Lease Agreement

LEASE AGREEMENT
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BY AND BETWEEN:


Cedar Brook Corporate Center, L.P.


"Landlord"


- and -


3 Dimensional Pharmaceuticals, Inc.


"Tenant"


PREMISES: 8 Clarke Drive
Cranbury, NJ 08512


DATED: June 14, 2001


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TABLE OF CONTENTS
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1. LEASED PREMISES.......................................................1
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2. TERM OF LEASE.........................................................2
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3. CONSTRUCTION OF THE TENANT IMPROVEMENTS...............................2
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4. RENT..................................................................6
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5. PARKING AND USE OF EXTERIOR AREA......................................7
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6. USE...................................................................8
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7. REPAIRS AND MAINTENANCE...............................................8
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8. COMMON AREA EXPENSES, TAXES AND INSURANCE............................10
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9. SIGNS................................................................13
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10. ASSIGNMENT AND SUBLETTING............................................13
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11. FIRE AND CASUALTY....................................................14
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12. COMPLIANCE WITH LAWS, RULES AND REGULATIONS..........................16
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13. INSPECTION BY LANDLORD...............................................18
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14. DEFAULT BY TENANT....................................................19
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15. LIABILITY OF TENANT FOR DEFICIENCY...................................21
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16. NOTICES..............................................................21
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17. NON-WAIVER BY LANDLORD...............................................22
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18. RIGHT OF TENANT TO MAKE ALTERATIONS AND IMPROVEMENTS.................22
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19. NON-LIABILITY OF LANDLORD............................................22
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20. RESERVATION OF EASEMENT..............................................23
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21. STATEMENT OF ACCEPTANCE..............................................23
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22. FORCE MAJEURE........................................................23
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23. STATEMENTS BY LANDLORD AND TENANT....................................23
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24. CONDEMNATION.........................................................24
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25. LANDLORD'S REMEDIES..................................................24
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26. QUIET ENJOYMENT......................................................25
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27. SURRENDER OF PREMISES................................................25
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28. INDEMNITY............................................................26
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29. BIND AND CONSTRUE CLAUSE.............................................26
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30. INCLUSIONS...........................................................27
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31. DEFINITION OF TERM "LANDLORD"........................................27
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32. COVENANTS OF FURTHER ASSURANCES......................................27
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33. COVENANT AGAINST LIENS...............................................27
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34. SUBORDINATION........................................................28
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35. EXCULPATION OF LANDLORD..............................................28
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36. NET RENT.............................................................28
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37. SECURITY.............................................................28
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38. BROKERAGE............................................................29
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39. LATE CHARGES.........................................................29
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40. PRESS RELEASES.......................................................29
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41. WAIVER OF JURY TRIAL.................................................29
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42. LAWS OF NEW JERSEY...................................................30
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43. OPTION TO RENEW......................................................30
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Exhibit 10.43


AGREEMENT, made June 14, 2001, between Cedar Brook Corporate Center, L.P., 1000 Eastpark Blvd., Cranbury, New Jersey 08512, "Landlord"; and 3 Dimensional Pharmaceuticals, Inc., 8 Clarke Drive, Cranbury, NJ 08512, "Tenant".


W I T N E S S E T H:
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WHEREAS, the Landlord intends to lease to the Tenant a portion of 8 Clarke Drive, Cranbury, NJ 08512 ("Building") constituting a portion of the office/industrial park known as Cedar Brook Corporate Center ("Office Park"); and


WHEREAS, the parties hereto wish to mutually define their rights, duties and obligations in connection with the said lease;


NOW THEREFORE, in consideration of the promises set forth herein, the Landlord leases unto the Tenant and the Tenant rents from the Landlord the leased premises described in Paragraph 1, and the Landlord and Tenant do hereby mutually covenant and agree as follows:


1. LEASED PREMISES
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The leased premises shall consist of 10,497 rentable square feet of office space, 5,698 square feet of which is already constructed and which Tenant accepts in its "as is" condition and 4,799 square feet of which the Landlord shall construct for Tenant ("Leased Premises"). The Leased Premises, all as more particularly identified on the plan attached hereto as Schedule "A", shall be measured from the outside of exterior walls to the center line of common walls, and shall include all improvements to be constructed thereon by the Landlord for the use of the Tenant, and all


Initial: Landlord
Tenant Lease Version Date: 5-31-01


easements, tenements, appurtenances, hereditaments, rights and privileges appurtenant thereto, and any and all fixtures and equipment which are to be installed in said Building by the Landlord for the use of the Tenant in its occupancy of the Leased Premises. Tenant shall also have the right to use all common areas of the Office Park in a similar manner as other Office Park tenants.


