LEASE AGREEMENT WITH JOHN HANCOCK

EXHIBIT 10.9





LEASE AGREEMENT



BY AND BETWEEN



JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY

("LANDLORD")





ACCENT COLOR SCIENCES, INC.

("TENANT")



DATED: FEBRUARY 16, 1996

TABLE OF CONTENTS



ARTICLE 1. PREMISES.................................................. 1

ARTICLE 2. TERM AND CONDITION OF LEASED PREMISES..................... 1

ARTICLE 3. USE, NUISANCE, OR HAZARD.................................. 2

ARTICLE 4. RENT...................................................... 2

ARTICLE 5. RENT ADJUSTMENT........................................... 3

ARTICLE 6. SERVICES TO BE PROVIDED BY LANDLORD....................... 5

ARTICLE 7. REPAIRS AND MAINTENANCE BY LANDLORD....................... 6

ARTICLE 8. REPAIRS AND CARE OF BUILDING COMPLEX BY TENANT............ 7

ARTICLE 9. TENANT'S EQUIPMENT AND INSTALLATIONS...................... 7

ARTICLE 10. FORCE MAJEURE............................................ 7

ARTICLE 11. MECHANICS'AND MATERIALMAN'S LIENS........................ 8

ARTICLE 12. ARBITRATION.............................................. 8

ARTICLE 13. INSURANCE................................................ 8

ARTICLE 14. QUIET ENJOYMENT.......................................... 9

ARTICLE 15. ALTERATIONS.............................................. 9

ARTICLE 16. FURNITURE, FIXTURES, AND PERSONAL PROPERTY............... 10

ARTICLE 17. TAXES.................................................... 10

ARTICLE 18. ASSIGNMENT AND SUBLETTING................................ 11

ARTICLE 19. FIRE AND CASUALTY........................................ 12

ARTICLE 20. CONDEMNATION............................................. 13

ARTICLE 21. HOLD HARMLESS............................................ 13

ARTICLE 22. DEFAULT BY TENANT........................................ 13

ARTICLE 23. INTENTIONALLY OMITTED.................................... 17

ARTICLE 24. INTENTIONALLY OMITTED.................................... 17

ARTICLE 25. ATTORNEYS' FEES.......................................... 17

ARTICLE 26. NON-WAIVER............................................... 17

ARTICLE 27. RULES AND REGULATIONS.................................... 17

ARTICLE 28. ASSIGNMENT BY LANDLORD................................... 17

ARTICLE 29. LIABILITY OF LANDLORD.................................... 17

ARTICLE 30. SUBORDINATION AND ATTORNMENT............................. 18

ARTICLE 31. HOLDING OVER............................................. 18

ARTICLE 32. SIGNS.................................................... 18

ARTICLE 33. HAZARDOUS SUBSTANCES..................................... 18

ARTICLE 34. COMPLIANCE WITH LAWS AND OTHER REGULATIONS............... 19

ARTICLE 35. SEVERABILITY............................................. 19

ARTICLE 36. NOTICES.................................................. 19

ARTICLE 37. OBLIGATIONS OF SUCCESSORS, PLURALITY, GENDER............. 20

ARTICLE 38. ENTIRE AGREEMENT......................................... 20

ARTICLE 39. PARAGRAPH CAPTIONS....................................... 20

ARTICLE 40. CHANGES.................................................. 20

ARTICLE 41. AUTHORITY................................................ 21

ARTICLE 42. BROKERAGE................................................ 21

ARTICLE 43. EXHIBITS................................................. 21

ARTICLE 44. APPURTENANCES............................................ 21

ARTICLE 45. PREJUDGMENT REMEDY, REDEMPTION, COUNTERCLAIM, AND JURY... 21

ARTICLE 46. RECORDING................................................ 22

ARTICLE 47. MORTGAGEE PROTECTION..................................... 22

ARTICLE 48. SHORING.................................................. 22

ARTICLE 49. PARKING.................................................. 22

ARTICLE 50. EXPANSION................................................ 22

ARTICLE 51. ZONING................................................... 23

ARTICLE 52. LANDLORD DEFAULT......................................... 24



LEASE AGREEMENT







THIS LEASE AGREEMENT (the "Lease") is made and entered into as of the 16/th/ day of February, 1996, by and between JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts corporation ("Landlord") and ACCENT COLOR SCIENCES, INC., a Connecticut corporation ("Tenant").





