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Exhibit 10.8(a)
FIRST AMENDMENT TO LEASE
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THIS FIRST AMENDMENT TO LEASE is made as of the 9th day of June, 1997 by
and between MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a Massachusetts educational
corporation with an address of 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000
("Lessor"), and ALKERMES, INC., a Pennsylvania corporation with an address of 00
Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 ("Lessee").
Reference is made to a lease dated July 26, 1993 by and between Lessor and
Lessee (the "Original Lease"), concerning certain premises located at 000 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx, as more particularly described in the Lease.
As used in the Original Lease or in this Amendment, the term "Lease" shall mean
the Original Lease as amended hereby.
Lessee desires to extend the Lease Term, to expand the premises demised to
it pursuant to the Original Lease, and to provide for an option to expand the
Building. Lessor is willing to agree to the foregoing subject to the terms and
conditions of the Original Lease, as hereby amended.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and legal sufficiency of
which are hereby acknowledged, Lessor and Lessee hereby agree to amend the
Original Lease as follows:
1. DEFINITIONS. Capitalized terms used in this Amendment which are defined
in the Original Lease and not otherwise defined herein shall have the same
meaning in this Amendment as in the Original Lease. The following terms shall
have the meanings set forth below:
ADDITION WORK. As defined in the Supplementary Work Letter.
ADJACENT BUILDING. The building currently existing on the Adjacent
Land.
ADJACENT LAND. That certain parcel of land adjoining the Land, known
as and numbered 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx.
ADJACENT PREMISES. Collectively, the Adjacent Land and the Adjacent
Building.
BASIC RENT. As defined in Paragraph 4 below.
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BROKER. Xxxxxxxx & Grew, Inc.
BUILDING ADDITION. An addition to the Building to be constructed by
Lessor and Lessee on the Adjacent Land, subject to the terms and
conditions of this Amendment.
BUILDING ADDITION OPTION. The option on the part of Alkermes, Inc. to
cause Lessor to construct the shell of the Building Addition (or to
construct the entire Building Addition itself), subject to the terms
and conditions of this Amendment. The Building Addition Option shall
be personal to Alkermes, Inc. and may not be exercised by any
sublessee, assignee or successor of or to Alkermes, Inc.
BUILDING ADDITION RENT COMMENCEMENT DATE. As defined in the
Supplementary Work Letter.
EXPANSION PREMISES. The entire second floor of the Building,
containing approximately 6,500 rentable square feet.
EXPANSION PREMISES COMMENCEMENT DATE. July 1, 1997.
EXPANSION WORK. As defined in the Supplementary Work Letter.
EXTENSION TERM. As defined in Paragraph 3(b) below.
INITIAL LEASE TERM. As defined in Paragraph 3(a) below.
INITIAL PREMISES. The first floor of the Building, as described in
Section 1.0 of the Original Lease.
LEASE TERM. Collectively, (i) the Initial Lease Term and (ii) the
Extension Term (if Lessee duly exercises the Extension Option).
LESSEE'S ADDITION WORK. As defined in the Supplementary Work Letter.
LESSEE'S WORKING DRAWINGS. As defined in the Supplementary Work
Letter.
LESSOR'S ADDITION WORK. As defined in the Supplementary Work Letter.
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LESSOR'S WORKING DRAWINGS. As defined in the Supplementary Work
Letter.
NOTICE DATE. As defined in Paragraph 5(b) below.
SUPPLEMENTARY WORK LETTER. The Supplementary Work Letter attached
hereto as Exhibit I.
2. PREMISES. Effective on the Expansion Premises Commencement Date:
(a) Lessee shall lease the Expansion Premises, subject to all of the terms
and conditions of the Lease, (b) the term "Premises" as used in the
Original Lease shall mean and include both the Initial Premises and the
Expansion Premises, and (c) the Expansion Premises shall be considered to
be part of the Premises for all purposes of the Lease. The expansion of the
Premises described in the preceding sentence of this Paragraph shall be
deemed an exercise in full of Lessee's Expansion Option set forth in
Section 2.0 of the Lease, and Section 2.0 of the Lease shall thereafter be
null and void and of no further force or effect.
The Expansion Premises shall be delivered by Lessor to Lessee broom clean,
but otherwise in the condition in which the same are redelivered to Lessor
by the current occupant thereof. Lessor shall have no obligation to perform
any work in or to the Expansion Premises.
3. INITIAL LEASE TERM; EXTENSION TERM; LEASE TERM. (a) Section 3.1 of the
Original Lease is hereby amended by deleting therefrom the first sentence
in its entirety and substituting therefor the following:
"The initial term of this Lease (the "Initial Lease Term") shall
commence on August 15, 1993 and shall expire, unless sooner terminated
as hereinafter provided, on August 14, 2008; PROVIDED, HOWEVER, that
if Lessee duly exercises the Building Addition Option and the Building
Addition is constructed as provided in Paragraph 15 below, then the
Initial Lease Term shall automatically be further extended as of the
Building Addition Rent Commencement Date to the date which is the
earlier of (i) the day immediately preceding the tenth (10th)
anniversary of the Building Addition Rent Commencement Date, or (ii)
August 14, 2013."
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(b) Section 3.2 of the Original Lease is hereby amended as follows:
(i) The "Extension Term" shall be the period commencing on the day
after the last day of the Initial Lease Term and expiring on
August 14, 2013, unless sooner terminated as provided in the
Lease;
(ii) In the second paragraph of said Section 3.2, line 4, the number
in parenthesis shall be changed from "18" to "15"; and
(iii) The table appearing at the top of page 4 of the Original Lease
is hereby deleted.
4. BASIC RENT. Effective on the Expansion Premises Commencement Date, Section
4.1(a) of the Original Lease shall be deleted in its entirety and the
following substituted therefor:
"(a) Basic rent ("Basic Rent"), which term shall mean, collectively, the
sums identified in the following subparagraphs (i) and (ii):
"(i) with respect to the Initial Premises and the Expansion Premises:
(w) for the period commencing on July 1, 1997 and ending on August
14, 1998, the sum of $141,000.00 per Lease Year (PRO-RATED for
partial Lease Years), payable in equal monthly installments of
$11,750.00;
(x) for the period commencing on August 15, 1998 and ending on August
14, 2003, the sum of $192,000.00 per Lease Year, payable in equal
monthly installments of $16,000.00;
(y) for the period commencing on August 15, 2003 and ending on August
14, 2008, the sum of $232,000.00 per Lease Year, payable in equal
monthly installments of $19,333.33; and
(z) for the Extension Term, if any, the "Fair Market Rent" of the
Initial Premises and the Expansion Premises, determined in
accordance with the provisions of Section 4.2 below;
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PROVIDED, HOWEVER, that if Lessee duly exercises the Building Addition
Option and the Initial Lease Term is consequently extended as provided in
Section 3.1 of the Lease, then notwithstanding anything to the contrary set
forth in the preceding provisions of this Section 4.1(a), Basic Rent for
the Initial Premises and the Expansion Premises for the portion of the
Initial Lease Term commencing on August 15, 2008 shall be the Fair Market
Rent of the Initial Premises and the Expansion Premises as of August 15,
2008, determined in the manner provided in Section 4.2 of the Lease.
