive on Tenant and
Landlord. Notwithstanding the foregoing, if the Other Party shall fail to
appoint the appraiser to be appointed by such Other Party within twenty (20)
days after the Initiating Party's notice requiring the Other Party to do so, the
appraisal shall be conducted only by the appraiser appointed by the Initiating
Party, and the fair market rental value as determined by the appraiser appointed
by the Initiating Party shall be binding and conclusive upon Landlord and
Tenant. Anything herein to the contrary notwithstanding,
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Landlord and Tenant shall have similar rights to appeal said determination which
may then exist under New Jersey Law with respect to binding arbitration.
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EXHIBIT A-1
Floor Plan(s) of Premises
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EXHIBIT A-2
Tax Lot in Block as shown on the Parsippany-Troy Hills Tax Map.
---- -----
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EXHIBIT-B
TENANT'S WORK LETTER
Landlord and Tenant acknowledge and agree that Tenant shall do all work
to the Premises which is required to prepare the Premises for Tenant's occupancy
which work shall be done in accordance with Landlord's Construction Rules and
Regulations attached as Exhibit B-1. Therefore, it is the intent of this Exhibit
that Tenant shall be permitted access to the Premises prior to the Commencement
Date during days and hours stipulated in Article 9 and, subject to Landlord's
prior approval, at such other times as Tenant may require for the purposes set
forth in this Work Letter, subject, however, to all applicable terms and
provisions of the Lease to the extent not inconsistent with Tenant's performance
of the work, and that Tenant shall have reasonable freedom in the interior
design and layout of the premises, consistent with applicable building codes and
sound architectural and construction practices in first class office buildings.
Tenant and Tenant's employees, agents and contractors shall not cause any
interference with the operation of the Building's mechanical, heating, cooling
or electrical systems or other Building operations or functions, and shall not
cause any increase in maintenance or utility charges for the Building. Any
additional costs of design, construction, operation or maintenance of the
Building or Premises which results from Tenant's construction, design or
specifications shall be charged to Tenant.
A. IMPROVEMENTS
All improvements required by Tenant in the Premises shall be completed
at Tenant's sole cost and expense (subject to the reimbursement provisions set
forth in Paragraph C3 of this Work Letter) in accordance with Tenant's Plan (as
defined in Paragraph B of this Work Letter). As set forth above, Tenant may
commence such work prior to Commencement Date, but Tenant's occupancy of
Premises for such purposes will be subject to all applicable terms of the Lease
to the extent not inconsistent with Tenant's performance of the work.
B. PLANS AND SPECIFICATIONS
Not later than September 15, 1996 Tenant shall submit to Landlord for
Landlord's written approval a complete set of working drawings and
specifications prepared by Spector Associates - Architects which shall show all
the work to the Premises. Landlord agrees not to unreasonably withhold its
approval of such drawings and specifications and Landlord agrees to notify
Tenant of Landlord's approval or disapproval within seven (7) business days
after Landlord's receipt of the same. If Landlord fails to notify Tenant of
Landlord's disapproval within seven (7) business days then Landlord shall be
deemed to have approved the plans. Such plans as approved by Landlord are
hereinafter referred to as "TENANT'S PLAN". If Tenant's Plan requires any
variance or any modifications of any existing Building system, Tenant agrees to
pay for obtaining, at Tenant's expense, all required approvals.
Tenant shall pay all costs incurred in connection with the preparation
of Tenant's Plan and any revisions thereto (subject to the reimbursement
provisions set forth in Paragraph C 3 of this Work Letter) and all costs
resulting from Tenant's Plan, including but not limited to architectural and
engineering charges, and any special permits or fees attributed thereto.
C. CONSTRUCTION
1. By Tenant: All work in the Premises, shall be done by Tenant in
compliance with the following:
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(a) No such work shall proceed without Landlord's prior written
approval which approval shall not be unreasonably withheld or delayed, of (i)
Tenant's contractor; (ii) detailed plans and specifications for the work; and
(iii) a certificate of worker's compensation insurance in an amount and with a
company and on a form acceptable to Landlord and a certificate of insurance in
form and from an insurer acceptable to Landlord, showing Tenant or Tenant's
contractor to have in effect public liability, comprehensive general liability
and property damage insurance with limits of not less than $1,000,000/$5,000,000
and $2,000,000 respectively. All such certificates except worker's compensation
shall be endorsed to show Landlord, Landlord's Contract Manager (Herb Maierle)
and Landlord's Property Manager as an additional insured and such insurance
shall be maintained by Tenant or Tenant's contractor at all times during the
performance of Tenant's work.
(b) All such work shall be done in conformity with applicable codes and
regulations of governmental authorities having jurisdiction over the Building
and Premises and with valid building permits. Such permits and other
authorizations from appropriate governmental agencies, when required, shall be
obtained by Tenant's representative at Tenant's sole expense. Any work not
acceptable to the appropriate governmental agencies or Landlord, shall be
promptly replaced at Tenant's sole expense. Notwithstanding any failure by
Landlord to object to any such work, Landlord shall have no responsibility
therefor. Tenant agrees to save and hold Landlord harmless as provided in the
Lease for said work.
(c) Tenant and Tenant's contractors shall abide by all safety and
construction laws, ordinances, rules and regulations. All work and deliveries
shall be scheduled through Landlord's Contract Manager and Landlord's Property
Manager by notice telecopied to (201) 285-9642 Entry by Tenant's contractors
shall be deemed to be complete under all the terms, covenants, provisions and
conditions of the Lease to the extent not inconsistent with Tenant's performance
of the work. All Tenant's materials, work, installations and decorations of any
nature brought upon or installed in the Premises before the Commencement Date
shall be at Tenant's risk, and neither Landlord nor any party acting on
Landlord's behalf shall be responsible for any damage thereto or loss or
destruction thereof. Tenant shall not employ any contractor who in Landlord's
opinion may prejudice Landlord's negotiations or relationships with Landlord's
contractors or subcontractors or the negotiations or relationship of those
contractors or subcontractors with their employees, or as may disturb harmonious
labor relations.
(d) Tenant shall reimburse Landlord for any extra expenses incurred by
Landlord by reason of faulty work done by Tenant or Tenant's contractors, or by
reason of delays caused by such work, or by reason of cleanup which fails to
comply with Landlord's Rules and Regulations, or by reason of use of elevators
outside normal working hours.
(e) Tenant's contractors shall not post any signs on any part of the
Building or the Premises.
(f) Tenant shall, upon Landlord's request, provide Landlord with copies
of bills and invoices for the cost of Tenant's Work hereunder and Tenant shall
certify as to the correctness of such bills and invoices.
(g) Tenant shall reimburse Landlord for the cost of Landlord's Contract
Manager in the amount of $7,265.00.
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<PAGE> 35
2. Changes: If Tenant requests any changes after Landlord's approval of
Tenant's Plan, Tenant shall be responsible for all costs (subject to the
reimbursement provisions set forth in Paragraph C3 of this Work Letter)
including but not limited to architectural, engineering and related design
expenses resulting from such changes. No such changes shall be made without
prior written approval of Landlord. Tenant shall notify Landlord's Contract
Manager and Landlord's Property Manager of any proposed changes. Landlord agrees
not to unreasonably withhold its approval of any proposed changes, and Landlord
agrees to notify Tenant of Landlord's approval or disapproval within three (3)
business days after Landlord's receipt of a detailed description of any proposed
changes, together with such revised plans and specifications and such other
documents as Landlord may reasonably request in connection with said proposed
changes. If Landlord fails to notify Tenant of Landlord's disapproval within
three (3) business days after Landlord's receipt of the description, the revised
plans and specifications and the other documents, then Landlord shall be deemed
to have approved the proposed change in question. Landlord shall not be
responsible for delay in occupancy by Tenant because of changes.
3. Tenant Allowance: Landlord shall provide Tenant a Work Allowance in
the amount of $159,830.00 to be paid in accordance with the provisions of this
Paragraph C3 with the balance, if any, at the election of Tenant being taken as
a credit against rent due under the Lease or being paid in cash. Landlord agrees
to disburse the Work Allowance to Tenant in two (2) installments. The first
installment shall be paid on October 31, 1996 and shall not exceed the aggregate
of all approved requisitions submitted to Landlord on or before October 15,
1996. The second installment shall be paid within fifteen (15) business days
after receipt of Tenant's requisition, a final certificate of occupancy and a
certificate from Tenant's architect certifying to Landlord that all work has
been completed in accordance with Tenant's Plan. Attached to each requisition
shall be (i) a certificate from Tenant's architect certifying that the work
described on Tenant's requisition has been completed in accordance with Tenant's
Plan, (ii) copies of all bills submitted by the contractors, subcontractors,
suppliers and materialmen for the work described on the requisition, and (iii)
lien waivers from all contractors, suppliers and materialmen who performed work,
furnished services or provided materials and supplies in connection with the
immediately preceding requisition. Landlord shall have the right to refuse to
pay all or any portion of a requisition if Landlord determines that the work
described thereon has not been completed, has not been completed in a good and
workmanlike manner or has not been completed in accordance with Tenant's Plan.
Landlord shall deduct from each of the payments an amount equal to the cost of
Landlord's Contract Manager incurred on or before said payment, subject,
however, to the limitation set forth in Paragraph C 1(g).
Landlord's Contract Manager shall make periodic inspections of the
Premises during construction and at completion. If, during any inspection of the
work, Landlord's Contract Manager discovers any problems with the work or has
any objections to the work, Landlord shall advise Tenant of any such problems or
objections within a reasonable period of time after such inspection. After
Landlord's inspection and upon completion of all Tenant's Work and issuance of a
permanent Certificate of Occupancy and upon Tenant's presenting satisfactory
evidence to Landlord of actual payments of cost of Tenant's work, Landlord will
pay the second (and final) installment of the Work Allowance.
D. DELAYS
If Tenant shall cause any delay in the construction of the Premises,
whether by reason of any failure by Tenant to comply with the applicable time
schedule or by Tenant's requirement of specific materials or installations, or
by delays in performance of completion by a party employed by Tenant, or by
reason of building code problems arising from Tenant's design,
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<PAGE> 36
or by reason of changes in the work ordered by Tenant, then notwithstanding the
provisions of the Lease or any other provision of this Exhibit, any such delay
in completing the Premises shall not in any manner affect the Commencement Date
or Tenant's liability for the payment of Rent as set forth in the Lease.
E. INCORPORATION IN LEASE
This Work Letter is, and shall be incorporated by reference in the
Lease and all of the terms and provisions of said Lease are and shall be
incorporated herein by this reference.
F. ELECTRICAL CONSUMPTION CALCULATION
During the construction of the work, Tenant shall pay to Landlord the
cost of all electricity consumed by Tenant in the Premises. Said cost shall be
determined in accordance with the provisions of Paragraph 3(E) of the Lease and
shall be paid to Landlord from time to time within ten (10) business days after
Tenant's receipt of a statement.
G. MISCELLANEOUS
Wherever in this Work Letter Tenant is obligated to comply with the
terms and conditions of the Lease, such obligation shall be deemed to mean that
Tenant shall comply with the terms and conditions of the Lease to the extent not
inconsistent with Tenant's performance of the work.
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<PAGE> 37
EXHIBIT B-1
-----------
[THE PRUDENTIAL BUSINESS CAMPUS LETTERHEAD]
TO: All Contractors, Sub-Contractors & Tenants
FROM: Herb Maierle
Director of Construction
DATE: 1996
SUBJECT: BUILDING RULES & REGULATIONS FOR TENANT BUILD-OUTS
In order to make tenant improvements, alterations or other work in buildings at
The Prudential Business Campus run smoothly, it's important that the following
guidelines be adhered to:
1. Prior to commencement of work, the contractor is to submit a
certificate of liability insurance of not less than $5,000,000.
PruBeta-3 & Premisys Real Estate Services, Inc. shall be named as
additional insured. Said certificates shall provide that insurance will
not be canceled or reduced without thirty days written notice to the
owner. In addition, contractor shall submit to the owner a copy of the
building permit before starting work.
2. The corridors, walls & floors, lobby and elevator shall be protected
during construction. No material shall be delivered through the lobby
or main entrance.
3. All required demolition and new construction is to be accomplished
without interference to the tenants within the adjoining space and
building.
4. The building utilities can not be shut-down during normal business
hours and any and all such shut-downs must be prearranged with the
building management. The cost associated with shut-downs after normal
working hours shall be borne solely by the tenant contractor, i.e.
salaries for maintenance staff.
5. It is the responsibility of the tenant or contractor to obtain all
approvals required by the Municipal Authorities, including building
permits and certificate of occupancy.
<PAGE> 38
[LOGO]
1996
All Contractors, Sub-Contractors & Tenants
Building Rules & Regulations
for Tenant Build-outs
Page 2
6. The contractor shall provide and install fire extinguishers as required
by the fire department.
7. Contractor shall maintain fire extinguishers in all work areas at all
times during construction.
8. Contractor shall be responsible for cleaning toilet facilities being
used during construction.
9. Contractor shall use only the freight elevator for all work. The
building passenger elevator shall not be used by contractors.
Contractors shall protect the freight elevator with plywood at all
times.
10. During construction operations involving removal of substantial debris,
contractor and/or its subcontractors shall supply their own containers
and be placed where designated by building management.
11. Contractor shall remove all debris from the work area on a daily basis.
Contractor shall prevent the storage of debris or any other materials
that would constitute a fire hazard.
12. Contractor shall maintain the service of the wet sprinklers at all
times. Contractor shall notify the building manager, at least 24 hours
in advance, when the system is to be activated or deactivated in
connection with the performance of work thereon.
13. Building management is to be present at all plumbing,, electrical, fire
and building inspections. It is the responsibility of the general
contractor to advise management when inspections are scheduled, and to
provide adequate notice to building management.
14. Any systems which tie into the base building shall be coordinated
through building management. Fire detection system to be connected to
the fire panel by building management contractor, Stillwell-Hansen, at
tenant or tenant contractor's expense.
15. Smoke detector service shall be maintained in any area already under
protection, including but not limited to demised premises, elevator
lobby, stairs, etc.
16. Contractor shall maintain a smoke detector on the return air side of
any active air handlers.
<PAGE> 39
[LOGO]
1996
All Contractors, Sub-Contractors & Tenants
Building Rules & Regulations
for Tenant Build-outs
Page 3
17. Contractor shall supply and install construction grade filters with 35%
efficiency on the HVAC system return ducts. Filters to be changed
monthly.
18. Any work which may cause an inconvenience or annoyance to tenants is to
be performed before or after normal working hours (7:00 a.m. through
6:00 p.m. Monday to Friday).
19. At the commencement of the project, owner shall designate employee
parking areas for the employees of contractor and its subcontractors.
20. Contractor shall be responsible for patching steel fireproofing, as
required.
21. Cutting, chasing, drilling or demolition of walls, slab, etc.,
requiring the use of jackhammers or other heavy power tools shall be
performed during the off hours.
22. All unused electrical and communication cabling within the plenum area
to be disconnected and removed to point of origin.
23. Contractor shall provide re-keying of all doors to match Premisys'
existing master keying. Contact building management for information.
24. At the commencement of the project, owner shall designate, if required,
an appropriate location for the placement of any trailers of contractor
and its subcontractors and owner retains the right to demand the prompt
removal of any such trailers within five (5) days after the Certificate
of Occupancy for the project has been obtained.
25. Tenant contractor's assume complete responsibility for the security of
contractor's and subcontractor's materials, supplies and equipment.
26. At the completion of the project, the tenant shall submit to the owner
a complete set of as-built drawings and all product warranties
including cut sheets, maintenance and operations manuals.
27. All work shall be accomplished using harmonious labor.
28. Post construction clean-up (including but not limited to vacuuming and
inside window cleaning) shall be contractors responsibility. All
material stored in the building by the contractor or sub-contractors is
to be removed upon or prior to job completion.
<PAGE> 40
[LOGO]
1996
All Contractors, Sub-Contractors & Tenants
Building Rules & Regulations
for Tenant Build-outs
Page 4
29. Lunch and break areas will be designated by general contractor's
supervisor. These areas are to be located within the construction
space. All food and food wrappers are to be bagged and discarded in
cans with tight lids. All construction areas are to be policed nightly
by contractor and all refuse is to be placed in contractors dumpster.
Loose food is to be placed in plastic garbage bags, secured then put in
contractors' dumpster.
30. Building management is to be notified regarding use of the freight
elevator for extended periods or work performed other than normal
hours.
31. The sidewalks and public portions of the building, such as entrances,
passages, courts, elevators, vestibules, stairways, corridors or halls
should not be obstructed or encumbered by any tenant or used for any
purpose other than ingress and egress to and from the demised premises.
32. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed,
and no sweepings, rubbish, rags or other substances shall be thrown
therein. All damages resulting from any misuse of the fixtures shall be
borne by the tenant contractor.
33. In order that the building can and will maintain a uniform appearance
from the outside, each tenant in building perimeter areas shall (a) use
only building standard lighting, as defined in work letter, in areas
where lighting, is visible from outside of the building and (b) use
only inch horizontal blinds (or other building standard) in window
areas which are visible from the outside of the building.
34. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any tenant contractor on any part of
the outside of the demised premises, on any entrance door or doors to
the demised premises or on the outside of the building.
35. It is understood and agreed that tenant contractor shall not place a
load on any floor of the premises exceeding the floor load per square
foot area which such floor was designed to carry and which is allowed
by code.
36. The premises shall not be used for lodging or sleeping or for any
immoral or illegal purpose.
<PAGE> 41
[LOGO]
1996
All Contractors, Sub-Contractors & Tenants
Building Rules & Regulations
for Tenant Build-outs
Page 5
37. All construction shall be performed and completed in compliance with
all applicable codes and regulations, including Uniform New Jersey
Building Code, Federal Occupational Safety and Health Act (OSHA) and
American Disability Act (ADA).
38. Contractor shall replace all defective thermostats and repair all new
and existing VAV boxes found to be inoperative.
39. All doors to be 8'8" nominal height, suite entry doors to match
building standard.
40. All door frames to be welded at the corners. (No knock-down)
41. All door frames shall be properly secured by diagonal bracing at each
top corner and fastened to the deck above. In addition, the bottom
shall be mechanically fastened to the floor slab.
42. Tenant shall clean and repair all window blinds located in the tenant
space.
43. Tenant shall clean and relamp all light fixtures in tenant area, as
required.
44. Check all AC ducts for air leaks and reseal where necessary.
45. The contractor shall insulate all new ducts & flex, as part of the
contract.
46. The contractor shall check all existing ducts for proper support. If
additional hangers are required, contractor shall supply same at no
additional cost to the owner.
47. The balancing of the HVAC system to required air flow (minimum &
maximum) shall be performed by the contractor's independent
balancing/testing agency.
48. Provide return air grills in all offices and open areas.
49. Contractor or tenant shall submit architectural, mechanical and
electrical drawings for owners' review and approval prior to
commencement of work.
50. Tenant shall submit a building permit to the owner issued by the Town
of Parsippany prior to commencement of work.
<PAGE> 42
EXHIBIT C
COMMENCEMENT DATE MEMORANDUM
THIS AGREEMENT made as of the day of , 1996 between PRUBETA-3, a general
partnership organized under the laws of New Jersey, with an office at c/o THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, Newark Realty Group Office, Three
Gateway Center, 100 Mulberry Street, 13th Floor, Newark, New Jersey 07102
("Landlord") and INNOVEX INC with an office at 9 Campus Drive, Parsippany, New
Jersey ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a Lease dated ______, 1996
("Lease") setting forth the terms of occupancy by Tenant for a portion of the
______ floor of 9 Campus Drive located at The Prudential Business Campus at
Parsippany-Troy Hills, New Jersey; and
WHEREAS, the Lease is for an initial term of ___ years with the "Target
Commencement Date" of the term being defined in Basic Lease Provisions; and
WHEREAS, it has been determined in accordance with these provisions
that __________, 1996 is the Commencement Date of the initial term of the Lease.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter set forth, it is agreed:
1. The Commencement Date of the initial term of the Lease is ________,
1996 and the Expiration Date thereof is ___________, 19 .
2. This agreement is executed by the parties for purposes of providing
a record of the commencement and termination dates of the initial term of the
Lease.
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first above written.
PRUBETA-3
<TABLE>
<S> <C>
Attest: BY: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
a New Jersey corporation, as General Partner
By:
- ------------------------- -----------------------------------------------
Assistant Secretary Name:
------------------------------------------
Title:
-----------------------------------------
BY: EQUITY PARSIPPANY VENTURE,
a Colorado general partnership, as General Partner
By: U S WEST Real Estate, Inc., a Colorado
corporation, as Managing Partner
By: BetaWest, Inc., a Colorado corporation
formerly known as BW Acquisition, Inc.
as authorized agent
Approved as to legal form
by Counsel to Landlord: By:
---------------------------------------
- ------------------------- Name:
----------------------------------
Title:
---------------------------------
By:
----------------------
Date:
--------------------
ATTEST:(or Witness:) INNOVEX INC
By:
- ------------------------- ----------------------------------
Name:
-----------------------------
Title:
----------------------------
</TABLE>
<PAGE> 43
EXHIBIT D
RULES AND REGULATIONS
1. The sidewalks, and public portions of the Building, such as entrances,
passages, courts, elevators, vestibules, stairways, corridors or halls shall not
be obstructed or encumbered by any tenant or used for any purpose other than
ingress and egress to and from the demised premises ("demised premises" in this
Exhibit D shall mean the "Premises" as set forth in the Lease).
2. No awnings or other projections shall be attached to the outside
walls of the Building. No curtains, blinds, shades, louvered openings or screens
shall be attached to or hung in, or used in connection with, any window or door
of the demised premises, without the prior written consent of Landlord, unless
installed by Landlord.
3. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any tenant on any part of the outside of the
demised premises or Building or on corridor walls. Signs on entrance door or
doors shall conform to building standard signs, samples of which are on display
in Landlord's rental office. Signs on doors shall, at the tenant's expense, be
inscribed, painted or affixed for each tenant by sign makers approved by
Landlord. In the event of the violation of the foregoing by any tenant, Landlord
may remove same without any liability, and may charge the expense incurred by
such removal to the tenant or tenants violating this rule.
4. The sashes, sash doors, skylights, windows, heating, ventilating and
air conditioning vents and door that reflect or admit light and air into the
halls, passageways or other public places in the Building shall not be covered
or obstructed by any tenant, nor shall any bottles, parcels, or other articles
be placed outside of the demised premises.
5. No show cases or other articles shall be put in front of or affixed
to any part of the exterior of the Building, nor placed in the public halls,
corridors or vestibules without the prior written consent of Landlord.
6. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags, or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by the tenant
who, or whose servants, employees, agents, visitors or licensees, shall have
caused the same.
7. No tenant shall in any way deface any part of the demised premises
or the Building. No tenant shall lay linoleum, or other similar floor covering,
so that the same shall come in direct contact with the floor of the demised
Premises, and, if linoleum or other similar floor covering is desired to be
used, an interlining of builder's deadening felt shall be first affixed to the
floor, by a paste or other material, soluble in water, the use of cement or
other similar adhesive material being expressly prohibited.
8. No bicycles, vehicles or animals of any kind (except seeing eye
dogs) shall be brought into or kept in or about the Premises.
9. No cooking shall be done or permitted by Tenant in the Premises except
in conformity to law
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<PAGE> 44
and then only in the cafeteria kitchen. No tenant shall cause or permit any
unusual or objectionable odors to be produced upon or permeate from the
Premises.
lO. No space in the Building shall be used for manufacturing or
distribution or for the storage of merchandise, or for the sale at auction or
otherwise of merchandise, goods or property of any kind.
11. No tenant shall make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of the Building or
neighboring buildings or premises or those having business with them whether by
the use of any musical instrument, radio, in any other way.
12. No tenant, nor any of the tenant's servants, employees, agents,
visitors or licensees, shall at any time bring or keep upon the premises any
inflammable, combustible or explosive fluid, or chemical substance, other than
reasonable amounts of cleaning fluids and solvents required in the normal
operation of tenant's business offices.
13. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by any tenant, nor shall any changes be made in existing
locks or the mechanism thereof, without the prior written approval of the
Landlord and unless and until a duplicate key is delivered to Landlord. Each
tenant must, upon the termination of his tenancy, restore to the Landlord all
keys of offices and toilet rooms, either furnished to, or otherwise procured by,
such tenant, and in the event of the loss of any keys, so furnished, such tenant
shall pay to Landlord the cost thereof.
14. All removals, or the carrying in or out of any safes, freight,
furniture or bulky matter of any description must take place during the hours
which Landlord or its agent may determine from time to time. Landlord reserves
the right to inspect all freight to be brought into the Building and to exclude
from the Building all freight which violates any of these Rules and Regulations
or the Lease of which these Rules and Regulations are a part.
15. No tenant shall occupy or permit any portion of the premises
demised to it to be occupied as, by or for a public stenographer or typist,
barber shop, bootblacking, beauty shop or manicuring, beauty parlor, telephone
or telegraph agency, employment agency open to the public, public restaurant or
bar, commercial document reproduction or offset printing service, public vending
machines, retail, wholesale or discount shop for sale of merchandise, retail
service shop, labor union, school or classroom, governmental or
quasi-governmental bureau, department or agency, including an autonomous
governmental corporation, a firm the principal business of which is real estate
brokerage, or a company engaged in the business of renting office or desk space;
or for a public finance (personal loan) business, or for manufacturing. No
tenant shall engage or pay any employees on the demised premises, except those
actually working for such tenant on said premises, nor advertise for laborers
giving an address at said Premises. Nothing herein shall be interpreted to
prevent Tenant from making up at the Premises payroll and payroll checks for
employees at other location.
16. Landlord shall have the right to prohibit any advertising by any tenant
mentioning the Building which, in Landlord's reasonable opinion, tends to impair
the reputation of the Building or its desirability as a building for offices,
and upon written notice from Landlord, tenant shall refrain from and discontinue
such advertising.
17. In order that the Building can and will maintain a uniform
appearance from the outside, each Tenant in building perimeter areas shall (a)
use only building standard lighting, as defined in Work Letter, in areas where
lighting is visible from outside of the Building and (b) use only inch (")
horizontal blinds in window areas which are visible from the outside of the
Building.
18. Landlord reserves the right to exclude from the Building between the
hours of 6:00 p.m. and
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<PAGE> 45
8:00 a.m. and at all hours on non-business days all persons who do not present a
pass to the Building signed by a tenant. Each tenant shall be responsible for
all persons for whom such pass is issued and shall be liable to Landlord for all
acts of such persons.
19. The premises shall not be used for lodging or sleeping or for any
immoral or illegal purpose.
20. At Landlord's option, tenants shall purchase from Landlord or its
designee all lighting tubes, lamps, bulbs and ballasts used in the demised
premises and tenants shall pay Landlord's actual costs including reasonable
overhead and profit for providing and installing same, on demand.
21. Canvassing, soliciting and peddling in the Building are prohibited
and each tenant shall cooperate to prevent the same.
22. There shall not be used in any space, or in the public halls of any
building, either by any tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and side guards. No hand trucks shall be used in passenger elevators.
23. Tenants, in order to obtain maximum effectiveness of the cooling
system, shall lower and/or close venetian or vertical blinds or drapes when
sun's rays fall directly on windows of demised Premises.
24. Replacement of ceiling tiles after they are removed for Tenant by
telephone company installers, in both the demised premises and the public
corridors, will be charged to Tenant on a per tile basis. Landlord's charge will
be actual costs plus reasonable overhead and profit.
25. All panelling, grounds or other wood products which are
incorporated in construction of fire rated assembly shall be of fire retardant
materials. Before installation of any such materials, certification of the
materials' fire retardant characteristics shall be submitted to Landlord, or its
agents, in a manner satisfactory to the Landlord.
26. Tenant shall not in any way obstruct or interfere with the rights
of other tenants or occupants of the Building or the Project or injure or annoy
them, or use or allow the Premises to be used for any unlawful or objectionable
purpose, nor shall Tenant cause, maintain, or permit any nuisance in, on, or
about the Premises. Tenant shall not commit or suffer to be committed any waste
in or upon the Premises.
27. It is understood and agreed that Tenant shall not place a load on
any floor of the premises exceeding the floor load per square foot area which
such floor was designed to carry and which is allowed by law. Landlord reserves
the right to prescribe the weight and position of all safes, vaults, and other
equipment which must be placed so as to distribute the weight. Business machines
and mechanical equipment shall be placed and maintained by the Tenant, at
Tenant's expense, in settings sufficient in the Landlord's judgment to absorb
and prevent vibrations, noise and annoyance.
28. Tenant (including Tenant's employees, agents, invitees, and
visitors) will use the Parking Spaces solely for the purpose of parking
passenger model cars, small vans and small trucks and will comply in all
respects with any rules and regulations that may be promulgated by Landlord from
time to time, with respect to the Parking Areas. The Parking Areas may be used
by Tenant, its agents or employees, for occasional overnight parking of
vehicles. Tenant will ensure that any vehicle parked in any of the Parking
Spaces will be kept in proper repair and will not leak excessive amounts of oil
or grease or any amount of gasoline. If any of the Parking Spaces are at any
time used (a) for any purpose other than parking as provided above; (b) in any
way or
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<PAGE> 46
manner reasonably objectionable to Landlord; or (c) by Tenant after default by
Tenant under the Lease, Landlord, in addition to any other rights otherwise
available to Landlord, may consider such default an event of default under the
Lease.
29. Tenant's right to use the Parking Areas will be in common with
other tenants of the Project and with other parties permitted by Landlord to use
the Parking Areas. Landlord reserves the right to assign and reassign, from time
to time, particular Parking Spaces for use by persons selected by Landlord,
provided that Tenant's rights under the Lease are preserved. Landlord will not
be liable to Tenant for any unavailability of Tenant's designated spaces, if
any, nor will any unavailability entitle Tenant to any refund, deduction, or
allowance. Tenant will not park in any numbered space or any space designated
as: RESERVED, HANDICAPPED, VISITORS ONLY, or LIMITED TIME PARKING (or similar
designation).
30. If the Parking Areas are damaged or destroyed, or if the use of the
Parking Areas is limited or prohibited by any governmental authority, or the use
or operation of the Parking Areas is limited or prevented by strikes or other
labor difficulties or other causes beyond Landlord's control, Tenant's inability
to use the Parking Spaces will not subject Landlord or any operator of the
Parking Areas to any liability to Tenant and will not relieve Tenant of any of
its obligations under the Lease and the Lease will remain in full force and
effect. Tenant will pay to Landlord upon demand, and Tenant indemnifies Landlord
against, any and all loss or damage to the Parking Areas, or any equipment,
fixtures, or signs used in connection with the Parking Areas and any adjoining
buildings or structures caused by Tenant or any of its employees, agents,
invitees, or visitors.
31. Tenant has no right to assign or sublicense any of its rights in
the Parking Spaces, except as part of a permitted assignment or sublease of the
Lease; however, Tenant may allocate the Parking Spaces among its employees.
Whenever and to the extent that the above rules conflict with any of the rights
or obligations of Tenant pursuant to the provisions of the Paragraphs of the
Lease, the provisions of the Paragraphs shall govern.
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<PAGE> 47
EXHIBIT "E"
PRUDENTIAL BUSINESS CAMPUS
HOLIDAY SCHEDULE
NEW YEAR'S DAY
MEMORIAL DAY
INDEPENDENCE DAY
LABOR DAY
THANKSGIVING DAY
CHRISTMAS DAY
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<PAGE> 48
EXHIBIT "F"
JANITORIAL SERVICES - TENANT AREAS
OFFICES - NIGHTLY CLEANING
1. Empty and clean ash trays and screen all sand urns (sand furnished by
Contractor). Wipe ash trays with cloth or sponge dampened with detergent to
remove soil.
2. Empty wastebaskets and other trash receptacles (liners to be
furnished by Contractor). Remove rubbish to compactor area and compact. Plastic
bags used for rubbish removal to be furnished by Contractor and shall be
adequate to hold contents without breaking.
3. Clean, polish and sanitize drinking fountains.
4. Dust, (using treated dust mop) or vacuum uncarpeted areas.
5. Remove fingermarks and smudges from doors, door frames, walls, light
switches and glass.
EVERY OTHER NIGHT - OFFICES
6. Dust with treated cloths, all office furniture, desk accessories
(including telephone shelving, window frames, sills up to 84" in height) and
other surfaces.
7. Vacuum all carpeted areas including edges and corners using beater
bar or brush vacuum cleaner.
WEEKLY - OFFICES
8. Spot clean walls, partitions, fixtures, and doors.
<PAGE> 49
MONTHLY - OFFICES
9. Wipe trash receptacles to remove evident soil.
10. High dust with treated cloths and vacuum all vents, louvers and
moldings and all other areas above hand high reach.
11. Dust picture frames and wash picture glass.
QUARTERLY - OFFICES
12. Dust all blinds.
NIGHTLY CLEANING - PUBLIC AREAS
13. Vacuum, clean and polish all elevator interiors, doors, tracks, saddles
and call buttons.
14. Clean and polish all entrance glass, frames and saddles.
15. Vacuum carpeted corridors.
16. Clean Lobby Floor. -A Nightly - sweep and damp mop.
-B Nightly spray buff with high speed buffing
machine.
-C Re-coat with non-slip wax as needed.
17. Maintain all janitorial closets in a clean and orderly condition.
18. Sweep stairways and landings, wiping clean all railings.
19. Clean, polish and sanitize drinking fountain.
20. Clean and screen all sand urns - refill sand as needed (sand supplied
by Contractor).
21. Sweep or dust mop all non-carpeted floors with treated cloth or mop.
22. Remove fingermark and smudges from doors and wall surfaces.
23. Wash concrete flooring and disinfect compactor area.
WEEKLY CLEANING - PUBLIC AREAS
24. Wet mop stairways and landings.
25. Spot check all carpeted areas.
26. Spray buff V.C.T. and recoat with non-slip wax as needed.
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27. Shampoo elevator carpet as required - public areas.
LAVATORIES - NIGHTLY CLEANING
28. Sweep, wash and disinfect all floors.
29. Clean and polish mirrors, shelves, fixtures and brightwork.
30. Wash and disinfect basins, bowls, urinals and walls around urinals.
31. Empty and clean waste receptacles and sanitary napkin disposal; fill
dispensers with tissues, towels, sanitary napkins and soap.
LAVATORIES - WEEKLY
32. Spot clean all non-tiled wall surfaces.
33. Tile walls and dividing partitions to be washed and disinfected.
34. High dust all doors, frames, ceilings and vents with treated cloth.
LAVATORIES - MONTHLY
35. Vacuum all vents and louvers.
36. Machine scrub floors.
SUPPLIES
37. All supplies furnished will be of a high quality conforming with
building standards.
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<PAGE> 1
EXHIBIT 10.39
LEASE AT SOUTHLAKE
THIS LEASE is made and entered into as of this 30 day of November,
1995, by and between LENEXA INDUSTRIAL PARK, INC., a Kansas corporation,
hereinafter referred to as Lessor, and INNOVEX INC., a Delaware corporation,
hereinafter referred to as Lessee.
WITNESSETH:
Lessor, for and in consideration of the rent and other covenants herein
contained to be kept and performed by Lessee, does hereby demise, lease, and let
to Lessee, and Lessee does hereby rent, hire, and take from Lessor and agrees to
occupy in accordance with the covenants hereinafter set forth, the premises
described in Exhibit "A" hereto. The premises are known and numbered as 15705
College Boulevard, Lenexa, Kansas 66219 and for purposes of this lease are
deemed to contain 15,474 square feet of rentable area.
1. TERM:
The original term of this Lease shall commence on the 1st day of
January, 1996, and shall continue for FIVE (5), ending on the 31st day of
December, 2000. (SEE ADDITIONAL PARAGRAPH 1A.)
Upon the expiration of the term of this Lease or its other termination,
Lessee shall return all keys, remove all of its personal property, and return
the premises to Lessor in accordance with the terms of this Lease. Should the
last day of this Lease fall on a Sunday or on a legal holiday, the termination
shall be on the preceding business day.
In the event Lessor is unable to deliver possession of the premises to
Lessee on the commencement date specified above, the ending date shall be
extended for a period equal to the delay in delivery of possession, plus the
number of days necessary to end the term on the last day of a month. Lessor and
Lessee shall execute an amendment to this Lease setting forth said revised
beginning and ending dates. (SEE ADDITIONAL PARAGRAPH 1B.)
Lessee agrees to vacate the premises on the ending date of the lease
term and shall indemnify Lessor from any damages which Lessor incurs from
Lessee's delay in vacating the premises. In the absence of any agreement to the
contrary, any occupancy of the premises after the ending date of this Lease
shall be a "month-to-month" tenancy, subject to all of the terms of this Lease
applicable to a month-to-month tenancy except that the basic rent then in effect
shall be increased by twenty-five percent (25%).
2. RENTAL:
The basic rental for the premises shall be at the rate of (SEE
ADDITIONAL PARAGRAPH 2A.) annually, payable in equal monthly installments,
without deduction or set off, each due and payable to Lessor on the first day of
each and every month of the term hereof in advance. Any rentals or other
payments required by this Lease not received by Lessor within ten (10) days
after the due date set forth herein shall be subject to a late charge of five
percent (5%) of the amount thereof for each month or portion of a month during
which said amount remains unpaid. Failure by Lessee to pay said late charge,
within ten (10) days after notice from Lessor that it is due shall constitute a
default of this Lease by Lessee. Lessor acknowledges receipt of Nine Thousand
One Hundred Sixty-Seven and 00/100 Dollars ($9,167.00) paid to Lessor by Lessee
concurrently with the execution of this Lease as a deposit, to be applied as
rent for the first month of the term hereof. All rental payments and other
payments required under this Lease shall be made to Lessor at P.O. Box 411299,
Kansas City, Missouri 64141-1299 or at such other place as may be requested by
Lessor in writing.
3. POSSESSION AND CONDITION AT BEGINNING OF TERM:
Lessor shall use diligence to give possession as nearly as possible at
the beginning of the term of this Lease, and rent shall abate pro rata for the
period of any delay in so doing, which abatement shall be in full for Lessee's
damages therefrom. Lessee has inspected and knows the condition of the premises
and accepts the same in their present condition (subject to ordinary wear, tear,
and deterioration in the event the term commences after the date hereof and to
the rights of present or former occupant, if any, to take his removable
property). Lessee acknowledges that neither Lessor, nor Lessor's agent, has
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made any representations or warranties concerning premises or their suitability
for Lessee's use, except as is set forth in this Lease.
Any changes in or to the premises to be accomplished by Lessor shall
only be as specifically set forth in Exhibit "B" hereto. Certification of the
completion of any such changes by the architect for the building shall be
conclusive evidence of such completion.
Lessor covenants and warrants to Lessee and to Realtor that to its
knowledge there are no conditions concerning the property except as set forth on
Exhibit "C" hereto related to the existence of asbestos, PCB transformers, or
other toxic, hazardous or contaminated substances (hereinafter referred to as
hazardous substances), and/or underground storage tanks on or about the premises
existing at the date of this Lease.
4. USE OF PREMISES:
The demised premises are leased as a commercial facility for the
purpose of administrative, data entry, and other general office functions and
are not to be used for any other purpose without first having secured the
written consent of the Lessor, which consent shall not be unreasonably withheld.
Lessee agrees to conduct its business in a manner that will not be
objectionable to other businesses in SOUTHLAKE including noise, vibration, odor,
or fumes. In the event Lessor receives complaints from other businesses in
SOUTHLAKE and determines, in its sole reasonable judgment, that Lessee is
conducting its operations in a manner so as to be objectionable to such other
businesses, Lessee agrees, upon notice from Lessor, to promptly modify the
conduct of its operations to eliminate such objectionable operations.
Lessee shall not use, store, generate, treat, transport, or dispose of
any hazardous substance on the premises without first obtaining Lessor's written
approval. Lessor may withdraw approval of any hazardous substance at any time,
for reasonable cause related to the threat of site contamination, or damage or
injury to persons, property or resources on or near the premises. Upon
withdrawal of such approval by Lessor, Lessee shall immediately remove the
hazardous substance from the premises. (SEE ADDITIONAL PARAGRAPH 4A.)
For any month in which any hazardous substances have been used,
generated, treated, stored, transported or otherwise been present on or about
the premises pursuant to the above provisions, Lessee shall provide Lessor with
a written report listing the hazardous substances which were present on the
premises, all releases that occurred or were discovered on the premises, all
compliance activities related to such hazardous substances including any
contacts with government agencies or private parties concerning the same. If
requested by Lessor, Lessee shall furnish Lessor with copies of all documents
and correspondence related to such activities and written reports of any oral
contacts relating thereto.
5. PUBLIC REQUIREMENTS:
Lessee shall comply with all applicable laws, ordinances, governmental
orders and regulations and other public requirements now and hereafter affecting
the premises or Lessee's use thereof, including but not limited to the
Declaration of Covenants and Restrictions Affecting SOUTHLAKE (attached hereto
as Exhibit "D") as the same may be lawfully amended from time to time, and shall
save and hold Lessor harmless from expense or damage resuming from failure to do
so. (SEE ADDITIONAL PARAGRAPH 5A.)
6. ASSIGNING AND SUBLEASING:
Lessee shall not sublet the premises or any part thereof and Lessee
shall not assign, transfer, pledge, mortgage or otherwise encumber this Lease,
or any portion of the term thereof, without the previous written consent in each
instance of Lessor, and Lessee shall furnish to Lessor with each request a copy
of such proposed instrument; Lessor agreeing, however, not to arbitrarily
withhold consent to subletting for any legitimate business not detrimental to
the premises or adjacent property, or occupants thereof, and not more hazardous
on account of fire or otherwise, and not creating wear and tear to the premises
more than the business for which the premises are herein leased. Permission is,
however, granted Lessee to assign this Lease and
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<PAGE> 3
also to sublet the premises to any subsidiary corporation or parent corporation
of Lessee, upon giving Lessor written notice of intent so to do. In the event of
any assignment or subletting, Lessee shall remain the principal obligor to the
Lessor under all covenants of this Lease, and by accepting any assignment or
subletting, an assignee or sublessee shall become bound by and shall perform all
of the terms, conditions and covenants by which the Lessee hereunder is bound.
7. INSURANCE:
Lessor shall, throughout the term of this Lease, maintain fire and
extended coverage insurance on the premises leased in an amount equal to the
full insurable value thereof, subject to any allowances for coinsurance rating
provisions utilized by Lessor. Lessor shall also carry owner's public liability
and property damage insurance coverage on the premises with limits not less than
$1,000,000 combined single limits. Subject to the provisions of Paragraph 16
hereof, all such insurance shall be for the sole benefit of the Lessor and under
its sole control.
Lessee shall comply with all insurance regulations so the lowest insurance rates
consistent with the use of the premises permitted by this Lease may be obtained,
and shall not permit anything on or about the leased premises which would make
void or voidable any insurance now or hereafter on the premises. If, during the
term of this Lease, the fire and extended coverage insurance rates are
increased, or the amount of insurance coverage is increased in order to comply
wish Lessor's obligations contained in this Paragraph 7. Lessee agrees to
reimburse Lessor for Lessee's percentage of the amount of such increased
insurance cost in any year of the Lease term in excess of the base insurance
cost to which this Lease is subject. It is agreed, that the base insurance cost
for the leased premises (or for the entire building of which the premises are a
part if the premises are a part of a multi-tenant building) is $ 0. Proration
shall be made for partial year's occupancy in the first and last year of the
Lease term.
8. TAXES:
Lessor shall pay all ad valorem taxes and special assessments lawfully
levied against the premises during the term of this Lease. Lessee agrees to pay
Lessor the Lessee's percentage of the amount of ad valorem taxes and special
assessments, if any, levied against the leased premises in any year of the lease
term in excess of the base taxes to which this Lease is subject. In the event
Lessor retains the services of an attorney or tax consulting firm to attempt to
reduce the valuation of the premises for tax purposes, Lessee shall pay Lessor
the Lessee's percentage of the cost of said professional services. It is agreed
that the base taxes for the leased premises (or for the entire building of which
the premises are a part if the premises are part of a multi-tenant building) are
$ 0. Proration shall be made for partial years occupancy during the first and
last year of the lease term.
9. MAINTENANCE BY LESSOR:
Lessor shall keep in repair, ordinary wear and tear excepted, only the
roof, foundations, exterior walls (exclusive of inside surfaces, glass, dock
bumpers, louvers or doors therein), gutters and downspouts of any building of
which the premises are a part and shall also make any repairs required due to
fire or other insured casualty, but Lessee shall be responsible for the cost of
any of the foregoing repairs resulting from Lessee's negligence or abuse or the
negligence or abuse of Lessee's invitees (e.g. delivery truck, etc.), including,
but not being limited to, the neglect or abusive handling or storage of
hazardous substances, and shall also be responsible for the deductible portion
only of any repair covered by Lessor's insurance on the premises. Before any
obligation on Lessor to make repairs, Lessor shall first be given written notice
of any defects and shall have a reasonable time thereafter to make such repairs;
and Lessor shall in no event be liable for damages beyond the actual cost of any
repairs Lessor fails to make within a reasonable time after such written notice.
Lessee shall reimburse Lessor for Lessee's percentage of the foregoing
maintenance costs. Lessor shall also be responsible for such additional
maintenance responsibilities, if any, as are set forth in Paragraph 23 of this
Lease.
10. OUTSIDE STORAGE:
Lessee shall not use any part of the exterior of the premises for
outside storage except for proper storage of trash in enclosed metal containers
located as directed by Lessor, pending regular pickup of the same.
11. MAINTENANCE BY LESSEE:
Subject to the foregoing obligation of Lessor and further subject to
the provisions of Paragraph 23 of this Lease, Lessee agrees to take good care of
the premises and appur-
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tenances thereto, and to keep them in good repair and sanitary condition, free
from filth, and hazardous substances, overloading, danger of fire, or any pest
or nuisance, and to keep all mechanical systems in good working order. Lessee
shall conduct a continuing program of preventive maintenance covering such
mechanical equipment, including regular service and maintenance to heating and
air conditioning equipment by competent tradesmen and shall furnish Lessor
evidence of such maintenance upon request. Lessee shall not permit any waste of
the premises. At the expiration or other termination of this Lease, Lessee shall
return the premises to Lessor pursuant to the terms of this Lease, broom clean,
and in good and sanitary order, condition and repair, except for such wear and
tear as would be normal for the period of Lessee's occupancy and except for
damage by fire, explosion or other insured casualty. If Lessee fails to do
anything required of Lessee in this paragraph or elsewhere in this Lease within
a reasonable time, Lessor may, at Lessor's option, perform the same at Lessee's
expense. (SEE ADDITIONAL PARAGRAPH 11A.)
No spill, deposit, emission, leakage or other release of hazardous
substances on the premises shall be deemed to be "wear and tear as would be
normal for the period of Lessee's occupancy". Lessee shall be responsible to
promptly and completely clean up any such release caused by Lessee, its
employees, agents, contractors and invitees as shall occur on the premises
during the term of this Lease and shall surrender the premises free of any
contamination or other damage caused by such occurrences during the term of this
Lease.
12. ALTERATIONS AND ADDITIONS:
Lessee shall have the right, at its sole expense, to make
non-structural additions, improvements, or modifications to the interior of the
premises for the convenient conduct of its business. All such changes shall be
made in a good workman-like manner and in accordance with applicable codes and
regulations, and shall become a part of the premises; provided, however, that at
Lessor's option Lessor may require Lessee to restore the premises to their
original condition at the termination of this Lease. Lessee shall give Lessor
poor written notice of any alterations, additions, improvements or modifications
so made. Any increase in ad valorem taxes or insurance premiums resulting from
such improvements shall be the sole responsibility of Lessee.
Lessee shall have the right to install such machinery, equipment, and
business and trade fixtures as it deems necessary, and such items shall remain
the property of Lessee and shall be removed at the termination of this Lease,
the Lessee repairing any damage occasioned by removal If Lessee shall obtain
written consent of Lessor to leave any machinery or like equipment in the
premises, then the full title to such machinery and equipment shall thereupon
pass to Lessor.
13. LESSOR'S RIGHT OF ENTRY:
Lessor, or Lessor's Agent, may enter upon the premises at reasonable
hours, upon reasonable prior notice, to examine the same and to do anything
required of Lessor hereunder or which Lessor may deem necessary for the good of
the premises. Such right of entry and inspection shall not constitute managerial
or operational control by Lessor over any actvities of Lessee in the premises.
During the last 180 days of this Lease, Lessor may display a sign offering bee
premises for sale or for lease, which sign may be affixed in a conspicuous place
on the front of the premises.
14. SIGNS AND ADVERTISEMENTS:
Lessee shall not install nor permit the installation of any signs in or
upon the premises which are visible from the exterior thereof without the
written approval of Lessor. All such signs shall be installed in accordance with
the terms of such approval and in conformance with applicable laws and
regulations and provisions of the Declaration of Covenants and Restrictions
Affecting SOUTHLAKE. Lessee shall remove all signs from the premises at the
termination of this Lease and shall repair any damage to the premises caused by
its signs at as sole cost and expense.
15. LIABILITY:
Lessee hereby relinquishes all claims, releases, assumes all risks and
agrees to hold Lessor harmless from any liability for any damage done or
occasioned by or from any plumbing, wiring, gas, water, steam, sprinkler system,
equipment or other pipes, or the bursting, leaking or running of any tank,
washstand, water closet, waste pipe or other articles in, above, upon or about
the building or premises, or for damage occasioned from or by water, snow, or
ice being upon, above or about the premises unless caused by the
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<PAGE> 5
intentional act or omission of Lessor. Lessee also agrees to hold Lessor
harmless from any claim, damage, liability or expense (inducing attorneys' fees)
incurred by, claimed, or assessed against Lessor in any way occasioned by
hazardous substances on the premises or by the negligent or intentional
activities of Lessee during or in conjunction with, or arising from Lessee's
occupancy of the premises pursuant to this Lease.
Lessor and Lessee hereby expressly waive any cause of action or right
of recovery which either may have hereafter against the other for any loss or
damage to the leased premises, or to the contents thereof, from all claims and
liabilities arising from or caused by any hazard chat could be covered by a
standard fire insurance policy with extended coverage and "all risk" endorsement
on the leased premises, or on the contents thereof, and each party hereto shall
obtain a waiver from any insurance carrier with which it carrier insurance
covering the leased premises, or the contents thereof, releasing its subrogation
rights as against the other party, and upon request by either party evidence of
said waiver shall be furnished by each party hereto to the other party.
Lessee agrees to save and hold Lessor harmless from any claim, damage,
liability, or expense arising from any injury, (including death) to persons or
damage to property occurring in, on or about the premises arising out of the use
or occupancy of the premises by Lessee. Lessee shall maintain in effect
throughout the term of this Lease, general public liability insurance covering
the premises, and including the Lessor as an additional insured, with combined
single limits not less than $1,000,000.00. (SEE ADDITIONAL PARAGRAPH 15A.)
All merchandise and property in or about the premises shall be at
Lessee's sole duty and risk and Lessee does hereby now and forever relinquish
all claims, release, and agree to hold Lessor harmless from any claims for
damages thereto or any of same, howsoever caused.
16. DAMAGE BY CASUALTY:
If, during the term hereof, or previous thereto, the premises or any
building of which the premises are a part shall suffer damage by fire,
explosion, providential means, or any other casualty to the extent that the
premises or building cannot reasonably be repaired within 120 days after date of
such damage, or to such an extent that under the then existing laws, orders,
ordinances or other public requirements the same cannot be repaired to
substantially the same form and with substantially the same materials as before
such damage, then the term hereby created shall terminate as of the date of such
damage and rent shall cease as of the date of such damage, with proportionate
refund of any prepayment, on condition Lessee forthwith surrenders the premises
to Lessor. If this Lease is not so terminated, then Lessor shall repair the
premises as soon as practicable with due diligence, placing the same in as good
condition as they were just before such damage, and rent shall abate pro rata
and in proportion to untenantability of the premises from the time of such
damage until restoration of the premises by Lessor. It is further agreed that
the period for reconstruction shall be extended for such time during which
strikes, riots, civil commotion, governmental intervention, acts of God, or any
other contingency beyond Lessor's control shall delay the construction. In case
of such damage, whether this Lease is thereby terminated or not, Lessee shall
remove all of the rubbish and debris of Lessee's property within five (5) days
after written request by Lessor, and if this Lease is not thereby terminated.
Lessee shall not do anything to hinder or delay Lessor's work of repair, and
will cooperate with Lesson such work. Lessor shall not be liable for
inconvenience to Lessee by making repairs to any part of the premises or
building, nor for the restoration of any improvements made by Lessee. nor for
the restoration of any property of Lessee. Notwithstanding anything herein to
the contrary in the event the holder of any indebtedness secured by a mortgage
or deed of trust covering the premises requires that the insurance proceeds be
applied to such indebtedness, then Lessor shall have the right to terminate this
Lease by delivering written notice of termination to Lessee, whereupon all
rights and obligations hereunder shall cease and terminate.
17. DEFAULT:
If there be default in payment of any rent or in any other of Lessee's
obligations hereunder or if the premises be abandoned or vacated, and if such
default or condition shall continue after ten (10) days' notice, or thirty (30)
days notice for non-monetary defaults, in writing, from Lessor to Lessee to make
good such default or correct such condition, Lessor may, at Lessor's option, at
any time thereafter while such default or condition continues, without further
notice or demand, declare His Lease terminated and enter upon and repossess the
premises free of this Lease; or Lessor may, at Lessor's option in the event
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the premises be abandoned or vacated, enter upon and repossess the premises
without judicial proceedings, or in the event the premises are not abandoned or
vacated Lessor may obtain possession of the premises by summary proceedings,
such as by an action for rent and possession (it being understood that rent and
possession is only an example of a summary proceeding and is not intended to
limit the type of summary proceeding this right would extend to), Lessee hereby
acknowledging that the repossession of the premises without judicial proceedings
as aforesaid or the obtaining of possession by summary proceedings as aforesaid
(and any subsequent judgment entered as a result of such a proceeding), shall
not terminate the Lease and shall not absolve the Lessee from liability for rent
for the remainder of the term; Lessee hereby acknowledging that in the event
Lessor receives possession by abandonment, agreement or by summary proceeding,
possession has been obtained and retained by Lessor as Agent of the Lessee and
Lessor is authorized to relet the premises as Agent for the balance of the term
of this Lease, for a shorter or longer term, at such rental as Lessor deems fit,
and may receive the rents therefor, applying the same first to the payment of
the expense of such reletting and second to the payment of rent due and to
become due under this Lease, Lessee remaining liable for and agreeing hereby to
pay Lessor any deficiency. Provided, however, if any such default be other than
for non-payment of money and it would take more than to thirty (30) days to cure
the same, Lessor shall not be entitled to terminate this Lease or enter upon the
premises for such default if Lessee begins the cure of such default within said
Thirty (30) days and prosecutes the cure thereof with due diligence to
completion. If any proceedings under the present or any other Bankruptcy Code,
including but not being limited to voluntary or involuntary straight bankruptcy
proceedings, arrangements or reorganizations, be instituted by or against
Lessee, or if a receiver or trustee be appointed for or ordered to dispose of
Lessee's business or property, or if Lessee makes any assignment or conveyance
for benefit of creditors, the same shall constitute a breach of this Lease and
Lessor shall forthwith on such breach be entitled to collect damages therefor as
provided by law, and, in addition thereto, Lessor shall, to the extent permitted
by law, have the right of termination, entry and repossession as above, in this
paragraph set forth.
18. EMINENT DOMAIN:
If the premises or any substantial part thereof shall be taken by any
competent authority under the power of eminent domain, or a conveyance thereof
be made in lieu of or in anticipation of the exercise of such power, or if the
premises or any substantial part thereof be acquired for any public or
quasi-public use or purpose, the term of this Lease shall cease and terminate
upon the date when the possession of said premises or the part thereof so taken
shall be required for such use or purpose and without apportionment of the
award, and Lessee shall have no claim against Lessor for the value of any
unexpired term of this Lease. In said event, rent at the then current rate shall
be apportioned as of the date of the termination. No money or other
consideration shall be payable by the Lessor to the Lessee for the right of
cancellation and the Lessee shall have no right to share in the condemnation
award or in any judgment for damages caused by the taking. Nothing in this
paragraph shall preclude an award being made to Lessee for loss of business or
depreciation to and cost of removal of equipment or fixtures.