WITNESSETH:





ARTICLE 1. PREMISES



Subject to all of the terms and conditions hereinafter set forth, Landlord hereby leases to Tenant and Tenant Hereby leases from Landlord the premises (the "Leased Premises"), outlined on Exhibit B to this Lease, containing

------------ approximately 50,895 rentable square feet of Rentable Area (as hereinafter defined), consisting of all of a portion of the basement, all of the leasable space on the first floor and the entire third and fourth floors of the six-story office building, being 800 Connecticut Boulevard, East Hartford, Connecticut (the "Building"). 'Me exact number of square feet of Rentable Area shall be determined by Landlord's Architect in accordance with Building Owners and Managers Association International ANSI Z 65.1 standards ("BOMA Standards"), and once so determined, such number of square feet of Rentable Area shall be used for determining Base Rent and Tenant's Building Percentage. The land described in Exhibit A to this Lease and all improvements thereon and appurtenances thereto, including, but not limited to, the Building, access roadway, and related areas, and all areas used for parking for the Building, shall be collectively Hereinafter referred to as the "Building Complex."



ARTICLE 2. TERM AND CONDITION OF LEASED PREMISES



2.1 The term of the Lease "Term") shall commence on June 1, 1996 (the "Commencement Date") and end on July 31, 2000 (the "Expiration Date") unless sooner terminated (the "Termination Date") as hereinafter provided. The Commencement Date of this Lease and the obligation of Tenant to pay rent, additional rent and all other charges hereunder shall not be delayed or postponed by reason of any delay by Tenant in performing changes or alterations in the premises to be performed by Tenant. In the event that Tenant completes its build-out in any portion of the Leased Premises prior to the Commencement Date, it shall be permitted to occupy and conduct its business therein. All of the terms and conditions of this Lease, except for Articles 4 and 5 hereof, shall apply to such period of early occupancy.



2.2 Landlord will provide Tenant with an allowance, toward the cost of Tenant's initial buildout of the Leased Premises, in the amount of One Hundred Twenty-Five Thousand and 00/100 Dollars ($125,000.00) (the "Allowance"). Tenant shall pay for all necessary permits and fees out of the Allowance. The Allowance shall be paid to Tenant on a bi-weekly progress payment basis, upon receipt of the following:

(a) an invoice and certification from Tenant's general contractor as to the amount billed to date;



(b) a certification from Landlord's architect as to the costs incurred to date;



(c) partial lien waivers from Landlord's general contractor and all subcontractors in the full amount being invoiced that month; and



(d) such other documentation as Landlord shall reasonably require in connection therewith.



Tenant represents that Tenant has inspected the Leased Premises and the Building and is thoroughly acquainted with their condition and, except for Landlord's Work (as defined below) takes the premises "as is," and the taking of possession of the Leased Premises by Tenant shall be conclusive evidence that the Leased Premises and the Building were in good and satisfactory condition at the time possession was taken by Tenant. Neither Landlord nor Landlord's agents have made any representations or promises with respect to the condition of the Building, the Leased Premises, the land upon which the Building is constructed, or any other matter or thing affecting or related to the Building or the Leased Premises, except as herein expressly set forth, and no rights, easement or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in this Lease.



2.3 Landlord shall, within ninety (90) days after the Commencement Date, perform the work, in the common areas of the Building, that is set forth on Exhibit C attached hereto ("Landlord's Work").



