EX-10.1 2 a2048393zex-10_1.txt EXHIBIT 10.1 LEASE LEASE made this 30th day of January, 2001 (the "Date of this Lease" or "Date of the Lease") by and between WATERFORD PARK, LLC, a Massachusetts limited liability company (the "Landlord"), and SEPRACOR, INC., a Delaware corporation (the "Tenant"). In consideration of the mutual covenants and conditions set forth below, Landlord and Tenant hereby agree as follows. ARTICLE I Basic Data, Definitions, Schedules 1.1 Basic Data. Each reference in this Lease to any of the following subjects shall be construed to incorporate the data stated for that subject in this Section 1.1. Landlord's Address: c/o Waterford Development Corp. 175 Highland Avenue Needham, Massachusetts 02494 Tenant's Address: 111 Locke Drive Marlborough, Massachusetts 01752 Attn: Senior Vice President of of Finance and Administration Office, Research and Development Park or Park: Solomon Pond Corporate Center, Marlborough, Middlesex County, Massachusetts, as more particularly described in Schedule DP attached hereto. The Office, Research and Development Park consists of the Subject Land, Phase II Land, Phase III Land and related easements. The Park contains approximately 58 acres. Subject Land or Land: The particular parcel of land in the Office, Research and Development Park described in Schedule DL attached hereto. Ground Landlord: Hillside School, Inc., a Massachusetts non-profit corporation which owns the fee interest in the Subject Land and Office, Research and Development Park. Ground Lease: A 99 year lease of the Subject Land between Ground Landlord and Landlord (as Ground Tenant) dated on or about the Date of this Lease and entitled "Phase I Ground Lease from Hillside School, Inc. to Waterford Park, LLC for Land Located in Marlborough, Massachusetts." A copy of the Ground Lease is attached hereto as Schedule GL. A Notice of the Ground Lease is to be recorded with Middlesex South Registry of Deeds. Building: An approximately 192,600 square foot building to be constructed by Landlord on the Subject Land as part of the Project. Infrastructure: The access roadways, driveways, parking areas, utilities, sidewalks, traffic controls and other improvements to be constructed by Landlord on the Subject Land or otherwise in or about the Office, Research and Development Park (including required off-site work) to serve the Building and/or buildings in the Park, as part of the Project or future development phases of the Park. Base Project: The Building (exclusive of Tenant's Specialized Improvements/Base Building Upgrades and Tenant's Fixtures and Equipment) plus the Infrastructure to be constructed by Landlord on the Subject Land and in or about other portions of the Office, Research and Development Park which is allocated to the Base Project, all pursuant to Article IV. The Base Project is more particularly described in Schedule BP attached hereto. Tenant's Specialized Improvements/ Base Building Upgrades (sometimes abbreviated as TSI/BBU): The specialized improvements to be constructed in the Building by Landlord pursuant to Article IV, above and beyond the Base Project, in order to meet the particular requirements of the Tenant's business, including both specialized additional items and upgrades to Base Building Elements (such as enhanced ventilation systems). Tenant's Specialized Improvements/Base Building Upgrades are more particularly described in Schedule SI attached -2- hereto. Tenant's Specialized Improvements/Base Building Upgrades (as distinguished from Tenant's Fixtures and Equipment described below) generally consist of items built or incorporated into the fabric of the Building and therefore not easily removed. Landlord is responsible for both procurement and installation of the TSI/BBU. Tenant's Fixtures and Equipment (sometimes abbreviated as TFE): The specialized fixtures and equipment to be installed in the Building by Landlord pursuant to Article IV, above and beyond the Base Project, in order to meet the particular requirements of Tenant's business. Tenant's Fixtures and Equipment are more particularly described in Schedule FE attached hereto. Tenant's Fixtures and Equipment, (as distinguished from Tenant's Specialized Improvements/Base Building Upgrades described above) generally consist of items which are only placed or affixed in the Building and therefore are easily removed. The TFE are to be procured by Tenant at its own cost and expense, separate from the Project, and delivered to Landlord, and then, once so delivered, installed by Landlord as part of the Project. Phases II/III Preliminary Work: Portions of the Infrastructure work in the Office, Research and Development Park and design, permitting and legal work for the entire park being completed as part of the initial Project but allocated for cost purposes to the future Phase II and Phase III Projects because they will also benefit therefrom. Project: The Base Project, Tenant's Specialized Improvements/Base Building Upgrades, installation (but not procurement) of Tenant's Fixtures and Equipment and Phases II/III Preliminary Work. Premises: The Subject Land and the Building and Infrastructure thereon, (a) together with the right and easement to use the Infrastructure located in or about other portions of the Office, Research and Development Park from time to time as are necessary to serve the Subject Land -3- and Building and (b) subject to the rights of all others entitled thereto to use the Infrastructure (whether located on or off the Subject Land) in common with the owner, tenants or occupants of the Subject Land and Building. Plans and Specifications: The plans and specifications for the Project set forth in Schedule PS attached hereto. Budgeted Cost for Base Project: $29,471,463 Budgeted Cost for Tenant's Specialized Improvements/Base Building Upgrades: $9,106,671 Budgeted Cost for Installation of Tenant's Fixtures and Equipment; $218,623 Budgeted Cost for Phases II/III Preliminary Work: $874,288 Budgeted Cost for Entire Project: $39,671,045 Interim First Mortgage Lender or IFM Lender: Tenant, or at Tenant's option, a Tenant Affiliate. Interim First Mortgage Loan or IFM Loan: A $20,860,000 interest-only construction loan secured by a first mortgage of the Premises to be made by Interim First Mortgage Lender to Landlord to finance construction of the Project, and then upon substantial completion of the Project to convert to an amortizing term loan maturing five years after the original loan date (i.e. a so-called "mini-perm" loan), all as more particularly set forth in Section 4.11 and the Interim First Mortgage Loan Documents. Second Mortgage Lender: Tenant or, at Tenant's option, a Tenant Affiliate. Second Mortgage Loan: A $6,458,597 mortgage loan (such amount being 75% of the remainder obtained after subtracting (a) the Construction Loan amount from (b) the Budgeted Cost for the Base Project), to be made by Second Mortgage Lender to Landlord further to finance the Project, all as more particularly set forth in Section 4.11 and the Second Mortgage Loan Documents. -4- Landlord's Contribution to Base Project Cost: $2,152,866, being 25% of the remainder obtained after subtracting (a) the Construction Loan amount from (b) the Budgeted Cost for the Base Project. Tenant's Contribution for Tenant's Specialized Improvements/Base Building Upgrades: $9,106,671, being 100% of the Budgeted Cost for Tenant's Specialized Improvements/Base Building Upgrades. Tenant's Contribution for Installation of Tenant's Fixtures and Equipment: $218,623, being 100% of the Budgeted Cost for installation Tenant's Fixtures and Equipment. Landlord's Contribution for Phases II/III Preliminary Work: $874,288, being 100% of the Budgeted Cost for the Phases II/III Preliminary Work. Excess Base Project Cost: The amount, if any, by which the actual Base Project Cost exceeds the Budgeted Cost for the Base Project shall be borne by the respective Parties as provided in Section 4.33. Base Project Cost Savings: The amount, if any, by which the actual Base Project Cost is less than the Budgeted Cost for the Base Project shall be shared between the Parties as provided in Section 4.34. Excess Tenant Specialized Improvements/ Base Building Upgrades Cost: The amount, if any, by which the actual Tenant's Specialized Improvements/Base Building Upgrades Cost exceeds the Budgeted Cost for the TSI/BBU shall be borne by the respective Parties as provided in Section 4.35. Tenant's Specialized Improvements/ Base Building Upgrades Savings: The amount, if any, by which the actual Tenant's Specialized Improvements/Base Building Upgrades Cost is less than the Budgeted Cost for the TSI/BBU shall be shared by the parties as provided in Section 4.36. Excess Tenant's Fixtures and Equipment Installation Cost: The amount, if any, by which the actual Tenant's Fixtures and Equipment Installation Cost -5- exceeds the Budgeted Cost of for Installation of the TFE shall be borne by the respective Parties as provided in Section 4.37. Tenant's Fixtures and Equipment Installation Cost Savings: The amount, if any, by which the actual Tenant's Fixtures and Equipment Installation Cost is less than the Budgeted Cost for Installation of the TFE shall be shared between the Parties as provided in Section 4.38. Excess Phase II/III Preliminary Work Cost: The amount, if any, by which the actual Phases II/III Preliminary Work Cost exceeds the Budgeted Cost for such work shall be borne by the respective Parties as provided in Section 4.39. Phase II/III Preliminary Work Cost Savings: The amount, if any, by which the actual Phases II/III Preliminary Work Cost is less than the Budgeted Cost for such work shall be shared between the Parties as provided in Section 4.40. Term Commencement Date or Commencement Date: The first to occur of (a) the date which is 20 days after Landlord has Substantially Completed the Project and the Premises are Ready for Tenant's Occupancy or (b) the date on which Tenant first occupies the Premises or any part thereof for the operation of its business therein for the Permitted Uses. Term: Fifteen (15) years, plus the partial month, if any, at the beginning of the Term, beginning on the Term Commencement Date. Construction Commencement Deadline: Landlord shall submit a purchase order for steel frame for the Building to a qualified manufacturer within ten days after the Date of this Lease. Landlord should then in due course receive a scheduled delivery date from such manufacturer, and shall promptly notify Tenant upon such receipt. The Construction Commencement Deadline shall then be the later of (a) 60 days before the scheduled steel delivery -6- date as specified by such manufacturer or (b) 30 days after the Date of this Lease. Scheduled Completion Date: 13 months after the Construction Commencement Deadline. Outside Completion Deadline: 15 months after the Construction Commencement Deadline. Base Rent: As set forth in Schedule BR attached hereto. Permitted Uses: Office, research, development and laboratory use, including without limitation medical, pharmaceutical, biological and biotechnology research, development and laboratory work which may include experimentation involving laboratory animals (such as mice, rabbits and rats) and so-called recombinant DNA and other genetic research to the extent permitted by Applicable Laws. Also, limited manufacturing accessory to the aforesaid uses, provided that such manufacturing (a) is allowed on the Premises under Applicable Laws, (b) is authorized by the Declaration of Easements, (c) occurs within a building which has substantially the appearance of a first-class office, research and development building and (d) does not result in material air, water noise or other emissions outside such building. Comprehensive General Liability Insurance Limits: $10,000,000 combined single limit (including so-called umbrella or excess liability coverage). Permanent First Mortgage Lender: A recognized bank, insurance company, pension fund, real estate investment trust or other institutional lender which Landlord obtains to make the Permanent First Mortgage Loan. Permanent First Mortgage Loan: A long term first mortgage loan which Landlord shall obtain to pay off and replace the Interim First Mortgage Loan by the maturity date of the latter, as more particularly set forth in Section 5.2 and the First Mortgage Loan Documents. -7- Extension Options or Options to Extend: Tenant shall have options to extend the Term for four consecutive Extension Periods of five years each, as more particularly set forth in Section 2.6. Phase II Land: The particular parcel of land in the Office, Research and Development Park described in Schedule L2 attached hereto. The Phase II Land is adjacent to the Subject Land to the northwest. Phase II Landlord: Waterford Park Phase II, LLC, a Massachusetts limited liability company which is a Landlord Affiliate. Phase II Ground Lease: A 99-year lease of the Phase II Land between Ground Landlord and Phase II Landlord (as Ground Tenant) dated on or about the Date of this Lease and entitled "Phase II Ground Lease from Hillside School, Inc. to Waterford Park Phase II, LLC for Land Located in Marlborough, Massachusetts". A copy of the Phase II Ground Lease is attached hereto as Schedule G2. A notice of the Phase II Ground Lease is to be recorded with Middlesex South Registry of Deeds. Phase II Building: An approximately 79,400 square foot expansion of the Building which Phase II Landlord may construct on the Phase II Land pursuant to the Phase II Project. Phase II Project: The Phase II Building and related infrastructure on the Phase II Land, together with such further infrastructure (if any) in or about other portions of the Office, Research and Development Park as are part of Phase II of construction therein, which Phase II Landlord may construct pursuant to Article XX. A preliminary plan of the Phase II Project is attached hereto as Schedule P2. Phase II Premises: The Phase II Land and Building and related infrastructure thereon, together with the right and easement to use the infrastructure located in or about other portions of the Office, Research and Development Park from time to time as are -8- necessary to service the Phase II Land and Building, in common with all others entitled thereto. Phase II Expansion Option: Tenant has the option to have Phase II Landlord build the Phase II Project on the Phase II Land and to lease the Phase II Premises from Phase II Landlord, in addition to Tenant's leasing of the Premises pursuant to this Lease, as more particularly set forth in Article XX. Phase II Base Rent: If Tenant exercises the Phase II Expansion Option, the base rent under the Phase II Lease between Tenant and Phase II Landlord shall be as set forth in Schedule B2. Phase III Land: The particular parcel of land in the Office, Research and Development Park described in Schedule L3 attached hereto. The Phase III Land is adjacent to the Subject Land to the east. Phase III Landlord: Waterford Park Phase III, LLC, a Massachusetts limited liability company and which is a Landlord Affiliate. Phase III Ground Lease: A 99-year lease of the Phase III Land between Ground Landlord and Phase III Landlord (as Ground Tenant) dated on or about the Date of this Lease and entitled "Phase III Ground Lease from Hillside School, Inc. to Waterford Park Phase III, LLC for Land Located in Marlborough, Massachusetts". A copy of the Phase III Ground Lease is attached hereto as Schedule G3. A notice of the Phase III Ground Lease is to be recorded with Middlesex South Registry of Deeds. Phase III Building: An approximately 153,000 square foot Building which Phase III Landlord may construct on the Phase III Land pursuant to the Phase III Project. Phase III Project: The Phase III Building and related infrastructure on the Phase III Land, together with such further infrastructure (if any) in or about other portions of the Office, Research and Development Park as are part of Phase III of construction therein, which Phase III Landlord -9- may construct pursuant to Article XXI. A preliminary plan of the Phase III Project is attached hereto as Schedule P3. Phase III Premises: The Phase III Land and Building and related infrastructure thereon, together with the right and easement to use the infrastructure located in or about other portions of the Office, Research and Development Park from time to time as are necessary to serve the Phase III Land and Building, in common with all others entitled thereto. Phase III Expansion Option: Tenant has the option to have Phase III Landlord build the Phase III Project on the Phase III Land and to lease the Phase III Premises from Phase III Landlord, in addition to Tenant's leasing of the Premises pursuant to this Lease, as more particularly set forth in Article XXI. Phase III Base Rent: If Tenant exercises the Phase III Expansion Option, the base rent under the Phase III Lease between Tenant and Phase III Landlord shall be as set forth in Schedule B3. Purchase Option or Option to Purchase: Tenant shall have an option to purchase the entire Office Research and Development Park, as more particularly set forth in Article XXII. Purchase Option Notification Deadline: Three years after the Date of this Lease. Right of First Offer to Purchase: Tenant shall also have a right of first offer to purchase the entire Park, as more particularly set forth in Article XXIII. Broker: Trammell Crow Company (formerly Fallon, Hines & O'Connor). 1.2 Further Definitions. In addition to terms set forth above, the following terms shall be defined as indicated. 1.2.1 Additional Rent. "Additional Rent" shall mean all Operating Expenses (including Real Estate Taxes), personal property taxes, insurance premiums, utility charges, late payment interest and other amounts charged to or to be paid by Tenant pursuant to Article VII, plus any other charges to be paid by Tenant and designated as Additional Rent by any other of the terms and conditions of this Lease. -10- 1.2.2 Annual Operating Cost Reconciliation Statement. "Annual Operating Cost Reconciliation Statement" or "Annual OC Reconciliation Statement" refers to the annual statements rendered by Landlord pursuant to Section 7.3 to settle the annual Operating Costs paid by Tenant with respect to the Premises, and shall have the specific meaning set forth in said Section. 1.2.3 Applicable Laws. "Applicable Laws" shall mean all laws, codes, statutes, ordinances, by-laws, regulations, rules, licenses, permits, variances, governmental orders, governmental approvals, title restrictions and requirements of any board of fire underwriters, insurance rating organization and other insurance requirements applicable to any given facts, things, circumstances or events. 1.2.4 Base Building Elements. "Base Building Elements" shall mean all items, elements and components of the Building which constitute the so-called "base building", such as, by way of example but without limitation, the Building foundations, structural elements, exterior walls, roofs, windows, doors, other items constituting the so-called "building envelope", heating, ventilating, air conditioning, plumbing, electrical, mechanical and other utility systems and equipment, and regular or standard interior walls, lighting, lavatories and facilities. Base Building Elements are distinguished from and do not include additional special fixtures, furnishings and equipment installed to meet the requirements of Tenant's particular business or uses. 1.2.5 Base Project Cost. "Base Project Cost" shall mean the total actual costs and expenses incurred to develop and construct the Base Project for each of the line items specified in the Base Project Cost pro forma attached hereto as Schedule PB. The current estimated cost of each such line item, as reasonably determined by the Parties as of the Date of this Lease, is set forth in said pro forma. The Base Project Cost does not include the Phases II/III Preliminary Work Cost. 1.2.6 Budgeted Cost. "Budgeted Cost" shall refer to any or all the Budgeted Cost for the Base Project, the Budgeted Cost for the Tenant's Specialized Improvements/Base Building Upgrades, the Budgeted Cost for Installation of Tenant's Fixtures and Equipment and/or the Budgeted Cost for the Phase II/III Preliminary Work, as the context requires. 1.2.7 Cash and Cash Equivalents. "Cash and Cash Equivalents" shall mean (a) actual cash plus (b) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, having maturities of one year or less, (c) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of six months or less by or with any commercial bank or other financial institution organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000, (d) commercial paper of an issuer rated at least A-2 by Standard & Poor's Rating Services or P-2 by Moody's Investor Services, Inc, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and having maturities of one year or less, (e) repurchase obligations of any commercial bank or other financial institution satisfying the requirements of clause (c) of this definition, having a term of not more than 30 days with respect to securities issued or -11- fully guaranteed or insured by the United States government, (f) securities having maturities of one year or less issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any state, commonwealth or territory or by and foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by Standard & Poor's or A by Moody's, (g) securities having maturities of one year or less backed by standby letters of credit issued by any commercial bank or other financial institution satisfying the requirements of clause (c) of this definition; or (h) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (g) of this definition. 1.2.8 Closing. "Closing" and "Closing Date" shall refer to the time and place for delivery of the Deed by the Collective Owners to Tenant and the payment of the Purchase Price by Tenant to the Collective Owners pursuant to Tenant's Purchase Option under Section 22.4 or pursuant to Tenant's Right of First Offer to Purchase under Section 23.2, as applicable, and shall be more particularly defined as set forth in said Sections. 1.2.9 Closing Escrow Agent. "Closing Escrow Agent" or "Escrow Agent" shall mean a recognized title insurance company, bank or similar financial institution selected by Landlord to be the escrow agent for the Closing under Tenant's Purchase Option or Right of First Offer to Purchase, subject to Tenant's approval, which shall not be unreasonable withheld or delayed. 1.2.10 Collective Owners. "Collective Owners" shall mean Landlord, Phase II Landlord, Phase III Landlord, Ground Landlord and their respective successors and assigns, collectively, as the owners, collectively, of the entire fee simple absolute interest in the Office, Research and Development Park (Ground Landlord as the owner of the underlying fee interest in the entire Park, Landlord as the owner of the leasehold interest in the Premises pursuant to the Ground Lease, Phase II Landlord as the owner of the leasehold interest in the Phase II Premises under the Phase II Ground Lease and Phase III Landlord as the owner of the leasehold interest in the Phase III Premises under the Phase III Ground Lease). 1.2.11 Construction Management Contract. "Construction Management Contract" shall have the meaning set forth in Section 4.5. 1.2.12 Construction Manager. "Construction Manager" shall have the meaning set forth in Section 4.5 1.2.13 Construction Loan Segment. "Construction Loan Segment" or "Construction Loan" shall mean to the construction portion of the Interim First Mortgage Loan for the Property and Project pursuant to Section 4.11 and the First Mortgage Loan Documents. 1.2.14 Declaration of Easements. "Declaration of Easements, Covenants and Restrictions" or "Declaration" shall mean the Declaration of Easements, Covenants and Restrictions for Solomon Pond Corporate Center, Marlborough and Northborough, Massachusetts by Ground Landlord dated on or about the Date of this Lease and to be -12- recorded with the Middlesex South Registry of Deeds, prior to the Notice of Lease herefor, setting forth the various common easements, covenants and restrictions to service and govern the Office, Research and Development Park. 1.2.15 Deed. "Deed" shall mean a good and sufficient quitclaim deed by which the Collective Owners convey the Office, Research and Development Park to Tenant pursuant to Tenant's Purchase Option under Article XXII or Tenant's Right of First Offer under Article XXIII, as applicable. 1.2.16 Defect Notice. "Defect Notice" shall refer to a notice from Tenant to Landlord, given either under Section 22.8 in connection with Tenant's exercise of its Option to Purchase the Office, Research and Development Park or under Section 23.2 in connection with Tenant's exercise of its Right of First Offer to Purchase the Park, notifying Landlord that Tenant's Due Diligence Investigations have uncovered a Qualifying Defect and specifying the course of action on account thereof which Tenant elects pursuant to whichever said Section is applicable, all as more particularly set forth and defined in such Sections. 1.2.17 Developer's Fee. The amount to be paid to Landlord for managing development of the Base Project as set forth in the Base Project Cost pro forma attached hereto as Schedule BP and calculated as $3.30 per square foot of the space in the Building. 1.2.18 Due Diligence Deadline. "Due Diligence Deadline" shall mean (a) with respect to Tenant's Purchase Option, 60 days after the Purchase Option Exercise Notice, as more particularly defined and set forth in Section 22.8, and (b) with respect to Tenant's Right of Offer to Purchase, 60 days after Tenant's Purchase Acceptance Notice, as more particularly defined and set forth in Section 23.2. 1.2.19 Due Diligence Investigations. "Due Diligence Investigations" shall mean such investigations, examinations, testing and evaluations as Tenant may elect to make at its sole cost and expense in connection with Tenant's exercise of its Option to Purchase or Right of First Offer to Purchase the Office, Research and Development Park, with respect to (a) title to the Park, (b) what access, easements and utilities are available to the Park, (c) the physical condition of the Park (including without limitation the structural integrity, watertight condition and working order of any buildings and improvements therein), (d) the Applicable Laws with respect to the Park, and whether or not the Park complies therewith, (e) whether or not the Park has all Necessary Permits for the buildings and improvements therein and uses made thereof, (f) the presence or absence of any Hazardous Substances or other pollutants in, on or about the Park, (g) any other environmental conditions, issues or problems with respect to the Park and (h) any other relevant conditions, facts, things, circumstances or matters with respect to the Park. 1.2.20 Event of Default. "Event of Default" shall refer to a default by Tenant under this Lease as enumerated and described in Section 17.1, and shall have the specific meaning set forth in said Section. 