"(ii) With respect to the Building Addition and the Adjacent Land (as
hereinafter defined), for the period commencing on the Building Addition
Rent Commencement Date and continuing for the remainder of the Lease Term,
the following amount per Lease Year:
(x) if Lessor performs Lessor's Addition Work, an amount equal to
twelve (12%) percent of the sum of (1) the aggregate amount of
Lessor's actual out-of-pocket costs incurred in (a) demolishing
the Adjacent Building, (b) preparing the Adjacent Land for
construction of the Building Addition, (c) obtaining the permits,
licenses, consents and approvals from governmental authorities
for Lessor's Addition Work, (d) preparing Lessor's Working
Drawings for Lessor's Addition Work, and (e) constructing
Lessor's Addition Work (both "hard costs" and "soft costs"), and
(2) Three Hundred Seventy Thousand Dollars ($370,000.00) (on
account of the Adjacent Land); or
(y) if Lessee performs Lessor's Addition Work at its sole cost and
expense, an amount equal to twelve (12%) percent of the sum (1)
the aggregate amount of Lessor's actual out-of pocket costs
incurred in (a) demolishing the Adjacent Building, and (b)
preparing the Adjacent Land for construction of the Building
Addition, and (2) Three Hundred Seventy Thousand Dollars
($370,000.00) (on account of the Adjacent Land).
"Basic Rent shall be due and payable in equal monthly installments, in
advance, without offset or deduction, and without previous demand therefor,
commencing (x) with respect to the Initial Premises, on the Commencement
Date, (y) with respect to the Expansion Premises, on
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the Expansion Premises Commencement Date, and (z) with respect to the
Building Addition, on the Building Addition Rent Commencement Date, and in
each case continuing on the first day of each calendar month or portion
thereof during the Lease Term. If the Expansion Premises Commencement Date
or the Building Addition Rent Commencement Date is other than the first day
of a calendar month, Basic Rent for the Expansion Premises or the Building
Addition (as the case may be) shall be PRO-RATED for such month. Basic Rent
shall also be PRO-RATED for a partial month occurring at the end of the
Lease Term."
5. FAIR MARKET RENT. (a) For purposes of determining "Fair Market Rent"
pursuant to Section 4.2 of the Lease, all improvements to the Premises or
the Building which are funded, in the first instance, by Lessor pursuant to
this Amendment, regardless of whether Lessee makes payments to Lessor on
account thereof pursuant to Paragraph 4 above, shall be deemed to be
"improvements made by Lessor" and shall be included in determining Fair
Market Rent.
(b) The first three sentences of the second paragraph of Section 4.2 are
hereby deleted in their entirety and the following are substituted
therefor:
"If Lessee duly exercises the Extension Option as provided in Section
3.2 of the Lease, then within twenty (20) days after Lessor receives
Lessee's notice of exercise of the Extension Option, Lessor shall
provide to Lessee Lessor's good faith determination of the Fair Market
Rent of the Initial Premises and the Expansion Premises as of the
first day of the Extension Term. If Lessee duly exercises the Building
Addition Option as provided in Paragraph 15 of this Amendment and the
Building Addition is constructed and the Initial Lease Term extended
as provided in Section 3.1 of the Lease, then Lessor shall provide to
Lessee not later than April 1, 2008 Lessor's good faith determination
of the Fair Market Rent of the Initial Premises and the Expansion
Premises as of August 15, 2008. The date on which Lessor provides such
determination is hereinafter referred to as the "Notice Date". If
Lessor and Lessee are unable to agree on such Fair Market Rent within
thirty (30) days after the Notice Date, then Lessor and Lessee shall,
not later than sixty (60) days after the Notice Date, each retain a
real estate appraiser with at least ten (10) years' continuous
experience in
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the business of appraising or marketing commercial real estate in the
Cambridge, Massachusetts vicinity, who shall, within sixty (60) days
of his or her selection, prepare a written report summarizing his or
her conclusion as to Fair Market Rent. Lessor and Lessee shall
simultaneously exchange such reports; PROVIDED, HOWEVER, that if one
party has not obtained such a report within one hundred thirty (130)
days after the Notice Date, then the determination set forth in the
other party's report shall be final and binding upon the parties."
(c) All references to the "Expansion Premises" in Section 4.2 of the Lease
shall be deemed to refer to the Initial Premises and the Expansion Premises
together.
6. PRELIMINARY ENTRY. Section 4.3, PRELIMINARY ENTRY, is hereby amended as
follows:
(a) All references in such Section to the "Commencement Date" shall be
deemed to mean and refer to the "Expansion Premises Commencement Date"; and
(b) The third sentence thereof is deleted in its entirety.
7. DISCONTINUED OCCUPANCY. For purposes of calculating the Termination Payment
as provided in Section 5.0 of the Original Lease, the costs incurred by
Lessee in connection with the design and construction of the Expansion Work
and Lessee's Addition Work shall be amortized on a straight-line basis over
ten (10) years rather than the 5-year period stated in the Original Lease,
with such amortization period commencing on the first day of the first
calendar month commencing after the day on which such work is substantially
completed (i.e., completed except for items of work which are not necessary
to make the Building or the Building Addition (as the case may be)
reasonably useable for the Permitted Uses and which, because of season or
weather or nature of the item, cannot practicably be done at that time).
8. TAXES. (a) Section 6.1 of the Original Lease is hereby amended by adding
the following sentence to the end thereof as it appears in the Original
Lease:
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"Notwithstanding anything to the contrary contained in this Lease,
provided that Lessee makes all payments to Lessor on account of Taxes
hereunder within the time specified in this Lease, "Taxes" shall not
include any interest, penalties or other charges assessed against
Lessor on account of Lessor's failure to pay Taxes on a timely basis
to the taxing authority."
(b) Effective on the Expansion Premises Commencement Date, "Lessee's Share"
as defined in Section 6.2 of the Lease shall be one hundred percent (100%),
and Lessee shall be responsible for the payment of all Taxes relating to
the Premises, the Building or the Land, which payments shall be made to
Lessor in the manner provided in Section 7 of the Lease.
(c) Effective on the Expansion Premises Commencement Date, Lessee's
pro-rata share of Taxes with respect to each of the Off-Site Lots in which
are located any of the parking spaces leased by Lessee pursuant to Section
10 of the Lease shall be adjusted to reflect the number of parking spaces
then leased by Lessee pursuant to said Section 10.
(d) Effective on the Expansion Premises Commencement Date, Section 6.3,
ABATEMENT OF TAXES, is hereby amended as follows:
(i) The first paragraph shall be deleted in its entirety; and
(ii) The first sentence of the second paragraph shall be deleted and
the following substituted therefor:
"Lessee shall have the right to file an application for the
abatement of Taxes with respect to the Land and/or the Building
provided that Lessee gives notice of such filing to Lessor
(together with a copy of such abatement application) promptly
after such application is filed."
9. UTILITIES AND SERVICES. Effective on the Expansion Premises Commencement
Date, Section 7.0 of the Original Lease is hereby amended by deleting the
second paragraph thereof in its entirety and substituting therefor the
following:
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"The only services which Lessor shall provide to the Premises, the
Building or the Land during the Lease Term (collectively, "Lessor's
Services") shall be: (i) maintaining the alarm and sprinkler systems,
and (ii) snowplowing, paving, striping and general maintenance of the
parking lots in which are located parking spaces leased by Lessee
pursuant to Section 10.0 below. Lessee's obligation to make payments
on account of such snowplowing, paving, striping and general
maintenance of such parking lots shall be PRO-RATED in the manner
provided in Section 10.0 of this Lease. Lessee shall continue to pay
to Lessor as Additional Rent the property management fee paid by
Lessor (if any) in connection with the Premises, which fee shall not
exceed four (4%) percent of the gross rental revenue of the Premises."
10. INSURANCE. Section 8.2, CASUALTY INSURANCE, is hereby amended by inserting
into the seventh line thereof after the phrase "as their respective
interests may appear", the phrase "but naming Lessee as loss payee".
