This is a document preview
LEASE FOR COMBINATION
EAGLEVIEW CORPORATE CENTER
LANDLORD: THE HANKIN GROUP
TENANT: ISOLAGEN, INC.
TABLE OF CONTENTS
LEASE is made this 7 th day of April, 2005 between THE HANKIN GROUP , a Pennsylvania limited partnership (“Landlord”), with its office at Eagleview Corporate Center, 707 Eagleview Boulevard, P.O. Box 562, Exton, Pennsylvania 19341, and ISOLAGEN, INC. , a Delaware corporation (“Tenant”), with its office at 2500 Wilcrest, 5 th Floor, Houston, TX 77042.
1. LEASED SPACE AND PURPOSE.
(a) Landlord hereby rents to Tenant 86,500 rentable square feet of space within the building located at 405 Eagleview Boulevard (“Building”), including the parcel of land known as Lot 10 (the “Land”) within the center (“Center” or “Eagleview Corporate Center”) known as Eagleview Corporate Center, Route 100, Exton, Uwchlan Township, Chester County, Pennsylvania. The Building and Land are sometimes referred to collectively as the “Leased Space”. The location of the Leased Space and the Building is shown on the plan attached hereto as Exhibit “A”. The Leased Space includes all fixtures, improvements, additions and other property installed therein at the Commencement Date (hereafter defined), or at any time during the term of this Lease (other than Tenant’s movable personal property and trade fixtures), together with the Land and, in common with others, all public portions of the Center.
(b) The Leased Space shall be used and occupied as a mixed-use facility consisting of general office space, warehouse space and laboratory space in connection with Tenant’s Business (hereafter defined) and for no other purpose. For purposes hereof, Tenant’s Business shall be deemed to be the development and commercialization of pharmaceutical products and research activities in connection therewith.
(c) Tenant accepts the Leased Space in its current condition, “as is”.
(d) This Lease is contingent upon Landlord’s entering into a termination agreement in form and substance satisfactory to Landlord in its sole discretion with Viropharma, Inc., the current tenant of the Leased Space. Landlord shall notify Tenant in writing when this condition has been satisfied; in the absence of Tenant’s receipt of such notice on or before the Commencement Date, this Lease shall be null and void and neither party shall have any further obligation to the other hereunder.
(a) The term of this Lease and Tenant’s obligation to pay rent hereunder shall commence upon April 1, 2005 (“Commencement Date”).
(b) The term (“Term”) of this Lease shall end on March 31, 2013 unless sooner terminated or renewed in accordance with this Lease. The portion of the term ending on March 31, 2008 is sometimes referred to herein as “Initial Period”.
(c) Notwithstanding anything contained in this Lease to the contrary, on or before March 31, 2007, Tenant shall deliver to Landlord written notice of whether or not Tenant desires to accelerate the expiration date of the Term to the end of the Initial Period, being March 31, 2008, or continue in occupancy until the originally scheduled expiration date, March 31, 2013, in which latter event the Term of this Lease shall continue as originally scheduled until March 31, 2013. In the absence of any notice, Landlord shall issue written notice to Tenant that Landlord has not received the required notice from Tenant, and unless within five (5) days thereafter, Tenant by written notice to Landlord reinstates the Lease and the Term until March 31, 2013, Tenant shall be deemed to have elected to accelerate the expiration date to March 31, 2008, and shall vacate the Premises on such date.
(i) “Tenant’s Proportionate Share” is 100%.
(ii) “Real Estate Taxes” shall mean all taxes and assessments levied, assessed or imposed at any time by any governmental authority upon or against the Building and the land upon which the Building is situate, and also any tax or assessment levied, assessed or imposed at any time by any governmental authority in connection with the receipt of income or rents from said Building or land to the extent that the same shall be in lieu of (and/or in lieu of an increase in) all or a portion of any of the aforesaid taxes or assessments upon or against the said Building and/or land. If, however, any assessment included within Real Estate Taxes is payable in installments extending beyond the term of this Lease, Tenant shall only be obligated to pay those installments coming due during the term of this Lease. “Real Estate Taxes” shall not include any penalty or interest as a result of Landlord’s late payment. Landlord further agrees to make payment of Real Estate Taxes in a timely manner so as to take advantage of any applicable discount and to provide to Tenant copies of receipts for paid Real Estate Taxes not later than thirty (30) days after the Real Estate Taxes are due. Failure of Landlord to provide such receipts to Tenant shall permit Tenant to suspend payment of Tenant’s Proportionate Share of Real Estate Taxes until such receipts are furnished to Tenant.