19. UTILITIES:
Except as set forth in Paragraph 23 hereof, Lessee shall contrast in
its own name and pay for all charges for water, sewer charges, gas, heat, oil,
electricity, fuel, telephone and other utilities used in or serving the premises
during the term of this Lease.
20. MECHANIC'S LIENS:
Lessee will not permit any mechanic's liens, or other liens, to be
placed upon the premises or any building improvement thereon during the term
hereof, and in case of the filing of any such lien, Lessee will promptly pay
same; provided, however, that Lessee shall have the right to contest the
validity or amount of any such lien upon posting security with Lessor which in
Lessors sole reasonable judgment is adequate to pay and discharge any such lien
in full if held valid. If Lessee fails to pay or otherwise discharge any lien
after thirty (30) days' notice from Lessor that a lien has been filed,
Lessor shall have the right and privilege at Lessor's option of paying the same
or any portion thereof without inquiry as to the validity thereof, and any
amounts so paid, including expenses and interest, shall be immediately due by
Lessee to Lessor and shall be paid promptly upon presentation of bill thereof.
21. MORTGAGES AND ESTOPPEL CERTIFICATES:
This Lease shall be subject and subordinate to any mortgage or deed or
trust now or at any time hereafter constituting a lien or charge upon the
premises or the improve-
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ments situated thereon. Lessee shall at any hereafter on demand execute any
instruments, releases or other documents which may be required by any such
mortgagee for the purpose of subjecting and subordinating this Lease to the lien
of any such mortgage. (SEE ADDITIONAL PARAGRAPH 21A.)
Lessee shall at any time and from time to time, upon not less than (10)
days' prior request by Lessor, execute, acknowledge and deliver to Lessor a
statement in writing certifying that (i) this Lease is unmodified and in full
force and effect (or if there have been modifications that the same is in full
force and effect as modified and identifying the modifications, (ii) the dates
to which the base rent and other charges have been paid, and (iii) so far as the
person making the certificate knows, Lessor is not in default under any
provisions of this Lease (or if there are defaults, specifying the defaults). It
is intended that any such statement may be relied upon by any person proposing
to acquire Lessor's interest in this Lease or the premises, or any prospective
mortgagee of, or assignee of any mortgage upon such interest or the premises.
22. SECURITY DEPOSIT:
Lessee agrees to deposit on the date hereof the sum of Fourteen
Thousand One Hundred Eighty-Four and 00/100 Dollars ($14,184.00), which sum
shall be held by Lessor, without obligation for interest, as security for the
performance of Lessee's covenants and obligations under this Lease; it being
expressly understood that such deposit is not an advance rental deposit or a
measure of Lessor's damages in case of Lessee's default. Upon the occurrence of
any event of default by Lessee, Lessor may, from time to time, without prejudice
to any other remedy provided herein or provided by law, use such fund to the
extent necessary to make good any such default, or any damage, expense, or
liability caused by such default, and Lessee shall promptly pay to Lessor on
demand the amount as applied in order to restore the security deposit to its
original amount. Failure of Lessee to restore the security deposit, as set forth
above, within ten (10) days from demand by Lessor shall constitute an act of
default under this Lease. If Lessee is not then in default hereunder, the
balance of such deposit shall be returned by Lessor to Lessee upon termination
of this Lease and return of the premises to Lessor in accordance with the terms
thereof.
23. DEFINED SERVICES BY LESSOR TO LESSEE:
It is agreed chat for purposes of this Lease, Lessee occupies 36.14% of
the floor space in the building of which the premises are a part (Lessee's
percentage) and 11.35% of the floor space in the project in which the premises
are located (Lessee's CAM percentage).
(a) Lessor shall furnish and pay for water, fire sprinkler charges and
normal trash removal used in and servicing the building of which the premises
are a part and Lessee shall reimburse Lessor for Lessee's usage of said
services. If Lessee's usage reasonably exceeds normal usage in the building as
measured by floor space occupied by Lessee, Lessor may levy an appropriate
surcharge to properly reflect Lessee's usage of said utilities and services.
(b) Lessor shall also furnish other services for the benefit of Lessee
pertaining to the building and the project of which the premises are a part such
as landscaping and paving maintenance, maintenance to project and tenant
signage, snow removal, exterior lighting, and charges levied pursuant to the
Declaration of Covenants and Restrictions to which the premises are subject and
Lessee shall reimburse Lessor for Lessee's CAM percentage of such costs incurred
by Lessor on Lessee's behalf.
It is agreed that Lessee's payment to Lessor for paving maintenance
during the original term of this Lease shall be $ 774.00 annually, payable as
set forth in 23(f) below. Lessor reserves the right to equitably adjust said
payment during extensions of said original term. In consideration of such
payment, Lessor agrees to be responsible for all paving maintenance in the
project of which the premises are a part and Lessee shall bear no additional
cost for paving maintenance unless the same is occasioned by Lessee's abuse of
paved areas serving the premises.
Page 7 - Defined Service Lease (SOUTHLAKE)
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<PAGE> 8
(e) It is specifically understood that Lessor's performance of any of
the defined services set forth in this Paragraph 23 shall not extend to the
assumption of any of Lessee's responsibilities under this Lease related to
hazardous substances as the same are defined and covered throughout this Lease.
(f) Promptly following execution of this Lease, and on or about the
commencement of each calendar year during the term of this Lease, Lessor shall
notify Lessee of the estimated annual amount of Lessee's cost of the
reimbursements for defined services called for in this Paragraph 23 and
including Paragraphs 7, 8, and 9 hereof, and Lessee shall pay one-twelfth (1/12)
of said amount as additional rent with each monthly installment of basic rent
due under this Lease.
As near as possible following the end of each calendar year, Lessor
shall furnish Lessee with a statement of Lessee's reimbursements called for in
this Paragraph 23 and Lessee shall pay the balance due, if any, upon receipt of
statement therefor, or shall receive credit in the coming year for any excess
paid by Lessee during the previous year.
24. WAIVER:
A waiver by Lessor of any default or breach hereunder shall not be
construed to be a continuing waiver of such default or breach, nor as a waiver
or permission, expressed or implied, of any other or subsequent default or
breach. All waivers must be in writing and no course of conduct shall establish
a custom or confer any rights upon Lessee.
25. NOTICES:
Unless otherwise designated by like notice in writing by either party
to the other, notices required herein shall be sent by registered or certified
mail as follows:
To Lessor: Lenexa Industrial Park, Inc.
1220 Washington
Kansas City, Missouri 64105
To Lessee: Innovex Inc.
11250 Corporate Avenue
Lenexa, Kansas 66219
Attn: Life Starbird
Notices so mailed shall be deemed duly given upon mailing, postage prepaid,
addressed as above indicated.
26. SUCCESSORS:
All of the terms, covenants and conditions of this Lease shall apply
and inure to the benefit of, and be binding upon the parties hereto, and upon
their respective successors in interest and legal representatives, except as
otherwise provided herein.
27. QUIET POSSESSION:
Lessor covenants with Lessee that Lessee, on paying the rent herein
required to be paid and performing the covenants herein contained, shall and may
peaceably and quietly have, hold and enjoy the premises during the term of this
Lease.
28. PROCUREMENT OF THIS LEASE:
It is understood by the parties hereto that this Lease has been
negotiated by The Zimmer Companies, Inc., hereinafter called Realtor. It is
understood that said Realtor has acted in the capacity of Agent for the Lessor
and both Lessor and Lessee acknowledge that said Realtor and no other was the
procuring cause of this Lease. Lessor agrees to pay said Realtor, and no other,
a commission for services rendered herein in accordance with written agreement
between Lessor and Realtor named herein.
Page 8 - Defined Service Lease (SOUTHLAKE)
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<PAGE> 9
It is understood that the above named Realtor, or members of the above
named Realtor firm, have a financial interest in the ownership of the premises
covered by this Lease.
29. ATTORNEY'S FEES:
If any action at law or in equity shall be brought to enforce any of
the covenants, terms or conditions of this Lease, the prevailing party shall be
entitled to recover from the other party, as part of the prevailing party's
costs, reasonable attorney's fees, the amount of which shall be fixed by the
court, and shall be made a part of any judgment or decree rendered.
30. DEFINITIONS:
(a) HAZARDOUS SUBSTANCE
"Hazardous Substance(s)" shall mean any substance which at any time
shall be listed as "hazardous" or "toxic" under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et
seq., as amended and the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. Section 6901 et seq., as amended, or in the regulations implementing such
statutes, or which has been or shall be determined at any time by any agency or
court to be a hazardous or toxic substance regulated under any other applicable
laws (as hereinafter defined). The term "hazardous substance(s)" shall also
include, without limitation, raw materials, building components, the products of
any manufacturing or other activities on the premises, wastes, petroleum
products, or special nuclear or by-product material as defined by the Atomic
Energy Ad of 1954, 42 U.S.C. Section 3011, et seq., as amended.
(b) APPLICABLE LAW(S)
"Applicable Law(s)" shall include, but shall not be limited to, CERCLA,
RCRA, the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.,
the Clean Air Act, 42 U.S.C. Section 7401 et seq., as amended, and the
regulations promulgated thereunder, and any other federal, state and/or local
laws or regulations, whether currently in existence or hereafter enacted or
promulgated, that govern or relate to:
(1) The existence, cleanup and/or remedy of contamination of
property;
(2) The protection of the environment from spilled, deposited or
otherwise emplaced contamination.
(3) The control of hazardous or toxic substances or wastes; or
(4) The use, generation, discharge, transportation, treatment,
removal or recovery of hazardous or toxic substances or
wastes, including building materials
31. LEASE CONSTITUTES ENTIRE CONTRACT:
Each party to this Lease acknowledges that this Lease constitutes all
of the agreements between the parties hereto, and that no representations,
warranties, or other covenants are included except as set forth herein, and this
Lease shall not be recordable, but a "Memorandum of Lease" in usual and
customary form will be executed and acknowledged by the parties, upon request of
either party, which may be recorded.
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9IZM2
<PAGE> 10
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease
Agreement or have caused it to be executed by their respective authorized
representatives the day and year first above written. Each of the persons
executing this Lease represent that they are authorized to execute the same on
behalf of the party for whom they have executed hereafter.
<TABLE>
<S> <C>
INNOVEX INC.
/s/ Janet H. Parkey
- ---------------------------- -----------------------------------------------------
By: /s/ Janet H. Parkey Lessee
-----------------------------------------------------
Title: Vice Pres. - Finance & Support Services
LENEXA INDUSTRIAL PARK, INC.
/s/ Hugh J. Zimmer
- ---------------------------- -----------------------------------------------------
By: Hugh J. Zimmer Lessor
</TABLE>
For the provisions of Paragraph 3, POSSESSION AND CONDITION AT
BEGINNING OF TERM, and Paragraph 28, PROCUREMENT OF THIS LEASE, only, the
undersigned Realtor is made a party to this Contract.
<TABLE>
<S> <C>
THE ZIMMER COMPANIES, INC.
/s/ Hugh J. Zimmer
---------------------------- -----------------------------------------------------
</TABLE>
This lease consists of 12 pages, together with attached Exhibits "A", "B",
"B-1.1", B-1.2", "B-2", "C" and "D".
Page 10 - Defined Service Lease (SOUTHLAKE)
9IZM2
<PAGE> 11
ADDITIONAL PARAGRAPHS TO LEASE
LESSEE: INNOVEX INC.
LESSOR: LENEXA INDUSTRIAL PARK, INC.
1A. TERM:
Lessee is hereby granted the option of terminating this Lease Agreement
at one time during the term hereof. The following termination schedule shall
apply and shows the date in which written notification of Lessee's desire to
terminate shall be delivered to Lessor along with the effective date of the
termination, as well as the corresponding termination penalty which shall be
paid by Lessee to Lessor on the effective date of said termination.
<TABLE>
<CAPTION>
Notification Date Effective Date Termination Penalty
By Lessee to Lessor of Termination Paid by Lessee to Lessor
------------------- -------------- ------------------------
<S> <C> <C>
June 30, 1998 December 31, 1998 $56,736.00
</TABLE>
1B. TERM
In the event Lessor is unable to deliver possession of the premises to
Lessee, with Lessor's work as set forth on Exhibit "B" substantially completed,
by March 1, 1996, Lessee shall have the right to terminate this Lease by notice
thereof to Lessor. Lessor will use its best efforts to prepare the Northeast
area of the space including the reception area and restrooms in a tenantable
condition by January 1,1996.
2A. RENTAL:
Basic rental for the premises shall be the following:
<TABLE>
<CAPTION>
Period $/Month
-------------------------------- -------------
<S> <C>
January 1, 1996 - June 30, 1996 $ 9,167.00
July 1, 1996 - December 31, 1996 $11,458.00
January 1, 1997 - June 30, 1997 $12,830.00
July 1, 1997 - December 31, 2000 $14,184.00
</TABLE>
4A. USE OF PREMISES:
Notwithstanding the foregoing, Lessee shall have the right to use
hazardous substances in insubstantial amounts, in the ordinary course of the
operation of an office.
5A. PUBLIC REQUIREMENTS:
It is expressly acknowledged and agreed by the Lessor that the
responsibility for and cost associated with causing the exterior common areas of
the building and property to comply with Title III of the Americans with
Disabilities Act ("ADA") are the Lessor's.
11A. MAINTENANCE BY LESSEE:
Notwithstanding the foregoing, Lessee's obligations under this paragraph
shall be limited to such mechanical equipment, utility lines and other
facilities which serve the premises exclusively.
15A. LIABILITY:
Lessor agrees to save and hold Lessee harmless from any claim, damage,
liability or expense arising from any injury (including death) to persons or
damage to property occurring in, on or about the premises, to the extent caused
by or arising out of the activities of Lessor, its employees, agents,
contractors, servants or invitees.
21A. MORTGAGES AND ESTOPPEL CERTIFICATES:
As a condition of any subordination of this Lease to any mortgage or
deed of trust at any time hereafter constituting a lien or charge upon the
premises, or the improvements situated thereon, the holder of any such mortgage
or deed of trust shall be required to agree in writing with Lessee that so long
as Lessee is not in default of its obligations under this Lease beyond the
period, if any, provided herein for the cure of such default, Lessee's
possession of the premises and its estate under this Lease shall not be
disturbed by reason of a foreclosure of such mortgage or deed of trust or
conveyance in lieu thereof.
32. PREFERENTIAL RIGHT TO LEASE ADJACENT SPACE:
Lessee is granted a preferential right to lease the 12,025 rentable
square feet which are currently under lease to VisualTools, Inc. by Lease dated
February 10, 1993 and are
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9IZM2
<PAGE> 12
adjacent to the premises in the building of which the premises are a part as the
same may become available for lease to third parties and occupancy from time to
time during the term of this Lease. At such time as said adjacent floor space
becomes available for lease, Lessor shall notify Lessee of said availability
stipulating the amount of space available, the rental, and other terms by which
Lessor is agreeable to lease said space. For a period of twenty (20) days
following receipt of said notice, Lessee shall have the right to lease said
adjacent space upon the terms offered, or upon such other terms as Lessor and
Lessee may agree. If Lessor and Lessee have failed to execute a lease covering
said adjacent space within twenty (20) days from the date of Lessor's notice of
availability, this preferential right shall automatically expire without further
notice and Lessor shall have the right to lease said adjacent space to others
without regard to this preferential right except if Lessor is willing to accept
a cash rental less than ninety percent (90%) of the cash rental specified in
Lessor's notice to Lessee. Lessor shall then give a second notice to Lessee
specifying said revised terms and Lessee shall have an additional ten (10) day
period following receipt of said second notice in which to lease said adjacent
space upon the revised terms offered.
This preferential right granted to Lessee is subject to the provisions
of a Lease between Lessor and Bankline MidAmerica, Inc., dated February 25,
1991, which grants to Bankline MidAmerica, Inc. a preferential right to lease
space which is adjacent to their premises on the east.
33. OPTION TO RENEW:
Provided Lessee is not then in default of any of the provisions
hereunder and this Lease has not been terminated or canceled under any other
provisions hereof, it is agreed that the Lessee shall have the option to extend
the original term hereof for one (1) additional and consecutive five (5) year
term commencing with the end of the original term. The five (5) year term shall
be referred to hereinafter as the extended term. In the even Lessee exercises
this option, all terms and conditions of this Lease shall be applicable to the
extended term except for basic rental, which shall be adjusted as set forth
hereafter.
In the event Lessee wishes to extend the term as set forth above, Lessee shall
give written notice to Lessor of its intent to so extend at least six (6) months
prior to the expiration of the original term.
Basic rental for the extended term shall be at the rate of One Hundred Ninety
Five Thousand Seven Hundred Forty Four and 00/100 Dollars ($195,744.00)
annually, payable in equal monthly installments of Sixteen Thousand Three
Hundred Twelve and 00/100 Dollars ($16,312.00).
Page 12 - Defined Service Lease (SOUTHLAKE)
9IZM2
<PAGE> 13
[THE TECH CENTER AT SOUTHLAKE MAP]
<PAGE> 14
EXHIBIT "B"
Southlake Tech Center #1
15705 College Blvd
Lenexa, Kansas 66219
[FLOOR PLAN]
<PAGE> 15
[FLOOR PLAN]
EXHIBIT B1
[SPACE PLAN]
<PAGE> 16
[FLOOR PLAN]
EXHIBIT B-1.1
[WALL FINISHES]
<PAGE> 17
[LEGEND]
[FLOOR PLAN]
EXHIBIT B-1.2
[ADDITIONAL ELECTRICAL OUTLETS]
<PAGE> 18
EXHIBIT B-2
Outline Specifications
for Innovex
Southlake Tech Building #1
15705 College Blvd.
Lenexa, Kansas 66219
- - The Lessor will procure all necessary building permits as required by
the City of Lenexa in order to expedite occupancy for the Lessee.
- - The premises, prior to occupancy will be cleaned and left in a state
that will allow the Lessee to occupy the premises. All carpeted areas
will be vacuumed and cleaned as required. All restrooms and public
areas will be cleansed and sanitized. All VCT flooring will be cleaned
and waxed. All interior windows will be cleaned. All walls and
doors/frames will be cleaned as required. All cleaned as required.
- - Demolition of existing walls as noted on the attached Exhibit B will be
removed by Lessor. Areas requiring repair and patch back will be
performed in a good workmanlike manner and in a standard conforming to
good quality commercial construction.
- - Wood blocking and backing as required will be installed.
- - Demolition areas receiving new acoustical ceiling will have 3-1/2
blanket insulation installed.
- - All new roof penetrations for new mechanical equipment installed by the
Lessor will be performed as required by the roofing manufacturer to
insure proper warranty continuance.
- - All existing and new doors installed will be equipped with lever style
door hardware.
- - Drywall surfaces requiring patching and repair will be performed prior
to final wall finish. Final wall finishes shall be installed as
outlined on Exhibit B-1.1. Wallcovering shall be Koroseal Palais
Antique 8921-10 Walls as indicated to receive paint shall he painted
Sherwin Williams Interior Latex Paint. Walls and door frames shall be
painted with SW 1305.
- - New acoustical ceilings installed will be standard 2x4x5/8"
non-directional ceiling tile as manufactured by Armstrong or equal.
Acoustical grid system shall be Armstrong Series 200.
- - New 4" rubber cove base with toe will be installed on all new and
existing partitions. Color to be #64 Smoke.
- - Floor areas to receive VCT shall be the rear vestibule area, telephone,
room, janitor closet, and breakroom. Tile shall be 12x12x1/8" Armstrong
or equal.
- - Carpeted areas will he furnished with new 26 oz. Level Loop Direct glue
carpet as manufactured by Holleytex. Carpet shall be Holleytex 730 Blue
Suede. Areas with existing ceramic file or quarry tile shall remain.
- - The existing fire protection system will be modified to accommodate the
revised floor plan and shall be performed in conformance with NFPA and
the City of Lenexa Codes Enforcement and Fire Department.
- - The base HVAC system will be modified to accommodate a Parker Control
Zoning System. Ten zones of control will be included. The existing
demolished area will have a new 5 ton combination roof top unit
installed. The existing will be modified to be in conformance with
ASHRAE standards for this location.
- - All existing light fixtures will be modified with T8 lamps with
electronic ballast, and paracube lenses. All lighting in general open
office areas will be controlled by motion sensor devices. Emergency and
exit lights will be installed as required by building codes and the
fire department. New electrical devices to be installed shall be
installed as indicated on Exhibit B-1.2. Exact locations shall be
determined by Lessee prior to installation.
<PAGE> 19
EXHIBIT"C"
NO EXCEPTIONS.
<PAGE> 20
Exhibit "D"
DECLARATION
WITH RESPECT TO
COVENANTS AND
RESTRICTIONS
AFFECTING
SOUTHLAKE
[SOUTHLAKE LOGO]
<PAGE> 21
DECLARATION
WITH RESPECT TO
COVENANTS AND RESTRICTIONS
AFFECTING SOUTHLAKE
THIS DECLARATION is made as of this 1st day of April, 1986 by LENEXA INDUSTRIAL
PARK, INC., a Kansas Corporation, (hereinafter called Declarant).
WHEREAS, this Declaration relates to a tract of land situated in the City of
Lenexa, County of Johnson, State of Kansas, legally described as set forth in
Exhibit 1 hereto, fee simple title to which is vested in Declarant, hereinafter
referred to as the Entire Tract; and,
WHEREAS, Declarant proposes to develop said tract as an integrated business
development for office, commercial and limited industrial purposes, and desires
to fix and establish certain covenants, conditions and restrictions upon and
subject to which the Entire Tract, or any part thereof, shall be improved, held,
leased, sold and/or conveyed.
NOW, THEREFORE, Declarant, as owner of the land described in Exhibit 1 hereto,
for itself and its successors and assigns, hereby declares as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.01 The following terms shall, except where the context otherwise requires,
have the respective meanings hereinafter specified:
(a) The term "BUILDING" shall mean any structure which (i) is
permanently affixed to the land, (ii) has one or more floors
and a roof, and (iii) is bounded by either an open area or the
lot lines of a Building Site. A Building shall not include
such structures as billboards, fences, or radio towers, or
structures with interior surfaces not normally accessible for
human use, such as tanks, smokestacks, or similar structures.
(b) The term "BUILDING LINE" shall have the meaning given to such
term in Section 4.01 hereof.
(c) The term "BUILDING SITE" shall mean a portion of the Entire
Tract on which a Building is erected or on which a Building
could be constructed within the terms of this Declaration. If
a Building is one of a group of Buildings constructed upon a
contiguous portion of the Entire Tract according to an
integrated plan approved by the Trustees, then the portion of
the Entire Tract utilized for such development may be
designated a Building Site for purposes of these Restrictions.
(d) "COMMON PROPERTIES" shall mean and refer to those areas of
land shown on any recorded plat or its equivalent, or any area
of land designated by recorded document in Johnson County,
Kansas, comprising a portion of the Entire Tract which are
identified thereon as "Common Properties of the Southlake
Association."
(e) The term "DECLARANT" shall mean Lenexa Industrial Park, Inc.,
a Kansas corporation, its successors and assigns.
(f) The term "FLOOR AREA" shall mean the aggregate area of all
floors within all Buildings erected on any Building Site. Each
floor shall be measured to the
Page 2
<PAGE> 22
ARTICLE 1
CERTAIN DEFINITIONS
1.01 (f) exterior side of each outside wall where such floor extends to
an outside wall and shall be measured to the interior side of
the supporting pillars or walls where such floor does not
extend to an outside wall. The term "Floor Area" shall not
include truck ramps or shipping or delivery areas situated
outside any Building, improvement or other structure.
(g) The term "PERSON" shall mean an individual, corporation,
trust, partnership or unincorporated organization.
(h) The term "RECORD OWNER" shall mean the owner at the time of
any part of the Entire Tract as shown on the records of the
Recorder for the County of Johnson, State of Kansas, as of the
date of any action to be taken by such Record Owner under the
provisions of this Declaration, and shall also mean and
include any person designated in writing, whether in a lease
or otherwise, by any such Record Owner to act in the manner
provided herein with complete authority and in the place of
such owner in the matter for which action is taken.
(i) The term "RESTRICTIONS" shall mean the covenants, conditions
and restrictions upon and subject to which the Entire Tract,
or any part thereof, shall be improved, held, leased, sold
and/or conveyed, all as hereinafter set forth.
(j) The term "SIGN" is any writing (including letter, word, or
numeral); pictorial representation (including illustration or
declaration); emblem (including device, symbol or trademark);
flag (including banner or pennant); or any other figure of
similar character, which (i) is a structure or any part
thereof, or is attached to, painted on or in any other manner
represented on a Building or other structure, (ii) is used to
announce, direct attention to, or advertise, and (iii) is
visible from outside a Building. A Sign shall include writing,
representation, or other figure of similar character within a
Building only when regularly visible from outside the
Building. The following shall not he deemed to be a Sign
within the meaning as hereinabove set forth: (i) signs of a
duly constituted governmental body, including traffic or
regulatory devices, legal notices or warnings; (ii) small
signs displayed for the direction or convenience of the
public, including signs which identify restrooms, freight
entrances or the like, but these shall also be subject to the
approval of the Trustees.
(k) The term "STRUCTURE" shall mean any physical object
temporarily or permanently affixed to the land, except grass,
shrubbery, trees or other landscaping.
(1) The term "SUBSIDIARY" shall mean any corporation at least a
majority of the outstanding voting stock of which shall at the
time he owned by a Record Owner.
(m) The term "TRUSTEE" shall mean those persons selected and
elected as members of the Board of Trustees as hereinafter
provided.
(n) The term "UNAVOIDABLE DELAYS" shall mean strikes, lockouts,
acts of God, casualty, boycotts, governmental restrictions,
war, national emergency, inability to obtain labor or
materials or other cause beyond the reasonable control of the
Record Owner or the person claiming under such Record Owners;
provided, however, lack of funds or financing shall not be
deemed an Unavoidable Delay.
Page 3
<PAGE> 23
ARTICLE 2
GENERAL PURPOSES OF RESTRICTIONS
2.01 The Entire Tract is hereby subjected to the Restrictions for the
following purposes:
(a) To encourage development in a manner which is free from danger
of fire, explosion, toxic and noxious matter and other
hazards, and from offensive noise, vibration, smoke, dust,
odorous matter and other objectionable influences.
(b) To protect the Entire Tract against congestion by limiting the
bulk of Buildings in relation to the land around them and to
one another, and providing for off-street parking and loading
facilities.
(c) To promote the proper and most desirable use and development
of the various parts of the Entire Tract in accordance with
a well considered plan.
(d) To conserve the value of Building Sites and Buildings of
Owners in the Entire Tract.
(e) To protect against construction of improvements on Building
Sites which are of poor design or quality and to encourage
construction of improvements utilizing good quality and
attractive material and good architectural and planning
standards, compatible with other improvements in the Entire
Tract.
(f) To ensure compliance with all applicable federal, state and
local laws and regulations.
(g) To provide for the continuing care and maintenance of all
land, Buildings and Structures in the Entire Tract so that
Southlake may be, and continue to be, a location which
provides an aesthetically pleasing workplace for Record
Owners, their tenants, employees and invitees.
ARTICLE 3
REVIEW AND APPROVAL OF IMPROVEMENTS
3.01 No Building or Structure, or other improvement including, but not
limited to, any signs, poles or towers, paved areas or fences shall be
erected, placed or altered on any Building Site in the Entire Tract
until the plans and specifications therefor, and a plot plan showing
the location thereof on the particular Building Site and a landscaping
plan shall have been submitted to and approved in writing by the
Trustees. In reviewing such plans, specifications and plot plans, the
Trustees shall give consideration to conformity and harmony of exterior
design with existing Buildings, Structures and other improvements in
the Entire Tract, and to the location of existing Buildings, Structures
and other improvements on the Building Site, giving due regard to the
anticipated use thereof, as the same may affect adjoining Buildings,
uses and operations, and as to location of such proposed Buildings,
Structures and improvements with respect to topography, grade and
finished ground elevation. In the event the Trustees fail to approve or
disapprove such plans, specifications, and plot plans, in writing,
within sixty (60) days after the same have been submitted to the
Trustees, then such plans, specifications, and plot plans shall be
deemed to have been approved, provided, however, that lack of approval
by the Trustees shall not waive any express covenant contained herein.
3.02 Neither the Trustees, nor Declarant, nor any member, employee or agent
of any of them shall be liable to any Record Owner or tenant or to
anyone else submitting plans for approval, or to any other action in
connection with its or their duties hereunder.
Page 4
<PAGE> 24
ARTICLE 3
REVIEW AND APPROVAL OF IMPROVEMENTS
3.02 Likewise, anyone so submitting plans to the Trustees for approval, by
submitting such plans, and any person when he or it becomes a Record
Owner or tenant, agrees that he or it will not bring any action or suit
to recover any damages against the Trustees, Declarant or any member,
employee or agent of any of them, arising or in any way connected with
this Declaration or the approval or failure to approve any plans
submitted by anyone.
3.03 After approval of aforementioned plans and specifications by the
Trustees, no deviation shall be made during construction which would
materially change the scope of the improvements, and no changes in
exterior quality or appearance of the improvements shall be made
without written approval of the Trustees.
3.04 The Trustees may require all or any part of the following information
be submitted to them in connection with their consideration of any
plans, submittal or application:
(a) Architectural plans for the proposed building or structure,
which shall include outline specifications designating
materials and mechanical, electrical and structural systems,
and samples of external colors.
(b) A site plan for traffic engineering analysis, showing the
location and design of buildings, driveways, driveway
intersections with streets, parking areas, loading areas,
maneuvering areas and sidewalks designated.
(c) A grading plan and planting plan, including screen walls and
fences for analysis of adequacy of visual screening, erosion
control, drainage and landscape architectural design, together
with plan for automatic underground sprinklering system.
(d) A site plan showing utilities and utility easements.
(e) Plans for all signs to be erected, including details of
materials, location, design, size, color and lighting.
(f) Plans showing exterior illumination of the Building, as well
as parking and loading areas.
(g) A description of the proposed business operation in sufficient
detail to permit judgment (i) of the extent of any noise,
odor, glare, vibration, smoke, dust, gases, hazard, radiation,
radioactivity or liquid wastes that may be created; and (ii)
as to whether or not the proposed operation includes only uses
permitted under the terms of any existing zoning ordinances
and this Declaration and other laws and governmental
regulations.
(h) Any other information as may he reasonably requested by the
Trustees in order to insure compliance with the covenants
contained herein.
3.05 The Trustees shall have the right to approve a variance in conformance
to these Restrictions which does not, in the sole reasonable judgment
of the Trustees, violate the spirit and intent of the Restrictions.
3.06 Once The Trustees have approved plans and specifications for a Building
or other Structure and such Building or other Structure has been
constructed in conformity with
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ARTICLE 3
REVIEW AND APPROVAL OF IMPROVEMENTS
3.06 such plans and specifications, the approval shall not be withdrawn and
such Building or other Structure shall thereafter be deemed to be in
compliance with these Restrictions as then in effect or thereafter
amended.
ARTICLE 4
BUILDING AND SETBACK LINES
4.01 Except as hereinafter provided, no Building or other Structure shall at
any time be erected on a Building Site nearer than one hundred feet
(100') to the right-of-way line of College Boulevard, or to Santa Fe
Trail Drive, or nearer than fifty feet (50') to the right-of-way line
of any other street adjoining the Building Site. Likewise, no Building
or other Structure shall be nearer than thirty feet (30') to any side
boundary line or rear boundary line of such Building Site, except as
provided herein. The foregoing are designated as a Building Line.
4.02 No parking or loading areas nor vehicle maneuvering areas shall at any
time be constructed or maintained nearer than thirty feet (30') to the
right-of-way line of any street adjoining the Building Site nor nearer
than fifteen feet (15') to any other side or rear boundary line of a
Building Site, but the same may be permitted on other portions of a
Building Site between the property line and the Building Lines.
4.03 Incidental structures, such as flagpoles, light standards, sign
standards, meter pits, fire hose houses, sidewalks, patios and similar
accessory Structures, may be permitted between property lines and
Building Lines upon the written approval of the Trustees.
4.04 Except as provided above, the area between property lines and Building
Lines shall be used for landscaped areas, lawn, driveways to parking
and loading areas, and walks in accordance with other provisions of
this Declaration.
ARTICLE 5
PARKING AND LOADING
5.01 No parking of automobiles, trucks, trailers, or other vehicles will be
permitted on any public or private streets in the Entire Tract, and it
will be the responsibility of each Record Owner to provide sufficient
parking and loading facilities on its Building Site at least to the
minimum standards set forth herein, and each Record Owner shall be
responsible for compliance with the provision of this Article by its
employees, customers, visitors, invitees, and motor carriers serving
the Building Site. Each Record Owner shall keep available on its
Building Site paved areas, or land for future permitted paved areas, at
least as set forth below:
(a) Four (4) parking spaces per thousand (1,000) square feet of
Floor Area devoted to office, administrative, or similar
purposes.
(b) Four (4) parking spaces per thousand (1,000) square feet of
Floor Area devoted to retail or commercial purposes.
(c) Two (2) parking spaces per thousand (1,000) square feet for
Floor Area devoted to distribution or manufacturing purposes.
5.02 No loading dock or loading door used for the frequent receipt or
shipment of goods or materials shall be erected fronting on any public
street without the written permission
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ARTICLE 5
PARKING AND LOADING
5.02 of the Trustees. Any loading docks or loading doors so permitted shall
be constructed so that any exposed sides of a loading space so created
shall be appropriately and effectively screened by landscaping or
otherwise and to the extent considered reasonable by the Trustees. The
front of the loading space so created shall be screened by landscaping
or berms so as to minimize view from public streets and adjacent
Building Sites as determined by the Trustees.
5.03 All portions of any Building Site used for driveways, parking areas and
loading areas shall be paved with a dustfree, all-weather surface at
least equal to the required specifications of the City of Lenexa and
shall be kept in a good condition and state of repair.
5.04 With respect to any Building devoted to industrial purposes and
involving the frequent loading and unloading of products and materials
at the Building Site on which such Building is erected, the Record
Owner shall provide, or reserve land for future provision, off-street
loading space on the basis of space for loading and unloading one (1)
truck for the first ten thousand (10,000) square feet of Floor Area
devoted to such industrial purposes and space for loading and unloading
one (1) additional truck for each succeeding twenty thousand (20,000)
square feet of Floor Area devoted to such industrial purposes. A truck
loading space shall have a minimum horizontal width of eleven feet six
inches (11' 6"), a minimum depth of sixty feet (60') and a minimum
vertical clearance of fourteen feet (14').
ARTICLE 6
BUILDING CONSTRUCTION
6.01 All Buildings erected on a Record Owner's Building Site shall be
masonry construction or its equivalent, or better as determined by the
Trustees.
6.02 Exterior walls of Buildings shall be finished with face brick, stone,
modern metal paneling with enduring finish, glass, concrete panels
painted or finished with a permanent and attractive surface, or their
equivalent, as determined by the Trustees. With the written permission
of the Trustees, exterior walls of Buildings not facing streets may be
constructed of painted concrete blocks, provided returns of twenty feet
(20') are constructed from walls facing streets of the same material as
the material on walls facing streets.
6.03 The improvements on each Building Site shall include a flagpole flying
the American flag or the flag of national origin of the occupant of a
Building on said Building Site.
6.04 The exterior of all Buildings on a Building Site shall be illuminated
according to a plan approved in writing by the Trustees.
6.05 In the event that any Building or other improvement on a Building Site
is to be constructed or otherwise improved with an exposed metal roof,
such as a standing seam metal roof or similar installations, the
Trustees may require that said roof be finished with an enduring finish
in a color approved by the Trustees to achieve an aesthetically
pleasing appearance of said roof from other portions of the Entire
Tract.
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ARTICLE 7
LANDSCAPING AND MAINTENANCE OF GROUNDS AND BUILDINGS
7.01 The maintenance of all land, Buildings and other Structures in the
Entire Tract is the continuing responsibility and obligation of each
Record Owner and each of the same covenant and agree with the other
Record Owners and the Trustees to keep and maintain the same in
accordance with the provisions of this Declaration. The standards of
maintenance of all improvements in the Entire Tract shall be determined
by the Trustees in their sole reasonable judgment and shall be based
upon the terms and provisions of these covenants and the intent of
these covenants to create and maintain a modern and prestigious
business park consistent with the provisions of Article 2 hereof.
(a) All land areas between required Building Lines and property
lines (including street rights-of-way adjoining the same) of a
Building Site which has been improved with a Building, not
used for drives, walks or parking areas, must be attractively
landscaped and maintained as lawn and landscaped areas. Weeds
and undergrowth must be kept mowed to a height of not more
than twelve inches (12") on all other unimproved land areas.
Common Areas shall he kept in a clean and orderly condition as
determined by the Trustees and in accordance with the
provisions of Article 16 hereof.
(b) No trash, debris or litter shall be permitted on any Building
Site and it shall be the responsibility of each Record Owner
to conduct its business in a manner which will not result in
the same being generated on its or other Building Sites.
(c) Exterior surfaces of Buildings, Structures and other
improvements, including all paved areas, must be kept in a
good condition and state of repair and otherwise in conformity
with the intent of these Restrictions. Said exteriors shall be
maintained and renewed or replaced as necessary to keep the
same consistent with the plans therefore originally approved
by the Trustees. Color or finish of exterior surfaces shall
not be changed except as the same may be approved by the
Trustees.
7.02 Improved Building Sites shall be landscaped in accordance with a plan
submitted to and approved in writing by the Trustees; and no tenant or
Record Owner shall occupy the Building or Structure until such plan,
together with adequate provisions for implementing the same, has been
so approved. The plan shall include the use of conifers and tall
evergreens, particularly in the screened areas defined in Article 5.02
above, as well as in other areas of the site that require plantings.
Owners are urged to also provide groupings of conifers and tall
evergreens in areas between property lines and Building Lines along
streets and abutting Common Properties to provide year round screening
in these areas.
Minimum size of trees to be installed upon improved Building Sites at
the time of initial or replacement planting shall be as follows:
Shade Trees- 2-2 1/2" calipers
Flowering and ornamental trees - 5-6' high
Conifers - 5-6' high
Upright evergreens - 4' high
7.03 It is the intent of Declarant that landscaping shall be provided in a
manner and to an extent to properly compliment the building
improvements on a site and to properly screen parking and loading
areas. Initial planting, exclusive of sodding, seeding, and
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ARTICLE 7
LANDSCAPING AND MAINTENANCE OF GROUNDS AND BUILDINGS
7.03 lawn sprinkler system shall be included at a cost or value of not less
than two percent (2%) of the estimated cost of building and other
improvements up to $250,000; and one percent (1%) of the estimated cost
over $250,000 and less than $500,000; and one-half percent (1/2%) for
any cost or value over $500,000.
7.04 The landscape development, having been installed, shall be maintained
by the Record Owner or tenant of the Building Site in a neat and
adequate manner, which shall include the mowing of lawns, trimming of
hedges, fertilizing, watering when needed, and removal of weeds from
planted areas on Record Owner's Building Sites and public rights-of-way
adjacent thereto. Maintenance of the landscaping development shall
include replacement of all plant material included in the approved
landscaping plan, as well as replacement of any street trees on or
adjacent to a Building Site originally provided by Declarant.
7.05 Installation and utilization of an automatic underground lawn and
landscape watering system is required for each Building Site which has
been improved with a Building pursuant to this Declaration. Said system
shall be designed so as to properly water all lawn and landscaped areas
of a Building Site.
The Trustees may waive the installation of a watering system in areas
of a Building Site other than between Building Lines and property lines
if such area is held for the expansion of a Building or parking areas.
Such a waiver shall only be for the term and under conditions stated in
the written approval of the Trustees regarding said improvements.
7.06 The approved plan for landscaping the Building Site may not be altered
without written approval by the Trustees.
7.07 Each Record Owner and tenant shall keep its premises, Buildings,
improvements and appurtenances in a safe, sightly, clean, neat and
wholesome condition, and shall comply in all respects with all
governmental, health and police requirements. Each Record Owner and
tenant shall remove at its own expense any rubbish or trash of any
character which may accumulate on its property and shall keep
unlandscaped areas mowed as required by these Restrictions. Rubbish and
trash shall not be disposed of on the premises by burning in open
fires. Use of any incinerators shall only be with written approval of
the Trustees.
7.08 A part of each Record Owner's obligations set forth in this Article
shall be the implementation and maintenance of an erosion control
program on its Building Site. This program shall be designed to insure
that, to the greatest extent deemed practical by the Trustees, measures
shall be taken to minimize water discharge from a Building Site onto
the Common Properties in a manner to prevent erosion of banks or
silting in of lakes on said Common Properties.
7.09 In the event any Record Owner or tenant does not comply with the
provisions of this Article within ten (10) days after written notice by
the Trustees, the Trustees and their representatives or employees shall
have the right to enter on such Building Site and perform the work
specified in such notice and the Record Owner or tenant shall pay the
cost thereof upon demand. If the cost of such work is not paid within
ten (10) days after demand is made therefor upon such Record Owner or
tenant, it shall become a lien on such land the same as and enforceable
to the extent provided for assessment in this Declaration.
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ARTICLE 8
OUTSIDE STORAGE
8.01 No outside storage of any type, including but not limited to materials,
supplies, equipment, vehicles, finished or semifinished products, raw
materials or articles of any nature shall be stored or permitted to
remain on any Building Site outside of the Building or Buildings
constructed thereon, without the written approval of the Trustees. Any
permitted storage shall be screened and/or fenced in a manner so as to
not be objectionable to any occupant of other Building Sites in the
Entire Tract, and shall be continued only in accordance with the terms
of the Trustee's approval.
8.02 Facilities for storage of waste and rubbish shall be maintained within
a screened area in closed metal containers of type approved by the
Trustees in writing and only in locations approved by the Trustees in
writing.
8.03 The bulk storage of any liquids or materials on the outside of
Buildings shall be permitted only in locations and in a manner as may
he approved in writing by the Trustees.
ARTICLE 9
MINERALS
9.01 No oil or gas drilling, oil development, mining or quarrying operations
of any kind shall be permitted upon the entire Tract, or any part
thereof, nor shall oil wells, gas wells, tanks, tunnels, mineral
excavations or shafts be permitted upon the Entire Tract or any part
thereof without written approval of the Trustees.
ARTICLE 10
SIGNS
10.01 No sign shall be erected, placed or otherwise installed upon a Building
Site or affixed to a Building, Structure, or other improvement erected
on a Building Site until the plans for such sign shall have been
approved in writing by the Trustees. All signs, whether or not included
or excluded from the definition of such term in Section 1.01 (j) hereof
(except such signs as may be wholly within a Building and not visible
from outside thereof) shall be conservative and in good taste, shall be
identification signs as distinguished from promotional signs or
billboards, and shall comply with the general purposes of this
Declaration as set forth in Section 2.01 hereof. Flashing or moving
signs shall be prohibited. Product or service replicas or models shall
be prohibited unless the same are conservative and in good taste, are
for identification purposes as distinguished from promotional purposes,
and shall comply with the general purposes of this Declaration as set
forth in Section 2.01 hereof. Declarant, or its agent, or authorized
agents of Record Owners, shall be permitted to erect a reasonable
number of Signs, which shall be conservative and in good taste, for the
purpose of identifying the development and advertising the availability
of Buildings and Building Sites therein, but the same shall only be
permitted as authorized by the Trustees.
ARTICLE 11
PERFORMANCE STANDARDS
11.01 No operation shall be conducted on any Building Site or any part
thereof which results in the emission of noise, smoke, dust, dirt, fly
ash or odor to an extent to be reasonably objectionable to any other
Record Owner or occupant of other Building Sites in the Entire Tract.
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ARTICLE 12
RIGHT TO REPURCHASE
12.01 If, after the expiration of two (2) years from the date of conveyance
of any Building Site within the Entire Tract, any Record Owner (or
anyone claiming under such Record Owner) shall not have begun in good
faith (subject, however, to Unavoidable Delays) the construction of an
acceptable and approved Building upon such Building Site for the uses
permitted hereunder, and thereafter, with diligence, prosecuted such
construction in strict compliance with the provisions hereof, Declarant
may within a two (2) year period thereafter, at its option, require the
Record Owner to reconvey the Building Site to Declarant, free and clear
from all liens, charges, encumbrances, tenancies and other such title
exceptions except those in existence at the time of such original
conveyance, and at such time Declarant shall refund to the Record Owner
the purchase price and enter into possession of said Building Site. At
any time Declarant may extend, in writing, the time in which such
Building may be commenced and/or completed. Such right to repurchase
shall be an additional material consideration to Declarant for the
conveyance of any Building Site. A notice of such right to repurchase
or an agreement with respect to such right may be included in contracts
for sale or in deeds by which Declarant conveys title, but the failure
in any particular transaction so to include either the notice or the
agreement or both shall not deprive Declarant of such right without
specific recitation to such effect in such contracts and deeds.
ARTICLE 13
UTILITY CONNECTION
13.01 All public utility connections and installations of wires and conduits
to Buildings shall be made underground from the nearest available power
source. No transformer, electric, gas or other meter of any type or
other apparatus shall be located on any power pole but the same shall
be placed on or below the surface of the land or hung on the outside of
a Building on a wall not facing a street, and where placed on the
surface of the land shall be adequately screened and fenced, and all
such installations shall be subject to prior written approval of the
Trustees.
13.02 The provisions of this Article 13 shall not operate to prohibit or
modify the overhead electrical transmission line of Kansas City Power &
Light Company located on portions of the Entire Tract at the date of
these Restrictions.
ARTICLE 14
SUBDIVISION
14.01 No Building Site shall be subdivided, nor shall any portion be
separately sold, leased or rented, until a plan for such proposed
subdivision or separate sale, leasing or renting, shall have been
submitted to and approved by the Trustees in writing.
ARTICLE 15
THE BOARD OF TRUSTEES
15.01 There hereby is established a Board of Trustees, for all purposes set
forth in these Restrictions, which shall consist of three members.
Declarant hereby appoints Hugh J. Zimmer, David J. Zimmer, and Ellen B.
Zimmer, as the initial Board of Trustees, the appointment to be
effective upon the recordation of this declaration in the Office of the
Recorder of Deeds for Johnson County, Kansas, who shall hold office
until their respective successors are appointed and qualified, unless
sooner removed pursuant hereto.
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ARTICLE 15
THE BOARD OF TRUSTEES
15.02 So long as fifty percent (50%) or more of the acreage subject to these
Restrictions (exclusive of public roadways and Common Properties) is
owned by Declarant, the three (3) members of the Board of Trustees
shall be appointed by Declarant. So long as twenty percent (20%) to
forty-nine percent (49%) of the acreage subject to these Restrictions
is owned by Declarant, two (2) members shall be appointed by Declarant
and one (1) member shall be elected by the other Record Owners. So long
as five percent (5%) to nineteen percent (19%) of the acreage subject
to these restrictions is owned by Declarant, one (1) member shall be
appointed by it and two (2) members shall be elected by the other
Record Owners. If less than five percent (5%) of the acreage subject to
these Restrictions is owned by Declarant, all of the members of the
Board of Trustees shall be elected by the other Record Owners.
15.03 Subject to the provisions of 15.02, in all elections for members of the
Board of Trustees, every Record Owner shall have the right to vote in
person or by proxy, having one (1) vote for each full acre owned, and
fraction of an acre owned in excess of one-half (1/2) acre, for as many
persons as there are Trustees to be elected, or to accumulate said
votes and give one (1) candidate as many votes as the number of
Trustees multiplied by the total number of full acres and fractional
acres in excess of one-half (1/2) of an acre shall equal, or to
distribute such votes on the same principle among as many candidates as
a Record Owner shall see fit.
15.04 The term of office of the members of the Board of Trustees shall be for
two (2) years and shall run from January 1st through December 31st of
the second year or until their successors are elected and/or appointed
and qualified; provided, however, that upon written notice by the
Record Owners of over fifty percent (50%) of the square foot land area
of the Entire Tract (exclusive of public road ways and Common
Properties) the term of any Trustee shall automatically terminate and
the unexpired term shall be filled in accordance with provisions of
this Article within thirty (30) days from the date of said termination.
15.05 Two (2) members of the Board of Trustees shall constitute a quorum, and
actions of the Board shall be by majority vote of those members in
attendance at any meeting at which there is a quorum present. The Board
of Trustees shall promulgate operating procedures for the conduct of
its affairs, which procedures shall provide for written notice to all
Trustees of meetings, given at least three (3) days prior to any such
meeting, provided that such notice may be waived. However, if all
Trustees severally or collectively consent in writing to any action to
be taken by the Trustees, such consents shall have the same force and
effect as a unanimous vote of the Trustees or a resolution unanimously
passed by the Trustees at a meeting duly held, and may be hereinafter
referred to as such. Such consent shall be filed with the minutes of
the meetings of the Trustees.
15.06 The Board of Trustees shall provide for the enforcement of the
Restrictions herein set forth, shall establish policies and procedures
for the review and approval of plans and the like required by these
Restrictions, shall have the right to provide for any improvements or
maintenance of improvements, or services, which they may deem necessary
or desirable, shall have the power as hereinafter provided to levy
assessments, shall set dates for the election of Trustees when such
elections are appropriate, and shall otherwise establish such
procedures and policies necessary or deemed desirable to provide for
the general welfare of the Entire Tract, in accordance with the spirit
and letter of the Restrictions set forth in this Declaration.
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ARTICLE 15
THE BOARD OF TRUSTEES
15.07 Without limiting the generality of the foregoing, the Board of Trustees
shall have the following powers, provided, however, that nothing herein
contained shall be deemed to prevent any Record Owner having the
contractual right to do so from enforcing any Restrictions in its own
name:
(a) To enforce, either in the name of one or more Trustees, or in
the name of any Record Owner within the Entire Tract, any and
all Restrictions herein contained. The expenses and costs, if
any, in such proceedings shall be paid out of the funds of the
Trustees raised by assessments or otherwise.
(b) To provide for the plowing or removal of snow from sidewalks
and streets.
(c) To care for, protect and replant trees, shrubbery, grass and
other improvements on all parkways, streets, Common Properties
and in other public places.
(d) To mow, care for and maintain parkways in front of vacant or
other property and to cut and remove weeds and grass from such
parkways, vacant property or other places; to pick up and
remove therefrom loose material, trash and rubbish of all
kinds and to do such other things necessary or desirable to
keep vacant and unimproved property neat in appearance and in
good order.
(e) To provide and maintain such lights as the Trustees may deem
advisable on streets, parks, parkways, gateways, entrances or
other features, Common Properties and in other public or
semi-public places.
(f) To exercise such control over streets, sidewalks, parks,
Common Properties and pedestrian ways as may be within its
powers including the cleaning of the same, and the erection
and maintenance of street signs.
(g) To acquire and hold the title in its name, or the name of one
of the Trustees or a nominee or otherwise, to such real estate
and easements as may be reasonably necessary to carry out
purposes of this Declaration, or to the Common Properties, and
to pay taxes on such real estate as may be so used by it, as
well as such taxes as may be assessed against land in public
or semi-public places or the Common Properties.
(h) To provide for grounds and lawn maintenance, snow removal,
trash removal or other services to be performed for Record
Owners on their Building Sites, all of said services to be
billed to and paid for by said Record Owners. If the Trustees
so determine, said services may he mandatory on all Building
Sites and shall be according to a degree and specification
consistent with the intent of these Restrictions. Said
services may he performed by employees of the Trustees or
their agents, or may he performed by contract or both. The
charges for such services shall be comparable to prevailing
charges for similar services in the area and shall be
equitably billed to each Record Owner. Said billings shall be
in a manner determined by the Trustees and may include
reasonable charges for administration and supervision, as well
as for other direct and indirect costs approved by the
Trustees. The Trustees may, in their sole discretion, exempt
any Record Owner from the obligation to accept such services.
All charges billed in accordance with this Section shall be
collectible in the manner called for regarding payment of
assessments and shall constitute liens as hereinafter
provided.
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ARTICLE 15
THE BOARD OF TRUSTEES
15.08 The Trustees shall have power to levy assessments upon and against the
Record Owners and against the Building Sites themselves for the purpose
of carrying out the general duties and powers of the Board of Trustees
set forth in this Article and elsewhere in these Restrictions. In
making such assessments, the Trustees may levy a charge of not more
than $.005 per square foot of land area in the Entire Tract in any
one (1) calendar year against the Record Owners of property and the
Building Sites themselves within the Entire Tract, apportioned to and
against such property and Building Sites according to the square foot
area of land contained therein. Such maximum amount may not be
exceeded, provided, however, that such maximum amount shall be changed,
if the change results in an increase, but not if the change results in
a decrease, on the fifth (5th) anniversary of the date of the recording
of this Declaration in the Recorder of Deeds of Johnson County, Kansas,
and on each successive fifth (5th) anniversary thereafter, to an amount
in each case, which is the product of five (5) mills, multiplied by a
fraction, the numerator of which shall be the Consumer Price Index for
Urban Wage Earners and Clerical Workers, U.S. City Average, All Items
(1967 equals 100) published by the Bureau of Labor Statistics, United
States Department of Labor ("CPI-U"), or its successor or other
comparable index in the event of the discontinuance of CPI-U, for June
of the calendar year in which each fifth (5th) anniversary falls, and
the denominator of which shall be the CPI-U as defined above for
December, 1985. Any charge pursuant to Article 7.09 or 15.07 (h)
enforceable as an assessment lien shall not be limited as herein set
forth, but shall be in the amount as set forth in said Articles. All
assessments shall be made in the manner and subject to the following
provisions:
(a) Notice of the levying of all assessments shall be given by
mail, addressed to the address for such Record Owner as set
forth in the deed from Declarant conveying title to the
Building Site in question or to such other address as the
Record Owner may have given notice pursuant to Section 19.01
hereof and deposited in the United States mail with postage
prepaid, or may be given by posting a brief notice of the
assessment upon the Building Site itself.
(b) Every assessment shall become due and payable upon the date
set forth in the notice thereof, which shall not be less than
thirty (30) days after such notice. From and after the date
when said payment is due, the same shall bear interest at the
Kansas legal rate of interest per annum until paid, and such
payment with accrued interest shall constitute a lien on the
affected property which shall continue in full force and
effect until the amount is fully paid. At any time after the
passage of the resolution (whether at a meeting or by consent)
levying an assessment and its entry in its minutes, the Board
of Trustees or any one of the Trustees acting in behalf of the
Board, may, in addition, execute and acknowledge an instrument
reciting the levy of the assessment with respect to any one or
more Building Sites and cause the same to be recorded in the
Johnson County, Kansas Recorder's office; and the Board of
Trustees may upon payment cancel or release any one or more
Building Sites from the liability of the assessment (as shown
by recorded instrument) by recording (at the expense of the
affected owner) a like instrument releasing such assessment
with respect to any property affected. The Trustees shall
cause to be noted from time to time in the minutes of their
proceedings or in other appropriate records the payments made
on account of assessments. All statutory laws and rights for
enforcing and collecting general taxes in the State of Kansas,
now or hereafter existing, are conferred upon the Trustees,
and the Trustees may bring suits to collect such assessment or
enforce such liens. Such liens shall continue for a period of
three years from the date of delinquency, unless within such
time suit shall have
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ARTICLE 15
THE BOARD OF TRUSTEES
15.08 (b) been instituted for the collection of the assessment, in which
event the lien shall continue until termination of the suit
and satisfaction of the judgment resulting therefrom.
15.09 In addition to the annual charges permitted in Section 15.08 above, the
Trustees shall have the right to levy special assessments on all of the
Building Sites in the Entire Tract for the sole purpose of
reconstruction, unexpected repair or replacement of improvements within
the Common Properties of SOUTHLAKE. Such special assessments shall only
be levied after at least thirty (30) days' notice to each Record Owner
specifying the nature and amount of such proposed special assessment
and the approval of the same by a vote representing approval by the
Record Owners of a majority of the acreage in the Entire Tract. After
approval as set forth herein, special assessments shall be subject to
collection in the same manner as annual charges set forth in 15.08
above.
