ARIAD Pharmaceuticals 10-Q 2011
NINTH AMENDMENT TO LEASE
This Ninth Amendment to Lease (“Ninth Amendment”) is dated as of this 20th day of May, 2011, by and between UP 26 Landsdowne, LLC, a Delaware limited liability company (the “Landlord”) and ARIAD Corporation, a Delaware corporation (the “Tenant”).
WHEREAS, by Lease dated January 8, 1992 (“Lease”), Tenant’s predecessor-in-interest leased certain space from Landlord’s predecessor-in-interest in the building known as The Jackson Building, having a street address of 26 Landsdowne Street, Cambridge, Massachusetts (“Premises”);
WHEREAS, Tenant assumed the Lease by that certain Assignment and Assumption of Lease dated October 19, 1992, and recorded with the Middlesex County Southern District Registry of Deeds in Book 22527, Page 581, and filed with the Middlesex County Southern Registry District of the Land Court as Document 888025 noted on Certificate of Title No. 157415;
WHEREAS, the Lease was amended by the First Amendment to Lease dated May 12, 1994, the Settlement Agreement and Second Amendment to Lease dated May, 12, 1994, the Third Amendment to Lease dated June 1, 1994, a letter agreement dated December 16, 1996, a letter agreement dated November 5, 1997, a letter agreement dated July 31, 1998, a letter agreement dated November 30, 1998, the Sixth Amendment to Lease dated December 31, 1999, the Seventh Amendment to Lease dated as of March _, 2001, and the Eighth Amendment to Lease dated as of October 30, 2006 (collectively, the “Lease”), for certain premises (the “Premises”) as more particularly described in the Lease; and
WHEREAS, Landlord and Tenant desire to extend the term of the Lease, and have agreed to further amend the Lease as provided herein.
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, each to the other paid, the receipt and sufficiency of which are hereby mutually acknowledged, Landlord and Tenant hereby agree as follows:
“Section 2.6 Extension Option. Provided that there has been no Event of Default which is uncured and continuing on the part of the Tenant, and the Tenant is, as of the date of exercise and as of the commencement date of the Extension Term, actually occupying at least fifty-one percent (51%) of the Premises for its business purposes, the Tenant shall have the right to extend the Term hereof for two (2) additional periods of five (5) years each (any such period an “Extension Term”) on the following terms and conditions:
(a) Such right to extend the Term shall be exercised by the giving of notice by Tenant to Landlord at least twelve (12) months prior to the expiration of the Term or the first Extension Term, as applicable (the “Extension Notice Deadline Date”). Upon the giving of such notice on or before the Extension Notice Deadline Date, this Lease and the Term hereof shall be extended for an additional term, as specified above, without the necessity for the execution of any additional documents except a document memorializing the Annual Fixed Rent for the Extension Term to be determined as set forth below. Time shall be of the essence with respect to the Tenant’s giving notice to extend the Term on or before the Extension Notice Deadline Date.
(b) The Extension Term shall be upon all the terms, conditions and provisions of this Lease, except the Annual Fixed Rent payable during the first Extension Term shall be at the then Extension Fair Rental Value of the Premises, to be determined under Section 2.6(d) or Section 2.6(e) below. For purposes of this Section 2.6, the “Extension Fair Rental Value” of the Premises shall mean the then current fair market annual rent for leases of other space in Cambridge, Massachusetts, based on the then “as is” conditions of the Premises when compared to similar class A laboratory/office properties in the Cambridge market.
(c) If the Tenant makes a written request to the Landlord for a proposal for the Extension Fair Rental Value for the first Extension Term (“Tenant’s Extension Rental Request”) on or before the day two (2) months prior to the Extension Notice Deadline Date, then the Landlord shall make such a written proposal (“Landlord’s Rental Proposal”) to the Tenant within fifteen (15) days after receipt of Tenant’s Extension Rental Request, but in no event shall the Landlord be required to deliver such a proposal sooner than fourteen (14) months prior to the scheduled commencement of the Extension Term. Following delivery by the Landlord of Landlord’s Rental Proposal to the Tenant, the parties will endeavor in good faith to reach agreement with respect to the establishment of the Extension Fair Rental Value.
(d) Unless the parties have already mutually agreed upon such Extension Fair Rental Value, on or before the day that is ten (10) days prior to the Extension Notice Deadline Date, the Landlord and the Tenant shall deliver to each other their final Rental Proposal and each of such Landlord's Rental Proposal and such Tenant's Rental Proposal (the "Final Rental Proposals") shall be binding on the Landlord and the Tenant, respectively, for the purpose of conducting the resolution procedure described in clause (e) below. Failure by the Landlord or the Tenant to timely deliver a Final Landlord's Rental Proposal or Final Tenant's Rental Proposal, as the case may be, shall result in the other party's proposal being deemed the Extension Fair Rental Value.