At any time and from time to time during the term of this Lease, Tenant, at its expense, shall have the right to institute proceedings challenging the amount of Real Estate Taxes. Landlord agrees to reasonably cooperate with Tenant in connection therewith. Any refund awarded shall be reimbursed first to each party in proportion to the expenses incurred by such party in prosecuting such appeal, with any balance thereof next being refunded to Tenant in an amount equal to Tenant’s Proportionate Share of (A) the balance of such award remaining after the foregoing cost reimbursements (B) multiplied by a fraction (1) the numerator of which shall be the number of days during the tax year for which the refund is awarded for which Tenant has paid Real Estate Taxes pursuant to this Lease and (2) the denominator of which is 365.
(iii) “Operating Expenses” shall mean that part of any and all expenses reasonably and actually incurred by Landlord in connection with its ownership, maintenance and
operation of the Building, the land upon which the Building is situate, excluding Real Estate Taxes and interest or amortization payments on any mortgage, but including, without limitation, electricity (other than as billed directly to tenants based on usage); insurance maintained on the Building in accordance herewith; all direct and indirect labor costs; a management fee for Landlord’s management of the relationships with contractors (other than the Association) providing yard and landscape maintenance, snow clearance and insurance required to be maintained hereunder if Landlord, upon request of Tenant, is able to place such insurance at more favorable premium rates than Tenant is able to obtain, which management fee shall not exceed four percent (4%) of the annual amount actually paid under such contracts (“Management Fee”); legal expenses; all repairs required to be performed by Landlord as provided for in this Lease; exterior, roof and structural decoration, repairs and maintenance; snow removal; building supplies; all charges for the exterior of the Building for electricity; the cost of operating an identification sign or signs for the Building; replacing of paving, curbs, walkways, directions or other signs; drainage; maintenance and monitoring of fire sprinkling systems (if any); the Building’s proportionate share of common expenses owed to the Eagleview Corporate Center Association or its successor or any other similar entity which owns and maintains the common areas of the Center (collectively, “Association”); and such other expenses as Landlord may deem necessary and proper in connection with the operation and maintenance of the exterior, roof and structure of the Building, excluding any costs which under generally accepted accounting principles (“GAAP”) are capital expenditures; provided, however, that Operating Expenses shall also include the annual amortization (over the anticipated useful life established in accordance with GAAP) of a capital improvement falling within any of the following categories: (i) a labor saving device or improvement which is intended to reduce or eliminate any other component of Operating Expenses; (ii) an installation or improvement required by reason of any law, ordinance or regulation, which requirement did not exist on the date of this Lease and is generally applicable to similar buildings; (iii) an installation or improvement which directly enhances safety of tenants in the Building or Center generally. Landlord shall have the right to bill Tenant directly for any items of Operating Expenses which can be attributed directly to Tenant’s use only.