15.10 The Board of Trustees shall have all powers and authority necessary or
desirable to carry out the spirit and letter of the Restrictions set
forth in this Declaration even though such powers and authority are not
specifically granted in this Declaration.
15.11 The Board of Trustees shall have such bank accounts in which shall be
deposited the funds of the Board of Trustees, whether raised by
assessment or otherwise, in such banks, and requiring such signatures
for withdrawal as the Board of Trustees shall determine. The Board of
Trustees shall keep books of account relating to the collection and
disbursement of funds.
15.12 The Board of Trustees may, at any time, and from time to time, create
and terminate an association or associations to be composed of Record
Owners or their tenants or both in the Entire Tract. The Association
shall be incorporated or unincorporated as the Trustees shall
determine, shall have such duration and such articles and bylaws as the
Trustees shall determine, and shall have such duties, powers and
responsibilities as the Trustees shall determine and assign to it,
including, but not limited to, such of the powers and duties of the
Trustees as are set forth in this Article.
ARTICLE 16
COMMON PROPERTIES
16.01 Common Properties, as the same may be vested in SOUTHLAKE, shall be
held by the Trustees for the use and benefit of all Record Owners and
their employees and invitees in the Entire Tract, and others as may he
determined by the Trustees. The Trustees may hold the Common Properties
in fee simple, by easement, or in any other manner approved by the
Trustees.
16.02 The Trustees shall establish such rules and regulations for the use of
Common Properties by Record Owners and others as they shall deem to be
appropriate and shall have the right to enforce the same with the same
authority granted by these Covenants.
16.03 The Trustees shall establish standards of maintenance for the Common
Properties which shall be consistent with the intent of these
Restrictions and shall maintain the same in accordance with such
standards.
16.04 The Trustees shall have the right to enter into contracts with the City
of Lenexa or other appropriate public bodies for the maintenance, use,
control, development, and operation of the Common Properties, all in
the sole discretion of the Trustees. The
Page 15
<PAGE> 35
ARTICLE 16
COMMON PROPERTIES
16.04 rights referred to in this Article may include conveyance by easement,
contract, or in fee simple of all or any part of the Common Areas as
determined by the Trustees.
ARTICLE 17
ADDITIONAL LAND TO BE MADE SUBJECT HERETO
17.01 Declarant, from time to time, shall have the right at any time before
it has conveyed all of the land then subject hereto to render other
lands also subject and subservient to the Restrictions, if such land is
contiguous, adjoining or adjacent to the Entire Tract or some point
thereof, or if separated from the Entire Tract only by a dedicated
street, by executing, delivering to the Board of Trustees, and
recording a supplement to the Restrictions stating:
(a) A description of the land to be added and made subject to the
Restrictions.
(b) A statement that Declarant is the owner in fee simple of such
land; or, in lieu thereof, a statement that all persons
joining in such supplement constitute the entire fee simple
ownership of such land.
(c) A statement of any additional restrictions or burdens to which
the land to be added shall be subjected, if any, and a
statement of any restrictions or provisions of the
Restrictions which shall in whole or in part not be applicable
to such land to be added, or which shall be applicable in
modified form, if any; provided, however, that such land to be
added must be subject to assessment as herein provided.
17.02 Following the execution, delivery and recording of such supplement, but
subject to its terms, such land to be added and the then or future
owners thereof shall in all respects be fully subject to the
Restrictions and all rights, privileges, obligations and the like set
forth herein, except as otherwise provided in such supplement,
including, but not limited to, the right to serve as and elect members
of the Board of Trustees and to the payment of assessments as though
said land had originally been included in and subject to these
Restrictions.
ARTICLE 18
ENFORCEMENT AND DURATION
18.01 The conditions, covenants, restrictions and reservations herein
contained shall run with the land, and be binding upon and inure to the
benefit of Declarant and the now and future Record Owners of every part
of the land now or hereafter covered by the provisions hereof; shall
create mutual, equitable servitudes upon each Building Site in favor of
every other such Building site; and shall create reciprocal rights and
obligations between and among Declarant and the respective Record
Owners and tenants of all Building Sites and privity of contract and
estate between Declarant and all grantees of said Building Sites, their
heirs, successors and assigns.
18.02 These conditions, covenants, restrictions and reservations may be
enforced as herein provided and by Declarant, any Record Owner, or any
Tenant with approval of the Record Owner of the Building Site of which
the Tenant occupies in whole or in part, as well as by the Trustees
acting on behalf of Declarant and Record Owners, and violation of any
conditions, covenant, restriction or reservation herein contained shall
give to Declarant, the Trustees, the Association and to the Record
Owners or any of them, the right to bring proceedings at law or in
equity against the party or parties violating or
Page 16
<PAGE> 36
ARTICLE 18
ENFORCEMENT AND DURATION
18.02 attempting to violate any of said covenants, conditions, restrictions
and reservations; to enjoin them from so doing; to cause such violation
to be remedied; or to recover damages resulting from any such
violation. Every act, omission to act, or condition which violates the
covenants, conditions, restrictions and reservations herein contained
shall constitute a nuisance and every remedy available at law or in
equity for the abatement of public or private nuisances shall he
available to Declarant, the Record Owners, the Association and the
Trustees. In any legal or equitable proceeding to enforce the
provisions hereof or to enjoin their violation, the party or parties
against whom judgment is entered shall pay the reasonable attorneys'
fees of the party or parties for whom judgment is entered in such
amount as may be fixed by the court in such proceeding. Such remedies
shall be cumulative and not exclusive.
18.03 It is understood that from time to time Declarant or other Record
Owners may dedicate portions of the Entire Tract to various
governmental bodies to be used as public streets, parks, or for similar
purposes essential to the use and development of the Entire Tract. It
is further understood that Declarant may also from time to time
designate certain portions of the Entire Tract to be used for private
roads or Common Properties, without dedication to governmental bodies.
So long as any of the foregoing are dedicated or conveyed by deed or
easement for purposes as set forth above, and are used for such
purposes, they shall be automatically released from this Declaration
including the obligation for assessments set forth in Article 15. In
the event, however, that any of the foregoing are vacated, and revert
to and become a part of adjoining Building Sites, they shall
automatically come under the terms and provisions of this Declaration.
18.04 All restrictions and other provisions herein contained shall be deemed
prior and superior to all mortgages and deeds of trust hereafter
executed upon land subject to this Declaration, and to all leases
covering part or all of any Building Site; provided, however, the
violation of these restrictions shall not defeat nor render invalid the
lien of any mortgage or deed of trust made in good faith and for value,
nor the leasehold estate of any tenant except to the extent otherwise
expressly provided in its lease. If any portion of the land is sold
under foreclosure of any mortgage or deed of trust, any purchaser at
such sale, and his successors and assigns, shall hold any and all of
such properties purchased subject to all of the Restrictions and other
provisions hereof as fully as if he were an original party to this
Declaration.
18.05 The failure of Declarant, the Trustees, the Association or any Record
Owner to take action to enforce the provisions hereof or to enjoin
their violation shall in no event be deemed a waiver of its right to
subsequently do so, nor shall it be deemed a waiver of any subsequent
default or of the continuation of any existing default.
18.06 Invalidation of any part or parts of this Declaration by judgment or
court action shall in no way affect any of the other provisions which
shall remain in full force and effect.
18.07 These Restrictions shall run with the land and shall he binding upon
and shall inure to the benefit of all parties and all persons claiming
under or through Declarant or any Record Owner until December 31, 2015,
at which time the Restrictions shall be automatically extended for
successive periods of ten (10) years; provided, however, that at any
time the Record Owners of more than fifty percent (50%) of the acreage
in the Entire Tract, and Declarant (whose acreage may be included
for the fifty percent (50%) computation) may, by written declaration
signed and acknowledged by them and recorded in the office of the
Recorder of Deeds for Johnson County, Kansas, alter, amend, modify or
terminate these Restrictions, except that no amendment shall be made
which shall change Section 3.06, the maximum amount of the assessments
Page 17
<PAGE> 37
ARTICLE 18
ENFORCEMENT AND DURATION
18.07 provided for in Section 15.08, or the provisions protecting mortgages,
deeds of trust, and leasehold estates in Section 18.04, without the
agreement of one hundred percent (100%) of the Record Owners.
ARTICLE 19
MISCELLANEOUS
19.01 All notices, consents, approvals or other communications (herein called
Notices) required or permitted to be given hereunder shall be in
writing and shall be deemed to have been properly given if sent by
registered or certified mail, postage prepaid, if to Declarant, or the
Trustees, addressed to Declarant at 1220 Washington, P.O. Box 414317,
Kansas City, Missouri 64141, or to any Record Owner at the address
specified in the deed from Declarant to the Record Owner owning the
Building Site in question, or at such other address as shall be
furnished to Declarant by a Record Owner in accordance with the terms
of this Section 19.01 or to the street address of a Building located on
a Building Site. Declarant, the Trustees, or any Record Owner may
change the address to which Notices are to be sent in the manner herein
before provided. Notices shall be deemed given on the date of the
registration or certification thereof. Declarant shall not be bound by
any change in record ownership of any Building Site until it has been
given notice of such change in ownership in the manner herein
provided for the giving of Notices.
19.02 Every person who now or hereafter owns or acquires any rights, title,
estate or interest to any portion of the property covered hereby is and
shall be conclusively deemed to have consented and agreed to every
covenant, condition and restriction contained herein, whether or not
reference to this Declaration is contained in the instrument by which
such person acquired an interest in said property.
19.03 This Agreement and the separate provisions thereof shall be construed
and enforced in accordance with the laws of the State of Kansas.
IN WITNESS WHEREOF, LENEXA INDUSTRIAL PARK, INC. has caused this
Declaration to be duly executed as of the date first above written.
LENEXA INDUSTRIAL PARK, INC.
By: /s/ Hugh J. Zimmer
-------------------------------
Hugh J. Zimmer, President
ATTEST:
/s/ Oneta F. Copeland
- --------------------------------
Oneta F. Copeland, Secretary
Page 18
<PAGE> 38
STATE Of MISSOURI )
) ss.
COUNTY OF CLAY )
On this 1st day of April, 1986, personally appeared Hugh J. Zimmer to me
personally known, who being duly sworn, did say that he is President of Lenexa
Industrial Park, Inc., that the seal affixed to the foregoing instrument was
signed and sealed on behalf of said corporation and said Hugh J. Zimmer
acknowledged said instrument to be the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal at
my office in Kansas City, Missouri, the day and year last above written.
My commission expires:
June 24, 1989 /s/ Cheryl A. Brockman
- ------------- ----------------------
Cheryl A. Brockman
Notary Public
EXHIBIT 1
All that part of the North One-Half of Section 17, Township 13, Range 24, now in
the City of Lenexa, Johnson County, Kansas, more particularly described as
follows: Beginning at the Northwest corner of said Section 17; thence North
90 (degree) East, along the North line of said Section 17, a distance of 5299.71
feet, to the Northeast corner of said Section 17; thence South 0 (degree) 31'59"
West, along the East line of the Northeast Quarter of said Section 17, a
distance of 165.00 feet; thence South 90 (degree) West, parallel with the North
line of said Section 17, a distance of 220.00 feet; thence South
0 (degree) 31'59" West, parallel with the East line of the Northeast Quarter of
said Section 17, a distance of 120.00 feet; thence North 90 (degree) East,
parallel with the North line of said Section 17, a distance of 220.00 feet, to a
point on the East line of the Northeast Quarter of said Section 17; thence South
0 (degree 31'59" West, along said East line, a distance of 116.00 feet; thence
North 87 (degree) 38'58" West, a distance of 311.40 feet; thence South
0 (degree) 31'59" West, parallel with the East line of the Northeast Quarter of
said Section 17, a distance of 182.50 feet; thence South 8 (degree) 38'58" East,
a distance of 311.40 feet, to a point on the East line of the Northeast Quarter
of said Section 17; thence South 0(degree) 31'59" West, along said East line, a
distance of 377.74 feet, to a point on the Westerly right-of-way line of the St.
Louis and San Francisco Railroad and the Missouri and Kansas Interurban Railway
Company; thence South 33 (degree) 32'14" West, along said Westerly Railroad
right-of-way line, a distance of 2028.93 feet, to a point on the South line of
the Northeast Quarter of said Section 17; thence North 89 (degree) 56'09" West,
along said South line, a distance of 1538.74 feet, to the Southwest corner of
the Northeast Quarter of said Section 17; thence North 89 (degree) 55'30" West,
along the South line of the Northwest Quarter of said Section 17, a distance of
2639.70 feet, to the Southwest corner of the Northwest Quarter of said Section
17; thence North 0(degree)11'10" East, along the West line of the Northwest
Quarter of said Section 17, a distance of 2647.20 feet, to the Point of
Beginning, containing 298.6062 acres, more or less.
Page 19
<PAGE> 1
EXHIBIT 10.40
THIS SUBLEASE (the "Sublease") is entered into as of the date set forth
in Section 1.l(e) below, by and between the Sublandlord and the Subtenant set
forth below.
WITNESSETH
1. SUBLEASE SUMMARY AND DEFINITIONS.
1.1. The Sublease provisions and definitions set forth in this
SECTION 1.1 in summary form are solely to facilitate convenient reference by the
parties. If there is any conflict between this Section and any other provisions
of this Sublease, the latter shall control.
<TABLE>
<S> <C>
(a) Sublandlord's Name LEGENT CORPORATION
and address: 1 Computer Associates Plaza
Islandia, N.Y. 11788-7000
Attn: Senior Vice President - Facilities
(b) Sublandlord's State of
Incorporation: Delaware
(c) Subtenant's Name and INNOVEX INC.
address: 9 Campus Drive
Parsippany, NJ
Attn: Mr. David Stack
(d) Subtenant's State of Delaware
Incorporation:
(e) Sublease Date: January 18, 1996
(f) Overlandlord's Name and
Address: Prubeta-3
c/o The Prudential Insurance Co. of America
3 Gateway Center
100 Mulberry Street, 13th Floor
Newark, NJ 07102
(g) Overlease: Between Overlandlord and Sublandlord
dated October 10, 1989. Amended by First
Amendment to Lease dated September 20,
1990, Second Amendment to Lease dated
May 16, 1994 and Commencement Date
Memorandum dated March 14, 1995.
(h) Unincorporated provisions
of the Overlease: Articles: 1, 2(a), 6(a), 27, 29(B), 44
and 45; First Amendment Articles 4, 5, 6,
7, 10; Second
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Amendment Articles 1, 3, 4, 6, 7, 9.
Exhibits: B-1, C; First Amendment Exhibits
B and C;
(i) Building: 9 CAMPUS DRIVE
PARSIPPANY, NJ
(j) Premises: 10,857 Rentable Square Feet on the 2nd
floor
(k) Sublease Commencement Date: The later of (i) Overlandlord's consent
and (ii) February 1, 1996
(1) Sublease Expiration Date: July 30, 2000
(m) Base Rent:
</TABLE>
<TABLE>
<CAPTION>
Annual
Rent per rentable
Yearly Periods square foot Monthly Base Rent Annual Base Rent
- -------------- ----------------- ----------------- ----------------
<S> <C> <C> <C>
Sublease Commencement
through March 31, 2000 $16.50 $14,928.37 $179,140.50
April 1, 2000
through Sublease
Expiration Date - 0 - - 0 - - 0 -
</TABLE>
<TABLE>
<S> <C>
(n) Prepaid Base Rent: $14,928.37
(o) Operating Expenses: See Section 13/Base year 1996
(p) Subtenant's Proportionate
Share: 7%
(q) Electric Charge: Per Overlease - See Section 14
(r) Security Deposit: Letter of Credit - See Section 16
(s) Alterations: See Section 7
</TABLE>
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 2 -2-
<PAGE> 3
<TABLE>
<S> <C>
(t) Brokers: For Sublandlord: Cushman & Wakefield
For Subtenant: Cushman & Wakefield
(u) Parking: Included - per Overlease
(v) Termination: See Article 18
</TABLE>
2. SUBLEASE GRANT
2.1. By lease (hereinafter referred to as the "Overlease")
described above, the Overlandlord leased to Sublandlord certain space
(hereinafter called the "Leased Space") in the Building in accordance with
the terms of the Overlease. Sublandlord represents that a complete copy of the
Overlease (from which certain terms which do not relate to Subtenant's
obligations hereunder may have been deleted) is annexed hereto as EXHIBIT A.
2.2. In consideration of the obligation of Subtenant to pay rent as
herein provided and in consideration of the other terms, covenants and
conditions hereof, Sublandlord hereby leases to Subtenant and Subtenant hereby
hires from Sublandlord, upon and subject to the provisions of this Sublease and
the Overlease, the square feet of rentable area as set forth in SECTION 1.1
herein and as shown hatched on EXHIBIT B annexed hereto and made a part hereof
(hereinafter called the "Premises").
3. SUBLEASE TERM
3.1. Subject to the other provisions hereof, this Sublease shall
continue in full force and effect for a primary term beginning on the Sublease
Commencement Date and ending on the Sublease Expiration Date as defined above.
Such term, as it may be extended or modified only by written agreement of the
parties or pursuant to an express provision of this Sublease, is herein called
the "Sublease Term". Notwithstanding anything herein to the contrary, Subtenant
may terminate this Sublease if Overlandlord's approval is not received within
forty (40) days after Subtenant has executed and delivered this Sublease to
Sublandlord in which event Sublandlord shall return to Subtenant the Prepaid
Rent and Letter of Credit provided herewith; provided that Subtenant has
cooperated with Sublandlord in seeking such approval.
4. RENT
4.1. Subtenant, in consideration of this Sublease agrees to pay to
Sublandlord as rent ("Base Rent") the amounts set forth in SECTION 1.1 hereof.
Base rent is payable in advance and without demand, at Sublandlord's office (or
such other location as Sublandlord shall designate) by check in equal monthly
installments, on the first day of each month during the Sublease Term without
any set-off, off-set, abatement or reduction whatsoever except that no Base Rent
shall be due for the last four (4) months of the Sublease Term. Subtenant's
failure to receive an invoice from Sublandlord for the rent shall not relieve
Subtenant from its obligation of timely
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 3 -3-
<PAGE> 4
payment hereunder. The Prepaid Base Rent shall be paid upon Subtenant's
execution of this Sublease. Notwithstanding anything to the contrary contained
herein, Subtenant shall not be considered in default for late payment of Base
Rent provided that (i) such Base Rent is paid within five (5) days after written
notice that such Base Rent is past due; and (ii) such notice shall not be
required more than twice in any twelve (12) month period.
4.2. As used in this Sublease, "Rent" shall mean the Base Rent, the
Operating Expense reimbursements pursuant to SECTION 1.1, and all other monetary
obligations provided for in this Sublease to be laud by Subtenant, all of which
constitute rental in consideration for this Sublease.
4.3. In the event the rent is not paid when due as aforesaid,
interest shall accrue thereon at the lesser of 18% per annum or the maximum rate
permitted by law. In addition, if the rent is not paid by the tenth day of any
given month, Subtenant shall pay as a penalty to Sublandlord an additional
amount equal to five percent (5%) of the rent which is due, but not less than
$100.
5. ASSIGNMENT OR UNDERLETTING
5.1. Subtenant shall not (a) assign this Sublease, nor (b) permit
this Sublease to be assigned by operation of law or otherwise, nor (c) underlet
all or any desk space therein to be occupied by any person(s), without first
obtaining:
(a) Overlandlord's consent and all other required
consents to such assignment or subletting as set forth in and
pursuant to the Overlease, and
(b) Sublandlord's consent.
Notwithstanding anything hereinbefore contained in SECTION 5.1
hereof, in the event Subtenant desires Sublandlord's consent to an assignment of
this Sublease or an underletting of all of the Premises, Subtenant by notice in
writing (a) shall notify Sublandlord of the name of the proposed assignee or
undertenant, furnish such information as to the proposed assignee's or
undertenant's financial responsibility and standing as Sublandlord may
reasonably request, and advise Sublandlord of the covenants, agreements, terms,
provisions and conditions contained in the proposed assignment or underlease and
(b) shall offer to vacate the Premises and to Surrender the same to Sublandlord
as of a date (hereafter called the "Surrender Date") specified in said offer
which shall be the last day of any calendar month during the term hereof,
provided, however, that the Surrender Date shall not be earlier than the date
occurring 120 days after the giving of such notice nor be later than the
effective date of the proposed assignment or the commencement date of the term
of the proposed underlease. Sublandlord may accept such offer by notice to
Subtenant given within 30 days after the receipt of such notice from Subtenant.
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 4 -4-
<PAGE> 5
If Sublandlord accepts such offer, Subtenant shall surrender to Sublandlord,
effective as of the Surrender Date, all Subtenant's right, title and interest in
and to the entire Premises. If the Premises be so surrendered by Subtenant, this
Sublease shall be canceled and terminated as of the Surrender Date with the same
force and effect as if the Surrender Date were the date hereinbefore specified
for the expiration of the full term of this Sublease.
5.2. In the event Sublandlord does not accept such offer of
Subtenant referred to in SECTION 5.2 hereof, Sublandlord covenants not to
unreasonably withhold its consent to such proposed assignment or underletting by
Subtenant of the Premises to the proposed assignee or undertenant and such
consent shall be granted or denied within thirty (30) days of receipt of
Subtenant's request, on said covenants, agreements, terms, provisions and
conditions set forth in notice to Sublandlord referred to in clause (a) of the
first sentence of Section 5.2 hereof; provided, however, that Sublandlord shall
not in any event be obligated to consent to any such proposed assignment or
underletting unless:
(a) the proposed assignee or undertenant is of a financial
standing and is engaged in a business and the Premises will be used in
a manner which is in keeping with the then standards of the Building;
(b) the assignment or underletting shall not have the effect (or
give the utility company servicing the Building with electricity cause
to claim) that Sublandlord may not service the Premises, or any part
thereof, with electricity on a Rent inclusion" basis;
(c) Sublandlord shall have the right, upon five (5) days prior
written notice to Subtenant, to require Subtenant thereafter to pay to
Sublandlord a sum equal to one half of: (i) any rent or other
consideration paid to Subtenant by any undertenant which is in excess
of the fixed annual rent and additional rent then being paid by
Subtenant to Sublandlord pursuant to the terms of this Sublease, and
(ii) any other profit or gain realized by Subtenant from any such
assignment or underletting in connection with any underletting; all
sums payable hereunder by Subtenant shall be paid to Sublandlord as
additional rent immediately upon receipt thereof by Subtenant and, if
requested by Sublandlord, Subtenant shall promptly enter into a written
agreement with Sublandlord setting forth the amount of additional rent
to be paid to Sublandlord pursuant to this Section;
(d) there shall be no default by Subtenant under any of the terms,
covenants and conditions of this Sublease beyond the applicable cure
period at the time that Sublandlord's consent to any such assignment or
underletting is requested and on the effective date of the assignment
or the proposed underlease;
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 5 -5-
<PAGE> 6
(e) the proposed assignee or undertenant shall not be (i) a
government or any subdivision or agency thereof, or (ii) a school
college, university or educational institution of any type, whether for
profit or non-profit;
(f) Subtenant shall reimburse Sublandlord for any reasonable
expenses that may be incurred by Sublandlord in connection with the
proposed assignment or underlease, including without limitation the
reasonable costs of making investigations as to the acceptability of a
proposed assignee or undertenant and reasonable legal expenses incurred
in connection with the granting of any requested consent to the
assignment or underlease;
(g) such proposed underletting will result in there being no more
than one occupant of the Premises including Subtenant.
6. TERMS OF THE OVERLEASE
6.1. Except as herein otherwise expressly provided in Section
l.l(h) and except for the obligation to pay rent and additional rent under the
Overlease, all of the terms, covenants, conditions and provisions in the
Overlease are hereby incorporated in, and made a part of this Sublease, and such
rights and obligations as are contained in the Overlease are hereby imposed upon
the respective parties hereto; the Sublandlord herein being substituted for the
Landlord in the Overlease, and the Subtenant herein being substituted for the
Tenant named in the Overlease; provided, however, that the Sublandlord herein
shall not be liable for any defaults by Overlandlord and, if Overlandlord is not
the fee owner, the owner in fee of the land and Building of which the Premises
are a part. If the Overlease shall be terminated for any reason (except due to
Sublandlord's acts of default) during the term hereof, then and in that event
this Sublease shall thereupon automatically terminate and Sublandlord shall have
no liability to Subtenant by reason thereof. In the event of a default by
Sublandlord under the Overlease for which Sublandlord does not have a reasonable
dispute which would, if uncured, lead to a termination of the Overlease,
Subtenant may, after providing Sublandlord with then (10) business days notice,
perform Sublandlord's obligation under the Overlease and Sublandlord shall
reimburse Subtenant upon receipt of paid invoices for its actual costs incurred
in so performing, provided that Subtenant shall indemnify and hold Sublandlord
harmless from any costs incurred by Sublandlord as a result of Subtenant's
negligence or willful misconduct in this regard. In the event Sublandlord does
not so reimburse Subtenant within ten (10) days after additional written notice
from Subtenant, Subtenant may reduce its payments of Base Rent for the following
month(s) by an amount equal to the unreimbursed costs. Upon the termination of
this Sublease, whether by forfeiture, lapse of time or otherwise, or upon the
termination of Subtenant's right to possession, Subtenant will at once surrender
and deliver up the Premises in good condition and repair, reasonable wear and
tear excepted.
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 6 -6-
<PAGE> 7
6.2. This Sublease is subject to, and Subtenant accepts this
Sublease subject to, any amendments and supplements to the Overlease hereafter
made between Overlandlord and Sublandlord, provided that any such amendment or
supplement to the Overlease will not prevent or adversely affect the use by
Subtenant of the Premises in accordance with the terms of this Sublease,
increase the obligations of Subtenant or decrease its rights under the Sublease
or in any other way adversely affect Subtenant.
6.3. This Sublease is subject and subordinate to the Overlease and
to all ground or underlying leases and to all mortgages which may now or
hereafter affect such leases or the real property of which the Premises are a
part and all renewals, modifications, replacements and extensions of any of the
foregoing. This Section 6.3 shall be self-operative and no further instrument of
subordination shall be required. To confirm such subordination, Subtenant shall
execute promptly any certificate that Sublandlord may request.
7. CONDITION OF PREMISES
7.1. Subtenant has examined the Premises, is aware of the physical
condition thereof, and agrees to take the same "as is," (unless otherwise
provided in SECTION 15 herein) with the understanding that (a) the shelving in
the mailroom and the extra air conditioning unit in the telephone room will
remain in the Premises, and (b) there shall be no obligation on the part of
Sublandlord to incur any expense whatsoever in connection with the preparation
of the Premises for Subtenant's occupancy thereof except that Sublandlord shall
clean and paint the Premises prior to the Sublease Commencement Date. Any work
performed by Subtenant shall be in accordance with the terms of the Overlease
and Section 15 herein.
8. USE OF PREMISES
8.1. Subtenant agrees that the Premises shall be occupied only as
executive, administrative and general offices for Subtenant's business.
9. CONSENT OF OVERLANDLORD
9.1. This Sublease is conditioned upon the consent thereto by
Overlandlord which consent shall be evidenced by Overlandlord's signature
appended hereto or a separate consent in the form utilized by Overlandlord for
such purposes. Provided Overlandlord's consent does not affect the terms of this
Sublease, Subtenant shall immediately execute any documents requested by
Overlandlord in order to obtain Overlandlord's approval.
9.2. Sublandlord makes no representation with respect to obtaining
Overlandlord's approval of this Sublease except that Sublandlord agrees to send
the Sublease to Overlandlord within five (5) business days of receipt of an
executed-copy from Subtenant, and will use reasonably diligent efforts to seek
Overlandlord's consent as expeditiously as reasonably possible, and, in the
event that Overlandlord notifies Sublandlord that Overlandlord will not give
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 7 -7-
<PAGE> 8
such approval, Sublandlord will so notify Subtenant and, upon receipt of such
notification by Sublandlord of the disapproval by Overlandlord, this Sublease
shall be deemed to be null and void and without force or effect, and Sublandlord
and Subtenant shall have no further obligations or liabilities to the other with
respect to this Sublease.
9.3 Except as otherwise specifically provided herein, wherever in
this Sublease Subtenant is required to obtain Sublandlord's consent or approval,
Subtenant understands that Sublandlord may be required to first obtain the
consent or approval of Overlandlord. If Overlandlord should refuse such consent
or approval, Sublandlord shall be released of any obligation to grant its
consent or approval whether or not Overlandlord's refusal, in Subtenant's
opinion, is arbitrary or unreasonable.
10. DEFAULT
10.1. Subtenant acknowledges that the services to be rendered to the
Premises are to be rendered by Overlandlord. Anything in this Sublease to the
contrary notwithstanding, if there exists a breach by Sublandlord of any of its
obligations under this Sublease and, concurrently, a corresponding breach by
Overlandlord under the Overlease of its obligations under the Overlease exists,
then and in such event, Subtenant's sole remedy against Sublandlord in the event
of any breach of obligations under this Sublease shall be the right to pursue a
claim in the name of Sublandlord against Overlandlord, and Sublandlord agrees
that it will, at Subtenant's expense, cooperate with Subtenant in the pursuit of
such claim.
10.2. Anything contained in any provisions of this Sublease to the
contrary notwithstanding, Subtenant agrees, with respect to the Premises, to
comply with and remedy any default claimed by Overlandlord and caused by
Subtenant, within the period allowed to Sublandlord as tenant under the
Overlease, even if such time period is shorter than the period otherwise allowed
in the Overlease, due to the fact that notice of default from Sublandlord to
Subtenant is given after the corresponding notice of default from Overlandlord.
Sublandlord agrees to forward to Subtenant, upon receipt thereof by Sublandlord,
a copy of each notice of default received by Sublandlord in its capacity as
tenant under the Overlease. Subtenant agrees to forward to Sublandlord, upon
receipt thereof, copies of any notices received by Subtenant with respect to the
Premises from Overlandlord or from any governmental authorities.
10.3. Subtenant acknowledges that upon breach of any provisions of
this Sublease by Subtenant, any rights or options granted to Subtenant under
this Sublease or the Overlease relating to expansion, renewal, or any other
equity option, shall immediately terminate and shall not be exercisable for the
remainder of the Sublease term. If and whenever there shall occur any event of
monetary default of this Sublease which is not cured within five (5) days of
receipt of written notice (except a default for failure to pay Base Rent, for
which the cure period is set forth in Section 4.1 hereof), or any non-monetary
default which is not cured within fifteen (15)
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 8 -8-
<PAGE> 9
days of receipt of notice from Sublandlord (which cure period shall be extended
if the default cannot be cured within such period, and Subtenant is diligently
pursuing a cure), Sublandlord may, at Sublandlord's option, in addition to any
other remedy or right given under the Overlease or by law or equity, do any one
or more of the following:
(a) Terminate this Sublease without notice to Subtenant, in which
Subtenant shall immediately surrender possession of the Premises to
Sublandlord;
(b) Terminate Subtenant's right to possession of the Premises
under this Sublease without terminating the Sublease itself, by written
notice to Subtenant, in which event Subtenant shall immediately
surrender possession of the Premises to Sublandlord;
(c) Enter upon and take possession of the Premises and expel or
remove Subtenant and any other occupant therefrom, with or without
having terminated this Sublease;
(d) Alter locks and other security devices at the Premises with or
without having terminated this Sublease or Subtenant's right to
possession under the Sublease;
(e) Enter upon the Premises by force if necessary without being
liable for prosection or any claim for damages therefor, and do
whatever Subtenant is obligated to do under the terms of this Sublease;
and Subtenant agrees to reimburse Sublandlord on demand for any direct
or indirect expenses which Sublandlord or Overlandlord may incur in
thus effecting compliance with Subtenant's obligations under this
Sublease, and Subtenant further agrees that Sublandlord shall not be
liable for any damages resulting to Subtenant from such action.
10.4. It is hereby expressly stipulated by Sublandlord and Subtenant
that any of the above listed actions including, without limitation, termination
of this Sublease, termination of Subtenant's right to possession, and re-entry
by Sublandlord, will not affect the obligations of Subtenant for the unexpired
Sublease Term, including the obligations to pay an amount ("Accelerated
Damages") equal to the excess of (x) the then present value of all Base Rent and
all Additional Rent that would be payable under this Sublease from the date of
demand for what would be the unexpired term of this Sublease, plus (y) any
estimated or actual reletting expenses not previously paid by Subtenant, over
(z) the then present value of the then fair rental value of the Premises at the
date of such demand for what would be the unexpired term of this Sublease
beginning a reasonable period of time (not to exceed five months) after the date
of the demand.
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 9 -9-
<PAGE> 10
Present value shall be determined for the purpose of the immediate preceding
sentence by application of a discount factor equal to the Federal Discount Rate
per year. If the Premises has been relet, the fair rental value of the Premises
for purpose of determining the Accelerated Damages shall be the amount of rent
obtained upon such reletting, provided such reletting is on commercially
reasonable terms. Sublandlord shall not refuse to relet the Premises, but the
good faith failure of Sublandlord to relet the Premises or any part or parts
thereof, or the good faith failure of Sublandlord to collect the rent thereof
under such reletting, shall not release or affect Subtenant's liability for
damages. If an event of default occurs, Sublandlord is entitled and is hereby
authorized, without notice to Subtenant, to enter upon the Premises by use of a
master key, a duplicate key, or other peaceable means, and to change, alter,
and/or modify the door locks on all entry doors of the Premises, thereby
permanently excluding Subtenant, and its officers, principals, agents,
employees, and representatives therefrom. In the event that Sublandlord has
either terminated Subtenant's right to possession of the Premises pursuant to
the foregoing provisions of this Sublease, or has terminated the Sublease by
reason of Subtenant's default, Sublandlord shall not thereafter be obligated to
provide Subtenant with a key to the Premises at any time; provided, however,
that in any such instance, during Sublandlord's normal business hours and at the
convenience of Sublandlord, and upon the written request of Subtenant
accompanied by such written waiver and releases as the Sublandlord may require,
Sublandlord will escort Subtenant or its authorized personnel to the Premises to
retrieve any personal belongings or other property of Subtenant. If Sublandlord
elects to exclude Subtenant from the Premises without permanently repossessing
the Premises or terminating the Sublease pursuant to the foregoing provisions of
this Sublease, the Sublandlord (at any time prior to actual permanent
repossession or termination) shall not be obligated to provide Subtenant a key
to re-enter the Premises until such time as all delinquent rental and other
amounts due under this Sublease have been paid in full (and all other defaults,
if any, have been completely cured to Sublandlord's satisfaction), and
Sublandlord has been given assurance reasonably satisfactory to Sublandlord
evidencing Subtenant's ability to satisfy its remaining obligations under this
Sublease. During any such temporary period of exclusion, Sublandlord will,
during Sublandlord's regular business hours, and at Sublandlord's convenience,
upon written request by Subtenant accompanied by such waivers and releases as
the Sublandlord may require, escort Subtenant or its authorized personnel to the
Premises to retrieve personal belongings of Subtenant or its employees. This
remedy of Sublandlord shall be in addition to, and not in lieu of, any of its
other remedies set forth in this Sublease, the Overlease, or otherwise available
to Sublandlord at law or in equity.
10.5. Exercise by Sublandlord of any one or more remedies hereunder
granted or otherwise available shall not be deemed to be an acceptance of
surrender of the Premises by Subtenant, whether by agreement or by operation of
law, it being understood that such surrender can be effected only by the written
agreement of Sublandlord and Subtenant. No such alteration of locks or other
security devices and no removal or other exercise of dominion by Sublandlord
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 10 -10-
<PAGE> 11
over the property of Subtenant or others at the Premises shall be deemed
unauthorized or constitute a conversion, Subtenant hereby consenting, after any
event of default, to the aforesaid exercise of dominion over Subtenant's
property within the Premises. All claims for damages by reason of such re-entry
and/or repossession and/or alteration of locks or other security devices are
hereby waived, as are all claims for damages by reason of any distress warrant,
forcible detainer proceedings, sequestration proceedings or other legal process.
Subtenant agrees that any re-entry by Sublandlord may be pursuant to a judgment
obtained in forcible detainer proceedings or other legal proceedings or without
the necessity for any legal proceedings, as Sublandlord may elect, and
Sublandlord shall not be liable in trespass or otherwise.
11. SUBLANDLORD REPRESENTATION
11.1. Sublandlord represents (a) that it is the holder of the
interest of the tenant under the Overlease, (b) that the Overlease is in full
force and effect.
12. BROKERS
12.1. Both parties covenant, represent and warrant that they have
had no dealings or communications with any broker or agent in connection with ]
the consummation of this Sublease other than those set forth in SECTION 1.1
hereof (which Sublandlord is obligated to compensate), and each party covenants
and agrees to pay, hold harmless and indemnify the other from and against any
and all cost, expense (including reasonable attorneys' fees) or liability for
any compensation, commissions or charges claimed by any broker or agent other
than such brokers with respect to this Sublease or the negotiation thereof.
13. OPERATING EXPENSES/TAXES
13.1. All charges for standard Operating Expenses and Property Taxes,
as defined in the Overlease, incurred during normal business hours for the Base
Year set forth in Subsection l.l(o) hereof shall be included in the rent paid
herein and will not be passed through to Subtenant. Any additional charges shall
be paid by Subtenant to Sublandlord as additional rent at the times that Tenant
is required to pay its percentage share of increases in Project Operating
Expenses and Project Property Taxes over Base Project Operating Expenses and
Base Project Property Taxes (as such terms are defined in the Overlease);
provided, however, for purposes of this Sublease the Base Project Operating
Expenses and Base Project Taxes shall be actual expenses and taxes per square
foot for calendar year 1996, adjusted as provided in the second sentence of
Paragraph 3(A) of the Overlease. Any rights granted to Sublandlord under the
Overlease relating to Project Operating Expenses and Project Property Taxes
shall be provided to Subtenant hereunder, and Sublandlord agrees to cooperate
with Subtenant in seeking any rebates or reimbursements in this regard from
Overlandlord on Subtenant's behalf.
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 11 -11-
<PAGE> 12
14. ELECTRIC CHARGE
14.1. Subtenant shall pay the monthly electric fee set forth in the
Overlease as Additional Rent hereunder which shall cover all charges for normal
office electric service use associated with the Premises during normal business
hours.
15. ALTERATIONS
15.1. In the event Subtenant is permitted to perform alterations in
the Premises hereunder, Subtenant may make no changes, alterations, additions,
improvements or decorations in, to or about the Premises without submitting
detailed plans and construction schedules to Sublandlord and receiving
Sublandlord's prior written consent to such plans. Sublandlord will not withhold
its consent to any alterations which were approved in writing by Overlandlord.
Subtenant shall 'make no changes, alterations, additions, improvements or
decorations which would result in Overlandlord charging Sublandlord for the cost
of same, including any removal costs associated therewith unless Subtenant
expressly agrees to pay such costs, and Subtenant shall comply with all laws and
regulations relating to such construction including, but not limited to, receipt
of certificates of occupancy, permits and ADA requirements, and shall be
responsible for all costs associated therewith.
16. SECURITY DEPOSIT
16.1. As security for the faithful performance and observance by
Subtenant of the terms, provisions, covenants and conditions of this Sublease,
Subtenant is simultaneously herewith delivering to Sublandlord an irrevocable
letter of credit in the amount of $89,570.22 from a recognized financial
institution which shall be renewed on an annual basis until the Sublease
Expiration Date. In the event Subtenant cannot renew the letter of credit, it
shall allow Sublandlord to draw the amount of the security and hold the cash
amount as security. Beginning on October 31, 1997, Subtenant may decrease the
amount of the letter of credit to $44,785.11. Such letter of credit shall have
Sublandlord as the beneficiary thereunder.
16.2. In the event Subtenant defaults in respect of any of the
terms, provisions, covenants and conditions of this Sublease, including, but not
limited to, the payment of annual fixed rent and additional rent, and such
default is not cured within the applicable cure period, Sublandlord may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any annual fixed rent and additional rent or any
other sum as to which Subtenant is in default or for any sum which Sublandlord
may expend or may be required to expend by reason of Subtenant's default in
respect of any of the terms, provisions, covenants, and conditions of this
Sublease, including, but not limited to, any damages or deficiency accrued
before or after summary proceedings or other re-entry by Landlord.
16.3. In the event that Subtenant defaults in respect of any of the
terms, provisions, covenants and conditions of the Sublease beyond the
applicable cure period, and Sublandlord
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 12 -12-
<PAGE> 13
utilizes all or any part of the security but does not terminate this Sublease as
provided herein, Sublandlord may in addition to exercising its rights as
provided in Section 16.2, retain the unapplied and unused balance of the
principal amount of the security as security for the faithful performance and
observance by Subtenant thereafter of the terms, provisions and conditions of
this Sublease and may use, apply or retain the whole or any part of said balance
to the extent required for payment of rent, additional rent, or any other sum as
to which Subtenant is in default or for any sum which Sublandlord may expend or
be required to expend by reason of Subtenant's default in respect of any of the
terms, covenants, and conditions of this Sublease. In the event Sublandlord
applies or retains any portion or all of the security delivered hereunder,
Subtenant shall forthwith restore the amount so applied or retained so that at
all times the amount deposited shall be no less than the security required by
SECTION 16.1.
16.4. Provided Subtenant is not then in default of this Sublease,
the security, together with the interest accrued thereon, shall be returned to
Subtenant (i) after the Sublease Expiration Date and after delivery of entire
possession of the Premises to Sublandlord, or (ii) upon Sublandlord's receipt of
an equivalent amount of security from a assignee or undertenant pursuant to an
assignment or Underletting permitted by SECTION 5 of this Sublease. In the event
of an assignment of the Overlease by Sublandlord, Sublandlord shall have the
right to transfer any interest it may have in the security to the assignee and
Sublandlord shall thereupon be released by Subtenant from all liability for the
return of such security, provided such assignee assumes any responsibilities of
Sublandlord with respect to such security, and Subtenant agrees to look solely
to the new Sublandlord for the return of said security; and it is agreed that
the provisions hereof shall apply to every transfer or assignment made of the
security to a new sublandlord. Subtenant further covenants that it will not
assign or encumber or attempt to assign or encumber the monies deposited herein
as security and that neither Sublandlord nor its successors or assigns shall be
bound by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
17. QUIET ENJOYMENT
17.1. So long as Subtenant pays all of the rent and additional rent
due under this Sublease and performs all of Subtenant's other obligations
hereunder, Subtenant shall peacefully and quietly have, hold and enjoy the
Premises subject, however, to the terms, provisions and obligations of this
Sublease and the Overlease.
17.2. In the event Subtenant does not completely vacate the Premises
by the Sublease Expiration Date or earlier termination of this Sublease,
Subtenant shall indemnify and hold harmless Sublandlord in respect of any and
all holdover charges or penalties imposed under the Overlease upon Sublandlord
in respect of the entire Leased Space and in respect of any and all costs,
liabilities or expenses (including attorneys fees) suffered by Sublandlord in
respect of same, as and when such costs, liabilities or expenses are incurred.
In this regard, Subtenant
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 13 -13-
<PAGE> 14
shall, if requested by Sublandlord, in Sublandlord's sole discretion, defend
Sublandlord against any action or proceeding brought against Sublandlord which
arises out of said holdover.
18. TERMINATION OPTION
18.1. Subtenant shall have the right to terminate this Sublease as
of October 30, 1997, provided that (i) Subtenant is not then in default under
this Sublease beyond applicable cure periods, and (ii) Subtenant gives
Sublandlord notice of such termination on or before November 30, 1996 and
simultaneously delivers to Sublandlord a certified check in the amount of One
Hundred Eighty Five Thousand Seven Hundred Ninety Seven Dollars ($185,797.00) as
a termination fee. This termination fee shall be in addition to all Base Rent
and Additional Rent falling due during the balance of the Sublease Term through
the date of termination.
19. NO WAIVER
19.1. The failure of either party to seek redress for violation of,
or to insist upon the strict performance of any covenant or condition of this
Sublease or of any of the Rules and Regulations set forth or hereafter adopted
by Sublandlord, shall not prevent a subsequent act which would have originally
constituted a violation from having all the force and effect of an original
violation. The receipt by Sublandlord of rent with knowledge of the breach of
any covenant of this Sublease shall not be deemed a waiver of such breach and no
provision of this Sublease shall be deemed to have been waived by either party
unless such waiver be in writing signed by the waiving party. No payment by
Subtenant or receipt by Sublandlord of a lesser amount than the monthly rent
herein stipulated shall be deemed to be other than on account of the earliest
stipulated base rent, additional rent or other charge, nor shall any endorsement
or statement on any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Sublandlord may accept such check
or payment without prejudice to Sublandlord's right to recover the balance of
such base rent, additional rent or other charge, or pursue any other remedy in
this Sublease provided. No act or thing done by Sublandlord or Sublandlord's
agents during the term hereby demised shall be deemed an acceptance of a
surrender of the demised premises and no agreement to accept such surrender
shall be valid unless in writing signed by Sublandlord. No employee of
Sublandlord of Sublandlord's agent shall have any power to accept the keys of
the demised premises prior to the termination of the Sublease and the delivery
of keys to any such agent or employee shall not operate as a termination of the
Sublease or a surrender of the demised premises.
20. NOTICES
20.1. Any notice, demand or communication which, under the terms of
this Sublease or under any statute or municipal regulation must or may be given
or made by the parties hereto, shall be in writing and given or made by mailing
the same by registered or certified mail, return receipt requested to the
address and person designated in Section 1.l(a) and (c) herein.
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 14 -14-
<PAGE> 15
Either party, however, may designate such new or other address to which
such notices, demands or communications thereafter shall be given, made or
mailed by notice (given in the manner prescribed herein). Any such notice,
demand or communication shall be deemed given or served, as the case may be, on
the date of the posting thereof. In the event Subtenant's address is not set
forth above, notice to Subtenant shall be deemed sufficient if sent to the
Premises.
21. MISCELLANEOUS
21.1. Where applicable, Subtenant shall be responsible for all
additional costs incurred as a result of this Sublease including, but not
limited to, security cards, keys and parking cards.
21.2. This Sublease may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.
21.3. This Sublease shall not be binding upon Sublandlord unless and
until it is signed by Sublandlord and delivered to Subtenant. This SECTION 21.3
shall not be deemed to modify the provisions of SECTION 9 hereof.
21.4. This Sublease constitutes the entire agreement between the
parties and all representations and understandings have been merged herein.
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 15 -15-
<PAGE> 16
21.5. This Sublease shall inure to the benefit of all of the parties
hereto, their successors and (subject to the provisions hereof) their assigns.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
of the day and year first above written.
ATTEST: LEGENT CORPORATION,
Sublandlord
/s/ By /s/ Peter A. Schwartz
- ------------------------ --------------------------------
ATTEST: INNOVEX INC., Subtenant
/s/ Christine S. Stack By /s/ David Stack
- ------------------------ --------------------------------
1-19-96 David Stack
President, General Manager
1-19-96
ACKNOWLEDGED AND AGREED:
PRUBETA-3, Overlandlord
By
---------------------
SUBLEASE AGREEMENT BETWEEN
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
AND INNOVEX
JANUARY 17, 1996
PAGE 16 -16-
<PAGE> 17
LEASE AGREEMENT
PRUBETA 3 BUSINESS CAMPUS
LEGENT CORPORATION
TENANT
DATE: October l0, 1989
<PAGE> 18
JV #528.3
9/28/89
THIS LEASE is made this 10th day of October, 1989, between PRUBETA 3, a
general partnership organized under the laws of New Jersey, with an office at
c/o THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Newark Realty Group Office,
Three Gateway Center 100 Mulberry Street, 13th Floor, Newark, New Jersey
07102-4077 hereinafter called "Landlord," and LEGENT CORPORATION, a Corporation
of the State of Delaware, having its principal office at Two Allegheny Center,
Pittsburgh, Pennsylvania 15212 hereinafter called "Tenant."
LEASE OF PREMISES: Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord, subject to all of the terms and conditions hereinafter set forth,
those certain premises (the "Premises") as set forth in Item 1 of the Basic
Lease Provisions and as shown in the drawing(s) attached hereto as Exhibit
"A-1"; said Premises being located on the floor(s) indicated in that certain
office building (the "Building") situated on certain land, which said land
together with the Building are collectively hereinafter referred to as the
"Project," being known as Linden Plaza being located at 9 Campus Drive in the
Township of Parsippany-Troy Hills, County of Morris, State of New Jersey and
being a part of PruBeta-3 Business Campus (the "Complex" or "Campus").
BASIC LEASE PROVISIONS:
<TABLE>
<S> <C> <C>
1. Location of Premises: Floor: Second
2. Rentable Area of Premises: 5,873 rentable, not usuable, square feet
3. Percentage Share: 3.79%
4. Base Project Operating Expenses: $5.50 per square foot per year
Base Project Property Taxes: $2.75 per square foot per year
5. Term: 5 years
6. Initial Estimated Annual
Electricity Charge: $1.50 per square foot per year
7. Basic Annual Rent: $123,333.00
($21.00 per square foot)
8. Basic Monthly Rental Installments: $10,277.75
9. Target Commencement Date: November 1, 1989
10. Security Deposit: None
10. Parking Spaces: 24 non-designated
11. Broker(s): Cushman & Wakefield of Hew Jersey, Inc.
1099 Wall Street West
Lyndhurst, New Jersey 07071
12. Permitted Use: General Office Use
13. Addresses for Notices:
</TABLE>
<TABLE>
<CAPTION>
LANDLORD: TENANT:
<S> <C>
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA LEGENT CORPORATION
Newark Realty Group Two Allegheny Drive
Three Gateway Center, 13th Floor Pittsburgh, Pennsylvania 15212
100 Mulberry Street
Newark, New Jersey 07102 Attn: Carolyn D. Vetovich
Attn: Vice President
Prudential Property Company
with copy to:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
Newark Realty Group
Three Gateway Center, 13th Floor
100 Mulberry Street
Newark, New Jersey 07102
Attn: Susan L. Blount
Regional Counsel
</TABLE>
<PAGE> 19
14. All payments under this Lease shall be payable and delivered to:
Property Management Systems
9 Campus Drive
Parsippany-Troy Hills, New Jersey 07054
or such other payee or address as Landlord may designate from time to time.
IN WITNESS WHEREOF, the parties hereto have executed this Lease,
consisting of the foregoing and Paragraphs 1 through 43 which follow, together
with Exhibits A through F, inclusive, incorporated herein by this reference as
of the date first above written.
(LANDLORD) PRUBETA 3
ATTEST: BY: THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA, General Partner
/s/ Richard E. Pigott By: /s/John S. Gregorits
- --------------------- --------------------------------
RICHARD E. PIGOTT JOHN S. GREGORITS
ASSISTANT SECRETARY VICE PRESIDENT
(TENANT)
ATTEST: LEGENT CORPORATION
/s/ Kim Steffanina By: /s/ Arthur F. Knapp. Jr. - CFO
- --------------------- --------------------------------
Arthur F. Knapp. Jr. - CFO
By: EQUITY PARSIPPANY VENTURE,
General Partner
APPROVED AS TO LEGAL FORM:
By: BetaWest Properties, Inc.
General Partner
By: /s/ Sara E. Culhane By: /s/
-------------------- ----------------------------
VICE PRESIDENT
Date: 10/26/89 Its: ASSET MANAGEMENT
------------------ ----------------------------
Tenant's Federal Tax Identification Number is: 25-1589745
--------------------------------
<PAGE> 20
STATE OF NEW JERSEY:
SS.
COUNTY OF ESSEX :
BE IT REMEMBERED, that on this 16th day of October, 1989, before me,
the subscriber, a notary public of New Jersey, personally appeared John S.
Gregorits, Vice President of THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, who I
am satisfied, is the person who has signed the within instrument; and he did
acknowledge that he signed, sealed and delivered the same as such officer
aforesaid; and that the within instrument is the voluntary act and deed of said
corporation made by virtue of authority from its Board of Directors.
/s/ Angelina C. Monti
---------------------
ANGELINA C. MONTI
A NOTARY PUBLIC OF NEW JERSEY
My Commission Expires March 14, 1990
STATE OF COLORADO)
:SS
COUNTY OF DENVER )
BE IT REMEMBERED, that on this day of , 1989,
before me, the subscriber, a notary public of , personally
appeared , who, I am satisfied is the
of BetaWest Properties, Inc. General Partner of EQUITY PARSIPPANY VENTURE who
has signed the within instrument, and he thereupon acknowledged that he signed,
sealed and delivered the said instrument as the voluntary act and deed of said
corporation as General Partner of said partnership made in accordance with and
fully authorized by its partners and the partnership agreement.
------------------------
STATE OF Pennsylvania
SS.
COUNTY OF Allegheny:
BE IT REMEMBERED, that on this 10th day of October, 1989, before me, the
subscriber, a notary public of State of Pennsylvania, personally appeared Arthur
F. Knapp, Jr. - CFO of LEGENT CORPORATION, who I am satisfied, is the
person who has signed the within instrument; and he did acknowledge that he
signed, sealed and delivered the same as such officer aforesaid; and that the
within instrument is the voluntary act and deed of said corporation made by
virtue of authority from its Board of Directors.
/s/ Karen M. Lutsko
------------------------
[Seal]
<PAGE> 21
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PARAGRAPH: PAGE
<S> <C> <C>
1. Term .................................................................... 1
2. Basic Annual Rent ....................................................... 1
3. Additional Rent for Taxes and Operating Expenses, Etc.................... 1
4. Security Deposit ........................................................ 3
5. Repairs ................................................................. 4
6. Improvements and Alterations ............................................ 4
7. Liens ................................................................... 5
8. Use of Premises ......................................................... 5
9. Utilities and Services .................................................. 5
10. Rules and Regulations ................................................... 7
11. Taxes on Tenant's Property .............................................. 7
12. Substituted Premises .................................................... 7
13. Fire or Casualty ........................................................ 7
14. Eminent Domain .......................................................... 8
I5. Assignment and Subletting ............................................... 8
16. Landlord's Access to Premises ...........................................10
17. Subordination; Attornment; Estoppel Certificates ........................10
18. Sale by Landlord ........................................................10
19. Indemnification of Landlord and Insurance ...............................10
20. Waiver of Subrogation ...................................................12
21. No Waiver ...............................................................12
22. Default .................................................................12
23. Right of Landlord to Cure Tenant's Default ..............................13
24. Notices .................................................................14
25. Insolvency or Bankruptcy ................................................14
26. Surrender and Holdover ..................................................14
27. Condition of Premises ...................................................14
28. Quiet Possession ........................................................14
29. Limitation of Landlord's Liability ......................................14
30. Governing Law ...........................................................15
31. Common Facilities .......................................................15
32. Successors and Assigns ..................................................15
33. Brokers .................................................................15
34. Name; Landlord's Rights .................................................16
35. Examination of Lease ....................................................16
36. Additional Charges ......................................................16
37. Defined Terms and Marginal Headings .....................................16
38. Prior Agreements; Severability ..........................................17
39. Parking .................................................................17
40. Force Majeure ...........................................................17
41. No Light, Air or View Easement ..........................................17
42. Authority and Signatories ...............................................17
43. Campus Association ......................................................18
44. Tenant's Option to Cancel ...............................................18
45. Tenant's Option to Renew ................................................19
</TABLE>
<TABLE>
<S> <C>
Exhibit "A-1" Floor Plan(s) of Premises
Exhibit "A-2" Description of the Land
Exhibit "B-1" Landlord's Work Letter
Exhibit "C" Commencement Date Memorandum
Exhibit "D" Rules and Regulations
Exhibit "E" Holiday Schedule
Exhibit "F" Janitorial Services
Exhibit "G" Tenant's Plan
</TABLE>
<PAGE> 22
PARAGRAPH 1 TERM: (A) The term of this Lease shall be as shown in Item 4 of the
Basic Lease Provisions. The Lease shall commence on the Target commencement Date
as shown in Item 8 of the Basic Lease Provisions or upon such earlier date as
Tenant takes possession or commences use of the Premises. Such date of
commencement, hereinafter the "Commencement Date", and the date of expiration,
hereinafter the "Expiration Date", shall be confirmed by Landlord by means of a
"Commencement Date Memorandum" in form substantially similar to Exhibit "C."