ARTICLE 3. USE, NUISANCE, OR HAZARD



3.1 The Leased Premises shall be used and occupied by Tenant solely for general office purposes, including engineering offices, and for no other purposes without the prior written consent of Landlord, except that the portion of the Leased Premises that is on the first floor of the building may be used for light assembly of printing equipment, a shop area and storage purposes.



3.2 Tenant shall not use, occupy, or permit the use or occupancy of the Leased Premises for any purpose which Landlord, in its reasonable discretion, deems to be illegal, immoral, or dangerous; permit any public or private nuisance; do or permit any act or thing which may disturb the quiet enjoyment of any other tenant of the Building Complex; keep any substance or carry on or permit any operation which might introduce offensive odors or conditions into other portions of the Building Complex; use any apparatus which might make undue noise or set up vibrations in or about the Building Complex; permit anything to be done which would increase the premiums paid by Landlord for FIRE and extended coverage insurance on the Building Complex or its contents or cause a cancellation of any insurance policy covering the Building Complex or any part thereof or any of its contents; or permit anything to be done which is prohibited by or which shall in any way conflict with any law, statute, ordinance, or governmental rule or regulation now or hereinafter in force. Should Tenant do any of the foregoing without the prior written consent of Landlord, it shall constitute an Act of Default (as hereinafter defined) and shall enable Landlord to resort to any of its remedies hereunder.



ARTICLE 4. RENT

4.1 Tenant hereby agrees to pay Landlord a base annual rental (the "Base Rent") Three Hundred Ninety-Four Thousand Four Hundred Thirty-Six and 25/100 Dollars ($394,436.25) per N-ear (based on $7.75 per rentable square foot), payable in monthly installments of Tbirty-Two Thousand Eight Hundred Sixty-Nine and 69/100 Dollars ($32,869.69), for the first two (2) years of the Term (pro rated for any partial month at the commencement of the Term) and Five Hundred Ninety-Eight Thousand Sixteen and 25/100 Dollars ($598,016.25) per year (based on $11.75 per rentable square foot), payable in monthly installments of Forty- Nine Thousand Eight Hundred Thirty-Four and 68/100 Dollars ($49,834.68), for the balance of the Term. The Base Rent shall be due and payable in advance in twelve (12) equal installments (the "Monthly Rent") in check or by money order on or before the first day of each calendar month. In addition to the Base Rent, Tenant also agrees to pay the Operating Expenses, Taxes, and any and all other sums of money as shall become due and payable by Tenant as hereinafter set forth, all of which shall constitute additional rent under this Lease (the "Additional Rent"). The Monthly Rent and the Additional Rent are sometimes hereinafter collectively called "Rent" and shall be paid when due in lawful money of the United States with demand, deduction, abatement, or offset at such place as is set forth in Article 36 of this Lease or as Landlord may designate from time to time. Landlord expressly reserves the right to apply any payment received to Base Rent or any other items of Rent that are not paid by Tenant. Notwithstanding the above, no Base Rent shall be due or payable for the first and second complete calendar months of the Term.



4.2 In the event any Monthly or Additional Rent or other amount payable by Tenant hereunder is not paid within five (5) business days after its due date, Tenant shall pay to Landlord a late charge (the "Late Charge"), as Additional Rent, in an amount of ten percent (10%) of the amount of such late payment. Failure to pay any Late Charge shall be deemed a Monetary Default (as hereinafter defined). Provision for the Late Charge shall be in addition to all other rights and remedies available to Landlord hereunder, at law or in equity, and shall not be construed as liquidated damages or limiting Landlord's remedies in any manner. Failure to charge or collect such Late Charge in connection with any one (1) or more such late payments shall not constitute a waiver of Landlord's right to charge and collect such Late Charges in connection with any other or similar of like late payments.



4.3 The amount of Sixty Five Thousand Seven Hundred Thirty Nine and 37/100 Dollars ($65,739.37) shall be due and payable upon the execution of this Lease by Tenant, which sum shall be the Monthly Rent for the third and fourth complete calendar months of the Term.