Notwithstanding any provision to the contrary, Operating Expenses shall not include:
(A) any payments (such as salaries or fees) to the Landlord’s executive personnel or in-house site managers except for the Management Fee;
(B) depreciation or interest, except to the extent permitted above in connection with capital improvements;
(C) mortgage or ground lease payments;
(D) taxes on the Landlord’s business (such as income, excess profits, franchise, capital stock, estate, inheritance) except to the extent same are in lieu of Real Estate Taxes or increases in Real Estate Taxes;
(E) leasing commissions, broker’s fees or legal fees incurred in connection with leases of space in the Building;
(F) legal fees that do not directly benefit Tenant or the Building (provided that legal fees incurred in connection with leases of space in the Building or in enforcing tenant obligations shall not be deemed to benefit the Building);
(G) costs to correct defective repairs or replacements hereinafter provided by or at the direction of Landlord;
(H) costs of repairs covered by valid warranties;
(I) expenses paid directly by a tenant for any reason (such as excessive utility use, direct utility consumption, damage for which such tenant is responsible);
(J) costs for improving any tenant’s space;
(K) any repair or other work necessitated by condemnation, or by fire or other insured casualty in excess of applicable deductibles;
(L) any costs, fines and the like due to Landlord’s violation of any law, governmental rule or authority;
(M) refinancing costs;
(N) costs for any conversion of the heating system to gas heat except to the extent such conversion is undertaken in an effort to reduce Operating Expenses and the cost thereof is treated in the same manner as a capital improvement;
(O) costs paid to Landlord or its affiliates other than the Management Fee which exceed those reasonably charged in arms length transactions with third parties in the general area of the Building; and
(P) services, benefits or both provided to some tenants but not to Tenant.
(iv) The “Base Rent for Adjustment Purposes” shall mean, for the first year of the Term following the Initial Period beginning April 1, 2008, $1,119,310.00, and for each subsequent year during the five year period beginning April 1, 2008 and expiring March 31, 2013, the Minimum Annual Rent under this Lease in effect for the immediately preceding year.
(v) The “CPI U” shall mean the Consumer Price Index established by the U.S. Department of Labor Bureau of Labor Statistics for all urban consumers for the Philadelphia metropolitan area (CPI-U) (1982-1984 = 100).
(vi) The “Base Index” shall mean, for the initial year following the Initial Period, the CPI U for March, 2005, and for each subsequent year, the CPI U for the month of March one year prior to the Comparison Index.
(vii) The “Comparison Index” shall mean the CPI U for month of March immediately preceding the commencement of each year following the Initial Period.
(viii) The “CPI Adjustment” shall mean, for each year of the Term following the Initial Period, an increase in the Base Rent for Adjustment Purposes by the percentage increase in the Comparison Index over the Base Index, applicable to such year.
The Base Index and Comparison Index for each year of the Term following the Initial Period shall be:
(b) Tenant shall pay Landlord the minimum annual rent (“Minimum Annual Rent”) during the Term in the amounts set forth below, which annual amount shall be paid in equal monthly installments as set forth below on the first day of each calendar month in advance. All rent shall be payable, in advance, and without prior notice or demand, at the address of Landlord set forth in the heading of this Lease or at such other place, or to such other person, as Landlord may from time to time direct in written notice to Tenant. During the Initial Period, Minimum Annual Rent shall be $778,500.00 per year, payable in monthly installments of $64,875.00 each. Thereafter, for each year of the Term following the Initial Period, Minimum Annual Rent shall increase to a sum equal to the Base Rent for Adjustment Purposes, increased by one half the CPI Adjustment, but in no event shall such Minimum Annual Rent be (1) less than the Base Rent for Adjustment Purposes for such year, or (2) during the first year of the five year period beginning April 1, 2008, greater than $1,297,500, or (3) during any subsequent year of such five year period, greater than $1,384,000. Upon the expiration of the Initial Period, and for each year of the Term thereafter, Landlord shall notify Tenant of the Minimum Annual Rent in effect for such year; in the event of any delay in calculation because of a delay in publication of the applicable Comparison Index, Tenant shall pay rent on account based upon the Minimum Annual Rent previously in effect, to be adjusted when the Comparison Index is published.
(c) In addition, Tenant shall pay to Landlord as Additional Rent in equal monthly installments one twelfth (1/12) of Tenant’s Proportionate Share of annual Real Estate Taxes and Operating Expenses, at the time of payment of each monthly installment of Minimum Annual Rent, based upon the most recent costs of Operating Expenses and Real Estate Taxes available.
For the period from the Commencement Date until the issuance of a statement pursuant to subparagraph 3(d) below, such monthly installment shall be equal to $26,742.92.