(B) Anything herein to the contrary notwithstanding and expressly
subject to extension by reason of 1) events or circumstances described in
Paragraph 40 (Force Majeure) hereof, and 2) delays and extensions of time
described in Exhibit "B-1" Landlord's Work Letter, if Landlord shall be unable
or shall otherwise fail to give possession of the Premises as provided herein on
or before December 1, 1989 then Landlord shall give written notice to Tenant
within thirty (30) days prior to that date of another date for delivery of
possession, which date Tenant may, at its option given within ten (10) days of
the date of Landlord's notice, elect to accept or reject. If that date is
rejected by Tenant, Landlord and Tenant shall be relieved of all obligations
hereunder. If that date is accepted by Tenant and Landlord delivers possession
on said date, the date of delivery of possession shall be the Commencement Date.
If accepted by Tenant and Landlord fails to deliver possession on said date,
then Tenant may reject this Lease and be relieved of all obligations hereunder
or Tenant may permit Landlord an additional period of thirty (30) days within
which to deliver possession and if possession is not delivered on such date,
Tenant may reject or continue to permit Landlord additional thirty (30) day
periods until Tenant rejects the Lease or is delivered possession hereunder.
Under no circumstances shall Landlord be responsible to Tenant for any cost of
Tenant's Improvements installed in the Premises and not removed by Tenant
immediately upon Tenant's rejection of this Lease as permitted in this
subparagraph.
PARAGRAPH 2 BASIC ANNUAL RENT: (A) Tenant agrees to pay as Basic Annual Rent for
the Premises the sum or sums shown in Item 6 of the Basic Lease Provisions. The
Basic Annual Rent shall be payable in U.S. currency in equal monthly
installments, hereinafter sometimes referred to as "Basic Monthly Rental
Installments", in advance and without notice, deduction, offset, or abatement.
Basic Monthly Rental Installments shall be in the sum or sums shown in Item 7 of
the Basic Lease Provisions. Basic Annual Rent shall commence on the first day of
the third month after the Commencement Date and continue on the first day of
each calendar month thereafter. The Basic Monthly Rental Installment for any
partial month during the term hereof shall be prorated in the proportion that
the number of days this Lease is in effect during such partial month bears to
the number of days in that calendar month, and such Basic Monthly Rental
Installment shall be paid at the commencement of such partial month.
(B) In addition to the Basic Annual Rent stipulated herein, Tenant
covenants and agrees to pay in U.S. currency, without deduction, offset, or
abatement, to Landlord as additional rent, hereinafter "Additional Rent", all
other sums and charges which are to be paid by Tenant pursuant to the terms of
this Lease. Except as otherwise provided in this Lease, Additional Rent shall be
due and payable on the later of the first day of the month following the date on
which Tenant is given notice that Additional Rent is due or fifteen (15) days
from date of notice.
(C) The Basic Annual Rent plus Additional Rent are sometimes collectively
referred to as "Rent".
PARAGRAPH 3 ADDITIONAL RENT FOR TAXES AND OPERATING EXPENSES, ETC.:
(A) Commencing with the Commencement Date, Tenant agrees to pay as items of
Additional Rent for the Premises, Tenant's "Percentage Share" (being the
percentage indicated in Item 3 of Basic Lease Provisions) of all increases in
"Project Operating Expenses" and "Project Property Taxes" (as hereinafter
defined) over Base Project Operating Expenses and Base Project Property Taxes
(being the amounts indicated in Item 4 of Basic Lease Provision incurred by
Landlord in the operation of the Project. For purposes of this paragraph, during
each year actual occupancy of the Building is less than one hundred (100%)
percent, Landlord will adjust the costs of all Project Operating Expenses to
assume one
<PAGE> 23
2
hundred (100%) percent occupancy of the Building and Landlord will adjust
Project Property Taxes to reflect assumed standard tenant improvements for one
hundred (100%) percent occupancy.
(B) The items of Additional Rent contemplated under subparagraph 3(A)
shall be determined in accordance with the following procedures:
(i) Each December during the term hereof or as soon thereafter as
practical, Landlord shall give Tenant written notice of
Landlord's itemized estimate of any amounts payable under
subparagraph 3(A) above for the ensuing calendar year. On or
before the first day of each month during the ensuing calendar
year, Tenant shall pay Landlord without further notice
one-twelfth (1/12) of such estimated amounts, provided that if
such notice is not given in December, Tenant shall continue to
pay on the basis of the then applicable rental until the month
after such notice is given. If at any time or times it appears
to Landlord that the increased amounts payable under
subparagraph 3(A) for the current calendar year will exceed
its estimate, Landlord may, by thirty (30) days written notice
to Tenant, revise its estimate for such year. Subsequent
payments by Tenant for such year shall be based upon such
revised estimate.
(ii) Within 90 (ninety) days after the close of each calendar year
or as soon thereafter as is reasonably practical, Landlord
shall deliver to Tenant a statement of the annual adjustment
of those Additional Rent items made pursuant to subparagraph
3(A) for such calendar year. If on the basis of such statement
Tenant owes an amount that is less than the estimated payments
for such calendar year previously made by Tenant, Landlord
shall refund or credit within thirty (30) days such excess to
Tenant. If on the basis of such statement Tenant owes an
amount that is more than the estimated payments for such
calendar year previously made by Tenant, Tenant shall pay the
deficiency to Landlord within 30 (thirty) days after delivery
of the statement.
(iii) The Additional Rent due under the terms and conditions of this
Paragraph 3 shall survive termination of this Lease, shall be
payable by Tenant without any setoff or deduction, and shall
be computed by Landlord on a prorated basis for any period
less than a full calendar year.
(C) Definitions:
(i) The term "Project Operating Expenses" as used herein shall
include all costs of operation and maintenance of the Project
calculated on an accrual basis for each calendar year as
determined by generally accepted accounting principles
consistently applied. Project Operating Expenses shall, by way
of illustration but not limitation, include water and sewer
charges, insurance premiums, license, permit, and inspection
fees, fuel, heat, light, power (except for that electricity
charged directly to the Premises and other rental space on the
Project), steam, janitorial and security services, labor,
salaries, air conditioning, landscaping, maintenance and
ordinary repair of the Building and driveways, parking
structures and surface parking areas, ice and snow removal,
supplies, materials, equipment, tools; repair or replacement
of equipment, machinery, and other items of Landlord's
property; the property management fees and costs including but
not limited to office rent for the on-site property management
office; and the cost incurred in contesting the validity or an
assessment of Project Property Taxes. Project Operating
Expenses shall also include but not be limited to the cost of
any capital improvements made to the Project by Landlord that
reduce operating expenses or that are required under any
governmental law or regulation not previously applicable to
the Project or not in effect at the time it was constructed.
Such capital cost shall be amortized over such reasonable
periods as Landlord shall determine with a return on capital
at the then current prime interest rate of the largest
national bank in New York City or at such higher rate as may
have been paid by Landlord on the funds borrowed for the
purpose of providing such capital improvements. Project
Operating Expenses shall not include (a) depreciation; (b)
interest and amortization on debt; (c) all other capital
expenses; (d) costs of correcting latent defects; (e) costs
which are reimbursed by insurance proceeds or eminent domain
awards; (f) costs of any special service to another tenant not
<PAGE> 24
3
furnished to tenants generally, and (g) costs of collecting
rent from other tenants and of enforcing lease rights against
other tenants.
(ii) The term "Project Property Taxes" as used herein shall include
all real estate taxes or personal property taxes and other
taxes, charges and assessments, unforeseen as well as
foreseen, which are levied with respect to the Project and any
improvements, fixtures and equipment and other property of
Landlord, real or personal, located in the Building or on the
Project and used in connection with the operation of the
Project for each calendar year and shall include any tax,
surcharge or assessment which shall be levied in addition to
or in lieu of real estate or personal property taxes, other
than taxes covered in Paragraph 11, and shall also include any
rental, excise, sales, transaction, privilege, or other tax or
levy, however denominated, imposed upon or measured by the
rental reserved hereunder or on Landlord's business of leasing
the Premises and Project, excepting only net income taxes.
Project Property Taxes shall be based upon the fully assessed
value of the fully completed Building including standard
tenant improvements, driveways, and other common areas of the
Building and Project. In the event tax assessment is not
detailed, sufficiently or, in the event either party shall
dispute the tax assessor's determination of full assessment
value, then Landlord and Tenant shall look to the following
two alternatives in the order given to determine assessed
value: (i) notes and records of tax assessor and (ii) any
reasonable method upon which the parties may agree.
(D) Unless Tenant takes written exception to any item in the statement
referred to in subparagraph 3(B)(ii) within thirty (30) days after the
furnishing of the statement, such statement shall be considered as final and
accepted by Tenant. Any amount due Landlord as shown on any such statement shall
be paid by Tenant within thirty (30) days after it is furnished to Tenant. If
Tenant shall dispute in writing any specific item or items in the statement of
Project Operating Expenses and Project Property Taxes, and such dispute is not
resolved between Landlord and Tenant within sixty (60) days after the date the
statement was rendered, either party may, during the thirty (30) days next
following the expiration of the sixty (60) days, refer such disputed item or
items to a mutually agreed upon Big Eight accounting firm for a determination
which shall be final, conclusive and binding upon Landlord and Tenant. Tenant
agrees to pay all costs involved in such determination unless it is determined
that Landlord's original calculation of both Project Property Taxes and Project
Operating Expenses was in error by more than five (5%) percent. Pending the
determination of any dispute with respect to the statement submitted by
Landlord, Tenant shall pay when due the sums shown as due on such statement. If
it shall be determined that any portion of such sums were not properly
chargeable to Tenant, then Landlord shall refund or immediately credit the
appropriate sum to Tenant.
E) As one of the items of Additional Rent, payable monthly, Tenant
shall also pay to Landlord the full cost of Tenant's consumption of electricity
(including heating and air-conditioning installed for a particular use by
Tenant), as determined from time to time by Landlord through proration,
engineering survey by Landlord's electric rate consultant, or other reasonable
method. In the event Landlord meters or submeters Tenant's electricity usage,
Tenant shall pay Tenant's share of any surcharge, "peak-hour" premium or other
similar additional charge. The initial estimated monthly electricity charge for
the Premises shall be as shown in Item 5 of the Basic Lease Provisions.
Commencing on Commencement Date Tenant shall also pay Landlord any increase in
the cost of electricity to the Premises based upon increases in the billing rate
after the date hereof.
(F) Notwithstanding anything to the contrary in this Lease, in no event
shall the Basic Annual Rent be reduced in any way because of anything in this
Paragraph 3.
PARAGRAPH 4 SECURITY DEPOSIT: INTENTIONALLY DELETED
PARAGRAPH 5 REPAIRS: (A) Subject to subparagraph 5(B), Landlord shall cause all
necessary repairs to be made to the exterior walls, exterior doors, windows,
corridors and other common areas of the Building and the Project and Landlord
shall cause the Building and the Project to be kept in a safe, clean and neat
condition, and shall use reasonable efforts to keep all equipment used in common
with other Tenants (such as elevators, plumbing, heating, air conditioning and
similar equipment) in good condition and repair. Landlord shall also repair all
<PAGE> 25
4
heat pumps, and shall repair or replace the heat pumps in the exterior or
peripheral areas of the Building in the Premises. Except as provided in
Paragraph 13 hereof, there shall be no abatement of Rent and no liability of
Landlord by reason of any injury to or interference with Tenant's, business
arising from the making of any repairs, alterations or improvements in or to any
portion of the Building or the Project or in or to fixtures, appurtenances and
equipment therein or thereon.
(B) Tenant agrees that all repairs to the Premises not required above
to be made by Landlord during the term of this Lease, if approved by Landlord,
shall be made by Landlord at the sole cost and expense of Tenant unless Landlord
has been otherwise compensated therefore. Tenant will pay for any repairs to the
Premises, the Building or the Project made necessary by any negligence or
willful acts or omissions of Tenant or its assignees, subtenants, employees or
their respective agents or other persons permitted in the Building or on the
Project by Tenant, or any of them. Tenant will also maintain the Premises, and,
upon termination of this Lease, will leave the Premises in a safe, clean, neat
and sanitary condition.
PARAGRAPH 6 IMPROVEMENTS AND ALTERATIONS: (A) Landlord's sole construction
obligation under this Lease is as set forth in Landlord's Work Letter attached
hereto as Exhibit "B-1" and incorporated herein by this reference. Prior to
Commencement Date, Tenant's obligations with respect to alterations and
improvements to the Premises are governed by Landlord's Work Letter. If no work
letter is attached, Tenant hereby accepts the Premises in its current "as is"
condition less any items owned or removable by the prior tenant.
(B) Landlord shall have the right at any time to change the arrangement
and/or location of entrances or passageways, doors and doorways, and corridors,
(provided that such changes do not unreasonably interfere with Tenant's access
to the Premises) elevators, stairs, toilets, or other public parts of the
Building or Project, and, upon giving Tenant prompt notice thereof, to change
the name, number or designation by which the Building or the Project is commonly
known.
(C) From and after Commencement Date, Tenant shall not make or suffer
to be made any alterations, additions or improvements (including decorating,
remodeling and painting) to or of the Premises or any part thereof, or attach
any fixtures or equipment thereto, without first obtaining Landlord's prior
written consent. Any consent by Landlord may be subject to such reasonable
conditions as Landlord may deem necessary. Any such alterations, additions or
improvements to the Premises consented to by Landlord shall, at Landlord's
option, be made by Landlord for Tenant's account and Tenant shall pay Landlord
for the cost thereof (including a reasonable charge for Landlord's overhead)
within ten (10) days after receipt of Landlord's statement. All such
alterations, additions and improvements shall (without compensation to Tenant)
immediately become Landlord's property (except easily moveable furniture,
equipment, and trade fixtures) and, at the end of the term hereof, shall remain
on the Premises unless Landlord elects by notice given to Tenant at the time of
the original request for consent (which notice Landlord must give Tenant at the
time Landlord consents to the alteration, addition or improvement) to have
Tenant remove same, in which event Tenant shall promptly restore the Premises to
their condition prior to the installation of such alterations, additions and
improvements. Tenant will obtain, at Tenant's expense, all necessary permits and
certificates and Tenant shall furnish Landlord copies of all such permits and
certificates.
PARAGRAPH 7 LIENS: Tenant shall keep the Premises free from any mechanics
notices of intention, liens or encumbrances (collectively in this paragraph
hereinafter referred to as "lien" or "liens") arising out of any work performed,
materials furnished, or obligations incurred by or for Tenant. In the event that
Tenant shall not, within ten (10) days following the imposition of any such
lien, cause the same to be released of record by payment or posting of a proper
bond, Landlord shall have, in addition to all other remedies provided herein or
by law, the right, but not the obligation, to cause the same to be released by
such means as it shall deem proper, including payment of or defense against the
claim giving rise to such lien. All sums paid by Landlord and all expenses
incurred by it in connection therewith, shall create automatically an obligation
of Tenant to pay to Landlord an equivalent amount as Additional Rent, which
Additional Rent shall be payable by Tenant upon Landlord's demand, with interest
at the maximum rate per annum permitted by law, until paid. To the extent
permitted by law, Tenant shall require all Tenant's contractors and materialmen
to waive any and all rights they may have to file any liens.
<PAGE> 26
5
PARAGRAPH 8 USE OF THE PREMISES: (A) Tenant shall use the Premises only as set
forth in Item 12 of the Basic Lease Provisions and shall not use or permit the
Premises to be used for any other purpose without the prior written consent of
Landlord. Tenant shall comply with all laws, and shall not use or occupy the
Premises in violation of law or of the certificate of occupancy issued for the
Building, and shall immediately discontinue any use of the Premises which is
declared by Landlord or any governmental authority having jurisdiction to be a
violation of law or of said certificate of occupancy. Tenant shall comply with
any direction of any governmental authority having jurisdiction which shall, by
reason of the nature of Tenant's use or occupancy of the Premises, impose any
duty upon Tenant or Landlord with respect to the Premises or with respect to the
use or occupancy thereof. Landlord represents that no applicable law prohibits
use of the Building for office purposes. Tenant shall not do or permit to be
done anything which will invalidate or increase the cost of any fire, extended
coverage or any other insurance policy covering the Building, the Project and/or
property located therein and shall comply with all rules, orders, regulations
and requirements of the appropriate fire rating bureau or any other organization
performing a similar function. Tenant shall upon demand reimburse Landlord for
the full amount of any additional premium charged for such policy by reason of
Tenant's failure to comply with the provisions of this paragraph. Such
reimbursement shall not be Landlord's exclusive remedy.
B) With respect to Tenant's use and occupancy of the Premises, Tenant
shall, at Tenant's own expense, comply with the Environmental Cleanup
Responsibility Act, N.J.S.A. 13:1k-6 et seq., and the regulations promulgated
thereunder ("ECRA"). Tenant shall, at Tenant's own expense, make all submissions
to, provide all information to, and comply with all requirements of, the New
Jersey Department of Environmental Protection or its replacement or similar
department, agency, bureau or division ("NJDEP") and promptly comply with
Landlord's requirements in connection therewith. Should any division of NJDEP
determine that a Cleanup Plan be prepared and that a cleanup be undertaken
because of any spills or discharges of hazardous substances or wastes at the
Building or land in or on which the Premises is located which were caused by
Tenant or its officers, employees, agents, contractors or invitees and which
occur during the term of this Lease, then Tenant shall, at Tenant's own expense,
prepare and execute a Cleanup Plan which shall be approved by NJDEP and complete
the cleanup.
PARAGRAPH 9 UTILITIES AND SERVICES: (A) Provided that Tenant is not in default
hereunder, Landlord agrees to furnish or cause to be furnished to the Premises
the following utilities and services, subject to the conditions and standards
set forth below and elsewhere herein:
(i) Landlord shall provide automatic elevator facilities from 8:00
a.m. to 6:00 p.m., Monday through Friday (legal holidays
listed in Exhibit "E" "Legal Holidays" excepted), and shall
have at least one elevator available for use at all other
times.
(ii) From 8:00 a.m. to 6:00 p.m., Monday through Friday (Legal
Holidays excepted), Landlord shall, subject to interruptions
beyond Landlord's control and subject to subparagraph 3(E),
furnish heat or air conditioning in accordance with Exhibit
"B-2", subject to any governmental requirements or standards
relating to, among other things, energy conservation. Upon
reasonable, prior written request, Landlord shall make
available at Tenant's expense, after-hours heat or air
conditioning. The charge for after-hours heat or air
conditioning shall be determined by Landlord and confirmed in
writing to Tenant, as the same may change from time to time.
There shall be a minimum charge of one hour for every partial
hour of usage.
(iii) Landlord shall furnish to the Premises, subject to
interruptions beyond Landlord's control and subject to
subparagraphs 3(E) and 9(B), electric current as required by
the building standard office lighting and receptacles. At no
time shall Tenant's use of electric current exceed the
capacity of 7 1/2 watts per square foot for lighting and power
and for purposes of air supply and distribution of HVAC
System. Landlord represents that Landlord will furnish
electric current of 7 1/2 watts per square foot for lighting
and power and for purposes of air supply and distribution of
HVAC System and that Landlord will not reduce said capacity
during the term hereof. To the extent Tenant design exceeds
the electrical current design capacity, then Tenant will pay
all costs of providing additional required electrical service.
<PAGE> 27
6
(iv) Landlord shall, subject to interruptions beyond Landlord's
control and other provisions hereunder, furnish the building
with water for heating, ventilating, air-conditioning.
drinking and lavatory purposes only.
(v) Landlord shall provide janitorial services to the Building and
Premises, in accordance with Exhibit "F" provided that the
Premises are kept in good order by Tenant. Tenant shall pay to
Landlord the cost of removal of any of Tenant's refuse and
rubbish to the extent that the same exceeds the refuse and
rubbish usually attendant upon the use of the Premises as
offices.
(vi) Landlord shall replace, as necessary, the fluorescent tubes in
the standard lighting fixtures installed by Landlord. Tenant
agrees to reimburse Landlord upon demand for the cost of such
fluorescent tubes and the labor and overhead for their
installation.
(B) Landlord may impose a reasonable charge, which Tenant hereby agrees
to pay upon demand, for any utilities and services, including without
limitation, heating, air conditioning, electric current and water, provided by
Landlord by reason of any use of the Premises at any time other than the hours
of 8:00 a.m. to 6:00 p.m. Monday through Friday (excluding Legal Holidays), or
any use beyond that which Landlord agrees to furnish as described above, or
special electrical, cooling and ventilating needs created in certain areas by
telephone equipment, computers and other similar equipment or uses. At
Landlord's option, separate meters for such utilities and services may be
installed for the Premises, and upon demand, Tenant shall immediately pay
Landlord for the installation, maintenance and/or repair of such meters and for
all charges with respect to consumption of such utilities or services so metered
or provided.
(C) Tenant agrees to cooperate fully at all times with Landlord and to
abide by all regulations and requirements which Landlord may prescribe for the
use of the above utilities and services. Any failure to pay any costs as
described above shall constitute a breach of the obligation to pay Rent under
this Lease and shall entitle Landlord to the rights herein granted for such
breach.
(D) Landlord shall not be liable for, and Tenant shall not be entitled
to, any abatement or reduction of Rent by reason of Landlord's failure to
furnish any of the foregoing services, more than for a reasonable period of time
nor shall any such failure, stoppage or interruption of any such service be
construed either as an eviction of Tenant, or relieve Tenant from the obligation
to perform any covenant or agreement. However, in the event of any failure,
stoppage or interruption thereof, Landlord shall use reasonable diligence to
have service resumed promptly.
(E) Notwithstanding anything herein to the contrary, Landlord reserves
the right from time to time to make reasonable modifications to the above
provisions for utilities and services; provided, such modifications do not
diminish the level or quality of service below that level or quality which is
consistent with a first class office building.
PARAGRAPH 10 RULES AND REGULATIONS: (Other than that which interferes with the
quiet enjoyment of Tenant) Tenant agrees to abide by all rules and regulations
of the Building and Project ("Rules and Regulations") imposed by Landlord as set
forth in Exhibit "D" attached hereto, and as the same may be changed from time
to time upon reasonable notice to Tenant. These Rules and Regulations are
imposed for the cleanliness, good appearance, proper maintenance, good order and
reasonable use of the Premises and the Project, as may be necessary for the
enjoyment of the Project by all tenants and their employees and invitees.
Landlord shall not enforce these Rules and Regulations arbitrarily among
tenants. Landlord shall not be liable for the failure of any tenant, its agents
or employees to conform to the Rules and Regulations.
PARAGRAPH 11 TAXES ON TENANT'S PROPERTY: (A) Tenant shall be liable for and
shall pay not later than ten (10) days before delinquency, all taxes, levies and
assessments levied against any personal property or trade fixtures placed by
Tenant in or about the Premises. If any such taxes, levies and assessments on
Tenant's personal property or trade fixtures are levied against Landlord or
Landlord's property or if the assessed value of the Building or the Project is
increased by the inclusion therein of a value placed upon such personal property
or trade fixtures of Tenant and if Landlord pays the taxes, levies and
assessments
<PAGE> 28
7
based upon such increased assessment, Tenant shall, upon demand, repay to
Landlord the taxes, levies and assessments so levied against Landlord, or the
proportion of such taxes, levies and assessments resulting from such increase in
the assessment.
(B) If the Tenant Improvements, whether installed and/or paid for by
Landlord or Tenant and whether or not affixed to the real property so as to
become a part thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which tenant improvements conforming to
building standard (as determined by Landlord) are assessed, then the real
property taxes and assessments levied against Landlord or the Project by reason
of such excess assessed valuation shall be deemed to be taxes levied against
personal property of Tenant and shall be governed by the provisions of
subparagraph 11(A). If the records of the tax assessor are available and
sufficiently detailed to serve as a basis for determining whether said Tenant
Improvements are assessed at a higher valuation than building standard, such
records shall be binding on both Landlord and Tenant; otherwise, the actual cost
of construction shall be the basis for such determination.
PARAGRAPH 12 SUBSTITUTED PREMISES: Landlord reserves the right without Tenant's
consent, on thirty (30) days written notice to Tenant, to substitute other
premises within the Building for the Premises described above, provided that the
substituted premises: (i) contain approximately the same square footage as the
Premises, (ii) contain comparable tenant improvements, and (iii) are made
available to Tenant at the same rental rate {per rentable square foot) for such
space, as the rental rate specified herein. Landlord shall pay all reasonable
moving expenses of Tenant incidental to such substitution of premises.
PARAGRAPH 13 FIRE OR CASUALTY: (A) In the event that the Project (regardless of
whether the Premises or access thereto is affected) is so damaged or destroyed
to the extent of more than one-third (1/3) of its replacement cost, or to any
substantial extent by a casualty not covered by Landlord's insurance (or, in the
event Landlord self-insures which Landlord reserves the absolute right to do, by
a casualty.*
(B) In the event the Premises are completely destroyed or so badly
damaged that, in Landlord's reasonable opinion, repairs to the Premises cannot
be commenced within ninety (90) days and completed within one hundred eighty
(180) days from the date of damage or destruction, Landlord will so notify
Tenant, in which event this Lease may be terminated by either Landlord or Tenant
by giving thirty (30) days advance written notice. Also, if notice of such
opinion or notice of termination has not been given, and if repairs have not
been commenced by Landlord within ninety (90) days from the date of damage or
destruction, this Lease may be terminated immediately thereafter upon written
notice from Tenant given no later than one hundred twenty (120) days after the
date of damage or destruction. In the event Tenant shall fail to terminate this
Lease as provided in this subparagraph (B) then, Tenant shall thereafter have no
further right to so terminate based upon the provisions of this subparagraph
(B).
(C) If this Lease is not terminated as provided in Subsection 13(b), or
if the damage or destruction is other than as provided above, then Landlord
shall commence within ninety (90) days after the occurrence of such damage or
destruction to rebuild, repair or restore the Premises and access thereto to
substantially the same condition as when the same were delivered to Tenant,
excluding any improvements owned by Tenant, and the Lease shall continue in full
force and effect.
(D) If this Lease is terminated as provided above, Tenant's obligation
to pay Rent hereunder shall cease as of the date (i) of damage or destruction if
Premises are rendered untenantable or (ii) Tenant vacates the Premises if
Premises are not rendered untenantable.
(E) Landlord shall in no event be obligated to make any repairs or
replacement of any fixtures, furnitures, equipment or other Property (real or
personal) owned by Tenant. If the lease is not terminated but the Premises are
rendered totally untenantable, Rent shall abate during the period of such
untenantabillty. Tenant acknowledges (i) that Landlord shall not obtain
insurance of any kind on Tenant Improvements, alterations, additions and
improvements to the Premises owned by Tenant or on Tenant's furniture, fixtures,
equipment and other personal property,
*not ordinarily covered by all-risk insurance) or during the last two years of
this lease, landlord upon giving thirty (30) days notice to Tenant, may elect
to terminate this lease.
<PAGE> 29
8
(ii) that it is Tenant's obligation to obtain such insurance at Tenant's
sole cost and expense, and (iii) that Landlord shall not be obligated
to repair any damage thereto or replace the same. The provisions of this
Paragraph 13 shall be considered an express agreement governing any case of
damage or destruction of the Premises by fire or other casualty, and NJSA 46:8-6
shall have not application in such case.
PARAGRAPH 14 EMINENT DOMAIN: In case the whole of the Premises, or such part
thereof as shall substantially interfere with Tenant's use and occupancy
thereof, shall be taken by any lawful power or authority by exercise of the
power of eminent domain, this Lease shall terminate effective as of the date
possession is required to be surrendered to said authority. In the event of any
taking (in whole or part) of the Project whether or not the Premises or access
thereto are affected thereby, which taking in Landlord's judgment will render
continued operation of the Project economically infeasible, Landlord shall have
the right to terminate this Lease. Except as provided herein, Tenant shall not,
because of any taking, assert any claim against Landlord or the taking authority
for any compensation because of such taking, and Landlord shall be entitled to
receive the entire amount of any award without deduction for any estate or
interest of Tenant. In the event the amount of property or the type of estate
taken shall not substantially interfere with Tenant's use of the Premises, and
Landlord does not terminate this Lease, Landlord shall proceed to restore the
Premises (to the extent permitted by the taking) to substantially their
condition prior to such partial taking, and a proportionate allowance shall be
made to Tenant for Rent corresponding to the time during which, and to the part
of the Premises of which, Tenant shall be so deprived on account of such taking
and restoration. Provided same shall not diminish Landlord's award in any way,
nothing contained in this Paragraph 14 shall prevent Tenant from seeking any
award against the taking authority for the taking of personal property and
fixtures owned by Tenant or for relocation expenses recoverable from the taking
authority. In no event shall Landlord be required to expend more for restoration
than received from the taking authority for such taking. For the purposes of
this paragraph, "taking" shall also include any conveyance in lieu of
condemnation.
PARAGRAPH 15 ASSIGNMENT AND SUBLETTING: (A) Tenant shall not voluntarily or
involuntarily assign, sublet, mortgage or otherwise encumber all or any portion
of its interest in this Lease or in the Premises without obtaining the prior
written consent of Landlord and any such attempted assignment, subletting,
mortgage or other encumbrance without such consent shall be null and void and of
no effect.
(B) No assignment, subletting, mortgage or other encumbrance of
Tenant's interest in this Lease shall relieve Tenant of its obligation to pay
the Rent and to perform all of the other obligations to be performed by Tenant
hereunder. The acceptance of rent by Landlord from any other person shall not be
deemed to be a waiver by Landlord of any provision of this Lease or be a consent
to any subletting, assignment, mortgage or other encumbrance. Consent to one
sublease, assignment, mortgage or other encumbrance shall not be deemed to
constitute consent to any subsequent attempted subletting, assignment, mortgage
or other encumbrance. No permitted assignment or sublease shall permit any
further assignment, subletting, mortgage or other encumbrance.
(C) If Tenant desires at any time to assign this Lease or to sublet the
Premises or any portion thereof, Tenant shall first notify Landlord of Tenant's
desire to do so and shall submit in writing to Landlord no less than sixty (60)
days prior to such assignment or subletting (i) the name of the proposed
subtenant or assignee; (ii) the nature of the proposed subtenant's or assignee's
business to be carried on in the Premises; (iii) the terms and provisions of the
proposed sublease or assignment and a copy of the proposed sublease or
assignment; and (iv) such financial information as Landlord may reasonably
request concerning the proposed subtenant or assignee.
(D) At any time within thirty (30) days after Landlord's receipt of the
information specified in subparagraph (C) above, Landlord shall by written
notice to Tenant, elect (i) to take from Tenant a sublease of the Premises or
the portion thereof proposed to be subleased by Tenant, or to take an assignment
of Tenant's leasehold estate hereunder, or such part thereof as shall be
specified in said notice, upon the same terms as those offered to the proposed
subtenant or assignee, as the case may be; (ii) to give Tenant written consent
to the proposed assignment or sublease, provided that the Rent payable monthly
by the Tenant to
<PAGE> 30
9
the Landlord under the terms of this Lease shall be increased by a sum equal to
all rental and other considerations received by Tenant from its subtenant or
assignee in excess of the Rent payable by Tenant under the terms of this Lease;
or (iii) to terminate this Lease as to the portion (including all) of the
Premises proposed to be subleased or assigned, with a proportionate abatement in
the Rent payable hereunder (iv) to deny consent, in writing, to Tenant's
proposed sublet or assignment. If Landlord does not exercise any option set
forth in this subparagraph (D) within said thirty (30) day period, Landlord
shall be deemed to have consented to the proposed assignment or sublease.
(E) Landlord shall not unreasonably exercise its rights under
subparagraph (D) (iv) above, provided, all the following conditions are present:
(i) Tenant shall send notice to Landlord, in writing, including all the
information specified in subparagraph (C) above; (ii) the subtenant or assignee
is of high quality, character and financial stability consistent with the high
standards of the Building as determined by Landlord in Landlord's reasonable
business judgment; (iii) the proposed subtenant or assignee is not a party then
occupying space in the Building or party who has negotiated with Landlord for
space in the Building within the twelve (12) month period preceding the date of
Tenant's notice pursuant to this subparagraph (E); (v) Tenant shall not have
publicly advertised the availability for assignment, sublease or occupancy of
all or any part of the Premises at a rental rate lower than the rate at which
Landlord is then offering to lease similar space in the Building.
(F) Landlord, in any case which does not involve an assignment for the
benefit of creditors or an assignment growing out of, or having any connection
with, operation of law or any other of the eventualities made the subject of an
event of default in Paragraph 22 of this Lease, shall not withhold its consent
to bona-fide assignments of this Lease as a whole to "subsidiary or affiliate
corporations" as the term is hereinafter defined upon the satisfaction of the
respective conditions and upon compliance with the requirements by Tenant of all
notice provisions of this Paragraph 15. A "subsidiary or affiliate corporation"
is defined for the purposes of this Lease as a corporation or other legal entity
organized and existing or qualified or otherwise permitted to do business in the
State of New Jersey, and under common control and ownership of Tenant, or which
owns and controls Tenant or which is owned and controlled by Tenant or by any
corporation or legal entity wholly-owned and controlled directly or through
other corporations or legal entities wholly-owned and controlled by Tenant. For
the purposes of this Paragraph 15, "owned and controlled" shall, in the case of
a corporation, mean the ownership of at least fifty (50%) percent of the capital
stock entitled to vote, and shall, in the case of any other legal entity, mean
ownership of at least fifty (50%) percent of the beneficial interest therein and
at least a fifty (50%) percent voice in the management thereof.
(G) If Tenant is a corporation, an unincorporated association or
partnership, the transfer, assignment or hypothecation of any stock or interest
in such corporation, association or partnership, in the aggregate in excess of
twenty-five (25%) percent, shall be deemed an assignment within the meaning and
provisions of this Paragraph 15. See Subsection (H) attached as Page 9A.
PARAGRAPH 16 LANDLORD'S ACCESS TO PREMISES: Landlord reserves and shall at any
and all times have the right to enter the Premises to inspect the same, to
supply janitor service and any other service to be provided by Landlord to
Tenant hereunder, to show said Premises to prospective purchasers, mortgagees,
or tenants, to alter or repair the Premises or any portion of the Building or
Project, all without being deemed guilty of an eviction of Tenant and without
abatement of Rent, and may for that purpose erect scaffolding and other
necessary structures where reasonably required by the character of the work to
be performed, provided that the business of Tenant shall be interfered with as
little as is reasonably practicable. Tenant hereby waives any claim for damages
or any injury or inconvenience to or interference with Tenant's business, any
loss of occupancy or quiet enjoyment of the Premises, and any other loss
occasioned thereby. For each of the aforesaid purposes, Landlord shall at all
times have and retain a key with which to unlock all of the doors in, upon and
about the Premises, excluding Tenant's vaults and safes, and Landlord shall have
the right to use any and all means which Landlord may deem proper to open said
doors in an emergency in order to obtain entry to the Premises, and any entry to
the Premises obtained by Landlord by any of said means shall not under any
circumstances be construed or deemed to be a forcible or unlawful entry into, or
a detainer of the Premises, or any eviction of Tenant from the Premises or any
portion thereof. No provision of this Lease shall be construed as obligating
Landlord to perform any repairs, alterations or decoration except as otherwise
expressly agreed to be performed by Landlord.
<PAGE> 31
10
PARAGRAPH 17 SUBORDINATION, ATTORNMENT, ESTOPPEL CERTIFICATES: (A) This Lease is
junior, subject, and subordinate to all ground leases, mortgages, deeds of
trust, and other security instruments of any kind now covering the Project or
any portion thereof. Landlord reserves right to place liens or encumbrances on
the Project or any part thereof or interest therein superior in lien and effect
to this Lease. This Lease, at the option of Landlord, shall be subject and
subordinate to any and all such liens or encumbrances now or hereafter imposed
by Landlord without the necessity of the execution and delivery of any further
instruments on the part of Tenant to effectuate such subordination.
Notwithstanding the foregoing, Tenant covenants and agrees to execute and
deliver upon request such further instruments evidencing such subordination of
this Lease as may be requested by Landlord.
(B) Tenant shall at any time and from time to time upon not less than
ten (10) days prior notice by Landlord, execute, acknowledge and deliver to
Landlord a statement in writing and in form and substance satisfactory to
Landlord certifying that this Lease is unmodified and in full force and effect
(or if there have been modifications, that the same is in full force and effect
as modified and stating the modifications), and the dates to which the Basic
Annual Rent, Additional Rent and other charges have been paid in advance, if
any, and 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 Tenant may have
knowledge. Any such statement delivered pursuant to this Paragraph 17 may be
relied upon by any prospective purchaser of the fee of the Building or the
Project or any mortgagee, ground lessor or other encumbrancer thereof or any
assignee of any such person. Tenant shall also, at any time, and from time to
time, upon not less than ten (10) days prior notice by Landlord execute and
deliver to Landlord forms and documents as may be necessary for compliance with
any applicable law, statute, ordinance, rule or regulation. See Subsection (C)
attached as Page 10A.
PARAGRAPH 18 SALE BY LANDLORD: In the event of a sale or conveyance by Landlord
of the Project or any part thereof, the same shall operate to release Landlord
from any and all liability under this Lease accruing after the date of such
conveyance of title. If any Security Deposit has been made by Tenant, Landlord
shall transfer such Security Deposit to the purchaser, and Purchaser has been
notified in writing of such transfer, and thereupon Landlord shall be discharged
from any further liability in reference thereto. Notwithstanding any sale by
Landlord, Tenant's possession under this Lease shall not be disturbed if Tenant
is not in default and so long as Tenant shall pay all amounts due hereunder and
otherwise observe and perform all provisions of this Lease.
PARAGRAPH 19 INDEMNIFICATION AND INSURANCE: (A) Tenant shall indemnify, hold
Landlord harmless from and defend Landlord against any and all claims, loss,
costs, damage, expense or liability, including without limitation reasonable
attorneys' fees, for any injury or damages to any person or property whatsoever,
when such injury or damage has been caused in part or in whole by any default,
act, neglect, fault, or omission of Tenant, its agents, servants, employees or
invitees. This indemnity shall not require any payment by Landlord as a
condition precedent to recovery. In addition, if any person not a party to this
Lease shall institute any other type of action with respect to Tenant's
occupancy of the Premises or Tenant's obligations under this Lease against
Tenant in which Landlord shall be made a party defendant, Tenant shall
indemnify, hold Landlord harmless from and defend Landlord from all liabilities
and costs by reason thereof. For the purposes of subparagraphs 19(A) and 19(B),
the term "Landlord" shall also include as indemnitees, as the case may be,
Landlord's servants, employees, officers, agents, and/or contract managers.
(B) Landlord shall indemnify, hold Tenant harmless from and defend
Tenant against any and all claims, loss, cost, damage, expense or liability
including, without limitation, reasonable attorneys' fees for any injury or
damage to any person or property whatsoever, occurring in the Common Areas of
the Building or Project when such injury or damage has been caused in part or in
whole by any default, act, neglect, fault or omission of Landlord, its agents,
employees or invitees. This indemnity shall not require any payment by Tenant as
a condition precedent to recovery. Landlord hereby agrees to maintain in full
force and effect at all times during the term of this Lease, at Landlord's own
expense (subject to reimbursement pursuant to Paragraph 3 hereof) property
damage insurance on the Building and improvements (the amount of such coverages
and of all deductibles to be In Landlord's absolute and sole discretion) or to
self-insure against the losses insured against by property damage coverage.
<PAGE> 32
-10A-
(c) Tenant agrees that in the event that any holder of any ground or
underlying lease, mortgage, deed of trust, or other encumbrance encumbering any
part of the Project succeeds to Landlord's interest in the Premises, Tenant
shall pay to such holder all rents subsequently payable under this Lease and
shall, upon request of any such person or party succeeding to Landlord's
interest, automatically become the Tenant of and attorn to such successor in
interest without change in the terms or provisions of this Lease. Such successor
in interest shall not be bound by (i) any payment of Basic Monthly Rental
Installments for more than one month in advance except prepayments in the nature
of a security deposit, or (ii) any amendment or modification of this Lease made
without the written consent of such successor in interest. Upon request by such
successor in interest and without cost to Landlord or such successor in
interest, Tenant shall execute, acknowledge, and deliver an instrument or
instruments confirming the attornment.
<PAGE> 33
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(C) Tenant hereby agrees to maintain in full force and effect at all
times during the term of this Lease, at its own expense, for the protection of
Tenant and Landlord as their interests may appear, policies of insurance issued
by a responsible carrier or carriers acceptable to Landlord which afford the
following coverages:
<TABLE>
<S> <C> <C>
(i) Worker's Compensation --Statutory or higher
Employer's Liability, if such --Not less than
coverage is available $250,000
(ii) Comprehensive General --Not Less than
Liability Insurance, $2,000,000
including Blanket Combined Single
Contractual Liability, Limit for both
Broad Form Property bodily injury and
Damage, Personal Injury, property damage
Fire Damage
</TABLE>
Landlord shall be named as an additional insured on all policies listed under
(ii).
(iii) All Risk Property Coverage in an amount sufficient to cover
the full cost of replacement of all improvements and
betterments to the Premises owned by Tenant and all of
Tenant's fixtures and other personal property.
(D) Tenant shall deliver to Landlord at least thirty (30) days prior to
the time such insurance is first required to be carried by Tenant, and
thereafter at least thirty (30) days prior to expiration of each such policy,
certificates of insurance evidencing the above coverage with limits not less
than those specified above. Such certificate, with the exception of Worker's
Compensation, shall expressly provide that the interest of Landlord therein
shall not be affected by any breach by Tenant of any provision of any such
policy. Further, all certificates shall expressly provide that no less than
thirty (30) days prior written notice shall be given Landlord in the event of
material alterations to or cancellation of the coverages evidenced by such
certificates.
(E) Upon demand, Tenant shall provide Landlord, at Tenant's expense,
with such increased amount of existing insurance, and such other insurance in
such limits as Landlord may reasonably require and such other hazard insurance
as the nature and condition of the Premises may require in the judgment of
Landlord, to afford Landlord adequate protection for said risks.
(F) If on account of the failure of Tenant to comply with the
provisions of this Paragraph 19, Landlord is adjudged a co-insurer by its
insurance carrier, then any loss or damage Landlord shall sustain by reason
thereof shall be borne by Tenant and shall be immediately paid by Tenant upon
receipt of a bill therefor and evidence of such loss.
(G) Landlord makes no representation that the limits of liability
specified to be carried by Tenant under the terms of this Lease are adequate to
protect Tenant against Tenant's undertaking under this Paragraph 19. In the
event Tenant believes that any such insurance coverage called for under this
Lease is insufficient, Tenant shall provide, at its own expense, such additional
insurance as Tenant deems adequate.
PARAGRAPH 20 WAIVER OF SUBROGATION: Tenant and Landlord each agree that the
respective insurance carried by it against loss or damage by fire or other
casualty shall contain a clause whereby the insurer waives its right of
subrogation against the other party. Pursuant to the foregoing, Landlord and
Tenant hereby waive all claims for recovery from the other party for any loss or
damage to any of its property insured under valid and collectible insurance
policies to the extent of any recovery collectible under such insurance.
PARAGRAPH 21 NO WAIVER: No failure by Landlord to insist upon the strict
performance of any covenant, agreement, term or condition of this Lease, or to
exercise any right or remedy consequent upon a breach thereof, and no acceptance
of full or partial Rent during the continuance of any such breach, shall
constitute a waiver of any such breach or of such covenant, agreement. term or
<PAGE> 34
12
condition. Landlord's waiver, if any, shall only be as expressly stated in
writing and signed by Landlord. No consent or waiver by Landlord to or of any
breach of any covenant, condition or duty of Tenant shall be construed as a
consent or waiver to or of any other breach of the same or any other covenant'
condition or duty, unless expressly stated otherwise in writing and signed by
Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than
the Rent and additional charges payable hereunder shall be deemed to be other
than a payment on account of the earliest stipulated Rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment for Rent be deemed an accord and satisfaction, and Landlord may accept
SUCH check or payment without prejudice to Landlord's right to recover the
balance of such Rent or pursue any other remedy provided herein or by law.
PARAGRAPH 22 DEFAULT: (A) The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant:
(i) Any failure by Tenant to pay the Rent or to make any other
payment required to be made by Tenant hereunder within five
(5) days of date due;
(ii) The abandonment or vacation of the Premises by Tenant;
(iii) Any failure by Tenant to observe and perform any of its other
obligations under this Lease, where such failure continues for
fifteen (15) days (except where a different period of time is
specified in this Lease) after Landlord has given Tenant
written notice or such other notice as may be required by law;
provided, however, if such obligation cannot be cured within
said fifteen (15) day period, such longer period (but in no
event more than six (6) months) as may be reasonably necessary
to effect such cure and upon condition that Tenant is
diligently and continuously proceeding to effect said cure;
(iv) Tenant makes, or has made, or furnishes, or has furnished, any
warranty, representation or statement to Landlord in
connection with this Lease, or any other agreement to which
Tenant and Landlord are parties, which is or was false or
misleading in any material respect when made or furnished;
(v) Any substantial portion of the assets of Tenant is transferred
unless such transfer is incurred in the ordinary course of
Tenant's business in good faith for fair equivalent
consideration;
(vi) Tenant becomes insolvent as defined in the Federal Bankruptcy
Code, admits in writing its insolvency or its present or
prospective inability to pay its debts as they become due, is
unable to or does not pay all or any material portion (in
number or dollar amount) of its debts as they become due,
permits or suffers a judgment to exist against it which
affects Tenant's ability to conduct its business in the
ordinary course (unless enforcement thereof is stayed pending
appeal), makes or proposes an assignment for the benefit of
creditors or any class thereof for purposes of effecting a
moratorium upon or extension or composition of its debts,
proposes any such moratorium, extension or composition, or
commences or proposes to commence any bankruptcy,
reorganization or insolvency proceeding, or other proceeding
under any federal, state or other law for the relief of
debtors;
(vii) Tenant fails to obtain the dismissal, within thirty (30) days
after the commencement thereof, of any bankruptcy,
reorganization or insolvency proceeding, or other proceeding
under any law for the relief of debtors, instituted against it
by one or more third parties, or fails actively to oppose any
such proceeding, or, in any such proceeding, defaults or files
an answer admitting the material allegations upon which the
proceeding was based or alleges its willingness to have an
order for relief entered or its desire to seek liquidation,
reorganization or adjustment of any of its debts;
(viii) Any receiver, trustee or custodian is appointed to take
possession of all or any substantial portion of the assets of
Tenant, or any committee of Tenant's creditors, or any class
thereof is formed for the purpose of monitoring or
investigating the financial affairs of Tenant or enforcing
such creditors' rights.
<PAGE> 35
13
(B) In the event of any such default by Tenant then in addition to any
other remedies available to Landlord at law or in equity, Landlord shall have
the option to immediately terminate this Lease and all rights of Tenant
hereunder by giving written notice of such intention to terminate. In the event
that Landlord shall elect to so terminate the Lease then Landlord may recover
from Tenant:
(i) any unpaid Rent which shall have accrued at the time of such
termination; plus
(ii) the entire amount of unpaid Rent for the balance of the Lease
term which amount shall, at Landlord's option, be immediately
due and payable, but discounted at the interest rate payable
on United States five (5) year Treasury Notes issued
immediately prior to default; plus
(iii) any other amount necessary to compensate Landlord for
Landlord's loss or damage caused directly or indirectly by
Tenant's failure to perform its obligations under this Lease
including, but not limited to, reasonable attorneys' fees and
costs; plus
(iv) at Landlord's election, such other amounts in addition to, or
in lieu of the foregoing, as may be permitted from time to
time by applicable law.
(C) In the event of any such default by Tenant, Landlord shall also
have the right, with or without terminating this Lease, to reenter and to take
possession of the Premises and to remove all persons and property from the
Premises. Landlord is hereby granted a lien, in addition to any statutory lien
or right to distrain that may exist, on all personal property of Tenant in or
upon the Premises, to assure payment of the Rent and performance of the
covenants and conditions of this Lease.
(D) In the event of the vacation or abandonment of the Premises by
Tenant or in the event that Landlord shall elect to reenter as provided above or
shall take possession of the Premises pursuant to legal proceeding or pursuant
to any notice provided by law, then if Landlord does not elect to terminate this
Lease as provided in this Paragraph 22, Landlord may from time to time, without
terminating this Lease, either recover all Rent as it becomes due or relet the
Premises or any part thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable with the right to make alterations and repairs to~
the Premises. Notwithstanding the provisions of NJSA 2A:18-60 Tenant agrees not
to seek to remove any Summary Dispossess Action to Superior Court.
(E) In the event that Landlord shall elect to so relet, then rentals
received by Landlord from such reletting shall be applied: first, to the payment
of any indebtedness other than Rent due hereunder from Tenant to Landlord;
second, to the payment of any cost of such reletting including, but not limited
to, broker's commissions and reasonable attorneys' fees; third, to the payment
of the cost of any alterations and repairs to the Premises; fourth, to the
payment of Rent due and unpaid hereunder; 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. Should any such reletting result in the payment of rentals
less than the Rent payable by Tenant hereunder, then Tenant shall pay such
deficiency to Landlord immediately upon demand therefor by Landlord. Tenant
shall also pay Landlord as soon as ascertained, any costs and expenses incurred
by Landlord in such reletting or in making such alterations and repairs not
covered by the rentals received from such reletting.
F) No reentry or taking possession of the Premises by Landlord pursuant
to this Paragraph 22 shall be construed as an election to terminate this Lease
unless a written notice of such intention be given to Tenant. Notwithstanding
any reletting without termination by Landlord because of any default by Tenant,
Landlord may at any time after such reletting, elect to terminate this Lease for
any such default.
PARAGRAPH 23 RIGHT OF LANDLORD TO CURE TENANT'S DEFAULT: If Tenant defaults in
the making of any payment or in the doing of any act herein required to be made
or done by Tenant, then Landlord may, but shall not be required to, make such
payment or do such act and charge to Tenant the amount of all costs in
connection therewith including, but not limited to, reasonable legal fees and
expenses
<PAGE> 36
14
incurred by Landlord, with interest thereon as provided in Paragraph 36 from the
date paid by Landlord to the date of payment thereof by Tenant. Such payment and
interest shall constitute Additional Rent hereunder due and payable upon demand
but the making of such payment or the taking of such action by Landlord shall
not operate to cure such default or to stop Landlord from the pursuit of any
other remedy to which Landlord would otherwise be entitled.
PARAGRAPH 24 NOTICES: All notices which Landlord or Tenant may be required or
may desire to serve on the other may be served, as an alternative to personal
service, by mailing the same by registered or certified mail, return receipt
requested, postage prepaid, addressed as set forth in Item 13 of the Basic Lease
Provisions, or addressed to such other address or addresses as either Landlord
or Tenant may from time to time designate to the other by written notice.
PARAGRAPH 25 INSOLVENCY OR BANKRUPTCY: In no event shall this Lease be
assigned or assignable by operation of law and in no event shall this Lease be
an asset of Tenant in any receivership, bankruptcy, insolvency, or
reorganization proceeding.
PARAGRAPH 26 SURRENDER AND HOLDOVER: (A) On the expiration or the sooner
termination hereof, Tenant shall peaceably surrender the Premises broom clean,
in good order, condition and repair. On or before the last day of the Lease term
or the sooner termination hereof, Tenant shall at its expense remove within
fifteen (15) days its trade fixtures, signs and other personal property from the
Premises. Any property not removed shall be deemed abandoned and may either be
retained by Landlord as its property, or disposed of, without accountability and
at Tenant's expense, in such manner as Landlord may determine. If the Premises
are not surrendered at the end of the Lease term or the sooner termination
Tenant shall indemnify Landlord against loss or liability resulting from delay
by Tenant in so surrendering the Premises, including, without limitation, claims
made by any succeeding tenants founded on such delay. Tenant shall promptly
surrender all keys for the Premises and Building restrooms to Landlord at the
place then fixed for payments of Rent. Tenant's covenants hereunder shall
survive the expiration or termination of this Lease.
(B) If Tenant holds over after the expiration or sooner termination
hereof without the express written consent of Landlord, Tenant shall become a
Tenant at sufferance only at one and one half times the greater of (i) the Rent
due hereunder or (ii) the then prevailing market rate rent, as determined by
Landlord in its sole and absolute discretion, plus all items of Additional Rent
provided herein, and either (i) or (ii) shall be prorated on a daily basis
according to the number of days contained in the month that such expiration or
earlier termination takes place, and otherwise upon the terms, covenants and
conditions herein specified, so far as applicable. Acceptance by Landlord of
Rent after such expiration or earlier termination shall not constitute a consent
to a holdover hereunder or result in a renewal. The foregoing provisions of this
paragraph are in addition to and do not affect Landlord's rights of reentry or
any other rights of Landlord hereunder or as otherwise provided by law.
PARAGRAPH 27 CONDITION OF PREMISES: Landlord's responsibility with respect to
the condition of the Premises is set forth in Exhibit "B-1" Landlord's Work
Letters Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation or warranty with respect to the Premises, the Building
or the Project or with respect to the suitability of any part of the Project for
the conduct of Tenant's business. The taking of possession of the Premises by
Tenant shall conclusively establish that the Building and the Premises were at
such time in good order and repair.
PARAGRAPH 28 QUIET POSSESSION: Upon Tenant's paying the rent reserved hereunder
and observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire term hereof, subject to all of the
provisions of this Lease. This covenant shall be binding upon any landlord
hereunder only during its respective ownership of the Premises.
PARAGRAPH 29 LIMITATION OF LANDLORD'S LIABILITY: (A) Landlord and its employees
and agents shall not be liable for any damage to Tenant's property entrusted to
employees of Landlord or its agents, nor for any loss or interruption of
Tenant's possession, nor for loss of or damage to any property by theft or
<PAGE> 37
15
otherwise, nor for any injury or damage to property resulting from fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak from any part of the Building or from the pipes, appliances or plumbing
works therein or from the roof, street or sub-surface or from any other place or
resulting from dampness or any other cause whatsoever in the Building or the
Project. Landlord and its employees and agents shall not be liable for any
property loss resulting from any latent defect in the Premises or in the
Building. Tenant shall give prompt notice to Landlord in case of fire, accidents
or defects in the Premises or in the Building. Tenant shall give prompt notice
to Landlord in case of fire, accident or defects in the Premises or in the
Building.
(B) Tenant shall look solely to Landlord's estate and property in the
Project (or the proceeds thereof) for the satisfaction of Tenant's remedies for
the collection of a judgment (or other judicial process) requiring the payment
of money by Landlord in the event of any default by Landlord hereunder, and no
other property or assets of Landlord or Landlord's partners or members shall be
subject to levy, execution or other enforcement procedure for the satisfaction
of Tenant's remedies under or with respect to either this Lease, the
relationship of Landlord and Tenant hereunder, or Tenant's use and occupancy of
the Premises.
PARAGRAPH 30 GOVERNING LAW: This Lease shall be governed by and construed
pursuant to the law of the State of New Jersey.
PARAGRAPH 31 COMMON FACILITIES: Tenant shall have the non-exclusive right in
common with others, to the use of common entrances, lobbies, elevators, ramps,
drives, stairs, and similar access and serviceways and the other common
facilities (except for parking spaces other than those provided for in Paragraph
39) in and adjacent to the Building or Project, as may be provided by Landlord
from time to time for general use, subject to such rules and regulations as may
be adopted by the Landlord including, but not limited to, the right to close
from time to time all or any portion of said common facilities to such extent as
may be legally sufficient, in Landlord's sole opinion, to prevent a dedication
thereof or the accrual of rights to any person or to the public therein.
PARAGRAPH 32 SUCCESSORS AND ASSIGNS: Except as otherwise provided in this Lease,
all of the covenants, conditions and provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns. However, the
obligations of Landlord under this Lease shall not be binding upon Landlord
herein named with respect to any period subsequent to the transfer of its
interest in the Project as owner or lessee thereof, and in the event of such
transfer said obligations shall thereafter be binding upon each transferee of
the interest of Landlord herein named as such owner or lessee of the Project,
but only with respect to the period commencing with its respective transfer in
and ending with a subsequent transfer out, and such transferee, by accepting
such interest, shall be deemed to have assumed such obligations except only as
may be expressly otherwise provided in this Lease. Any lease of all or
substantially all of Landlord's interest in the Project as owner or lessee
thereof shall be deemed a transfer, to the tenant under such lease, within the
meaning of Paragraph 32.