11. ASSIGNMENT AND SUBLETTING. Section 9.0(c) is hereby amended by deleting
therefrom clause (iii) in its entirety, and substituting therefor the
following:
"(iii) Lessee shall pay to Lessor, as Additional Rent, immediately
upon receipt thereof by Lessee, one-half (1/2) of the amount by which
the aggregate rent and other amounts payable to Lessee under or in
connection with such assignment or sublease, after deduction of (A)
the costs reasonably incurred by Lessee in entering into such
assignment or sublease (including, without limitation, reasonable
attorneys' fees and expenses, brokerage commissions, alteration costs,
and tenant concessions (such as free rent) granted by Lessee, all
amortized on a straight-line basis over the term of such sublease or,
in the case of an assignment, over the remaining Lease Term of this
Lease), and (B) the monthly amount of the unamortized portion of the
actual out-of-pocket costs reasonably incurred by Lessee in
constructing those portions of the Expansion Work or Lessee's Addition
Work which are permanently affixed to and
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integrated into the structure of the Building or Building systems, for
the term of such sublease (or in the case of an assignment, for the
remainder of the Lease Term) determined on the basis of straight line
amortization of such costs over a period of 10 years (and in the case
of a sublease, then allocated on a PRO-RATA square footage basis to
the portion of the Premises subject to such sublease), exceeds the
Rent payable hereunder with respect to the portion of the Premises
subject to such sublease (or, in the case of an assignment, the entire
Premises). In the case of a sublease, unless otherwise agreed to in
writing by Lessor at the time that it consents to such sublease, the
calculation described in clause (iii) of the immediately preceding
sentence shall be performed on a monthly basis and payment shall be
made to Lessor on the basis of such monthly calculation. All separate
charges reasonably imposed by Lessee upon such sublessee or assignee
for the purchase of or use of equipment owned by Lessee which is not
permanently affixed to and integrated into the structure of the
Building or Building systems shall be excluded from the calculation
described in clause (iii). Notwithstanding anything to the contrary
herein contained, no assignee, sublessee or successor of or to
Alkermes, Inc. shall have the right to exercise the Building Addition
Option, which option is personal to and may only be exercised by
Alkermes, Inc."
12. PARKING. Section 10.0, PARKING, is hereby amended by deleting therefrom the
third paragraph in its entirety and substituting therefor the following:
"Commencing on August 14, 1998, Lessee shall pay, as Additional Rent,
on the same day on which Basic Rent is due and payable hereunder, rent
on account of each parking space leased by Lessee at the then-fair
market rent thereof, which amount may be adjusted by Lessor from year
to year."
13. CONSTRUCTION; WORK LETTER. (a) Article 13.0, CONSTRUCTION, is hereby
deleted in its entirety.
(b) The Work Letter attached to the Original Lease as EXHIBIT C is
hereby deleted in its entirety and the Supplementary Work Letter
attached to this Amendment as EXHIBIT I is substituted therefor. All
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references in the Lease to the "Work Letter" shall be deemed to refer
to the Supplementary Work Letter.
14. EXPANSION WORK: Lessee may, at its sole cost and expense and in accordance
with the provisions of the Supplementary Work Letter, make certain
improvements to the Initial Premises and the Expansion Premises in
connection with Lessee's initial occupancy of the Expansion Premises. All
of the "Expansion Work" (as defined in the Supplementary Work Letter) shall
be deemed to be part of "Lessee's Work" as that term is used in the Lease.
Lessor shall have no obligation to (x) prepare any Working Drawings, (y)
perform any work, or (z) make any contribution to Lessee, in connection
with the design or construction by Lessee of the Expansion Work. All of the
Expansion Work shall be finally completed by January 1, 1999, subject to
the provisions of Section 24.0 (Force Majeure) of the Lease.
15. CONSTRUCTION OF BUILDING ADDITION. (a) Lessor owns the Adjacent Premises.
The Adjacent Building is currently leased by Lessor to a third party, who,
in turn, has subleased it to Cambridge Bottle and Can. Lessor hereby
represents and warrants to Lessee that the term of the lease currently in
effect with respect to the Adjacent Building expires on June 30, 1999.
Lessor hereby agrees that it shall not extend nor renew the existing lease
of the Adjacent Premises or enter into any other lease or tenancy agreement
relating to the Adjacent Premises until the first to occur of (i) receipt
by Lessor of a written waiver from Lessee of its right to exercise the
Building Addition Option, or (ii) Lessee's failure to exercise the Building
Addition Option in accordance with the requirements of this Paragraph 15.
(b) Provided that:
(i) as of the day on which Lessee gives "Lessee's Exercise Notice"
(as hereinafter defined), (A) no Event of Default is then
continuing and (B) Alkermes, Inc. is actually occupying at least
twenty-five (25%) percent of the Premises; and
(ii) (A) Lessee's net worth as set forth in the 10-Q report most
recently prepared by Lessee immediately prior to the date on
which Lessee gives Lessee's Exercise Notice to Lessor is not less
than Lessee's net worth as set forth
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in the 10-Q report most recently prepared by Lessee immediately
prior to the date of this Amendment, and (B) the amount of
unrestricted cash or cash equivalents then held by Lessee as of
the date on which Lessee gives Lessee's Exercise Notice, together
with the amount of financing then available to Lessee, exceeds
the amount reasonably estimated by Lessor to be required by
Lessee for (x) operation of Lessee's business for one (1) year as
it is then being operated, plus (y) the costs to be incurred by
Lessee in designing and constructing the Building Addition,
then Lessee (which term shall mean, in connection with the Building
Addition Option, only Alkermes, Inc., and not any sublessee, assignee or
successor of or to Alkermes, Inc.) shall have the right to exercise the
Building Addition Option by giving to Lessor not later than August 15, 2001
written notice of such exercise ("Lessee's Exercise Notice").
If Lessee duly exercises the Building Addition Option in accordance with
the foregoing terms and conditions, then such exercise shall (i) be
irrevocable except as expressly provided in Paragraph 7 of the
Supplementary Work Letter, (ii) constitute the agreement of Lessee to
perform at its sole cost and expense Lessee's Addition Work in accordance
with the terms and conditions of this Amendment, and (iii) subject to the
provisions of subparagraph 15(g) below and Paragraph 7 of the Supplementary
Work Letter, require Lessor to perform at its sole cost and expense
Lessor's Addition Work in accordance with the terms and conditions of this
Amendment.
(c) If Lessee duly exercises the Building Addition Option, then (i) from
and after such exercise Lessor shall not enter into any further leases or
tenancy agreements relating to the Adjacent Premises, (ii) promptly after
receiving such notice of exercise, Lessor shall (x) terminate any tenancies
or occupancies affecting the Adjacent Premises (if any) and make diligent
efforts to obtain possession of the Adjacent Premises from the tenants and
occupants thereof, and (y) at its sole cost and expense, subject to the
terms and conditions of this Amendment, demolish and remove all structures
on the Adjacent Land down to foundations, and level the surface of the
Adjacent Land such that such demolition and removal is completed within six
(6) months after Lessee's exercise of the Building Addition Option. Lessor
shall
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notify Lessee when such demolition and site levelling have been completed.