2. TERM OF LEASE
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The term of the Lease shall be coincident with the term of that certain sublease of 31,423 square feet of space in the Building between Tenant and Advanced Medicine, Inc., which expires on May 31, 2007. The Commencement Date of this Lease shall mean the first day of the next succeeding month following the occurrence of all of the following conditions:


(a) Landlord shall have achieved Substantial Completion (as that term is defined hereafter); and


(b) Water, sewer, gas, and electricity utility service shall be available to the Leased Premises.


The Substantial Completion date is projected to be August 15, 2001. However, such date shall be contingent upon Landlord receiving, reviewing and approving the Plans (as that term is defined hereafter), and upon the vacation of the Leased Premises by its existing tenant whose lease expires on June 30, 2001


3. CONSTRUCTION OF THE TENANT IMPROVEMENTS
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3.1 The Landlord shall provide all necessary labor and materials and perform all of the work required for the construction of that portion of the Leased Premises comprising 4,799 square feet including machinery, fixtures and equipment to be constructed and other improvements to be installed by Landlord in the Leased Premises in order to ready the same for Tenant's occupancy


Initial: Landlord
Tenant Lease Version Date: 5-31-01


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(the "Tenant Improvements"), all as shown on the Plans as defined herein. Tenant's designated representative for all work pertaining to the Tenant Improvements shall be Jason Van Buren (hereinafter the "Representative").


3.2 The Landlord shall supervise and direct the work on the Tenant Improvements using Landlord's best skill and attention, and Landlord shall be solely responsible for all construction means, methods, techniques, sequences and procedures and for coordinating all portions of the work on the Tenant Improvements. Landlord shall use its best efforts to cause the Tenant Improvements to be carried forward expeditiously so as to achieve Substantial Completion of the Leased Premises on or before July 1, 2001, or as soon thereafter as possible. Landlord shall be responsible for initiating, maintaining and supervising all safety precautions and programs in connection with performance of the Tenant Improvements.


3.3 Landlord warrants to the Tenant that all materials and equipment incorporated in the Tenant Improvements will be new unless otherwise specified, and that all work on the Tenant Improvements will be of good quality, free from known faults and defects, and in substantial conformity with the Plans.


3.4 (a) Landlord shall complete the construction of the Leased Premises in a good and workmanlike manner and in substantial accordance with plans and specifications ("Plans") to be prepared by Bala Consulting Engineers, Inc. The Plans shall be provided to Landlord on or before June 30, 2001. In the event Tenant fails to deliver the Plans to Landlord by said date, and such failure delays the projected date of Substantial Completion then Tenant shall be obligated to pay rent to Landlord for as many days prior to the date of Substantial Completion as Tenant was late in providing the Plans. The Plans shall be in sufficient detail to permit Landlord to apply for a


Initial: Landlord
Tenant Lease Version Date: 5-31-01


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building permit for the Tenant Improvements (which Landlord shall promptly do), and to prepare a draft construction budget for the construction of the Tenant Improvements (the "Construction Budget"). The Construction Budget shall set forth the lump sum amount payable by Tenant to Landlord for the construction of the Tenant Improvements, which amount shall include Landlord's standard mark-up for general conditions (2%) times overhead (10%) times profit (7%), for a total mark-up of 20%. The only exception to the lump sum amount shall be the actual fees charged by the Township of Cranbury for construction permits and the Council on Affordable Housing ("COAH") fee in connection with the Tenant Improvements, both of which will not be determined by the municipality until after the Landlord applies for the construction permits and shall be paid by Tenant as set forth hereafter. After receipt of the draft construction budget, Tenant shall give written notice to Landlord within 5 business days as to whether or not it is acceptable. If the Tenant accepts the draft construction budget during the 5 business day period then that shall be the budget for the Tenant Improvements ("Construction Budget"). If Tenant does not accept the draft construction budget during such 5 business day period, then the parties agree to negotiate in good faith to reach an agreement on a budget for the Tenant Improvements. In the event no agreement can be reached within a further 15 day period, then either party may terminate this Lease.