PARAGRAPH 33 BROKERS: (A) Tenant represents and agrees that it has not directly
or indirectly dealt with any real estate broker(s) other than the firm(s)
specified in Item 11 of the Basic Lease Provisions in connection with this
transaction. Tenant agrees to defend, indemnify and hold Landlord harmless from
and against any claims for brokerage commission or finder's fee arising out of
or based on any alleged actions of Tenant with any other broker or brokers.
(B) Landlord represents and agrees that it has not directly or
indirectly dealt with any real estate broker(s) other than the firm(s) specified
in Item 11 of the Basic Lease Provisions in connection with this transaction.
Landlord agrees to defend, indemnify and hold Tenant harmless from and against
any claims for brokerage commission or finder's fee arising out of or based on
any alleged actions of Landlord with any other broker or brokers.
(C) If, after the date hereof, either Landlord or Tenant shall employ,
retain or consult with any real estate broker or brokers other than the firms
specified in Item 11 of the Basic Lease Provisions in connection with any
matters pertaining to this Lease, the Premises or the Project, the employing
party hereby agrees to pay the broker or brokers and the employing party hereby
agrees to defend,
<PAGE> 38
16
indemnify and to hold harmless the other party hereto from and against any
claims for brokerage commission or finder's fee arising out of or based on any
alleged actions of the employing party with respect to said broker or brokers
not specified in Item 11.
PARAGRAPH 34 NAME; LANDLORD'S RIGHTS: (A) Tenant shall not, without the written
consent of Landlord, use the name of the Building or the Project for any purpose
other than as the address of the business to be conducted by Tenant in the
Premises, and in no event shall Tenant acquire any rights in or to such names.
Landlord reserves the right to change the name and/or address of the Building or
Project at any time and from time to time, and agrees to give reasonable notice
of same to Tenant.
(B) It is understood and agreed that the architectural design,
aesthetic appeal and use of the Building and the Project are and shall remain
always in the sole control of Landlord. Therefore, notwithstanding anything to
the contrary contained herein, Landlord does hereby reserve the right from time
to time and at any time to make reasonable changes and additions, without
restriction, to the Building and the Project, improvements or other areas,
including without limitation, eliminating land, adding other lands, decreasing
or changing the Building and the Project, which are deemed desirable by
Landlord, and the making of such changes or additions shall not invalidate or
affect this Lease or any rights hereunder nor constitute an eviction of Tenant
or a breach of this Lease, nor give rise to any claim for damages.
Notwithstanding the foregoing provisions, Landlord represents and confirms that
no such changes will unreasonably and substantially interfere with Tenant's use
and occupancy of the Premises or Tenant's access to the Building.
PARAGRAPH 35 EXAMINATION OF LEASE: Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or option for lease,
and it is not effective as a lease or otherwise until execution by and delivery
to both Landlord and Tenant.
PARAGRAPH 36 ADDITIONAL CHARGES: Any amount due from Tenant to Landlord which is
not paid when due, in addition to other remedies available to Landlord shall, at
Landlord's option, bear interest which shall be at the lesser of (i) eighteen
(18%) percent per annum or (ii) the maximum lawful rate per annum, from the date
such payment is due until the date actually paid, but the payment of such
interest shall not excuse or cure the default.
PARAGRAPH 37 DEFINED TERMS AND ADDITIONAL HEADINGS: The words "Landlord" and
"Tenant" as used herein shall, as the case may be, include the plural as well as
the singular. If more than one person or entity is named as Tenant the
obligations of such persons or entities are joint and several. The marginal
headings and titles to the Paragraphs of this Lease are not a part of this Lease
and shall have no effect upon the construction or interpretation of any part
hereof. This Lease shall be construed without regard to any presumption or other
rule requiring construction against the party causing this Lease to be drafted.
PARAGRAPH 38 PRIOR AGREEMENTS; SEVERABILITY: This Lease contains all of the
agreements of the parties hereto with respect to any matter covered or mentioned
in this Lease, and no prior agreement, understanding or representation
pertaining to any such matter shall be effective for any purpose. No provision
of this Lease may be amended or added to except by an agreement in writing
signed by the parties hereto or their respective successors in interest. If any
term or provision of this Lease, the deletion of which would not adversely
affect the receipt of any material benefit by either party hereunder, shall be
held invalid or unenforceable to any extent, the remainder of this Lease shall
not be affected thereby and each term and provision of this Lease shall be valid
and enforceable to the fullest extent permitted by law.
PARAGRAPH 39 PARKING: Tenant shall have the right to the use of the number of
parking spaces shown in Item 10 of Basic Lease Provisions. Landlord shall have,
in its absolute discretion, the right to assign parking spaces. Tenant covenants
and agrees to comply with all reasonable rules and regulations which Landlord
may from time to time make to assure proper use of parking spaces by permitted
users including but not limited to the prohibition of overnight parking.
Landlord's remedies under such rules and regulations may include, but shall not
be limited to, the right to tow away at owner's expense any vehicles not parked
in compliance with these rules and regulations. Landlord shall not be
responsible to Tenant for the noncompliance or breach by any other tenant of
said rules and regulations.
<PAGE> 39
17
PARAGRAPH 40 FORCE MAJEURE: Except as otherwise expressly provided herein, this
Lease and the obligations of either party Rent hereunder to perform all of the
covenants, agreements, terms, provisions and conditions hereunder on the part of
Tenant to be performed shall in no way be affected, impaired or excused because
such party's is unable to fulfill any of its obligations under this Lease, if
such party's is prevented or delayed from so doing by reason of any cause beyond
such party's reasonable control including, but not limited to, Acts of God,
strikes, labor troubles, shortage of materials, governmental preemption in
connection with a national emergency or by reason of any rule, order or
regulations of any governmental agency or by reason of war, hostilities or
similar emergency; provided that Landlord shall in each instance exercise
reasonable diligence to effect performance as soon as possible. It is agreed
that Landlord shall not be required to incur any overtime or additional expenses
in Landlord's reasonable diligence to effect the performance of any of
Landlord's obligations hereunder.
PARAGRAPH 41 NO LIGHT, AIR OR VIEW EASEMENT: Any diminution or shutting off of
light, air or view by any structure which may be erected on lands adjacent to
the Building shall in no way affect this Lease or impose any liability on
Landlord.
PARAGRAPH 42 AUTHORITY AND SIGNATORIES: If Tenant executes this Lease in other
than individual capacity, each of the persons executing this Lease on behalf of
Tenant does hereby personally covenant and warrant that Tenant is a duly
authorized and existing entity as herein represented, that Tenant was and is
qualified to do business in the State of New Jersey, that the Tenant has full
right and authority to enter into this Lease, and that each person signing on
behalf of the Tenant is authorized to do so. Upon Landlord's request, the
Tenant's signatories hereto will furnish satisfactory evidence of Tenant's
authorization, and their personal authority on behalf of Tenant, to execute this
Lease.
PARAGRAPH 43 CAMPUS ASSOCIATION: (A) This lease, and all rights of Tenant
hereunder, are and shall be subject and subordinate in all respects to all
present and future recorded covenants and restrictions (and any amendments,
renewals, replacements, or modifications thereof) referring to any owners' or
campus association for the Complex or any part thereof in which the Building is
located. Landlord shall promptly advise Tenant of such recordings. The aforesaid
association shall be intended to benefit the owners and tenants of the Complex,
and shall have the following main purposes: sustain the first-class quality of
the Complex; maintain on-site and off-site common improvements (landscaping,
etc.) of the Complex; and engage in projects and programs which improve traffic
and transportation concerning the Complex. Tenant covenants and agrees that it
will not perform (or fail to perform) any act which may constitute a default
under such covenants and restrictions.
(B) Tenant further covenants and agrees to cooperate with, and
participate in, programs of any such aforesaid association, including but not
limited to: car and van pooling; flex-time work scheduling; jitney buses to
nearby train stations, airports, etc.; relocation of, or new, bus routes and bus
stops through and at the Complex to Newark, Morristown, etc.; development of a
park-and-ride facility, possibly to ultimately become a transportation center;
and other programs and projects.
PARAGRAPH 44 TENANT'S OPTION TO CANCEL: Anything in this Lease to the contrary
notwithstanding and upon condition that Tenant is not in default in the payment
of any Rent under this Lease and not in default in the performance of any
covenant or obligation to be performed by Tenant under this Lease, Tenant may at
Tenant's option given by written notice to Landlord six (6) months in advance,
terminate this Lease in accordance with the schedule set forth below provided
said notice is accompanied by payment to Landlord of (i) $41,111.00 plus (ii)
the amount set forth in said schedule.
<TABLE>
<CAPTION>
END OF LEASE MONTH ADDITIONAL PAYMENT
------------------ ------------------
<S> <C>
24 $97,246.00
25 $94,781.00
26 $92,293.00
27 $89,779.00
28 $87,240.00
</TABLE>
<PAGE> 40
18
<TABLE>
<S> <C>
29 $84,676.oo
30 $82,086.00
31 $79,470.00
32 $76,828.00
33 $74,160.00
34 $71,465.00
35 $68,743.00
36 $65,994.00
37 $63,218.00
38 $60,413.00
39 $57,581.00
40 $54,720.00
41 $51,831.00
42 $48,913.00
43 $45,965.00
44 $42,988.00
45 $39,982.00
46 $36,945.00
47 $33,878.00
48 $30,780.00
49 $27,651.00
50 $24,491.00
51 $21,300.00
52 $18,076.00
53 $14,820.00
</TABLE>
(said payments to be in addition to all Rent falling due during any time the
Premises are occupied). Should Tenant default in any payment to be made by
Tenant or in the performance of any obligation to be performed by Tenant under
this Lease after exercising the option to cancel herein granted, the exercise of
the option shall be null and void.
PARAGRAPH 45 TENANT'S OPTION TO RENEW Upon condition that Tenant is not in
default in the payment of any Rent, under this Lease and not in default in the
performance of any covenant or obligation to be performed by Tenant under this
Lease and upon Tenant's giving Landlord six (6) months notice in writing prior
to the expiration of the term hereof Tenant shall have the option to renew and
extend this Lease for a further term of five (5) years, pursuant and subject to
all the terms, covenants, provisions and conditions of the Lease, including,
without limitation, the payment of all items of Additional Rent as provided for
hereunder, except that Basic Annual Rent shall be adjusted to $26.00 per
rentable square foot.
<PAGE> 41
EXHIBIT A-1
FLOOR PLANS OF SECOND FLOOR
NINE CAMPUS DRIVE
PARSIPPANY, NJ
[FLOOR PLAN]
<PAGE> 42
EXHIBIT A-2
ALL those tracts or parcels of land and premises, situate, lying and
being in the Township of Parsippany-Troy Hills in the County of Morris and State
of New Jersey, more particularly described as follows:
<PAGE> 43
9/28/89
EXHIBIT B-1
LANDLORD'S WORK LETTER
(I) Tenant's Plan
(a) Landlord has approved certain architectural, mechanical and
electrical working plans and specifications for the Premises (hereinafter
collectively referred to as "Tenant's Plan" and attached hereto as Exhibit "G").
Plans prepared by TEC 3, 2E-1 through 2E-4 AND D-1, dated July 31, 1989 as
revised Comments through August 7, 1989 for Legent Corporation, second floor -
east wing at Prudential Business Center, 9 Campus Drive, Linden Plaza,
Parsippany-Troy Hills, N.J. Tenant's Plan contains all designations and
selections required to be made by Tenant in connection with Landlord's
installation and the heat factor if any, of all equipment intended to be used
in, and the human load heat factor proposed for each room or other area in the
Premises. Landlord will pay the costs of Tenant's Plan. Tenant shall pay for any
changes made to Tenant's Plan subsequent to the dates indicated thereon.
(II) Tenant shall pay all cost associated with any changes to Tenant's
Plan made by Tenant (except Tenant is not obligated to pay any amounts toward
Landlord's overhead and profit) including but not limited to: labor, materials,
legal, architectural, and engineering fees and costs; permits and licenses;
structural modifications to the Building. No change can be made without
Landlord's written consent, and Landlord shall have no obligation to consent to
any change which it believes might delay the Commencement Date.
(III) Landlord shall complete and prepare the Premises for Tenant's initial
occupancy in accordance with Tenant's Plan and the provisions of this Exhibit
B-1, and Landlord's general contractor shall schedule the performance of said
work in such a manner as in its sole discretion it considers proper for the
expeditious completion thereof. In making this undertaking, Landlord has assumed
and Tenant agrees (i) that all of Tenant's work stations are prewired for
communication, telephone and electrical capability, and that Landlord is only
responsible for bringing electrical wiring to the point of initial connection
with such work stations, and (ii) that indications on Tenant's Plans regarding
telephone equipment are locational only and that Tenant is paying the cost of
all telephone and communication wiring and equipment.
Tenant may at its own expense select and employ its own contractors for
finishing work, such as carpeting, cabinet work, millwork, draperies,
installation of special equipment or decorations (hereinafter called "Tenant's
Work"), provided that Tenant abides by all the terms, covenants and conditions
of Paragraph 6(c) of the Lease is which this Work Letter is Exhibit B-1.
Tenant and its contractors shall be responsible for transportation, safekeeping
and storage of materials and equipment used in the performance of Tenant's Work
and for the removal of waste and debris resulting form the performance of
Tenant's Work, and Landlord and its general contractor or representative shall
not be responsible for the coordination of the work of Tenant's own contractors.
With reasonable charge being made therefor, Landlord shall allow Tenant and its
contractors during normal working hours to use utilities, to the extent
available, as may be reasonably required in the Demised Premises for the
performance of Tenant's Work.
Prior to the commencement of Tenant's Work, Tenant shall obtain and maintain, or
cause to be obtained and maintained, at its own expense Worker's Compensation
and Bodily Injury and Property Damage, Public Liability Insurance and so called
"Builder's Risk" insurance (all such insurance shall conform to the requirements
of Article 12 hereof) in amounts as will be acceptable to Landlord and shall
submit certificates as evidence thereof to Landlord with provisions for at least
30 days written notice of cancellation to the Landlord.
<PAGE> 44
(IV) Landlord shall afford Tenant and its employees, agents or contractors
access to the Premises, at reasonable times prior to the commencement date, and
at Tenant's sole risk and expense, for the purposes of inspecting and verifying
the performance of the work being done by the Landlord pursuant to Landlord's
obligation hereunder and of making preparations for and performing, or
inspecting and verifying the performance of, Tenant's Work, and Tenant shall
inspect the performance of all such work regularly and diligently and shall
advise Landlord promptly in writing of any objection to the performance of such
work as is the Landlord's responsibility. Access for only such purposes shall
not be deemed to constitute possession or occupancy accelerating the
commencement date of Tenant's obligation to pay rent under this lease. Tenant
will not store building materials, equipment, or machinery outside the Premises
except with prior written consent of the Landlord, as reasonably required for
the diligent prosecution of Tenant's Work and if such consent is given, such
storage is to be done in a manner so as to cause as little inconvenience to the
Landlord, Landlord's contractors, other tenants, their employees, invitees and
visitors, and as little interference with their business pursuits as is
reasonably possible. Landlord shall not be liable in any way for any injury,
loss, damage or claim which may occur to or because of any Tenant's Work, the
same being solely at Tenant's risk and expense unless due to negligence or
willful misconduct of Landlord. The Premises will be considered as "ready for
occupancy" on the earlier of (a) the date a certificate of occupancy is issued
for the Premises or (b) the date on which the Landlord shall have in Landlord's
reasonable business judgment, substantially completed all standard improvement
work to be performed in accordance with Tenant's Plans, except for any work
which could reasonably follow Tenant's work (as defined in Section III) or (c)
the date Tenant accepts the Premises with the exception of punch list items.
(V) If the whole of the Premises shall not be ready for occupancy at
approximately the same time, Tenant may, with the written consent of Landlord,
take possession of any part or parts of the Premises for its use and occupancy
prior to an otherwise intended commencement date, provided that a temporary or
permanent Certificate of Occupancy shall have been obtained for the part or
parts of the Premises in respect to which Tenant desires to take possession.
Tenant shall be deemed to have taken possession of the Premises for use and
occupancy (herein called "actual possession") when any personnel of Tenant or
anyone claiming under or through Tenant shall first occupy any part thereof for
the conduct of business. Tenant's actual possession of any part or parts of the
demised Premises shall constitute effectuation of the Commencement Date, if not
already effectuated otherwise pursuant to this lease, and shall be subject to
all of the obligations of this lease, including the payment of rent, except that
Landlord may apportion the rent to the rentable area of each such part, prorated
from the date of taking actual possession, which shall be payable at the
beginning of each calendar month.
(VI) On the Commencement Date, and if a different date, at such time as
Tenant shall take actual possession of the whole or part of the Premises, it
shall be conclusively presumed that the same were in satisfactory condition as
of such dates and that to each of the dates thereof Landlord shall have
performed all of its obligations hereunder, subject to punchlist items.
-2-
<PAGE> 45
JV #528.3 9/28/89
EXHIBIT C
COMMENCEMENT DATE MEMORANDUM
THIS AGREEMENT made the day of 1989, between PRUBETA-3,
a general partnership organized under the laws of New Jersey, with an office at
c/o THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Newark Realty Group Office,
Three Gateway Center 100 Mulberry Street, 13th Floor, Newark, New Jersey 07102
("Landlord") and LEGENT CORPORATION, with an office at Two Allegheny Center,
Pittsburgh, Pennsylvania 15212 ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a Lease dated ______________
1989 ("Lease") setting forth the terms of occupancy by Tenant a portion of the
second floor of the PruBeta 3 Business Campus at Parsippany-Troy Hills, New
Jersey; and
WHEREAS, the Lease is for an initial term of five (5) years with the
"Target Commencement Date" of the term being defined in Basic Lease Provisions;
and
WHEREAS, it has been determined in accordance with these provisions
that __________, 19__ is the Commencement Date of the initial term of the Lease.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter set forth, it is agreed:
1. The Commencement Date of the initial term of the Lease is ,
1989 and the Expiration Date thereof is , 1994.
2. This agreement is executed by the parties for purposes of providing
a record of the commencement and termination dates of the initial term of the
Lease.
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first above written.
PRUBETA-3
ATTEST: BY: THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA, General Partner
By:
- -------------------------- ---------------------------------
ASSISTANT SECRETARY VICE PRESIDENT
WITNESS: BY: PARSIPPANY EQUITY VENTURE
General Partner
By:
- -------------------------- ---------------------------------
GENERAL PARTNER
ATTEST: LEGENT CORPORATION
By:
- -------------------------- ---------------------------------
<PAGE> 46
EXHIBIT D
RULES AND REGULATIONS
1. The sidewalks, and public portions of the Building, such as
entrances, passages, courts, elevators, vestibules, stairways, corridors or
halls shall not be obstructed or encumbered by any tenant or used for any
purpose other than ingress and egress to and from the demised premises ("demised
premises" in this Exhibit D shall mean the "Premises" as set forth in the
Lease).
2. No awnings or other projections shall be attached to the outside
walls of the Building. No curtains, blinds, shades, louvered openings or screens
shall be attached to or hung in, or used in connection with, any window or door
of the demised premises, without the prior written consent of Landlord, unless
installed by Landlord.
3. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any tenant on any part of the
outside of the demised premises or Building or on corridor walls. Signs on
entrance door or doors shall conform to building standard signs, samples of
which are on display in Landlord's rental office. Signs on doors shall, at the
tenant's expense, be inscribed, painted or affixed for each tenant by sign
makers approved by Landlord. In the event of the violation of the foregoing by
any tenant, Landlord may remove same without any liability, and may charge the
expense incurred by such removal to the tenant or tenants violating this rule.
4. The sashes, sash doors, skylights, windows, heating, ventilating
and air conditioning vents and door that reflect or admit light and air into
the halls, passageways or other public places in the Building shall not be
covered or obstructed by any tenant, nor shall any bottles, parcels, or other
articles be placed outside of the demised premises.
5. No show cases or other articles shall be put in front of or affixed
to any part of the exterior of the Building, nor placed in the public halls,
corridors or vestibules without the prior written consent of Landlord.
6. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed, and no
sweepings, rubbish, rags, or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by the tenant
who, or whose servants, employees, agents, visitors or licensees, shall have
caused the same.
7. No tenant shall in any way deface any part of the demised premises
or the Building. No tenant shall lay linoleum, or other similar floor covering,
so that the same shall come in direct contact with the floor of the demised
Premises, and, if linoleum or other similar floor covering is desired to be
used, an interlining of builder's deadening felt shall be first affixed to the
floor, by a paste or other material, soluble in water, the use of cement or
other similar adhesive material being expressly prohibited.
8. No bicycles, vehicles or animals of any kind (except seeing eye
dogs) shall be brought into or kept in or about the Premises.
9. No cooking shall be done or permitted by Tenant in the Premises
except in conformity to law and then only in the cafeteria kitchen. No tenant
shall cause or permit any unusual or objectionable odors to be produced upon or
permeate from the Premises.
D-1
<PAGE> 47
10. No space in the Building shall be used for manufacturing or
distribution or for the storage of merchandise, or for the sale at auction or
otherwise of merchandise, goods or property of any kind.
11. No tenant shall make, or permit to be made, any unseemly or
disturbing noises or disturb or interfere with occupants of the Building or
neighboring buildings or premises or those having business with them whether by
the use of any musical instrument, radio, in any other way.
12. No tenant, nor any of the tenant's servants, employees, agents,
visitors or licensees, shall at any time bring or keep upon the premises any
inflammable, combustible or explosive fluid, or chemical substance, other than
reasonable amounts of cleaning fluids and solvents required in the normal
operation of tenant's business offices.
13. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by any tenant, nor shall any changes be made in existing
locks or the mechanism thereof, without the prior written approval of the
Landlord and unless and until a duplicate key is delivered to Landlord. Each
tenant must, upon the termination of his tenancy, restore to the Landlord all
keys of offices and toilet rooms, either furnished to, or otherwise procured by,
such tenant, and in the event of the loss of any keys, so furnished, such tenant
shall pay to Landlord the cost thereof.
14. All removals, or the carrying in or out of any safes, freight,
furniture or bulky matter of any description must take place during the hours
which Landlord or its agent may determine from time to time. Landlord reserves
the right to inspect all freight to be brought into the Building and to exclude
from the Building all freight which violates any of these Rules and Regulations
or the Lease of which these Rules and Regulations are a part.
15. No tenant shall occupy or permit any portion of the premises
demised to it to be occupied as, by or for a public stenographer or typist,
barber shop, bootblacking, beauty shop or manicuring, beauty parlor, telephone
or telegraph agency, employment agency, public restaurant or bar, commercial
document reproduction or offset printing service, public vending machines,
retail, wholesale or discount shop for sale of merchandise, retail service shop,
labor union, school or classroom, governmental or quasi-governmental bureau,
department or agency, including an autonomous governmental corporation, a firm
the principal business of which is real estate brokerage, or a company engaged
in the business of renting office or desk space; or for a public finance
(personal loan) business, or for manufacturing. No tenant shall engage or pay
any employees on the demised premises, except those actually working for such
tenant on said premises, nor advertise for laborers giving an address at said
Premises, nor advertise for laborers giving an address at the Premises. Nothing
herein shall be interpreted to prevent Tenant from making up at the Premises
payroll and payroll checks for employees at other location.
16. Landlord shall have the right to prohibit any advertising by any
tenant mentioning the Building which, in Landlord's reasonable opinion, tends to
impair the reputation of the Building or its desirability as a building for
offices, and upon written notice from Landlord, tenants shall refrain from and
discontinue such advertising.
17. In order that the Building can and will maintain a uniform
appearance from the outside, each Tenant in building perimeter areas shall (a)
use only building standard lighting, as defined in Work Letter, in areas where
lighting is visible from outside of the Building and (b) use only inch (")
horizontal blinds in window areas which are visible from the outside of the
Building.
18. Landlord reserves the right to exclude from the Building between
the hours of 6:00 p.m. and 8:00 a.m. and at all hours on non-business days all
persons who do not present a pass to the Building signed by a tenant. Each
D-2
<PAGE> 48
tenant shall be responsible for all persons for whom such pass is issued and
shall be liable to Landlord for all acts of such persons.
19. The premises shall not be used for lodging or sleeping or for any
immoral or illegal purpose.
20. At Landlord's option, tenants shall purchase from Landlord or its
designee all lighting tubes, lamps, bulbs and ballasts used in the demised
premises and tenants shall pay Landlord's actual costs including reasonable
overhead and profit for providing and installing same, on demand.
21. Canvassing, soliciting and peddling in the Building are prohibited
and each tenant shall cooperate to prevent the same.
22. There shall not be used in any space, or in the public halls of
any building, either by any tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and side guards. No hand trucks shall be used in passenger elevators.
23. Tenants, in order to obtain maximum effectiveness of the cooling
system, shall lower and/or close Venetian or vertical blinds or drapes when
sun's rays fall directly on windows of demised Premises.
24. Replacement of ceiling tiles after they are removed for Tenant by
telephone company installers, in both the demised premises and the public
corridors, will be charged to Tenant on a per tile basis. Landlord's charge will
be actual costs plus reasonable overhead and profit.
25. All panelling, grounds or other wood products which are
incorporated in construction of fire rated assembly shall be of fire retardant
materials. Before installation of any such materials, certification of the
materials' fire retardant characteristics shall be submitted to Landlord, or its
agents, in a manner satisfactory to the Landlord.
26. Tenant shall not in any way obstruct or interfere with the rights
of other tenants or occupants of the Building or the Project or injure or annoy
them, or use or allow the Premises to be used for any unlawful or objectionable
purpose, nor shall Tenant cause, maintain, or permit any nuisance in, on, or
about the Premises. Tenant shall not commit or suffer to be committed any waste
in or upon the Premises.
27. It is understood and agreed that Tenant shall not place a load on
any floor of the premises exceeding the floor load per square foot area which
such floor was designed to carry and which is allowed by law. Landlord reserves
the right to prescribe the weight and position of all safes, vaults, and other
equipment which must be placed so as to distribute the weight. Business machines
and mechanical equipment shall be placed and maintained by the Tenant, at
Tenant's expense, in settings sufficient in the Landlord's judgment to absorb
and prevent vibrations, noise and annoyance.
Whenever and to the extent that the above rules conflict with any of
the rights or obligations of Tenant pursuant to the provisions of the Paragraphs
of the Lease, the provisions of the Paragraphs shall govern.
D-3
<PAGE> 49
EXHIBIT "E"
PRUBETA 3 OFFICE CAMPUS
HOLIDAY SCHEDULE
NEW YEAR'S DAY
MEMORIAL DAY
INDEPENDENCE DAY
LABOR DAY
THANKSGIVING DAY
CHRISTMAS DAY
<PAGE> 50
EXHIBIT "F"
JANITORIAL SERVICES - TENANT AREAS
OFFICES - NIGHTLY CLEANING
1. Empty and clean ash trays and screen all sand urns (sand furnishes by
Contractor). Wipe ash trays with cloth or sponge dampened with
detergent to remove soil.
2. Empty wastebaskets and other trash receptacles (liners to be furnished
by Contractor). Remove rubbish to compactor area and compact. Plastic
bags used for rubbish removal to be furnished by Contractor and shall
be adequate to hold contents without breaking.
3. Clean, polish and sanitize drinking fountains.
4. Dust, (using treated dust mop) or vacuum uncarpeted areas.
5. Remove fingermarks and smudges from doors, door frames, walls, light
switches and glass.
EVERY OTHER NIGHT - OFFICES
6. Dust with treated cloths, all office furniture, desk accessories
(including telephone shelving, window frames, sills up to 84" in height
and other surfaces.
7. Vacuum all carpeted areas including edges and corners using beater bar
or brush vacuum cleaner.
WEEKLY - OFFICES
8. Spot clean walls, partitions, fixtures, and doors.
MONTHLY - OFFICES
9. Wipe trash receptacles to remove evident soil.
lO. High dust with treated cloths and vacuum all vents, louvers and
moldings and all other areas above hand high reach.
11. Oust picture frames and wash picture glass.
QUARTERLY - OFFICES
12. Dust all blinds.
NIGHTLY CLEANING - PUBLIC AREAS
13. Vacuum, clean and polish all elevator interiors, doors, tracks, saddles
and call buttons.
14. Clean and polish all entrance glass, frames and saddles.
15. Vacuum carpeted corridors.
F-1
<PAGE> 51
FIRST AMENDMENT TO LEASE
THIS FIRST AMENDMENT TO LEASE (the "Amendment") made as of this 20th
day of September, 1990, by and between PRUBETA-3 ("Landlord") a general
partnership organized under the laws of New Jersey, with an office at c/o THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, Newark Realty Group Office, Three
Gateway Center, 100 Mulberry Street, 13th Floor, Newark, New Jersey 07102-4077,
and LEGENT CORPORATION, ("Tenant"), a Delaware Corporation authorized to do
business in New Jersey, having an office at Nine Campus Drive, Parsippany, New
Jersey 07054.
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Lease (the
"Lease") dated as of October 10, 1989 pursuant to which Landlord leased to
Tenant and Tenant rented from Landlord 5,873 rentable square feet (the "Original
Premises") in the office building known as Linden Plaza, (the "Building")
located at Nine Campus Drive in the Prudential Business Campus, Parsippany,
Morris County, New Jersey, and
WHEREAS, Tenant desires to rent from Landlord and Landlord desires to
lease to Tenant an additional 1,341 square feet of rentable, not useable, space
in the Building (the "Additional Premises"), subject to the terms of the Lease,
except as amended by this Amendment;
NOW, THEREFORE, Landlord and Tenant, in consideration of ten dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree to amend the Lease as
follows, effective as of the Additional Space Commencement Date defined in
Paragraph 6 of this Amendment:
1. The Premises described in the preamble to the Lease entitled "Lease
of Premises" (the "Premises") is expanded to include the Additional Premises on
the second floor of the Building, as depicted on Exhibit "A" attached hereto.
Landlord shall perform certain work ("Landlord's Work") at the Additional
Premises as described in Exhibit "C" ("Landlord's Work Letter") attached hereto.
2. Item 2 of the Basic Lease Provisions of the Lease is amended to
provide that the rentable area of the Premises is 7,214 rentable, not useable,
square feet, being the sum of the Original Premises and the Additional Premises.
3. Item 3 of the Basic Lease Provisions of the Lease is amended to
provide that the Tenant's Percentage Share is 4.65%, representing an increase of
.8652% over the previous Percentage Share of 3.79%.
4. Item 5 of the Basic Lease Provisions of the Lease is amended to
provide that the Term of the Lease shall run until November 5, 1994.
1
<PAGE> 52
5. Item 7 of the Basic Lease Provisions of the Lease is amended to
provide that the Basic Annual Rent for the Premises shall be one hundred fifty
one thousand four hundred ninety four dollars ($151,494.00), representing the
sum of the Basic Annual Rent for the Original Premises of one hundred twenty
three thousand three hundred thirty three dollars ($123,333.00) and the Basic
Annual Rent for the Additional Premises of twenty eight thousand one hundred
sixty one dollars ($28,161.00).
6. Item 8 of the Basic Lease Provisions is amended to provide that the
Basic Monthly Rental Installments for the Premises shall be twelve thousand six
hundred twenty four and 50/100 dollars ($12,624.50) representing the sum of the
Basic Monthly Rental Installments for the Original Premises of ten thousand two
hundred seventy seven and 75/100 dollars ($lO,277.75) and the Basic Monthly
Rental Installments for the Additional Premises of two thousand three hundred
forty six and 75/100 dollars ($2,346.75).
7. Item 9 of the Basic Lease provisions of the Lease is supplemented to
provide that the Commencement Date for the Additional Premises (the "Additional
Space Commencement Date") is October 1, 1990 or upon such earlier date as Tenant
takes possession or commences use of the Additional Premises. The Additional
Space Commencement Date is subject to extension by reason of 1) events or
circumstances described in Paragraph 40 of the Lease ("Force Majeure") and 2)
delays and extensions of time described in Exhibit "B-1" of the Lease
("Landlord's Work Letter").
8. Item 10 of the Basic Lease Provisions of the Lease is amended to
provide that the number of parking spaces is 29.
9. Item 14 of the Basic Lease Provisions of the Lease is amended to
delete the name "Property Management Systems" and replace it with "Premisys Real
Estate Services, Inc. "
10. Paragraph 44 of the Lease ("Tenant's Option to Cancel") is amended
to supplement the table of Additional Payments with the Table attached hereto as
Exhibit "B".
11. In all other aspects not inconsistent herewith, the Lease is hereby
ratified and confirmed by Landlord and Tenant. Landlord and Tenant expressly
acknowledge that, effective as of the Additional Space Commencement Date, the
Premises shall be regarded as a single, indivisible unit and all provisions of
the Lease shall apply to the Additional Premises as though the Additional
Premises had been a portion of the Original Premises at the time of the
execution of the Lease, subject only to the terms of this Amendment.
2
<PAGE> 53
IN WITNESS WHEREOF, this First Amendment to Lease is signed by the parties as of
the day and year above written
(LANDLORD) PRUBETA 3
Attest: BY: THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, General Partner
/s/ Richard E. Pigott By:/s/ John Gregorits
- ---------------------- --------------------
ASSISTANT SECRETARY VICE PRESIDENT
BY: EQUITY PARSIPPANY VENTURE, a
Colorado general partnership
By: US WEST Real Estate, Inc., a Colorado
corporation formerly known as BetaWest
Properties, Inc., as managing partner
By: BetaWest Properties, Ltd., a Colorado
limited partnership, as authorized agent
By: BetaWest, Inc., a Colorado
corporation, as general partner
Approved as to legal form:
By:/s/ By:/s/
---------------------- ------------------------
Date: Title:
-------------------- ---------------------
(TENANT) LEGENT CORPORATION
ATTEST:(or Witness:)
/s/ Carolyn D. Vetovich By:/s/ Authur F. Knapp, Jr.
---------------------- ---------------------------------
CAROLYN D. VETOVICH ARTHUR F. KNAPP, JR.
VICE PRESIDENT & CFO
<PAGE> 54
EXHIBIT "A"
2nd FLOOR
9 CAMPUS DRIVE
LEGENT CORPORATION
1,341 RSF
(the "Additional Premises")
[FLOOR PLAN]
<PAGE> 55
EXHIBIT "B"
(Page one of two)
LEGENT CORPORATION
ADDITIONAL PREMISES
TERMINATION PAYMENT SCHEDULE
The payments contained on this page are for the Additional Premises only and are
payable in addition to those payments contained in Paragraph 44 of the Lease and
on Page Two of this Exhibit.
<TABLE>
<CAPTION>
CANCELLATION
DATE PAYMENT
---- -------
<C> <C>
10/31/91 15,910.00
11/30/91 15,535.00
12/31/91 15,157 00
01/31/92 14,775.00
02/29/92 14,390.00
03/31/92 14,001.00
04/30/92 13,608.00
05/31/92 13,212.00
06/30/92 12,812.00
07/31/92 12,409.00
08/31/92 12,001.00
09/30/92 11,591.00
10/31/92 11,176.00
11/30/92 10,758.00
12/31/92 10,335.00
01/31/93 9,909.00
02/28/93 9,479.00
03/31/93 9,045.00
04/30/93 8,607.00
05/31/93 8,165.0O
06/30/93 7,719.00
07/31/93 7,269.00
08/31/93 6,185.00
09/30/93 6,356.00
10/31/93 5,894.00
11/30/93 5,427.00
12/31/93 4,956.00
01/31/94 4,480.00
02/28/94 4,000.00
03/31/94 3,516.00
04/30/94 3,027.00
05/31/94 2,534.00
06/30/94 2,036.00
07/31/94 1,534.00
08/31/94 1,028.00
09/30/94 516.00
10/31/94 -0-
</TABLE>
<PAGE> 56
EXHIBIT "B"
(Page two of two)
<TABLE>
<CAPTION>
ORIGINAL PREMISES PAYMENT SCHEDULE
Months 54 through 60
End of Lease Month Additional Payment
------------------ ------------------
<C> <C>
54 $12,215.00
55 10,132.00
56 8,029.00
57 5,907.00
58 3,766.00
59 1,605.00
60 -0-
</TABLE>
<PAGE> 57
EXHIBIT "C"
Landlord's Work Letter
Landlord will perform certain architectural, mechanical and electrical work
("Landlord's Work") for the Additional Premises in accordance with working plans
and specifications which have been prepared by Tec 3, Inc. and which are known
as Drawings 2-1, 2-2, and 2-3 dated August 13, 1990 and which were approved by
Tenant August 22, 199O. All other terms and conditions contained in Exhibit B-1
of the Lease ("Landlord's Work Letter") shall govern the operation of this
Exhibit "C".
<PAGE> 58
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE (the "Second Amendment") made as of this
16th day of May, 1994, by and between PRUBETA-3 ("Landlord") a general
partnership organized under the laws of New Jersey, with an office at c/o THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, Newark Realty Group Office, Three
Gateway Center, 100 Mulberry Street, 13th Floor, Newark, New Jersey 07102-4077,
and LEGENT CORPORATION, ("Tenant"), a Delaware Corporation authorized to do
business in New Jersey, having an office at Nine Campus Drive, Parsippany, New
Jersey 07054.
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Lease (the
"Lease") dated as of October 10, 1989 pursuant to which Landlord leased to
Tenant and Tenant rented from Landlord 5,873 rentable square feet (the "Original
Premises") in the office building known as Linden Plaza, (the "Building")
located at Nine Campus Drive in the Prudential Business Campus, Parsippany,
Morris County, New Jersey, and
WHEREAS, Landlord and Tenant entered into a certain First Amendment to
Lease wherein an additional 1,341 square feet of rentable, not useable, space in
the Building (the "Additional Premises"), were added to the Premises, which
Additional Premises have subsequently been subleased to Asea, Brown Boveri,
Inc., and
WHEREAS, Landlord and Tenant wish to further amend the Lease to provide
for, among other things, the deletion of the Additional Premises (1,341 rentable
square feet) from the Premises, the addition of an additional 4,984 square foot
unit to the Premises as depicted in Exhibit "A" attached hereto (the "New
Space") and the extension of the Term of the Lease.
NOW, THEREFORE, in consideration of ten dollars ($10.00) and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree to amend the Lease as follows:
1. TERM; RENEWAL OPTIONS: Subject to the conditions contained in
Paragraph 2 herein, the Term of the Lease is hereby extended to the last
calendar day of the month which is five (5) years and nine (9) months from the
date of the Substantial Completion of Landlord's Work, as that term is defined
in the Landlord's Work Letter, attached hereto as Exhibit "B". This date shall
be referred to as the "New Commencement Date" and shall be memorialized in a
Commencement Date Memorandum signed by Landlord and Tenant. The revised Term
shall be referred to as the "Revised Term." Upon condition that Tenant is not in
default in the payment of any Rent under this Lease and is not in default in the
performance of any covenant or obligation to be performed by Tenant under this
Lease, and upon Tenant's giving Landlord six (6) months' notice in writing prior
to the expiration of the Term, hereof, Tenant shall have the option to renew and
extend this Lease for two (2) three (3) year periods each (the "First Renewal
Term" and the "Second Renewal Term", respectively) pursuant and subject to all
the terms, covenants, provisions and conditions of this Lease. Paragraph 45 of
the Lease ("Tenant's Option to Renew") is deleted in its entirety, and Landlord
and Tenant acknowledge that this Amendment is made outside the provisions
thereof.
1
<PAGE> 59
2. PREMISES: Effective as of April 4, 1994, the Additional Premises
shall be deleted from the Premises and Tenant and/or its subtenant shall vacate
the Additional Premises in accordance with the terms of the Lease. Upon the New
Commencement Date, Item 2 of the Basic Lease Provisions of the Lease shall be
amended to provide that the rentable area of the Premises is 10,857 rentable,
not useable, square feet, being the sum of the Original Premises and the New
Space, and Item 3 of the Basic Lease Provisions of the Lease shall be amended to
provide that the Tenant's Percentage Share shall be seven per cent (7)%.
3. BASIC ANNUAL RENT: Item 7 of the Basic Lease Provisions of the Lease
is amended to provide that from the New Commencement Date to the Expiration Date
of the Revised Term, Basic Annual Rent for the entire Premises shall be $17.75
per rentable square foot. For the First Renewal Term Basic Annual Rent shall be
ninety five per cent (95%) of Fair Market Rental Value, as defined in Paragraph
3 herein, and for the Second Renewal Term Basic Annual Rent shall be one hundred
per cent (100%) of Fair Market Rental Value. Basic Annual Rent for months two
(2) through five (5) of the Revised Term shall be abated.
4. FAIR MARKET RENTAL VALUE: (A) For purposes of Paragraph 3, "Fair
Market Rental Value" shall mean that rental value for the Premises under the
existing zoning on an "as is" basis which a landlord and tenant would agree to
in an arms-length transaction. If Tenant disagrees with the Fair Market Rental
Value determined by Landlord, then Tenant shall within thirty (30) days of
Landlord's notice so advise Landlord in writing, and thereafter, Landlord and
Tenant shall use their best efforts to reach agreement on the Fair Market Rental
Value during the thirty (30) days following Tenant's giving Landlord notice to
renew and extend this Lease.
(B) If Landlord and Tenant cannot reach agreement, the Fair Market
Rental Value of the Premises shall be determined by an appraisal made by a
reputable New Jersey real estate appraiser mutually acceptable to Landlord and
Tenant who shall be a member of the American Institute of Real Estate Appraisers
or a successor body hereinafter constituted exercising a similar function, shall
have experience in appraising property similar to the Premises, and shall have
no substantial direct or indirect financial or other business interests in
Landlord, or its affiliates, or Tenant or its affiliates. The cost of the
appraiser shall be divided equally between Landlord and Tenant. In the event
Landlord and Tenant are unable to agree on a mutually acceptable appraiser
within thirty (30) days after Tenant's notice of its exercise of the renewal
option, the appraisal shall be performed by three New Jersey real estate
appraisers possessing the qualifications described above in this subparagraph,
one of whom shall be appointed by Landlord, one appointed by Tenant and the
third appointed by the first two appraisers. If the first two appraisers are
unable to agree on a third appraiser, such third appraiser shall be appointed by
the President of the Society of Real Estate Appraisers, North Jersey Chapter,
Chatham, New Jersey. If such individual refuses to act, such third appraiser
shall be appointed pursuant to the rules of the American Arbitration
Association, as the same are applicable in the State of New Jersey. The costs
and expenses of each appraiser appointed separately by Tenant and Landlord will
be borne by the party who appointed the appraiser. The costs and expenses of the
third Appraiser will be shared equally by Landlord and Tenant. Landlord and
Tenant will have twenty (20) days running coterminously to select their own
appraisers, who, in turn, will have twenty (20) days to select a third
appraiser.
(C) The appraiser(s) shall appraise the Premises and notify Tenant and
Landlord by written notice of the Fair Market Rental Value, which notice(s)
shall be accompanied by copies of their appraisal report(s). If the
determinations of the Fair Market Rental Value of any two or all three of the
appraisers shall be identical in amount, said amount shall be deemed to be the
Fair Market Rental Value, but if such determinations of all three
2
<PAGE> 60
appraisers shall be different in amount, the appraised value which is the
closest in amount to the middle appraised value, whether it be the highest or
the lowest appraised value, shall be averaged with the middle appraised value
and the resulting averaged appraised value shall be the fair market value of the
Premises. The appraised value which is the furthest from the middle appraised
value will not be utilized or considered.
(D) The Fair Market Rental Value, determined in accordance with the
provisions of this Paragraph, shall be binding and conclusive on Tenant and
Landlord. Notwithstanding the foregoing, in the event that the three appraisal
process is required to be utilized and if one party shall fail to appoint an
appraiser on a timely basis. the appraisal shall be conducted only by the
appraiser appointed by the other party, and the Fair Market Rental Value as
determined by the appraiser appointed by the other party shall be binding and
conclusive upon Landlord and Tenant. Anything herein to the contrary
notwithstanding, Landlord and Tenant shall have similar rights to appeal said
determination which may then exist under New Jersey Law with respect to binding
arbitration.
5. ADDITIONAL RENT FOR TAXES AND OPERATING EXPENSES: Paragraph 3 of the
Lease is amended to delete as of the New Commencement Date the words "Base
Project Operating Expenses" and "Base Project Property Taxes" and replace them
with "Base Year Project Operating Expenses" and "Base Year Project Property
Taxes" respectively. In both instances, the "Base Year" shall be the calendar
year 1994.
6. LANDLORD'S WORK: Landlord shall perform in accordance with the terms
of Landlord's Work Letter all the work described therein ("Landlord's Work").
Landlord's contribution in connection therewith shall be $162,855.00 (the
"Tenant Allowance"). Tenant shall also receive an allowance of $2.00 per
rentable square foot of the combined Original Premises and New Space (together,
the "Entire Space") for architectural drawings and $1.00 per rentable square
foot of the Entire Space for engineering drawings. The architectural and
engineering drawings allowances shall be paid as a credit towards the cost of
Landlord's Work.
7. TERMINATION OPTION: Article 44 of the Lease ("Tenant's Option to
Cancel") is hereby deleted and replaced with the following provision:
Tenant shall have a one-time option to terminate this Lease as of the
last day of the calendar month which is thirty six (36) months after
the New Commencement Date by giving Landlord nine (9) months prior
notice of intent to terminate, time being the essence thereof, provided
said notice is accompanied by payment to Landlord of the "Termination
Fee" in the amount of One Hundred Eighty Five Thousand Seven Hundred
Ninety Seven Dollars ($185,797.00), and provided further that no Event
of Default exists and is continuing at the time of the exercise of this
Termination Option. The Termination Fee shall be in addition to all
Basic Annual Rent and Additional Rent falling due during the balance of
the Term, as reduced.
8. PARKING: The second "Item 10" of the Basic Lease Provisions of the
Lease is amended to provide that effective on the New Commencement Date the
number of unreserved, non-designated parking spaces shall be forty (40) and
Tenant shall receive one (1) reserved covered space.
9. REIMBURSEMENT TO TENANT: Upon the final execution and delivery of
this Second Amendment, Landlord shall incur an obligation to refund to Tenant
the amount of $55,931.00 ("Tenant's Refund."). Tenant's Refund shall be paid as
a credit toward tenant improvements in the Premises in the event that the cost
of such improvements exceeds the
3
<PAGE> 61
Tenant Allowance. Any remaining amount of Tenant's Refund shall be paid in a
cash payment to Tenant no later than sixty (60) days after the New Commencement
Date.
10. SUBSTITUTION OF PREMISES: Paragraph 12 of the Lease ("Substituted
Premises") is hereby deleted in its entirety.
11. PLACE OF PAYMENT OF RENT: Item 14 of the Basic Lease Provisions of
the Lease is amended to delete the name and address of "Property Management
Systems" and replace it with "Premisys Real Estate Services, Inc., 2 Hilton
Court, Parsippany, NJ 07054".
12. NOTICES: Item No. 16 of the Basic Lease Provisions is amended to
provide that unless directed otherwise all Notices to Landlord shall be
delivered as follows:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
Newark Realty Group
Three Gateway Center, 13th Floor
100 Mulberry Street
Newark, New Jersey 07102
Attn: General Manager, with copy to:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
Newark Realty Group
Three Gateway Center, 13th Floor
100 Mulberry Street
Newark, New Jersey 07102
Attn: Regional Counsel
with a copy to:
BetaWest, Inc.
1050 17th Street, Suite 10
Denver, CO 80265
Attn: Legal Department
13. ADA: Landlord represents and warrants that to the best of the
knowledge of John Gregorits, Vice President of The Prudential Realty Group, all
improvements in the common areas of the Building are in substantial compliance
with the accessibility requirements promulgated pursuant to Title III of the
Americans With Disabilities Act ("ADA"). Tenant shall be responsible for
compliance with the ADA within the Premises.
14. In all other aspects not inconsistent herewith, the Lease is hereby
ratified and confirmed by landlord and Tenant.
4
<PAGE> 62
IN WITNESS WHEREOF, this Amendment to Lease is signed by the panics as
of the day and year above written.
Tenant:
LEGENT CORPORATION
WITNESS:
/s/ By:/s/
- ------------------- ------------------------------
------------------------------
By:/s/
------------------------------
------------------------------
Landlord:
PRUBETA-3
ATTEST: BY: THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, a New Jersey
corporation, as General Partner of PruBeta-3
- ------------------- By: /s/John Gregorits
Assistant Secretary ------------------------------
Vice President
By: EQUITY PARSIPPANY VENTURE, a
Colorado general partnership, as General
Partner of PruBeta-3
Approved as to legal form:
By:
-------------------
Date:
-----------------
By: U S WEST Real Estate, Inc., a Colorado
corporation as Managing Partner
By: BetaWest, Inc., a Colorado Corporation
formerly know as BW Acquisition, Inc.,
as authorized agent
By: /s/Robert E. Cardwell
---------------------
Name: ROBERT E. CARDWELL
---------------------
Its: Principal
---------------------
5
<PAGE> 63
[SECOND FLOOR PLAN]
FLOOR PLANS OF SECOND FLOOR
[NEW SPACE]
NINE CAMPUS DRIVE
PARSIPPANY, NJ
[FLOOR PLAN]
<PAGE> 64
EXHIBIT B
LANDLORD'S WORK LETTER
A. IMPROVEMENTS
Landlord shall furnish and install all improvements ("Landlord's Work")
as described in certain plans to be prepared by Interior Space Services, Inc. to
be reasonably acceptable to Landlord and Tenant (the "Plans"). Tenant shall be
solely responsible for the Plans' compliance with the Americans With
Disabilities Act. In the event that the cost of Landlord's Work exceeds the
Tenant Allowance and all other credits to Tenant provided in this Amendment, or
in the event of any subsequent changes made to Landlord's Work, Tenant shall
pay, as Additional Rent, the additional cost thereof within thirty (30) days of
receipt of invoices from Landlord. In the event that the cost of Landlord's Work
is less than the Tenant Allowance, Landlord shall, at Tenant's option, either
(i) remit such savings to Tenant within thirty (30) days of the New Commencement
Date or (ii) apply such savings towards the Rent due under the Lease until
exhausted. In the event Tenant defaults in any payment required by this Work
Letter, Landlord shall, in addition to all other legally allowable remedies,
have the same right as in the case of default in Rent under the Lease.
B. CONSTRUCTION
1. Changes: If there are any changes to the Plans,
Tenant shall pay all costs including, but not limited to, permits and
fees, architectural, engineering and related design expenses resulting
from such changes.
2. Construction By Tenant: Any work in the Premises
beyond that described in the Plans and done by Tenant shall done in
compliance with subparagraphs (a) through (g) of this Paragraph.
(a.) No such work shall proceed without
Landlord's prior written approval of (i) Tenant's contractor;
(ii) detailed plans and specifications for the work; and (iii)
a certificate or worker's compensation insurance in an amount
and with a company and on a form acceptable to Landlord and a
certificates of insurance in form and from an insurer
acceptable to Landlord, showing Tenant or Tenant's contractor
to have in effect comprehensive general public liability and
property damage insurance with limits of not less than
$1,000,000/$2,000,000 and $1,000,000 respectively. All such
certificates, except worker's compensation, shall be endorsed
to show Landlord as an additional insured and such insurance
shall be maintained by Tenant or Tenant's contractor at all
times during the performance of Tenant's Work.
(b.) All such work shall be done in conformity
with applicable codes and regulations of governmental agencies
having jurisdiction over the Building and the Base Building
Specifications, a copy of which is available for review in
Building Manager's Office. Valid building permits and other
authorizations from appropriate governmental agencies, when
required, shall be obtained by Landlord's representative at
Tenant's sole expense. Any work not acceptable to the
appropriate governmental agencies or not reasonably
6
<PAGE> 65
satisfactory to Landlord, shall be promptly replaced at
Tenant's expense. Notwithstanding any failure by Landlord to
object to any such work, Landlord shall have no responsibility
therefor. Tenant agrees to save and hold Landlord harmless as
provided in the Lease for said work.
(c.) Tenant and Tenant's contractors shall
abide by all safety and construction laws, ordinances, rules
and regulations. All work and deliveries shall be scheduled
through Landlord. Entry by Tenant's contractors shall be
deemed to be under all the terms, covenants, provisions and
conditions of the Lease. All Tenant's materials, work,
installations and decorations of any nature brought upon or
installed in the Premises before the Lease Commencement Date
shall be at Tenant's risk, and neither Landlord nor any party
acting on Landlord's behalf shall be responsible for any
damage thereto or loss or destruction thereof. Tenant shall
not employ any contractor in doing Tenant's work or removing
Tenant's property, who, in Landlord's opinion, may prejudice
Landlord's negotiations or relationships with Landlord's
contractors or subcontractors with their employees, or any may
disturb harmonious labor relations.
(d.) Tenant shall reimburse Landlord for any
extra expenses incurred by Landlord by reason of faulty work
done by Tenant or its contractors, or by reason of delays
caused by such work, or by reason of cleanup which fails to
comply with landlord's rules and regulations, or by reason of
use of elevators outside normal working hours.
(e.) Tenant shall pay to Landlord a building
service fee of five (5%) percent of the total cost of Tenant's
work not done by Landlord's contractor to cover Landlord's
cost of coordination of Tenant's Work. Such building service
fee shall be paid to Landlord at the time of completion of
Tenant's Work.
(f.) Tenant's contractors shall not post any
signs on any part of the Building.
(g.) Tenant shall, upon Landlord's request,
provide Landlord with copies of bills and invoices for the
cost of Tenant's Work hereunder, and shall also provide
Landlord with a set of sepias of as-built plans depicting
Tenant's Work.
C. PUNCHLIST
Within five (5) business days of Landlord's notice that such work has
been substantially completed except for minor finishing matters ("Substantially
Completed" or "Substantial Completion") Tenant shall inspect the Premises in the
presence of Landlord and Landlord's contractor and Architect in order to
establish a punchlist of items to be completed or corrected which Landlord shall
cause to be completed as soon thereafter as is reasonably possible.
ii
<PAGE> 66
D. INCORPORATION IN LEASE
This Work Letter is, and shall be incorporated by reference in the
Lease and all of the terms and provisions of said Lease are and shall be
incorporated herein by this reference.
iii
<PAGE> 67
COMMENCEMENT DATE MEMORANDUM
THIS AGREEMENT made as of the 14th day of March, 1995 between PRUBETA-3, a
general partnership organized under the laws of New Jersey, with an office c/o
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Newark Realty Group Office, Three
Gateway Center, 100 Mulberry Street, 13th Floor, Newark, New Jersey 07102
("Landlord") and LEGENT CORPORATION, a Delaware corporation, having an office at
9 Campus Drive, Parsippany, New Jersey ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a Lease dated October 10,
1989 ("Lease") setting forth the terms of occupancy by Tenant for a portion of
the second floor of 9 Campus Drive located at The Prudential Business Campus at
Parsippany-Troy Hills, New Jersey; and
WHEREAS, the Lease is for the initial term of five (5) years with the
Target Commencement Date" of the term being defined in Basic Lease Provisions;
and
WHEREAS, by virtue of the Second Amendment To Lease (the "Second
Amendment") the Lease was amended, among other things, to delete 1,341 square
feet (the "Additional Premises") and to increase the size of the Premises by an
additional 4,984 rentable square feet (the "New Space") so that the demised
premises now equals 10,857 rentable, not usable square feet, and
WHEREAS, it has been determined in accordance with these provisions
that October 10, 1994 is the Commencement Date for the Additional Space (the
"New Commencement Date"), and
WHEREAS, the Second Amendment provided that the Term of the Lease is
five (5) years and nine (9) months from the date of Substantial Completion of
Landlord's Work Letter, unless terminated earlier by Tenant as of October 31,
1997 in accordance with Paragraph 7 of the Second Amendment ("Termination
Option").
NOW, THEREFORE, in consideration of the premises and covenants
hereinafter set forth, it is agreed:
1. The Original Commencement Date of the initial term of the Lease was
November 6, 1989 and the Expiration Date thereof was originally November 5,
1994.