1.2.21 Extension Period. "Extension Period" shall mean a given five year period by which the Term may be extended pursuant to Tenant's Extension Option. An Extension Period shall commence upon the expiration of the then current Term (i.e., the initial Term -13- or the last Extension Period for which Tenant exercised its Extension Option, as applicable) and expire five years thereafter. 1.2.22 First Offer Notice. "First Offer Notice" or "First Offer" shall refer to the notice and offer to be given by Landlord to Tenant if Landlord should wish to sell the Office, Research and Development Park in accordance with Tenant's Right of First Offer to Purchase pursuant to Section 23.1, and shall have the specific meaning set forth in said Section. 1.2.23 First Offer Purchase Price. "First Offer Purchase Price" shall refer to the purchase price which Tenant shall pay for the Office, Research, and Development Park pursuant to Section 23.2 if Tenant exercises its Right of First Offer therefor, and shall have the specific meaning set forth in said Section. 1.2.24 Five Party Notice. "Five Party Notice" shall mean a Notice of Option to Purchase and Right of First Offer to Purchase and Agreement among Collective Owners and Tenant dated on or about the Date of this Lease confirming that said parties all agree to and shall be bound by Tenant's Purchase Option and Right of First Offer to Purchase, notwithstanding anything to the contrary or inconsistent therewith in the Ground Lease, Phase II Ground Lease or Phase III Ground Lease. The Five Party Notice shall be substantially in the form set forth in Schedule 5P attached hereto and shall be recorded in Middlesex South Registry of Deeds. 1.2.25 Ground Lease Subordination, Nondisturbance and Attornment Agreement. "Ground Lease Subordination, Nondisturbance and Attornment Agreement" or "Ground Lease SNDA" shall mean an agreement among Ground Landlord, Landlord and Tenant providing in essence that (a) Ground Landlord consents to this Lease, (b) this Lease is subordinate to the Ground Lease and all of the provisions, terms and conditions hereof (except as otherwise provided in the Five Party Notice with respect to Tenant's Purchase Option and Right of First Refusal to Purchase), (c) in the event that Ground Landlord succeeds to Landlord's interest in the Premises under this Lease due to termination of the Ground Lease or otherwise, Tenant shall attorn to Ground Landlord, and Ground Landlord, provided that Tenant is not in default hereunder after any applicable notice and cure period, shall recognize this Lease and Tenant's rights hereunder and shall not disturb Tenant's possession of the Premises pursuant hereto and (d) Ground Landlord shall not be responsible for Landlord's obligations under this Lease unless and until Ground Landlord so succeeds to Landlord's interest hereunder. The Ground Lease SNDA shall be substantially in the form set forth in Schedule GS attached hereto. 1.2.26 Hazardous Substances. "Hazardous Substances" shall mean any substances, materials or wastes defined or regulated as hazardous or toxic by the federal Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. ss.9601 et. seq., the federal Resource, Conservation and Recovery Act, 42 U.S.C. ss.6901 et. seq., the federal Hazardous Materials Transportation Act, 49 U.S.C. ss.1802 et. seq., the federal Toxic Substances Act, 15 U.S.C. ss.2601 et. seq., the Massachusetts Hazardous Materials Release Prevention and Response Act, M.G.L. ch. 21E, the regulations adopted and publications promulgated pursuant to said Acts, and any other Applicable Laws, and shall specifically include, without limitation, oil, petroleum products, asbestos, urea formaldehyde -14- insulation, materials containing lead and flammable, combustible and explosive substances. 1.2.27 Interim First Mortgage Loan Documents. "Interim First Mortgage Loan Documents" or "IFM Loan Documents" shall mean the note, mortgage and other documents and instruments evidencing, securing or otherwise relating to the Interim First Mortgage Loan. 1.2.28 Interim Term Loan. "Interim Term Loan" or "Term Loan Segment" shall mean the term loan portion of the Interim First Mortgage Loan for the Premises and Project pursuant to Section 5.1 and the Interim First Mortgage Loan Documents. 1.2.29 Landlord Affiliate. "Landlord Affiliate" shall mean any corporation, limited liability company, partnership, trust or other entity (a) at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of which is directly or indirectly owned by Landlord, (b) which directly or indirectly owns at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of Landlord, (c) at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of which is directly or indirectly owned by a third corporation, limited liability company, partnership, trust or other entity which also directly or indirectly owns at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of Landlord or (d) at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of which is directly or indirectly owned collectively by stockholders, members, partners or beneficiaries who also directly or indirectly own collectively at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of Landlord. Without limiting the foregoing, the Parties acknowledge that Waterford Development Corp., a Massachusetts corporation, is a Landlord Affiliate with respect to the Landlord named in the preamble of this Lease. 1.2.30 Late Payment/Default Interest Rate. "Late Payment/Default Interest Rate" shall mean the greater of (a) prime rate of interest published from time to time in the Wall Street Journal (or if such newspaper ceases publication or ceases publishing such rate, as published from time to time in a reasonably comparable publication), plus 2% per annum, or (b) the default rate of interest applicable under the first Mortgage on the Premises, but in no event more, when taken together with any other charges due from Tenant in connection therewith, than the maximum rate of interest allowed by Applicable Laws. 1.2.31 Landlord's Proposed Pricing/Timing Adjustment. "Landlord's Proposed Pricing/Timing Adjustment" or "Proposed Pricing/Timing Adjustment" shall refer to Landlord's notice back to Tenant after receiving a Tenant Change Proposal pursuant to Section 4.21 setting forth Landlord's reasonable and good faith determination as to how such Change Proposal, if executed, would effect the Base Project Cost, Tenant's Specialized Improvements/Base Building Upgrades Cost, Tenant's Fixtures and Equipment Installation Cost, Phases II/III Preliminary Work Cost and/or the Project completion schedule, and shall have the specific meaning set forth in said Section. -15- 1.2.32 Landlord Related Party. "Landlord Related Party" shall mean a person or entity (a) in which Landlord directly or indirectly owns a material interest, (b) which directly or indirectly owns a material interest in Landlord, (c) in which a material interest is directly or indirectly owned by another person or entity which also directly or indirectly owns a material interest in Landlord, (d) which directly or indirectly owns a material interest in another entity which also directly or indirectly owns a material interest in Landlord, (e) who is related to any person which directly or indirectly owns a material interest in Landlord as such person's parent, guardian, grandparent, father-in-law, mother-in-law, spouse, fiance, child, ward, grandchild, sibling, brother-in-law, sister-in-law, uncle, aunt, great uncle, great aunt, niece, nephew, grandnephew, grandniece, cousin or similar family or legal relation or (f) in which any such relation directly or indirectly owns a material interest. Without limiting the foregoing, the Parties acknowledge that Waterford Development Corp., a Massachusetts corporation, is a Landlord Related Party with respect to the Landlord named in the preamble of this Lease. 1.2.33 Lease Year. "Lease Year" shall mean (a) if the Term Commencement Date occurs on the first day of a calendar month, each twelve month period during the Term beginning on the Term Commencement Date and each anniversary thereof and ending on the day before the next succeeding such anniversary and (b) if the Term Commencement Date occurs on a day other than the first day of a calendar month, each twelve month period during the Term beginning on the first day of the calendar month immediately after the month in which the Term Commencement Date occurs and each anniversary of such day, and ending on the day before the next succeeding such anniversary. 1.2.34 Monthly Debt Service Component. "Monthly Debt Service Component" of Base Rent shall mean the sum of (a) either (i) Interim First Mortgage Monthly Debt Service Amount or (ii) the Permanent First Mortgage Monthly Debt Service Amount, whichever is then applicable, plus (b) the Second Mortgage Monthly Debt Service Amount, as more particularly defined in Schedule BR. 1.2.35 Monthly Estimated Operating Cost Payments. "Monthly Estimated Operating Cost Payments" or Monthly Estimated OC Payments" shall refer to the monthly estimated payments made by Tenant to Landlord on account of Operating Costs for a given year pursuant to Section 7.2, and shall have the specific meaning set forth in said Section. 1.2.36 Monthly Return on Landlord's Equity Component. "Monthly Return on Landlord's Equity Component" or "Monthly ROE Component" shall refer to the component of Base Rent constituting the return on Landlord's Contribution to Base Project Cost pursuant to Schedule BR, and shall have the specific meaning set forth in said Schedule. 1.2.37 Mortgage. "Mortgage" shall mean any mortgage, deed of trust or other similar instrument evidencing a voluntary lien or encumbrance on the Premises, including without limitation the mortgage under the Interim First Mortgage Loan, Permanent First Mortgage Loan and Second Mortgage Loan and all modifications, amendments, extensions, renewals, replacements, substitutes and consolidations thereof. -16- 1.2.38 Mortgagee. "Mortgagee" shall mean the holder of any Mortgage on the Premises, including without limitation the Interim First Mortgage Lender, Permanent First Mortgage Lender and Second Mortgage Lender. 1.2.39 Mortgage Subordination, Nondisturbance and Attornment Agreement. "Mortgage Subordination, Nondisturbance and Attornment Agreement" or "Mortgage SNDA" shall mean an agreement among Landlord, Tenant and a Mortgagee of the Premises in a commercially reasonable form, providing in essence that (a) Mortgagee consents to this Lease, (b) this Lease is subordinate to the Mortgage and subject to all of the provisions, terms and conditions thereof, (c) in the event that Mortgagee succeeds to Landlord's interest hereunder due to foreclosure of the Mortgage or otherwise, Tenant shall attorn to Mortgagee, and Mortgagee, provided that Tenant is not in default hereunder after any applicable notice and cure period, shall recognize this Lease and Tenant's rights pursuant hereto and shall not disturb Tenant's possession hereunder and (d) Mortgagee shall not be responsible for Landlord's obligations under this Lease unless and until Mortgagee so succeeds to Landlord's interest hereunder. 1.2.40 Necessary Permits. "Necessary Permits" shall mean all licenses, permits, approvals and variances necessary under all Applicable Laws to conduct a subject activity. 1.2.41 Normal Business Days and Hours. "Normal Business Days and Hours" shall mean Mondays through Fridays from 7:30 a.m. to 6:30 p.m. and Saturdays from 7:30 a.m. to 1:30 p.m., excluding legal holidays. 1.2.42 Operating Costs. "Operating Costs" shall mean all Landlord's costs and expenses in operating, managing, cleaning, maintaining and repairing the Premises, including without limitation costs of, for or with respect to (a) wages, salaries, fringe benefits, workers compensation insurance premiums and payroll taxes paid to or for persons employed in performing the aforesaid functions, (b) oil, gas, electricity, water, sewer, telephone and other utilities not otherwise paid by Tenant directly to the applicable utility company or authority, (c) premiums for all insurance which Landlord is required to maintain with respect to the Premises under the terms hereof or otherwise carries in accordance with good building management practice, (d) furnishing all services to the Premises which Landlord is required to furnish hereunder, (f) supplies, materials and equipment (including rentals) needed for the foregoing functions, (g) snow plowing and removal, (h) landscaping, (i) payments to independent contractors performing any of the aforesaid functions, (j) the proportionate share of costs for operation, maintenance, real estate taxes and reasonable resources with respect to the common areas, easements and facilities of the Office and Research and Development Park, as are properly charged and allocated to the Premises pursuant to the Declaration of Easements, Covenants and Restrictions for the Park, (k) capital replacements or improvements (amortized as provided below) either (i) required under Applicable Laws subsequent to the Commencement Date or (ii) necessary to maintain the Premises in the condition required hereunder, (l) a management fee to the party performing such function with respect to the Premises not to exceed then prevailing market fees for such services for similar properties in the so-called Metro West/Route 495 area of Middlesex and Worcester Counties, Massachusetts, and (m) reasonable maintenance and replacement reserves in such amounts as would customarily be made for properties similar to the Premises in the MetroWest/Route 495 area under then prevailing building management practices in such area. Any costs which would be -17- deemed capital expenditures under generally accepted accounting principles