From and after the date on which such work is completed:
(1) Lessee shall be responsible for paying to Lessor, as Additional
Rent, all Taxes (as defined in the Lease) assessed or imposed
upon the Adjacent Land, which payments shall be made in the same
manner and at the same times as Taxes are paid by Lessee pursuant
to Section 6.0 of the Lease; and
(2) Unless and until construction of the Building Addition commences
on the Adjacent Land pursuant to the provisions of this
Amendment, Lessor shall have the right to make any use of the
surface of the Adjacent Land, including, without limitation,
parking of automobiles (and Lessor may, at its sole cost and
expense, pave the surface of all or portions of the Adjacent
Land), but Lessor shall not construct any buildings or structures
on the Adjacent Land. If Lessor does make use of the Adjacent
Land as provided in this subparagraph (2), then for such time as
Lessor continues to make such use of the Adjacent Land Lessor
shall (A) be solely responsible for maintaining any pavement laid
by Lessor on the Adjacent Land and (B) save Lessee harmless and
indemnified from any loss, cost and expense (including, without
limitation, reasonable attorney's fees) arising out of or
relating to a claim of injury to any person or damage to any
property while on the Adjacent Land unless occasioned by any
omission, neglect or default of Lessee or any officer, agent,
employee, servant, contractor or invitee of Lessee or anyone
claiming by, through or under Lessee.
(d) If at any time after Lessee duly exercises the Building Addition
Option, an Event of Default occurs, then in addition to any other rights
and remedies of Lessor hereunder, Lessor shall be entitled to cease the
design or construction of Lessor's Addition Work.
(e) In addition to the foregoing provisions of this Paragraph 15, the
design and construction of the Building Addition shall be governed by the
provisions of the Supplementary Work Letter.
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(f) From and after the date on which Lessee exercises the Building Addition
Option, (i) the Adjacent Land shall be deemed to be part of the Land for
all purposes of the Lease (subject to the rights and obligations of Lessor
as set forth in subparagraph 15(c)(2) above), and (ii) all obligations of
Lessee under the Lease with respect to the Land, the Building or the
Premises shall apply equally to the Land and the Building Addition (except
that no Rent shall be due or payable hereunder in connection with the
Building Addition until the Building Addition Rent Commencement Date except
as otherwise specifically provided in Paragraph 15(c) above). From and
after the Building Addition Rent Commencement Date, (i) the Building
Addition shall be deemed to be part of the Building and the Premises for
all purposes of the Lease, and (ii) Basic Rent shall be due and payable on
account of the Building Addition and the Adjacent Land as provided in
Section 4.1(a)(ii) of the Lease.
(g) Notwithstanding anything to the contrary contained in this Xxxxxxxxx
00, Xxxxxx shall have the right, by written notice given to Lessor either
(i) prior to the commencement of design work by Lessor on Lessor's Addition
Work, or (ii) as provided in Paragraph 7 of the Supplementary Work Letter,
to design and perform Lessor's Addition Work at Lessee's sole cost and
expense, in which event (w) "Lessor's Addition Work" shall be deemed to be
part of "Lessee's Addition Work" as that term is used in this Amendment,
(x) "Lessor's Addition Work" shall be deemed to be part of "Lessee's Work"
as that term is used in the Original Lease, (y) Lessor shall have no
obligation to (1) prepare any Working Drawings, (2) perform any work, or
(3) incur any costs in connection with the design or construction of the
Building Addition (other than costs associated with Lessor's review of
Lessee's Working Drawings), and (z) all references in the Supplementary
Work Letter to "Lessee's Addition Work" shall be deemed to include and
refer to "Lessor's Addition Work".
(h) Notwithstanding anything to the contrary contained in this Amendment,
Lessee shall have the right to rescind its exercise of the Building
Addition Option in the circumstances described in Paragraph 7 of the
Supplementary Work Letter. If Lessee so rescinds its exercise of the
Building Addition Option, then effective upon the date of such rescission
(i) the Adjacent Land shall no longer be deemed to be part of the Land
subject to the Lease, and (ii) Lessee shall have no
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obligation to pay Taxes assessed or imposed upon the Adjacent Land for any
period beyond such effective date.
16. REAL ESTATE BROKER. Lessor and Lessee each represent to the other that they
have dealt with no broker in connection with this First Amendment to Lease
other than the Broker. Lessor shall pay the Broker as part of a separate
agreement. Lessee agrees to indemnify and hold Lessor harmless from and
against any claims for commissions or fees by any person other than the
Broker arising from a breach by Lessee of the foregoing representation.
Lessor agrees to indemnify and hold Lessee harmless from and against any
claims for commissions or fees by the Broker or any other person by reason
of a breach by Lessor of the foregoing representation.
17. SECURITY DEPOSIT. (a) Contemporaneously with the delivery by Lessee to
Lessor of executed counterparts of this First Amendment to Lease, Lessee
shall deliver the sum of $8,000.00 as an additional Security Deposit, which
shall be deemed to be part of the "Security Deposit" for all purposes of
the Lease.
(b) Lessee shall deliver to Lessor, not later than the Building Addition
Rent Commencement Date, an amount equal to one (1) months' Basic Rent on
account of the Building Addition and the Adjacent Land (the "Additional
Security Deposit"), which amount shall be deemed to be part of the
"Security Deposit" for all purposes of the Lease; PROVIDED, HOWEVER, that
if Lessor performs Lessor's Addition Work then (i) the amount of the
Additional Security Deposit shall be increased to six (6) months' Basic
Rent on account of the Building Addition and the Adjacent Land, and (ii)
the Additional Security Deposit shall earn interest at the rate of five
(5%) percent per annum.
18. ELECTRONIC COPIES OF LEASE, ETC. In connection with Lessee's public
filings, upon request by Lessee, Lessor shall provide (or shall cause
Lessor's counsel to provide) to Lessee a copy of the Lease, this Amendment,
any other amendments to the Lease hereafter executed, or any other
agreements between Lessee and lessor relating to the Lease, in a
computer-readable electronic format (i.e., on a computer disk in the format
in which such documents were prepared or maintained by Lessor or its
counsel).
19. EFFECTIVE DATE. Except to the extent to which this Amendment specifically
provides otherwise, all provisions of this Amendment shall
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be effective immediately upon the execution of this Amendment by both
Lessor and Lessee.
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In all other respects, the terms and provisions of the Lease are hereby
ratified and confirmed and remain in full force and effect and unamended.
EXECUTED UNDER SEAL as of the date set forth above.
LESSOR: MASSACHUSETTS INSTITUTE OF
TECHNOLOGY
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxx, /s/ JTM
Director of Real Estate and
Associate Treasurer
Hereunto duly authorized
LESSEE: ALKERMES, INC.
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Financial Officer
Hereunto duly authorized
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EXHIBIT I
---------
SUPPLEMENTARY WORK LETTER
-------------------------
This Supplementary Work Letter is incorporated by reference into the First
Amendment to Lease (the "Amendment") by and between Massachusetts Institute of
Technology, as Lessor, and Alkermes, Inc., as Lessee. Terms defined in or by
reference in the Amendment not otherwise defined herein shall have the same
meaning herein as therein.
1. INTRODUCTION. This Supplementary Work Letter sets forth the terms and
conditions for the construction of (i) improvements to the Building, and/or
(ii) construction of the Building Addition.
2. ADDITIONAL DEFINITIONS. Each of the following terms shall have the meaning
stated immediately after it:
ADDITION WORK. Collectively, Lessee's Addition Work and Lessor's
Addition Work.
CONSTRUCTION AUTHORIZATIONS. All permits, licenses and other consents
and approvals required from any governmental authority for the
construction of (as the case may be): (i) the Expansion Work, (ii)
Lessee's Addition Work, or (iii) Lessor's Addition Work.
EXPANSION WORK. The work to be performed by Lessee in and to the
existing Building, as shown on Lessee's Working Drawings as approved
by Lessor pursuant to Paragraph 4 hereof.
LESSEE'S ADDITION WORK. The work, as shown on Lessee's Working
Drawings as approved by Lessor pursuant to Paragraph 5(b) hereof, to
be performed by Lessee as part of the initial construction of the
Building Addition for Lessee's use and occupancy.