2. The New commencement Date is October 10, 1994.
<PAGE> 68
3. The Expiration Date of the Lease, provided Tenant's Termination is not
exercised, is July 31, 2000.
4. This Agreement is executed by the parties for purposes of providing a
record of the Original Commencement Date, the New Commencement Date and
Expiration Date of the Lease.
IN WITNESS WHEREOF, the parties hereto have duly executed this
instrument as of the day and year first above written.
Landlord:
ATTEST: PRUBETA-3
BY: THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA, General Partner
/s/ Richard E. Pigott By: /s/ John S. Gregorits
- ------------------------ -------------------------------
RICHARD PIGOTT JOHN S. GREGORITS
ASSISTANT SECRETARY VICE PRESIDENT
BY: EQUITY PARSIPPANY VENTURE, a
Colorado general partnership, General Partner
By: U S WEST Real Estate, Inc., a Colorado
corporation, as managing partner
By: BetaWest, Inc., a Colorado corporation,
formerly known as BW Acquisition, Inc.
as authorized agent
Approved as to legal form
By: /s/
------------------- By: /s/
Date: 3/8/95 ---------------------------------
------------------- Title:
-------------------------------
Tenant:
ATTEST: (or Witness:) LEGENT CORPORATION
/s/ By: /s/ Franchon M. Smithson
- ------------------------- ---------------------------------
Franchon M. Smithson
Chief Financial Officer
<PAGE> 1
EXHIBIT 10.53
Quintiles Transnational Corp.
Common Stock, $.01 par value
-----------------------------
UNDERWRITING AGREEMENT
(U.S. VERSION)
-----------------------
March 6, 1997
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
Smith Barney Inc.
William Blair & Company, L.L.C.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
Quintiles Transnational Corp., a North Carolina corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 1,132,000 shares of Common Stock, $.01 par
value ("Stock") of the Company and the shareholders of the Company named in
Schedule II hereto (the "Selling Shareholders") propose, subject to the terms
and conditions stated herein, to sell to the Underwriters an aggregate of
2,708,000 shares and, in the case of certain Selling Shareholders identified
with an asterisk in Schedule II hereto and at the election of the Underwriters,
up to 576,000 additional shares of Stock. The aggregate of 3,840,000 shares to
be sold by the Company and the Selling Shareholders hereto is herein called the
"Firm Shares" and the aggregate of 576,000 additional shares to be sold by the
Selling Shareholders identified with an asterisk in Schedule II hereto is
herein called the "Optional Shares". The Firm Shares and the Optional Shares
that the Underwriters elect to purchase pursuant to Section 2 hereof are herein
collectively called the "Shares".
<PAGE> 2
It is understood and agreed to by all parties that the Company and
the Selling Shareholders are concurrently entering into an agreement (the
"International Underwriting Agreement") providing for the sale by the Company
and the Selling Shareholders of up to a total of 1,104,000 shares of Stock (the
"International Shares"), including the overallotment option thereunder, through
arrangements with certain underwriters outside the United States (the
"International Underwriters"), for whom Goldman Sachs International, Morgan
Stanley & Co. International Limited, Smith Barney Inc. and William Blair &
Company, L.L.C. are acting as lead managers. Anything herein or therein to the
contrary notwithstanding, the respective closings under this Agreement and the
International Underwriting Agreement are hereby expressly made conditional on
one another. The Underwriters hereunder and the International Underwriters are
simultaneously entering into an Agreement between U.S. and International
Underwriting Syndicates (the "Agreement between Syndicates") which provides,
among other things, for the transfer of shares of Stock between the two
syndicates. Two forms of prospectus are to be used in connection with the
offering and sale of shares of Stock contemplated by the foregoing, one
relating to the Shares hereunder and the other relating to the International
Shares. The latter form of prospectus will be identical to the former except
for certain substitute pages as included in the registration statement and
amendments thereto as mentioned below. Except as used in Sections 2, 3, 4, 9
and 11 herein, and except as the context may otherwise require, references
hereinafter to the Shares shall include all the shares of Stock which may be
sold pursuant to either this Agreement or the International Underwriting
Agreement, and references herein to any prospectus whether in preliminary or
final form, and whether as amended or supplemented, shall include both the U.S.
and the international versions thereof.
1. (a) The Company represents and warrants to, and
agrees with, each of the Underwriters that:
(i) A registration statement on Form S-3
(File No. 333-21393) (the "Initial Registration Statement") in
respect of the Shares has been filed with the Securities and
Exchange Commission (the "Commission"); the Initial Registration
Statement and any post-effective amendment thereto, each in the form
heretofore delivered to you, and, excluding exhibits thereto but
including all documents incorporated by reference in the prospectus
contained therein, delivered to you for each of the other
Underwriters, have been declared effective by the Commission in such
form; other than a registration statement increasing the size of the
offering, filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Act"), which became effective upon filing
(the "Rule 462(b) Registration Statement"), no other document with
respect to the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement or
document incorporated by reference therein has heretofore been filed
with the Commission; and no stop order suspending the effectiveness
of the Initial Registration Statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant
2
<PAGE> 3
to Rule 424(a) of the rules and regulations of the Commission under
the Act is hereinafter called a "Preliminary Prospectus"); the
various parts of the Initial Registration Statement and the Rule
462(b) Registration Statement, including all exhibits thereto and
including (A) the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under
the Act in accordance with Section 5(a) hereof and deemed by virtue
of Rule 430A under the Act to be part of the Initial Registration
Statement at the time it was declared effective and (B) the
documents incorporated by reference in the prospectus contained in
the Initial Registration Statement at the time such part of the
Initial Registration Statement became effective or such part of the
Rule 462(b) Registration Statement became or hereafter becomes
effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule
462(b) Registration Statement became effective, are hereinafter
collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under
the Act, is hereinafter called the "Prospectus"; any reference
herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as
of the date of such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment
to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section
13(a) or 15(d) of the Exchange Act after the effective date of the
Initial Registration Statement that is incorporated by reference in
the Registration Statement;
(ii) No order preventing or suspending the
use of any Preliminary Prospectus has been issued by the Commission,
and each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder, and did
not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein or by a Selling
Shareholder expressly for use in the preparation of the answers
therein to Item 7 of Form S-3;
(iii) The documents incorporated by
reference in the Prospectus, when they became effective or were
filed with the Commission, as the case may be, conformed in all
material respects to the requirements of the Act or the Exchange
3
<PAGE> 4
Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement
of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by
an Underwriter through Goldman, Sachs & Co. expressly for use
therein;
(iv) The Registration Statement conforms,
and the Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder and do not and will not, as
of the applicable effective date as to the Registration Statement
and any amendment thereto and as of the applicable filing date as to
the Prospectus and any amendment or supplement thereto, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through Goldman, Sachs &
Co. expressly for use therein or by a Selling Shareholder expressly
for use in the preparation of the answers therein to Item 7 of Form
S-3;
(v) Other than as set forth or
contemplated in the Prospectus, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or
long-term debt of the Company and its subsidiaries, taken as a
whole, or any material adverse change, or any development involving
a prospective material adverse change, in the condition (financial
or otherwise) or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole;
(vi) The Company and each of its
subsidiaries possesses all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and
neither the Company nor any such subsidiary has received any notice
of proceedings relating to the revocation or modification of any
such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the
4
<PAGE> 5
Company and its subsidiaries, taken as a whole, except as set forth
or contemplated by the Prospectus;
(vii) The Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of North Carolina, with corporate power and
authority to own its properties and conduct its business as
described in the Prospectus; and has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole. Each
Significant Subsidiary (as defined below) of the Company has been
duly incorporated or otherwise formed as a non-corporate entity, is
validly existing as a corporation or other entity, as the case may
be, in good standing under the laws of the jurisdiction of its
organization, with corporate or other organizational power and
authority to own its properties and to conduct its business as
described in the Prospectus and has been duly qualified as a foreign
corporation or other entity, as the case may be, for the transaction
of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole. As used in this Agreement, the term "Significant
Subsidiary" shall have the meaning set forth for the term
"Significant Subsidiary" in Rule 1-02(w) of Regulation S-X
promulgated pursuant to the Securities Act;
(viii) The Company has an authorized
capitalization as set forth in the Prospectus, and all of the issued
shares of capital stock of the Company have been duly authorized and
validly issued, are fully paid and non-assessable and conform to the
description of the Stock contained in the Prospectus; and all of the
issued shares of capital stock of each Significant Subsidiary of the
Company have been duly authorized and validly issued, are fully paid
and non-assessable and (except for directors' qualifying shares and
except as set forth in the Prospectus) are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(ix) The unissued Shares to be issued and
sold by the Company to the Underwriters hereunder and under the
International Underwriting Agreement have been duly authorized and,
when issued and delivered against payment therefor as provided
herein, will be validly issued and fully paid and non-assessable and
will conform to the description of the Stock contained in the
Prospectus;
(x) The issue and sale of the Shares to
be sold by the Company hereunder and under the International
Underwriting Agreement, the compliance by the Company with all of
the provisions of this Agreement and the International Underwriting
Agreement and the consummation of the transactions herein and
therein contemplated will not contravene any provision of applicable
law or the
5
<PAGE> 6
Amended and Restated Articles of Incorporation or Amended and
Restated Bylaws of the Company or any agreement or other instrument
binding upon the Company or any of its subsidiaries that is material
to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the issue and sale
of the Shares by the Company or the consummation by the Company of
the transactions contemplated by this Agreement and the
International Underwriting Agreement except such consents,
approvals, authorizations, registrations or qualifications as may be
required under state or foreign securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters and the International Underwriters;
(xi) Other than as set forth in the
Prospectus, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which
any property of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future consolidated financial
position, shareholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole; and, to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(xii) Neither the Company nor any of its
subsidiaries has taken, directly, any action which was designed to
or which has constituted or which might reasonably be expected to
cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Stock;
(xiii) The Company is not and, after giving
effect to the offering and sale of the Shares, will not be an
"investment company" "unit investment trust", "closed-end investment
company", "face-amount certificate company" or an entity
"controlled" by an "investment company" that is required to be
registered under Section 8 of the United States Investment Company
Act of 1940, as amended (the "Investment Company Act");
(xiv) The Company and its subsidiaries (A)
are in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of
human health or safety, the environment or any hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"), (B) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct
their respective businesses and (C) are in compliance with all terms
and conditions of any such permit, license or approval, except where
such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
6
<PAGE> 7
(xv) The Company has conducted a review of
the effect of Environmental Laws on the current and former
businesses, operations and properties of the Company and its
subsidiaries, in the course of which it identified and evaluated
potential associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for
clean-up or closure of any property, or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities or any potential liabilities to
third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities
would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(xvi) The use of the proceeds from the sale
of the Securities will not violate or result in a violation of
Section 7 of the Exchange Act, or any regulation promulgated
thereunder, including, without limitation, Regulations G, T, U, and
X of the Board of Governors of the Federal Reserve System;
(xvii) Ernst & Young LLP, who have certified
certain financial statements of the Company and its subsidiaries,
are, to the best of the Company's knowledge, independent public
accountants as required by the Act and the rules and regulations of
the Commission thereunder;
(xviii) This Agreement has been duly
authorized, executed and delivered by the Company;
(xix) There are no contracts, agreements or
understandings between the Company and any person granting such
person the right (A) to require the Company to file a registration
statement under the Securities Act with respect to any securities of
the Company, except as disclosed in the Registration Statement or
(B) to require the Company to include securities in the securities
registered pursuant to the Registration Statement, except any such
right that has been effectively waived or satisfied by the inclusion
of securities in the Registration Statement;
(xx) The statements set forth in the
Prospectus under the caption "Description of Capital Stock", insofar
as they purport to constitute a summary of the terms of the Stock,
are accurate, complete and fair; and
(xxi) Certain of the directors, officers
and shareholders of the Company listed in Schedule III hereto who
are not Selling Shareholders have each entered into a written
agreement with the Company (each such agreement, a "Lock-up
Agreement"), and executed originals of each Lock-up Agreement have
been delivered to you.
(b) Each of the Selling Shareholders severally
represents and warrants to, and agrees with, each of the Underwriters and the
Company that:
(i) All consents, approvals,
authorizations and orders necessary for the execution and delivery by
such Selling Shareholder of this Agreement, the
7
<PAGE> 8
International Underwriting Agreement, the Power of Attorney and the
Custody Agreement hereinafter referred to, and for the sale and
delivery of the Shares to be sold by such Selling Shareholder
hereunder and under the International Underwriting Agreement, have
been obtained; and such Selling Shareholder has full right, power
and authority to enter into this Agreement, the International
Underwriting Agreement, the Power of Attorney and the Custody
Agreement and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Shareholder hereunder and under the
International Underwriting Agreement;
(ii) The sale of the Shares to be sold by
such Selling Shareholder hereunder and under the International
Underwriting Agreement and the compliance by such Selling
Shareholder with all of the provisions of this Agreement, the
International Underwriting Agreement, the Power of Attorney and the
Custody Agreement and the consummation of the transactions herein
and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any statute, indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which
such Selling Shareholder is a party or by which such Selling
Shareholder is bound, or to which any of the property or assets of
such Selling Shareholder is subject, nor will such action result in
any violation of the provisions of the Certificate of Incorporation
and By-laws or other governing instrument of such Selling
Shareholder if such Selling Shareholder is a corporation, the
Partnership Agreement of such Selling Shareholder if such Selling
Shareholder is a partnership, the governing trust agreement or other
governing instrument of such Selling Shareholder if such Selling
Shareholder is a trust, or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over such Selling Shareholder or the property of such
Selling Shareholder;
(iii) Such Selling Shareholder has, and
immediately prior to each Time of Delivery (as defined in Section 4
hereof) such Selling Shareholder will have, good and valid title to
the Shares to be sold by such Selling Shareholder hereunder and
under the International Underwriting Agreement, free and clear of
all liens, encumbrances, equities or claims; and, upon delivery of
such Shares and payment therefor pursuant hereto and thereto, good
and valid title to such Shares, free and clear of all liens,
encumbrances, equities or claims, will pass to the several
Underwriters or the International Underwriters, as the case may be;
(iv) During the period beginning from the
date that is 30 days prior to the First Time of Delivery and
continuing to and including the date 90 days after the date of the
Prospectus, such Selling Shareholder shall not offer, sell, contract
to sell or otherwise dispose of, except as provided hereunder or
under the International Underwriting Agreement, any shares of Common
Stock or any securities of the Company that are substantially
similar to the Shares, including but not limited to any securities
that are convertible into or exchangeable for, or that represent the
right to receive, Stock or any such substantially similar securities
(other than pursuant to employee stock option plans existing on, or
upon the
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<PAGE> 9
conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement), without the prior
written consent of Goldman, Sachs & Co. and the Company;
(v) Such Selling Shareholder has not
taken and will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of the Shares;
(vi) To the extent that any statements or
omissions made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto
are made in reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder expressly for
use therein, such Preliminary Prospectus and the Registration
Statement did, and the Prospectus and any further amendments or
supplements to the Registration Statement and the Prospectus, when
they become effective or are filed with the Commission, as the case
may be, will conform in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder
and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(vii) In order to document the
Underwriters' compliance with the reporting and withholding
provisions of the Tax Equity and Fiscal Responsibility Act of 1982
with respect to the transactions herein contemplated, such Selling
Shareholder will deliver to you prior to or at the First Time of
Delivery (as hereinafter defined) a properly completed and executed
United States Treasury Department Form W-8 or Form W-9 (or other
applicable form or statement specified by Treasury Department
regulations in lieu thereof);
(viii) Certificates in negotiable form
representing all of the Shares to be sold by such Selling
Shareholder hereunder and under the International Underwriting
Agreement have been placed in custody under a Custody Agreement, in
the form heretofore furnished to you (the "Custody Agreement"), duly
executed and delivered by such Selling Shareholder to First Union
National Bank of North Carolina, as custodian (the "Custodian"), and
such Selling Shareholder has duly executed and delivered a Power of
Attorney, in the form heretofore furnished to you (the "Power of
Attorney"), appointing the persons indicated in Schedule II hereto,
and each of them, as such Selling Shareholder's attorneys-in-fact
(the "Attorneys-in-Fact") with authority to execute and deliver this
Agreement and the International Underwriting Agreement on behalf of
such Selling Shareholder, to determine the purchase price to be paid
by the Underwriters and the International Underwriters to the
Selling Shareholders as provided in Section 2 hereof, to authorize
the delivery of the Shares to be sold by such Selling Shareholder
hereunder and otherwise to act on behalf of such Selling Shareholder
in connection
9
<PAGE> 10
with the transactions contemplated by this Agreement, the
International Underwriting Agreement and the Custody Agreement;
(ix) The Shares represented by the
certificates held in custody for such Selling Shareholder under the
Custody Agreement are subject to the interests of the Underwriters
hereunder and the International Underwriters under the International
Underwriting Agreement; the arrangements made by such Selling
Shareholder for such custody, and the appointment by such Selling
Shareholder of the Attorneys-in-Fact by the Power of Attorney, are
to that extent irrevocable; the obligations of the Selling
Shareholders hereunder shall not be terminated by operation of law,
whether by the death or incapacity of any individual Selling
Shareholder or, in the case of an estate or trust, by the death or
incapacity of any executor or trustee or the termination of such
estate or trust, or in the case of a partnership or corporation, by
the dissolution of such partnership or corporation, or by the
occurrence of any other event; if any individual Selling Shareholder
or any such executor or trustee should die or become incapacitated,
or if any such estate or trust should be terminated, or if any such
partnership or corporation should be dissolved, or if any other such
event should occur, before the delivery of the Shares hereunder,
certificates representing the Shares shall be delivered by or on
behalf of the Selling Shareholders in accordance with the terms and
conditions of this Agreement, of the International Underwriting
Agreement and of the Custody Agreements; and actions taken by the
Attorneys-in-Fact pursuant to the Powers of Attorney shall be as
valid as if such death, incapacity, termination, dissolution or
other event had not occurred, regardless of whether or not the
Custodian, the Attorneys-in-Fact, or any of them, shall have
received notice of such death, incapacity, termination, dissolution
or other event;
(x) If such Selling Shareholder was
previously a shareholder of Innovex Limited ("Innovex") and became a
shareholder of the Company as a result of receiving shares of stock
of the Company in exchange for such Selling Shareholder's shares of
Innovex in connection with the acquisition of Innovex by the
Company, pursuant to the Share Exchange Agreement, dated as of
October 4, 1996 by and among the Company, Innovex and the
shareholders of Innovex (the "Exchange Agreement"), that all of the
Shares being sold by such Selling Shareholder hereunder and under
the International Underwriting Agreement were received pursuant to
the Exchange Agreement or obtained pursuant to the exercise of
options to purchase Common Stock received pursuant to the Exchange
Agreement and not otherwise; and
(xi) Any and all rights in the nature of
those described in Section 1(a)(xix) hereof to which such Selling
Shareholder is entitled are satisfied in full with respect to the
registration and public offering contemplated by this Agreement and
the International Underwriting Agreement by the inclusion of such
Selling Shareholder's shares of Common Stock in the Registration
Statement, and such Selling Shareholder hereby waives any and all
rights whatsoever to have any additional securities included in the
Registration Statement.
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<PAGE> 11
2. Subject to the terms and conditions herein set forth, (a)
each Selling Shareholder agrees that the purchase price per share at which the
Underwriters will purchase Shares from such Selling Shareholder (as set forth
in clause (b) below) shall be the same as the purchase price per share at which
the Company sells shares to be purchased by the Underwriters from the Company
hereunder, (b) the Company and each of the Selling Shareholders agree,
severally and not jointly, to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company
and each of the Selling Shareholders, at a purchase price per share of $60.355,
the number of Firm Shares (to be adjusted by you so as to eliminate fractional
shares) determined by multiplying the aggregate number of Firm Shares to be
sold by the Company and each of the Selling Shareholders as set forth opposite
their respective names in Schedule II hereto by a fraction, the numerator of
which is the aggregate number of Firm Shares to be purchased by such
Underwriter as set forth opposite the name of such Underwriter in Schedule I
hereto and the denominator of which is the aggregate number of Firm Shares to
be purchased by all of the Underwriters from the Company and all of the Selling
Shareholders hereunder and (c) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Shares as
provided below, each of the Selling Shareholders identified with an asterisk in
Schedule II hereto, agrees, severally and not jointly, to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly,
to purchase from each of the Selling Shareholders, at the purchase price per
share set forth in clause (b) of this Section 2, that portion of the number of
Optional Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Optional Shares by a fraction the numerator of which is the
maximum number of Optional Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I
hereto and the denominator of which is the maximum number of Optional Shares
that all of the Underwriters are entitled to purchase hereunder.
The Selling Shareholders identified with an asterisk in Schedule II
hereto, hereby grant, severally and not jointly, to the Underwriters the right
to purchase at their election up to 576,000 Optional Shares, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering overallotments in the sale of the Firm Shares. Any such election to
purchase Optional Shares shall be made in proportion to the maximum number of
Optional Shares to be sold by each such Selling Shareholder as set forth in
Schedule II hereto. Any such election to purchase Optional Shares may be
exercised only by written notice from you to the Attorneys-in-Fact, given
within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you
but in no event earlier than the First Time of Delivery (as defined in Section
4 hereof) or, unless you and the Attorneys-in-Fact otherwise agree in writing,
earlier than two or later than ten business days after the date of such notice.
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<PAGE> 12
3. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as Goldman, Sachs & Co. may request upon at least two
full business days' prior notice to the Company and the Selling Shareholders
shall be delivered by or on behalf of the Company and the Selling Shareholders
to Goldman, Sachs & Co., for the account of such Underwriter, against payment
by or on behalf of such Underwriter of the purchase price therefor in United
States dollars by wire transfer of immediately available funds to an account or
accounts designated by the Custodian and the Company. The Company and the
Selling Shareholders will cause the certificates representing the Shares to be
made available for checking and packaging at least one full business day prior
to the Time of Delivery (as defined below) with respect thereto at the office
of Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004 (the
"Designated Office"). The time and date of such delivery and payment shall be,
with respect to the Firm Shares, 9:30 a.m., New York City time, on March 12,
1997 or such other time and date as Goldman, Sachs & Co., the Company and the
Selling Shareholders may agree upon in writing, and, with respect to the
Optional Shares, 9:30 a.m., New York City time, on the date specified by
Goldman, Sachs & Co. in the written notice given by Goldman, Sachs & Co. of the
Underwriters' election to purchase such Optional Shares, or such other time and
date as Goldman, Sachs & Co., the Company and the Selling Shareholders may
agree upon in writing. Such time and date for delivery of the Firm Shares is
herein called the "First Time of Delivery", such time and date for delivery of
the Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery", and each such time and date for delivery is herein
called a "Time of Delivery".
(b) The documents to be delivered at each Time of
Delivery by or on behalf of the parties hereto pursuant to Section 7 hereof,
including the cross-receipt for the Shares and any additional documents
requested by the Underwriters pursuant to Section 7(k) hereof, will be
delivered at the offices of Sullivan & Cromwell, 125 Broad Street, New York,
New York 10004 (the "Closing Location"), and the Shares will be delivered at
the Designated Office, all at each Time of Delivery. A meeting will be held at
the Closing Location at 2:00 p.m., New York City time, on the New York Business
Day next preceding each Time of Delivery, at which meeting the final drafts of
the documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto. For the purposes of this Section
4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by
you and to file such Prospectus pursuant to Rule 424(b) under the
Act not later than the Commission's
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<PAGE> 13
close of business on the second business day following the execution
and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or
Prospectus prior to the last Time of Delivery which shall be
reasonably objected to by you promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the Prospectus
or any amended Prospectus has been filed and to furnish you copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so
long as the delivery of a prospectus is required in connection with
the offering or sale of the Shares; to advise you, promptly after it
receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or prospectus or suspending
any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action
as you may reasonably request to qualify the Shares for offering and
sale under the securities laws of such jurisdictions as you may
request and to comply with such laws so as to permit the continuance
of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Shares,
provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(c) Prior to 5:00 p.m., New York City time, on the
New York Business Day next succeeding the date of this Agreement and
from time to time, to furnish the Underwriters with copies of the
Prospectus in New York City in such quantities as you may reasonably
request, and, if the delivery of a prospectus is required by law at
any time prior to the expiration of nine months after the time of
issue of the Prospectus in connection with the offering or sale of
the Shares and if at such time any events shall have occurred as a
result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary during such period to amend or supplement the
Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with
the Act or the Exchange Act, to notify you and upon your
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<PAGE> 14
request to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many
copies as you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any
Underwriter is required by law to deliver a prospectus in connection
with sales of any of the Shares at any time nine months or more
after the time of issue of the Prospectus, upon your request but at
the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as you may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its
securityholders as soon as practicable, but in any event not later
than eighteen months after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Act), an earnings
statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the option
of the Company, Rule 158);
(e)(i) During the period beginning from the date that
is 30 days prior to the First Time of Delivery and continuing to and
including the 90th day after the date of the Prospectus, the Company
shall not, directly or indirectly, offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock, any securities of
the Company which are substantially similar to the Common Stock,
including but not limited to any other securities that are
convertible into or exchangeable for, or that represent the right to
receive, any shares of Common Stock, or any such substantially
similar securities, other than (A) the Shares to be sold by the
Company pursuant to this Agreement and the International Underwriting
Agreement (B) shares of Common Stock issued pursuant to the Company's
stock option plans or agreements existing as of the date hereof, (C)
shares of Common Stock issued upon the conversion of securities of
the Company outstanding as of the date hereof, or (D) shares of
Common Stock issued as consideration for acquisitions of businesses,
properties or assets, provided, however, that each offeree, purchaser
or other transferee of any shares of Common Stock so issued in
connection with any such acquisition shall agree in writing for the
benefit of the Underwriters and the International Underwriters, in
form and substance satisfactory to Goldman, Sachs & Co., that all
such shares of Common Stock shall remain subject to the restrictions
of this Section 5(e); and (ii) that it will use best efforts to cause
each person who has entered into a Lock-up Agreement to comply
therewith, will not grant any waivers or consents to non-compliance
therewith and will enforce its rights under each such agreement, in
each case unless and to the extent that it shall have obtained the
prior written consent of Goldman, Sachs & Co.;
(f) To furnish to its shareholders as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income,
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<PAGE> 15
shareholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public
accountants);
(g) During a period of five years from the effective
date of the Registration Statement, to furnish to you, upon request,
copies of any reports mailed to stockholders, together with the
exhibits thereto, and copies of all reports filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed, together with the exhibits
thereto;
(h) To use the net proceeds received by it from the
sale of the Shares pursuant to this Agreement and the International
Underwriting Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(i) To use its best efforts to list for quotation
the Shares on the National Association of Securities Dealers
Automated Quotations National Market System ("NASDAQ"); and
(j) The Company shall file a Rule 462(b)
Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement, and the Company shall at the time of filing either pay to
the Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of such
fee pursuant to Rule 111(b) under the Act.
6. The Company and each of the Selling Shareholders, jointly
and severally, covenant and agree with one another and with the several
Underwriters that (a) the Company will pay the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the International
Underwriting Agreement, the Agreement between Syndicates, the Selling
Agreements, the Blue Sky Memorandum, closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Shares; (iii) all expenses in connection
with the qualification of the Shares for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky surveys; (iv) all fees and
expenses in connection with listing the Shares on the NASDAQ; and (v) the
filing fees incident to, and the fees and disbursements of counsel for the
Underwriters in connection with, securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the Shares;
and (b) the Company will pay or cause to be paid: (i) the cost of preparing
stock certificates; (ii) the cost and charges of any transfer agent or
registrar; (iii) the fees and expenses of the Attorney-in-Fact and the
Custodian; and (iv) all other costs and expenses incident to the performance of
its obligations hereunder
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<PAGE> 16
which are not otherwise specifically provided for in this Section; and (c) such
Selling Shareholder will pay or cause to be paid all costs and expenses
incident to the performance of such Selling Shareholder's obligations hereunder
which are not otherwise specifically provided for in this Section, including
(i) any fees and expenses of counsel for such Selling Shareholder, (ii) all
expenses and taxes incident to the sale and delivery of the Shares to be sold
by such Selling Shareholder to the Underwriters hereunder. In connection with
Clause (c) (iii) of the preceding sentence, Goldman, Sachs & Co. agrees to pay
New York State stock transfer tax, and the Selling Shareholder agrees to
reimburse Goldman, Sachs & Co. for associated carrying costs if such tax
payment is not rebated on the day of payment and for any portion of such tax
payment not rebated. It is understood, however, that the Company shall bear,
and the Selling Shareholders shall not be required to pay or to reimburse the
Company for, the cost of any other matters not directly relating to the sale
and purchase of the Shares pursuant to this Agreement, and that, except as
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
stock transfer taxes on resale of any of the Shares by them, and any
advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the
Shares to be delivered at each Time of Delivery, shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company and of the Selling Shareholders herein are, at and as
of such Time of Delivery, true and correct, the condition that the Company and
the Selling Shareholders shall have performed all of its and their obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the rules and regulations under the
Act and in accordance with Section 5(a) hereof; the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement; no stop order
suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission;
and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable
satisfaction;
(b) Sullivan & Cromwell, counsel for the
Underwriters, shall have furnished to you such opinion or opinions,
dated such Time of Delivery, with respect to the incorporation of
the Company, the validity of the Shares being delivered by the
Company and certain of the Selling Shareholders at such Time of
Delivery, the Registration Statement, and the Prospectus as well as
such other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters. In
rendering such opinions, such counsel may rely as to all matters
16
<PAGE> 17
governed by North Carolina law upon the opinion referred to in
subsection (c) of this Section;
(c) Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P., counsel for the Company, shall have furnished to
you their written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the North Carolina, with corporate power
and authority to own its properties and conduct its business as
described in the Prospectus;
(ii) The Company has an authorized
capitalization as set forth in the Prospectus, and all of the issued
shares of capital stock of the Company (including the Shares being
delivered at such Time of Delivery) have been duly authorized and
validly issued, are fully paid and non-assessable and are not
subject to any preemptive rights under any North Carolina statute or
the Company's Amended and Restated Articles of Incorporation or
Amended and Restated Bylaws; and the Shares conform to the
description of the Stock contained in the Prospectus;
(iii) The Company has been duly qualified
as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to require
such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries taken as a whole (such
counsel being entitled to rely in respect of the opinion in this
clause upon opinions of local counsel and in respect of matters of
fact upon certificates of officers of the Company and the
significant subsidiaries of the Company, provided that such counsel
shall state that they believe that both you and they are justified
in relying upon such opinions and certificates);
(iv) Each Significant Subsidiary of the
Company has been duly incorporated or otherwise formed as a
non-corporate entity and is validly existing as a corporation or
other entity, as the case may be, in good standing under the laws of
the jurisdiction of its organization; with corporate or other
organizational power and authority to own its properties and to
conduct its business as described in the Prospectus and has been duly
qualified as a foreign corporation or other entity, as the case may
be, for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, except
to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon certificates of
officers of the Company, provided that such counsel shall state that
they believe that both you and they are justified in relying upon
such opinions and certificates);
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<PAGE> 18
(v) To the best of such counsel's
knowledge and other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material adverse
effect on the current consolidated financial position, shareholders'
equity or results of operations of the Company and its subsidiaries;
and, to the best of such counsel's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others;
(vi) This Agreement and the International
Underwriting Agreement have been duly authorized, executed and
delivered by the Company;
(vii) The issue and sale of the Shares, and
the compliance by the Company with all of the provisions of this
Agreement and the International Underwriting Agreement and the
consummation of the transactions herein and therein contemplated
will not contravene (A) any provision of applicable federal or North
Carolina law which in such counsel's experience is normally
applicable to transactions of the type contemplated by this
Agreement and the contravention of which would have a material
adverse effect on the business of the Company and its Significant
Subsidiaries, taken as a whole, (B) the Amended and Restated
Articles of Incorporation or Amended and Restated Bylaws of the
Company, (C) any agreement or other instrument filed as an exhibit
to the Registration Statement or incorporated by reference in the
Prospectus, or (D) to the best of such counsel's knowledge, any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any Significant Subsidiary;
(viii) No consent, approval, authorization,
order of, or qualification with, any governmental agency or body is
required for the issue and sale of the Shares or the consummation by
the Company of the transactions contemplated by this Agreement and
the International Underwriting Agreement, except such consents,
approvals, authorizations, registrations or qualifications as may be
required under state or foreign securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters and the International Underwriters;
(ix) The statements set forth in the
Prospectus under the caption "Description of Capital Stock", insofar
as they purport to constitute a summary of the terms of the Stock,
under the caption "Certain U.S. Federal Tax Considerations for
Non-U.S. Holders of Common Stock", and under the caption
"Underwriting", insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate,
complete and fair;
(x) The Company is not an "investment
company" or an entity "controlled" by an "investment company", as
such terms are defined in the Investment Company Act;
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(xi) The documents incorporated by
reference in the Prospectus or any further amendment or supplement
thereto made by the Company prior to such Time of Delivery (other
than the financial statements and related schedules therein or other
financial data derived from accounting records, as to which such
counsel need express no opinion), when they became effective or were
filed with the Commission, as the case may be, complied as to form
in all material respects with the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder; and they have no reason to believe that any
of such documents (other than the financial statements and related
schedules therein or other financial data derived from accounting
records), when such documents became effective or were so filed, as
the case may be, contained, in the case of a registration statement
which became effective under the Act, an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or, in the case of other documents which were filed
under the Exchange Act with the Commission (other than the financial
statements and related schedules therein or other financial data
derived from accounting records), an untrue statement of a material
fact or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made when such documents were so filed, not
misleading; and
(xii) (A) The Registration Statement and
the Prospectus and any further amendments and supplements thereto
made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein or other
financial data derived from accounting records, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the rules and
regulations thereunder; (B) no facts have come to the attention of
such counsel which lead them to believe that, as of its effective
date, the Registration Statement or any further amendment thereto
made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein or other
financial data derived from accounting records, as to which such
counsel need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus or any further
amendment or supplement thereto made by the Company prior to such
Time of Delivery (other than the financial statements and related
schedules therein or other financial data derived from accounting
records, as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading or
that, as of such Time of Delivery, either the Registration Statement
or the Prospectus or any further amendment or supplement thereto
made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein or other
financial data derived from accounting records, as to which such
counsel need express no opinion) contains
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<PAGE> 20
an untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (C)
and they do not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be incorporated by reference into the
Prospectus or required to be described in the Registration Statement
or the Prospectus which are not filed or incorporated by reference
or described as required.
In rendering their opinions contained in this Section 7(c), such
counsel may state that they express no opinion as to the laws of any
jurisdiction outside the United States. In rendering the opinion contained in
clause (vi) of this Section 7(c), such counsel may rely as to all matters
governed by New York law upon the opinion referred to in subsection (b) of this
Section 7. With respect to the matters referred to in clause (xii)(B) of this
Section 7(c), such counsel may state that their opinion and belief are based
upon their review of the Registration Statement and the Prospectus and any
amendments or supplements thereto made by the Company prior to such Time of
Delivery and participation in conferences and discussions with officers and
other representatives of the Company, representatives of the independent public
accountants for the Company, and representatives of the Underwriters at which
the contents of the Registration Statement and the Prospectus and any
amendments or supplements thereto made by the Company prior to such Time of
Delivery and related matters were discussed and, that, except to the extent set
forth in clause (ix) of this Section 7(c), they do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus and any amendments
or supplements thereto made by the Company prior to such Time of Delivery.
(d) (A) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
each of the Selling Shareholders indicated with footnote (a) or (b)
in Schedule II hereto, shall have furnished to you their written
opinion with respect to each of such Selling Shareholder, dated such
Time of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) A Power of Attorney and a Custody
Agreement have been duly executed and delivered by such Selling
Shareholder and constitute valid and binding agreements of such
Selling Shareholder in accordance with their terms except (a) to the
extent that the enforcement thereof may be limited by (1)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors'
rights generally and (2) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity);
(ii) This Agreement and the International
Underwriting Agreement have been duly executed and delivered by or
on behalf of such Selling Shareholder; and the execution and
delivery of the Power of Attorney, the Custody Agreement by such
Selling Shareholder, the execution of this Agreement and the
International
20
<PAGE> 21
Underwriting Agreement by or on behalf of such Selling Shareholder
and the sale of the Shares to be sold by such Selling Shareholder
hereunder and thereunder and the compliance by such Selling
Shareholder with all of the provisions of this Agreement and the
International Underwriting Agreement, the Power of Attorney and the
Custody Agreement and the consummation of the transactions herein and
therein contemplated will not (a) result in the violation of the
provisions of the Memorandum and Articles of Association or other
constitutional documents of such Selling Shareholder, (b) conflict
with or constitute a breach of, or default under any instrument
identified to such counsel by such Selling Shareholder as material to
such Selling Shareholder's interest in the Shares being sold by such
Selling Shareholder, nor (c) result in a breach or violation by such
Selling Shareholder of the laws of the State of New York, the federal
laws of the United States of America or the laws of England, in each
case, that such counsel believes, are applicable to transactions of
the type contemplated by the Power of Attorney, the Custody
Agreement, this Agreement and the International Underwriting
Agreement, except that such counsel need not express any opinion with
respect to compliance with the registration or filing requirements or
disclosure provisions of state securities laws of the United States
or the securities or blue sky laws of any other jurisdiction.
(iii) No consent or approval of, or other
action by or filing with, any English, United States or New York
State court or administrative or governmental body is required under
the federal laws of the United States of America, the laws of
England or the laws of the State of New York for such Selling
Shareholder to execute and deliver the Power of Attorney, the
Custody Agreement, for the execution and delivery by or on behalf of
such Selling Shareholder of this Agreement and the International
Underwriting Agreement or for such Selling Shareholder to consummate
the transactions provided for herein and therein, except as have
been obtained, and such consents, approvals, authorizations, orders,
registrations or qualifications as may be required under state
securities or blue sky laws in connection with the purchase and
distribution of the Shares to be purchased from such Selling
Shareholder under this Agreement by the Underwriters or under the
International Underwriting Agreement by the International
Underwriters.
(iv) Assuming that Goldman, Sachs & Co.,
as agent for the other Underwriters and the International
Underwriters, and each of the Underwriters and the International
Underwriters acquired their interest in a new certificate,
registered in the name of Goldman, Sachs & Co., as an Underwriter
and as agent for the other Underwriters and the International
Underwriters, representing the Shares delivered at such Time of
Delivery by such Selling Shareholders (the "Securities") in good
faith and without notice of any adverse claims, upon delivery of the
Securities to Goldman, Sachs & Co., as an Underwriter and as agent
for the other Underwriters and the International Underwriters, in
the State of New York, Goldman, Sachs & Co., as an Underwriter and
as agent for the other Underwriters and the International
Underwriters, will acquire the Securities free of any adverse
21
<PAGE> 22
claims within the meaning of Section 8-302 of the New York Uniform
Commercial Code and free of any action or claims under Section 8-315
of such Code.
(B) Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P., counsel for each of the Selling Shareholders
indicated with footnote (c) in Schedule II hereto, shall have
furnished to you their written opinion with respect to each of such
Selling Shareholders, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) A Power of Attorney and a Custody
Agreement have been duly executed and delivered by such Selling
Shareholder and constitute valid and binding agreements of such
Selling Shareholder in accordance with their terms;
(ii) This Agreement and the International
Underwriting Agreement have been duly executed and delivered by or
on behalf of such Selling Shareholder; and the sale of the Shares to
be sold by such Selling Shareholder hereunder and thereunder and the
compliance by such Selling Shareholder with all of the provisions of
this Agreement and the International Underwriting Agreement, the
Power of Attorney and the Custody Agreement and the consummation of
the transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any terms or provisions
of, or constitute a default under, any statute, indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument known
to such counsel to which such Selling Shareholder is a party or by
which such Selling Shareholder is bound, or to which any of the
property or assets of such Selling Shareholder is subject, nor will
such action result in any violation of the provisions of the
Articles of Incorporation and By-laws or other governing instrument
of such Selling Shareholder if such Selling Shareholder is a
corporation, the Partnership Agreement of such Selling Shareholder
if such Selling Shareholder is a partnership, the governing trust
agreement or other governing instrument of such Selling Shareholder
if such selling Shareholder is a trust, or any order, rule or
regulation known to such counsel of any court or governmental agency
or body having jurisdiction over such Selling Shareholder or the
property of such Selling Shareholder;
(iii) No consent, approval, authorization
or order of any court or governmental agency or body is required for
the consummation of the transactions contemplated by this Agreement
and the International Underwriting Agreement in connection with the
Shares to be sold by such Selling Shareholder hereunder or
thereunder, except such as shall have been specified in such opinion
which have been duly obtained and are in full force and effect and
such as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of such Shares by the
Underwriters or the International Underwriters;
(iv) Immediately prior to such Time of
Delivery such Selling Shareholder had good and valid title to the
Shares to be sold at such Time of Delivery by such Selling
Shareholder under this Agreement and the International Underwriting
Agreement, free and clear of all liens, encumbrances, equities or
22
<PAGE> 23
claims, and full right, power and authority to sell, assign,
transfer and deliver the Shares to be sold by such Selling
Shareholder hereunder and thereunder; and
(v) Good and valid title to such Shares,
free and clear of all liens, encumbrances, equities or claims, has
been transferred to each of the several Underwriters or
International Underwriters, as the case may be, who have purchased
such Shares in good faith and without notice of any such lien,
encumbrance, equity or claim or any other adverse claim within the
meaning of the Uniform Commercial Code.
In rendering the opinion in subparagraph (iv) such counsel may rely
upon a certificate of such Selling Shareholder in respect of matters of fact as
to ownership of, and liens, encumbrances, equities or claims on the Shares sold
by such Selling Shareholder, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such certificate;
(e) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the effective
date of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of Delivery (A)
Ernst & Young LLP shall have furnished to you and the Company a letter or
letters, dated the respective date of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I(a) hereto, (B) Coopers
& Lybrand shall have furnished to you and the Company a letter or letters,
dated the respective date of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex 1(b) and (C) KPMG shall
have furnished to you and the Company a letter or letters, dated the respective
date of delivery thereof, in form and substance satisfactory to you, to the
effect set forth in Annex I(c).
(f) Since the respective dates as of which information is
given in the Prospectus, there shall not have been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries, taken as a
whole, or any change, or any development involving a prospective change, in the
condition (financial or otherwise) or the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Prospectus, the effect of which, in any such case
described in this subsection (f), is in the judgment of the Representatives so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered at such Time
of Delivery on the terms and in the manner contemplated in the Prospectus;
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of any
of the Company's debt securities;
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<PAGE> 24
(h) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on NASDAQ; (ii) a
suspension or material limitation in trading in the Company's securities on
NASDAQ; (iii) a general moratorium on commercial banking activities declared by
either Federal or New York State authorities; (iv) the outbreak or escalation
of hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event
specified in clause (iv) above in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the terms
and in the manner contemplated in this Agreement and in the Prospectus;
(i) The Shares to be sold by the Company and the Selling
Shareholders at such Time of Delivery shall have been duly listed for quotation
on NASDAQ;
(j) The Company has obtained and delivered to the Underwriters
executed copies of the Lock-up Agreements referred to in Subsection 1(a)(xxii)
hereof in form and substance satisfactory to you;
(k) The Company and the Selling Shareholders shall have
furnished or caused to be furnished to you at such Time of Delivery
certificates of officers of the Company and of the Selling Shareholders,
respectively, satisfactory to you as to the accuracy of the representations and
warranties of the Company and the Selling Shareholders, respectively, herein at
and as of such Time of Delivery, as to the performance by the Company and the
Selling Shareholders of all of their respective obligations hereunder to be
performed at or prior to such Time of Delivery, and as to such other matters as
you may reasonably request, and the Company shall have furnished or caused to
be furnished certificates as to the matters set forth in subsections (a) and
(f) of this Section, and as to such other matters as you may reasonably
request; and
(l) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of this Agreement.
8. (a) The Company will indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will periodically
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability
24
<PAGE> 25
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Goldman, Sachs & Co. or by any Selling
Shareholder expressly for use therein; and provided, further, that the Company
shall not be liable to any Underwriter under the indemnity agreement in this
subsection (a) with respect to any Preliminary Prospectus to the extent that
any such loss, claim, damage or liability of such Underwriter results from the
fact that such Underwriter sold Shares to a person as to whom it shall be
established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (excluding documents
incorporated by reference) or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference) in any case where such delivery
is required by the Act if the Company has previously furnished copies thereof
in sufficient quantity to such Underwriter and the loss, claim, damage or
liability of such Underwriter results from an untrue statement or omission of a
material fact contained in the Preliminary Prospectus which was identified in
writing prior to the date hereof to such Underwriter and corrected in the
Prospectus (excluding document incorporated by reference) or in the Prospectus
as then amended or supplemented (excluding documents incorporated by
reference).
(b) Each of the Selling Shareholders will indemnify and hold
harmless each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) an untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Selling Shareholder expressly for
use therein, or (ii) the failure of such Selling Shareholder at or prior to the
written confirmation of the sale of the Shares to be sold by such Selling
Shareholder to send or deliver a copy of an amended Preliminary Prospectus or
Prospectus (or the Prospectus as amended or supplemented) to the person
asserting any such losses, claims, damages or liabilities against any
Underwriter, which person purchased the Shares which are the subject thereof,
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact made in such Preliminary Prospectus was corrected
in the amended Preliminary Prospectus or the Prospectus (or the Prospectus as
amended and supplemented); and each Selling Shareholder will periodically
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter
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<PAGE> 26
in connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the amount of such indemnity
shall be limited to the total net proceeds received by each such Selling
Shareholder from the offering of Shares purchased under this Agreement (before
deducting expenses).
(c) Each Underwriter will indemnify and hold harmless the
Company and each Selling Shareholder against any losses, claims, damages or
liabilities to which the Company or such Selling Shareholder may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Goldman, Sachs
& Co. expressly for use therein; and will reimburse the Company and each
Selling Shareholder for any legal or other expenses reasonably incurred by the
Company or such Selling Shareholder in connection with investigating or
defending any such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (which shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i)
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<PAGE> 27
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling Shareholders on
the one hand and the Underwriters on the other from the offering of the Shares.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Shareholders on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Shareholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares purchased
under this Agreement (before deducting expenses) received by the Company and the
Selling Shareholders bear to the total underwriting discounts and commissions
received by the Underwriters with respect to the Shares purchased under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Shareholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, each of the Selling Shareholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this subsection (e)
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (e). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), (i) no Selling Shareholder shall be required
to contribute any amount by which the total price at which the Shares sold by
such Selling Shareholder and distributed to the public were offered to the
public (before deducting expenses) exceeds the amount of any damages
27
<PAGE> 28
that such Selling Shareholder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and
(ii) no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint. The remedies provided for in this
Section 8 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in equity.
(f) The obligations of the Company and the Selling
Shareholders under this Section 8 shall be in addition to any liability which
the Company and the respective Selling Shareholders may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section 8 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company
(including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the Company) and to
each person, if any, who controls the Company or any Selling Shareholder within
the meaning of the Act.
9. (a) If any Underwriter shall default in its
obligation to purchase the Shares which it has agreed to purchase hereunder at
a Time of Delivery, you may in your discretion arrange for you or another party
or other parties to purchase such Shares on the terms contained herein. If
within thirty-six hours after such default by any Underwriter you do not
arrange for the purchase of such Shares, then the Company and the Selling
Shareholders shall be entitled to a further period of thirty-six hours within
which to procure another party or other parties satisfactory to you to purchase
such Shares on such terms. In the event that, within the respective prescribed
periods, you notify the Company and the Selling Shareholders that you have so
arranged for the purchase of such Shares, or the Company and the Selling
Shareholders notify you that they have so arranged for the purchase of such
Shares, you or the Company and the Selling Shareholders shall have the right to
postpone such Time of Delivery for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect
28
<PAGE> 29
as if such person had originally been a party to this Agreement with respect to
such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company and the Selling Shareholders as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased does not exceed
one-eleventh of the aggregate number of all of the Shares to be purchased at
such Time of Delivery, then the Company and the Selling Shareholders shall have
the right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company and the Selling Shareholders as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased exceeds
one-eleventh of the aggregate number of all of the Shares to be purchased at
such Time of Delivery, or if the Company and the Selling Shareholders shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Selling Shareholders to
sell the Optional Shares) shall thereupon terminate, without liability on the
part of any non-defaulting Underwriter or the Company or the Selling
Shareholders, except for the expenses to be borne by the Company and the
Selling Shareholders and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Selling Shareholders and
the several Underwriters, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Underwriter or any controlling
person of any Underwriter, or the Company, or any of the Selling Shareholders,
or any officer or director or controlling person of the Company, or any
controlling person of any Selling Shareholder, and shall survive delivery of
and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section
9 hereof, neither the Company nor the Selling Shareholders shall then be under
any liability to any Underwriter except as provided in Sections 6 and 8 hereof;
but, if for any other reason any Shares are not delivered by or on behalf of
the Company and the Selling
29
<PAGE> 30
Shareholders as provided herein, the Company and each of the Selling
Shareholders pro rata (based on the number of Shares to be sold by the Company
and such Selling Shareholder hereunder) will reimburse the Underwriters through
you for all out-of-pocket expenses approved in writing by you, including fees
and disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so
delivered, but the Company and the Selling Shareholders shall then be under no
further liability to any Underwriter in respect of the Shares not so delivered
except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each
of the Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any Underwriter
made or given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives; and in all dealings with any Selling Shareholder hereunder,
you and the Company shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of such Selling Shareholder made or
given by any or all of the Attorneys-in-Fact for such Selling Shareholder.
All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you as the representatives in care of
Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Attention:
Registration Department; if to any Selling Shareholder shall be delivered or
sent by mail, telex or facsimile transmission to counsel for such Selling
Shareholder at its address set forth in Schedule II hereto; and if to the
Company shall be delivered or sent by mail, telex or facsimile transmission to
the address of the Company set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire or telex constituting such Questionnaire, which address will be
supplied to the Company or the Selling Shareholders by you upon request. Any
such statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to
the benefit of, the Underwriters, the Company and the Selling Shareholders and,
to the extent provided in Sections 8 and 10 hereof, the officers and directors
of the Company and each person who controls the Company, any Selling
Shareholder or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of
the Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement. As used
herein, the term "business day" shall mean any day when the Commission's office
in Washington, D.C. is open for business.
30
<PAGE> 31
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
If the foregoing is in accordance with your understanding, please
sign and return to us 10 counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters, the
Company and each of the Selling Shareholders. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters (U.S.
Version), the form of which shall be submitted to the Company and the Selling
Shareholders for examination upon request, but without warranty on your part as
to the authority of the signers thereof.
31
<PAGE> 32
Any person executing and delivering this Agreement as
Attorney-in-Fact for a Selling Shareholder represents by so doing that he has
been duly appointed as Attorney-in-Fact by such Selling Shareholder pursuant to
a validly existing and binding Power of Attorney which authorizes such
Attorney-in-Fact to take such action.
Very truly yours,
Quintiles Transnational Corp.
By:/s/ Rachel R. Selisker
--------------------------
Name: Rachel R. Selisker
Title: Chief Financial Officer,
Executive Vice President Finance
and Treasurer
Barrie S. Haigh
David F. White
Irene White
Paul Knott, Ph.D.
Kathryn M. Knott
Stella D. Haigh
Barrie Haigh Children's Settlement No.1
Barrie Haigh Children's Settlement No.2
David Martin Fleet
Victoria S. Fleet
Jonathan Kenneth Bolter
Sally-Ann Bolter
Nicholas John McCooke
Susan McCooke
Christopher S. Morley
Elaine Morley
By: /s/ Rachel R. Selisker
--------------------------
Name: Rachel R. Selisker
As Attorney-in-Fact acting on behalf of
the above named Selling Shareholders.
32
<PAGE> 33
HSBC Private Equity Investments Limited
Lloyds Development Capital Limited
MSS Nominees Limited (Account 758170)
MSS Nominees Limited (Account 758979)
MSS Nominees Limited (Account 757549)
MSS Nominees Limited (Account 778392)
General Accident Executor and Trustee
Company Limited (Account H715)
General Accident Executor and Trustee
Company Limited (Account H716)
By: /s/ Christopher M. Masterson
--------------------------------
Name: Christopher M. Masterson
As Attorney-in-Fact acting on behalf of the above
named Selling Shareholders.
Ludo J. Reynders, Ph.D
Santo J. Costa
Gregory D. Porter
By: /s/ Rachel R. Selisker
------------------------------
Name: Rachel R. Selisker
As Attorney-in-Fact acting on behalf of the above
named Selling Shareholders.
Accepted as of the date hereof at:
Goldman, Sachs & Co.
Morgan Stanley & Co. Incorporated
Smith Barney Inc.
William Blair & Company, L.L.C.
By: /s/ Goldman, Sachs & Co.
-----------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
33
<PAGE> 34
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- ------------------- -----------------------
<S> <C> <C>
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . . 720,750 108,113
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . . 720,750 108,113
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . 720,750 108,112
William Blair & Company, L.L.C. . . . . . . . . . . . . . . . . . 720,750 108,112
Genesis Merchant Group Securities LLC . . . . . . . . . . . . . . 95,000 14,250
Gerard Klauer Mattison & Co., Inc. . . . . . . . . . . . . . . . 95,000 14,250
Hambrecht & Quist . . . . . . . . . . . . . . . . . . . . . . . . 168,000 25,200
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . 168,000 25,200
Scott & Stringfellow, Inc. . . . . . . . . . . . . . . . . . . . 95,000 14,250
Vector Securities International, Inc. . . . . . . . . . . . . . . 168,000 25,200
Wessels, Arnold & Henderson, L.L.C. . . . . . . . . . . . . . . . 168,000 25,200
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . 3,840,000 576,000
--------- ---------
</TABLE>
<PAGE> 35
SCHEDULE II
<TABLE>
<CAPTION>
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF SOLD IF
FIRM SHARES MAXIMUM OPTION
TO BE SOLD EXERCISED
------------------ --------------------
<S> <C> <C>
The Company . . . . . . . . . . . . . . . . . . . . . . . 1,132,000 0
The Selling Shareholders:
Barrie S. Haigh(a)* . . . . . . . . . . . . . . . . . . 181,586 99,777
David F. White(a) . . . . . . . . . . . . . . . . . . . 400 0
Irene White(a) . . . . . . . . . . . . . . . . . . . . 800 0
Paul Knott, Ph.D.(a) . . . . . . . . . . . . . . . . . 20,072 0
Kathryn M. Knott(a) . . . . . . . . . . . . . . . . . 19,600 0
Stella D. Haigh(a)* . . . . . . . . . . . . . . . . . . 40,000 40,000
Barrie Haigh Children's Settlement No. 1(a)* . . . . . 80,000 40,000
Barrie Haigh Children's Settlement No. 2(a)* . . . . . 60,000 20,000
HSBC Private Equity Investments Limited(b)* . . . . . . 1,310,006 244,480
Lloyds Development Capital Limited(b) . . . . . . . . . 240,000 0
MSS Nominees Limited (Account 758170)(b)* . . . . . . . 94,701 17,673
MSS Nominees Limited (Account 758979)(b)* . . . . . . . 42,303 7,894
MSS Nominees Limited (Account 757549)(b)* . . . . . . . 378,854 70,704
MSS Nominees Limited (Account 778392)(b)* . . . . . . . 32,190 6,009
General Accident Executor and Trustee
Company Limited (Account H715)(b)* . . . . . . . . . 126,285 23,568
General Accident Executor and Trustee
Company Limited (Account H716)(b)* . . . . . . . . . 31,583 5,895
David Martin Fleet(a) . . . . . . . . . . . . . . . . . 7,560 0
Victoria S. Fleet(a) . . . . . . . . . . . . . . . . . 8,000 0
Jonathan Kenneth Bolter(a) . . . . . . . . . . . . . . 2,526 0
Sally-Ann Bolter(a) . . . . . . . . . . . . . . . . . 2,526 0
Nicholas John McCooke(a) . . . . . . . . . . . . . . . 3,628 0
Susan McCooke(a) . . . . . . . . . . . . . . . . . . . 3,192 0
Christopher S. Morley(a) . . . . . . . . . . . . . . . 2,854 0
Elaine Morley(a) . . . . . . . . . . . . . . . . . . . 2,854 0
Ludo J. Reynders, Ph.D.(c) . . . . . . . . . . . . . . 12,000 0
Santo J. Costa(c) . . . . . . . . . . . . . . . . . . . 4,000 0
Gregory D. Porter(c) . . . . . . . . . . . . . . . . . 480 0
--------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,840,000 576,000
--------- -------
</TABLE>
(a) This Selling Shareholder is represented by Skadden, Arps,
Slate, Meagher & Flom LLP and has appointed Barrie S. Haigh, Paul Knott, Ph.D.,
Dennis B.