4.4 If the Term commences on a date other than the first day of the calendar month or expires or terminates on a date other than the last day of a calendar month, the Rent for any such partial month shall be prorated to the actual number of days Tenant is in occupancy of the Leased Premises for such partial month.



4.5 All Rents and any other amount payable by Tenant to Landlord hereunder, if not paid when due, shall bear interest from the date due until paid at the rate equal to the prime commercial rate established from time to time by Fleet Bank, Boston. Massachusetts, plus four percent (4%) per annum. but not in excess of the maximum legal rate permitted by law. Failure to charge or collect such interest in connection with any one (1) or more delinquent payments shall not constitute a waiver of Landlord's right to charge and collect such interest in connection with any other or similar or like delinquent payments.



4.6 If Tenant fails to make when due two (2) consecutive payments of Monthly Rent or makes two (2) consecutive payments of Monthly Rent which are returned to Landlord by Tenant's financial institution for insufficient funds, Landlord may require, by giving written notice to Tenant, that all future payments of Rent shall be made in cashier's check or by money order. The foregoing is in addition to any other remedy of Landlord hereunder, at law or in equity.



ARTICLE 5. RENT ADJUSTMENT



5.1 Definitions.

-----------



(a) "Operating Expenses," as said term is used herein, shall mean all expenses, costs, and disbursements of every kind and nature which Landlord shall pay or become obligated to pay because of or in connection with the ownership, operation, or maintenance of the Building Complex. If less than ninety-five percent (95%) of the Rentable Area of the Building is actually occupied during any Lease Year (as hereinafter defined), Operating Expenses for such Lease Year shall be the amount that the Operating Expenses should have been for such Lease Year had ninety-five percent (95%) of the Rentable Area of the Building been occupied during all of such Lease Year, as determined by Landlord. Operating Expenses shall be computed in accordance with generally accepted accounting principles, consistently applied, and shall include, but not be limited to, the items as listed below:



(i) Wages, salaries, and any and all taxes, insurance and benefits of the Building manager and any clerical, maintenance, or other management employees directly associated with the operation of the Building;



(ii) All expenses for the Building management office including rent, office supplies, and materials therefor,



(iii) All supplies, materials, and tools;



(iv) All costs incurred in connection with the operation, maintenance, and repair of the Building Complex including, but not limited to, the following: elevators; heating, ventilating and air conditioning systems; security; cleaning and janitorial; parking lot and landscape; window washing; and license, permit, and inspection fees;



(v) Costs of water, pure water, sewer, electric, and any other utility charges, except that costs of electricity consumed by tenants for lighting and plugged-in equipment in the leased or leasable areas of the Building shall be excluded from Operating Expenses;



(vi) Costs of casualty, rental interruption, and liability insurance, and any deductibles payable thereunder;



(vii) Management fees;



(viii) Any and all Taxes (as hereinafter defined) whether Federal, State, county, or municipal, and whether by taxing districts or authorities presently in existence or by other subsequently created (excluding, however, Federal and State taxes on income, if any) and any costs and expenses of contesting the validity of same. "Taxes" shall mean all ad valorem taxes, personal property taxes, and all other taxes, assessments, embellishments, use and occupancy taxes, transit taxes, water, sewer and pure water charges not included in Section 5.1 (a)(v) above, excises, levies, license and peat fees or taxes, and all other similar charges, levies, penalties, or taxes, if any, which are levied, assessed , or imposed upon or due and payable in connection with, or a lien upon, the land, the Building, or facilities used in connection therewith, and rentals or receipts therefrom and all taxes of whatsoever nature that are imposed in substitution for or in lieu of any of the taxes, assessments, or other charges including in this definition of Taxes;