(d) Within ninety (90) days of the expiration of each calendar year Landlord shall furnish Tenant with a written statement of the actual Operating Expenses and Real Estate Taxes incurred for such year itemizing the expenses claimed by Landlord in reasonable detail. Within ten (10) days of the rendition of such statement, Tenant shall pay any amounts in excess of those collected pursuant to the payments on account of Real Estate Taxes and Operating Expenses pursuant to paragraph 3(c) hereof, and any overpayments shall be credited against the next installment(s) of rent due under this Lease or, at Tenant’s option, refunded to Tenant. In the event the first and/or last years of the Term of this Lease shall not be full calendar years, then Tenant’s obligation for Operating Expenses and Real Estate Taxes attributable to such years shall be pro rated. Tenant may, at its own cost and expense, after full payment of all sums due and owing, audit Landlord’s books and records not more than once each year within sixty (60) days after Landlord’s delivery of its annual statement of Operating Expenses, which books and records shall be maintained in accordance with GAAP. Notwithstanding the foregoing, if any said review of Landlord’s books and records reveals that any item(s) were incorrectly included in Operating Expenses, Tenant shall have the right to inspect Landlord’s books and records with respect to such items for each prior lease year and an adjustment, if any, shall be made in accordance herewith. If Tenant’s audit determines that Landlord’s total charges for Operating Expenses or Real Estate Taxes for a given lease year exceed by more than 5% the total amount properly chargeable to Tenant under this Lease for such year, Landlord, in addition to reimbursing Tenant such excess amount, shall pay Tenant an amount equal to the cost of the audit.
(e) On or before the Commencement Date, Tenant shall establish with a commercial bank approved by Landlord (which approval shall not be unreasonably withheld or delayed), an interest bearing account, into which Tenant shall deposit the sum of $3,298,245 (representing Minimum Annual Rent and estimated Operating Expenses and Real Estate Taxes for the Initial Period) (the “Rent Account”). Tenant shall instruct the bank in which the Rent Account is established (the “Rent Bank”) that there shall be wired into Landlord’s account pursuant to wiring instructions issued by Landlord the sum of $91,618 on the first day of each month beginning on the Commencement Date through and including March 1, 2008, and that such instructions shall be irrevocable absent written instructions (1) from Landlord alone with respect to either (A) an assignment of this Lease and the rights to the Rent Account, instructing the Rent Bank to make payments to Landlord’s assignee, or (B) a request for payment of the balance remaining in the Rent Account, if such request is made after the occurrence of an Event of Default, and such request is accompanied by certification from Landlord that a material Event of Default has occurred, notice of the Event of Default has been properly delivered to Tenant, the grace or notice period required under the Lease and stated in the notice of the default has expired, and the Event of Default has not been cured; or (2) with respect to any other instructions modifying the amount or timing of payment, by Landlord and Tenant jointly. Landlord shall send to Tenant in the manner for delivering notices under this Lease a copy of the request, certification and notice of the Event of Default attached to the certification referred to in clause (B) of the preceding sentence when it is sent or delivered to the Rent Bank. Such disbursements shall be credited
against Tenant’s rent obligations as they come due, and in the event any additional sums are due and owing from Tenant to Landlord, by reason of annual Operating Expense or Real Estate Tax adjustments, or otherwise, the same shall be paid directly by Tenant to Landlord as billed. Tenant hereby grants to Landlord a security interest in the Rent Account, as security for Tenant’s performance of all of its obligations under this Lease, and Tenant shall execute (and cause the Rent Bank to execute) a control agreement and such further documents and instruments reasonable or necessary to perfect such security interest in favor of Landlord, having priority over any claims that may be made by any other party (including those of the Rent Bank). If this Lease terminates pursuant to Section 18(e) or 19, the foregoing security interest shall terminate upon Tenant satisfying any accrued and unpaid rent obligations, and the balance in the Rent Account shall be returned to Tenant. Accrued interest on the Rent Account shall be disbursed to Tenant periodically in accordance with the rules established by the Rent Bank for disbursing interest from similar accounts.