<PAGE> 36
Gillings, Ph.D. and Rachel R. Selisker, and each of them, as the
Attorneys-in-Fact for such Selling Shareholder.
(b) This Selling Shareholder is represented by Skadden, Arps,
Slate, Meagher & Flom LLP and has appointed Christopher M. Masterson and Ian M.
Forrest, and each of them, as the Attorneys-in-Fact for such Selling
Shareholder.
(c) This Selling Shareholder is represented by Smith, Anderson,
Blount, Dorsett, Mitchell & Jernigan, L.L.P. and has appointed Barrie S. Haigh,
Paul Knott, Ph.D., Dennis B. Gillings, Ph.D. and Rachel R. Selisker, and each
of them, as the Attorneys-in-Fact for such Selling Shareholder.
II-2
<PAGE> 37
SCHEDULE III
Dennis B. Gillings, Ph.D.
Santo J. Costa
Rachel R. Selisker
Lawrence S. Lewin
Eric J. Souetre, M.D., Ph.D.
Robert C. Bishop
Chester W. Douglass, Ph.D.
John G. Fryer, Ph.D.
Arthur M. Pappas
Richard H. Thompson
<PAGE> 38
ANNEX I(A)
Pursuant to Section 7(e)(A) of the Underwriting Agreement, Ernst & Young
LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to the
Company and its subsidiaries, BRI International, Inc. and Lewin-VHI within the
meaning of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial forecasts
and/or pro forma financial information) of the Company and its subsidiaries,
BRI International, Inc. and Lewin-VHI examined by them and included or
incorporated by reference in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, as applicable, and the related
published rules and regulations thereunder; and, if applicable, they have made
a review in accordance with standards established by the American Institute of
Certified Public Accountants of the consolidated interim financial statements,
selected financial data, pro forma financial information, financial forecasts
and/or condensed financial statements derived from audited financial statements
of the Company or Lewin-VHI, as the case may be, for the periods specified in
such letter, as indicated in their reports thereon, copies of which have been
furnished to the representatives of the Underwriters (the "Representatives")
and are attached hereto;
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus and/or
included in the Company's Quarterly Reports on Form 10-Q incorporated by
reference into the Prospectus; and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published rules
and regulations, nothing came to their attention that caused them to believe
that the unaudited condensed consolidated financial statements do not comply as
to form in all material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for
the five most recent fiscal years included in the Prospectus and included or
incorporated by reference in Item 6 of the Company's Annual Report on Form 10-K
for the year ended
<PAGE> 39
December 31, 1995 agrees with the corresponding amounts (after restatement
where applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in the
Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and on the basis of
limited procedures specified in such letter nothing came to their attention as
a result of the foregoing procedures that caused them to believe that this
information does not conform in all material respects with the disclosure
requirements of Items 301, 302, 402 and 503(d), respectively, of Regulation
S-K;
(vi) On the basis of limited procedures, not constituting an examination in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below,
a reading of the latest available interim financial statements of the Company
and its subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements included
or incorporated by reference in the Prospectus, inquiries of officials of the
Company and its subsidiaries responsible for financial and accounting matters
and such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included or incorporated by reference in
the Company's Quarterly Reports on Form 10-Q incorporated by reference in
the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act and the related
published rules and regulations, or (ii) any material modifications should
be made to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus or included in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus, for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding items
in the unaudited consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited consolidated financial statements
included or incorporated by reference in the Prospectus for the year ended
December 31, 1996;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited condensed
financial statements referred to in Clause (A) and any unaudited income
statement data and balance sheet items included in the Prospectus and
referred to in Clause (B) were
A1a-2
<PAGE> 40
not determined on a basis substantially consistent with the basis for the
audited financial statements included or incorporated by reference in the
Prospectus for the year ended December 31, 1996;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations thereunder
or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital
stock (other than issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were outstanding
on the date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated long-term
debt of the Company and its subsidiaries, or any decreases in consolidated
net current assets or shareholders' equity or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the latest
balance sheet included or incorporated by reference in the Prospectus,
except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described in
such letter; and
(F) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the specified
date referred to in Clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the Representatives, or
any increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with any
other period of corresponding length specified by the Representatives,
except in each case for increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such letter;
and
(vii) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures referred
to in paragraphs (iii) and (vi) above, they have carried out certain specified
procedures, not constituting an examination in accordance with generally
accepted auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representatives which are derived from
the general accounting records of the Company and its subsidiaries, which
appear in the Prospectus (excluding documents incorporated by reference) or in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Representatives or in documents incorporated by reference in
the Prospectus specified by the Representatives, and have compared
A1a-3
<PAGE> 41
certain of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found them to
be in agreement.
A1a-4
<PAGE> 42
ANNEX I(B)
Pursuant to Section 7(e)(B) of the Underwriting Agreement, Coopers &
Lybrand shall furnish letters to the Underwriters to the effect that, in their
opinion, the financial statements and any supplementary financial information
and schedules of BRI International, Inc. examined by them and included or
incorporated by reference in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, as applicable, and the related
published rules and regulations thereunder.
<PAGE> 43
ANNEX I(C)
Pursuant to Section 7(e)(C) of the Underwriting Agreement, KPMG shall
furnish letters to the Underwriters to the effect that:
(i) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial forecasts
and/or pro forma financial information) of the Innovex Companies, which
comprised a combination of Innovex PLC and Innovex Holdings Limited (the
"Combined Innovex Companies"), examined by them and included or incorporated by
reference in the Registration Statement or the Prospectus comply as to form in
all material respects with the applicable accounting requirements of the Act or
the Exchange Act, as applicable, and the related published rules and
regulations thereunder;
(ii) They have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets,
consolidated statements of cash flows and consolidated total recognized gains
and losses of Innovex PLC and its subsidiaries included in the Company's
Current Reports on Form 8-K incorporated by reference into the Prospectus; and
on the basis of specified procedures including inquiries of officials of the
Innovex PLC who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial statements
referred to in paragraph (iii)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations, nothing came to
their attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(iii) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, inspection of the minute books of Innovex PLC
and its subsidiaries since the date of the latest audited financial statements
of the Combined Innovex Companies included or incorporated by reference in the
Prospectus, inquiries of officials of the Innovex PLC and its subsidiaries
responsible for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of income,
consolidated balance sheets, consolidated statements of cash flows and
consolidated total recognized gains and losses of Innovex PLC and its
subsidiaries
<PAGE> 44
included in the Company's Current Reports on Form 8-K incorporated by
reference into the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Exchange Act
and the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets, consolidated statements
of cash flows and consolidated total recognized gains and losses of Innovex
PLC and its subsidiaries included in the Company's Current Reports on Form
8-K incorporated by reference into the Prospectus, for them to be in
conformity with generally accepted accounting principles;
(B) the unaudited financial statements which were not included in
the Prospectus but from which were derived the unaudited condensed
financial statements referred to in Clause (A) were not determined on a
basis substantially consistent with the basis for the audited financial
statements of the Combined Innovex Companies included or incorporated by
reference in the Prospectus for the year ended March 31, 1996; and
(C) any unaudited pro forma consolidated condensed financial
statements of the Combined Innovex Companies or Innovex PLC and its
subsidiaries included or incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations thereunder
or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements.
A1c-2
<PAGE> 1
EXHIBIT 10.54
QUINTILES TRANSNATIONAL CORP.
COMMON STOCK, $.01 PAR VALUE
UNDERWRITING AGREEMENT
(INTERNATIONAL VERSION)
March 6, 1997
Goldman Sachs International
Morgan Stanley & Co. International Limited
Smith Barney Inc.
William Blair & Company, L.L.C.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman Sachs International,
Peterborough Court,
133 Fleet Street,
London EC4A 2BB, England.
Ladies and Gentlemen:
Quintiles Transnational Corp., a North Carolina corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 283,000 shares of Common Stock, $.01 par value ("Stock") of the Company and
the shareholders of the Company named in Schedule II hereto (the "Selling
Shareholders") propose, subject to the terms and conditions stated herein, to
sell to the Underwriters an aggregate of 677,000 shares and, in the case of
certain Selling Shareholders identified with an asterisk in Schedule II hereto
and at the election of the Underwriters, up to 144,000 additional shares of
Stock. The aggregate of 960,000 shares to be sold by the Company and the
Selling Shareholders is herein called the "Firm Shares" and the aggregate of
144,000 additional shares to be sold by the Selling Shareholders identified with
an asterisk in Schedule II hereto is herein called the "Optional Shares". The
Firm Shares and the Optional Shares which the Underwriters elect to purchase
pursuant to Section 2 hereof are herein collectively called, the "Shares".
It is understood and agreed to by all parties that the Company and the
Selling Shareholders are concurrently entering into an agreement, a copy of
which is attached hereto (the "U.S. Underwriting Agreement"), providing for the
sale by the Company and the Selling Shareholders of up to a total of 4,416,000
shares of Stock (the "U.S. Shares"), including the overallotment option
thereunder, through arrangements with certain underwriters in the United States
(the "U.S. Underwriters"), for whom Goldman, Sachs & Co., Morgan Stanley & Co.
Incorporated, Smith Barney Inc. and William Blair & Company, L.L.C. are acting
as representatives. Anything herein or therein to the contrary notwithstanding,
the respective closings under this Agreement and the U.S. Underwriting Agreement
are hereby expressly
<PAGE> 2
made conditional on one another. The Underwriters hereunder and the U.S.
Underwriters are simultaneously entering into an Agreement between U.S. and
International Underwriting Syndicates (the "Agreement between Syndicates")
which provides, among other things, for the transfer of shares of Stock between
the two syndicates and for consultation by the Lead Manager hereunder with
Goldman, Sachs & Co. prior to exercising the rights of the Underwriters under
Section 7 hereof. Two forms of prospectus are to be used in connection with
the offering and sale of shares of Stock contemplated by the foregoing, one
relating to the Shares hereunder and the other relating to the U.S. Shares.
The latter form of prospectus will be identical to the former except for
certain substitute pages as included in the registration statement and
amendments thereto as mentioned below. Except as used in Sections 2, 3, 4, 9
and 11 herein, and except as context may otherwise require, references
hereinafter to the Shares shall include all of the shares of Stock which may be
sold pursuant to either this Agreement or the U.S. Underwriting Agreement, and
references herein to any prospectus whether in preliminary or final form, and
whether as amended or supplemented, shall include both the U.S. and the
international versions thereof.
In addition, this Agreement incorporates by reference certain provisions
from the U.S. Underwriting Agreement (including the related definitions of
terms, which are also used elsewhere herein) and, for purposes of applying the
same, references (whether in these precise words or their equivalent) in the
incorporated provisions to the "Underwriters" shall be to the Underwriters
hereunder, to the "Shares" shall be to the Shares hereunder as just defined, to
"this Agreement" (meaning therein the U.S. Underwriting Agreement) shall be to
this Agreement (except where this Agreement is already referred to or as the
context may otherwise require) and to the representatives of the Underwriters or
to Goldman, Sachs & Co. shall be to the addressees of this Agreement and to
Goldman Sachs International ("GSI"), and, in general, all such provisions and
defined terms shall be applied mutatis mutandis as if the incorporated
provisions were set forth in full herein having regard to their context in this
Agreement as opposed to the U.S. Underwriting Agreement.
1. The Company and each of the several Selling Shareholders hereby make
to the Underwriters the same respective representations, warranties and
agreements as are set forth in Section 1 of the U.S. Underwriting Agreement,
which Section is incorporated herein by this reference.
2. Subject to the terms and conditions herein set forth, (a) each Selling
Shareholder agrees that the purchase price per share at which the Underwriters
will purchase Shares from such Selling Shareholder (as set forth in clause (b)
below) shall be the same as the purchase price per share at which the Company
sells shares to be purchased by the Underwriters from the Company hereunder,
(b) the Company and each of the Selling Shareholders agree, severally and not
jointly, to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company and each of the
Selling Shareholders, at a purchase price per share of $60.355, the number of
Firm Shares (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying the aggregate number of Firm Shares to be sold by the
Company and each of the Selling Shareholders as set forth opposite their
respective names in Schedule II hereto by a fraction, the numerator of which is
the aggregate number of Firm Shares to be purchased by such Underwriter as set
forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of
2
<PAGE> 3
which is the aggregate number of Firm Shares to be purchased by all the
Underwriters from the Company and all the Selling Shareholders hereunder and
(c) in the event and to the extent that the Underwriters shall exercise the
election to purchase Optional Shares as provided below, each of the Selling
Shareholders identified with an asterisk in Schedule II hereto, agrees,
severally and not jointly, to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from each of the
Selling Shareholders, at the purchase price per share set forth in clause (b)
of this Section 2, that portion of the number of Optional Shares as to which
such election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying such number of Optional
Shares by a fraction the numerator of which is the maximum number of Optional
Shares which such Underwriter is entitled to purchase as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the maximum number of Optional Shares that all of the Underwriters are entitled
to purchase hereunder.
The Selling Shareholders identified with an asterisk in Schedule II hereto,
hereby grant, severally and not jointly, to the Underwriters the right to
purchase at their election up to 144,000 Optional Shares, at the purchase price
per share set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares shall be made in proportion to the maximum number of Optional
Shares to be sold by each Selling Shareholder as set forth in Schedule II
hereto. Any such election to purchase Optional Shares may be exercised only by
written notice from you to the Attorneys-in-Fact, given within a period of 30
calendar days after the date of this Agreement and setting forth the aggregate
number of Optional Shares to be purchased and the date on which such Optional
Shares are to be delivered, as determined by you but in no event earlier than
the First Time of Delivery (as defined in Section 4 hereof) or, unless you and
the Attorneys-in-Fact otherwise agree in writing, earlier than two or later
than ten business days after the date of such notice.
3. Upon the authorization by GSI of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus and in the forms of Agreement among
Underwriters (International Version) and Selling Agreements, which have been
previously submitted to the Company and the Selling Shareholders by you. Each
Underwriter hereby makes to and with the Company and the Selling Shareholders
the representations and agreements of such Underwriter as a member of the
selling group contained in Sections 3(d) and 3(e) of the form of Selling
Agreements.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least two business days'
prior notice to the Company and the Selling Shareholders shall be delivered by
or on behalf of the Company and the Selling Shareholders to Goldman, Sachs &
Co., for the account of such Underwriter, against payment by or on behalf of
such Underwriter of the purchase price therefor in United States dollars by
wire transfer of immediately available funds to an account or accounts
designated by the Custodian and the Company. The Company and the Selling
Shareholders will cause the certificates representing the Shares to be made
available for checking and packaging at least one full business day prior to
the Time of Delivery (as defined below) with respect thereto at the office of
Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004 (the
"Designated
3
<PAGE> 4
Office"). The time and date of such delivery and payment shall be, with
respect to the Firm Shares, 9:30 a.m., New York City time, on March 12, 1997 on
such other time and date as Goldman, Sachs & Co. and the Company and the
Selling Shareholders may agree upon in writing, and, with respect to the
Optional Shares, 9:30 a.m., New York time, on the date specified by Goldman,
Sachs & Co. in the written notice given by Goldman, Sachs & Co. of the
Underwriters' election to purchase such Optional Shares, or such other time and
date as Goldman, Sachs & Co. and the Company and the Selling Shareholders may
agree upon in writing. Such time and date for delivery of the Firm Shares is
herein called the "First Time of Delivery", such time and date for delivery of
the Firm Optional Shares, if not the First Time of Delivery, is herein called
the "Second Time of Delivery", and each such time and date for delivery is
herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 of the U.S. Underwriting
Agreement, including the cross-receipt for the Shares and any additional
documents requested by the Underwriters pursuant to Section 7(k) of the U.S.
Underwriting Agreement will be delivered at the offices of Sullivan & Cromwell,
125 Broad Street, New York, New York 10004 (the "Closing Location"), and the
Shares will be delivered at the Designated Office, all at each Time of
Delivery. A meeting will be held at the Closing Location at 2:00 p.m., New
York City time, on the New York Business Day next preceding each Time of
Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in New York are generally authorized or obligated by
law or executive order to close.
5. The Company hereby makes with the Underwriters the same agreements as
are set forth in Section 5 of the U.S. Underwriting Agreement, which Section is
incorporated herein by this reference.
6. The Company, each of the Selling Shareholders, and the Underwriters
hereby agree with respect to certain expenses on the same terms as are set
forth in Section 6 of the U.S. Underwriting Agreement, which Section is
incorporated herein by this reference.
7. Subject to the provisions of the Agreement between Syndicates, the
obligations of the Underwriters hereunder shall be subject, in their
discretion, at each Time of Delivery to the condition that all representations
and warranties and other statements of the Company, and the Selling
Shareholders herein are, at and as of each Time of Delivery, true and correct,
the condition that the Company and the Selling Shareholders shall have
performed all of their respective obligations hereunder theretofore to be
performed, and additional conditions identical to those set forth in Section 7
of the U.S. Underwriting Agreement, which Section is incorporated herein by
this reference.
8. (a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
4
<PAGE> 5
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will periodically reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through GSI or by any Selling
Shareholder expressly for use therein; and provided, further, that the Company
shall not be liable to any Underwriter under the indemnity agreement in this
subsection (a) with respect to any Preliminary Prospectus to the extent that
any such loss, claim, damage or liability of such Underwriter results from the
fact that such Underwriter sold Shares to a person as to whom it shall be
established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (excluding documents
incorporated by reference) or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference) in any case where such delivery
is required by the Act if the Company has previously furnished copies thereof
in sufficient quantity to such Underwriter and the loss, claim, damage or
liability of such Underwriter results from an untrue statement or omission of a
material fact contained in the Preliminary Prospectus which was identified in
writing prior to the date hereof to such Underwriter and corrected in the
Prospectus (excluding documents incorporated by reference) or in the Prospectus
as then amended or supplemented (excluding documents incorporated by
reference).
(b) Each of the Selling Shareholders will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Selling Shareholder expressly for use therein,
or (ii) the failure of such Selling Shareholder at or prior to the written
confirmation of the sale of the Shares to be sold by such Selling Shareholder
to send or deliver a copy of an amended Preliminary Prospectus or Prospectus
(or the Prospectus as amended or supplemented) to the person asserting any such
losses, claims, damages or liabilities against any Underwriter, which person
purchased the Shares which are the subject thereof, and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
made in such Preliminary Prospectus was corrected in the amended Preliminary
Prospectus or the Prospectus (or the Prospectus as amended and
5
<PAGE> 6
supplemented); and each Selling Shareholder will periodically reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the amount of such
indemnity shall be limited to the total net proceeds received by each such
Selling Shareholder from the offering of Shares purchased under this Agreement
(before deducting expenses).
(c) Each Underwriter will indemnify and hold harmless the Company and each
Selling Shareholder against any losses, claims, damages or liabilities to which
the Company or such Selling Shareholder may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through GSI expressly for use
therein; and will reimburse the Company and each Selling Shareholder for any
legal or other expenses reasonably incurred by the Company or such Selling
Shareholder in connection with investigating or defending any such action or
claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (which shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement
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<PAGE> 7
as to or an admission of fault, culpability or a failure to act, by or on
behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Selling Shareholders on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (d) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Shareholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Shareholders on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Company and the Selling
Shareholders bear to the total underwriting discounts and commissions received
by the Underwriters with respect to the Shares purchased under this Agreement,
in each case as set forth in the table on the cover page of the Prospectus.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Shareholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company, each of the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (e) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (e). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (e), (i) no Selling
Shareholder shall be required to contribute any amount by which the total price
at which the Shares sold by such Selling Shareholder and distributed to the
public were offered to the public (before deducting expenses) exceeds the
amount of any damages that such Selling Shareholder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission, and (ii) no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to
7
<PAGE> 8
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (e) to contribute are several in proportion to
their respective underwriting obligations and not joint. The remedies provided
for in this Section 8 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
(f) The obligations of the Company and the Selling Shareholders under this
Section 8 shall be in addition to any liability which the Company and the
respective Selling Shareholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company (including any person
who, with his or her consent, is named in the Registration Statement as about
to become a director of the Company) and to each person, if any, who controls
the Company or any Selling Shareholder within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company and the Selling Shareholders shall be entitled to
a further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Shares on such terms. In
the event that, within the respective prescribed periods, you notify the
Company and the Selling Shareholders that you have so arranged for the purchase
of such Shares, or the Company and the Selling Shareholders notify you that
they have so arranged for the purchase of such Shares, you or the Company and
the Selling Shareholders shall have the right to postpone such Time of Delivery
for a period of not more than seven days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus,
or in any other documents or arrangements, and the Company agrees to file
promptly any amendments to the Registration Statement or the Prospectus which
in your opinion may thereby be made necessary. The term "Underwriter" as used
in this Agreement shall include any person substituted under this Section with
like effect as if such person had originally been a party to this Agreement
with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Shareholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of all the Shares to be purchased at such Time of
Delivery, then the Company and the Selling Shareholders shall have the right to
require each non-defaulting Underwriter to purchase the number of Shares which
such Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such
8
<PAGE> 9
defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Shareholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of all the Shares to be purchased at such Time of Delivery, or
if the Company and the Selling Shareholders shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this
Agreement (or, with respect to the Second Time of Delivery, the obligations of
the Underwriters to purchase and of the Selling Shareholders to sell the
Optional Shares) shall thereupon terminate, without liability on the part of
any non-defaulting Underwriter or the Company or the Selling Shareholders,
except for the expenses to be borne by the Company and the Selling Shareholders
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Shareholders and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company or any of the Selling Shareholders, or any
officer or director or controlling person of the Company or any controlling
person of any Selling Shareholders, and shall survive delivery of and payment
for the Shares.
11. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by GSI on your behalf; and in all dealings with any
Selling Shareholder hereunder, you and the Company shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of such Selling
Shareholder made or given by any or all of the Attorneys-in-Fact for such
Selling Shareholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to the Underwriters in care of GSI, Peterborough
Court, 133 Fleet Street, London EC4A 2BB, England, Attention: Equity Capital
Markets, Telex No. 94012165, facsimile transmission No. (071) 774-1550; if to
any Selling Shareholder shall be delivered or sent by mail, telex or facsimile
transmission to counsel for such Selling Shareholder at its address set forth
in Schedule II hereto; and if to the Company shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: Secretary; provided, however, that
any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered
or sent by mail, telex or facsimile transmission to such Underwriter at its
address set forth in its Underwriters' Questionnaire, or telex constituting
such Questionnaire, which address will be supplied to the Company or the
Selling
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<PAGE> 10
Shareholders by GSI upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
12. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Selling Shareholders and, to the
extent provided in Sections 8 and 10 hereof, the officers and directors of the
Company and each person who controls the Company, any Selling Shareholder or
any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
13. Time shall be of the essence of this Agreement.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and one for each of the Lead Managers or Lead
Managing Underwriters plus one for each counsel and the Custodian, if any,
counterparts hereof, and upon the acceptance hereof by you, on behalf of each
of the Underwriters, this letter and such acceptance hereof shall constitute a
binding agreement among each of the Underwriters, the Company and each of the
Selling Shareholders. It is understood that your acceptance of this letter on
behalf of each of the Underwriters is pursuant to the authority set forth in a
form of Agreement among Underwriters (International Version), the form of which
shall be furnished to the Company and the Selling Shareholders for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
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<PAGE> 11
Any person executing and delivering this Agreement as Attorney-in-Fact for
a Selling Shareholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing and
binding Power of Attorney which authorizes such Attorney-in-Fact to take such
action.
Very truly yours,
Quintiles Transnational Corp.
By: /s/ Rachel R. Selisker
-------------------------------------------
Name: Rachel R. Selisker
Title: Chief Financial Officer,
Executive Vice President Finance and
Treasurer
Barrie S. Haigh
David F. White
Irene White
Paul Knott, Ph.D.
Kathryn M. Knott
Stella D. Haigh
Barrie Haigh Children's Settlement No.1
Barrie Haigh Children's Settlement No.2
David Martin Fleet
Victoria S. Fleet
Jonathan Kenneth Bolter
Sally-Ann Bolter
Nicholas John McCooke
Susan McCooke
Christopher S. Morley
Elaine Morley
By: /s/ Rachel R. Selisker
-------------------------------------------
Name: Rachel R. Selisker
As Attorney-in-Fact acting on behalf of
the above named Selling Shareholders.
11
<PAGE> 12
HSBC Private Equity Investments Limited
Lloyds Development Capital Limited
MSS Nominees Limited (Account 758170)
MSS Nominees Limited (Account 758979)
MSS Nominees Limited (Account 757549)
MSS Nominees Limited (Account 778392)
General Accident Executor and Trustee
Company Limited (Account H715)
General Accident Executor and Trustee
Company Limited (Account H716)
By: /s/ Christopher M. Masterson
------------------------------------
Name: Christopher M. Masterson
As Attorney-in-Fact acting on behalf of
the above named Selling Shareholders.
Ludo J. Reynders, Ph.D.
Santo J. Costa
Gregory D. Porter
By: /s/ Rachel R. Selisker
-----------------------------------
Name: Rachel R. Selisker
As Attorney-in-Fact acting on behalf of
the above named Selling Shareholders.
Accepted as of the date hereof:
Goldman Sachs International
Morgan Stanley & Co. International Limited
Smith Barney Inc.
William Blair & Company, L.L.C.
By: Goldman Sachs International
By:/s/ Elizabeth J. Ford
---------------------------
(Attorney-in-fact)
On behalf of each of the Underwriters
12
<PAGE> 13
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- ------------------ -------------------------
<S> <C> <C>
Goldman Sachs International . . . . . . . . . . . . . . . . . . . 288,000 43,200
Morgan Stanley & Co. International Limited . . . . . . . . . . . 288,000 43,200
Smith Barney, Inc. . . . . . . . . . . . . . . . . . . . . . . . 144,000 21,600
William Blair & Company, L.L.C. . . . . . . . . . . . . . . . . 144,000 21,600
ABN AMRO Rothschild . . . . . . . . . . . . . . . . . . . . . . . 48,000 7,200
Bayerische Landesbank Girozentrale . . . . . . . . . . . . . . . 48,000 7,200
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 960,000 144,000
------- -------
</TABLE>
<PAGE> 14
SCHEDULE II
<TABLE>
<CAPTION>
NUMBER OF
OPTIONAL
SHARES TO BE
TOTAL NUMBER OF SOLD IF
FIRM SHARES MAXIMUM OPTION
TO BE SOLD EXERCISED
------------------ -----------------
<S> <C> <C>
The Company . . . . . . . . . . . . . . . . . . . . . . . 283,000 0
The Selling Shareholders:
Barrie S. Haigh(a)* . . . . . . . . . . . . . . . . . . 45,395 24,945
David F. White(a) . . . . . . . . . . . . . . . . . . . 100 0
Irene White (a) . . . . . . . . . . . . . . . . . . . . 200 0
Paul Knott, Ph.D.(a) . . . . . . . . . . . . . . . . . 5,017 0
Kathryn M. Knott(a) . . . . . . . . . . . . . . . . . . 4,900 0
Stella D. Haigh(a)* . . . . . . . . . . . . . . . . . . 10,000 10,000
Barrie Haigh Children's Settlement No. 1(a)* . . . . . 20,000 10,000
Barrie Haigh Children's Settlement No. 2(a)* . . . . . 15,000 5,000
HSBC Private Equity Investments Limited(b)* . . . . . . 327,502 61,120
Lloyds Development Capital Limited(b) . . . . . . . . . 60,000 0
MSS Nominees Limited (Account 758170)(b)* . . . . . . . 23,675 4,418
MSS Nominees Limited (Account 758979)(b)* . . . . . . . 10,576 1,973
MSS Nominees Limited (Account 757549)(b)* . . . . . . . 94,714 17,676
MSS Nominees Limited (Account 778392)(b)* . . . . . . . 8,047 1,502
General Accident Executor and Trustee
Company Limited (Account H715)(b)* . . . . . . . . . 31,571 5,892
General Accident Executor and Trustee
Company Limited (Account H716)(b)* . . . . . . . . . 7,896 1,474
David Martin Fleet(a) . . . . . . . . . . . . . . . . . 1,890 0
Victoria S. Fleet(a) . . . . . . . . . . . . . . . . . 2,000 0
Jonathan Kenneth Bolter(a) . . . . . . . . . . . . . . 632 0
Sally-Ann Bolter(a) . . . . . . . . . . . . . . . . . . 632 0
Nicholas John McCooke(a) . . . . . . . . . . . . . . . 907 0
Susan McCooke(a) . . . . . . . . . . . . . . . . . . . 798 0
Christopher S. Morley(a) . . . . . . . . . . . . . . . 714 0
Elaine Morley(a) . . . . . . . . . . . . . . . . . . . 714 0
Ludo J. Reynders, Ph.D.(c) . . . . . . . . . . . . . . 3,000 0
Santo J. Costa(c) . . . . . . . . . . . . . . . . . . . 1,000 0
Gregory D. Porter(c) . . . . . . . . . . . . . . . . . 120 0
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 960,000 144,000
------- -------
</TABLE>
(a) This Selling Shareholder is represented by Skadden, Arps,
Slate, Meagher & Flom LLP and has appointed Barrie S. Haigh, Paul Knott, Ph.D.,
Dennis B. Gillings, Ph.D.
<PAGE> 15
and Rachel R. Selisker, and each of them, as the Attorneys-in-Fact for such
Selling Shareholder.
(b) This Selling Shareholder is represented by Skadden, Arps,
Slate, Meagher & Flom LLP and has appointed Christopher M. Masterson and Ian M.
Forrest, and each of them, as the Attorneys-in-Fact for such Selling
Shareholder.
(c) This Selling Shareholder is represented by Smith, Anderson,
Blount, Dorsett, Mitchell & Jernigan, L.L.P. and has appointed Barrie S. Haigh,
Paul Knott, Ph.D., Dennis B. Gillings, Ph.D. and Rachel R. Selisker, and each
of them, as the Attorneys-in-Fact for such Selling Shareholder.
II-2
<PAGE> 1
EXHIBIT 13
20
SELECTED CONSOLIDATED FINANCIAL DATA
INCOME FROM OPERATIONS*
DOLLARS IN THOUSANDS
(GRAPH)
NET INCOME PER SHARE*
DOLLARS
(GRAPH)
*Excludes non-recurring costs
The following selected consolidated financial data should be read in conjunction
with "Management's Discussion & Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and accompanying Notes
thereto appearing elsewhere herein.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1996(1) 1995(1) 1994(1) 1993(1) 1992(1)
- -------------------------------------------------------------------------------------------------------------------
(In Thousands, Except Per Share Data)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Professional fee income $620,117 $397,998 $247,595 $159,508 $111,745
Less reimbursed costs(2) 82,509 74,306 51,695 17,585 15,409
----------------------------------------------------------------
Net revenue 537,608 323,692 195,900 141,923 96,336
Costs and expenses:
Direct costs 272,590 165,313 97,293 70,258 45,957
General and administrative
expense 187,589 113,247 73,432 53,335 37,833
Depreciation and amortization 24,780 16,903 10,352 7,823 4,607
Non-recurring costs:
Restructuring costs 13,102 2,373 - - -
Special pension contribution 2,329 2,329 - - -
----------------------------------------------------------------
Total costs and expenses 500,390 300,165 181,077 131,416 88,397
----------------------------------------------------------------
Income from operations 37,218 23,527 14,823 10,507 7,939
Non-recurring transaction costs (17,118) - - - -
Other expense (2,975) (1,445) (1,191) (2,890) (2,635)
-----------------------------------------------------------------
Total other expense (20,093) (1,445) (1,191) (2,890) (2,635)
-----------------------------------------------------------------
Income before income taxes 17,125 22,082 13,632 7,617 5,304
Income taxes 11,914 8,181 4,585 3,272 2,467
----------------------------------------------------------------
Income before cumulative effect
of accounting change 5,211 13,901 9,047 4,345 2,837
Cumulative effect of
accounting change - - - (158) -
----------------------------------------------------------------
</TABLE>
<PAGE> 2
21
WORKING CAPITAL
DOLLARS IN THOUSANDS
(GRAPH)
CASH AND INVESTMENTS
DOLLARS IN THOUSANDS
(GRAPH)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 (CONTINUED) 1996(1) 1995(1) 1994(1) 1993(1) 1992(1)
- -------------------------------------------------------------------------------------------------------------------
(In Thousands, Except Per Share Data)
<S> <C> <C> <C> <C> <C>
Net income $ 5,211 $ 13,901 $ 9,047 $ 4,187 $ 2,837
Non-equity dividend (846) - - - -
---------------------------------------------------------------
Net income available for
common shareholders $ 4,365 $ 13,901 $ 9,047 $ 4,187 $ 2,837
===============================================================
Net income per share $ 0.13 $ 0.45 $ 0.32 $ 0.17 $ 0.14
===============================================================
Weighted average shares
outstanding(3) 33,714 31,233 28,044 23,972 20,888
===============================================================
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents $ 62,032 $ 80,061 $ 45,625 $ 14,539 $ 4,333
Working capital 96,008 70,020 46,384 16,896 2,773
Total assets 518,005 334,642 193,568 125,366 70,993
Long-term debt and obligations,
including current portion 182,293 51,831 21,874 21,373 12,931
Shareholders' equity $144,348 $161,805 $ 87,092 $ 40,097 $23,585
Employees 7,394 4,372 2,592 1,908 1,376
---------------------------------------------------------------
</TABLE>
(1) Prior to the Company's November 29, 1996 share exchange with Innovex
Limited ("Innovex"), Innovex had a fiscal year end of March 31 and the
Company had (and continues to have) a fiscal year end of December 31. As a
result, the pooled data presented above for 1992 through 1995 include
Innovex's March 31 fiscal year data in combination with the Company's
December 31 fiscal year data. In connection with the share exchange, Innovex
changed its fiscal year end to December 31. Accordingly, the pooled data
presented above for 1996 include both Innovex's and the Company's data on a
December 31 year end basis. Because of the difference between
Innovex's fiscal year end in 1995 compared with 1996, Innovex's quarter
ended March 31, 1996 data are included in the Company's pooled data for both
1995 and 1996.
(2) Reimbursed costs consist primarily of payments to third party physician
investigators, travel and other costs that are billed to and reimbursed by
the Company's clients. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
(3) Restated to reflect a two-for-one stock split of the Company's Common Stock
effected as a 100% stock dividend on November 27, 1995.
<PAGE> 3
22
MANAGEMENT'S DISCUSSION AND ANALYSIS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
OVERVIEW
Quintiles Transnational Corp. ("Quintiles" or the "Company") is a leading
provider of full-service contract research, sales and marketing services to the
global pharmaceutical, biotechnology and medical device industries.
Additionally, the Company supports the developing information needs of the
broader healthcare industry by providing health economics and healthcare policy
consulting and disease and health information management services.
Since its inception in 1982, the Company has followed a focused strategy of
expanding the scope of its services and geographic presence to support the
worldwide needs of its client base. During 1996, through internal expansion and
strategic acquisitions, the Company considerably broadened its array of
services, created new opportunities for growth and enhanced its management team
and scientific and technical operating staff. Specifically:
- - On February 15, 1996, the Company acquired PMC Contract Research AB
("PMC"), a CRO located in Uppsala, Sweden. The Company acquired PMC for
approximately 273,000 shares of the Company's Common Stock. Additionally,
approximately $1.3 million in cash was paid to a dissenting shareholder.
The acquisition of PMC was accounted for as a pooling of interests, and all
consolidated financial data for periods subsequent to January 1, 1996 have
been restated to include the results of the pooled company. The financial
data of the pooled companies prior to January 1, 1996 were not materially
different from that previously reported by the Company, and thus have not
been restated.
- - On May 13, 1996, the Company acquired the operating assets of Lewin-VHI,
Inc., a healthcare consulting firm, headquartered in Fairfax, VA, and
formed a new subsidiary of the Company, Lewin. In connection with this
transaction, the Company paid approximately $30.0 million in cash for the
operating assets of Lewin and issued options to Lewin's management team and
key staff to purchase 203,717 shares of the Company's Common Stock.
- - In August 1996, the Company began construction of a new 171,000 square foot
facility in Bathgate, Scotland, for formulation, manufacturing, packaging
and distribution of clinical trial drugs. The Bathgate facility, currently
estimated to be completed in late 1997, is anticipated to house 300
employees and will also include a data management center.
- - On November 22, 1996, the Company acquired BRI International, Inc. ("BRI"),
a leading international contract research firm, headquartered in Arlington,
VA, specializing in medical device development and regulatory compliance
consulting. The Company exchanged 1,614,862 shares of its Common Stock for
all of BRI's outstanding shares of capital stock and exchanged options
exercisable for 336,112 shares of the Company's Common Stock. The Company
recognized in the fourth quarter of 1996 approximately $2.5 million in
non-recurring transaction costs and approximately $2.3 million in
non-recurring restructuring costs related to the transaction. The
acquisition was accounted for as a pooling of interests, and accordingly,
the Company has restated all historical financial data to include the
historical financial data of BRI.
- - On November 29, 1996, the Company effected a share exchange with Innovex
Limited ("Innovex"), an international contract services organization
headquartered in Marlow, U.K., specializing in the sales and marketing of
drugs for the pharmaceutical industry. In the Innovex transaction, which
was
<PAGE> 4
23
accounted for as a pooling of interests, the Company acquired 100% of the
outstanding shares of Innovex in exchange for 9,214,239 shares of the
Company's Common Stock and exchanged 786,226 options to purchase shares of
the Company's Common Stock for Innovex stock options. Subsequently, the
Company retired approximately $56.8 million of Innovex obligations. In the
fourth quarter of 1996, related to the Innovex transaction, the Company
recognized approximately $14.5 million in non-recurring transaction costs
and approximately $8.5 million in non-recurring restructuring costs. In
addition, Innovex had previously recognized approximately $2.4 million and
$2.3 million, respectively, in non-recurring restructuring and special
pension costs in the quarter ended March 31, 1996. The Company has restated
all historical financial data to include Innovex historical financial data
in accordance with pooling of interests accounting.
During the year ended December 31, 1996, the Company added more than
20 offices through its acquisitions and internal growth, expanded its presence
from 16 to 20 countries, and grew from approximately 2,025 employees to
approximately 7,375 employees worldwide. To facilitate the integration of its
acquisitions, capitalize on the synergies each acquisition provides and manage
its internal growth, the Company recently reorganized into three operating
divisions which work closely together to provide the Company's services on an
integrated basis. The Contract Research Division includes clinical trial
studies, clinical data management and biostatistical analysis, laboratory
services, formulation and packaging of clinical trial drugs, pre-clinical
services, regulatory affairs and medical device consulting services. The Innovex
Division includes perimarketing clinical trial studies in Phases IIIb and IV, as
well as the Company's pharmaceutical sales and marketing services. The
Lewin-Benefit Division encompasses the Company's health economics and healthcare
policy consulting and disease and health information management services.
CONTRACT REVENUE
Most of the Company's contracts are fixed price, with some variable
components, and range in duration from a few months to several years. Generally,
a portion of the contract fee is paid at the time the project is initiated with
performance-based installments payable over the contract duration. Most
contracts are terminable upon 15-90 days' notice by the client, and typically
provide for termination or winding down fees. Also, some client contracts call
for the client to reimburse the Company at cost for certain items such as
investigator payments and travel. These reimbursed costs are deducted from
professional fee income in calculating net revenue. The Company recognizes net
revenue from its contracts on a percentage-of-completion or per diem basis as
work is performed. Consistent with prior years' practice, the Company considers
net revenue its primary measure of revenue growth.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED
DECEMBER 31, 1995
Prior to the Company's November 29, 1996 share exchange with Innovex,
Innovex had a fiscal year end of March 31, and the Company had (and continues to
have) a fiscal year end of December 31. As a result, the pooled data presented
for 1992 through 1995 include Innovex's March 31 fiscal year data in combination
with the Company's December 31 fiscal year data. In connection with the share
exchange, Innovex changed its fiscal year end to December 31. Accordingly, the
pooled data presented for 1996 include both Innovex's and the Company's data on
a
<PAGE> 5
24
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
December 31 year end basis. Because of the difference between Innovex's
fiscal year end in 1995 compared with 1996, Innovex's quarter ended March 31,
1996 data are included in the Company's pooled data for both 1995 and 1996.
Net revenue for the year ended December 31, 1996 was $537.6 million, an
increase of $213.9 million or 66.1% over fiscal 1995 net revenue of $323.7
million. In general, growth occurred across each of the Company's three
geographic regions and within each contract service sector. Factors contributing
to both the regional and service growth include the provision of increased
services rendered under existing contracts, the initiation of services under
contracts awarded subsequent to January 1, 1996 and the Company's acquisitions
(excluding BRI and Innovex) completed during 1996 and 1995 which contributed
approximately $44.8 million in 1996 versus $11.7 million in 1995. Without these
acquisitions, the Company's 1996 net revenue increased by $180.8 million or
57.9% over comparable 1995 net revenue. As a result of the Company's broad range
of contract service offerings, one client accounted for 11.9% of the Company's
1996 net revenue.
Direct costs, which include compensation and related fringe benefits for
billable employees and any other expenses directly related to contracts which
are not included as reimbursed costs, were $272.6 million or 50.7% of 1996 net
revenue versus $165.3 million or 51.1% of 1995 net revenue. The decrease in
direct costs as a percentage of net revenue is primarily attributable to
efficiency realized through the use of information technology in the Company's
provision of services related to global, long-term contracts, offset by
increased costs attributable to the increase in net revenue generated from
contract sales and marketing services, which incur a higher level of direct
costs (but lower general and administrative expenses) relative to net revenue
than contract research services.
General and administrative expense, which includes compensation and fringe
benefits for administrative employees, non-billable travel, professional
services, advertising, computer and facility expenses, was $187.6 million or
34.9% of 1996 net revenue versus $113.2 million or 35.0% of 1995 net revenue.
The $74.3 million growth in general and administrative expense is primarily due
to an increase in personnel, facilities and locations, business development and
marketing activities, and outside services brought on by the Company's growth.
Depreciation and amortization was $24.8 million or 4.6% of 1996 net revenue
versus $16.9 million or 5.2% of 1995 net revenue.
Income from operations was $37.2 million or 6.9% of 1996 net revenue versus
$23.5 million or 7.3% of 1995 net revenue. Net of non-recurring costs, income
from operations was $52.6 million or 9.8% of 1996 net revenue versus $28.2
million or 8.7% of 1995 net revenue. During the quarter ended March 31, 1996,
Innovex recognized two non-recurring charges: a $2.4 million expense for an
Innovex internal reorganization and a related $2.3 million special pension
contribution. Accordingly, the Company's pooled, consolidated financial results
include such charges, totalling $4.7 million, in both the fiscal years ended
December 31, 1996 and 1995. In the fourth quarter of 1996, the Company
recognized approximately $10.7 million in non-recurring restructuring costs
related to the BRI and Innovex transactions.
Other expense increased to $20.1 million in 1996 from $1.4 million in 1995.
Other expense includes approximately $17.1 million of non-recurring acquisition
transaction costs for the year ended December 31, 1996, most of which were not
deductible for tax purposes. Net of such non-recurring transaction
<PAGE> 6
25
costs, other expense was $3.0 million for 1996 and $1.4 million in 1995. This
increase of approximately $1.5 million was primarily due to an increase of
interest and miscellaneous expense of $5.9 million which was offset by an
increase in interest income of approximately $4.4 million.
The effective tax rate for 1996 was 69.6% versus a 37.0% rate in 1995. The
increase in the 1996 effective tax rate was primarily attributable to the
non-tax deductible, non-recurring acquisition transaction costs incurred and a
portion of the non-recurring costs relating to the Innovex internal
reorganization prior to its pooling of interests with the Company. The lack of
tax relief for the Innovex internal reorganization cost is reflected in both the
effective tax rates for 1996 and 1995. The effective tax rate for 1996 was 33.6%
versus a 34.7% rate in 1995 excluding the non-recurring costs. The Company's
effective tax rate may vary as profits in locations with different tax rates
change. See "-Taxes."
YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED
DECEMBER 31, 1994
Net revenue for 1995 was $323.7 million versus $195.9 million in 1994, an
increase of $127.8 million or 65.2%. In general, the growth occurred across each
of the Company's three geographic regions. The growth can be attributed
primarily to the increase in services rendered under existing contracts and the
initiation of services under new contract work awarded in 1995. Excluding fiscal
1995 acquisitions, which contributed net revenue of approximately $11.7 million
in that year, the Company's net revenue was $312.0 million, which represented
growth of $116.2 million or 59.3% over 1994.
Direct costs, which include compensation and related fringe benefits for
billable employees and any other expenses directly related to contracts which
are not included as reimbursed costs, were $165.3 million or 51.1% of 1995 net
revenue versus $97.3 million or 49.7% of 1994 net revenue. The increase in
direct costs as a percentage of net revenue is due primarily to costs
attributable to the increasing net revenue from sales and marketing services,
which incur a higher level of direct costs (but lower general and administrative
expenses) relative to revenue than contract research services, the establishment
of start-up operations and direct costs associated with the operational
integration of the Company's acquitions in 1995.
General and administrative expense, which includes compensation and fringe
benefits for administrative employees, non-billable travel, professional
services, advertising, computer and facility expenses, was $113.2 million or
35.0% of 1995 net revenue versus $73.4 million or 37.5% of 1994 net revenue. The
$39.8 million growth in general and administrative expense is primarily due to
an increase in personnel, facilities and locations, business development and
marketing activities, information technology investments and the use of outside
services brought on by the Company's growth and operation as a publicly-held
company.
Depreciation and amortization was $16.9 million or 5.2% of 1995 net revenue
versus $10.4 million or 5.3% of 1994 net revenue.
Income from operations was $23.5 million or 7.3% of net revenue in 1995
versus $14.8 million or 7.6% of net revenue in 1994. The decrease as a
percentage of net revenue was due to the recognition of two non-recurring
charges: Innovex recorded a $2.4 million expense related to an internal
reorganization and a $2.3 million expense related to a special pension
contribution. Excluding these costs, income from operations would have been
approximately $28.2 million or 8.7% of 1995 net revenue.
<PAGE> 7
26
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
Other expense increased to $1.4 million in 1995 from $1.2 million in 1994.
Net of a 1994 one-time gain of approximately $460,000, other expense decreased
approximately $210,000. This decrease is primarily attributable to an increase
in interest income and other income of approximately $1.7 million, offset by an
increase in interest expense of $970,000 and $475,000 in non-recurring
acquisition transaction costs expensed by the Company in 1995, most of which
were non-tax deductible.
The effective tax rate for 1995 was 37.0% versus a 33.6% rate in 1994. The
increase in the 1995 effective tax rate was primarily attributable to the
non-tax deductible nature of some of the non-recurring costs relating to the
internal reorganization, some of the foreign operating losses and some of the
acquisition transaction costs incurred. The Company's effective tax rate may
vary as profits in locations with different tax rates change. See "-T axes."
LIQUIDITY AND CAPITAL RESOURCES
Cash flows generated from operations were $28.3 million in 1996 versus
$34.5 million and $14.8 million in 1995 and 1994, respectively. Investing
activities in 1996 were $142.6 million, versus $38.1 million and $14.3 million
in 1995 and 1994, respectively. The change in the amount of cash used in
investing activities is primarily due to the investment of the Company's net
proceeds from the May 1996 private placement of its 4.25% Convertible
Subordinated Notes due May 31, 2000 and its October 1995 equity offering. Such
proceeds were used as follows: $62.7 million was invested in investment-grade,
interest-bearing securities with maturities of greater than 90 days; $11.4
million was used for the payment of non-recurring transaction costs in
connection with business combinations described above; $33.4 million was used
for acquisitions; and $56.8 million was used to retire Innovex obligations
assumed in the share exchange with Innovex. Approximately $45.2 million of the
Innovex obligations was related to debt incurred for the recapitalization of
Innovex in April 1996. Capital asset purchases required $39.1 million in 1996
versus $25.7 million and $16.1 million in 1995 and 1994, respectively. Capital
asset expenditures in 1996 included approximately $5.0 million related to the
Company's purchase of land and commencement of construction of a facility in
Bathgate, Scotland. The remaining capital expenditures were predominantly
incurred in connection with the expansion of existing operations, the
enhancement of information technology capabilities and the opening of new
offices.
Total working capital was $96.0 million at December 31, 1996 compared to
$70.0 million at December 31, 1995. Total accounts receivable and unbilled
services increased 69.9% to $178.6 million at December 31, 1996 from $105.1
million at December 31, 1995, as a result of the growth in net revenue. The
number of days revenue outstanding in accounts receivable and unbilled services,
net of unearned income was 48 days at December 31, 1996 and December 31, 1995.
In August 1996, the Company began construction of a 171,000 square foot
facility in Bathgate, Scotland, expected to be completed in late 1997.
Management's current best estimate of the total capital required for the
Bathgate facility is 17.5 million (approximately $28.4 million), which includes
the acquisition of land, construction of the facility and purchase of machinery
and equipment. As of December 31, 1996, the Company had spent approximately 3.0
million (approximately $5.0 million) relating to the acquisition of land and
construction of the Bathgate facility.
<PAGE> 8
27
In November 1996, in conjunction with the Company's share exchange with
Innovex, the Company assumed the following commitments:
- - During 1993, Innovex acquired Clinical Research Foundation, an
international contract research organization, for total consideration of
approximately Deutsche marks ("DM") 30.0 million, of which a final payment
of approximately DM6.6 million (approximately $4.0 million) is due from the
Company in April 1997.
- - In August 1996, Innovex acquired Eminent, a Spanish contract sales and
marketing services firm. An initial payment of 100 Spanish Pesetas million
was made in August 1996. A remaining amount of up to 700 Spanish Pesetas
million (approximately $5.0 million) would be due over the next three years
if certain performance measures are met.
During 1995, the Company acquired a drug development facility in Edinburgh,
Scotland. Related to this acquisition, the Company entered into a purchase
commitment valued at 13.0 million pound (approximately $21.8 million) with
payment due in December 1999. The Company has hedged this commitment by
purchasing forward contracts. The Company's forward contracts mature on
December 29, 1999, and as of December 31, 1996, the Company had committed to
purchasing approximately 600,000 pound (approximately $852,000) under such
contracts.
The Company has renewed its previously expired $15.0 million unsecured line of
credit with a U.S. bank. Also, the Company has a $4.0 million secured line of
credit with a second U.S. bank. Additionally, the Company has available to it a
6.0 million pound unsecured line of credit with a U.K. bank and a 5.0 million
pound secured overdraft facility with a second U.K. bank. At December 31, 1996,
the Company had $19.0 million and 5.7 million pound available under these credit
agreements.
All foreign currency denominated amounts due, subsequent to December 31,
1996, have been translated using the Wednesday, January 29, 1997 foreign
exchange rate as published in the January 30, 1997 edition of the Wall Street
Journal.
On March 12, 1997, the Company completed its public offering. The Company
intends to use the net proceeds from the sale of the shares of common stock
offered by the Company for the replenishment of working capital following the
Company's repayment in November 1996 of approximately $56.8 million of
obligations assumed in the share exchange with Innovex. The Company intends to
use this working capital and the remaining proceeds for geographic expansion,
addition of new services, potential acquisitions, genera l corporate purposes
and capital expenditures, including approximately $23.4 million to complete
construction of the Company's 171,000 square foot clinical trial drug
formulation, manufacturing, packaging and distribution facility in Bathgate,
Scotland. See "Recent Events."
Based on its current operating plan, the Company believes that its
available cash and cash equivalents (including the net proceeds from the common
stock offering), together with future cash flows from operations and borrowings
under its line of credit agreements will be sufficient to meet its foreseeable
cash needs in connection with its operations. As part of its business strategy,
the Company reviews many acquisition candidates in the ordinary course of
business, and in addition to acquisitions already made, the Company continually
is evaluating new acquisition and expansion possibilities. The Company may from
time to time seek to obtain debt or equity financing to facilitate possible
acquisitions or expansion.
<PAGE> 9
28
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
FOREIGN CURRENCY
Approximately 56.5%, 59.2% and 57.0% of the Company's net revenue for the
years ended December 31, 1996, 1995, and 1994, respectively, were derived from
the Company's operations outside the United States. The Company's consolidated
financial statements are denominated in U.S. dollars, and accordingly, changes
in the exchange rate between foreign currencies and the U.S. dollar will affect
the translation of such subsidiaries' financial results into U.S. dollars for
purposes of reporting the Company's consolidated financial results.
The Company may be subject to foreign currency transaction risks when the
Company's service contracts are denominated in a currency other than the
currency in which the Company incurs expenses related to such contracts. The
Company limits its foreign currency transaction risks through exchange rate
collars stated in its contracts with clients or the Company hedges the
transaction risk with foreign exchange contracts or options. The Company
recognizes changes in value in income only when contracts are settled or options
are exercised. There were no open foreign exchange contracts or options relating
to service contracts at December 31, 1996.
TAXES
Since the Company conducts operations on a global basis, the Company's
effective tax rate has depended and will continue to depend on the amount of
profits in locations with varying tax rates. The Company's results of operations
will be impacted by changes in the tax rates of the various jurisdictions and by
changes in any applicable tax treaties. In particular, as the portion of the
Company's non-U.S. business increases, the Company's effective tax rate may vary
significantly from period to period. The Company's effective tax rate may also
depend upon the extent to which the Company is allowed (and is able to use under
applicable limitations) United States foreign tax credits in respect of taxes
paid on its foreign operations.
INFLATION
The Company believes the effects of inflation generally do not have a
material adverse impact on its operations or financial condition.
RECENT EVENTS
On March 12, 1997, the Company closed a 5,520,000 common stock offering to
the public at a share price of $62.875 per share. Of the 5,520,000 shares sold,
1,415,000 were sold by the Company. Net proceeds to the Company which exclude
underwriting discounts and offering expenses amounted to approximately $85
million.
<PAGE> 10
29
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1996 1995 1994
- -------------------------------------------------------------------------------------------
(In thousands, except per share data)
<S> <C> <C> <C>
Professional fee income $620,117 $397,998 $247,595
Less reimbursed costs 82,509 74,306 51,695
----------------------------------
Net revenue 537,608 323,692 195,900
Costs and expenses
Direct costs 272,590 165,313 97,293
General and administrative expense 187,589 113,247 73,432
Depreciation and amortization 24,780 16,903 10,352
Non-recurring costs:
Restructuring costs 13,102 2,373 -
Special pension contribution 2,329 2,329 -
----------------------------------
500,390 300,165 181,077
----------------------------------
Income from operations 37,218 23,527 14,823
Other income (expense):
Interest income 6,947 2,548 1,250
Interest expense (9,526) (3,765) (2,795)
Non-recurring transaction costs (17,118) - -
Other (396) (228) 354
-----------------------------------
(20,093) (1,445) (1,191)
-----------------------------------
Income before income taxes 17,125 22,082 13,632
Income taxes 11,914 8,181 4,585
-----------------------------------
Net income 5,211 13,901 9,047
Non-equity dividend (846) - -
----------------------------------
Net income available for common shareholders $ 4,365 $ 13,901 $ 9,047
==================================
Net income per share $ 0.13 $ 0.45 $ 0.32
==================================
Weighted average shares outstanding 33,714 31,233 28,044
==================================
</TABLE>
See accompanying notes.