shall be amortized on a straight line basis over the entire useful life of the subject item, at an interest rate equal to the prevailing market rate for businesses substantially similar to Landlord for obligations with maturities equal to such useful life at the time of the subject expenditure, and only the amortization attributable to the subject calendar year or other applicable accounting period shall be included in Operating Costs for such year or period. Operating Costs shall not include, and there shall be excluded therefrom, any costs or charges for (a) the initial construction of the Project, (b) any subsequent expansion, additions to or redevelopment of the Project, (c) depreciation of the Premises, (d) principal, interest, debt service and other similar charges under any Mortgages or other loans with respect to the Premises, (e) rent or other charges under the Ground Lease or any other ground, master or underlying lease with respect to the Premises, (f) repair or correction of any defective workmanship or materials with respect to the original construction of the Project or any subsequent expansion, additions to or redevelopment thereof, (g) repair or replacement of any structural elements of the Building or elements constituting the basic Building shell or envelope (such as foundations, supporting columns, supporting beams, exterior walls and roofs), (h) remediation of or liability with respect to any Hazardous Substances or other pollutants in, on or about the Premises which were not brought, released or discharged thereon or therefrom by Tenant or any Party for which Tenant Is Responsible, (i) repairing or restoring damage to the Premises by fire or other casualty or taking by condemnation or eminent domain (except only for the amount of any customary and commercially reasonable insurance deductible), (j) damage, loss or liability to the extent that the same are or would be covered by any insurance which Landlord is required to carry hereunder (whether or not Landlord does so) or otherwise carries, the proceeds of eminent domain or takings awards or legal claims against the responsible parties, or for which Landlord is otherwise reimbursed, (k) damage, loss or liability resulting from Landlord's negligence, willful misconduct, violation of law, breach of contract or that of any Party for which Landlord is Responsible or (l) management fees, administrative costs, overhead or profits other than or in excess of the management fee specifically allowed above. Costs which would normally be paid out of the aforesaid maintenance and replacement reserves under prevailing building management practices in the MetroWest/Route 495 area shall be paid out of such reserves, and, to the extent so covered, shall not also be included in Operating Costs for the subject accounting period (so as not in effect to be charged to Tenant twice). 1.2.43 Option Purchase Price. "Option Purchase Price" shall refer to the purchase price which Tenant shall pay for the Office, Research and Development Park pursuant to Section 22.3 and Schedule OP if Tenant exercises its Purchase Option therefor, and shall have the specific meaning set forth in said Section and Schedule. 1.2.44 Outstanding Encumbrances. "Outstanding Encumbrances" shall mean the existing and outstanding encumbrances on title to the Premises and the Office, Research and Development Park, and the other matters with respect to such title, identified in Schedule OE attached. 1.2.45 Parties for Which Landlord Is Responsible. "Parties for Which Landlord Is Responsible" shall mean Landlord's employees, servants, agents, contractors, invitees -18- and any other parties claiming or occupying by, through or under Landlord or for which Landlord is otherwise legally responsible. 1.2.46 Parties for Which Tenant Is Responsible. "Parties for Which Tenant Is Responsible" shall mean Tenant's employees, servants, agents, contractors, assignees, subtenants, licensees, concessionaires, invitees and any other parties claiming or occupying by, through or under Tenant or for which Tenant is otherwise legally responsible. 1.2.47 Party; Parties. "Party" shall mean either Landlord or Tenant generally. "Parties" shall mean both Landlord and Tenant together. 1.2.48 Permanent First Mortgage Loan Documents. "Permanent First Mortgage Loan Documents" or "PFM Loan Documents" shall mean the note, mortgage and other documents and instruments evidencing, securing or otherwise relating to the Permanent First Mortgage Loan. 1.2.49 Permitted Assignments/Subleasings to Tenant Affiliates or Tenant Successors. "Permitted Assignments/Subleasings to Tenant Affiliates or Tenant Successors" shall have the meaning set forth in Section 12.2. 1.2.50 Permitted Encumbrances for Option Conveyance. "Permitted Encumbrances for Option Conveyance" or "Permitted Encumbrances" shall mean (a) the current Outstanding Encumbrances on title to the Office, Research and Development Park set forth on Schedule OE attached hereto, (b) any encumbrances created or caused by Tenant and (c) any other encumbrances or other matters affecting such title which would not (i) prevent the Park or any of the buildings and improvements therein from being used for the Permitted Uses, (ii) potentially cause the enforced removal of or otherwise unreasonably interfere with such buildings and improvements or any portions thereof or (iii) materially adversely affect the value of the Park. Without limiting the foregoing, no Mortgages (including without limitation Mortgages securing the Interim First Mortgage Loan, Permanent First Mortgage Loan, Second Mortgage Loan or any replacements thereof), liens or other encumbrances securing the payment of money, unless created or caused by Tenant (neither the Mortgages securing the Interim First Mortgage Loan or the Second Mortgage Loan, under which Tenant or a Tenant Affiliate is the mortgagee, to be deemed created or caused by Tenant in such regard), shall be Permitted Encumbrances. 1.2.51 Permitted Hazardous Substances. "Permitted Hazardous Substances" shall mean Hazardous Substances as are ordinarily necessary in the conduct of Tenant's business on the Premises pursuant to the Permitted Uses. Tenant may bring and use Permitted Hazardous Substances on the Premises, however, subject to the requirements and restrictions set forth in Section 10.4. 1.2.52 Permitted Subleasings of Surplus Space. "Permitted Subleasings of Surplus Space" shall have the meaning set forth in Section 12.3. 1.2.53 Phase II Lease. "Phase II Lease" shall refer to the lease into which Phase II Landlord and Tenant shall enter for the Phase II Premises pursuant to Section 20.4 if Tenant exercises the Phase II Expansion Option, and shall have the specific meaning set forth in said Section. -19- 1.2.54 Phase III Lease. "Phase III Lease" shall refer the lease into which Phase III Landlord and Tenant shall enter for the Phase III Premises pursuant to Section 21.3 if Tenant exercises the Phase III Expansion Option, and shall have the specific meaning set forth in said Section. 1.2.55 Phases II/III Preliminary Work Cost. "Phases II/III Preliminary Work Cost" shall mean the total actual costs and expenses incurred to complete the Phases II/III Preliminary Work. The current estimated cost of such work, as reasonably determined by the Parties as of the Date of this Lease, is $874,288. 1.2.56 Project Architect. "Project Architect" shall mean Clifford Hoffman Associates of 142 Berkeley Street, Boston, Massachusetts 01803. 1.2.57 Project Cost. "Project Cost" shall mean the total of the actual Base Project Cost, Tenant's Specialized Improvements/Base Building Upgrades Cost, Tenant's Fixtures and Equipment Installation Cost and Phases II/III Preliminary Work Cost. 1.2.58 Purchase Option Exercise Notice. "Purchase Option Exercise Notice" or "Purchase Option Notice" shall refer to the notice to be given by Tenant to Landlord if Tenant wishes to exercise its Option to Purchase the Office, Research and Development Park pursuant to Section 22.2, and shall have the specific meaning set forth in said Section. 1.2.59 Purchase Price. "Purchase Price" shall mean either the Option Purchase Price or the First Offer Purchase Price, as the context requires. 1.2.60 Qualifying Defect. "Qualifying Defect" shall mean a defect with respect to the Office, Research and Development Park, discovered in the course of Tenant's Due Diligence Investigations in connection with its exercise of either its Option to Purchase or Right of First Offer to Purchase the Park, which (a) would either (i) cause title to the Park to be unmarketable, (ii) constitute an encumbrance on such title which is not a Permitted Encumbrance, (iii) prevent the Park or any of the buildings and improvements therein from being used for the Permitted Uses, (iv) potentially cause the enforced removal of or otherwise unreasonably interfere with any such buildings and improvements or any portions thereof, (v) cost more than $25,000 to correct, repair or remediate or (vii) adversely affect the value of the Park by more than $25,000, and also which (b) were neither (i) caused by Tenant or any Party for which Tenant is Responsible or (ii) within the scope of Tenant's obligations under this Lease. No Permitted Encumbrance shall be a Qualifying Defect. 1.2.61 Ready for Tenant's Occupancy. The Premises shall be deemed "Ready for Tenant's Occupancy" when Landlord has (a) Substantially Completed the entire Project and (b) obtained and delivered to Tenant copies of any certificates of occupancy (which may initially be temporary certificates of occupancy, in which case Landlord shall obtain permanent certificates to replace such temporary ones before the latter expire) and other Necessary Permits required under Applicable Laws for Tenant to use and occupy the Property, as improved by the Project, for all Permitted Uses (but excluding permits necessary for specific Tenant operations and functions on the Premises, such as FDA approvals for particular research methods and government approvals required for any -20- Permitted Hazardous Substances which Tenant may utilize, any of which shall be Tenant's responsibility). 1.2.62 Real Estate Taxes. "Real Estate Taxes" shall mean (a) all taxes, assessments (special or otherwise), levies, fees, water and sewer rents and charges, and all other government levies and charges, general and special, ordinary and extraordinary, foreseen and unforeseen, which are, at any time prior to or during the Term hereof, imposed or levied upon or assessed against the Premises, the Base Rent, Additional Rent, any other charges payable by Tenant hereunder, this Lease or the leasehold estate created hereby, or which arise with respect to the operation, possession or use of the Premises, (b) all gross receipts and similar taxes imposed or levied upon, assessed against or measured by any Base Rent, Additional Rent or other charges payable by Tenant hereunder, (c) all sales, value added, use and similar taxes at any time levied, assessed or payable on account of the acquisition, leasing or use of the Premises, and (d) all charges for utilities furnished to the Premises which may become a lien on the Premises. 1.2.63 Residual Days and Hours. "Residual Days and Hours" shall mean all days and hours other than Normal Business Days and Hours. 1.2.64 Second Mortgage Loan Documents. "Second Mortgage Loan Documents" shall mean the note, mortgage and other documents and instruments evidencing, securing or otherwise relating to the Second Mortgage Loan. 1.2.65 Subsequent Alterations and Improvements. "Subsequent Alterations and Improvements" shall mean any alterations, modifications, installations, additions and improvements made by Tenant to the Premises after construction of the Project pursuant to Article XI or otherwise made by either Party. 1.2.66 Substantially Completed. The Project shall be deemed "Substantially Completed" (a) when it has been completed in accordance with the Plans and Specifications to the point that it may be properly occupied by Tenant for all the Permitted Uses, (b) the only remaining unfinished items or items requiring adjustment or correction are minor so-called "punchlist" items (i) the lack of which shall not materially interfere with Tenant's use of the Project for all Permitted Uses or access thereto (ii) which can be completed, adjusted or corrected by Landlord within 30 days, or in the alternative which cannot be completed until a later time because of season, weather, time required for ordering and delivery of requisite materials and similar factors, in either case without material interference with Tenant's said use or access and (iii) the cost of completing, adjusting or correcting the same shall not exceed 3% of the Project Budget (not including budgeted amounts for work in other areas of the Office, Research and Development Park), and (c) the Project Architect has executed and delivered a certificate to the Parties attesting to the foregoing. 1.2.67 Substitute Taxes. "Substitute Taxes" shall have the meaning set forth in Section 7.10. 1.2.68 Tenant Affiliate. "Tenant Affiliate" shall mean any corporation, limited liability company, partnership, trust or other entity (a) at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of which is directly -21- or indirectly owned by Tenant, (b) which directly or indirectly owns at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of Tenant, (c) at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of which is directly or indirectly owned by a third corporation, limited liability company, partnership, trust or other entity which also directly or indirectly owns at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of Tenant or (d) at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of which is directly or indirectly owned collectively by stockholders, members, partners or beneficiaries who also directly or indirectly own collectively at least 51% of the outstanding stock, membership interest, partnership interest or beneficial interest of Tenant. 