LESSEE'S DELAY. A delay of the type identified in Paragraph 11(b) of
this Supplementary Work Letter.
LESSEE'S GENERAL CONTRACTOR. A general contractor selected by Lessee
and approved in writing by Lessor (which approval shall not be
unreasonably withheld or delayed, but Lessor may withhold approval of
any general contractor based on Lessor's past experience with such
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general contractor), who will be engaged by Lessee to construct (as
the case may be) the Expansion Work or Lessee's Addition Work.
LESSEE'S WORKING DRAWINGS. The working drawings and specifications
for, as the case may be, the Expansion Work or Lessee's Addition Work,
to be prepared by Lessee and Lessee's architect in accordance with
this Work Letter. Lessee's Working Drawings shall be prepared in
compliance with all applicable Legal Requirements and stamped by
registered Massachusetts professionals, and shall consist of all
architectural and engineering plans and specifications which are
required to construct the Expansion Work or Lessee's Addition Work (as
the case may be) or to obtain any Construction Authorization required
therefor.
LESSOR'S ADDITION WORK. The work to be performed by Lessor in or on
the Building Addition so as to provide the Building Addition as
unfinished "shell" space to Lessee for the performance of Lessee's
Addition Work, as shown on Lessor's Working Drawings as approved by
Lessee pursuant to Paragraph 5(c) hereof, which work is anticipated to
include the construction of (i) exterior walls and fenestration,
including taped drywall on the inside surface of exterior walls, (ii)
roof, (iii) foundation, (iv) subfloor, (v) electrical power feed,
telephone cable, gas supply, water supply, and sanitary sewer service
to the Building Addition from public utility lines, and (vi) heat (but
not air-conditioning or make-up air), depending upon the actual
operational requirements of Lessee.
LESSOR'S DELAY. A delay of the type identified in Paragraph 11(a) of
this Supplementary Work Letter.
LESSOR'S WORKING DRAWINGS. The working drawings and specifications for
Lessor's Addition Work, to be prepared by Lessor and Lessor's
architect in accordance with this Work Letter. Lessor's Working
Drawings shall be prepared in compliance with all applicable Legal
Requirements and stamped by registered Massachusetts professionals,
and shall consist of all architectural and engineering plans and
specifications which are required to construct Lessor's Addition Work
or to obtain any Construction Authorization required therefor.
3. INSURANCE AND BONDS. Prior to the commencement of any design work on the
Expansion Work or Lessee's Addition Work (as the case may be), Lessee shall
provide to Lessor an original certificate of insurance, in customary
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form, for each architect and engineer retained by Lessee in connection with
the design and/or construction of such work, which certificate shall
evidence a current "errors and omissions" insurance policy as in effect, in
an amount reasonably acceptable to Lessor. Prior to the commencement of any
design work on Lessor's Addition Work, Lessor shall provide to Lessee an
original certificate of insurance, in customary form, for each architect
and engineer retained by Lessor in connection with the design and/or
construction of Lessor's Addition Work, which certificate shall evidence a
current "errors and omissions" insurance policy as in effect, in an amount
reasonably acceptable to Lessee. Prior to the commencement of the
construction of the Expansion Work or Lessee's Addition Work (as the case
may be), Lessee shall provide to Lessor an original certificate of
insurance for Lessee's General Contractor (or, if no general contractor is
used, each trade contractor employed by Lessee in connection with the
construction of such work), which certificate shall evidence a current
general liability insurance policy as in effect, in an amount reasonably
acceptable to Lessor, naming Lessor as an additional insured. Prior to the
commencement of the construction of Lessor's Addition Work, Lessor shall
provide to Lessee an original certificate of insurance for its general
contractor (or, if no general contractor is used, each trade contractor
employed by Lessor in connection with the construction of such work), which
certificate shall evidence a current general liability insurance policy as
in effect, in an amount reasonably acceptable to Lessee, naming Lessee as
an additional insured.
Lessee shall obtain from a surety reasonably satisfactory to Lessor payment
and performance bonds for Lessee's General Contractor (in an amount not
less than the full contract price), or if no general contractor is used,
then for each trade contractor employed by Lessor in connection with the
construction of such work whose bid price or contract price equals or
exceeds $150,000 (in an amount not less than each such trade contractor's
respective bid price or contract price), each of which bonds shall name
Lessor as an additional obligee.
4. Working Drawings for the Expansion Work.
---------------------------------------
Lessee shall be solely responsible for the preparation and completion of
all preliminary and final Lessee's Working Drawings for all of the
Expansion Work. Lessee shall retain its own architects and engineers to
prepare Lessee's Working Drawings, provided that Lessor first approves such
engineers and architects so selected by Lessee, which approval shall not be
unreasonably withheld or delayed. Lessee shall provide copies of the
preliminary Lessee's Working Drawings to Lessor, and Lessor shall provide
to
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Lessee within fifteen (15) business days after receipt of a complete set
thereof a list of corrections and modifications which Lessor reasonably
requires to be made to Lessee's Working Drawings. Lessor shall also provide
to Lessee within such 15-business day period a list of those elements of
the Expansion Work which Lessee must remove at the expiration or earlier
termination of this Lease.
Lessee shall revise the preliminary Lessee's Working Drawings to
incorporate, to the extent reasonably practical, the corrections and
modifications reasonably required by Lessor and shall submit final Lessee's
Working Drawings to Lessor for its approval. Lessor shall review the final
Lessee's Working Drawings and, within fifteen (15) business days after
receipt of a complete set thereof, Lessor shall either (a) notify Lessee
that Lessor has approved the final Lessee's Working Drawings, or (b)
provide to Lessee a list of corrections and modifications which Lessor
reasonably requires to be made to Lessee's Working Drawings. Lessor shall
also provide to Lessee within such 15-business day period a supplementary
list of those elements of the Expansion Work which Lessee must remove at
the expiration or earlier termination of this Lease (if any). In the event
Lessor returns Lessee's Working Drawings to Lessee for correction or
modification, Lessee shall diligently correct the Working Drawings to
incorporate, to the extent reasonably practical, the corrections and
modifications reasonably required by Lessor and re-submit them to Lessor
for approval pursuant to the preceding provisions of this paragraph. None
of the Expansion Work shall commence until final Lessee's Working Drawings
have been approved in writing by Lessor.
Lessor's review of Lessee's Working Drawings shall be limited to the impact
of the Expansion Work on the structural components of the Building, the
roof of the Building and the Building systems, and the exterior appearance
of the Building.
5. Working Drawings for the Addition Work.
--------------------------------------
(a) CONCEPT OF BUILDING ADDITION. Lessor and Lessee hereby acknowledge and
agree that it is their mutual intention that the Building Addition be
a two-story building which can be constructed on the Adjacent Land in
conformance with then-applicable Legal Requirements, as the same may
be varied by zoning relief obtainable by Lessor at Lessee's expense,
upon such conditions as are acceptable to Lessor in its reasonable
discretion. Lessor shall provide reasonable cooperation to Lessee in
connection with obtaining such zoning relief, and Lessee
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shall reimburse Lessor upon request for all reasonable out-of-pocket
expenses incurred by Lessor in connection therewith. Lessor and Lessee
shall negotiate in good faith the location and size of the Building
Addition, consistent with the understandings set forth in this
subparagraph, in connection with the commencement of preparation of
preliminary Lessor's Working Drawings and Lessee's Working Drawings
for the Building Addition.