<PAGE> 11
30
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DECEMBER 31 1996 1995
- -------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 62,032 $ 80,061
Accounts receivable and unbilled services 178,579 105,124
Investments 37,623 -
Prepaid expenses and other current assets 12,656 11,182
----------------------
Total current assets 290,890 196,367
Property and equipment:
Land, buildings and leasehold improvements 50,060 41,411
Equipment and software 68,321 47,239
Furniture and fixtures 30,314 14,437
Motor vehicles 29,771 19,557
----------------------
178,466 122,644
Less accumulated depreciation 54,286 35,288
----------------------
124,180 87,356
Intangibles and other assets:
Intangibles 66,804 47,965
Investments 25,083 -
Deposits and other assets 11,048 2,954
----------------------
102,935 50,919
----------------------
======================
Total assets $518,005 $334,642
======================
</TABLE>
<PAGE> 12
31
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DECEMBER 31 1996 1995
- --------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Lines of credit $ 9,013 $ 8,667
Accounts payable 33,396 18,254
Accrued expenses 51,970 33,290
Unearned income 77,825 42,986
Income taxes payable 3,047 2,385
Current portion of obligations held
under capital leases 11,704 7,300
Current portion of long-term debt 1,897 8,021
Other current liabilities 6,030 5,444
-------------------
Total current liabilities 194,882 126,347
Long-term liabilities:
Obligations held under capital leases,
less current portion 5,407 3,287
Long-term debt and obligation, less current portion 163,285 33,223
Deferred income taxes 4,747 3,491
Other liabilities 5,336 6,489
-------------------
178,775 46,490
-------------------
Total liabilities 373,657 172,837
Commitments and contingencies
Shareholders' equity:
Preferred Stock, none issued and outstanding - -
Common Stock and additional paid-in capital,
33,149,962 and 32,216,251 shares issued and
outstanding in 1996 and 1995, respectively 139,221 132,223
Retained earnings 5,702 29,431
Other equity (575) 151
-------------------
Total shareholders' equity 144,348 161,805
-------------------
Total liabilities and shareholders' equity $518,005 $334,642
===================
</TABLE>
See accompanying notes.
<PAGE> 13
32
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 5,211 $ 13,901 $ 9,047
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 25,397 16,903 10,352
Non-recurring transaction costs 17,118 - -
Net gain on sale of property and equipment (139) (140) (847)
Provision for deferred income tax expense (benefit) 731 1,926 (596)
Change in operating assets and liabilities:
Accounts receivable and unbilled services (66,205) (36,231) (13,512)
Prepaid expenses and other current assets (11,382) (834) (3,477)
Accounts payable and accrued expenses 21,431 17,331 12,348
Unearned income 42,777 21,044 1,797
Income taxes payable and other current liabilities 2,805 606 8
Change in fiscal year of pooled entity (9,378) - -
Other (24) (25) (335)
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 28,342 34,481 14,785
INVESTING ACTIVITIES:
Proceeds from disposition of property and equipment 1,429 4,216 3,158
Purchase of investments held to maturity (95,939) - -
Maturities of investments held to maturity 43,345 - -
Purchase of investments available for sale (19,003) - -
Proceeds from sale of investments available for sale 8,936 - -
Acquisition of property and equipment (39,143) (25,716) (16,073)
Acquisition of businesses, net of cash acquired (33,352) (16,571) (1,357)
Payment of non-recurring transaction costs (11,440) - -
Change in fiscal year of pooled entity 2,606 - -
- ----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (142,561) (38,071) (14,272)
</TABLE>
<PAGE> 14
33
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
FINANCING ACTIVITIES:
Increase (decrease) in lines of credit, net $ 2,536 $ 3,917 $ (609)
Proceeds from issuance of debt 139,650 568 1,355
Repayment of debt (56,792) (1,371) (4,151)
Principal payments on capital lease obligations (9,382) (6,506) (2,890)
Issuance of common stock 3,575 56,746 35,378
Issuance of debt for capitalization of pooled entity 45,197 - -
Recapitalization of pooled entity (29,230) - -
Non-equity dividend (846) - -
Dividend paid by pooled entity - (9,162) -
Change in fiscal year of pooled entity 1,399 - -
Other (249) (6,047) 918
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 95,858 38,145 30,001
Effect of foreign currency exchange rate changes on cash 332 (119) 572
- ------------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents (18,029) 34,436 31,086
Cash and cash equivalents at beginning of year 80,061 45,625 14,539
- ------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 62,032 $80,061 $45,625
==================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 9,446 $ 2,644 $ 2,621
Income taxes paid $ 11,523 $ 8,978 $ 4,417
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capitalized leases $ 12,867 $11,544 $ 4,597
Equity impact of mergers and acquisitions $(23,253) $11,803 $ 687
</TABLE>
See accompanying notes
<PAGE> 15
34
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Employee
Stock
Ownership
Additional Plan Loan Currency
Common Paid-In Retained Guarantee Translation
Stock Capital Earnings & Other Adjustments Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(In thousands)
Balance, December 31, 1993, as previously reported $ 72 $ 26,073 $ 11,380 $(1,567) $ (838) $ 35,120
Adjustments for poolings of interests 108 727 4,240 (1,311) 1,212 4,976
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 180 26,800 15,620 (2,878) 374 40,096
Issuance of common stock 21 36,128 - - - 36,149
Principal payments on ESOP loans - - - 920 - 920
Other equity transactions - (171) (6) - 1,057 880
Net income - - 9,047 - - 9,047
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 201 62,757 24,661 (1,958) 1,431 87,092
Issuance of common stock 10 56,893 - - - 56,903
Principal payments on ESOP loans - - - 401 - 401
Common stock issued for acquisitions 4 11,799 31 - - 11,834
Reduction of liability under stock option plan, - 693 - - - 693
net of tax
Dividends paid by pooled entity - - (9,162) - - (9,162)
Two-for-one stock split 107 (107) - - - -
Other equity transactions - (134) - - 277 143
Net income - - 13,901 - - 13,901
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 322 131,901 29,431 (1,557) 1,708 161,805
Common stock issued for acquisitions 3 516 608 - - 1,127
Issuance of common stock 7 3,739 - - - 3,746
Principal payments on ESOP loans - - - 420 - 420
Effect due to change in fiscal year of pooled company - - 326 - - 326
Recapitalization of pooled entity - (202) (29,028) - - (29,230)
Tax benefit from the exercise of
non-qualified stock options - 2,920 - - - 2,920
Non-equity dividend - - (846) - - (846)
Other equity transactions - 15 - 45 (1,191) (1,131)
Net income - - 5,211 - - 5,211
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 $332 $138,889 $ 5,702 $(1,092) $ 517 $144,348
====================================================================================================================================
</TABLE>
See accompanying notes
<PAGE> 16
35
NOTES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
The Company is a leading provider of comprehensive contract research and
sales and marketing services to the worldwide pharmaceutical, biotechnology and
medical device industries. Additionally, the Company supports the developing
information needs of the broader healthcare industry by providing health
economics and healthcare policy consulting and disease and health information
management services.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts
and operations of the Company and its subsidiaries. All material intercompany
accounts and transactions have been eliminated in consolidation.
Prior to the Company's November 29, 1996 share exchange with Innovex,
Innovex had a fiscal year end of March 31 and the Company had (and continues to
have) a fiscal year end of December 31. As a result, the pooled data presented
for 1992 through 1995 include Innovex's March 31 fiscal year data in combination
with the Company's December 31 fiscal year data. In connection with the share
exchange, Innovex changed its fiscal year end to December 31. Accordingly, the
pooled data presented for 1996 include both Innovex's and the Company's data on
a December 31 year end basis. Because of the difference between Innovex's fiscal
year end in 1995 compared with 1996, Innovex's quarter ended March 31, 1996 data
are included in the Company's pooled data for both 1995 and 1996.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
FOREIGN CURRENCIES
Assets and liabilities recorded in foreign currencies on the books of
foreign subsidiaries are translated at the exchange rate on the balance sheet
date. Revenues, costs and expenses are recorded at average rates of exchange
during the year. Translation adjustments resulting from this process are charged
or credited to equity. Gains and losses on foreign currency transactions are
included in other income (expense).
REVENUE RECOGNITION
The Company recognizes net revenue from its contracts on a
percentage-of-completion or per diem basis as work is performed. The Company's
exposure to credit loss is equal to the outstanding accounts receivable and
unbilled services balance. Although the Company does not require collateral for
unpaid balances, credit losses have consistently been within management's
expectations. Certain contracts contain provisions for price redetermination for
cost overruns. Such redetermined amounts are included in service revenue when
realization is assured and the amounts can be reasonably determined. In the
period in which it is determined that a loss will result from the performance of
a contract, the entire amount of the estimated ultimate loss is charged against
income. One client accounted for 11.9% of consolidated net revenue in 1996.
<PAGE> 17
36
NOTES (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
UNBILLED SERVICES AND UNEARNED INCOME
In general, prerequisites for billings are established by contractual
provisions including predetermined payment schedules, the achievement of
contract milestones or submission of appropriate billing detail. Unbilled
services arise when services have been rendered but clients have not been
billed. Similarly, unearned income represents prebillings for services that have
not yet been rendered.
REIMBURSED COSTS
Investigator payments are recognized as expense based upon patient
enrollment over the life of the contract. Investigator payments are made based
on predetermined contractual arrangements, which may differ from the recognition
of the expense. Payments to investigators in excess of the expense recognized
are classified as prepaid expenses, and recognized expenses in excess of amounts
paid are classified as accrued expenses.
CASH EQUIVALENTS AND INVESTMENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. The Company has
excluded from cash and cash equivalents in the accompanying balance sheets cash
held for clients for investigator payments in the amount of $4.6 million and
$3.0 million at December 31, 1996 and 1995, respectively, that pursuant to
agreements with these clients, remains the property of the clients.
The Company's investments in debt and equity securities are classified
as held-to-maturity and available for sale. Investments classified as
held-to-maturity are recorded at amortized cost. Investments classified as
available for sale are measured at market value and net unrealized gains and
losses are recorded as a separate component of stockholders' equity until
realized. Any gains or losses on sales of investments are computed by specific
identification.
PROPERTY AND EQUIPMENT
Property and equipment are carried at historical cost and are
depreciated using the straight-line method over the shorter of the asset's
estimated useful life or the lease term ranging from three to 50 years.
INTANGIBLE ASSETS
Intangibles consist principally of the excess cost over the fair value
of net assets acquired ("goodwill") and are being amortized on a straight-line
basis over periods not exceeding 40 years. Accumulated amortization totaled
$10.5 million and $5.2 million at December 31, 1996 and 1995, respectively.
The carrying values of intangible assets are reviewed if the facts and
circumstances suggest impairment. If this review indicates that carrying values
will not be recoverable, as determined based on undiscounted cash flows over the
remaining amortization period, the Company would reduce carrying values by the
estimated shortfall of cash flows.
LONG-LIVED ASSETS
The Company adopted Financial Accounting Standard Board ("FASB")
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of" ("Statement 121") in the first quarter of
1996. The adoption of Statement 121 had no material effect on the financial
statements in 1996.
NET INCOME PER SHARE
Net income per share has been computed using the weighted average number
of common shares (including the common shares held by the Employee Stock
Ownership Plan) and common share equivalents outstanding during each period.
Common equivalent shares are excluded from the computation in periods in which
they have an anti-dilutive effect. All share and per share data in the
<PAGE> 18
37
financial statements and notes thereto have been retroactively adjusted to give
effect to the two-for-one stock split in November 1995 and to the pooling of
interests combinations with BRI and Innovex (see Note 3). For all periods
presented, the difference between primary and fully diluted net income per
common share is not significant.
INCOME TAXES
Income tax expense includes U.S. and international income taxes. Certain
items of income and expense are not reported in tax returns and financial
statements in the same year. The tax effects of these differences are reported
as deferred income taxes. Tax credits are accounted for as a reduction of tax
expense in the year in which the credits reduce taxes payable.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs relating principally to new software
applications and computer technology are charged to expense as incurred.
These expenses totaled $2.3 million, $1.9 million and $1.7 million in 1996, 1995
and 1994, respectively.
FOREIGN CURRENCY HEDGING
The Company uses foreign exchange contracts and options to hedge the
risk of changes in foreign currency exchange rates associated with contracts in
which the expenses for providing services are incurred in one currency and paid
for by the client in another currency. The Company recognizes changes in value
in income only when contracts are settled or options are exercised. There were
no open foreign exchange contracts or options relating to service contracts at
December 31, 1996.
2. SHAREHOLDERS' EQUITY
The Company is authorized to issue 25 million shares of preferred stock,
$.01 per share par value. At December 31, 1996, 200 million common shares of
$.01 par value were authorized.
On November 26, 1996, the Company's shareholders approved an increase in
the number of authorized shares of the Common Stock from 50 million to 200
million.
On July 25, 1996, the Board of Directors authorized an employee stock
purchase plan for all eligible employees effective October 1, 1996. Under the
plan, shares of the Company's Common Stock may be purchased at three month
intervals at 85% of the lower of the fair market value on the first or the last
day of each three month period. Employees may purchase shares having a value not
exceeding the lesser of 15% of their gross compensation during an offering
period or $25,000. During 1996, employees purchased 4,788 shares at $56.3125 per
share. At December 31, 1996, 95,212 shares were reserved for future issuance.
On April 3, 1996, in anticipation of a planned initial public offering,
Innovex was recapitalized by the purchase of the entire issued share capital of
Innovex Holdings Limited (the former holding company of the Innovex Group) from
its shareholders in exchange for a combination of newly issued Ordinary Shares,
Preferred Ordinary Shares (the "Preferred Shares"), loan notes and cash. In
exchange for its holdings in Innovex Holdings Limited, the principal shareholder
received 67,994,225 newly issued Ordinary Shares of Innovex Limited,
approximately $26.0 million of loan notes and approximately $2.4 million of
cash. In exchange for their respective
<PAGE> 19
38
NOTES (continued)
2. SHAREHOLDERS' EQUITY (CONTINUED)
holdings, certain investors received 14,285,720 newly issued Preferred
Shares, and certain members of management received 4,637,080 Ordinary Shares.
Pursuant to an investment agreement, Innovex also issued 28,533,345
additional preferred shares and created and issued 11 million 7.5% preference
shares ("Preference Shares") and approximately $10.7 million of loan stock.
In connection with the Preference Shares, the Company paid $846,000 of
non-equity dividends in 1996. Prior to the recapitalization, Innovex paid a
dividend of $9.2 million to the principal shareholder and made a special
pension contribution of $2.3 million. In connection with the Innovex merger,
the Company has paid off $56.8 million of Innovex obligations.
On October 4, 1995, the Company completed a stock offering of
3,500,000 shares of its Common Stock. Of the shares sold, 2,019,960 shares were
sold by the Company and 1,480,040 shares by certain selling shareholders. The
offering provided the Company with approximately $55.9 million, net of expenses.
On October 16, 1995, the Board of Directors authorized a two-for-one
split of the Company's Common Stock in the form of a 100% stock dividend. A
total of 10,678,575 shares of Common Stock were issued in connection with the
split. The stated par value of each share was not changed from $.01. A total of
$107,000 was reclassified from additional paid in capital to Common Stock. All
references in the financial statements to number of shares, per share amounts,
stock option data and market prices of Common Stock have been restated to
retroactively reflect the stock split.
3. MERGERS AND ACQUISITIONS
On November 29, 1996, the Company acquired 100% of the outstanding stock
of Innovex, an international contract pharmaceutical organization based in
Marlow, United Kingdom, for 9,214,239 shares of the Company's Common Stock and
the exchange of options to purchase 786,226 shares of the Company's Common
Stock. On November 22, 1996, the Company acquired BRI, a global contract
research organization, through an exchange of 100% of BRI's stock for 1,614,862
shares of the Company's Common Stock. Related to the Innovex and BRI
transactions, the Company recognized approximately $17.1 million in
non-recurring transaction costs and approximately $10.7 million in non-recurring
restructuring costs. Both transactions were accounted for by the pooling of
interests method.
Included in the consolidated statements of income for the year ended
December 31, 1996, are the following results of the previously separate
companies:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------------------
(in thousands) COMPANY INNOVEX BRI CONSOLIDATED
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue $259,476 $218,891 $59,241 $537,608
Net income (loss)
available for
common shareholders $ 2,437 $ 2,392 $ (464) $ 4,365
- --------------------------------------------------------------------------------------------
</TABLE>
The following are reconciliations of net revenue and net income
available for common shareholders previously reported by the Company for the
years ended December 31, 1995 and 1994, with the combined amounts currently
presented in the financial statements for those years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------------
(in thousands) COMPANY INNOVEX BRI CONSOLIDATED
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue $156,437 $129,055 $38,200 $323,692
Net income
available for
common shareholders $ 11,259 $ 1,641 $ 1,001 $ 13,901
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 20
39
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
- -------------------------------------------------------------------------------------------------
(in thousands) COMPANY INNOVEX BRI CONSOLIDATED
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue $ 90,067 $ 81,063 $24,770 $195,900
Net income
available for
common shareholders $ 6,672 $ 2,083 $ 292 $ 9,047
- --------------------------------------------------------------------------------------------------
</TABLE>
On May 13, 1996, the Company acquired the operating assets of Lewin-VHI,
Inc., a healthcare consulting company, for approximately $30 million in cash.
The Company recorded approximately $20 million related to the excess cost over
the fair value of net assets acquired. The acquisition was accounted for as a
purchase and accordingly, the consolidated financial statements include the
results of operations of the business from the date of acquisition.
In addition to the above mergers and acquisitions, the Company has
completed other mergers and acquisitions all of which are immaterial to the
consolidated financial statements.
4. CREDIT ARRANGEMENTS AND OBLIGATIONS
On May 23, 1996, the Company completed a private placement of $143.75
million of 4.25% Convertible Subordinated Notes ("Notes") due May 31, 2000. Net
proceeds to the Company amounted to approximately $139.7 million. The Notes are
convertible into 1,737,160 shares of Common Stock, at the option of the holder,
at a conversion price of $82.75 per share, subject to adjustment under certain
circumstances, at any time after August 21, 1996. The Notes are redeemable, at
the option of the Company, beginning May 31, 1999. Interest is payable on the
notes semi-annually on May 31 and November 30 each year.
The Company has a $15 million unsecured line of credit agreement with a
bank. The line of credit is available through February 1997, and it is
guaranteed by the Company's domestic subsidiaries. Interest is charged either at
the LIBOR rate (5.5625% at December 31, 1996), plus 1.25% to 1.85% or the bank's
prime rate (8.25% at December 31, 1996), at the option of the Company, and the
interest rate is established every 90 days. At December 31, 1996 and 1995, there
was no outstanding balance on the line of credit.
The Company also has a $4 million line of credit with a second U.S.
bank. The line of credit is available through June 30, 1997 and interest is
charged at the bank's prime rate (currently 8.25%). The line of credit had an
outstanding balance of $0 and $2.6 million at December 31, 1996 and 1995,
respectively.
The Company has 6.0 million pound (approximately $10 million) line of credit
which is guaranteed by the Company's United Kingdom subsidiaries. The line of
credit is available through March 31, 1997. Interest is charged at the bank's
base rate (6.0% at December 31, 1996), plus 1.25%, with a minimum of 5.75%. The
line of credit had an outstanding balance of $6.6 million and $160,000 at
December 31, 1996 and 1995, respectively.
The Company has a 5.0 million pound (approximately $8.5 million) line of
credit with a second U.K. bank. The line of credit is available through April
1997 and is charged interest at the bank's published base rate (6.0% at December
31, 1996) plus 1.5%. The line of credit had an outstanding balance of $2.4
million and $5.9 million at December 31, 1996 and 1995, respectively.
In March, 1995, Quintiles Scotland Limited, a wholly-owned subsidiary of
the Company, acquired assets of a drug development facility in Edinburgh,
Scotland from Syntex Pharmaceuticals Limited, a member of the Roche group based
in Basel, Switzerland for a purchase commitment valued at 13.0 million pound
(approximately $21.8 million), with payment due in December 1999. As of December
31, 1996, the Company has committed to purchasing approximately 600,000 pound
(approximately $852,000) under foreign exchange contracts. The Company is
obligated to purchase up to an additional
<PAGE> 21
40
NOTES (continued)
4. CREDIT ARRANGEMENTS AND OBLIGATIONS (CONTINUED)
pound 8.6 million through December 28, 1999 in varying amounts as the daily
dollar-to-pound exchange rate ranges between 1.5499 and 1.6800.
Long-term debt and obligation consist of the following
(in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DECEMBER 31 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
4.25% Convertible Subordinated Notes
due 2000 $143,750 $ --
Employee Stock Ownership Plan
notes payable, due 1997 1,138 1,556
Other notes payable 1,953 9,459
Loan stock at 10%
(15.1% effective interest rate) -- 10,715
Long-term obligation 21,823 19,514
---------------------------
168,664 41,244
Less: current portion 1,897 8,021
unamortized issuance costs 3,482 --
---------------------------
$163,285 $ 33,223
===========================
</TABLE>
Maturities of long-term debt and obligation at December 31, 1996 are
as follows (in thousands):
<TABLE>
<C> <C>
1997 $ 1,897
1998 697
1999 22,161
2000 143,854
2001 55
- --------------------------------------------------------------------------------
$168,664
================================================================================
</TABLE>
5. INVESTMENTS
The following is a summary of held-to-maturity securities and
available-for-sale securities by contractual maturity where applicable (in
thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
HELD-TO-MATURITY SECURITIES: COST GAINS LOSSES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government
Securities --
Maturing in one year
or less $ 5,707 $ -- $ -- $ 5,707
Maturing between one
and three years 9,951 -- -- 9,951
State and Municipal
Securities --
Maturing in one year
or less 22,327 -- -- 22,327
Maturing between one
and three years 5,065 -- -- 5,065
Other 8,564 -- -- 8,564
- --------------------------------------------------------------------------------
$ 51,614 $ -- $ -- $ 51,614
================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
AVAILABLE-FOR-SALE SECURITIES: COST GAINS LOSSES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government
Securities --
Maturing between one
and three years $ 10,008 $ 59 $ -- $ 10,067
Money Funds 1,019 6 -- 1,025
- --------------------------------------------------------------------------------
$ 11,027 $ 65 $ -- $ 11,092
================================================================================
</TABLE>
Differences between cost and market of $65,000 (less deferred taxes of
$20,190) were credited to shareholders' equity.
<PAGE> 22
41
6. ACCOUNTS RECEIVABLE AND UNBILLED SERVICES
Accounts receivable consist of the following (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DECEMBER 31 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Trade:
Billed $117,196 $ 63,163
Unbilled services 52,772 35,610
---------------------------
169,968 98,773
Other 10,657 7,105
Allowance for doubtful accounts (2,046) (754)
---------------------------
$178,579 $105,124
===========================
</TABLE>
The Company provides professional services involved in the development,
testing, approval, sale and marketing of new drugs. Substantially all of the
Company's accounts receivable are due from companies in the pharmaceutical and
biotechnology industries located in the Americas and Europe. The percentage of
accounts receivable and unbilled services by region is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DECEMBER 31 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
REGION
Americas 45% 41%
Europe 53 57
Asia-Pacific 2 2
---------------------------
100% 100%
===========================
</TABLE>
7. ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DECEMBER 31 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Compensation and payroll taxes $ 21,829 $ 15,378
Transaction and restructuring costs 16,047 --
Other 14,094 17,912
---------------------------
$ 51,970 $ 33,290
===========================
</TABLE>
8. LEASES
The Company leases certain office space and equipment under operating
leases. The leases expire at various dates through 2049 with options to cancel
certain leases at five-year increments. Some leases contain renewal options.
Annual rental expenses under these agreements were approximately $20.6 million,
$10.1 million and $7.0 million for the years ended December 31, 1996, 1995 and
1994, respectively. The Company leases certain assets, primarily vehicles, under
capital leases. Capital lease amortization is included with depreciation and
amortization expense and accumulated depreciation in the accompanying financial
statements.
The following is a summary of future minimum payments under capitalized
leases and under operating leases that have initial or remaining noncancelable
lease terms in excess of one year at December 31, 1996 (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CAPITAL OPERATING
LEASES LEASES
- --------------------------------------------------------------------------------
<S> <C> <C>
1997 $ 12,959 $ 23,015
1998 5,675 20,101
1999 50 13,091
2000 4 7,709
2001 4 4,738
Thereafter -- 17,170
- --------------------------------------------------------------------------------
Total minimum lease payments 18,692 $ 85,824
========
Amounts representing interest 1,581
- ---------------------------------------------------------------
Present value of net minimum payments 17,111
Current portion 11,704
- ---------------------------------------------------------------
Long-term capital lease obligations $ 5,407
===============================================================
</TABLE>
<PAGE> 23
42
NOTES (continued)
9. INCOME TAXES
The U.S.-based and U.K.-based subsidiaries file consolidated tax returns
in the U.S. and U.K., respectively. The other foreign subsidiaries are taxed
separately under the laws of their respective countries. Income before income
taxes from foreign operations was approximately $20 million, $8 million and $5
million for the years 1996, 1995 and 1994, respectively.
The components of income tax expense are as follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 4,530 $ 4,133 $ 3,123
State 1,645 829 719
Foreign 4,483 1,440 1,328
--------------------------------------
10,658 6,402 5,170
Deferred expense (benefit):
Federal (682) 598 (854)
Foreign 1,938 1,181 269
--------------------------------------
$ 11,914 $ 8,181 $ 4,585
================================================================================
</TABLE>
The Company's consolidated effective tax rate differed from the
statutory rate as set forth below (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal taxes at statutory rate $ 5,992 $ 7,507 $ 4,669
State and local income taxes
net of federal benefit 980 635 496
Non-deductible
transaction costs 4,761 -- --
Foreign earnings taxed
at different rates (135) 13 (118)
Foreign losses for which no
benefit has been recognized -- 646 404
Utilization of net operating
loss carryforwards -- (1,520) (1,244)
Other 316 900 378
- --------------------------------------------------------------------------------
$ 11,914 $ 8,181 $ 4,585
================================================================================
</TABLE>
Undistributed earnings of the Company's foreign subsidiaries amounted to
approximately $19 million at December 31, 1996. Those earnings are considered to
be indefinitely reinvested, and accordingly, no U.S. federal and state income
taxes have been provided thereon. Upon distribution of those earnings in the
form of dividends or otherwise, the Company would be subject to both U.S. income
taxes (subject to an adjustment for foreign tax credits) and withholding taxes
payable to the various countries.
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities are presented below
(in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation and amortization $ 16,359 $ 6,945
Prepaid expenses 1,034 573
Other 213 560
--------------------------
Total deferred tax liabilities 17,606 8,078
Deferred tax assets:
Net operating loss carryforwards 7,028 5,745
Accrued expenses and
unearned income 5,345 928
Benefit plans 675 2,512
Non-deductible transaction costs 2,206 --
Other 2,445 866
--------------------------
Total deferred tax assets 17,699 10,051
Valuation allowance for deferred tax assets (4,840) (5,464)
--------------------------
Net deferred tax assets 12,859 4,587
--------------------------
Net deferred tax liabilities $ 4,747 $ 3,491
================================================================================
</TABLE>
The decrease in the Company's valuation allowance for deferred tax
assets from $5,464,000 at December 31, 1995 to $4,840,000 at December 31, 1996
is primarily due to the net operating losses utilized in 1996 which had been
fully reserved in prior years.
<PAGE> 24
43
The Company's deferred income tax expense (benefit) results from the
following (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Excess (deficiency) of tax
over financial reporting:
Depreciation and
amortization $ 9,414 $ 1,681 $ 793
Net operating loss
carryforwards (1,907) 1,025 (550)
Accrued expenses and
unearned income (4,417) 110 (374)
Benefit plans -- (656) --
Other items, net (1,834) (381) (454)
------------------------------------
$ 1,256 $ 1,779 $ (585)
================================================================================
</TABLE>
The U.K. subsidiaries qualify for Scientific Research Allowances (SRAs)
for 100% of capital expenditures on certain assets under the Inland Revenue
Service guidelines. For 1996, 1995 and 1994, these allowances were $11 million,
$6 million and $3 million, respectively, which helped to generate net operating
loss carryforwards of $3 million to be used to offset taxable income in that
country. Assuming the U.K. subsidiaries continue to invest in qualified capital
expenditures at an adequate level, the portion of the deferred tax liability
relating to the U.K. subsidiaries may be deferred indefinitely. Quintiles
Transnational has state net operating loss carryforwards of approximately $10
million which begin to expire in 2001. Innovex has German net operating loss
carryforwards that do not expire of $10 million to be used to offset taxable
income in that country. In addition, Innovex, Inc. has U.S. net operating loss
carryforwards of approximately $5 million which will expire beginning 2005.
10. EMPLOYEE BENEFIT PLANS
The Company has numerous employee benefit plans for which contributions
are discretionary. Plans exist in the United States, Germany, the United
Kingdom, Ireland, Belgium, France, and Australia which cover substantially all
eligible employees in those countries. Plans include Approved Profit Sharing
Schemes in Great Britain and Ireland which are funded with Company stock, a
defined contribution plan funded by Company stock in Belgium and Australia,
defined contribution plans in Great Britain, a profit sharing scheme in France,
and defined benefit plans in Great Britain and Germany. The defined benefit plan
in Germany is an unfunded plan which is provided for in the balance sheet.
The Company has two leveraged Employee Stock Ownership Plans ("ESOPs")
which provide benefits to eligible employees. Contributions and related
compensation expenses for these plans totaled $585,000, $734,000, and $174,000
in 1996, 1995 and 1994, respectively. Interest paid by the Company on the ESOP
loan was approximately $130,000, $157,000, and $179,000 for 1996, 1995, and
1994, respectively. Shares allocated to participants totaled 938,000 at December
31, 1996. Unallocated shares totaled 178,000 as of December 31, 1996 with a fair
value of $11,820,000.
The Company has two employee savings and investment plans (401(k)
Plans) available to all eligible employees meeting certain specified
criteria. The Company matches employee deferrals at varying percentages, set
at the discretion of the Board of Directors. For the years ended December 31,
1996, 1995 and 1994, the Company expensed $539,000, $177,000 and $0,
respectively as matching contributions.
<PAGE> 25
44
NOTES (continued)
10. EMPLOYEE BENEFIT PLANS (CONTINUED)
On July 25, 1996, the Company's Board of Directors adopted the
Quintiles Transnational Corp. Employee Stock Purchase Plan (the "Purchase
Plan") which is intended to provide eligible employees an opportunity to
acquire the Company's Common Stock. Participating employees have the option to
purchase shares at 85% of the lower of the closing price per share of Common
Stock on the first or last day of the calendar quarter. The Purchase Plan is
intended to qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended. The Board of Directors has
reserved 100,000 shares of Common Stock for issuance under the Purchase Plan.
As of December 31, 1996, 4,788 shares were purchased under the Purchase Plan at
a cost of $56.3125 per share.
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, "Accounting for Stock-Based Compensation" ("Statement 123"),
requires use of option valuation models that were not developed for use in
valuing employee stock options. Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.
The Company has stock option plans to provide incentives to eligible
employees, officers, and directors in the form of incentive stock options,
non-qualified stock options, stock appreciation rights, and restricted stock.
The Board of Directors determines the option price (not to be less than fair
market value of incentive options) at the date of grant. The majority of
options, granted under the Executive Compensation Plan, typically vest twenty
five percent per year over four years, and expire ten years from the date of
grant. Other options including options granted and exchanged as a result of
acquisitions have various vesting schedules and expiration periods.
Information with respect to the consolidated option plans is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
WEIGHTED AVERAGE
NUMBER EXERCISE PRICE
- ------------------------------------------------------------------------
<S> <C> <C>
Outstanding January 1, 1994 633,958 $ 5.70
Granted 276,400 12.72
Exercised (9,666) 3.37
Canceled (82,586) 6.47
- -------------------------------------------------------
Outstanding at December 31, 1994 818,106 8.14
Granted 552,655 27.98
Exercised (155,870) 5.15
Canceled (19,580) 10.33
- -------------------------------------------------------
Outstanding at December 31, 1995 1,195,311 17.13
Granted 2,070,866 68.60
Exercised (656,005) 5.06
Canceled (205,840) 72.64
- -------------------------------------------------------
Outstanding at December 31, 1996 2,404,332 $ 31.92
================================================================================
</TABLE>
Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1996 and 1995: risk-free interest rate of 6%; dividend yields of
0%; volatility factors of the expected market price of the Company's Common
Stock of 0.4; and an average expected life of the option of one year from the
date of vesting.
<PAGE> 26
45
For options outstanding and exercisable at December 31, 1996 the
following number of options, range of exercise prices, weighted average exercise
prices and weighted average contractual lives existed:
<TABLE>
<CAPTION>
======================================================================================
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------ -----------------------------------
WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE AVERAGE NUMBER AVERAGE
OF EXERCISE EXERCISE CONTRACTUAL OF EXERCISE
OPTIONS PRICE PRICE LIFE OPTIONS PRICE
------- -------------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
214,596 $ 0.015-$ 2.07 $ 1.40 6.6 214,596 $ 1.40
262,106 $ 2.615-$ 6.45 5.20 4.9 262,106 5.20
319,072 $ 8.635-$12.625 9.59 6.3 308,572 9.61
389,556 $13.24 -$19.00 16.08 7.1 245,056 14.48
165,691 $21.375-$31.50 28.77 8.8 64,298 28.83
512,641 $41.00 -$61.31 48.82 8.6 48,144 41.15
480,920 $62.50 -$66.25 65.86 8.0 107,022 65.65
59,750 $68.50 -$77.00 75.24 6.7 14,711 77.00
- --------- ---------
2,404,332 $31.92 7.3 1,264,505 $15.95
========= =========
</TABLE>
The Black-Scholes valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
transferable. In addition, the option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options and changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The grant date
Black-Scholes value of the options for 1996 was $10,900,000. Of this amount,
$7,145,000 relates to options issued and exchanged to employees of acquired
companies. The remaining $3,755,000 relates to Quintiles options, representing
7% of operating income. The Black-Scholes value of the options for 1995 was
$739,000 which includes $85,000 relating to acquired companies.
The Company's pro forma information follows (in thousands except for
per share data):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Net income available for
common shareholders $ 4,365 $ 13,901
Pro forma (loss) net income
available for common shareholders (6,535) 13,162
Pro forma (loss) earnings per share $ (0.20) $ 0.42
</TABLE>
The effects on net income available for common shareholders and earnings
per share are not likely to be representative of the effects on reported net
income for future years since 1995 reflects expense for only one year's vesting.
<PAGE> 27
46
NOTES (continued)
11. OPERATIONS
The following table presents the Company's operations by geographical
location (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
NET REVENUE:
Americas $ 235,572 $ 132,199 $ 84,231
Europe 289,325 184,506 108,468
Asia-Pacific 12,711 6,987 3,201
-----------------------------------------
$ 537,608 $ 323,692 $ 195,900
================================================================================
INCOME (LOSS) FROM OPERAIONS:
Americas $ 15,228 $ 11,951 $ 7,138
Europe 21,974 12,016 8,008
Asia-Pacific 16 (440) (323)
-----------------------------------------
$ 37,218 $ 23,527 $ 14,823
================================================================================
IDENTIFIABLE ASSETS:
Americas $ 267,512 $ 152,857 $ 96,308
Europe 241,549 176,609 94,979
Asia-Pacific 8,944 5,176 2,279
-----------------------------------------
$ 518,005 $ 334,642 $ 193,566
================================================================================
</TABLE>
12. PRO FORMA QUARTERLY FINANCIAL DATA (UNAUDITED)
Prior to the Innovex merger, Innovex had a March 31 fiscal year. The pro
forma unaudited quarterly financial data presented below reflect the financial
results of the combined companies on a calendar year basis including
nonrecurring costs. The non-recurring costs consist of transaction and
restructuring costs of $27.8 million in the fourth quarter of 1996 and $4.7
million of one-time restructuring costs and special pension contribution in the
first quarter of 1996. The Company's Consolidated Statements of Income contained
herein reports financial results on a fiscal year basis (which includes Innovex
results for the quarter ended March 31, 1996 in both 1995 and 1996 fiscal
years). The following pro forma quarterly financial information reflects actual
calendar quarter results of operations (in thousands, except for per share
data):
<PAGE> 28
47
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996 FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue $ 110,592 $ 127,416 $ 137,498 $ 162,102
Income from operations 7,042 11,519 13,396 5,261
Net income (loss) available
for common shareholders 4,436 6,884 7,831 (14,786)
Earnings (loss) per share $ 0.13 $ 0.20 $ 0.23 $ (0.45)
Range of stock prices $37.000-69.250 $56.500-82.000 $52.500-83.250 $58.250-83.250
.................................................................................................................
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue $ 62,409 $ 72,822 $ 78,546 $ 89,032
Income from operations 6,077 5,140 5,921 8,590
Net income available for
common shareholders 4,190 2,647 3,645 5,665
Earnings per share $ 0.14 $ 0.09 $ 0.12 $ 0.17
Range of stock prices $14.500-19.438 $17.250-24.125 $22.000-32.125 $26.250-46.000
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The following pro forma quarterly financial information reflects
actual calendar quarter results of operations excluding non-recurring costs
(in thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996 FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue $ 110,592 $ 127,416 $ 137,498 $ 162,102
Income from operations 11,744 11,519 13,396 15,990
Net income available for
common shareholders $ 8,024 $ 6,884 $ 7,831 $ 9,382
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1995 FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue $ 62,409 $ 72,822 $ 78,546 $ 89,032
Income from operations 6,077 5,140 5,921 8,590
Net income available for
common shareholders $ 4,190 $ 2,647 $ 3,645 $ 5,665
=================================================================================================================
</TABLE>
<PAGE> 29
48
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders of
Quintiles Transnational Corp.
We have audited the accompanying consolidated balance sheets of
Quintiles Transnational Corp. and subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of income, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits. We did not audit the 1995 and 1994 consolidated financial
statements of BRI International, Inc. and Innovex Limited, each of which was
combined with the Company in 1996 in transactions accounted for as poolings of
interests. Total assets of the two businesses represent 39% of the consolidated
assets for 1995, and total revenues constituted 42% and 43% of consolidated
revenue for 1995 and 1994, respectively. Those statements were audited by other
auditors whose reports have been provided to us, and our opinion, insofar as it
relates to amounts included for BRI International, Inc. and Innovex Limited for
1995 and 1994, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors,
the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Quintiles Transnational Corp.
and subsidiaries at December 31, 1996 and 1995, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
/S/ ERNST & YOUNG LLP
Raleigh, North Carolina
January 29, 1997
<PAGE> 1
EXHIBIT 21
QUINTILES TRANSNATIONAL CORP.
SCHEDULE OF SUBSIDIARIES
<TABLE>
<CAPTION>
Name Jurisdiction of Organization
- ---- ----------------------------
<S> <C>
Quintiles, Inc.(1) North Carolina
Quintiles (UK) Limited United Kingdom
Quintiles Pacific, Inc.(1)(2) North Carolina
Quintiles Ireland Limited Ireland
Quintiles GmbH Germany
Quintiles Laboratories Limited North Carolina
Quintiles S.A. France
Quintiles (UK) Holdings Limited United Kingdom
Toxicol Laboratories Limited United Kingdom
Histological Services Limited United Kingdom
Quintiles Australia Pty. Limited Australia
Quintiles Asia, Inc. North Carolina
Quintiles Ireland (Finance) Limited Ireland
Quintiles S.r.l. Italy
Quintiles Scotland Limited United Kingdom
Quintiles East Asia Pte. Limited Singapore
Quintiles Latin America, Inc.(1) North Carolina
Quintiles Canada, Inc.(1) Canada
International Clinical Research Limited United Kingdom
G.D.R.U. Limited United Kingdom
PMC Contract Research AB Sweden
Benefit, Inc. North Carolina
Benefit Holding, Inc. North Carolina
Benefit Transnational Holding Corp. North Carolina
Benefit Canada Medico-Economic Studies, Inc. Canada
Benefit Deutschland Gmbh Germany
Benefit Research Italia Italy
Benefit B.V. The Netherlands
Quintiles Holding SNC France
Benefit International SNC France
Innovex Merger Corp. [North Carolina][United Kingdom]
Innovex (UK) Merger Limited United Kingdom
Innovex Limited United Kingdom
Innovex Holdings Limited United Kingdom
Innovex (UK) Ltd. United Kingdom
Innovex Medical Products Ltd. United Kingdom
Novex Pharma Ltd. United Kingdom
Ethical Contact Ltd. United Kingdom
Innovex Overseas Holdings Ltd. United Kingdom
Innovex (North America) Inc. [United States]
Innovex (Benelux) BV Holland
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Innovex Nordic AB Sweden
Innovex S.r.l. Italy
Innovex SARL France
Penderwood Limited England
Eminent Innovex International Spain
Innovex GmbH Germany
Innovex (Biodesign) GmbH Germany
The Clinical Research Foundation (UK) Ltd. England
Innovex (DCCG) Holdings Pty. Limited Australia
BRI Quality Regulatory Alliance, Inc. Virginia
BRI International Limited England
BRI International S.A.R.L. France
BRI International Holdings N.V. Belgium
BRI International N.V. Belgium
Health Care Research U.K. Limited England
Health Care Research A.G. Sweden
Medical Technology Consultants - BRI International Limited England
MTCE France S.A.R.L. France
AR-MED Limited England
The Lewin Group, Inc. North Carolina
Debra Chapman Consulting Group Pty. Limited Australia
Medical Alliances Pty. Limited Australia
Alchemy Pharmaceutical Pty. Limited Australia
PharmaBio Development, Inc. North Carolina
Synapse Pharmaceuticals Pty. Limited Australia
</TABLE>
(1) Quintiles, Inc., Quintiles Pacific, Inc., Quintiles Latin America,
Inc. and Quintiles Canada, Inc. sometimes are referred to collectively for
internal and marketing purposes as "Quintiles Americas".
(2) Effective January 1, 1996, the Company's wholly-owned subsidiaries
International Clinical Research Corporation, a California corporation, and
Quintiles Pacific, Inc., a North Carolina corporation, merged into the
Company's wholly-owned subsidiary San Diego Clinical Research Associates,
Inc., a North Carolina corporation, which changed its corporate name to
"Quintiles Pacific, Inc."
(3) Quintiles Scotland Limited and Quintiles England Limited sometimes are
referred to collectively for internal and marketing purposes as "Quintiles
Preclinical Services".
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Quintiles Transnational Corp. of our report dated January 29, 1997 included
in the 1996 Annual Report to Shareholders of Quintiles Transnational Corp.
We also consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 333-19009) and related Prospectus of Quintiles Transnational
Corp. for the registration of $75,990,000 of its 4.25% Convertible Subordinated
Notes Due May 31, 2000 and 918,282 shares of its Common Stock of our report
dated January 29, 1997, with respect to the consolidated financial statements
incorporated by reference in this Annual Report (Form 10-K) of Quintiles
Transnational Corp. for the year ended December 31, 1996.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-91026) pertaining to the Quintiles Transnational Corp. Equity
Compensation Plan of our report dated January 29, 1997, with respect to the
consolidated financial statements incorporated by reference in this Annual
Report (Form 10-K) of Quintiles Transnational Corp. for the year ended
December 31, 1996.
We also consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-16553) pertaining to the Quintiles Transnational
Corp. Employee Stock Purchase Plan, the Quintiles Transnational Corp./BRI
International, Inc. Nonqualified Stock Option Plan and the Innovex Limited 1996
Unapproved Executive Share Option Scheme of our report dated January 29, 1997,
with respect to the consolidated financial statements incorporated by reference
in this Annual Report (Form 10-K) of Quintiles Transnational Corp. for the year
ended December 31, 1996.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-03603) pertaining to the Quintiles Transnational Corp. Lewin
Nonqualified Stock Option Plan of our report dated January 29, 1997, with
respect to the consolidated financial statements incorporated by reference in
this Annual Report (Form 10-K) of Quintiles Transnational Corp. for the year
ended December 31, 1996.
Ernst & Young LLP
Raleigh, North Carolina
March 25, 1997
<PAGE> 1
EXHIBIT 99.01
RISK FACTORS OF THE COMPANY
DEPENDENCE ON CERTAIN INDUSTRIES AND CLIENTS
The Company's revenues are highly dependent upon the research and
development and sales and marketing expenditures of the pharmaceutical and
biotechnology industries. The Company has benefited to date from the growing
tendency of pharmaceutical and biotechnology companies to engage independent
outside organizations to conduct large clinical research and sales and marketing
projects. The Company's operations could be materially and adversely affected by
a general economic decline in these industries or by any reduction in the
outsourcing of development or sales and marketing expenditures. The Company has
in the past derived, and may in the future derive, a significant portion of its
net revenue from a relatively limited number of major projects or clients. In
1996, 10 clients accounted for approximately 48% of the Company's consolidated
net revenue. As pharmaceutical companies continue to outsource large projects
and studies to fewer full-service global providers, the concentration of
business could increase. The Company is likely to experience such concentration
in 1997 and in future years. The loss of any such client could materially and
adversely affect the Company. See "Business -- Clients and Marketing".
MANAGEMENT OF GROWTH
The Company has experienced rapid growth over the past 10 years. The
Company believes that its sustained growth places a strain on operational, human
and financial resources. In order to manage its growth, the Company must
continue to improve its operating and administrative systems and to attract and
retain qualified management, professional, scientific and technical personnel.
Foreign operations may involve the additional risks of assimilating differences
in foreign business practices, hiring and retaining qualified personnel, and
overcoming language barriers. The Company has a transnational organizational
structure, comprised of three operating divisions performing complementary
functions with a holding company performing management functions. While this
transnational structure has successfully supported the Company's growth to date,
the Company recently has completed a number of acquisitions, and there can be no
assurance that this structure will continue to be effective. See "Business --
General". Failure to manage growth effectively could have a material adverse
effect on the Company.
ACQUISITION RISKS
Acquisitions involve numerous risks, including difficulties and expenses
incurred in connection with the acquisition and the assimilation of the
operations and services of the acquired companies, the diversion of management's
attention from other business concerns and the potential loss of key employees
of the acquired companies. Acquisitions of foreign companies also may involve
the additional risks of assimilating differences in foreign business practices
and overcoming language barriers. Since February 1996, the Company has completed
four acquisitions, both within the United States and internationally. There can
be no assurance that the Company's past and any future acquisitions will be
successfully integrated into its operations. See "Business -- General". The
Company reviews many acquisition candidates in the ordinary course of business,
and the Company continually is evaluating new acquisition opportunities. Given
the CRO industry consolidation which is occurring, the Company expects to
continue to evaluate and compete for suitable acquisition candidates. There can
be no assurance that the Company will successfully complete future acquisitions
nor that acquisitions, if completed, will contribute favorably to the Company's
operations and future financial condition. Although the Company performs due
diligence investigations on each company or business it seeks to acquire, there
may be liabilities which the Company fails or is unable to discover for which
the Company, as a successor owner, may be liable. The Company generally seeks to
minimize its exposure to such liabilities by obtaining
<PAGE> 2
indemnification from each seller, which may be supported by deferring payment of
a portion of the purchase price. However, there is no assurance that such
indemnifications, even if obtainable, enforceable and collectible (as to which
there also is no assurance), will be sufficient in amount, scope or duration to
fully offset the potential liabilities arising from the acquisitions.
RISKS RELATING TO CONTRACT SALES SERVICES
Outsourced contract sales services is a relatively new industry outside the
U.K. The Company believes that the contract sales industry emerged in the 1980s,
primarily in the U.K., because of regulatory cost containment pressure on
pharmaceutical companies. As a result, large pharmaceutical companies began to
outsource their sales and marketing activities incident to product launch. There
is a relatively low level of market penetration for outsourced sales and
marketing services in most other countries, including the United States. As
such, companies in this industry are subject to all of the risks inherent in a
new or emerging industry, including an inability to attract and retain clients,
changes in the regulatory regime, an absence of an established earnings history,
the availability of adequately trained sales representatives and additional and
unforeseen costs and expenses. There can be no assurance that the Company will
be able to market successfully its contract sales and marketing services outside
the U.K. See "Business -- Services".
COMPETITION; INDUSTRY CONSOLIDATION
The market for the Company's contract research services is highly
competitive, and the Company competes against traditional CROs, the in-house
research and development departments of pharmaceutical companies, as well as
universities and teaching hospitals. In sales and marketing services, the
Company competes against the in-house sales and marketing departments of
pharmaceutical companies and small local contract sales organizations in each
country in which it operates. The Company also competes against consulting firms
offering healthcare consulting services, including boutique firms specializing
in the healthcare industry and the healthcare departments of large firms.
Expansion by these competitors into other areas in which the Company operates
could affect the Company's competitive position. Increased competition may lead
to price and other forms of competition that may affect the Company's margins.
See "Business -- Competition". Consolidation within the pharmaceutical industry,
as well as a trend by pharmaceutical companies to limit outsourcing to fewer
organizations, has heightened the competition for contract research services. As
a result, consolidation also has occurred among the providers of contract
research services, and several large, full-service providers have emerged,
including the Company. If these consolidation trends continue, they may result
in greater competition among the larger contract research providers for clients
and acquisition candidates.
LOSS OR DELAY OF LARGE CONTRACTS; FIXED PRICE NATURE OF CONTRACTS
Most of the Company's contracts are terminable upon 15-90 days' notice by
the client. Although the contracts typically provide for payment of certain fees
for winding down the study and, in some cases, a termination fee, the loss or
delay of a large contract or the loss or delay of multiple contracts could
adversely affect the Company's future net revenue and profitability. Contracts
may be terminated for a variety of reasons, including the failure of a product
to satisfy safety requirements, unexpected or undesired results of the product,
the client's decision to forego a particular study or insufficient patient
enrollment or investigator recruitment. The Company contracts with investigators
who undertake to recruit large numbers of patients in many of its studies. There
can be no assurance that the Company will always be able to satisfy recruitment
targets, particularly in large studies for which there is little precedent. In
addition, most of the Company's contracts for the provision of its services are
fixed price or fee-for-service subject to a cap. Since the Company's contracts
are predominantly structured in this manner, the Company bears the risk of cost
overruns. Underpricing of contracts or significant cost overruns could have a
material adverse effect on the Company. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Contract Revenue".
<PAGE> 3
DEPENDENCE ON PERSONNEL
The Company relies on a number of key executives, including Dennis B.
Gillings, Ph.D., its Chairman of the Board of Directors and Chief Executive
Officer. The Company maintains key man life insurance on Dr. Gillings in the
amount of $3 million. The loss of the services of any key executives could have
a material adverse effect on the Company. In addition, the Company's performance
depends on its ability to attract and retain qualified management and
professional, scientific and technical operating staff, as well as its ability
to recruit qualified representatives for its contract sales services. There can
be no assurance that the Company will be able to continue to attract and retain
qualified personnel.
POTENTIAL LIABILITY
In connection with its provision of contract research services, the Company
contracts with physicians to serve as investigators in conducting clinical
trials to test new drugs on human volunteers. Such testing creates risk of
liability for personal injury to or death of volunteers, particularly to
volunteers with life-threatening illnesses, resulting from adverse reactions to
the drugs administered. Although the Company does not believe it is legally
accountable for the medical care rendered by third party investigators, it is
possible that the Company could be held liable for the claims and expenses
arising from any professional malpractice of the investigators with whom it
contracts or in the event of personal injury to or death of persons
participating in clinical trials. The Company also could be held liable for
errors or omissions in connection with the services it performs. In addition, as
a result of its Phase I clinical trials facilities, the Company could be liable
for the general risks associated with a Phase I facility including, but not
limited to, adverse events resulting from the administration of drugs to
clinical trial participants or the professional malpractice of Phase I medical
care providers. The Company believes that its risks are reduced by contractual
indemnification provisions with clients and investigators, insurance maintained
by clients and investigators and by the Company, various regulatory
requirements, including the use of institutional review boards and the
procurement of each volunteer's informed consent to participate in the study.
The contractual indemnifications generally do not protect the Company against
certain of its own actions such as negligence. The contractual arrangements are
subject to negotiation with clients and the terms and scope of such
indemnification vary from client to client and from trial to trial. The
financial performance of these indemnities is not secured. Therefore, the
Company bears the risk that the indemnifying party may not have the financial
ability to fulfill its indemnification obligations. The Company maintains
professional liability insurance that covers worldwide territories in which the
Company currently does business and includes drug safety issues as well as data
processing errors and omissions. There can be no assurance that the Company will
be able to maintain such insurance coverage on terms acceptable to the Company.
The Company could be materially and adversely affected if it were required to
pay damages or bear the costs of defending any claim outside the scope of or in
excess of a contractual indemnification provision or beyond the level of
insurance coverage or in the event that an indemnifying party does not fulfill
its indemnification obligations.
DEPENDENCE ON GOVERNMENT REGULATION
The Company's contract research business has benefited from the extensive
governmental regulation of the drug development process, particularly in the
United States. In Europe, the general trend has been towards establishing common
standards for clinical testing of new drugs, leading to changes in the various
requirements currently imposed by each country. The Company believes that the
level of regulation is generally less burdensome outside the United States. From
time to time legislation is introduced in the U.S. Congress to substantially
modify regulations administered by the Food and Drug Administration ("FDA")
governing the drug approval process. Changes in regulation in the United States
or elsewhere, including mandatory substitution of generic drugs for patented
drugs, relaxation in the scope of regulatory requirements or the introduction of
simplified drug approval procedures, could decrease the business opportunities
available to the Company. In addition, the failure on the part of the Company to
comply with applicable regulations could result in the termination of ongoing
clinical research
<PAGE> 4
or sales and marketing projects or the disqualification of data for submission
to regulatory authorities, either of which could have a material adverse effect
on the Company.
UNCERTAINTY IN HEALTHCARE INDUSTRY AND POSSIBLE HEALTHCARE REFORM
The healthcare industry is subject to changing political, economic and
regulatory influences that may affect the pharmaceutical, biotechnology and
medical device industries. Numerous governments have undertaken efforts to
control growing healthcare costs through legislation, regulation and voluntary
agreements with medical care providers and pharmaceutical companies.
Implementation of government healthcare reform may adversely affect research and
development expenditures by pharmaceutical, biotechnology and medical device
companies which could decrease the business opportunities available to the
Company. Management is unable to predict the likelihood of healthcare reform
legislation being enacted or the effects such legislation would have on the
Company.
EXCHANGE RATE FLUCTUATIONS
Approximately 56.5%, 59.2% and 57.0% of the Company's net revenue for the
years ended December 31, 1996, 1995, and 1994, respectively, were derived from
the Company's operations outside the United States. The Company's operations and
financial results could be significantly affected by factors associated with
international operations such as changes in foreign currency exchange rates and
uncertainties relative to regional economic circumstances, as well as by other
risks sometimes associated with international operations. Since the revenue and
expenses of the Company's foreign operations are generally denominated in local
currencies, exchange rate fluctuations between such local currencies and the
U.S. dollar will subject the Company to currency translation risk with respect
to the reported results of its foreign operations. Also, the Company may be
subject to foreign currency transaction risks when the Company's service
contracts are denominated in a currency other than the currency in which the
Company incurs expenses related to such contracts. The Company limits its
foreign currency transaction risks through exchange rate collars stated in its
contracts with clients or the Company hedges the transaction risk with foreign
exchange contracts or options. There can be no assurance that the Company will
not experience fluctuations in financial results from the Company's operations
outside the United States, and there can be no assurance the Company will be
able to contractually or otherwise favorably reduce its currency transaction
risk associated with its service contracts. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations".
VARIATION IN QUARTERLY OPERATING RESULTS
The Company's results of operations have been and can be expected to be
subject to quarterly fluctuations. Quarterly results can fluctuate as a result
of a number of factors, including the timing of start-up expenses for new
offices, acquisitions, the completion or commencement of significant contracts,
changes in the mix of services offered and foreign exchange fluctuations. The
Company believes that quarterly comparisons of its financial results should not
be relied upon as an indication of future performance. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock has been and may continue to
be subject to wide fluctuations in response to variations in operating results
from quarter to quarter, changes in earnings estimates by analysts, market
conditions in the industry and general economic conditions. See "Price Range of
Common Stock and Dividend Policy".