(e) If the Tenant exercises its election to extend the Term under clause (a) above, without the Extension Fair Rental Value of the Premises having been established by mutual agreement of the parties as contemplated under clauses (c) and (d) above, then within thirty (30) days after the Tenant's exercise of its election to extend the Term, Landlord and Tenant shall either (i) mutually agree upon the identity of a real estate professional ("Arbiter") with at least ten (10) years continuous experience in the business of appraising or marketing similar commercial real estate in the Cambridge, Massachusetts area who has agreed to serve as hereinafter provided (the "Deciding Arbiter"), or (ii) each appoint an Arbiter who shall, within thirty (30) days of selection, select a third Arbiter to serve as the Deciding Arbiter. The Deciding Arbiter shall select either the Final Landlord's Rental Proposal or the Final Tenant's Rental Proposal as the proposal most accurately stating the Extension Fair Rental Value of the Premises. If the two Arbiters respectively selected by the parties (the "Party Selected Arbiters") cannot agree upon the selection of a Deciding Arbiter, then such two Party Selected Arbiters shall seek the selection of the Deciding Arbiter by the Massachusetts Chapter of the Commercial Brokers Association. The Deciding Arbiter shall give notice of his or her selection to the Landlord and the Tenant and, within thirty (30) days following the Deciding Arbiter’s appointment, its selection of either Final Landlord's Rental Proposal or Final Tenant's Rental Proposal which selection shall be final and binding upon the Landlord and the Tenant. Each party shall pay the fees and expenses of its Party Selected Arbiter and one-half of the fees and expenses of the Deciding Arbiter. In the event that the commencement of the Extension Term occurs prior to a final determination of the Extension Fair Rental Value therefore (the "Extension Rent Determination Date"), then the Tenant shall pay the Annual Fixed Rent in effect at the time. If the Annual Fixed Rent for the Extension Term is determined to be greater than the Annual Fixed Rent paid with respect to the Premises prior to the Extension Rent Determination Date, then the Tenant shall pay to the Landlord the amount of such underpayment within thirty (30) days of the Expansion Rent Determination Date. If the Annual Fixed Rent for the Extension Term is determined to be less than the Annual Fixed Rent paid with respect to the Premises prior to the Extension Rent Determination Date, then the Landlord shall refund to the Tenant the amount of such overpayment within thirty (30) days of the Expansion Rent Determination Date.”
Additionally, so long as Landlord is an affiliate of other building owners within University Park, Landlord shall keep Tenant reasonably informed of other potential expansion opportunities within University Park.”
“Section 2.9 – Termination Option. Provided no Event of Default then exists, Tenant shall have a one (1) time option to terminate this Lease (“Termination Option”), effective on the last day of the fifth (5th) Lease Year (the “Early Termination Date”). Tenant shall exercise the Termination Option by (i) delivering to Landlord written notice (the “Termination Notice”) of such election to terminate the Lease at least twelve (12) months prior to the Early Termination Date, and (ii) paying to Landlord the Termination Payment (as hereinafter defined) at least twelve (12) months prior to the Early Termination Date. If Tenant properly delivers the Termination Notice and makes the Termination Payment in a timely manner, then the Lease shall be deemed to have expired by lapse of time on the Early Termination Date. Tenant shall return the Premises to Landlord on the Early Termination Date in accordance with the terms of the Lease, including, but not limited to, Section 4.3. Upon Tenant’s delivery of the Termination Notice, any and all rights of Tenant to extend the Term or lease additional space in University Park shall immediately be void and of no further force or effect. As used herein, "Termination Payment" shall mean the unamortized balance of the Leasing Costs (hereinafter defined) as calculated on a straight-line basis. The term "Leasing Costs" shall mean the sum of (i) the total brokerage commission payable by Landlord in connection with this Amendment ($1,053,790.50), and (ii) any Leasehold Improvement Allowance paid by Landlord pursuant to this Amendment. The Termination Payment amount shall equal two-sevenths of the Leasing Costs up to a maximum Termination Payment of One Million Seven Hundred Thirty-Four Thousand Eight Hundred Twelve and 00/100 Dollars ($1,734,812.00) if the Landlord has paid to the Tenant the entire Leasehold Improvement Allowance. If the Termination Option is properly exercised by the Tenant, the Lease shall be terminated effective as of July 31, 2017.”
During the construction of any Improvements with respect to which Tenant desires to have the Leasehold Improvement Allowance applied, and in accordance with the commercially reasonable terms and conditions typically imposed upon a landlord pursuant to a construction loan agreement, such as, without limitation, lien waiver, and other requisition conditions, Tenant shall, on a periodic basis (but in any event no more frequently than once per month), deliver to Landlord a requisition (“Requisition”) for payment showing the costs of the Improvements in question and the amount of the current payment requested from Landlord for disbursement from the Leasehold Improvement Allowance within thirty (30) days after receipt of Tenant’s Requisition. Following the completion of any such Improvements, Tenant shall deliver to the Landlord, within ninety (90) days of completion, a statement showing the final costs of such Improvements, the amounts paid to date by or on behalf of the Tenant for such Improvements, and any amounts available for release of retainage, together with a copy of the final as built drawings of any Improvements. In no event shall Landlord charge any markup or oversight fee for any work performed by Tenant; provided, however, Tenant shall reimburse Landlord for any reasonable third party out of pocket expenses incurred by Landlord up to Five Thousand Dollars ($5,000.00) in connection with Landlord’s review of the plans and specifications together with the Improvements; provided, however, Landlord shall first use in house personnel to review the plans and specifications and will only utilize third party resources in the event that additional expertise is necessary in Landlord’s reasonable opinion.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Amendment to be duly executed under seal by persons hereunto duly authorized, and multiple copies, each to be considered an original hereof, as of the date first set forth above.