(b) LESSEE'S WORKING DRAWINGS. Lessee shall be solely responsible for the
preparation and completion of all preliminary and final Lessee's
Working Drawings for Lessee's Addition Work. Lessee shall retain its
own architects and engineers to prepare Lessee's Working Drawings,
provided that Lessor first approves such engineers and architects so
selected by Lessee, which approval shall not be unreasonably withheld
or delayed. Lessee shall provide copies of the preliminary Lessee's
Working Drawings to Lessor, and Lessor shall provide to Lessee within
fifteen (15) business days after receipt of a complete set thereof a
list of corrections and modifications which Lessor reasonably requires
to be made to Lessee's Working Drawings. Lessor shall also provide to
Lessee within such 15-business day period a list of those elements of
Lessee's Addition Work which Lessee must remove at the expiration or
earlier termination of this Lease.
Lessee shall revise the preliminary Lessee's Working Drawings to
incorporate, to the extent reasonably practical, the corrections and
modifications reasonably required by Lessor and shall submit final
Lessee's Working Drawings to Lessor for its approval. Lessor shall
review the final Lessee's Working Drawings and, within fifteen (15)
business days after receipt of a complete set thereof, Lessor shall
either (a) notify Lessee that Lessor has approved the final Lessee's
Working Drawings, or (b) provide to Lessee a list of corrections and
modifications which Lessor reasonably requires to be made to Lessee's
Working Drawings. Lessor shall also provide to Lessee within such
15-business day period a supplementary list of those elements of
Lessee's Addition Work which Lessee must remove at the expiration or
earlier termination of this Lease (if any). In the event Lessor
returns Lessee's Working Drawings to Lessee for correction or
modification, Lessee shall diligently correct the Working Drawings to
incorporate, to the extent reasonably practical, the corrections and
modifications reasonably required by Lessor and re-submit them to
Lessor for approval pursuant to the preceding provisions of this
paragraph. None of Lessee's Addition Work shall commence until
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final Lessee's Working Drawings have been approved in writing by
Lessor.
(c) LESSOR'S WORKING DRAWINGS. Lessor shall be solely responsible for the
preparation and completion of all preliminary and final Lessor's
Working Drawings for Lessor's Addition Work. Lessor shall retain its
own architects and engineers to prepare Lessor's Working Drawings.
Within thirty (30) days after Lessor approves the preliminary Lessee's
Working Drawings for Lessee's Addition Work, Lessor shall cause
preliminary Lessor's Working Drawings to be prepared, and upon
completion thereof Lessor shall provide copies of the same to Lessee.
Lessee shall provide to Lessor within fifteen (15) business days
thereafter a list of corrections and modifications which Lessee
reasonably requires to be made to the preliminary Lessor's Working
Drawings by reason of a conflict between such preliminary Working
Drawings and the preliminary Lessee's Working Drawings as approved by
Lessor.
After Lessor has approved final versions of Lessee's Working Drawings
for Lessee's Addition Work, Lessor shall revise the preliminary
Lessor's Working Drawings or Lessor's Addition Work to incorporate, to
the extent reasonably practical, the corrections and modifications
reasonably required by Lessee and to make the same consistent with the
approved final Lessee's Working Drawings. Lessor shall submit final
Lessor's Working Drawings to Lessee for its approval. Lessee shall
review the final Lessor's Working Drawings and, within fifteen (15)
business days after receipt thereof, Lessee shall either (a) notify
Lessor that Lessee has approved the final Lessor's Working Drawings,
or (b) provide to Lessor a list of corrections and modifications which
Lessee reasonably requires to be made to Lessor's Working Drawings by
reason of a conflict between the final approved Lessee's Working
Drawings and such revised Lessor's Working Drawings. In the event
Lessee returns Lessor's Working Drawings to Lessor for such correction
or modification, Lessor shall diligently correct Lessor's Working
Drawings to incorporate, to the extent reasonably practical, the
corrections and modifications reasonably required by Lessee and to
make the same consistent with the approved final Lessee's Working
Drawings, and resubmit them to Lessee for approval pursuant to the
preceding provisions of this paragraph.
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6. PROVISIONS APPLICABLE TO WORKING DRAWINGS GENERALLY. The review and/or
approval by Lessor or its architect or engineers of any plans, sketches or
Lessee's Working Drawings submitted by Lessee relating to the Expansion
Work or Lessee's Addition Work, or the review and/or approval by Lessee or
its architect or engineers of any plans, sketches or Lessor's Working
Drawings submitted by Lessor relating to Lessor's Addition Work, shall not
(i) constitute an opinion or representation by the reviewing/approving
party that the same are in compliance with all applicable Legal
Requirements and the provisions of all applicable insurance policies or as
to the feasibility of constructing the work shown thereon, or (ii) impose
on the reviewing/approving party any responsibility for a design defect, it
being agreed that all such responsibility shall remain solely with the
party which submitted such Working Drawings for review and approval.
Each party submitting preliminary Working Drawings to the other for
approval pursuant to this Work Letter shall include with such submittal a
proposed schedule for the commencement and completion (both substantial
completion and final completion) of the work shown thereon. Each party
reviewing Working Drawings shall also, within the time period above
provided for review of Working Drawings, review and approve or suggest
modifications to such proposed schedule. No Expansion Work shall commence
unless and until the parties have reached agreement upon the schedule for
the Expansion Work; no Addition Work shall commence unless and until the
parties have reached agreement upon the schedule for Lessor's Addition Work
and Lessee's Addition Work. The parties shall make good faith efforts to
reach agreement on each other's Working Drawings and on the schedule for
the performance of the work shown thereon.
In the event that Lessor or Lessee fails to respond to the other party
within any of the 15-business day periods set forth in Paragraphs 4 or 5
above, the party submitting the Working Drawings and/or schedule for review
(the "Submitting Party") shall provide written notice to the other party
(the "Reviewing Party") of such Reviewing Party's failure to respond, which
notice shall state that such Reviewing Party's continued failure to respond
to such Working Drawings and/or schedule within ten (10) days of such
Reviewing Party's receipt of such notice shall be deemed to be approval by
the Reviewing Party of the Working Drawings and/or schedule as submitted by
the Submitting Party. In the event that the Reviewing Party fails to
respond in writing to the Working Drawings within such 10-day period, the
Reviewing Party shall be deemed to have approved the Working Drawings
and/or schedule as submitted to it.
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7. COST OF LESSOR'S ADDITION WORK. Lessor shall also provide to Lessee,
together with Lessor's preliminary Working Drawings for Lessor's Addition
Work, an estimate of the cost to construct Lessor's Addition Work
(supported by bids or take-offs from the preliminary Working Drawings),
broken down into reasonable detail. Lessee shall have twenty (20) days from
its receipt of such cost breakdown to notify Lessor in writing that either
(i) Lessee approves such cost estimate, or (ii) Lessee does not approve
such cost estimate and desires to complete the preparation of Lessor's
Working Drawings and to construct Lessor's Work as provided in Paragraph
15(g) of the Amendment, or (iii) Lessee does not approve such cost estimate
and thereby rescinds its exercise of the Building Addition Option. Lessee
acknowledges that any such cost estimate is an estimate only, and that
Basic Rent on account of the Building Addition shall be based upon the
actual out-of-pocket cost to Lessor of performing Lessor's Addition Work.
If Lessee does not approve such cost estimate and desires to complete the
preparation of Lessor's Working Drawings and to construct Lessor's Work as
provided in Paragraph 15(g) of the Amendment, then Lessee shall pay to
Lessor, within thirty (30) days of demand therefor, as Additional Rent, all
out-of-pocket costs incurred by Lessor (i) in connection with preparing the
Working Drawings for Lessor's Addition Work prior to Lessor's receipt of
such notice from Lessee, or (ii) in terminating any contracts theretofore
entered into by Lessor in connection with the preparation of Lessor's
Working Drawings for Lessor's Addition Work or for the construction
thereof.
