Exhibit 10-Y
AMENDMENT TO LEASE AGREEMENT
This Amendment to Lease ("Amendment") is entered into, and
dated for reference purposes, as of March 29, 2004 (the "Execution
Date") by and between METROPOLITAN LIFE INSURANCE COMPANY, a New
York corporation ("Metropolitan"), as Landlord ("Landlord"), and
A.P. PHARMA, INC., a Delaware corporation, ("A.P. Pharma"), which
was formerly named Advanced Polymer Systems, a Delaware
corporation), as Tenant ("Tenant"), with reference to the following
facts ("Recitals"):
A. Metropolitan and A.P. Pharma are parties to that certain
written Lease, dated as of November 7, 1997, for Premises comprising
part of the Building, which current street address of the Premises
remains 000 Xxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000, all as
more particularly described in such Lease (the "Existing Lease").
B. Tenant and Landlord desire to provide for a modification
and extension of the Term, new rental rate applicable thereto and
such other modifications and amendments of the Existing Lease as
more particularly set forth below.
NOW, THEREFORE, in consideration of the foregoing, and of the
mutual covenants set forth herein and of other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Scope of Amendment; Defined Terms; Tenant Name
Change.
(a) Except as expressly provided in this Amendment, the
Existing Lease shall remain in full force and effect. Should any
inconsistency arise between this Amendment and the Existing Lease as
to the specific matters which are the subject of this Amendment, the
terms and conditions of this Amendment shall control. The term
"Lease" as used herein and in the Existing Lease shall refer to the
Existing Lease as modified by this Amendment. All capitalized terms
used in this Amendment and not defined herein shall have the
meanings set forth in the Existing Lease unless the context clearly
requires otherwise.
(b) Tenant represents, warrants and agrees that: (i) it has
amended its Articles of Incorporation to change its name from
Advanced Polymer Systems to A.P. Pharma, Inc., which is its name as
of the Execution Date; (ii) Tenant's legal entity remains the same
and was not otherwise changed; (iii) A.P. Pharma is the Tenant under
the Existing Lease, is bound by all obligations of the Tenant under
the Existing Lease and holds all right, title and interest of the
Tenant under the Existing Lease; (iv) Tenant's Federal Employer
Identification Number has not changed and remains 00-0000000.
Tenant's obligations with respect to the representations, warranties
and agreements under this Section survive the expiration or sooner
termination of the Term of this Lease.
Section 2. Modification and Extension of Term. Landlord
and Tenant acknowledge and agree that, before giving effect to this
Amendment, pursuant to the Existing Lease, the Expiration Date of
the Term of the Existing Lease is November 14, 2004.
Notwithstanding any provision of the Existing Lease to the contrary,
the Existing Lease is hereby amended to provide that the Expiration
Date of the Term of the Existing Lease shall be March 31, 2004
instead of November 14, 2004, and then this Lease shall continue for
a term (the "Extended Term") beginning on April 1, 2004 (the
"Extended Term Commencement Date") and expiring on March 31, 2011
(hereafter, the "Expiration Date" with respect to the Extended
Term), unless sooner terminated pursuant to the terms of the Lease.
Provided however, in the event that this Amendment is not executed
by both Tenant and Landlord on or before April 1, 2004, then the
Extended Term Commencement Date shall instead be the day after the
date on which both Tenant and Landlord have executed this Amendment,
the Expiration Date of the Term of the Existing Lease shall instead
be the date of such execution, and the Expiration Date of the
Extended Term shall remain March 31, 2011. Landlord and Tenant
acknowledge and agree that this Amendment provides all rights and
obligations of the parties with respect to extension of the current
Term, whether or not in accordance with any other provisions, if
any, of the Existing Lease regarding renewal or extension, and any
such provisions, options or rights for renewal or extension provided
in the Existing Lease are hereby deleted as of the Execution Date,
and without limiting the generality of the foregoing, the Option to
Extend in the Rider of the Existing Lease is hereby deleted.
Section 3. Base Annual Rent. Notwithstanding any provision of
the Existing Lease to the contrary, Tenant and Landlord agree that
Basic Annual Rent and Monthly Installments thereof due and payable
(in the manner required under the Lease for Monthly Installments of
Basic Annual Rent) by Tenant for the Extended Term shall be as set
forth follows:
(a) For the Extended Term, Item 3 of the Basic Lease
Provisions and Paragraph 2(a) of the Existing Lease are hereby
amended to provide that the Initial Basic Annual Rent applicable to
the first year of the Extended Term shall be Four Hundred Twenty-two
Thousand Two Hundred Eighty-five and 40/100 Dollars ($422,285.40)
(i.e., $16.20 NNN per square foot of Rentable Area annually).