(b) A complete set of the agreed upon Plans, and the agreed upon Construction Budget, shall be initialed by and distributed to Landlord and Tenant. Neither the Construction Budget nor the Plans shall be changed or altered in any way except by change order approved in writing by Landlord, Architect and Tenant ("Change Order"). Each and every Change Order shall state whether the change will entail a delay in the date of Substantial Completion. Any approved delay to the date of Substantial Completion shall not delay the commencement date for the


Initial: Landlord
Tenant Lease Version Date: 5-31-01


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payment of rent. All Change Orders shall be valid and binding upon Landlord and Tenant only if authorized by written Change Order signed prior to commencement of the work on the Tenant Improvements reflected thereby. The cost or credit to the Tenant due to any Change Order shall be determined per the terms of such Change Order. The Landlord shall have the right to substitute any materials and equipment required by the Plans, with materials and equipment of equal or better quality and standard, provided said substitutions conform with applicable building codes and are the subject of a Change Order.


3.5 (a) The Landlord may secure and advance payment for the construction permits and for all other permits and governmental fees, licenses and inspections necessary for the proper execution and completion of the Tenant Improvements, and for the COAH fee. Tenant shall pay such amounts to Landlord not later than 10 business days after receipt of an invoice therefor. Landlord shall not, however, be responsible for securing any environmental or operating permits or certifications which are required in order for Tenant to actually conduct its business.


(b) Tenant shall be responsible for providing Landlord with, and bearing the cost of, sufficient copies of the Plans, as Landlord determines are necessary, in order to obtain the permits and efficiently manage the construction of the Leased Premises. In the event any Change Orders are required during construction, Tenant shall be responsible for all costs related to the preparation and reproduction of plans therefore. After construction is complete, Tenant shall be responsible for all costs related to the reproduction of "as built" plans. In all instances where plans are required, Tenant shall provide Landlord with a reproducable set.


(c) Tenant shall receive a construction allowance (the "Construction Allowance") equal to $15.00 per square foot multiplied by 4,799 square feet of space ($71,985) in


Initial: Landlord
Tenant Lease Version Date: 5-31-01


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which Landlord will construct the Tenant Improvements. Any cost in excess of such allowance shall be the responsibility of Tenant ("Tenant's Cost Share"). Upon approval of the Final Construction Budget, Tenant shall immediately pay to Landlord, prior to the Landlord's commencement of work on Tenant Improvements, a sum equal to 50% of Tenant's Cost Share. Upon Substantial Completion of Tenant Improvements, Tenant shall immediately pay to Landlord a sum equal to the remaining balance of Tenant's Cost Share. In the event Tenant fails to pay to Landlord, upon approval of the Construction Budget a sum equal to 50% of Tenant's Cost Share, Landlord shall not be obligated to commence work on the Tenant Improvements for the Leased Premises, and such failure to pay shall not delay the Commencement Date of this Lease or any of Tenant's obligations hereunder including, without limitation, Tenant's obligation to pay all rent. In the event that Tenant fails to pay to Landlord, upon Substantial Completion of the Tenant Improvements for the Premises, a sum equal to the remaining cost of Tenant's Cost Share, along with the COAH fee and construction permit fees, such failure shall constitute a default under this Lease; and Tenant shall not be permitted to occupy the Leased Premises; and Landlord shall be entitled to all rights and remedies available hereunder, at law or in equity, or otherwise, which rights shall be cumulative. All sums so owing to Landlord shall constitute Additional Rent and shall be subject to the imposition of late charges as provided in this Lease.