If Lessee rescinds its exercise of the Building Addition Option, then the
Lease shall continue in full force and effect as if Lessee had given
Lessee's Notice of Exercise and not exercised the Building Addition Option,
except that:
(i) Lessee shall pay to Lessor, within thirty (30) days of demand
therefor, as Additional Rent, all out-of-pocket costs incurred by
Lessor (A) in demolishing the Adjacent Building and levelling the
Adjacent Land, (B) in preparing the Working Drawings for Lessor's
Addition Work, or (C) in terminating any contracts theretofore entered
into by Lessor in connection with the preparation of Lessor's Working
Drawings for Lessor's Addition Work or for the construction thereof;
and
(ii) Lessee shall have waived any further right to exercise the Building
Addition Option.
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If Lessee does not respond to such cost breakdown within such 20-day
period, Lessor shall give Lessee written notice of its failure to respond,
which notice shall state that Lessee's continued failure to respond to such
cost breakdown within ten (10) days of Lessee's receipt of such notice
shall be deemed to be approval of such cost breakdown by Lessee, and if
Lessee thereafter fails to respond in writing to such cost breakdown within
such 10- day period, Lessee shall be deemed to have approved such cost
breakdown as submitted to it. In no event shall Lessor be required to
prepare final Working Drawings for Lessor's Addition Work, or to perform
any of Lessor's Addition Work, unless and until Lessee has approved the
estimated cost of Lessor's Addition Work (or is deemed, pursuant to the
provisions of this Paragraph 7, to have approved such estimated cost).
8. EXPANSION WORK AND LESSEE'S ADDITION WORK. Lessee shall be solely
responsible for obtaining all Construction Authorizations required for the
Expansion Work or Lessee's Addition Work. Lessor shall provide reasonable
cooperation to Lessee in making and prosecuting applications for such
Construction Authorizations, but Lessor shall not be required to incur any
cost or expense in so doing. Lessee shall apply for and maintain in full
force and effect (or cause Lessee's General Contractor to apply for and so
maintain) all Construction Authorizations required for the construction of
the Expansion Work or Lessee's Addition Work, and upon completion of the
Expansion Work or Lessee's Addition Work (as the case may be), shall obtain
a certificate of occupancy for the Premises or the Building Addition (as
the case may be) from the appropriate governmental authority. Lessee shall
deliver to Lessor a copy of said certificate of occupancy promptly after
receiving the same.
Lessee shall obtain from Lessee's General Contractor (or, if no general
contractor is retained, from each trade contractor) a guaranty against
construction defects for a period of not less than one (1) year.
Promptly after receiving all Construction Authorizations required for the
Expansion Work or Lessee's Addition Work (as the case may be), Lessee shall
cause Lessee's General Contractor to commence construction and diligently
to proceed to completion thereof. All construction shall be performed in a
good and workmanlike manner, using new materials and in compliance with the
approved Lessee's Working Drawings, the Construction Authorizations, all
Legal Requirements, and the provisions of all applicable insurance
policies.
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Lessee shall be solely responsible for all costs and expenses of all
architects, engineers and other consultants, and contractors,
subcontractors and suppliers retained or employed (directly or indirectly)
by Lessee in connection with the design or construction of the Expansion
Work or Lessee's Addition Work. Lessee shall pay promptly for all labor and
materials supplied to Lessee in connection with the Expansion Work or
Lessee's Addition Work, shall not cause or permit any liens for such labor
or materials to attach to the Land, the Building, the Adjacent Land or the
Building Addition, and shall bond or discharge any such lien which may be
filed or recorded within thirty (30) days after Lessee receives notice of
such filing or recording.
Lessor shall have no obligation to make any payment on account of the cost
of preparing Lessee's Working Drawings or the construction of the Expansion
Work or Lessee's Addition Work.
The performance of the Expansion Work or Lessee's Addition Work (as the
case may be) shall be subject to the requirements set forth in Section
12.0(f) of the Lease. Lessor may inspect such work at any time or times and
shall promptly give written notice to Lessee of any observed defects.
Lessee shall promptly correct all such defective work at its sole cost and
expense. In the event that at any time during construction of the Expansion
Work or Lessee's Addition Work Lessee fails so to correct promptly any
defective work, Lessor shall give an additional written notice to Lessee
which notice shall state that if Lessee does not correct such defective
work within ten (10) days of its receipt of such notice (or, if such
defective work cannot reasonably be corrected within such 10-day period, if
Lessee does not commence the correction of such defective work within such
10-day period and continue such correction diligently to completion
thereafter), then, in addition to any other remedies which Lessor may have
under the Lease or at law or in equity for such default, Lessor may correct
such work. If Lessor thereafter corrects such defective work in accordance
with the provisions of this Paragraph, Lessor shall provide to Lessee
reasonable supporting documentation of the actual out-of-pocket costs
incurred by Lessor in correcting such defective work and the provisions of
Paragraph 16(b) below shall apply.
9. LESSOR'S ADDITION WORK. Lessor shall be solely responsible for obtaining
all Construction Authorizations required for Lessor's Addition Work.
Promptly after receiving all Construction Authorizations required for
Lessor's Addition Work, Lessor shall commence construction and diligently
proceed to completion thereof. All construction shall be performed in a
good and workmanlike manner, using new materials and in compliance with the
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approved Lessor's Working Drawings, the Construction Authorizations, all
Legal Requirements, and the provisions of all applicable insurance
policies. Lessor shall use reasonable efforts to minimize the cost of
Lessor's Addition Work.
Lessor shall obtain from its general contractor (or, if no general
contractor is retained, from each trade contractor) a guaranty against
construction defects for a period of not less than one (1) year.
Lessee may inspect such work at any time or times and shall promptly give
written notice to Lessor of any observed defects. Lessor shall promptly
correct all such defective work at its sole cost and expense. In the event
that at any time during construction of Lessor's Addition Work Lessor fails
so to correct promptly any defective work, Lessee shall give an additional
written notice to Lessor which notice shall state that if Lessor does not
correct such defective work within ten (10) days of its receipt of such
notice (or, if such defective work cannot reasonably be corrected within
such 10- day period, if Lessor does not commence the correction of such
defective work within such 10-day period and continue such correction
diligently to completion thereafter), Lessee may correct such work. If
Lessee thereafter corrects such defective work in accordance with the
provisions of this Paragraph, Lessee shall provide to Lessor reasonable
supporting documentation of the actual out-of-pocket costs incurred by
Lessee in correcting such defective work and the provisions of Paragraph
16(a) below shall apply.
10. Substantial Completion; Building Addition Rent Commencement Date.
----------------------------------------------------------------
(a) Lessor and Lessee acknowledge that portions of Lessor's Addition Work
will be proceeding concurrently with Lessee's Addition Work. Each party
shall make diligent efforts to complete in a timely manner those portions
of its respective work which must be completed before the other party can
perform its work in that area.
(b) The Building Addition Rent Commencement Date shall be the first to
occur of:
(i) the day on which Lessor's and Lessee's architects jointly
reasonably determine that the Building Addition has been
"substantially completed", meaning that Lessor's Addition Work
and Lessee's Addition Work have been completed, except for items
of work which are not necessary to make the Building
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Addition reasonably usable for the Permitted Uses and which,
because of season or weather or nature of the item, cannot
practicably be done at that time;
(ii) the date on which Lessee first occupies the Building Addition or
any portion thereof for the Permitted Uses; or
(iii) the date on which Lessor's and Lessee's architects jointly
reasonably determine that the Building Addition would have been
substantially completed but for Lessee's Delay.