(ix) The cost of any capital improvements made to the Building Complex by Landlord after the date of this Lease which are or may be required, by any law, ordinance, rule, regulation, or otherwise that was not applicable or in effect at the time the Building Complex was constructed, including, but not limited to, the Americans with Disabilities Act, amortized over such period as Landlord shall reasonably determine, together with interest on the unamortized balance;





(x) The cost of any labor or energy saving device or other equipment installed by Landlord which improves the operating efficiency of any system within the Building Complex and thereby reduces Operating Expenses. Such costs may be added to Operating Expenses in each Lease Year during the useful life of such device or equipment an amount equal to the annual amortization allowance of the cost of such device or equipment as determined in accordance with generally accepted accounting principles, consistently applied, together with interest on the unamortized balance thereof, provided, however, that the amount of such allowance and interest shall not exceed the annual cost or expense reduction attributed by Landlord to such device or equipment; and



(xi) Legal, accounting, inspection, and consultation fees incurred in connection with the operation of the Building Complex.



Expressly excluded from Operating Expenses are the following items:



(1) Replacement of capital investment items (except as provided

hereinabove);



(2) Advertising and leasing commissions (other than those set

forth hereinabove);



(3) Repairs and restoration, to the extent paid for by the

proceeds of any insurance policies;



(4) Principal, interest, and other costs directly related to

financing the Building Complex; and



(5) The cost of special services to tenants (including Tenant)

for which a special charge is made.



(b) "Lease Year" shall mean the twelve (12) month period commencing January 1/st/. and ending December 31st.



(c) "Tenant's Building Percentage" shall mean Tenant's percentage of the entire Building as determined by dividing the Rentable Area of the Leased Premises by the total Rentable Area of the Building, which is 95,410 square feet. For the purposes of this Section, Tenant's Building Percentage is fifty- three and thirty-three one-hundredths percent (53.33%), subject to recalculation when the precise number of square feet of rentable area in the Leased Premises is determined pursuant to Article I hereof. If there is a change in the total Building Rentable Area as a result of an addition to the Building, partial destruction, modification or similar cause, which event causes a reduction or increase on a permanent basis, Landlord shall cause adjustments in the computations as shall be necessary to provide for any such changes.



5.2 In the event that the Operating Expenses of Landlord's operation of the Building Complex during any Lease Year of the Term shall exceed the actual Operating Expenses for the Building Complex for the 1996 calendar year as adjusted to ninety-five percent (95%) occupancy for entire twelve (12) months (the "Base Year"), Tenant shall pay to Landlord, as Additional Rent, "Tenant's Share" as hereinafter defined) of the difference between the Operating Expenses for a particular Lease Year and the Base Year. "Tenant's Share" shall be determined by multiplying any such difference between Operating Expenses for any Lease Year and the Base Year or pro rata portion thereof, respectively, by Tenant's Building Percentage. Landlord shall, in advance of each Lease Year, estimate what Tenant's share will be for such Lease Year based, in part, on Landlord's operating budget for such Lease Year, and Tenant shall pay Tenant's share as so estimated each month (the "Monthly Escalation Payments"). The Monthly Escalation Payments shall be due and payable at the same time and in the same manner as the Monthly Rent.



5.3 Landlord shall, within one hundred twenty (120) days after the end of each Lease Year, provide Tenant with a written statement of the actual Operating Expenses incurred during such Lease Year for the Building Complex and such statement shall set forth Tenant's share of such Operating Expenses. Tenant shall pay Landlord, as Additional Rent, the difference between Tenant's Share of any increases in Operating Expense and the amount of Monthly Escalation Payments made by Tenant attributable to said Lease Year, such payment to be made within thirty (30) days; or the date of the statement, similarly, Tenant shall receive a credit if Tenant's Share is less than the amount of Monthly Escalation Payments collected by Landlord during said Lease Year, such credit to be applied to future Monthly Escalation Payments to become due hereunder. If real estate taxes, utilities, janitorial services or any other components of Operating Expenses increase during any Lease Year, Landlord may revise Monthly Escalation Payments due during such Lease Year by giving Tenant written notice to that effect', and, thereafter, Tenant shall pay, in each of the remaining months of such Lease Year, a sum equal to the amount of revised difference in Operating Expenses times Tenant's Building Percentage divided by the number of months remaining in such Lease Year.