1.2.69 Tenant Change Order. "Tenant Change Order" shall refer to a change in the Plans and Specifications which Landlord and Tenant have agreed to make during the course of construction of the Project by virtue of a Tenant Change Proposal being approved by Landlord and a Landlord Proposed Pricing/Timing Adjustment with respect thereto being accepted by Tenant pursuant to Section 4.21, and shall be specifically defined as set forth in said Section. 1.2.70 Tenant Change Proposal. "Tenant Change Proposal" or "Change Proposal" shall refer to a proposal by Tenant for changes in the Plans and Specifications during the course of construction of the Project pursuant to Section 4.21, and shall have the specific meaning set forth in said Section. 1.2.71 Tenant Successor. "Tenant Successor" shall mean any corporation, limited liability company, partnership, trust or other entity which is the successor to Tenant by merger, consolidation, non-bankruptcy reorganization or acquisition of substantially all the assets or stock of Tenant. 1.2.72 Tenant's Fixtures and Equipment Installation Costs. "Tenant's Fixtures and Equipment Installation Cost" or "TFE Installation Cost" shall mean the actual costs and expenses incurred to install (but not procure) Tenant's Fixtures and Equipment for each of the line items in the TFE Installation Cost pro forma attached hereto as Schedule PF. The current estimated cost of such installation, as reasonably determined by the Parties as of the Date of this Lease, is set forth in said pro forma. 1.2.73 Tenant's Purchase Acceptance Notice. "Tenant's Purchase Acceptance Notice" or "Purchase Acceptance Notice" shall refer to Tenant's notice accepting Landlord's First Offer Notice to Tenant in accordance with Tenant's Right of First Offer to Purchase the Office, Research and Development Park pursuant to Section 23.1, if Tenant elects to exercise such right, and shall have the specific meaning set forth in said Section. 1.2.74 Tenant's Specialized Improvements/Base Building Upgrades Cost. "Tenant's Specialized Improvements/Base Building Upgrade Cost" or "TSI/BBU Cost" shall mean the total actual costs and expenses incurred to construct Tenant's Specialized Improvements/Base Building Upgrades for each of the line items specified in the TSI/BBU Cost pro forma attached hereto as Schedule PI. The current estimated cost of each such line item, as reasonably determined by the Parties as of the Date of this Lease, is set forth in said pro forma. -22- 1.3 Schedules. The Schedules listed below in this section are incorporated in this Lease by reference and are to be construed as a part hereof: SCHEDULE DP Description of Office, Research and Development Park SCHEDULE DL Description of Subject Land SCHEDULE GL Ground Lease SCHEDULE BP Description of Base Project SCHEDULE SI Description of Tenant's Specialized Improvements/Base Building Upgrades SCHEDULE FE Description of Tenant's Fixtures and Equipment SCHEDULE PS Plans and Specifications for Project SCHEDULE BR Base Rent SCHEDULE PB Cost Pro Forma for Base Project SCHEDULE PI Cost Pro Forma for Tenant's Specialized Improvements/Base Building Upgrades SCHEDULE PF Cost Pro Forma for Tenant's Fixtures and Equipment Installation SCHEDULE 5P Form for Five Party Notice SCHEDULE GS Form for Ground Lease Subordination, Nondisturbance and Attornment Agreement SCHEDULE OE Currently Outstanding Encumbrances on the Premises SCHEDULE HS Heating, Ventilating and Air Conditioning Specifications SCHEDULE CS Cleaning and Janitorial Specifications SCHEDULE IS Tenant's Initial Signs SCHEDULE L2 Description of Phase II Land SCHEDULE G2 Phase II Ground Lease SCHEDULE P2 Preliminary Plan of Phase II Project SCHEDULE B2 Base Rent for Phase II Lease SCHEDULE L3 Description of Phase III Land -23- SCHEDULE G3 Phase III Ground Lease SCHEDULE P3 Preliminary Plan of Phase III Project SCHEDULE B3 Base Rent for Phase III Lease SCHEDULE OP Purchase Price Under Tenant's Option to Purchase ARTICLE II Premises and Term 2.1 Premises. Landlord hereby leases and demises the Premises to Tenant, and Tenant hereby leases the Premises from Landlord, subject to and with the benefit of the terms, covenants, conditions and provisions of this Lease. 2.2 Term. TO HAVE AND TO HOLD for the Term, beginning on the Term Commencement Date. 2.3 Title. Tenant shall, at its own cost and expense by the execution and delivery of this Lease, endeavor to, obtain a leasehold title insurance commitment from a recognized title insurer in insuring that Tenant has by virtue hereof a good and sufficient leasehold estate in the Premises and option interest in the balance of the Office, Research and Development Park, subject only to the Outstanding Encumbrances identified in Schedule OE attached hereto. If Tenant is unable to do so, Tenant may refrain from executing and delivering this Lease. Landlord shall immediately provide Tenant with a copy of Landlord's existing title insurance commitment for the Park to assist Tenant in obtaining Tenant's own commitment. 2.4 Declaration of Easements, Covenants and Restrictions. The Office, Research and Development Park, including the Premises, shall be subject to and have the benefit of the provisions, terms and conditions of the Declaration of Easements, Covenants and Restrictions. 2.4.1 Park Restricted to Office, Research and Development Use. In order to ensure the first class quality of the Park, the Declaration contains, among other things, the following restrictions. The Park shall be used only for (a) office, research and development purposes, (b) limited manufacturing accessory to the aforesaid uses, provided that such manufacturing (i) is allowed in the subject location under Applicable Laws, (ii) occurs within a building which has substantially the appearance of a first class office, research and development building and (iii) does not result in material air, water, noise or other emissions outside such building, and (c) limited retail uses to provide appropriate amenities for tenants and workers in the Park, as are customarily found in office, research development parks of similar nature in the MetroWest/Route 495 area and as long as completely inside the subject buildings. Without limiting the foregoing, large scale or general retail uses and residential uses shall be prohibited in the Park. Manufacturing in the Park may only be conducted as ancillary to the main office, research and development use and consequently must be limited in scale and scope (as, for example, a small pilot -24- production operation ancillary to the research and development conducted at a subject location). Any other manufacturing shall be prohibited. 2.4.2 Covenants Run with Land; Recording. The easements, covenants and restrictions set forth in the Declaration shall run with the land constituting the Park. In such regard, the Declaration shall be recorded in the applicable Registry of Deeds prior to and contemporaneously with the Notice of Lease for this Lease. 2.5 Environmental Review. Landlord has had the Land studied, inspected, tested and evaluated for the presence or absence of Hazardous Substances and the potential for migration of Hazardous Substances onto the Land from off-site sources by Rizzo Associates, which set forth its findings in a report dated May 7, 1997 entitled "Level I Environmental Site Assessment, 58-Acre Parcel, Robin Hill Street, Marlborough, MA" as updated by a supplementary report by Rizzo dated December 19, 2000 entitled "Level I Environmental Site Assessment Update, 58-Acre Parcel, Robin Hill Street, Marlborough, Massachusetts." Landlord has provided a copy of such report and update to Tenant. 2.6 Extension Options. Tenant shall have Options to Extend the Term of this Lease for up to four consecutive Extension Periods of five years each, provided that (a) this Lease is in force and effect at the time Tenant exercises the subject Extension Option and (b) no Event of Default exists which Tenant has failed to cure after any applicable notice and cure period, either at the time the subject Extension Option is exercised or at the commencement of the subject Extension Term. Tenant may exercise any such Extension Option by giving Landlord notice by the date which is 15 months prior to the expiration of the then current Term. The subject Option to Extend and any remaining Extension Options shall lapse if Tenant fails to give Landlord an exercise notice by such date. If Tenant exercises any Extension Option, then (a) the Term of this Lease shall automatically be extended by the subject Extension Period without the requirement of any further instrument, (b) the Base Rent during the subject Extension Period shall be as specified for such period in Schedule BR attached hereto, (c) all of the other provisions, terms and conditions of this Lease shall continue to apply during such Extension Period and (d) except only where the context clearly requires otherwise, the word "Term" as used herein shall mean the original Term, plus any previous Extension Periods the Extension Options for which Tenant previously exercised, plus the subject Extension Period. ARTICLE III Ground Lease 3.1 Ground Lease. Landlord does not own the fee to the Premises but rather leases the Premises from Ground Landlord for a term of 99 years pursuant to the Ground Lease. This Lease is, accordingly, a sublease under the Ground Lease. 3.2 Representations and Warranties. Landlord represents and warrants to Tenant as follows with respect to the Ground Lease, as of the Date of this Lease: 3.2.1 In Full Force and Effect. The Ground Lease is valid and binding on both Ground Landlord and Landlord (as tenant thereunder) and is in full force and effect. -25- 3.2.2 True Copy; No Amendments. The copy of the Ground Lease attached hereto as Schedule GL is true, accurate and complete in all respects and has not been amended or modified in any manner. 3.2.3 No Defaults. Neither Ground Landlord nor Landlord is presently in default under the Ground Lease, nor has any event occurred which with the giving of notice or the passage of time or both could ripen into a default. 3.2.4 No Litigation. There is not presently any material litigation pending or threatened with respect to the Ground Lease. 3.3 Landlord's Covenants re Ground Lease. From and after the Date of this Lease and throughout the Term hereof, Landlord shall: 3.3.1 Keep in Effect. Keep the Ground Lease in full force and effect, not agree or consent to any cancellation or termination thereof and not take or fail to take any action which would cause a cancellation or termination thereof. 3.3.2 Perform Obligations. Pay and perform all of Landlord's obligations under the Ground Lease by the dates due from time to time. 3.3.3 Not Breach. Not breach or default with respect to any of the provisions, terms and conditions of the Ground Lease. 3.3.4 Not Modify. Not modify or amend the Ground Lease, nor agree or consent to any modification thereof, in any manner which would materially adversely affect Tenant's rights and privileges under this Lease. 3.3.5 Notices. Promptly provide Tenant with a copy of all notices received from Ground Landlord or any other party with respect to the Ground Lease. 3.4 Tenant's Covenants re Ground Lease. Tenant shall not in any manner breach or violate the provisions, terms and conditions of the Ground Lease. Tenant shall perform any of its obligations under this Lease which correspond to obligations of Landlord as the ground tenant under the Ground Lease, in the place, stead and for the benefit of Landlord, as if Tenant where said ground tenant. 3.5 Subordination, Nondisturbance and Attornment Agreement. Simultaneously with the execution and delivery hereof, the Parties shall mutually execute and deliver, and Landlord shall cause Ground Landlord to execute and deliver, a Ground Lease Subordination, Nondisturbance and Attornment Agreement with respect to the Ground Lease and this Lease and the respective rights of Landlord, Tenant and Ground Tenant with respect thereto, substantially in the form attached hereto as Schedule GS. -26- ARTICLE IV Project Construction 4.1 Construction. In order to prepare the Premises for Tenant's use and occupancy, Landlord shall construct the Project (including each the Base Project, Tenant's Specialized Improvements/Base Building Upgrades, installation, but not procurement, of Tenant's Fixtures and Equipment and the Phases II/III Preliminary Work) on the Subject Land and in the Office, Research and Development Park in accordance with the provisions, terms, conditions and deadlines set forth in this Article IV and otherwise subject to and in accordance with the provisions of this Lease. 4.2 Plans and Specifications. The Parties have agreed upon the Plans and Specifications for the Project set forth in Schedule PS attached hereto. Such Plans and Specifications are so-called "detailed" or "construction" plans and specifications, sufficient in scope and detail for use by the applicable trades in construction and for putting out to bid. Landlord shall construct the Project in compliance with the Plans and Specifications. 