4. ADDITIONAL RENT.
Tenant shall pay to Landlord as “Additional Rent” (in addition to sums payable pursuant to paragraphs 3 (c) and 3(d)) the following:
(a) Expenses Incurred by Landlord as a Result of Tenant’s Default . All sums which may become due by reason of Tenant’s failure to comply with any of the terms, conditions and covenants of this Lease to be kept and observed by Tenant, and any and all damages, costs and expenses (including without limitation thereto reasonable attorney’s fees) which Landlord may suffer or incur by reason of any default of Tenant and any damage to the Building or the real estate of which the Building is a part caused by any negligence or willful misconduct of Tenant or violation of Tenant’s covenants in Section 5(a) below, together with interest to the date of payment (whether before or after entry of judgment and issuance of execution thereon) at a rate equal to five percent (5%) above the prime interest rate (or similar rate if the prime interest rate is no longer published) of Wachovia Bank or its successor, in effect on the date during the period said payment is due (“Default Rate”), which shall continue to accrue interest at the Default Rate after entry of judgment and issuance of execution thereon until paid in full.
(b) Use and Occupancy Taxes . All use and occupancy taxes imposed by any governmental body allocable to the Leased Space.
(c) Utilities . All charges for heat, gas, water, electric, trash and sewage disposal for the Leased Space, whether billed directly by the providers of the same to Tenant or by Landlord as the owner of the Building, which charges shall not exceed the charges actually incurred by Landlord therefor.
(d) For purposes of this Lease, the term “Rent” or “rent” shall be deemed to refer to Minimum Annual Rent and Additional Rent.
5. NEGATIVE COVENANTS OF TENANT: HAZARDOUS SUBSTANCES.
(a) Tenant will not:
(i) damage the Leased Space or any other part of the Building;
(ii) bring into or permit to be kept in the Leased Space any dangerous, explosive or obnoxious substances except as may be used in Tenant’s Business which use Tenant shall undertake in compliance with all applicable laws regulating same;
(iii) conduct itself or permit its agents, servants, employees or invitees to conduct themselves in a manner that in Landlord’s judgment reasonably exercised is improper or unsafe except that the operation of, or activities related to, Tenant’s Business shall not be deemed to violate this provision, provided same are undertaken in compliance with all applicable laws;
(iv) manufacture any commodity other than in the course of Tenant’s Business or prepare or dispense any food or beverages in the Leased Space, except for consumption in the Leased Space by Tenant, its employees or invitees;
(v) remove, attempt to remove or manifest any intention to remove Tenant’s goods or property from the Leased Space other than in the ordinary course of business;
(vi) do or suffer to be done, any act, matter or thing objectionable to Landlord’s fire insurance companies or Board of Underwriters whereby the fire insurance or any other insurance now in force or hereafter to be placed by Landlord on the Leased Space or the Building or Center shall become void or suspended, or whereby the same shall be rated as a more hazardous risk than at the Commencement Date. Tenant agrees to pay to Landlord as Additional Rent, any and all increases in premiums for insurance carried by Landlord on the Leased Space, or on the Building, caused in any way by the occupancy of Tenant.
(b) Tenant’s Responsibility Regarding Hazardous Substances.
(i) The following definitions shall apply herein:
(A) Hazardous Substances . The term “Hazardous Substances,” as used in this Lease, shall include, without limitation, flammables, explosives, radioactive materials, asbestos, polychlorinated biphenyls (PCB’s), chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances or related materials, petroleum and petroleum products, and substances declared to be hazardous or toxic under any law or regulation now or hereafter enacted or promulgated by any governmental authority.
(B) Tenant Responsible Parties . The term “Tenant Responsible Parties” as used in this Lease shall mean Tenant, its employees, agents, contractors and/or invitees.
(ii) Tenant’s Restrictions. Tenant shall not cause or permit to occur:
(A) Any violation of any federal, state, or local law, ordinance, or regulation now or hereafter enacted, related to environmental conditions on, under, or about the Leased Space or Center, arising from the use or occupancy of the Leased Space by any Tenant Responsible Party, including, but not limited to, soil and ground water conditions; or
(B) The use, generation, release, manufacture, ref