(d) Tenant shall be responsible for the design and installation of its own phone, data, communication, fire alarm and security systems, which systems shall be installed in a manner not to interfere with Landlord's construction efforts.


(e) Apart from extensions of time for delays and the commencement date for the payment of rent as hereinbefore provided, no payment or allowance of any kind shall be


Initial: Landlord
Tenant Lease Version Date: 5-31-01


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claimed by or made to the Landlord as compensation for damages on account of hindrance or delay from any cause in the Substantial Completion of the Tenant Improvements whether such hindrance or delay be avoidable or unavoidable, anything in this Agreement inconsistent herewith or to the contrary notwithstanding.


(f) During construction of Tenant Improvements, a representative of Tenant shall inspect the site no less frequently than once a week and verify and agree that the work in progress has been completed in a manner acceptable to both Landlord and Tenant.


3.6 The Tenant Improvements shall be commenced upon approval by governmental entities having jurisdiction therefor and, subject to authorized adjustments, Substantial Completion is projected to be achieved on or about August 15, 2001. As used herein the term "Substantial Completion" shall mean that the Leased Premises have been built and completed in substantial conformity with the Plans, and a temporary or permanent certificate of occupancy or a temporary or permanent certificate of acceptance ("CO/CA") has been issued permitting Tenant to use and occupy the Leased Premises, even though minor details, adjustments or punch list items which shall not materially impair Tenant's use and enjoyment of the Leased Premises may not have been finally completed, but which work Landlord agrees shall be diligently pursued to final completion. Tenant shall allow Landlord and its contractors to enter the Leased Premises during normal working hours after issuance of the CO/CA to complete remaining minor work or punch list items. It is agreed that for the purpose of this Lease, wherever and whenever the term Substantial Completion is used, it shall not include items of maintenance, service, punch list, or guarantee.


3.7 Immediately prior to occupancy of the Leased Premises by the Tenant, the Tenant and Landlord shall jointly inspect the Tenant Improvements in order to determine and record their


Initial: Landlord
Tenant Lease Version Date: 5-31-01


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condition and to prepare a comprehensive list of items that have not been completed (or which have not been correctly or properly completed) in conformity with the Plans and which are to be completed or corrected by Landlord ("Punch List Items"); and Landlord thereafter shall proceed promptly to complete and correct all Punch List Items. Failure to include an item on such list does not alter the responsibility of Landlord to complete all Tenant Improvements in accordance with the Plans. Occupancy and use of the Leased Premises by Tenant shall not constitute acceptance of Punch List Items not complying with the requirements of the Plans.


3.8 If, within one year after the date of Substantial Completion any of the Tenant Improvements is found to be not in accordance with the requirements of the Plans, Landlord shall correct said items promptly after receipt of written notice from Tenant. Landlord's obligation under this Subsection shall survive Tenant's occupancy of the Leased Premises. Tenant shall give Landlord notice promptly after discovery of any deficient condition.


4. RENT
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4.1 Tenant shall pay, as rent for the Leased Premises, the following:


(a) During the first 5 years of the term, an estimated annual base rent per square foot of $15.75, for an aggregate annual base rent of $165,327.75 ("Base Rent"), payable monthly in the sum of $13,777.31.


(b) During the remainder of the term, the Base Rent shall increase by 15%.


(c) If the date of Substantial Completion occurs on a day other than the first day of a month, rent from such day until the first day of the following month shall be prorated (at a rate of 1/30th of the monthly rent per day). During said period of partial monthly occupancy,


Initial: Landlord
Tenant Lease Version Date: 5-31-01


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all other terms and conditions of this Lease shall apply. All payments assume rentable square footage of 10,497 square feet.


4.2 Tenant shall pay as Additional Rent its proportionate share of the taxes and any other charges allocated amongst the tenants. Tenant's Proportionate Share shall be adjusted as of each first day of January during the term, based on the relationship between the gross square footage leased to Tenant and the gross square footage of building construction completed and initially occupied in the Office Park as of such first day of January. Tenant's Proportionate Share shall be adjusted over time as additional space is constructed in the office/industrial park.