(b) For the Extended Term, Item 4 of the Basic Lease
Provisions and Paragraph 2(a) of the Existing Lease are hereby
amended to provide that the Initial Monthly Rental Installments
applicable to the first year of the Extended Term shall be Thirty-
five Thousand One Hundred Ninety and 45/100 ($35,190.45) per month
(i.e., $1.35 NNN per square foot of Rentable Area per month).
(c) For the Extended Term, Item 5 of the Basic Lease
Provisions and Paragraph 2(a) of the Existing Lease are hereby
amended to provide that the Rent Adjustment Date(s) are the
respective anniversaries of the Extended Term Commencement Date set
forth in the table below with corresponding new Basic Annual Rent
and Monthly Rental Installments effective until the next Rent
Adjustment Date:
Monthly
Rent Adjustment Basic Annual Monthly Rental Rate/RSF
Date Rent NNN Installment NNN NNN
--------------- ------------ --------------- --------
1st Anniversary $434,797.56 $36,233.13 $1.39
2nd Anniversary $447,309.72 $37,275.81 $1.43
3rd Anniversary $462,949.92 $38,579.16 $1.48
4th Anniversary $475,462.08 $39,621.84 $1.52
5th Anniversary $491,102.28 $40,925.19 $1.57
6th Anniversary $503,614.44 $41,967.87 $1.61
Section 4. Project & Tenant's Project Share. Notwithstanding
any provision of the Existing Lease to the contrary, including
without limitation, Paragraphs 1(a) and 3(a), and Item 6 of the
Basic Lease Provisions, Phase III ceased to be part of the Project,
and as of the Execution Date, the Project consists of Phase I and
Phase II with a total of 301,824 rentable square feet, and Tenant's
Project Share is agreed to be 8.64%.
Section 5. Condition of Premises. Notwithstanding any
provision of the Existing Lease to the contrary, Tenant acknowledges
and agrees that: (1) Tenant has been in occupancy of the Premises
since 1997; (2) Tenant has investigated the condition of the
Premises to the extent Tenant desires to do so; (3) Tenant is
leasing the Premises in its "As Is" condition; (4) no representation
regarding the condition of the Premises has been made by or on
behalf of Landlord; (5) in connection with this Amendment, Landlord
has no obligation to remodel or to make any repairs, alterations or
improvements in connection with this Amendment, or to provide Tenant
any allowance therefor; and (5) all alterations, additions or
improvements in connection with this Amendment or hereafter shall be
in accordance with Paragraph 7 of the Existing Lease and Tenant
shall pay a fee to Landlord ("Construction Administration Fee") in
connection with Landlord's review of plans and specifications and
monitoring construction performed by Tenant, which shall not exceed
two percent (2%) of the contract amount for the design and
construction.
Section 6. Rights & Responsibilities of Landlord Re Certain
HVAC Units. Notwithstanding any provision of the Existing Lease to
the contrary, including, without limitation, Sections 6(a) and (b),
and Section3(c)(18), if and to the extent that replacement of the
Original HVAC Units (defined below) or components thereof is
necessary and would constitute a capital expenditure, Landlord
(rather than Tenant) shall cause such replacement to be made and
Tenant shall pay 100% of the portion of the amortized cost of such
capital expenditures allocable to the remainder of the Extended
Term, calculated using an amortization period equal to the useful
life of the HVAC unit or component, as applicable, together with a
return on capital at the rate of ten percent (10%) per annum. For
purposes hereof, "Original HVAC Units" shall mean those HVAC units
owned by Landlord which exclusively serve the Premises and which
were in place when the Premises was originally delivered to Tenant.
Section 7. Amendment & Reduction of the Security Deposit.
Provided that (a) all Rent due and owing under the Lease (as
modified by this Amendment) has been paid in full; and (b) Tenant is
not, on the Extended Term Commencement Date, in default under the
Existing Lease beyond any applicable notice and grace period; then:
(i) the cash Security Deposit required under Paragraph 4 of the
Lease and Item 10 of the Basic Lease Provisions shall be reduced
from One Hundred Fifty Thousand Dollars ($150,000.00) to Seventy-
five Thousand Dollars ($75,000.00) and Landlord shall apply the
unapplied outstanding balance of the Security Deposit then held by
Landlord in excess of the reduced amount as a credit against the
next payments of Rent due and owing under the Lease on and after the
Extended Term Commencement Date.
Section 8. Change of Address for Copies of Notices to Landlord.