4.3 Necessary Permits. Landlord shall be responsible for, and make reasonable and diligent efforts to obtain, all Necessary Permits required generally to conduct the Permitted Uses on the Premises (but excluding permits necessary for specific Tenant operations and functions on the Premises, such as FDA approvals for particular research methods and governmental approvals required for any Permitted Hazardous Substances which Tenant may utilize, any of which shall be Tenant's responsibility), to construct the Project on the Subject Land and in the Office, Research and Development Park and to construct any off-site improvements included in and necessary for the Project. Tenant shall assist and cooperate with Landlord in such effort. Upon Landlord's request, Tenant shall attend and assist Landlord with presentations at any scheduled hearings and proceedings. Absent such request, Tenant shall still be entitled to attend and observe such hearings and proceedings. All plans and specifications submitted with permit applications shall be substantially consistent with the Plans and Specifications listed in Schedule PS attached hereto. If during the course of any permitting proceeding it should become necessary or desirable to modify such plans and specifications, then if and to the extent (if any) such modifications materially differ from the Plans and Specifications listed in Schedule PS, Landlord shall first obtain Tenant's approval of such modifications, which approval shall not be unreasonably withheld or delayed. 4.4 Permitting Status. Landlord represents and warrants that it has as of the Date of this Lease obtained all Necessary Permits for the Permitted Uses (to the extent Landlord is responsible therefor pursuant to Section 4.3) and the Project, except only for (a) the building permit for the Project from the Marlborough Building Department, which the Project Architect has indicated to Landlord should be issued in due course without any expected problems, and (b) certain permits (such as the sewer connection permit and certain traffic and signal permits) which cannot, under the practice of the subject regulatory authorities, be obtained until after construction of the Project is underway. 4.5 Construction Manager. Landlord shall utilize Erland Construction of 63 Second Avenue, Burlington, Massachusetts 01803 as construction manager for the Project -27- (including each the Base Project, Tenant's Specialized Improvements/Base Building Upgrades, installation, but not procurement, of Tenant's Fixtures and Equipment and the Phases II/III Preliminary Work) (the "Construction Manager"). Landlord shall enter into a construction management contract for the Project with the Construction Manager, subject to review by and approval of Tenant, which shall not be unreasonably withheld or delayed (the "Construction Management Contract"). 4.6 Putting Project Out to Bid. Landlord shall, through the Construction Manager, seek bids for all component parts of the Project (including each the Base Project, Tenant's Specialized Improvements/Base Building Upgrades, installation, but not procurement, of Tenant's Fixtures and Equipment and the Phases II/III Preliminary Work), as defined by the Plans and Specifications, from qualified contractors or subcontractors. Bids shall be required to be either for a specified sum or cost plus with a guaranteed maximum price. No unlimited cost plus or other open ended bids shall be considered. Landlord and Construction Manager shall select the contractors and subcontractors for each component of the Project from among the bids received, in consultation with Tenant and subject to Tenant's approval of the identity of the contractor or subcontractor and amount of the bid, which shall not be unreasonably withheld or delayed. If Tenant does not respond to any proposal by Landlord to utilize a given contractor or subcontractor or accept a given bid within five days after receipt, Tenant shall be deemed to have approved such contractor, subcontractor or bid, as applicable. Construction Manager shall enter into construction contracts or subcontracts with each contractor or subcontractor so selected. The Construction Management Contract shall provide for the Construction Manager to act in accordance with the foregoing procedures. Landlord shall retain ultimate responsibility for all construction work with respect to the Project (including each the Base Project, Tenant's Specialized Improvements/Base Building Cost, installation, but not procurement, of Tenant's Fixtures and Equipment and the Phases II/III Preliminary Work), subject to (a) funding of the Interim First Mortgage Loan by the Interim First Mortgage Lender, (b) funding of the Second Mortgage Loan by the Second Mortgage Lender, (c) payment of Tenant's Contribution for Tenant's Specialized Improvements/Base Building Upgrades by Tenant and (d) payment of Tenant's Contribution for Installation of Tenant's Fixtures and Equipment by Tenant. 4.7 Base Project Cost. Landlord represents and warrants to Tenant that, based on Landlord's good faith estimate arrived at employing cost estimation procedures customarily utilized in the construction industry, Landlord reasonably expects the actual Base Projects Costs incurred to develop and construct the Base Project to be within the Budgeted Cost therefore specified in Section 1.1. It shall be Landlord's responsibility to construct the Base Project within said Budgeted Cost, except only for cost overruns caused by Tenant as addressed in Section 4.33. 4.8 Tenant's Specialized Improvements/Base Building Upgrades Cost. Landlord represents and warrants to Tenant that, based on Landlord's good faith estimate arrived at employing cost estimation procedures customarily applied in the construction industry, Landlord reasonably expects the actual Tenant's Specialized Improvements/Base Building Upgrade Costs incurred to install and construct the Tenant's Specialized Improvements/Base Building Upgrades to be within the Budgeted Cost therefor specified in Section 1.1. Landlord shall make reasonable and diligent efforts to construct the -28- TSI/BBU within said Budgeted Cost, with any cost overruns to be allocated between the Parties as provided in Section 4.35. 4.9 Tenant's Fixtures and Equipment Installation Cost. Landlord represents and warrants to Tenant that, based on Landlord's good faith estimate arrived at employing cost estimation procedures customarily utilized in the construction industry, Landlord reasonably expects the actual Tenant's Fixtures and Equipment Installation Costs incurred to perform such installation to be within the Budgeted Cost therefor specified in Section 1.1. Landlord shall make reasonable and diligent efforts to install the TFE within said Budgeted Cost, with any cost overruns to be allocated between the Parties as provided in Section 4.37. 4.10 Phases II/III Preliminary Work Cost. Landlord represents and warrants to Tenant that, based on Landlord's good faith estimate arrived at employing cost estimation procedures customarily utilized in the construction industry, Landlord reasonably excepts the actual Phases II/III Preliminary Work Cost to be within the Budgeted Cost therefor specified in Section 1.1. It shall be Landlord's responsibility to perform the Phases II/III Preliminary Work within said Budgeted Cost, except only for cost overruns caused by Tenant as addressed in Section 4.39. 4.11 Financing for Base Project. The Base Project shall be financed from the following sources: 4.11.1 Interim First Mortgage Loan. $20,860,000 from the Interim First Mortgage Loan (Construction Loan Segment), which Interim First Mortgage Lender (which shall be Tenant or a Tenant Affiliate) shall make to Landlord in such original principal amount pursuant to the Interim First Mortgage Loan Documents to be executed and delivered by Interim First Mortgage Lender and Landlord simultaneously herewith. 4.11.2 Second Mortgage Loan. $6,458,597 from the Second Mortgage Loan, which Second Mortgage Lender (which shall be Tenant or a Tenant Affiliate) shall make to Landlord in said original principal amount (being 75% of the difference between (a) the Budgeted Cost for the Base Project and (b) the amount of the Interim First Mortgage Loan) pursuant to the Second Mortgage Loan Documents to be executed and delivered by Second Mortgage Lender and Landlord simultaneously herewith. 4.11.3 Landlord's Contribution to the Base Project Cost. $2,152,866 from Landlord's equity as Landlord's Contribution to the Base Project (being 25% of the difference between (a) the Budgeted Cost for the Base Project and (b) the amount of the Interim First Mortgage Loan). 4.11.4 Cost Savings; Overruns. The amounts from the foregoing funding sources add up to the Budgeted Cost for Base Project specified in Section 1.1. In the event that the final actual Base Project Cost should be less or more than such Budgeted Cost, the resulting overrun or savings shall be paid or credited as provided in Sections 4.33 and 4.34. 4.12 Financing for Tenant's Specialized Improvements/Base Building Upgrades. Tenant's Specialized Improvements/Base Building Upgrades shall be paid for out of the $9,106,671 Tenant's Contribution for the TSI/BBU (100% of the Budgeted Cost therefor) -29- specified in Section 1.1. In the event that the final actual TSI/BBU Cost should be more or less than such Budgeted Cost, the resulting overrun or savings shall be paid or credited as provided in Sections 4.35 and 4.36. 4.13 Financing for Installation of Tenant's Fixtures and Equipment. The installation of Tenant's Fixtures and Equipment shall be paid for out of the $218,623 Tenant's Contribution for such work (100% of the Budgeted Cost therefor) specified in Section 1.1. In the event that the final actual TFE Installation Cost should be more or less than such Budgeted Cost, the resulting overrun or savings shall be paid or credited as provided in Sections 4.37 and 4.38. Tenant shall be responsible for procuring Tenant's Fixtures and Equipment itself, at its own cost and expense separately from the Project, and delivering the TFE to Landlord for installation. 4.14 Financing for Phase II/III Preliminary Work. The Phases II/III Preliminary work shall be paid for out of the $874,288 Landlord's Contribution of such work (100% of the Budgeted Cost therefor) specified in Section 1.1. In the event that the final actual Phases II/III Preliminary Work Cost should be more or less than such Budgeted Cost, the resulting overrun or savings shall be paid or credited as provided in Sections 4.39 and 4.40. 4.15 Construction Commencement. Landlord shall begin construction of the Project (including each the Base Project, Tenant's Specialized Improvements/Base Building Upgrades, installation, put not procurement, of Tenant's Fixtures and Equipment and the Phases II/III Preliminary Work) promptly after all Necessary Permits have been obtained, the Construction Manager has been selected, Landlord has entered into the Construction Management Contract with the Construction Manager and the Interim First Mortgage Loan (Construction Loan Segment) and Second Mortgage Loan have been closed. If for any reason Landlord fails to commence construction by the Construction Commencement Deadline, Tenant may give Landlord notice terminating this Lease at any time after such deadline while construction still has not been commenced, and if Tenant does so, this Lease shall terminate 30 days after such notice unless Landlord commences construction before the end of said 30 days. 4.16 Prosecution of Construction. Landlord shall construct the Project (including each the Base Project, Tenant's Specialized Improvements/Base Building Upgrades, installation, but not procurement, of Tenant's Fixtures and Equipment and the Phases II/III Preliminary Work) in compliance with the Plans and Specifications, the Necessary Permits received and all Applicable Laws. Landlord shall not materially deviate from the Plans and Specifications approved by Tenant without either Tenant's prior written consent (required for material deviations only) or pursuant to the change order procedure set forth in Section 4.21, except only that Landlord may substitute materials of equal or better quality to those specified in the Plans and Specifications by prior written notice to Tenant disclosing and describing the proposed substitution in reasonable detail and including a certification from the Project Architect that the substituted materials are equal to or better than the originally specified ones, and if Tenant does not object within 48 hours, Landlord may proceed with such substitution. In the case of minor substitutions, the Project Architect's certification may be dispensed with if Landlord, Tenant and the Project Architect all verbally agree on the subject substitution. All work shall be done by the Construction Manager and other contractors and subcontractors selected in accordance with the provisions hereof, in a good and workmanlike manner and using first class -30- materials. Once having commenced, Landlord shall diligently and continuously prosecute construction of the Project until completed. 4.17 Funding Procedure/Base Project. Landlord shall first pay for Base Project Costs (a) 50% out of Landlord's Contribution and 50% out of the Second Mortgage Loan proceeds in increments as work progresses and (b) then, once Landlord's Contribution has been exhausted, 100% out of the Second Mortgage Loan proceeds in such increments until they are exhausted. Then, after both such funding services have been fully used up, Landlord shall pay for Base Project Costs out of the proceeds of the Interim First Mortgage Loan (Construction Loan Segment) up to the original principal amount thereof. Interim First Mortgage Lender and Second Mortgage Lender shall disburse funds to Landlord for such purposes in accordance with and subject to the provisions, terms and conditions of the Interim First Mortgage Loan Documents and Second Mortgage Loan Documents, respectively. 