11. Delays.
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(a) LESSOR'S DELAY. If the substantial completion of Lessee's Addition Work
is delayed by:
(i) the failure of Lessor to substantially complete those portions of
Lessor's Addition Work which must be substantially completed in
order for construction of Lessee's Addition Work to proceed in a
timely manner, which failure is caused by the delay of Lessor,
Lessor's employees or agents, or Lessor's architects or
engineers, or Lessor's general contractor or any subcontractor or
supplier thereof (but specifically excluding any delay caused by
Lessee, Lessee's architects or engineers, Lessee's General
Contractor, or any subcontractor or supplier thereof or any delay
caused by an event of Force Majeure (as defined in Section 24.0
of the Lease)), then the Building Addition Rent Commencement
Date shall be delayed beyond the date set forth in the schedule
approved pursuant to Paragraph 5 above by the number of days of
actual delay in the substantial completion of Lessee's Addition
Work caused by such failure on the part of Lessor (as reasonably
determined by Lessor's architect), PROVIDED, HOWEVER that in the
event of the occurrence of any such act or omission which Lessee
believes is delaying the performance by Lessee's General
Contractor or any subcontractor thereof, Lessee shall give notice
thereof to Lessor within ten (10) days of Lessee's acquiring
actual knowledge of such act or omission, which notice shall be a
condition precedent to such act or omission being deemed a basis
for an extension of the Building Addition Rent Commencement Date
under this clause (i); or
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(ii) the failure of Lessor to respond to preliminary Working Drawings
or final Working Drawings submitted by Lessee within the
15-business day period for such response as set forth in
Paragraph 5 of this Work Letter, then the Building Addition Rent
Commencement Date shall be delayed beyond the date set forth in
the schedule approved pursuant to Paragraph 5 above by one day
for each day such response is delayed beyond such 15-business day
period.
(b) LESSEE'S DELAY. If the substantial completion of Lessee's Addition Work
is delayed by any cause other than (i) a Lessor's Delay as defined above,
or (ii) an event of Force Majeure (as defined in Section 24.0 of the Lease)
(a "Lessee's Delay"), such delay shall have no effect on the Building
Addition Rent Commencement Date and the Building Addition Rent Commencement
Date shall be the date on which Lessor's architect reasonably determines
that the Building Addition would have been substantially completed but for
such Lessee's Delay.
(c) FORCE MAJEURE. In the event that either Lessee or Lessor is delayed in
the performance of any of its obligations hereunder by the occurrence of an
event of Force Majeure, then the Building Addition Rent Commencement Date
shall be extended one day for each day such event of Force Majeure
continues.
12. COSTS OF WORK. In connection with any Expansion Work, Lessor's Addition
Work or Lessee's Addition Work performed pursuant to this Supplementary
Work Letter:
(a) the party performing such work shall provide reasonably detailed
information to the other party on a periodic basis concerning the
actual out-of-pocket costs and expenses being incurred in connection
with the design and performance of such work, together with, upon
request, reasonable supporting documentation, and
(b) within a reasonable time after completion of such work, the party
performing such work shall provide to the other party a final
statement of the total actual out-of-pocket costs and expenses
incurred in connection with the design and performance of such work,
in reasonable detail, and shall further provide, upon request,
reasonable supporting documentation therefor to the extent not
previously provided to the requesting party pursuant to the preceding
subparagraph (a).
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13. LESSEE'S ACCESS TO THE PREMISES. Lessee and Lessee's architects, engineers,
Lessee's General Contractor, its subcontractors and suppliers may, at
Lessee's sole risk, enter upon the Expansion Premises (and in the case of
Lessee's Addition Work, upon the Adjacent Land and the Building Addition)
for the limited purpose of constructing the Expansion Work or Lessee's
Addition Work (as the case may be) PROVIDED that such persons work in
harmony with Lessor and Lessor's general contractor, its subcontractors and
suppliers. If at any time such entry shall cause or threaten to cause
disharmony or otherwise interfere with the orderly completion or operation
of the Building or the Building Addition, Lessor shall have the right upon
twenty-four (24) hours' written notice to Lessee to withdraw the consent to
such entry given in this Paragraph. Any such entry onto the Land, the
Building, the Premises, the Adjacent Land or the Building Addition shall be
deemed to be under all of the terms, covenants, conditions and provisions
of this Lease. Lessor shall not be liable in any way for any injury, loss
or damage which may occur to any of Lessee's work and installations made in
the Building or the Building Addition or to properties placed therein
during construction of the Expansion Work or Lessee's Addition Work, the
same being at Lessee's sole risk, EXCEPT that the foregoing shall not apply
to any injury, loss or damage caused by the negligence or willful
misconduct of Lessor or its officers, agents, employees, servants or
contractors.
14. LESSOR'S AND LESSEE'S REPRESENTATIVES. Prior to the commencement of any
design work for each of the Expansion Work or the Addition Work, each party
hereto shall designate in writing to the other a person as "Lessor's
Representative" and "Lessee's Representative" respectively, which person
shall be available during ordinary business hours to review the progress of
the work and to respond to issues which arise during construction. Each
party may rely on the other's Representative with respect to all matters
which pertain to this Work Letter, each party having authorized its
Representative to make decisions binding upon such party with respect to
such matters.
15. Completion of Lessor's Addition Work and Acceptance by Lessee.
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(a) A punchlist of incomplete or defective items of Lessor's Addition Work
shall be developed by Lessee and Lessor within fifteen (15) days after
Lessor's Addition Work is "substantially completed" (as defined in
Paragraph 10(b) of this Work Letter) by means of a joint inspection of
the Building Addition by Lessor and Lessee or their respective
architects or designees. Lessor shall complete all punchlist work as
soon as practicable.
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(b) Lessor's Addition Work shall be deemed to be accepted by Lessee except
for such items as are specified either (a) in the punchlist described
in the preceding subparagraph or (b) in a written notice given by
Lessee to Lessor not later than thirty (30) days after the earlier of
(i) the date on which Lessor notifies Lessee that Lessor's Addition
Work is complete or (ii) the date on which Lessee first occupies any
portion of the Building Addition to conduct its business therein,
except for defects which are not reasonably discoverable during such
30-day period. Lessor shall correct the items set forth in such notice
as soon as practicable.
(c) In the event that Lessor fails to correct any item specified in the
punchlist or in such a written notice delivered by Lessee to Lessor
within the time period specified in the preceding subparagraphs of
this Paragraph 15, then Lessee may correct such work. If Lessee
thereafter corrects such item in accordance with the provisions of
this Paragraph, Lessee shall provide to Lessor reasonable supporting
documentation of the actual out-of-pocket costs incurred by Lessee in
correcting such defective work and the provisions of Paragraph 16(a)
below shall apply.
16. Costs Incurred in Correcting or Completing Other Party's Work.
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(a) All actual out-of-pocket costs reasonably incurred by Lessee in
correcting or completing any of Lessor's Addition Work as performed by
Lessor shall be deducted from the cost of Lessor's Addition Work for
purposes of calculating Basic Rent for the Building Addition pursuant to
Section 4.1(a)(ii) of the Lease.
(b) All actual out-of-pocket costs reasonably incurred by Lessor in
correcting or completing any item of the Expansion Work or Lessee's
Addition Work shall be paid by Lessee to Lessor, as Additional Rent, within
thirty (30) days of written demand therefor by Lessor.
17. GENERAL. A breach by Lessee of any provision of this Work Letter shall
constitute a default under the Lease, for which Lessor shall have all
remedies therein provided.
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