The current addresses for notices to be sent to Landlord pursuant to
Paragraph 23 of the Existing Lease are modified as follows:
Metropolitan Life Insurance Company
c/o Seaport Centre Property Manager
000 Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Property Manager
with copies to the following:
Metropolitan Life Insurance Company
000 Xxxxx Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: EIM Manager, Real Estate Investments
and
Metropolitan Life Insurance Company
000 Xxxxx Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Associate General Counsel
Section 9. Time of Essence. Without limiting the generality of
any other provision of the Existing Lease, time is of the essence to
each and every term and condition of this Amendment.
Section 10. Brokers. Tenant represents that no broker,
agent or person has represented, dealt with or had discussions with
it in connection with this Amendment transaction other than Xxx
Xxxxxxxx and Xxx Xxxxxx of Xxxxxxx & Xxxxx Commercial ("Tenant's
Broker") and that no broker, agent or person except Tenant's Broker
has brought about this Amendment transaction. Tenant hereby
indemnifies and agrees to protect, defend and hold Landlord harmless
from and against all claims, losses, damages, liability, costs and
expenses (including, without limitation, attorneys' fees and
expenses) by any broker, agent or other person (except Landlord's
Broker) claiming a commission or other form of compensation by
virtue of alleged representation of, or dealings or discussions
with, Tenant with respect to the transaction contemplated by this
Amendment, except for a commission payable to Tenant's Broker to the
extent provided for in a separate written agreement between Tenant's
Broker and Landlord's Broker (defined below). The term "Landlord's
Broker" shall mean Xxxxxx Xxxxxxx and Xxxxxxxx Xxxxxxx of Xxxxxxx &
Xxxxx Commercial, and Tenant shall not be responsible for payment of
any commission to Landlord's Broker. The provisions of this Section
shall survive the expiration or earlier termination of the Amendment
or the Lease. Landlord hereby agrees to pay such commission, if
any, to which Landlord's Broker is entitled in connection with the
subject matter of this Amendment pursuant to Landlord's separate
written agreement with Landlord's Broker, and agrees that Tenant is
not obligated to pay or fund any amount to Landlord's Broker. The
provisions of this Section shall survive the expiration or earlier
termination of the Amendment or the Lease.
Section 11. Attorneys' Fees. Each party to this Amendment
shall bear its own attorneys' fees and costs incurred in connection
with the discussions preceding, negotiations for and documentation
of this Amendment. In the event any party brings any suit or other
proceeding with respect to the subject matter or enforcement of this
Amendment or the Lease, the prevailing party (as determined by the
court, agency or other authority before which such suit or
proceeding is commenced) shall, in addition to such other relief as
may be awarded, be entitled to recover attorneys' fees, expenses and
costs of investigation as actually incurred, including court costs,
expert witness fees, costs and expenses of investigation, and all
attorneys' fees, costs and expenses in any such suit or proceeding
(including in any action or participation in or in connection with
any case or proceeding under the Bankruptcy Xxxx, 00 Xxxxxx Xxxxxx
Code Sections 101 et seq., or any successor statutes, in
establishing or enforcing the right to indemnification, in appellate
proceedings, or in connection with the enforcement or collection of
any judgment obtained in any such suit or proceeding).
Section 12. Effect of Headings. The titles or headings of
the various parts or sections hereof are intended solely for
convenience and are not intended and shall not be deemed to or in
any way be used to modify, explain or place any construction upon
any of the provisions of this Amendment.
Section 13. Entire Agreement; Amendment. This Amendment
taken together with the Existing Lease, together with all exhibits,
schedules, riders and addenda to each, constitutes the full and
complete agreement and understanding between the parties hereto and
shall supersede all prior communications, representations,
understandings or agreements, if any, whether oral or written,
concerning the subject matter contained in this Amendment and the
Existing Lease, as so amended, and no provision of the Lease as so
amended may be modified, amended, waived or discharged, in whole or
in part, except by a written instrument executed by all of the
parties hereto.
Section 14. Authority. Each person executing this
Amendment represents and warrants that he or she is duly authorized
and empowered to execute it, and does so as the act of and on behalf
of the party indicated below.
Section 15. Counterparts. This Amendment may be executed
in duplicates or counterparts, or both, and such duplicates or
counterparts together shall constitute but one original of the
Amendment. The parties contemplate that they may be executing
counterparts of this Amendment transmitted by facsimile and agree
and intend that a signature by facsimile machine shall bind the
party so signing with the same effect as though the signature were
an original signature. Each duplicate and counterpart shall be
equally admissible in evidence, and each original shall fully bind
each party who has executed it.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first set forth above.
TENANT: A.P. PHARMA, INC.,
a Delaware corporation
By: /S/ Xxxxxx Xxxxxxxx
--------------------
Print Name: Xxxxxx Xxxxxxxx
----------------
Title: Chief Financial Officer
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LANDLORD: METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: /S/ Xxx X. Xxxxxx
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Print Name: Xxx X. Xxxxxx
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Title: Director
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