4.18 Funding Procedure/Tenant's Specialized Improvements/Base Building Upgrades. Landlord shall pay for Tenant's Specialized Improvements/Base Building Upgrades out of Tenant's Contribution for TSI/BBU in increments as work progresses. Tenant shall make disbursements out of such contribution to Landlord for such purpose in accordance with substantially the same requirements and procedures as provided by the Second Mortgage Loan Documents for disbursements from the Second Mortgage Loan. 4.19 Funding Procedure/Installation of Tenant's Fixtures and Equipment. Landlord shall pay for the Tenant's Fixtures and Equipment Installation Costs out of Tenant's Contribution for such installation in increments as work progresses. Tenant shall make disbursements out of such contribution to Landlord for such purpose in accordance with substantially the same requirements and procedures as provided by the Second Mortgage Loan Documents for disbursements from the Second Mortgage Loan. 4.20 Funding Procedure/Phases II-III Preliminary Work. Landlord shall pay for the Phases II/III Preliminary Work Costs out of the Landlord's Contribution therefor in increments as work progresses. 4.21 Tenant Change Orders. Tenant may request changes in the Plans and Specifications from time to time during construction of the Project by submitting a written request describing any proposed change to Landlord (a "Tenant Change Proposal" or "Change Proposal"). Any increase in Base Project Cost, Tenant's Specialized Improvements/Base Building Upgrades Cost, Tenant's Fixtures and Equipment Installation Cost or Phases II/III Preliminary Work Cost which results from a Tenant Change Proposal, if implemented, shall be paid by Tenant in the same manner as regular Tenant Contributions for Specialized Leasehold Improvements/Base Building Upgrades and Tenant's Fixtures and Equipment Installation. Landlord shall give notice back to Tenant responding to Tenant's Change Proposal within ten days after Landlord's receipt thereof. If Landlord approves Tenant's Change Proposal, Landlord shall in its approval notice specify the increase or decrease, if any, in the Base Project Cost, Tenant's Specialized Improvements/Base Building Upgrades Cost, Tenant's Fixtures and Equipment Installation Cost, Phases II/III Preliminary Work Cost, Scheduled Completion Date and Outside Completion Date, whichever is or are applicable, which would result from the subject Change Proposal, as determined by Landlord reasonably and in good faith based on -31- cost and time estimation methods customarily utilized in the construction industry (the "Landlord's Proposed Pricing/Timing Adjustment" or "Proposed Pricing/Timing Adjustment"). Tenant shall give notice back to Landlord approving or disapproving Landlord's Proposed Pricing/Timing Adjustment within five days after Tenant's receipt thereof. If Tenant approves the Proposed Pricing/Timing Adjustment, then (a) the subject Tenant Change Proposal shall become a change order and be incorporated into the Plans and Specifications and executed in the construction of the Project (a "Tenant Change Order"), (b) Tenant shall pay any resulting increased cost specified in the Landlord's Proposal Pricing/Timing Adjustment as provided above and (c) the Scheduled Completion Date and the Outside Completion Date shall be adjusted as set forth in the Landlord's Proposed Pricing/Timing Adjustment, as applicable. Any resulting cost savings shall be allocated as provided in Sections 4.34, 4.36, 4.38 and 4.40. Both Parties must give final approval to any Tenant Change Order, which approval shall not be unreasonably withheld or delayed. If Tenant disapproves or does not timely respond to the Landlord's Proposed Pricing/Timing Adjustment, then the Plans and Specifications shall not be modified, the Project shall be constructed without regard to the Tenant Change Proposal, Tenant shall not be charged for any increased cost and the aforesaid completion dates shall remain unchanged. 4.22 Tenant's Fixtures and Equipment. Tenant shall be responsible, at its own cost and expense outside of the Project Budget, to procure Tenant's Fixtures and Equipment and to deliver the TFE to Landlord in compliance with the Project schedule. Landlord shall then be responsible for installation of the TFE as part of the Project. 4.23 Inspection. Tenant shall have the right, but shall not be obligated, to inspect Landlord's work on the Project from time to time throughout the course of construction in order to determine whether or not such work complies with the approved Plans and Specifications and other requirements of this Article IV. Landlord shall promptly correct any material deviations of which Tenant gives Landlord notice and which are confirmed by the Project Architect. 4.24 Tracking Project Costs. As work on the Project progresses, Landlord shall provide Tenant with monthly written reports of the actual Base Project Cost, Tenant's Specialized Improvements/Base Building Upgrades Costs, Tenant's Fixtures and Equipment Installation Costs and Phases II/III Preliminary Development Costs incurred. Each report shall set forth in reasonable detail the actual such Project Costs incurred for the subject month, and the total such Project Costs incurred from the beginning of the Project through the end of such month. Such reports shall include copies of or otherwise disclose all requisitions for payment and similar invoices received from contractors, subcontractors, suppliers and other similar parties with respect to the Project for the subject month, the Project Architect's certifications as to such requisitions and invoices, requisitions made by Landlord to the Interim First Mortgage Lender and the Second Mortgage Lender, statements from such lenders for disbursements made and interest and other charges due under their respective loans, and all applicable items paid by or debited against the account of Landlord and/or the Construction Manager during such month. Each such report shall be delivered to Tenant within 15 days after the end of the month in which it occurs. -32- 4.25 Tenant's Representatives. Tenant may at its own cost and expense employ architects, engineers, consultants and other qualified personnel to assist Tenant in making all reviews, inspections and decisions which Tenant is required to make hereunder. Such persons shall be entitled to receive, inspect and review the same documents and materials and have the same access to the Premises as Tenant is entitled to hereunder, provided that they do not (a) hinder Landlord's progress, (b) exceed Tenant's authority hereunder, (c) interfere with Landlord's Construction Manager, architects, engineers and consultants or (d) make unreasonable demands on the aforesaid parties' time. 4.26 Tenant Not Responsible for Landlord's Work. Unless specifically stated to the contrary in writing, no approval given by Tenant, or failure by Tenant to raise any objection, pursuant to this Article IV shall constitute a representation, warranty or acknowledgment that the element approved or not objected to is in compliance with Applicable Laws, properly designed or constructed or fit for its intended purpose, or that that the person approved or not objected to is qualified for the given job or task. All judgments and determinations with respect to such matters shall remain the sole responsibility of Landlord. Tenant shall not be a party to any construction or other contract for the Project, nor shall Tenant have any obligation or liability to any of Landlord's contractors, subcontractors or any other party with respect to any construction of or work on the Project, whether under any such contract or otherwise. 4.27 Completion. Subject to the force majeure provisions set forth in Section 25.5, Landlord shall make reasonable and diligent efforts Substantially to Complete the Project by the Scheduled Completion Date. 4.28 Outside Completion Date. Landlord shall in any event Substantially Complete the Project and have the Premises Ready for Tenant's Occupancy by the Outside Completion Date, subject only to delays caused by Acts of God, war, civil commotion, fire, flood, hurricane or other unusually severe weather event or shortages of materials and equipment, but not any of the other force majeure events under Section 25.5. If Landlord shall fail Substantially to Complete the Project and to have the Premises Ready for Tenant's Occupancy by the Outside Completion Date, then, in addition to and not in lieu or limitation of any other rights and remedies which Tenant may have against Landlord on account of such failure, Tenant shall receive a credit against the Base Rent and Additional Rent hereunder, once the same begin to be due, equal to the product of (a) $8,000 per day times (b) the number of days from the Outside Completion Date until the date on which the Project is finally Substantially Completed and the Premises are Ready for Tenant's Occupancy. In the event Tenant should become entitled to any other damages on account of such failure, such rent credit shall be counted as a payment toward such damages, with the remaining amount due Tenant reduced accordingly. 4.29 Punchlist Items. After the Project is Substantially Completed, the Premises are Ready for Tenant's Occupancy and the Term Commencement Date has occurred, Landlord shall complete any unfinished punchlist items within 30 days after the latter said date or, as to any of such items which cannot be completed until a later time because of season, weather, time required for receipt of requisite materials or similar factors, as soon as possible thereafter. -33- 4.30 Tenant Delays in Procuring and Delivering TFE. If there should be any Tenant delays in procuring and delivering any of the Tenant's Fixtures and Equipment which Landlord is to install as part of the Project, and the Project would be Substantially Complete but for the late TFE items, then the Project shall be deemed Substantially Complete without such items. In such event, Landlord shall subsequently install or complete installation of the late TFE items as additional punchlist items, and shall be afforded the same amount of time to complete such installation as originally provided therefor in the Project schedule. 4.31 Determination of Actual Final Project Costs. Within 30 days after full and final completion of the Project (including all punchlist items to be completed after Substantial Completion), Landlord shall deliver to Tenant a certification signed by both Landlord and the Project Architect setting forth the final actual Base Project Cost, Tenant's Specialized Improvements/Base Building Upgrades Cost, Tenant's Fixtures and Equipment Installation Cost and Phases II/III Preliminary Work Cost, each itemized in reasonable detail and including reasonable supporting documentation ("Landlord's Project Cost Certification"). Landlord shall promptly provide Tenant with any further supporting documentation and information which Tenant may request regarding Landlord's Project Cost Certification. Tenant shall further have the right to examine, inspect and audit all of Landlord's and the Construction Manager's records with respect to Project Costs. Within 45 days after receipt of Landlord's Project Cost Certification, Tenant shall give notice back to Landlord agreeing with or disputing the same. If Tenant agrees or fails to respond within said 45 days, the final actual Base Project Cost, Tenant's Specialized Improvements/Base Building Upgrades Cost, Tenant's Fixtures and Equipment Installation Cost and Phases II/III Preliminary Work Cost shall each be as set forth in Landlord's certification. If Tenant gives notice disputing Landlord's Project Cost Certification within said 45 days, then such dispute shall be resolved as provided in Section 4.32 below. 4.32 Dispute Resolution. If Tenant disputes Landlord's Project Cost Certification, the Parties shall make reasonable and diligent efforts in good faith to resolve such dispute and agree in writing as to the amount of the final actual Base Project Cost, Tenant's Specialized Improvements/Base Building Upgrades Cost, Tenant's Fixtures and Equipment Installation Cost and/or Phases II/III Preliminary Work Cost, whichever are in dispute, within 30 days after Tenant's dispute notice. If they succeed, then the final actual Base Project Cost, Tenant's Specialized Improvements/Base Building Upgrades Cost Tenant's Fixtures and Equipment Installation Cost and/or Phases II/III Preliminary Work Cost, as applicable, shall be as established by their agreement. If they do not, then the Parties shall submit the matter to arbitration in accordance with the rules of the American Arbitration Association, and the final actual Base Project Cost, Tenant's Specialized Improvements/Base Building Upgrades Cost, Tenant's Fixtures and Equipment Installation Cost and/or Phases II/III Preliminary Work Cost, as applicable, shall be as determined by such arbitration. In such event, the arbitrator shall be authorized to allocate the cost of the arbitration (including reasonable legal fees) between the Parties as an element of his or her decision. 4.33 Cost Overruns/Base Project. In the event that the final actual Base Project Cost is greater than the Budgeted Cost for the Base Project, then (a) any such excess -34- caused by Tenant Change Orders or otherwise caused by or the fault of Tenant shall be paid by Tenant and (b) the balance of any such excess shall be paid by Landlord, each out of their own funds. 