4.3 The annual Base Rent shall be payable in advance in equal monthly installments on the first day of each calendar month. Tenant covenants to pay the Base Rent and Additional Rent in lawful money of the United States which shall be legal tender for the payment of all debts, public and private, at the time of payment. Such rent shall be paid to Landlord at its office address hereinabove set forth, or at such other place as Landlord may, from time to time, designate by notice to Tenant.


4.4 The Base Rent and Additional Rent shall be payable by Tenant without any set-off or deduction of any kind or nature whatsoever and without notice or demand; and all Additional Rent under this Lease shall constitute rent payable hereunder. The sum of all increases required to be paid as Additional Rent, and/or increases in Base Rent in accordance with this Lease, shall be paid to Landlord within 10 days following the giving of notice hereof by Landlord of such increases.


5. PARKING AND USE OF EXTERIOR AREA
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Initial: Landlord
Tenant Lease Version Date: 5-31-01


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The Tenant shall have the right to use parking spaces on a non-exclusive basis in common with other tenants of the Building. Landlord reserves the right to allocate specific parking spaces if it chooses. The Landlord and Tenant mutually agree that they will not block, hinder or otherwise obstruct the access driveways and parking areas so as to impede the free flow of vehicular traffic on the property. In connection with the use of the loading platforms, if any, Tenant agrees that it will not use the same so as to unreasonably interfere with the use of the access driveways and parking areas. Tenant shall not store trailers or other vehicles on any portion of the access driveways or parking areas, and may not utilize any portion of the land outside of the Leased Premises for any purpose unless consented to in advance by Landlord.


6. USE
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The Tenant covenants and agrees to use and occupy the Leased Premises for office, general laboratory, manufacturing, marketing, pharmaceutical and bio-technical research and development, or any combination of the foregoing normally undertaken by a pharmaceutical company, which uses are expressly subject to all applicable zoning ordinances, rules and regulations of any governmental instrumentalities, boards or bureaus having jurisdiction thereof. Tenant's use of the Leased Premises shall not interfere with the peaceable and quiet use and enjoyment by other tenants at their respective leased premises located at the Building or in the Office Park, nor shall Tenant's activities cause Landlord to be in default under its leases with such other tenants.


7. REPAIRS AND MAINTENANCE
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7.1 Tenant shall generally maintain and repair the Leased Premises, in a good and workmanlike manner, and shall, at the expiration of the term, deliver the Leased Premises in good order and condition, damages by fire or casualty, the elements and ordinary wear and tear excepted.


Initial: Landlord
Tenant Lease Version Date: 5-31-01


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Tenant covenants and agrees that it shall not cause or permit any waste, damage or disfigurement to the Leased Premises, or any overloading of the floors. Tenant shall maintain and make all repairs to the floor surface, plumbing and electrical systems including all ballasts and fluorescent fixtures located within the Leased Premises, and the entire HVAC system, unless the repair is the result of the negligence of Landlord, its agents, contractors, employees, tenants or invitees. Landlord shall be responsible for repairs necessary to the roof, foundation, exterior and load-bearing walls and other structural elements, and electric, plumbing and other Building systems to the point where they enter the Leased Premises, unless, and to the extent, the repair is necessitated by negligence of Tenant, or its agents, employees or contractors, and the cost thereof is not covered by Landlord's insurance, or the insurance Landlord is required to carry under this Lease, (without taking into account any deductible) whichever is greater. Repairs and replacements shall be made within a reasonable time after Landlord receives notice or has actual knowledge of the need for such repair or replacement.


7.2 The Tenant shall, at its own cost and expense, pay all utility meter and service charges, including gas and electric services used by the Tenant in the Leased Premises. Landlord shall have the option to install, at its own cost, a separate water meter and invoice Tenant directly for its water usage. The Tenant agrees to maintain all leased areas at a minimum temperature of 45 degrees, excluding cold rooms on other rooms specifically designed for a lower temperature, to prevent the freezing of domestic water and sprinkler pipes, provided that Tenant shall not be responsible if gas or electrical service to the Building has been interrupted for a reason not caused by Tenant. Tenant shall not store any items outside the Leased Premises, and shall deliver its garbage ...