5.4 If, within sixty (60) days following receipt of the Operating Expense statement, neither party hereto delivers to the other party a notice referring in reasonable detail to one (1) or more errors in such statement, it shall be deemed conclusively that the information set forth in such statement is correct. Tenant shall, however, be entitled to conduct or require an audit to be conducted, provided that not more than one (1) such audit may be conducted during any Lease Year of the Term. In no event shall payment of Rent ever be contingent upon the performance of such audit. For purposes of any Audit, Tenant or Tenant's duly authorized representative, at Tenant's sole cost and expense, shall have the right, upon fifteen (15) days' written notice to Landlord, to inspect Landlord's books and records pertaining to Operating Expenses at the offices of Landlord during Landlord's ordinary business hours, provided that such audit must be conducted so as not to interfere with Landlord's Business Operations and must be reasonable as to scope and time. Alternatively, at Landlord's sole discretion, Landlord may provide an audit of such books and records prepared by a independent public accountant of Landlord's selection. but at Tenant's expense, which shall be deemed to be conclusive for the purposes of this Lease.

5.5 Tenant's obligation with respect to Additional Rent and the Payment of Tenant's Share shall survive the Expiration Date or Termination Date of this Lease and Landlord shall have the right to retain the Security Deposit, or so much thereof as it deems necessary, to secure payment of Tenant's Share for the final year of the Lease, or part thereof, during which Tenant was obligated to pay such expenses. If Tenant occupies the Leased Premises for less than a full calendar year during the first or last calendar years of the Term, Tenant's Share for such partial year shall be calculated by proportionately reducing the Base Year Operating Expenses to reflect the number of months in such year during which Tenant occupied the Leased Premises (the "Adjusted Base Operating Expenses"). The Adjusted Base Operating Expenses shall then be compared with the actual Operating Expenses for said partial ),ear to determine the amount of any increases or decreases in the actual Operating Expenses for such partial year over the Adjusted Base Operating Expenses. Tenant shall pay its Tenant's Share of any such increases within thirty (30) days following the receipt of a final statement.



ARTICLE 6. SERVICES TO BE PROVIDED BY LANDLORD



6.1 Subject to Articles 5 and 9 herein, Landlord shall pay for and furnish to Tenant, while occupying the Leased Premises, the following services:



(a) The existing electric service at the Leased Premises, to furnish sufficient power for lighting in the Leased Premises, typewriters, voice writers, calculating machines, personal computers, and other machines of similar low electrical consumption. In the event that Tenant requires any electric capacity that is in excess of the existing service, Tenant shall have the right to provide such excess service, at Tenant's cost. Any such work shall be subject to the provisions of Article 15 hereof Tenant shall pay to Landlord monthly, as billed, for all costs of the electricity used by Tenant in the Leased Premises, as aforesaid, as measured by a separate meter or meters therefor;



(b) Hot, cold, and refrigerated water at those points of supply provided for general use of all lessees in the Building;



(c) Janitorial service on a five (5) day weed basis at no extra charge pursuant to Exhibit E, provided that in no event shall Landlord be

--------- obligated to clean any portions of the Leased Premises that are not used for normal use. Carpet cleaning, except as provided in normal business services, shall be performed at Tenant's request and at Tenant's expense;



(d) Air conditioning and heating as reasonably required for comfortable use and occupancy under ordinary office conditions from 7:00 a.m. to 6:00 p.m., Monday through Friday, and 7:00 a.m. to 12:00 p.m., Saturdays or any legal holidays and on any holidays observed by a majority of the Building lessees from time to time. Landlord shall also make available heat, air- conditioning and ve ...