4.34 Cost Savings/Base Project. In the event that the final actual Base Project Cost is less than the Budgeted Cost for the Base Project, whether because of Tenant Change Orders which reduced costs as for any other reason, then (a) 75% of such savings shall be paid to Second Mortgage Lender (which is Tenant or a Tenant Affiliate) to pay down the Second Mortgage Loan and (b) 25% of such savings shall be reimbursed to Landlord. 4.35 Cost Overruns/Tenant Specialized Improvements-Base Building Upgrades. In the event that the final actual Tenant Specialized Improvements/Base Building Cost is greater than the Budgeted Cost for the TSI/BBU, then (a) any such excess caused by or the fault of Landlord shall be paid by Landlord and (b) the balance of any such excess, including without limitation all such excess caused by Tenant Change Orders, shall be paid by Tenant, each out of their own funds. 4.36 Cost Savings/Tenant Specialized Improvements-Base Building Upgrades. In the event that the final actual Tenant Specialized Improvements-Base Building Upgrades Cost is less than the Budgeted Cost for the TSI/BBU, whether because of Tenant Change Orders or for any other reason, such savings shall be credited to Tenant and the amount of Tenant's Contribution for TSI/BBU shall be reduced accordingly. 4.37 Cost Overruns/Installation of Tenant's Fixtures and Equipment. In the event that the final actual Tenant's Fixtures and Equipment Installation Cost is greater than the Budgeted Cost for Installation of the TFE, then (a) any such excess caused by or the fault of Landlord shall be paid by Landlord and (b) the balance of any such excess, including without limitation all such excess caused by Tenant Change Orders, shall be paid by Tenant, each out of their own funds. 4.38 Cost Savings/Installation of Tenant's Fixtures and Equipment. In the event that the final actual Tenant's Fixtures and Equipment Installation Cost is less than the Budget Cost for Installation of the TFE, whether because of Tenant Change Orders or for any other reason, such savings shall be credited to Tenant and the amount of Tenant's Contribution for TFE Installation shall be reduced accordingly. 4.39 Cost Overruns/Phases II-III Preliminary Work. In the event that the final actual Phases II/III Preliminary Work Cost is greater that the Budgeted Cost for such work, then (a) any such excess caused by Tenant change orders or otherwise caused by or the fault of Tenant shall be paid by Tenant and (b) the balance of any such excess shall be paid by Landlord (or its affiliates, Phase II Landlord and/or Phase III Landlord, whichever is applicable), each out of their own funds. 4.40 Cost Savings/Phase II-III Preliminary Work. In the event that the final Actual Phases II/III Preliminary Work Cost is less than the Budgeted Cost for such work, whether because of Tenant Change Orders which reduced cost or for any other reason, such savings shall be credited to Landlord (or its affiliates, the Phase II Landlord and/or -35- Phase III Landlord, whichever is applicable), and the amount of Landlord's Contribution for Phases II/III Preliminary Work shall be reduced accordingly. 4.41 Correction of Construction Defects. Landlord shall correct and repair at its own cost and expense any defects in the construction of the Project arising and of which Tenant gives Landlord notice prior to end of the first Lease Year. 4.42 Buy-Out Obligation. If at any time prior to Substantial Completion of the Project the Tenant's Cash and Cash Equivalents shall fall below $137,000,000, Tenant shall purchase the Office, Research and Development Park from Landlord and the other Collective Owners at the same price and upon the same basis as under Tenant's Purchase Option pursuant to Article XXII. Tenant shall provide Landlord with monthly reports of its Cash and Cash Equivalents certified by an appropriate officer of Tenant within 20 days after the end of each month throughout the construction period. If the aforesaid condition occurs, the Closing shall take place 60 days after the monthly report indicating the same. Landlord shall have the right reasonably to examine Tenant's financial records to confirm such reports after reasonable notice to Tenant. Landlord shall keep all financial information which it receives or learns strictly confidential. Landlord shall have the right to enforce Tenant's obligation to purchase the Park as aforesaid by the remedy of specific performance. ARTICLE V Interim Term Loan; Permanent First Mortgage Loan 5.1 Interim Term Loan. After Landlord has substantially completed the Project and the Premises are Ready for Tenant's Occupancy and any other applicable conditions as may be set forth in the Interim First Mortgage Loan Documents have been satisfied, the Interim First Mortgage Loan shall convert from a Construction Loan into an Interim Term Loan with a fixed interest rate and 25 year amortization schedule for the balance of the time until the maturity thereof, all as more particularly set forth in the IFM Loan Documents. 5.2 Permanent First Mortgage Loan. No sooner than the beginning of the fourth year of the Interim First Mortgage Loan and no later than the maturity date thereunder (the end of the fifth year of such loan), Landlord shall obtain a Permanent First Mortgage Loan from a Permanent First Mortgage Lender to "take out" the Interim First Mortgage Loan. The original principal amount of the Permanent First Mortgage Loan shall be the then outstanding balance due under the Interim First Mortgage Loan (and not more), and the proceeds thereof shall be used to fully pay off and discharge the Interim First Mortgage Loan. The Permanent First Mortgage Loan shall have (a) a term of at least the greater of (i) the then remainder of the initial Term of this Lease or (ii) ten years and (b) an amortization schedule of no less than 20 years. Landlord shall make reasonable and diligent efforts to obtain the Permanent First Mortgage Loan at the lowest possible interest rates and on the best possible other terms and conditions, given then prevailing market conditions. Landlord shall obtain Tenant's prior written approval of the rates, terms and conditions of the Permanent First Mortgage Loan, which approval shall not be unreasonably withheld or delayed. Aspects of the foregoing are more particularly -36- described in the Interim First Mortgage Loan Documents, to which reference is made for a complete statement thereof. 5.3 Tenant's Option. If Tenant is unsatisfied with the rate or other terms of the First Permanent Mortgage Loan to be obtained by Landlord, Tenant may at its option (but without any obligation to do so) cause Interim First Mortgage Lender (which is Tenant or an Affiliate of Tenant) to extend the maturity date of the Interim Term Loan by ten years at the same interest rate, amortization rate and other provisions, terms and conditions set forth in the Interim First Mortgage Loan Documents, thereby converting such loan into the permanent financing for the Premises. Landlord shall in such case refrain from obtaining the First Permanent Mortgage Loan from the third party Permanent Lender. Aspects of the foregoing are more particularly described in Articles IV and V of the Loan Agreement for the Interim First Mortgage Loan, to which reference is made for a complete statement thereof. ARTICLE VI Base Rent 6.1 Base Rent. Tenant covenants and agrees to pay the Base Rent to Landlord throughout the Term at Landlord's Address or at such other place or to such other person or entity as Landlord may direct by notice to Tenant from time to time, in the monthly amount for each Lease Year specified in Section 1.1 and Schedule BR attached hereto, in advance on the first day of each calendar month during the Term, and for any partial month at the beginning or the end of the Term, the pro-rata portion of such monthly amount allocable thereto. ARTICLE VII Additional Rent 7.1 Payment. This is a so-called "triple net" Lease. In order that the Base Rent shall be net to Landlord, Tenant shall pay as Additional Rent during the Term (a) to Landlord, Landlord's Operating Costs (including Real Estate Taxes) with respect to the Property and (b) to the applicable parties owed or charged with the collection thereof, Tenant's personal property taxes, Tenant's insurance costs and utility charges with respect to the Premises, as set forth in this Article VII. 7.2 Operating Costs - Estimated Monthly Payments. At least 30 days prior to the start of each calendar year during the Term, Landlord shall reasonably estimate Landlord's Operating Costs with respect to the Premises (including the appropriate share of such costs for the common areas, easements and facilities of the Office Research and Development Park as are allocated to the Premises as provided in Section 1.2.42(j) hereof for the upcoming year and shall give Tenant notice thereof, setting forth such estimate by line items in reasonable detail. Landlord's notice shall also specify an amount for monthly operating cost installments equal to 1/12 of Landlord's total annual estimate (the "Monthly Estimated Operating Cost Payments" or "Monthly Estimated OC Payments"). Tenant -37- shall pay Landlord such Monthly Estimated Operating Cost Payments on the first day of each month during the subject calendar year, together with its regular monthly payments of Base Rent. Landlord may from time to time before or during a subject year reasonably revise its estimate of Operating Costs for such year (for either or both retroactive or future items with respect to the subject year), and adjust Tenant's Monthly Estimated OC Payments accordingly by subsequent notice to Tenant, which notice shall include an explanation in reasonable detail for the change. Such adjustments may include amounts necessary to "catch up" on payment or crediting of retroactively adjusted items by the end of the year. If Landlord shall fail to give Tenant notice of such estimates prior to the start of any calendar year, then Tenant shall continue to make Monthly Estimated OC Payments in the amount in effect for the previous year until Landlord gives Tenant notice revising such estimates. Any change made by Landlord in the amount of Tenant's Monthly Estimated OC Payments shall be effective on the first day of the second calendar month after the month in which Landlord's notice effecting the change was given. For example, if Landlord gives Tenant notice changing Tenant's Monthly Estimated OC Payment during the month of May, Tenant would begin making payment in the new amount commencing the following July 1. 7.3 Operating Costs - Annual Reconciliation. Within 90 days after the end of each calendar year during the Term, Landlord shall prepare and deliver a statement to Tenant setting forth Landlord's actual Operating Costs with respect to the Premises for the subject year, the total of Tenant's Monthly Estimated Operating Cost Payments for such year and the difference between the two (the "Annual Operating Cost Reconciliation Statement" or "Annual OC Reconciliation Statement"). Each Annual Operating Cost Reconciliation Statement shall set forth all items (including costs by line items) in reasonable detail, shall be prepared in accordance with generally accepted accounting principles and shall be certified by Landlord and signed in such regard by an officer thereof. If the Annual OC Reconciliation Statement shows that Landlord's actual Operating Costs with respect to the Premises for the subject year exceeded the total of Tenant's Estimated Monthly OC Payments therefor, then Tenant shall pay Landlord the difference within 30 days after receiving such statement. If, on the other hand, the Annual OC Reconciliation Statement shows that the total of Tenant's Monthly Estimated OC Payments for the subject year exceeded Landlord's actual Operating Costs, then Landlord shall credit Tenant the amount of the difference against Tenant's next Monthly Estimated Operating Cost Payment or Payments or other Additional Rent due to Landlord hereunder, or, if at the expiration or termination hereof, shall reimburse such difference to Tenant simultaneously with the rendering of such statement. 7.4 Operating Costs - Records; Accounting. Landlord shall account for and maintain true, accurate and complete records of its Operating Costs with respect to the Premises for each calendar year or portion thereof during the Term in accordance with generally accepted accounting principles and good building management practices. Such records shall be kept at Landlord's administrative offices in the Boston metropolitan area, the location of which Landlord shall give Tenant notice, and shall be retained for at least three years after the calendar year to which they relate. 7.5 Operating Costs - Substantiation, Examination and Audits. Upon Tenant's request from time to time within six months after receipt of the Annual Operating Cost -38- Reconciliation Statement for the calendar year in which the subject expenditure occurred, Landlord shall promptly provide Tenant with reasonable supporting documentation for any particular item or items of Operating Costs. Tenant may further from time to time up to the end of said six months examine Landlord's records with respect to Operating Costs and audit Landlord's Annual OC Reconciliation Statement or other statements regarding Operating Costs for the calendar year in question. Landlord shall make all such records readily available to Tenant for such examination and audit at Landlord's or its property manager's offices in the Commonwealth of Massachusetts. If and whenever it deems such